Wall Street Brings Back Bigger Bonuses & Trouble in Mega-City Neom Paradise?
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flash brew good morning blue daily show I am your friend and I told me, house today now is a good time to get back in touch with your friends in finance. They're about to be .

rolling in end of year bonuses. Mag in the desert just lost its C. E, O, and could be in trouble. It's wednesday, november thirty. Let's ride.

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like a be beautiful salado loaf. In the proving draw, bonuses on the wall street are set to rise across the industry for the first time. Sense twenty twenty one investment bankers, traders and wealth managers, basically anyone who might rock a role in a patagium of veto work, all had above average years, thanks to an increase in corporate deal making and a stock market run up.

According to an analysis by Johnson associates, every single business area is expected to see pay jumps this year, except for real state investing in retAiling, commercial banking. Now bones are still not back to the frenzy heights of twenty and twenty one. When deal volume IT Sparks became a thing in, companies were going public left and right. But it's clear that wall street is emerging from the muted spell over the past two years. Activity and bonuses actually fell.

The start this year's show is debt underwriters, the bankers, to work on those deals where corporations need to refinance or raise new debt. IT may not be the sexist role on wall street, but this year IT will be the most lucrative. Debt underwriters are expected to collect bonuses that are anywhere from twenty five percent to thirty five percent higher than last year. Big picture twenty twenty four bonuses are set to zed for nearly every subset of the finance industry, making IT the second biggest end of your windfall for bankers in the last five years. And easing illustrates in a thug M, A market mean that twenty twenty five could be even bigger.

Yeah, we are coming off of a weird time for investment bankers. The last two years were kind of muted. There wasn't a lot of things going on.

The marky got very clogged up. We weren't seeing any of these big M A deals. But as the interest have started to thought, you have started to see more of these mergers popping up.

I mean, some that we've talked about on the show are the the pending merger between kaloga snacked business and IT sail to mars, which is the thirty six billion or deal we've talked about the private credit market as well. Boeing just raised a huge amount of debt to try to pull itself out of its nose dive. That is something that back of amErica city group, jp Morgan, wells fargo, all these big investment banks are getting in on. So in taking fees from so we are starting to see I think we're starting to see more of these companies being more active really across ema, across uh I P O A market, in across just the corporate or private credit market as well. So that is why you're seeing some of these increase in bonuses after two years of IT, not increasing .

actually going down. no. I mean, but if if that mars deal comes to pass that so much money for banks, golden sex is said to make ninety million dollars on that deal if IT should happen.

So that's how much ema market means to these banks. Let's talk about just the amount of bonuses that these wall stress get because IT is a large chunk of their pay. The average bonus last year on wall street was one hundred and seventy six thousand five hundred dollars, and the average wall street salary total was four hundred and seventy one thousand three hundred and seventy.

That's nearly five times the average of the annual of the new yorkers average salary. But you can see that's like a pretty big chunk. So IT is a big deal when these end of your bonuses come IT through. And a lot of what happens on while he drives a larger in new york economy as well.

right? Let's talk about that. I can hear some people rolling their eyes right now saying, like, oh, world's tiny's violence bonuses were done last years, but IT does impact new ork city in new york states economy as a whole. Uh, the industry accounted for around twenty eight billion dollars in state tax revenue, which is over a quarter of the state's entire collections last year. And then if you zoom in on the city level at accounted for five point five point four billion in city tax revenue. So as bonuses go, if they go down, that's less tax revenue for the city, which they less tax revenue for them to spend on public works and the transportation authority and all sorts of things that does filter down to the economy. So even though no one is that sad of bonus are going from the, you know, six figure range, the lower six gure range IT still does have brother impacts .

and going for A I think there's a lot of optimism around the banking sector at the end of this year and next year as well. I've talked about interest rates going down any time that the stock market volatility is also good for their trading division. That looks like the IPO market, which has been frozen over for the past years, is starting to get going again.

We talked about ma as well, and that's been reflected in the stock Prices at these banks. I mean, there's five big street banks, James Morgan chase, bank of amErica city group, goldman sex and Morgan standing. All of those uh, share Prices have increased by thirty five percent or more over the last year and they've only skyrocket since the election, uh, last tuesday. And optimism that there could be more deregulation around the financial sector.

The only ugly stepchild that we should mentioned. I mentioned that in the intro to the story, retAiling, commercial bankers are expected to ceive smaller end of year bonuses as because in the higher rate atmosphere of the last couple of years, blow demand has just really been weaker and then commercial real state has just been an absolute disaster recently. The office sector has just been continuing to slip.

People haven't return to office in the same amount a sense precoe day. So that's why bonuses are flat on the air. So there are still some weak points, but they are kind of what you'd expect. Commercial office real state has been just a tough.

tough business to be in the manufacturing can. Glamorous honeywell is like lebron James on the lakers in aging superstar who represents the last hold out of a bygone era. But it's time may be running out and IT won't be jj radic putting that out to pasture. Yesterday, activist investor elliot management said IT has built a giant five billion dollars stake in honeywell and is urging the spelling company to split up into two distinct businesses, is the biggest single bet ever by Elliott, which is also taken on corporate giants like southwest st airlines and starbucks.

By acquiring a balloon of shares and pushing for changes, honeywell might be the biggest company you interact with on a daily basis, but never really think about value at one hundred and fifty billion dollars, and makes everything from airplane cockpits to tools for warehouses to home thermo stats. And that might be the problem. Allia thinks this matchup of desperate businesses, the halls mark of the conglomerate del, is inefficient and wing down the share Price. So IT wants to split IT into two separate companies, the airspace division and automation. If IT succeeds, enforcing a break up of honeywell IT could mean the end of one of the few american conglomerate left standing.

Yeah, the writing has been on the wall conflates for years now. I mean, one of the most famous one's G E, uh, which was one of the biggest companies in the world. And eighties and nineties is now broken up into two separate businesses, uh, three separate businesses.

The thinking behind these split is that the the belief is that below drags down performance IT used to be conglomeration bine backhouse back offices and just increasing fictious cities that way. But now story are increasingly wanting you to shave off these businesses, become a little bit more focus, and they think that's the athlete to Better return. So G, E, S. Lit up Johnson, and Johnson has split up ilog. Es, hello.

Gues.

like you can go down the line there. What used to be the era of consumers is now becoming the era of specialized companies.

And lets look talk a little about about what's happening at honeywell specifically. Uh Ellie says that their share Price as lag this rows its rising twelve percent since the start of the year compared to the S P S. Twenty six percent growth has this error ACE business, which drive forty percent of the revenue that's growing really fast.

And then IT has this automation business where they provide tools to warehouses in buildings, and that has been the lagging. So he thinks that that that section has been a drag on the overall share Price. So IT says, why don't we follow the path of the other codes that are broken up?

G, E, has unlocked two hundred billion dollars and share of their value since its split up. Let's get more focus. Let's get more streamline. And that's its argument. And it's saying that there's a lot of examples of government that broken up in the last five years to point to and saying is a good idea.

I have also found a conclusion that that does work though. E and is an industrial conglomerate does compete on a lot of the same industries that honeywell does. IT is done very well since twenty six teens, up four hundred percent compared to hunting wells, more muted, seventy eight percent growth.

And the way that he did that is via planting and pruning as a spoon berg article described IT. They sold businesses that valued at five billion dogs. I had annual sales growth of two and hf percent, profit margins of twelve percent.

They replace those businesses with acquisitions worth seven billion dollars, annual sales growth of seven percent in twenty seven percent margins. That's the planting. The other part was the pruning. So you do have to be very cognizant of the companies you are bringing in to your portfolio, the companies that maybe you are offload as well. So they kind of do work, but you you need to treat them like a garden. You can't let one business kind of spraying over and assume other businesses, but you also can't let, uh, the underperforming businesses kind of take away nutrient and oceans from the good businesses. So I do think there is a world where congeries can work, but there are plenty of examples of instances were breaking them up does to Better shareholder.

say amazon as a consequence.

I mean, I don't know because .

they don't of them from A W S, you know cloud services to uh automated driving and e commerce, there's very desperate business is that kind of has the hall and IT does IT has a movie division and A T V division. It's very much the hallmark of a of a modern day comer.

I guess they just they're not as active in an M N A space like they don't buy that many companies are. Most of IT yc A W S is homegrown ing. Maybe someone who works at amazon tell us if you think that you self identify as a there is trouble in paradise if your version of paradise is a mega city in the desert NIO the future risk project currently under construction in the middle of the saudi arabia desert lost its CEO not me out, master.

Yesterday, a surprise exit, according to a report from the wall street journal. While the report didn't sign a specific reason for his departure, new has been running into delays in costs over runs for years now. IT turns out that IT is really freaking hard to build a giant future iisi city in the desert.

Sadi crown pince mohamad been salmon is the brainchild behind turning barca e into the world's largest construction project. Neon was meant to be anchored by two emerge skyscrapers dumped the line stretching one hundred and six miles, complete with hidden trains, mountain ski resorts in nine million residents. But the project has repeatedly been down side from that hundred miles vision, first to ten miles, and later to just one and a half miles in length, which is still the biggest building in the world. But ASR is now out in the future. The project is looking a little shaky eel.

A there has been a lot of warning signs that this project was running into many delays, engineering chAllenges. And I guess that's what comes with trying to build a mega city on a, on a piece of land the size of massacres. These guys have bragged about how big their construction project one recently, and officials said that they currently are using one fifth of all of the steel produced in the world.

So something of this size is hard to actually pull off as we're seeing. There's been a bunch of executive departures recently as well as you know kept off by by the CEO, the CEO leaving yesterday. But clearly all is not well in the omand.

IT comes at a very critical time because sadia abia is spending over a trillion dollars, not just on but on all these other initiatives to transform its economy away from fossil fuel and oil and natural gas, into a modern economy that relies on things like entertainment and tech in other forms of innovation. So this, and this is the center piece of the plants of this, doesn't go well. Then the entire transformation is certainly on rocket footing.

Part of the issue is exactly what you said. The Price tag has just gone exponential. In twenty seventeen, when this a project was first announce, they slapped to five hundred billion dollars tag on IT. The cost of the line alone, which is just one part of project, it's probably going to be well over two trillion dollars based on estimates and sai rabia, I thought that they could find most of this on their own.

But they also expected foreign money to come in and help out with some of the costs that foreign money has really not so not very well because IT is extremely risky to put money into development that is literally being reconstructed in the desert. And so that is the issue that satiable is looking at kind of checkbook and saying a way this second, even we can afford this right now. So but baby, that is one of the reason to why some of the projects is facing these headwinds up. Next, let's talk amazon smart glasses.

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Amazon might have figured out a way to get you your packages even faster. According to reuters, the company is working on a project that would equip its delivery drivers with mark glasses or easily guide them right to your door. The glasses would contain a small embedded screen that provide drivers with turn by turn navigation, helping them determine things like which direction to go after getting off an elevator and even avoiding the billiard.

An dog in your neighborhood. Amazon hopes that the high tech eyewear could shape seconds off delivery times. But when you're doing as much volume as amazon drivers visit more than one hundred customers per shift, those seconds can add up quickly, and amazon doesn't need any glasses to see the competition.

Its biggest rival, waller t has been beeping up its delivery ARM, cutting Prices and offering more incentives to delivery drivers ahead of the holiday shopping. Reason to me, these glasses appear to be years out still if they get used at all. But it's another interesting use case for what appears to be a rapidly .

growing category. You can roll your eyes a little bit about amazon equipping their delivery drivers with like glasses that given you turn by turn navigation. But I read some articles are written by former delivery drivers and they said one of the worst parts of the of the job.

As you walk into a complex, you can't find the elevator like a labor neth in front of you, so having those turn by turn navigation would be very helpful, said there are a lot of issues and chAllenges with doing that. Mapping the internal hallways are the the stress in front of of, uh, resistance is very difficult, not like a google maps. You can just drive a car down and get street view.

You have to know the internal intricate of actual building complex. So that is one aspect that a has been plus they're just turning into the same issues that a lot of these glasses manufacturers run into. One is battery life. Trying to get a glasses to last last an entire eight hour shift is an issue. Then also, they could just be heavy and ugly, which is something driver .

to want to deal with either. And what amazon is trying to solve is what's known is this last mile of delivery. Even though it's the last mile, IT is IT accounts for a half of all of the costs associated with delivery.

Just sending something on a truck across a highway to a warehouse, super easy, super cheap, but getting IT from that warehouse to someone's store, extremely expensive, extremely time centive. So if they can solve that and really shape of seconds and that can really boost their business, they're facing definitely intense competition from walmart. Let's talk about the glasses segment in general because amazon, you said there's a lot of technical chAllenges involved in this, but seems like pretty much every big tech company is growing their hat in the ring with this.

Probably the most successful one is meet up with their meta ray and they sell IT for about three hundred dollars and that every single earnings calls is talking about how much they're selling that has been hugely successful. Amazon does have smart classes, which you wouldn't know about because they don't sell. They sold.

They call all the echo frames. And I guess this is what these glasses would be based on those particular frames. But they sell less than ten thousand of them.

Apple is a going to try to introduce a mark glasses as well. Snap also has some of they. Snap and meta are the leaders, and these other ones are all playing catch up. But amazon's in an interesting place because is doing IT in the enterprise market for its workers and not necessarily for its consumers because consumers don't want IT. At the point this moment.

I had no idea that amazon echo frames or a thing at all, but I do think that is interesting to see the different expirations in the different use cases for Spark glasses. Media clearly sees IT as one a tool for capturing content and has a camera that you can film what you're singing in front of you. But also, they have tools to interact with the world around you, they embedded with their AI.

You can ask me like I looking at right now, but that enterprise use case you haven't seen from a ton of company. I do think amazon solving, they just wanted solve that last mile delivery like it's everyone is trying and they they tried, they're thrown thrown out IT if thrown autonomous, what you need is just a quicker way to do IT. So I do think that they will invest a decent amount resources into trying to bring this reality because the upside is just so much.

I'll tell you where you've see in these enterprise use cases before, and it's where smart glasses go to die because when they don't work for the consumer market, all these companies pivet them to Price and trying to sell them to companies. I mean, if you think of things like google glass magic, leave microsoft hollow lens. All of those tried to be consumer facing products.

And when that didn't work out, they said, okay, we'll sell them to companies. And so those things you don't care about anymore because they are not viable businesses. So amazon, starting with enterprise, they always do that though.

That's their bread and butter. So we see if amazon can do IT, but maybe in in a few years, you'll see you're delivery driver being all by stacker and looking like a cyworld a little bit. R IT.

Lets spread to the finish with some final headlines. First, IT was a mean that IT was a crypto currency. Now it's an unofficial al government program.

Yesterday, a president electrum t announced the creation of doge, the department of government efficiency, which will be LED by elan musk and biotech entrepreneurs VC RAM swami. The goal of doge according to trump is to dismantle government reoccupy, slash access regulations, cut wasteful, expendable and restructure federal agencies. Just to be clear, this is not an official government department trust said doge would Operate and provide advice from outside of the government. Toby, this has been a project pushed by musk for months, especially the name IT points to his influence with the .

new administration. IT really does, which has nothing to do with department of government efficiency other than sharing the same chronic name surge twenty to thirty percent after the news as of this morning. Those going has a market cap of fifty five billion dollars.

Ford has a market cap of forty four billion dollars. So yes, not yet clear if this will exist within the federal government, are outside the federal government agency can only be created within act of congress. So IT does look like IT will be outside. But just a funny time on that.

We live in that a crypto currency named after a dog is surging because of a organization was named a similar, named twenty three, and me is more like fourteen and me, after the struggling in DNA testing company laid off roughly forty percent of its staff, A C O N wgt d worked to write the ship on her money losing business. As part of the restructuring, the company is closing its drug development ARM, which was supposed to be the very thing that was going to save the business. But this business is not in good shape right now. Last last quarter, revenue declined at twelve percent to forty four million, while that losses hit fifty nine million million. This this is the last we see of twenty three.

And me. There certainly has been shrinking across the board. They used to have eight hundred employees, now they have three hundred.

They used to have a share market value of five point eight billion. Now that stand to one hundred and fifty million. They did warn that they could go out of business if they don't raise cash.

That will be a key to see if twenty three and me doesn't become, in your terms, zero and me. But IT has been A A big downfall for this company. That was what's very high flying, endorsed by celebrities seen as the toast of silicon valley, and now are here.

Remember the hype lunches experiment in schools? Yeah, didn't work. Craft hang said he would suspend its program offering lunch ables to schools this year, pausing a controversial initiative that face push back from child nutrition advocates and consumer watchdogs.

The concept, which has introduced last year, was simple enough by putting lunches ables in front of hungry kids, the billion dollar brand would gain massive exposure to a Younger generation, which could drive out of school sales too. But the demand just wasn't there for the bet to pay off. Craft time said, tell me what went wrong here?

I mean, IT was always a little unpopular because there was some opposition from parents, from child nutrition advocate tes said, do we really want our kids eating this process, meat and cheese? But the company did make some changes to its launch. Habs, they reduce SATA fact, they added some proteins.

They added some whole grains as well to try to make these lunches healthy IT just never quite caught on in the way that IT seem like. I think this was very much later in the beginning. Like you are getting your lunch ables in front of this new crop of customers, uh, introducing them to school children around the country, but for whatever reason, they just didn't work.

Also, we have to mention the looming presence of launching, which is mr. Bee slogan pole in K S. Size brands.

This this influencer launch lunch habes competitive lunching. Any bad news for lunch ables is technically good news for lunches. I don't see them sliding in for as I like for like replacement.

But at any time you see your your main legacy competitor struggling IT probably does mean that uh, market share could be uh, sending your way. So a bad news for lunch. Ebs is good news for lunches.

Finally, south korean president unit suk yal is dusting off his old set of golf clubs in the back of his garage, not to get his handy cap down, but to sharpen up his game ahead of Donald trumps presidency. Trump is obviously a huge gulfs, and yung suk believes that the best way to align himself with the u. S's interest is to strike one three hundred yards down the middle of the fairway.

For our countries to continue our conversations. Our president also needs to hit the ball properly, an an anonymous official said about the presidency golf practice into that. I say me .

flipping too. This is not a joke because there there's been a really tighter relationship during the trumps last presidency with, uh, shinzo abbey, who was the prime minister of japan, who was who was assassinated, abby and trump to develop a very, very close relationship because they both both loved golf. Obey gave him gold, played golf clubs on his first visit to the White house.

So this is a big deals as golf to pome mean, we talk about golf, you being a big part of business and making business deals be not anymore. But he used to. But at least for the trump presidency, knowing your way around the golf course, knowing how to fix your David is really important to getting in good grades with them. And only in a global diplomacy is.

I like that that aides are saying we just needed our president to hit the ball squarely, just probably not embarrass himself. And I mean, I think a lot of us can everybody. So with us, even though we don't have global diplomacy on the right.

everyone just wants to make good contact. That is all the time we have. Thanks for starting your day with us and have a wonderful wednesday to be you out for the next day.

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great to day. New, let's run back tomorrow.