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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: We had some more earnings. General Motors out with some numbers.

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Speaker 2: They raised their profit outlook for the year by five

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Speaker 2: hundred million dollars. Let's break it down with Steve Mann

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Speaker 2: Global Autos and Industrials Research channels for Bloomberg Intelligency Space

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Speaker 2: down in Princeton. See what have we learned from General

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Speaker 2: Motors and their earnings release.

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Speaker 3: I actually, overall their earnings was pretty good, and if

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Speaker 3: this Iran war, you know, doesn't drag on, I think

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Speaker 3: they're going to have a great second half. You know,

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Speaker 3: inventory is low, they've managed it very well. That means

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Speaker 3: they're pricing is pretty steady up to you know, up

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Speaker 3: a bit, and like you know, truck truck sales are

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Speaker 3: still going well despite the four dollars gas prices. So

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Speaker 3: so you know, second half production could could could ramp

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Speaker 3: back up if the war doesn't drag on.

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Speaker 4: If the war doesn't drag on and if the company

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Speaker 4: gets the relief from paying all those tariffs. My understanding

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Speaker 4: is that that increased outlook that Paul reference does reflect

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Speaker 4: the benefits of tariff cost relief tied to the Supreme

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Speaker 4: Court deciding to strike down those reciprocal tariffs that President

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Speaker 4: Trump imposed.

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Speaker 3: Yeah, you know, they they they they had a five

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Speaker 3: hundred million dollars benefit. Uh, well, less costs from the tariff.

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Speaker 3: You know, there could be more coming. And you know

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Speaker 3: right now there are inventory is that uh you know,

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Speaker 3: that could be low target, especially in the pickup truck side,

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Speaker 3: so you know, and pickup trucks are the highest profit

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Speaker 3: margin vehicles for them. So if they can keep production steady,

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Speaker 3: you know, increase the inventory dealer inventory a bit by

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Speaker 3: raising the production. You know, that eight point six percent

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Speaker 3: EBIT adjust the ebitdel margin that they had in North America,

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Speaker 3: could you know, could stay up there or even get

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Speaker 3: even better.

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Speaker 2: What's GM saying about You mentioned the trucks, and that's

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Speaker 2: what Americans we like to drive, you know, big trucks, SUVs,

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Speaker 2: all that kind of stuff here, but with gas north

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Speaker 2: of four dollars a barrel, what's GM saying about the

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Speaker 2: demand for those big vehicles.

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Speaker 3: Yeah, they're actually very cautious. You know, gas prices are up,

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Speaker 3: like oil prices up like three dollars today, and I

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Speaker 3: think that's really impact on the consumer discretionary stocks and

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Speaker 3: including GM despite its you know, a very good earnings results,

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Speaker 3: but they are very cautious. You know, not only demand,

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Speaker 3: but you know, if elevated oil prices are staying up,

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Speaker 3: you know, it could trickle down into material costs, even

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Speaker 3: though they haven't seen a huge impact from that yet,

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Speaker 3: but a prolonged war could could impact it. But the

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Speaker 3: other thing that you know we've talked about is is

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Speaker 3: k economy. Right, it's very interesting to see what's happening

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Speaker 3: today where the high end expensive vehicles are actually doing well.

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Speaker 3: Where we're seeing the client is really on the cheaper

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Speaker 3: vehicles where you know, buyers in that segment are more

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Speaker 3: cost conscious and I think there are holding onto their

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Speaker 3: purse strings. But like you know, it's all about the war.

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Speaker 4: Yeah, absolutely, it's all about the war that affects everyone's

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Speaker 4: willingness to spend, their mood when it comes to spending.

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Speaker 4: What is GM offering by way of low cost vehicles,

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Speaker 4: how big of a lineup offering.

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Speaker 3: Does it really have they do? I mean they have

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Speaker 3: you know, the Chevrolet Tracks is selling very well. Uh,

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Speaker 3: you know, the Buick Envision not bad, you know they are.

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Speaker 3: They do have a view vehicles. The eb Chevrolet Vault,

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Speaker 3: which is they just rolled it out, is one of

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Speaker 3: the most popular eds out there. That's going to help them,

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Speaker 3: you know, reduce some of the EV losses there. So

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Speaker 3: they have a pretty diverse portfolio. But you know, I

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Speaker 3: think if truck sales maintain where it's at consumer sentiments,

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Speaker 3: they you know, gets better if the war ends, and

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Speaker 3: even the commercial side, if commercial demand stays steady, I

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Speaker 3: think you know, they're going to have a decent second half.

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Speaker 2: Ford reports tomorrow after the closed Steve is a readacross

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Speaker 2: from GM over to Ford.

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Speaker 3: Yeah, definitely. Uh. You know, Ford realies much more on

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Speaker 3: their pickup truck. The F one fifty is you know,

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Speaker 3: the top selling pickup trucks in the US, not just

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Speaker 3: to consumers but to the commercial commercial buyers. So it

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Speaker 3: is it is a positive rate across to the only

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Speaker 3: thing that's on the Risks side is you know, they

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Speaker 3: had some delays on ramping up the F one fifty

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Speaker 3: or due to the Novella's aluminum plant fire last year.

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Speaker 3: But again, look, they they're going to get that aluminum

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Speaker 3: shortage fixed up, and if the war ends, you know,

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Speaker 3: they're going to have to ramp up the F one

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Speaker 3: fifty production and that's only going to improve their unit

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Speaker 3: costs and profitability in the second half.

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Speaker 2: Stay with us.

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Speaker 4: More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: All right, we've got Eitha wrong annathon with us. She's

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Speaker 2: a media analyst for Bloomberg Intelligence, and we're supposed to

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Speaker 2: talk about Spotify, which we kind of will. Spotify reported

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Speaker 2: their quarter results were good, their guidance is a little

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Speaker 2: disappointing in the stocks down thirteen percent. There, I gave

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Speaker 2: it to you. That's the analysis. What I want to know,

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Speaker 2: Githa is AI and music. Is AI a threat to

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Speaker 2: recorded music?

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Speaker 5: I think it is, Paul, and I think that is

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Speaker 5: what we're kind of seeing reflected in you know, the

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Speaker 5: Spotify stock market. Stock price reaction today. So for Spotify,

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Speaker 5: I mean, the way that they've generally framed this is

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Speaker 5: that it is actually AI is going to be a

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Speaker 5: positive for them because you know, you have AI tools

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Speaker 5: that can create more personalization, that can enhance music discovery,

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Speaker 5: that you know, can help with customization, can help with

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Speaker 5: better ad targeting. So all of the things that they're saying,

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Speaker 5: they're saying the right things. The problem is that they

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Speaker 5: will have to obviously undertake significant investments for all of

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Speaker 5: that to actually happen. So we know that Spotify already

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Speaker 5: offers one of the best user experiences. This is why

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Speaker 5: they have a thirty five percent subscriber share of the

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Speaker 5: global music market. So there's no doubt that people really

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Speaker 5: love their Spotify app. But they're going to have to

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Speaker 5: really invest heavily, and I think that is what the

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Speaker 5: street is getting a little bit uncomfortable about.

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Speaker 4: So how exactly is AI a competitive threat here?

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Speaker 5: Do people?

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Speaker 2: Then?

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Speaker 4: I mean, is the concern that people won't subscribe to

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Speaker 4: Spotify because AI can serve up music better and cheaper,

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Speaker 4: Or is it that AI generated music takes the place

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Speaker 4: of what Spotify can offer.

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Speaker 5: Yeah, it's actually a combination of both. Scarlets. So, yes,

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Speaker 5: AI generated music, and we've seen number of platforms kind

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Speaker 5: of emerge over the past few months. I mean, Suno, Udio,

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Speaker 5: all of these are you know, yes, Suno and Udio.

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Speaker 5: They're the big ones that have come up, you know,

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Speaker 5: which just offer you AI generated tracks and people are

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Speaker 5: actually tuning into those, you know, so so they if

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Speaker 5: you just look at downloads for instance, those have kind

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Speaker 5: of been off the charts, and so there's obviously a

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Speaker 5: very real fear that you know, these these can become

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Speaker 5: real competitors to the traditional DSPs, you know, to a Spotify,

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Speaker 5: to a YouTube Music, to a Amazon Music. But then

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Speaker 5: I think the bigger threat for Spotify is that, remember

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Speaker 5: Spotify is a pure play audio streamer. It is up

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Speaker 5: against all the other big tech companies, tech companies that

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Speaker 5: are already investing very, very heavily in AI capability. So

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Speaker 5: you know, you look at YouTube Music, you look at

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Speaker 5: Amazon Music, or you look at Apple Music. These are

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Speaker 5: all companies that are already going to be spending something

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Speaker 5: like seven hundred billion dollars in capital expenditure this year

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Speaker 5: just on AI developments. You know, Google for instance, just

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Speaker 5: introduce something called Lyria in you know Lyria three in March,

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Speaker 5: which basically allows for AI generated music up to three

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Speaker 5: minutes of a music track. And so this is a real,

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Speaker 5: real risk for Spotify because you know, now now the

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Speaker 5: hyperscalers can really gain market share.

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Speaker 2: Wow, I'm just I just went on to the Suno

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Speaker 2: is AI for music creators creating stunning original music for

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Speaker 2: free in seconds using our AI generator. Make your masterpieces,

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Speaker 2: share with friends, and discover music from I mean, wait, is.

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Speaker 4: Music that labeled AI generated or not?

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Speaker 2: I don't get it.

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Speaker 5: It is, but people still like it because you know,

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Speaker 5: you can.

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Speaker 4: Connect you to anyone who's making it.

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Speaker 3: Is there?

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Speaker 5: Yeah, there has been actually there have been a couple

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Speaker 5: of AI generated artists that have actually topped some of

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Speaker 5: the Billboard charts. So it's surprising, but they've done it.

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Speaker 5: So it it you know right now, still very early,

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Speaker 5: but it can become a big thing pretty fast.

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Speaker 4: And what AI generator music cannot hold concerts, right, I

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Speaker 4: mean that's other.

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Speaker 2: Big part of it, right, Yeah, unless you get a

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Speaker 2: robot or something that's no fun. See, I'm telling you

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Speaker 2: it's all common. So all right, So that's music, And

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Speaker 2: now that brings you to the probably the biggest fear

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Speaker 2: in Los Angeles in Hollywood right now, which is AI

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Speaker 2: created just content in general? What are the big content creators,

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Speaker 2: the Disneys of the world, the Paramount of the world.

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Speaker 2: What are they saying about that?

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Speaker 5: Yeah, so the really big thing that I think everybody

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Speaker 5: is looking for is this big WGA contract, the writer's

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Speaker 5: skilled contract that kind of comes up in a few weeks. Actually,

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Speaker 5: you know, negotiations, and AI is obviously supposed to be

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Speaker 5: a big key topic there. So far, we've not really

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Speaker 5: heard any major rumblings. I mean, yes, we've heard, you know,

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Speaker 5: something from Paramount in terms of offering AI efficiencies. We've

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Speaker 5: heard about Netflix talk about AI efficiencies, but nothing really

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Speaker 5: significant or radical on the content creation side. So so

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Speaker 5: far it's pretty benign. But all that can change pretty quickly.

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Speaker 4: Too, Keith, I got to get your take on what's

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Speaker 4: happening between President Trump and Jimmy Kimmel. Jimmy Kimmel making

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Speaker 4: some jokes before the White House Correspondents Dinner that referenced

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Speaker 4: Milania being a prospective widow, he says. Jimmy Kimmel says

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Speaker 4: it was a reference to the age disparity between the

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Speaker 4: President the first lady. In light of what happened over

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Speaker 4: the weekend, President Trump calls it despicable and now is

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Speaker 4: calling on ABC to fire Jimmy Kimmel. Is this something

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Speaker 4: that could pose a threat to the company, to Disney,

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Speaker 4: to ABC.

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Speaker 5: Yeah, it's definitely controversial, Scarlett, And it's kind of a

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Speaker 5: pr nightmare for the new CEO of Josh Tomorrow, who

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Speaker 5: really doesn't have much experience in kind of navigating all

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Speaker 5: of this Hollywood talent stuff. So, you know, Bob Iger,

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Speaker 5: the previous CEO, obviously had you know, had his fair

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Speaker 5: share of these moments. He kind of knew what to do.

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Speaker 5: We do have Dana Walden, who is the content chief

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Speaker 5: and who actually helped navigate a very similar issue a

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Speaker 5: few months ago, when you know, we had a similar

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Speaker 5: controversy with Jimmy Kimmel and the whole Charlie Kirk debate.

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Speaker 5: She kind of obviously helped smooth things over. I don't

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Speaker 5: know how things are going to play out this time,

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Speaker 5: but obviously President Trump again with his whole rhetoric of

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Speaker 5: you know, revoking ABC's license, and Brendan Carr, who is

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Speaker 5: the FCC chair, also kind of chiming in obviously lots

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Speaker 5: of you know, noise, lots of political maneuvers here, but

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Speaker 5: I'm not necessarily sure that anything tangible is going to happen,

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Speaker 5: at least in terms of licenses. But again, it's a

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Speaker 5: pr nightmare.

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Speaker 3: Stay with us.

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Speaker 2: More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay, and Android

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Speaker 2: Coca Cola reported some numbers today, some pretty good numbers.

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Speaker 2: Stock is up six percent today on the news, up

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Speaker 2: about fourteen and a half percent year to dates. So

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Speaker 2: some good numbers out of Coke Ken Shake follows all

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Speaker 2: the consumer finance companies for Bloomberg Intelligence joints US now

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Speaker 2: can talk to us about Coca Cola. How is their quarter?

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Speaker 6: Yeah, hi, paul a coach. Quarter was strong. Hard to

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Speaker 6: characterize it in any other way. Really. Organic growth was

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Speaker 6: up ten percent, expectations were seven and it was a

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Speaker 6: balanced performance. Also, it was not relying on price mix

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Speaker 6: as much as they had been in the past. Volumes

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Speaker 6: are up three which is pretty good. For this mature company.

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Speaker 6: The results were also broad based geographically and by product line.

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Speaker 6: I think the key takeaway here is that it shows

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Speaker 6: the company's ability to be agile during a period of

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Speaker 6: low consumer confidence. You got a war going on, you know,

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Speaker 6: the A company that's in two hundred countries is always

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Speaker 6: going to have a pocket of strength and weakness, and

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Speaker 6: this quarter showed that by far, there's more positive things

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Speaker 6: going on to negative here.

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Speaker 2: So unlike Pepsi, which has the you know, the the

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Speaker 2: snack business, coc is pretty much pure play beverage company.

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Speaker 2: Which one is is more rewarded by the street. Which

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Speaker 2: one do you think the street likes better?

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Speaker 6: I think generally speaking, the street has rewarded companies that

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Speaker 6: with more focus and you know more uh more focus,

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Speaker 6: I guess it's the right word. And coke has always

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Speaker 6: uh generated a higher multiple on the street. Also, food

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Speaker 6: tends to have more problems when it comes to cost inflation.

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Speaker 6: You know, your beverage company, particularly with coke business model,

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Speaker 6: you can all set a lot of these inflationary pressures

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Speaker 6: because you're off sending it to third party bottlers. So

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Speaker 6: that kind of dovetails into probably your next question, which

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Speaker 6: is how are they how are they firing in the

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Speaker 6: in this period of high commodity costs? Pretty darn well,

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Speaker 6: I would say, because again they get to push off

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Speaker 6: the production of the finished product just coribution. And therefore,

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Speaker 6: these are companies that are incurring high gasoline prices onto

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Speaker 6: third party bottlers, and Coke is not incurring them by

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Speaker 6: far as much as they are.

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Speaker 2: What's we're now a year into these tariffs. Now, what

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Speaker 2: is a company, a global company like Coca Cola, What

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Speaker 2: are they saying about how they're navigating terraces? Are they

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Speaker 2: kind of finding a new normal?

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Speaker 6: Terrifftion are really a big thing for a Coke again

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Speaker 6: because of its business model where it pushes off, you know,

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Speaker 6: the procurement of auto materials to their bottlers around the world.

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Speaker 6: And they're not immune to it. I mean, there are

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Speaker 6: a limited as a result of the tariff. The lunar

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Speaker 6: costs are higher. That certainly affects the you know, the

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Speaker 6: North area, the US bottling companies gasoline price and so on.

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Speaker 6: So it's it's a minor hit to Coke. But you know,

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Speaker 6: the margins were strong and matter of fact, the operating

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Speaker 6: margin wide in this quarter thirty four and a half percent.

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Speaker 6: It was the comparable number. I mean that's almost like

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Speaker 6: an Apple like operating margin. Company is highly profitable. It's

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Speaker 6: been resilient, and I think that's part of that relief,

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Speaker 6: you know about what we hear about the macro environment

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Speaker 6: is being reflected in the sock price today.

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Speaker 2: Yeah, I mean, you know, they have I'm looking at

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Speaker 2: twenty twenty six seventeen billion dollars projected E but then

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Speaker 2: they drop a lot of that down to the free

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Speaker 2: cash flow line about twelve billion dollars. So that's pretty

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Speaker 2: darn solid. Do we still have cola wars out there?

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Speaker 6: Ken, I would say yeah. It's an inherently competitive business.

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Speaker 6: You go down to you know, the soda aisle, see

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Speaker 6: lots of different products by different companies. But having said that,

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Speaker 6: I think high innovation is good for everybody because you're

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Speaker 6: expanding the pie. So Co talked about today about some

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Speaker 6: of its innovation cherry float, coke, diet coke, cherry, this

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Speaker 6: kind of mirrors and things of the Texico and Kiyot

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Speaker 6: and Pepper for that matter, do and they're experimenting with

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Speaker 6: innovative new flavors bring excitement to the category, and so

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Speaker 6: I think that competitive spirit is good for the category

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Speaker 6: as a whole.

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Speaker 2: You know, as a kid, I always get be bummed

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Speaker 2: out when my mom would buy the store brand cola

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Speaker 2: as opposed to coke or pepsi. Is that still a

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Speaker 2: thing out there?

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Speaker 6: Private label is not really maturable material threat. You know,

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Speaker 6: it serves a role in the marketplace, But I think

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Speaker 6: many retailers are more than thrilled about having coke and

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Speaker 6: pepsi on the aisles to bring customers in, and even

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Speaker 6: if they don't make a big margin on that product,

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Speaker 6: it brings traffic in where they can buy other things.

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Speaker 6: And so I think any retailer that doesn't have coke

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Speaker 6: and pepsi products are probably alienating a lot of consumers.

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