WEBVTT - BI Weekend: Walt Disney, Ford Earnings 0:00:02.720 --> 0:00:11.039 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.119 --> 0:00:13.240 with Alex Steel and Paul Sweeney. 0:00:13.360 --> 0:00:16.560 The real AP performance has been in US corporate high yield. 0:00:16.720 --> 0:00:19.120 Are the companies lean enough? Have they trimmed all the fats? 0:00:19.160 --> 0:00:22.960 The semiconductor business is a really cyclical business. 0:00:22.440 --> 0:00:26.120 Breaking market headlines and corporate news from across the globe. 0:00:26.160 --> 0:00:28.600 Do investors like the M and A that we've seen? 0:00:28.800 --> 0:00:31.760 These are two big time blue chip companies. 0:00:32.040 --> 0:00:35.839 Window between the peak and cunt changing super fast. 0:00:35.680 --> 0:00:40.720 Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio. 0:00:42.280 --> 0:00:44.800 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.840 --> 0:00:47.159 business stories impacting Wall Street and the global markets. 0:00:47.240 --> 0:00:49.199 Each and every week we provide in depth research and 0:00:49.280 --> 0:00:51.080 data on some of the two thousand companies and one 0:00:51.159 --> 0:00:53.800 hundred and thirty industries our analysts cover worldwide. 0:00:53.920 --> 0:00:56.240 Today, we'll look at why the world's largest hotel company 0:00:56.280 --> 0:00:58.240 lowered it's estimate for sales growth this year. 0:00:58.320 --> 0:01:00.800 Plus we'll discuss why the automaker Ward announced it will 0:01:00.840 --> 0:01:03.320 be suspending its full year guidance for twenty twenty five. 0:01:03.560 --> 0:01:05.480 But first we begin with earnings from the media and 0:01:05.560 --> 0:01:07.000 entertainment giant Walt Disney. 0:01:07.040 --> 0:01:09.399 This week, Disney reported second quarter results that beat Wall 0:01:09.440 --> 0:01:12.360 Street's expectations. The company also raised its outlook for the 0:01:12.360 --> 0:01:12.800 full year. 0:01:13.120 --> 0:01:16.080 This comes as Disney said it saw increased visitors and 0:01:16.080 --> 0:01:19.119 guest spending at its parks and and uptick in streaming subscribers. 0:01:19.160 --> 0:01:21.920 Disney also announced plans for its first theme park in 0:01:22.120 --> 0:01:24.440 the Middle East, a resort property in the Emirate of 0:01:24.440 --> 0:01:25.040 Abu Dhabi. 0:01:25.360 --> 0:01:28.320 For more, we were enjoyed Mike Githa Ranganathan Bloomberg Intelligence 0:01:28.400 --> 0:01:29.360 Senior media analyst. 0:01:29.600 --> 0:01:31.840 We first asked Etha for her key takeaway from Disney's 0:01:31.840 --> 0:01:33.880 earnings and whether the company has turned a corner. 0:01:34.200 --> 0:01:37.320 This turnaround story has now been in the works ever 0:01:37.360 --> 0:01:40.480 since Bob Aiger came back more than two years ago, 0:01:41.040 --> 0:01:42.920 and it looks like, you know, everything that he's kind 0:01:42.920 --> 0:01:45.679 of put in place along with the CFO Hugh Johnston, 0:01:45.920 --> 0:01:50.000 is really working. So they did raise a guidance, you know, 0:01:50.080 --> 0:01:52.400 for the full year. But it's not just that, it's 0:01:52.440 --> 0:01:54.920 just the conviction in the outlook as you kind of 0:01:55.120 --> 0:01:58.200 look out and build out the earnings model. I mean, 0:01:58.240 --> 0:02:01.280 we are basically looking at them doubling their EPs from 0:02:01.320 --> 0:02:04.360 close to almost six dollars this year to well over 0:02:04.480 --> 0:02:06.800 ten eleven dollars in the next four to five years. 0:02:06.880 --> 0:02:09.560 So just a lot of conviction I think now in 0:02:09.600 --> 0:02:12.840 their long term growth trajectory, with those new parks, with 0:02:12.919 --> 0:02:15.760 the added capacity, with the sixty billion dollar investment, with 0:02:16.120 --> 0:02:19.160 you know, the Abu Dhabi Park, new cruise ships, everything 0:02:19.200 --> 0:02:21.120 seems to be finally kind of coming together. 0:02:21.639 --> 0:02:24.440 Last quarter, though, the question was about their theme parks 0:02:24.440 --> 0:02:27.000 prices are too high. The consumers pinched there was a 0:02:27.000 --> 0:02:29.239 competitor opening up a park in Florida and everyone was 0:02:29.320 --> 0:02:31.320 kind of worried. What changed in three months. 0:02:31.680 --> 0:02:33.640 Yeah, so they did say at that point that you know, 0:02:33.720 --> 0:02:36.840 summer bookings were strong. Of course, nobody really believed them. 0:02:37.480 --> 0:02:39.800 But you know, when they kind of reported the numbers 0:02:39.840 --> 0:02:43.920 and you saw that thirteen percent increase in operating income 0:02:43.960 --> 0:02:46.120 in the domestic parks, domestic parks are really the bread 0:02:46.120 --> 0:02:48.280 and butter of you know, the Disney theme park business 0:02:48.280 --> 0:02:51.120 makes up seventy percent of revenue. You know, then that 0:02:51.280 --> 0:02:53.520 has really managed to I think a lay fears and 0:02:53.680 --> 0:02:56.480 they you know, it's not just what they reported, Alex, 0:02:56.520 --> 0:02:58.560 it's what they said for the remainder of the year. 0:02:58.639 --> 0:03:01.920 So they said bookings are up this quarter four percent. 0:03:02.000 --> 0:03:05.120 They said bookings advanced bookings are up for the fiscal 0:03:05.240 --> 0:03:08.959 fourth quarter seven percent, and that is with that new 0:03:09.000 --> 0:03:13.240 Epic Universe coming on board. So still demand seems to 0:03:13.240 --> 0:03:16.359 be really resilient. It seems to be strong, even though 0:03:16.360 --> 0:03:19.440 there's a little bit of softness internationally. Domestically, they seem 0:03:19.480 --> 0:03:20.480 to be in very good shape. 0:03:21.280 --> 0:03:23.359 So Geitha talk to us about the profitability of their 0:03:23.360 --> 0:03:26.720 streaming businesses writ large here, how profitable are they? Do 0:03:26.720 --> 0:03:30.080 you think they can approach the profitability of say. 0:03:29.880 --> 0:03:33.120 Netflix, I think they can over time. They definitely can. 0:03:33.160 --> 0:03:36.560 So this year, Paul, we're looking at just over a 0:03:36.640 --> 0:03:41.000 billion dollars in operating income on a twenty five billion 0:03:41.000 --> 0:03:44.320 in revenue. That's about four or five percent margins. But 0:03:44.440 --> 0:03:47.600 really what we're looking to the north star here is 0:03:47.640 --> 0:03:51.120 definitely Netflix. As you just pointed out, Netflix should get 0:03:51.160 --> 0:03:55.280 to thirty percent operating margins this year. So that's really 0:03:55.320 --> 0:03:58.440 what what Disney is working towards. So even as we 0:03:58.560 --> 0:04:00.920 kind of build out, you know, or we look at 0:04:00.920 --> 0:04:04.240 the earnings trajectory for that streaming unit over the next 0:04:04.240 --> 0:04:06.400 couple of years, I mean, we look at them getting 0:04:06.440 --> 0:04:08.880 to you know, fifteen sixteen percent margins over the next 0:04:08.920 --> 0:04:11.000 two to three years, and then of course a lot 0:04:11.080 --> 0:04:15.360 more upside with you know, the pricing power, with subscription growth, 0:04:15.400 --> 0:04:18.479 with password sharing, with you know, their advertising buildout, so 0:04:18.520 --> 0:04:20.120 they have a lot of different levers that they can 0:04:20.120 --> 0:04:20.760 pull as well. 0:04:21.200 --> 0:04:23.840 Is the goal to catch up with Netflix in terms 0:04:23.880 --> 0:04:29.760 of streamer subscribers? Is it about profitability? Like? What's the 0:04:29.800 --> 0:04:32.680 goal there? Because Netflix is so far ahead just in basic. 0:04:32.440 --> 0:04:36.760 Numbers, Netflix is absolutely far ahead, and there's no doubt 0:04:36.760 --> 0:04:39.920 about that, Alex. They have well over three hundred million 0:04:39.920 --> 0:04:42.560 subscribers just in terms of scale, Disney has about one 0:04:42.600 --> 0:04:44.839 hundred and twenty five. So there's one hundred and twenty 0:04:44.839 --> 0:04:46.479 five million. So there's a lot of cashing up to do. 0:04:46.760 --> 0:04:49.800 But there is one area where Disney's far ahead of Netflix, 0:04:49.839 --> 0:04:54.040 and that's advertising. They have a very very good advertising 0:04:54.040 --> 0:04:56.080 infrastructure and this is an area that Netflix is kind 0:04:56.120 --> 0:04:59.320 of really struggling with. And then remember, Disney has a 0:04:59.360 --> 0:05:02.200 big weapon that they can use with that ESPN. It's 0:05:02.240 --> 0:05:03.839 not going to be called flagship, I know, but with 0:05:03.920 --> 0:05:07.200 that ESPN streaming launch coming a little bit later, this 0:05:07.320 --> 0:05:10.560 year they have. You know, they're spending something like eleven 0:05:10.600 --> 0:05:13.440 to twelve billion dollars in sports rights that they are 0:05:13.480 --> 0:05:17.640 going to monetize from a streaming perspective. So that is 0:05:17.680 --> 0:05:20.320 where you know, they're going to have an unrivaled streaming 0:05:20.400 --> 0:05:22.680 product even when you compare it to Netflix, because they're 0:05:22.680 --> 0:05:24.760 going to offer you entertainment, they're going to offer you sports. 0:05:25.000 --> 0:05:27.080 You know, there's going to be something for everybody. So 0:05:27.120 --> 0:05:28.920 it's going to be you know, I think they can. 0:05:29.080 --> 0:05:31.440 You know, I'm not sure if they're going to completely 0:05:31.480 --> 0:05:34.080 be able to match Netflix in terms of subscriptions, but 0:05:34.120 --> 0:05:36.040 they're going to be able to get to that profit number, 0:05:36.080 --> 0:05:37.320 I think pretty quickly. 0:05:37.920 --> 0:05:40.000 Keith, if I'm an investor in Disney, do I just 0:05:40.080 --> 0:05:42.559 kind of write off what used to be the core business, 0:05:42.600 --> 0:05:45.200 which is the cable network business and to say it's 0:05:45.520 --> 0:05:49.080 in secular decline, I'm focusing more on the growing streaming business. 0:05:49.120 --> 0:05:50.960 Is that kind of the play that. 0:05:51.040 --> 0:05:54.400 Is the playball across and that's across majority of the space, 0:05:54.560 --> 0:05:58.080 So you know, yes, it's it's just kind of you know, 0:05:58.600 --> 0:06:01.520 coming along if you will. Advertising is a big concern. 0:06:01.560 --> 0:06:04.560 Their affiliate fees, again as in secular decline. We know 0:06:04.680 --> 0:06:07.719 other companies are actually trying to separate out their cable 0:06:07.720 --> 0:06:10.760 networks business just because it's been struggling and the outlook 0:06:10.760 --> 0:06:14.160 doesn't look good. Comcast actually is, you know, separating out 0:06:14.200 --> 0:06:16.560 its cable networks a little bit later this year. They 0:06:16.600 --> 0:06:20.160 even have a new name for that new business. And 0:06:20.480 --> 0:06:23.320 you know, we kind of expect WBD, Warner Brothers, Discovery 0:06:23.320 --> 0:06:26.080 will do something similar, But yeah, I think it's pretty 0:06:26.120 --> 0:06:29.359 much at this point, it's pretty much written off. Paul. 0:06:29.600 --> 0:06:31.839 The billinear networks business is dying. 0:06:32.000 --> 0:06:35.520 Our thanks to Githa Wronganathan, Bloomberg Intelligence Senior media analyst. 0:06:35.760 --> 0:06:38.440 We move next to corporate earnings from Tyson Foods. This week, 0:06:38.680 --> 0:06:41.159 shares of Tyson Foods some the most since twenty twenty three. 0:06:41.200 --> 0:06:44.080 Is investors shrugged off stronger than expecting quarterly earnings. 0:06:44.360 --> 0:06:47.160 Investors were focused mainly on deepening losses at the company's 0:06:47.279 --> 0:06:50.520 beef business. This business has lost money for six straight 0:06:50.600 --> 0:06:53.040 quarters due to a severe cattle shortage in the US. 0:06:53.240 --> 0:06:55.840 For more, we are joined by Jim Martash's Bloomberg Intelligence 0:06:55.839 --> 0:06:58.560 senior analysts retail staples and packaged foods, and we first 0:06:58.600 --> 0:07:01.160 asked Jen if there was demand concern at Tyson. 0:07:01.600 --> 0:07:04.919 On the beef side, it's an input concern. And actually 0:07:04.960 --> 0:07:07.880 there's a piece to that puzzle that Tyson touched on, 0:07:07.960 --> 0:07:10.440 but they didn't really go into detail, and that's that 0:07:10.680 --> 0:07:13.840 they talk about how consumers have really still had a 0:07:13.880 --> 0:07:16.400 lot of demand for beef, which is true, except that 0:07:16.440 --> 0:07:19.360 when you look at the consumer they're trading down into 0:07:19.440 --> 0:07:23.440 like ground beef. Now when you have a shortage of cows, 0:07:24.400 --> 0:07:27.760 you know, the problem that Tyson has is that they 0:07:27.880 --> 0:07:31.160 have to put higher quality parts of the animal into 0:07:31.200 --> 0:07:33.280 grind in order to sell it, which means that their 0:07:33.280 --> 0:07:36.720 profit per animal is coming down. And that's a concern 0:07:36.800 --> 0:07:40.600 over the long term if those changes in behavior patterns 0:07:40.960 --> 0:07:42.800 don't alter in the near future. 0:07:42.960 --> 0:07:46.080 All right, you know, during our little egg shortage, my 0:07:46.200 --> 0:07:51.160 scientific analysis was basically, just make more chickens. Tyson's are 0:07:51.160 --> 0:07:54.120 the chicken people, I think, what are they saying about 0:07:54.160 --> 0:07:56.720 the chicken population these days and eggs and all that 0:07:56.760 --> 0:07:58.960 kind of stuff, because they're the folks that know. 0:07:59.480 --> 0:08:02.720 Yeah, so the chicken supply is actually pretty healthy from 0:08:03.200 --> 0:08:05.880 a standpoint of the chickens that are used for consumption, 0:08:06.840 --> 0:08:09.880 they really weren't impacted all that much. By avian influenza, 0:08:09.920 --> 0:08:12.760 and so that was the good news. The bad news 0:08:12.800 --> 0:08:16.280 is that the mortality rates on the type of chicken 0:08:16.280 --> 0:08:18.880 that they're currently using is still pretty high. So that 0:08:19.000 --> 0:08:21.880 means that they're not getting as many chickens into the 0:08:21.920 --> 0:08:25.480 processing plants that they normally would given the number of 0:08:25.520 --> 0:08:28.200 eggs that are being laid, and so that is an 0:08:28.240 --> 0:08:32.800 inherent top or cap to supply. So supply is robust. 0:08:32.840 --> 0:08:36.000 It's going to grow about one percent this year, but 0:08:36.920 --> 0:08:39.320 there are some constraints there with how much more they 0:08:39.320 --> 0:08:41.080 could actually grow supply overall. 0:08:41.640 --> 0:08:45.480 What's the tariff impact, if any, on Tyson on both 0:08:45.480 --> 0:08:46.880 sides the demand and supply. 0:08:47.880 --> 0:08:51.200 For Tyson, Actually, they have very limited exposure for tariffs 0:08:51.800 --> 0:08:53.800 they set on their callts. About ninety five percent of 0:08:53.840 --> 0:08:56.720 their revenue comes from product that's sold in the United States. 0:08:57.360 --> 0:09:01.320 Their export is relatively small, and they've had some time 0:09:01.320 --> 0:09:04.880 to work on contingency plans, so finding different end markets 0:09:04.880 --> 0:09:07.600 that they can send some of the parts of animals 0:09:07.600 --> 0:09:11.240 that US consumers just don't eat. So right now, it 0:09:11.240 --> 0:09:13.280 doesn't appear to be a very large risk for Tyson 0:09:13.360 --> 0:09:13.600 at all. 0:09:13.960 --> 0:09:17.800 You mentioned maybe some issue with the cow herd. I 0:09:17.840 --> 0:09:20.800 mean I watch Yosemite. I know all about the. 0:09:20.760 --> 0:09:22.360 Ranching business to see it. 0:09:22.440 --> 0:09:24.760 Yeah, so I mean, can't we make more cows? What's 0:09:24.800 --> 0:09:25.360 going on there? 0:09:26.280 --> 0:09:29.520 We can make more cows. The problem is that for 0:09:29.640 --> 0:09:33.320 ranchers it's a tough environment to decide to actually build 0:09:33.400 --> 0:09:36.520 up herds. Interest rates are still relatively high, there's still 0:09:36.600 --> 0:09:40.720 high cost to expand operations. We've had drought that's only 0:09:40.840 --> 0:09:43.200 just reversing in a lot of the key areas where 0:09:43.200 --> 0:09:48.080 we raise cattle, and so that decision has been coming. 0:09:48.880 --> 0:09:51.760 But the problem is that once you even start, you know, 0:09:51.760 --> 0:09:53.760 it takes eighteen months to get a cattle for birth 0:09:53.800 --> 0:09:56.600 to market. So even if they start, we're not going 0:09:56.640 --> 0:09:58.760 to see an influxus supply for quite some time. 0:09:59.280 --> 0:10:00.800 I feel like just a few years ago it was 0:10:00.800 --> 0:10:04.680 all about alternative protein. I remember, particularly with Cargil for example, 0:10:04.679 --> 0:10:07.440 they're making a really big push into that. Has that 0:10:07.559 --> 0:10:09.760 trend for these guys shifted now? 0:10:10.600 --> 0:10:13.720 It has. When we look at the consumer consumption data, 0:10:13.880 --> 0:10:17.880 the luster around plant based has really fallen off. And 0:10:17.960 --> 0:10:21.800 so you know, right now there's a core demographic that 0:10:21.880 --> 0:10:25.920 will always be interested in that product, but at the 0:10:26.000 --> 0:10:29.240 moment it's not growing. The sales are continuing to contract. 0:10:29.520 --> 0:10:32.440 Part of that is that the cost of regular meat 0:10:32.440 --> 0:10:36.120 has come down, and we had food inflation which pushed 0:10:36.120 --> 0:10:39.719 the cost of special ingredients for alternative meat way up. 0:10:40.040 --> 0:10:43.560 So the price gap between alternative proteins and conventional proteins 0:10:43.559 --> 0:10:45.640 got a lot wider in the last couple of years, 0:10:45.960 --> 0:10:48.720 and it still hasn't completely collapsed again, and so until 0:10:48.720 --> 0:10:51.000 that gets a little bit closer, it's going to be 0:10:51.040 --> 0:10:54.520 harder to get consumers to get interested again in alternative proteins. 0:10:55.040 --> 0:10:57.320 So what is it the Tysons of the world. What 0:10:57.360 --> 0:11:00.239 are they saying about their consumer these days? 0:11:01.200 --> 0:11:04.160 So, you know, they talk about the demand for protein, 0:11:04.600 --> 0:11:07.920 and this is something where at the Bloomberg Intelligence Farm 0:11:07.920 --> 0:11:10.640 Food Fuel Conference we had a whole lot of panelists 0:11:10.679 --> 0:11:15.040 on protein, and the demand for protein is really strong, 0:11:15.080 --> 0:11:18.360 whether you're talking about animal protein, whether you're talking about dairy. 0:11:19.800 --> 0:11:23.600 Current diet trends are high protein based, and so that 0:11:23.640 --> 0:11:29.080 really bodes well for producers like Tyson as the consumer 0:11:29.240 --> 0:11:32.120 is willing to still spend on protein and it's in 0:11:32.160 --> 0:11:34.280 the majority of their purchases when they're going to the 0:11:34.280 --> 0:11:35.000 grocery store. 0:11:35.320 --> 0:11:38.440 Our thanks to Jennifer Bartash, is Bloomberg Intelligence Senior Animals 0:11:38.480 --> 0:11:40.720 covering in the retail, staples and packaged foods coman. 0:11:40.800 --> 0:11:42.800 We're going to break down why the German drug maker 0:11:42.840 --> 0:11:46.160 at BioNTech reported lower than expected quarterly sales. 0:11:46.280 --> 0:11:49.080 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:11:49.120 --> 0:11:51.560 depth research and data on two thousand companies in one 0:11:51.640 --> 0:11:54.640 hundred and thirty industries. You can access Bloomberg Intelligence via 0:11:54.720 --> 0:11:57.000 b I go on the terminal AM Paul Sweeney. 0:11:56.720 --> 0:11:58.760 An am Alex Steel, and this is Bloomberg. 0:12:02.559 --> 0:12:06.240 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:06.360 --> 0:12:09.439 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:09.440 --> 0:12:12.760 Auto with the Bloomberg Business App. Listen on demand wherever 0:12:12.800 --> 0:12:15.920 you get your podcasts, or watch us live on YouTube. 0:12:16.440 --> 0:12:18.480 We move next to the hospitality industry. 0:12:18.720 --> 0:12:22.360 Marriott followed its rivals Hilton, Hyatt and Wyndham and learning 0:12:22.400 --> 0:12:25.199 it's four year guidance setting macroeconomic uncertainty. 0:12:25.280 --> 0:12:27.920 But Marriott did cut its outlook by less and its peers, 0:12:27.960 --> 0:12:31.439 indicating that affluent travelers are less affected by economic uncertainty. 0:12:31.640 --> 0:12:33.640 For more on this, we were joined by Brian Egger, 0:12:33.679 --> 0:12:36.160 Bloomberg Intelligence Senior Gaming and lodging analysts. 0:12:36.200 --> 0:12:38.520 We first asked Brian for his key takeaways from Marion's 0:12:38.520 --> 0:12:39.400 first quarter results. 0:12:39.840 --> 0:12:40.080 Yeah. 0:12:40.120 --> 0:12:42.480 I think the big surpriser was that the rev par 0:12:42.720 --> 0:12:46.040 guidance reduction was actually more modest than some of the 0:12:46.080 --> 0:12:49.439 other hotel companies like Hilton and Hyatt, So I think 0:12:49.480 --> 0:12:52.040 that was a bit of a sigh of relief. They 0:12:52.040 --> 0:12:55.440 did acknowledge there's some US softness for certain customer segments, 0:12:56.200 --> 0:12:58.720 but at the same time they're seeing kind of pretty 0:12:58.720 --> 0:13:02.040 consistent international so I think it was just the relative 0:13:02.120 --> 0:13:05.240 magnitude of the reduction that probably was viewed as being 0:13:05.320 --> 0:13:06.120 somewhat favorable. 0:13:07.080 --> 0:13:09.600 So across Marriott and Hilton and Huyatt and all those 0:13:09.600 --> 0:13:12.520 other companies that you cover, BRIME, are they seeing it 0:13:13.280 --> 0:13:15.960 to the extent they're seeing any softening? Is it from 0:13:15.960 --> 0:13:18.160 the leisure travel the business traveler both? 0:13:19.640 --> 0:13:22.880 Yeah, good question. It's really from i'd say three primary 0:13:22.960 --> 0:13:28.120 customer categories, independent leisure travelers, extended stay kind of the 0:13:28.120 --> 0:13:33.080 lower tier, limited service customers, and then government employees, which 0:13:33.120 --> 0:13:37.040 are a customer base of some importance for Marriott, and 0:13:37.160 --> 0:13:41.559 offsetting that is somewhat greater strength in things like group bookings. 0:13:41.920 --> 0:13:44.360 So there's a bit of divergence across segments. 0:13:45.280 --> 0:13:48.640 What about geographically, what's holding up? Because one can make 0:13:48.679 --> 0:13:50.320 an argument if you're tied on budgets, you're not going 0:13:50.360 --> 0:13:51.839 to go to Europe, but maybe you'll travel within the 0:13:51.920 --> 0:13:52.760 United States. 0:13:53.280 --> 0:13:56.360 Yeah, So to the extent that Marriott did trim guidance, 0:13:56.760 --> 0:13:59.760 all of their guidance cut was related to US in particular, 0:14:00.080 --> 0:14:04.000 particularly those segments I mentioned. Internationally, they have not changed 0:14:04.720 --> 0:14:07.920 expectations at all. You know, there's been some concern about 0:14:08.000 --> 0:14:11.880 inbound travel from international markets to the US, but within 0:14:12.480 --> 0:14:15.880 those non US markets, Asia, Europe, et cetera, they have 0:14:15.960 --> 0:14:19.120 not changed or in any way trim their expectations. 0:14:19.840 --> 0:14:22.640 Just in terms of expansion plans. Are there hotel companies 0:14:22.680 --> 0:14:26.400 still planning on maybe developing new hotels or building new 0:14:26.400 --> 0:14:28.200 hotels or are they kind of put their growth plans 0:14:28.240 --> 0:14:28.680 on hold. 0:14:29.200 --> 0:14:29.920 Yeah, so the. 0:14:29.920 --> 0:14:33.480 Unit growth expectations of the rooms are unchanged. There's still 0:14:33.920 --> 0:14:36.240 as they were that they have not really observed and 0:14:36.280 --> 0:14:39.320 I'm speaking particularly about Marryout. They haven't really observed any 0:14:39.400 --> 0:14:43.280 changes in terms of construction starts. So there's really not 0:14:43.400 --> 0:14:47.040 been a material change. Obviously, in an uncertain economic environment, 0:14:47.440 --> 0:14:50.480 it's something that we're watchful of. But to the extent 0:14:50.560 --> 0:14:52.760 that we're looking at that, there's been no change in 0:14:52.840 --> 0:14:55.880 terms of their room expansion pipeline or development plan. 0:14:56.520 --> 0:14:59.880 If we wind up getting more calm and more in 0:15:00.080 --> 0:15:02.480 decision is thrown by the wayside, right, and we get 0:15:02.480 --> 0:15:07.440 clarity which hotel lodging is best set up for that right. 0:15:07.480 --> 0:15:09.640 So that's a good question. I think, to the extent 0:15:09.680 --> 0:15:14.040 that we're talking about the big wild card being independent 0:15:14.120 --> 0:15:17.840 leisure travel extends fairly broadly across the companies. You know, 0:15:17.880 --> 0:15:20.360 to the extent that we look at the degree of 0:15:20.560 --> 0:15:22.840 let's say cuts, Windom probably cut the most, and they're 0:15:22.840 --> 0:15:25.720 deeply in the extended stay segment, maybe you would see 0:15:25.960 --> 0:15:28.320 a little bit more bounce back there to the degree 0:15:28.400 --> 0:15:32.240 that they have reduced expectitions more. But you know, I 0:15:32.240 --> 0:15:35.160 think across the board they all have some degree of 0:15:35.200 --> 0:15:37.520 exposure to the segments that have been a little weaker, 0:15:37.840 --> 0:15:42.040 which is independent leisure travel, certain types of extended state 0:15:42.080 --> 0:15:46.040 customer segments, particularly for Windom and things like government employees, 0:15:46.080 --> 0:15:47.400 which I mentioned for Marriott. 0:15:48.200 --> 0:15:52.160 We've seen a lot of soft data suggesting that inbound 0:15:52.240 --> 0:15:56.360 international travel is down, and this is a short term 0:15:56.440 --> 0:15:58.520 data maybe not any long term trends. What are your 0:15:58.560 --> 0:15:59.600 companies saying about that. 0:16:00.160 --> 0:16:02.320 Yeah, that's been a concern of hours for a while 0:16:02.360 --> 0:16:04.840 that you would see a reduction, particularly from inbound travel 0:16:04.920 --> 0:16:08.200 from Canada and Europe, and I think to some extent 0:16:08.520 --> 0:16:12.760 we've seen that. Mariot did say that their Canadian bookings 0:16:12.760 --> 0:16:16.400 for US stay room nights were down about five percent 0:16:16.480 --> 0:16:18.880 year of the year. However, they did observe that that 0:16:19.000 --> 0:16:22.600 was offset by strower inbound travel from other markets. And 0:16:22.680 --> 0:16:27.520 also Hilton mentioned that Canada represented only about one and 0:16:27.520 --> 0:16:30.920 a half percent of their total company revenues in terms 0:16:30.920 --> 0:16:36.720 of Canadian customer stays at US hotels, right, so the 0:16:36.760 --> 0:16:39.720 exposure to some of those inbound markets is relatively small, 0:16:39.760 --> 0:16:41.640 but there does seem to be some put and takes 0:16:41.920 --> 0:16:45.040 where they're getting summer leaf from other markets. Even though 0:16:45.400 --> 0:16:48.320 across the board Canada inbound tourism to the US is down, 0:16:48.720 --> 0:16:52.240 it's just not a particularly material percentage of the overall 0:16:52.320 --> 0:16:53.120 customer base. 0:16:53.960 --> 0:16:56.880 So that's sort of the lodging side. What about the 0:16:56.960 --> 0:16:59.400 gaming side, What have we noticed in terms of an 0:16:59.480 --> 0:17:02.560 earnings or forecast or just any sort of read through there. 0:17:03.240 --> 0:17:05.359 You know, not really much of a change in terms 0:17:05.359 --> 0:17:10.240 of markets like Las Vegas, which is really principally a 0:17:10.240 --> 0:17:13.760 domestic audience. Really not any material change in terms of 0:17:13.800 --> 0:17:18.400 expectations there, although those companies guidance metrics are a little 0:17:18.400 --> 0:17:21.560 bit less specific. In the case of the Las Vegas companies, 0:17:21.880 --> 0:17:24.840 we were watchful of the sector because at least one company, 0:17:24.960 --> 0:17:29.560 Churchill Downs, delayed a capital spending plan at the Churchill 0:17:29.600 --> 0:17:33.359 Downs racetrack, and there were plenty on fairly large expansion 0:17:33.400 --> 0:17:36.560 project there which they've delayed amid economic and trade uncertainty. 0:17:36.800 --> 0:17:39.400 But that does not seem to have extended to other companies. 0:17:39.440 --> 0:17:43.160 So no major changes in terms of capital spending plans 0:17:43.720 --> 0:17:46.840 or bookings trends for some of the major gaming operators. 0:17:47.400 --> 0:17:49.720 So by and large, here what are the stocks telling you, Brian? 0:17:49.760 --> 0:17:52.200 Here across the lodging space, have they been selling off 0:17:52.200 --> 0:17:54.119 for underperforming the market? What are they telling us? 0:17:54.440 --> 0:17:59.400 I think there's been certainly some expectation of an economic 0:17:59.440 --> 0:18:02.479 impact from both the traded in the economic uncertainties, and 0:18:02.560 --> 0:18:04.760 we did see, you know, for some of the recent 0:18:05.320 --> 0:18:08.280 sell offs of the market, lodging companies were certainly hit. 0:18:09.600 --> 0:18:12.400 And so by the time he got to the companies 0:18:12.600 --> 0:18:16.399 like Hyatt and Hilton actually reducing guidance, you know, the 0:18:16.480 --> 0:18:20.600 reduction follow on Stockbrice behavior was not particularly pronounced because 0:18:20.600 --> 0:18:23.520 I think there's been some anticipation that we'll see a 0:18:23.520 --> 0:18:27.800 little bit of a slowdown and amid the uncertain economic environment. 0:18:28.160 --> 0:18:30.840 Our thanks to Brian Egger, Bloomberg Intelligence, Senior Gaming and 0:18:30.920 --> 0:18:32.160 Lodging analysts. 0:18:31.960 --> 0:18:33.520 We move next to the biotech space. 0:18:33.880 --> 0:18:37.479 This week, the German drugmaker BioNTech reported lower than expected 0:18:37.560 --> 0:18:40.840 quarterly sales on weaker demand for its COVID nineteen vaccine 0:18:40.840 --> 0:18:41.800 developed with Pfizer. 0:18:41.920 --> 0:18:44.600 This comes as the company's now seeking to evolve into 0:18:44.640 --> 0:18:47.400 a broader biotech company focused on cancer treatments. 0:18:47.560 --> 0:18:49.240 For more on this and the latest news in the 0:18:49.280 --> 0:18:52.080 drug space, we were joined by Sam Fazzelli, Bloomberg Intelligence, 0:18:52.119 --> 0:18:55.560 Director of Research for Global Industries and senior pharmaceuticals analysts. 0:18:55.560 --> 0:18:57.960 The first asked Sam for his take on Biontechs results. 0:18:58.280 --> 0:19:01.520 I can remember BioNTech is the originator of the Pfizer 0:19:01.960 --> 0:19:04.760 COVID shot, so they're one of the two mRNA shots 0:19:04.800 --> 0:19:08.040 out there. And what was again good to see is 0:19:08.040 --> 0:19:10.359 that despite all the uncertainties that we're hearing about with 0:19:10.400 --> 0:19:14.560 regards to attitude, CMRNA, vaccines, et cetera. Neither of the 0:19:14.600 --> 0:19:17.760 companies have reduced their guidance for the air, but the 0:19:17.800 --> 0:19:21.639 guidance have got really really wide margins in terms of 0:19:21.680 --> 0:19:24.160 where they're going. And they both need it because they're 0:19:24.200 --> 0:19:27.199 both spending a large amount of money on R and D, 0:19:27.359 --> 0:19:30.280 which is what companies should be doing to discover new drugs, 0:19:30.320 --> 0:19:32.399 and a lot of those drugs are at least in 0:19:32.440 --> 0:19:35.919 the biontic case in cancer in general. And we have 0:19:36.000 --> 0:19:38.679 some interesting mechanisms that are going to read out, so 0:19:39.880 --> 0:19:41.560 that it's going to be interesting to see how this 0:19:41.600 --> 0:19:44.280 all pans out over the next few months with regards 0:19:44.359 --> 0:19:48.840 to vaccine attitudes, et cetera. So as crossed that people 0:19:48.880 --> 0:19:50.200 would take those shots. 0:19:50.480 --> 0:19:54.720 Yeah, Historically, sam have healthcare stocks broadly defined. I'm thinking 0:19:54.720 --> 0:19:57.080 that the big cap pharma companies, So, are there are 0:19:57.080 --> 0:20:00.000 places to hide out in times of uncertainty? 0:20:01.040 --> 0:20:04.000 Yeah? Absolutely, They are probably the most defensive of the 0:20:04.040 --> 0:20:07.960 defensives along with utilities. Along with utilities, et cetera. But 0:20:08.080 --> 0:20:10.399 the problem I think Farma got right now is that, 0:20:10.440 --> 0:20:13.080 as we just saw, President Trump apparently has said that 0:20:13.160 --> 0:20:15.320 he might come back again in the next two weeks 0:20:15.640 --> 0:20:18.879 with some tariffs for pharmaceutical companies. Most of them have 0:20:19.000 --> 0:20:21.800 said that they're ready to manage it and be able 0:20:21.840 --> 0:20:25.000 to absorb it. Some have already given us some numbers 0:20:25.040 --> 0:20:27.399