1 00:00:02,759 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,640 --> 00:00:14,600 Speaker 1: Bloomberg Intelligence podcast. Catch US Live weekdays at ten am 3 00:00:14,640 --> 00:00:17,880 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,960 --> 00:00:21,080 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,400 --> 00:00:23,120 Speaker 1: or watch US live on YouTube. 6 00:00:23,800 --> 00:00:26,320 Speaker 2: You know, drive in early enough to work. You get 7 00:00:26,320 --> 00:00:29,360 Speaker 2: to see their trucks on the roadway making deliveries to restaurants, 8 00:00:29,680 --> 00:00:32,879 Speaker 2: A Performance Food Group and US Foods. 9 00:00:33,479 --> 00:00:35,560 Speaker 3: Oh you see, No, I see all the time. I 10 00:00:35,600 --> 00:00:37,519 Speaker 3: don't come as early as you I should probably. 11 00:00:37,720 --> 00:00:40,000 Speaker 4: Anyways, three am, there's like. 12 00:00:41,720 --> 00:00:45,520 Speaker 2: Talk about a possible deal takeover one by the other. 13 00:00:46,080 --> 00:00:50,960 Speaker 2: Crystal C is our US deals reporter. Who's taking over? Who? 14 00:00:51,000 --> 00:00:51,440 Speaker 2: Do we know? 15 00:00:51,560 --> 00:00:53,120 Speaker 4: Or is this this rumor at this point? 16 00:00:53,280 --> 00:00:56,680 Speaker 5: So we're reporting that US Foods has made and has 17 00:00:56,720 --> 00:01:02,000 Speaker 5: shown interest in tie up. So the companies are actually 18 00:01:02,080 --> 00:01:05,959 Speaker 5: pretty similar in size in terms of enterprise value. They 19 00:01:05,959 --> 00:01:07,520 Speaker 5: have a lot of debt, both of them. So at 20 00:01:07,520 --> 00:01:10,800 Speaker 5: this point it's early. We don't know who'shitting over who 21 00:01:10,920 --> 00:01:13,800 Speaker 5: just yet. But what we know is if this deal 22 00:01:13,840 --> 00:01:15,959 Speaker 5: does go through, or if this deal does go ahead, 23 00:01:16,000 --> 00:01:20,839 Speaker 5: it will face a lot of regulatory scrutiny. And eventually 24 00:01:21,520 --> 00:01:24,160 Speaker 5: the goal is to combine the company into a company 25 00:01:24,200 --> 00:01:26,440 Speaker 5: that has one hundred billion dollars worth of revenue. 26 00:01:26,720 --> 00:01:30,200 Speaker 3: Do we think it's more about scale, margins, distribution, overlap, 27 00:01:30,280 --> 00:01:31,920 Speaker 3: or just really fending off Cisco. 28 00:01:32,600 --> 00:01:36,120 Speaker 5: So Cisco is actually currently the number one, the top 29 00:01:36,160 --> 00:01:36,959 Speaker 5: three four players. 30 00:01:37,040 --> 00:01:40,560 Speaker 4: Actually that's Cisco with an S an S. 31 00:01:40,680 --> 00:01:43,280 Speaker 5: That's right, and that actually I see those trucks more 32 00:01:43,319 --> 00:01:44,920 Speaker 5: than I see the others, at least in the city. 33 00:01:45,000 --> 00:01:49,000 Speaker 5: So Cisco US Foods performances. They all have their moment 34 00:01:49,120 --> 00:01:51,440 Speaker 5: like in the past decade or so. Actually they have 35 00:01:51,760 --> 00:01:54,760 Speaker 5: each like taken top spot and it's moved around. So 36 00:01:55,280 --> 00:01:58,160 Speaker 5: there are moments where you know, they have had activists 37 00:01:58,160 --> 00:02:01,560 Speaker 5: attack at various different points. So it's interesting that this 38 00:02:01,800 --> 00:02:05,600 Speaker 5: is the moment where you see that US Food is 39 00:02:05,600 --> 00:02:09,160 Speaker 5: performing better than Performance Food despite the name. So it's 40 00:02:09,360 --> 00:02:12,520 Speaker 5: it's it's going to be a very challenging deal in 41 00:02:12,560 --> 00:02:15,680 Speaker 5: twenty fifteen when Cisco and US try for a tie up. 42 00:02:15,680 --> 00:02:18,880 Speaker 5: That that deal got struck by antitrust. So definitely is 43 00:02:18,880 --> 00:02:23,959 Speaker 5: a market where scale matters, margin matters. You can combine regions, 44 00:02:24,000 --> 00:02:26,640 Speaker 5: you can combine your fleets, so all of those things 45 00:02:26,639 --> 00:02:29,760 Speaker 5: make it a very good synergetic. 46 00:02:30,120 --> 00:02:33,040 Speaker 4: Margins right now, or like you said, the razor thin right. 47 00:02:33,360 --> 00:02:36,040 Speaker 5: So it depends on the market that you surface, like 48 00:02:36,080 --> 00:02:39,359 Speaker 5: depending on whether you're going after restaurants, is its cafes 49 00:02:39,560 --> 00:02:42,280 Speaker 5: or is it like uh should back up school? 50 00:02:42,320 --> 00:02:46,480 Speaker 2: What do these companies do? They prepare food, they bring 51 00:02:47,080 --> 00:02:47,640 Speaker 2: explain that. 52 00:02:47,720 --> 00:02:49,720 Speaker 5: So there are various different things that they do. They 53 00:02:50,360 --> 00:02:53,400 Speaker 5: it comes from, they do produce, they do prepared food, 54 00:02:53,520 --> 00:02:59,360 Speaker 5: and they supplied to places like restaurants, hospitals, schools, hotels. 55 00:02:59,480 --> 00:03:03,040 Speaker 5: So depending on your end customers and what your products are, 56 00:03:03,160 --> 00:03:07,600 Speaker 5: the margins slightly different also means your production would be 57 00:03:07,639 --> 00:03:11,720 Speaker 5: different and it impacts costs. So I'm sure there is 58 00:03:11,919 --> 00:03:15,720 Speaker 5: in these CEO's head the dream combination of you know, 59 00:03:15,800 --> 00:03:19,800 Speaker 5: what the composition of each product or each geographic should be, 60 00:03:20,280 --> 00:03:24,320 Speaker 5: and well, if so this in this case, US would 61 00:03:24,320 --> 00:03:27,839 Speaker 5: clearly think that a tie up with performance would get 62 00:03:27,840 --> 00:03:31,200 Speaker 5: them closer to that ideal business portfolio. 63 00:03:31,560 --> 00:03:33,680 Speaker 3: And regarding the why, now, do you think it has 64 00:03:33,720 --> 00:03:38,360 Speaker 3: something to do with software regulatory regulations with the TRAP 65 00:03:38,440 --> 00:03:40,360 Speaker 3: administration as compared to the bidens. 66 00:03:40,480 --> 00:03:44,200 Speaker 5: Yeah, that's definitely one big concern. It is a very 67 00:03:44,360 --> 00:03:48,960 Speaker 5: consolidated industry. So my gut feeling is either way, under 68 00:03:49,000 --> 00:03:53,400 Speaker 5: whatever administration, it will be looked at by d ANTI trust. 69 00:03:54,280 --> 00:03:58,080 Speaker 5: That said, the M and A deal maker had been 70 00:03:58,240 --> 00:04:01,840 Speaker 5: expecting twenty twenty five since Inauguration Day that this would 71 00:04:01,880 --> 00:04:05,920 Speaker 5: be a much friendlier M and A market under President 72 00:04:05,920 --> 00:04:09,840 Speaker 5: Trump and Liberation Day hit and that put a lot 73 00:04:09,840 --> 00:04:12,360 Speaker 5: of things on pause. In the past month or so, 74 00:04:12,560 --> 00:04:16,080 Speaker 5: we have seen people warming up to the idea of 75 00:04:16,400 --> 00:04:20,320 Speaker 5: exploring deals or like you know, pulling triggers. So there 76 00:04:20,400 --> 00:04:24,760 Speaker 5: isn't a there is an element of a friendlier regulatory environment. 77 00:04:24,800 --> 00:04:28,680 Speaker 2: All right, Crystal appreciated. Crystal sed the US deals reporter 78 00:04:28,760 --> 00:04:33,040 Speaker 2: from Bloomberg News talking about Performance Group attracting a takeover 79 00:04:33,160 --> 00:04:36,440 Speaker 2: interest from US Food. Again, this is a potentially could 80 00:04:36,480 --> 00:04:39,800 Speaker 2: create a distribution company with combined sales of something on 81 00:04:39,839 --> 00:04:42,160 Speaker 2: the order of like one hundred billion dollars. 82 00:04:43,920 --> 00:04:47,640 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch US Live 83 00:04:47,720 --> 00:04:50,799 Speaker 1: weekdays at ten am Eastern on Apple Corplay and Android 84 00:04:50,800 --> 00:04:54,120 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 85 00:04:54,160 --> 00:04:57,320 Speaker 1: you get your podcasts, or watch US Live on YouTube. 86 00:04:57,960 --> 00:05:01,960 Speaker 2: Did you know the use remnants from the manufacture of 87 00:05:02,000 --> 00:05:03,919 Speaker 2: denim in the US currency. 88 00:05:04,440 --> 00:05:04,680 Speaker 3: No. 89 00:05:05,279 --> 00:05:07,520 Speaker 2: Really, Well, if you hold up a bill you'll see 90 00:05:07,520 --> 00:05:09,800 Speaker 2: like little shreds. It looks like, you. 91 00:05:09,680 --> 00:05:12,640 Speaker 3: Know, is that only in the US or does that 92 00:05:12,680 --> 00:05:13,080 Speaker 3: happen all? 93 00:05:13,560 --> 00:05:14,080 Speaker 4: I don't know. 94 00:05:14,160 --> 00:05:19,640 Speaker 2: I know that's definitely the case with US currency. And 95 00:05:19,640 --> 00:05:22,080 Speaker 2: that brings us to a discussion about Levi Strauss with 96 00:05:22,240 --> 00:05:25,880 Speaker 2: their herrings. Mary Ross Gilbert is senior equity analyst covering 97 00:05:25,920 --> 00:05:26,840 Speaker 2: retail for Bloomberg. 98 00:05:27,200 --> 00:05:27,760 Speaker 4: Did you know that? 99 00:05:29,760 --> 00:05:30,279 Speaker 6: I did not. 100 00:05:30,480 --> 00:05:33,000 Speaker 7: I mean, I know what you're talking about, those little threads, and. 101 00:05:33,320 --> 00:05:38,000 Speaker 2: Yes, no, that's from that's from the byproduct of manufacturing Denham. 102 00:05:38,000 --> 00:05:42,080 Speaker 2: They use it at the Treasury. Mary was Mary Ross 103 00:05:42,120 --> 00:05:44,400 Speaker 2: Gilbert yesterday? Was she was wearing? 104 00:05:45,080 --> 00:05:48,080 Speaker 4: Where were you wearing yesterday? 105 00:05:47,200 --> 00:05:47,320 Speaker 5: Uh? 106 00:05:48,839 --> 00:05:53,279 Speaker 2: Ralph Lauren? And today the Brooks brothers No gap, Okay. 107 00:05:53,040 --> 00:05:56,160 Speaker 7: Very nice, but it's a it's a it's a malbond 108 00:05:56,240 --> 00:05:59,080 Speaker 7: gap collab so sold out. 109 00:05:59,360 --> 00:06:02,760 Speaker 2: It looked like the Brooks Brothers thing. But anyway, so 110 00:06:03,640 --> 00:06:06,560 Speaker 2: Levi what did we learn from Levi Strauss and their earnings? 111 00:06:07,839 --> 00:06:10,760 Speaker 7: So I think what we learned in the earnings report 112 00:06:11,040 --> 00:06:14,000 Speaker 7: first of all, you know, very optimistic view. But if 113 00:06:14,040 --> 00:06:16,480 Speaker 7: you really dissect it, for example, the guidance that they 114 00:06:16,560 --> 00:06:19,480 Speaker 7: raised on the revenue line. They now expect full your 115 00:06:19,520 --> 00:06:22,160 Speaker 7: revenue to be up one to two versus down one 116 00:06:22,200 --> 00:06:24,960 Speaker 7: to two. Most of it looked like a change a 117 00:06:25,120 --> 00:06:28,440 Speaker 7: shift in their view on the currency headwind, and then 118 00:06:28,480 --> 00:06:31,599 Speaker 7: the other piece was because they had a strong second quarter. 119 00:06:32,279 --> 00:06:35,279 Speaker 7: So the way we look at it is there's probably 120 00:06:35,839 --> 00:06:40,400 Speaker 7: upside above their guidance and consensus view, which is in 121 00:06:40,440 --> 00:06:44,000 Speaker 7: that range. So you know, we think that the way 122 00:06:44,080 --> 00:06:47,200 Speaker 7: the business has been reset, look, Dockers is out of 123 00:06:47,240 --> 00:06:48,040 Speaker 7: the picture now. 124 00:06:48,320 --> 00:06:50,520 Speaker 6: They got rid of some underperforming lines. 125 00:06:50,600 --> 00:06:54,680 Speaker 7: They really honed in their skew count, their stock keeping 126 00:06:54,760 --> 00:07:01,440 Speaker 7: u an account, and really honed on profitable merchandise, and 127 00:07:01,880 --> 00:07:08,080 Speaker 7: they've really taken their tops business. They've infused more fashion 128 00:07:08,200 --> 00:07:12,360 Speaker 7: and style and it's a growing category for them, as 129 00:07:12,560 --> 00:07:14,960 Speaker 7: is non den and bottoms, and of course their core 130 00:07:15,080 --> 00:07:17,280 Speaker 7: denim business jeans business, which. 131 00:07:17,480 --> 00:07:19,840 Speaker 6: They are at the leading edge of the latest trends. 132 00:07:19,920 --> 00:07:25,200 Speaker 7: And you know, even slim and straight are still a thing, 133 00:07:25,680 --> 00:07:28,360 Speaker 7: but the biggest growth is really coming from loose and 134 00:07:28,440 --> 00:07:32,640 Speaker 7: baggy and that actually translated with shorts too for summer, 135 00:07:32,800 --> 00:07:35,120 Speaker 7: and that kind of explains why they also had a 136 00:07:35,200 --> 00:07:40,200 Speaker 7: strong second quarter and they saw it globally, so you know, 137 00:07:40,360 --> 00:07:44,080 Speaker 7: very very good and across wholesale too, So that was 138 00:07:44,160 --> 00:07:47,440 Speaker 7: nice to see that. But DTC directed consumer really led 139 00:07:47,880 --> 00:07:49,440 Speaker 7: and that was up double digits. 140 00:07:49,880 --> 00:07:52,280 Speaker 3: Have you heard John skin and jeans are out and 141 00:07:52,400 --> 00:07:54,320 Speaker 3: baggy is in. If you look at all the young 142 00:07:54,360 --> 00:07:56,840 Speaker 3: folks like gen Z, they do wear baggy. 143 00:07:58,280 --> 00:08:01,960 Speaker 2: I've got these stretch fabrics. Okay, good's disappointed, which I 144 00:08:02,040 --> 00:08:02,880 Speaker 2: find myself. 145 00:08:03,200 --> 00:08:07,800 Speaker 3: Okay, that's good. Levi's welcomes all styles. Okay, so more 146 00:08:07,840 --> 00:08:10,880 Speaker 3: than half of Levi's merchandise merchandise needs for the rest 147 00:08:10,880 --> 00:08:13,880 Speaker 3: of the year according to the company, they've already been imported. 148 00:08:14,400 --> 00:08:17,880 Speaker 3: But what will happen when that runs out? Have they 149 00:08:17,920 --> 00:08:21,280 Speaker 3: released any plans when that happens? And with tariffs set 150 00:08:21,320 --> 00:08:22,040 Speaker 3: in place by then? 151 00:08:22,200 --> 00:08:26,119 Speaker 7: Assuming yeah, Isabelle, So you brought up a key point 152 00:08:26,160 --> 00:08:28,920 Speaker 7: and that is what is the impact of terriffs? So 153 00:08:29,200 --> 00:08:31,760 Speaker 7: just to give you a little perspective, Levi's is very 154 00:08:31,800 --> 00:08:35,440 Speaker 7: well diversified. They only source about one percent from China, 155 00:08:35,800 --> 00:08:39,200 Speaker 7: so very little exposure there. Vietnam is probably five to 156 00:08:39,280 --> 00:08:42,600 Speaker 7: nine percent. Of course, we have news that that tariff 157 00:08:42,600 --> 00:08:45,360 Speaker 7: freight Trump has set, but it's not carved in stone 158 00:08:45,400 --> 00:08:47,000 Speaker 7: and there's no effective date yet. 159 00:08:47,080 --> 00:08:49,160 Speaker 6: And as we got news today. 160 00:08:48,880 --> 00:08:51,600 Speaker 7: That Vietnam is saying, hey, we don't want a twenty 161 00:08:51,640 --> 00:08:52,360 Speaker 7: percent tariff. 162 00:08:52,440 --> 00:08:54,199 Speaker 6: We wanted to be ten to fifteen. 163 00:08:54,440 --> 00:08:59,280 Speaker 7: Nonetheless, with Vietnam being five to nine percent, and then 164 00:08:59,400 --> 00:09:06,199 Speaker 7: Mexico's probably that is under their Canada agreement, so chances 165 00:09:06,200 --> 00:09:09,240 Speaker 7: are they're not affected, and then everywhere else they're assuming 166 00:09:09,320 --> 00:09:12,720 Speaker 7: ten percent. So the unmitigated impact is only about fifty 167 00:09:12,760 --> 00:09:18,640 Speaker 7: basis points for the year, but with mitigation mitigation measures 168 00:09:18,880 --> 00:09:22,680 Speaker 7: already taken effect, that's going to reduce it down to 169 00:09:22,800 --> 00:09:25,000 Speaker 7: just twenty basis points. So they are one of the 170 00:09:25,040 --> 00:09:28,079 Speaker 7: companies if I look at my universe of apparel branded 171 00:09:28,120 --> 00:09:32,199 Speaker 7: retailers that are sort of the least impacted by tariffs. 172 00:09:33,360 --> 00:09:37,199 Speaker 7: LUs things change, but we still think that the impact 173 00:09:37,360 --> 00:09:40,360 Speaker 7: will will still not be as significant as it might 174 00:09:40,400 --> 00:09:41,160 Speaker 7: be for others. 175 00:09:41,440 --> 00:09:43,520 Speaker 2: I mean, is a company like this willing to take 176 00:09:43,559 --> 00:09:48,959 Speaker 2: a hit to margins before raising prices for consumers? Is 177 00:09:49,000 --> 00:09:50,599 Speaker 2: it like thirty seconds? 178 00:09:51,400 --> 00:09:55,440 Speaker 7: Yeah, John, you know, they're actually strategically raising prices on 179 00:09:55,480 --> 00:09:58,520 Speaker 7: some of their new innovation, and that's where they're able 180 00:09:58,559 --> 00:10:00,640 Speaker 7: to sort of build it in with that product. 181 00:10:00,640 --> 00:10:02,280 Speaker 6: And I think that's working effectively. 182 00:10:02,640 --> 00:10:04,600 Speaker 2: All right, Mary, boy, he's a pleasure. I can't wait 183 00:10:04,600 --> 00:10:07,040 Speaker 2: to see what you're wearing next week. Mary Ross Gilbert, 184 00:10:07,360 --> 00:10:11,480 Speaker 2: a senior equity analyst covering that sounded kind of creepy, sorry, 185 00:10:12,280 --> 00:10:15,839 Speaker 2: covering retail for us here at Bloomberg Intelligence. 186 00:10:17,640 --> 00:10:21,320 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 187 00:10:21,400 --> 00:10:24,480 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 188 00:10:24,520 --> 00:10:27,800 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 189 00:10:27,880 --> 00:10:31,000 Speaker 1: you get your podcasts, or watch us live on YouTube. 190 00:10:31,559 --> 00:10:33,200 Speaker 2: You know what time of the year it is. It's 191 00:10:33,240 --> 00:10:37,520 Speaker 2: time for the mid year assessments for the global communications 192 00:10:37,920 --> 00:10:41,920 Speaker 2: and network equipment specifically. Who better to do that than 193 00:10:41,960 --> 00:10:45,920 Speaker 2: Wujin Ho. He's the senior technology analyst from Bloomberg Intelligence 194 00:10:46,000 --> 00:10:49,800 Speaker 2: and joining us on this Friday morning from our campus 195 00:10:50,000 --> 00:10:54,480 Speaker 2: in Princeton, New Jersey. All right, midyear updates. So what's 196 00:10:54,520 --> 00:10:55,680 Speaker 2: the update, Wou Jin. 197 00:10:56,600 --> 00:11:01,400 Speaker 8: Well, I will tell you. Look, the fundamentals are actually 198 00:11:01,400 --> 00:11:05,040 Speaker 8: fairly positive. You have AI drivers driving certain names like 199 00:11:05,080 --> 00:11:10,000 Speaker 8: Arista Networks and Celestica, and also the enterprise campus switching 200 00:11:10,000 --> 00:11:13,720 Speaker 8: and the data center searching have upgrade drivers as well. 201 00:11:13,800 --> 00:11:17,480 Speaker 8: That's going to benefit someone like a Cisco and an HPE. 202 00:11:18,160 --> 00:11:21,360 Speaker 8: Now the issue is, and your prior guest was talking 203 00:11:21,360 --> 00:11:25,880 Speaker 8: about tariffs and export restrictions. Tariffs actually really spooked me out. 204 00:11:26,360 --> 00:11:28,800 Speaker 8: And does that throw a monkey ranch and enterprise IT 205 00:11:29,080 --> 00:11:31,680 Speaker 8: spending into the second half of the year and temper 206 00:11:31,720 --> 00:11:33,680 Speaker 8: the growth and earnings expectations. 207 00:11:34,120 --> 00:11:37,200 Speaker 3: So how much could tariff's and economic uncertainty really trip 208 00:11:37,280 --> 00:11:40,040 Speaker 3: up the global networking sector sales in the latter half 209 00:11:40,040 --> 00:11:42,680 Speaker 3: of the year. Do we have a number in mind, Yeah. 210 00:11:42,960 --> 00:11:46,200 Speaker 8: Don't have a number in mind. There's a couple of things. 211 00:11:46,360 --> 00:11:49,160 Speaker 8: The networking sector has actually done a very very good 212 00:11:49,280 --> 00:11:55,160 Speaker 8: job in managing and navigating tariffs. Right from a sales perspective, 213 00:11:55,200 --> 00:11:58,320 Speaker 8: we really haven't seen estimate cuts as a result of it. 214 00:11:58,720 --> 00:12:01,520 Speaker 8: From a gross margin perspective, we're thinking about one hundred 215 00:12:01,520 --> 00:12:03,839 Speaker 8: and two hundred basis points, and that's already reflected into 216 00:12:03,880 --> 00:12:08,839 Speaker 8: consensus expectations. What I don't know right, but there are 217 00:12:08,920 --> 00:12:11,439 Speaker 8: a lot of enterprise IT spending surveys that are out 218 00:12:11,480 --> 00:12:14,680 Speaker 8: there saying that they are going to start ciphoning, potentially 219 00:12:14,720 --> 00:12:18,360 Speaker 8: siphoning off some of their spending plans. One of the 220 00:12:18,360 --> 00:12:21,560 Speaker 8: things that I will say is that enterprise enterprise networking 221 00:12:21,679 --> 00:12:26,440 Speaker 8: tends to be a more mature and commoditized market. So 222 00:12:26,600 --> 00:12:28,600 Speaker 8: if there's going to be a couple of areas of 223 00:12:28,840 --> 00:12:34,280 Speaker 8: spending that could be curtailed, PCs obviously, but also networking 224 00:12:34,520 --> 00:12:36,000 Speaker 8: would be second in line. 225 00:12:36,360 --> 00:12:38,800 Speaker 2: Hey, Wujin, we've been making a big deal about well, 226 00:12:38,840 --> 00:12:40,840 Speaker 2: it is a big deal that in Vidia across the 227 00:12:41,360 --> 00:12:47,079 Speaker 2: ford trillion dollar market cap. Can that be sustained given 228 00:12:47,160 --> 00:12:52,199 Speaker 2: what you just said, Let's let's talk about the multiple expansions. 229 00:12:53,000 --> 00:12:53,320 Speaker 4: Sure. 230 00:12:53,880 --> 00:12:56,480 Speaker 8: So I'm not the Invidia analyst, I can talk from 231 00:12:56,520 --> 00:12:58,360 Speaker 8: a high level in terms of what's going on in 232 00:12:58,440 --> 00:13:02,880 Speaker 8: Nvidia as well as some of the drivers to earnings growth. 233 00:13:03,600 --> 00:13:07,680 Speaker 8: If we look at some of the AI initiatives that 234 00:13:07,720 --> 00:13:10,560 Speaker 8: are going on, whether it's by the hyperscale cloud guys 235 00:13:11,200 --> 00:13:15,440 Speaker 8: or some of the sovereigns and these neo clouds like 236 00:13:15,480 --> 00:13:19,760 Speaker 8: core Waves, they're building out these one hundred thousand GPU 237 00:13:19,920 --> 00:13:23,240 Speaker 8: type of installments. This is the lasting based on my 238 00:13:23,440 --> 00:13:26,160 Speaker 8: work and my colleagues works, this is lasting over the 239 00:13:26,200 --> 00:13:29,839 Speaker 8: next couple of years. The only gaming time town for 240 00:13:30,600 --> 00:13:34,840 Speaker 8: high end GPUs to train AI models is in Vidia. 241 00:13:35,200 --> 00:13:38,520 Speaker 8: So is there a sales momentum as well as earnings 242 00:13:38,520 --> 00:13:40,800 Speaker 8: momentum to support it. Yes, there is for Nvidia as 243 00:13:40,840 --> 00:13:42,520 Speaker 8: well as the rest of the supply chain. 244 00:13:43,280 --> 00:13:45,840 Speaker 3: In the note you mentioned or it was mentioned that 245 00:13:46,960 --> 00:13:49,400 Speaker 3: we aren't seeing any trade overhang risks when it comes 246 00:13:49,400 --> 00:13:51,320 Speaker 3: to demand in the latter half of the year, and 247 00:13:51,360 --> 00:13:55,120 Speaker 3: they aren't really reflected in consensus and invaluations. Why do 248 00:13:55,160 --> 00:13:56,080 Speaker 3: you think that's the case? 249 00:13:56,960 --> 00:14:00,920 Speaker 8: Yeah, I don't know, right. I think what happened was 250 00:14:00,960 --> 00:14:05,240 Speaker 8: in the after following the first quarter results. You know, 251 00:14:06,960 --> 00:14:11,960 Speaker 8: the companies have not yet really fully reflected the tariff 252 00:14:12,000 --> 00:14:16,080 Speaker 8: impacts into their expectations and consensus have carried that through 253 00:14:16,160 --> 00:14:19,160 Speaker 8: through the through the rest of the year. There has 254 00:14:19,240 --> 00:14:23,440 Speaker 8: been very little indication after following first quarter results with 255 00:14:23,560 --> 00:14:27,120 Speaker 8: regards to a pullback in demand or more importantly, a 256 00:14:27,200 --> 00:14:30,000 Speaker 8: pull forward in demand that's going to affect the second half. So, 257 00:14:31,080 --> 00:14:35,120 Speaker 8: you know, my guess is is that I'm waiting for 258 00:14:35,200 --> 00:14:37,600 Speaker 8: what the second quarter results according to tell Us in 259 00:14:37,680 --> 00:14:38,600 Speaker 8: terms of the second half. 260 00:14:38,720 --> 00:14:40,160 Speaker 4: We thanks, so I appreciate it. 261 00:14:40,600 --> 00:14:44,160 Speaker 2: Woljin the hold the senior technology and it's from Bloomberg 262 00:14:44,240 --> 00:14:48,360 Speaker 2: Intelligence joining us there from our Princeton, New Jersey canvas. 263 00:14:50,240 --> 00:14:53,920 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 264 00:14:54,040 --> 00:14:57,120 Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android 265 00:14:57,120 --> 00:15:00,440 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 266 00:15:00,480 --> 00:15:03,600 Speaker 1: you get your podcasts, or watch us live on YouTube. 267 00:15:04,640 --> 00:15:05,240 Speaker 4: Do you have a pet? 268 00:15:06,040 --> 00:15:07,120 Speaker 9: I used to growing up? 269 00:15:07,400 --> 00:15:09,760 Speaker 3: Now I live alone in and I used to growing up, 270 00:15:09,760 --> 00:15:11,440 Speaker 3: but now it's hard in New York City. You have 271 00:15:11,480 --> 00:15:14,600 Speaker 3: to take them out in the morning, at noon, after work, 272 00:15:14,800 --> 00:15:17,640 Speaker 3: and for some even before bed. Do you have a pet. 273 00:15:18,200 --> 00:15:20,320 Speaker 4: Used to to? You know? 274 00:15:20,400 --> 00:15:22,800 Speaker 2: I was so upset when we lost her that I 275 00:15:22,920 --> 00:15:25,880 Speaker 2: just I can't bring myself to heartbreak replacer. 276 00:15:27,200 --> 00:15:27,920 Speaker 4: Well, it's a bummer. 277 00:15:29,040 --> 00:15:33,200 Speaker 2: Janna Rosario Pena is our consumer staples analysts, and she's 278 00:15:33,240 --> 00:15:35,520 Speaker 2: here to tell us about just how much we spend 279 00:15:36,120 --> 00:15:36,880 Speaker 2: on pets. 280 00:15:37,120 --> 00:15:39,360 Speaker 4: It's like a staggering figure, isn't it. 281 00:15:39,600 --> 00:15:42,600 Speaker 9: Yes, yes, and it's going to keep growing up over 282 00:15:42,640 --> 00:15:46,240 Speaker 9: the next five years. We expect globally that the market 283 00:15:46,400 --> 00:15:50,200 Speaker 9: my reach about five hundred billion dollars by twenty. 284 00:15:50,200 --> 00:15:51,920 Speaker 4: Only five hundred billion, that's it. 285 00:15:52,040 --> 00:15:54,520 Speaker 2: What God's name of people's I mean, yeah, it's obvious 286 00:15:54,640 --> 00:15:57,840 Speaker 2: dog food and stuff like that, But is there anything 287 00:15:58,000 --> 00:16:00,800 Speaker 2: like else I need to know about, like dressing? Their 288 00:16:00,840 --> 00:16:03,600 Speaker 2: pets up in little crazy costumes and stuff like that 289 00:16:03,640 --> 00:16:08,760 Speaker 2: and little boots. Yes, so there's been a couple of things. 290 00:16:09,600 --> 00:16:13,840 Speaker 9: Food remains the biggest expense for pet ownership. It's about 291 00:16:14,000 --> 00:16:19,160 Speaker 9: thirty forty percent of the expenditure. But there are other 292 00:16:19,400 --> 00:16:23,240 Speaker 9: things that come with owning a pet. Now people are 293 00:16:23,400 --> 00:16:28,760 Speaker 9: more willing to get into discretionary like you know, vests 294 00:16:29,040 --> 00:16:34,680 Speaker 9: and shoes for their dogs and creates and the things 295 00:16:34,760 --> 00:16:35,080 Speaker 9: like that. 296 00:16:35,360 --> 00:16:37,480 Speaker 3: Also, healthcare is a big thing. 297 00:16:38,080 --> 00:16:41,160 Speaker 9: People are more willing to spend more on the healthcare 298 00:16:41,200 --> 00:16:42,560 Speaker 9: of their pet than they used to. 299 00:16:43,520 --> 00:16:46,360 Speaker 3: Why is that Is it because more dogs are getting sick? 300 00:16:46,520 --> 00:16:49,120 Speaker 3: Or is it more because of the insurance company? Like 301 00:16:49,160 --> 00:16:52,680 Speaker 3: why does trend? Well, it's a couple of things. First 302 00:16:52,720 --> 00:16:54,320 Speaker 3: of all, the humanization of pets. 303 00:16:55,120 --> 00:16:59,360 Speaker 9: Now people consider them as family, so they're willing to 304 00:16:59,480 --> 00:17:02,280 Speaker 9: spend a little bit more to you know, keep their 305 00:17:02,640 --> 00:17:07,119 Speaker 9: family member around. So there's a greater acceptance of that 306 00:17:07,280 --> 00:17:09,440 Speaker 9: kind of attitude. 307 00:17:10,240 --> 00:17:13,600 Speaker 2: Who benefits the most from all this what particular companies. 308 00:17:14,640 --> 00:17:16,600 Speaker 2: I think when we used to feed our dog. 309 00:17:16,600 --> 00:17:19,919 Speaker 3: The human food, actually when I was younger, No, you 310 00:17:19,960 --> 00:17:22,560 Speaker 3: don't feed them human Yeah, maybe that's why my dog 311 00:17:22,640 --> 00:17:24,000 Speaker 3: wasn't the healthiest. 312 00:17:23,560 --> 00:17:27,400 Speaker 9: Well human grade food, I will guess. So it really 313 00:17:27,440 --> 00:17:33,160 Speaker 9: depends if you're looking at food. The big food companies Nestley, Colgate, Mars, 314 00:17:33,280 --> 00:17:38,399 Speaker 9: General Males, they have you know, food offerings in different 315 00:17:38,440 --> 00:17:41,600 Speaker 9: price points. But on the more premium side you have 316 00:17:41,760 --> 00:17:44,800 Speaker 9: things like fresh pet that they have the fresh frozen 317 00:17:44,840 --> 00:17:47,720 Speaker 9: which is really like human great food that you just 318 00:17:48,480 --> 00:17:49,520 Speaker 9: you know, take it out of the. 319 00:17:49,440 --> 00:17:53,439 Speaker 3: Fridge and you give it to your dog. We know that, 320 00:17:53,440 --> 00:17:57,280 Speaker 3: I exadly, I shouldn't have said that, So we know 321 00:17:57,320 --> 00:18:01,119 Speaker 3: that Americans love their pets, and everyone knows that. To 322 00:18:01,200 --> 00:18:04,040 Speaker 3: your point, people are delaying having children because they have 323 00:18:04,119 --> 00:18:06,440 Speaker 3: pets are in part because they have pets and because 324 00:18:06,480 --> 00:18:08,879 Speaker 3: the economy is tough. Where does the US that. 325 00:18:09,000 --> 00:18:14,680 Speaker 9: Globally, Yes, so we're still about forty percent of the market. 326 00:18:15,080 --> 00:18:18,360 Speaker 9: You know, we're probably going to grow about thirty five 327 00:18:18,400 --> 00:18:20,639 Speaker 9: percent compared to like the thirty eight percent that we 328 00:18:20,760 --> 00:18:23,800 Speaker 9: expect over the next five years. So we're still going 329 00:18:23,880 --> 00:18:28,119 Speaker 9: to be the biggest, the most mature part of the industry. 330 00:18:28,160 --> 00:18:31,440 Speaker 9: There's others that might grow faster than that. There's other 331 00:18:31,520 --> 00:18:36,080 Speaker 9: regions outside of Europe and the United States. However, that 332 00:18:36,560 --> 00:18:38,320 Speaker 9: size of the pie is smaller. 333 00:18:38,359 --> 00:18:40,719 Speaker 4: Obviously, you know, it's not just dogs. 334 00:18:40,760 --> 00:18:43,800 Speaker 2: There was a fascinating Bloomberg profile of a guy I 335 00:18:43,840 --> 00:18:48,119 Speaker 2: think it must have been Florida who sells designer geckos, 336 00:18:48,320 --> 00:18:52,879 Speaker 2: and some of them fetch a fortune, like five grand 337 00:18:52,960 --> 00:18:53,840 Speaker 2: for a little get go. 338 00:18:54,359 --> 00:18:56,920 Speaker 4: What's the most popular pet? Is it the dog? 339 00:18:57,200 --> 00:19:00,199 Speaker 9: It's steel dogs and cats, you know, And that is 340 00:19:00,240 --> 00:19:03,960 Speaker 9: like mainly, you know, where we focused on. Of course, 341 00:19:04,000 --> 00:19:08,320 Speaker 9: there's like others like hamsters and cobras and things like that, 342 00:19:08,440 --> 00:19:09,880 Speaker 9: but that doesn't by. 343 00:19:09,800 --> 00:19:10,440 Speaker 4: The way, just. 344 00:19:11,960 --> 00:19:14,960 Speaker 2: Parenthetically, don't put the hamster near the cobra. 345 00:19:15,440 --> 00:19:17,800 Speaker 3: Oh my fish is also I don't want to imagine that, 346 00:19:17,880 --> 00:19:20,400 Speaker 3: she seem Obviously, fish is also fun. I think it's 347 00:19:20,440 --> 00:19:22,880 Speaker 3: good training for young kids. You know, they just feed 348 00:19:22,920 --> 00:19:26,560 Speaker 3: it once today. The cleaning of the aquarium is always tough, though, 349 00:19:26,800 --> 00:19:30,000 Speaker 3: don't you smell them responsibility for sure. Okay, so we 350 00:19:30,080 --> 00:19:31,800 Speaker 3: know that e commerce sales. You wrote in your note 351 00:19:31,800 --> 00:19:33,960 Speaker 3: that in the US it might reach twenty seven percent 352 00:19:34,000 --> 00:19:36,919 Speaker 3: of the total from twenty percent in twenty twenty. So 353 00:19:36,960 --> 00:19:38,840 Speaker 3: we have that, we have the pharma market, we have 354 00:19:38,880 --> 00:19:43,040 Speaker 3: the food market really just growing. What could be what 355 00:19:43,080 --> 00:19:46,200 Speaker 3: could be the hindrance here. What headwinds are you seeing 356 00:19:46,200 --> 00:19:46,760 Speaker 3: in this space. 357 00:19:46,920 --> 00:19:50,680 Speaker 9: Well, we actually see certain pockets of the market being 358 00:19:50,840 --> 00:19:53,720 Speaker 9: a little bit more conflicted, particularly in the past year 359 00:19:54,480 --> 00:19:58,399 Speaker 9: discretionary spending. You know, we did make fun of the 360 00:19:58,520 --> 00:20:04,800 Speaker 9: vests and even you know, popular fashion brands are expanding 361 00:20:04,840 --> 00:20:08,320 Speaker 9: their their you know, their names into pets. But that 362 00:20:08,520 --> 00:20:11,960 Speaker 9: part of the spending has been a little bit subdued, 363 00:20:12,040 --> 00:20:14,600 Speaker 9: I want to say. And part of it is because 364 00:20:15,240 --> 00:20:19,439 Speaker 9: the population, the pet population has been you know, not 365 00:20:19,600 --> 00:20:21,840 Speaker 9: growing as much as they used to, like back in 366 00:20:22,080 --> 00:20:25,399 Speaker 9: at the beginning of the pandemic. But another thing is 367 00:20:25,440 --> 00:20:29,280 Speaker 9: obviously economic, uh, you know, the economic situation. People are 368 00:20:29,640 --> 00:20:32,040 Speaker 9: curbing their spending, so that is like one of the 369 00:20:32,080 --> 00:20:35,760 Speaker 9: first few things. In terms of premium we still think 370 00:20:35,800 --> 00:20:40,320 Speaker 9: it's gonna premium food. We still continue to think that 371 00:20:40,440 --> 00:20:43,520 Speaker 9: it's probably going to get to fifty seven sixty percent 372 00:20:43,560 --> 00:20:47,000 Speaker 9: of the food in the US, like the overall food, 373 00:20:47,440 --> 00:20:50,280 Speaker 9: but the cadence is probably going to be more like 374 00:20:50,359 --> 00:20:54,399 Speaker 9: twenty seven on rather than shorter term. We think people 375 00:20:54,440 --> 00:21:00,639 Speaker 9: are going to probably get with kibbles rather than you know, 376 00:21:00,800 --> 00:21:03,040 Speaker 9: the fresh frozen part. 377 00:21:03,400 --> 00:21:08,120 Speaker 2: Diana, thank you, Diana, Rosaria Penya. The consumer staples analyst, 378 00:21:08,800 --> 00:21:11,600 Speaker 2: how the world is going to spend five hundred billion 379 00:21:11,680 --> 00:21:13,240 Speaker 2: dollars other pets. 380 00:21:13,640 --> 00:21:18,320 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 381 00:21:18,520 --> 00:21:21,960 Speaker 1: and anywhere else you get your podcasts. Listen live each 382 00:21:22,000 --> 00:21:25,760 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 383 00:21:25,880 --> 00:21:29,399 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 384 00:21:29,840 --> 00:21:32,879 Speaker 1: You can also watch us live every weekday on YouTube 385 00:21:33,160 --> 00:21:35,400 Speaker 1: and always on the Bloomberg Terminal.