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Let's get more on you missed.
So it was really that one year inflation expectation following at two point seven percent, the lowest in December twenty twenty. Johanna Sho's University of Michigan Surveys of Consumer director and she joins us now walk us through the increase in sentiment and the decline in those one year inflation expectations.
Consumers actually now have had several months of general improvements and how they feel about the economy, and clearly the drop in one year inflation expectations is a huge part of it. Consumers are one hundred percent aware and have noticed that inflation has slowed down quite a bit, not just this year, but over the course of the last two Yearsnsumers are starting to feel a bit more optimistic
about the future. You know, with one year business conditions, we've had four or five consecutive months of increases at this point, I think they are recovering a bit from the malays that we were saying earlier in the summer.
So the headline, Joanne cam in it you've missed sentiment sixty nine versus consensus sixty eight point five and sixty seven point nine last period. Can you frame that give us a sense of context there? Like, for example, for im, above fifties means economies are expanding. Below fifty means it's contracting. What does a number of sixty nine mean to you? Put that in context for us?
Please?
So overall it's still below the historical average that we've seen since nineteen seventy eight. But I think what's more important than just the number itself is the overall trend. And now we've had two consecutive months of increases in in sentiment. We're at the highest level since in several months now, and so you know, I think the thing to notice that consumers are starting to feel a bit more upbeat, and that's the or trend that we've been seeing.
How does it go on party lines, Republican versus Democrat? Because is this the first survey that really encapsulates Biden out Harrison.
Yeah, We saw a bit of that at the with the August reading, and we saw kind of a continuation of that. So it's very clear that democrats are seeing both Democrats and Republicans are now increasingly expecting a Harris win relative to last month and certainly relative to when it was Biden versus Trump. Now, Democrats think that's a good thing, and we see that in their economic expectations that really surged in August, and we were continuing to see,
you know, this higher level in September as well. Republicans, on the other hand, think that the potential of a Harris presidency is bad news, and their their sentiment, their expectations have declined. And so we saw a widening of the normal partisan gap in August, with Democrats improving, but that was offset by Republicans. I'm getting worse, And we saw a little bit more of that, not as dramatic as last month, but that partisan gap is continuing to widen.
All right, Thanks so much to really appreciate Joanne Joan Chu University of Michigan Surveys of Consumers Director joining us there on. You mish solely grinding its way higher and at that one year and Blanche expectation falling as well.
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All right, let's go to our friends at Boeing here, I mean, stockdown two point seven percent. They got to strike up there in that Pacific Northwest region of the world, which is where they are generally based. I think the heart and souls certainly there. George Ferguson joins us. He'son Bloomberg Intelligence, Senior aerospace analyst for Bloomberg Intelligence. George, how is it so we've got we've got to strike affecting Boeing up there in the Seattle area. How impactful is
this strike to them? What do they need to do?
Yeah?
So it's super impactful, right because it's on there seven thirty seven Max, I mean, it's going to be on the programs that are out of the Pacific Northwest, I should say first once you're going to be seven sixty seven, Triple seven and the seven thirty seven max.
The seven thirty seven max is what matters most.
Right, that's the revenue generator.
That's the that's the cash flow generator. That's part of that's not even part of.
That's the largest part of their recovery plan for the back half, so super important. Look, we'll see how long the strike lasts, but if they can't get seven thirty sevens delivered, this bat half recovery isn't bad shape.
So let me get this straight. You were in the city yesterday then there was this huge Bloomberg Intelligence celebrating fifteen year party where you all are like struggling to focus, and it somehow you wind up back at home this morning.
What is this?
It's been a.
Busy twenty four hours. They wish they could have time a strike differently, but.
I definitely thought it'd be showing up very tired. But in the studio, all right, what's the TikTok?
Now? So what's the schedule of events?
Well, I mean, I think you know, Boeing and the machinists have to get back together at the table and figure out what the machinists want so they can get them back on the job and start delivering airplanes and generating cash right the meanest machinists sounded like they were a little bit coy about it too. I heard one of them saying, you know what, as soon as we have a chance, we'll get back together to talk about it,
or something like that. So it sounds like they think they've got a bit of the upper hand, which I think they do. I think, you know, Boeing probably has to go back and look in their pockets and figure out how much more, how much more of a pay increase.
They can give.
Right the Spirit Aero Systems folks got a mid thirties pay increase, So I suspect the machinists are looking at that thinking, hey, we probably deserve something close to that. And I think that they want some better guarantees on an airplane.
They want to be guaranteed.
I think that the next generation seven thirty seven, it's the most important airplane for Boeing. So if the machinist union has sort of longevity in their sites, they want to be building that.
Seven thirty seven successor. And they don't want just the commitment to be able to build it to last for the four years of this contract. But they wanted to last longer, if not forever.
And George, just refresh our memory. Where does Boeing actually make their planes? I know they do it up in Seattle, but did they do it in the question maybe some areas of the country that are not unionized.
Well, so they do make the seven eighty seven in South Carolina down by Charleston, and that's a non union plan, So I expect that seven eighty seven production will continue. Everything else is made up in the Pacific Northwest from a commercial airplane stand point, and so seven sixty sevens, triple sevens, they're made in Everett, Washington, north of Seattle, and the seven thirty seven has made is final assembled at a single plant in rent in Washington, which kind of southeast of Seattle.
Those are all union shops. I expect them all to be doing little to know work today.
And then of course the fuselage comes out of Wichita, which is owned by Spirit Air Systems, which Boeing.
Is buying, Whichita, Kansas.
But again, they had a strike earlier this year, got mid thirties pay increase and they should be continuing to work.
So I guess then the question becomes how long?
Now I know we talked about that yesterday and you're like, look, it can't go on more than like two weeks. One analyst I was mentioning fifty days was what they were kind of looking at, which is a significant cash burn for Boeing.
What's your best guess?
Yeah, I mean, I think there's a lot of people out there saying fifty days because that's the average strike blah blah blah. I just don't, you know, I don't subscribe to that being the right logic here. I'm saying a couple of weeks because I think Boeing really needs these workers back on the job. There is no substitute for these workers, period, and so I think they've got to go engage the union intently and figure out what's going to take to put them back, you know, back
on the job. I mean we think what we you know, our analysis was that it would cost an extra billion dollars a year or something like that for wages right around there at the twenty five percent increase, that would probably trim Boeing commercial margins one hundred and seventy two hundred basis points.
Do you like that?
No, But it's not the end of the world, right, They back in back pre pandemic, this was a company that was making thirteen percent ish margins in that business ten to thirteen.
So can you bear that and be profitable? You can? Can you bear more?
You can?
So I think that means that Boeing has the leeway. They got to get the building airplanes in volume again. So they got to engage the union and get it done. That's why I'm saying, I think less than a couple of weeks, I think they got to get it done.
Hey, George, I mean, I know in the past you talked to us about, you know, the labor shortages and aerospace industry. Where are we where's the industry in terms of getting past that is that's still a challenge getting good folks in the factory floors.
I think it's totally still a challenge, right, And so we saw a pretty decent turnover in the aerospace workers, you know, coming out of the pandemic. I think some of them watched their industry. It looked like the collapse, right. Air travel went to zero for a couple of quarters,
or almost zero, so you know, demand for airplanes. People looked at it and thought, hey, you know, the industry I'm in is horrible and if you are, I think near retirement age, you said let's cast it in and moved to Jacksonville, Florida or something like that, right, So it's hard to get those folks back to the line from Jacksonville and backfill.
Part of the backfield challenges.
The backfield came out of some of the suppliers, so they kind of hurt their own ecosystem as they pulled some of the backfill in. And they're in the middle of training that we even't heard CEO Calhoun say the old CEO Calhoun say. I think at one of his congressional testimonies he talked about people coming in the door having experience bending metal and you know, working with their hands, and I think, you know, he said something like in the old days, and this isn't exactly right, but it's close.
You know, maybe seventy five percent of people that came to the door had experience working with their hands metalworking.
Now twenty five percent.
So they're in the middle of trying to train that next generation of aerospace workers and the supply chain is still trying to backfill. I think it's it's been getting better, Yeah, but that training and backfill is still going there.
All right, Hey George, we appreciate it.
George ferguson Bloomberg Intelligence and your aerospace, defense and Airlines analyst.
Great stuff. Good to see you there.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
I'm Alex you alongside pauls. We need this Bloomberg Intelligence Radio. We bring you all the top news and business and finance economics. So there are lens of our Bloomberg Intelligence folks. They cover two thousand companies and one hundred and thirty industries worldwide. They're a little tired today. They had a fifteen year anniversary party yesterday, so you.
Know, cut it loose a little bit.
Yeah, yeah, yeah, yeah. I mean Paul got some sleep, but the other guys, I'm not sure. All right, But so we want to go outside of Bloomberg Intelligence now for a look on how to market is positioned into the FED. Mohagman is head of Solutions and Multi Asset Strategies over at Invesco and he joins us, Now, what is this setup like in terms of asset allocation headed into Wednesday?
Well, Alex, thanks for having me, nice to be here with you and Paul. I think, you know, we are continuing to maintain a bit of a defensive posture, and we have been defensive for about a couple of months now, and really this is around what we're seeing in economic growth expectations, both from the market and from the data.
We are very benchmark aware, so you know, I think that underweight isn't something that's significant at this point, just given how the economy has been incredibly resilient and the market has been incredibly resilient. But what we're seeing in the labor market and what we're seeing with economic growth over the several last several quarters is something that we're watching very closely.
Mo.
And how about being defensive, what does that mean fixed and come versus equities.
Here, Yeah, so that means we have a little bit of a longer duration profile versus our benchmark, So we're you know, favoring fixed income over equity. So and within equities, you know, there's a bit of a tilt towards more defensive sector, so think healthcare, consumer staples, information technology. You know, these are the areas that are a bit more defensive.
These are companies that are higher quality and lower volatility, generally cash flow rich and can weather an economic downturn or a slow down in growth.
So does that mean that you think that the bond market, if we look at the equity in the bond market, is being on different pages in that we're making like another run in the smp here versus the bond bowl appears to be very sticky.
Does that mean that the economic.
Situation is geared more towards a recession than a soft landing in your view?
I don't think so. I think we're still probably base case soft landing. But you know, what we're thinking about is just in the shorter term period, so from a tactical perspective, just given how far extended the equity markets are, and you know, in our opinion, yields are very attractive at these levels they have been, although they've you know, come back a little bit. You know, we're kind of extending that duration profile getting underweight equity slightly relative to
our benchmarks. And again this is all around growth and growth expectations. Although we don't necessarily see a recession in the next couple of quarters.
So, MO, how about on the pick income side, are we sitting here in to your treasures at three point six percent or are we going out there and taking some credit risk? What are we doing there in fixingcome So.
In credit we favor again higher quality credit, so you know, credit spreads continue to be incredibly tight, you know, relative to equities. I think credit is a very attractive risk adjusted allocation. But we're probably not right now favoring kind of the lower quality high yield sectors and we're taking a bit more.
It's posteros.
So the best performance this year and fixing them has been and by far has been in US corporate high.
Yield exactly, and I think that's part of the reason that we've gotten a bit defensive. So just to kind of backtrack a little bit, you know, we have been pretty risk gone in portfolios for the last several years. You know, post COVID, we took a little bit more of an aggressive stance versus our benchmarks. We kind of maintained that stance over the last several years, and now what we're seeing is just that softening of the economic data.
We're seeing some softening in the labor markets, and that's that's kind of what's informing a bit of a defensive posture. But I don't really want to overdo that, right. You know, we're not kind of underweight equities to a significant magnitude. We're not suggesting that people move into cash. It's actually quite the opposite. We're telling investors and clients to get
out of cash. We've seen elevated cash balances now for a long time, and the yields on offer if you extend that duration, seem to be very attractive to us, especially as we're moving into an easing cycle and those short term rates are going to be coming down.
Yeah.
JP Morgan was saying that usually the rate cut cycle needs to get underway more significantly for than the money to move, But you're right, I mean over six tillion dollars ready to roll. Hey, I'm curious as to dollar yen. It has a pretty significant rerating at this point. I think we're at one forty right. There was some reports on Bloomberg that we're seeing some bullish bets on the yen right now. What's your take on where that currency goes and is the carry trade unwind situation.
Over So from a currency perspective, just kind of consist with my comments earlier around equities and fixed income, we have a bit more of a defensive posture, So that means overweights and dollar, GBP, euro versus international currencies, you know, especially if you kind of think about the more emerging market currencies. You know, I think right now the defensive posture is probably warranted just given we're kind of going
into election season. September and October tend to be more volatile months for the market overall, and that home country bias, at least for US is kind of an important factor as we get through the next few months.
In terms of the equity market, where's evaluation for you guys? Do you feel like this market is fully valued at this point? How do you guys think about that?
I would say fully valued to maybe a little extended, just given what we've seen here to date. So for us, there's no real concerns around earnings or earnings projections. There has been some revisions that we're taking a close look at, but for now, you know, I would I would say probably well priced or maybe a little bit extent did relative to what we see kind of on offer in other places outside of the US, and I think my comments are very much on the US side, and the
equity market in the US is pretty concentrated. That's another topic that we're having a lot of conversations on with clients. You know, we expect to see that broadening if the economy continues to be resilient, but if we are going to go into a prolonged downturn or a growth kind of scare, you know, actually the defensive sectors should perform better. And I've talked about this a little bit on the
show before. In the past the relationship between equity sectors and rates was was really when when wastes were going up, you know that that was not necessarily a good thing for sectors that had more duration exposure or more interest rates sensitivity, So technology, healthcare we've kind of seen the opposite of that. So you know, it's a little bit of a weird dynamic at the moment, but I do
think that should renormalize. So what the catalyst needs to be for small cap value stocks to really get going again, I think is a little bit of a change in the regime and an economy that kind of reaccelerates because those companies small cap companies, value companies. They tend to have more operating leverage, they tend to be more geared to the business cycle, and I do think longer term that relationship will still hold.
All right, Well, thanks a lot, We really appreciate thanks for stopping by mo Hagman joining us. There was his call on acid allocation. He had of solutions and multi asset strategies. Over at Invesco.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa, playing Bloomberg eleven thirty.
Alex Steel alongside Paul Sweeney for Bloomberg Intelligence Radio. We're broadcasting to live from Interactive Broker Studio right here in midtown Manhattan. I saw that though for the Weimo thing that like a driverless car like show up even if you didn't order one, that'd be kind of weird, right, and yeah, like like, I mean, what if you don't.
Want to get into car? The perfect stranger about it, no one at all?
Yeah, Okay, well, it's an adjustment period for us.
All all right? Joining us now is Dan.
I was managing director and senior equity analyst at Wedbush Securities. I bet you he's probably bullish on WEIMO and would totally get into a driverless car, no worries, Am I right?
Dan? I mean I've done it. Look, I think I think end of the decade, I think twenty percent of ride share are going to be no drivers.
But isn't it weird that they would show up? You wouldn't have a choice.
It would just be like, here's your driverless car, even if you don't want it.
Yeah. Look, there's gonna be clearly kings to work out here. But I mean, and we'll see this at Tessa's Roado Taxi day. But the technology is starting to get to a point where this is no longer sci fi. I know the next few years, it's something where demisation is gonna be clear. That's why you see that Uber waymo mm hmm.
Well, and I should point out that you're in Bangkok, so it's like, what time is it? It's like midnight now Friday and Friday. I know he's a good guy, Dan. We appreciate that by the way I'm looking at Adobe, Adobe is down nine percent.
What was the problem with their earnings yesterday?
I think it's really just the softer guidens. But I mean, in our opinion, this is just just a transition in that Adobe story. I mean, when you look at AI and use cases, I think they are probably within three to six months of significantly benefiting from AI stock obviously, you know, is one of the core plays in big tech. But you look at Adobe, obviously little softness. But then you look at a Oracle, which I think is probably even more important to the broader AI story for big tech.
Then what about some of the other like so then how do we distinguish like what's the line item right? And as an investor, how do you know when to buy that? Like you might three see three to six months until we get a really big payoff for Adobe, how do you play it?
Yeah, Look, that's why we use so much work in the field, because they're trying to figure out second third derivatives of AI. Who's benefit in terms of real monization. That's where you look at, of course Pall and Teer Oracle Service. Now I think Salesforce next week some big announcements at Dreamforce. What they're going to talk about now, Adobe maybe a little softer. They haven't seen it yet, right, So this is really gonna be sort of pieces of a puzzle trying to figure out who in software are
benefits from the second derivative. Clearly the hyperscale players, and we would argue even cybersecurity are going to benefits. Is more workless, move to the cloud.
So Dan, as soon as I get off the air here and finish up my twenty seven straight hours of radio, I'm gonna go to my Apple Store app and I'm going to pre order that Apple.
Oh this is today, You're doing today?
Do it today? Yeah, okay, already gave me my instructions Apple sixteen pro. I'm gonna spend a an jillion dollars. How many people are out there are going to be doing the same thing? How big is this new phone?
Well, first off, I mean I think it is huge new, the Sweeney upgrade.
This is the this is the start of the super psycle.
I mean for years, exactly for years, the Sweeney upgrade. I know. But Paul, I mean I think now it comes down to it's not just you. There's three hundred million iPhones that have an upgrade four plus years. And this is everything we're seeing here in Asia is showing that this is weeding to what we believe is gonna be an AI driven supercycle. And I think we'll see this pre orders and obviously going to the next week, but I think demand's gonna be pretty robust here street.
I think still underestimate what this is gonna be about.
Okay, but are people in China really buying into that supercycle? Like, I know Asia is bigger than just China, but can we have a supercycle without a super strong China demand for the iPhone?
Yeah, So it's a great point. You cannot have a super cycle without growth in China. To that point, you have one hundred million iPhones in China that are in that window of an upgrade opportunity, and everything we're seeing that actually China, you will now start to see modern to significant growth in the region from iPhone sixteen over you know, call it the next year. And that's huge Apple.
I mean that goes from a headwind too, a taland which is really key this whole sum of the part story as it plays out, and they monetize China front and center.
So folks when technology channels like Dan i'ves go to Asia, it's not just to see their clients. The big reason is to do what they call channel checks. Since much of global tech hardware software comes out of that part of the world. You get a good sense of kind of who's making this stuff, who's buying the stuff, who's selling the stuff. So Dan IIMs, what's kind of the vibe you're getting from your your channel checks there in Asia these days?
Yeah, I mean look across Taiwan, and I think just across Asia, demand is not slowing. I mean it's accelerating in terms of broader when we look at from a chip perspective in ai which I think is very very important and Jensen talked about this week, demands outstream and supply we think twelve to fifteen X and that is the most important thing is the use cases where the it'torical pound tier that will ultimately be the drivers, but enterprises.
We're talking about a trillion dours of tap acts that ultimately is coming to techo of the next three to four years.
What is that?
What you make of the in media rally the last five days, like how do you understand that structural shift and that thesis versus the daily swings of some of the biggest players where seemingly they become more important on the central banks some days and drag up the broader equity market, and I can't find a headline on that.
Look, I think part of I mean that was a confluence of things from the watch parties to technicals to just come into September, and obviously the Macro sell off tech front and center. But I think, look, anyone that's doing checks in tech, you're not coming back in any way negative. Uninvidia. I mean, it is actually getting more and more incremental, not just for Nvidia chips, and I think brought the AI revolution, so we're gonna have these
ebbs and flus. But I continue to believe this will be a tech market that ultimately rallies into your end because I think it all comes down to fundamentals and Macro's gonna do what Macro's going to do. But we are not seeing any So it is an acceleration clearly that we're seeing over the last few weeks.
All Right, Dan, thanks so much for joining us there as always appreciated. Managing director, Senior equity analyst for Webbush to curious securities. He's Bangkok Tiland, go out and get into some trouble. Uh that's an order, so Dan, I'm doing it? Or use again there bullish seeing some channel checks there in Asia, suggesting that the demand continues to be there, not just for I guess Ai chips, but just for you know, tech in general.
I feel like he's been in Asia for like a month the last three times I've talked to him.
He's been there every.
Time, five times a year. I think, oh yeah.
But what I think is interesting, Like we can always joke about Dan ives being the bullish guy on tech for sure, but is so interesting to get that take on the structural shift versus a cyclical market and from understanding how the cyclicality makes sense when we're all transitioning to a different kind of world. And you can see
that in lots of other sectors as well. Obviously energy is one that I'm gonna be paying attention to cars with EVS and the structure issues with that, So it's kind of fun.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg Business You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa playing Bloomberg eleven thirty.
All right, what are we doing here with these markets? That's a lot of folks are trying to figure out as a think about next week when we get the Federal Reserve giving us their thoughts on earnings. Cissel joins US Chief Presidency of Banryon Capital Management, joining us from Chicago via zoom. Shane, thanks so much for joining us here. We've had a whole slew of economic data really over the past a couple of weeks. You put it all together and it seems like the market is getting ready
for the Fed to begin cutting rates. How are you guys positioning kind of your portfolio and what are you telling your clients?
Well, as much as I love to be a confrarion, I am in complete alignment with market sentiment and that the Fed will cut at this meeting. You know, Chairman Powell has been very transparent and in his remarks at Jackson Hole, he was very clear that it was time to make a pivot from their previous roadmap to make changes, and cuts were part of that change. So I agree with the market. I think where the debate comes in
is how big that rate cut will be. And as you noted earlier, the market probability for a fifty basis point cut is actually rising. And I'm not sure I understand what is driving this belief that the FED will cut fifty basis points. They've been super cautious, and I just can't imagine cutting fifty basis points without seeing something in the economic growth activity or in the US economy that warrants that kind of what I think would be kind of a knee jerk reaction. So we're telling clients,
you know, to prepare for a loosening cycle. The FED is obviously loosening policy, and we want to take advantage of that, which in an economy where it's which is fairly stable, means that it's a risk on environment.
So let's go back to what happened in Vidia in the last five days. Right, I mentioned this yesterday, Charlie Micgela got over at no Mora said that Nvidia was basically the central banker of power. That yeah, yeah, we can look at the FED, but it was Nvidia and the FOMO that kind of gripped the market that has really propelled the s and be higher this week. What matters more for you and your acid allocation, is it what's happening with Nvidia stock or what Jay Powell says on Wednesday?
What Jay Powell says on Wednesday?
Oh me and entirely Vida killing me. Sorry, I know I love Nvidia, I do.
But as much as we want to pretend it's a proxy for the economy, and it is to some extent, we should not be basing our portfolio management decisions on, uh, the the technical trends of a single stock, especially one which is kind of you know, shrinking in terms of its growth potential. It's an amazing company. It's growing, you know, triple digits, but it's growing at a slower rate than it was a year ago, and that is reflective of
what I think the economy is doing. But the Fed policies at the end of the day, what drives the underlying market liquidity and the under my alying opportunity for investors in banks or whatever they take access capital. So, you know, nvidious great and control access to capital.
So I guess just looking at the equity markets in general, give us your thoughts on valuation here these days, a lot of folks feel like it's stretched. A lot of folks will say, yeah, but if you pull out some of those big tech names, not so much. So how do you guys look at it?
So I learn at Fidelity, and this is super basic, but I think it's actually a really great tool for people out there who just want to do like quick math in their head. But I learned the role of twenty during my days at Fidelity. So that is taking the pe of the market and adding in the inflation number and then looking at it in a historical basis, and the general consensus zip it was valuations were above twenty, it was stretched, and if it was below twenty, it
was attractive. And so we're well above twenty. Yes, some of that has to do with tech stocks and how how much they are are kind of weighing on the market. But I think even in the equal weight indexes we are above that twenty number, and so there's definitely opportunities in the market. But it feels like we're a little frothy here. I don't think we're super expensive by any stretch of the imagination, but I do think that I wouldn't call the market.
Cheap favorite pick right now.
You know, I really like Apple.
I really like Apple.
Okay, why so the stock up beating.
Up, and then they had their iPhone event last week, which was sort of like anti climactic, So the stock.
Has been kind of, you know, not doing much for a while.
Valuation wise, it's attract when you compare to the rest of the Mag seven, and I think that overall, they're doing the right things to maintain market share, and I think that there's a potential for them to take market share in the future. So you know, from that standpoint, I think Apple has the ability to grow their global footprint and people like the ecosystem. I'm definitely one of
those people. The stock is relatively attractive on a valuation basis, whereas you look at something like an n Video or one of the other names in the Mag seven and they don't look quite as attractive on a valuation basis.
Paul scrolling on his old iPhone, ready.
To buy the new iPhone very soon, as in like in forty five minutes time, exactly.
All right, Shanna, thanks a lot, really appreciate it.
A shanea ccil President CEO, benmon On Capital Management joining us there.
Thank you. Very much.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.
This is Bloomberg Intelligence Radio.
We bring you all the top news in business and finance economics from our beautiful world headquarters right here in midtown Manhattan. There's a really interesting big Take story today that everyone should read. You can find it Bloomberg Big Takes story about college football players facing an ugly truth about payment details. You can read the story on Bloomberg and at Bloomberg dot com slash Big Tape. But we're lucky to Peter Robinson here. He's an investigations reporter here
at Bloomberg News. Part of this story. I thought college football players got their own money now and that was awesome, and that was it.
What's going on.
That's exactly what the popular belief is. And that's why my colleague Noah Bluhire and I wanted to look into this. Because if you are a casual fan and you hear about these deals apparently worth millions for college football players. You think, well, that problem of the players being exploited while the coaches and the administrators make millions has been fixed. But we took a really deep dive into these contracts, and they're at most of the big time football schools.
They're controlled by booster groups, which are essentially wealthy individuals, think the richest car dealer in town, and they're in charge of the deal. They write the contracts, and we actually got our hands on at least three of these contracts, and in many cases, according to other people we've talked to as well, these come with broad termination rights which wouldn't be seen in virtually any other industry. But there's one contract we looked at that said it can be
terminated at any time for any reason. So players are essentially still being exploited. It's a version of the black market that's existed in college football for a long time.
Peter, By and large, do these student athletes have representation, whether it's legal or an agent to kind of protect them.
Here, it really catches catch can and it depends on the player.
And you can imagine for someone who's a teenager, these are seventeen, eighteen, nineteen year old kids. They're entering this world for the first time. And a majority of the players to Division one schools are black, many from disadvantaged backgrounds, and so you have these situations where players are not aware of their options, they're not apprized of their options. And because it's a third party relationship between the university and these donor groups, there's really no one looking out
for their interests. There's no one accountable when one of these deals goes wrong.
So how do we fix this?
Many people I've talked to look at the pro leagues and they say, what's happening in college football is a professionalization of college football, and in the pro leagues the players collectively bargain. In the pro leagues, the NFL Players Association, for instance, requires that the contracts be disclosed to them so that all the players know what all the terms are.
It's a very transparent, very fair market, and so many people I talked to said that that's exactly what should happen in college support and at least in big time college football, where there are billions being made.
These booster groups are now have a new moniker. They're called collectives. Which I think is kind of spooky in and of themselves. And we actually know some people that are parts of collectives of their university, and those are the ones that are who's monitoring or regulating these collectives?
If anyone, Well, that's exactly the question. And yeah, you're right.
The word collective hasn't been in popular use since the nineteen thirty Soviet Union. But because of the way that NCAA has lost repeated anti trust suits and has lost the ability to enforce really any rules over college football, there is no one monitoring this. Congress has looked at this, has held a dozen hearings since twenty twenty, but there just hasn't been the momentum for bipartisan legislation that might put some guardrails in this market.
What about the whole and forgive my complete lack of knowledge. The likeness thing like image of likeness, what's that called? What's the nil?
That's what we're talking.
Yeah, okay, if you follow college.
Sports, you clearly I don't look ahead.
You know that name image likeness has become. It's amazing how rapidly it's become part of the daily coverage in sports, and it gives people the impression that athletes are signing endorsement deals with Nike, with Adidas, that they're out there on social media.
But the interesting thing.
About college football is that although there isn't really good statistics about this, the best statistics we have show that about eighty percent of these NIL deals are actually from these collectives. So people have the impression that Adidas and Nike are pouring money into into the sport, into especially specific players, but at least as far as what the players are making individually, that's not the case.
It's still these collectives that are in charge.
And Peter, is this a case so far with the big stars get most of the money and if you're in a non if you're in like an Olympic sport, you're not getting much if anything.
Yeah, it really depends on the individual athlete. And like the rest of the economy, it's it's a star system. We looked closely at these contracts and talk to agents, and what's happening is that if you are a star with leverage, you can make you know, a starter at a at a power conference school in football can make in the six figures every year. But if you're not a starter, you you're on a month to month contract. If you don't perform well or if you're injured, that
that money goes away. So it's just not a guarantee, especially in the same way that coaches have. Coaches, even assistant coaches in college football can make four hundred thousand, even up to two million and up.
Wow.
All right, Peter, thanks a lot, We really appreciate it was a really great piece everybody. Peter Robson Investigations reporter joining us from Seattle, Washington Again. You can find that story on the Bloomberg and at Bloomberg dot com Slash Big Take talking about college football players facing on ugly truth about how they actually get paid for step.
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