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

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Speaker 1: Bloomberg Intelligence Podcast. Catch US Live weekdays at ten am

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

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

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Speaker 2: Should build Up Bloomberg, chief correspondent for Global Aviation Should

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Speaker 2: Spirit Airlines trying to end operation what happened to the

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Speaker 2: potential deal with the US government.

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Speaker 3: So from what we understand, Spirit Deadlines couldn't reach a

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Speaker 3: deal with its creditors, and so the creditors were a roadblock.

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Speaker 3: Bloomberg earlier reported that creditors were a roadblock in agreeing

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Speaker 3: to any deal with the government, and that was primarily

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Speaker 3: because of concerns about what basically liabilities and what their

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Speaker 3: recoveries would look like post a government deal. I mean, remember,

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Speaker 3: the government was proposing them superseding other lenders, and so

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Speaker 3: that's turned into a bit of a The creditors weren't

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Speaker 3: sort of happy with that deal, and so we understand

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Speaker 3: because of that, the government deal can't go forward, and

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Speaker 3: that's really forcing spad Alines to consider bankruptcy and shutting down.

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Speaker 4: Essentially Okay, So a shutdown, what would that look like

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Speaker 4: for an airline? How long does that take?

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Speaker 3: Shutdowns usually take a few It could take a matter

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Speaker 3: of a couple of days, or it could be a day,

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Speaker 3: and it would sort of cause considerable discomfort and considerable

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Speaker 3: sort of pain to various people. So on one hand,

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Speaker 3: you have the passengers who would then be stranded without

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Speaker 3: options in terms of being able to fly. I mean,

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Speaker 3: we may see some of the credit the other airlines

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Speaker 3: and their competitors offering rescue flights or other sort of alternatives,

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Speaker 3: but as far as because the consumers are concerned, they

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Speaker 3: would be sort of looking for a way to get

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Speaker 3: out of their flights and see if they could go

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Speaker 3: to And the other concern is one for the staff

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Speaker 3: and essentially what happens with them, and then also the

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Speaker 3: assets of the airline and what happens with the aircraft

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Speaker 3: and other sort of assets that the airline has. So

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Speaker 3: there's multifacets to that thing. And we are still looking

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Speaker 3: to see what the rollout is going to be if

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Speaker 3: there is in fact no chance of saving this.

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Speaker 2: Yeah, I'm just looking at dees screen for Spirit Airlines

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Speaker 2: as shows has about almost ten thousand employees, So that's

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Speaker 2: the human side of it. Is there any chance, said,

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Speaker 2: that another airline could come in here, I see that

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Speaker 2: Jet bluestock is down more than four percent. Maybe people

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Speaker 2: speculating that they might come in and try to buy

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Speaker 2: this thing.

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Speaker 3: There could be speculation that the assets could go up

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Speaker 3: for the assets could be available to other airlines to

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Speaker 3: get them. There's also a possibility that the creditors and

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Speaker 3: the government reached some sort of agreement just in the

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Speaker 3: sort of final like the final hours. So it's still

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Speaker 3: not yet over, but we will be watching the story

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Speaker 3: to see what happens next.

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Speaker 2: Looking at Jet Blue Airways right now, the stock's actually

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Speaker 2: trading up. I correct myself, stocks trading up a little bit.

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Speaker 2: But I wonder the government blocked them before, so I'm

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Speaker 2: not sure they would proceed again.

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Speaker 4: That's a good question, I mean said, do you think

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Speaker 4: the government might try to pivot and not force consolidation

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Speaker 4: but encourage an airline to pick up spirit.

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Speaker 3: The government would drive, but again the stumbling block would

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Speaker 3: be what price those are paid and essentially what the

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Speaker 3: creditors sort of want from this. So it is hard

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Speaker 3: to see how an airline could come in and get

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Speaker 3: a merger done, especially given that Spirit's been running out

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Speaker 3: of cash and there's no in their second bankruptcy. I mean,

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Speaker 3: they were meant to exit their second bankruptcy, and so

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Speaker 3: it's hard to see how that could happen so quickly

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Speaker 3: in terms of giving them a lifeline to actually keep going.

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Speaker 2: Stay with us.

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

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

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

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

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

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Speaker 2: This is a conversation of the day for me Gene.

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Speaker 2: Monster managing partner Deep Border Asset Management joins us here

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Speaker 2: because it was a big, big week for some of

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Speaker 2: the leading technology compans. You remember Friday afternoon we had

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Speaker 2: the Amazons, the Facebooks, to Metas, all that kind of stuff.

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Speaker 2: Microsoft report numbers, and then last night Apple Gene. You

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Speaker 2: saw a lot of the big names, a lot of

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Speaker 2: the headline names report earnings. Here today, it seems like

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Speaker 2: the market really is trying to identify winners, maybe a

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Speaker 2: Google losers at least in a short term, maybe a

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Speaker 2: Meta given it stockbased performance yesterday. What was your takeaway

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Speaker 2: from all these numbers.

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Speaker 5: Well, I tend to look at beyond the quarter, beyond

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Speaker 5: the guidance, and try to think about what we've learned

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Speaker 5: about whatever the kind of the investment curve that we're on.

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Speaker 5: Of course, we know what the a topic is, what

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Speaker 5: inning are we in AI? And what I learned is

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Speaker 5: I would say it's probably consensus from the takeaways, so

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Speaker 5: it's that we're still early, probably earlier than what we

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Speaker 5: had thought maybe six months or a year ago. And specifically,

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Speaker 5: if we look at kind of one benchmark, which is

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Speaker 5: the hyperscalers capex spend for this year and for next year,

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Speaker 5: we saw a measurable bump up for calendar twenty six

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Speaker 5: calendar twenty seven. So three of the four, with the

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Speaker 5: exception of Amazon three, those the other three, Google, Microsoft

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Speaker 5: and Meta all increased their growth rates meaningfully, again off

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Speaker 5: of numbers that were hard to imagine them going higher.

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Speaker 5: That's been kind of a well traveled so Paul, to

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Speaker 5: answer your question is I think we are still very early,

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Speaker 5: very early, second inning in all of this, and I

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Speaker 5: think there's just this there's part of just being a

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Speaker 5: human thinking that this just can't last. I mean we've

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Speaker 5: been we're entering year three of this incredible growth. Like

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Speaker 5: the numbers just keep getting bigger and the comps get

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Speaker 5: more difficult, and they just keep crushing through it. Eventually

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Speaker 5: it has to slow down. We're just not seeing that.

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Speaker 5: And I would just put one other piece that we've learned.

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Speaker 5: Google and Meta both have shown that they can leverage

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Speaker 5: AI at scale. Those companies have seen some remarkable accelerations

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Speaker 5: in their growth, Google Search going from call it ten

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Speaker 5: to eleven percent a year or so ago to nineteen

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Speaker 5: percent in the March quarter. Meta was growing at sixteen

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Speaker 5: percent their AD business in the March twenty five quarter.

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Speaker 5: They were at thirty three percent a year later and

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Speaker 5: guided to twenty eight percent for the June quarter. So

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Speaker 5: we have seen these two companies are great examples of

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Speaker 5: the benefit this nagging question about is there actually utility

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Speaker 5: and AI. These companies have showed that, but beyond those,

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Speaker 5: the world really hasn't seen it. And I think that's

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Speaker 5: the opportunity.

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Speaker 4: So if we're the second inning of the AI cycle,

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Speaker 4: as you put it, does that mean Apple, which really

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Speaker 4: has not done very much with AI, is really not

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Speaker 4: that far behind and can make up whatever lost ground

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Speaker 4: people seem to think it has, or is Apple's interaction

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Speaker 4: with AI just fundamentally different than the hyperscalers and the rest.

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Speaker 6: Of big tech.

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Speaker 5: Well, Apple is both behind, but not far enough behind

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Speaker 5: that they can't catch up. To your point, and I

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Speaker 5: would just look at very simply, is you know there's

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Speaker 5: a problem if there was some other competing AI consumer

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Speaker 5: device that was capturing people's attention. We haven't seen that yet.

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Speaker 5: That's example of a problem. Another example that we'd know

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Speaker 5: there's a problem if somehow the kind of the base

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Speaker 5: was starting to drift away for whatever reason. And they've

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Speaker 5: essentially continued to strengthen their underlying base. And you know,

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Speaker 5: the numbers are are quite remarkable, and I think that

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Speaker 5: part of the reason why we've seen this surge over

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Speaker 5: the last three quarters. So iPhone on average has grown

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Speaker 5: at twenty percent of the last three quarters. The previous

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Speaker 5: basically four years, it grew at an average of just

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Speaker 5: over one percent. So we've seen this big jump up.

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Speaker 5: That's called a supercycle. That's what I would call a supercycle.

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Speaker 5: Supercycles don't last, but the fact that they're able to

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Speaker 5: deliver a supercycle in the face of not having any

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Speaker 5: compelling AI. I think speaks to how they've just become

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Speaker 5: the fabric of consumers' lives so scarlet to kind of

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Speaker 5: bring it all together, I think that you know, they're

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Speaker 5: not so far behind that they can't capitalize on this,

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Speaker 5: And I mean that's the real question here. Shares of

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Speaker 5: Apple right now up four percent ish on what was

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Speaker 5: some spectacular guidance, really underscores that investors are essentially looking

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Speaker 5: past this great guidance in the June quarter. They're already

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Speaker 5: thinking about next year where that growth slows down, back down,

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Speaker 5: iPhone growth back to five percent versus twenty percent over

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Speaker 5: the past few quarters. And that's kind of the central

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Speaker 5: question here. You're getting at. The real question is like, ultimately,

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Speaker 5: can they take AI and create growth, outsize growth outside

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Speaker 5: of the supercycle. And that's what investors essentially don't believe

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Speaker 5: right now. But that's what kind of where the lines

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Speaker 5: are laying down Geene.

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Speaker 2: If we're in the second inning, does that suggest we've

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Speaker 2: got many quarters and maybe years of this elevated level

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Speaker 2: of capex to look forward to, and if so, would

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Speaker 2: that become increasingly ahead winding for the stocks?

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Speaker 5: Well, the CAPEX impact is different for different companies, and

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Speaker 5: so the best that I can see is that if

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Speaker 5: you're a hyper scaler and you're spending more on Capex,

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Speaker 5: if you have a cloud business, then your investors are

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Speaker 5: generally okay with that spending. On the Google call, they

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Speaker 5: announced that they're going to be basically gave a suggestion

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Speaker 5: that they'll grow CAPEX next year between twenty and thirty percent.

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Speaker 5: The street was at ten percent. This is for calendar

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Speaker 5: twenty seven now, and the stock didn't. It went down

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Speaker 5: and then it kind of came right back up on that.

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Speaker 5: It basically ugged it off. Meta does the same thing,

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Speaker 5: talks about twenty six, a step up in twenty six

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Speaker 5: and the stocks down seven percent. And so the difference

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Speaker 5: between those and Microsoft talked about a step up and

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Speaker 5: spending is in this stock didn't wasn't bothered by it.

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Speaker 5: I think the issue here is like CAPEX in itself

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Speaker 5: is not negative. What's the issue is, I think for

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Speaker 5: many investors is that they just don't see the path

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Speaker 5: between CAPEX. One last thing. It's a mystery to me

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Speaker 5: because I don't understand why investors don't give metacredit because

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Speaker 5: they've shown that they can deliver capex on faster revenue growth.

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Speaker 6: Stay with us.

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

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

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Speaker 1: weekdays at ten am Eastern on Applecarclay and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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

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Speaker 2: Bencent Piazza Joints to season senior equity research channels. Follow

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Speaker 2: all this oil and gas stuff. He's here in our

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Speaker 2: Blueberg Interactive Broker studio.

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Speaker 7: Fince.

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Speaker 2: What you learn from Exon and Chevron today.

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Speaker 7: Well, like you said, you know, price Trump's volume number one,

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Speaker 7: number two, the rest of the world got punched, and

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Speaker 7: Exon and Chevron got pinched. And I think you know,

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Speaker 7: when you think about the integrated model during times of stress,

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Speaker 7: that's when it works. And I think you'll see similar

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Speaker 7: for two Q as well. Because you know, one Q

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Speaker 7: we only had one month of that price inflation. We're

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Speaker 7: coming into the second month of inflated prices here. So

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Speaker 7: from an upstream perspective, net benefit to both, even though

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Speaker 7: the production outages are probably more sustained into two Q,

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Speaker 7: but overall prices are higher and price Trump's volume. So

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Speaker 7: for the most part, we're moving toward an environment for

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Speaker 7: them where at least the upstream component will do well.

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Speaker 4: And upstream, of course's exploration in production downstream is refining

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Speaker 4: what was notable to me and looking at the results

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Speaker 4: is that xcell will was just as challenged as everyone

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Speaker 4: else and giving guidance because no one knows how long

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Speaker 4: the street of horm moves will be closed for, and

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Speaker 4: they really couldn't pinpoint anything.

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Speaker 7: Can't pinpoint anything, And if you look at prices along

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Speaker 7: the curve, I'm not really sure the traders really appreciate

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Speaker 7: it as well, because you know, we're here and we

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Speaker 7: see that one hundred dollars per barrel. But if you

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Speaker 7: look at the November and December contracts, there somewhere in

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Speaker 7: the high seventies, low eighties, and so interestingly, by the

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Speaker 7: time we get into election season, those contracts will be

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Speaker 7: the spot contracts, so it'll be very interesting to see

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Speaker 7: what happens at that point. But for the most part,

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Speaker 7: if you think about not only excell On and Chevron,

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Speaker 7: but also the other majors across the globe, you're seeing

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Speaker 7: the same kind of results where price is trumping a

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Speaker 7: volume for the most part.

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Speaker 2: Last events before we let you go, why don't I

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Speaker 2: just go down to Texas and drill hole? What are

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Speaker 2: recounts doing? Are the landman's the wildcatters of the world.

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Speaker 2: Are they taking advantage of one hundred dollars oil?

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Speaker 7: They are still being disciplined because, as I mentioned to you,

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Speaker 7: the prices out on the longer end of the curve

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Speaker 7: are still somewhat subdued, and so you're not really incentivizing

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Speaker 7: you to drop a lot of capital into the ground.

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Speaker 7: But more importantly, guys like you investors overall telling the space,

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Speaker 7: I don't want additional molecules. What I want is distributions,

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Speaker 7: and that's the process for shareholder engagement, giving them dividends

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Speaker 7: and the stock buybacks that they need.

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Speaker 2: Stay with us.

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Speaker 4: More from Bloomberg Intelligence coming.

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Speaker 6: Up after this.

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

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

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

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

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Speaker 2: Let's switch gears to We've been talking about luxury esday

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Speaker 2: lawder and you want to talk luxury, there's only one

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Speaker 2: person to talk to, and that's Debake and Bloomberg Intelligence

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Speaker 2: Luxury Goods Annaly. She is based in London. She spends

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Speaker 2: most of her time on the various high streets around

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Speaker 2: the world at the high luxury dealers there. What would

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Speaker 2: you learn from from Esday Lauder this reporting period.

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Speaker 8: Well, it's quite a mixed bag actually, you know, the

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Speaker 8: share price was off heavily into results here to date.

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Speaker 8: But what we learned is that the PRGP, the profit

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Speaker 8: saving program, the way they're adding innovation and.

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Speaker 6: Flexibility is starting to work for them.

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Speaker 8: So they've returned to growth on the top line, a

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Speaker 8: couple of percent constant currency sales growth and then they

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Speaker 8: got a three percent forex benefit, So that will help

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Speaker 8: them to really be able to, you know, to invest

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Speaker 8: more and add to what they're doing on the safe inside.

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Speaker 8: When we look at the underlying growth, it's all fragrances

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Speaker 8: and other so skincare, hair care in particular. Skincare is

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Speaker 8: an issue for them because it's their biggest division. All

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Speaker 8: those numbers are flat year on you. So it's ten

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Speaker 8: percent growth in fragrances, not much growth elsewhere, so still

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Speaker 8: a lot to do.

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Speaker 6: And what that makes me wonder is how.

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Speaker 8: Quickly these potential the potential for combining with Pooge, how

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Speaker 8: quickly that might go ahead, or whether it may be delayed,

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Speaker 8: or whether it may be off the table. So there's

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Speaker 8: quite a lot behind these numbers to me when I

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Speaker 8: dig deep.

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Speaker 4: So I'm so glad you bring up Poosh because there's

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Speaker 4: that proposed mergerer with Poosh brands, and they really the

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Speaker 4: company did not give very many details in the earnings

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Speaker 4: call about how that's going or how those conversations are going.

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Speaker 4: Is that a reason to be concerned about whether this

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Speaker 4: is will actually happen.

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Speaker 6: No, not at all.

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Speaker 8: So we had Poosh as well reporting a couple of

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Speaker 8: days ago.

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Speaker 6: They were okay as well in what they were doing

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Speaker 6: in their.

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Speaker 8: Improvements from what we saw from the prior quarters. But

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Speaker 8: actually because there's no agreement in place, it's just we've

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Speaker 8: just been informed from both parties that they're in talks.

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Speaker 8: It's usual if they don't break earnings because something is

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Speaker 8: about to happen. Or certainly Poosha's delayed a cup the

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Speaker 8: market day, but it goes ahead within AGM on the

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Speaker 8: twenty ninth of May. But it is usual that these

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Speaker 8: companies would come out and say this is about earnings

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Speaker 8: and we're not going to give any comment on what

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Speaker 8: we're doing behind any potential talks.

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Speaker 2: Yeah, what's the current feel out there in the investor

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Speaker 2: community about luxury these days? Is what's the driver right

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Speaker 2: here in terms of sentiment what we're.

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Speaker 8: Seeing actually as so we picked upon it. The last

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Speaker 8: couple of quarters, we did some work where we were

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Speaker 8: starting to see in China the shift from red towards

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Speaker 8: neutral and then the last couple of quarters towards green,

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Speaker 8: and we've seen that continue. So it's slow progress, but

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Speaker 8: we now have the beauty companies also including estill Order

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Speaker 8: coming through with six percent organic growth in China. So

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Speaker 8: some repair in travel retail and repairing the premium end

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Speaker 8: in China coming through, and that is very much across

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Speaker 8: those premium beauty brands and also the high end of luxury.

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Speaker 6: That would be the one thing.

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Speaker 8: The second thing we don't quite see it here though

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Speaker 8: it is in some of Still Order's brands and not others. Americas,

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Speaker 8: particularly the US has proven very robust and we're getting

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Speaker 8: decent growth rates coming through on the luxury side. And

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Speaker 8: I would in fact say that for twenty twenty six,

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Speaker 8: given that China is against a decline still versus twenty five,

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Speaker 8: it's actually Americas and particularly the US that is driving

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Speaker 8: the growth rate in luxury goods.

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Speaker 6: So we're kinds of looking at.

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Speaker 8: This market and the beachy market coming through it around

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Speaker 8: four to five percent growth, and what we find in

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Speaker 8: so far is that the Middle East is about one

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Speaker 8: hundred basis points impact on that growth rate.

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