GM Boosts 2026 Outlook on Premium Pricing for Big Trucks

0:00So, like, 100 % of investors think that protection is important, but only about 70 % of advisors are, like, talking to their clients about that.

0:07Scarlet Fu:Where do you think the disconnect is happening? There's these huge differences that exist in terms of what advisors think they're talking about to their clients, what clients are actually hearing. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business.

0:42Let's create smarter business. IBM. Support for this 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 of the workflow, and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.

1:23An 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.

1:57Scarlet Fu:Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. 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. David Welsh, he is our Bloomberg Detroit Bureau Chief, and we'll talk about General Motors' earnings, but I was checking out Canada's exports to the U.S., and energy is number one on the list,$160 billion Canadian dollars worth of exports to the U.S. in 2025. Number two is motor vehicles and parts at$74 billion Canadian dollars.

2:39Scarlet Fu:What's the thinking in Detroit when the president threatens tariffs on Canadian products? you know generally speaking in in detroit the the car companies worry about this because they've got long-standing manufacturing there a lot of big canadian parts suppliers too magnet is big martin ray is another one that's a good-sized company uh they send a lot of parts over the border very quietly toyota makes a lot of vehicles in ontario and ford and general motors still have production over there so does stelantis so look the car companies don't like anything that really is going to upset their supply chains any more than it already has.

3:17Mexico has already been a big deal for them, and certain parts of Asia as well. So they'd rather see the status quo remain in place and hope it does here. In fact, the car companies generally want to see USMCA remain as similar to what it's been since Trump set it up, what, five, six years ago to begin with. But that's not going to be the case. But they have been fighting to sort of claw back some exemptions to that and reduce their cost. That's why General Motors, one of the reasons General Motors had better earnings today is they've managed to lobby their way into at least a little bit of a reprieve on these tariffs.

3:56And looking at the GM results here, this is right back to their playbook, which is, I mean, they boost their 2026 outlook due to premium pricing on big trucks. Boy, that is America auto industry today. premium pricing big trucks suvs that seems to be working for certainly ford here i mean gm it did well it's working for for all of them really um a couple of things uh so yeah they are charging a lot of money for their big vehicles uh no we did actually i will say this we did see some discounting on pickup trucks as the you know the competition is always tough in that segment and you've got high fuel prices that I think is keeping some buyers on the fence for a while.

4:40So, you know, there's a bit of that going on. But GM's average vehicle is selling for$52 ,000. And, you know, that's an expensive vehicle. So they are keeping price up. That's one of the things that's doing well for them. We talked about tariff relief. They have lower warranty costs. That's helping them as well. The other thing, too, to keep an eye on, they've been boosting production. They had pretty lean inventories throughout the second quarter. So some of this is that they're just kind of putting more into the channel to their dealerships. And now GM says it's sustainable and that they see similar momentum into 2027 or 26 and 27.

5:21But they've got to deliver on that. Otherwise, you know, they're building inventory and they may have to pull back at some point.

5:28Scarlet Fu:Okay, so GM and Ford, they're all doubling down on these big premium trucks. What does the carmaker strategy look like when it comes to hybrids, when it comes to EVs? Because my understanding is there was another charge related to reduced production of EVs. That's right. And what that charge is, it's basically for stuff they've already announced. But they've had to pull back production on the batteries they make for the EVs. and they've had to pull back on production of the electric vehicles themselves. They're retooling a plant in suburban Detroit that they thought was going to make electric pickup trucks, but nobody buys electric pickup trucks.

6:04They don't buy GMs, they don't buy Ford's, they don't buy Tesla's, they don't buy Rivian's. No one wants an electric pickup truck. So right now what you're seeing are these charges coming through the system, and GM has taken a total of$11 billion in charges there. They haven't canceled a single electric vehicle in that lineup. They still sell a dozen different EVs. And that's their strategy. They don't have any hybrids on the market now, except for the E-Ray, which is a Corvette, very low volume. They say they're going to have a handful of them coming. Mary Barra told Bloomberg TV that. But not on the market yet.

6:37Ford only has a couple. Stellantis, very little presence there. Right now, that's a Hyundai and Toyota and two-degree Honda game. And all three of them are getting good sales gains in the U.S. market because they've got hybrid electric vehicles at a time when gas is selling for more than$4.

6:54Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. I don't love the word retirement because I think it has negative baggage. I like the word financial independence. If you were to be financial independent, like how would you spend your time? And that's exactly what a lot of my clients talk about. And the term they'll use is a work optional lifestyle. I agree. Like the next gen, millennials and below are not thinking about retirement. We're thinking about let's find something that we enjoy, that we can have financial independence. I think that's a better way to think about the end of life stage versus quote unquote retirement.

7:51S &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. An 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.

8:31Advisory 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. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM.

9:10Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. 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. Well, here, this is a story that just won't die. Paramount Skydance, I'm not even used to calling it that, but whatever. Warner Brothers Discovery, Paramount wants to buy them. The federal regulators said, OK. The state said, whoa, whoa, whoa, wait up here. We've got some problems. And it looks like they're going to hold off this deal at least temporarily.

9:44This is Paramount Skydance taking over Warner Brothers Discovery. Wow. Chris Palmieri joins us here, senior editor and entertainment team leader for Bloomberg News. He's based out there in L.A. with all those folks, but he's here in the greatest city in the world, New York. Chris, thanks so much for joining us here. The states are blocking the Paramount Skydance merger or acquisition of Warner Brothers Discovery. Can they do that? Apparently, yes. Apparently they can get a judge to do that. Yeah. And, you know, we've seen this a couple of instances. We saw, you know, the states get together and go around a Department of Justice deal with Live Nation member and the whole Ticketmaster thing.

10:24So so, yes, they do have this power and and they're using it. This is seen as sort of like antidote to a very sort of relaxed Trump administration merger and acquisition policy. So at the very least, they've got some, I guess, a temporary restraining order. Is that what they have here? And that's going to delay the deal for a couple of weeks. Right. So right now they can't close the deal until August 3rd. There's another hearing August 3rd. That will be determining whether that injunction, don't close the deal, goes until there's a verdict in this case. So potentially pushing it through to next year, which would be very bad for Paramount.

11:03Yes. And now the parties, I guess the seller here said, there's probably some risk when we were negotiating this deal that something would happen. And so we negotiated a ticking fee. Yeah. What's that? $7 million a day that Paramount must play Warner Brothers shareholders if they fail to close by the end of September. OK. Wow. And so that adds up to more than$600 million a quarter. OK. Holy. All right. So, again, you put that on the deal if you think there's a material risk that for whatever reason it won't get approved. And so you've got to really put the onus on the buyer to make sure it does get approved.

11:43What's the feeling in Hollywood? Is this deal going to go through? Can it really be blocked? Well, yeah, we're going to do the sort of Hollywood version and the Wall Street version. I think Wall Street has largely bet that he's going to get this deal done. OK. OK. He being David Ellison, who is the CEO of. Whose father is one of the richest guys in the world. And so that helps. In Hollywood, there's certainly people think it's going to happen. who sort of resigned to the fate, but they're very not happy about it. I mean, we've seen the Writers Guild actually sue to try to block the deal. We've seen very strong statements from other unions.

12:17You know, the rank and file person in Hollywood, who's never a happy person in general. It's a tough business. It sees this for what it is. There's going to be massive consolidation. There's going to be layoffs. There's going to be one bigger conglomerate that they have to answer to, you know, for pitching stories, you know pitching movies and tv shows and things like that jobs all of that it's it's it's it's going to be it's going to be difficult and it's already been a difficult market in particularly in los angeles in the film business a lot of jobs moving overseas a lot of cutbacks and the threat of ai it's not a happy time there so i mean in reality i mean you think about it you're putting two studios together paramount and warner brothers two of the largest studios in the business it's almost like 100 % redundancy.

13:05I mean, do I need this stage manager on this studio if I've got one across the street on the other? You know, I mean, yeah, well, and not and not just the two studios, but two streaming services, Paramount Plus and HBO Max and two giant cable network operations. I mean, everything from CNN to MTV. So a lot of redundancies. Paramount's argument is that they're going to run Warner Brothers and Paramount Studios separately, separate lots, separate management teams. They said they're going to have 30 movies a year they're releasing specifically for theaters, which is higher output than they've had historically, the two companies separate.

13:42We'll see if that all happens. That's the promises now. The question is, you know, when they do this deal, they've got$80 billion in debt. You know, the cable networks are losing viewers and advertisers and very rapid clip. If things really get difficult, how can they keep all of that operations up? Is there a chance that they walk away from this Paramount Skydance who says it's just too much of a hassle here? What's the company been saying? Well, no, that's not what they're saying publicly, but look at this math, $7 billion breakup fee if the deal doesn't go through, whether it's their choice or a court's choice.

14:22and that's on top of the$2.8 billion they've already paid Netflix to walk away. So that would be close to$10 billion, probably considering all the lawyers' fees and all that. $10 billion that the Ellisons have spent on this quest that potentially could get them nothing. Wow. It just goes, I mean, you've been in this business a long time. I've been in this business a long time. Hollywood is a tough place to do deals. They just, by and large, don't work. Well, just look at the history of Warner Brothers. How many owners has it had in the last 15 years and how has it ended?

14:56Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. Support 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 of the workflow and your agent handles the rest.

15:33Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An 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.

16:14So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.

16:40Scarlet Fu:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

17:19Scarlet Fu:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

18:06market. Give us an overview. How are things out there these days? It seems like it's coming back in a big way, but give us the details. It's more than back. I mean, I've been in this business for 30 years and I have not seen the New York office market as strong as it is today. If you look at leasing for the first six months, it was 23 million square feet. If that carries through this year, it will take us back to levels that we haven't seen since 2000. Rent growth has been extraordinary, the fastest in the country, you know, there's still a flight to quality. So you've seen the higher quality buildings are really, really doing well.

18:40But when you take like the top 50 buildings, the vacancy rate's like 3%, right? So when you're in that mode and even big blocks of space, there's in all of Manhattan, there's about 22 high quality big blocks of space. And there's right now over 60 companies looking for over 100 ,000 square feet. So 100 ,000 square feet, only 22 available and 60 something looking for 100 ,000 square feet of block. So it's shifted to a landlord's market versus a tenant's market right now.

19:06Scarlet Fu:Of course, all office buildings are not created equal, and plenty of office buildings are being retrofitted to become residential. And we saw in New York, at least an incident in which there was a buckling of one of those commercial buildings that's being converted into residential. Tell us what you thought when that first happened and, you know, just your thought process and how we can prevent things like that. Yeah. So, you know, these these conversions of office to residential has been a great program for New York. It was actually they put a tax incentive in place to encourage it. And there's been almost 15 million square feet that's underway right now.

19:40So taking old office buildings, creating housing where we have a one point eight percent vacancy rate in housing. So great public policy. But not all conversions are created equal either, because this is not just taking an office building and putting residential into it. They were actually building another building on top of the existing structure, which already takes a complex construction project and makes it more complex. And, you know, the initial readout is that there was two columns that were supposed to have been reinforced that weren't reinforced, which created that buckling that you're talking about.

20:13You know, I think we're going to get better clarity as to what ultimately happened. And was it an engineering issue? Was it an issue on the project? but clearly this is a program that New York should continue to lean into. It's really created a great dynamic for New York. It's not only great in terms of creating housing, but think about these little neighborhoods that we're creating that used to be just commercial. Now people live there, they support the retail and the restaurants on the weekends, these 24 seven walkable communities. So what you have seen is lenders and investors have raised the risk spectrum now because we're doing 4 ,000 units ourselves, both on the investing side and development side.

20:50And we've looked at these things now and said, okay, if this risk is higher, if you were going to have this overbuild, maybe we wouldn't do it today. So talk to us about retail in big cities like New York. Because when you're done with us today, you can walk out on Lexington Avenue. I'm going to ask you to look right across the street. There's a ton of unused retail space that's been there since the pandemic. Can you go rent that today? What's going on out there? You know, it's again, sub-market by sub-market when you think about New York, right? So even this point about these conversions, right?

21:22It's across the street from Bloomberg. I mean, let's rent this space out. Interesting, the Upper East Side, you know, has had a more challenging time than some of the others. But you go by, you know, Rock Center, the retail's packed, right? Obviously, you go down to Midtown South, Chelsea, retail packed. And so what you're seeing, these are the neighborhoods where people want to be. Grand Central has, in terms of, you know, in Park Avenue, one of the strongest retail markets, office markets. in the country right now. And, you know, it's also because of public transportation, right? I mean, we're building a three million square foot.

21:53Scarlet Fu:Well, we've got public transportation here at 59th and Lex. I mean, there's something. I'm not kidding. Something's wrong. Like. It's haunted. It's mispriced. People were talking about Lexington Avenue at 58th Street. It doesn't get that much better than that. And this thing's been vacant. And it's a big slug of space. Right. It's not just the corner property. It's kind of the whole block. I don't know what's going on. Scarlett and I were out in San Francisco. six months ago, maybe, for a real estate - Yeah, and it was like everyone was bullish. They were saying AI saved San Francisco. Literally, you know, it's now fully, you can't get an apartment and all the space is being leased like crazy.

22:30How has AI impacted other markets? Yeah, I think it's interesting. When you think about AI, there's compute power and there's people power, right? And the compute power isn't happening in all these data centers that are being built in these areas around the country where energy is cheap. You know, people power is in the office buildings, right? And I think what you're seeing in San Francisco is very focused on tech. What you're seeing in New York is this incredible diverse ecosystem where you have this, you know, you have capital, you have creativity, you have collaboration all combust together through all these different industries.

23:01Right. And so we're seeing with our law firms, you know, in the capital markets. I mean, think about this year in terms of you've had the largest IPO. We had the largest M &A. Wall Street earnings are off the roof. Right. I just told you about the office market. Obviously, Knicks win the championship. Right. We had the World Cup. I mean, the energy in New York is unbelievable. But AI is just like everything else is a big driver of the economic growth, either directly or indirectly with the wealth effect. Right. And that's something that we're getting a great benefit and tailwind in New York for.