WEBVTT - Tesla, Boeing, UPS Earnings, Morning Consult Poll 0:00:02.920 --> 0:00:07.280 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.560 --> 0:00:14.440 This is Bloomberg Intelligence with Alex Steinhl and Paul'sweenye. 0:00:14.520 --> 0:00:17.720 The real app performance has been the US corporate high yield. 0:00:17.880 --> 0:00:20.280 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.880 The semiconductor business is a really cyclical business. 0:00:23.600 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:33.159 These are two big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:41.680 Bloomberg Intelligence with Alex Steinhl and Paul'sweenye on Bloomberg Radio. 0:00:43.440 --> 0:00:45.800 I'll Paul Sweeney and I'm Mollie Smith filling in for 0:00:45.880 --> 0:00:46.480 Alex Steele. 0:00:46.720 --> 0:00:49.080 On Today's Bloomberg Intelligence Show. We dig inside the big 0:00:49.120 --> 0:00:51.600 business stories impacty Wall Street and the global markets. 0:00:51.680 --> 0:00:54.120 Each and every week we provide in depth research and 0:00:54.240 --> 0:00:56.640 data on some of the two thousand companies and one 0:00:56.720 --> 0:00:59.360 hundred and thirty industries are analysts cover worldwide. 0:00:59.440 --> 0:01:01.560 Today, we'll look at how the seven three seven Max 0:01:01.680 --> 0:01:03.920 crisis impacted Boeings quarterly earnings. 0:01:04.040 --> 0:01:07.640 Plus we'll discuss how cost cuts impacted earnings at UPS. 0:01:07.760 --> 0:01:09.760 For first, we kick off a big week of corporate 0:01:09.800 --> 0:01:12.880 earnings with the electric vehicle maker Tesla. Tesla report a 0:01:12.920 --> 0:01:16.560 quarterly profit that fell forty eight percent. Sales also fell 0:01:16.680 --> 0:01:17.480 nine percent. 0:01:17.280 --> 0:01:19.280 And this comes as the company has spent more than 0:01:19.360 --> 0:01:22.120 a year slashing prices across the lineup in an effort 0:01:22.200 --> 0:01:26.039 to boost sales, and after Tesla reported results, CEO Elon 0:01:26.160 --> 0:01:29.240 musk vowed to launch a less expensive vehicle as soon 0:01:29.280 --> 0:01:30.200 as later this year. 0:01:30.319 --> 0:01:33.080 For more, we were joined by Steven Mann Bloomberg Intelligence, 0:01:33.120 --> 0:01:36.600 Global Autos and Industrials Research Channels. We first asked first 0:01:36.640 --> 0:01:38.399 reaction to musk comments. 0:01:38.400 --> 0:01:43.160 I think the affordable EV is the real thing ROBOTAXI. 0:01:43.720 --> 0:01:47.360 I think there's still needs time for development. But if 0:01:47.360 --> 0:01:50.040 you look at the affordable EV actually kills two birds 0:01:50.040 --> 0:01:53.240 in one stone. You know it actually increases a scale 0:01:53.360 --> 0:01:56.880 for Tesla. We're going to see revenue growth, we potentially 0:01:56.920 --> 0:01:59.880 see profit growth from that affordable EV. And that's what 0:02:00.120 --> 0:02:03.880 exactly what the market needs. It's more affordable vehicles to 0:02:04.120 --> 0:02:08.440 increase penetration UH of evs. The other thing that's really 0:02:08.520 --> 0:02:12.639 important with this UH affordable EV launches, it actually ink 0:02:12.919 --> 0:02:18.120 helps UH Tesla increases reach globally because you know you 0:02:18.200 --> 0:02:20.480 have a lot of emerging markets that you know, a 0:02:20.520 --> 0:02:23.120 lot of people, a lot of consumers there cannot afford 0:02:23.200 --> 0:02:27.560 an expensive fifty thousand dollars vehicle, forty thousand dollars vehicles, 0:02:27.600 --> 0:02:30.160 So a sub thirty thousand vehicle is p is is 0:02:30.160 --> 0:02:33.760 the right product for them to expand geographically. 0:02:33.600 --> 0:02:36.040 Steve, what do we know about the economics of such 0:02:36.080 --> 0:02:38.880 a a new or lower cost vehicle? Can they produce 0:02:38.960 --> 0:02:42.280 that at a profitable basis on a per unit basis? 0:02:43.080 --> 0:02:45.800 Yeah, there's there's a couple of ways they can approach this. 0:02:46.160 --> 0:02:49.680 I think they can develop a totally new platform. But 0:02:49.960 --> 0:02:52.359 you know, in the other segments that I've done with you, 0:02:52.480 --> 0:02:56.400 we've talked about vertical integration, and vertical integration has actually 0:02:57.000 --> 0:03:03.080 reduced the cost of you know, car production. So for them, 0:03:03.400 --> 0:03:06.840 you know, for TESTA, it's the only company that's profitable 0:03:06.880 --> 0:03:11.000 in producing evs. So the other option is actually think about, 0:03:11.280 --> 0:03:13.720 you know, what they can do with the three and 0:03:13.760 --> 0:03:18.200 the Y. You know, can they offer you know, lower trims, 0:03:18.240 --> 0:03:21.679 maybe even you know, a smaller battery that's going to 0:03:21.760 --> 0:03:25.760 allow them to cut costs and also make that available 0:03:25.760 --> 0:03:27.280 to the consumer at a lower price. 0:03:27.800 --> 0:03:30.640 So this obviously was the best part of the report, 0:03:30.720 --> 0:03:33.720 but you still had elsewhere in the earnings report. We 0:03:33.760 --> 0:03:37.440 had falling vehicle sales. We had worse than expected revenue 0:03:37.480 --> 0:03:40.640 and profit, and a pretty significant cash burn figure. So 0:03:41.200 --> 0:03:44.480 I mean, Steve, are you totally optimistic here? What kind 0:03:44.520 --> 0:03:46.440 of concerns do you still have here? 0:03:47.080 --> 0:03:49.640 I I've always said, you know, I think this year 0:03:49.760 --> 0:03:53.000 and even into next year, there's there's some bumps on 0:03:53.040 --> 0:03:55.840 the road. You know, cyber truck is still ramping up. 0:03:56.000 --> 0:03:59.400 It's a very difficult vehicle to build. They're still working 0:03:59.440 --> 0:04:00.400 on those issue shoes. 0:04:01.520 --> 0:04:01.720 You know. 0:04:02.080 --> 0:04:05.520 We don't think the EV market actually, especially in the US, 0:04:06.040 --> 0:04:10.080 will pick back up until twenty twenty five, late twenty 0:04:10.120 --> 0:04:14.800 twenty five into twenty twenty six, because the market really 0:04:14.920 --> 0:04:19.599 needs a lower cost, more affordable EV to entice kind 0:04:19.600 --> 0:04:23.480 of more new buyers into the market. I'm very positive. 0:04:23.520 --> 0:04:26.560 I think this company has done everything right in terms 0:04:26.560 --> 0:04:29.360 of looking at AI, looking at AV. I still believe 0:04:29.440 --> 0:04:33.040 the EV, you know, shift has actually sailed. We're going 0:04:33.120 --> 0:04:36.840 to have EV's and I think that subscription based software 0:04:36.839 --> 0:04:39.640 based vehicle that they're trying to build is the right 0:04:39.680 --> 0:04:41.840 move right strategy for the industry. 0:04:42.400 --> 0:04:45.400 Steve, what did the Elon say or to what extent 0:04:45.440 --> 0:04:47.599 did he address just kind of the developments in China, 0:04:47.640 --> 0:04:50.200 how things are developing there from a competitive standpoint, a 0:04:50.240 --> 0:04:51.240 sales standpoint and all that. 0:04:51.839 --> 0:04:56.320 Yeah, it's I actually see that we'll continue to be bumpy. 0:04:57.120 --> 0:04:59.960 They probably likely to lose market share, continue to lose 0:05:00.040 --> 0:05:02.880 some market share there. But I think you know, Tesla 0:05:03.000 --> 0:05:06.000 is leveraging China, not just for sales, but it's a 0:05:06.000 --> 0:05:10.479 low cost manufacturing base for the company. The Shanghai factory 0:05:10.520 --> 0:05:12.839 still pumps out a million vehicles, close to a million 0:05:12.920 --> 0:05:16.000 vehicles a year at a very low cost. They still 0:05:16.080 --> 0:05:19.520 are able to source battery from companies like c at L, 0:05:19.680 --> 0:05:22.919 the largest EV battery maker in the world, at a 0:05:23.040 --> 0:05:28.120 very attractive price given their volume. So, you know, China 0:05:28.360 --> 0:05:32.040 sales will probably slow. There's it's a hyper combetitive market. 0:05:32.480 --> 0:05:36.480 Shao Me which is a you know, a major cell 0:05:36.520 --> 0:05:39.599 phone maker in China, they're launching on vehicles that's also 0:05:39.680 --> 0:05:43.080 very affordable, so they're gonna see more competition in China. 0:05:43.520 --> 0:05:47.520 So but again, China is not just for sales, it's 0:05:47.520 --> 0:05:50.080 a manufacturing, low cost manufacturing. 0:05:49.520 --> 0:05:50.040 Base for them. 0:05:50.360 --> 0:05:52.919 Elon had took a dig at the car makers that 0:05:53.000 --> 0:05:55.840 are pairing back on the EV production plans and going 0:05:55.880 --> 0:05:59.240 more to the gas electric hybrids instead. He didn't call 0:05:59.279 --> 0:06:01.960 them out, but DM and Forward are among those ones. 0:06:02.000 --> 0:06:05.279 And but isn't that really where consumers are going more 0:06:05.360 --> 0:06:08.839 proportionally right now, more into the plug in hybrid space 0:06:08.920 --> 0:06:11.680 or maybe non plug in hybrid, but just hybrids in 0:06:11.760 --> 0:06:13.599 general versus full on evs. 0:06:14.520 --> 0:06:17.040 Yeah, I think the consumer I think, you know, we 0:06:17.320 --> 0:06:20.080 did a survey not so long ago. I think what 0:06:20.200 --> 0:06:22.839 we got from that survey was that I think the 0:06:22.960 --> 0:06:27.240 consumer needs to trial evs. They actually need to be 0:06:28.240 --> 0:06:31.400 educated on, you know, how to make EV work in 0:06:31.440 --> 0:06:35.120 their daily life. So, you know, PHVs, plug in hybrids, 0:06:35.240 --> 0:06:40.520 hybrids is actually good transition into full evs. They alleviate 0:06:40.600 --> 0:06:43.119 some of the concerns in terms of range, in terms 0:06:43.160 --> 0:06:46.719 of the lack of infrastructure that's for the EV market 0:06:46.800 --> 0:06:51.160 right now. So PHIV and EV are a good transitional product, 0:06:51.200 --> 0:06:53.400 but it's not a long term product because if you 0:06:53.480 --> 0:06:57.240 look at some of the emission standards, it's continued to 0:06:57.279 --> 0:07:03.400 continue to be tighter and tighter. Eventually hybrids and phgvs 0:07:03.480 --> 0:07:07.799 are probably won't even meet the more stringent emission standards down, 0:07:08.120 --> 0:07:09.159 you know, in the next decade. 0:07:09.400 --> 0:07:12.080 Our thanks to Steve Man, Bloomberg Intelligence, Global Autos and 0:07:12.120 --> 0:07:13.600 Industrials research analysts. 0:07:13.720 --> 0:07:15.920 All right now, we're going to move to the software space. 0:07:16.000 --> 0:07:19.480 This week we heard that software giants Salesforce's talks to 0:07:19.520 --> 0:07:23.640 acquire the data management company Informatica have fallen through. We 0:07:23.640 --> 0:07:27.280 were told that Informatica said it's not engaged in takeover talks. 0:07:27.480 --> 0:07:30.200 The deal would have ranked among the largest ever by Salesforce. 0:07:30.320 --> 0:07:30.680 For more. 0:07:30.720 --> 0:07:32.880 In this I was joined by Anna Rock, Rana Bloomberg 0:07:32.880 --> 0:07:37.520 Intelligence technology analysts and so Neil Rojokopal, Bloomberg Intelligence, Senior 0:07:37.560 --> 0:07:40.320 software Analysts. I first asked Ana Rock for his reaction 0:07:40.520 --> 0:07:41.119 to the news. 0:07:41.440 --> 0:07:43.760 Yeah, it was just a big head scratch for us too, 0:07:43.840 --> 0:07:47.880 almost because last March, Bennihoff comes and says, I've disbanded 0:07:47.920 --> 0:07:50.120 the mn committee, no more m and A. I'm going 0:07:50.160 --> 0:07:53.040 to focus on margins and organic growth. And in less 0:07:53.040 --> 0:07:56.200 than a year, you know, just around that one year mark, 0:07:56.280 --> 0:07:57.920 he's like, oh, we're going to go back and you know, 0:07:57.920 --> 0:07:59.960 buy something now. He didn't say that, the company didn't 0:08:00.040 --> 0:08:01.960 say that, but that was the rumor on the street 0:08:02.000 --> 0:08:04.760 that they're looking to buy Informatica. For us, that was 0:08:04.760 --> 0:08:07.280 a bit of a surprise because Informatica grows six to 0:08:07.320 --> 0:08:10.040 seven percent compared to Salesforce, which is growing north of 0:08:10.080 --> 0:08:12.840 ten percent. So why would anybody buy something that is 0:08:13.200 --> 0:08:15.840 slow growth? I get the data angle of it, but 0:08:16.200 --> 0:08:18.160 you know it was it was not something that we 0:08:18.280 --> 0:08:18.880 really liked. 0:08:19.040 --> 0:08:21.320 So Neil tell us about Informatica. I don't know a 0:08:21.360 --> 0:08:23.280 lot about it. I don't think a lot of investors 0:08:23.320 --> 0:08:25.480 know a lot about it. And that was one of 0:08:25.560 --> 0:08:28.040 the reasons that they're saying, what is Salesforce buying here 0:08:28.080 --> 0:08:30.720 or maybe thinking about buying? What tell us about this company? 0:08:31.040 --> 0:08:36.160 Sure, Informatica is all about data management, which is about 0:08:36.400 --> 0:08:40.400 cleaning all the data that comes from different sources and 0:08:40.559 --> 0:08:45.120 aligning it with the applications and getting all things sorted out. 0:08:45.160 --> 0:08:48.440 For data, so data comes in various shapes, forms and 0:08:48.520 --> 0:08:51.000 different sources, so all of that needs to be cleaned 0:08:51.080 --> 0:08:54.440 up to be used in a proper shape. So I 0:08:54.480 --> 0:08:59.199 think Informatica is that layer that acts as a cleanser 0:08:59.280 --> 0:09:03.160 of data and gets you to that right usage. So 0:09:03.200 --> 0:09:05.360 that's where it comes in as a player. 0:09:05.800 --> 0:09:09.239 So if they're not going to tie up with Salesforce. 0:09:09.360 --> 0:09:11.360 What's the call on this company? What's the call on 0:09:11.400 --> 0:09:14.240 the stock? Either you know, bullsh or bears. 0:09:14.400 --> 0:09:18.160 Look strategically. For Informatica, such an alliance would have been 0:09:18.200 --> 0:09:21.840 a great move that would have helped fuel its cloud journey, 0:09:22.000 --> 0:09:25.640 and that now accounts for roughly one third of its revenues. 0:09:26.559 --> 0:09:30.600 With the deal not happening, Informatica now has to focus 0:09:30.640 --> 0:09:35.560 on fueling its cloud growth organically. The company is boosting 0:09:35.600 --> 0:09:40.200 its partnership and rolling out new AI powered features, but 0:09:40.320 --> 0:09:46.520 this space is highly fragmented and competitive. The company has 0:09:46.640 --> 0:09:50.920 continued to lose market share, especially with the challengers that 0:09:51.000 --> 0:09:55.440 have risen substantially over the last few years. There are 0:09:55.480 --> 0:09:59.000 other big players like SAP and IBM that also compete, 0:09:59.040 --> 0:10:02.120 So I think going forward the market will definitely look 0:10:02.200 --> 0:10:05.760 a lot more challenging because now Salesforce are not having 0:10:05.800 --> 0:10:08.679 to go through with this tale will put more resources 0:10:08.720 --> 0:10:13.760 into MuleSoft, which I think will raise the competitive intensity 0:10:13.840 --> 0:10:16.400 and I think that is a big challenge for informatical 0:10:16.480 --> 0:10:17.000 going forward. 0:10:17.360 --> 0:10:20.600 An rag on your side from the Salesforce side, I mean, 0:10:20.880 --> 0:10:22.520 is it just steady as she goes? I mean, it's 0:10:22.520 --> 0:10:24.360 just such a great company. What's the call for the 0:10:24.400 --> 0:10:28.040 next twelve to eighteen months for Salesforce dot com? 0:10:28.200 --> 0:10:30.560 So, Paul, what we're thinking. You know, hopefully by the 0:10:30.640 --> 0:10:32.520 end of this year we get a little more clarity 0:10:32.559 --> 0:10:35.880 on technology spending, and perhaps from next year onwards we 0:10:35.920 --> 0:10:39.960 can see that lower doubleg growth in sales coupled with 0:10:40.080 --> 0:10:42.880 some margin expansion getting you to that mid to high 0:10:42.920 --> 0:10:46.880 teens earnings growth. That's what we want from Salesforce, organic growth, 0:10:47.200 --> 0:10:50.480 organic earnings, not so much driven by M and A, 0:10:50.600 --> 0:10:53.320 and I'm hoping that that's what the company delivers. 0:10:54.200 --> 0:10:57.319 On the software side, what are the most exciting areas 0:10:57.360 --> 0:10:59.000 for you that you're looking at here? 0:10:59.200 --> 0:11:04.320 Look for me. In the overall enterprise software space, I 0:11:04.520 --> 0:11:11.880 still like names in the observability sector. The name yeah, 0:11:11.960 --> 0:11:16.000 all right. So the observability is they act as a 0:11:16.080 --> 0:11:21.280 layer that monitors all of your systems applications. So be 0:11:21.320 --> 0:11:24.840 it any kind of an application that you're running your enterprise, 0:11:24.960 --> 0:11:28.439 everything needs to be monitored if there are like any bugs, 0:11:28.480 --> 0:11:32.040 if there are like system downtimes, et cetera. So observability 0:11:32.320 --> 0:11:37.480 vendors typically monitor all your applications and the infrastructure, so 0:11:37.559 --> 0:11:40.600 they play a very critical role in the overall enterprise 0:11:40.640 --> 0:11:44.120 software space, and I think players such as the Data Dog, 0:11:44.280 --> 0:11:46.600 diner Trace are very well positioned here. 0:11:46.520 --> 0:11:48.440 Public recently like recently as a couple of years. 0:11:48.559 --> 0:11:49.520 Yeah, yes, that's right. 0:11:49.800 --> 0:11:52.000 So what is I mean? I love the name. Looking 0:11:52.040 --> 0:11:54.319 at the stock here and bringing up the stock Data Dog. 0:11:54.720 --> 0:11:58.000 The symbol is ddog. This is kind of forty billion 0:11:58.040 --> 0:12:00.760 dollar market cap. It's kind of flat stock price on 0:12:00.760 --> 0:12:02.319 the year, but up to seventy five percent over the 0:12:02.360 --> 0:12:04.800 trailing twelve months. What's the call on Data Dog here? 0:12:05.120 --> 0:12:09.120 Look, it's a very I would say it has been 0:12:09.160 --> 0:12:13.160 a fast growing company. And of course last year we've 0:12:13.200 --> 0:12:16.240 seen a slow down in the overall enterprise software space, 0:12:16.280 --> 0:12:18.880 and Data Dog of course has been impacted with that 0:12:19.280 --> 0:12:22.760 slow it spending trends. But overall, if you look at 0:12:22.760 --> 0:12:26.920 the observability space as we see, I think that is 0:12:26.960 --> 0:12:30.079 a space that will continue to grow because the number 0:12:30.080 --> 0:12:34.840 of applications and the infrastructure that enterprises are deploying, especially 0:12:34.880 --> 0:12:38.160 with what is supposed to come with Jenny AI and others, 0:12:38.360 --> 0:12:40.520 we will continue to see a massive rise in the 0:12:40.520 --> 0:12:43.640 infrastructure and applications and that should all bode well for 0:12:44.200 --> 0:12:46.640 Data Dog and a players such as a Dina Trace 0:12:46.679 --> 0:12:48.120 and others in the observaty space. 0:12:48.440 --> 0:12:51.640 Our thanks to Sigeo, Roger Paul, Bloomberg Intelligence software analysts, 0:12:51.640 --> 0:12:54.280 and anaack runa Bloomberg Intelligence technology analyst. 0:12:54.440 --> 0:12:57.040 Coming up will break down why pessimism about the US 0:12:57.160 --> 0:13:00.640 economy may be impacting President Biden standing with voters. 0:13:00.679 --> 0:13:03.480 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:13:03.520 --> 0:13:05.720 depth research and data on two thousand companies and one 0:13:05.800 --> 0:13:08.920 hundred and thirty industries. You can access Bloomberg Intelligence via 0:13:09.000 --> 0:13:11.960 Bigo on the terminal. I'm Paul Sweeney and I'm Molly Smith. 0:13:12.160 --> 0:13:13.240 This is Bloomberg. 0:13:16.960 --> 0:13:20.839 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:13:20.920 --> 0:13:24.240 weekdays at ten am Eastern on Applecarplay and Androud Auto 0:13:24.360 --> 0:13:27.240 with the Bloomberg Business App. Listen on demand wherever you 0:13:27.320 --> 0:13:31.000 get your podcasts, or watch us live on YouTube. 0:13:31.520 --> 0:13:33.839 I'm Paul Sweeney and I'm Molly Smith, hilling in for 0:13:33.960 --> 0:13:36.720 Alex Ziel. We move next to earnings from the logistics 0:13:36.760 --> 0:13:40.640 company UPS. This week, UPS reported first quarter profit that 0:13:40.760 --> 0:13:44.120 was higher than analyst expectations. This comes as the courier's 0:13:44.160 --> 0:13:47.679 headcount management and restructuring of its Delivery Roots begins to 0:13:47.720 --> 0:13:48.800 bear fruit for more. 0:13:49.000 --> 0:13:51.560 Guest host Emily Graffeo and I were joined by Lee Clascow, 0:13:51.559 --> 0:13:55.520 Bloomberg Intelligence Senior Transport, Logistics and Shipping Analysts. We first 0:13:55.559 --> 0:13:57.880 asked Lee for his take on UPS earnings. 0:13:58.200 --> 0:14:00.640 I think it's really about what they're doing on the 0:14:00.640 --> 0:14:04.640 cost side. I think that's really the driver of the 0:14:04.640 --> 0:14:08.920 outperformance in EPs, because revenue did come in slightly lower 0:14:09.240 --> 0:14:13.080 than expectations on lower volumes. You know, they're dealing with 0:14:13.160 --> 0:14:18.720 lower volumes from last share last year when they you know, 0:14:18.760 --> 0:14:21.920 were negotiating their labor contract and a lot of shippers 0:14:22.000 --> 0:14:24.520 kind of try to find other alternatives in case there 0:14:24.560 --> 0:14:27.800 was an issue with their network, you know, from a strike, 0:14:27.880 --> 0:14:30.920 but obviously that didn't happen. Now they're being pretty busy 0:14:30.960 --> 0:14:34.240 trying to win back that share, so, you know, I 0:14:34.240 --> 0:14:37.760 think what they're all in all, it was a good quarter. 0:14:38.120 --> 0:14:41.800 I think if UPS is you know, meeting or beating expectations, 0:14:42.080 --> 0:14:44.360 that's a good thing because they've had a rough year, 0:14:45.200 --> 0:14:49.040 driven a lot by that labor negotiation, which increased costs 0:14:49.040 --> 0:14:53.160 considerably and resulted in a lost amount of volume, which 0:14:53.440 --> 0:14:56.520 you know, for a company like UPS, the deleveraging effect 0:14:56.560 --> 0:14:59.920 on margins is quite substantial. But there are definitely some 0:15:00.040 --> 0:15:02.480 good news in the report that you know, we remain 0:15:02.520 --> 0:15:07.280 optimistic that they might be even looking to possibly increase, 0:15:07.480 --> 0:15:10.160 you know, their full year guidance for twenty twenty four, 0:15:10.640 --> 0:15:14.080 especially as the US postal service contract which they recently 0:15:14.240 --> 0:15:17.360 won from FedEx starts hitting their p and L. 0:15:18.560 --> 0:15:21.840 When you talk about average daily package volume down, your 0:15:21.840 --> 0:15:25.280 over year revenue down year over year, how much of 0:15:25.360 --> 0:15:29.760 the softer demand for UPS is related to macro economic 0:15:29.880 --> 0:15:34.160 factors and maybe coming out of the pandemic consumers shipping less. 0:15:34.440 --> 0:15:35.480 Is that a factor here? 0:15:35.880 --> 0:15:39.920 Yeah, I think it's a you know, probably a trieffective things. 0:15:39.960 --> 0:15:46.960 It's probably a softer great outlook all together, that coupled 0:15:46.960 --> 0:15:50.840 with tougher comparisons and the fact that they are, you know, 0:15:51.000 --> 0:15:53.160 are still trying to win back the share that they 0:15:53.200 --> 0:15:57.640 lost from their labor contract negotiation. So I think those 0:15:57.680 --> 0:16:02.000 three things are kind of weighing on their volumes, probably 0:16:02.120 --> 0:16:06.200 more than maybe their competitors like a FedEx or a DHL. 0:16:07.200 --> 0:16:10.400 Hayley. I know labor is a big deal with UPS 0:16:10.520 --> 0:16:12.760 and these companies here. I know UPS they had a 0:16:12.840 --> 0:16:17.119 new labor contract that really pushed up wages and benefits 0:16:17.600 --> 0:16:20.440 starting I guess this year. But then on the other side, 0:16:20.560 --> 0:16:24.640 they also cut twelve hundred or twelve thousand white collar jobs. 0:16:24.640 --> 0:16:28.400 That's like fourteen percent of the workforce here. So talk 0:16:28.400 --> 0:16:30.400 to us about the labor and component they're in the 0:16:30.400 --> 0:16:31.040 cost structure. 0:16:31.240 --> 0:16:33.720 Yeah, I mean that they're they're doing the right things. 0:16:33.880 --> 0:16:38.040 You know, the contract might have a you know, with 0:16:38.240 --> 0:16:41.479 the team serves, might have had a negative impact to margins, 0:16:41.520 --> 0:16:43.520 but you know we are going to anniversary those in 0:16:43.560 --> 0:16:46.680 the second half of the year, so those comparisons won't 0:16:46.680 --> 0:16:49.840 be as bad. And also, you know, does provide them 0:16:49.840 --> 0:16:53.320 with a steady labor force, because you know, if your 0:16:53.400 --> 0:16:55.200 labor is happy, you're gonna have less turnover, you have 0:16:55.280 --> 0:16:58.240 less turnover, you probably have better service and better safety, 0:16:58.280 --> 0:17:02.000 and that usually yields better profits. So I think, like 0:17:02.080 --> 0:17:05.320 when if you look longer term, beyond the initial shock 0:17:05.480 --> 0:17:08.840 of that new contract, which is very front loaded, you know, 0:17:08.920 --> 0:17:11.880 the increases aren't as bad. As we get to year two, 0:17:12.600 --> 0:17:14.760 it's not going to be as bad. And listen, you 0:17:14.760 --> 0:17:17.280 know UPS and FedEx and a lot of these companies, 0:17:17.320 --> 0:17:19.880 you know, they did get a little on the fat side, 0:17:19.920 --> 0:17:22.720 if you will, on their corporate ranks, and I think 0:17:22.720 --> 0:17:25.040 they're both doing the right things in terms of trimming 0:17:25.080 --> 0:17:28.760 it for the new normal of what their operating environment 0:17:29.119 --> 0:17:29.680 is today. 0:17:30.200 --> 0:17:32.600 How should investors be thinking about UPS? 0:17:32.760 --> 0:17:34.399 You know, I think what they need to do is 0:17:34.440 --> 0:17:36.119 they need to execute. They do not only need to 0:17:36.119 --> 0:17:39.280 execute on their twenty twenty four plans, but their twenty 0:17:39.280 --> 0:17:42.679 twenty six plans. And I do as I said earlier, 0:17:42.720 --> 0:17:45.120 I think there is some opportunity for some upside surprise. 0:17:45.200 --> 0:17:49.160 Given their US postal service contract. It didn't really make 0:17:49.160 --> 0:17:52.320 that much money for FedEx, But I think UPS's network 0:17:52.359 --> 0:17:55.320 is very different than FedEx's. It's more integrated, it's not 0:17:55.359 --> 0:17:58.400 a hub and spoke network, and that will provide them 0:17:58.440 --> 0:18:01.040 with some profitability and management pretty confident, at least it 0:18:01.119 --> 0:18:03.679 peers confident that this business is going to be not 0:18:03.720 --> 0:18:06.639 only creative to earnings, but a creative to margins. And 0:18:06.920 --> 0:18:08.639 that's kind of what you know, we as we look 0:18:08.680 --> 0:18:10.760 at the company, really want to see. We really want 0:18:10.760 --> 0:18:12.880 to see those domestic margins start to improve. 0:18:13.400 --> 0:18:16.560 Haylee, what are the companies saying about kind of normalized 0:18:16.680 --> 0:18:20.399 growth rates in terms of I guess unit volume. Where's 0:18:20.520 --> 0:18:23.639 this US economy in terms of just packages? Is it 0:18:23.680 --> 0:18:26.919 a GDP kind of number? Is that kind of the story. 0:18:28.000 --> 0:18:29.720 Yeah, it's a GDP kind of number. But you know 0:18:29.840 --> 0:18:32.480 UPS wants to grow beyond GDP and how they're going 0:18:32.560 --> 0:18:36.080 to do that is they've made some pretty significant not 0:18:36.200 --> 0:18:40.960 in size necessarily, but in terms of you know, capabilities acquisitions. 0:18:41.240 --> 0:18:44.600 You know, they bought a company Roadie, which you know 0:18:44.720 --> 0:18:47.360 it's not a drink on the road ball, but it's 0:18:47.920 --> 0:18:51.919 it is. What they do is they deliver heavy stuff 0:18:51.960 --> 0:18:56.080 to people's doors, so think furniture, think workout equipment, fitness equipment, 0:18:56.400 --> 0:18:58.679 and that is done through more or less an asset 0:18:58.760 --> 0:19:02.679 light model where you know, they're arranging the delivery. So 0:19:03.320 --> 0:19:07.679 that's that's a very good business. They're also invested or 0:19:07.760 --> 0:19:10.760 acquired a company that does returns without having it to 0:19:10.840 --> 0:19:14.720 box it, so it's a lot easier for consumers to 0:19:15.119 --> 0:19:17.280 you know, either go to a UPS stoor one of 0:19:17.280 --> 0:19:20.440 the other drop points that UPS provides to return something. 0:19:20.480 --> 0:19:22.400 And that's good for UPS because that stuff goes into 0:19:22.480 --> 0:19:26.040 their system and it becomes a B to B delivery 0:19:26.240 --> 0:19:28.800 where when we say B to B business business and 0:19:28.960 --> 0:19:32.000 meeting that there's more density, so it's you know, they're 0:19:32.040 --> 0:19:37.000 they're shipping you know, they're consolidating and shipping twenty boxes 0:19:37.160 --> 0:19:40.960 versus just one envelope, and that tends to be more profitable. U. 0:19:41.119 --> 0:19:43.960 And then their investments in the healthcare space, you know, 0:19:44.000 --> 0:19:47.080 their goal is to be the largest healthcare logistics provider. 0:19:47.440 --> 0:19:51.920 Healthcare has above average margins for transportation companies given the 0:19:51.960 --> 0:19:55.680 high level of service that's involved there. I think temperature control, 0:19:55.880 --> 0:19:58.479 think the fact that it has to get somewhere at 0:19:58.520 --> 0:20:01.840 a very specific time. So you know, those are higher 0:20:01.880 --> 0:20:04.960 margin business. So, you know, I think that those growth 0:20:04.960 --> 0:20:07.520 areas that I just mentioned will help them grow their 0:20:07.560 --> 0:20:11.560 overall volumes beyond you know, just GDP numbers. 0:20:11.880 --> 0:20:15.359 All thanks to Lead Glasgow, Bloomberg Intelligence Senior Transport, Logistics 0:20:15.359 --> 0:20:16.400 and Shipping Analyst. 0:20:16.640 --> 0:20:19.560 Now we're going to move to politics. President Joe Biden's 0:20:19.600 --> 0:20:23.360 recent polling bump and key battleground states has mostly evaporated. 0:20:23.560 --> 0:20:26.280 Biden is now trailing Donald Trump in six of seven 0:20:26.440 --> 0:20:29.560 swing states. That's according to the April Bloomberg News Morning 0:20:29.600 --> 0:20:31.920 Console poll. For more on this poll, we were joined 0:20:31.920 --> 0:20:35.119 by Gregory Corti, Bloomberg News White House and Political correspondent. 0:20:35.160 --> 0:20:38.000 We first asked Gregory for his takeaways from the latest poll. 0:20:38.119 --> 0:20:40.120 We've been doing this every month. This is the seventh 0:20:40.200 --> 0:20:44.439 iteration of this poll in seven key battleground states, and 0:20:44.600 --> 0:20:47.320 for the first five months it was a pretty stable 0:20:47.440 --> 0:20:50.160 race with former President Trump with a slight lead over 0:20:50.200 --> 0:20:53.480 President Biden. Then after the State of Union address, we 0:20:53.520 --> 0:20:56.639 got a little bit of good economic news, and we 0:20:56.680 --> 0:21:01.040 saw last month President Biden pretty much bring it even 0:21:01.640 --> 0:21:04.360 he was winning or even in the russ Belt states, 0:21:04.400 --> 0:21:07.800 the blue Wall states we call them of Michigan, Pennsylvania, 0:21:07.800 --> 0:21:11.159 and Wisconsin made it, gave him a fighting chance. But 0:21:11.280 --> 0:21:13.000 now we're seeing in this month, in the April poll 0:21:13.440 --> 0:21:15.280 sort of reversion back to the mean what we had 0:21:15.320 --> 0:21:19.959 been seeing all along, with former President Trump having across 0:21:20.000 --> 0:21:23.920 these seven battleground states as six point lead, and that's significant. 0:21:24.000 --> 0:21:27.119 Biden can't win this without getting at least those Blue 0:21:27.119 --> 0:21:30.800 Wall states and probably another one. And he's now down 0:21:30.960 --> 0:21:35.119 in Pennsylvania within the margin of error, but significantly down 0:21:35.240 --> 0:21:39.719 in Wisconsin. Michigan. Interestingly, is this bright spot And who 0:21:39.720 --> 0:21:42.120 would have known, because there are a lot of concerns 0:21:42.119 --> 0:21:46.960 there about a large population of Muslim voters. Union workers, 0:21:47.440 --> 0:21:48.840 but he seems to be holding his own there. 0:21:49.240 --> 0:21:51.679 Gregory, what are the key drivers are key influencers in 0:21:51.720 --> 0:21:54.119