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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: us live on YouTube.

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Speaker 2: Let's get to this job's number.

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Speaker 3: I mean better than expected, as John pointed out, again, weaker.

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Speaker 2: From last period.

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Speaker 3: Let's see what the world of the economists are thinking

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Speaker 3: about this. So Steve Blitz, chief US economist at TS Lombard. Hey, Steve,

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Speaker 3: what was your takeaway from kind of the various.

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Speaker 2: Parts of this job's report today?

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Speaker 4: Yeah, you know, I actually find the market reaction a

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Speaker 4: bit perplexing because when you look at a lot of

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Speaker 4: the pieces inside of it, it really shows a weakening

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Speaker 4: job more trempening one. Right, all the job games really

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Speaker 4: were in restaurants and healthcare services. The rest of it

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Speaker 4: was added up to pretty much of a flat number.

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Speaker 4: A good part of the decline was an employment look

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Speaker 4: at the households survey was in the sixteen to twenty

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Speaker 4: four year old, so people who are parents who are

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Speaker 4: fretting about their children not being able to find jobs,

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Speaker 4: they're right, it is a bad market for them. But

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Speaker 4: when I look at a lot of the different things

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Speaker 4: that diffusion index and stuff like that, I see it

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Speaker 4: in number that reflects a lot of what ADP was saying.

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Speaker 4: Even though obviously ADP is typical the number, it's very

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Speaker 4: off from the reactual number, but it's a weakening trend,

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Speaker 4: especially against the backdrop of the Bays report.

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Speaker 5: Right then you have President Trump saying basically Defedcha J.

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Speaker 5: Powell on social media, saying the Fed's got to go

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Speaker 5: for a full perconercentage point rocket fuel. Is this an

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Speaker 5: economy that needs one hundred basis point worth of cuts

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Speaker 5: and rocket fuel?

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Speaker 4: Well, first of all, you know, a real estate guy

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Speaker 4: wanting lower interest rates is neither neither news nor novel. Right, So,

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Speaker 4: but I think there, you know, the fans betwixt and

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Speaker 4: between a tough spot here, right, because inflation is higher is.

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Speaker 6: Running if you look at it from an on a

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Speaker 6: rolling three month basis, we're still stuck in this too,

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Speaker 6: and af three percent range on core PC inflation where

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Speaker 6: it was under two percent you know pre COVID.

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Speaker 4: So we're still higher. Yet we're seeing lower hiring rates

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Speaker 4: and things like that and the fans leaning on the

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Speaker 4: inflation side. Everything that president is doing, all of his

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Speaker 4: policies are inflationary, not deflationary. And you know how all

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Speaker 4: of effect has a whole right, So I think that

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Speaker 4: you know, he knows he's got of a job. In

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Speaker 4: May's we're into legacy building on his part. And Trump

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Speaker 4: said a few months ago, though you know it changes

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Speaker 4: every day with him, but he said, no pay, no

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Speaker 4: gain on the tariff side. So it's a tough spot

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Speaker 4: for them. I think though, the we're going to get

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Speaker 4: a doubsh sentiment coming out of the June meeting, and

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Speaker 4: I think the chances of a July hike, well, I'm

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Speaker 4: not I certainly don't think they're gonna cut, not hike.

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Speaker 4: I don't think they're going to cut in July, but

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Speaker 4: I think the odds are closely to fifty to fifty

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Speaker 4: than what the market is priced in.

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Speaker 3: Steve, is this economy, I mean, how do you think

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Speaker 3: this economy is going to perform in the back half

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Speaker 3: of this year?

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Speaker 2: Here?

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Speaker 3: Is it a time when maybe some of these tariffs

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Speaker 3: are going to catch up and we will see a

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Speaker 3: market slow down?

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Speaker 4: Yeah, because there's a couple of things here that you know,

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Speaker 4: we're in a bit of a sweet spot. And and

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Speaker 4: I look to the third quarter one, firms are just

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Speaker 4: beginning to find out how much of this of these

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Speaker 4: tariffs they can pass through to the final price, right.

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Speaker 4: I mean, we saw the surge of buying, so they've

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Speaker 4: got a lot of stuff in inventory pre tariff. They're

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Speaker 4: going to sell it tariff plus their markup. What can

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Speaker 4: they get through, how much can they get out? And

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Speaker 4: then once they know that, then there's gonna be a

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Speaker 4: payroll question, do we now have too many people that

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Speaker 4: have to shrink my firm whatever, We're gonna find that

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Speaker 4: out in the next few months. At the same time,

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Speaker 4: you're getting the debt sealing is going to get lifted

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Speaker 4: in July either as part of the budget or is

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Speaker 4: it one off, and then it'll be part of the

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Speaker 4: budget later a few months later. And that means that

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Speaker 4: we've got to return to treasury borrowing a treasury borrowing

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Speaker 4: plus because they're going to borrow for the deficit and

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Speaker 4: Q three and then they're gonna also have to borrow

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Speaker 4: to put money back in the in the savings account,

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Speaker 4: and that's going to put up with pressure on yields

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Speaker 4: at a time when you don't really have a lot

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Speaker 4: of sponsorship for the ten year, so it really is

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Speaker 4: a going to get pushed up. And also what I

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Speaker 4: found is that there's a tailwind to the economy when

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Speaker 4: you have a debt ceiling in place, because Treasury is

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Speaker 4: spending money, they're not raising and you get the reverse

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Speaker 4: of that in the third quarter. So there's a lot

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Speaker 4: of things coming in Q three that are more likely

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Speaker 4: to slow growth than speed it up. And so what

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Speaker 4: the Fed does in reaction to that, we'll have to see.

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Speaker 5: All right, Chuck, Sorry, I Chuck, We're going to speak

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Speaker 5: to Chuck.

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Speaker 7: Just kidding.

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Speaker 5: Thanks at We really appreciate it. Steve, Steve Blitz joining

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Speaker 5: us from ts Lombard. Thank you for breaking down that

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Speaker 5: jobs number four.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cock Play and

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Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 5: I feel like yesterday we'll go down in the analogs

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Speaker 5: of history is where were you when dot dot dot?

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Speaker 5: The tweet fight between President Trump and Elon Musk. Arguably

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Speaker 5: two of the most important people in the entire world

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Speaker 5: started on social media and then erupted overnight into full

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Speaker 5: public display. Elon Musk Donald Trump's alliance just ended with

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Speaker 5: that public spat. Now, the latest read is that Musk

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Speaker 5: has backed down after Tesla's stock price just tanked his

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Speaker 5: networth crumbled thirty four billion dollars. Matt max Chafkin is

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Speaker 5: Bloomberger Business Week senior reporter and the co host of

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Speaker 5: the Elon Inc. Podcast. He joins us, now, who has

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Speaker 5: the upper hand here? Quote unquote who won?

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Speaker 8: Donald Trump has the upper hand here? He's the President

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Speaker 8: of the United States. He controls a lot of aspects

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Speaker 8: of Elon Musk's businesses. He also is the more important

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Speaker 8: cultural figure. The fandom around Donald Trump. You know, as

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Speaker 8: popular as Elon Musk is, the fandom around Donald Trump

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Speaker 8: is much more intent and he's much more influential.

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Speaker 2: That said, nobody's one yet.

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Speaker 8: I mean, this has been just disastrous for Elon Musk,

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Speaker 8: especially not ideal for Donald Trump. You know, I think

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Speaker 8: he'd prefer to just have the big, beautiful bill, his

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Speaker 8: his tax bill, the extension of the tax cuts, which

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Speaker 8: with a bunch of other stuff swirled in just sail

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Speaker 8: through the Senate rather than have this very influential, very loud,

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Speaker 8: rich guy, you know, banging on on Twitter or suggesting

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Speaker 8: he should be impeached and so on. So so I'm

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Speaker 8: not sure there are any winners. I will say I

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Speaker 8: was shocked by this because and I wrote a piece

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Speaker 8: a week ago basically saying, you know, for all the

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Speaker 8: talk of a breakup, you shouldn't bet on it, because

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Speaker 8: there are so many reasons why these two guys need

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Speaker 8: each other. And of course that's looking like not the

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Speaker 8: right take on this. And and you know, it just

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Speaker 8: seems like Elon Musk at his most erratic, most self destructive,

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Speaker 8: you know, taking the opportunity he had the chance to

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Speaker 8: exit the White House, you know, gracefully maintain his contact,

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Speaker 8: his influence with Trump, while also keeping investors happy by

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Speaker 8: by by spending more time with his companies.

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Speaker 2: And that all feels like it's out the window.

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Speaker 8: He's not spending time with his companies, he's spending time

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Speaker 8: on Twitter.

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Speaker 2: You know.

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Speaker 8: Obviously, investors not going to be thrilled with the stock price.

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Speaker 8: I think they're hoping, against hope that he somehow backs

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Speaker 8: down and they are able to resolve this.

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Speaker 3: My personally, I saw this day coming the first day

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Speaker 3: they got together, said this is exactly how it's going

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Speaker 3: to end. This is how it always ends when someone

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Speaker 3: gets closest to President Trump, either in his political life

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Speaker 3: or in his personal life. That's been well documented. Didn't

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Speaker 3: Elon what was Elon's thinking? Didn't Elon know it had

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Speaker 3: to end this way?

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Speaker 8: You know, Elon Musk is not a man renowned for humility, right.

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Speaker 2: This is a guy whose.

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Speaker 8: Whole thing is doing more than anyone can do. I

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Speaker 8: think the big surprise here for Elon Musk was that

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Speaker 8: he wasn't able to control Donald Trump in the way

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Speaker 8: that I think he imagined. And you see that come

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Speaker 8: out that in that very surreal Oval Office meeting with

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Speaker 8: Friedrich Murz yesterday where Trump is talking about ev tax credits,

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Speaker 8: he's talking about the ways in which he wasn't delivering

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Speaker 8: for Elon Musk.

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Speaker 2: And I think ultimately that is a big part of this.

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Speaker 2: Of course, there's also ego.

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Speaker 8: You know that there is the you know, like kind

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Speaker 8: of what you're alluding to here, Paul, the two alpha

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Speaker 8: guys who can't handle, you know, playing second fiddle, And

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Speaker 8: I think that's that's another factor.

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Speaker 5: What on the other on the flip side, though, one

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Speaker 5: can make the argument that the US government really does

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Speaker 5: need Elon Musk when it comes to SpaceX.

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Speaker 2: Absolutely without that.

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Speaker 5: I mean, I realized that Musk is back down on

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Speaker 5: his threats to pull space SpaceX in the government. But

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Speaker 5: how important is that to our government? What does it

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Speaker 5: mean if Musk did pull out?

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Speaker 2: What would that look like?

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Speaker 8: I mean, it was that, honestly, was probably the most

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Speaker 8: shocking thing that happened yesterday. It was Elon Musk threatened

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Speaker 8: to cancel its Dragon spacecraft, that is the vessel that

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Speaker 8: is used to bring cargo and astronauts to the International

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Speaker 8: Space Program. He's effectively saying, I am going to end

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Speaker 8: the US support for the ISS, which you know, obviously

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Speaker 8: the ISS is not like a military program. But that's

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Speaker 8: the kind of thing that I think the Pentagon probably

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Speaker 8: would react very negatively to. And you're right, there aren't

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Speaker 8: really any other aerospace companies that can do what Elon

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Speaker 8: Musk can can do. But but you saw immediately saw

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Speaker 8: people in MAGA world talking about nationalizing SpaceX, And honestly,

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Speaker 8: I don't think that is the craziest like I think

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Speaker 8: I think you would have started, you would have seen

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Speaker 8: that start to bubble up if if Elon must try

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Speaker 8: to make good on this threat, because the Pentagon has

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Speaker 8: like put itself in a position where it really is

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Speaker 8: dependent on SpaceX. You know, long run, the US government

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Speaker 8: has a lot of money, and there are other big

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Speaker 8: defense contractors, and they also have launch vehicles.

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Speaker 2: So I think you know this.

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Speaker 8: It's not like Elon can just can just dictate policy

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Speaker 8: to Donald Trump because of his position in the aerospace market,

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Speaker 8: in the launch market, but his position is stronger because

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Speaker 8: of that.

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Speaker 9: Hey, from the peanut gallery of question, can these companies

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Speaker 9: survive and thrive someday without Elon?

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Speaker 8: You know, I've been talking to Tesla investors and one

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Speaker 8: of the interesting things you hear in the before this happened,

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Speaker 8: there were people saying, hey, Tesla will be better off

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Speaker 8: without Elon Musk. But it was really a kind of

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Speaker 8: a rump coalition, right. It's the basically the people who

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Speaker 8: are really upset by his behavior, who see him walking

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Speaker 8: away from evs and the sort of like ROBOTAXI Elon

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Speaker 8: Musk as a visionary. Those folks really saw Elon as

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Speaker 8: being one hundred percent linked with the success of Tesla,

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Speaker 8: like there would be no way for Tesla to.

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Speaker 2: Succeed without him.

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Speaker 8: You know, I'm starting to hear little murmurs of hey,

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Speaker 8: you know, actually, like our robotaxes are pretty good, we

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Speaker 8: wouldn't necessarily need Elon Musk. I think if Elon Musk

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Speaker 8: were ousted from the company tomorrow or today, the stock

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Speaker 8: would instantly plummet, because the shareholder base is really much

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Speaker 8: is very much behind him. That said, if enough things

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Speaker 8: like this happens, you know, like crazy things can happen,

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Speaker 8: and this is an important company. This is a company

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Speaker 8: with you know, a huge amount of market cap. There

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Speaker 8: is a lot of money on the line, and anytime

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Speaker 8: when there's a lot of money on the line, you know,

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Speaker 8: opinions can change very quickly.

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Speaker 2: All Right, Max, thanks so much, appreciate it.

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Speaker 3: Max Chaffian, Bloomberg BusinessWeek, Senior reporter and co host of

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Speaker 3: the Elon Inc.

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Speaker 2: Podcasters.

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Speaker 3: Anybody knows what's going on inside the head of Elon

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Speaker 3: Musk in this building, it would be Max Chaffick.

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Speaker 2: I appreciate getting a.

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Speaker 3: Few minutes of his time on our Bloomberg Interactive Broker's studio.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch US Live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your or watch US live on YouTube.

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Speaker 3: Looks like Harvard has won a reprieve from some of

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Speaker 3: Trump's bands, particularly as rates to foreign students.

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Speaker 2: What's the latest janet?

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Speaker 9: Yes, So that came last night, a temporary restraining order

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Speaker 9: from President Trump's latest efforts on international students, and that

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Speaker 9: was banning them from entering following a couple of weeks

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Speaker 9: ago revoking Harvard's ability to issue student visas. So another

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Speaker 9: pause on a second track regarding international students, and in

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Speaker 9: Harvard filed a third lawsuit yesterday. It's getting hard to

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Speaker 9: keep track of everything because there's so much going on.

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Speaker 5: It was hard before, Like now your spreadsheet must be huge.

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Speaker 5: But if I'm a foreign student, even though it's going

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Speaker 5: to go to the courts and there's been stays on

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Speaker 5: it from the court system, why would I want to

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Speaker 5: go to Harvard anymore? Why would I want to go

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Speaker 5: to any major US institution.

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Speaker 9: Yeah, No, it's a good question, and I think the

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Speaker 9: intention is to as we've talked about before, So uncertainty, confusion,

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Speaker 9: do I go What if I'm going just for the summer,

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Speaker 9: if I'm going to go for a four year program?

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Speaker 9: Is this going to be continuous disruptions? It's it's very confusing,

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Speaker 9: and if you're an international student, somebody you know, seventeen

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Speaker 9: eighteen years old starting college, it's it's confusing and it's scary.

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Speaker 3: Harvard appears to be I guess Harvard recognizes it's being

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Speaker 3: targeted by the Trump administration. Their strategy seems to be

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Speaker 3: to fight back. Have they said what their strategy is,

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Speaker 3: how aggressive they plan to do this. Are they still

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Speaker 3: in the mode of, you know, we'll work something out

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Speaker 3: with you the administration, or what have they been saying.

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Speaker 9: Recently, Well publicly, what they're saying is in their lawsuits

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Speaker 9: and they they're trying to fight back, And you know, privately,

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Speaker 9: I'm not sure what's going on. But you know, they

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Speaker 9: certainly train a lot of lawyers, and they certainly train a.

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Speaker 2: Lot of people in strategy.

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Speaker 9: But you know, as we've talked about before, the federal

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Speaker 9: government has tremendous power and money at stake. You saw

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Speaker 9: the other day the administration talking about accreditation in Colombia.

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Speaker 9: What that triggers is issues over federal student loans, which

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Speaker 9: doesn't affect international students because they can't take federal student loans.

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Speaker 2: But that's another.

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Speaker 9: Potential money source that's you know, hundreds of millions of

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Speaker 9: dollars that you know, that's upping the ante for a

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Speaker 9: completely different source of revenue that we haven't seen before.

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Speaker 9: And it's actually not revenue, but it's it helps the

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Speaker 9: students finance or education. Because a year at Harvard Law

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Speaker 9: School Columbia Law School is about one hundred and twenty

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Speaker 9: thousand dollars, So how are you going to pay for

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Speaker 9: that student loans?

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Speaker 2: Yep, these are great questions. What else is on your radar.

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Speaker 5: In the world of higher education? Obviously this Harvard thing

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Speaker 5: will unfold as it goes. What else is a front

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Speaker 5: and center for you?

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Speaker 9: Well, we can talk about secondary sales of private equity.

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Speaker 2: That's another issue.

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Speaker 9: We had a story about a month ago that Harvard

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Speaker 9: had been shopping around about a billion dollars in private

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Speaker 9: equity secondary sales. We had a story this week about

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Speaker 9: Yale closing in on selling about two point five billion

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Speaker 9: in secondary sale.

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Speaker 5: And by secondary is we mean that they have private

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Speaker 5: equity investments they can't get out of them, so they're

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Speaker 5: going to sell them to someone else who's going to

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Speaker 5: get them because they need the liquidity.

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Speaker 2: Well, Yale, good question about liquidity.

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Speaker 9: So when we're talking about forty one billion dollar endowment,

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Speaker 9: they have roughly, you know, thirty to forty percent in

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Speaker 9: private equity tied up. Is it a question of liquidity? Possibly? Yes,

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Speaker 9: certainly for some universities, but as we know, private equity

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Speaker 9: has not really been returning very much lately. And to

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Speaker 9: have a huge chunk of your endowment tied up in

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Speaker 9: an investment that isn't giving you distributions like it had

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Speaker 9: been before. Or yes, question about liquidity, but perhaps they

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Speaker 9: wanted to do something else more opportunistic without cash.

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Speaker 2: So just remind us of your reporting.

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Speaker 3: What has a Trump administration said to just universities generally

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Speaker 3: in the US about funding?

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Speaker 2: Has that been frozen tech efficial? Well, there's a couple

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Speaker 2: of things.

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Speaker 9: First off, the bat is the reimbursements for research funding.

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Speaker 9: Some universities like Harvard had very high reimbursements for research

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Speaker 9: costs sixty percent. So let's say you get a grant

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Speaker 9: for a million dollars, then Harvard would get an additional

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Speaker 9: say six hundred thousand dollars for things like hiring people

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Speaker 9: in the labs, lab equipment rent and that went down

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Speaker 9: to fifteen percent, So that was a big change for

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Speaker 9: most institutions. Then other grants, you know, across the board

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Speaker 9: affecting lots of universities were frozen terminated over diversity equity inclusion,

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Speaker 9: so that that affects not just the top universities that

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Speaker 9: have been targeted. And then at Harvard they have frozen

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Speaker 9: grants and contracts almost to the tune of three billion

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Speaker 9: dollars and has said Harvard will not get future grants.

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Speaker 3: Wow, I mean this changes the generational research and development

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Speaker 3: strategy of this country.

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Speaker 2: Yes, in one Well, so what.

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Speaker 3: I learned my work at Douke is you know, on average,

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Speaker 3: at these big research universities, including state schools like the

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Speaker 3: University of Florida, University of Texas, two thirds of the

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Speaker 3: R and D budget that is used for lab work

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Speaker 3: and all the stuff that they do is two thirds

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Speaker 3: is roughly the government. One third is the private and

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Speaker 3: the university itself and other private funding sources. So that

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Speaker 3: public private real cooperation or relationship that was really born

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Speaker 3: after World War.

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Speaker 2: Two it's really important. Goodbye, Janet Lauren, thanks so much

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Speaker 2: for joining us. Really appreciate general and covers the higher

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Speaker 2: education for us. We really appreciate that.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Let's talk to Lululemon Athletica l U. L U is

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Speaker 2: the ticker.

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Speaker 3: It's off twenty percent here today, it's off thirty one

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Speaker 3: percent here to date. Tough, tough quarter tariffs are taking

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Speaker 3: effect the consumer, all that kind of stuff. It is

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Speaker 3: a challenge for a lot of these consumer companies. So

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Speaker 3: we talked to Punham Goyle. She covers all the retailers

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Speaker 3: for Bloomberg Intelligence. Punham, what's the Lululemon story that we

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Speaker 3: heard this quarter?

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Speaker 7: Yeah, it's the guidance. You know, they slashed guidance and

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Speaker 7: they're expecting margins to fall all largely due to tariffs.

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Speaker 7: The hardest hit quarter will be too Q because they're

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Speaker 7: unable to mitigate a lot of the tariff headwinds until

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Speaker 7: two h and along with that they're going to have

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Speaker 7: more promotions. They did say that traffic was lighter in stories.

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Speaker 7: That's not something new, you know, we've heard the story

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Speaker 7: for quite a few quarters now, and it just means

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Speaker 7: that they really need to step up their game to

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Speaker 7: get traffic back to stores. Be the Lululemon that we

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Speaker 7: knew where you know, the stores would be crowded, irrespective

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Speaker 7: of what was going on inside the walls.

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Speaker 5: What does this do for the supply chain? So that's

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Speaker 5: the consumer part. In terms of their supply part, what

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Speaker 5: are they dealing with?

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Speaker 7: Sure, So when you think of Lululemon, the one thing

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Speaker 7: that I think we should have noticed they don't make

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Speaker 7: product in China, so they do not have product exposure

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Speaker 7: to China. They do source raw material from China, for

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Speaker 7: which there will be some exposure, but the largest hit

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Speaker 7: that they're going to face is from the other countries

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Speaker 7: in Asia, where the tariff is a ten percent right

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Speaker 7: now until early July, so they have that ten percent

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Speaker 7: headwind and we do think that they'll be able to

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Speaker 7: mitigate that in two age and they said they would too,

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Speaker 7: largely through a combination of supplier negotiations, some select price

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Speaker 7: increases and then internal efficiencies, the.

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Speaker 3: Ability to pass along cost increases. It sounds like Lululemon

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Speaker 3: does not maybe have the pricing power that maybe some

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Speaker 3: of the other retailers you follow have talk to us

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Speaker 3: about Lululemon in that side.

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Speaker 7: Sure, so one thing is that Lululemon does have the

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Speaker 7: more affluent customer, so they can, you know, sell things

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Speaker 7: at relatively higher prices than other retailers that sell at leisure.

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Speaker 7: That said, if you're used to paying one hundred and

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Speaker 7: twenty dollars for a pair of yoga pants, you know,

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Speaker 7: and you see the price book to one thirty, you'll

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Speaker 7: be you know, you may start to wonder. The way

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Speaker 7: to take up prices here for retailers like lul Lemon

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Speaker 7: is on new product, because you don't have a price

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Speaker 7: set in mind for what that product should be. So

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Speaker 7: if they introduce a new lagging, if they introduce a

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Speaker 7: new siloette, and they price that a little higher, the

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Speaker 7: customer may not even notice. So I think that would

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Speaker 7: be the smarter way to do it.

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Speaker 5: Oh, I see what you're saying, and I'm one hundred

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Speaker 5: percent not paying one hundred and thirty dollars for a

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Speaker 5: pair of pants.

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Speaker 3: I'm gonna sweat in that.

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Speaker 2: Just can't they look good?

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Speaker 8: Though? No?

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Speaker 5: I mean I literally just work out in my bedroom anyway,

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Speaker 5: Moving on, not about me.

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Speaker 2: One of the competition.

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Speaker 5: We were talking earlier about that and I was saying, well,

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Speaker 5: but now you have Alo Yoga, you have a lot

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Speaker 5: of other competitors in a way that we didn't have

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Speaker 5: about ten years ago or so.

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Speaker 2: So how is that affecting Lulu?

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Speaker 7: Yeah, competition is definitely getting tough or not just from

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Speaker 7: the likes of Alo, but also from the traditional legacy

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Speaker 7: at leisure players like Nike, Adidas. You know, they're all

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Speaker 7: making a put big push, especially into women's and focusing

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Speaker 7: on the same segment that lul Lemon sort of made

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Speaker 7: its money on.

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Speaker 3: So put them a sense of timing for tariff share?

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Speaker 3: What are your companies telling you about when they think

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Speaker 3: they will really start to see their costs increase and

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Speaker 3: then they're going to have to make a decision. I mean,

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Speaker 3: is that happening now? Is that something that will happen

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Speaker 3: maybe even.

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Speaker 7: Fall, it's happening. It started to happen. Costs are going

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00:22:54,440 --> 00:22:57,480
Speaker 7: up and they can only mitigate so much. If you

441
00:22:57,560 --> 00:23:00,440
Speaker 7: have a ten percent headwind and you have to no

442
00:23:00,560 --> 00:23:03,959
Speaker 7: exployure to China. I could see you mitigating most of

443
00:23:04,000 --> 00:23:06,120
Speaker 7: that for some of our companies, but as soon as

444
00:23:06,119 --> 00:23:08,679
Speaker 7: you add China to the mix where you need China

445
00:23:09,240 --> 00:23:12,920
Speaker 7: to get product to the US, it's much much harder

446
00:23:12,960 --> 00:23:17,160
Speaker 7: and the margins will be pressured. You know, these retailers

447
00:23:17,200 --> 00:23:20,360
Speaker 7: all they have margins that are in the single digits.

448
00:23:20,680 --> 00:23:23,800
Speaker 7: So even a ten percent increase in costs is a

449
00:23:23,840 --> 00:23:27,000
Speaker 7: big increase. We're all thinking ten percents. Okay, you know

450
00:23:27,040 --> 00:23:28,760
Speaker 7: it's not that bad when we heart one hundred and

451
00:23:28,840 --> 00:23:31,840
Speaker 7: thirty five percent with China, but it's still a big deal.

452
00:23:32,040 --> 00:23:34,000
Speaker 7: It's a large increase for them to have to absorb

453
00:23:34,080 --> 00:23:34,560
Speaker 7: or deal with.

454
00:23:35,000 --> 00:23:37,640
Speaker 5: Put them thirty seconds. Top retailer right now.

455
00:23:38,880 --> 00:23:42,160
Speaker 7: Amazon. You know, we like Amazon as a long term play.

456
00:23:42,160 --> 00:23:44,840
Speaker 7: We think their cloud business, their advertising business, they have

457
00:23:44,920 --> 00:23:47,399
Speaker 7: a lot of runway, even on the retail side, to

458
00:23:47,480 --> 00:23:51,520
Speaker 7: really grow. And in this environment, scale matters, scales where

459
00:23:51,560 --> 00:23:53,560
Speaker 7: you get pricing power, and we think Amazon, out of

460
00:23:53,600 --> 00:23:55,960
Speaker 7: all the retailers that we cover, have the largest scale.

461
00:23:57,080 --> 00:23:59,479
Speaker 2: Yeah. Absolutely goods tough. Put them goil, Thank you so much.

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00:23:59,520 --> 00:24:00,199
Speaker 2: We appreciate that.

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00:24:00,400 --> 00:24:03,080
Speaker 3: Putam Goyle, Senior Retail analysts covering all the retailers for

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00:24:03,080 --> 00:24:05,919
Speaker 3: Bloomberg Intelligence down there in Prince, New Jersey.

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