October 6, 2025 • 23 mins
Watch Scarlet and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu
- Ed Ludlow, BTech Co-Anchor, discusses Advanced Micro Devices inking a deal with OpenAI to roll out artificial intelligence infrastructure in a pact the chipmaker said is expected to generate tens of billions of dollars in new revenue.
- Herman Chan, Bloomberg Intelligence Senior Analyst for US Regional Banks, discusses Fifth Third Bancorp agreeing to buy Comerica Inc. for about $10.9 billion in stock, the largest US bank deal this year.
-John Butler, Bloomberg Intelligence Senior Telecom Analyst, discusses Verizon Communications naming Dan Schulman as chief executive officer, replacing Hans Vestberg. Vestberg, who has served as CEO since 2018, will stay on through Oct. 4, 2026, to help ensure a smooth transition in leadership.
-Adrian Balfour, Founder and Chariman at Envorso, discusses the latest autos news, including how the transition to electric vehicles is going.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:24):
And the big I think news that probably really surprised
people to the upside was this news on an Advanced
micro Devices signing that deal with open AI and AMD
just ripping, adding one hundred million dollars in market cap
today on that news. The numbers around these AI stories
are just bigger and bigger every single time. I think
(00:44):
it makes me feel uncomfortable. Some of the numbers that
are being thrown around makes me think about I woke
up this morning looking at this news and I felt like, man,
it just feels toppy to me.
Speaker 3 (00:52):
This whole AI.
Speaker 4 (00:54):
Story topy as in early two thousand seven, or like
mid two thousand and seven or eight two thousand, don't know.
Speaker 2 (01:00):
It just feels like there's this too many big numbers
being thrown around too quickly. I'm not sure where the
returns are. It's one of those types of things. But
Ed Ludlow, this is his Bailely Wick. He's a Bloomberg
Tech co host. He is out there in Silicon Valley supposedly.
Who knows where this guy is all the time? And
what do you make of this news? These are some big.
Speaker 3 (01:17):
Names Open Ai AMD, Yeah.
Speaker 5 (01:21):
I mean the deal, the specifics of the deal are
really important. What is opening going to use AMD's technology for.
It's going to use it for inference, in other words,
running the models that already exist, not training them. It
is six gigawatts of capacity. The reason that that figure
is critical is that equates to the peak collectricity demand
(01:43):
of most major US cities. Like these are huge numbers,
as you say, but it just speaks to what's happening
to the mind of the participants in the industry, which
is they will need this capacity. You guys are using
words like top and bubble, and I think that's completely fair.
Maybe you saw my column this morning on the debt
(02:05):
role that in what's happening. But I would say that
AMD has done something interesting here which is different to
what Nvidia did, which is they will issue stock to
open Ai. AMD shares going to open Ai, but only
once open Ai is spent some money and actually built
(02:26):
some stuff. So where's open ai going to get the money?
Speaker 4 (02:30):
Well, that's why Sam Allman has been traveling the world
meeting with all kinds of investors trying to get some funding.
You said the specifics matter ed, but we don't know
how much this partnership, this deal is worth beyond the
very generic tens of billions of dollars, right, that could
be ten billion dollars, that could be ninety nine billion dollars.
Speaker 5 (02:48):
Yes, that's correct. I mean AMDCFO framed it as being
tens of billion dollars of revenue opportunity. But that's why
I think the specifics of the terms I've made a
careful examination of them are really important understand versus what
Nvidia did with open Ai. So Nvidia said it was
going to invest one hundred billion dollars into open Ai.
(03:10):
We don't even know if that was cash or chips
in lieu of cash, but basically in video would get
some equity in open Ai in return. In this instance
AMD and open Ai. Open ai is getting AMD shares,
but they are deliverable in tranches against milestones, which relate
to literally building the data centers. So for each gig
(03:31):
of what of capacity that comes online in video would
then say Okay, I'm sorry. AMD would then say, here
is this tranch of stock, and that's why I'm saying
focus on the open AI obligation here. They need actual
money to dig up the dirt, put the foundations in,
get the data center up, and put the servers in
before any of this stock comes into play.
Speaker 3 (03:52):
Stay with us more from Bloomberg Intelligence coming up every this.
Speaker 1 (04:00):
Listening to the Bloomberg Intelligence Podcast. Catch us live weekdays
at ten am Eastern on Apple, Coarclay, and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 3 (04:14):
Got an M and A trade in the regional bank business.
I think it's kind of a big one.
Speaker 2 (04:18):
I like this one fifth Third Bank Corporate buying Co
America for about ten point nine billion dollars in stock
JP Morgan, Goldman Sachs and Keith Rutton Woods.
Speaker 3 (04:27):
Those are the bankers getting paid.
Speaker 2 (04:28):
And I always take a look at that first and foremost.
I go to the last paragraph of every column, every
story about it.
Speaker 4 (04:33):
M A trade.
Speaker 3 (04:34):
So who gets paid? Herman Chan Joints is here.
Speaker 2 (04:36):
He covers the regional banks for Bloomberg Intelligence you like
to steal herman.
Speaker 6 (04:41):
Yeah. I think it's a win win, okay for both.
Comerica has been sort of in the doldrums over the
past couple of years after the SVB debacle. It's taken
on some long time to get it under its own
footing and they've gotten a lot of agitated investors and
activists pushing for a sale and this was a great outcome.
(05:01):
On the other hand, for Fifth Third, it's a great deal.
It moves them into growth, growthier markets in Texas and California,
supplements their Michigan presence, and really builds out their branching
presence across the southeast and Southwest.
Speaker 4 (05:17):
So within the regional banking space, what does this deal
put pressure on? Who does this deal put pressure on
to make a move of their own?
Speaker 6 (05:24):
Yeah, So that's a question, the follow on question like
who's next. So there are other banks that are operating
within the size of a Fifth Third that have also
done deals, like a PNC and Huntington, and the others
that are still on the sidelines are banks like Regions
in the Southeast, Key Corp in Ohio as well, and
(05:45):
M and T and Citizens in the northeast, So those
are the ones that probably are going to get asked.
A lot of questions on the three to two earnings
go about M and A.
Speaker 2 (05:53):
So what do we know about the Trumpet administration and
its view towards bank consolidation?
Speaker 3 (05:57):
Are they a pined on this at all?
Speaker 6 (05:59):
Yeah, and see that these bank deals are getting approved
at much faster clips. So I mentioned Huntingdon earlier. They're
buying a bank in Texas named Vera tex And it's
going to take them about ninety eight days from deal
closed from merger announcements. And that contrasts with under Biden administration,
it's taken four hundred to six hundred days for a
(06:21):
large banker may deal.
Speaker 3 (06:22):
So these deals under.
Speaker 6 (06:24):
Trump are being fast tracked, and it's really encouraging the
management teams to really go out there and search for deals.
Speaker 4 (06:31):
So for so long, a lot of people had commented
that the US is overbanked. By one count there's almost
forty five hundred FDI and see insured banking institutions here.
Are we still over banked? Herman I would.
Speaker 6 (06:43):
Say, so, there's a lot of competition, and that's the
reason why COO America is looking to sell because they
were lacking in the retail branch presence. They mostly bank
middle market commercial customers are grades, but it doesn't create
the diversity that they needed during time to stress like
(07:06):
the SVB environments. And so that was a lesson learned
for a lot of the banking industry that you need
to diversify your deposit base. And one way to diversify
as the cell to a larger organization.
Speaker 4 (07:18):
Which segment of the banking industry is bloated, needs to
streamline the most.
Speaker 7 (07:24):
Yeah.
Speaker 6 (07:24):
So there you mentioned forty five hundred banks. Does there
need to be that many banks within the United States?
Probably not. They don't have to scale to operate a
retail branch presence. They don't have the capabilities on the
fee side and the advisory side to really help their
customers on the commercial side. And you see so much
(07:45):
competition from not only larger banks, but also the FinTechs
that are just binding at the heels on the consumer side.
So it's a really tough operating environment and we'd expect
more consolidation over the next several years.
Speaker 2 (08:00):
All right, riddle me this year, why do banks even
have branches? I hear adding branches. I've been into a branch.
Speaker 4 (08:07):
In years across the street from Bloomberg Headcutters, City Groups.
Speaker 6 (08:11):
City Branch right across. A lot of it is marketing
because and a lot of it is scale. So for
a bank like Fifth Third, they're growing organically in the
Southeast and that's been a major growth driver for them.
Speaker 8 (08:25):
If you need a branch, you you don't need a branch,
but you need the branch for a marketing aspect, so
you need to have ability, right It's a big billboards,
expensive billboard in markets where.
Speaker 6 (08:36):
You have a lot of foot traffic and higher growth markets,
so it's a big billboard and it's been a proven
growth driver for banks. But on the other hand, branches
are declining. So if you have critical mass and scale
in your existing markets, you can trim your branch presence
and not affect your depositors. But if you're entering new markets,
(08:57):
then opening new branches is the way.
Speaker 2 (08:59):
Do you think I could find my checkbook?
Speaker 4 (09:02):
That raises a question does a fintech that wants to
be a bank need to therefore have a retail presence?
Do they need to open up a branch also across
the street from our office.
Speaker 6 (09:10):
So that's that's the beauty of the fintech models that
they're issuing the branches. It's not a requirement. It's a
lower cost to serve because you don't have the physical
retail presence. And uh it's one way to to really
compete effectively with these with these legacy banks where you
have a really easy to use app and you you
(09:33):
aren't burden by this cost basis of owning the physical presence.
Speaker 7 (09:37):
All right.
Speaker 3 (09:38):
So when we had a couple of little blow ups
in your world a couple of years ago, I did.
Speaker 2 (09:42):
I found this k r E the spider S and
P Regional Banking ETF.
Speaker 3 (09:46):
That's right. How are you? How are the regional banks
training these days? Yeah, so they're they're really doing all right.
Speaker 6 (09:53):
We're talking about price the tangibles around one point five
to one points uh times is during the height of
the weakest point during the SBB debacle, it was less
than one time. So they've rebounded really nicely despite some
of the uncertainty on the economy and what's hariffs, and
so we've seen some growth from them, especially on the
(10:14):
commercial lending side. That's really helped grow their top line.
Speaker 3 (10:19):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (10:26):
You're listening to the Bloomberg Intelligence podcast. Catch us Live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (10:40):
We've had a management change in the telecom space. Verizon
Communications named Dan Shulman chief executive Officer, replacing Hans Wesberg.
Speaker 3 (10:49):
That's effective.
Speaker 2 (10:49):
Immediately looking over at the stock for Verizon down four
percent today, although it's up about four percent year today.
Let's see what this means for Verizon.
Speaker 3 (10:58):
In for the telecom space.
Speaker 2 (11:00):
We're joined by John Butler, senior telecomanals for Bloomberg Intelligencies
down there in our Princeton office. Hey, John, so a
change at the top four of Verizon. Was this expected
or is this something new for the company?
Speaker 3 (11:13):
Not at all, Paul.
Speaker 9 (11:14):
I mean, you know, when you think merger Monday. I've
had a lot of busy Mondays lately. But the last
piece of news I expected was this change in leadership
at Verizon. The company had really been sort of I
guess prepping the head of the consumer business or grooming
is a better word, summer. Ryan sam Path who is
(11:38):
just a phenomenal talent in my opinion, and he's been
sort of pushed out there doing a lot of investor
conferences and giving the investment community the impression that he
was the next in line. So when the news broke
this morning that Dan is taking over as CEO, it
really surprised a lot of people, including me.
Speaker 3 (11:59):
So, what's what a company saying here?
Speaker 2 (12:01):
Why do you think they chose this outsider versus somebody that,
again an insider that maybe the street thought was going
to be the next to line.
Speaker 9 (12:08):
You know, I think for telecoms, all three of the majors,
the wireless business is slowing very rapidly on them. We're
seeing subscriber growth down a lot this year. There's a
lot of pressure on pricing, and I think the thought
is Dan Shulman used to be CEO of PayPal. He's
got experience at amex in the consumer finance business.
Speaker 3 (12:33):
So they're thinking in terms of.
Speaker 9 (12:34):
How to monetize the one hundred and fifty million consumer
relationships they have to move into adjacencies. The naming of Shulman,
in my mind, tells me they're looking to tap the
consumer finance market. You know, they've already got a credit
card business. I think it's probably doing pretty well. But
they're not actually in the loan business there, but they're
(12:57):
doing a lot of device finance, and so I think
the hope, maybe this is my speculation, maybe that they
can take that perhaps a step deeper into the consumer
finance market and maybe other adjacencies to be able to
monetize that base a little bit more and diversify away
(13:17):
from the slowdown and wireless.
Speaker 2 (13:19):
And Verizon they've kind of dabbled over the years, and
other businesses, purchasing.
Speaker 3 (13:25):
AOL and Yahoo. So what's the focus going forward here?
Speaker 2 (13:30):
Is it to try to just manage the wireless business
as the decline in the wireless business as best they can.
Speaker 9 (13:38):
So again it's the strategy here, Paul, I think, is
to sort of build off that base that they have.
The wireless business is stable, it's not going anywhere. It's
typically a GDP plus business. Again, we're seeing a slowdown now,
so it could move down to a GDP like growth rate.
(13:59):
But again it's all about extensions. So all three of
the majors here are pushing hard into consumer broadband. They're
doing very well there, both in the fiber and the
fixed wireless access business. But even that business is starting
to mature a bit as it saturates here in the US.
So the question becomes what's next, And maybe the what's
(14:22):
next could be consumer finance. If you look at T Mobile,
they've tapped the outdoor advertising market, which actually is growing
double digit. I never would have guessed, but the thought is, hey,
is people carry around these phones, we know where they are.
Perhaps we can leverage that and come up with very
(14:44):
innovative ways of increasing eyeballs on our outdoor advertising. So
I think they're looking for that type of creative thinking
to come up with new ways of generating growth. And again,
you're trying to leverage that huge core or base of
wireless subs that you have.
Speaker 2 (15:02):
Just been at their balance sheet, John, this is a
this is company Verizon. It's got one hundred and seventy
billion dollars of total debt. There, how's the How does
the market feel about their balance sheet?
Speaker 9 (15:14):
So I think of the big three, Verizon is probably
at a point where they want to be in terms
of financing the business. Can they load on a bunch
more debt? It's it's hard to say. I'm going to
defer to our credit as for that, Steve Flynn, But
(15:34):
I don't view their ability to finance new ventures as
an issue here at all. It's a very cash rich business,
wireless that is, and you know, I think that will
allow Verizon to bankroll any of the new ventures they
plan to push into from here.
Speaker 2 (15:53):
And one thing I certainly pro shareholders is six point
six percent dividend yield?
Speaker 3 (15:56):
Is that safe?
Speaker 9 (15:58):
I think it is safe. That's a good question. I
think Verizon, of the big three, really sort of gets
it when it comes to the importance of the dividend
to the investment community. There's a lot of telecoms out
there at and T included that have cut the dividend
in the past and learned the hard way that that
really I call it the third rail of telecom. I mean,
(16:21):
you do not want to cut the dividend yep. So
my call here is that I think the dividend is safe.
Speaker 3 (16:28):
Yes, stay with us. More from Bloomberg Intelligence coming up
after this.
Speaker 1 (16:35):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarclay, and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts or watch us live on YouTube.
Speaker 2 (16:50):
Let's get an update on what's going on in the
auto industry, particularly transition from internal combustion engines to electric vehicles.
Speaker 3 (16:58):
I'm not sure where we are.
Speaker 2 (17:00):
In the process now if we've kind of lost some
momentum of what's.
Speaker 3 (17:02):
Going on there.
Speaker 2 (17:03):
But let's check out with our next guest. There's some
thoughts here, agent Balfour. He's a founder and chairman of
and Vorso joining us. And Vorso is a consulting firm
specializing in digital transformation, AI and software driven innovation, with
a focus in part on the auto industry.
Speaker 3 (17:20):
Adrian, thanks so much for joining us here.
Speaker 2 (17:22):
Give us a sense of kind of where you think
we are here in this country, and then we can
go globally if you want on this. I guess transition
to electric vehicles.
Speaker 7 (17:33):
Yeah, now, thanks for having me. I think you know
you take a look at it. We are transitioning to
an electric vehicle sort of infrastructure and a future going
forward with software defined vehicles. Various sort of like companies
have got certain advantages over others. Companies like stillant Us
have pulled back a little bit. I think some of
the traditional autos have spent too much money on it
(17:56):
and have achieved less than stellar results, and they tend
to be pulling back a little bit, whereas companies like Tesla, Lucid,
Rivian or kind of pushing forward. I think overall the
next sort of twenty twenty six twenty twenty seven, you're
going to see an increasing acceptance of the electrical vehicle
market as we go forward in the marketplace.
Speaker 4 (18:16):
Yeah, your former employer Ford among those legacy automakers that
have perhaps spent too much and maybe aren't seeing enough return.
In the meantime, where are we, Adrian, now that the
seventy five hundred dollars us EN tax credit is gone.
How much momentum did that halt?
Speaker 7 (18:34):
And I think you know, you saw like a seven
percent seven point four percent, I think increase in quarter
to quarter revenues for Tesla. I think that's going to
be hard to stay in going into Q four, So
that will be difficult, primarily because it was a bit
of a pull ahead. But as you look going into
twenty twenty six, you're going to see in particularly with Tesla,
with the advances of a sort of sub thirty thousand
(18:56):
dollars model. Ford are working hard to come out with
a sub thirty thousand dollars model as well, So I
think there's a big shift to apply software defined vehicles.
But the major issues is that the costs went too high.
So a lot of the automotive makers are now focusing
on the sub thirty thousand dollars category to try and
get something in there, to try and get a sort
(19:17):
of market presence. In particular, I'm interested in seeing how
test those launch goes with the model too, and I
think if that goes well, and if you can get
some of the ROBOTAXI legislation SLASH provides pilots to improve,
I think you're going to see a really big uptick
because the technology is pretty cool.
Speaker 4 (19:37):
Right Well, you mentioned a couple of times a sub
thirty thousand EV, and of course we're not there yet,
but you do see that around the world. Chinese evs
are cheap and incredibly technologically advanced, and they're available everywhere
except the United States. Do we get to a point
where we might one day see Chinese main evs in
the US.
Speaker 7 (19:59):
I think that's that's that's an ecumenical decision up to
the Congress. So I think right now there's very serious
sort of tariffs on the Chinese vehicles coming into the US,
and I think the idea there is to give the
US automakers a chance to play catch up. I mean,
if you go to Europe, you will see some thirty
dollars Chinese evs that are really high quality, and I
(20:23):
think it's really in the US we're really sort of
like playing catch up a little bit. So I think
the tariffs there are there designed to give us a
head start, or to give us, well not a head start,
but catch up time.
Speaker 4 (20:34):
Play catch up.
Speaker 7 (20:35):
Yeah, yeah.
Speaker 2 (20:37):
What does this mean for the automakers forwards, the gms,
the Volkswagens. I mean it's a tough game for them
because I got to wean themselves off of these ice cars,
vehicles that make a lot of money for them, F
one fifty trucks and whatnot. How do you think they're
going to work this out?
Speaker 7 (20:54):
Well, it's like it's like every sort of transition in
the economy, you know. The traditional automakers come from a
sort of modular basis where they buy modules from multiple suppliers.
So you may have one hundred modules in the particular
vehicles or one hundred plus modules in a particular vehicle
and they have to integrate that together. That's a very
complex sort of scenario versus something like a Chinese YV
(21:16):
that's a startup or a Tesla where they have two
to three modules in the vehicle that they have to integrate.
So it's a different framework from where you're coming from.
And so the automakers in the US have got the capital,
they've got the experience, and they've got the knowledge. They
will pull it off. They just need time to get there.
They have to move from over one hundred modules down
(21:36):
to less than ten, and they've got to do that
within three to four years. It's a difficult challenge.
Speaker 4 (21:42):
It's a difficult challenge. I know you're in the business
of vehicles and auto suppliers. I want to get your
take on the financial troubles of First Brands and Tricolor,
which are of course tangentially linked to the auto industry.
What does it say about the strength of the auto
industry that these two companies have fallen into financial disfavor
so quickly and taken so many people by surprise. I
(22:04):
know there are some idiosyncratic reasons behind them, but it
does speak volumes about a certain segment of the US
consumer that is having trouble keeping up in this economy.
Speaker 7 (22:14):
Yeah, I think US consumer is sort of like I think,
it was sort of pushed towards evs, and there's been
a negative reaction as part of that. But as people
buy evs and become more stealth mode, I think people
are going to start adopting them them faster and faster.
I know the people that I am familiar with that
have been very skeptical of evs, once they get an
(22:35):
EV they start to really like it. The difficulty still
becomes down to fear of you long long trips, travel,
charging networks, that sort of thing. But I think as
the consumer becomes more confident, and that is only going
to happen by stealth, that's only going to happen incrementally.
But as they do so it will be it will
(22:55):
be positive. The key thing is the getting Tesla to
get out there, because they are the market leader and
they are setting the tone for the rest of the industry.
If they continue to do that and then GMS the
Lantas and Ford Ribble to follow suit, then I think
the future is bright for the automotive world in the US,
provided the tires keep the Chinese out for the next
sort of profercable future.
Speaker 1 (23:17):
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Business App. Listen on demand wherever you get your podcasts,
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Speaker 2 (00:24):
And the big I think news that probably really surprised
people to the upside was this news on an Advanced
micro Devices signing that deal with open AI and AMD
just ripping, adding one hundred million dollars in market cap
today on that news. The numbers around these AI stories
are just bigger and bigger every single time. I think
(00:44):
it makes me feel uncomfortable. Some of the numbers that
are being thrown around makes me think about I woke
up this morning looking at this news and I felt like, man,
it just feels toppy to me.
Speaker 3 (00:52):
This whole AI.
Speaker 4 (00:54):
Story topy as in early two thousand seven, or like
mid two thousand and seven or eight two thousand, don't know.
Speaker 2 (01:00):
It just feels like there's this too many big numbers
being thrown around too quickly. I'm not sure where the
returns are. It's one of those types of things. But
Ed Ludlow, this is his Bailely Wick. He's a Bloomberg
Tech co host. He is out there in Silicon Valley supposedly.
Who knows where this guy is all the time? And
what do you make of this news? These are some big.
Speaker 3 (01:17):
Names Open Ai AMD, Yeah.
Speaker 5 (01:21):
I mean the deal, the specifics of the deal are
really important. What is opening going to use AMD's technology for.
It's going to use it for inference, in other words,
running the models that already exist, not training them. It
is six gigawatts of capacity. The reason that that figure
is critical is that equates to the peak collectricity demand
(01:43):
of most major US cities. Like these are huge numbers,
as you say, but it just speaks to what's happening
to the mind of the participants in the industry, which
is they will need this capacity. You guys are using
words like top and bubble, and I think that's completely fair.
Maybe you saw my column this morning on the debt
(02:05):
role that in what's happening. But I would say that
AMD has done something interesting here which is different to
what Nvidia did, which is they will issue stock to
open Ai. AMD shares going to open Ai, but only
once open Ai is spent some money and actually built
(02:26):
some stuff. So where's open ai going to get the money?
Speaker 4 (02:30):
Well, that's why Sam Allman has been traveling the world
meeting with all kinds of investors trying to get some funding.
You said the specifics matter ed, but we don't know
how much this partnership, this deal is worth beyond the
very generic tens of billions of dollars, right, that could
be ten billion dollars, that could be ninety nine billion dollars.
Speaker 5 (02:48):
Yes, that's correct. I mean AMDCFO framed it as being
tens of billion dollars of revenue opportunity. But that's why
I think the specifics of the terms I've made a
careful examination of them are really important understand versus what
Nvidia did with open Ai. So Nvidia said it was
going to invest one hundred billion dollars into open Ai.
(03:10):
We don't even know if that was cash or chips
in lieu of cash, but basically in video would get
some equity in open Ai in return. In this instance
AMD and open Ai. Open ai is getting AMD shares,
but they are deliverable in tranches against milestones, which relate
to literally building the data centers. So for each gig
(03:31):
of what of capacity that comes online in video would
then say Okay, I'm sorry. AMD would then say, here
is this tranch of stock, and that's why I'm saying
focus on the open AI obligation here. They need actual
money to dig up the dirt, put the foundations in,
get the data center up, and put the servers in
before any of this stock comes into play.
Speaker 3 (03:52):
Stay with us more from Bloomberg Intelligence coming up every this.
Speaker 1 (04:00):
Listening to the Bloomberg Intelligence Podcast. Catch us live weekdays
at ten am Eastern on Apple, Coarclay, and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 3 (04:14):
Got an M and A trade in the regional bank business.
I think it's kind of a big one.
Speaker 2 (04:18):
I like this one fifth Third Bank Corporate buying Co
America for about ten point nine billion dollars in stock
JP Morgan, Goldman Sachs and Keith Rutton Woods.
Speaker 3 (04:27):
Those are the bankers getting paid.
Speaker 2 (04:28):
And I always take a look at that first and foremost.
I go to the last paragraph of every column, every
story about it.
Speaker 4 (04:33):
M A trade.
Speaker 3 (04:34):
So who gets paid? Herman Chan Joints is here.
Speaker 2 (04:36):
He covers the regional banks for Bloomberg Intelligence you like
to steal herman.
Speaker 6 (04:41):
Yeah. I think it's a win win, okay for both.
Comerica has been sort of in the doldrums over the
past couple of years after the SVB debacle. It's taken
on some long time to get it under its own
footing and they've gotten a lot of agitated investors and
activists pushing for a sale and this was a great outcome.
(05:01):
On the other hand, for Fifth Third, it's a great deal.
It moves them into growth, growthier markets in Texas and California,
supplements their Michigan presence, and really builds out their branching
presence across the southeast and Southwest.
Speaker 4 (05:17):
So within the regional banking space, what does this deal
put pressure on? Who does this deal put pressure on
to make a move of their own?
Speaker 6 (05:24):
Yeah, So that's a question, the follow on question like
who's next. So there are other banks that are operating
within the size of a Fifth Third that have also
done deals, like a PNC and Huntington, and the others
that are still on the sidelines are banks like Regions
in the Southeast, Key Corp in Ohio as well, and
(05:45):
M and T and Citizens in the northeast, So those
are the ones that probably are going to get asked.
A lot of questions on the three to two earnings
go about M and A.
Speaker 2 (05:53):
So what do we know about the Trumpet administration and
its view towards bank consolidation?
Speaker 3 (05:57):
Are they a pined on this at all?
Speaker 6 (05:59):
Yeah, and see that these bank deals are getting approved
at much faster clips. So I mentioned Huntingdon earlier. They're
buying a bank in Texas named Vera tex And it's
going to take them about ninety eight days from deal
closed from merger announcements. And that contrasts with under Biden administration,
it's taken four hundred to six hundred days for a
(06:21):
large banker may deal.
Speaker 3 (06:22):
So these deals under.
Speaker 6 (06:24):
Trump are being fast tracked, and it's really encouraging the
management teams to really go out there and search for deals.
Speaker 4 (06:31):
So for so long, a lot of people had commented
that the US is overbanked. By one count there's almost
forty five hundred FDI and see insured banking institutions here.
Are we still over banked? Herman I would.
Speaker 6 (06:43):
Say, so, there's a lot of competition, and that's the
reason why COO America is looking to sell because they
were lacking in the retail branch presence. They mostly bank
middle market commercial customers are grades, but it doesn't create
the diversity that they needed during time to stress like
(07:06):
the SVB environments. And so that was a lesson learned
for a lot of the banking industry that you need
to diversify your deposit base. And one way to diversify
as the cell to a larger organization.
Speaker 4 (07:18):
Which segment of the banking industry is bloated, needs to
streamline the most.
Speaker 7 (07:24):
Yeah.
Speaker 6 (07:24):
So there you mentioned forty five hundred banks. Does there
need to be that many banks within the United States?
Probably not. They don't have to scale to operate a
retail branch presence. They don't have the capabilities on the
fee side and the advisory side to really help their
customers on the commercial side. And you see so much
(07:45):
competition from not only larger banks, but also the FinTechs
that are just binding at the heels on the consumer side.
So it's a really tough operating environment and we'd expect
more consolidation over the next several years.
Speaker 2 (08:00):
All right, riddle me this year, why do banks even
have branches? I hear adding branches. I've been into a branch.
Speaker 4 (08:07):
In years across the street from Bloomberg Headcutters, City Groups.
Speaker 6 (08:11):
City Branch right across. A lot of it is marketing
because and a lot of it is scale. So for
a bank like Fifth Third, they're growing organically in the
Southeast and that's been a major growth driver for them.
Speaker 8 (08:25):
If you need a branch, you you don't need a branch,
but you need the branch for a marketing aspect, so
you need to have ability, right It's a big billboards,
expensive billboard in markets where.
Speaker 6 (08:36):
You have a lot of foot traffic and higher growth markets,
so it's a big billboard and it's been a proven
growth driver for banks. But on the other hand, branches
are declining. So if you have critical mass and scale
in your existing markets, you can trim your branch presence
and not affect your depositors. But if you're entering new markets,
(08:57):
then opening new branches is the way.
Speaker 2 (08:59):
Do you think I could find my checkbook?
Speaker 4 (09:02):
That raises a question does a fintech that wants to
be a bank need to therefore have a retail presence?
Do they need to open up a branch also across
the street from our office.
Speaker 6 (09:10):
So that's that's the beauty of the fintech models that
they're issuing the branches. It's not a requirement. It's a
lower cost to serve because you don't have the physical
retail presence. And uh it's one way to to really
compete effectively with these with these legacy banks where you
have a really easy to use app and you you
(09:33):
aren't burden by this cost basis of owning the physical presence.
Speaker 7 (09:37):
All right.
Speaker 3 (09:38):
So when we had a couple of little blow ups
in your world a couple of years ago, I did.
Speaker 2 (09:42):
I found this k r E the spider S and
P Regional Banking ETF.
Speaker 3 (09:46):
That's right. How are you? How are the regional banks
training these days? Yeah, so they're they're really doing all right.
Speaker 6 (09:53):
We're talking about price the tangibles around one point five
to one points uh times is during the height of
the weakest point during the SBB debacle, it was less
than one time. So they've rebounded really nicely despite some
of the uncertainty on the economy and what's hariffs, and
so we've seen some growth from them, especially on the
(10:14):
commercial lending side. That's really helped grow their top line.
Speaker 3 (10:19):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (10:26):
You're listening to the Bloomberg Intelligence podcast. Catch us Live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (10:40):
We've had a management change in the telecom space. Verizon
Communications named Dan Shulman chief executive Officer, replacing Hans Wesberg.
Speaker 3 (10:49):
That's effective.
Speaker 2 (10:49):
Immediately looking over at the stock for Verizon down four
percent today, although it's up about four percent year today.
Let's see what this means for Verizon.
Speaker 3 (10:58):
In for the telecom space.
Speaker 2 (11:00):
We're joined by John Butler, senior telecomanals for Bloomberg Intelligencies
down there in our Princeton office. Hey, John, so a
change at the top four of Verizon. Was this expected
or is this something new for the company?
Speaker 3 (11:13):
Not at all, Paul.
Speaker 9 (11:14):
I mean, you know, when you think merger Monday. I've
had a lot of busy Mondays lately. But the last
piece of news I expected was this change in leadership
at Verizon. The company had really been sort of I
guess prepping the head of the consumer business or grooming
is a better word, summer. Ryan sam Path who is
(11:38):
just a phenomenal talent in my opinion, and he's been
sort of pushed out there doing a lot of investor
conferences and giving the investment community the impression that he
was the next in line. So when the news broke
this morning that Dan is taking over as CEO, it
really surprised a lot of people, including me.
Speaker 3 (11:59):
So, what's what a company saying here?
Speaker 2 (12:01):
Why do you think they chose this outsider versus somebody that,
again an insider that maybe the street thought was going
to be the next to line.
Speaker 9 (12:08):
You know, I think for telecoms, all three of the majors,
the wireless business is slowing very rapidly on them. We're
seeing subscriber growth down a lot this year. There's a
lot of pressure on pricing, and I think the thought
is Dan Shulman used to be CEO of PayPal. He's
got experience at amex in the consumer finance business.
Speaker 3 (12:33):
So they're thinking in terms of.
Speaker 9 (12:34):
How to monetize the one hundred and fifty million consumer
relationships they have to move into adjacencies. The naming of Shulman,
in my mind, tells me they're looking to tap the
consumer finance market. You know, they've already got a credit
card business. I think it's probably doing pretty well. But
they're not actually in the loan business there, but they're
(12:57):
doing a lot of device finance, and so I think
the hope, maybe this is my speculation, maybe that they
can take that perhaps a step deeper into the consumer
finance market and maybe other adjacencies to be able to
monetize that base a little bit more and diversify away
(13:17):
from the slowdown and wireless.
Speaker 2 (13:19):
And Verizon they've kind of dabbled over the years, and
other businesses, purchasing.
Speaker 3 (13:25):
AOL and Yahoo. So what's the focus going forward here?
Speaker 2 (13:30):
Is it to try to just manage the wireless business
as the decline in the wireless business as best they can.
Speaker 9 (13:38):
So again it's the strategy here, Paul, I think, is
to sort of build off that base that they have.
The wireless business is stable, it's not going anywhere. It's
typically a GDP plus business. Again, we're seeing a slowdown now,
so it could move down to a GDP like growth rate.
(13:59):
But again it's all about extensions. So all three of
the majors here are pushing hard into consumer broadband. They're
doing very well there, both in the fiber and the
fixed wireless access business. But even that business is starting
to mature a bit as it saturates here in the US.
So the question becomes what's next, And maybe the what's
(14:22):
next could be consumer finance. If you look at T Mobile,
they've tapped the outdoor advertising market, which actually is growing
double digit. I never would have guessed, but the thought is, hey,
is people carry around these phones, we know where they are.
Perhaps we can leverage that and come up with very
(14:44):
innovative ways of increasing eyeballs on our outdoor advertising. So
I think they're looking for that type of creative thinking
to come up with new ways of generating growth. And again,
you're trying to leverage that huge core or base of
wireless subs that you have.
Speaker 2 (15:02):
Just been at their balance sheet, John, this is a
this is company Verizon. It's got one hundred and seventy
billion dollars of total debt. There, how's the How does
the market feel about their balance sheet?
Speaker 9 (15:14):
So I think of the big three, Verizon is probably
at a point where they want to be in terms
of financing the business. Can they load on a bunch
more debt? It's it's hard to say. I'm going to
defer to our credit as for that, Steve Flynn, But
(15:34):
I don't view their ability to finance new ventures as
an issue here at all. It's a very cash rich business,
wireless that is, and you know, I think that will
allow Verizon to bankroll any of the new ventures they
plan to push into from here.
Speaker 2 (15:53):
And one thing I certainly pro shareholders is six point
six percent dividend yield?
Speaker 3 (15:56):
Is that safe?
Speaker 9 (15:58):
I think it is safe. That's a good question. I
think Verizon, of the big three, really sort of gets
it when it comes to the importance of the dividend
to the investment community. There's a lot of telecoms out
there at and T included that have cut the dividend
in the past and learned the hard way that that
really I call it the third rail of telecom. I mean,
(16:21):
you do not want to cut the dividend yep. So
my call here is that I think the dividend is safe.
Speaker 3 (16:28):
Yes, stay with us. More from Bloomberg Intelligence coming up
after this.
Speaker 1 (16:35):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarclay, and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts or watch us live on YouTube.
Speaker 2 (16:50):
Let's get an update on what's going on in the
auto industry, particularly transition from internal combustion engines to electric vehicles.
Speaker 3 (16:58):
I'm not sure where we are.
Speaker 2 (17:00):
In the process now if we've kind of lost some
momentum of what's.
Speaker 3 (17:02):
Going on there.
Speaker 2 (17:03):
But let's check out with our next guest. There's some
thoughts here, agent Balfour. He's a founder and chairman of
and Vorso joining us. And Vorso is a consulting firm
specializing in digital transformation, AI and software driven innovation, with
a focus in part on the auto industry.
Speaker 3 (17:20):
Adrian, thanks so much for joining us here.
Speaker 2 (17:22):
Give us a sense of kind of where you think
we are here in this country, and then we can
go globally if you want on this. I guess transition
to electric vehicles.
Speaker 7 (17:33):
Yeah, now, thanks for having me. I think you know
you take a look at it. We are transitioning to
an electric vehicle sort of infrastructure and a future going
forward with software defined vehicles. Various sort of like companies
have got certain advantages over others. Companies like stillant Us
have pulled back a little bit. I think some of
the traditional autos have spent too much money on it
(17:56):
and have achieved less than stellar results, and they tend
to be pulling back a little bit, whereas companies like Tesla, Lucid,
Rivian or kind of pushing forward. I think overall the
next sort of twenty twenty six twenty twenty seven, you're
going to see an increasing acceptance of the electrical vehicle
market as we go forward in the marketplace.
Speaker 4 (18:16):
Yeah, your former employer Ford among those legacy automakers that
have perhaps spent too much and maybe aren't seeing enough return.
In the meantime, where are we, Adrian, now that the
seventy five hundred dollars us EN tax credit is gone.
How much momentum did that halt?
Speaker 7 (18:34):
And I think you know, you saw like a seven
percent seven point four percent, I think increase in quarter
to quarter revenues for Tesla. I think that's going to
be hard to stay in going into Q four, So
that will be difficult, primarily because it was a bit
of a pull ahead. But as you look going into
twenty twenty six, you're going to see in particularly with Tesla,
with the advances of a sort of sub thirty thousand
(18:56):
dollars model. Ford are working hard to come out with
a sub thirty thousand dollars model as well, So I
think there's a big shift to apply software defined vehicles.
But the major issues is that the costs went too high.
So a lot of the automotive makers are now focusing
on the sub thirty thousand dollars category to try and
get something in there, to try and get a sort
(19:17):
of market presence. In particular, I'm interested in seeing how
test those launch goes with the model too, and I
think if that goes well, and if you can get
some of the ROBOTAXI legislation SLASH provides pilots to improve,
I think you're going to see a really big uptick
because the technology is pretty cool.
Speaker 4 (19:37):
Right Well, you mentioned a couple of times a sub
thirty thousand EV, and of course we're not there yet,
but you do see that around the world. Chinese evs
are cheap and incredibly technologically advanced, and they're available everywhere
except the United States. Do we get to a point
where we might one day see Chinese main evs in
the US.
Speaker 7 (19:59):
I think that's that's that's an ecumenical decision up to
the Congress. So I think right now there's very serious
sort of tariffs on the Chinese vehicles coming into the US,
and I think the idea there is to give the
US automakers a chance to play catch up. I mean,
if you go to Europe, you will see some thirty
dollars Chinese evs that are really high quality, and I
(20:23):
think it's really in the US we're really sort of
like playing catch up a little bit. So I think
the tariffs there are there designed to give us a
head start, or to give us, well not a head start,
but catch up time.
Speaker 4 (20:34):
Play catch up.
Speaker 7 (20:35):
Yeah, yeah.
Speaker 2 (20:37):
What does this mean for the automakers forwards, the gms,
the Volkswagens. I mean it's a tough game for them
because I got to wean themselves off of these ice cars,
vehicles that make a lot of money for them, F
one fifty trucks and whatnot. How do you think they're
going to work this out?
Speaker 7 (20:54):
Well, it's like it's like every sort of transition in
the economy, you know. The traditional automakers come from a
sort of modular basis where they buy modules from multiple suppliers.
So you may have one hundred modules in the particular
vehicles or one hundred plus modules in a particular vehicle
and they have to integrate that together. That's a very
complex sort of scenario versus something like a Chinese YV
(21:16):
that's a startup or a Tesla where they have two
to three modules in the vehicle that they have to integrate.
So it's a different framework from where you're coming from.
And so the automakers in the US have got the capital,
they've got the experience, and they've got the knowledge. They
will pull it off. They just need time to get there.
They have to move from over one hundred modules down
(21:36):
to less than ten, and they've got to do that
within three to four years. It's a difficult challenge.
Speaker 4 (21:42):
It's a difficult challenge. I know you're in the business
of vehicles and auto suppliers. I want to get your
take on the financial troubles of First Brands and Tricolor,
which are of course tangentially linked to the auto industry.
What does it say about the strength of the auto
industry that these two companies have fallen into financial disfavor
so quickly and taken so many people by surprise. I
(22:04):
know there are some idiosyncratic reasons behind them, but it
does speak volumes about a certain segment of the US
consumer that is having trouble keeping up in this economy.
Speaker 7 (22:14):
Yeah, I think US consumer is sort of like I think,
it was sort of pushed towards evs, and there's been
a negative reaction as part of that. But as people
buy evs and become more stealth mode, I think people
are going to start adopting them them faster and faster.
I know the people that I am familiar with that
have been very skeptical of evs, once they get an
(22:35):
EV they start to really like it. The difficulty still
becomes down to fear of you long long trips, travel,
charging networks, that sort of thing. But I think as
the consumer becomes more confident, and that is only going
to happen by stealth, that's only going to happen incrementally.
But as they do so it will be it will
(22:55):
be positive. The key thing is the getting Tesla to
get out there, because they are the market leader and
they are setting the tone for the rest of the industry.
If they continue to do that and then GMS the
Lantas and Ford Ribble to follow suit, then I think
the future is bright for the automotive world in the US,
provided the tires keep the Chinese out for the next
sort of profercable future.
Speaker 1 (23:17):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday ten am to noon Eastern on Bloomberg dot com,
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