December 18, 2025 • 42 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Underlying US inflation rose in November at the slowest annual pace since early 2021, an unexpected improvement in a report muddled by the government shutdown.
The core consumer price index, which excludes the often-volatile food and energy categories, increased 2.6% in November from a year ago, according to Bureau of Labor Statistics data out Thursday. The overall CPI climbed 2.7% in November from a year ago.
The longest-ever government shutdown prevented the BLS from collecting much of the October price data. That not only limited the agency’s ability to determine month-over-month changes for the broader measures of inflation, but some economists noted it likely impacted the annual November figures as well.
Despite numerous caveats, the report offers some hope that inflationary pressures are easing after remaining stuck in a narrow range since early this year. The BLS said the core CPI rose just 0.2% over the two months ended in November, restrained by declines in costs of hotel stays, recreation and apparel. Prices of household furnishings and personal care products rose.
However, several economists noted that the two-month change in key shelter categories, which are some of the biggest components of the CPI, was basically flat — calling the calculations into question.
Today's show features:
- Jason Granet, Chief Investment Officer of BNY, on the market outlook and the Federal Reserve’s path forward
- Frank Sorrentino, Founder and CEO of ConnectOne Bank, on the economic outlook and the health of community banking sector
- Bloomberg News Energy Reporter Will Wade on a planned $6 billion merger between Trump Media & Technology nuclear fusion developer TAE Technologies
- Michelle Korsmo, CEO of the National Restaurant Association, on the struggles of restaurant workers and smaller eateries amid rising inflation
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business Week,
Daily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 2 (00:32):
Hey, we want to stay though on the markets and
the ALEC. We've got a great guest to do that,
and also to get into some new research that they
had out late last month, six for twenty six Essential
questions for investors. Investors probably have a lot of questions
going into the new year. Back with us is Jason Grannitt.
He's chief investment officer of B and Y. Right here
in studio. How are you?
Speaker 3 (00:50):
I'm great?
Speaker 4 (00:50):
How are you love the new studio?
Speaker 5 (00:52):
Thank you?
Speaker 4 (00:52):
Thank you cool?
Speaker 2 (00:53):
We're kind of loving it too. How are you loving
kind of the market environment right now? And how are
you thinking about the new year?
Speaker 3 (01:00):
Yeah, So if I go back and think about this
year and we're at the beginning, you think about all
the wild things that happened. We went through the new administration, liberation.
People forget that the US military was engaged in a
war back in the spring, the One Big Beautiful Bill,
in negotiations, the long government shutdown, these MEGAAI deals that
happened over the course of the year, and what happened
(01:22):
kind of what everyone thought would happen. Policy rates are
a little bit lower, risk assets are higher, but it
was very nonlinear, and so if I think about twenty six,
I think it's probably going to feel somewhat similar. Is
going to be weeks maybe months that don't feel that
warm and fuzzy, but pretty strong backdrop. You have the
stimulus coming from the One Big Beautiful Bill.
Speaker 2 (01:44):
Will that be inflationary though, and cause some problems perhaps
for the FED and the next feduer, whoever that may
be he or she.
Speaker 3 (01:51):
So, I mean, look, we're talking a lot about the
inflation data today in questions around it. Obviously the headline
was softer, but markets are not reacting believing that the
underbelly of that data is as clean as it could
be from a hangover from the shutdown. I'm not convinced
that it's going to be super inflationary. It could be
a little, it could put a little pressure against it
and I think, but if you look at where policy
(02:14):
rates have been trading for the end of twenty twenty six,
no matter what we've talked about, all those things that happened,
all the questions about all these different FED people, they've
been right between two ninety and three ten, and so
the market kind of has this credibility around where it's heading,
no matter all these kind of balls that are thrown
at it.
Speaker 6 (02:32):
Well, I wanted to just talk about the FED a
little bit because the President did say speaking to three
or four different candidates. If you look at polymarket, for example,
the money's still on Kevin Hasset, but Kevin worsh is
a close second favorite. Christopher Waller's on there too. Michelle Bowman,
who he mentioned, is still only at one percent at
this point. Does it matter to you of those four
(02:53):
who gets picked. Yeah, so we've had a lot of names.
I think there were five and there were one. Now
there's four.
Speaker 3 (02:58):
Back to my point, it seemed to be anchored at
a certain point, no matter where the winds swing on
these choices. What I would say is, we're still talking
about a committee. We're still talking about consensus on a committee.
If you look at the dots that come. It looks
like a scatterplot. There's a lot of work to do
to bring people together. So while I think that it
(03:19):
does matter ultimately over a long period of time, obviously
who the chair is. We're talking about the New York term.
This is about building consensus, getting the views, and quite frankly,
this is a tricky environment, you know, Carol, you raise
the underbelly of inflation. We have the labor market that's
a little weak. These are tricky times for both the
Fed and global central banks.
Speaker 1 (03:38):
Question.
Speaker 2 (03:38):
All right, so you guys have whittled it down to
six for twenty six is all we tried.
Speaker 4 (03:42):
We tried.
Speaker 2 (03:43):
Was it hard whittling it down to six? Yeah?
Speaker 3 (03:45):
Look, I mean we tried to catch the big themes
that are out there, right, you know, obviously central bank,
obviously the dollar, obviously AI.
Speaker 4 (03:53):
We try to capture all those different things.
Speaker 2 (03:54):
Let's go through a couple global economy maintain its delicate
balance through twenty twenty six, and you just talk about
forces balancing toward growth acceleration, and I guess those that
might not be towards that.
Speaker 4 (04:06):
Yeah, Look, it's it's fragile. This is what we're talking about.
Speaker 3 (04:10):
I mean, we think that it can maintain our conviction
when we went through and did the work to put
that out as we think that the tailwinds continue to
aweigh the headwinds.
Speaker 4 (04:18):
But there's some fragility.
Speaker 3 (04:20):
Yeah, the labor report showed you that it's kind of
not every sector with strength. Obviously, the questions about the
inflation data are where things are happening. You know, we
think it does.
Speaker 4 (04:30):
Have the support behind, but it's.
Speaker 6 (04:33):
More closer call than not. Jason, We're going to jump
around a little bit in the report. The question that
you have posed, I think a lot of people have
right now and they look at the US equity market.
Are US equities overvalued? Yes?
Speaker 7 (04:44):
Or no?
Speaker 8 (04:45):
Yeah?
Speaker 6 (04:46):
I mean obviously this is are some overvalued?
Speaker 3 (04:50):
And what I would say is there's always some that
are overvalued, and there's always some that doesn't are valued.
Speaker 6 (04:54):
But are there some more right now than usual that
are overvalued?
Speaker 4 (04:58):
It looked there's a lot of price for perf action
in the market in certain sectors.
Speaker 3 (05:02):
Right that being said, we are getting some stimulus that's
coming into the market next year. We do have easier
or not tighter monetary policy on the horizon. We do
have fiscal stimulus, corporate tax benefits that are there. I
think a lot of it's in the price, but we
think there continue to be a little support on risk
assets here into next year, for sure.
Speaker 2 (05:18):
Jason, what do you do? Who do you talk to?
What is the research that you guys look at to
figure out whether the AI trade, the AI spend, the
AI build out is getting frothy. Is it just a
case of looking at valuations or who do you talk to?
You to kind of get an idea?
Speaker 3 (05:31):
So you can't just look at valuations. These are new
technologies and new horizons where on some level the raw
evaluation doesn't really matter as much as what are the fundamentals,
what's the forward of the different projects, what partnerships you're
seeing all these partnerships come out, So there's a whole
series of strategic alliances that are going to be developed
over time.
Speaker 2 (05:51):
Are you comfortable though, with the circular financing and complicated
relationships and kind of coosy relationships.
Speaker 4 (05:58):
I'm a bond guy a little. I'm always a little nervous.
That's how it works.
Speaker 2 (06:03):
So are you know those folks when they look at
Oracle right and what's going on in their balance.
Speaker 3 (06:07):
Yeah, I think what you're seeing across the horizon is
that we're starting to sift through and think about who
some possible.
Speaker 4 (06:13):
Winners and losers are. But this is a long game.
Speaker 7 (06:15):
You know.
Speaker 3 (06:15):
If I think about back in the spring, people are
questioning Google, what's going to happen to search? What's going
to happen in that ecosystem? Now people see Google as
you know, maybe the biggest winner. So these things can
change very, very very quickly. And I think that we're
early enough. And we have a little chart that shows
how early we are kind of in the journey here,
and that's what I think it's.
Speaker 4 (06:34):
Important for folks to remember.
Speaker 3 (06:36):
We're early days in whatever this AI adventure will be.
It's not going to be all highs or all.
Speaker 4 (06:42):
Lowse but we're But you know, there's going to be
some sorting that goes.
Speaker 6 (06:45):
Through what what's the risk, the main risk for twenty
twenty six? What what gets the train off the rails?
Speaker 2 (06:51):
Ye?
Speaker 3 (06:51):
Look, like I said, there's a lot of fragility. I
think obviously for the FED and for policy here in
the US is clear.
Speaker 4 (06:56):
The labor market.
Speaker 3 (06:58):
You seeing a lot of unevenness across the labor market,
you know, growth is strong, but probably slightly below potential.
So is there a point where the late taking folks
out of the labor market brings growth down and.
Speaker 4 (07:11):
That starts to fall further below potential?
Speaker 3 (07:16):
And then look, we've had rate cuts last fall, we've
had rate cuts this fall, and we still have ten
years that won't get all four percent. Yeah, and so
to me, that's something that has to manifest itself through
the economy still as well.
Speaker 2 (07:28):
Yeah, it's so funny because we dipped below for a moment,
it felt like, and then we had some guests maybe
even talking about moving, you know, closer to three, and
yet here we are at four point one and we're
sitting there for a while.
Speaker 4 (07:38):
Yeah, it's pretty stubborn there.
Speaker 2 (07:40):
Well, you said, you know, you're a bond guy. So
the diverging one of the things that you guys are
talking about the six essential questions for investors. How are
diverging rate paths shaping fixed income of the US, Europe
and emerging markets? And this is on a day where
the BOE and ECB right rained in with rates. We
get a decision from the Bank of Japan tomorrow. We
had the FED recently. There are diverging policies amongst some
(08:01):
central banks, and.
Speaker 3 (08:03):
Carol would say beyond diverging policies, the agreement is not there.
The Bank of England had a five to four vote,
very tight. Look as I said, look at the dots,
it's all over the ECB.
Speaker 4 (08:15):
Look listen to what they're saying.
Speaker 3 (08:17):
It's not everyone is student body rights, student body left
at all these different central banks. So not only do
you have different speeds across these, but you also have
inside there's still some sorting that happened. So when you
ask about the risks and the things, you can see
the confusion in the market and even from the experts
you make these decisions.
Speaker 2 (08:38):
So it could go a lot of different ways into yeah.
Speaker 4 (08:42):
Let's have fun. That's what makes this a fun That's
what it makes it fun to do.
Speaker 2 (08:46):
It does sound like there's a consensus that we got
to keep our watch on Washington, whether it's policy out
of the White House. In so many different ways, our
policy over you know, monetary policy from the Fed. There's
a lot that's going to be coming our way that way.
Speaker 3 (08:57):
Yeah, people or policy, and so you got to listen
to what the people are saying. They push it through
and that's what happened this year, right, They drove all
these undulations. But if you talked about where we were
at the beginning, I think we are where we thought
we'd beat the end.
Speaker 4 (09:11):
But it wasn't that smooth.
Speaker 2 (09:12):
No, And there were points where you never thought it
was going to it was going to end out this way, right, Jason,
Happy holidays.
Speaker 4 (09:17):
Hay Holiday is great to see you. Enjoy your break.
Speaker 2 (09:19):
We'll see you in twenty twenty twenty six.
Speaker 4 (09:21):
Best everybody.
Speaker 2 (09:22):
Yeah, same to you, Jason Granite, Chief Investment Officer, b
and Y right here in studio.
Speaker 6 (09:27):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (09:34):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
the Listen on Apple Karplay and Android Auto with the
Bloomberg Business app, or watch us live on YouTube.
Speaker 2 (09:49):
Bloomberg has reported out, as many other news organizations, something
you and I've talked about a lot tim about how.
Speaker 6 (09:55):
Some including you, just open up the app formerly known
as Twitter. This is true.
Speaker 2 (10:01):
It's about how some that are wealthy and just some
in general are concerned about some of the priorities of
incoming New York City mayors or on Mumdannie on that
we cut up with Kathy Wilde outgoing presidency of the
Partnership for New York City. They represent a lot of
the city's corporate leaderships that we're talking about, real estate developers,
pe firms, banks, law firms. By the way, Bloomberg Elp
(10:22):
is a member of the Partnership for New York City.
Kathy Wilde also part of New York City Mayor Elect
Zoron Mundani's transition team, and she addressed some of his
policies that he campaigned on, including higher taxes. Check it out.
Speaker 8 (10:35):
You may raise the rates of taxes, but that may
not result in more revenues if you scare people away,
or if you scare companies away, or as we've seen lately,
we're seeing a real threat to jobs in New York
for the first time, first time in my experience over
fifty years, are seeing a decline in the number of
(10:55):
jobs in our financial services industry. Scary thing. That's forty
percent of our state income. Text news. We don't I
mean these are you know, we've got to pay attention
and I think he gets that. But we've got to
be at the table discussing these issues and helping figure
out how to employers help solve the childcare problem.
Speaker 6 (11:15):
It's Kathy Wilde, outgoing president and CEO of the Partnership
for New York City, also part of New York City
Mayor like Zorah and Mam Donnie's transition team.
Speaker 7 (11:22):
Carol.
Speaker 6 (11:23):
Here's what our next guest has to say about all this.
Speaker 2 (11:25):
Yeah, great to have back in studio. Frank Sorrentino, chairman
and CEO at the publicly held New Jersey based community
bank connect One Bank Core there, the parent company of
connect One Bank. Great. Great, great to have you here.
Speaker 5 (11:35):
How are you here?
Speaker 7 (11:35):
Great to be here, Great to be the new studio.
It's fantastic, Thank.
Speaker 2 (11:38):
You, thank you. Yeah, we've been working on, you know,
real estate around here.
Speaker 7 (11:41):
Huh.
Speaker 2 (11:42):
Tell us about the environment. You are kind of consistently
optimistic and have been a lot over the past year.
Is that still the case.
Speaker 7 (11:51):
I'm very very optimistic about where we are. Yeah, and
especially the journey we've taken this year to get here.
It's been a you know, quite the roller that are
up and down, and we certainly didn't start the year
in the same place. But I really felt the foundation
was there for a very solid end to twenty twenty five,
but that foundation now has really created, I believe, an
(12:13):
unbelievable ramp into twenty six, and I think we're going
to have a lot less of the noise that we
heard during twenty five and more focus on how this
economy is building strength as we move through twenty six.
Speaker 6 (12:25):
I want to go to what Kathy Wilde was saying
about concern over New York City. She has a close
relationship with many business leaders. She's also part of the
mayor's transition team. Last time you're on with us, it
was just after the election. We spent a lot of
time talking about politics, specifically housing. Because of your construction background.
Speaker 2 (12:41):
It's a great conversation.
Speaker 6 (12:42):
But the New York City side of things, I mean,
you've got locations in New Jersey and New York and
Florida as well, but you've lot locations here in New
York City, so you understand the economy. What are you
hearing from your New York City based clients.
Speaker 7 (12:53):
Look, I think the economy in general is very strong,
but we are, as you just heard, we are on
the press of if there are changes that drive the
sentiment to think that New York is not a friendly
place to do business. We could see change, and so
certainly that's a concern. We certainly know there's a concern
about affordability in New York City. But overall, I think
(13:18):
it's all going to work out. It always has before.
Speaker 6 (13:20):
Does it make you optimistic that somebody like Kathy Wilde,
who has the year of so many in the business community,
is involved with the incoming mayor.
Speaker 7 (13:27):
Yeah.
Speaker 4 (13:28):
Absolutely.
Speaker 7 (13:28):
And there's others who are joining the team who I
think we would all say we're happy they're there. Look,
at the end of the day, I don't think anybody
can argue with some of why this mayor was elected. Right,
the issue of affordability, trying to make a fair system
for everyone, I think we could all get around that.
How we go about doing that is a different story.
Speaker 2 (13:50):
How do we I know we talked about this with you,
and but you know you're a builder, So that's why
we talk about with you, because you understand these things.
I'm trying to unpack this. I mean, a builder's not
going to build a building if it's not going to
be profitable.
Speaker 7 (14:00):
Right. There's been numerous studies across this country and across
various time periods. It doesn't matter when, how or where
you look at it. There's a really interesting story right
now in the Twin Cities, where you know, one city
is trying to maintain affordability by government control and then
the other city is doing it by free market. Let's
(14:21):
let the builders build because you know, to me, some
of the laws of economics they like the laws of physics.
You may like to agree or disagree, but they are
what they are. And if we increase supply, we're going
to have lower prices. And that's something I think politicians
don't typically understand. I mean, if you look right now,
(14:41):
even in the rent regulated portfolio, rent stabilized portfolio of
New York City, there's fifty thousand units that are unoccupied
because they're uneconomical to put back on the market. Based
on what they're rent stabilized at and the investment needed
to get them back in order, you would think that
that would be a priority. We want to get those
(15:03):
units back into the marketplace because that would help the
that would help those who need the help.
Speaker 6 (15:07):
So if you were advising a politician, the incoming mayor
perhaps or I'd love the opportunity to do that what
would you what would you have to but.
Speaker 7 (15:15):
Not yet, what would we have our opportunity?
Speaker 6 (15:18):
So what would be the suggestion to actually fill those
vacant apartments?
Speaker 7 (15:22):
Oh, there's there's a number of things we could do, right,
we could mean test for the people that live in
rent stabilized apartments. There there are incentives the city could
provide to entice the builders to be able to invest
the you know, make the investments they needed each one
of those apartments to make them viable since they're vacant,
allow for vacancy decontrol up to some level. I mean,
(15:44):
there's there's a there's a so many common sense things
that we could do, probably over at dinner, napkin, that
would get those those apartments back online in ninety to
one hundred and twenty days.
Speaker 2 (15:55):
So why is this so hard?
Speaker 7 (15:58):
You know, it's it's how politics works, I don't know.
And it's a mindset, right, there's a mindset that government
can do a better job than the market can do,
when in fact, we've learned over and over and over
again here in the United States, the market generally is
able to solve these problems and in a very efficient way.
Speaker 2 (16:18):
Mind you all right, I want to broaden out. We
always do like to talk to you because you have
such great exposure to small business and construction generally. How
are both of those areas doing. And I'm also curious
about small business as we had a story this week
about PayPal looking to apply to become a bank and
really tap into the small business area. It doesn't happen overnight,
so I'm just curious. You laugh, Do you think that's I.
Speaker 7 (16:40):
Think it's fine. You know what I find fascinating is
all these companies that want to be banks because in
the current regulatory environment it's fashionable, profitable and whatever to
be a bank.
Speaker 4 (16:52):
They've done really well this' here there.
Speaker 7 (16:54):
You know, there are other times in history when being
a bank is you know, is a little bit more
difficult than that. And you know, the banking industry is
not just one particular point in time. It's built the
last for very very long periods of time, and so
we'll see how they like the regulatory environment at other points.
Speaker 2 (17:09):
So small business, small.
Speaker 7 (17:10):
Business, I think is doing very very well today. Again,
the noise is out of the marketplace. People are feeling good.
I think one of the biggest things we're hearing, notwithstanding
some of the employment or unemployment information is that small
business is having a hard time hiring qualified people to
fill positions. You know, I think they're getting their arms
(17:31):
around what's happening with tariffs. I think they're getting their
arms around whether or not there's real structural inflation in
the economy, and it appears there really isn't. There's been,
you know, some price setting that's been going on. But overall,
the vast majority of the small to medium sized businesses
that we represent a connect Water are doing quite well,
and they're seeing what's more important, they're seeing pipelines and
(17:55):
backlogs that are taking them into twenty six, which is
one of the reasons I feel so optimistic about we're
headed in twenty six.
Speaker 6 (18:01):
So let's get to We got the environment side of this,
Let's get to the actual running of the banking business.
We saw an uptick this year in M and A.
You mentioned a favorable regulatory environment. We saw you guys
actually close on first of Long Island. That deal was
announced last year. Any more M and A for you
in the new year.
Speaker 7 (18:20):
Listen, this is I think our fourth or fifth transaction
we've done over the twenty years that we've been in business,
and we always like to say we're very opportunistic based
on where we are, where the market is, what opportunities
are in the marketplace. We've gone through stretches of three,
four or five years at a time without any M
and A. That's okay. I do think there's going to
(18:42):
be a robust organic growth engine for us as we
continue to move forward. But there could be opportunities for
M and A and right now. One of the things
that I think would promote that is a regulatory environment
that's a little bit more favorable towards it happening. We
did not have well that's when we announced the last transaction.
There are only a few that were done that year.
Speaker 2 (19:06):
That's what I wanted to like follow up on, is
that you are in an environment that's much more favorable.
So as someone who runs a bank and knows that
you haven't done that many over the entire lifespan, but
you're in an environment where it is much more you know,
favorable because it doesn't make you.
Speaker 7 (19:21):
Say, you know, it's not so much that it makes
us say it because it has to make financial sense.
It has to be something that for us, you know,
we can say this is a good opportunity for us
to take advantage of the better regulatory environment, though, provides
more opportunities because then there'll be other institutions that think
they're better off if they partner with somebody, and you know,
(19:42):
in the last three, four or five years, that hasn't
been the case. Right, Many institutions to saying, hey, we
don't want to take a risk here of trying to
sell ourselves or partner with someone, and maybe that doesn't happen,
or it takes too long to happen and they hurt
the franchise.
Speaker 2 (19:57):
So that's probably a no for twenty twenty six.
Speaker 7 (20:00):
Well, it's hard to say.
Speaker 6 (20:01):
Well, just geographically, just in twenty seconds, geographically the most
appealing area where you want to be where you're not
right now.
Speaker 7 (20:07):
Look, we're in New York Metro, you know, based institution,
So that's a big market.
Speaker 4 (20:12):
Is awful?
Speaker 6 (20:13):
You want to grow here?
Speaker 7 (20:14):
Yeah, we want to go And as I always joke here,
you know Florida is part of that market. So I
like the growth prospects here in the New York metro market.
I like what's going on in Florida.
Speaker 2 (20:25):
Okay, we'd be remiss in terms of FED policy and
what we get in terms of a new FED chair.
And also we did get that additional rate cut last week. Frank,
you know the bank.
Speaker 7 (20:33):
We said, we said we were going to have a
rape cut last time we were here.
Speaker 2 (20:37):
Just real quickly, thirty second, how's the bank managing the
rate backdrop in the steeper yeal curve that we're seeing?
Speaker 4 (20:41):
Just quickly listen.
Speaker 7 (20:42):
I think it's great for banks, and I think you
see it, you know, in the market reaction to banks
over the last thirty forty five days, right, bank valuations
are up pretty strongly. Banks are now you know, favored
in portfolios today. I think part of it is the
steepness of the Yeal curve, and I think part of
it is the optimism around the economy.
Speaker 2 (21:00):
And it's twenty six it's still optimistic. Yeah, very kind
of love that, right, We could do use some optimism.
Frank Sorrentino. Thank you have a great holiday.
Speaker 6 (21:07):
Oh you heavy new year?
Speaker 2 (21:08):
Yeah, I really appreciate it. Founder chairman, founder chairman and
chief executive officer of Connect One Bank right here in
our studio.
Speaker 6 (21:15):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (21:23):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to fiveys during Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 6 (21:38):
I'm looking at shares a dgt US. It's Trump Media
and Technology Group. It's the parent company True Social, THEYDA
so Crypto financial Services. They're getting into nuclear fusion. It's
surging today more than forty one percent. The company said
today will merge with Tae Technologies. It's a closely held
fusion developer founded in nineteen ninety eight. This is a
transaction value at more than six billion dollars.
Speaker 2 (22:00):
It's it's kind of wild.
Speaker 6 (22:02):
Shareholders not on my business, my big go card. This
was not on mine either.
Speaker 2 (22:07):
Shareholders of each company or are going to own about
fifty percent of the combined business after the all stock
deals completed. That according to Trump Media. They put that
out in a statement. We have a ton of questions
about this, and we knew right off the bat that
we want to talk to Will Waite.
Speaker 6 (22:20):
He's Bloomberg News Energy reporter. He joins us here in
the Bloomberg Interactive Brokers Studio. I got a full disclosure
I had never heard of this company before six thirty
am this morning. Had you ever heard of it? No,
there were, Yeah, I've heard of Okay, so people in
the energy people in the energy world know this company.
Speaker 9 (22:38):
Yeah, yeah, TA is one of the companies in fusion
that we've been watching that's making solid progress.
Speaker 6 (22:44):
Solid progress. That's an important way to put it, because
because this is unproven at this point.
Speaker 5 (22:50):
Yeah, because is hard.
Speaker 9 (22:52):
Fusion is really hard. I mean I write about nuclear fission,
which moves really slow. Fusion is slower than that. It's
you know, it's it's literally creating a little tiny star
that you can find with super powerful magnets and somehow
get energy out of that. So if that sounds hard, yeah,
it is hard. But TA is a company that's been
(23:12):
They've been at this for a long time. We've been
watching them. But when I say solid progress, what that
really means is nobody has done this yet. It's been
demonstrated in a lab situation about and a couple times
since then. It's Lawrence Livermore in California. But no one's
(23:33):
got a commercial system working, no one's got demo systems working.
We're we're waiting for it.
Speaker 2 (23:41):
Is it the kind of thing will that all of
a sudden, like you know, Eureka, all of a sudden,
they figure it out and it could happen tomorrow. No,
it's more likely it's not going to happen for fill
in the blank.
Speaker 9 (23:51):
How many years, maybe less than ten for a couple things.
Speaker 2 (23:58):
That's a long ways out.
Speaker 9 (24:00):
So, I mean, the company I've really been watching is
called Commonwealth. They're already planning their first commercial system. They're
working on it in Virginia, but they're doing all their
research outside Boston because they came out of MIT. They
don't have their demo system working yet. They've been talking
about reaching like this critical milestone in twenty twenty seven,
(24:21):
twenty twenty eight ish. So, like I said, no one
can do this yet, but there's several companies that we
think are getting close. So I put TAE on the
list and they told us, you know that they're going
to start construction next year on a commercial system. I'm like,
you're going to start building what next year? I'd love
(24:44):
to see it happen. It'd be great, but I have questions.
Speaker 6 (24:48):
Apart from the association with the president and the close
ties to the president, that this gives the company. What
else would be in this I don't want this combination
of these two companies, Like, why would TAU do this money?
Speaker 9 (25:04):
They want money. In fact, they had a call this
morning and their CEO said that capital is becoming one
of their big challenges. And I'm like, I thought the
physics and the engineering was your big challenges. But you know,
they said they get up to three hundred million cash
out of this right away or when the deal closes,
(25:25):
but you know, close to nowish to start working on
their commercial system.
Speaker 5 (25:30):
So that's great.
Speaker 9 (25:30):
And they get you know, access to the Trump media backing,
so that's good for them. So there's a lot of
money happening here.
Speaker 2 (25:39):
I mean, if it was so promising, why aren't other
investors rushing to give them money or others? Is it
just because of how long this is taking?
Speaker 5 (25:51):
It could be.
Speaker 9 (25:52):
I don't know the answer to that question, but it's
the right question to ask. They've already raised like I
think a billion three to date, which is, you know,
a lot of money. But fusion takes time and takes
a lot of money. There's a lot of companies you know,
working on it, and they've all raised billions of dollars
as well.
Speaker 6 (26:12):
So let's say one of these companies, maybe TA, maybe
another company, maybe Commonwealth, is able to pull this off.
What is the ultimate promise and what does that look
like in terms of facilities, in terms of what it
does to the grid, in terms of what it does
to our power bills.
Speaker 9 (26:25):
Okay, the ultimate promise is really something special. This fusion energy.
It does not have the dangerous radioactive waste that you
get from fission energy, so that's great. And some of
the raw materials that they use for fuel and a
lot of it just comes from hydrogen, so it's not
(26:48):
as hard to get. So fusion companies will say we
have the promise of abundant clean energy and like it sounds,
you know, like a fantasy, but it's actually kind of
what they're what they're working towards, so it would be great.
Speaker 6 (27:03):
It's called nuclear fusion. Yeah, where's the Where does the
nuclear part come at?
Speaker 2 (27:07):
The process?
Speaker 6 (27:08):
The process? All right?
Speaker 9 (27:09):
So fission, which is what we have now, is when
you have a big atom and you break it up
and you get energy from splitting it. Fusion is the
exact opposite. You take small atoms and you smush them
together and you get energy when they fuse into something.
Speaker 2 (27:24):
Else and there's no byproduct.
Speaker 9 (27:27):
I wouldn't say there's no byproduct. So some of the
processes have some radioactive waste, but it's not the dangerous
toxic waste like from fuel rods, you know, the old
spent uranium fuel rods. It's low level waste. It's not
as bad, it's not nothing. It's easier to deal with it.
Speaker 2 (27:46):
Is it interesting? And forgive me, I was just looking
for the specifics, but I believe the administration dropped some
nuclear regulation regulations or regulatory framework this week. I mean,
is it interesting? Kind of the.
Speaker 4 (27:57):
Timing on all of this.
Speaker 2 (27:58):
And I don't well to point fingers in anything, but
it seems kind of coinky digg.
Speaker 9 (28:05):
It could be a coincidence. It could be not a coincidence.
I'm not in a position to say, but I might
say it would be.
Speaker 1 (28:12):
Yeah.
Speaker 9 (28:13):
But it's definitely true that the Trump administration is really
supportive of nuclear energy. They've done a lot of executive
orders and policy changes to make nuclear happen.
Speaker 2 (28:25):
Is that a good thing in your view? For someone
who's been following this space. Has there been too much
regulatory oversight to be fair?
Speaker 5 (28:34):
To be fair?
Speaker 9 (28:35):
I hear consistently that one of the challenges for getting
a nuclear power plant built is the paperwork. It's getting
all the approvals. Now. To be even more fair, I
want a government that takes radiation seriously, but it has
been something that slows the process, and especially in this country,
(28:58):
nuclear is very, very expensive, and one of the reasons
is because it takes so long to get things going.
So having some of the processes streamlined, I'm in favor
of that.
Speaker 6 (29:11):
Very briefly. Well, ten seconds. How many nuclear plants will
be brought online next year?
Speaker 4 (29:15):
Next year?
Speaker 6 (29:16):
Yeah, one that I know of, Okay, more than's one?
More than this year?
Speaker 7 (29:19):
Yeah.
Speaker 9 (29:20):
Then Palisades Plant Michigan should come back online January February.
Speaker 2 (29:23):
Five seconds. How many are China putting online next year?
Speaker 5 (29:26):
Way more than that?
Speaker 2 (29:28):
Okay. We will continue this conversation into the New York
will wait. Thank you so much, Happy Holidays, Merry Christmas,
all that good stuff. Bloomberg News Energy Reporter.
Speaker 6 (29:37):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (29:45):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eyes during
listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 6 (30:00):
Darden Restaurants, the owner of Olive Garden and Longhorn Steakhouse,
climbed after the company Race's comp sales forecast is cited
better than expected growth fueled by affordable meal options and
strong spending from higher income diners. Dartnet expects some economic
pressure in the first half of next year, but Carol
this could be offset by consumer spending from potential fiscal
stimulus in early twenty twenty six, and beef prices are
(30:22):
also expected to fall next year. Hallelujah as production increases.
I mean, beef has been getting hit hard.
Speaker 2 (30:28):
In our home. Yeah. Michelle Coursmo is presidency of the
National Restaurant Association. We're curious what she has to say.
It is the trade group for the restaurant industry, and
she joins us from Washington, d C. Michelle tim just
laid out really good news, or some good news, we
should say, from Darden today. We've seen mixed results though
from the restaurants. It's a great read on the business community,
(30:51):
a great read on the consumer. Sweet Greens co founder
also stepping down from the struggling salad chain after the
share price has dropped about eighty percent so far this year,
covs down sixty percent from this year's size to poutlet
is down forty five percent from this year's high. It
doesn't sound so great. These are your members, these are
this is your community. What are you hearing from them?
Speaker 10 (31:13):
Well, exactly what you've said in terms of such a
great industry and such a great bell weather for how
the economy is doing. And it really is a mixed bag.
So we've seen one point five trillion dollars in restaurant
industry sales in twenty twenty five, which is up from
last year, but not as strong as it needs to
be and not as strong as we want it to
be in these really tight margin businesses. And what we
(31:34):
found is it kind of depends on is it kind
of depends on how your it is and really how
you're leaning into that price certainty for customers, value matters.
Price certainty really matters. And so you see that making
a difference as they're also navigating all of the tariff
and supply chain and beef price problems that you've just
talked about.
Speaker 6 (31:53):
Yeah, we're going to get to some of the challenges
in just a minute. So that's how your members are doing.
Your members depend on consumers. From your perch, how's the
consumer doing? And it's not monolithic by any means, but
how would you describe the US consumer right now?
Speaker 2 (32:10):
So?
Speaker 10 (32:11):
The US consumer right now, I would say is very deliberate.
They want to be certain about what they are spending
and how they're doing it. And that's really a place
where restaurants have been able to lean into some of
that certainty in the offerings they have in the pricing.
But it's definitely been a situation where we're not seeing as.
Speaker 5 (32:30):
Much traffic as we normally would.
Speaker 10 (32:33):
We always want to see those guest count numbers going
up in restaurants, and it hasn't been going up at
the level that people want.
Speaker 6 (32:42):
Okay, So I just want to go through some of
the challenges you mentioned. Some of the challenges you said,
the tariff related challenges, the beef price challenges. What is
the biggest challenge that restaurants are facing.
Speaker 5 (32:58):
Certainty.
Speaker 10 (32:58):
I think with every industry and with every business, what
everyone is looking for is certainty. And we certainly know
that the President has an aggressive agenda to try to
make a strong economy for US consumers, but the lack
of certainty actually creates.
Speaker 5 (33:15):
Something that feels quite the opposite.
Speaker 10 (33:17):
When restaurants are dealing with how to navigate different pricing,
supply chain problems, tear iff price increases, changing from day
to day. That definitely gets to be a bit of
a challenge for restaurants trying to serve consumers that are
looking for that certainty.
Speaker 6 (33:33):
You know, one thing that we're seeing certain about is immigration,
And this note from Torsten Slock at Apollo this morning
really caught my attention, he said. He writes, from twenty
twenty two to twenty twenty four, net immigration was around
three million people per year, the CBO forecasting that annual
immigration at twenty twenty five and twenty twenty six will
be around five hundred thousand people. Torston writing quote, this
(33:56):
has important consequences for labor supply, wage growth, and housing demand.
From a labor supply issue that affects your members, but
also from a customer's perspective that affects your members. Which
one is harder for the restaurants in the US right now.
Is it the lack of workers from immigration? Yeah, that
(34:17):
customers from immigration.
Speaker 5 (34:18):
That feels like a Hobson's choice.
Speaker 10 (34:20):
So, without a doubt, the restaurant industry really cares about
ensuring that we've got enough workforce to help provide that
great hospitality that makes people love restaurants. And there's nine
hundred and eighty eight thousand open positions in restaurant and
hospitality this month.
Speaker 5 (34:36):
So we need workers.
Speaker 10 (34:38):
And this is why it's been a significant issue for
us to push for immigration reform. We need more legal
pathways for guest worker programs, more opportunities.
Speaker 5 (34:48):
For people to come in and do this.
Speaker 10 (34:50):
Work even as a guest worker, in a legal, documented fashion.
And so getting to that solution is something we're really
pushing for for Congress because we need to get people
in jobs in restaurants well, the constomers need it.
Speaker 2 (35:03):
Well. Big problem that's a lot of workers that aren't
that the industry needs. Is the White House listening. Are
members of Congress listening?
Speaker 5 (35:14):
We never feel like they're listening enough on immigration, so
they're always seems.
Speaker 2 (35:18):
Are they listening less than maybe they were in years past,
recent years.
Speaker 10 (35:22):
Past, this has been a difficult issue. In fact, some
would call this the third rail in terms of issues
that Congress deals with. For decades, frankly, and we get
close often, but we need to get it across the
finish line. And so that's really what we're pushing, is
it's time for them to realize that it has to
(35:44):
provide some legal pathways because we're seeing I mean, those
numbers that you're talking about with immigration coming down, I
think we're going to see in twenty twenty five in
reports I've read that this will be the first year
that the US population will not have increased. And that's
a significant impact on our workforce. And so we care
a lot about making sure that we've got enough workers
in the restaurant industry. You know, there's certainly a lot
(36:06):
of places for technology to take jobs, but hospitality is
still built on people and personal interactions. So we want
those people to work in restaurants, and we want obviously
a robust economy with lots of consumers that are coming
in to enjoy those restaurants.
Speaker 2 (36:21):
Well, you know, and I just want to go back
to the speech that President Trump gave last night, the
primetime speech, and he talked a lot about immigrants and immigration,
but he said a lot of the immigrants and forgive
me and I should have the exact quote in front
of me, but basically that a lot of the immigrants
that are coming in are criminals, and so on, what's
(36:42):
the restaurant industry's experience with immigrants who come into the
United States? And I realized, there's legal, there's illegal. So
I'm just but there's a lot of folks that maybe
aren't legal that are in the restaurant industry that you
might hear that kind of on the side. So I'm
just curious about that commentary from the President and the
reality of of what it really is all about.
Speaker 10 (37:02):
We don't think that that commentary tells the full story.
And I think we want to start with a complete
agreement that people that are breaking laws, especially those laws
that are hurting Americans, really aren't as illegal immigrants certainly
not a place for them here, and so creating a
(37:22):
safe environment for Americans is really important. But there's a
lot of people who are showing up every day, working hard,
being reliable, taking care of their families, doing the right thing,
mowing their law, all of those things that make your
neighbor somebody that is friendly and reliable that.
Speaker 5 (37:39):
You want to see.
Speaker 10 (37:40):
And so this is why it's important to us that
we push for more legal pathways to guestworker programs because
those people need to be in our communities contributing. And
obviously we need.
Speaker 5 (37:52):
To deal with the people that are breaking the laws.
Speaker 10 (37:54):
But for those people that want to work hard and
show up and contribute to our economy, let's find a
place for them to do that.
Speaker 6 (38:01):
Beef price is still up thirteen percent so far this year,
though they're down from the highs that we saw in
August and September of this year. We've spoken to you
in the past and we've talked about inflationary concerns, but
it hits restaurants different because the margins are so tight.
What are the biggest costs right now for your members?
Speaker 10 (38:22):
So beef costs for sure. We're seeing a lot of
fluctuation on seafood. One of the things that we're seeing
in the data that we're trying to figure out is
a lot of data is showing seafood as a protein
price going down. But what our members are telling us
from our survey work is that they're seeing increase seafood prices,
and so there's a lot more we've got to figure
(38:43):
out there. And I think this is a place where
tariffs or the threat of tariffs is really hurting that
supply chain, especially as whatever happened to be in the
warehouse under a pre tariff price really starts to deplete.
And so I think anytime you're looking at ros, that's
going to be a place where people are concerned. And
then anytime you're.
Speaker 5 (39:04):
Looking at any kind of vegetable.
Speaker 10 (39:07):
Or produce, we want to make sure that those tariffs
stay off as well, because we can't produce in the
United States the amount of produce that can we consume
on a regular basis, and we certainly can't produce it year.
Speaker 5 (39:20):
Round, Michelle, not in DC in.
Speaker 6 (39:23):
The wind that is that is true, and even in California,
doesn't you know, satisfy the entire country or provide for
the entire country. Hey, before we let you go, we
got to talk about cold hard cash, specifically the penny.
I was surprised on our editorial call when our producer
already said that this is a big issue for you guys.
Costing your restaurants thirteen to fourteen million dollars monthly enforced
(39:44):
rounding losses will explain what's going on with the penny.
Speaker 10 (39:48):
Well, it is certainly interesting and nobody really had on
our BINGO card for twenty twenty five that we would
be talking about penny shortages. But for some reason that
we can't quite figure out, the FED has stopped c
sculating pennies. So the Federal Reserve does a really important
thing by keeping money and coins circulating around the country
so that we've got the right level of those coins
(40:11):
and bills in the right areas and regions, And right
now they're not doing that with pennies, and so we're
seeing pennage shortages, and so often consumers are coming in
and paying cash. In fact, I think people would be
surprised to know that one in four transactions and restaurants
is a cash transaction. So people are coming in paying
cash and often they can't get exact change. So that's
(40:31):
creating a difficult situation for consumers. But also that difficult
situation that you cited in the thirteen to fourteen million
dollars a year in lost revenue for restaurants.
Speaker 2 (40:42):
Wow, that's a real number. It's interesting. My understanding is
they stop mining them because I think it costs more.
Speaker 6 (40:48):
But this is different. This is the Federal Reserve in
circulation versus the US not producing them.
Speaker 2 (40:52):
New ones, so they're amount of circulation.
Speaker 10 (40:55):
Yeah, there are three hundred million pennies that are in
circulation right now in the US, and so there should
be enough pennies rolling around that we can keep using
pennies even though they are not mint.
Speaker 4 (41:09):
They check the couch cushions, that's right.
Speaker 6 (41:13):
My husband's for the washing machine. That's usually where they end.
Speaker 2 (41:18):
U TU bring up those pennies, It matters, and those
single socks. Michelle, Thanks so much. Michelle Cosmo, President and
CEO of the National Restaurant Association trade group for the
restaurant industries.
Speaker 1 (41:29):
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(41:50):
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(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 2 (00:32):
Hey, we want to stay though on the markets and
the ALEC. We've got a great guest to do that,
and also to get into some new research that they
had out late last month, six for twenty six Essential
questions for investors. Investors probably have a lot of questions
going into the new year. Back with us is Jason Grannitt.
He's chief investment officer of B and Y. Right here
in studio. How are you?
Speaker 3 (00:50):
I'm great?
Speaker 4 (00:50):
How are you love the new studio?
Speaker 5 (00:52):
Thank you?
Speaker 4 (00:52):
Thank you cool?
Speaker 2 (00:53):
We're kind of loving it too. How are you loving
kind of the market environment right now? And how are
you thinking about the new year?
Speaker 3 (01:00):
Yeah, So if I go back and think about this
year and we're at the beginning, you think about all
the wild things that happened. We went through the new administration, liberation.
People forget that the US military was engaged in a
war back in the spring, the One Big Beautiful Bill,
in negotiations, the long government shutdown, these MEGAAI deals that
happened over the course of the year, and what happened
(01:22):
kind of what everyone thought would happen. Policy rates are
a little bit lower, risk assets are higher, but it
was very nonlinear, and so if I think about twenty six,
I think it's probably going to feel somewhat similar. Is
going to be weeks maybe months that don't feel that
warm and fuzzy, but pretty strong backdrop. You have the
stimulus coming from the One Big Beautiful Bill.
Speaker 2 (01:44):
Will that be inflationary though, and cause some problems perhaps
for the FED and the next feduer, whoever that may
be he or she.
Speaker 3 (01:51):
So, I mean, look, we're talking a lot about the
inflation data today in questions around it. Obviously the headline
was softer, but markets are not reacting believing that the
underbelly of that data is as clean as it could
be from a hangover from the shutdown. I'm not convinced
that it's going to be super inflationary. It could be
a little, it could put a little pressure against it
and I think, but if you look at where policy
(02:14):
rates have been trading for the end of twenty twenty six,
no matter what we've talked about, all those things that happened,
all the questions about all these different FED people, they've
been right between two ninety and three ten, and so
the market kind of has this credibility around where it's heading,
no matter all these kind of balls that are thrown
at it.
Speaker 6 (02:32):
Well, I wanted to just talk about the FED a
little bit because the President did say speaking to three
or four different candidates. If you look at polymarket, for example,
the money's still on Kevin Hasset, but Kevin worsh is
a close second favorite. Christopher Waller's on there too. Michelle Bowman,
who he mentioned, is still only at one percent at
this point. Does it matter to you of those four
(02:53):
who gets picked. Yeah, so we've had a lot of names.
I think there were five and there were one. Now
there's four.
Speaker 3 (02:58):
Back to my point, it seemed to be anchored at
a certain point, no matter where the winds swing on
these choices. What I would say is, we're still talking
about a committee. We're still talking about consensus on a committee.
If you look at the dots that come. It looks
like a scatterplot. There's a lot of work to do
to bring people together. So while I think that it
(03:19):
does matter ultimately over a long period of time, obviously
who the chair is. We're talking about the New York term.
This is about building consensus, getting the views, and quite frankly,
this is a tricky environment, you know, Carol, you raise
the underbelly of inflation. We have the labor market that's
a little weak. These are tricky times for both the
Fed and global central banks.
Speaker 1 (03:38):
Question.
Speaker 2 (03:38):
All right, so you guys have whittled it down to
six for twenty six is all we tried.
Speaker 4 (03:42):
We tried.
Speaker 2 (03:43):
Was it hard whittling it down to six? Yeah?
Speaker 3 (03:45):
Look, I mean we tried to catch the big themes
that are out there, right, you know, obviously central bank,
obviously the dollar, obviously AI.
Speaker 4 (03:53):
We try to capture all those different things.
Speaker 2 (03:54):
Let's go through a couple global economy maintain its delicate
balance through twenty twenty six, and you just talk about
forces balancing toward growth acceleration, and I guess those that
might not be towards that.
Speaker 4 (04:06):
Yeah, Look, it's it's fragile. This is what we're talking about.
Speaker 3 (04:10):
I mean, we think that it can maintain our conviction
when we went through and did the work to put
that out as we think that the tailwinds continue to
aweigh the headwinds.
Speaker 4 (04:18):
But there's some fragility.
Speaker 3 (04:20):
Yeah, the labor report showed you that it's kind of
not every sector with strength. Obviously, the questions about the
inflation data are where things are happening. You know, we
think it does.
Speaker 4 (04:30):
Have the support behind, but it's.
Speaker 6 (04:33):
More closer call than not. Jason, We're going to jump
around a little bit in the report. The question that
you have posed, I think a lot of people have
right now and they look at the US equity market.
Are US equities overvalued? Yes?
Speaker 7 (04:44):
Or no?
Speaker 8 (04:45):
Yeah?
Speaker 6 (04:46):
I mean obviously this is are some overvalued?
Speaker 3 (04:50):
And what I would say is there's always some that
are overvalued, and there's always some that doesn't are valued.
Speaker 6 (04:54):
But are there some more right now than usual that
are overvalued?
Speaker 4 (04:58):
It looked there's a lot of price for perf action
in the market in certain sectors.
Speaker 3 (05:02):
Right that being said, we are getting some stimulus that's
coming into the market next year. We do have easier
or not tighter monetary policy on the horizon. We do
have fiscal stimulus, corporate tax benefits that are there. I
think a lot of it's in the price, but we
think there continue to be a little support on risk
assets here into next year, for sure.
Speaker 2 (05:18):
Jason, what do you do? Who do you talk to?
What is the research that you guys look at to
figure out whether the AI trade, the AI spend, the
AI build out is getting frothy. Is it just a
case of looking at valuations or who do you talk to?
You to kind of get an idea?
Speaker 3 (05:31):
So you can't just look at valuations. These are new
technologies and new horizons where on some level the raw
evaluation doesn't really matter as much as what are the fundamentals,
what's the forward of the different projects, what partnerships you're
seeing all these partnerships come out, So there's a whole
series of strategic alliances that are going to be developed
over time.
Speaker 2 (05:51):
Are you comfortable though, with the circular financing and complicated
relationships and kind of coosy relationships.
Speaker 4 (05:58):
I'm a bond guy a little. I'm always a little nervous.
That's how it works.
Speaker 2 (06:03):
So are you know those folks when they look at
Oracle right and what's going on in their balance.
Speaker 3 (06:07):
Yeah, I think what you're seeing across the horizon is
that we're starting to sift through and think about who
some possible.
Speaker 4 (06:13):
Winners and losers are. But this is a long game.
Speaker 7 (06:15):
You know.
Speaker 3 (06:15):
If I think about back in the spring, people are
questioning Google, what's going to happen to search? What's going
to happen in that ecosystem? Now people see Google as
you know, maybe the biggest winner. So these things can
change very, very very quickly. And I think that we're
early enough. And we have a little chart that shows
how early we are kind of in the journey here,
and that's what I think it's.
Speaker 4 (06:34):
Important for folks to remember.
Speaker 3 (06:36):
We're early days in whatever this AI adventure will be.
It's not going to be all highs or all.
Speaker 4 (06:42):
Lowse but we're But you know, there's going to be
some sorting that goes.
Speaker 6 (06:45):
Through what what's the risk, the main risk for twenty
twenty six? What what gets the train off the rails?
Speaker 2 (06:51):
Ye?
Speaker 3 (06:51):
Look, like I said, there's a lot of fragility. I
think obviously for the FED and for policy here in
the US is clear.
Speaker 4 (06:56):
The labor market.
Speaker 3 (06:58):
You seeing a lot of unevenness across the labor market,
you know, growth is strong, but probably slightly below potential.
So is there a point where the late taking folks
out of the labor market brings growth down and.
Speaker 4 (07:11):
That starts to fall further below potential?
Speaker 3 (07:16):
And then look, we've had rate cuts last fall, we've
had rate cuts this fall, and we still have ten
years that won't get all four percent. Yeah, and so
to me, that's something that has to manifest itself through
the economy still as well.
Speaker 2 (07:28):
Yeah, it's so funny because we dipped below for a moment,
it felt like, and then we had some guests maybe
even talking about moving, you know, closer to three, and
yet here we are at four point one and we're
sitting there for a while.
Speaker 4 (07:38):
Yeah, it's pretty stubborn there.
Speaker 2 (07:40):
Well, you said, you know, you're a bond guy. So
the diverging one of the things that you guys are
talking about the six essential questions for investors. How are
diverging rate paths shaping fixed income of the US, Europe
and emerging markets? And this is on a day where
the BOE and ECB right rained in with rates. We
get a decision from the Bank of Japan tomorrow. We
had the FED recently. There are diverging policies amongst some
(08:01):
central banks, and.
Speaker 3 (08:03):
Carol would say beyond diverging policies, the agreement is not there.
The Bank of England had a five to four vote,
very tight. Look as I said, look at the dots,
it's all over the ECB.
Speaker 4 (08:15):
Look listen to what they're saying.
Speaker 3 (08:17):
It's not everyone is student body rights, student body left
at all these different central banks. So not only do
you have different speeds across these, but you also have
inside there's still some sorting that happened. So when you
ask about the risks and the things, you can see
the confusion in the market and even from the experts
you make these decisions.
Speaker 2 (08:38):
So it could go a lot of different ways into yeah.
Speaker 4 (08:42):
Let's have fun. That's what makes this a fun That's
what it makes it fun to do.
Speaker 2 (08:46):
It does sound like there's a consensus that we got
to keep our watch on Washington, whether it's policy out
of the White House. In so many different ways, our
policy over you know, monetary policy from the Fed. There's
a lot that's going to be coming our way that way.
Speaker 3 (08:57):
Yeah, people or policy, and so you got to listen
to what the people are saying. They push it through
and that's what happened this year, right, They drove all
these undulations. But if you talked about where we were
at the beginning, I think we are where we thought
we'd beat the end.
Speaker 4 (09:11):
But it wasn't that smooth.
Speaker 2 (09:12):
No, And there were points where you never thought it
was going to it was going to end out this way, right, Jason,
Happy holidays.
Speaker 4 (09:17):
Hay Holiday is great to see you. Enjoy your break.
Speaker 2 (09:19):
We'll see you in twenty twenty twenty six.
Speaker 4 (09:21):
Best everybody.
Speaker 2 (09:22):
Yeah, same to you, Jason Granite, Chief Investment Officer, b
and Y right here in studio.
Speaker 6 (09:27):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (09:34):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
the Listen on Apple Karplay and Android Auto with the
Bloomberg Business app, or watch us live on YouTube.
Speaker 2 (09:49):
Bloomberg has reported out, as many other news organizations, something
you and I've talked about a lot tim about how.
Speaker 6 (09:55):
Some including you, just open up the app formerly known
as Twitter. This is true.
Speaker 2 (10:01):
It's about how some that are wealthy and just some
in general are concerned about some of the priorities of
incoming New York City mayors or on Mumdannie on that
we cut up with Kathy Wilde outgoing presidency of the
Partnership for New York City. They represent a lot of
the city's corporate leaderships that we're talking about, real estate developers,
pe firms, banks, law firms. By the way, Bloomberg Elp
(10:22):
is a member of the Partnership for New York City.
Kathy Wilde also part of New York City Mayor Elect
Zoron Mundani's transition team, and she addressed some of his
policies that he campaigned on, including higher taxes. Check it out.
Speaker 8 (10:35):
You may raise the rates of taxes, but that may
not result in more revenues if you scare people away,
or if you scare companies away, or as we've seen lately,
we're seeing a real threat to jobs in New York
for the first time, first time in my experience over
fifty years, are seeing a decline in the number of
(10:55):
jobs in our financial services industry. Scary thing. That's forty
percent of our state income. Text news. We don't I
mean these are you know, we've got to pay attention
and I think he gets that. But we've got to
be at the table discussing these issues and helping figure
out how to employers help solve the childcare problem.
Speaker 6 (11:15):
It's Kathy Wilde, outgoing president and CEO of the Partnership
for New York City, also part of New York City
Mayor like Zorah and Mam Donnie's transition team.
Speaker 7 (11:22):
Carol.
Speaker 6 (11:23):
Here's what our next guest has to say about all this.
Speaker 2 (11:25):
Yeah, great to have back in studio. Frank Sorrentino, chairman
and CEO at the publicly held New Jersey based community
bank connect One Bank Core there, the parent company of
connect One Bank. Great. Great, great to have you here.
Speaker 5 (11:35):
How are you here?
Speaker 7 (11:35):
Great to be here, Great to be the new studio.
It's fantastic, Thank.
Speaker 2 (11:38):
You, thank you. Yeah, we've been working on, you know,
real estate around here.
Speaker 7 (11:41):
Huh.
Speaker 2 (11:42):
Tell us about the environment. You are kind of consistently
optimistic and have been a lot over the past year.
Is that still the case.
Speaker 7 (11:51):
I'm very very optimistic about where we are. Yeah, and
especially the journey we've taken this year to get here.
It's been a you know, quite the roller that are
up and down, and we certainly didn't start the year
in the same place. But I really felt the foundation
was there for a very solid end to twenty twenty five,
but that foundation now has really created, I believe, an
(12:13):
unbelievable ramp into twenty six, and I think we're going
to have a lot less of the noise that we
heard during twenty five and more focus on how this
economy is building strength as we move through twenty six.
Speaker 6 (12:25):
I want to go to what Kathy Wilde was saying
about concern over New York City. She has a close
relationship with many business leaders. She's also part of the
mayor's transition team. Last time you're on with us, it
was just after the election. We spent a lot of
time talking about politics, specifically housing. Because of your construction background.
Speaker 2 (12:41):
It's a great conversation.
Speaker 6 (12:42):
But the New York City side of things, I mean,
you've got locations in New Jersey and New York and
Florida as well, but you've lot locations here in New
York City, so you understand the economy. What are you
hearing from your New York City based clients.
Speaker 7 (12:53):
Look, I think the economy in general is very strong,
but we are, as you just heard, we are on
the press of if there are changes that drive the
sentiment to think that New York is not a friendly
place to do business. We could see change, and so
certainly that's a concern. We certainly know there's a concern
about affordability in New York City. But overall, I think
(13:18):
it's all going to work out. It always has before.
Speaker 6 (13:20):
Does it make you optimistic that somebody like Kathy Wilde,
who has the year of so many in the business community,
is involved with the incoming mayor.
Speaker 7 (13:27):
Yeah.
Speaker 4 (13:28):
Absolutely.
Speaker 7 (13:28):
And there's others who are joining the team who I
think we would all say we're happy they're there. Look,
at the end of the day, I don't think anybody
can argue with some of why this mayor was elected. Right,
the issue of affordability, trying to make a fair system
for everyone, I think we could all get around that.
How we go about doing that is a different story.
Speaker 2 (13:50):
How do we I know we talked about this with you,
and but you know you're a builder, So that's why
we talk about with you, because you understand these things.
I'm trying to unpack this. I mean, a builder's not
going to build a building if it's not going to
be profitable.
Speaker 7 (14:00):
Right. There's been numerous studies across this country and across
various time periods. It doesn't matter when, how or where
you look at it. There's a really interesting story right
now in the Twin Cities, where you know, one city
is trying to maintain affordability by government control and then
the other city is doing it by free market. Let's
(14:21):
let the builders build because you know, to me, some
of the laws of economics they like the laws of physics.
You may like to agree or disagree, but they are
what they are. And if we increase supply, we're going
to have lower prices. And that's something I think politicians
don't typically understand. I mean, if you look right now,
(14:41):
even in the rent regulated portfolio, rent stabilized portfolio of
New York City, there's fifty thousand units that are unoccupied
because they're uneconomical to put back on the market. Based
on what they're rent stabilized at and the investment needed
to get them back in order, you would think that
that would be a priority. We want to get those
(15:03):
units back into the marketplace because that would help the
that would help those who need the help.
Speaker 6 (15:07):
So if you were advising a politician, the incoming mayor
perhaps or I'd love the opportunity to do that what
would you what would you have to but.
Speaker 7 (15:15):
Not yet, what would we have our opportunity?
Speaker 6 (15:18):
So what would be the suggestion to actually fill those
vacant apartments?
Speaker 7 (15:22):
Oh, there's there's a number of things we could do, right,
we could mean test for the people that live in
rent stabilized apartments. There there are incentives the city could
provide to entice the builders to be able to invest
the you know, make the investments they needed each one
of those apartments to make them viable since they're vacant,
allow for vacancy decontrol up to some level. I mean,
(15:44):
there's there's a there's a so many common sense things
that we could do, probably over at dinner, napkin, that
would get those those apartments back online in ninety to
one hundred and twenty days.
Speaker 2 (15:55):
So why is this so hard?
Speaker 7 (15:58):
You know, it's it's how politics works, I don't know.
And it's a mindset, right, there's a mindset that government
can do a better job than the market can do,
when in fact, we've learned over and over and over
again here in the United States, the market generally is
able to solve these problems and in a very efficient way.
Speaker 2 (16:18):
Mind you all right, I want to broaden out. We
always do like to talk to you because you have
such great exposure to small business and construction generally. How
are both of those areas doing. And I'm also curious
about small business as we had a story this week
about PayPal looking to apply to become a bank and
really tap into the small business area. It doesn't happen overnight,
so I'm just curious. You laugh, Do you think that's I.
Speaker 7 (16:40):
Think it's fine. You know what I find fascinating is
all these companies that want to be banks because in
the current regulatory environment it's fashionable, profitable and whatever to
be a bank.
Speaker 4 (16:52):
They've done really well this' here there.
Speaker 7 (16:54):
You know, there are other times in history when being
a bank is you know, is a little bit more
difficult than that. And you know, the banking industry is
not just one particular point in time. It's built the
last for very very long periods of time, and so
we'll see how they like the regulatory environment at other points.
Speaker 2 (17:09):
So small business, small.
Speaker 7 (17:10):
Business, I think is doing very very well today. Again,
the noise is out of the marketplace. People are feeling good.
I think one of the biggest things we're hearing, notwithstanding
some of the employment or unemployment information is that small
business is having a hard time hiring qualified people to
fill positions. You know, I think they're getting their arms
(17:31):
around what's happening with tariffs. I think they're getting their
arms around whether or not there's real structural inflation in
the economy, and it appears there really isn't. There's been,
you know, some price setting that's been going on. But overall,
the vast majority of the small to medium sized businesses
that we represent a connect Water are doing quite well,
and they're seeing what's more important, they're seeing pipelines and
(17:55):
backlogs that are taking them into twenty six, which is
one of the reasons I feel so optimistic about we're
headed in twenty six.
Speaker 6 (18:01):
So let's get to We got the environment side of this,
Let's get to the actual running of the banking business.
We saw an uptick this year in M and A.
You mentioned a favorable regulatory environment. We saw you guys
actually close on first of Long Island. That deal was
announced last year. Any more M and A for you
in the new year.
Speaker 7 (18:20):
Listen, this is I think our fourth or fifth transaction
we've done over the twenty years that we've been in business,
and we always like to say we're very opportunistic based
on where we are, where the market is, what opportunities
are in the marketplace. We've gone through stretches of three,
four or five years at a time without any M
and A. That's okay. I do think there's going to
(18:42):
be a robust organic growth engine for us as we
continue to move forward. But there could be opportunities for
M and A and right now. One of the things
that I think would promote that is a regulatory environment
that's a little bit more favorable towards it happening. We
did not have well that's when we announced the last transaction.
There are only a few that were done that year.
Speaker 2 (19:06):
That's what I wanted to like follow up on, is
that you are in an environment that's much more favorable.
So as someone who runs a bank and knows that
you haven't done that many over the entire lifespan, but
you're in an environment where it is much more you know,
favorable because it doesn't make you.
Speaker 7 (19:21):
Say, you know, it's not so much that it makes
us say it because it has to make financial sense.
It has to be something that for us, you know,
we can say this is a good opportunity for us
to take advantage of the better regulatory environment, though, provides
more opportunities because then there'll be other institutions that think
they're better off if they partner with somebody, and you know,
(19:42):
in the last three, four or five years, that hasn't
been the case. Right, Many institutions to saying, hey, we
don't want to take a risk here of trying to
sell ourselves or partner with someone, and maybe that doesn't happen,
or it takes too long to happen and they hurt
the franchise.
Speaker 2 (19:57):
So that's probably a no for twenty twenty six.
Speaker 7 (20:00):
Well, it's hard to say.
Speaker 6 (20:01):
Well, just geographically, just in twenty seconds, geographically the most
appealing area where you want to be where you're not
right now.
Speaker 7 (20:07):
Look, we're in New York Metro, you know, based institution,
So that's a big market.
Speaker 4 (20:12):
Is awful?
Speaker 6 (20:13):
You want to grow here?
Speaker 7 (20:14):
Yeah, we want to go And as I always joke here,
you know Florida is part of that market. So I
like the growth prospects here in the New York metro market.
I like what's going on in Florida.
Speaker 2 (20:25):
Okay, we'd be remiss in terms of FED policy and
what we get in terms of a new FED chair.
And also we did get that additional rate cut last week. Frank,
you know the bank.
Speaker 7 (20:33):
We said, we said we were going to have a
rape cut last time we were here.
Speaker 2 (20:37):
Just real quickly, thirty second, how's the bank managing the
rate backdrop in the steeper yeal curve that we're seeing?
Speaker 4 (20:41):
Just quickly listen.
Speaker 7 (20:42):
I think it's great for banks, and I think you
see it, you know, in the market reaction to banks
over the last thirty forty five days, right, bank valuations
are up pretty strongly. Banks are now you know, favored
in portfolios today. I think part of it is the
steepness of the Yeal curve, and I think part of
it is the optimism around the economy.
Speaker 2 (21:00):
And it's twenty six it's still optimistic. Yeah, very kind
of love that, right, We could do use some optimism.
Frank Sorrentino. Thank you have a great holiday.
Speaker 6 (21:07):
Oh you heavy new year?
Speaker 2 (21:08):
Yeah, I really appreciate it. Founder chairman, founder chairman and
chief executive officer of Connect One Bank right here in
our studio.
Speaker 6 (21:15):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (21:23):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to fiveys during Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 6 (21:38):
I'm looking at shares a dgt US. It's Trump Media
and Technology Group. It's the parent company True Social, THEYDA
so Crypto financial Services. They're getting into nuclear fusion. It's
surging today more than forty one percent. The company said
today will merge with Tae Technologies. It's a closely held
fusion developer founded in nineteen ninety eight. This is a
transaction value at more than six billion dollars.
Speaker 2 (22:00):
It's it's kind of wild.
Speaker 6 (22:02):
Shareholders not on my business, my big go card. This
was not on mine either.
Speaker 2 (22:07):
Shareholders of each company or are going to own about
fifty percent of the combined business after the all stock
deals completed. That according to Trump Media. They put that
out in a statement. We have a ton of questions
about this, and we knew right off the bat that
we want to talk to Will Waite.
Speaker 6 (22:20):
He's Bloomberg News Energy reporter. He joins us here in
the Bloomberg Interactive Brokers Studio. I got a full disclosure
I had never heard of this company before six thirty
am this morning. Had you ever heard of it? No,
there were, Yeah, I've heard of Okay, so people in
the energy people in the energy world know this company.
Speaker 9 (22:38):
Yeah, yeah, TA is one of the companies in fusion
that we've been watching that's making solid progress.
Speaker 6 (22:44):
Solid progress. That's an important way to put it, because
because this is unproven at this point.
Speaker 5 (22:50):
Yeah, because is hard.
Speaker 9 (22:52):
Fusion is really hard. I mean I write about nuclear fission,
which moves really slow. Fusion is slower than that. It's
you know, it's it's literally creating a little tiny star
that you can find with super powerful magnets and somehow
get energy out of that. So if that sounds hard, yeah,
it is hard. But TA is a company that's been
(23:12):
They've been at this for a long time. We've been
watching them. But when I say solid progress, what that
really means is nobody has done this yet. It's been
demonstrated in a lab situation about and a couple times
since then. It's Lawrence Livermore in California. But no one's
(23:33):
got a commercial system working, no one's got demo systems working.
We're we're waiting for it.
Speaker 2 (23:41):
Is it the kind of thing will that all of
a sudden, like you know, Eureka, all of a sudden,
they figure it out and it could happen tomorrow. No,
it's more likely it's not going to happen for fill
in the blank.
Speaker 9 (23:51):
How many years, maybe less than ten for a couple things.
Speaker 2 (23:58):
That's a long ways out.
Speaker 9 (24:00):
So, I mean, the company I've really been watching is
called Commonwealth. They're already planning their first commercial system. They're
working on it in Virginia, but they're doing all their
research outside Boston because they came out of MIT. They
don't have their demo system working yet. They've been talking
about reaching like this critical milestone in twenty twenty seven,
(24:21):
twenty twenty eight ish. So, like I said, no one
can do this yet, but there's several companies that we
think are getting close. So I put TAE on the
list and they told us, you know that they're going
to start construction next year on a commercial system. I'm like,
you're going to start building what next year? I'd love
(24:44):
to see it happen. It'd be great, but I have questions.
Speaker 6 (24:48):
Apart from the association with the president and the close
ties to the president, that this gives the company. What
else would be in this I don't want this combination
of these two companies, Like, why would TAU do this money?
Speaker 9 (25:04):
They want money. In fact, they had a call this
morning and their CEO said that capital is becoming one
of their big challenges. And I'm like, I thought the
physics and the engineering was your big challenges. But you know,
they said they get up to three hundred million cash
out of this right away or when the deal closes,
(25:25):
but you know, close to nowish to start working on
their commercial system.
Speaker 5 (25:30):
So that's great.
Speaker 9 (25:30):
And they get you know, access to the Trump media backing,
so that's good for them. So there's a lot of
money happening here.
Speaker 2 (25:39):
I mean, if it was so promising, why aren't other
investors rushing to give them money or others? Is it
just because of how long this is taking?
Speaker 5 (25:51):
It could be.
Speaker 9 (25:52):
I don't know the answer to that question, but it's
the right question to ask. They've already raised like I
think a billion three to date, which is, you know,
a lot of money. But fusion takes time and takes
a lot of money. There's a lot of companies you know,
working on it, and they've all raised billions of dollars
as well.
Speaker 6 (26:12):
So let's say one of these companies, maybe TA, maybe
another company, maybe Commonwealth, is able to pull this off.
What is the ultimate promise and what does that look
like in terms of facilities, in terms of what it
does to the grid, in terms of what it does
to our power bills.
Speaker 9 (26:25):
Okay, the ultimate promise is really something special. This fusion energy.
It does not have the dangerous radioactive waste that you
get from fission energy, so that's great. And some of
the raw materials that they use for fuel and a
lot of it just comes from hydrogen, so it's not
(26:48):
as hard to get. So fusion companies will say we
have the promise of abundant clean energy and like it sounds,
you know, like a fantasy, but it's actually kind of
what they're what they're working towards, so it would be great.
Speaker 6 (27:03):
It's called nuclear fusion. Yeah, where's the Where does the
nuclear part come at?
Speaker 2 (27:07):
The process?
Speaker 6 (27:08):
The process? All right?
Speaker 9 (27:09):
So fission, which is what we have now, is when
you have a big atom and you break it up
and you get energy from splitting it. Fusion is the
exact opposite. You take small atoms and you smush them
together and you get energy when they fuse into something.
Speaker 2 (27:24):
Else and there's no byproduct.
Speaker 9 (27:27):
I wouldn't say there's no byproduct. So some of the
processes have some radioactive waste, but it's not the dangerous
toxic waste like from fuel rods, you know, the old
spent uranium fuel rods. It's low level waste. It's not
as bad, it's not nothing. It's easier to deal with it.
Speaker 2 (27:46):
Is it interesting? And forgive me, I was just looking
for the specifics, but I believe the administration dropped some
nuclear regulation regulations or regulatory framework this week. I mean,
is it interesting? Kind of the.
Speaker 4 (27:57):
Timing on all of this.
Speaker 2 (27:58):
And I don't well to point fingers in anything, but
it seems kind of coinky digg.
Speaker 9 (28:05):
It could be a coincidence. It could be not a coincidence.
I'm not in a position to say, but I might
say it would be.
Speaker 1 (28:12):
Yeah.
Speaker 9 (28:13):
But it's definitely true that the Trump administration is really
supportive of nuclear energy. They've done a lot of executive
orders and policy changes to make nuclear happen.
Speaker 2 (28:25):
Is that a good thing in your view? For someone
who's been following this space. Has there been too much
regulatory oversight to be fair?
Speaker 5 (28:34):
To be fair?
Speaker 9 (28:35):
I hear consistently that one of the challenges for getting
a nuclear power plant built is the paperwork. It's getting
all the approvals. Now. To be even more fair, I
want a government that takes radiation seriously, but it has
been something that slows the process, and especially in this country,
(28:58):
nuclear is very, very expensive, and one of the reasons
is because it takes so long to get things going.
So having some of the processes streamlined, I'm in favor
of that.
Speaker 6 (29:11):
Very briefly. Well, ten seconds. How many nuclear plants will
be brought online next year?
Speaker 4 (29:15):
Next year?
Speaker 6 (29:16):
Yeah, one that I know of, Okay, more than's one?
More than this year?
Speaker 7 (29:19):
Yeah.
Speaker 9 (29:20):
Then Palisades Plant Michigan should come back online January February.
Speaker 2 (29:23):
Five seconds. How many are China putting online next year?
Speaker 5 (29:26):
Way more than that?
Speaker 2 (29:28):
Okay. We will continue this conversation into the New York
will wait. Thank you so much, Happy Holidays, Merry Christmas,
all that good stuff. Bloomberg News Energy Reporter.
Speaker 6 (29:37):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (29:45):
You're listening to the Bloomberg Business Week Daily podcast. Catch
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Speaker 6 (30:00):
Darden Restaurants, the owner of Olive Garden and Longhorn Steakhouse,
climbed after the company Race's comp sales forecast is cited
better than expected growth fueled by affordable meal options and
strong spending from higher income diners. Dartnet expects some economic
pressure in the first half of next year, but Carol
this could be offset by consumer spending from potential fiscal
stimulus in early twenty twenty six, and beef prices are
(30:22):
also expected to fall next year. Hallelujah as production increases.
I mean, beef has been getting hit hard.
Speaker 2 (30:28):
In our home. Yeah. Michelle Coursmo is presidency of the
National Restaurant Association. We're curious what she has to say.
It is the trade group for the restaurant industry, and
she joins us from Washington, d C. Michelle tim just
laid out really good news, or some good news, we
should say, from Darden today. We've seen mixed results though
from the restaurants. It's a great read on the business community,
(30:51):
a great read on the consumer. Sweet Greens co founder
also stepping down from the struggling salad chain after the
share price has dropped about eighty percent so far this year,
covs down sixty percent from this year's size to poutlet
is down forty five percent from this year's high. It
doesn't sound so great. These are your members, these are
this is your community. What are you hearing from them?
Speaker 10 (31:13):
Well, exactly what you've said in terms of such a
great industry and such a great bell weather for how
the economy is doing. And it really is a mixed bag.
So we've seen one point five trillion dollars in restaurant
industry sales in twenty twenty five, which is up from
last year, but not as strong as it needs to
be and not as strong as we want it to
be in these really tight margin businesses. And what we
(31:34):
found is it kind of depends on is it kind
of depends on how your it is and really how
you're leaning into that price certainty for customers, value matters.
Price certainty really matters. And so you see that making
a difference as they're also navigating all of the tariff
and supply chain and beef price problems that you've just
talked about.
Speaker 6 (31:53):
Yeah, we're going to get to some of the challenges
in just a minute. So that's how your members are doing.
Your members depend on consumers. From your perch, how's the
consumer doing? And it's not monolithic by any means, but
how would you describe the US consumer right now?
Speaker 2 (32:10):
So?
Speaker 10 (32:11):
The US consumer right now, I would say is very deliberate.
They want to be certain about what they are spending
and how they're doing it. And that's really a place
where restaurants have been able to lean into some of
that certainty in the offerings they have in the pricing.
But it's definitely been a situation where we're not seeing as.
Speaker 5 (32:30):
Much traffic as we normally would.
Speaker 10 (32:33):
We always want to see those guest count numbers going
up in restaurants, and it hasn't been going up at
the level that people want.
Speaker 6 (32:42):
Okay, So I just want to go through some of
the challenges you mentioned. Some of the challenges you said,
the tariff related challenges, the beef price challenges. What is
the biggest challenge that restaurants are facing.
Speaker 5 (32:58):
Certainty.
Speaker 10 (32:58):
I think with every industry and with every business, what
everyone is looking for is certainty. And we certainly know
that the President has an aggressive agenda to try to
make a strong economy for US consumers, but the lack
of certainty actually creates.
Speaker 5 (33:15):
Something that feels quite the opposite.
Speaker 10 (33:17):
When restaurants are dealing with how to navigate different pricing,
supply chain problems, tear iff price increases, changing from day
to day. That definitely gets to be a bit of
a challenge for restaurants trying to serve consumers that are
looking for that certainty.
Speaker 6 (33:33):
You know, one thing that we're seeing certain about is immigration,
And this note from Torsten Slock at Apollo this morning
really caught my attention, he said. He writes, from twenty
twenty two to twenty twenty four, net immigration was around
three million people per year, the CBO forecasting that annual
immigration at twenty twenty five and twenty twenty six will
be around five hundred thousand people. Torston writing quote, this
(33:56):
has important consequences for labor supply, wage growth, and housing demand.
From a labor supply issue that affects your members, but
also from a customer's perspective that affects your members. Which
one is harder for the restaurants in the US right now.
Is it the lack of workers from immigration? Yeah, that
(34:17):
customers from immigration.
Speaker 5 (34:18):
That feels like a Hobson's choice.
Speaker 10 (34:20):
So, without a doubt, the restaurant industry really cares about
ensuring that we've got enough workforce to help provide that
great hospitality that makes people love restaurants. And there's nine
hundred and eighty eight thousand open positions in restaurant and
hospitality this month.
Speaker 5 (34:36):
So we need workers.
Speaker 10 (34:38):
And this is why it's been a significant issue for
us to push for immigration reform. We need more legal
pathways for guest worker programs, more opportunities.
Speaker 5 (34:48):
For people to come in and do this.
Speaker 10 (34:50):
Work even as a guest worker, in a legal, documented fashion.
And so getting to that solution is something we're really
pushing for for Congress because we need to get people
in jobs in restaurants well, the constomers need it.
Speaker 2 (35:03):
Well. Big problem that's a lot of workers that aren't
that the industry needs. Is the White House listening. Are
members of Congress listening?
Speaker 5 (35:14):
We never feel like they're listening enough on immigration, so
they're always seems.
Speaker 2 (35:18):
Are they listening less than maybe they were in years past,
recent years.
Speaker 10 (35:22):
Past, this has been a difficult issue. In fact, some
would call this the third rail in terms of issues
that Congress deals with. For decades, frankly, and we get
close often, but we need to get it across the
finish line. And so that's really what we're pushing, is
it's time for them to realize that it has to
(35:44):
provide some legal pathways because we're seeing I mean, those
numbers that you're talking about with immigration coming down, I
think we're going to see in twenty twenty five in
reports I've read that this will be the first year
that the US population will not have increased. And that's
a significant impact on our workforce. And so we care
a lot about making sure that we've got enough workers
in the restaurant industry. You know, there's certainly a lot
(36:06):
of places for technology to take jobs, but hospitality is
still built on people and personal interactions. So we want
those people to work in restaurants, and we want obviously
a robust economy with lots of consumers that are coming
in to enjoy those restaurants.
Speaker 2 (36:21):
Well, you know, and I just want to go back
to the speech that President Trump gave last night, the
primetime speech, and he talked a lot about immigrants and immigration,
but he said a lot of the immigrants and forgive
me and I should have the exact quote in front
of me, but basically that a lot of the immigrants
that are coming in are criminals, and so on, what's
(36:42):
the restaurant industry's experience with immigrants who come into the
United States? And I realized, there's legal, there's illegal. So
I'm just but there's a lot of folks that maybe
aren't legal that are in the restaurant industry that you
might hear that kind of on the side. So I'm
just curious about that commentary from the President and the
reality of of what it really is all about.
Speaker 10 (37:02):
We don't think that that commentary tells the full story.
And I think we want to start with a complete
agreement that people that are breaking laws, especially those laws
that are hurting Americans, really aren't as illegal immigrants certainly
not a place for them here, and so creating a
(37:22):
safe environment for Americans is really important. But there's a
lot of people who are showing up every day, working hard,
being reliable, taking care of their families, doing the right thing,
mowing their law, all of those things that make your
neighbor somebody that is friendly and reliable that.
Speaker 5 (37:39):
You want to see.
Speaker 10 (37:40):
And so this is why it's important to us that
we push for more legal pathways to guestworker programs because
those people need to be in our communities contributing. And
obviously we need.
Speaker 5 (37:52):
To deal with the people that are breaking the laws.
Speaker 10 (37:54):
But for those people that want to work hard and
show up and contribute to our economy, let's find a
place for them to do that.
Speaker 6 (38:01):
Beef price is still up thirteen percent so far this year,
though they're down from the highs that we saw in
August and September of this year. We've spoken to you
in the past and we've talked about inflationary concerns, but
it hits restaurants different because the margins are so tight.
What are the biggest costs right now for your members?
Speaker 10 (38:22):
So beef costs for sure. We're seeing a lot of
fluctuation on seafood. One of the things that we're seeing
in the data that we're trying to figure out is
a lot of data is showing seafood as a protein
price going down. But what our members are telling us
from our survey work is that they're seeing increase seafood prices,
and so there's a lot more we've got to figure
(38:43):
out there. And I think this is a place where
tariffs or the threat of tariffs is really hurting that
supply chain, especially as whatever happened to be in the
warehouse under a pre tariff price really starts to deplete.
And so I think anytime you're looking at ros, that's
going to be a place where people are concerned. And
then anytime you're.
Speaker 5 (39:04):
Looking at any kind of vegetable.
Speaker 10 (39:07):
Or produce, we want to make sure that those tariffs
stay off as well, because we can't produce in the
United States the amount of produce that can we consume
on a regular basis, and we certainly can't produce it year.
Speaker 5 (39:20):
Round, Michelle, not in DC in.
Speaker 6 (39:23):
The wind that is that is true, and even in California,
doesn't you know, satisfy the entire country or provide for
the entire country. Hey, before we let you go, we
got to talk about cold hard cash, specifically the penny.
I was surprised on our editorial call when our producer
already said that this is a big issue for you guys.
Costing your restaurants thirteen to fourteen million dollars monthly enforced
(39:44):
rounding losses will explain what's going on with the penny.
Speaker 10 (39:48):
Well, it is certainly interesting and nobody really had on
our BINGO card for twenty twenty five that we would
be talking about penny shortages. But for some reason that
we can't quite figure out, the FED has stopped c
sculating pennies. So the Federal Reserve does a really important
thing by keeping money and coins circulating around the country
so that we've got the right level of those coins
(40:11):
and bills in the right areas and regions, And right
now they're not doing that with pennies, and so we're
seeing pennage shortages, and so often consumers are coming in
and paying cash. In fact, I think people would be
surprised to know that one in four transactions and restaurants
is a cash transaction. So people are coming in paying
cash and often they can't get exact change. So that's
(40:31):
creating a difficult situation for consumers. But also that difficult
situation that you cited in the thirteen to fourteen million
dollars a year in lost revenue for restaurants.
Speaker 2 (40:42):
Wow, that's a real number. It's interesting. My understanding is
they stop mining them because I think it costs more.
Speaker 6 (40:48):
But this is different. This is the Federal Reserve in
circulation versus the US not producing them.
Speaker 2 (40:52):
New ones, so they're amount of circulation.
Speaker 10 (40:55):
Yeah, there are three hundred million pennies that are in
circulation right now in the US, and so there should
be enough pennies rolling around that we can keep using
pennies even though they are not mint.
Speaker 4 (41:09):
They check the couch cushions, that's right.
Speaker 6 (41:13):
My husband's for the washing machine. That's usually where they end.
Speaker 2 (41:18):
U TU bring up those pennies, It matters, and those
single socks. Michelle, Thanks so much. Michelle Cosmo, President and
CEO of the National Restaurant Association trade group for the
restaurant industries.
Speaker 1 (41:29):
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