Trump Weighs 10% Government Stake in Intel as Softbank Buys In

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1:09We'll be right back. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. 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. Well, a few headlines for Intel. So for one, the Trump administration reportedly weighing a 10 % government stake in Intel and then SoftBank buying in. So let's go to someone who knows more about this. That would be Dan Ives, Global Head of Technology Research this morning.

1:55Joining us from Westfield, New Jersey, where they do have some good restaurants and shopping, might I add there. Yes, they do. Dan, thanks for joining us. So the news, this could see the U.S. become the company's largest shareholder. I mean, what does that mean for Intel, but also for the future? Are we going to be seeing more of this?

2:14Dan Ives:Look, I mean, Intel, you know, as everyone knows, backwards against the wall. I mean, look, I think ultimately if this didn't happen, strategic breakup was basically a done deal. And I think U.S. government recognized, not necessarily national security, but like they needed to revive Intel, clearly unorthodox in terms of the structure. but for intel i mean it's a little cinderella story at least that's happening here you know based on a lot of dark days i've seen the last few years and lisa you may not be aware but the pre-season rankings for college football have come out and penn state is number two that's the highest i can remember okay and i've been following these dudes for a long time since i was a kid hey dan how do investors feel about the u.s government taking a direct equity investment in a company.

3:04What have you heard from some of Intel's shareholders?

3:06Dan Ives:Look, I mean, obviously it's a head scratcher. If you're an Intel shareholder, you're popping the champagne, right? I mean, because this is something that came out of left field and obviously the SoftBank as well. But look, it does, it crosses into a gray zone, right? I mean, a sort of line in the sand. Like Lisa was saying, does it end here? Is there more like this. I think that's the issue is that like his government gets more into, especially when it comes to chips and AI, there's a lot of unintended consequences. And I think that's some of the worry. And then we have SoftBank buy-in. So I guess the thinking minus is there's a potential for a turnaround at Intel.

3:49I mean, do you see that?

3:51Dan Ives:I mean, look, I think there's a better chance of me playing Beth Page Ryder Cup in September than the turnaround Intel. Now, again, like I'm not saying like you definitely have clearly like they're a lot better today than they were 24 hours ago. But this isn't ever a psych uphill climb. I mean, Intel is run like motor vehicle and that's a big problem. Secretary Lutnik was on another network today saying that we need to bring more chip manufacturing back to the U.S. That's been a theme of President Trump as well. How do you think about it? How how is how should the U.S. proceed here, do you think?

4:36Dan Ives:Look, I mean, they're trying to lay the groundwork and obviously you've seen investments. But the reality is it's going to be really more around A.I. And it's going to be about a lot more of what I'll call next gen technologies. The reality is, as I've said, to produce chips in the U.S. and the supply chain moving over from Asia to the U.S., I view it's almost an impossibility relative to cost structure. Taking four to five years to build a factory, you know, and then just the reality of the IP that's really based in Asia. So, well, they have great talking points and they're moving the needle.

5:13But the reality is, like I've said, like that is that's going to be, I'll call it four to five years before you see any sort of real movement there. Hey, Dan, I got to take you back to that that 10 percent stake. Can you explain how exactly it's going to be funded?

5:31Dan Ives:look that's good i mean you could go back to maybe some of those like fanny freddy like you know days like like odd structures government almost like a you know in terms of how they're going to actually get paid back what the ownership is debt equity look and i think the devil's in the details right in terms of you know do you have a board seat are you a border observer i mean i think those are some of the sort of questions that need to get asked. But it all comes down to like, I think it delays a breakup. But I still believe the end result for Intel is going to be a strategic breakup. So, Dan, what's the next big thing that we're going to be talking to you about in the coming weeks, do you think?

6:18Is it an earnings release? Is it a new product launch? What should we be paying attention to in your world of technology?

6:25Dan Ives:I think we'll be talking next Thursday morning. You know, I mean, like, you know, obviously, godfather of AI, Jensen and video, like when they were poor, look, I think, to me, you know, but we've talked about in the show, you know, obviously, the last few weeks, like you look at earnings season, that was a validation movement for tech, validation for AI. And, and I think now comes down to with NVIDIA reporting like, OK, what is demand and supply? We think demand and supply is 10 to 12 to 1. And I think that is going to be the next data point that ultimately, I think, puts fuel in this rally that I believe tech stocks rally hard into year end, despite some, you know, whether it's Fed geopolitical and other sort of headline risk or news.

7:10Hey, Dan, can Intel catch up to, let's say, Taiwan semiconductor manufacturing, contract chip making, NVIDIA and chip design. They miss out on this boom in spending and artificial intelligence.

7:22Dan Ives:I mean, it's like me going to Rucker Park and playing in a pickup game with an NBA player. It's just not... Look, they've missed the window. I'm not saying you can't have some small victories, but I mean that's the shame of the thing. They've missed it. Now, look, you have a big install base. You could have some wins here and there. But you look where TSMC, you look at NVIDIA, you look what Broadcom's done. You look at, obviously, what Lisa Su and AMD has done. I think that's part of the problem with Intel. I mean, U.S. government, SoftBank, others will get involved. But they have to stop running it like motor vehicle.

8:04Dan, all right, let's get to the heart of the matter here. Is Penn State overrated at number two?

8:10Dan Ives:No, I mean, like, I believe Notch is number two. I think, like, they'll be the number one team in the country. I think this is our year. 2025, again, Michigan, Penn State. This year, you know, you look at it, Ohio State. I think Big Ted's going to dominate. Texas, obviously, great teams. But this is the year we are. I think we win the natty. Stay with us. More from Bloomberg Intelligence coming up after this. When your options are limited, so are your opportunities. At SIBO, the global exchange that pioneered options trading, we offer more ways to move with the market. From VIX and SPX options to global market data solutions, SIBO helps investors diversify, manage risk, and stay ahead of whatever the market does next.

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11:01this. Dig deeper into it. Let's bring in Drew Redding. He's Bloomberg Intelligence U.S. home building analyst joining us from Princeton. Drew, thanks for joining us. How much is that a reflection of interest rates and inflation, what we heard from Home Depot? Yeah, so it was actually a pretty much in-line quarter for Home Depot today. Comps up about one little shy consensus, but if you back out some of the Forex impact, it was pretty much in line. Now, of course, growth isn't as strong as you would like to see. And a lot of that, as you mentioned, has to do with where rates are, both rates on home equity loans and mortgage rates.

11:38You have to remember, housing turnover is at the lowest level since the financial crisis. And what we've heard consistently from Home Depot over the last several quarters is that consumers are pulling back on big-ticket discretionary categories. So think of things like kitchen and bath remodels or flooring. And the reason is because these tend to be financed with debt and with rates where they are and consumers with the expectation that rates are going to pull back. They're taking a wait and see approach and deciding to opt for their smaller ticket projects instead. Drew, what does Home Depot say about tariff risk for them?

12:13How did they quantify for the street? Yeah, good question. Obviously, on top of mind for a lot of investors. So Home Depot has done well to diversify their sourcing over the last several years. They get about 50 % of their products from the U.S., so they are in pretty good shape from that regard. We would estimate products coming from China are somewhere around 15 % to 20%. And there's a couple ways that they're going to manage this. One, given the scale that they have, they're able to push back against suppliers. The second, they continue to diversify their supply chain. And on their last quarter call, they mentioned that no single country outside of the U.S.

12:49will be more than 10 percent of sourcing. And then lastly, I think we're going to start to see some selective price increases coming through in the next several quarters. Now, they've done a little bit of pre-buy on the inventory side to make sure that they had some of that lower cost product on the shelves for consumers. But I think, you know, as we get to the end of this year and into next year, you're going to start to see a little bit of pricing. Now, we wouldn't expect it to be widespread or significant. Remember, Home Depot sells about 30 ,000 to 40 ,000 products on their shelf. So they tend to take a portfolio approach and manage pricing really across the entire project rather than raising prices across the board.

13:29Drew, so are you telling me my next Home Depot run is going to be more expensive? It's going to cost me more. Drew, I have painting. I have a deck to build. I have things to do. I mean, you're saying this could take effect pretty soon. Well, maybe not your next trip. Okay, thank you. The next couple, maybe looking more towards the end of this year or into next year, we would expect to see prices up marginally. So I need to rush now. Well, if consumers are putting off those big projects, what are they focusing on? I mean, is it the smaller ones or are they just canceling projects altogether? Yeah, it tends to be more maintenance, repair oriented.

14:07You know, so there's those projects around the house where things break and you have to fix them immediately or replacement products for for appliances and things of that nature. And again, what we're not seeing is the big ticket discretionary things like like kitchen and bath that require financing. What is going on in the mortgage market here? Drew, what do your companies say? What do they expect mortgage rates to do here? because we do have a Fed that presumably is going to start cutting rates. Yeah, so mortgage rates have come down over the last couple of months. We're in the 6.5 % range. So really the move in mortgage rates has already kind of front run the expectations for what the Fed's going to do.

14:50So I wouldn't expect to see a whole lot of reaction on the mortgage rate side from an upcoming Fed cut. And not to mention, remember the last time the Fed cut rates, we saw an increase in mortgage rates. So I think what we really need to see, I mean, sure, it would be great if we could get rates into the high five or low six percent range. But, you know, as we've discussed before, what you really need to see is rates remain consistent and stable. And that's just something that we haven't had. You know, homeowners, when they're out shopping for a home, they want to be able to get a good grasp of what they're going to be spending.

15:21And with all the volatility we've seen in rates over the last couple of years, that's become increasingly challenging. Now, on the home building side, we continue to see the builders increase their use of incentives, and primarily that's for mortgage rate buy-down. So they're getting their buyers somewhere around 100 basis points lower than the headline rate. Of course, as the demand environment continues to remain weak, we're seeing an increased use of that, and that's what we expect through the second half. So from the builder's perspective, they're getting their buyers better monthly payments than you're seeing at the headline rate.

15:55Hey, Drew, before you go, Lowe's reports this week, too. I believe it's tomorrow. Do you expect to hear a similar story from them? Yeah, pretty much. I mean, the one difference will be that Lowe's has a greater exposure to the do-it-yourself customer. And as we know, over the last couple of years, they've really been impacted to a greater degree than the professional customer, you know, due to concerns over the economy or the cumulative impact of inflation. So we do think that on a relative basis, that exposure will weigh on them. But we do think that they're going to benefit a little bit more from the recent hurricane activity, also from strong seasonal trends.

16:31So by and large, we think it's going to be pretty much the same stories that trends are starting to improve, but it's still that big ticket discretionary piece that remains weak. Drew, how about on the existing home market? How's that market doing? And are there regional differences these days? Yeah, I mean, the existing home market is pretty much frozen. We've been bumping along that 4 million annualized run rate for a couple of years now. And if you think of what normalized is somewhere around 5 million, we're 20, 25 percent below what we would normally be doing. Part of the reason has been the lack of inventory, but we're seeing more inventory come onto the market.

17:10So what we expect is going to happen is that you'll start to see some volume improvements off of a low base, but we think that that's going to come at the expense of pricing. We've seen home prices start to moderate. They're still rising at the national level, but we think you start to see the increases less. And in some of the markets around the country, to your point, if you look at markets in Florida, Texas, some in the Southwest, we're already seeing home prices come down on a year-over-year basis. So it's kind of a rolling scenario where different markets are seeing minor corrections at different times.

17:42And that's kind of how we expect it to play out going forward. Stay with us. More from Bloomberg Intelligence coming up after this. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts.

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19:52You'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. All right, let's get into the med tech space. Here's a company I know very well, the famed Chase Manhattan Credit Training Program, which has trained half of Wall Street over the years. The final project is like you get a week to do a big credit research report. My credit research report was on Medtronic. I know all about this stuff. Anyway, they're in the news here today.

20:25Elliott Investment Management, the activist, they took a stake in this company and they wanted some change. And I think they got something here. Matt Hendrickson, senior med tech analyst at Bloomberg Intelligence, joins us here. Matt, bring us up to date on what's happening at Medtronic. Yeah, so with the Elliott Management News, they reported that they have a significant stake in the stock. And they're going to plan to bring on two new board of directors. These are previous MedTech CEOs from back in history. And basically, they're looking to revitalize growth and capture efficiencies to, as they quoted in the earnings call, build oxygen for future growth.

21:08And so one of the things we saw in the quarter in the earnings today, there were some areas that had strong growth, strong momentum. But in their diversified portfolio, there were other areas that kind of, let's say, needed some tweaking. But when it comes to the board, who are some of the additions that are coming in because of Elliott Investor? And has Elliott disclosed the size of the stake? As I've seen now, I have not seen an actual size of what the stake is. Some of these, the board directors, they were former CEOs at Dentsply, so some med tech companies. They were also previously at Beckman Dickinson.

21:50Other ones, they are able to come in with more of an operational background. And so being able to drive kind of that efficiency to be able to create the savings to be able to invest into their R &D programs. All right. For the folks in front of the terminal, the ticker is MDT. Then you type in the ANR function to get the analyst rating. The street doesn't know what to do with this stock. 17 buys, 16 holds in one cell. What's the confusion out there about this name? The confusion... I mean, it's medical devices. Everybody needs medical stuff. Everyone needs medical devices. Medtronic has invested a lot of money into these home-run type products.