July 21, 2025 • 41 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
The start of a busy week for Corporate America saw stocks giving up most of their gains, with traders looking for signs of resilience in earnings amid tariff risks. Treasury yields fell alongside the dollar.
While the S&P 500 closed above 6,300 for the first time, the equity benchmark rose just 0.1%. Energy shares joined a decline in oil amid lingering worries about crude demand. A gauge of the “Magnificent Seven” megacaps outperformed, with Tesla Inc. and Google parent Alphabet Inc. due to report results this week. The stakes will again be high as traders look for updates on artificial-intelligence spending. Nvidia Corp. fell.
Gains in Treasuries were led by longer maturities, with the 30-year yield slipping four basis points to 4.95%. The greenback dropped against all of its developed-world peers. The yen climbed as Japan’s Prime Minister Shigeru Ishiba said he would carry on as leader even as the ruling coalition lost its majority in the upper house election.
Investors will also keep a close eye on tariff headlines. President Donald Trump may issue more unilateral tariff letters before Aug. 1, White House Press Secretary Karoline Leavitt said. More trade deals may also be reached before the deadline, she added.
Today's show features:
- Alan Zafran, Co-Founder and Managing Partner of IEQ Capital on return of the bull market
- Bloomberg Businessweek Senior Reporter Max Chafkin on his Bloomberg Big Take, co-written with Ed Ludlow: Elon Musk’s Empire Is Creaking Under the Strain of His Antics
- Dr. Rebecca Homkes, Lecturer at the London Business School on business planning amid geopolitical uncertainty
- Bloomberg News Telecom Reporter Kelcee Griffis on Verizon’s earnings beat and boosted profit outlook
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. 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
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 2 (00:32):
Bloommarcle, how about you let me drive?
Speaker 3 (00:36):
No, no, no no, this is not a toy.
Speaker 4 (00:40):
Honey, please.
Speaker 5 (00:43):
Listen.
Speaker 6 (00:44):
I want to drive.
Speaker 7 (00:44):
It's good question.
Speaker 6 (00:51):
This is the Drive to the clothes on Bloomberg Radio.
All right, TikTok, everybody. We've got about eight minutes to
go until we wrap up the trade on this Monday,
July twenty first, Carol mass or Tim Stanovik live in
our Bloomberg Interactive Brokers studio. And Tim, we're definitely well
off our best levels of the session, still above sixty
three hundred on the S and P five hundred, but
(01:13):
we're only up about seventeen points Nasdaq one hundred again
of one hundred and forty five points twenty three thousand
and two eleven.
Speaker 8 (01:21):
I like to do percentages. Let me go there.
Speaker 6 (01:22):
Up about three tons of a percent on the S
and P five hundred, up six tens of a percent
on the Nasdaq one hundred, and little change in terms
of a percentage for the Dow Jones industrial avatars. Just
checking check our records, I think we're back on what
July seventeenth, oh sixty two, ninety seven thirty six was
the closer for the S and P.
Speaker 9 (01:40):
Here we are right now. We're fine. It's a record.
We're set for a record close at this point, and.
Speaker 8 (01:45):
Same thing easily right for the NASDEK one hundred.
Speaker 9 (01:50):
Sorry, I'll take your word for it. I only have
the I only have the S and P five hundred
pulled up on my terminal herd. All right, well, I
trust you. Carol. Hey, I want to bring in Alan Zafrind.
He is the co found and managing partner of at
I EQ Capital. He joins us this afternoon, not from
northern California, but from southern California in sunny Los Angeles. Alan,
good to have you, as always. The S and P
(02:11):
five hundred up twenty six point seven percent from those
lows in the early part of April. Is the bullmarket
back on.
Speaker 10 (02:21):
Tim and Carroll, Thanks for having me on. Yes, the
bullmarket is back on, and I can give you a
couple of reasons why. But it appears as if fundamentally
and technically things, barring modest corrections, seem as if everything
every indication is we will continue ok our way gradually
higher over time.
Speaker 8 (02:39):
Wait say that again. That was quick. Wait say that
when we're time.
Speaker 10 (02:42):
I think we're going to move up higher. I think
if you look at the technicals on the charts, most
most components indities have not hit anywhere near their fifty
two week highs yet if you look fundamentally, earnings on
balance are coming in better than expected. If you look
at this we talked about this last time.
Speaker 6 (03:00):
Reduced expectations though for those earnings right coming into the cycle.
Speaker 9 (03:04):
That's right, that's exactly right.
Speaker 10 (03:05):
But what's really pushing thrusting this market forward is there's
twenty two trillion dollars globally have cash currencies and money
market funds waiting around, and every time we get the
proverbial sell offs of any magnitude on any semblance of hope,
let alone fundamentals, the market gets flooded with capital. That
really started back in two thousand and nine saving US
(03:26):
from the Great Financial Crisis. It was only accelerated by
money printed fiscally monetarily from saving US from COVID. And
so the world is flush with cash, and every time
Acid sell off, the cash flows right back into the
global financial system, mostly in the form of stocks.
Speaker 9 (03:42):
So I'm having a hard time understanding what changed between
Liberation Day and now, or so called liberation Day, because
the tariffs for all intents and purposes are set to
going to effect on August first. We've had some folks
on our air today like Geno Martin Atoms of Bloomberg Intelligence,
who Alan says, well, the market's not necessarily pricing in
(04:06):
tariffs at this rate for a long period of time.
Do you agree with that.
Speaker 10 (04:13):
I have a different thesis slightly, which is tariff surprised
in at an effective rate of below fifteen percent, which glide,
which means, albeit it's not ideal, it's tolerable and it
might reduce a bit global economic growth, but it doesn't
put the globe into an economic recession. Thirty percent tariffs
(04:35):
are catastrophically bad and would create an economic global recession
of some significance. The other thing that's changed is the
recognition of just how powerful all of these technological advances
are for the growth of profits. It's not just AI
that's a buzzword, but just the rampant use of technology
(04:56):
across all forms of business, catapulting productivity, profit margins, and growth.
And because the indices, especially in the US is really
when you look under the cover, forty percent technology or
technology like kind of companies. So when you look at
the indexes going up, that may not be entirely what's
going on in main street America, but it's what's going
(05:18):
on in the US large cap tech overweight stock market
that we watch every day.
Speaker 6 (05:24):
Hey, I am curious whether it bothers you or it
tells you something that's important when we see the Russell
two thousands, so those small caps, and I always think
about what really is the engine of the US economy,
those smaller companies that are out there. It is little
changed on the year, also bounce back from those April lows,
(05:44):
but little changed on the year, call it almost unchanged.
S and P meantime is up about seven and a
quarter percent year to date. Similar bounce back, but certainly outperformance.
Nasdaq one hundred is up more than ten percent. Year
to date, So definitely some opup formants there. What's the
importance or is it even necessary that we see small
(06:05):
caps rally to suggest to you that things are more
optimistic than pessimistic.
Speaker 10 (06:13):
It is, it is important. What's hidden a bit in
that conversation is a challenge that the financial markets are
still grappling with, and that is that when Microsoft went
public in the nineteen eighties, it might have had a
valuation of about one billion dollars or so and grown
into its multi trillion dollar valuation, and when it was
(06:35):
a young company was part of the small cap index. Today,
when prominent companies like SpaceX let alone, a lot of
AI companies have very high valuations if and when they
go public, they may never end up in the small
cap index to begin with. And so part of the
challenge that small cap investors face are we going to
see the same champions, many of which are technologically driven
(06:57):
with faster growth rates, ever making it into the small
cap indices going forward? It is problematic, Carol, because by
definition technology is a smaller component than index. But that's
part of what's taking place.
Speaker 9 (07:08):
But what's also happening over that time, Alan, and I
know you can speak to. This is the growth of
alternative assets and the way that clients of wealth managers
are able to get access to some of these companies
that you named on a pre IPO level. Yeah, they
certainly can.
Speaker 10 (07:24):
However, just like diversification as a way to be protected,
when you have very well document and public disclosures of
financials and you buy into indexes, it's incredibly challenging to
pick the single private company that's going to be the winner.
So for those individuals that hope to speculate and invest
in private companies, make sure there's an ample array of
(07:45):
choices because you don't have much public disclosure about what's
actually happening.
Speaker 9 (07:49):
Do you do it for your clients or do you
hire managers to do it? What do you do both?
Speaker 10 (07:55):
So we have managers that will make investments in private
companies technological evident companies that have nothing to do with technology,
and we have clients where we find private companies. We
get access, but we make sure that we invest proper,
meaning relatively small percentage of someone's networth in each component,
and stayed very diversified. It's impossible to pick the single winner.
Speaker 8 (08:17):
All right, we got a run.
Speaker 9 (08:18):
Not if you have a time machine.
Speaker 8 (08:23):
Are you a toime traveler?
Speaker 9 (08:24):
No, I'm not, but that would you imagine if you were.
I would be the best investor ever you would. That's
all you would need.
Speaker 8 (08:30):
I could just go back in time.
Speaker 9 (08:32):
You could invent Facebook, Carol, I could. You could invent
the Bloomberg terminal.
Speaker 8 (08:35):
I could, well, I don't know about that.
Speaker 9 (08:37):
Yeah, right, all of it? Right, Yeah, you could. That's
all you need.
Speaker 8 (08:41):
We could do it. I just buy up real estate.
Speaker 9 (08:43):
You know you're thinking now, I know, I got the
wheels turning.
Speaker 8 (08:46):
Sorry, just buy a real estate. Hey, Alan, thank you
so much.
Speaker 6 (08:50):
Alan Zaffron, co founder managing partner of IUQ Capital. Out
there in Los Angeles.
Speaker 1 (08:56):
You're listening to the Bloomberg Business Week Daily Podcast. Yes,
catch us live weekday afternoons from two to five East.
During that listen on Apple Karplay and Android Otto with
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Speaker 6 (09:10):
Hey, so many, so many seem to have called it
that the bromance wouldn't last between the billionaire and the president.
The breakup happening after disruptions to the US government under
what some say was the guys of Efficiency and data foraging.
We are of course, talking about Elon musk Key and
his black Eye and Oval Office sendoff and subsequent spat
(09:30):
with President Trump, at the creaking of his empire, and
so much more, all in the cover story of the
upcoming issue of Bloomberg BusinessWeek. It is by Bloomberg's Max
Chafkin and Ed Ludlow. Soon to hit newsstands, it is
already though tim on the Bloomberg and online.
Speaker 9 (09:44):
It's also the subject of today's Bloomberg A Big Take
with More Great to have back with us Bloomberg Business
Week Senior reporter Max Chafkin. He's the Cost of Everybody's
Business and the Elon Inc. Podcast. He's also the author
of the contrarian Peter Teel and Silicon Valleyes Pursuit Power.
He joins us here in the Bloomberg BusinessWeek Studio, you've
spent many years writing about Elon musk You give us
(10:05):
the backdrop, you remind us of his foray into politics,
and then you get into what really matters, certainly to investors,
into what made Elon his empire. How bad is it?
Speaker 4 (10:16):
I mean, it is challenging this guy in the world.
Speaker 3 (10:18):
I think he's the wealthiest guy in the world and
investors to date have essentially allowed him to do whatever
he wants and to do things that most CEOs, most
entrepreneurs would would never be able to essentially get away with.
That said, there are i'd say bigger challenges facing these
(10:42):
companies today than he's experienced in a very long time.
You know, of course, Elon Musk has a history of
sort of flirting with disaster, and you look at the
history of Tesla. There were some very dicey moments in
the two thousand, same thing with SpaceX, but you haven't
had this situation we have today where you have essentially
three companies SpaceX, Tesla, and Xai. I'm going to leave
(11:06):
off this sort of small smaller ones, but those are
there too. And then in the foreground, you have this
potential fight with Donald Trump, and so you know, everyone's
focused on the fight. But those three companies, each in
their own way, have very significant challenges.
Speaker 6 (11:21):
So let's get to it, because you do right, there
are many more weapons President Trump could deploy against Elon
Musk's business interests where he's so motivated.
Speaker 8 (11:28):
So so much as like does he or doesn't, Let's start.
I love the way you guys do this.
Speaker 6 (11:33):
You do basically like these case studies of each of
these three businesses. So let's talk about Tesla. He makes promises,
sometimes it takes longer we have all gone along from
the ride that we eventually get this stuff. And to
be fair, when it comes to ev certainly in the
United States, he moved the needle.
Speaker 3 (11:48):
Yeah, absolutely, And that's what's made i'd say the events
of the last couple of years so surprising because Elon
Musk is attempting this very dramatic pivot away from evs
and towards robotach, which kind of strange because the EV
market is still growing very quickly.
Speaker 4 (12:04):
Tesla, on the other hand, is not growing.
Speaker 3 (12:07):
I mean, their deliveries have been falling for the last
two quarters, had a down year in twenty twenty four.
We'll see what this latest quarter looks like when they
report earnings. But they are selling fewer cars each quarter
than they than they did a year ago. And that
is kind of surprising for a company that is trading
at just this insane multiple, trading at a value that
(12:29):
is way way, way richer than you know, a normal
car company. Now, of course, the reason investors are going
for this, the reason they're you know, continuing to buy
the stock at a relatively high price is because of robotaxis,
this belief that Elon Musk is gonna revolutionize transportation. The
issue is that's been this kind of thing that Musk
(12:50):
was able to point ahead in the future and say, look,
this is going to be great.
Speaker 4 (12:53):
Don't focus on the now, focus on the future. And
we're now we have the now.
Speaker 3 (12:57):
Now, we're now we have some robotaxis on roads and
it's really a very small number. It's something like ten
to twenty robotaxis in a very small part of Austin. Meanwhile,
you got Weimo, and we've talked about this before, but
there is this obvious competitor, Weimo, which has way way
more robotaxis and more markets and is not getting valued
(13:17):
the way that Elon Musk the way that Tesla is
getting valued. So you do wonder, you know, how long
is it before investors start to look at that, and
you know how many quarters of sort of declining deliveries,
declining car sales are they really going to tolerate?
Speaker 9 (13:32):
These companies have sort of always Elon Musk's companies have
always kind of used one another, been shared engineers at
certain points. Now we're getting to appoint Max where Elon
wants more investment from one company to another company, specifically Tesla,
to invest in Xai, which is a challenging thing to
do because Tesla's a public company Xai is not. Shareholders
(13:52):
might not love this idea. Explain the sort of borders
or lack thereof when it comes to this accounting.
Speaker 4 (13:58):
I mean, the thing is.
Speaker 3 (13:59):
From point of view of Tesla investors, and I think
this is true of most of the investors in most
of Elon Musk companies. They're not investing in a particular product,
They're just investing in Elon Musk. And that's one of
the reasons why, you know, even when Musk does something
that seems on its face a little bit foolish or crazy,
for instance, the the on again, off again purchase of
(14:19):
x at a ridiculous you know, overvalued at the time,
investors go along with because they just think, Okay, Elon
Musk wants this, he's a brilliant guy.
Speaker 4 (14:28):
And so you have this thing where the.
Speaker 3 (14:30):
Companies, although they are nominally independent, are sharing resources, sharing management.
Of course, not just Elon Musk, but other folks, you know,
sort of bouncing between them or doing work on the side.
And now even you have Xai, which is desperately trying
to raise money, raising money from Elon Musk's other companies, SpaceX,
according to Elon Musk, putting two billion dollars into Xai,
(14:52):
and then Musk has said he's going to ask Tesla
for money for a year ago he suggested the number
will be five billion, So you're talking about significant amount
of money. Tesla of course, has a lot of cash
at the moment, so it's not like it can't afford it.
But you gotta ask yourself what is the rationale, Like,
what's the business rationale if you're a Tesla investor to
you know, move money from from Tesla to X especially
(15:15):
when X and Tesla are sort of in competition, you know,
they're both AI companies, and so that's an issue. I mean,
what I think it shows is that as much as
these companies, you know, add up to this big empire,
they're interlocking and if one struggles, the others are going
to struggle. If Tesla's value were to decline dramatically, that
(15:36):
would hurt Elon Musk's empire in a big way because
Tesla shares are a big source of his wealth. The
way he finances things, and beyond that, there's this aura
of success that he has used to sort of promote
himself and promote these companies. And as that has i'd say,
come into some question, you know, I think that hurts
some of these other companies.
Speaker 6 (15:54):
So he did post on x that he's back to
working seven days a week, sleeping in his office if
my little kids are away, yay. But I'm just wondering
which part of his empire is the most interested. You
guys talk about Xai that that's what he seems to
be super interested.
Speaker 3 (16:14):
In, right, Yeah, And you get different answers depending on
who you talk to within the empire, because, of course
Tesla also feels like Tesla uh. Employees, board members also
feel like they are in the middle of this really
unique opportunity with robotaxis. But yeah, I mean, Musk has
spent it seems, at least over the last couple of weeks,
a lot of time on with Xai and Grock. Now,
(16:37):
of course Ai chatbots. That's that's an area that a
lot of investors are excited about. On the other hand,
this is a very expensive company to finance. We've Bloomberg
has reported that they're losing a billion dollars a month,
so like that, you know, five billion dollars from Tesla,
that's gonna they're gonna burn through that, you know, pretty quickly.
And and you know, I think I think from the
(16:58):
sort of bull cases, Hey, these large language models are
really expensive to finance, so we need to you know,
put as much into them now catch up to open AI.
Speaker 4 (17:07):
But of course the other side of the coin is like.
Speaker 3 (17:09):
Why, you know, why why does this very successful car
company that's worth a trillion dollars by market cap, you know,
what does it have to do with AI chatbots? I
don't think that the answer is a whole lot.
Speaker 8 (17:20):
Yeah.
Speaker 9 (17:22):
Elon Musk claimed without evidence that President Trump was an
accomplice in the crimes of Jeffrey Epstein and alleged that
the President had covered them up. This was sort of
the nadir in their relationship. I think if we look
back over the last six weeks, is there any recovering
from that, Like, do they get back together, do they
become allies again?
Speaker 4 (17:42):
I think it.
Speaker 3 (17:43):
Is very hard to see. I mean, obviously those are
very serious charges. I mean sort of like the most
serious charges in Republican politics, and it's led to a
news cycle, right that that happened, you know, as their
feud was kicking off at the beginning of June. Now
we're in you know, mid late July, and Republicans are
(18:03):
still talking about Epstein quite a lot. So so yeah,
I mean it's it's been a bad that's a thing
that's going to really throw a wrench in any kind
of you know, potential makeup. Now, I will say Trump
and Musk are both This is going to sound weird,
but they're both kind of forgiving. They both although they
like to cultivate this, both of them, you know, Alpha
(18:24):
image or whatever they have. You know, Trump has done
this where where people have been on the outside and
then they find their way in. Steve Bannon, of course,
famously was very much on the outs. Now he's no
longer on the outs. Musk is the same Musk. You know,
we will get very mad at people and and you know,
find a way to get them back in. So I
wouldn't discount it entirely just because, and I've said this
on on your show before, there are there are reasons
(18:46):
each of them has an interest in being on good
terms with the other. That said, I mean, it is
it has seemed very difficult and you're seeing now and
we get into this in the story, there are lots
of signs if you're looking closely for ways in which
this relationship is hurting Elon Musk today. Now I'm not
just talking about Jared Isaacman, the you know, the person
(19:08):
that Trump originally nominated to head NASA, the Space Agency,
who is close to Elon Musk, who's out now. But
there are lots of little regulatory moves, policy moves, And
just to give you one example, the guy who's going
to run NITZA, you know, at his confirmation hearing I
believe it was last week, suggested that we need to
have more oversight of autonomous vehicles.
Speaker 9 (19:27):
So if you're Elon Musk, you don't want to hear
that when taxes trying to get on the roads.
Speaker 4 (19:32):
Yeah, you absolutely don't.
Speaker 3 (19:33):
And and so or you know Sean Duffy running NASA now,
who's he was, according at least some reporting from inside
the White House, was one of the people who was
really upset about DOGE. So you're seeing these little things
that are potentially troubling if you're Elon Musk, and certainly
cut against the sort of bull thesis around the time
(19:54):
of the election, which was like, these guys are perfectly aligned.
This is going to be amazing. I mean, that's what
sent the stock up to its you know, crazy heights
in mid December, and it's fallen I think last I
looked around thirty three percent since then, as that that
argument has sort of fallen apart.
Speaker 6 (20:11):
It's, you know, as you guys say, you know, you
can't count out Elon ever, But it is curious to
see how this ultimately plays out and whether or not
he becomes a target of the administration potentially. Hey Max,
thank you so much, really appreciate it. Bloomberg BusinessWeek Senior
reporter Max Chafkin, Max and Ed Ludlow writing this story.
Speaker 8 (20:29):
It's an upcoming issue of Bloomberg Business Week.
Speaker 6 (20:32):
It is the cover story already on the Bloomberg and
at Bloomberg dot com.
Speaker 1 (20:36):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay and
Android Auto with the Bloomberg Business app. You can also
listen live on Amazon Alexa from our flagship New York station,
Just Say Alexa Play Bloomberg eleven thirty Well.
Speaker 9 (20:55):
As we talked about last hour, a lot for investors
to make sense of right now when it comes to trade,
questions about the economy. And get this, a chair of
the Federal Reserve under attack, Carol, last week you were out.
I don't know if you.
Speaker 8 (21:08):
I did follow some of this. So they did certainly feel.
Speaker 9 (21:11):
In there was a point last week where it felt like, Okay,
this is different than the other rhetoric.
Speaker 8 (21:16):
The market dip.
Speaker 9 (21:17):
The market dipped, and then the President made comments that said, no,
it's not going to happen, and then the market recovered.
But get this, Just moments ago, I learned that Fox
News reporting that Representative Anna Paulina Luna is referring FED
Chair J Powell to the Department of Justice for criminal charges.
This according to Fox, they cited Representative Luna's letter to
(21:38):
the Department of Justice.
Speaker 8 (21:39):
Gosh, so what do you do if you're a CEO
in this environment?
Speaker 5 (21:42):
Well.
Speaker 9 (21:42):
Rebecca Humkiss is faculty at the London Business School and
at Duke Corporate Executive Education. She's also the author of Survive, Reset, Thrive, Leading,
Breakthrough Growth Strategy and Volatile Time. She joined us not
from the UK today but from South Florida. Professor Humpkiss.
Good to have you back with us. The book was
written obviously before all of this volatility, but it does
(22:04):
seem like for a corporate executive out there, there's probably
there haven't been many times where there's been volatility such
as this. What do you do if you're the CEO
of a Fortune five hundred company, let's say Coca Cola,
and you find out via a post on social media
that you're going to make a change to a product.
Speaker 11 (22:26):
Yeah, we are certainly living in different times. Look, you're
going to struggle to find a CEO to say that
he or she has run their business through certain times.
We've always had an element of uncertainty when it comes
to planning and preparing, but we have a geopolitical regulatory
uncertainty now which is creating a whole different level of
uncertainty which often borderlines on chaos, and chaos has a
(22:48):
cost which we have to factor into, and we might
eventually start to see that pan into into how some
of these companies start performing over the next couple of years.
Speaker 9 (22:55):
Is there a sorry peril go ahead? Is there a
way to measure chaos like some sort of index we
could look at or or something like, look, this is
you know, it's qualitative, it's not necessarily quantitative, but you
say that you be struggled. It's a struggle to find
a CEO who would say that they led through times
that weren't volatile. But I'm just trying to get an
(23:16):
idea if this is a more volatile time than in
the past.
Speaker 11 (23:20):
Well, when we're facing uncertainty, we tend to see three
common responses delusion, paralysis, and chaos. Right, delusion happens where
CEOs say this news isn't going to stick. I've already
made a commitment to my shareholders. I'm just going to
plow ahead. We see proalysis where CEOs say, let's just wait,
let's just wait until after the FED meeting, let's just
(23:40):
wait and tell after the midterm elections, and they delay
any type of decision. And we also see frenzy, where
we sometimes just see things almost thrown at the market hoping.
Speaker 7 (23:49):
That something sticks. All of those have a cost.
Speaker 11 (23:52):
Right delusion you misgrowth opportunities and go for the wrong ones.
Proalysis has both a short term and a long term cost,
and frenzy has significant cost not just on value creation
but to brand confidence that you have both internally and
externally for the market. So it is a bit qualitative,
but we can actually put indicators across all three of those.
And then what I'm watching right now, especially as we
(24:13):
look a course, what's happened the first next six months,
but also I'm looking for the next couple of years.
Speaker 6 (24:18):
So but there's stuff that's going on in the short term,
and I should point out I am looking at a
market that is definitely pulling off its highs of the session.
An S and P that's now just up about eighteen points,
a DAT that's up about sixty seven, and announced TEQ
one hundred that's up about one hundred and forty three.
Speaker 8 (24:34):
I don't know whether it's J. Powell stuff.
Speaker 6 (24:38):
I don't know, but it's in you know, we have
a sensitive market.
Speaker 8 (24:43):
There's chaos, and then there's chaos.
Speaker 6 (24:44):
There's the financial crisis, and then there's you know, what
some would say is a president that could be rather
unpredictable and as predicted, there doesn't seem to be what
some say were the guardrails that were in President Trump's
first term in the White House. So I don't know
(25:05):
what are CEOs doing. I can't tell whether CEOs are
doing things that they're saying publicly and then doing other
things behind closed doors. Help me understand so that we
have maybe a better understanding.
Speaker 11 (25:18):
Well, here's what i'd say, Carol Is, as a CEO,
tell me the story that you want to tell, and
I'll make the data tell that story. Right. If you
are a proponent of the current administration, things look great.
We have relatively low unemployment, we have increasing consumer confidence,
we have steady retail sales and stock markets that record highs.
Speaker 7 (25:35):
Right, so I could.
Speaker 11 (25:36):
Paint a very bullish story. If you're a critic of
the current administration. As a CEO, you're painting a different story.
You're going one layer deeper under all those and saying, actually,
we're not adding any private sector jobs in the economy.
Consumer confidence is still well below it was in Q
four last year. Retail spending is eking up, but largely
fueled by credit. So the challenge we have right now
(25:57):
is the data is telling a story. But it's a
story that you can enter, but in the way that
you want to unfortunately, which is largely change to your
political leanings. So we're seeing lots of different reactions in
the market. CEO is very much so I'm seeing a
lot more proalysis than I would like. And to go
back to our previous conversation, proalysis has a cost both
in this short term but also the mid to the
long term. What we often forget is that growth and
(26:19):
performance are a muscle. It's just like going to the
gym and working out. If as an organization you constantly
delay decisions, investments, new growth opportunities, hiring, and you delay
and delay and delay, you actually you lose that growth
and performance muscle. So even when a bit of confidence
and certainty comes back, you're not going to be able
to do so with the same vigor that you did before.
(26:41):
So again, plysis and waiting too long. If you don't
believe either of these stories, which we're seeing a bit
as well, that's going to have a cost that we're
going to see pan out through the economy. Now all said,
you know, I'm an absolute bull on the American economy
and the American consumer, But as a CEO, it's very
difficult to plan and prepare through the current environment.
Speaker 6 (27:00):
No, it's interesting, it's interesting, you know, And I also
feel like in the first you know term for President Trump,
we had a lot of CEOs parading through the White House.
Speaker 8 (27:09):
I think there are some that have also.
Speaker 6 (27:11):
Made their way, but it does seem to be a
lot more cautious, and I always get a little nervous
about whether or not that is indeed.
Speaker 8 (27:17):
I mean, the.
Speaker 6 (27:18):
CEOs that you talk to, are they able to access
the White House if they need to and make their
needs known.
Speaker 11 (27:26):
You know, it's very circumstantial, Carol, depending on the individual's
CEO or the company. What we are seeing right now,
and we solid in the Q two earnings, and we're
going to see a bunch more as they come out
this week, is a lot of for lack of a
better word, pandering, you know, CEOs mentioning the criticality of
US jobs, the criticality of US capacity, and how much
that mattered. We're seeing a little bit less action right
(27:50):
so CEOs are making sure the administration knows that they're listening,
they are paying attention. They share some of these and
greed values about what we want to do for the
American economy.
Speaker 7 (27:59):
Not all of that is being backed up by action.
Speaker 11 (28:01):
Look, this is an administration you can get access to,
which is probably a credit to the administration. However, you
may or may not be aligned with the current way
they're trying to approach some of these very real issues.
Right now, we speak a lot about, oh, it's just
short term, it's viral to over the.
Speaker 7 (28:17):
Mintern it'll all pan out.
Speaker 11 (28:18):
That might be okay if you're one of the largest
one hundred companies in the US, but when you're one
of the tens of thousands small to medium sized businesses
that employ the substantial size of the American workforce, you
not only don't have that access, you don't have that
ability to weather storms that might happen. And we need
to think about those organizations as well when we have
these conversations.
Speaker 9 (28:37):
Can you afford not to get in line behind this
administration if you're the CEO of a puply traded company.
Speaker 11 (28:43):
So far, we are seeing no ceo really stepping out
and taking that and that's paybe a surprise, right to
some folks, especially on the left, who did expect a
couple of CEOs to stand up and make big brand
promises against the administration. We're seeing most CEOs sit on
the sidelines, just as we're seeing a lot of decisions
sit on the sidelines. You could say that surprising, but
this is also an administration that does come down against
(29:05):
those who speaks out about their views. So I expect
we see a little bit more of that. Can you
afford to maybe quietly, but loudly and vocally. We don't
have too many examples of that working out very well
so far.
Speaker 9 (29:16):
All right?
Speaker 6 (29:16):
Can I leave it on that note, Rebecca, Good to
touch base with you once again.
Speaker 8 (29:19):
Rebecca Humkiss.
Speaker 6 (29:20):
She's faculty at the London Business School and at Due
Corporate Executive Education. She's also the author of Survive, Reset, Thrive,
Leading breakthrough Growth Strategy.
Speaker 8 (29:29):
In Volatile Times. She's been joining us set today from
the UK.
Speaker 1 (29:33):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five these during
the listen on Applecarplay and Android Atto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 9 (29:47):
Verizon is the best performer in the S and P
five hundred as we speak, up about four and a
half percent born and a half percent.
Speaker 8 (29:54):
Yeah, not too shabby.
Speaker 9 (29:55):
No, it was higher earlier in the session, guys, let's
hear it, Carol, I don't know five and a half percent.
Speaker 8 (30:02):
Thank you, You're welcome a little bit higher, all.
Speaker 9 (30:04):
Right, it's going to be one of your gainers today
would be a good one.
Speaker 8 (30:06):
It is indeed.
Speaker 9 (30:07):
Okay, Well, the company posted second quarter revenue that surpassed
analyst estimates. It raised its profit out look. It was
booed by wireless price increases in recent tax legislation. Here's
CEO Hans Wesberg earlier today on Bloomberg TV with Shanali
Bassek and Katie Greifeld, speaking about the effect of Trump's
tax and spending package.
Speaker 5 (30:24):
When it comes to the bill that was passed, I
mean there was one piece that is very important for Riyson.
That's of course the depreciation we can do directly on
our capital investment that have this year an impact of
one and a half billion, two billion dollars on a
free cash flow. So it's significant together with our operation
or cash from operation that is improving. That's why we
(30:46):
increased our guidance with the almost two billion in the
quarter compared to the financial guidance we had from the
beginning of the year. So that's one piece of the bill.
Now the piece of the bill is of course that
the government wants to watch an out spectrum again. Verison
is great positional spectrum today, but you know, over the
time as we as a country want to be the
most digitalized country in the world, where spectrum needs to
(31:09):
come out for six G and other technologies going forward,
so we encourage we're very encouraged to see that as well.
It's going to take the time before that spectrum comes
out for auction, but it's good that the government are
thinking long term in this area.
Speaker 12 (31:22):
On tax impacts in particular. You know, your earnings are
perhaps the more obvious first set of glaring results that
show you a benefit immediately. But is this kind of
a one time benefit or do you see some sort
of ripple effect that comes out of that big beautiful
bill for you and maybe even the rest of corporate America.
Speaker 7 (31:41):
Frankly, so, the.
Speaker 5 (31:43):
Tax benefit has not impacted or financials yet. That's going
to be in the second half and then going into
next year because it's a perpetual sort of benefit will
have so that will continue. So but I think for us,
we are very disciplined for our capital. We'll already increased
our capital for twenty twenty five compared to twenty twenty four.
Now we have our frontier acquisition pending. We're waiting for
(32:06):
the lost approvals here. When that comes in. Of course,
we're going to make a holistic view how we're going
to do capital allocation going forward, but always we put
first priority in the business. Number two, we have increased
our dividend eighteen consecutive years, and we're going to put
our board in a position to do that. And then
we paint our debt to get our leverage right too.
And after that, including Frontier, we're also going to come
(32:28):
to buybacks. We're going to package that in the next
couple of months and talk to the market how we
see about capital location and the benefits of incorporating a
frontier when that's approved.
Speaker 9 (32:39):
That was Verizon CEO Hans Wesberg earlier today on Bloomberg Television.
I want to bring in Kelsey Griffis, Bloomberg News telecom reporter.
She follows the space and the company closely. She joins
us from our Washington, DC bureau. Kelsey, there was this
moment during at least that clip that Carol and I
both went and it has to do with spectrum and
the idea of spectrum and how on VESPERG talked a
(33:00):
little bit about being interested in buying more spectrum for
the company's network. Can you kind of explain how this
stuff works.
Speaker 2 (33:10):
Sure things. So, spectrum is a big deal here in Washington.
In the Big Beautiful Bill, the Congress decided to allocate
eight hundred megahertz of spectrum for auction or repurposing. And
in the wireless space, that's a huge deal. Spectrum licenses
(33:30):
cost millions and millions of dollars, and they actually add
to the portfolio of infrastructure that the mobile carriers can build.
It offers this bigger runway to allow more customers and
more data on the network. And so that's why that's
sort of this lifeblood that keeps the industry moving forward.
Now we just hear vesperg say that Verizon has a
(33:54):
pretty good spectrum portfolio right now, so he's not necessarily
worried about the next year or even the next five years.
I think think having Congress thinking about and kind of
planning for the future spectrum needs gives them that runway
in a bit of assurance that they will be able
to grow in the coming years.
Speaker 9 (34:10):
Is it a finite resource. It is.
Speaker 2 (34:13):
It is a electromagnetic engineering principle. We can only have
so much data on the airwaves, only so many users
can be on them at one time, and it's the
same principle that constrains the TV airwaves or the TV
channels that you're able to pick up.
Speaker 9 (34:30):
So does it get to a point where we are
looking for so much data that there's not enough spectrum
to accommodate what we need.
Speaker 2 (34:39):
I've asked many engineers and telecom experts about this over
the years, and everyone has assured me that we're not
coming up into a spectrum crunch yet. As technology advances,
they've found ways to get more data on higher spectrum bands,
so we're able to use the resources that we have
more efficiently. But you know, who's to say, maybe there
(35:02):
is a day when we start to run out. So far,
I haven't heard that from the experts.
Speaker 9 (35:08):
Well I do. I do have an anecdote that I've
been thinking about that maybe I could ask cons Vestberg
about Chelsea. But here in New York. I know this
is not an issue for you because you live in DC.
But here in New York there's no service between stations
for cell phones. But once you get to a station,
there is service. And one thing that I've found is
that over the last few months, or maybe for the
last yeah, over the last few months, during rush hour.
(35:31):
You can't really use your phone in these stations anymore.
And I'm wondering if it's because we are using more
and more data as consumers that these networks when they're crowded,
are just completely overcrowded. And it seems to be like
when we get, you know, more advanced phones, when we
do more with our phones, we're just using more and
more data.
Speaker 4 (35:49):
Are trying to.
Speaker 6 (35:50):
Play wordle on the way home and we can't because
we can't get it on the phone.
Speaker 9 (35:55):
Yeah, is there some truth to that.
Speaker 8 (35:57):
Yeah, that's exactly right.
Speaker 2 (35:58):
You know, like you're saying, these networks are finite resources
and there's only so much data that you can kind
of cram through the pipe. So these carriers are trying
to add more spectrum bands to their network to kind
of open.
Speaker 4 (36:11):
Up those lanes a bit.
Speaker 2 (36:13):
They can also do some things locally, like adding more
five G small cells, adding receptors underground to make those
signals kind of travel through the concrete a little bit
more easily. But yeah, there's a lot of things that
they can do to kind of relieve the pressure on
the networks as that builds, And I think that's what
you're seeing.
Speaker 8 (36:29):
But do we at some point max out.
Speaker 6 (36:31):
Is that the possibility or is that the question that
again you say nobody.
Speaker 9 (36:35):
She asks, and again why she says, no.
Speaker 6 (36:38):
Timonize to do here, like, so, wait, is there a
point where we're gonna get in.
Speaker 9 (36:41):
The face with spectrum, Caroll, and we'll be okay and
go back to portlines.
Speaker 2 (36:45):
It's really funny because when you talk to some of
these spectrum experts, I mean you talk to people who've
worked at the Federal Communications Commission for a long time.
There are slices of the airwaves that used to be
considered junk bands, and now they're bringing in millions, even billions.
Speaker 8 (37:00):
Of dollars for these licenses.
Speaker 2 (37:02):
So as technology marches on our use of the airwaves,
can you know, get more efficient? But it also means
that we can bring really valuable spectrum licenses to market.
So we might be seeing that what you know, as
the technology advances.
Speaker 8 (37:17):
Well, just one more question on this, Kelsey.
Speaker 6 (37:19):
So I just think about those that don't still have
access right the underdeveloped parts of the country, where the
infrastructure maybe isn't there in terms of spectrum or service.
Do they constantly get squeezed out because of the DNSE areas.
Speaker 2 (37:35):
That just really need it. Yeah, so you raise a
really good point. Spectrum exists, you know, above our heads.
You just have to have the technology available to sort
of capture it.
Speaker 8 (37:48):
And make use of it.
Speaker 2 (37:49):
And in these urban areas, obviously, usage is really dense.
And so that's why it takes this like really big
network investment and to create the infrastructure. Let's you get
that benefit of the spectrum. In rural areas, there's maybe
less of a case for investment in that infrastructure that
would allow residents in that area to make use of
(38:11):
the spectrum that's already over their heads. So I think
that's kind of where the tension is there. Companies need
that incentive to build the macro towers and to build
the five G small cells that will let people have
that access.
Speaker 9 (38:26):
You know, I am wondering why shares are hire even
after the company saw a net loss of fifty one
thousand monthly consumer wireless phone subscribers. Analysts, we're calling for
twelve thousand in terms of a net gain. What happened here?
Speaker 2 (38:40):
Yeah, We're seeing a really interesting dynamic here. You know,
I think that the company for a long time has
been encouraging us to not only look at subscriber numbers,
but to look at their overall growth. We saw growth
in the broadband sector where Verizon is not only becoming
your mobile phone provider, they're increasingly becoming your home internet
(39:02):
provider as well, and that's become a big bright spot
for them. We see them gearing up to invest in
more infrastructure, like we were just talking about. So I
think they're trying to kind of steer us away from
looking at that one single metric of how many consumers
they gained or lost in any one quarter. I think
we're seeing the market maybe responding to this longer term
(39:25):
picture that Verizon has been, you know, trying to kind
of sell us on.
Speaker 6 (39:29):
Where does Verizon kind of stack up against, you know,
its competitors, its peers.
Speaker 2 (39:35):
Yeah, so Verizon is the biggest mobile customer. I guess
it has the most mobile customers, followed by T Mobile
and then AT and T, and each of these companies
has sort of their their own personalities, you know. I
think Verizon is seeing as sort of this like slow
and steady giant. They talk a lot about discipline, growth
(39:56):
and really wanting to make sure that they keep pace
and are competitive, but they're making these really smart investments.
Of course, the same can be said for all for
the other peers as well. But I think AT and
T has made a really big fiber bet. They talk
a lot about convergence and you know, doing these bundled
offerings to give you home internet streaming services and also
(40:21):
your mobile phone service. And then for T Mobile, I
think we see them as this big, splashy, you know,
company that's great with marketing campaigns, great with bringing celebrity
talent in. So you know, I think they each play
well in this space and kind of have their strength.
So that's what we're seeing from Verizon.
Speaker 9 (40:40):
All right, just thirty seconds or twenty seconds here the
acquisition of Frontier. What's it going to do?
Speaker 11 (40:46):
So?
Speaker 2 (40:47):
In short, this would expand Verizon's ability to reach home
internet customers with direct wired connections. That means fast service,
that means no latency or virtually none, and that means
you won't have to rely on your phone's five G
signal to try to stream Netflix.
Speaker 4 (41:07):
Interesting stuff.
Speaker 6 (41:08):
Well, investors definitely taking note of Verizon on this Monday.
As you mentioned, it's the number one gainer in the
S and P five hundred. It's up about four and
a half percent as we speak, so investors definitely moving
into that one.
Speaker 8 (41:20):
Kelsey. Thanks Kelsey Griffiths.
Speaker 6 (41:22):
She is telecom reporter at Bloomberg News, joining us from
our bureau in the nation's capital.
Speaker 1 (41:28):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(41:49):
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stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 2 (00:32):
Bloommarcle, how about you let me drive?
Speaker 3 (00:36):
No, no, no no, this is not a toy.
Speaker 4 (00:40):
Honey, please.
Speaker 5 (00:43):
Listen.
Speaker 6 (00:44):
I want to drive.
Speaker 7 (00:44):
It's good question.
Speaker 6 (00:51):
This is the Drive to the clothes on Bloomberg Radio.
All right, TikTok, everybody. We've got about eight minutes to
go until we wrap up the trade on this Monday,
July twenty first, Carol mass or Tim Stanovik live in
our Bloomberg Interactive Brokers studio. And Tim, we're definitely well
off our best levels of the session, still above sixty
three hundred on the S and P five hundred, but
(01:13):
we're only up about seventeen points Nasdaq one hundred again
of one hundred and forty five points twenty three thousand
and two eleven.
Speaker 8 (01:21):
I like to do percentages. Let me go there.
Speaker 6 (01:22):
Up about three tons of a percent on the S
and P five hundred, up six tens of a percent
on the Nasdaq one hundred, and little change in terms
of a percentage for the Dow Jones industrial avatars. Just
checking check our records, I think we're back on what
July seventeenth, oh sixty two, ninety seven thirty six was
the closer for the S and P.
Speaker 9 (01:40):
Here we are right now. We're fine. It's a record.
We're set for a record close at this point, and.
Speaker 8 (01:45):
Same thing easily right for the NASDEK one hundred.
Speaker 9 (01:50):
Sorry, I'll take your word for it. I only have
the I only have the S and P five hundred
pulled up on my terminal herd. All right, well, I
trust you. Carol. Hey, I want to bring in Alan Zafrind.
He is the co found and managing partner of at
I EQ Capital. He joins us this afternoon, not from
northern California, but from southern California in sunny Los Angeles. Alan,
good to have you, as always. The S and P
(02:11):
five hundred up twenty six point seven percent from those
lows in the early part of April. Is the bullmarket
back on.
Speaker 10 (02:21):
Tim and Carroll, Thanks for having me on. Yes, the
bullmarket is back on, and I can give you a
couple of reasons why. But it appears as if fundamentally
and technically things, barring modest corrections, seem as if everything
every indication is we will continue ok our way gradually
higher over time.
Speaker 8 (02:39):
Wait say that again. That was quick. Wait say that
when we're time.
Speaker 10 (02:42):
I think we're going to move up higher. I think
if you look at the technicals on the charts, most
most components indities have not hit anywhere near their fifty
two week highs yet if you look fundamentally, earnings on
balance are coming in better than expected. If you look
at this we talked about this last time.
Speaker 6 (03:00):
Reduced expectations though for those earnings right coming into the cycle.
Speaker 9 (03:04):
That's right, that's exactly right.
Speaker 10 (03:05):
But what's really pushing thrusting this market forward is there's
twenty two trillion dollars globally have cash currencies and money
market funds waiting around, and every time we get the
proverbial sell offs of any magnitude on any semblance of hope,
let alone fundamentals, the market gets flooded with capital. That
really started back in two thousand and nine saving US
(03:26):
from the Great Financial Crisis. It was only accelerated by
money printed fiscally monetarily from saving US from COVID. And
so the world is flush with cash, and every time
Acid sell off, the cash flows right back into the
global financial system, mostly in the form of stocks.
Speaker 9 (03:42):
So I'm having a hard time understanding what changed between
Liberation Day and now, or so called liberation Day, because
the tariffs for all intents and purposes are set to
going to effect on August first. We've had some folks
on our air today like Geno Martin Atoms of Bloomberg Intelligence,
who Alan says, well, the market's not necessarily pricing in
(04:06):
tariffs at this rate for a long period of time.
Do you agree with that.
Speaker 10 (04:13):
I have a different thesis slightly, which is tariff surprised
in at an effective rate of below fifteen percent, which glide,
which means, albeit it's not ideal, it's tolerable and it
might reduce a bit global economic growth, but it doesn't
put the globe into an economic recession. Thirty percent tariffs
(04:35):
are catastrophically bad and would create an economic global recession
of some significance. The other thing that's changed is the
recognition of just how powerful all of these technological advances
are for the growth of profits. It's not just AI
that's a buzzword, but just the rampant use of technology
(04:56):
across all forms of business, catapulting productivity, profit margins, and growth.
And because the indices, especially in the US is really
when you look under the cover, forty percent technology or
technology like kind of companies. So when you look at
the indexes going up, that may not be entirely what's
going on in main street America, but it's what's going
(05:18):
on in the US large cap tech overweight stock market
that we watch every day.
Speaker 6 (05:24):
Hey, I am curious whether it bothers you or it
tells you something that's important when we see the Russell
two thousands, so those small caps, and I always think
about what really is the engine of the US economy,
those smaller companies that are out there. It is little
changed on the year, also bounce back from those April lows,
(05:44):
but little changed on the year, call it almost unchanged.
S and P meantime is up about seven and a
quarter percent year to date. Similar bounce back, but certainly outperformance.
Nasdaq one hundred is up more than ten percent. Year
to date, So definitely some opup formants there. What's the
importance or is it even necessary that we see small
(06:05):
caps rally to suggest to you that things are more
optimistic than pessimistic.
Speaker 10 (06:13):
It is, it is important. What's hidden a bit in
that conversation is a challenge that the financial markets are
still grappling with, and that is that when Microsoft went
public in the nineteen eighties, it might have had a
valuation of about one billion dollars or so and grown
into its multi trillion dollar valuation, and when it was
(06:35):
a young company was part of the small cap index. Today,
when prominent companies like SpaceX let alone, a lot of
AI companies have very high valuations if and when they
go public, they may never end up in the small
cap index to begin with. And so part of the
challenge that small cap investors face are we going to
see the same champions, many of which are technologically driven
(06:57):
with faster growth rates, ever making it into the small
cap indices going forward? It is problematic, Carol, because by
definition technology is a smaller component than index. But that's
part of what's taking place.
Speaker 9 (07:08):
But what's also happening over that time, Alan, and I
know you can speak to. This is the growth of
alternative assets and the way that clients of wealth managers
are able to get access to some of these companies
that you named on a pre IPO level. Yeah, they
certainly can.
Speaker 10 (07:24):
However, just like diversification as a way to be protected,
when you have very well document and public disclosures of
financials and you buy into indexes, it's incredibly challenging to
pick the single private company that's going to be the winner.
So for those individuals that hope to speculate and invest
in private companies, make sure there's an ample array of
(07:45):
choices because you don't have much public disclosure about what's
actually happening.
Speaker 9 (07:49):
Do you do it for your clients or do you
hire managers to do it? What do you do both?
Speaker 10 (07:55):
So we have managers that will make investments in private
companies technological evident companies that have nothing to do with technology,
and we have clients where we find private companies. We
get access, but we make sure that we invest proper,
meaning relatively small percentage of someone's networth in each component,
and stayed very diversified. It's impossible to pick the single winner.
Speaker 8 (08:17):
All right, we got a run.
Speaker 9 (08:18):
Not if you have a time machine.
Speaker 8 (08:23):
Are you a toime traveler?
Speaker 9 (08:24):
No, I'm not, but that would you imagine if you were.
I would be the best investor ever you would. That's
all you would need.
Speaker 8 (08:30):
I could just go back in time.
Speaker 9 (08:32):
You could invent Facebook, Carol, I could. You could invent
the Bloomberg terminal.
Speaker 8 (08:35):
I could, well, I don't know about that.
Speaker 9 (08:37):
Yeah, right, all of it? Right, Yeah, you could. That's
all you need.
Speaker 8 (08:41):
We could do it. I just buy up real estate.
Speaker 9 (08:43):
You know you're thinking now, I know, I got the
wheels turning.
Speaker 8 (08:46):
Sorry, just buy a real estate. Hey, Alan, thank you
so much.
Speaker 6 (08:50):
Alan Zaffron, co founder managing partner of IUQ Capital. Out
there in Los Angeles.
Speaker 1 (08:56):
You're listening to the Bloomberg Business Week Daily Podcast. Yes,
catch us live weekday afternoons from two to five East.
During that listen on Apple Karplay and Android Otto with
the Bloomberg Business app, or watch us live on YouTube.
Speaker 6 (09:10):
Hey, so many, so many seem to have called it
that the bromance wouldn't last between the billionaire and the president.
The breakup happening after disruptions to the US government under
what some say was the guys of Efficiency and data foraging.
We are of course, talking about Elon musk Key and
his black Eye and Oval Office sendoff and subsequent spat
(09:30):
with President Trump, at the creaking of his empire, and
so much more, all in the cover story of the
upcoming issue of Bloomberg BusinessWeek. It is by Bloomberg's Max
Chafkin and Ed Ludlow. Soon to hit newsstands, it is
already though tim on the Bloomberg and online.
Speaker 9 (09:44):
It's also the subject of today's Bloomberg A Big Take
with More Great to have back with us Bloomberg Business
Week Senior reporter Max Chafkin. He's the Cost of Everybody's
Business and the Elon Inc. Podcast. He's also the author
of the contrarian Peter Teel and Silicon Valleyes Pursuit Power.
He joins us here in the Bloomberg BusinessWeek Studio, you've
spent many years writing about Elon musk You give us
(10:05):
the backdrop, you remind us of his foray into politics,
and then you get into what really matters, certainly to investors,
into what made Elon his empire. How bad is it?
Speaker 4 (10:16):
I mean, it is challenging this guy in the world.
Speaker 3 (10:18):
I think he's the wealthiest guy in the world and
investors to date have essentially allowed him to do whatever
he wants and to do things that most CEOs, most
entrepreneurs would would never be able to essentially get away with.
That said, there are i'd say bigger challenges facing these
(10:42):
companies today than he's experienced in a very long time.
You know, of course, Elon Musk has a history of
sort of flirting with disaster, and you look at the
history of Tesla. There were some very dicey moments in
the two thousand, same thing with SpaceX, but you haven't
had this situation we have today where you have essentially
three companies SpaceX, Tesla, and Xai. I'm going to leave
(11:06):
off this sort of small smaller ones, but those are
there too. And then in the foreground, you have this
potential fight with Donald Trump, and so you know, everyone's
focused on the fight. But those three companies, each in
their own way, have very significant challenges.
Speaker 6 (11:21):
So let's get to it, because you do right, there
are many more weapons President Trump could deploy against Elon
Musk's business interests where he's so motivated.
Speaker 8 (11:28):
So so much as like does he or doesn't, Let's start.
I love the way you guys do this.
Speaker 6 (11:33):
You do basically like these case studies of each of
these three businesses. So let's talk about Tesla. He makes promises,
sometimes it takes longer we have all gone along from
the ride that we eventually get this stuff. And to
be fair, when it comes to ev certainly in the
United States, he moved the needle.
Speaker 3 (11:48):
Yeah, absolutely, And that's what's made i'd say the events
of the last couple of years so surprising because Elon
Musk is attempting this very dramatic pivot away from evs
and towards robotach, which kind of strange because the EV
market is still growing very quickly.
Speaker 4 (12:04):
Tesla, on the other hand, is not growing.
Speaker 3 (12:07):
I mean, their deliveries have been falling for the last
two quarters, had a down year in twenty twenty four.
We'll see what this latest quarter looks like when they
report earnings. But they are selling fewer cars each quarter
than they than they did a year ago. And that
is kind of surprising for a company that is trading
at just this insane multiple, trading at a value that
(12:29):
is way way, way richer than you know, a normal
car company. Now, of course, the reason investors are going
for this, the reason they're you know, continuing to buy
the stock at a relatively high price is because of robotaxis,
this belief that Elon Musk is gonna revolutionize transportation. The
issue is that's been this kind of thing that Musk
(12:50):
was able to point ahead in the future and say, look,
this is going to be great.
Speaker 4 (12:53):
Don't focus on the now, focus on the future. And
we're now we have the now.
Speaker 3 (12:57):
Now, we're now we have some robotaxis on roads and
it's really a very small number. It's something like ten
to twenty robotaxis in a very small part of Austin. Meanwhile,
you got Weimo, and we've talked about this before, but
there is this obvious competitor, Weimo, which has way way
more robotaxis and more markets and is not getting valued
(13:17):
the way that Elon Musk the way that Tesla is
getting valued. So you do wonder, you know, how long
is it before investors start to look at that, and
you know how many quarters of sort of declining deliveries,
declining car sales are they really going to tolerate?
Speaker 9 (13:32):
These companies have sort of always Elon Musk's companies have
always kind of used one another, been shared engineers at
certain points. Now we're getting to appoint Max where Elon
wants more investment from one company to another company, specifically Tesla,
to invest in Xai, which is a challenging thing to
do because Tesla's a public company Xai is not. Shareholders
(13:52):
might not love this idea. Explain the sort of borders
or lack thereof when it comes to this accounting.
Speaker 4 (13:58):
I mean, the thing is.
Speaker 3 (13:59):
From point of view of Tesla investors, and I think
this is true of most of the investors in most
of Elon Musk companies. They're not investing in a particular product,
They're just investing in Elon Musk. And that's one of
the reasons why, you know, even when Musk does something
that seems on its face a little bit foolish or crazy,
for instance, the the on again, off again purchase of
(14:19):
x at a ridiculous you know, overvalued at the time,
investors go along with because they just think, Okay, Elon
Musk wants this, he's a brilliant guy.
Speaker 4 (14:28):
And so you have this thing where the.
Speaker 3 (14:30):
Companies, although they are nominally independent, are sharing resources, sharing management.
Of course, not just Elon Musk, but other folks, you know,
sort of bouncing between them or doing work on the side.
And now even you have Xai, which is desperately trying
to raise money, raising money from Elon Musk's other companies, SpaceX,
according to Elon Musk, putting two billion dollars into Xai,
(14:52):
and then Musk has said he's going to ask Tesla
for money for a year ago he suggested the number
will be five billion, So you're talking about significant amount
of money. Tesla of course, has a lot of cash
at the moment, so it's not like it can't afford it.
But you gotta ask yourself what is the rationale, Like,
what's the business rationale if you're a Tesla investor to
you know, move money from from Tesla to X especially
(15:15):
when X and Tesla are sort of in competition, you know,
they're both AI companies, and so that's an issue. I mean,
what I think it shows is that as much as
these companies, you know, add up to this big empire,
they're interlocking and if one struggles, the others are going
to struggle. If Tesla's value were to decline dramatically, that
(15:36):
would hurt Elon Musk's empire in a big way because
Tesla shares are a big source of his wealth. The
way he finances things, and beyond that, there's this aura
of success that he has used to sort of promote
himself and promote these companies. And as that has i'd say,
come into some question, you know, I think that hurts
some of these other companies.
Speaker 6 (15:54):
So he did post on x that he's back to
working seven days a week, sleeping in his office if
my little kids are away, yay. But I'm just wondering
which part of his empire is the most interested. You
guys talk about Xai that that's what he seems to
be super interested.
Speaker 3 (16:14):
In, right, Yeah, And you get different answers depending on
who you talk to within the empire, because, of course
Tesla also feels like Tesla uh. Employees, board members also
feel like they are in the middle of this really
unique opportunity with robotaxis. But yeah, I mean, Musk has
spent it seems, at least over the last couple of weeks,
a lot of time on with Xai and Grock. Now,
(16:37):
of course Ai chatbots. That's that's an area that a
lot of investors are excited about. On the other hand,
this is a very expensive company to finance. We've Bloomberg
has reported that they're losing a billion dollars a month,
so like that, you know, five billion dollars from Tesla,
that's gonna they're gonna burn through that, you know, pretty quickly.
And and you know, I think I think from the
(16:58):
sort of bull cases, Hey, these large language models are
really expensive to finance, so we need to you know,
put as much into them now catch up to open AI.
Speaker 4 (17:07):
But of course the other side of the coin is like.
Speaker 3 (17:09):
Why, you know, why why does this very successful car
company that's worth a trillion dollars by market cap, you know,
what does it have to do with AI chatbots? I
don't think that the answer is a whole lot.
Speaker 8 (17:20):
Yeah.
Speaker 9 (17:22):
Elon Musk claimed without evidence that President Trump was an
accomplice in the crimes of Jeffrey Epstein and alleged that
the President had covered them up. This was sort of
the nadir in their relationship. I think if we look
back over the last six weeks, is there any recovering
from that, Like, do they get back together, do they
become allies again?
Speaker 4 (17:42):
I think it.
Speaker 3 (17:43):
Is very hard to see. I mean, obviously those are
very serious charges. I mean sort of like the most
serious charges in Republican politics, and it's led to a
news cycle, right that that happened, you know, as their
feud was kicking off at the beginning of June. Now
we're in you know, mid late July, and Republicans are
(18:03):
still talking about Epstein quite a lot. So so yeah,
I mean it's it's been a bad that's a thing
that's going to really throw a wrench in any kind
of you know, potential makeup. Now, I will say Trump
and Musk are both This is going to sound weird,
but they're both kind of forgiving. They both although they
like to cultivate this, both of them, you know, Alpha
(18:24):
image or whatever they have. You know, Trump has done
this where where people have been on the outside and
then they find their way in. Steve Bannon, of course,
famously was very much on the outs. Now he's no
longer on the outs. Musk is the same Musk. You know,
we will get very mad at people and and you know,
find a way to get them back in. So I
wouldn't discount it entirely just because, and I've said this
on on your show before, there are there are reasons
(18:46):
each of them has an interest in being on good
terms with the other. That said, I mean, it is
it has seemed very difficult and you're seeing now and
we get into this in the story, there are lots
of signs if you're looking closely for ways in which
this relationship is hurting Elon Musk today. Now I'm not
just talking about Jared Isaacman, the you know, the person
(19:08):
that Trump originally nominated to head NASA, the Space Agency,
who is close to Elon Musk, who's out now. But
there are lots of little regulatory moves, policy moves, And
just to give you one example, the guy who's going
to run NITZA, you know, at his confirmation hearing I
believe it was last week, suggested that we need to
have more oversight of autonomous vehicles.
Speaker 9 (19:27):
So if you're Elon Musk, you don't want to hear
that when taxes trying to get on the roads.
Speaker 4 (19:32):
Yeah, you absolutely don't.
Speaker 3 (19:33):
And and so or you know Sean Duffy running NASA now,
who's he was, according at least some reporting from inside
the White House, was one of the people who was
really upset about DOGE. So you're seeing these little things
that are potentially troubling if you're Elon Musk, and certainly
cut against the sort of bull thesis around the time
(19:54):
of the election, which was like, these guys are perfectly aligned.
This is going to be amazing. I mean, that's what
sent the stock up to its you know, crazy heights
in mid December, and it's fallen I think last I
looked around thirty three percent since then, as that that
argument has sort of fallen apart.
Speaker 6 (20:11):
It's, you know, as you guys say, you know, you
can't count out Elon ever, But it is curious to
see how this ultimately plays out and whether or not
he becomes a target of the administration potentially. Hey Max,
thank you so much, really appreciate it. Bloomberg BusinessWeek Senior
reporter Max Chafkin, Max and Ed Ludlow writing this story.
Speaker 8 (20:29):
It's an upcoming issue of Bloomberg Business Week.
Speaker 6 (20:32):
It is the cover story already on the Bloomberg and
at Bloomberg dot com.
Speaker 1 (20:36):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay and
Android Auto with the Bloomberg Business app. You can also
listen live on Amazon Alexa from our flagship New York station,
Just Say Alexa Play Bloomberg eleven thirty Well.
Speaker 9 (20:55):
As we talked about last hour, a lot for investors
to make sense of right now when it comes to trade,
questions about the economy. And get this, a chair of
the Federal Reserve under attack, Carol, last week you were out.
I don't know if you.
Speaker 8 (21:08):
I did follow some of this. So they did certainly feel.
Speaker 9 (21:11):
In there was a point last week where it felt like, Okay,
this is different than the other rhetoric.
Speaker 8 (21:16):
The market dip.
Speaker 9 (21:17):
The market dipped, and then the President made comments that said, no,
it's not going to happen, and then the market recovered.
But get this, Just moments ago, I learned that Fox
News reporting that Representative Anna Paulina Luna is referring FED
Chair J Powell to the Department of Justice for criminal charges.
This according to Fox, they cited Representative Luna's letter to
(21:38):
the Department of Justice.
Speaker 8 (21:39):
Gosh, so what do you do if you're a CEO
in this environment?
Speaker 5 (21:42):
Well.
Speaker 9 (21:42):
Rebecca Humkiss is faculty at the London Business School and
at Duke Corporate Executive Education. She's also the author of Survive, Reset, Thrive, Leading,
Breakthrough Growth Strategy and Volatile Time. She joined us not
from the UK today but from South Florida. Professor Humpkiss.
Good to have you back with us. The book was
written obviously before all of this volatility, but it does
(22:04):
seem like for a corporate executive out there, there's probably
there haven't been many times where there's been volatility such
as this. What do you do if you're the CEO
of a Fortune five hundred company, let's say Coca Cola,
and you find out via a post on social media
that you're going to make a change to a product.
Speaker 11 (22:26):
Yeah, we are certainly living in different times. Look, you're
going to struggle to find a CEO to say that
he or she has run their business through certain times.
We've always had an element of uncertainty when it comes
to planning and preparing, but we have a geopolitical regulatory
uncertainty now which is creating a whole different level of
uncertainty which often borderlines on chaos, and chaos has a
(22:48):
cost which we have to factor into, and we might
eventually start to see that pan into into how some
of these companies start performing over the next couple of years.
Speaker 9 (22:55):
Is there a sorry peril go ahead? Is there a
way to measure chaos like some sort of index we
could look at or or something like, look, this is
you know, it's qualitative, it's not necessarily quantitative, but you
say that you be struggled. It's a struggle to find
a CEO who would say that they led through times
that weren't volatile. But I'm just trying to get an
(23:16):
idea if this is a more volatile time than in
the past.
Speaker 11 (23:20):
Well, when we're facing uncertainty, we tend to see three
common responses delusion, paralysis, and chaos. Right, delusion happens where
CEOs say this news isn't going to stick. I've already
made a commitment to my shareholders. I'm just going to
plow ahead. We see proalysis where CEOs say, let's just wait,
let's just wait until after the FED meeting, let's just
(23:40):
wait and tell after the midterm elections, and they delay
any type of decision. And we also see frenzy, where
we sometimes just see things almost thrown at the market hoping.
Speaker 7 (23:49):
That something sticks. All of those have a cost.
Speaker 11 (23:52):
Right delusion you misgrowth opportunities and go for the wrong ones.
Proalysis has both a short term and a long term cost,
and frenzy has significant cost not just on value creation
but to brand confidence that you have both internally and
externally for the market. So it is a bit qualitative,
but we can actually put indicators across all three of those.
And then what I'm watching right now, especially as we
(24:13):
look a course, what's happened the first next six months,
but also I'm looking for the next couple of years.
Speaker 6 (24:18):
So but there's stuff that's going on in the short term,
and I should point out I am looking at a
market that is definitely pulling off its highs of the session.
An S and P that's now just up about eighteen points,
a DAT that's up about sixty seven, and announced TEQ
one hundred that's up about one hundred and forty three.
Speaker 8 (24:34):
I don't know whether it's J. Powell stuff.
Speaker 6 (24:38):
I don't know, but it's in you know, we have
a sensitive market.
Speaker 8 (24:43):
There's chaos, and then there's chaos.
Speaker 6 (24:44):
There's the financial crisis, and then there's you know, what
some would say is a president that could be rather
unpredictable and as predicted, there doesn't seem to be what
some say were the guardrails that were in President Trump's
first term in the White House. So I don't know
(25:05):
what are CEOs doing. I can't tell whether CEOs are
doing things that they're saying publicly and then doing other
things behind closed doors. Help me understand so that we
have maybe a better understanding.
Speaker 11 (25:18):
Well, here's what i'd say, Carol Is, as a CEO,
tell me the story that you want to tell, and
I'll make the data tell that story. Right. If you
are a proponent of the current administration, things look great.
We have relatively low unemployment, we have increasing consumer confidence,
we have steady retail sales and stock markets that record highs.
Speaker 7 (25:35):
Right, so I could.
Speaker 11 (25:36):
Paint a very bullish story. If you're a critic of
the current administration. As a CEO, you're painting a different story.
You're going one layer deeper under all those and saying, actually,
we're not adding any private sector jobs in the economy.
Consumer confidence is still well below it was in Q
four last year. Retail spending is eking up, but largely
fueled by credit. So the challenge we have right now
(25:57):
is the data is telling a story. But it's a
story that you can enter, but in the way that
you want to unfortunately, which is largely change to your
political leanings. So we're seeing lots of different reactions in
the market. CEO is very much so I'm seeing a
lot more proalysis than I would like. And to go
back to our previous conversation, proalysis has a cost both
in this short term but also the mid to the
long term. What we often forget is that growth and
(26:19):
performance are a muscle. It's just like going to the
gym and working out. If as an organization you constantly
delay decisions, investments, new growth opportunities, hiring, and you delay
and delay and delay, you actually you lose that growth
and performance muscle. So even when a bit of confidence
and certainty comes back, you're not going to be able
to do so with the same vigor that you did before.
(26:41):
So again, plysis and waiting too long. If you don't
believe either of these stories, which we're seeing a bit
as well, that's going to have a cost that we're
going to see pan out through the economy. Now all said,
you know, I'm an absolute bull on the American economy
and the American consumer, But as a CEO, it's very
difficult to plan and prepare through the current environment.
Speaker 6 (27:00):
No, it's interesting, it's interesting, you know, And I also
feel like in the first you know term for President Trump,
we had a lot of CEOs parading through the White House.
Speaker 8 (27:09):
I think there are some that have also.
Speaker 6 (27:11):
Made their way, but it does seem to be a
lot more cautious, and I always get a little nervous
about whether or not that is indeed.
Speaker 8 (27:17):
I mean, the.
Speaker 6 (27:18):
CEOs that you talk to, are they able to access
the White House if they need to and make their
needs known.
Speaker 11 (27:26):
You know, it's very circumstantial, Carol, depending on the individual's
CEO or the company. What we are seeing right now,
and we solid in the Q two earnings, and we're
going to see a bunch more as they come out
this week, is a lot of for lack of a
better word, pandering, you know, CEOs mentioning the criticality of
US jobs, the criticality of US capacity, and how much
that mattered. We're seeing a little bit less action right
(27:50):
so CEOs are making sure the administration knows that they're listening,
they are paying attention. They share some of these and
greed values about what we want to do for the
American economy.
Speaker 7 (27:59):
Not all of that is being backed up by action.
Speaker 11 (28:01):
Look, this is an administration you can get access to,
which is probably a credit to the administration. However, you
may or may not be aligned with the current way
they're trying to approach some of these very real issues.
Right now, we speak a lot about, oh, it's just
short term, it's viral to over the.
Speaker 7 (28:17):
Mintern it'll all pan out.
Speaker 11 (28:18):
That might be okay if you're one of the largest
one hundred companies in the US, but when you're one
of the tens of thousands small to medium sized businesses
that employ the substantial size of the American workforce, you
not only don't have that access, you don't have that
ability to weather storms that might happen. And we need
to think about those organizations as well when we have
these conversations.
Speaker 9 (28:37):
Can you afford not to get in line behind this
administration if you're the CEO of a puply traded company.
Speaker 11 (28:43):
So far, we are seeing no ceo really stepping out
and taking that and that's paybe a surprise, right to
some folks, especially on the left, who did expect a
couple of CEOs to stand up and make big brand
promises against the administration. We're seeing most CEOs sit on
the sidelines, just as we're seeing a lot of decisions
sit on the sidelines. You could say that surprising, but
this is also an administration that does come down against
(29:05):
those who speaks out about their views. So I expect
we see a little bit more of that. Can you
afford to maybe quietly, but loudly and vocally. We don't
have too many examples of that working out very well
so far.
Speaker 9 (29:16):
All right?
Speaker 6 (29:16):
Can I leave it on that note, Rebecca, Good to
touch base with you once again.
Speaker 8 (29:19):
Rebecca Humkiss.
Speaker 6 (29:20):
She's faculty at the London Business School and at Due
Corporate Executive Education. She's also the author of Survive, Reset, Thrive,
Leading breakthrough Growth Strategy.
Speaker 8 (29:29):
In Volatile Times. She's been joining us set today from
the UK.
Speaker 1 (29:33):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five these during
the listen on Applecarplay and Android Atto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 9 (29:47):
Verizon is the best performer in the S and P
five hundred as we speak, up about four and a
half percent born and a half percent.
Speaker 8 (29:54):
Yeah, not too shabby.
Speaker 9 (29:55):
No, it was higher earlier in the session, guys, let's
hear it, Carol, I don't know five and a half percent.
Speaker 8 (30:02):
Thank you, You're welcome a little bit higher, all.
Speaker 9 (30:04):
Right, it's going to be one of your gainers today
would be a good one.
Speaker 8 (30:06):
It is indeed.
Speaker 9 (30:07):
Okay, Well, the company posted second quarter revenue that surpassed
analyst estimates. It raised its profit out look. It was
booed by wireless price increases in recent tax legislation. Here's
CEO Hans Wesberg earlier today on Bloomberg TV with Shanali
Bassek and Katie Greifeld, speaking about the effect of Trump's
tax and spending package.
Speaker 5 (30:24):
When it comes to the bill that was passed, I
mean there was one piece that is very important for Riyson.
That's of course the depreciation we can do directly on
our capital investment that have this year an impact of
one and a half billion, two billion dollars on a
free cash flow. So it's significant together with our operation
or cash from operation that is improving. That's why we
(30:46):
increased our guidance with the almost two billion in the
quarter compared to the financial guidance we had from the
beginning of the year. So that's one piece of the bill.
Now the piece of the bill is of course that
the government wants to watch an out spectrum again. Verison
is great positional spectrum today, but you know, over the
time as we as a country want to be the
most digitalized country in the world, where spectrum needs to
(31:09):
come out for six G and other technologies going forward,
so we encourage we're very encouraged to see that as well.
It's going to take the time before that spectrum comes
out for auction, but it's good that the government are
thinking long term in this area.
Speaker 12 (31:22):
On tax impacts in particular. You know, your earnings are
perhaps the more obvious first set of glaring results that
show you a benefit immediately. But is this kind of
a one time benefit or do you see some sort
of ripple effect that comes out of that big beautiful
bill for you and maybe even the rest of corporate America.
Speaker 7 (31:41):
Frankly, so, the.
Speaker 5 (31:43):
Tax benefit has not impacted or financials yet. That's going
to be in the second half and then going into
next year because it's a perpetual sort of benefit will
have so that will continue. So but I think for us,
we are very disciplined for our capital. We'll already increased
our capital for twenty twenty five compared to twenty twenty four.
Now we have our frontier acquisition pending. We're waiting for
(32:06):
the lost approvals here. When that comes in. Of course,
we're going to make a holistic view how we're going
to do capital allocation going forward, but always we put
first priority in the business. Number two, we have increased
our dividend eighteen consecutive years, and we're going to put
our board in a position to do that. And then
we paint our debt to get our leverage right too.
And after that, including Frontier, we're also going to come
(32:28):
to buybacks. We're going to package that in the next
couple of months and talk to the market how we
see about capital location and the benefits of incorporating a
frontier when that's approved.
Speaker 9 (32:39):
That was Verizon CEO Hans Wesberg earlier today on Bloomberg Television.
I want to bring in Kelsey Griffis, Bloomberg News telecom reporter.
She follows the space and the company closely. She joins
us from our Washington, DC bureau. Kelsey, there was this
moment during at least that clip that Carol and I
both went and it has to do with spectrum and
the idea of spectrum and how on VESPERG talked a
(33:00):
little bit about being interested in buying more spectrum for
the company's network. Can you kind of explain how this
stuff works.
Speaker 2 (33:10):
Sure things. So, spectrum is a big deal here in Washington.
In the Big Beautiful Bill, the Congress decided to allocate
eight hundred megahertz of spectrum for auction or repurposing. And
in the wireless space, that's a huge deal. Spectrum licenses
(33:30):
cost millions and millions of dollars, and they actually add
to the portfolio of infrastructure that the mobile carriers can build.
It offers this bigger runway to allow more customers and
more data on the network. And so that's why that's
sort of this lifeblood that keeps the industry moving forward.
Now we just hear vesperg say that Verizon has a
(33:54):
pretty good spectrum portfolio right now, so he's not necessarily
worried about the next year or even the next five years.
I think think having Congress thinking about and kind of
planning for the future spectrum needs gives them that runway
in a bit of assurance that they will be able
to grow in the coming years.
Speaker 9 (34:10):
Is it a finite resource. It is.
Speaker 2 (34:13):
It is a electromagnetic engineering principle. We can only have
so much data on the airwaves, only so many users
can be on them at one time, and it's the
same principle that constrains the TV airwaves or the TV
channels that you're able to pick up.
Speaker 9 (34:30):
So does it get to a point where we are
looking for so much data that there's not enough spectrum
to accommodate what we need.
Speaker 2 (34:39):
I've asked many engineers and telecom experts about this over
the years, and everyone has assured me that we're not
coming up into a spectrum crunch yet. As technology advances,
they've found ways to get more data on higher spectrum bands,
so we're able to use the resources that we have
more efficiently. But you know, who's to say, maybe there
(35:02):
is a day when we start to run out. So far,
I haven't heard that from the experts.
Speaker 9 (35:08):
Well I do. I do have an anecdote that I've
been thinking about that maybe I could ask cons Vestberg
about Chelsea. But here in New York. I know this
is not an issue for you because you live in DC.
But here in New York there's no service between stations
for cell phones. But once you get to a station,
there is service. And one thing that I've found is
that over the last few months, or maybe for the
last yeah, over the last few months, during rush hour.
(35:31):
You can't really use your phone in these stations anymore.
And I'm wondering if it's because we are using more
and more data as consumers that these networks when they're crowded,
are just completely overcrowded. And it seems to be like
when we get, you know, more advanced phones, when we
do more with our phones, we're just using more and
more data.
Speaker 4 (35:49):
Are trying to.
Speaker 6 (35:50):
Play wordle on the way home and we can't because
we can't get it on the phone.
Speaker 9 (35:55):
Yeah, is there some truth to that.
Speaker 8 (35:57):
Yeah, that's exactly right.
Speaker 2 (35:58):
You know, like you're saying, these networks are finite resources
and there's only so much data that you can kind
of cram through the pipe. So these carriers are trying
to add more spectrum bands to their network to kind
of open.
Speaker 4 (36:11):
Up those lanes a bit.
Speaker 2 (36:13):
They can also do some things locally, like adding more
five G small cells, adding receptors underground to make those
signals kind of travel through the concrete a little bit
more easily. But yeah, there's a lot of things that
they can do to kind of relieve the pressure on
the networks as that builds, And I think that's what
you're seeing.
Speaker 8 (36:29):
But do we at some point max out.
Speaker 6 (36:31):
Is that the possibility or is that the question that
again you say nobody.
Speaker 9 (36:35):
She asks, and again why she says, no.
Speaker 6 (36:38):
Timonize to do here, like, so, wait, is there a
point where we're gonna get in.
Speaker 9 (36:41):
The face with spectrum, Caroll, and we'll be okay and
go back to portlines.
Speaker 2 (36:45):
It's really funny because when you talk to some of
these spectrum experts, I mean you talk to people who've
worked at the Federal Communications Commission for a long time.
There are slices of the airwaves that used to be
considered junk bands, and now they're bringing in millions, even billions.
Speaker 8 (37:00):
Of dollars for these licenses.
Speaker 2 (37:02):
So as technology marches on our use of the airwaves,
can you know, get more efficient? But it also means
that we can bring really valuable spectrum licenses to market.
So we might be seeing that what you know, as
the technology advances.
Speaker 8 (37:17):
Well, just one more question on this, Kelsey.
Speaker 6 (37:19):
So I just think about those that don't still have
access right the underdeveloped parts of the country, where the
infrastructure maybe isn't there in terms of spectrum or service.
Do they constantly get squeezed out because of the DNSE areas.
Speaker 2 (37:35):
That just really need it. Yeah, so you raise a
really good point. Spectrum exists, you know, above our heads.
You just have to have the technology available to sort
of capture it.
Speaker 8 (37:48):
And make use of it.
Speaker 2 (37:49):
And in these urban areas, obviously, usage is really dense.
And so that's why it takes this like really big
network investment and to create the infrastructure. Let's you get
that benefit of the spectrum. In rural areas, there's maybe
less of a case for investment in that infrastructure that
would allow residents in that area to make use of
(38:11):
the spectrum that's already over their heads. So I think
that's kind of where the tension is there. Companies need
that incentive to build the macro towers and to build
the five G small cells that will let people have
that access.
Speaker 9 (38:26):
You know, I am wondering why shares are hire even
after the company saw a net loss of fifty one
thousand monthly consumer wireless phone subscribers. Analysts, we're calling for
twelve thousand in terms of a net gain. What happened here?
Speaker 2 (38:40):
Yeah, We're seeing a really interesting dynamic here. You know,
I think that the company for a long time has
been encouraging us to not only look at subscriber numbers,
but to look at their overall growth. We saw growth
in the broadband sector where Verizon is not only becoming
your mobile phone provider, they're increasingly becoming your home internet
(39:02):
provider as well, and that's become a big bright spot
for them. We see them gearing up to invest in
more infrastructure, like we were just talking about. So I
think they're trying to kind of steer us away from
looking at that one single metric of how many consumers
they gained or lost in any one quarter. I think
we're seeing the market maybe responding to this longer term
(39:25):
picture that Verizon has been, you know, trying to kind
of sell us on.
Speaker 6 (39:29):
Where does Verizon kind of stack up against, you know,
its competitors, its peers.
Speaker 2 (39:35):
Yeah, so Verizon is the biggest mobile customer. I guess
it has the most mobile customers, followed by T Mobile
and then AT and T, and each of these companies
has sort of their their own personalities, you know. I
think Verizon is seeing as sort of this like slow
and steady giant. They talk a lot about discipline, growth
(39:56):
and really wanting to make sure that they keep pace
and are competitive, but they're making these really smart investments.
Of course, the same can be said for all for
the other peers as well. But I think AT and
T has made a really big fiber bet. They talk
a lot about convergence and you know, doing these bundled
offerings to give you home internet streaming services and also
(40:21):
your mobile phone service. And then for T Mobile, I
think we see them as this big, splashy, you know,
company that's great with marketing campaigns, great with bringing celebrity
talent in. So you know, I think they each play
well in this space and kind of have their strength.
So that's what we're seeing from Verizon.
Speaker 9 (40:40):
All right, just thirty seconds or twenty seconds here the
acquisition of Frontier. What's it going to do?
Speaker 11 (40:46):
So?
Speaker 2 (40:47):
In short, this would expand Verizon's ability to reach home
internet customers with direct wired connections. That means fast service,
that means no latency or virtually none, and that means
you won't have to rely on your phone's five G
signal to try to stream Netflix.
Speaker 4 (41:07):
Interesting stuff.
Speaker 6 (41:08):
Well, investors definitely taking note of Verizon on this Monday.
As you mentioned, it's the number one gainer in the
S and P five hundred. It's up about four and
a half percent as we speak, so investors definitely moving
into that one.
Speaker 8 (41:20):
Kelsey. Thanks Kelsey Griffiths.
Speaker 6 (41:22):
She is telecom reporter at Bloomberg News, joining us from
our bureau in the nation's capital.
Speaker 1 (41:28):
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
(41:49):
and always on the Bloomberg terminal
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Carol Massar
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