1 00:00:02,920 --> 00:00:12,600 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 2 00:00:12,640 --> 00:00:14,440 Speaker 1: with Alex Steinhl and Paul'sweenye. 3 00:00:14,520 --> 00:00:17,720 Speaker 2: The real app performance has been in US corporate high yield. 4 00:00:17,880 --> 00:00:20,239 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:20,320 --> 00:00:23,880 Speaker 2: The semiconductor business is a really cyclical business. 6 00:00:23,600 --> 00:00:27,160 Speaker 1: Breaking market headlines and corporate news from across the globe. 7 00:00:27,240 --> 00:00:29,880 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:30,080 --> 00:00:31,000 Speaker 4: These are two. 9 00:00:31,040 --> 00:00:33,159 Speaker 2: Big time blue chip companies. 10 00:00:33,320 --> 00:00:36,920 Speaker 3: The window between the peak and cut changing super fast. 11 00:00:37,080 --> 00:00:41,680 Speaker 1: Bloomberg Intelligence with Alex Steinhl and Paul'sweenye on Bloomberg Radio. 12 00:00:43,240 --> 00:00:45,720 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 13 00:00:45,760 --> 00:00:48,120 Speaker 2: business story some inm Pacnew Wall Street and the global markets. 14 00:00:48,280 --> 00:00:50,440 Speaker 3: Each and every week we provide in depth research and 15 00:00:50,560 --> 00:00:52,440 Speaker 3: data on some of the two thousand companies and one 16 00:00:52,479 --> 00:00:55,120 Speaker 3: hundred and thirty industries our analysts cover worldwide. 17 00:00:55,160 --> 00:00:56,960 Speaker 2: Today, we'll take a look at why there may be 18 00:00:57,160 --> 00:00:59,840 Speaker 2: prolonged legal battle over whether TikTok will be banned. 19 00:01:00,480 --> 00:01:03,400 Speaker 3: Plus we'll discuss how and why one company thinks most 20 00:01:03,440 --> 00:01:06,000 Speaker 3: banker bonuses will rise in twenty twenty four. 21 00:01:06,200 --> 00:01:08,200 Speaker 2: But first we dive into the world's largest media and 22 00:01:08,280 --> 00:01:09,840 Speaker 2: entertainment company Walt Disney. 23 00:01:09,880 --> 00:01:13,240 Speaker 3: The company reported second quarter earnings that surpassed analyst expectations, 24 00:01:13,280 --> 00:01:15,600 Speaker 3: but this was overshadowed by the company giving a week 25 00:01:15,640 --> 00:01:18,680 Speaker 3: outlook for streaming subscriber growth in the current quarter. 26 00:01:19,080 --> 00:01:21,440 Speaker 2: For more, guest host Tim Stenovick and I were joined 27 00:01:21,480 --> 00:01:24,839 Speaker 2: by Githa Ranganathan, Bloomberg Intelligence analysts on the US media space. 28 00:01:25,080 --> 00:01:27,520 Speaker 2: We first asked Getha for some of her key takeaways 29 00:01:27,520 --> 00:01:28,520 Speaker 2: from Disney's results. 30 00:01:28,959 --> 00:01:32,319 Speaker 5: What the street didn't like was the outlook. The outlook 31 00:01:32,440 --> 00:01:36,200 Speaker 5: for the fiscal third quarter, especially for the theme park business, 32 00:01:36,440 --> 00:01:39,520 Speaker 5: was definitely weak and not something that the street was expecting. 33 00:01:39,640 --> 00:01:43,199 Speaker 5: So consensus had a twelve percent growth in operating income 34 00:01:43,200 --> 00:01:46,800 Speaker 5: for the park's business. What Disney said zero growth. Wow, 35 00:01:47,000 --> 00:01:49,240 Speaker 5: And that kind of really spooked investors. And they talked 36 00:01:49,240 --> 00:01:52,840 Speaker 5: about different aspects here. They said that they have, you know, 37 00:01:52,920 --> 00:01:56,080 Speaker 5: three new cruise ships that are basically coming on board, 38 00:01:56,120 --> 00:01:58,560 Speaker 5: and you know there are launch costs associated with that. 39 00:01:58,760 --> 00:02:01,720 Speaker 5: They're also opening this new kind of private island along 40 00:02:01,760 --> 00:02:04,840 Speaker 5: with their vacation club and cruise business. Of course that also, 41 00:02:05,120 --> 00:02:07,120 Speaker 5: you know, is contributing to that. But I think what 42 00:02:07,640 --> 00:02:11,519 Speaker 5: really has investors super nervous. Is that they spoke about 43 00:02:11,560 --> 00:02:15,320 Speaker 5: a moderation in demand, and this has been a constant, 44 00:02:15,440 --> 00:02:18,600 Speaker 5: constant question for Disney. You know, can that park's momentum 45 00:02:18,760 --> 00:02:21,280 Speaker 5: sustain and how long can it sustain? And will they 46 00:02:21,280 --> 00:02:23,520 Speaker 5: have pricing power? And I think people are not so 47 00:02:23,680 --> 00:02:24,520 Speaker 5: confident anymore. 48 00:02:24,639 --> 00:02:27,880 Speaker 6: Is the moderation of demand about Disney's lack of exciting 49 00:02:28,040 --> 00:02:31,000 Speaker 6: things to draw in people to the parks, to draw 50 00:02:31,040 --> 00:02:33,920 Speaker 6: people to the theaters, or is it about a story 51 00:02:33,919 --> 00:02:35,760 Speaker 6: that has to do with the consumer and the way 52 00:02:35,800 --> 00:02:37,240 Speaker 6: that the consumer feels strapped. 53 00:02:38,160 --> 00:02:40,600 Speaker 5: I think it's a little bit of everything. Tim So, 54 00:02:40,840 --> 00:02:43,320 Speaker 5: you know, definitely the consumer, the overall health of the 55 00:02:43,360 --> 00:02:47,399 Speaker 5: economy and the consumer for certain and you know, tremendous 56 00:02:47,400 --> 00:02:50,120 Speaker 5: inflationary pressures. But of course for Disney, you know, one 57 00:02:50,120 --> 00:02:52,239 Speaker 5: thing that they've done over over the past few years 58 00:02:52,320 --> 00:02:56,160 Speaker 5: is they've really raised prices in their parks pretty dramatically, 59 00:02:56,400 --> 00:02:59,959 Speaker 5: and it's becoming increasingly increasingly expensive for you know, affect 60 00:03:00,000 --> 00:03:03,040 Speaker 5: family vacations, so to the point of almost becoming prohibitive. 61 00:03:03,120 --> 00:03:05,320 Speaker 5: And you know, that's where kind of that whole pricing 62 00:03:05,400 --> 00:03:07,680 Speaker 5: power question comes in. I think they're going to have 63 00:03:07,720 --> 00:03:10,560 Speaker 5: to do it much more cautiously and gently in the future. 64 00:03:10,840 --> 00:03:13,280 Speaker 6: Paul talking to some neighbors the other day who recently 65 00:03:13,280 --> 00:03:15,800 Speaker 6: took their kids to Disney. Yep, they were adding up 66 00:03:15,800 --> 00:03:17,440 Speaker 6: how much it costs for just a couple of days 67 00:03:17,440 --> 00:03:20,440 Speaker 6: down there. They were saying, probably about five grand is 68 00:03:20,480 --> 00:03:23,560 Speaker 6: what they spent in Florida. Wow, two kids a few 69 00:03:23,639 --> 00:03:24,400 Speaker 6: days down there. 70 00:03:24,720 --> 00:03:26,760 Speaker 2: Wow, it's a lot of money. I just called I 71 00:03:26,800 --> 00:03:28,360 Speaker 2: just called Githa. She makes a phone call and I'm 72 00:03:28,440 --> 00:03:31,120 Speaker 2: like the front of the line every time. Eithan. The 73 00:03:31,160 --> 00:03:33,519 Speaker 2: other part of this story, And for the longest time, 74 00:03:33,639 --> 00:03:35,320 Speaker 2: you know, the last four or five years, has been 75 00:03:35,440 --> 00:03:38,560 Speaker 2: their streaming business and when will that business term profitable? 76 00:03:38,760 --> 00:03:40,920 Speaker 2: They had some pretty good news on that front, didn't they. 77 00:03:41,600 --> 00:03:42,240 Speaker 7: They did, Paul. 78 00:03:42,280 --> 00:03:44,360 Speaker 5: I mean, we're just on the cusp of a major, 79 00:03:44,560 --> 00:03:47,520 Speaker 5: major earning inflection point here for the first time ever 80 00:03:47,720 --> 00:03:50,880 Speaker 5: in the in the streaming business's history, they actually posted 81 00:03:50,880 --> 00:03:54,440 Speaker 5: them all this profit now again, they said fiscal third quarter, 82 00:03:54,440 --> 00:03:55,760 Speaker 5: which is the next quarter, is going to be a 83 00:03:55,800 --> 00:03:58,640 Speaker 5: little bit choppy. But then what they've said all along 84 00:03:58,760 --> 00:04:02,040 Speaker 5: is that expect some some really good results in the 85 00:04:02,040 --> 00:04:04,440 Speaker 5: fiscal fourth quarter, and then they're really going to build 86 00:04:04,480 --> 00:04:06,640 Speaker 5: on that starting in you know, fiscal twenty twenty five 87 00:04:06,680 --> 00:04:09,600 Speaker 5: and beyond. They have a lot of initiatives in the works. 88 00:04:10,040 --> 00:04:13,120 Speaker 5: You know, they're cracking down on password sharing a la Netflix, 89 00:04:13,400 --> 00:04:16,200 Speaker 5: and remember that has been a huge growth story at Netflix. 90 00:04:16,240 --> 00:04:18,920 Speaker 5: The Netflix aded almost thirty five million subscribers after they 91 00:04:18,920 --> 00:04:21,880 Speaker 5: started cracking down on password sharing, So Disney can also 92 00:04:22,000 --> 00:04:23,640 Speaker 5: hope to see quite a lot of success with that. 93 00:04:23,839 --> 00:04:25,760 Speaker 5: And then of course they also have the Hulu integration 94 00:04:25,880 --> 00:04:27,839 Speaker 5: as well as you know, the ad tier, all of 95 00:04:27,880 --> 00:04:30,159 Speaker 5: that kind of contributing. So streaming, I think is going 96 00:04:30,200 --> 00:04:33,760 Speaker 5: to be a considerable source of earnings upside in the 97 00:04:33,800 --> 00:04:34,480 Speaker 5: next few years. 98 00:04:34,560 --> 00:04:35,640 Speaker 6: How's Bob Ayger doing? 99 00:04:36,360 --> 00:04:37,479 Speaker 2: Does he have an ex successor? 100 00:04:38,920 --> 00:04:40,880 Speaker 5: He spoke about that actually on the call that that 101 00:04:41,040 --> 00:04:43,000 Speaker 5: came up, and he said that they're, you know, they're 102 00:04:43,080 --> 00:04:46,080 Speaker 5: kind of actively considering. They have four internal candidates, the 103 00:04:46,240 --> 00:04:48,839 Speaker 5: all of the division chiefs, the chiefs that are kind 104 00:04:48,880 --> 00:04:52,039 Speaker 5: of up for consideration, and you know, he said that 105 00:04:52,080 --> 00:04:54,719 Speaker 5: they're looking at them very carefully and the announcement will 106 00:04:54,720 --> 00:04:55,760 Speaker 5: come when the time is right. 107 00:04:56,080 --> 00:04:59,360 Speaker 6: Is this any replay of what happened a few years 108 00:04:59,360 --> 00:05:01,520 Speaker 6: ago when Jpek took over? I mean It kind of 109 00:05:01,560 --> 00:05:04,880 Speaker 6: sounds familiar. A number of internal candidates, the person gets picked, 110 00:05:04,880 --> 00:05:07,000 Speaker 6: the other one's leave, and then Bob Ager comes back 111 00:05:07,040 --> 00:05:07,960 Speaker 6: because it didn't work out. 112 00:05:09,080 --> 00:05:09,279 Speaker 8: Yeah. 113 00:05:09,279 --> 00:05:11,360 Speaker 5: I mean we've seen this movie play out so many 114 00:05:11,400 --> 00:05:14,359 Speaker 5: times now at Disney. I hope and I think this 115 00:05:14,480 --> 00:05:17,000 Speaker 5: time it really will be different. I mean, that was 116 00:05:17,040 --> 00:05:20,359 Speaker 5: the whole bone of contention, you know, for the activist investors, 117 00:05:20,400 --> 00:05:23,240 Speaker 5: including Nelson Pals and I think having this new succession 118 00:05:23,320 --> 00:05:26,880 Speaker 5: planning committee suggests that this time they will do things 119 00:05:26,920 --> 00:05:28,080 Speaker 5: probably a little bit differently. 120 00:05:28,560 --> 00:05:31,320 Speaker 2: What did the companies say about their ability to potentially 121 00:05:31,440 --> 00:05:35,000 Speaker 2: deal with maybe weaker demand. It's been a long time 122 00:05:35,040 --> 00:05:39,280 Speaker 2: since we've seen them ever cut prices at the theme parks, promote, 123 00:05:39,640 --> 00:05:42,640 Speaker 2: you know, at the theme parks, anything that would hurt profitability. 124 00:05:42,640 --> 00:05:44,159 Speaker 2: It's been a long time since they've had to do that. 125 00:05:44,640 --> 00:05:46,480 Speaker 5: Yeah, I mean, the theme park business has been such 126 00:05:46,520 --> 00:05:49,480 Speaker 5: a consistent story for them, Paul, as you just pointed out, 127 00:05:49,520 --> 00:05:52,000 Speaker 5: they have twenty five percent operating margin in that business, 128 00:05:52,360 --> 00:05:55,120 Speaker 5: and they are really looking at this as a future 129 00:05:55,360 --> 00:05:58,880 Speaker 5: earnings growth driver, which is why you know they're investing 130 00:05:59,000 --> 00:06:02,480 Speaker 5: sixty billion dollars in the theme parks over the next 131 00:06:02,480 --> 00:06:06,400 Speaker 5: ten years. Over half of that is basically just adding capacity, 132 00:06:06,480 --> 00:06:10,160 Speaker 5: adding new attractions, and I think it's it's a really 133 00:06:10,200 --> 00:06:12,279 Speaker 5: timely and a good strategic move. They're also bringing on 134 00:06:12,320 --> 00:06:14,520 Speaker 5: those cruise ships that that's going to cost them about 135 00:06:14,520 --> 00:06:17,800 Speaker 5: twelve to fifteen billion dollars, so you know, they're definitely 136 00:06:17,839 --> 00:06:20,360 Speaker 5: adding capacity. So I think, you know, overall, definitely the 137 00:06:20,400 --> 00:06:22,880 Speaker 5: business is in good shape, but in the near term, obviously, 138 00:06:22,880 --> 00:06:24,560 Speaker 5: the sentiment has definitely soured. 139 00:06:24,880 --> 00:06:27,640 Speaker 2: Our Thanks to Geitha rang Andath and Bloomberg Intelligence analysts 140 00:06:27,640 --> 00:06:28,440 Speaker 2: on US. 141 00:06:28,240 --> 00:06:31,080 Speaker 3: Media, we move next to the chip maker Intel. This week, 142 00:06:31,120 --> 00:06:33,280 Speaker 3: the company said it now expect second quarter revenue to 143 00:06:33,320 --> 00:06:35,919 Speaker 3: fall below the midpoint of previously issued projections. 144 00:06:36,120 --> 00:06:38,800 Speaker 2: This comes as a result of the US revoking licenses 145 00:06:39,120 --> 00:06:43,080 Speaker 2: allowing Huawei Technologies to buy semi conductors from Qualcomm and Intel. 146 00:06:43,440 --> 00:06:46,200 Speaker 2: The move is aimed at preventing China from developing advanced 147 00:06:46,279 --> 00:06:47,440 Speaker 2: artificial intelligence. 148 00:06:47,560 --> 00:06:49,120 Speaker 3: For more on all of this, we were joined by 149 00:06:49,120 --> 00:06:52,080 Speaker 3: Michael Sheppard, Bloomberg News senior editor. We asked him first 150 00:06:52,240 --> 00:06:54,520 Speaker 3: to walk us through the revenue pain that Intel will 151 00:06:54,520 --> 00:06:55,040 Speaker 3: see from this. 152 00:06:55,720 --> 00:06:59,960 Speaker 9: For Intel, the company is under some pressure to produce 153 00:07:00,320 --> 00:07:04,800 Speaker 9: on the turnaround that Pat Gelsinger has outlined to try 154 00:07:04,839 --> 00:07:08,600 Speaker 9: to get the company back into the vanguard of manufacturing, 155 00:07:08,680 --> 00:07:12,520 Speaker 9: but here in the US in particular, So analysts are 156 00:07:12,520 --> 00:07:17,720 Speaker 9: out there looking for any sign of potential trouble for 157 00:07:17,840 --> 00:07:21,880 Speaker 9: Intel as it tries to execute this plan. And here, 158 00:07:22,120 --> 00:07:25,920 Speaker 9: even though we're not seeing a significant market for Intel 159 00:07:26,120 --> 00:07:30,080 Speaker 9: with Huahwei, nonetheless any sign of trouble is something that 160 00:07:30,080 --> 00:07:31,880 Speaker 9: they have to take into account. 161 00:07:32,160 --> 00:07:35,160 Speaker 2: So, you know, for I guess the bigger picture here 162 00:07:35,480 --> 00:07:38,960 Speaker 2: as you step back, it just feels like this technology 163 00:07:39,080 --> 00:07:43,720 Speaker 2: cold war between China and the West, China and the US, 164 00:07:44,120 --> 00:07:46,880 Speaker 2: it seems to we're just intensifying. Is that the feeling 165 00:07:46,880 --> 00:07:49,080 Speaker 2: in Washington is that where Washington really wants to take this. 166 00:07:49,960 --> 00:07:51,760 Speaker 9: But Paul, I'm glad you brought it up that way 167 00:07:51,800 --> 00:07:54,400 Speaker 9: in those terms, because we really are seeing much more 168 00:07:54,400 --> 00:07:57,880 Speaker 9: of a frost when it comes to technology. Settling in 169 00:07:58,520 --> 00:08:03,520 Speaker 9: the US has been making clear. We heard Commerce Secretary 170 00:08:03,600 --> 00:08:07,160 Speaker 9: Gina Raymunder just a few weeks ago say technological security 171 00:08:07,200 --> 00:08:10,920 Speaker 9: is national security, and they are drawing a line when 172 00:08:10,960 --> 00:08:15,840 Speaker 9: it comes to the more sophisticated and more advanced technology, 173 00:08:16,000 --> 00:08:18,840 Speaker 9: especially when it comes to computer chips. The US is 174 00:08:18,880 --> 00:08:22,360 Speaker 9: a leading innovator, if not a leading producer, of some 175 00:08:22,440 --> 00:08:26,160 Speaker 9: of the most advanced and tiniest semiconductors that are out 176 00:08:26,160 --> 00:08:30,400 Speaker 9: there powering technology everywhere. And one of the emerging fronts is, 177 00:08:30,440 --> 00:08:34,560 Speaker 9: of course, artificial intelligence. And we spoke to House Foreign 178 00:08:34,559 --> 00:08:37,520 Speaker 9: Affairs Committee Chairman Michael McCall, who's been pushing for these 179 00:08:37,559 --> 00:08:41,040 Speaker 9: Quawei restrictions, and he said, the idea of the export 180 00:08:41,200 --> 00:08:45,400 Speaker 9: controls that we reported on yesterday was to keep the 181 00:08:45,400 --> 00:08:48,240 Speaker 9: most advanced AI tech out of China's hands. 182 00:08:49,040 --> 00:08:51,280 Speaker 3: What about tech that's already in their hands that then 183 00:08:51,400 --> 00:08:54,840 Speaker 3: China can adapt themselves. Wasn't there like a Huawei phone 184 00:08:55,520 --> 00:08:58,440 Speaker 3: that really scratched everyone's head on like what kind of 185 00:08:58,480 --> 00:09:00,679 Speaker 3: chips they actually used? I mean, how do you restrict 186 00:09:00,679 --> 00:09:01,480 Speaker 3: that kind of stuff? 187 00:09:02,360 --> 00:09:05,880 Speaker 9: Well, the US is actually investigating what happened with the 188 00:09:05,880 --> 00:09:09,959 Speaker 9: May ninety. This device was unveiled as Gina Raimondo was 189 00:09:10,120 --> 00:09:14,040 Speaker 9: visiting China and it was taken as a you know, 190 00:09:14,640 --> 00:09:18,679 Speaker 9: something that was aimed directly at her during her visit 191 00:09:19,080 --> 00:09:21,720 Speaker 9: to say that, look, you're trying to put these restrictions 192 00:09:21,720 --> 00:09:23,360 Speaker 9: in place, we will show you. 193 00:09:23,760 --> 00:09:23,880 Speaker 2: Now. 194 00:09:23,920 --> 00:09:28,000 Speaker 9: The US has launched an investigation into how Huawei was 195 00:09:28,160 --> 00:09:31,119 Speaker 9: able to develop it, and whether there are other companies 196 00:09:31,200 --> 00:09:35,280 Speaker 9: that are forming this shadow network of suppliers to Huawei, 197 00:09:35,360 --> 00:09:39,280 Speaker 9: in other words, creating proxies that allow the device maker 198 00:09:39,400 --> 00:09:41,440 Speaker 9: to obtain the chips that it otherwise can't. 199 00:09:43,120 --> 00:09:46,040 Speaker 2: So what's the response been from China? What can we 200 00:09:46,120 --> 00:09:47,800 Speaker 2: It's just gonna be a tit for tat type of thing. 201 00:09:47,880 --> 00:09:49,839 Speaker 2: So I'm Tim Cook, I'm paying attention here. 202 00:09:50,800 --> 00:09:57,319 Speaker 9: Well, American technology executives should be watching this space. China responded, 203 00:09:57,400 --> 00:10:01,160 Speaker 9: calling the moves economic coercion and a violation of what 204 00:10:01,240 --> 00:10:04,839 Speaker 9: it sees as World Trade Organization rules, and they may 205 00:10:05,040 --> 00:10:08,440 Speaker 9: very well decide to proceed with the case. At the 206 00:10:08,480 --> 00:10:10,880 Speaker 9: same time, the US is trying to draw a line 207 00:10:11,160 --> 00:10:14,640 Speaker 9: around the whole question of national security, and that is 208 00:10:14,679 --> 00:10:17,079 Speaker 9: going to be something that we see as a tension 209 00:10:17,120 --> 00:10:20,360 Speaker 9: point between the two countries. The US is made clear 210 00:10:20,400 --> 00:10:23,760 Speaker 9: that it wants to do business with China, but just 211 00:10:24,320 --> 00:10:27,200 Speaker 9: not that far. It is only willing to go so 212 00:10:27,400 --> 00:10:33,200 Speaker 9: far when it comes to trade in more advanced technologies. 213 00:10:33,200 --> 00:10:36,120 Speaker 9: It wants to preserve the American edge here at home. 214 00:10:36,640 --> 00:10:38,840 Speaker 3: How hard is it for Intel to make up that 215 00:10:38,880 --> 00:10:39,920 Speaker 3: revenue elsewhere? 216 00:10:40,880 --> 00:10:43,560 Speaker 9: You know, it's a good question It's unclear exactly how 217 00:10:43,679 --> 00:10:48,079 Speaker 9: much they would be losing here. It was only a 218 00:10:48,120 --> 00:10:52,080 Speaker 9: slight drop. If you read between the lines on it. 219 00:10:52,400 --> 00:10:55,439 Speaker 9: You know they're now seeing something more to the midpoint 220 00:10:55,960 --> 00:10:59,720 Speaker 9: of their guidance, but it is still within the revenue 221 00:10:59,720 --> 00:11:02,680 Speaker 9: that they projected between twelve and a half billion and 222 00:11:02,800 --> 00:11:03,960 Speaker 9: thirteen and a half billion. 223 00:11:04,400 --> 00:11:07,240 Speaker 2: You know, Michael, we've all grown up with Intel, and 224 00:11:07,520 --> 00:11:09,679 Speaker 2: you know kind of I guess we now consider kind 225 00:11:09,679 --> 00:11:13,720 Speaker 2: of the older generation of Silicon Valley of technology. It 226 00:11:13,760 --> 00:11:16,720 Speaker 2: appears that they just have not been able to catch 227 00:11:16,760 --> 00:11:20,200 Speaker 2: that AI wave, at least from investors perspective, in any way, 228 00:11:20,240 --> 00:11:24,000 Speaker 2: shape or form. Is there any optimism that maybe they 229 00:11:24,040 --> 00:11:27,920 Speaker 2: can infect pivot their company to go to where the 230 00:11:27,960 --> 00:11:29,880 Speaker 2: puck is going, which is for AI. 231 00:11:31,120 --> 00:11:34,760 Speaker 9: Well, Paul, we all remember the Intel inside jingle from 232 00:11:34,800 --> 00:11:37,680 Speaker 9: those ads years ago, and that is something that Pat 233 00:11:37,760 --> 00:11:42,240 Speaker 9: Gelsinger is really trying to recapture, and he is seizing 234 00:11:42,360 --> 00:11:47,559 Speaker 9: upon the Biden Administration's Chips Act all those investments. We're 235 00:11:47,600 --> 00:11:52,040 Speaker 9: seeing the company launch plants in Arizona and in Ohio. 236 00:11:52,120 --> 00:11:55,720 Speaker 9: We just profiled the construction of this new facility in 237 00:11:55,760 --> 00:11:59,640 Speaker 9: Ohio was really impressive. Look inside what they are trying 238 00:11:59,640 --> 00:12:02,400 Speaker 9: to build there. It's ambitious, but it will take some 239 00:12:02,520 --> 00:12:06,440 Speaker 9: time too. These plants can't be built overnight, and it 240 00:12:06,480 --> 00:12:08,480 Speaker 9: is a race against the clock when it comes to AI. 241 00:12:09,000 --> 00:12:11,679 Speaker 2: Our thanks to Michael Sheppard, Bloomberg News Senior editor. 242 00:12:11,920 --> 00:12:14,559 Speaker 3: Coming up, we'll break down Apple's online launch event from 243 00:12:14,559 --> 00:12:16,120 Speaker 3: this week's dubbed let Loose. 244 00:12:16,480 --> 00:12:19,520 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing indepth 245 00:12:19,520 --> 00:12:21,760 Speaker 2: research and data on two thousand companies and one hundred 246 00:12:21,760 --> 00:12:24,559 Speaker 2: and thirty industries. You can access Bloomberg Intelligence via b 247 00:12:24,679 --> 00:12:25,600 Speaker 2: I go on the terminal. 248 00:12:25,679 --> 00:12:28,640 Speaker 3: I'm Paul Sweetey an Alex Steele, and this is Bloomberg. 249 00:12:32,559 --> 00:12:36,439 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 250 00:12:36,520 --> 00:12:39,160 Speaker 1: weekdays at ten am Eastern on Apple car Play and 251 00:12:39,160 --> 00:12:42,240 Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand 252 00:12:42,280 --> 00:12:46,600 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 253 00:12:47,520 --> 00:12:49,800 Speaker 3: We moved now to big tech and Apple. Apple had 254 00:12:49,840 --> 00:12:52,520 Speaker 3: its online launch event Tuesday dud let Loose, and the 255 00:12:52,559 --> 00:12:55,719 Speaker 3: company unveiled a new artificial intelligence focused iPad pro and 256 00:12:55,840 --> 00:12:56,760 Speaker 3: larger iPad Air. 257 00:12:57,200 --> 00:12:59,440 Speaker 2: The goal is to reinvigorate a tablet lineup that has 258 00:12:59,520 --> 00:13:01,000 Speaker 2: languished the past two years. 259 00:13:01,120 --> 00:13:01,439 Speaker 10: For more. 260 00:13:01,720 --> 00:13:04,040 Speaker 2: Guest host Tim Stenevick and I were joined by Man Deep, 261 00:13:04,040 --> 00:13:08,000 Speaker 2: saying Bloomberg Intelligence senior technology analyst. We first asked man 262 00:13:08,040 --> 00:13:10,920 Speaker 2: Deep about how important the new iPads are to Apple. 263 00:13:11,320 --> 00:13:14,800 Speaker 4: iPad line is about a high single digit contributor to 264 00:13:14,920 --> 00:13:19,240 Speaker 4: their overall revenue, so not as big as the iPhone, 265 00:13:19,280 --> 00:13:22,840 Speaker 4: of course, but clearly you know they are trying to 266 00:13:22,920 --> 00:13:23,600 Speaker 4: put their. 267 00:13:23,480 --> 00:13:26,160 Speaker 10: Latest chip in the iPad. 268 00:13:26,640 --> 00:13:32,079 Speaker 4: They showcase a new keyboard for the iPad and there 269 00:13:32,120 --> 00:13:36,240 Speaker 4: were other battery announcements new all at display. So all 270 00:13:36,280 --> 00:13:39,520 Speaker 4: these are cool, but fundamentally you have to ask yourself, 271 00:13:40,240 --> 00:13:43,679 Speaker 4: is it, you know, worth to upgrade to a new 272 00:13:43,720 --> 00:13:46,840 Speaker 4: iPad with all these incremental features as I would like 273 00:13:46,920 --> 00:13:50,679 Speaker 4: to call And that's where I think the market is 274 00:13:50,720 --> 00:13:53,760 Speaker 4: anticipating more along the lines of what can you show 275 00:13:53,800 --> 00:13:57,760 Speaker 4: me in terms of AI and the wow factor around LMS? 276 00:13:58,040 --> 00:14:01,040 Speaker 10: And I think that's what was messing at the event. 277 00:14:01,320 --> 00:14:03,439 Speaker 6: Well what could they show? I mean, when we talk 278 00:14:03,480 --> 00:14:07,520 Speaker 6: about AI and Apple, what are we thinking about? Because 279 00:14:08,280 --> 00:14:11,400 Speaker 6: Mark German says that this is an AI focused pro model, 280 00:14:11,480 --> 00:14:15,560 Speaker 6: So I'm wondering, apart from the chip, what about it 281 00:14:15,640 --> 00:14:16,800 Speaker 6: is AI. 282 00:14:17,600 --> 00:14:20,720 Speaker 4: It's at the app level, so that's why that operating 283 00:14:20,760 --> 00:14:21,920 Speaker 4: system upgrade. 284 00:14:21,960 --> 00:14:24,120 Speaker 10: And they did talk about the iOS eighteen. 285 00:14:24,680 --> 00:14:28,640 Speaker 4: Look right now, the current version of my iPad, which 286 00:14:28,680 --> 00:14:32,160 Speaker 4: is five generations behind what they launch, can run the 287 00:14:32,200 --> 00:14:35,880 Speaker 4: latest version of the iOS operating system. So why do 288 00:14:35,960 --> 00:14:38,160 Speaker 4: I need to upgrade? They have to give me a 289 00:14:38,200 --> 00:14:42,040 Speaker 4: reason to upgrade to the latest iPad because my current 290 00:14:42,120 --> 00:14:45,240 Speaker 4: version can't run the operating system and it's got some 291 00:14:45,360 --> 00:14:46,200 Speaker 4: cool apps. 292 00:14:46,680 --> 00:14:48,880 Speaker 10: That is what was missing, Like what. 293 00:14:48,760 --> 00:14:52,800 Speaker 4: Functionality can you show me around Siri, around image editing, 294 00:14:52,920 --> 00:14:56,320 Speaker 4: around summaries, like all the cool stuff that we talk 295 00:14:56,400 --> 00:15:00,280 Speaker 4: about from Nvidia at the data center level. That's what 296 00:15:00,760 --> 00:15:03,400 Speaker 4: a small kind of version of it is what you 297 00:15:03,440 --> 00:15:06,360 Speaker 4: want to run on device instead of going to the cloud. 298 00:15:06,800 --> 00:15:09,600 Speaker 10: And that's what they got a showcase in terms of 299 00:15:09,680 --> 00:15:11,640 Speaker 10: why you need to upgrade to the latest hardware. 300 00:15:11,800 --> 00:15:15,960 Speaker 6: Okay, so Paul, this is not our first rodeo. You 301 00:15:16,040 --> 00:15:18,640 Speaker 6: and I have anchored before, and one thing that's different 302 00:15:19,560 --> 00:15:22,160 Speaker 6: than versus a few years ago. When I would walk 303 00:15:22,160 --> 00:15:24,360 Speaker 6: in here, you would have an iPad next to you. 304 00:15:24,480 --> 00:15:24,720 Speaker 1: Yep. 305 00:15:24,800 --> 00:15:27,520 Speaker 6: And the iPad you told me was like a really 306 00:15:27,560 --> 00:15:29,520 Speaker 6: big part of how you prepared for the show, use 307 00:15:29,520 --> 00:15:32,160 Speaker 6: the Boomberg terminal on the iPad. You also have the 308 00:15:32,160 --> 00:15:35,320 Speaker 6: two screens for the terminal. You have no iPad anymore? Nope, 309 00:15:35,400 --> 00:15:35,720 Speaker 6: why not? 310 00:15:36,480 --> 00:15:39,000 Speaker 2: I still have the iPad, although it's probably the original version, 311 00:15:39,040 --> 00:15:40,200 Speaker 2: but now everything's on the phone. 312 00:15:40,840 --> 00:15:42,840 Speaker 6: So your phone has replaced your iPad absolutely. 313 00:15:42,920 --> 00:15:46,240 Speaker 2: And I have a very long train ride every day, 314 00:15:46,280 --> 00:15:50,200 Speaker 2: which I need a very engaging device, and your. 315 00:15:50,080 --> 00:15:52,160 Speaker 6: Phone is that it's not the iPad. So, man, deep, 316 00:15:52,200 --> 00:15:53,680 Speaker 6: how big of a problem is that for Apple? 317 00:15:54,320 --> 00:15:57,600 Speaker 4: I mean, look in their case some of their newer 318 00:15:57,640 --> 00:16:00,640 Speaker 4: products to cannibalize. You know, if the eye pad is 319 00:16:00,800 --> 00:16:03,640 Speaker 4: very good, it's going to cannibalize the Mac sales. And 320 00:16:03,680 --> 00:16:06,360 Speaker 4: if the iPhone is very good, it's going to cannibalize 321 00:16:06,400 --> 00:16:07,640 Speaker 4: the iPad sales. 322 00:16:07,720 --> 00:16:09,560 Speaker 10: So that's always been the case. 323 00:16:09,600 --> 00:16:12,600 Speaker 4: But it's still a very sticky operating system, and you know, 324 00:16:13,040 --> 00:16:17,400 Speaker 4: just ecosystem overall. The only problem that I think people 325 00:16:17,440 --> 00:16:20,200 Speaker 4: are trying to grapple with here is what is the 326 00:16:20,280 --> 00:16:23,880 Speaker 4: refresh cycle? Because right now, the refresh cycle continues to 327 00:16:23,880 --> 00:16:25,000 Speaker 4: get longer and longer. 328 00:16:25,040 --> 00:16:26,440 Speaker 10: It's not as if, you know, people. 329 00:16:26,240 --> 00:16:29,440 Speaker 4: Are moving out of the ecosystem, but they're not gaining 330 00:16:29,480 --> 00:16:33,360 Speaker 4: more Android users because they don't have the best looking 331 00:16:33,400 --> 00:16:37,360 Speaker 4: phones or the best features that Android phones can offer, 332 00:16:37,520 --> 00:16:39,880 Speaker 4: and so that is the part that is hurting their 333 00:16:39,920 --> 00:16:43,360 Speaker 4: refresh rate and also the share gain from Android users. 334 00:16:43,880 --> 00:16:45,520 Speaker 2: Is there a chance in your June developer meeting that 335 00:16:45,520 --> 00:16:46,800 Speaker 2: they're going to come out with something that's going to 336 00:16:46,800 --> 00:16:49,040 Speaker 2: blow the street away or expectations low? 337 00:16:49,520 --> 00:16:53,320 Speaker 4: I mean, I'm expecting more emphasis on the software side 338 00:16:53,400 --> 00:16:57,360 Speaker 4: in that developer meeting, and clearly they need to showcase 339 00:16:57,480 --> 00:17:01,800 Speaker 4: what they are doing around the LM's trap, whether an 340 00:17:02,080 --> 00:17:05,200 Speaker 4: LL and large anguid model will be part of their OS, 341 00:17:05,480 --> 00:17:09,840 Speaker 4: and then how it influences the overall app ecosystem because 342 00:17:09,920 --> 00:17:11,960 Speaker 4: that those are the features. If you look at the 343 00:17:12,119 --> 00:17:15,920 Speaker 4: latest Pixel phone, they offer you a lot of those 344 00:17:15,960 --> 00:17:20,400 Speaker 4: features already on Android, and that's what the Android ecosystem 345 00:17:20,440 --> 00:17:22,479 Speaker 4: is looking to leverage more and more. Off look at 346 00:17:22,480 --> 00:17:26,000 Speaker 4: the latest Samsung phones, they are targeting a lot of 347 00:17:26,040 --> 00:17:29,600 Speaker 4: those JNAI features and Apple is really playing catch up 348 00:17:29,640 --> 00:17:31,800 Speaker 4: over there, and they need to showcase that at. 349 00:17:31,680 --> 00:17:35,960 Speaker 10: The WWDC when they have all the developers over there. 350 00:17:36,119 --> 00:17:37,879 Speaker 6: Meande, this is something you think about a lot. So 351 00:17:37,960 --> 00:17:40,399 Speaker 6: lay out the ultimate vision for us. What does Apple 352 00:17:40,760 --> 00:17:43,239 Speaker 6: want its devices to be able to do for us 353 00:17:43,240 --> 00:17:45,800 Speaker 6: from an AI perspective, like how is it going to 354 00:17:46,200 --> 00:17:47,920 Speaker 6: interact with me using AI? 355 00:17:48,880 --> 00:17:52,760 Speaker 4: I mean, the biggest kind of UI upgrade they can 356 00:17:52,880 --> 00:17:55,919 Speaker 4: offer is around this sery. You know the fact that 357 00:17:56,119 --> 00:17:59,720 Speaker 4: Siri is so underutilized right now as a voice assistant. 358 00:18:00,320 --> 00:18:03,560 Speaker 4: If it has the right set of JENNYI features, clearly 359 00:18:03,720 --> 00:18:06,160 Speaker 4: that will have a big influence and how we interact 360 00:18:06,240 --> 00:18:09,040 Speaker 4: with the next version offer of the phones they make. 361 00:18:09,440 --> 00:18:12,840 Speaker 4: And also you know some of the utility inside the app, 362 00:18:13,280 --> 00:18:17,399 Speaker 4: like you don't have to you know, kind of touch 363 00:18:17,520 --> 00:18:22,119 Speaker 4: everything or do everything manually in terms of giving instructions. 364 00:18:22,200 --> 00:18:25,720 Speaker 4: There is this concept of AI agents that has to 365 00:18:25,760 --> 00:18:28,760 Speaker 4: be front and center in the next version of software 366 00:18:28,800 --> 00:18:32,359 Speaker 4: that Apple offers within their operating system, so that AI 367 00:18:32,480 --> 00:18:37,119 Speaker 4: agent can automate a lot of the tasks, not fully, 368 00:18:37,280 --> 00:18:39,960 Speaker 4: but pieces of it. And you want to see Apple 369 00:18:40,040 --> 00:18:41,240 Speaker 4: making progress. 370 00:18:40,840 --> 00:18:43,600 Speaker 2: On that front thanks to Man Deep Seeing Bloomberg Intelligence 371 00:18:43,640 --> 00:18:45,080 Speaker 2: Senior Technology Analyst. 372 00:18:45,320 --> 00:18:47,159 Speaker 3: You move now to social media and there may be 373 00:18:47,160 --> 00:18:49,560 Speaker 3: a prolonged legal battle now on the horizon involving the 374 00:18:49,600 --> 00:18:51,280 Speaker 3: popular video sharing app TikTok. 375 00:18:51,480 --> 00:18:54,080 Speaker 2: TikTok is owned by China based Byte Dance, this week, 376 00:18:54,119 --> 00:18:56,720 Speaker 2: the company filed a legal challenge to a measure signed 377 00:18:56,720 --> 00:18:59,520 Speaker 2: by President Biden last month. That measure with ban TikTok 378 00:18:59,560 --> 00:19:03,000 Speaker 2: in the US, if ByteDance hasn't divested from the app 379 00:19:03,080 --> 00:19:04,919 Speaker 2: by January nineteenth. 380 00:19:05,000 --> 00:19:07,800 Speaker 3: The potential ban is meant to address national security concerns 381 00:19:07,800 --> 00:19:10,520 Speaker 3: that the Chinese government could access user data or influence 382 00:19:10,560 --> 00:19:12,200 Speaker 3: what's scene on the TikTok platform. 383 00:19:12,440 --> 00:19:15,320 Speaker 2: For more, we were joined by Matthew Schuttenhelm, Bloomberg Intelligence 384 00:19:15,400 --> 00:19:18,679 Speaker 2: media litigation analysts. We first asked for his take on 385 00:19:18,720 --> 00:19:19,560 Speaker 2: this week's news. 386 00:19:19,960 --> 00:19:23,040 Speaker 11: This is the first Amendment lawsuit that we expected TikTok 387 00:19:23,200 --> 00:19:28,520 Speaker 11: to bring, basically saying that Congress's action violates its First 388 00:19:28,520 --> 00:19:33,680 Speaker 11: Amendment rights, that it, like any other platform, think about 389 00:19:33,720 --> 00:19:37,240 Speaker 11: the New York Times or any other media outlet. If 390 00:19:37,320 --> 00:19:42,199 Speaker 11: Congress were to effectively ban it, that it violates the 391 00:19:42,200 --> 00:19:46,280 Speaker 11: First Amendment to do so unless Congress can pass a 392 00:19:46,359 --> 00:19:49,600 Speaker 11: pretty tough test. And so I think this is a 393 00:19:49,600 --> 00:19:53,800 Speaker 11: pretty substantial First Amendment case because we've rarely seen Congress 394 00:19:53,880 --> 00:19:58,280 Speaker 11: take such drastic action with respect to such a major 395 00:19:58,359 --> 00:19:59,240 Speaker 11: media platform. 396 00:20:00,160 --> 00:20:03,400 Speaker 2: We hired Matt He was just a kid's got gray hair. 397 00:20:04,480 --> 00:20:07,800 Speaker 2: I know, I don't know what happened exactly as a 398 00:20:07,840 --> 00:20:11,240 Speaker 2: grizzled veteran there, Matt, I know it's important which court 399 00:20:11,320 --> 00:20:13,040 Speaker 2: these things go to. So tell us where you think 400 00:20:13,359 --> 00:20:16,080 Speaker 2: this case will be litigated initially and kind of how 401 00:20:16,119 --> 00:20:16,640 Speaker 2: that might play. 402 00:20:16,760 --> 00:20:19,640 Speaker 11: Yeah, So this one's pretty easy to figure that out 403 00:20:19,680 --> 00:20:24,359 Speaker 11: because Congress limited where the companies can sue, and they 404 00:20:24,400 --> 00:20:27,920 Speaker 11: said any suit can only be filed at the DC 405 00:20:28,119 --> 00:20:31,960 Speaker 11: Circuit here here in Washington, which is sometimes referred to 406 00:20:32,040 --> 00:20:35,520 Speaker 11: as the second most important court in the United States, 407 00:20:35,560 --> 00:20:37,440 Speaker 11: below the US Supreme Court. This is a court that 408 00:20:38,200 --> 00:20:42,560 Speaker 11: takes most of its cases actually involved challenges to US 409 00:20:42,680 --> 00:20:48,320 Speaker 11: government action, usually agencies the alphabet soup of agencies. 410 00:20:47,720 --> 00:20:50,520 Speaker 2: The FCC, the FAA, the E p A. 411 00:20:51,200 --> 00:20:55,360 Speaker 11: But here it's Congress actually taking the action. So this 412 00:20:55,480 --> 00:21:00,160 Speaker 11: is a pretty experienced court. This won't allow a single 413 00:21:00,280 --> 00:21:02,120 Speaker 11: judge to go out and sort of make a name 414 00:21:02,200 --> 00:21:05,480 Speaker 11: for himself with an opinion. This will be a three 415 00:21:05,600 --> 00:21:09,880 Speaker 11: judge panel of very experienced judges, and then the only 416 00:21:09,920 --> 00:21:12,520 Speaker 11: appeal option would be to the Supreme Court after that. 417 00:21:13,240 --> 00:21:16,439 Speaker 3: Does it violate the First Amendment free speech rights? 418 00:21:17,760 --> 00:21:22,200 Speaker 11: So I think it's it's a strong argument that TikTok presents. 419 00:21:22,240 --> 00:21:26,560 Speaker 11: This is not an easy case on either side. What 420 00:21:26,760 --> 00:21:29,479 Speaker 11: the court is going to look at is whether there 421 00:21:29,560 --> 00:21:32,960 Speaker 11: is an important interest that Congress was trying to serve 422 00:21:33,040 --> 00:21:37,200 Speaker 11: and whether it tried to address that interest in an 423 00:21:37,240 --> 00:21:41,440 Speaker 11: appropriate and narrow way. Did it burden more speech than 424 00:21:41,520 --> 00:21:44,879 Speaker 11: is necessary to go after the interest? And one of 425 00:21:44,960 --> 00:21:47,440 Speaker 11: the things that the government has going for it here 426 00:21:47,640 --> 00:21:51,080 Speaker 11: is that this is a national security question. I think 427 00:21:51,200 --> 00:21:53,600 Speaker 11: if this were just an agency trying to do this, 428 00:21:54,200 --> 00:21:57,000 Speaker 11: I think that the DC Circuit would would have issues 429 00:21:57,040 --> 00:21:59,720 Speaker 11: with the state of the record here and require it 430 00:21:59,760 --> 00:22:03,119 Speaker 11: to do There's very little evidence in the legislative record 431 00:22:03,160 --> 00:22:07,639 Speaker 11: about what exactly is the risk and what exactly why 432 00:22:07,840 --> 00:22:11,359 Speaker 11: Congress needed to pursue this avenue versus another avenue. If 433 00:22:11,400 --> 00:22:13,879 Speaker 11: an agency did this, a court would would have issues 434 00:22:13,920 --> 00:22:17,280 Speaker 11: with it. But this is Congress. This is our biggest 435 00:22:17,520 --> 00:22:21,520 Speaker 11: policymaking body, and it's on national security, something these judges 436 00:22:21,680 --> 00:22:24,040 Speaker 11: really know nothing about, and they're going to be be 437 00:22:24,400 --> 00:22:27,440 Speaker 11: very careful about interfering. So at the end of the day, 438 00:22:27,840 --> 00:22:30,920 Speaker 11: it's a close call, but I give the United States 439 00:22:30,960 --> 00:22:34,720 Speaker 11: a slight edge because of that deference on national security 440 00:22:34,800 --> 00:22:37,280 Speaker 11: questions where judges just aren't expert. 441 00:22:38,000 --> 00:22:42,520 Speaker 2: So let's just assume that maybe this DC District rules 442 00:22:42,520 --> 00:22:46,280 Speaker 2: in favor of Congress. TikTok presumably would then take it 443 00:22:46,359 --> 00:22:48,479 Speaker 2: to the Supreme Court. Do you think the Supreme Court 444 00:22:48,920 --> 00:22:49,960 Speaker 2: would hear such a case? 445 00:22:50,560 --> 00:22:53,840 Speaker 11: Yeah, so every Supreme Court case is discretionary. They could 446 00:22:53,880 --> 00:22:57,840 Speaker 11: say no. You know, I think more likely if the 447 00:22:57,920 --> 00:23:01,200 Speaker 11: scenario were flipped, I think think the Supreme Court would 448 00:23:01,200 --> 00:23:04,240 Speaker 11: take it that. If the d C Circuit rules initially 449 00:23:04,440 --> 00:23:08,879 Speaker 11: in TikTok's favor, I think the United States would almost 450 00:23:08,920 --> 00:23:12,159 Speaker 11: certainly get a second chance at the Supreme Court. And 451 00:23:12,160 --> 00:23:14,159 Speaker 11: that's one of the reasons why I like the United 452 00:23:14,160 --> 00:23:17,399 Speaker 11: States chances here is that I see even if it 453 00:23:17,440 --> 00:23:20,040 Speaker 11: doesn't go well for the United States at the d 454 00:23:20,160 --> 00:23:23,320 Speaker 11: C Circuit, I think it might go better at the 455 00:23:23,359 --> 00:23:24,680 Speaker 11: Supreme Court. It gets two. 456 00:23:24,520 --> 00:23:25,600 Speaker 2: Shots at it. 457 00:23:25,720 --> 00:23:28,560 Speaker 11: If the d C Circuit rules for the United States, 458 00:23:28,600 --> 00:23:30,399 Speaker 11: I could see the Supreme Court saying, you know what, 459 00:23:30,880 --> 00:23:32,560 Speaker 11: the d C Circuit got it right, we don't need 460 00:23:32,600 --> 00:23:34,800 Speaker 11: to take it up and say the same thing. So 461 00:23:35,640 --> 00:23:37,840 Speaker 11: it's definitely going to be on the Supreme Court's radar, 462 00:23:37,920 --> 00:23:40,120 Speaker 11: assuming the timing fits, that's going to be the first 463 00:23:40,240 --> 00:23:42,560 Speaker 11: question is how do you squeeze all this in on 464 00:23:42,680 --> 00:23:46,920 Speaker 11: Congress's timeline by January nineteenth, we're supposed to have a divestiture. 465 00:23:47,480 --> 00:23:49,600 Speaker 11: The courts usually take much longer than that. 466 00:23:50,080 --> 00:23:52,959 Speaker 2: Who argues this case on benf of the US government? 467 00:23:53,480 --> 00:23:56,760 Speaker 11: I would think it's pretty high level attorneys in the 468 00:23:56,920 --> 00:24:00,960 Speaker 11: Attorney's General Office, potentially the Solicitor General of the United 469 00:24:01,000 --> 00:24:04,040 Speaker 11: States if this goes to the US Supreme Court. This 470 00:24:04,200 --> 00:24:08,119 Speaker 11: suit named Merrick Garland, the Attorney General, as the defendant, 471 00:24:08,240 --> 00:24:11,520 Speaker 11: so I would think he would name one of his 472 00:24:12,200 --> 00:24:15,560 Speaker 11: top attorneys to represent him and the United States in 473 00:24:15,560 --> 00:24:16,040 Speaker 11: this case. 474 00:24:16,560 --> 00:24:20,320 Speaker 2: Our thanks to Matthew Shuttenhelm, Bloomberg Intelligence media litigation analyst. 475 00:24:20,440 --> 00:24:21,960 Speaker 3: Coming up in the program, we'll look at how and 476 00:24:22,000 --> 00:24:25,240 Speaker 3: why one company thinks most banker bonuses will rise in 477 00:24:25,320 --> 00:24:26,120 Speaker 3: twenty twenty four. 478 00:24:26,359 --> 00:24:29,760 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing into 479 00:24:29,840 --> 00:24:32,120 Speaker 2: research and data on two thousand companies and one hundred 480 00:24:32,160 --> 00:24:34,840 Speaker 2: and thirty industries. You can access Bloomberg Intelligence via b 481 00:24:34,960 --> 00:24:36,880 Speaker 2: I go on the terminal. I'm Paul Sweeney and. 482 00:24:36,880 --> 00:24:38,879 Speaker 3: Am Alex Steele, and this is Bloomberg. 483 00:24:43,560 --> 00:24:47,440 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 484 00:24:47,480 --> 00:24:51,000 Speaker 1: weekdays at ten am Eastern on applecard Play and Android 485 00:24:51,040 --> 00:24:54,200 Speaker 1: Otto with the Bloomberg Business. You can also listen live 486 00:24:54,320 --> 00:24:57,480 Speaker 1: on Amazon Alexa from our flagship New York station Just 487 00:24:57,560 --> 00:25:00,000 Speaker 1: Say Alexa playing Bloomberg eleven thirty. 488 00:25:00,840 --> 00:25:04,760 Speaker 3: We move now to banks and this week the financial 489 00:25:04,760 --> 00:25:08,520 Speaker 3: services compensation from Johnson Associates predicted the bonuses on Wall 490 00:25:08,560 --> 00:25:11,000 Speaker 3: Street would rebound this year, and the company said this 491 00:25:11,040 --> 00:25:14,000 Speaker 3: applies mostly to desks that help companies tap markets or 492 00:25:14,000 --> 00:25:14,880 Speaker 3: trade their bonds. 493 00:25:15,240 --> 00:25:16,760 Speaker 2: For more on all of this, I was joined by 494 00:25:16,760 --> 00:25:20,800 Speaker 2: Alison Williams, Bloomberg Intelligence senior analysts Global banks and asset managers. 495 00:25:21,080 --> 00:25:23,720 Speaker 2: I first asked, Allison, isn't May too early to be 496 00:25:23,760 --> 00:25:24,720 Speaker 2: talking about bonuses? 497 00:25:25,000 --> 00:25:29,600 Speaker 8: I think so, Although the appetite for any incremental knowledge 498 00:25:29,760 --> 00:25:34,080 Speaker 8: about compensation is insatiable, we just, you know, we've really 499 00:25:34,160 --> 00:25:36,720 Speaker 8: just gotten sort of the look back at last year. 500 00:25:36,880 --> 00:25:40,399 Speaker 8: We've had the first quarter of results. But you know, 501 00:25:40,480 --> 00:25:43,320 Speaker 8: to your point, you know, it's a long way out. 502 00:25:43,440 --> 00:25:45,800 Speaker 8: And I would say if you look at some of 503 00:25:45,840 --> 00:25:49,560 Speaker 8: the estimates, I mean, some things seem sort of reasonable, right, 504 00:25:49,640 --> 00:25:54,200 Speaker 8: So wealth and asset management, you know, the global markets 505 00:25:54,200 --> 00:25:57,679 Speaker 8: are close to record highs. Certain markets are you know, 506 00:25:57,760 --> 00:26:01,600 Speaker 8: hitting highs and obvious, so their strength all around. 507 00:26:01,800 --> 00:26:03,400 Speaker 2: But we are in early. 508 00:26:03,520 --> 00:26:07,680 Speaker 8: May, but we look at some numbers, so the story 509 00:26:07,720 --> 00:26:11,760 Speaker 8: I think, as you said, most bullish seemingly on bond 510 00:26:11,800 --> 00:26:17,679 Speaker 8: trading revenues, and it's tough for us to see. You know, 511 00:26:17,760 --> 00:26:20,560 Speaker 8: certainly it's possible to get a huge increase in fixed 512 00:26:20,560 --> 00:26:23,840 Speaker 8: income trading, but fixed income trading has been doing well 513 00:26:24,000 --> 00:26:26,600 Speaker 8: the last few years, and we do think that business 514 00:26:26,640 --> 00:26:30,280 Speaker 8: is resilient. But when we say resilient, we say, you know, 515 00:26:30,359 --> 00:26:34,480 Speaker 8: about in the range of last year. Similarly, equities again 516 00:26:34,640 --> 00:26:37,960 Speaker 8: about in the range. I mean where we think things 517 00:26:38,000 --> 00:26:41,960 Speaker 8: are going to be much better than last year is that, 518 00:26:42,240 --> 00:26:46,040 Speaker 8: you know, debt underwriting, equity underwriting. I mean, those are 519 00:26:46,040 --> 00:26:49,199 Speaker 8: the businesses really strong in this quarter. But keep in 520 00:26:49,200 --> 00:26:52,600 Speaker 8: mind they're coming off of a very low base. So 521 00:26:53,240 --> 00:26:57,760 Speaker 8: you know, twenty twenty one was just an incredibly strong year. 522 00:26:58,760 --> 00:27:03,920 Speaker 8: We've had really two really bad years, and compensation has 523 00:27:03,960 --> 00:27:08,320 Speaker 8: not really gone down to reflect that. It's gone down, 524 00:27:08,359 --> 00:27:11,280 Speaker 8: but not as much as you would think, just because 525 00:27:11,920 --> 00:27:13,760 Speaker 8: there was such a scramble in twenty twenty one for 526 00:27:13,880 --> 00:27:16,840 Speaker 8: talent of the banks that we talked to you know, 527 00:27:16,880 --> 00:27:19,760 Speaker 8: are cognizant of that, and they don't want to they 528 00:27:19,760 --> 00:27:21,520 Speaker 8: don't want to go back to that. And we did 529 00:27:21,560 --> 00:27:24,480 Speaker 8: hear a lot of encouraging things about the pipelines. As 530 00:27:24,520 --> 00:27:27,919 Speaker 8: I said, one Q strength, so you know, out of 531 00:27:27,960 --> 00:27:30,800 Speaker 8: all the numbers, maybe that is the most optimistic. But 532 00:27:30,920 --> 00:27:32,040 Speaker 8: we are early in the year. 533 00:27:32,240 --> 00:27:35,160 Speaker 2: Hey Elison, on a typical bond desk or equity desk, 534 00:27:35,200 --> 00:27:37,639 Speaker 2: how much principal risk of any do they take? Do 535 00:27:37,720 --> 00:27:40,480 Speaker 2: their traders get to take positions or is most of 536 00:27:40,520 --> 00:27:43,600 Speaker 2: the commissions that they report just kind of you know, 537 00:27:43,680 --> 00:27:45,400 Speaker 2: agency trading on behalf of their clients. 538 00:27:45,920 --> 00:27:48,720 Speaker 8: So it's it's always a big mystery from the outside 539 00:27:49,480 --> 00:27:53,320 Speaker 8: in terms of, you know, the types of risks and 540 00:27:54,520 --> 00:27:57,880 Speaker 8: traders and banks will say since the global financial crisis 541 00:27:57,880 --> 00:28:00,800 Speaker 8: that it's really hard to define and separate. I would 542 00:28:00,840 --> 00:28:05,240 Speaker 8: say that certainly the proprietary trading that really fueled a 543 00:28:05,280 --> 00:28:07,800 Speaker 8: lot of the banks around the time of the global 544 00:28:07,840 --> 00:28:12,480 Speaker 8: financial crisis as certainly something that the regulators have attempted 545 00:28:12,520 --> 00:28:16,440 Speaker 8: to scale back, and you can see in different business 546 00:28:16,520 --> 00:28:20,520 Speaker 8: models those that really do focus on the flows. I 547 00:28:20,560 --> 00:28:23,119 Speaker 8: would also note that there are certain businesses that are 548 00:28:23,200 --> 00:28:27,320 Speaker 8: really much more geared towards flows. So if we look 549 00:28:27,359 --> 00:28:31,800 Speaker 8: at something like currency trading, very high turnover, high flow 550 00:28:31,880 --> 00:28:36,239 Speaker 8: business versus something like asset back trading where it is 551 00:28:36,320 --> 00:28:38,960 Speaker 8: much more specialized and you are using the balad sheet. 552 00:28:39,640 --> 00:28:42,200 Speaker 2: So for a typical trader out there these days, do 553 00:28:42,240 --> 00:28:44,160 Speaker 2: we have a sense of what percentage of their compensation 554 00:28:44,360 --> 00:28:48,120 Speaker 2: is really variable kind of year end bonus versus fixed salary. 555 00:28:48,200 --> 00:28:51,120 Speaker 2: Like when I was on the street many years, in 556 00:28:51,160 --> 00:28:53,880 Speaker 2: my total compensation, ninety percent of that would be bonus. 557 00:28:54,240 --> 00:28:56,640 Speaker 2: And I understand it's changed a little bit as they've 558 00:28:56,680 --> 00:28:59,440 Speaker 2: kind of try to increase the percentage of base salary, 559 00:29:00,000 --> 00:29:01,160 Speaker 2: so it has changed. 560 00:29:01,160 --> 00:29:03,440 Speaker 8: I mean, that was sort of one of the interesting 561 00:29:04,080 --> 00:29:08,680 Speaker 8: developments and perhaps unintended consequences that as we moved out 562 00:29:08,720 --> 00:29:12,840 Speaker 8: of the financial crisis, regulators really wanted to limit that 563 00:29:12,920 --> 00:29:16,360 Speaker 8: portion that was a bonus, and what ended up happening 564 00:29:16,520 --> 00:29:21,240 Speaker 8: was salaries ended up going up. So to your point, 565 00:29:21,400 --> 00:29:24,840 Speaker 8: back in the day before the global financial crisis, you know, 566 00:29:24,920 --> 00:29:29,480 Speaker 8: you could see salaries roughly equivalent across the board, but 567 00:29:29,680 --> 00:29:32,800 Speaker 8: for someone on the lower end, their bonus was, you know, 568 00:29:32,920 --> 00:29:35,720 Speaker 8: a fraction of their salary, whereas for someone on the 569 00:29:35,760 --> 00:29:39,880 Speaker 8: higher end, their salary was a fraction of their total 570 00:29:40,080 --> 00:29:44,240 Speaker 8: comp and so actually what that did for investment banks 571 00:29:44,760 --> 00:29:49,320 Speaker 8: was really increased the volatility of the headcount, especially towards 572 00:29:49,360 --> 00:29:54,080 Speaker 8: your end, because if it was a bad year, investment banks, 573 00:29:54,280 --> 00:29:57,480 Speaker 8: you know, could cut people, and since the majority of 574 00:29:57,520 --> 00:30:01,520 Speaker 8: the payout was the bonus, it really kept that sort 575 00:30:01,520 --> 00:30:07,400 Speaker 8: of higher correlation costs with revenues. But since then, because 576 00:30:07,760 --> 00:30:10,600 Speaker 8: banks have tried to even that at a little bit, 577 00:30:11,080 --> 00:30:15,240 Speaker 8: and certainly it is still a sizeable portion I think 578 00:30:15,360 --> 00:30:18,840 Speaker 8: for the higher end, as I said, not as skewed 579 00:30:18,880 --> 00:30:22,520 Speaker 8: as in the past, but certainly still can be skewed. 580 00:30:22,720 --> 00:30:25,200 Speaker 8: And I think I sort of grown into that over time, 581 00:30:25,360 --> 00:30:28,520 Speaker 8: just because as I said, it can be so variable 582 00:30:29,240 --> 00:30:32,480 Speaker 8: and so at least you know, if it is a 583 00:30:32,480 --> 00:30:36,200 Speaker 8: bad year, there is some kind of floor that people 584 00:30:36,240 --> 00:30:39,240 Speaker 8: can count on. But as we discussed, people reading these 585 00:30:39,240 --> 00:30:42,800 Speaker 8: stories still thinking about the year and comp it really 586 00:30:43,400 --> 00:30:46,600 Speaker 8: is something that is variable with the revenue. So to 587 00:30:46,640 --> 00:30:50,800 Speaker 8: the extent that bonuses are looking good, the underlying thought 588 00:30:50,840 --> 00:30:53,000 Speaker 8: would be that you are pretty bullish on the revenue 589 00:30:53,000 --> 00:30:53,680 Speaker 8: for these banks. 590 00:30:54,160 --> 00:30:57,160 Speaker 3: Thanks to Alison Williams, Boombrig Intelligence senior analysts for global 591 00:30:57,160 --> 00:30:58,320 Speaker 3: banks and asset managers. 592 00:30:58,640 --> 00:31:01,640 Speaker 2: We turned out to the largest US meat supplier, Tyson Foods. 593 00:31:01,720 --> 00:31:04,240 Speaker 3: This week, the company reported second quarter results that beat 594 00:31:04,240 --> 00:31:08,440 Speaker 3: analyst expectations. Tyson also raised its adjusted operating profit outlook, 595 00:31:08,480 --> 00:31:11,480 Speaker 3: citing improved performance of its chicken business, but this was 596 00:31:11,560 --> 00:31:14,600 Speaker 3: way overshadowed by the company's CEO, Donnie King, saying that 597 00:31:14,640 --> 00:31:17,240 Speaker 3: Tyson is quote not immune to the macro environment. 598 00:31:17,480 --> 00:31:20,360 Speaker 2: For more guestos, Tim Stenovic and I were joined by 599 00:31:20,520 --> 00:31:25,080 Speaker 2: Jennifer Bartasha's Bloomberg Intelligence senior analyst Retail, staples and packaged Foods. 600 00:31:25,160 --> 00:31:27,760 Speaker 2: We first asked Jennifer for her key takeaways from the 601 00:31:27,800 --> 00:31:28,640 Speaker 2: company's earnings. 602 00:31:29,080 --> 00:31:31,520 Speaker 7: By all accounts, they had a pretty decent quarter. They 603 00:31:31,520 --> 00:31:33,920 Speaker 7: did raise their full year outlook for adjusted operating income 604 00:31:34,600 --> 00:31:37,760 Speaker 7: off of strengthen the chicken segment, which has been long awaited. 605 00:31:38,440 --> 00:31:41,720 Speaker 7: But they may see third quarter be weaker than fourth quarter, 606 00:31:41,960 --> 00:31:44,920 Speaker 7: which would buck historical trends. And so a little bit 607 00:31:44,920 --> 00:31:47,440 Speaker 7: of a mixed report coming out of Tyson's. But generally 608 00:31:47,520 --> 00:31:48,480 Speaker 7: a pretty solid quarter. 609 00:31:48,760 --> 00:31:52,320 Speaker 6: Is the current quarter usually strong because we're getting into summer. 610 00:31:52,400 --> 00:31:55,120 Speaker 6: We got Memorial Day coming up. We buy the meat 611 00:31:55,120 --> 00:31:58,280 Speaker 6: for the barbecue. I mean why is it typically stronger? 612 00:31:59,280 --> 00:32:03,360 Speaker 7: So only stronger for meats like you like your chicken, 613 00:32:03,440 --> 00:32:08,080 Speaker 7: or you're in historically for beef specifically because a grilling season. 614 00:32:08,120 --> 00:32:11,880 Speaker 7: But that does translate into a weakness for prepared foods 615 00:32:11,920 --> 00:32:15,680 Speaker 7: and for the pork segment generally. And so they're saying 616 00:32:15,720 --> 00:32:18,880 Speaker 7: that the weakness in prepared foods and pork may outweigh 617 00:32:19,320 --> 00:32:22,160 Speaker 7: the strength coming for the grilling season for chicken and 618 00:32:22,240 --> 00:32:22,920 Speaker 7: for beef. 619 00:32:23,120 --> 00:32:27,040 Speaker 2: All right, I'm looking at the PGeo function for Tyson 620 00:32:27,080 --> 00:32:30,440 Speaker 2: Food TSN. Is the ticker percentage of revenue thirty seven 621 00:32:30,480 --> 00:32:34,560 Speaker 2: percent beef, thirty three percent chicken, nineteen percent prepared foods 622 00:32:34,600 --> 00:32:38,320 Speaker 2: and nine percent pork. Which business do you like? Which 623 00:32:38,360 --> 00:32:40,840 Speaker 2: business does the street like? Is one better than the other? 624 00:32:40,880 --> 00:32:43,040 Speaker 2: Better margins, better growth? How do we think about that? 625 00:32:43,960 --> 00:32:47,280 Speaker 7: So, historically speaking, prepared foods is a much higher margin 626 00:32:47,680 --> 00:32:50,400 Speaker 7: business within the company, and there were intents from Tyson 627 00:32:50,440 --> 00:32:53,840 Speaker 7: to grow that considerably. That has great long term potential, 628 00:32:54,440 --> 00:32:56,840 Speaker 7: but they are going through a little bit of short 629 00:32:56,920 --> 00:33:01,200 Speaker 7: term turbulence with regards to additional startup costs associated with 630 00:33:01,320 --> 00:33:04,360 Speaker 7: new plant lines and things like that. The chicken segment, 631 00:33:04,440 --> 00:33:07,280 Speaker 7: which is a big part of the company's business has 632 00:33:07,320 --> 00:33:10,800 Speaker 7: been underperforming for years, and so what's encouraging coming out 633 00:33:10,840 --> 00:33:14,800 Speaker 7: of earnings is that the chicken segment is finally showing improvement. 634 00:33:15,400 --> 00:33:18,520 Speaker 7: Margins are up, they're doing better with efficiencies, and even 635 00:33:18,520 --> 00:33:22,840 Speaker 7: though overall volume is down, it's a much healthier margin 636 00:33:22,880 --> 00:33:25,720 Speaker 7: that they're achieving out of that chicken business. Now, remember 637 00:33:25,760 --> 00:33:29,360 Speaker 7: they've closed a bunch of plants recently, they've been resizing 638 00:33:29,400 --> 00:33:33,160 Speaker 7: their processing footprint, so all the things that they need 639 00:33:33,200 --> 00:33:35,120 Speaker 7: to do seem to be underway to help make that 640 00:33:35,200 --> 00:33:38,480 Speaker 7: a much more profitable and bigger contributor to the overall company. 641 00:33:38,640 --> 00:33:42,040 Speaker 6: We had kind of an interesting conversation about Tyson Foods 642 00:33:42,160 --> 00:33:44,640 Speaker 6: and we all were all talking, well, we don't necessarily 643 00:33:44,680 --> 00:33:48,520 Speaker 6: know necessarily the brand of whatever we're buying when we're 644 00:33:48,560 --> 00:33:51,240 Speaker 6: in the store, and Tyson has much more than just 645 00:33:51,320 --> 00:33:56,840 Speaker 6: Tyson Foods. Is this at its core a commodity company? 646 00:33:57,240 --> 00:34:01,600 Speaker 6: Or do the brands Sarah le ballpark hillshar Arm, Jimmy Dean, Tyson, 647 00:34:02,160 --> 00:34:05,959 Speaker 6: Bossco's Gallo Salami do these matter to consumers? 648 00:34:07,080 --> 00:34:10,360 Speaker 7: The brands do matter, and it depends on which consumer 649 00:34:10,400 --> 00:34:14,560 Speaker 7: demographic you're talking about. But Tyson has intentionally over the 650 00:34:14,600 --> 00:34:17,280 Speaker 7: past several years, moved away from being a strictly commodity 651 00:34:17,320 --> 00:34:20,640 Speaker 7: driven company. That has helped smooth out earnings volatility. That 652 00:34:20,680 --> 00:34:24,880 Speaker 7: helps make it a much healthier margin profile overall, and 653 00:34:25,000 --> 00:34:27,600 Speaker 7: so that progress I think is going to continue. So 654 00:34:27,640 --> 00:34:31,880 Speaker 7: those brands are very central to that long term plan. 655 00:34:32,400 --> 00:34:34,920 Speaker 7: That side. You're right, there is a lot of Tyson 656 00:34:34,960 --> 00:34:36,279 Speaker 7: meat out there that you eat and you don't even 657 00:34:36,320 --> 00:34:39,480 Speaker 7: realize it's Tyson. They you know, obviously will supply retailers 658 00:34:39,560 --> 00:34:41,920 Speaker 7: that then have that as their private label brand. There 659 00:34:41,920 --> 00:34:45,040 Speaker 7: are things like that that happen. But overall, what we're 660 00:34:45,080 --> 00:34:49,560 Speaker 7: seeing is with the consumer, especially lower income households, have 661 00:34:49,600 --> 00:34:51,840 Speaker 7: been trading more into private label and that has left 662 00:34:51,920 --> 00:34:54,960 Speaker 7: these brands a little bit lower in terms of overall 663 00:34:55,040 --> 00:34:58,040 Speaker 7: volumes that's being sold. So that's where we're seeing a 664 00:34:58,040 --> 00:35:00,400 Speaker 7: little bit a little bit of that brand volatile in 665 00:35:00,440 --> 00:35:01,480 Speaker 7: the last few quarters. 666 00:35:02,040 --> 00:35:04,280 Speaker 2: Jen, you need to talk to investors in this company. 667 00:35:04,360 --> 00:35:06,319 Speaker 2: What's the call here? I mean, are they do they 668 00:35:06,360 --> 00:35:08,520 Speaker 2: own it for the dividend? Did they own it because 669 00:35:08,560 --> 00:35:12,000 Speaker 2: they're bullush on chicken? I mean, what's the investment call 670 00:35:12,080 --> 00:35:14,080 Speaker 2: for owning a food company like this? 671 00:35:15,160 --> 00:35:18,600 Speaker 7: Well, the dividend has been something that's been of appeal 672 00:35:18,719 --> 00:35:22,000 Speaker 7: in recent years. The good news is that Tyson is 673 00:35:22,040 --> 00:35:24,439 Speaker 7: back to where their free cash flower generation will cover 674 00:35:24,520 --> 00:35:28,000 Speaker 7: the dividend. That also appeases some concern that the dividend 675 00:35:28,080 --> 00:35:32,400 Speaker 7: might be cut. So generally it's been along those lines. 676 00:35:32,719 --> 00:35:36,240 Speaker 7: There is also long term growth. Tyson has been slowly 677 00:35:36,280 --> 00:35:40,640 Speaker 7: expanding international operations. When they get the formula right, meaning 678 00:35:40,680 --> 00:35:42,719 Speaker 7: they get the right productivity in the plants that they've 679 00:35:42,760 --> 00:35:46,160 Speaker 7: opened up overseas, there's a long runway for potential growth 680 00:35:46,520 --> 00:35:49,000 Speaker 7: for Tyson outside the United States as well as within 681 00:35:49,040 --> 00:35:51,320 Speaker 7: the United States. So that's a little bit of the 682 00:35:51,360 --> 00:35:54,719 Speaker 7: appeal as well if you're a longer term perspective investor. 683 00:35:54,880 --> 00:35:56,799 Speaker 6: Anything that investors have to keep their eyes on when 684 00:35:56,840 --> 00:35:59,919 Speaker 6: it comes to supply issues out there, any bird flu 685 00:36:00,040 --> 00:36:03,520 Speaker 6: avian flu type stuff that's getting into their production line 686 00:36:03,560 --> 00:36:05,880 Speaker 6: that we've seen hit other types of companies. 687 00:36:06,239 --> 00:36:08,800 Speaker 7: Yeah, so the bird flu or avian flu is certainly 688 00:36:08,800 --> 00:36:11,040 Speaker 7: something that's in the headlines lately. You know, we've seen 689 00:36:11,080 --> 00:36:14,040 Speaker 7: outbreaks in very specific areas. Thus far hasn't really had 690 00:36:14,040 --> 00:36:17,239 Speaker 7: a major impact on Tyson this year, but we are 691 00:36:17,280 --> 00:36:21,000 Speaker 7: watching that very carefully. One of the longer term issues 692 00:36:21,280 --> 00:36:23,720 Speaker 7: Tyson's going to face is just the beef cattle cycle. 693 00:36:24,120 --> 00:36:26,720 Speaker 7: We're at the bottom of a cycle. There's very limited 694 00:36:27,120 --> 00:36:31,400 Speaker 7: animal availability, and once that starts to rebuild, things are 695 00:36:31,440 --> 00:36:33,080 Speaker 7: going to get a little bit worse before they get 696 00:36:33,120 --> 00:36:37,200 Speaker 7: better with regards to supply. That means that the profitability 697 00:36:37,239 --> 00:36:40,080 Speaker 7: of the cattle, of the beef segment within Tyson is 698 00:36:40,080 --> 00:36:42,680 Speaker 7: going to remain pressured well into twenty twenty five. 699 00:36:43,160 --> 00:36:46,360 Speaker 3: Our thanks to Jen Bartash's Bloomberg Intelligence Senior Analyst, retail 700 00:36:46,360 --> 00:36:47,840 Speaker 3: stables and packaged. 701 00:36:47,440 --> 00:36:53,040 Speaker 1: Boot This is the Bloomberg Intelligence podcast, available on Apples, Spotter, Pye, 702 00:36:53,200 --> 00:36:56,080 Speaker 1: and anywhere else you will get your podcasts. Listen live 703 00:36:56,200 --> 00:36:59,800 Speaker 1: each weekday ten am to noon Eastern on Bloomberg dot Com, 704 00:37:00,120 --> 00:37:03,480 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 705 00:37:03,520 --> 00:37:06,719 Speaker 1: can also watch us live every weekday on YouTube and 706 00:37:06,880 --> 00:37:08,480 Speaker 1: always on the Bloomberg Terminal.