May 5, 2025 • 24 mins
Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Alix Steel
Today’s Podcast Features are:
Matthew Palazola, Bloomberg Intelligence, Senior Analyst, P&C Insurance, discusses Berkshire CEO Warren Buffet retiring. Berkshire Hathaway Inc. followed Warren Buffett’s recommendation, naming Vice Chairman Greg Abel to replace the billionaire as CEO, effective Jan. 1.
Jennifer Bartashus, Bloomberg Intelligence Senior Analyst, Retail Staples & Packaged Food, discusses Tyson Foods earnings. Tyson Foods' shares dropped after the company reported stronger-than-expected quarterly earnings, as investors focused on the company's deepening losses in its beef business.
Enda Curran, Bloomberg Global Economy Reporter, discusses President Donald Trump suggesting that his administration could strike trade deals with some countries as soon as this week, offering the prospect of relief for trading partners seeking to avoid higher US import duties.
Michael McKee, Bloomberg International Economics and Policy Correspondent, discusses U.S economic data. The ISM survey prices paid jumped to 65.1, far higher than the 61.4 expected by economists. It’s the highest print since early 2023, when inflation was slowing after the pandemic supply shock.
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Episode Transcript
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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
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Business app. Listen on demand wherever you get your podcasts,
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Speaker 2 (00:23):
It was the bombshell news over the weekend. Even my
husband talked to me about it. And that is Warren
Buffett leaving the CEO head at Berkshire Hathaway. Matthew Palazoa
is Bloomberg Intelligence Senior analyst for PNC Insurance. He was
there on the ground. Matthew, what was it like when
he said that in the last few minutes of his address.
Speaker 3 (00:44):
I was there boots on the ground, so I have
to admit. So it's cold in there, it's dark. People
are up since four o'clock in the morning right now.
Speaker 4 (00:52):
Yeah.
Speaker 3 (00:52):
Get The guy in front of me is slumped over
asleep in his chair. And I looked at my watch
and I said, oh, there's only five minutes least. And
I say, it's kind of not that eventful of a meeting.
It literally said five minutes left. And then Buffett's looks
up and he says, I've just gotten alert this five
minutes left. I have to say something before the meeting ends.
And once he said that, I think everyone in the
(01:13):
building knew what was coming. I was personally really sad,
Like I was almost choked up. It was it was
a sad moment he talked about he got a big
standing ovation. It was you know, you could definitely feel
the emotion in the building.
Speaker 5 (01:30):
What do we know about Greg Gable? He's been kind
of the successor to mister Buffett. He's been kind of
running things really for a number of years now, right.
Speaker 3 (01:39):
Yeah, And I mean a couple of things on Greg.
So number one, he's been with Berkshire since the early nineties,
so he's been around for a long time. He's vice
chairman twenty eighteen. We've talked about over the years, how
Buffett has talked about at these meetings that he's been
seeding a lot of responsibilities and control to Greg, and
(02:01):
how he's been working on, you know, kind of these
bigger deals to go over time.
Speaker 2 (02:07):
What do we think the premium is going to be worth?
Speaker 4 (02:09):
Now?
Speaker 2 (02:11):
No one can replicate Warren Buffett period. The structure could
still be there to run a very successful behemoth right,
but it's not going to be the same. Yeah, what
the premium there?
Speaker 3 (02:19):
Do you think certainly some of the magic has gone
right and the buffet premium, You know, I would argue that,
you know, let's see, you see the stocks down I
think was six percent when I left my desk. You know,
it kind of makes sense to me. He probably had
people with large unrealized gain positions in it, and they're
like kind of buffets out now I'm out, similar to
(02:41):
why Berkshire itself sold their positions in Apple Bank of America.
Speaker 6 (02:46):
But I would look forward to the future and.
Speaker 3 (02:48):
Say, you know, maybe you're not getting these kind of
home run deals, but maybe you're getting better capital allocation.
Maybe you're getting a dividends, so you know, maybe those
things offset each other.
Speaker 4 (02:59):
Just degree.
Speaker 5 (03:00):
That's where we got to go. What's what's a three
hundred and fifty billion three fifty billion amongst friends? Got
to put up a significant dividen, you'll, and you got
to stop buying back some stuff. Yeah, I mean, so
what that happened today?
Speaker 3 (03:12):
I don't so I don't think it's happening today. I
probably don't think. I don't think it's going to happen
this year, right. I think when when Greg takes over,
I think he will be very cognizant of making dramatic changes.
But I also feel like Berkshire got away with a
lot because Buffett right, so that that will not hold
water anymore. And I think it would behoove able to
(03:37):
really do something with the capital, and it.
Speaker 6 (03:40):
Would investor questions would carry more weight.
Speaker 2 (03:44):
How is the how is the company doing?
Speaker 6 (03:47):
Fine? The first quarter I didn't I didn't love the
first quarter is.
Speaker 2 (03:51):
A great love.
Speaker 6 (03:52):
The word fine, I mean.
Speaker 3 (03:53):
Ten billion dollars a quarter is good, right, that's the
kind of earnings power. They were just a couple of
signals in the first quarter results that I didn't love.
And I'm an insurance guide. And they had adverse development,
which means some claims from prior years were costing more
than they expected. The wild fire losses were a little
bit more than I thought they were going to be.
(04:15):
The fire loss is not that's not a go forward thing,
but the reserve issues are a little concerning. But the
beauty of the company is such a behemoth, so many
streams of differentiated earnings that they kind of upset each other.
Speaker 6 (04:29):
So their earnings have been better.
Speaker 3 (04:31):
Than expected the past couple of quarters, so I thought
they were in line for a kind of slight disappointment.
Speaker 5 (04:37):
Thirty seconds. Some of the parts valuation, where are we.
Speaker 3 (04:40):
Are Bloomberg Intelligence midpoint? Some of the parts analysis comes
up to like one point one trillion, which was kind
of before the meeting, the stock was trading slightly above that.
I don't know if it's you know, below that now,
and I mean, you know, I don't claim to know
what Buffet knows, but they haven't been buying max shares
(05:02):
for a couple of quarters, so I think he's probably
viewing it very much in the same way as fully valued,
and the stock's at all time highs.
Speaker 5 (05:10):
Won what he does now? Like you're warn he's ninety.
Speaker 2 (05:13):
Digital chairman, right, you gotta do, you're ninety four?
Speaker 5 (05:18):
Like no, just relax, Yes, exactly, I take that I
would too, all right, Matthew Palizo, Well, thank you so much.
We appreciate that, Matt Palizzoli. He's a senior Anniston covers
all the property and casualty insurance companies for Bloomberg Intelligence.
Boots on the ground in Omaha over the weekend, mister
Bethey as Tom Keener first Tom stepping down at the
age of ninety four and just obviously historic, historic run.
Speaker 1 (05:42):
Now 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 5 (05:58):
It is earning season, folks, and we got the Tyson's
Foods reporting earnings. I don't know, maybe it's just me.
I think of Tyson's food I just think chicken. But
they're also in the beef business as well. That's the
extent of my knowledge. Stocks trading off on some earnings.
Jen Bartashis joins us. She's a senior retail staples and
packaged foods analysts for Bloomberg Intelligence. Jen the street doesn't
(06:21):
like what they heard from tyson Foods Springdale, Arkansas. What
happened there, Well, it's.
Speaker 7 (06:28):
Really two things, Paul. The first thing is that the
beef business did worse than people expected. But secondly, the
company held their guidance for the fiscal year, which is
generally a good thing, except that they're ahead of paste
for the top of their guidance for adjusted operating income
for both the chicken and the pork segment. So there
are a lot of questions on why, given the strong
first half performance they've had that they didn't actually raise
(06:51):
their guidance overall. And so between those two things, that's
what's putting pressure on the stock today.
Speaker 2 (06:55):
Do we get the sense that that's a demand concern
or is it an input concern?
Speaker 7 (07:00):
Well, on the beef side, it's an input concern. And
actually there's a piece to that puzzle that Tyson touched on,
but they didn't really go into detail, and that's that
they talk about how consumers have really still had a
lot of demand for beef, which is true, except that
when you look at the consumer they're trading down into
like ground beef. Now when you have a shortage of cows,
(07:23):
you know, the problem that Tyson has is that they
have to put higher quality parts of the animal into
grind in order to sell it, which means that their
profit per animal is coming down. And that's a concern
over the long term if those changes in behavior patterns
don't alter in the near future.
Speaker 5 (07:42):
All right, you know, during our little egg shortage, my
scientific analysis was basically just make more chickens. Tyson's are
the chicken people. I think, what are they saying about
the chicken population these days and eggs and all that
kind of stuff, because they're the folks that know.
Speaker 7 (07:58):
Yeah, so the chicken supply is actually pretty healthy from
a standpoint of the chickens that are used for consumption,
they really weren't impacted all that much by avian influenza,
and so that was the good news. The bad news
is that the mortality rates on the type of chicken
that they're currently using is still pretty high. So that
means that they're not getting as many chickens into the
(08:21):
processing plants that they normally would given the number of
eggs that are being laid, and so that is an
inherent top or cap to supply. So supply is robust.
It's going to grow about one percent this year, but
there are some constraints there with how much more they
could actually grow supply overall.
Speaker 2 (08:41):
What's the tariff impact, if any, on Tyson? On both
sides the demand and supply.
Speaker 7 (08:47):
For Tyson, Actually they have very limited exposure for tariffs.
They set on their call today about ninety five percent
of their revenue comes from product that's sold in the
United States. Their export is relatively small, and they've had
some time to work on contingency plans, so finding different
end markets that they can send some of the parts
of animals that US consumers just don't eat. So right
(09:10):
now it doesn't appear to be a very large risk
for Tyson at all.
Speaker 5 (09:13):
You mentioned maybe some issue with the cow herd. I mean,
I watched Yosemite. I know all about the ranching business
to see it. Yeah, so I mean, can't we make
more cows? What's going on there?
Speaker 7 (09:25):
We can make more cows. The problem is that for ranchers,
it's a tough environment to decide to actually build up herds.
Interest rates are still relatively high, there's still high cost
to expand operations. We've had drought that's only just reversing
in a lot of the key areas where we raise cattle,
and so that decision has been coming. But the problem
(09:49):
is that once you even start, you know, it takes
eighteen months to get a cattle for birth to market.
So even if they start today, we're not going to
see an influxus supply for quite some time.
Speaker 2 (09:59):
I feel like just a few years ago it was
all about alternative protein. I remember, particularly with Cargil for example,
they're making a really big push into that. Has that
trend for these guys shifted now?
Speaker 7 (10:10):
It has. When we look at the consumer consumption data,
the luster around plant based has really fallen off. And
so you know, right now there's a core demographic that
will always be interested in that product, but at the
at the moment, it's not growing. The sales are continuing
to contract. Part of that is that the cost of
(10:32):
regular meat has come down, and we had food inflation
which pushed the cost of special ingredients for alternative meat
way up. So the price gap between alternative proteins and
conventional proteins got a lot wider in the last couple
of years, and it still hasn't completely collapsed again. And
so until that gets a little bit closer, it's going
to be harder to get consumers to get interested again
(10:54):
in alternative proteins.
Speaker 5 (10:55):
So what is it the tysons of the world, What
are they saying about their consumer these days?
Speaker 7 (11:01):
So you know, they talk about the demand for protein,
and this is something where at the Bloomberg Bloomberg Intelligence
Farm Food Fuel Conference we had a whole suit of
panelists on protein and the demand for protein is really strong,
Whether you're talking about animal protein, whether you're talking about dairy,
current diet trends are high protein based, and so that
(11:24):
really bodes well for for producers like Tyson as as
the consumer is willing to still spend on protein and
it's in the majority of their purchases when they're going
to the grocery store.
Speaker 2 (11:36):
So true big protein person.
Speaker 5 (11:39):
Well, who isn't who doesn't.
Speaker 2 (11:41):
Like to actively search for protein that feels different?
Speaker 5 (11:44):
Doesn't it?
Speaker 4 (11:46):
All? Right?
Speaker 2 (11:47):
Fair enough?
Speaker 5 (11:48):
Last night?
Speaker 2 (11:49):
Yeah burgers, but then you get cholesterol issues. Okay, anyway, Jen,
thanks a lot. Jennifer Bartasha's as she joins us from
Bloomberg Intelligence and your analyst retail staples and packaged food.
Speaker 1 (12:00):
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 5 (12:14):
Alex del poulswehen you live here, and a Bloomberg Interactive
broker's studio streaming live on YouTube as well. On the
trade front, President Trump suggests that some trade deals may
come as soon as this week. How about that? And
the current global economy reporter for Bloomberg News. He joins us,
he's down there in DC, and how do you think
this thing is going to play out here? Is it
(12:35):
country by country by country by country that we're going
to have to wait for trade deals to be announced.
Speaker 8 (12:42):
Well, it's something of a tease from President Trump. We're
about a month now, it's just over months Liberation Day.
The presidents picked the point that there may or may
not be some agreements coming in this week. And he
wasn't being specific. He wasn't He was quite vague, and
he was being asked by reporters about this. But what
we do know from an administration efficiency is that folks
are ongoing with several countries they have identified at different times.
(13:05):
Japan is near the top of that list. India could
be near the top of that list. South Korea could
be near the top of that list. So there could
be some kind of agreement reached with one of those
at some point soon.
Speaker 4 (13:16):
Now.
Speaker 8 (13:16):
The question then becomes the details of that agreement, and
that's where everybody will be parising this. Well, what sort
of moves had been made on non tariff barriers to
satisfy in Washington, for example, what kind of concessions have
been made on.
Speaker 4 (13:28):
Maybe investment into the US. Where will the actual US
tariffs settle?
Speaker 8 (13:33):
All of those may well obviously offer nuggets, for sure,
but it also may off our roadmap for other economies
to say, I am like, we can do that too,
and come to the table to the US to try
and work it out.
Speaker 4 (13:44):
So, you know, we don't have specifics yet.
Speaker 8 (13:46):
It's a little bit vague, but clearly something's coming down
the pipes at some point soon.
Speaker 2 (13:51):
But I understand that the agreement versus like an MoU
versus a deal, they all mean different things. But do
we think anything that's on paper at this point, even
as a member of understanding, would that count as getting
something done and tick that box?
Speaker 8 (14:06):
And as the role of Congress and all of this
that there's so skeptics say, look, negotiating a real meaningful
trade deal takes months, if not years, of protracted trade talks. Okay,
so clearly that can't be done in weeks. Nonetheless, I
think what people are looking at for is a first
of all, what is actually greed, but most importantly, where
will US tariff rates settle in the air terms.
Speaker 4 (14:28):
Remember, all of.
Speaker 8 (14:29):
Those what were described as reciprocal tariffs or those levels
that were set pretty high for you know, money.
Speaker 4 (14:34):
Trading partners right around the world.
Speaker 8 (14:36):
If the tariff level is maybe back towards this ten
percent based on level, then that might suggest that, you know,
that's where things might settle. If you could deal with
the US, could deal with the US, and you settle
for that based on ten percent, that's the way for
But of course.
Speaker 4 (14:49):
If it's not on that tariff level is higher. That's
what I think about. A lot of people are going
to keep an eye out for.
Speaker 5 (14:55):
Who's driving the bus here. Is it the President? Is
it his trade advisors? Who's kind of because there's a
lot of balls in the area when you think about
all the countries that are presumably in negotiations with the US.
Speaker 8 (15:06):
Yeah, I think there must be at least a dozen
or so in serious negotiations, and of course they say
they're talking to up to seventy. I think it is
all governments all together. It's you know, it seems to
be different personal he's playing different roles treasure sectors. Got president,
it's clearly front and center for the aged trade talks.
He's kind of made that clear. The trade representative career
obviously is kind of the technical guy behind the scenes,
(15:29):
he would be involved in all of this, and of
course Commerce Secretary Howard Lutnik, He's seems to be more vocal,
maybe in the European side, but they're all playing the
role or all part of it. But ultimately, you know,
as the older officials say, and as we can say,
the anside looking and ultimately President Trump will make that agreement,
He will decide whatever will be decided. The market rally
in recent weeks will of course give the administration a
(15:50):
lot of confidence that what they're trying to do is
the right thing. But at the same time, we all
know that they got pretty nervous, you know, couple of
weeks ago, and they did pull back for the pose
ownership with Carr. So a lot of folks on what
kind of what level of terwer will be great in
their term and what the roadmap will be from there
on for these for all the countries involvement.
Speaker 2 (16:12):
And super appreciate thank you so much and the current
Bloomberg Global Ecademy reporter joining us on those three deals
that may come as soon as this week.
Speaker 1 (16:22):
You're listening to the Bloomberg Intelligence podcast Catch US live
weekdays at ten am Eastern on Apple Coarcklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (16:36):
Alex Still, Paul Swinni live here in our Bloomberg Interactive
Broker Studio, streaming live on YouTube. Michael McKee joins us here. Mike,
what do you think about some of the economic data
we get the it Some services came out, you know,
better and expected, But boy, that pricious paid number you
kind of jump out at you. How do you pick
that all in?
Speaker 9 (16:53):
Well, I think you're seeing the beginning. I'd better hear
more about John Touch.
Speaker 6 (16:59):
Back in the day.
Speaker 9 (17:00):
I think what you're seeing is the beginnings of the
impacts of the tariffs. This is soft data, essentially, but
it has a sort of a hard component to it,
in that the ism is asking what's happening in your
business this month? And if you go under the hood,
you see that imports have dropped a lot and prices
(17:23):
paid went up a lot, and those two things are
probably going to be connected. Also, inventories went up because
people front loaded ordering. The interesting thing about it, though,
was that new orders were still rising. So it may
be that the businesses are retrenching but the customers have
not yet, or it may be that the customers are
(17:46):
looking to those who import to keep them going, which
they may or may not be.
Speaker 4 (17:52):
Able to do.
Speaker 2 (17:53):
Yeah, eleven industries reported growth last month, led by accommodation
and food service. Is only six industries contracted. When do
you think we're going to get a clean read on
all these numbers.
Speaker 9 (18:04):
It's going to probably be over a period of time,
depending on the number and how businesses react to a
specific data point. I would imagine that you're not going
to get a full picture of it until either July
or August, when we know what the tariffs are. Remember
(18:26):
the reciprocal tariffs are postponed until July, so that could
hang out there for a long time. When we know
that the tariffs are, that will help, and when we
see how people react to it, both other countries, whether
they're reciprocal tariffs or whether they come to some kind
(18:47):
of a deal. So at this point, it's really hard
to say when you'll know, but I suspect it's going
to be one of those things that slowly becomes obvious.
Speaker 5 (18:59):
How about to the federies are they going to be
slow to kind of recognize what may be happening out
there in terms of inflation and growth.
Speaker 9 (19:06):
Unless we get some sort of rapid movement in either
one of those things, which nobody is really predicting at
the moment, they're going to be slow because there's no
benefit to them to moving quickly. If the economy is
slowing down, then the question becomes how slow And with
inflation still above target et cetera, et cetera, then the
(19:30):
Fed doesn't want to get into a situation where it's
boosting inflation by cutting rates too quickly, so they'll just
wait and see. And the economy is in pretty good
shape right now, appears with the numbers still doing okay
and inflation still slowly coming down, so no problem for them.
Speaker 2 (19:50):
That's one of the arguments too for the OPEC plus
production increase, right It's like, hey, listen, the hard dat
is actually okay. Maybe there can There are lots of
reasons why this is to do it, but maybe it's
the market can actually absorb it because we haven't seen
demand necessarily a fall off a cliff.
Speaker 9 (20:07):
Well, it sets up an interesting question about how consumers
will react if gasoline prices start going down, and then
how the FED reacts to that. I guess if in
headline inflation goes down because gasoline prices and energy prices
go down, and I suspect they will try to look
through that as much as possible because they know that
could easily change, and because the real issue is going
(20:32):
to be is the economy slowing down. If the economy
is slowing down, that's going to put a drag on inflation.
It's also going to mean that that money that you
would have spent somewhere else because you're not spending it
on gas, you may not be spending it anyway because
you're trying to cut back and save money.
Speaker 5 (20:46):
You know, just you know, you're paying attention here to
a lot of the speakers out at the Milking conference today,
and a lot of them, you know, whether it's Bill Aufman,
Paul Taubman, mister Rowan from Apollo, all saying yeah, there's
uncertainty out there and there's some issues out there as
it's to their businesses. Yet Secretary Beston calls the US
quote the premier destination for global capital. So I guess
(21:07):
that's the argument of near term paying maybe long term
gain from the industry.
Speaker 9 (21:10):
Well, it is still we have the largest deepest capital markets,
especially on the treasury side on the bond side, so
there are not a lot of alternatives if you want
to move a lot of money around. But most of
what Scott Besson was saying today was a sales pitch
to you highlight the administration's economic agenda. The one bit
(21:36):
of news I thought to the extended's news was his
description of how he would see the ten year yield dropping,
because he's made a big deal out of that being
sort of the benchmark rate for business activity. And his
argument was, you lower the budget deficit because then takes
(21:57):
some of the credit risk out of the bond market,
and rates can drop if if you take out the
you know, the premium, the risk premiums.
Speaker 5 (22:06):
And he was talking about one percentage point per year
ideally would be as you know, the deficit to or
debt to GDP would be meaningful now.
Speaker 9 (22:16):
But but the obviously one if you follow the budget process,
has to laugh because the budget that they are working
on this year, the recond through through reconciliation, raises the
budget deficit.
Speaker 4 (22:32):
Uh.
Speaker 9 (22:32):
And that's even beyond just the machinations they're doing to
avoid the reconciliation rules. They want to spend more money,
and every day Donald Trump is talking about spending more money,
let's rebuild Alcatraz, Uh right kind of thing. So, uh,
we're not going to get that one percent per year
definit of decline, I don't think, And so it kind
(22:55):
of makes his argument not not relevant at this point.
Speaker 2 (23:01):
And you're headed off to d see tonight or tomorrow.
When do you go tomorrow? The FED meeting? Any firework?
Speaker 9 (23:08):
No, just one.
Speaker 2 (23:09):
I was like fire, Why didn't say work, firework?
Speaker 4 (23:11):
Fire?
Speaker 9 (23:12):
It's not even uh, not even one firework. I don't
think we will get no move on rates. The FED
will be very circumspect about what it says in its
statement because they can't They can tell us what's been happening,
which is okay, but they have to emphasize we don't
know what's going to happen going forward. And then there's
(23:32):
no new economic forecast, there's no new dot plot.
Speaker 5 (23:36):
There is only.
Speaker 9 (23:37):
Jay Powell, and I suspect Jay, I suspect. We get
a lot of questions that are answered by I don't.
Speaker 2 (23:45):
Know fair enough. That's a lot of the questions that
we also ask an answer to a right. Mike Thanks Lot.
Mike mcke Bloomerg Inter National Economics and Policy correspondent.
Speaker 1 (23:54):
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Speaker 2 (00:23):
It was the bombshell news over the weekend. Even my
husband talked to me about it. And that is Warren
Buffett leaving the CEO head at Berkshire Hathaway. Matthew Palazoa
is Bloomberg Intelligence Senior analyst for PNC Insurance. He was
there on the ground. Matthew, what was it like when
he said that in the last few minutes of his address.
Speaker 3 (00:44):
I was there boots on the ground, so I have
to admit. So it's cold in there, it's dark. People
are up since four o'clock in the morning right now.
Speaker 4 (00:52):
Yeah.
Speaker 3 (00:52):
Get The guy in front of me is slumped over
asleep in his chair. And I looked at my watch
and I said, oh, there's only five minutes least. And
I say, it's kind of not that eventful of a meeting.
It literally said five minutes left. And then Buffett's looks
up and he says, I've just gotten alert this five
minutes left. I have to say something before the meeting ends.
And once he said that, I think everyone in the
(01:13):
building knew what was coming. I was personally really sad,
Like I was almost choked up. It was it was
a sad moment he talked about he got a big
standing ovation. It was you know, you could definitely feel
the emotion in the building.
Speaker 5 (01:30):
What do we know about Greg Gable? He's been kind
of the successor to mister Buffett. He's been kind of
running things really for a number of years now, right.
Speaker 3 (01:39):
Yeah, And I mean a couple of things on Greg.
So number one, he's been with Berkshire since the early nineties,
so he's been around for a long time. He's vice
chairman twenty eighteen. We've talked about over the years, how
Buffett has talked about at these meetings that he's been
seeding a lot of responsibilities and control to Greg, and
(02:01):
how he's been working on, you know, kind of these
bigger deals to go over time.
Speaker 2 (02:07):
What do we think the premium is going to be worth?
Speaker 4 (02:09):
Now?
Speaker 2 (02:11):
No one can replicate Warren Buffett period. The structure could
still be there to run a very successful behemoth right,
but it's not going to be the same. Yeah, what
the premium there?
Speaker 3 (02:19):
Do you think certainly some of the magic has gone
right and the buffet premium, You know, I would argue that,
you know, let's see, you see the stocks down I
think was six percent when I left my desk. You know,
it kind of makes sense to me. He probably had
people with large unrealized gain positions in it, and they're
like kind of buffets out now I'm out, similar to
(02:41):
why Berkshire itself sold their positions in Apple Bank of America.
Speaker 6 (02:46):
But I would look forward to the future and.
Speaker 3 (02:48):
Say, you know, maybe you're not getting these kind of
home run deals, but maybe you're getting better capital allocation.
Maybe you're getting a dividends, so you know, maybe those
things offset each other.
Speaker 4 (02:59):
Just degree.
Speaker 5 (03:00):
That's where we got to go. What's what's a three
hundred and fifty billion three fifty billion amongst friends? Got
to put up a significant dividen, you'll, and you got
to stop buying back some stuff. Yeah, I mean, so
what that happened today?
Speaker 3 (03:12):
I don't so I don't think it's happening today. I
probably don't think. I don't think it's going to happen
this year, right. I think when when Greg takes over,
I think he will be very cognizant of making dramatic changes.
But I also feel like Berkshire got away with a
lot because Buffett right, so that that will not hold
water anymore. And I think it would behoove able to
(03:37):
really do something with the capital, and it.
Speaker 6 (03:40):
Would investor questions would carry more weight.
Speaker 2 (03:44):
How is the how is the company doing?
Speaker 6 (03:47):
Fine? The first quarter I didn't I didn't love the
first quarter is.
Speaker 2 (03:51):
A great love.
Speaker 6 (03:52):
The word fine, I mean.
Speaker 3 (03:53):
Ten billion dollars a quarter is good, right, that's the
kind of earnings power. They were just a couple of
signals in the first quarter results that I didn't love.
And I'm an insurance guide. And they had adverse development,
which means some claims from prior years were costing more
than they expected. The wild fire losses were a little
bit more than I thought they were going to be.
(04:15):
The fire loss is not that's not a go forward thing,
but the reserve issues are a little concerning. But the
beauty of the company is such a behemoth, so many
streams of differentiated earnings that they kind of upset each other.
Speaker 6 (04:29):
So their earnings have been better.
Speaker 3 (04:31):
Than expected the past couple of quarters, so I thought
they were in line for a kind of slight disappointment.
Speaker 5 (04:37):
Thirty seconds. Some of the parts valuation, where are we.
Speaker 3 (04:40):
Are Bloomberg Intelligence midpoint? Some of the parts analysis comes
up to like one point one trillion, which was kind
of before the meeting, the stock was trading slightly above that.
I don't know if it's you know, below that now,
and I mean, you know, I don't claim to know
what Buffet knows, but they haven't been buying max shares
(05:02):
for a couple of quarters, so I think he's probably
viewing it very much in the same way as fully valued,
and the stock's at all time highs.
Speaker 5 (05:10):
Won what he does now? Like you're warn he's ninety.
Speaker 2 (05:13):
Digital chairman, right, you gotta do, you're ninety four?
Speaker 5 (05:18):
Like no, just relax, Yes, exactly, I take that I
would too, all right, Matthew Palizo, Well, thank you so much.
We appreciate that, Matt Palizzoli. He's a senior Anniston covers
all the property and casualty insurance companies for Bloomberg Intelligence.
Boots on the ground in Omaha over the weekend, mister
Bethey as Tom Keener first Tom stepping down at the
age of ninety four and just obviously historic, historic run.
Speaker 1 (05:42):
Now 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 5 (05:58):
It is earning season, folks, and we got the Tyson's
Foods reporting earnings. I don't know, maybe it's just me.
I think of Tyson's food I just think chicken. But
they're also in the beef business as well. That's the
extent of my knowledge. Stocks trading off on some earnings.
Jen Bartashis joins us. She's a senior retail staples and
packaged foods analysts for Bloomberg Intelligence. Jen the street doesn't
(06:21):
like what they heard from tyson Foods Springdale, Arkansas. What
happened there, Well, it's.
Speaker 7 (06:28):
Really two things, Paul. The first thing is that the
beef business did worse than people expected. But secondly, the
company held their guidance for the fiscal year, which is
generally a good thing, except that they're ahead of paste
for the top of their guidance for adjusted operating income
for both the chicken and the pork segment. So there
are a lot of questions on why, given the strong
first half performance they've had that they didn't actually raise
(06:51):
their guidance overall. And so between those two things, that's
what's putting pressure on the stock today.
Speaker 2 (06:55):
Do we get the sense that that's a demand concern
or is it an input concern?
Speaker 7 (07:00):
Well, on the beef side, it's an input concern. And
actually there's a piece to that puzzle that Tyson touched on,
but they didn't really go into detail, and that's that
they talk about how consumers have really still had a
lot of demand for beef, which is true, except that
when you look at the consumer they're trading down into
like ground beef. Now when you have a shortage of cows,
(07:23):
you know, the problem that Tyson has is that they
have to put higher quality parts of the animal into
grind in order to sell it, which means that their
profit per animal is coming down. And that's a concern
over the long term if those changes in behavior patterns
don't alter in the near future.
Speaker 5 (07:42):
All right, you know, during our little egg shortage, my
scientific analysis was basically just make more chickens. Tyson's are
the chicken people. I think, what are they saying about
the chicken population these days and eggs and all that
kind of stuff, because they're the folks that know.
Speaker 7 (07:58):
Yeah, so the chicken supply is actually pretty healthy from
a standpoint of the chickens that are used for consumption,
they really weren't impacted all that much by avian influenza,
and so that was the good news. The bad news
is that the mortality rates on the type of chicken
that they're currently using is still pretty high. So that
means that they're not getting as many chickens into the
(08:21):
processing plants that they normally would given the number of
eggs that are being laid, and so that is an
inherent top or cap to supply. So supply is robust.
It's going to grow about one percent this year, but
there are some constraints there with how much more they
could actually grow supply overall.
Speaker 2 (08:41):
What's the tariff impact, if any, on Tyson? On both
sides the demand and supply.
Speaker 7 (08:47):
For Tyson, Actually they have very limited exposure for tariffs.
They set on their call today about ninety five percent
of their revenue comes from product that's sold in the
United States. Their export is relatively small, and they've had
some time to work on contingency plans, so finding different
end markets that they can send some of the parts
of animals that US consumers just don't eat. So right
(09:10):
now it doesn't appear to be a very large risk
for Tyson at all.
Speaker 5 (09:13):
You mentioned maybe some issue with the cow herd. I mean,
I watched Yosemite. I know all about the ranching business
to see it. Yeah, so I mean, can't we make
more cows? What's going on there?
Speaker 7 (09:25):
We can make more cows. The problem is that for ranchers,
it's a tough environment to decide to actually build up herds.
Interest rates are still relatively high, there's still high cost
to expand operations. We've had drought that's only just reversing
in a lot of the key areas where we raise cattle,
and so that decision has been coming. But the problem
(09:49):
is that once you even start, you know, it takes
eighteen months to get a cattle for birth to market.
So even if they start today, we're not going to
see an influxus supply for quite some time.
Speaker 2 (09:59):
I feel like just a few years ago it was
all about alternative protein. I remember, particularly with Cargil for example,
they're making a really big push into that. Has that
trend for these guys shifted now?
Speaker 7 (10:10):
It has. When we look at the consumer consumption data,
the luster around plant based has really fallen off. And
so you know, right now there's a core demographic that
will always be interested in that product, but at the
at the moment, it's not growing. The sales are continuing
to contract. Part of that is that the cost of
(10:32):
regular meat has come down, and we had food inflation
which pushed the cost of special ingredients for alternative meat
way up. So the price gap between alternative proteins and
conventional proteins got a lot wider in the last couple
of years, and it still hasn't completely collapsed again. And
so until that gets a little bit closer, it's going
to be harder to get consumers to get interested again
(10:54):
in alternative proteins.
Speaker 5 (10:55):
So what is it the tysons of the world, What
are they saying about their consumer these days?
Speaker 7 (11:01):
So you know, they talk about the demand for protein,
and this is something where at the Bloomberg Bloomberg Intelligence
Farm Food Fuel Conference we had a whole suit of
panelists on protein and the demand for protein is really strong,
Whether you're talking about animal protein, whether you're talking about dairy,
current diet trends are high protein based, and so that
(11:24):
really bodes well for for producers like Tyson as as
the consumer is willing to still spend on protein and
it's in the majority of their purchases when they're going
to the grocery store.
Speaker 2 (11:36):
So true big protein person.
Speaker 5 (11:39):
Well, who isn't who doesn't.
Speaker 2 (11:41):
Like to actively search for protein that feels different?
Speaker 5 (11:44):
Doesn't it?
Speaker 4 (11:46):
All? Right?
Speaker 2 (11:47):
Fair enough?
Speaker 5 (11:48):
Last night?
Speaker 2 (11:49):
Yeah burgers, but then you get cholesterol issues. Okay, anyway, Jen,
thanks a lot. Jennifer Bartasha's as she joins us from
Bloomberg Intelligence and your analyst retail staples and packaged food.
Speaker 1 (12:00):
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 5 (12:14):
Alex del poulswehen you live here, and a Bloomberg Interactive
broker's studio streaming live on YouTube as well. On the
trade front, President Trump suggests that some trade deals may
come as soon as this week. How about that? And
the current global economy reporter for Bloomberg News. He joins us,
he's down there in DC, and how do you think
this thing is going to play out here? Is it
(12:35):
country by country by country by country that we're going
to have to wait for trade deals to be announced.
Speaker 8 (12:42):
Well, it's something of a tease from President Trump. We're
about a month now, it's just over months Liberation Day.
The presidents picked the point that there may or may
not be some agreements coming in this week. And he
wasn't being specific. He wasn't He was quite vague, and
he was being asked by reporters about this. But what
we do know from an administration efficiency is that folks
are ongoing with several countries they have identified at different times.
(13:05):
Japan is near the top of that list. India could
be near the top of that list. South Korea could
be near the top of that list. So there could
be some kind of agreement reached with one of those
at some point soon.
Speaker 4 (13:16):
Now.
Speaker 8 (13:16):
The question then becomes the details of that agreement, and
that's where everybody will be parising this. Well, what sort
of moves had been made on non tariff barriers to
satisfy in Washington, for example, what kind of concessions have
been made on.
Speaker 4 (13:28):
Maybe investment into the US. Where will the actual US
tariffs settle?
Speaker 8 (13:33):
All of those may well obviously offer nuggets, for sure,
but it also may off our roadmap for other economies
to say, I am like, we can do that too,
and come to the table to the US to try
and work it out.
Speaker 4 (13:44):
So, you know, we don't have specifics yet.
Speaker 8 (13:46):
It's a little bit vague, but clearly something's coming down
the pipes at some point soon.
Speaker 2 (13:51):
But I understand that the agreement versus like an MoU
versus a deal, they all mean different things. But do
we think anything that's on paper at this point, even
as a member of understanding, would that count as getting
something done and tick that box?
Speaker 8 (14:06):
And as the role of Congress and all of this
that there's so skeptics say, look, negotiating a real meaningful
trade deal takes months, if not years, of protracted trade talks. Okay,
so clearly that can't be done in weeks. Nonetheless, I
think what people are looking at for is a first
of all, what is actually greed, but most importantly, where
will US tariff rates settle in the air terms.
Speaker 4 (14:28):
Remember, all of.
Speaker 8 (14:29):
Those what were described as reciprocal tariffs or those levels
that were set pretty high for you know, money.
Speaker 4 (14:34):
Trading partners right around the world.
Speaker 8 (14:36):
If the tariff level is maybe back towards this ten
percent based on level, then that might suggest that, you know,
that's where things might settle. If you could deal with
the US, could deal with the US, and you settle
for that based on ten percent, that's the way for
But of course.
Speaker 4 (14:49):
If it's not on that tariff level is higher. That's
what I think about. A lot of people are going
to keep an eye out for.
Speaker 5 (14:55):
Who's driving the bus here. Is it the President? Is
it his trade advisors? Who's kind of because there's a
lot of balls in the area when you think about
all the countries that are presumably in negotiations with the US.
Speaker 8 (15:06):
Yeah, I think there must be at least a dozen
or so in serious negotiations, and of course they say
they're talking to up to seventy. I think it is
all governments all together. It's you know, it seems to
be different personal he's playing different roles treasure sectors. Got president,
it's clearly front and center for the aged trade talks.
He's kind of made that clear. The trade representative career
obviously is kind of the technical guy behind the scenes,
(15:29):
he would be involved in all of this, and of
course Commerce Secretary Howard Lutnik, He's seems to be more vocal,
maybe in the European side, but they're all playing the
role or all part of it. But ultimately, you know,
as the older officials say, and as we can say,
the anside looking and ultimately President Trump will make that agreement,
He will decide whatever will be decided. The market rally
in recent weeks will of course give the administration a
(15:50):
lot of confidence that what they're trying to do is
the right thing. But at the same time, we all
know that they got pretty nervous, you know, couple of
weeks ago, and they did pull back for the pose
ownership with Carr. So a lot of folks on what
kind of what level of terwer will be great in
their term and what the roadmap will be from there
on for these for all the countries involvement.
Speaker 2 (16:12):
And super appreciate thank you so much and the current
Bloomberg Global Ecademy reporter joining us on those three deals
that may come as soon as this week.
Speaker 1 (16:22):
You're listening to the Bloomberg Intelligence podcast Catch US live
weekdays at ten am Eastern on Apple Coarcklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (16:36):
Alex Still, Paul Swinni live here in our Bloomberg Interactive
Broker Studio, streaming live on YouTube. Michael McKee joins us here. Mike,
what do you think about some of the economic data
we get the it Some services came out, you know,
better and expected, But boy, that pricious paid number you
kind of jump out at you. How do you pick
that all in?
Speaker 9 (16:53):
Well, I think you're seeing the beginning. I'd better hear
more about John Touch.
Speaker 6 (16:59):
Back in the day.
Speaker 9 (17:00):
I think what you're seeing is the beginnings of the
impacts of the tariffs. This is soft data, essentially, but
it has a sort of a hard component to it,
in that the ism is asking what's happening in your
business this month? And if you go under the hood,
you see that imports have dropped a lot and prices
(17:23):
paid went up a lot, and those two things are
probably going to be connected. Also, inventories went up because
people front loaded ordering. The interesting thing about it, though,
was that new orders were still rising. So it may
be that the businesses are retrenching but the customers have
not yet, or it may be that the customers are
(17:46):
looking to those who import to keep them going, which
they may or may not be.
Speaker 4 (17:52):
Able to do.
Speaker 2 (17:53):
Yeah, eleven industries reported growth last month, led by accommodation
and food service. Is only six industries contracted. When do
you think we're going to get a clean read on
all these numbers.
Speaker 9 (18:04):
It's going to probably be over a period of time,
depending on the number and how businesses react to a
specific data point. I would imagine that you're not going
to get a full picture of it until either July
or August, when we know what the tariffs are. Remember
(18:26):
the reciprocal tariffs are postponed until July, so that could
hang out there for a long time. When we know
that the tariffs are, that will help, and when we
see how people react to it, both other countries, whether
they're reciprocal tariffs or whether they come to some kind
(18:47):
of a deal. So at this point, it's really hard
to say when you'll know, but I suspect it's going
to be one of those things that slowly becomes obvious.
Speaker 5 (18:59):
How about to the federies are they going to be
slow to kind of recognize what may be happening out
there in terms of inflation and growth.
Speaker 9 (19:06):
Unless we get some sort of rapid movement in either
one of those things, which nobody is really predicting at
the moment, they're going to be slow because there's no
benefit to them to moving quickly. If the economy is
slowing down, then the question becomes how slow And with
inflation still above target et cetera, et cetera, then the
(19:30):
Fed doesn't want to get into a situation where it's
boosting inflation by cutting rates too quickly, so they'll just
wait and see. And the economy is in pretty good
shape right now, appears with the numbers still doing okay
and inflation still slowly coming down, so no problem for them.
Speaker 2 (19:50):
That's one of the arguments too for the OPEC plus
production increase, right It's like, hey, listen, the hard dat
is actually okay. Maybe there can There are lots of
reasons why this is to do it, but maybe it's
the market can actually absorb it because we haven't seen
demand necessarily a fall off a cliff.
Speaker 9 (20:07):
Well, it sets up an interesting question about how consumers
will react if gasoline prices start going down, and then
how the FED reacts to that. I guess if in
headline inflation goes down because gasoline prices and energy prices
go down, and I suspect they will try to look
through that as much as possible because they know that
could easily change, and because the real issue is going
(20:32):
to be is the economy slowing down. If the economy
is slowing down, that's going to put a drag on inflation.
It's also going to mean that that money that you
would have spent somewhere else because you're not spending it
on gas, you may not be spending it anyway because
you're trying to cut back and save money.
Speaker 5 (20:46):
You know, just you know, you're paying attention here to
a lot of the speakers out at the Milking conference today,
and a lot of them, you know, whether it's Bill Aufman,
Paul Taubman, mister Rowan from Apollo, all saying yeah, there's
uncertainty out there and there's some issues out there as
it's to their businesses. Yet Secretary Beston calls the US
quote the premier destination for global capital. So I guess
(21:07):
that's the argument of near term paying maybe long term
gain from the industry.
Speaker 9 (21:10):
Well, it is still we have the largest deepest capital markets,
especially on the treasury side on the bond side, so
there are not a lot of alternatives if you want
to move a lot of money around. But most of
what Scott Besson was saying today was a sales pitch
to you highlight the administration's economic agenda. The one bit
(21:36):
of news I thought to the extended's news was his
description of how he would see the ten year yield dropping,
because he's made a big deal out of that being
sort of the benchmark rate for business activity. And his
argument was, you lower the budget deficit because then takes
(21:57):
some of the credit risk out of the bond market,
and rates can drop if if you take out the
you know, the premium, the risk premiums.
Speaker 5 (22:06):
And he was talking about one percentage point per year
ideally would be as you know, the deficit to or
debt to GDP would be meaningful now.
Speaker 9 (22:16):
But but the obviously one if you follow the budget process,
has to laugh because the budget that they are working
on this year, the recond through through reconciliation, raises the
budget deficit.
Speaker 4 (22:32):
Uh.
Speaker 9 (22:32):
And that's even beyond just the machinations they're doing to
avoid the reconciliation rules. They want to spend more money,
and every day Donald Trump is talking about spending more money,
let's rebuild Alcatraz, Uh right kind of thing. So, uh,
we're not going to get that one percent per year
definit of decline, I don't think, And so it kind
(22:55):
of makes his argument not not relevant at this point.
Speaker 2 (23:01):
And you're headed off to d see tonight or tomorrow.
When do you go tomorrow? The FED meeting? Any firework?
Speaker 9 (23:08):
No, just one.
Speaker 2 (23:09):
I was like fire, Why didn't say work, firework?
Speaker 4 (23:11):
Fire?
Speaker 9 (23:12):
It's not even uh, not even one firework. I don't
think we will get no move on rates. The FED
will be very circumspect about what it says in its
statement because they can't They can tell us what's been happening,
which is okay, but they have to emphasize we don't
know what's going to happen going forward. And then there's
(23:32):
no new economic forecast, there's no new dot plot.
Speaker 5 (23:36):
There is only.
Speaker 9 (23:37):
Jay Powell, and I suspect Jay, I suspect. We get
a lot of questions that are answered by I don't.
Speaker 2 (23:45):
Know fair enough. That's a lot of the questions that
we also ask an answer to a right. Mike Thanks Lot.
Mike mcke Bloomerg Inter National Economics and Policy correspondent.
Speaker 1 (23:54):
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ten am to noon Eastern on Bloomberg dot com, the
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