WEBVTT - Huawei Threat Poses Grave Risk To Trade Deal 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.680 along with my co host Lisa brahma Witz. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:23.840 at Bloomberg dot com. We'll trade tensions between the U 0:00:23.920 --> 0:00:26.840 S and China continue to escalate. The U S Commerce 0:00:26.920 --> 0:00:30.800 Department announside it has placed China's largest telecom equipment company 0:00:30.840 --> 0:00:34.440 on the Entity List, which denies US suppliers from selling 0:00:34.479 --> 0:00:37.120 to Whahwei without a license. To get a sense of 0:00:37.159 --> 0:00:39.239 what this does mean, not just for Whahwei, but for 0:00:39.280 --> 0:00:42.120 the trade discussion between the US and China, we go 0:00:42.200 --> 0:00:46.239 to Meredith Sumter, Meredith's head of research and strategy and 0:00:46.280 --> 0:00:49.760 operations for the Eurasia Group, joining us in Washington, d C. Meredith, 0:00:49.760 --> 0:00:52.120 thank you so much for joining us. Do you think 0:00:52.159 --> 0:00:55.400 this band, which seems to be pretty serious, will actually 0:00:55.440 --> 0:01:00.240 be activated? That's the critical question here, Paul, and what 0:01:00.240 --> 0:01:02.920 we're gonna be watching for moving forward is whether or 0:01:02.960 --> 0:01:06.960 not the US enforces a blanket VAN or whether it 0:01:07.080 --> 0:01:12.840 chooses to instead issue licenses to most US in foreign suppliers. Uh. 0:01:12.920 --> 0:01:16.680 The actual notice did come forth and say that a 0:01:16.840 --> 0:01:19.760 license would be required and issued by the b I S, 0:01:19.800 --> 0:01:23.560 but it all comes down to implementation from here. So, Meredith, 0:01:23.840 --> 0:01:27.480 I'm struggling to understand the market reaction today because you 0:01:27.560 --> 0:01:30.040 are seeing the NASDAK up one point three percent. There 0:01:30.080 --> 0:01:32.320 seems to be a very risk on feel But it 0:01:32.400 --> 0:01:35.920 seems like President Trump's issues with some of these big 0:01:36.000 --> 0:01:39.800 technology companies out of China, this is a major escalation. 0:01:39.959 --> 0:01:43.639 Why is it not being viewed that way? I couldn't 0:01:43.680 --> 0:01:45.960 agree more, Lisa, and in fact this morning. So so 0:01:46.040 --> 0:01:48.760 the notice came out last night, and at your AGEA group, 0:01:48.760 --> 0:01:51.280 we've been working overnight to pull together own thoughts and 0:01:51.360 --> 0:01:54.400 views as to how grave this really is not just 0:01:54.560 --> 0:01:58.520 for the US relationship with China more broadly on technology 0:01:58.600 --> 0:02:01.600 issues and on Huawei and five G, but also for 0:02:02.120 --> 0:02:07.760 the trade negotiations that are ongoing. Even before last night's notice, Lisa, 0:02:08.360 --> 0:02:11.560 we had drawn down our call of prospects for US 0:02:11.680 --> 0:02:14.320 China trade deal by the G twenty. Of course, this 0:02:14.440 --> 0:02:17.320 is when Presidents Trump and she are set to meet. 0:02:17.840 --> 0:02:21.000 We dropped our call from a six probability to just 0:02:21.200 --> 0:02:24.919 a probability. Now you add on top of this the 0:02:25.000 --> 0:02:28.079 latest solvo against Kahwei, and we find ourselves in a 0:02:28.240 --> 0:02:32.959 very serious situation. Indeed, Yeah, it's interesting, Meredith that that's 0:02:33.040 --> 0:02:36.600 a significant reduction um. And again I would historically that 0:02:36.600 --> 0:02:38.440 would have had a very negative impact on the market, 0:02:38.480 --> 0:02:40.720 but as Lisa noted, the market seem to be shrugging 0:02:40.760 --> 0:02:44.280 it off. I wonder what the impact will be on 0:02:44.639 --> 0:02:47.720 China as it thinks about how it wants to react. 0:02:47.840 --> 0:02:50.400 How do you think China will react to something like this. 0:02:53.080 --> 0:02:55.799 We need to watch closely China's moves over the next 0:02:55.880 --> 0:02:58.120 day or two. It's been very quiet out of Beijing, 0:02:58.160 --> 0:03:00.840 and I think probably this is the sort of shock 0:03:01.520 --> 0:03:05.320 um but also efforts on the part of Chinese leaders 0:03:05.360 --> 0:03:09.280 to figure out how should they respond both to this 0:03:09.440 --> 0:03:12.840 latest salvo against Huafwei, but also what does it mean 0:03:12.960 --> 0:03:17.000 for their broader response to US. China ties. This is 0:03:17.040 --> 0:03:20.400 all happening at a time fallen Lisa, when we're watching 0:03:20.840 --> 0:03:24.720 a nationalist sentiment in China which appears to be hardening. 0:03:25.280 --> 0:03:29.000 For the longest time, Beijing has taken a very moderated 0:03:29.120 --> 0:03:35.440 tone when responding to US pushing against Chinese industrial practices 0:03:35.480 --> 0:03:38.600 and policies, and of course with the escalation of tariffs, 0:03:39.200 --> 0:03:41.720 that may be changing. And again what it comes down 0:03:41.760 --> 0:03:43.560 to is, first and foremost, Beijing is going to be 0:03:43.640 --> 0:03:47.720 looking to understand how lenient or how hard rather will 0:03:47.760 --> 0:03:54.320 the Trump administration be in executing um UH the approving 0:03:54.440 --> 0:03:58.760 licenses or not for companies suppliers to be able to 0:03:58.840 --> 0:04:00.800 continue to work for what? Right now? Why is this 0:04:00.920 --> 0:04:07.880 important to Beijing? Huawei is its most important, biggest technology company. 0:04:08.000 --> 0:04:11.840 It is a global champion in leader UH, and if 0:04:12.080 --> 0:04:16.440 fully implemented, the entity list would immediately deny Huahwei access 0:04:16.560 --> 0:04:20.159 to critical hardware and software suppliers here in the US 0:04:20.240 --> 0:04:23.839 that it uses in this global mobile infrastructure and handset businesses. 0:04:24.279 --> 0:04:28.560 This could virtually hit all of Huawei's products, high end smartphones, 0:04:28.640 --> 0:04:31.840 mobile infrastructure, data centers, and cloud services. It's going to 0:04:31.920 --> 0:04:35.920 have an immediate global impact for any company that utilizes 0:04:36.000 --> 0:04:39.280 Huawei products or services. It really puts that company at 0:04:39.440 --> 0:04:43.320 at grave risk. Meredith, how do we assess whether this 0:04:43.560 --> 0:04:46.320 is just sort of a chip that President Trump is 0:04:46.480 --> 0:04:49.839 using to try to bring a deal to a close 0:04:49.880 --> 0:04:52.479 in the near term versus some sort of longer term 0:04:53.760 --> 0:04:56.800 effort by the United States to curb Chinese growth and 0:04:57.480 --> 0:05:01.880 development and technology space. So the Trump administration would say 0:05:01.920 --> 0:05:04.880 that that look, these are are parallel tracks that the 0:05:05.120 --> 0:05:09.240 efforts to investigate Huawei and to come to determination on 0:05:09.680 --> 0:05:13.160 on what should happen with Huawei with the entity list, 0:05:13.240 --> 0:05:17.440 So that was separate from the ongoing three oh one 0:05:17.520 --> 0:05:23.000 trade investigation and negotiations. But critical from here on is 0:05:23.360 --> 0:05:27.480 watching for signs that Trump is actively seeking to manage 0:05:27.560 --> 0:05:31.160 the situation, including by signaling to She continued interest in 0:05:31.279 --> 0:05:35.960 negotiating um. This will will tell us if the prospect 0:05:36.120 --> 0:05:38.760 of a meeting between Trump and She to de escalate 0:05:39.600 --> 0:05:42.080 the trade tensions and to do it to de escalate 0:05:42.160 --> 0:05:46.119 this latest evo against Huawei will take place in coming 0:05:46.360 --> 0:05:49.480 weeks or not. Meredith Sumter, thank you so much for 0:05:49.560 --> 0:06:06.720 taking the time with us well. The White House on 0:06:06.839 --> 0:06:11.000 Wednesday initiated a two prompt assault on China, first barring 0:06:11.120 --> 0:06:14.200 companies deemed a national security threat from selling to the 0:06:14.320 --> 0:06:18.599 US and to threatening to blacklist Huawei technologies from buying 0:06:19.080 --> 0:06:21.520 essential components. To get a sense of what this means 0:06:21.600 --> 0:06:24.799 for the global telecom business. We welcome wu Jinhoe. Wouin 0:06:24.880 --> 0:06:27.760 is a senior technology as for Bloomberg Intelligence based in Princeton, 0:06:27.800 --> 0:06:32.000 New Jersey, and John Butler, senior Telecom services and Equipment 0:06:32.040 --> 0:06:34.680 analysts for Bloomberg Intelligence. He joins us here in our 0:06:34.680 --> 0:06:37.880 Bloomberg Interactive Broker Studio. So would I want to start 0:06:37.920 --> 0:06:41.880 with you if you could just describe what Wahwei does 0:06:42.160 --> 0:06:44.479 and how important they are to the global telecom space. 0:06:45.240 --> 0:06:48.400 Thanks Paul, Thanks Lisa. So so a couple of things. Uh, 0:06:48.480 --> 0:06:50.800 if you look at Wahwei the way I've always you, 0:06:50.920 --> 0:06:55.520 blahweh is um one of the fastest growing company that 0:06:55.600 --> 0:06:58.359 Americans have not really have heard of up until recently. 0:06:58.920 --> 0:07:03.680 And what Whahwei is the number one telecom equipment supplier globally. 0:07:04.000 --> 0:07:08.840 They're also the number one smartphone supplier globally. And UM, 0:07:09.160 --> 0:07:12.160 you know, from a supply cham perspective, they rely on 0:07:13.160 --> 0:07:16.360 a lot of the U S components because even though 0:07:16.400 --> 0:07:18.640 they do make their own chips, uh, they can't make 0:07:18.680 --> 0:07:21.680 all of it. So there is a global supply chain 0:07:21.880 --> 0:07:26.760 application from this from a potential ban So I'm just wondering, John, 0:07:27.040 --> 0:07:30.559 from your perspective, which companies in the United States stand 0:07:30.640 --> 0:07:32.920 to benefit the most. I mean, certainly we've there's been 0:07:32.920 --> 0:07:35.680 a lot of focus on the ones that have that 0:07:35.880 --> 0:07:38.720 have suffered as a result of speculation that Wahwei could 0:07:38.720 --> 0:07:41.440 be uh that could be banned from buying components here. 0:07:42.240 --> 0:07:44.760 So the immediate thoughtly said that I had when I 0:07:44.880 --> 0:07:48.280 heard this news was g it's good for Nokiana, Ericson, 0:07:48.400 --> 0:07:53.000 which are not US companies, um, but they compete very 0:07:53.160 --> 0:07:58.040 closely with Huawei in the radio based station market. So 0:07:58.240 --> 0:08:02.080 as all these networks in the US initially and elsewhere 0:08:02.160 --> 0:08:05.800 around the world later this year upgrade to five G, 0:08:06.680 --> 0:08:10.920 the race is on between Huawei, Nokia, Ericsson, and Samsung 0:08:11.120 --> 0:08:14.400 to get share of that market. So I think net 0:08:14.480 --> 0:08:18.440 net this is good for Nokia and Ericsson. The one 0:08:18.520 --> 0:08:21.480 thing to watch is what Jim was talking about. There's 0:08:21.720 --> 0:08:24.720 the threat of a ban on the supply of US 0:08:24.800 --> 0:08:28.800 components to Huawei, and so the question becomes, how does 0:08:29.120 --> 0:08:32.960 Beijing respond to that if in fact the US makes 0:08:33.000 --> 0:08:36.079 good on that threat. So Jin, how about on the 0:08:36.360 --> 0:08:40.200 chip side. I know, again some of the big chip makers, 0:08:40.240 --> 0:08:42.720 a lot of them US based. Uh you know, listen, 0:08:42.840 --> 0:08:47.000 Huawei is a big customer. How are they reacting sure. So, Um, 0:08:47.679 --> 0:08:50.439 I'm looking at my screen right now, and uh, half 0:08:50.520 --> 0:08:53.640 my screen is green and half my screen is read. 0:08:54.040 --> 0:08:57.280 So from from the red side has been essentially all 0:08:57.320 --> 0:09:01.360 the chip makers. Anybody who's anybody in the semiconductor space 0:09:01.640 --> 0:09:05.199 will supply to Whahwei, especially given their dominance and a 0:09:05.280 --> 0:09:09.839 smartphone space and on the networking space in particular in 0:09:09.880 --> 0:09:12.480 the optical space. So if we look at companies like 0:09:12.760 --> 0:09:15.960 Neo Photonics of a small cap company, but they supply 0:09:16.080 --> 0:09:19.719 optical components of Whawe, they are about revenues. And on 0:09:19.840 --> 0:09:23.760 the other hand, we have companies like Skywork as well 0:09:23.840 --> 0:09:29.280 as Corvo, meaningful radio frequency chip suppliers globally. Um, you know, 0:09:29.360 --> 0:09:31.640 they're about ten percent of sales, and then you have 0:09:31.800 --> 0:09:36.800 a slew of companies that provide anywhere between two to 0:09:37.000 --> 0:09:41.760 three percent of total sales to Yahwei. So John, you're 0:09:41.800 --> 0:09:44.959 talking about how you know there is this sort of 0:09:45.040 --> 0:09:49.719 positive benefit potentially to providers of five G technology in 0:09:49.760 --> 0:09:51.760 the United States who are not going to have these 0:09:51.800 --> 0:09:54.800 restrictions on them. I'm just wondering that you also mentioned 0:09:54.840 --> 0:09:57.880 the retaliation from China. What are some of the potential 0:09:58.559 --> 0:10:02.000 steps that China could take Well, the one I'm worried about, 0:10:02.120 --> 0:10:05.800 Lisa is the potential for Apple to get slapped with 0:10:06.000 --> 0:10:11.080 restrictions in China. Um. They derive almost of their revenue 0:10:11.240 --> 0:10:15.600 from from Greater China, so that would include Hong Kong 0:10:15.720 --> 0:10:19.880 and other surrounding regions within China. But the reality is 0:10:20.000 --> 0:10:23.439 that Beijing wanted to really get tough on Apple, Um, 0:10:23.840 --> 0:10:26.400 it would hurt and it could hurt the US as well. 0:10:27.320 --> 0:10:31.440 Keep in mind that one of the iPhones are manufactured 0:10:31.559 --> 0:10:35.800 in China, so they could not only uh, look at 0:10:35.800 --> 0:10:39.040 Apple or hit Apple on the sales side, but also 0:10:39.200 --> 0:10:42.800 on the manufacturing side. It's interesting, John, just looking at Apple, 0:10:42.840 --> 0:10:45.280 It's off about zero point eight percent today in a 0:10:45.400 --> 0:10:47.959 market where the nasdacs up over one percent. So clearly 0:10:48.120 --> 0:10:51.160 clearly some concern in there. Well, which just wondering, you know, 0:10:51.360 --> 0:10:54.320 if if I'm Whahwei, this is a really big deal, 0:10:54.559 --> 0:10:56.600 isn't it, Because I mean, this is really a threat 0:10:56.640 --> 0:10:58.280 to my business because if I can't get chips from 0:10:58.280 --> 0:11:01.440 the US, can they even source chips to make up 0:11:01.480 --> 0:11:06.120 from other parts of the world. Um? Uh, great question, Paul. Uh. 0:11:06.679 --> 0:11:09.719 The short answer is no. But the one thing that 0:11:09.800 --> 0:11:11.920 I can say based on the learning's calls that I've 0:11:12.000 --> 0:11:17.440 heard UM across my sector is that Wawei actually has 0:11:17.520 --> 0:11:20.640 some STOCKPI stockpiling chips over the past couple of quarters 0:11:21.360 --> 0:11:25.760 UH to help the risk some of the supply supply 0:11:25.880 --> 0:11:29.920 chain concerns. We don't know how much that they've inventoried. UM, 0:11:30.120 --> 0:11:32.520 it might be a quarter or two of supply. So 0:11:32.640 --> 0:11:36.320 if this is a short band, and then let's keep 0:11:36.360 --> 0:11:38.120 in mind a band has not been put in place. 0:11:38.240 --> 0:11:40.800 But if there is a short ban in place, UM, 0:11:41.240 --> 0:11:43.560 you know, it might not impact Huawei's business at all, 0:11:44.000 --> 0:11:48.400 but if they lasts beyond two potentially three quarters UH, 0:11:48.480 --> 0:11:51.319 then it could have broader implications for the space. I 0:11:51.400 --> 0:11:53.559 have to say, Paul, it's interesting just looking at the 0:11:53.640 --> 0:11:56.760 market reaction right now, it does not seem uh light 0:11:56.840 --> 0:12:00.640 markets are fully pricing in that Huawei will be banned 0:12:00.640 --> 0:12:04.160 from buying components in the US because right now, and 0:12:04.280 --> 0:12:07.000 we're not seeing the sort of response that indicates that 0:12:07.000 --> 0:12:10.040 people are betting on an escalation and trade concerns. Yeah, 0:12:10.120 --> 0:12:12.360 you're right, I'm just looking at this strong nastac here. 0:12:12.400 --> 0:12:15.600 So there's some pockets of weakness clearly where the semi chips, 0:12:15.640 --> 0:12:18.840 but otherwise pretty strong that's right. Bloomer Intelligence is Wuginhoe 0:12:19.120 --> 0:12:23.760 focusing on technology and John Butler focusing on telecoms. Thank 0:12:23.800 --> 0:12:44.720 you so much for being with us. We appreciate it, so, Paul. 0:12:44.800 --> 0:12:47.280 Among the people who I spoke with last night at 0:12:47.360 --> 0:12:51.440 this modern CFO conference was Virginny Costa, chief financial officer 0:12:51.800 --> 0:12:55.079 of Goodiva, and it was interesting. She talked about a 0:12:55.200 --> 0:12:59.840 goal to increase revenue fivefold over the next five year 0:13:00.200 --> 0:13:02.199 and the way that they're doing it is betting on 0:13:02.600 --> 0:13:05.240 these cafes that they're starting to roll out. Uh and 0:13:05.360 --> 0:13:10.720 something called a craffle or crawfle crossotte waffle uh, which 0:13:10.760 --> 0:13:14.480 sounds delicious and which also sounds like you might not 0:13:14.720 --> 0:13:19.120 want to know the content. It sounds very good. Let's 0:13:19.240 --> 0:13:21.599 I started out the conversation. Are we talking about the 0:13:21.679 --> 0:13:25.360 cafe concept? What is new? Why it was rolled out 0:13:25.360 --> 0:13:27.800 in the first place? Uh? And how the first good 0:13:27.840 --> 0:13:29.520 I have a cafe was rolled out in the United 0:13:29.520 --> 0:13:32.160 States last month. Let's listen to what she had to say. 0:13:32.960 --> 0:13:36.720 We decided really to open a cafe for two reasons. First, 0:13:36.760 --> 0:13:39.480 because we had an existing based in Middle East. We 0:13:39.559 --> 0:13:42.120 have about forty of those cafe in Middle East that 0:13:42.160 --> 0:13:46.240 were very successful and in here in North America. As 0:13:46.280 --> 0:13:48.680 you said, we opened up the first one last month 0:13:49.080 --> 0:13:52.400 with a brand new concept and more excitedly. Actually, we 0:13:52.520 --> 0:13:57.679 also now have an expanded assortment, so we have available 0:13:57.880 --> 0:14:02.400 about two dozen of unique items and new items. One 0:14:02.480 --> 0:14:05.480 that I'm very fond of is called the craffle. It's 0:14:05.480 --> 0:14:09.240 a trademarked name. It's a combination of croissan and waffle 0:14:09.360 --> 0:14:12.040 because it's actually a croissant that you press in a 0:14:12.120 --> 0:14:14.880 waffle iron. And the beauty about it is that you 0:14:14.960 --> 0:14:18.360 can fill it with either our milk or dark chocolate 0:14:18.440 --> 0:14:21.120 for an afternoon snack, or you can have it severed 0:14:21.160 --> 0:14:24.560 in the morning your breakfast sandwich, fill with hamond cheese 0:14:24.760 --> 0:14:27.760 three cheese, which is my favorite egg sausage and career. 0:14:28.400 --> 0:14:31.760 And it's really providing now an everyday occasion for our 0:14:31.840 --> 0:14:35.120 customers to come to go diver and expanding on our 0:14:35.560 --> 0:14:38.960 special occasion product. Now now you can come to us 0:14:39.080 --> 0:14:42.080 every day. What's the financial case for opening up a 0:14:42.160 --> 0:14:45.360 cafe at a time when restaurants are struggling, and we 0:14:45.480 --> 0:14:49.840 know that other outlets are closing some some locations, we 0:14:50.240 --> 0:14:54.800 think that there's a really immense opportunity to really rooted 0:14:54.880 --> 0:14:58.640 in our Belgium heritage. We have a unique proposition. It's 0:14:58.720 --> 0:15:01.640 a unique product as as said, and just to share 0:15:01.720 --> 0:15:05.240 the craffle, we also have Belgium waffles. We also developed 0:15:05.240 --> 0:15:08.680 a signature Godiver cafe that pair very well with chocolate 0:15:08.880 --> 0:15:11.640 and as well as signature tea pairing the same thing 0:15:11.840 --> 0:15:14.840 very well with chocolate. So it's a a really very 0:15:15.000 --> 0:15:19.320 nice expanded assortment rooted in a special Belgium heritage, a 0:15:19.520 --> 0:15:23.640 unique proposition that we believe will really benefit the customers 0:15:23.680 --> 0:15:26.640 across all their parts. Is it the experience kind of 0:15:26.800 --> 0:15:29.040 aspect of it as well, and is that really the 0:15:29.280 --> 0:15:32.280 biggest source of growth going forward that you see right 0:15:32.280 --> 0:15:36.720 now for Cadivera. Correct, absolutely, we think that exactly and 0:15:37.040 --> 0:15:39.840 as a matter of fact, we have a plan to 0:15:40.240 --> 0:15:44.160 grow our revenue fivefold over the next six years and 0:15:44.720 --> 0:15:47.200 the big part of that growth will come from those cafe. 0:15:47.320 --> 0:15:51.000 We intend on actually deploying about two thousand cafe across 0:15:51.040 --> 0:15:54.200 the globe. And and again back to that opportunity to 0:15:54.320 --> 0:15:58.680 really have a proposition that is really bringing customers across 0:15:58.720 --> 0:16:01.200 all their parts and come in the morning, you can 0:16:01.280 --> 0:16:03.160 come for your lunch. We also have grab and go, 0:16:04.000 --> 0:16:06.000 you can come for your afternoon snacks. So now we 0:16:06.120 --> 0:16:10.640 do have really building on our special occasion gifting proposition. 0:16:10.760 --> 0:16:15.240 We really have a unique larger proposition. One thing that 0:16:15.320 --> 0:16:19.600 we talk a lot about, aside from chocolate and wonderful waffles, 0:16:20.520 --> 0:16:22.920 is the trade concerns that have been picking up recently. 0:16:23.080 --> 0:16:26.840 And I have to wonder with a food consumer company 0:16:26.920 --> 0:16:28.880 where I'm sure you import the ingredients from a lot 0:16:28.920 --> 0:16:32.160 of different places, how much do some of the trade 0:16:32.200 --> 0:16:35.480 tensions affect what you do? So the beauty of good 0:16:35.520 --> 0:16:38.440 Ivan it's not really well known. It's we are actually 0:16:38.480 --> 0:16:42.440 a global business. We are presenting more than a hundred countries. 0:16:42.520 --> 0:16:47.360 We have about eight hundred retail locations. And the benefit 0:16:47.440 --> 0:16:50.720 of this is that and with the international customer traveling, 0:16:51.240 --> 0:16:55.360 we are really benefiting from all the different elements that 0:16:55.480 --> 0:16:58.560 can you know, happen in every piece of the world. 0:16:59.000 --> 0:17:02.240 Um So being globe all business help and enables you 0:17:02.480 --> 0:17:06.359 I believe to have really a strong fundamentals to really 0:17:06.440 --> 0:17:09.520 be in any sort of change that can happen in 0:17:09.680 --> 0:17:11.760 So at some point in some place of the world, 0:17:12.200 --> 0:17:13.600 what do you think it's going to be the biggest 0:17:13.680 --> 0:17:17.639 challenge over the next few years. That's a very interesting question. 0:17:17.920 --> 0:17:20.520 I think what continues and that's part of what the 0:17:20.600 --> 0:17:23.840 conversation has been together is I think um and with 0:17:24.000 --> 0:17:26.959 my heart as a CFO, I think what really matters 0:17:27.200 --> 0:17:30.359 is big data and how we will use and and 0:17:30.440 --> 0:17:33.360 actually leverage big data. I think there's still a lot 0:17:33.440 --> 0:17:37.440 of things that everybody is learning, either from a customer 0:17:37.600 --> 0:17:41.000 perspective because you have access to such a lot of information, 0:17:41.119 --> 0:17:44.680 but as well as an enterprise how to really leverage 0:17:44.680 --> 0:17:47.920 the data. So I think it's um it's a challenge, 0:17:47.960 --> 0:17:51.440 but as well as a great opportunity for everybody as 0:17:51.560 --> 0:17:54.639 individuals and as well as professionals in an organization. Do 0:17:54.680 --> 0:17:56.479 you think that the big data issue is the biggest 0:17:56.560 --> 0:17:59.600 change facing CFOs right now? I think it's a big 0:17:59.640 --> 0:18:02.920 company none of what has made that role evolve over 0:18:03.080 --> 0:18:06.200 already the past few years, and he will continue to evolve. 0:18:06.320 --> 0:18:09.280 I believe how often do you actually eat goodiva chocolate 0:18:09.320 --> 0:18:11.760 because you're quite slimmed. I'm wondering, and how often do 0:18:11.800 --> 0:18:16.359 you have quaffles, honest, honest chocolates every day? I cannot 0:18:16.440 --> 0:18:20.080 help it. I have my my favorite proline and the 0:18:20.200 --> 0:18:23.200 crawfoy is very addictive. Once you have tasted one, you 0:18:23.320 --> 0:18:26.040 want that for your breakfast morning every morning? So that's 0:18:26.040 --> 0:18:28.920 what you have every morning for breakfast. I try every 0:18:29.000 --> 0:18:32.240 morning a different flavor. I have to admit, maybe all 0:18:32.320 --> 0:18:35.440 have your metabolism. Virginia Costa, thank you so much for 0:18:35.480 --> 0:18:38.800 being with us. That was Virginia Costa, CFO of Godiva, 0:18:38.880 --> 0:18:41.760 on their new cafe concept and maybe why should eat 0:18:41.800 --> 0:18:44.240 quaffles every morning? I think that was my takeaway. Lisa, 0:18:44.960 --> 0:18:49.720 it sounds delicious, certainly very angry. Honestly. She elaborated a 0:18:49.800 --> 0:18:52.480 little bit on the panel about big data and just 0:18:52.640 --> 0:18:55.359 what that means for a retail brand, how you can 0:18:55.400 --> 0:18:58.560 predict people's habits so you can predict when people are 0:18:58.560 --> 0:19:01.400 going to be coming in and better cater to them. 0:19:01.800 --> 0:19:04.800 It's just there's a lot of opportunity with big data 0:19:04.960 --> 0:19:07.760 that a lot of particularly retail facing companies are exploring, 0:19:07.840 --> 0:19:11.000 but frankly all companies. That was really interesting to me. Yeah, 0:19:11.000 --> 0:19:13.080 it's interesting, and just for the good divers story, just 0:19:13.240 --> 0:19:15.040 to hear that, you know, the kind of growth they 0:19:15.119 --> 0:19:17.879 are forecasting for their company and uh, you know, basing 0:19:17.960 --> 0:19:21.040 that growth on the cafe concept. So you know, I 0:19:21.080 --> 0:19:23.400 would say a significant change in kind of their business model, 0:19:23.400 --> 0:19:41.400 getting into kind of the retail side of chocolate. Walmart 0:19:41.480 --> 0:19:45.040 shares are having their best one day rallies since December 0:19:45.320 --> 0:19:48.600 as they reported better than expected earnings their strongest same 0:19:48.680 --> 0:19:52.359 store growth in nine years. Joining us now to discuss 0:19:52.400 --> 0:19:55.760 Bert Flicking ger managing director for Strategic Resource Group, in 0:19:55.880 --> 0:19:59.479 our Bloombergotter Active Broker Studios in New York Bird, can 0:19:59.560 --> 0:20:02.920 we get a sense of how long lasting the strength 0:20:03.400 --> 0:20:07.200 that we saw in Walmart seems to be? Lisa, the 0:20:07.960 --> 0:20:11.000 strength will go on for the foreseeable future, certainly the 0:20:11.080 --> 0:20:13.400 next ten to fifteen years. If you look at Chicago, 0:20:14.200 --> 0:20:19.720 where you're broadcasting from now, you look at south side Chicago, Land, 0:20:20.119 --> 0:20:24.520 the state, Uh, from the Great Lakes region to the northeast, 0:20:24.600 --> 0:20:29.000 densely populated areas. Walmart has one store for every thirty 0:20:29.040 --> 0:20:32.800 to fifty thousand people in Alabama and states like California, 0:20:32.840 --> 0:20:35.320 they've got one store for every half a million people. 0:20:35.800 --> 0:20:41.040 So Uh, Doug McMillan, dynamic CEO is like the reincarnation 0:20:41.119 --> 0:20:45.680 of Elane Elane May and Warren Beatties Uh seminal movie 0:20:45.800 --> 0:20:52.879 Heaven Can Wait. He's uh investing in technology, investing in rooftop, solar, 0:20:53.080 --> 0:20:56.440 every other kind of savings and lowering prices to race 0:20:56.520 --> 0:20:59.159 shop or standard of living. And instead of looking at 0:20:59.200 --> 0:21:01.840 marketing as an expense, he's got the best and the 0:21:01.960 --> 0:21:06.560 most effective advertising anywhere worldwide in retail. So for one 0:21:06.600 --> 0:21:08.480 of the numbers that jumped out at me is that 0:21:08.840 --> 0:21:11.760 has really for several quarters now is the online business. 0:21:11.800 --> 0:21:15.160 Their e commerce business. The revenue is up thirty seven percent. Boy, 0:21:15.200 --> 0:21:17.840 it looks like, after you know, some initial stumbles early 0:21:17.960 --> 0:21:20.280 on in their development of their e commerce platform, they've 0:21:20.320 --> 0:21:22.480 really figured it out, and it looks like they're gonna 0:21:22.480 --> 0:21:24.040 give Amazon a run for their money in terms of 0:21:24.080 --> 0:21:27.200 the e commerce across a broad swath of consumer products. 0:21:27.440 --> 0:21:31.720 Paul completely correct, And what Walmart is doing is investing 0:21:31.800 --> 0:21:38.440 in robotics, UH mechanization, satellite communications, doing it everything themselves, 0:21:38.800 --> 0:21:42.840 where their competitors, with the exception of Amazon, are outsourcing. 0:21:43.240 --> 0:21:47.520 So Walmart has more terribly like Bloomberg on the terminal. 0:21:47.640 --> 0:21:51.640 Walmart has more terrob bytes of data than anybody worldwide, 0:21:52.119 --> 0:21:55.840 than the other than the US Pentagon to be able 0:21:55.920 --> 0:21:59.919 to deliver a ninety percent of the Bloomberg XM serious 0:22:00.000 --> 0:22:03.720 audience within the next fifteen months, UH forty of the 0:22:03.800 --> 0:22:08.400 top fifty metro areas ultimately forty five of the top fifties. 0:22:08.440 --> 0:22:11.040 So whether it's in store click and collect or the 0:22:11.160 --> 0:22:16.399 FedEx centers in the Walmart eleven format in Avon, Colorado, UH, 0:22:16.560 --> 0:22:22.879 can consumer can save worldwide anywhere anytime with Walmart. No 0:22:23.000 --> 0:22:24.639 one else can do that. Well, you know, when we 0:22:24.720 --> 0:22:28.199 talk about Amazon and the shipping costs, we always focus 0:22:28.280 --> 0:22:31.280 on how much more they're spending UH to get those 0:22:31.320 --> 0:22:34.360 packages to people sooner and sooner. And Walmart is trying 0:22:34.400 --> 0:22:37.480 to compete with that, offering similar types of delivery times. 0:22:37.520 --> 0:22:40.199 And I'm wondering how much they're spending is going up? 0:22:40.880 --> 0:22:45.040 Spending is going up, Lisa, But uh, their total supply 0:22:45.320 --> 0:22:50.239 savings at Walmart. So Amazon will sell small products light 0:22:50.320 --> 0:22:53.399 and weight small in cube uh and make a lot 0:22:53.480 --> 0:22:55.960 of money. But if someone wants to order a baby 0:22:56.040 --> 0:22:59.960 stroller or a big bag of pet food, UH, Amazon 0:23:00.040 --> 0:23:03.200 on charges a fortune and part of the savings and 0:23:03.560 --> 0:23:08.199 in Walmart's brilliance in being the low price leader. Bloomberg 0:23:08.560 --> 0:23:11.880 Editor in chief of Meredith Matthew Winkler did a great 0:23:12.000 --> 0:23:16.199 session with Tom yesterday on E S g u UM 0:23:17.600 --> 0:23:23.000 Environmental social, sustainable and governance. And Walmart is investing so 0:23:23.240 --> 0:23:27.960 much in sustainable rooftop solar with Inner Solar and others 0:23:28.119 --> 0:23:32.920 as his Amazon target all the and BJ's wholesale club too, 0:23:33.400 --> 0:23:37.320 that whether it's terraces or not, Walmart is finding so 0:23:37.480 --> 0:23:41.760 many ways to save to reinvest. So, as Tom King says, 0:23:42.240 --> 0:23:45.000 what are the units? Walmart was up three point four 0:23:45.119 --> 0:23:48.080 percent as Paul reference today and same store sales, but 0:23:48.359 --> 0:23:51.760 units are up over five percent. So you've got dollar 0:23:51.880 --> 0:23:56.840 stores like Fred's multi regionally potentially filing for bankruptcy liquidation. 0:23:57.320 --> 0:24:00.440 So Walmart's becoming a shopping center with in the four 0:24:00.560 --> 0:24:04.800 walls of of Walmart and displacing thousands of shopping centers 0:24:04.800 --> 0:24:08.280 across America in the In the process, Walmart's winning, to 0:24:08.400 --> 0:24:12.120 your point, Lisa, for the foreseeable future at least um 0:24:12.560 --> 0:24:16.600 to and beyond. So just you know, looking at the 0:24:16.640 --> 0:24:20.120 Bloomberg terminal um and the pg O function for Walmart's 0:24:20.280 --> 0:24:24.680 nick at about almost of their sales from international, give 0:24:24.760 --> 0:24:27.080 us a sense of where do you think that number goes? 0:24:27.160 --> 0:24:28.439 You want to do? You think they want to continue 0:24:28.440 --> 0:24:32.800 to grow their international business, grow international, but cautiously in 0:24:33.160 --> 0:24:38.040 our field work UK Ireland. We saw the twin towers 0:24:38.080 --> 0:24:41.680 of power from the continent. Uh all Brecht, which owns 0:24:41.720 --> 0:24:44.919 Trader Joe's an Aldi in the US and Lethal as 0:24:45.000 --> 0:24:48.359 well as Occato and Amazon wal run Walmart out of 0:24:48.400 --> 0:24:52.960