WEBVTT - Ford Will Take $19.5 Billion in Charges Tied to EV Overhaul 0:00:02.720 --> 0:00:10.559 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.880 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.560 or watch us live on YouTube. 0:00:24.239 --> 0:00:26.640 Ford and US it will take a nineteen point five 0:00:26.720 --> 0:00:30.360 billion dollar charge tied to an overhaul of its electric 0:00:30.440 --> 0:00:33.640 vehicle business after struggling to turn a profit. Speaking of 0:00:33.680 --> 0:00:37.280 Bloomberg's remain Bostic, Katie Greifeld and Matt Miller CEO Jim 0:00:37.360 --> 0:00:41.959 Farley says the overhaul is about moving towards more profitable vehicles. 0:00:42.400 --> 0:00:45.280 Look for this announcement, Matt, It's really about moving to 0:00:45.320 --> 0:00:48.000 more profitable vehicles. You know, we're going to make in 0:00:48.040 --> 0:00:52.279 Tennessee now an affordable pickup truck. I think is going 0:00:52.320 --> 0:00:54.880 to really surprise the market. These are customers we know, 0:00:55.320 --> 0:00:57.480 not a lot of guestwork in terms of the revenue, 0:00:57.800 --> 0:00:59.560 the cost we need to get at and in war 0:00:59.720 --> 0:01:02.280 four vaner in Ohio. So these are going to be 0:01:02.280 --> 0:01:06.240 better investments for the company profit and all those hybrid sales, 0:01:06.480 --> 0:01:09.440 you know, those are really profitable vehicles for us. 0:01:10.440 --> 0:01:13.520 All right, That was ford A CEO Jim Farley, speaking 0:01:13.520 --> 0:01:16.720 with Bloomberg's remained boss at Katie Greifeld and Matt Miller. 0:01:16.959 --> 0:01:20.600 After that nineteen point five billion dollar charge, Let's break 0:01:20.600 --> 0:01:22.600 it down and what does it mean for the company 0:01:22.600 --> 0:01:24.360 and for the stock. We do that with Steve Mann 0:01:24.480 --> 0:01:27.920 Global Autos and Industrials Research Channels, a Bloomberg Intelligencies based 0:01:27.920 --> 0:01:31.199 down there in Princeton, Steve nineteen point five billion dollars. 0:01:31.240 --> 0:01:34.759 That is a massive number for Ford. What goes into 0:01:34.800 --> 0:01:38.000 that number? What does it mean about their commitment to EVS. 0:01:38.680 --> 0:01:41.720 Yeah, it is a very big number. It pretty much 0:01:41.840 --> 0:01:46.959 backed up the truck on these charges. But the important 0:01:46.959 --> 0:01:51.400 thing is it's Clarinda deeck for next year. Right, there 0:01:51.560 --> 0:01:56.720 is a couple of earnings tailwind for Ford and actually 0:01:56.960 --> 0:02:02.360 to their competitors in the right as well. So the biggest, 0:02:02.680 --> 0:02:05.680 I think the biggest write down. Two biggest write down 0:02:05.880 --> 0:02:09.880 is the writing down the losses on their Mustang Machy. 0:02:10.280 --> 0:02:12.960 You know they've been losing around twenty five thousand dollars 0:02:13.120 --> 0:02:16.880 on the edit line per vehicle, so it's massive. The 0:02:16.919 --> 0:02:21.520 other is the charges really on their joint venture with 0:02:21.639 --> 0:02:25.080 their battery supplier in Korea, So you know they're going 0:02:25.160 --> 0:02:29.919 to repurpose one of those plants for energy storage. So 0:02:30.880 --> 0:02:33.720 again it's really clearing the deck. There's a couple of 0:02:33.720 --> 0:02:38.200 tailwinds for twenty twenty six, which includes you know, Trump's 0:02:38.240 --> 0:02:41.200 loosening the MPG miles per gallon rule. 0:02:41.800 --> 0:02:42.080 Yeah. 0:02:42.120 --> 0:02:44.640 Absolutely, Just looking at the stock pretty much flat today, 0:02:44.639 --> 0:02:46.640 but the stock is at a fifty two week high 0:02:46.680 --> 0:02:50.840 of thirty seven percent. Does that reflect steve investors want 0:02:50.880 --> 0:02:54.600 these auto companies to kind of back away or proceed 0:02:54.680 --> 0:02:57.200 more cautiously towards their move towards EV's. 0:02:58.400 --> 0:03:04.600 Yeah, definitely, especially in the US. And look, Ford is 0:03:05.000 --> 0:03:08.600 you know, not just pivoting in the US, but they're 0:03:08.639 --> 0:03:11.480 also pivoting in Europe. You know, they just announced a 0:03:11.560 --> 0:03:16.240 joint venture with Renault to develop evs over in Europe, 0:03:16.360 --> 0:03:18.840 and you know Ford doesn't really have a big presence 0:03:19.200 --> 0:03:23.840 in Europe, so they're taking that approach of partnership. GM 0:03:24.000 --> 0:03:26.560 is doing the same thing. Remember they took one point 0:03:26.639 --> 0:03:30.800 six billion dollar charge, much more modest than the nineteen 0:03:30.840 --> 0:03:34.440 billion that Ford is taking. But you know GM is 0:03:34.480 --> 0:03:38.320 dialing back but keeping one foot on the EV's. I 0:03:38.360 --> 0:03:41.320 think they I believe they still think that they're you know, 0:03:41.360 --> 0:03:45.360 they still can succeed, especially when they introduced the Chevy 0:03:45.360 --> 0:03:46.720 Bolt in the New Year. 0:03:47.280 --> 0:03:50.920 So, Steve, you know, we're many years into this transition 0:03:51.000 --> 0:03:54.000 to EV's, and you know, I know there are many 0:03:54.280 --> 0:03:57.440 there are European country, Scandinavian countries where it's almost one 0:03:57.520 --> 0:04:00.720 hundred percent of their fleets are are their new car 0:04:00.800 --> 0:04:04.240 sales are EV's. That ain't the case here in the US. 0:04:05.000 --> 0:04:09.440 With some hindsight here, why hasn't Why haven't EV's taken 0:04:09.640 --> 0:04:11.560 a better hold here in this US market? 0:04:12.160 --> 0:04:16.880 Yeah, it definitely needs more, you know, regulatory support for 0:04:17.000 --> 0:04:21.960 EV to take uh grow because you know, ev UH 0:04:22.160 --> 0:04:24.599 there's a lot of three hurdles, right that consumers have 0:04:24.680 --> 0:04:28.359 to get over, which is the price, the range uh in, 0:04:28.400 --> 0:04:34.000 the convenience, right of charging infrastructure. You know, without government 0:04:34.040 --> 0:04:36.640 support to actually build that out, it's gonna take some 0:04:36.760 --> 0:04:41.760 time for this electrification transition. I think a lot of 0:04:41.800 --> 0:04:46.600 people in the industry still feels that electrification, battery EV 0:04:47.680 --> 0:04:51.440 maybe hybrids in between it is the way to go 0:04:51.680 --> 0:04:55.159 in the future. But you know, I think there's there's 0:04:55.160 --> 0:04:59.400 a huge paradigm shift that consumers hair hair have to 0:04:59.440 --> 0:05:02.400 get over and it's it's really challenging to do that 0:05:02.480 --> 0:05:04.480 without government support. 0:05:04.120 --> 0:05:06.800 Here, and it does not appear that this administration at 0:05:06.880 --> 0:05:10.560 least is willing to provide support that support. 0:05:11.520 --> 0:05:14.719 How does the industry kind of view that, Oh. 0:05:14.680 --> 0:05:19.840 It's it's it's very unfortunate. I think the gyration, the 0:05:20.240 --> 0:05:23.920 volatility that we're seeing in regulation is really not helping 0:05:23.960 --> 0:05:27.680 the industry. There's a lot of some costs that's been 0:05:27.720 --> 0:05:32.040 incurred with the shift to the emphasize evs. You know, 0:05:32.360 --> 0:05:37.560 all three many automakers around the globe have spent billions, 0:05:37.680 --> 0:05:40.160 you know, with that nineteen point five billion that Ford 0:05:40.440 --> 0:05:43.200 just written down, you know, it's probably about half of 0:05:43.240 --> 0:05:47.000 what they what they've invested in in ev already. So, 0:05:47.920 --> 0:05:51.680 you know, we do need more stable policy. Uh. You 0:05:51.680 --> 0:05:55.640 know you mentioned Europe earlier. Uh, you know, Europe is 0:05:55.680 --> 0:05:59.239 in the same situation. I'll sink the European regulators really 0:05:59.279 --> 0:06:01.840 know what they want to do in the future. They're 0:06:01.880 --> 0:06:06.640 still continuing to talk about delaying going all evs by 0:06:06.680 --> 0:06:08.960 twenty thirty five, and you know that's going to have 0:06:10.120 --> 0:06:13.200 you know, some negative as well as positive implication to 0:06:13.640 --> 0:06:15.440 the global autumn auto industry. 0:06:17.480 --> 0:06:20.560 Stay with us. More from Bloomberg Intelligence coming up after this. 0:06:24.200 --> 0:06:27.880 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:27.960 --> 0:06:31.039 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:31.080 --> 0:06:34.360 Auto with the Bloomberg Business app. Listen on demand wherever 0:06:34.440 --> 0:06:38.479 you get your podcasts, or watch us live on YouTube. 0:06:38.760 --> 0:06:40.920 So we want to take a look at the companies 0:06:40.920 --> 0:06:42.839 to watch for in twenty twenty six. But how do 0:06:42.880 --> 0:06:46.960 you shrink that universe of investamble companies down into fifty 0:06:47.000 --> 0:06:48.400 that you really want to focus on. 0:06:48.640 --> 0:06:49.960 Well, thankfully we have. 0:06:49.880 --> 0:06:53.280 Bloomberg Intelligence and Tim Craighead, who is our global Chief 0:06:53.279 --> 0:06:58.359 Content Officer for doing just that. Tim is joining us 0:06:58.440 --> 0:07:01.200 right now. And Tim, you guys have really narrowed it 0:07:01.279 --> 0:07:04.240 down to companies to watch for for better or for worse. 0:07:04.320 --> 0:07:06.640 And you have a couple of themes to keep in 0:07:06.680 --> 0:07:11.240 mind here. What are the companies or what are the 0:07:11.280 --> 0:07:14.720 big themes that have the most companies that you really 0:07:14.760 --> 0:07:15.240 point us to? 0:07:16.200 --> 0:07:19.120 Yeah, sure, thanks so, and we dive into some of those. 0:07:19.160 --> 0:07:22.240 So put a little bit of context. This group of 0:07:22.240 --> 0:07:25.720 fifty are all part of what we call focus ideas. 0:07:25.720 --> 0:07:28.880 It's a broader group of about one hundred. These are 0:07:28.920 --> 0:07:30.400 all high conviction ideas. 0:07:30.920 --> 0:07:31.640 They have. 0:07:34.400 --> 0:07:38.800 High conviction ideas where we see something very different from 0:07:38.800 --> 0:07:42.920 what we think is embedded in market expectations, and there's 0:07:43.000 --> 0:07:47.480 catalysts ahead to change the market mindset. Those catalysts coming 0:07:47.520 --> 0:07:50.200 up in twenty twenty six, and that's where these fifty 0:07:50.640 --> 0:07:56.080 come into and across the group this year, the biggest 0:07:56.400 --> 0:08:00.920 bucket are two. One is just simply new product innovation 0:08:02.000 --> 0:08:05.400 that is being rapped out into twenty twenty six. The 0:08:05.480 --> 0:08:10.200 other no surprise AI related, and some of it's the 0:08:10.280 --> 0:08:13.240 tech companies. Some of it are companies that are feeding 0:08:13.280 --> 0:08:15.760 into the process and happy to get into some of 0:08:15.800 --> 0:08:19.480 those or other topics as well, such as cyclical pressures 0:08:19.520 --> 0:08:23.040 and competitive concerns on the negative side, and there's a 0:08:23.080 --> 0:08:24.320 couple of other things as well. 0:08:24.880 --> 0:08:26.720 So on the new products, give us an example of 0:08:26.760 --> 0:08:29.160 a new product that you guys think might really be 0:08:29.200 --> 0:08:30.520 important for a company in a stock. 0:08:31.600 --> 0:08:31.960 Yeah. 0:08:32.040 --> 0:08:34.560 So, you know, it's interesting because some of these can 0:08:34.640 --> 0:08:39.600 be quite technical. Paul. You know, you think Annilan Pharma 0:08:39.760 --> 0:08:44.120 or Bridge Bio are two biotech companies that have new 0:08:44.160 --> 0:08:50.120 products coming. One of them relates to heart issues, another 0:08:50.240 --> 0:08:54.400 relates to dwarfism. But it's new products that will expand 0:08:54.440 --> 0:08:58.319 to market and drive we think significantly better revenue and earnings. 0:08:58.800 --> 0:09:01.560 On the other hand, there are some good old fashioned 0:09:01.600 --> 0:09:05.800 names that you know and you love. Canada Goose has 0:09:06.480 --> 0:09:09.640 new product flow coming through that we think reinvigorates the 0:09:09.679 --> 0:09:14.200 top line. Brinker think Chili's, the restaurant are going through 0:09:14.240 --> 0:09:18.760 a whole new upgrade of their menu and up selling 0:09:19.040 --> 0:09:25.720 clients with good stuff like Margarita's with Patron and so 0:09:25.800 --> 0:09:31.480 the new product idea can expand across a whole number 0:09:31.520 --> 0:09:33.560 of different segments. It's quite interesting. 0:09:33.840 --> 0:09:35.679 Yeah, I'm looking at Decker's as one of the new 0:09:35.679 --> 0:09:38.760 products companies you highlight and their ug is introducing styles 0:09:38.760 --> 0:09:40.640 to stay relevant beyond the winter months. 0:09:41.320 --> 0:09:43.600 Let's talk a little bit about AI because that's. 0:09:43.400 --> 0:09:45.439 Going to continue to be a big theme even as 0:09:45.480 --> 0:09:50.040 investors are starting to make distinctions between companies that are 0:09:50.240 --> 0:09:52.280 in it for good and those that maybe kind of 0:09:52.840 --> 0:09:55.800 fat ish. What are some new names that surprised you 0:09:56.320 --> 0:09:57.560 in terms of their making the list. 0:09:58.400 --> 0:10:01.200 Yeah, it's it's interesting. I'll givia the new names and 0:10:01.240 --> 0:10:03.439 the ones that aren't on here, and I'll do the 0:10:03.520 --> 0:10:06.880 latter first. There's none of the big llms this year 0:10:07.080 --> 0:10:11.240 that are on our list or in video that's on 0:10:11.280 --> 0:10:14.240 the list that's not on the list. What you find 0:10:14.400 --> 0:10:19.280 are other either enabling technologies, so I think LAMB Research 0:10:19.360 --> 0:10:23.000 it's a semicap equipment company that makes the gear that 0:10:23.040 --> 0:10:27.840 you make the semiconductors with. That's quite well positioned. TSMC, 0:10:28.040 --> 0:10:32.600 the world's largest foundry that's making the AI accelerator chips 0:10:32.760 --> 0:10:38.200 that feed into the llms, or even back up in 0:10:38.400 --> 0:10:42.520 the channel of how do you build out AI constellation, 0:10:42.840 --> 0:10:48.240 which is the US's largest nuclear utility. That's quite important 0:10:48.240 --> 0:10:51.200 if you're going to generate the electricity to drive the 0:10:51.280 --> 0:10:58.240 data centers to drive AI acs. Interestingly, European construction company 0:10:58.280 --> 0:11:01.960 they own Turner, which is the US largest construction company. 0:11:02.160 --> 0:11:05.200 They've got the biggest order book for building out data centers. 0:11:06.240 --> 0:11:09.080 So there's a host of different kinds of ways you 0:11:09.080 --> 0:11:13.920 can think about leveraging AI beyond just simply the big 0:11:14.200 --> 0:11:18.760 lllms like Google or Open AI or things along those 0:11:18.760 --> 0:11:19.720 lines that you hear about. 0:11:20.280 --> 0:11:22.679 Tim on this list, you and the BI analysts also 0:11:22.960 --> 0:11:27.199 highlight stocks that might be have pressure on the downside, 0:11:27.200 --> 0:11:32.520 whether it's cyclical pressure, competition, MNA, project delay. Give us 0:11:32.760 --> 0:11:35.360 a name or two that might have some downside risk 0:11:35.480 --> 0:11:35.880 this year. 0:11:37.000 --> 0:11:42.559 Yeah, it's interesting on that. Think about what's going on 0:11:42.720 --> 0:11:47.800 from the standpoint of you're just talking about airlines from 0:11:47.800 --> 0:11:52.240 a European vantage point, We've got wage pressures that are rising, 0:11:53.400 --> 0:11:57.360 and for Air France KLM, a big chunk of their 0:11:57.400 --> 0:12:00.760 business is the Transatlantic market, which is getting more and 0:12:00.760 --> 0:12:05.880 more competitive, and with both of those factors, we think 0:12:05.920 --> 0:12:10.559 that there's risks to estimates. China Railway Group. It's a 0:12:10.559 --> 0:12:14.280 big state owned enterprise in China. It's one of the 0:12:14.280 --> 0:12:18.679 big four engineering companies. And to the degree that China 0:12:18.880 --> 0:12:25.840 is shifting towards more technology and innovation driven investment and 0:12:25.960 --> 0:12:29.200 less away from bridges and roads and railroads and things 0:12:29.200 --> 0:12:33.600 along those lines, China Railway Group we think has downside risk. 0:12:34.840 --> 0:12:41.600 A couple little companies that are unusual but intriguing. Dino Polska, 0:12:41.679 --> 0:12:44.880 which you've never heard of, I'm sure, is a Polish 0:12:44.920 --> 0:12:49.720 supermarket company, but they've got two big European competitors that 0:12:49.760 --> 0:12:53.760 are coming into the Polish market. Again, downside risk to earnings, 0:12:54.080 --> 0:12:57.280 and the same thing can be said about Joined Labs. 0:12:57.280 --> 0:13:00.320 We talked about a couple of positive healthcare companies. This 0:13:00.480 --> 0:13:04.560 is one of the contract research companies that helps a 0:13:04.640 --> 0:13:10.600 pharmaceutical do their drug development. And China is now looking 0:13:10.640 --> 0:13:15.959 to go broad and global with approvals on new pharmaceutical products. 0:13:16.480 --> 0:13:19.720 Join who focuses in on China is losing some of 0:13:19.760 --> 0:13:22.199 their business. So there's lotswo ways we can think about this. 0:13:23.320 --> 0:13:26.480 Stay with us. More from Bloomberg Intelligence coming up after this. 0:13:30.320 --> 0:13:34.040 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:13:34.120 --> 0:13:37.520 weekdays at ten am Eastern on Applecarplay and Android Auto 0:13:37.600 --> 0:13:40.679 with the Bloomberg Business App. Listen on demand wherever you 0:13:40.720 --> 0:13:43.680 get your podcasts, or watch us live on YouTube. 0:13:44.559 --> 0:13:47.240 Some news in the food business today, Kraft Heines is 0:13:47.240 --> 0:13:51.160 replacing its chief executive officer get somebody new here starting 0:13:51.679 --> 0:13:54.920 January first. And this move follows a difficult period for 0:13:54.960 --> 0:13:57.200 the food company here and I know they made some 0:13:57.200 --> 0:13:59.600 announcements about splitting up the company. So a lot going 0:13:59.640 --> 0:14:03.280 on Kraft Heins. Let's break it down with Christina Peterson, 0:14:03.320 --> 0:14:05.719 food industry reporter for Bloomberg News. She joins US lifeg 0:14:05.800 --> 0:14:08.320 on our Bloomberg Interactive Broker Studio. Talk to those first 0:14:08.320 --> 0:14:10.400 about this, the change at the CEO level. What's going 0:14:10.440 --> 0:14:10.800 on there? 0:14:11.240 --> 0:14:14.600 Yeah, we had expected in September that the current CEO 0:14:14.880 --> 0:14:18.240 would lead one of the two new companies, specifically the 0:14:18.280 --> 0:14:21.960 one that is the grocery staples. They actually don't have 0:14:22.040 --> 0:14:25.440 official names yet, but that was a collection of the 0:14:25.560 --> 0:14:29.800 least profitable or less profitable food items there, including things 0:14:29.840 --> 0:14:34.520 like lunch abules and Oscar Meyer Deli meats. The surprise 0:14:34.600 --> 0:14:36.480 came this morning that he is in fact not going 0:14:36.480 --> 0:14:38.840 to lead that company, and instead they are bringing in 0:14:39.000 --> 0:14:45.200 Steve kay Helene from Kelenova to lead the second company 0:14:45.600 --> 0:14:48.720 after the split has gone through. That is being called 0:14:48.720 --> 0:14:53.200 the Global Taste Elevation Company, and that's going to have Heinz, Ketchup, Kraft, 0:14:53.240 --> 0:14:56.200 mac and cheese, some of those beloved iconic products. 0:14:56.440 --> 0:14:58.560 So that's the fast going part of the company, and 0:14:58.600 --> 0:15:00.840 the other one is kind of the you know, the 0:15:00.880 --> 0:15:04.440 equivalent of CNN, TNT and you know, the leave it 0:15:04.480 --> 0:15:07.920 behind assets that you know are you're managing a decline 0:15:07.960 --> 0:15:10.600 in What can you tell us about Steve cal Lane uh, 0:15:10.760 --> 0:15:14.280 the former Kelenova CEO. What is his approach his philosophy. 0:15:15.040 --> 0:15:16.960 Well, I just spoke with him and he said that 0:15:17.000 --> 0:15:19.480 he's going to be focused on bringing organic growth to 0:15:19.520 --> 0:15:22.520 the company. We talked a little bit about focusing on 0:15:22.560 --> 0:15:24.720 some of the health and wellness trends that consumers are 0:15:24.720 --> 0:15:29.080 looking for, increasing offerings with protein, with fiber, with shorter 0:15:29.280 --> 0:15:32.560 ingredient lists, you know, the so called cleaner labels. So 0:15:32.600 --> 0:15:34.880 they'll definitely be leaning into that. It sounds like a 0:15:34.880 --> 0:15:39.400 little bit more. He also led Kellogg through it split. 0:15:39.960 --> 0:15:43.320 The Kelag company split into w K Kellogg and then Kelenova. 0:15:43.680 --> 0:15:47.760 Both of those companies were then separately acquired. I asked 0:15:47.840 --> 0:15:49.880 him if he thought that could be a path here, 0:15:49.960 --> 0:15:52.000 and he said, it's hard to break the future. So 0:15:52.280 --> 0:15:53.080 not rolling it out. 0:15:53.440 --> 0:15:57.360 Just looking at this stock here, Craft times compound it 0:15:57.400 --> 0:16:00.680 and your return over the last five years negative to 0:16:00.720 --> 0:16:04.560 percent versus the consumer Packaged Good Index up about seventy 0:16:04.560 --> 0:16:06.240 eight percent. Of course, the S and P up about 0:16:06.240 --> 0:16:09.240 fifteen percent. So what's what's been a challenge for Craft, 0:16:09.320 --> 0:16:11.560 heigns over the last number of years. 0:16:12.240 --> 0:16:15.920 I mean, in general, the food companies are all struggling 0:16:15.960 --> 0:16:20.200 with this shift as consumers move towards healthier, less processed food. 0:16:21.360 --> 0:16:24.240 The company says that they just had too many brands 0:16:24.320 --> 0:16:27.080 and that splitting into two will help them focus on 0:16:27.360 --> 0:16:32.280 each component. I think that there is. Some analysts chatter 0:16:32.360 --> 0:16:34.680 that that's what companies say when they just need to 0:16:35.320 --> 0:16:38.400 know spin off some of their less profitable items. But 0:16:39.280 --> 0:16:41.640 they will tell you that they expect both companies will 0:16:42.000 --> 0:16:44.600 have better value when there's an ability to focus more 0:16:44.640 --> 0:16:47.120 on the condiments and box meals and then on some 0:16:47.160 --> 0:16:47.840 of the other foods. 0:16:48.160 --> 0:16:51.440 Chris Christina put this all into context for us when 0:16:51.440 --> 0:16:53.880 Paul talks about how you know this group has been 0:16:54.080 --> 0:16:55.640 kind of struggling overall. 0:16:56.080 --> 0:16:57.200 We also saw that. 0:16:57.120 --> 0:17:00.280 With PepsiCo with Coca Cola, I mean, they have had 0:17:00.320 --> 0:17:01.960 to rethink their strategy completely. 0:17:02.320 --> 0:17:04.760 Yet there's just been a lot of movement in the 0:17:04.760 --> 0:17:08.720 food industry right now. PepsiCo announced some pretty dramatic changes 0:17:08.800 --> 0:17:11.119 last week. They're going to reduce the number of products 0:17:11.160 --> 0:17:13.719 they sell by twenty percent and lower prices in some 0:17:13.760 --> 0:17:17.000 of their key brands as part of agreement with activist 0:17:17.080 --> 0:17:21.080 investor Elliott Investment Management. Coke has a new CEO. I 0:17:21.080 --> 0:17:24.760 think Coke is in pretty solid shape. They've been doing 0:17:25.280 --> 0:17:27.720 their shares have been doing really well compared to some 0:17:27.720 --> 0:17:30.920 of the other business companies. But yet, in general, the 0:17:31.560 --> 0:17:34.280 companies that I think are really tapping into this health 0:17:34.280 --> 0:17:38.080 and wellness interest in. Consumers are often the smaller startup brands, 0:17:38.400 --> 0:17:40.520 and the big companies are playing catch up not only 0:17:40.560 --> 0:17:42.640 with them, but some of the private label companies too 0:17:42.640 --> 0:17:45.280 that are really nimble and able to get some of 0:17:45.280 --> 0:17:46.720 these new products to market really fast. 0:17:46.760 --> 0:17:48.480 Well I know, I mean you mentioned a private label. 0:17:48.520 --> 0:17:50.359 I know when I go to the shop right bellmar 0:17:50.440 --> 0:17:52.600 New Jersey, we bluay a lot more private label than 0:17:52.640 --> 0:17:55.600 we ever used to. How's that's got to be a 0:17:55.600 --> 0:17:57.560 bummer for some of the like craft tients who spend 0:17:58.280 --> 0:18:01.919 my lifetime getting me to you know, brand up with 0:18:02.000 --> 0:18:03.840 cheese Whiz or something. I mean, now I'm going to 0:18:03.920 --> 0:18:05.400 store brand, That's going to be a problem. 0:18:05.560 --> 0:18:08.920 I mean, consumers are definitely under pressure. They still need 0:18:08.960 --> 0:18:10.800 to buy food, and one of the things they do 0:18:10.920 --> 0:18:14.000 is turn to more affordable food, and often private label 0:18:14.080 --> 0:18:16.960 is an enticing option. Interestingly, we are seeing that more 0:18:17.000 --> 0:18:18.800 on the food side than on the beverage side. 0:18:19.359 --> 0:18:20.399 Yeah that's true. 0:18:20.560 --> 0:18:22.359 Yeah, I guess people are willing to pay for beverage. 0:18:22.359 --> 0:18:24.120 But I mean, I think about especially on the food side, 0:18:24.119 --> 0:18:28.160 it's that move towards protein. Everyone is obsessed with ingesting 0:18:28.200 --> 0:18:30.440 protein and making sure that whatever they are eating and 0:18:30.480 --> 0:18:32.600 when if they are on Ozenbic or something else that 0:18:32.960 --> 0:18:36.120 it's going to add to their you know, their healthfulness 0:18:36.240 --> 0:18:38.479 rather than you know, kind of take away from it. 0:18:39.520 --> 0:18:42.520 What are these companies doing in terms of competing better 0:18:42.680 --> 0:18:45.000 against those startup brands? Are they looking to acquire them? 0:18:45.040 --> 0:18:45.560 For instance? 0:18:45.960 --> 0:18:48.639 Yeah, for sure in some cases that we saw PepsiCo 0:18:48.720 --> 0:18:52.800 acquire Poppy, the prebiotic soda brand this year and Coete 0:18:52.920 --> 0:18:56.480 grain free chips. So they are in certain instances acquiring 0:18:57.000 --> 0:18:59.239 some of these companies, and I expect we'll see more 0:18:59.240 --> 0:18:59.960 of that in twenty twenties. 0:19:00.280 --> 0:19:03.719 Also, stay with us more from Bloomberg Intelligence coming up 0:19:03.960 --> 0:19:04.439 after this. 0:19:08.320 --> 0:19:12.040 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:19:12.119 --> 0:19:15.159 weekdays at ten am Eastern on Apple, Coarclay, and Android 0:19:15.200 --> 0:19:18.520 Auto with the Bloomberg Business App. Listen on demand wherever 0:19:18.560 --> 0:19:21.680 you get your podcasts, or watch us live on YouTube. 0:19:22.640 --> 0:19:24.919 Big Take Story, You know we love these Big Takes stories. 0:19:24.920 --> 0:19:28.120 These are great topics on who thinks of them? Great topics. 0:19:28.640 --> 0:19:32.240 They're really well reported, deeply sourced, all that kind of 0:19:32.240 --> 0:19:34.240 good stuff. A lot of times they have fun graphics 0:19:34.240 --> 0:19:37.200 for me to look at. So this one is really cool. 0:19:37.480 --> 0:19:42.440 Saudi sisters wheeled fifty billion dollar fortune as global power brokers. 0:19:42.480 --> 0:19:44.440 I had no idea about these people, but our next 0:19:44.440 --> 0:19:45.040 guest does. 0:19:45.119 --> 0:19:47.480 Devin Pendleton. She's a wealth reporter for Bloomberg News. She 0:19:47.560 --> 0:19:51.400 joins us live here in the Interactive Brokers studios. Who 0:19:51.760 --> 0:19:56.119 is the Oleyan Group? Olayan Group, O Lion O Lion. 0:19:56.440 --> 0:19:59.520 Who are the two sisters behind the Saudi group? 0:20:00.119 --> 0:20:03.200 So it is Lubna and her sister, Hizam a Lion. 0:20:03.400 --> 0:20:06.560 They're both in their early seventies and they have been 0:20:06.560 --> 0:20:10.120 at the helm of this family enterprise for decades, for 0:20:10.160 --> 0:20:11.160 more than forty years. 0:20:11.760 --> 0:20:12.080 Wow. 0:20:12.760 --> 0:20:15.400 And they have fairly low profiles too. That's the thing 0:20:15.440 --> 0:20:18.520 that is striking. They have these low profiles, but they 0:20:18.640 --> 0:20:21.720 are known as steally negotiators. 0:20:21.760 --> 0:20:22.800 Tell us what they've done. 0:20:23.040 --> 0:20:26.359 Yeah, they've done an incredible job building this family business, 0:20:26.359 --> 0:20:28.520 which was started by their father, who was a really 0:20:29.160 --> 0:20:32.359 unbelievable character. He basically worked his way up from nothing. 0:20:32.440 --> 0:20:34.320 You know, he's not a royal, was not connected to 0:20:34.320 --> 0:20:36.439 the royals at a young age, but he built an 0:20:36.480 --> 0:20:41.880 oil servicing company which he grew striking deals with all 0:20:41.920 --> 0:20:44.840 sorts of consumer brand companies in the US, bringing them 0:20:44.880 --> 0:20:49.720 to Saudi Arabia, everything from Coca Cola to cheese its 0:20:49.800 --> 0:20:54.040 to oreos. And he came over to the US in 0:20:54.080 --> 0:20:57.560 the early nineteen sixties, was very inspired by what he 0:20:57.600 --> 0:21:00.520 saw and bought some bank stocks, and basically his daughters 0:21:00.640 --> 0:21:03.080 took over that business which was sprawling. I mean it 0:21:03.119 --> 0:21:07.360 was in all sorts of sectors real estate, oil filled services, 0:21:08.160 --> 0:21:12.240 consumer goods, and hung on to those equity stakes, those 0:21:12.280 --> 0:21:15.960 banking steaks. So now they have this incredible portfolio of 0:21:16.000 --> 0:21:18.360 investments in the US on Wall Street as well as 0:21:18.400 --> 0:21:23.200 this you know, booming multi sector business in Saudi Arabia. 0:21:24.240 --> 0:21:28.959 So but people in power know these two sisters. They 0:21:28.960 --> 0:21:31.719 were at the White House recently t tell us about that. 0:21:31.920 --> 0:21:34.400 How do they subtly wield their influence? 0:21:35.000 --> 0:21:38.120 They are not noisy people. I think it's one thing 0:21:38.200 --> 0:21:40.679 to do business and thrive in Saudi Arabia as you 0:21:40.720 --> 0:21:44.920 have to really sort of be be quiet, be force full, 0:21:45.200 --> 0:21:48.199 sort of no be a little bit deferential to you 0:21:48.240 --> 0:21:50.760 know who's really in charge, which would be the government 0:21:50.840 --> 0:21:54.639 and the king and the Crown Prince. But they have 0:21:54.800 --> 0:21:57.240 had long term ties with the US. I mean you 0:21:57.240 --> 0:21:59.480 really saw that at the White House dinner you mentioned Paul. 0:21:59.600 --> 0:22:01.760 She was sitting right next to Elon Musk, but you know, 0:22:01.920 --> 0:22:03.920 arguably one of the most important people in the room 0:22:04.000 --> 0:22:07.160 because she has these connections on Wall Street through their 0:22:07.200 --> 0:22:11.360 long term equity investments. It's really important right now, especially 0:22:11.400 --> 0:22:13.959 because the Kingdom is trying to bring in a lot 0:22:14.000 --> 0:22:17.720 of inbound investment to transform their economy past oil. It's 0:22:17.760 --> 0:22:19.879 a big deal for them to be bringing in money. 0:22:19.880 --> 0:22:22.639 And these Alliance sisters have had these connections for a 0:22:22.720 --> 0:22:24.720 long long time, so they're more important than ever. 0:22:25.320 --> 0:22:27.119 So they have the connections with the right people in 0:22:27.119 --> 0:22:29.800 Saudi Arabia. How does their I mean when I think 0:22:29.800 --> 0:22:33.520 about prominent investors in the kingdom, I think about Prince 0:22:33.520 --> 0:22:36.240 Abolid been to Lull and how he's been very vocal 0:22:36.280 --> 0:22:40.159 about his positions. He's you know, often seen on media networks. 0:22:40.359 --> 0:22:43.159 You don't hear about these Alliance Sisters at all, and 0:22:43.480 --> 0:22:47.119 I wonder how much of that is. You know, it 0:22:47.520 --> 0:22:49.479 is part of their success story totally. 0:22:49.520 --> 0:22:53.119 It's so so important. I think they are extremely discreete 0:22:54.280 --> 0:22:56.880 they are, like I said, like they really know their 0:22:56.960 --> 0:22:59.359