1 00:00:00,280 --> 00:00:11,719 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 2 00:00:11,840 --> 00:00:13,920 Speaker 1: with Alex Steel and Paul Sweeney. 3 00:00:14,040 --> 00:00:17,239 Speaker 2: The real app performance has been in US corporate high yield. 4 00:00:17,440 --> 00:00:19,800 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:19,840 --> 00:00:23,000 Speaker 2: The semiconductor business is a really cyclical. 6 00:00:22,600 --> 00:00:26,800 Speaker 1: Business, breaking market headlines and corporate news from across the globe. 7 00:00:26,840 --> 00:00:29,280 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:29,520 --> 00:00:32,440 Speaker 2: These are two big time blue chip companies. 9 00:00:32,720 --> 00:00:36,120 Speaker 3: Window between the peak and cunt changing super fast. 10 00:00:36,360 --> 00:00:41,400 Speaker 1: Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio. 11 00:00:42,960 --> 00:00:45,240 Speaker 2: Today's Bloomberg Intelligence Show, we dig inside the big business 12 00:00:45,280 --> 00:00:47,280 Speaker 2: stories impacting Wall Street and the global markets. 13 00:00:47,560 --> 00:00:49,600 Speaker 3: Each and every week we provide in depth research and 14 00:00:49,680 --> 00:00:51,479 Speaker 3: data on some of the two thousand companies and one 15 00:00:51,520 --> 00:00:54,040 Speaker 3: hundred and thirty industries our analysts cover worldwide. 16 00:00:54,080 --> 00:00:56,440 Speaker 2: Today, well look at why home improvement has been resilient 17 00:00:56,480 --> 00:00:57,400 Speaker 2: at the retailer. 18 00:00:57,120 --> 00:00:59,480 Speaker 3: Home depot, and we'll discuss why the tech giant Apple 19 00:00:59,600 --> 00:01:01,520 Speaker 3: still hasn't managed to crack AI. 20 00:01:01,840 --> 00:01:04,520 Speaker 2: But first we begin with earnings from the retailer Targets. 21 00:01:04,680 --> 00:01:07,240 Speaker 3: This week, Target reported sales that dropped in the first quarter, 22 00:01:07,240 --> 00:01:09,440 Speaker 3: and the company also cut at sales forecast for the year. 23 00:01:09,720 --> 00:01:12,679 Speaker 2: Target sited inclining consumer spending along with the impact of 24 00:01:12,760 --> 00:01:13,800 Speaker 2: tariffs and boycotts. 25 00:01:13,840 --> 00:01:16,000 Speaker 3: Target shares fell after the report and raise some questions 26 00:01:16,040 --> 00:01:18,720 Speaker 3: over the company's ability to recapture growth after two years 27 00:01:18,720 --> 00:01:19,640 Speaker 3: of choppy results. 28 00:01:19,800 --> 00:01:22,600 Speaker 2: For more, we were joined by Jennifer Bartashi's Bloomberg Intelligence 29 00:01:22,600 --> 00:01:25,000 Speaker 2: senior analyst Retail, Stables and packaged Food. 30 00:01:25,120 --> 00:01:27,520 Speaker 3: We first asked Jennifer if she was surprised by the results. 31 00:01:28,040 --> 00:01:31,160 Speaker 4: None of this really was a surprise. It's really about 32 00:01:31,280 --> 00:01:34,119 Speaker 4: the degree to which it was a surprise. So sales 33 00:01:34,160 --> 00:01:36,680 Speaker 4: came in softer than expected, profit was a little softer 34 00:01:36,800 --> 00:01:40,280 Speaker 4: than expected, And it's just I think people are waiting 35 00:01:40,319 --> 00:01:43,000 Speaker 4: for Target to say how they're going to fix it. 36 00:01:43,880 --> 00:01:46,520 Speaker 4: And you know, they came out talking about a new office, 37 00:01:47,319 --> 00:01:49,800 Speaker 4: you know, to accelerate their plans. But I think people 38 00:01:49,800 --> 00:01:52,680 Speaker 4: are just waiting for something tangible that they can really 39 00:01:52,720 --> 00:01:55,880 Speaker 4: hold the company accountable for to reignite growth in the 40 00:01:55,920 --> 00:01:56,960 Speaker 4: in what they're trying to do. 41 00:01:57,440 --> 00:01:59,800 Speaker 2: What does Target need to do specifically, because it seems 42 00:01:59,800 --> 00:02:02,480 Speaker 2: like I don't know it just every time I've walk 43 00:02:02,520 --> 00:02:04,680 Speaker 2: into a Target, it's lots of people doing stuff. The 44 00:02:04,720 --> 00:02:06,600 Speaker 2: shelves are in good shape. What do they need to 45 00:02:06,640 --> 00:02:07,400 Speaker 2: do well? 46 00:02:07,440 --> 00:02:10,880 Speaker 4: A lot of it is continuing what they've started, which 47 00:02:10,919 --> 00:02:14,720 Speaker 4: is improving their merchandise mix. You know, Target does best 48 00:02:14,760 --> 00:02:18,519 Speaker 4: when their assortment is new, it's fresh, it's relevant to people, 49 00:02:18,880 --> 00:02:21,080 Speaker 4: and they've made good strides in that area. But those 50 00:02:21,120 --> 00:02:24,400 Speaker 4: types of changes take time for consumers to see and 51 00:02:24,480 --> 00:02:27,600 Speaker 4: to start to embrace, and it's just a hard environment 52 00:02:27,639 --> 00:02:30,040 Speaker 4: where people are still being a little bit conservative for 53 00:02:30,120 --> 00:02:33,800 Speaker 4: those changes to really create some momentum in the business. 54 00:02:34,320 --> 00:02:37,919 Speaker 3: So where are they with the pricing stuff in terms 55 00:02:37,919 --> 00:02:40,200 Speaker 3: of their inventory, in terms of tariffs, in terms of 56 00:02:40,200 --> 00:02:41,400 Speaker 3: where they source their material. 57 00:02:42,440 --> 00:02:45,839 Speaker 4: Yeah, so from a pricing perspective, you know, when people 58 00:02:45,919 --> 00:02:47,839 Speaker 4: look at value, price is one of the first things 59 00:02:47,840 --> 00:02:51,399 Speaker 4: they look at. They're fairly priced competitive, and we've seen 60 00:02:51,440 --> 00:02:53,919 Speaker 4: an uptick in the number of promotions that they're doing, 61 00:02:54,040 --> 00:02:56,520 Speaker 4: so you know, buy forty dollars of these kinds of 62 00:02:56,680 --> 00:02:59,400 Speaker 4: essentials and get a five dollars gift card. They're doing 63 00:02:59,440 --> 00:03:01,359 Speaker 4: a lot more of that kind of promotion to pull 64 00:03:01,400 --> 00:03:04,679 Speaker 4: people in. But one of the issues is that they 65 00:03:04,960 --> 00:03:08,600 Speaker 4: talk today about inventory and having to you know, adjust 66 00:03:08,600 --> 00:03:10,920 Speaker 4: and right size their inventory. And that's a little bit 67 00:03:10,960 --> 00:03:13,760 Speaker 4: concerning because that's been a topic that has It's not 68 00:03:13,960 --> 00:03:16,240 Speaker 4: new for Target, It's come up a couple of times 69 00:03:16,280 --> 00:03:18,640 Speaker 4: in the past few years. And so the fact that 70 00:03:18,680 --> 00:03:23,000 Speaker 4: they are expecting, you know, some inventory adjustments and markdowns 71 00:03:23,000 --> 00:03:26,440 Speaker 4: to weigh on margins and profit you know, for the 72 00:03:26,480 --> 00:03:29,480 Speaker 4: next quarter, is a little bit concerning that they still 73 00:03:29,480 --> 00:03:32,880 Speaker 4: haven't quite figured out how they're going to navigate that, Jen. 74 00:03:32,919 --> 00:03:35,760 Speaker 2: I know Walmart said on there recently that they would 75 00:03:36,000 --> 00:03:40,560 Speaker 2: pass along probably some of their terror related cost increases 76 00:03:40,600 --> 00:03:43,320 Speaker 2: to consumers, and then President Trump came out pretty publicly 77 00:03:43,440 --> 00:03:47,920 Speaker 2: against that. What is Target saying about their ability to 78 00:03:47,960 --> 00:03:52,160 Speaker 2: take whatever price increases cost increases may come about through tariffs, 79 00:03:52,160 --> 00:03:54,560 Speaker 2: either in their margin or passing it along to consumers. 80 00:03:54,960 --> 00:03:57,800 Speaker 4: Yeah, it's a definitely a good topic, Paul, And you 81 00:03:57,800 --> 00:04:00,360 Speaker 4: know what they said was that price increases would be 82 00:04:00,360 --> 00:04:04,040 Speaker 4: the last resort, but they didn't count them out. Instead, 83 00:04:04,080 --> 00:04:06,120 Speaker 4: they focused on the tactics that he needs to try 84 00:04:06,160 --> 00:04:09,080 Speaker 4: to mitigate some of the some of the pressure from tariffs. 85 00:04:09,400 --> 00:04:12,240 Speaker 4: They're the same levers that every company is pulling. It's 86 00:04:12,440 --> 00:04:15,040 Speaker 4: using your scale, it's working with your suppliers, it's trying 87 00:04:15,080 --> 00:04:18,880 Speaker 4: to negotiate better you know, you know, better sourcing and 88 00:04:18,960 --> 00:04:22,839 Speaker 4: better prices on the on the purchasing side. So you know, 89 00:04:22,960 --> 00:04:25,760 Speaker 4: Target is certainly able to offset some of the some 90 00:04:25,800 --> 00:04:28,000 Speaker 4: of the cost of tariffs, but it would be surprising 91 00:04:28,000 --> 00:04:30,360 Speaker 4: if they can offset all of it. And and ultimately 92 00:04:30,440 --> 00:04:33,640 Speaker 4: they're most likely going to have to be some selective 93 00:04:33,839 --> 00:04:35,520 Speaker 4: price increases that get pushed through. 94 00:04:35,760 --> 00:04:38,159 Speaker 3: Oh what are there? What's their inventory like in terms 95 00:04:38,160 --> 00:04:41,040 Speaker 3: of that part and how that filters into their pricing. 96 00:04:42,200 --> 00:04:44,840 Speaker 4: Yeah, so inventory has actually been getting a little bit 97 00:04:44,880 --> 00:04:48,760 Speaker 4: better in terms of on shelf availability and tracking through 98 00:04:48,800 --> 00:04:52,520 Speaker 4: the supply chain. It's just I think because they skew 99 00:04:52,600 --> 00:04:56,600 Speaker 4: so much more to discretionary. If there's like, for example, 100 00:04:56,640 --> 00:04:59,239 Speaker 4: in first quarter, we had some very unseasonably cold weather 101 00:04:59,560 --> 00:05:02,440 Speaker 4: that impact apparel sales, That impacts a lot of those things. 102 00:05:02,480 --> 00:05:06,600 Speaker 4: So you know that that increases markdowns. Hopefully that's a 103 00:05:06,640 --> 00:05:09,920 Speaker 4: transitory type of thing. But they are talking about getting 104 00:05:09,960 --> 00:05:12,080 Speaker 4: their inventory right sized as they head into back to 105 00:05:12,120 --> 00:05:13,800 Speaker 4: school and the holiday season. 106 00:05:13,800 --> 00:05:16,919 Speaker 2: And Jen the stock seems cheap to me? Is it 107 00:05:17,120 --> 00:05:20,160 Speaker 2: cheap on a historical basis? Or how are people thinking 108 00:05:20,160 --> 00:05:20,839 Speaker 2: about valuation? 109 00:05:21,320 --> 00:05:23,960 Speaker 4: Yeah, it's it's definitely, you know, at a discount from 110 00:05:23,960 --> 00:05:27,359 Speaker 4: it from a historical, you know, valuation perspective. But I 111 00:05:27,400 --> 00:05:29,919 Speaker 4: think part of the part of the reason that it 112 00:05:30,040 --> 00:05:32,479 Speaker 4: is where it is is that for a long time, 113 00:05:32,640 --> 00:05:36,760 Speaker 4: what has differentiated Target was their private label selection, their 114 00:05:36,800 --> 00:05:40,240 Speaker 4: own brands things that the quality of those brands where 115 00:05:40,240 --> 00:05:43,279 Speaker 4: people could get value and style at a really compelling price. 116 00:05:43,720 --> 00:05:46,120 Speaker 4: In the last couple of years, a lot of their competitors, 117 00:05:46,160 --> 00:05:49,320 Speaker 4: whether you're talking about Walmart or Cohal's or or or 118 00:05:49,360 --> 00:05:52,520 Speaker 4: companies like that, have invested in their private label. They've 119 00:05:52,600 --> 00:05:55,920 Speaker 4: improved the quality, They've they've become a little bit more 120 00:05:55,960 --> 00:06:00,240 Speaker 4: fashion forward, and that's that erodes the differentiation that it 121 00:06:00,320 --> 00:06:03,280 Speaker 4: has always enjoyed and part of what has catapulted their 122 00:06:03,360 --> 00:06:08,240 Speaker 4: success in recent years. So until Target gets that newness 123 00:06:08,240 --> 00:06:11,560 Speaker 4: and that assortment readjusted again to be a leader and 124 00:06:11,600 --> 00:06:16,000 Speaker 4: a differentiator, you may see that kind of valuation discount 125 00:06:16,040 --> 00:06:17,040 Speaker 4: persist our. 126 00:06:17,120 --> 00:06:20,560 Speaker 2: Thanks to Jen Bartashi's Bloomberg Intelligence Senior Retail Analyst. 127 00:06:20,400 --> 00:06:22,840 Speaker 3: Each week we look at research from Bloomberg n EF 128 00:06:22,839 --> 00:06:25,400 Speaker 3: previously known as New Energy Finance. They're the team at 129 00:06:25,400 --> 00:06:28,800 Speaker 3: Bloomberg the tracks and analyzes the energy transition from commodities 130 00:06:28,839 --> 00:06:32,279 Speaker 3: to power, transport, industries, buildings, and agricultural sectors. 131 00:06:32,480 --> 00:06:34,360 Speaker 2: This week we looked at how the cost of clean 132 00:06:34,480 --> 00:06:37,560 Speaker 2: energy technologies has changed. Solar and wind have been the 133 00:06:37,600 --> 00:06:40,760 Speaker 2: most competitive source of new power for a few years. 134 00:06:40,520 --> 00:06:43,200 Speaker 3: Now and for more. We are joined by Amar vasdev 135 00:06:43,520 --> 00:06:47,080 Speaker 3: v an EF, a lead levelized cost expert. We first 136 00:06:47,080 --> 00:06:48,840 Speaker 3: asked AMR to break down his research and what his 137 00:06:48,920 --> 00:06:49,760 Speaker 3: team actually does. 138 00:06:50,120 --> 00:06:54,520 Speaker 5: Effectively. We collect cost data on recently finance power projects 139 00:06:54,600 --> 00:06:57,599 Speaker 5: and we sum that up into a metric that we 140 00:06:57,680 --> 00:07:01,160 Speaker 5: call the levetized cost of electricity. And in short, what 141 00:07:01,200 --> 00:07:03,680 Speaker 5: that is is it tells us what the long term 142 00:07:03,680 --> 00:07:08,400 Speaker 5: off take price is that project developer needs to hit 143 00:07:08,440 --> 00:07:11,160 Speaker 5: their IRR, recoup all of their costs and of course 144 00:07:11,200 --> 00:07:13,520 Speaker 5: pay back the pay the taxes. 145 00:07:14,000 --> 00:07:17,480 Speaker 2: So, Amara, here's what I don't think people understand, and 146 00:07:17,560 --> 00:07:20,400 Speaker 2: I did not understand it until recently, that renewables are 147 00:07:20,440 --> 00:07:24,800 Speaker 2: the cheapest source to meet new demand almost everywhere. Talk 148 00:07:24,840 --> 00:07:25,520 Speaker 2: to us about that. 149 00:07:27,000 --> 00:07:31,760 Speaker 5: Yeah, So the cost reductions in renewable technology, so specifically 150 00:07:31,800 --> 00:07:35,640 Speaker 5: wind and solar, have been quite remarkable over the last 151 00:07:35,920 --> 00:07:39,760 Speaker 5: decade or so. And so when we look at those 152 00:07:39,800 --> 00:07:44,000 Speaker 5: projects that were financed last year and we estimate those costs. 153 00:07:44,600 --> 00:07:47,640 Speaker 5: We find that either wind or soda is out competing 154 00:07:47,920 --> 00:07:51,800 Speaker 5: either coal or gas in markets that are equivalent to 155 00:07:51,840 --> 00:07:56,040 Speaker 5: two thirds of global power generation, so that includes China, 156 00:07:56,760 --> 00:07:58,320 Speaker 5: includes most of Europe as well. 157 00:07:58,680 --> 00:08:02,240 Speaker 3: But we take into a the intermittent power issue for 158 00:08:02,520 --> 00:08:04,840 Speaker 3: wind and solar and how does that change the cause 159 00:08:04,920 --> 00:08:06,920 Speaker 3: profile Like it might be cheaper to build a wind 160 00:08:07,280 --> 00:08:09,880 Speaker 3: a wind farm than a billion nuclear plant, but the 161 00:08:09,920 --> 00:08:12,440 Speaker 3: intermittent power of it all is an issue. 162 00:08:12,840 --> 00:08:16,680 Speaker 5: Yeah, that is definitely right. It is a it is 163 00:08:16,720 --> 00:08:22,120 Speaker 5: a problem with renewables that is often cited. But there 164 00:08:22,200 --> 00:08:30,680 Speaker 5: are supporting technologies for supporting a grid that is dominated 165 00:08:30,680 --> 00:08:34,120 Speaker 5: by wind and soda, and that would be battery storage 166 00:08:34,160 --> 00:08:37,520 Speaker 5: for example. And so if we look last year alone, 167 00:08:37,559 --> 00:08:42,959 Speaker 5: the cost of the typical projects fell by one third 168 00:08:43,240 --> 00:08:46,000 Speaker 5: and out to twenty thirty five, we estimate that the 169 00:08:46,040 --> 00:08:51,240 Speaker 5: cost of battery storage projects for by fifty percent. So 170 00:08:52,080 --> 00:08:55,880 Speaker 5: there are supporting technologies that pair with wind and soda, 171 00:08:56,960 --> 00:09:00,640 Speaker 5: and we also model we look at these, we break 172 00:09:00,640 --> 00:09:03,880 Speaker 5: them down, and we look at the view out of 173 00:09:03,960 --> 00:09:07,200 Speaker 5: twenty fifty how different power markets are likely to change. 174 00:09:07,880 --> 00:09:09,880 Speaker 5: And just to put that in context, when we take 175 00:09:09,960 --> 00:09:13,600 Speaker 5: that system view, we see that there are really strong 176 00:09:13,720 --> 00:09:19,040 Speaker 5: long term fundamentals for renewables. So today wind and soda 177 00:09:19,120 --> 00:09:23,360 Speaker 5: around eight percent of generation and that increases to sixty 178 00:09:23,360 --> 00:09:26,520 Speaker 5: percent in our modeling by twenty fifty. And at the 179 00:09:26,559 --> 00:09:29,760 Speaker 5: same time, the flip side of that is with fossil 180 00:09:29,760 --> 00:09:33,319 Speaker 5: few assets, so coal and gas plants today they're at 181 00:09:33,320 --> 00:09:36,200 Speaker 5: sixty percent. By twenty to fifty they go down to 182 00:09:36,240 --> 00:09:38,240 Speaker 5: twenty five percent. And what they do is they kind 183 00:09:38,240 --> 00:09:41,679 Speaker 5: of operate in a space where they support wind and 184 00:09:41,720 --> 00:09:44,359 Speaker 5: soda as well as battery storage. 185 00:09:44,840 --> 00:09:48,839 Speaker 2: So thinking just in the near term, what do high 186 00:09:48,840 --> 00:09:51,959 Speaker 2: tariffs and maybe possible cuts to tax credits, what does 187 00:09:51,960 --> 00:09:55,880 Speaker 2: that mean for this transition? Does it slow it down materially? Possibly? 188 00:09:57,080 --> 00:10:01,520 Speaker 5: Yeah, it is a really interesting question, and it's as 189 00:10:01,520 --> 00:10:05,320 Speaker 5: you know, it's moving very quickly. So our team in 190 00:10:05,320 --> 00:10:08,120 Speaker 5: the US are really attracting this very very closely. And 191 00:10:09,600 --> 00:10:11,560 Speaker 5: what we can say is that the policy and tariff 192 00:10:11,640 --> 00:10:17,160 Speaker 5: uncertainty is posing a challenge for business confidence. It kind 193 00:10:17,200 --> 00:10:23,960 Speaker 5: of impacts the willingness and investor appetite. But we do 194 00:10:24,040 --> 00:10:30,640 Speaker 5: see that there is resilient demand that deployment stays resilient 195 00:10:31,200 --> 00:10:33,480 Speaker 5: over the next ten years or so, because we do 196 00:10:33,520 --> 00:10:37,720 Speaker 5: see increased electricity demand from AI needs from manufacturing as well, 197 00:10:38,520 --> 00:10:42,200 Speaker 5: and what tends to be the cheapest source of electricity 198 00:10:43,640 --> 00:10:47,559 Speaker 5: is wind and soda, so there is resilient deployment. We 199 00:10:47,600 --> 00:10:52,640 Speaker 5: did model a scenario where if tax if tax credits 200 00:10:52,640 --> 00:10:56,240 Speaker 5: were cut, the amount of wind and soda being added 201 00:10:56,280 --> 00:10:59,880 Speaker 5: over the next ten years would reduce by around seven 202 00:11:00,000 --> 00:11:02,720 Speaker 5: teen percent or so. So there is there is a 203 00:11:02,720 --> 00:11:06,599 Speaker 5: material impact. But if we're adding new power to the 204 00:11:06,880 --> 00:11:09,040 Speaker 5: if we're adding new supply to the grid, then it 205 00:11:09,080 --> 00:11:11,240 Speaker 5: would tend to come from wind and sola. 206 00:11:12,280 --> 00:11:16,439 Speaker 3: What about geothermal? The administration is definitely positive on geothermal. 207 00:11:16,760 --> 00:11:19,520 Speaker 3: In speaking with the Energy Secretary here, he speaks a 208 00:11:19,520 --> 00:11:22,240 Speaker 3: lot about that as well as clean coal. What's the 209 00:11:22,280 --> 00:11:23,920 Speaker 3: cost profile like for geothermal? 210 00:11:25,480 --> 00:11:27,640 Speaker 5: Yeah, it's hard for me to comment on that. I 211 00:11:27,640 --> 00:11:33,200 Speaker 5: think the configuration of geothermal changes significantly, but there have 212 00:11:33,280 --> 00:11:36,000 Speaker 5: been developments recently, and I suppose with the pairing with 213 00:11:37,200 --> 00:11:40,640 Speaker 5: the kind of coupling with oil and gas experience with geothermal, 214 00:11:40,679 --> 00:11:43,480 Speaker 5: there's a lot of overlap there on the specific costs. 215 00:11:43,840 --> 00:11:46,679 Speaker 2: I couldn't comment on our Thanks to amar a Vestev 216 00:11:46,840 --> 00:11:49,440 Speaker 2: b n EF lead levelized cost Expert. 217 00:11:49,480 --> 00:11:51,120 Speaker 3: Coming up, We're going to look at why cancer risks 218 00:11:51,160 --> 00:11:53,280 Speaker 3: are being linked to a popular over the counter drug. 219 00:11:53,480 --> 00:11:56,240 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 220 00:11:56,320 --> 00:11:58,439 Speaker 2: depth research and data on two thousand companies in one 221 00:11:58,480 --> 00:12:01,360 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 222 00:12:01,440 --> 00:12:02,720 Speaker 2: Bidell on the terminal. 223 00:12:02,480 --> 00:12:05,160 Speaker 3: From Whole Sweeting and a Malex Steel and this is Bloomberg. 224 00:12:09,840 --> 00:12:13,520 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 225 00:12:13,600 --> 00:12:16,679 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 226 00:12:16,720 --> 00:12:20,000 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 227 00:12:20,080 --> 00:12:23,600 Speaker 1: you get your podcasts, or watch us live on YouTube. 228 00:12:24,280 --> 00:12:26,439 Speaker 3: We move next to news from the world's largest home 229 00:12:26,480 --> 00:12:28,080 Speaker 3: improvement retailer, Home Depot. 230 00:12:28,320 --> 00:12:30,840 Speaker 2: This week, Home Depot maintained its guidance for their fiscal 231 00:12:30,920 --> 00:12:32,480 Speaker 2: year as US sales ticked up. 232 00:12:32,559 --> 00:12:35,199 Speaker 3: The company said consumers are deferring larger projects due to 233 00:12:35,200 --> 00:12:38,599 Speaker 3: the raid environment, but are still taking on smaller home projects. 234 00:12:38,920 --> 00:12:41,479 Speaker 2: For more. We were joined by Drew Redding, Bloomberg Intelligence 235 00:12:41,640 --> 00:12:42,720 Speaker 2: US home building analysts. 236 00:12:42,720 --> 00:12:44,439 Speaker 3: We first asked Drew for his take on my home 237 00:12:44,480 --> 00:12:46,960 Speaker 3: improvement has been so resilient at home Depot. 238 00:12:47,360 --> 00:12:49,920 Speaker 6: One of the reasons why Home Improvement and Hope Depot 239 00:12:49,920 --> 00:12:53,440 Speaker 6: have been so resilient is because a large portion of 240 00:12:53,440 --> 00:12:55,680 Speaker 6: the industry has to do with that maintenance and repair 241 00:12:55,800 --> 00:12:57,839 Speaker 6: oriented work. So I think that's where they're seeing a 242 00:12:57,840 --> 00:13:01,079 Speaker 6: lot of the lift now. It's homeowners are taking care 243 00:13:01,120 --> 00:13:03,000 Speaker 6: of the things that they need to just to maintain 244 00:13:03,080 --> 00:13:05,440 Speaker 6: their home. This really isn't no, it's been a couple 245 00:13:05,480 --> 00:13:07,600 Speaker 6: of quarters now where we've heard from them that big 246 00:13:07,600 --> 00:13:11,400 Speaker 6: ticket discretionary categories have been relatively weaker. So think about 247 00:13:11,440 --> 00:13:16,360 Speaker 6: things like kitchenry models, bathroom models, flooring projects. These are 248 00:13:16,360 --> 00:13:19,560 Speaker 6: things that tend to be financed by the consumer, and 249 00:13:19,880 --> 00:13:21,520 Speaker 6: with rates as high as they are right now, it's 250 00:13:21,559 --> 00:13:24,320 Speaker 6: just become a little bit prohibitive for them to undertake 251 00:13:24,360 --> 00:13:27,280 Speaker 6: those projects. So I think in order to see more 252 00:13:27,400 --> 00:13:29,680 Speaker 6: robust growth out of these categories, which is really the 253 00:13:29,720 --> 00:13:32,679 Speaker 6: missing piece of the story, we need to see rates 254 00:13:32,679 --> 00:13:34,040 Speaker 6: start to come back down a little bit. 255 00:13:34,760 --> 00:13:38,120 Speaker 2: How about tires. Is that impacting the costs of their 256 00:13:38,160 --> 00:13:40,559 Speaker 2: goods like getting lumber from Canada, for example. 257 00:13:41,160 --> 00:13:44,000 Speaker 6: So we think Home Depot's pretty well positioned from a 258 00:13:44,080 --> 00:13:47,920 Speaker 6: tariff perspective. They source about fifty percent of the products 259 00:13:47,920 --> 00:13:50,400 Speaker 6: they sell from inside the US, and you know, like 260 00:13:50,440 --> 00:13:52,680 Speaker 6: a lot of other retailers, over the last decade, they've 261 00:13:52,720 --> 00:13:55,920 Speaker 6: done a great job in diversifying their supply chain. They 262 00:13:55,920 --> 00:13:59,079 Speaker 6: actually said that over the next twelve months, no single 263 00:13:59,080 --> 00:14:01,079 Speaker 6: country outside of the US is going to account for 264 00:14:01,240 --> 00:14:05,440 Speaker 6: more than ten percent of their product purchases. So the 265 00:14:05,480 --> 00:14:08,160 Speaker 6: fact that they're diversifying their supply chain should help with costs. 266 00:14:08,160 --> 00:14:10,800 Speaker 6: At the same time, given their scale the largest home 267 00:14:10,840 --> 00:14:13,880 Speaker 6: improvement retailer, they'll have the ability to push back on 268 00:14:13,920 --> 00:14:16,800 Speaker 6: some of their suppliers in terms of cost. Now, what 269 00:14:16,840 --> 00:14:20,960 Speaker 6: they said is that they're looking to generally maintain their prices, 270 00:14:21,880 --> 00:14:24,160 Speaker 6: so I think people took that as a positive. You 271 00:14:24,240 --> 00:14:26,760 Speaker 6: have to remember Home Depot sales about thirty thousand to 272 00:14:26,760 --> 00:14:29,720 Speaker 6: forty thousand products in their store. So when they talk 273 00:14:29,760 --> 00:14:32,800 Speaker 6: about pricing, they take a portfolio approach. So you may 274 00:14:32,880 --> 00:14:35,360 Speaker 6: not see them raise the price on a particular item 275 00:14:35,360 --> 00:14:37,840 Speaker 6: that was tariffed, but they look at the elasticities of 276 00:14:37,880 --> 00:14:40,680 Speaker 6: their various products and they'll take prices they need to 277 00:14:40,720 --> 00:14:42,720 Speaker 6: where they can, gotcha. 278 00:14:43,560 --> 00:14:46,200 Speaker 3: So they're going to manage that margin. So they're not 279 00:14:46,240 --> 00:14:47,760 Speaker 3: going to sacrifice margin then. 280 00:14:49,240 --> 00:14:51,760 Speaker 6: So they actually guided to an operating margin pretty much 281 00:14:51,800 --> 00:14:54,320 Speaker 6: in line with what they were looking for at the 282 00:14:54,440 --> 00:14:57,120 Speaker 6: end of last quarter. There are a couple puts in takes. 283 00:14:57,120 --> 00:14:59,840 Speaker 6: They're doing better on shrinks, so they're managing their re 284 00:15:00,040 --> 00:15:03,160 Speaker 6: tell theft a little better, which is always a positive. 285 00:15:04,240 --> 00:15:08,200 Speaker 6: So they're also you know, getting some more leverage from productivity. 286 00:15:08,320 --> 00:15:10,400 Speaker 6: So you know, I think pricing is going to be 287 00:15:10,400 --> 00:15:12,360 Speaker 6: a component of it, but they also have other levers 288 00:15:12,360 --> 00:15:14,240 Speaker 6: within the business that are going to help to maintain 289 00:15:14,280 --> 00:15:17,040 Speaker 6: their margins, you know, where they expected them. 290 00:15:17,400 --> 00:15:19,960 Speaker 2: Just what's home Depot do with the number of stores? 291 00:15:20,000 --> 00:15:23,200 Speaker 2: Have they added stores? Are they fully kind of where 292 00:15:23,200 --> 00:15:25,320 Speaker 2: they want to be? What's the store count story? 293 00:15:26,360 --> 00:15:29,080 Speaker 6: Yeah, So interestingly, Home Depot over the last year has 294 00:15:29,120 --> 00:15:31,760 Speaker 6: actually returned to store growth, which is something we haven't 295 00:15:31,800 --> 00:15:34,640 Speaker 6: seen from them in a very long time. They kind 296 00:15:34,640 --> 00:15:37,480 Speaker 6: of have had the established footprint in the US, but 297 00:15:37,520 --> 00:15:40,040 Speaker 6: as the business has grown so much, as they've grown 298 00:15:40,080 --> 00:15:43,400 Speaker 6: their pro business, they've started to add new stores in 299 00:15:43,520 --> 00:15:46,200 Speaker 6: markets where you know, populations are growing or where they 300 00:15:46,240 --> 00:15:48,480 Speaker 6: want to kind of take some of the pressure off 301 00:15:48,520 --> 00:15:51,920 Speaker 6: the existing store base to look to drive some additional productivity. 302 00:15:51,920 --> 00:15:55,000 Speaker 6: So this year they're adding about thirteen new stores. They're 303 00:15:55,000 --> 00:15:57,040 Speaker 6: going to do that. I think their their plan was 304 00:15:57,080 --> 00:16:00,000 Speaker 6: about eighty over a five year period, So the next 305 00:16:00,080 --> 00:16:01,440 Speaker 6: couple of years they'll continue to add. 306 00:16:01,440 --> 00:16:04,080 Speaker 2: To you to our thanks, did you're writing, Bloomberg Intelligence, 307 00:16:04,200 --> 00:16:05,160 Speaker 2: US homebuilding analyst. 308 00:16:05,600 --> 00:16:08,360 Speaker 3: We move next to earnings from the off price retailer TJX. 309 00:16:08,520 --> 00:16:11,600 Speaker 2: TJX reported a gross margin shortfall for its first quarter 310 00:16:11,840 --> 00:16:15,120 Speaker 2: and issued for your guidance that fell short expectations. 311 00:16:15,160 --> 00:16:17,440 Speaker 3: However, the company said it's global network of vendors and 312 00:16:17,480 --> 00:16:20,880 Speaker 3: flexibility on prices will help it manage future tariff pressures. 313 00:16:21,200 --> 00:16:24,200 Speaker 2: For more, we were joined by Mary Ross Gilbert, Bloomberg Intelligence, 314 00:16:24,240 --> 00:16:26,000 Speaker 2: senior equity analysts covering retail. 315 00:16:26,160 --> 00:16:28,800 Speaker 3: We first asked Mary for her key takeaways from tjx 316 00:16:28,840 --> 00:16:29,400 Speaker 3: as results. 317 00:16:29,640 --> 00:16:33,360 Speaker 7: So, when I look at the results, they beat for 318 00:16:33,440 --> 00:16:36,280 Speaker 7: the quarter. They beat on the top line, you know, 319 00:16:36,320 --> 00:16:38,600 Speaker 7: for total sales, and they came in line on comp 320 00:16:38,720 --> 00:16:41,480 Speaker 7: sales comp sales being up three percent, and that was 321 00:16:41,560 --> 00:16:44,280 Speaker 7: at the high end of their guidance. The real issue, 322 00:16:44,400 --> 00:16:47,840 Speaker 7: I think is the forward guidance. So when you look 323 00:16:47,880 --> 00:16:51,840 Speaker 7: at the second quarter, analysts were looking for EPs of 324 00:16:51,920 --> 00:16:56,720 Speaker 7: about a dollar four and the top end of their guidance, 325 00:16:56,840 --> 00:16:59,760 Speaker 7: it's ninety seven cents to a dollar, and so I 326 00:16:59,760 --> 00:17:02,960 Speaker 7: think there's a disappointment there. But frankly, this management team 327 00:17:03,240 --> 00:17:07,480 Speaker 7: really executes. They tend to provide conservative guidance, So we 328 00:17:07,520 --> 00:17:11,320 Speaker 7: really view this as whatever guidance they put out there, 329 00:17:11,359 --> 00:17:14,359 Speaker 7: we see upside to it. They certainly have seen a 330 00:17:14,440 --> 00:17:19,000 Speaker 7: strong start to the second quarter concerns around tariffs. They're 331 00:17:19,080 --> 00:17:23,160 Speaker 7: saying that they can mostly mitigate most of the impact 332 00:17:23,600 --> 00:17:27,480 Speaker 7: when it comes to directly sourced merchandise. And then with 333 00:17:27,600 --> 00:17:32,600 Speaker 7: regard to indirectly sourced merchandise, this is where they're buying overstocks. 334 00:17:32,920 --> 00:17:37,560 Speaker 7: They'll be able to negotiate. They see plenty of availability 335 00:17:37,600 --> 00:17:40,320 Speaker 7: and so they see a lot of opportunity in terms 336 00:17:40,320 --> 00:17:42,720 Speaker 7: of the buying there, and they'll make sure that they 337 00:17:42,880 --> 00:17:46,080 Speaker 7: always maintain that gap, and that gap being twenty to 338 00:17:46,119 --> 00:17:50,040 Speaker 7: sixty percent versus what you'd see a department in specialty store. 339 00:17:50,280 --> 00:17:52,800 Speaker 3: Oh I know, yes, I was telling these guys that 340 00:17:53,040 --> 00:17:55,639 Speaker 3: I feel like I'm single handedly keeping home Goods in business, 341 00:17:55,760 --> 00:17:57,800 Speaker 3: having to furnish a house. 342 00:17:58,119 --> 00:18:02,399 Speaker 2: Who is the TJX consumer other than Alex Deal and 343 00:18:02,400 --> 00:18:05,040 Speaker 2: Lisa MATTEI, who I know? Who is that consumer? Who 344 00:18:05,080 --> 00:18:07,400 Speaker 2: is that customer and what's the company saying about their 345 00:18:07,520 --> 00:18:08,120 Speaker 2: their customer. 346 00:18:08,640 --> 00:18:14,400 Speaker 7: So Paul gg Max's customer, you know, Marmax and Home Goods, 347 00:18:14,840 --> 00:18:18,280 Speaker 7: it spans from low income all the way up to 348 00:18:18,400 --> 00:18:22,480 Speaker 7: high income. So within the Marmax you know, which is 349 00:18:22,520 --> 00:18:25,520 Speaker 7: where you have TJ Max and Marshall's, they carry brands 350 00:18:25,560 --> 00:18:29,560 Speaker 7: as high as Gucci, Fendy, Chloe, you name it, and 351 00:18:29,560 --> 00:18:32,000 Speaker 7: we see a lot of that merchandise there. They have 352 00:18:32,320 --> 00:18:35,200 Speaker 7: stores where you can walk in and you'll see these 353 00:18:35,560 --> 00:18:38,600 Speaker 7: high end handbags and glass cases, just like you would 354 00:18:38,640 --> 00:18:41,720 Speaker 7: in a department store where it's really tethered, and so 355 00:18:41,880 --> 00:18:43,879 Speaker 7: they have that as well. But then they also have 356 00:18:44,400 --> 00:18:47,159 Speaker 7: you know, more moderate brands like a Tommy hillfigure and 357 00:18:47,200 --> 00:18:51,800 Speaker 7: a Calvin Klein or Juicy Couture, even you know, at 358 00:18:51,840 --> 00:18:53,080 Speaker 7: a lower end there. 359 00:18:53,520 --> 00:18:56,000 Speaker 8: So they're able to attract. 360 00:18:55,720 --> 00:19:00,520 Speaker 7: All income levels and they know how to merchandise stores 361 00:19:00,560 --> 00:19:04,600 Speaker 7: appropriately all around the country and actually all around the world, 362 00:19:04,920 --> 00:19:09,000 Speaker 7: because we're seeing strength in all of their markets. And 363 00:19:09,359 --> 00:19:11,680 Speaker 7: you raised a good point, Alex. I think you talked 364 00:19:11,680 --> 00:19:15,159 Speaker 7: about home goods, and you're absolutely right. Home goods actually 365 00:19:15,240 --> 00:19:18,399 Speaker 7: led the comps. They were up four percent and so 366 00:19:18,480 --> 00:19:21,080 Speaker 7: when you look at the comps that were at Marmax, 367 00:19:21,119 --> 00:19:24,200 Speaker 7: they were up two percent, so they definitely saw strength 368 00:19:24,240 --> 00:19:25,600 Speaker 7: and home goods our. 369 00:19:25,600 --> 00:19:29,320 Speaker 2: Thanks to Mary Ross, Gilbert Bloomberg Intelligence senior equitanaals covering retail. 370 00:19:29,760 --> 00:19:32,000 Speaker 3: This week, we focused on the Bloomberg Big Take story 371 00:19:32,040 --> 00:19:35,240 Speaker 3: titled Possible Cancer Health risks are lurking in a popular 372 00:19:35,320 --> 00:19:38,440 Speaker 3: OTC drug and you can find it on Bloomberg dot 373 00:19:38,480 --> 00:19:39,360 Speaker 3: com and in the terminal. 374 00:19:39,600 --> 00:19:41,800 Speaker 2: The story looks at the dangers of a widely available 375 00:19:41,840 --> 00:19:45,439 Speaker 2: drug for urinary tract infections that has never been formally 376 00:19:45,440 --> 00:19:48,159 Speaker 2: approved by the US government, and it's not the only one. 377 00:19:48,240 --> 00:19:50,520 Speaker 3: For more. We were joined by the story's author, Anna Edney, 378 00:19:50,520 --> 00:19:53,439 Speaker 3: Bloomberg National healthcare reporter, and we first asked Anna to 379 00:19:53,440 --> 00:19:55,399 Speaker 3: walk us through some of the over the counter drugs 380 00:19:55,440 --> 00:19:56,359 Speaker 3: discussed in the story. 381 00:19:56,840 --> 00:19:59,119 Speaker 9: Probably the most popular one, I think a lot of 382 00:20:00,240 --> 00:20:04,000 Speaker 9: our listeners will recognize as Azo. It's an over the 383 00:20:04,040 --> 00:20:07,399 Speaker 9: counter drugs, so you can go into most any store 384 00:20:08,119 --> 00:20:12,679 Speaker 9: you know, Target, Walmart, anything like that, and and purchase it. 385 00:20:12,760 --> 00:20:16,280 Speaker 9: You don't need a prescription. Your a stat is another brand, 386 00:20:16,359 --> 00:20:20,960 Speaker 9: but all of these stores also make their own generic version, 387 00:20:21,160 --> 00:20:25,080 Speaker 9: so it's something that is supposed to treat the pain 388 00:20:25,400 --> 00:20:29,280 Speaker 9: with your airy tract infections. A lot of people seem 389 00:20:29,400 --> 00:20:32,040 Speaker 9: to think it goes beyond that and it's actually curing 390 00:20:32,240 --> 00:20:35,760 Speaker 9: their infections. So one of the issues being that, you know, 391 00:20:36,520 --> 00:20:40,280 Speaker 9: people might need antibiotics, but instead they're they're using this. 392 00:20:41,040 --> 00:20:44,359 Speaker 3: Now, what's the drug in it that is causing some 393 00:20:44,400 --> 00:20:46,159 Speaker 3: of the issues and how do we know? 394 00:20:47,480 --> 00:20:50,960 Speaker 9: Yeah, so this is the active ingredient in all of 395 00:20:51,000 --> 00:20:53,920 Speaker 9: these drugs. It's what the generics will go by. It's 396 00:20:53,960 --> 00:20:58,760 Speaker 9: called naso purdine. I may still be butchering that name, 397 00:20:59,160 --> 00:21:04,159 Speaker 9: but it's an unapproved drug, which was really interesting to 398 00:21:04,200 --> 00:21:07,320 Speaker 9: me and something sort of new to me even though 399 00:21:07,320 --> 00:21:09,359 Speaker 9: I've covered these issues for a long time that I 400 00:21:09,400 --> 00:21:12,840 Speaker 9: came across. What it means is the FDA has never 401 00:21:13,359 --> 00:21:17,679 Speaker 9: formally approved this drug, so, you know, while millions of 402 00:21:17,680 --> 00:21:22,080 Speaker 9: women are using it for decades that there's never been 403 00:21:22,160 --> 00:21:26,760 Speaker 9: a true vetting of, you know, how this drug interacts 404 00:21:26,800 --> 00:21:30,359 Speaker 9: with our bodies. One of the things that a National 405 00:21:30,400 --> 00:21:33,720 Speaker 9: Cancer Institute's study found, this was back in nineteen seventy eight, 406 00:21:33,800 --> 00:21:38,520 Speaker 9: is that it caused tumors to form in rats and mice. 407 00:21:39,440 --> 00:21:42,440 Speaker 9: That's never been looked at in humans because it's never 408 00:21:42,520 --> 00:21:45,600 Speaker 9: been this drug has never gone through clinical trials or 409 00:21:45,640 --> 00:21:47,280 Speaker 9: anything like that. 410 00:21:47,280 --> 00:21:51,520 Speaker 3: That is just that statement is so insane, And Paul, 411 00:21:51,600 --> 00:21:53,120 Speaker 3: just me, I'll explain to you a little bit here. 412 00:21:53,160 --> 00:21:56,000 Speaker 3: So if you have a UTI, it comes on really fast. 413 00:21:56,080 --> 00:21:59,080 Speaker 3: And if you order to get medication from your doctor aginecologists, 414 00:21:59,080 --> 00:22:01,119 Speaker 3: you have to go in so they can test it. 415 00:22:01,200 --> 00:22:02,679 Speaker 3: And if you're in pain and you know what it 416 00:22:02,760 --> 00:22:04,760 Speaker 3: is because as you've had it before, you just go 417 00:22:04,800 --> 00:22:06,280 Speaker 3: to the store, pick it up and you feel better 418 00:22:06,280 --> 00:22:08,399 Speaker 3: in twenty four hours. Like that's why these drugs are 419 00:22:08,440 --> 00:22:10,760 Speaker 3: so popular and easy to access. 420 00:22:10,840 --> 00:22:13,679 Speaker 2: And what I learned and a story, and they're not 421 00:22:13,880 --> 00:22:17,360 Speaker 2: FDA approved. They are essentially grandfathered in. So if I'm 422 00:22:17,359 --> 00:22:19,840 Speaker 2: walking down the aisle looking at you know, over the 423 00:22:19,880 --> 00:22:22,240 Speaker 2: counter drugs, do I have any way of knowing what's 424 00:22:22,280 --> 00:22:25,520 Speaker 2: been FDA approved and maybe what hasn't been. 425 00:22:26,880 --> 00:22:29,640 Speaker 9: Yeah, I think that's a really good question. And there 426 00:22:29,680 --> 00:22:33,879 Speaker 9: were multiple, you know, quotes out there from congressional testimony 427 00:22:33,880 --> 00:22:38,480 Speaker 9: and other places where FDA staff members were talking about 428 00:22:38,560 --> 00:22:43,120 Speaker 9: there's you know, there are many such grandfathered in kind 429 00:22:43,119 --> 00:22:46,520 Speaker 9: of drugs, but the agency did not give me a list, 430 00:22:46,800 --> 00:22:49,560 Speaker 9: wouldn't even tell me how many might be out there, 431 00:22:50,600 --> 00:22:54,440 Speaker 9: But there is potentially you know this is this takes 432 00:22:54,440 --> 00:22:56,199 Speaker 9: a little sleuth thing. It's not that easy to do 433 00:22:56,240 --> 00:22:59,000 Speaker 9: in the drug store aisle. But there's a website that 434 00:22:59,080 --> 00:23:03,400 Speaker 9: the National Institute of Health runs called Daily Med and 435 00:23:03,760 --> 00:23:06,880 Speaker 9: people can search by drug there. I wouldn't say it's 436 00:23:06,880 --> 00:23:10,040 Speaker 9: like the misuser friendly looking piece, but if you look 437 00:23:10,080 --> 00:23:12,600 Speaker 9: for azo or you're a stat or Finazo, Piaroty in 438 00:23:12,640 --> 00:23:14,399 Speaker 9: any of those, what will come up as kind of 439 00:23:14,440 --> 00:23:17,400 Speaker 9: a disclaimer saying, you know, this hasn't been vetted by 440 00:23:17,880 --> 00:23:20,640 Speaker 9: the Food and Drug Administration, its safety is not known, 441 00:23:20,800 --> 00:23:22,879 Speaker 9: and that kind of gives you an indication. You can 442 00:23:22,920 --> 00:23:25,520 Speaker 9: dive deeper into that data and you can actually see 443 00:23:25,520 --> 00:23:28,600 Speaker 9: that it's unapproved, but just for the lay person at 444 00:23:28,680 --> 00:23:30,600 Speaker 9: least with that disclaimer, that would give you a good 445 00:23:30,600 --> 00:23:31,560 Speaker 9: idea at the top. 446 00:23:31,760 --> 00:23:32,840 Speaker 3: So what happens then. 447 00:23:33,119 --> 00:23:34,200 Speaker 8: I think that's a good question. 448 00:23:34,280 --> 00:23:38,840 Speaker 9: So the FDA is they have a system where they're 449 00:23:38,880 --> 00:23:42,000 Speaker 9: supposed to have vetted these kind of very old drugs 450 00:23:42,040 --> 00:23:44,879 Speaker 9: and given them what's called a monograph. This is the 451 00:23:45,000 --> 00:23:48,040 Speaker 9: agency's instruction book. Here's how this drug should be made, 452 00:23:48,080 --> 00:23:51,040 Speaker 9: Here's how the dosing, what it should be, here's how 453 00:23:51,040 --> 00:23:54,280 Speaker 9: it should be manufactured. They have not done that for 454 00:23:54,520 --> 00:23:59,159 Speaker 9: FINASO piaroting. So it's possible that, you know, with this 455 00:23:59,200 --> 00:24:02,239 Speaker 9: increased attention, that they could decide to look into that. 456 00:24:03,280 --> 00:24:06,000 Speaker 9: There's you know, they asked in two thousand and three 457 00:24:06,080 --> 00:24:10,159 Speaker 9: whether this drug should actually be prescription only, just given 458 00:24:10,640 --> 00:24:15,639 Speaker 9: the risks and that people don't often follow directions on 459 00:24:15,760 --> 00:24:18,239 Speaker 9: OTC drugs. You know, you're only supposed to take this 460 00:24:18,320 --> 00:24:20,399 Speaker 9: for two days, and you're not supposed to take it 461 00:24:20,440 --> 00:24:25,800 Speaker 9: all the time. There are companies, particularly online retailers, that 462 00:24:26,040 --> 00:24:28,880 Speaker 9: are really pushing this drug on women and girls, kind 463 00:24:28,920 --> 00:24:30,560 Speaker 9: of just to have on hand all the time. 464 00:24:30,920 --> 00:24:33,760 Speaker 2: Our thanks to an Ednie Bloomberg national healthcare reporter. 465 00:24:34,080 --> 00:24:35,520 Speaker 3: Coming up on the program, we're going to look at 466 00:24:35,560 --> 00:24:39,919 Speaker 3: how diversity, equity and Inclusion DEI efforts have changed at 467 00:24:40,040 --> 00:24:40,760 Speaker 3: US companies. 468 00:24:40,880 --> 00:24:43,720 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 469 00:24:43,720 --> 00:24:45,879 Speaker 2: depth research and data on two thousand companies and one 470 00:24:45,960 --> 00:24:48,840 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 471 00:24:48,920 --> 00:24:49,879 Speaker 2: bi go on the terminal. 472 00:24:49,920 --> 00:24:52,800 Speaker 3: I'm Paul Sweeney and a Malex Steel, and this is Bloomberg. 473 00:25:00,440 --> 00:25:04,120 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 474 00:25:04,200 --> 00:25:07,600 Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto 475 00:25:07,680 --> 00:25:10,760 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 476 00:25:10,800 --> 00:25:14,560 Speaker 1: get your podcasts, or watch us live on YouTube. 477 00:25:14,600 --> 00:25:16,840 Speaker 3: This week, we focus on a Bloomberg Big Take story 478 00:25:16,880 --> 00:25:19,960 Speaker 3: titled Apple Spending Billions and still has it managed to 479 00:25:20,000 --> 00:25:22,399 Speaker 3: crack AI? You can find it on Bloomberg dot Com 480 00:25:22,400 --> 00:25:23,080 Speaker 3: and the Terminal. 481 00:25:23,400 --> 00:25:25,920 Speaker 2: The story looks at Apple's continued failures to get artificial 482 00:25:25,960 --> 00:25:29,480 Speaker 2: intelligence right, and it discusses how this threatens everything from 483 00:25:29,480 --> 00:25:32,720 Speaker 2: the iPhone's dominance to plans for robots and other products. 484 00:25:32,800 --> 00:25:35,040 Speaker 3: For more, We are joined by the stories author Mark German, 485 00:25:35,119 --> 00:25:37,640 Speaker 3: Bloomberg News Managing editor for Global Consumer Tech. 486 00:25:37,920 --> 00:25:40,760 Speaker 2: First, ask Mark about what's going on at Coopertino as 487 00:25:40,760 --> 00:25:42,480 Speaker 2: it relates to AI. 488 00:25:42,400 --> 00:25:47,719 Speaker 10: Well, philosophical differences, mismanagement and the biggest thing is they 489 00:25:47,720 --> 00:25:51,200 Speaker 10: were blindsided when generative AI with chat, GPT and GitHub 490 00:25:51,280 --> 00:25:54,679 Speaker 10: launched back in twenty twenty two. November twenty twenty two. 491 00:25:54,920 --> 00:25:59,600 Speaker 10: I'm told Apple Intelligence wasn't even an idea back then. Why, well, 492 00:25:59,600 --> 00:26:00,480 Speaker 10: they missed the boat. 493 00:26:00,640 --> 00:26:02,960 Speaker 3: But how I mean? I mean, I don't understand. 494 00:26:03,280 --> 00:26:07,960 Speaker 10: Yeah, well, clearly there was philosophical disagreement, in philosophical disinterest 495 00:26:08,000 --> 00:26:10,880 Speaker 10: in the topic of artificial intelligence. I write about how 496 00:26:10,880 --> 00:26:14,800 Speaker 10: Craig freederighi, Apple's senior VP of software engineering, doesn't really 497 00:26:14,840 --> 00:26:19,320 Speaker 10: believe in these multi billion dollar projects. He tends to 498 00:26:19,359 --> 00:26:21,879 Speaker 10: try to shut down or steer away from projects of 499 00:26:21,920 --> 00:26:24,800 Speaker 10: that sort, and AI is something of that nature. AI 500 00:26:24,920 --> 00:26:27,200 Speaker 10: is quite a bit messy. They're known for the very 501 00:26:27,280 --> 00:26:31,880 Speaker 10: intricate and well designed user experiences. AI sometimes with hallucinations 502 00:26:31,920 --> 00:26:34,160 Speaker 10: can take away from that. But I think they didn't 503 00:26:34,200 --> 00:26:35,639 Speaker 10: think it was going to be as big of a 504 00:26:35,680 --> 00:26:37,760 Speaker 10: thing as it became today. A lot of it fell 505 00:26:37,800 --> 00:26:40,600 Speaker 10: on deaf years years ago, I'm told. But really, this 506 00:26:40,720 --> 00:26:43,400 Speaker 10: is a company that's known for updating their operating systems 507 00:26:43,440 --> 00:26:47,000 Speaker 10: once a year. It's known as a company that focuses 508 00:26:47,240 --> 00:26:50,320 Speaker 10: on the minutia, and they missed the big picture here 509 00:26:50,600 --> 00:26:54,280 Speaker 10: with artificial intelligence, and it really is a shame. You know, 510 00:26:54,359 --> 00:26:57,440 Speaker 10: the big picture here isn't the AI capabilities of its 511 00:26:57,480 --> 00:27:01,360 Speaker 10: devices today. The big picture today is the AI capability 512 00:27:01,720 --> 00:27:04,720 Speaker 10: of future hardware. If you don't have the core technology, 513 00:27:04,760 --> 00:27:06,919 Speaker 10: the AI ready to go at a deep level, how 514 00:27:06,960 --> 00:27:11,040 Speaker 10: are you going to develop products like humanoid robots, smart glasses, 515 00:27:11,760 --> 00:27:15,400 Speaker 10: watches in AirPods with depth sens and cameras for AI purposes. 516 00:27:15,840 --> 00:27:18,240 Speaker 10: Can't do any of that if you don't have that technology. 517 00:27:18,520 --> 00:27:21,399 Speaker 10: So they need to seriously turn this thing around quickly 518 00:27:21,480 --> 00:27:24,439 Speaker 10: or they're going to be in big trouble. This is 519 00:27:24,520 --> 00:27:27,400 Speaker 10: as core technology as the touchscreen. 520 00:27:28,359 --> 00:27:28,760 Speaker 8: Wow. 521 00:27:29,359 --> 00:27:31,280 Speaker 2: I mean, first of all, how many words is this story? 522 00:27:31,359 --> 00:27:31,679 Speaker 9: Dude? 523 00:27:31,840 --> 00:27:32,479 Speaker 10: Six thousand? 524 00:27:32,560 --> 00:27:32,720 Speaker 9: Yeah? 525 00:27:32,760 --> 00:27:36,119 Speaker 2: This is a long, well that story, folks. So if 526 00:27:36,160 --> 00:27:38,800 Speaker 2: you wouldn't get smart on AI and Apple, you got 527 00:27:38,800 --> 00:27:40,560 Speaker 2: to read the story. It's in the Bloomberg Business Week, 528 00:27:40,560 --> 00:27:42,600 Speaker 2: It's on the terminal. I'm sure it's everywhere else as well. 529 00:27:43,440 --> 00:27:43,720 Speaker 6: Mark. 530 00:27:43,920 --> 00:27:47,040 Speaker 2: What can they do if I'm an investor? That's the 531 00:27:47,080 --> 00:27:49,879 Speaker 2: only question I have for Tim Cook. Can you guys 532 00:27:50,200 --> 00:27:52,520 Speaker 2: catch up and get some of that AI pixie dusk 533 00:27:52,600 --> 00:27:53,200 Speaker 2: in your stock? 534 00:27:53,400 --> 00:27:56,159 Speaker 10: Yes, they need to make acquisitions and they need to 535 00:27:56,640 --> 00:28:00,480 Speaker 10: up the percentage of that R and D budget tied 536 00:28:00,520 --> 00:28:02,520 Speaker 10: to AI. They need to up that percentage. They need 537 00:28:02,560 --> 00:28:05,160 Speaker 10: to allocate more of their hires to AI as well. 538 00:28:05,240 --> 00:28:07,440 Speaker 10: So they need to go big or go home on this. 539 00:28:07,720 --> 00:28:09,880 Speaker 2: And I think do they know that? Do you think? 540 00:28:09,960 --> 00:28:10,120 Speaker 6: Yeah? 541 00:28:10,160 --> 00:28:10,879 Speaker 10: Of course they know that. 542 00:28:10,920 --> 00:28:12,720 Speaker 3: Okay, how do they go big? 543 00:28:13,440 --> 00:28:16,240 Speaker 10: You got to spend more money. AI is really one 544 00:28:16,240 --> 00:28:19,080 Speaker 10: of the only things that you can buy your way 545 00:28:19,119 --> 00:28:22,040 Speaker 10: into when it comes to this technology, right, you can 546 00:28:22,080 --> 00:28:23,960 Speaker 10: buy your way into it. You just need to throw 547 00:28:24,080 --> 00:28:27,000 Speaker 10: billions and billions at AI training. They need to make 548 00:28:27,040 --> 00:28:29,720 Speaker 10: probably some tweaks to their privacy policy. Right, they have 549 00:28:29,920 --> 00:28:32,120 Speaker 10: so many devices, They have more devices than anyone else 550 00:28:32,160 --> 00:28:34,800 Speaker 10: as a single brand of a hardware company, of any 551 00:28:34,800 --> 00:28:36,760 Speaker 10: company in the entire world, in the history of the world. 552 00:28:36,960 --> 00:28:39,520 Speaker 10: But they don't leverage that because of their privacy stands. 553 00:28:39,560 --> 00:28:41,240 Speaker 10: So maybe make some tweaks there to be able to 554 00:28:41,280 --> 00:28:44,080 Speaker 10: collect some more data, maybe figure out a way to 555 00:28:44,120 --> 00:28:45,920 Speaker 10: convince people to give up some of their data for 556 00:28:46,000 --> 00:28:48,960 Speaker 10: this purpose. And I think that could go a long 557 00:28:49,000 --> 00:28:51,520 Speaker 10: way for them. So spending money collecting more data. 558 00:28:52,640 --> 00:28:55,000 Speaker 2: Is there somebody out there that they could buy, should buy, 559 00:28:55,040 --> 00:28:56,520 Speaker 2: that would leapfrog them? 560 00:28:56,560 --> 00:28:57,720 Speaker 3: Do you think they hate doing that though? 561 00:28:57,760 --> 00:28:58,080 Speaker 2: Right? 562 00:28:58,200 --> 00:29:01,800 Speaker 10: Well, the problem is this philosophical discussed. I would say 563 00:29:01,880 --> 00:29:05,560 Speaker 10: to making these large acquisitions if I told you, I mean, 564 00:29:05,560 --> 00:29:07,000 Speaker 10: you know this is true, so maybe you're not a 565 00:29:07,040 --> 00:29:09,760 Speaker 10: good example. But if I said to someone who didn't 566 00:29:09,920 --> 00:29:11,640 Speaker 10: know the company as well as you too. Would you 567 00:29:11,640 --> 00:29:13,800 Speaker 10: believe me if I told you that Apple's biggest acquisition 568 00:29:13,960 --> 00:29:16,000 Speaker 10: in the history of the company was three billion dollars? 569 00:29:16,280 --> 00:29:17,080 Speaker 3: I actually believe that. 570 00:29:17,560 --> 00:29:18,360 Speaker 2: Well, you believe that. 571 00:29:18,320 --> 00:29:20,120 Speaker 10: Because you know that, But I think if you ask 572 00:29:20,160 --> 00:29:23,000 Speaker 10: people who didn't know that, that would be completely unbelievable. 573 00:29:23,040 --> 00:29:23,240 Speaker 6: Yep. 574 00:29:23,360 --> 00:29:26,360 Speaker 10: They make these small acquisitions, and in addition to not 575 00:29:26,400 --> 00:29:30,280 Speaker 10: wanting to spend big bucks on a company, they're really 576 00:29:30,520 --> 00:29:34,360 Speaker 10: poor at integrating companies. The Beats integration, integrating all those 577 00:29:34,360 --> 00:29:37,960 Speaker 10: engineers into the company, Disaster Intel, they bought the modem 578 00:29:38,040 --> 00:29:41,920 Speaker 10: unit for a billion dollars back in nineteen Disaster. What 579 00:29:42,040 --> 00:29:44,239 Speaker 10: is it going to feel as an AI person at 580 00:29:44,240 --> 00:29:48,000 Speaker 10: Apple today if you're bringing if the company buys your 581 00:29:48,040 --> 00:29:50,400 Speaker 10: replacement to bring them in, It's not going to be fun. 582 00:29:50,440 --> 00:29:52,560 Speaker 10: There's enough turf wars as it is at Apple. 583 00:29:53,040 --> 00:29:55,920 Speaker 3: So if they do then have to do it internally, 584 00:29:56,160 --> 00:29:57,920 Speaker 3: they've still not done well at that. 585 00:29:58,360 --> 00:29:59,720 Speaker 10: They've got to do both. They got to make the 586 00:29:59,720 --> 00:30:01,479 Speaker 10: equ position, They got to just deal with that. They 587 00:30:01,520 --> 00:30:04,040 Speaker 10: got to make their biggest acquisition ever, and it has 588 00:30:04,080 --> 00:30:07,320 Speaker 10: to be for AI, maybe multiple acquisitions. They have to 589 00:30:07,920 --> 00:30:10,640 Speaker 10: turn things up a notch internally as well. They're going 590 00:30:10,680 --> 00:30:14,240 Speaker 10: to be making changes. I mean, there's so many philosophical disagreements. 591 00:30:14,280 --> 00:30:17,160 Speaker 10: The biggest is about chatbots. When it comes to AI. 592 00:30:17,320 --> 00:30:20,440 Speaker 10: They are allergic to AI chatbots. They don't like the technology. 593 00:30:20,480 --> 00:30:23,840 Speaker 10: They don't think open ai has staying power. So you're yes, 594 00:30:24,280 --> 00:30:24,640 Speaker 10: I know. 595 00:30:24,600 --> 00:30:27,360 Speaker 3: I made a face when he said that. You're going to. 596 00:30:27,240 --> 00:30:29,800 Speaker 10: See deeper integrations with other companies. You're going to see 597 00:30:29,800 --> 00:30:33,240 Speaker 10: Google Gemini integration. I think next year you'll see Perplexity integration, 598 00:30:33,720 --> 00:30:38,160 Speaker 10: maybe some Anthropic integration, maybe some Microsoft integration. But they're 599 00:30:38,160 --> 00:30:40,200 Speaker 10: going to keep pushing and this is going to be 600 00:30:40,200 --> 00:30:42,520 Speaker 10: a multi year thing. The biggest problems they were caught 601 00:30:42,520 --> 00:30:45,240 Speaker 10: off guvernment's happened, so they had no head start on this. 602 00:30:45,600 --> 00:30:47,320 Speaker 10: They're coming way from behind. 603 00:30:47,920 --> 00:30:51,000 Speaker 2: Well yeah, it's amazing. It's amazing now that some people 604 00:30:51,000 --> 00:30:54,800 Speaker 2: would say, hey, they're rarely first phones. Oh boy, when 605 00:30:54,800 --> 00:30:56,680 Speaker 2: they decide to get into phones, they do it. 606 00:30:56,760 --> 00:30:59,640 Speaker 10: That's the big difference. They were not first and they're 607 00:30:59,640 --> 00:31:00,800 Speaker 10: the worst, all right. 608 00:31:00,840 --> 00:31:03,040 Speaker 3: Thanks to Mark German and Bloomberg News Managing editor for 609 00:31:03,080 --> 00:31:04,120 Speaker 3: Global Consumer Tech. 610 00:31:04,280 --> 00:31:06,280 Speaker 2: This week we focused on a story on the Bloomberg 611 00:31:06,360 --> 00:31:10,880 Speaker 2: terminal and Bloomberg dot Com entitled Despite Backlash, DEI Hasn't 612 00:31:11,160 --> 00:31:12,440 Speaker 2: Disappeared at US companies. 613 00:31:12,480 --> 00:31:15,120 Speaker 3: It discusses how Walmart and other large US companies have 614 00:31:15,200 --> 00:31:18,480 Speaker 3: made modest changes to their diversity, equity and inclusion efforts, 615 00:31:18,520 --> 00:31:22,240 Speaker 3: but most programs retained intact with minor adjustments. 616 00:31:22,480 --> 00:31:24,880 Speaker 2: From where we were joined by the story's author, Simone Foxman, 617 00:31:25,000 --> 00:31:28,000 Speaker 2: reporter for the Bloomberg News Equality Team. We first asked 618 00:31:28,000 --> 00:31:31,280 Speaker 2: Simone to break down what she's learned recently about DEI 619 00:31:31,480 --> 00:31:32,360 Speaker 2: at US companies. 620 00:31:32,720 --> 00:31:36,080 Speaker 11: Well, Frankly, I've been talking to senior executives at large 621 00:31:36,080 --> 00:31:40,400 Speaker 11: companies their corporate advisors ever since Trump's executive orders came 622 00:31:40,440 --> 00:31:43,360 Speaker 11: out on January twenty first, and the message I've been 623 00:31:43,400 --> 00:31:47,440 Speaker 11: hearing is no, Frankly, many of the programs that were 624 00:31:47,520 --> 00:31:51,080 Speaker 11: part of diversity, equity and inclusion, many of which had 625 00:31:51,080 --> 00:31:54,360 Speaker 11: frankly been around since long before the acronym even existed, 626 00:31:54,800 --> 00:31:58,280 Speaker 11: they're still there. They've had some tweaks, maybe, and we 627 00:31:58,280 --> 00:32:01,920 Speaker 11: can talk about exactly what those are, but they companies 628 00:32:01,920 --> 00:32:05,160 Speaker 11: still believe that these underlying programs the ones that will 629 00:32:05,160 --> 00:32:09,560 Speaker 11: help them recruit diverse talent as well as keep employees happy. 630 00:32:09,760 --> 00:32:10,960 Speaker 8: These are largely there. 631 00:32:11,000 --> 00:32:13,760 Speaker 11: And so even at companies that have sort of tried 632 00:32:13,760 --> 00:32:18,640 Speaker 11: to send a message to their to perhapshaps the Trump administration, 633 00:32:18,760 --> 00:32:21,640 Speaker 11: perhaps conservative activists, they're sending a very different message to 634 00:32:21,680 --> 00:32:23,040 Speaker 11: their employees and investors. 635 00:32:23,200 --> 00:32:23,360 Speaker 8: Well. 636 00:32:23,360 --> 00:32:25,640 Speaker 2: I think what got a lot of people's attention, including myself, 637 00:32:25,680 --> 00:32:28,160 Speaker 2: was when Walmart came out and said they were going 638 00:32:28,160 --> 00:32:31,560 Speaker 2: to scale back DEA. I mean, it'sok, a monster employer 639 00:32:31,720 --> 00:32:35,160 Speaker 2: all over the country. What did you find at Walmart? Oh? 640 00:32:35,200 --> 00:32:36,920 Speaker 8: I mean, even when that announcement came out. 641 00:32:36,840 --> 00:32:39,480 Speaker 11: Which was just before Black Friday, if you looked into 642 00:32:39,600 --> 00:32:43,680 Speaker 11: the actual depth of what they were talking about, sunsetting 643 00:32:43,800 --> 00:32:47,080 Speaker 11: the term DEI in favor of belonging. 644 00:32:47,280 --> 00:32:47,440 Speaker 9: Ok. 645 00:32:47,920 --> 00:32:50,680 Speaker 8: You know these aren't why. 646 00:32:50,120 --> 00:32:54,240 Speaker 11: The huge enormous things a racial equity training that they 647 00:32:54,280 --> 00:32:57,720 Speaker 11: had had in conjunction with a racial equity institute. It 648 00:32:57,760 --> 00:33:01,440 Speaker 11: hadn't been offered since the spring of that year, and 649 00:33:01,480 --> 00:33:03,680 Speaker 11: that was something that they said, Okay, we're not. 650 00:33:03,680 --> 00:33:04,760 Speaker 8: Going to have this anymore. 651 00:33:05,160 --> 00:33:08,360 Speaker 11: In fact, you know, Walmart still mentioning in its job 652 00:33:08,400 --> 00:33:10,959 Speaker 11: postings that they want associates who are committed to diversity, 653 00:33:11,000 --> 00:33:14,120 Speaker 11: equity inclusion. Spokesman told us that they're trying to phase 654 00:33:14,160 --> 00:33:19,200 Speaker 11: out that language in posts, and some people call different names, but. 655 00:33:19,320 --> 00:33:21,600 Speaker 3: At what are the names? Like, what are the kind 656 00:33:21,600 --> 00:33:23,720 Speaker 3: of things that people are now sort of spinning out there? 657 00:33:24,200 --> 00:33:28,240 Speaker 11: I mean it depends company by company. At Walmart, supplier 658 00:33:28,280 --> 00:33:33,040 Speaker 11: diversity became supplier inclusion, for example, and there were some 659 00:33:33,080 --> 00:33:36,600 Speaker 11: small tweaks to their supplier diversity program not just focusing 660 00:33:36,640 --> 00:33:38,880 Speaker 11: on race and gender in terms of trying to find 661 00:33:39,120 --> 00:33:39,920 Speaker 11: diverse suppliers. 662 00:33:39,920 --> 00:33:41,400 Speaker 8: But they're absolutely. 663 00:33:40,920 --> 00:33:45,880 Speaker 11: Still highlighting brands that are owned by women, Hispanic people, 664 00:33:46,000 --> 00:33:50,560 Speaker 11: black people, it's lgbt Q, i A plus people. 665 00:33:50,800 --> 00:33:54,080 Speaker 8: These in fact all have landing pages. So it clearly 666 00:33:54,080 --> 00:33:56,280 Speaker 8: speaks to the idea that consumers want this. 667 00:33:56,800 --> 00:34:00,640 Speaker 11: They're they're looking for brands, or Walmart believes they're looking 668 00:34:00,680 --> 00:34:04,400 Speaker 11: for these brands. So maybe that's not somewhere where they 669 00:34:04,400 --> 00:34:08,440 Speaker 11: really pull back, you know, Does that satisfy the Trump administration, 670 00:34:08,640 --> 00:34:10,360 Speaker 11: conservative activists, et cetera. 671 00:34:11,880 --> 00:34:14,640 Speaker 8: Maybe maybe not. I will say one thing as well that. 672 00:34:15,120 --> 00:34:19,200 Speaker 11: Was very controversial. We're sort of demographic targets. For example, 673 00:34:19,239 --> 00:34:22,240 Speaker 11: we want to double the number of women in senior 674 00:34:22,320 --> 00:34:26,680 Speaker 11: management roles by twenty twenty six. That target that, you know, 675 00:34:26,960 --> 00:34:31,760 Speaker 11: very specific target. Lawyers are advising companies that this sounds 676 00:34:31,760 --> 00:34:33,920 Speaker 11: a little bit too much like a quota, so don't 677 00:34:33,960 --> 00:34:37,919 Speaker 11: have that anymore, or if I guess the lawyers are saying, 678 00:34:37,960 --> 00:34:40,360 Speaker 11: don't have that, you know at best, you know companies 679 00:34:40,400 --> 00:34:44,479 Speaker 11: are not having that publicly because that is a little 680 00:34:44,480 --> 00:34:47,319 Speaker 11: bit on that legal gray area not sorted out by 681 00:34:47,360 --> 00:34:50,360 Speaker 11: the court, but something even a voluntary target that lawyers 682 00:34:50,400 --> 00:34:52,040 Speaker 11: say you might want to stay away from that. 683 00:34:52,640 --> 00:34:56,560 Speaker 2: But I sort remember, you know, talking about internships, mentor 684 00:34:56,640 --> 00:35:00,799 Speaker 2: programs that help marginalize groups, and maybe you know talking 685 00:35:00,800 --> 00:35:04,480 Speaker 2: about hiring and historically black colleges and universities. Is that 686 00:35:04,600 --> 00:35:06,160 Speaker 2: under pressure or is that going to be changing? 687 00:35:06,400 --> 00:35:10,759 Speaker 11: So those are actually two different things. One, mentorships and 688 00:35:10,800 --> 00:35:16,400 Speaker 11: internship programs have now been opened to everyone, and this 689 00:35:16,560 --> 00:35:20,760 Speaker 11: is sort of another thing that was recommended by lawyers. 690 00:35:20,920 --> 00:35:24,040 Speaker 11: Came especially after the Students for Fair Admissions at Harvard 691 00:35:24,120 --> 00:35:29,960 Speaker 11: decision HBCU scholarships. However, if you know recruiting from a 692 00:35:30,000 --> 00:35:35,240 Speaker 11: specific HBCU historically black college and university, these are actually 693 00:35:35,280 --> 00:35:38,239 Speaker 11: still getting a lot of interest from companies because there 694 00:35:38,239 --> 00:35:39,040 Speaker 11: are something that. 695 00:35:39,040 --> 00:35:42,000 Speaker 8: Is extremely legally above board. 696 00:35:42,200 --> 00:35:46,279 Speaker 11: Anyone can apply to go to an HBCU and a 697 00:35:46,360 --> 00:35:49,799 Speaker 11: company can choose to hire or to have a scholarship 698 00:35:49,880 --> 00:35:54,320 Speaker 11: or internship program specifically targeted towards an HBCU, and because 699 00:35:54,560 --> 00:35:56,920 Speaker 11: anyone can go there, that that means they're definitely not, 700 00:35:57,040 --> 00:36:01,200 Speaker 11: you know, discriminating on race from a legal perspective, and frankly, 701 00:36:01,280 --> 00:36:03,960 Speaker 11: you know, among conservative groups, this is a little bit 702 00:36:04,000 --> 00:36:04,800 Speaker 11: of a bone. 703 00:36:06,080 --> 00:36:06,920 Speaker 8: It's a little bit of a. 704 00:36:07,120 --> 00:36:11,520 Speaker 11: Kind of subjective controversy because these are you know, HPCU 705 00:36:11,560 --> 00:36:13,319 Speaker 11: programs are the ones that feel. 706 00:36:13,080 --> 00:36:16,120 Speaker 8: Like DEI at its very. 707 00:36:16,320 --> 00:36:19,200 Speaker 11: Heart, and frankly, they were the way to try and 708 00:36:19,280 --> 00:36:24,279 Speaker 11: increase the pipeline of black managers and black engineers and 709 00:36:24,600 --> 00:36:28,640 Speaker 11: technologists and et cetera. So we'll see if there's more 710 00:36:29,719 --> 00:36:33,480 Speaker 11: at tax on those specific programs going forward. At at 711 00:36:33,480 --> 00:36:35,600 Speaker 11: the moment, that seems to be a legal area where 712 00:36:35,800 --> 00:36:36,920 Speaker 11: you know, many companies are doing. 713 00:36:36,920 --> 00:36:38,959 Speaker 3: Do you get the sense from any companies that there 714 00:36:39,120 --> 00:36:41,640 Speaker 3: is a worry about going too far in the other direction, 715 00:36:42,160 --> 00:36:44,839 Speaker 3: like stripping out certain things that actually need to be 716 00:36:45,239 --> 00:36:46,200 Speaker 3: thought of and done. 717 00:36:46,640 --> 00:36:50,479 Speaker 11: One hundred percent absolutely, And you know, when you talk 718 00:36:50,719 --> 00:36:54,320 Speaker 11: to a senior executive at an accounting firm was telling 719 00:36:54,320 --> 00:36:58,400 Speaker 11: me they just need accountants. They cannot get accountants unless 720 00:36:58,440 --> 00:37:01,640 Speaker 11: they are going to places where people have not been 721 00:37:01,680 --> 00:37:04,719 Speaker 11: exposed to accounting to try and encourage them to work 722 00:37:04,760 --> 00:37:05,080 Speaker 11: for them. 723 00:37:05,320 --> 00:37:07,440 Speaker 8: They don't want to make young people unhappy. 724 00:37:07,520 --> 00:37:07,680 Speaker 5: You know. 725 00:37:07,760 --> 00:37:11,480 Speaker 11: These are affinity groups. Employee resource groups still exist in part. 726 00:37:12,440 --> 00:37:15,000 Speaker 11: Maybe they're scrutiny of their spending, but they still exist 727 00:37:15,320 --> 00:37:17,680 Speaker 11: a lot because this is stuff that makes people happy 728 00:37:17,719 --> 00:37:20,720 Speaker 11: to come to work, and companies are very afraid because 729 00:37:20,760 --> 00:37:25,799 Speaker 11: the actual employment law has not changed substantially. They are 730 00:37:25,920 --> 00:37:28,560 Speaker 11: very afraid that they are going to see your traditional 731 00:37:28,600 --> 00:37:33,560 Speaker 11: discrimination suits filed by women, people of color, LGBTQ, people, 732 00:37:33,840 --> 00:37:35,520 Speaker 11: people with disabilities a right. 733 00:37:35,520 --> 00:37:38,560 Speaker 3: Thanks to Simone Foxman, reporter for the Bloomberg News Equality Team. 734 00:37:39,080 --> 00:37:43,759 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 735 00:37:43,960 --> 00:37:47,920 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 736 00:37:48,120 --> 00:37:51,440 Speaker 1: ten am to noon Eastern on Bloomberg dot Com, the 737 00:37:51,480 --> 00:37:55,360 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 738 00:37:55,400 --> 00:37:58,719 Speaker 1: can also watch us live every weekday on YouTube and 739 00:37:58,920 --> 00:38:00,840 Speaker 1: always on the blue Burg terminal 740 00:38:04,320 --> 00:38:04,360 Speaker 6: M