September 12, 2025 • 38 mins
Watch Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Hosts: Scarlet Fu and Norah Mulinda
On this podcast:
- Anurag Rana, Bloomberg Intelligence Technology Analyst, recaps Oracle earnings.
- John Butler, Bloomberg Intelligence Senior Telecom Analyst, discusses SpaceX agreeing to buy EchoStar Spectrum for $17 billion.
- Richard Bourke, Bloomberg Intelligence Senior Analyst, Basic Materials, discusses Anglo American agreeing to buy Teck in a deal reshaping mining.
- Sam Fazeli, Bloomberg Intelligence, Director of Research for Global Industries and Senior Pharmaceuticals Analyst, discusses Novo Nordisk cutting 11% of its staff.
- Eric Roston, Bloomberg Climate Reporter, discusses the Bloomberg Big Take story: “Trump Is Unwinding Climate Science at a Dangerous Pace.”
- Herman Chan, Bloomberg Intelligence Senior Analyst for US Regional Banks, discusses PNC agreeing to buy Colorado’s FirstBank for about $4.1 billion.
- Craig Trudell, Bloomberg Global Autos Editor, discusses the Bloomberg Big Take story: “Tesla's Dangerous Door Design Can Trap People Inside.”
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?
Speaker 3 (00:15):
The uncertainty of terriffs. Let's take a look at the
sectors and how they performed.
Speaker 4 (00:19):
A lot of investors getting whip saled every day by
news events.
Speaker 1 (00:22):
Breaking market headlines, and corporate news from across the globe.
Speaker 3 (00:26):
Could we see a market disruption of market events?
Speaker 2 (00:28):
So people just too exuberant out there?
Speaker 3 (00:31):
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 Scarletfoo and I'm normal Inda, filling in for Paul
Sweeney on today's Bloomberg Intelligence Show. We dig inside the
big business stories impacting Wall Street and the global markets.
Speaker 5 (00:51):
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 3 (00:58):
Today, we look at one of the biggest mining deals
in over a decade.
Speaker 5 (01:01):
Plaus Well look at why the Danish drug maker Novo
Nordist is cutting about eleven percent of its workforce.
Speaker 3 (01:06):
But first we begin with earnings from the computer tech
company Oracle.
Speaker 5 (01:10):
This week, the company gave an aggressive outlook for its
cloud business, causing the stock to surge the most since
nineteen ninety two.
Speaker 3 (01:16):
For more, guest host Alexis Christophers and I were joined
by anor Agrana, Bloomberg Intelligence technology analyst. We first asked
on Aroan to break down Oracles earnings and the company's
major stock jump.
Speaker 6 (01:26):
Oracle is a very unique company because it has your
traditional software but also a few years ago it started
a cloud business called Oracle Cloud Infrastructure, something very similar
to what Aws Tells or Microsoft Azure. And one of
the advantages it has is it just rents out it's
you know, servers for people to go out and train
their AI models or you know, run their applications on it.
(01:48):
So this is really a new business for them, you know,
just came up the last few years, and that's where
the biggest growth is and that's what's driving the stock.
Speaker 3 (01:55):
What's happening with the rest of the company, its operations,
it's software bil business. Is it still cutting costs for instance,
and reducing headcount.
Speaker 6 (02:04):
The advantage Oracle has compared to let's say a company
like core v for Nebus, is that it has a
very high margin database business and very high margin application business.
These businesses have gross margins, you know, let's say north
of ninety percent. Now when you marry that with a
massive AI infrastructure business where you need to spend a
lot of money, that's problematic for somebody that doesn't have that.
(02:28):
But Oracle has that luxury that it can spend billions
of dollars. You know, before we were thinking they're going
to spend you know, somewhere in the low thirty billion range,
which was already higher than what they had guided, and
you know, even the street was expecting. They came out
and said they're going to spend over thirty five billion
and you know the next financial year. So that's a
lot of money going into expanding data center, buying chips
(02:51):
by you know, creating a new infrastructure to fulfill this demand.
Speaker 7 (02:54):
When you look at the competition here, Microsoft, Amazon, Alphabet,
what does Oracle or how does Oracle differentiate itself not
only for the customer, the client, but for investors.
Speaker 6 (03:08):
Yeah, and one of the things I would say is
everybody is having a good time in this particular party.
Speaker 8 (03:12):
It's not just you know, one company that's scaling it.
Speaker 6 (03:15):
It's just the size of their business is far smaller
than it is for let's say AWS or Microsoft. You know,
in the last financial year, the revenue was you know,
roughly about ten billion or so. Aws's rund rate is
one hundred and twenty five billion. Microsoft's business is seventy
five billion. Google's business is fifty billion. So you know, please,
you know, you've got to take that with the context
(03:36):
of how big Oracle's cloud infrastructure is compared to some
of the bigger vendors out there.
Speaker 3 (03:41):
You know, honrog it feels like Oracle kind of came
from out of nowhere with its you know, contributions to
the AI space and being such a big player. Certainly,
the bookings of almost half a trillion dollars caught my eye,
and it's more than four times what it was the
same time last year. Are there any other kind of
dark horses out there that you would be keeping your
(04:01):
eye on that could be the next Oracle, which is
already feels like it's the next in.
Speaker 6 (04:05):
VideA, Yeah, I think one of the things you have
to think about it is it's not easy to come
up with this structure. A lot of business like this
because you need billions of dollars to create a data
center or to lease out a data center, then buy
equipment like in Vidia chips and computing equipment. There are
a handful of companies like you know, core beav of Nebeus,
which are smaller neo cloud players that specialize in renting
(04:28):
and VideA GPUs to customers. Now, the bigger vendors have
the capital that they are also expanding it. But again,
as I said, given the size of the increment that
they are seeing, you know, you're not getting that same
growth rate.
Speaker 7 (04:40):
Do you think there's a little over exuberance though in
the market, especially with so much talk about whether or
not we are in an AI bubble and what happens
if it starts to deflate.
Speaker 8 (04:51):
Yeah.
Speaker 6 (04:51):
See, one of the things you have to remember is
for Oracle, at least they have this backlock of ordos
coming in and it's coming you know. For example, one
of the biggest customers right now is open Ai. If
Opening Eye continues to expand revenue at a good pace
over the next several years, they are going to be
spending a lot of money to train their models in
order to stay ahead. So I think there is a
lot of relationship over there. If let's say you and
(05:13):
I don't use chat GPT as much, that would have
an impact on open Aiy's revenue, That would have impact
downstream revenue on all the other players, you know, whether
that's in Verdiao Oracle.
Speaker 8 (05:24):
But frankly speaking, we are not there yet.
Speaker 3 (05:26):
It doesn't feel like this is a situation where it's
a zero sum game Oracle wins and Microsoft, Google and
Amazon lose, or is it.
Speaker 6 (05:36):
So there are a few companies that fall into this pocket,
you know, and those include Amazon Web Services, Microsoft, Google
Cloud Code, viv Oracle, and Nabius for example. So these
are the ones that are seeing extra spending right now.
But when you look at on the application side, you know,
whether that's Salesforce or Workday, those guys are not seeing
that benefit because they're not in that infrastructure game. So
(05:58):
there's a huge difference between two vendors, or between the
two category of vendors.
Speaker 8 (06:03):
Right now.
Speaker 6 (06:03):
We are more in the built phase of AI, not
the implementation phase of AI.
Speaker 7 (06:08):
You know, it's hard to believe, Scarlett, but this stock
and is now worth more than has a larger market
cap than Walmart, Eli, Lilly, JP, Morgan Chase.
Speaker 3 (06:21):
Yeah, that is pretty remarkable, and again it feels like
it kind of came from out of nowhere.
Speaker 7 (06:25):
You're right on that, which is why I brought up,
you know, Amazon, Microsoft, right on your rog I mean,
the fact that those were the names we were really
talking about when it came to AI and then sort
of Oracle comes out of out of the blue.
Speaker 6 (06:38):
Yeah, but that's the whole point this particular infrastructure. If
you're going to run large models, it's very unlikely you
going to do it in house. I mean, you can
do it, but you required a lot of investment going in.
You're better off renting out data center capacity or computing
capacity from one of the cloud vendors. And Oracle has
the money to spend it, and they have the relationship
with Nvidia to get those GPUs. And on top of that,
(07:00):
they're offering this to customers and saying here's my equipment,
come and test it out the way you like it. Amazon,
on the other hand, thought example sells it as a package,
and that's where you're you're seeing some distinction. And also
the size, as I mentioned, before our.
Speaker 5 (07:15):
Thanks to Honor Agrana, Bloomberg Intelligence technology analysts.
Speaker 3 (07:18):
We move next to news in the telecommunications space.
Speaker 5 (07:20):
This week, the space tech company SpaceX agreed to buy
wireless spectrum from EchoStar for about seventeen billion dollars in
cash and stock.
Speaker 3 (07:28):
And this comes weeks after EchoStar agreed to sell spectrum
licenses to AT and T for about twenty three billion
dollars in an all cash transaction.
Speaker 8 (07:36):
For more.
Speaker 5 (07:36):
Guest host Alexis Christopherus was joined by John Butler, Bloomberg
Intelligence Senior telecom analysts. We first asked John how this
deal will help SpaceX.
Speaker 9 (07:45):
So the key to this deal is a spectrum called
AWS four. So if you look at Starlink and it's
sprivals in the satellite space, they all hold spectrum, but
they're not allowed to offer wireless spectrum, I'm sorry, wireless
services over that spectrum. AWS four spectrum, according to the FCC,
(08:10):
can be used flexibly. It's called flexible use spectrum, meaning
the satellite providers can offer anything from mobile services to
satellite data, downlinked services, video, whatever. It's open use spectrum
if you want to think of it that way. And
so Starlink getting its hands on this key spectrum will
(08:32):
allow them at some point in the future to potentially
enter the wireless market as a competitor to AT and T,
Verizon and T Mobile.
Speaker 7 (08:42):
So EchoStar's shareholders seem to like this deal. What are
they going to do with the proceeds? What will Echo
Star do with the proceeds of the sale?
Speaker 9 (08:50):
So for EchoStar, it's a very good deal as well.
They have really struggled to get their wireless service off
the ground. They've been building this five G wireless network
and have a relatively weak prepaid brand called Boost and
they've really struggled there. So this brings in much needed
funds for them to pay down debt. They've been a
(09:13):
bit stretched on that front, over leveraged, and you know,
this deal, together with a deal a couple of weeks
ago with AT and T, is going to bring in
billions of dollars to reduce debt. That's number one. And
number two, it brings in fresh capital for them to
invest in the business. And I have a feeling they're
probably going to take a step back and reevaluate the
(09:36):
strategy here based on the fresh funding and decide what
the best avenues of growth may be going forward.
Speaker 7 (09:44):
I'm wondering if this is going to satisfy the FCC
this deal, because I know that they were sort of
on EchoStar's case, if you will. They wanted them to
sell some of their airwaves as the company looks to
roll out it's five G technology. I know they sold
some spectrum licenses to at and recently. So do you
think this is going to sort of take the FCC
off their backs?
Speaker 2 (10:06):
I do.
Speaker 9 (10:06):
I mean, I think Starlink was working with the FCC.
They had written a letter about Echo Stars under use
of this spectrum. Starlink obviously really wants to get their
hands on it, and I think the FCC really took
their side on this one. I think they understood that
(10:27):
echo Star, being the only owner of this flexible use spectrum,
had not really put it to use to date, so
in their view it was being underutilized and being such
a critical asset, felt that, you know, sale might make sense,
and so they really EchoStar really got into it with
(10:47):
the FCC trying to protect those licenses. But in the
end here I think, if you want to think of
it this way, the FCC won the day and net.
I think it's a good deal for both Echo Stars
and Starlink and the FCC.
Speaker 7 (11:03):
Now I know SpaceX or Starlink had a deal with
T Mobile, right, how is this spectrum acquisition with EchoStar
different if at all?
Speaker 9 (11:11):
So? I think ultimately Starlink could go from being a
partner with T Mobile to being a competitor of T Mobiles.
As I said a moment ago, this spectrum opens the
door for them to get into wireless directly without having
to partner with a terrestrial carrier. The current deal with
(11:32):
T Mobile basically has Starlink. I think the best way
to think about it is they're almost like a tower company.
They're providing the space based cell sites if you will,
to carry T Mobile traffic, and they get paid a
fee for that, but they're not earning the level of
profits that you could as as a direct carrier. So
(11:56):
down the road, Starlink, understanding this, wants to enter the
cellular business directly. They have a lot to do before
that that happens, but I think it longer term puts
the deal with T Mobile in jeopardy.
Speaker 7 (12:11):
The seventeen billion dollars a fair price for this for
these spectrum licenses.
Speaker 6 (12:15):
Do you think you know?
Speaker 9 (12:17):
Spectrums a very liquid market, so it's tough to gauge valuations.
But in my mind, I look at it as a
fair price given the potential again for Starlink to enter
this huge market. Down the road.
Speaker 3 (12:33):
Our thanks to John Butler, Bloomberg Intelligence, senior telecom analyst.
Speaker 5 (12:37):
Coming up, Well, look at how the US's ability to
assess data on climate change is being impacted by the
Trump administration.
Speaker 3 (12:43):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies at one
hundred and thirty industries.
Speaker 5 (12:50):
You can access Bloomberg Intelligence via Bigo on the terminal.
I'm Normal Indo.
Speaker 3 (12:54):
And I'm Scarlet Food. This is Bloomberg.
Speaker 1 (13:00):
Is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney on
Bloomberg Radio.
Speaker 5 (13:06):
I'm Scarlet Foo and I'm normal in a filling in
for Paul Sweeney. We move next to a major deal
in the mining industry.
Speaker 3 (13:13):
This week, the global mining company Anglo American agree to
acquire Canada's natural resource company tech Resources.
Speaker 5 (13:19):
It's a so called zero premium deal and this deal
will create a more than fifty billion dollar company and
one of the biggest mining deals in over a decade.
Speaker 3 (13:27):
So for more guest host Alexis Christophers and I were
joined by Richard Burke, Bloomberg Intelligence senior basic materials analysts.
We first asked Richard what a zero premium transaction actually is.
Speaker 4 (13:37):
So what they've done is it's a merger of equals,
and it's kind of interesting even though it's it's labeled
mergers equal that American Angle shareholders are going to end
up owning Butts two thirds of company roughly, and tech
is shareholders going to end up owning a third company. Well,
(13:58):
it's gonna be headquarter in Canada, the board is going
to be fifty to fifty the city, and the management's
gonna be fifty to fifty. So even though it's kind
of you know, no premium merger equals kind of you know,
the the governance issues kind of point to merger of
equals and that's really probably structured in order to get
(14:19):
approved by the Investment Act Kada Investment Act. And also
the Kevil family that owns Tech has two classes shore olders,
class Class A and Class B. Class A is super
voting rights. He's owned, he owns majority of those shares,
so he has to approve this deal. In the past,
(14:39):
he you know, Glenn Corter, when Glencourt tried to buy
them about two years ago, he kind of vetoed the deal.
So the deal and go through. So there's kind of
a unique structure this deal to kind of you know,
fitted through final approval makes sense.
Speaker 3 (14:54):
Okay. So there was also language in the statement of
this so called merger of equals that would allow both
firms to con that are unsolicited proposals and for the
deal to end if there's a better offer. Does that
mean they're angling for some counter offer from someone else.
Speaker 4 (15:09):
Well, I think it would be a hard press, I doubt,
in order to get it through the Canadian Investment Act,
which you know, copper is now being considered a critical
material critical mineral. Canada has said they don't want to
see any of their mining companies go away. So would
somebody come in who can pay that much, be willing
(15:31):
or to PHP or Rio Tinto, be willing to move
their headquarters from where they're at to Canada. I highly
doubt it. So, but I think you have to put
that language in the deal that hey, we're open to.
Speaker 10 (15:44):
So it's like boilerplate, language plate and also prevent that
you know't get sued by shareholders that you have to
go out and looked at for all deals.
Speaker 8 (15:52):
Right.
Speaker 7 (15:52):
Do you think that this deal though, between Anglo American
and Tech is going to be the thing that sort
of ignites more M and A in this industry?
Speaker 4 (16:01):
I think you know, they used to be saying I
used to cover oil and gas industry years ago before
more focused on Melson mining. There's you used to be
on saying it's cheaper draw on Wall Street and then
drill up in the field. And that seems to be
happening in If you look at how much it costs
to you know, get a new copper, deposit up and
(16:25):
writing also how many years were permitting and all the
other things that happens, you can see that maybe you
sit down and look at this and say, Okay, maybe
cheaper draw out, you know, mine on Wall Street, then
go out and make the.
Speaker 5 (16:40):
Mine our Thanks to Richard Bork Bloomberg Intelligence Senior Basic
materials analysts.
Speaker 3 (16:45):
We now moved to some news in the pharmaceutical space.
Speaker 5 (16:47):
This week, the Danish drug maker Novo Nordis announces it's
cutting nine thousand jobs globally. This equals about eleven percent
of its workforce. The company also cut its profit forecast
for the third time this year as it fights to
recover ground in the obesity dry market.
Speaker 3 (17:00):
For more on this, guest host Alexis Christophers and I
turned to Sam Fazzelli, Bloomberg Intelligence, Director of Research for
Global Industries and senior pharmaceuticals analysts. We began by asking
Sam to talk about the larger changes taking place at NOVO.
Speaker 11 (17:13):
The story here is that this is not the first
time they've lowered guidance for the year. I mean this
time there's an impact on the EPs front from obviously
the cost of restructuring, assuming they can get it all
done this year, but it's a pretty chunky one. Nine
thousand people, about eleven percent of the workforce, and a
lot of that.
Speaker 8 (17:29):
Coming from Denmark.
Speaker 11 (17:31):
If you read the essence of the press release that
they put at there's a couple of things that they
bring out.
Speaker 8 (17:35):
They want to invest more on R and D Well.
Speaker 11 (17:38):
What I think this is telling you is that the
growth that they had planned for the next five years,
they may be thinking maybe that won't come as test
as we were expecting it because of competition from Lily,
compounders and other products potentially coming to market to the
pace that they were hoping. So if you want to
keep investing in R and D, you need to liberate
some cash. And also it looks like that they're also
(17:58):
thinking about changing the world that they're doing their marketing
because of the different channels that they're getting involved with
now direct to consumer, that is not something that Prauma
has done very often before. In fact, only Lily had
done it prior to this, also for obesity drugs, So
maybe the costs of that are different. And there's an
element that they keep that they've referred to in there,
which is a culture of performance related reward, and you
(18:24):
think to yourself, well, what was it before? So it
seems like that they want to make it much harder
focus on you've got to deliver because we need the growth.
Speaker 8 (18:34):
So that's the interesting wle to.
Speaker 7 (18:35):
Watch, you know, Sam, I think to a lot of
casual investors who don't deep dive into you know, Novo
Nordisk the way you might say, would look at this
and say, listen, they have the most popular weight loss drugs, right,
will go vi Ozempek. Why is this company having these
problems when you drill down or is it just a
(18:55):
problem with having to scale too quickly? Is it that
the company isn't nimble enough, just sort of change with
the times.
Speaker 11 (19:04):
Well, Nobodordisk has been a poster child of how you
grow from a small company selling to a relatively basic
set of products twenty thirty years ago to one that's
become essentially one of the innovators in this space. They
brought the first JL we want to market, so we
can't fault them for that. It's just that I think
this growth that they had to go through where the
(19:25):
planning was done, you know a lot of I mean,
we have one hundred billion dollar market potential for more
obesity as a whole, right, So it's just difficult, I think,
to judge into this space. And maybe the previous CEO
had looked and said, I'm pretty sure we're going to
be fifty percent of that market. We need to plan
for that growth. And then two things changed. Competition from
(19:46):
really is superintense. They have what I would call it
a better drug in terms of the efficacy profile that's
been shown in head to her trials. And then of
course you've got on top of that compounders that don't
seem to be don't seem to be going way, they
keep taking cheaper generics or generics manufactured, they'll try to
making the drugs. So that's where I think the new
(20:08):
Area issue is in that we all expected the FDA
to really clump hard down on that and they haven't
made issue, you know, statements, but they're allowing them. They
even found areas outside the US where these compound compounders
can get their drugs from, which is counterintuitive.
Speaker 5 (20:26):
Our thanks to Sam Fazelli, Bloomberg Intelligence, Director of Research
for Global Industries and senior pharmaceuticals analysts.
Speaker 3 (20:32):
This week we focus on a Bloomberg Big Take story
entitled Trump is Unwinding Climate Science at a Dangerous Pace.
You can find it on Bloomberg dot Com and the Terminal.
Speaker 5 (20:41):
The story looks at how mass firings, regulatory rollbacks, program closures,
and funding cuts across agencies have threatened the US's ability
to gather and says data on climate change, and this
is under the current Trump administration.
Speaker 3 (20:52):
For more guestos, Alexis Christophers and I were joined by
Eric Roston, Bloomberg Climate reporter. We began by asking Eric
to explain how President Trump's policies are impacting the ability
to gather data.
Speaker 2 (21:03):
Whether you are a mayor of a city, or head
of an insurance company or head of an agriculture company,
everyone throughout the economy, public and private sector needs good
information to make good decisions, and the US in recent
(21:24):
decades has had the global leadership role in developing the
kinds of data that everybody needs in order to see
what's coming, to set insurance rates, to understand whether we
should build a house here, to understand if this floodplane
is going to be like a bad place to build houses.
(21:45):
And so that's the data we're talking about here, is
actionable data that people in the economy have come to
rely on to make decisions. To cite one of the
many examples we talk about it in in the story,
the US produces it's supposed to be not more than
(22:06):
every four years national Climate Assessment, which is a huge
amount of time, a huge amount of time, and they take,
you know, years to develop, hundreds of people to write,
and thousands of papers that they're based on. And you
see these reports. Cite it in Travelers earning calls and
(22:26):
Chipotle earning calls and reports in Marriott, you know, brands
we see every day understand the material and understand the
needs of this material. I'm not putting words in their mouth.
I'm just pointing out that they say things like this,
those were taken away from public view. So I think
that's an interesting place to start on because like, yeah,
(22:47):
the government, like any government, can be cut right and
save money, and it's just the nature of bureaucracy. But
why are some of the most authoritative and well vetted
scientific reports ever written being taken away from public view
(23:08):
where they've been for many years?
Speaker 3 (23:11):
All good questions, and I'm sure that we won't get
answers to them right away either. So what does it
mean if you're a company like Travelers and you're relying
on that data? Do you can you go to private
sources for that kind of information? Does that exist?
Speaker 2 (23:24):
It's that's a great question. And if we had like
another two hours, I'd love to, you know, because we've
spent a lot of time in the last few years
on the private sectors, you know, filling a hole in
useful climate data that that businesses the businesses needs. So
the short answer is, yes, some of this this this data,
(23:50):
A lot of it is like translated into the language
of risk for companies, it does exist. The bigger concern is, like,
that's a tiny fraction of what we're talking about here.
You know, we're talking about, you know, very sophisticated computer
models that like the entire world relies on to make
sense of you know, observations we see and weather stations
(24:14):
and in you know, in other sources and a particularly
you know, I don't know, I'll get in trouble for
saying this, but this could be described as like the
most boring kind of data is also some of the
most important, and that is unsexy data. Unsexy data. It's
like continuous monitoring data. It's you know, it's very important
(24:38):
for some kinds of data that you have a complete,
unbroken record. The most iconic one in this space is
the CO two measurements from Hawaii and Mauna Loa that
have been going on since the late nineteen fifties and
are largely responsible for the discovery of global warming. Like
(25:00):
that data set, one of the most famous data sets
ever collected, was slated for closure in the recent White
House budget.
Speaker 5 (25:11):
Hard thanks to Eric Roston Bloomberg Climate Reporter, Coming up,
look Ahead to a potentially big m and a deal
in the banking sector.
Speaker 3 (25:18):
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 5 (25:25):
You can access Bloomberg Intelligence via Bigo on the terminal.
Speaker 3 (25:28):
I'm normal Linda, and I'm Scarletfoo. This is Bloomberg.
Speaker 1 (25:38):
This is Bloomberg Intelligence with Scarlettfoo and Paul Sweeney on
Bloomberg Radio.
Speaker 3 (25:45):
I'm Scarletfoo and I'm normal Linda, filling in for Paul Sweeney.
We moved to some news in the banking sector this week.
PNC Financial Services agreed to buy First Bank for about
four point one billion dollars, adding more than twenty six
billion dollars in assets and branches in Colorado and Araa, Arizona.
Speaker 5 (26:00):
The acquisition will triple the number of P and C
branches in Colorado, and it will give the combined company
more than fifteen percent of deposits in the state.
Speaker 3 (26:08):
Guest hosts Alexis Christophers and I were joined by Herman Chen,
Bloomberg Intelligence, senior analysts for US regional banks. We first
asked Herman if bank regulators are going to be okay
with the deal of this size.
Speaker 10 (26:19):
The regular toory landscape has been really great for banking
and getting bank deals done. That's why you've seen some
more bank deals over the past couple of months. You
saw Huntington, which is based in Ohio, go into Texas
for Vera Techs. And you've see an emerging of vehicles
in the Southeast with so Novas and Pinnacle. And this
is sort of like the third large regional bank deal
(26:41):
over the past couple months. So it just sort of
signals that the bank the Trump administration is really open
it for a bank of an am.
Speaker 3 (26:48):
And this is not PNC's first attempt at real expanding
its Colorado presence. It had previously sought to open sixteen
locations in Colorado. Why is Colorado such a hot market
for P ANDC?
Speaker 10 (26:59):
Right, I would take step back and sort of highlight
that the P and C, which is mostly in the Northeast,
mid Atlantic Midwest, that they've expanded across the Sun Belt
states in Colorado with the twenty twenty one deal for
BBVA USA, and they sort of double down on those
markets with this expansion plan to grow organically by opening
(27:23):
up new branches and this deal that they announced really
sort of supports that growth and accelerates it in Colorado
and in Arizona.
Speaker 7 (27:30):
So I'm just wondering, as you look out onto the
landscape now, who might be the next takeover candidate. Who
might we be talking about in the not too just
in future.
Speaker 10 (27:39):
Yeah, So you've seen some of these deals where these
slower growth Midwest banks grow into areas like Texas, Florida, Colorado.
So the banks are sort of smaller in size, and
we're talking about the first banks about twenty billion in assets,
so banks of slimmer of that size, these higher growth
(28:01):
markets are really attractive to some of these larger institutions.
Speaker 3 (28:06):
So with this purchase, PNC's total assets approaches six hundred
billion dollars. It will bring it closer to the number
one regional bank, which is US Bank Corp. Is Uanrup
still a regional bank, Yeah.
Speaker 10 (28:18):
I would say there are three super regional banks, and
that will put p and C, US Bank Corp and
Truest where they're sort of below that seven P fifty mark,
but larger than your typical regional bank. And they PNC
now is a coast to coast lender, so and have
operations all from the Northeast all the way down to Florida, Texas, California,
(28:41):
So you can't really call them a regional bank at
this point. I would view them as more super regional.
Speaker 7 (28:48):
And I want to tie it back to the FED
in interest rates, because don't all roads really lead there
at this point, And I want to talk about what again,
if this is going to be an environment of lower
interest rates for the foreseeable future, what is this going
to mean for the banks, but especially these smaller regional banks,
because I'm thinking it may even squeeze their profitability more.
Speaker 8 (29:06):
Yeah.
Speaker 10 (29:07):
Yeah, it's interesting because we had a few FED rate
cuts at the end of last year, and the regional
banks that I cover were able to navigate that pretty well.
They're able to keep their net interest margins, which is
a key metric for profitability, fairly stable. And that's one
of the reasons why they've been able to do that
is they've been able to lower their deposit costs, which
(29:28):
was one of the things that really is a key
metric for banks to really show top line growth. On
top of that, lower interest rates could help loan growth.
You've seen some companies like Rockets Mortgage be very abuiliant
for lower interest rates, and so that could help improve
(29:51):
some of the demand for lending, and that's something that
we're seeing so far over the first half of the year.
Speaker 3 (29:57):
So they'll make it up in volume what they lose
in profitability, they plan.
Speaker 10 (29:59):
To we can make it in volume. You'll see some
dents in like the rates that they charge for loans,
but they'll also make it up in volume and lowering
their funding costs.
Speaker 3 (30:10):
When you look at the landscape overall of M and
A in the banking sector, it feels like we've been
waiting for something to happen for a long time, and
maybe this is kind of the domino, the first domino
that falls. Yeah, well, the big banks and I'm here,
I'm talking about the JP Morgans, the Bank of America's,
Wells Fargo's. Will they play any role in this consolidation.
Speaker 10 (30:27):
They're already too big, So there's that they are prohibited
from from doing such deals because they just have dominant
market share in their markets. One thing that we did
see during the height of the regional banking crisis a
couple of years back is that JP Morgan bought First
Republic in an FDIC failed bank acquisition. So if we
(30:51):
in the sense that if there we do get to
a place like that, that's when the big banks can play,
but in a straight man a type scenario.
Speaker 3 (31:01):
To clean up messes.
Speaker 2 (31:02):
They can clean They can.
Speaker 10 (31:02):
Clean up messes, but they can't outworthy buy a bank
at this point, they're just way too big.
Speaker 7 (31:08):
And just what about the consumer out there only shopping
for the best deal. You know, it used to be
that these smaller regional banks would be the place to
go for the better CD rates, right or a more
friendly friendly mortgage terms. Is that still the case?
Speaker 8 (31:21):
Yeah?
Speaker 10 (31:21):
Sure, So that's what really great about these markets that
P and C is going to where they can have
really dominant market share in Denver and Arizona, and just
having that marketing and having the branches really helps with
deposit taking and helping your consumer.
Speaker 5 (31:39):
Out our Thanks to Herman Chan, Bloomberg Intelligence senior analysts
for US regional banks.
Speaker 3 (31:44):
This week we focus on another Bloomberg Big Take story
entitled Tesla's dangerous store design can trap people inside. You
can find it on Bloomberg dot Com and The Terminal.
Speaker 5 (31:53):
This story looks at how some of Tesla's design features,
like door handles are confusing occupants and first responders, and
this worsening injuries and damage caused by survivable crashes.
Speaker 3 (32:03):
So for more on this guest host Alexis Christophers and
I were joined by Craig Tdrudell, Bloomberg Global Autos Editor.
We began by asking Craig to give us his main
takeaways from this story.
Speaker 12 (32:13):
This is a company that you know from the from
the beginning, you've heard Musk talk about, you know, just
how safe his vehicles are, and you know, even just
very recently, the company has posted on X if you
love them, put them in a Tesla. That's the kind
of language that you see and hear from from Tesla
and from Musk. I think what happened here with the
(32:35):
doors is, you know, sort of from the beginning, an
attempt to kind of innovate what I think Tesla's critics
would say didn't need innovating. We didn't need to change
the way that you know, a door opens and closes.
It's it's intuitive. Everyone knows how to do it. You
sort of know how to do it when you're three
or four years old and you know the company wanted
(32:56):
to go to this, you know, new different sort of
path breaking approach of handles that would be flushed to
the to the doors for better aerodynamics. And and also
you know, if you think about a battery powered car,
it's it's very quiet, right, you don't have engine noise
to drown out any sort of you know, whistles or
anything like that. So the smoother the surfaces, the flatter everything,
(33:19):
the better in terms of not just aerodynamics, but also uh,
you know, this sort of getting rid of any any noise.
And so while while those all you know, are understandable
reasons to sort of make some design changes, what we
found in the course of reporting of this story is just,
you know, some sort of tragic consequences of those decisions
(33:40):
in terms of, you know, how difficult it is both
for you as an occupant to get out and also
for first responders to get to you, to open the
doors and get to you, and in situations where maybe
you're incapacitated or you're having trouble with the doors.
Speaker 7 (33:56):
Yeah, I mean the stories that you highlight, Craig were
really popping and disturbing. I mean, one a little eighteen
month old girl was stuck in the car her parents
couldn't get her out, and that was one of the
better stories. It had a better ending. They were able
to get her out. I mean, I'm surprised that the
National Highway Traffic Safety Administration isn't really cracking down on Tesla.
(34:17):
What are they saying about all of this?
Speaker 12 (34:20):
I think that was one of the more interesting, you know,
issues with this story is is that Nit's a you know,
a lot of complaints, a lot of safety concerns come
across their their proverbial desk, if you will, and at
times it will take all of a single complaint or
you know, a handful of owner surveys that that will
(34:43):
sort of get its attention and lead to communication with
manufacturers of hey, you need to take a look at this,
and sort of, you know, the agency will sort of
put its thumb on the scale in terms of, you know,
a potential recall. In the case of this story, what
NITSA told us is that they are in communication with
(35:03):
Tesla to gather additional data and determine whether a quote
full investigation unquote is warranted. That does allude to this
idea that there may be some sort of initial investigating
going on, but in terms of a formal probe that
has not been initiated at least as of yet.
Speaker 3 (35:24):
Okay, so that's where the regulators stand. What's interesting to
me as well is that other ev makers have kind
of taken Tesla's design and copied it. They are also
doing the same thing. So this now goes beyond Tesla vehicles,
doesn't it.
Speaker 12 (35:39):
Yeah. And I think what was interesting to us and
sort of you know, kind of trying to get a
sense for just how problematic this is for other manufacturers.
I think, you know, there was nothing that stood out
more for me was, you know, looking at JD Powers
study that they do every year. It's called the Initial
(35:59):
Qualities the IQs. You might be familiar from with you know,
car companies you know, put making this, you know, a
point of emphasis in their ads or their commercials when
they do well in that. In that study, and in
twenty twenty three, uh, they had a record high number
of problems per US vehicle in the US market and
(36:21):
one of the things that they pointed to as a
reason for this was was doors. And they kind of
poked fun a little bit at the industry that they
you know, researched by saying, this wasn't something that we
needed to change, you know it was working. We weren't
getting complaints from people that we survey for this study,
and you know, now this is a percolating problem area
was the phrasing that they used. And seven of the
(36:43):
ten most problematic models in this respect were EV. So
what we're seeing is a lot of sort of you know,
taking after Tesla in terms of door design. And for
the most part, what we're seeing is is sort of
you know, copycatting or taking after EV for EV right,
you know, trying to feel a model Wi Fighter that
also has you know, doors that are similar to the
(37:04):
model Y.
Speaker 7 (37:05):
I'm wondering, I don't think your story got into the
story got into this, Craig, But what's the legal ramifications
here for for Tesla? You know, I would imagine the
lawsuits are piling up. I mean if certainly, if my
child was stuck in a Tesla and I couldn't get
him out, I might be suing Tesla.
Speaker 12 (37:21):
We are aware of a handful of lawsuits and I
think you know, one of the complicating factors here is
is Tesla uh pushes its its customers into arbitration for
for these sorts of of suits that this is part
of the sort of purchase agreement when you buy it
a Tesla, that is something that you know, liigans are
going to have to sort of overcome because of that
(37:43):
sort of policy on the part of the company. I
think another sort of complicating factor here is that you know,
one of the uh you know, uh a couple that
that we speak with in the story, they had no
inclination to sue Tesla immediately after the crash. It took
one of the first responders coming to them after the
fact and saying, hey, we really had a hard time
(38:04):
getting to you, and it was because of your vehicle.
That is part of the issue here. You don't necessarily
know right off the bat, Hey something wasn't right here.
I need to do some investigating hard.
Speaker 5 (38:17):
Thanks to Craig Trudell, Bloomberg Global Autos Editor.
Speaker 3 (38:20):
That is 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 5 (38:28):
And remember you can access Bloomberg Intelligence via Bigo on
the terminal. I'm normal Inda, and I'm Scarlet Foo.
Speaker 3 (38:33):
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?
Speaker 3 (00:15):
The uncertainty of terriffs. Let's take a look at the
sectors and how they performed.
Speaker 4 (00:19):
A lot of investors getting whip saled every day by
news events.
Speaker 1 (00:22):
Breaking market headlines, and corporate news from across the globe.
Speaker 3 (00:26):
Could we see a market disruption of market events?
Speaker 2 (00:28):
So people just too exuberant out there?
Speaker 3 (00:31):
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 Scarletfoo and I'm normal Inda, filling in for Paul
Sweeney on today's Bloomberg Intelligence Show. We dig inside the
big business stories impacting Wall Street and the global markets.
Speaker 5 (00:51):
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 3 (00:58):
Today, we look at one of the biggest mining deals
in over a decade.
Speaker 5 (01:01):
Plaus Well look at why the Danish drug maker Novo
Nordist is cutting about eleven percent of its workforce.
Speaker 3 (01:06):
But first we begin with earnings from the computer tech
company Oracle.
Speaker 5 (01:10):
This week, the company gave an aggressive outlook for its
cloud business, causing the stock to surge the most since
nineteen ninety two.
Speaker 3 (01:16):
For more, guest host Alexis Christophers and I were joined
by anor Agrana, Bloomberg Intelligence technology analyst. We first asked
on Aroan to break down Oracles earnings and the company's
major stock jump.
Speaker 6 (01:26):
Oracle is a very unique company because it has your
traditional software but also a few years ago it started
a cloud business called Oracle Cloud Infrastructure, something very similar
to what Aws Tells or Microsoft Azure. And one of
the advantages it has is it just rents out it's
you know, servers for people to go out and train
their AI models or you know, run their applications on it.
(01:48):
So this is really a new business for them, you know,
just came up the last few years, and that's where
the biggest growth is and that's what's driving the stock.
Speaker 3 (01:55):
What's happening with the rest of the company, its operations,
it's software bil business. Is it still cutting costs for instance,
and reducing headcount.
Speaker 6 (02:04):
The advantage Oracle has compared to let's say a company
like core v for Nebus, is that it has a
very high margin database business and very high margin application business.
These businesses have gross margins, you know, let's say north
of ninety percent. Now when you marry that with a
massive AI infrastructure business where you need to spend a
lot of money, that's problematic for somebody that doesn't have that.
(02:28):
But Oracle has that luxury that it can spend billions
of dollars. You know, before we were thinking they're going
to spend you know, somewhere in the low thirty billion range,
which was already higher than what they had guided, and
you know, even the street was expecting. They came out
and said they're going to spend over thirty five billion
and you know the next financial year. So that's a
lot of money going into expanding data center, buying chips
(02:51):
by you know, creating a new infrastructure to fulfill this demand.
Speaker 7 (02:54):
When you look at the competition here, Microsoft, Amazon, Alphabet,
what does Oracle or how does Oracle differentiate itself not
only for the customer, the client, but for investors.
Speaker 6 (03:08):
Yeah, and one of the things I would say is
everybody is having a good time in this particular party.
Speaker 8 (03:12):
It's not just you know, one company that's scaling it.
Speaker 6 (03:15):
It's just the size of their business is far smaller
than it is for let's say AWS or Microsoft. You know,
in the last financial year, the revenue was you know,
roughly about ten billion or so. Aws's rund rate is
one hundred and twenty five billion. Microsoft's business is seventy
five billion. Google's business is fifty billion. So you know, please,
you know, you've got to take that with the context
(03:36):
of how big Oracle's cloud infrastructure is compared to some
of the bigger vendors out there.
Speaker 3 (03:41):
You know, honrog it feels like Oracle kind of came
from out of nowhere with its you know, contributions to
the AI space and being such a big player. Certainly,
the bookings of almost half a trillion dollars caught my eye,
and it's more than four times what it was the
same time last year. Are there any other kind of
dark horses out there that you would be keeping your
(04:01):
eye on that could be the next Oracle, which is
already feels like it's the next in.
Speaker 6 (04:05):
VideA, Yeah, I think one of the things you have
to think about it is it's not easy to come
up with this structure. A lot of business like this
because you need billions of dollars to create a data
center or to lease out a data center, then buy
equipment like in Vidia chips and computing equipment. There are
a handful of companies like you know, core beav of Nebeus,
which are smaller neo cloud players that specialize in renting
(04:28):
and VideA GPUs to customers. Now, the bigger vendors have
the capital that they are also expanding it. But again,
as I said, given the size of the increment that
they are seeing, you know, you're not getting that same
growth rate.
Speaker 7 (04:40):
Do you think there's a little over exuberance though in
the market, especially with so much talk about whether or
not we are in an AI bubble and what happens
if it starts to deflate.
Speaker 8 (04:51):
Yeah.
Speaker 6 (04:51):
See, one of the things you have to remember is
for Oracle, at least they have this backlock of ordos
coming in and it's coming you know. For example, one
of the biggest customers right now is open Ai. If
Opening Eye continues to expand revenue at a good pace
over the next several years, they are going to be
spending a lot of money to train their models in
order to stay ahead. So I think there is a
lot of relationship over there. If let's say you and
(05:13):
I don't use chat GPT as much, that would have
an impact on open Aiy's revenue, That would have impact
downstream revenue on all the other players, you know, whether
that's in Verdiao Oracle.
Speaker 8 (05:24):
But frankly speaking, we are not there yet.
Speaker 3 (05:26):
It doesn't feel like this is a situation where it's
a zero sum game Oracle wins and Microsoft, Google and
Amazon lose, or is it.
Speaker 6 (05:36):
So there are a few companies that fall into this pocket,
you know, and those include Amazon Web Services, Microsoft, Google
Cloud Code, viv Oracle, and Nabius for example. So these
are the ones that are seeing extra spending right now.
But when you look at on the application side, you know,
whether that's Salesforce or Workday, those guys are not seeing
that benefit because they're not in that infrastructure game. So
(05:58):
there's a huge difference between two vendors, or between the
two category of vendors.
Speaker 8 (06:03):
Right now.
Speaker 6 (06:03):
We are more in the built phase of AI, not
the implementation phase of AI.
Speaker 7 (06:08):
You know, it's hard to believe, Scarlett, but this stock
and is now worth more than has a larger market
cap than Walmart, Eli, Lilly, JP, Morgan Chase.
Speaker 3 (06:21):
Yeah, that is pretty remarkable, and again it feels like
it kind of came from out of nowhere.
Speaker 7 (06:25):
You're right on that, which is why I brought up,
you know, Amazon, Microsoft, right on your rog I mean,
the fact that those were the names we were really
talking about when it came to AI and then sort
of Oracle comes out of out of the blue.
Speaker 6 (06:38):
Yeah, but that's the whole point this particular infrastructure. If
you're going to run large models, it's very unlikely you
going to do it in house. I mean, you can
do it, but you required a lot of investment going in.
You're better off renting out data center capacity or computing
capacity from one of the cloud vendors. And Oracle has
the money to spend it, and they have the relationship
with Nvidia to get those GPUs. And on top of that,
(07:00):
they're offering this to customers and saying here's my equipment,
come and test it out the way you like it. Amazon,
on the other hand, thought example sells it as a package,
and that's where you're you're seeing some distinction. And also
the size, as I mentioned, before our.
Speaker 5 (07:15):
Thanks to Honor Agrana, Bloomberg Intelligence technology analysts.
Speaker 3 (07:18):
We move next to news in the telecommunications space.
Speaker 5 (07:20):
This week, the space tech company SpaceX agreed to buy
wireless spectrum from EchoStar for about seventeen billion dollars in
cash and stock.
Speaker 3 (07:28):
And this comes weeks after EchoStar agreed to sell spectrum
licenses to AT and T for about twenty three billion
dollars in an all cash transaction.
Speaker 8 (07:36):
For more.
Speaker 5 (07:36):
Guest host Alexis Christopherus was joined by John Butler, Bloomberg
Intelligence Senior telecom analysts. We first asked John how this
deal will help SpaceX.
Speaker 9 (07:45):
So the key to this deal is a spectrum called
AWS four. So if you look at Starlink and it's
sprivals in the satellite space, they all hold spectrum, but
they're not allowed to offer wireless spectrum, I'm sorry, wireless
services over that spectrum. AWS four spectrum, according to the FCC,
(08:10):
can be used flexibly. It's called flexible use spectrum, meaning
the satellite providers can offer anything from mobile services to
satellite data, downlinked services, video, whatever. It's open use spectrum
if you want to think of it that way. And
so Starlink getting its hands on this key spectrum will
(08:32):
allow them at some point in the future to potentially
enter the wireless market as a competitor to AT and T,
Verizon and T Mobile.
Speaker 7 (08:42):
So EchoStar's shareholders seem to like this deal. What are
they going to do with the proceeds? What will Echo
Star do with the proceeds of the sale?
Speaker 9 (08:50):
So for EchoStar, it's a very good deal as well.
They have really struggled to get their wireless service off
the ground. They've been building this five G wireless network
and have a relatively weak prepaid brand called Boost and
they've really struggled there. So this brings in much needed
funds for them to pay down debt. They've been a
(09:13):
bit stretched on that front, over leveraged, and you know,
this deal, together with a deal a couple of weeks
ago with AT and T, is going to bring in
billions of dollars to reduce debt. That's number one. And
number two, it brings in fresh capital for them to
invest in the business. And I have a feeling they're
probably going to take a step back and reevaluate the
(09:36):
strategy here based on the fresh funding and decide what
the best avenues of growth may be going forward.
Speaker 7 (09:44):
I'm wondering if this is going to satisfy the FCC
this deal, because I know that they were sort of
on EchoStar's case, if you will. They wanted them to
sell some of their airwaves as the company looks to
roll out it's five G technology. I know they sold
some spectrum licenses to at and recently. So do you
think this is going to sort of take the FCC
off their backs?
Speaker 2 (10:06):
I do.
Speaker 9 (10:06):
I mean, I think Starlink was working with the FCC.
They had written a letter about Echo Stars under use
of this spectrum. Starlink obviously really wants to get their
hands on it, and I think the FCC really took
their side on this one. I think they understood that
(10:27):
echo Star, being the only owner of this flexible use spectrum,
had not really put it to use to date, so
in their view it was being underutilized and being such
a critical asset, felt that, you know, sale might make sense,
and so they really EchoStar really got into it with
(10:47):
the FCC trying to protect those licenses. But in the
end here I think, if you want to think of
it this way, the FCC won the day and net.
I think it's a good deal for both Echo Stars
and Starlink and the FCC.
Speaker 7 (11:03):
Now I know SpaceX or Starlink had a deal with
T Mobile, right, how is this spectrum acquisition with EchoStar
different if at all?
Speaker 9 (11:11):
So? I think ultimately Starlink could go from being a
partner with T Mobile to being a competitor of T Mobiles.
As I said a moment ago, this spectrum opens the
door for them to get into wireless directly without having
to partner with a terrestrial carrier. The current deal with
(11:32):
T Mobile basically has Starlink. I think the best way
to think about it is they're almost like a tower company.
They're providing the space based cell sites if you will,
to carry T Mobile traffic, and they get paid a
fee for that, but they're not earning the level of
profits that you could as as a direct carrier. So
(11:56):
down the road, Starlink, understanding this, wants to enter the
cellular business directly. They have a lot to do before
that that happens, but I think it longer term puts
the deal with T Mobile in jeopardy.
Speaker 7 (12:11):
The seventeen billion dollars a fair price for this for
these spectrum licenses.
Speaker 6 (12:15):
Do you think you know?
Speaker 9 (12:17):
Spectrums a very liquid market, so it's tough to gauge valuations.
But in my mind, I look at it as a
fair price given the potential again for Starlink to enter
this huge market. Down the road.
Speaker 3 (12:33):
Our thanks to John Butler, Bloomberg Intelligence, senior telecom analyst.
Speaker 5 (12:37):
Coming up, Well, look at how the US's ability to
assess data on climate change is being impacted by the
Trump administration.
Speaker 3 (12:43):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies at one
hundred and thirty industries.
Speaker 5 (12:50):
You can access Bloomberg Intelligence via Bigo on the terminal.
I'm Normal Indo.
Speaker 3 (12:54):
And I'm Scarlet Food. This is Bloomberg.
Speaker 1 (13:00):
Is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney on
Bloomberg Radio.
Speaker 5 (13:06):
I'm Scarlet Foo and I'm normal in a filling in
for Paul Sweeney. We move next to a major deal
in the mining industry.
Speaker 3 (13:13):
This week, the global mining company Anglo American agree to
acquire Canada's natural resource company tech Resources.
Speaker 5 (13:19):
It's a so called zero premium deal and this deal
will create a more than fifty billion dollar company and
one of the biggest mining deals in over a decade.
Speaker 3 (13:27):
So for more guest host Alexis Christophers and I were
joined by Richard Burke, Bloomberg Intelligence senior basic materials analysts.
We first asked Richard what a zero premium transaction actually is.
Speaker 4 (13:37):
So what they've done is it's a merger of equals,
and it's kind of interesting even though it's it's labeled
mergers equal that American Angle shareholders are going to end
up owning Butts two thirds of company roughly, and tech
is shareholders going to end up owning a third company. Well,
(13:58):
it's gonna be headquarter in Canada, the board is going
to be fifty to fifty the city, and the management's
gonna be fifty to fifty. So even though it's kind
of you know, no premium merger equals kind of you know,
the the governance issues kind of point to merger of
equals and that's really probably structured in order to get
(14:19):
approved by the Investment Act Kada Investment Act. And also
the Kevil family that owns Tech has two classes shore olders,
class Class A and Class B. Class A is super
voting rights. He's owned, he owns majority of those shares,
so he has to approve this deal. In the past,
(14:39):
he you know, Glenn Corter, when Glencourt tried to buy
them about two years ago, he kind of vetoed the deal.
So the deal and go through. So there's kind of
a unique structure this deal to kind of you know,
fitted through final approval makes sense.
Speaker 3 (14:54):
Okay. So there was also language in the statement of
this so called merger of equals that would allow both
firms to con that are unsolicited proposals and for the
deal to end if there's a better offer. Does that
mean they're angling for some counter offer from someone else.
Speaker 4 (15:09):
Well, I think it would be a hard press, I doubt,
in order to get it through the Canadian Investment Act,
which you know, copper is now being considered a critical
material critical mineral. Canada has said they don't want to
see any of their mining companies go away. So would
somebody come in who can pay that much, be willing
(15:31):
or to PHP or Rio Tinto, be willing to move
their headquarters from where they're at to Canada. I highly
doubt it. So, but I think you have to put
that language in the deal that hey, we're open to.
Speaker 10 (15:44):
So it's like boilerplate, language plate and also prevent that
you know't get sued by shareholders that you have to
go out and looked at for all deals.
Speaker 8 (15:52):
Right.
Speaker 7 (15:52):
Do you think that this deal though, between Anglo American
and Tech is going to be the thing that sort
of ignites more M and A in this industry?
Speaker 4 (16:01):
I think you know, they used to be saying I
used to cover oil and gas industry years ago before
more focused on Melson mining. There's you used to be
on saying it's cheaper draw on Wall Street and then
drill up in the field. And that seems to be
happening in If you look at how much it costs
to you know, get a new copper, deposit up and
(16:25):
writing also how many years were permitting and all the
other things that happens, you can see that maybe you
sit down and look at this and say, Okay, maybe
cheaper draw out, you know, mine on Wall Street, then
go out and make the.
Speaker 5 (16:40):
Mine our Thanks to Richard Bork Bloomberg Intelligence Senior Basic
materials analysts.
Speaker 3 (16:45):
We now moved to some news in the pharmaceutical space.
Speaker 5 (16:47):
This week, the Danish drug maker Novo Nordis announces it's
cutting nine thousand jobs globally. This equals about eleven percent
of its workforce. The company also cut its profit forecast
for the third time this year as it fights to
recover ground in the obesity dry market.
Speaker 3 (17:00):
For more on this, guest host Alexis Christophers and I
turned to Sam Fazzelli, Bloomberg Intelligence, Director of Research for
Global Industries and senior pharmaceuticals analysts. We began by asking
Sam to talk about the larger changes taking place at NOVO.
Speaker 11 (17:13):
The story here is that this is not the first
time they've lowered guidance for the year. I mean this
time there's an impact on the EPs front from obviously
the cost of restructuring, assuming they can get it all
done this year, but it's a pretty chunky one. Nine
thousand people, about eleven percent of the workforce, and a
lot of that.
Speaker 8 (17:29):
Coming from Denmark.
Speaker 11 (17:31):
If you read the essence of the press release that
they put at there's a couple of things that they
bring out.
Speaker 8 (17:35):
They want to invest more on R and D Well.
Speaker 11 (17:38):
What I think this is telling you is that the
growth that they had planned for the next five years,
they may be thinking maybe that won't come as test
as we were expecting it because of competition from Lily,
compounders and other products potentially coming to market to the
pace that they were hoping. So if you want to
keep investing in R and D, you need to liberate
some cash. And also it looks like that they're also
(17:58):
thinking about changing the world that they're doing their marketing
because of the different channels that they're getting involved with
now direct to consumer, that is not something that Prauma
has done very often before. In fact, only Lily had
done it prior to this, also for obesity drugs, So
maybe the costs of that are different. And there's an
element that they keep that they've referred to in there,
which is a culture of performance related reward, and you
(18:24):
think to yourself, well, what was it before? So it
seems like that they want to make it much harder
focus on you've got to deliver because we need the growth.
Speaker 8 (18:34):
So that's the interesting wle to.
Speaker 7 (18:35):
Watch, you know, Sam, I think to a lot of
casual investors who don't deep dive into you know, Novo
Nordisk the way you might say, would look at this
and say, listen, they have the most popular weight loss drugs, right,
will go vi Ozempek. Why is this company having these
problems when you drill down or is it just a
(18:55):
problem with having to scale too quickly? Is it that
the company isn't nimble enough, just sort of change with
the times.
Speaker 11 (19:04):
Well, Nobodordisk has been a poster child of how you
grow from a small company selling to a relatively basic
set of products twenty thirty years ago to one that's
become essentially one of the innovators in this space. They
brought the first JL we want to market, so we
can't fault them for that. It's just that I think
this growth that they had to go through where the
(19:25):
planning was done, you know a lot of I mean,
we have one hundred billion dollar market potential for more
obesity as a whole, right, So it's just difficult, I think,
to judge into this space. And maybe the previous CEO
had looked and said, I'm pretty sure we're going to
be fifty percent of that market. We need to plan
for that growth. And then two things changed. Competition from
(19:46):
really is superintense. They have what I would call it
a better drug in terms of the efficacy profile that's
been shown in head to her trials. And then of
course you've got on top of that compounders that don't
seem to be don't seem to be going way, they
keep taking cheaper generics or generics manufactured, they'll try to
making the drugs. So that's where I think the new
(20:08):
Area issue is in that we all expected the FDA
to really clump hard down on that and they haven't
made issue, you know, statements, but they're allowing them. They
even found areas outside the US where these compound compounders
can get their drugs from, which is counterintuitive.
Speaker 5 (20:26):
Our thanks to Sam Fazelli, Bloomberg Intelligence, Director of Research
for Global Industries and senior pharmaceuticals analysts.
Speaker 3 (20:32):
This week we focus on a Bloomberg Big Take story
entitled Trump is Unwinding Climate Science at a Dangerous Pace.
You can find it on Bloomberg dot Com and the Terminal.
Speaker 5 (20:41):
The story looks at how mass firings, regulatory rollbacks, program closures,
and funding cuts across agencies have threatened the US's ability
to gather and says data on climate change, and this
is under the current Trump administration.
Speaker 3 (20:52):
For more guestos, Alexis Christophers and I were joined by
Eric Roston, Bloomberg Climate reporter. We began by asking Eric
to explain how President Trump's policies are impacting the ability
to gather data.
Speaker 2 (21:03):
Whether you are a mayor of a city, or head
of an insurance company or head of an agriculture company,
everyone throughout the economy, public and private sector needs good
information to make good decisions, and the US in recent
(21:24):
decades has had the global leadership role in developing the
kinds of data that everybody needs in order to see
what's coming, to set insurance rates, to understand whether we
should build a house here, to understand if this floodplane
is going to be like a bad place to build houses.
(21:45):
And so that's the data we're talking about here, is
actionable data that people in the economy have come to
rely on to make decisions. To cite one of the
many examples we talk about it in in the story,
the US produces it's supposed to be not more than
(22:06):
every four years national Climate Assessment, which is a huge
amount of time, a huge amount of time, and they take,
you know, years to develop, hundreds of people to write,
and thousands of papers that they're based on. And you
see these reports. Cite it in Travelers earning calls and
(22:26):
Chipotle earning calls and reports in Marriott, you know, brands
we see every day understand the material and understand the
needs of this material. I'm not putting words in their mouth.
I'm just pointing out that they say things like this,
those were taken away from public view. So I think
that's an interesting place to start on because like, yeah,
(22:47):
the government, like any government, can be cut right and
save money, and it's just the nature of bureaucracy. But
why are some of the most authoritative and well vetted
scientific reports ever written being taken away from public view
(23:08):
where they've been for many years?
Speaker 3 (23:11):
All good questions, and I'm sure that we won't get
answers to them right away either. So what does it
mean if you're a company like Travelers and you're relying
on that data? Do you can you go to private
sources for that kind of information? Does that exist?
Speaker 2 (23:24):
It's that's a great question. And if we had like
another two hours, I'd love to, you know, because we've
spent a lot of time in the last few years
on the private sectors, you know, filling a hole in
useful climate data that that businesses the businesses needs. So
the short answer is, yes, some of this this this data,
(23:50):
A lot of it is like translated into the language
of risk for companies, it does exist. The bigger concern is, like,
that's a tiny fraction of what we're talking about here.
You know, we're talking about, you know, very sophisticated computer
models that like the entire world relies on to make
sense of you know, observations we see and weather stations
(24:14):
and in you know, in other sources and a particularly
you know, I don't know, I'll get in trouble for
saying this, but this could be described as like the
most boring kind of data is also some of the
most important, and that is unsexy data. Unsexy data. It's
like continuous monitoring data. It's you know, it's very important
(24:38):
for some kinds of data that you have a complete,
unbroken record. The most iconic one in this space is
the CO two measurements from Hawaii and Mauna Loa that
have been going on since the late nineteen fifties and
are largely responsible for the discovery of global warming. Like
(25:00):
that data set, one of the most famous data sets
ever collected, was slated for closure in the recent White
House budget.
Speaker 5 (25:11):
Hard thanks to Eric Roston Bloomberg Climate Reporter, Coming up,
look Ahead to a potentially big m and a deal
in the banking sector.
Speaker 3 (25:18):
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 5 (25:25):
You can access Bloomberg Intelligence via Bigo on the terminal.
Speaker 3 (25:28):
I'm normal Linda, and I'm Scarletfoo. This is Bloomberg.
Speaker 1 (25:38):
This is Bloomberg Intelligence with Scarlettfoo and Paul Sweeney on
Bloomberg Radio.
Speaker 3 (25:45):
I'm Scarletfoo and I'm normal Linda, filling in for Paul Sweeney.
We moved to some news in the banking sector this week.
PNC Financial Services agreed to buy First Bank for about
four point one billion dollars, adding more than twenty six
billion dollars in assets and branches in Colorado and Araa, Arizona.
Speaker 5 (26:00):
The acquisition will triple the number of P and C
branches in Colorado, and it will give the combined company
more than fifteen percent of deposits in the state.
Speaker 3 (26:08):
Guest hosts Alexis Christophers and I were joined by Herman Chen,
Bloomberg Intelligence, senior analysts for US regional banks. We first
asked Herman if bank regulators are going to be okay
with the deal of this size.
Speaker 10 (26:19):
The regular toory landscape has been really great for banking
and getting bank deals done. That's why you've seen some
more bank deals over the past couple of months. You
saw Huntington, which is based in Ohio, go into Texas
for Vera Techs. And you've see an emerging of vehicles
in the Southeast with so Novas and Pinnacle. And this
is sort of like the third large regional bank deal
(26:41):
over the past couple months. So it just sort of
signals that the bank the Trump administration is really open
it for a bank of an am.
Speaker 3 (26:48):
And this is not PNC's first attempt at real expanding
its Colorado presence. It had previously sought to open sixteen
locations in Colorado. Why is Colorado such a hot market
for P ANDC?
Speaker 10 (26:59):
Right, I would take step back and sort of highlight
that the P and C, which is mostly in the Northeast,
mid Atlantic Midwest, that they've expanded across the Sun Belt
states in Colorado with the twenty twenty one deal for
BBVA USA, and they sort of double down on those
markets with this expansion plan to grow organically by opening
(27:23):
up new branches and this deal that they announced really
sort of supports that growth and accelerates it in Colorado
and in Arizona.
Speaker 7 (27:30):
So I'm just wondering, as you look out onto the
landscape now, who might be the next takeover candidate. Who
might we be talking about in the not too just
in future.
Speaker 10 (27:39):
Yeah, So you've seen some of these deals where these
slower growth Midwest banks grow into areas like Texas, Florida, Colorado.
So the banks are sort of smaller in size, and
we're talking about the first banks about twenty billion in assets,
so banks of slimmer of that size, these higher growth
(28:01):
markets are really attractive to some of these larger institutions.
Speaker 3 (28:06):
So with this purchase, PNC's total assets approaches six hundred
billion dollars. It will bring it closer to the number
one regional bank, which is US Bank Corp. Is Uanrup
still a regional bank, Yeah.
Speaker 10 (28:18):
I would say there are three super regional banks, and
that will put p and C, US Bank Corp and
Truest where they're sort of below that seven P fifty mark,
but larger than your typical regional bank. And they PNC
now is a coast to coast lender, so and have
operations all from the Northeast all the way down to Florida, Texas, California,
(28:41):
So you can't really call them a regional bank at
this point. I would view them as more super regional.
Speaker 7 (28:48):
And I want to tie it back to the FED
in interest rates, because don't all roads really lead there
at this point, And I want to talk about what again,
if this is going to be an environment of lower
interest rates for the foreseeable future, what is this going
to mean for the banks, but especially these smaller regional banks,
because I'm thinking it may even squeeze their profitability more.
Speaker 8 (29:06):
Yeah.
Speaker 10 (29:07):
Yeah, it's interesting because we had a few FED rate
cuts at the end of last year, and the regional
banks that I cover were able to navigate that pretty well.
They're able to keep their net interest margins, which is
a key metric for profitability, fairly stable. And that's one
of the reasons why they've been able to do that
is they've been able to lower their deposit costs, which
(29:28):
was one of the things that really is a key
metric for banks to really show top line growth. On
top of that, lower interest rates could help loan growth.
You've seen some companies like Rockets Mortgage be very abuiliant
for lower interest rates, and so that could help improve
(29:51):
some of the demand for lending, and that's something that
we're seeing so far over the first half of the year.
Speaker 3 (29:57):
So they'll make it up in volume what they lose
in profitability, they plan.
Speaker 10 (29:59):
To we can make it in volume. You'll see some
dents in like the rates that they charge for loans,
but they'll also make it up in volume and lowering
their funding costs.
Speaker 3 (30:10):
When you look at the landscape overall of M and
A in the banking sector, it feels like we've been
waiting for something to happen for a long time, and
maybe this is kind of the domino, the first domino
that falls. Yeah, well, the big banks and I'm here,
I'm talking about the JP Morgans, the Bank of America's,
Wells Fargo's. Will they play any role in this consolidation.
Speaker 10 (30:27):
They're already too big, So there's that they are prohibited
from from doing such deals because they just have dominant
market share in their markets. One thing that we did
see during the height of the regional banking crisis a
couple of years back is that JP Morgan bought First
Republic in an FDIC failed bank acquisition. So if we
(30:51):
in the sense that if there we do get to
a place like that, that's when the big banks can play,
but in a straight man a type scenario.
Speaker 3 (31:01):
To clean up messes.
Speaker 2 (31:02):
They can clean They can.
Speaker 10 (31:02):
Clean up messes, but they can't outworthy buy a bank
at this point, they're just way too big.
Speaker 7 (31:08):
And just what about the consumer out there only shopping
for the best deal. You know, it used to be
that these smaller regional banks would be the place to
go for the better CD rates, right or a more
friendly friendly mortgage terms. Is that still the case?
Speaker 8 (31:21):
Yeah?
Speaker 10 (31:21):
Sure, So that's what really great about these markets that
P and C is going to where they can have
really dominant market share in Denver and Arizona, and just
having that marketing and having the branches really helps with
deposit taking and helping your consumer.
Speaker 5 (31:39):
Out our Thanks to Herman Chan, Bloomberg Intelligence senior analysts
for US regional banks.
Speaker 3 (31:44):
This week we focus on another Bloomberg Big Take story
entitled Tesla's dangerous store design can trap people inside. You
can find it on Bloomberg dot Com and The Terminal.
Speaker 5 (31:53):
This story looks at how some of Tesla's design features,
like door handles are confusing occupants and first responders, and
this worsening injuries and damage caused by survivable crashes.
Speaker 3 (32:03):
So for more on this guest host Alexis Christophers and
I were joined by Craig Tdrudell, Bloomberg Global Autos Editor.
We began by asking Craig to give us his main
takeaways from this story.
Speaker 12 (32:13):
This is a company that you know from the from
the beginning, you've heard Musk talk about, you know, just
how safe his vehicles are, and you know, even just
very recently, the company has posted on X if you
love them, put them in a Tesla. That's the kind
of language that you see and hear from from Tesla
and from Musk. I think what happened here with the
(32:35):
doors is, you know, sort of from the beginning, an
attempt to kind of innovate what I think Tesla's critics
would say didn't need innovating. We didn't need to change
the way that you know, a door opens and closes.
It's it's intuitive. Everyone knows how to do it. You
sort of know how to do it when you're three
or four years old and you know the company wanted
(32:56):
to go to this, you know, new different sort of
path breaking approach of handles that would be flushed to
the to the doors for better aerodynamics. And and also
you know, if you think about a battery powered car,
it's it's very quiet, right, you don't have engine noise
to drown out any sort of you know, whistles or
anything like that. So the smoother the surfaces, the flatter everything,
(33:19):
the better in terms of not just aerodynamics, but also uh,
you know, this sort of getting rid of any any noise.
And so while while those all you know, are understandable
reasons to sort of make some design changes, what we
found in the course of reporting of this story is just,
you know, some sort of tragic consequences of those decisions
(33:40):
in terms of, you know, how difficult it is both
for you as an occupant to get out and also
for first responders to get to you, to open the
doors and get to you, and in situations where maybe
you're incapacitated or you're having trouble with the doors.
Speaker 7 (33:56):
Yeah, I mean the stories that you highlight, Craig were
really popping and disturbing. I mean, one a little eighteen
month old girl was stuck in the car her parents
couldn't get her out, and that was one of the
better stories. It had a better ending. They were able
to get her out. I mean, I'm surprised that the
National Highway Traffic Safety Administration isn't really cracking down on Tesla.
(34:17):
What are they saying about all of this?
Speaker 12 (34:20):
I think that was one of the more interesting, you know,
issues with this story is is that Nit's a you know,
a lot of complaints, a lot of safety concerns come
across their their proverbial desk, if you will, and at
times it will take all of a single complaint or
you know, a handful of owner surveys that that will
(34:43):
sort of get its attention and lead to communication with
manufacturers of hey, you need to take a look at this,
and sort of, you know, the agency will sort of
put its thumb on the scale in terms of, you know,
a potential recall. In the case of this story, what
NITSA told us is that they are in communication with
(35:03):
Tesla to gather additional data and determine whether a quote
full investigation unquote is warranted. That does allude to this
idea that there may be some sort of initial investigating
going on, but in terms of a formal probe that
has not been initiated at least as of yet.
Speaker 3 (35:24):
Okay, so that's where the regulators stand. What's interesting to
me as well is that other ev makers have kind
of taken Tesla's design and copied it. They are also
doing the same thing. So this now goes beyond Tesla vehicles,
doesn't it.
Speaker 12 (35:39):
Yeah. And I think what was interesting to us and
sort of you know, kind of trying to get a
sense for just how problematic this is for other manufacturers.
I think, you know, there was nothing that stood out
more for me was, you know, looking at JD Powers
study that they do every year. It's called the Initial
(35:59):
Qualities the IQs. You might be familiar from with you know,
car companies you know, put making this, you know, a
point of emphasis in their ads or their commercials when
they do well in that. In that study, and in
twenty twenty three, uh, they had a record high number
of problems per US vehicle in the US market and
(36:21):
one of the things that they pointed to as a
reason for this was was doors. And they kind of
poked fun a little bit at the industry that they
you know, researched by saying, this wasn't something that we
needed to change, you know it was working. We weren't
getting complaints from people that we survey for this study,
and you know, now this is a percolating problem area
was the phrasing that they used. And seven of the
(36:43):
ten most problematic models in this respect were EV. So
what we're seeing is a lot of sort of you know,
taking after Tesla in terms of door design. And for
the most part, what we're seeing is is sort of
you know, copycatting or taking after EV for EV right,
you know, trying to feel a model Wi Fighter that
also has you know, doors that are similar to the
(37:04):
model Y.
Speaker 7 (37:05):
I'm wondering, I don't think your story got into the
story got into this, Craig, But what's the legal ramifications
here for for Tesla? You know, I would imagine the
lawsuits are piling up. I mean if certainly, if my
child was stuck in a Tesla and I couldn't get
him out, I might be suing Tesla.
Speaker 12 (37:21):
We are aware of a handful of lawsuits and I
think you know, one of the complicating factors here is
is Tesla uh pushes its its customers into arbitration for
for these sorts of of suits that this is part
of the sort of purchase agreement when you buy it
a Tesla, that is something that you know, liigans are
going to have to sort of overcome because of that
(37:43):
sort of policy on the part of the company. I
think another sort of complicating factor here is that you know,
one of the uh you know, uh a couple that
that we speak with in the story, they had no
inclination to sue Tesla immediately after the crash. It took
one of the first responders coming to them after the
fact and saying, hey, we really had a hard time
(38:04):
getting to you, and it was because of your vehicle.
That is part of the issue here. You don't necessarily
know right off the bat, Hey something wasn't right here.
I need to do some investigating hard.
Speaker 5 (38:17):
Thanks to Craig Trudell, Bloomberg Global Autos Editor.
Speaker 3 (38:20):
That is 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 5 (38:28):
And remember you can access Bloomberg Intelligence via Bigo on
the terminal. I'm normal Inda, and I'm Scarlet Foo.
Speaker 3 (38:33):
Stay with us. Today's top stories and global business headlines
are coming up right now.
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