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- [00:00]
Commercial Announcer
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- [00:58]
Hiscox Insurance Representative
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- [01:32]
Podcast Host
Bloomberg Audio Studios Podcasts Radio news. You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am 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.
- [01:53]
Paul Sweeney
One of the stock stories in the news, folks, is it is Amazon cutting 14,000 jobs. I was doing some reading of Bloomberg News and they had like almost doubled their headcount pre pandemic.
- [02:05]
Putam Goyal
Sure.
- [02:05]
Paul Sweeney
Coming out of the pandemic. And so it makes sense that they should be shedding some jobs, perhaps. Let's check it with Putam Goyal, senior US E Commerce and Retail Analyst for Bloomberg Intelligence. Put him. Talk to us about Amazon here. 14,000 jobs. It seems like a big number, but I do know and for those affected, it is a big number, but they have, you know, over a million employees. So what's happening at Amazon?
- [02:27]
Putam Goyal
Yeah, it sounds like a big number, but in the grand scheme of things and for Amazon, it's not needle moving, right. It's 14,000 is about 4% of its corporate workforce and even smaller when you look at it on a base of 1.55 million employees worldwide. So still Very small. But, but they're cutting. Right. And that's the thing. They've been cutting since after the pandemic, as you mentioned. And we think this is just the beginning. We're just scratching the surface. There will be more cuts with Amazon, especially as automation and AI continue to fuel efficiencies across the organization. We haven't even got to warehouses yet, right, where there's a lot of automation going on.
- [03:05]
Interviewer
So is AI the main reason behind the layoffs? I mean, is the company trying to offset that rising AI Capex?
- [03:11]
Putam Goyal
I mean it helps, right, because they're continuing to invest in AI and Capex through aws. But how do they, how do they drive margin efficiencies? It's through using some of those efficiencies and paring back on the employee headcount. That and automation, those are the, I think two biggest things that are going to drive the need for more efficiency and then give back to the company through fewer headcounts.
- [03:34]
Paul Sweeney
I don't know Lisa, call me cynical, but I believe in my, this is my opinion that AI is going to be a net job taker and I think in size too for a lot of industries. I think this is going to be.
- [03:43]
Interviewer
A real issue, continuing to see it in stories.
- [03:46]
Paul Sweeney
So, and you know, some CEOs are trying to paint a different picture. So I put it. Let's take a look. You're, you're the boss of all things retail. How's this holiday season going to be here? Is this going to be a good year?
- [03:59]
Putam Goyal
I think so. I think the consumer has been holding up relatively well. Spending is higher and we think Amazon's continuing to take share. They're going to be reporting this Thursday and we're expecting solid retail sales numbers, high single digits and we do think that they're going to take share once again this holiday season. Overall, I think the consumer will show up.
- [04:21]
Interviewer
Can you dig into, go back to Andy Jassy's kind of role in the company. It seems to be filled with job cuts, changing different programs, programs. What's his focus right now?
- [04:32]
Putam Goyal
I mean he clearly said that he's going to be cutting back on jobs earlier this year in the summer. So we do see that rolling out. I think the focus is to invest in long term growth. I mean he was very clear in his statements that, you know, we can't worry about the intra quarter, the quarter to quarter trends and we really need to stay focused on the longer run. How does Amazon continue to the, to remain the leader that it has been because as you know, it's very easy to now operate an online business. Whether it's through Shopify, everyone almost has the same playing ground to compete in. So how does Amazon differentiate? And the only way to do it is continue to invest in the future. And right now that's AI. Whether it's gen AI, agentic AI, wherever it may lead us, it is AI.
- [05:19]
Paul Sweeney
Stay with us. More from Bloomberg Intelligence coming up after this.
- [05:24]
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- [05:51]
Public Investing Announcer
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- [06:51]
Commercial Announcer
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- [07:24]
Podcast Host
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am 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.
- [07:38]
Paul Sweeney
UPS is in the news today. Reports and some numbers cutting some headcount. The street likes it. The stock's up 7 1/2 percent. It's down 24% year to date. But a good day for United Parcel Service. Let's break it down with Lee Klaskow. He's our senior logistics analyst for Bloomberg Intelligence. He covers the rails, the trucks, the shipping, the air freight. He covers it all. We didn't really talk to Lee too much until the pandemic and then logistics. We all became experts on logistics and we're like, Lee, help us out. We don't know what's going on. So Lee, thanks for joining us here. Talk to us about ups, what's going on there?
- [08:11]
Lee Klaskow
Yeah, trust me, I enjoy being flavor of the month. So I'm glad to be here and talk about transport. You know, what's going on. UPS is they are making progress and they're executing on their plan. And their plan really is to create a network that can not only handle but thrive in an ever changing environment. And that change is being driven by E commerce. It's being driven by the uncertainty around tariffs. And what they've been able to do is increase productivity through technology, whether it's automation or AI. And that also they were stepping away from business, from Amazon. You know, they noted on their morning call that there are 3/4 into a 6/4 glide down of Amazon business. And the reason why they want to move away from Amazon business, it tends to be lower margin, lower yielding packages. But that's not to say that they don't want to totally walk away from Amazon because their return business is a good business for them. And we're seeing the success in the numbers. And you know, going into the quarter, I think investors were cautious or had low expectations and management kind of exceeded those with the results. And their outlook really shows us that, you know, expectations for the fourth quarter in 2026, at least as it relates to, you know, sell side analyst consensus is probably a bit low and it needs to move higher.
- [09:46]
Interviewer
Lee, can you get more into the cuts that we were talking about? 34,000 job cuts, where were they seen it and what kind of, let's say year over year cost savings does it expect in 2025 from all of this?
- [09:57]
Lee Klaskow
Yeah. So you know what they're trying to do, their overall cost savings, which includes, you know, the headcount reductions, they're looking to get $3.5 billion in cost savings. This year. They've done around 2.2 billion of that so far. And some of the reductions are driven by, you know, they offered early retirement for some of their drivers. They said they've had pretty good pickup with that. And that payoff should be about a year from what it costs, cost something 170, $580 million. And they mentioned on the call that it will take about a year to get to make those costs back up. So, you know, it really should be paying for itself. And they're closing a lot of facilities. So they've, they've closed, you know, something like 90, 95 facilities so far. And that's being driven by they don't need the network they had when they were, you know, really handling a lot of Amazon business. And now that, you know, like I mentioned earlier, they're walking away from that business. They're kind of reconfiguring their network. And they're also, you know, as I mentioned, they're increasing overall automation. You know, they noted on their call that they've added automation to around 35 more facilities. And about 66% of their packages touch these automated facilities, which is around 300 basis points more than was last year. And that number is just going to continue as management makes more inroads at modernizing their facilities.
- [11:26]
Paul Sweeney
Lee, what is UPS and maybe FedEx for that matter, how are they kind of talking to you guys about tariffs and how it might be impacting their business just as a big, big part of the supply chain?
- [11:35]
Lee Klaskow
Yeah, you know, it's interesting. So for like a ups, you know, there's good and bad when it comes to the tariffs and the more protectionist policies in the U.S. you know, we've ended the de minimis exemptions, which, you know, stated that if a shipment came into the United States and it was worth $800 or less, it didn't have to pay a duty or a tariff. You know, the Biden administration was working towards getting rid of that. The Trump brought that. Trump administration brought that to the finish line. You know, first it was just packages that were coming in from China and Hong Kong. And now it's been, you know, all packages coming to the United States and that's hurting volumes. They noted their U.S. or their China to U.S. volumes were down around 20%. And that's having a negative impact. Now you look at their forwarding business, you know, because of all these packages are now, if they are going to be coming in lower value packages, have to pay duty, they need to lean more heavily on their customs business. So you've seen their supply chain business outperform this quarter, and I suspect a lot of that had to do with the additional fees that they generate from helping shippers clear packages through customs.
- [12:47]
Paul Sweeney
Stay with us. More from Bloomberg Intelligence coming up after this.
- [12:53]
Public Investing Announcer
You're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic options plays on the side. The point is, you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On Public, you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto. It's all there plus an industry leading 3.8% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by BAKKT Crypto Solutions LLC. Complete disclosures available at public.com disclosure introducing.
- [13:53]
Commercial Announcer
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- [14:24]
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- [14:50]
Podcast Host
You'Re listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am 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.
- [15:05]
Paul Sweeney
Lisa Mateo sitting in for Scarlet Fu. I'm Paul Sweeney. We're live at Ban Mutual headquarters down in Lower Manhattan. This is what I call the Oppenheimer Building. I call it World Financial center, but the kids call it Brookfield Place. I don't know what's going on down here, but it is a great part of town. I worked down here pre 9 11. And what they've done down here, folks, if you're not from New York area, if you come to the city, you have to come down to lower Manhattan, see what they've done down here. It's just extraordinary. It's just really, really vibrant down here. We're joined right now by Sean McCarthy. He's the CEO of BAM Mutual. Sean, thanks for having us back to your offices. We appreciate it, sir.
- [15:36]
Sean McCarthy
You know, thank you, Paulisa, for coming. It's. This is an annual tradition and we really appreciate it.
- [15:42]
Paul Sweeney
Absolutely. I think when I was here last year at this time, you said 2024 was going to be a record year in municipal bond issuance. That was what happened. How about this year?
- [15:53]
Sean McCarthy
This year is going to be, in all probability, another record. Wow. The growth of the business has been really robust. A number of factors that make that happen. First, the state and local governments. The responsibility is being pushed down on them to issue more infrastructure debt. So if you think about infrastructure, 80% of what you think about is just infrastructure is financed at the state and local government level, not at the federal level. So this has been a year where many, many issuers have come to market. And we. And that's a result of a lack of, you know, a change in the federal support from health care to other programs. And so we think the state and local governments are going to pick up where the federal government is stepping back. And so I think it's going to be a record year this year and probably pretty robust next year.
- [16:49]
Interviewer
Now, there are certain areas of munis that have performed better than others. So.
- [16:53]
Sean McCarthy
Well, I think from an activity standpoint, it's been across the board. Okay, so you see a lot of health care general obligations, which are full faith from state and local governments themselves, lots and lots of projects across the country. I think one of the areas that's going to be most dynamic going forward is power. You know, if you think about AI, the amount of power and data centers that are in their demands. I was speaking to one of the heads of one of the largest municipal power agencies, and he said that the demand that they're being asked for now, let's assume that some of it's double counting, is going to be four to ten times what they produce right now.
- [17:34]
Paul Sweeney
So, Sean, just for the folks that don't know what you guys do, BAM insures municipal bonds giving another Level of certainty for investors.
- [17:43]
Sean McCarthy
That's correct. So we are a double A rated insurance company by Standard and Poor's and really what we do is guarantee different than other kinds of insurance. We guarantee timely payment of principal and interest when due. So that means if there is a credit event that would cause a default, we pay first and then mitigate later. But one of the unique things that we do and the reason why at this point we've, through our inception, which is 13 years, we've guaranteed $170 billion worth of transactions and we've had no defaults on these transactions. And that's really because we focus on municipal essential infrastructure, state local government obligations and we work with municipalities. If there are bumps in the road like what happened during COVID we're proactive in working with the municipalities to make sure that they're in the best financial health that could be.
- [18:44]
Interviewer
And how have munis been performing compared to Treasuries?
- [18:48]
Sean McCarthy
I think, you know. Well, I mean, I think that the way we look at it, it's when issuers are coming to market and what the performance of municipal bonds are. We're going to have an investor come speak a little bit later today, I think, and the relative performance has been really quite, quite robust. And I think that's going to sort of augur into the next year.
- [19:09]
Paul Sweeney
Talk to us about just credit quality of the municipal bond market. I haven't really heard or seen or read about major blow ups. Whether it was years ago, Puerto Rico or Chicago or just Illinois in general. Quite frankly, we haven't really seen that too much.
- [19:24]
Sean McCarthy
So I think massive individual credit problems is not what's happening at the moment. I think what you're going to see happening, what we feel is happening, is a greater differentiation among credits. So for example, if you take health care, there are lots of very big financial hospital systems, large single hospital institutions and a lot of small rural hospitals. How they're going to be affected by what happens to Medicare and Medicaid payments and how technology changes the way health care is delivered is going to create a different sense of who the winners are and who the losers are would be a good example of that.
- [20:08]
Interviewer
Are you expecting a slowdown by the end of the year? Maybe November? Do things tend to. I think end of the year?
- [20:14]
Sean McCarthy
I think you're right. I think volume will tail off in the fourth quarter, usually does unless there's a change in the tax law. But one of the important things that happened earlier this year was that when the big beautiful bill was passed, tax exemption and municipal bonds really was not affected. So that enabled at the beginning of the year, if you think issuers were trying to come to market to try to because they weren't sure what the outcome was going to be, and then later the market environment was so favorable that they continued to participate in the market to bring their new issues to market. We'd see going forward if interest rates continue to decline, you probably have a better idea of what's going to happen tomorrow than I do. But but if you think about that effect, there'll be a greater number of refinancings as well.
- [21:02]
Podcast Host
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 10am to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.
- [21:28]
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Paul Sweeney
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Paul Sweeney
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Hiscox Insurance Representative
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