August 8, 2025 • 32 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
The Trump administration is considering selling shares of Fannie Mae and Freddie Mac in an offering that could start as early as this year, according to senior administration officials.
The plan could value the government-controlled mortgage giants at some $500 billion or more and would involve selling between 5% and 15% of their stock with an offering expected to raise about $30 billion.
No final decision has been made and President Donald Trump is still weighing his options, one official said. The Wall Street Journal earlier reported the news.
Shares of both Fannie Mae and Freddie Mac surged as much as 22% in Friday trading, the most in more than two months.
The federal government bailed out the companies in September 2008 to stave off catastrophic losses during the financial crisis. Policymakers in Washington have struggled for years with what to do with the so-called government-sponsored enterprises. Congressional efforts to free the companies have repeatedly failed on concerns about the impact on mortgage costs and the firms’ commitment to affordable housing. One official said that Fannie and Freddie may stay in the conservatorship while being taken public.
Today's show features:
- Bloomberg TV & Radio International Economics & Policy Correspondent Mike McKee on reports of the Trump Administration planning IPOs for Fannie Mae and Freddie Mac
- Wendy Culter, Vice President at the Asia Society Policy Institute, on US trade policy news concerning India and China
- Bloomberg News Jerusalem journalist Dan Williams on Israel's security cabinet approving an operation to take control of Gaza City
- Mark Mahaney Senior Managing Director and Head of Internet Research at Evercore I-S-I ... On the Trump White House's impact on American tech companies
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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 Week
Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:32):
I don't know if you checked out shares a Fannie
May and Freddie mac.
Speaker 1 (00:35):
I mean just say, soaring, soaring off the charts.
Speaker 4 (00:39):
It's incredible too, and just given the where they've come
and gone and being in that consumership since the height
of the global financial crisis.
Speaker 1 (00:45):
Yeah, it's a really good point.
Speaker 3 (00:46):
And it feels like we need a little bit of
a history lesson the news that's got the movie, We've got.
We've got Fanny May. It's up about twenty percent. I'm
looking at Freddie Mack up about twenty two percent. And
this is after the administration is said to be preparing
to sell shares in an offering that could start as
early as this year. Again according to that senior administration
(01:06):
official with the latest on that, and kind of as
I said, A history lesson Blue or TV and Radio,
International Economics and Policy correspondent Michael.
Speaker 5 (01:14):
Mcker bringing the old guys for thea the old guy.
Speaker 3 (01:19):
Like a fine line, Mike, you just get better and better.
But no, like there is history behind these two in
a big way.
Speaker 5 (01:26):
Especially you look at Fanny May was chartered in nineteen
thirty eight. It's been around for a long time. Freddy
Mack came along in nineteen seventy. Stepping back for just
a second, here's what they do. They basically buy mortgages
from banks and mortgage lenders and package them into securities
and sell them to investors. And that way the banks
have more space on their balance sheets to make loans.
(01:48):
And because Fannie Mae and Freddie Mack have sold these
off to investors who are anxious to get the yield
on them, they can predict essentially what they're mortgage costs
are going to be, and so they can keep mortgage
rates generally fairly stable. Along the way, from the time
Fanny May was created, they created the thirty year mortgage,
(02:12):
which is we're the only country that has something like that.
But then of course they bought a lot of really
bad mortgages and the run up to the Great Financial
Crisis and basically went bankrupt and the government had to
bail them out, and they did and have put them
into conservatorship is what they did. But the way they
(02:34):
did it was they still left shares outstanding, and so
a lot of people who a lot of hedge funds
got into the business of buying up Fanny and Freddy
shares at pennies on the dollar and have been sitting
on them for seventeen years now. And the Biden administration
and the Obama administration had no desire to bring them
(02:55):
out of conservatorship. But the Trump administration seems bound and
determined to do that. They've been talking about it since
he came back to office. It's complicated, it will be difficult.
But boy, if you were Bill Ackman or John.
Speaker 1 (03:09):
Paulson pretty happy today, you're pretty happy today. Yeah.
Speaker 6 (03:14):
Well.
Speaker 4 (03:14):
Trump also met with the CEOs of Bank of America
City Group earlier this week, and then last week Bloomberg
News had a reported that he met with Jamie Diamond
and David Salman over at Goldman Sachs Group. So I'm
wondering how difficult will it be to pull off a
potential feet here when we're talking about an IPO.
Speaker 5 (03:30):
Well, it's not so much the selling the shares, although
it has to be designed in a sort of specific
way because the government owns eighty percent of the shares
right now.
Speaker 7 (03:39):
And one of the big questions is.
Speaker 5 (03:41):
Are you going to put the companies into receivership and
basically bankrupt all the existing shareholders, which is what you
normally do with a company that's going to come out
of bankruptcy, or do you leave them with equity in
the new company and then they make a huge profit.
(04:02):
But the biggest problem is that because they have been
owned by the government, and before that there was an
implicit guarantee by the government, rates were low.
Speaker 7 (04:14):
You didn't demand an extra.
Speaker 5 (04:17):
Premium because you knew that they were insured and they
were gonna get paid. You were going to get paid
either way because the government would step in. And so
if the government steps out and lets this be a
private company, then maybe mortgage rates are going to go up,
and things like the mortgage rate lock when you lock
in a mortgage that could go away. So there are
(04:40):
a lot of questions about how this would be handled,
and that's one of the reasons it's very complex.
Speaker 7 (04:46):
Jesse.
Speaker 5 (04:46):
We're talking about the bank's meeting with the president. They're
looking apparently for a lead underwriter. Now, this is going
to be a huge sale, so they would, I'm sure,
have a consort, but somebody's got to be the lead,
and you know, not pauls and act and are going
to make.
Speaker 3 (05:01):
Mike I feel like so many things this year we
are saying are complicated.
Speaker 1 (05:05):
But I do wonder that it would be a very
different entity.
Speaker 3 (05:09):
Both of them would be different entities if they are
publicly held and it's not that quasi public private that
we've seen.
Speaker 1 (05:16):
Correct.
Speaker 5 (05:16):
Yeah, and nobody quite knows how this will play out
because you you would worry that rates will go up
if they don't have a government guarantee. But does the
government want to stay in the guarantee business if it's
a private company and we're basically subsidizing their low rates
and their profits. So it's a tough call the administration.
(05:38):
This administration is very much a free market, you know,
get the government out of business stuff. So they're in
favor of this, as are some of Donal Trump's biggest
campaign downers. But it's not going to be easy to
put it all together, and a lot of people in
the mortgage industries have been concerned about it. I don't
wan say they're worried, but they are concerned because, as
(06:00):
they know, it's a complex issue.
Speaker 3 (06:02):
Complex and so not a given that this ultimately plays out.
Mike McKee, thank you, thank you, and not all just smart.
Speaker 1 (06:09):
That's what we love to have them on.
Speaker 2 (06:11):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
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Speaker 3 (06:25):
All right, we're going to continue on the geopolitical because
it really seems to be a major theme when we
look at what's going on today.
Speaker 1 (06:32):
Joining us now is Wendy.
Speaker 3 (06:33):
Cutler, vice president of Asia Society Policy Institute. She joins
us from San Diego. Wendy, is so good to have
you here. We just did kind of a rundown from
our genda LOOI in terms of all the stuff that
is going on. You know, I want that whiteboard US, China, India,
Russia around. Talk to us a little bit about the
news coming out of the news flow, about geopolitics and
(06:58):
the US role and what they're trying to do. So
maybe we start with Russia because it is curious whether
or not something will ultimately get done to end this war,
because it does seem like President Putin is going to
stand pretty pat when it comes to his demands.
Speaker 8 (07:13):
Look, it's unclear how this is all going to develop,
but it's clear that the President is very determined to
use his office to try and broker a cease fire.
What I'm watching on the trade front, however, is how
this may impact our relations with India right now, because
(07:34):
we are in a twenty one day period where the
President has threatened to increase India's tariffs by an additional
twenty five percent, taking them to fifty percent, due to
their purchases of Russian oil. But perhaps if indeed there's
some progress made with Russia that will provide an opening
(07:54):
to remove this threat and impending terrif hike.
Speaker 1 (07:58):
Talk to us more.
Speaker 4 (07:59):
About this would mean for say India's relationship with Russia,
or maybe even China's relationship when it comes to Russia
as well.
Speaker 8 (08:06):
Yeah, so for India in particular. Look, we've spent twenty
odd years trying to strengthen our relations with India.
Speaker 1 (08:13):
The past two weeks, the.
Speaker 8 (08:16):
Relationship has been spiraling downward and it's going to be
hard to rebuild. And I think in many respects India
is going to gravitate, you know, not in a major way,
but gradually more towards China and Russia, viewing US as
an unreliable partner.
Speaker 1 (08:35):
So that's what I want to ask you.
Speaker 3 (08:36):
I mean, I like to remind or have someone remind
us about why it is so important that the US
continue to have positive relations in a positive relationship with India.
Speaker 1 (08:49):
Remind us about that.
Speaker 3 (08:50):
And what be at risk if India is much more
aligned with China rather than the United States.
Speaker 8 (08:58):
Well, we have looked to India as the counterweight to China,
both on the strategic front but also on the economic front.
On the economic front, we have been encouraging our companies to,
you know, to leave China, and one of the destinations
they've been gravitating towards is India. So many US companies
(09:19):
now are expanding their operations in India, and you know,
if relations start going south, this is all kind of
you know, throws things up in the air. And the
last thing the US business community needs right now is
more uncertainty. There's enough uncertainty with all of these tariff
announcements coming out on a daily basis.
Speaker 4 (09:40):
Do you think there's been long term damage with that
bilateral relationship?
Speaker 1 (09:46):
Absolutely?
Speaker 8 (09:47):
Again, you know, you could you spend years and years
building a relationship, building trust, but it can take just
a matter of hours or.
Speaker 1 (09:55):
Days to break.
Speaker 8 (09:57):
That trust and so rebuilding it is not going to
happen in a matter of hours or days. And we're
not just seeing this with India. I'm just back from
Japan and I'm kind of hearing the same thing that
you know, the Japanese have been a very strong ally
or looking at the past couple of months and how
they've been, in their view, kind of jerked around in
these trade negotiations and are also talking about like developing
(10:21):
some kind of Plan B where they become less reliant
on the United States. So this is long term implications
and again hard to rebuild trust, you know, in a
short period of time.
Speaker 3 (10:34):
You know what has happened here because when the President
came back to the White House earlier this year, he
did look set to build upon kind of the warm
ties he had with Prime Minister Mody during his first term.
He had called the relationship the best it's ever been
between two leaders of the two countries, and the Prime
Minister called President.
Speaker 1 (10:52):
Trump my dear friend.
Speaker 3 (10:54):
Is this just I don't know, gamesmanship. I try to
kind of understand, and you know, what we hear, what
we see sometimes and then what's you know, a new
set of headlines that show something very different. So should
we take this at face value that the relationship really
is breaking down or is it just the negotiating process
(11:15):
between leaders of two really important countries.
Speaker 8 (11:19):
Well, look, a few weeks ago everyone was saying we
were on the verge of an early trade deal with India,
and there was a lot of optimism about that, and
somehow the trade deal got derailed. It could be that
the US was asking for more but a combination of
India couldn't make those couldn't meet our last few requests,
particularly in the agriculture sector, which is very sensitive for them.
(11:43):
But I don't think that's the whole picture. Obviously something
happened that made the President extremely frustrated. Maybe he got
the numbers of how much oil India continues to buy
from Russia and that you know, somehow rubbed him wrong way.
But again, the words he's been using towards India. I
(12:05):
don't think this is something that you just turn around overnight.
It's pretty deep right now, and if you talk to
the Indian officials or the Indian public, I think that
there is a lot of deep seated anger and frankly,
you know, they don't really understand how this spiral down
(12:26):
so quickly either.
Speaker 4 (12:28):
What are your eyes on next? When it comes to
a timetable, I know August twelfth, that's that deadline for
the decision on Chinese tariffs coming up soon.
Speaker 8 (12:37):
Exactly next Tuesday is key, I would I'm counting on
that we will roll over the tariff truce that we
achieved with China ninety days ago, and then I think
we are going to see a continuation of negotiations with
China to try and see if we can do some
kind of deal with them in the lead up to
(12:59):
a possible meeting or visit by the President to China
around the Korea APEC meeting in late October.
Speaker 3 (13:08):
What I wanted to ask you is just to kind
of wrap up here, Wendy, and again devils in the details.
We'll see what ultimately happens and whether or not they
come back to the table and they become friends again.
But I guess if there is a broken relationship, which
is how it seems right now, and that lasts longer term,
(13:29):
what's the cost to the United States with India.
Speaker 8 (13:33):
Yeah, yeah, look, the cost is, you know, we we
have damaged a relationship with an extremely important partner that
is only becoming more important on the global stage, and
particularly at a time when we want to diversify away
from China. This does present serious concerns.
Speaker 1 (13:57):
How much is China watching this in your view?
Speaker 8 (14:00):
Oh, very very closely, And I would expect that China
is going to make overtures to India right now in
an effort to bring India more in their camp. Now
let's form Let's keep in mind though China India relations
historically have never been good, and so I don't expect
India to move to the China camp. But again, I
(14:22):
think they're going to hedge their bets and view the
US as less reliable and gravitate both towards Russia and China.
Speaker 3 (14:30):
Franklin, And even that they could possibly talk, or that
we're even talking about them possibly talking, is just shows
that things could possibly be shifting.
Speaker 1 (14:40):
Wendy.
Speaker 3 (14:40):
So glad we could get some time with you on
this Friday, a very very busy friday, certainly when it
comes to geopolitics. Wendy Cutler back with us. She is
vice president of Asia Society Policy Institute.
Speaker 1 (14:50):
Joining us from San Diego. Wendy, thank you again.
Speaker 2 (14:54):
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Speaker 3 (15:11):
We're going to go back to geopolitics, although this really
plays into geopolitics as well. We're going to get to
Israel saying it will take control of Gaza City. It's
a move that could displace one million Palestinians leaving there.
Let's get to the latest on what we are seeing,
what we are hearing. Bloomberg News Jerusalem journalist Dan Williams
is in Jerusalem, So Dan, what are you hearing about
(15:32):
new moves to take control of Gaza?
Speaker 1 (15:34):
What are you seeing in and around?
Speaker 6 (15:36):
Also right now, it's declarative, as you will have read
on Bloomberg and elsewhere. The Israeli security Cabinet, that's really
the top decision making form of the country, the war cabinet,
if you like, decided, after a night long debate ten
hours behind closed doors a four am resolution that they
(15:56):
would order the storming of Gaza City as part of
Israel's efforts to end this war with what it would
define as a victory against Hamas. Now, Gaza City is
part of the twenty five percent of the Gaza Strip
yet to be overrun by Israeli tanks and troops, yet
to be under full control of the Israeli army, and
(16:16):
moving against it would be a long process, weeks or
months in the making. It would involve the evacuation, the
forcible evacuation potentially hundreds of thousand civilians, and then presumably
laying siege to the Hamas holdouts who are there in
the thousands. We're told of Hamas fighters and also potentially
hostages which they're holding. It's worth remembering Hamas still has
(16:38):
fifty hostages, most of them from the October seventh attack
in twenty twenty three that sparked this war. Twenty of
them are believed to be alive. Previously, these ralies avoided
entering these areas of the Gaza Strip for fear of
endangering those hostages. It appears now the gloves are off.
But with that said, this will not happen immediately on
the ground. It will require apparently a doubling of these
RAREI forces deployed that will take potentially a week or
(17:01):
two to muster in terms of reinforcements, call ups of reservists,
and that does actually leave a window for Hamas to
think again about whether its tack in negotiated efforts to
achieve a ceasefire, perhaps negotiated enter this war needs to change,
so we will see. There are indications that Hamas is
sending out feelers that it wants to renegotiate or review
(17:22):
those negotiations. So until we see the tanks and troops moving,
all bets are off.
Speaker 4 (17:27):
Hey Dan, how's that Trump administration?
Speaker 1 (17:29):
Responded?
Speaker 6 (17:31):
The Trump administration has been openly, openly supportive. We interview
the US ambassador to Israel just a few days ago,
and the ambassador made clear that Trump, as he put it,
is fed up. He actually said, has run out of
patients with Hamas, with Hamas stonewalling, as Israel and the
US have described it in those negotiations, and the US
(17:54):
wants to see Israel end this war. Now, for the
Nittanel government in Israel, ending the war means winning it
through force and the absence of negotiations. However, many Israelis,
to judge by Poles, would prefer to see this will
ended by a review of Israel's objectives, basically abandoning the
objective destroying mass of returning all those hostages in a
(18:17):
negotiated deal that would keep Amass in power. And basically
what we have now is a government that's out of
sync with its people to judge by the polls, but
insists that this is what the country needs to guarantee
its long term security.
Speaker 3 (18:30):
Is it also a government that's out of sync with
the region and I just think about that, and also
out of sync with the Abraham Accords right, which we
know set a series of diplomatic agreements normalizing relations between
Israel and several Arab nations broken by the US the first.
Speaker 1 (18:49):
Trump administration the first term.
Speaker 3 (18:50):
So are they out of touch to with their partners
and other Arab nations in terms of what they want
to see done with Gaza?
Speaker 6 (19:01):
Well, to judge by open statements. Absolutely, the Palestinian civilian
suffering in the Gaza strip has become intolerable to many viewers,
certainly in this part of the world, where it's become
especially combustible in terms of public opinion. However, oftentimes what's
said behind the scenes isn't the same and it's the
same as what's said in public. I'd remind you that
(19:22):
some ten twelve years ago, WikiLeaks revealed that what was
being said between US aligned Arab powers and Israel behind
the scenes to US diplomats was very different to what
was being said in public. In public, there was talk
of Palestinians behind the scenes, behind closed doors, the real
focus of the discussions was Iran. It's also worth remembering that,
to most assessments, Hamas triggered this war in part because
(19:44):
it wanted to scuttle those Abram accords Israel and Saudi
Arabia on the verge of establishing a peace deal. So
there is that worth remembering. I think everyone would like
to put this in their rearview mirror. The argument of
the Hawks in this equation is that the best way
to do that is to defeat ha mass militarily, even
if that requires weeks or a few months of intense
(20:05):
pain all around in the very near future.
Speaker 3 (20:07):
You know, sometimes we forget, you know, war. But as
you said, there are still hostages Israelis who are held
hostages hostage by Hamas. There's also Palestinians who don't.
Speaker 1 (20:17):
Have any homes anymore.
Speaker 3 (20:18):
I mean, where are the residents of Gaza City supposed
to go?
Speaker 6 (20:24):
They will be evacuated, to judge by the previous course
of action taken by the Israelis over several rounds of
these moves into population centers, they'll be evacuated to an
air called Al Muwassi that's on the southwestern coast of
the Gaza Strip. It's a large area of sand dudes
where the Israelis are convinced Hamas was not able to
establish bunkers underground tunnel systems and therefore there's no direct
(20:47):
military threat to concentrating people there. Effectively a very large
tense city at DP camp if you like. Conditions there
are not easy at all. It's worth remembering that the
Americans are now saying that they to quadruple in the
coming two months, and I think in the coming two
months that's a timeframe that's meant to work in tandem
with the Israeli the new is raeally move against Garza City.
(21:09):
They intend to quadruple the GHF, the Gazi Humanitarian Foundation that,
as you'll be aware, is a substitute a distribution system
set up by the Americans and the Israelis in hope
of sidelining UN agencies, the traditional humanitarian network that their
accused of being too close to Hamas, effectively propping up
a mass rules going back, rule going back are years.
(21:31):
So if the Americans managed to quadruple that GHF operating volume,
it will go quite a long way to dealing with
the immediate needs.
Speaker 7 (21:39):
Of those displaced people.
Speaker 6 (21:40):
But obviously, living indefinitely in a camps, in a camp
that's composed of tents, knowing your house has been destroyed
not a pleasant prospect for anyone.
Speaker 4 (21:49):
Dan, what's next and what's the window for her ma
ask to achieve ceasefire?
Speaker 6 (21:55):
A ceasefire talks stalled a month ago, and I think
these rallies and the Americans have made clear that if
they resume, the terms would be very different what we
had previously. And they've already been two ceasefires in this
war with partial hostage releases by Hamas in exchange for
prisoner releases by Israel increased to aid. That's no longer
(22:15):
the case. Those were largely instrumental. A ceasefire now would
be existential. In fact, rather than referring to them as
ceasefire talks or hostage talks, they'd actually be harmass talks,
because what's at the essence of the negotiations now is
whether Hamas gets to stick around. What it tried to
do is parley another truce of sixty days that was
proposed into an Israeli guarantee of an enter the war,
(22:39):
a full withdrawal of Israeli forces. Israel refused that it
will not withdraw forces. It will not end the war
until it's objective of seeing Hamas gone is achieved. Ha
Mass being gone means a total dismantling of the Hamas
power structure, a removal of the Hamas arsenal, the exiling
of Hamas leaders abroad. So what these Raelies in Americans
(22:59):
have been saying is you want more ceasefire talks, Fine,
but it's an all or nothing deal now, meaning a
full return of all of the hostages. There's fifty hostages
and a full har mass capitulation, meaning you agree consentually
to give up your weapons, to give up power, and
to leave quietly. It's basically the difference between forced out
or killed in the course of battle or captured and
(23:20):
leaving consensually in abandoning power. Kind of a stark choice
for Hamas. It's worth remembering this is a group that's
shunned by much of the West as a terrorist group,
and it's accused, including by the way in the Middle East,
given a resolution passed by the Arab League just last week,
of having needlessly started this war with a very significant
attack on Israeli civilians on October seventh, twenty twenty three.
(23:43):
I'm not sure there's much sympathy for them in the
region and beyond. There's certainly a sympathy for suffering Palestine
in civilians, but I think a resolution like that where
Hamas to surrender would be welcomed all around.
Speaker 3 (23:54):
All Right, Thank you so much, Dan, We know it's
later there in Jerusalem. Thank you so much, Bloomberg News
Jerusalem journalist Dan Williams.
Speaker 2 (24:02):
In Jerusalem, 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
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Speaker 1 (24:17):
Man, it's been a busy week when it comes to earnings.
Speaker 3 (24:19):
Pinterest, Trede Desk, Expedia, Zillow, Lift, Uber geor Dash, jose A, Lingo, Mountain, Spotify,
and then the week before we had Booking, Amazon Meta
in Alphabet. The next guest covers all of these companies.
He is someone that is a must read on Wall Street,
closely followed certainly by our Bloomberg community. Mark Mahaney is
Senior Managing director and head of Internet Research at Evercore
(24:41):
ISI from San Francisco. He's also the author of Nothing
but Net ten, timeless stock picking lessons from one of
Wall Street's top tech analysts.
Speaker 7 (24:49):
Mark.
Speaker 1 (24:49):
Really great to have you with justin myself.
Speaker 7 (24:51):
How are you, hey, Carol. Nice to hear your voice,
Nice to see you.
Speaker 1 (24:55):
Yeah, same here. I mean, it's been quite a week.
Speaker 3 (24:58):
I want to ask you just kind of big broad
macro because it seems like so much of our world
is being upended, or at least there's some uncertainties, certainly
when it comes to various policies tech companies, sectors, overall, definitely.
Speaker 1 (25:11):
Called out by the Trump administration.
Speaker 3 (25:13):
We've seen apples Tim Cook at the White House, We've
had the Intel CEO just this week being called out
in a negative way by the President this administration. How
do you think about it broadly in terms of policies
and acts and actions that are impacting could impact the
technology industry and the investment potential.
Speaker 9 (25:34):
Well, shoot, I can think of a lot of different
answers to that question. I think the facts are this
is the most activist administration when it comes to business,
maybe since FDR. I don't know, I'm a history of you,
I'm a student of US history.
Speaker 7 (25:50):
But you're stretching me there.
Speaker 9 (25:52):
But yeah, this is an extraordinarily activist administration. And anyway,
so I guess that's one. And maybe the most obvious
factor is tariffs, which are at the end of the day,
a tax, and so somebody's going to pay that tax,
and it's either American businesses or it's American consumers. So yeah,
that's out there. And then yeah, there's a lot of
(26:14):
pressure or attempts to influence these companies, so that's out
there too. Look, all of that's part of the backdrop
that all these CEOs and these executives have to deal
with they're paid to deal with this, these kind of challenges.
It's just unusually high, you know, in this administration.
Speaker 7 (26:31):
The backdrop to the tech sector. However, there's some.
Speaker 9 (26:34):
Other things that are well within their control that are
really lifting.
Speaker 7 (26:37):
You know, what's a three year.
Speaker 9 (26:38):
Bull market now in tech stocks, and that's it's Jenny
I and what we're seeing in terms of reduced costs
and improved processes and improve products and solutions and offerings,
it's really you know, we're going through a major supercycle
here when it comes to Jenny I. I know it's
been over hyped at times, but there's a lot of
reality behind it. And there's some companies that have had
really good stock price performance, decisely because they're perceived as
(27:01):
GENNII winners.
Speaker 4 (27:02):
That's right. And of course when you're talking about AI
have to bring up a semiconductor and chip maker's stocks.
When you think about the juxtaposition between former President Biden's
types of policies versus Presidents Trump's call just recently for
one hundred percent tariffs on chips coming into the US,
will all this make for more robust domestically located semiconductor industry,
or is that really possible break that down for US.
Speaker 9 (27:27):
I'm not sure I've got a really thoughtful, educated answer
to that question. You're asking a you're asking whether if
you want to promote US manufacturing, particularly in what are
considered to be highly strategic industries, whether it's better to
use incentives and subsidies. I think that crudely explains the
Biden administration policy, or whether it's better to use tariffs
(27:50):
and broadby companies to come back into the US.
Speaker 7 (27:53):
And I'm not sure.
Speaker 9 (27:55):
I mean, they're both active government policies into businesses, and
so I'm not sure. It is just an interesting step up.
I mean, we had a laissez faire economy. Generally government
stays out of the way of a business, and you know,
we've had a lot of what I look, I'm out
here in tech Land. Most of these companies are out
(28:16):
here and they've been very successful, run by entrepreneurs.
Speaker 7 (28:20):
They come from different parts of the world.
Speaker 9 (28:22):
They come to California area and other parts of the US,
and they create these extraordinary businesses and they've.
Speaker 7 (28:27):
Done it on their own.
Speaker 9 (28:27):
I mean, there's always some help there, but they've pretty
much done it on their own, and I think that's
actually created a really good situation for people in this country.
Speaker 7 (28:35):
I hope we don't I hope we don't spoil that.
Speaker 3 (28:37):
Well, let's get to some of the numbers that we
got this week and certainly the week before. I caught
some of your calls following the updates Zillo was out
this week. You raised your price target on it uber
to you raised your price target on that one to
one fifty. Door Dash you uped it to three sixty
the price target. What companies results show to you kind
(28:58):
of a more interesting investment thesis as a result, either
this week or last week, when we got some of
the big major tech names, Well.
Speaker 7 (29:06):
I like to set up on a question.
Speaker 9 (29:07):
So where I thought we had some just really surprisingly
constructive positive results.
Speaker 7 (29:13):
I thought door Dash was in that list.
Speaker 9 (29:15):
We had some record high operating margins out of that company.
Meta was definitely in that list, and most of the
other names.
Speaker 7 (29:24):
I thought those are kind of two standout companies. Maybe
Booking dot Com was in that list too.
Speaker 9 (29:29):
The other names, uh, you know, we had some good
prints out of names like Google. We had some good
prints out of names like uh, you know, Amazon, But
but but the really strongest, kind of cleanest prints there
were there were a few in there, and.
Speaker 7 (29:43):
I would put uh, I'd put booking in.
Speaker 9 (29:46):
There, door Dash and yeah, those would probably be at
the top of the list. And and if you just
step back, because you've asked you, we started off talking
about some of these macro concerns, and these companies give
you a very broad read into the economy they do,
into consumer demand, into some enterprise demand. And if I'd
use one single word to describe the results of this
earning season.
Speaker 7 (30:06):
It's resilience.
Speaker 9 (30:07):
It's not like we had a positive inflection, though there
are a few cases where that happened, but generally, the
overall view is that spend has been relatively resilient and
it's at a relatively robust level for these companies. It's
this may.
Speaker 7 (30:22):
Change in the back half of the year, but so far,
so far, so good.
Speaker 1 (30:27):
Mark, You're comfortable with Meta in particular.
Speaker 3 (30:29):
I mean, we had some news today too that they
have selected Pimco on Blue Owl Capital to lead a
twenty nine billion dollar financing for their data center expansion
in rural Louisiana. It's all about the race for AI infrastructure.
We know that this is according to people familiar that
major mega spend and the talent grab and what they're
(30:49):
spending for AI talent meta, you're comfortable with all of it.
Speaker 9 (30:53):
Well, I guess if they keep putting up prints that
we keep putting up a fundamental result like they are
doing where they're using AI to improve their cost structure
but also to improve their products, like you're getting an ROAI,
you know, return on ROI, return on investment ROAI return
on all that AI APEX spend and op x spend.
(31:17):
They took their revenue growth and they reaccelerated it despite
being at the scale that they're at, you know, one
hundred and fifty billion ROUGHLYET revenue run rate. They took
they took their revenue growth and accelerated to twenty percent.
Speaker 7 (31:28):
They didn't come out of nowhere.
Speaker 9 (31:29):
They were using AI to better target ad campaigns and
so marketers are getting a better return on their meta
ad spend and in consumers are finding the service better.
I mean, the evidence is that they're spending more time
with META, they're spending more time with Instagram. There's nothing
more objective than just time spent. So they've been able
(31:49):
to Meta has been able to use all that AI
investment to improve their product, to improve their service. And yeah,
so if you keep doing that, you absolutely you earned
the right to spend more, to invest more.
Speaker 1 (32:00):
All Right, We've got to run unfortunately.
Speaker 3 (32:02):
Thank you so much, and I really appreciate you going
macro with us and then also drilling down a little
bit on some of the companies.
Speaker 1 (32:08):
So appreciate it. Mark Mahaney.
Speaker 3 (32:09):
He's Senior Managing Director, head of Internet Research over at
Evercore ISI, author of Nothing but Net ten timeless stock
picking lessons from one of Wall Street's.
Speaker 1 (32:18):
Top tech analysts. Joining us out there out West.
Speaker 2 (32:22):
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(32:42):
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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 Week
Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:32):
I don't know if you checked out shares a Fannie
May and Freddie mac.
Speaker 1 (00:35):
I mean just say, soaring, soaring off the charts.
Speaker 4 (00:39):
It's incredible too, and just given the where they've come
and gone and being in that consumership since the height
of the global financial crisis.
Speaker 1 (00:45):
Yeah, it's a really good point.
Speaker 3 (00:46):
And it feels like we need a little bit of
a history lesson the news that's got the movie, We've got.
We've got Fanny May. It's up about twenty percent. I'm
looking at Freddie Mack up about twenty two percent. And
this is after the administration is said to be preparing
to sell shares in an offering that could start as
early as this year. Again according to that senior administration
(01:06):
official with the latest on that, and kind of as
I said, A history lesson Blue or TV and Radio,
International Economics and Policy correspondent Michael.
Speaker 5 (01:14):
Mcker bringing the old guys for thea the old guy.
Speaker 3 (01:19):
Like a fine line, Mike, you just get better and better.
But no, like there is history behind these two in
a big way.
Speaker 5 (01:26):
Especially you look at Fanny May was chartered in nineteen
thirty eight. It's been around for a long time. Freddy
Mack came along in nineteen seventy. Stepping back for just
a second, here's what they do. They basically buy mortgages
from banks and mortgage lenders and package them into securities
and sell them to investors. And that way the banks
have more space on their balance sheets to make loans.
(01:48):
And because Fannie Mae and Freddie Mack have sold these
off to investors who are anxious to get the yield
on them, they can predict essentially what they're mortgage costs
are going to be, and so they can keep mortgage
rates generally fairly stable. Along the way, from the time
Fanny May was created, they created the thirty year mortgage,
(02:12):
which is we're the only country that has something like that.
But then of course they bought a lot of really
bad mortgages and the run up to the Great Financial
Crisis and basically went bankrupt and the government had to
bail them out, and they did and have put them
into conservatorship is what they did. But the way they
(02:34):
did it was they still left shares outstanding, and so
a lot of people who a lot of hedge funds
got into the business of buying up Fanny and Freddy
shares at pennies on the dollar and have been sitting
on them for seventeen years now. And the Biden administration
and the Obama administration had no desire to bring them
(02:55):
out of conservatorship. But the Trump administration seems bound and
determined to do that. They've been talking about it since
he came back to office. It's complicated, it will be difficult.
But boy, if you were Bill Ackman or John.
Speaker 1 (03:09):
Paulson pretty happy today, you're pretty happy today. Yeah.
Speaker 6 (03:14):
Well.
Speaker 4 (03:14):
Trump also met with the CEOs of Bank of America
City Group earlier this week, and then last week Bloomberg
News had a reported that he met with Jamie Diamond
and David Salman over at Goldman Sachs Group. So I'm
wondering how difficult will it be to pull off a
potential feet here when we're talking about an IPO.
Speaker 5 (03:30):
Well, it's not so much the selling the shares, although
it has to be designed in a sort of specific
way because the government owns eighty percent of the shares
right now.
Speaker 7 (03:39):
And one of the big questions is.
Speaker 5 (03:41):
Are you going to put the companies into receivership and
basically bankrupt all the existing shareholders, which is what you
normally do with a company that's going to come out
of bankruptcy, or do you leave them with equity in
the new company and then they make a huge profit.
(04:02):
But the biggest problem is that because they have been
owned by the government, and before that there was an
implicit guarantee by the government, rates were low.
Speaker 7 (04:14):
You didn't demand an extra.
Speaker 5 (04:17):
Premium because you knew that they were insured and they
were gonna get paid. You were going to get paid
either way because the government would step in. And so
if the government steps out and lets this be a
private company, then maybe mortgage rates are going to go up,
and things like the mortgage rate lock when you lock
in a mortgage that could go away. So there are
(04:40):
a lot of questions about how this would be handled,
and that's one of the reasons it's very complex.
Speaker 7 (04:46):
Jesse.
Speaker 5 (04:46):
We're talking about the bank's meeting with the president. They're
looking apparently for a lead underwriter. Now, this is going
to be a huge sale, so they would, I'm sure,
have a consort, but somebody's got to be the lead,
and you know, not pauls and act and are going
to make.
Speaker 3 (05:01):
Mike I feel like so many things this year we
are saying are complicated.
Speaker 1 (05:05):
But I do wonder that it would be a very
different entity.
Speaker 3 (05:09):
Both of them would be different entities if they are
publicly held and it's not that quasi public private that
we've seen.
Speaker 1 (05:16):
Correct.
Speaker 5 (05:16):
Yeah, and nobody quite knows how this will play out
because you you would worry that rates will go up
if they don't have a government guarantee. But does the
government want to stay in the guarantee business if it's
a private company and we're basically subsidizing their low rates
and their profits. So it's a tough call the administration.
(05:38):
This administration is very much a free market, you know,
get the government out of business stuff. So they're in
favor of this, as are some of Donal Trump's biggest
campaign downers. But it's not going to be easy to
put it all together, and a lot of people in
the mortgage industries have been concerned about it. I don't
wan say they're worried, but they are concerned because, as
(06:00):
they know, it's a complex issue.
Speaker 3 (06:02):
Complex and so not a given that this ultimately plays out.
Mike McKee, thank you, thank you, and not all just smart.
Speaker 1 (06:09):
That's what we love to have them on.
Speaker 2 (06:11):
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 3 (06:25):
All right, we're going to continue on the geopolitical because
it really seems to be a major theme when we
look at what's going on today.
Speaker 1 (06:32):
Joining us now is Wendy.
Speaker 3 (06:33):
Cutler, vice president of Asia Society Policy Institute. She joins
us from San Diego. Wendy, is so good to have
you here. We just did kind of a rundown from
our genda LOOI in terms of all the stuff that
is going on. You know, I want that whiteboard US, China, India,
Russia around. Talk to us a little bit about the
news coming out of the news flow, about geopolitics and
(06:58):
the US role and what they're trying to do. So
maybe we start with Russia because it is curious whether
or not something will ultimately get done to end this war,
because it does seem like President Putin is going to
stand pretty pat when it comes to his demands.
Speaker 8 (07:13):
Look, it's unclear how this is all going to develop,
but it's clear that the President is very determined to
use his office to try and broker a cease fire.
What I'm watching on the trade front, however, is how
this may impact our relations with India right now, because
(07:34):
we are in a twenty one day period where the
President has threatened to increase India's tariffs by an additional
twenty five percent, taking them to fifty percent, due to
their purchases of Russian oil. But perhaps if indeed there's
some progress made with Russia that will provide an opening
(07:54):
to remove this threat and impending terrif hike.
Speaker 1 (07:58):
Talk to us more.
Speaker 4 (07:59):
About this would mean for say India's relationship with Russia,
or maybe even China's relationship when it comes to Russia
as well.
Speaker 8 (08:06):
Yeah, so for India in particular. Look, we've spent twenty
odd years trying to strengthen our relations with India.
Speaker 1 (08:13):
The past two weeks, the.
Speaker 8 (08:16):
Relationship has been spiraling downward and it's going to be
hard to rebuild. And I think in many respects India
is going to gravitate, you know, not in a major way,
but gradually more towards China and Russia, viewing US as
an unreliable partner.
Speaker 1 (08:35):
So that's what I want to ask you.
Speaker 3 (08:36):
I mean, I like to remind or have someone remind
us about why it is so important that the US
continue to have positive relations in a positive relationship with India.
Speaker 1 (08:49):
Remind us about that.
Speaker 3 (08:50):
And what be at risk if India is much more
aligned with China rather than the United States.
Speaker 8 (08:58):
Well, we have looked to India as the counterweight to China,
both on the strategic front but also on the economic front.
On the economic front, we have been encouraging our companies to,
you know, to leave China, and one of the destinations
they've been gravitating towards is India. So many US companies
(09:19):
now are expanding their operations in India, and you know,
if relations start going south, this is all kind of
you know, throws things up in the air. And the
last thing the US business community needs right now is
more uncertainty. There's enough uncertainty with all of these tariff
announcements coming out on a daily basis.
Speaker 4 (09:40):
Do you think there's been long term damage with that
bilateral relationship?
Speaker 1 (09:46):
Absolutely?
Speaker 8 (09:47):
Again, you know, you could you spend years and years
building a relationship, building trust, but it can take just
a matter of hours or.
Speaker 1 (09:55):
Days to break.
Speaker 8 (09:57):
That trust and so rebuilding it is not going to
happen in a matter of hours or days. And we're
not just seeing this with India. I'm just back from
Japan and I'm kind of hearing the same thing that
you know, the Japanese have been a very strong ally
or looking at the past couple of months and how
they've been, in their view, kind of jerked around in
these trade negotiations and are also talking about like developing
(10:21):
some kind of Plan B where they become less reliant
on the United States. So this is long term implications
and again hard to rebuild trust, you know, in a
short period of time.
Speaker 3 (10:34):
You know what has happened here because when the President
came back to the White House earlier this year, he
did look set to build upon kind of the warm
ties he had with Prime Minister Mody during his first term.
He had called the relationship the best it's ever been
between two leaders of the two countries, and the Prime
Minister called President.
Speaker 1 (10:52):
Trump my dear friend.
Speaker 3 (10:54):
Is this just I don't know, gamesmanship. I try to
kind of understand, and you know, what we hear, what
we see sometimes and then what's you know, a new
set of headlines that show something very different. So should
we take this at face value that the relationship really
is breaking down or is it just the negotiating process
(11:15):
between leaders of two really important countries.
Speaker 8 (11:19):
Well, look, a few weeks ago everyone was saying we
were on the verge of an early trade deal with India,
and there was a lot of optimism about that, and
somehow the trade deal got derailed. It could be that
the US was asking for more but a combination of
India couldn't make those couldn't meet our last few requests,
particularly in the agriculture sector, which is very sensitive for them.
(11:43):
But I don't think that's the whole picture. Obviously something
happened that made the President extremely frustrated. Maybe he got
the numbers of how much oil India continues to buy
from Russia and that you know, somehow rubbed him wrong way.
But again, the words he's been using towards India. I
(12:05):
don't think this is something that you just turn around overnight.
It's pretty deep right now, and if you talk to
the Indian officials or the Indian public, I think that
there is a lot of deep seated anger and frankly,
you know, they don't really understand how this spiral down
(12:26):
so quickly either.
Speaker 4 (12:28):
What are your eyes on next? When it comes to
a timetable, I know August twelfth, that's that deadline for
the decision on Chinese tariffs coming up soon.
Speaker 8 (12:37):
Exactly next Tuesday is key, I would I'm counting on
that we will roll over the tariff truce that we
achieved with China ninety days ago, and then I think
we are going to see a continuation of negotiations with
China to try and see if we can do some
kind of deal with them in the lead up to
(12:59):
a possible meeting or visit by the President to China
around the Korea APEC meeting in late October.
Speaker 3 (13:08):
What I wanted to ask you is just to kind
of wrap up here, Wendy, and again devils in the details.
We'll see what ultimately happens and whether or not they
come back to the table and they become friends again.
But I guess if there is a broken relationship, which
is how it seems right now, and that lasts longer term,
(13:29):
what's the cost to the United States with India.
Speaker 8 (13:33):
Yeah, yeah, look, the cost is, you know, we we
have damaged a relationship with an extremely important partner that
is only becoming more important on the global stage, and
particularly at a time when we want to diversify away
from China. This does present serious concerns.
Speaker 1 (13:57):
How much is China watching this in your view?
Speaker 8 (14:00):
Oh, very very closely, And I would expect that China
is going to make overtures to India right now in
an effort to bring India more in their camp. Now
let's form Let's keep in mind though China India relations
historically have never been good, and so I don't expect
India to move to the China camp. But again, I
(14:22):
think they're going to hedge their bets and view the
US as less reliable and gravitate both towards Russia and China.
Speaker 3 (14:30):
Franklin, And even that they could possibly talk, or that
we're even talking about them possibly talking, is just shows
that things could possibly be shifting.
Speaker 1 (14:40):
Wendy.
Speaker 3 (14:40):
So glad we could get some time with you on
this Friday, a very very busy friday, certainly when it
comes to geopolitics. Wendy Cutler back with us. She is
vice president of Asia Society Policy Institute.
Speaker 1 (14:50):
Joining us from San Diego. Wendy, thank you again.
Speaker 2 (14:54):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm ST on Applecarplay and
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station Just Say Alexa played Bloomberg eleven thirty.
Speaker 3 (15:11):
We're going to go back to geopolitics, although this really
plays into geopolitics as well. We're going to get to
Israel saying it will take control of Gaza City. It's
a move that could displace one million Palestinians leaving there.
Let's get to the latest on what we are seeing,
what we are hearing. Bloomberg News Jerusalem journalist Dan Williams
is in Jerusalem, So Dan, what are you hearing about
(15:32):
new moves to take control of Gaza?
Speaker 1 (15:34):
What are you seeing in and around?
Speaker 6 (15:36):
Also right now, it's declarative, as you will have read
on Bloomberg and elsewhere. The Israeli security Cabinet, that's really
the top decision making form of the country, the war cabinet,
if you like, decided, after a night long debate ten
hours behind closed doors a four am resolution that they
(15:56):
would order the storming of Gaza City as part of
Israel's efforts to end this war with what it would
define as a victory against Hamas. Now, Gaza City is
part of the twenty five percent of the Gaza Strip
yet to be overrun by Israeli tanks and troops, yet
to be under full control of the Israeli army, and
(16:16):
moving against it would be a long process, weeks or
months in the making. It would involve the evacuation, the
forcible evacuation potentially hundreds of thousand civilians, and then presumably
laying siege to the Hamas holdouts who are there in
the thousands. We're told of Hamas fighters and also potentially
hostages which they're holding. It's worth remembering Hamas still has
(16:38):
fifty hostages, most of them from the October seventh attack
in twenty twenty three that sparked this war. Twenty of
them are believed to be alive. Previously, these ralies avoided
entering these areas of the Gaza Strip for fear of
endangering those hostages. It appears now the gloves are off.
But with that said, this will not happen immediately on
the ground. It will require apparently a doubling of these
RAREI forces deployed that will take potentially a week or
(17:01):
two to muster in terms of reinforcements, call ups of reservists,
and that does actually leave a window for Hamas to
think again about whether its tack in negotiated efforts to
achieve a ceasefire, perhaps negotiated enter this war needs to change,
so we will see. There are indications that Hamas is
sending out feelers that it wants to renegotiate or review
(17:22):
those negotiations. So until we see the tanks and troops moving,
all bets are off.
Speaker 4 (17:27):
Hey Dan, how's that Trump administration?
Speaker 1 (17:29):
Responded?
Speaker 6 (17:31):
The Trump administration has been openly, openly supportive. We interview
the US ambassador to Israel just a few days ago,
and the ambassador made clear that Trump, as he put it,
is fed up. He actually said, has run out of
patients with Hamas, with Hamas stonewalling, as Israel and the
US have described it in those negotiations, and the US
(17:54):
wants to see Israel end this war. Now, for the
Nittanel government in Israel, ending the war means winning it
through force and the absence of negotiations. However, many Israelis,
to judge by Poles, would prefer to see this will
ended by a review of Israel's objectives, basically abandoning the
objective destroying mass of returning all those hostages in a
(18:17):
negotiated deal that would keep Amass in power. And basically
what we have now is a government that's out of
sync with its people to judge by the polls, but
insists that this is what the country needs to guarantee
its long term security.
Speaker 3 (18:30):
Is it also a government that's out of sync with
the region and I just think about that, and also
out of sync with the Abraham Accords right, which we
know set a series of diplomatic agreements normalizing relations between
Israel and several Arab nations broken by the US the first.
Speaker 1 (18:49):
Trump administration the first term.
Speaker 3 (18:50):
So are they out of touch to with their partners
and other Arab nations in terms of what they want
to see done with Gaza?
Speaker 6 (19:01):
Well, to judge by open statements. Absolutely, the Palestinian civilian
suffering in the Gaza strip has become intolerable to many viewers,
certainly in this part of the world, where it's become
especially combustible in terms of public opinion. However, oftentimes what's
said behind the scenes isn't the same and it's the
same as what's said in public. I'd remind you that
(19:22):
some ten twelve years ago, WikiLeaks revealed that what was
being said between US aligned Arab powers and Israel behind
the scenes to US diplomats was very different to what
was being said in public. In public, there was talk
of Palestinians behind the scenes, behind closed doors, the real
focus of the discussions was Iran. It's also worth remembering that,
to most assessments, Hamas triggered this war in part because
(19:44):
it wanted to scuttle those Abram accords Israel and Saudi
Arabia on the verge of establishing a peace deal. So
there is that worth remembering. I think everyone would like
to put this in their rearview mirror. The argument of
the Hawks in this equation is that the best way
to do that is to defeat ha mass militarily, even
if that requires weeks or a few months of intense
(20:05):
pain all around in the very near future.
Speaker 3 (20:07):
You know, sometimes we forget, you know, war. But as
you said, there are still hostages Israelis who are held
hostages hostage by Hamas. There's also Palestinians who don't.
Speaker 1 (20:17):
Have any homes anymore.
Speaker 3 (20:18):
I mean, where are the residents of Gaza City supposed
to go?
Speaker 6 (20:24):
They will be evacuated, to judge by the previous course
of action taken by the Israelis over several rounds of
these moves into population centers, they'll be evacuated to an
air called Al Muwassi that's on the southwestern coast of
the Gaza Strip. It's a large area of sand dudes
where the Israelis are convinced Hamas was not able to
establish bunkers underground tunnel systems and therefore there's no direct
(20:47):
military threat to concentrating people there. Effectively a very large
tense city at DP camp if you like. Conditions there
are not easy at all. It's worth remembering that the
Americans are now saying that they to quadruple in the
coming two months, and I think in the coming two
months that's a timeframe that's meant to work in tandem
with the Israeli the new is raeally move against Garza City.
(21:09):
They intend to quadruple the GHF, the Gazi Humanitarian Foundation that,
as you'll be aware, is a substitute a distribution system
set up by the Americans and the Israelis in hope
of sidelining UN agencies, the traditional humanitarian network that their
accused of being too close to Hamas, effectively propping up
a mass rules going back, rule going back are years.
(21:31):
So if the Americans managed to quadruple that GHF operating volume,
it will go quite a long way to dealing with
the immediate needs.
Speaker 7 (21:39):
Of those displaced people.
Speaker 6 (21:40):
But obviously, living indefinitely in a camps, in a camp
that's composed of tents, knowing your house has been destroyed
not a pleasant prospect for anyone.
Speaker 4 (21:49):
Dan, what's next and what's the window for her ma
ask to achieve ceasefire?
Speaker 6 (21:55):
A ceasefire talks stalled a month ago, and I think
these rallies and the Americans have made clear that if
they resume, the terms would be very different what we
had previously. And they've already been two ceasefires in this
war with partial hostage releases by Hamas in exchange for
prisoner releases by Israel increased to aid. That's no longer
(22:15):
the case. Those were largely instrumental. A ceasefire now would
be existential. In fact, rather than referring to them as
ceasefire talks or hostage talks, they'd actually be harmass talks,
because what's at the essence of the negotiations now is
whether Hamas gets to stick around. What it tried to
do is parley another truce of sixty days that was
proposed into an Israeli guarantee of an enter the war,
(22:39):
a full withdrawal of Israeli forces. Israel refused that it
will not withdraw forces. It will not end the war
until it's objective of seeing Hamas gone is achieved. Ha
Mass being gone means a total dismantling of the Hamas
power structure, a removal of the Hamas arsenal, the exiling
of Hamas leaders abroad. So what these Raelies in Americans
(22:59):
have been saying is you want more ceasefire talks, Fine,
but it's an all or nothing deal now, meaning a
full return of all of the hostages. There's fifty hostages
and a full har mass capitulation, meaning you agree consentually
to give up your weapons, to give up power, and
to leave quietly. It's basically the difference between forced out
or killed in the course of battle or captured and
(23:20):
leaving consensually in abandoning power. Kind of a stark choice
for Hamas. It's worth remembering this is a group that's
shunned by much of the West as a terrorist group,
and it's accused, including by the way in the Middle East,
given a resolution passed by the Arab League just last week,
of having needlessly started this war with a very significant
attack on Israeli civilians on October seventh, twenty twenty three.
(23:43):
I'm not sure there's much sympathy for them in the
region and beyond. There's certainly a sympathy for suffering Palestine
in civilians, but I think a resolution like that where
Hamas to surrender would be welcomed all around.
Speaker 3 (23:54):
All Right, Thank you so much, Dan, We know it's
later there in Jerusalem. Thank you so much, Bloomberg News
Jerusalem journalist Dan Williams.
Speaker 2 (24:02):
In Jerusalem, 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 1 (24:17):
Man, it's been a busy week when it comes to earnings.
Speaker 3 (24:19):
Pinterest, Trede Desk, Expedia, Zillow, Lift, Uber geor Dash, jose A, Lingo, Mountain, Spotify,
and then the week before we had Booking, Amazon Meta
in Alphabet. The next guest covers all of these companies.
He is someone that is a must read on Wall Street,
closely followed certainly by our Bloomberg community. Mark Mahaney is
Senior Managing director and head of Internet Research at Evercore
(24:41):
ISI from San Francisco. He's also the author of Nothing
but Net ten, timeless stock picking lessons from one of
Wall Street's top tech analysts.
Speaker 7 (24:49):
Mark.
Speaker 1 (24:49):
Really great to have you with justin myself.
Speaker 7 (24:51):
How are you, hey, Carol. Nice to hear your voice,
Nice to see you.
Speaker 1 (24:55):
Yeah, same here. I mean, it's been quite a week.
Speaker 3 (24:58):
I want to ask you just kind of big broad
macro because it seems like so much of our world
is being upended, or at least there's some uncertainties, certainly
when it comes to various policies tech companies, sectors, overall, definitely.
Speaker 1 (25:11):
Called out by the Trump administration.
Speaker 3 (25:13):
We've seen apples Tim Cook at the White House, We've
had the Intel CEO just this week being called out
in a negative way by the President this administration. How
do you think about it broadly in terms of policies
and acts and actions that are impacting could impact the
technology industry and the investment potential.
Speaker 9 (25:34):
Well, shoot, I can think of a lot of different
answers to that question. I think the facts are this
is the most activist administration when it comes to business,
maybe since FDR. I don't know, I'm a history of you,
I'm a student of US history.
Speaker 7 (25:50):
But you're stretching me there.
Speaker 9 (25:52):
But yeah, this is an extraordinarily activist administration. And anyway,
so I guess that's one. And maybe the most obvious
factor is tariffs, which are at the end of the day,
a tax, and so somebody's going to pay that tax,
and it's either American businesses or it's American consumers. So yeah,
that's out there. And then yeah, there's a lot of
(26:14):
pressure or attempts to influence these companies, so that's out
there too. Look, all of that's part of the backdrop
that all these CEOs and these executives have to deal
with they're paid to deal with this, these kind of challenges.
It's just unusually high, you know, in this administration.
Speaker 7 (26:31):
The backdrop to the tech sector. However, there's some.
Speaker 9 (26:34):
Other things that are well within their control that are
really lifting.
Speaker 7 (26:37):
You know, what's a three year.
Speaker 9 (26:38):
Bull market now in tech stocks, and that's it's Jenny
I and what we're seeing in terms of reduced costs
and improved processes and improve products and solutions and offerings,
it's really you know, we're going through a major supercycle
here when it comes to Jenny I. I know it's
been over hyped at times, but there's a lot of
reality behind it. And there's some companies that have had
really good stock price performance, decisely because they're perceived as
(27:01):
GENNII winners.
Speaker 4 (27:02):
That's right. And of course when you're talking about AI
have to bring up a semiconductor and chip maker's stocks.
When you think about the juxtaposition between former President Biden's
types of policies versus Presidents Trump's call just recently for
one hundred percent tariffs on chips coming into the US,
will all this make for more robust domestically located semiconductor industry,
or is that really possible break that down for US.
Speaker 9 (27:27):
I'm not sure I've got a really thoughtful, educated answer
to that question. You're asking a you're asking whether if
you want to promote US manufacturing, particularly in what are
considered to be highly strategic industries, whether it's better to
use incentives and subsidies. I think that crudely explains the
Biden administration policy, or whether it's better to use tariffs
(27:50):
and broadby companies to come back into the US.
Speaker 7 (27:53):
And I'm not sure.
Speaker 9 (27:55):
I mean, they're both active government policies into businesses, and
so I'm not sure. It is just an interesting step up.
I mean, we had a laissez faire economy. Generally government
stays out of the way of a business, and you know,
we've had a lot of what I look, I'm out
here in tech Land. Most of these companies are out
(28:16):
here and they've been very successful, run by entrepreneurs.
Speaker 7 (28:20):
They come from different parts of the world.
Speaker 9 (28:22):
They come to California area and other parts of the US,
and they create these extraordinary businesses and they've.
Speaker 7 (28:27):
Done it on their own.
Speaker 9 (28:27):
I mean, there's always some help there, but they've pretty
much done it on their own, and I think that's
actually created a really good situation for people in this country.
Speaker 7 (28:35):
I hope we don't I hope we don't spoil that.
Speaker 3 (28:37):
Well, let's get to some of the numbers that we
got this week and certainly the week before. I caught
some of your calls following the updates Zillo was out
this week. You raised your price target on it uber
to you raised your price target on that one to
one fifty. Door Dash you uped it to three sixty
the price target. What companies results show to you kind
(28:58):
of a more interesting investment thesis as a result, either
this week or last week, when we got some of
the big major tech names, Well.
Speaker 7 (29:06):
I like to set up on a question.
Speaker 9 (29:07):
So where I thought we had some just really surprisingly
constructive positive results.
Speaker 7 (29:13):
I thought door Dash was in that list.
Speaker 9 (29:15):
We had some record high operating margins out of that company.
Meta was definitely in that list, and most of the
other names.
Speaker 7 (29:24):
I thought those are kind of two standout companies. Maybe
Booking dot Com was in that list too.
Speaker 9 (29:29):
The other names, uh, you know, we had some good
prints out of names like Google. We had some good
prints out of names like uh, you know, Amazon, But
but but the really strongest, kind of cleanest prints there
were there were a few in there, and.
Speaker 7 (29:43):
I would put uh, I'd put booking in.
Speaker 9 (29:46):
There, door Dash and yeah, those would probably be at
the top of the list. And and if you just
step back, because you've asked you, we started off talking
about some of these macro concerns, and these companies give
you a very broad read into the economy they do,
into consumer demand, into some enterprise demand. And if I'd
use one single word to describe the results of this
earning season.
Speaker 7 (30:06):
It's resilience.
Speaker 9 (30:07):
It's not like we had a positive inflection, though there
are a few cases where that happened, but generally, the
overall view is that spend has been relatively resilient and
it's at a relatively robust level for these companies. It's
this may.
Speaker 7 (30:22):
Change in the back half of the year, but so far,
so far, so good.
Speaker 1 (30:27):
Mark, You're comfortable with Meta in particular.
Speaker 3 (30:29):
I mean, we had some news today too that they
have selected Pimco on Blue Owl Capital to lead a
twenty nine billion dollar financing for their data center expansion
in rural Louisiana. It's all about the race for AI infrastructure.
We know that this is according to people familiar that
major mega spend and the talent grab and what they're
(30:49):
spending for AI talent meta, you're comfortable with all of it.
Speaker 9 (30:53):
Well, I guess if they keep putting up prints that
we keep putting up a fundamental result like they are
doing where they're using AI to improve their cost structure
but also to improve their products, like you're getting an ROAI,
you know, return on ROI, return on investment ROAI return
on all that AI APEX spend and op x spend.
(31:17):
They took their revenue growth and they reaccelerated it despite
being at the scale that they're at, you know, one
hundred and fifty billion ROUGHLYET revenue run rate. They took
they took their revenue growth and accelerated to twenty percent.
Speaker 7 (31:28):
They didn't come out of nowhere.
Speaker 9 (31:29):
They were using AI to better target ad campaigns and
so marketers are getting a better return on their meta
ad spend and in consumers are finding the service better.
I mean, the evidence is that they're spending more time
with META, they're spending more time with Instagram. There's nothing
more objective than just time spent. So they've been able
(31:49):
to Meta has been able to use all that AI
investment to improve their product, to improve their service. And yeah,
so if you keep doing that, you absolutely you earned
the right to spend more, to invest more.
Speaker 1 (32:00):
All Right, We've got to run unfortunately.
Speaker 3 (32:02):
Thank you so much, and I really appreciate you going
macro with us and then also drilling down a little
bit on some of the companies.
Speaker 1 (32:08):
So appreciate it. Mark Mahaney.
Speaker 3 (32:09):
He's Senior Managing Director, head of Internet Research over at
Evercore ISI, author of Nothing but Net ten timeless stock
picking lessons from one of Wall Street's.
Speaker 1 (32:18):
Top tech analysts. Joining us out there out West.
Speaker 2 (32:22):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(32:42):
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