WEBVTT - Trump Nvidia Deal Reshapes US’s China Strategy 0:00:02.720 --> 0:00:10.559 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.880 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.080 or watch us live on YouTube. 0:00:23.160 --> 0:00:27.800 Through President Trump has now opened the door to Nvidia 0:00:28.000 --> 0:00:30.280 selling some of its high end chips to China. 0:00:30.800 --> 0:00:33.199 Yeah, I'm not sure. I kind of can't follow the policies. 0:00:33.280 --> 0:00:35.120 Some days the door's open, some days it's closed. 0:00:35.240 --> 0:00:37.599 Yeah, and it could always move in the other that's 0:00:37.600 --> 0:00:38.240 the other risk. 0:00:38.320 --> 0:00:38.560 Right. 0:00:38.680 --> 0:00:41.839 Let's bring in Bloomberg Tech co host Caroline Hide to 0:00:41.840 --> 0:00:43.559 tell us a little bit more so on b Tech. 0:00:43.560 --> 0:00:45.120 I'm sure you're going to be talking all about this, 0:00:45.280 --> 0:00:48.239 but Caroline, what does it mean that Nvidia can now 0:00:48.280 --> 0:00:50.600 sell these h two hundred chips to China? Because that 0:00:50.680 --> 0:00:52.360 is not the most advanced chips. 0:00:52.200 --> 0:00:52.800 Is it. 0:00:52.800 --> 0:00:53.159 It's not. 0:00:53.320 --> 0:00:56.760 It's based on Grace Hopper architecture, which isn't the Blackwell 0:00:56.800 --> 0:00:58.600 that we're currently in. It isn't the Vera Rubin that 0:00:58.600 --> 0:01:01.640 we're looking towards. It's the pre V's iterations. It is 0:01:01.840 --> 0:01:05.759 ten x superior to the ah twenties that remember cast 0:01:05.800 --> 0:01:08.839 Your Mind Back had also been deemed okay to ship 0:01:08.880 --> 0:01:11.800 from the United States to China if a fifteen percent 0:01:11.880 --> 0:01:14.160 cut was given to the US government, but that was 0:01:14.200 --> 0:01:16.640 never signed into law. They were never able to execute 0:01:16.640 --> 0:01:21.039 on that. And most importantly, China doesn't want them. And 0:01:21.080 --> 0:01:23.000 I think this is the key the financial times of 0:01:23.040 --> 0:01:26.120 reporting that basically already China's looking at putting curves licenses, 0:01:26.319 --> 0:01:29.320 basically limiting the ability for certain companies to access the 0:01:29.440 --> 0:01:32.400 H two hundreds even if Invidia is allowed to ship them. 0:01:32.480 --> 0:01:35.560 And I think this is what everyone's got to currently digest. 0:01:35.800 --> 0:01:37.720 I'm hearing time and time again from some of the 0:01:37.760 --> 0:01:40.280 most powerful people in the technology space that we are 0:01:40.360 --> 0:01:44.600 underestimating how sophisticated China is at using the Invidia chips, 0:01:44.600 --> 0:01:46.520 the small amount they already have and some of those 0:01:46.520 --> 0:01:47.240 homegrown ones. 0:01:47.680 --> 0:01:52.400 Typically, how has this trade policy negotiated? Who typically says 0:01:53.200 --> 0:01:55.560 US tech company, you can sell this into China or 0:01:55.560 --> 0:01:58.400 to other markets, or you can't. Is because it just 0:01:58.440 --> 0:02:00.920 seems like it's now the whim of the present in 0:02:00.960 --> 0:02:04.280 his ex account or truth social account setting trade policies 0:02:04.280 --> 0:02:06.040 at how's it typically done well? 0:02:06.080 --> 0:02:09.000 Isn't it interesting that just last week Jensen Wang was 0:02:09.040 --> 0:02:11.720 meeting with a president, but was meeting with some of 0:02:11.720 --> 0:02:14.320 the leaders over in Congress. Most crucially, he was with 0:02:14.400 --> 0:02:17.639 the Senate Banking Committee, because it's the Banking Committee oddly 0:02:17.880 --> 0:02:20.680 that tends to be in charge of export restrictions, and 0:02:20.760 --> 0:02:24.679 so it was that group of leaders. But many are frustrated, 0:02:24.720 --> 0:02:27.040 and I was just at the Reagan Defense Forum National 0:02:27.040 --> 0:02:29.920 Defense Forum this weekend, and there is handwringing going on 0:02:29.919 --> 0:02:32.200 from Congress that they're being cut out of a lot 0:02:32.240 --> 0:02:34.360 of these discussions. Really they should have ownership of to 0:02:34.400 --> 0:02:36.040 how much trade should be allowed, But at the moment 0:02:36.120 --> 0:02:38.440 these are coming through executive orders. And we know that 0:02:38.480 --> 0:02:41.000 the President likes to cut a deal and Vidia, Jensen 0:02:41.040 --> 0:02:43.120 Wang likes to cut a deal. They have a very 0:02:43.120 --> 0:02:47.000 personal relationship. And most broadly, in Vidia and Jensen want 0:02:47.040 --> 0:02:49.280 access to China. They think there's something like a fifty 0:02:49.320 --> 0:02:52.840 billion dollar total addressable market they're being forced to have 0:02:52.919 --> 0:02:55.160 to put down. At the moment, he's has zero percent 0:02:55.200 --> 0:02:57.440 revenue coming from that country. But you've got this tussel 0:02:57.480 --> 0:02:59.520 at the top of the China Hawks, who were worried 0:02:59.639 --> 0:03:02.640 from anal security perspective, if you allow technology to go 0:03:02.680 --> 0:03:03.840 from the US into China. 0:03:04.000 --> 0:03:05.560 But on the flip side. 0:03:05.360 --> 0:03:07.440 In Jenson Wrong would say, they're just going to build 0:03:07.440 --> 0:03:09.960 it themselves, and we're forcing them to speed up that 0:03:10.320 --> 0:03:13.400 by limiting my technology. Let our stack own that of 0:03:13.560 --> 0:03:16.560 China's big large language model development. 0:03:17.080 --> 0:03:19.480 So you had mentioned that China didn't want to buy 0:03:19.520 --> 0:03:21.640 the H twenty chips. Does China want to buy the 0:03:21.760 --> 0:03:22.840 H two hundred chips? 0:03:22.919 --> 0:03:25.960 I think if you asked, what the reporting shows is 0:03:25.960 --> 0:03:27.239 that if you turn to an Ali. 0:03:27.040 --> 0:03:29.520 Barbar or a Tensen or a by Do, they are. 0:03:29.440 --> 0:03:31.720 Limited by the amount of GPUs they have access to. 0:03:31.800 --> 0:03:35.360 So I think more is more from their perspective. And yes, 0:03:35.440 --> 0:03:37.560 the H two hundreds build on the H twenties, but 0:03:37.680 --> 0:03:41.120 longer term, the government wants to focus on domestic supply here. 0:03:41.120 --> 0:03:42.880 That's why you're seeing camera con do so well, while 0:03:42.880 --> 0:03:45.360 you're seeing Huawei do well, while you're hearing Bido wants 0:03:45.360 --> 0:03:47.200 to spin off its chip manufacturer. While we just had 0:03:47.240 --> 0:03:50.760 that superb entrance to the market just of the Moore's 0:03:50.840 --> 0:03:53.920 technology company that has shot up more than four hundred percent, 0:03:54.200 --> 0:03:56.240 they do want to make it homegrown. 0:03:56.720 --> 0:03:58.040 Great store on a Bloomberg terurnal. 0:03:58.120 --> 0:04:01.520 Today, Apple shares have sorted thirty five percent since the 0:04:01.600 --> 0:04:04.400 end of the gym as the market scrutiny of AI development 0:04:04.400 --> 0:04:07.760 spending has made the company's lack of an AI strategy 0:04:08.280 --> 0:04:08.800 a strength. 0:04:08.960 --> 0:04:10.200 So do nothing and benefit. 0:04:10.320 --> 0:04:12.080 I don't know, but I mean Apple. 0:04:12.240 --> 0:04:14.560 We always say about Apple they don't have to be first, 0:04:14.560 --> 0:04:16.320 and tim that they are not first, but when they 0:04:16.320 --> 0:04:18.680 do come into the market, they do it really well. 0:04:18.800 --> 0:04:22.120 It's a thought out approach and that people, you know, 0:04:22.160 --> 0:04:24.720 the Apple bullsmen saying, don't worry, don't worry, don't worry. 0:04:24.720 --> 0:04:25.360 They're going to be fine. 0:04:25.440 --> 0:04:28.160 There's two billion Apple devices out there, they'll be fine. 0:04:28.200 --> 0:04:28.560 I don't know. 0:04:28.800 --> 0:04:31.640 Yeah, And meanwhile, goodbye to the guy who is in 0:04:31.720 --> 0:04:34.039 charge of AI policy over at Apple. Because of that 0:04:34.120 --> 0:04:37.120 botched Apple intelligence roll up, people have been frustrated that 0:04:37.160 --> 0:04:40.320 Apple seems to be a slow player to adoption, but 0:04:40.440 --> 0:04:44.200 longer term, most in the generative AI space thinking that 0:04:44.279 --> 0:04:46.359 we are going to be using this from a consumer perspective, 0:04:46.839 --> 0:04:50.760 from our edge devices. Therefore, computer is going to change 0:04:50.760 --> 0:04:52.240 in the way in which you know it. Your models 0:04:52.279 --> 0:04:53.560 are going to change in the way in which you 0:04:53.600 --> 0:04:55.800 know it, and eventually we will be doing running our 0:04:55.839 --> 0:04:59.320 Chatchpt or our Gemini or whatever model you like on 0:04:59.520 --> 0:05:02.800 your device. Eventually that means you'll need an Android or 0:05:02.839 --> 0:05:05.600 an Apple or maybe some future AI device that hasn't 0:05:05.640 --> 0:05:07.719 yet been created and is probably being developed in the 0:05:07.760 --> 0:05:10.440 minds of the great leaders right now. But we'll have 0:05:10.520 --> 0:05:13.359 to see how Apple continues to basically do the benefit 0:05:13.480 --> 0:05:15.840 of not having got a load of debt and not 0:05:15.880 --> 0:05:18.200 having spent an awful lot of money on the buildout, 0:05:18.200 --> 0:05:20.920 because at the moment the come I think investors are 0:05:20.960 --> 0:05:24.560 just still grappling with the sheer scale of capital expenditure 0:05:24.560 --> 0:05:26.479 that's going into this and wondering whether there's going to 0:05:26.480 --> 0:05:28.400 be a real upside. Can Apple get the upside without 0:05:28.440 --> 0:05:29.880 making the infrastructure investment. 0:05:31.160 --> 0:05:34.240 Stay with us more from Bloomberg Intelligence coming up after this. 0:05:37.839 --> 0:05:41.520 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:05:41.640 --> 0:05:44.320 weekdays at ten am. He's Dene on Apple Coarclay, and 0:05:44.320 --> 0:05:47.600 Android Auto with the Bloomberg Business app. Listen on demand 0:05:47.640 --> 0:05:51.200 wherever you get your podcasts, or watch us live on YouTube. 0:05:52.040 --> 0:05:54.960 Our next guest one of the most highly respected media 0:05:55.000 --> 0:05:57.200 analysts on Wall Street for a long time, and I 0:05:57.240 --> 0:05:59.839 think the value that I really find from her res 0:06:00.080 --> 0:06:02.560 or it's consistently over the years, is she's not afraid 0:06:02.600 --> 0:06:04.800 to be out of consensus here. And I think she's 0:06:04.839 --> 0:06:07.680 got a again, a non consensus call here that even 0:06:07.680 --> 0:06:09.920 if you don't agree with it, it makes you think. And 0:06:09.920 --> 0:06:12.160 that's the value of a good animals. Laura Martin joins 0:06:12.160 --> 0:06:14.680 his senior analysts that need them company, Laura, as it 0:06:14.720 --> 0:06:18.200 relates to Netflix, do you think they should even pursue 0:06:18.240 --> 0:06:19.400 this deal here? 0:06:21.040 --> 0:06:23.760 Yeah, So we published a note this morning say no 0:06:24.040 --> 0:06:28.440 that the big cultural Warner Brothers would create cultural problems 0:06:28.480 --> 0:06:31.719 at Netflix. Netflix has about fourteen thousand employees and Warner 0:06:31.720 --> 0:06:34.440 Brothers is about thirty five thousand, some of which they 0:06:34.440 --> 0:06:37.120 wouldn't be buying, but it would be about twice as 0:06:37.160 --> 0:06:40.640 many employees from let's call it the old world, the 0:06:40.720 --> 0:06:44.200 fifty year old studio who really is averse to make 0:06:44.440 --> 0:06:47.279 taking risks and they really do things the old fashioned 0:06:47.279 --> 0:06:54.640 way and siloed, competitive, internally fighting culture. And that isn't Netflix. 0:06:54.720 --> 0:06:58.320 Netflix is sort of single purpose disruptor. Everybody on the 0:06:58.320 --> 0:07:01.240 same page, move fast and break things, iterate if you 0:07:01.279 --> 0:07:04.000 get it wrong. And I just feel like the culture 0:07:04.480 --> 0:07:07.880 that Warner Brothers is an anchor would be an anchor 0:07:07.920 --> 0:07:12.440 to Netflix and a time when jenerative AI technology risks 0:07:12.520 --> 0:07:17.240 are collapsing timeframes into weeks with the changes. So we 0:07:17.280 --> 0:07:21.640 think the next disruption created by jeneritive AI requires really 0:07:21.760 --> 0:07:25.520 fast reaction times, which Netflix has the fastest in media, 0:07:25.600 --> 0:07:27.960 and it would really slow their reaction times if they 0:07:28.000 --> 0:07:31.200 suddenly brought on twice as many employees that were stuck 0:07:31.520 --> 0:07:34.640 in the fifty year old business model of the Hollywood studio. 0:07:34.920 --> 0:07:39.320 And you quantified the drag that this would have on Netflix, 0:07:39.360 --> 0:07:40.160 what does that look like? 0:07:42.480 --> 0:07:42.560 So? 0:07:42.720 --> 0:07:45.160 I mean, I think what we're saying is that the 0:07:45.240 --> 0:07:49.280 eighty three billion dollar purchase price that they would pay 0:07:49.480 --> 0:07:54.720 to buy Warner Brothers would add another that cash would 0:07:54.760 --> 0:08:00.280 be at risk of not returning its capital because would 0:08:00.280 --> 0:08:04.280 bring all these cultural problems and envelop the entire consolidated 0:08:04.640 --> 0:08:06.280 four hundred billion dollar entity. 0:08:07.400 --> 0:08:10.400 Lars, So, as it related to jen ai, is that 0:08:10.480 --> 0:08:14.880 a friend or a foe to Hollywood, to the media companies? 0:08:16.280 --> 0:08:19.240 Yeah? So to date, Paul, what isn't different about jen 0:08:19.320 --> 0:08:22.640 ai is it's being used as tools by humans, in 0:08:22.680 --> 0:08:24.640 which case it's not different than the web. It's not 0:08:24.680 --> 0:08:27.600 different than our smartphones our you know, our Apple phones 0:08:27.920 --> 0:08:33.600 are you know, flashlights and communication devices and map they 0:08:33.640 --> 0:08:35.800 replace Thomas Guides, so their utility. 0:08:36.200 --> 0:08:37.080 So so far. 0:08:37.120 --> 0:08:40.520 Jenai technology has been a tool or a utility for 0:08:40.800 --> 0:08:45.000 human beings. I think the vision of Sam Altman at 0:08:45.000 --> 0:08:49.840 open Ai, Elon Musk, Mark Zuckerberg over at Meta is 0:08:49.880 --> 0:08:54.760 to have and certainly of course of Navidia is to 0:08:54.880 --> 0:08:59.240 have to achieve what's called superintelligence, where machines trained machines, 0:08:59.679 --> 0:09:03.760 and case it replaces people at some level. It does better, thinking, faster, 0:09:03.880 --> 0:09:07.679 it's less emotional. So if that comes true and they're 0:09:07.720 --> 0:09:10.520 saying that's ten years out, that's superintelligence, it would actually 0:09:10.520 --> 0:09:13.120 replace humans. But in near term it's just like the 0:09:13.200 --> 0:09:16.400 other three technological disruptions you and I've seen where it 0:09:16.440 --> 0:09:18.520 makes our life better. It's a tool for humans to 0:09:18.520 --> 0:09:20.760 do faster, better, safer work. 0:09:21.160 --> 0:09:23.880 So, Laura, you make the case that Netflix doesn't need 0:09:23.920 --> 0:09:27.280 to buy Warner Brothers Discovery. It would be adding an 0:09:27.320 --> 0:09:31.040 anchor and it would drag it down because it's this disruptor. 0:09:31.400 --> 0:09:34.760 What about paramount skuidance? Doesn't that argument also apply or 0:09:35.000 --> 0:09:35.400 does it not? 0:09:36.559 --> 0:09:40.360 It does, But the distinction I would make is Netflix 0:09:40.440 --> 0:09:43.760 is large enough to go it alone, and with generative 0:09:43.800 --> 0:09:48.640 AI collapsing timeframes, their culture is really well suited to 0:09:48.720 --> 0:09:52.880 the technological you know, the future of the next five years. 0:09:53.240 --> 0:09:59.160 Peace Guy is subscale. It probably can't survive without bulking up, 0:09:59.240 --> 0:10:02.200 and it doesn't really have time to build in a 0:10:02.280 --> 0:10:06.640 generative world because it's just too small and change is 0:10:06.640 --> 0:10:10.400 happening too fast, so it needs to bulk up and 0:10:10.520 --> 0:10:12.840 buy in something. We think they could get it closed 0:10:13.000 --> 0:10:17.160 in six months because we think the senior Ellison is 0:10:17.200 --> 0:10:19.079 good friends with Donald Trump and he would have it 0:10:19.160 --> 0:10:22.160 sale through regulatory so it would happen faster, there'd be 0:10:22.240 --> 0:10:25.600 less uncertainty, and it would allow peace Guy to survive. 0:10:26.080 --> 0:10:28.600 So I think they have to take the technological risk 0:10:28.880 --> 0:10:30.880 because they must have scale. 0:10:31.240 --> 0:10:32.120 Or they're going to die. 0:10:32.200 --> 0:10:35.120 So they might die because I'm right about the culture 0:10:35.160 --> 0:10:37.880 problem and the anchor problem, but they're going to die 0:10:37.920 --> 0:10:40.959 if they don't buy something anyway, so it gives them 0:10:40.960 --> 0:10:43.640 a better chance to survive. I think to buy Warner. 0:10:43.520 --> 0:10:46.440 And Laurie you follow on Netflix, since it's inception here. 0:10:46.480 --> 0:10:48.360 This is a company and a management team and a 0:10:48.400 --> 0:10:49.720 board that's been pretty adamant. 0:10:49.720 --> 0:10:51.839 They don't they'd rather build from within than buy. 0:10:52.080 --> 0:10:54.560 What do you think is changed here, because this is 0:10:54.600 --> 0:10:57.600 a huge turnaround for this company strategic wise. 0:10:58.480 --> 0:11:01.000 Yeah, Paul, you know, we really wanted to write a 0:11:01.040 --> 0:11:04.280 note that says dogma is bad. I mean, they said 0:11:04.280 --> 0:11:07.440 they'd never do advertising. They do advertising. They said we'll 0:11:07.480 --> 0:11:10.360 never do live sports, and now they've broadcast NFL games 0:11:10.400 --> 0:11:13.120 on Christmas Day. And then they said, well, we don't 0:11:13.200 --> 0:11:16.679 like the Hollywood, we don't like the theatrical window, and 0:11:16.720 --> 0:11:19.439 we don't want to release any films in the theatrical 0:11:19.480 --> 0:11:22.439 window unless talent like directors force us because they want 0:11:22.440 --> 0:11:27.200 Academy Award consideration, which is a turn which is a requirement. 0:11:27.240 --> 0:11:28.720 To get an Academy Award, you have to have been 0:11:28.760 --> 0:11:32.319 released in theaters. So that is really hurting them in 0:11:31.640 --> 0:11:35.080 this In this those words are really hurting them with 0:11:35.240 --> 0:11:39.720 the talent community. So when they say we will never 0:11:39.800 --> 0:11:42.240 do something, please take that with a grain of salt 0:11:42.320 --> 0:11:46.320 because they often reverse themselves completely one hundred and eighty degrees, 0:11:46.640 --> 0:11:49.480 and it's really those words about the theatrical window are 0:11:49.520 --> 0:11:54.200 really hurting their hurting the feedback loops with talent like 0:11:54.280 --> 0:11:57.199 big talent like Jim Cameron and Scarce. Like all these 0:11:57.240 --> 0:11:59.559 people that really are big talent, they all want a 0:11:59.600 --> 0:12:03.600 theatre window and Netflix. They're scared to death that if 0:12:03.679 --> 0:12:07.200 Netflix bought Warners, the theatrical window over five years would 0:12:07.240 --> 0:12:07.760 go to zero. 0:12:08.760 --> 0:12:11.959 Stay with us. More from Bloomberg Intelligence coming up after this. 0:12:15.800 --> 0:12:19.520 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:12:19.600 --> 0:12:22.679 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:22.679 --> 0:12:26.000 Auto with the Bloomberg Business App. Listen on demand wherever 0:12:26.080 --> 0:12:29.160 you get your podcasts, or watch us live on YouTube. 0:12:29.800 --> 0:12:31.720 All right, let's move on here and talk a little 0:12:31.720 --> 0:12:34.360 bit about Home Depot. Home Depot, of course did come 0:12:34.360 --> 0:12:36.120 out with earnings a while ago, but they are giving 0:12:37.120 --> 0:12:41.199 a bigger long term outlook here for its business. It's 0:12:41.200 --> 0:12:43.680 an investor day kind of outlook. And for that we 0:12:43.760 --> 0:12:46.760 have Matthew Griffin, He's a Bloomberg Stocks reporter, to just 0:12:46.840 --> 0:12:49.000 talk us through some of the issues at Home Depot's face. 0:12:49.040 --> 0:12:52.000 Because at the last earning support, Home Depot made clear 0:12:52.160 --> 0:12:55.720 that the expected rebound in demand that it was looking 0:12:55.760 --> 0:12:58.720 for had not yet materialized. Is the tone changing here 0:12:58.760 --> 0:12:59.720 from Home Depot? 0:13:00.559 --> 0:13:04.520 Well, Scarlett I would say the tone really hasn't changed 0:13:04.600 --> 0:13:08.520 in a meaningful way. Everyone's trying to make sense of 0:13:08.559 --> 0:13:11.040 the economic moment that we're in. I mean, you were 0:13:11.080 --> 0:13:13.800 just talking about economic data that we got this morning 0:13:13.840 --> 0:13:15.960 that had some puts and takes in it when you 0:13:16.040 --> 0:13:19.400 look at job openings versus layoffs, and I would say that, 0:13:19.800 --> 0:13:25.160 like pretty much any economically sensitive company right now, Home 0:13:25.200 --> 0:13:28.280 Depot is facing some puts in takes as well. So 0:13:28.640 --> 0:13:32.560 they gave an outlook for comparable sales next year. They 0:13:32.600 --> 0:13:36.439 are preliminary views. They'll be flat to up two percent. 0:13:37.240 --> 0:13:40.360 That's lower than what Wall Street was looking for. But 0:13:40.440 --> 0:13:45.240 then they also gave this market recovery scenario where there's 0:13:45.320 --> 0:13:47.840 a bit more of a rebound in the US housing market, 0:13:47.920 --> 0:13:51.800 more demand for home improvement, and in that scenario, comparable 0:13:51.800 --> 0:13:55.080 sales would beat estimates at up four percent to five percent. 0:13:56.200 --> 0:13:58.160 You know, you zoom out and you've got a picture 0:13:58.200 --> 0:14:01.559 where mortgage rates have come down, but consumers are still 0:14:01.640 --> 0:14:04.880 under pressure. Housing prices are still high, and so are 0:14:04.960 --> 0:14:10.920 rates you know historically, and so you've got the consumer 0:14:11.000 --> 0:14:13.600 trying to muddle through, companies trying to make sense of it, 0:14:13.640 --> 0:14:15.520 and investors trying to make sense of it. You've got 0:14:15.520 --> 0:14:17.839 the stock down a little bit pre market and now 0:14:17.920 --> 0:14:18.679 just about flat on. 0:14:18.640 --> 0:14:22.480 The day, four hundred and seventy thousand employees at home Depot. 0:14:22.520 --> 0:14:24.640 That is amazing, But I don't think I could gave 0:14:24.680 --> 0:14:26.240 a job there because I really don't know a hammer 0:14:26.240 --> 0:14:26.880 from a screwdrive. 0:14:26.960 --> 0:14:29.040 Okay, so back up a little bit, because Paul's goal 0:14:29.080 --> 0:14:31.440 is to become a greeter at Walmart down the road. Like, 0:14:31.480 --> 0:14:33.040 that's what he that's his dream job. 0:14:32.920 --> 0:14:35.600 That's the final career. 0:14:35.280 --> 0:14:36.480 Path, final destination. 0:14:37.920 --> 0:14:40.480 So what are they saying about just the consumer behavior 0:14:40.600 --> 0:14:41.080 these days? 0:14:41.200 --> 0:14:43.840 I mean, interest rates are still high. 0:14:43.920 --> 0:14:49.400 Are people still working on their homes, you know, the professional. 0:14:48.920 --> 0:14:50.440 Versus the private? 0:14:50.680 --> 0:14:52.000 What's going on with their core customer? 0:14:52.680 --> 0:14:56.720 Yes, So we can actually look back to a few 0:14:56.760 --> 0:15:00.360 weeks ago when they reported earnings and actually cut their 0:15:00.400 --> 0:15:05.120 profit outlook for this year. What we saw in was 0:15:05.160 --> 0:15:08.880 a continuation of trends at the company, which is you 0:15:09.000 --> 0:15:14.280 have flagging demand for some of the bigger ticket home remodels. Again, 0:15:14.320 --> 0:15:18.840 because there's pressure on consumers, people are not taking on 0:15:18.920 --> 0:15:21.920 big projects, projects that require financing. At the same time, 0:15:21.960 --> 0:15:26.960 they are shifting maybe into projects like gardening, smaller projects. 0:15:27.000 --> 0:15:28.960 So it's not that people don't want to do anything. 0:15:29.040 --> 0:15:32.680 It's that people are maybe the doing the home remodeling 0:15:32.720 --> 0:15:36.680 equivalent of trading down here, which is a trend that 0:15:36.720 --> 0:15:39.640 we've seen in other corners of the economy. For example, 0:15:39.760 --> 0:15:42.640 Walmart's business holding up. You know, if you want that 0:15:42.720 --> 0:15:47.160 greater job, it might be open for you because consumers 0:15:47.160 --> 0:15:49.800 are trading down. That's good for Walmart's business, it's good 0:15:49.840 --> 0:15:53.360 for a segment of Home depots business, but not enough 0:15:53.400 --> 0:15:56.560 to support the overall outlook so far. And if you 0:15:56.640 --> 0:16:01.640 look at these slides from their analyst today, they see 0:16:02.480 --> 0:16:06.800 pressures continuing, including high home prices, and that's weighing on 0:16:06.840 --> 0:16:07.440 consumers here. 0:16:07.520 --> 0:16:11.760 Yeah, the affordability crisis strikes again. So, Matthew, I'm looking 0:16:11.800 --> 0:16:14.560 at Loads shares, which are of course a competitor to 0:16:14.600 --> 0:16:17.960 Home Depot down at the moment as Home Depot's basically unchanged. 0:16:18.240 --> 0:16:21.480 Do we presume that these same headwinds that are dogging 0:16:21.520 --> 0:16:24.560 Home Depot are the same that kind of our clouding 0:16:24.640 --> 0:16:26.440 the outlook for our LOWS or does Loads have a 0:16:26.520 --> 0:16:27.480 different approach? 0:16:28.920 --> 0:16:33.040 Interestingly, you know, they both serve similar corners of the 0:16:33.080 --> 0:16:37.880 market home improvement. So far, it does seem like LOWS 0:16:37.880 --> 0:16:40.040 has fared a little bit better this year, at least 0:16:40.040 --> 0:16:42.360 with how investors have viewed the way they've been managing 0:16:42.400 --> 0:16:46.400 through their shares currently down about two percent on the year, 0:16:46.840 --> 0:16:50.080 compared to down ten percent for Home Depot. If you 0:16:50.120 --> 0:16:52.960 look at that reaction today, it's possible investors are thinking 0:16:53.920 --> 0:16:58.560 there could be some of the same headwinds in their future. 0:16:59.200 --> 0:17:01.440 But again, it do us seem like they've gotten a 0:17:01.440 --> 0:17:02.640 little bit more of a pass so far. 0:17:03.600 --> 0:17:05.880 I about tariffs here, What's what are the companies saying 0:17:05.920 --> 0:17:08.440 about tariffs and their ability to deal with them? 0:17:08.520 --> 0:17:12.720 So so far, the companies in their commentary have really 0:17:12.840 --> 0:17:18.680 focused on the state of the consumer rather than directly 0:17:19.320 --> 0:17:22.120 talking or at least talking constantly about tariffs. I would 0:17:22.200 --> 0:17:27.560 say though, that Home Depot did call out high building 0:17:27.640 --> 0:17:32.720 material costs as a reason that consumers are deferring home 0:17:32.720 --> 0:17:36.840 improvement projects, So you know, you do think about tariffs 0:17:36.880 --> 0:17:39.880 on lumber things like that. That doesn't help that side 0:17:39.880 --> 0:17:40.359 of the equation. 0:17:40.960 --> 0:17:44.120 Stay with us. More from Bloomberg Intelligence coming up after this. 0:17:48.000 --> 0:17:51.680 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:51.760 --> 0:17:54.880 weekdays at ten am Eastern on Apple, Cocklay and Android 0:17:54.880 --> 0:17:58.200 Auto with the Bloomberg Business app. Listen on demand wherever 0:17:58.240 --> 0:18:01.360 you get your podcasts, or that's just live on YouTube. 0:18:02.000 --> 0:18:04.080 We want to talk about Campbell's. The company came out 0:18:04.080 --> 0:18:06.800 with its fiscal first quarter earnings. Both the top line 0:18:06.840 --> 0:18:09.720 and the bottom line beat analy assessments, but the direction 0:18:09.800 --> 0:18:13.000 of travel for revenue profit is still lower. Let's bring 0:18:13.040 --> 0:18:17.520 in Diana Rosera, pennacious Bloomberg Intelligence consumer staples analysts on 0:18:17.680 --> 0:18:20.280 the latest on Campbell's and of course the package foods 0:18:20.280 --> 0:18:25.120 industry overall. So Campbell's has two businesses, the snacks business 0:18:25.160 --> 0:18:27.920 and the meals and beverages portfolio. How are the two 0:18:27.960 --> 0:18:30.680 businesses doing, Diana, Well, they are just. 0:18:30.920 --> 0:18:33.439 Put some takes on both of them. You know, for 0:18:33.520 --> 0:18:37.959 meals and beverages, there's some headwinds on ready to serve soup, 0:18:38.160 --> 0:18:42.119 whereas broth and condensed soup, which is usually used in cooking, 0:18:42.640 --> 0:18:46.000 is improving. You know, you have V eight, which is 0:18:46.040 --> 0:18:48.440 not really it's a brand that is not really doing 0:18:48.480 --> 0:18:50.120 that well so. 0:18:51.640 --> 0:18:54.560 Well to me. To me, that's like my healthy eating 0:18:54.560 --> 0:18:56.720 for the day. Drink a little one in the morning. 0:18:56.800 --> 0:18:58.119 When you're on the plane, You'll get a VA and 0:18:58.160 --> 0:18:58.760 you're like, I'm. 0:18:58.600 --> 0:19:01.159 Good, I'm good, I'm good. That's WoT. No need to 0:19:01.200 --> 0:19:02.560 go to the gym on exactly. 0:19:02.800 --> 0:19:08.040 So, but it's still facing some headwinds for snacks. It's 0:19:08.080 --> 0:19:11.520 it's kind of I found out odd because there seems 0:19:11.560 --> 0:19:15.119 to be a bifurcation of the consumer trends here. You 0:19:15.200 --> 0:19:20.440 have salty snacks being you know, challenged by people trying 0:19:20.480 --> 0:19:24.199 to eat healthier, reducing their sodium, but then you have 0:19:24.280 --> 0:19:29.040 cookies outperforming. So I guess it's the salad with the fries. 0:19:28.960 --> 0:19:30.280 All right, which I love. 0:19:30.320 --> 0:19:31.840 By the way, Yes, yeah, absolutely. 0:19:32.480 --> 0:19:35.120 Campbell Wills agreed to take a forty nine percent stake 0:19:35.160 --> 0:19:38.120 in Lot Regina. What is law Regina? What's Campbell's trying 0:19:38.160 --> 0:19:38.520 to do here? 0:19:38.760 --> 0:19:42.680 Yeah, so that is the supplier for REOs, which they 0:19:42.720 --> 0:19:46.639 bought it a year or so ago, and that it 0:19:46.760 --> 0:19:49.480 makes it kind of like have a little bit more 0:19:49.480 --> 0:19:53.320 control on the supply side. There has been some headwinds 0:19:53.359 --> 0:19:57.680 on this brand because tomatoes are being exported or imported 0:19:57.760 --> 0:20:01.080 to the United States, so they have to face some tariffs. 0:20:01.119 --> 0:20:04.359 So you know, with this they're trying to not only 0:20:04.400 --> 0:20:06.520 offset tyres, but have a little bit more on the 0:20:07.080 --> 0:20:09.280 supply chain, have a little bit more control on that. 0:20:09.320 --> 0:20:10.440 Here's my Rao story. 0:20:10.520 --> 0:20:13.320 I mean it's for people to arn't in New York City. 0:20:13.359 --> 0:20:15.000 It's a very famous restaurant in New York. It's very 0:20:15.000 --> 0:20:17.399 difficult to get a table there, to get a reservation. 0:20:18.400 --> 0:20:20.800 On my thirty years of Wall Street, I've asked people 0:20:21.200 --> 0:20:23.040 to take me. Who I know go there to take me. 0:20:23.240 --> 0:20:26.000 I haven't gone once. Really, Yeah, I mean it is impossible. 0:20:26.080 --> 0:20:28.080 Like I never asked people to take me out on 0:20:28.080 --> 0:20:30.439