1 00:00:02,080 --> 00:00:05,880 Speaker 1: This is Bloomberg Intelligence with Alex Steel and Paul Sweeny. 2 00:00:06,000 --> 00:00:09,240 Speaker 2: The real app performance has been the US corporate high yield. 3 00:00:09,400 --> 00:00:11,760 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 4 00:00:11,800 --> 00:00:15,600 Speaker 2: The semiconductor business is a really cyclical business. 5 00:00:15,080 --> 00:00:18,720 Speaker 1: Breaking market headlines and corporate news from across the globe. 6 00:00:18,760 --> 00:00:21,400 Speaker 3: Do investors like the M and A that we've seen? 7 00:00:21,600 --> 00:00:22,560 Speaker 4: These are two. 8 00:00:22,520 --> 00:00:25,120 Speaker 2: Big time blue chip companies. 9 00:00:24,960 --> 00:00:29,640 Speaker 3: Window between the peak and cut changing super fast Bloomberg. 10 00:00:29,200 --> 00:00:33,400 Speaker 1: Intelligence with Alex Steel and Paul'sweeny on Bloomberg Radio. 11 00:00:35,400 --> 00:00:37,720 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 12 00:00:37,760 --> 00:00:40,080 Speaker 2: business stories impacting Wall Street and the global markets. 13 00:00:40,200 --> 00:00:42,280 Speaker 3: Each and every week we provide in depth research and 14 00:00:42,360 --> 00:00:44,199 Speaker 3: data on some of the two thousand companies and one 15 00:00:44,280 --> 00:00:46,960 Speaker 3: hundred and thirty industries our analysts cover worldwide. 16 00:00:47,080 --> 00:00:49,839 Speaker 2: Today we'll look at why Ford Motor is recalibrating its 17 00:00:49,840 --> 00:00:51,720 Speaker 2: electrification strategy yet again. 18 00:00:51,840 --> 00:00:53,680 Speaker 3: Plus we're going to discuss the M and A space 19 00:00:53,720 --> 00:00:56,200 Speaker 3: and the potential for what could be the biggest foreign 20 00:00:56,240 --> 00:00:57,800 Speaker 3: takeover of a Japanese company. 21 00:00:58,000 --> 00:01:00,600 Speaker 2: But first we dive into the biotech space. This week, 22 00:01:00,640 --> 00:01:03,360 Speaker 2: a three year study showed that patients taken ELI Lilly's 23 00:01:03,400 --> 00:01:07,039 Speaker 2: blockbuster weight loss shot were ninety four percent less likely 24 00:01:07,080 --> 00:01:08,040 Speaker 2: to develop diabetes. 25 00:01:08,240 --> 00:01:10,760 Speaker 3: ELI Lily said that this is the longest continuous study 26 00:01:10,760 --> 00:01:12,720 Speaker 3: of a zep bound drug to date, and the company's 27 00:01:12,720 --> 00:01:14,880 Speaker 3: shares rose to an all time high after the news. 28 00:01:15,080 --> 00:01:17,080 Speaker 2: For more, Alex and I were joined by Sam Fazzelli, 29 00:01:17,160 --> 00:01:20,320 Speaker 2: Bloomberg Intelligence Director of Research for Global Industries and senior 30 00:01:20,319 --> 00:01:21,360 Speaker 2: pharmaceuticals analyst. 31 00:01:21,560 --> 00:01:23,600 Speaker 3: We first asked Sam, what numbers we mean that literly 32 00:01:23,680 --> 00:01:24,840 Speaker 3: study jumped out. 33 00:01:25,120 --> 00:01:28,039 Speaker 4: Let me take you back a little bit where we 34 00:01:28,280 --> 00:01:30,800 Speaker 4: not always told we went to the doctor and we 35 00:01:30,840 --> 00:01:34,319 Speaker 4: started our glucose was going up. Not you guys, obviously 36 00:01:34,360 --> 00:01:38,440 Speaker 4: you're a fascinatingly amazingly healthy and fit, but those who 37 00:01:38,520 --> 00:01:41,080 Speaker 4: weren't and told you need to lose some weight to 38 00:01:41,120 --> 00:01:44,399 Speaker 4: my friend, because you have risk of developing diabetes. So 39 00:01:44,560 --> 00:01:48,200 Speaker 4: where is the shock? If you reduce weight and manage 40 00:01:48,200 --> 00:01:52,120 Speaker 4: the obesity, you lose all these you know, I'll be 41 00:01:52,160 --> 00:01:56,880 Speaker 4: suppeating this thing, sleep APNA, risk of developing diabetes, everything 42 00:01:56,920 --> 00:01:59,280 Speaker 4: that we're talking about here. You eat less, you lose weight, 43 00:01:59,680 --> 00:02:04,000 Speaker 4: let's could developing diabetes. So not exactly a shock. Nevertheless, 44 00:02:04,040 --> 00:02:07,040 Speaker 4: it's great to see that it actually does what it 45 00:02:07,080 --> 00:02:10,400 Speaker 4: says on the tin that by reducing weight you do 46 00:02:10,560 --> 00:02:14,120 Speaker 4: manage all these side effects. But before we get too excited, 47 00:02:14,160 --> 00:02:17,040 Speaker 4: I want to highlight one little wrinkle here. It's no 48 00:02:17,080 --> 00:02:19,640 Speaker 4: wrinkle with the data if you read the press release, 49 00:02:19,639 --> 00:02:21,359 Speaker 4: and I've got it right up here on my terminal 50 00:02:21,720 --> 00:02:24,520 Speaker 4: eli Lei coming announced positive top line results from this 51 00:02:24,560 --> 00:02:27,919 Speaker 4: amount one a three year study, one hundred and seventy 52 00:02:28,040 --> 00:02:32,880 Speaker 4: six week treatment period. Find me somebody who stayed in 53 00:02:32,919 --> 00:02:35,240 Speaker 4: the real world on this drug for one hundred and 54 00:02:35,280 --> 00:02:39,520 Speaker 4: seventy six weeks, So we survey physicians. But if we 55 00:02:39,600 --> 00:02:43,320 Speaker 4: find forty weeks, I'm sure it's going to go up. 56 00:02:43,520 --> 00:02:47,040 Speaker 4: But that's very different settings. So how much of a 57 00:02:47,080 --> 00:02:50,359 Speaker 4: real world will this actually translate into in terms of 58 00:02:50,600 --> 00:02:52,600 Speaker 4: preventing diabetes. Time will tell. 59 00:02:52,800 --> 00:02:54,680 Speaker 3: So you're not saying that the study was bogus. You're 60 00:02:54,720 --> 00:02:57,720 Speaker 3: saying the study was real. But in reality, people don't 61 00:02:57,919 --> 00:03:00,480 Speaker 3: stay that long on the drug. Therefore the result won't 62 00:03:00,480 --> 00:03:02,040 Speaker 3: be as magical for them. 63 00:03:02,760 --> 00:03:05,600 Speaker 4: Right in clinical trials, you get the best possible data 64 00:03:05,639 --> 00:03:09,519 Speaker 4: basically because it's highly controlled. People are followed, you make 65 00:03:09,560 --> 00:03:12,520 Speaker 4: sure that they stay on. There would probably have been 66 00:03:12,560 --> 00:03:15,560 Speaker 4: people who have dropped off here, So maybe the actual 67 00:03:15,720 --> 00:03:20,560 Speaker 4: average treatment period wasn't exactly one hundred and seventy six 68 00:03:20,600 --> 00:03:23,480 Speaker 4: weeks for everybody, because people do drop off. And I'm 69 00:03:23,520 --> 00:03:26,280 Speaker 4: assuming in this trial the data they're reporting to us 70 00:03:26,320 --> 00:03:29,680 Speaker 4: is what's called intent to treat. I e. I've intended 71 00:03:29,680 --> 00:03:32,000 Speaker 4: to treat that patience. Whatever happens to them, you still 72 00:03:32,040 --> 00:03:35,240 Speaker 4: count them, even if they've fallen off the drug. Nevertheless, 73 00:03:35,240 --> 00:03:37,240 Speaker 4: we need to see the detail. But in a trial 74 00:03:37,320 --> 00:03:39,800 Speaker 4: setting things always look better than in real world. So 75 00:03:40,320 --> 00:03:43,920 Speaker 4: here we have to remember average stay time, according to 76 00:03:43,960 --> 00:03:47,240 Speaker 4: our surveys that Mark show my colleague runs every six months, 77 00:03:47,520 --> 00:03:49,960 Speaker 4: is about forty weeks, similar to what we get for 78 00:03:50,040 --> 00:03:52,800 Speaker 4: we go VI and people, and even the press release 79 00:03:52,840 --> 00:03:54,640 Speaker 4: they say as soon as they came off, weight went 80 00:03:54,680 --> 00:03:56,800 Speaker 4: back up and the risks started going up again of 81 00:03:56,880 --> 00:03:59,880 Speaker 4: developing diabetes. So this is not something that you've cleaned. 82 00:04:00,520 --> 00:04:02,320 Speaker 4: I can stop now at one hundred and seventy six 83 00:04:02,480 --> 00:04:05,000 Speaker 4: and I'm done. It's the same story over again. 84 00:04:05,200 --> 00:04:07,760 Speaker 2: Right exactly. So I look at the stock for Eli 85 00:04:07,800 --> 00:04:11,960 Speaker 2: Lily Sam. How much of this stock performance is these glps? 86 00:04:12,400 --> 00:04:16,320 Speaker 4: Oh gosh, if you know, if you look at the 87 00:04:16,400 --> 00:04:19,159 Speaker 4: chart and look at the flow of information and news 88 00:04:19,240 --> 00:04:22,200 Speaker 4: and the upgrades, et cetera that are coming to every 89 00:04:22,279 --> 00:04:26,159 Speaker 4: quarter result, et cetera. Sales. I would say a meaningful 90 00:04:26,279 --> 00:04:28,680 Speaker 4: chunk of this. I can't quantify it exactly because this 91 00:04:28,760 --> 00:04:33,400 Speaker 4: is a company that's got other stuff going on. Alzheimer's disease, oncology, 92 00:04:33,920 --> 00:04:36,240 Speaker 4: is skin diseases, et cetera. So this is not a 93 00:04:36,720 --> 00:04:40,160 Speaker 4: one trick pony, but a large amount of this story. 94 00:04:40,200 --> 00:04:42,679 Speaker 4: And you can tell by when somebody reports a positive 95 00:04:42,680 --> 00:04:45,120 Speaker 4: results in a competitor setting, these stocks sell off four 96 00:04:45,160 --> 00:04:48,000 Speaker 4: or five percent, right You remember the days with rash 97 00:04:48,400 --> 00:04:50,600 Speaker 4: only three or four weeks ago, I think, right. So, 98 00:04:50,880 --> 00:04:53,320 Speaker 4: and let's not forget in a few weeks time, we 99 00:04:53,360 --> 00:04:57,279 Speaker 4: have the European Association for the Study of Diabetes rush's 100 00:04:57,320 --> 00:04:59,720 Speaker 4: data is coming out. Somebody's going to be up three 101 00:04:59,800 --> 00:05:01,960 Speaker 4: or four two percent that day, and somebody's going to 102 00:05:02,000 --> 00:05:04,120 Speaker 4: be down three or four percent. Who it is, we'll 103 00:05:04,120 --> 00:05:05,159 Speaker 4: see what the data says. 104 00:05:05,640 --> 00:05:08,360 Speaker 3: The point that you made that if people come off 105 00:05:08,400 --> 00:05:10,440 Speaker 3: it and they gain the weight back, so in that sense, 106 00:05:10,440 --> 00:05:14,159 Speaker 3: it's not like everlastingly magical. Will there be iterations though, 107 00:05:14,400 --> 00:05:15,839 Speaker 3: where that won't be the case. 108 00:05:16,960 --> 00:05:19,200 Speaker 4: And there's two ways of dealing with this. So you 109 00:05:19,240 --> 00:05:21,000 Speaker 4: go on the drug, you come off the drug, you 110 00:05:21,040 --> 00:05:22,600 Speaker 4: go back on the drug, you come off the drug, 111 00:05:22,640 --> 00:05:25,520 Speaker 4: and you just do your cycling every few years after 112 00:05:25,560 --> 00:05:27,920 Speaker 4: you've got to a point where you think, I don't 113 00:05:27,920 --> 00:05:30,320 Speaker 4: know why people come off the drug necessarily on an 114 00:05:30,360 --> 00:05:32,720 Speaker 4: average is it side effect tends to get a lot 115 00:05:32,720 --> 00:05:37,400 Speaker 4: better over time, and maybe it's cost. Maybe it's because 116 00:05:37,400 --> 00:05:40,080 Speaker 4: they're fed up taking an injection every week. So if 117 00:05:40,080 --> 00:05:42,159 Speaker 4: you put all those things together, as they get cheaper 118 00:05:42,839 --> 00:05:46,200 Speaker 4: and injections become once a month, maybe or they become 119 00:05:46,320 --> 00:05:48,479 Speaker 4: oral for the maintenance phase of the dose, and that 120 00:05:48,720 --> 00:05:52,320 Speaker 4: oral doesn't make you feel ill every time you take 121 00:05:52,360 --> 00:05:55,239 Speaker 4: it in terms of gastric intestinal maybe that's the future. 122 00:05:55,360 --> 00:05:59,760 Speaker 4: Maybe there are other modalities. Amilin is one that no 123 00:05:59,760 --> 00:06:04,360 Speaker 4: One and Zealand Farm are developing as a target that 124 00:06:04,480 --> 00:06:07,000 Speaker 4: seems to have less side effect issues. Maybe you can 125 00:06:07,040 --> 00:06:10,640 Speaker 4: maintain your weight loss by those drugs which don't have 126 00:06:10,680 --> 00:06:13,640 Speaker 4: the same side effect issue. So that has to be 127 00:06:13,680 --> 00:06:15,920 Speaker 4: the way that you see it, But nobody ever complies 128 00:06:15,960 --> 00:06:17,960 Speaker 4: with the drug forever our. 129 00:06:17,960 --> 00:06:20,800 Speaker 2: Thanks to Sam Fazzelli, Bloomberg Intelligence, Director of Research for 130 00:06:20,800 --> 00:06:23,480 Speaker 2: Global Industries and senior pharmaceuticals analysts. 131 00:06:23,520 --> 00:06:26,440 Speaker 3: This week, the department store chain Macy's reported quarterly revenue 132 00:06:26,440 --> 00:06:27,920 Speaker 3: that missed analyst expectations. 133 00:06:28,160 --> 00:06:31,440 Speaker 2: Macy's also lowered its yearly outlook for sales. It's cited 134 00:06:31,440 --> 00:06:34,440 Speaker 2: increase discounting by competitors and a more cautious consumer. 135 00:06:34,600 --> 00:06:37,000 Speaker 3: On the other hand, you had TJX increasing its full 136 00:06:37,080 --> 00:06:40,159 Speaker 3: year projections for comparable sales and profit. This show the 137 00:06:40,160 --> 00:06:43,080 Speaker 3: company's brand choices and execution are working. 138 00:06:43,560 --> 00:06:45,560 Speaker 2: For more on all of this, guest hosts Jessemett and 139 00:06:45,560 --> 00:06:48,520 Speaker 2: I were joined by Mary Ross Gilbert Bloomberg Intelligence, senior 140 00:06:48,520 --> 00:06:51,760 Speaker 2: equity analysts covering retail. We first asked Mary for key 141 00:06:51,760 --> 00:06:53,800 Speaker 2: takeaways from Macy's most recent results. 142 00:06:54,000 --> 00:06:57,760 Speaker 5: As with any turnaround, and here we are in another 143 00:06:57,839 --> 00:07:01,680 Speaker 5: iteration of trying to get growth back for this. It's 144 00:07:01,720 --> 00:07:06,159 Speaker 5: the largest department store Macy's. They did show traction in 145 00:07:06,200 --> 00:07:09,279 Speaker 5: the first fifty stores. The comps were up one percent, 146 00:07:09,400 --> 00:07:11,640 Speaker 5: and that was an improvement from the first quarter, which 147 00:07:11,680 --> 00:07:14,840 Speaker 5: was up just less than one percent. But the fact 148 00:07:15,000 --> 00:07:17,440 Speaker 5: is that the rest of the go forward stores were 149 00:07:17,480 --> 00:07:21,680 Speaker 5: down three point seven percent. This is on a comparable basis, 150 00:07:21,760 --> 00:07:25,160 Speaker 5: and it's owned plus license, so it includes license brands 151 00:07:25,200 --> 00:07:28,120 Speaker 5: that they'll have you know, within the mix there. So 152 00:07:29,200 --> 00:07:31,760 Speaker 5: they're showing traction in those little stores, but with the 153 00:07:31,800 --> 00:07:34,360 Speaker 5: rest of the base, you know, being very weak and 154 00:07:34,400 --> 00:07:37,000 Speaker 5: as they pointed out, they weren't really getting the conversion. 155 00:07:37,960 --> 00:07:41,360 Speaker 5: What they're finding is you bring in sales people. Wow, 156 00:07:41,480 --> 00:07:45,000 Speaker 5: that's really what if you think about department stores and 157 00:07:45,320 --> 00:07:47,920 Speaker 5: where they came from, that's what they were known for 158 00:07:48,360 --> 00:07:52,080 Speaker 5: in the past with service, but over the last couple 159 00:07:52,080 --> 00:07:54,960 Speaker 5: of decades, the service and the salespeople have sort of 160 00:07:55,040 --> 00:07:57,920 Speaker 5: left the stores. Now they're finding if they bring them 161 00:07:58,000 --> 00:08:01,200 Speaker 5: back and they bring back the real brands, because one 162 00:08:01,200 --> 00:08:03,840 Speaker 5: of the things that Tony Spring, CEO of the company, 163 00:08:04,240 --> 00:08:08,720 Speaker 5: indicated is having newness and having the relevant brands that 164 00:08:08,760 --> 00:08:13,080 Speaker 5: consumers care about. That's where you can get the impulse purchases. 165 00:08:13,560 --> 00:08:16,360 Speaker 5: And so they're finding bringing in like a Carl Logger 166 00:08:16,480 --> 00:08:22,040 Speaker 5: Field or a Veclove Fee, which is it's like a Parisian, 167 00:08:22,360 --> 00:08:26,640 Speaker 5: a chic Parisian type brand. It's a US brand, but 168 00:08:26,720 --> 00:08:31,400 Speaker 5: it has that Paris streetwear aesthetic and that's resonating really well, 169 00:08:31,400 --> 00:08:35,240 Speaker 5: and they're getting very strong conversion. So bringing back service levels, 170 00:08:35,240 --> 00:08:38,400 Speaker 5: bringing back the relevant brands is really making a difference 171 00:08:38,440 --> 00:08:41,520 Speaker 5: in those fifty stores. So they're going to add another 172 00:08:41,520 --> 00:08:43,480 Speaker 5: one hundred stores where they're going to bring in service 173 00:08:43,520 --> 00:08:47,119 Speaker 5: and handbags. They did see some strong sales with handbags 174 00:08:47,120 --> 00:08:50,440 Speaker 5: again in those stores with the Lauren Ralph Mourn brand. 175 00:08:50,960 --> 00:08:54,079 Speaker 5: So that's where I think you're going to see some improvements. 176 00:08:54,440 --> 00:08:59,559 Speaker 5: Is just really better signage, cleaner stores. We've been seeing 177 00:08:59,600 --> 00:09:03,240 Speaker 5: those moments in the store that we frequent. They just 178 00:09:03,280 --> 00:09:05,040 Speaker 5: need to take it across the rest of the base. 179 00:09:06,040 --> 00:09:08,360 Speaker 6: And it seems like an about face because justin May, 180 00:09:08,400 --> 00:09:11,400 Speaker 6: when we had heard from Macy's previously in their prior 181 00:09:11,800 --> 00:09:15,360 Speaker 6: earnings report, they had beat estimates also raised the company's 182 00:09:15,360 --> 00:09:17,080 Speaker 6: outlook for the remainder of the year. But as you know, 183 00:09:17,240 --> 00:09:20,360 Speaker 6: this Ladist report comes on the heels of the company 184 00:09:20,360 --> 00:09:23,160 Speaker 6: turning down that close to seven billion dollars buyout to 185 00:09:23,200 --> 00:09:25,320 Speaker 6: offer from one of its shareholders, our Cows and of 186 00:09:25,320 --> 00:09:28,199 Speaker 6: course it's partner Bridgegade Capital Management. Do we have any 187 00:09:28,200 --> 00:09:30,800 Speaker 6: indication of whether or not that could be back on 188 00:09:30,840 --> 00:09:32,000 Speaker 6: the table at some point. 189 00:09:32,840 --> 00:09:34,720 Speaker 5: I don't know if that'll be back on the table. 190 00:09:35,120 --> 00:09:39,320 Speaker 5: I really think that they weren't able to demonstrate financing. 191 00:09:40,000 --> 00:09:42,840 Speaker 5: I think that was the problem with that, and I 192 00:09:42,880 --> 00:09:45,560 Speaker 5: also think that the price was low because even though 193 00:09:45,559 --> 00:09:48,920 Speaker 5: Macy's is showing very weak results right now and the 194 00:09:48,960 --> 00:09:52,319 Speaker 5: market is showing investors don't really like what they're seeing 195 00:09:52,320 --> 00:09:56,079 Speaker 5: in the quarter, it's one quarter and it's going to 196 00:09:56,160 --> 00:09:59,360 Speaker 5: take time before we see real traction. So a year 197 00:09:59,400 --> 00:10:02,520 Speaker 5: from now, the story could look very different if they're 198 00:10:02,559 --> 00:10:06,160 Speaker 5: really able to execute on this plan closing the stores. 199 00:10:06,200 --> 00:10:08,480 Speaker 5: They haven't closed the stores yet. They're going to close 200 00:10:08,840 --> 00:10:11,320 Speaker 5: the first fifty five it was going to be fifty. 201 00:10:11,360 --> 00:10:14,400 Speaker 5: They up to another five stores are going to close 202 00:10:14,440 --> 00:10:16,559 Speaker 5: at the end of the year. They always wait until 203 00:10:16,679 --> 00:10:19,480 Speaker 5: after the holidays because that's when they generate the most cash. 204 00:10:19,920 --> 00:10:21,920 Speaker 5: And then of course they're going to close another one 205 00:10:22,000 --> 00:10:24,480 Speaker 5: hundred stores over the next couple of years. But again, 206 00:10:24,559 --> 00:10:27,960 Speaker 5: they might accelerate that, so it's going to take time 207 00:10:28,000 --> 00:10:31,360 Speaker 5: to show traction. So we'll see how the third quarter 208 00:10:31,400 --> 00:10:33,800 Speaker 5: and fourth quorder go, especially with some of the changes 209 00:10:33,800 --> 00:10:36,880 Speaker 5: that they're making to these incremental stores. But nonetheless you 210 00:10:36,920 --> 00:10:40,400 Speaker 5: can see who's gaining in. It's on the off price side. 211 00:10:40,720 --> 00:10:43,280 Speaker 2: Let's go to TJX owner of TJ max stocks, hit 212 00:10:43,360 --> 00:10:46,640 Speaker 2: An All time high today, what's TJX? What are they 213 00:10:46,640 --> 00:10:47,120 Speaker 2: getting right? 214 00:10:48,440 --> 00:10:50,720 Speaker 5: What they're getting right is they have all those brands. 215 00:10:50,720 --> 00:10:53,920 Speaker 5: They have the Treasure Hunt. There's fresh merchandise in those 216 00:10:54,000 --> 00:10:58,600 Speaker 5: stores every week, and the brands range from the very 217 00:10:58,640 --> 00:11:02,920 Speaker 5: high end, so they'll have Gucci and Chloe handbags, and 218 00:11:02,960 --> 00:11:05,840 Speaker 5: then they'll also have like Anklin. So they're sort of 219 00:11:05,920 --> 00:11:11,280 Speaker 5: covering all of the demographics with their assortments and they're 220 00:11:11,320 --> 00:11:15,160 Speaker 5: making it relevant by store. They have the winning formula. 221 00:11:15,600 --> 00:11:18,080 Speaker 5: This is an expertise that they have built up for 222 00:11:18,240 --> 00:11:20,480 Speaker 5: years and they're the largest out there. It's a fifty 223 00:11:20,520 --> 00:11:25,280 Speaker 5: six billion dollars in sales company. And so in their quarter, 224 00:11:25,360 --> 00:11:28,160 Speaker 5: of course they beat with a four percent comp sales 225 00:11:28,200 --> 00:11:30,960 Speaker 5: and the consensus with two point seven and guidance two 226 00:11:31,040 --> 00:11:33,480 Speaker 5: point you know, sort of in that one to two 227 00:11:33,559 --> 00:11:36,360 Speaker 5: percent or low single digit range, and of course they 228 00:11:36,480 --> 00:11:39,280 Speaker 5: raise their guidance. They're now expecting comp sales to be 229 00:11:39,440 --> 00:11:41,920 Speaker 5: sort of in that three to four percent range, and 230 00:11:41,960 --> 00:11:44,840 Speaker 5: they raised their EPs by about six cents. 231 00:11:45,040 --> 00:11:47,839 Speaker 2: Our thanks to Mary Ross, Gilbert Bloomberg Intelligence senior ECOD 232 00:11:47,920 --> 00:11:48,960 Speaker 2: analyst covering retail. 233 00:11:49,160 --> 00:11:50,840 Speaker 3: Coming up, we're going to break down how the retailer 234 00:11:50,880 --> 00:11:53,560 Speaker 3: Target ended a string of quarterly sales declines. 235 00:11:53,679 --> 00:11:56,360 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio and providing 236 00:11:56,400 --> 00:11:58,760 Speaker 2: INDP research and data on two thousand companies and one 237 00:11:58,840 --> 00:12:01,640 Speaker 2: hundred and thirty injtries. You can access Bloomberg Intelligence via 238 00:12:01,679 --> 00:12:04,000 Speaker 2: b I go on the terminal on Paul Sweeney. 239 00:12:03,600 --> 00:12:05,720 Speaker 3: And I'm Alex Steel and this is Bloomberg. 240 00:12:11,480 --> 00:12:14,080 Speaker 7: Adopt Us Kids presents What do you expect when you're 241 00:12:14,120 --> 00:12:17,200 Speaker 7: expecting a teenager? Learning the lingo. 242 00:12:17,360 --> 00:12:22,240 Speaker 1: Goat GA t acronym stands for greatest of all time, 243 00:12:22,520 --> 00:12:24,840 Speaker 1: as in spaghetti sandwiches for dinner. 244 00:12:25,120 --> 00:12:28,080 Speaker 4: They're my fav Dad, You're the goat. 245 00:12:28,559 --> 00:12:30,560 Speaker 7: You don't have to speak teen to be a perfect parent. 246 00:12:30,800 --> 00:12:32,880 Speaker 7: Thousands of teens in foster care will love you just 247 00:12:32,960 --> 00:12:36,120 Speaker 7: the same. Visit adopt us Kids dot org, brought to 248 00:12:36,120 --> 00:12:38,440 Speaker 7: you by the US Department of Health and Human Services 249 00:12:38,480 --> 00:12:40,319 Speaker 7: adopt Us Kids in the ad Council. 250 00:12:43,760 --> 00:12:48,200 Speaker 1: This is Bloomberg Intelligence with Alex Steele and Paul Sweeney 251 00:12:48,480 --> 00:12:50,120 Speaker 1: on Bloomberg Radio. 252 00:12:50,920 --> 00:12:53,000 Speaker 3: We move now to earnings from the retailer Target. 253 00:12:53,280 --> 00:12:56,200 Speaker 2: This week, Target reported second quarter comparable sales that rose 254 00:12:56,200 --> 00:12:57,720 Speaker 2: for the first time in more than a year. 255 00:12:57,920 --> 00:12:59,920 Speaker 3: This comes as the company has been focusing on cut 256 00:13:00,200 --> 00:13:03,319 Speaker 3: prices on essential goods to win over inflation hit consumers. 257 00:13:03,600 --> 00:13:05,720 Speaker 2: For more, guest hosts Jessman and I were joined by 258 00:13:05,800 --> 00:13:09,880 Speaker 2: Jennifer Bartash's Bloomberg Intelligence senior analysts retail stables and packaged food. 259 00:13:10,160 --> 00:13:12,400 Speaker 2: We first asked Jen to tell us what Target is 260 00:13:12,400 --> 00:13:12,839 Speaker 2: doing right. 261 00:13:13,240 --> 00:13:16,040 Speaker 8: With Target, what we're really seeing is that they sort 262 00:13:16,040 --> 00:13:21,800 Speaker 8: of reaffirmed their strategy around creating newness, reducing prices, and 263 00:13:21,920 --> 00:13:25,080 Speaker 8: enhancing the value perception they have with customers, and this 264 00:13:25,200 --> 00:13:27,600 Speaker 8: second quarter results, we really see that that is starting 265 00:13:27,640 --> 00:13:30,760 Speaker 8: to resonate, especially because they're seeing traffic going back into 266 00:13:30,800 --> 00:13:35,360 Speaker 8: stores as well as online. So really positive early signs 267 00:13:35,400 --> 00:13:38,079 Speaker 8: from Target that this momentum might be able to continue. 268 00:13:38,440 --> 00:13:41,000 Speaker 6: What about when it comes to consumer package good companies, 269 00:13:41,040 --> 00:13:42,600 Speaker 6: Because you and I have talked in the past, and 270 00:13:42,640 --> 00:13:45,800 Speaker 6: we know that Richmond FED President Tom Barkin watches a 271 00:13:45,880 --> 00:13:47,840 Speaker 6: price to mix very closely, and that's a lot of 272 00:13:47,840 --> 00:13:50,320 Speaker 6: the data that you crunch over at Bloomberg Intelligence as 273 00:13:50,320 --> 00:13:52,800 Speaker 6: far as what that means for inflation and also the 274 00:13:52,800 --> 00:13:55,520 Speaker 6: direction potentially for FED policy. What are you seeing on 275 00:13:55,559 --> 00:13:57,800 Speaker 6: there as we begin to get more consumer package good 276 00:13:57,800 --> 00:14:00,000 Speaker 6: companies reporting as well. 277 00:14:00,000 --> 00:14:03,319 Speaker 8: What we're seeing is obviously there's political pressure with a 278 00:14:03,360 --> 00:14:05,280 Speaker 8: lot of rhetoric going on right now about the need 279 00:14:05,320 --> 00:14:09,320 Speaker 8: to lower prices. We're seeing retailers like Walmart, like Target, 280 00:14:09,400 --> 00:14:12,960 Speaker 8: like Krger, like Albertson's pushing back on package food companies 281 00:14:13,120 --> 00:14:15,319 Speaker 8: who are you know, in some instances still looking to 282 00:14:15,360 --> 00:14:18,880 Speaker 8: push through some selective price increases. So there is that 283 00:14:19,040 --> 00:14:22,440 Speaker 8: tension that's happening kind of behind the scenes. But overall, 284 00:14:22,480 --> 00:14:25,520 Speaker 8: we are seeing prices on the shelf starting to come down, 285 00:14:26,000 --> 00:14:29,360 Speaker 8: and that spells relief for consumers. It's just a matter 286 00:14:29,400 --> 00:14:32,120 Speaker 8: of how long it takes for them to actually recognize 287 00:14:32,120 --> 00:14:35,120 Speaker 8: it and appreciate it and reward it with higher volumes 288 00:14:35,120 --> 00:14:35,720 Speaker 8: that they're buying. 289 00:14:36,440 --> 00:14:38,600 Speaker 2: What's Target saying about the consumer? What are the other 290 00:14:38,680 --> 00:14:41,600 Speaker 2: retailers that you talk to, Jenny, you follow, what are 291 00:14:41,600 --> 00:14:44,080 Speaker 2: they saying about the consumer today? Because I'm I think 292 00:14:44,120 --> 00:14:45,880 Speaker 2: as investors we kind of feel like we're getting mixed 293 00:14:45,880 --> 00:14:47,000 Speaker 2: messages about the consumer. 294 00:14:48,000 --> 00:14:50,480 Speaker 8: Yeah, I think when you're talking about the staple space, 295 00:14:50,520 --> 00:14:53,200 Speaker 8: which is you know, where these companies that I follow fall, 296 00:14:53,960 --> 00:14:57,600 Speaker 8: it's that the consumer is not getting worse, They're not 297 00:14:57,640 --> 00:15:01,080 Speaker 8: necessarily getting better, but they're sort of holding study. And 298 00:15:01,360 --> 00:15:03,360 Speaker 8: you know, part of that is that we've had some 299 00:15:03,400 --> 00:15:06,280 Speaker 8: consumers you kind of trade down into those middle tier 300 00:15:06,360 --> 00:15:09,280 Speaker 8: stores or even to some of the discount stores in 301 00:15:09,360 --> 00:15:11,320 Speaker 8: order to save a little bit of money. So the 302 00:15:11,360 --> 00:15:14,680 Speaker 8: companies in this space are pretty well positioned because they 303 00:15:14,680 --> 00:15:17,360 Speaker 8: do well no matter what the economic circumstances are. And 304 00:15:17,400 --> 00:15:21,160 Speaker 8: I think that's showing through with the results. But they're saying, 305 00:15:21,200 --> 00:15:24,200 Speaker 8: you know, consumers are spending, but it's still very thoughtfully 306 00:15:24,840 --> 00:15:27,440 Speaker 8: and so the things that will attract them to spending 307 00:15:27,720 --> 00:15:31,800 Speaker 8: is your merchandise mix, your newness, your convenience, the quality 308 00:15:32,400 --> 00:15:34,720 Speaker 8: things that will then tempt them into into spending the 309 00:15:34,760 --> 00:15:36,680 Speaker 8: dollars that they're managing very carefully. 310 00:15:37,040 --> 00:15:39,520 Speaker 6: You've talked a lot about how you're expecting more consumer 311 00:15:39,560 --> 00:15:42,760 Speaker 6: package good companies to roll out promotions in the second 312 00:15:42,760 --> 00:15:44,680 Speaker 6: half of the year, like buy one, get one free, 313 00:15:44,720 --> 00:15:46,280 Speaker 6: buy one, get one fifty percent off. What are you 314 00:15:46,280 --> 00:15:48,400 Speaker 6: seeing so far with that as far as what companies 315 00:15:48,440 --> 00:15:50,000 Speaker 6: are saying on these earnings calls. 316 00:15:50,440 --> 00:15:53,880 Speaker 8: Yeah, promotions have definitely accelerated and we are back at 317 00:15:54,080 --> 00:15:56,160 Speaker 8: sort of the levels that we were at before the pandemic. 318 00:15:56,560 --> 00:15:58,920 Speaker 8: What's interesting is most of these companies say that they're 319 00:15:58,960 --> 00:16:02,080 Speaker 8: able to be more percone, so that it's not just 320 00:16:02,120 --> 00:16:04,320 Speaker 8: a blanket offer like you used to see on the 321 00:16:04,600 --> 00:16:07,280 Speaker 8: front of an insert or a mailer. But they're sort 322 00:16:07,320 --> 00:16:10,440 Speaker 8: of targeting promotions to customers based on what they buy, 323 00:16:10,800 --> 00:16:13,520 Speaker 8: so they're able to preserve a little bit of profitability 324 00:16:13,600 --> 00:16:16,880 Speaker 8: and still offer higher discounts. And so I think that's 325 00:16:16,920 --> 00:16:19,440 Speaker 8: that's a pattern that we're expecting to continue through the 326 00:16:19,440 --> 00:16:21,920 Speaker 8: second half and probably into twenty twenty five as well. 327 00:16:22,080 --> 00:16:25,160 Speaker 3: All right, thanks to Jennifer Bartasha's Bloomberg Intelligence Senior analyst. 328 00:16:25,240 --> 00:16:27,040 Speaker 3: Retail stables and packaged food. 329 00:16:27,200 --> 00:16:28,840 Speaker 2: Move next to the automotive industry. 330 00:16:29,120 --> 00:16:31,400 Speaker 3: This week, Ford Motors that it is canceling plans for 331 00:16:31,440 --> 00:16:34,640 Speaker 3: a fully electric sport utility vehicle. It is a shift 332 00:16:34,680 --> 00:16:36,840 Speaker 3: that may cost the car maker around one point nine 333 00:16:36,920 --> 00:16:37,840 Speaker 3: billion dollars. 334 00:16:38,200 --> 00:16:40,080 Speaker 2: For more of this, guest host Jess Mett and I 335 00:16:40,120 --> 00:16:42,840 Speaker 2: were joined by Steve Man, Bloomberg Intelligence Global Autos and 336 00:16:42,880 --> 00:16:46,320 Speaker 2: Industrials research analysts. We first asked Steve, what's going on 337 00:16:46,440 --> 00:16:49,200 Speaker 2: with legacy auto companies and their transition to evs. 338 00:16:49,760 --> 00:16:51,960 Speaker 9: Yeah, it's a huge kind of one eighty. 339 00:16:51,800 --> 00:16:53,280 Speaker 4: Turn for Ford. 340 00:16:53,880 --> 00:16:56,640 Speaker 9: Remember you know, they were probably one of the first 341 00:16:56,720 --> 00:17:00,560 Speaker 9: Western automakers to actually introduce evs, your the must Machy, 342 00:17:01,360 --> 00:17:04,440 Speaker 9: the fort one F Lightning, and you know, they're still 343 00:17:04,480 --> 00:17:07,520 Speaker 9: selling well, but I think it's they're actually bleeding quite 344 00:17:07,560 --> 00:17:09,920 Speaker 9: a bit of money in the last twelve months. They've 345 00:17:09,920 --> 00:17:14,600 Speaker 9: lost five billion on evs, So you know, I think, 346 00:17:14,680 --> 00:17:17,639 Speaker 9: you know, they need to revisit and see instead of 347 00:17:17,680 --> 00:17:21,280 Speaker 9: a market leader in evs, they probably needs to know, 348 00:17:21,320 --> 00:17:24,960 Speaker 9: step back and maybe become a follower until the market recovers. 349 00:17:25,119 --> 00:17:27,120 Speaker 2: All right, Steve, This kind of goes to the heart 350 00:17:27,160 --> 00:17:30,040 Speaker 2: of the matter. I think for me and probably a 351 00:17:30,040 --> 00:17:34,760 Speaker 2: lot of investors in this auto industry is what really 352 00:17:35,000 --> 00:17:38,680 Speaker 2: at the end of the day is consumer demand for evs? 353 00:17:39,480 --> 00:17:42,399 Speaker 2: Is it fair to say it's not as much today 354 00:17:42,440 --> 00:17:44,840 Speaker 2: as maybe the industry thought two three years ago. 355 00:17:45,359 --> 00:17:48,439 Speaker 9: Yeah, I think the estimates out there in the past 356 00:17:48,520 --> 00:17:51,760 Speaker 9: were probably a little bit frothy, Like we're actually expecting, 357 00:17:52,359 --> 00:17:56,399 Speaker 9: you know, penetration to be around twenty five maybe thirty 358 00:17:56,440 --> 00:18:00,240 Speaker 9: percent by twenty thirty, but other estimates out there, we're 359 00:18:00,480 --> 00:18:04,520 Speaker 9: like fifty seventy five percent penetration rate by twenty thirty. 360 00:18:04,920 --> 00:18:07,520 Speaker 9: It's a little bit too aggressive. I think we're just 361 00:18:07,600 --> 00:18:11,199 Speaker 9: coming back through reality from the hype we have. But 362 00:18:11,240 --> 00:18:14,440 Speaker 9: the other thing is there's a lot of competition out there, right. 363 00:18:14,520 --> 00:18:19,880 Speaker 9: The Chinese are really looking to compete with the legacy 364 00:18:19,920 --> 00:18:25,600 Speaker 9: auto makers on cost, on technology, and you know that 365 00:18:25,640 --> 00:18:28,720 Speaker 9: brings up another question that I think investors have in 366 00:18:28,760 --> 00:18:31,399 Speaker 9: their mind is, you know, is this the right strategy 367 00:18:31,440 --> 00:18:34,440 Speaker 9: for Ford really to step back at this moment? Should 368 00:18:34,480 --> 00:18:38,080 Speaker 9: they be doubling down right, investing more and really compete 369 00:18:38,160 --> 00:18:39,480 Speaker 9: on a global level. 370 00:18:40,080 --> 00:18:42,160 Speaker 6: And you've written about too when it comes to Ford 371 00:18:42,320 --> 00:18:46,320 Speaker 6: and the rising inventories as well as the increasing price competition. 372 00:18:46,680 --> 00:18:50,320 Speaker 6: When it comes to a profitability headwind here, what as 373 00:18:50,480 --> 00:18:52,359 Speaker 6: we know as far as what the rest of the 374 00:18:52,440 --> 00:18:54,520 Speaker 6: year could look like when it comes to those earnings 375 00:18:54,600 --> 00:18:56,800 Speaker 6: calls that executives have talked about. 376 00:18:57,240 --> 00:18:59,480 Speaker 9: Oh, there's a lot of risk in the second half. 377 00:19:00,359 --> 00:19:03,919 Speaker 9: I think we're heading back to pre COVID levels, you know, 378 00:19:04,080 --> 00:19:08,640 Speaker 9: with the supply chains booth out, they're ramping up production 379 00:19:09,160 --> 00:19:11,560 Speaker 9: and at the same time, interest rate is still high. Right, 380 00:19:11,640 --> 00:19:14,880 Speaker 9: there are talks about cutting interest rates to help out 381 00:19:14,920 --> 00:19:17,920 Speaker 9: the consumers, but you know, we haven't seen that yet, 382 00:19:17,960 --> 00:19:20,400 Speaker 9: and you know we you know it probably needs more 383 00:19:20,400 --> 00:19:22,280 Speaker 9: than a couple of cuts before we get to a 384 00:19:22,320 --> 00:19:25,800 Speaker 9: point where consumer gets more excited about buying. You know, 385 00:19:26,520 --> 00:19:29,920 Speaker 9: a much more expensive vehicle today than it was three 386 00:19:30,000 --> 00:19:32,959 Speaker 9: years ago. You know, average price for vehicles fifty thousand 387 00:19:32,960 --> 00:19:36,000 Speaker 9: dollars now is not thirty five, it's not forty, it's 388 00:19:36,040 --> 00:19:39,040 Speaker 9: fifty thousand. So you know, monthly cost is a lot 389 00:19:39,119 --> 00:19:42,320 Speaker 9: higher for consumer. The cost of acquisition, the cost of 390 00:19:42,359 --> 00:19:45,119 Speaker 9: ownership is much higher today than before our. 391 00:19:45,000 --> 00:19:47,480 Speaker 3: Thanks to Steve Mann Bloomberg Intelligence Global Auto is an 392 00:19:47,480 --> 00:19:48,760 Speaker 3: industrial's research analyst. 393 00:19:49,119 --> 00:19:50,920 Speaker 2: We now take a deep dive into one of our 394 00:19:50,960 --> 00:19:53,800 Speaker 2: favorite Bloomberg Big Take stories of the week from Bloomberg News. 395 00:19:53,920 --> 00:19:57,000 Speaker 3: It is titled A two trillion dollar Reckoning Looms at 396 00:19:57,000 --> 00:20:00,600 Speaker 3: Ports Become Pawns and Geopolitics Now. The piece discusses how 397 00:20:00,600 --> 00:20:03,080 Speaker 3: the world's biggest ports are vital ponds in a new 398 00:20:03,119 --> 00:20:06,560 Speaker 3: area of geopolitics. They're spending billions to keep up with 399 00:20:06,640 --> 00:20:07,600 Speaker 3: demand for more. 400 00:20:07,640 --> 00:20:09,280 Speaker 2: Guest host j Just Mett and I were joined by 401 00:20:09,359 --> 00:20:12,879 Speaker 2: Brendan Murray, Bloomberg Global Trade Editor. We first asked Brendan 402 00:20:12,960 --> 00:20:15,879 Speaker 2: talk to us about the importance of ports around the world, 403 00:20:15,920 --> 00:20:18,040 Speaker 2: as it seems there's an arms race. 404 00:20:18,440 --> 00:20:19,200 Speaker 4: Yeah, exactly. 405 00:20:19,280 --> 00:20:22,200 Speaker 10: So maritime ports have been kind of the forgotten cogs 406 00:20:22,560 --> 00:20:27,240 Speaker 10: of the global economy. They allow countries to export what 407 00:20:28,119 --> 00:20:31,840 Speaker 10: they produce, and they allow usually developed economies to import 408 00:20:31,880 --> 00:20:35,240 Speaker 10: lots of you know, cheap goods ideally like the US 409 00:20:35,280 --> 00:20:37,879 Speaker 10: does from China. But in a world where we're dealing 410 00:20:37,880 --> 00:20:40,639 Speaker 10: with a lot of trades commerces going on around the world, 411 00:20:41,000 --> 00:20:46,240 Speaker 10: that ports have become almost national security assets, where governments 412 00:20:46,359 --> 00:20:50,320 Speaker 10: and the companies that do business around ports are investing 413 00:20:50,359 --> 00:20:53,680 Speaker 10: a lot in making sure that they're efficient, that they're 414 00:20:53,760 --> 00:20:56,919 Speaker 10: running smoothly, and that they're not victims of things like 415 00:20:56,960 --> 00:21:00,239 Speaker 10: cyber attacks, which can really paralyze an economy. We've seen 416 00:21:00,320 --> 00:21:03,680 Speaker 10: ports over the past couple of years go through this 417 00:21:03,880 --> 00:21:08,800 Speaker 10: transformation from you know, kind of hum drum places where goods, 418 00:21:08,920 --> 00:21:12,280 Speaker 10: you know, kind of go through turnstiles for trade to 419 00:21:12,359 --> 00:21:16,680 Speaker 10: become real important assets for economic security. 420 00:21:16,880 --> 00:21:19,480 Speaker 6: And I'm glad you brought that up, because economic security 421 00:21:19,520 --> 00:21:21,520 Speaker 6: also when it comes to the economy. So, Paul, if 422 00:21:21,560 --> 00:21:23,800 Speaker 6: you remember back during the peak and the height of 423 00:21:23,880 --> 00:21:27,239 Speaker 6: COVID and everything that it did on unprecedented impacts when 424 00:21:27,280 --> 00:21:29,760 Speaker 6: it comes to global supply chains, ports and shipping so 425 00:21:29,760 --> 00:21:32,439 Speaker 6: I'm curious, Brendan, when it comes to sort of the 426 00:21:32,520 --> 00:21:36,080 Speaker 6: economic outlook as we've pulled out, obviously coming a couple 427 00:21:36,119 --> 00:21:38,159 Speaker 6: of years out of what happened with COVID here, what 428 00:21:38,160 --> 00:21:40,680 Speaker 6: does this tell us about the direction when it comes 429 00:21:40,680 --> 00:21:43,160 Speaker 6: to the US and compared to its counterparts globally. 430 00:21:44,200 --> 00:21:47,080 Speaker 10: Yeah, well this is it's interesting. Just this week, Lloyd's 431 00:21:47,119 --> 00:21:51,160 Speaker 10: List published its top one hundred list of ports and 432 00:21:51,680 --> 00:21:54,760 Speaker 10: of the top ten, seven were in China. And guess 433 00:21:54,760 --> 00:21:59,320 Speaker 10: how many were in Europe and the US none? So wow, 434 00:21:59,560 --> 00:22:04,080 Speaker 10: exactly so. And now you would think that a big 435 00:22:04,119 --> 00:22:07,119 Speaker 10: economy like the European Union or the US would would 436 00:22:07,320 --> 00:22:09,520 Speaker 10: would have, you know, have couple in the top ten, 437 00:22:09,560 --> 00:22:13,280 Speaker 10: and you know, but but places like Los Angeles Long 438 00:22:13,359 --> 00:22:16,840 Speaker 10: Beach have have just steadily fallen down the list. Rotterdam 439 00:22:16,920 --> 00:22:19,000 Speaker 10: fell out of the top ten for the first time 440 00:22:19,160 --> 00:22:21,800 Speaker 10: in records going back, you know, a couple of decades. 441 00:22:21,840 --> 00:22:26,040 Speaker 10: So it's China has been playing this game for a while. 442 00:22:26,520 --> 00:22:29,320 Speaker 10: And when you know, they are part of the global 443 00:22:29,359 --> 00:22:32,800 Speaker 10: economy as a playing by the rules and there are 444 00:22:32,800 --> 00:22:35,640 Speaker 10: no trade wars going on, that's just fine. But if 445 00:22:35,840 --> 00:22:41,280 Speaker 10: China becomes you know, a strategic rival and geoeconomic rival 446 00:22:41,280 --> 00:22:44,120 Speaker 10: of the West. Then you're looking at the scales tilted 447 00:22:44,119 --> 00:22:45,639 Speaker 10: heavily in their favor. 448 00:22:45,880 --> 00:22:49,040 Speaker 2: I's so many cool parts of the story. And the folks, 449 00:22:49,080 --> 00:22:51,280 Speaker 2: if you're sitting on the beach, go read the story. 450 00:22:51,320 --> 00:22:53,680 Speaker 2: If you're got a long commute today, go read this story. 451 00:22:53,720 --> 00:22:56,439 Speaker 2: It is unbelievable. What really shocked me as a part 452 00:22:56,480 --> 00:22:58,560 Speaker 2: of the story talking about in China, how they had 453 00:22:58,560 --> 00:23:01,320 Speaker 2: the by D, which is electric car maker. They have 454 00:23:01,359 --> 00:23:04,479 Speaker 2: a plant there. They produce a gajillion of these cars 455 00:23:04,520 --> 00:23:06,000 Speaker 2: and they export them around the world. So what do 456 00:23:06,040 --> 00:23:07,800 Speaker 2: they do. They build a port rate there and then 457 00:23:07,800 --> 00:23:10,080 Speaker 2: they have their own like they develop their own car 458 00:23:10,240 --> 00:23:15,439 Speaker 2: shipping fascinating vessel, and they crank out, you know, just 459 00:23:15,600 --> 00:23:18,000 Speaker 2: tens of thousands of these cars and they export them 460 00:23:18,040 --> 00:23:20,640 Speaker 2: around the world. Is this a concern for the US 461 00:23:20,840 --> 00:23:24,000 Speaker 2: government Brendan that perhaps, you know, we're falling behind in 462 00:23:24,040 --> 00:23:25,800 Speaker 2: global shipping and global trade. 463 00:23:26,200 --> 00:23:29,120 Speaker 4: This is the thing that you know, China over the past. 464 00:23:28,960 --> 00:23:31,199 Speaker 10: You know, a couple of decades, would have would have 465 00:23:31,240 --> 00:23:34,119 Speaker 10: been the leader in kind of a low cost manufacturing. 466 00:23:34,280 --> 00:23:37,080 Speaker 10: So you know, and the's stuff that you know that 467 00:23:37,080 --> 00:23:40,199 Speaker 10: that American companies don't really want to make anymore. You know, 468 00:23:40,240 --> 00:23:42,840 Speaker 10: they've moved up the value chain. But now China is 469 00:23:43,520 --> 00:23:45,960 Speaker 10: moving up the value chain itself and like you said, 470 00:23:46,040 --> 00:23:49,239 Speaker 10: making things like cars and solar panels and you know, 471 00:23:49,480 --> 00:23:53,919 Speaker 10: a lot less labor intensive, more technology driven products. So 472 00:23:54,400 --> 00:23:57,200 Speaker 10: you know that's the stuff that that you know, American 473 00:23:57,240 --> 00:23:59,280 Speaker 10: companies want to compete on. And so if you've got 474 00:23:59,359 --> 00:24:03,080 Speaker 10: a flood of Chinese electric vehicles, say like you mentioned 475 00:24:03,119 --> 00:24:06,320 Speaker 10: the vi id facility kind of linking up with that 476 00:24:06,520 --> 00:24:10,280 Speaker 10: large port, you know, that's a real threat to American 477 00:24:10,359 --> 00:24:14,840 Speaker 10: and European car makers. So it's it's something that is 478 00:24:14,880 --> 00:24:18,119 Speaker 10: not a direct rivalry to something that that is now 479 00:24:18,560 --> 00:24:22,760 Speaker 10: you know, in direct competition with Americas and European car companies. 480 00:24:23,080 --> 00:24:26,280 Speaker 6: Beyond China, talk to us about India specifically and how 481 00:24:26,280 --> 00:24:28,840 Speaker 6: it's aiming for a slice of this export pie. 482 00:24:29,840 --> 00:24:33,119 Speaker 10: Yeah, exactly. So, so India has a very old, not 483 00:24:33,320 --> 00:24:37,000 Speaker 10: very well developed port system. A lot of a lot 484 00:24:37,000 --> 00:24:39,920 Speaker 10: of the big ships can't even pull into India's ports, 485 00:24:40,000 --> 00:24:44,080 Speaker 10: So they pull into place like Singapore or somewhere else nearby, 486 00:24:44,359 --> 00:24:46,040 Speaker 10: put it on a smaller ship so they can get 487 00:24:46,040 --> 00:24:46,520 Speaker 10: into India. 488 00:24:46,600 --> 00:24:46,919 Speaker 4: Sports. 489 00:24:46,960 --> 00:24:50,480 Speaker 10: But India about a couple hours north of Mumbai is 490 00:24:50,520 --> 00:24:55,840 Speaker 10: building a nine billion dollars deep water container port that 491 00:24:56,000 --> 00:24:59,119 Speaker 10: is going to help fix some of those issues. And 492 00:24:59,520 --> 00:25:03,399 Speaker 10: in the eight in India, you know program under the 493 00:25:03,400 --> 00:25:08,320 Speaker 10: Modi government will will get a big lift from a 494 00:25:08,400 --> 00:25:11,359 Speaker 10: port like that. So there are you know, new ports 495 00:25:11,480 --> 00:25:13,359 Speaker 10: in this story that we talk about, and there are 496 00:25:13,400 --> 00:25:16,040 Speaker 10: old ones that are being overhauled, but this one in 497 00:25:16,080 --> 00:25:19,679 Speaker 10: India in particular was an interesting case study to focus on. 498 00:25:20,119 --> 00:25:22,800 Speaker 2: Our thanks to Brendan Murray, Bloomberg Global Trade Editor. 499 00:25:23,240 --> 00:25:24,639 Speaker 3: Coming up on the program, We're going to take a 500 00:25:24,640 --> 00:25:28,119 Speaker 3: look at how China's impacting sales the cosmetics giant Esta Lauder. 501 00:25:28,359 --> 00:25:31,200 Speaker 2: We're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 502 00:25:31,480 --> 00:25:33,760 Speaker 2: research and data on two thousand companies in one hundred 503 00:25:33,760 --> 00:25:36,440 Speaker 2: and thirty industries. You can access Bloomberg Intelligence via b 504 00:25:36,560 --> 00:25:37,399 Speaker 2: I go on the terminal. 505 00:25:37,520 --> 00:25:40,520 Speaker 3: I'm Paul Sweeney and I'm Alex Steele, and this is Bloomberg. 506 00:25:46,320 --> 00:25:50,280 Speaker 1: You're listening to Bloomberg Intelligence with Alex Steele and Paul 507 00:25:50,320 --> 00:25:52,720 Speaker 1: Sweeney on Bloomberg Radio. 508 00:25:53,840 --> 00:25:55,439 Speaker 3: We move now to the M and A space. 509 00:25:55,640 --> 00:25:59,160 Speaker 2: The Canadian Circle K operator Cooch Tard made a proposal 510 00:25:59,200 --> 00:26:02,080 Speaker 2: to take over Japanese rival and seven eleven owner seven 511 00:26:02,160 --> 00:26:03,160 Speaker 2: and I Holdings. 512 00:26:03,440 --> 00:26:05,520 Speaker 3: With seven and I is market value exceeding thirty eight 513 00:26:05,520 --> 00:26:08,000 Speaker 3: billion dollars, it would be the biggest foreign takeover of 514 00:26:08,000 --> 00:26:11,040 Speaker 3: a Japanese company, and merger would create the world's top 515 00:26:11,080 --> 00:26:13,719 Speaker 3: operator of roughly one hundred thousand convenience stores. 516 00:26:14,000 --> 00:26:15,600 Speaker 2: For more. At guest host, Matt Miller and I were 517 00:26:15,640 --> 00:26:19,960 Speaker 2: joined by Diana rossetto pena Bloomberg Intelligence consumer staples analyst. 518 00:26:20,280 --> 00:26:22,800 Speaker 2: We first asked Diana to tell us more about couch 519 00:26:22,840 --> 00:26:24,760 Speaker 2: Tart and why they're making this purchase. 520 00:26:25,040 --> 00:26:31,400 Speaker 11: Kushtard is the second largest convenience store in the United States. 521 00:26:31,480 --> 00:26:32,879 Speaker 11: They manage Circle K. 522 00:26:34,160 --> 00:26:36,439 Speaker 12: Yes, okay, but they're Canadian and that's why they have 523 00:26:36,480 --> 00:26:39,320 Speaker 12: a French name that sounds funny to American years. 524 00:26:39,520 --> 00:26:42,080 Speaker 11: Yes, it took me actually a while to be able 525 00:26:42,119 --> 00:26:43,040 Speaker 11: to pronounce their name. 526 00:26:43,640 --> 00:26:46,120 Speaker 13: But yeah, So they're very inquisitive. 527 00:26:46,600 --> 00:26:51,560 Speaker 11: We're not that surprise that they are, you know, their stocks, 528 00:26:51,560 --> 00:26:55,040 Speaker 11: that they want to buy something. But seven eleven is 529 00:26:55,080 --> 00:27:00,159 Speaker 11: actually a big name. There's valuations going from like fifty 530 00:27:00,359 --> 00:27:03,640 Speaker 11: billion dollars to as much as like eighty five billion dollars. 531 00:27:04,080 --> 00:27:06,960 Speaker 11: So for them to be able to do that, it's 532 00:27:07,040 --> 00:27:08,000 Speaker 11: it's quite impressive. 533 00:27:08,040 --> 00:27:09,320 Speaker 13: If they are able to. 534 00:27:09,720 --> 00:27:13,159 Speaker 12: It's always surprising, I think to people who aren't in 535 00:27:13,200 --> 00:27:15,480 Speaker 12: the know that seven to eleven is owned by a 536 00:27:15,560 --> 00:27:18,560 Speaker 12: Japanese holding company, and I think they own Speedway as well. 537 00:27:18,840 --> 00:27:22,679 Speaker 12: These seem like such American brands, So does Circle k 538 00:27:23,119 --> 00:27:25,919 Speaker 12: and it's owned by a Canadian company. Is there going 539 00:27:26,000 --> 00:27:28,120 Speaker 12: to be anti trust issues here? 540 00:27:28,480 --> 00:27:31,960 Speaker 11: Well, for sure, d FDC. I mean, ask Kroger. They 541 00:27:32,040 --> 00:27:35,000 Speaker 11: have been trying to purchase Albertson's for a couple of 542 00:27:35,119 --> 00:27:38,119 Speaker 11: years now, So if they actually come up with the 543 00:27:38,200 --> 00:27:41,240 Speaker 11: numbers and their's acceptance, I'm sure the FDC will have 544 00:27:41,280 --> 00:27:44,879 Speaker 11: something to say. Seven eleven has like about fourteen percent 545 00:27:44,880 --> 00:27:48,320 Speaker 11: of market share in the United States, whereas Pushtar with 546 00:27:48,400 --> 00:27:50,840 Speaker 11: their Circle K brand, they have about five percent. 547 00:27:50,920 --> 00:27:54,200 Speaker 2: So it definitely will be you know, up for again, 548 00:27:54,680 --> 00:27:56,719 Speaker 2: I'm a wah wah guy, but you know I can 549 00:27:56,720 --> 00:27:57,159 Speaker 2: see is. 550 00:27:57,200 --> 00:28:00,120 Speaker 12: Wah wah just like a New Jersey No. 551 00:27:59,520 --> 00:28:02,919 Speaker 11: No, but it what is It's in the Northeast. There's 552 00:28:03,040 --> 00:28:05,880 Speaker 11: mostly in the Northeast. So but yeah, there's. 553 00:28:05,440 --> 00:28:08,800 Speaker 2: Explained to me this convenience store business. What's the economics 554 00:28:08,800 --> 00:28:10,639 Speaker 2: of a convenience store. I just see people going in 555 00:28:10,680 --> 00:28:11,879 Speaker 2: and out all the time. 556 00:28:12,400 --> 00:28:16,160 Speaker 11: What's the economics, Well, basically, they want you to go 557 00:28:16,240 --> 00:28:19,160 Speaker 11: in for your gas. They're very competitive in gas prices. 558 00:28:19,920 --> 00:28:22,520 Speaker 11: Fuel margins have been improven in the past few years. 559 00:28:22,840 --> 00:28:27,600 Speaker 11: Kushtar actually has about forty cents per gallon in terms 560 00:28:27,600 --> 00:28:30,879 Speaker 11: of fuel margins. But what they're making money on is 561 00:28:30,920 --> 00:28:34,120 Speaker 11: when you go into the store, particularly if you buy 562 00:28:34,160 --> 00:28:36,359 Speaker 11: their sand, which is the margins for that is like 563 00:28:36,400 --> 00:28:37,119 Speaker 11: fifty percent. 564 00:28:37,440 --> 00:28:38,120 Speaker 13: It's true. 565 00:28:38,280 --> 00:28:39,840 Speaker 12: I was, by the way, I was filling up on 566 00:28:39,920 --> 00:28:43,400 Speaker 12: the way there and back for more than four dollars 567 00:28:43,440 --> 00:28:45,080 Speaker 12: and fifty cents a gallon. 568 00:28:45,040 --> 00:28:46,920 Speaker 2: O because you're putting in the super duper high I go. 569 00:28:46,880 --> 00:28:50,280 Speaker 12: With ninety three. And then I go in and I 570 00:28:50,920 --> 00:28:54,400 Speaker 12: pick up a Snickers bar for my kid brother, and 571 00:28:54,440 --> 00:28:56,640 Speaker 12: I got i don't know, like a TwixT. Each of 572 00:28:56,680 --> 00:28:59,720 Speaker 12: those candy bars was more than two dollars and fifty 573 00:28:59,760 --> 00:29:02,320 Speaker 12: cent margin there, And I'm starting to feel like a 574 00:29:02,320 --> 00:29:04,520 Speaker 12: really old man, you know, because when I was a kid, 575 00:29:05,520 --> 00:29:07,560 Speaker 12: fifty cents is what you paid for these things. 576 00:29:07,720 --> 00:29:09,040 Speaker 2: So are these good businesses? 577 00:29:09,240 --> 00:29:13,160 Speaker 11: I mean, oh yeah, if they're buying I'm sure you know, 578 00:29:13,360 --> 00:29:16,320 Speaker 11: they think that there's some good business. I mean Kushtart 579 00:29:16,720 --> 00:29:20,240 Speaker 11: has Usually they they do big acquisitions. The last acquisition 580 00:29:20,320 --> 00:29:23,560 Speaker 11: that they did was for eleven billion dollars for the 581 00:29:23,640 --> 00:29:27,360 Speaker 11: total energy is in Europe, but they usually in the 582 00:29:27,480 --> 00:29:31,640 Speaker 11: US they usually buy smaller operators. They announced that they 583 00:29:31,720 --> 00:29:35,480 Speaker 11: bought Get Go from Giant Eagle. So that's another convenience 584 00:29:35,520 --> 00:29:36,480 Speaker 11: store which is in the. 585 00:29:37,200 --> 00:29:39,720 Speaker 2: You know with a delicious cold pork sandwich by the way. 586 00:29:39,880 --> 00:29:41,960 Speaker 13: Oh well, I actually haven't tried it. 587 00:29:42,080 --> 00:29:43,320 Speaker 4: Yeah, I had one to go this weekend. 588 00:29:43,400 --> 00:29:44,160 Speaker 2: Yeah, where's get Go? 589 00:29:44,880 --> 00:29:46,360 Speaker 12: I had them in Pennsylvania. 590 00:29:46,440 --> 00:29:48,040 Speaker 13: Yeah, it's regional. 591 00:29:48,160 --> 00:29:50,080 Speaker 2: Yeah, okay, all right, it's the Midwest. It's part of 592 00:29:50,120 --> 00:29:50,960 Speaker 2: the world I don't go to. 593 00:29:51,160 --> 00:29:53,760 Speaker 12: I skipped the what's the one you like? The cracker barrel? 594 00:29:53,840 --> 00:29:55,920 Speaker 12: Cracker Barrel, I declined. 595 00:29:55,520 --> 00:29:57,640 Speaker 2: But you probably drove through past like one hundred of 596 00:29:57,640 --> 00:29:58,960 Speaker 2: them month, Yes, yes, a lot of it. 597 00:29:59,040 --> 00:30:00,560 Speaker 12: And I used to always stop because you get a 598 00:30:00,600 --> 00:30:04,160 Speaker 12: books books on tape at one and then you'd return 599 00:30:04,240 --> 00:30:06,320 Speaker 12: it at the next but you know. 600 00:30:06,280 --> 00:30:08,120 Speaker 2: Longer, what else are we seeing in your space? And 601 00:30:08,200 --> 00:30:09,560 Speaker 2: then in a retail space, what are some of the 602 00:30:09,640 --> 00:30:10,920 Speaker 2: key things people are looking at? Cause you cover a 603 00:30:10,960 --> 00:30:11,520 Speaker 2: lot of retail. 604 00:30:11,680 --> 00:30:14,720 Speaker 11: Yeah, I mean, obviously this is like the biggest thing 605 00:30:14,800 --> 00:30:16,440 Speaker 11: that has happened, one of. 606 00:30:16,400 --> 00:30:19,080 Speaker 12: The biggest deals of the year, right, well, yeah, even 607 00:30:19,880 --> 00:30:21,200 Speaker 12: Dollars puts it like number two. 608 00:30:21,600 --> 00:30:26,520 Speaker 11: Yeah, I mean, obviously the Kruger Albertson's acquisition. It's also 609 00:30:26,960 --> 00:30:29,600 Speaker 11: the talk of the town. There's like likelihood that it 610 00:30:29,680 --> 00:30:31,400 Speaker 11: might not happen. The FDC might object. 611 00:30:31,440 --> 00:30:32,760 Speaker 2: So what are we going to hear about that deal? 612 00:30:32,800 --> 00:30:35,040 Speaker 2: Because we've been talking about Kruger's and Albertson's for a 613 00:30:35,120 --> 00:30:35,600 Speaker 2: long time. 614 00:30:35,720 --> 00:30:39,360 Speaker 11: Yeah, honestly, like it really depends on, you know, what 615 00:30:39,440 --> 00:30:43,920 Speaker 11: happens with the election and how you know, M and 616 00:30:43,960 --> 00:30:46,800 Speaker 11: A friendly the FDC will be afterwards, all. 617 00:30:46,760 --> 00:30:48,560 Speaker 2: Right, Well, seven to eleven by the numbers, and this 618 00:30:48,640 --> 00:30:53,560 Speaker 2: is according to Bloomberger reporting eighty five thousand stores. That's huge, 619 00:30:53,600 --> 00:30:55,720 Speaker 2: and they've got one hundred and fifty seven thousand employees, 620 00:30:55,920 --> 00:30:58,520 Speaker 2: so that's a big business. Yeah, you know, and cus charges, 621 00:30:58,600 --> 00:31:01,880 Speaker 2: I mean, it's Cure Short's got a bigger valuation, fifty 622 00:31:01,880 --> 00:31:05,000 Speaker 2: eight billion dollars valuation versus thirty eight for the seven 623 00:31:05,000 --> 00:31:08,920 Speaker 2: and eleven, so much higher valuation using that stock in cash, 624 00:31:08,960 --> 00:31:10,080 Speaker 2: I guess to get bigger. 625 00:31:10,200 --> 00:31:13,160 Speaker 11: Yeah, I think, you know, definitely, I mean obviously I 626 00:31:13,200 --> 00:31:16,240 Speaker 11: see this as an ASHA play, to be honest. 627 00:31:15,960 --> 00:31:19,680 Speaker 12: With you, which we've seen more and more and more of, right, 628 00:31:19,720 --> 00:31:23,400 Speaker 12: I mean, if you look at activists investors involved in 629 00:31:23,520 --> 00:31:27,400 Speaker 12: Japanese stocks, for example, it goes from fifteen and twenty 630 00:31:27,440 --> 00:31:30,880 Speaker 12: twenty two to twenty five last year to twenty eight 631 00:31:30,960 --> 00:31:31,800 Speaker 12: so far this year. 632 00:31:31,840 --> 00:31:33,200 Speaker 2: And we're only in the first half. 633 00:31:33,560 --> 00:31:36,440 Speaker 11: Yeah, I mean seven eleven has like thirty one percent 634 00:31:36,480 --> 00:31:38,080 Speaker 11: of the Asia Pacific market share. 635 00:31:38,200 --> 00:31:41,360 Speaker 13: So yeah, now we're talking. Now, we're talking, all right. 636 00:31:41,360 --> 00:31:45,360 Speaker 3: Thanks to Diana Rosea Penya, Bloomberg Intelligence consumer staples analyst. 637 00:31:45,160 --> 00:31:47,440 Speaker 2: We turned down to the cosmetics company es Day Lauder 638 00:31:47,560 --> 00:31:49,800 Speaker 2: this week. The company said that it sees annual revenue 639 00:31:49,800 --> 00:31:51,760 Speaker 2: growth below analyst expectations. 640 00:31:51,920 --> 00:31:56,200 Speaker 3: The cosmetics giant sited continued declines in prestige beauty sales 641 00:31:56,200 --> 00:31:59,480 Speaker 3: in China, and separately, Esda Lauder said it's longtime CEO 642 00:31:59,600 --> 00:32:02,040 Speaker 3: for Breeze Zeofrida will retire at the end of June 643 00:32:02,040 --> 00:32:02,960 Speaker 3: twenty twenty five. 644 00:32:03,320 --> 00:32:05,280 Speaker 2: For more, guest hosts Michael Reagan and I were joined 645 00:32:05,280 --> 00:32:08,120 Speaker 2: by Red Brown, a Bloomberg News Earnings reporter. We first 646 00:32:08,160 --> 00:32:10,160 Speaker 2: they asked Red for his take on this week's news. 647 00:32:10,400 --> 00:32:12,240 Speaker 14: This is a clean slate, I think for this company. 648 00:32:12,280 --> 00:32:15,480 Speaker 14: We saw obviously CEO stepping away at the end of 649 00:32:15,480 --> 00:32:18,200 Speaker 14: this year. CFO is also leaving around the same time, 650 00:32:18,280 --> 00:32:20,360 Speaker 14: so you know, a new management team. And also, if 651 00:32:20,360 --> 00:32:21,880 Speaker 14: we look at the guidance that they gave out for 652 00:32:21,920 --> 00:32:25,280 Speaker 14: their fiscal twenty twenty five, it came in much lower 653 00:32:25,320 --> 00:32:27,800 Speaker 14: than what and else we're expecting and else we're expecting 654 00:32:27,960 --> 00:32:30,560 Speaker 14: to see constant currency growth. They were expecting to see 655 00:32:30,920 --> 00:32:33,680 Speaker 14: earnings about the whole dollar higher than what the company 656 00:32:33,680 --> 00:32:36,440 Speaker 14: guided for. So again just kind of setting a low 657 00:32:36,480 --> 00:32:39,560 Speaker 14: bar for this company going forward, clean slate, let's go 658 00:32:39,600 --> 00:32:41,480 Speaker 14: from here, I think is kind of the message that 659 00:32:41,520 --> 00:32:43,280 Speaker 14: they're going to be trying to change the narrative to 660 00:32:43,400 --> 00:32:44,040 Speaker 14: going forward. 661 00:32:44,240 --> 00:32:46,760 Speaker 15: Red, how big of a deal is China to Estay Lauder. 662 00:32:46,760 --> 00:32:48,800 Speaker 15: I know they have a pretty decent sized business. There 663 00:32:48,840 --> 00:32:51,680 Speaker 15: was that part of the sort of disappointing results this quarter. 664 00:32:51,800 --> 00:32:54,360 Speaker 14: Yeah, I mean, I think that is the main culprit 665 00:32:54,520 --> 00:32:56,800 Speaker 14: of the issues that they're going through. I mean, we've 666 00:32:56,800 --> 00:32:59,320 Speaker 14: seen throughout this earning season, a lot of these companies, 667 00:32:59,400 --> 00:33:01,560 Speaker 14: especially in the uxury space that have tied their fortunes 668 00:33:01,560 --> 00:33:04,840 Speaker 14: to China are paying the price of that at the moment. 669 00:33:04,920 --> 00:33:08,320 Speaker 14: So China came in really soft again this quarter and 670 00:33:08,440 --> 00:33:10,840 Speaker 14: als we're expecting for around three or four percent growth 671 00:33:10,920 --> 00:33:13,400 Speaker 14: in the Asia region, which is dominated by China obviously, 672 00:33:13,640 --> 00:33:16,080 Speaker 14: and what they saw was a four percent contraction in 673 00:33:16,080 --> 00:33:19,920 Speaker 14: that market. So yeah, again paying the price for the 674 00:33:20,000 --> 00:33:25,400 Speaker 14: investment in that region as China, China sales demand for 675 00:33:25,440 --> 00:33:29,520 Speaker 14: these luxury products, whether it's LVMH's goods or you know, fashion, 676 00:33:29,680 --> 00:33:32,680 Speaker 14: anything like that. And then also skincare, fragrance, things like 677 00:33:32,720 --> 00:33:35,880 Speaker 14: that are also weak as the demand waivers there. 678 00:33:36,160 --> 00:33:38,719 Speaker 2: Just reading some of the reporting on this here company 679 00:33:39,080 --> 00:33:41,200 Speaker 2: in the midst of a turnaround, I'm not sure necessarily 680 00:33:41,240 --> 00:33:42,760 Speaker 2: what it has to be turned around. So when you 681 00:33:42,800 --> 00:33:45,160 Speaker 2: get it, presumably a new management team coming in. Did 682 00:33:45,200 --> 00:33:48,560 Speaker 2: they want somebody from inside or maybe some fresh set 683 00:33:48,600 --> 00:33:51,240 Speaker 2: of eyes coming from the outside. What's the thinking there. 684 00:33:51,440 --> 00:33:55,000 Speaker 14: I think both the CEO CFO have been there for 685 00:33:55,080 --> 00:33:57,840 Speaker 14: over a decade now, so I mean it's always good 686 00:33:57,840 --> 00:34:00,720 Speaker 14: to have somebody within the company knows the company, but 687 00:34:01,040 --> 00:34:04,160 Speaker 14: it might be time for some fresh eyes. The company 688 00:34:04,160 --> 00:34:07,040 Speaker 14: has missed guidance or cut guidance several times over the 689 00:34:07,080 --> 00:34:10,600 Speaker 14: last few years. Analysts start to get When that happens, 690 00:34:10,640 --> 00:34:13,480 Speaker 14: analysts starts to feel they start to lose confidence in 691 00:34:14,000 --> 00:34:18,080 Speaker 14: that management group's ability to understand or grapple with the 692 00:34:18,080 --> 00:34:21,319 Speaker 14: business dynamics at the moment. So I think there could 693 00:34:21,360 --> 00:34:23,319 Speaker 14: be some calls for an outside look. The company says 694 00:34:23,320 --> 00:34:27,279 Speaker 14: they're already undertaking the next CEO search. Obviously they are 695 00:34:27,280 --> 00:34:30,000 Speaker 14: going to say they're considering internal and external candidates. But yeah, 696 00:34:30,040 --> 00:34:32,800 Speaker 14: definitely might be time for a for a fresh look. 697 00:34:33,280 --> 00:34:36,239 Speaker 15: I'm smirking here a little bit looking back on a 698 00:34:36,320 --> 00:34:39,719 Speaker 15: story we had out in February on Stay Lauder where 699 00:34:40,120 --> 00:34:45,120 Speaker 15: CEO Fabrizio Freda said, I'm not going anywhere so op president, 700 00:34:45,840 --> 00:34:47,279 Speaker 15: but Red, you know, I don't know how much of 701 00:34:47,320 --> 00:34:50,880 Speaker 15: an expert you are on the beauty care market and skincare, 702 00:34:50,960 --> 00:34:53,719 Speaker 15: But you know, are they an outlier here as far 703 00:34:53,760 --> 00:34:56,440 Speaker 15: as you know, you go through a million earnings reports 704 00:34:56,480 --> 00:34:58,400 Speaker 15: every quarter a year. Are they Are they an outlier 705 00:34:58,440 --> 00:35:03,080 Speaker 15: as far as that you consumer discretionary space or are 706 00:35:03,120 --> 00:35:06,200 Speaker 15: we seeing similar stories from other, you know, companies that 707 00:35:06,239 --> 00:35:09,640 Speaker 15: depend on I don't know whether it's beauty care or 708 00:35:09,760 --> 00:35:13,440 Speaker 15: you know, high fashion, you know is is is there 709 00:35:13,440 --> 00:35:14,080 Speaker 15: a theme here? 710 00:35:14,160 --> 00:35:15,520 Speaker 14: I don't know what gave it away that I'm not 711 00:35:15,560 --> 00:35:20,120 Speaker 14: an ex space but you have good skin. No, I 712 00:35:20,160 --> 00:35:23,080 Speaker 14: don't think they're an outlier. Look, I think it's you 713 00:35:23,120 --> 00:35:25,160 Speaker 14: see something for me. The similar trend that I'm picking 714 00:35:25,239 --> 00:35:26,960 Speaker 14: up across all of the retail, even you know, something 715 00:35:27,000 --> 00:35:29,440 Speaker 14: as far away as home Depot is that people are 716 00:35:29,480 --> 00:35:34,080 Speaker 14: focused on needs, not once and this luxury space skincare 717 00:35:34,239 --> 00:35:37,560 Speaker 14: especially is a want, it's not a need. A fragrance 718 00:35:37,640 --> 00:35:40,120 Speaker 14: is a want, not a need. So consumers are cutting 719 00:35:40,120 --> 00:35:43,319 Speaker 14: back where they can, whether it's you know, fixing your 720 00:35:43,360 --> 00:35:46,080 Speaker 14: house up or yeah, making yourself appear a little bit better, 721 00:35:46,760 --> 00:35:49,880 Speaker 14: it doesn't matter. That's that's kind of the The macro 722 00:35:49,960 --> 00:35:52,520 Speaker 14: pressure is gonna win out in this this this scenario. 723 00:35:52,800 --> 00:35:56,280 Speaker 2: But as our good friend Samantha writes in Alex Steele 724 00:35:56,320 --> 00:35:58,920 Speaker 2: has always told us that you have to invest in 725 00:35:58,960 --> 00:36:02,120 Speaker 2: your face, which she does and Michael and I do not. 726 00:36:02,600 --> 00:36:05,359 Speaker 15: So I mean, clearly my face is a value stock, 727 00:36:05,560 --> 00:36:06,440 Speaker 15: yes right now. 728 00:36:07,360 --> 00:36:10,880 Speaker 2: But all I know is during the lockdown across the 729 00:36:10,880 --> 00:36:14,000 Speaker 2: street to the four stores packed, Yeah, I mean, no 730 00:36:14,000 --> 00:36:17,080 Speaker 2: matter what, people need to get that stuff. 731 00:36:17,239 --> 00:36:19,200 Speaker 15: Yeah, I mean, I guess it's in the pandemic, people 732 00:36:19,200 --> 00:36:21,880 Speaker 15: had a few extra bucks. They weren't spending on concerts 733 00:36:21,880 --> 00:36:22,320 Speaker 15: and movies. 734 00:36:22,400 --> 00:36:26,279 Speaker 2: It was just it shocked me how strong that category is. 735 00:36:26,520 --> 00:36:28,480 Speaker 14: Yeah, and then right after the pandemic as well, they 736 00:36:28,520 --> 00:36:30,640 Speaker 14: did really well because people were like, I'm emerging from 737 00:36:30,640 --> 00:36:33,239 Speaker 14: the world, I want to make sure I haven't shaved 738 00:36:33,280 --> 00:36:35,560 Speaker 14: my face in six months. I might as well get 739 00:36:35,600 --> 00:36:38,279 Speaker 14: moisturized or something. But yeah, it's there's there's trends have 740 00:36:38,320 --> 00:36:41,160 Speaker 14: just fallen off now and they haven't really returned to 741 00:36:41,160 --> 00:36:42,520 Speaker 14: like pre pandemic levels of growth. 742 00:36:42,560 --> 00:36:42,640 Speaker 6: You know. 743 00:36:43,480 --> 00:36:46,000 Speaker 14: Excuse me. Este later was a was a company that 744 00:36:46,080 --> 00:36:48,360 Speaker 14: was like really you know, flying into the pandemic and 745 00:36:48,360 --> 00:36:50,839 Speaker 14: through the pandemic, and then yeah, just the the fall 746 00:36:50,840 --> 00:36:53,600 Speaker 14: off of China and then the United States as well 747 00:36:53,680 --> 00:36:55,319 Speaker 14: is kind of not getting a lot of attention at 748 00:36:55,320 --> 00:36:58,080 Speaker 14: the moment. But like US sales contracted as well this quarter. 749 00:36:58,080 --> 00:37:01,080 Speaker 14: It's maybe hidden because there's been so much emphasis on China. Yeah, 750 00:37:01,120 --> 00:37:03,080 Speaker 14: but those are the two biggest markets and both are 751 00:37:02,920 --> 00:37:04,719 Speaker 14: are underperforming I think at the moment. 752 00:37:04,800 --> 00:37:08,400 Speaker 15: So it still seems like China's consumer economy is a 753 00:37:08,400 --> 00:37:11,040 Speaker 15: bit of a black Box to analyst, do you find 754 00:37:11,040 --> 00:37:14,640 Speaker 15: a lot of surprises either upside or downside on companies 755 00:37:14,880 --> 00:37:16,839 Speaker 15: as far as their their business in China goes. 756 00:37:16,920 --> 00:37:18,600 Speaker 14: Yeah, it's hard to get a read because if you think, 757 00:37:18,640 --> 00:37:22,719 Speaker 14: like there was so much worry and again jumping around here, 758 00:37:22,719 --> 00:37:25,360 Speaker 14: but I just connecting all the different kind of earnings threads, 759 00:37:25,400 --> 00:37:27,440 Speaker 14: Like there was so much worry going into Apple's report 760 00:37:27,440 --> 00:37:30,280 Speaker 14: of like where's the Chinese consumer? Are they buying iPhones? 761 00:37:30,320 --> 00:37:30,719 Speaker 4: Things like that. 762 00:37:30,760 --> 00:37:32,760 Speaker 14: You know, it's the same dollar that's going towards these things. 763 00:37:34,120 --> 00:37:36,000 Speaker 14: But yeah, it's really hard to get a read because 764 00:37:36,040 --> 00:37:39,400 Speaker 14: Apple well performs as they Lauder underperforms. Yeah, it is 765 00:37:39,800 --> 00:37:41,120 Speaker 14: just a kind of you know, most of the analysts, 766 00:37:41,160 --> 00:37:42,440 Speaker 14: they said here in New York, they're just looking at 767 00:37:42,520 --> 00:37:42,919 Speaker 14: data points. 768 00:37:42,960 --> 00:37:44,360 Speaker 3: So it is kind of a tough read, all right. 769 00:37:44,360 --> 00:37:46,440 Speaker 3: Thanks to Red Brown, Bloomberg News Earnings Reporter. 770 00:37:46,719 --> 00:37:49,440 Speaker 2: That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, 771 00:37:49,600 --> 00:37:52,320 Speaker 2: providing in depth research and data on two thousand companies 772 00:37:52,320 --> 00:37:53,680 Speaker 2: and one hundred and thirty industries. 773 00:37:53,760 --> 00:37:56,200 Speaker 3: And remember you can access Bloomberg Intelligence through b I 774 00:37:56,239 --> 00:37:58,120 Speaker 3: go on the terminal. I'm Alex Steel. 775 00:37:57,960 --> 00:38:00,000 Speaker 2: And I'm Paul Sweeney. If you're listening to us in Boss, 776 00:38:00,360 --> 00:38:02,759 Speaker 2: our new home starting September third will be ninety two 777 00:38:02,880 --> 00:38:05,520 Speaker 2: nine FM. That's the day after Labor Day. Bloomberg Radio 778 00:38:05,600 --> 00:38:08,799 Speaker 2: moving to ninety two nine FM in Boston. Stay with us. 779 00:38:08,920 --> 00:38:11,400 Speaker 2: Today's top stories and global business headlines are coming up 780 00:38:11,680 --> 00:38:12,120 Speaker 2: right now