December 5, 2025 • 35 mins
Watch Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Hosts: Paul Sweeney and Norah Mulinda
On this podcast:
- Brian Egger, Bloomberg Intelligence Senior Gaming and Lodging Analyst, discusses New York Mets owner Steve Cohen winning approval to operate a casino next to Citi Field in Queens.
- Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail, discusses Macy's earnings.
- Lily Meier, Bloomberg Retail Reporter, discusses Dollar Tree earnings.
- Anurag Rana, Bloomberg Intelligence Technology Analyst, discusses Salesforce earnings.
- George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense, & Airlines Analyst, discusses Airbus shares dropping on report of quality issues on dozens of A320s.
- Jeffrey Langbaum, Bloomberg Intelligence Senior US REIT Analyst, discusses latest in real estate.
- Helen Kou, BNEF Head of US Power Markets Research, discusses power demand from AI/data centers
Bloomberg Intelligence, the research arm of Bloomberg L.P., has more than 400 professionals who provide in-depth analysis on more than 2,000 companies and 135 industries while considering strategic, equity and credit perspectives. BI also provides interactive data from over 500 independent contributors. It is available exclusively for Bloomberg Terminal subscribers.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio, Studios, podcasts, radio News. This is Bloomberg Intelligence
with Scarletfoo and Paul Sweeney.
Speaker 2 (00:13):
How do you think the FED is looking at tariffs?
The uncertainty of terriffs.
Speaker 3 (00:17):
Let's take a look at the sectors and how they.
Speaker 2 (00:19):
Performed a lot of investors getting whip salt every day
by news.
Speaker 1 (00:21):
Events, breaking market headlines, and corporate news from across the globe.
Speaker 4 (00:26):
Could we see a market disruption of market events?
Speaker 2 (00:28):
So people just too exuberant out there?
Speaker 4 (00:30):
You see some so called low quality stocks driving this
short term rally.
Speaker 1 (00:34):
Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio,
YouTube and Bloomberg Originals.
Speaker 3 (00:42):
I'm Paul Sweeney and I'm marm Melinda filling in for Scarlettfoo.
Speaker 2 (00:45):
On today's Bloomberg Intelligence Show. We dig inside the big
business stories impacting Wall Street and the global markets.
Speaker 3 (00:50):
Each and every week, we provide in depth research and
data on some of the two thousand companies and one
hundred and thirty industries are analysts cover worldwide.
Speaker 2 (00:57):
Today, we'll look at why the cloud based software company
Salesforce gave a strong outlook for sales in the current quarter.
Speaker 3 (01:03):
Class well dive into why shares of the aerospace company
Airbus plunged and how this might affect the delivery of
its newly produced jets.
Speaker 2 (01:10):
But first we begin with some news in the casino
and gaming space.
Speaker 3 (01:13):
This week, New York Mets owner Steve Cohen won approval
to operate a casino next to City Fields and Queens.
Speaker 2 (01:19):
It's one of the three projects select different gambling licenses
in New York City, and this was done by the
State Gaming Commission's Facility Location Board.
Speaker 3 (01:27):
Cohen, the Hedge Fund Mobile submitted an eight billion dollar
casino proposal with partner hard Rock International and was picked
alongside genting groups Resorts World and Ballys. These three projects
are expected to generate significant revenue and create thousands of
jobs for.
Speaker 2 (01:41):
More and all. This guest host Alex Simonova and I
were joined by Brian Eggert, Bloomberg Intelligence senior Gaming and
launching analysts. We first asked Brian to talk about what
the licenses represent and where we go from here.
Speaker 5 (01:52):
So this is a fairly protractive process involving ultimately di
selection of three recipients. By the way, the only three
left in the running after a few others were limited
and dropped out, and really it authorized resort casinos for
the downstate New York area, mostly in New York City.
And as it turns out, the three qualified casino applicants,
(02:12):
if you will, really are are in New York City
but outside the Borough of Manhattan itself.
Speaker 4 (02:17):
Brian, just looking at your note on these license approvals,
you write that they face a narrow path to decent
returns on investment. Can you please talk to us a
little bit more about that idea?
Speaker 5 (02:28):
Sure? So, what we assume for those resorts is they
will get what I would call a gaming revenue premium
and room rate premium of ten twenty percent to other
kind of high end urban area resorts such as the
Burgata and Atlantic City wins Encore in Boston. However, are
concerned if in terms of the return prospects are that
(02:51):
development costs are quite high and perhaps some of the
targeted non gaming contribution elements might be a bit ambitious.
So for that reason, when we worked the numbers, we
came up with something like a ten percent return on investment,
which is certainly a bit less than most operators would
expect to attain in these regional markets.
Speaker 2 (03:11):
So I'm thinking here I mean again, I'm just thinking
about Steve Cohen's I was looking at his plans in
conjunction with his city field. He obviously he owns the Mets.
City field is out there, the National Tennis centers out there.
We had the world's fair situations, so there's a ton
of opportunity out there. It seems like these are going
to be more retail hotel than casino. How do you
(03:35):
think the mix of revenue is going to be there?
Speaker 5 (03:37):
So this certainly is I think when we work the numbers,
we assume that with respect to either food and beverage
or retail entertainment revenue, those will be fairly sizable chunks
of the overall revenue PI probably cuatively close to half,
which is true of many kind of gaming resorts in
(03:58):
attractive environments get a lot of non gaming revenue. I
think the same will be true here. The question is
will it be enough and will be margins which we
take to be about thirty percent, be sufficient to get
a good return. But certainly, you know the logic of
having at nexas city field makes a lot of sense.
You know, the other locations valleys and a golf course
in the Bronx. You know, the the resorts world in
(04:21):
Queen's pretty much expanding and existing facility all have their merit.
The question is will be enough to get a decent return,
But certainly some of these locations have rational prospects.
Speaker 4 (04:32):
What does this victory for these three companies mean for
their competitors like Sands MGM, When where do they go
from here?
Speaker 5 (04:40):
So to be queer, You know, Sans exited this process
back in April. When exited in May, it's Hudson York
project because of community opposition at MGM in October because
of the licensed terms. But bear in mind that they
do have other prospects. You know, when is developing a
UAE resort of its own, gm is building in Osaka, Japan.
(05:02):
They all can buy back in their own stock. So
I think they're weighing this particular opportunity relative to other
development prospects.
Speaker 2 (05:10):
So we're going to get the licenses by year end.
What's the time taime if anybody any of these three
licensed winners lay out of timetable for getting a shovel
in the ground and maybe even opening the doors.
Speaker 5 (05:22):
So I think it'll vary by operator. But the expectations
that these resorts will generally open by twenty thirty or so.
It'll take a few years to develop. There was always
the possibility of construction challenges, but that's the target. And
of course our related to concerns since you mentioned MGM
was MGM Ballely's Caesars O operaate casinos in Atlantic City,
(05:45):
and you know, the proximity to Alantic City of resorts
with casino elements at this caliber certainly presents a potential
competitive challenge to Atlantic City itself.
Speaker 2 (05:56):
AC. That's tough. That's tough because I would see you know,
on the parkway, Brian, I know you see it too.
We have for years, for twenty thirty years, we've seen
the limousines from New York City going down the Parkway
to AC. That's going to get it impacted, isn't.
Speaker 5 (06:11):
It It will? I think you know, some operaters Burgata,
for example, a hard rock may hold up better than others.
But you know, there's always a challenge when you've got
this much additional gaming capacity with resort elements opening up
in relative close proximity to a to a key Atlantic
City feeder market.
Speaker 3 (06:31):
Our thanks to Brian Eger, Bloomberg Intelligence Senior Gaming and
Lodging analysts.
Speaker 2 (06:35):
We move now to the retail space.
Speaker 3 (06:36):
This week, the department store chains Macy's posted better than
expected results last quarter. However, shares dropped if the company
pointed to a potential for soft demand from low income
shoppers for the current quarter.
Speaker 2 (06:47):
For more, Nora and I were joined by Mary Ross
and Gilbert Bloomberg Intelligence senior equity analyst covering retail.
Speaker 3 (06:52):
We first asked Mary to break down Macy's most recent quarter.
Speaker 6 (06:55):
We saw, actually, I think great results coming out of
Macy's see but the company put out conservative fourth quarter
guidance and that's really what they always do. They seek
to beat their numbers, and so that guidance came in
very close, you know, at the high end. It's right
around where analysts are because they already saw strong results
come in from other retailers. But we think, when we
(07:19):
think about it, we think there's upside here. So we
really view the results as look Macy's name plate because
of all the changes that they're making, and what that
means is they're bringing in more relevant brands that are
resonating with their consumer. Not only that, but the stores
look brighter. There's really kind of exciting music in the stores.
(07:41):
The store associates are more engaged with the customer. We've
noticed that on our channel text, particularly on Black Friday,
we saw more traffic in the store than we've seen
in years past. So we think that the changes that
CEO Tony Sprain is making and he's really making his
cues from what he's done at Bloomingdale's, it's resonating, it's working,
(08:04):
and so we think this momentum is building and we
certainly saw it in the third quarter numbers with comp
sales two point seven percent for the Go Forwards stores,
and so with that, I mean that's a big improvement sequentially,
and so we think that's building, you know, going into
the fourth quarter and just with you know, the constant
improvement that we're seeing there.
Speaker 3 (08:25):
So when most people think about the retail space right now,
a lot of people think about the transition to e commerce,
but it sounds as though, from what you're explaining, a
lot of people are going there in person. I mean,
I'm looking at Coals, I'm looking at Dillard's. What are
they doing in particular that's really attracting customers to come
through the doors. Is it also collaborations with celebrities by chance?
Speaker 6 (08:45):
Yes, you raised a valid point, and it is. It
does include collaborations. So for example, they Aqua you know,
they're under their Bloomingdale's brand currently has a collapse going
out with a designer out to move on and so yes,
these collaborations also even you know, they'll have some events.
Speaker 7 (09:06):
But all of that is is certainly drawing.
Speaker 6 (09:09):
In new customers and I think Macy's nameplate could certainly
do more on that end. They had their first collab
with their on thirty fourth brand this year, but we
think we're going to see more next year because if
you look at what Dillard's has been doing over the
last few years, and they have a different business model
than Macy's does. They're not really promotional. For example, for
(09:31):
Black Friday, they just had clearance sales and it was
pretty comparable to last year, so that didn't mean that
the rest of the merchandise was on sale.
Speaker 7 (09:39):
Macy's the you know, is far more promotional.
Speaker 6 (09:43):
But by doing collaborations, you know, by getting celebrities involved.
So for example, for the holiday, they have Jennifer Hudson
that's you know, fronting their campaign for the holiday, and
they're also engaging with social influencers. Yes, all of that
is resonating. We're seeing it with other brands, like for
(10:04):
example with American Eagle, which just tapped Martha Stewart and
that that's appealing to gen Z.
Speaker 3 (10:11):
Oh wow, so one.
Speaker 6 (10:14):
Yeah, so these bold campaigns that these brands are doing,
Macy's is also getting involved there and they're dipping there
to I would say, they're dipping their toe in the water.
But I think we're going to see that increase, you know,
and build as we get into twenty twenty six. And
when you talk about the digital business, because of course
you're always hearing let's say, stronger growth on digital. For example,
(10:37):
when we looked at Black Friday, you know, over the
weekend through Cyber Monday, the sales strength was really led
by digital. Digital was up double digits versus you know,
load to mid single digits for in store.
Speaker 7 (10:51):
So I think that's really positive there.
Speaker 6 (10:55):
But so when we look at Macy's, a third of
their sales come from digital, so still in the store
is very big, but it's also omni channel well, the
ability to buy online, take back in store, or buy
online pickup in store.
Speaker 2 (11:09):
Just real quick, thirty seconds, what's macy saying about the
consumer out there.
Speaker 6 (11:13):
Yeah, So they're saying that the lower end consumer is
really feeling pinched, and that's where they're seeing some challenges
on some of the price increases on their lower price
point items. But the higher middle income, in the higher
income consumer is resilient and they haven't flashed or batter
DENI with higher prices that they took to offset tariffs,
(11:35):
and they're still buying.
Speaker 2 (11:37):
Thanks to Mary Ross Gilbert Bloomberg Intelligence, senior equity analyst
covering retail.
Speaker 3 (11:41):
Coming up, we continue in the retail space and look
at earnings from the discout retailer dollar.
Speaker 2 (11:45):
Tree listening to Bloomberg Intelligence on Bloomberg Radio, providing research
and data on two thousand companies and one hundred and
thirty industries.
Speaker 3 (11:52):
You can access Bloomberg Intelligence via b I go on
the terminal. I'm normal Linda, and I'm Paul.
Speaker 2 (11:56):
Sweeney, and this is Bloomberg.
Speaker 1 (12:02):
This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney
on Bloomberg Radio.
Speaker 3 (12:09):
I'm Paul Sweeney and I'm normal Linda, filling in for
Scarlet Foo.
Speaker 2 (12:12):
We continue into retail space. This week, dollar Tree reported
better than expected profit and raised its full year outlook.
Speaker 3 (12:18):
It's a sign that the discount retailer is capturing more
spending from stretched shoppers. For more of this, Paul and
I were joined by Lilly Meyer, Bloomberg Retail reporter.
Speaker 2 (12:26):
First ass Lily to break down Dollar Tree's most recent quarter.
Speaker 8 (12:29):
Yeah.
Speaker 9 (12:29):
So Dollar Tree did well this quarter at matt expectations
on revenue and same store sales, and it raised its
profit outlook for the year. I think they really have
hit a niche in being able to capture consumers, both
lower end consumers who need cheaper goods and then high
income consumers who are looking to trade down.
Speaker 3 (12:50):
So, I mean, what do we think about elasticity of
the lower end consumer right now? Because I mean, if
you think about Walmart, I used to think of this
as a company that you know, was a cheaper place
to show, but it seems as though it's appealing to
multiple consumer types. But it seems as a dollar Tree
really is a great place for the lower end consumer.
Speaker 9 (13:07):
Yeah, and actually recently dollar Tree has been looking to
kind of break into that higher income shopper as well.
So it has this pricing strategy, so it has some
products that are still cheaper, but then it has some
it's getting more products that are more expensive.
Speaker 2 (13:23):
What is Dollar Tree saying about its core consumer out there?
Who is that core consumer and how are they behaving?
Speaker 9 (13:30):
Yeah, so I think it's core consumer is still a
lower income shopper. Eighty five percent of their products are
two dollars an under, so they really still have a
lot of value.
Speaker 3 (13:39):
So they're seeing.
Speaker 9 (13:39):
Those shoppers continue to go in. But this quarter they
saw traffic down and they attributed that to tariff increases.
Speaker 3 (13:46):
But what's the takeaway in terms of the outlook. I mean,
you talked about tariff still being a drag here.
Speaker 9 (13:51):
Yeah, so tariffs will really dragged this quarter. They said
that's going to lessen, So I think this was the
quarter where we're really seeing the biggest tariff impact. It'll
be really interesting to see what they predict for consumers
next year. I'm interested to hear about that and also
what they see for holiday if they continue to see
hire income shoppers trading down for gifts.
Speaker 2 (14:11):
Is the dollar stores do they see a surgeon sales
seasonal surge and sales from holiday sales that Do they
see that like a department store would.
Speaker 9 (14:20):
Yeah, I don't know if it's the same surge, but
you know, they sell a lot of gift wrapping and
gift bags and some of those smaller gifts stocking stuffer,
so I think they see a lot of that around
the holidays.
Speaker 3 (14:30):
So what are we seeing in terms of just the
broader read on the retail space? This kind of gives
us a picture of the lower end consumer, But what
are you seeing across the board?
Speaker 9 (14:37):
So broadly, we're really still seeing consumer spend, So there
hasn't been that massive pullback that I think some of
us were imagining might happen. We're still seeing consumer spend,
but they're really value driven, so they're looking for the
best deals they can get. They're trading down when they
need to, They're stocking up on essentials.
Speaker 2 (14:54):
How promotional are retailers right now? Because I'm in I know,
talk to Punham Gooile, the retail analyst Bloomberg Intelligence. She says,
you know, the more promotions you see out there, that's
going to be that goes right to the margins, the
profit margins of some of these retailers. What are we
seeing this season?
Speaker 9 (15:11):
That's a good question. So this season, we've actually seen
some retailers pull back on deals to protect their margin.
So some companies are doing that as part of a
broader strategy, and then some are having to do that
because of tariff. So, you know, for Black Friday, typically
they'd offer big discounts and some are pulling back or
not offering discounts at all.
Speaker 3 (15:29):
So consumers have still been broadly spending in the retail space.
What are they spending on? Is it? You know, are
we spending money on essentials right now? Skipping this lurging? Yeah, yeah,
that's exactly it.
Speaker 9 (15:41):
So Black Friday, we talked to a lot of folks
who were saying they're going to just get essentials this
Black Friday. So instead of buying, you know, a Lake Crusette,
Dutch oven, they were We talked to someone who instead
was going to buy like three bags of forty pounds
dog food.
Speaker 2 (15:55):
Oh that sounds okay.
Speaker 7 (15:57):
Yeah, So really.
Speaker 9 (15:58):
Using you know, deals to get things that they need
for themselves rather than getting that big ticket item they
waited for.
Speaker 2 (16:05):
What I learned from talking to retail folks is omni
channel retail, which is you use both the online and
the bricks and mortar, and maybe you look at something online,
then you want to go touch and feel it, or
maybe you order it then you pick it up at
the store. Omni channels that still a thing.
Speaker 9 (16:21):
Yeah, Yeah, So we were out there on Black Friday
and some of the stores, and you know, while a
lot of people have switched their holiday shopping to be online,
we still saw a ton of people in stores, especially
at stores with really good deals and stores that have
appealed to young shoppers. So brands like Addicted and Princess
Paul that are in malls were really flooded with young people.
Speaker 3 (16:41):
Our thanks to Lily Meyer, Bloomberg Retail reporter, move next.
Speaker 2 (16:44):
To quarterly earnings from the cloud based software company Salesforce.
Speaker 3 (16:48):
This week, the company reported third quarter earnings that beat
analyst expectations. Salesforce also gave an outlook for revenue in
the current quarter that topped Wall Street estimates.
Speaker 2 (16:56):
This suggests that the software company is persuading customers to
buy it AI tools. For more on this, Nornite were
joined by anarag Rana, Bloomberg Intelligence technology analyst.
Speaker 3 (17:05):
We first asked Aniog for his take on the most
recent earnings report from Salesforce.
Speaker 10 (17:09):
Yeah, the sack.
Speaker 11 (17:10):
The results did come in, I mean almost in line
with how we were looking at it in terms of
that the core business is still struggling. But when it
comes to some of their AI products that has started
to do well, they've gained momentum. But when you look
at somebody like a salesforce, when you have a revenue
base of forty one billion dollars, it takes a lot
to move the needles. So even though these products are
(17:30):
very small and you know, growing triple digits, but they
are not you know, right there in order to take
down what is happening on the core business, which is
a decline in seat growth or the less addition of
seats because of macro IT spending, and that is probably
going to be the story, at least for the near term.
Speaker 3 (17:51):
So it seems as though analysts are still generally positive
on in terms of AI adoption trends when we think
about this company though.
Speaker 11 (17:59):
Yes, absolutely, and that's you know, one of the things.
We saw really good numbers on both the data cloud
side of it and also the agent force. But when
you look at the stock reaction and finally people have
when you really scrape the numbers and see that their
commercial remaining performance obligations, which is the order book for
next quarter, which they expect to grow about thirteen percent
(18:19):
in constant currency four percentage of point of that is informatica.
So when you strip that out, you will see that
that particular backlock number goes from eleven percent this quarter
to let's say nine or ten percent. So the core
is still declining or the core is still under pressure.
Speaker 2 (18:35):
So the stock down twenty seven percent year to date
on a rock that does that reflect the fact that
it's just it budgets are tight, or that AI poses
an existential threat to certain providers like a Salesforce.
Speaker 11 (18:50):
I don't think that's the case, because it's going to
be very difficult for an established Fortune two thousand company
to get rid of their core system of record, you know,
whether that's an HRS sales customer service and just deploy
a model in there. At least we are not there yet.
Maybe you know, five years down the road we may
see a scenario like this. But that's not really why
Salesforce is struggling. It is basically, we are the largest
(19:13):
provider of sales automation tool and customer service tool to
Fortune two thousand companies. It's those companies that are not
hiding at that same rate that they used to because
outside of AI and AI infrastructure, everything else is still
weak at this.
Speaker 2 (19:27):
Point our thanks to anaag Rana Bloomberg Intelligence technology analysts, we.
Speaker 3 (19:31):
Move to some news in the aerospace sector.
Speaker 2 (19:33):
This week's shares of the aerospace company Airbus plunged after
revealed a quality issue on some fuselage panels of its
A three to twenty airliner. This came just days after
Airbus flagged a software glitch on about six thousand jets.
Speaker 3 (19:46):
As a result, Airbus must inspect hundreds of its best
selling A three twenty jets for potential quality flaws in
the aircraft's body, and this could risk slowing down delivery
of newly produced jets.
Speaker 2 (19:55):
For more on this guest host Alex Semonova and I
were joined by George ferguson Bloomberg Intelligence. Your aerospace, defense
and airlines analysts first asked George to talk to us
about why it seems Airbus has been able to fly
under the radar until just recently.
Speaker 8 (20:08):
I think they've also had their challenges in the supply
chain along the way, just throwing challenges were so much
greater that they stole the spotlight, if you will. But
I mean, look, the aerospace supply chain is a bit
thin right, It doesn't have the same redundancy as like
you'd get in an auto supply chain, and so when
you just have some little problem at one of your suppliers,
(20:31):
you know, it can really interrupt your ability to deliver airplanes.
And I think right now what you're seeing is that
Airbus already has a really tall order to meet the
something like eight hundred and twenty airplane guidance or delivery
guidance they've got for this year. We don't think they're
gonna make it. I think they need seventy plus a
(20:52):
three twenties in the last two months of the year
in November December. We think that's pretty hard given they've
kind of delivered fifty five ish most months of in
the last couple, you know, for months, and so I
think a quality problem here probably really places in doubt
their ability to make that guidance, and that's going to
(21:14):
hurt their profitability for the year.
Speaker 4 (21:15):
George, you mentioned that really ambitious target for eight hundred
and twenty aircraft deliveries by the end of this year.
How disappointed could investors get if it fails to meet
that target. On top of the headwinds that this company
is already facing well.
Speaker 8 (21:30):
I mean, so I think you're starting to see, you know,
the disappointment here. Again, I'd be surprised if most investors
weren't already concerned that the target was too high. I
think Airbus has really put out a bunch of very
ambitious build rate targets right the I think our latest
number in A three twenty is that we would be
going to something like seventy five a month, and that's
(21:54):
consistently throughout the entire year, right by the end of
twenty twenty six, which to us just seems far too high.
And I feel like Airbus keeps trying to lead the
supplier base by pushing these higher numbers out and trying
to pull the supplier base along, and then over time
lowers some of these expectations. So look, I think anything
(22:15):
they miss now isn't going away. It gets pushed into
the next year and the next year, and again, I
think the bigger challenge here is investors have to ask themselves,
are a lot of these Airbus targets for delivery rates?
Are they just too ambitious? And don't we have to
sort of knock them down when we build our consensus
for what we think the company's going to be able
to do.
Speaker 2 (22:35):
Because George, I mean a number like seventy seems really
high to me because when we talk about Boeing, it's like, Gee,
I hope they can get the forty maybe to fifty.
Is that does Boeing typically run that far behind on
a production schedule than a Airbus.
Speaker 8 (22:51):
So I would say that if you would consider normal
the end of the last decade when both were building
and Boeing wasn't having the problems with mcas Airbus was
up in the higher sixties and Boeing was in the
higher fifties, and so we have traditionally seen Airbus be
able to put out more airplanes than Boeing. I think
(23:13):
their supply base maybe a little bit more robust, and
I think they have sort of multiple final assembly areas
around the world. I think those are some of the
reasons why Airbus can just has the infrastructure to put
out more airplanes, more narrowbody airplanes per month.
Speaker 2 (23:30):
Our thanks to George Ferguson Bloomberg Intelligence senior Aerospace, Defense
and Airlines analysts.
Speaker 3 (23:34):
Coming up, we'll take a look at US data centered
power demand and just how quickly the sector is expanding.
Speaker 2 (23:39):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries.
Speaker 3 (23:45):
You can access Bloomberg Intelligence be a B I go
on the terminal. I'm normal Inda, and.
Speaker 2 (23:49):
I'm Paul Sweeney, and this is Bloomberg.
Speaker 1 (23:57):
This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
on Bloomberg Radio.
Speaker 3 (24:04):
On Paul Sweeney and I'm normal Linda filling in for Scarlettfoo.
Speaker 2 (24:07):
We move next to the real estate Space nor Nite.
We're joined by Jeff Langbaum. This week, Bloomberg Intelligence Senior
US REET analyst.
Speaker 3 (24:14):
Jeff discussed research on real estate investment trusts or reads
as his outlook for them. In twenty twenty six.
Speaker 2 (24:19):
We first asked Jeff how reads have been performing this year.
Speaker 12 (24:23):
They haven't performed well in twenty twenty five, that's for sure.
I mean, basically, you know, kind of flats to slightly
down on an aggregate basis, but relative to the S
and P underperformed significantly. And that's going on three years now. Obviously,
you know, you had the rising rate cycle that was
pretty damaging. You had some difficulties especially in the office sector.
(24:47):
But as we sit here looking ahead to twenty twenty six,
the fundamental backdrop looks okay. And especially if you get
rates falling, if that ten year yield starts to drop,
and you know, that has cascading effects on evaluations, it
has cascading effects on cost of capital and and really
would be a boost for the sector going forward.
Speaker 3 (25:08):
We are you seeing to be some bright spots right
now in the reat sector, Jeff Senior.
Speaker 12 (25:14):
Housing, That is the that I didn't look at you.
I'm looking at you, Paul, the I mean, that's that's
the clear winner right now. The fundamental backdrop, driven by
demographics is huge and growing. There's an incredible coming need
(25:37):
for housing for the aging baby boomers, and you know
there's nothing, nothing being built, so the supply demand uh
dynamics in that space are incredible. And you know there's
a couple of roots that play in that space, Well
Towers the biggest one. They're growing like crazy and the
stock is reflecting it.
Speaker 2 (25:58):
All right, So what's the aside from folks, you know,
old folks housing, which is I'm going to say, because
you know, I'm there, I'm there, I'm in the demo
what else is working here? What is is it? Is
there a replay on all this AI data center stuff.
Speaker 12 (26:16):
So the you know, there's there's a couple of different
ways to answer that. The direct impact of AI on
on reads is the two big data center reads Equinics
and Digital Realty, and they are playing in that space
right now. It's kind of unclear exactly where they fit.
There should be a significant amount of demand for their space,
(26:38):
especially for the stuff that they're looking to build, but
they have to raise a ton of capital in order
to fund that that that development, you know, and you
see capex numbers coming out from all the hyperscalers that
are astronomical, and you know reads, you know, investors in
reads don't necessarily love the concept of raising a ton
of money to deploy it in kind of risky assets
(27:00):
that you need to then go lease up. So the
demand should clearly be there, but it's going to be
interesting to see how it plays out over the next
couple of years as that demand filters through.
Speaker 2 (27:09):
The other issue with AI, though, is there.
Speaker 12 (27:11):
Is a kind of a concern that AI is going
to impact demand for office space, and you know, as
companies get more efficient, they need less headcount, they need
less office space. Haven't really started to see that play
out yet, but it's definitely a sentiment that is out
there and is impacting the stocks to a degree. You know,
just as we got past the whole work from home
(27:33):
thing and concern over whether offices we're ever going to
have people back in them, now we have concerned that
the robots are going to replace the people.
Speaker 3 (27:42):
So of course we do have the income in New
York City Mayor saying that he wants to freeze rents
on rent stabilized apartments in New York City. What's the
latest in terms of the apartment rate space right now?
Speaker 12 (27:53):
Yeah, I mean it's unclear exactly what he's going to
be able to do on rent stabilization freeze capping rents.
But the reats that own own residential in New York City,
names like Avalon Bay Equity Residential, they own stuff that's
not subject to those caps. It's it's largely newer market
rate stuff, and so they're not going to be directly impacted.
(28:16):
And so you know, at the end of the day,
if there is less new the net result of of
caps like that is less new stuff, get less stuff
getting renovated, less stuff getting built, and and that just
you know, keeps supply down and as long as demands
stays elevated, then that should flow through to the ability
to keep buildings full and keep rents rising to a degree.
(28:38):
So I think that in the in the near term,
you know, that that should be it should be fine
for names like like those that play in the in
the city, you know, the the it's it's those that
own the kind of the lower tier space that maybe
are a little bit more exposed are.
Speaker 3 (28:53):
Thanks to Jeff'slingbam Bloomberg Intelligence senior US re analysts.
Speaker 2 (28:57):
On Bloomberg Intelligence, we often look at research from Bloomberg
and EF previously known as New Energy Finance.
Speaker 3 (29:02):
They have a team at Bloomberg that tracks and analyzes
the energy transition from commodities to power, transport, industries, buildings,
and agriculture sectors. This week we took a look at
US data center powered demand and just how quickly that
sector is expanding.
Speaker 2 (29:15):
For more on this guest host Alex Semonovan and I
were joined by Helen co b Nf, head of US
Power Markets Research. We first asked Helen if we have
the power necessary to power all the data centers we
keep hearing about.
Speaker 10 (29:28):
What we're seeing is quite an unprecedented acceleration of data
center demand, driven largely by AI and at BNF. What
we see and expect is that data center power demand
is going to reach roughly one hundred and six gigawatts
by twenty thirty five.
Speaker 2 (29:46):
Where are we today, just for example.
Speaker 10 (29:48):
Today, we are definitely a lot lower in capacity, so
roughly half of that right now. What we also know
is that that one oho six gigawats by twenty thirty five,
that's thirty six percent higher than our outlook just six
months ago. So we've increased that forecast quite a lot
since these last six months. What we've seen is a
(30:10):
flood of early stage projects getting announced, which results in
a much larger pipeline, and therefore our forecast has also
increased quite a bit to power these data centers. What
we know is that there's a lot of new build
of power supply coming online to try to reach this
overall power demand.
Speaker 4 (30:30):
Helen, we're obviously in the early innings of this build
out of data centers. What signs are you seeing already
of any kind of strains on resources on electricity?
Speaker 10 (30:40):
What we know is there are certain regions that are
hitting a tipping point in terms of actually being able
to power this overall supply. What we know is that
Northern Virginia is still the largest kind of market for
data center demand based on our forecast, and we are
seeing a lot of growing concern in that PEG region.
(31:01):
What we project in PGM is that data center capacity
is going to hit roughly thirty one gigawatts by twenty thirty.
And what we do is when we adjust that overall
kind of like what power demand looks like in PGM
relative to supply, what we expect is there might be
a nine point five gigawatch shortfall of overall power supply
(31:24):
by the end of the decade if we assume that
all of this data center demand is going to come online.
Speaker 2 (31:30):
If all this data center demand comes online, obviously the
need for electricity or power is just extraordinary. I'm a
big fan of nuclear, A small mobile reactor, modular reactor here,
there's SMR type things talk to us about that is
that a viable technology solution at some point.
Speaker 10 (31:47):
So we know that there has been a lot of
company announcements around small modular nuclear as well as just
nuclear in general. And there has been several different new
power purchase agreement and surround nuclear by major hyperscale companies
as well. What we see within BNF is that in
the near term what is likely going to power data
(32:10):
center demand is actually going to be gas, and nuclear
is a much more longer kind of like long term
play in terms of how you power data center demand.
But what we expect is that the major ramp up
in overall demand is coming over these next three years,
and gas is likely what's going to meet that overall demand.
Speaker 4 (32:30):
What kind of measures are being taken to limit any
kind of potential power outages from this build.
Speaker 10 (32:37):
Out, Well, we do see that there's been a lot
of different regulations that are evolving real time around data
center demand. What we know is that Georgia adopted new
rules pushing grid connection costs onto large users like industrial users.
Ohio now requires data centers to pay for at least
eighty five percent of the energy they request each month,
(33:01):
even if it is underutilized, and so policies are kind
of being put in place to kind of navigate rising
and growing demand.
Speaker 2 (33:09):
Are we building these data centers too quickly? Is there
a risk for an overbuild? It just feels like it's
too much, too fast, but all the projections say we're
going to need all that compute.
Speaker 10 (33:21):
It's a really great question, something as an analyst I
think about quite a bit. At BNF. What we've done
is we've benchmarked our data center forecast relative to a
whole bunch of other third party forecasts out there, and
what we see is that our forecast is relatively conservative
compared to other third parties because our data center forecast
(33:44):
does include and analyze some of the additional power constraints
as well as like project development timelines of data center development.
And what we found is that it roughly takes seven
years to develop a data center, and even that we're
seeing quite a bit of new capacity come online. That
(34:05):
is a result of just fundamentals around AI demand, whether
that is company announcements of data centers as well as
just like the underlying growth and trend around AI.
Speaker 4 (34:17):
I can't help but wonder how are data centers addressing sustainability?
Are they using clean energy? What measures are they taking.
Speaker 10 (34:26):
A lot of these hyperscalers that are building out data
centers do have sustainability goals and clean energy commitments. However,
like within the data center's outlook. What we mostly focused
on is just what is the additional capacity and activity
around data center demand within the United States, And we
(34:47):
also did a small analysis on specific markets that are
likely going to have constraints in the market around power supply,
and within URCOTT and PGM, which is our two larges
power market region that expects high data center demand growth,
what we're seeing is that the likelihood of what's going
(35:08):
to meet that supply is going to be gas, and
so we don't specifically look at sustainability commitments, but what
we know is that a lot of what's supplying data
centers will be gas in the narature.
Speaker 3 (35:23):
Our thanks to Helen co be Any, head of US
Power Markets Research.
Speaker 2 (35:26):
That's this week's edition of Bloomberg Intelligence on Bloomberg Radio,
providing in depth research and data on two thousand companies
and one hundred and thirty industries.
Speaker 3 (35:33):
And remember you can access Bloomberg Intelligence be a Bigo
on the terminal. I'm normal Indo and I'm Paul Sweeney.
Speaker 2 (35:38):
Stay with us. Today's top stories and global business headlines
are coming up right now.
Bloomberg Audio, Studios, podcasts, radio News. This is Bloomberg Intelligence
with Scarletfoo and Paul Sweeney.
Speaker 2 (00:13):
How do you think the FED is looking at tariffs?
The uncertainty of terriffs.
Speaker 3 (00:17):
Let's take a look at the sectors and how they.
Speaker 2 (00:19):
Performed a lot of investors getting whip salt every day
by news.
Speaker 1 (00:21):
Events, breaking market headlines, and corporate news from across the globe.
Speaker 4 (00:26):
Could we see a market disruption of market events?
Speaker 2 (00:28):
So people just too exuberant out there?
Speaker 4 (00:30):
You see some so called low quality stocks driving this
short term rally.
Speaker 1 (00:34):
Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio,
YouTube and Bloomberg Originals.
Speaker 3 (00:42):
I'm Paul Sweeney and I'm marm Melinda filling in for Scarlettfoo.
Speaker 2 (00:45):
On today's Bloomberg Intelligence Show. We dig inside the big
business stories impacting Wall Street and the global markets.
Speaker 3 (00:50):
Each and every week, we provide in depth research and
data on some of the two thousand companies and one
hundred and thirty industries are analysts cover worldwide.
Speaker 2 (00:57):
Today, we'll look at why the cloud based software company
Salesforce gave a strong outlook for sales in the current quarter.
Speaker 3 (01:03):
Class well dive into why shares of the aerospace company
Airbus plunged and how this might affect the delivery of
its newly produced jets.
Speaker 2 (01:10):
But first we begin with some news in the casino
and gaming space.
Speaker 3 (01:13):
This week, New York Mets owner Steve Cohen won approval
to operate a casino next to City Fields and Queens.
Speaker 2 (01:19):
It's one of the three projects select different gambling licenses
in New York City, and this was done by the
State Gaming Commission's Facility Location Board.
Speaker 3 (01:27):
Cohen, the Hedge Fund Mobile submitted an eight billion dollar
casino proposal with partner hard Rock International and was picked
alongside genting groups Resorts World and Ballys. These three projects
are expected to generate significant revenue and create thousands of
jobs for.
Speaker 2 (01:41):
More and all. This guest host Alex Simonova and I
were joined by Brian Eggert, Bloomberg Intelligence senior Gaming and
launching analysts. We first asked Brian to talk about what
the licenses represent and where we go from here.
Speaker 5 (01:52):
So this is a fairly protractive process involving ultimately di
selection of three recipients. By the way, the only three
left in the running after a few others were limited
and dropped out, and really it authorized resort casinos for
the downstate New York area, mostly in New York City.
And as it turns out, the three qualified casino applicants,
(02:12):
if you will, really are are in New York City
but outside the Borough of Manhattan itself.
Speaker 4 (02:17):
Brian, just looking at your note on these license approvals,
you write that they face a narrow path to decent
returns on investment. Can you please talk to us a
little bit more about that idea?
Speaker 5 (02:28):
Sure? So, what we assume for those resorts is they
will get what I would call a gaming revenue premium
and room rate premium of ten twenty percent to other
kind of high end urban area resorts such as the
Burgata and Atlantic City wins Encore in Boston. However, are
concerned if in terms of the return prospects are that
(02:51):
development costs are quite high and perhaps some of the
targeted non gaming contribution elements might be a bit ambitious.
So for that reason, when we worked the numbers, we
came up with something like a ten percent return on investment,
which is certainly a bit less than most operators would
expect to attain in these regional markets.
Speaker 2 (03:11):
So I'm thinking here I mean again, I'm just thinking
about Steve Cohen's I was looking at his plans in
conjunction with his city field. He obviously he owns the Mets.
City field is out there, the National Tennis centers out there.
We had the world's fair situations, so there's a ton
of opportunity out there. It seems like these are going
to be more retail hotel than casino. How do you
(03:35):
think the mix of revenue is going to be there?
Speaker 5 (03:37):
So this certainly is I think when we work the numbers,
we assume that with respect to either food and beverage
or retail entertainment revenue, those will be fairly sizable chunks
of the overall revenue PI probably cuatively close to half,
which is true of many kind of gaming resorts in
(03:58):
attractive environments get a lot of non gaming revenue. I
think the same will be true here. The question is
will it be enough and will be margins which we
take to be about thirty percent, be sufficient to get
a good return. But certainly, you know the logic of
having at nexas city field makes a lot of sense.
You know, the other locations valleys and a golf course
in the Bronx. You know, the the resorts world in
(04:21):
Queen's pretty much expanding and existing facility all have their merit.
The question is will be enough to get a decent return,
But certainly some of these locations have rational prospects.
Speaker 4 (04:32):
What does this victory for these three companies mean for
their competitors like Sands MGM, When where do they go
from here?
Speaker 5 (04:40):
So to be queer, You know, Sans exited this process
back in April. When exited in May, it's Hudson York
project because of community opposition at MGM in October because
of the licensed terms. But bear in mind that they
do have other prospects. You know, when is developing a
UAE resort of its own, gm is building in Osaka, Japan.
(05:02):
They all can buy back in their own stock. So
I think they're weighing this particular opportunity relative to other
development prospects.
Speaker 2 (05:10):
So we're going to get the licenses by year end.
What's the time taime if anybody any of these three
licensed winners lay out of timetable for getting a shovel
in the ground and maybe even opening the doors.
Speaker 5 (05:22):
So I think it'll vary by operator. But the expectations
that these resorts will generally open by twenty thirty or so.
It'll take a few years to develop. There was always
the possibility of construction challenges, but that's the target. And
of course our related to concerns since you mentioned MGM
was MGM Ballely's Caesars O operaate casinos in Atlantic City,
(05:45):
and you know, the proximity to Alantic City of resorts
with casino elements at this caliber certainly presents a potential
competitive challenge to Atlantic City itself.
Speaker 2 (05:56):
AC. That's tough. That's tough because I would see you know,
on the parkway, Brian, I know you see it too.
We have for years, for twenty thirty years, we've seen
the limousines from New York City going down the Parkway
to AC. That's going to get it impacted, isn't.
Speaker 5 (06:11):
It It will? I think you know, some operaters Burgata,
for example, a hard rock may hold up better than others.
But you know, there's always a challenge when you've got
this much additional gaming capacity with resort elements opening up
in relative close proximity to a to a key Atlantic
City feeder market.
Speaker 3 (06:31):
Our thanks to Brian Eger, Bloomberg Intelligence Senior Gaming and
Lodging analysts.
Speaker 2 (06:35):
We move now to the retail space.
Speaker 3 (06:36):
This week, the department store chains Macy's posted better than
expected results last quarter. However, shares dropped if the company
pointed to a potential for soft demand from low income
shoppers for the current quarter.
Speaker 2 (06:47):
For more, Nora and I were joined by Mary Ross
and Gilbert Bloomberg Intelligence senior equity analyst covering retail.
Speaker 3 (06:52):
We first asked Mary to break down Macy's most recent quarter.
Speaker 6 (06:55):
We saw, actually, I think great results coming out of
Macy's see but the company put out conservative fourth quarter
guidance and that's really what they always do. They seek
to beat their numbers, and so that guidance came in
very close, you know, at the high end. It's right
around where analysts are because they already saw strong results
come in from other retailers. But we think, when we
(07:19):
think about it, we think there's upside here. So we
really view the results as look Macy's name plate because
of all the changes that they're making, and what that
means is they're bringing in more relevant brands that are
resonating with their consumer. Not only that, but the stores
look brighter. There's really kind of exciting music in the stores.
(07:41):
The store associates are more engaged with the customer. We've
noticed that on our channel text, particularly on Black Friday,
we saw more traffic in the store than we've seen
in years past. So we think that the changes that
CEO Tony Sprain is making and he's really making his
cues from what he's done at Bloomingdale's, it's resonating, it's working,
(08:04):
and so we think this momentum is building and we
certainly saw it in the third quarter numbers with comp
sales two point seven percent for the Go Forwards stores,
and so with that, I mean that's a big improvement sequentially,
and so we think that's building, you know, going into
the fourth quarter and just with you know, the constant
improvement that we're seeing there.
Speaker 3 (08:25):
So when most people think about the retail space right now,
a lot of people think about the transition to e commerce,
but it sounds as though, from what you're explaining, a
lot of people are going there in person. I mean,
I'm looking at Coals, I'm looking at Dillard's. What are
they doing in particular that's really attracting customers to come
through the doors. Is it also collaborations with celebrities by chance?
Speaker 6 (08:45):
Yes, you raised a valid point, and it is. It
does include collaborations. So for example, they Aqua you know,
they're under their Bloomingdale's brand currently has a collapse going
out with a designer out to move on and so yes,
these collaborations also even you know, they'll have some events.
Speaker 7 (09:06):
But all of that is is certainly drawing.
Speaker 6 (09:09):
In new customers and I think Macy's nameplate could certainly
do more on that end. They had their first collab
with their on thirty fourth brand this year, but we
think we're going to see more next year because if
you look at what Dillard's has been doing over the
last few years, and they have a different business model
than Macy's does. They're not really promotional. For example, for
(09:31):
Black Friday, they just had clearance sales and it was
pretty comparable to last year, so that didn't mean that
the rest of the merchandise was on sale.
Speaker 7 (09:39):
Macy's the you know, is far more promotional.
Speaker 6 (09:43):
But by doing collaborations, you know, by getting celebrities involved.
So for example, for the holiday, they have Jennifer Hudson
that's you know, fronting their campaign for the holiday, and
they're also engaging with social influencers. Yes, all of that
is resonating. We're seeing it with other brands, like for
(10:04):
example with American Eagle, which just tapped Martha Stewart and
that that's appealing to gen Z.
Speaker 3 (10:11):
Oh wow, so one.
Speaker 6 (10:14):
Yeah, so these bold campaigns that these brands are doing,
Macy's is also getting involved there and they're dipping there
to I would say, they're dipping their toe in the water.
But I think we're going to see that increase, you know,
and build as we get into twenty twenty six. And
when you talk about the digital business, because of course
you're always hearing let's say, stronger growth on digital. For example,
(10:37):
when we looked at Black Friday, you know, over the
weekend through Cyber Monday, the sales strength was really led
by digital. Digital was up double digits versus you know,
load to mid single digits for in store.
Speaker 7 (10:51):
So I think that's really positive there.
Speaker 6 (10:55):
But so when we look at Macy's, a third of
their sales come from digital, so still in the store
is very big, but it's also omni channel well, the
ability to buy online, take back in store, or buy
online pickup in store.
Speaker 2 (11:09):
Just real quick, thirty seconds, what's macy saying about the
consumer out there.
Speaker 6 (11:13):
Yeah, So they're saying that the lower end consumer is
really feeling pinched, and that's where they're seeing some challenges
on some of the price increases on their lower price
point items. But the higher middle income, in the higher
income consumer is resilient and they haven't flashed or batter
DENI with higher prices that they took to offset tariffs,
(11:35):
and they're still buying.
Speaker 2 (11:37):
Thanks to Mary Ross Gilbert Bloomberg Intelligence, senior equity analyst
covering retail.
Speaker 3 (11:41):
Coming up, we continue in the retail space and look
at earnings from the discout retailer dollar.
Speaker 2 (11:45):
Tree listening to Bloomberg Intelligence on Bloomberg Radio, providing research
and data on two thousand companies and one hundred and
thirty industries.
Speaker 3 (11:52):
You can access Bloomberg Intelligence via b I go on
the terminal. I'm normal Linda, and I'm Paul.
Speaker 2 (11:56):
Sweeney, and this is Bloomberg.
Speaker 1 (12:02):
This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney
on Bloomberg Radio.
Speaker 3 (12:09):
I'm Paul Sweeney and I'm normal Linda, filling in for
Scarlet Foo.
Speaker 2 (12:12):
We continue into retail space. This week, dollar Tree reported
better than expected profit and raised its full year outlook.
Speaker 3 (12:18):
It's a sign that the discount retailer is capturing more
spending from stretched shoppers. For more of this, Paul and
I were joined by Lilly Meyer, Bloomberg Retail reporter.
Speaker 2 (12:26):
First ass Lily to break down Dollar Tree's most recent quarter.
Speaker 8 (12:29):
Yeah.
Speaker 9 (12:29):
So Dollar Tree did well this quarter at matt expectations
on revenue and same store sales, and it raised its
profit outlook for the year. I think they really have
hit a niche in being able to capture consumers, both
lower end consumers who need cheaper goods and then high
income consumers who are looking to trade down.
Speaker 3 (12:50):
So, I mean, what do we think about elasticity of
the lower end consumer right now? Because I mean, if
you think about Walmart, I used to think of this
as a company that you know, was a cheaper place
to show, but it seems as though it's appealing to
multiple consumer types. But it seems as a dollar Tree
really is a great place for the lower end consumer.
Speaker 9 (13:07):
Yeah, and actually recently dollar Tree has been looking to
kind of break into that higher income shopper as well.
So it has this pricing strategy, so it has some
products that are still cheaper, but then it has some
it's getting more products that are more expensive.
Speaker 2 (13:23):
What is Dollar Tree saying about its core consumer out there?
Who is that core consumer and how are they behaving?
Speaker 9 (13:30):
Yeah, so I think it's core consumer is still a
lower income shopper. Eighty five percent of their products are
two dollars an under, so they really still have a
lot of value.
Speaker 3 (13:39):
So they're seeing.
Speaker 9 (13:39):
Those shoppers continue to go in. But this quarter they
saw traffic down and they attributed that to tariff increases.
Speaker 3 (13:46):
But what's the takeaway in terms of the outlook. I mean,
you talked about tariff still being a drag here.
Speaker 9 (13:51):
Yeah, so tariffs will really dragged this quarter. They said
that's going to lessen, So I think this was the
quarter where we're really seeing the biggest tariff impact. It'll
be really interesting to see what they predict for consumers
next year. I'm interested to hear about that and also
what they see for holiday if they continue to see
hire income shoppers trading down for gifts.
Speaker 2 (14:11):
Is the dollar stores do they see a surgeon sales
seasonal surge and sales from holiday sales that Do they
see that like a department store would.
Speaker 9 (14:20):
Yeah, I don't know if it's the same surge, but
you know, they sell a lot of gift wrapping and
gift bags and some of those smaller gifts stocking stuffer,
so I think they see a lot of that around
the holidays.
Speaker 3 (14:30):
So what are we seeing in terms of just the
broader read on the retail space? This kind of gives
us a picture of the lower end consumer, But what
are you seeing across the board?
Speaker 9 (14:37):
So broadly, we're really still seeing consumer spend, So there
hasn't been that massive pullback that I think some of
us were imagining might happen. We're still seeing consumer spend,
but they're really value driven, so they're looking for the
best deals they can get. They're trading down when they
need to, They're stocking up on essentials.
Speaker 2 (14:54):
How promotional are retailers right now? Because I'm in I know,
talk to Punham Gooile, the retail analyst Bloomberg Intelligence. She says,
you know, the more promotions you see out there, that's
going to be that goes right to the margins, the
profit margins of some of these retailers. What are we
seeing this season?
Speaker 9 (15:11):
That's a good question. So this season, we've actually seen
some retailers pull back on deals to protect their margin.
So some companies are doing that as part of a
broader strategy, and then some are having to do that
because of tariff. So, you know, for Black Friday, typically
they'd offer big discounts and some are pulling back or
not offering discounts at all.
Speaker 3 (15:29):
So consumers have still been broadly spending in the retail space.
What are they spending on? Is it? You know, are
we spending money on essentials right now? Skipping this lurging? Yeah, yeah,
that's exactly it.
Speaker 9 (15:41):
So Black Friday, we talked to a lot of folks
who were saying they're going to just get essentials this
Black Friday. So instead of buying, you know, a Lake Crusette,
Dutch oven, they were We talked to someone who instead
was going to buy like three bags of forty pounds
dog food.
Speaker 2 (15:55):
Oh that sounds okay.
Speaker 7 (15:57):
Yeah, So really.
Speaker 9 (15:58):
Using you know, deals to get things that they need
for themselves rather than getting that big ticket item they
waited for.
Speaker 2 (16:05):
What I learned from talking to retail folks is omni
channel retail, which is you use both the online and
the bricks and mortar, and maybe you look at something online,
then you want to go touch and feel it, or
maybe you order it then you pick it up at
the store. Omni channels that still a thing.
Speaker 9 (16:21):
Yeah, Yeah, So we were out there on Black Friday
and some of the stores, and you know, while a
lot of people have switched their holiday shopping to be online,
we still saw a ton of people in stores, especially
at stores with really good deals and stores that have
appealed to young shoppers. So brands like Addicted and Princess
Paul that are in malls were really flooded with young people.
Speaker 3 (16:41):
Our thanks to Lily Meyer, Bloomberg Retail reporter, move next.
Speaker 2 (16:44):
To quarterly earnings from the cloud based software company Salesforce.
Speaker 3 (16:48):
This week, the company reported third quarter earnings that beat
analyst expectations. Salesforce also gave an outlook for revenue in
the current quarter that topped Wall Street estimates.
Speaker 2 (16:56):
This suggests that the software company is persuading customers to
buy it AI tools. For more on this, Nornite were
joined by anarag Rana, Bloomberg Intelligence technology analyst.
Speaker 3 (17:05):
We first asked Aniog for his take on the most
recent earnings report from Salesforce.
Speaker 10 (17:09):
Yeah, the sack.
Speaker 11 (17:10):
The results did come in, I mean almost in line
with how we were looking at it in terms of
that the core business is still struggling. But when it
comes to some of their AI products that has started
to do well, they've gained momentum. But when you look
at somebody like a salesforce, when you have a revenue
base of forty one billion dollars, it takes a lot
to move the needles. So even though these products are
(17:30):
very small and you know, growing triple digits, but they
are not you know, right there in order to take
down what is happening on the core business, which is
a decline in seat growth or the less addition of
seats because of macro IT spending, and that is probably
going to be the story, at least for the near term.
Speaker 3 (17:51):
So it seems as though analysts are still generally positive
on in terms of AI adoption trends when we think
about this company though.
Speaker 11 (17:59):
Yes, absolutely, and that's you know, one of the things.
We saw really good numbers on both the data cloud
side of it and also the agent force. But when
you look at the stock reaction and finally people have
when you really scrape the numbers and see that their
commercial remaining performance obligations, which is the order book for
next quarter, which they expect to grow about thirteen percent
(18:19):
in constant currency four percentage of point of that is informatica.
So when you strip that out, you will see that
that particular backlock number goes from eleven percent this quarter
to let's say nine or ten percent. So the core
is still declining or the core is still under pressure.
Speaker 2 (18:35):
So the stock down twenty seven percent year to date
on a rock that does that reflect the fact that
it's just it budgets are tight, or that AI poses
an existential threat to certain providers like a Salesforce.
Speaker 11 (18:50):
I don't think that's the case, because it's going to
be very difficult for an established Fortune two thousand company
to get rid of their core system of record, you know,
whether that's an HRS sales customer service and just deploy
a model in there. At least we are not there yet.
Maybe you know, five years down the road we may
see a scenario like this. But that's not really why
Salesforce is struggling. It is basically, we are the largest
(19:13):
provider of sales automation tool and customer service tool to
Fortune two thousand companies. It's those companies that are not
hiding at that same rate that they used to because
outside of AI and AI infrastructure, everything else is still
weak at this.
Speaker 2 (19:27):
Point our thanks to anaag Rana Bloomberg Intelligence technology analysts, we.
Speaker 3 (19:31):
Move to some news in the aerospace sector.
Speaker 2 (19:33):
This week's shares of the aerospace company Airbus plunged after
revealed a quality issue on some fuselage panels of its
A three to twenty airliner. This came just days after
Airbus flagged a software glitch on about six thousand jets.
Speaker 3 (19:46):
As a result, Airbus must inspect hundreds of its best
selling A three twenty jets for potential quality flaws in
the aircraft's body, and this could risk slowing down delivery
of newly produced jets.
Speaker 2 (19:55):
For more on this guest host Alex Semonova and I
were joined by George ferguson Bloomberg Intelligence. Your aerospace, defense
and airlines analysts first asked George to talk to us
about why it seems Airbus has been able to fly
under the radar until just recently.
Speaker 8 (20:08):
I think they've also had their challenges in the supply
chain along the way, just throwing challenges were so much
greater that they stole the spotlight, if you will. But
I mean, look, the aerospace supply chain is a bit
thin right, It doesn't have the same redundancy as like
you'd get in an auto supply chain, and so when
you just have some little problem at one of your suppliers,
(20:31):
you know, it can really interrupt your ability to deliver airplanes.
And I think right now what you're seeing is that
Airbus already has a really tall order to meet the
something like eight hundred and twenty airplane guidance or delivery
guidance they've got for this year. We don't think they're
gonna make it. I think they need seventy plus a
(20:52):
three twenties in the last two months of the year
in November December. We think that's pretty hard given they've
kind of delivered fifty five ish most months of in
the last couple, you know, for months, and so I
think a quality problem here probably really places in doubt
their ability to make that guidance, and that's going to
(21:14):
hurt their profitability for the year.
Speaker 4 (21:15):
George, you mentioned that really ambitious target for eight hundred
and twenty aircraft deliveries by the end of this year.
How disappointed could investors get if it fails to meet
that target. On top of the headwinds that this company
is already facing well.
Speaker 8 (21:30):
I mean, so I think you're starting to see, you know,
the disappointment here. Again, I'd be surprised if most investors
weren't already concerned that the target was too high. I
think Airbus has really put out a bunch of very
ambitious build rate targets right the I think our latest
number in A three twenty is that we would be
going to something like seventy five a month, and that's
(21:54):
consistently throughout the entire year, right by the end of
twenty twenty six, which to us just seems far too high.
And I feel like Airbus keeps trying to lead the
supplier base by pushing these higher numbers out and trying
to pull the supplier base along, and then over time
lowers some of these expectations. So look, I think anything
(22:15):
they miss now isn't going away. It gets pushed into
the next year and the next year, and again, I
think the bigger challenge here is investors have to ask themselves,
are a lot of these Airbus targets for delivery rates?
Are they just too ambitious? And don't we have to
sort of knock them down when we build our consensus
for what we think the company's going to be able
to do.
Speaker 2 (22:35):
Because George, I mean a number like seventy seems really
high to me because when we talk about Boeing, it's like, Gee,
I hope they can get the forty maybe to fifty.
Is that does Boeing typically run that far behind on
a production schedule than a Airbus.
Speaker 8 (22:51):
So I would say that if you would consider normal
the end of the last decade when both were building
and Boeing wasn't having the problems with mcas Airbus was
up in the higher sixties and Boeing was in the
higher fifties, and so we have traditionally seen Airbus be
able to put out more airplanes than Boeing. I think
(23:13):
their supply base maybe a little bit more robust, and
I think they have sort of multiple final assembly areas
around the world. I think those are some of the
reasons why Airbus can just has the infrastructure to put
out more airplanes, more narrowbody airplanes per month.
Speaker 2 (23:30):
Our thanks to George Ferguson Bloomberg Intelligence senior Aerospace, Defense
and Airlines analysts.
Speaker 3 (23:34):
Coming up, we'll take a look at US data centered
power demand and just how quickly the sector is expanding.
Speaker 2 (23:39):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries.
Speaker 3 (23:45):
You can access Bloomberg Intelligence be a B I go
on the terminal. I'm normal Inda, and.
Speaker 2 (23:49):
I'm Paul Sweeney, and this is Bloomberg.
Speaker 1 (23:57):
This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
on Bloomberg Radio.
Speaker 3 (24:04):
On Paul Sweeney and I'm normal Linda filling in for Scarlettfoo.
Speaker 2 (24:07):
We move next to the real estate Space nor Nite.
We're joined by Jeff Langbaum. This week, Bloomberg Intelligence Senior
US REET analyst.
Speaker 3 (24:14):
Jeff discussed research on real estate investment trusts or reads
as his outlook for them. In twenty twenty six.
Speaker 2 (24:19):
We first asked Jeff how reads have been performing this year.
Speaker 12 (24:23):
They haven't performed well in twenty twenty five, that's for sure.
I mean, basically, you know, kind of flats to slightly
down on an aggregate basis, but relative to the S
and P underperformed significantly. And that's going on three years now. Obviously,
you know, you had the rising rate cycle that was
pretty damaging. You had some difficulties especially in the office sector.
(24:47):
But as we sit here looking ahead to twenty twenty six,
the fundamental backdrop looks okay. And especially if you get
rates falling, if that ten year yield starts to drop,
and you know, that has cascading effects on evaluations, it
has cascading effects on cost of capital and and really
would be a boost for the sector going forward.
Speaker 3 (25:08):
We are you seeing to be some bright spots right
now in the reat sector, Jeff Senior.
Speaker 12 (25:14):
Housing, That is the that I didn't look at you.
I'm looking at you, Paul, the I mean, that's that's
the clear winner right now. The fundamental backdrop, driven by
demographics is huge and growing. There's an incredible coming need
(25:37):
for housing for the aging baby boomers, and you know
there's nothing, nothing being built, so the supply demand uh
dynamics in that space are incredible. And you know there's
a couple of roots that play in that space, Well
Towers the biggest one. They're growing like crazy and the
stock is reflecting it.
Speaker 2 (25:58):
All right, So what's the aside from folks, you know,
old folks housing, which is I'm going to say, because
you know, I'm there, I'm there, I'm in the demo
what else is working here? What is is it? Is
there a replay on all this AI data center stuff.
Speaker 12 (26:16):
So the you know, there's there's a couple of different
ways to answer that. The direct impact of AI on
on reads is the two big data center reads Equinics
and Digital Realty, and they are playing in that space
right now. It's kind of unclear exactly where they fit.
There should be a significant amount of demand for their space,
(26:38):
especially for the stuff that they're looking to build, but
they have to raise a ton of capital in order
to fund that that that development, you know, and you
see capex numbers coming out from all the hyperscalers that
are astronomical, and you know reads, you know, investors in
reads don't necessarily love the concept of raising a ton
of money to deploy it in kind of risky assets
(27:00):
that you need to then go lease up. So the
demand should clearly be there, but it's going to be
interesting to see how it plays out over the next
couple of years as that demand filters through.
Speaker 2 (27:09):
The other issue with AI, though, is there.
Speaker 12 (27:11):
Is a kind of a concern that AI is going
to impact demand for office space, and you know, as
companies get more efficient, they need less headcount, they need
less office space. Haven't really started to see that play
out yet, but it's definitely a sentiment that is out
there and is impacting the stocks to a degree. You know,
just as we got past the whole work from home
(27:33):
thing and concern over whether offices we're ever going to
have people back in them, now we have concerned that
the robots are going to replace the people.
Speaker 3 (27:42):
So of course we do have the income in New
York City Mayor saying that he wants to freeze rents
on rent stabilized apartments in New York City. What's the
latest in terms of the apartment rate space right now?
Speaker 12 (27:53):
Yeah, I mean it's unclear exactly what he's going to
be able to do on rent stabilization freeze capping rents.
But the reats that own own residential in New York City,
names like Avalon Bay Equity Residential, they own stuff that's
not subject to those caps. It's it's largely newer market
rate stuff, and so they're not going to be directly impacted.
(28:16):
And so you know, at the end of the day,
if there is less new the net result of of
caps like that is less new stuff, get less stuff
getting renovated, less stuff getting built, and and that just
you know, keeps supply down and as long as demands
stays elevated, then that should flow through to the ability
to keep buildings full and keep rents rising to a degree.
(28:38):
So I think that in the in the near term,
you know, that that should be it should be fine
for names like like those that play in the in
the city, you know, the the it's it's those that
own the kind of the lower tier space that maybe
are a little bit more exposed are.
Speaker 3 (28:53):
Thanks to Jeff'slingbam Bloomberg Intelligence senior US re analysts.
Speaker 2 (28:57):
On Bloomberg Intelligence, we often look at research from Bloomberg
and EF previously known as New Energy Finance.
Speaker 3 (29:02):
They have a team at Bloomberg that tracks and analyzes
the energy transition from commodities to power, transport, industries, buildings,
and agriculture sectors. This week we took a look at
US data center powered demand and just how quickly that
sector is expanding.
Speaker 2 (29:15):
For more on this guest host Alex Semonovan and I
were joined by Helen co b Nf, head of US
Power Markets Research. We first asked Helen if we have
the power necessary to power all the data centers we
keep hearing about.
Speaker 10 (29:28):
What we're seeing is quite an unprecedented acceleration of data
center demand, driven largely by AI and at BNF. What
we see and expect is that data center power demand
is going to reach roughly one hundred and six gigawatts
by twenty thirty five.
Speaker 2 (29:46):
Where are we today, just for example.
Speaker 10 (29:48):
Today, we are definitely a lot lower in capacity, so
roughly half of that right now. What we also know
is that that one oho six gigawats by twenty thirty five,
that's thirty six percent higher than our outlook just six
months ago. So we've increased that forecast quite a lot
since these last six months. What we've seen is a
(30:10):
flood of early stage projects getting announced, which results in
a much larger pipeline, and therefore our forecast has also
increased quite a bit to power these data centers. What
we know is that there's a lot of new build
of power supply coming online to try to reach this
overall power demand.
Speaker 4 (30:30):
Helen, we're obviously in the early innings of this build
out of data centers. What signs are you seeing already
of any kind of strains on resources on electricity?
Speaker 10 (30:40):
What we know is there are certain regions that are
hitting a tipping point in terms of actually being able
to power this overall supply. What we know is that
Northern Virginia is still the largest kind of market for
data center demand based on our forecast, and we are
seeing a lot of growing concern in that PEG region.
(31:01):
What we project in PGM is that data center capacity
is going to hit roughly thirty one gigawatts by twenty thirty.
And what we do is when we adjust that overall
kind of like what power demand looks like in PGM
relative to supply, what we expect is there might be
a nine point five gigawatch shortfall of overall power supply
(31:24):
by the end of the decade if we assume that
all of this data center demand is going to come online.
Speaker 2 (31:30):
If all this data center demand comes online, obviously the
need for electricity or power is just extraordinary. I'm a
big fan of nuclear, A small mobile reactor, modular reactor here,
there's SMR type things talk to us about that is
that a viable technology solution at some point.
Speaker 10 (31:47):
So we know that there has been a lot of
company announcements around small modular nuclear as well as just
nuclear in general. And there has been several different new
power purchase agreement and surround nuclear by major hyperscale companies
as well. What we see within BNF is that in
the near term what is likely going to power data
(32:10):
center demand is actually going to be gas, and nuclear
is a much more longer kind of like long term
play in terms of how you power data center demand.
But what we expect is that the major ramp up
in overall demand is coming over these next three years,
and gas is likely what's going to meet that overall demand.
Speaker 4 (32:30):
What kind of measures are being taken to limit any
kind of potential power outages from this build.
Speaker 10 (32:37):
Out, Well, we do see that there's been a lot
of different regulations that are evolving real time around data
center demand. What we know is that Georgia adopted new
rules pushing grid connection costs onto large users like industrial users.
Ohio now requires data centers to pay for at least
eighty five percent of the energy they request each month,
(33:01):
even if it is underutilized, and so policies are kind
of being put in place to kind of navigate rising
and growing demand.
Speaker 2 (33:09):
Are we building these data centers too quickly? Is there
a risk for an overbuild? It just feels like it's
too much, too fast, but all the projections say we're
going to need all that compute.
Speaker 10 (33:21):
It's a really great question, something as an analyst I
think about quite a bit. At BNF. What we've done
is we've benchmarked our data center forecast relative to a
whole bunch of other third party forecasts out there, and
what we see is that our forecast is relatively conservative
compared to other third parties because our data center forecast
(33:44):
does include and analyze some of the additional power constraints
as well as like project development timelines of data center development.
And what we found is that it roughly takes seven
years to develop a data center, and even that we're
seeing quite a bit of new capacity come online. That
(34:05):
is a result of just fundamentals around AI demand, whether
that is company announcements of data centers as well as
just like the underlying growth and trend around AI.
Speaker 4 (34:17):
I can't help but wonder how are data centers addressing sustainability?
Are they using clean energy? What measures are they taking.
Speaker 10 (34:26):
A lot of these hyperscalers that are building out data
centers do have sustainability goals and clean energy commitments. However,
like within the data center's outlook. What we mostly focused
on is just what is the additional capacity and activity
around data center demand within the United States, And we
(34:47):
also did a small analysis on specific markets that are
likely going to have constraints in the market around power supply,
and within URCOTT and PGM, which is our two larges
power market region that expects high data center demand growth,
what we're seeing is that the likelihood of what's going
(35:08):
to meet that supply is going to be gas, and
so we don't specifically look at sustainability commitments, but what
we know is that a lot of what's supplying data
centers will be gas in the narature.
Speaker 3 (35:23):
Our thanks to Helen co be Any, head of US
Power Markets Research.
Speaker 2 (35:26):
That's this week's edition of Bloomberg Intelligence on Bloomberg Radio,
providing in depth research and data on two thousand companies
and one hundred and thirty industries.
Speaker 3 (35:33):
And remember you can access Bloomberg Intelligence be a Bigo
on the terminal. I'm normal Indo and I'm Paul Sweeney.
Speaker 2 (35:38):
Stay with us. Today's top stories and global business headlines
are coming up right now.
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