April 4, 2025 • 38 mins
Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Hosts: Paul Sweeney and Alix Steel
On this podcast: Tim Craighead, Bloomberg Intelligence Research Director for Content, discusses 10 companies to watch in the second quarter of 2025. Chris Gadomski, Bloomberg NEF Lead Nuclear Analyst, discusses the growing enthusiasm for nuclear power. Paige Smith, Bloomberg News Consumer Finance Reporter, discusses Rocket agreeing to buy mortgage firm Mr. Cooper in a $9.4 Billion deal. Jon Lin, Chief Business Officer at Equinix, discusses the future of AI and powering data centers. Michael Halen, Bloomberg Intelligence Senior Restaurant and Foodservice Analyst, talks about the rising costs of food and how that is impacting the consumer. Julie Choi, CMO of Cerebras, discusses generative AI.
Bloomberg Intelligence, the research arm of Bloomberg L.P., has more than 400 professionals who provide in-depth analysis on more than 2,000 companies and 135 industries while considering strategic, equity and credit perspectives. BI also provides interactive data from over 500 independent contributors. It is available exclusively for Bloomberg Terminal subscribers.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence
with Alex Steel and Paul Sweeney.
Speaker 2 (00:13):
The real app performance has been in US corporate high yield.
Speaker 3 (00:17):
Are the companies lean enough? Have they trimmed all the fats?
Speaker 2 (00:19):
The semiconductor business is a really cyclical.
Speaker 1 (00:22):
Business, breaking market headlines and corporate news from across the globe.
Speaker 3 (00:26):
Do investors like the M and A that we've seen?
Speaker 2 (00:29):
These are two big time blue chip companies.
Speaker 3 (00:32):
Window between the peak and cunt changing super fast.
Speaker 1 (00:36):
Bloomberg Intelligence with Alex Steel and Paul Sweeney on Bloomberg Radio.
Speaker 2 (00:42):
On Today's Boomberg Intelligence Show, we dig inside the big
business stories impacting Wall Street and the global markets.
Speaker 3 (00:47):
Each and every week we provide in depth research and
data on some of the two thousand companies and one
hundred and thirty industries our analysts cover worldwide.
Speaker 2 (00:53):
Today, we'll look at a big deal in the M
and A space that will create a mortgage behemoth.
Speaker 3 (00:57):
Plus we're going to discuss the rising costs of food
and wow that's effecting the consumer.
Speaker 2 (01:01):
But first we begin with research. Bloomberg Intelligence recently put
out on ten companies to watch for in the second
quarter of twenty twenty five and for more on this.
Speaker 3 (01:08):
Liz Paul and I were joined by Tim Craig, head
Bloomberg Intelligence Global Chief Content Officer.
Speaker 2 (01:13):
We first asked him to give us a broad scope
of the company he's looking at.
Speaker 4 (01:17):
So just as a reminder, these are all based off
of focus ideas, which for us in Bloomberg Intelligence are
high conviction out of consensus views where we see catalysts
ahead that can actually change the market's mindset around these companies.
So you've talked about the weight on consumer sentiment and
(01:40):
things along those lines. Well, Dollar Rama, which is a
dollar store up in Canada has yeah, exactly, They're going
to face slower wage growth, higher inflation. We've not seen
estimate cuts yet for Dollar Rama, like we've seen a
dollar Tree and dollar stores and whatnot. We think that's coming.
(02:05):
Another one that is interesting if you want to throw
on as well the whole tariff concept is PDD. You
might not have heard of this, but this is one
of the big Chinese companies that trade tech companies that
trades in New York. They own Timu, which is that
ultra low priced e commerce platform in the States. There's
(02:29):
their bigger platform is one in China, they're going to
have constraints on what they can bring in at the
right price, and they're also investing pretty heavily outside the
US to grow their non US platform beyond China. So
again we think that there's estimate cuts there to come.
Speaker 2 (02:47):
Hey, Tim, One of the more looking at this list,
one of the more controversial calls, I think is Tesla.
Steve Manner, the analyst for Bloomberg Intelligence covering the auto business,
he's pretty positive on Tesla here despite the stock price
in there. I guess the concern about Elon Muskin is focus.
Speaker 4 (03:04):
Yeah, you know, you could throw this in with tariffs,
with policy, et cetera, and clearly it's taken a shellacking
from a stock price perspective. We see two things going
on here. Number One, there's been a lot of talk
about how their sales have been disappointing as of Leyden.
Is that because of politics, We think, frankly it's because
(03:26):
of the model transition with the new Model Y coming out,
orders even in China have been good, and we would
expect to see sales to pick up as we proceed
through the second quarter and on ind to midyear. You've
also got a really underappreciated battery storage business that is
also starting to ramp up. So we see two catalysts
(03:49):
here to play out that people aren't focused on because
of all the other noise.
Speaker 3 (03:53):
And here's one for Paul here Cracker Barrel, Oh yeah,
is on your list again. I've never been.
Speaker 2 (04:00):
Now, Tim, he lives in London.
Speaker 4 (04:02):
You go to New.
Speaker 3 (04:04):
York City, man like, I don't know what I'm going
to see.
Speaker 2 (04:06):
Tim grew up in southwest Virginia. He knows.
Speaker 3 (04:10):
I mean I'll eat it. If you buy it and
eat it, I mean give it to me, I'll eat it.
Let's put it that way, all right, talk to us about.
Speaker 4 (04:16):
Really good I've crack. Cracker Barrel falls into the restructuring
reorganization bucket. And there's another one on the list as
well that actually may be good for you, Alex. I'll
come back to But cracker Barrel three years of estimate cuts.
(04:36):
There's next to no buys on this on this stock.
And from an underlying business perspective, they've made some wholesale revamps,
the menu, their approach to service. Uh, they're remodeling stores,
and we think that there's an inflection to come from
the standpoint of earnings trends. Notwithstanding the economy, this one's
(04:57):
already been beaten down, and we think that there's an
up decided to come Carrying's the other one carrying? Yeah?
So again three years of estimate cuts, you think who
is carrying? Well, their biggest label is Gucci. There you go,
Alex and if.
Speaker 3 (05:13):
I only discount him, let's be clear.
Speaker 4 (05:15):
Yeah, So new CEO at Gucci, a new head designer
at Gucci. We think there's a rejuvenation at hand, and
it's not in the estimates.
Speaker 2 (05:27):
So again, Tim, let's just step back a little bit.
European markets really performing well, certainly relative to the US market.
What are your clients saying here?
Speaker 4 (05:36):
So I think there are a couple of things coalescing. Three.
In fact, you take tariffs and all the concern that's
going on. You take deep seek and that raising the
specter of g Is there a different dynamic in the
world of tech that's been driving US markets and US exceptionalism.
(05:58):
And then you have a big European defense initiative and
imperative with Germany coming out with what people around here
are calling the Bazooka. And you add these together, there's
a growth idea developing in Europe. There's concern about what's
going on in the US. And if you look at
(06:19):
our economists, they see as much of a hit on
US growth and inflation as they see it anywhere outside
of Mexico and Canada. So you know, all of that
weighs on the US and Europe is an alternative, and
obviously we've talked a lot about how it's valued relative
to the States. I think that creates a money flow issue,
(06:42):
a money flow opportunity, just like it does for China.
Speaker 5 (06:44):
All right.
Speaker 3 (06:45):
Thanks to Tim Craig had Bloomberg Intelligence, a global Chief
Content Officer, Each week we look at research from Bloomberg
n EF previously known as New Energy Finance. They're the
team at Bloomberg that tracks and analyzes the energy transition
from commodities to power, transport, industries, building, and ag sectors.
This week we looked at the growing enthusiasm for nuclear
(07:05):
power for more.
Speaker 2 (07:06):
Guest hosts Isabelle Lee and I were joined by Chris Gaddomski,
Bloomberg and EF lead nuclear analysts. We first to ask
Chris what his thoughts are on nuclear power as a
source to fuel AI expansion.
Speaker 6 (07:17):
It's a great technology for supplying clean, carbon free twenty
four to seven base load power. However, there's a mismatch
between the demand for the electricity. Data centers say they
would like to have the electricity right away tomorrow, if
(07:37):
not sooner, and any new nuclear capacity in the US
is not going to come online until after twenty thirty.
I mean you may have one or two outliers come
on beforehand, but before you have a reliable demonstration of
the technology. Because these are all new technologies being built,
(07:58):
we'll be looking for after twenty thirty, So possibly we
could miss the first wave of advanced reactor contribution to
the AI developments.
Speaker 5 (08:09):
Why is nuclear construction in the West barely budgeting, whereas,
in for instance, Asia Pacific region it's booming.
Speaker 6 (08:15):
There's two big reasons for that. One, the price at
which the Chinese, for example, can build a nuclear power
plant is much lower than we can in the US,
and that's the function the fact that China right now
is building twenty eight nuclear power plants. We have built
two in the last ten or fifteen years, and so
(08:37):
they will build six nuclear power plants at the same site,
and the construction team moves from one reactor to the
next reactor to the next reactive reactor h reactor subsequently
costs less than the first. So to China to build
reactors for maybe one fifth to one quarter of what
the US can build, it makes sense for them to
build a lot of nuclear power plants. We've lost the
(08:59):
x tease and the desire to build a lot of
large nuclear power plants. To cite some advantages and significant
benefits to the technology, talk to.
Speaker 2 (09:10):
Us about small modular reactors. Is that a solution.
Speaker 6 (09:16):
Yeah, it is a solution because the not dynamic has
has has changed in the past. We've seen let's build
large reactors to get economies of scale in size. The
conversations talk, well, let's build a lot of small reactors
and get down the learning curve as quickly as we can.
So there are only two small modi reactors operating modern
(09:38):
ones operating in the world, one in China, one in Russia.
China is building another one. Russia is planning to build
another one, but they haven't yet broken ground on that.
So it's a technology that presents a lot less risk
to the utility or the hyperscaler who is buying it.
There's no big deployment risk. There is technology risk because
(10:02):
these are all first of a kind, and so with
the first of a kind project, especially in the nucle
power business, there's a lot of uncertainty with regards to
schedule and cost, and so people are thinking about this.
A lot of the utilities of are making plans to
go forward. The US and Canada the UK are leading
the effort, and so it's going to take some time
(10:23):
before those first reactors, small, major reactors, and advanced reactors
across the finish line.
Speaker 5 (10:29):
We know that new nuclear projects are coming online slower,
But do you think this administration will change that or
is it going to be status quo.
Speaker 6 (10:37):
The Trump administration in its first time first term was
very very pro developing uranium the equivalent of drill baby
drill from the uranium sector, and to a certain extent
that uranium has bounced back up. The current administration now
(10:58):
is favorable towards nuclear. Chris Wright, the Secretary of Energy,
has a pedigree from Berkeley and MIT to the leading
academic institutions regarding nuclear, and I think that they are
very pro nuclear. However, the big question is how much
government funding will be used to support nuclear reactor construction.
(11:19):
That's something that we're still working out and trying to
understand Chris.
Speaker 2 (11:23):
I finished the first season of the TV show Landman,
so I now consider myself an expert in the oil
and gas business, and I think my takeaway is, you know,
listening to energy providers and energy users, we're going to
need everything. We're going to need fossil fuels, We're gonna
need the wind, We're going to need solar, all that
kind of stuff. Maybe nuclear. How do you think about that?
Speaker 6 (11:47):
Yeah, my take is that we certainly do need nuclear.
If you look on a geopolitical basis, you have China
building twenty eight reactors, large reactors. Also, as soon as
it passes are post twenty third, they'll have more nuclear
power plants operating than we do. The Russians are very,
very aggressively building nuclear power plants not only in Russia
(12:07):
but in Middle East and establishing one hundred year relations
with that, and I think that has caused a lot
of concern for the US government saying, hey, listen, we
need to sort of offer a viable alternative option for
new nuclear in the years ahead. And I think it's
a very very solid ambition. Biden dedministration called for two
hundred gigawats of extra nuclear capacity. That's tripling what we
(12:31):
have right now, and so there is a tremendous need
for it, and I think there has a place. It's
not a solution for all the problems, but it works
very well for many types of applications.
Speaker 2 (12:42):
Our thanks to Chris Gadomski, Bloomberg and EF lead nuclear analyst.
Speaker 3 (12:47):
All right, coming up, we're going to break down the
future of AI empowering data centers.
Speaker 2 (12:50):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries. You can access Bloomberg Intelligence via
bi go in the terminal Paul Sweeney and.
Speaker 3 (13:00):
I'm Alex Steele, and this is Bloomberg.
Speaker 1 (13:07):
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 3 (13:21):
We move now to the M and A space.
Speaker 2 (13:23):
This week we heard that the online mortgage provider Rocket
is acquiring mister Cooper Group, the country's largest mortgage servicer it's.
Speaker 3 (13:31):
An all stock deal valued about nine point four billion dollars,
and this will create a mortgage behemoth that handles one
in every six mortgages in the US.
Speaker 2 (13:39):
For more, guest host Isabelle Lee and I were joined
by Page Smith, Bloomberg News consumer finance reporter. We first
asked Page to explain the latest deal and what mister
Cooper is.
Speaker 7 (13:48):
Mister Cooper is more is best known, I would say,
in the mortgage servicing side of things, So it's sort
of after the fact, you've got your mortgage, but who
were you actually interacting with, you know, gears down the line,
it's actually going to be mister Cooper. But this is
a big deal for Rocket because they've kind of they've
been trying to position themselves as sort of a one
stop shop for consumers finance offerings, so think credit cards
(14:13):
in addition to your mortgage and you know, now theoretically
your mortgage servicing rights. So it's it's a pretty big
deal for this company based in Detroit. Dan Gilbert a
pretty prominent person in the finance yep, pretty big in
sports as well. But nine point four billion dollars, it's
a big deal for these folks.
Speaker 5 (14:34):
We have Rocket also striking a deal to acquire Redfin,
which is a real estate brokerage. How will that build
into this one or if they're even connected at all.
Speaker 7 (14:43):
Certainly it's it is basically sort of from a sort
of a nose to nose to toe, if you will,
of the home buying experience. Everything will sort of be
under this Rocket umbrella. It you know Redfinn as you
as I think a lot of folks will you know
quite well, is this platform for buying and selling homes
(15:04):
and it would be sort of a starting point for
the home buying journey. Rocket is well known for originating,
getting or creating mortgages, and now mister Cooper is well
known for sort of the servicing of mortgages. So it's
it is kind of from start to finish of the
home buying process.
Speaker 2 (15:20):
Theoretically, they got a lot of debt on their bouncy
because I being a former banker, I don't look at
stock market values. I look at enterprise value to include
the debt. It's eighteen point five billion dollars because that's
what you get paid on. You get paid on enterprise
a so that is a big, big number there. Talk
to us about the mortgage business. I mean, is it
doesn't seem like there's a lot of deals happening in
(15:41):
the business.
Speaker 7 (15:42):
Well, I mean, I think we can look at interest rates.
It's certainly been a tough time for home buyers and sellers,
and that also weighs on these home on these home lenders.
It's a tough time for folks who kind of have
put their eggs all in one basket, which is the
home lending business. But that's kind of what Rocket has
been aiming to do, is to really branch out and
(16:04):
diversify their business so they're not so interest rate reliant
or exposed rather which they have been in the past.
And frankly that's showed up in their earnings over the
past couple of years. So I chatted with CEO U
and Krishna over the summer. Actually we did kind of
a deeper dive into Rocket and the company, and one
(16:24):
thing that he told me then was that artificial intelligence
is actually a big bet that they're making to really
try to boost the business and make that home buying
process truly as smooth as possible for the customers, to
kind of amp up their offerings and we'll see how
it works out. With for them in the end, But
so far numbers look pretty good.
Speaker 5 (16:44):
What's this deal expected? Were you hearing chatter before? Did
it's completely shock you?
Speaker 7 (16:49):
I was not hearing chatter before, and it seems like
the market is responding in kind of an interesting way.
But we're going to continue to follow the story and
see how this kind of fits into the broader rockets.
Speaker 2 (17:00):
Who do they compete against? Do they compete against the
banks that make the loans or the banks that make
the loans usually just syndicate them away, right.
Speaker 7 (17:07):
Well, I kind of take a different take on that
since I cover consumer and finance kind of broadly. I
think of folks who are kind of trying to be
that one one stop shop for consumer the consumer finance experience.
So for me, I think of you know, so FI
technologies for example, that is like a they have a
lot of lending opportunities for consumers, but they do a
(17:29):
heck of a lot of other business as well. Robinhood
even coming at it from the investing side of things
now offering banking products for folks, That's kind of how
I think about it in terms of competitors. But that's
just from a fintech consumer finance perspective when it comes
to home lenders. You know, other big folks in the space,
the space. I was just looking at some data by
(17:50):
Inside Mortgage Finance that placed United Wholesale Mortgagees number one,
Pennymac is number two, and Rocket as number three.
Speaker 2 (17:58):
Penny Mac is what I use. Anything that rings a bell? Okay,
Dan Gilbert just for what it's worth. Kids on the
rich top list of Bloomberg all the wealthy people, he
comes in at number sixty two. Well they're not bad.
Net worth of twenty eight point seven billion dollars up
two point six billion.
Speaker 8 (18:14):
Year to date.
Speaker 7 (18:15):
Yeah, he's a force in Detroit. I would say some
of our colleagues out of the Detroit Bureau did a
great story on him last year. If you're interested in
the terminal, All.
Speaker 3 (18:23):
Right, thanks to Paige Smith, Bloomberg News Consumer Finance Reporter,
we move next to the artificial intelligence sector.
Speaker 2 (18:29):
Guest host Normal Linda and I were joined by John Lynn,
chief business officer at Equinox.
Speaker 3 (18:34):
Equinex is the largest global data center provider and is
listed on the Nasdaq Stock Exchange under the ticker symbol.
Speaker 4 (18:39):
E q i X.
Speaker 2 (18:41):
John lenn joined to discuss the future of AI empowering
data centers, and I began the conversation by asking John
to explain what Equinox does.
Speaker 8 (18:49):
We're really the fundamental digital infrastructure provider of the world,
building two hundred and sixty eight data centers across seventy
four market If you're the guys, we are the guys
building and connecting all of these cloud provide and enterprises,
making all of that data available for AI.
Speaker 9 (19:03):
And it's really interesting because I was just speaking with
him during the break saying that I cover US real
estate stocks, I cover real estate investment trusts, and that's
exactly what falls in that patch. This is my guy.
So wonderful to have this conversation. But I think that
there's often people don't really when you think about data centers,
they don't often think about the people that are actually
providing the real estate for data centers. So can you
(19:26):
talk a little bit about how equinics differs from maybe
for thinking about a data center itself, but more or
less the fact that you guys are acquiring properties and
doing it that way.
Speaker 8 (19:34):
Yeah, you can think about it as full scope development,
where I mean we're going from raw land getting their
entitlements and then building the entire data center and then
operating that for perpetuity essentially. And our focus is around
making sure we're getting as many customers as possible into
the facilities and really interconnecting their data flows together, which
is pretty unique in the data center space, which has
also been a great opportunity for us to participate in
(19:56):
the AI growth.
Speaker 2 (19:57):
What are you guys seeing here? What are you seeing
from your client and the people you talk to about
kind of their needs going forward? Because right now, I
think in the marketplace, if you look at like Nvidious
stock and some of the other stocks that trade around
the AI theme, twenty twenty five has not been a
good year, after obviously phenomenal extraordinary growth in twenty three
twenty four, maybe before that. How are you viewing the
(20:18):
growth here in AI and from your end of the business,
the real estate side.
Speaker 8 (20:21):
Yeah, First, I'd just say, you know, AI is a
portion of the demand for data centers, but data center
as a whole are powering everything that everybody is doing,
right like listening to this broadcast, you know, ordering food
for lunch, you know, trading, trading on the exchange, et cetera.
I mean, you need computers for everything nowadays, and that's
still continuing. I think, you know, digital transformation is not
in the early stages anymore, but we're far from done,
(20:43):
and so that is just the secular driver that will continue.
From the eye landscape, I'd say obviously a huge amount
of interest and excitement and I think the it caught
the imagination of everyone, and I'd say, right now what
we're seeing is like exciting use cases that are really
providing durable value, right. And I think it's still early
stages for many of that across the general business landscape,
(21:05):
but that's what gets me fundamentally excited. You look at
a company like a Bristol Meyers squib a customer of ours.
They're doing drug discovery using videogpus and like being able
to increase and accelerate their time to therapeutics. That's fundamentally
going to improve like human life, right, and I think
that there's so many different aspects that AI can improve
based on that.
Speaker 9 (21:23):
So run us through some of your biggest customers, who
do you all work with.
Speaker 8 (21:26):
Certainly the cloud providers are some of our top customers.
We've got over two thousand different network providers as well.
The Genesis of the company was really around how do
we help the Internet scale? And that ended up being, well,
how do we help the globes telecommunications and data flows scale.
And so when you think about all of the cloud providers,
how do they connect to the end customers, that's through
our facilities. And then as we've built that landscape, we've
(21:50):
ended up basically becoming the place where enterprises put their
most trusted assets. When you think about then, whether they
have some workloads that are in the public cloud, well,
they're going to have some that are going to have
ownership and control of themselves. When they put those in
our facilities, it lets them glue that infrastructure together and
become like one super powerful environment.
Speaker 2 (22:09):
And folks, Equinics is a publicly traded company. Eqix is
the ticker. It's got a market cap of eighty one
billion dollars. And if you want some research on it
and you're on the Bloomberg terminal, Jeffrey Langbaum was my
reat analyst. He covers eqix. You can go big and
that's where you find the research on Equinox. John talk
(22:30):
to us about the global formfront and we know you
guys are global here, where are you seeing growth stronger
growth versus weaker growth.
Speaker 8 (22:38):
Yeah, I'd say across the landscape, there's still quite a
bit of demand for data center activity. You know, we're
particularly excited about some of the emerging markets Southeast Asia
for instance. It's certainly growing quite a bit. But you know,
based off of a lot of the recent Surgeon AI
and kind of the use cases set up for that,
just a tremendous amount of growth in the US over
the course of the last two years.
Speaker 9 (22:58):
So, I mean, when we think about your creditors in
this broader landscape, there's obviously digital realty trust when we're
thinking about publicly traded routes here in the data center space,
and if you look over the past five years, we
have equinic shares that have risen forty percent, but that's
compared to digital realty that's risen about eleven percent. What
do you think that you all are doing differently than
your competitors.
Speaker 8 (23:18):
I think one, it's our focus around really driving diversity
of customer and like kind of having an ecosystem that
we've built around the value that we're doing, and so
that's incredibly important for us. Like for the AI trade,
for instance, we're focusing not just on capturing some of
these large training footprints, but really, how do we make
sure we're getting all of these AI players and exposing
(23:39):
them to the rest of our customer base and really,
again that fuel becomes additional growth across our entire portfolio.
Speaker 2 (23:46):
Do you develop and build data centers or do you
just buy existing we develop and build? Where are you
developing and building these days? And if you say Texas.
Speaker 8 (23:56):
Or Florida, Well, we're building all around the world. I
think we've got sixty eight current like major construction projects
across it. Yeah, so it's we're very active.
Speaker 2 (24:05):
Wow, how about it?
Speaker 9 (24:07):
It's really it's a big company in this. I mean, yeah,
people think about you guys have to come to my path.
Speaker 8 (24:15):
It's a beautiful space.
Speaker 9 (24:17):
So what is your you know, what are your thoughts
for people who are saying that, you know, the tech
rally has run too far? You know, maybe we have
CAPEC spend that's just you know, bloated. There's so much
spending in this space. Is this a place to be
investing right now? When we think about AI and places
of that.
Speaker 8 (24:31):
Regard, I think the long term trend around this is
going to be inevitable, right, I think it's certainly we're
creating durable value, not just for you know, kind of
the planet and all of our customers, but but for shareholders.
I think the the amount of investment in the space,
and like the numbers are candidly like eyewatering right now.
And so but a lot of that I think is
just capital accumulation rather than deployment. And you know, compared
(24:52):
to a lot of other markets in the real estate side,
it's actually a little hard to kind of overbuild just
because there's so many natural like limiters in terms of
the way we want to scale, from utility power availability,
to supply chain to you know kind of just the
amount of trades you need to be able to build
and operate these facilities. And so I think that that
helps kind of provide more rationality than you know, in
(25:15):
some some real estate markets where you know, you can
throw up a shell pretty easily, you can you can
kind of just like convert and overbuild. In this case,
it's a very long development cycle, and so I think
you'll you'll see kind of some self metering there.
Speaker 2 (25:26):
Our thanks to John Lynn, chief business officer Equinics.
Speaker 3 (25:29):
Coming up in the program, we're going to break down
the rising cost of food and how that's affecting the consumer.
Speaker 2 (25:33):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries. You can access Bloomberg Intelligence via
b I go on the terminal. I'm Paul Sweeney and.
Speaker 3 (25:43):
Am Alex Steele, and this is Bloomberg.
Speaker 1 (25:53):
You're listening to the Bloomberg Intelligence Podcast. Catch the program
live weekdays at ten a m. Eastern on app Cocklay
and Android Auto with the Bloomberg Business App. You can
also listen live on Amazon Alexa from our flagship New
York station. Just say Alexa play Bloomberg eleven thirty.
Speaker 2 (26:11):
We turned out to the restaurant industry this week. Guess
so was normal? Lindon I were joined by Michael Halen,
Bloomberg Intelligence senior restaurant and food service analysts.
Speaker 3 (26:18):
He joined to discuss the rise and costs of food
and how that's affecting the consumer.
Speaker 2 (26:23):
First asked Michael to break down his most recent research
on restaurant spending.
Speaker 10 (26:27):
Restaurant space is unique. We were in a restaurant recession
last year. Higher prices, Yeah, higher prices really kind of
you know, the you know, the low income consumer kind
of pushed back against higher prices.
Speaker 4 (26:38):
Right.
Speaker 10 (26:39):
QUSR has been raising their prices since twenty twenty. The
rest of the restaurant industry has been raising prices since
twenty twenty one. So last year was kind of that
restaurant recession. This year, you know, we see you know,
higher income consumers with a better balance sheet. Right, Crypto's
up significantly. Home prices are still rising, right, and so
(26:59):
you know, for that reason, we think that this is
going to be a better year. And we still think
so in the data that we've seen and from a
lot of the CEOs that we've spoken to. The weakness
in February was broad based, and to me that's less concerning.
I would be more concerned if they said, listen, low
income consumer pulled back even harder, the middle income consumer
(27:20):
started to pull back harder, that would be more concerning
to me. Broad Based tells me that, well, it was
really cold. We got snow all over the country, including Sarasota, right,
and New Orleans. It was the coldest January in thirteen
years or so, right, and the flu was really bad.
So for me, it really seems that people were just
(27:42):
sick of the weather and sitting on the couch waiting
for things to open up. We have some weekly data
for early March, and data got better.
Speaker 9 (27:49):
So what data are you looking at when it comes
to consumer health? I know you said there's some that
you don't really pay as much attention to.
Speaker 6 (27:55):
Yeah.
Speaker 10 (27:55):
For the restaurant stuff, we use black box intelligence. We
get very good industry level and sub segment level seems
source sales traffic and check data. When I'm looking at
the consumer, you know, it's kind of dated right now
because it comes out quarterly, But I'm looking very closely
at credit card balances and so credit card balances, credit
card delinquencies, autal on delinquencies. They are still rising, but
(28:17):
at a much lower slower pace than they were early
last year, so it's a rate of change improvement. We're
also looking at CPI declining, real income's rising, and savings
rates rising, right, and so to me, those are all
good things for the low income consumer, right, So yeah,
we're not so concerned about that that consumer sentiment data.
Speaker 2 (28:41):
How about terraffs, How does that impact the average restaurant
if they're buying food and that type of stuff.
Speaker 10 (28:46):
Yeah, Listen, if you're a mom and pop shop and
you're importing you know, Italian or Japanese items, stuff like that,
it could hurt.
Speaker 4 (28:55):
Right.
Speaker 10 (28:56):
For most our chains, they're sourcing a very large majority
of their products in the United States. You know, Chipotle
was one everyone was worried about their saying, it's gonna
be like thirty basis points impact to their food.
Speaker 2 (29:08):
So the block prices aren't going to go crazy.
Speaker 10 (29:10):
Yeah, it's gonna be like thirty basis points for the
Alvocado prices, right, And they've for years they've been you know,
expanding beyond Mexico in terms of sourcing. One of the
companies that we cover that has probably the most exposure
overseas is Darden. They said they actually import about twenty
percent of their items. Part of that is they have
an Italian chain, right, but also it's just cheaper for them,
(29:32):
and so they're working on sourcing domestically and in other
places to try to ease some of that pain. So
even though it's a twenty percent number, it can be
much lower than that, So the restaurants aren't going to
be impacted that harshly.
Speaker 9 (29:45):
How are consumers adjusting to the price increases. Are people
just saying, Hey, I want to go out, I want
to eat, so I'm just going to pay more even
sell or are they a bit more resistant?
Speaker 2 (29:54):
If so, witch groups, it's a case shaped recovery, right.
Speaker 10 (29:57):
And so chains like Chilis, I mean, they just posted
a thirty percent comp in the United States over a
five percent comp. We've never seen that before for a
chain that's been around as long as But they're bringing
in younger consumers, wealthier consumers that are willing to spend, right.
And so the top slant of the K, people with money,
(30:18):
they're doing just fine, and they're still spending at restaurants, right.
It's the people on the bottom slant of the K.
It's these chains that are catering to low income consumers, right,
that are getting that pushback. Either they're you know, going
to restaurants less frequently, they're doing more shopping at the
grocery store, or and when they do go to the restaurants,
oftentimes they're ordering off the menu, or they're ordering less drinks, apptizers,
(30:38):
desserts and stuff like that.
Speaker 2 (30:40):
Hey, Mike, how about labor real quick? Thirty seconds, bus boys, dishwashers,
migrant labor migrant labors cut off here is that can
be a problem for some of these restaurants.
Speaker 10 (30:48):
Well, it's a concern for the restaurant and industry in general.
Most of our companies are compliant, they are right, and
so they're not really too worried about it.
Speaker 2 (30:57):
Our thanks to Michael Halen, Bloomberg Intelligence scene restaurant and
food service analyst.
Speaker 3 (31:01):
This week, Bloomberg Intelligence hosted its fourth Generative Artificial Intelligence
Conference and there were some great lineups in terms of
how you apply and mag jen AI for more.
Speaker 2 (31:11):
Alex and I were joined by Julie Choice, CMO of
Sarah Bros. We first to ask Julie where she thinks
we are with the changing views of AI.
Speaker 11 (31:20):
Well, I think that AI is really kind of hitting
the mainstream more. I think that you know, chatchipt surfaced
at the end of was that twenty two? I mean technically,
I think the first model came out in twenty twenty two,
and it's been almost two and a half years since then,
and chatchipt has found its way into so much of
(31:42):
our lives, and so people are more comfortable with AI, right,
and so now I think we're just shifting into okay,
AI can be a part of my life. But it's
still early days.
Speaker 3 (31:54):
So where do you sit then, in the in the
pyramid for AI?
Speaker 11 (31:58):
So we are Cerebras makes this beautiful chip which is
basically AI infrastructure. We are the equivalent of Nvidia, so
in video GPUs, it's just an alternative type of processor
for AI. So we are the underlying compute that's powering
the training and running of models like CHET GPT.
Speaker 2 (32:19):
I guess one of the questions now is people are
trying to just get a better handle on what the
compute needs are going forward. Gensen Wong at Nvidia remains
extraordinary bullish about that, and he has been, you know,
the voice of AI for many investors for the past
couple of years. Where do you think we are in
that compute need?
Speaker 11 (32:37):
Oh my goodness, I completely agree with Jensen Hang. I've
been following Jensen kind of unofficially as a mentor. I
find him to be an incredibly inspiring leader. I agree.
I think that the compute needs for AI are ever
increasing now with models like GPT four O which and
(32:59):
the whole one series. These are like these reasoning models. Right.
I'm here in New York to go to the generative
AI scaling event that Bloomberg is hosting, and it's all
about this like inference time. Compute. Inference time requires a
tremendous amount of compute, and so we're still just scratching
(33:19):
the surface of how much compute is really needed for
this extra level of intelligence.
Speaker 3 (33:24):
And do you play in the inference and the LM
space like the training and the usage you do both?
Speaker 4 (33:30):
Yes?
Speaker 11 (33:30):
Okay, yes, so cerebversus in both training and inference.
Speaker 3 (33:34):
What is has demand for your products changed at all
since deep Seed came out in terms of pricing or
in terms of demand.
Speaker 11 (33:42):
Yeah, I mean deep Seak happened in January and it
was such a big moment for the industry and we
immediately within forty eight hours of the news that big day,
we added deep Seek to our catalog of models. And
so what we do is we offer Lama models, Deep
Seek models, and other kinds of models to the developer
(34:02):
community right in our cloud. And our differentiation from GPUs
is that we're like twenty to seventy times faster in
terms of like that response time when you put in
a query. Our responses are about twenty to seventy times
faster because of the architecture being bigger, So deep Seek
really created this moment of developers coming at us saying,
(34:25):
oh my god, you guys have the fastest deep Seek.
We want to you know, we want we want that,
we want to see what that can do. And that's
led to a lot of prototyping. But what we do
see is that when it comes to developers that are
building AI businesses, there's a lot more usage of Lama.
So Meta Lama is probably still the most popular open
(34:46):
source AI model that is downloaded at least from the
Cerebraus cloud. And then we have customers like Perplexity and
mistral Alpha Sense based here in New York that are
kind of serving their adapted Lama models as well as
their own custom models.
Speaker 2 (35:01):
So the deep Seak issue for the industry was, Hey,
here's this Chinese company coming out with an AI solution
at a much lower cost. Is that good or bad
or neither good or bad for the AI evolution?
Speaker 7 (35:19):
Oh?
Speaker 11 (35:19):
I think it's very good because deep Seek was a
state of the art model when it came out. It's
still one of the best models in the world, especially
I think with their at V three. And what it
proves is that when you can open source this level
of intelligence, You're bringing down the cost to developers and
(35:40):
it increases developer creativity. And so one of the things
that Cerebras is super passionate about is providing developers with
the best models open source or custom you know, fastest
at the best price. And so we were just very
excited when Deepseak open sourced, and clearly like the developers
were very excited as well. It was definitely kind of
(36:01):
an inflection moment.
Speaker 3 (36:03):
In terms of what you're most excited about right now, Like,
what's the coolest use case you've seen when it comes
to training and when it comes to in fronts.
Speaker 11 (36:11):
Fantastic question. So for training, I'm going to bring up
a healthcare use case. So one of our favorite partners,
and you know, we shouldn't have favorites, but I really
appreciate the work that Mayo Clinic has done in Cerebras.
They have been able to train world leading foundation model
using genomic data, and the point of their genomic model
(36:34):
is to help patients of rheumatoid arthritis. I have a
family member who's been struggling with this terrible disease for
a decade, and this AI model can help her find
the medicine that actually works much more quickly. I didn't
realize that actually rheumatoid arthritis generally forty percent fail rate
(36:55):
in terms of aligning the right medicine to the patient.
And so really proud of the work that the mail
Clinic team has done in partnership with Cerebris, training that
model super fast on our chip, releasing it in probably
less than nine months of development time. Wow on the
training side. On the inference side, I'm very excited to
be working with companies like Perplexity as well as Mistral.
(37:18):
These are some very very AI forward companies leading the
way in terms of disruptive search experiences for consumers and
amazing chat assistance, especially in Europe, and we're powering their
super fast results.
Speaker 2 (37:34):
Your company, are you seeing any impacts of just the
uncertainty surrounding how this TWERFF policy will evolve? Is it
and your customers saying, you know, we're just going to
wait a little bit before we place an order or
something like that.
Speaker 11 (37:45):
No, Actually, it's really all systems go Okay. Our customers
want the fastest inference speeds, they want the smartest models
in their applications. We're not waiting to find out. There's
no time to wait. We have to deliver the fastest
compute to the best Custos commers in the world.
Speaker 3 (38:01):
Our thanks to Julie Choi, CMO of Sarah Bross.
Speaker 1 (38:04):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
ten am to noon Eastern on Bloomberg dot com, the
iHeartRadio app tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
always on the Bloomberg terminal
Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence
with Alex Steel and Paul Sweeney.
Speaker 2 (00:13):
The real app performance has been in US corporate high yield.
Speaker 3 (00:17):
Are the companies lean enough? Have they trimmed all the fats?
Speaker 2 (00:19):
The semiconductor business is a really cyclical.
Speaker 1 (00:22):
Business, breaking market headlines and corporate news from across the globe.
Speaker 3 (00:26):
Do investors like the M and A that we've seen?
Speaker 2 (00:29):
These are two big time blue chip companies.
Speaker 3 (00:32):
Window between the peak and cunt changing super fast.
Speaker 1 (00:36):
Bloomberg Intelligence with Alex Steel and Paul Sweeney on Bloomberg Radio.
Speaker 2 (00:42):
On Today's Boomberg Intelligence Show, we dig inside the big
business stories impacting Wall Street and the global markets.
Speaker 3 (00:47):
Each and every week we provide in depth research and
data on some of the two thousand companies and one
hundred and thirty industries our analysts cover worldwide.
Speaker 2 (00:53):
Today, we'll look at a big deal in the M
and A space that will create a mortgage behemoth.
Speaker 3 (00:57):
Plus we're going to discuss the rising costs of food
and wow that's effecting the consumer.
Speaker 2 (01:01):
But first we begin with research. Bloomberg Intelligence recently put
out on ten companies to watch for in the second
quarter of twenty twenty five and for more on this.
Speaker 3 (01:08):
Liz Paul and I were joined by Tim Craig, head
Bloomberg Intelligence Global Chief Content Officer.
Speaker 2 (01:13):
We first asked him to give us a broad scope
of the company he's looking at.
Speaker 4 (01:17):
So just as a reminder, these are all based off
of focus ideas, which for us in Bloomberg Intelligence are
high conviction out of consensus views where we see catalysts
ahead that can actually change the market's mindset around these companies.
So you've talked about the weight on consumer sentiment and
(01:40):
things along those lines. Well, Dollar Rama, which is a
dollar store up in Canada has yeah, exactly, They're going
to face slower wage growth, higher inflation. We've not seen
estimate cuts yet for Dollar Rama, like we've seen a
dollar Tree and dollar stores and whatnot. We think that's coming.
(02:05):
Another one that is interesting if you want to throw
on as well the whole tariff concept is PDD. You
might not have heard of this, but this is one
of the big Chinese companies that trade tech companies that
trades in New York. They own Timu, which is that
ultra low priced e commerce platform in the States. There's
(02:29):
their bigger platform is one in China, they're going to
have constraints on what they can bring in at the
right price, and they're also investing pretty heavily outside the
US to grow their non US platform beyond China. So
again we think that there's estimate cuts there to come.
Speaker 2 (02:47):
Hey, Tim, One of the more looking at this list,
one of the more controversial calls, I think is Tesla.
Steve Manner, the analyst for Bloomberg Intelligence covering the auto business,
he's pretty positive on Tesla here despite the stock price
in there. I guess the concern about Elon Muskin is focus.
Speaker 4 (03:04):
Yeah, you know, you could throw this in with tariffs,
with policy, et cetera, and clearly it's taken a shellacking
from a stock price perspective. We see two things going
on here. Number One, there's been a lot of talk
about how their sales have been disappointing as of Leyden.
Is that because of politics, We think, frankly it's because
(03:26):
of the model transition with the new Model Y coming out,
orders even in China have been good, and we would
expect to see sales to pick up as we proceed
through the second quarter and on ind to midyear. You've
also got a really underappreciated battery storage business that is
also starting to ramp up. So we see two catalysts
(03:49):
here to play out that people aren't focused on because
of all the other noise.
Speaker 3 (03:53):
And here's one for Paul here Cracker Barrel, Oh yeah,
is on your list again. I've never been.
Speaker 2 (04:00):
Now, Tim, he lives in London.
Speaker 4 (04:02):
You go to New.
Speaker 3 (04:04):
York City, man like, I don't know what I'm going
to see.
Speaker 2 (04:06):
Tim grew up in southwest Virginia. He knows.
Speaker 3 (04:10):
I mean I'll eat it. If you buy it and
eat it, I mean give it to me, I'll eat it.
Let's put it that way, all right, talk to us about.
Speaker 4 (04:16):
Really good I've crack. Cracker Barrel falls into the restructuring
reorganization bucket. And there's another one on the list as
well that actually may be good for you, Alex. I'll
come back to But cracker Barrel three years of estimate cuts.
(04:36):
There's next to no buys on this on this stock.
And from an underlying business perspective, they've made some wholesale revamps,
the menu, their approach to service. Uh, they're remodeling stores,
and we think that there's an inflection to come from
the standpoint of earnings trends. Notwithstanding the economy, this one's
(04:57):
already been beaten down, and we think that there's an
up decided to come Carrying's the other one carrying? Yeah?
So again three years of estimate cuts, you think who
is carrying? Well, their biggest label is Gucci. There you go,
Alex and if.
Speaker 3 (05:13):
I only discount him, let's be clear.
Speaker 4 (05:15):
Yeah, So new CEO at Gucci, a new head designer
at Gucci. We think there's a rejuvenation at hand, and
it's not in the estimates.
Speaker 2 (05:27):
So again, Tim, let's just step back a little bit.
European markets really performing well, certainly relative to the US market.
What are your clients saying here?
Speaker 4 (05:36):
So I think there are a couple of things coalescing. Three.
In fact, you take tariffs and all the concern that's
going on. You take deep seek and that raising the
specter of g Is there a different dynamic in the
world of tech that's been driving US markets and US exceptionalism.
(05:58):
And then you have a big European defense initiative and
imperative with Germany coming out with what people around here
are calling the Bazooka. And you add these together, there's
a growth idea developing in Europe. There's concern about what's
going on in the US. And if you look at
(06:19):
our economists, they see as much of a hit on
US growth and inflation as they see it anywhere outside
of Mexico and Canada. So you know, all of that
weighs on the US and Europe is an alternative, and
obviously we've talked a lot about how it's valued relative
to the States. I think that creates a money flow issue,
(06:42):
a money flow opportunity, just like it does for China.
Speaker 5 (06:44):
All right.
Speaker 3 (06:45):
Thanks to Tim Craig had Bloomberg Intelligence, a global Chief
Content Officer, Each week we look at research from Bloomberg
n EF previously known as New Energy Finance. They're the
team at Bloomberg that tracks and analyzes the energy transition
from commodities to power, transport, industries, building, and ag sectors.
This week we looked at the growing enthusiasm for nuclear
(07:05):
power for more.
Speaker 2 (07:06):
Guest hosts Isabelle Lee and I were joined by Chris Gaddomski,
Bloomberg and EF lead nuclear analysts. We first to ask
Chris what his thoughts are on nuclear power as a
source to fuel AI expansion.
Speaker 6 (07:17):
It's a great technology for supplying clean, carbon free twenty
four to seven base load power. However, there's a mismatch
between the demand for the electricity. Data centers say they
would like to have the electricity right away tomorrow, if
(07:37):
not sooner, and any new nuclear capacity in the US
is not going to come online until after twenty thirty.
I mean you may have one or two outliers come
on beforehand, but before you have a reliable demonstration of
the technology. Because these are all new technologies being built,
(07:58):
we'll be looking for after twenty thirty, So possibly we
could miss the first wave of advanced reactor contribution to
the AI developments.
Speaker 5 (08:09):
Why is nuclear construction in the West barely budgeting, whereas,
in for instance, Asia Pacific region it's booming.
Speaker 6 (08:15):
There's two big reasons for that. One, the price at
which the Chinese, for example, can build a nuclear power
plant is much lower than we can in the US,
and that's the function the fact that China right now
is building twenty eight nuclear power plants. We have built
two in the last ten or fifteen years, and so
(08:37):
they will build six nuclear power plants at the same site,
and the construction team moves from one reactor to the
next reactor to the next reactive reactor h reactor subsequently
costs less than the first. So to China to build
reactors for maybe one fifth to one quarter of what
the US can build, it makes sense for them to
build a lot of nuclear power plants. We've lost the
(08:59):
x tease and the desire to build a lot of
large nuclear power plants. To cite some advantages and significant
benefits to the technology, talk to.
Speaker 2 (09:10):
Us about small modular reactors. Is that a solution.
Speaker 6 (09:16):
Yeah, it is a solution because the not dynamic has
has has changed in the past. We've seen let's build
large reactors to get economies of scale in size. The
conversations talk, well, let's build a lot of small reactors
and get down the learning curve as quickly as we can.
So there are only two small modi reactors operating modern
(09:38):
ones operating in the world, one in China, one in Russia.
China is building another one. Russia is planning to build
another one, but they haven't yet broken ground on that.
So it's a technology that presents a lot less risk
to the utility or the hyperscaler who is buying it.
There's no big deployment risk. There is technology risk because
(10:02):
these are all first of a kind, and so with
the first of a kind project, especially in the nucle
power business, there's a lot of uncertainty with regards to
schedule and cost, and so people are thinking about this.
A lot of the utilities of are making plans to
go forward. The US and Canada the UK are leading
the effort, and so it's going to take some time
(10:23):
before those first reactors, small, major reactors, and advanced reactors
across the finish line.
Speaker 5 (10:29):
We know that new nuclear projects are coming online slower,
But do you think this administration will change that or
is it going to be status quo.
Speaker 6 (10:37):
The Trump administration in its first time first term was
very very pro developing uranium the equivalent of drill baby
drill from the uranium sector, and to a certain extent
that uranium has bounced back up. The current administration now
(10:58):
is favorable towards nuclear. Chris Wright, the Secretary of Energy,
has a pedigree from Berkeley and MIT to the leading
academic institutions regarding nuclear, and I think that they are
very pro nuclear. However, the big question is how much
government funding will be used to support nuclear reactor construction.
(11:19):
That's something that we're still working out and trying to
understand Chris.
Speaker 2 (11:23):
I finished the first season of the TV show Landman,
so I now consider myself an expert in the oil
and gas business, and I think my takeaway is, you know,
listening to energy providers and energy users, we're going to
need everything. We're going to need fossil fuels, We're gonna
need the wind, We're going to need solar, all that
kind of stuff. Maybe nuclear. How do you think about that?
Speaker 6 (11:47):
Yeah, my take is that we certainly do need nuclear.
If you look on a geopolitical basis, you have China
building twenty eight reactors, large reactors. Also, as soon as
it passes are post twenty third, they'll have more nuclear
power plants operating than we do. The Russians are very,
very aggressively building nuclear power plants not only in Russia
(12:07):
but in Middle East and establishing one hundred year relations
with that, and I think that has caused a lot
of concern for the US government saying, hey, listen, we
need to sort of offer a viable alternative option for
new nuclear in the years ahead. And I think it's
a very very solid ambition. Biden dedministration called for two
hundred gigawats of extra nuclear capacity. That's tripling what we
(12:31):
have right now, and so there is a tremendous need
for it, and I think there has a place. It's
not a solution for all the problems, but it works
very well for many types of applications.
Speaker 2 (12:42):
Our thanks to Chris Gadomski, Bloomberg and EF lead nuclear analyst.
Speaker 3 (12:47):
All right, coming up, we're going to break down the
future of AI empowering data centers.
Speaker 2 (12:50):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries. You can access Bloomberg Intelligence via
bi go in the terminal Paul Sweeney and.
Speaker 3 (13:00):
I'm Alex Steele, and this is Bloomberg.
Speaker 1 (13:07):
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 3 (13:21):
We move now to the M and A space.
Speaker 2 (13:23):
This week we heard that the online mortgage provider Rocket
is acquiring mister Cooper Group, the country's largest mortgage servicer it's.
Speaker 3 (13:31):
An all stock deal valued about nine point four billion dollars,
and this will create a mortgage behemoth that handles one
in every six mortgages in the US.
Speaker 2 (13:39):
For more, guest host Isabelle Lee and I were joined
by Page Smith, Bloomberg News consumer finance reporter. We first
asked Page to explain the latest deal and what mister
Cooper is.
Speaker 7 (13:48):
Mister Cooper is more is best known, I would say,
in the mortgage servicing side of things, So it's sort
of after the fact, you've got your mortgage, but who
were you actually interacting with, you know, gears down the line,
it's actually going to be mister Cooper. But this is
a big deal for Rocket because they've kind of they've
been trying to position themselves as sort of a one
stop shop for consumers finance offerings, so think credit cards
(14:13):
in addition to your mortgage and you know, now theoretically
your mortgage servicing rights. So it's it's a pretty big
deal for this company based in Detroit. Dan Gilbert a
pretty prominent person in the finance yep, pretty big in
sports as well. But nine point four billion dollars, it's
a big deal for these folks.
Speaker 5 (14:34):
We have Rocket also striking a deal to acquire Redfin,
which is a real estate brokerage. How will that build
into this one or if they're even connected at all.
Speaker 7 (14:43):
Certainly it's it is basically sort of from a sort
of a nose to nose to toe, if you will,
of the home buying experience. Everything will sort of be
under this Rocket umbrella. It you know Redfinn as you
as I think a lot of folks will you know
quite well, is this platform for buying and selling homes
(15:04):
and it would be sort of a starting point for
the home buying journey. Rocket is well known for originating,
getting or creating mortgages, and now mister Cooper is well
known for sort of the servicing of mortgages. So it's
it is kind of from start to finish of the
home buying process.
Speaker 2 (15:20):
Theoretically, they got a lot of debt on their bouncy
because I being a former banker, I don't look at
stock market values. I look at enterprise value to include
the debt. It's eighteen point five billion dollars because that's
what you get paid on. You get paid on enterprise
a so that is a big, big number there. Talk
to us about the mortgage business. I mean, is it
doesn't seem like there's a lot of deals happening in
(15:41):
the business.
Speaker 7 (15:42):
Well, I mean, I think we can look at interest rates.
It's certainly been a tough time for home buyers and sellers,
and that also weighs on these home on these home lenders.
It's a tough time for folks who kind of have
put their eggs all in one basket, which is the
home lending business. But that's kind of what Rocket has
been aiming to do, is to really branch out and
(16:04):
diversify their business so they're not so interest rate reliant
or exposed rather which they have been in the past.
And frankly that's showed up in their earnings over the
past couple of years. So I chatted with CEO U
and Krishna over the summer. Actually we did kind of
a deeper dive into Rocket and the company, and one
(16:24):
thing that he told me then was that artificial intelligence
is actually a big bet that they're making to really
try to boost the business and make that home buying
process truly as smooth as possible for the customers, to
kind of amp up their offerings and we'll see how
it works out. With for them in the end, But
so far numbers look pretty good.
Speaker 5 (16:44):
What's this deal expected? Were you hearing chatter before? Did
it's completely shock you?
Speaker 7 (16:49):
I was not hearing chatter before, and it seems like
the market is responding in kind of an interesting way.
But we're going to continue to follow the story and
see how this kind of fits into the broader rockets.
Speaker 2 (17:00):
Who do they compete against? Do they compete against the
banks that make the loans or the banks that make
the loans usually just syndicate them away, right.
Speaker 7 (17:07):
Well, I kind of take a different take on that
since I cover consumer and finance kind of broadly. I
think of folks who are kind of trying to be
that one one stop shop for consumer the consumer finance experience.
So for me, I think of you know, so FI
technologies for example, that is like a they have a
lot of lending opportunities for consumers, but they do a
(17:29):
heck of a lot of other business as well. Robinhood
even coming at it from the investing side of things
now offering banking products for folks, That's kind of how
I think about it in terms of competitors. But that's
just from a fintech consumer finance perspective when it comes
to home lenders. You know, other big folks in the space,
the space. I was just looking at some data by
(17:50):
Inside Mortgage Finance that placed United Wholesale Mortgagees number one,
Pennymac is number two, and Rocket as number three.
Speaker 2 (17:58):
Penny Mac is what I use. Anything that rings a bell? Okay,
Dan Gilbert just for what it's worth. Kids on the
rich top list of Bloomberg all the wealthy people, he
comes in at number sixty two. Well they're not bad.
Net worth of twenty eight point seven billion dollars up
two point six billion.
Speaker 8 (18:14):
Year to date.
Speaker 7 (18:15):
Yeah, he's a force in Detroit. I would say some
of our colleagues out of the Detroit Bureau did a
great story on him last year. If you're interested in
the terminal, All.
Speaker 3 (18:23):
Right, thanks to Paige Smith, Bloomberg News Consumer Finance Reporter,
we move next to the artificial intelligence sector.
Speaker 2 (18:29):
Guest host Normal Linda and I were joined by John Lynn,
chief business officer at Equinox.
Speaker 3 (18:34):
Equinex is the largest global data center provider and is
listed on the Nasdaq Stock Exchange under the ticker symbol.
Speaker 4 (18:39):
E q i X.
Speaker 2 (18:41):
John lenn joined to discuss the future of AI empowering
data centers, and I began the conversation by asking John
to explain what Equinox does.
Speaker 8 (18:49):
We're really the fundamental digital infrastructure provider of the world,
building two hundred and sixty eight data centers across seventy
four market If you're the guys, we are the guys
building and connecting all of these cloud provide and enterprises,
making all of that data available for AI.
Speaker 9 (19:03):
And it's really interesting because I was just speaking with
him during the break saying that I cover US real
estate stocks, I cover real estate investment trusts, and that's
exactly what falls in that patch. This is my guy.
So wonderful to have this conversation. But I think that
there's often people don't really when you think about data centers,
they don't often think about the people that are actually
providing the real estate for data centers. So can you
(19:26):
talk a little bit about how equinics differs from maybe
for thinking about a data center itself, but more or
less the fact that you guys are acquiring properties and
doing it that way.
Speaker 8 (19:34):
Yeah, you can think about it as full scope development,
where I mean we're going from raw land getting their
entitlements and then building the entire data center and then
operating that for perpetuity essentially. And our focus is around
making sure we're getting as many customers as possible into
the facilities and really interconnecting their data flows together, which
is pretty unique in the data center space, which has
also been a great opportunity for us to participate in
(19:56):
the AI growth.
Speaker 2 (19:57):
What are you guys seeing here? What are you seeing
from your client and the people you talk to about
kind of their needs going forward? Because right now, I
think in the marketplace, if you look at like Nvidious
stock and some of the other stocks that trade around
the AI theme, twenty twenty five has not been a
good year, after obviously phenomenal extraordinary growth in twenty three
twenty four, maybe before that. How are you viewing the
(20:18):
growth here in AI and from your end of the business,
the real estate side.
Speaker 8 (20:21):
Yeah, First, I'd just say, you know, AI is a
portion of the demand for data centers, but data center
as a whole are powering everything that everybody is doing,
right like listening to this broadcast, you know, ordering food
for lunch, you know, trading, trading on the exchange, et cetera.
I mean, you need computers for everything nowadays, and that's
still continuing. I think, you know, digital transformation is not
in the early stages anymore, but we're far from done,
(20:43):
and so that is just the secular driver that will continue.
From the eye landscape, I'd say obviously a huge amount
of interest and excitement and I think the it caught
the imagination of everyone, and I'd say, right now what
we're seeing is like exciting use cases that are really
providing durable value, right. And I think it's still early
stages for many of that across the general business landscape,
(21:05):
but that's what gets me fundamentally excited. You look at
a company like a Bristol Meyers squib a customer of ours.
They're doing drug discovery using videogpus and like being able
to increase and accelerate their time to therapeutics. That's fundamentally
going to improve like human life, right, and I think
that there's so many different aspects that AI can improve
based on that.
Speaker 9 (21:23):
So run us through some of your biggest customers, who
do you all work with.
Speaker 8 (21:26):
Certainly the cloud providers are some of our top customers.
We've got over two thousand different network providers as well.
The Genesis of the company was really around how do
we help the Internet scale? And that ended up being, well,
how do we help the globes telecommunications and data flows scale.
And so when you think about all of the cloud providers,
how do they connect to the end customers, that's through
our facilities. And then as we've built that landscape, we've
(21:50):
ended up basically becoming the place where enterprises put their
most trusted assets. When you think about then, whether they
have some workloads that are in the public cloud, well,
they're going to have some that are going to have
ownership and control of themselves. When they put those in
our facilities, it lets them glue that infrastructure together and
become like one super powerful environment.
Speaker 2 (22:09):
And folks, Equinics is a publicly traded company. Eqix is
the ticker. It's got a market cap of eighty one
billion dollars. And if you want some research on it
and you're on the Bloomberg terminal, Jeffrey Langbaum was my
reat analyst. He covers eqix. You can go big and
that's where you find the research on Equinox. John talk
(22:30):
to us about the global formfront and we know you
guys are global here, where are you seeing growth stronger
growth versus weaker growth.
Speaker 8 (22:38):
Yeah, I'd say across the landscape, there's still quite a
bit of demand for data center activity. You know, we're
particularly excited about some of the emerging markets Southeast Asia
for instance. It's certainly growing quite a bit. But you know,
based off of a lot of the recent Surgeon AI
and kind of the use cases set up for that,
just a tremendous amount of growth in the US over
the course of the last two years.
Speaker 9 (22:58):
So, I mean, when we think about your creditors in
this broader landscape, there's obviously digital realty trust when we're
thinking about publicly traded routes here in the data center space,
and if you look over the past five years, we
have equinic shares that have risen forty percent, but that's
compared to digital realty that's risen about eleven percent. What
do you think that you all are doing differently than
your competitors.
Speaker 8 (23:18):
I think one, it's our focus around really driving diversity
of customer and like kind of having an ecosystem that
we've built around the value that we're doing, and so
that's incredibly important for us. Like for the AI trade,
for instance, we're focusing not just on capturing some of
these large training footprints, but really, how do we make
sure we're getting all of these AI players and exposing
(23:39):
them to the rest of our customer base and really,
again that fuel becomes additional growth across our entire portfolio.
Speaker 2 (23:46):
Do you develop and build data centers or do you
just buy existing we develop and build? Where are you
developing and building these days? And if you say Texas.
Speaker 8 (23:56):
Or Florida, Well, we're building all around the world. I
think we've got sixty eight current like major construction projects
across it. Yeah, so it's we're very active.
Speaker 2 (24:05):
Wow, how about it?
Speaker 9 (24:07):
It's really it's a big company in this. I mean, yeah,
people think about you guys have to come to my path.
Speaker 8 (24:15):
It's a beautiful space.
Speaker 9 (24:17):
So what is your you know, what are your thoughts
for people who are saying that, you know, the tech
rally has run too far? You know, maybe we have
CAPEC spend that's just you know, bloated. There's so much
spending in this space. Is this a place to be
investing right now? When we think about AI and places
of that.
Speaker 8 (24:31):
Regard, I think the long term trend around this is
going to be inevitable, right, I think it's certainly we're
creating durable value, not just for you know, kind of
the planet and all of our customers, but but for shareholders.
I think the the amount of investment in the space,
and like the numbers are candidly like eyewatering right now.
And so but a lot of that I think is
just capital accumulation rather than deployment. And you know, compared
(24:52):
to a lot of other markets in the real estate side,
it's actually a little hard to kind of overbuild just
because there's so many natural like limiters in terms of
the way we want to scale, from utility power availability,
to supply chain to you know kind of just the
amount of trades you need to be able to build
and operate these facilities. And so I think that that
helps kind of provide more rationality than you know, in
(25:15):
some some real estate markets where you know, you can
throw up a shell pretty easily, you can you can
kind of just like convert and overbuild. In this case,
it's a very long development cycle, and so I think
you'll you'll see kind of some self metering there.
Speaker 2 (25:26):
Our thanks to John Lynn, chief business officer Equinics.
Speaker 3 (25:29):
Coming up in the program, we're going to break down
the rising cost of food and how that's affecting the consumer.
Speaker 2 (25:33):
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
depth research and data on two thousand companies and one
hundred and thirty industries. You can access Bloomberg Intelligence via
b I go on the terminal. I'm Paul Sweeney and.
Speaker 3 (25:43):
Am Alex Steele, and this is Bloomberg.
Speaker 1 (25:53):
You're listening to the Bloomberg Intelligence Podcast. Catch the program
live weekdays at ten a m. Eastern on app Cocklay
and Android Auto with the Bloomberg Business App. You can
also listen live on Amazon Alexa from our flagship New
York station. Just say Alexa play Bloomberg eleven thirty.
Speaker 2 (26:11):
We turned out to the restaurant industry this week. Guess
so was normal? Lindon I were joined by Michael Halen,
Bloomberg Intelligence senior restaurant and food service analysts.
Speaker 3 (26:18):
He joined to discuss the rise and costs of food
and how that's affecting the consumer.
Speaker 2 (26:23):
First asked Michael to break down his most recent research
on restaurant spending.
Speaker 10 (26:27):
Restaurant space is unique. We were in a restaurant recession
last year. Higher prices, Yeah, higher prices really kind of
you know, the you know, the low income consumer kind
of pushed back against higher prices.
Speaker 4 (26:38):
Right.
Speaker 10 (26:39):
QUSR has been raising their prices since twenty twenty. The
rest of the restaurant industry has been raising prices since
twenty twenty one. So last year was kind of that
restaurant recession. This year, you know, we see you know,
higher income consumers with a better balance sheet. Right, Crypto's
up significantly. Home prices are still rising, right, and so
(26:59):
you know, for that reason, we think that this is
going to be a better year. And we still think
so in the data that we've seen and from a
lot of the CEOs that we've spoken to. The weakness
in February was broad based, and to me that's less concerning.
I would be more concerned if they said, listen, low
income consumer pulled back even harder, the middle income consumer
(27:20):
started to pull back harder, that would be more concerning
to me. Broad Based tells me that, well, it was
really cold. We got snow all over the country, including Sarasota, right,
and New Orleans. It was the coldest January in thirteen
years or so, right, and the flu was really bad.
So for me, it really seems that people were just
(27:42):
sick of the weather and sitting on the couch waiting
for things to open up. We have some weekly data
for early March, and data got better.
Speaker 9 (27:49):
So what data are you looking at when it comes
to consumer health? I know you said there's some that
you don't really pay as much attention to.
Speaker 6 (27:55):
Yeah.
Speaker 10 (27:55):
For the restaurant stuff, we use black box intelligence. We
get very good industry level and sub segment level seems
source sales traffic and check data. When I'm looking at
the consumer, you know, it's kind of dated right now
because it comes out quarterly, But I'm looking very closely
at credit card balances and so credit card balances, credit
card delinquencies, autal on delinquencies. They are still rising, but
(28:17):
at a much lower slower pace than they were early
last year, so it's a rate of change improvement. We're
also looking at CPI declining, real income's rising, and savings
rates rising, right, and so to me, those are all
good things for the low income consumer, right, So yeah,
we're not so concerned about that that consumer sentiment data.
Speaker 2 (28:41):
How about terraffs, How does that impact the average restaurant
if they're buying food and that type of stuff.
Speaker 10 (28:46):
Yeah, Listen, if you're a mom and pop shop and
you're importing you know, Italian or Japanese items, stuff like that,
it could hurt.
Speaker 4 (28:55):
Right.
Speaker 10 (28:56):
For most our chains, they're sourcing a very large majority
of their products in the United States. You know, Chipotle
was one everyone was worried about their saying, it's gonna
be like thirty basis points impact to their food.
Speaker 2 (29:08):
So the block prices aren't going to go crazy.
Speaker 10 (29:10):
Yeah, it's gonna be like thirty basis points for the
Alvocado prices, right, And they've for years they've been you know,
expanding beyond Mexico in terms of sourcing. One of the
companies that we cover that has probably the most exposure
overseas is Darden. They said they actually import about twenty
percent of their items. Part of that is they have
an Italian chain, right, but also it's just cheaper for them,
(29:32):
and so they're working on sourcing domestically and in other
places to try to ease some of that pain. So
even though it's a twenty percent number, it can be
much lower than that, So the restaurants aren't going to
be impacted that harshly.
Speaker 9 (29:45):
How are consumers adjusting to the price increases. Are people
just saying, Hey, I want to go out, I want
to eat, so I'm just going to pay more even
sell or are they a bit more resistant?
Speaker 2 (29:54):
If so, witch groups, it's a case shaped recovery, right.
Speaker 10 (29:57):
And so chains like Chilis, I mean, they just posted
a thirty percent comp in the United States over a
five percent comp. We've never seen that before for a
chain that's been around as long as But they're bringing
in younger consumers, wealthier consumers that are willing to spend, right.
And so the top slant of the K, people with money,
(30:18):
they're doing just fine, and they're still spending at restaurants, right.
It's the people on the bottom slant of the K.
It's these chains that are catering to low income consumers, right,
that are getting that pushback. Either they're you know, going
to restaurants less frequently, they're doing more shopping at the
grocery store, or and when they do go to the restaurants,
oftentimes they're ordering off the menu, or they're ordering less drinks, apptizers,
(30:38):
desserts and stuff like that.
Speaker 2 (30:40):
Hey, Mike, how about labor real quick? Thirty seconds, bus boys, dishwashers,
migrant labor migrant labors cut off here is that can
be a problem for some of these restaurants.
Speaker 10 (30:48):
Well, it's a concern for the restaurant and industry in general.
Most of our companies are compliant, they are right, and
so they're not really too worried about it.
Speaker 2 (30:57):
Our thanks to Michael Halen, Bloomberg Intelligence scene restaurant and
food service analyst.
Speaker 3 (31:01):
This week, Bloomberg Intelligence hosted its fourth Generative Artificial Intelligence
Conference and there were some great lineups in terms of
how you apply and mag jen AI for more.
Speaker 2 (31:11):
Alex and I were joined by Julie Choice, CMO of
Sarah Bros. We first to ask Julie where she thinks
we are with the changing views of AI.
Speaker 11 (31:20):
Well, I think that AI is really kind of hitting
the mainstream more. I think that you know, chatchipt surfaced
at the end of was that twenty two? I mean technically,
I think the first model came out in twenty twenty two,
and it's been almost two and a half years since then,
and chatchipt has found its way into so much of
(31:42):
our lives, and so people are more comfortable with AI, right,
and so now I think we're just shifting into okay,
AI can be a part of my life. But it's
still early days.
Speaker 3 (31:54):
So where do you sit then, in the in the
pyramid for AI?
Speaker 11 (31:58):
So we are Cerebras makes this beautiful chip which is
basically AI infrastructure. We are the equivalent of Nvidia, so
in video GPUs, it's just an alternative type of processor
for AI. So we are the underlying compute that's powering
the training and running of models like CHET GPT.
Speaker 2 (32:19):
I guess one of the questions now is people are
trying to just get a better handle on what the
compute needs are going forward. Gensen Wong at Nvidia remains
extraordinary bullish about that, and he has been, you know,
the voice of AI for many investors for the past
couple of years. Where do you think we are in
that compute need?
Speaker 11 (32:37):
Oh my goodness, I completely agree with Jensen Hang. I've
been following Jensen kind of unofficially as a mentor. I
find him to be an incredibly inspiring leader. I agree.
I think that the compute needs for AI are ever
increasing now with models like GPT four O which and
(32:59):
the whole one series. These are like these reasoning models. Right.
I'm here in New York to go to the generative
AI scaling event that Bloomberg is hosting, and it's all
about this like inference time. Compute. Inference time requires a
tremendous amount of compute, and so we're still just scratching
(33:19):
the surface of how much compute is really needed for
this extra level of intelligence.
Speaker 3 (33:24):
And do you play in the inference and the LM
space like the training and the usage you do both?
Speaker 4 (33:30):
Yes?
Speaker 11 (33:30):
Okay, yes, so cerebversus in both training and inference.
Speaker 3 (33:34):
What is has demand for your products changed at all
since deep Seed came out in terms of pricing or
in terms of demand.
Speaker 11 (33:42):
Yeah, I mean deep Seak happened in January and it
was such a big moment for the industry and we
immediately within forty eight hours of the news that big day,
we added deep Seek to our catalog of models. And
so what we do is we offer Lama models, Deep
Seek models, and other kinds of models to the developer
(34:02):
community right in our cloud. And our differentiation from GPUs
is that we're like twenty to seventy times faster in
terms of like that response time when you put in
a query. Our responses are about twenty to seventy times
faster because of the architecture being bigger, So deep Seek
really created this moment of developers coming at us saying,
(34:25):
oh my god, you guys have the fastest deep Seek.
We want to you know, we want we want that,
we want to see what that can do. And that's
led to a lot of prototyping. But what we do
see is that when it comes to developers that are
building AI businesses, there's a lot more usage of Lama.
So Meta Lama is probably still the most popular open
(34:46):
source AI model that is downloaded at least from the
Cerebraus cloud. And then we have customers like Perplexity and
mistral Alpha Sense based here in New York that are
kind of serving their adapted Lama models as well as
their own custom models.
Speaker 2 (35:01):
So the deep Seak issue for the industry was, Hey,
here's this Chinese company coming out with an AI solution
at a much lower cost. Is that good or bad
or neither good or bad for the AI evolution?
Speaker 7 (35:19):
Oh?
Speaker 11 (35:19):
I think it's very good because deep Seek was a
state of the art model when it came out. It's
still one of the best models in the world, especially
I think with their at V three. And what it
proves is that when you can open source this level
of intelligence, You're bringing down the cost to developers and
(35:40):
it increases developer creativity. And so one of the things
that Cerebras is super passionate about is providing developers with
the best models open source or custom you know, fastest
at the best price. And so we were just very
excited when Deepseak open sourced, and clearly like the developers
were very excited as well. It was definitely kind of
(36:01):
an inflection moment.
Speaker 3 (36:03):
In terms of what you're most excited about right now, Like,
what's the coolest use case you've seen when it comes
to training and when it comes to in fronts.
Speaker 11 (36:11):
Fantastic question. So for training, I'm going to bring up
a healthcare use case. So one of our favorite partners,
and you know, we shouldn't have favorites, but I really
appreciate the work that Mayo Clinic has done in Cerebras.
They have been able to train world leading foundation model
using genomic data, and the point of their genomic model
(36:34):
is to help patients of rheumatoid arthritis. I have a
family member who's been struggling with this terrible disease for
a decade, and this AI model can help her find
the medicine that actually works much more quickly. I didn't
realize that actually rheumatoid arthritis generally forty percent fail rate
(36:55):
in terms of aligning the right medicine to the patient.
And so really proud of the work that the mail
Clinic team has done in partnership with Cerebris, training that
model super fast on our chip, releasing it in probably
less than nine months of development time. Wow on the
training side. On the inference side, I'm very excited to
be working with companies like Perplexity as well as Mistral.
(37:18):
These are some very very AI forward companies leading the
way in terms of disruptive search experiences for consumers and
amazing chat assistance, especially in Europe, and we're powering their
super fast results.
Speaker 2 (37:34):
Your company, are you seeing any impacts of just the
uncertainty surrounding how this TWERFF policy will evolve? Is it
and your customers saying, you know, we're just going to
wait a little bit before we place an order or
something like that.
Speaker 11 (37:45):
No, Actually, it's really all systems go Okay. Our customers
want the fastest inference speeds, they want the smartest models
in their applications. We're not waiting to find out. There's
no time to wait. We have to deliver the fastest
compute to the best Custos commers in the world.
Speaker 3 (38:01):
Our thanks to Julie Choi, CMO of Sarah Bross.
Speaker 1 (38:04):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
ten am to noon Eastern on Bloomberg dot com, the
iHeartRadio app tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
always on the Bloomberg terminal
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