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Speaker 2: Stay with Autos for just a moment. Craig Trudella's Bloomberg
Speaker 2: Global Autos Editor and joins us now Craig. At the
Speaker 2: same time, we also got the news that Tesla's estimates
Speaker 2: were cut further by an analyst unquote unprecedented brand damage.
Speaker 2: What's the conversation with zeitgeist around that right now?
Speaker 3: I think over here in Europe it's particularly bleak when
Speaker 3: you look at some of the numbers. Just yesterday we
Speaker 3: saw the full figures for Tesla and Germany in the
Speaker 3: first quarter for them to have some you know, some
Speaker 3: months in the beginning of this year, they were down
Speaker 3: more than seventy percent. And that's in a country where
Speaker 3: they where they build vehicles, where you would think that
Speaker 3: they would perhaps have have built up some goodwill on
Speaker 3: the basis of employing quite a lot of people outside
Speaker 3: of Berlin at their factory, and yet for Musk to
Speaker 3: sort of intervene in the federal election in February in
Speaker 3: a way that was highly unpopular and for some of
Speaker 3: the protests that we've seen across the US to also
Speaker 3: you know carry over here where you know, we've seen
Speaker 3: dealerships get you know, paint tossed on them, cars you know,
Speaker 3: set on fire. It's it's really intense the backlash that
Speaker 3: we've seen against Musk.
Speaker 4: So Craig, I'm trying to get a sense how much
Speaker 4: of their sales weakness is due to some of that
Speaker 4: backlash against Elon Musk versus maybe some of the model
Speaker 4: why introduction and the change over there of lines. Do
Speaker 4: we have make any sense as to what's you know,
Speaker 4: the kind of the percentage between those two.
Speaker 3: It's it's really difficult.
Speaker 5: I think we are going to be spending the next
Speaker 5: you know, probably months, maybe quarters, uh, you know, unpacking
Speaker 5: what exactly the dynamics are here, because you know, to
Speaker 5: your point, they did have a sort of you know,
Speaker 5: self inflicted disruption that I should point out is not
Speaker 5: unusual in the auto industry, even very experienced you know, carmakers,
Speaker 5: when they go from one generation of vehicle to the next,
Speaker 5: they often need to do some retooling and take the factory,
Speaker 5: you know, down a bit, you know, work on the
Speaker 5: production lines. Tesla in this case had to do that
Speaker 5: at all of its factories around the world because they
Speaker 5: make them model y everywhere, and you know, so that
Speaker 5: that was a substantial disruption for them in the first
Speaker 5: quarter that we shouldn't sort of lose sight of. I
Speaker 5: do think that, you know, it can't be a coincidence
Speaker 5: that in a place like Germany, where you've seen a
Speaker 5: Musk poll so poorly, and you know where he so
Speaker 5: asserted himself so emphatically. You know, you look at those
Speaker 5: figures and even as you've seen some some weakness for
Speaker 5: Tesla and other parts of Europe, we haven't seen it
Speaker 5: be as drastic as we've seen it in Germany. So
Speaker 5: I think, you know, to your question, I think there's
Speaker 5: there's absolutely a bit of both, and it's a little
Speaker 5: bit it's going to take us probably some months, maybe
Speaker 5: some quarters to sort out, you know, just how much
Speaker 5: sort of lasting damage has been done here and whether
Speaker 5: you know they can lure buyers back with this fresh product.
Speaker 2: I have to say, you know, you look at if
Speaker 2: you do Tesla equity in the dees. You get all
Speaker 2: the good information on Tesla right away. You look at
Speaker 2: a PE ratio is still one hundred and twelve times.
Speaker 2: You look at the PE ratio of in Nvidia and
Speaker 2: it's thirty two times, just meaning that it is still
Speaker 2: incredibly expensive when you look at it from that metric. Hey, Craig,
Speaker 2: really good perspective. Thank you so very much. Craig Trudel,
Speaker 2: Bloomberg Global Autos Editor, joining us on the overall impact
Speaker 2: of terroriffs but really brand reputational damage when it comes
Speaker 2: to Tesla.
Speaker 6: Wow.
Speaker 2: This is a week.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 4: One of the things we want to do in this
Speaker 4: Bloomberg Intelligence programs talk to the analysts that Bloomberg Intelligence
Speaker 4: and talk to us about their sectors.
Speaker 7: Let's do that right now.
Speaker 4: With Herman changing all was the regional banks for Bloomberg Intelligence.
Speaker 2: I was gonna say, it's never good when you see
Speaker 2: him in studio because it always something is going to
Speaker 2: be blown up we see Herman. Otherwise when we ignore Herman,
Speaker 2: it's like, oh, everything's.
Speaker 7: Fine and kind good.
Speaker 4: So how do you view from the banks perspective a
Speaker 4: world where it seems like we're in a trade war here, right?
Speaker 8: Well, banks are ultimately a reflection of their economies that
Speaker 8: they operate in, and when the economic expectations are in flux,
Speaker 8: then typically there's some pain for the banks, and that's
Speaker 8: where we are today.
Speaker 1: We have while all the.
Speaker 8: Bad news has been reflected in the stocks, the fundamental
Speaker 8: performance is still sort of shaking out. I would say
Speaker 8: that we're coming up on first qu results in the
Speaker 8: next couple of weeks, and so we'll get a better
Speaker 8: picture of guidance changes performance going forward. But right now
Speaker 8: we're still waiting to see where the shoes going to
Speaker 8: drop in terms of loan growth, credit quality, et cetera.
Speaker 2: And that's my question because I understand the big banks
Speaker 2: getting hit in part because the capital markets are just
Speaker 2: going to freeze up, Like forget IPOs, M and e's,
Speaker 2: we're going to put that on the side. Okay, that
Speaker 2: kind of makes sense, But the regional banks may not
Speaker 2: have the same kind of exposure, right, and the real
Speaker 2: economy the hard data is still fine, right, So were
Speaker 2: you surprised at the extent to which your sector got hit.
Speaker 8: Every time there's worries about the economy, these bank stocks
Speaker 8: sort of get hit first and then investors ask questions later.
Speaker 8: So that's where we are today. Valuations have come down,
Speaker 8: and there's just a lot of worries about future credit quality,
Speaker 8: the guidance coming down, loan growth fees coming down, top
Speaker 8: lines coming down. So there's going to be a lot
Speaker 8: of revisions going forward if these terrorists do really materialize.
Speaker 4: So I guess one of the things we're hearing, and
Speaker 4: we've heard it, you know, all the years we're building
Speaker 4: up to this tariff day. Now it's just kind of
Speaker 4: reflected in the financial markets is just I just don't
Speaker 4: feel like doing anything.
Speaker 7: I don't know.
Speaker 4: If I'm a CEO, I don't want to buy a company.
Speaker 4: If I'm a consumer, I don't want to make that
Speaker 4: big expenditure from the washing machine or the car or whatever,
Speaker 4: And that means I probably don't need growth capital, right.
Speaker 7: So if I'm a bank, I'm probably not writing too
Speaker 7: many loans these days exactly.
Speaker 8: And that's actually been happening over the past few years.
Speaker 8: Given the uncertainty with interest rates first and then regulation
Speaker 8: under the Biden administration, there was just a lot of
Speaker 8: demand that was just on the sidelines, and you've seen
Speaker 8: that reflected in loan growth for the industry. It really
Speaker 8: hasn't moved a lot over the past couple of years,
Speaker 8: and the expectations heading into this year was that Donald
Speaker 8: Trump and the administration was really going to unleash more
Speaker 8: activity from a deep regulation. But now the trade spats
Speaker 8: and just the chaos that's happening over the past couple
Speaker 8: of days, everything really continues to be on the sideline.
Speaker 2: Something any kind of like regional m and A that
Speaker 2: we've all been expecting for the last couple of years,
Speaker 2: that's not going.
Speaker 7: To happen banks right right exactly.
Speaker 8: There has been some news that the Discovery Capital wind
Speaker 8: deal could be pushed through with the dj giving the
Speaker 8: green light to that. So now we're waiting on the
Speaker 8: FED and other bank regulators the weigh in, so that
Speaker 8: could be a good litmus test going forward. But still
Speaker 8: there's a lot of uncertainty involved.
Speaker 4: When you see an economy slow down like it. Here's
Speaker 4: the US economy is doing. Where's the first place you
Speaker 4: see it from a regional bank. Is it credit quality
Speaker 4: is slowing loan growth?
Speaker 7: What do you see it first?
Speaker 8: Yeah, well it's going to be slowing loan growth and
Speaker 8: it's going to be sort of the delinquencies, right So
Speaker 8: these thirty day past new metrics, ninety day past new metrics,
Speaker 8: so those will start trickling in. And then there's other
Speaker 8: early warning signs for credit quality that the banks talk
Speaker 8: about that there's some bank bank parlance, it's called criticized loans.
Speaker 8: Loans that may not be passed due yet, but the
Speaker 8: bank knows that there's some problems with the borrower or
Speaker 8: the project, so they'll flag it as a potential problem.
Speaker 8: So those are sort of the metrics that we look
Speaker 8: out for every reporting season.
Speaker 2: Which banks in your coverage are pretty well set up
Speaker 2: to manage this kind of environment right now?
Speaker 8: Yeah, I think the market is telling you some things.
Speaker 8: We just put up something on MRR looking at the
Speaker 8: five day performance of the KBW index, and it shows
Speaker 8: the trust banks like Bank of New York, Mellon Northern
Speaker 8: Trust holding up fairly well. M and T and P
Speaker 8: and C are the ones in my region and bank
Speaker 8: coverage that are holding up very fairly well, and then
Speaker 8: there are others, smaller regionals that are are faring worse.
Speaker 9: Can interest bring some breaking news to Yeah, the NASTAQ
Speaker 9: one hundred just entered a bear market, down twenty percent
Speaker 9: from it. I know it's just numbers, but.
Speaker 4: But no, I mean a bear market. We haven't talked
Speaker 4: out of bear marketing quite some time.
Speaker 2: But they're numbers, but they're also headlines. Yeah, that's you know,
Speaker 2: that's part of it too.
Speaker 7: There's people's iras and the four to one case there.
Speaker 2: I mean, I'm not looking at that. Who's looking at that?
Speaker 2: Any of you guys look at that? Look, I'm not
Speaker 2: one on one care I'm not looking for twenty more years.
Speaker 6: Just gonna sit there.
Speaker 2: And that's the story. Okay, And then before I let
Speaker 2: you go real quick, carman, what is like sort of
Speaker 2: the the type of bank that's going to struggle the most.
Speaker 8: Yeah, it's going to be the banks that have still
Speaker 8: been dinged during the prior regional bank crisis. Probably they'll
Speaker 8: be in the headline still. So yeah, the banks that
Speaker 8: have have sort of weathered it, but there's always that
Speaker 8: recent history that all investors going back to, so banks
Speaker 8: like Western Alliance and and others that that were sort
Speaker 8: of teetering during that time probably get pushed a bit
Speaker 8: more by investors, but we think that they're they're balance
Speaker 8: sheet and the deposits are really strong going forward.
Speaker 2: All right, Herman, thanks a lot, really appreciate it. Herman
Speaker 2: Chan joining us in studio, always good to get your perspective.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 2: All right, let's go now to tech and where we
Speaker 2: are in that market after the big sell up on
Speaker 2: a rug run a Bloomberg Intelligence and your technology analysts.
Speaker 2: All right, Honora, what stops the bleeding here for tech?
Speaker 6: That we need a few more of those announcements that
Speaker 6: other countries are willing to negotiate as well, because unless
Speaker 6: that happens, you know, it'll be very tough to figure
Speaker 6: out where the bottom is in terms of fundamentals for
Speaker 6: any of these companies.
Speaker 4: Yeah, Onrack, we had Dan ives in studio earlier this
Speaker 4: morning on surveillance, and it's by far the most cautious.
Speaker 4: I've ever heard him in on Granted he's a very
Speaker 4: bullish analyst by nature, but he's saying, basically, this is
Speaker 4: a black swan event for technology and you know, unless
Speaker 4: it changes, you know, this is a long term head
Speaker 4: win for tech and I guess that kind of goes
Speaker 4: is there. And he even went to the to the
Speaker 4: level on a Raja saying he'd be surprised that if
Speaker 4: many of his companies even provide guidance in the upcoming
Speaker 4: earnings here, So as you talk to clients, what's the
Speaker 4: mood at there? Is there anybody saying I feel the
Speaker 4: bottom here? These are great companies. I can buy him
Speaker 4: cheap here? What are the conversations like?
Speaker 6: I think the biggest thing is like how long is
Speaker 6: this malay is going to last? On the uncertainty side
Speaker 6: of it, because you know, frankly, if you extrapolate and
Speaker 6: see what Nazdak has done over the last three years,
Speaker 6: it has been phenomenal since Chad Gibaut came out. So
Speaker 6: you know, one could argue there is a lot to
Speaker 6: give on the price action point of view, but fundamentally
Speaker 6: these are very strong companies, really amazing balance sheets and
Speaker 6: also the growth profile down the road, and you know,
Speaker 6: we talked about the conference and everybody is looking to
Speaker 6: invest more in more AI related services. So the fundamentals
Speaker 6: on paper are very good. But what happens is when
Speaker 6: you have a shock in this system like this, everybody freezes,
Speaker 6: hiding freezes, spending freezes. So you don't know what to
Speaker 6: do for the next six months. You don't know whether
Speaker 6: the revenue decline, how much is it going to be,
Speaker 6: the margin, you know, pressure because of the tartiffs. So
Speaker 6: there is so much uncertainty right now, and I think
Speaker 6: there's a there's a fair point that the guidance is
Speaker 6: going to be very tough at this point.
Speaker 2: Oh yeah, tough for everyone. I should point out some
Speaker 2: more headlines coming out of President Trump saying that's a
Speaker 2: perfect time perfet shaired j Powell to cut rates. This
Speaker 2: is as Jay Powell is expected to speak in just
Speaker 2: about twenty minutes time. That's going to be a fascinating
Speaker 2: conversation to unfold. That's pretty tough, okay, Anna Rag. When
Speaker 2: we take a look at earnings estimates for these companies
Speaker 2: in your tech space, in what part, in what sub
Speaker 2: sector do they need to rerate more?
Speaker 6: I think software numbers needs to come down quite a
Speaker 6: bit and something we you know, did a note a
Speaker 6: few days ago. We looked at the top fifty software
Speaker 6: companies and saw that the medium growth rate for those
Speaker 6: was thirteen point two percent on December thirty first, so
Speaker 6: that is f FI for calendar twenty five. Just a
Speaker 6: few days ago that number was twelve point four percent,
Speaker 6: so less than one percent decline in the expectations of
Speaker 6: a growth rate. You know, that number needs to come
Speaker 6: down quite a bit. It needs to come down, you know,
Speaker 6: well under ten percent at this point before one could
Speaker 6: say that, Okay, we are at that point where fundamentals
Speaker 6: are now aligned with where the overall economic situation is.
Speaker 7: So let's go down and talk about Apple here.
Speaker 4: It's off another three point six percent today, off twenty
Speaker 4: one percent year to date.
Speaker 7: ANAK, Is there any call here on Apple?
Speaker 4: They're just so and we've known this for years and
Speaker 4: we've talked about it for years, how so dependent they
Speaker 4: are on China, but from a supply chain as well
Speaker 4: as an end market.
Speaker 7: What's your current view on China in this environment? On Apple?
Speaker 6: Yeah, I'm really getting worried about how the you know,
Speaker 6: how consumers will react in China or with this thing,
Speaker 6: because you know, it's one thing to say that, Okay,
Speaker 6: my phone buying has been pushed out by three months
Speaker 6: or six months or so, Okay, the demand comes back
Speaker 6: next year. You know, it's it's not that big of
Speaker 6: a deal. But once you really get a bad feeling
Speaker 6: about a company or a country, that sourness really impacts
Speaker 6: the fundamentals of it. You know, we have seen what's
Speaker 6: going on with Tesla and Europe, for example. You don't
Speaker 6: want Apple to have that same feeling in China where
Speaker 6: consumer is saying, you know what, I don't want to
Speaker 6: touch an American brand. I would rather just buy the
Speaker 6: local one. And that's a very big problem in our
Speaker 6: view because Greater China region accounts for twenty percent of
Speaker 6: Apple's revenue.
Speaker 2: Yeah, and this is what we're talking about. Now, we're
Speaker 2: not even talking super cycles anymore. I feel like six
Speaker 2: months ago is like now it's coming. Then it's well,
Speaker 2: I have wone supercycle. To that point, we've already seen
Speaker 2: save Ford talking about discounting their cars to get people
Speaker 2: in the door. Is this going to be a similar
Speaker 2: case for Apple because they're not a discountery kind of thing.
Speaker 6: No, I don't think so. I mean, I think, you know,
Speaker 6: I think the Apple CEO has played it very well
Speaker 6: when it comes to China. He has gone to China
Speaker 6: few times, He's been seen with the commerce ministers. He's
Speaker 6: talking about investing more money here there, and I think
Speaker 6: he's playing the cards right, because you really don't want
Speaker 6: the world's you know, most nucrative market for your goods
Speaker 6: to basically have a very bad feeling about your products
Speaker 6: because at the end of the day in the US,
Speaker 6: you know, they really cannot grow much. It's a saturated
Speaker 6: market for them. Their growth rate will come from emerging markets,
Speaker 6: whether it's China or in a few years from India.
Speaker 6: But you know, they really have to play it nicely
Speaker 6: in China in order to show growth rate over the
Speaker 6: next three to five years.
Speaker 4: In terms of overall tech spending on a rag, how
Speaker 4: elastic is tech spending broadly defined? It is it something
Speaker 4: that these companies feel like they have to do no
Speaker 4: matter what, or like advertising. We're just talking to Etherrong
Speaker 4: andoth and that is very discretionary spending on a part
Speaker 4: of a company that tech.
Speaker 6: I think you divided in two categories. One is your
Speaker 6: growth capex where you're going to invest for newer products,
Speaker 6: and that will remain the case. You know, AI spending.
Speaker 6: Let's say somebody is spending you know, one hundred dollars more,
Speaker 6: they will probably spend ninety five hundred dollars again, that's okay.
Speaker 6: But the problem comes in now it comes at the
Speaker 6: expense of something else. You know, you are going to
Speaker 6: upgrade the PCs in your department. That's not going to happen.
Speaker 6: You're gonna push it out by six months. Servers, normal
Speaker 6: software that you use for day to day works. You know,
Speaker 6: you're going to scale back on some of those elements. Consulting,
Speaker 6: you know, is off the window at this point. I mean,
Speaker 6: I'd be very surprised to see consulting. I you know,
Speaker 6: one could expect layoffs coming in the consulting world over
Speaker 6: the next few months because if there is no work,
Speaker 6: you know, these companies are going to count out consultants,
Speaker 6: you know, whether it's McKenzie, BCG or some of the
Speaker 6: other services companies. So you have to take money out
Speaker 6: from one to give it to the other person.
Speaker 2: I'd say, is there rotation of money or just a
Speaker 2: non spend of money altogether? Like does one section spend
Speaker 2: more while the other spends less or is this a
Speaker 2: true pullback?
Speaker 6: It was a mix of both. I think reallocation is
Speaker 6: definitely going to go, but I don't expect you know,
Speaker 6: if somebody is investing in AI to improve their operations,
Speaker 6: they're not going to stop that project. But to be
Speaker 6: very frank that number as a percentage of total spending
Speaker 6: is still not that big for a large bank or
Speaker 6: a retail company. It's really the day to day work,
Speaker 6: and that's where you're going to see. I, you know,
Speaker 6: anticipating more layoffs coming in over the next one one
Speaker 6: and a half months from some of these vendors.
Speaker 2: Oh man, that is a grim prediction on that point.
Speaker 2: How fast do you think spending could pick up? Like
Speaker 2: what would be a trigger for reset?
Speaker 6: You know, the news like viatam. Please give me five
Speaker 6: or more of those news releases and all of this
Speaker 6: on turns and everything goes back to normal. Because frankly speaking,
Speaker 6: this is we are really on a thin line when
Speaker 6: it comes to business confidence. And I think really the
Speaker 6: the you know, in our view, these things are really
Speaker 6: they're playing with fire because once it takes the spiral downturn,
Speaker 6: it's very difficult to stop it. So if it stops
Speaker 6: over the next few weeks, I think we have we
Speaker 6: can see a good end to the year. But otherwise,
Speaker 6: you know, once the layoff starts, then it's a vicious cycle.
Speaker 4: So is there any safe names in tech? I mean,
Speaker 4: is Microsoft the safe name is?
Speaker 6: That's a very good point, Paul. You know, we have
Speaker 6: been thinking a lot about it, and you know, discussions
Speaker 6: we have been having and and you know, with with
Speaker 6: works like you, we've been saying that companies that are
Speaker 6: really exposed to the large enterprises, so the Fortune five
Speaker 6: hundred companies or the Fortune one thousand companies, they will
Speaker 6: be less impacted than the ones that are impacted to
Speaker 6: the SMB spending. So I'll give you a very good
Speaker 6: example here is Shopify. Look at how it's completely been
Speaker 6: you know, decimated yesterday and today because the bulk of
Speaker 6: their consumer base or the client base is small and
Speaker 6: medium businesses. Now somebody like a Microsoft or a Workday
Speaker 6: that deals primarily with larger companies and larger enterprises a
Speaker 6: lot less you know, disturbance in their revenue flow, they
Speaker 6: will also get hit. It's not that they're immune, but
Speaker 6: it'd be a lot less than somebody like a Shopify.
Speaker 2: I also have to wonder if this does this change
Speaker 2: the ROI for AI for example, like you got to
Speaker 2: prove it harder and faster in this kind of environment.
Speaker 6: See, one of the things is that's still in the
Speaker 6: experimentation state. So let's say if a company, if a
Speaker 6: bank is spending one hundred dollars in technology spending, you know,
Speaker 6: in total, they're not spending more than a dollar or
Speaker 6: two dollars in AI. So it doesn't really you know,
Speaker 6: that doesn't move the needles. It's really the bulk of
Speaker 6: the big hardware purchases, big computer purchases, that's the one
Speaker 6: that you know, gets gets pushed.
Speaker 9: Out all right.
Speaker 7: On ra grana, thank you so much. We appreciate that.
Speaker 4: On a rog Rana covers all the technology for Bloomberg Intelligence.
Speaker 4: Joining us from Chicago via a zoom Here live.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
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Speaker 4: What we've been trying to do is kind of go
Speaker 4: industry by injury and see what potential impact could be
Speaker 4: on a world where there are much higher tariffs in
Speaker 4: most of the world. One of the areas we want
Speaker 4: look at now is the media business. It is a
Speaker 4: global business, and for that we go to KEITHA. Rounganath
Speaker 4: and she covers the media industry for Bloomberg Intelligence.
Speaker 7: KEITHA.
Speaker 4: I mean, I guess where do you see some of
Speaker 4: the risks to some of these big media companies to
Speaker 4: their business in a world that appears to be going
Speaker 4: through some type of trade and dislocation to say the least.
Speaker 10: Yeah, sure, Paul, So I think in general what we're
Speaker 10: seeing is, of course, a lot of these media companies
Speaker 10: are heavily exposed to advertising, television advertising, and television advertising
Speaker 10: has already kind of been a little bit down in
Speaker 10: the dumps, and overall we're seeing, you know, kind of
Speaker 10: consumer confidence shaken up pretty badly. And with that, we're
Speaker 10: seeing ad projections, so ad growth projections actually come down
Speaker 10: by quite a bit. So before all of this stuff started,
Speaker 10: you know, Magnat Global was projecting about five percent increase
Speaker 10: in US advertising spend for twenty twenty five. Now it's down. Actually,
Speaker 10: before the tariff News it was down to four percent,
Speaker 10: and I suspect it could go even lower. So that
Speaker 10: is going to be a big blow to the bottom
Speaker 10: lines of a lot of companies like a Warner Brothers
Speaker 10: or a paramount.
Speaker 2: So let me just ask a stupid question for you too,
Speaker 2: smart media people. So I'm Nike. I usually do advertising,
Speaker 2: say on CBS, I'm making all of this up right,
Speaker 2: all of a sudden, I'm like, oh my gosh, I'm
Speaker 2: not being able to sell my product, so I'm going
Speaker 2: to pull that ad all together. And is that like
Speaker 2: the logical one plus one plus one equals three trickle down, Kita.
Speaker 10: That is exactly what it is. We have seen, you know,
Speaker 10: it's great that you brought up Nike. We've seen commentary
Speaker 10: from a lot of these consumer facing companies that are
Speaker 10: saying that they are going to pull back on advertising
Speaker 10: quite a bit this year, and that's really just a
Speaker 10: way of them protecting their bottom lines. So we're seeing
Speaker 10: that commentary actually across the board. We're seeing even you know,
Speaker 10: digital advertising, and remember digital advertising has kind of been
Speaker 10: the standout, has been the star of the show, if
Speaker 10: you will, for so many years now, you know, jumping
Speaker 10: up every year about fifteen to eighteen percent, and we've
Speaker 10: seen some pretty soft commentary even for digital advertising. So
Speaker 10: I think across the board there is definitely a lot
Speaker 10: of nervousness.
Speaker 4: How about you know, I think about the Walt Disney
Speaker 4: Company and even Comcast. The theme park business, which has
Speaker 4: been such a great business for or It's been a
Speaker 4: great business just across the board, and Disney's really stepped
Speaker 4: up its capital spending for that business because they're so
Speaker 4: bullish on it. But if consumers sentiment is shaky, here
Speaker 4: is the expectation that they'll see see it in their
Speaker 4: top line.
Speaker 10: I think so, Paul, I think this is going to
Speaker 10: be a real risk for Disney. Remember this is so
Speaker 10: so important for Disney. Parks make up sixty percent of
Speaker 10: the company's profits, so absolutely critical to their bottom line. Now,
Speaker 10: what management did is they already guided to six to
Speaker 10: eight percent profit growth in the theme park business for
Speaker 10: this year. But I think they might have spoken too soon.
Speaker 10: So we've already kind of seen a little bit of
Speaker 10: softening in terms of theme park trends, and I think
Speaker 10: it's going to get even more and more difficult as
Speaker 10: kind of the year progresses. Disney also faces some competition
Speaker 10: from Comcast actually, because Comcast is opening Epic Universe on
Speaker 10: on May twenty seconds. So for Disney, it could almost
Speaker 10: be like a double blow here.
Speaker 2: Which is so weird because weren't we saying just like
Speaker 2: a couple quarters ago, Oh, it's great because it's like
Speaker 2: a one stop shop. You get to go there. You're
Speaker 2: going to Universal or Comcast, but you're going to go
Speaker 2: to Disney at the same time. Now that's not the case.
Speaker 10: Not the case because again there's going to be a
Speaker 10: lot of pressure on consumer wallets and we've seen some
Speaker 10: really clever pricing come out of Comcasts. So the way
Speaker 10: that they're packaging their promotions for you know, Epic Universe
Speaker 10: is it's a three or a four day package leaving
Speaker 10: you know, a family like very little time to go
Speaker 10: to Disney. So they know what they're doing.
Speaker 7: Is there going to be an analyst day for this
Speaker 7: new theme park?
Speaker 10: Not that I've heard.
Speaker 6: I haven't heard.
Speaker 4: See, that's what Comcasts and most other companies don't get that.
Speaker 7: Disney gets Disney.
Speaker 4: Whenever they do something from like a new crew Ship
Speaker 4: or open up Shanghai, they have all their investors' annals
Speaker 4: come and it makes everybody feel good and presumably that's
Speaker 4: good for your stock.
Speaker 7: And they know how to play that game. Look like
Speaker 7: a bribe, yeah, but it's fun. They used to be
Speaker 7: missing and what's your points?
Speaker 4: All right, Githa, thank you so much for you appreciate that,
Speaker 4: Geitha Ranganathan for Bloomberg Intelligence and the best one.
Speaker 7: Of those I did.
Speaker 4: It was in Canadian National opened up their tunnel through
Speaker 4: one of the rocky mountains that cut the trip the
Speaker 4: trans continent trip by like fifty percent. That we had
Speaker 4: a multi day rail trip through the Canadian ROCKIESWS.
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