WEBVTT - US Banks Post Mixed Earnings Results 0:00:02.730 --> 0:00:04.410 Bloomberg Audio Studios. 0:00:04.890 --> 0:00:05.569 Podcasts. 0:00:05.890 --> 0:00:06.410 Radio. 0:00:06.850 --> 0:00:07.250 News. 0:00:09.750 --> 0:00:13.460 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:13.540 --> 0:00:16.580 weekdays at 10 a.m. Eastern on Apple CarPlay and Android 0:00:16.640 --> 0:00:19.939 Auto with the Bloomberg Business App. Listen on demand wherever 0:00:19.980 --> 0:00:23.080 you get your podcasts or watch us live on YouTube. 0:00:24.560 --> 0:00:27.300 Given that we have just started earnings season, banks kicked 0:00:27.320 --> 0:00:31.200 things off. Four big banks reporting this morning. Their share 0:00:31.220 --> 0:00:33.300 prices are kind of all over the place, Alexis, given 0:00:33.340 --> 0:00:34.000 the results they've delivered. 0:00:34.020 --> 0:00:35.199 Yeah, I think it's hard to get a handle on what, 0:00:35.229 --> 0:00:38.130 you know, because initially J.P. Morgan had a big leg down, 0:00:38.150 --> 0:00:41.010 then it was up. Now it's sort of, you know, meh, 0:00:41.510 --> 0:00:43.470 I guess is the technical term. So, yeah, it's hard 0:00:43.490 --> 0:00:44.630 to wrap our heads around it. 0:00:44.710 --> 0:00:45.669 How do you quantify meh? 0:00:47.590 --> 0:00:49.089 I think we should ask Herman Chan. 0:00:49.330 --> 0:00:52.410 Let's do that. Herman Chan is our senior analyst covering U.S. 0:00:52.850 --> 0:00:55.400 banks for Bloomberg Intelligence. He's here with us in studio. 0:00:55.800 --> 0:00:58.500 And Herman, if you had to kind of summarize everything, 0:00:58.560 --> 0:01:01.160 what's the takeaway from the four big banks' earnings reports 0:01:01.200 --> 0:01:01.600 this morning? 0:01:01.620 --> 0:01:01.779 Yeah. 0:01:01.960 --> 0:01:05.660 Takeaway is that equity trading performance continues to be robust. 0:01:06.380 --> 0:01:08.910 Recall the second quarter, the banks really blew out the 0:01:08.930 --> 0:01:12.470 equity trading front. It did slow down from a quarter-to-quarter basis, 0:01:12.530 --> 0:01:17.000 but still... David Solomon mentioned CEO Goldman Sachs. We're in 0:01:17.050 --> 0:01:20.690 a sort of top quartile trading environment versus a top 0:01:20.850 --> 0:01:22.450 decile previously. 0:01:22.530 --> 0:01:23.410 So, you know. 0:01:23.490 --> 0:01:27.650 From a longer-term view, trading results really look good. That 0:01:27.670 --> 0:01:29.970 being said, fixed income trading slowed down a little bit 0:01:30.900 --> 0:01:36.600 in the third quarter. That's weighing on stocks like Wells Fargo, JP. 0:01:36.819 --> 0:01:40.260 It was down in earlier reporting due to that fact 0:01:40.300 --> 0:01:41.000 of the FICMIS. 0:01:41.970 --> 0:01:44.229 But Herman, if you take a look at Citigroup, of course, 0:01:44.300 --> 0:01:47.760 fixed income traders posting their highest revenue in at least 0:01:47.920 --> 0:01:51.520 a decade, was this just that expectations were lower for 0:01:51.540 --> 0:01:53.500 them so they met that bar? Or is it that 0:01:53.540 --> 0:01:56.419 they're doing something that the other banks maybe could learn from? 0:01:56.600 --> 0:01:57.220 Yeah, that's right. 0:01:57.980 --> 0:02:00.690 Citi definitely bucked the trend in terms of fixed income trading. 0:02:01.190 --> 0:02:05.130 Stronger on FIC relative to expectations, weaker on equities relative 0:02:05.170 --> 0:02:08.450 to expectations. So They were a bit of an outlier, 0:02:08.530 --> 0:02:14.400 whereas banks like Goldman and JP really beat on the 0:02:14.480 --> 0:02:17.200 equity side, but were a bit softer on fixed income trading. 0:02:17.750 --> 0:02:19.810 Do we know if that's because they gained market share 0:02:19.880 --> 0:02:21.900 or stole market share from someone else, or have they 0:02:21.980 --> 0:02:26.959 just really improved their approach to or their business for 0:02:26.980 --> 0:02:27.840 that particular part? 0:02:27.860 --> 0:02:29.700 Yeah, I think we'll hear more about that on the 0:02:29.820 --> 0:02:33.989 earnings call when that happens later this morning. I would 0:02:34.040 --> 0:02:37.929 say that predominantly for the ones that did show a 0:02:37.950 --> 0:02:40.290 bit weaker results, a lot of that was driven by... 0:02:40.910 --> 0:02:45.250 Really expectations across the market of higher, longer rate environment. 0:02:45.389 --> 0:02:48.130 It didn't create a lot of opportunities in areas like 0:02:48.570 --> 0:02:54.560 government trading and rates trading. So that could dampen expectations 0:02:54.620 --> 0:02:59.600 going forward for the market's revenue. But overall, the power 0:02:59.720 --> 0:03:02.460 from the trading business continues to be on the equity side. 0:03:02.810 --> 0:03:04.310 I know we're going to hear from Bank of America 0:03:04.430 --> 0:03:07.109 and Morgan Stanley tomorrow, but from the four banks that 0:03:07.150 --> 0:03:10.960 reported today, are they all pretty bullish about the future? 0:03:11.000 --> 0:03:12.060 What's their outlook like? 0:03:12.280 --> 0:03:14.480 Yeah, so I would say that J.P. 0:03:14.520 --> 0:03:19.420 Morgan lifted their guidance for, actually introduced their guidance for 0:03:19.500 --> 0:03:23.030 net interest income for the following year. And those numbers 0:03:23.130 --> 0:03:27.430 look a bit higher than expectations across consensus. So that's 0:03:27.490 --> 0:03:30.410 a positive sign. They talked about growth in net interest income. 0:03:30.490 --> 0:03:34.970 That's just general forecast. growth from higher interest rates. That's 0:03:35.000 --> 0:03:38.600 helpful for their balance sheet and also just growth in 0:03:38.660 --> 0:03:42.980 loans and deposits. And they saw some growth in low-yielding 0:03:43.080 --> 0:03:44.780 or low-cost deposits as well. 0:03:44.860 --> 0:03:47.339 So, that all bodes well for margin at NII. 0:03:48.670 --> 0:03:50.690 I have a question for you about Wells Fargo, because 0:03:50.770 --> 0:03:52.670 for a number of years, it was operating under this 0:03:52.830 --> 0:03:54.170 asset cap imposed. 0:03:53.850 --> 0:03:56.010 By the Federal Reserve. And that was lifted, I believe, 0:03:56.050 --> 0:03:59.450 last year. What's changed? Has it taken advantage of the 0:03:59.490 --> 0:04:00.690 fact that it can now grow? 0:04:01.050 --> 0:04:01.290 Yes. 0:04:01.390 --> 0:04:05.990 So Wells Fargo has been on this journey of getting 0:04:06.070 --> 0:04:09.250 back some of the market share that they lost in 0:04:09.440 --> 0:04:14.640 areas like trading and just general banking, where they weren't 0:04:14.740 --> 0:04:17.280 growing as fast as their peer group due to that 0:04:17.380 --> 0:04:18.600 asset cap that you mentioned. 0:04:19.000 --> 0:04:19.880 And that's happening. 0:04:21.360 --> 0:04:24.000 Balance sheet growth was actually a bit softer for Wells 0:04:24.060 --> 0:04:28.460 this year, this quarter, particularly in commercial lending. So we'll 0:04:28.500 --> 0:04:31.580 hear more about that on the earnings call. But the 0:04:31.640 --> 0:04:34.150 general trend is that they're growing much faster in the 0:04:34.210 --> 0:04:36.570 markets business and in commercial lending. 0:04:37.529 --> 0:04:40.350 Stay with us. More from Bloomberg Intelligence coming up after this. 0:04:44.510 --> 0:04:47.089 You're listening to the Bloomberg Intelligence Podcast. 0:04:47.430 --> 0:04:49.310 Catch us live weekdays at 10 a.m. 0:04:49.370 --> 0:04:52.640 Eastern on Apple CarPlay and Android Auto with the Bloomberg 0:04:52.660 --> 0:04:55.720 Business App. Listen on demand wherever you get your podcasts 0:04:56.080 --> 0:04:57.760 or watch us live on YouTube. 0:04:59.180 --> 0:05:01.359 Of course, it's not just the big banks that have reported. 0:05:01.460 --> 0:05:03.789 Domino's Pizza also reported results. 0:05:04.130 --> 0:05:05.630 Let's bring in our Michael Halen. 0:05:05.970 --> 0:05:08.910 He's our senior restaurant and food service analyst at Bloomberg 0:05:08.950 --> 0:05:12.890 Intelligence joining us from Princeton, New Jersey. Domino's shares down 0:05:12.910 --> 0:05:16.890 about 3.7% this morning. What did we learn from the company? 0:05:18.460 --> 0:05:21.710 You know, the earnings call wasn't all that encouraging. You know, 0:05:21.750 --> 0:05:26.450 same-store sales missed estimates came in pretty weak. You know, 0:05:26.470 --> 0:05:30.610 the fourth quarter guide is still kind of wide for 0:05:30.710 --> 0:05:35.110 our tastes. You know, discounting efforts to bring people in 0:05:35.810 --> 0:05:40.640 via discounting are boosting traffic, but they're hurting average checks. 0:05:40.700 --> 0:05:41.860 You know, management cited. 0:05:43.550 --> 0:05:47.190 You know, less items per order. So that's how they're 0:05:47.210 --> 0:05:50.729 seeing their low-income consumers and middle-income consumers cut back is 0:05:50.770 --> 0:05:56.120 by just ordering less items when they do order from Domino's. 0:05:56.500 --> 0:05:58.740 You know, and we have concerns about the fourth quarter. So, 0:05:59.120 --> 0:06:02.570 you know, their new product, the Domino, is a personal... 0:06:02.630 --> 0:06:08.300 Detroit style pizza. Um, what's problematic here for us is 0:06:08.390 --> 0:06:09.980 it's at a lower price point. 0:06:10.080 --> 0:06:13.560 So we think this is going to continue to pressure check. 0:06:13.800 --> 0:06:14.040 Right. 0:06:14.100 --> 0:06:19.060 And so, you know, you know, we're not too optimistic 0:06:19.140 --> 0:06:23.170 here that dominoes can get back to, you know, two 0:06:23.210 --> 0:06:26.250 to 3% seam source sales growth, especially as they're going 0:06:26.270 --> 0:06:28.910 to be lapping a pretty strong, uh, comp here in 0:06:28.950 --> 0:06:29.610 the fourth quarter. 0:06:30.310 --> 0:06:34.480 So, Michael, is this a Domino's pizza problem, or are 0:06:34.500 --> 0:06:37.120 they just sort of in the same boat with the competition? 0:06:37.339 --> 0:06:40.219 I'm thinking, you know, Papa John's, Pizza Hut. Are they 0:06:40.400 --> 0:06:43.580 all just struggling for market share, a market share that 0:06:43.620 --> 0:06:46.620 continues to dwindle as people eat out less? I guess 0:06:46.640 --> 0:06:49.540 when they do, what are they choosing, protein over pizza? 0:06:51.339 --> 0:06:53.400 You know, for the names, that's part of it. Yes, 0:06:53.430 --> 0:06:55.730 protein over pizza, you know, protein's hot right now. But, 0:06:55.770 --> 0:06:59.590 you know, these companies that you mentioned earlier, are all 0:06:59.870 --> 0:07:04.390 over-indexed to low-income consumers. And that's the segment of the 0:07:04.430 --> 0:07:06.909 consumer that is struggling the most. 0:07:06.930 --> 0:07:08.969 And so I think that's why you're seeing the struggles. 0:07:09.860 --> 0:07:14.900 Domino's has outperformed Papa John's and Pizza Hut for some time. 0:07:15.360 --> 0:07:18.960 And part of their issues are lapping very strong success 0:07:19.000 --> 0:07:22.570 from last year. They expanded into DoorDash last year. They 0:07:22.770 --> 0:07:26.950 they also debuted the stuffed crust pizza, which we think 0:07:28.190 --> 0:07:30.250 which was very good. And we don't think the Domino 0:07:30.310 --> 0:07:33.010 is going to be nearly as strong for them. So 0:07:33.670 --> 0:07:36.690 partly Domino's is is a victim of its own success. 0:07:36.740 --> 0:07:42.780 But there's competition everywhere. You know, Casey's General Stores apparently 0:07:42.820 --> 0:07:46.690 has has a very good pizza out there. You know, 0:07:47.170 --> 0:07:50.150 it's just a very difficult segment of the market and 0:07:50.470 --> 0:07:53.770 it's exacerbated when you're mainly serving low and middle income consumers. 0:07:54.010 --> 0:07:55.690 I like what you said about they're over indexed to 0:07:55.730 --> 0:07:59.410 lower income consumers. We've seen other consumer facing companies solve 0:07:59.450 --> 0:08:04.350 that by really catering to premium customers and getting chasing 0:08:04.450 --> 0:08:07.020 that segment of the market. Do we presume that that's 0:08:07.060 --> 0:08:09.360 something Domino's will likely chase as well? 0:08:11.310 --> 0:08:13.990 Well, they are, and they are doing that by going 0:08:14.090 --> 0:08:18.030 to Uber Eats and then DoorDash. That's their way of 0:08:18.110 --> 0:08:22.210 trying to get more higher-income consumers. 0:08:23.310 --> 0:08:24.580 Under their umbrella, right? 0:08:24.640 --> 0:08:26.240 And so they're going to continue to market that. 0:08:26.280 --> 0:08:27.940 They're going to continue to push that. 0:08:29.200 --> 0:08:30.980 What they said on the call was that they still 0:08:31.020 --> 0:08:36.660 don't have their fair share of that third-party marketplace aggregator market. 0:08:37.320 --> 0:08:39.079 And so they're going to continue to spend money there 0:08:39.120 --> 0:08:41.069 to try to attract higher-income consumers, yeah. 0:08:41.520 --> 0:08:43.190 And I guess Domino's is not going to be opening 0:08:43.230 --> 0:08:46.510 up as many new stores as it had hoped or 0:08:46.710 --> 0:08:49.410 as it was expecting to in this year. 0:08:49.450 --> 0:08:50.100 What did they say? 0:08:50.120 --> 0:08:56.819 Yeah, that was probably the biggest red flag on the call, right? 0:08:56.840 --> 0:08:57.120 Yeah. 0:08:58.280 --> 0:09:01.280 Domino's has had strong net unit growth for years, and 0:09:01.320 --> 0:09:05.130 that's kind of something that investors in Wall Street has 0:09:05.190 --> 0:09:09.270 banked on year after year. And, you know, their commentary about, 0:09:09.290 --> 0:09:15.170 you know, franchisees, franchisee profitability dropping and that impacting net 0:09:15.410 --> 0:09:19.630 unit growth. I don't think was taking taken very well 0:09:19.710 --> 0:09:21.510 by the street. And I think that's a big reason 0:09:21.580 --> 0:09:23.160 why the stock is down so much. 0:09:23.240 --> 0:09:23.440 Right. 0:09:23.480 --> 0:09:26.840 I think there's some concern now that, you know, number one, 0:09:26.860 --> 0:09:30.040 they're not going to hit their 125 to 105, 150 U.S. 0:09:30.240 --> 0:09:32.410 Store goal for this year. 0:09:32.450 --> 0:09:36.010 But that net unit growth as a system may come 0:09:36.090 --> 0:09:39.569 in lighter next year than investors had expected. 0:09:40.440 --> 0:09:42.720 And before we let you go, Michael, just a quick 0:09:42.780 --> 0:09:45.000 roundup of what you think we might expect when Jersey 0:09:45.059 --> 0:09:47.110 Mike's reports. And I believe this is the first earnings 0:09:47.120 --> 0:09:48.810 report as a publicly traded company. 0:09:51.750 --> 0:09:54.069 Yeah, they've reported that this will be the second. 0:09:54.730 --> 0:09:56.510 They were a little bit off cycle, so you might 0:09:56.550 --> 0:09:59.450 have missed it. Yeah, they reported a little bit late. 0:09:59.490 --> 0:09:59.989 I guess they got it. 0:10:01.140 --> 0:10:04.350 The chance to do that since they IPO'd. You know, 0:10:04.830 --> 0:10:06.730 what we are expecting, you know, what we think is 0:10:06.809 --> 0:10:09.030 unique about this name, which we know is unique about 0:10:09.050 --> 0:10:11.450 this name, is that it's one of the few fully 0:10:11.510 --> 0:10:14.880 franchised businesses that are experiencing growth. 0:10:15.360 --> 0:10:15.460 Oh. 0:10:15.620 --> 0:10:16.430 Like strong growth. 0:10:16.480 --> 0:10:18.640 We're talking about 8% to 10% net unit growth. We're 0:10:18.660 --> 0:10:21.900 talking 3% to 4% same-store sales growth. We think marketing 0:10:21.920 --> 0:10:25.760 is going to, you know, get them same-store sales that 0:10:25.800 --> 0:10:27.600 are better than the street expects. 0:10:28.720 --> 0:10:31.559 Stay with us. More from Bloomberg Intelligence coming up after this. 0:10:35.660 --> 0:10:39.339 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:10:39.440 --> 0:10:42.460 weekdays at 10 a.m. Eastern on Apple CarPlay and Android 0:10:42.520 --> 0:10:45.820 Auto with the Bloomberg Business App. Listen on demand wherever 0:10:45.860 --> 0:10:48.920 you get your podcasts or watch us live on YouTube. 0:10:50.380 --> 0:10:51.660 This is Bloomberg Intelligence. 0:10:51.720 --> 0:10:54.439 Alexis Kristoforos and Scarlett Fu here with you as Paul 0:10:54.460 --> 0:10:57.470 Sweeney is off. He's actually in Europe and I wonder 0:10:57.500 --> 0:10:58.490 if he's doing any shopping. 0:10:58.990 --> 0:11:00.850 Oh, I have a feeling the person he's with is 0:11:00.890 --> 0:11:01.870 doing some shopping. 0:11:03.280 --> 0:11:05.640 Certainly, he can enjoy the strong dollar versus the euro 0:11:05.660 --> 0:11:09.830 because that's been a theme here as political concerns drive 0:11:09.990 --> 0:11:13.630 that euro weaker. The reason we're talking about shopping in 0:11:13.750 --> 0:11:16.830 Europe is because LVMH has come out with results. This 0:11:16.890 --> 0:11:21.130 is the French luxury giant, LVMH Moet Hennessy Louis Vuitton. 0:11:21.150 --> 0:11:22.270 It's a mouthful. 0:11:23.110 --> 0:11:25.429 And their results kind of give us a sense of 0:11:25.510 --> 0:11:28.860 what the Chinese consumer is doing and what especially consumers 0:11:28.920 --> 0:11:31.520 who are visiting Europe are doing with their purchases as well. 0:11:31.580 --> 0:11:35.079 Deb Akin is our Bloomberg Intelligence Luxury Goods Analyst, and 0:11:35.120 --> 0:11:38.520 she joins us now from London. Deb, what did LVMH's 0:11:38.570 --> 0:11:40.530 latest results tell us? 0:11:40.550 --> 0:11:42.609 Hi. 0:11:43.950 --> 0:11:47.550 Yeah, so we had the third quarter sales figure. 0:11:48.490 --> 0:11:50.849 The first to report, and they'll be joined by a 0:11:50.890 --> 0:11:53.880 raft of a dozen companies over the next couple of weeks. 0:11:55.030 --> 0:11:59.179 The big takeaway from positive stance is that the US 0:11:59.380 --> 0:12:05.160 is robust. We saw growth of 5%, Europe 4%, Japan 6%. 0:12:05.160 --> 0:12:07.250 The area that isn't is Asia. 0:12:07.140 --> 0:12:11.370 ex-Japan, where China has continued on the back of the 0:12:11.410 --> 0:12:16.290 macro environment to trend down. So we actually saw mid-teens 0:12:16.350 --> 0:12:21.790 decline in in China overall, which brought Asia X Japan 0:12:21.809 --> 0:12:22.150 down to. 0:12:24.300 --> 0:12:25.059 Minus 5%. 0:12:25.059 --> 0:12:31.440 And what we're seeing there is more price cyclicality, really 0:12:31.660 --> 0:12:35.880 locals and newness fighting over traditional styles. 0:12:37.250 --> 0:12:38.930 We ran surveys. 0:12:38.610 --> 0:12:41.750 Actually as a department through August, and there's a lot 0:12:41.770 --> 0:12:46.760 of detail on terminal on which brands, which bags, which 0:12:46.860 --> 0:12:51.819 categories are doing best. And there was a noticeable shift 0:12:51.900 --> 0:12:57.059 towards more affordable product. Whereas for Louis Vuitton, for example, 0:12:57.120 --> 0:12:59.140 they would hold and say, you know, we're in this 0:12:59.179 --> 0:13:00.020 for the long term. 0:13:00.660 --> 0:13:04.160 Our product is worth, our design is worth what it is. 0:13:04.940 --> 0:13:08.239 And we're doing so much more to stimulate the economy 0:13:08.380 --> 0:13:11.920 to make good and to do well with the local shopper. 0:13:12.590 --> 0:13:14.950 And I think that that will be something that will. 0:13:14.830 --> 0:13:18.290 Feed through this earnings season as we progress over the 0:13:18.350 --> 0:13:19.910 next couple of weeks out of China. 0:13:20.309 --> 0:13:23.530 Deb, I'm just looking at the brands that fall under LVMH. 0:13:23.570 --> 0:13:28.880 There are 75 luxury brands divided into six core business categories. 0:13:28.920 --> 0:13:30.780 One of them, of course, being fashion and leather, but 0:13:30.820 --> 0:13:34.620 they've also got perfume and cosmetics, wines and spirits. Don't 0:13:34.660 --> 0:13:36.420 mean to catch you off guard, but was there anything 0:13:36.540 --> 0:13:39.520 in there that was showing real promise or strength in 0:13:39.559 --> 0:13:40.340 this latest report? 0:13:41.230 --> 0:13:42.070 Yeah, absolutely. 0:13:42.170 --> 0:13:44.790 And really outside of fashion and leather, the big thing 0:13:44.850 --> 0:13:46.709 on fashion and leather is that it has a big 0:13:46.850 --> 0:13:48.770 exposure to China. 0:13:49.670 --> 0:13:53.469 And a lot of volume from the Louis Vuitton bag. 0:13:53.550 --> 0:13:57.150 So if the Louis Vuitton volume is down on the 0:13:57.190 --> 0:13:59.979 bag category, it's going to hit fashion and leather overall. 0:14:01.120 --> 0:14:04.520 But aside from that, yes. If we look across the board, 0:14:04.540 --> 0:14:05.920 we can see. 0:14:08.170 --> 0:14:09.010 Wines and spirits. 0:14:09.350 --> 0:14:13.650 So it's been for the last couple of quarters, improving gradually, 0:14:13.820 --> 0:14:16.620 and that was up 6%. So we're starting to see 0:14:16.720 --> 0:14:21.200 some good numbers come through, sell out and selling equal. 0:14:21.360 --> 0:14:24.160 So we should see some more growth coming forward there. 0:14:25.100 --> 0:14:30.080 Perfume and cosmetics, I kind of feel with the LVMH group, 0:14:30.200 --> 0:14:32.760 also with Hermes and others, they don't do as well 0:14:32.820 --> 0:14:36.740 as a L'Oreal. So perfume and cosmetics up 1%. And 0:14:36.780 --> 0:14:39.380 I think that this is more there's more that these 0:14:39.460 --> 0:14:41.420 companies can do and i think that they will be 0:14:41.480 --> 0:14:44.990 able to do once their bigger market categories have firmed 0:14:45.010 --> 0:14:48.370 themselves up a bit um watches and jewelry up six 0:14:48.410 --> 0:14:51.030 percent we've seen jewelry has been strong across the board 0:14:51.070 --> 0:14:55.600 for so many of these categories including um carrying jewelry 0:14:55.680 --> 0:14:59.060 for example where new companies gucci and others are going 0:14:59.120 --> 0:15:04.210 into this category and are enjoying the huge success that 0:15:04.350 --> 0:15:07.470 Richemont with brands like Cartier, Van Cleef and Arpel and 0:15:07.490 --> 0:15:11.110 others have enjoyed. So, for example, under the LVMH group, 0:15:11.230 --> 0:15:15.820 Bulgari is a big brand and the acquired Tiffany brand, 0:15:15.910 --> 0:15:19.100 which is doing more and more to upscale and doing 0:15:19.140 --> 0:15:21.480 very well on the back of that. And then their 0:15:21.500 --> 0:15:24.040 selective retail in the one big area under there that 0:15:24.100 --> 0:15:29.040 you will know very well, Sephora. So selective retail growth 0:15:29.140 --> 0:15:34.440 is 8% within that area. And also duty-free stores where 0:15:34.460 --> 0:15:37.930 they pulled away from some parts of China with disposals. 0:15:38.330 --> 0:15:42.410 So that's evened out for them there. So everywhere except 0:15:42.450 --> 0:15:46.290 for fashion and leather goods was a positive score. And 0:15:46.330 --> 0:15:49.250 that gave them 1% overall because actually fashion and leather 0:15:49.270 --> 0:15:51.020 goods is their biggest category by far. 0:15:51.600 --> 0:15:56.300 Deb, very quickly, the wobbliness in China means that overall 0:15:56.470 --> 0:15:58.830 LVMH and other brands will need to rely more on 0:15:58.850 --> 0:15:59.410 the U.S. 0:15:59.570 --> 0:16:02.370 Can the U.S. make up for the Chinese market? 0:16:05.010 --> 0:16:06.990 The big thing on China over the last couple of 0:16:07.010 --> 0:16:10.760 years is that we've seen double-digit decline. And actually, I 0:16:10.820 --> 0:16:14.600 made some presentations in September where I actually think we 0:16:14.640 --> 0:16:18.600 get about 6% growth coming solidly the next few years 0:16:18.800 --> 0:16:24.220 from the K-wealth positive curve, the impact out of the US. 0:16:24.860 --> 0:16:29.040 I see the US shifting from 26% to around about 30%, 31% 0:16:29.040 --> 0:16:33.390 of the market overall. Meanwhile, my estimate, China and Chinese 0:16:33.470 --> 0:16:37.890 cluster shoppers across the greater region, pre-COVID used to be 0:16:37.950 --> 0:16:40.290 about a third of sales, including when traveling. 0:16:40.360 --> 0:16:42.860 And I think they're only just over 20% now. 0:16:43.400 --> 0:16:46.640 So in answer to that, yes, with the US solid, 0:16:47.040 --> 0:16:51.360 with Europe robust, another key emerging markets growing, I think 0:16:51.400 --> 0:16:54.100 there's still a way forward for the luxury market until 0:16:54.140 --> 0:16:58.310 China can gradually improve and they can work their products 0:16:58.370 --> 0:17:00.670 directly for the Chinese market as a group. 0:17:01.860 --> 0:17:04.740 Stay with us. More from Bloomberg Intelligence coming up after this. 0:17:08.830 --> 0:17:12.530 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:12.609 --> 0:17:15.649 weekdays at 10 a.m. Eastern on Apple CarPlay and Android 0:17:15.710 --> 0:17:19.020 Auto with the Bloomberg Business app. Listen on demand wherever 0:17:19.060 --> 0:17:22.100 you get your podcasts or watch us live on YouTube. 0:17:23.680 --> 0:17:26.379 We are looking at Netflix making an announcement. And Alexis, 0:17:26.400 --> 0:17:28.209 you mentioned this earlier. It's going to show the 2030 0:17:28.210 --> 0:17:31.850 World Cup in Spain as part of its push to 0:17:32.270 --> 0:17:34.340 add live sports content to its programming. 0:17:34.520 --> 0:17:37.320 Yeah, also has some NFL games. It's got women's FIFA. 0:17:39.200 --> 0:17:41.510 I think some of their games coming to the platform 0:17:41.550 --> 0:17:44.109 as well. So it's really making a huge investment in 0:17:44.150 --> 0:17:44.669 live sports. 0:17:44.830 --> 0:17:46.550 Starting to add up. And of course, that's a lot 0:17:46.570 --> 0:17:47.670 of cash outlay as well. 0:17:47.730 --> 0:17:51.450 Geetha Ranganathan is our Bloomberg Intelligence Analyst on U.S. 0:17:51.510 --> 0:17:51.750 Media. 0:17:51.810 --> 0:17:54.620 And Geetha, just looking at this announcement once again, exclusive 0:17:54.640 --> 0:17:58.420 broadcasting rights for the 2030 FIFA World Cup, Men's FIFA 0:17:58.440 --> 0:18:02.160 World Cup, in Spain and in Dora. It just reminds 0:18:02.180 --> 0:18:03.880 you of how they have to slice and dice these 0:18:03.960 --> 0:18:07.480 deals up so carefully. I mean, this is for two markets, 0:18:07.900 --> 0:18:11.209 not for the 2030 World Cup overall. So there's going 0:18:11.230 --> 0:18:13.530 to be a lot of announcements like this. To negotiate 0:18:13.570 --> 0:18:16.149 something like this takes an incredible amount of time. Is 0:18:16.630 --> 0:18:21.730 something like broadcasting the World Cup going to be something 0:18:21.750 --> 0:18:23.250 that really moves the needle for Netflix? 0:18:24.720 --> 0:18:28.190 Yeah, absolutely, Scarlett. So I think they're making very measured investments, 0:18:28.230 --> 0:18:31.330 very calculated moves here. I think the real, to answer 0:18:31.350 --> 0:18:34.980 your question, it's definitely a big move in Spain. I mean, 0:18:35.060 --> 0:18:37.780 let's remember, these are the defending champions. This is a 0:18:37.840 --> 0:18:42.050 nation that is really, really passionate about the sport. They 0:18:42.090 --> 0:18:45.609 are also one of the hosts of the 2030 FIFA 0:18:45.630 --> 0:18:47.930 Men's World Cup. All of that definitely makes a difference. 0:18:48.070 --> 0:18:51.290 This is a big move for Netflix, at least when 0:18:51.310 --> 0:18:54.429 it comes to advertising. You really get a share of 0:18:54.530 --> 0:18:57.290 eyeballs and you're able to make a pretty big dent 0:18:57.330 --> 0:19:00.300 from an advertising standpoint. Is it going to move the 0:19:00.340 --> 0:19:03.100 needle for them overall? Maybe not. 0:19:03.560 --> 0:19:05.520 I think they need a much bigger splash. 0:19:05.600 --> 0:19:07.920 I think maybe getting the rights to the FIFA World 0:19:08.000 --> 0:19:11.840 Cup in the United States will be something that is really, 0:19:11.900 --> 0:19:14.740 really huge. And we know that that's in negotiation right now. 0:19:15.300 --> 0:19:17.660 But just remember, that's going to be a huge, huge 0:19:17.720 --> 0:19:20.419 price tag. We don't know the financial details behind the 0:19:20.460 --> 0:19:23.780 Spanish broadcasting rights. But we do know what it's going 0:19:23.820 --> 0:19:27.020 to be in the U.S. It's going to be somewhere upwards. 0:19:26.780 --> 0:19:29.050 Of $ 2. 0:19:27.590 --> 0:19:29.290 Billion per tournament. 0:19:29.920 --> 0:19:32.250 So that's a huge step up from what Fox paid 0:19:32.310 --> 0:19:35.550 for this year, which was around $ 485 million. So FIFA 0:19:35.590 --> 0:19:37.670 is really looking to score big. And it's going to 0:19:37.690 --> 0:19:39.460 be interesting to see if Netflix is willing to pay up. 0:19:40.230 --> 0:19:42.290 Now, I'm just taking a look at the stock here, Geetha. 0:19:42.830 --> 0:19:46.450 One-year return down nearly 42 percent. Talking about Netflix here. 0:19:46.470 --> 0:19:49.590 They're out with earnings next, I think it is Tuesday, 0:19:49.650 --> 0:19:49.990 October 21st. 0:19:50.180 --> 0:19:50.420 20th. 0:19:50.980 --> 0:19:53.330 There's been talk about engagement. It's just not where it 0:19:53.369 --> 0:19:55.970 needs to be with Netflix. What are you expecting from 0:19:56.010 --> 0:19:56.909 that profit report? 0:19:58.480 --> 0:20:00.119 Yeah, it's going to be really interesting because as you 0:20:00.140 --> 0:20:03.369 just pointed out, sentiment has been really muted on this talk. 0:20:03.470 --> 0:20:06.229 And yes, it's coming down all to engagement. So we 0:20:06.270 --> 0:20:10.540 really need something to kind of re-energize the growth narrative here. 0:20:10.560 --> 0:20:12.780 You know, when we're kind of looking at the financial metrics, 0:20:12.880 --> 0:20:15.020 revenue growth, we kind of expect it to be in line. 0:20:15.060 --> 0:20:18.709 They're guiding to about 12%. you know, operating margin, all 0:20:18.730 --> 0:20:20.530 of that to be in line, you know, but it's 0:20:20.550 --> 0:20:22.270 going to be interesting to see if they do make 0:20:22.490 --> 0:20:26.550 any major announcements regarding their advertising, how that is progressing. 0:20:26.590 --> 0:20:28.379 They've said a couple of times that they expected to 0:20:28.460 --> 0:20:32.260 hit $ 3 billion this year. Again, I think the market 0:20:32.280 --> 0:20:34.780 will definitely be looking for updates to see if, you know, 0:20:34.880 --> 0:20:37.550 if they're pacing right there on track or if they're 0:20:37.570 --> 0:20:39.730 going to exceed that. And then again, whether they set 0:20:39.790 --> 0:20:44.690 a target for advertising going into 2027. That is also 0:20:44.710 --> 0:20:46.990 going to be something interesting. And also whether they set 0:20:47.070 --> 0:20:50.770 other broader financial targets, whether it's operating margin, which has 0:20:50.810 --> 0:20:53.550 kind of been hovering around 30%, 31%. But I think 0:20:53.590 --> 0:20:55.929 the street really wants to see that get closer to 0:20:55.950 --> 0:20:59.250 about 35%. And then again, revenue growth is the big number. 0:20:59.330 --> 0:21:01.890 Can they hold on to the double-digit gains? This year, 0:21:01.930 --> 0:21:02.970 we know they're going to get to about 13%, 14%. 0:21:02.970 --> 0:21:07.669 Can they keep that same margin? low to mid teens 0:21:07.760 --> 0:21:09.440