October 20, 2025 • 44 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Amazon Web Services, the world’s largest cloud provider, said issues continued to plague its operations after a widespread outage degraded services for a range of customers including government agencies, AI companies and financial platforms.
Hours after saying Monday that it had mostly recovered from the database network issue, AWS said some users were still struggling to connect with rented servers. In an update on its health dashboard, the company said multiple AWS services in the East Coast region had experienced network connectivity issues.“We continue to observe recovery across all AWS services,” the company said at 3:15 p.m. on Monday.
Amazon.com Inc.’s service underpins a large chunk of the internet, accounting for about a third of the cloud market. Downdetector tracked disruptions at hundreds of sites, including for financial services outfits Venmo and Robinhood Markets Inc., Apple Inc.’s Apple Music and Apple TV, software companies such as Zoom Communications Inc., Salesforce Inc. and Snowflake Inc., food services giants including McDonald’s Corp. and gaming companies like Epic Games Inc. Even Amazon’s own services, including Alexa and the Ring home security system, weren’t immune.
Today's show features:
- Bloomberg Big Tech team leader Sarah Frier on the AWS service disruption
- Bloomberg News Managing Editor for Global Consumer Tech Mark Gurman on Apple hitting its first record day of the year
Bloomberg Businessweek national correspondent Josh Green on his Businessweek profile of California Governor Gavin Newsom - Herman Chan, Bloomberg Intelligence senior analyst & David George, senior research analyst at Baird on Zions earnings and regional banks
- Gary Evans, Chairman and CEO of United States Antimony Corp
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business, finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:31):
AWS is the world's largest cloud provider. You know this,
The company saying issues continuing to plague its operations after
a widespread auttegraded services for a range of customers, including
government agencies, AI companies, and financial platforms. Shares the company
They've actually traded higher today, up one point three percent.
Right now. We got a great voice on this.
Speaker 4 (00:51):
Yeah, Sarah Fryer is with us.
Speaker 5 (00:52):
Let's head to our Bloomberg News bureau in San Francisco.
She's a Bloomberg News Big Tech team leader. She's also
the author of New Filter, The Inner Side Story of Instagram. Sarah, Sarah,
what exactly happened and why are there still problems?
Speaker 6 (01:06):
Well, when a large chunk of the Internet is relying
on one service, there are all these cascading effects, right,
they said, there was an issue in a database that
was loading incorrectly, and that just had this domino effect
for a large portion of the Internet. A third of
cloud computing services are on Amazon. So when something is fixed,
(01:29):
and they do say it is fixed now, it does
take a while for all of those errors to resolve.
That is something that is people will still feel the
effects of for a little while. But it's so funny
that you said the stock is going up. I mean,
this is a moment where you realize how crucial Amazon
(01:50):
is in our web infrastructure and our governments and so
much about our lives. So it is a sign of
their power stuff else.
Speaker 3 (02:00):
But is it also a sign of our reliance on one,
two or three really large companies If an outage at
a single company can disrupt such a diverse array of
services that so many people rely on. I mean, we
were kind of joking about Netflix and the ring camera,
but you know, government agencies are experiencing outages as a
result of this. There issues with dispatching taxis, for example,
(02:24):
in some cities right now. As a result of this.
What does it say about our reliance on single pieces
of technology.
Speaker 6 (02:32):
My train to work was late this morning. It was
like only one track was working, and I was like, oh,
is this related to the Amazon outage? Like I just
kind of assumed I don't think it was, but I
I it is. It is such a good good reminder
of how that concentration of power is a threat to
(02:53):
things getting done in an economy. Remember CrowdStrike last year
went out and planes were grounded and you know, so
many things stopped working. That was that was a huge cost,
billions of costs to the global economy when that happened.
So I think that there is there's really something to
(03:14):
be said for the the threat of this kind of problem,
and it's probably a queue to you know, the hackers
of the world that this is this is a vulnerability, right.
That's why it's so important for these companies have really
fast response, quickly pinpointing the problem when something goes down.
(03:35):
One issue that may be in our future, right is
more code is written by AI. When when big services
like this go down, will the engineers know where the
problem is and if it was written by a wind
of code that they didn't actually write. So I think
that that's sort of like when you think about risk
(03:55):
to these kinds of outages in the future, you have
to think about from the very beginning when you're building
the system. How safe is the system as it grows
and as more services become dependent on it.
Speaker 4 (04:10):
Yeah, great, Happy Monday. Everybody.
Speaker 3 (04:12):
Hope you Applex works tonight. Carol absolut. Actually you got
to stop refreshing it from the studio computer.
Speaker 4 (04:18):
Okay, actually came back.
Speaker 3 (04:19):
Maybe it's blocked at work and that's what it is.
You shouldn't be watching it here.
Speaker 7 (04:22):
Binging. This was last night.
Speaker 5 (04:24):
We did get it finally on and we were able
to finish Binging a certain series.
Speaker 3 (04:27):
Okay, I'm not even gonna ask.
Speaker 4 (04:29):
Don't ask, don't ask. Sarah Friar, thank you so much.
Speaker 5 (04:32):
Bloomberg News, Big Tech team leader, author of No Filter,
the inside story of Instagram.
Speaker 3 (04:37):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (04:45):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (05:00):
Seven to another week go.
Speaker 5 (05:01):
Apple Shares hitting their first record of twenty twenty five
after Luke Capital upgrade the stock to buy from Hole
becoming the latest firm to site positive iPhone demand trends,
and then Team Tim we heard about Apple's.
Speaker 4 (05:14):
Latest generation of iPhones. They seem to be selling well.
Speaker 3 (05:17):
Yeah, off to a faster start than usual. It's most
basic model surging in popularity. With our Monday Apple round up,
Bloomberg News Managing editor for Global Consumer Tech, Mark German
is with us. He's in the Bloomberg News La Bureau.
Speaker 4 (05:29):
Mark.
Speaker 3 (05:29):
I want to start with the stock because it does
seem like the optimism that we're seeing with the trade
with Apple is giving some momentum to other companies out there,
certainly lifting the major indexes. What's your view on Apple
hitting its first new record of the year.
Speaker 7 (05:45):
Yeah. A couple things to note. One, this is old news.
Speaker 8 (05:49):
We've been known for several weeks now that the iPhone
seventeen Pro and Promacs have been a hit. We've known
for some time now that the base level iPhone is
a hit. They made major change is on that consumer model.
Speaker 7 (06:02):
You have the.
Speaker 8 (06:02):
Faster refresh display, the better cameras, the larger screen size, etc.
Speaker 7 (06:08):
Etc.
Speaker 8 (06:09):
The Pro models first redesign in half a decade, got
that orange color, which I happen to like they're doing
very well. Second thing I'll say is I just continue
to find it fascinating. I know I've been in this
space for a decade now, in the financial news space,
that a firm can come out They could say we
predict that the stock price is going to XYZ, and
(06:32):
then the stock follows right, stock goes up. Anyone could
just shout out and say I think the price is
going to that and see what happens.
Speaker 9 (06:40):
Right.
Speaker 8 (06:40):
So these are predictions, they're not set in stone, and
there's really no way to know how the stock is
going to go one way or another. We don't know
what the different ramifications are of different political policies and
what can happen in the world at the drop of
a dime. So it's really a coin flip to know
where this stock price is going to go, the stock price.
Speaker 7 (07:01):
For any company. So that's my take in two cents on.
Speaker 3 (07:04):
I just think it's worth pointing on because I don't
think Mark would do this himself. But oftentimes when Mark
does report news that nobody knows it does move Apples
stock price. It's not just the analysts who know you
do that, but Mark's reporting often does that.
Speaker 5 (07:15):
You know, it's going to come back at you, mark,
because you know we do have with this call out
from Loop Capital that not everyone is sure that that
early momentum for the iPhone justifies Apple's valuation. That's out
there shares trading it more than thirty thirty two times
estimated earnings, well above their ten year average of twenty
two times. You are not a financial analyst, but your
reporting does move the share price. But you do know
(07:38):
what's coming in terms of products, services, fundable.
Speaker 7 (07:41):
They all use my reporting to make their report.
Speaker 3 (07:44):
Yeah, there we go. I like it.
Speaker 5 (07:46):
What do you say about those that are concerned about valuations? Again,
you're not a financial analyst. I'm not asking you to
give me a buys, you know, seller, hold or whatever.
But you understand kind of what's coming at us from
the company. There are drivers out there, right.
Speaker 8 (08:00):
I think I can give you a pretty good idea
actually if you should buy a hold or sell.
Speaker 7 (08:04):
But you know I won't give that black and white.
Speaker 8 (08:07):
But I will tell you that the product pipeline that
they have is phenomenal. I think the foldable iPhone coming
at the end of next year is going to raise
ASPS quite significantly. I think you're going from a device
right now, a pro model that costs around one thousand dollars,
You're going to see phone starting at two thousand dollars
from Apple at the end of next year, and I
(08:28):
think that's going to do wonders for asps and overall revenue.
They're going to expand the product portfolio that's sort of
that other product segment with the new slate of smart
home devices. They're going to compete with Ring their parent
company Amazon, They're going to compete with Google, ecob At,
a bunch of other companies in the smart home space.
(08:50):
With this new smart home display coming in March, they're
going to come out in the following year in twenty
twenty seven with a robotics. Smart home display is actually
a very popular product category right now. It's growing and
it's becoming increasingly popular, i should say in China tabletop robots.
So if you're a smart home user or robotic span,
(09:11):
this is something that I think is going to be
fairly compelling. You've got a foldable eighteen inch iPad in
the pipeline from before the end of the decade. You've
got multiple different variations of smart glasses, So in terms
of hardware. You're going to see a pretty rapid and
broad expansion of the hardware lineup. You have the new
sery coming out this spring, then you have another update
(09:34):
to Serrie coming at the end of next year, and
then another update to Serree coming the year after trying
to get something closer to chat GPT. They're looking at
a bunch of acquisitions. So you know, we're on a
very solid path in terms of Apple right now.
Speaker 7 (09:50):
A two thousand dollars I take your bet based on that.
Speaker 3 (09:53):
Okay, Okay, So a two thousand dollars iPhone mark I
think would make a lot of people balk at just
the list price there, that headline price. What is Apple
need to do or what do carriers around the world
need to do to they make that more digestible, to
break that up so people actually spend the money but
don't realize they're spending it.
Speaker 8 (10:08):
Yeah, I think that issue has been solved with installment
plans from Apple on their credit card in the US.
I think it's also been solved by the carriers in
terms of their trade in promotions, and I think people
understand that pricing is going up. You know, one benefit
I should say with the tariffs is it's given Apple
some air cover, even if they're not being hit by
(10:29):
tariffs directly. It's given them some air cover to do
price adjustments. And so I think the general consumer understands
that because of teriffs, because of inflation, pricing is going up,
and so it gives them some air cover there. And
they're not going to be the first at this point.
When Apple came out with a thousand dollars ifone ten
in twenty seventeen, they really were the first to hit
that you know, massive at the time pricing threshold. Now
(10:50):
it's sort of whatever, and I think pretty soon the
two thousand is going to be pretty whatever.
Speaker 5 (10:54):
Also, you know, we've always talked about Apple and we're
always so concerned about how much exposure they have to
one big product, and that is their phone.
Speaker 4 (11:01):
Are we still worried?
Speaker 8 (11:04):
Oh yeah, I mean, at some point the iPhone is
going to need to be not replaced right by, but
succeeded right with the iPhone still sticking around. It's kind
of like everyone thought the laptop was going to die
because of the iPad, and then everyone thought, you know,
maybe the Apple Watch would cannibalize some things. The only
(11:25):
real cannibalization that we've ever seen in the history of Apple.
In my viewpoint is the iPod where the iPhone killed
the iPod, but nothing has killed the mac. Nothing's going
to kill the phone. You're always going to have that
pocket device. You're going to see fewer people use the
laptop because they've got the iPhone. You're going to maybe
see fewer people use the iPhone because you have the
(11:47):
smart glasses. But you're still going to probably want and
own and buy all of them, right, and so that's
the tricky needle.
Speaker 7 (11:53):
Apple needs the thread. But I don't believe the phone
is going away.
Speaker 3 (11:57):
I miss that iPad iPod shuffle.
Speaker 5 (12:00):
Oh love that say, parents giving them to their kids
so that they didn't have to have a phone but
they could play around with music or something.
Speaker 4 (12:05):
I thought, I'll say some story. I don't know. Tim's
looking at me like I'm crazy.
Speaker 5 (12:09):
Craig Gray, Mark German and Bloomberg News me together for
global consumer tech. Apple now at three point nine trillion
dollar market cap company.
Speaker 1 (12:17):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eas during
listen on Applecarplay and Android Auto with the Bloomberg Business
app or watch us live on YouTube.
Speaker 3 (12:31):
Poll show Democrats are more disillusion than they've been in decades,
sped up with aging, feckless leaders, frustrated by a party
adrift and unsure who their next standard bearer should be,
but yearning for someone to take on Trump. So right,
Josh Green and elaiyu Chemischer for Bloomberg BusinessWeek, California Governor
Gavin Newsom has leaped into the breach. He's on for
(12:53):
the podcast A Ballot Measure and tweets Governorsom is spoiling
for a fight with the President he is.
Speaker 5 (12:59):
Indeed, It is the cover of the new ratio of
Bloomberg Business Week, out on newsstands, now online, and on
the Bloomberg terminal. Bloomberg BusinessWeek National correspondent Josh Green is
the lead author of the Profile of the Governor. Josh
is also the author of several books, including the number
one New York Times bestseller Devil's Bargain, Steve Bannon, Donald Trump,
and The Storming of the Presidency. He joins us Josh
from Washington, DC.
Speaker 4 (13:20):
Josh, great to have you here with us. I mean,
Gavin Newsom.
Speaker 5 (13:24):
He went from one of his lowest political points earlier
this year, as deadly fires burned in southern California. She
now being a potential leader of the Democratic Party. That
seems quite a turn. How did this happen and how
dark was it for him?
Speaker 10 (13:40):
Well, yeah, as you guys said in that nice intro,
he was our cover story, our cover profile this week,
went out to Sacramento, spent some time with him, talk
to him. For a lot of people nationally, I think
outside California. The last time they really keyed in and
focused on Governor Newsom was back in January, during the wildfires.
Speaker 3 (13:56):
Things were out of control.
Speaker 10 (13:58):
Trump was the new president, sort of insulting him, tweeting
negative things about him, and so, you know, he told
us that was really the low point I think of
as governorship. But what's interesting is that over the last
couple of months, partly due to some things that Trump
has done, Newsom has re emerged on the national stage
as perhaps the most important Democrat right now, because he
(14:20):
is in the middle of leading a ballot initiative that
would create as many as five new Democratic House districts,
and Democrats nationally are pretty much without power. They don't
control the White House, they don't control either House of Congress,
but they're very much hoping to win back the House
next November. And so Newsom, by dint of his ability
(14:40):
to kind of run the table in California, get this
initiative on the ballot, has suddenly become important in preserving Democrats'
chance to win back some shred of power to confront
Donald Trump with next November. And of course that would
vault Newsom himself into even more prominent role as Democrats
look for somebody to lead the party in twenty two,
twenty eight and out of the Trump era.
Speaker 3 (15:02):
Does that proposition have widespread support in California right now?
I mean, former Governor Ronald Schwarzenegger has spoken out recently
against it. What did you find in your reporting? Yeah,
it's not clear that it does.
Speaker 10 (15:13):
I mean, What's what's going on, just to kind of
clue in viewers, is that Trump and Republicans have been
very aggressive about deciding to redraw or try and redraw
congressional districts in red states across the country as a
way of kind of putting their thumb on the scale
in midterm elections in a way that would help Republicans
withstand what I think most people expect to be an
electoral backlash. So the fear for Democrats is that Republicans
(15:38):
essentially rewrite the rules and you know, take control or
keep control of a House of Representatives that they think
they ought to be able to win. And so Newsome's
value to the parties that he's been able to kind
of come in and I think offset this if this
ballot referendum wins. But it's not clear that it's winning
by a lot. The latest poll I've seen has it
(15:58):
at about fifty percent favor, about thirty five thirty six
percent of pose and the rest undecided.
Speaker 3 (16:04):
So it really could still swing either way.
Speaker 10 (16:06):
And as you said, there have been prominent Republicans like
former Governor ar Schwarzenegger have come out and said, no,
we don't want to do this, We don't want to
create these democratic districts.
Speaker 3 (16:15):
And so we'll see.
Speaker 10 (16:16):
But I think the expectation among the experts that I've
spoken to is that this probably will prevail, and if
it does, Democrats nationally, I think are going to breathe
a big sigh of relief.
Speaker 2 (16:26):
Josh.
Speaker 5 (16:26):
We want to dig more into this profile piece of
Gavin Newsoen, but I just want to on this referendum,
this ballot referendum, how important is it to new some specifically,
how important is it to really Democrats more broadly, as
we all are kind of looking at the upcoming midterms
and what it means and what it says about President
Trump's administration.
Speaker 10 (16:45):
Yeah, it's a great question. The answer is that it's
really important to both of them. I just explained on
kind of the national democratic side why it's important. But
for Newsom himself, I think it's especially important because you know,
he is somebody who has long been thought to have
presidential ambitions. Democrats are obviously looking for a new leader
in twenty twenty eight, but talking to people around Washington,
(17:06):
around the country, in Democratic circles, there could be literally
dozens of people running. And so if this ballot referendum
does pass, it will be a real validating credential for Newsome.
He's one of the rare Democrats right now who isn't
a position of power. And if he's able to lead
his party to victory on this ballot initiative and help
(17:27):
Democrats win back the House of Representatives in twenty twenty six,
he can go out and say, look like I'm out here.
I'm fighting Trump, I'm doing things. I'm helping the Democratic Party,
and that's just not something that a lot of other
elected Democrats can say right now. And I do a
lot of business coming of this self, as I mentioned,
as we mentioned it some like in the profile, has
(17:48):
spent a lot of time trying to raise his profile online,
doing everything from you know, YouTube to Twitch to Twitter
to x to try and raise his visibility. So I
think a win on this ballot initiative would really help
him in that regard.
Speaker 5 (17:59):
Always think about COVID and like how much he became
so prominent, and we covered certainly everything he did during
COVID and what was going.
Speaker 4 (18:06):
On in the state, but he really became a national.
Speaker 3 (18:08):
Figure, especially during that visit to the French laundry. As
Josh points out in his piece, which what did he
call that? In his podcast Josh she quoted in the piece.
Speaker 10 (18:17):
I think he said it was like his most boneheaded
move he made his governor, and not a lot of
people would disagree with that. But you know, he is
prone to the occasional scandal. So that's part of the
excitement of following Governor Gavin Newsom. So it does a
lot of exciting things, both for good and for bad.
Speaker 3 (18:31):
So so let's talk about that a little bit. As
a California and I followed Gavin Newsom for decades at
this point, one thing that just always surprises me, though,
is where he was and who he was with early
on in his political life. I mean, there's the famous
photo shoot, was that any Lebowitz with Kimberly Gilfoyle, his
former wife, who is now you know, she was linked
(18:52):
to one of the Trump's sons romantically. She's now the
ambassador to Greece. What is his political history? You dive
in here, there's connections to the Getty family. You really
go really far back generations. Actually yeah, I mean he's
had this fascinating life. You know, his his father and
grandfather were kind of big time political fixers in San Francisco,
(19:13):
which gave him entree into the kind of wealthy world
of San Francisco politics and business. While at the same time,
you know, his mom after his parents' divorce, was a
single mom who worked three jobs, so he kind of.
Speaker 10 (19:24):
Really grew up with a foot in both worlds. I
think he's always been drawn to the camera as a politician.
As he said, there's a famous Vanity Fair cover shirt
shoot back when he was married to Kimberly Guilfoyle. You know,
he managed to be a very high profile mayor of
San Francisco conducting or allowing gay marriages back before the
Supreme Court had allowed that first got him on the
national stage. But he's also you know, good looking, telligenic
(19:45):
guy who really wants to have his profile out there,
and you know, has a lot of political talent. I
think that the challenge for Newsome as governor California, and
we get into this in the piece a little bit,
is that there's a lot not to like you about
California right now at a time when you know, Americans
are more and more concerned with inflation and the high
cost of living. California has sky high home prices. It
(20:09):
sort of struggles with a lot of the things that
Americans struggle with generally, whether it's high gas prices, high unemployment, homelessness,
so all of these things are subjects at Newsom and
Business Week spoke about, talked about and try to kind
of war game out of the piece whether this is
something that he can overcome. And as Newsome himself said too,
you know, He's got a real pitch, I think for
(20:30):
Democrats nationally, which is that California is this engine of dynamism,
whether it's tech or AI or business, and really conducts
itself in a way that I think Newsom would describe
as the polar opposite of the way Donald Trump runs
the US economy with a focus on kind of industrial
nostalgia and looking back. Newsom is very much a California guy,
(20:52):
almost seems like a venture capitalist at times, kind of.
Speaker 3 (20:55):
Pitching his state.
Speaker 10 (20:56):
And I think it's going to be interesting to see
whether Democratic voters connect with that and decide this is
the guy that they want leading them forward.
Speaker 4 (21:01):
Josh, Dude.
Speaker 5 (21:02):
Democratic voters also connect with the way he's begun using
social media, kind of playing President Trump at his own
game with AI generated content and caps and so on
and so forth. You single this out certainly in the story.
Does that resonate? Is that what Democrats want?
Speaker 10 (21:18):
I mean to me, this is the most interesting part
of the profile is you know, a couple of months ago,
Newsom turned the governor's Twitter feed into this kind of
mockery of Donald Trump and the way he comports himself
on social media with these all caps tweets kind of
mocking and insulting him, and you know, AI generated images
of Trump eating McDonald's burgers, kind of stuffing his face,
(21:39):
and it was basically kind of meant to get down
in the mud with Trump. And it's something that's caused
a ton of attention, a ton of engagement.
Speaker 3 (21:47):
A lot of.
Speaker 10 (21:48):
Democratic voters are seeing this and engaging with this online.
I know in my own life, people relatives in mine,
not particularly political, would have no reason to be interested
in Gavin Newsom were suddenly asking me about him because
of his wild social media persona. So in an intention
getting sense, I think it's helped him. Whether or not
this helps him like win votes in purple swing states
(22:10):
three years from now, I'm still a little bit skeptical
about that, but you know, partly the race right now,
if you're a Democrat, is the race for eyeballs and attention,
and there's no question that Newsome is doing that kind
of more aggressively and in a more interesting way than
any other Democrat on.
Speaker 3 (22:25):
The scene right now. Is it a risk politically for
the constituents in California? Karen Bass, the mayor of Los Angeles,
spoke at Bloomberg screen time earlier this month, and she
talked about collaborating with President Trump in the wake of
the disastrous wildfires. If there is another big natural disaster
in California before Gavin Newsom's term is up, does he
have to go begging to President Trump? And President Trump says, no,
(22:47):
You've made a mockery of me.
Speaker 9 (22:50):
Yeah.
Speaker 3 (22:50):
I mean it's a good question.
Speaker 10 (22:51):
I mean one of the things we talked about with
Newsom and this piece is that he essentially, you know,
Trump had kind of written him off back in January,
before he'd even taken office. The kind of turned on
Newsome and Newsom and said, you know, in the past,
they'd had a good working relationship. Back in the twenty
eighteen Paradise fires in California, he thought Trump had been
pretty helpful, but this time around he wasn't, and Newsom
(23:12):
had to kind of force his way into Trump's sphere
in orbit in order to get some of the help
that California needed. I think it does run a risk
when you kind of intentionally mock and insult someone, especially
as a democratic governor, if you need to then turn
around and ask that president for help, it could be problematic.
Speaker 3 (23:26):
On the other hand, Trump as president.
Speaker 10 (23:28):
Has pursued a scorched earth policy against just about every
Democrat every blue state, in every blue city that I
can think of, regardless of whether or not the mayors
and governors of those states have insulted him personally and
gratuitously the way Governor Newsom has. I'm not sure in
the end will make much of a difference, but it'll
certainly be something to watch if there is another big
(23:48):
national disaster in California that requires federal help passating stuff.
Speaker 4 (23:54):
I wish we had another fifteen to twenty minutes.
Speaker 5 (23:56):
Josh with you. That's always the case. Josh Green National
Course on at Bloomberg business Week. This is the cover
story of the issue New Issue at Bloomberg Business Week.
Find it on newsstands. It is on the Bloomberg and
at Bloomberg dot Com. His profile so much detail.
Speaker 2 (24:13):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay and
the Android Auto with the Bloomberg Business app. You can
also listen live on Amazon Alexa from our flagship New
York station, just Say Alexa played Bloomberg eleven thirty.
Speaker 3 (24:32):
Just worth repeating shares of Zion's right now up by
about three point nine percent, bouncing around. Carolyn, the after
hours been steadily in the green just after reporting those results.
Speaker 5 (24:43):
Yeah, it was rolling in today's session ahead of earnings.
Keep in mind On lost about five percent for the
week overall. But we've seen a two day rally and
it looks like the rally might continue into a third day.
Speaker 4 (24:52):
Let's get to it.
Speaker 5 (24:53):
Herman Chan follows the regional banks, including Zion's Bank Corp.
He's senior analyst for US regional banks here at Bloomberg Intelligence,
and he's here in our Bloomberg Interactive Brokers studio. As
you reminded us, I messaged him like, wait a minute,
what did they say last week? They talked about the
credit losses, right, That's the big number we focused on,
so we had that already out there.
Speaker 4 (25:12):
What else did we get from the quarter that might
be of note, sir?
Speaker 11 (25:16):
The big takeaway is that outside of the fifty million
charge off that we just talked about, there was really
no credit concerns at all. They only posted six million
charge offs or about four basis points on average on
average loans outside of the issue that they flagged last week.
Speaker 4 (25:33):
So credit's benign.
Speaker 11 (25:34):
We're not seeing any cracks within the credit quality, and
so everything's really good.
Speaker 3 (25:39):
So your view idiosyncratic not systemic.
Speaker 11 (25:42):
I would say these are one off. I was told
in radio not to say it.
Speaker 4 (25:46):
Is said that John Tuku did John.
Speaker 3 (25:52):
John gets up, so really he's asleep right now. So
that means you can say whatever you want about that's good.
Speaker 11 (25:56):
So we don't see any absyncratic issues.
Speaker 3 (26:00):
John doesn't know what to do. A syncratic means maybe
he just hurt it.
Speaker 10 (26:03):
Did you think you.
Speaker 4 (26:04):
Said idiot and he like got upset or something. I
don't know.
Speaker 5 (26:08):
We're talking with Herman Chan of our Bloomberg Intelligence team.
I want to bring David and George also into this conversation.
Senior research analyst at Baird. He joins us from Nashville, Tennessee.
Last week, he upgraded Zions to outperform from neutral, saying
the drop in market cap of the more than a
billion dollars over that fifty million charge off was excessive.
There was that twenty four hour period where we getting
(26:29):
a little concern that it was regional bank scare two
point zero.
Speaker 4 (26:33):
David, come on in. We're here with Herman Chan.
Speaker 5 (26:35):
Of our bi team earnings out anything new that came
to light for you here.
Speaker 9 (26:41):
Hey, Carol, good afternoon. The earnings, as Herman kind of noted,
the earnings and taking a kind of a cursory look
at them, looked pretty good. Despite that fifty million dollar charge,
they earned over two hundred and twenty million dollars, and
their pre provision net revenue, which is kind of a
key foundation that we'd like to think about as it
relates to just the earnings power of the banking industry
(27:04):
was better than expected. So the core business momentum at
Zions is actually quite good. And I think the market
is going to like these numbers. And as Herman mentioned,
this does not seem to be a systemic issue. I
think these numbers this afternoon corroborated that, and I think
it was a huge overreaction in the stock last week,
(27:24):
and we continue to like it.
Speaker 3 (27:26):
David, you have a sixty five dollars price target on
the stock. You have an outperform recommendation. As Carol mentioned,
you upgraded it to perform from neutral just last week.
Would you raise your price target based on what you
saw today? It seems like you could be doing a
victory lap right now.
Speaker 9 (27:47):
I'm not one this is too hard of a business
tempt to spike the ball. So I'm not really in that.
I've been doing it too long and have a lot
of scars. But the price target thing is something that
we instantly evaluate. I don't think I'm allowed to tell
you what I'm going to do with it, but just
suffice it to say that the quarter is good, and
(28:08):
we feel pretty good about the fundamentals at Zion's and
the risk of work trade off and evaluation of zigns.
You know, last Thursday, after the bell, I think it
got it. I think it was forty seven when we
upgraded it. It got down I think seven and a half
times earnings and five times pre provision earnings. And that's
that's about as low as these tend to get apps
in a really, really nasty recession. So I think it
(28:30):
was just really a lesson in overreaction and kind of
sentiment overweighing the numbers in this particular case.
Speaker 5 (28:39):
Yes, stock was down about thirteen percent on Thursday, October sixteenth,
and bouncing back about six percent on Friday, and then
another four point six percent today, and then we're seeing
it up in the aftermarket, you know, Herman, one of
the things that we were all talking about is, you know,
what does this mean for the regional banking sector overall?
I'm looking at the sector was down about one point
nine percent last week overall over concerns about credit, specifically
(29:04):
what comes to the regional banks. It was up about
two and a half percent today, right, right.
Speaker 11 (29:08):
So this is sort of the tail end of earnings
for US, and last week we had a slew of
earnings and outside of one issue that was already flagged
by fifth third, credit was really strong across the board.
We haven't seen really any cracks from non performers, criticized loans,
those sort of early warning signs. So I do think
(29:30):
that these one off issues are digestible and not really
reflective anything systemic across the board.
Speaker 3 (29:38):
Yeah, David, come on back in here, and I'm curious
if you agree with that, and maybe we can kind
of broaden the conversation too and include private credit, which
isn't necessarily in the purview of a lot of analysts
because it's you know, exactly what it is, private credit.
But I'm curious if you see challenges in private credit
affecting regionals.
Speaker 9 (29:58):
Yeah, so I think that's a two part question, so
I try and do it one piece at the time.
So I think what Herman said is correct if you
just look at the data, I think and this is
pretty much the tail end of earning season. The cap
one comes after the bell tomorrow night. But I think
seventy five percent of the banks we cover had lower
levels of non performing loans sequentially, and just from a
(30:22):
cyclical perspective, we're pretty much close to an all time
low as it relates to problem loans. So on private
credit that we could have an entire show on that.
You know, from my perspective, the growth in private credit
is very notable in the banking industry anytime in my
(30:43):
experience of the last twenty five years, when you have
outsized growth is when you can have problems. And this
is an asset class that has not been through a
sustained recession. So my concern as it relates to the
banks and private credit is really an indirect If I
(31:04):
guess said differently, if we experience problems in the private
credit market, my concern would would be that liquidity starts
to dry up and there's kind of some knock on
effects of just liquidity coming out of the system having
an indirect impact potentially on just corporate borrowers broadly. It's
(31:26):
not something that I think there would be meaningful direct exposure,
but it's just a situation where when liquidity slows that
will have an impact on the borrowers within the private
credit universe, and to the extent they have issues, they
could have customers that are in the traditional bank market.
So it's an indirect impact something that we're clearly very
(31:47):
vigilant on tim as it relates to just thinking about
credit risk and so forth. But I think it's an
indirect risk rather than a direct one.
Speaker 11 (31:55):
Hi, David, this is Herma Chan. Just a quick question
for you in terms of how you when you talk
to management teams, how do you get comfortable with their
underwriting they're monitoring of their credits, their due diligence. It
seems like the overarching thread for Tricolor and the Scanter
loans is that a lot of these assets were pledged
to different places at the same time. So love to
(32:17):
get your thoughts on that.
Speaker 9 (32:19):
Yeah, it's an excellent question. I think ultimately bank investors
are making qualitative assessments. Ferman on bank management team's ability
to assess credit risk, interest rate risk, and allocate capital.
And these are obviously levered companies, much less levered than
they used to be. But I think the annual CCAR
(32:41):
and stress testing process has made this industry much better
with respect to just understanding where the risks come from
in terms of exposures and being able to quantify exposures
to different industry levels and loan to values and collateral
coverage and so forth. So I think if it it's
like if you go to the doctor once a year
(33:02):
and you know that you're going to have a very
rigorous exam, I just think that the behavior coming out
of that has really changed. And I think the biggest
evidence of that emanates from the fact that bank loans
are only really growing at two to three percent. So
it's hard for me to see when market participants worry
(33:22):
about bubbles on bank balance sheets, the growth isn't in there.
Just to suggest where that bubble would come from as
it relates to bank loan exposure directly, well.
Speaker 5 (33:32):
Just to follow on that, like I do wonder about
all the money that's been slashing around post pandemic. You know,
we just have a massive you know, bill that was
spent that was passed by Congress too, that there's going
to be more money coming into the system, but there
has been a fair amount of money. Are we silly
to think that there's going to be some kind of
(33:52):
bubble and that there is going to be some financial
and bank exposure to it.
Speaker 9 (33:59):
No, I don't think at all. I think it's just
important to everything. Every question like this, Carol, is just
it's very contextual and it all depends on the context
of where stocks are trading, what is priced into them,
what isn't priced into them. And I think it's fair
to say that that there that asset prices are elevated,
(34:20):
both private and public, and if there is any semblance
or any any mean reversion or a twenty to forty
percent haircut and asset prices, that is going to leave
a mark on the banking industry. Absolutely, But to it's
one of those things that it's it's going to take time,
(34:40):
and banks benefit from time in the form of just
these quarterly pre provisioned earnings that I mentioned that that
that is essentially the lever that this industry has to
pay for credit issues, and Reuss assured that these companies
are very vigilant as it relates to credit risk, it is,
They've got very extensive risk and credit department functions. That's
(35:00):
all they do every day is think about where their
risks are and where their losses could be. And you know,
as it relays design, say twelve basis points of losses,
that means that they're right ninety nine point nine percent
of the time. And I think that the industry has
deserved some credit part in the pun for how well
they've managed credit risk since at GFC.
Speaker 5 (35:21):
All right, going to leave it on that note, guys,
thank you so much, gentlemen, so appreciate that. David George,
Senior Research, Jannalist over at Baird, and of course our
own Hermann Chan who covers the regional banking sector. He's
senior analyst for US regional banks here at our Bloomberg
Intelligence Team. Zion's up about two point six percent here
in the aftermarket after reporting its latest quarterly update.
Speaker 3 (35:41):
Stay with us more from Bloomberg Business Weekdaily coming up
after this.
Speaker 2 (35:48):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and Android Auto with the Bloomberg Business
app watch US live on YouTube.
Speaker 4 (36:03):
Check out.
Speaker 5 (36:04):
We heard Alexis talking about this rare earth and critical
mineral stocks. They have certainly been on the move, rising
as William Blair analyst Neil Dingman initiates the companies as
outperform as he sees the government potentially taking a stake
in them. Among the stocks name United States Antimony, with
William Blair's analyst seeing the US government taking a notable
stake in the company as the US's only antimony producer.
Speaker 4 (36:27):
Shares of US Antimony, by.
Speaker 5 (36:28):
The way, are up nearly five hundred and sixty five
percent year to date. Yes, you heard that right, with
about fourteen percent of the floatshirt and we're seeing these
stocks on the move today.
Speaker 3 (36:37):
I'm back with US once again for the first time
since August is Gary Evans, chairman and CEO of the
United States Antimony Corps, more than one point six billion
dollar market cap mining milling company refines and sells antimony products.
He joins US from the Bloomberg News Dallas bureau. So
the analyst that William Blair out saying that the US
government could take a notable stake in the company is
(36:58):
the only US antimony producer. Gary, Do you see the
US government taking a stake in the company.
Speaker 12 (37:06):
Well, it's something we don't, you know, stay up at
night worried about. We've been very fortunate in that the
US government has given us an incredible contract. This is
the DLA, which is the Defense Logistics Division of the
Department of Defense. We want a two hundred and forty
five million dollars sole source contract about a month ago,
and so we're working hard to fulfill that contract. And
(37:29):
what that is is antimony ingots is used for Defense
to hold in stockpile for future wars.
Speaker 3 (37:36):
So could can you fulfill that with the capital structure
that you have right now? Do you need more money
in order to fulfill this?
Speaker 12 (37:45):
We no, Fortunately, we've raised over the last month month
and a half about one hundred million dollars of capital,
so we're sitting on a lot of cash. We have
no debt and we were actually had have revenues cash
flow EBADAH and net income, which is unusual for a
small mining company. We did announce though, on Sunday yesterday,
(38:10):
of our attempted takeover of a company in Australia, which
is a large antimony as well as gold producers.
Speaker 3 (38:17):
Levado resources some new.
Speaker 12 (38:19):
Mind starting exactly. So what that does for us is
it adds additional value. In fact, with our reserves and
Larvata reserves would be in the top five of the world,
which is something I think both the Australian government and
the US government really would like to see.
Speaker 4 (38:36):
Yeah, and I just want to dig a little bit deeper.
Speaker 5 (38:38):
What kind of tonnage of antimony would this be in
terms of this deal that you're making with Levado.
Speaker 12 (38:47):
Well, you get to understand Leervata is just a miner.
They do not do the refining end, which is what
we do. So we have a smelter in Thompson Falls, Montana,
and we have one in Madero, Mexico. So what we're
the one in Montana is being expanded significantly five times
greater than what we currently produce. That expansion will be
done our first week of January. The smelter in Mexico,
(39:12):
we could expand that probably five to six times as well.
So what this resource that Levata has we can bring
to our smelters and make a finished product not only
for the government, but we make products for seven other customers.
People don't realize that antimony is used in many, many
different things, and especially with a new AI technology going on.
(39:32):
We make fire retargeants for roofing materials, which all these
data centers require, and then we make typically most electrical
cords to keep them from catching fire.
Speaker 4 (39:42):
Wait.
Speaker 5 (39:42):
So okay, so it sounds like important, and I'm just
curious how much you guys are paying. Can you share
anything in terms of this company that you're buying how much?
Speaker 3 (39:51):
Well?
Speaker 12 (39:52):
Yeah, yeah, yeah, so that we did make an offer.
It's a we already owned ten percent of the company.
So over the the last thirty days, we've been quietly
acquiring shares company we've been looking at for nine to
ten months and we wanted to wait to the appropriate time,
so we bought stock. We owned ten percent, we announced
that we're required by the Australian government to do so,
(40:15):
and then we made an offer to the management of
the company. And the offer is basically, we will give
them six shares for every one hundred shares of their stock.
So if you looked at the valuation, it's a four
hundred plus million dollar transaction.
Speaker 5 (40:30):
Okay, good to know. I want to go back though
to what Tim asked you. Gary initially about William Blair's call.
I mean, are you guys talking with the US government
about them taking a notable stake in your company?
Speaker 4 (40:45):
Are you working on a deal? Is there anything going
on right now?
Speaker 12 (40:51):
Well, obviously those type of discussions I can't really talk about.
We'll tell you we've been working with a DoD on
a grant. We've talked about that publicly, hopefully at the
final stages of that. And I mentioned already the contracts,
So the timing of the transaction with Larvata couldn't be better. Obviously,
(41:12):
the Prime Minister of Australia was meeting with President Trump
today in the White House and I'm pretty certain this
deal was discussed. So anyway, I think that what we've
got to do as Americans is realized that China has
one hundred year plan and we're not part of that plan,
and we, as the largest antimony producer in the United States,
(41:34):
want to build those reserves and resources and not be
dependent upon a country that is not doing things that
our best enterers. So it's not only antimony we're involved
in tungsten, we're involved in cobalt as other rare earth
companies are also moving into the space. So we're trying
to step it up, and we think a collaboration between
(41:55):
the United States and Australia is a great way to
do it.
Speaker 3 (41:58):
You just said that you're pretty sure that was discussed
between the two leaders today. How are you so sure
that was discussed?
Speaker 12 (42:07):
General Jack Keene is on our board. So did that
help answer your question?
Speaker 3 (42:12):
It does? Thank you? Okay, I Carol had another night.
Speaker 4 (42:15):
Did they call you?
Speaker 5 (42:16):
Did they call you to talk even a little bit
further about the possibility of this?
Speaker 9 (42:20):
No?
Speaker 12 (42:21):
No, no, no, But I'm if you look at what
the discussions were about, it was about critical minerals. It's
about rare earths and a collaboration, and this is obviously
what we're doing.
Speaker 5 (42:32):
Do you want the United States to take a position
in your company?
Speaker 12 (42:38):
Not necessarily, We've access to capital is not an issue
for United States antimony. We want to do what's best
for our shareholders and what's best for the country. Right now,
we think that we can accomplish those goals as an
independent company without shareholder ownership. If the government comes to
me and says, hey, we definitely want an ownership position,
(43:00):
then that's a different story. You know, I'm not really
in this position to talk about that at this point.
But you can see the close alignment between United States
Antimony and the US federal government, and it continues to strengthen.
We talk to them almost every day about different things.
Speaker 5 (43:16):
But do you feel like you need a US investment
to maybe you know, I just feel like, do the
companies that get US investments in the mineral space, if
you will, have an advantage over those that don't.
Speaker 12 (43:29):
I'm not sure what the investment does as an advantage.
If you need capital, that's one thing. We don't need capital.
We have plenty of access to capital. As you noted
when we first came on the air. We've had a
tremendous run in our stock and it's because we have
access to antimony. We started mining our first antimony mine
(43:52):
in Montana last week. Brought seven loads of trucks down
the mountain, so we are actively mining. We're the first
fully integrated antimony company in the world outside of China,
and we're happy about that. We think Larvata will definitely
add to that equation.
Speaker 5 (44:07):
Got to say, we never have enough time with you.
This space is certainly on fire. Gary Evans, Chairman CEO
of United States Antimony corporation stock is up fifteen percent
in today's session.
Speaker 4 (44:16):
This is Bloomberg.
Speaker 2 (44:17):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(44:38):
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business, finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:31):
AWS is the world's largest cloud provider. You know this,
The company saying issues continuing to plague its operations after
a widespread auttegraded services for a range of customers, including
government agencies, AI companies, and financial platforms. Shares the company
They've actually traded higher today, up one point three percent.
Right now. We got a great voice on this.
Speaker 4 (00:51):
Yeah, Sarah Fryer is with us.
Speaker 5 (00:52):
Let's head to our Bloomberg News bureau in San Francisco.
She's a Bloomberg News Big Tech team leader. She's also
the author of New Filter, The Inner Side Story of Instagram. Sarah, Sarah,
what exactly happened and why are there still problems?
Speaker 6 (01:06):
Well, when a large chunk of the Internet is relying
on one service, there are all these cascading effects, right,
they said, there was an issue in a database that
was loading incorrectly, and that just had this domino effect
for a large portion of the Internet. A third of
cloud computing services are on Amazon. So when something is fixed,
(01:29):
and they do say it is fixed now, it does
take a while for all of those errors to resolve.
That is something that is people will still feel the
effects of for a little while. But it's so funny
that you said the stock is going up. I mean,
this is a moment where you realize how crucial Amazon
(01:50):
is in our web infrastructure and our governments and so
much about our lives. So it is a sign of
their power stuff else.
Speaker 3 (02:00):
But is it also a sign of our reliance on one,
two or three really large companies If an outage at
a single company can disrupt such a diverse array of
services that so many people rely on. I mean, we
were kind of joking about Netflix and the ring camera,
but you know, government agencies are experiencing outages as a
result of this. There issues with dispatching taxis, for example,
(02:24):
in some cities right now. As a result of this.
What does it say about our reliance on single pieces
of technology.
Speaker 6 (02:32):
My train to work was late this morning. It was
like only one track was working, and I was like, oh,
is this related to the Amazon outage? Like I just
kind of assumed I don't think it was, but I
I it is. It is such a good good reminder
of how that concentration of power is a threat to
(02:53):
things getting done in an economy. Remember CrowdStrike last year
went out and planes were grounded and you know, so
many things stopped working. That was that was a huge cost,
billions of costs to the global economy when that happened.
So I think that there is there's really something to
(03:14):
be said for the the threat of this kind of problem,
and it's probably a queue to you know, the hackers
of the world that this is this is a vulnerability, right.
That's why it's so important for these companies have really
fast response, quickly pinpointing the problem when something goes down.
(03:35):
One issue that may be in our future, right is
more code is written by AI. When when big services
like this go down, will the engineers know where the
problem is and if it was written by a wind
of code that they didn't actually write. So I think
that that's sort of like when you think about risk
(03:55):
to these kinds of outages in the future, you have
to think about from the very beginning when you're building
the system. How safe is the system as it grows
and as more services become dependent on it.
Speaker 4 (04:10):
Yeah, great, Happy Monday. Everybody.
Speaker 3 (04:12):
Hope you Applex works tonight. Carol absolut. Actually you got
to stop refreshing it from the studio computer.
Speaker 4 (04:18):
Okay, actually came back.
Speaker 3 (04:19):
Maybe it's blocked at work and that's what it is.
You shouldn't be watching it here.
Speaker 7 (04:22):
Binging. This was last night.
Speaker 5 (04:24):
We did get it finally on and we were able
to finish Binging a certain series.
Speaker 3 (04:27):
Okay, I'm not even gonna ask.
Speaker 4 (04:29):
Don't ask, don't ask. Sarah Friar, thank you so much.
Speaker 5 (04:32):
Bloomberg News, Big Tech team leader, author of No Filter,
the inside story of Instagram.
Speaker 3 (04:37):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (04:45):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (05:00):
Seven to another week go.
Speaker 5 (05:01):
Apple Shares hitting their first record of twenty twenty five
after Luke Capital upgrade the stock to buy from Hole
becoming the latest firm to site positive iPhone demand trends,
and then Team Tim we heard about Apple's.
Speaker 4 (05:14):
Latest generation of iPhones. They seem to be selling well.
Speaker 3 (05:17):
Yeah, off to a faster start than usual. It's most
basic model surging in popularity. With our Monday Apple round up,
Bloomberg News Managing editor for Global Consumer Tech, Mark German
is with us. He's in the Bloomberg News La Bureau.
Speaker 4 (05:29):
Mark.
Speaker 3 (05:29):
I want to start with the stock because it does
seem like the optimism that we're seeing with the trade
with Apple is giving some momentum to other companies out there,
certainly lifting the major indexes. What's your view on Apple
hitting its first new record of the year.
Speaker 7 (05:45):
Yeah. A couple things to note. One, this is old news.
Speaker 8 (05:49):
We've been known for several weeks now that the iPhone
seventeen Pro and Promacs have been a hit. We've known
for some time now that the base level iPhone is
a hit. They made major change is on that consumer model.
Speaker 7 (06:02):
You have the.
Speaker 8 (06:02):
Faster refresh display, the better cameras, the larger screen size, etc.
Speaker 7 (06:08):
Etc.
Speaker 8 (06:09):
The Pro models first redesign in half a decade, got
that orange color, which I happen to like they're doing
very well. Second thing I'll say is I just continue
to find it fascinating. I know I've been in this
space for a decade now, in the financial news space,
that a firm can come out They could say we
predict that the stock price is going to XYZ, and
(06:32):
then the stock follows right, stock goes up. Anyone could
just shout out and say I think the price is
going to that and see what happens.
Speaker 9 (06:40):
Right.
Speaker 8 (06:40):
So these are predictions, they're not set in stone, and
there's really no way to know how the stock is
going to go one way or another. We don't know
what the different ramifications are of different political policies and
what can happen in the world at the drop of
a dime. So it's really a coin flip to know
where this stock price is going to go, the stock price.
Speaker 7 (07:01):
For any company. So that's my take in two cents on.
Speaker 3 (07:04):
I just think it's worth pointing on because I don't
think Mark would do this himself. But oftentimes when Mark
does report news that nobody knows it does move Apples
stock price. It's not just the analysts who know you
do that, but Mark's reporting often does that.
Speaker 5 (07:15):
You know, it's going to come back at you, mark,
because you know we do have with this call out
from Loop Capital that not everyone is sure that that
early momentum for the iPhone justifies Apple's valuation. That's out
there shares trading it more than thirty thirty two times
estimated earnings, well above their ten year average of twenty
two times. You are not a financial analyst, but your
reporting does move the share price. But you do know
(07:38):
what's coming in terms of products, services, fundable.
Speaker 7 (07:41):
They all use my reporting to make their report.
Speaker 3 (07:44):
Yeah, there we go. I like it.
Speaker 5 (07:46):
What do you say about those that are concerned about valuations? Again,
you're not a financial analyst. I'm not asking you to
give me a buys, you know, seller, hold or whatever.
But you understand kind of what's coming at us from
the company. There are drivers out there, right.
Speaker 8 (08:00):
I think I can give you a pretty good idea
actually if you should buy a hold or sell.
Speaker 7 (08:04):
But you know I won't give that black and white.
Speaker 8 (08:07):
But I will tell you that the product pipeline that
they have is phenomenal. I think the foldable iPhone coming
at the end of next year is going to raise
ASPS quite significantly. I think you're going from a device
right now, a pro model that costs around one thousand dollars,
You're going to see phone starting at two thousand dollars
from Apple at the end of next year, and I
(08:28):
think that's going to do wonders for asps and overall revenue.
They're going to expand the product portfolio that's sort of
that other product segment with the new slate of smart
home devices. They're going to compete with Ring their parent
company Amazon, They're going to compete with Google, ecob At,
a bunch of other companies in the smart home space.
(08:50):
With this new smart home display coming in March, they're
going to come out in the following year in twenty
twenty seven with a robotics. Smart home display is actually
a very popular product category right now. It's growing and
it's becoming increasingly popular, i should say in China tabletop robots.
So if you're a smart home user or robotic span,
(09:11):
this is something that I think is going to be
fairly compelling. You've got a foldable eighteen inch iPad in
the pipeline from before the end of the decade. You've
got multiple different variations of smart glasses, So in terms
of hardware. You're going to see a pretty rapid and
broad expansion of the hardware lineup. You have the new
sery coming out this spring, then you have another update
(09:34):
to Serrie coming at the end of next year, and
then another update to Serree coming the year after trying
to get something closer to chat GPT. They're looking at
a bunch of acquisitions. So you know, we're on a
very solid path in terms of Apple right now.
Speaker 7 (09:50):
A two thousand dollars I take your bet based on that.
Speaker 3 (09:53):
Okay, Okay, So a two thousand dollars iPhone mark I
think would make a lot of people balk at just
the list price there, that headline price. What is Apple
need to do or what do carriers around the world
need to do to they make that more digestible, to
break that up so people actually spend the money but
don't realize they're spending it.
Speaker 8 (10:08):
Yeah, I think that issue has been solved with installment
plans from Apple on their credit card in the US.
I think it's also been solved by the carriers in
terms of their trade in promotions, and I think people
understand that pricing is going up. You know, one benefit
I should say with the tariffs is it's given Apple
some air cover, even if they're not being hit by
(10:29):
tariffs directly. It's given them some air cover to do
price adjustments. And so I think the general consumer understands
that because of teriffs, because of inflation, pricing is going up,
and so it gives them some air cover there. And
they're not going to be the first at this point.
When Apple came out with a thousand dollars ifone ten
in twenty seventeen, they really were the first to hit
that you know, massive at the time pricing threshold. Now
(10:50):
it's sort of whatever, and I think pretty soon the
two thousand is going to be pretty whatever.
Speaker 5 (10:54):
Also, you know, we've always talked about Apple and we're
always so concerned about how much exposure they have to
one big product, and that is their phone.
Speaker 4 (11:01):
Are we still worried?
Speaker 8 (11:04):
Oh yeah, I mean, at some point the iPhone is
going to need to be not replaced right by, but
succeeded right with the iPhone still sticking around. It's kind
of like everyone thought the laptop was going to die
because of the iPad, and then everyone thought, you know,
maybe the Apple Watch would cannibalize some things. The only
(11:25):
real cannibalization that we've ever seen in the history of Apple.
In my viewpoint is the iPod where the iPhone killed
the iPod, but nothing has killed the mac. Nothing's going
to kill the phone. You're always going to have that
pocket device. You're going to see fewer people use the
laptop because they've got the iPhone. You're going to maybe
see fewer people use the iPhone because you have the
(11:47):
smart glasses. But you're still going to probably want and
own and buy all of them, right, and so that's
the tricky needle.
Speaker 7 (11:53):
Apple needs the thread. But I don't believe the phone
is going away.
Speaker 3 (11:57):
I miss that iPad iPod shuffle.
Speaker 5 (12:00):
Oh love that say, parents giving them to their kids
so that they didn't have to have a phone but
they could play around with music or something.
Speaker 4 (12:05):
I thought, I'll say some story. I don't know. Tim's
looking at me like I'm crazy.
Speaker 5 (12:09):
Craig Gray, Mark German and Bloomberg News me together for
global consumer tech. Apple now at three point nine trillion
dollar market cap company.
Speaker 1 (12:17):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eas during
listen on Applecarplay and Android Auto with the Bloomberg Business
app or watch us live on YouTube.
Speaker 3 (12:31):
Poll show Democrats are more disillusion than they've been in decades,
sped up with aging, feckless leaders, frustrated by a party
adrift and unsure who their next standard bearer should be,
but yearning for someone to take on Trump. So right,
Josh Green and elaiyu Chemischer for Bloomberg BusinessWeek, California Governor
Gavin Newsom has leaped into the breach. He's on for
(12:53):
the podcast A Ballot Measure and tweets Governorsom is spoiling
for a fight with the President he is.
Speaker 5 (12:59):
Indeed, It is the cover of the new ratio of
Bloomberg Business Week, out on newsstands, now online, and on
the Bloomberg terminal. Bloomberg BusinessWeek National correspondent Josh Green is
the lead author of the Profile of the Governor. Josh
is also the author of several books, including the number
one New York Times bestseller Devil's Bargain, Steve Bannon, Donald Trump,
and The Storming of the Presidency. He joins us Josh
from Washington, DC.
Speaker 4 (13:20):
Josh, great to have you here with us. I mean,
Gavin Newsom.
Speaker 5 (13:24):
He went from one of his lowest political points earlier
this year, as deadly fires burned in southern California. She
now being a potential leader of the Democratic Party. That
seems quite a turn. How did this happen and how
dark was it for him?
Speaker 10 (13:40):
Well, yeah, as you guys said in that nice intro,
he was our cover story, our cover profile this week,
went out to Sacramento, spent some time with him, talk
to him. For a lot of people nationally, I think
outside California. The last time they really keyed in and
focused on Governor Newsom was back in January, during the wildfires.
Speaker 3 (13:56):
Things were out of control.
Speaker 10 (13:58):
Trump was the new president, sort of insulting him, tweeting
negative things about him, and so, you know, he told
us that was really the low point I think of
as governorship. But what's interesting is that over the last
couple of months, partly due to some things that Trump
has done, Newsom has re emerged on the national stage
as perhaps the most important Democrat right now, because he
(14:20):
is in the middle of leading a ballot initiative that
would create as many as five new Democratic House districts,
and Democrats nationally are pretty much without power. They don't
control the White House, they don't control either House of Congress,
but they're very much hoping to win back the House
next November. And so Newsom, by dint of his ability
(14:40):
to kind of run the table in California, get this
initiative on the ballot, has suddenly become important in preserving Democrats'
chance to win back some shred of power to confront
Donald Trump with next November. And of course that would
vault Newsom himself into even more prominent role as Democrats
look for somebody to lead the party in twenty two,
twenty eight and out of the Trump era.
Speaker 3 (15:02):
Does that proposition have widespread support in California right now?
I mean, former Governor Ronald Schwarzenegger has spoken out recently
against it. What did you find in your reporting? Yeah,
it's not clear that it does.
Speaker 10 (15:13):
I mean, What's what's going on, just to kind of
clue in viewers, is that Trump and Republicans have been
very aggressive about deciding to redraw or try and redraw
congressional districts in red states across the country as a
way of kind of putting their thumb on the scale
in midterm elections in a way that would help Republicans
withstand what I think most people expect to be an
electoral backlash. So the fear for Democrats is that Republicans
(15:38):
essentially rewrite the rules and you know, take control or
keep control of a House of Representatives that they think
they ought to be able to win. And so Newsome's
value to the parties that he's been able to kind
of come in and I think offset this if this
ballot referendum wins. But it's not clear that it's winning
by a lot. The latest poll I've seen has it
(15:58):
at about fifty percent favor, about thirty five thirty six
percent of pose and the rest undecided.
Speaker 3 (16:04):
So it really could still swing either way.
Speaker 10 (16:06):
And as you said, there have been prominent Republicans like
former Governor ar Schwarzenegger have come out and said, no,
we don't want to do this, We don't want to
create these democratic districts.
Speaker 3 (16:15):
And so we'll see.
Speaker 10 (16:16):
But I think the expectation among the experts that I've
spoken to is that this probably will prevail, and if
it does, Democrats nationally, I think are going to breathe
a big sigh of relief.
Speaker 2 (16:26):
Josh.
Speaker 5 (16:26):
We want to dig more into this profile piece of
Gavin Newsoen, but I just want to on this referendum,
this ballot referendum, how important is it to new some specifically,
how important is it to really Democrats more broadly, as
we all are kind of looking at the upcoming midterms
and what it means and what it says about President
Trump's administration.
Speaker 10 (16:45):
Yeah, it's a great question. The answer is that it's
really important to both of them. I just explained on
kind of the national democratic side why it's important. But
for Newsom himself, I think it's especially important because you know,
he is somebody who has long been thought to have
presidential ambitions. Democrats are obviously looking for a new leader
in twenty twenty eight, but talking to people around Washington,
(17:06):
around the country, in Democratic circles, there could be literally
dozens of people running. And so if this ballot referendum
does pass, it will be a real validating credential for Newsome.
He's one of the rare Democrats right now who isn't
a position of power. And if he's able to lead
his party to victory on this ballot initiative and help
(17:27):
Democrats win back the House of Representatives in twenty twenty six,
he can go out and say, look like I'm out here.
I'm fighting Trump, I'm doing things. I'm helping the Democratic Party,
and that's just not something that a lot of other
elected Democrats can say right now. And I do a
lot of business coming of this self, as I mentioned,
as we mentioned it some like in the profile, has
(17:48):
spent a lot of time trying to raise his profile online,
doing everything from you know, YouTube to Twitch to Twitter
to x to try and raise his visibility. So I
think a win on this ballot initiative would really help
him in that regard.
Speaker 5 (17:59):
Always think about COVID and like how much he became
so prominent, and we covered certainly everything he did during
COVID and what was going.
Speaker 4 (18:06):
On in the state, but he really became a national.
Speaker 3 (18:08):
Figure, especially during that visit to the French laundry. As
Josh points out in his piece, which what did he
call that? In his podcast Josh she quoted in the piece.
Speaker 10 (18:17):
I think he said it was like his most boneheaded
move he made his governor, and not a lot of
people would disagree with that. But you know, he is
prone to the occasional scandal. So that's part of the
excitement of following Governor Gavin Newsom. So it does a
lot of exciting things, both for good and for bad.
Speaker 3 (18:31):
So so let's talk about that a little bit. As
a California and I followed Gavin Newsom for decades at
this point, one thing that just always surprises me, though,
is where he was and who he was with early
on in his political life. I mean, there's the famous
photo shoot, was that any Lebowitz with Kimberly Gilfoyle, his
former wife, who is now you know, she was linked
(18:52):
to one of the Trump's sons romantically. She's now the
ambassador to Greece. What is his political history? You dive
in here, there's connections to the Getty family. You really
go really far back generations. Actually yeah, I mean he's
had this fascinating life. You know, his his father and
grandfather were kind of big time political fixers in San Francisco,
(19:13):
which gave him entree into the kind of wealthy world
of San Francisco politics and business. While at the same time,
you know, his mom after his parents' divorce, was a
single mom who worked three jobs, so he kind of.
Speaker 10 (19:24):
Really grew up with a foot in both worlds. I
think he's always been drawn to the camera as a politician.
As he said, there's a famous Vanity Fair cover shirt
shoot back when he was married to Kimberly Guilfoyle. You know,
he managed to be a very high profile mayor of
San Francisco conducting or allowing gay marriages back before the
Supreme Court had allowed that first got him on the
national stage. But he's also you know, good looking, telligenic
(19:45):
guy who really wants to have his profile out there,
and you know, has a lot of political talent. I
think that the challenge for Newsome as governor California, and
we get into this in the piece a little bit,
is that there's a lot not to like you about
California right now at a time when you know, Americans
are more and more concerned with inflation and the high
cost of living. California has sky high home prices. It
(20:09):
sort of struggles with a lot of the things that
Americans struggle with generally, whether it's high gas prices, high unemployment, homelessness,
so all of these things are subjects at Newsom and
Business Week spoke about, talked about and try to kind
of war game out of the piece whether this is
something that he can overcome. And as Newsome himself said too,
you know, He's got a real pitch, I think for
(20:30):
Democrats nationally, which is that California is this engine of dynamism,
whether it's tech or AI or business, and really conducts
itself in a way that I think Newsom would describe
as the polar opposite of the way Donald Trump runs
the US economy with a focus on kind of industrial
nostalgia and looking back. Newsom is very much a California guy,
(20:52):
almost seems like a venture capitalist at times, kind of.
Speaker 3 (20:55):
Pitching his state.
Speaker 10 (20:56):
And I think it's going to be interesting to see
whether Democratic voters connect with that and decide this is
the guy that they want leading them forward.
Speaker 4 (21:01):
Josh, Dude.
Speaker 5 (21:02):
Democratic voters also connect with the way he's begun using
social media, kind of playing President Trump at his own
game with AI generated content and caps and so on
and so forth. You single this out certainly in the story.
Does that resonate? Is that what Democrats want?
Speaker 10 (21:18):
I mean to me, this is the most interesting part
of the profile is you know, a couple of months ago,
Newsom turned the governor's Twitter feed into this kind of
mockery of Donald Trump and the way he comports himself
on social media with these all caps tweets kind of
mocking and insulting him, and you know, AI generated images
of Trump eating McDonald's burgers, kind of stuffing his face,
(21:39):
and it was basically kind of meant to get down
in the mud with Trump. And it's something that's caused
a ton of attention, a ton of engagement.
Speaker 3 (21:47):
A lot of.
Speaker 10 (21:48):
Democratic voters are seeing this and engaging with this online.
I know in my own life, people relatives in mine,
not particularly political, would have no reason to be interested
in Gavin Newsom were suddenly asking me about him because
of his wild social media persona. So in an intention
getting sense, I think it's helped him. Whether or not
this helps him like win votes in purple swing states
(22:10):
three years from now, I'm still a little bit skeptical
about that, but you know, partly the race right now,
if you're a Democrat, is the race for eyeballs and attention,
and there's no question that Newsome is doing that kind
of more aggressively and in a more interesting way than
any other Democrat on.
Speaker 3 (22:25):
The scene right now. Is it a risk politically for
the constituents in California? Karen Bass, the mayor of Los Angeles,
spoke at Bloomberg screen time earlier this month, and she
talked about collaborating with President Trump in the wake of
the disastrous wildfires. If there is another big natural disaster
in California before Gavin Newsom's term is up, does he
have to go begging to President Trump? And President Trump says, no,
(22:47):
You've made a mockery of me.
Speaker 9 (22:50):
Yeah.
Speaker 3 (22:50):
I mean it's a good question.
Speaker 10 (22:51):
I mean one of the things we talked about with
Newsom and this piece is that he essentially, you know,
Trump had kind of written him off back in January,
before he'd even taken office. The kind of turned on
Newsome and Newsom and said, you know, in the past,
they'd had a good working relationship. Back in the twenty
eighteen Paradise fires in California, he thought Trump had been
pretty helpful, but this time around he wasn't, and Newsom
(23:12):
had to kind of force his way into Trump's sphere
in orbit in order to get some of the help
that California needed. I think it does run a risk
when you kind of intentionally mock and insult someone, especially
as a democratic governor, if you need to then turn
around and ask that president for help, it could be problematic.
Speaker 3 (23:26):
On the other hand, Trump as president.
Speaker 10 (23:28):
Has pursued a scorched earth policy against just about every
Democrat every blue state, in every blue city that I
can think of, regardless of whether or not the mayors
and governors of those states have insulted him personally and
gratuitously the way Governor Newsom has. I'm not sure in
the end will make much of a difference, but it'll
certainly be something to watch if there is another big
(23:48):
national disaster in California that requires federal help passating stuff.
Speaker 4 (23:54):
I wish we had another fifteen to twenty minutes.
Speaker 5 (23:56):
Josh with you. That's always the case. Josh Green National
Course on at Bloomberg business Week. This is the cover
story of the issue New Issue at Bloomberg Business Week.
Find it on newsstands. It is on the Bloomberg and
at Bloomberg dot Com. His profile so much detail.
Speaker 2 (24:13):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay and
the Android Auto with the Bloomberg Business app. You can
also listen live on Amazon Alexa from our flagship New
York station, just Say Alexa played Bloomberg eleven thirty.
Speaker 3 (24:32):
Just worth repeating shares of Zion's right now up by
about three point nine percent, bouncing around. Carolyn, the after
hours been steadily in the green just after reporting those results.
Speaker 5 (24:43):
Yeah, it was rolling in today's session ahead of earnings.
Keep in mind On lost about five percent for the
week overall. But we've seen a two day rally and
it looks like the rally might continue into a third day.
Speaker 4 (24:52):
Let's get to it.
Speaker 5 (24:53):
Herman Chan follows the regional banks, including Zion's Bank Corp.
He's senior analyst for US regional banks here at Bloomberg Intelligence,
and he's here in our Bloomberg Interactive Brokers studio. As
you reminded us, I messaged him like, wait a minute,
what did they say last week? They talked about the
credit losses, right, That's the big number we focused on,
so we had that already out there.
Speaker 4 (25:12):
What else did we get from the quarter that might
be of note, sir?
Speaker 11 (25:16):
The big takeaway is that outside of the fifty million
charge off that we just talked about, there was really
no credit concerns at all. They only posted six million
charge offs or about four basis points on average on
average loans outside of the issue that they flagged last week.
Speaker 4 (25:33):
So credit's benign.
Speaker 11 (25:34):
We're not seeing any cracks within the credit quality, and
so everything's really good.
Speaker 3 (25:39):
So your view idiosyncratic not systemic.
Speaker 11 (25:42):
I would say these are one off. I was told
in radio not to say it.
Speaker 4 (25:46):
Is said that John Tuku did John.
Speaker 3 (25:52):
John gets up, so really he's asleep right now. So
that means you can say whatever you want about that's good.
Speaker 11 (25:56):
So we don't see any absyncratic issues.
Speaker 3 (26:00):
John doesn't know what to do. A syncratic means maybe
he just hurt it.
Speaker 10 (26:03):
Did you think you.
Speaker 4 (26:04):
Said idiot and he like got upset or something. I
don't know.
Speaker 5 (26:08):
We're talking with Herman Chan of our Bloomberg Intelligence team.
I want to bring David and George also into this conversation.
Senior research analyst at Baird. He joins us from Nashville, Tennessee.
Last week, he upgraded Zions to outperform from neutral, saying
the drop in market cap of the more than a
billion dollars over that fifty million charge off was excessive.
There was that twenty four hour period where we getting
(26:29):
a little concern that it was regional bank scare two
point zero.
Speaker 4 (26:33):
David, come on in. We're here with Herman Chan.
Speaker 5 (26:35):
Of our bi team earnings out anything new that came
to light for you here.
Speaker 9 (26:41):
Hey, Carol, good afternoon. The earnings, as Herman kind of noted,
the earnings and taking a kind of a cursory look
at them, looked pretty good. Despite that fifty million dollar charge,
they earned over two hundred and twenty million dollars, and
their pre provision net revenue, which is kind of a
key foundation that we'd like to think about as it
relates to just the earnings power of the banking industry
(27:04):
was better than expected. So the core business momentum at
Zions is actually quite good. And I think the market
is going to like these numbers. And as Herman mentioned,
this does not seem to be a systemic issue. I
think these numbers this afternoon corroborated that, and I think
it was a huge overreaction in the stock last week,
(27:24):
and we continue to like it.
Speaker 3 (27:26):
David, you have a sixty five dollars price target on
the stock. You have an outperform recommendation. As Carol mentioned,
you upgraded it to perform from neutral just last week.
Would you raise your price target based on what you
saw today? It seems like you could be doing a
victory lap right now.
Speaker 9 (27:47):
I'm not one this is too hard of a business
tempt to spike the ball. So I'm not really in that.
I've been doing it too long and have a lot
of scars. But the price target thing is something that
we instantly evaluate. I don't think I'm allowed to tell
you what I'm going to do with it, but just
suffice it to say that the quarter is good, and
(28:08):
we feel pretty good about the fundamentals at Zion's and
the risk of work trade off and evaluation of zigns.
You know, last Thursday, after the bell, I think it
got it. I think it was forty seven when we
upgraded it. It got down I think seven and a half
times earnings and five times pre provision earnings. And that's
that's about as low as these tend to get apps
in a really, really nasty recession. So I think it
(28:30):
was just really a lesson in overreaction and kind of
sentiment overweighing the numbers in this particular case.
Speaker 5 (28:39):
Yes, stock was down about thirteen percent on Thursday, October sixteenth,
and bouncing back about six percent on Friday, and then
another four point six percent today, and then we're seeing
it up in the aftermarket, you know, Herman, one of
the things that we were all talking about is, you know,
what does this mean for the regional banking sector overall?
I'm looking at the sector was down about one point
nine percent last week overall over concerns about credit, specifically
(29:04):
what comes to the regional banks. It was up about
two and a half percent today, right, right.
Speaker 11 (29:08):
So this is sort of the tail end of earnings
for US, and last week we had a slew of
earnings and outside of one issue that was already flagged
by fifth third, credit was really strong across the board.
We haven't seen really any cracks from non performers, criticized loans,
those sort of early warning signs. So I do think
(29:30):
that these one off issues are digestible and not really
reflective anything systemic across the board.
Speaker 3 (29:38):
Yeah, David, come on back in here, and I'm curious
if you agree with that, and maybe we can kind
of broaden the conversation too and include private credit, which
isn't necessarily in the purview of a lot of analysts
because it's you know, exactly what it is, private credit.
But I'm curious if you see challenges in private credit
affecting regionals.
Speaker 9 (29:58):
Yeah, so I think that's a two part question, so
I try and do it one piece at the time.
So I think what Herman said is correct if you
just look at the data, I think and this is
pretty much the tail end of earning season. The cap
one comes after the bell tomorrow night. But I think
seventy five percent of the banks we cover had lower
levels of non performing loans sequentially, and just from a
(30:22):
cyclical perspective, we're pretty much close to an all time
low as it relates to problem loans. So on private
credit that we could have an entire show on that.
You know, from my perspective, the growth in private credit
is very notable in the banking industry anytime in my
(30:43):
experience of the last twenty five years, when you have
outsized growth is when you can have problems. And this
is an asset class that has not been through a
sustained recession. So my concern as it relates to the
banks and private credit is really an indirect If I
(31:04):
guess said differently, if we experience problems in the private
credit market, my concern would would be that liquidity starts
to dry up and there's kind of some knock on
effects of just liquidity coming out of the system having
an indirect impact potentially on just corporate borrowers broadly. It's
(31:26):
not something that I think there would be meaningful direct exposure,
but it's just a situation where when liquidity slows that
will have an impact on the borrowers within the private
credit universe, and to the extent they have issues, they
could have customers that are in the traditional bank market.
So it's an indirect impact something that we're clearly very
(31:47):
vigilant on tim as it relates to just thinking about
credit risk and so forth. But I think it's an
indirect risk rather than a direct one.
Speaker 11 (31:55):
Hi, David, this is Herma Chan. Just a quick question
for you in terms of how you when you talk
to management teams, how do you get comfortable with their
underwriting they're monitoring of their credits, their due diligence. It
seems like the overarching thread for Tricolor and the Scanter
loans is that a lot of these assets were pledged
to different places at the same time. So love to
(32:17):
get your thoughts on that.
Speaker 9 (32:19):
Yeah, it's an excellent question. I think ultimately bank investors
are making qualitative assessments. Ferman on bank management team's ability
to assess credit risk, interest rate risk, and allocate capital.
And these are obviously levered companies, much less levered than
they used to be. But I think the annual CCAR
(32:41):
and stress testing process has made this industry much better
with respect to just understanding where the risks come from
in terms of exposures and being able to quantify exposures
to different industry levels and loan to values and collateral
coverage and so forth. So I think if it it's
like if you go to the doctor once a year
(33:02):
and you know that you're going to have a very
rigorous exam, I just think that the behavior coming out
of that has really changed. And I think the biggest
evidence of that emanates from the fact that bank loans
are only really growing at two to three percent. So
it's hard for me to see when market participants worry
(33:22):
about bubbles on bank balance sheets, the growth isn't in there.
Just to suggest where that bubble would come from as
it relates to bank loan exposure directly, well.
Speaker 5 (33:32):
Just to follow on that, like I do wonder about
all the money that's been slashing around post pandemic. You know,
we just have a massive you know, bill that was
spent that was passed by Congress too, that there's going
to be more money coming into the system, but there
has been a fair amount of money. Are we silly
to think that there's going to be some kind of
(33:52):
bubble and that there is going to be some financial
and bank exposure to it.
Speaker 9 (33:59):
No, I don't think at all. I think it's just
important to everything. Every question like this, Carol, is just
it's very contextual and it all depends on the context
of where stocks are trading, what is priced into them,
what isn't priced into them. And I think it's fair
to say that that there that asset prices are elevated,
(34:20):
both private and public, and if there is any semblance
or any any mean reversion or a twenty to forty
percent haircut and asset prices, that is going to leave
a mark on the banking industry. Absolutely, But to it's
one of those things that it's it's going to take time,
(34:40):
and banks benefit from time in the form of just
these quarterly pre provisioned earnings that I mentioned that that
that is essentially the lever that this industry has to
pay for credit issues, and Reuss assured that these companies
are very vigilant as it relates to credit risk, it is,
They've got very extensive risk and credit department functions. That's
(35:00):
all they do every day is think about where their
risks are and where their losses could be. And you know,
as it relays design, say twelve basis points of losses,
that means that they're right ninety nine point nine percent
of the time. And I think that the industry has
deserved some credit part in the pun for how well
they've managed credit risk since at GFC.
Speaker 5 (35:21):
All right, going to leave it on that note, guys,
thank you so much, gentlemen, so appreciate that. David George,
Senior Research, Jannalist over at Baird, and of course our
own Hermann Chan who covers the regional banking sector. He's
senior analyst for US regional banks here at our Bloomberg
Intelligence Team. Zion's up about two point six percent here
in the aftermarket after reporting its latest quarterly update.
Speaker 3 (35:41):
Stay with us more from Bloomberg Business Weekdaily coming up
after this.
Speaker 2 (35:48):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple CarPlay and Android Auto with the Bloomberg Business
app watch US live on YouTube.
Speaker 4 (36:03):
Check out.
Speaker 5 (36:04):
We heard Alexis talking about this rare earth and critical
mineral stocks. They have certainly been on the move, rising
as William Blair analyst Neil Dingman initiates the companies as
outperform as he sees the government potentially taking a stake
in them. Among the stocks name United States Antimony, with
William Blair's analyst seeing the US government taking a notable
stake in the company as the US's only antimony producer.
Speaker 4 (36:27):
Shares of US Antimony, by.
Speaker 5 (36:28):
The way, are up nearly five hundred and sixty five
percent year to date. Yes, you heard that right, with
about fourteen percent of the floatshirt and we're seeing these
stocks on the move today.
Speaker 3 (36:37):
I'm back with US once again for the first time
since August is Gary Evans, chairman and CEO of the
United States Antimony Corps, more than one point six billion
dollar market cap mining milling company refines and sells antimony products.
He joins US from the Bloomberg News Dallas bureau. So
the analyst that William Blair out saying that the US
government could take a notable stake in the company is
(36:58):
the only US antimony producer. Gary, Do you see the
US government taking a stake in the company.
Speaker 12 (37:06):
Well, it's something we don't, you know, stay up at
night worried about. We've been very fortunate in that the
US government has given us an incredible contract. This is
the DLA, which is the Defense Logistics Division of the
Department of Defense. We want a two hundred and forty
five million dollars sole source contract about a month ago,
and so we're working hard to fulfill that contract. And
(37:29):
what that is is antimony ingots is used for Defense
to hold in stockpile for future wars.
Speaker 3 (37:36):
So could can you fulfill that with the capital structure
that you have right now? Do you need more money
in order to fulfill this?
Speaker 12 (37:45):
We no, Fortunately, we've raised over the last month month
and a half about one hundred million dollars of capital,
so we're sitting on a lot of cash. We have
no debt and we were actually had have revenues cash
flow EBADAH and net income, which is unusual for a
small mining company. We did announce though, on Sunday yesterday,
(38:10):
of our attempted takeover of a company in Australia, which
is a large antimony as well as gold producers.
Speaker 3 (38:17):
Levado resources some new.
Speaker 12 (38:19):
Mind starting exactly. So what that does for us is
it adds additional value. In fact, with our reserves and
Larvata reserves would be in the top five of the world,
which is something I think both the Australian government and
the US government really would like to see.
Speaker 4 (38:36):
Yeah, and I just want to dig a little bit deeper.
Speaker 5 (38:38):
What kind of tonnage of antimony would this be in
terms of this deal that you're making with Levado.
Speaker 12 (38:47):
Well, you get to understand Leervata is just a miner.
They do not do the refining end, which is what
we do. So we have a smelter in Thompson Falls, Montana,
and we have one in Madero, Mexico. So what we're
the one in Montana is being expanded significantly five times
greater than what we currently produce. That expansion will be
done our first week of January. The smelter in Mexico,
(39:12):
we could expand that probably five to six times as well.
So what this resource that Levata has we can bring
to our smelters and make a finished product not only
for the government, but we make products for seven other customers.
People don't realize that antimony is used in many, many
different things, and especially with a new AI technology going on.
(39:32):
We make fire retargeants for roofing materials, which all these
data centers require, and then we make typically most electrical
cords to keep them from catching fire.
Speaker 4 (39:42):
Wait.
Speaker 5 (39:42):
So okay, so it sounds like important, and I'm just
curious how much you guys are paying. Can you share
anything in terms of this company that you're buying how much?
Speaker 3 (39:51):
Well?
Speaker 12 (39:52):
Yeah, yeah, yeah, so that we did make an offer.
It's a we already owned ten percent of the company.
So over the the last thirty days, we've been quietly
acquiring shares company we've been looking at for nine to
ten months and we wanted to wait to the appropriate time,
so we bought stock. We owned ten percent, we announced
that we're required by the Australian government to do so,
(40:15):
and then we made an offer to the management of
the company. And the offer is basically, we will give
them six shares for every one hundred shares of their stock.
So if you looked at the valuation, it's a four
hundred plus million dollar transaction.
Speaker 5 (40:30):
Okay, good to know. I want to go back though
to what Tim asked you. Gary initially about William Blair's call.
I mean, are you guys talking with the US government
about them taking a notable stake in your company?
Speaker 4 (40:45):
Are you working on a deal? Is there anything going
on right now?
Speaker 12 (40:51):
Well, obviously those type of discussions I can't really talk about.
We'll tell you we've been working with a DoD on
a grant. We've talked about that publicly, hopefully at the
final stages of that. And I mentioned already the contracts,
So the timing of the transaction with Larvata couldn't be better. Obviously,
(41:12):
the Prime Minister of Australia was meeting with President Trump
today in the White House and I'm pretty certain this
deal was discussed. So anyway, I think that what we've
got to do as Americans is realized that China has
one hundred year plan and we're not part of that plan,
and we, as the largest antimony producer in the United States,
(41:34):
want to build those reserves and resources and not be
dependent upon a country that is not doing things that
our best enterers. So it's not only antimony we're involved
in tungsten, we're involved in cobalt as other rare earth
companies are also moving into the space. So we're trying
to step it up, and we think a collaboration between
(41:55):
the United States and Australia is a great way to
do it.
Speaker 3 (41:58):
You just said that you're pretty sure that was discussed
between the two leaders today. How are you so sure
that was discussed?
Speaker 12 (42:07):
General Jack Keene is on our board. So did that
help answer your question?
Speaker 3 (42:12):
It does? Thank you? Okay, I Carol had another night.
Speaker 4 (42:15):
Did they call you?
Speaker 5 (42:16):
Did they call you to talk even a little bit
further about the possibility of this?
Speaker 9 (42:20):
No?
Speaker 12 (42:21):
No, no, no, But I'm if you look at what
the discussions were about, it was about critical minerals. It's
about rare earths and a collaboration, and this is obviously
what we're doing.
Speaker 5 (42:32):
Do you want the United States to take a position
in your company?
Speaker 12 (42:38):
Not necessarily, We've access to capital is not an issue
for United States antimony. We want to do what's best
for our shareholders and what's best for the country. Right now,
we think that we can accomplish those goals as an
independent company without shareholder ownership. If the government comes to
me and says, hey, we definitely want an ownership position,
(43:00):
then that's a different story. You know, I'm not really
in this position to talk about that at this point.
But you can see the close alignment between United States
Antimony and the US federal government, and it continues to strengthen.
We talk to them almost every day about different things.
Speaker 5 (43:16):
But do you feel like you need a US investment
to maybe you know, I just feel like, do the
companies that get US investments in the mineral space, if
you will, have an advantage over those that don't.
Speaker 12 (43:29):
I'm not sure what the investment does as an advantage.
If you need capital, that's one thing. We don't need capital.
We have plenty of access to capital. As you noted
when we first came on the air. We've had a
tremendous run in our stock and it's because we have
access to antimony. We started mining our first antimony mine
(43:52):
in Montana last week. Brought seven loads of trucks down
the mountain, so we are actively mining. We're the first
fully integrated antimony company in the world outside of China,
and we're happy about that. We think Larvata will definitely
add to that equation.
Speaker 5 (44:07):
Got to say, we never have enough time with you.
This space is certainly on fire. Gary Evans, Chairman CEO
of United States Antimony corporation stock is up fifteen percent
in today's session.
Speaker 4 (44:16):
This is Bloomberg.
Speaker 2 (44:17):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(44:38):
and always on the Bloomberg terminal
Hosts And Creators
Tim Stenovec
Carol Massar
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies!
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!