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It was the bombshell news over the weekend. Even my husband talked to me about it. And that is Warren Buffett leaving the CEO head at Berkshire Hathaway. Matthew Palazoa is Bloomberg Intelligence Senior analyst for PNC Insurance. He was there on the ground. Matthew, what was it like when he said that in the last few minutes of his address.
I was there boots on the ground, so I have to admit. So it's cold in there, it's dark. People are up since four o'clock in the morning right now.
Yeah.
Get The guy in front of me is slumped over asleep in his chair. And I looked at my watch and I said, oh, there's only five minutes least. And I say, it's kind of not that eventful of a meeting. It literally said five minutes left. And then Buffett's looks up and he says, I've just gotten alert this five minutes left. I have to say something before the meeting ends. And once he said that, I think everyone in the building knew what was coming. I was personally really sad,
Like I was almost choked up. It was it was a sad moment he talked about he got a big standing ovation. It was you know, you could definitely feel the emotion in the building.
What do we know about Greg Gable? He's been kind of the successor to mister Buffett. He's been kind of running things really for a number of years now, right.
Yeah, And I mean a couple of things on Greg. So number one, he's been with Berkshire since the early nineties, so he's been around for a long time. He's vice chairman twenty eighteen. We've talked about over the years, how Buffett has talked about at these meetings that he's been seeding a lot of responsibilities and control to Greg, and how he's been working on, you know, kind of these bigger deals to go over time.
What do we think the premium is going to be worth?
Now?
No one can replicate Warren Buffett period. The structure could still be there to run a very successful behemoth right, but it's not going to be the same. Yeah, what the premium there?
Do you think certainly some of the magic has gone right and the buffet premium, You know, I would argue that, you know, let's see, you see the stocks down I think was six percent when I left my desk. You know, it kind of makes sense to me. He probably had people with large unrealized gain positions in it, and they're like kind of buffets out now I'm out, similar to why Berkshire itself sold their positions in Apple Bank of America.
But I would look forward to the future and.
Say, you know, maybe you're not getting these kind of home run deals, but maybe you're getting better capital allocation. Maybe you're getting a dividends, so you know, maybe those things offset each other.
Just degree.
That's where we got to go. What's what's a three hundred and fifty billion three fifty billion amongst friends? Got to put up a significant dividen, you'll, and you got to stop buying back some stuff. Yeah, I mean, so what that happened today?
I don't so I don't think it's happening today. I probably don't think. I don't think it's going to happen this year, right. I think when when Greg takes over, I think he will be very cognizant of making dramatic changes. But I also feel like Berkshire got away with a lot because Buffett right, so that that will not hold water anymore. And I think it would behoove able to really do something with the capital, and it.
Would investor questions would carry more weight.
How is the how is the company doing?
Fine? The first quarter I didn't I didn't love the first quarter is.
A great love.
The word fine, I mean.
Ten billion dollars a quarter is good, right, that's the kind of earnings power. They were just a couple of signals in the first quarter results that I didn't love. And I'm an insurance guide. And they had adverse development, which means some claims from prior years were costing more than they expected. The wild fire losses were a little bit more than I thought they were going to be. The fire loss is not that's not a go forward thing,
but the reserve issues are a little concerning. But the beauty of the company is such a behemoth, so many streams of differentiated earnings that they kind of upset each other.
So their earnings have been better.
Than expected the past couple of quarters, so I thought they were in line for a kind of slight disappointment.
Thirty seconds. Some of the parts valuation, where are we.
Are Bloomberg Intelligence midpoint? Some of the parts analysis comes up to like one point one trillion, which was kind of before the meeting, the stock was trading slightly above that. I don't know if it's you know, below that now, and I mean, you know, I don't claim to know what Buffet knows, but they haven't been buying max shares for a couple of quarters, so I think he's probably viewing it very much in the same way as fully valued, and the stock's at all time highs.
Won what he does now? Like you're warn he's ninety.
Digital chairman, right, you gotta do, you're ninety four?
Like no, just relax, Yes, exactly, I take that I would too, all right, Matthew Palizo, Well, thank you so much. We appreciate that, Matt Palizzoli. He's a senior Anniston covers all the property and casualty insurance companies for Bloomberg Intelligence. Boots on the ground in Omaha over the weekend, mister Bethey as Tom Keener first Tom stepping down at the age of ninety four and just obviously historic, historic run.
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It is earning season, folks, and we got the Tyson's Foods reporting earnings. I don't know, maybe it's just me. I think of Tyson's food I just think chicken. But they're also in the beef business as well. That's the extent of my knowledge. Stocks trading off on some earnings. Jen Bartashis joins us. She's a senior retail staples and packaged foods analysts for Bloomberg Intelligence. Jen the street doesn't
like what they heard from tyson Foods Springdale, Arkansas. What happened there, Well, it's.
Really two things, Paul. The first thing is that the beef business did worse than people expected. But secondly, the company held their guidance for the fiscal year, which is generally a good thing, except that they're ahead of paste for the top of their guidance for adjusted operating income for both the chicken and the pork segment. So there are a lot of questions on why, given the strong first half performance they've had that they didn't actually raise
their guidance overall. And so between those two things, that's what's putting pressure on the stock today.
Do we get the sense that that's a demand concern or is it an input concern?
Well, on the beef side, it's an input concern. And actually there's a piece to that puzzle that Tyson touched on, but they didn't really go into detail, and that's that they talk about how consumers have really still had a lot of demand for beef, which is true, except that when you look at the consumer they're trading down into
like ground beef. Now when you have a shortage of cows, you know, the problem that Tyson has is that they have to put higher quality parts of the animal into grind in order to sell it, which means that their profit per animal is coming down. And that's a concern over the long term if those changes in behavior patterns don't alter in the near future.
All right, you know, during our little egg shortage, my scientific analysis was basically just make more chickens. Tyson's are the chicken people. I think, what are they saying about the chicken population these days and eggs and all that kind of stuff, because they're the folks that know.
Yeah, so the chicken supply is actually pretty healthy from a standpoint of the chickens that are used for consumption, they really weren't impacted all that much by avian influenza, and so that was the good news. The bad news is that the mortality rates on the type of chicken that they're currently using is still pretty high. So that means that they're not getting as many chickens into the processing plants that they normally would given the number of eggs that are being laid, and so that is an
inherent top or cap to supply. So supply is robust. It's going to grow about one percent this year, but there are some constraints there with how much more they could actually grow supply overall.
What's the tariff impact, if any, on Tyson? On both sides the demand and supply.
For Tyson, Actually they have very limited exposure for tariffs. They set on their call today about ninety five percent of their revenue comes from product that's sold in the United States. Their export is relatively small, and they've had some time to work on contingency plans, so finding different end markets that they can send some of the parts of animals that US consumers just don't eat. So right now it doesn't appear to be a very large risk for Tyson at all.
You mentioned maybe some issue with the cow herd. I mean, I watched Yosemite. I know all about the ranching business to see it. Yeah, so I mean, can't we make more cows? What's going on there?
We can make more cows. The problem is that for ranchers, it's a tough environment to decide to actually build up herds. Interest rates are still relatively high, there's still high cost to expand operations. We've had drought that's only just reversing in a lot of the key areas where we raise cattle, and so that decision has been coming. But the problem is that once you even start, you know, it takes eighteen months to get a cattle for birth to market.
So even if they start today, we're not going to see an influxus supply for quite some time.
I feel like just a few years ago it was all about alternative protein. I remember, particularly with Cargil for example, they're making a really big push into that. Has that trend for these guys shifted now?
It has. When we look at the consumer consumption data, the luster around plant based has really fallen off. And so you know, right now there's a core demographic that will always be interested in that product, but at the at the moment, it's not growing. The sales are continuing to contract. Part of that is that the cost of regular meat has come down, and we had food inflation which pushed the cost of special ingredients for alternative meat
way up. So the price gap between alternative proteins and conventional proteins got a lot wider in the last couple of years, and it still hasn't completely collapsed again. And so until that gets a little bit closer, it's going to be harder to get consumers to get interested again in alternative proteins.
So what is it the tysons of the world, What are they saying about their consumer these days?
So you know, they talk about the demand for protein, and this is something where at the Bloomberg Bloomberg Intelligence Farm Food Fuel Conference we had a whole suit of panelists on protein and the demand for protein is really strong, Whether you're talking about animal protein, whether you're talking about dairy, current diet trends are high protein based, and so that really bodes well for for producers like Tyson as as the consumer is willing to still spend on protein and
it's in the majority of their purchases when they're going to the grocery store.
So true big protein person.
Well, who isn't who doesn't.
Like to actively search for protein that feels different?
Doesn't it?
All? Right?
Fair enough?
Last night?
Yeah burgers, but then you get cholesterol issues. Okay, anyway, Jen, thanks a lot. Jennifer Bartasha's as she joins us from Bloomberg Intelligence and your analyst retail staples and packaged food.
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Alex del poulswehen you live here, and a Bloomberg Interactive broker's studio streaming live on YouTube as well. On the trade front, President Trump suggests that some trade deals may come as soon as this week. How about that? And the current global economy reporter for Bloomberg News. He joins us, he's down there in DC, and how do you think this thing is going to play out here? Is it country by country by country by country that we're going to have to wait for trade deals to be announced.
Well, it's something of a tease from President Trump. We're about a month now, it's just over months Liberation Day. The presidents picked the point that there may or may not be some agreements coming in this week. And he wasn't being specific. He wasn't He was quite vague, and he was being asked by reporters about this. But what we do know from an administration efficiency is that folks are ongoing with several countries they have identified at different times.
Japan is near the top of that list. India could be near the top of that list. South Korea could be near the top of that list. So there could be some kind of agreement reached with one of those at some point soon.
Now.
The question then becomes the details of that agreement, and that's where everybody will be parising this. Well, what sort of moves had been made on non tariff barriers to satisfy in Washington, for example, what kind of concessions have been made on.
Maybe investment into the US. Where will the actual US tariffs settle?
All of those may well obviously offer nuggets, for sure, but it also may off our roadmap for other economies to say, I am like, we can do that too, and come to the table to the US to try and work it out.
So, you know, we don't have specifics yet.
It's a little bit vague, but clearly something's coming down the pipes at some point soon.
But I understand that the agreement versus like an MoU versus a deal, they all mean different things. But do we think anything that's on paper at this point, even as a member of understanding, would that count as getting something done and tick that box?
And as the role of Congress and all of this that there's so skeptics say, look, negotiating a real meaningful trade deal takes months, if not years, of protracted trade talks. Okay, so clearly that can't be done in weeks. Nonetheless, I think what people are looking at for is a first of all, what is actually greed, but most importantly, where will US tariff rates settle in the air terms.
Remember, all of.
Those what were described as reciprocal tariffs or those levels that were set pretty high for you know, money.
Trading partners right around the world.
If the tariff level is maybe back towards this ten percent based on level, then that might suggest that, you know, that's where things might settle. If you could deal with the US, could deal with the US, and you settle for that based on ten percent, that's the way for But of course.
If it's not on that tariff level is higher. That's what I think about. A lot of people are going to keep an eye out for.
Who's driving the bus here. Is it the President? Is it his trade advisors? Who's kind of because there's a lot of balls in the area when you think about all the countries that are presumably in negotiations with the US.
Yeah, I think there must be at least a dozen or so in serious negotiations, and of course they say they're talking to up to seventy. I think it is all governments all together. It's you know, it seems to be different personal he's playing different roles treasure sectors. Got president, it's clearly front and center for the aged trade talks.
He's kind of made that clear. The trade representative career obviously is kind of the technical guy behind the scenes, he would be involved in all of this, and of course Commerce Secretary Howard Lutnik, He's seems to be more vocal, maybe in the European side, but they're all playing the role or all part of it. But ultimately, you know, as the older officials say, and as we can say, the anside looking and ultimately President Trump will make that agreement,
He will decide whatever will be decided. The market rally in recent weeks will of course give the administration a lot of confidence that what they're trying to do is the right thing. But at the same time, we all know that they got pretty nervous, you know, couple of weeks ago, and they did pull back for the pose
ownership with Carr. So a lot of folks on what kind of what level of terwer will be great in their term and what the roadmap will be from there on for these for all the countries involvement.
And super appreciate thank you so much and the current Bloomberg Global Ecademy reporter joining us on those three deals that may come as soon as this week.
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Alex Still, Paul Swinni live here in our Bloomberg Interactive Broker Studio, streaming live on YouTube. Michael McKee joins us here. Mike, what do you think about some of the economic data we get the it Some services came out, you know, better and expected, But boy, that pricious paid number you kind of jump out at you. How do you pick that all in?
Well, I think you're seeing the beginning. I'd better hear more about John Touch.
Back in the day.
I think what you're seeing is the beginnings of the impacts of the tariffs. This is soft data, essentially, but it has a sort of a hard component to it, in that the ism is asking what's happening in your business this month? And if you go under the hood, you see that imports have dropped a lot and prices paid went up a lot, and those two things are probably going to be connected. Also, inventories went up because people front loaded ordering. The interesting thing about it, though,
was that new orders were still rising. So it may be that the businesses are retrenching but the customers have not yet, or it may be that the customers are looking to those who import to keep them going, which they may or may not be.
Able to do.
Yeah, eleven industries reported growth last month, led by accommodation and food service. Is only six industries contracted. When do you think we're going to get a clean read on all these numbers.
It's going to probably be over a period of time, depending on the number and how businesses react to a specific data point. I would imagine that you're not going to get a full picture of it until either July or August, when we know what the tariffs are. Remember the reciprocal tariffs are postponed until July, so that could
hang out there for a long time. When we know that the tariffs are, that will help, and when we see how people react to it, both other countries, whether they're reciprocal tariffs or whether they come to some kind of a deal. So at this point, it's really hard to say when you'll know, but I suspect it's going to be one of those things that slowly becomes obvious.
How about to the federies are they going to be slow to kind of recognize what may be happening out there in terms of inflation and growth.
Unless we get some sort of rapid movement in either one of those things, which nobody is really predicting at the moment, they're going to be slow because there's no benefit to them to moving quickly. If the economy is slowing down, then the question becomes how slow And with inflation still above target et cetera, et cetera, then the Fed doesn't want to get into a situation where it's boosting inflation by cutting rates too quickly, so they'll just
wait and see. And the economy is in pretty good shape right now, appears with the numbers still doing okay and inflation still slowly coming down, so no problem for them.
That's one of the arguments too for the OPEC plus production increase, right It's like, hey, listen, the hard dat is actually okay. Maybe there can There are lots of reasons why this is to do it, but maybe it's the market can actually absorb it because we haven't seen demand necessarily a fall off a cliff.
Well, it sets up an interesting question about how consumers will react if gasoline prices start going down, and then how the FED reacts to that. I guess if in headline inflation goes down because gasoline prices and energy prices go down, and I suspect they will try to look through that as much as possible because they know that could easily change, and because the real issue is going to be is the economy slowing down. If the economy is slowing down, that's going to put a drag on inflation.
It's also going to mean that that money that you would have spent somewhere else because you're not spending it on gas, you may not be spending it anyway because you're trying to cut back and save money.
You know, just you know, you're paying attention here to a lot of the speakers out at the Milking conference today, and a lot of them, you know, whether it's Bill Aufman, Paul Taubman, mister Rowan from Apollo, all saying yeah, there's uncertainty out there and there's some issues out there as it's to their businesses. Yet Secretary Beston calls the US quote the premier destination for global capital. So I guess that's the argument of near term paying maybe long term gain from the industry.
Well, it is still we have the largest deepest capital markets, especially on the treasury side on the bond side, so there are not a lot of alternatives if you want to move a lot of money around. But most of what Scott Besson was saying today was a sales pitch to you highlight the administration's economic agenda. The one bit of news I thought to the extended's news was his description of how he would see the ten year yield dropping, because he's made a big deal out of that being
sort of the benchmark rate for business activity. And his argument was, you lower the budget deficit because then takes some of the credit risk out of the bond market, and rates can drop if if you take out the you know, the premium, the risk premiums.
And he was talking about one percentage point per year ideally would be as you know, the deficit to or debt to GDP would be meaningful now.
But but the obviously one if you follow the budget process, has to laugh because the budget that they are working on this year, the recond through through reconciliation, raises the budget deficit.
Uh.
And that's even beyond just the machinations they're doing to avoid the reconciliation rules. They want to spend more money, and every day Donald Trump is talking about spending more money, let's rebuild Alcatraz, Uh right kind of thing. So, uh, we're not going to get that one percent per year definit of decline, I don't think, And so it kind of makes his argument not not relevant at this point.
And you're headed off to d see tonight or tomorrow. When do you go tomorrow? The FED meeting? Any firework?
No, just one.
I was like fire, Why didn't say work, firework?
Fire?
It's not even uh, not even one firework. I don't think we will get no move on rates. The FED will be very circumspect about what it says in its statement because they can't They can tell us what's been happening, which is okay, but they have to emphasize we don't know what's going to happen going forward. And then there's no new economic forecast, there's no new dot plot.
There is only.
Jay Powell, and I suspect Jay, I suspect. We get a lot of questions that are answered by I don't.
Know fair enough. That's a lot of the questions that we also ask an answer to a right. Mike Thanks Lot. Mike mcke Bloomerg Inter National Economics and Policy correspondent.
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