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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence

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Speaker 1: with Alex Steel and Paul Sweeney.

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Speaker 2: The real our performance has been in US corporate high yield.

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Speaker 3: Are the companies lean enough? Have they trimmed all the fats?

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Speaker 2: The semiconductor business is a really cyclical business.

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Speaker 1: Breaking market headlines and corporate news from across the globe.

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Speaker 3: Do investors like the M and A that we've seen?

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Speaker 2: These are two big time blue chip companies.

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Speaker 3: Window between the peak and cunt changing super fast.

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Speaker 1: Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio.

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Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big

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Speaker 2: business stories impacting Wall Street and the global markets.

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Speaker 3: Each and every week we provide in depth research and

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Speaker 3: data on some of the two thousand companies and one

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Speaker 3: hundred and thirty industries our analysts cover worldwide.

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Speaker 2: Today, we'll look at how Donald Trump's empire has landed

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Speaker 2: billions of dollars since his last presidential campaign kicked off.

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Speaker 3: Plus we'll discuss how sales of the department store chain

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Speaker 3: may sees are being impacted by tariffs.

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Speaker 2: But first we begin with big tech and the world's

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Speaker 2: most valuable chip maker Nvidio.

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Speaker 3: This week, the company gave an upbeat revenue forecast for

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Speaker 3: the current quarter, even as a slowdown in China. Wait

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Speaker 3: on first quarter results for more on why.

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Speaker 2: We were joined by Kunjan Sabani, Bloomberg Intelligence senior semi

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Speaker 2: conductor analysts.

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Speaker 3: We first asked Kujon for his take on Nvidia's most

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Speaker 3: recent quarter.

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Speaker 4: Yeah two big tickeabase. The GB two hundred ram continues

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Speaker 4: to be stronger than we expected or people an dissipated.

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Speaker 4: We believe based on of our math, the GB two

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Speaker 4: hundred came in three billion above expectations both in one

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Speaker 4: Q and physical two Q, which is what helped them

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Speaker 4: beat the numbers despite the significant China had been which

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Speaker 4: was eight billion for two Q. The second key point

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Speaker 4: was if you take out the China write down, grossmagin

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Speaker 4: actually came in better than antissipated, again suggesting the GB

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Speaker 4: two hundred yeelds and cost optimization are running better than

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Speaker 4: anticipated and we expect margins to continue to rise through

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Speaker 4: the year, exiting year at mid seventy percent, which we

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Speaker 4: believe was the very key a lot of key important

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Speaker 4: factor for the long time long term investors in the company.

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Speaker 3: Yeah that's what you're mentioning yesterday, that making sure that

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Speaker 3: we can do that. Namidia can deliver the mid seventies

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Speaker 3: for margins at the end of the year. So are

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Speaker 3: you what are your outstanding concerns slash questions when it

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Speaker 3: comes to Nvidia, Well, the.

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Speaker 4: Number one is we really hope to hear the new

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Speaker 4: China variant and get clarity on it, which didn't happen.

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Speaker 4: There have been some rumors flying around that that might

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Speaker 4: soon happen, both from Nvidia and AMD, but as we

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Speaker 4: would like to get it officially the specs you know

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Speaker 4: what kind of asps and what sort of applications it

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Speaker 4: will be targeting to as soon as possible to put

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Speaker 4: those concerns at bed. The other key thing, which right

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Speaker 4: now they did help reduce the risk, which is slow

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Speaker 4: down from the hyperscas in cloud we don't see that risk.

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Speaker 4: But as we get into fiscal cue with the August

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Speaker 4: time frame, this is when hyperscalers and clouds really think

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Speaker 4: about their CAPEX budgets for next year. That will be

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Speaker 4: another key milestone for them.

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Speaker 2: The revenue it gets from China, I know percent, I'm

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Speaker 2: not sure what it is. I know it's been declining,

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Speaker 2: could that go to zero? And if so, can the

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Speaker 2: stock still work if that were to go to zero.

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Speaker 4: So at this point, the revenue from China within data

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Speaker 4: center is almost zero, right and estimates don't include anything

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Speaker 4: back from that for at least for this year, so

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Speaker 4: that's almost gone to zero. There is definitely China revenues

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Speaker 4: coming from their gaming segment and their auto segment, but

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Speaker 4: the data center, which is the real meat of it,

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Speaker 4: which was expected to They were expected to sell about

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Speaker 4: fifteen billion of it just this year from the H twenty,

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Speaker 4: which has almost gone to zero. So until the new

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Speaker 4: compliant chip does not come out and they start selling,

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Speaker 4: it's essentially down to zero.

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Speaker 3: Right now, we're talking about how important Middle Eastern clients

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Speaker 3: were to in video for example, and the kind of

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Speaker 3: cap that they're spending. What other growth areas or regions

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Speaker 3: do you think are going to really start delivering?

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Speaker 4: Yeah, so a couple of key regions we are keeping

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Speaker 4: an eye out. Just like you mentioned Middle East. There

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Speaker 4: are a lot of so many entites, so just don't

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Speaker 4: think of Middle East, think of India, Japan and a

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Speaker 4: lot of other countries. Because right now having self regional

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Speaker 4: AI models, having regional AI localized data centers is national

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Speaker 4: priority for a lot of emerging and big countries. So

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Speaker 4: all of these regions are going have already announced, planned

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Speaker 4: and big budgets based on the respective GDPs to spend on.

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Speaker 4: So and media will be a big beneficiary of that.

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Speaker 4: US the Middle East is just a key example. Like

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Speaker 4: I said, you have other regions, especially India and Japan

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Speaker 4: investing heavily here as well. The second key driver outside

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Speaker 4: of the top four CSPs are going to the enterprises.

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Speaker 5: Now.

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Speaker 4: One big example is Xai. They have announced significant big projects.

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Speaker 4: The other second example is the Target Project. So we

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Speaker 4: anticipate a lot more such projects at the enterprise level

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Speaker 4: coming in where they will start to pitch in to

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Speaker 4: robust billions of dollars of growth for NVIDIAU.

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Speaker 2: John, what's the competitive landscape these days Nvidia versus who Yes,

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Speaker 2: The answer is yes.

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Speaker 4: But just for theoretical purposes. The second biggest competitor in

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Speaker 4: the GPU landscape is a MD But the bigger threat

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Speaker 4: to US is the ACIK providers like the broadcoms in Marvel.

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Speaker 4: Because in terms, when you look at the TAM sizing

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Speaker 4: right now, the AMD's market is what the revenue they're

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Speaker 4: generating is still significantly small versus the ACIK market is

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Speaker 4: expected to grow faster, and that they are not a

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Speaker 4: direct competitor, that you don't replace out in Nvidia GPU,

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Speaker 4: that they are not emerging GPU, but they still take

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Speaker 4: away the wallets share at the same large customers, So

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Speaker 4: they could start deploying their own A six and not

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Speaker 4: rely as much on the n Media GPUs. That's a

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Speaker 4: long term risk.

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Speaker 2: Our Thanks to Kunjan Sabani, Bloomberg Intelligence Senior Semiconductor Analyst.

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Speaker 3: Each week we take a look at research from Bloomberg

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Speaker 3: NEF previously known as New Energy Finance.

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Speaker 2: They're the team at Bloomberg that tracks and analyzes the

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Speaker 2: energy transition from commodities to power, transport, industries, buildings, and

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Speaker 2: agricultural sectors.

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Speaker 3: This week, we looked at the final version of the

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Speaker 3: tax and spending bill passed by House Republicans and how

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Speaker 3: it represents a nightmare scenario for clean energy advocates and

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Speaker 3: defenders of the Inflation Reduction Act.

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Speaker 2: For more, we were joined by Derek Flekel, BNEF Lead

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Speaker 2: US policy analyst.

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Speaker 3: We first asked Derek just how bad this tax bill

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Speaker 3: from the House is for clean energy.

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Speaker 6: Well, it's pretty bad, to be honest. Depending on which

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Speaker 6: market you're looking at, you might see more or less

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Speaker 6: severe restrictions if you look at home batteries, home electricity credits,

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Speaker 6: home solar that gets repealed outright at the end of

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Speaker 6: twenty twenty five, and if you look at utility scale stuff.

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Speaker 6: There was already some pretty severe restrictions in an earlier

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Speaker 6: version of this bill introduced by the Ways and Means Committee,

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Speaker 6: nearly unworkable restrictions on any kind of Chinese linked intellectual

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Speaker 6: property or supplies, as well as earlier phase outs and

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Speaker 6: a variety of other complicated barriers to usage. Now, this

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Speaker 6: final version of the bill that the House is put

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Speaker 6: out has made that even more restrictive, in part by

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Speaker 6: saying that only projects that begin construction within sixty days

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Speaker 6: after the bill's final signature by the President would be

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Speaker 6: able to qualify at all. So that would really restrict

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Speaker 6: it to a handful of things already in the pipeline.

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Speaker 3: What it did seem to do, though, is give a

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Speaker 3: lot of leeway well maybe a lot too strong a word,

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Speaker 3: but leeway to commercial solar, for example, but not residential solar.

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Speaker 3: How does that make sense?

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Speaker 6: Well, the amount of leeway is a little bit relative,

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Speaker 6: and I would say, firstly, the political logic is essentially

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Speaker 6: around the culture war element. The idea is, if you're

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Speaker 6: putting solar panels on your roof and deducting that form

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Speaker 6: your taxes to probably higher income, you're an elite, so

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Speaker 6: to speak. And so there's probably a desire to reduce

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Speaker 6: that element in terms of the sort of regional power.

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Speaker 6: And that's really good for Republican districts.

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Speaker 7: A lot of them have relatively cheap land.

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Speaker 6: It's a pretty big source of tax revenue and potentially

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Speaker 6: construction jobs. So there's an attempt to keep those at

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Speaker 6: least nominally alive. But in practice, the restriction of the

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Speaker 6: regulations on these credits make them unusable for all but

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Speaker 6: a few projects. This is an attempt to balance between

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Speaker 6: about twelve to twenty Republicans who really wanted to keep

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Speaker 6: those credits alive and practical to use and a faction

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Speaker 6: that really wanted to cut spending by any means necessary

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Speaker 6: and saw the IRA credits as a great place to

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Speaker 6: go for that. So in practice it looks a little

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Speaker 6: bit less restrictive, but the sheer web of complications and

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Speaker 6: limitations means that a very very small number of utility

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Speaker 6: scale projects would actually get that.

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Speaker 2: Derek Tomkin is famous for saying that companies adapt, corporations adapt,

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Speaker 2: industries adapt, people adapt. Can the clean energy industry, again

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Speaker 2: broadly defined, can it adapt and deal and grow and

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Speaker 2: in make the estments in this environment?

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Speaker 7: I think that's going to be a very big challenge.

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Speaker 6: Certainly, there have been opportunities to try and final alternatives

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Speaker 6: to Chinese intellectual property and suppliers from Korea and Japan.

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Speaker 6: There's progress on building factories out in the US, but

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Speaker 6: the level of uncertainty surrounding this bill is pretty high.

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Speaker 6: Even if it gets finalized in something like its current form,

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Speaker 6: you might need to wait for up to two years

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Speaker 6: to see final regulations on some of these foreign empty restrictions,

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Speaker 6: and that's pretty chilling to investment.

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Speaker 7: Ultimately, we do see our.

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Speaker 6: Model for if the credits were fully repealed beginning at

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Speaker 6: the end of twenty twenty five, still found that about

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Speaker 6: eighty three percent of renewable projects at the utility scale

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Speaker 6: but still get built, at least across solar winded storage.

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Speaker 6: But that wasn't that was a pre tariff projection. We

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Speaker 6: still are sort of thinking how those will fit together

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Speaker 6: since the tariff rates are ever changing. But fundamentally, I

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Speaker 6: think there will be a lot of challenges adapting to this.

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Speaker 6: There's certainly markets where there's still regulatory pushes for renewables,

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Speaker 6: there's still the fastest thing to install or the cheapest,

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Speaker 6: but ultimately the level of adaptation is going to be

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Speaker 6: fairly challenging, and fairly women had given some of the

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Speaker 6: severity of these subsidy based.

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Speaker 3: Restrictions, which is just so striking too, because this affects

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Speaker 3: sort of the supply part and the demand part, like

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Speaker 3: it hits on both angles. I was talking to the

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Speaker 3: former CEO of Sonova, which it had its own problems

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Speaker 3: including not being able to pay debt, looking at bankruptcy, etc.

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Speaker 3: Before any of this happened, and I asked him, I

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Speaker 3: was like, can these sell our companies stay in business?

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Speaker 3: Are they going to go bankrupt? And he's like bankrupt,

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Speaker 3: Like there's no way that they can survive. Is that

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Speaker 3: what we're going to be looking for.

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Speaker 7: I think we're going to be looking at a few

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Speaker 7: different things.

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Speaker 6: First of all, a lot of Chinese assets are joined investments,

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Speaker 6: like there's one with in energy and LAUNG solar in Ohio,

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Speaker 6: you might see changes in ownership there, so maybe a

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Speaker 6: bit of a consolidation. Obviously, there's a reason that for

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Speaker 6: solar stock went up. It's fairly insulated from some of

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Speaker 6: these restrictions. But at the same time, like you're going

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Speaker 6: to see in a wave of consolidation, and that does

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Speaker 6: mean you see some losers and some people falling out

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Speaker 6: of the market, and particularly segments that are tied to

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Speaker 6: more price sensitive sectors. When a residential solar you might

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Speaker 6: see a bigger hit to those areas as well.

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Speaker 2: Derek, I know you're at the bn EF summit in Munich.

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Speaker 2: What's the view from Europe as to what's happening to

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Speaker 2: the the Green Energy initiative in the US.

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Speaker 6: Everybody was a little bit curious about where that's going

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Speaker 6: to stand, what's going to be permanent. Europe is often

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Speaker 6: thinking is this maybe our moment to have more investment

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Speaker 6: here because we have a bit more consistent policy through

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Speaker 6: the carbon price. But it's also dealing with its own challenges.

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Speaker 6: There's been a big focus on shifting to defense and

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Speaker 6: energy security rather than the energy transition per se. Sometimes

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Speaker 6: those go together, say by creating local battery storage reducing

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Speaker 6: reliance on Russian gas.

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Speaker 7: At the same time, you see.

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Speaker 6: A lot of both political and economic pressure to continue

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Speaker 6: using gas through a mix perhaps of US liquefied natural

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Speaker 6: gas as well as imported gas. Where As for investments

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Speaker 6: in the US that a lot of manufacturers have made

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Speaker 6: when the economic concentives of the Irara seem much more stable,

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Speaker 6: they're certainly questioning what will remain At the end of

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Speaker 6: the day. As I said, you're going to see shifts

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Speaker 6: and ownship. You're going to see consolidation, and depending on

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Speaker 6: the fiscal picture in Europe and the degree that you

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Speaker 6: can fit the energy transition into that energy security framework,

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Speaker 6: you could see a bit of a shift over there.

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Speaker 2: Our thanks to Derek flickl b NEF, lead US policy analyst.

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Speaker 3: Coming up, we're going to break down how Meta CEO

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Speaker 3: Mark Zuckerberg is trying to win over President Donald Trump

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Speaker 3: but may not have a lot to show for those efforts.

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Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in

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Speaker 2: depth research and data on two thousand companies one hundred

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Speaker 2: and thirty industries. You can access Bloomberg Intelligence via b

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Speaker 2: I go on the terminal.

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Speaker 3: Paul Sweeney and a Malex Steel and this is Bloomberg.

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

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

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

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

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Speaker 3: We recently focused on a Bloomberg Big Take story titled

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Speaker 3: the Trump Family's Money Making Machine. You can find it

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Speaker 3: on Bloomberg dot Com and The Terminal.

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Speaker 2: The story looks at all the ways Donald Trump and

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Speaker 2: his family have enriched themselves since his most recent presidential

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Speaker 2: campaign began.

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Speaker 3: For more, we were joined by Max Abelson, Bloomberg News

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Speaker 3: Finance reporter, and any mass Up, Bloomberg Wealth reporter.

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Speaker 2: We first asked Max about what Trump's money making machine is.

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Speaker 5: If we were able to put it into one word

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Speaker 5: or one line, we really would have. Unfortunately, it does

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Speaker 5: take like four thousand words to describe because the machine

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Speaker 5: is really really big. I think the way what we

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Speaker 5: ended up deciding is that no modern American president has

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Speaker 5: ever positioned his family to make this much money while

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Speaker 5: in the White House.

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Speaker 2: And you can't you can't.

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Speaker 5: Oversimplify it either as a supporter or is a critic.

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Speaker 5: You can't say, oh, what he's doing is crypto, or oh,

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Speaker 5: what he's doing is licensing his name, or oh what

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Speaker 5: he's doing is going overseas or what what what the

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Speaker 5: family is doing is making corporate connections?

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Speaker 2: That it really is.

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Speaker 5: We ended up thinking about this as basically an atlas,

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Speaker 5: an atlas to what the Trump family is doing. To

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Speaker 5: take it seriously and to really focus on the facts

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Speaker 5: and on the numbers and on the places. It was

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Speaker 5: real work and I was actually, dare I say, even

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Speaker 5: fun to work with Anyon.

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Speaker 2: I'm trying to figure it out. Hey, l So Annie,

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Speaker 2: I mean, is this I guess part of the question

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Speaker 2: is depending on Hey, look at it. Is this legal?

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Speaker 7: Is it ethical?

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Speaker 2: What are the folks in Washington saying?

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Speaker 3: Well?

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Speaker 5: So.

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Speaker 8: One of the challenges of working on the story was

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Speaker 8: that almost week by week there would be new details

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Speaker 8: to add. And I think what Max and I found

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Speaker 8: was that to go through each of these different categories.

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Speaker 8: We covered real estate, we covered crypto, We covered this

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Speaker 8: kind of grab bag of other ventures that the Trump

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Speaker 8: family has become involved in. You have to go really

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Speaker 8: deep into each one, and there's a high velocity of

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Speaker 8: new deals coming now from the ethical standpoint, what the

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Speaker 8: Trump family has decided to do is they've issued an

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Speaker 8: ethics plan for Trump's second term, as they did in

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Speaker 8: his first term. The way that they've handled it is

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Speaker 8: by putting President Trump's assets in a trust which is

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Speaker 8: overseen by his son, Donald Trump Junior. But there are

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Speaker 8: some differences in the ethics plan of Trump's first term

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Speaker 8: and his second term this time around. As we note

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Speaker 8: in the story, the ban on new foreign deals that

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Speaker 8: existed last time is no longer in place, and you

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Speaker 8: can see the new deals popping up all the time.

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Speaker 5: I found it very liberating actually to in our work

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Speaker 5: rather than putting ourselves in a position where we wanted

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Speaker 5: to say Trump is the most amazing president and everything

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Speaker 5: he does is amazing, or being a position where we

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Speaker 5: have to say Trump is the worst president and everything

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Speaker 5: he does is illegal. What we tried to do is

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Speaker 5: just to understand, peace by piece, the way the family

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Speaker 5: is making money, and it was helpful to just use

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Speaker 5: Trump's own words and own plan. Last time around, in

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Speaker 5: the first administration, he was unwilling for the family to

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Speaker 5: do new deals around the world. This time the family

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Speaker 5: is embracing deals around the world. And by their own account,

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Speaker 5: what they're not allowing is deals with foreign governments. And

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Speaker 5: when Andy and I look closely, what we found is

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Speaker 5: that there are some deals, especially in Oman, especially in

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Speaker 5: Cutter that really test the edge of that agreement. They

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Speaker 5: are with arms of governments. Now it may not necessarily

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Speaker 5: be the Trump organization doing these deals. Sometimes their entities

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Speaker 5: kind of in between. There's this one developer called dar Global.

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Speaker 5: So what we're hoping listeners out there will do is

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Speaker 5: read our story because we really tried to vary carefully

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Speaker 5: without doing anything but the facts, just really tried to

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Speaker 5: understand everything about this money making machine.

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Speaker 3: How much of this money making machine are real deals

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Speaker 3: based on properties and hotels, and how much of it

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Speaker 3: are like NFTs and capitalizing more on the celebrity that

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Speaker 3: is President Trump.

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Speaker 8: Everyone kind of knows that Trump real estate Empire has

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Speaker 8: in many ways moved for a long time, been moving

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Speaker 8: toward licensing the Trump brand for hotels and developments. That's

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Speaker 8: a big that's a big part of what they do now.

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Speaker 8: But what's new or in the second term, is you

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Speaker 8: see his sons Eric Trump and Donald Trump Junior joining

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Speaker 8: the boards of companies both private and public, and lending

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Speaker 8: the name in a way to those companies, and what

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Speaker 8: tends to happen when they join, either in an executive

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Speaker 8: role or as advisors is, at least in the case

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Speaker 8: of public companies, sometimes the share price of those companies

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Speaker 8: will go flying. So it shows the celebrity to your

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Speaker 8: point and name that they bring into the business world,

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Speaker 8: into all these different ventures, including in crypto, but in

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Speaker 8: other realms too, like prediction markets.

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Speaker 5: And to be fair, what Donald Trump Junior will say,

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Speaker 5: and what he said to us is I'm a private citizen.

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Speaker 5: I've been a businessman all my life. It's ridiculous to

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Speaker 5: expect me to stop doing what I do just because

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Speaker 5: my dad is president.

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Speaker 2: And that what Donald Trump will say.

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Speaker 5: A White House pokes versus said to us is you know,

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Speaker 5: I'm transparent and I handed over this multi billion dollar

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Speaker 5: empire to serve our country. The White House described at

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Speaker 5: President Trump as making a great sacrifice. I think it's

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Speaker 5: really helpful though, to just look at the numbers, and

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Speaker 5: I just want to quickly mention what we found is

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Speaker 5: that the Trump name is powering more than ten billion

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Speaker 5: dollars of real estate projects since the re election campaign began.

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Speaker 5: A multi billion dollar valuation for the social media company,

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Speaker 5: A money losing social media company that just went public.

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Speaker 5: I mean, you forget it went public last year, plus

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Speaker 5: the money from crypto, plus the money from corporate connections,

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Speaker 5: I think it's worth taking your time to kind of

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Speaker 5: wrap your arms around it, because it really is sort of,

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Speaker 5: I guess, unlike anything I've ever reported on.

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Speaker 3: All right, thanks to Max Abelson and Bloomberg News Finance

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Speaker 3: reporter and Annie Massa Bloomberg Wealth reporter. This week we

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Speaker 3: looked at another Bloomberg Big Take story titled Zuckerberg's bet

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Speaker 3: on Maga has Yet to Bear Fruit. You can find

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Speaker 3: it on Bloomberg dot Com and The Terminal.

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Speaker 2: The story looks at how Meta CEO Mark Zuckerberg has

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Speaker 2: done everything he can do to win over President Donald Trump,

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Speaker 2: but it's not yet clear he has much to show

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Speaker 2: for it.

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Speaker 3: From where we were joined by one of the story's

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Speaker 3: co authors, Kurt Wagner, Bloomberg News Tech reporter, and we

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Speaker 3: first asked Kurt what Mark Zuckerberg's strategy has been to

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Speaker 3: get on President Trump's good side.

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Speaker 9: We noticed this starting in January, actually slightly before the inauguration.

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Speaker 9: In January, Mark Zuckerberg showed up at mar Alago for

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Speaker 9: a dinner with Trump, which was something that was notable

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Speaker 9: not just because of who Mark Zuckerberg is, but because

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Speaker 9: of the contentious relationship that they have had for years,

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Speaker 9: ever since Facebook and Instagram banned Donald Trump after the

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Speaker 9: January sixth riots at the Capitol. And so he goes

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Speaker 9: to mar aw Lago, he shows up at the inauguration,

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Speaker 9: he starts making frequent trips to the White House to

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Speaker 9: meet with Trump and other officials in the administration. And

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Speaker 9: so we just sort of set out to figure out

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Speaker 9: what is this strategy here? Right on the one hand,

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Speaker 9: it seems somewhat obvious everyone you know, wants to be

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Speaker 9: close to that center of power in DC and build

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Speaker 9: those relationships. But given the history between these two men,

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Speaker 9: it was very notable, like is this a shift in

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Speaker 9: Mark Zuckerberg's personal politics or is this just him simply

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Speaker 9: trying to play this political game. And I think through

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Speaker 9: the reporting and interviews that we did, I think what

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Speaker 9: we sort of came to see was this picture of

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Speaker 9: a CEO who's less tied to his own specific, you know,

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Speaker 9: political ideals and more a sense of self preservation.

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Speaker 10: Right.

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Speaker 9: He's someone who out to try and make sure that

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Speaker 9: he and his company survive. And that's what this is

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Speaker 9: all about.

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Speaker 3: Which was so striking in your piece, because what came

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Speaker 3: up for me is that no one seems to like

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Speaker 3: Mark Zuckerberg, whether you're a Democrat or a public and

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Speaker 3: everyone seems to ignore him and not like him. So

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Speaker 3: to your point, it's really about the political showmanship.

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Speaker 9: I think he's an easy person for people to point to,

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Speaker 9: right We've seen this for years in Congress, Like when

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Speaker 9: things go poorly, it's it's easy to point to Facebook.

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Speaker 9: It's easy to point to Mark Zuckerberg. What happens in

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Speaker 9: the world, what happens in society usually happens on their products,

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Speaker 9: on their platform. So they end up sort of, in

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Speaker 9: some ways they totally deserve a lot of this blame.

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Speaker 9: In some ways they don't, but they get it anyway.

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Speaker 9: And I think Mark Zuckerberg, you know, has been a

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Speaker 9: uniting person in DC in that both sides of the

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Speaker 9: political ais'll dislike him historically, and so on the one hand,

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Speaker 9: you can understand, you know, why he would want to

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Speaker 9: try and forge this relationship with President Trump. On the

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Speaker 9: other hand, it's it's unclear if it's working and I

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Speaker 9: think that we have sort of to this point not

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Speaker 9: seen the returns on those efforts from him. There's a

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Speaker 9: bunch of stuff that that meta is still facing in

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Speaker 9: terms of regulation and politics that are that are hard

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Speaker 9: for the company, and I'm not sure that he's quite

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Speaker 9: gotten the return that he wanted.

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Speaker 2: Yet he bought a mansion in Washington, d C. He

442
00:22:09,600 --> 00:22:11,280
Speaker 2: being Mark Zuckerberg. What's that about.

443
00:22:11,720 --> 00:22:15,280
Speaker 9: Yeah, twenty three million dollars, you know, as we all

444
00:22:15,320 --> 00:22:19,200
Speaker 9: do by I believe, like a fourth home. I think

445
00:22:19,200 --> 00:22:21,920
Speaker 9: the idea there is that he's just going to simply

446
00:22:22,119 --> 00:22:24,920
Speaker 9: be in DC a lot more, especially over these next

447
00:22:24,920 --> 00:22:28,359
Speaker 9: four years. I think it's certainly a signal to not

448
00:22:28,440 --> 00:22:31,840
Speaker 9: only the administration but others on on Capitol Hill that hey,

449
00:22:31,880 --> 00:22:34,239
Speaker 9: I'm going to be a regular presence here and and

450
00:22:34,280 --> 00:22:36,720
Speaker 9: you're going to see me around. I want to be involved.

451
00:22:36,720 --> 00:22:40,199
Speaker 9: It's a change of posture for him for the you know,

452
00:22:40,240 --> 00:22:43,000
Speaker 9: the prior four years, or at least the prior two years,

453
00:22:43,240 --> 00:22:46,119
Speaker 9: he had really sort of handed the policy and politics

454
00:22:46,160 --> 00:22:49,159
Speaker 9: part of the business over to Nick Clegg, who was

455
00:22:49,200 --> 00:22:52,280
Speaker 9: the former Deputy Prime Minister of the UK. But Clegg

456
00:22:52,280 --> 00:22:56,600
Speaker 9: announced that he's leaving shortly after the election, and I

457
00:22:56,600 --> 00:22:58,639
Speaker 9: think Mark Zuckerberg has sort of picked up that baton

458
00:22:58,720 --> 00:23:00,960
Speaker 9: and he sort of said, you know, I need to

459
00:23:00,960 --> 00:23:02,840
Speaker 9: be the person to do this. Donald Trump doesn't want

460
00:23:02,840 --> 00:23:04,360
Speaker 9: to deal with a number two or a number three

461
00:23:04,359 --> 00:23:06,879
Speaker 9: at any company, right, President Trump wants to deal with

462
00:23:06,920 --> 00:23:09,040
Speaker 9: the CEO. And I think Mark Zuckerberg knows that, which

463
00:23:09,040 --> 00:23:11,200
Speaker 9: is why he's showing up in DC himself as often

464
00:23:11,200 --> 00:23:11,600
Speaker 9: as he is.

465
00:23:11,680 --> 00:23:13,320
Speaker 3: What you also talk about in the piece is just

466
00:23:13,359 --> 00:23:16,960
Speaker 3: the contrast between Elon Musk and Mark Zuckerberg, like two entrepreneurs,

467
00:23:17,000 --> 00:23:21,840
Speaker 3: incredibly brilliant starting different companies, and just how politically their

468
00:23:21,880 --> 00:23:23,000
Speaker 3: paths have diverged.

469
00:23:23,480 --> 00:23:27,000
Speaker 9: Yeah, we had the section and the story about how

470
00:23:27,040 --> 00:23:29,240
Speaker 9: it was described as as sort of Elon envy on

471
00:23:29,640 --> 00:23:33,840
Speaker 9: Mark Zuckerberg's part, So you can kind of imagine he's

472
00:23:34,040 --> 00:23:36,840
Speaker 9: for years kind of getting grilled, as we talked about

473
00:23:36,880 --> 00:23:39,439
Speaker 9: by politicians on both sides. He did spend a lot

474
00:23:39,480 --> 00:23:42,080
Speaker 9: of time, at least a few years ago, apologizing, right, hey,

475
00:23:42,080 --> 00:23:43,840
Speaker 9: we need to do better, We're going to do better,

476
00:23:43,960 --> 00:23:47,320
Speaker 9: kind of like trying to appease everybody to no success.

477
00:23:47,960 --> 00:23:50,720
Speaker 9: And meanwhile, you look out if you're Mark Zuckerberg and

478
00:23:50,720 --> 00:23:53,520
Speaker 9: you see what Elon Musk is doing, and he's pretty

479
00:23:53,560 --> 00:23:57,760
Speaker 9: much just doing whatever he wants, you know, Consequences be damned,

480
00:23:57,800 --> 00:24:00,880
Speaker 9: And I think they're developed the sense of like, why

481
00:24:00,880 --> 00:24:02,520
Speaker 9: am I out here apologizing? And why am I out

482
00:24:02,520 --> 00:24:05,240
Speaker 9: here trying to please everybody and play down the middle

483
00:24:05,240 --> 00:24:08,040
Speaker 9: and all this stuff when you know he's out there

484
00:24:08,240 --> 00:24:11,520
Speaker 9: he being Elon picking aside donating you know, hundreds of

485
00:24:11,520 --> 00:24:14,239
Speaker 9: millions of dollars to the Trump campaign, literally campaigning for

486
00:24:14,280 --> 00:24:17,639
Speaker 9: the president while running a social network, and there seems

487
00:24:17,640 --> 00:24:20,280
Speaker 9: to be no repercussions. And so I think over time

488
00:24:20,359 --> 00:24:22,560
Speaker 9: he developed, like I said, this, like Elon envy, this

489
00:24:22,680 --> 00:24:25,280
Speaker 9: sense that maybe I'm doing it wrong and he's doing

490
00:24:25,320 --> 00:24:27,400
Speaker 9: it right. And I think we've seen some of that

491
00:24:27,520 --> 00:24:29,520
Speaker 9: sort of show up in the way we see Mark

492
00:24:29,560 --> 00:24:32,720
Speaker 9: Zuckerberg last you know, six to twelve months. He's a

493
00:24:32,720 --> 00:24:35,639
Speaker 9: lot less. He's an unapologetic guy as far as how

494
00:24:35,680 --> 00:24:37,960
Speaker 9: he used to be. And I think I think Elon

495
00:24:38,040 --> 00:24:38,800
Speaker 9: has a lot to do with.

496
00:24:38,760 --> 00:24:39,600
Speaker 1: That o right.

497
00:24:39,600 --> 00:24:42,520
Speaker 2: Thanks to Kurt Wagner, Bloomberg News tech reporter, coming up.

498
00:24:42,480 --> 00:24:44,399
Speaker 3: In the program will break down why the sporting goods

499
00:24:44,400 --> 00:24:47,119
Speaker 3: retailer Dick Sporting Goods is maintaining his annual sales and

500
00:24:47,160 --> 00:24:48,000
Speaker 3: profit forecast.

501
00:24:48,119 --> 00:24:50,919
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in

502
00:24:50,920 --> 00:24:53,159
Speaker 2: depth research and data on two thousand companies and one

503
00:24:53,280 --> 00:24:56,240
Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via

504
00:24:56,280 --> 00:24:57,399
Speaker 2: b I go on the terminal.

505
00:24:57,480 --> 00:25:00,240
Speaker 3: I'm Paul Sweeney and am Malex Steel, and this is bloom.

506
00:25:07,600 --> 00:25:11,320
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

507
00:25:11,400 --> 00:25:14,480
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

508
00:25:14,480 --> 00:25:17,800
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

509
00:25:17,880 --> 00:25:20,960
Speaker 1: you get your podcasts, or watch us live on YouTube.

510
00:25:21,760 --> 00:25:24,119
Speaker 2: This week, the department store chain Macy's posted better than

511
00:25:24,160 --> 00:25:27,240
Speaker 2: expected quarterly sales and maintain its sales outlook for the

512
00:25:27,280 --> 00:25:30,200
Speaker 2: current year. This comes to spite new tariffs and moderation

513
00:25:30,520 --> 00:25:31,479
Speaker 2: in consumer spending.

514
00:25:31,720 --> 00:25:34,600
Speaker 3: Meantime, the clothing retailer Abercrombie and Fitch raised it's full

515
00:25:34,640 --> 00:25:37,200
Speaker 3: your outlook, showing confidence in its ability to navigate the

516
00:25:37,280 --> 00:25:38,600
Speaker 3: changing tear of landscape.

517
00:25:38,640 --> 00:25:40,440
Speaker 2: For more on these companies, we were joined by Mary

518
00:25:40,480 --> 00:25:43,439
Speaker 2: Ross Gilbert Bloomberg Intelligence, senior equity analysts covering retail.

519
00:25:43,480 --> 00:25:45,840
Speaker 3: We first asked Mary for her key takeaways. On Macy's

520
00:25:45,840 --> 00:25:46,680
Speaker 3: most recent quarter.

521
00:25:47,200 --> 00:25:50,159
Speaker 11: I think the green shoots here is that Macy's is

522
00:25:50,280 --> 00:25:55,239
Speaker 11: showing some traction here with their refresh strategy. When you

523
00:25:55,280 --> 00:25:57,399
Speaker 11: look at their one hundred and twenty five stores that

524
00:25:57,440 --> 00:26:00,879
Speaker 11: they've refreshed, and they've expanded that to include some additional stores.

525
00:26:00,880 --> 00:26:03,720
Speaker 11: Their comp sales were down about two percent. About one

526
00:26:03,760 --> 00:26:08,280
Speaker 11: point nine is the figure that they're using. And you know, look,

527
00:26:08,600 --> 00:26:11,840
Speaker 11: Dillard's outperformed because they were down one percent, so they're

528
00:26:11,880 --> 00:26:14,919
Speaker 11: getting better. But where they really need to improve is

529
00:26:14,960 --> 00:26:18,920
Speaker 11: on the service levels. Where you also saw strength here

530
00:26:19,200 --> 00:26:22,200
Speaker 11: is really on the luxury side, and that's Bloomingdale's. Bloomingdale's

531
00:26:22,240 --> 00:26:25,560
Speaker 11: was up three point eight percent and Blue Mercury, which

532
00:26:25,640 --> 00:26:29,440
Speaker 11: is their beauty specialty beauty growth concept, and that was

533
00:26:29,520 --> 00:26:31,440
Speaker 11: up one and a half percent. So that's where you're

534
00:26:31,480 --> 00:26:33,800
Speaker 11: really seeing strength. But it's such a small piece of

535
00:26:33,800 --> 00:26:36,480
Speaker 11: the business. It's really all about the Nacy's name plate,

536
00:26:37,000 --> 00:26:39,639
Speaker 11: and we still need to see better traction there, but

537
00:26:39,960 --> 00:26:42,919
Speaker 11: it's getting better and better. And with regard to the

538
00:26:43,000 --> 00:26:45,600
Speaker 11: tariff hits, it's going to be about twenty to forty

539
00:26:45,640 --> 00:26:50,360
Speaker 11: basis points, so very manageable. They directly source about you know,

540
00:26:50,600 --> 00:26:54,520
Speaker 11: we estimate that their private label business is about thirteen

541
00:26:54,520 --> 00:26:57,960
Speaker 11: to fourteen percent. That's on a consolidated basis of sales,

542
00:26:58,640 --> 00:27:03,320
Speaker 11: and so there sourcing about twenty seven percent from China directly.

543
00:27:04,000 --> 00:27:06,439
Speaker 11: So they have a number of initiatives that are helping

544
00:27:06,440 --> 00:27:09,880
Speaker 11: them to offset the full effect of tariffs, which you'll

545
00:27:09,880 --> 00:27:11,840
Speaker 11: see the biggest hit in the second quarter, but for

546
00:27:11,880 --> 00:27:14,600
Speaker 11: the full year, it's very manageable, you know, in that

547
00:27:14,680 --> 00:27:17,440
Speaker 11: twenty to forty basis point impact.

548
00:27:17,960 --> 00:27:22,400
Speaker 2: Mary for Macy's, are they comfortable with their store footprint

549
00:27:22,480 --> 00:27:23,040
Speaker 2: these days?

550
00:27:23,560 --> 00:27:27,480
Speaker 11: So, Paul, they're reducing their store footprint with the Macy's

551
00:27:27,760 --> 00:27:30,680
Speaker 11: name plate, with some of the stores that they're closing.

552
00:27:30,720 --> 00:27:33,320
Speaker 11: They've already closed sixty four. The total that they plan

553
00:27:33,440 --> 00:27:36,040
Speaker 11: to close is one hundred and fifty. So they sort

554
00:27:36,080 --> 00:27:38,520
Speaker 11: of feel like the go forward store base is about

555
00:27:38,560 --> 00:27:42,280
Speaker 11: three hundred and fifty stores. But right now there's a

556
00:27:42,280 --> 00:27:44,240
Speaker 11: little bit of a pause, you know, just because of

557
00:27:44,280 --> 00:27:46,600
Speaker 11: the real estate market and some of the store closures

558
00:27:46,640 --> 00:27:49,679
Speaker 11: that they have planned for this year. But yes, no,

559
00:27:49,800 --> 00:27:51,920
Speaker 11: they need to take that store base down.

560
00:27:52,480 --> 00:27:52,760
Speaker 4: All right.

561
00:27:52,840 --> 00:27:55,160
Speaker 3: Let's go to the other one on the highlight here

562
00:27:55,160 --> 00:27:58,040
Speaker 3: Abercromme and Fisch I'm kind of floored by this. Like

563
00:27:58,080 --> 00:28:01,239
Speaker 3: we saw it with Urban, it with the American Eagle, Like

564
00:28:01,359 --> 00:28:05,000
Speaker 3: these specialty stores, they seem to be somewhat cyclical in nature,

565
00:28:05,040 --> 00:28:06,280
Speaker 3: and they're crushing it right now.

566
00:28:07,000 --> 00:28:09,679
Speaker 11: Yeah, I mean, you can say Abercrombie is crushing it.

567
00:28:10,119 --> 00:28:11,800
Speaker 11: They kind of are. But I mean, if you look

568
00:28:11,800 --> 00:28:15,199
Speaker 11: at the namesake brand, the Abercrombie and Fitch brand, that

569
00:28:15,359 --> 00:28:18,360
Speaker 11: was actually down ten percent on a comp sales basis,

570
00:28:18,400 --> 00:28:21,040
Speaker 11: but in all fairness, they were going against a twenty

571
00:28:21,160 --> 00:28:24,960
Speaker 11: nine percent increase in the prior year. First quarter in

572
00:28:25,320 --> 00:28:28,200
Speaker 11: a way you'd say, look, that's no excuse. And certainly

573
00:28:28,240 --> 00:28:32,080
Speaker 11: they were impacted in the quarter by lower average unit retail.

574
00:28:32,160 --> 00:28:34,920
Speaker 11: That was because they had some carryover inventory from the

575
00:28:34,960 --> 00:28:37,560
Speaker 11: winter season, and also it looks like they had a

576
00:28:37,560 --> 00:28:41,080
Speaker 11: little bit of a miss on their bridle, you know,

577
00:28:41,120 --> 00:28:44,760
Speaker 11: the wedding business. But where they did have some strength

578
00:28:44,920 --> 00:28:47,680
Speaker 11: was in swim They really chased after it. So they've

579
00:28:47,720 --> 00:28:50,560
Speaker 11: really got a good sort of summer shop going, and

580
00:28:50,600 --> 00:28:53,840
Speaker 11: they expect that Abercrombie will inflect back to positive in

581
00:28:53,920 --> 00:28:56,720
Speaker 11: the second half of the year. Where you really saw

582
00:28:56,760 --> 00:29:00,760
Speaker 11: the strength was Hollister. So Hollister turned in a nice

583
00:29:00,800 --> 00:29:03,360
Speaker 11: twenty three percent comp sales gain, and that was on

584
00:29:03,440 --> 00:29:06,320
Speaker 11: top of a double digit gain last year, So they're

585
00:29:06,400 --> 00:29:09,640
Speaker 11: really hitting it out of the ballpark, you know with

586
00:29:09,120 --> 00:29:12,240
Speaker 11: the team gen Z retail customer there.

587
00:29:12,440 --> 00:29:15,520
Speaker 2: Hey, Mary, what are the Macy's and the Amber Crombies

588
00:29:15,520 --> 00:29:17,320
Speaker 2: of the world. What are they saying about the consumer

589
00:29:17,520 --> 00:29:18,040
Speaker 2: right now?

590
00:29:18,280 --> 00:29:21,480
Speaker 11: Yeah, so Macy's is taking a very cautious perspective on

591
00:29:21,520 --> 00:29:25,640
Speaker 11: the consumer. We think the consumer is pretty resilient. I mean,

592
00:29:25,680 --> 00:29:28,160
Speaker 11: clearly at the higher end they're more resilient than at

593
00:29:28,160 --> 00:29:32,200
Speaker 11: the lower end, and there's some caution in there, but generally,

594
00:29:32,240 --> 00:29:35,080
Speaker 11: I would say, you know, when we have employment levels,

595
00:29:35,640 --> 00:29:37,920
Speaker 11: you know, in that sort of unemployment levels in that

596
00:29:38,000 --> 00:29:41,280
Speaker 11: sort of four percent range, that's really full employment. And

597
00:29:41,360 --> 00:29:44,719
Speaker 11: when you're employed, you feel good about spending money. So

598
00:29:44,800 --> 00:29:47,840
Speaker 11: we really think it's holding up. We think there's retailers

599
00:29:47,840 --> 00:29:51,440
Speaker 11: are taking a cautious conservative approach hoping to be able

600
00:29:51,480 --> 00:29:54,200
Speaker 11: to beat and we think they probably can, particularly as

601
00:29:54,200 --> 00:29:56,360
Speaker 11: we get into the back half of the year and

602
00:29:56,360 --> 00:29:59,480
Speaker 11: they're able to delay more of the tariff impact as well.

603
00:30:00,000 --> 00:30:02,480
Speaker 2: Our thanks to Mary Ross Gilbert Bloomberg Intelligence senior equity

604
00:30:02,520 --> 00:30:03,440
Speaker 2: analysts covering.

605
00:30:03,200 --> 00:30:05,400
Speaker 3: Retail We move next to news from the sporting goods

606
00:30:05,480 --> 00:30:07,160
Speaker 3: retailer Dick's Sporting Goods.

607
00:30:07,400 --> 00:30:09,560
Speaker 2: This week, the company said it maintained it's annual sales

608
00:30:09,560 --> 00:30:11,600
Speaker 2: and profit FORCAS and this can be viewed us a

609
00:30:11,640 --> 00:30:14,280
Speaker 2: sign of strength as the retailer prepares to require the

610
00:30:14,320 --> 00:30:16,200
Speaker 2: struggling footwear chain Footlocker.

611
00:30:16,400 --> 00:30:16,720
Speaker 4: For more.

612
00:30:16,720 --> 00:30:19,520
Speaker 3: We were joined by Lindsay Dutch, Bloomberg Intelligence Consumer Hardline

613
00:30:19,560 --> 00:30:20,280
Speaker 3: Senior analyst.

614
00:30:20,560 --> 00:30:23,240
Speaker 2: We first asked Lindsay for her key takeaways from quarterly

615
00:30:23,280 --> 00:30:24,720
Speaker 2: results at dick Sporting Goods.

616
00:30:25,080 --> 00:30:27,520
Speaker 12: Yes, so the numbers Dix did pre announce when they

617
00:30:27,520 --> 00:30:30,040
Speaker 12: announced their footlocker deal a couple of weeks ago, and

618
00:30:30,160 --> 00:30:33,080
Speaker 12: numbers were in line with their pre announcement. But the

619
00:30:33,160 --> 00:30:37,080
Speaker 12: key focus was that guidance what they left where they

620
00:30:37,120 --> 00:30:39,080
Speaker 12: said it at the beginning of the year, and it

621
00:30:39,160 --> 00:30:41,960
Speaker 12: really tells us, you know, combined with the strong first

622
00:30:42,200 --> 00:30:45,280
Speaker 12: quarter results, that demand is holding very strong for this

623
00:30:45,400 --> 00:30:48,720
Speaker 12: company and we should continue to see growth in coming

624
00:30:48,800 --> 00:30:52,239
Speaker 12: quarters and tariffs with the rising costs, there should be

625
00:30:52,280 --> 00:30:53,760
Speaker 12: manageable for the rest of the year.

626
00:30:54,360 --> 00:30:56,800
Speaker 3: What changed because I feel like before earning season, we

627
00:30:56,800 --> 00:30:58,640
Speaker 3: thought this was going to be just like total disaster

628
00:30:59,280 --> 00:31:02,160
Speaker 3: for retailers came to tariffs, it is something fundamentally changed,

629
00:31:02,240 --> 00:31:03,720
Speaker 3: or do we just not give them enough credit?

630
00:31:04,160 --> 00:31:07,520
Speaker 12: So I think Dix might not be a barometer for

631
00:31:07,680 --> 00:31:10,960
Speaker 12: retailers across the board. I think they're uniquely positioned in

632
00:31:11,000 --> 00:31:14,320
Speaker 12: a couple of ways. One is that their consumer base

633
00:31:14,960 --> 00:31:18,640
Speaker 12: is a higher income consumer. That consumer has been holding

634
00:31:18,720 --> 00:31:21,960
Speaker 12: up pretty well, and we haven't seen a change, you know,

635
00:31:22,080 --> 00:31:25,640
Speaker 12: in the spending patterns for them yet. The other piece

636
00:31:25,840 --> 00:31:27,880
Speaker 12: I would say is, you know, Dix has done a

637
00:31:27,920 --> 00:31:33,080
Speaker 12: really great job improving their assortment, and because they carry

638
00:31:33,320 --> 00:31:37,160
Speaker 12: you know, premium brands, they are in a very good

639
00:31:37,200 --> 00:31:41,600
Speaker 12: position to pass through these higher costs to that consumer.

640
00:31:41,800 --> 00:31:44,480
Speaker 12: And we expect that more affluent consumer to continue to

641
00:31:44,520 --> 00:31:48,120
Speaker 12: spend a Nike even if it's five percent higher in

642
00:31:48,240 --> 00:31:52,480
Speaker 12: terms of the shoe that you're picking. So it is manageable,

643
00:31:52,800 --> 00:31:54,800
Speaker 12: you know, for Dix, and you know that might not

644
00:31:54,840 --> 00:31:58,480
Speaker 12: be the case across the board, but they are positioned

645
00:31:58,520 --> 00:31:58,960
Speaker 12: to do so.

646
00:31:59,440 --> 00:32:02,640
Speaker 2: Linda guessing that my sneakers are not stitched in pure

647
00:32:02,720 --> 00:32:06,719
Speaker 2: at Illinois, So what are they saying about tariffs and

648
00:32:06,760 --> 00:32:08,440
Speaker 2: the impact on their margins?

649
00:32:09,600 --> 00:32:13,040
Speaker 12: Right, So we haven't gotten a lot of specific details,

650
00:32:13,240 --> 00:32:16,800
Speaker 12: but in the guidance that they are still expecting about

651
00:32:16,800 --> 00:32:20,880
Speaker 12: seventy five basis points of gross margin expansion this year,

652
00:32:21,040 --> 00:32:25,320
Speaker 12: so that expectation of growing margin is still in place.

653
00:32:26,080 --> 00:32:28,880
Speaker 12: Like I said, I think that they're looking to pass

654
00:32:29,000 --> 00:32:32,440
Speaker 12: those higher costs on to consumers. So that's sort of

655
00:32:32,720 --> 00:32:36,880
Speaker 12: a margin neutral impact. And the way they're getting the

656
00:32:36,960 --> 00:32:39,840
Speaker 12: expansion on the margin line is, you know, Dix has

657
00:32:39,880 --> 00:32:43,520
Speaker 12: really pulled back on promotions. They don't really offer blanket discounts.

658
00:32:43,520 --> 00:32:46,280
Speaker 12: You never see twenty percent off the entire site, not

659
00:32:46,320 --> 00:32:49,080
Speaker 12: even on Black Friday. They just don't do that anymore.

660
00:32:49,320 --> 00:32:52,040
Speaker 12: And they haven't really done that since the pandemic, you know,

661
00:32:52,080 --> 00:32:56,320
Speaker 12: once they saw that consumers really are interested in sports

662
00:32:56,360 --> 00:32:59,840
Speaker 12: fitness at leisure, they will pay the full price and

663
00:33:00,240 --> 00:33:03,520
Speaker 12: they could plan to continue to sell through on the

664
00:33:03,520 --> 00:33:06,440
Speaker 12: full price for the rest of the year.

665
00:33:07,360 --> 00:33:11,280
Speaker 3: What other stocks in your coverage are holding up surprisingly well.

666
00:33:12,440 --> 00:33:14,840
Speaker 12: Yeah, so that's a great question, Alex. So we had

667
00:33:14,840 --> 00:33:18,479
Speaker 12: william Sonoma report last week and they too held their

668
00:33:18,520 --> 00:33:23,080
Speaker 12: guidance flat. Very similar backdrop for them, again, it's a

669
00:33:23,160 --> 00:33:26,960
Speaker 12: higher income consumer. They are seeing demand you know, for

670
00:33:27,160 --> 00:33:29,800
Speaker 12: the price point of their goods, especially in the Williams

671
00:33:29,840 --> 00:33:34,160
Speaker 12: Sonoma home brand that's performed very well. They're also making

672
00:33:34,200 --> 00:33:38,920
Speaker 12: inroads with kids and their teen pottery barn brand, so

673
00:33:39,000 --> 00:33:41,680
Speaker 12: that another one, you know, very similar to Dix. You know,

674
00:33:41,720 --> 00:33:44,920
Speaker 12: both kind of entered the year with strong demand momentum,

675
00:33:45,000 --> 00:33:47,920
Speaker 12: and we saw that demand continue into the first quarter

676
00:33:48,320 --> 00:33:51,840
Speaker 12: and it looks like it could continue to extend this year,

677
00:33:52,240 --> 00:33:52,480
Speaker 12: all right.

678
00:33:52,480 --> 00:33:56,160
Speaker 3: Thanks to Lindsay Dutch, Bloomberg Intelligence Consumer Hardline Senior Analyst.

679
00:33:56,000 --> 00:33:58,000
Speaker 2: We moved next to the auto sector this week. The

680
00:33:58,040 --> 00:34:02,600
Speaker 2: automaker stilentis appointed and it's America's head Antonio Filosa, as

681
00:34:02,640 --> 00:34:04,320
Speaker 2: its chief executive.

682
00:34:03,800 --> 00:34:07,120
Speaker 3: Officer, and this comes after former boss Carlos Saveras was

683
00:34:07,160 --> 00:34:09,040
Speaker 3: forced out over a slumping sales and profit.

684
00:34:09,400 --> 00:34:11,920
Speaker 2: For more, we were joined by Steve Man Bloomberg Intelligence

685
00:34:12,040 --> 00:34:15,399
Speaker 2: Global Autos and Industrials Research Channels. We first asked Steve

686
00:34:15,440 --> 00:34:16,880
Speaker 2: to break down this week's news.

687
00:34:17,040 --> 00:34:21,200
Speaker 10: Well, the old CEO resigned. Part of it is because,

688
00:34:21,520 --> 00:34:25,200
Speaker 10: you know, earnings were pretty bad and it may not

689
00:34:25,280 --> 00:34:27,359
Speaker 10: be one hundred percent of his fault. The market was

690
00:34:27,800 --> 00:34:30,880
Speaker 10: the auto market was weakening. So we have a new CEO.

691
00:34:31,520 --> 00:34:33,960
Speaker 10: He does have a lot of experience in the auto industry.

692
00:34:33,960 --> 00:34:37,960
Speaker 10: He's been with Stalentis since nineteen ninety nine, so it's

693
00:34:38,040 --> 00:34:40,480
Speaker 10: been a while. Like you said, the last dint he

694
00:34:40,600 --> 00:34:44,160
Speaker 10: was was in managing the North American business for a

695
00:34:44,160 --> 00:34:47,640
Speaker 10: few months, and prior to that he was at Cheap

696
00:34:48,120 --> 00:34:50,640
Speaker 10: But you know, it took a number of months for

697
00:34:50,719 --> 00:34:53,160
Speaker 10: them to identify someone new. But I think the market

698
00:34:53,200 --> 00:34:56,520
Speaker 10: is just pretty surprised that they went with somebody internal

699
00:34:56,560 --> 00:34:58,360
Speaker 10: and not somebody external.

700
00:34:58,760 --> 00:35:01,080
Speaker 3: So what do we learn about that? Because so many

701
00:35:01,120 --> 00:35:03,759
Speaker 3: of the problems that are hitting carmakers are in some

702
00:35:03,800 --> 00:35:06,480
Speaker 3: ways completely out of their control. Yes, in terms of trade,

703
00:35:06,600 --> 00:35:09,040
Speaker 3: supply chains, sort of the war on evs here in

704
00:35:09,040 --> 00:35:12,120
Speaker 3: the US, right, So do we learn that, Like, hey,

705
00:35:12,200 --> 00:35:13,960
Speaker 3: we don't think it's very fixable, so we're not gonna

706
00:35:13,960 --> 00:35:16,000
Speaker 3: worry about something from the outside or is it like, look,

707
00:35:16,080 --> 00:35:18,359
Speaker 3: the US is in turmoil. We need someone who knows

708
00:35:18,400 --> 00:35:19,680
Speaker 3: that market. Like, what do we learn?

709
00:35:19,800 --> 00:35:22,000
Speaker 10: So there's you know, they are they do have issues

710
00:35:22,040 --> 00:35:24,560
Speaker 10: that's not in their control, but there's a lot of

711
00:35:24,560 --> 00:35:28,560
Speaker 10: issues that they are in control. So you know, quality

712
00:35:28,600 --> 00:35:31,000
Speaker 10: is an issue. You know, I think a lot of

713
00:35:31,040 --> 00:35:35,440
Speaker 10: American buyers thinks Jeep has kind of fallen off in

714
00:35:35,480 --> 00:35:39,200
Speaker 10: the quality side. The new CEO, Antonio actually managed Jeep

715
00:35:39,800 --> 00:35:43,520
Speaker 10: for about two years, so you know, I think, you know,

716
00:35:43,760 --> 00:35:48,480
Speaker 10: the investor will take that as probably a negative. And

717
00:35:48,520 --> 00:35:51,880
Speaker 10: then the other issues is morale. You know, over the

718
00:35:51,960 --> 00:35:55,600
Speaker 10: past few years, sales have been weakening, They've been closing

719
00:35:55,600 --> 00:35:59,600
Speaker 10: a lot of plants as a result. Dealers are not

720
00:35:59,800 --> 00:36:05,080
Speaker 10: very happy with some pricing issues since COVID. So there's

721
00:36:05,120 --> 00:36:07,479
Speaker 10: a lot of issues that you know, the new CEO

722
00:36:07,520 --> 00:36:10,600
Speaker 10: will have to kind of address and hopefully you can

723
00:36:10,640 --> 00:36:11,120
Speaker 10: turn out a.

724
00:36:11,040 --> 00:36:13,480
Speaker 2: Rep all right, So for the big three US automakers

725
00:36:13,520 --> 00:36:17,719
Speaker 2: in general, what is the consensus on tariffs and how

726
00:36:17,800 --> 00:36:20,239
Speaker 2: much it will impact their business?

727
00:36:20,400 --> 00:36:23,640
Speaker 10: Well, interestingly, Trump has been giving a lot of reprieves

728
00:36:23,680 --> 00:36:27,600
Speaker 10: and reliefs to you know, various countries and regions and

729
00:36:27,880 --> 00:36:31,120
Speaker 10: a certain sector, but he hasn't really done much for

730
00:36:31,200 --> 00:36:34,880
Speaker 10: the auto industry. There was some relief, a two year relief,

731
00:36:35,480 --> 00:36:38,160
Speaker 10: but I think he's you know, going full full ahead

732
00:36:38,200 --> 00:36:41,799
Speaker 10: with these auto tariffs and a lot of companies still

733
00:36:41,880 --> 00:36:44,799
Speaker 10: don't know where the impact, how big of the impact is.

734
00:36:44,920 --> 00:36:47,120
Speaker 10: GM actually announced they're going to be a four to

735
00:36:47,239 --> 00:36:52,680
Speaker 10: five billion impact this year. Toyota said, you know, over

736
00:36:53,160 --> 00:36:57,879
Speaker 10: between May and March and April the impact was one

737
00:36:57,960 --> 00:37:00,719
Speaker 10: point three to one point five billion. So given these

738
00:37:00,800 --> 00:37:02,440
Speaker 10: numbers is going to be huge.

739
00:37:03,440 --> 00:37:06,719
Speaker 3: What about EV's. Is it possible that EV's in the

740
00:37:06,800 --> 00:37:09,880
Speaker 3: US go the way that EV's went one hundred years ago.

741
00:37:11,640 --> 00:37:14,480
Speaker 3: It could, It could, That's not immaterial.

742
00:37:14,960 --> 00:37:17,560
Speaker 10: I think, you know, there's a number of issues that's

743
00:37:17,600 --> 00:37:22,160
Speaker 10: facing the EV market. Infrastructure is a big one. It's

744
00:37:22,239 --> 00:37:25,880
Speaker 10: just not as convenient as people would like it to be.

745
00:37:26,719 --> 00:37:30,000
Speaker 10: The other thing is the cost. You know, I still

746
00:37:30,040 --> 00:37:34,200
Speaker 10: think that you know, EV has a place in the marketplace.

747
00:37:34,800 --> 00:37:37,759
Speaker 10: It's not going to be fifty percent market share by

748
00:37:38,080 --> 00:37:40,920
Speaker 10: twenty thirty. We think it's more like half of that

749
00:37:41,120 --> 00:37:45,200
Speaker 10: twenty to twenty five percent. And then look there is

750
00:37:45,239 --> 00:37:49,880
Speaker 10: a risk to lower number because of the tariffs and affordability.

751
00:37:49,920 --> 00:37:51,799
Speaker 10: A lot of these some of these EV's are actually

752
00:37:51,840 --> 00:37:54,560
Speaker 10: made in Mexico, so if you slap on tariffs, that

753
00:37:54,680 --> 00:37:56,800
Speaker 10: makes it less affordable for consumers.

754
00:37:57,080 --> 00:37:59,640
Speaker 3: Our thanks to Steve Man, Bloomberg Intelligence, Global autos in

755
00:37:59,680 --> 00:38:01,000
Speaker 3: a dust research analyst.

756
00:38:01,400 --> 00:38:06,080
Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,

757
00:38:06,239 --> 00:38:09,680
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758
00:38:09,760 --> 00:38:13,520
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759
00:38:13,640 --> 00:38:17,160
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760
00:38:17,600 --> 00:38:20,480
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761
00:38:20,920 --> 00:38:23,160
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