WEBVTT - FedEx Falls After Outlook Cut Again Amid Economic Worries 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.640 --> 0:00:12.640 This is Bloomberg Business Week Insight from the reporters and 0:00:12.840 --> 0:00:16.800 editors that bring you America's most trusted business magazine, plus 0:00:17.000 --> 0:00:20.799 global business, finance and tech news. The Bloomberg Business Week 0:00:20.840 --> 0:00:25.600 Podcast with Carol Masser and Tim Stenoveek on Bloomberg Radio. 0:00:26.720 --> 0:00:29.960 We've just seen, certainly, you know, Stock's struggle. We're at 0:00:30.000 --> 0:00:32.160 the tail end of earnings. Although we've got a couple 0:00:32.200 --> 0:00:34.920 of earnings that certainly we're key in today's trade, and 0:00:34.960 --> 0:00:37.200 a couple of big ones that we continue to get 0:00:37.640 --> 0:00:40.440 to fill in the earnings picture. But this is so important, 0:00:40.640 --> 0:00:44.640 and we're getting stories of concerns about or i should 0:00:44.640 --> 0:00:47.839 say the c suite talking about uncertainty, economic uncertainty in 0:00:47.920 --> 0:00:51.560 terms of the outlook, you know, pointing to things like trade, sentiment. 0:00:52.320 --> 0:00:55.000 These are things that you know, especially sentiment. 0:00:55.400 --> 0:00:56.000 It's just a. 0:00:55.920 --> 0:00:59.400 Way people feel, whether it's about shopping, spending, or what 0:00:59.440 --> 0:01:03.080 they feel about the market. But sentiment can turn into reality, 0:01:03.760 --> 0:01:05.880 and so that's why we pay so close attention to it, 0:01:06.280 --> 0:01:08.160 especially when we think about what might happen. I mean, 0:01:08.160 --> 0:01:10.920 we're almost halfway through this year. I know, we still 0:01:10.959 --> 0:01:11.640 have a couple of months. 0:01:11.760 --> 0:01:13.920 But I know, no, but it's kind of. 0:01:13.959 --> 0:01:15.720 Let's say we're almost a quarter the way through this year. 0:01:15.800 --> 0:01:18.479 Let's say that, all right, a quarter a quarter technically correct, 0:01:18.520 --> 0:01:19.880 but it feels like a lot more. 0:01:20.440 --> 0:01:21.440 It does feel like a lot. 0:01:21.680 --> 0:01:21.880 Look. 0:01:22.000 --> 0:01:24.679 I talked to some market observers this week who repeated 0:01:24.680 --> 0:01:29.080 this idea that once we do get regulatory clarity on tariffs, 0:01:29.080 --> 0:01:32.399 which supposedly is coming April second the President keeps reminding us, 0:01:32.840 --> 0:01:35.200 then we will see things settle down a bit. I 0:01:35.200 --> 0:01:36.679 don't know, Carol, I'm not so sure. 0:01:36.800 --> 0:01:39.399 I got to say, if that's it, yes, if more 0:01:39.440 --> 0:01:41.880 tariffs possibly come, or we continue to hear it in 0:01:41.920 --> 0:01:44.839 the narrative out of the White House, that could be problematic. Hey, listen, 0:01:44.880 --> 0:01:49.160 another great bell Weather economic, bell Weather Market, Bellweather is FedEx. 0:01:49.160 --> 0:01:52.400 We got their earnings last night. Stock at it's lows. 0:01:52.200 --> 0:01:54.440 Today down almost twelve percent right now down about six 0:01:54.520 --> 0:01:57.560 point three percent. Company did lower its full year guidance 0:01:57.600 --> 0:02:01.320 for our third consecutive quarter, citing inflation and citing uncertain 0:02:01.360 --> 0:02:04.680 demand for shipment. So let's get back to Lee Klascow. 0:02:04.800 --> 0:02:06.520 He was with us as we were breaking down those 0:02:06.520 --> 0:02:10.080 earnings last night. He Bloomberg Intelligence senior Transport, Logistics and 0:02:10.080 --> 0:02:13.120 shipping analysts. He joins US from BI headquarters in Princeton, 0:02:13.120 --> 0:02:16.120 New Jersey. So, Lee, did we get more from the 0:02:16.160 --> 0:02:18.720 company following earnings about that cut in its full year 0:02:18.800 --> 0:02:20.160 guidance for the third quarter? 0:02:21.120 --> 0:02:23.080 Yeah, I think you know, what it pointed to is 0:02:23.120 --> 0:02:26.600 a weaker industrial economy and a weaker B to B 0:02:26.919 --> 0:02:30.120 demand or business to business demand. So obviously not the 0:02:30.160 --> 0:02:34.240 home deliveries, it's just parcels between companies, so think of 0:02:34.560 --> 0:02:38.560 lawyers and things of that nature. That's been much weaker 0:02:38.600 --> 0:02:42.359 than I think they expected. And as you mentioned, we're mentioning, 0:02:42.400 --> 0:02:46.239 you know, the whole uncertainty that's swirling around the economy 0:02:46.440 --> 0:02:49.360 really is making it hard not only for people like 0:02:49.440 --> 0:02:51.120 me to kind of figure out, you know, where things 0:02:51.160 --> 0:02:54.080 are heading, but also the C suite to kind of 0:02:54.160 --> 0:02:57.280 give guidance that that's going to come in within range. 0:02:57.280 --> 0:03:01.440 So there's a lot of risks to guidance going forward 0:03:01.600 --> 0:03:03.200 for not only fed X, but for a lot of 0:03:03.200 --> 0:03:06.640 companies in the space because if the risk or if 0:03:06.639 --> 0:03:10.040 actual tariffs are going to hurt demand and be inflationary, 0:03:10.680 --> 0:03:14.720 that is going to really hurt the freight economy recovery, 0:03:14.960 --> 0:03:18.080 which is something we're really hoping for in twenty twenty five. 0:03:18.639 --> 0:03:20.799 But it seems that that recovery is getting pushed out 0:03:20.840 --> 0:03:21.600 further and further. 0:03:22.639 --> 0:03:24.519 Lee, how much further do you think that recovery is 0:03:24.520 --> 0:03:25.280 getting pushed out. 0:03:26.320 --> 0:03:28.799 Well, we're seeing, like you know, certain aspects of the market. 0:03:28.960 --> 0:03:31.840 So like the rail industry. The rail industry is showing 0:03:31.960 --> 0:03:34.519 volume growth, which is good, but some might argue a 0:03:34.560 --> 0:03:37.600 lot of that growth is just pull forward demand less 0:03:37.600 --> 0:03:42.320 than truckload carriers, which FedEx is actually the largest provider 0:03:42.400 --> 0:03:45.320 of that kind of service LTL service and their FedEx 0:03:45.360 --> 0:03:49.240 freight business. You know that's been down. We've seen you know, 0:03:49.320 --> 0:03:53.960 tonnage down from FedEx from its competitors, down by mid 0:03:54.000 --> 0:03:56.920 to high single digits. And that business is really tied 0:03:57.000 --> 0:04:01.640 to the industrial economy, so that business will go as 0:04:01.720 --> 0:04:04.440 the ism goes, which is a good leading indicator. And 0:04:04.480 --> 0:04:08.640 while that's been positive for the last two months, it's 0:04:08.680 --> 0:04:13.000 been barely in expansion mode. So you know that recovery 0:04:13.080 --> 0:04:14.040 is extremely. 0:04:13.680 --> 0:04:17.360 Fragile, is there. I mean, are you are you taking 0:04:17.360 --> 0:04:20.760 any signs from this report, from the commentary that we 0:04:20.800 --> 0:04:25.200 got on the call, Lee about this being an economic 0:04:25.200 --> 0:04:28.080 bell weather for how the economy is doing. You did 0:04:28.120 --> 0:04:30.719 say that, you know that B to B communication that 0:04:30.760 --> 0:04:33.440 typically happens with FedEx, less of that is happening. How 0:04:33.480 --> 0:04:34.400 are you reading into that? 0:04:35.120 --> 0:04:37.560 Yeah, So I think with FedEx, it's two things. So 0:04:37.640 --> 0:04:40.279 some things are very FedEx specific in terms of their 0:04:40.320 --> 0:04:43.080 earnings announcement and their lower expectations, and some things are 0:04:43.120 --> 0:04:46.479 just the just the macro for the FedEx specific stuff. 0:04:46.520 --> 0:04:46.680 You know. 0:04:46.760 --> 0:04:49.960 There they are walked away from their contract with the 0:04:50.040 --> 0:04:52.520 US postal business because it was low margin business and 0:04:52.800 --> 0:04:56.240 they wanted to restructure their networks. They didn't have as 0:04:56.240 --> 0:04:59.880 many planes in the air because that's very expensive to operate. 0:05:00.040 --> 0:05:03.440 So they're they're kind of decided not to renew that business. Uh, 0:05:03.440 --> 0:05:05.880 and they're restructuring their business. And FedEx is also a 0:05:05.920 --> 0:05:08.880 company that was extremely bloated, uh you know, call it 0:05:08.920 --> 0:05:11.560 five six years ago and it's uh, you know now 0:05:11.600 --> 0:05:15.080 they're really doing the hard work of the productivity improvements 0:05:15.080 --> 0:05:18.720 that we're seeing within whether it's their driving initiative or 0:05:18.760 --> 0:05:20.840 some of their other initiatives that are really good to 0:05:20.960 --> 0:05:23.680 drive margin improvement. The problem is is that you know, 0:05:23.720 --> 0:05:28.039 you need more growth on the volume side to really 0:05:28.120 --> 0:05:30.760 see those margins improve, and a lot of that growth 0:05:30.800 --> 0:05:32.400 has to be on the B to B side. And 0:05:32.480 --> 0:05:35.040 so to answer your question, you know, yes, it is. 0:05:35.520 --> 0:05:39.040 They are telling us that the the industrial economy is 0:05:39.080 --> 0:05:42.960 a lot weaker. The consumer is, you know, somewhat resilient. 0:05:43.160 --> 0:05:45.960 But that resiliency again, you know, I think the two 0:05:45.960 --> 0:05:48.279 words that we're playing a drinking game would be fragile 0:05:48.640 --> 0:05:52.080 and uncertainty. Uh, you know, every time someone said that 0:05:52.120 --> 0:05:53.880 you have to take a drink. I think that, you know, 0:05:55.240 --> 0:05:59.000 depending on how inflationary tarists are, you know, could have 0:05:59.040 --> 0:06:02.480 a really big packed on consumers. And as you noted 0:06:02.560 --> 0:06:05.720 earlier before I came on that, you know, the consumer 0:06:05.760 --> 0:06:09.120 confidence is kind of like, you know, stumbling along and 0:06:09.160 --> 0:06:11.360 it's been moderating since the beginning of the year. 0:06:11.560 --> 0:06:13.960 Well, that drinking game made its way to our makeup room, 0:06:13.960 --> 0:06:17.600 where they actually said tariffs would be another one where 0:06:17.680 --> 0:06:19.320 it would put you on the floor because we say 0:06:19.360 --> 0:06:19.800 it so much. 0:06:19.920 --> 0:06:21.040 Hey, one thing I want to ask you. 0:06:21.040 --> 0:06:23.320 We had a couple of analysts cut their price targets 0:06:23.320 --> 0:06:24.119 on FedEx today. 0:06:24.120 --> 0:06:24.719 One downgrade. 0:06:24.760 --> 0:06:28.280 I'm looking at MarketWatch, who actually noted that Loop Capital 0:06:28.360 --> 0:06:31.480 downgrade the stock to sell from hold due to the 0:06:31.520 --> 0:06:34.039 company's vulnerability to an economic downtur What they said is 0:06:34.040 --> 0:06:37.200 with economists wratching up US recession risk, be aware that 0:06:37.240 --> 0:06:40.719 FedEx is a really bad recession stock because thin express 0:06:40.720 --> 0:06:44.600 margins amplify the earnings hit whenever there's pressure on the 0:06:44.640 --> 0:06:46.760 top line. It's not when you want to own if 0:06:46.800 --> 0:06:50.400 things go south your own analysis. If things go south, 0:06:50.440 --> 0:06:53.640 you know, there's uncertainty, and then there's recession, which is 0:06:53.720 --> 0:06:55.840 a recession problematic for FedEx. 0:06:55.920 --> 0:06:58.000 If indeed that happens, well. 0:06:57.880 --> 0:07:01.040 We don't do bihole cell now I know, I know, 0:07:01.320 --> 0:07:04.720 So just just sit that. You know, the probability of 0:07:04.760 --> 0:07:07.400 a recession I think on the Bloomberg terminals twenty five percent, 0:07:07.680 --> 0:07:09.960 and that's up from a low of twenty percent, So 0:07:10.040 --> 0:07:14.000 the probability has increased, but it's still extremely low. The 0:07:14.120 --> 0:07:18.480 US consumer has been resilient. I tend not to bet 0:07:18.480 --> 0:07:21.040 against the US consumer. I am concerned that they maybe 0:07:21.040 --> 0:07:24.760 they'll spend less, but I would never really bet against them. 0:07:24.960 --> 0:07:27.680 And when you're looking at FedEx as a company, they 0:07:28.080 --> 0:07:31.280 are finally in the midst of a transformation that was 0:07:31.520 --> 0:07:34.240 well overdue, and I think once they come out of this, 0:07:34.320 --> 0:07:38.480 and there's a better backdrop the benefits to the transformation 0:07:38.600 --> 0:07:40.800 and the cost cutting that they've been doing is really 0:07:40.840 --> 0:07:43.440 going to create a more flexible, more productive, and more 0:07:43.920 --> 0:07:47.920 profitable network. So I think I think, you know, FedEx 0:07:47.960 --> 0:07:51.160 is a very interesting name, not in the near term 0:07:51.200 --> 0:07:54.160 because they're still trying to figure things out, but looking 0:07:54.280 --> 0:07:57.680 past the noise of tariffs. 0:07:57.360 --> 0:07:59.040 Lee, we'd be remissed not to ask you about UPS. 0:07:59.120 --> 0:08:01.880 Just quickly twenty seven seconds. UPS is also down about 0:08:01.880 --> 0:08:04.440 two point two percent today. I know they're different models, 0:08:04.520 --> 0:08:08.200 different companies, but they do all work in the delivery space. 0:08:08.480 --> 0:08:10.440 What does it say about UPS or does it say 0:08:10.480 --> 0:08:12.239 nothing in terms of what we got from FedEx? 0:08:12.760 --> 0:08:15.280 So UPS sold their less than truckload business in twenty 0:08:15.320 --> 0:08:19.120 twenty one, so they don't have that that that larger 0:08:19.120 --> 0:08:23.160 exposure to the industrial economy that's that FedEx does. And 0:08:23.200 --> 0:08:25.920 then also I would say that you know, UPS is. 0:08:27.520 --> 0:08:27.960 B to B. 0:08:28.000 --> 0:08:31.160 Exposure is around thirty to thirty five percent. Don't quote 0:08:31.200 --> 0:08:33.160 me on that. It was around that in their US 0:08:33.200 --> 0:08:37.240 domestic business. So it's a it's not a huge portion 0:08:37.320 --> 0:08:40.480 of their overall business. You know, B two C is 0:08:40.520 --> 0:08:42.840 more important for them right now. And I would say 0:08:42.920 --> 0:08:45.280 UPS is probably like two or three years ahead of 0:08:45.280 --> 0:08:48.040 FedEx in terms of restructuring itself to deal with the 0:08:48.080 --> 0:08:51.640 fact that, you know, R e commerce growth is really 0:08:51.679 --> 0:08:53.199 going to drive their growth, not. 0:08:53.280 --> 0:08:53.640 B to B. 0:08:53.800 --> 0:08:56.040 All right, good stuff as always, Thanks again for that 0:08:56.360 --> 0:08:58.760 doing double duty with us over the last twenty four hours. 0:08:58.840 --> 0:09:02.920 Lea Clascow Isloomberg Intelligence Senior Transport, Logistics and Shipping Alice 0:09:03.040 --> 0:09:06.120 joining us from BI headquarters in Princeton, New Jersey. 0:09:06.679 --> 0:09:10.240 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:10.280 --> 0:09:13.760 live weekday afternoons from two to five pm Eastern. Listen 0:09:13.760 --> 0:09:17.319 on Applecarplay and Android Auto with the Bloomberg Business app, 0:09:17.480 --> 0:09:20.120 or watch us live on YouTube. 0:09:20.679 --> 0:09:23.040 There was one story that caught our attention today. 0:09:23.800 --> 0:09:26.200 Actually, one of our producers, Elizabeth, pointed it out because 0:09:26.200 --> 0:09:27.920 it just seemed to tie in so well with our 0:09:27.960 --> 0:09:30.360 next guest, Astra. Zeneca will invest two and a half 0:09:30.360 --> 0:09:32.839 billion dollars in a new research center in Beijing in 0:09:32.880 --> 0:09:36.040 a major show of commitment to China, just months after 0:09:36.160 --> 0:09:39.400 that company's top executive there was detained by authorities. We 0:09:39.520 --> 0:09:42.760 know it is so complicated doing business globally. Today, our 0:09:42.800 --> 0:09:45.320 next guest has separate supply chains for China and Asia 0:09:45.360 --> 0:09:48.040 and their Western clients, which safe to say comes in 0:09:48.280 --> 0:09:50.680 pretty handy right now. Here to talk about that and 0:09:50.720 --> 0:09:54.720 more is Siemens Healthenier's chief financial officer Jahan Schmidts, who 0:09:54.800 --> 0:09:58.560 is featured in this Sunday's Bloomberg CFO Briefing newsletter. Jahan 0:09:58.720 --> 0:10:02.680 joins us from Munich along with our own in a treatment. 0:10:02.720 --> 0:10:05.480 She's here in our studio. She's senior editor at Bloomberg News, 0:10:05.679 --> 0:10:08.120 author of the CFO Briefing newsletter, which you can sign 0:10:08.200 --> 0:10:11.120 up for at Bloomberg dot com slash CFO Briefing. 0:10:12.000 --> 0:10:14.800 Johan. Great to have you here with us. There's a 0:10:14.800 --> 0:10:15.600 lot to talk about. 0:10:15.640 --> 0:10:17.360 I do want to start with supply chains because I 0:10:17.400 --> 0:10:21.280 feel like that and tariffs and globalization is so much 0:10:21.280 --> 0:10:23.640 front and center right now. Talk to us about how 0:10:23.679 --> 0:10:26.360 you manage it, build it, think about it, and how 0:10:26.400 --> 0:10:28.520 what you have today came together. 0:10:30.000 --> 0:10:32.960 Yeah, thank you very much first for having me. I'm 0:10:32.960 --> 0:10:37.880 when I think about our global value add footprint. We 0:10:38.080 --> 0:10:41.280 have as you right for you said in the beginning, 0:10:41.280 --> 0:10:45.280 we have so we say a two site so to say, 0:10:45.320 --> 0:10:51.280 two side strategy. We manufacture and develop everything for China 0:10:51.520 --> 0:10:56.120 and for the China block out of China, and we 0:10:56.200 --> 0:11:01.080 manufacture and develop everything else in the also in the 0:11:01.080 --> 0:11:06.800 Western world. That means we have relatively detached two value 0:11:07.720 --> 0:11:11.120 chains in place. Now, this is a Karlie I would say, 0:11:11.760 --> 0:11:17.040 for the current situation, kind of a comfortable setup because 0:11:17.080 --> 0:11:19.400 we are not affected, so to say, too much by 0:11:19.760 --> 0:11:26.520 the geopolitical or teriff discussion between so far between the 0:11:26.600 --> 0:11:31.040 United States and China. And when we look at our 0:11:31.080 --> 0:11:35.120 global footprint in the Western world, twenty five percent of 0:11:35.120 --> 0:11:40.280 our employees are in the United States. We have four segments. 0:11:40.640 --> 0:11:43.480 Two of the segments are headquartered or the United States, 0:11:45.440 --> 0:11:48.520 or seventeen thousand total employees seventeen thousand. As I said, 0:11:48.559 --> 0:11:52.040 twenty five percent are in the United States. So we 0:11:52.080 --> 0:11:56.480 are well spread across the world. And this gives us 0:11:56.800 --> 0:11:59.679 a decent resilience. Yeah, but it does not make us 0:11:59.679 --> 0:12:02.120 immune against global trade wars. And I would to say this. 0:12:02.640 --> 0:12:04.880 Yeah, to follow up on that, Johan, thanks for for 0:12:05.000 --> 0:12:09.320 joining us talk to us about the Trump terraffs. Of course, 0:12:09.320 --> 0:12:11.880 a lot of moving parts, but how do you think 0:12:11.880 --> 0:12:14.360 about those and could there be an impact on your 0:12:14.400 --> 0:12:16.800 business given that you have a strong US footprint. 0:12:18.960 --> 0:12:20.960 First of all, let me look at what is currently 0:12:21.040 --> 0:12:27.600 in place the Mexico, Canada, and China additional terrorists. As 0:12:27.640 --> 0:12:30.040 I said, China is not a major topic for US 0:12:30.040 --> 0:12:35.160 because the latest since Trump one or zero, we change 0:12:35.160 --> 0:12:38.280 our supply chains so that they are detached from each other. 0:12:39.120 --> 0:12:42.520 We have i would say, some impact from some sub 0:12:42.559 --> 0:12:47.080 supply from Mexico into the United States for one of 0:12:47.120 --> 0:12:51.839 our two headquartered business in the United States or wear 0:12:51.920 --> 0:12:55.160 in business at the West Coast. This is I would say, 0:12:55.480 --> 0:12:59.079 the major impact. But it's not a huge topic. It's 0:12:59.120 --> 0:13:03.120 a so far small topic Canada, US so far not 0:13:03.160 --> 0:13:04.240 a big topic for US. 0:13:04.840 --> 0:13:06.839 And to follow up on that, have you had any 0:13:06.880 --> 0:13:10.160 sort of conversations with the administration to see if if 0:13:10.200 --> 0:13:12.800 you could be exempt from any tariffs? I know that 0:13:12.920 --> 0:13:16.920 sort of. Beijing, for example, in its retaliatory tariffs on 0:13:17.600 --> 0:13:20.080 US goods, has excluded healthcare. 0:13:21.480 --> 0:13:26.720 Yeah, and obviously we are trying to get healthcare and 0:13:26.840 --> 0:13:30.320 together with other companies in the healthcare sector out of 0:13:31.559 --> 0:13:34.640 exempt from from terraffs. I think that makes a lot 0:13:34.679 --> 0:13:39.520 of things sense because when you think about terraffs, what 0:13:39.880 --> 0:13:44.360 do they do? They will limit the flow of products 0:13:44.360 --> 0:13:47.360 and services across across the world on the one hand, 0:13:47.400 --> 0:13:51.280 but they're also will will limit the flow of knowledge 0:13:51.280 --> 0:13:53.040 and that is to the detment of patience. 0:13:53.120 --> 0:13:53.280 Yeah. 0:13:53.280 --> 0:13:58.280 Therefore, when you look at comparable situations like sanctions or others, 0:13:58.600 --> 0:14:01.800 normally healthcare gets exclude it over time. And I'm I'm 0:14:01.800 --> 0:14:05.760 hopeful that this will also get into into play in terror, 0:14:06.840 --> 0:14:07.960 hopefully sooner than later. 0:14:09.480 --> 0:14:13.240 Jagom, How do you think about this administration as president 0:14:13.360 --> 0:14:16.839 versus other world leaders that you've dealt with? How is 0:14:16.880 --> 0:14:19.280 he different to deal with? How is this administration different 0:14:19.320 --> 0:14:19.840 to deal with? 0:14:21.400 --> 0:14:25.880 Yeah, I mean normally, to be honest, when we in 0:14:25.920 --> 0:14:30.200 the particular in the United States, we do not have 0:14:30.320 --> 0:14:35.320 a lot of business with government because the prior, the 0:14:35.320 --> 0:14:38.360 healthcare system in the United States is primarily a private 0:14:38.960 --> 0:14:44.200 a private system. Therefore, where we look at changes in 0:14:44.200 --> 0:14:48.520 the administration in the United States, the impact in general 0:14:48.720 --> 0:14:53.200 on our business on the healthcare markets are for us 0:14:53.400 --> 0:14:57.840 relatively limited. Yeah, and our current assumption as we see 0:14:57.880 --> 0:15:00.520 it is also with regard to the WES market, we 0:15:00.600 --> 0:15:05.200 don't see significant disruption at the horizon in this regard now. 0:15:06.160 --> 0:15:11.240 And obviously when we look at the Trump administration, it's 0:15:11.320 --> 0:15:14.880 from it. It's not a surprise what is happening. It 0:15:15.040 --> 0:15:19.200 was clear. It was also mentioned in the campaign that 0:15:19.560 --> 0:15:23.840 things like this might happen. From a strategic standpoint, we 0:15:23.920 --> 0:15:28.240 need to stay flexible edgile because we cannot plan for everything. 0:15:28.640 --> 0:15:31.320 Will there will be surprises, and we need to try 0:15:31.320 --> 0:15:34.720 to deal with this as as rapidly as possible. 0:15:35.000 --> 0:15:35.640 I am curious. 0:15:35.680 --> 0:15:37.960 You know. There was a story out today actually from 0:15:38.000 --> 0:15:40.000 Dow Jones that talked about how you guys are setting 0:15:40.040 --> 0:15:43.760 up to cancer research centers in Alberta, Canada, focusing on 0:15:43.760 --> 0:15:47.280 oncology training and artificial intelligence and machine learning. And I 0:15:47.280 --> 0:15:49.400 guess what I want to ask you is do you 0:15:49.560 --> 0:15:51.720 see because it does feel like for so long or 0:15:51.720 --> 0:15:54.120 the last couple of months, we talked about American exceptionalism 0:15:54.640 --> 0:15:57.560 doing so well, growth and still investment coming in. But 0:15:57.640 --> 0:16:00.760 I do wonder do you think that the you, as 0:16:00.760 --> 0:16:03.480 a result of this administration and the policies that are 0:16:03.480 --> 0:16:06.680 coming out, is potentially putting an end to that exceptionalism 0:16:06.960 --> 0:16:10.480 and maybe cutting the US off from collaborations, whether it 0:16:10.560 --> 0:16:14.520 might be with your company or with healthcare in general, 0:16:14.960 --> 0:16:17.800 or research, whether it's AI, whether it's in healthcare, and 0:16:17.840 --> 0:16:18.240 so on. 0:16:22.320 --> 0:16:27.040 My personal opinion is basically answer is no, this will happen. 0:16:27.120 --> 0:16:32.200 From my standpoint, we also do not see this currently. 0:16:32.640 --> 0:16:35.520 First of all, we are a huge company in the 0:16:35.600 --> 0:16:37.880 United States. As I said, we have two or more 0:16:38.840 --> 0:16:41.040 segments in the United State States. We have more than 0:16:41.080 --> 0:16:45.880 seventeen thousand employees in the United States. We run here, 0:16:46.280 --> 0:16:49.880 of other United States, I would say, the by far 0:16:49.960 --> 0:16:55.040 most successful global variation therapy company in the world variant 0:16:55.440 --> 0:16:59.400 and we have a very very strong lab diagnostic business 0:16:59.400 --> 0:17:03.320 out of Tearytown, New York. So I think we are 0:17:03.520 --> 0:17:07.639 very us Ish also like we are very European, like 0:17:07.720 --> 0:17:10.720 we are very Chinese. We are really a global company 0:17:10.760 --> 0:17:15.200 with a very well spread global footprint. And I can't 0:17:15.240 --> 0:17:19.879 imagine that the United States will harm their people to 0:17:19.920 --> 0:17:23.440 that extent that they will cut off research in healthcare 0:17:23.560 --> 0:17:27.680 and and really do crazy things in this regard, because 0:17:27.720 --> 0:17:31.160 as I said in the beginning, this will all ultimately 0:17:31.600 --> 0:17:36.960 would go to the detriment of passions and that will on't. 0:17:36.200 --> 0:17:38.960 So just to clarify this idea of American exceptionalism being 0:17:39.040 --> 0:17:42.440 done being gone dead, if you will you don't agree 0:17:42.440 --> 0:17:42.879 with that. 0:17:45.280 --> 0:17:46.240 Yeah, I don't agree. 0:17:46.280 --> 0:17:46.680 Will okay? 0:17:48.240 --> 0:17:48.960 To follow up. 0:17:49.320 --> 0:17:55.280 You're based in Germany, A fair amount of your value 0:17:55.320 --> 0:17:57.960 creation is there, but only only I think forty five 0:17:57.960 --> 0:17:59.879 percent of your revenue comes from there. Talk to us 0:17:59.880 --> 0:18:02.959 a little bit about the changing government that we're expecting 0:18:03.600 --> 0:18:07.760 and how far you're seeing that. Potentially improving competitiveness in Germany, 0:18:07.760 --> 0:18:09.359 a topic that you and I have talked about in 0:18:09.400 --> 0:18:09.840 the past. 0:18:11.400 --> 0:18:15.199 Yeah, as you right, for we said the German market 0:18:15.280 --> 0:18:18.760 persist for us is not unimportant, but it's not super 0:18:18.960 --> 0:18:23.600 super critically ivispot to five percent of revenue. When we 0:18:23.640 --> 0:18:27.200 look at Germany as a country, I think we need 0:18:27.240 --> 0:18:31.960 to have a change in how we administer this country. 0:18:32.760 --> 0:18:38.679 I think the first steps we have seen here are promising. 0:18:39.280 --> 0:18:44.560 There were at least decision making, pragmatic decision making. The 0:18:44.920 --> 0:18:50.359 supposed to be new government establish itself. I call it 0:18:50.440 --> 0:18:57.800 a very nice credit line of one thousand billion euros. 0:18:58.320 --> 0:19:01.679 But this is I would say, very comfortable to have. 0:19:01.760 --> 0:19:03.240 On the one hand, on the other hand, it does 0:19:03.280 --> 0:19:09.960 not release this government from making tough decisions on leaning 0:19:10.600 --> 0:19:15.359 on leaning up the bureaucracy in the country and reforma things, 0:19:15.440 --> 0:19:19.639 so to say that the social systems, because otherwise, also 0:19:19.680 --> 0:19:25.040 this nice investment program will not find its way or 0:19:25.119 --> 0:19:28.000 will not pave the way to sustainable growth. 0:19:28.400 --> 0:19:31.160 So that means you'll hold off for now with new 0:19:31.200 --> 0:19:34.480 investment decisions for Germany or sort of what's your take 0:19:34.480 --> 0:19:34.840 on that. 0:19:35.640 --> 0:19:38.119 No, that's not the case. I mean for us, we 0:19:38.200 --> 0:19:42.000 have a significant value act in Germany. We see the 0:19:42.000 --> 0:19:45.840 circumstances for us in Germany as as a value at 0:19:45.920 --> 0:19:52.000 the location still very positive. We have maybe also because 0:19:52.000 --> 0:19:56.880 of the industry we get very good people. The education 0:19:57.000 --> 0:20:01.359 system is still attractive to to what we for what 0:20:01.440 --> 0:20:05.639 we need, and I think we are ongoing well. We 0:20:05.680 --> 0:20:08.760 will continue to invest. We have invested in the last 0:20:09.760 --> 0:20:13.800 three to four years, about three to five years, about 0:20:14.240 --> 0:20:18.360 six and fifty million euros a billion euros in Germany 0:20:18.560 --> 0:20:21.440 and this is a significant investment a million euros. 0:20:22.359 --> 0:20:27.240 Thirty seconds, very quickly, John, Yeah, I wonder what's the 0:20:27.280 --> 0:20:30.359 biggest kind of interesting trend disruption that's going on in 0:20:30.400 --> 0:20:31.199 your industry right now? 0:20:31.240 --> 0:20:32.399 And I do have to ask you to be very 0:20:32.480 --> 0:20:34.359 quick mhm. 0:20:35.200 --> 0:20:37.520 I think our industry is not an industry which is 0:20:37.600 --> 0:20:40.919 driven by disruption, because it's about the I would say 0:20:40.960 --> 0:20:47.520 the health of patients. Obviously, AI will play a constantly 0:20:47.760 --> 0:20:51.360 more important role, and those who do not build their 0:20:51.400 --> 0:20:53.080 case on AI will not succeed. 0:20:53.560 --> 0:20:57.280 Important well, super interesting and so appreciate your time. We 0:20:57.359 --> 0:21:01.760 coverage so much ground Johann Schmidtz, CFO of Semen's Healtheneers, 0:21:01.760 --> 0:21:04.160 and of course our Nina Trentman, Senior editor at Bloomberg News. 0:21:04.200 --> 0:21:06.600 Be sure to check out the CFO Briefing newsletter. A 0:21:06.600 --> 0:21:08.040 new one comes out on Sunday. 0:21:10.240 --> 0:21:14.000 This is the Bloomberg Business Week Podcast. Listen live each 0:21:14.040 --> 0:21:17.199 weekday starting at two pm Eastern on applecar Play and 0:21:17.280 --> 0:21:19.919 the Android Auto with the Bloomberg Business app. You can 0:21:19.960 --> 0:21:23.119 also listen live on Amazon Alexa from our flagship New 0:21:23.200 --> 0:21:29.080 York station, Just Say Alexa played Bloomberg eleven thirty Well, Carnival. 0:21:28.760 --> 0:21:31.360 Reported earnings, and the stock at one point sold off 0:21:31.359 --> 0:21:33.280 more than six percent on the news. This after a 0:21:33.400 --> 0:21:36.960 key quarterly earnings forecast trailed estimates, adding to worries that 0:21:37.000 --> 0:21:39.840 a travel slowdown has spread to even the most robust 0:21:39.880 --> 0:21:43.520 corner of the market. However, Carnival did boost full year 0:21:43.600 --> 0:21:47.879 profit expectations, beating Wall Streets view, suggesting any slow down 0:21:48.000 --> 0:21:50.600 may prove transitory. Do you want to point out too? 0:21:50.600 --> 0:21:53.040 The stock is down about fifteen percent so far here 0:21:53.080 --> 0:21:56.000 in twenty twenty five. Let's get some context and more 0:21:56.040 --> 0:21:59.199 detail around at the company's quarterly update. Great to have 0:21:59.280 --> 0:22:01.960 back with us, Josh Weinstein. He's president, CEO, and Chief 0:22:01.960 --> 0:22:05.040 Climate Officer of Carnival Corporation, and he joins us from 0:22:05.080 --> 0:22:07.160 Carnival's headquarters in Miami. 0:22:07.520 --> 0:22:09.760 Josh, great to be talking with you. How are you 0:22:11.200 --> 0:22:11.680 very well? 0:22:11.680 --> 0:22:12.920 Thank you? How are you doing? 0:22:13.080 --> 0:22:13.679 Doing okay? 0:22:13.720 --> 0:22:16.400 Trying to keep up with everything that's coming at us 0:22:16.720 --> 0:22:19.000 on a daily basis, And I kind of want to 0:22:19.040 --> 0:22:21.719 start there because there is a lot coming at anyone 0:22:21.720 --> 0:22:24.959 who's running a big company like yours today, whether it's 0:22:24.960 --> 0:22:27.879 out of Washington, whether it's out of how the consumer 0:22:28.000 --> 0:22:30.840 is feeling. How would you describe the crew's business and 0:22:30.880 --> 0:22:33.120 how it compares from your last quarterly update? 0:22:33.400 --> 0:22:34.600 What has changed at all? 0:22:34.640 --> 0:22:37.040 Because I know you have been very optimistic and it 0:22:37.040 --> 0:22:39.600 seems like you're still optimistic about the business based on 0:22:39.640 --> 0:22:40.200 the releases. 0:22:41.200 --> 0:22:44.760 Yeah, yeah, absolutely, So the thing that's changed from December 0:22:44.800 --> 0:22:47.359 to today is, well, we just completed our first quarter 0:22:47.840 --> 0:22:50.679 and instead of yields being up four point seven percent, 0:22:50.680 --> 0:22:52.520 which is what we guided to, they were up seven 0:22:52.560 --> 0:22:57.160 point three percent, and so clearly things went very very 0:22:57.160 --> 0:23:01.240 well in the first quarter. Consumers love to and we've 0:23:01.280 --> 0:23:05.120 got eight brands that are purposely tied to particular demographics, 0:23:05.119 --> 0:23:08.240 particular national markets, and it serves us very very well. 0:23:08.960 --> 0:23:12.040 And so what we see is enough strength in that 0:23:12.080 --> 0:23:15.879 first quarter that we can raise our yields for the 0:23:15.960 --> 0:23:19.840 year for our full year guidance, and that's basically saying 0:23:20.280 --> 0:23:24.800 that we're we're content to keep four percent plus yields 0:23:24.840 --> 0:23:28.479 for the remaining three quarters of the year, despite the 0:23:28.480 --> 0:23:32.920 fact that there is you know, geopolitical macroeconomic uncertainty, which 0:23:32.960 --> 0:23:35.439 certainly wasn't on the radar when we came up with 0:23:35.440 --> 0:23:36.920 our guidance to begin with in December. 0:23:37.200 --> 0:23:40.440 And yet investors seem to be at least initially disappointed 0:23:40.440 --> 0:23:44.480 over your second quarter even a forecast. Your forecast was 0:23:44.640 --> 0:23:46.879 one point three to two billion in the second quarter, 0:23:46.920 --> 0:23:48.480 as it expected one point three. 0:23:48.320 --> 0:23:50.920 To five billion. Should they be disappointed? 0:23:52.760 --> 0:23:55.360 You know what, I guess I'll answer by saying, our 0:23:55.480 --> 0:23:59.320 December guidance was basically saying we're going to be about 0:24:00.200 --> 0:24:01.920 was it a buck seventy give or take for the 0:24:02.000 --> 0:24:04.760 year on EPs. We just came out with guidance, said 0:24:04.760 --> 0:24:08.920 Buck eighty three. We all performed on revenue yields on board. 0:24:09.080 --> 0:24:12.280 On board trends are really really healthy with our consumers. 0:24:12.320 --> 0:24:15.320 So I would argue that we should be higher than 0:24:15.359 --> 0:24:18.000 where we were in December since our results are better 0:24:18.160 --> 0:24:19.320 than where we were in December. 0:24:19.359 --> 0:24:21.560 But that's really up to up to the street. 0:24:21.680 --> 0:24:24.640 Our job is to deliver and hopefully over deliver, which 0:24:24.640 --> 0:24:25.800 is what we did in the first quarter. 0:24:26.640 --> 0:24:28.280 So Josh, let's talk a little bit more about that 0:24:28.280 --> 0:24:30.760 consumer because in the press release you noted that Carnival's 0:24:30.800 --> 0:24:35.280 not completely immune from heightened macroeconomic and geopolitical volatility, and 0:24:35.320 --> 0:24:38.119 you're still taking up earnings expectations for the year. You 0:24:38.200 --> 0:24:40.399 remain on track to have another stellar year across the 0:24:40.560 --> 0:24:44.760 entire brand of cruises. Why are we hearing, then from 0:24:44.920 --> 0:24:49.280 airlines that consumers are pulling back? Why are we not 0:24:49.320 --> 0:24:50.840 seeing that in your business? 0:24:52.080 --> 0:24:55.320 Well, I think there's a couple of things to differentiate. 0:24:55.400 --> 0:25:00.000 First of all, airlines aren't just for holidays. Airlines are business. 0:25:01.240 --> 0:25:05.359 It is holidays, it's conferences, it's government travel. We are 0:25:05.400 --> 0:25:09.520 really holidays, we are vacations. So we're in a different 0:25:09.560 --> 0:25:11.800 bucket than than where Airlines are. 0:25:11.840 --> 0:25:14.560 You know, we came in to twenty twenty. 0:25:14.280 --> 0:25:16.959 Five, the best book position we've ever been in at 0:25:17.000 --> 0:25:20.080 higher prices. We came out at the end of the 0:25:20.119 --> 0:25:26.000 first quarter still being in line with record occupancy percentage 0:25:26.040 --> 0:25:29.680 and price is still nicely higher. We're eighty percent book 0:25:29.760 --> 0:25:33.440 for the year, and so we have relatively limited inventory 0:25:33.520 --> 0:25:36.240 to sell when it comes to twenty twenty five. At 0:25:36.240 --> 0:25:38.919 the same time, our guests and our brands aren't just 0:25:39.000 --> 0:25:41.359 focused on in year. You know, we just came out 0:25:41.400 --> 0:25:43.119 of the first quarter of the wave period, which is 0:25:43.160 --> 0:25:46.520 considered the traditional big push for selling, and we set 0:25:46.560 --> 0:25:49.600 a record for the most volume we've ever done during 0:25:49.680 --> 0:25:52.960 wave for future years out. So people aren't just thinking 0:25:53.000 --> 0:25:54.920 about the short term, they're thinking about the long term, 0:25:54.920 --> 0:25:56.760 which is exactly what we're doing as a company. 0:25:57.359 --> 0:25:59.199 But are you noticing any change in the tone of 0:25:59.200 --> 0:26:02.680 the bookings, of the bookings or perhaps even people canceling 0:26:02.720 --> 0:26:05.280 because of their own uncertainty. I understand there's this difference 0:26:05.320 --> 0:26:08.880 between discretionary spend and business spend, but after all, discretionary 0:26:09.280 --> 0:26:11.239 is discretionary, and that's often the first thing to go 0:26:11.280 --> 0:26:12.520 if people are feeling uncertain. 0:26:13.720 --> 0:26:16.639 Yeah, you know, we haven't seen any noticeable change in 0:26:16.720 --> 0:26:20.680 trends on cancelations, certainly, as we mentioned on the call, 0:26:20.840 --> 0:26:23.480 you know, there were ups and downs over the first quarter. 0:26:23.480 --> 0:26:26.840 There's ups and downs all the time, but we got 0:26:26.840 --> 0:26:30.320 through our period exactly at pretty much the highest point 0:26:30.320 --> 0:26:31.680 that you can get at at least for us in 0:26:31.720 --> 0:26:34.640 our history, and we feel good about. 0:26:34.400 --> 0:26:35.879 The position that puts us in. 0:26:36.440 --> 0:26:39.240 Like I said, onboard spending, you know, it's up about 0:26:39.280 --> 0:26:41.800 ten percent year over year in the first quarter. That's 0:26:41.800 --> 0:26:45.119 an acceleration of year over year performance versus where we 0:26:45.119 --> 0:26:47.560 were in the fourth quarter, and at least into the 0:26:47.600 --> 0:26:49.960 first couple of weeks of March. With cruises that have ended, 0:26:50.440 --> 0:26:53.360 we really haven't seen a slowdown in that consumer behavior 0:26:53.440 --> 0:26:55.760 that onboard spending. And so you know, at the end 0:26:55.760 --> 0:26:58.920 of the day, people in good times and bad times, 0:26:59.280 --> 0:27:00.920 they take holiday, they take a break. 0:27:00.960 --> 0:27:01.760 They need a break. 0:27:01.920 --> 0:27:05.040 You could argue in bad times they need that break 0:27:05.119 --> 0:27:06.760 even more than they do in the good times. 0:27:07.680 --> 0:27:09.440 And that's what cruising is. It's a break. 0:27:09.480 --> 0:27:11.600 It's a way to relax, to get away from things, 0:27:11.680 --> 0:27:13.880 enjoy time with friends and family. That's what people pay 0:27:13.920 --> 0:27:17.520 for now and when you line up cruise versus other 0:27:17.640 --> 0:27:21.080 vacation alternatives frustrating as it is for me as the 0:27:21.119 --> 0:27:24.119 CEO of a cruise company. We're a great value and 0:27:24.160 --> 0:27:27.800 the fact is, if people are getting concerned, if there's uncertainty, 0:27:27.800 --> 0:27:30.200 if there's noise in the background, people are searching for 0:27:30.240 --> 0:27:33.800 more value for their money. And that's exactly what we do. 0:27:34.480 --> 0:27:36.320 So it plays very well into our strength. 0:27:36.600 --> 0:27:39.320 So just for the record, I could go on a 0:27:39.359 --> 0:27:41.000 cruise for about a month right now because I need 0:27:41.000 --> 0:27:41.439 a break, but. 0:27:41.520 --> 0:27:42.800 I'd love to have you. 0:27:42.920 --> 0:27:43.880 We'd love to have you. 0:27:44.080 --> 0:27:46.520 Having said that, what about in terms of pricing, are 0:27:46.560 --> 0:27:49.919 you guys able to maintain pricing? Nothing changing in that 0:27:49.960 --> 0:27:54.080 regard either for the first quarter or even for the 0:27:54.119 --> 0:27:55.359 outlook for the second quarter. 0:27:56.680 --> 0:27:59.119 Yeah, you know, so, like I said, the first quarter, 0:27:59.320 --> 0:28:01.280 you know, are you year over year we're up over 0:28:01.320 --> 0:28:04.240 seven percent and over a two year period, we're talking 0:28:04.240 --> 0:28:06.440 about twenty four percent higher yields. 0:28:06.560 --> 0:28:08.000 Yeah, for the first quarter. 0:28:08.680 --> 0:28:10.800 When we look at the rest of the year Ques 0:28:10.800 --> 0:28:13.720 two through four, we're projecting a little bit over four 0:28:13.800 --> 0:28:17.640 percent yield improvement year over year for that nine month 0:28:17.680 --> 0:28:21.080 period remainder of the year. So you know, look, it's 0:28:21.119 --> 0:28:23.520 hard going right it's not like anything is easy, and 0:28:23.560 --> 0:28:24.440 we got to work hard. 0:28:24.440 --> 0:28:25.720 Our brands work hard. 0:28:25.520 --> 0:28:27.560 To make that become a reality, and they do it 0:28:27.880 --> 0:28:31.399 through good revenue management techniques, through the great advertising that 0:28:31.440 --> 0:28:35.000 they're doing, and then ultimately delivering onboard experiences that people 0:28:35.040 --> 0:28:37.000 want to pay for. And then they get off of 0:28:37.040 --> 0:28:39.480 our ships and they tell their friends and family how 0:28:39.520 --> 0:28:41.360 amazing it is, and we get more. 0:28:42.240 --> 0:28:43.880 Hey, one of the things we wanted to ask you 0:28:44.280 --> 0:28:47.960 is something that in late February, the US Commerce Secretary 0:28:47.960 --> 0:28:50.400 of Howard Lutnik, he made some comments about how US 0:28:50.440 --> 0:28:53.800 based cruise companies Josh should be paying taxes even on 0:28:53.840 --> 0:28:56.640 ships that are registered abroad. We saw your stock, along 0:28:56.680 --> 0:29:00.160 with everybody in the major crew space, sell off on 0:29:00.200 --> 0:29:03.120 his words, even though analysts indicated the worry may be overblown. 0:29:03.120 --> 0:29:05.680 They said, we've heard this before over the years. Is 0:29:05.720 --> 0:29:08.840 it overblown? Are you talking with a Trump administration about this? 0:29:08.920 --> 0:29:12.080 And if there was a US registration change, what would 0:29:12.080 --> 0:29:13.080 that mean for you guys. 0:29:14.760 --> 0:29:18.400 So clearly we're operating in the confines of US laws 0:29:18.520 --> 0:29:21.960 as well we should shipping. International shipping is based on 0:29:22.480 --> 0:29:24.880 very specific tax regimes that are set up in the 0:29:24.960 --> 0:29:27.200 US and all over the world, and effectively it's based 0:29:27.240 --> 0:29:30.440 on reciprocity, So we feel like we're in a good place. 0:29:30.440 --> 0:29:31.840 We're doing what we should be doing. 0:29:31.960 --> 0:29:36.480 Having said that, anything out of the administration, including Secretary Lutnik, 0:29:36.520 --> 0:29:40.120 we certainly take seriously, and we're working hard to understand 0:29:40.200 --> 0:29:43.120 what the concerns are and how we can address them. 0:29:43.120 --> 0:29:46.280 If any there's really nothing, there's nothing to report on 0:29:46.680 --> 0:29:49.680 from my perspective as far as you know what that 0:29:49.720 --> 0:29:53.240 means or where things could be going. But we'll stay 0:29:53.280 --> 0:29:56.040 on our guard and do whatever we need to do 0:29:56.080 --> 0:30:00.160 to make sure we're staying on the right side of policy. 0:30:00.960 --> 0:30:04.200 Josh, why don't you register in the US? Is it 0:30:04.680 --> 0:30:08.800 regulatory reasons? Is it tax reasons? Is it labor reasons? 0:30:08.960 --> 0:30:11.000 Is it all of the above? Why don't you register 0:30:11.080 --> 0:30:11.600 in the US? 0:30:11.960 --> 0:30:14.120 Yeah, it's just not that simple. 0:30:14.120 --> 0:30:15.640 You don't just take a ship and all of a sudden, 0:30:15.680 --> 0:30:18.120 ship you can't just switch to US registry. 0:30:18.160 --> 0:30:20.760 It's it's just not that simple. And and really it's. 0:30:20.600 --> 0:30:23.640 A it's a it's a people to go to school 0:30:23.640 --> 0:30:26.880 for classes for this right about international shipping and what 0:30:26.880 --> 0:30:29.000 what it means, how it works. Uh, And it's been 0:30:29.040 --> 0:30:32.760 in place for much longer than I've been alive. Uh 0:30:32.800 --> 0:30:34.920 and and so you know, we could we could do 0:30:34.960 --> 0:30:37.520 a separate session on that. But but suffice it to say, 0:30:38.920 --> 0:30:42.040 it's a regime that is that is well founded and 0:30:42.040 --> 0:30:43.080 and it's where we are. 0:30:43.000 --> 0:30:45.680 Right now, all right, So it's not something that we 0:30:45.720 --> 0:30:48.440 should think about. I mean, it can be done, though. 0:30:48.360 --> 0:30:48.680 Right. 0:30:50.480 --> 0:30:53.680 What what is the it in terms of registering in 0:30:53.720 --> 0:30:54.560 the United States? 0:30:55.520 --> 0:30:58.640 It's honestly not that simple based on how US law works. 0:30:58.720 --> 0:31:00.000 It's it's just not that simple. 0:31:00.360 --> 0:31:00.719 Okay. 0:31:01.040 --> 0:31:03.080 Would that be a conversation though, then to have with 0:31:03.080 --> 0:31:05.480 the Trump administration Josh and say, listen, guys, if it 0:31:05.520 --> 0:31:08.760 was simpler, I mean, they're all about making things simpler, 0:31:08.840 --> 0:31:12.080 right efficient. Is there a conversation to be had? 0:31:13.080 --> 0:31:15.240 Oh, We're happy to talk to the administration truly. 0:31:15.400 --> 0:31:17.160 Okay, Okay, hey, listen. 0:31:17.200 --> 0:31:18.400 One of the things we wanted to talk to you 0:31:18.440 --> 0:31:20.880 about in a big way, and I've seen it firsthand, 0:31:21.120 --> 0:31:23.560 is the island destinations that you guys have and it 0:31:23.600 --> 0:31:26.400 seems to be a continued, you know, move for you 0:31:26.480 --> 0:31:30.080 guys and expansion. You open celebration key this July. This 0:31:30.120 --> 0:31:34.200 is in Grand Bahama Island. How do these island destinations. 0:31:34.240 --> 0:31:35.920 We've talked to you about it, but it continues to 0:31:35.920 --> 0:31:38.280 be something we find really interesting. How does it fit 0:31:38.320 --> 0:31:40.920 into the North American crew strategy and how important it 0:31:41.000 --> 0:31:42.840 is I always think about to the top line, the 0:31:42.840 --> 0:31:44.280 profitability picture. 0:31:45.600 --> 0:31:48.520 Yeah, So for us, what we're doing with Celebration Key, 0:31:48.520 --> 0:31:51.480 which opens in July, it's a bit of a first 0:31:51.480 --> 0:31:53.880 for us. Even though we have a wonderful footprint around 0:31:53.920 --> 0:31:58.240 the Caribbean, we've really we've we've built and created these 0:31:58.240 --> 0:32:01.400 destinations really as a service to our brands and something 0:32:01.400 --> 0:32:05.440 that's supportive of and really supplemental to what brands are 0:32:05.480 --> 0:32:07.920 doing and leading with with a cruise experience that makes 0:32:07.960 --> 0:32:12.040 them so loved. What we're doing with Celebration Key, which 0:32:12.160 --> 0:32:16.000 doesn't even exist yet and yet it's captivated the audience 0:32:16.040 --> 0:32:20.520 and captivated the imagination of Carnival cruisers and others, is 0:32:20.680 --> 0:32:24.520 we want to also lead with destination as a driver 0:32:24.640 --> 0:32:27.560 of consideration, of a driver for people saying I need 0:32:27.600 --> 0:32:30.400 to go on Carnival Cruise Line because I'll get to 0:32:30.400 --> 0:32:33.400 go to Celebration Key, or because I'll get to go 0:32:33.480 --> 0:32:36.120 to relax Away Half Moon Key, because it's the only 0:32:36.160 --> 0:32:38.880 way to get there, and so We believe that there's 0:32:38.920 --> 0:32:43.200 a tremendous amount of untapped value there in revenue generation, 0:32:43.520 --> 0:32:46.040 as well as the fact that these destinations are built 0:32:46.080 --> 0:32:49.360 close to the United States. Hence we consume less fuel 0:32:49.440 --> 0:32:51.200 in order to get there, which saves money is obviously 0:32:51.240 --> 0:32:51.880 good for the planet. 0:32:52.240 --> 0:32:54.600 Hey listen, twenty seconds left here. What is your most 0:32:54.640 --> 0:32:57.320 popular destination? Where do most people want to go and 0:32:57.360 --> 0:32:58.200 what kind of trip? 0:32:58.920 --> 0:33:01.640 Wow, we carryllion people last year. They want they want 0:33:01.640 --> 0:33:03.760 to go to a lot of places. I'd say, if 0:33:03.760 --> 0:33:05.640 you're going to ask me what's my top that I've 0:33:05.640 --> 0:33:07.240 ever been to, I got to say, you got to 0:33:07.280 --> 0:33:09.400 go on a cruise to Alaska, and you gotta go 0:33:09.440 --> 0:33:11.760 with Princess Hall in America or a carnival because they 0:33:11.760 --> 0:33:13.600 do it in an amazing way and qn R for 0:33:13.680 --> 0:33:15.880 those who are looking for the for the luxury end. 0:33:16.280 --> 0:33:17.200 But if you want to see the. 0:33:17.160 --> 0:33:19.120 Great State, the only way to do it is with 0:33:19.160 --> 0:33:21.040 a great brand that can take you on both c 0:33:21.600 --> 0:33:24.280 and with our land experiences. Because we've got hotels and 0:33:24.320 --> 0:33:27.640 motor coaches and Glasstone railcars and you name it. 0:33:27.560 --> 0:33:28.800 We got it up in Alaska. 0:33:28.880 --> 0:33:30.200 I just want to go somewhere where I get a 0:33:30.200 --> 0:33:32.120 cocktail with like a little umbrella in it. 0:33:32.160 --> 0:33:34.640 I just I'm that we also serve cocktails with them 0:33:34.960 --> 0:33:36.040 when we go to Alaska. 0:33:36.840 --> 0:33:39.480 Josh, thank you so much. I always appreciate the time 0:33:39.520 --> 0:33:40.000 you give us. 0:33:40.040 --> 0:33:40.320 Be well. 0:33:40.440 --> 0:33:40.720 Be well. 0:33:40.800 --> 0:33:44.200 Josh Weinstein, President, CEO, and Chief Climate Office of Carnival Corporation, 0:33:44.560 --> 0:33:46.880 joining us from Carnival's headquarters in Miami. 0:33:48.520 --> 0:33:52.200 You're listening to the Bloomberg Business Week Podcast. Catch us 0:33:52.280 --> 0:33:55.280 live weekday afternoons from two to five e's during Listen 0:33:55.320 --> 0:33:58.880 on Applecarplay and Android Atto with the Bloomberg Business app, 0:33:59.080 --> 0:34:00.800 or watch us live on YouTube. 0:34:01.960 --> 0:34:03.440 Where we spent a lot of time this week talking 0:34:03.440 --> 0:34:07.360 about Nvidia GtC. It's the annual developers event in San Jose. 0:34:07.400 --> 0:34:10.239 It's been dubbed the super Bowl of AI. Ironian King 0:34:10.280 --> 0:34:13.799 writes today that Nvidia CEO Jensen Wong's presentation there was 0:34:13.840 --> 0:34:16.120 all about how to get a return on the expensive 0:34:16.160 --> 0:34:19.680 gear being installed now, and he spent a good rest 0:34:19.680 --> 0:34:22.600 of the week reinforcing his message designed to counter increasing 0:34:22.640 --> 0:34:26.160 concerns that the sustainability of spending and encourage executives in 0:34:26.200 --> 0:34:29.840 the broader economy to join his vision for the future. 0:34:30.239 --> 0:34:32.840 One executive who was there was Antonio Neary, the president 0:34:32.880 --> 0:34:36.920 and CEO of HPE. Antonio joins us from HPE's headquarters 0:34:36.920 --> 0:34:40.520 in Spring Texas. Antonio, good to see you, Welcome back 0:34:40.520 --> 0:34:44.120 to the program. You spoke with Jensen earlier this week 0:34:44.160 --> 0:34:46.600 at the event. What was your big takeaway? What did 0:34:46.600 --> 0:34:49.880 you learn, because investors certainly weren't as impressed as they 0:34:49.920 --> 0:34:51.720 have been in the past couple of years. 0:34:53.480 --> 0:34:56.120 Well, good afternoon, and thank you for having me back. 0:34:56.440 --> 0:34:59.920 It was a fantastic event. Obviously, you can look at 0:35:00.040 --> 0:35:04.200 from many different perspective. Number one, the innovation front. I 0:35:04.239 --> 0:35:07.759 have to tell you, I've never seen such an innovation 0:35:07.920 --> 0:35:10.880 at the speed that we are all experiencing. You know, 0:35:11.200 --> 0:35:14.200 two years ago we were talking about the boom of 0:35:14.320 --> 0:35:18.600 generative AI. Now we're talking about physical AI, robotics and 0:35:18.640 --> 0:35:22.360 what can do for manufacturing in other industries. On the 0:35:22.440 --> 0:35:25.319 other hand, obviously you talk about what this can do 0:35:25.440 --> 0:35:29.400 for the enterprise and the enterprise. What I see, particularly 0:35:29.400 --> 0:35:32.920 in the last ninety days or one hundred and eighty days, 0:35:33.320 --> 0:35:37.320 is an accelerational deployment because they all realize that AI 0:35:37.440 --> 0:35:41.120 has a tremendous potential to improve productivity, to improve business 0:35:41.120 --> 0:35:44.200 processes and deliver value to each of the businesses and 0:35:44.200 --> 0:35:46.880 the last but a list obviously what they can do 0:35:46.960 --> 0:35:47.719 for society. 0:35:47.960 --> 0:35:49.560 And if you think about the. 0:35:49.960 --> 0:35:53.879 Opportunity to address some of the societal challenges, whether it's 0:35:53.880 --> 0:35:58.480 finding new cures through you know, molecular docking research or 0:35:58.600 --> 0:36:02.000 weather forecasting and any other type of use cases is 0:36:02.040 --> 0:36:04.799 all there. Now we have to see it, we have 0:36:04.920 --> 0:36:06.720 to build it, and we need to see it through 0:36:07.080 --> 0:36:09.520 the benefit of it over a period of time that 0:36:09.560 --> 0:36:11.359 people need to live with. 0:36:12.000 --> 0:36:15.240 Well, we also heard Antonio this promise of physical AI. 0:36:15.600 --> 0:36:18.080 That was one of the big themes that emerged. And look, 0:36:18.080 --> 0:36:19.719 I'm in San Francisco right now, so I get to 0:36:19.719 --> 0:36:23.400 see the waymos driving around a little peek into the future. 0:36:23.520 --> 0:36:28.719 But from your perch at HPE, what's the future that 0:36:28.800 --> 0:36:32.720 you see? What's the future that you envision with physical AI? 0:36:33.800 --> 0:36:37.960 Well, I see a world where basically we can remove 0:36:38.360 --> 0:36:41.200 the humans that they are in the loop and be 0:36:41.440 --> 0:36:45.880 on the loop, where some of these physical AI, robotics 0:36:45.920 --> 0:36:49.720 and other type of applications can do the basic task 0:36:50.040 --> 0:36:54.080 that we are totally automated, where we can use ourselves 0:36:54.120 --> 0:36:57.960 the humans for other more interesting and value other tasks 0:36:58.440 --> 0:37:00.480 and that will drive a level of product activity we 0:37:00.560 --> 0:37:04.640 haven't seen before. And that applies to every industry. You 0:37:04.719 --> 0:37:08.120 talked about autonomous cars obviously that that includes a lot 0:37:08.160 --> 0:37:12.200 of artificial intelligence, machine learning, and other techniques. Well, when 0:37:12.200 --> 0:37:15.919 I think about the old industries, the potential is enormous. Now, 0:37:16.120 --> 0:37:19.440 not everything will be applicable, but I think, you know, 0:37:19.560 --> 0:37:22.239 we see a world where AI will be embedded in 0:37:22.280 --> 0:37:22.920 everything we do. 0:37:24.600 --> 0:37:26.080 One of the things I wanted to follow up on, 0:37:26.440 --> 0:37:28.640 you know, and you guys made it actually an announcement 0:37:28.719 --> 0:37:31.920 kind of off of this event about you and video 0:37:32.160 --> 0:37:35.319 coming up with some new enterprise AI solutions working on 0:37:35.320 --> 0:37:37.880 this together. Antonio, what I wanted to follow up on, 0:37:38.040 --> 0:37:39.560 though you said we have to build it, we have 0:37:39.600 --> 0:37:40.959 to see it and to see what. 0:37:40.880 --> 0:37:42.120 The payoff really is. 0:37:43.280 --> 0:37:45.279 That's what like the last couple of years, right have 0:37:45.360 --> 0:37:49.120 been about this build out, this spend, and we continue 0:37:49.120 --> 0:37:51.640 to see partnerships to continue the spend. But how long 0:37:51.680 --> 0:37:54.239 do you think it will be until companies really have 0:37:54.280 --> 0:37:58.280 an idea of what payoff they get for their investment. 0:38:00.080 --> 0:38:03.279 Well, look, I mean I see already today in our 0:38:03.320 --> 0:38:06.360 own company, we deploy AI in many of our business 0:38:06.360 --> 0:38:12.680 processes across finance, digital marketing, customer service, forecast planning and 0:38:12.719 --> 0:38:15.720 the like and even on they are in D side. 0:38:15.800 --> 0:38:19.160 You know, our level of productivity in our software development 0:38:19.160 --> 0:38:23.440 process has improved by thirty percent. So the learning hit 0:38:23.560 --> 0:38:26.040 is that first of all, it takes time to build infrastructure, 0:38:26.040 --> 0:38:29.120 but for enterprise is not a big of a lift 0:38:29.120 --> 0:38:32.279 from an infrastructure perspective. I can tell you in my 0:38:32.360 --> 0:38:35.960 own company, I have only a couple of hundred GPUs 0:38:36.200 --> 0:38:39.360 and it's plenty for what I need to do compared 0:38:39.360 --> 0:38:42.920 to the service providers, the model builders that many tens 0:38:42.920 --> 0:38:45.600 of thousands, of hundreds of thousands for the matter to 0:38:45.680 --> 0:38:49.560 bid these large language models which are very sophisticated from 0:38:49.560 --> 0:38:53.800 what I call generality to agentic to reasoning and eventually 0:38:53.840 --> 0:38:57.439 these models that will do the robotics side the physical AI. 0:38:57.960 --> 0:39:01.319 But inside the enterprise we really see the benefits. And 0:39:01.560 --> 0:39:03.720 I spent more than fifty percent of my time talking 0:39:03.719 --> 0:39:07.440 to customers and they are going from the experimentation phase 0:39:07.480 --> 0:39:09.040 to more deployment side. 0:39:09.200 --> 0:39:10.839 And that's why the last quarter that. 0:39:10.840 --> 0:39:14.279 We saw a forty percent increase on a year over 0:39:14.440 --> 0:39:19.560 year basis, the demand for enterprise AI solutions and obviously 0:39:19.600 --> 0:39:22.279 for US was the deep partnership with Nvidia, where we 0:39:22.320 --> 0:39:26.360 took their software stack, the famous Kuda environment with the 0:39:26.480 --> 0:39:30.600 names and ergentic approaches including only partners with our infrastructure 0:39:30.640 --> 0:39:33.040 and our own software and the cloud, and there is 0:39:33.080 --> 0:39:36.200 all about time to value. Basically, we made the so 0:39:36.360 --> 0:39:39.160 simple tree clicks less than thirty seconds, you can deploy 0:39:39.200 --> 0:39:42.319 an environment for your developers to rag or find you 0:39:42.360 --> 0:39:45.960 in a model with your data, or to deploy inferencing. 0:39:46.200 --> 0:39:48.719 And that's where the acceleration is going to come. The 0:39:48.800 --> 0:39:52.160 simplicity of deployment with the use cases that can return 0:39:52.239 --> 0:39:54.080 that investment very very quickly. 0:39:54.160 --> 0:39:57.160 It's all just kind of really really cool stuff and 0:39:57.239 --> 0:40:00.080 something we think about so much. It's happening now, but 0:40:00.239 --> 0:40:03.200 really kind of what the future means and the impact. 0:40:03.440 --> 0:40:05.520 I do want to ask you though about today's environment. 0:40:05.560 --> 0:40:10.760 There's so much coming at CEOs, the C suite of companies, 0:40:10.800 --> 0:40:13.880 a lot of stuff out of Washington, and we continue 0:40:13.920 --> 0:40:16.680 to watch this spending when it comes to it, given 0:40:16.719 --> 0:40:19.120 some of the recession fears that are out there. 0:40:19.200 --> 0:40:21.120 What has your conversations with. 0:40:21.160 --> 0:40:25.000 CEOs revealed on the spending environment, any signs of pullback, 0:40:25.200 --> 0:40:28.600 any signs that a recession might be coming. What color 0:40:28.640 --> 0:40:29.680 can you give us about that? 0:40:31.719 --> 0:40:35.200 Well, up to our Q one which ended in generary 0:40:35.200 --> 0:40:38.120 thirty first, the demand has been very strong. 0:40:38.640 --> 0:40:39.640 In fact, if you look. 0:40:39.480 --> 0:40:42.760 At our own demand for a moment for our networking business, 0:40:42.920 --> 0:40:46.319 our hybrid cloud business, and our AI business, which are 0:40:46.320 --> 0:40:49.680 the three paillars of our company, we saw double digits 0:40:49.800 --> 0:40:53.680 or the growth demand for every solution that we have 0:40:53.800 --> 0:40:57.799 in the available today in the market. Now that said, 0:40:58.080 --> 0:41:01.400 you know the conversation today in the market about tariffs, 0:41:01.440 --> 0:41:04.560 some of the geopolitical tention, the work that the United 0:41:04.600 --> 0:41:08.839 States doing to control spend obviously is causing a little 0:41:08.840 --> 0:41:12.879 bit of uncertainty. But I do believe it is one 0:41:12.880 --> 0:41:16.600 of those areas where spend will be protected because ultimately, 0:41:17.160 --> 0:41:20.120 whether you think about position yourself for the next wave, 0:41:20.360 --> 0:41:24.480 or the supply chain through digitization and automation as you 0:41:24.640 --> 0:41:27.520 rebalance the supply chain where it makes sense for you, 0:41:27.719 --> 0:41:30.960 or whether you think about using your data to your 0:41:31.040 --> 0:41:35.359 advantage as a good example, using AI, or whether it's 0:41:35.400 --> 0:41:38.919 to simplify your processes, it will require it. And that's 0:41:38.960 --> 0:41:42.680 why I continue to be positive about the spend of it. 0:41:43.040 --> 0:41:45.920 As we think about the next few years, because it 0:41:45.960 --> 0:41:48.280 will grow in my mind faster than GDP. 0:41:49.320 --> 0:41:50.680 All Right, we're going to have to leave it there. 0:41:51.000 --> 0:41:53.160 Antonio, thank you so much for giving us some time. 0:41:53.480 --> 0:41:56.920 We greatly appreciate it. Thanks to Antonio Neari, he's president's 0:41:56.920 --> 0:42:00.000 CEO of HPE. Of course, as you know, stock right now, 0:42:00.200 --> 0:42:03.400 today's session just down about one point three percent, has 0:42:03.480 --> 0:42:05.279 had a lot of pressure on it though this year 0:42:05.600 --> 0:42:08.239 down about twenty five percent here in twenty twenty five. 0:42:08.880 --> 0:42:13.160 Company did report earnings back in March March seventh, earlier 0:42:13.239 --> 0:42:15.000 this month, and there were some concerns about the week 0:42:15.000 --> 0:42:17.080 profit outlook. But you can certainly read a little bit 0:42:17.080 --> 0:42:18.880 more if you want at Bloomberg dot com and of 0:42:18.880 --> 0:42:20.320 course on the Bloomberg terminal. 0:42:20.800 --> 0:42:24.359 You're listening to the Bloomberg Business Week podcast. Catch us 0:42:24.440 --> 0:42:27.880 live weekday afternoons from two to five pm Eastern Listen 0:42:27.920 --> 0:42:31.440 on Applecarplay and Android Auto with the Bloomberg Business app, 0:42:31.600 --> 0:42:33.520 or watch us live on YouTube. 0:42:34.440 --> 0:42:37.160 We have talked about some big global macro issues. 0:42:37.200 --> 0:42:39.120 We've talked to a lot of folks in the C 0:42:39.320 --> 0:42:42.359 suite here on Business Week. On this Friday edition, we've 0:42:42.400 --> 0:42:44.560 talked a lot about supply chains and there is some 0:42:44.680 --> 0:42:47.319 news in the complicated, as you know, but exciting world 0:42:47.320 --> 0:42:48.279 of supply chains. Today. 0:42:48.320 --> 0:42:50.839 We love to follow supply chains logistics. 0:42:51.160 --> 0:42:53.800 US officials Tim talked about this earlier, have asked Italian 0:42:53.840 --> 0:42:57.480 producers if they can help secure egg supplies amid shortages 0:42:57.520 --> 0:42:59.960 and upcoming holidays, including Eastern Passover. 0:43:00.200 --> 0:43:01.759 I don't know about you, Tim, but I grew up, 0:43:02.200 --> 0:43:03.360 you know, taking eggs and. 0:43:03.440 --> 0:43:05.960 Dyeing them and coloring them and like it's an important 0:43:05.960 --> 0:43:06.680 part of the holiday. 0:43:07.239 --> 0:43:09.160 Yeah, we'll see if they're a plastic this year or 0:43:09.160 --> 0:43:12.000 if they're real eggs. Also next week, the supplier chain 0:43:12.040 --> 0:43:14.120 relationships of a Dollar Tree will be in focus when 0:43:14.120 --> 0:43:17.480 the company reports earnings. Supply chains coming under increased focus 0:43:17.520 --> 0:43:19.640 given the tariff back and forth the White House. Remember 0:43:19.640 --> 0:43:22.360 fresh US tariffs are set to land on April second. 0:43:22.680 --> 0:43:26.480 Jeremy Jansen watches supply chains closely. He's managing director of 0:43:26.560 --> 0:43:30.720 supply chain Finance at Wells Fargo. He joins US from Atlanta. Jeremy, 0:43:30.760 --> 0:43:32.800 I want to start big picture. Somebody might hear supply 0:43:32.920 --> 0:43:35.840 chain finance and Wells Fargo and think what the heck 0:43:35.920 --> 0:43:38.960 is Wells Fargo doing with supply chains? So what do 0:43:39.040 --> 0:43:39.759 you and your team do. 0:43:40.920 --> 0:43:42.799 Yeah, sure, thanks and thanks for having me, guys, it's 0:43:42.840 --> 0:43:45.880 a pleasure to be here. So quite simply, we provide 0:43:45.880 --> 0:43:51.080 working capital and supply chain financing to Wells Fargo commercial clients. 0:43:51.360 --> 0:43:57.600 We establish traditional supply chain financing programs between buyers and 0:43:57.640 --> 0:44:01.200 their suppliers, and we also provide by letters of credit, 0:44:01.360 --> 0:44:05.600 import export letters of credit and very traditional trade finance 0:44:05.680 --> 0:44:06.680 type products. 0:44:08.239 --> 0:44:10.279 So interesting, all right, So tell us what you are 0:44:10.320 --> 0:44:13.400 seeing in particular when it comes to the supply chain narrative. 0:44:13.440 --> 0:44:16.399 We've talked a lot about it just in today's edition 0:44:16.440 --> 0:44:19.440 because we've been talking to folks from the C suite 0:44:20.160 --> 0:44:23.239 who are dealing with some of those issues. And so 0:44:23.320 --> 0:44:26.279 what are you seeing our companies making changes? Were they 0:44:26.440 --> 0:44:29.680 already from our undestanding They were already making changes coming 0:44:29.680 --> 0:44:31.680 off of COVID. But what can you tell us in 0:44:31.760 --> 0:44:34.200 terms of the macro and the narrative here? 0:44:35.239 --> 0:44:37.319 Yeah, so thanks Carol. I think first thing I'd like 0:44:37.400 --> 0:44:42.280 to say is fundamentally, the supply chain itself logistically remains 0:44:42.480 --> 0:44:46.640 very healthy when you look at key indicators shipping costs, 0:44:46.800 --> 0:44:52.120 port congestion, port job vacancies, inventory to sales ratios, all 0:44:52.160 --> 0:44:54.799 those dials in the cockpit are still at at a 0:44:55.000 --> 0:44:58.280 really nice level, and to your point, somewhat at pre 0:44:58.400 --> 0:45:02.720 COVID levels. But the US trade policy it could remain 0:45:02.840 --> 0:45:05.840 dynamic for quite some time. And how our business is 0:45:06.400 --> 0:45:11.799 reacting to this. Many management teams that we speak to 0:45:12.200 --> 0:45:15.640 are taking somewhat of a wait and see posture publicly, 0:45:16.120 --> 0:45:19.480 but behind the scenes in closed doors, they're working out 0:45:19.719 --> 0:45:24.000 many different scenarios. As you also mentioned, this is not 0:45:24.120 --> 0:45:26.720 the first time. Our clients have been here. In twenty 0:45:26.760 --> 0:45:32.200 eighteen and twenty nineteen with tariffs that came in at 0:45:32.239 --> 0:45:35.840 that time, they built some playbooks, right, so they have 0:45:35.920 --> 0:45:39.160 a pretty good roadmap on how on how to navigate this. 0:45:40.200 --> 0:45:44.520 Is this different, though, Jeremy, because we're sort of going global, 0:45:44.960 --> 0:45:47.359 or the Trump administration seems to be going global. We'll 0:45:47.560 --> 0:45:51.080 kind of find out all the details on April second, Yeah, 0:45:51.640 --> 0:45:53.480 Liberation Day. But is this a little different? 0:45:54.600 --> 0:45:56.960 It's a little too soon to tell from my perspective. 0:45:57.600 --> 0:46:02.839 I don't want to speculate, but certainly the discussions are 0:46:02.960 --> 0:46:08.839 very similar, right and our clients, our clients do have 0:46:08.920 --> 0:46:12.520 a pretty strong playbook and a pretty strong roadmap on 0:46:12.600 --> 0:46:15.720 how to handle this. Perhaps it's a two way share 0:46:15.880 --> 0:46:19.040 between the supplier and the importer. Perhaps it's a three 0:46:19.080 --> 0:46:23.080 way share between the supplier, the importer and the customer. 0:46:23.280 --> 0:46:27.560 We're seeing all of those, all of those strategies play 0:46:27.600 --> 0:46:31.359 out again behind closed doors and even publicly. Right you're 0:46:31.360 --> 0:46:34.360 starting to see some companies come out and talk about 0:46:34.400 --> 0:46:37.279 the impacts that it could have on their costs for 0:46:37.320 --> 0:46:40.440 the year or maybe give some glimmer of how they 0:46:40.480 --> 0:46:42.280 may pass that through onto the consumer. 0:46:42.560 --> 0:46:46.000 Yeah, it's certainly important issues as we continue to track 0:46:46.800 --> 0:46:48.879 all of the companies, certainly the publicly held, and something 0:46:48.920 --> 0:46:51.240 that we continue to look for when they are reporting 0:46:51.239 --> 0:46:52.920 earnings and will continue. 0:46:52.520 --> 0:46:55.239 To do so what they have to say about it. Hey, listen, 0:46:55.320 --> 0:46:55.920 thank you so much. 0:46:56.000 --> 0:46:59.240 Jeremy important angel certainly someone that we're covering here at Bloomberg. 0:46:59.280 --> 0:47:02.440 Jeremy Jannsen. As we mentioned, he watches supply chains very closely. 0:47:02.520 --> 0:47:05.320 Managing director of Supply Chain Finance over at Wells Fargo. 0:47:05.680 --> 0:47:08.280 Joining us from Atlanta on this Friday. 0:47:09.400 --> 0:47:12.359 Bromc, I'll bet you let me drive. 0:47:12.640 --> 0:47:14.799 Oh no, no, no, no, this is not a toy. 0:47:14.960 --> 0:47:17.440 Who's going to judge, honey? 0:47:17.560 --> 0:47:17.880 Please? 0:47:18.000 --> 0:47:19.600 How do the riding gravels? 0:47:19.880 --> 0:47:21.279 Let's wat I want to drive. 0:47:21.280 --> 0:47:24.440 It's a good question. 0:47:24.880 --> 0:47:25.399 Good drive. 0:47:28.280 --> 0:47:30.320 This is the drive to the clothes. 0:47:30.680 --> 0:47:33.680 Plung's commuting well, Brikelvin. 0:47:32.840 --> 0:47:34.680 Down on Bloomberg Radio. 0:47:34.840 --> 0:47:37.080 All right, everybody coming up on eighteen minutes to go 0:47:37.120 --> 0:47:40.239 to wrap up the trade. We are definitely holding on 0:47:40.280 --> 0:47:42.960 to our better levels of the session. We were down 0:47:42.960 --> 0:47:44.920 a lot more earlier on. You just heard Charlie and 0:47:44.920 --> 0:47:48.240 Bill Maloney breaking it all down. We'll see if it holds, 0:47:48.239 --> 0:47:51.680 whether or not we see some selling into the clothes here. 0:47:51.719 --> 0:47:55.240 We do have some expirations and so in terms of options, 0:47:55.280 --> 0:47:57.200 so whether or not that will be a factor, but 0:47:57.280 --> 0:47:59.080 nonetheless holding on some gains. 0:47:59.120 --> 0:48:02.040 So let's get to it. It's been another full week, 0:48:02.360 --> 0:48:03.200 to say the least. 0:48:03.360 --> 0:48:08.040 Marta Norton is chief investment strategist at Empower, joining us 0:48:08.040 --> 0:48:11.080 from Chicago. Hey Marda, good to have you here with 0:48:11.080 --> 0:48:13.880 Tim and myself. We are so familiar with your company. 0:48:13.920 --> 0:48:16.359 You guys administer the Bloomberg four. 0:48:16.280 --> 0:48:18.160 Oh one K plan. We'd like to be transparent. 0:48:18.920 --> 0:48:20.480 You talk, Carol, You've been talking a lot about your 0:48:20.480 --> 0:48:21.480 furroh one k this week. 0:48:21.640 --> 0:48:24.799 It's been kind of terrifying, you know, and I have 0:48:24.840 --> 0:48:26.279 to be honest with you, I was looking at making 0:48:26.360 --> 0:48:28.799 some changes a little while ago because we've all been 0:48:28.840 --> 0:48:32.960 talking about the European markets doing so much better. You guys, though, 0:48:33.680 --> 0:48:36.400 are the second largest retirement plan provider in the United States. 0:48:36.600 --> 0:48:38.480 Talk to us about what your role is and what 0:48:38.600 --> 0:48:40.520 you see to get an idea of what's on. 0:48:40.480 --> 0:48:42.279 The minds of investors and what's going on. 0:48:43.320 --> 0:48:43.640 Yeah. 0:48:43.680 --> 0:48:46.360 Sure, so my role at Empower, and of course Empower 0:48:46.440 --> 0:48:49.520 has that retirement business, it also has a wealth business, 0:48:49.520 --> 0:48:52.360 and so my goal is to really formulate that markets 0:48:52.360 --> 0:48:55.920 and economic point of view across both our retirement business 0:48:56.000 --> 0:48:59.880 our wealth business and provide that perspective to our clients 0:49:00.160 --> 0:49:02.600 to financial media. And I think one of the things 0:49:02.600 --> 0:49:04.319 that of course is top of mind, and you've kind 0:49:04.360 --> 0:49:08.480 of alluded to it already, is this idea of whether 0:49:08.680 --> 0:49:11.279 we're going to see some sort of capitulation in how 0:49:11.320 --> 0:49:16.080 investors are positioned, and of course that ever important retirement investor. 0:49:16.840 --> 0:49:19.360 And I think at this point, you know, we've had 0:49:19.520 --> 0:49:22.200 that technical correction in the S and P. Five hundred, 0:49:22.520 --> 0:49:24.680 and I think you see a little bit of pickup 0:49:24.840 --> 0:49:27.640 of nerves I guess, I would say in the retirement space, 0:49:28.000 --> 0:49:31.280 but not massive shifts in terms of how people are positioned. 0:49:31.320 --> 0:49:34.120 So you see some movement on the margin, but nothing 0:49:34.160 --> 0:49:38.440 that would suggest that investors are, you know, frantically moving 0:49:38.440 --> 0:49:41.080 things around in their retirement accounts Marta. 0:49:41.120 --> 0:49:43.080 It looks like in the notes that our producer Paul 0:49:43.080 --> 0:49:46.400 Brennan sent us you you argue that the market's not 0:49:46.440 --> 0:49:49.399 fully understanding the extent of tariffs. What do you mean 0:49:49.400 --> 0:49:49.719 by that. 0:49:50.920 --> 0:49:53.879 Well, you know, and this is we're doing scenario analysis here. 0:49:53.880 --> 0:49:56.360 Of course, in the future is uncertain. There's a range 0:49:56.360 --> 0:49:58.640 of outcomes here. But I think when you take a 0:49:58.680 --> 0:50:03.239 look at what the tariffs could look like, you know immediately. 0:50:03.400 --> 0:50:05.200 You know, in twenty twenty five, as we saw those 0:50:05.239 --> 0:50:09.600 initial forays with Canada and Mexico, the general narrative was 0:50:09.640 --> 0:50:13.120 that those were largely negotiating tactics. And I think there's 0:50:13.239 --> 0:50:15.640 good reason to think that there's a certain level of 0:50:15.680 --> 0:50:18.799 negotiation when it comes to a lot of this tariff talk. 0:50:18.840 --> 0:50:21.120 But when you look at the broader picture of what 0:50:21.320 --> 0:50:24.000 President Trump has talked about, both on the campaign trail 0:50:24.440 --> 0:50:26.960 and more recently, when it comes to tariffs, he's focusing 0:50:27.000 --> 0:50:30.640 on raising revenue for the federal government. He talks about 0:50:30.920 --> 0:50:35.120 establishing a US manufacturing base. He talks about trade deficit, 0:50:35.440 --> 0:50:38.560 and I think as you look at those objectives, you 0:50:38.640 --> 0:50:41.240 have to entertain the notion that tariffs could be both 0:50:41.320 --> 0:50:44.600 broad based and long lasting. And the market I think 0:50:44.960 --> 0:50:47.640 has begun to grapple with that idea, but I don't 0:50:47.640 --> 0:50:51.200 know if it's a really common full force when you 0:50:51.239 --> 0:50:53.160 think about what that impact could be, both on the 0:50:53.239 --> 0:50:57.400 costs on companies, businesses, and then potentially from a retaliatory 0:50:57.440 --> 0:51:00.719 perspective on the revenue. And I say that especially because 0:51:00.760 --> 0:51:03.759 where we look at where evaluations are, earnings expectations, it 0:51:03.880 --> 0:51:05.960 just doesn't look like there's been a massive recalibration. 0:51:07.560 --> 0:51:09.920 Can I ask you, is it really hard to figure 0:51:09.960 --> 0:51:13.160 out what's next for the markets? I mean, even Bill Dudley, 0:51:14.239 --> 0:51:16.399 formerly of the New York FED, was kind of saying 0:51:16.400 --> 0:51:19.000 it's really hard for the VEED, the US Central Bank 0:51:19.080 --> 0:51:22.759 to kind of figure out the outlook right now, kind 0:51:22.800 --> 0:51:24.719 of flying blind at this point. 0:51:24.800 --> 0:51:27.960 So it's kind of hard right now, isn't it. 0:51:28.000 --> 0:51:29.600 I Mean I feel like we could go we could 0:51:29.600 --> 0:51:33.520 either really recover if certain policies come out of Washington 0:51:33.560 --> 0:51:37.680 that'll be really supportive to business and to the markets. 0:51:37.680 --> 0:51:41.239 And to investors, and then there are policies that if 0:51:41.239 --> 0:51:44.799 they stick, will not be How difficult is it to 0:51:44.840 --> 0:51:45.640 predict right now? 0:51:46.680 --> 0:51:48.759 Well, I think if there was one word, and of 0:51:48.760 --> 0:51:51.080 course I didn't do kind of a word count with 0:51:51.200 --> 0:51:53.840 Powell's comments, but if there was one word that jumped 0:51:53.880 --> 0:51:56.799 out over and over again, it was that theme of uncertainty. 0:51:57.120 --> 0:51:59.680 So we heard that from Powell as he talked about 0:52:00.080 --> 0:52:03.080 Certainly there was a directionality in the summary of economic projections, 0:52:03.080 --> 0:52:06.880 growth coming down, unemployment edging up, inflation edging up, at 0:52:06.960 --> 0:52:11.080 least for twenty twenty five, So you had that directionality, 0:52:11.160 --> 0:52:13.360 but there was this real sense of uncertainty there, and 0:52:13.400 --> 0:52:16.320 then you see it in the Economic Policy Uncertainty Index, 0:52:16.400 --> 0:52:18.919 you see it in consumer sentiment, you have a little 0:52:18.960 --> 0:52:21.400 bit of a read from businesses in that regard. So 0:52:21.440 --> 0:52:24.799 I think there's really been coming out of Washington, this 0:52:24.960 --> 0:52:28.719 fiscal directional switch on a lot of different policies, from 0:52:28.760 --> 0:52:34.680 regulation to taxes, to immigration, and then within trade of course, 0:52:34.800 --> 0:52:37.719 maybe not a directional shift, but a magnitude shift. And 0:52:37.760 --> 0:52:40.600 so trying to understand how that plays out and what 0:52:40.680 --> 0:52:43.960 the market implications are I think is pretty meaningful. 0:52:44.000 --> 0:52:44.200 Now. 0:52:44.520 --> 0:52:46.799 I think as we look back at kind of where 0:52:46.800 --> 0:52:48.960 are we starting from a foundational level. There's a few 0:52:48.960 --> 0:52:51.640 things we know. We know the economy is cooling but 0:52:51.760 --> 0:52:54.680 is still generally strong, and we know valuations are high, 0:52:54.920 --> 0:52:56.879 so that gives us a little bit of sense ato 0:52:56.920 --> 0:52:59.560 how to take everything in. But yeah, you're right, I 0:52:59.560 --> 0:53:01.320 think it's maybe trickier than usual. 0:53:02.400 --> 0:53:04.839 Well, what would change your mind? Like, what would make 0:53:04.880 --> 0:53:07.160 you less cautious? Because you do seem cautious. You say, 0:53:07.160 --> 0:53:10.359 this isn't necessarily a by the dip moment unless investors 0:53:10.520 --> 0:53:14.560 were on the sidelines with you know, overweight cash, or 0:53:14.600 --> 0:53:17.200 they were you know, under exposed to equities. Is perhaps 0:53:17.239 --> 0:53:19.239 another way to say what would make you change your 0:53:19.280 --> 0:53:21.680 mind and say, Okay, now I'm feeling more comfortable about 0:53:21.680 --> 0:53:22.640 getting into this market. 0:53:23.760 --> 0:53:25.319 Well, there's a few things. I think if we had 0:53:25.360 --> 0:53:28.720 greater certainty on the policy front as it comes to tariffs, 0:53:28.760 --> 0:53:31.359 I think that would be helpful. I think also if 0:53:31.400 --> 0:53:34.120 we were to see valuations look a little bit more attractive. 0:53:34.120 --> 0:53:36.560 Sometimes I think people focus a lot on price movement 0:53:36.600 --> 0:53:39.279 to determine you know, those by the dip moments, But 0:53:39.320 --> 0:53:41.680 I think you really want to look beyond price movement 0:53:41.719 --> 0:53:44.359 to where valuations actually sit, and as you get those 0:53:44.480 --> 0:53:46.640 on your side, then you can have a little bit 0:53:46.680 --> 0:53:49.279 more of a margin of safety and expect maybe a 0:53:49.360 --> 0:53:52.440 better you know, three year outlook when it comes to returns. 0:53:52.560 --> 0:53:55.880 So having valuations on your side, getting clarity on a 0:53:55.880 --> 0:53:58.680 policy standpoint, I think that would help. But I'm not 0:53:58.800 --> 0:54:02.040 you know, as a I certainly am cautious, but I 0:54:02.080 --> 0:54:05.440 want to clarify that I'm not necessarily calling for, you know, 0:54:05.480 --> 0:54:09.600 a recession, and that ilk I think that we can 0:54:09.640 --> 0:54:13.600 see a growth slowdown certainly as uncertainty picks up, alongside 0:54:13.600 --> 0:54:16.200 the fact that we were already seeing some cooling in 0:54:16.239 --> 0:54:18.400 the market, But I don't know if that would necessarily 0:54:18.400 --> 0:54:21.839 tip us into a recession. So I think there's there's 0:54:21.920 --> 0:54:23.799 news that we have to navigate, But I don't know 0:54:23.840 --> 0:54:25.400 if we should put our head in our hands and 0:54:25.719 --> 0:54:26.560 cry in a corner. 0:54:28.080 --> 0:54:29.719 All right, we're gonna have to leave it there. Hey, listen, 0:54:29.800 --> 0:54:32.160 thank you so much. I'm glad to hear that. 0:54:33.640 --> 0:54:36.040 Or have a glass, have. 0:54:36.040 --> 0:54:38.400 A glass of wine or two on the weekend. Marta Norton. 0:54:38.440 --> 0:54:41.600 She's chief investment strategistic Empower joining us from Chicago. 0:54:41.719 --> 0:54:42.560 Marta, thanks so much. 0:54:43.600 --> 0:54:48.440 This is the Bloomberg Business Week podcast, available on Apple, Spotify, 0:54:48.560 --> 0:54:52.280 and anywhere else you get your podcasts. Listen live weekday 0:54:52.280 --> 0:54:56.320 afternoons from two to five pm Eastern on Bloomberg dot Com, 0:54:56.360 --> 0:55:00.560 the iHeartRadio app, tune In, and the Bloomberg Business You 0:55:00.600 --> 0:55:03.560 can also watch us live every weekday on YouTube and 0:55:03.760 --> 0:55:05.640 always on the Bloomberg terminal.