WEBVTT - BI Weekend: US Earnings, Morning Consult Poll 0:00:02.920 --> 0:00:12.600 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:12.640 --> 0:00:14.440 with Alex Steinah and Paul'sweenye. 0:00:14.520 --> 0:00:17.720 The real app performance has been in US corporate high yield. 0:00:17.880 --> 0:00:20.240 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.880 The semiconductor business is a really cyclical business. 0:00:23.600 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:31.000 These are two. 0:00:31.040 --> 0:00:33.159 Big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:43.519 Bloomberg Intelligence with Alex Steinhall and Paul'sweenye on Bloomberg Radio. 0:00:43.640 --> 0:00:46.440 Today's Bloomberg Intelligence Show, we dig inside the big business 0:00:46.440 --> 0:00:48.360 stories impacting Wall Street and the global markets. 0:00:48.400 --> 0:00:50.400 Each and every week we provide in depth research and 0:00:50.520 --> 0:00:52.320 data on some of the two thousand companies and one 0:00:52.400 --> 0:00:55.000 hundred and thirty industries our analysts cover worldwide. 0:00:55.080 --> 0:00:57.920 Today, well, look at why fast food chain McDonald's experience 0:00:57.960 --> 0:00:59.560 its first sales drop in four years. 0:00:59.680 --> 0:01:02.560 Plus, plainmaker Boeing has a new CEO. We'll discuss that 0:01:02.600 --> 0:01:04.200 in the company's second quarter earnings. 0:01:04.440 --> 0:01:06.560 But first we will begin with the big tech earnings 0:01:06.600 --> 0:01:10.120 and Microsoft. Microsoft reported fourth quarter earnings and revenue the 0:01:10.200 --> 0:01:12.000 top analysts expectations. 0:01:11.440 --> 0:01:14.199 But the company's Azure cloud competing service posted a slow 0:01:14.240 --> 0:01:16.640 down in growth last quarter, and this comes as investors 0:01:16.680 --> 0:01:19.600 are anxious to see a payoff from huge investments in 0:01:19.680 --> 0:01:20.600 AI products. 0:01:20.800 --> 0:01:23.440 For more, we were joined by Anna Agrana, Bloomberg Intelligence 0:01:23.480 --> 0:01:24.400 technology analyst. 0:01:24.520 --> 0:01:27.759 We first asked Animog for his key takeaways from Microsoft results. 0:01:28.120 --> 0:01:31.520 When Microsoft keep guidance for rasher last quarter, they said 0:01:31.959 --> 0:01:34.880 growth rate of thirty to thirty one percent in constant currency, 0:01:35.400 --> 0:01:37.160 and boy, they didn't hit thirty one. 0:01:37.200 --> 0:01:37.959 They hit thirty. 0:01:38.040 --> 0:01:40.959 People got disappointed, but they did a good job of 0:01:41.000 --> 0:01:43.800 explaining what's happening on the conference called at the end 0:01:43.840 --> 0:01:46.600 of the day, they are adding more capacity for their 0:01:46.680 --> 0:01:50.600 data centers, and the growth rate of the cloud, still 0:01:50.760 --> 0:01:55.080 very strong, will slow down slightly because of capacity issues 0:01:55.280 --> 0:01:58.160 and not demand issues. And as they get more data 0:01:58.160 --> 0:02:00.760 centers up, growth will accelerate. 0:02:01.200 --> 0:02:04.000 Oh okay, So to be clear, then they're saying, look, 0:02:04.040 --> 0:02:06.200 it's on us to build out all this stuff and 0:02:06.200 --> 0:02:08.000 then all of a sudden, the revenue will accelerate. This 0:02:08.040 --> 0:02:10.880 and not like a trend of slowing cloud revenue growth 0:02:10.919 --> 0:02:11.800 because of demand. 0:02:11.919 --> 0:02:15.320 Just to clarify for me, yes, absolutely. In fact, and 0:02:15.360 --> 0:02:18.639 the cloud growth is driven in part or I would 0:02:18.639 --> 0:02:22.160 say largely by AI bookloads because of their relationship with 0:02:22.200 --> 0:02:25.320 Opening Eye. That really is the biggest driving factor. And 0:02:25.440 --> 0:02:28.480 Microsoft has an edge there over others because of that 0:02:28.639 --> 0:02:32.480 unique relationship that I mentioned. So I think Microsoft remains 0:02:32.560 --> 0:02:35.880 the primary beneficiary on the software side, similar to what 0:02:36.040 --> 0:02:37.640 Nvidia has on the chip side. 0:02:38.400 --> 0:02:41.920 So an rag part of the discussion I guess probably 0:02:41.960 --> 0:02:44.360 over the last month or month and a half about 0:02:44.400 --> 0:02:48.520 AI has been Okay, I understand the spending aspect of it, 0:02:48.600 --> 0:02:51.080 to build out capacity, to build out you know, whatever 0:02:51.120 --> 0:02:54.280 I need. Remind me once again, what's the return on 0:02:54.280 --> 0:02:56.799 that investment? So there's been some questions about the returns. 0:02:57.680 --> 0:02:59.160 How do you answer that question? 0:03:00.200 --> 0:03:02.119 So you know, if you were in the semiconductor world, 0:03:02.160 --> 0:03:04.400 your return is pretty quickly because the people are going 0:03:04.440 --> 0:03:07.560 to buy chips immediately. But if you're in the software world, 0:03:07.680 --> 0:03:10.320 first you're going to get those chip, create a data center, 0:03:10.639 --> 0:03:14.959 add more servers, and then create your software products that 0:03:15.080 --> 0:03:17.000 which you're going to sell. Now, that thing's going to 0:03:17.040 --> 0:03:19.480 take time, whether it's going to take six months, twelve months, 0:03:19.560 --> 0:03:22.400 two years, and then you're going to realize that AI 0:03:22.440 --> 0:03:25.480 revenue and that's where the entire rest of the world is, 0:03:25.520 --> 0:03:28.320 whether it's on the software side or the services side, 0:03:28.400 --> 0:03:31.160 and people need to have a very good understanding of it. 0:03:31.440 --> 0:03:34.800 Otherwise they keep on harping on this capex issue, which 0:03:34.840 --> 0:03:36.920 is going to get much bigger, and which is why 0:03:36.960 --> 0:03:40.280 the chip stocks are doing very well because Microsoft communicated 0:03:40.400 --> 0:03:42.360 that they're going to increase their capex even. 0:03:42.160 --> 0:03:42.800 More this year. 0:03:43.120 --> 0:03:45.760 So this is really where people need to understand this 0:03:46.040 --> 0:03:48.560 and otherwise this confusion is going to continue going in 0:03:48.600 --> 0:03:49.720 a next quarter as well. 0:03:50.000 --> 0:03:50.160 Well. 0:03:50.200 --> 0:03:53.360 Then to that point, you know, we got AMD boosting 0:03:53.640 --> 0:03:56.560 at sales forecast for AI at the same time Intel's 0:03:56.600 --> 0:04:00.680 cutting thousands of jobs. Where is Intel in this party? 0:04:00.960 --> 0:04:01.160 Yeah? 0:04:01.200 --> 0:04:03.600 I mean, I think the biggest party player really is 0:04:03.640 --> 0:04:06.680 in video with their GPUs that are truly required for 0:04:07.360 --> 0:04:09.960 these workloads, and AMD is also benefiting a little bit 0:04:10.000 --> 0:04:12.280 from that. Intel, I think is needs to do a 0:04:12.280 --> 0:04:15.960 lot more work before they can capitalize on this particular trend. 0:04:16.120 --> 0:04:19.560 So Intel's in like the quad, like not even not 0:04:19.600 --> 0:04:22.480 even closed to coming into the frat house. Basically, can 0:04:22.520 --> 0:04:23.120 we look at it that? 0:04:23.320 --> 0:04:23.760 Yeah? 0:04:23.800 --> 0:04:24.360 Exactly? 0:04:25.760 --> 0:04:28.880 How else in your space an A rag what else 0:04:28.920 --> 0:04:30.200 looks attractive here. 0:04:31.520 --> 0:04:33.599 I think the fun is going to be tomorrow evening 0:04:33.640 --> 0:04:36.960 when Amazon reports and they start talking about their AI strategy, 0:04:37.000 --> 0:04:39.800 because remember they do not have a relationship with open ai, 0:04:40.160 --> 0:04:43.240 but they are still the largest cloud infrastructure vendor and 0:04:43.320 --> 0:04:46.280 have more services than anybody else. They will come out 0:04:46.279 --> 0:04:49.040 and give the message that listen, it's not just OpenAI, 0:04:49.200 --> 0:04:52.080 but other large language models as well that people are using, 0:04:52.360 --> 0:04:55.200 and they're using AWS services for that. You know, whether 0:04:55.279 --> 0:04:59.039 that's anthropic or whether that's meta. All these companies have 0:04:59.120 --> 0:05:01.479 their models as well, and people should be trying that. 0:05:02.360 --> 0:05:04.080 And before I let you go, what I also found 0:05:04.040 --> 0:05:07.560 interesting was that eight percentage points of the increase in 0:05:08.040 --> 0:05:10.679 as your revenue and cloud revenue was attributable to AI. 0:05:10.880 --> 0:05:13.800 That was up about seven percentage points. How do you 0:05:13.839 --> 0:05:15.920 think that winds up looking like, are we going to 0:05:15.960 --> 0:05:18.520 start to see like double digit increases here? Is it 0:05:18.560 --> 0:05:19.920 going to be a slow grind higher? 0:05:20.920 --> 0:05:21.000 No? 0:05:21.120 --> 0:05:23.040 I think over time it will be double digits, But 0:05:23.080 --> 0:05:26.360 again the timing is difficult. When we extrapolated this number, 0:05:26.440 --> 0:05:28.800 we are coming to somewhere around one point four billion 0:05:28.839 --> 0:05:32.479 in this quarter. That's over ten times in just one year. 0:05:32.880 --> 0:05:35.000 It was, you know, it was roughly around one hundred 0:05:35.000 --> 0:05:38.000 plus million a year ago. This is all the AI 0:05:38.040 --> 0:05:40.960 workloads from open Ai, So I mean it is really 0:05:40.960 --> 0:05:44.679 a big number frankly. But over time what will also 0:05:44.720 --> 0:05:47.120 happen is there's going to be a blending between the 0:05:47.120 --> 0:05:50.400 workloads on AI and the non AI workloads. And for us, 0:05:50.480 --> 0:05:53.520 the net beneficiary are the three biggest cloud vendors, and 0:05:53.560 --> 0:05:55.640 in fact, even Oracle is going to benefit from this. 0:05:56.080 --> 0:06:00.400 Our thanks to anorog Rana Bloomberg Intelligence technology analyst, take. 0:06:00.200 --> 0:06:02.800 A look at the latest Bloomberg News Morning Console poll. 0:06:03.160 --> 0:06:05.880 It shows a Kamala Harris has wiped out Donald Trump's 0:06:05.920 --> 0:06:08.800 leader across seven battle ground states as a vice president, 0:06:08.880 --> 0:06:12.400 rise a wave of enthusiasm among young, black and Hispanic voters. 0:06:12.440 --> 0:06:15.760 For more, we are joined by Laura Davison, Bloomberg Politics editor. 0:06:15.920 --> 0:06:18.440 We first asked her for her key takeaways from this pole. 0:06:18.760 --> 0:06:21.599 This is the best that the Democratic challenger to Trump 0:06:21.680 --> 0:06:23.120 has ever done. You know, this is the first time 0:06:23.120 --> 0:06:26.559 we have polled Harris. It's a statistical tie essentially between 0:06:26.560 --> 0:06:29.360 the two candidates. She's technically up one percentage point, but 0:06:29.400 --> 0:06:32.160 that's within the margin of air. The other key takeaway 0:06:32.160 --> 0:06:35.280 here is that black voters, young voters, Hispanic voters are 0:06:35.360 --> 0:06:38.080 much more likely to vote now that Harris is on 0:06:38.120 --> 0:06:40.400 the ticket. So this is, you know, been something that 0:06:40.400 --> 0:06:42.880 that the Trump campaign has created their strategy around of 0:06:42.920 --> 0:06:45.600 trying to get you know, pull away at the margins 0:06:45.600 --> 0:06:48.400 and black voters and Hispanic support. But this would indicate 0:06:48.440 --> 0:06:50.719 that perhaps the tides are shifting in Harris's favor on 0:06:50.720 --> 0:06:51.119 that front. 0:06:51.200 --> 0:06:52.600 Well, that was sort of one of my questions too. 0:06:52.640 --> 0:06:55.599 Are these voters that are switching or are they new 0:06:55.680 --> 0:06:57.320 voters that are swinging these poles. 0:06:58.279 --> 0:07:01.160 So we don't yet know what that is based on 0:07:01.200 --> 0:07:03.159 how the poll works, but what we see is that 0:07:03.240 --> 0:07:05.240 voters who are unsure if they're going to vote are 0:07:05.279 --> 0:07:07.560 now saying they're much more likely that they're going to vote. 0:07:07.600 --> 0:07:09.680 So these may be people who voted in twenty who 0:07:09.680 --> 0:07:11.960 were not enthused by either candidate, who are going to 0:07:12.000 --> 0:07:14.000 stay at home, or people who maybe have never voted. 0:07:14.320 --> 0:07:17.560 But you know, a turnout election is expected to help 0:07:17.640 --> 0:07:20.600 Harris on this front versus Trump. You know, the Trump 0:07:20.640 --> 0:07:22.960 folks were you know, sort of hoping to pull away 0:07:23.120 --> 0:07:26.640 particularly black men Hispanic men, but you know, we're not 0:07:26.760 --> 0:07:28.840 hoping to see a big surgeon turnout that you know, 0:07:28.880 --> 0:07:32.200 really helped Biden in twenty twenty and could potentially help 0:07:32.200 --> 0:07:33.160 Harris in twenty four. 0:07:33.600 --> 0:07:35.920 Or you know, as a former Wall Street person, I 0:07:35.960 --> 0:07:39.920 tend to follow the money and Vice President Kamala Harris 0:07:39.920 --> 0:07:41.720 has had a pretty good run here in the last 0:07:41.920 --> 0:07:44.000 week or so raising money. Do we know where that 0:07:44.000 --> 0:07:44.800 money's coming from. 0:07:45.560 --> 0:07:47.680 Yeah, So, her campaign says they've raised about two hundred 0:07:47.720 --> 0:07:49.520 million dollars and that's in the first week or so 0:07:49.680 --> 0:07:53.000 of the campaign. This is largely from small dollar donors. 0:07:53.080 --> 0:07:55.040 These are people who are going and giving online and 0:07:55.080 --> 0:07:57.000 you know, increments of you know, anywhere from you know, 0:07:57.040 --> 0:07:58.480 just a couple of dollars to you know, up to 0:07:58.560 --> 0:08:01.520 a couple thousand dollars. We've also known that her super Pack, 0:08:01.600 --> 0:08:04.240 this is the group that can accept money in unlimited amounts, 0:08:04.240 --> 0:08:07.120 has gotten one hundred and fifty million in commitments since 0:08:07.160 --> 0:08:09.960 Biden has dropped out of the race. These big dollar donors, 0:08:09.960 --> 0:08:12.840 people who give millions of dollars, had decided to withhold 0:08:12.840 --> 0:08:14.760 a bunch of contributions, you know, in order to sort 0:08:14.760 --> 0:08:17.440 of pressure Biden to get off of the ticket. So 0:08:17.480 --> 0:08:19.440 now that money is coming back into the fore just 0:08:19.440 --> 0:08:21.400 for you know, kind of some in comparison here of 0:08:21.520 --> 0:08:24.200 Harris when she inherited the Biden campaign accounts that had 0:08:24.240 --> 0:08:26.640 about one hundred million dollars. Since then, she's raised another 0:08:26.680 --> 0:08:28.760 two hundred million dollars, So these are really big sums. 0:08:29.120 --> 0:08:31.720 How much of this could be also attributed just to momentum, 0:08:31.800 --> 0:08:34.760 as in, when you have the RNC, the candidate gets 0:08:34.800 --> 0:08:36.800 a boost, the DNC provides a boost. This is an 0:08:36.840 --> 0:08:40.840 unprecedented moment in political history, so no doubt the candidate 0:08:40.840 --> 0:08:41.560 would get a boosed. 0:08:42.160 --> 0:08:44.280 Yes, and the timing year is all really interesting because, 0:08:44.280 --> 0:08:46.680 of course Biden has dropped out two days after the RNC, 0:08:46.840 --> 0:08:49.000 so Trump was expecting to see a big polling boost 0:08:49.000 --> 0:08:50.880 coming out of that. Of course, just a week prior 0:08:50.920 --> 0:08:54.000 that had been the assassination attempt. Leaving the RNC, Republicans 0:08:54.000 --> 0:08:56.920 were very confident about their chances, and you know, even 0:08:56.960 --> 0:08:59.319 Republican operatives were saying one of the things they needed 0:08:59.360 --> 0:09:01.920 to be cautious of is that they weren't overconfident. Of course, 0:09:01.960 --> 0:09:04.120 that all switched, you know, just a couple of days later. 0:09:04.400 --> 0:09:06.280 What the Trump team is saying is, look, this is 0:09:06.280 --> 0:09:09.360 a Harris honeymoon. This is a surgeon momentum that will 0:09:09.360 --> 0:09:11.160 just be a flash in the pan and won't last 0:09:11.200 --> 0:09:13.840 until November. That's really what what we'll be looking for 0:09:13.880 --> 0:09:15.240 in the next couple weeks, if you know, is she 0:09:15.320 --> 0:09:18.040 able to maintain both this fundraising edge as well as 0:09:18.040 --> 0:09:20.240 this polling edge, or do we revert to where you know, 0:09:20.280 --> 0:09:22.559 the Biden Trump race was just with Harris on the 0:09:22.600 --> 0:09:23.640 ticket in a couple of weeks. 0:09:23.720 --> 0:09:26.600 What do we make about the situation in Israel and 0:09:26.640 --> 0:09:30.360 how that is polling for Kamala Harris, Because clearly there's 0:09:30.400 --> 0:09:32.439 a huge section of voters that is very unhappy of 0:09:32.480 --> 0:09:35.520 what's happening in Gaza right that we're maybe not voting 0:09:35.520 --> 0:09:39.360 at all for President Biden, But are they coming back 0:09:39.440 --> 0:09:41.840 in now? Do we know anything along those lines? 0:09:42.480 --> 0:09:44.240 Yeah, So what this poll shows is that people who 0:09:44.240 --> 0:09:47.199 are very concerned about the Israel Gaza war, and particularly 0:09:47.240 --> 0:09:49.679 young voters for whom this is a bigger issue, are 0:09:49.720 --> 0:09:52.080 more likely to vote for Harris. She's taken a softer 0:09:52.200 --> 0:09:54.920 tone on this and is you know, just doesn't have 0:09:55.000 --> 0:09:57.160 quite the same negatives on this issue that Biden does. 0:09:57.720 --> 0:09:59.240 You know, one of the things, you know, particularly just 0:09:59.240 --> 0:10:01.679 with the you know events of late of you know, 0:10:01.760 --> 0:10:03.880 kind of there being more unrest in the Middle East. 0:10:04.640 --> 0:10:07.199 Is you know that the Biden administration is still pushing 0:10:07.200 --> 0:10:09.439 for a ceasefire. Harris is still pushing for a ceasefire. 0:10:09.640 --> 0:10:12.040 Democrats really want this to be an issue that is 0:10:12.080 --> 0:10:15.160 working towards a resolution versus, you know, an issue that's 0:10:15.200 --> 0:10:17.720 flaring up, particularly as students go back to college campuses 0:10:17.760 --> 0:10:19.440 in a couple of weeks. They don't want to see 0:10:19.440 --> 0:10:20.760 the protests that we saw last spring. 0:10:21.400 --> 0:10:23.680 Did the Republicans have buyer's remorse for JD. 0:10:23.800 --> 0:10:24.040 Vance. 0:10:24.120 --> 0:10:26.440 I'm seeing some reporting all along those lines. 0:10:27.320 --> 0:10:29.480 Yes, there's there's a lot of conversations on that, even 0:10:29.520 --> 0:10:32.040 on a Bloomberg television mcmulvaney, who's a Trump ally, came 0:10:32.080 --> 0:10:34.520 on earlier this week and said, no, they're not looking 0:10:34.760 --> 0:10:37.520 to replace JD. Vance. But of course, if you're being 0:10:37.559 --> 0:10:39.400 asked about this, this means that this is at least 0:10:39.440 --> 0:10:42.400 a conversation that is circulating. You know, Vance has had 0:10:42.559 --> 0:10:44.600 a rough rollout, you know, just in about the you know, 0:10:44.920 --> 0:10:46.800 two weeks or so that he's been on the ticket. 0:10:47.320 --> 0:10:49.520 You know, some past comments he's made, you know, sort 0:10:49.520 --> 0:10:53.760 of degrading childless cat ladies have come up. He has 0:10:53.840 --> 0:10:55.600 had had some jokes on the campaign trail that have 0:10:55.640 --> 0:10:58.320 come across as crass and haven't really landed. So this 0:10:58.400 --> 0:11:01.400 is a conversation that's happening on the upon the sort 0:11:01.400 --> 0:11:05.320 of Republican elite to the mainstream Republican class, but isn't 0:11:05.360 --> 0:11:07.880 really reaching the Trump campaign. They have continued to say 0:11:08.080 --> 0:11:10.080 JD is our guy, and we're going to stick by him. 0:11:10.160 --> 0:11:12.480 Our thanks to Lard Davison, Bloomberg Politics Editor. 0:11:12.600 --> 0:11:14.720 Coming up, we're going to break down why wireless carrier 0:11:14.760 --> 0:11:17.079 Team Mobile added more subscribers last quarter. 0:11:17.200 --> 0:11:20.160 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing inft 0:11:20.160 --> 0:11:22.400 research and data on two thousand companies and one hundred 0:11:22.440 --> 0:11:25.199 and thirty industries. You can access Bloomberg Intelligence via b 0:11:25.360 --> 0:11:26.400 I go on the terminal. 0:11:26.440 --> 0:11:29.319 I'm Paul Sweeney and am Alex Steele, and this is Bloomberg. 0:11:32.760 --> 0:11:36.640 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:36.720 --> 0:11:39.360 weekdays at ten am Eastern on Affo car Playing and 0:11:39.559 --> 0:11:42.440 Broud Auto with the Bloomberg Business App. Listen on demand 0:11:42.480 --> 0:11:46.800 wherever you get your podcasts, or watch us live on YouTube. 0:11:47.559 --> 0:11:50.320 Move next to the aerospace industry and Boeing. This week, 0:11:50.360 --> 0:11:53.760 Boeing announced its appointing Kelly Ordberg as its next CEO, 0:11:53.840 --> 0:11:55.040 replacing Dave Calhoun. 0:11:55.280 --> 0:11:57.800 Bobbing made the announcement as it reported burning through more 0:11:57.840 --> 0:12:00.640 than four billion dollars in cash last quarter. Well more 0:12:00.679 --> 0:12:02.720 and all this. We were joined by George Ferguson, Bloomberg 0:12:02.760 --> 0:12:05.240 Intelligence Senior Aerospace, Defense and Airlines analyst. 0:12:05.400 --> 0:12:07.560 He first asked, George, if it's new CEO, is the 0:12:07.600 --> 0:12:09.760 guy that Boeing needs to turn things around? 0:12:10.360 --> 0:12:12.760 Not so sure. I think it's the guy that Boeing 0:12:12.800 --> 0:12:16.640 needs for a small period of time, right because he 0:12:16.720 --> 0:12:19.760 was already retired, right, he has you know, he's a 0:12:19.880 --> 0:12:23.760 great career in aerospace working to Collins, help him put 0:12:23.840 --> 0:12:28.600 Collins into RTX, I mean, a great experience. He's sixty four, 0:12:29.280 --> 0:12:30.920 So my guess is he doesn't have a lot of 0:12:31.000 --> 0:12:33.520 runway to work at Boeing. I think it'd have been 0:12:33.559 --> 0:12:36.319 nicer to see a CEO that could have put I 0:12:36.360 --> 0:12:41.959 don't know, five, seven, ten years into Boeing. But look, 0:12:42.000 --> 0:12:43.760 I think the job is very difficult, and so I 0:12:43.760 --> 0:12:45.760 think it's going to take a lot out of the 0:12:45.800 --> 0:12:51.320 next CEO. And so maybe this is an interim as 0:12:51.360 --> 0:12:56.360 they continue to develop internal candidates for the job. Maybe 0:12:56.360 --> 0:12:58.840 it's very pretty difficult to recruit somebody into this job 0:12:58.920 --> 0:13:01.840 right now. Could be an interim because of that as well. 0:13:01.920 --> 0:13:06.760 So again, you know, the strong aerospace background at the 0:13:06.800 --> 0:13:10.480 component at the you know, parts maker level, but doesn't 0:13:10.480 --> 0:13:12.280 look like someone's going to be around for the next 0:13:12.880 --> 0:13:14.160 five seven years. 0:13:14.400 --> 0:13:16.800 All right, George, all right, so that's the CEO. How 0:13:16.800 --> 0:13:19.120 about on the fundamentals here, I'm looking at the second 0:13:19.160 --> 0:13:24.600 quarter negative adjusted free cash slow four point three billion dollars. 0:13:25.360 --> 0:13:27.559 You can't like that. Talk to us about kind of 0:13:27.600 --> 0:13:29.679 the cash flow, the dynamics and what they need to do. 0:13:30.440 --> 0:13:32.760 So we kind of expected that four point three billion 0:13:32.800 --> 0:13:36.959 dollars to be really honest, I'm not totally sure why 0:13:37.000 --> 0:13:39.120 the stock is up. I don't think it's Kelly because 0:13:39.200 --> 0:13:42.400 Kelly News started the day out and bowing anchors up 0:13:42.440 --> 0:13:45.280 about one so post earnings were up. You know, we've 0:13:45.320 --> 0:13:47.960 done this pop. I mean, you know, we heard from 0:13:48.000 --> 0:13:51.040 CFO Brian West during the call. He told us Burn 0:13:51.200 --> 0:13:54.440 was going to be pretty strong in three Q two, 0:13:55.280 --> 0:13:57.440 and then some the analysts tried to box him in 0:13:57.480 --> 0:13:59.160 on what Burn was going to be for the year. 0:13:59.760 --> 0:14:03.520 One said would be closer to five billion or ten billion. 0:14:04.080 --> 0:14:05.880 He said he wasn't. I think his quote somebody got, 0:14:05.880 --> 0:14:07.600 I'm not smart enough to tell you at this time. 0:14:08.360 --> 0:14:11.400 So there's just a lot of variability right now. That look, 0:14:11.440 --> 0:14:16.000 Boeing has to keep taking inventory, taking ship sets from 0:14:16.000 --> 0:14:19.760 their supplier base to keep their supplier base in business 0:14:20.360 --> 0:14:22.480 while they ramp up builds. And they had some good 0:14:22.480 --> 0:14:26.000 commentaries and builds. They talked about the factory kind of 0:14:26.000 --> 0:14:28.320 putting out twenty ish I think was the number, and 0:14:28.400 --> 0:14:31.480 I think total deliveries in the thirty ish range for 0:14:31.600 --> 0:14:35.120 seven thirty sevens rising to thirty eight shutting down those 0:14:35.120 --> 0:14:39.720 shadow factories. It's the factories that they have the inventoried airplanes, 0:14:39.840 --> 0:14:42.840 a lot of seven three sevens, some seven eight sevens 0:14:42.840 --> 0:14:44.520 in shutting them down by the end of the year. 0:14:44.880 --> 0:14:48.240 That was I think, great commentary. You know, we got 0:14:48.240 --> 0:14:50.240 to the commentary about what's going to go on with 0:14:50.280 --> 0:14:53.240 the union negotiations. Those are coming up in September. Dave 0:14:53.320 --> 0:14:56.680 Calhoun kind of told us he I think wasn't totally 0:14:56.840 --> 0:14:59.680 focused on that right now, or didn't have couldn't give 0:14:59.720 --> 0:15:02.880 us PU and takes there that's incredibly important. Right, So 0:15:03.160 --> 0:15:05.240 if we get into a situation where the union shuts 0:15:05.280 --> 0:15:09.480 this company down in September, the cash burn this year 0:15:09.480 --> 0:15:13.720 looks looks horrible. Their back going to capital markets looking 0:15:13.800 --> 0:15:16.120 for a bond raise, which I think everybody on the 0:15:16.120 --> 0:15:18.280 bond side is scared to death about because they don't 0:15:18.280 --> 0:15:20.600 want to see a fall to investment grade, or they're 0:15:20.640 --> 0:15:23.440 going to the equity side, which the equity guys don't 0:15:23.440 --> 0:15:26.000 want to hear about, right, because that's dilution, you know. 0:15:26.040 --> 0:15:28.400 So I think again commentary was good around deliveries and 0:15:28.440 --> 0:15:30.920 things like that, but a lot of variability coming, you 0:15:30.960 --> 0:15:34.560 know here around this cash flow burn, and it's super important. 0:15:34.840 --> 0:15:38.040 Thanks to George Ferguson Bloomberg Intelligence senior Aerospace, Defense and 0:15:38.080 --> 0:15:38.880 airlines analysts. 0:15:39.160 --> 0:15:41.720 We move next to earnings from Training Technologies, the maker 0:15:41.760 --> 0:15:44.120 of heating and cooling systems. So the company posted better 0:15:44.160 --> 0:15:46.360 than expected earnings in the second quarter and raise it's 0:15:46.360 --> 0:15:47.800 full your forecast. 0:15:47.440 --> 0:15:50.800 From Morewood, joined by Train's CEO Dave REGNERI. First the 0:15:50.800 --> 0:15:53.400 asked David why the company had such positive results. 0:15:53.240 --> 0:15:55.760 As far as what's driving our growth? You know, I 0:15:55.760 --> 0:15:57.720 always tell people we have a system of things that 0:15:57.800 --> 0:16:00.960 makes Train Technology is a great company. And whether it's 0:16:01.000 --> 0:16:05.320 the way we operate our facilities, through our business operating 0:16:05.360 --> 0:16:08.520 system ways, whether it's the way we innovate our new products, 0:16:08.600 --> 0:16:12.120 or whether it's our direct salesforce. Those are a system 0:16:12.120 --> 0:16:15.320 of things that make us a great company. And we 0:16:15.400 --> 0:16:17.760 have a service business that's a third of our company 0:16:18.200 --> 0:16:23.000 that's performing extremely well. In the second quarter, our service 0:16:23.040 --> 0:16:27.400 business was up mid teens from a growth perspective, and 0:16:27.520 --> 0:16:30.040 we have a culture that's you know, we believe in 0:16:30.120 --> 0:16:32.800 challenging what's possible and innovating for a sustainable world. 0:16:33.360 --> 0:16:35.840 So based on that, it's great to chat with you. 0:16:35.880 --> 0:16:38.920 By the way, I love love talking to you, because 0:16:38.920 --> 0:16:40.960 you have such a great read on the residential and 0:16:41.040 --> 0:16:44.720 commercial businesses. Basically a commercial HVAC unit and a near 0:16:44.840 --> 0:16:49.400 term residential HVAC unit, and of course that's heating, ventiletion, 0:16:49.680 --> 0:16:53.600 air and cooling. Where's the strength, where's the growth, where 0:16:53.600 --> 0:16:54.440 are the weak points? 0:16:55.520 --> 0:16:58.600 Yeah, I'll start with residential. We had a very strong 0:16:58.720 --> 0:17:01.760 quarter in the second quarter or revenue was up low teens, 0:17:02.320 --> 0:17:06.399 but that our residential business for the prior I'll say, 0:17:06.640 --> 0:17:10.840 you know, three quarters had really been struggling with a 0:17:11.000 --> 0:17:15.320 refrigerant change that wasn't clear. That's been clarified. It was 0:17:15.359 --> 0:17:18.720 really struggling with excess inventory kind of a hangover from 0:17:18.760 --> 0:17:21.560 the COVID days that was in the channel. Those both 0:17:21.680 --> 0:17:24.760 correct it, and we're off to a very warm start 0:17:24.960 --> 0:17:27.560 to the cooling season, which should have us all concerned 0:17:27.560 --> 0:17:31.400 for a different reason as the climate continues to increase 0:17:31.440 --> 0:17:34.000 in temperature. But I would tell you that it's a 0:17:34.080 --> 0:17:36.760 very strong start of the year, so very strong and residential, 0:17:36.840 --> 0:17:40.480 our commercial business really broad based growth. You know, certainly 0:17:40.560 --> 0:17:43.680 the high growth verticals like data centers. We do very 0:17:43.840 --> 0:17:47.840 very well in our education or in healthcare, but we 0:17:47.920 --> 0:17:52.280 had broad based growth in the Americas. We track fourteen 0:17:52.320 --> 0:17:55.679 different verticals and we were hard pressed to find a 0:17:55.800 --> 0:17:59.040 vertical that we were not strong in. So it was 0:17:59.119 --> 0:18:01.640 just it was a very strong quarter for Trained Technology. 0:18:01.680 --> 0:18:04.640 I'm very proud of what the team's been able to accomplish. 0:18:04.880 --> 0:18:08.080 Yeah, I'm reading the Bloomberg Intelligence research note on your earnings. 0:18:08.080 --> 0:18:11.840 North America's sixteen percent organic growth was much greater than 0:18:11.880 --> 0:18:13.200 the ten percent consensus. 0:18:13.480 --> 0:18:14.159 What drove that? 0:18:14.600 --> 0:18:17.639 Yeah, really two things. Our residential business perform better. Okay, 0:18:17.720 --> 0:18:19.800 we thought that was going to be. You know, in 0:18:19.840 --> 0:18:21.920 the beginning of the year, we thought our residential business 0:18:21.920 --> 0:18:24.480 would below single digits. We came in you know, low 0:18:24.560 --> 0:18:28.679 teams in the quarter, so we significantly outdrove that. And 0:18:28.720 --> 0:18:32.040 then our commercial HVAC business just continues to operate at 0:18:32.040 --> 0:18:32.879 a very high level. 0:18:33.359 --> 0:18:34.600 And like I. 0:18:34.560 --> 0:18:38.399 Said, services was up in the high teens actually in 0:18:38.440 --> 0:18:43.080 the Americas, and their equipment business just continues to exceed 0:18:43.119 --> 0:18:47.199 our customers' expectations. So very strong quarter. You know, I 0:18:47.240 --> 0:18:50.720 was listening to your show earlier. You were talking about sustainability, 0:18:50.760 --> 0:18:54.840