1 00:00:02,720 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,640 --> 00:00:14,600 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am 3 00:00:14,640 --> 00:00:17,880 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,960 --> 00:00:21,080 Speaker 1: Business app. Listen on demand wherever you get your podcasts, 5 00:00:21,400 --> 00:00:23,120 Speaker 1: or watch US live on YouTube. 6 00:00:23,960 --> 00:00:26,320 Speaker 2: One of the stocks in the news is Delta Airlines. 7 00:00:26,880 --> 00:00:31,480 Speaker 2: Stocks up thirteen point eight percent here today. Delta Airlines 8 00:00:31,560 --> 00:00:35,080 Speaker 2: reinstated profit outlook for the year, and they say that 9 00:00:35,120 --> 00:00:38,600 Speaker 2: the travel in the US is climbing back, corporate travel 10 00:00:38,640 --> 00:00:42,960 Speaker 2: is strengthening, so looks pretty good, and consumers have become 11 00:00:43,040 --> 00:00:45,280 Speaker 2: a little numb to the ongoing trade disputes. 12 00:00:45,320 --> 00:00:46,600 Speaker 3: That's, according to the CEO, is. 13 00:00:46,680 --> 00:00:50,680 Speaker 4: Being numb good though exactly maybe relative to where you're 14 00:00:50,720 --> 00:00:51,640 Speaker 4: flying exactly. 15 00:00:52,680 --> 00:00:54,360 Speaker 3: George Ferguson he does this stuff for a living. 16 00:00:54,400 --> 00:00:56,400 Speaker 2: He files all the airlines and all the aerospace companies 17 00:00:56,440 --> 00:00:59,600 Speaker 2: for Bloomberg Intelligence joins us. Now, George, what did you 18 00:00:59,600 --> 00:01:02,959 Speaker 2: take away from kind of Delta? What's changed since they 19 00:01:03,040 --> 00:01:05,360 Speaker 2: pulled guidance and now they're reinstating their guidance. 20 00:01:06,600 --> 00:01:08,720 Speaker 5: Well, I think what's changed since they pulled guidance is 21 00:01:08,760 --> 00:01:11,800 Speaker 5: that guidance got lower. But they didn't mention that right, 22 00:01:11,840 --> 00:01:15,200 Speaker 5: so they reinstated guidance, but at a lower EPs than 23 00:01:15,240 --> 00:01:18,720 Speaker 5: they had initiated at the end of the year. I 24 00:01:18,720 --> 00:01:21,440 Speaker 5: think the market still looks a little bit soft to us. 25 00:01:22,640 --> 00:01:24,040 Speaker 3: For sure, fuel. 26 00:01:23,720 --> 00:01:28,039 Speaker 5: Prices are giving airlines a bit of a bolster on 27 00:01:28,080 --> 00:01:31,600 Speaker 5: the bottom line. But I think, you know, what we 28 00:01:31,720 --> 00:01:35,360 Speaker 5: heard today was on the demand side was more of 29 00:01:35,360 --> 00:01:38,760 Speaker 5: the continuing story, and that is that premium is holding 30 00:01:38,800 --> 00:01:41,440 Speaker 5: up really well and Delta's going to do very well 31 00:01:41,440 --> 00:01:45,759 Speaker 5: there because of their loyalty programs and such. Basic economy 32 00:01:45,840 --> 00:01:49,919 Speaker 5: isn't And if you look at Delta's you know, price 33 00:01:49,960 --> 00:01:52,960 Speaker 5: paid per mile flown for customer, it was down and 34 00:01:53,120 --> 00:01:56,440 Speaker 5: every single market that they served or maybe flatish in 35 00:01:56,480 --> 00:01:58,480 Speaker 5: Latin America, but all the rest of the markets down 36 00:01:59,160 --> 00:02:01,960 Speaker 5: during the quarters. So to us, it looks like a 37 00:02:01,960 --> 00:02:05,480 Speaker 5: market that still needs to have capacity come out. Some 38 00:02:05,560 --> 00:02:06,480 Speaker 5: of it will see. 39 00:02:07,080 --> 00:02:10,919 Speaker 4: The CEO pointed to progress in trade talks between the 40 00:02:11,040 --> 00:02:14,440 Speaker 4: US and other countries and the potential for some geopolitical 41 00:02:14,520 --> 00:02:18,679 Speaker 4: conflicts to abate. I mean the flying public, really, I 42 00:02:18,720 --> 00:02:20,800 Speaker 4: don't know, are they really thinking about this when they 43 00:02:20,800 --> 00:02:23,440 Speaker 4: book a flight on Delta or any other airline. 44 00:02:24,160 --> 00:02:25,800 Speaker 5: Yeah, I mean, so when I think of that, I 45 00:02:25,800 --> 00:02:30,880 Speaker 5: think that's going to largely benefit his international business. I 46 00:02:30,919 --> 00:02:32,880 Speaker 5: don't know, you know, I was polis to pick him 47 00:02:32,919 --> 00:02:36,240 Speaker 5: because I get to Paris for Paris Air Show, you know, 48 00:02:36,360 --> 00:02:38,880 Speaker 5: every other summer, and when I was in Paris, it 49 00:02:38,919 --> 00:02:42,480 Speaker 5: was teaming with Americans. So it didn't seem like, even 50 00:02:42,520 --> 00:02:47,120 Speaker 5: with protests going on around, it didn't seem like demand 51 00:02:47,240 --> 00:02:50,919 Speaker 5: was off for international travel at least you know, anecdotally 52 00:02:50,960 --> 00:02:52,320 Speaker 5: and some of the places I've been to. 53 00:02:53,400 --> 00:02:54,680 Speaker 3: So I don't know. 54 00:02:54,720 --> 00:02:56,360 Speaker 5: I mean, I think it takes a little bit of 55 00:02:56,440 --> 00:02:59,480 Speaker 5: demand off, maybe a very little bit, but right now 56 00:02:59,760 --> 00:03:02,760 Speaker 5: the international traveler seems to be rolling right over top 57 00:03:02,800 --> 00:03:04,400 Speaker 5: of that and going anyways. 58 00:03:04,280 --> 00:03:08,080 Speaker 2: George, how does an airline take capacity out of the system? 59 00:03:08,160 --> 00:03:10,880 Speaker 2: Is that just going from like ten flights between Newark 60 00:03:10,919 --> 00:03:13,480 Speaker 2: and Miami a day to I don't know, seven or eight. 61 00:03:14,720 --> 00:03:19,640 Speaker 5: I mean, I think ultimately you gotta park airplanes. I mean, 62 00:03:20,240 --> 00:03:22,360 Speaker 5: you know, it's a capital intensive business. You don't want 63 00:03:22,360 --> 00:03:25,079 Speaker 5: to buy those airplanes and not utilize them. You take 64 00:03:25,120 --> 00:03:28,360 Speaker 5: your old stuff, you park it, you maybe retire it, 65 00:03:28,560 --> 00:03:31,120 Speaker 5: sell it off. But what I mean, what we're seeing 66 00:03:31,160 --> 00:03:34,320 Speaker 5: as three Q develops and so we'll watch as closely 67 00:03:34,360 --> 00:03:37,400 Speaker 5: to see what it does to demand. Is we're seeing 68 00:03:37,440 --> 00:03:42,080 Speaker 5: that the low cost carriers Spirit Frontier look like they're 69 00:03:42,120 --> 00:03:47,960 Speaker 5: taking large portions out of their plan for three Q. 70 00:03:48,200 --> 00:03:49,440 Speaker 3: Now it may not hold. 71 00:03:49,800 --> 00:03:52,680 Speaker 5: They may add some of those those routes back, some 72 00:03:52,720 --> 00:03:55,600 Speaker 5: of those seats back, but we're seeing numbers down twenty 73 00:03:55,680 --> 00:03:59,320 Speaker 5: percent in some of their capacity. On the full service side, 74 00:04:00,040 --> 00:04:02,600 Speaker 5: United and Delta is still adding. United adding the most 75 00:04:02,680 --> 00:04:04,640 Speaker 5: I think, I want to say, five is six is 76 00:04:04,680 --> 00:04:07,800 Speaker 5: percent when I looked at earlier today, Delta adding two 77 00:04:08,120 --> 00:04:11,560 Speaker 5: three ish percent, an economy that's not growing that fast. 78 00:04:11,880 --> 00:04:14,600 Speaker 5: American look kind of flat, meaning the economy is growing 79 00:04:15,000 --> 00:04:18,719 Speaker 5: at rates, you know, some two percent. So it feels 80 00:04:18,760 --> 00:04:20,840 Speaker 5: like the big full service are going to push through 81 00:04:20,960 --> 00:04:23,680 Speaker 5: here and try to push through and continued to subsidize 82 00:04:23,760 --> 00:04:26,680 Speaker 5: the front of the cabin, sorry, subsidized the back of 83 00:04:26,720 --> 00:04:29,240 Speaker 5: the cabin. That basic economy with the front of the 84 00:04:29,320 --> 00:04:32,800 Speaker 5: cabin strength. I feel like at some point they'll break 85 00:04:32,839 --> 00:04:34,919 Speaker 5: that front of the cabin. I think that's sort of 86 00:04:34,920 --> 00:04:36,239 Speaker 5: how the industry always works. 87 00:04:36,400 --> 00:04:39,000 Speaker 4: We'll see in none of these reports do I see 88 00:04:39,040 --> 00:04:44,320 Speaker 4: anything mentioned about jet field prices. Should we be concerned 89 00:04:44,360 --> 00:04:44,760 Speaker 4: about that. 90 00:04:45,960 --> 00:04:47,839 Speaker 5: Well, I mean, right now it's a tailwind, and if 91 00:04:47,920 --> 00:04:51,680 Speaker 5: that reverses could be a problem. Right, But I mean 92 00:04:51,720 --> 00:04:56,320 Speaker 5: jet fuel prices are down because of slower global growth, right, 93 00:04:56,360 --> 00:04:59,120 Speaker 5: I mean, I think the geopolitical backdrop doesn't help it, 94 00:04:59,160 --> 00:05:01,600 Speaker 5: but it doesn't seem to have pushed prices up. 95 00:05:01,640 --> 00:05:01,960 Speaker 2: Firmer. 96 00:05:02,000 --> 00:05:05,120 Speaker 5: I think I saw today Saudi's are talking potentially about 97 00:05:05,680 --> 00:05:08,480 Speaker 5: reducing some of the capacity ads they're coming on. I 98 00:05:08,520 --> 00:05:11,240 Speaker 5: don't know if that sounds strong enough yet, but if 99 00:05:11,320 --> 00:05:15,160 Speaker 5: jet fuel turns, that would be that would work against them, 100 00:05:15,160 --> 00:05:17,040 Speaker 5: because again, we've got an airline business. If you look 101 00:05:17,040 --> 00:05:21,600 Speaker 5: at Delta, they added three ish percent capacity or around 102 00:05:21,680 --> 00:05:25,520 Speaker 5: there for this quarter and revenues were flat. Right, So 103 00:05:25,520 --> 00:05:28,960 Speaker 5: they're adding capacity and revenues are flat. I generally don't 104 00:05:29,080 --> 00:05:30,000 Speaker 5: like that kind of. 105 00:05:30,080 --> 00:05:32,640 Speaker 3: Backdrop business travel. 106 00:05:32,720 --> 00:05:36,239 Speaker 2: Delta actually kind of called that out as perhaps corporate 107 00:05:36,279 --> 00:05:37,919 Speaker 2: travel is quote unquote strengthening. 108 00:05:38,720 --> 00:05:40,080 Speaker 3: Are you seeing that across the industry? 109 00:05:40,080 --> 00:05:43,720 Speaker 2: And where I guess where's corporate travel versus pre pandemic. 110 00:05:44,839 --> 00:05:47,279 Speaker 5: Yeah, so they're not telling us anymore, right, and usually 111 00:05:47,880 --> 00:05:52,320 Speaker 5: you tell us when you're really excited about where it is. Look, 112 00:05:52,360 --> 00:05:54,840 Speaker 5: I think the summer flying seasons are all about leisure. 113 00:05:54,920 --> 00:05:59,880 Speaker 5: What I heard was that they that they were having weakening, 114 00:06:00,240 --> 00:06:04,560 Speaker 5: weaker pricing power in sort of the off peak demand times. 115 00:06:05,080 --> 00:06:08,920 Speaker 5: And my read through on that is that summer leisure 116 00:06:08,960 --> 00:06:11,279 Speaker 5: traveler where they know they got you right. All my 117 00:06:11,320 --> 00:06:13,680 Speaker 5: friends call me, they go, hey, George, I hear airfares 118 00:06:13,680 --> 00:06:16,520 Speaker 5: are down, but I'm trying to travel over July fourth 119 00:06:16,560 --> 00:06:19,120 Speaker 5: week on vacation with the family, and I'm paying a 120 00:06:19,120 --> 00:06:21,520 Speaker 5: crazy price. And I'm like, yeah, because you're going when 121 00:06:21,560 --> 00:06:23,760 Speaker 5: everyone else in the world wants to go somewhere, right, 122 00:06:24,440 --> 00:06:26,600 Speaker 5: So when I read off peak, I also think that's 123 00:06:26,600 --> 00:06:30,599 Speaker 5: probably a little bit of business travel, and so I 124 00:06:30,640 --> 00:06:33,200 Speaker 5: don't know that it's going swimmingly and they're not. They're 125 00:06:33,279 --> 00:06:36,800 Speaker 5: not giving us numbers. What I heard was kind of stabilized, 126 00:06:37,200 --> 00:06:39,960 Speaker 5: but I didn't hear to me, I didn't hear something 127 00:06:39,960 --> 00:06:41,880 Speaker 5: that sounded like it was getting much better. And again, 128 00:06:42,000 --> 00:06:43,600 Speaker 5: summer's about leisure. 129 00:06:44,480 --> 00:06:46,680 Speaker 4: I live in the flight path of I guess it's 130 00:06:46,760 --> 00:06:51,280 Speaker 4: candy well everything. Yeah. Sometimes I look up and I'm like, oh, wow, Jed, 131 00:06:51,680 --> 00:06:55,400 Speaker 4: it's amazing to me George that I guess the engine 132 00:06:55,400 --> 00:06:58,840 Speaker 4: technology has advanced so much that I barely hear them. 133 00:06:58,839 --> 00:07:02,800 Speaker 4: Should I get excited about the advancements in jet engine technology? 134 00:07:02,960 --> 00:07:04,279 Speaker 4: Thirty seconds? 135 00:07:04,560 --> 00:07:07,159 Speaker 5: Yeah. Look, first, I'm jealous because you're in the flight 136 00:07:07,200 --> 00:07:08,120 Speaker 5: path of everything. 137 00:07:08,320 --> 00:07:09,520 Speaker 3: And yeah, you come over an. 138 00:07:10,960 --> 00:07:14,280 Speaker 5: I'll sit there with a lawn chair and we'll watch them. Jeff, 139 00:07:14,520 --> 00:07:17,280 Speaker 5: jet engine technology is outstanding. It is probably even getting 140 00:07:17,320 --> 00:07:20,480 Speaker 5: quieter and more fuel efficient. It'll cost more to it'll 141 00:07:20,480 --> 00:07:22,800 Speaker 5: cost more to maintain over the long run, but going 142 00:07:22,800 --> 00:07:23,400 Speaker 5: the right direction. 143 00:07:24,280 --> 00:07:27,119 Speaker 2: Years ago, George turned me onto this app flight Radar 144 00:07:27,160 --> 00:07:27,600 Speaker 2: twenty five. 145 00:07:27,760 --> 00:07:28,200 Speaker 4: It's great. 146 00:07:28,560 --> 00:07:30,400 Speaker 2: Yeah, so you can track every plane in now and 147 00:07:30,720 --> 00:07:30,960 Speaker 2: you could. 148 00:07:30,960 --> 00:07:32,560 Speaker 4: There's also a button where you can push where you 149 00:07:32,600 --> 00:07:36,239 Speaker 4: can get the cockpit view. Yes, like pretend you're flying. 150 00:07:36,800 --> 00:07:38,600 Speaker 3: Great. So now I'm completely addicted to that. 151 00:07:39,160 --> 00:07:43,640 Speaker 2: George Ferguson's senior aerospace, defense and Airlines analyst of Bloomberg Intelligence, 152 00:07:44,080 --> 00:07:45,920 Speaker 2: giving us the latest here on Delta and again Delta 153 00:07:45,920 --> 00:07:48,800 Speaker 2: stock up about thirteen percent here today on news that 154 00:07:48,840 --> 00:07:52,000 Speaker 2: they are putting out guidance which they had pulled their guidance, 155 00:07:52,320 --> 00:07:54,800 Speaker 2: so Street taking that as a positive sign that the 156 00:07:54,800 --> 00:07:57,560 Speaker 2: company has some confidence in their business allegory. 157 00:07:59,280 --> 00:08:03,000 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 158 00:08:03,080 --> 00:08:06,120 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 159 00:08:06,160 --> 00:08:09,480 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 160 00:08:09,520 --> 00:08:12,600 Speaker 1: you get your podcasts, or watch us live on YouTube. 161 00:08:13,200 --> 00:08:16,680 Speaker 2: Speaking of technology, we like talking to men Deep Singing. 162 00:08:16,680 --> 00:08:19,560 Speaker 2: He's a senior tech and also Bloomberg Intelligence. All right, 163 00:08:21,600 --> 00:08:24,400 Speaker 2: you've scoled us on AI over the last several years. 164 00:08:24,440 --> 00:08:26,960 Speaker 2: I think I now understand what it is. I understand 165 00:08:26,960 --> 00:08:31,080 Speaker 2: that it's big. It's a big business. But four trillion 166 00:08:31,280 --> 00:08:34,000 Speaker 2: dollar market cap for NVIDI are you kidding me? 167 00:08:34,400 --> 00:08:36,800 Speaker 3: What's going on? I mean, tell me that's overvalued. 168 00:08:37,600 --> 00:08:41,679 Speaker 6: Well, when you see a company that's growing fifty percent 169 00:08:42,080 --> 00:08:45,760 Speaker 6: and is able to generate almost one hundred billion dollars 170 00:08:45,760 --> 00:08:49,320 Speaker 6: in free cash flow, then it's not. And that's where 171 00:08:49,480 --> 00:08:51,680 Speaker 6: you know you have to look at it from the 172 00:08:51,760 --> 00:08:56,160 Speaker 6: lens of what is sustainable versus what is happening right 173 00:08:56,200 --> 00:09:01,559 Speaker 6: now now. Typically chip companies, we know they have that 174 00:09:01,600 --> 00:09:06,120 Speaker 6: cyclical element where you know, after a period of rapid growth, 175 00:09:06,160 --> 00:09:09,760 Speaker 6: there is a digestion period. I don't think this time 176 00:09:09,840 --> 00:09:12,680 Speaker 6: is any different. But what we are witnessing now is 177 00:09:12,679 --> 00:09:16,520 Speaker 6: the super cycle in terms of the buildout of AI infrastructure, 178 00:09:16,679 --> 00:09:20,280 Speaker 6: so you are not going to see a very quick 179 00:09:20,400 --> 00:09:24,240 Speaker 6: slowdown simply because right now we are in AI land 180 00:09:24,240 --> 00:09:27,920 Speaker 6: grab mode. Everyone is. I mean, we talked about picks 181 00:09:27,920 --> 00:09:31,000 Speaker 6: and shovels for the longest time, you know, in the 182 00:09:31,040 --> 00:09:35,319 Speaker 6: past twelve months. That trade is still ongoing simply because 183 00:09:35,960 --> 00:09:41,960 Speaker 6: the demand for GPU compute really continues to rise. Because 184 00:09:42,120 --> 00:09:46,079 Speaker 6: you have this explosion in coding agents now. I mean, 185 00:09:46,120 --> 00:09:49,600 Speaker 6: think of what has coding agents done in the past 186 00:09:49,640 --> 00:09:53,400 Speaker 6: six months. That is the use case that every hyperscaler 187 00:09:53,480 --> 00:09:57,600 Speaker 6: is using now, every enterprise is looking to deploy. In fact, 188 00:09:57,600 --> 00:10:00,640 Speaker 6: Microsoft set thirty five percent of their new code is 189 00:10:00,679 --> 00:10:05,160 Speaker 6: written by a coding agent. That's all AIGPU based And 190 00:10:05,160 --> 00:10:06,800 Speaker 6: that's why there is so much exciting. 191 00:10:06,559 --> 00:10:09,719 Speaker 4: And if I'm in a company with earnings coming up, 192 00:10:09,840 --> 00:10:12,160 Speaker 4: I don't have to wait very long to show the 193 00:10:12,240 --> 00:10:15,439 Speaker 4: results of my big investments in AI do It's already 194 00:10:15,440 --> 00:10:17,040 Speaker 4: there right well? 195 00:10:17,280 --> 00:10:21,440 Speaker 6: I think for hyperscalers, especially Microsoft. 196 00:10:21,000 --> 00:10:23,640 Speaker 4: Send users, I mean the regular Joe's out there. 197 00:10:24,080 --> 00:10:27,959 Speaker 6: Yeah, I think again depends on w sector you are 198 00:10:27,960 --> 00:10:30,440 Speaker 6: in and how far along you are in terms of 199 00:10:30,480 --> 00:10:33,640 Speaker 6: deploying those I mean, what these companies have shown is 200 00:10:34,040 --> 00:10:37,280 Speaker 6: not only are they investing in AI data center build out, 201 00:10:37,520 --> 00:10:40,640 Speaker 6: they're actually deploying it in house. And Microsoft is the 202 00:10:40,679 --> 00:10:44,240 Speaker 6: prime example of that, where they've done a couple of restructurings. 203 00:10:44,280 --> 00:10:47,280 Speaker 6: They've set thirty five percent of their code is written 204 00:10:47,280 --> 00:10:50,920 Speaker 6: by AI. So it's hard to argue against the proof 205 00:10:50,920 --> 00:10:54,160 Speaker 6: points that they're giving us. And look at open Aiy's growth. 206 00:10:54,520 --> 00:10:57,000 Speaker 6: They've almost doubled their revenue in the first six months 207 00:10:57,000 --> 00:11:00,319 Speaker 6: of the year, and Tropic has foxed its revenue from 208 00:11:00,320 --> 00:11:02,160 Speaker 6: one to four billion, and in the first six months 209 00:11:02,200 --> 00:11:05,559 Speaker 6: of the year. That kind of growth, it's hard to argue. 210 00:11:05,559 --> 00:11:07,760 Speaker 6: Again said, you're right. I mean some of it will 211 00:11:07,800 --> 00:11:11,360 Speaker 6: be visible and you know the companies that are using 212 00:11:11,400 --> 00:11:15,240 Speaker 6: it as end customers. But really there is so much 213 00:11:15,320 --> 00:11:19,240 Speaker 6: runway because these use cases are all new and everyone 214 00:11:19,600 --> 00:11:23,400 Speaker 6: is looking at the productivity aspect, and that's what everyone 215 00:11:23,480 --> 00:11:24,200 Speaker 6: is excited about. 216 00:11:24,480 --> 00:11:26,559 Speaker 2: All right, let's switch gears to something near and dear 217 00:11:26,559 --> 00:11:29,440 Speaker 2: to my heart, which is paying huge compensation packages for people. 218 00:11:29,440 --> 00:11:31,400 Speaker 2: It used to be like in my Wall Street, this 219 00:11:31,480 --> 00:11:34,119 Speaker 2: is like sports teams. He did it for bankers and traders. 220 00:11:34,480 --> 00:11:39,080 Speaker 2: Now in your world, the geek engineers are getting pay 221 00:11:39,080 --> 00:11:41,920 Speaker 2: packages of a couple hundred million dollars. I'm seeing Meta 222 00:11:41,920 --> 00:11:45,720 Speaker 2: Platforms has made high compensation offers to new members of 223 00:11:45,720 --> 00:11:48,960 Speaker 2: its super intelligence team, including more than a two hundred 224 00:11:48,960 --> 00:11:51,319 Speaker 2: million dollar package for a former Apple executive. 225 00:11:52,200 --> 00:11:53,400 Speaker 3: What's going on here. 226 00:11:53,840 --> 00:11:57,560 Speaker 6: Well, I mean with this AI wave specifically, when you 227 00:11:57,559 --> 00:12:02,560 Speaker 6: think about the transformer model and the subsequent development, a 228 00:12:02,600 --> 00:12:05,679 Speaker 6: lot of it has been pioneered by I would say, 229 00:12:05,720 --> 00:12:08,440 Speaker 6: you know one hundred to two hundred AI researchers that 230 00:12:08,480 --> 00:12:11,960 Speaker 6: were at the forefoil. So if you are one of those, 231 00:12:12,400 --> 00:12:16,599 Speaker 6: and everyone knows you're either working at open Ai or 232 00:12:16,920 --> 00:12:22,040 Speaker 6: Entropic or Google DeepMind, that's where you know. Meta was like, 233 00:12:22,160 --> 00:12:26,240 Speaker 6: we are lacking behind in our large angline model efforts. 234 00:12:26,280 --> 00:12:29,040 Speaker 6: We have really got all the compute and the data. 235 00:12:29,559 --> 00:12:32,200 Speaker 6: What is it that we can do to fill up 236 00:12:32,240 --> 00:12:34,920 Speaker 6: that gap in terms of whire model is not being 237 00:12:35,080 --> 00:12:37,560 Speaker 6: as heavily used as an open ai model. 238 00:12:37,960 --> 00:12:38,400 Speaker 4: So they have. 239 00:12:38,440 --> 00:12:41,559 Speaker 6: Brought in all the researchers. I doubt they'll be able 240 00:12:41,600 --> 00:12:45,040 Speaker 6: to fix all the problems with their model by bringing 241 00:12:45,080 --> 00:12:47,800 Speaker 6: in all the researchers over the next six months, but 242 00:12:47,880 --> 00:12:50,760 Speaker 6: what it could do is slow down open ai because 243 00:12:50,800 --> 00:12:54,240 Speaker 6: open ai was shipping product you know pretty much every month. 244 00:12:54,559 --> 00:12:57,520 Speaker 6: Now suddenly, if you lose two or three of your 245 00:12:57,600 --> 00:13:01,800 Speaker 6: key people, then maybe cheap doesn't get shipped in the 246 00:13:01,840 --> 00:13:05,000 Speaker 6: second half. So I think what Meta has done is 247 00:13:05,440 --> 00:13:08,880 Speaker 6: really made every attempt to slow others down and then 248 00:13:08,920 --> 00:13:11,400 Speaker 6: in the process they'll have more time to catch up. 249 00:13:11,440 --> 00:13:14,080 Speaker 6: And I think that seems to be the strategy. 250 00:13:14,120 --> 00:13:17,400 Speaker 2: It's a show Hey O Tani type contract man Deep 251 00:13:17,440 --> 00:13:20,439 Speaker 2: saying thank you so much because you guys can't do 252 00:13:20,760 --> 00:13:21,680 Speaker 2: lave exactly. 253 00:13:21,720 --> 00:13:23,600 Speaker 3: We're going to see it and lead go exactly. 254 00:13:24,720 --> 00:13:26,920 Speaker 6: Yeah, you wait it on the way out of. 255 00:13:26,920 --> 00:13:30,320 Speaker 2: The door, men Deep seeing senior tech analysts for the moment. 256 00:13:30,400 --> 00:13:34,000 Speaker 2: Bloomberg Intelligence. Here in our Bloomberg Inactive Broker's. 257 00:13:33,600 --> 00:13:39,200 Speaker 1: Studio, you're listening to the Bloomberg Intelligence Podcast. Catch us 258 00:13:39,240 --> 00:13:42,280 Speaker 1: live weekdays at ten am Eastern on Apple Corplay and 259 00:13:42,280 --> 00:13:45,560 Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand 260 00:13:45,640 --> 00:13:49,200 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 261 00:13:49,800 --> 00:13:51,720 Speaker 2: All right, John Tucker Ball Sweeney, We're live. 262 00:13:51,600 --> 00:13:53,439 Speaker 3: Here on Bloomberg Directive Broker Studio. 263 00:13:53,200 --> 00:13:55,600 Speaker 2: Or streaming live on YouTube as well as to check 264 00:13:55,640 --> 00:13:59,520 Speaker 2: us out there Amazon Prime Day. I know you're all 265 00:13:59,520 --> 00:14:02,319 Speaker 2: over John, It's actually Prime Days plural. I think there's 266 00:14:02,400 --> 00:14:03,040 Speaker 2: four of them. 267 00:14:03,040 --> 00:14:05,640 Speaker 4: So you spread it out and things are I don't know. 268 00:14:05,600 --> 00:14:08,520 Speaker 2: But it just gets you just buy stuff in July. 269 00:14:08,640 --> 00:14:10,840 Speaker 2: I guess you wouldn't ordinarily be thinking about buying stuff. 270 00:14:10,920 --> 00:14:12,360 Speaker 2: But let's see how it's going out there in the 271 00:14:12,360 --> 00:14:14,400 Speaker 2: world of retail and etail. 272 00:14:14,640 --> 00:14:14,960 Speaker 3: Put them. 273 00:14:14,960 --> 00:14:18,200 Speaker 2: Goyle, senior US e commerce and retail analysts, joins us here, 274 00:14:18,640 --> 00:14:23,120 Speaker 2: she's at Bloomberg Intelligence. She's down there in prinstance, put 275 00:14:23,400 --> 00:14:26,600 Speaker 2: what are we learning about Amazon and Amazon Prime Days 276 00:14:26,720 --> 00:14:28,960 Speaker 2: and maybe how the consumers do in these days? 277 00:14:29,800 --> 00:14:32,240 Speaker 7: Sure, so you know the days. It's four days this 278 00:14:32,400 --> 00:14:35,760 Speaker 7: year versus two days last year, so longer, which means 279 00:14:35,760 --> 00:14:39,080 Speaker 7: that people have more time to shop. So early reads 280 00:14:39,120 --> 00:14:42,520 Speaker 7: from different third party vendors suggest that sales were down 281 00:14:42,640 --> 00:14:45,560 Speaker 7: in its first day, and I'm not surprised by that 282 00:14:45,680 --> 00:14:49,080 Speaker 7: because there's no urgency, right you have till Friday midnight 283 00:14:49,120 --> 00:14:52,240 Speaker 7: to shop, so I think people are taking their time. Overall, 284 00:14:52,280 --> 00:14:55,880 Speaker 7: we do expect a Prime Day versus last year will 285 00:14:55,920 --> 00:14:58,280 Speaker 7: be up by the end of it. Consumers are looking 286 00:14:58,320 --> 00:15:01,240 Speaker 7: for deals, Prices are are going to go up with 287 00:15:01,280 --> 00:15:05,600 Speaker 7: the terriff situation and the best time until block Friday 288 00:15:05,600 --> 00:15:07,360 Speaker 7: to get deals is this week? 289 00:15:07,800 --> 00:15:09,440 Speaker 4: Okay, you always leave it to me to ask the 290 00:15:09,520 --> 00:15:12,640 Speaker 4: stupid question, Well, what are the big sellers on the 291 00:15:12,680 --> 00:15:14,480 Speaker 4: AM on the amasode. 292 00:15:15,880 --> 00:15:18,640 Speaker 7: So what they're pushing is exactly what they've pushed before. 293 00:15:18,720 --> 00:15:21,400 Speaker 7: You have electronics, you have home products, you have the 294 00:15:21,440 --> 00:15:24,760 Speaker 7: vacuum cleaners, you have the devices that they have, whether 295 00:15:24,800 --> 00:15:28,160 Speaker 7: it's the Alexa, it's really a little bit of everything 296 00:15:28,360 --> 00:15:31,800 Speaker 7: is on sale. The average discount that I've seen, you know, 297 00:15:31,840 --> 00:15:33,960 Speaker 7: there are clearly some things that are fifty to sixty 298 00:15:34,000 --> 00:15:36,400 Speaker 7: percent off, but I'd say the average discount is probably 299 00:15:36,400 --> 00:15:38,840 Speaker 7: in the twenty to thirty five percent range from just 300 00:15:38,880 --> 00:15:40,760 Speaker 7: the products that I've seen as I've been tracking it. 301 00:15:41,360 --> 00:15:43,960 Speaker 4: But that's the stuff they're pushing. What is this stuff 302 00:15:44,000 --> 00:15:45,280 Speaker 4: people are actually buying. 303 00:15:46,600 --> 00:15:48,920 Speaker 7: I think they're buying what they're pushing because people want 304 00:15:48,960 --> 00:15:51,840 Speaker 7: to buy what's on sale, right, So if it's not 305 00:15:51,920 --> 00:15:54,040 Speaker 7: on sale, why do I need to buy it today? 306 00:15:54,080 --> 00:15:56,120 Speaker 7: I can wait till I need it, all right? 307 00:15:56,160 --> 00:15:59,040 Speaker 2: So next Wednesday we are picking up our new puppy, 308 00:15:59,120 --> 00:16:01,280 Speaker 2: and so we've spent the last couple of days taking 309 00:16:01,320 --> 00:16:05,000 Speaker 2: advantage of Amazon Prime buying a lot of dog stuff. 310 00:16:05,680 --> 00:16:09,520 Speaker 4: Is that dog stuff? Manufactured overseas where you're now paying like. 311 00:16:09,640 --> 00:16:13,320 Speaker 2: I don't know teriffs, and that's kind of where I 312 00:16:13,320 --> 00:16:16,280 Speaker 2: wanted to go poon them. If we haven't seen the 313 00:16:16,320 --> 00:16:18,320 Speaker 2: tariff impact yet, or maybe we have, I don't know. 314 00:16:18,960 --> 00:16:21,120 Speaker 2: When do you and the retail companies you talk to, 315 00:16:21,840 --> 00:16:25,000 Speaker 2: when do you think the tariff price increases? If any 316 00:16:25,360 --> 00:16:28,480 Speaker 2: come through to the consumer, they may not. When do 317 00:16:28,600 --> 00:16:30,600 Speaker 2: your companies think we'll see it? 318 00:16:31,120 --> 00:16:33,120 Speaker 7: So I can tell you that I think they're there, 319 00:16:33,200 --> 00:16:37,600 Speaker 7: but they're selectively there. Companies have already started to raise prices. Nike, 320 00:16:37,720 --> 00:16:40,640 Speaker 7: for example, has raised the price of its sneakers that 321 00:16:40,680 --> 00:16:43,160 Speaker 7: are over one hundred and forty dollars by five dollars. 322 00:16:43,360 --> 00:16:46,360 Speaker 7: And that's that the ten percent pause teriff rate. When 323 00:16:46,400 --> 00:16:48,920 Speaker 7: I'd say, it depends where these rates settle. Right now, 324 00:16:48,960 --> 00:16:53,800 Speaker 7: we're hearing Vietnam twenty percent, and that's ten percent versus 325 00:16:53,800 --> 00:16:56,600 Speaker 7: twenty percent. So now Nike will it have to increase 326 00:16:56,640 --> 00:17:00,160 Speaker 7: its rates further? I think so they will act they 327 00:17:00,200 --> 00:17:01,720 Speaker 7: have to do that. They said the ten percent is 328 00:17:01,760 --> 00:17:04,840 Speaker 7: costing them an additional billion dollars in costs this year 329 00:17:05,080 --> 00:17:08,840 Speaker 7: in their physical twenty twenty six. If it goes to 330 00:17:08,840 --> 00:17:13,040 Speaker 7: twenty percent, Vietnam is a big sourcing country for footwear especially, 331 00:17:13,560 --> 00:17:15,879 Speaker 7: They're definitely going to have to take prices up unless 332 00:17:15,880 --> 00:17:17,160 Speaker 7: they're going to let the margin. 333 00:17:16,880 --> 00:17:17,320 Speaker 6: Take a hit. 334 00:17:17,720 --> 00:17:20,720 Speaker 4: Do these companies like Puma do they have to reinvent 335 00:17:20,800 --> 00:17:25,400 Speaker 4: themselves in light to all this, So to. 336 00:17:25,320 --> 00:17:27,440 Speaker 7: A certain extent, they have to think about their cost 337 00:17:27,480 --> 00:17:29,600 Speaker 7: structure a little more. But what I would say is 338 00:17:29,680 --> 00:17:33,200 Speaker 7: Puma is a little more diversified. Right, It's a European name, 339 00:17:33,320 --> 00:17:35,399 Speaker 7: so the exposure to the US is less than what 340 00:17:35,440 --> 00:17:38,080 Speaker 7: it is for a Nike, so they do benefit from that. 341 00:17:38,119 --> 00:17:41,639 Speaker 7: Even ADDIAUS, for example, their exposure to the US is 342 00:17:41,760 --> 00:17:44,440 Speaker 7: less the Nike, so they can take what they make 343 00:17:44,640 --> 00:17:48,320 Speaker 7: in the higher tariff countries and use that for everywhere 344 00:17:48,320 --> 00:17:51,120 Speaker 7: else but the US. So they do have some strategies 345 00:17:51,119 --> 00:17:54,360 Speaker 7: that they can deploy and are already deploying. But strategies 346 00:17:54,400 --> 00:17:57,120 Speaker 7: will have to change, right, will materials get compromise if 347 00:17:57,119 --> 00:18:00,440 Speaker 7: the consumers not willing to pay for the added costs. 348 00:18:00,520 --> 00:18:05,879 Speaker 7: These retailers cannot absorb a twenty percent tariff, They just cannot. 349 00:18:05,880 --> 00:18:08,840 Speaker 7: Their margins are in the single digits, so it's just 350 00:18:08,880 --> 00:18:09,959 Speaker 7: not something they can afford. 351 00:18:10,520 --> 00:18:13,920 Speaker 2: So what Yeah, interesting, So Bloomberg News is out with 352 00:18:13,920 --> 00:18:17,760 Speaker 2: the stories saying that talking about the running category, and 353 00:18:17,800 --> 00:18:20,320 Speaker 2: that's critical for a lot of these sneaker makers in 354 00:18:20,400 --> 00:18:23,000 Speaker 2: how competitive it is. How do you think about that 355 00:18:23,119 --> 00:18:24,879 Speaker 2: part of the retail space. 356 00:18:25,880 --> 00:18:28,399 Speaker 7: So running is a very important category for all the 357 00:18:28,440 --> 00:18:31,960 Speaker 7: at leisure brands. I would say probably since the pandemic, 358 00:18:32,000 --> 00:18:34,679 Speaker 7: it's grown and important. So there have been more people 359 00:18:34,720 --> 00:18:37,520 Speaker 7: that choose to run. Now, is it going to be 360 00:18:37,560 --> 00:18:40,119 Speaker 7: easy for any of them to win the running race? No? 361 00:18:40,560 --> 00:18:44,760 Speaker 7: Because really the clear standouts in running today are the Adds, 362 00:18:45,240 --> 00:18:48,399 Speaker 7: the Asex, the Brooks, and the Nikes. Those are the 363 00:18:48,520 --> 00:18:50,160 Speaker 7: names that you kind of think of when you think 364 00:18:50,160 --> 00:18:53,119 Speaker 7: about running. And while Puma has its own shoe and 365 00:18:53,160 --> 00:18:56,840 Speaker 7: Sodas Adidas, it's going to be hard to penetrate in 366 00:18:56,840 --> 00:19:00,400 Speaker 7: that market because the others aren't slowing down. Everyone layser 367 00:19:00,440 --> 00:19:02,840 Speaker 7: focused on this category and we'll just have to see 368 00:19:02,880 --> 00:19:05,640 Speaker 7: who bites that what because it is a very very 369 00:19:05,640 --> 00:19:07,679 Speaker 7: competitive category in the leisure space. 370 00:19:07,880 --> 00:19:11,440 Speaker 4: And I'll quote Calvin Coolidge here, I choose not to run. 371 00:19:12,280 --> 00:19:16,560 Speaker 3: That's exactly right. I don't know though, I'll walk on 372 00:19:16,400 --> 00:19:17,200 Speaker 3: the warlock. 373 00:19:17,440 --> 00:19:18,880 Speaker 4: There we go, All right, let'll stick with. 374 00:19:18,840 --> 00:19:20,199 Speaker 3: That all right, put them goil. Thank you so much 375 00:19:20,200 --> 00:19:21,359 Speaker 3: for we appreciate that putting Goile. 376 00:19:21,520 --> 00:19:26,240 Speaker 2: She covers all the retail stuff for Bloomberg Intelligence. 377 00:19:27,960 --> 00:19:31,680 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 378 00:19:31,760 --> 00:19:34,800 Speaker 1: weekdays at ten am Eastern on Apple Coarcklay and Android 379 00:19:34,840 --> 00:19:38,160 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 380 00:19:38,200 --> 00:19:41,320 Speaker 1: you get your podcasts, or watch us live on YouTube. 381 00:19:42,240 --> 00:19:44,120 Speaker 2: Fall swing you live here on Bloomberg and Active Broker 382 00:19:44,200 --> 00:19:46,120 Speaker 2: Studio streaming live on YouTube. 383 00:19:46,119 --> 00:19:46,199 Speaker 6: Well. 384 00:19:46,200 --> 00:19:48,840 Speaker 2: A lot of investors trying to get a sense of 385 00:19:48,880 --> 00:19:52,159 Speaker 2: how the consumer is faring during this time of uncertainty 386 00:19:52,760 --> 00:19:55,879 Speaker 2: brought about in part by all this discussion of tariffs 387 00:19:55,920 --> 00:19:57,399 Speaker 2: and what I might mean for the economy. One of 388 00:19:57,400 --> 00:19:59,359 Speaker 2: the areas they look at is the retailers. What are 389 00:19:59,400 --> 00:20:00,280 Speaker 2: the retailers well? 390 00:20:00,320 --> 00:20:00,639 Speaker 3: Today? 391 00:20:00,880 --> 00:20:04,919 Speaker 2: On Bloomberg Television, Ralph Lauren, CEO Patrese Louvey said that 392 00:20:05,040 --> 00:20:08,840 Speaker 2: demand for its signature clothing such as cable knit sweaters 393 00:20:08,840 --> 00:20:11,679 Speaker 2: remain strong even as the fashion industry is buffetted by 394 00:20:11,760 --> 00:20:13,680 Speaker 2: terras and an economic slowed down. 395 00:20:13,720 --> 00:20:15,480 Speaker 3: Let's break that down a little bit. Mary Ross Gilbert 396 00:20:15,520 --> 00:20:15,960 Speaker 3: joins us. 397 00:20:16,160 --> 00:20:18,440 Speaker 2: She's a senior equity analy's covered in the retail space 398 00:20:18,480 --> 00:20:24,280 Speaker 2: for Bloomberg Intelligence. She joins us from La via Zoom. So, Mary, 399 00:20:24,359 --> 00:20:27,440 Speaker 2: we heard from the Ralph Lauren CEO says he still 400 00:20:27,480 --> 00:20:29,959 Speaker 2: sees demand kind of pretty solid. What do you make 401 00:20:30,000 --> 00:20:32,320 Speaker 2: of his comments and what are you seeing across your 402 00:20:32,320 --> 00:20:33,240 Speaker 2: retail coverage. 403 00:20:34,880 --> 00:20:39,240 Speaker 8: Yeah, so, Paul, we're seeing strength clearly with Ralph Lauren. 404 00:20:39,720 --> 00:20:41,680 Speaker 8: When we look at the data for the June quarter, 405 00:20:41,760 --> 00:20:45,520 Speaker 8: which they're going to report in early August, their sales 406 00:20:45,560 --> 00:20:49,520 Speaker 8: are trending up about twenty percent, and that's just for 407 00:20:49,560 --> 00:20:52,560 Speaker 8: the US market, and the US is about forty two 408 00:20:52,560 --> 00:20:55,720 Speaker 8: to forty three percent of their sales, and when you 409 00:20:55,760 --> 00:20:58,280 Speaker 8: look at the consensus third at six percent, so they're 410 00:20:58,320 --> 00:21:01,040 Speaker 8: really hitting it out of the ballpark. And it's not 411 00:21:01,160 --> 00:21:03,360 Speaker 8: just in the US, it's actually around the globe. 412 00:21:03,400 --> 00:21:04,520 Speaker 3: So when you think about. 413 00:21:04,359 --> 00:21:08,639 Speaker 8: China, China is supposed to be having a slowdown, but 414 00:21:08,760 --> 00:21:12,080 Speaker 8: not for Ralph Lauren. There are sales in the last quarter, 415 00:21:12,080 --> 00:21:14,800 Speaker 8: which was the March quarter, it was up twenty percent. 416 00:21:15,040 --> 00:21:17,560 Speaker 8: So they're really seeing some strength. And when you look 417 00:21:17,560 --> 00:21:21,240 Speaker 8: at some of the other brands out there, I think 418 00:21:21,280 --> 00:21:24,960 Speaker 8: you'll see some variability, You'll see some retailers kind of struggling. 419 00:21:25,000 --> 00:21:28,160 Speaker 8: So on the value side, we saw American Eagle shows 420 00:21:28,200 --> 00:21:30,240 Speaker 8: some struggles there, but part of it had to do 421 00:21:30,400 --> 00:21:35,040 Speaker 8: with some fashion misses, So there it was really associated 422 00:21:35,040 --> 00:21:38,199 Speaker 8: with execution. And then the other companies that are executing, 423 00:21:38,480 --> 00:21:41,200 Speaker 8: we're seeing good sales trends and so we're seeing off 424 00:21:41,280 --> 00:21:44,280 Speaker 8: price is still showing resilience. So we think the consumer 425 00:21:44,400 --> 00:21:46,400 Speaker 8: really is showing resilience. 426 00:21:47,480 --> 00:21:49,640 Speaker 4: Where does Ralph Lauren make it stuff? 427 00:21:51,880 --> 00:21:55,600 Speaker 8: That is a good question, John, So about twenty percent 428 00:21:55,680 --> 00:22:00,000 Speaker 8: comes from Vietnam. China is probably around seven or eight 429 00:22:00,080 --> 00:22:03,239 Speaker 8: percent is what we estimate, So they've been diversifying, and 430 00:22:03,280 --> 00:22:05,520 Speaker 8: of course we just got the news about a week 431 00:22:05,640 --> 00:22:09,119 Speaker 8: or so ago that Vietnam tariffs are going up to 432 00:22:09,160 --> 00:22:13,040 Speaker 8: twenty percent, possibly by August first, they haven't set an 433 00:22:13,080 --> 00:22:15,840 Speaker 8: exact date yet, and that's up from ten percent. So 434 00:22:15,840 --> 00:22:21,120 Speaker 8: when you think about non China tariffs for apparel retailers, 435 00:22:21,680 --> 00:22:25,560 Speaker 8: that's about ten percent, and so then does this mean 436 00:22:25,680 --> 00:22:29,840 Speaker 8: Vietnam at twenty percent is sort of the new We're 437 00:22:29,880 --> 00:22:32,639 Speaker 8: going up to twenty percent for non China, and China 438 00:22:32,720 --> 00:22:35,840 Speaker 8: right now is at thirty percent, so we estimate that 439 00:22:35,880 --> 00:22:39,119 Speaker 8: would be an incremental twenty six basis points impact. But 440 00:22:39,480 --> 00:22:43,280 Speaker 8: if anything, Ralph Lauren has the ability to pass on 441 00:22:43,400 --> 00:22:47,160 Speaker 8: price increases and to be less impacted. They have pricing 442 00:22:47,240 --> 00:22:51,160 Speaker 8: power with their consumers. Their average price point has been 443 00:22:52,080 --> 00:22:55,119 Speaker 8: marching up, and consumers are willing to pay full price. 444 00:22:55,160 --> 00:22:58,000 Speaker 8: If you look at their Wimbledon collection, good luck trying 445 00:22:58,040 --> 00:23:00,240 Speaker 8: to find something because a lot of it has been 446 00:23:00,280 --> 00:23:01,159 Speaker 8: sold out. 447 00:23:01,400 --> 00:23:04,840 Speaker 2: So is that how you're approaching tariffs here? 448 00:23:04,960 --> 00:23:05,160 Speaker 3: Mary? 449 00:23:05,200 --> 00:23:08,040 Speaker 2: As you look across your research coverage of retail companies, 450 00:23:08,080 --> 00:23:10,560 Speaker 2: is the higher end will have a better chance of 451 00:23:10,600 --> 00:23:14,560 Speaker 2: passing along price increases versus maybe something towards the middle 452 00:23:14,600 --> 00:23:15,000 Speaker 2: lower end. 453 00:23:16,600 --> 00:23:19,480 Speaker 8: Yeah, it's going to be a combination of how these 454 00:23:19,480 --> 00:23:21,800 Speaker 8: companies are able to mitigate the impact. I mean, we 455 00:23:21,880 --> 00:23:26,000 Speaker 8: certainly saw in two thousand and nineteen, you remember twenty eighteen, 456 00:23:26,040 --> 00:23:30,560 Speaker 8: twenty nineteen Trump one point zero it most of these 457 00:23:30,560 --> 00:23:34,679 Speaker 8: companies were able to sort of cycle past it. So 458 00:23:35,400 --> 00:23:38,919 Speaker 8: even companies on the value side will look for strategic 459 00:23:39,000 --> 00:23:42,199 Speaker 8: price increases, so they'll be very pointed in that. But 460 00:23:42,240 --> 00:23:44,919 Speaker 8: they're also sharing the costs with their suppliers, so the 461 00:23:44,960 --> 00:23:48,680 Speaker 8: suppliers are absorbing some of it. In that Trump one 462 00:23:48,720 --> 00:23:53,320 Speaker 8: point zero scenario, they actually absorbed half the cost, So 463 00:23:53,560 --> 00:23:57,240 Speaker 8: there are ways to mitigate it obviously, you know, focusing 464 00:23:57,280 --> 00:24:01,440 Speaker 8: on your cost, continuing to redo your costs, so all 465 00:24:01,480 --> 00:24:03,800 Speaker 8: of those things. So there will be an impact this year, 466 00:24:03,920 --> 00:24:06,440 Speaker 8: mainly in the second half, but then as we get 467 00:24:06,720 --> 00:24:10,400 Speaker 8: you know, into twenty twenty six, most of these companies 468 00:24:10,440 --> 00:24:14,480 Speaker 8: will be able to cycle past that and hopefully see 469 00:24:14,480 --> 00:24:18,960 Speaker 8: some margin improve it depending on how final negotiations come 470 00:24:18,960 --> 00:24:19,920 Speaker 8: out on tariffs. 471 00:24:20,359 --> 00:24:23,080 Speaker 4: In the meantime, does Resilient demand more than makeup for 472 00:24:23,160 --> 00:24:26,240 Speaker 4: any hit top margins. And by the way, parenthetically, I 473 00:24:26,320 --> 00:24:28,920 Speaker 4: have to tell everybody I think that's Ralph Lauren. 474 00:24:29,000 --> 00:24:31,800 Speaker 3: She's wearing I'm wearing Ralph Lauren. 475 00:24:33,280 --> 00:24:34,920 Speaker 4: I'm not going to say it's a content of entry. 476 00:24:34,960 --> 00:24:39,080 Speaker 8: I had no idea I came in, but I guess 477 00:24:39,119 --> 00:24:41,879 Speaker 8: I'm an example, but it's not really, it's not me. 478 00:24:42,160 --> 00:24:44,640 Speaker 8: When you look at the fact that they added five 479 00:24:44,680 --> 00:24:45,800 Speaker 8: point nine million. 480 00:24:45,520 --> 00:24:47,200 Speaker 4: Cousins, they need to put you on the defensive. 481 00:24:49,920 --> 00:24:55,040 Speaker 8: It's mainly younger consumers, so millennials and gen z love 482 00:24:55,160 --> 00:24:58,000 Speaker 8: the brand, so you will be seeing it more and 483 00:24:58,080 --> 00:24:59,200 Speaker 8: more on them, all. 484 00:24:59,240 --> 00:25:01,440 Speaker 2: Right, be talking to you more and more because this 485 00:25:01,600 --> 00:25:04,920 Speaker 2: retaillers report, it is gonna be really a good view 486 00:25:04,960 --> 00:25:08,000 Speaker 2: as to how much they're taking in their margin versus 487 00:25:08,040 --> 00:25:09,399 Speaker 2: how much you and I are going to be. 488 00:25:09,480 --> 00:25:14,520 Speaker 4: The CEO also cited for Ralph Lauren increased demand, not 489 00:25:14,600 --> 00:25:18,600 Speaker 4: just like from the tennis set, but from what's that 490 00:25:18,680 --> 00:25:22,040 Speaker 4: other sport that's kind of okay, No, the one that's 491 00:25:22,119 --> 00:25:26,000 Speaker 4: kind of like baseball, Yes. 492 00:25:26,160 --> 00:25:30,160 Speaker 2: Slight set, like exactly. 493 00:25:30,160 --> 00:25:30,880 Speaker 3: Thank you so much. 494 00:25:31,119 --> 00:25:35,240 Speaker 2: Mary Ross, Gilbertie's senior equanalys covering retail for Bloomberg Intelligence. 495 00:25:35,760 --> 00:25:40,440 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 496 00:25:40,640 --> 00:25:44,120 Speaker 1: and anywhere else you get your podcasts. 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