Yaccarino Stepping Down as CEO of Musk’s X After Two Years

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1:53I'm Linda Paul Sweeney live here in our Bloomberg Interactive Broker Studio streaming live on YouTube as well. Well, for me, being a media and entertainment background person, the news for me today was Linda Yaccarino stepping down as chief executive officer of Elon Musk's ex-social media platform after only two years on the job. From her days at NBCUniversal, I knew Linda Yaccarino. She's widely respected on Wall Street, in the media and entertainment business. I personally was surprised that she left NBCUniversal to go work for X simply because I didn't think anybody could work for Elon Musk because he's that hands-on for the business.

2:29We are perfectly timed to speak with our good friend, Ed Ludlow, Bloomberg Technology co-host. He's in Sun Valley, Idaho, where all of the media and tech moguls are meeting up for a couple of days at the Allen & Company conference. Ed, how did this news land in Sun Valley?

2:48Ed Ludlow:Yeah, it's slightly surprising. It's interesting because, you know, in her post, Yaccarino framed it as a, you know, mission complete kind of turnaround process. But remember, lower down in the post, she references XAI. And what's changed in recent months is that Musk had combined X, the social platform, with XAI, the AI company, under XAI holdings. You hit a lot of the themes spot on, Paul, that it is difficult to work for Elon Musk. but the turnaround bit that she cites in her post is one for debate. You know, as we understand it, revenues in 2024 were down from 2023. They were looking like they might be up in 2025.

3:32Ed Ludlow:It was difficult to bring advertisers back to the platform but Iacomino had said many had returned to the platform. Elon Musk being the sort of wild card about the appropriateness, I guess, of advertising on that platform. But yeah, there's a lot of ways we could go with this one. Ed, I mean, you talked about, you know, the volatility, especially when we think about a lot of Musk's businesses and what's happening inside. For Linda, does this seem as though this was just a decision waiting to happen? Or what are you hearing?

4:08Ed Ludlow:Yeah, nothing so far. We just don't know. I would note that it's sort of the latest high profile stepping down or departure from Elon Inc. We're seeing it happen across Tesla, as we reported, Omid Afshar, who for a really long time was basically Elon's chief of staff and later had more broader responsibilities across sales and manufacturing. We broke the story that he was gone out of Tesla. in SpaceX. I know that internally, you know, we broke the story on their latest valuation yesterday, but internally departures have kind of ramped up recently as Musk's political activity has ramped up. It is not easy to work for Elon Musk, like kind of how the structure works at these companies is there are very capable people there.

4:54Ed Ludlow:For example, XAI, like XAI is a really key point here about what's happening with X. But there's a guy there called Ross Nordeen, who like is also kind of like the chief of staff, but he's doing a lot for Elon while Elon's out doing whatever Elon's doing. But at the end of the day, no matter how many decisions are made by committee, by this group of very talented people in all these companies, the final call is kind of made by Elon. And that can sometimes slow things down. It can sometimes lead to robust debate, you know, things like that. But again, I'm really focused on where X fits into XAI long term.

5:26Ed Ludlow:I think that's a big factor here. And there's a hint in that Yaccarino post. I can see you're out in Sun Valley, Idaho. I love the background there. I skied that mountain many years ago. It's fantastic out there, summer or winter. I highly recommend. Ed, at the Sun Valley Conference out there, the Allen & Company Conference, what's kind of the expectation for these couple of days?

5:48Ed Ludlow:Yeah, so it's interesting because there is a bit of movement in TMT, and that goes to the history of this event, right, Paul? You know it so well. You know, the news that we got is that Disney Hearst might look at selling their A &E asset, which is the cable channels like History Channel. So that's interesting. Just having that out there means that there's a marketplace right now. We know that Warner Brothers is on this plan moving into the middle of next year where they want to have a split, right? A standalone streaming company and a standalone pure play studio. And we did manage to catch up with David Zaslav, the CEO of Warner Brothers Discovery, who said it's kind of all on track.

6:22Ed Ludlow:We don't need any approvals. We're not really ready to talk about the debt side of things. They also just, of course, had Superman hit the box office, and he was pretty happy about that. But I think that the signals are that in that space, media assets, there's some life, and it just takes one domino for the rest to fall, if you know what I mean. Well, thanks so much to Ed Ludlow. As we really break down what's happening at the Sun Valley Conference, and of course that Linda Iaccarino headline of her departure from X. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m.

6:57Eastern 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, folks, if you're sitting in front of a terminal, type in read go. Over the last eight hours, the number one red story has been about Goldman Sachs. Goldman asking their analysts to swear they haven't lined up P.E. jobs. I have no idea what's going on here. Back in my day, you worked two to three years. You went and got your MBA. You came back as an associate to double your money. And then you just kind of moved on and onward upwards.

7:30It ain't that way right now. Sally Bakewell joins us. Bloomberg U.S. finance team leader joins us here. Sally, what's the story of Goldman Sachs here? They have to ask their associates or their analysts to swear? That's right. And also just to say back in your day, couldn't have been obviously that long ago. But yes, Goldman Sachs is asking its incoming class of analysts to effectively take a bit of its own kind of pledge of allegiance to the bank and certify that every three months they're not accepting an offer from basically a private equity firm. And was this accepting? I hadn't even started Goldman Sachs, but I've already accepted something at KKR like two years later?

8:11Exactly. So I'm interviewing at Goldman Sachs for a job, and I'm interviewing at KKR for a job. Planners. Gotcha. Okay, that makes sense. Doesn't it sound kind of horrific, honestly? But yes, it's known as on-cycle recruitment. And it's this practice where private equity firms try and recruit incoming junior bankers who maybe haven't even officially got in the door at their bank programs, analyst programs, and line them up to take on private equity jobs as soon as they finish those analyst programs. And you can kind of understand why. They get this fully trained, fully formed mini junior banker, and they haven't had to pay a penny to train them.

8:47Yep. I honestly feel like these big banks are always doing something that surprises me. There's always news coming out of these things. And I'm like, what's what's going on with the young bankers here? But well, the reason I think the banks have allowed this to kind of happen, because who is Goldman Sachs biggest customers? The private equity firms. You don't want to upset them. Fair. It's kind of a quid pro quo. We'll train these kids if they want to go and work for you. fine. It works for us long term because we've got a Goldman or Morgan Stanley alum that's now in KKR and who knows where that person will be 10 years from now that could be a big player.

9:20And it all kind of works out. But it's got silly now, hasn't it? Is it uncommon? I mean, are we seeing a lot of other banks doing some of these stringent rules? So a few banks have started to push back. J.P. Morgan was the first in recent months. Jamie Dimon has actually called this practice of on-cycle recruitment unethical and warned that he wanted to eliminate it because he says it puts the junior bankers in a difficult position. They're barely in the door at a bank and they already have to start thinking about a career and they don't even know at that stage what they might want, what they might be good at.

9:52Fresh out of college probably as well. Fresh out of college. And so J.P. Morgan earlier this month, it actually told incoming graduates that if they do accept offers during their first 18 months at the bank, they will be fired. So it was a very clear message. And actually, a lot of some private equity firms have pulled back since then. Apollo is one. General Atlantic is another. They've actually said to their candidates that they will not be recruiting. They will not be doing this on-cycle recruiting and recruiting junior analysts so early. It's, yeah, it's just crazy. I know times have changed.

10:27I mean, it used to be you worked two to three years as an analyst at an investment bank like I did, And then they literally kick you out the door and say, go get your MBA. You go get your MBA. You come back and you double your money and you kind of do the same job as you were doing two years ago. That in itself was kind of an odd situation. But now they don't even force you to go get an MBA because they don't want to lose you. I mean, you know, lose you to anybody. Are they having trouble with recruits? No, it's still 27 kajillion resumes for one slot. But do you think this is going to hold, Sally?

11:02I think that's the big question. Does this spell the end of the practice? Probably not. I think it depends how competitive the market gets. Banks have periodically made bursts of effort over the last 10 years or so. Morgan Stanley did back in 2013. That didn't really go anywhere. So they've tried to sort of stem this tide. Whether it takes hold permanently, I think it's almost impossible to say it will depend on market dynamics. But this is certainly one moment where they seem to have created this pullback by private equity from doing this. I mean, as a prospective junior banker, can you really even scout out a different bank?

11:37Are they all doing the same thing? I think that's a great question. And I mean, I think this is part of the rationale for the private equity firms are really saying, you know, at that stage in your career, you don't know what you're doing. I certainly didn't know what I was doing at that age. I still barely do. So how can you make this kind of decision? and also puts you in a conflict of interest position. You know, you're in a bank, you have access to the bank's confidential information, but you're already committed to a private equity job. I mean, that's not a good position to be in. Yeah, it's tough for the junior people from that conflict of interest thing.

12:10And it's just an odd economic model. I never really understood why they did it that way. So anyway, it's on the Bloomberg terminal. It's probably on Bloomberg.com. By now, the number one red story out there. Goldman asked analysts to swear They haven't lined up PE jobs, so I guess it's a pinky swear. I'm not sure how that all works, but Sarah Bakewell joins us there, and we appreciate her reporting on that story and taking the time to come into our studio. This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT Work, I'm Carol Masser. Social media posts on sleep outnumber those on exercise by 3 to 1 and those on diet by 5 to 1, according to consumer researcher Rila Global Consulting.

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15:47I do want to turn to Tim Craighead, and he's based in London. He's joining us via Zoom. He's a research director for content for Bloomberg Intelligence. And I'm looking at this story that's out right now and lots of really interesting illustrations. But the story is called Banking Booze and 007 Wheels. Ten companies to watch right now. Paul, I have no idea where this is going. I'm so curious just based off the headline alone. Let's do it. Let's do it. But Tim, contextualize this for us. Tell us, what is this list? Yep, sure thing. Thanks for having me on. So these ten ideas are all part of a broader list of what we call focus ideas.

16:27Focus ideas are where our analysts around the globe, across regions, across sectors, have high conviction, fundamental points of view that they think are different from what the market thinks, anti-consensus. And importantly, they're catalysts coming up that we think can change market perceptions. And these 10 all have important catalysts coming up during the third quarter. And just to put it out there, you can see all of these focus ideas on BI focus on the terminal. Tim, what I like about these ideas, you know, because people are always looking for ideas, long and short. You guys have the ideas.

17:06And what I really like about this research format is you have the triggers. What's going to make, what has to happen in order for this call to work on a particular stock? Aston Martin, I'm asking for Matt Miller. What's the call here on Aston Martin? So the call on acid Martin, as much as I like the cars, and obviously this is where the 007 reference comes from, they've got a really interesting new lineup of vehicles. But they're short on V12s. And notwithstanding the world of EVs and all that sort of stuff, high-end V12s from Ferrari and Lamborghini are hot. And you look at the inventory levels of Aston Martin on the lots, they're too high.

17:53We think that there's a capital infusion that's likely needed in coming months. And so we actually have a cautious view on Aston Martin from that perspective. Tim, you all are always putting out super interesting stuff. I mean, we had 50 companies to watch in January, and then we had the quarterly update in April. And then, of course, now this story that's out. Loving the graphics here. How long did it take to put this together? Well, it's an ongoing process of working with our analysts in terms of where do we see these ideas coming from. And then our friends in Business Week like to pull together the graphics on these things.

18:33It is a good-looking piece on Bloomberg.com. Booz, Diageo, what's the story there? Yeah, Diageo ties in a little bit with a couple of ideas here. I mentioned Aston Martin. That's obviously a high-end consumer idea. And even though we're concerned about Aston Martin specifically, the high-end luxury vehicle market is good. Similarly with Diageo, high-end booze, high-end spirits, they are the world's largest spirits manufacturer, is doing relatively well. Their recent sales trends have been robust. We think that's going to continue to show through. There has been concern about things like tariffs and what could be the impact, especially from a U.S.

19:23consumer base. We're less concerned and we're optimistic. Another consumer higher-end idea you guys know and love in the States is Dick's Sporting Goods. This is a classic good old consumer's growth story where not only do you know the store, but you might have been in one of their new bigger formats where they have that much more kit. their sales trends continue to be quite good despite concerns about what are tariffs going to mean for consumer here or there. So, you know, those are all those are all consumer ideas. There is certainly a common thread there. You mentioned Dix and I'm looking at EasyJet, which, of course, we know is a low cost British airline.

20:08And we have a sunny outlook here. But what do you think will be the most surprising call here for readers? Yeah, it's interesting. in this instance, obviously this is not the high-end consumer, this is everyday consumer, is that this isn't so much about the demand, which actually demand for travel and experience continues to be pretty good. This is more of a story on an operational basis. They're replacing a lot of older planes with newer planes that have bigger capacity and much more fuel efficient. So EasyJet has historically lagged behind Ryanair, the other low-cost carrier here in Europe. We think that that's set to change.

20:54Tim, you live and work in London, but as most of our listeners can tell, you're not an Englishman. You're from the great Commonwealth of Virginia. Talk to us, are the tourists, is it as crazy in London this year as it's been in recent years? What's the tourism factor there in London these days? The quick answer is yes. Notwithstanding the fact that the pound is actually pretty robust as of late, streets are busy. And, you know, it's true in the city. Walk out the door here, Tuesday, Wednesday, Thursday are the new Friday. It has been a warm summer. But, you know, this is also the time for Wimbledon.

21:37And beyond that, it's just been busy with people coming from all over the world, whether it's china whether it's the u.s this seems to be a a hot ticket so yeah it still feels pretty good yeah i'm trying to get you know audrey child friedman to get the the uh the euro back to parity because i'm coming over to europe in the fall a little vacation a little holiday but i mean the you mentioned the pound sterling but the boy the euro 117 that gets your attention Yeah, it does. Well, I guess from our perspective and primarily Audrey's perspective, this is a weak dollar story as opposed to stronger other currency story.

22:24And we think that there's more legs to this. One of the big themes that comes up in all the investor discussions or events that I'm at is the longstanding premise of American exceptionalism. You pop money in U.S. bonds, U.S. stocks, and they take off. Is that holding? Valuation is a lot more interesting elsewhere. All right. Tim, great stuff. As always, Tim Cricket, Chief Content Officer of Bloomberg Intelligence. 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.

23:06Welcome back to Bloomberg Intelligence Radio. I'm Norma Linda here with Paul Sweeney, and it is Wednesday morning. We're seeing stocks that are higher right now. We've got consumer communication services and consumer discretionary as some of the best performing sectors in the S &P 500 right now. Lots to keep an eye on today, but we want to talk to Jennifer Rhee. She is Bloomberg Intelligence Senior Litigation Analyst, and we're going to be chatting a little bit about the U.S. antitrust environment and what the second half of this year looks like. I mean, Jennifer, the antitrust environment was pretty aggressive under the Biden administration.

23:40We were seeing a lot of those larger companies getting caught in the crosshairs here. Can you set up for us what it looks like right now under the new administration? You know, that's right, Nora. It was a really tough four years, particularly for dealmakers. And I think, you know, there was a lot of uncertainty going into the election during the fourth quarter of last year. But I think there are some really good signs for those companies that want to engage in big deals going forward. And the main reason is because Trump's antitrust enforcers are willing to accept settlements with a remedy to allow a bigger deal to close, essentially meaning that if there's an overlapping product and there'd be too much concentration in the market for that product, that product line can be sold and the larger deal can get closed.