Tiger Woods Is Once Again Golf's Biggest Star (Podcast)

entirely flatt ast Nike. Nike shares up about a quarter of a percentage point after Tiger Woods one yet again, although after more than ten years of a hiatus of winning a major golf tournament. Joining us now to talk about how this is wonderful news for his sponsors is Evan Novihi Williams joining us here in our Bloomberg Interactive Broker's Studios. So Evan, first, let's just talk about the number of sponsors who stuck with Tiger Woods through an

incredibly tumultuous period. Who stuck with him? Who dropped away? Yeah, it's not a long list of companies, right, Nike is one of them, um and Upper Deck the st is the other one. So those are the only two that

stuck with him. You have a long list of companies like A Center, A, T and T, Gillette, Gatorade, companies, Tag Hoyer that either dropped him or you know, refused to renew him when their sponsorship came up, right, So, so it's been ten long years for Tiger Woods and the company's backing him are a bit different, you know. So so Nike upper Deck are still there, Bridge Stone makes the balls he uses, Tailor Made makes the clubs he uses. Monster Energy is the logo on the bag

for people who watched over the weekend. So it's a it's a kind of a whole different stable of of endorsers outside of Nike, you know, which has been the mainstay and the company that I think people you know most closely associate with Tiger. So have we been able to quantify what the impact was, Like what do those tigers you know, sponsorship income back in the day when he had those A listers too? Maybe today where maybe

it's not so many, Yeah, it's not. He's certainly he's he's still making money off the course, obviously, you know, Um, his relationship with Nike was once a thirty million dollar a year relationship. That's changed a bit because Nike has you know, they no longer make golf equipment, so Nike doesn't make the ball and the clubs and the bag anymore. Um. And and yeah, he's probably not being paid, you know, in total what he was when he was making when

it's sixty million dollars a year off the course. Um. But you know, he has a very successful course design business. He still has a number of sponsors that pay him well. I imagine the fact that he just won the Masters is not going to hurt him, uh in any regard in that way either. So you know, it's his portfolio is not what it used to be, but he's not

struggling for cash right now. I'm curious, though, you know, beyond just Tiger Woods and Nike, I'm wondering what kind of audience, uh, these golf tournaments get because my understanding is that the population of people watching these has been going down and getting older. Yeah. It's funny. Ten years ago, you know, we we always talked about, you know, the Tiger bump. What happened, you know, the the amount of people that turned in just to watch golf only when

Tiger Woods was playing well. And eleven years it we're having the same conversations. Golf is still reliant on this one athlete, and it's great for golf that he's back. Right, if you're the Golf Channel, if you're CBS, anyone who's going to televise a golf a professional golf tournament in the next couple of months, you are thrilled by what just happened because people are going to tune in to watch uh Tiger Woods to see if he can do

this again. The bigger underlying issue is the sport still, you know, is reliant on a forty three year old with a bad back, who is who is not going to be this good in another eleven years. Right, there is a there is a finite end to Tiger woods dominance. It's amazing that he got back to this stage, but you know, you can make an argument that it's not great for golf that that he is still the number

one biggest draw. Well, a lot of winners came out of yesterday's performance by Tiger Woods, but one of the losers, which is the sports betting business. You know what happened the book He's had the wrong side of this trade, and yeah, it's funny they you know, Tiger Woods, just because of his popularity is almost always the most bet golfer in the field. And when Tiger Woods was bad, that was a great, a great business opportunity for for sports books. And you know, now that he won, you

know it was a bad business opportunity. The William Hill had a single bet that they paid out one point two million dollars on. It's the biggest single golf bet liability they've ever had taking bets in the US. FanDuel lost two million dollars. Draft Kings was out a million and a half. A lot of sports books took a big bath on this. Again, it doesn't come close to off setting the money they've made off of Tiger in

the past ten years. Um. But yeah, in general, being a sports book is a pretty darn good business model. Occasionally you get burned by individual events, and this was

certainly one that that burned them. Interesting, but thus, certainly a lot of winners yesterday, and uh, you know from the broadcast networks just just you know, to the sponsors, and you know, I won't be surprised at all to see some of those A list sponsors who left Tiger Woods when he had those troubles uh, come flocking back, um, because you know, you could just tell if you think about the uh, if you follow the game up off and you just kind of look at your Twitter feed

or your Facebook. It was just exploding yesterday with Tiger Woods in contention at the Master. So it's a it's a whole another dynamic. As Evan was mentioning, so uh, Evan, we appreciated Evan Wi Williams and Bloomberg News bringing us the latest on everything that is Tiger Woods and golf. He is back. Well. We are right smack in the

middle of earning season for the big banks. We had JP Morgan on Friday Today, Goldman, Sachs and City Group mixed bag across the board to dig in to some of these results of what it means for the big money center banks. We welcome Ken Leon Kenna's Global director of Industry and Equity Research at cfr A Research. He joins us on the phone from New York. So, Ken, thanks so much for joining us. What are some of the takeaways that you are seeing from some of these

first wave of big bank earnings. JP Morgan headed out of the park. You know, the expectations for all these banks was dismal performance for the first quarter UM March really helped JP Morgan and it provides some glimmer of hope, you know for certainly City and Golden Sacks today. You know, the capital markets were from the government phrase really hurt the underwriting pipeline, both equity and debt, and the I p O market really just started to click in March.

So we think what's unusual here is first quarter tends to be the strongest quarter for the banks UM and it looks to be a base quarter with improvement every quarter. In two thousand nineteen, Ken it seems like big US banks are being put to the test. How much can they diversify away from trading revenue because that has not been the driver that it once was. So can you give them a grade? How are they doing in terms of turning to advisor to the revenue or consumer consumer profitability?

So the banks are pretty much agents and not principal businesses where they invest for the house and from a regulatory standpoint in the capacity of how much capital is needed for trading, they have been de risking the last few years and even on the Goldmen call today, look, we have we have a new management, a new management now lad from former executives and investment banking, not trading as before, and they're going to size down further thick,

which is the fixed income, currency and commodity business, so they get efficiencies and higher returns. When you look at the other banks, UM, the one area that's the bread and butter for the large commercial banks is treasury because he's tied directly into their corporate relationships and corporate lending. So I think um directionally, Um, none of these banks want to put that much capital. Um. We also had low investor activity, we had low volatility as measured by

the VIS We'll put that together. You had uh high uppertee negative declines in trading. So you want to be Another business is that you have confidence can grow. So ken, as a former wall streeter, I always take a look at the cost line for Cindy's big investment banks because that usually goes to head count, into compensation to things near and dear to my heart as a former wall streeter, but I see for Coleman sacks down twent firm wide expenses. Um.

Is that just the people's side of the business. So um. Part of it is the early stages of efficiencies from heavy technology investing. UM, it's not. It is absolutely not major head count cuts yet. What's interesting for Goldman of their workforces technology and that's what's driving their platforms in the business. UM. For the other banks UM, the efficiency ratios seem to be more of a UM fading indicator

that no one has. None of the banks have conviction to say that we're going to go from low SI to low fifty in the next two years, as they did for several quarters, not this one UH, and even asked that question City Group today. They kind of backed off because they're just there is that uncertainty just about global economy and the capital markets. But that's generally part parcel for these banks. Can One notable factor also with

City Groups win on bond trading revenues. They actually UH posted an increase you over year after it expected decrease, and the other banks that have reported have all seen declines in their year of year comps for bond trading. I'm just wondering where is City getting the volumes? What how do they eat this out? They have a very UM strong global network in terms of working with corporate US treasuries, and they're they're not doing it on the high risk side of the curve, which would be derivatives

or any futures. It's it's mostly UM playing vanilla treasury services UM and that continues to be a strength for a City also for JP Morgan. What's interesting is Goldman Sachs really wasn't in those parts of fixed income trading UH, and they have increased their headcount to go there and take market share. So can When I think about City Group, I'm good at the stock here. It's up almost thirty

percent year to date. How is this company position globally from a franchise perspective, it seems like they have you know, they had really had a tough time coming out from the financial crisis, but they've seen pretty solid So they had a terrific two thousand and eighteen and the first quarter as a continuum UM and that's reflected in the stock. We raised our target price to seventy from sixty five this morning. We do feel um that City Um is

getting the most out of its global footprint. We have a whole recommendation on City buying Goldman simply because we think with City it's more now dependent on the global economic environment. They had flat first quarter in Europe as well as in Asia, Mexico and Latin America is another very important franchise for City, and it's likely to be flat or low single digit. Look at Goldman Sachs. You've

got a new management team on board. There's a delta for improvement on earnings coming from strategic moves across the board in terms of realigning fixed income trading um. They're also aligning to get more business and investment banking by hiring hundreds of investment bankers for small companies. Never heard of that for decades. Well, it seems like that's where the profitability is. Ken Leon, thank you so much for being with us, Global Director of Industry and Equity Research

at cf are A Research in New York. Well, there's a great story out on the Bloomberg terminal today about taxes. Yes, taxes can be interesting. Basically just here is basically President Trump gave most Americans a big tax cut last year. But the problem is they did not notice it. In fact, just one fifth of taxpayers believe that their taxes have

been cut. So to get a sense of what happened here with the messaging, we welcome Lara Davidson one of the reporters on this story, larsa congressional tax reporter for Bloomberg Tax. She's on Capitol Hill in Washington, d C. Today. Laura, thank you so much for joining us. So again, there was a tax cut. Not a lot of people believe there was a tax cut. So what happened with the mess?

So really there were there were two big missteps that that Republicans made here in One is that the Democrats argument that this was going towards the wealthy and towards large corporations was just more salient with voters. Um they saw the big, big tax breaks go to corporations, and when they saw the changes that we're going to to

them as individuals, it didn't seem as big. The second thing is that the way people got their tax cuts, so instead of getting a big refund at the end of the year, which is what many people expected, they got basically they paid less throughout the year, so there was less taken out of their paycheck. But in most cases, once you spread that out over over paychecks over the year,

it wasn't that much. So by the time that people got to you know today to April fifte uh, they either had a much smaller refund or in some cases they owed money because they had too much taken out over the year. And uh, you know, even though they ended up getting more money that they still felt like they owed more. So what is the truth here as

far as who got the biggest tax cuts? Right? Because if you're saying that the Democrats kind of one on their messaging, they went on the facts, Well, it really depends. So you look, our our tax system is progressive, so that means that there are higher rates for people at the higher end of the income spectrum. So people who make more uh also pay more, but they also got a bigger tax cut in comparison overall. So it's a little bit tricky to say, you know who definitively want

and lost. But particularly in a lot of U states where where Democrats are who already uh disinclined to like this tax cut, New York, New Jersey, they were also limited by these state and local tax deductions. Used to be able to write off all of your state and local taxes that's now capped at ten thousand dollars to lots of voters in the in the northeastern California are finding that they actually saw a tax increase. Overall, it's

a relatively small portion. You know, about five ten percent of people actually had their taxes increase, but they're mostly in Democratic leaning places and they feel that they were targeted by this law. Boy, you can count me as one of those people who paid lost on the sought deduction. So here being the metro New York area. UM Laura Trump's top economic advisor, Larry Cudlow last week, I believe, said that the tax cut package had largely already paid

for itself. Is that accurate? That is not. We have seen that there's been some economic feedback from the law, but it's really only paid for a fraction of the one point five trillion dollars that this cost over a decade. And once you throw on you know, what it costs to service this debt um, it's even more than that one point five trillion, approaching almost two trillion. So the that's simply simply not the case. And and when you look at the Republicans have been a little bit um

inconsistent on their messaging about this. You know, at times they've said, oh, look, we never said this was going to pay for it for itself. Cudlow said, it would pay for itself, but the facts and the numbers that have so far been coming in have shown that it has not paid for itself, and it probably will not over the course of the next decade. Laura, I want to go back to the salt the state and local tax deductions that were eliminated basically or kept at ten

thousand dollars. Is there any evidence that residents of some of the high tax states New York, New Jersey, California have been moving to lower tax states in response to this tax lot change. There has not been great evidence yet, and we're only you know, a year in um and it would be a pretty drastic move to to move somewhere across the country just for a lower tax rate. On the margins, you're seeing a little bit of that.

In particular on the higher end, you're seeing um condo developers and and real estate agents who are trying to target some of these high earners and convince them to move to Miami or you know, in California, to move across the state line to Nevada. So far that that's not necessarily going to be economist or looking at this not a huge driving factor, just because there's so many reasons to be in New York and your business is there,

your kids are there, your your network is there. Uh. That that uh in New York State also makes it very hard to leave. They will look very closely if you can have a home in Florida. They look at how many nights you're spending in Florida versus New York and really sort of this teddy bear test of where does your teddy bear at night? Do as you do you have your dentists? Do you have your that is that's a very technical term. You can look that up

in the tax coak just real quickly. What is What do you think the Democrats are going to do here with this tax issue? Are they're gonna try to use this as something to really be a positive for them and go against the Republicans. So far they were successful in that and really ran hard on the tax issue. And you've seen so far a lot of Democrats campaigning

on on raising taxes, particularly for the wealthy. So you know, Elizabeth Warren and Bernie Sanders have talked about you know, expanding the estate tax or or paying um uh, you know, having the wealth the wealthy pay an annual tax on their on their total wealth, and and they're saying, look, this will pay for you know, um costs for childcare, or for free college tuition or medicare for all. And that's where they're really seeing that these ideas are polling

really well, you know in some cases. Laura Davison, thank you so much for being with us. Laura Davison is Congressional tax reporter for Bloomberg Tax, joining us from Washington, d C. Well, it looks like the on again, off again trade talks between the US and China are most certainly back on again. To get the latest, we welcome Mike McDonough. Mike is a chief economist for financial Products at Bloomberg. He joined us live here in Bloomberg eleven three oh studios in New York. So, Mike, is China

just gonna buy more soybeans from US? Or is there something more substantive coming down the pike? You know, I think I think we're going to see something far more substantive than China buying more soybeans. I think the reason we haven't seen a deal yet, well, there's many reasons, but one of them is they are trying to do something that is a little bit more holistic that answers for some of the UH investor access into China, some

of the intellectual property UH issues. UH. And of course, you know China buying more stuff, trying to buying more stuff is actually the easiest thing to tackle it. If that was it, this would have been done months ago. It's trying to figure out how do you open up more of China's economy to foreign investors, how do you deal with intellectual property? And what is the enforcement mechanism put in place to make sure that that happens well.

Talking about the enforcement mechanism, Steve mcnuch in, the Treasury Secretary in the United States, said over the weekend at the I m F meetings that the US is open to facing repercussions if it doesn't live up to its commitments and a potential trade deal with China. So this actually speaks to the mechanism of enforcement. And my question is how significant is that statement by Treasure Secretary monution.

You know, I know there had been some debate over what if it was decided China wasn't following through with part of the deal, what would happen. The US wanted to put sanctions back on China. China wanted to be able to reciprocate. I think that that was a line in the sand that had been drawn that the US was saying no. So it would indicate that there has been some progress made on that front. But I'd be really really interested to hear President Trump's comments on that

suggestion to see if they're a line there. So, Mike, when you take a look at the both sides, I'm thinking about China here, who is more incentive to get a real deal done as a one as opposed to one is more of a kind of a headline like deal. Uh. Well, I think you know, China would like to see a deal that kind of makes this go away this problem. But I think you know what what China is worried about right now is not just getting this deal done.

They're looking further ahead, and I think they're worried about you know what if the economy starts to slow in what is the situation going to be? Right if they pass a holistic deal, you have these enforcement mechanisms in place. Uh, will the bluster continue from the administration, as you know? If growth is slowing ahead of the election and China becomes another target despite this deal, so I think that

is a bit of a concern. I think that on the U S side, the trade negotiators, the lighthousers of the administration, um, they have a certain bar they'd like to see. They view this as an opportunity to do something meaningful with China. I think though, as growth has slowed in the U S a little bit or become yeah, that's growth is slowed, markets have become a little bit more sang wine, I think that you have, um, the President Trump's bar may have actually gone down below that

of his own trade negotiators. That's why I was saying it would be interesting to get his comments on Stephen Minusian statement of the China being able to put tariffs on the U S if they don't follow through with the deal. I I it's all very interesting to me that, well, here,

here's my here's my question. I'm trying to understand the China U S trade negotiations in the context of the latest salvos with the European Union in the United States, and evidently talks are ongoing between those two regions to try to come to some sort of agreement on everything from whiskey to motorcycles to wine. And cheese. I'm just trying to figure out why is that happening at the

same time that we're also hearing about the China talks. Well, it's interesting, right, I think that the Europeans are concerned at the moment that if there is closure on the US trying a trade talks, that they are going to become the next target of the administration. And I guess you're starting to see some some signs of that. So, um, you know, maybe it's a precursor for something more uh more direct targeting Europe. But we're all gonna have to

kind of wait and see. I think, Mike wonder if you could give your comments or your thoughts on this. But it seems like, you know that the tariffs as it relates to China actually worked. It brought them to the table, and it has them maybe negotiating in a way that's maybe a little bit more than we even anticipated initially. Yeah, So, I mean I was talking about

the bar in the US. I think the bar for China also went down, right, So when when the trade war really started you were starting to see a deceleration of China's economy, it wasn't due to the trade war. It was due to the leveraging cycle they were having at home. They misjudged the impact that would have. But then coming into this year, you had that slowdown. Then you had the kind of the bad sentiment of okay, we are going into a trade war. So it's kind

of a double whammy. Uh. So they were eager to come to the table and maybe make a little bit more concessions than they had before. So I mean, really, both sides bars are lower. I think that it is imminent in my view, that we do get a deal. I think that the reason we don't have a deal yet. Uh, it's unrelated. But it's interesting when you look at when President Trump had the summit with Kim jongun for North Korea, when he went to Hanoi, I think everyone was surprised

that he just kind of walked away from that. Everybody had assumed work had been done, the would at least be some sort of friendly handshake and would end on positive terms for the Chinese. Um they're fearful that if they send President she to Marrow Lago and that repeats that would not that would be a very unacceptable outcome for the Chinese. So I think that they're making sure, before that data is said, every eye is dotted and

every t is crossed. So for me, the moment that date is set in my mind, I think that means that deal has been done and they're just going to kind of go through the motions. Mike mcdonnald, thank you so much for being with us. Always love having you. Mike mcdona, chief economist covering financial products for us here at Bloomberg, joining us in our interactive broker's studio. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or

whatever podcast platform you prefer. I'm Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa abram Woyit's I'm on Twitter at Lisa abram woits one before the podcast. You can always catch us worldwide on Bloomberg Radio.