Markets May Be Undervaluing Potential Benefit To DISH (Podcast)

So we finally got the Department of Justice approving T Mobile's acquisition of Sprint, clearing one of the biggest hurdles left to get this deal done. This deal is announced more than a year ago, Folks, to help us break it down, what the d o J actually said, today's Nabila Ahmed. She is a deal's reporter for Bloomberg News. She joins us in our Bloomberg Interactive Broker studio. So, uh, Nabila, what will? What is this d o J approval? What

does it really look like? D i J is requiring Sprint in T Mobile to divest Sprints um prepaid businesses. So this includes Boost Mobile, Virgin Mobile and Sprints are in prepaid brand to dish and also give them some spectrum assets. And on top of that, they have to make available to Dish at least twenty thousand cell sites and hundreds of retail locations so that Dish can actually,

you know, do its business with consumers. So far, the market response has indicated that people are underwhelmed by dishes involvement here and think that this is a wholesale win for T Mobile, Sprint as well as Verizon and a T and T. Is that what people are saying who you speak to as well in the Billa listen the question. I mean, it can't both be a win for Sprint

and T Mobile and for Dish, can it? I mean? So, yeah, you can argue that Dish, you know, through this deal will be set up to become a really strong force carrier, but it's going to take a really long time. So you've got Sprint and T Mobile being strengthened here, but Dish is going to be a distant fourth I think, and you know, making del Rahim today just said that the remedies set up Dish as a disruptive force in wireless. I don't know about that. I want to bring a

te equal Asian. Uh. Jennifer Reid. Jennifer is a senior litigation annalys from Bloomberg Intelligence. She also joins us here in our Bloomberg Interactive Broker Studio. So, Jen, from your anti trust perspective, UH, is there anything unusual in what came out of the d o J today? You know, I don't think that there's anything unusual. But the one thing I do want to push back on because I've I've heard from many that this is really not going to create a fourth competitor, and you know, what is

the d o J thinking? But I will have to say that the d o J knows how much opposition there's been to this deal and how much opposition there may be to this settlement, and they're really still coming

off that loss. You know, from a T and T time, Warner and I do think that they're going to be very careful about what they do here, and they vet these divestiture packages very carefully, and I have to think they went through it with a fine tooth comb and at least are convinced that this will do the trick. But but in terms of being unusual or unique, I think the time it took was unusual. How much came out to the public was unusual, and even the announcement

today was a bit unusual. I'm surprised to hear you say this. Do do you think that markets are sort of under estimating how good this deal could potentially be for Dish. Well, it's possible, that's one thing, But it could also be that they still have a challenge the companies with the state lawsuit. So this isn't over because they still have a challenge. They still have to go to court, and they either have to win in court or they have to ultimately settle with the States in

order to get this deal closed. The other thing is that Dish has been trading for a long time on the expectation that they sell their spectrum assets and make a ton of money out of that. This deal means that Dish will not that's not what's going to be happening, because they still will mean that Dish actually can't sell control of those assets to anybody for three years. So that may be another reason why you're seeing Dish kind

of share price performance being underwhelming today. So Nobilla, what's the sense on timing when the sink can actually close? Well, I guess they could close now, even though the lawsuit from the State Ages is pending. They can technically do that, but my understanding is that the companies are actually going to be looking to settle with the State ages, these twelve states and the District of Columbia, and you know the court date is coming up in early October, but

they're going to try to settle before that. I love how Paul asks the question, you know, when are they going to finally settle this? When can we stop talking about that there's there's there's there exactly? I should just mention just shares are up two and a half percent, so people do see some potential upside here, much bigger gains though so far year to data on both Team

Mobile and Sprint, I do have to wonder. Tara La Chappella, Bloomberg Opinion earlier today was asking the question, really wisely, why are anti trust regulators not more focused on the wireless carriers in the same way that they are big tech? Jen Well, I think the issue is that when they

open these investigations, they're usually based on complaints. This is what triggers it and true antitrust complaints, not not complaints that I just don't like this company, but this company is doing things that thwart me as a new competitor or in increase consumer prices. And when those complaints come in, this is what leads to an investigation, and usually it will be an investigation of a company that's dominant, dominant

within a market. And if you look at wireless, while we call it a concentrated market and we have big carriers, you can't really say any one of them is necessarily dominant. No, but you could say that the fight between T Mobile and Sprint lowered costs for consumers materially well absolutely, and then eliminating that fight will end up increasing costs for everyone, which is a reason why people think that A T and T and Verizon are going to be such big

winners from this high up. So, I mean, Nobilla, come in here. I mean, what's the what's the counter argument? What's the counter argument that you know, America is going to be leading in five G, this is going to be good for consumers, that's the counter argument. You know. This is what Makin del Rahim wanted to do with the settlement is to be able to say this is

actually going to be good for consumers. And if you had Sprint was left behind, as we know, Lasa's friends got a lot of its own issue is and and you know it may have gone broke or would have needed to have been taken over by somebody else. They would have needed a partner at the very least. Um, So this is a way of ensuring that you have a stronger third carrier as well as an emerging fourth carrier. It's been such a long time to Bill, if I forget the original terms of the deal, but is massa

Herosan and soft Bank? Are they exiting completely their investment? They're not. They're not clemented the company. They are going to be still in the new company, but Derscha Telecom will be the controlling shareholder. And the terms, just to remind everyone, so it's twenty six and a half billion dollars is the overall headline value. And actually they're saying that even though they're making these divestitures, um, they're planned,

forty three billion dollars of synergies will still stand. And I was going to say, at least of the argument that you just made that you asked no Bill about is exactly what the state's argument is in court. And the answer is going to be that the remedy is not going to allow the other three wireless carriers to raise prices. That that's going to constrain their ability to raise prices. So that's exactly what the fight is going

to be going forward. And the one last thing I should say is that you know, we are still waiting for formal left c C clearance here, so the companies technically can't close until they get that, and that might not be until September. When that happens, the States may have to go to court to seek an emergency order to keep the companies from closing. This is so interesting

to me. I mean, yes, we've been talking about this deal forever, but it involves so much, and it involves, you know, so many different players, and I'm just wondering, Jen, what's the next step with some of these state lawsuits. I mean, we we've heard that they're probably going to settle. Is that your sense as well? Right now? I don't

see it that way. I think the states are really dug in now at the companies are going to go in there and try hard to settle, and the states have more flexibility than the Department of Justice does in terms of what they can accept. They can even accept something like money just put into a fund or promises to build out even for G in certain rural areas. So I think that the companies will be trying very hard to do that. The next step right now is

in August first meeting to hammer out the schedule. There was in October seventh trial date that was agreed upon, but it was contingent on T Mobile and Sprint getting this deal. The terms of the deal done July twelfth. Then that didn't happen, so Nobila legic real quickly. T Mobile, what are they going to do with these Sprint assets? Is there costs are taken out as a revenue, synergies.

What's the upside here? Yeah, I mean they've got these forty three billion dollars of synergies which will be out of operational costs. And really what they're getting is really good quality midvance spectrum. Sprint has a lot of that, and that you know, this is what they're going to use to build out their five G network. Nabilla Ahmed,

thank you so much for being with us. Jennifer Reeh Bloomberg Intelligence uh and Nabilla of Bloomberg News, thank you both for being here and passing through the d o J approval. It is official. UH, it is official that they have approved the tie up between Sprint and T Mobile. Right now, we want to turn our attention to UH to the Intel. Intel shows rose today after reporting second quarter earnings that beat expectations, that gave an upbeat forecast

for chip sales, sort of an indo key indicator. We're very excited that we're about to hear from the CEO himself about what the outlook might be. There's been a lot of question recently about the outlook given China slowdown, given global economy. UH. So we're going to turn our attention over to Intel CEO Robert Swan talking with Bloomberg anchors Vonnie Quinn and Guy Johnson. You're listening to Bloomberg Markets with Lisa Ramowitz and Paul Sweeney on Bloomberg Radio.

If you speak with any chief executive or chief financial officer of a big company, the buzzword today is artificial intelligence. How do you use it? How can we best get ahead of our competitors by understanding our business and deploying it UH in a way that makes our our employment more efficient. Joining us now as someone who knows a lot about it. Don White, chief executive officer and founder

of Satisfied Labs in New York. So don before we get into sort of the big conundrum of where artificial intelligence can be deployed right now out and in the future, just give us a sense of what Satisfied Labs is. Satisfy Labs is an AI knowledge management platform that means we take information data and convert it into a way that machines can understand. Big buzzword around AI is that machines can learn well. For them to learn these we taught in specific format as specific verbiage. So what are

some of the early investors? Like? Who are you doing business with right now? Our last round was led by Major League Baseball. We've also worked with the Broadway Community, a company called Broadway I which is a consortium of producers and theater owners. And then red Light Management, which is the largest independent music agency, has also bought in for the entertainment and music festival business. So what do you do for Major League Baseball? If I go to

city Field for example see field. The company started out of the city Field. We were looking at a menu and there was a question one of my co founders asked, hey, you know they have bacon on a stick here, and he said, hey, how could we find bacon on a six? So we started promoting that idea and fans asked where can I get baking on a stick? And the whole idea kind of flew from that. That is a unique story about how an AI UH data management company to find bacon bake it on a stick. That's how I

guess that. My question is when we talk about AI, it can be deployed in a whole host of different ways across a whole host of different industries. Just to give people a sense of what we're talking about, is is basically being to call somebody, call a company up and have a robot speak to you in a in a sufficient way? Is it? Uh? The concept of predicting a fans behavior? I mean, what what exactly are you trying to cater to? In the AI sort of umbrella.

The future format is messaging. Messaging will be both chat and voice. It's really about collecting all the exact answers to questions so that you're not going through some tree, but getting exactly what you need based on your query. So all the technology companies right now are focused on getting their information in a format or a way that now when you do go onto chat, you can get exactly what you need right away. How predictable are we do? We just ask the same questions over and over again,

us humans. We have reviewed nine million questions in just stadiums and about are very similar. But what you'll find is I have sixty five different ways to ask where the bathroom is? And it's really interesting to see how people approach that very common question with their own little skew. We're really boring essentially, what the nuts involved in this are. So what's your relationship with Apple? So we are a developer,

we support the platform. So Apple business Chat has enabled our technology to be put through in l a f C and some of the other stadiums. So l a f C is Los Angeles Football Club. Okay, that's soccer. That is soccer. Just look at me. So if you go to the game tonight, you'll be able to leverage Apple business Chat to get a beer at a Express locations. You can order your beer, pay for it through Apple Pay on your Apple iPhone or or iPad, and then go walk up and get it right away and go

back to your seat. So which industries have most effectively used AI already? So m AI is heavy in retail, it's now becoming much larger in sports and entertainment, tourism. You'll start to see the transportation companies pick up on it. Pharma obviously is another good opportunity to health the health area, and I think just the whole food and beverage industry. Like, we're working with some large brands both on the beverage side that are interested in how this data could change

the way they predict products. What are people looking for versus what are people getting is a huge area AI can step in well. And I think that this is actually super important because people think about it from a messaging standpoint and from you calling someone up and not knowing whether you're dealing with a human or a robot. But what I when I've talked to CFOs in particular before, what they say is we want to understand what to create next and basically how to telegraph demands sort of

the way Netflix does right with shows. It's fascinating to people. Yeah, which, so what are the some of the other applications here, So I kind of get the stadium thing. What are some of the retail applications of this. So retail is simple as navigating a store, like you walk into a store, and if you do talk to a person and get guided to a location or a product, the store brand

never knows you wanted that product. So this fulfills a demand curve, which is like what you just said is if you could provide a digital messaging way to get what people want instead of talking necessarily to a person and looking for the staff, you now know what people are looking for and how you can better stock and provide product. I I love what this tells us about humans. What have you learned about humans as you try to recreate and teach computers about them? You know, there's a

concept in search called the long tail. It means that we all assume that sevent of things were common, but once you try to conquer that last, all of our interests do become quite unique and personalized. So I've learned is that we think very broadly about customers. But this personal personalization move will require AI to really get to what your needs are and my needs are and sell to me what I can consume. Who do you compete against?

I mean, there's other companies out in the market. I won't give them any airtime, right because that's not something that I would do. But there are companies trying to solve the same problem. But we are very dominant in our industry because of our investor group and the people that we've worked with. Got it, Donnie White, thanks so much for joining us Donnie as a CEO and founder of Satisfy Labs based here in New York City. See another example of some cool tech in New York City.

It's not all Silicon Valley. I look at that way to plug, plug plug the house they're trying to sell exactly, will say, I will say, I do find it really interesting that we learn more about ourselves as we try to teach computers about us sometimes than we would otherwise.

And uh and I kind of like that. I kind of like the beer application, you know, because the worse stadium you go into a baseball game, as you get there and there's a line of thirty people and you miss an inning and a half and it's just not worth It's I mean, bacon on a stick, bacon all of one to know all this time, Bacon on a stick. This is Bloomberg Markets with Lisa Brahmo Eds and Paul

Sweeney on Bloomberg Radio. Bloomberg Markets is brought to you by Commonwealth Financial Network, home to the industry's most satisfied advisers. Learn more about the firm that's been putting independent advisors and their clients first since nineteen nine visit Commonwealth dot com. Well, we have the SMP five so far this year. The FED certainly remains dubbish. The economy is slowing, but as we saw today, is still posting solid growth. So the question is what's next. To help us answer that, we

welcome Scott Wren. Scott is a senior global equity strategist for Wells Fargo Investment Management based in St. Louis. Scott, thanks so much for joining us. Just want to start our start off first by getting your sense of kind of what you took away from the g d P numbers this morning. Well and Paul, First, I want to say before we get sorry, I want to pass along my condolences to Tom Keene and his family on the loss of his father. So always tough to lose a parent,

so I's wanted to say that. Um, but on the GDP number this morning, you know a little bit better than expected modest growth, and I think really for us that's going to be the story for this year. I mean, you know, we have an official number out there of two point three percent. I think that's about right for GDP for the year. So, uh, two point one, you know, two point three anywhere in there. Uh not the end

of the world by any stretch. And I think that's growth that that the stock market would would certainly find acceptable. How long can the consumer continue to be strong if business spending doesn't pick up speed here? Yeah, at least I tell you that the consumption number inside of that GDP number was pretty strong. But I think that uh, you know, typically when you're when you're later in the cycle, and and and you know, we're certainly in the last third of this cycle, at least we believe we are.

You know, the baton would be hung would be handed from the consumer to businesses who would and do capex spending, and that obviously hasn't happened. But you know, we we think that we are going to get some kind of trade deal. We need some better business confidence that would help UM in terms of capex is really capex spending here in the States. UM is seeing some headwinds, but

also globally with a lot of these trade uncertainties. So you know, for us, I think we can chug along for at these modest rates of growth without a lot of capex spending. But it would certainly improve and broaden the economy if we could see uh, someone other than the consumer carrying the ball down the field. So, Scott, how do you think these GDP numbers will influence the Fed as it meets next week? Well, you know, first let me say that really in our opinion, we don't

think the Fed needs to do anything. I mean, you know, we we we're a good level of unemployment obviously, of inflation is modest although a little bit below the target.

But you know we're looking for a quarter point and you know this this next week, you know, between some potential positive or negative comments coming out of these trade negotiations with with Minutian and Lightheiser in Shanghai and then the Wednesday announcement from the Fed, where you know, you could make a rational argument that they should do nothing, uh the quarter point we're expecting, or you can make an argument for the shot and awe of a fifty

basis point cut. So, um, the Fed's probably going to kind of you know, keep you know, keep it right down the middle to a basis point cut, talk a little bit about inflation and a little bit about um some risk to global growth. But you know, from our perspective, you know, are are you really going to get much bang for your buck? You do now? Maybe do in September. You know, it seems like you're not going to get

much bang for your buck. And if that's what the FED is trying to do with a rate cut, Umm, not quite sure points is going to do it well. Regardless of whether or not it will work, it does seem like the markets are pricing in a basis point right cut next week, in addition to possibly two more later in the year. And I'm wondering what this means for global equities, but particularly US equities. You have them

close to all time highs yet again today. Do you think that this is supportive, especially with that strong consumer Well, I do think it's supportive. And and you know, for US stocks are not far from what we would consider their their at are very close to what we would consider fair value. You know, you look out over the next twelve months, you know, maybe you can get you know,

six percent high or something like that. But I think the most important thing, Lisa is that you have reassurance from the FED that, should this global growth deteriorate, which it seems like, you know, certainly the risk is to the downside, that the FED is ready to step in. I think that's what the market really wanted to hear. Um Um. You know, we think there'll be two cuts

this year. He seems three seems excessive. But uh um, I think it's safe to say that not only is the US Federal Reserve, um uh, have the economy and the markets back, so to speak. But you know, let's face a little literally every major central bank on the planet is either easing or trying to figure out how to ease. I was a little surprised that the CB

didn't actually do something yesterday. I thought, you know, I mean, it's like, come on, you know, Germany's p m I s down at forty three and change, and you're talking about doing something in September. You know, I just, uh, I don't really get the e c B. I mean, I think we need to need to act, but in any case, these central banks are in an easing mode that's going to be at least positive for the market

and not a negative. So Scott, given where we are in this economic cycle ten plus years into it, what sectors do you suggest investors take a look at you Well, i'd tell you know, we've in in recent months, we've taken a little bit of money off the table. We've backed off of stocks in general. But what we're still where we still have a good lean on is sectors and we're we we think this expansion is going to continue.

We continue to like technology, consumer discretionary industrials. We do like financials, which has been you know, certainly certainly dicey on a year today basis, they've trailed not by a lot, but by by a bit um. So we want to be in those sectors that are going to benefit from a continuation of this expansion. We think that's still the way to go. We don't want our clients getting defensive here and loading up on staples and utilities and and

and things like that. So that's the way we're leaning. Um. I think that's where you're going to see the best earnings earnings growth happen, not just in this reporting quarter we're seeing, but as we look ahead over the next twelve months or so. Just real quick, why should investors just do sixty portfolio? Put it there, keep it there, not think about it again. Well, you know, I tell

you one thing. Least, if you do that and you've had this gigantic running here, at the very least you need to look at doing some rebalancing to get back to that. Because if you've had that split and you started that seven years ago or something like that, you're going to be way out of whack. And there's a lot to be said. Most of our clients and most retail investors, that's the foundation of your portio portfolio, whether

it's sixty or whatever it is. And then you've got some portion of that portfolio you try to be a little lighter on your feet on and be in the right sectors and that in the right sectors out of the sectors that are going to underperform. So um, the foundation your portfolio should be in it for the long haul. You can trim it and work around the edges, but you know, mostly the stock market you need to have the bulk of your assets dedicated. Scott Wren, thank you

so much for being with us. Scott Wren, Senior Global Equity strategist at Wells Fargo Investment Institute, which overseas nearly two trillion dollars. Interesting to think about that, Paul, And it's actually a really important point, which is that stocks have outperformed so dramatically that you have to then reallocate some of that back to bonds or reallocate some of the money that you've gotten cast off from dividends UH

into stocks. So where are you going to go? But right now it looks like it's pretty good backdrop with central banks saying we got your back, and the consumer still going strong. This is Bloomberg. So we got that second quarter GDP print this morning. It was better than people expected, still still signified a slowdown in the US economy. The key question, though, for many people is what will this mean for the Federal Reserve? Is this a good

sign or a bad sign for the US economy? Here to tell us the answer to that, Carbor Kadona, chief US economist for Bloomberg Economics. Here in our eleven three oh studios, Carl, there was good news and there was bad news. The good news was the consumer. The bad news was business expenditures. UH and a number of other data points what's your main takeaway from this report? Well, I'm gonna stick with the theme of the O or here,

which seems to be caffeine and coffee. So, uh right, let's just talk about coffee the segue there, no, no, no no, not novel kind of coffee. I like free coffee. But the theme here is that the caffe nation of consumers and consumers spending really drove the show in Q two, and this is really providing a template for what growth is going to look like over the next several quarters. So you want to see the Q three and the

Q four GDP reports in advance. Just take a look at what you saw today in the Q two numbers. Business investment has been rattled by slowing global growth, trade tensions with China in particular. These things are not going away anytime soon. Nor is the low level of the unemployment rate and the tailwind that that's providing to household income generation. Uh. And so consumer spending is going to

what not go away anytime soon? Not either. And so really this modestly above trend pace of we're all economic growth driven by consumers, uh, is you know, the the new normal for the economy for the foreseeable future. So, Carl, you mentioned trade as being an impact. We have some tweets from Larry Cudlow the National Economic Council UH today just coming across saying the U. S And China not expected to reach a grand deal next week. That's according

to Mr Cudlow. How important is getting something done on trade or not to these GDP numbers that we're seeing. Well, absolutely we see a significant distortion. We saw it in UH in the back half of last year. We saw it in the Q one number. So when the trade gap narrowed dramatically in inventory levels increased, all of that was due to trade saber rattling because producers are trying to pad their supply chains and rush materials in before

tariffs go into effect. And UH they're afraid to make capital outlays as they don't know what the next twists and turns in the trade war will actually be. So we're certainly see an impact in the economic data, especially business investment UH. And will that go away anytime soon? I'm very much in the cut Low camp here that I don't see any grand compromise coming down the pike, probably not until at least after the election. So we may see a little deals on Huawei or soybean or

agricultural purchases and whatnot. We're not going to see a grand compromise because that's I think an important pillar of President Trump's reelection campaign. So the big question w W T F D what would the FED do? Right? I mean, the question is here. I'm I'm trying to figure out, you know, what does this all mean for the expected three rate cuts that are gonna get this year. Well, this means that next week's basis point cut is largely

appropriate for the Fed. I think that they'll follow through with another rape cut, probably at the December meeting, maybe October. I don't think the FED wants to go back to back with basis points July basis points in September. Then you start to create a feeding frenzy in the marketplace, where the market is going to then drag the FED into a more pronounced easing cycle than the FED really wants to invasion. But but here's my question. I mean, does this GDP report move the needle in any way,

shape or form. Even though it gives a FED confidence that consumers are looking good, it also reinforces their concerns about a weak business investment climate, which is which is almost I mean, I don't want to say entirely due to trade, but significantly due to trade. It's trade, it's slowing global growth, and it's a strong dollar, which is part of the reason why the FED needs to ease.

If central banks around the global are easing, which we saw hints it that is coming soon from the e c B, We've already seen it from Australia, New Zealand, South Africa, a slew of emerging market central banks, Turkey the earlier this week. If everyone else is easy and the FED is not, you're going to have a very strong trade weighted dollar, which is a de facto tightening

of monetary conditions in the US economy. So the FED needs to do a little bit of easy just to avoid the dollar blowing through the roof and really toppling both the export sector and a lot of domestic industry which is sensitive to currency strengths as well. Carra Kadonna,

thank you so much for the perspective. Carra Kadona, chief US economist for Bloomberg Economics, UH talking about that GDP report, US growth slowing to two point one percent, still ahead of the expected one point eight percent in the quarter in a year in annual terms. We do want to just bring you those headlines that we had earlier about US China not expected to reach some sort of grand deal nets the week. This according to Larry Cutlow speaking

on CNBC. He also said that the White House has ruled out any current the intervention, shooting down some speculation that President Trump may intervene to weaken the dollar further. This is Bloomberg. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. It's one before the podcast.

You can always catch us worldwide on Bloomberg Radio.