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Let's switch gears to the housing market. Lenar, one of the big home builders out there, reported some numbers. We're going to break that down and get a better sense of what's happening out there in the US housing market. To do that, we check with Drew Reddink. He covers all the housing stuff for Bloomberg Intelligence. He's safely asconced down there in Princeton, New Jersey. You forgot that there's a train into New York City from Princeton, but we'll
get to that later. Drew, talk to us about Leonar. What did you hear from our folks there.
Yeah, it was a pretty tough quarter for Lenar. Orders were actually pretty solid there of twelve percent from last year. But what management said is that they can see continued pressure in the house market and that they had increased their use of sales incentives to drive traffic and demand. Now for a little bit of context last quarter, and we'll wait to see how three Q ultimately shapes out. But last quarter, incentives represented thirteen percent of the average
selling price at home. By comparison, in a normal market that's about five to six percent, and some of the most important markets Florida, Texas, it's as high as seventeen to eighteen percent. So you could see, you know, just the extent of how much they're having incentivized to drive traffic through the doors, and we saw that ultimately play out in the results. Their average order price is down about twelve percent, and their guidance for next year, I excuse me for four Q was a little soft on
the orders and delivery side of the business. Now, if Lenard comes out and tells us that they intentionally pull are intentionally pulling back on deliveries because they think they could capture some margin upside, I think that could be well received. But at the same time, their four Q margin guide is still weaker than ex So they did say they have some optimism with rates coming down in the FED cutting rates, but we'll be listening on the call to see if that's actually materializing.
So, Drew, do you see this as isolated to Lenar or a broader theme here in the housing market. I mean, of course, we have luxury home builder Toll Brothers reporting about a month ago today.
Yeah, so Lenar is a little bit of a different animal within the public space. You have to remember, they're primarily focused on driving higher sales volumes, and what they've said consistently over the last couple of years is that they're willing to sacrifice gross margin to drive volumes. So when you see a weakness in demand for Lenar, you're going to see it show up primarily in their gross margin. That being said, the issues that they're facing are really
across the spectrum. I mean, no builder can get away from the fact that affordability continues to hover near the lowest levels of all time. I think that the recent pullback in rates will help a little bit, but in terms of it being you know, the silver bowl for the broader housing market and getting us back to normalized levels of demand, you know, I think I think there's other factors at play that prevent that from happening immediately.
So drew rates remain incredibly high, especially for the average home buyers. So what do you make of the fact that the S one to five home The index at tract home builders is up thirteen percent.
You're today, Yeah, great question.
And if you look at how the stocks have behaved really since mid June, they're up over thirty percent, and that was really the stocks moving in anticipation of rates coming down. In the FED cutting rates, you could also see that and how mortgage rates have responded. They moved up ahead of the rate cut, and if you look at where rates are today, actually they're up twenty five
basis points since the FED cut. It's kind of reminiscent of the last time they cut when rates, you know, rallied pretty low ahead of the rate cut and then after that actually came in, you saw rates move back higher. So I certainly think that, you know, builder stocks are always going to react to rates. The group right now is trading at about one point nine times book. There's an old rule of thumb in the industry that you buy the builders at one one times, you sell them
at two times. Certainly, there have been cases where they've traded outside those ranges over the last twenty years or so, but what has been pretty consistent is that once they get to that kind of two point two to and a quarter times book, there has been resistance from evaluation perspective, so it's something to keep an eye on.
Drew talk to us about the existing home market today. How's that is? Are people that are sitting on their homes? Are they any incentive to get out?
Yeah? Great question. I mean, the existing home market is still pretty much frozen. Volumes are twenty to twenty five percent below what would be considered normal, And you're right, the incentive just isn't there. You have, you know, fifty to seventy five percent of mortgages are below four and a half percent, So even as the headline rate comes down to six and a quarter, we're still talking about
a pretty big delta. When you layer on top of that that, you know, it's not just the rate they're trading in, but home prices are up fifty percent from twenty nineteen. So when you look at the total cost of ownership, factoring in property taxes and higher insurance costs, that monthly payment is significantly higher.
I mean, so, I mean, I'm going to speak for the normal lenders of the world, the Sebastians of the world. How are young people getting into the ownership these days? You get about thirty second Street to fix this problem for us.
Yeah, a great question, and afraid to kick. Can't be fixed that quick. But what we're actually seeing is a significant shift towards the rental market. If you look at household formations over the last quarter, household growth was exclusively driven by renner occupied units. So it has become increasingly challenging, and we see that the rental market has been the beneficiary.
I don't know, man, I mean, Sebastian Nora. I feel for you, guys. I don't know how the young folks today take forever are going to do it. If you're reading a home building analyst of Bloomberg Intelligence, thanks so much for joining us. He's down there in Prince of New Jersey again, Leonora fill the effects of kind of a little bit of a tougher market at their rates come down a little bit, but they're still, you know, higher than a lot of people want them to be.
And still these new homebuilders have to, you know, supply a lot of incentives just to get people into the homes. So we'll stay on top of that. Stay with us. More from Bloomberg Intelligence coming up after this.
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So obviously some big news out there in Hollywood. ABC pulling Jimmy Kimmel's show, I guess indefinitely. I'm not sure what that means over some content that some folks found objectionable. And this feature the chairman of the FCC, the Federal Communications Commission, which is responsible for licensing television stations across the country, mister Brendan Carr playing a pretty big role, getting the support also of President Trump. Let's see how
this plays out from a regultary perspective. Matthew Shechittenhelm, He's immediate litigation analyst for Bloomberg Intelligence. Matt talk to us about the role that the FCC and the chairman, mister Carr, are playing in what appears to be, I guess a free speech issue with the ABC television network.
Yeah, that's right, Paul Win.
When you saw Brendan Carr go on that podcast the other day, he was stressing the FCC's role as the regulator of the broadcast TV stations that are all across the country that have to get a license to carry their content, and the law says that they have to act in the public interest. And Brendan Carr has been taking a very aggressive approach to the meaning of what is in the public interest. We have a long history under that provision of the law goes back.
To Nixon, the Reagan era.
Historically, the FCC used to look at whether broadcasters were being fair or not and whether they were being balanced.
They've largely gotten out of that business. Brendan Carr seems to be reinvigorating the push to get into broadcast content decisions that you know, and and so this was a threat to Disney that this is this is potentially a distortion of the news by broadcasting these comments on on on Jimmy Kimmel's show that sort of triggered action first from smaller companies Next Star and Sinclair, and then Disney followed along.
So, I know you mentioned that the FCC likely couldn't have found a news distortion violation by Disney or any of the other broadcasters based specifically on Kimmel's comments. Do you mind expanding a bit there?
Yeah, so I'm really skeptical that that would have gone anywhere. That the FCC's news distortion rule is extremely narrow. First of all, it applies to news. Uh, there's there's a direct FCC decision that says, look, we're not going to apply this to an entertainment program. And then even with respect to news, it's very limited to the FCC needs to see evidence that management of the station knew what
it was saying was false and ran the story anyway. Otherwise, the FCC has said, look, we need to get out of the way of editorial decisions, leave breathing room for news to do their job. That's historically been the approach, and Brendan Carr is working against that precedent. What this was really about, though, is these companies need to stay in the good graces of the FCC. It's not so much the threat that the FCC is going to win
on a case like this. These companies need the FCC to finish a couple rulemakings that are deregulating the whole sector, and so if the FCC asked them to do something, they have a strong incentive to do it because they want other actions from this FCC that will help their business.
Does that partially explain to some degree the actions from Next Star, which is one of the largest owners of TV stations in the country, and they have a pending acquisition of Tegna, which is a TV broadcasting company that's in front of the FCC.
Right now, that's exactly right.
And so that's a six billion dollar deal, and it depends on the FCC easing a rule.
Right now, there's an.
FCC rule on the book that says you can only reach about thirty nine percent of US households. This deal would reach seventy percent or eighty percent of US households. They need the FCC not only to approve the deal, but to scrap that rule first.
If they don't do that, the deal's going nowhere.
And so when Brendan Carr goes on this podcast and says local stations, would you please do this? You saw an almost immediate response from Next Star and Sinclair, followed by a thank you from Brendan Carr.
I mean, what's the likelihood of this deal being approved? I mean, of course that would be massive to have that amount of way ownership there.
Yeah, all signals are that this deregulation will move ahead at the FCC. This has been a priority for Republicans in FCC circles for a long time, and I think it will advance. There is a very difficult legal question looming as to whether the FCC can change that thirty nine percent cap. There's a strong argument on the other side that Congress must do it, and I think we're going to have a tough court fight on exactly that issue.
I think the FCC probably can win that fight, but it might depend on what court ends up hearing it, what set of three judges ends up hearing it first.
All right, Matt, thanks so much for joining us. Appreciate it as always. Matt Chuttenholm, he's media litigation analyst. He's kind of really the litigation and the regulatory guye that we chat with when it comes to all things related to the media and the regulation of the media. And clearly this is a big issue for the ABC Television network, for Walt Disney in general, and of course other parties involved there, whether it be next to our Sinclaarence, some others.
So we'll keep an eye on that, but it's certainly a big news, a big piece of news in the TV business. Stay with us. More from Bloomberg Intelligence coming up after this.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarclay, and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
All my personal take on energy and where we get energy going forward is I think we're just gonna need pretty much everything. If fossil fuels, guess oil and gas, the renewable stuff, the water, the wind, whatever, I think we're gonna need at all, and that includes nuclear as well. And I've been really fascinated by some of the new technologies in the nuclear I don't think we're talking about building a new three mile island or anything. But James Walker.
He's the CEO and board member of a company called Nano Nuclear Energy. It is a publica traded company on Nasdaq. NNE is the ticker. He'sat there in Salt Lake Sea, the Utah, which I've been to a million times, but quite frankly, I just go to the airport and then I hop in a car and drive up to one.
Of the ski resorts.
That's my asied that's ideal assault. Like, James, thanks so much for joining us here. Talk to us about your company and kind of this whole technology around micro reactors. Talk to us of what that technology is and is it a thing.
Sure, it's it's definitely a thing. It's it should be the next big thing because there's a there's a big sort of energy bottleneck coming in the country. There's huge energy demands reindustrialization, electrification, but also significant demands from the
tech industry. They need gigawatts and gigawats of power and they need that a lot of the time to be off grid, to be co located with them and need to be output power consistently over decades, and like that's put them in bed with nuclear and that's it's kind of why there's this hot space at the moment in the nuclear industry and you're seeing so much investment go
into it. The new the US is trying to build back nuclear infrastructure as fast as it can just to enable this sort of massive scale up of new clear power. So our company is obviously involved in that. We make advanced reactor systems. They're lots smaller than the conventional ones. But the idea here is that you can. You can maduce these things and sort of roll them out like products and deploy them and assemble them and output power anywhere.
Meta, Amazon, Google, Microsoft, all these big names seem to be going nuclear. And in your own words, it seems as though we're in the middle of a nuclear renaissance. What do you make of this, in particular in regards to the tech sector.
Well, I would say this is a pretty unprecedented time. Like previously with nuclear, everyone always thought of renaissance was coming with it because theoretically it should be the cheapest and easiest form of power in the world, but it never really came. But what's happened now is that it's say, for instance, if you're a big data center, if you are the Googles or the Microsoft's of the world, you
need you need a lot of power. But even if you were to have all the gas and coal that you needed or with anything like that, you would still need to massively upgrade the national grid to a point where it could begin outputting the power that you require, and the infrastructure of costs that will be involved upgrading the grid might be five trillion dollars something like that. So they're not in the business of doing that, but they need the power. So with a with nuclear you
don't need to be on the grid. You could be off grid and you could just build a reactor wherever you want and use a micro grid and then outlay the power through that system to a data center or an AI center, anything like that. So the tech industry has sort of settled on this as the solution, the long term solution. And then in the interim, you know, they'll yield do anything. It'll be geothermal, they'll use gas'll they'll use wind and solar as much as they can.
But like in their long term strategy, they realize that for what they actually need, the large scale of it, nuclear is gonna have to be a major component, if not the largest, component of that solution.
All right, your company, Nano nuclear Energy, it's got a market cap of one point eight billion. Stock is up three hundred percent of the trailing twelve months. It's up seventy three percent year to dat, it's up thirteen percent today. I think you sold some technology to somebody. I go to your P and L. You don't have a nickel of revenue. What is going on with your stock? Explain to me what the investment theme is out there in the marketplace for your company.
It's it's the same with every advanced reactor company at the moment, they're all in the same boat. We're all building things. But the reason why Nano has particular interest is that we have construction projects already scheduled. We have a big project. They've been building the first the US's first microrector at the University of Illinois, and we actually should be building Canada's first microrector at the same time
up at Chalk River on Canadian Nuclear Laboratory land. So there's huge interest in what we're doing, and so we're getting an enormous amount of support. And what the institutional investment is doing now is that they're hedging their bets. They know that nuclear is going to take off, and
now they're beginning to bet on companies. And there's already a sort of a convergence of you know, in a hot sector, you'll have twenty companies come out of the woodwork, but already they're sort of being squeezed down to a handful of leading companies and we're one of them. And that's why you're seeing like this huge market interest in US because it's it's positioning. Everyone's positioning themselves for essentially the future.
Well, we definitely touched on your stock performance. Here, tell me what sets you apart from your competitors though.
So, I mean, we've kept things very simple. We know that the technology we're utilizing is going to work. High temperature gas reactors have been used for decades. All we're doing is scaling them down. But on top of that, we're actually utilizing a special form of fuel which eliminates the necessity the necessity to have all these redundant safety systems you can co locate with. If it was a data center in AI, you could be pressed right up against them. You could even be sited in the middle
of a population center. There's no risk to anybody around you because the reactor has no chance of having a meltdown, and conventional civil nuclear power plant can. So it's a very different kind of tech and so and already more novel techs I think having a bit of a struggle, whereas, for instance, high temperature gas reactors that utilize try so that seems to be almost the most popular model amongst
developers at the moment. And so we've got that, but our key One of our better strategies is that we've made a reactor as big as you can possibly make it and still move all the components by road, and that means we will be able to have factory level processes that just continuously manufacture these things. We can ship everything by road, assemble it there, and then we don't need to have big construction as big construction projects at
the site itself with individual licensing processes. So we're simplifying things as much as we possibly can. That's why we've proven to be pretty popular.
I'm just looking at kind of what's moving your stock here. I know that you guys recently signed a letter of intent for the proposed sale of its odin low pressure currant micro designed to Cambridge adam Or, a UK based company talked to us about that deal.
So that we were streamlining the company. We have a reactor called the Kronos reactor. That's our that's our flagship product. That's the one we'll be building at University of Illinois and at Chalk River in Canada. And the other reactors that we were developing, like the low Key reactor and the Zeus reactor, they were also high temperature gas reactors.
So the Odium reactor, it's a fantastic system, but we we let the team, the technical team take that on to develop themselves so we can concentrate fully on that Kronos reactor, so that that streamlining of the organization is obviously very important. We're scaling up very quickly, but we're going to need, you know, ninety five percent of our technical personnel working on this Kronos reactor. And when you're focused like that and building, you know, it does have a positive market influence.
All right. James A is a former investment banker. I would say take advantage of the stock price and sell some stock, but I see you have been selling stock periodically, so good for you. Good source of capital here. James Walker, CEO on board matter of a Nano Nuclear Energy. It
is a puply traded company NNE. I'm kind of one of those folks to say, I think nuclear has got to be part of the energy solution because all I hear from these data centers, there are gonna be tons and tons of energy going forward, and I guess nuclear is going to be a part of that to some extent.
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