WEBVTT - Berkshire, Tyson, Activision, and Apple (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.200 --> 0:00:23.560 A little bit of an investor meeting over the weekend. Now, 0:00:23.560 --> 0:00:25.680 who has investor meetings like on a Saturday? 0:00:25.840 --> 0:00:27.920 The ones that don't want to have them while markets 0:00:27.920 --> 0:00:28.800 are publicly trading. 0:00:28.960 --> 0:00:30.080 I think it's brilliant. 0:00:30.080 --> 0:00:31.560 And if you want to be the center of attention, 0:00:32.280 --> 0:00:34.040 you know that people are going to pay attention on 0:00:34.040 --> 0:00:34.559 a Saturday. 0:00:34.600 --> 0:00:37.440 I think it's great, and some people actually go out 0:00:37.440 --> 0:00:40.879 the Omaha, Nebraska to attend. One of those people is 0:00:41.360 --> 0:00:45.560 Matt Palozola. He's a senior insurance analyst for Bloomberg Intelligence. 0:00:46.080 --> 0:00:47.599 How was Omaha? 0:00:48.880 --> 0:00:51.440 I was there. It was fine, it was supposed to 0:00:51.440 --> 0:00:53.320 be warm. It was a little rainy the first day, 0:00:54.000 --> 0:00:56.040 but I got to stay in downtown Omaha, which had 0:00:56.480 --> 0:00:57.400 some nice restaurants. 0:00:57.480 --> 0:01:01.040 No, so let's get disappointed, Paul, So, I mean, do 0:01:01.080 --> 0:01:03.480 you literally thousands of people go into an arena. 0:01:03.800 --> 0:01:07.480 Yeah, it's the downtown arena there. They have two days. 0:01:07.520 --> 0:01:10.759 The first day is essentially a shopping day where all 0:01:10.800 --> 0:01:13.800 the companies are there, people are buying stuff hand over fist. 0:01:13.840 --> 0:01:15.360 Did you get to talk to some of the managements 0:01:15.400 --> 0:01:16.920 of the companies? Which is coal? And then the second 0:01:16.959 --> 0:01:17.840 day is the actual meeting. 0:01:17.880 --> 0:01:20.479 I'm sorry, wait at an arena like college orientation? 0:01:20.920 --> 0:01:25.360 Like, yeah, no, I think it's described. It's the Chi 0:01:25.440 --> 0:01:27.320 or Chai. Actually don't know the name of the arena 0:01:27.480 --> 0:01:30.520 in Omaha. And there are sports teams that play there, 0:01:30.720 --> 0:01:32.880 so it's it's kind of like a smaller version of 0:01:33.040 --> 0:01:34.800 a sports arena that you might see here. 0:01:34.880 --> 0:01:39.759 All right, so takeaways here, occidental patrolling, let's start there. 0:01:39.120 --> 0:01:41.480 What's burshore Hathway saying they're going to do that? 0:01:41.720 --> 0:01:44.880 So he shot that down. He specifically brought up, we're 0:01:44.880 --> 0:01:46.520 not going to buy it. We don't want to buy 0:01:46.560 --> 0:01:48.240 the whole company. We might buy more of the stock, 0:01:48.320 --> 0:01:50.160 but we're not interested in owning the whole company. 0:01:50.240 --> 0:01:52.680 And is that anything more than that? Like we feel 0:01:52.680 --> 0:01:55.600 like we've got enough energy, we've had enough exposure. Why 0:01:55.680 --> 0:01:57.640 wouldn't they take a control you didn't. 0:01:57.480 --> 0:01:59.440 Really touch on it. I mean they have a lot 0:01:59.440 --> 0:02:01.840 of energy, they own a ton of Chevron as well. 0:02:02.760 --> 0:02:05.520 Those kind of operate in the same space. So and 0:02:05.560 --> 0:02:07.040 he said, why would we want to do that, I mean, 0:02:07.040 --> 0:02:09.720 they own the preferreds. Why would they want to lose 0:02:09.760 --> 0:02:12.000 that yield on those preferreds to own the stock. 0:02:12.440 --> 0:02:13.080 That's a good point. 0:02:13.240 --> 0:02:15.920 Well, you are at its core, as I discovered this 0:02:15.960 --> 0:02:19.120 morning an insurance guy. So give us the give us 0:02:19.160 --> 0:02:20.919 the highlights from Geico here. 0:02:21.240 --> 0:02:24.720 So what was interesting is auto insurers have been really 0:02:24.720 --> 0:02:26.760 taking it on the chin for the pasting year. The 0:02:26.800 --> 0:02:30.600 first quarter results surprised on the upside because of Geico. 0:02:30.800 --> 0:02:32.560 So the results were better than I thought they'd be. 0:02:33.919 --> 0:02:34.079 A G. 0:02:34.280 --> 0:02:36.800 Jane, who's in charge of the insurance business and vice chairman, 0:02:37.120 --> 0:02:40.280 pointed out they had favorable reserve development and it was 0:02:40.320 --> 0:02:42.200 a little bit of seasonality and he kind of talked 0:02:42.240 --> 0:02:45.680 down the next two years. So it was a kind 0:02:45.680 --> 0:02:48.760 of earnings beat on that. But the go forward outlook 0:02:48.840 --> 0:02:49.240 not great. 0:02:50.280 --> 0:02:55.080 So so like on the auto business, Detroitch making fewer cars, 0:02:55.440 --> 0:03:00.360 therefore there's fewer insurance policies. Therefore Geico's business growth that 0:03:00.800 --> 0:03:02.280 is coming down is that kind of the way I 0:03:02.280 --> 0:03:03.040 think about it. 0:03:02.919 --> 0:03:06.280 Not necessarily. So what it is is maybe fewer cars 0:03:06.320 --> 0:03:10.959 being built, prices of those cars going up, those cars 0:03:11.000 --> 0:03:14.720 becoming more expensive to repair or replace, thus insurance claims 0:03:14.720 --> 0:03:19.760 going up. Kiko is actually cutting claim cutting policies to 0:03:19.919 --> 0:03:22.400 combat that. So their policies are going down, but not 0:03:23.000 --> 0:03:24.519 for the reason that they're being less cars, for the 0:03:24.520 --> 0:03:26.320 reason that they're just making less money so they want 0:03:26.360 --> 0:03:27.000 to stop losing. 0:03:28.240 --> 0:03:29.800 And they still spend a lot on advertising. 0:03:30.680 --> 0:03:33.480 They certainly do. All of them are cutting across the board, 0:03:33.520 --> 0:03:34.639 but cutting. 0:03:34.320 --> 0:03:38.360 From a large starting right, what else, I'm sorry, what 0:03:38.400 --> 0:03:41.240 else in the insurance business? Like to explain those what else? 0:03:41.600 --> 0:03:43.400 Berkshire Hathaway has an insurance. 0:03:43.080 --> 0:03:45.000 Business, so they have a I know, this is your 0:03:45.000 --> 0:03:49.400 favorite business, reinsurance business, which is insurance for insurance companies. 0:03:49.720 --> 0:03:52.840 And what was very interesting was there's renewal points at 0:03:52.840 --> 0:03:55.200 certain points in the year, and one of the big 0:03:55.280 --> 0:03:58.200 ones is January first, and Berkshire was kind of a 0:03:58.320 --> 0:04:01.800 non player in that huge player in the space. So 0:04:02.120 --> 0:04:04.600 there was a question of what are they seeing that 0:04:04.640 --> 0:04:07.640 we're not seeing, because this is the prices in reinsurance 0:04:07.640 --> 0:04:09.600 are doing really well. And other reinsurance can be saying 0:04:09.640 --> 0:04:13.320 this is great. It's a generational market. And Berkshire, known 0:04:13.360 --> 0:04:17.080 as one of the smartest players, actually didn't participate and 0:04:17.120 --> 0:04:20.080 we didn't know what happened. A jet actually said at 0:04:20.120 --> 0:04:22.640 the meeting, you know what, a lot of capacity came 0:04:22.640 --> 0:04:25.960 on that undercut us in price in January, but in 0:04:26.000 --> 0:04:29.560 April we saw that capacity come back. So they're jumping 0:04:29.560 --> 0:04:32.000 back into reinsurance in a big way. Oh my gosh, 0:04:32.000 --> 0:04:36.920 so who ensures the reinsurance the retro reinsurance. There's another 0:04:37.000 --> 0:04:37.479 level of it. 0:04:37.520 --> 0:04:40.760 Actually, wait really yes, oh okay, that was scastic hing 0:04:40.839 --> 0:04:43.200 every single day. Let's talk a little bit about the 0:04:43.200 --> 0:04:46.200 cash pile of the Brickshire is sitting on here, so. 0:04:46.600 --> 0:04:50.960 One hundred and thirty billion ish in cash. What was 0:04:51.560 --> 0:04:54.200 incredibly interesting is, you know, the takeaway a lot of 0:04:54.200 --> 0:04:57.279 headlines where Buffett says operating companies going to make less 0:04:57.320 --> 0:05:00.280 money next year, which he did say, and it was 0:05:00.279 --> 0:05:03.039 an extraordinary environment in the past couple of years. That 0:05:03.080 --> 0:05:05.840 demand was through the roof. If people couldn't buy one thing, 0:05:05.880 --> 0:05:09.279 they bought another, and that is slowing down, it's stopping. 0:05:09.520 --> 0:05:12.400 But the cash that they're earning or the interest they're 0:05:12.400 --> 0:05:17.280 earning right, going from fifty million to five billion on 0:05:17.320 --> 0:05:20.640 their cash and short term securities, which would essentially offset 0:05:20.760 --> 0:05:22.560 any decline in demand they saw. 0:05:23.000 --> 0:05:27.080 All right, is succession not the TV show? We're talking 0:05:27.080 --> 0:05:27.800 about succession? 0:05:27.880 --> 0:05:30.240 At so excited for just one second there? 0:05:30.640 --> 0:05:34.280 Yes, exactly, Greg Abel he is the successor. He was 0:05:34.360 --> 0:05:37.560 named in twenty twenty one. Is that whole succession question 0:05:37.920 --> 0:05:38.880 kind of off the table? 0:05:38.960 --> 0:05:39.200 Now? 0:05:39.720 --> 0:05:39.880 Yeah? 0:05:39.920 --> 0:05:42.360 I think, I mean, I think Greg Is is clearly 0:05:42.920 --> 0:05:44.599 the one who's going to do it. They're trying to 0:05:44.600 --> 0:05:46.200 get him out there a little bit more. He was 0:05:46.600 --> 0:05:48.279 on the stage for the first half of the meeting. 0:05:48.360 --> 0:05:50.839 Why I mean, I got Charlie and I got mister 0:05:50.920 --> 0:05:54.039 Munger there. Why don't I have the guy who's actually 0:05:54.120 --> 0:05:54.840 running the business. 0:05:55.160 --> 0:05:57.919 So so he was. Greg and a Jet were in 0:05:57.960 --> 0:05:59.760 the at the beginning of the meeting for a couple 0:05:59.760 --> 0:06:02.840 of hours. Greg didn't get a lot of questions. Unfortunately, 0:06:03.160 --> 0:06:05.359 Ajet actually ended up talking more than Greg, but he 0:06:05.400 --> 0:06:09.360 talked a lot in another interview. You know, Buffett and 0:06:09.440 --> 0:06:12.279 Munger will will say that running their business is quote easy. 0:06:12.360 --> 0:06:16.680 Clearly it's not, but they have a point in that 0:06:17.800 --> 0:06:22.000 as constructed even just left alone, will generate significant amounts 0:06:22.040 --> 0:06:22.359 of capital. 0:06:22.360 --> 0:06:23.760 All right, I'm going to ask you to go little 0:06:23.760 --> 0:06:25.720 wonky here, because we're coming into the summer, which means 0:06:25.760 --> 0:06:28.640 we're coming into hurricane season. How does the state of 0:06:28.640 --> 0:06:31.720 Florida ensure itself against hurricanes? 0:06:33.320 --> 0:06:35.520 It's barely hanging on by a thread. So what is 0:06:35.600 --> 0:06:38.080 going on in Florida is if. 0:06:37.920 --> 0:06:39.800 I go buy a conda down there with like every 0:06:39.800 --> 0:06:41.600 one of my neighbors who's moving down to Florida, which 0:06:41.640 --> 0:06:43.000 I'm not doing, by the way, and that'd be the 0:06:43.080 --> 0:06:45.400 last thing I do. Can I get insurance down there 0:06:45.400 --> 0:06:46.080 for my little. 0:06:46.080 --> 0:06:47.880 You can get it. It would be quite expensive. I 0:06:47.920 --> 0:06:50.800 believe what was happening is it's not just the weather risk, 0:06:50.839 --> 0:06:54.800 but the litigious environment in Florida was causing claims to 0:06:54.839 --> 0:06:57.640 be multiples of what they should be. If a claim 0:06:57.720 --> 0:06:59.320 was ten thousand dollars, you could end up being one 0:06:59.360 --> 0:07:02.880 hundred thousand with legal costs and all these things. So 0:07:02.960 --> 0:07:05.479 what happened is our friends, the reinsurers, actually said we're 0:07:05.520 --> 0:07:09.720 not reinsuring you anymore, and that led to the primary 0:07:09.760 --> 0:07:13.880 insurance companies losing financial strength ratings and going out of business. 0:07:13.960 --> 0:07:15.600 So the cost of it went through the roof, and 0:07:15.640 --> 0:07:19.160 the state actually ensures a lot of that. Berkshire to 0:07:19.160 --> 0:07:22.720 bring it back to them, actually jumped into Florida in 0:07:22.720 --> 0:07:25.320 these reinsurance retals. So if there is a hurricane of 0:07:25.360 --> 0:07:27.080 Florida and you have me back here in a couple 0:07:27.120 --> 0:07:29.400 of months, Berkshire would actually be pretty exposed. 0:07:29.800 --> 0:07:31.720 Now why do you think they got back into the 0:07:31.760 --> 0:07:32.400 Florida market? 0:07:32.520 --> 0:07:35.080 So g was saying the pricing was probably just too 0:07:35.080 --> 0:07:39.480 good to resist. And look, they're incredibly smart, so they 0:07:40.040 --> 0:07:41.920 know the balance of what the capital are putting at 0:07:42.000 --> 0:07:44.000 risk versus what they can make. 0:07:44.240 --> 0:07:46.520 So it's not ideal is it to have this state 0:07:46.680 --> 0:07:49.320 as the insurance backbone of us? 0:07:49.840 --> 0:07:52.840 It is not at all the insurance industry, I believe 0:07:52.840 --> 0:07:54.800 it was Evan Greenberg, the CEO of Chubb, said, we 0:07:54.840 --> 0:07:59.440 don't want the government taking our business, but there's some 0:07:59.680 --> 0:08:03.000 point where it just it's not economically viable for them. 0:08:03.160 --> 0:08:06.280 Is there a solution? Is it something on political? 0:08:06.400 --> 0:08:08.760 So there is, So Florida has been working on it 0:08:08.800 --> 0:08:10.920 and they have legislation going through. It's a little bit 0:08:10.960 --> 0:08:13.440 of wait and see, but I think we're cautiously optimistic 0:08:13.480 --> 0:08:16.440 that they may have helped the problem, maybe not solved, 0:08:16.440 --> 0:08:16.800 but helped. 0:08:17.080 --> 0:08:19.960 You think, I mean again, coming into a hurricane season 0:08:19.960 --> 0:08:21.880 again and our good friends down in Florida seems to 0:08:21.920 --> 0:08:24.600 get just hammered it. It seems to be getting worse. 0:08:24.840 --> 0:08:26.520 So I would think if I were a politician, I'd 0:08:26.520 --> 0:08:27.600 want to get this thing addressed. 0:08:27.800 --> 0:08:30.080 Yeah, the frequency and severity of hurricanes is definitely getting 0:08:30.080 --> 0:08:30.720 worse than Florida. 0:08:30.880 --> 0:08:33.880 All right, we'll see how it plays out and we'll 0:08:33.880 --> 0:08:35.319 get to it. All right, some good stuff, thank ver 0:08:35.400 --> 0:08:38.280 Matt Palizoli. He covers all that good stuff for insurance. 0:08:38.280 --> 0:08:39.360 For Bloomberg Intelligence. 0:08:40.880 --> 0:08:44.280 You're listening to the teenth Ken's her live program Bloomberg 0:08:44.320 --> 0:08:47.680 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:08:47.760 --> 0:08:50.920 the iHeartRadio app, and the Bloomberg Business App, or listen 0:08:51.000 --> 0:08:53.120 on demand wherever you get your podcasts. 0:08:55.160 --> 0:08:58.400 I guess earnings still matter. They certainly matter. For Tyson 0:08:58.520 --> 0:09:01.240 Foods stock is down th firteen percent today, fifty two 0:09:01.280 --> 0:09:03.200 week low, kind of wiping out most of the year's 0:09:03.360 --> 0:09:05.640 gains here. I guess they missed some numbers here. People 0:09:05.679 --> 0:09:08.360 aren't eating chicken and what's going on here. Jen Bartash 0:09:08.480 --> 0:09:11.080 is senior Industry analysts for Bloomberg Intelligence. She follows the 0:09:11.080 --> 0:09:16.200 food industry Jen TSN, Tyson Foods. What happened. 0:09:17.360 --> 0:09:21.120 Well with Tyson? It's really a combination of things. One, 0:09:21.160 --> 0:09:24.160 you've got some structural market issues in the protein market 0:09:24.679 --> 0:09:27.560 for both beef for beef, pork and chicken, and it's 0:09:27.640 --> 0:09:30.680 hitting Tyson all simultaneously. And then second, you have some 0:09:30.760 --> 0:09:33.920 execution issues that are Tyson owned in terms of not 0:09:34.000 --> 0:09:37.680 running plants at full capacity and weak margins across the board. 0:09:37.679 --> 0:09:39.520 And so when you put all this together, it turned 0:09:39.559 --> 0:09:41.439 out to be a really weak quarter for the company. 0:09:41.600 --> 0:09:43.800 All Right, There's so many cool things on the Bloomberg terminal. 0:09:43.840 --> 0:09:46.680 PGeo is one of it. It kind of breaks down where 0:09:46.840 --> 0:09:49.600 companies get their revenue from, and for Tyson it is awesome. 0:09:50.160 --> 0:09:53.080 Beef thirty eight percent of the revenue, chicken thirty three 0:09:53.120 --> 0:09:56.000 percent of the revenue, prepared foods nineteen percent of the revenue, 0:09:56.040 --> 0:09:58.640 and pork ten percent of the revenue. So that's a 0:09:58.679 --> 0:10:01.200 breakdown for you. So let's just focus on you mentioned 0:10:01.240 --> 0:10:04.240 one's kind of an industry wide you know, protein issues. 0:10:04.640 --> 0:10:06.400 What's going on there? I'm meaning my proteins. 0:10:06.880 --> 0:10:09.680 Well, I think everybody's eating their protein. But but when 0:10:09.679 --> 0:10:13.560 it comes to the actual cycle of growing animals, there's 0:10:13.559 --> 0:10:16.559 some structural issues that are happening. So if you remember, 0:10:17.000 --> 0:10:19.040 not that long ago, we were talking about the beef 0:10:19.040 --> 0:10:21.200 market and we were talking about how herds were just 0:10:21.320 --> 0:10:25.880 being we're just being obliterated, and it takes a long 0:10:25.920 --> 0:10:29.000 time to actually rebuild beef herds, and so what we 0:10:29.320 --> 0:10:32.440 still haven't really hit the bottom of the beef cycle yet, 0:10:32.440 --> 0:10:34.560 And so what that means is that there are fewer 0:10:34.640 --> 0:10:39.000 animals and the prices are higher, so it costs more 0:10:39.000 --> 0:10:43.280 to get them, and prices at retail have been high, 0:10:43.400 --> 0:10:46.280 so the demand hasn't been as strong. So there's some 0:10:46.280 --> 0:10:50.840 some awkwardness going on there. And with Typhoning, everything everybody 0:10:50.840 --> 0:10:53.319 wants to think about is with the chicken market, and 0:10:53.600 --> 0:10:57.320 Tyson is underperformed in chicken for a long time. They've 0:10:57.360 --> 0:11:00.040 made some moves, they've you know, announced to their closing 0:11:00.080 --> 0:11:02.800 a couple of plants, things like that, but that takes 0:11:02.840 --> 0:11:06.400 time to actually see the benefit from. And so even 0:11:06.440 --> 0:11:09.840 though they're you know, they're improving their full rates to customers, 0:11:09.880 --> 0:11:13.439 there's still there's still a lag in terms of execution 0:11:13.600 --> 0:11:14.840 versus where the market is. 0:11:15.200 --> 0:11:19.000 So you guess you can't blame those darn vegetarians at all. 0:11:20.040 --> 0:11:22.560 Talk to us a little bit about the timeline there 0:11:22.640 --> 0:11:26.440 when you're talking about Tyson rebuilding that kind of hurt. 0:11:26.559 --> 0:11:30.320 Is that a story of a quarter or years? 0:11:31.000 --> 0:11:33.560 Well, you know, beefy By, you know, takes takes the 0:11:33.600 --> 0:11:37.000 longest in terms of the cycle. We're talking probably twenty 0:11:37.040 --> 0:11:39.319 twenty late twenty twenty four or early twenty twenty five 0:11:39.360 --> 0:11:42.280 until we see a real change in that market. You know, 0:11:42.440 --> 0:11:45.720 for pork that's a slightly shorter time span, but we're 0:11:45.720 --> 0:11:49.360 talking probably twenty twenty four, and for chicken it's a 0:11:49.400 --> 0:11:51.280 short time span, but there are a lot of moving 0:11:51.320 --> 0:11:54.720 parts to it. And that's the area where Tyson's business 0:11:54.760 --> 0:11:59.160 has had the most execution issues. So although the company 0:11:59.200 --> 0:12:02.120 is expecting proof performance in the second half of this year, 0:12:02.559 --> 0:12:05.200 realistically we may be looking at twenty twenty four before 0:12:05.200 --> 0:12:06.280 things really settle down. 0:12:07.160 --> 0:12:09.520 You know, I watch Yellowstone, I think I fully understand 0:12:09.520 --> 0:12:13.480 this whole ranching cattle thing. Where does Tyson where do 0:12:13.520 --> 0:12:17.520 they get their cattle? Like how many ranches are out there? 0:12:17.720 --> 0:12:20.160 The Dutton ranch on Montana, mean, like how many ranches 0:12:20.160 --> 0:12:22.679 are there out there? Like supply beef and all that 0:12:22.760 --> 0:12:23.360 kind of stuff. 0:12:23.800 --> 0:12:25.960 Well, there are a large number of ranches out there, 0:12:26.000 --> 0:12:31.280 and Tyson they have long established relationships with individual ranchers 0:12:31.520 --> 0:12:33.800 in terms of their supply, so that they are sure 0:12:33.840 --> 0:12:36.520 that they have kind of that, you know, the supply 0:12:36.679 --> 0:12:39.800 locked in. But it's been tough times. We've had years 0:12:39.800 --> 0:12:43.200 of drought. You know, we've had higher costs to feed animals. 0:12:43.960 --> 0:12:45.920 It is not an easy time to be a rancher 0:12:46.000 --> 0:12:49.880 right now, and so that makes it there's less incentive 0:12:50.000 --> 0:12:53.280 to increase herd size when you've got a lot of 0:12:53.280 --> 0:12:58.080 those kind of macroeconomic and you know pressures, and you know, 0:12:58.200 --> 0:13:00.000 even interest rates are higher, it's you know, it's hard 0:13:00.120 --> 0:13:02.480 or to invest in your in your ranch as well. 0:13:02.720 --> 0:13:05.000 I'm really glad you mentioned just the higher pricing and 0:13:05.120 --> 0:13:07.400 interest rates as well. Talk to us about the pricing 0:13:07.360 --> 0:13:09.320 the equation. I felt like a lot of food companies 0:13:09.320 --> 0:13:14.600 and consumer companies broadly, Uh, we're almost rewarded by the 0:13:14.600 --> 0:13:16.640 stock market when they were able to say we're going 0:13:16.679 --> 0:13:19.200 to hike up our prices and still see that demand. 0:13:20.200 --> 0:13:21.840 Just how sticky are those prices? 0:13:22.640 --> 0:13:26.040 Well, yeah, the prices so far have been sticky. But 0:13:26.120 --> 0:13:28.720 what we're seeing when we look at transaction level data 0:13:29.080 --> 0:13:32.760 from uh, you know, from what's what people are actually buying. 0:13:32.920 --> 0:13:35.840 What we're seeing is that that that tolerance for the 0:13:35.880 --> 0:13:40.640 price increases is abating. And so you know, in our perspective, 0:13:40.760 --> 0:13:42.880 what that really means is that as we get towards 0:13:42.920 --> 0:13:44.360 the second and a half of the year, there's a 0:13:44.400 --> 0:13:46.600 real chance that we're going to see an increase in 0:13:46.640 --> 0:13:52.000 promotions and so you're going to see retailers running more sales. Now, 0:13:52.120 --> 0:13:55.360 I think everyone's going to try to minimize, you know, 0:13:55.480 --> 0:14:00.400 the profit impact of those, but the the macro economic 0:14:00.440 --> 0:14:03.000 environment is really setting these companies up to where they're 0:14:03.000 --> 0:14:05.600 going to have to be more promotional in nature, and 0:14:05.679 --> 0:14:09.000 consumers in parder demanding that so that tolerance for price 0:14:09.080 --> 0:14:13.400 increases is almost gone. Now it's going to be harder 0:14:13.400 --> 0:14:16.360 and harder for these companies to put more price more 0:14:16.400 --> 0:14:20.000 price increases through. So it's it's going to be a 0:14:20.080 --> 0:14:22.120 tricky second half of the year to navigate. 0:14:22.320 --> 0:14:24.960 So, Jen, the troubles you outlined here for Tyson, are 0:14:24.960 --> 0:14:27.040 we seeing that with some of their peers like Pilgrim's 0:14:27.040 --> 0:14:29.360 Pride and some of those others. This is an industry 0:14:29.360 --> 0:14:30.960 wide type of issue. 0:14:31.160 --> 0:14:33.840 Well, some of it is industry wide. So some of 0:14:33.880 --> 0:14:38.240 those structural issues in terms of like animal availability, the 0:14:38.280 --> 0:14:42.880 cost of feed, those impact everybody relatively equally. You know, 0:14:42.960 --> 0:14:45.720 when it comes to actual internal challenges in terms of 0:14:45.760 --> 0:14:48.440 how you're running your plants, are you fully staffed, you know, 0:14:48.480 --> 0:14:52.000 are you at your maximum capacity? That's where Tyson has 0:14:52.160 --> 0:14:54.200 has had more challenges than some of their peers. 0:14:54.920 --> 0:14:57.360 Jen, talk to us a little bit about the You 0:14:57.520 --> 0:14:59.680 talked about the macroeconomic piece of it. Talk to us 0:14:59.680 --> 0:15:02.120 about the interest rates specific piece of it. I think 0:15:02.160 --> 0:15:05.800 you talked about how higher interest rates makes it harder 0:15:05.880 --> 0:15:10.360 to invest in ranches specifically. Again, walk us to the 0:15:10.400 --> 0:15:13.480 timeline on it. Is there an extra lag of from 0:15:13.760 --> 0:15:16.760 one the Federal Reserve hikes interest rates to just how 0:15:16.840 --> 0:15:21.160 much difficulty some of these kind of ranchers face, or 0:15:21.400 --> 0:15:25.520 is this something that we kind of look at idiosyncratically. 0:15:26.400 --> 0:15:30.560 Well, I think that there's there's no there's no easy 0:15:30.880 --> 0:15:33.120 you know, there's no easy answer to that, to be honest. 0:15:34.040 --> 0:15:37.000 You know, ranchers, you know, tend to be a conservative 0:15:37.040 --> 0:15:40.280 bunch by nature, and it's it's not an easy business 0:15:40.280 --> 0:15:43.560 to be in. And so anytime there in there are 0:15:43.600 --> 0:15:46.520 factors that impact their ability to grow their business or 0:15:46.560 --> 0:15:50.480 to invest in their business. That that puts puts them 0:15:50.600 --> 0:15:54.160 on a more defensive footing, and so there there's definitely 0:15:54.200 --> 0:15:57.160 a lag. So it will take time once interest rates, 0:15:57.280 --> 0:15:59.520 if they start to come down a little bit, it 0:15:59.560 --> 0:16:01.520 will take a little bit of time for confidence to 0:16:01.560 --> 0:16:03.800 come back that that is the right time to do 0:16:03.920 --> 0:16:08.440 more investment. And so it's it's it's it's you know, 0:16:08.480 --> 0:16:11.480 you're talking about people's you know, long term livelihoods, and 0:16:11.560 --> 0:16:14.160 so it's it's not something that tends to move or 0:16:14.200 --> 0:16:15.160 pivot very quickly. 0:16:15.600 --> 0:16:18.960 Jen, you also cover the supermarket side of the supply 0:16:19.040 --> 0:16:21.720 chain here, the food supply chain. So Entyson, they have 0:16:21.800 --> 0:16:26.080 higher costs, therefore they raise their prices. Are the supermarkets 0:16:26.160 --> 0:16:28.840 able to pass along those price increases to consumers? 0:16:29.560 --> 0:16:34.400 They are passing through selectively, and so you know where 0:16:34.440 --> 0:16:37.440 they can they do. I think the one advantage that 0:16:37.760 --> 0:16:40.280 grocers have is because a lot of them offer private 0:16:40.360 --> 0:16:43.640 label products, they're very in tune with what it costs 0:16:43.680 --> 0:16:46.880 to manufacture certain products, and so they can have very 0:16:46.920 --> 0:16:50.480 good negotiations with the packaged food companies and not just 0:16:50.600 --> 0:16:54.560 accept price increases for the sake of price increases. You know, 0:16:54.640 --> 0:16:56.720 what what a grocer will do is they will pick 0:16:56.760 --> 0:17:00.120 certain products where you know, they would have maintained their 0:17:00.280 --> 0:17:02.760 their value perception in the minds of their customers, and 0:17:02.840 --> 0:17:08.480 so if prices like hugely, say on a particular product, 0:17:09.320 --> 0:17:11.560 they may not pass the full price increase through just 0:17:11.600 --> 0:17:13.720 so that their customers feel like they're still getting a 0:17:13.760 --> 0:17:17.359 good deal, but they will pass through price on you know, 0:17:17.440 --> 0:17:20.280 other products. So they kind of focus on key items 0:17:20.960 --> 0:17:25.000 that drive value perception and manage that what they pass 0:17:25.040 --> 0:17:27.639 through very carefully on those, and then they take a 0:17:27.640 --> 0:17:29.840 little bit more they have a little bit more flexibility 0:17:29.920 --> 0:17:32.440 on the rest of the store in terms of price increases. 0:17:33.280 --> 0:17:38.200 Jen, very quickly thirty seconds. Do we see buybacks, dividend increases, 0:17:38.240 --> 0:17:40.080 any of that jazz in Tyson's future. 0:17:41.119 --> 0:17:43.000 Well, they say that they're going to kind of maintain 0:17:43.080 --> 0:17:46.600 the same courses they've had in terms of their capital allocation, 0:17:46.800 --> 0:17:50.000 and so you know, don't don't anticipate any any cuts 0:17:50.040 --> 0:17:53.160 to that, to that policy, and we'll have to see 0:17:53.160 --> 0:17:54.119 what their quarter holds. 0:17:54.720 --> 0:17:57.240 All right, Jen, thank you so much. We appreciate checking 0:17:57.280 --> 0:17:59.760 in with you. Talking about Tyson Food again. They had 0:17:59.760 --> 0:18:04.000 some a tough quarter, tough outlook for that business. Jen 0:18:04.040 --> 0:18:06.800 Bartasha's senior industry antal. She covers all the whole food 0:18:06.840 --> 0:18:08.359 stuff all the way through to the retail and to 0:18:08.440 --> 0:18:10.200 the supermarkets. So a great understanding there. 0:18:10.480 --> 0:18:13.600 You're listening to the tape cans are live program Bloomberg 0:18:13.640 --> 0:18:17.240 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:18:17.320 --> 0:18:20.560 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:18:20.560 --> 0:18:23.400 You can also listen live on Amazon Alexa from our 0:18:23.400 --> 0:18:28.480 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:18:29.480 --> 0:18:31.720 All right, let's talk to professional here about these markets, 0:18:31.720 --> 0:18:33.520 because time and time you just feel like you're in 0:18:33.560 --> 0:18:36.080 a market with so many cross currents out there. Ecodata, 0:18:36.520 --> 0:18:40.240 Federal Reserve movement, here, earnings, we're right finishing up the 0:18:40.280 --> 0:18:42.920 earning season. We've got a little bit of a bank 0:18:43.040 --> 0:18:45.520 turmoil here, and we put all that together and it's 0:18:45.560 --> 0:18:48.480 tough to come up with some big conviction buys. Let's 0:18:48.520 --> 0:18:49.920 check in what somebody who does this for a living. 0:18:50.600 --> 0:18:55.159 Efan Debit Chief Investment Officer of Manetta Group. Again, cross 0:18:55.200 --> 0:18:57.600 currents out there. I'll be interested to get your perspective 0:18:57.640 --> 0:19:00.360 about how you think this market is behaving and where 0:19:00.400 --> 0:19:01.720 you think it's going to go going forward. 0:19:02.960 --> 0:19:06.479 It's extremely difficult to give a sense of direction right 0:19:06.520 --> 0:19:09.760 now because we're seeing such contrary indicators. We even have 0:19:09.800 --> 0:19:12.880 to look at today's performance and markets versus Friday's performance 0:19:13.240 --> 0:19:15.399 when we can see that markets really are moving on. 0:19:15.440 --> 0:19:18.600 The smallest piece of news, most of which is contradictory, 0:19:19.040 --> 0:19:21.440 was inflation coming into check. It looks like that at 0:19:21.440 --> 0:19:24.680 some point last week we heard the said we potentially 0:19:24.720 --> 0:19:27.000 a pause and that all looks very positive. And now 0:19:27.040 --> 0:19:29.840