Speaker 1: This is Bloomberg Intelligence with Alex Steinhl and Paul'sweenye.
Speaker 2: The real AP performance has been the US corporate high yield.
Speaker 3: Are the companies lean enough? Have they trimmed all the fats?
Speaker 2: The semiconductor business is a really cyclical.
Speaker 1: Business, breaking market headlines and corporate news from across the globe.
Speaker 3: Do investors like the M and A that we've seen?
Speaker 2: These are two big time blue chip companies.
Speaker 3: The window between the peak and cut changing super fast.
Speaker 1: Bloomberg Intelligence with Alex Steinhl and Paul'sweenye.
Speaker 2: On Bloomberg Radio. On Today's Bloomberg Intelligence Show, we dig
Speaker 2: inside the big business stories impacting Wall Street and the
Speaker 2: global markets.
Speaker 3: Each and every week we provide in depth research and
Speaker 3: data on some of the two thousand companies and one
Speaker 3: hundred and thirty industries our analysts cover worldwide.
Speaker 2: Today, we'll take a look at how one company is
Speaker 2: looking to fix your terrible board meetings.
Speaker 3: Plus we'll discuss why many Swings Day voters say they're
Speaker 3: worried about violence surrounding the US presidential election.
Speaker 2: But first we dive into big tech and in Vidia.
Speaker 2: This week, maker gave a bullish forecast for second quarter.
Speaker 3: Revenue Nvidia also reported that its sales in the first
Speaker 3: quarter more than triple to twenty six billion, and this
Speaker 3: shows that spending on artificial intelligence computing remains strong for more.
Speaker 2: We were joined by Kunjon Sobani, Bloomberg Intelligence Senior semiconductor analyst.
Speaker 2: We first asked for his takeaways from Nvidia's results.
Speaker 4: Demand on most of their products keep running ahead of supply.
Speaker 4: We don't see any slowing down in terms of purchasing
Speaker 4: from their customers. In fact, beyond their largest cloud customer,
Speaker 4: enterprise and consumer intern companies are coming in strong, so
Speaker 4: we don't see any sort of big risk that says
Speaker 4: they cannot continue.
Speaker 2: So, Kunjon, I was selling Alexon. When we get smart
Speaker 2: people on like yourself, I like to ask the question
Speaker 2: about competition. I'm kind of surprised that, you know, in
Speaker 2: Nvidia has this competitive leadership position relative to everybody else.
Speaker 2: How proprietary is their chip design versus I don't know
Speaker 2: the AMDs of the world, even as Cisco. What is
Speaker 2: the competitive landscape?
Speaker 4: Yeah, I mean, look, they were I would say almost
Speaker 4: two to even arguably three years ahead of everyone, and
Speaker 4: it's not easy in the chip landscape to catch up
Speaker 4: when someone has that kind of a lead. They have
Speaker 4: actually aggressively gone out and out in it their peers.
Speaker 4: Before they were on an eighteen to twenty four month
Speaker 4: product cycle, Now they are on a twelve month product cycle.
Speaker 4: So they just keep staying ahead of their combination. Their
Speaker 4: combination is trying to catch up. AMD has made significant
Speaker 4: progress and now is another second viral alternative in the market.
Speaker 4: Hence you see that in their significant growth as well.
Speaker 4: But we don't think at this point there is anyone
Speaker 4: else who can rival the total system tco and performance
Speaker 4: that they have.
Speaker 3: I was mentioning earlier that Nvidia gets about forty percent
Speaker 3: its revenue from the big four players, Microsoft, Meta Alphabet,
Speaker 3: and Amazon. What kind of risk is that, if any?
Speaker 4: I mean there have been concerns around it. So there's
Speaker 4: two good data points that came out of this print.
Speaker 4: One that concentration did rid use for the very first time,
Speaker 4: and what we liked it, It was not reduced because
Speaker 4: the cloud guys slowed their purchasing. In fact, those top
Speaker 4: four guys that are expected to increase their capec spent
Speaker 4: by forty five percent this year and they are all
Speaker 4: lined up to purchase its newest Blackwell products. But what
Speaker 4: was good was that the share was taken by strong
Speaker 4: enterprise demand, which we really like because that is much
Speaker 4: more diversified and sticky.
Speaker 2: Kunjan. Let's say I'm at Amazon and I buy one
Speaker 2: of nvidious chips. When do I have to replace it?
Speaker 5: Question?
Speaker 4: There's two answers to it. If we were in a
Speaker 4: normal sector semicaractor cycle like you are in smartphones or PCs,
Speaker 4: the refreshed time would be longer, so I would say
Speaker 4: on ideally three to five years. But what's going on
Speaker 4: right now is all of these customers are just racing
Speaker 4: against each other, so they cannot afford to stop. So
Speaker 4: as soon as a newer, better chip is available that
Speaker 4: they can change, they are going to change.
Speaker 3: What would stop all this? We know that AI is
Speaker 3: going to grow, We know that there will be demand
Speaker 3: for chips. We know all that. That's a structural shift
Speaker 3: within the economy. But what makes it cyclical?
Speaker 4: I think the first point of cyclicality would be when
Speaker 4: the demand momentum stops, which we haven't seen no signs of. Look,
Speaker 4: the supply keeps on coming up, so at some point
Speaker 4: demand is going to be meeting supply. And after that,
Speaker 4: if we see any kind of weakness in demand. Look, look,
Speaker 4: if the largest cloud providers don't see return on that investment,
Speaker 4: don't see monetization benefit, don't see their earnings and revenue
Speaker 4: grow from these investments, that's when we can start worrying
Speaker 4: about sort of a cyclical DOWNTOWND.
Speaker 2: All right, So how else in your universe of semiconductors,
Speaker 2: how else do you if you play this trend?
Speaker 4: Look, it's still Nvidia still remains sort of the best
Speaker 4: pure play AI play in semiconductors. So I don't know
Speaker 4: why you would want to look elsewhere, but if you
Speaker 4: were forced to, we also like you know, players like
Speaker 4: broad Common MA when it comes to AI networking, and
Speaker 4: it comes to the ask chips, which and media's largest
Speaker 4: customers are designing themselves. So these are the two areas
Speaker 4: where we see significant growth coming in over the next
Speaker 4: two years.
Speaker 2: Our thanks to Kunjan Sobani, Bloomberg Intelligence senior semiconductor analysts.
Speaker 3: We move now to the home improvement retailer. Low's Lowe
Speaker 3: said the comparable sales fell four point one percent in
Speaker 3: the first quarter, though they were better than analysts projected.
Speaker 2: This all comes as uncertainty around interest rates and inflation
Speaker 2: continue to weigh on home improvement demand.
Speaker 3: For more on all of this, we were joined by
Speaker 3: Drew Redding, Bloomberg Intelligence US home building analyst.
Speaker 2: First asked Drew for his key takeaways on Loew's most
Speaker 2: recent report.
Speaker 6: Quarter was a little bit of a tug of war
Speaker 6: between sales and margins. Part of that sales performance was
Speaker 6: due to the fact that there was a more promotional
Speaker 6: environment out there. If you think back to when Home
Speaker 6: Deepot reported last week, they cite a late start to
Speaker 6: spring is something that muted sales lows actually said. Spring
Speaker 6: got off to a good start, and that has to
Speaker 6: do with them being more we're aggressive on promotions as
Speaker 6: part of their Spring Fest, and I think that really
Speaker 6: speaks to, you know, what we're seeing really across the
Speaker 6: retail landscape with the consumer, and that's that they're looking
Speaker 6: for value wherever they could get it. Now, they did
Speaker 6: reaffirm their full year operating margin guidance, but that's going
Speaker 6: to require the company to execute on some internal initiatives.
Speaker 6: In the back half of the year. Loses made good
Speaker 6: progress in improving their their margin profile and them narrowing
Speaker 6: the gap with home Depot has really been a key
Speaker 6: that investors have kind of you know, grasped onto. So
Speaker 6: the fact that they're taking a little bit of a
Speaker 6: step back here maybe making them a little bit uneasy.
Speaker 3: How much would the stock have to re rate for
Speaker 3: investors and analysts to say, okay, fine, the margins are suffering,
Speaker 3: but at least the volume and the sales are there.
Speaker 6: Yeah, Well, the stock is still trading above you know,
Speaker 6: the ten year average, even if you go back to
Speaker 6: prior to the pandemic. So from a pure valuation perspective,
Speaker 6: you know, it's still a little bit elevated. The move
Speaker 6: they've made on margins and now rowing the gap with
Speaker 6: Home Depot has been impressive over the last couple of years,
Speaker 6: So I think, you know, the bulls would argue that
Speaker 6: this is kind of a one off, and as we
Speaker 6: get to the back half of the year, margins start
Speaker 6: to improve as they implement some of their PPI initiatives,
Speaker 6: And in terms of sales, you know, we're not expecting
Speaker 6: a huge rebound in sales this year and the second
Speaker 6: half comps will definitely get easier, but even Lows has
Speaker 6: stated that comps may turn positive, but that's not a
Speaker 6: reflection of an improved demand. Environment. It's strictly a reflection
Speaker 6: of easier comps. So we think as we get into
Speaker 6: twenty twenty five, that's when we would expect the market
Speaker 6: to see more of a turn, as we get more
Speaker 6: of a rebound and existing home sales.
Speaker 2: How about lumber, that's something they buy a lot of.
Speaker 2: How's the cost of lumber these days? How's that impacting
Speaker 2: their margins?
Speaker 6: Yeah, lumber is about ten percent of sales for both
Speaker 6: Home Depot and Low's. Lumber was really more of a story.
Speaker 6: Last year was extremely volatile, so you saw the impact
Speaker 6: on the on their top line. There not so much
Speaker 6: of a story this year. I think Cody, particularly lumber
Speaker 6: are going to have less of an impact in the
Speaker 6: near term.
Speaker 3: So you feel like we're not going to really see
Speaker 3: a benefit in hold twenty twenty five. I mean, some
Speaker 3: analysts are looking for the back half of this year
Speaker 3: maybe some improvement, but for you, it's really like a
Speaker 3: year out kind of thing.
Speaker 6: Well, I think as we get to the end of
Speaker 6: this year, I think you'll start to see a little
Speaker 6: bit of a turn, and you know, a lot of
Speaker 6: that is predicated upon with what happens in the housing market. Obviously,
Speaker 6: people are looking for the FED to cut rates at
Speaker 6: some point this year. Obviously not as much as we
Speaker 6: had hoped for previously, but we think that you know,
Speaker 6: when you when you look at existing home sales, we're
Speaker 6: you know, at the lowest levels in you know, more
Speaker 6: than two decades. So there's not a whole lot lower
Speaker 6: we can go absent you know, a broader economic decline
Speaker 6: where you start to see a lot of job loss.
Speaker 6: So we think that you know, if it's come in
Speaker 6: a little bit, you could kind of start to build
Speaker 6: a little momentum ending this year carrying into next year.
Speaker 6: When we think, you know, bigger picture about the home
Speaker 6: improvement market, there's some there's some solid tail winds out there.
Speaker 6: You know, you have homeowners who are sitting on record
Speaker 6: amount of home equity. When you think about you know,
Speaker 6: the rise and home prices we've seen over the last
Speaker 6: several years, you've got an aging housing stock, and I
Speaker 6: think the fact that mobility has been so low is
Speaker 6: going to continue to encourage people to invest in their
Speaker 6: house And I think what kind of triggers that is
Speaker 6: rates coming back in a little bit so you can
Speaker 6: start to tap that equity.
Speaker 2: True, how many stores as lows have and are they
Speaker 2: adding stores, are they pairing backstores? Kind of worthy with
Speaker 2: their store count these days.
Speaker 6: Yeah, so they're under two thousand. It's an interesting dynamic.
Speaker 6: So their competitor, Home Depot, is actually embarking on their
Speaker 6: first store expansion in a long time. Lows, on the
Speaker 6: other hand, has cut back. They got out of their
Speaker 6: Canadian business, which reduced their store count. But what they're
Speaker 6: doing from a store perspective is really introducing new formats.
Speaker 6: So they're starting to go after the rural customer. Their
Speaker 6: stores tend to be located in more rural locations compared
Speaker 6: to Home Depot, which are more densely populated locations, and
Speaker 6: they found success with that, so they're starting to compete
Speaker 6: more with the detractor supplies of the w world. They're
Speaker 6: also introducing Lows outlets, so if you think of, you know,
Speaker 6: appliances that might have things and scratches, you could go
Speaker 6: there and get heavily discounted items. And that's another way
Speaker 6: they're looking to kind of, you know, drive traffic through
Speaker 6: the Low's brand.
Speaker 3: Okay, now you're speaking my language. You put outlet there
Speaker 3: and I'm like, boom, we will go find things that
Speaker 3: are cool.
Speaker 2: I don't do outlets either.
Speaker 3: I know you don't do outlets. That's my thing. It's
Speaker 3: just my thing. Even if I had a bazillion dollars,
Speaker 3: I wouldn't pay full price part of the hunt. Okay,
Speaker 3: AnyWho so drew based on all this, If I wanted
Speaker 3: to play this housing market right now, what is the
Speaker 3: best play? And I say that because it's not like
Speaker 3: the housing market that the demand isn't there, The supply
Speaker 3: might not be there, the costs are a little too high,
Speaker 3: mortgage rates are too high, but eventually it'll normalize. What's
Speaker 3: the best way to capitalize?
Speaker 6: We think right now, kind of sitting at the top
Speaker 6: of the broader housing ecosystem is the home builders. We think,
Speaker 6: you know, from a supply perspective, they're in a good position.
Speaker 6: Their ability to buy down mortgage rates and make payments
Speaker 6: more palatable to the consumers is something that differentiates them
Speaker 6: versus the resale market. They're going to grow community counts
Speaker 6: in the coming year, so we really think that they're
Speaker 6: still in a good position from a competitive perspective. And
Speaker 6: when you look at you know, within the home building space,
Speaker 6: you have the large, well capitalized, publicly traded homebuilders who
Speaker 6: have access to land, access to labor, and you compare
Speaker 6: that versus the smaller private piers, and you have to
Speaker 6: remember home building is a very fragmented industry, particularly outside
Speaker 6: some of the largest markets. But those smaller private peers
Speaker 6: tend to rely on regional banks for growth capital. And
Speaker 6: with you know, a slowing economy and more concern there,
Speaker 6: you're starting to see a poolback and lending. So we
Speaker 6: think it's a good opportunity for those larger builders to
Speaker 6: continue to take share.
Speaker 2: Our thanks to Drew reading Bloomberg Intelligence, US home building analyst.
Speaker 3: All right, coming out, we're going to say on retail
Speaker 3: and breakdown targets quarterly results.
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
Speaker 2: depth research and data on two thousand companies and one
Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via
Speaker 2: bi go on the terminal. I'm Paul Sweeney and.
Speaker 3: I'm Alex Steel, and this is Bloomberg.
Speaker 1: This is Bloomberg Intelligence with Alex Steel and Paul Sweeney
Speaker 1: on Bloomberg Radio.
Speaker 3: We look now at the retailer target. This week, the
Speaker 3: company reported first quarter earnings that missed analyst expectations and
Speaker 3: at sales fell about three percent year over year.
Speaker 2: Target also said it remains cautious on discretionary spending over
Speaker 2: the coming months, despite having optimism for later this year.
Speaker 2: For more, we were joined by Jennifer bartashis Bloomberg Intelligence
Speaker 2: Senior analyst Retail, Staples and packaged Food.
Speaker 3: We first asked jen for her reaction to this week's report.
Speaker 7: Target missed on profit, but they are very optimistic about
Speaker 7: second quarter and for the rest of the year, and
Speaker 7: so I think there's a little bit of reticence about
Speaker 7: how realistic that is when it comes to second quarter
Speaker 7: in terms so same store sales. You know, Target says
Speaker 7: that they're going to return to profit, like they're going
Speaker 7: to return to growth in second quarter. It's feasible, but
Speaker 7: remember last year second quarter is when they had the
Speaker 7: blowback from all of the boycotts, so they have a
Speaker 7: really easy comparison when you talk about a year over year.
Speaker 7: So that return to growth, yes, but there's a caveat
Speaker 7: around it. That means to me that the second half
Speaker 7: is going to be really important if they're going to
Speaker 7: reach those goals that they put out to is the.
Speaker 2: Target shopper the same similar no relation to the Walmart shopper.
Speaker 7: Well, historically speaking, the Target shopper has been a slightly
Speaker 7: higher income household. They tend to be a little bit
Speaker 7: more fashion forward, fashion focus type individuals, so there's been overlap.
Speaker 7: But Walmart has slowly been encroaching on what has been
Speaker 7: Target's kind of main audience, and Target has seen that
Speaker 7: their customers are under a lot of pressure because they're
Speaker 7: sort of middle income households. There's been a lot of
Speaker 7: inflationary press sure, a lot of cutbacks and discretionary spending,
Speaker 7: so there's been kind of pressure from both sides, and
Speaker 7: so Walmart says they're going to up their private label game,
Speaker 7: especially in apparel. That could be a threat to Target,
Speaker 7: but it is one of Target's core strengths. So if
Speaker 7: they can get people to come back and start engaging again,
Speaker 7: that's really what historically has helped Target drive their success.
Speaker 3: So reaffirming their guidance for the full year, I mean,
Speaker 3: like you mentioned, that means they're going to have to
Speaker 3: really deliver in the back of what are the levers
Speaker 3: they can pull to do that.
Speaker 7: So from a profit perspective, they have a lot of
Speaker 7: things that are that they've been doing in terms of
Speaker 7: cost control, in terms of streamlining their supply chain. Their
Speaker 7: inventory was down in another seven percent this quarter. Those
Speaker 7: are all great things because it helps make them more
Speaker 7: efficient and cost effective. So from a margin perspective, you know,
Speaker 7: there's still some runway to continue to expand margins. The
Speaker 7: real question is are they going to be able to
Speaker 7: drive sales growth. What's concerning is that the in store
Speaker 7: sales for same store sales are still significantly lower. And
Speaker 7: you know, part of the idea behind the discretionary categories
Speaker 7: is that people come into stores and they browse and
Speaker 7: they find an outfit or they find an accessory. And
Speaker 7: it's great that digital sales are reaccelerating, but if people
Speaker 7: aren't in the store, that's a hard thing for Target
Speaker 7: to deal with.
Speaker 2: Hey, Jen, want to think back to the Walmart releases
Speaker 2: that I've really paid attention to. I always see double digit,
Speaker 2: maybe twenty percent e commerce sales growth. How does Target
Speaker 2: do there?
Speaker 6: Well?
Speaker 7: Target actually does pretty well in terms of digital sales growth,
Speaker 7: but there's a very different strategy. Walmart is pursuing a
Speaker 7: strategy of as many possible items as possible on the
Speaker 7: Walmart dot Com. They do a lot of third party sales.
Speaker 7: When it comes to Target, their broader assortment is much
Speaker 7: more curated, and so they are very thoughtful about which
Speaker 7: vendors they bring onto the target dot com to enhance
Speaker 7: the offering that Target has. So they're different approaches to
Speaker 7: e commerce. Both are seeing some success, but you can't
Speaker 7: really compare them strictly side by side.
Speaker 3: What other company, like what did you make of then TJX,
Speaker 3: for example, because in some ways they can be immune
Speaker 3: from the slowdown, right because everyone me included, we'll go shop.
Speaker 3: There are we seeing that reflected in the numbers?
Speaker 7: I mean, I think the strong results from TJX just
Speaker 7: underscore that people still like the treasure hunt, but people
Speaker 7: are seeking value and one of the things that Target
Speaker 7: talked about is that they need to reinforce that value proposition.
Speaker 7: That's part of why they've rejiggered their entire Target loyalty
Speaker 7: program with Target Circle TJX, everybody knows you can go
Speaker 7: and you have the potential to find something that is
Speaker 7: an amazing deal, and that's enough to draw people into stores.
Speaker 7: Target has has gotten a little bit away from that.
Speaker 3: Yeah, yeah, see polism. So pauls, we've been in a TJX.
Speaker 3: I don't think he truly understands the beauty of this.
Speaker 2: I went to my first Walmart last weekend.
Speaker 3: Yeah, I'm so. That's like a semi gold star. So
Speaker 3: they have not only just discounted stuff, but they have
Speaker 3: the runway and that's the jam. That is designer stuff
Speaker 3: on some serious sale and you can get that on
Speaker 3: clearance and you're looking at like a ninety percent off
Speaker 3: a designer kind of situation.
Speaker 2: Do you know beforehanded whether it's going to be there?
Speaker 3: No, that's that's that's fun. Then you add the treasure hunt,
Speaker 3: and you don't know the beauty that will be unveiled
Speaker 3: as you go in. Am I selling this appropriately?
Speaker 6: Jen?
Speaker 7: Absolutely? I mean that is that is some of the appeal.
Speaker 7: You just you never know what you're going to find,
Speaker 7: and so you go as often as you as you
Speaker 7: can because there's a chance you'll find that amazing deal.
Speaker 2: What's the promotional environment out there, Jenner. Are the Walmarts,
Speaker 2: the tjx's, the targets. Are they putting out a lot
Speaker 2: of promotions to get people in the store or to
Speaker 2: click that button.
Speaker 7: The promotional environment has been escalating, and so we talk
Speaker 7: you hear Walmart talk about rollbacks that's basically putting things
Speaker 7: on sale or discounts. Target talked about cutting prices by
Speaker 7: the end of the summer up to five thousand items,
Speaker 7: all for essential So the idea is to try to
Speaker 7: advertise that there's value proposition there and you know in
Speaker 7: force that they're they're looking at for the customer, trying
Speaker 7: to get people to engage in coming back and perhaps
Speaker 7: buying a little bit more. And let's be honest, it
Speaker 7: doesn't hurt from a public relations perspective when you have
Speaker 7: the White House talking about retailers not being responsible enough
Speaker 7: and rolling back costs on essentials. So there's certainly a
Speaker 7: little bit of a play there to help appease some
Speaker 7: of that political pressure.
Speaker 3: Is but that doesn't make me want to buy the
Speaker 3: stock though, No.
Speaker 7: But you know it does help ultimately from a consumer perspective.
Speaker 7: If you think that it's a better value to shop there,
Speaker 7: or that you're getting more for your money, you're more
Speaker 7: inclined to shop there, and that ultimately leads to your
Speaker 7: traffic and your sales, and that is what is appealing
Speaker 7: to investors.
Speaker 2: What are the dollar stores seeing these days? Are they
Speaker 2: seeing a pickup in traffic, maybe the people trading down
Speaker 2: from a Walmart or Target.
Speaker 7: There's been some trade down into the dollar stores, and
Speaker 7: we tend to see that every time we go through
Speaker 7: sort of an economic depression. One of the challenges for
Speaker 7: the dollar stores is that people are coming in, but
Speaker 7: they've abandoned the discretionary spending, even though at dollar store
Speaker 7: the discretionary spending is not that expensive, so their consumables mix.
Speaker 7: For example, a Dollar General is is close to eighty
Speaker 7: percent of their sales are what would could be considered
Speaker 7: consumable items. That is good in terms of people coming
Speaker 7: into the store, but it's not great for the long
Speaker 7: term mix for the company because those are very low
Speaker 7: margin sales. They're high frequency, but people have been really
Speaker 7: watching those, you know, watching their wallets, and so the
Speaker 7: basket sizes are a little smaller, the mix is more
Speaker 7: just you know, more consumable. So we'll be watching for
Speaker 7: any signs that they're getting some hir income households coming
Speaker 7: in to spend on those more discretionary items, or that
Speaker 7: their their core consumers are loosening spending a little bit.
Speaker 7: But honestly, this quarter is probably not going to be
Speaker 7: you know.
Speaker 3: Panning out No, definitely not. I'm target falling the most,
Speaker 3: I should say, going back to Target the most is
Speaker 3: November of twenty twenty two. Does that feel extreme to you,
Speaker 3: considering that the actual numbers weren't like terrible terrible.
Speaker 7: I think you shouldn't distarget it for being target. I
Speaker 7: guess this is my response to that. And what I mean, Like,
Speaker 7: what I mean by that is, you know, Target has
Speaker 7: always been about the fashion. It's been about the discretionary categories.
Speaker 7: It's been about home decor, it's been about things you
Speaker 7: know of that nature. They've never tried to be you know,
Speaker 7: heavy on the essentials category. And so when you've got
Speaker 7: consumer weakness and you've got people who aren't spending in
Speaker 7: those categories, it's hard to beat up Target for being
Speaker 7: true to what their values are. And so what I
Speaker 7: would say is, you know, if we see some improvement
Speaker 7: in just the discretionary spending, Target will start to take
Speaker 7: off again. You know, their sales will accelerate, people will
Speaker 7: be coming back. It seems more of a waiting game
Speaker 7: for when the consumer is ready for that at this point.
Speaker 3: Our thanks to Jim Bartasha's Bloomberg Intelligence Senior analysts for
Speaker 3: Retail staples and packaged food.
Speaker 2: On Bloomberg Intelligence Radio, we bring you all the top
Speaker 2: analysts providing in depth research and data on two thousand
Speaker 2: companies and one hundred and thirty industries.
Speaker 3: We also have something here at Bloomberg called Bloomberg New
Speaker 3: Energy Finance, and the idea behind it is to provide
Speaker 3: data on commodities, power, transport, industries, buildings and agriculture and
Speaker 3: also new technology.
Speaker 2: This week we also looked at a BNF report that
Speaker 2: said governments and companies need to spend an extra thirty
Speaker 2: four trillion dollars on the clean energy transition between now
Speaker 2: and twenty fifty to reach net zero emissions.
Speaker 3: For more, we're drawn by Aiman Farhat, Bloomberg European Power
Speaker 3: and Renewables reporter.
Speaker 2: We first asked in for more context on the BNEF report.
Speaker 5: I mean they were pool outlines two scenarios. One of
Speaker 5: them is exactly that trying to get to net zero
Speaker 5: by twenty fifty, So it is possible it will cost
Speaker 5: something like one hundred and fifteen trillion dollars between now
Speaker 5: and twenty fifty, and twenty percent more than the actual
Speaker 5: kind of base case, which is if we just go
Speaker 5: along with all the all the different technologies actually make
Speaker 5: economical sense. So the net zero scenario is about governments
Speaker 5: putting in policy and putting in drivers to make it
Speaker 5: happen faster.
Speaker 2: Are the big I guess players globally. I'm thinking just
Speaker 2: the West broadly defined China. Do we have global buy
Speaker 2: in to any of this right now or is it
Speaker 2: just piecemeal?
Speaker 5: I think that's a good question. I think one of
Speaker 5: the things that the report does is look till twenty fifty,
Speaker 5: but as well as that, they also look for the
Speaker 5: next like five ten years, and they show that the
Speaker 5: investment level that's being planned for the next even just
Speaker 5: so twenty thirty isn't really there to keep on track
Speaker 5: to be reaching that zero. It isn't even there to
Speaker 5: be reaching any kind of these scenarios. So I'd say
Speaker 5: what the report redes say is that it is possible
Speaker 5: we have to really stop moving immediately, and that most
Speaker 5: players aren't moving fast enough. It's all a bit too slow.
Speaker 3: Say that number again, about how many trillions of dollars?
Speaker 5: More so, it's two hundred and fifteen trillion for net zero,
Speaker 5: So that's about thirty four trillion dollars more than the
Speaker 5: base case.
Speaker 3: Oh my gosh, Okay, where does that is that all
Speaker 3: going to come from governments? I mean, at the end
Speaker 3: of the day, whether it's through taxes, et cetera.
Speaker 5: So that's going to be coming from government, from like
Speaker 5: private investment. I mean, this covers everything. This covers everything
Speaker 5: from grid to evs to you know, like how you're
Speaker 5: going to be getting your solar panels on your houses,
Speaker 5: getting wind farms in the sea. It really covers everything.
Speaker 5: But it just shows that when you take a holistic view,
Speaker 5: the cost is very high. You know, when you break
Speaker 5: it down by year, it might be you know, a
Speaker 5: few trillion per year, but over twenty sixtyeth period, that
Speaker 5: is a lot of money for the world to bear.
Speaker 2: So Aiman, talk to us about the next ten years.
Speaker 2: What are some of the critical milestones that need to
Speaker 2: be met here? It feels like it's more than just
Speaker 2: everybody's going to have an electric vehicle.
Speaker 6: Yeah.
Speaker 5: So when I was reading through this beautiful ten fifty
Speaker 5: page report, thing one thing that really stuck out to
Speaker 5: me at first is the report says that right now
Speaker 5: we start the tenure countdown, in ten years time, there
Speaker 5: will be one ice vehicle sold. It'll be all electric
Speaker 5: vehicles being sold. They want to triple renewables in that
Speaker 5: period as well to be on track for next year,
Speaker 5: and then triple them again in the next twenty years.
Speaker 5: So it really is kind of everything is doubling down.
Speaker 6: You know.
Speaker 5: They have this whole section about sustainable aviation fuel, trying
Speaker 5: to decarbonize aviation. I think they said that something like
Speaker 5: the crops you have to grow to get this spio
Speaker 5: mass to get the stainial aviation fuel will take up
Speaker 5: as much space as the whole European Union. So some
Speaker 5: of these numbers are just really really huge, but are
Speaker 5: needed in the next ten fifteen years.
Speaker 3: And that's so important because we also need the stuff
Speaker 3: for food and things, so there's also that that poses
Speaker 3: a lot of issues. I'm also curious as to the
Speaker 3: divide between developed and emerging markets when it comes to energy,
Speaker 3: because you know, Europe, in the US, we may have
Speaker 3: the money to tax and then maybe have the money
Speaker 3: to put forth, but India is sure doesn't, Africa sure doesn't,
Speaker 3: parts of Southeast Asia sure don't. How does the report
Speaker 3: address that lack of financing?
Speaker 5: Yeah, it's interesting I think on both hands on some
Speaker 5: ways when it comes to like example, grid grid is
Speaker 5: a huge thing, one of the actually the second biggest
Speaker 5: costs to come into this twenty fifteen trillion, and actually
Speaker 5: in some of the developing nations, as you said India
Speaker 5: for example, because the grid is actually knew there, it's
Speaker 5: easier to upgrade it and to kind of build it out,
Speaker 5: you know, when you're talking about the British grid or
Speaker 5: the American grid, these ones are much older and harder
Speaker 5: to move forward. But then when it comes to things
Speaker 5: like renewables, you know, we still see lots of coal,
Speaker 5: lots of gas, lots of fossil fuels being used in
Speaker 5: Southeast Asia into the twenty thirties just because you know,
Speaker 5: they need that. Supply demand is growing, econditioning demand is growing,
Speaker 5: you know, a growing middle class, which means that they
Speaker 5: just need to keep up and they can't be going
Speaker 5: on too renewables as quickly as Europe can.
Speaker 2: For example, our thanks to Aman Farhat Lumberg European Power
Speaker 2: and Renewables Reporter.
Speaker 3: Coming up on the program, we're going to take a
Speaker 3: look at how one company is looking to fix your
Speaker 3: terrible board meetings.
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio providing in
Speaker 2: depth research and data on two thousand companies and one
Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via
Speaker 2: Big on the terminal.
Speaker 3: I'm Paul Sweeney and I'm Alex Steel, and this is Bloomberg.
Speaker 1: This is Bloomberg Intelligence with Alex Steel and Paul Sweeney
Speaker 1: on Bloomberg Radio.
Speaker 3: We move now to politics. Half of swing state voters
Speaker 3: say they're worried about violence surrounding the US presidential election. Now,
Speaker 3: that's according to the May Bloomberg News Morning Console poll.
Speaker 2: Many swing state voters also said they're worried that the
Speaker 2: growing presence of artificial intelligence could one day diminish privacy
Speaker 2: and hurt job prospects.
Speaker 3: For more, we were joined by Jody Schneider, political news
Speaker 3: director for Bloomberg TV and Radio, and we first asked
Speaker 3: Jody about violence being that big concern in the latest poll.
Speaker 8: We've been doing this poll now since last fall, as
Speaker 8: you know, Paul, and we've been asking about the candidates themselves,
Speaker 8: and we continued to ask about that, but we wanted
Speaker 8: to ask on some issues as well, and this seemed
Speaker 8: to be one that's percolating out there quite a bit
Speaker 8: that we hear a lot from and so we went
Speaker 8: and asked the voters themselves, as in these swing states,
Speaker 8: in these seven swing states, and as you noted, about
Speaker 8: half say they are concerned about that, and it seems
Speaker 8: to be pretty evenly split between Republicans and Democrats in
Speaker 8: terms of that concern. So that's real and that could
Speaker 8: affect them in terms of how they vote, perhaps whether
Speaker 8: they vote, because both parties really need a big turnout.
Speaker 8: It's going to be, as everyone expects, a close election,
Speaker 8: close in terms of the popular vote, and of course
Speaker 8: that affects the electoral college, which is where it comes
Speaker 8: down to where the rubber meets the road.
Speaker 3: If you will, Jody, does the fear sway how people
Speaker 3: are going to vote.
Speaker 8: Well, I think it more could affect whether they vote, Alex,
Speaker 8: I really think that's part of it. If you fear that,
Speaker 8: you know, perhaps there's going to be violence surrounding this,
Speaker 8: or there's this kind of fear about things, maybe you say.
Speaker 8: And we've seen a lot of polling around the fact
Speaker 8: that there isn't a lot of excitement around either candidate.
Speaker 8: We had at one point polls showing that they wish
Speaker 8: there was someone other than Biden. Or Trump, but this
Speaker 8: is who we have, This is who's going to be
Speaker 8: on the ballots, and so I think it's more going
Speaker 8: to be a turnout issue. We'll see now. Of course,
Speaker 8: we do this pulling and we all talk about polls
Speaker 8: a great deal in an election year like this, but
Speaker 8: it's still it's still about five and a half months
Speaker 8: out before the election, and a lot of people don't
Speaker 8: make up their minds fully until after Labor Day. So
Speaker 8: this is still this is an issue that could affect voting,
Speaker 8: but we still have plenty of time before people actually
Speaker 8: start voting.
Speaker 2: So Jody, aside from these issues, what are kind of
Speaker 2: the key issues that are polling has kind of illuminated
Speaker 2: are kind of going to be the key issues for
Speaker 2: these candidates through the election.
Speaker 3: Yeah, so the race is narrowing.
Speaker 8: According to again, these are seven swing states where we think,
Speaker 8: you know, a lot of the election will be determined.
Speaker 8: And we found that six and ten of the voters
Speaker 8: worry about misinformation, not only violence but misinformation. Forty six
Speaker 8: percent had concerns about perhaps foreign interference in the election.
Speaker 8: So that's an interesting take. We've seen former President Trump's
Speaker 8: swing state lead dipping slightly. He is still ahead in
Speaker 8: many of these swing states according to our poll, but
Speaker 8: it has dipped slightly since the last time we pulled
Speaker 8: about a month ago, So that could be viewed as
Speaker 8: a little bit of encouraging news for those who support Biden,
Speaker 8: but those who support Trump say, well, he's still ahead there,
Speaker 8: So we have that. We also have that Biden gaining
Speaker 8: ground from April in each of the competitive sun Belt states,
Speaker 8: So that's an interesting factor that he's gaining there. The
Speaker 8: states where he needs to win. He absolutely must win
Speaker 8: what we're calling those blue wall states of Wisconsin, Pennsylvania, Michigan,
Speaker 8: which he won last time, which Hillary Clinton famously did
Speaker 8: not win in her race against Donald Trump. We're finding
Speaker 8: that he is doing a little bit better there. They're
Speaker 8: separated by no more than two percentage points in those
Speaker 8: blue wall states, so very close there.
Speaker 3: Judy, when you talked about misinformation, do we have an
Speaker 3: idea where voters are going to get their information if
Speaker 3: they're worried about misinformation.
Speaker 8: Well, that's a really good question, Alex and so many
Speaker 8: of them talk about misinformation, but then they go to
Speaker 8: places where they are, you know, where there's potentially misinformation
Speaker 8: and a lot of voters are getting their news from
Speaker 8: a lot of places that we don't necessarily consider traditional
Speaker 8: news outlets, so it's an interesting question. We did ask
Speaker 8: about TikTok. That's been a big issue the US government
Speaker 8: has under legislation that was passed for emergency funding for
Speaker 8: Ukraine and other places in the world. It was in
Speaker 8: there a ban on TikTok if the Chinese parent by
Speaker 8: Dance does not sell it. We asked these swing state
Speaker 8: voters whether they thought it was a good idea to
Speaker 8: ban TikTok, and almost half said they thought it was,
Speaker 8: So another interesting wrinkle there in terms of information all right.
Speaker 3: Thanks to Jody Schneider, political news director for Bloomberg TV
Speaker 3: and Radio, we.
Speaker 2: Now moved to the cloud space. ZECH, a cloud based
Speaker 2: software company, is now trying to fix any potential dread
Speaker 2: you may have for an upcoming board meeting.
Speaker 3: The company distills hundreds of pages of corporate documents and
Speaker 3: your interactive websites for boards to expedite meetings, and even
Speaker 3: has an AI product, and recently ZEK announced it closes
Speaker 3: seven and a half million dollar investment led by Salesforce Ventures.
Speaker 2: For more and all this, we were joined by ZECH
Speaker 2: co founder Edward Norton. We first asked him more about
Speaker 2: what zech is trying to do.
Speaker 9: We're trying to make the experience between management of organizations,
Speaker 9: and I say that meaning corporations or nonprofits because obviously
Speaker 9: we've got a couple of million nonprofit organizations in this
Speaker 9: country that have governance and boards and stuff like that.
Speaker 9: We're trying to take what we feel is an increasingly
Speaker 9: toxic dynamic and reform it into being what it's supposed
Speaker 9: to be, which is a relationship that propels in organizations, supports,
Speaker 9: you know, brings additional leverage positivity to an organization. And
Speaker 9: we you know, I've definitely had some people say to me, like,
Speaker 9: you have an interesting day job, why would you get
Speaker 9: involved in a.
Speaker 2: Your day job. Just for folks that on the radio,
Speaker 2: Edward Norton actor has been in a bunch of movies
Speaker 2: and all that kind of stuff.
Speaker 9: Yeah, the and I and I will, I will admit that,
Speaker 9: you know, on the surface, like a software platform for
Speaker 9: for board governance features seems pretty esoteric, but it grew
Speaker 9: out of it grew out of my own experiences over
Speaker 9: the last thirty years, not disimilar to years from serving
Speaker 9: on the board of arts organizations. Serving on you know,
Speaker 9: conservation organization boards. And then as I built my own companies,
Speaker 9: and I've built a few software companies that we had
Speaker 9: our own boards, people like Fred Wilson from Union Square
Speaker 9: or you know Excel or Graylock or these these firms.
Speaker 9: We were on the management side and we were experiencing
Speaker 9: what it meant to have a board. And then when
Speaker 9: I sold one of my companies and I joined the
Speaker 9: board of GoFundMe, the company that acquired us, you know,
Speaker 9: I started sitting on corporate boards and we my partners,
Speaker 9: and I really started feeling that that this there was
Speaker 9: this elephant in the room, which is that is that
Speaker 9: companies go through four to eight times a year. They
Speaker 9: go pencils down to get ready for this thing that
Speaker 9: essentially to them feels like a hall monitoring moment. And
Speaker 9: board members, on the other hand, when I was a
Speaker 9: board member, you got thirty six hours before the meeting,
Speaker 9: You get a ninety page PDF and you're supposed to
Speaker 9: read it in the airport terminal, and then you go
Speaker 9: to the meeting and get it read back to you.
Speaker 2: You know what I mean.
Speaker 3: Like there was just so you're looking to make it
Speaker 3: a more what interactive visual engaging experience.
Speaker 9: I think we say two things. One is quantitatively, board
Speaker 9: meetings are an enormous waste of time for everybody, and
Speaker 9: that has to do with the amount of redundant time
Speaker 9: waste on setting these meetings up and the presentation materials.
Speaker 9: And that can be crushed down by having cloud based
Speaker 9: AI powered tools that make it like a tenth the
Speaker 9: time for a company. On zech, a company can set
Speaker 9: up for a board meeting in one tenth the time
Speaker 9: that they were using to prep before it. Board members
Speaker 9: should get to read something that's you know, you wouldn't
Speaker 9: read in the New York Times or Bloomberg on a PDF.
Speaker 9: You read it in a mobile friendly scroll right that
Speaker 9: we expect that now and so everything about the user
Speaker 9: interface should be easier for both sides of the table.
Speaker 9: But also think about this, think about how much time,
Speaker 9: how many professional talented people with time is valuable sit
Speaker 9: there in board meetings, approving minutes, approvals, approving stock option packages,
Speaker 9: things that they ought to be able to do from
Speaker 9: the airport lounge in advance. So we built governance function
Speaker 9: that can be interactive and mobile.
Speaker 2: And also, so your customer is the board.
Speaker 9: The customer is the company and the board. You know, yeah,
Speaker 9: both sides, management and board members suffer in different ways,
Speaker 9: and we've tried to reform it. But when you crush
Speaker 9: the redundant inefficiency of time waste, you improve the quality
Speaker 9: of the meeting too, because a board meeting should be
Speaker 9: a forward looking experience, not a You don't want to
Speaker 9: spend hours looking backward. Everybody can ingest the looking backward
Speaker 9: part before the meeting. You want meeting to be propulsive
Speaker 9: and additive to where the company or the organization is
Speaker 9: trying to go. And the best thing about what people
Speaker 9: are saying to us is not just oh, we really
Speaker 9: love the user interface. It's much easier, it's easier to read.
Speaker 9: We love that they're saying to us. This has radically
Speaker 9: improved the quality and the value of the meeting itself
Speaker 9: and what we're getting out of our board.
Speaker 3: So you guys just raised about seven and a half
Speaker 3: million Series A led by Salesforce Ventures, including some other
Speaker 3: guys as well. What are you gonna do with it?
Speaker 3: And what's sort of your angle here?
Speaker 9: Well, you know, I think if you look at I mean,
Speaker 9: first of all, Salesforce to this day is still I mean,
Speaker 9: they still are the greatest innovator in cloud based corporate tools.
Speaker 9: And I've known Mark Benyov a long time, even though
Speaker 9: I never told him that we were doing this with
Speaker 9: his own team until it was done, because I didn't
Speaker 9: I didn't want to, you know, I didn't want it
Speaker 9: to come from the top down. The Salesforce team is
Speaker 9: really phenomenal. But you know, our fantasy was to work
Speaker 9: with Salesforce because really nobody, nobody understands the business of
Speaker 9: cloud based corporate tools better than they do. And I
Speaker 9: also like their ethos as a company. I think they
Speaker 9: have a great customer service ethos there. But you know,
Speaker 9: if you look at think about today, would you ever
Speaker 9: get a FedEx package with signature tabs on your legal documents?
Speaker 7: No?
Speaker 9: You get it in DocuSign now right. You don't manage
Speaker 9: your cap table in Excel spreadsheets anymore. You use Karta.
Speaker 9: And we've made this evolution towards lots of aspects of
Speaker 9: corporate function have gone into the cloud, but this really
Speaker 9: critical function hasn't. And we think that on a business level,
Speaker 9: to be honest, if you look at you know, Karta,
Speaker 9: which is a seven billion dollar private company and DocuSign
Speaker 9: is a fifteen billion dollar public company. There's an enormous
Speaker 9: market in relatively low priced corporate software tools, and we
Speaker 9: really thought that this was a good business. We think
Speaker 9: there's a very large marketplace of companies and nonprofit orgs
Speaker 9: that need to reform this critical piece.
Speaker 3: All right, thanks? Is that co founder Edward Norton