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- [00:01]
Baillie Gifford Representative
What is actual investing? We believe that it's a real world.
- [00:05]
Lenovo/IBM/Odoo Advertiser
Task to deliver thoughtful capital deployment.
- [00:07]
Tim Craighead
It's not about speculating over the short.
- [00:09]
Lenovo/IBM/Odoo Advertiser
Term, it's about understanding the long term.
- [00:12]
Baillie Gifford Representative
Opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world.
- [00:21]
Lenovo/IBM/Odoo Advertiser
Then we back them to give those ideas time to flourish.
- [00:25]
Baillie Gifford Representative
Bailey Gifford Actual Investors Find out more@baileygifford.com.
- [00:30]
Lenovo/IBM/Odoo Advertiser
If a Lenovo computer for your business is on your holiday list, don't shop around. Just go directly to the source Lenovo.com it's your last chance to get exclusive deals on the PCs you want for your business, like the ThinkPad X914 Aura Edition and Yoga 7i 2in1. So avoid all that shopping chaos and price comparing and just go directly to the source. Lenovo.com where PCs are up to 35% off. That's Lenovo.com Lenovo Lenovo no. So you're telling me that the AI that's meant to make everyone's job easier to manage just adds more to manage on top of the thousands of apps the IT department already manages? Funny how that works. Any business can add AI. IBM helps you scale and manage AI to change how you do business. Let's create Smile to Business IBM.
- [01:31]
Baillie Gifford Representative
Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all in one platform that replaces them all. CRM, Accounting, inventory, E Commerce, hr. Fully integrated, easy to use and built to grow with your business. Thousands have already made the switch. Why not you try Odoo for free@odoo.com, that's odoo.com.
- [02:04]
Scarlet Fu
Bloomberg Audio Studios podcasts Radio.
- [02:08]
Sam Fazeli
News.
- [02:10]
Scarlet Fu
This is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney.
- [02:15]
Paul Sweeney
How do you think the Fed is looking at tariffs? The uncertainty of tariffs?
- [02:18]
Scarlet Fu
Let's take a look at the sectors and how they perform.
- [02:21]
Paul Sweeney
A lot of investors getting whipsawed every.
- [02:22]
Scarlet Fu
Day by news events, breaking market headlines and corporate news from across the globe. Could we see a market disruption? A market event?
- [02:30]
Paul Sweeney
People just too exuberant out there?
- [02:32]
Scarlet Fu
You see some so called low quality stocks driving this short term rally. Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Radio, YouTube and Bloomberg.
- [02:42]
Paul Sweeney
Originals on today's Bloomberg Intelligence show we dig inside the big business stories impacting Wall street and the global markets each and every week.
- [02:49]
Scarlet Fu
We provide in depth research and data on some of the 2000 companies and 130 industries our analysts cover worldwide.
- [02:55]
Paul Sweeney
Today we'll look at how the automaker Ford is being impacted by its struggling EV business.
- [02:59]
Scarlet Fu
Plus we'll dive into why the food and beverage giant Kraft Heinz is replacing its CEO.
- [03:02]
Paul Sweeney
But first we begin with research Bloomberg Intelligence recently put out on companies to watch for in the new year.
- [03:08]
Scarlet Fu
It's titled 50 Companies to Watch in 2026. We are joined by Tim Craighead, Bloomberg Intelligence Global Chief Content Officer.
- [03:14]
Paul Sweeney
We first asked him to break down.
- [03:16]
Tim Craighead
This research, put a little bit of context. This group of 50 are all part of what we call focus ideas. It's a broader group of about 100. These are all high conviction ideas. They have high conviction ideas where we see something very different from what we think is embedded in market expectations. And there's catalyst ahead to change the market mindset. Those catalysts coming up in 2026 and that's where these 50 come into. And across the group this year the biggest bucket are two. One is just simply new product innovation that is being ramped out into 2026. The other, no surprise, AI related. And in some of it's the tech companies. Some of it are companies that are feeding into the process and you know, happy to get into some of those or other topics as well such as cyclical pressures and competitive concerns on the negative side. And there's a couple of other things.
- [04:21]
Paul Sweeney
As well on the new products. Give us an example of a new product that you guys think might really be important for a company in a stock.
- [04:29]
Tim Craighead
Yeah, it's interesting because some of these can be quite technical. Paul, you think Anilon Pharma or Bridge Bio are two biotech companies that have new products coming. One of them relates to heart issues, another relates to dwarfism. But it's new products that will expand the market and drive we think significantly better revenue and earnings. On the other hand, there's some good old fashioned names that you know and you love. Canada Goose has new product flow coming through that we think reinvigorates the top line. Brinker think Chili's the restaurant are going through a whole new upgrade of their menu and and upselling clients with, with good stuff like margaritas with patron. And so the new product idea can expand, you know, across a whole number of different segments. It's quite interesting.
- [05:31]
Scarlet Fu
Yeah, I'm looking at Deckers is one of the new products companies you highlight and their ugg is introducing styles to stay relevant beyond the winter months. Let's talk a little bit about AI because that's going to continue to be a big theme even as investors are starting to make distinctions between companies that are in it for good and those that may be kind of faddish. What are some new names that surprised you in terms of their making the list?
- [05:56]
Tim Craighead
Yeah, it's interesting. I'll give you the new names and the ones that aren't on here and I'll do the latter first. There's none of the big LLMs this year that are on our list or Nvidia that's not on the list. What you find are other either enabling technologies. So think Lam Research, it's a semi cap equipment company that makes makes the gear that you make the semiconductors with. That's quite well positioned. Tsmc, the world's largest foundry that's making the AI accelerator chips that feed into the LLMs or even even back up in the channel of how do you build out AI Constellation, which is the US's largest nuclear utility. That's quite important if you're going to generate the electricity to drive the data centers to drive a acs. Interestingly European construction company they own Turner, which is the US's largest construction company. They've got the biggest order book for building out data centers. So there's a host of different kinds of ways you can think about leveraging AI beyond just simply the big LLMs like Google or OpenAI or things along those lines that you hear about.
- [07:15]
Paul Sweeney
Tim, on this list you and the BI analysts also highlight stocks that might be have pressure on the downside. Whether it's cyclical pressure, competition M and a project delay. Give us a name or two that might have some downside risk this year.
- [07:31]
Tim Craighead
Yeah, it's interesting on that. Think about what's going on from the standpoint of you were just talking about airlines from a European vantage point we've got wage pressures that are rising. And for Air France, klm, a big chunk of their business is the transatlantic market which is getting more and more competitive. And with both of those factors we think that there's risks to estimates. China Railway Group, it's a big state owned enterprise in China. It's one of the big four engineering companies and to the degree that China is shifting towards more technology and innovation driven investment and less away from bridges and roads and railroads and things along those lines. China Railway Group we think has downside risk. Couple little companies that are unusual but intriguing. Dinopolska, which you've never heard of I'm sure is a Polish supermarket company but they've got two big European competitors that are coming into the Polish market again, downside risk to earnings. And the same thing can be said about Join Labs talked about a couple of positive health care companies. This is one of the contract research companies that helps a pharmaceutical do their drug development. And China is now looking to go broad and global with approvals on new pharmaceutical products. Join who focuses in on China. China is losing some of their business. There's lots of ways we can think about this.
- [09:15]
Scarlet Fu
Our thanks to Tim Craighead, Bloomberg Intelligence Chief Content Officer.
- [09:19]
Paul Sweeney
We recently focused on a Bloomberg Big Take story entitled Saudi sisters wield $50 billion fortune as global Power Brokers. You can find it on bloomberg.com and the Terminal.
- [09:28]
Scarlet Fu
The story looks at the Allian Group, a Saudi empire led by sisters that has grown in influence. It has a nearly $13 billion stock portfolio in the U.S. as well as stakes in companies like BlackRock and JP Morgan Chase.
- [09:40]
Paul Sweeney
For more, Scarlet and I were joined by Devin Pendleton, Bloomberg Wealth Reporter. We first asked Devin to explain what the alliance is and who the sisters are behind it.
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Devin Pendleton
So it is Lubna and her sister Huzam Alayan. They're both in their early 70s and they have been at the helm of this family enterprise for decades, for more than 40 years.
- [10:01]
Sam Fazeli
Wow.
- [10:02]
Scarlet Fu
And they have fairly low profiles too. That's the thing that is striking. They have these low profiles but they are known to as steely negotiators. Tell us what they've done.
- [10:12]
Devin Pendleton
Yeah, they've done an incredible job building this family business which was started by their father who was a really, you know, unbelievable character. He basically worked his way up from nothing. You know, he's not a royal, was not connected to the royals at a young age. But he built an oil servicing company which he grew striking deals with all sorts of consumer brand companies in the US bringing them to Saudi Arabia, everything from Coca Cola to Cheez its to Oreos. And he came over to the US in the early 1960s, was very inspired by what he saw and bought some bank stocks and basically his daughters took over that business which was sprawling. I mean it was in all sorts of sectors, real estate, oil field services, consumer goods and hung on to those equity stakes, those banking stakes. So now they have this incredible portfolio of investments in the US on Wall street as well as this booming multi sector business in Saudi Arabia.
- [11:14]
Paul Sweeney
But people in power know these two sisters. They were at the White House recently. Tell us about that. How do they subtly wield their influence?
- [11:24]
Devin Pendleton
They are not noisy people. I think it's one thing to do business and thrive in Saudi Arabia is You have to really sort of be, be quiet, be, be forceful, sort of know, be a little bit deferential to, you know, who's really in charge, which would be the government and the king and the Crown Prince. But they have had long term ties with the U.S. i mean you really saw that at the White House dinner. You mentioned Paul. She was sitting right next to Elon Musk, but you know, arguably one of the most important people in the room because she has these connections on Wall street through their long term equity investments. It's really important right now, especially because the kingdom is trying to bring in a lot of inbound investment to transform their economy past oil. It's a big deal for them to be bringing in money. And these Olayan sisters have had these connections for a long, long time. So they're more important than ever.
- [12:14]
Scarlet Fu
So they have the connections with the right people in Saudi Arabia. How does therei mean? When I think about prominent investors in the kingdom, I think about Prince Abaleed bin Talal and how he's been very vocal about his positions. He's, you know, often seen on media networks. You don't hear about these alliance sisters at all. And I wonder how much of that is, you know, is part of their success story.
- [12:38]
Zeke Fox
Totally.
- [12:38]
Devin Pendleton
It's, it's so, so important. I think they are extremely discreet. They are, like I said, like they really know their role in the kingdom. Like they're important. They step in and help when they need to. For example, in Saudi Aramco IPO back in 2019, the kingdom was having trouble kind of getting people excited and really getting the investors they needed early to get backstop this ipo. They asked some influential families and the alliance were one that, you know, they really showed up. That matters for the kingdom. And it also gives them, you know, license to, to really expand their business as much as they need to and to be in a position of power to help out, but also, you know, have favors in return.
- [13:19]
Paul Sweeney
And the Bloomberg the Rich go function lists their wealth of the family at approximately $50 billion US, right?
- [13:27]
Devin Pendleton
Yes, $50 billion US but I can guarantee you that that is a conservative estimate.
- [13:31]
Paul Sweeney
Is that right? Now I understand that they, while they keep a low profile, these sisters, they have good relationships with some of the big folks on Wall street like Larry Fink of blackrock, things like that. So that's got to be useful.
- [13:42]
Devin Pendleton
Yeah, absolutely. I mean, just through one portfolio alone, they have their big investors and BlackRock, the equity investors, they have a one and a half billion dollar stake in BlackRock they own an almost billion dollar stake in JP Morgan. It's actually where Lip Line first got her start. She was initially working as a low level banker at JP Morgan right after college. So they're really worldly, very well traveled and just tough, tough in this sort of very, you know, meaningful business sense. Like negotiators, they're very involved in their investments.
- [14:20]
Scarlet Fu
Our thanks to Devin Pendleton, Bloomberg Wealth Reporter. Coming up, we'll move to the biotech sector and why myeloma patients are failing to get the treatment they need.
- [14:27]
Paul Sweeney
You're listening to Bloomberg Intelligence on Bloomberg Radio providing in depth research and data on 2000 companies and 130 industries.
- [14:33]
Scarlet Fu
You can access Bloomberg Intelligence via BI Go on the terminal. I'm Scarlet Fu.
- [14:37]
Paul Sweeney
And I'm Paul Sweeney and this is is Bloomberg.
- [14:42]
Baillie Gifford Representative
What is actual investing? We believe that it's a real world.
- [14:46]
Lenovo/IBM/Odoo Advertiser
Task to deliver thoughtful capital deployment.
- [14:49]
Tim Craighead
It's not about speculating over the short term.
- [14:51]
Lenovo/IBM/Odoo Advertiser
It's about understanding the long term opportunities.
- [14:53]
Baillie Gifford Representative
For companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world.
- [15:02]
Lenovo/IBM/Odoo Advertiser
Then we back them to give those ideas time to flourish.
- [15:06]
Baillie Gifford Representative
Baillie Gifford Actual Investors Find out more@baileygifford.com.
- [15:11]
Lenovo/IBM/Odoo Advertiser
If a Lenovo computer for your business is on your holiday list, don't shop around. Just go directly to the source lenovo.com it's your last chance to get exclusive deals on the PCs you want for your business, like the ThinkPad X914 Aura Edition and Yoga 7i 2in1. So avoid all that shopping chaos and price comparing and just go directly to the source lenovo.com where PCs are up to 35% off. That's lenovo.com lenovo Lenovo. So you're telling me that the AI that's meant to make everyone's job easier to manage just adds more to manage? On top of the thousands of apps the IT department already manages? Funny how that works. Any business can add AI. IBM helps you scale and manage AI to change how you do business.
- [16:04]
Baillie Gifford Representative
Business.
- [16:05]
Lenovo/IBM/Odoo Advertiser
Let's create Smile to Business IBM.
- [16:12]
Baillie Gifford Representative
Running a business is hard enough, so why make it harder With a dozen different apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. Before you know it, you are drowning in software Instead of growing your business. This is where Odoo comes in. Odoo is the only business software you'll ever need. It's an all in one fully integrated platform that handles everything CRM, accounting, inventory, E commerce, HR and More. No more app overload, no more juggling logins. Just one seamless system that makes work easier. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business, whether you are just starting out or already scaling up. Plus, it's easy to use, customizable and designed to streamline every process so you can focus on what really matters running your business. Thousands of businesses have made the switch, so why not you try Odoo for free@odoo.com that's o-o o.com.
- [17:15]
Scarlet Fu
This is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Radio.
- [17:21]
Paul Sweeney
We move now to to news in the auto sector.
- [17:24]
Scarlet Fu
This week, automaker Ford announced it will take 19 and a half billion dollars in charges tied to an overhaul of its EV business. And this comes after years of Ford struggling to make its electric vehicle business profitable.
- [17:35]
Paul Sweeney
For more, we're joined by Stephen Mann, Bloomberg Intelligence, Global autos and industrials research analyst.
- [17:40]
Scarlet Fu
We began by asking Steve for his reaction to the nineteen and a half billion dollar charge.
- [17:44]
Tim Craighead
Yeah, it is a very big number. He pretty much backed up the truck on these charges. But the important thing is it's clearing the deck for next year. Right. There is a couple of earnings tailwind for Ford and actually to their competitors in Detroit as well. So the biggest, I think the biggest write down, two biggest write down is the writing down the losses on their Mustang Mach E. You know, they've been losing around $25,000 on the EBIT line per vehicle. So it's massive. The other is the charge is really on the joint venture with their battery supplier in Korea. So you know, they're going to repurpose one of those plants for energy storage. So again, it's really clearing the deck. There's a couple of tailwinds for 2026, which includes Trump's loosening the mpg miles per gallon rule.
- [18:47]
Paul Sweeney
Yeah, absolutely. Does that reflect, Steve, investors want these auto companies to kind of back away or proceed more cautiously towards their move towards EVs.
- [18:58]
Tim Craighead
Yeah, definitely. Especially in the U.S. and look, Ford is not just pivoting in the U.S. but they're also pivoting in Europe. They just announced a joint venture with Renault to develop EVs over in Europe. Ford doesn't really have a big presence in Europe, so they're taking that approach of partnership. GM is doing the same thing. Remember, they took a $1.6 billion charge, much more modest than the 19 billion that Ford is taking. But GM is dialing back but keeping one foot on the EVs, I think they, I believe they still think that they're, you know, they still can succeed especially when they introduce the Chevy bolt in the new year.
- [19:47]
Paul Sweeney
So Steve, you know we're many years into this transition to EVs and you know, I know there are many, there are European countries, Scandinavian countries where it's almost 100% of their fleets are, their new car sales are EVs. But that ain't the case here in the U.S. with some hindsight here, why hasn't, why haven't EVs taken a better hold here in this U.S. market?
- [20:11]
Tim Craighead
Yeah, it definitely needs more, you know, regulatory support for EV to take grow because you know, ev, there's a lot, three hurdles right that consumers have to get over which is the price, the range and the convenience. Right. Of charging infrastructure. You know, without government support to actually build that out, it's going to take some time for this electrification transition. I think a lot of people in the industry still feel that electrification, battery, ev, maybe hybrids in between is the way to go in the future. But, but you know, I think there's, there's a huge paradigm shift that consumers hair have to get over and it's really challenging to do that without government support here.
- [21:04]
Paul Sweeney
Our thanks to Steve Mann, Bloomberg Intelligence Global autos and Industrials Research analyst.
- [21:08]
Scarlet Fu
We move next to some news in the food and beverage industry.
- [21:11]
Paul Sweeney
This week Kraft Heinz announced it would be replacing its CEO with former Kellanova CEO Steve Cahalane on January 1st.
- [21:19]
Scarlet Fu
This comes as the company plans to split into two separate publicly traded companies. One will sell condiments and boxed meals while the other will include its slower growing grocery products like lunchables.
- [21:29]
Paul Sweeney
For more, Scarlet and I were joined by Christina Petersen, Bloomberg Food industry reporter. We first asked Christina to break down the CEO change.
- [21:37]
I
We had expected in September that the current CEO would lead one of the two new companies, specifically the one that is the grocery staples. They actually don't have official names yet, but that was a collection of the least profitable or less profitable food items there, including things like lunchables and Oscar Mayer Deli meats. The surprise came this morning that he is in fact not going to lead that company and instead they are bringing in Steve C.A. hellane from Kellanova to lead the second company after the split has gone through. That is being called the Global Taste Elevation Company that's going to have Heinz ketchup, Kraft Mac and cheese, some of those beloved iconic products.
- [22:21]
Scarlet Fu
So that's the fast growing part of the company and the other One is kind of the, you know, the equivalent of CNN TNT and you know, leave it behind assets that, you know, are, you're managing a decline in. What can you tell us about Steve Cowling, the former Kellanova CEO? What is his approach? Approach, his philosophy?
- [22:40]
I
Well, I just spoke with him and he said that he's going to be focused on bringing organic growth to the company. We talked a little bit about focusing on some of the health and wellness trends that consumers are looking for. Increasing offerings with protein, with fiber, with shorter ingredient lists, you know, the so called cleaner labels. So they'll definitely be leaning into that. It sounds like a little bit more. He also led Kellogg through its split. The Kellogg company split into W.K. kellogg and then Kellanova. Both of those companies were then separately acquired. I asked him if he thought that could be a path here and he said it's hard to predict the future, so not ruling it out.
- [23:18]
Paul Sweeney
So what's the, what's been the challenge for Kraft Heinz over the last number of years?
- [23:23]
I
I mean, in general, the food companies are all struggling with this shift as consumers move towards healthier, less processed food. The company says that they just had too many brands and that splitting into two will help them focus on each component. I think that there is some analyst chatter that that's what companies say when they just need to, you know, spin off some of their less profitable items. But they will tell you that they expect both companies will have better value when there's an ability to focus more on the condiments and boxed meals and then on some of the other foods.
- [23:59]
Scarlet Fu
Put this all into context for us when Paul talks about how, you know, this group has been kind of struggling overall. We also saw that with PepsiCo, with Coca Cola. I mean, they have had to rethink their strategy completely.
- [24:12]
I
Yeah, there's just been a lot of movement in the food industry right now. PepsiCo announced some pretty dramatic changes. They're going to reduce the number of products they sell by 20% and lower prices in some of their key brands as part of an agreement with activist investor Elliott Investment Management. Coke has a new CEO. I think Coke is in pretty solid shape. They've been doing their, their shares have been doing really well compared to some of the other business companies. But yet in general the, the companies that I think are really tapping into this health and wellness interest in consumers are often the smaller startup brands and the big companies are playing catch up, not only with them, but some of the private label companies too that are really nimble and able to get some of These new products to market really fast.
- [24:56]
Scarlet Fu
Our thanks to Christina Petersen, Bloomberg food industry reporter.
- [24:59]
Paul Sweeney
We move next to the biotech sector. Bloomberg Intelligence recently came out with research which gives an overview of the blood cancer myeloma.
- [25:06]
Scarlet Fu
According to Bloomberg Intelligence, multiple myeloma patient numbers are rising globally due to the aging population. And despite an evolved treatment landscape that's leveraged the FDA's accelerated drug approval, there's still unmet need.
- [25:19]
Paul Sweeney
For more on this and the latest in the biotech sector, we were joined by Sam Fazeli, Bloomberg Intelligence director of research for Global Industries and senior pharmaceuticals analyst.
- [25:28]
Scarlet Fu
We began by asking Sam where we are in terms of treating myeloma.
- [25:31]
Sam Fazeli
Well, I've been telling you about these cancer therapy treatments and these cancer areas where patient numbers in terms of those who live rather than those who die is fundamentally changing. Breast cancer has been one of them. Prostate cancer is another one. Melanoma is another one, which of course people are familiar with. And of course myeloma has been one that we've also got there. There are patients who are alive today who were diagnosed in 1996, 1998, and there are, and there have been people developments in that space that literally are changing completely the way that people end up living with their disease. Of course it's not for everybody that ends up like that, but the average mortality or the average life expectancy of a patient with myeloma has significant changed. And what is it? It's a cancer of the bone marrow which then of course translates to some changes in your blood. So it's a hematological cancer. And yet another major development in the last week or so that came out at Orlando, a conference that was held last week.
- [26:38]
Scarlet Fu
What is the treatment landscape then for myeloma?
- [26:41]
Sam Fazeli
Yeah, so given that it goes on for so long now, we've got first line, second line, third line, fourth line, fifth line, fifth, etc. Right. There are so many patients, there are some patients that enter trials these days that have had eight lines of therapy. But that's, I would say, a good thing. That means we have drugs to treat people every time they fail a previous one. The most exciting recent development was this data that came out of Johnson and Johnson's trial called Majestic 3, which takes a special type of antibody, married it with a well known accepted drug on the market today called Darzalex, also another J and J drug. And lo and behold, at 36 months post therapy, 83% of patients were alive versus the next big thing. Best thing that we've just had recently added to the armamentarium at about 50%. So massive shift in survival. I mean, these are things that we don't often see in oncology. When you see it, you get standing ovations and you get celebration because it makes a huge difference to patients. So that's what we've been seeing recently.
- [27:46]
Paul Sweeney
Sam, here in the United States, the Trump administration has taken a real hard line against some federal funding of universities. And I know a lot of universities are saying that's really hitting their funding for their medical centers, for example, some of the medical research. Are you seeing that? Are you hearing that from the companies? Is the effects, are they being felt yet or is that something in the future?
- [28:10]
Sam Fazeli
No, I would say that type of research funding is something that's going to translate into trouble in 5 to 10 years time if indeed it sticks and if indeed you really end up with people not being able to start a scientific career because they can't get money to do their research. Now, I had a conversation with somebody who said actually it's not as bad as it sounds. It's only some areas that are being cut, the budget hasn't been halved, and then others tell me something different. So let's see how this all pans out in 2026. But if it goes in the bad way that you were just referring to, you're going to end up with fewer scientists in 5 to 10 years time in US universities developing these new ideas. And then of course, where does that all go? China. And they are doing a fantastic job of getting their research funded and pushed. And that's where I think we all US and Europe need to watch because we lose the competitiveness angle.
- [29:08]
Paul Sweeney
Our thanks to Sam Fazeli, Bloomberg Intelligence Director of Research for Global Industries and Senior Pharmaceuticals Analyst.
- [29:13]
Scarlet Fu
Coming up, we'll look at why the global management consulting firm McKinsey is cutting headcount.
- [29:18]
Paul Sweeney
You're listening to Bloomberg Intelligence on Bloomberg Radio providing in depth research and data on 2000 companies and 130 industries.
- [29:24]
Scarlet Fu
You can access Bloomberg Intelligence through BI Go on the terminal. I'm Scarlet Fox.
- [29:28]
Paul Sweeney
And I'm Paul Sweeney and this is Bloomberg.
- [29:36]
Lenovo/IBM/Odoo Advertiser
If a Lenovo computer for your business is on your holiday list, don't shop around, just go directly to the source lenovo.com it's your last chance to get exclusive deals on the PCs you want for your business like the ThinkPad X914 Aura Edition and Yoga 7i 2in1. So avoid all that shopping chaos and price comparing and just go directly to the source lenovo.com where PCs are up to 35% off. That's lenovo.com lenovo lenovo. So let me get this straight. Your company has data here, there and everywhere. But your AI can't use the data because it's here, there and everywhere? Seems like something's missing. Every business has unique data. IBM helps your AI access your data wherever it lives. To change how you do business, let's create smarter business IBM.
- [30:36]
Baillie Gifford Representative
Running a business is hard enough, so why make it harder? With a dozen different apps that don't talk to each other, one for sales, another for inventory, a separate one for accounting. Before you know it, you are drowning in software instead of growing your business. This is where Odoo comes in. Odoo is the only business software you'll ever need. It's an all in one fully integrated platform that handles everything. CRM, accounting, inventory, E commerce, HR and more. No more app overload, no more juggling logins. Just one seamless system that makes work easier. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business whether you are just starting or already scaling up. Plus it's easy to use, customizable and designed to streamline every process so you can focus on what really matters running your business. Thousands of businesses have made the switch, so why not you try Odoo for free@odoo.com that's o d o o.com hey.
- [31:38]
Lenovo/IBM/Odoo Advertiser
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Scarlet Fu
Of $45 for three month plan equivalent to $15 per month required new customer offer for first three months only. Speed slow after 35 gigabytes if network's busy, taxes and fees extra. See mintmobile.com this is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Bloomberg Radio.
- [32:16]
Paul Sweeney
We move next to some news at the global management consulting firm McKinsey &.
- [32:20]
Scarlet Fu
Company. This week the firm announced its leadership is cutting about 10% of headcount across non client facing.
- [32:25]
Paul Sweeney
Departments. Could amount to a few thousand job cuts over 18 to 24 months. And this comes even as the firm marks its 100 year.
- [32:33]
Scarlet Fu
Anniversary. McKinsey's revenue growth has flatlined in the last five years, leading to a reset after some rapid hiring over the prior.
- [32:39]
Paul Sweeney
Decade. For more on all of this, we were joined by Sri Nataranjan, Bloomberg News chief Wall street.
- [32:44]
Scarlet Fu
Correspondent. We began by asking SRI to break down why the firm's last five years have been so.
- [32:48]
Lenovo/IBM/Odoo Advertiser
Disappointing. Around 2021, McKinsey had revenue at the $15 billion mark. Here we are in 2024, 25. By the time this year ends, we're going to be 16 billion, just a little bit over. So they've operated in this narrow band of $15 billion to $16 billion in annual revenue, which is great. Any other management consulting firm would absolutely love to post numbers like that. For McKinsey, it is a sense that their revenue has flatlined a little bit. And you did mention their hundred year celebrations, right? Which 2026. That is when they will turn 100. So they had this annual partner gathering, which also doubled up as this kickoff for their 100 year festivities. And for those who were there, who listened to Bob Sternfels, the global managing partner at McKinsey, the de facto leader, you could sense some plain spoken bravado. He was asking people, are you in for this mission? And those who say, yes, I can assure you good are ahead. Because it is also an acknowledgment that the last few years have been rocky, not just from its standpoint of its financial health, but you have to think about some of the challenges and the controversies that McKinsey has had to navigate. The opioid scandal, some of the criticism over their work in China and Saudi Arabia and even back home here in the US with ice, for instance. These are questions that were asked and stuff that McKinsey has had to answer. And it presented an unwelcome distraction. But the bottom line is for this firm is when it looks at its numbers, it does realize people won't like hearing this. But at management levels, that's how they talk about it. It realized that there was some bloat. And the message that's percolating through the firm right now is it's time to get.
- [34:26]
Paul Sweeney
Leaner. I was interviewing with McKinsey when I was in business school and like second round, they asked me to get up on a whiteboard and sketch out kind of like a business flow model. I just turned to him and said, thank you, but no thank you, and walked out the door. Anytime you bring a whiteboard, I'm out of there. I can't think like it. So I went and traded stocks for a living after that. Sri why has revenue been Flat here. Is there some concern that maybe all this AI spending is taken away from other budgets where maybe I don't need the consulting or that's certainly the.
- [35:00]
Lenovo/IBM/Odoo Advertiser
Concern. On the forward, perhaps, but just in the last few years the reality of the industry and McKinsey in some ways is the flag bearer for the industry. But there are perhaps other major consulting firms that are struggling even more. And the fact is that the demand for traditional consulting services may not be as high as it used to be. Companies and clients are getting cost conscious. When your clients are not able to post great revenue growth, the only other lever that they can pull is expenses. And consulting fees are the first ones thrown out the.
- [35:34]
Tim Craighead
Window.
- [35:34]
Paul Sweeney
Right. Advertising is the first one, I.
- [35:35]
Lenovo/IBM/Odoo Advertiser
Think. Advertising then consulting fees.
- [35:38]
Scarlet Fu
Perhaps. But is McKinsey Solutions so out of the box? I mean, at this point what McKinsey recommends is kind of dogma in corporate boardrooms. You don't need to hire McKinsey to tell you to how to do some of these.
- [35:48]
Lenovo/IBM/Odoo Advertiser
Things. Look, and I think the way you're framing it is just a little bit more of a polite way of some of the memes that you see out there, which is this idea that all that consulting firms do is prescribe people, grow revenue and cut costs. In the moment it might be funny, but to some extent it is an oversimplification of what they do. Because if you look at the list of clients that they've racked up, we talked about them starting out in 1926. University professor who advised a local meatpacker, Armours & Co. From that what they've grown up to. They are the go to advisor to blue chip companies from Coca Cola and Goldman Sachs to everyone else and also countries that span the globe. And a lot of these people are repeat clients. So you have to assume that it's not as simple as rote advice that they're doling out. Because for these big companies to turn to McKinsey again and again tells you that they see value in most of what they do. There might be some extreme cases on either side. One, it might be some undesirable work and two, it might just be obvious advice. But for the most part they're clearly doing something that companies value and.
- [36:58]
Scarlet Fu
Countries value. Speaking of countries, you mentioned China and Saudi Arabia. China wants its companies to continue to bring in consultants, but they just want them to be.
- [37:09]
Zeke Fox
Homegrown.
- [37:10]
Lenovo/IBM/Odoo Advertiser
Consultants. Right. And that seems to be the push in China, which is good job relying on all of these western firms to figure out how you need to modernize and be ready to compete on a global scale. But they are also encouraging them now to turn to homegrown consulting firms. Saudi Arabia is a completely different channel. We have a person at McKinsey who estimated that in the prior decades of 2014 to 2024, McKinsey earned at least, at least $500 million a year from the kingdom, which is either with companies affiliated with Saudi Arabia or the government itself. But the challenge in Saudi Arabia is also obvious. You've seen some of the recent headlines where they're pulling back on consulting expenses. Some of these pie in the sky projects are not working out as they had hoped for. And again, consulting fees are going away. And Saudi Arabia had become one of McKinsey's most important clients globally. So that is obviously also a place where they don't necessarily see a lot of room for.
- [38:04]
Paul Sweeney
Rapid growth. Our thanks to Sri Natarajan, Bloomberg News chief Wall.
- [38:08]
Scarlet Fu
Street correspondent. This week we looked at another Bloomberg Big Take story called a shadowy global network helped Trump make millions in.
- [38:15]
Paul Sweeney
Meme coins. You can find it on bloomberg.com and the Terminal. The story looks at how Donald and Melania Trump have made millions from meme.
- [38:22]
Scarlet Fu
Coin hype. For more on this, we're joined by one of the story's authors, Zeke Fox, Bloomberg.
- [38:27]
Paul Sweeney
Investigative reporter. We first asked Zeke to give us more context on.
- [38:30]
Zeke Fox
This story. During his first term just a couple of years ago, Trump was calling crypto a scam. But as he prepared to take office this time, he and his family started two big crypto ventures. And for this story, I went deep on kind of the silliest one, which is the Trump and Melania.
- [38:54]
Paul Sweeney
Meme coins. I forgot about.
- [38:55]
Zeke Fox
That one. Yeah. So this was on the eve of inauguration. The president and then his wife both announced they were creating new cryptocurrencies that didn't do anything at all. And these are, like, transparently useless. It's kind of like a, a gambling game. And at the time, this was really hot in crypto. So many people dived in that on paper for just a second. The Trump meme coin. The Trump family had $50 billion of holdings of this meme coin. But this is a crypto world where things can go poof overnight. The best estimates we found, from chainalysis and bubble maps to crypto research firms, were that the Trump family made about $350 million of real profit on these.
- [39:41]
Scarlet Fu
Meme coins. Who helped them market these coins? Who helped them, you know, presumably profit off of that? That's the. The gist of your story. And was It a difficult question.
- [39:53]
Zeke Fox
To answer. Yeah. Like on the one hand, the whole thing sort of happened in the open and it felt like there was, we sort of knew what happened. On the other hand, as I tried to dive in and figure out who was behind this, it was really tough. You'd think that people might be proud to say that they'd helped the president with an important business venture, but. But really nobody was talking. The trail took us in a very convoluted way, but it ended up with a guy who uses an icon of a cartoon cat wearing an astronaut suit. On Twitter, he goes only by meow and he runs a crypto exchange or he was the co founder of a crypto exchange called Meteora that was actually home to a ton of these giant meme coin launches. And all of them, or most of them seem to follow this pattern where they'd go up a lot on hype when they got announced and then soon crash. And we were trying to figure out who knew what when the trail took us to Istanbul, to Singapore. You got to read the story to see how close.
- [41:00]
Paul Sweeney
We got. So is the Trump meme coin still.
- [41:05]
Zeke Fox
In existence? Yeah, these things like never really die, but there's, there's no excitement around it anymore. The price is down about 90% from.
- [41:14]
Paul Sweeney
Its peak. Where do I find.
- [41:16]
Zeke Fox
The price? You know, their coin market cap is a pretty big crypto tracking site. But one funny thing we found in reporting this was talking to meme coin traders. A lot of them said that Trump actually killed this boom. Like for a while we were all having a lot of fun trading these meme coins. But the, the trumps made so much money off theirs that the gamblers in the casino were like, you know what, we're you, we've emptied our pockets, we got, we're done with this. We need bring on prediction markets. We need something different to.
- [41:49]
Scarlet Fu
Gamble on. So our meme coins, they've, they've peaked already. They've died or I mean, they're still there, but no one's making money off of them the way they.
- [41:56]
Zeke Fox
Used to. Yeah, it's a little bit like if you remember the NFT bubble, the like digital crypto art. For a minute, it's hot and people are making good money. They're telling their friends and then at some point people just, they crashes and people move on. So a lot of the same people who are in on NFTs got in on meme coins. And while this was, while this was running, it was a great business. We talked to one 22 year old who started one of the biggest meme coin creation and trading apps. His company, which just had a few employees, generated $1 billion from the during this meme coin bubble. But now a lot of the people who are excited about Meme Coins have moved on to prediction markets where the Trump family has its own interests.
- [42:48]
Scarlet Fu
As well. Yeah, Don Jr. Right, has some pretty big stakes or has a pretty key role in some of.
- [42:54]
Tim Craighead
The.
- [42:54]
Zeke Fox
Companies. Yeah. He is an advisor to both Kalshee and polymarket, the two big prediction markets. And then the Trump family's social media platform, Truth Social, has announced plans to create its own prediction market. But it's kind of a pattern where the Trump family has these business interests in this kind of gray area market. And then the Trump administration is creating rules that are legalizing these markets and helping make.
- [43:25]
Paul Sweeney
Them grow. Has President Trump or his family or his administration commented on your story or about the meme coin part.
- [43:32]
Zeke Fox
Of it? So the press secretary got back to us, not really getting into the specifics, but just saying, hey, the Trump family would never engage in conflicts of interest, but not really addressing how they manage having interests in both the business side and being in charge of drafting.
- [43:53]
Paul Sweeney
The rules. And I guess no one.
- [43:55]
Zeke Fox
Cares anymore. I'd like to think that people still care, but, you know, when it came normally you have like, let's say this was the stock market and somebody created like a penny stock that went up, you know, a thousand x and crashed. Yeah. Somebody would be diving in, they'd be digging through people's messages. They've been trying to figure out what happened. Meme coins. A few weeks after Trump was elected, the SEC put out a statement that basically said, not our business. Nobody has stepped up to look into.
- [44:26]
Scarlet Fu
These yet. Our thanks to Zeke Fox, Bloomberg.
- [44:29]
Paul Sweeney
Investigative reporter. That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on 2,000 companies and.
- [44:35]
Scarlet Fu
130 industries. And remember, you can access Bloomberg Intelligence via. Via bi. Go on the terminal. I'm.
- [44:40]
Paul Sweeney
Scarlet Fu. And I'm Paul Sweeney. Stay with us. Today's top stories and global business headlines are coming up.
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