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This is Bloomberg Business Week Daily,
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>> It is Bloomberg Business Week Daily.
Very good afternoon everyone. Happy
Monday. I'm Tim Stenc. That is Nor
Melinda. She's in for Carol Master this
afternoon. Looks like equity is pulling
back a little bit. The exuberance that
we saw on Friday taking a little bit of
a breather. We got a a big week coming
up when it comes to economic data, when
it comes to semiconductors, and we're
kind of going all in on all of the above
there. Uh Ian King is standing by. We're
going to be getting to him in just a
second. Also, we're going to the skies
to talk global aviation.
>> Absolutely. We're going to be getting a
check on global aviation on planes, with
Boeing, and on how much people are
traveling. And of course, we're going to
do all this with the woman in charge at
Pittsburgh's airport.
>> Also, an update on real estate with the
folks over at Walton Global. They kind
of sit in a really interesting position
when it comes to real estate, serving as
the middle entity between the
homebuilders and the folks selling that
real estate. So, a good temperature
check of the industry. All that and more
coming up over the next two hour, one
hour, three hours. We got a big show
today. All that coming up. Here is
Charlie Brown.
>> Thank you very much. Welcome back. Happy
Monday with the Dow. The S&P they are in
the red. Nasdaq continues to push
higher. The NASDAQ composite index up 39
now up by about 210 of 1%. Right to the
numbers. S&P down eight drop there of
2/10 of 1%. We do have the Dow lower by
264. Now that is a decline of 6/10 of
1%. A rally that put stocks on the brink
of records sputtered. Bond yields rose
as euphoria around Fed rate cuts eased
ahead of a key inflation reading this
week. Right now we've got the 10-year
4.26% the 2-year 3.73%.
Gold flat on the day 3371 the ounce.
West Texas Intermediate Crude rallying
2.1%
6497
the barrel and Bitcoin down 4/10en of 1%
$112,300
on Bitcoin. Elon Musk is accusing Apple
and Open AI and a lawsuit of unfairly
favoring Open AI across iPhones and
thwarting competition for other chatbot
makers. Shares of Apple right now, Apple
shares trading a little changed on the
day. Uh we do have uh the S&P lower by
onetenth of 1% cannot ignore the MAG 7
index up now by 8/10en of 1%. Again
recapping here S&P 500 index down
onetenth of 1%. And for ondemand news 24
hours a day subscribe to Bloomberg News
now wherever you get your podcast. I'm
Charlie Bella. That is a Bloomberg
Business Flash.
>> Hey, thanks for that update Charlie.
Certainly do appreciate it. I said we're
going in all in on semiconductors and I
mean it because there's a lot happening
in the space. Nvidia reporting on
Wednesday. It's closely watched because
it has the potential to move markets.
We're going to go all in on coverage on
our program on Bloomberg TV when those
numbers do cross. Also closely watch
what's happening with Intel now that
President Trump sealed a deal giving the
US government a close to 10% stake in
the chipmaker. Here's the president in
the Oval Office this morning weighing in
on this unconventional deal.
>> I invest my heart in it and my soul
because I want the country to be strong.
But uh I said I'd like you to give 10%
of Intel to the United States of
America, not to me, to the United States
of America. And I said, if you have them
as a partner, you have the United States
as a partner. I think that would be a
very good thing for Intel. And he
thought about it a little bit different.
And he said, I like that idea very much.
we have a deal and that's I just made10
billion or 11 billion for the United
States of America and yeah there will be
other cases if I have that opportunity
again I would do that and then you know
you do have stupid people say oh that's
a shame it's not a shame it's called
business that was President Trump
earlier today in the Oval Office at the
White House the president says he will
quote help those companies that make
such lucrative deals with the United
States he made a comment earlier on
social about this I want to bring in Ian
He's Bloomberg News US semiconductor and
networking reporter. He joins us from
the Bloomberg San Francisco studio. Ian,
you've been out for a couple for a
little few days. Um, so we haven't
actually had the chance to talk to you
about this story yet. I I want to start
with the fundamental question about the
health of Intel and to what extent a US
government stake will actually change
that at all. Will a US ownership stake
fix Intel's wos? Yeah, I mean that's the
heart of the matter and that's what
we've been delving into. So if you look
at what how the analysts have reported
to on it and how what the fundamental
agreement which Intel made public this
morning say frankly the money this kind
of money that they were lined up to get
anyway. What's good for them is arguably
that they're no longer tied to this
program where hey we have to build a
certain amount to get a certain amount
of money. So that's good. So they in
theory according to the agreement they
can use this money for whatever purpose
they need it for. But in terms of the
actual amount in terms of their
requirements to be what they really want
to be no it's not enough. Um $8 billion
is a lot to you and me. Um but for Intel
when you're building a plant that costs
more than $20 billion and is obsolete
within 5 years it's probably not enough
to completely change the picture in a
way that I guess investors would want.
Ian, how would they use this money
differently, especially, you know, if
they're no longer tied to the CHIPS act?
>> Yeah, I mean, we have to just we don't
know is the answer to that because they
haven't said and I'm guessing that
they're going to be very careful with
what they say. What the US government
wants is this giant new chip plant in
Ohio to go ahead, right? That's what
they want that money to be. They haven't
said it explicitly, but that's been the
push. um what Intel wants and what Wall
Street wants is is what the CFO said,
which is our balance sheet is not in a
good position. We need to do something
about that. We need to focus on that. We
need to improve our designs. We need to
improve our manufacturing technology and
play catch-up. But they, you know,
there's a there's a gap there, right?
So, we'll, you know, we'll have to wait
and see. We'll have to to hear whether
there were some kind of background
agreements and understandings put in
place, but so far based on the black and
white, they can use it for whatever they
want.
>> The president Ian saying in the
soundbite we just heard, quote, I just
made 10 billion 11 billion for the US.
That's just part of what he said in the
Oval Office. I I don't I know we don't
completely understand how this deal
works, but as the US government being an
investor in this storied US firm, we'd
only, and I'm speaking as the US people,
right? We as Americans would only make
money if we exit that investment at some
point. Certainly there's dividends,
certainly or potential for dividends,
certainly there's appreciation,
potential for appreciation. There's also
downside risk here as well. How does the
US government and therefore the US
people make money on a deal such as
this?
>> Yeah. No, that's a very good question.
I'm a taxpayer too. I want to know. So,
first of all, there's no dividends.
Remember, Intel because of its financial
situation stopped paying dividends,
which is not something that obviously
investors enjoyed particularly and
they're suspended until Intel's finances
improve. But yes, you're absolutely
right. The only way that you and I as
tax payers make money out of this deal
is if Intel is able to turn its fortunes
around and investors get behind it and
the stock price goes up. Right now, this
is we've bought a chunk of a company
that is not in the greatest position and
nowhere near where it used to be.
>> So, what does this mean for uh not only
Intel but other firms and potentially
the idea of the US taking a stake here
in Intel? What is the broader read
through here? Yeah. Well, the the
broader repercussion and I think the
derivative here is what Intel needs more
than anything else are customers,
outside customers. Right now, basically
the main customers for all of these
expensive factories are its own
products. Intel's big push and the
reason why it wanted to spend so much
money was because we want outside
customers, because we want Nvidia to
give us orders, because we want AMD to
give us orders. So far, that just hasn't
happened. So what's going on behind the
scenes here and what we're hearing is is
that at least from the analyst reports
is that unless Intel can get these
external customers as it said itself,
unless maybe Donald Trump who's very
good at deals apparently can get Nvidia
or get anybody that's a major chip um
maker to give Intel these orders, then
really not a lot has changed. So again,
it's horrible to keep saying we don't
know. We'll have to wait and see. But I
think we need a second or a third act in
this whole arrangement for it to be
really meaningful for Intel.
>> Okay. You said Nvidia, so that's where
we're going now. Ian, it's the world's
biggest stock. It makes up 3% of the
global market cap of all public
companies. It's a shocking stat to think
about. The remaining 97%
comes from 82,551
stocks. That's just how big of an impact
Nvidia has on global markets. What do we
need to know ahead of Wednesday's
report?
>> Yeah, I mean what I what I would say is
the impact is even greater than that. If
you look at the S&P by size of
companies, the next five, six, seven
companies, which you know, stick them
all together and they look almost to a
quarter of the value of the S&P, these
are all related to Nvidia. They're all
AI stories. They're all related to
either this companies that are spending
on AI or companies that are profiting
from that spending on AI. So what Nvidia
can tell us whether spending is still
strong, whether demand is still strong,
whether AI is spreading throughout the
economy is absolutely essential to an
even bigger part than Nvidia represents
itself. And I think that's why people
are so on edge and so focused about this
in terms of what Nvidia can say. Of
course, the story is are we still
spending? Are we still growing? I mean,
growth is I was looking at the numbers.
Growth is probably going to slow to 54%
for this projected quarter, which oh
dear, that's horrible, right? But, you
know, because last quarter it was 69%.
So, that sounds like a slowing, but you
got to remember it's on course this year
in terms of revenue. If it hits the
targets that Wall Street set for it,
it'll be basically a third of all sales
of semiconductors worldwide. So, I mean,
the numbers are just, we could go on and
on all day, but what people really want
is this fundamental confirmation of,
hey, everything's okay. People are still
spending. Hey Ian, valuations for many
AI firms are at nosebleleed levels.
Essentially, that's how a source from
the story that ran over the weekend from
our colleagues Carmen Reini and
Jessminton said from Steuart Partners
here, are expectations high heading into
this report. What is this really going
to illustrate in terms of the broader AI
scope? Really?
>> Yeah, I mean valuations is something
that obviously the market decides,
right? what they're comfortable with,
what levels they're at. And obviously,
we can look at the the percentages, the
PE ratios, and the projected. And but I,
you know, for for us, I think the best
way to look at it is how far, how fast
has this company come? Has it justified
this big runup? We've not seen anything
like it in terms of the valuation runup.
But on the flip side of it, we've not
seen anything like it in terms of runup,
in terms of the revenue, in terms of the
profitability. This year it's going to
have a net income on a gap basis of
$99 billion. Right? Three four years ago
total revenue when it hit $25 billion
that was a victory lap. So this is
unprecedented territory. So can you put
a normal valuation on that? I don't
know. You decide. It's for the you know
investors to decide. But the numbers
that it's projected and if it can
continue at this pace and it it looks
like it is then I think we're in a
territory that hasn't been explored
before.
>> Well, we are grateful to have you as a
leader exploring it with us and actually
helping us make sense of it. Ian King,
he's Bloomberg News US semiconductor and
networking reporter out there in San
Francisco. Nvidia earnings not the only
big event happening this week. Tomorrow
we get an update on durable goods
orders, consumer confidence as well from
the conference board. Thursday we're
going to get US GDP and on Friday watch
for core PCE that's just some of what's
going on some of the data to keep an eye
on watching it all and more. Jennifer
Lee, senior economist and managing
director of economics for Beimo Capital
Markets. The firm has just over a
trillion dollars in assets under
management. Jennifer joins us from
Toronto. Jennifer, we're going to get to
all of this data, but I I want to start
with your takeaways from Jackson Hole.
For a week ago, we were sitting here
saying it's all about Friday. It's all
about Friday. It's all about Fed Chair
Powell's speech. We got that markets
breathed a sigh of relief. There was a
relief rally, that euphoria around rate
cuts certainly easing. What were your
takeaways?
>> Um, so first of all, good afternoon and
thank you very much for having me on.
And full disclosure, I was actually one
of the few people that thought, oh, he's
not going to say anything. What is he
going to possibly say? He's going to
sort of keep stay safe. And I was
pleasantly surprised. And that's one of
the the positives that I took away on
Friday. um just not getting not just
getting some clarity on the trade front,
but getting some clarity on where you
know we see monetary policy going and he
certainly did hint toward a rate cut. Um
he didn't see anything I think beyond
that. Um but it certainly looks like he
is becoming a little more comfortable
with a September rate cut. And again,
you know, just to use uh phrases that
have been um used so many times over the
last number of years, you know, we're
going to be data dependent. It's going
to depend on a meeting and by meeting
basis. But he's talking about how, you
know, the the dual mandates are being
um, you know, there it's it's sort of
difficult to wrestle with both both dual
mandates right now and but there is more
of a downside risk coming from the job
side and he's not as worried it seems
now from the inflation side which is
kind of interesting. So anyway, um
definitely more comforted knowing that
at least he is starting to think about
rate cuts and although you know
President Trump did say it was too late
um but at least again we know that it is
most likely going to come data
dependent. We still have a few more
numbers, by the way, as you mentioned,
to keep an eye on before that September
um 17th date.
>> Jennifer, he's certainly becoming more
comfortable with the idea of a rate cut
as you're laying out here for us and
what we saw last week. Where do you see
monetary policy going? Are you expecting
a rate cut next month? What's the
cadence afterward, if so?
>> So, we haven't changed our forecasts um
much at all over the last little while.
We continue to see two more rate cuts
this year, September and December. 25
basis points each and about four next
year probably on a on a quarterly uh
cadence uh um theme I guess like four
times next year so and and two more
times this year. So that's sort of how
we see the economic landscape playing
out right now. Of course lots can change
depending on how some of these trade
deals go depending on how inflation um
pans out, what's happening on the jobs
front as well, but right now I think
it's a pretty fair um you know uh safe
sort of you know bet to take that you
know a couple more a couple of this
year. Although I don't think every
single Fed policy maker is on board with
that.
>> The president late on Friday uh said the
US is conducting a quote major tariff
investigation on furniture coming into
the United States. Just when you kind of
thought that there was a little bit of
clarity when it came to what was
happening with tariffs. There's a new
element thrown into this. How big of an
effect does that have in your view on
just the way that countries are thinking
about the United States as a trading
partner?
>> So I guess it it just suggests that and
again full disclosure that wasn't even
on my radar furniture but it sort of
yeah you and me both
>> it sort of leans into the whole lumber
and steel you know tariff um uh
category. Um but it just gives us a
reminder that nothing is off the table
um um in terms of tariffs and if they
are deemed to be you know a possible
source of national security or whatever
or there's some type of unfairness
kicking in then yes it's going to be um
the focus or one of the uh it's going to
be uh one of the things that the
administration is going to focus on. So,
we can't get too comfortable with it.
And it also suggests that, you know,
potentially in the inflation story, we
might start seeing those stronger
inflation uh inflationary um pressures
uh perk up again in coming months
because I think there's like 50 days, I
believe, that the administration said
that they're going to take to sort of
study this uh this sector. And if if all
is found to be in order or not in order,
then you can see uh terrorists being
thrown into onto the furniture sector.
So, again, so we could see potentially
more inflation playing out. we could see
more pressures on the consumer front and
then we're going to have to see how the
Fed is going to uh to handle it. Like
again, how much of of the higher prices
will be pushed onto the US consumer and
whether or not the US consumer can deal
with it.
>> Super briefly, I mean, do you believe
that the US consumer will be able to
deal with this? Of course, we saw a lot
of data previously. We didn't really see
tariffs being baked in there yet.
>> So, so far the US consumer has been
holding up and we've been saying for I
don't know 100 years now, you know,
never to underestimate the US consumer
and I still stand by that. Of course, at
the same time, it's all going to come
down to jobs and whether or not there is
going to be continued strong demand for
jobs. Um, wages especially, and that's
the one thing I'm going to I want to say
about the Friday's report on personal
income and spending. Want to keep an eye
on the wages and salaries component to
see whether or not we're going to still
see a solid reading. I think of the la
in the prior month it was a very soft
reading, which is a bit, you know,
disconcerting. Um, so as long as we
continue to see steady gains in wages
and salaries, consumers will still be
able to sock a little bit away for the
rainy day, keep the saving rate, you
know, around fourish percent or so, and
yeah, then they can they can sort of sit
back and maybe wait a little bit, wait
it out a little bit, but at least they
can still, as long as they have a job
and they can still afford to buy things,
I think the US consumer will be in
pretty good shape. And I will also say
that this whole 90-day pause that the US
now has with China um which brings us to
November I think it's November 10th
>> sort of also puts puts off you know some
of these higher tariffs onto these US
products as well. So that's good news on
the inflation front. Although I did see
a headline just flashed in front of me
>> um about how President Trump is
threatening China with 200%.
>> Always stay glued always stay glued to
the terminal for all the latest.
Jennifer Lee over at Beimo. Coming up
next, air travel.
>> It's 2:21 on Wall Street. We do check
markets all day long here at Bloomberg.
We have got US stocks trading mixed with
the Dow. The S&P they are lower. NASDAQ,
the composite index up now by onetenth
of 1%. NASDAQ 100 index, let's call that
unchanged on the day. Keeping it all in
context, the S&P down 10 now down 2/10en
of 1%. The Dow lower by 6/10 of 1%.
NASDAQ up onetenth of 1% and our MAG 7
index higher now by 7/10en of 1%. The
10-year at 4.26% with a 2-year 3.72%.
Gold little changed on the day up a
dollar the ounce 3372 while West Texas
intermediate crude up 1.9% 64.88 a
barrel and Bitcoin now down by 210 of 1%
112,510
on Bitcoin. Texasbased Crescent Energy
has agreed to buy rival shale oil
producer Vital Energy for about $733
million. This deal comes as small and
midsize shell producers are increasingly
turning to acquisitions to grow and
expand their portfolio of future
drilling sites. Buying Vital will give
Crescent access to sites across the
Peran Basin. Vital shares, they're
surging now by 16%. Cresant is down by
4.6%.
Recapping S&P down 210 of 1% for on
demand news 24 hours a day. Subscribe to
Bloomberg News now wherever you get your
podcast. I'm Charlie Pellet. That is a
Bloomberg Business Flash. Thanks for
that update, Charlie. Do appreciate it.
Boeing CEO Kelly Ortberg's campaign to
rebuild the company culture is being put
to the test by a rise in labor activism.
Boeing and union leaders representing
striking workers at its St. Lewis area
defense factories are set to return to
the bargaining table today as they aim
to end a 3-week long impass. Workers
have grievances over pay and pensions
that were sacrificed in long-term
contracts. And the company faces
lingering ill will from its past
tactics. We've got with us Sid Phillip,
chief correspondent for global aviation
for Bloomberg News. He joins us here in
the Bloomberg Business Week studio. Sid,
at the heart of the labor issue here,
what what exactly is it? because this is
focused on the defense portion of
Boeing's business.
>> Yeah. So this is uh this is Boeing's
defense workers who are on strike. So
it's a smaller strike than the one we
saw last year when people making the um
essentially their bread and butter
commercial aircraft went on strike and
that was sort of much more hard-hitting
for Boeing. This is a smaller scale
dispute but at the same time it is
vitally important because Boeing defense
business is in the process of being
overhauled and Kelly has talked about
how he wants to sort of bring it to a
more steady pace of growth a steady sort
of returns and that's really being put
to the test by this stoppage which is
basically affecting output. The lines
are still open unlike when the Seattle
strike happened. The lines are still
open in St. Lewis, but at the same time
output is nowhere near it should where
it should be.
>> Sid, so it seems as though there's some
pretty key requests here that the that
they are looking for here at the union
to see that Boeing is able to give them,
but we're dealing with a 3-w week long
impass here. Is this long? How long can
these potentially be drawn out for?
>> I mean, the previous strike went on for
99 days and so this is not the longest
strike that's been that have the
company's faced. At the same time, it is
disruptive for the company. is
disruptive to the efforts to turn around
the company and it is disruptive for
Boeing because there's just one more
fire that they need to fight at a time
when they're already fighting many
fires.
>> You know, I I they're they're doing a
good job though, I think analysts and
investors would say, of of combating
some of the issues that the company has
had. For all intents and purposes, Kelly
Ortberg, analysts and investors would
say, has done a pretty good job turning
the company around and now it finds
itself in this unique position as being
essentially this bargaining trip when it
comes to US trade. It does. I mean,
Boeing has sort of turned around the
corner since its massive it had those
the grounding of the 737 following those
two fatal crashes. The plane came back
into service and last year we had the
door plug blow out which then sort of
put back scrutiny on Boeing. We had the
strike last year. So Kelly Otber has
managed to sort of start turning the
process the process of turning the
company around. At the same time the
company still has long ways to go before
it's actually on a stable footing.
>> So you say that it has long ways to go.
What are you looking for? What are
investors looking for here?
>> So investors are looking for when Boeing
will be sort of untapped by the FA at
the moment has capped production of the
737 at 38 a month. They're looking to
see where the signs are in terms of
being able to go to 42 a month and then
potentially go to beyond where they were
pre- pandemic. Airbus has talked about
75 a month on the the competing A320
NEOM. So, this is where Boeing would
sort of in a in a scenario where they
can actually get everything together.
That's where Boeing would be.
>> You and the team last week were for the
first to report that Boeing is close to
ending its sales drought with China. The
story moving Boeing shares as much as
3.7%. and Boeing said to be in talks to
sell up to 500 jets to China. Is that
going to happen?
>> Uh we're still waiting to see. I mean a
lot of it depends on the trade
negotiations that are underway between
the US and China. And we understand that
any any agreement with Boeing would be
conditional on some sort of trade
agreement being reached. And Boeing has
become emblematic of trade agreements
across the world. I mean we saw that
with Qatar. We saw that with other deals
where Trump doubts the Boeing angle of
it is as part of the wins for the US.
And so Boeing has become really crucial
to US foreign policy and trade
negotiations. And this would be one of
the biggest trade uh the biggest orders
and potentially one of the biggest trade
negotiations.
>> Not to mention A747 that was given to
the US government by uh another country
as well. Hey uh Sid, always love
chatting planes with you. Sid Phillip is
a Bloomberg global aviation
correspondent, chief correspondent for
Global Aviation here in our Bloomberg
Interactive Brokers studio. For more on
global aviation, I want to bring in
Christina Cassot, CEO of the Pittsburgh
International Airport. We're going to
talk about the airport update in just a
minute, specifically that new terminal
and how it's going, setting to open up
this fall. Um, first though, give us an
update on how business is shaping up for
the summer because when we spoke earlier
in the summer, you gave us the
impression that things were looking
pretty good.
>> They they were looking pretty good and
they are pretty good. We're actually
having our second busiest June in nearly
20 years, but the industry overall is
definitely seeing some softness. And I'm
confident that on Bloomberg, I've heard
you cover airline earnings and what Ed
Bastion was saying about, you know, the
fact that airlines are having to cut
capacity in September in order to get
back to profitability is is something
that we're all paying attention to. Are
are you experiencing any cuts in routes
to or from Pittsburgh's international
airport?
>> Yes, we have seen some as a result of
Spirit's bankruptcy definitely, but
that's not unique to us. Um, otherwise,
you know, like I said, we're having a
great summer. It's just that we were
expecting to have a better summer. Okay.
>> So, you know, it's we're in good shape.
Um, we just were expecting we were
expecting more traffic this summer.
>> So, what are the drivers for that? uh
you know pull back drop off in traffic
here over the summer.
>> Well, the so one of the things there's
no question school there are a lot more
schools starting in August and I think
that that I agree with Ed Bastion that
that definitely has an impact on August.
I would say that the other thing is is
that you know as as we have seen the we
were all expecting much more growth in
air travel for this year when we were
doing our plans and while we're as I
said we're we're flat against last year
we expected to see an increase and you
know there's a lot of reasons for that
um we're certainly not the only ones
experiencing it uh we we are seeing that
globally and nationwide as well so lots
of reasons, I'm sure.
>> So, are you all at all being impacted by
the strikes from Air Canada?
>> We are not being impacted by the strikes
for Air Canada. Um, we have had service
flying uh to the markets that we have
here, Montreal and Toronto. And um yeah,
that has not been an impact to us
directly as of yet.
>> There's only so much within your
control. Yeah, I I don't you know that I
think maybe that's like a mantra that we
all should be repeating all the time,
but I think especially with you because
you know you think about it from the
perspective of customers, they're not
necessar they're they're the airports is
it's table stakes, right?
>> They're they're going to you especially
in a place like Pittsburgh in New York
City, it's like okay, well I can choose
to fly out of LaGuardia, Newark or JFK
depending on where I'm going and where
I'm coming from. So, so if you think
about it from your perspective, what do
you do in a situation where your
expectations don't meet reality?
>> Uh, so that is I mean first of all
that's the job just to be clear right as
an airport we have we are at definitely
at the mercy of the airlines and the
decisions that they make as well as our
passengers and what's affecting them
their household economies or what's
happening in their businesses. So what
we've done is spent a lot of time
candidly
reimagining what the airport can do and
be for the community which is why we
have for as much focus as we have on the
day-to-day operation and making sure
that it runs safely that we're building
this new terminal. We're demonstrating
to our business partners that we are a
good business partner for them. We are
also investing in a lot of other
activities that perhaps airports don't
necessarily pay attention to. energy
independence um on-site staff production
here at the airport um looking at how we
use our facility as a technology
innovative innovation accelerator um for
airlines and airports globally. In other
words, how do we participate in the
broader economic impact using the
facilities that we have and that has
actually been incredibly successful for
us. So, while passenger traffic will
drive the majority of our revenue, we
are looking to diversify that revenue
stream, in order to be able to continue
to invest in necessary capital and
programs that are really going to make
this airport be everything it can be and
should be when traffic does return and
uh continues to grow. Christina, if
summer wasn't as good, what are
expectations for the fall? Of course, we
have a couple holidays, Labor Day right
around the corner, Thanksgiving ahead.
What are the expectations moving forward
in the fall?
We're all watching. We're all watching,
you know, we're all watching the major
airlines to see what they're going to do
with capacity. We're watching Spirit.
We're looking at how Southwest is
managing in its I right now we are
expecting to continue to not rec to not
realize uh what we had budgeted in for
growth. So, we were looking for 6% this
year and we are expecting to probably
stay flat. Um, and that's something that
we're working around at the end of the
day. And you know this, you you both
have been covering this industry for a
while. Traffic always comes back. It
always comes back and it usually comes
back stronger. So it what we do is we
ride it out and we uh we manage in the
meantime.
>> Hey, we only have about a minute left
and I want to get two more questions in.
First on uh what happens this winter and
if you're seeing signs of airlines
pulling back even more this winter.
>> Not yet.
>> Okay. Not yet. So stay tuned for that.
We could also see airlines increase
capacity too. It doesn't just go one
way. That's right.
>> Uh let's talk about October and the new
terminal opening. Still on track for
October.
>> Still on track. We have not uh set a
final date yet, but yes, still on track.
We are moving forward with lots of
trials and testing, integrated trials um
and lots of events for the community and
for the industry to let everybody see
what they can expect. But yeah, we are
so far on track for uh sometime in
October. Date to be determined. What can
people expect?
>> Oh my gosh, it's fantastic. You should
come see it. It's uh as
>> I saw it under construction. It was just
walls
>> that I couldn't see into. So, I don't
know.
>> It's different now. So, um it's it's
actually like nothing else in the US.
It's just it's beautiful. It's filled
with lots of natural light. There's lots
of space and um lots of good intuitive
wayfinding, universal access, uh space
for meters and greeters. It just it it
makes sure that everybody who needs to
use this airport as either an employee
or a passenger and and or a partner is
going to get what they need and be able
to deliver services uh to each other
rather seamlessly. So, it's spectacular
in terms of design and the services
we'll deliver we think will be, you
know, far superior to what we're able to
do today. A lot of that enabled by
technology that keeps people still at
the center.
>> Well, looking forward to checking it
out, Christina. Always great to check in
with you. Thank you as always for
joining us on Bloomberg Business Week
Daily. Christina Cassotus. She's CEO of
the Pittsburgh International Airport.
Coming up next on Bloomberg Business
Week Daily, a check-in on real estate
with Walton Global.
It's 240 on Wall Street. We do check
A rally that puts stocks on the brink of
records is sputtering today. Bond yields
are rising as euphoria around Federal
Reserve rate cuts eases ahead of a key
inflation reading this week. We do have
the S&P 500 index lower by 11 right now
has been down all day 6455 where we
stand a drop there of 2/10en of 1%. The
Dow lower by 280 down 6/10 of 1%. NASDAQ
is up 23 now that is a gain of 1/10enth
of 1%. Our MAG 7 index is pushing higher
by 7/10en of 1%. Nvidia, which reports
earnings later in the week, specifically
Wednesday, up now by 1.9%.
10ear at 4.26% with a 2-year 3.72%.
Gold flat on the day, 3372 the ounce and
West Texas intermediate crude oil up
1.8%, 64.83 for a barrel of WTI.
Sales of new homes exceeded forecasts in
July after an upward revision to the
prior month as prices eased and heavy
incentives enticed more buyers. The
median sales price of a new home
decreased nearly 6% in July from a year
earlier to $43,800
the lowest since 2021.
Among home builders toll down 4/10en of
1% py little changed on the day KB home
down now by 1.9%.
Recapping S&P lower by 11 a drop there
of 2/10en of 1% for ondemand news 24
now wherever you get your podcast I'm
Charlie Pallet that is a Bloomberg
business flash. Charlie Pellet always
sets us up perfectly. He knows we're
going into real estate. I want to
reiterate what we just heard. Sales of
new US homes exceeded forecasts in July
after an upward revision to the prior
month as prices eased and heavy
incentives enticed more buyers off the
fence. While sales did top projections,
the new home market has grown dependent
on price cuts and incentives to get
customers amid high mortgage rates. Katy
Hubard watches this closely. She's
executive vice president of capital
markets at Walton Global. It's the
privatelyowned asset and real estate
investment company that has more than
$4.5 billion dollars of land assets
under management and administration and
more than 80,000 acres under management
and administration. She joins us from
Denver. Walton Global operates in
retail, industrial, and commercial.
Katie, you were last on with us about a
month ago. I'm going to ask you the same
question that I asked you at that
moment. Is the residential housing
market better, worse, or no different
than when you were last on our program?
Tim, thanks so much for having me. I
would say that it is better. While
prices are at 438,000,
it is much more affordable to buy a new
home now than an existing home. And
we're starting to see investors really
move into the new home market. In fact,
institutional investors reported last
year they were buying up about 4% of
homes for our builder clients. And now
they're were reporting 20% of homes are
going to institutional investors. That
means that they see the value in the new
home prices. While there's still a pent
up demand and um just, you know, high
high rates, they know that buying now is
going to be a good investment for the
long term for them.
>> So, what is driving that? Where are we
seeing this coming from? Especially
since if you look at the S&P 500 real
estate stocks are in the green so far
this year, but they're still one of the
worst performing industry groups on a
year-to- date basis in the S&P 500. If
you dig a little bit deeper into the
home building index, they're on pace for
their best month since July of last
year. So, what's really driving this
demand here? Because if you think about
the average person, they would say that
rates are too high,
right, Nora? That's a great question.
So, you saw that obviously recently
Warren Buffett, you know, nodded to the
industry with nearly a billion dollars
in investment in stock into this se
sector. And it's really just the
fundamentals that are driving this.
People need a place to live. And so if
you have the pent-up demand, knowing
that rates and I think that just the
macro looking at the macro rates could
be coming down and the demand is there
that just bodess well for the long-term
fundamentals. As far as the stocks go,
they're still trading really at a great
value, relative, you know, relatively
low PE ratios. And so I think that
that's why investors are also looking at
this as a good long-term fundamental
play. So the the remind everybody, we
were talking about this on the call, but
it's like Walton Global, not necessarily
a household name, but a lot of the firms
that you sell to are household names.
Remind everybody about the space you
play in and then also what demand is
looking like from those customers.
>> Absolutely. So Walton, we land bank for
public home builders. So we're
purchasing the land for them so that
they can keep it off their balance
sheet. And that is just not a fad or a
trend, but that is an ongoing future
wave of the home building industry where
the large public home builders are doing
extremely well because they're holding
land off their balance sheet, not tying
up their cash. They want to return
shareholder equity. They want to turn
their money two, three, even maybe four
times. And by keeping land, which is
obviously a piece that needs to go into
their formula, they just want to build
and sell homes. And so Wolen is feeding
the public home builders land. So, what
we're seeing is that the builders that
are doing the best are the ones that are
able to really scale their operations,
build houses faster, build to the
demographic shifts, and lock in their
land positions. They're doing just fine.
They do have to offer incentives to keep
the pace going, but they have, you know,
pace over price right now, and it's
working for them.
>> So, of course, you mentioned that you
land bake for public home builders.
What's it like on the land side when you
are trying to get prop or land from land
owners? Is there a lot of opportunity
there right now?
>> Well, it definitely is. Just like we
look at these national numbers that come
out, it is very regional. So, starts
while starts for new homes are up 12.9%
year-over-year. Starts in Southern
California are down 30% year-over-year.
And that's because insurance prices have
gone through the roof. We're now you've
gone from 3,000 per house to 17,000 per
house in some cases. Just they make it
very difficult to get projects off the
ground. They're now requiring in some
cases commercial sprinkler systems in
residential homes. That just doesn't
make the numbers work. Um, so Southern
California is on sale just because it
makes it it's difficult to get projects
off the ground. You can get a
three-bedroom house with sweeping views
in Malibu for 1.4 now just because
>> how much because how much is insur is it
because insurance insurance costs it's
uninsurable essentially. It's just
because insurance costs have gone up and
builders are really shying away from all
of the red tape that you have to go
through in that market. So land it's it
takes a long time where even we've we're
seeing fix and flippers go from, you
know, flipping homes to now they're
actually taking down land positions and
building homes. You can build for $125 a
square foot, sell it for $250 a square
foot. The numbers work, but that's not
in all markets. in Seattle and Portland
where it takes a year to get your land
zoned, you're just going to be, you
know, paying your lenders too much money
to sit on that land. So, in places where
it's easy easier to get zoning and it
can go much faster, which is the legal
right to build on the land like Texas,
Florida, the southeast, those land
positions are really valuable.
>> Hey, very quickly to go back to Malibu
because as a Californian, my head is
still spinning. This is one of the areas
of the world there is the real estate is
the historically has been the most
expensive. Repeat the deals you can find
in Malibu right now.
>> Yeah. So, sweeping views of the ocean,
three bedrooms for 1.4 million.
>> Unbelievable. Okay. Well,
>> go ahead, Nora.
>> I want to quickly move over into
commercial. I When we think about
commercial real estate, everyone tends
to think immediately of office
landlords. I cover publicly traded
office REITs and office REITs only make
up about 3% of REITs more broadly. But
what is the appetite like? What is the
demand right now in terms of securing
land for commercial properties and
offices more specifically?
>> Yeah, I would say it is very choppy and
again it's regional where you're seeing
landlords that are still sitting on, you
know, 50% vacant. They're trying to
repurpose. They're trying to renegotiate
with the banks. So, if you can be in the
best location where the the office is
strong, which is not in a lot of places
across the country, then those are going
to be more more desirable.
And what about other aspects of
commercial real estate?
>> Yeah, I mean I would say data centers. I
mean we also own a lot of land where
we're selling to data center developers
and so that's clearly a hot topic and so
we're you know trying to find the data
center numbers pencil but you have to
have the energy and the zoning available
to make those numbers work as well.
>> When do you start seeing push back from
folks who are saying not in my backyard
when it comes to these data centers? I
know we're already seeing that, but but
when does that make building one of
these just impossible?
>> Yeah. I mean, at some point you just
have to keep going farther and farther
out to where you're not building near
where it's going to be affecting people.
Um so you, you know, build farther out
and in, uh Texas, where Bolton owns
almost 40,000 acres of land, there's
plenty of land to build on, um for data
centers where you're not going to have
that nimi, um mentality.
>> Uh just 20 seconds. is the most
important place that investors should
look uh regionally right now when
thinking about land.
>> Yeah, I would say the Midwest and the
Northeast are performing the best as far
as um home price appreciation and starts
and the the West, Northern California is
really struggling.
>> Okay, there it is. Katie Hubard, always
love talking real estate with you. Katie
is executive vice president of capital
privately owned asset and real estate
investment company. Taking a look at
where equity markets are just a little
over an hour from the close of trading
today. The S&P 500 down close to 210 of
1%. The NASDAQ still in the green by
onetenth of 1%. Uh the Dow down by 6/10
of 1%. Coming up next, it's stocks on
the move. This is Bloomberg.
>> This is Bloomberg Business Week Daily
with Carol Masser and Tim Stenc on
Bloomberg radio and television. It is
Bloomberg Business Week Daily. That is
Nor Melinda. She's in for Carol Masser
this week and what a week it is going to
be. Nora, uh, we have a lot of data
coming in. We've got durable goods
tomorrow. We've got Nvidia earnings on
Wednesday, jobless claims, a check of
GDP on Thursday. We get core PCE and
University of Michigan sentiment on
Friday.
>> Yeah. And that does not even to mention
the data that we got already today. It's
because, you know, JPAL was done. Right
>> now comes all the data before the next
meeting.
>> Absolutely.
>> That I don't know if it changes the
picture with uh September's meeting.
We'll see.
>> Right. And I think that's what we've
been hearing from a lot of our people
that we've been chatting with today. You
know, what does the cadence look like
moving forward? Especially because we do
know that a lot of traders are all but
pricing in September is the first rate
cut that we're going to be seeing
upcoming. But what does it look like
after that? That's really the question
here.
>> Yeah, it is a question. And it's a
question too that I think a lot of
people have when it comes to corporate
earnings. As we mentioned, Nvidia stock
uh is a big mover. It represents 3% of
global market cap. We're going to bring
you all of the latest headlines and
analysis with our Nvidia coverage
happening just after the bell closes on
Bloomberg TV and radio. Do not miss it.
That's Wednesday. Nvidia earnings
coverage, our special coverage of
Nvidia's report. Let's take a look at
some stocks on the move today. I'm Tim
Stenc along with Nora Melinda. We're
joined by Bloomberg News cross asset
reporter Denita Sakova. Denita, what is
on your radar?
>> Let's start with the news of the day.
Kurig and do Dr. Pepper agreed to buy
JDP for 18 billion, but we're not
getting quite the reaction they were
hoping for. Ticker of course is KDP and
shares fell more than 10%. This is the
biggest indeed drop in more than five
years. So the company will paid 20%
premium over the co closing price of
August 2022. What we're seeing here is
Curig plans to separates its coffee and
soft drinks unit in two parts. Kind this
is kind of unduring the 2018 takeover
they had of Dr. Pepper. But what people
are worried about is S&P analysts are
warning that they may cut the company's
credit rating due to plans to
significantly increase its debt. Hence
the reaction we're seeing. Obviously,
the coffee business has been struggling
a lot. We we have high beam prices. We
have a lot of volatility there. Other
beverages have been doing better. Hence,
maybe the split in two businesses makes
sense. That said, Kurick is down 3% here
today. A lot of pressure.
>> Yeah, definitely seeing a bit of
pressure there. Let's look at shares of
Roblox. What's going on there with that
company?
>> That's interesting company. Uh shares
jump as much as 8.5%. It's a little bit
lower now, but it comes off a wet bush
defending the stock. I make little legal
threats. In the last few weeks, we've
seen seven complaints that have been
filed against the company. The suits
claim that predators are targeting
children. Uh WL Wed Bush is actually
seeing that Roblox continues to be quick
to response with meaningful actions and
is seeing optimism. They go as far to
say that this is the most compelling
growth opportunity in the video game
sector and clearly the stock is reacting
to that. Roblox actually has 25 buys,
seven holds, and four sales. So, there
are a lot of other optimists uh among
analysts.
>> All right. And finally, you are watching
Ollex uh holdings. They do uh the hair
care firm that IPOed last year, I
believe,
>> a few years back. And
>> was it Has it been a few years?
>> It's been a few years back, but it's
been a few pretty tough years. It was
down 32% last year. It's down 10% this
year, but today we're seeing some
relief. The company is up about 12%.
It's coming off a count genuinity
turning bullish. So what they're seeing
is that the hair company uh is uh seeing
some brand reinvigoration. They hired
some executives from Royale, Nike. So
that's one boost. The brand is finally
seeing sales and margins stabilize. Uh
so we're seeing some optimist that said
this is the only bullish uh analyst on
the stock. Uh the ticker is OLPX
and as we said it's had a pretty rough
start of the year, pretty rough year
last year and we had this great story
about how Ollex was like a social media
favorite and then it turned into like a
Tik Tok disaster
>> because everyone was talking about the
fact that they were having scalp issues,
hair loss, and all these other things.
But then there was also some anecdotal
evidence that people were leaving the
products in their hair for too long. And
so that's also what was causing some of
those issues. But they were It became a
big social media.
>> I have to I have to correct myself. This
IPOed in 2021.
>> Yes, it's been a while.
>> Where is the time gone?
>> I know.
>> 6 months ago that this IPO.
>> No, but it hasn't had a single positive
year. Every year it's down.
>> So, this is so now Canacor Genuity is
the only uh buy on rating on the company
stock.
>> The only buy rating.
>> Shares are down 92% over the past 5
years.
>> Okay. It's been it's been pretty brutal.
So a rare day of green for Ollex
holdings
>> for sure.
>> Bloomberg news cross asset reporter
Denita Sakova with today's stock mover.
For more conversations like this, check
out our new stock movers podcast. You
can subscribe for 5minute episodes on
the biggest winners and losers in the
stock market. You can listen to stock
movers on Apple, Spotify, or anywhere
you get your podcast. Speaking of stocks
that are moving, the indices are green
and red. The Nasdaq Composite up
onetenth of 1%, the S&P 500 down 210 of
1%, the Dow down 6/10en of 1%. If you
are sticking with us on Bloomberg
Business Week Daily, if you're watching
us on YouTube, Bloomberg Originals, or
listening to us on radio, we got a big
show coming up. Deals, deals, deals. The
flurry of M&A, we're talking about
another take private deal for Toma
Bravo, uh Dr. Pepper going after Pete's
and Elon going after Sam Alman. All that
and more next on Bloomberg Business Week
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close starts now.