Trump Says Netanyahu Agreed to 20-Point Plan to End Gaza War

24:29But at the end of the day, what we have to offer is a very, very amazing value to what you can get by doing any other type of holiday, any other type of vacation. And people pay for it. And the great thing is, even though they're paying more for our experiences than they did last year and the year before and the year before that, the gap to land-based vacations is still huge. And so if there is a weakness and pullback in consumer sentiment, that bodes very well for us because people are looking to stretch their dollar even further and figuring out how do I get an amazing holiday, because I need one, and spend as thoughtfully as I possibly can.

25:11And we turn out very well when you line us up against the alternatives.

25:15Carol Massar:What's cool about talking with you, and I know Carnival is your big brand, but I mean, you have multiple brands and I know you've consolidated in terms of some of the groupings, but you talked about positive momentum on all of the brands or is there one in particular that you're really seeing some standout activity? Well, you know, we have, as I said in my notes this morning, we have an internal leaderboard, obviously, with our eight world-class brands and we encourage the competition and everybody sees who's on top and who's marching forward. And, you know, the two strongest brands on top of our leaderboard of returns are Carnival Cruise Line, which is America's cruise line, and Aida Cruises, which is the equivalent in Germany.

25:56And the great thing is, as strong as they are and as high as they are, they're looking over their shoulder because everybody is making improvement year over year. And that stretches across both North America and Europe as well. And the great thing is, despite the fact that we're showing so much improvement, only about half of our brands are back to where they were in return since before our pause, before 2020. Only half of them are at their historical peak. So I know the latent potential that is in our brands. And they are marching forward at pace. And you can see the results on a consolidated basis for the corporation.

26:37Carol Massar:Josh, one of the things we always talk about is, and we have folks here who are, they do one cruise, they do another cruise, they do another cruise. And I've been on a Carnival ship where I'm - You're talking about Charlie Powell. I am, I am. But I've been on an elevator where I've talked to people in the elevator and they're like, yeah, this is our 10th cruise or our fifth cruise. I am curious, what's the mix between new passengers who are experiencing Carnival for the first time versus those who are coming back for a second, third, fourth, fifth, whatever time on one of your ships? Yeah, so I'll speak holistically and then I can get a little bit more specific.

27:12But holistically, we got about a third of our guests at any one time are going to be new to cruise. And the remainder is going to be a mix of brand loyalists and those who cruise in general. And they might go on various brands and they're back on board one of our ships, one of our brands. It really is dependent on the profile of the brand and the cruise because there is a huge difference between a three-nighter quick getaway for the weekend out of Miami and going on a Cunard ship for a 120-night world cruise. And you can imagine there's much more loyal guests on the 120-nighter and much more first-timers on a three-night weekend type of getaway.

27:48And the thing to keep in mind for us, because we have very, very measured capacity growth, we have no new ships next year. We only have one new ship a year for the next several years thereafter, going to Carnival Cruise Line and then shifting a little bit to Aida as well. our capacity profile is such that we're not looking for first timers because we need first timers to fill this this hole that we see on the horizon. We're in very strong shape and we're looking for loyalists and and newcomers alike and whoever wants to spend what we're looking to charge to get on our ships. Josh, I want to have a quick corporate finance question with you because you said something on the call that got my interest and I know a lot of interest from investors.

28:29Leverage is now down to 3.6 times net debt to EBITDA. You'll be able to return cash to shareholders when that metric gets to 3.5%. Can you give more color here on the size and scope of that just 30 seconds to what a dividend would look like, what buybacks would look like, and when exactly that would happen? Well, what we said on the call this morning is, you know, we finally got that line of sight to three and a half times. And from a pro forma perspective, after we do a couple of things that we talked about on the call, we expect to get to that three and a half times, you know, very early. in our fiscal 2026.

29:00And that really gives us freedom to not only continue to responsibly delever, but also start that process of returning cash to shareholders. Having a dividend is very important to us. Historically, we've been a dividend-paying company, and we know that that opens new doors for investors. It gives ongoing yield, and that's a great thing for a company to be able to guarantee to its shareholders. So that is really priority one after that continuing deleveraging, And that will happen in early 2026. And that will follow alongside buybacks, I'm sure, in due course. But that's something that is really a board discussion that we're going to take on over the coming months with our board.

29:40Carol Massar:We got to run. Thank you so much, as always. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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33:03This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay 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, play Bloomberg 1130.

33:21Carol Massar:All right, that is certainly a busy day out of Washington. And there was something that actually started happening on Friday, late Friday, that caught our attention. And we finally got confirmation really today in terms of a deal. Yeah, it's a parent company of, well, the maker of Battlefield, The Sims, Madden NFL. Carol's favorite, I think, is Battlefield. Totally. It's Electronic Arts. I'm in. All in. It's agreed to sell itself to Saudi Arabia's sovereign wealth fund and a pair of private equity firms. It's a deal that values the company at around$55 billion. It would be the largest leveraged buyout on record.

33:52We've got Leanna Baker with us, managing editor of the deals team for Bloomberg News. She joins us here in the Bloomberg Interactive Brokers Studio. I want to start on the deal because, well, I want to really just talk about the deal because there's a lot notable in here. The size, the source, Middle East sovereign wealth. There's been a lot of that lately. What do we need to know about this? Well, Battlefield 6 is coming out October 10th. Oh, good news for you, Carol.

34:15Carol Massar:Marking my calendar. So there's just so much to unpack here. You mentioned that a pair of private equity firms have partnered with Saudi Arabia's Sovereign Wealth Fund. And one of them was started by Jared Kushner, the president's son-in-law. He was referenced in this press conference just in the last couple of hours. So I guess he's a big video game fan and his, well, actually, I don't know that for sure. But his firm has ties to Middle East investors, including the Saudis. And so it's not hugely surprising that he'd be involved. Although it is a bit surprising to us, you know, deal watchers that he'd be involved in such a big M &A deal.

34:52Silver Lake is the other private equity firm, which we know well. They've also been in the news because they're involved in this U.S. TikTok deal. But they're more of like. Which also has a sovereign wealth fund from the Middle East, too. Right. So it's all worlds are colliding with, you know, deal making in the Trump era. But But there was also, you know, banks involved, Wall Street. We have Goldman Sachs with EA and JP Morgan helping finance the deal with this group of investors.

35:21Carol Massar:A lot of hands in the pot, it sounds like. Gibby, I think I thought I said that there was an assumption of about$20 billion in debt, but forgive me. So JP Morgan has put together a$20 billion financing package. There's still details to work out of exactly, you know, what kind of debt it is, you know, getting into the details. but it looks like it's bank debt, which is a good sign that we're seeing, you know, the markets open and for lending open to see the largest leverage buyout of all time. We bank debt, not private credit. No private credit that I could see. OK. Is it manageable? Because this is a company that's been dealing with some things, right?

35:55Carol Massar:And seeing some slowing growth and taking measures. I mean, is this manageable debt? And I mean, obviously, once you are out of the public eye and you're not in, you don't have to deal with those quarterly results like you can do things. But is this enough? And are they going to be able to manage kind of the financial structure of this? So we'll have to see, but definitely bankrolled by the Saudis and also just having you mentioned not being in the public eye. But this is a company that also makes money. This Battlefield six game that I joked about, like that can make hundreds of millions of dollars when it comes out.

36:32But these things, you know, it's like a temple blockbuster movie when these games come out. So this is a real company founded in 1982 based in Redwood City. And they, you know, have thousands of employees and they're all hard at work on different games. And my colleague who covers the video game industry was telling me that a lot of EA's revenue comes from live services. So that's buying virtual costumes for your avatar, which I'm sure you do.

37:00Carol Massar:um so like i don't but tim does when he's playing so um they've created a services business and that's you know sticky revenue and it's not just going to you know what's left of game spot stopped by the latest for your avatar well if you get the game for free and you're not purchases or what do you really care what they're wearing carol i don't does anybody in there yes a lot of people well a lot of people care about that stuff that's what so yeah you know i haven't um it's all but virtual. But the point is like, think how profitable that is. I know, I know. I'm having fun with it, but it's, but it, right.

37:35Carol Massar:And there is momentum around it. Like people care, people, I shouldn't make fun. Cause I know a lot of people like to play these games and they're big business. So they also do the sports games, which is an interesting angle. Should we assume that they're going to like sell this off and go public in a few years? Cause there are investors just quickly. It's funny that you mentioned that. So just PIF, they have so many other video game companies that like they maybe they merge them all together. We don't have the reporting, but that's just something to watch this empire of Saudi back video game companies.

38:03Carol Massar:Typically, you take it public, you take it private and maybe do something down the road. Leanna Baker. Thank you. Thank you. Managing editor of the deals team for Bloomberg News here in our Bloomberg Interactive Broker Studio. Check out the story. Stay with us. More from Bloomberg Business Week Daily coming up after this.

38:22support for the show comes from public.com if you're actively involved in your portfolio you probably catch yourself repeating the same actions buying the dip manually sweeping idle cash putting on a hedge on public you can now create ai agents that handle all these tasks on your behalf just describe what you want to do in plain english like if the vix hits 25 buy a put option on the S &P 500. Or if my cash balance goes above$20 ,000, move the excess into my direct index. You approve the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.

39:00An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results.

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40:59Whether you're sending money to family overseas, spending while on your holiday abroad, or paying bills across borders, Wise makes moving money simple, transparent, and straightforward. Wise offers 24-7 customer service and runs over 7 million daily checks to spot and stop fraud. And most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me. Join millions, saving billions. Be smart. Get Wise. Visit wise.com or download the Wise app today. T's and C's apply.

41:34You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. I'm driving in my car. How about you let me drive? Oh, no, no, no, no. This is not a toy. Who's going to drive you home? Honey, please, I'll do the driving. Drive home. Excuse me, I want to drive. You drive, stay in prison. It's the question that drives us.

42:07Carol Massar:This is the drive to the close. The punk to music will drive us till the dawn. On Bloomberg Radio. All right, everybody, just about 19 minutes to go until we wrap up the trade on this Monday. In fact, we're almost ready to wrap up the trade for the third quarter. We're getting ready to kick off the fourth quarter. Just one more day of trading. But having said that, we've been bouncing around on the equity trade. You just heard from Bill and Alexis. just up about 15 points on the S &P 500, a gain of about 80 on the Dow Jones Industrial Average, and the Nasdaq 100, a gain of nearly 100 points, Tim, good for a gain of about four-tenths of a percent.

42:43I want to bring in Joyce Wong watching the fixed income market closely. She is senior client portfolio manager for fixed income at American Century Investments. The firm has around$300 billion in assets under management. She joins us here in the Bloomberg Interactive Brokers Studio. I want to start big picture because the notes that you sent to our producer Ari says that your base case is stagnation, at least for the next six months. Why is that? It's better than stagflation, I guess. But why stagnation? Yes, exactly. I mean, it's really an interesting environment right now where at the beginning of 2025, we were actually more in the full recession camp.

43:20And as some of the different policies came in, as Trump was inaugurated, our tune started changing. The economy has remained strikingly resilient. And so we still believe that given that we are seeing some cracks in certain segments of the consumer market, we know consumer spending drives two thirds of GDP. It's interesting to see that we that some consumers are stressed. We expect that segment to slow leading the U.S. economy to slow, but not slip into the full recession state, because we do think also next year, it's kind of going to be a tale of two halves, where the first half is going to be more like what we've seen, slow, below-trend growth.

44:02Second half, there's a good chance that a lot of these stimulus things that have been passed through the one big, beautiful bill, that starts kicking in, onshoring investments in the U.S., more of the AI spending. That could all kind of come into play in the second half of the year and lead to the re-acceleration.

44:18Carol Massar:So is cutting rates more about helping those, if you look at the K-shaped economy, those on the lower economic, I guess, status of our economy? Is that what that's about? Or how do you see it? Because it sounds like what the scenario you lay out, Joyce says to me, do we really need to cut rates? Yeah. I mean, we're definitely in the camp that we didn't think that the Fed was going to cut until we saw the softening in the labor market. So we finally started seeing that at the end of the summer. Let's see what happens with the shutdown and if we get the Friday jobs report on time. But we expect that to continue to soften.

45:00And so the rate cut at this point was probably necessary. Now, the question is, how many more do we need? What is the appropriate terminal rate? And I think that's what is going to cause volatility and fixed income yields going into year end in first quarter. You spent a lot of time on the road visiting clients. I'm wondering what you're hearing from them. What worries them? Are they worried about valuations? Are they worried about the macroeconomic environment? Or are they like you guys in the sense of we thought it was going to be a recession at the beginning of the year as these policies started to become clearer or at least less murky?

45:38We're more comfortable. Yes. I mean, as a fixed income specialist, I've actually over the summer, it was kind of quiet. And then as the first rate cut became more and more evident, that it was going to happen in September, people started calling me and they're like, wait, the four and a half percent I'm getting in money markets and CDs is likely to keep falling. All of a sudden, I'm not going to be able to get such a nice coupon from that. What about bonds? And what's funny is when I talk to a lot of our clients who are thinking about getting back into fixed income, they're shocked when I tell them that intermediate core bonds are up seven percent for the year.

46:18You know, you've gotten really strong returns in fixed income because of the attractive yield carry. So we believe now is a great time to put money to work that's been sitting on the sidelines in cash, in T-bills, CDs, and move it into bonds.

46:34Carol Massar:Where? Where along? I mean, in terms of the U.S. curve, where do you like? And then in terms of fixed income generally, what do you like, Joyce? Yeah. So we're big fans as active managers of the multi-sector approach because, you know, you see little blips of volatility. We know credit spreads in both IG and high yield corporates are close to all time tights. But there are these little blips, you know, like who knows what goes on. You guys are experts, you know, different happenings every day in the news. But sometimes you'll just see some spread widening and our traders, our PMs will be active and be like, this is a great opportunity to add a little more here, to sell here.

47:11And, you know, we like the shorter end of the yield curve because like we said, there's less unclear expectations about what's going to happen at this point. But on the long end, government shutdown, deficit questions, that all still lingers, lingering inflation, that could push rates up.

47:31Carol Massar:So twos, fives, how short? Yeah. So we are actually, we have been short the two. We are moving that short out the curve. So again, we think that the two is likely to stay where it is. there is more risk in the intermediate and long end of the curve to go up, especially as we get closer and closer to this uncertainty that's happening. When do we, you know, if you're saying that the base case is stagnation for the next six months, your view in the first half of the year is a little different. What changes that view for you? How we get out of the stagnation? If we have an incredible print from the big banks or in commentary from the big banks in just a couple of weeks, is that going to change your view about stagnation?

48:18You know, we still think that there's been so much pressure built up due to higher rates. Consumers are still under stress. If people are not getting new jobs, if wage growth isn't going to continue to accelerate and people are going to get let go, that's still going to cause pressure. Right. So we don't see there is a chance. Right. I mean, we assign about a 20 percent probability that we will see above trend growth. So there is a chance. But likely the likely case is that we will likely see the, you know, average to below average growth in the U.S.

48:51Carol Massar:I mean, when you look at the Treasury, it's amazing in terms of yields like we've been, you know, closer to five. We've been close below four just recently. What's more likely, moving up from here and closer to five or going back below four? Right. So we do think that's why we're starting to think about going short more. The intermediate part is that it's likely to go up. The only reason it would really drop below four is if we actually moved more probability into the recession scenario. That's the concern that I think a lot of people have right now. OK, so then what becomes more what what moves you to make a recession more probable?

49:36I would have to say, you know, if we do get more pressure on the tariff situation, you know, like, for example, you know, I'm working on a kitchen remodel. So I was a little bit nervous about this 50 percent tariff on kitchen cabinets and upholstery. You know, so if there's different surprises like that coming out going into the holiday season, I'm really watching what's happening with consumers this holiday season. If people are going to continue to spend or if they're just going to add to the credit card debt, you know, that's something we haven't talked about is just the growing debt.

50:07Carol Massar:We just talked to the Carnival CEO. They're very upbeat. They're bookings. I mean, the spend is on. Yeah. It's pretty remarkable. Just put it on the card. Well, there is that. There is that. A good way to end it. And that can create some problems. Joyce Wong, thank you so much. Always fun to have you in studio. Senior Client Portfolio Manager at American Century Investments. investments, approximately$300 billion in assets under managers. This is the Bloomberg Business Week Daily Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m.

50:42Eastern 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.

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