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The semiconductor business is a really cyclical business.
These are two.
Big time blue chip companies, so people just too exuberant out there.
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On Today's Bloomberg Intelligence Show, we dig inside the big business stories impacting Wall Street and the global markets. Each and every week we provide in depth research and date on some of the two thousand companies and one hundred and thirty industries our animals cover worldwide. Today we'll look at Oracle signing a cloud deal with thirty billion dollars a year. Plus later on a big take story on
the Treasury Department's cybersecurity vulnerabilities. But first we begin with an outlook into travel and leisure for the second half of twenty twenty five. According to a bi US travel survey, tariffs, inflation, and geopolitics could deter consumers from spending money on hotels and flights. Jody Lourie, Bloomberg Intelligence Analysts breaks it down.
For a large part, the companies have been doing pretty well, and from a credit perspective, we've seen pretty decent total returns for the indices, and that's compared to high yield
and investment grade as a total. You know, we've seen that for discretionary that these leisure related companies have actually been doing better than most of discretionary and it makes sense because other parts of discretionaries, such as retail, are much more sensitive to know these tariffs and trade talks that are really affecting a lot of our outlook.
Jody, I'm looking through your note where you talk about the fact that there's a lot of uncertainties right now that are a lot of these consumers are grappling with as pertains to leisure traveling, with tariffs, inflation, China economy, and geopolitics. Can you just give us a little bit more of the backdrop right now? What is the consumer thinking as it relates to travel right now during the summer.
So I think that consumers are still going along with their plans for the most part, but maybe slightly tweaking it. What we saw in our second half leisure survey that we ran We run this every half a year, is that consumers are not pulling back on experiences. They're not pulling back on accommodations. What they might be pulling back on is destination to do a cheaper destination if they
need to cut costs. But by and large, most consumers are looking at spending on travel, spending on experiences as a way to escape what's going on and sort of the last party before maybe the chair gets pulled out from under them.
How about my favorite, UH secrament, which is the casino business. How does Zach perform in a time of maybe some uncertainty out there?
So I think it's a question of what region we're talking about. And so for Las Vegas, you're dealing with the fact that we had really strong comps because we had a couple of one time events such as the Super Bowl, such as the first Step one that really drove a lot of last year and the year before it's performance. This year, we're not seeing that same momentum there, So it's a little less exciting when you talk about regionals.
I mean, that's really my question. So a lot of the companies like to talk about how regional casinos are counter cyclical, meaning people will still go to regional casinos to gamble even during a recession. But I think the question I have is the last sort of data points we have on that is before we had online gaming. Right.
Online gaming is definitely a game changer to the whole industry, and my colleague Brian Egger, who covers on the equity side, can talk at nauseum about online gaming, as you know. But I think really the question is from more of a macro standpoint, how that's going to affect these companies as it really lates to their regional casinos. Now, when we talk about Macau, there's a lot of sort of questions about China and China's economy and how that might
trickle into the effects of a Macau. Never mind the fact that we're now going to have competition in the UAE with the Wind casino that's opening up in a few years. You know, we're seeing Thailand has been not so not so quick to get on the casino game, but we've seen japan As starting to open up with MGM, so there's a lot of competition globally that might change the dynamics of casinos at large.
Judy, when you think of travel, I immediately think of airlines. You know, how I'm I going to get from where I need to go point A to point B. Able we look at airlines, I'm looking at an index it's not about eighteen percent. But then hotels you have to need somewhere to stay. We're seeing them popping up about nine percent so far this year. What's going on in the hotel space right now?
So in the hotel space, they're still commanding these good prices for the rooms, right and I think that's a function of the fact that you're seeing business and conference travel tick up. Now, the question is how are people traveling? And are people doing more domestic travel? Are they driving to places, are they taking the train, are they opting out of airlines because it's just so uncomfortable, and are
they not doing international travel as much? And I think that's really what's sort of playing out is is that question of it is how are people getting to their destination? What destination are they going to? You know, there's definitely data points out there. I was just reading a report this morning. I was talking about how July fourth is going to be the busiest in terms of travel. But really, I mean for July fourth, are we flying places? Are
we driving to barbecues? That's really the question. And I think you know, with the sort of airline component, is that rental car component, right? And so when you look at what you know, the CPI, the Consumer Price Index is for airlines what it is for rental cars. You know, rental cars has shown a weakness of late, and I think that's a function of the fact that you're seeing consumers sort of not necessarily opting to rent a car, especially when so many rental cars are tied to airlines.
I know you cover six Flags as in six Flags Great Adventure in New Jersey. Haven't been since my junior year in high school.
I went three years ago.
You did, great time, great time. It's awesome. How about the theme park business, because a lot of listeners and viewers are Disney shareholders, and that's the biggest part of Disney's business. Are people still going to the high price theme parks?
People are still going to theme parks, But I think there's sort of a question of destination versus regional. Now we've been sort of, you know, less constructive. I guess on regional theme parks of late then say cruise lines, And that's a function of the fact that I think people were looking outside their general area. You know, somebody in New Jersey isn't necessarily seeing six fives Great Adventure as their big vacation. They're seeing, you know, the cruise
to the Hamas as their big vacation. But I think, as you know, consumers, if and one consumers start really feeling the straight on their wallet, we might see some of them come back to theme parks. And we're still trying to figure that out what that's going to look like and what percentage. But for someone like United Parks, which is formerly SeaWorld, you know, they're benefiting from the fact that Universal is opening up a theme park in Florida.
You know, they have the large portion of their properties are in Florida. You know, of course, they have the bush gardens, they have the Sesame place, they have stuff in San Diego. But a large percentage of their parks and their revenue comes from Florida. And so when you think about someone like a SeaWorld or United Parks, as
they go by. Now they are much more sensitive to what's going on with Disney and Universal and if they're building new parks, if they're getting people to come, they might then accidentally also go to SeaWorld.
Oh thanks to Jody Lorie Bloomberg Intelligence Credit analysts, if you choose to stay close to home this summer, no worries. There are still plenty to do, like watching a movie starring Brad Pitt on a Formula one racing track. That's exactly what Apple wants you to do. Apple Original Film f one. The movie is quickly becoming a some blockbuster and could be the catalyst to supercharge bidding prospects for
Formula ones US TV rights. For more Onette Emli Grafeo and I turned to geth It rang Anathan Bloomberg Intelligence Senior US Media Analyst.
So this was obviously a big success story for Apple. They've been dabbling in these theatrical films for quite a bit now, but none of you know, none of their movies have had this much of a success. So this is really good news and I think it kind of really emboldens them with respect to their strategy. So definitely, movie theaters are happy. And the other point that I'd like to make is, you know, more than twenty to twenty five percent of the total box office actually came
in from Imax. So this is really good news for the exhibiters because the premium large format, that whole thing about going to the theater to experience the movie is really working.
Okay, so your latest note is about how this F one movie here from Apple is going to jolt you say, lackluster lackluster bidding for the Formula one rights in the US. Give us a little bit of context here the landscape of rights for Formula one, Who currently has the rights, when does that expire? And just put into context kind of the current bidding right now?
Sure, Emily, so right now. So Formula one is, you know, as a global sports, global media property in the US, the rights to distribute Formula one content is owned by Disney's ESPN, So they have rights that go through the end of this year through the end of twenty twenty five. They're currently paying about eighty five million dollars a year. That's up from their last negotiation negotiation cycle when they were paying only about five million dollars. So it's up
to eighty five million. But what F one is saying is that this is such an interesting property, this is, you know, a hot property, you should be paying up for it. And they are really looking for something upwards of about one hundred and fifty two hundred and sixty million, and I'm not so sure ESPN wants to pay that that much money. So it's really price is really a sticking point here, and it looks like we've hit a
little bit of a stalemate. By the way, this problem, you know, F one really kind of shot into the limelight in the US with the Netflix drive to survive series. Now, Netflix has been hugely actually instrumental in kind of driving this Surgeon popularity. So everybody was kind of wondering whether Netflix or you know, maybe another streamer like an Amazon would kind of come in and bid for the rights. But I think what we're seeing with a lot of
these streaming platforms is that they want global rights. These are all global streaming platforms. They want rights to distribute this content and all markets, and they're not going to be able to get that right.
Now because Formula one, who's their European over is that Warner Brothers Discovery, who distributes.
Ski Ski actually distributes them in most markets, so you know, Ireland, UK, Germany, Italy again, France, Spain, they all have a little bit different you know, distributors, but ski is a is a very big one across most of Europe.
Wouldn't Apple be the obvious choice to partner up and you know, get the rights to Formula one because they just made this a blockbuster hit about Formula one.
You would think so, you know, but it's been a little bit of you know, again, it's hard to actually figure out what Apple is thinking here. One thing that Apple doesn't have, which both Amazon and Netflix have, is scale. So Netflix has well over three hundred million global subscribers. Amazon probably has closed about three hundred million as well on their video streaming service. Apple, on the other hand, has probably less than fifteen million, so they don't necessarily
have the scale to support it. And remember there are a few other things with the Formula one property. You don't have a lot of advertising inventory necessarily, So again that's something that doesn't necessarily appeal to streamers, especially because all of these different streaming platforms are really trying to build out their ad business. A Formula one doesn't necessarily lend itself to that, but you're absolutely right. Apple could be a very interested party down the road.
And for those who care, one can actually invest directly in. Formula one is a public traded company FWNK. I like Formula one K, it's owned by John Malone and Liberty Media. There's a million different share classes out there, but Formula one, Keith, I mean, under John Malone's leadership, they've done a good job of increasing rights, sporting rights and sponsorships and all that kind of stuff, making it actually profitable.
Very profitable, Paul, And they've they've done a fantastic job with the media rights. Again, they've really capitalized on this huge surgeon popularity because remember F one was really more of a European really not so big in America, but they've really kind of capitalized on this huge momentum in the United States. And you're absolutely right. They've added a whole lot of races, made it a year round calendar,
lots of sponsorship money. So they've done a very good job with this new Liberty Media management team.
Oh thanks to the Keith ron Ganathan Bloomberg Intelligence senior US media analyst, coming up a tech breakdown as we talk Tesla sales, Oracle and Apple outsourcing some AI assistants. You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in research and data on two thousand companies and one hundred and thirty industries. You can access Bloomberg Intelligence via bi go on the terminal. I'm Paul Sweeney. This is Bloomberg.
You're listening to Bloomberg Intelligence with Paul Sweeney on Bloomberg Radio.
This is the Bloomberg Intelligence Show. I'm Paul Sweeney. Tesla this past week reported second quarter deliveries on its vehicles and it was not good. Tesla now finds itself in a deep hole to dig out of to avoid consecutive annual declines. To help break down the numbers normally, Linda Nice Book to Pierre Ferubu, head of Global Technology Infrastructure at New Street Research.
There is a bit of a positive surprise, like people tracking very precisely deliveries in various markets by expecting slightly lower numbers. The surprise comes from the US. The US did is a place where it's the most difficult to track the number of Tesla being delivered, and the US beat beat expectations that model while coming in doing actree quite well, that's good. But then the at the end of the day, you have to remember the big picture.
We are down thirteen persons here on air. So we are facing a situation where Tesla is struggling to sell cars. A gross margin is in the latins. To me, Tesla facing good demons should be able to defend like mid mid twenties gross margin. So we have like we are facing like a core business and not a business that is really at a very low point that is struggling. And so that's the difficulty. You have, like one structural
difficulty that is relatively that we understand relatively well. It's that with their current product, Tesla has kind of saturated its opportunity. Tesla needs lower high points to keep growing and that's in the plan they're working on it. And then you have a number of other issues. You know, electric cars are less fashionable than they were a couple
of years ago. The Tesla brand has suffered, particularly in New Rope where numbers are down like almost forty percent on air, and so it is definitely it's difficult to quantify, but it is a significant headwind as well. And overall, you know, the economy is not right, the best you can imagine for auto dim Yeah.
I mean when we look at the mag seven stocks, we see Tesla as the primary laggard this year, down about twenty three percent. And of course we know that investors have really been vying for Musk's attention as he's been really politically involved. So as we're seeing these numbers come through, what do things like moving forward? Are these numbers a massive impact or are the Tesla loyalists still out there and is there some further positivity to come.
Yes, you the Tesla stock has been on a royal cost. It's like a very low performer this year, but it was like a clear out performer last year last year. And as you said, you know, it's following, it's following, you know, the political carrier, if I may say, of the sea in a Musk and like this has created
this situation. Now if you look at the stock, you know, since you know, like April first, what you see that what tends to really move the stock is actually the news flow around how the company is now focused on deploying fleets of robot taxes. They've just started that in a couple of weeks ago, like late late last months and I think that's going to be the primary driver
of the stock going forward. Of course, there is a lot of uncertainty on you know, how fast THETA is going to be able to deploy robotaxy or even make a profits, like generate the profits out of the robot taxi fleet. But the size of the price is so gigantic and so much more than the ATOL business that this is probably what drives the stock going forward.
Are thanks to Pierre Fair ahead of Global Technology Infrastructure at New Street Research with tech Oracle this past week said it had signed a single cloud deal worth thirty billion dollars in annual revenue. It's more than the current size of its entire cloud infrastructure business. For more on this deal and what this means for the computer software company, we turned to Anorak Rana, Bloomberg Intelligence technology analyst.
We think this is part of the Stargate contract. This is something that's going to flow from open aie, you know, the combination between soft Bank, Uticle and open AI. So if you remember there was a big deal, you know, just I think a day or two after the president took office, where Laddie Allison and you know got on TV and talked about it. I you know, we think this is a byproduct of that.
How is Oracle matching up with its competitors? I mean, I know it's gained traction for renting out computing power over the Internet, and of course it's been targeting a lot of its clients that are focused on AI there. But how does it look in comparison to peers?
Yeah, I think you know, it was really I go back a few years. It was, you know, to be honest, non existent about three years ago. So the revenue was you know, just a handful of billion dollars or so, compared to you know, somebody like an AWS which is now running at a rundred of over one hundred billion dollars. So, but this, if you look at it, in last year alone, oracles infrastructure as a service business, which is what we look as the proxy for their cloud infrastructure business, had
revenues of about ten billion dollars. So and then here comes a contract that in three years and you know, they will have thirty billion dollars annually from one just one customer. So you could see just the overall what's happening with AI? What is really need so much of computing power to run these models, and this is you know again they are going everywhere, but Oracle is you know, one of the bigger beneficiaries over here.
Rich go rich, the world's richest people. Larry Ellison of Oracle clocks in at number four, two hundred and twenty nine billion dollars, up thirty seven billion dollars year to date. The stock is up fifty two week high on a rockets at an all time high. What's the bookcase for Oracle? Here's just just another way to play cloud slash AI.
Yeah, so that's the bookcase. Definitely on that end, you could see their growth rates are going to pick up so much more than any of the other cloud providers, and partially because they're you know, the numbers are too small. As I said, They're only at about ten billion run rate or so in this case at this point. So that's one. But on the other side, you know, they will have to spend a lot on capex right now, so that capex number is going to go up. Margins
are going to most likely take a hit. But frankly speaking, in this market right now, it's all about market share gains and which of the companies can actually benefit from all these large language model training or inference basically, you know, they are you know, they're going everywhere. I mean look at for example, code WEEP their growth rate. The SAME's the case with Microsoft, Azure or EWS. I mean, everybody in this particular ecosystem is going to make lots of money.
We know, expectations remain high for a lot of these tech firms, especially as we think about the AI push. What do investors want to see right now? What's the next step for Oracle?
I think a lot of this would become to execution in this case, because you know, this is we are assuming flawless execution in terms of data centered expansion. But what if they are not able to get enough power in there out there? I mean, what if we get into a shortage in that area. So there's going to be a lot to you know, I would say ups and downs, not just for article, but everybody in the equation where maybe the project gets delayed some funding issues.
Right now, everything is fine when it comes to funding for these particular projects, but you know, those are the things that we would watch for. But other than that, I think the the you know, future is really bright for all the cloud providers because of the workloads that are coming.
In our thanks to anaag Rana Bloomberg Intelligence technology analysts. Closing out our tech segment is a story this week from Apple. The tech giant shocked investors when our Mark German announced that the company was considering using artificial intelligence technology from Anthropic or open AI to power a new version of Siri, potentially sidelining its own in house models. Man Deep Seeing, Bloomberg Intelligence senior tech oust breaks it down.
Yeah, I mean, if you remember at WWDC, all they showcase was that new liquid glass interface. There was no mention of AI, so it was pretty obvious that they
had nothing new to showcase from an LLM perspective. And look, given the astronomical rise of chat GPT and how it's taken the user and engagement share, I mean everyone is looking to use that kind of functionality on the apps that live within the Apple ecosystem, whether it's your email, your calendar, your contacts, like the photos that are stored on iCloud. You have to ask to yourself, why can't Apple will deploy AI in a similar fashion where I
can engage in a chatchipt type format. And so that's the use case here. Obviously, Apple's own LM efforts have gone nowhere because they have, frankly speaking, underinvested. I mean, look at their capex versus all the other hyperskillers. They're spending eighty billion dollars. Apple is spending ten billion dollars. So it's just not the same level of investment, and they underappreciated how transformational this generative AI LLLM wave is going to be. And now they are partnering with an
Entropic or open Ai. I think Entropic makes more sense to me because OpenAI has clearly said they have their own hardware ambitions, and to my mind, Entropic is an enterprise focused player. They have already partnered with Amazon and in this case they probably will partner with Apple as well.
As Paul mentioned the stock market, it wasn't disappointed in this snooze. The stock was up yesterday when Bloomberg's Markerman you know wrote the story, which I do think it came out he breaks yes, he does break everything. I think the story came after the close, but still the stock is hired today, so this is good. I mean, talk a little bit more about the partnerships, because if Anthropic is partnering with Amazon as well, Like, this isn't
really an exclusive deal that they're doing. Apple is just going to have the same AI as all the other times.
Yeah, but Apple controls the distribution across their iOS devices, and whether it's your tablet or your smartphone or macpcs, it's the Apple iOS ecosystem. So if Ententropics LLM is natively integrated, I mean, look at how much Microsoft has benefited from open AI's partnership. Microsoft doesn't have their own LLLM. The fact that they have risen so much is because of the open Ai partnership. So partnership isn't a bad thing for Apple, and in this case, clearly Entropic has
a very good LLM. On the tech side, maybe you could argue in terms of multi modality open Ai and Google are ahead, But for a text LLM, Entropics performance is comparable at part with the frontier models. And that's where it makes a ton of sense that they use Anthropic.
Thirty seconds, Can I think about this potent This announcement similar to Apple saying we're going to use Google for search.
Yeah, And part of the reason why there is no mention of Google here is because of that anti trust case that's pending. So clearly what Apple wants to signal is they don't want to do anything with Google right now, given that monopoly lawsuit and the twenty plus billion dollar of payment from Google to Apple, and right now they
are really diversifying their exposure to these LLM players. They could have very well used in LLLM, and I wouldn't be surprised down the line once this ad BODA cases resolved and if it's if it works out fine, they may end up using Google's LM as well. Apple's main goal here is to have as many LLLM partners and really not depend on just one, whether it's opening oranthropic. They want five players, and I think they would be willing to use anyone.
Our Thanks to Man Deep saying, Bloomberg Intelligence senior tech industry analyst coming up on the program A Trio Big Takes stories from this week you do not want to miss. You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies in one hundred and thirty industries. You can access Bloomberg Intelligence via Bigo on the terminal. I'm Paul Sweeney, and this is Bloomberg.
Now.
You're listening to Bloomberg Intelligence with Paul Sweeney on Bloomberg Radio.
We wrap up the show with a trio big takes stories from this past week worth highlighting. First up as a story on why the US Treasury keeps getting hacked. For more, Emily Grafe and I spoke to Jordan robertson Bloomberg News cybersecurity reporter.
So yeah, our Big Take, our Bloomberg Big Take investigation is about a series of really impactful cybersecurity attacks at the US Treasury Department. There was a major attack in twenty twenty, major attack in December, a major attack that was disclosed earlier this year, which news that was broken by our some of our Bloomberg colleagues. And the question we set out to answer was why does the US Treasury Department keep getting hacked? And why does it keep
getting hacked so badly? Every organization faces attempted hacking attacks. Many organizations experience successful hacking attacks. It's always about the depth though, of the intrusion. How far did the hackers get and what did they get where they wanted to go? And in each of these three attacks, the hackers got about as far deep into the organization as you could imagine, and what we set out to answer was how is
that happening? And one of the answers we came up with is that, you know, the Treasury Department is one agency, but with the cybersecurity, the cybersecurity of it is run effectively as a series of like a half dozen different countries. Almost these are subdivisions of the Treasury Department that have their own cybersecurity budget allocated by Congress, they have their own cybersecurity management, they have essentially of their own IT infrastructure.
And so what that means is some of these divisions have really good security. Some of these divisions don't have such good security. And you know, this is an organization that I think a lot of people focus on because of the financial aspect of what Treasury does. But it does so much more than that. Investigates sanctions, it investigates terrorists financing. It does so much more than just kind of collect tax revenue, you know, and issue treasury bonds.
What is the reporting show about who's actually committing these hacks and what exactly are the hacks on the Treasury.
So these are primarily nation state attack. So these are foreign governments attacking the US Treasury Department. Again, there are so many different types of cyber attacks that organizations face. A lot of them are very low level and kind of easily deflected. Increasingly nowadays we're seeing criminal groups, ransomware groups affecting, hijacking networks, and disrupting networks that way. That's not what we're talking about here with Treasury. We're talking
about espionage. We're talking about kind of large, long range cyber espionage where these are foreign government backed actors whose purpose is spying on data. So in the latest breach, the Office of the Comptroller of the Currency that's the regulator of America's national banks, had its email system hacked for almost two years. So for almost two years, a cyber attack group which hasn't been identified yet, you know, it was conducting very advanced cyber espionage on the emails
and the communications of America's national bank regulator. That's not supposed to happen. It led to this really extraordinary series of events where several of the biggest US banks JP, Morgan, bny ME and others severed there temporarily paused their electronic sharing of communicate of data with their regulator as a
result of this breach. That's really extraordinary to have a regulated entity tell their regulator your network is not safe enough for me to transmit data to That was the incident that really compelled us to take a deeper look at this and try to figure out what's going on at Treasury. And I might add as well, this is at a time that you know, Congress has allocated hundreds of millions of additional dollars to Treasury to enhance their cybersecurity,
and they've spent that money. They have done things, but they have still not been effective fully in preventing these attacks.
I noticing your reporting, Jordan, there's been a lot of I guess turnover or departures by cybersecurity people within the Treasury Department. Did that have any role in this?
Do?
We think that's right? So another interesting aspect of the reporting is that you know, Treasury senior most cybersecurity officials, from the Chief Technology Officer and the Chief Information Officer and all their deputies, there have been you know, more than a half dozen of these individuals who have left Treasury since the Trump administration took office. A lot of the attention with Elon Musk and the Doge group has been focused you know, understandably on the layoffs. This is
not a case of layoffs. This is primarily a case of buyouts. So when the Doge group, you know, has offered buyouts to large numbers of government employees, what's happened at Treasury is almost all of the senior most cybersecurity officials have taken the buyout. And what we've been told is that, in fact, some of those individuals may have even supported the Doge effort and the idea that you know, consolidating Treasury's IT infrastructure would help improve security. But all
of those folks are gone. So the cybersecurity leadership at Treasury is almost entirely gone, you know, at a time where it's facing kind of unprecedented levels of cyber attacks and successful cyber attacks.
Our thanks to Jordan robertson Bloomberg News cybersecurity reporter. The next Big Takes stories entitled Electronic Warfare Crashes Global Shipping's navigation systems. It highlights how the Iran Israel war exposed a critical flaw in the satellite based systems that makes the industry hauling eighty percent of global trade vulnerable the mass gymming. Jack Whittles is Bloomberg News Oil and Shipping reporter.
So we looked at shipping data around the Persian Gulf, so obviously relevant to the israel around war, but also the Red Sea, the Baltic and the Black Sea, and we basically saw a big spike in the number of strange signals from ships. And what I mean by strange signals from ships is ships showing that they are in impossible positions. So, for instance, we had a ship in the Persian Gulf saying that it was on the edge
of a camel racetrack. In the UAE, we had a ship jumping from off the coast of Saudi Arabia, which is on the western side of the Persian Gulf, all the way to Iran and then back again in one day, which is obviously impossible, especially as the j to Iran was on land in Iran.
Jack. Have we seen this type of signal interferences within any other sort of geopolitical crises.
We have seen it before, but the number when we've done our analysis, the number that we've done is massively increased for ships appearing on land. In June, there was a really huge spike for ships appearing on land in the areas that we looked at. So that was again the Red Sea, Black Sea, Baltic and push it off.
So Jack, is this just the standard performance of this satellite technology, i e. It's not great? Or is it in fact the subject of some type of electronic warfare maybe? Do we know?
Yeah? So's there's two ways that this equipment can be interfered with. There's what's called jamming, where the signals are essentially overwhelmed, and there's what's called spoofing, where ships are fed a false signal, so they're specifically told that there's somewhere that they're not. So went on to about these satellite navigation systems. They're using GPS, so you know, the
same sort of thing that's on your Google Maps. So it'd be like if the blue dot on your Google Maps that tells you where you are just suddenly told you that you were somewhere you weren't. So that's obviously quite a big problem when you consider that if you're in charge of an oil tanker and there are lots of oil tankers around you, and it can take you kilometers to stop, and you're not sure where all the other ships are. That can be a massive, massive problem.
I see in your story that alarm bells are also starting to ring in the insurance industry.
Yes, you know, it's a real big problem. If it wouldn't necessarily invalidate your insurance is my understanding. If you know your ship, you know, god forbid, had to crash as a result of jamming. But if the crew, if their navigation system was jammed and they didn't do anything about it, and then something happened, then I think that that could cause problems from an insurance point of view.
Thanks to Jack Those, Bloomberg News Oil and Shipping reporter, our final Big Takes story talks about America's hot garbage problem and how overheating landfills across the country are spewing toxic gases and geysers or trash juice. Yeah. Lar Bliss is an editor for Bloomberg Business Week.
Maybe I'll just start with a little bit of background about how I came across this story. I found some data on LinkedIn sometime last year that suggested fires at recycling facilities. We're skyrocketing, and we've probably all heard about this as we all throw bait pens and electric toothbrushes and even smartphones, you know, some of us into our recycling bins or trash cans, and that can cause real
problems because of the lithium batteries. And that really made me wonder what was happening in kind of the final resting place for so much of our trash, which are landfills. And it turns out a lot and as you mentioned, my colleague Rachel and I really took a deep dive into some of the problems that can arise as we pile up our waist higher and deeper burb and this landfill in Los Angeles County is called Chiquita Canyon, and since twenty twenty two, temperatures have been climbing to above
two hundred degrees in pockets of waste. That's like forty percent above the EPA safety standard. And this is a big problem because what that's doing is the trash breaks down deep below the surface at these really scorching temperatures. It's releasing toxic gases, it's releasing geysers of trash juice and these really noxious fumes, and it's making people sick in the nearby community.
And what I.
Discovered is that there's debate about what is actually going on and even kind of how to describe what I just shared with you, the kind of basic facts. Regulators in California suspect that the landfill is smoldering due to the operator letting too much oxygen in, and this is a problem that's known to start fires, which goes against
federal regulations. And the operator disputes that and says nothing is on fire and says that this is an example of a phenomenon the industry has seen a lot of in the last twenty years, these elevated temperature landfills.
Or a really interesting story, what when you were doing your reporting, what did you find out about what residents are doing to rectify this issue? Who's to blame in this situation?
Yeah, I mean, I think that is where a lot of the debate comes down. You know, the waste industry will say that, you know, these landfills that have overheated, in some cases, they've been tied to you know, specific reactive waste streams, right like aluminum dross, which is a byproduct of smelting, you know, twenty years later or years later reacting under the surface. You know, in other cases
like in Chikida Canyon. The regulators at the at the state are saying, no, this is or they suspect I should say that this is because of you know, the operator basically mismanaging the gas collection system and their landfill. And so this back and forth I think actually makes you know, accountability somewhat challenging. But I will say in California, you know, the state is is uh, you know, issuing violations uh, you know, on a regular basis to this operator.
But for residents, you know, they're really kind of stuck in their homes, you know, breathing in these these toxic fumes and and these noxious odors, and they feel like they can't sell their homes because of the financial barriers and and you know even ethical kind of questions about putting another family in the same situation, and so they feel kind of stuck and and at a loss for for kind of how to move forward.
Laura, who owns landfills across the US. Are these all privately owned?
Not all of them are, but but many are. The landfill I focused on in Los Angeles County is is owned and managed by Waste Connections. There's certainly other you know, large players in the industry Republic Services waste management, but some of the affected landfalls I looked at were municipally owned to Bristol Landfill in Virginia has been problematic in the last several years, a lot of the same kind of symptoms I've been describing affecting communities out there.
Our thanks to Laura Bliss, Bloomberg BusinessWeek editor, you can check out all of the Big Takes stories by going to Bloomberg dot com slash Big Take. That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries. And remember you can access Bloomberg Intelligence via Big on the terminal. I'm Paul Sweeney. Stay with us.
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