1
00:00:02,720 --> 00:00:10,520
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

2
00:00:10,560 --> 00:00:14,520
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

3
00:00:14,560 --> 00:00:17,799
Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

4
00:00:17,880 --> 00:00:21,000
Speaker 1: Business App. Listen on demand wherever you get your podcasts,

5
00:00:21,320 --> 00:00:23,040
Speaker 1: or watch us live on YouTube.

6
00:00:23,560 --> 00:00:25,799
Speaker 2: Stay with Autos for just a moment. Craig Trudella's Bloomberg

7
00:00:25,800 --> 00:00:29,040
Speaker 2: Global Autos Editor and joins us now Craig. At the

8
00:00:29,080 --> 00:00:31,560
Speaker 2: same time, we also got the news that Tesla's estimates

9
00:00:31,600 --> 00:00:36,159
Speaker 2: were cut further by an analyst unquote unprecedented brand damage.

10
00:00:36,240 --> 00:00:39,040
Speaker 2: What's the conversation with zeitgeist around that right now?

11
00:00:40,440 --> 00:00:44,639
Speaker 3: I think over here in Europe it's particularly bleak when

12
00:00:44,680 --> 00:00:47,440
Speaker 3: you look at some of the numbers. Just yesterday we

13
00:00:47,520 --> 00:00:53,000
Speaker 3: saw the full figures for Tesla and Germany in the

14
00:00:53,040 --> 00:00:55,840
Speaker 3: first quarter for them to have some you know, some

15
00:00:55,880 --> 00:00:58,480
Speaker 3: months in the beginning of this year, they were down

16
00:00:58,520 --> 00:01:01,480
Speaker 3: more than seventy percent. And that's in a country where

17
00:01:01,520 --> 00:01:04,000
Speaker 3: they where they build vehicles, where you would think that

18
00:01:04,040 --> 00:01:06,679
Speaker 3: they would perhaps have have built up some goodwill on

19
00:01:06,720 --> 00:01:10,319
Speaker 3: the basis of employing quite a lot of people outside

20
00:01:10,360 --> 00:01:14,000
Speaker 3: of Berlin at their factory, and yet for Musk to

21
00:01:14,200 --> 00:01:18,360
Speaker 3: sort of intervene in the federal election in February in

22
00:01:18,400 --> 00:01:21,640
Speaker 3: a way that was highly unpopular and for some of

23
00:01:21,680 --> 00:01:23,960
Speaker 3: the protests that we've seen across the US to also

24
00:01:24,240 --> 00:01:26,640
Speaker 3: you know carry over here where you know, we've seen

25
00:01:26,720 --> 00:01:30,600
Speaker 3: dealerships get you know, paint tossed on them, cars you know,

26
00:01:30,640 --> 00:01:35,520
Speaker 3: set on fire. It's it's really intense the backlash that

27
00:01:35,520 --> 00:01:36,600
Speaker 3: we've seen against Musk.

28
00:01:37,240 --> 00:01:40,280
Speaker 4: So Craig, I'm trying to get a sense how much

29
00:01:40,319 --> 00:01:42,959
Speaker 4: of their sales weakness is due to some of that

30
00:01:43,200 --> 00:01:46,840
Speaker 4: backlash against Elon Musk versus maybe some of the model

31
00:01:46,920 --> 00:01:49,840
Speaker 4: why introduction and the change over there of lines. Do

32
00:01:49,880 --> 00:01:53,080
Speaker 4: we have make any sense as to what's you know,

33
00:01:53,120 --> 00:01:54,840
Speaker 4: the kind of the percentage between those two.

34
00:01:56,120 --> 00:01:57,200
Speaker 3: It's it's really difficult.

35
00:01:57,240 --> 00:01:59,200
Speaker 5: I think we are going to be spending the next

36
00:01:59,200 --> 00:02:03,160
Speaker 5: you know, probably months, maybe quarters, uh, you know, unpacking

37
00:02:03,280 --> 00:02:06,480
Speaker 5: what exactly the dynamics are here, because you know, to

38
00:02:06,520 --> 00:02:09,160
Speaker 5: your point, they did have a sort of you know,

39
00:02:09,280 --> 00:02:11,920
Speaker 5: self inflicted disruption that I should point out is not

40
00:02:12,360 --> 00:02:16,120
Speaker 5: unusual in the auto industry, even very experienced you know, carmakers,

41
00:02:16,520 --> 00:02:18,919
Speaker 5: when they go from one generation of vehicle to the next,

42
00:02:18,960 --> 00:02:21,960
Speaker 5: they often need to do some retooling and take the factory,

43
00:02:22,400 --> 00:02:24,880
Speaker 5: you know, down a bit, you know, work on the

44
00:02:24,880 --> 00:02:27,600
Speaker 5: production lines. Tesla in this case had to do that

45
00:02:27,919 --> 00:02:30,280
Speaker 5: at all of its factories around the world because they

46
00:02:30,320 --> 00:02:33,560
Speaker 5: make them model y everywhere, and you know, so that

47
00:02:33,560 --> 00:02:36,680
Speaker 5: that was a substantial disruption for them in the first

48
00:02:36,720 --> 00:02:39,080
Speaker 5: quarter that we shouldn't sort of lose sight of. I

49
00:02:39,120 --> 00:02:42,480
Speaker 5: do think that, you know, it can't be a coincidence

50
00:02:42,520 --> 00:02:45,720
Speaker 5: that in a place like Germany, where you've seen a

51
00:02:45,840 --> 00:02:48,960
Speaker 5: Musk poll so poorly, and you know where he so

52
00:02:49,160 --> 00:02:53,560
Speaker 5: asserted himself so emphatically. You know, you look at those

53
00:02:53,600 --> 00:02:56,360
Speaker 5: figures and even as you've seen some some weakness for

54
00:02:56,440 --> 00:02:59,560
Speaker 5: Tesla and other parts of Europe, we haven't seen it

55
00:02:59,600 --> 00:03:02,360
Speaker 5: be as drastic as we've seen it in Germany. So

56
00:03:02,400 --> 00:03:05,040
Speaker 5: I think, you know, to your question, I think there's

57
00:03:05,080 --> 00:03:07,119
Speaker 5: there's absolutely a bit of both, and it's a little

58
00:03:07,160 --> 00:03:09,320
Speaker 5: bit it's going to take us probably some months, maybe

59
00:03:09,320 --> 00:03:11,919
Speaker 5: some quarters to sort out, you know, just how much

60
00:03:11,960 --> 00:03:14,120
Speaker 5: sort of lasting damage has been done here and whether

61
00:03:14,600 --> 00:03:17,040
Speaker 5: you know they can lure buyers back with this fresh product.

62
00:03:17,720 --> 00:03:19,800
Speaker 2: I have to say, you know, you look at if

63
00:03:19,840 --> 00:03:22,120
Speaker 2: you do Tesla equity in the dees. You get all

64
00:03:22,160 --> 00:03:24,640
Speaker 2: the good information on Tesla right away. You look at

65
00:03:24,800 --> 00:03:27,760
Speaker 2: a PE ratio is still one hundred and twelve times.

66
00:03:27,919 --> 00:03:29,880
Speaker 2: You look at the PE ratio of in Nvidia and

67
00:03:29,919 --> 00:03:32,040
Speaker 2: it's thirty two times, just meaning that it is still

68
00:03:32,080 --> 00:03:36,160
Speaker 2: incredibly expensive when you look at it from that metric. Hey, Craig,

69
00:03:36,200 --> 00:03:38,960
Speaker 2: really good perspective. Thank you so very much. Craig Trudel,

70
00:03:39,000 --> 00:03:42,200
Speaker 2: Bloomberg Global Autos Editor, joining us on the overall impact

71
00:03:42,240 --> 00:03:46,240
Speaker 2: of terroriffs but really brand reputational damage when it comes

72
00:03:46,760 --> 00:03:47,800
Speaker 2: to Tesla.

73
00:03:48,480 --> 00:03:48,760
Speaker 6: Wow.

74
00:03:49,440 --> 00:03:50,080
Speaker 2: This is a week.

75
00:03:51,840 --> 00:03:55,520
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

76
00:03:55,600 --> 00:03:58,680
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

77
00:03:58,720 --> 00:04:02,000
Speaker 1: Auto with the Bloomberg Business Up. Listen on demand wherever

78
00:04:02,080 --> 00:04:06,600
Speaker 1: you get your podcasts, or watch us live on YouTube's.

79
00:04:05,720 --> 00:04:06,680
Speaker 4: One of the things we want to do in this

80
00:04:06,680 --> 00:04:10,080
Speaker 4: Bloomberg Intelligence programs talk to the analysts that Bloomberg Intelligence

81
00:04:10,480 --> 00:04:12,760
Speaker 4: and talk to us about their sectors.

82
00:04:12,960 --> 00:04:13,840
Speaker 7: Let's do that right now.

83
00:04:13,880 --> 00:04:17,280
Speaker 4: With Herman changing all was the regional banks for Bloomberg Intelligence.

84
00:04:18,040 --> 00:04:19,520
Speaker 2: I was gonna say, it's never good when you see

85
00:04:19,560 --> 00:04:21,600
Speaker 2: him in studio because it always something is going to

86
00:04:21,640 --> 00:04:24,880
Speaker 2: be blown up we see Herman. Otherwise when we ignore Herman,

87
00:04:25,000 --> 00:04:26,360
Speaker 2: it's like, oh, everything's.

88
00:04:25,960 --> 00:04:27,360
Speaker 7: Fine and kind good.

89
00:04:28,000 --> 00:04:31,599
Speaker 4: So how do you view from the banks perspective a

90
00:04:31,680 --> 00:04:34,240
Speaker 4: world where it seems like we're in a trade war here, right?

91
00:04:34,440 --> 00:04:37,520
Speaker 8: Well, banks are ultimately a reflection of their economies that

92
00:04:37,560 --> 00:04:42,599
Speaker 8: they operate in, and when the economic expectations are in flux,

93
00:04:42,760 --> 00:04:46,120
Speaker 8: then typically there's some pain for the banks, and that's

94
00:04:46,160 --> 00:04:47,080
Speaker 8: where we are today.

95
00:04:47,720 --> 00:04:49,720
Speaker 1: We have while all the.

96
00:04:49,920 --> 00:04:53,120
Speaker 8: Bad news has been reflected in the stocks, the fundamental

97
00:04:53,240 --> 00:04:57,239
Speaker 8: performance is still sort of shaking out. I would say

98
00:04:57,320 --> 00:05:01,159
Speaker 8: that we're coming up on first qu results in the

99
00:05:01,200 --> 00:05:03,400
Speaker 8: next couple of weeks, and so we'll get a better

100
00:05:03,440 --> 00:05:07,640
Speaker 8: picture of guidance changes performance going forward. But right now

101
00:05:08,440 --> 00:05:11,000
Speaker 8: we're still waiting to see where the shoes going to

102
00:05:11,040 --> 00:05:13,600
Speaker 8: drop in terms of loan growth, credit quality, et cetera.

103
00:05:13,720 --> 00:05:16,080
Speaker 2: And that's my question because I understand the big banks

104
00:05:16,080 --> 00:05:19,479
Speaker 2: getting hit in part because the capital markets are just

105
00:05:19,480 --> 00:05:21,440
Speaker 2: going to freeze up, Like forget IPOs, M and e's,

106
00:05:21,440 --> 00:05:22,719
Speaker 2: we're going to put that on the side. Okay, that

107
00:05:22,800 --> 00:05:24,520
Speaker 2: kind of makes sense, But the regional banks may not

108
00:05:24,600 --> 00:05:26,440
Speaker 2: have the same kind of exposure, right, and the real

109
00:05:26,480 --> 00:05:29,200
Speaker 2: economy the hard data is still fine, right, So were

110
00:05:29,200 --> 00:05:32,279
Speaker 2: you surprised at the extent to which your sector got hit.

111
00:05:32,800 --> 00:05:37,200
Speaker 8: Every time there's worries about the economy, these bank stocks

112
00:05:37,240 --> 00:05:41,400
Speaker 8: sort of get hit first and then investors ask questions later.

113
00:05:41,520 --> 00:05:45,480
Speaker 8: So that's where we are today. Valuations have come down,

114
00:05:45,600 --> 00:05:49,480
Speaker 8: and there's just a lot of worries about future credit quality,

115
00:05:50,120 --> 00:05:54,360
Speaker 8: the guidance coming down, loan growth fees coming down, top

116
00:05:54,400 --> 00:05:56,120
Speaker 8: lines coming down. So there's going to be a lot

117
00:05:56,160 --> 00:06:01,440
Speaker 8: of revisions going forward if these terrorists do really materialize.

118
00:06:02,200 --> 00:06:04,599
Speaker 4: So I guess one of the things we're hearing, and

119
00:06:04,680 --> 00:06:06,760
Speaker 4: we've heard it, you know, all the years we're building

120
00:06:06,800 --> 00:06:08,359
Speaker 4: up to this tariff day. Now it's just kind of

121
00:06:08,360 --> 00:06:12,320
Speaker 4: reflected in the financial markets is just I just don't

122
00:06:12,560 --> 00:06:13,560
Speaker 4: feel like doing anything.

123
00:06:13,600 --> 00:06:13,880
Speaker 7: I don't know.

124
00:06:13,880 --> 00:06:16,240
Speaker 4: If I'm a CEO, I don't want to buy a company.

125
00:06:16,680 --> 00:06:18,120
Speaker 4: If I'm a consumer, I don't want to make that

126
00:06:18,160 --> 00:06:20,760
Speaker 4: big expenditure from the washing machine or the car or whatever,

127
00:06:21,320 --> 00:06:24,560
Speaker 4: And that means I probably don't need growth capital, right.

128
00:06:24,400 --> 00:06:26,280
Speaker 7: So if I'm a bank, I'm probably not writing too

129
00:06:26,279 --> 00:06:28,040
Speaker 7: many loans these days exactly.

130
00:06:28,560 --> 00:06:31,640
Speaker 8: And that's actually been happening over the past few years.

131
00:06:32,080 --> 00:06:35,640
Speaker 8: Given the uncertainty with interest rates first and then regulation

132
00:06:35,880 --> 00:06:38,640
Speaker 8: under the Biden administration, there was just a lot of

133
00:06:39,520 --> 00:06:42,039
Speaker 8: demand that was just on the sidelines, and you've seen

134
00:06:42,080 --> 00:06:44,800
Speaker 8: that reflected in loan growth for the industry. It really

135
00:06:44,880 --> 00:06:47,159
Speaker 8: hasn't moved a lot over the past couple of years,

136
00:06:47,440 --> 00:06:50,880
Speaker 8: and the expectations heading into this year was that Donald

137
00:06:50,880 --> 00:06:54,120
Speaker 8: Trump and the administration was really going to unleash more

138
00:06:54,160 --> 00:06:59,200
Speaker 8: activity from a deep regulation. But now the trade spats

139
00:06:59,200 --> 00:07:01,560
Speaker 8: and just the chaos that's happening over the past couple

140
00:07:01,600 --> 00:07:04,599
Speaker 8: of days, everything really continues to be on the sideline.

141
00:07:04,680 --> 00:07:06,400
Speaker 2: Something any kind of like regional m and A that

142
00:07:06,400 --> 00:07:08,240
Speaker 2: we've all been expecting for the last couple of years,

143
00:07:08,240 --> 00:07:08,720
Speaker 2: that's not going.

144
00:07:08,680 --> 00:07:10,480
Speaker 7: To happen banks right right exactly.

145
00:07:10,960 --> 00:07:14,360
Speaker 8: There has been some news that the Discovery Capital wind

146
00:07:14,360 --> 00:07:17,360
Speaker 8: deal could be pushed through with the dj giving the

147
00:07:17,400 --> 00:07:19,480
Speaker 8: green light to that. So now we're waiting on the

148
00:07:19,520 --> 00:07:22,840
Speaker 8: FED and other bank regulators the weigh in, so that

149
00:07:22,880 --> 00:07:25,400
Speaker 8: could be a good litmus test going forward. But still

150
00:07:25,480 --> 00:07:28,560
Speaker 8: there's a lot of uncertainty involved.

151
00:07:28,440 --> 00:07:31,000
Speaker 4: When you see an economy slow down like it. Here's

152
00:07:31,040 --> 00:07:33,920
Speaker 4: the US economy is doing. Where's the first place you

153
00:07:33,960 --> 00:07:36,960
Speaker 4: see it from a regional bank. Is it credit quality

154
00:07:37,040 --> 00:07:38,240
Speaker 4: is slowing loan growth?

155
00:07:38,240 --> 00:07:39,000
Speaker 7: What do you see it first?

156
00:07:39,200 --> 00:07:41,600
Speaker 8: Yeah, well it's going to be slowing loan growth and

157
00:07:41,640 --> 00:07:44,040
Speaker 8: it's going to be sort of the delinquencies, right So

158
00:07:44,240 --> 00:07:48,360
Speaker 8: these thirty day past new metrics, ninety day past new metrics,

159
00:07:48,360 --> 00:07:51,120
Speaker 8: so those will start trickling in. And then there's other

160
00:07:52,320 --> 00:07:55,280
Speaker 8: early warning signs for credit quality that the banks talk

161
00:07:55,360 --> 00:07:59,560
Speaker 8: about that there's some bank bank parlance, it's called criticized loans.

162
00:08:00,320 --> 00:08:04,160
Speaker 8: Loans that may not be passed due yet, but the

163
00:08:04,200 --> 00:08:06,840
Speaker 8: bank knows that there's some problems with the borrower or

164
00:08:06,880 --> 00:08:09,720
Speaker 8: the project, so they'll flag it as a potential problem.

165
00:08:09,760 --> 00:08:12,160
Speaker 8: So those are sort of the metrics that we look

166
00:08:12,160 --> 00:08:13,960
Speaker 8: out for every reporting season.

167
00:08:15,400 --> 00:08:20,040
Speaker 2: Which banks in your coverage are pretty well set up

168
00:08:20,080 --> 00:08:21,920
Speaker 2: to manage this kind of environment right now?

169
00:08:22,000 --> 00:08:24,360
Speaker 8: Yeah, I think the market is telling you some things.

170
00:08:24,520 --> 00:08:27,240
Speaker 8: We just put up something on MRR looking at the

171
00:08:27,240 --> 00:08:30,320
Speaker 8: five day performance of the KBW index, and it shows

172
00:08:30,840 --> 00:08:34,800
Speaker 8: the trust banks like Bank of New York, Mellon Northern

173
00:08:34,840 --> 00:08:37,880
Speaker 8: Trust holding up fairly well. M and T and P

174
00:08:38,000 --> 00:08:39,600
Speaker 8: and C are the ones in my region and bank

175
00:08:39,640 --> 00:08:42,480
Speaker 8: coverage that are holding up very fairly well, and then

176
00:08:42,480 --> 00:08:45,640
Speaker 8: there are others, smaller regionals that are are faring worse.

177
00:08:47,120 --> 00:08:50,240
Speaker 9: Can interest bring some breaking news to Yeah, the NASTAQ

178
00:08:50,320 --> 00:08:54,480
Speaker 9: one hundred just entered a bear market, down twenty percent

179
00:08:54,559 --> 00:08:57,559
Speaker 9: from it. I know it's just numbers, but.

180
00:08:57,240 --> 00:08:59,800
Speaker 4: But no, I mean a bear market. We haven't talked

181
00:09:00,000 --> 00:09:01,280
Speaker 4: out of bear marketing quite some time.

182
00:09:01,400 --> 00:09:05,000
Speaker 2: But they're numbers, but they're also headlines. Yeah, that's you know,

183
00:09:05,080 --> 00:09:05,880
Speaker 2: that's part of it too.

184
00:09:06,360 --> 00:09:08,520
Speaker 7: There's people's iras and the four to one case there.

185
00:09:08,559 --> 00:09:10,240
Speaker 2: I mean, I'm not looking at that. Who's looking at that?

186
00:09:10,280 --> 00:09:12,160
Speaker 2: Any of you guys look at that? Look, I'm not

187
00:09:13,120 --> 00:09:16,720
Speaker 2: one on one care I'm not looking for twenty more years.

188
00:09:16,760 --> 00:09:17,680
Speaker 6: Just gonna sit there.

189
00:09:17,720 --> 00:09:20,600
Speaker 2: And that's the story. Okay, And then before I let

190
00:09:20,600 --> 00:09:22,599
Speaker 2: you go real quick, carman, what is like sort of

191
00:09:22,679 --> 00:09:25,760
Speaker 2: the the type of bank that's going to struggle the most.

192
00:09:26,040 --> 00:09:30,000
Speaker 8: Yeah, it's going to be the banks that have still

193
00:09:30,000 --> 00:09:33,240
Speaker 8: been dinged during the prior regional bank crisis. Probably they'll

194
00:09:33,280 --> 00:09:35,880
Speaker 8: be in the headline still. So yeah, the banks that

195
00:09:36,000 --> 00:09:38,880
Speaker 8: have have sort of weathered it, but there's always that

196
00:09:38,960 --> 00:09:42,840
Speaker 8: recent history that all investors going back to, so banks

197
00:09:42,960 --> 00:09:47,600
Speaker 8: like Western Alliance and and others that that were sort

198
00:09:47,640 --> 00:09:50,680
Speaker 8: of teetering during that time probably get pushed a bit

199
00:09:50,720 --> 00:09:54,360
Speaker 8: more by investors, but we think that they're they're balance

200
00:09:54,400 --> 00:09:56,880
Speaker 8: sheet and the deposits are really strong going forward.

201
00:09:57,559 --> 00:10:00,320
Speaker 2: All right, Herman, thanks a lot, really appreciate it. Herman

202
00:10:00,360 --> 00:10:02,679
Speaker 2: Chan joining us in studio, always good to get your perspective.

203
00:10:04,320 --> 00:10:08,000
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

204
00:10:08,080 --> 00:10:11,440
Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto

205
00:10:11,559 --> 00:10:14,640
Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

206
00:10:14,679 --> 00:10:18,120
Speaker 1: get your podcasts, or watch us live on YouTube.

207
00:10:18,480 --> 00:10:21,199
Speaker 2: All right, let's go now to tech and where we

208
00:10:21,240 --> 00:10:22,719
Speaker 2: are in that market after the big sell up on

209
00:10:22,760 --> 00:10:25,640
Speaker 2: a rug run a Bloomberg Intelligence and your technology analysts.

210
00:10:25,600 --> 00:10:28,040
Speaker 2: All right, Honora, what stops the bleeding here for tech?

211
00:10:29,640 --> 00:10:31,640
Speaker 6: That we need a few more of those announcements that

212
00:10:31,720 --> 00:10:34,360
Speaker 6: other countries are willing to negotiate as well, because unless

213
00:10:34,400 --> 00:10:36,760
Speaker 6: that happens, you know, it'll be very tough to figure

214
00:10:36,800 --> 00:10:39,400
Speaker 6: out where the bottom is in terms of fundamentals for

215
00:10:39,520 --> 00:10:40,520
Speaker 6: any of these companies.

216
00:10:40,920 --> 00:10:43,880
Speaker 4: Yeah, Onrack, we had Dan ives in studio earlier this

217
00:10:43,920 --> 00:10:48,480
Speaker 4: morning on surveillance, and it's by far the most cautious.

218
00:10:48,480 --> 00:10:50,439
Speaker 4: I've ever heard him in on Granted he's a very

219
00:10:50,440 --> 00:10:53,599
Speaker 4: bullish analyst by nature, but he's saying, basically, this is

220
00:10:53,600 --> 00:10:56,240
Speaker 4: a black swan event for technology and you know, unless

221
00:10:56,880 --> 00:10:59,960
Speaker 4: it changes, you know, this is a long term head

222
00:11:00,080 --> 00:11:03,320
Speaker 4: win for tech and I guess that kind of goes

223
00:11:04,160 --> 00:11:06,680
Speaker 4: is there. And he even went to the to the

224
00:11:06,760 --> 00:11:09,600
Speaker 4: level on a Raja saying he'd be surprised that if

225
00:11:09,840 --> 00:11:13,080
Speaker 4: many of his companies even provide guidance in the upcoming

226
00:11:13,120 --> 00:11:16,280
Speaker 4: earnings here, So as you talk to clients, what's the

227
00:11:16,320 --> 00:11:18,319
Speaker 4: mood at there? Is there anybody saying I feel the

228
00:11:18,360 --> 00:11:20,520
Speaker 4: bottom here? These are great companies. I can buy him

229
00:11:20,559 --> 00:11:23,240
Speaker 4: cheap here? What are the conversations like?

230
00:11:24,200 --> 00:11:26,080
Speaker 6: I think the biggest thing is like how long is

231
00:11:26,120 --> 00:11:28,800
Speaker 6: this malay is going to last? On the uncertainty side

232
00:11:28,800 --> 00:11:31,400
Speaker 6: of it, because you know, frankly, if you extrapolate and

233
00:11:31,440 --> 00:11:33,960
Speaker 6: see what Nazdak has done over the last three years,

234
00:11:34,080 --> 00:11:37,000
Speaker 6: it has been phenomenal since Chad Gibaut came out. So

235
00:11:37,200 --> 00:11:38,960
Speaker 6: you know, one could argue there is a lot to

236
00:11:39,040 --> 00:11:42,199
Speaker 6: give on the price action point of view, but fundamentally

237
00:11:42,200 --> 00:11:45,880
Speaker 6: these are very strong companies, really amazing balance sheets and

238
00:11:46,000 --> 00:11:49,040
Speaker 6: also the growth profile down the road, and you know,

239
00:11:49,080 --> 00:11:52,480
Speaker 6: we talked about the conference and everybody is looking to

240
00:11:52,520 --> 00:11:56,439
Speaker 6: invest more in more AI related services. So the fundamentals

241
00:11:56,440 --> 00:11:58,959
Speaker 6: on paper are very good. But what happens is when

242
00:11:59,000 --> 00:12:02,000
Speaker 6: you have a shock in this system like this, everybody freezes,

243
00:12:02,240 --> 00:12:05,600
Speaker 6: hiding freezes, spending freezes. So you don't know what to

244
00:12:05,640 --> 00:12:07,840
Speaker 6: do for the next six months. You don't know whether

245
00:12:07,920 --> 00:12:10,720
Speaker 6: the revenue decline, how much is it going to be,

246
00:12:11,080 --> 00:12:15,480
Speaker 6: the margin, you know, pressure because of the tartiffs. So

247
00:12:15,520 --> 00:12:19,120
Speaker 6: there is so much uncertainty right now, and I think

248
00:12:19,160 --> 00:12:21,079
Speaker 6: there's a there's a fair point that the guidance is

249
00:12:21,120 --> 00:12:22,560
Speaker 6: going to be very tough at this point.

250
00:12:22,800 --> 00:12:24,679
Speaker 2: Oh yeah, tough for everyone. I should point out some

251
00:12:24,720 --> 00:12:27,040
Speaker 2: more headlines coming out of President Trump saying that's a

252
00:12:27,040 --> 00:12:30,800
Speaker 2: perfect time perfet shaired j Powell to cut rates. This

253
00:12:30,840 --> 00:12:32,720
Speaker 2: is as Jay Powell is expected to speak in just

254
00:12:32,760 --> 00:12:36,719
Speaker 2: about twenty minutes time. That's going to be a fascinating

255
00:12:36,760 --> 00:12:41,280
Speaker 2: conversation to unfold. That's pretty tough, okay, Anna Rag. When

256
00:12:41,280 --> 00:12:44,560
Speaker 2: we take a look at earnings estimates for these companies

257
00:12:44,600 --> 00:12:47,360
Speaker 2: in your tech space, in what part, in what sub

258
00:12:47,440 --> 00:12:49,120
Speaker 2: sector do they need to rerate more?

259
00:12:50,440 --> 00:12:52,600
Speaker 6: I think software numbers needs to come down quite a

260
00:12:52,600 --> 00:12:54,719
Speaker 6: bit and something we you know, did a note a

261
00:12:55,040 --> 00:12:57,720
Speaker 6: few days ago. We looked at the top fifty software

262
00:12:57,760 --> 00:13:00,920
Speaker 6: companies and saw that the medium growth rate for those

263
00:13:01,120 --> 00:13:04,240
Speaker 6: was thirteen point two percent on December thirty first, so

264
00:13:04,320 --> 00:13:08,680
Speaker 6: that is f FI for calendar twenty five. Just a

265
00:13:08,679 --> 00:13:11,520
Speaker 6: few days ago that number was twelve point four percent,

266
00:13:11,720 --> 00:13:14,679
Speaker 6: so less than one percent decline in the expectations of

267
00:13:14,720 --> 00:13:17,200
Speaker 6: a growth rate. You know, that number needs to come

268
00:13:17,240 --> 00:13:19,160
Speaker 6: down quite a bit. It needs to come down, you know,

269
00:13:19,240 --> 00:13:22,680
Speaker 6: well under ten percent at this point before one could

270
00:13:22,720 --> 00:13:26,160
Speaker 6: say that, Okay, we are at that point where fundamentals

271
00:13:26,200 --> 00:13:30,040
Speaker 6: are now aligned with where the overall economic situation is.

272
00:13:30,720 --> 00:13:33,880
Speaker 7: So let's go down and talk about Apple here.

273
00:13:33,880 --> 00:13:36,360
Speaker 4: It's off another three point six percent today, off twenty

274
00:13:36,400 --> 00:13:37,839
Speaker 4: one percent year to date.

275
00:13:39,880 --> 00:13:41,640
Speaker 7: ANAK, Is there any call here on Apple?

276
00:13:42,040 --> 00:13:44,280
Speaker 4: They're just so and we've known this for years and

277
00:13:44,280 --> 00:13:47,439
Speaker 4: we've talked about it for years, how so dependent they

278
00:13:47,440 --> 00:13:49,760
Speaker 4: are on China, but from a supply chain as well

279
00:13:49,800 --> 00:13:50,680
Speaker 4: as an end market.

280
00:13:51,040 --> 00:13:54,120
Speaker 7: What's your current view on China in this environment? On Apple?

281
00:13:55,280 --> 00:13:58,120
Speaker 6: Yeah, I'm really getting worried about how the you know,

282
00:13:58,160 --> 00:14:01,559
Speaker 6: how consumers will react in China or with this thing,

283
00:14:01,640 --> 00:14:04,000
Speaker 6: because you know, it's one thing to say that, Okay,

284
00:14:04,040 --> 00:14:06,640
Speaker 6: my phone buying has been pushed out by three months

285
00:14:06,760 --> 00:14:09,079
Speaker 6: or six months or so, Okay, the demand comes back

286
00:14:09,120 --> 00:14:10,760
Speaker 6: next year. You know, it's it's not that big of

287
00:14:10,800 --> 00:14:13,600
Speaker 6: a deal. But once you really get a bad feeling

288
00:14:13,720 --> 00:14:18,360
Speaker 6: about a company or a country, that sourness really impacts

289
00:14:18,360 --> 00:14:20,120
Speaker 6: the fundamentals of it. You know, we have seen what's

290
00:14:20,120 --> 00:14:22,960
Speaker 6: going on with Tesla and Europe, for example. You don't

291
00:14:23,000 --> 00:14:25,440
Speaker 6: want Apple to have that same feeling in China where

292
00:14:25,640 --> 00:14:27,200
Speaker 6: consumer is saying, you know what, I don't want to

293
00:14:27,200 --> 00:14:29,520
Speaker 6: touch an American brand. I would rather just buy the

294
00:14:29,520 --> 00:14:32,200
Speaker 6: local one. And that's a very big problem in our

295
00:14:32,280 --> 00:14:35,400
Speaker 6: view because Greater China region accounts for twenty percent of

296
00:14:35,440 --> 00:14:36,280
Speaker 6: Apple's revenue.

297
00:14:36,440 --> 00:14:37,680
Speaker 2: Yeah, and this is what we're talking about. Now, we're

298
00:14:37,720 --> 00:14:39,920
Speaker 2: not even talking super cycles anymore. I feel like six

299
00:14:39,960 --> 00:14:41,880
Speaker 2: months ago is like now it's coming. Then it's well,

300
00:14:41,880 --> 00:14:44,920
Speaker 2: I have wone supercycle. To that point, we've already seen

301
00:14:44,960 --> 00:14:47,680
Speaker 2: save Ford talking about discounting their cars to get people

302
00:14:47,720 --> 00:14:49,200
Speaker 2: in the door. Is this going to be a similar

303
00:14:49,240 --> 00:14:52,080
Speaker 2: case for Apple because they're not a discountery kind of thing.

304
00:14:52,760 --> 00:14:55,440
Speaker 6: No, I don't think so. I mean, I think, you know,

305
00:14:55,480 --> 00:14:57,680
Speaker 6: I think the Apple CEO has played it very well

306
00:14:57,720 --> 00:14:59,600
Speaker 6: when it comes to China. He has gone to China

307
00:14:59,680 --> 00:15:02,680
Speaker 6: few times, He's been seen with the commerce ministers. He's

308
00:15:02,720 --> 00:15:06,080
Speaker 6: talking about investing more money here there, and I think

309
00:15:06,120 --> 00:15:08,880
Speaker 6: he's playing the cards right, because you really don't want

310
00:15:08,920 --> 00:15:12,160
Speaker 6: the world's you know, most nucrative market for your goods

311
00:15:12,200 --> 00:15:14,880
Speaker 6: to basically have a very bad feeling about your products

312
00:15:15,040 --> 00:15:16,960
Speaker 6: because at the end of the day in the US,

313
00:15:17,080 --> 00:15:19,280
Speaker 6: you know, they really cannot grow much. It's a saturated

314
00:15:19,360 --> 00:15:22,760
Speaker 6: market for them. Their growth rate will come from emerging markets,

315
00:15:22,800 --> 00:15:25,479
Speaker 6: whether it's China or in a few years from India.

316
00:15:25,600 --> 00:15:27,880
Speaker 6: But you know, they really have to play it nicely

317
00:15:27,920 --> 00:15:30,680
Speaker 6: in China in order to show growth rate over the

318
00:15:30,680 --> 00:15:31,880
Speaker 6: next three to five years.

319
00:15:32,160 --> 00:15:35,480
Speaker 4: In terms of overall tech spending on a rag, how

320
00:15:35,520 --> 00:15:39,040
Speaker 4: elastic is tech spending broadly defined? It is it something

321
00:15:39,080 --> 00:15:41,840
Speaker 4: that these companies feel like they have to do no

322
00:15:41,880 --> 00:15:45,600
Speaker 4: matter what, or like advertising. We're just talking to Etherrong

323
00:15:45,640 --> 00:15:48,560
Speaker 4: andoth and that is very discretionary spending on a part

324
00:15:48,560 --> 00:15:49,960
Speaker 4: of a company that tech.

325
00:15:51,200 --> 00:15:53,520
Speaker 6: I think you divided in two categories. One is your

326
00:15:53,560 --> 00:15:56,800
Speaker 6: growth capex where you're going to invest for newer products,

327
00:15:57,000 --> 00:15:59,520
Speaker 6: and that will remain the case. You know, AI spending.

328
00:15:59,760 --> 00:16:02,440
Speaker 6: Let's say somebody is spending you know, one hundred dollars more,

329
00:16:02,520 --> 00:16:05,280
Speaker 6: they will probably spend ninety five hundred dollars again, that's okay.

330
00:16:05,560 --> 00:16:07,520
Speaker 6: But the problem comes in now it comes at the

331
00:16:07,560 --> 00:16:10,000
Speaker 6: expense of something else. You know, you are going to

332
00:16:10,080 --> 00:16:13,280
Speaker 6: upgrade the PCs in your department. That's not going to happen.

333
00:16:13,280 --> 00:16:16,760
Speaker 6: You're gonna push it out by six months. Servers, normal

334
00:16:16,840 --> 00:16:19,720
Speaker 6: software that you use for day to day works. You know,

335
00:16:19,760 --> 00:16:23,360
Speaker 6: you're going to scale back on some of those elements. Consulting,

336
00:16:23,400 --> 00:16:25,120
Speaker 6: you know, is off the window at this point. I mean,

337
00:16:25,160 --> 00:16:28,120
Speaker 6: I'd be very surprised to see consulting. I you know,

338
00:16:28,160 --> 00:16:31,120
Speaker 6: one could expect layoffs coming in the consulting world over

339
00:16:31,160 --> 00:16:34,200
Speaker 6: the next few months because if there is no work,

340
00:16:34,480 --> 00:16:36,640
Speaker 6: you know, these companies are going to count out consultants,

341
00:16:36,640 --> 00:16:39,480
Speaker 6: you know, whether it's McKenzie, BCG or some of the

342
00:16:39,560 --> 00:16:43,040
Speaker 6: other services companies. So you have to take money out

343
00:16:43,040 --> 00:16:44,800
Speaker 6: from one to give it to the other person.

344
00:16:44,800 --> 00:16:46,840
Speaker 2: I'd say, is there rotation of money or just a

345
00:16:46,920 --> 00:16:49,920
Speaker 2: non spend of money altogether? Like does one section spend

346
00:16:49,920 --> 00:16:51,920
Speaker 2: more while the other spends less or is this a

347
00:16:52,040 --> 00:16:52,880
Speaker 2: true pullback?

348
00:16:54,000 --> 00:16:56,200
Speaker 6: It was a mix of both. I think reallocation is

349
00:16:56,240 --> 00:16:59,200
Speaker 6: definitely going to go, but I don't expect you know,

350
00:16:59,200 --> 00:17:01,920
Speaker 6: if somebody is investing in AI to improve their operations,

351
00:17:01,960 --> 00:17:03,920
Speaker 6: they're not going to stop that project. But to be

352
00:17:04,040 --> 00:17:06,959
Speaker 6: very frank that number as a percentage of total spending

353
00:17:07,040 --> 00:17:09,720
Speaker 6: is still not that big for a large bank or

354
00:17:09,760 --> 00:17:12,359
Speaker 6: a retail company. It's really the day to day work,

355
00:17:12,600 --> 00:17:14,520
Speaker 6: and that's where you're going to see. I, you know,

356
00:17:14,560 --> 00:17:17,880
Speaker 6: anticipating more layoffs coming in over the next one one

357
00:17:17,880 --> 00:17:20,440
Speaker 6: and a half months from some of these vendors.

358
00:17:20,800 --> 00:17:24,960
Speaker 2: Oh man, that is a grim prediction on that point.

359
00:17:25,320 --> 00:17:27,800
Speaker 2: How fast do you think spending could pick up? Like

360
00:17:27,880 --> 00:17:29,760
Speaker 2: what would be a trigger for reset?

361
00:17:30,680 --> 00:17:32,960
Speaker 6: You know, the news like viatam. Please give me five

362
00:17:33,040 --> 00:17:34,920
Speaker 6: or more of those news releases and all of this

363
00:17:35,080 --> 00:17:38,280
Speaker 6: on turns and everything goes back to normal. Because frankly speaking,

364
00:17:38,320 --> 00:17:40,680
Speaker 6: this is we are really on a thin line when

365
00:17:40,680 --> 00:17:43,520
Speaker 6: it comes to business confidence. And I think really the

366
00:17:43,520 --> 00:17:45,560
Speaker 6: the you know, in our view, these things are really

367
00:17:45,600 --> 00:17:49,040
Speaker 6: they're playing with fire because once it takes the spiral downturn,

368
00:17:49,240 --> 00:17:51,399
Speaker 6: it's very difficult to stop it. So if it stops

369
00:17:51,400 --> 00:17:53,520
Speaker 6: over the next few weeks, I think we have we

370
00:17:53,640 --> 00:17:56,720
Speaker 6: can see a good end to the year. But otherwise,

371
00:17:56,760 --> 00:17:59,200
Speaker 6: you know, once the layoff starts, then it's a vicious cycle.

372
00:18:00,160 --> 00:18:04,320
Speaker 4: So is there any safe names in tech? I mean,

373
00:18:04,400 --> 00:18:06,240
Speaker 4: is Microsoft the safe name is?

374
00:18:06,920 --> 00:18:09,320
Speaker 6: That's a very good point, Paul. You know, we have

375
00:18:09,359 --> 00:18:11,520
Speaker 6: been thinking a lot about it, and you know, discussions

376
00:18:11,520 --> 00:18:13,280
Speaker 6: we have been having and and you know, with with

377
00:18:13,359 --> 00:18:15,920
Speaker 6: works like you, we've been saying that companies that are

378
00:18:16,000 --> 00:18:19,600
Speaker 6: really exposed to the large enterprises, so the Fortune five

379
00:18:19,680 --> 00:18:23,400
Speaker 6: hundred companies or the Fortune one thousand companies, they will

380
00:18:23,400 --> 00:18:26,320
Speaker 6: be less impacted than the ones that are impacted to

381
00:18:26,680 --> 00:18:28,640
Speaker 6: the SMB spending. So I'll give you a very good

382
00:18:28,680 --> 00:18:32,360
Speaker 6: example here is Shopify. Look at how it's completely been

383
00:18:32,520 --> 00:18:36,119
Speaker 6: you know, decimated yesterday and today because the bulk of

384
00:18:36,160 --> 00:18:39,560
Speaker 6: their consumer base or the client base is small and

385
00:18:39,640 --> 00:18:42,880
Speaker 6: medium businesses. Now somebody like a Microsoft or a Workday

386
00:18:43,200 --> 00:18:47,280
Speaker 6: that deals primarily with larger companies and larger enterprises a

387
00:18:47,400 --> 00:18:50,919
Speaker 6: lot less you know, disturbance in their revenue flow, they

388
00:18:50,960 --> 00:18:53,439
Speaker 6: will also get hit. It's not that they're immune, but

389
00:18:53,560 --> 00:18:55,720
Speaker 6: it'd be a lot less than somebody like a Shopify.

390
00:18:56,119 --> 00:18:58,240
Speaker 2: I also have to wonder if this does this change

391
00:18:58,320 --> 00:19:01,000
Speaker 2: the ROI for AI for example, like you got to

392
00:19:01,080 --> 00:19:03,560
Speaker 2: prove it harder and faster in this kind of environment.

393
00:19:04,800 --> 00:19:06,840
Speaker 6: See, one of the things is that's still in the

394
00:19:06,880 --> 00:19:09,800
Speaker 6: experimentation state. So let's say if a company, if a

395
00:19:09,840 --> 00:19:12,800
Speaker 6: bank is spending one hundred dollars in technology spending, you know,

396
00:19:12,840 --> 00:19:14,800
Speaker 6: in total, they're not spending more than a dollar or

397
00:19:14,800 --> 00:19:16,879
Speaker 6: two dollars in AI. So it doesn't really you know,

398
00:19:16,920 --> 00:19:19,399
Speaker 6: that doesn't move the needles. It's really the bulk of

399
00:19:19,440 --> 00:19:23,320
Speaker 6: the big hardware purchases, big computer purchases, that's the one

400
00:19:23,359 --> 00:19:25,080
Speaker 6: that you know, gets gets pushed.

401
00:19:24,800 --> 00:19:26,199
Speaker 9: Out all right.

402
00:19:26,200 --> 00:19:28,000
Speaker 7: On ra grana, thank you so much. We appreciate that.

403
00:19:28,040 --> 00:19:32,040
Speaker 4: On a rog Rana covers all the technology for Bloomberg Intelligence.

404
00:19:32,440 --> 00:19:35,720
Speaker 4: Joining us from Chicago via a zoom Here live.

405
00:19:37,080 --> 00:19:40,760
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

406
00:19:40,840 --> 00:19:43,960
Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android

407
00:19:43,960 --> 00:19:47,280
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

408
00:19:47,320 --> 00:19:50,840
Speaker 1: you get your podcasts, or watch us live on YouTube.

409
00:19:51,160 --> 00:19:52,439
Speaker 4: What we've been trying to do is kind of go

410
00:19:53,040 --> 00:19:55,840
Speaker 4: industry by injury and see what potential impact could be

411
00:19:55,960 --> 00:19:59,560
Speaker 4: on a world where there are much higher tariffs in

412
00:19:59,640 --> 00:20:01,639
Speaker 4: most of the world. One of the areas we want

413
00:20:01,640 --> 00:20:04,359
Speaker 4: look at now is the media business. It is a

414
00:20:04,440 --> 00:20:06,440
Speaker 4: global business, and for that we go to KEITHA. Rounganath

415
00:20:06,520 --> 00:20:09,760
Speaker 4: and she covers the media industry for Bloomberg Intelligence.

416
00:20:10,440 --> 00:20:10,760
Speaker 7: KEITHA.

417
00:20:11,480 --> 00:20:13,760
Speaker 4: I mean, I guess where do you see some of

418
00:20:13,760 --> 00:20:16,199
Speaker 4: the risks to some of these big media companies to

419
00:20:16,320 --> 00:20:20,760
Speaker 4: their business in a world that appears to be going

420
00:20:20,760 --> 00:20:23,440
Speaker 4: through some type of trade and dislocation to say the least.

421
00:20:24,800 --> 00:20:27,000
Speaker 10: Yeah, sure, Paul, So I think in general what we're

422
00:20:27,040 --> 00:20:29,320
Speaker 10: seeing is, of course, a lot of these media companies

423
00:20:29,359 --> 00:20:34,720
Speaker 10: are heavily exposed to advertising, television advertising, and television advertising

424
00:20:34,760 --> 00:20:36,600
Speaker 10: has already kind of been a little bit down in

425
00:20:36,680 --> 00:20:39,560
Speaker 10: the dumps, and overall we're seeing, you know, kind of

426
00:20:39,600 --> 00:20:44,320
Speaker 10: consumer confidence shaken up pretty badly. And with that, we're

427
00:20:44,440 --> 00:20:48,680
Speaker 10: seeing ad projections, so ad growth projections actually come down

428
00:20:48,720 --> 00:20:52,600
Speaker 10: by quite a bit. So before all of this stuff started,

429
00:20:53,040 --> 00:20:56,520
Speaker 10: you know, Magnat Global was projecting about five percent increase

430
00:20:56,720 --> 00:21:02,119
Speaker 10: in US advertising spend for twenty twenty five. Now it's down. Actually,

431
00:21:02,160 --> 00:21:04,359
Speaker 10: before the tariff News it was down to four percent,

432
00:21:05,040 --> 00:21:07,600
Speaker 10: and I suspect it could go even lower. So that

433
00:21:07,880 --> 00:21:09,600
Speaker 10: is going to be a big blow to the bottom

434
00:21:09,600 --> 00:21:11,879
Speaker 10: lines of a lot of companies like a Warner Brothers

435
00:21:11,960 --> 00:21:12,639
Speaker 10: or a paramount.

436
00:21:12,840 --> 00:21:15,080
Speaker 2: So let me just ask a stupid question for you too,

437
00:21:15,119 --> 00:21:19,160
Speaker 2: smart media people. So I'm Nike. I usually do advertising,

438
00:21:19,240 --> 00:21:21,520
Speaker 2: say on CBS, I'm making all of this up right,

439
00:21:21,520 --> 00:21:23,560
Speaker 2: all of a sudden, I'm like, oh my gosh, I'm

440
00:21:23,560 --> 00:21:25,280
Speaker 2: not being able to sell my product, so I'm going

441
00:21:25,320 --> 00:21:28,159
Speaker 2: to pull that ad all together. And is that like

442
00:21:28,200 --> 00:21:34,120
Speaker 2: the logical one plus one plus one equals three trickle down, Kita.

443
00:21:32,960 --> 00:21:35,520
Speaker 10: That is exactly what it is. We have seen, you know,

444
00:21:35,560 --> 00:21:38,280
Speaker 10: it's great that you brought up Nike. We've seen commentary

445
00:21:38,320 --> 00:21:41,840
Speaker 10: from a lot of these consumer facing companies that are

446
00:21:41,880 --> 00:21:44,320
Speaker 10: saying that they are going to pull back on advertising

447
00:21:44,400 --> 00:21:47,119
Speaker 10: quite a bit this year, and that's really just a

448
00:21:47,119 --> 00:21:49,800
Speaker 10: way of them protecting their bottom lines. So we're seeing

449
00:21:49,840 --> 00:21:53,639
Speaker 10: that commentary actually across the board. We're seeing even you know,

450
00:21:53,720 --> 00:21:56,800
Speaker 10: digital advertising, and remember digital advertising has kind of been

451
00:21:56,840 --> 00:21:58,880
Speaker 10: the standout, has been the star of the show, if

452
00:21:58,920 --> 00:22:01,399
Speaker 10: you will, for so many years now, you know, jumping

453
00:22:01,480 --> 00:22:04,560
Speaker 10: up every year about fifteen to eighteen percent, and we've

454
00:22:04,600 --> 00:22:07,600
Speaker 10: seen some pretty soft commentary even for digital advertising. So

455
00:22:07,640 --> 00:22:09,680
Speaker 10: I think across the board there is definitely a lot

456
00:22:09,680 --> 00:22:10,639
Speaker 10: of nervousness.

457
00:22:11,040 --> 00:22:12,919
Speaker 4: How about you know, I think about the Walt Disney

458
00:22:12,960 --> 00:22:16,639
Speaker 4: Company and even Comcast. The theme park business, which has

459
00:22:16,680 --> 00:22:19,200
Speaker 4: been such a great business for or It's been a

460
00:22:19,240 --> 00:22:22,280
Speaker 4: great business just across the board, and Disney's really stepped

461
00:22:22,359 --> 00:22:24,919
Speaker 4: up its capital spending for that business because they're so

462
00:22:24,960 --> 00:22:28,879
Speaker 4: bullish on it. But if consumers sentiment is shaky, here

463
00:22:29,520 --> 00:22:31,840
Speaker 4: is the expectation that they'll see see it in their

464
00:22:31,840 --> 00:22:32,439
Speaker 4: top line.

465
00:22:33,680 --> 00:22:35,440
Speaker 10: I think so, Paul, I think this is going to

466
00:22:35,480 --> 00:22:37,880
Speaker 10: be a real risk for Disney. Remember this is so

467
00:22:37,880 --> 00:22:41,199
Speaker 10: so important for Disney. Parks make up sixty percent of

468
00:22:41,240 --> 00:22:46,240
Speaker 10: the company's profits, so absolutely critical to their bottom line. Now,

469
00:22:46,440 --> 00:22:48,960
Speaker 10: what management did is they already guided to six to

470
00:22:49,080 --> 00:22:52,480
Speaker 10: eight percent profit growth in the theme park business for

471
00:22:52,560 --> 00:22:55,480
Speaker 10: this year. But I think they might have spoken too soon.

472
00:22:55,520 --> 00:22:57,800
Speaker 10: So we've already kind of seen a little bit of

473
00:22:57,840 --> 00:23:00,960
Speaker 10: softening in terms of theme park trends, and I think

474
00:23:01,000 --> 00:23:03,480
Speaker 10: it's going to get even more and more difficult as

475
00:23:03,560 --> 00:23:07,520
Speaker 10: kind of the year progresses. Disney also faces some competition

476
00:23:07,680 --> 00:23:11,880
Speaker 10: from Comcast actually, because Comcast is opening Epic Universe on

477
00:23:11,880 --> 00:23:14,760
Speaker 10: on May twenty seconds. So for Disney, it could almost

478
00:23:14,800 --> 00:23:16,120
Speaker 10: be like a double blow here.

479
00:23:16,440 --> 00:23:18,399
Speaker 2: Which is so weird because weren't we saying just like

480
00:23:18,440 --> 00:23:20,480
Speaker 2: a couple quarters ago, Oh, it's great because it's like

481
00:23:20,480 --> 00:23:22,080
Speaker 2: a one stop shop. You get to go there. You're

482
00:23:22,119 --> 00:23:23,960
Speaker 2: going to Universal or Comcast, but you're going to go

483
00:23:24,000 --> 00:23:26,280
Speaker 2: to Disney at the same time. Now that's not the case.

484
00:23:27,280 --> 00:23:29,399
Speaker 10: Not the case because again there's going to be a

485
00:23:29,400 --> 00:23:32,119
Speaker 10: lot of pressure on consumer wallets and we've seen some

486
00:23:32,200 --> 00:23:35,440
Speaker 10: really clever pricing come out of Comcasts. So the way

487
00:23:35,440 --> 00:23:38,959
Speaker 10: that they're packaging their promotions for you know, Epic Universe

488
00:23:39,040 --> 00:23:42,439
Speaker 10: is it's a three or a four day package leaving

489
00:23:42,480 --> 00:23:45,080
Speaker 10: you know, a family like very little time to go

490
00:23:45,119 --> 00:23:46,960
Speaker 10: to Disney. So they know what they're doing.

491
00:23:48,080 --> 00:23:49,719
Speaker 7: Is there going to be an analyst day for this

492
00:23:49,760 --> 00:23:50,440
Speaker 7: new theme park?

493
00:23:52,000 --> 00:23:52,800
Speaker 10: Not that I've heard.

494
00:23:52,800 --> 00:23:53,320
Speaker 6: I haven't heard.

495
00:23:53,359 --> 00:23:56,440
Speaker 4: See, that's what Comcasts and most other companies don't get that.

496
00:23:56,560 --> 00:23:58,160
Speaker 7: Disney gets Disney.

497
00:23:58,200 --> 00:24:00,440
Speaker 4: Whenever they do something from like a new crew Ship

498
00:24:00,520 --> 00:24:03,800
Speaker 4: or open up Shanghai, they have all their investors' annals

499
00:24:03,840 --> 00:24:06,160
Speaker 4: come and it makes everybody feel good and presumably that's

500
00:24:06,160 --> 00:24:06,840
Speaker 4: good for your stock.

501
00:24:06,880 --> 00:24:08,680
Speaker 7: And they know how to play that game. Look like

502
00:24:08,720 --> 00:24:12,080
Speaker 7: a bribe, yeah, but it's fun. They used to be

503
00:24:12,160 --> 00:24:13,520
Speaker 7: missing and what's your points?

504
00:24:14,480 --> 00:24:16,320
Speaker 4: All right, Githa, thank you so much for you appreciate that,

505
00:24:16,359 --> 00:24:19,800
Speaker 4: Geitha Ranganathan for Bloomberg Intelligence and the best one.

506
00:24:19,680 --> 00:24:20,240
Speaker 7: Of those I did.

507
00:24:20,280 --> 00:24:23,240
Speaker 4: It was in Canadian National opened up their tunnel through

508
00:24:23,240 --> 00:24:25,679
Speaker 4: one of the rocky mountains that cut the trip the

509
00:24:25,720 --> 00:24:29,040
Speaker 4: trans continent trip by like fifty percent. That we had

510
00:24:29,080 --> 00:24:32,119
Speaker 4: a multi day rail trip through the Canadian ROCKIESWS.

511
00:24:32,960 --> 00:24:37,679
Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,

512
00:24:37,840 --> 00:24:41,320
Speaker 1: and anywhere else you get your podcasts. Listen live each

513
00:24:41,359 --> 00:24:45,080
Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com,

514
00:24:45,240 --> 00:24:48,760
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

515
00:24:49,200 --> 00:24:52,120
Speaker 1: You can also watch us live every weekday on YouTube

516
00:24:52,520 --> 00:24:54,760
Speaker 1: and always on the Bloomberg terminal