WEBVTT - Adobe Tumbles Most Since 2022 0:00:02.920 --> 0:00:10.799 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.000 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:18.760 Eastern on focarplaying and broid Auto with the Bloomberg Business App. 0:00:18.760 --> 0:00:22.000 Listen on demand wherever you get your podcasts, or watch 0:00:22.040 --> 0:00:24.000 us live on YouTube. 0:00:24.920 --> 0:00:27.000 All right, let's get to Adobe worst performing snack on 0:00:27.000 --> 0:00:30.440 the SMP down almost fourteen percent week sales outlook for 0:00:30.480 --> 0:00:33.600 the current quarter. That's the key, and it's all about 0:00:33.640 --> 0:00:36.559 worries now about AI startups being a big threat to 0:00:36.600 --> 0:00:38.680 the company. So let's get more here with Brody Ford. 0:00:39.240 --> 0:00:42.479 He joins us. He covers tech for Bloomberg. So what happened? 0:00:43.040 --> 0:00:47.240 What happened yees last year? If you asked investors who's 0:00:47.280 --> 0:00:50.080 gonna benefit from AI in twenty twenty four, they'd say 0:00:50.120 --> 0:00:54.040 Microsoft and Adobe. But after last night, it might be 0:00:54.160 --> 0:00:58.120 just Microsoft for now, right, because Adobe has invested massively 0:00:58.280 --> 0:01:01.800 in new AI features to improve a lot of processes 0:01:01.840 --> 0:01:05.920 in Photoshop, Illustrator, other programs, but we're not seeing a 0:01:06.000 --> 0:01:09.760 revenue uplift yet. Right, Investors expected that these new features 0:01:09.800 --> 0:01:12.280 would drive a lot more financials in the new year, 0:01:12.640 --> 0:01:14.839 and we're just not seeing that. Yet, and they are 0:01:14.840 --> 0:01:17.080 not keen to weight at this point. 0:01:17.319 --> 0:01:20.440 I mean, was that reasonable for investors to think that 0:01:20.480 --> 0:01:22.440 the revenues would be coming in at this point because 0:01:22.440 --> 0:01:25.240 I feel like they've just developed these new products, like, 0:01:25.280 --> 0:01:26.479 you know, give them a minute. 0:01:26.720 --> 0:01:29.360 Yeah, I mean, I think management's been pretty consistent in saying, 0:01:29.440 --> 0:01:32.000 right now, we're pricing for adoption. We're trying to just 0:01:32.120 --> 0:01:35.000 get more users. But I just think it's not quick 0:01:35.120 --> 0:01:38.320 enough for investors, especially when there's this sense that many 0:01:38.360 --> 0:01:42.479 other AI startups out there are not moving so conservatively. Right, 0:01:42.520 --> 0:01:45.240 they're going to create tools like you all saw open 0:01:45.280 --> 0:01:49.680 AI's new Sora, which allows you to generate video right. 0:01:50.240 --> 0:01:52.760 Something like that gave investors a lot of anxiety because 0:01:52.760 --> 0:01:55.640 they said, whoa are people even going to need to 0:01:55.640 --> 0:01:58.760 pay for Adobe's tools if this becomes mainstream? So that's 0:01:58.800 --> 0:02:01.360 where a lot of this anxiety is stemming from. 0:02:01.480 --> 0:02:06.800 So also, don't they need people like me to not 0:02:06.920 --> 0:02:09.000 use it for free and come in and pay for stuff? 0:02:09.560 --> 0:02:11.960 How are they going to, like, aside from the AI conversation, 0:02:12.080 --> 0:02:14.000 how are they going to make me, who wouldn't know 0:02:14.000 --> 0:02:16.280 Adobe if it hit me in the face, come in 0:02:16.360 --> 0:02:17.720 and start to pay for some things. 0:02:18.360 --> 0:02:18.600 Yeah. 0:02:18.639 --> 0:02:21.240 So, I mean their primary user base is the kind 0:02:21.280 --> 0:02:26.800 of creators graphic design studios. Right, they are increasingly trying 0:02:26.840 --> 0:02:29.359 to break into people like you and me who might 0:02:29.480 --> 0:02:32.680 need to every so often, like you know, edit the 0:02:32.760 --> 0:02:36.760 margins on a photo or recolor something. And so they've. 0:02:36.520 --> 0:02:40.119 Invested Kate Middleton. I mean, it's the whole thing, right, exactly, exactly. 0:02:41.080 --> 0:02:43.960 Yeah, if they had a more unscrupulous marketing department, I'm 0:02:43.960 --> 0:02:45.400 sure they would have leaned into. 0:02:45.720 --> 0:02:50.239 Oh my god, yeah, don't do what she did services. 0:02:50.600 --> 0:02:53.440 If she had had Adobe Firefly, that never would have happened. 0:02:57.120 --> 0:02:57.920 That's pretty funny. 0:02:58.000 --> 0:02:58.200 Yeah. 0:02:58.280 --> 0:03:00.440 So, yes, I mean they have invested more trying to 0:03:00.440 --> 0:03:04.680 get average users using their stuff. That was a big cornerstone. 0:03:04.680 --> 0:03:06.079 I don't know if you all remember they tried to 0:03:06.080 --> 0:03:09.400 buy this company, Figma, for twenty billion dollars. That was 0:03:09.480 --> 0:03:12.639 part of that planned acquisition that, Hey, this company has 0:03:12.680 --> 0:03:15.240 been good at putting these complicated tools on the web, 0:03:15.400 --> 0:03:17.799 making it simple, making it so that average people can 0:03:17.919 --> 0:03:21.320 use them. We've had trouble with that. Let's just buy them. 0:03:21.880 --> 0:03:24.800 That's an interesting idea, but I guess I want to 0:03:24.880 --> 0:03:27.680 get your take on the bigger picture here. So in 0:03:27.720 --> 0:03:32.000 the long term, AI, do we really need Adobe software? 0:03:32.080 --> 0:03:34.639 I mean, is this the tail of a buggy whit 0:03:34.720 --> 0:03:38.120 manufacturer grasping it the last straw when the whole technology 0:03:38.120 --> 0:03:38.640 has moved on. 0:03:39.200 --> 0:03:41.960 Yeah, And there was this rare, candid moment on an 0:03:41.960 --> 0:03:44.320 earnings call last night where they kind of had this 0:03:44.480 --> 0:03:46.640 argument a little bit, right, some of these Wall Street 0:03:46.640 --> 0:03:51.040 analysts said, we understand that in the near term people 0:03:51.040 --> 0:03:54.720 will need Adobe's tools to edit the video, edit the photo. 0:03:55.360 --> 0:03:59.080 In the long term, are you going to get displaced entirely? 0:03:59.560 --> 0:04:03.200 Management pretty much said that you will always need something 0:04:03.280 --> 0:04:05.240 to you know, you're not going to generate a whole 0:04:05.320 --> 0:04:08.520 video just with a prompt and publish out there. I 0:04:08.520 --> 0:04:11.280 think the quote the CEO use was the next Oppenheimer. 0:04:11.320 --> 0:04:14.240 It's not going to be created with a prompt. But 0:04:14.320 --> 0:04:16.680 it's an open question right as the decades go on 0:04:16.839 --> 0:04:19.560 the current format of Adobe's tools, which is, you know, 0:04:19.920 --> 0:04:23.680 these kind of heavyweight applications on the desktop, think about 0:04:23.720 --> 0:04:30.960 like Photoshop, video editing, picture editing. Will these formats really 0:04:31.000 --> 0:04:33.680 still exist once you can generate so much more media 0:04:33.720 --> 0:04:34.320 with a prompt? 0:04:34.760 --> 0:04:36.800 But you know, I also I have two schools a 0:04:36.800 --> 0:04:38.760 thought on that, like one. People who want to do that. 0:04:38.800 --> 0:04:41.719 They want to do that, like they're creative people that 0:04:41.960 --> 0:04:43.680 enjoy it. They don't want to just put in the 0:04:43.720 --> 0:04:47.400 word flower and like get a picture. Right, However, do 0:04:47.480 --> 0:04:49.320 they have tools where you can put in the word 0:04:49.320 --> 0:04:51.880 flower and create a picture? Like are they working towards that? 0:04:52.480 --> 0:04:52.680 Oh? 0:04:52.760 --> 0:04:54.200 Yeah, I mean that's that. 0:04:54.320 --> 0:04:56.880 Is they're in it like they're in it. Yeah yeah. 0:04:56.880 --> 0:04:59.960 I mean the Adobe has present the entire last year 0:05:00.720 --> 0:05:05.200 working quickly because other AI startups did this first, to 0:05:05.680 --> 0:05:07.479 make these kind of tools where you can type in 0:05:07.560 --> 0:05:09.880 you know, yeah, like four journalists sitting around a radio 0:05:09.920 --> 0:05:11.320 booth and he generates the image. 0:05:11.320 --> 0:05:16.960 Pretty well, don't do that. You need us because we 0:05:17.120 --> 0:05:20.400 are unique and awesome. Okay, go ahead, Sorry, No. 0:05:20.360 --> 0:05:23.920 To your point, do creatives like it? It gives them 0:05:23.960 --> 0:05:27.160 some anxiety, no doubt, but like I mean, they need 0:05:27.160 --> 0:05:29.080 to get paid, right, and at the end of the day, 0:05:29.160 --> 0:05:31.320 if the bosses are saying that, hey, this is a 0:05:31.320 --> 0:05:33.159 pretty good tool, we're going to be able to create 0:05:33.200 --> 0:05:36.440 things faster. The incentives are all there. I mean, I 0:05:36.480 --> 0:05:40.040 don't think the idea that people are anxious because a 0:05:40.120 --> 0:05:43.320 I might replace their jobs could reduce the adoption of it. 0:05:43.360 --> 0:05:46.920 I don't think that will be really a prohibitor here. 0:05:47.480 --> 0:05:49.680 I mean, that's so interesting though, because ever since this 0:05:49.839 --> 0:05:52.520 generative AI mania came about, the whole question is what's 0:05:52.560 --> 0:05:53.880 this going to do to jobs? And a lot of 0:05:53.920 --> 0:05:56.800 the response has always been it'll always be people working 0:05:56.880 --> 0:06:00.479 in conjunction with AI. But the thing that makes me 0:06:00.760 --> 0:06:03.240 think about your Oppenheimer comment that the that was made 0:06:03.240 --> 0:06:05.520 on the call, I think that's a very telling comment 0:06:05.560 --> 0:06:08.560 because that Academy award went to the one person, not 0:06:08.600 --> 0:06:11.320 the one person in Hollywood, a prominent person in Hollywood 0:06:11.400 --> 0:06:13.760 who champions the old school way of doing things, shooting 0:06:13.800 --> 0:06:16.600 things just on film. And so that kind of leads 0:06:16.640 --> 0:06:19.120 me down this path that thinking, yeah, the Adobe software 0:06:19.240 --> 0:06:20.880 might stick around for a while, but it might just 0:06:20.880 --> 0:06:24.040 become very niche or something for a very specified sort 0:06:24.040 --> 0:06:26.239 of area of use, whereas the rest of the world 0:06:26.279 --> 0:06:27.680 is just going to move on with doing things with 0:06:27.720 --> 0:06:29.200 a couple of prompts totally. 0:06:29.240 --> 0:06:33.880 And the big question is like, will companies reinvest right 0:06:33.880 --> 0:06:37.320 because these are labor saving technologies. Will it be that, hey, 0:06:37.360 --> 0:06:39.520 I'm able to do more with each person so we 0:06:39.520 --> 0:06:42.400 can expand the scope of what we do, or are 0:06:42.400 --> 0:06:44.839 we going to do what we currently do work wise 0:06:44.920 --> 0:06:46.560 with less people and just save a bunch of money 0:06:46.560 --> 0:06:50.080 and employ less. And I think we're deluding ourselves if 0:06:50.080 --> 0:06:52.279 we don't think that companies are just going to cut labor, 0:06:52.800 --> 0:06:53.839 at least some of them will. 0:06:54.520 --> 0:06:56.760 Yeah, what else are you looking at? 0:06:57.000 --> 0:06:57.080 Like? 0:06:57.120 --> 0:06:59.520 What else is driking is built in your boat right now? 0:06:59.560 --> 0:07:01.279 I mean, I think think a really big one is 0:07:02.000 --> 0:07:04.800 how soon we are able just to generate these videos 0:07:04.800 --> 0:07:05.240 with prompts? 0:07:05.320 --> 0:07:05.400 Right? 0:07:05.400 --> 0:07:07.960 I mean this demo we saw from open Ai was 0:07:08.040 --> 0:07:13.120 such a kind of extreme example of this technology, And 0:07:13.160 --> 0:07:16.520 the big question is is this really ready for prime 0:07:16.600 --> 0:07:18.320 time or is this one of these demos that you 0:07:18.480 --> 0:07:21.600 show that isn't actually going to be in our hands 0:07:21.600 --> 0:07:22.720 for a couple of years. 0:07:23.040 --> 0:07:23.240 Yeah. 0:07:23.280 --> 0:07:25.640 I guess that's always the question though, And it's like 0:07:26.640 --> 0:07:29.360 we're leaving the hyper we're lapping up the hype, any 0:07:29.400 --> 0:07:32.280 example of how cool this could possibly be. But this 0:07:32.360 --> 0:07:34.800 is the question for all companies. You know, you've got 0:07:34.840 --> 0:07:37.320 to start putting real money behind it. And sometimes it 0:07:37.440 --> 0:07:40.960 just like doesn't work very well, or there's tweaks in 0:07:40.960 --> 0:07:42.840 the machine that makes you think, like I don't like 0:07:42.880 --> 0:07:44.120 this response. 0:07:43.760 --> 0:07:45.600 It looks well, I mean, and I'm sure you also 0:07:45.680 --> 0:07:49.040 have the controversy of Google's equivalent of the image generation. 0:07:49.680 --> 0:07:52.200 It had a lot of backlash in recent weeks because 0:07:52.200 --> 0:07:53.960 it would, you know, if you typed in a certain 0:07:54.080 --> 0:07:56.760 historical element. You know, some of these tools are made to, 0:07:57.600 --> 0:08:00.440 you know, emphasize diversity, and some folks there was some 0:08:00.480 --> 0:08:04.440 backlash to that and historical contacts, contacts or maybe it 0:08:04.440 --> 0:08:07.840 wouldn't be accurate. And so there is a lot of 0:08:08.040 --> 0:08:11.840 people very closely scrutinizing the outputs of these machines, right, 0:08:11.840 --> 0:08:15.640 I mean, there's no precise way to make everybody happy 0:08:15.680 --> 0:08:16.960 with these Yeah, I. 0:08:16.920 --> 0:08:19.160 Guess it's a lot of programming needs to keep happening, 0:08:19.160 --> 0:08:20.800 and it's a question of whether the money will still 0:08:20.840 --> 0:08:22.200 be there from companies to pay for it. 0:08:22.280 --> 0:08:23.119 Yeah. 0:08:23.240 --> 0:08:25.760 Well, Brodie, thanks lot, You're awesome. I love having you on. 0:08:25.880 --> 0:08:28.440 Your depth of knowledge is great. Brody Ford coming in 0:08:28.480 --> 0:08:31.720 their Bloomberg Tech and you're looking at Adobe where to 0:08:31.800 --> 0:08:34.360 go had it and it went away. It's down about 0:08:34.400 --> 0:08:39.720 seventeen percent. Yeah, it's real, down around seventeen percent. Fourteen 0:08:39.800 --> 0:08:43.040 Thank you. How to buy back though as well? It's like, hey, guys, 0:08:43.080 --> 0:08:45.720 stick around, stick around. We know we're not delivering what 0:08:45.760 --> 0:08:48.200 you want right now, but please stick around for that. 0:08:49.200 --> 0:08:50.880 I mean, I do think your point is taken, Jen 0:08:50.920 --> 0:08:53.880 that like everyone seems to say, you will use AI, 0:08:53.960 --> 0:08:56.520 but you need humans to help it. It's not maybe 0:08:56.559 --> 0:08:58.440 going to be as binary as maybe we thought a 0:08:58.440 --> 0:08:59.200 couple of years ago. 0:08:59.520 --> 0:09:02.000 You need humans. But maybe to Brodie's point, you don't 0:09:02.040 --> 0:09:04.600 need all those humans, right, just a couple of humans. 0:09:04.679 --> 0:09:06.760 But which is why you need people like us to 0:09:06.840 --> 0:09:10.120 want to diversify into you know, photoshop to do that, 0:09:10.160 --> 0:09:13.040 Like my dad does that, Like he takes photographs, he 0:09:13.160 --> 0:09:14.760 likes it, and they need tools around in it. Like 0:09:14.800 --> 0:09:16.760 you need those people to kind of pay for that 0:09:17.000 --> 0:09:19.480 stuff that is irrespective of AI. But is that really 0:09:19.520 --> 0:09:23.839 going to move the needle then for a company like Adobe. 0:09:24.320 --> 0:09:28.240 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:09:28.280 --> 0:09:31.840 weekdays at ten am Eastern on applecar Play and Android 0:09:31.840 --> 0:09:34.640 Auto with a Bloomberg Business Act. You can also listen 0:09:34.760 --> 0:09:37.840 live on Amazon Alexa from our flagship New York station, 0:09:38.200 --> 0:09:41.000 Just say Alexa play Bloomberg eleven thirty. 0:09:42.400 --> 0:09:45.920 Apparently Boeing is now advising airlines to check the cockpit 0:09:46.080 --> 0:09:48.920 seats on sevent eighty seven Dreamliner jets after a seat 0:09:49.040 --> 0:09:53.199 mishap likely pushed a pilot into the controls, calling a sudden, 0:09:53.480 --> 0:09:56.600 terrifying plunge on a flight to New Zealand this week. 0:09:56.800 --> 0:09:59.640 The flight attendant was serving a meal, and therefore all 0:09:59.679 --> 0:10:02.880 of this it happening. George Ferguson Bloomberg Intelligence Senior Aerospace, 0:10:02.920 --> 0:10:06.360 Defense and Airlines analyst joins us, Now, I mean this 0:10:06.400 --> 0:10:08.240 feels like, okay, yeah, it was a mess. 0:10:08.120 --> 0:10:09.000 Up, big deal. 0:10:10.840 --> 0:10:11.800 I'm sorry to catch up. 0:10:11.920 --> 0:10:15.439 Big deal or no. 0:10:14.120 --> 0:10:15.880 No, I don't think it's a big deal. I mean, 0:10:16.240 --> 0:10:18.120 if you were on the flight, obviously it was a 0:10:18.120 --> 0:10:22.200 big deal. And so we hope everybody's safe and okay 0:10:22.640 --> 0:10:26.560 after that. But you know, the seventy seven has been 0:10:26.559 --> 0:10:29.600 operating for a lot of years. Now, this is the 0:10:29.640 --> 0:10:32.760 first of this incident I've heard of. It sounds like 0:10:32.800 --> 0:10:36.080 there might not have been a safety device in place 0:10:36.559 --> 0:10:40.040 that allowed the seat to be adjusted, and so my 0:10:40.080 --> 0:10:43.320 guess is Boeing, out of abundance of caution, has pushed 0:10:43.360 --> 0:10:45.120 out to the fleet. You know, hey, make sure that 0:10:45.160 --> 0:10:48.600 this plastic cover, whatever safety piece is in place, and 0:10:49.000 --> 0:10:52.160 you don't adjust the seat by mistake. But again, I 0:10:52.160 --> 0:10:54.800 think it's not a major issue right now, there's definitely 0:10:54.800 --> 0:10:57.679 a heightened amount of awareness around anything that happens in 0:10:57.720 --> 0:10:58.439 a Boeing airplane. 0:10:58.440 --> 0:10:59.439 I think it's a little bit of that. 0:11:00.080 --> 0:11:02.240 I take your point that it's not a major issue 0:11:02.240 --> 0:11:04.560 in terms of this particular type of jetliner. But I 0:11:04.600 --> 0:11:07.040 do wonder about what the rita cross is going to 0:11:07.040 --> 0:11:09.840 be for the average consumer, because they're not short of 0:11:09.960 --> 0:11:13.440 news from Boeing that they've seeming to have one mishap 0:11:13.480 --> 0:11:15.840 after another, and I wonder if consumers are really going 0:11:15.880 --> 0:11:17.880 to be able to make the distinction between this jetliner 0:11:17.960 --> 0:11:18.959 versus that jetliner. 0:11:20.000 --> 0:11:22.280 Yeah, agreed, I mean I've seen, you know, a lot 0:11:22.280 --> 0:11:24.320 of press on every little thing that happens on any 0:11:24.360 --> 0:11:26.559 Boeing jet right now. I think, you know clearly it's 0:11:26.559 --> 0:11:28.679 getting a lot of clicks, and so the media is 0:11:28.720 --> 0:11:33.520 going after pretty pretty hard. I think at this point, 0:11:33.559 --> 0:11:39.200 where still still in this situation, where as the problems 0:11:39.240 --> 0:11:42.040 with the Max fade, I think some of the demand 0:11:42.120 --> 0:11:44.880 for these stories should fade. I don't think most people 0:11:44.920 --> 0:11:48.319 are going to the airport worried about what airplane they're flying. 0:11:48.360 --> 0:11:50.800 I talk to a lot of people, you know about 0:11:51.160 --> 0:11:53.280 where they're flying and what they're flying all the time. 0:11:53.320 --> 0:11:57.360 I'm an aerospace geek, so I'm still hearing people that 0:11:57.440 --> 0:12:00.679 aren't in aerospace say, hey, you know, yesterday I knew 0:12:00.720 --> 0:12:04.120 I flew a Max. But they're still getting on the airplane. 0:12:04.160 --> 0:12:06.200 So I think, you know, we're not at that point 0:12:06.320 --> 0:12:09.720 yet where people are sort of rejecting flying Boeing products, 0:12:09.720 --> 0:12:11.400 and that's a positive for Boeing. 0:12:11.400 --> 0:12:11.880 Obviously. 0:12:12.120 --> 0:12:14.120 I think Jen for like a hot minute, maybe it 0:12:14.160 --> 0:12:17.760 was on Priceline, you could search the type of aircraft 0:12:18.640 --> 0:12:22.720 after I think the panel blue off and stuff, and 0:12:22.200 --> 0:12:24.000 you could search your aircraft. 0:12:24.280 --> 0:12:24.720 You couldn't. 0:12:24.760 --> 0:12:27.440 That's got to be totally a function of consumer demand. 0:12:27.600 --> 0:12:30.280 Yeah, yeah, I wonder how many people actually cared or 0:12:30.320 --> 0:12:33.680 looked at it. To George's point, George, in the meantime, 0:12:33.760 --> 0:12:36.160 we learned a lot about the airline industry this week. 0:12:36.200 --> 0:12:38.000 There was a conference I think was JP Morgan right 0:12:38.480 --> 0:12:42.400 then airlines, particularly Southwest, was warning of in essence, some 0:12:42.520 --> 0:12:47.360 slowing demand. What are the order books like for Boeing, Like, 0:12:47.440 --> 0:12:50.200 how are they navigating that with their customers? 0:12:51.080 --> 0:12:53.280 So, I mean the order books are really you know, 0:12:53.360 --> 0:12:56.680 the backlog is very strong for Boeing and so like 0:12:56.760 --> 0:12:59.960 on the seven thirty seven, five six years worth of 0:13:00.040 --> 0:13:03.280 backlog on that airplane. That's why it's so disappointing when 0:13:03.760 --> 0:13:06.120 you know one of their major customers like Southwest, comes 0:13:06.160 --> 0:13:08.439 out and says, you know, we've been told by Boeing, 0:13:08.440 --> 0:13:10.360 we're not gonna be able to get this many jets, 0:13:10.360 --> 0:13:13.120 all the jets we wanted this year. There's a lot 0:13:13.120 --> 0:13:15.120 of work to be done for Boeing and that's part 0:13:15.120 --> 0:13:18.920 of their recovery story is increasing build rates, which is 0:13:18.960 --> 0:13:21.680 going to boost their profits, boost their cash flow. A 0:13:21.720 --> 0:13:23.959 lot of folks were looking for that to happen this year. 0:13:24.400 --> 0:13:26.160 When someone like Southwest comes out and says we're not 0:13:26.160 --> 0:13:28.800 gonna get all the airplanes this year, that means we're 0:13:28.840 --> 0:13:32.040 kind of set back another year. But that you know, 0:13:32.240 --> 0:13:34.600 they need to start to build that backlog and keep 0:13:34.600 --> 0:13:38.480 those customers happy so they don't go away. The longer 0:13:38.520 --> 0:13:41.640 the delays happen, the more risk there is the customers 0:13:41.679 --> 0:13:44.480 haven't out in their contract and can walk away from 0:13:44.679 --> 0:13:47.360 from their orders. But the backlogs are very strong for 0:13:47.400 --> 0:13:49.760 the seven thirty seven and the seven eighty seven. It's 0:13:49.800 --> 0:13:52.800 major competitors, the A three fifty, the seven eighty seven 0:13:52.920 --> 0:13:55.760 has a larger backlog than the A three fifty bid 0:13:55.760 --> 0:13:58.520 in service a long time. Airlines love it so right now, 0:13:58.679 --> 0:14:00.720 backlogs are very strong about they just have to start 0:14:00.720 --> 0:14:01.760 building airplane as well. 0:14:02.440 --> 0:14:05.360 Looking at the Boeing stock year today, it's the second 0:14:05.400 --> 0:14:07.640 worst performer in the S and P five hundred, I mean, 0:14:07.679 --> 0:14:10.000 when is the stock story going to start to turn around? 0:14:11.200 --> 0:14:11.360 You know? 0:14:11.559 --> 0:14:13.199 I mean that's always hard to say. I think you 0:14:13.280 --> 0:14:16.920 need obviously some level of sentiment to change for people 0:14:16.960 --> 0:14:20.000 to be excited about this. You know, I personally think 0:14:20.040 --> 0:14:25.120 that this purchase of Spirit Aerosystems that's been floated, I 0:14:25.240 --> 0:14:29.560 personally think getting that done could put a bottom under 0:14:29.600 --> 0:14:34.200 the problems Boeing's having in their manufacturing process. And getting 0:14:34.200 --> 0:14:38.920 that bottom underneath, I think, you know that this quality 0:14:39.000 --> 0:14:41.760 story that's going to be key, I think to keeping 0:14:41.760 --> 0:14:42.960 investors happy. 0:14:43.000 --> 0:14:45.040 All right, George, really appreciate it. Thanks so much for 0:14:45.040 --> 0:14:47.960 happing on with us. George Ferguson Bloomberg Intelligence, senior Aerospace, 0:14:48.000 --> 0:14:49.560 Defense and airlines analysts. 0:14:51.640 --> 0:14:55.520 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:14:55.600 --> 0:14:58.280 weekdays at ten am Eastern on Effo card Play and 0:14:58.280 --> 0:15:00.920 then Broudoto with the Bloomberg Pistons us a list non 0:15:00.960 --> 0:15:04.240 demand wherever you get your podcasts, or watch us live 0:15:04.360 --> 0:15:05.000 on YouTube. 0:15:06.680 --> 0:15:09.360 The University of Michigan sentiment, as John Tiger was just reporting, 0:15:09.400 --> 0:15:11.360 falling just a bit, let's get more data on it 0:15:11.720 --> 0:15:14.760 with Joanne Chu, University of Michigan Surveys of Consumer Director. 0:15:15.200 --> 0:15:17.600 She's breaking it down right now. Okay, So, Joanne, what 0:15:17.720 --> 0:15:18.200 happened here? 0:15:19.680 --> 0:15:23.360 Essentially not a whole lot. Consumer sentiment has been remarkably 0:15:23.440 --> 0:15:26.200 stable over the last three months. We've had very little 0:15:26.280 --> 0:15:30.960 movement since January, and that's following the enormous gains that 0:15:31.560 --> 0:15:36.160 happened in November and December, December, November and January. So 0:15:36.600 --> 0:15:38.880 not a whole lot of change. Consumers don't really perceive 0:15:39.000 --> 0:15:43.440 any sort of clear developments in the economy. Possibly more importantly, 0:15:43.520 --> 0:15:48.640 inflation expectations also remarkably stable. Consumers still expect inflation to 0:15:48.640 --> 0:15:50.720 slow down, both in the year ahead as well as 0:15:50.760 --> 0:15:51.480 the long term. 0:15:51.880 --> 0:15:53.920 You know, we've been talking so much on this program 0:15:53.960 --> 0:15:56.960 about where investors are expecting the FED to go. Can 0:15:57.040 --> 0:15:58.840 you dig in a little bit to what you think 0:15:58.920 --> 0:16:02.520 consumers read it on what what interest rate re cuts 0:16:02.520 --> 0:16:05.040 are coming. I mean, do they feel confident? Are they 0:16:05.040 --> 0:16:07.040 a little bit more enthusiastic than investors are? 0:16:07.080 --> 0:16:12.120 Perhaps consummers are expecting broadly speaking, they are expecting interest 0:16:12.200 --> 0:16:16.560 rates to come down over the next year. And you know, 0:16:16.600 --> 0:16:19.240 that was a pretty sharp change in consumer views or 0:16:19.240 --> 0:16:22.160 consumer expectations over interest rates over the last three to 0:16:22.200 --> 0:16:25.360 six months. So even though most consumers really aren't paying 0:16:25.400 --> 0:16:29.640 that close attention to developments and financial markets, more more broadly, 0:16:29.680 --> 0:16:31.720 they do expect the interest rates that they face to 0:16:32.640 --> 0:16:35.360 come down. We don't really know much about what they're 0:16:35.440 --> 0:16:38.440 thinking in terms of timing, but every month there is 0:16:38.480 --> 0:16:41.200 an increasing number who expect interest rates to soften. 0:16:41.880 --> 0:16:44.160 I mean, do we read anything from the fact that 0:16:44.600 --> 0:16:47.360 things are just slowing over time? Like, is this sort 0:16:47.400 --> 0:16:50.640 of the tightening that we've been waiting for and the 0:16:50.680 --> 0:16:53.520 consumer sentiment a bit lighter so they just buy and 0:16:53.560 --> 0:16:55.400 spend less, Like, is this kind of what we've been 0:16:55.440 --> 0:16:58.600 waiting for for the last year and a half. It's possible, 0:16:58.640 --> 0:17:01.080 but it's the part of the thing. 0:17:01.280 --> 0:17:03.880 Is that, excuse me, part of the reason that consumers 0:17:03.920 --> 0:17:07.080 are not really moving a whole lot in the sentiment 0:17:07.160 --> 0:17:09.360 is that there's a good chunk of consumers who are 0:17:09.400 --> 0:17:13.120 thinking about the election ahead, and you and a lot 0:17:13.160 --> 0:17:17.320 of consumers are telling us spontaneously that the trajectory of 0:17:17.320 --> 0:17:20.879 the economy very much depends on the result of November's election. 0:17:21.240 --> 0:17:23.360 So I think there are people who are just reserving 0:17:23.440 --> 0:17:25.840 judgment right now. Whether that's going to affect their spending, 0:17:25.840 --> 0:17:27.640 it's a little bit hard to say, because I think 0:17:27.680 --> 0:17:29.840 you know, even even though they're reserving judgment, you know 0:17:29.880 --> 0:17:32.480 that they they're they're still expecting. 0:17:33.720 --> 0:17:35.960 Two possible outcomes. 0:17:37.320 --> 0:17:40.040 And uh, and you know what we'll see as in 0:17:40.080 --> 0:17:42.720 the months ahead as it comes into focus, if that 0:17:42.880 --> 0:17:45.560 starts to move sentiment one way or the other. 0:17:46.000 --> 0:17:49.159 I noticed that in your data you do pull Republicans 0:17:49.240 --> 0:17:51.960 versus Democrats versus independence on how they're feeling. So is 0:17:52.000 --> 0:17:53.760 there any interesting change there this month? 0:17:55.280 --> 0:17:57.240 I would say it's a little early to say, because 0:17:57.320 --> 0:17:59.080 you know, at the preliminary reading, we don't want to 0:17:59.160 --> 0:18:01.639 draw too many conclud out of small samples. 0:18:02.160 --> 0:18:03.880 You're divided into three different parties. 0:18:04.600 --> 0:18:07.199 What I will say is that this general stability that 0:18:07.200 --> 0:18:10.760 we're seeing, we see that across party as well. So 0:18:10.960 --> 0:18:13.760 the the enormous gains in sentiment that we saw in 0:18:13.800 --> 0:18:17.160 November to January, and then the stability between January and March. 0:18:17.560 --> 0:18:19.480 All three of the both of those. 0:18:19.359 --> 0:18:24.360 Patterns are visible across Republican's Independence as well as Democrats. 0:18:24.400 --> 0:18:26.080 Interesting. Hey, Joan, we love it. Thank you for the 0:18:26.080 --> 0:18:28.439 incident analysis. It really helps us as we get through 0:18:28.480 --> 0:18:31.440 all the data. Here to insue of University of Michigan. 0:18:32.960 --> 0:18:36.840 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:18:36.920 --> 0:18:40.440 weekdays at ten am Eastern on applecar Play and Androud 0:18:40.480 --> 0:18:43.240 Auto with the Bloomberg Business App. You can also listen 0:18:43.359 --> 0:18:46.440 live on Amazon Alexa from our flagship New York station. 0:18:46.840 --> 0:18:50.760 Just say Alexa play Bloomberg eleven thirty. 0:18:50.840 --> 0:18:52.400 All right, let's get the take on a market here. 0:18:53.440 --> 0:18:55.960 My daughter's making animal sounds. Sit down, don't stand on 0:18:56.000 --> 0:18:58.760 the chair. All right, looking at a market here where 0:18:58.880 --> 0:19:01.600 we're training a little bit heavy. Yes, it's options expiration, 0:19:01.680 --> 0:19:04.760 triple witching, volumes super high. But you know, I'm trying 0:19:04.760 --> 0:19:07.400 to understand if we're gonna be looking for bad news 0:19:07.480 --> 0:19:10.600 or good news and what the reaction function is for stocks. 0:19:10.640 --> 0:19:15.320 So Dana Dioria is co CIO of Investment and she 0:19:15.520 --> 0:19:18.080 joins us. Now, Dana, what are we waiting for at 0:19:18.080 --> 0:19:20.159 this point, like you need to be selling into this. 0:19:20.240 --> 0:19:21.199 Do you buy whatever? 0:19:21.280 --> 0:19:21.520 Dip? 0:19:21.520 --> 0:19:25.720