WEBVTT - US Retail Earnings, Weight Loss Drug 0:00:02.080 --> 0:00:05.880 This is Bloomberg Intelligence with Alex Steel and Paul Sweeny. 0:00:06.000 --> 0:00:09.240 The real app performance has been the US corporate high yield. 0:00:09.400 --> 0:00:11.760 Are the companies lean enough? Have they trimmed all the fats? 0:00:11.800 --> 0:00:15.600 The semiconductor business is a really cyclical business. 0:00:15.080 --> 0:00:18.720 Breaking market headlines and corporate news from across the globe. 0:00:18.760 --> 0:00:21.400 Do investors like the M and A that we've seen? 0:00:21.600 --> 0:00:22.560 These are two. 0:00:22.520 --> 0:00:25.120 Big time blue chip companies. 0:00:24.960 --> 0:00:29.640 Window between the peak and cut changing super fast Bloomberg. 0:00:29.200 --> 0:00:33.400 Intelligence with Alex Steel and Paul'sweeny on Bloomberg Radio. 0:00:35.400 --> 0:00:37.720 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:37.760 --> 0:00:40.080 business stories impacting Wall Street and the global markets. 0:00:40.200 --> 0:00:42.280 Each and every week we provide in depth research and 0:00:42.360 --> 0:00:44.199 data on some of the two thousand companies and one 0:00:44.280 --> 0:00:46.960 hundred and thirty industries our analysts cover worldwide. 0:00:47.080 --> 0:00:49.839 Today we'll look at why Ford Motor is recalibrating its 0:00:49.840 --> 0:00:51.720 electrification strategy yet again. 0:00:51.840 --> 0:00:53.680 Plus we're going to discuss the M and A space 0:00:53.720 --> 0:00:56.200 and the potential for what could be the biggest foreign 0:00:56.240 --> 0:00:57.800 takeover of a Japanese company. 0:00:58.000 --> 0:01:00.600 But first we dive into the biotech space. This week, 0:01:00.640 --> 0:01:03.360 a three year study showed that patients taken ELI Lilly's 0:01:03.400 --> 0:01:07.039 blockbuster weight loss shot were ninety four percent less likely 0:01:07.080 --> 0:01:08.040 to develop diabetes. 0:01:08.240 --> 0:01:10.760 ELI Lily said that this is the longest continuous study 0:01:10.760 --> 0:01:12.720 of a zep bound drug to date, and the company's 0:01:12.720 --> 0:01:14.880 shares rose to an all time high after the news. 0:01:15.080 --> 0:01:17.080 For more, Alex and I were joined by Sam Fazzelli, 0:01:17.160 --> 0:01:20.320 Bloomberg Intelligence Director of Research for Global Industries and senior 0:01:20.319 --> 0:01:21.360 pharmaceuticals analyst. 0:01:21.560 --> 0:01:23.600 We first asked Sam, what numbers we mean that literly 0:01:23.680 --> 0:01:24.840 study jumped out. 0:01:25.120 --> 0:01:28.039 Let me take you back a little bit where we 0:01:28.280 --> 0:01:30.800 not always told we went to the doctor and we 0:01:30.840 --> 0:01:34.319 started our glucose was going up. Not you guys, obviously 0:01:34.360 --> 0:01:38.440 you're a fascinatingly amazingly healthy and fit, but those who 0:01:38.520 --> 0:01:41.080 weren't and told you need to lose some weight to 0:01:41.120 --> 0:01:44.399 my friend, because you have risk of developing diabetes. So 0:01:44.560 --> 0:01:48.200 where is the shock? If you reduce weight and manage 0:01:48.200 --> 0:01:52.120 the obesity, you lose all these you know, I'll be 0:01:52.160 --> 0:01:56.880 suppeating this thing, sleep APNA, risk of developing diabetes, everything 0:01:56.920 --> 0:01:59.280 that we're talking about here. You eat less, you lose weight, 0:01:59.680 --> 0:02:04.000 let's could developing diabetes. So not exactly a shock. Nevertheless, 0:02:04.040 --> 0:02:07.040 it's great to see that it actually does what it 0:02:07.080 --> 0:02:10.400 says on the tin that by reducing weight you do 0:02:10.560 --> 0:02:14.120 manage all these side effects. But before we get too excited, 0:02:14.160 --> 0:02:17.040 I want to highlight one little wrinkle here. It's no 0:02:17.080 --> 0:02:19.640 wrinkle with the data if you read the press release, 0:02:19.639 --> 0:02:21.359 and I've got it right up here on my terminal 0:02:21.720 --> 0:02:24.520 eli Lei coming announced positive top line results from this 0:02:24.560 --> 0:02:27.919 amount one a three year study, one hundred and seventy 0:02:28.040 --> 0:02:32.880 six week treatment period. Find me somebody who stayed in 0:02:32.919 --> 0:02:35.240 the real world on this drug for one hundred and 0:02:35.280 --> 0:02:39.520 seventy six weeks, So we survey physicians. But if we 0:02:39.600 --> 0:02:43.320 find forty weeks, I'm sure it's going to go up. 0:02:43.520 --> 0:02:47.040 But that's very different settings. So how much of a 0:02:47.080 --> 0:02:50.359 real world will this actually translate into in terms of 0:02:50.600 --> 0:02:52.600 preventing diabetes. Time will tell. 0:02:52.800 --> 0:02:54.680 So you're not saying that the study was bogus. You're 0:02:54.720 --> 0:02:57.720 saying the study was real. But in reality, people don't 0:02:57.919 --> 0:03:00.480 stay that long on the drug. Therefore the result won't 0:03:00.480 --> 0:03:02.040 be as magical for them. 0:03:02.760 --> 0:03:05.600 Right in clinical trials, you get the best possible data 0:03:05.639 --> 0:03:09.519 basically because it's highly controlled. People are followed, you make 0:03:09.560 --> 0:03:12.520 sure that they stay on. There would probably have been 0:03:12.560 --> 0:03:15.560 people who have dropped off here, So maybe the actual 0:03:15.720 --> 0:03:20.560 average treatment period wasn't exactly one hundred and seventy six 0:03:20.600 --> 0:03:23.480 weeks for everybody, because people do drop off. And I'm 0:03:23.520 --> 0:03:26.280 assuming in this trial the data they're reporting to us 0:03:26.320 --> 0:03:29.680 is what's called intent to treat. I e. I've intended 0:03:29.680 --> 0:03:32.000 to treat that patience. Whatever happens to them, you still 0:03:32.040 --> 0:03:35.240 count them, even if they've fallen off the drug. Nevertheless, 0:03:35.240 --> 0:03:37.240 we need to see the detail. But in a trial 0:03:37.320 --> 0:03:39.800 setting things always look better than in real world. So 0:03:40.320 --> 0:03:43.920 here we have to remember average stay time, according to 0:03:43.960 --> 0:03:47.240 our surveys that Mark show my colleague runs every six months, 0:03:47.520 --> 0:03:49.960 is about forty weeks, similar to what we get for 0:03:50.040 --> 0:03:52.800 we go VI and people, and even the press release 0:03:52.840 --> 0:03:54.640 they say as soon as they came off, weight went 0:03:54.680 --> 0:03:56.800 back up and the risks started going up again of 0:03:56.880 --> 0:03:59.880 developing diabetes. So this is not something that you've cleaned. 0:04:00.520 --> 0:04:02.320 I can stop now at one hundred and seventy six 0:04:02.480 --> 0:04:05.000 and I'm done. It's the same story over again. 0:04:05.200 --> 0:04:07.760 Right exactly. So I look at the stock for Eli 0:04:07.800 --> 0:04:11.960 Lily Sam. How much of this stock performance is these glps? 0:04:12.400 --> 0:04:16.320 Oh gosh, if you know, if you look at the 0:04:16.400 --> 0:04:19.159 chart and look at the flow of information and news 0:04:19.240 --> 0:04:22.200 and the upgrades, et cetera that are coming to every 0:04:22.279 --> 0:04:26.159 quarter result, et cetera. Sales. I would say a meaningful 0:04:26.279 --> 0:04:28.680 chunk of this. I can't quantify it exactly because this 0:04:28.760 --> 0:04:33.400 is a company that's got other stuff going on. Alzheimer's disease, oncology, 0:04:33.920 --> 0:04:36.240 is skin diseases, et cetera. So this is not a 0:04:36.720 --> 0:04:40.160 one trick pony, but a large amount of this story. 0:04:40.200 --> 0:04:42.679 And you can tell by when somebody reports a positive 0:04:42.680 --> 0:04:45.120 results in a competitor setting, these stocks sell off four 0:04:45.160 --> 0:04:48.000 or five percent, right You remember the days with rash 0:04:48.400 --> 0:04:50.600 only three or four weeks ago, I think, right. So, 0:04:50.880 --> 0:04:53.320 and let's not forget in a few weeks time, we 0:04:53.360 --> 0:04:57.279 have the European Association for the Study of Diabetes rush's 0:04:57.320 --> 0:04:59.720 data is coming out. Somebody's going to be up three 0:04:59.800 --> 0:05:01.960 or four two percent that day, and somebody's going to 0:05:02.000 --> 0:05:04.120 be down three or four percent. Who it is, we'll 0:05:04.120 --> 0:05:05.159 see what the data says. 0:05:05.640 --> 0:05:08.360 The point that you made that if people come off 0:05:08.400 --> 0:05:10.440 it and they gain the weight back, so in that sense, 0:05:10.440 --> 0:05:14.159 it's not like everlastingly magical. Will there be iterations though, 0:05:14.400 --> 0:05:15.839 where that won't be the case. 0:05:16.960 --> 0:05:19.200 And there's two ways of dealing with this. So you 0:05:19.240 --> 0:05:21.000 go on the drug, you come off the drug, you 0:05:21.040 --> 0:05:22.600 go back on the drug, you come off the drug, 0:05:22.640 --> 0:05:25.520 and you just do your cycling every few years after 0:05:25.560 --> 0:05:27.920 you've got to a point where you think, I don't 0:05:27.920 --> 0:05:30.320 know why people come off the drug necessarily on an 0:05:30.360 --> 0:05:32.720 average is it side effect tends to get a lot 0:05:32.720 --> 0:05:37.400 better over time, and maybe it's cost. Maybe it's because 0:05:37.400 --> 0:05:40.080 they're fed up taking an injection every week. So if 0:05:40.080 --> 0:05:42.159 you put all those things together, as they get cheaper 0:05:42.839 --> 0:05:46.200 and injections become once a month, maybe or they become 0:05:46.320 --> 0:05:48.479 oral for the maintenance phase of the dose, and that 0:05:48.720 --> 0:05:52.320 oral doesn't make you feel ill every time you take 0:05:52.360 --> 0:05:55.239 it in terms of gastric intestinal maybe that's the future. 0:05:55.360 --> 0:05:59.760 Maybe there are other modalities. Amilin is one that no 0:05:59.760 --> 0:06:04.360 One and Zealand Farm are developing as a target that 0:06:04.480 --> 0:06:07.000 seems to have less side effect issues. Maybe you can 0:06:07.040 --> 0:06:10.640 maintain your weight loss by those drugs which don't have 0:06:10.680 --> 0:06:13.640 the same side effect issue. So that has to be 0:06:13.680 --> 0:06:15.920 the way that you see it, But nobody ever complies 0:06:15.960 --> 0:06:17.960 with the drug forever our. 0:06:17.960 --> 0:06:20.800 Thanks to Sam Fazzelli, Bloomberg Intelligence, Director of Research for 0:06:20.800 --> 0:06:23.480 Global Industries and senior pharmaceuticals analysts. 0:06:23.520 --> 0:06:26.440 This week, the department store chain Macy's reported quarterly revenue 0:06:26.440 --> 0:06:27.920 that missed analyst expectations. 0:06:28.160 --> 0:06:31.440 Macy's also lowered its yearly outlook for sales. It's cited 0:06:31.440 --> 0:06:34.440 increase discounting by competitors and a more cautious consumer. 0:06:34.600 --> 0:06:37.000 On the other hand, you had TJX increasing its full 0:06:37.080 --> 0:06:40.159 year projections for comparable sales and profit. This show the 0:06:40.160 --> 0:06:43.080 company's brand choices and execution are working. 0:06:43.560 --> 0:06:45.560 For more on all of this, guest hosts Jessemett and 0:06:45.560 --> 0:06:48.520 I were joined by Mary Ross Gilbert Bloomberg Intelligence, senior 0:06:48.520 --> 0:06:51.760 equity analysts covering retail. We first asked Mary for key 0:06:51.760 --> 0:06:53.800 takeaways from Macy's most recent results. 0:06:54.000 --> 0:06:57.760 As with any turnaround, and here we are in another 0:06:57.839 --> 0:07:01.680 iteration of trying to get growth back for this. It's 0:07:01.720 --> 0:07:06.159 the largest department store Macy's. They did show traction in 0:07:06.200 --> 0:07:09.279 the first fifty stores. The comps were up one percent, 0:07:09.400 --> 0:07:11.640 and that was an improvement from the first quarter, which 0:07:11.680 --> 0:07:14.840 was up just less than one percent. But the fact 0:07:15.000 --> 0:07:17.440 is that the rest of the go forward stores were 0:07:17.480 --> 0:07:21.680 down three point seven percent. This is on a comparable basis, 0:07:21.760 --> 0:07:25.160 and it's owned plus license, so it includes license brands 0:07:25.200 --> 0:07:28.120 that they'll have you know, within the mix there. So 0:07:29.200 --> 0:07:31.760 they're showing traction in those little stores, but with the 0:07:31.800 --> 0:07:34.360 rest of the base, you know, being very weak and 0:07:34.400 --> 0:07:37.000 as they pointed out, they weren't really getting the conversion. 0:07:37.960 --> 0:07:41.360 What they're finding is you bring in sales people. Wow, 0:07:41.480 --> 0:07:45.000 that's really what if you think about department stores and 0:07:45.320 --> 0:07:47.920 where they came from, that's what they were known for 0:07:48.360 --> 0:07:52.080 in the past with service, but over the last couple 0:07:52.080 --> 0:07:54.960 of decades, the service and the salespeople have sort of 0:07:55.040 --> 0:07:57.920 left the stores. Now they're finding if they bring them 0:07:58.000 --> 0:08:01.200 back and they bring back the real brands, because one 0:08:01.200 --> 0:08:03.840 of the things that Tony Spring, CEO of the company, 0:08:04.240 --> 0:08:08.720 indicated is having newness and having the relevant brands that 0:08:08.760 --> 0:08:13.080 consumers care about. That's where you can get the impulse purchases. 0:08:13.560 --> 0:08:16.360 And so they're finding bringing in like a Carl Logger 0:08:16.480 --> 0:08:22.040 Field or a Veclove Fee, which is it's like a Parisian, 0:08:22.360 --> 0:08:26.640 a chic Parisian type brand. It's a US brand, but 0:08:26.720 --> 0:08:31.400 it has that Paris streetwear aesthetic and that's resonating really well, 0:08:31.400 --> 0:08:35.240 and they're getting very strong conversion. So bringing back service levels, 0:08:35.240 --> 0:08:38.400 bringing back the relevant brands is really making a difference 0:08:38.440 --> 0:08:41.520 in those fifty stores. So they're going to add another 0:08:41.520 --> 0:08:43.480 one hundred stores where they're going to bring in service 0:08:43.520 --> 0:08:47.119 and handbags. They did see some strong sales with handbags 0:08:47.120 --> 0:08:50.440 again in those stores with the Lauren Ralph Mourn brand. 0:08:50.960 --> 0:08:54.079 So that's where I think you're going to see some improvements. 0:08:54.440 --> 0:08:59.559 Is just really better signage, cleaner stores. We've been seeing 0:08:59.600 --> 0:09:03.240 those moments in the store that we frequent. They just 0:09:03.280 --> 0:09:05.040 need to take it across the rest of the base. 0:09:06.040 --> 0:09:08.360 And it seems like an about face because justin May, 0:09:08.400 --> 0:09:11.400 when we had heard from Macy's previously in their prior 0:09:11.800 --> 0:09:15.360 earnings report, they had beat estimates also raised the company's 0:09:15.360 --> 0:09:17.080 outlook for the remainder of the year. But as you know, 0:09:17.240 --> 0:09:20.360 this Ladist report comes on the heels of the company 0:09:20.360 --> 0:09:23.160 turning down that close to seven billion dollars buyout to 0:09:23.200 --> 0:09:25.320 offer from one of its shareholders, our Cows and of 0:09:25.320 --> 0:09:28.199 course it's partner Bridgegade Capital Management. Do we have any 0:09:28.200 --> 0:09:30.800 indication of whether or not that could be back on 0:09:30.840 --> 0:09:32.000 the table at some point. 0:09:32.840 --> 0:09:34.720 I don't know if that'll be back on the table. 0:09:35.120 --> 0:09:39.320 I really think that they weren't able to demonstrate financing. 0:09:40.000 --> 0:09:42.840 I think that was the problem with that, and I 0:09:42.880 --> 0:09:45.560 also think that the price was low because even though 0:09:45.559 --> 0:09:48.920 Macy's is showing very weak results right now and the 0:09:48.960 --> 0:09:52.319 market is showing investors don't really like what they're seeing 0:09:52.320 --> 0:09:56.079 in the quarter, it's one quarter and it's going to 0:09:56.160 --> 0:09:59.360 take time before we see real traction. So a year 0:09:59.400 --> 0:10:02.520 from now, the story could look very different if they're 0:10:02.559 --> 0:10:06.160 really able to execute on this plan closing the stores. 0:10:06.200 --> 0:10:08.480 They haven't closed the stores yet. They're going to close 0:10:08.840 --> 0:10:11.320 the first fifty five it was going to be fifty. 0:10:11.360 --> 0:10:14.400 They up to another five stores are going to close 0:10:14.440 --> 0:10:16.559 at the end of the year. They always wait until 0:10:16.679 --> 0:10:19.480 after the holidays because that's when they generate the most cash. 0:10:19.920 --> 0:10:21.920 And then of course they're going to close another one 0:10:22.000 --> 0:10:24.480 hundred stores over the next couple of years. But again, 0:10:24.559 --> 0:10:27.960 they might accelerate that, so it's going to take time 0:10:28.000 --> 0:10:31.360 to show traction. So we'll see how the third quarter 0:10:31.400 --> 0:10:33.800 and fourth quorder go, especially with some of the changes 0:10:33.800 --> 0:10:36.880 that they're making to these incremental stores. But nonetheless you 0:10:36.920 --> 0:10:40.400 can see who's gaining in. It's on the off price side. 0:10:40.720 --> 0:10:43.280 Let's go to TJX owner of TJ max stocks, hit 0:10:43.360 --> 0:10:46.640 An All time high today, what's TJX? What are they 0:10:46.640 --> 0:10:47.120 getting right? 0:10:48.440 --> 0:10:50.720 What they're getting right is they have all those brands. 0:10:50.720 --> 0:10:53.920 They have the Treasure Hunt. There's fresh merchandise in those 0:10:54.000 --> 0:10:58.600 stores every week, and the brands range from the very 0:10:58.640 --> 0:11:02.920 high end, so they'll have Gucci and Chloe handbags, and 0:11:02.960 --> 0:11:05.840 then they'll also have like Anklin. So they're sort of 0:11:05.920 --> 0:11:11.280 covering all of the demographics with their assortments and they're 0:11:11.320 --> 0:11:15.160 making it relevant by store. They have the winning formula. 0:11:15.600 --> 0:11:18.080 This is an expertise that they have built up for 0:11:18.240 --> 0:11:20.480 years and they're the largest out there. It's a fifty 0:11:20.520 --> 0:11:25.280 six billion dollars in sales company. And so in their quarter, 0:11:25.360 --> 0:11:28.160 of course they beat with a four percent comp sales 0:11:28.200 --> 0:11:30.960 and the consensus with two point seven and guidance two 0:11:31.040 --> 0:11:33.480 point you know, sort of in that one to two 0:11:33.559 --> 0:11:36.360 percent or low single digit range, and of course they 0:11:36.480 --> 0:11:39.280 raise their guidance. They're now expecting comp sales to be 0:11:39.440 --> 0:11:41.920 sort of in that three to four percent range, and 0:11:41.960 --> 0:11:44.840 they raised their EPs by about six cents. 0:11:45.040 --> 0:11:47.839 Our thanks to Mary Ross, Gilbert Bloomberg Intelligence senior ECOD 0:11:47.920 --> 0:11:48.960 analyst covering retail. 0:11:49.160 --> 0:11:50.840 Coming up, we're going to break down how the retailer 0:11:50.880 --> 0:11:53.560 Target ended a string of quarterly sales declines. 0:11:53.679 --> 0:11:56.360 You're listening to Bloomberg Intelligence on Bloomberg Radio and providing 0:11:56.400 --> 0:11:58.760 INDP research and data on two thousand companies and one 0:11:58.840 --> 0:12:01.640 hundred and thirty injtries. You can access Bloomberg Intelligence via 0:12:01.679 --> 0:12:04.000 b I go on the terminal on Paul Sweeney. 0:12:03.600 --> 0:12:05.720 And I'm Alex Steel and this is Bloomberg. 0:12:11.480 --> 0:12:14.080 Adopt Us Kids presents What do you expect when you're 0:12:14.120 --> 0:12:17.200 expecting a teenager? Learning the lingo. 0:12:17.360 --> 0:12:22.240 Goat GA t acronym stands for greatest of all time, 0:12:22.520 --> 0:12:24.840 as in spaghetti sandwiches for dinner. 0:12:25.120 --> 0:12:28.080 They're my fav Dad, You're the goat. 0:12:28.559 --> 0:12:30.560 You don't have to speak teen to be a perfect parent. 0:12:30.800 --> 0:12:32.880 Thousands of teens in foster care will love you just 0:12:32.960 --> 0:12:36.120 the same. Visit adopt us Kids dot org, brought to 0:12:36.120 --> 0:12:38.440 you by the US Department of Health and Human Services 0:12:38.480 --> 0:12:40.319 adopt Us Kids in the ad Council. 0:12:43.760 --> 0:12:48.200 This is Bloomberg Intelligence with Alex Steele and Paul Sweeney 0:12:48.480 --> 0:12:50.120 on Bloomberg Radio. 0:12:50.920 --> 0:12:53.000 We move now to earnings from the retailer Target. 0:12:53.280 --> 0:12:56.200 This week, Target reported second quarter comparable sales that rose 0:12:56.200 --> 0:12:57.720 for the first time in more than a year. 0:12:57.920 --> 0:12:59.920 This comes as the company has been focusing on cut 0:13:00.200 --> 0:13:03.319 prices on essential goods to win over inflation hit consumers. 0:13:03.600 --> 0:13:05.720 For more, guest hosts Jessman and I were joined by 0:13:05.800 --> 0:13:09.880 Jennifer Bartash's Bloomberg Intelligence senior analysts retail stables and packaged food. 0:13:10.160 --> 0:13:12.400 We first asked Jen to tell us what Target is 0:13:12.400 --> 0:13:12.839 doing right. 0:13:13.240 --> 0:13:16.040 With Target, what we're really seeing is that they sort 0:13:16.040 --> 0:13:21.800 of reaffirmed their strategy around creating newness, reducing prices, and 0:13:21.920 --> 0:13:25.080 enhancing the value perception they have with customers, and this 0:13:25.200 --> 0:13:27.600 second quarter results, we really see that that is starting 0:13:27.640 --> 0:13:30.760 to resonate, especially because they're seeing traffic going back into 0:13:30.800 --> 0:13:35.360 stores as well as online. So really positive early signs 0:13:35.400 --> 0:13:38.079 from Target that this momentum might be able to continue. 0:13:38.440 --> 0:13:41.000 What about when it comes to consumer package good companies, 0:13:41.040 --> 0:13:42.600 Because you and I have talked in the past, and 0:13:42.640 --> 0:13:45.800 we know that Richmond FED President Tom Barkin watches a 0:13:45.880 --> 0:13:47.840 price to mix very closely, and that's a lot of 0:13:47.840 --> 0:13:50.320 the data that you crunch over at Bloomberg Intelligence as 0:13:50.320 --> 0:13:52.800 far as what that means for inflation and also the 0:13:52.800 --> 0:13:55.520 direction potentially for FED policy. What are you seeing on 0:13:55.559 --> 0:13:57.800 there as we begin to get more consumer package good 0:13:57.800 --> 0:14:00.000 companies reporting as well. 0:14:00.000 --> 0:14:03.319 What we're seeing is obviously there's political pressure with a 0:14:03.360 --> 0:14:05.280 lot of rhetoric going on right now about the need 0:14:05.320 --> 0:14:09.320 to lower prices. We're seeing retailers like Walmart, like Target, 0:14:09.400 --> 0:14:12.960 like Krger, like Albertson's pushing back on package food companies 0:14:13.120 --> 0:14:15.319 who are you know, in some instances still looking to 0:14:15.360 --> 0:14:18.880 push through some selective price increases. So there is that 0:14:19.040 --> 0:14:22.440 tension that's happening kind of behind the scenes. But overall, 0:14:22.480 --> 0:14:25.520 we are seeing prices on the shelf starting to come down, 0:14:26.000 --> 0:14:29.360 and that spells relief for consumers. It's just a matter 0:14:29.400 --> 0:14:32.120 of how long it takes for them to actually recognize 0:14:32.120 --> 0:14:35.120 it and appreciate it and reward it with higher volumes 0:14:35.120 --> 0:14:35.720 that they're buying. 0:14:36.440 --> 0:14:38.600 What's Target saying about the consumer? What are the other 0:14:38.680 --> 0:14:41.600 retailers that you talk to, Jenny, you follow, what are 0:14:41.600 --> 0:14:44.080 they saying about the consumer today? Because I'm I think 0:14:44.120 --> 0:14:45.880 as investors we kind of feel like we're getting mixed 0:14:45.880 --> 0:14:47.000 messages about the consumer. 0:14:48.000 --> 0:14:50.480 Yeah, I think when you're talking about the staple space, 0:14:50.520 --> 0:14:53.200 which is you know, where these companies that I follow fall, 0:14:53.960 --> 0:14:57.600 it's that the consumer is not getting worse, They're not 0:14:57.640 --> 0:15:01.080 necessarily getting better, but they're sort of holding study. And 0:15:01.360 --> 0:15:03.360 you know, part of that is that we've had some 0:15:03.400 --> 0:15:06.280 consumers you kind of trade down into those middle tier 0:15:06.360 --> 0:15:09.280 stores or even to some of the discount stores in 0:15:09.360 --> 0:15:11.320 order to save a little bit of money. So the 0:15:11.360 --> 0:15:14.680 companies in this space are pretty well positioned because they 0:15:14.680 --> 0:15:17.360 do well no matter what the economic circumstances are. And 0:15:17.400 --> 0:15:21.160 I think that's showing through with the results. But they're saying, 0:15:21.200 --> 0:15:24.200 you know, consumers are spending, but it's still very thoughtfully 0:15:24.840 --> 0:15:27.440 and so the things that will attract them to spending 0:15:27.720 --> 0:15:31.800 is your merchandise mix, your newness, your convenience, the quality 0:15:32.400 --> 0:15:34.720 things that will then tempt them into into spending the 0:15:34.760 --> 0:15:36.680 dollars that they're managing very carefully. 0:15:37.040 --> 0:15:39.520 You've talked a lot about how you're expecting more consumer 0:15:39.560 --> 0:15:42.760 package good companies to roll out promotions in the second 0:15:42.760 --> 0:15:44.680 half of the year, like buy one, get one free, 0:15:44.720 --> 0:15:46.280 buy one, get one fifty percent off. What are you 0:15:46.280 --> 0:15:48.400 seeing so far with that as far as what companies 0:15:48.440 --> 0:15:50.000 are saying on these earnings calls. 0:15:50.440 --> 0:15:53.880 Yeah, promotions have definitely accelerated and we are back at 0:15:54.080 --> 0:15:56.160 sort of the levels that we were at before the pandemic. 0:15:56.560 --> 0:15:58.920 What's interesting is most of these companies say that they're 0:15:58.960 --> 0:16:02.080 able to be more percone, so that it's not just 0:16:02.120 --> 0:16:04.320 a blanket offer like you used to see on the 0:16:04.600 --> 0:16:07.280 front of an insert or a mailer. But they're sort 0:16:07.320 --> 0:16:10.440 of targeting promotions to customers based on what they buy, 0:16:10.800 --> 0:16:13.520 so they're able to preserve a little bit of profitability 0:16:13.600 --> 0:16:16.880 and still offer higher discounts. And so I think that's 0:16:16.920 --> 0:16:19.440 that's a pattern that we're expecting to continue through the 0:16:19.440 --> 0:16:21.920 second half and probably into twenty twenty five as well. 0:16:22.080 --> 0:16:25.160 All right, thanks to Jennifer Bartasha's Bloomberg Intelligence Senior analyst. 0:16:25.240 --> 0:16:27.040 Retail stables and packaged food. 0:16:27.200 --> 0:16:28.840 Move next to the automotive industry. 0:16:29.120 --> 0:16:31.400 This week, Ford Motors that it is canceling plans for 0:16:31.440 --> 0:16:34.640 a fully electric sport utility vehicle. It is a shift 0:16:34.680 --> 0:16:36.840 that may cost the car maker around one point nine 0:16:36.920 --> 0:16:37.840 billion dollars. 0:16:38.200 --> 0:16:40.080 For more of this, guest host Jess Mett and I 0:16:40.120 --> 0:16:42.840 were joined by Steve Man, Bloomberg Intelligence Global Autos and 0:16:42.880 --> 0:16:46.320 Industrials research analysts. We first asked Steve, what's going on 0:16:46.440 --> 0:16:49.200 with legacy auto companies and their transition to evs. 0:16:49.760 --> 0:16:51.960 Yeah, it's a huge kind of one eighty. 0:16:51.800 --> 0:16:53.280 Turn for Ford. 0:16:53.880 --> 0:16:56.640 Remember you know, they were probably one of the first 0:16:56.720 --> 0:17:00.560 Western automakers to actually introduce evs, your the must Machy, 0:17:01.360 --> 0:17:04.440 the fort one F Lightning, and you know, they're still 0:17:04.480 --> 0:17:07.520 selling well, but I think it's they're actually bleeding quite 0:17:07.560 --> 0:17:09.920 a bit of money in the last twelve months. They've 0:17:09.920 --> 0:17:14.600 lost five billion on evs, So you know, I think, 0:17:14.680 --> 0:17:17.639 you know, they need to revisit and see instead of 0:17:17.680 --> 0:17:21.280 a market leader in evs, they probably needs to know, 0:17:21.320 --> 0:17:24.960 step back and maybe become a follower until the market recovers. 0:17:25.119 --> 0:17:27.120 All right, Steve, This kind of goes to the heart 0:17:27.160 --> 0:17:30.040 of the matter. I think for me and probably a 0:17:30.040 --> 0:17:34.760 lot of investors in this auto industry is what really 0:17:35.000 --> 0:17:38.680 at the end of the day is consumer demand for evs? 0:17:39.480 --> 0:17:42.399 Is it fair to say it's not as much today 0:17:42.440 --> 0:17:44.840 as maybe the industry thought two three years ago. 0:17:45.359 --> 0:17:48.439 Yeah, I think the estimates out there in the past 0:17:48.520 --> 0:17:51.760 were probably a little bit frothy, Like we're actually expecting, 0:17:52.359 --> 0:17:56.399 you know, penetration to be around twenty five maybe thirty 0:17:56.440 --> 0:18:00.240 percent by twenty thirty, but other estimates out there, we're 0:18:00.480 --> 0:18:04.520 like fifty seventy five percent penetration rate by twenty thirty. 0:18:04.920 --> 0:18:07.520 It's a little bit too aggressive. I think we're just 0:18:07.600 --> 0:18:11.199 coming back through reality from the hype we have. But 0:18:11.240 --> 0:18:14.440 the other thing is there's a lot of competition out there, right. 0:18:14.520 --> 0:18:19.880 The Chinese are really looking to compete with the legacy 0:18:19.920 --> 0:18:25.600 auto makers on cost, on technology, and you know that 0:18:25.640 --> 0:18:28.720 brings up another question that I think investors have in 0:18:28.760 --> 0:18:31.399 their mind is, you know, is this the right strategy 0:18:31.440 --> 0:18:34.440 for Ford really to step back at this moment? Should 0:18:34.480 --> 0:18:38.080 they be doubling down right, investing more and really compete 0:18:38.160 --> 0:18:39.480 on a global level. 0:18:40.080 --> 0:18:42.160 And you've written about too when it comes to Ford 0:18:42.320 --> 0:18:46.320 and the rising inventories as well as the increasing price competition. 0:18:46.680 --> 0:18:50.320 When it comes to a profitability headwind here, what as 0:18:50.480 --> 0:18:52.359 we know as far as what the rest of the 0:18:52.440 --> 0:18:54.520 year could look like when it comes to those earnings 0:18:54.600 --> 0:18:56.800 calls that executives have talked about. 0:18:57.240 --> 0:18:59.480 Oh, there's a lot of risk in the second half. 0:19:00.359 --> 0:19:03.919 I think we're heading back to pre COVID levels, you know, 0:19:04.080 --> 0:19:08.640 with the supply chains booth out, they're ramping up production 0:19:09.160 --> 0:19:11.560 and at the same time, interest rate is still high. Right, 0:19:11.640 --> 0:19:14.880 there are talks about cutting interest rates to help out 0:19:14.920 --> 0:19:17.920 the consumers, but you know, we haven't seen that yet, 0:19:17.960 --> 0:19:20.400 and you know we you know it probably needs more 0:19:20.400 --> 0:19:22.280 than a couple of cuts before we get to a 0:19:22.320 --> 0:19:25.800 point where consumer gets more excited about buying. You know, 0:19:26.520 --> 0:19:29.920 a much more expensive vehicle today than it was three 0:19:30.000 --> 0:19:32.959 years ago. You know, average price for vehicles fifty thousand 0:19:32.960 --> 0:19:36.000 dollars now is not thirty five, it's not forty, it's 0:19:36.040 --> 0:19:39.040 fifty thousand. So you know, monthly cost is a lot 0:19:39.119 --> 0:19:42.320 higher for consumer. The cost of acquisition, the cost of 0:19:42.359 --> 0:19:45.119 ownership is much higher today than before our. 0:19:45.000 --> 0:19:47.480 Thanks to Steve Mann Bloomberg Intelligence Global Auto is an 0:19:47.480 --> 0:19:48.760 industrial's research analyst. 0:19:49.119 --> 0:19:50.920 We now take a deep dive into one of our 0:19:50.960 --> 0:19:53.800 favorite Bloomberg Big Take stories of the week from Bloomberg News. 0:19:53.920 --> 0:19:57.000 It is titled A two trillion dollar Reckoning Looms at 0:19:57.000 --> 0:20:00.600 Ports Become Pawns and Geopolitics Now. The piece discusses how 0:20:00.600 --> 0:20:03.080 the world's biggest ports are vital ponds in a new 0:20:03.119 --> 0:20:06.560 area of geopolitics. They're spending billions to keep up with 0:20:06.640 --> 0:20:07.600 demand for more. 0:20:07.640 --> 0:20:09.280 Guest host j Just Mett and I were joined by 0:20:09.359 --> 0:20:12.879