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One of the stock stories in the news, folks, is it is Amazon cutting fourteen thousand jobs. I was doing from reading a Bloomberg news and they had like almost doubled their.
Headcount pre pandemic.
So we're coming out of the pandemic, and so it makes sense that they can should be shedding some jobs.
Perhaps let's check it.
With put them Boil, senior US e commerce and retail analysts for Bloomberg Intelligence. Put them talk to us about Amazon here at fourteen thousand jobs, It seems like a big number, but I do know and for those effect that it is a big number. But they have, you know, over a million employees. So what's happening at Amazon?
Yeah, it sounds like a big number in the grand scheme of things, than for Amazon, it's not needle moving right. It's fourteen thousand is about four percent of its corporate workforce, and even smaller when you look at it on a base of one point five to five million employees worldwide, so still very small. But they're cutting, right, and that's the thing They've been cutting since after the pandemic, as you mentioned, and we think this is just the beginning.
We're just scratching the surface. There will be more cuts with Amazon, especially as automation and AI continue to fuel efficiencies across the organization. We haven't even got to warehouses yet right where there's a lot of automation going on.
So is AI the main reason behind the lanes I mean, is the company's run to offset that rising AI capex.
I mean it helps right because they're continuing to invest in AI and capex through AWS. But how do they drive margin efficiencies. It's through using some of those efficiencies and pairing back on the employee headcount. That and automation, those are the I think two biggest things that are going to drive the need for more efficient and then give back to the company through fewer headcounts.
I don't know, Lisa, call me Seneco, but I believe this is my opinion that AI is can be a net job taker.
And I think in size too, for a lot of industries. I think this is going to be a really We're continuing to see it in die stories.
I think so when you know, some CEOs are trying to paint a different picture. So all right, let's take a look. You're you're the boss of all things retail? How's this holiday season going to be?
Here? Is this is gonna be a good year?
I think so. I think the consumer has been holding up relatively well. Spending is higher, and we think Amazon's continuing to take share. They're going to be reporting this Thursday, and we're expecting solid retail sales numbers high single digits, and we do think that they're going to take share once again this holiday season. Overall, I think the consumer will show up.
Can you dig into go back to Amazon Andy Jase's kind of role in the company. It seems to be filled with job cuts, changing different. What's his focus right now?
I mean, he clearly said that he's going to be cutting back on jobs earlier this year in the summer, so we do see that rolling out. I think the focus is to invest in long term growth. I mean, he was very clear in his statements that you know, we can't worry about the intra quarter the quarter to quarter trends, and we really need to stay focused on
the longer run. How does Amazon continue to to remain the leader that it has been, because, as you know, it's very easy to now operate an online business, whether it's through Shopify, everyone almost has the same playing ground to compete in. So how does Amazon differentiate? And the only way to do it is continue to invest in the future, and right now that's Ai, whether it's jen Ai, agentic Ai, wherever it may lead us, it is AI.
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Through ups is. In the news today, I've poorted some numbers, cutting some headcount. The street likes it. The stocks up seven and a half percent. It's down twenty four percent year to date, but a good day for United Parcel Service.
Let's break it down with Lee Clasgow.
He's our senior logistics analyst for Bloomberg Intelligence. He covers the rails the trucks, the shipping, the air fready covers it all.
We didn't really talk.
To LEAD too much until the pandemic and then the logistics. We all became experts on logistics and we're like, Lee, help us out.
We don't know what's going on. So Lee, thanks for joining us here talk to us about UPS. What's going on there?
Yeah? Trust me, I enjoyableieve being a flavor of the month. So I'm glad to be here and talk about transports. You know, what's going on the UPS is they are making progress and they're executing on their plan. And their plan really is to create in a network that can not only handle, but thrive in an ever changing environment. And that change is being driven by e commerce. It's
being driven by the uncertainty around tariffs. And what they've been able to do is increase productivity through technology, whether it's automation or AI. And that also they were stepping away from business from Amazon. You know, they noted an on the morning call that there are three quarters into a six quarter glide down of Amazon business and the reason why they want to move away from Amazon business
that tends to be lower margin, lower yielding packages. But that's not to say that they don't want to totally walk away from Amazon, because their return business is a good business for them, and we're seeing you know, the success in the numbers, and you know, going into the quarter, I think investors were cautious or had low expectations, and
management kind of exceeded those with the results. And their outlook really shows us that, you know, expectations for the fourth quarter in twenty twenty six, at least as it relates to you know, sell side analyst consensus is probably a bit low and it needs to move higher.
Welle, can you get more into the cuts that we were talking about, thirty four thousand job cuts, Where were they seen and what kind of let's say, year over year cost savings does it expect in twenty twenty five from all of this.
Yeah, so, you know, what they're trying to do their overall cost savings, which includes you know, the headcount reductions. You know, they're looking to get three point five billion dollars in cost savings this year. They've done around two point two billion of that so far, and some of the reductions are driven by you know, they offered early
retirement for some of their drivers. They said they've had pretty good pick up with that, and that payoff should be about a year from what it costs costs something one hundred and seventy five hundred and eighty million dollars, and they mentioned on the call that it will take about a year to get to make those costs back up, so you know, it really should be paying for itself.
And they're closing a lot of facilities. So they've they've closed you know, something like ninety ninety five facilities so far, and that's being driven by they don't need the network they had when they were, you know, really handling a lot of Amazon business and now that you know, like I mentioned earlier, they're walking away from that business. They're kind of reconfiguring their network. And they're also you know,
as I mentioned, they're increasing overall automation. You know, they know, they're on their call that they've added automations around thirty five more facilities and about sixty six percent of their packages of touch these automated facilities, which is around three hundred basis points more than was last year, and that that numbers is going to continue as management makes more inroads at modernizing their facilities.
Lee, what is the ups and maybe effed extra that matter.
How are they kind of talking to you guys about tariffs and how it might be impacting their business just as a big, big part of supply chain.
Yeah, you know, it's interesting. So for like a UPS, you know, there's good and bad when it comes to the tariffs and the more protectionist policies in the US. You know, we've ended the dominamus exemptions, which you know stated that if a shipment came into the United States and it was worth eight hundred dollars or less, it didn't have to pay a duty or a tariff. You know, the Biden administration was working towards getting rid of that.
That Trump brought that Trump administration brought that to the finish line. You know, first it was it was just packages that were coming in from China and Hong Kong. And now that's been you know, all packages coming to the United States and that's hurting volumes. They noted their US or their China to US volumes were down around
twenty percent and that's having a negative impact. Now you look at their forwarding business, you know, because of all these packages are now if they are going to be coming in a lower value packages have to pay duty, they need to lean more heavily on their customs business. So you've seen their supply chain business outperform this quarter, and I suspect a lot of that had to do with the additional fees that they generate from helping shippers clear packages through customs.
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Polish Manteo sitting in for Scarlet Fu and Paul Sweeney. We're live at BAM Mutual headquarters down in Lower Manhattan.
This is what I call the Oppenheimer Building.
I call it World Financial Center, but the kids call it Brookfield Place.
I don't know what's going on down here, but it is a.
Great part of town. I worked down here pre nine to eleven. And what they've done down here, Folks, if you're not from New York area, if you to the city, you have to come down to Lower Manhattan see what they've done down here. It's just extraordinary. It's just really really vibrant down here. We're joining right now by Sean McCarthy. He's the CEO of BAM Mutual. Sean, thanks for having us back to your offices. We appreciate it, sir, you.
Know, thank you Paul Lisa for coming. It's this is an annual tradition and we really appreciate it absolutely.
I think when I was here last year at this time, you said twenty twenty four was going to be a record year in municipal bond issuance.
That was what happened. How about this year, this year.
Is going to be, in all probability another record.
Wow.
The growth of the business has been really robust. A number of factors that make that happen. First, the state and local government's the responsibility is being pushed down on them to issue more infrastructure debt. So if you think about infrastructure, eighty percent of what you think about is just infrastructure is financed at the state and local government level,
not at the level. So this has been a year where many many issuers have come to market and we and that's a result of a lack of you know, a change in the federal support from healthcare to other programs, and so we think the stand local government is going to pick up where the federal government is stepping back. And so I think it's going to be a record year this year and probably pretty robust next year.
Now, are there certain areas of many that have performed better than others?
So well, I think from an activity standpoint, it's been across the board. Okay, so you see a lot of healthcare general obligations which are full faith from stan local governments themselves, lots and lots of projects across the country. I think that one of the areas that's going to be most dynamic going forward is power. You know, if you think about AI, the amount of power and data
centers that are in their demands. I was speaking to one of the heads of one of the largest municipal power agencies and he said that the demand that they're being asked for now, let's assume that some of its double counting is going to be four to ten times with the produce right now, So.
Sean, just for the folks that don't know what you guys do, BAM insures municipal bonds, giving another level of certainty for investors.
That's correct. So we are a double A rated insurance company by Standard and Poors. And really what we do is guarantee different than other kinds of insurance. We guarantee timely payment of principle and interest when due. So that means if there is a credit event that would cause
a default, we pay first and then mitigate later. But one of the unique things that we do and the reason why at this point we've through our inception, which is thirteen years, we've guaranteed one hundred and seventy billion dollars worth of transactions and we have had no defaults on these transactions. That's really because we focus on municipal essential infrastructure, state local government obligations, and we work with municipalities.
If there are bumps in the road like what happened during COVID, we're proactive and working with the municipalities to make sure that they're in the best financial health that could be.
And how have MUNI has been performing compared to treasuries?
You know, well, I mean I think that the way we look at it, it's when issuers are coming to market and what the performance of municipal bonds are, we're going to have an investor come speak a little bit later today, I think, and the relative performance has been really quite quite robust, and I think that's going to sort of all going into the next year.
Talk to us about this credit quality of the municipal bond market. I haven't really heard or seen or read about major blow ups, whether it was years ago Puerto Rico or Chicago or just Illinois in general. Quite frankly, we haven't really seen that too much.
So I think massive individual credit problems is not what's happening at the moment. I think what you're going to see happening, what we feel is happening, is a greater differentiation among credits. So, for example, if you take healthcare, there are lots of very big financial hospital systems, large single hospital institutions, and a lot of small rural hospitals.
How they're going to be affected by what happens to Medicare and Medicaid payments and how technology changes the way healthcare is delivered is going to create a different sense of who the winners are and who the losers are would be a good example of that.
Are you expecting a slowdown by the end of the year, maybe November? Do things tend to I think the end of the year.
I think you're right. I think a volume will tail off in the fourth quarter. Usually does unless there's a change in the tax law. But one of the important things that happened earlier this year was that when the Big beautiful bill was passed, tax exemption I meannessial bonds
really was not affected. So that enabled at the beginning of the year, if you think issuers were trying to come to market, to try to because they weren't sure what the outcome is going to be, and then later the market environment was so favorable that they continued to participate in the market to bring their new issues to market. We'd see going forward if interest rates continue to decline, you probably have a better idea of what's going to
happen tomorrow than I do. But if you think about that effect, there'll be a greater number of refinancings as well.
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