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Speaker 2: As we saw with some of the last earnings, including
Speaker 2: Apple and Amazon, tariffs are definitely making their mark on
Speaker 2: many industries. We've talked about that a lot over the
Speaker 2: last couple of hours, none more though perhaps so than
Speaker 2: the auto industry, as we've reported on a lot as
Speaker 2: well here at Bloomberg, and as Bloomberg's Hannah Elliott writes
Speaker 2: in this week's Pursuits newsletter, quote, confusion and chaos have
Speaker 2: rained since President Trump signed a proclamation on March twenty
Speaker 2: six to implement a twenty five percent terrify autos and
Speaker 2: parts imported into the United States. So what's a global
Speaker 2: auto maker to do? Kind of looked into it. She
Speaker 2: is Bloomberg Pursuit's autocommist co host of the Hot Pursuit podcast.
Speaker 2: It can be found on the Bloomberg at Bloomberg dot
Speaker 2: com and wherever you get your podcast. She joins us
Speaker 2: from LA kinda great to have you here with Emily
Speaker 2: and me Big Picture if we can just start there
Speaker 2: and then we'll dig into the newsletter. But it all
Speaker 2: kind of relates when you have conversations with global automakers.
Speaker 2: How are they continuing to think about the tariffs, the
Speaker 2: global tariffs, how they're managing and how they continue to
Speaker 2: think about their global supply chains and sailing in the US.
Speaker 3: Yeah, it's been really interesting, and like we've talked about before,
Speaker 3: it seems like each automaker is doing something slightly different.
Speaker 3: I'll give you an example. Mercedes just announced this week
Speaker 3: that they are going to actually be moving production of
Speaker 3: one of their core segment vehicles. We don't know which
Speaker 3: one yet, but they will be moving production of.
Speaker 4: That vehicle into the US. So this is how they
Speaker 4: are coping.
Speaker 3: They're just saying, basically, all right, if we're gonna be
Speaker 3: taxed on vehicles we import, we're gonna start making more
Speaker 3: vehicles in the US.
Speaker 4: So that is one example.
Speaker 3: Ferrari, as we've talked about, has just said we're gonna
Speaker 3: have a ten percent across the board increase in prices.
Speaker 3: Let's be honest, probably not a lot of Ferrari owners
Speaker 3: are going.
Speaker 4: To bat any at that.
Speaker 3: In fact, maybe it makes the cars even more desirable.
Speaker 3: Asin Martin for instance, has said they're going to stop
Speaker 3: importing new cars for the moment, put a pause on
Speaker 3: it and see how this all shakes out. So again,
Speaker 3: it's like case by case by case. The main thing
Speaker 3: that I hear that everybody is saying is just it's very,
Speaker 3: very difficult to plan when you don't know what the
Speaker 3: target is. They would like some consistency and a target
Speaker 3: that doesn't move, and the target.
Speaker 4: Is still moving, which makes it difficult to.
Speaker 5: Plan well, but it sounds like Mercedes is at least
Speaker 5: planning a little bit. Do you do you know any
Speaker 5: more details about just kind of like how they're gonna
Speaker 5: do this, because are they gonna build a new factory
Speaker 5: and they still have I'm assuming many many different car
Speaker 5: parts that are all going to go into this vehicle.
Speaker 5: It it just sounds like a lot of not to
Speaker 5: have a pun here, but a lot of moving parts.
Speaker 4: That's a great question, Emily.
Speaker 3: The good thing that Mercedes has going for is it
Speaker 3: already is established in the US as a major major builder.
Speaker 3: Mercedes has been here for decades. They've got a factory
Speaker 3: in the South. They have over eleven thousand employees that
Speaker 3: are US workers, plus four hundred suppliers or so, all
Speaker 3: in the US. So this is not as necessarily a
Speaker 3: heavy lift as if they had nothing and then they're
Speaker 3: just going to decide we're going to build a new
Speaker 3: factory and do all these things.
Speaker 4: They're very firmly established.
Speaker 3: In fact, what Ola Collinius told me about a month
Speaker 3: ago when I was with him in Rome is that
Speaker 3: they consider themselves an American company. And I know that
Speaker 3: sounds a little bit weird, but considering how long they've
Speaker 3: been in the US and how many Americans they employ,
Speaker 3: Ola was really making the case that, hey, we are
Speaker 3: an American company. Let's not forget even a company like Tesla,
Speaker 3: which does have factories in California and Texas, also has
Speaker 3: a big factory in China. So you kind of get
Speaker 3: into this question of what is really American.
Speaker 4: It's a bit of a gray area when you start.
Speaker 3: Really counting components and imports and production and all of that.
Speaker 2: Now, I was kind of impressed by those numbers. I
Speaker 2: didn't realize how first of all, how long Hannah, and
Speaker 2: how much that they were doing. I knew they did some,
Speaker 2: but I didn't realize so much the presence. So they
Speaker 2: can really say made in America completely.
Speaker 4: BMW's in the same position.
Speaker 3: They've got literally, I believe eleven thousand workers in the US.
Speaker 3: Their plant in Spartanburg has been there for years. They
Speaker 3: really are part of the fabric, especially in the South,
Speaker 3: providing a lot of American jobs. So their argument is, hey,
Speaker 3: why are we being penalized as if we are not
Speaker 3: putting things back into the country.
Speaker 5: Okay, tell us about what's happening in Miami this weekend.
Speaker 5: I don't think you're going, but you know the plans.
Speaker 4: I know the plan I am this year.
Speaker 3: I am not going, but of course, this is year
Speaker 3: four of Formula one in Miami.
Speaker 4: It's funny you should mention it.
Speaker 3: Just this week we spoke with Allie Berriman, who's the
Speaker 3: driver for Hawes. He's nineteen years old. This is his
Speaker 3: first year in Formula one. Clause, of course, is an
Speaker 3: American team. He's racing in Miami this weekend.
Speaker 4: It's going to.
Speaker 3: Be a really big deal because I just saw that
Speaker 3: they have extended the deal to keep the race in
Speaker 3: Miami for until twenty forty one. So we're gonna be
Speaker 3: in Miami for a while. And the parties.
Speaker 4: Look really extreme.
Speaker 3: I just saw they've got Tso DJing too, so it's
Speaker 3: gonna be a big weekend.
Speaker 2: It's quite an event, right, no doubt about it. Hey,
Speaker 2: listen before you go. In the newsletter, you also talk
Speaker 2: about what you've been loving lately. It's actually in our backyard.
Speaker 2: It's in Brooklyn.
Speaker 4: Oh, Wheels of New York.
Speaker 3: This has been This is my favorite car show that
Speaker 3: I've been to in a year at least.
Speaker 4: It was so cool.
Speaker 3: It's Wheels of NYC is the Instagram handle. It was
Speaker 3: a car show of vintage cars, everything from Ferraris to
Speaker 3: like Grand Nationals like Kendrick Lamar loves the Porsche's to
Speaker 3: Rolls Royces, and the vibes were good and it was
Speaker 3: in the Brooklyn Navy Yard.
Speaker 4: I just had the best time. I loved.
Speaker 3: I highly recommend anyone going. They're gonna have another one
Speaker 3: pretty soon.
Speaker 2: So it's not a show that I've heard about it.
Speaker 2: I mean it's been around for a while. No, it's new.
Speaker 3: No, it's new, it's niche. This is not a big
Speaker 3: established This is like a very grassroots organic it's not corporate.
Speaker 3: It's just people who love cars. And I just love
Speaker 3: that it was all ages, all races, all different types
Speaker 3: of people and styles, and everyone was just happy. It
Speaker 3: felt like a little slice of heaven. It was really great.
Speaker 5: Okay, very quickly you got an email from Porsche. It
Speaker 5: was a mysterious note they're building this. Well, this picture
Speaker 5: that you have in the newsletter, I don't know if
Speaker 5: it's it's a makeup, if it's AI, or it's a
Speaker 5: real car.
Speaker 4: Yeah, it looks crazy.
Speaker 3: Porscha likes to tease us with these special projects that
Speaker 3: they have.
Speaker 4: The short of it is this.
Speaker 3: The Portcha nine seventeen is a very famous race car.
Speaker 3: They actually made one that was legal for the street,
Speaker 3: and Porscha has has sort of teased us, teased us
Speaker 3: with a picture of the car and then sort of saying,
Speaker 3: something's happening in June. Now we all know, as you
Speaker 3: know that Lemon, this big endurance race happens in June,
Speaker 3: so it's kind of like, are they going to be
Speaker 3: bringing a car back to race? You know, are they
Speaker 3: making a new one? We don't really know, but I
Speaker 3: think it could be something road legal that we might
Speaker 3: see in June.
Speaker 4: So stay tuned.
Speaker 2: Such cool stuff and it's all in the newsletter that
Speaker 2: you can check it out. Hannah, thank you so much.
Speaker 2: Have a good weekend. Bloomberg Pursued Auto columnist, cohost of
Speaker 2: the Hot Pursuit podcast.
Speaker 4: Download it.
Speaker 2: This is Bloomberg.
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Speaker 2: Hey, folks, we're going to stay with supply chains. We've
Speaker 2: got someone who's been following, studying, talking about supply chains
Speaker 2: for more than two decades. We head to Florida, Sarah
Speaker 2: Barnes Humphrey. She's an entrepreneur and an influencer, as we mentioned,
Speaker 2: studying supply chains for a long time. She's founded the
Speaker 2: Let's Talk Supply Chain brand and podcast. She's also co
Speaker 2: founder and CEO of a bid and freight platform called
Speaker 2: ships Inc. And she joins us. Hey, Sarah, good to
Speaker 2: have you here. Before we get into the nitty gritty,
Speaker 2: tell us about your study of supply chains for the
Speaker 2: past two decades, because it's obviously a super timely topic today.
Speaker 2: But I don't know that everybody cared so much a
Speaker 2: few decades ago, maybe during the pandemic, but necessarily twenty
Speaker 2: years ago.
Speaker 6: Yeah, no, they definitely didn't. Thanks for having me on
Speaker 6: the show.
Speaker 7: So I've basically been talking about supply chain at the
Speaker 7: dinner table since I was nine.
Speaker 6: My parents owned a logistics company.
Speaker 7: And I worked in the family business operations and sales,
Speaker 7: and then ended up funding our media business, which is
Speaker 7: let's talk supply chain, so podcasts and live shows and
Speaker 7: all sorts of things.
Speaker 5: Okay, so let's start high level. How are global supply
Speaker 5: chains looking in the here and now? There's a lot
Speaker 5: of fear about what.
Speaker 4: Tariffs are going to do.
Speaker 5: But in the here and now, what are you seeing?
Speaker 7: Yeah, so I was at a conference last week and
Speaker 7: there was a lot of optimism. It was a breakball conference,
Speaker 7: but I do know there's a lot of uncertainty. There's
Speaker 7: a lot of supply chains being redesigned. I think the
Speaker 7: mindset is going from what are the challenges to what
Speaker 7: are the opportunities? How can we design our supply chains?
Speaker 7: What does that need to look like. Examples I've seen
Speaker 7: recently so Apple a couple of years ago, they moved
Speaker 7: their production or they're manufacturing some of it into India,
Speaker 7: and they did that because they wanted to use India
Speaker 7: as a new consumer market for them. And it's really
Speaker 7: paying off today because they're going to be able to
Speaker 7: produce iPhones in India and skirt some of the tariffs
Speaker 7: in China to be able to bring iPhones to the
Speaker 7: US as well. And there's a couple of other examples
Speaker 7: where you know, the electric vehicle maker Pollstar, they've paused
Speaker 7: their annual forecast and they're shifting manufacturing to the US
Speaker 7: and Europe, whereas Aston Martin is limiting exports to the US.
Speaker 6: So I think everybody's just sort.
Speaker 7: Of taking a look at how do we want to
Speaker 7: spend our risk dollars, what does that look like, and
Speaker 7: what do we want to do right now?
Speaker 2: Well, you know, I think about all the globalization everybody's
Speaker 2: been pushing to over the last few decades, like that
Speaker 2: was the way to go, go to the low cost producer,
Speaker 2: you know, go to the countries that could do it
Speaker 2: the best. It just kind of made a lot of sense.
Speaker 2: Do you think that's over?
Speaker 6: No, I don't think it's over.
Speaker 7: I think people are waiting and seeing I think a
Speaker 7: lot of retailers were able to get product out before
Speaker 7: the tariffs hit. Some retailers are going to get hit
Speaker 7: with the new tariffs. But I think there's a lot
Speaker 7: of organizations that are pausing orders right now, which is
Speaker 7: a bit of a problem right because if we think
Speaker 7: about it, we're going into peak season, and peak season
Speaker 7: is where retailers and organizations are bringing in products for
Speaker 7: holiday season. So depending on how long this is going
Speaker 7: to go will determine whether they're going to turn on
Speaker 7: manufacturing again and whether they're going to order those products
Speaker 7: for holiday season. So we might not actually see some
Speaker 7: of the effects for another five to six months when
Speaker 7: people are starting to shop for holiday.
Speaker 4: How is shipping looking right now?
Speaker 5: Because there were a few analysts earlier in the week
Speaker 5: and even the week before who had started to fly
Speaker 5: shipping data that cargo shipments are slowing, and then that's
Speaker 5: going to mean that we're soon going to see shelves
Speaker 5: empty because trade is just going to stop. Are those
Speaker 5: fears overblown?
Speaker 8: No?
Speaker 6: I don't think so.
Speaker 7: The Port of Los Angeles came out with a stat
Speaker 7: that said that they're going to see a decline of
Speaker 7: thirty five percent, and they're also looking at every fourth
Speaker 7: vessel not stopping at the port, and so what's going
Speaker 7: to happen is not as much cargo is coming in,
Speaker 7: and so the shipping lines are actually going to start
Speaker 7: charging more.
Speaker 6: For container shipping as well.
Speaker 7: So not only are we going to have higher costs
Speaker 7: for goods, but we're also going to have higher shipping
Speaker 7: costs on container shipping because those vessels, those steamship lines,
Speaker 7: they're not gonna want to lose money either.
Speaker 2: You know. Do you think I don't know, I think
Speaker 2: about the negotiations between US and China or whether or
Speaker 2: not there really is any negotiations, right, I mean, do
Speaker 2: you think when all a said and done, that we're
Speaker 2: going to find more reasonable trade deals created and it
Speaker 2: will go back to kind of somewhat business as usual
Speaker 2: or no, things are going to change dramatically going forward.
Speaker 6: So I'm not sure.
Speaker 7: I think at this point nobody really has a crystal
Speaker 7: ball for that. I mean, if we think about what
Speaker 7: has happened, do companies.
Speaker 2: Or do companies that you talk to or that you know,
Speaker 2: do they think it's going to go back to more
Speaker 2: of kind of business as usual, or they're not quite
Speaker 2: so sure.
Speaker 7: They're not quite so sure right now either. I think
Speaker 7: everybody is sort of in a wait and see type
Speaker 7: mode at the moment with the changes that came in
Speaker 7: for Sheen and Timu today, you know, we're seeing eighty
Speaker 7: dollars shipments that now has close to sixty nine dollars
Speaker 7: in shipping and imports import charges. So these are the
Speaker 7: types of things that until it happens, we're not entirely
Speaker 7: sure how long it's going to stay and what that
Speaker 7: looks like, and so how do you plan for that?
Speaker 7: So a lot of forecasting and planning is really hard
Speaker 7: at the moment, and so supply chain teams have a
Speaker 7: lot on their plates right now.
Speaker 5: I'm also wondering, you know, you talk about manufacturing, do
Speaker 5: you think this idea that you know, companies are going
Speaker 5: to be able to bring the manufacturing to the US
Speaker 5: build factories. Here is the supply chain in the US
Speaker 5: equipped to handle, you know, what could be an influx
Speaker 5: of a ton more domestic manufacturing very quickly.
Speaker 7: Yeah, I think that's a great question, and I think
Speaker 7: there could be room for some I'm not sure we
Speaker 7: can do it all in the US. I think there's
Speaker 7: a number of different factors. There's some labor factors. I
Speaker 7: saw somebody the other day talking about how machinery into
Speaker 7: the US because of the tariffs might be more expensive
Speaker 7: as well.
Speaker 6: So I'm not sure we can.
Speaker 7: Necessarily equip those facilities with the machinery that we need
Speaker 7: to manufacture either. And also, it takes a long time
Speaker 7: to be able to set up manufacturing in a new location.
Speaker 7: I mean, if you take that example of Apple that
Speaker 7: I mentioned earlier, it's taken them a couple of years
Speaker 7: to shift some of that manufacturing into India, and it's
Speaker 7: paying off today because of the tariffs, But at the
Speaker 7: end of the day, it's a really long term play.
Speaker 7: And a lot of people were moving to Mexico and
Speaker 7: now they're unsure how that actually fits into their manufacturing.
Speaker 6: Like Cadence as well.
Speaker 2: That's what's fascinating Sarah and I think this is something
Speaker 2: that we talked about a lot after COVID. We would
Speaker 2: have just even architects or developers coming in and saying,
Speaker 2: you know where there's a lot of activity Mexico because
Speaker 2: people are moving operations to Mexico and coming off of COVID,
Speaker 2: we realized how vulnerable our supply chains really really were
Speaker 2: and that we wanted stuff closer to home. And so
Speaker 2: like that shift already started happening. I mean, what is
Speaker 2: going on behind the scenes. Even with Apple you mentioned India.
Speaker 2: We have talked with our mark German, who covers that
Speaker 2: company flawlessly and in depth, and you know, we've been
Speaker 2: having conversations how Apple was spreading out its supply chain
Speaker 2: but still so relying on China still is. But then bam,
Speaker 2: it was like, well, wait a minute, we can next
Speaker 2: year have all the iPhones that are needed in the
Speaker 2: United States come from India. So I feel like there's
Speaker 2: stuff that's been going on very quietly. What are you
Speaker 2: hearing about what companies are doing quietly as they continue
Speaker 2: to maybe spread their supply chain around.
Speaker 6: Yeah.
Speaker 7: Again, I think they're looking at the design of their
Speaker 7: supply chains. Where do I want to spend my risk dollars,
Speaker 7: Where can I actually source the components that I need
Speaker 7: to be able to create the products that I need.
Speaker 7: Just another mention on Apple, they looked at manufacturing the
Speaker 7: iPhone in the US and it would cost the US
Speaker 7: consumer thirty five hundred dollars, So there's a lot.
Speaker 2: Of on the phone. I mean fat in my household,
Speaker 2: and that's what almost ten thousand dollars. That's a lot, all.
Speaker 7: Right, go ahead, Yeah, No, I just mean like there's
Speaker 7: it's different for different organizations, and supply chains look different
Speaker 7: across the board. And so for some manufacturing in the
Speaker 7: US makes sense, especially for medications and chips, for technology
Speaker 7: and things like that what you were talking about coming
Speaker 7: out of the pandemic. Those are the things we want
Speaker 7: to manufacture close to home. But for some organizations it
Speaker 7: really doesn't make any sense. Taking that Apple example, at
Speaker 7: thirty five hundred dollars for an iPhone, nobody's going to
Speaker 7: spend that kind of money. So I think it's a
Speaker 7: bit of a push pull. Everybody's having this discussion. They're
Speaker 7: looking at the design, Where can we source, where can
Speaker 7: we purchase, Where can we manufacture? What makes the most
Speaker 7: sense for us and for our customers.
Speaker 5: Sarah, what are you seeing from small businesses? What are
Speaker 5: the particular challenges you know someone who's in the US
Speaker 5: is going to face if they're a small business.
Speaker 7: Yeah, I think if they're a product based business, they're
Speaker 7: sort of rethinking what it is that they want their
Speaker 7: business to look like. I was recently reading an article
Speaker 7: about there was a bunch of small businesses that were
Speaker 7: sort of looking at the tariffs and saying, we want
Speaker 7: to be exempt from it.
Speaker 6: And one of those.
Speaker 7: Small business actually said they're going to pivot from products
Speaker 7: into services because that makes the most sense for.
Speaker 6: Them right now.
Speaker 7: And I think back to the pandemic and some small
Speaker 7: businesses pivoted what product they were actually selling and someone
Speaker 7: into hand sanitizer. So I feel like this is kind
Speaker 7: of a similar thing at the moment that small businesses
Speaker 7: were faced with during the pandemic.
Speaker 2: All right, So when you kind of watched, like probably
Speaker 2: all of us, the news coming out of certainly the
Speaker 2: White House, and then just kind of what you are
Speaker 2: hearing from folks in terms of managing their own supply
Speaker 2: chains and what you're seeing, I don't know, how are
Speaker 2: you thinking about the next six months or so.
Speaker 7: I think that it's going to be very unpredictable. I
Speaker 7: think that it's extremely uncertain right now, and if retailers
Speaker 7: and organizations are pausing shipments at the moment, I don't
Speaker 7: think we're going to see the ripple effects for another
Speaker 7: five to six months, and I think we may see
Speaker 7: some challenges over the holiday season. I think organizations are
Speaker 7: sort of in a wait and see right And I
Speaker 7: just don't think that anybody has the answers right now
Speaker 7: until we figure out where those tariffs are going to land.
Speaker 2: Well and right, as you said, and we talked kind
Speaker 2: of kicked off in the two pm hour, talking with
Speaker 2: our Mike McKee, who follows the economy, and talking about
Speaker 2: the jobs report, and it looked like things at this
Speaker 2: point are doing pretty well. But the concern is when
Speaker 2: this data starts to hit, whether it's consumers. We've seen
Speaker 2: it in sentiment, but when it comes into the actuality
Speaker 2: of it, I am curious. Are you thinking a recession
Speaker 2: is likely too? From the conversations you're having in the
Speaker 2: pe you're talking to.
Speaker 6: I'm not sure.
Speaker 7: Everybody's kind of all over the map. Some have said possibly,
Speaker 7: some are saying we might not. I think it's too
Speaker 7: early to tell, to be perfectly honest with you.
Speaker 2: Okay, yep, that's why we're on pins and needles. Not today.
Speaker 2: Everything seems awesome today. Good to leave it there. Hey, Sarah,
Speaker 2: thank you so much. Good to meet you and talk
Speaker 2: with you. Sarah Barnes Humphrey, founder of Let's Talk Supply Chain,
Speaker 2: joining us there from Florida.
Speaker 1: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 1: Just Say Alexa Play Bloomberg eleven thirty So.
Speaker 2: We talked about last week Amazon and Apple, both noting
Speaker 2: kind of how their businesses were affected by tariff and
Speaker 2: trade policies. Amazon going so far to note that processionary
Speaker 2: fears and glob blackconomic and geopolitical conditions are in their forecast.
Speaker 2: Another company that's got a great read on the consumer's Wayfair.
Speaker 2: They reported earnings this week. They came in better than
Speaker 2: expected as consumers brought forward spending while suppliers are holding
Speaker 2: back from price increases. We caught up with Wayfair c
Speaker 2: FO Kate Gulliver. We talked to earning's business, the outlook
Speaker 2: and how the US consumer is doing.
Speaker 9: To your point, we had significant pull forward in the
Speaker 9: category in the COVID time right, so in the sort
Speaker 9: of twenty twenty twenty twenty one time since then, the
Speaker 9: category has been down consistently since then. The category so
Speaker 9: that was actually below you know, starting to be below
Speaker 9: twenty nineteen levels.
Speaker 4: Right, So we're.
Speaker 9: Seeing a category that has historically been over the last
Speaker 9: few years quite depressed, which may be different than you know,
Speaker 9: some of the other consumer discretionary categories that the folks
Speaker 9: are referring to. That said, yes, it's absolutely an uncertain environment.
Speaker 2: All right, everybody take a shot, because every time we
Speaker 2: hear uncertain, I mean, that's it.
Speaker 6: Daked.
Speaker 10: That's the word of the year. I think I can
Speaker 10: safely say.
Speaker 4: Totally, totally. All right, that's wayfair.
Speaker 2: CFO Kake Gulliver, Hey, let's get more into what CFOs
Speaker 2: are doing in this environment. The conversation she's been having
Speaker 2: with members of the CFO suite. Nina trentt menis senior
Speaker 2: editor a Bloomberg News author of CFO Briefing newsletter. You
Speaker 2: can find it at Bloomberg dot com slash CFO Dash Briefing.
Speaker 2: A new one comes out on Sunday.
Speaker 4: How are you?
Speaker 11: Thank you? I'm good, that's good.
Speaker 4: Thanks for having me.
Speaker 2: Well, I'm curious the CFOs that you talked to how
Speaker 2: are they feeling, Are they good? Are they saying uncertainty
Speaker 2: or uncertain times a lot in conversations. What are you hearing?
Speaker 11: Yeah, and certainly is probably the number one word, which
Speaker 11: sometimes is made harder by the fact that we aren't
Speaker 11: supposed to be writing it so often, given that, well
Speaker 11: what does this actually mean? And also we've heard it
Speaker 11: a lot during the pandemic? She mentioned it, and so
Speaker 11: the question is, of course, well, how do you navigate that?
Speaker 11: Of course we need to give CFOs also a bit
Speaker 11: of a pause, given that there's so many variables within
Speaker 11: their equations that they just don't have any information about
Speaker 11: tariffs being one of them. Way by sort of Yes,
Speaker 11: it's fair to say that times are very uncertain for
Speaker 11: CFOs right now.
Speaker 10: You have these two variables, and of course they're related.
Speaker 10: The first is uncertainty again I say it about the
Speaker 10: kind of broader economy and the trade picture, and the
Speaker 10: second has to do with just the market volatility we've seen.
Speaker 10: How is that impacting the appetite for deal making among CFOs?
Speaker 10: I mean, going back to the campaign in the election,
Speaker 10: there was this promise of the deal market opening up
Speaker 10: and there was going to be a huge swell of them.
Speaker 10: Has it come to pass. Are deals getting done?
Speaker 11: Some deals are getting done, yes, but we haven't necessarily
Speaker 11: seen this huge rise or surgeon deals that people were
Speaker 11: expecting because the deregulation that people were hoping for so
Speaker 11: far hasn't really happened, and instead there has been a
Speaker 11: lot of stuff that is not necessarily very conducive to deals, terrors, volatility,
Speaker 11: market volatility, and so I think for certain deals, yes,
Speaker 11: they're still going through. For example, Counagar this week announced
Speaker 11: in a divestiture where they're selling one of their brands
Speaker 11: to a PE firm. So those deals get done, and
Speaker 11: I think they're assuming it's going to be done in
Speaker 11: the next few months, so not necessarily a big challenge
Speaker 11: for them. But I think then also we're seeing that
Speaker 11: some deals are sort of hitting the brakes. I know,
Speaker 11: deals involving China, involving other countries. So I think bilateral
Speaker 11: deals and even multinational deals are very tricky these days.
Speaker 2: Yeah, it's interesting. I feel like we've been all talking
Speaker 2: about especially the private equity guys, right the private world
Speaker 2: just waiting for the environment so they can kind of
Speaker 2: start selling stuff or things to go public. So that
Speaker 2: they can kind of either return money to investors and
Speaker 2: move on to new deals. Having said that, always love
Speaker 2: the different CEOs CFOs. Excuse me that you talk to
Speaker 2: different areas of our world. Tell us who you've been
Speaker 2: talking to. You mentioned Canagra, but who else have you
Speaker 2: been talking to and what they're saying?
Speaker 11: Yeah, So this week we spoke to a few CFOs.
Speaker 11: Canago was one of them. Then we spoke to the
Speaker 11: CFO full Seam, which is a Swiss materials concrete stuff
Speaker 11: co create concrete maker.
Speaker 4: Correct, it's like the core of right.
Speaker 11: And then also a few a few other CFOs, including
Speaker 11: SMP Global. Interestingly enough, those companies are amongst the companies
Speaker 11: that are saying, okay, well, actually yes, the environment is tricky,
Speaker 11: but still we want to pull ahead with with our deals.
Speaker 11: So Whole SAM is in the process of spinning off
Speaker 11: its US and North America business, something that had started
Speaker 11: a while ago, so it's not something that they triggered recently,
Speaker 11: but they're expecting that spin to to take effect in
Speaker 11: May or in June. And I asked them, well, are
Speaker 11: you going ahead with it? Isn't the market volatility a
Speaker 11: tricky thing given that you're planning a spin off. This
Speaker 11: involves to some degree markets have to be confusive. You
Speaker 11: don't want the use your your shares to sell off
Speaker 11: on the day that the spin takes effect, And they
Speaker 11: were saying, well, no, the strategic rationale still is very
Speaker 11: much true and wholes and therefore, yeah, we're we're pulling
Speaker 11: through with the deal and we're we're not necessarily pausing it.
Speaker 11: Interesting enough, they're also pointing out that the dynamics in
Speaker 11: their business in North America versus in Europe are very different,
Speaker 11: where they were saying, well, in North America we have
Speaker 11: a lot of construction spending, and in Europe we are
Speaker 11: focusing on decarbonization. For example, let's CO two heavy concrete,
Speaker 11: as you pointed out, So they were saying, basically, it
Speaker 11: makes a lot of sense for these businesses to be separate.
Speaker 11: And so they think to some degree that the tariff
Speaker 11: tensions that we're seeing right now and the divergence between
Speaker 11: the US and the rest of the world might actually
Speaker 11: be sort of like, to some degree a supporting factor
Speaker 11: for the spin off, which was interesting because my assumption
Speaker 11: was that they would be like, oh, yeah, well timing
Speaker 11: isn't great.
Speaker 2: I think it's funny right strategy sometimes or fundamentals still matter.
Speaker 10: Yeah, I'm curious in the minute we have left, how
Speaker 10: persuadable these CFOs are. So now you talk to folks
Speaker 10: at advisory firms as well, what's the message that they're
Speaker 10: conveying to CFO is just about whether or not to
Speaker 10: move forward with deals or to pause or to reconsider them.
Speaker 11: Of course, advisory folks, to some degree always when they
Speaker 11: talk to us, they want to talk to the books.
Speaker 11: Some degree, what they tell CFOs is.
Speaker 4: Different than.
Speaker 6: Just kidding.
Speaker 11: But they've certainly told me that they have a lot
Speaker 11: in the pipeline, and they see a lot in the pipeline.
Speaker 11: I think what they are also telling their clients that
Speaker 11: they work with is that, well, you need to really
Speaker 11: do scenario analysis here, you need to sort of really
Speaker 11: work through Okay, well, what are your assumptions, what do
Speaker 11: you think is going to happen, and how will the
Speaker 11: deal work in a different environment, just mentioning tariffs for example,
Speaker 11: And so I think they were saying that select deals
Speaker 11: still go through, that it's a case by case basis,
Speaker 11: industry by industry basis. But yeah, I think they were
Speaker 11: all hoping for more certainty as well. I think not
Speaker 11: just the CFOs, but also the deal advisors for that.
Speaker 2: That's what's kind of wild. I think in this environment
Speaker 2: are Diena, Marn't Adams too, just saying I don't think
Speaker 2: I've ever seen a company come out and give you
Speaker 2: two you know, earning scenarios could happen, this could happen
Speaker 2: this way here, possibly recessioned so then not so good
Speaker 2: things go back to normal. And I think it's just
Speaker 2: this scenario led environment. I think companies do it all
Speaker 2: the time, but this is like amped up in a
Speaker 2: big way.
Speaker 11: Yeah, And also we're seeing sort of if you look
Speaker 11: at the guidance that companies are putting out right now,
Speaker 11: of course we've seen a fair amount of companies pulling guidance.
Speaker 11: All we all also.
Speaker 2: See get like, okay, we can't give you an outlook,
Speaker 2: but when you give like a couple of scenarios as wild.
Speaker 11: Well, we've also been seeing, of course, companies widening their guidance,
Speaker 11: which then also gives them gives them more room to
Speaker 11: some degree. It's understandable then also if you look at
Speaker 11: it from the analyst perspective, like companies that withdraw their guidance,
Speaker 11: that's basically for any analyst. Very difficult to then work
Speaker 11: with in terms of factoring models. But figure out we're
Speaker 11: all coming to the same question of not knowing what's
Speaker 11: going to happen.
Speaker 2: Dare I say it uncertain? Take us away, everybody, Nina,
Speaker 2: thank you so much as always, Nina Trentman, Senior editor
Speaker 2: of Bloomberg News. Check out the CFO Briefing newsletter comes out
Speaker 2: on Sunday on the Bloomberg and at Bloomberg dot Com.
Speaker 2: How about you let me drive?
Speaker 7: Oh no, no, no no, this is not a toy's going
Speaker 7: to drive?
Speaker 2: Alright, please, I'll do the gravels. Let's wat I want
Speaker 2: to drive.
Speaker 6: It's good question. This is the Drive to the Clothes.
Speaker 1: Punster music, Well drivers on Bloomberg Radio.
Speaker 5: All right, time now for Drive to the Clothes with
Speaker 5: Alexis Brown Roberts, COO at Alexis Investment partners with us
Speaker 5: from Montgomery, Texas, and she's joining.
Speaker 4: Us right now.
Speaker 5: When the S and P five hundred is on track
Speaker 5: for its longest streak of gains since two thousand and.
Speaker 2: Four, feels like a big deal.
Speaker 5: It feels like a big deal. But let's see what
Speaker 5: Alexis thinks. Is this a sustainable bounce off of the
Speaker 5: lows or are these gains just going to reverse soon
Speaker 5: and then next week we're going to be talking about.
Speaker 2: Yeah, O, there's so much read exactly.
Speaker 8: Well, Hi, Carol and Emily. It's great to see you again, Carol,
Speaker 8: and it's nice to meet you know, thank you both
Speaker 8: for having me on. And that really a million dollar
Speaker 8: question right now, isn't It's what investors are all asking
Speaker 8: each other themselves. But we think it's sustainable. I mean,
Speaker 8: we came into this year expecting a very volatile but
Speaker 8: overall positive year, although admittedly a little bit of a
Speaker 8: different path. We thought we were going to be more
Speaker 8: positive in the front end and then have this volatility
Speaker 8: in the back end. Looks like we're flipping that around.
Speaker 8: But we do see this as being sustainable. I mean,
Speaker 8: earnings are still doing well and honestly, there's a lot
Speaker 8: of cash on the sidelines.
Speaker 2: And as I have to stop you because what's interesting
Speaker 2: is you say earning's going well. Amazon, Apple, massive companies,
Speaker 2: massive waitings in the s and P five hundred, the
Speaker 2: Nasdaq one hundred. We talked with our Eric Greener about
Speaker 2: this that it is unusual, especially Apple, you know, often
Speaker 2: so goes Apple, so goes the market, and that to
Speaker 2: see kind of broad based buying. But these two names
Speaker 2: down substantially because of the worries. The big worries that
Speaker 2: is that is really the overhang of the overall financial
Speaker 2: US market that's not odd to you.
Speaker 4: And also that.
Speaker 2: Retail investors are really buying, but it's not necessarily the
Speaker 2: institutional guys. So like, how does that factor in too?
Speaker 2: You know, you're out like you're optimistic, but doesn't that
Speaker 2: kind of concern you a little bit?
Speaker 5: Heay?
Speaker 8: There is their earnings were actually strong if you look
Speaker 8: at the numbers, they did well this past quarter. That
Speaker 8: they're concerning investors.
Speaker 6: It's a guidance right.
Speaker 8: Right, but since I mean we've been living with tariffs
Speaker 8: for two months now, so it has been since liberation
Speaker 8: Day as they like to call it. But the guidance
Speaker 8: going forward is really what's worrying investors. I mean, honestly,
Speaker 8: with the amount of uncertainty right now, why wouldn't CEOs
Speaker 8: be saying, hey, this is an uncertain environment and kind
Speaker 8: of trying to tamper down expectations. I think as investors,
Speaker 8: if we didn't hear we're taking a step back going
Speaker 8: hold out. Are you not seeing what's happening? So yes,
Speaker 8: absolutely there's uncertainty, there's reasons to be worried. But honestly,
Speaker 8: those names, they were beaten down a lot because they
Speaker 8: had just been the leaders so strong prior to this move.
Speaker 8: When you're looking at things like productivity AI, they're going
Speaker 8: to be good again and even more since then. We
Speaker 8: actually did buy into these bigger cap tech names once
Speaker 8: we had this pullback, because they had been valued much
Speaker 8: higher than they were now. And when you have an
Speaker 8: opportunity to buy these names at a more reasonable valuation,
Speaker 8: I mean you might as well at the end of
Speaker 8: the day. And VideA is going to do better than
Speaker 8: Coca Cola. Nothing against Coca Cola, but just their earnings
Speaker 8: potential is higher. And if you can get a more
Speaker 8: similar pe between a big tech name versus a stable's
Speaker 8: name life, I would rather do it. So that's my
Speaker 8: view on the tech names there. I think they've been
Speaker 8: beaten down. They're going to participate more in this recovery
Speaker 8: as we've been seeing tech has really been participating in
Speaker 8: this recovery. Now once we're fully recovered, when we see
Speaker 8: a broadening of leadership potential rotation of leadership, absolutely, and
Speaker 8: we're watching for that. But here we'd rather be owning
Speaker 8: those names, and we took the opportunity with this dip
Speaker 8: to add to those names in particular.
Speaker 5: Right, so, I see your overweight stocks, but you also
Speaker 5: said in your notes that you're still hedging with gold,
Speaker 5: and I'm wondering what risks you're hedging for and then
Speaker 5: what would have to happen for you to add more gold.
Speaker 8: Yeah, so we are overweight stocks as well as we
Speaker 8: do hold our largest position is in gold. Now that's
Speaker 8: still just under a ten percent positions about a nine
Speaker 8: percent position, And really that's an opportunistic diversification, I would
Speaker 8: call it. It's not like every time gold goes app
Speaker 8: stocks go down or vice versa. It really moves differently,
Speaker 8: and you see these large swaths of time where gold
Speaker 8: does really well and then swats of time where they
Speaker 8: go lousy as well. But right now is one of
Speaker 8: those times where we really do see gold as performing well.
Speaker 8: We originally bought it as an inflation hedge and that
Speaker 8: was a good decision on our part. Now we're really
Speaker 8: holding it as a more of a geopolitical risk hedge,
Speaker 8: not just from a geopolitics standpoint, but also from there's
Speaker 8: a lot of different moves being made all across the
Speaker 8: world from all the central banks, So also from a
Speaker 8: policy risk standpoint there as well.
Speaker 2: What about overseas interest and allocation and buying.
Speaker 8: Yeah, it's something we're definitely watching and we are interested
Speaker 8: in potentially moving into foreign but that again will probably
Speaker 8: more be after this recovery, once we look to see
Speaker 8: more of that branding of leisured leadership and potentially that
Speaker 8: rotation of leadership. Foreign was doing definitely interestingly this year,
Speaker 8: but I think if you hop into it right now,
Speaker 8: you have that potential to really get whipsof and we
Speaker 8: didn't want to do that when some of these great
Speaker 8: tech names and other names had gotten beaten down and
Speaker 8: were more likely to participate in this recovery first. And
Speaker 8: then potentially we'll see that rotation ship rotation into foreign leadership,
Speaker 8: and that's when we would be more interested in getting
Speaker 8: in then. So we're just being a little patient to
Speaker 8: avoid that whipsoft, but it is definitely on our radar.
Speaker 2: Yeah, I would just point out, I mean the eurostocks fifty.
Speaker 2: I know it's been beaten up and maybe not as
Speaker 2: up as it was earlier this year, but it's still
Speaker 2: up about eight percent year to date, and that compares
Speaker 2: with still about a three and a half percent to
Speaker 2: cline in the S and P five hundred, So you know,
Speaker 2: betting overseas has still been pretty good this.
Speaker 5: Year, right this year, but in the longer term, no,
Speaker 5: I know, but you know when you're yeah, well, Alexis,
Speaker 5: we only have like forty five seconds left. But I'm
Speaker 5: just wondering what's the general vibe you're getting from clients.
Speaker 5: Are people panicked? Are they are they asking to go
Speaker 5: to cash gold or are people more optimistic.
Speaker 8: We're really lucky with our client base. They've been through
Speaker 8: markets like this with us, and they've seen really that
Speaker 8: it's really difficult to have to go through moments like this.
Speaker 8: But if you think about it, most of the time
Speaker 8: you're hearing investors say that you want to buy low now.
Speaker 8: That's really hard to do when you're emotionally charged. And luckily,
Speaker 8: our clients trust us enough that we've had Yeah, we've
Speaker 8: had some who are nervous who we just need to
Speaker 8: talk to and then they wind up being fine, and
Speaker 8: some who actually want to send us more money to
Speaker 8: get it more invested right now. But really, how we
Speaker 8: aim to make money for our clients is by participant.
Speaker 2: Oh sorry what no, we get a run unfortunately, but
Speaker 2: thank you, thank you. I was glad we can check
Speaker 2: in with you. Forgive me, Forgive Me. Alexis Brown Roberts
Speaker 2: at Alexis Investment Partners.
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