WEBVTT - BI Weekend: Nvidia Earnings, Apple US Investment 0:00:00.280 --> 0:00:11.440 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Intelligence 0:00:11.560 --> 0:00:13.680 with Alex Steel and Paul Sweeney. 0:00:13.760 --> 0:00:17.000 The real app performance has been in US corporate high yield. 0:00:17.160 --> 0:00:19.520 Are the companies lean enough? Have they trimmed all the fats? 0:00:19.600 --> 0:00:23.200 The semiconductor business is a really cyclical business. 0:00:22.840 --> 0:00:26.560 Breaking market headlines and corporate news from across the globe. 0:00:26.600 --> 0:00:29.040 Do investors like the M and A that we've seen? 0:00:29.240 --> 0:00:32.199 These are two big time blue chip companies. 0:00:32.479 --> 0:00:35.839 Window between the peak and count changing super fast. 0:00:36.120 --> 0:00:41.160 Bloomberg Intelligence with Alex Steel and Paul Sweeney on Bloomberg Radio. 0:00:42.360 --> 0:00:44.840 On Today's Bloomerg Intelligence Show, we dig inside the big 0:00:44.840 --> 0:00:47.199 business stories impacting Wall Street and the global markets. 0:00:47.280 --> 0:00:49.280 Each and every week we provide in depth research and 0:00:49.360 --> 0:00:51.080 data on some of the two thousand companies and one 0:00:51.120 --> 0:00:53.680 hundred and thirty industries our analysts cover worldwide. 0:00:53.880 --> 0:00:56.240 Today, we'll look at why Apple is investing five hundred 0:00:56.280 --> 0:00:58.400 billion dollars in the US over the next four years. 0:00:58.440 --> 0:01:00.960 Plus, we'll discuss how the global reach tell giant Walmart 0:01:01.000 --> 0:01:03.400 is navigating a second Donald Trump presidency. 0:01:03.760 --> 0:01:06.160 First, we begin with big tech and the chip giant 0:01:06.200 --> 0:01:08.920 and video This week and Vidia reported good but not 0:01:09.000 --> 0:01:09.800 great earnings. 0:01:10.040 --> 0:01:12.280 The company also warn the gross profit margins would be 0:01:12.319 --> 0:01:14.679 tighter than anticipated as it rushes to roll out a 0:01:14.680 --> 0:01:16.160 new chip design called Blackwell. 0:01:16.319 --> 0:01:18.080 For more on this, we were joined by Gene Munster, 0:01:18.240 --> 0:01:20.679 managing partner at deep Water Asset Management. 0:01:20.800 --> 0:01:23.240 We first asked Gene for his take on Vidia earnings. 0:01:23.440 --> 0:01:27.200 Well, the results were good but not great, And specifically 0:01:27.319 --> 0:01:30.920 is the margin guidance at seventy one percent versus the 0:01:30.959 --> 0:01:33.600 three to seventy two and there weren't a whispers that 0:01:33.640 --> 0:01:36.160 they were going to lower margins. I think that really 0:01:36.200 --> 0:01:39.600 stood out to me. The upside on revenue a billion 0:01:40.280 --> 0:01:42.760 compares to the expectations of like a billion and a 0:01:42.800 --> 0:01:45.319 half to two billion, and so I think that these 0:01:45.319 --> 0:01:47.840 were good in the sense they did raise on revenue, 0:01:47.840 --> 0:01:51.160 but not great effectively. What they're doing is pushing the 0:01:52.080 --> 0:01:55.560 ramp to the back half of the year, especially on margins. 0:01:55.600 --> 0:01:57.200 That's when the margins they said to kind of go 0:01:57.240 --> 0:01:59.360 to seventy five percent. And I would add one other 0:01:59.400 --> 0:02:02.600 piece to this is going into the print. I believe 0:02:02.640 --> 0:02:06.160 that the most important point was related to commentary about 0:02:06.160 --> 0:02:09.160 how sold out they were on Blackwell. This is a 0:02:09.200 --> 0:02:12.079 metric that they typically give and last quarter they said 0:02:12.080 --> 0:02:14.720 they were sold out. For basically three quarters of this year, 0:02:15.280 --> 0:02:18.600 they were radio silent on the topic. They surprisingly didn't 0:02:18.600 --> 0:02:21.040 get asked a question on it. But I think that 0:02:21.600 --> 0:02:26.000 Jensen's comments about the need for compute being one hundred 0:02:26.040 --> 0:02:29.480 to one million I double checked that on the transcript. 0:02:29.639 --> 0:02:32.480 One hundred to one million times more compute needed for 0:02:32.600 --> 0:02:38.399 reasoning and physical AI and robotics AI. That increase in compute, 0:02:38.800 --> 0:02:42.440 I think gave investors some optimism that, well, this year 0:02:42.520 --> 0:02:45.480 might not be the year that twenty twenty six is 0:02:45.520 --> 0:02:47.600 going to grow faster than what people think. And so 0:02:48.280 --> 0:02:51.760 set a different way is that the results and guidance 0:02:52.040 --> 0:02:55.040 don't give a ton of optimism. But if you look 0:02:55.080 --> 0:02:58.600 at where this ultimately could go, if you take what 0:02:58.720 --> 0:03:01.840 Jensen is saying right to buy ten, that means they're 0:03:01.880 --> 0:03:04.040 still going to comfortably beat the numbers next year. 0:03:05.040 --> 0:03:07.160 Okay, there's a lot of unpack with that. So let's 0:03:07.160 --> 0:03:09.799 go back to gross margins for a second. Based on 0:03:10.120 --> 0:03:12.600 their call that gross margins will hit seventy five percent 0:03:12.600 --> 0:03:14.560 in the back half of the year, when do we 0:03:14.600 --> 0:03:15.760 think they're going to bottom? 0:03:16.120 --> 0:03:18.600 So they got answered the guess that question on the call, 0:03:18.639 --> 0:03:20.600 and they kind of sidestep it, but if you read 0:03:20.680 --> 0:03:23.920 between the lines, they probably go lower again in the 0:03:24.000 --> 0:03:26.200 July quarter. So there's an April quarter that we're in 0:03:26.280 --> 0:03:28.040 right now than they go to the July quarter. My 0:03:28.120 --> 0:03:31.120 guess is they probably bottom then at around seventy percent, 0:03:31.280 --> 0:03:36.440 So effectively going from seventy to seventy five over six months, 0:03:36.440 --> 0:03:39.200 it's a pretty big jump. At the time of the call, 0:03:39.280 --> 0:03:42.360 the stock was up two percent in after hours when 0:03:42.440 --> 0:03:44.240 they came to the last question on the call, which 0:03:44.360 --> 0:03:47.600 was related to that ramp in margins and how realistic 0:03:47.760 --> 0:03:51.880 is that if we have more export controls and the 0:03:52.000 --> 0:03:54.760 answer was, we don't know how export controls are going 0:03:54.800 --> 0:03:57.120 to impact our business, And immediately the stock went from 0:03:57.240 --> 0:04:00.000 up call it two percent to down a half a percent. 0:04:00.280 --> 0:04:02.680 We saw basically two percent move in it, and so 0:04:02.880 --> 0:04:06.800 I think that speaks to investors saying like that's that's 0:04:06.800 --> 0:04:08.960 a risk here is like are we really going to 0:04:08.960 --> 0:04:11.840 get to that margin ramp we talked about the seventy 0:04:11.920 --> 0:04:14.800 three percent margins for a tech company, for a hardware company. 0:04:15.160 --> 0:04:17.279 I think at the end of the day, they're still remarkable. 0:04:17.400 --> 0:04:19.919 But for these stocks to keep working, you need to 0:04:19.920 --> 0:04:23.320 have margins at a minimum stable and growing. And I 0:04:23.400 --> 0:04:25.279 just want to put one final thought on this Alex 0:04:25.360 --> 0:04:27.919 is that ultimately I think margins will get back to 0:04:27.960 --> 0:04:29.479 that seventy five percent. I don't know if it's going 0:04:29.520 --> 0:04:32.560 to be in Q four early next year, but if 0:04:32.760 --> 0:04:34.479 the ramp is what I think it's going to be 0:04:34.520 --> 0:04:36.040 for next year, I think we're going to get back 0:04:36.080 --> 0:04:38.120 to some go go days and video. 0:04:38.520 --> 0:04:42.320 Geene, the driver for this stock tremendous performance over the 0:04:42.320 --> 0:04:45.160 past two years has been beaten and raised by a 0:04:45.200 --> 0:04:48.560 certain order of magnitude. If for no other reason than 0:04:48.560 --> 0:04:51.600 the law of large numbers, that order of magnitude likely 0:04:51.640 --> 0:04:55.160 will be lower. Can this stock continue to work with 0:04:55.680 --> 0:04:57.560 the law of large numbers not giving in that two 0:04:57.680 --> 0:05:00.280 three four billion dollar beat and raise every quarter? 0:05:01.320 --> 0:05:03.760 I think it can. And just to put in perspective, 0:05:03.800 --> 0:05:05.800 we've gone from a twenty billion dollar business a few 0:05:05.839 --> 0:05:07.400 years ago. It's going to be about a two hundred 0:05:07.400 --> 0:05:10.200 billion dollar business this year. But there's still our companies 0:05:10.240 --> 0:05:11.960 apples a four hundred billion dollar business. I mean, you 0:05:12.000 --> 0:05:15.080 can still continue to grow from that, and it doesn't 0:05:15.120 --> 0:05:18.400 need to have that breathtaking growth. And I would come 0:05:18.480 --> 0:05:21.839 back to the central question here. It's not about twenty 0:05:21.880 --> 0:05:25.200 twenty five, it's the twenty three percent growth in calendar 0:05:25.240 --> 0:05:27.760 twenty six, and do you think that the number is 0:05:27.800 --> 0:05:29.760 going to be higher or lower than that? And ultimately 0:05:29.800 --> 0:05:31.000 I think the number is going to be higher. I 0:05:31.040 --> 0:05:32.880 think we're going to get back to a point where we, 0:05:33.440 --> 0:05:36.000 despite the law of large numbers, we get to some 0:05:36.040 --> 0:05:39.880 of those improving, those improving upsize and beats, and it 0:05:39.960 --> 0:05:42.839 just comes down to what I think is a large 0:05:42.880 --> 0:05:45.440 tam and what I still believe is a competitive advantage 0:05:45.480 --> 0:05:49.080 that GPUs have over custom silicon, and we'll see how 0:05:49.080 --> 0:05:52.360 that plays out. But that's essentially the debate that's going 0:05:52.400 --> 0:05:55.200 on right now is just how much compute you need 0:05:55.200 --> 0:05:58.520 and how defensible is Vidia. I think there's a boatload 0:05:58.520 --> 0:06:00.520 of compute, much more than we realize it's going to 0:06:00.520 --> 0:06:02.120 be needed, and I think in Videa's in a great 0:06:02.120 --> 0:06:04.000 position related to that. We're going to have to wait 0:06:04.600 --> 0:06:08.200 to get to those results, but I think anticipation of 0:06:08.240 --> 0:06:09.840 that is going to be positive for the stock at 0:06:09.839 --> 0:06:10.599 some point this year. 0:06:10.680 --> 0:06:13.240 Our thanks to Gene Mounster, managing partner at deep Water 0:06:13.279 --> 0:06:14.560 Asset Management. 0:06:14.160 --> 0:06:16.279 We moved next to the Energy sector. This week, we 0:06:16.320 --> 0:06:20.080 looked at the energy technologies company American Superconductor Corp. It's 0:06:20.160 --> 0:06:22.360 NASDAK ticker is AMSC. 0:06:22.800 --> 0:06:26.279 The firm specializes in using superconductors for the development of 0:06:26.480 --> 0:06:29.520 diverse power systems, and the hope is to meet the 0:06:29.560 --> 0:06:32.000 world's demand for smarter, cleaner, and better energy. 0:06:32.360 --> 0:06:35.200 AMSC also recently reported third quarter earnings and said it's 0:06:35.240 --> 0:06:37.840 revenue grew fifty five percent from a year ago. 0:06:38.279 --> 0:06:41.400 For more on AMSC, we were joined by its CEO, 0:06:41.680 --> 0:06:42.480 Daniel McGahn. 0:06:42.800 --> 0:06:45.200 We first asked Daniel to describe what is company actually 0:06:45.279 --> 0:06:46.720 does with regard to power. 0:06:47.160 --> 0:06:49.039 We don't really make the power move the power, but 0:06:49.080 --> 0:06:50.919 we make sure that the power is where it is 0:06:50.960 --> 0:06:51.680 when it's needed. 0:06:52.040 --> 0:06:53.680 So what does that wind up meaning so you can 0:06:53.720 --> 0:06:55.839 tuck to the electricity basically. 0:06:55.720 --> 0:06:58.360 Yeah, So if it's an industrial site in the manufacturer 0:06:58.360 --> 0:07:01.599 that needs power at a certain level, certain frequency, we 0:07:01.720 --> 0:07:04.719 modulate that and make it the right way for that factory. 0:07:05.000 --> 0:07:08.000 Same thing if you're trying to deal with bringing generation 0:07:08.120 --> 0:07:11.400 onto the grid or even different spots within the grid itself, 0:07:11.440 --> 0:07:13.400 to bolster and make sure that the power can go 0:07:13.440 --> 0:07:14.200 where it's needed. 0:07:14.600 --> 0:07:18.000 All right, that sounds critical sounds important, but it doesn't 0:07:18.040 --> 0:07:20.000 sound sexy. Are you guys getting caught up in that 0:07:20.160 --> 0:07:21.800 AI and the need for energy? 0:07:21.880 --> 0:07:23.920 And I don't. Yeah, I think we're getting caught up 0:07:23.920 --> 0:07:25.400 in the need for energy. I think there's a lot 0:07:25.400 --> 0:07:28.680 of drivers that are changing our need for power. If 0:07:28.680 --> 0:07:31.560 you think about everything you do in your day now 0:07:31.640 --> 0:07:35.480 requires electricity, and that can be from healthcare to data 0:07:35.520 --> 0:07:39.960 to semiconductor manufacturing and everything in between. So power it 0:07:39.960 --> 0:07:42.720 becomes more and more critical. We're becoming more dependent upon it. 0:07:42.920 --> 0:07:45.640 And the grid really wasn't built for the modern era 0:07:45.720 --> 0:07:47.040 of electricity. 0:07:46.640 --> 0:07:48.920 And from that perspective, I mean just for a super 0:07:48.960 --> 0:07:51.920 nerdy moment. You guys also make the conductors, right, like 0:07:51.960 --> 0:07:53.800 the thing that so if you have a wind farm 0:07:53.840 --> 0:07:55.320 and you need attached to a grid, there's like a 0:07:55.360 --> 0:07:57.480 piece of equipment that you need to attach it. You 0:07:57.520 --> 0:08:00.480 make those and those are in super super soon tight 0:08:00.520 --> 0:08:03.520 demand like tons of demand, not on a supply, doesn't 0:08:03.520 --> 0:08:05.560 matter what kind of power source that is. Am I accurate? 0:08:05.640 --> 0:08:07.920 Yeah, And many of the suppliers are from overseas as well, 0:08:08.000 --> 0:08:10.240 So we're kind of unique also being in an American 0:08:10.280 --> 0:08:13.760 company making product in America with Americans and I think 0:08:13.880 --> 0:08:16.440 that fits very well in today's climate where we're trying 0:08:16.480 --> 0:08:17.400 to push the country. 0:08:17.600 --> 0:08:19.720 What are the drivers for your company right here, right now? 0:08:19.760 --> 0:08:22.360 I know you've recently reported earnings of what did you 0:08:22.400 --> 0:08:24.080 identify as the drivers for your business? 0:08:24.800 --> 0:08:26.600 A lot of it is this further in the need 0:08:26.680 --> 0:08:30.000 for demand. A lot of it we're seeing our business 0:08:30.040 --> 0:08:33.560 start to really with the reshoring of manufacturing capacity and 0:08:33.559 --> 0:08:37.440 capability in America. All those operations need power, so we 0:08:37.480 --> 0:08:41.360 see expansion in manufacturing that's starting to happen critically in 0:08:41.679 --> 0:08:44.320 these critical elements if you want to deal with cars 0:08:44.360 --> 0:08:46.960 and chips and AI and all those things. We sit 0:08:47.080 --> 0:08:49.880 kind of secondarily that we help enable the power to 0:08:49.960 --> 0:08:53.160 be there. But more and more operations are becoming more 0:08:53.200 --> 0:08:54.679 dependent upon electricity. 0:08:55.320 --> 0:08:57.920 So from that perspective, does it matter to you where 0:08:57.920 --> 0:09:00.839 the electricity comes from? In that is the policy from 0:09:00.880 --> 0:09:04.200 a Biden administration and transition to a Trump administration on 0:09:04.440 --> 0:09:06.920 say energy and climate, does that matter? 0:09:07.400 --> 0:09:09.760 Well, I'll say something that may not be popular, but 0:09:09.840 --> 0:09:12.520 I'll still say that I think that the end result 0:09:12.640 --> 0:09:16.280 and desire from both are the same. We want to 0:09:16.320 --> 0:09:19.520 make sure that we're building an economy in America for Americans. 0:09:20.320 --> 0:09:22.760 I think that was consistent with the last administration. It's 0:09:22.760 --> 0:09:25.760 definitely consistent with the current administration. The question is the 0:09:25.760 --> 0:09:28.719 policy and how how do we help enable it. Are 0:09:28.720 --> 0:09:32.400 we trying to create a market that people want to 0:09:32.679 --> 0:09:35.280 companies want to invest in, or is the government trying 0:09:35.320 --> 0:09:38.599 to help foster that through money and through policy that 0:09:39.040 --> 0:09:41.080 is more economic. At the end of the day, for us, 0:09:41.120 --> 0:09:43.760 it doesn't quite matter. The problem is still the problem. 0:09:43.800 --> 0:09:46.959 The grid needs to be improved. Utilities are working on that, 0:09:47.160 --> 0:09:51.160 but as more manufacturing capacity comes online, there's need for 0:09:51.280 --> 0:09:53.800 higher quality power and that's where we come in and 0:09:53.840 --> 0:09:56.599 help solve those problems. Who do you compete against? A 0:09:56.679 --> 0:09:59.319 lot of the big guys from your and what we 0:09:59.480 --> 0:10:02.280 found is that be like Semens, It could be Semans 0:10:02.360 --> 0:10:05.000 or ABB locally here in the US a small company 0:10:05.040 --> 0:10:08.720 called General Electric. But what we've found is over the 0:10:08.720 --> 0:10:12.600 past several years, our largest competitors have become very good customers. 0:10:13.480 --> 0:10:15.800 And what we found is what we offer, the uniqueness 0:10:15.800 --> 0:10:18.160 of what we do and the service that we provide, 0:10:19.080 --> 0:10:21.480 it complements their offering and I think they're starting to 0:10:21.600 --> 0:10:24.280 understand that we're not really a threat per se to 0:10:24.320 --> 0:10:26.719 their business. We're a helpful solution to. 0:10:26.679 --> 0:10:27.360 The end customer. 0:10:27.679 --> 0:10:30.320 What inputs do you need for your business? So? What 0:10:30.360 --> 0:10:32.800 things are tight for you? What things do you want 0:10:32.800 --> 0:10:33.680 to help change? 0:10:33.840 --> 0:10:36.000 When you say inputs, I think supply chaining. 0:10:36.120 --> 0:10:37.719 That's what I'm and that's what I'm trying to get at. 0:10:37.760 --> 0:10:39.679 So is it like the raw materials that you need 0:10:39.679 --> 0:10:41.360 to build stuff in the US to themselves? 0:10:41.559 --> 0:10:44.200 Yeah, almost everything that we make in the US, so 0:10:44.280 --> 0:10:47.640 probably eighty five percent of our businesses here home in 0:10:47.640 --> 0:10:51.840 the US manufactured here. Almost all of our supply chain, 0:10:52.040 --> 0:10:54.920 probably more than ninety five ninety six percent is sourced 0:10:54.960 --> 0:10:58.480 in the US. So the current applimate really puts us 0:10:58.480 --> 0:11:02.199 in a unique opportunity that we may have unique opportunities 0:11:02.240 --> 0:11:05.880 presented to us because we are American, American, made by Americans, 0:11:05.880 --> 0:11:10.800 supplied mostly by American suppliers. When people talk about tariffs 0:11:10.800 --> 0:11:13.960 and these kind of external policies, they don't have a 0:11:13.960 --> 0:11:16.800 great impact on what we do now. They may. I 0:11:16.800 --> 0:11:18.360 don't know how things are going to sort out. There's 0:11:18.360 --> 0:11:20.160 a lot of rhetoric and then we'll see how reality 0:11:20.200 --> 0:11:22.880 translates from that reetarc and really what gets put in place. 0:11:23.200 --> 0:11:25.040 But a lot of this is trying to push the 0:11:25.080 --> 0:11:27.560 country in a certain direction, and I think that general 0:11:27.559 --> 0:11:28.600 direction is good for us. 0:11:29.080 --> 0:11:31.640 So are you having conversations with your customers now? They 0:11:31.640 --> 0:11:33.599 may be calling you them saying, hey, Dan, we're a 0:11:33.640 --> 0:11:36.520 little nervous about what might be happening over the next three, six, 0:11:36.640 --> 0:11:39.600 twelve months in terms of tariffs. Are they Are you 0:11:39.640 --> 0:11:41.440 seeing that in your order flow or are you seeing 0:11:41.440 --> 0:11:42.920 that maybe just in conversations you're having. 0:11:43.240 --> 0:11:46.840 We're seeing that from companies in Canada, Mexico, We're seeing 0:11:46.840 --> 0:11:50.280 that to some extent, some companies on the continent of Europe, 0:11:51.000 --> 0:11:53.280 but certainly in the US they're comforted by the fact 0:11:53.320 --> 0:11:54.800 of where we make it and how we make it 0:11:54.840 --> 0:11:56.360 and where we source broughduct from. 0:11:56.400 --> 0:11:58.040 Some of the headlines over the last couple of days 0:11:58.080 --> 0:12:01.160 have evolved around tariffs on things like aluminum. Copper was 0:12:01.160 --> 0:12:04.800 thrown into the mix yesterday. If that winds up denting 0:12:04.920 --> 0:12:06.800 demand as and we're not going to build as much 0:12:06.800 --> 0:12:09.920 manufacturing or industrial sites because it's just really expensive, how 0:12:09.920 --> 0:12:10.920 does that trickle to you? 0:12:11.200 --> 0:12:13.440 Well, I think the opposite's going to happen. The need 0:12:13.559 --> 0:12:15.800 is going to persist. The question is can it absorb 0:12:15.840 --> 0:12:18.280 the cost and there's going to have to be a 0:12:18.280 --> 0:12:20.960 way to figure that out and find that out. But 0:12:21.040 --> 0:12:23.959 I think all of the things that go into the 0:12:24.000 --> 0:12:27.199 electric grid use all those materials, so they're going to 0:12:27.280 --> 0:12:30.720 have to get sources. And if it makes American sourced 0:12:30.840 --> 0:12:34.840 product more competitive, then so be it. From my standpoint, 0:12:34.880 --> 0:12:37.960 it doesn't directly affect us because we're already sourcing most 0:12:37.960 --> 0:12:40.040 of our principal equipment from the US. 0:12:40.440 --> 0:12:43.720 Our thanks to amsc CEO Daniel mcgahann. 0:12:43.800 --> 0:12:45.199 All right, coming up, we're going to break down why 0:12:45.200 --> 0:12:48.240 the coffee giant Starbucks is cutting jobs across it's corporate ranks. 0:12:48.360 --> 0:12:51.280 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:51.320 --> 0:12:53.480 depth research and data on two thousand companies and one 0:12:53.600 --> 0:12:56.760 hundred and thirty industries. You can access Bloomberg Intelligence VfB. 0:12:57.000 --> 0:12:58.040 I go on the terminal. 0:12:58.160 --> 0:13:01.079 I'm Paul swinging anmlex deal. This is Bloomberg. 0:13:05.440 --> 0:13:09.120 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:13:09.200 --> 0:13:12.319 weekdays at ten am Eastern on Apple, Cocklay and Android 0:13:12.320 --> 0:13:15.600 Auto with the Bloomberg Business App. Listen on demand wherever 0:13:15.679 --> 0:13:19.720 you get your podcasts, or watch us live on YouTube. 0:13:20.280 --> 0:13:22.640 We moved next to news from the coffee giant Starbucks. 0:13:22.960 --> 0:13:25.679 This week, the company announced that it's eliminating eleven hundred 0:13:25.760 --> 0:13:26.480 corporate jobs. 0:13:26.600 --> 0:13:29.200 The move by Starbucks has aimed at increasing efficiency and 0:13:29.240 --> 0:13:31.240 revitalizing the company for more. 0:13:31.280 --> 0:13:34.400 We were joined by Michael Halen Bloomberg Intelligence senior Restaurant 0:13:34.400 --> 0:13:35.400 and food service Anaallygics. 0:13:35.400 --> 0:13:37.600 We first asked Michael what he thinks of this week's news. 0:13:38.200 --> 0:13:40.800 Well, you know, every situation is a little different. You know, 0:13:41.360 --> 0:13:43.360 I did a lot of TV and radio last year 0:13:43.400 --> 0:13:46.720 when Brian Nichol was hired, and you know, I said 0:13:46.760 --> 0:13:50.800 he's going to instill a culture of transparency and accountability 0:13:50.840 --> 0:13:53.680 and if you're not adding value, you know, you're probably 0:13:53.720 --> 0:13:55.880 going to be shown the door. So this is really 0:13:55.920 --> 0:13:58.400 not a surprise to us. It's not a surprise to 0:13:58.400 --> 0:14:02.120 the street. It was communicated back in January. And you know, 0:14:02.160 --> 0:14:05.720 we've seen a lot of senior management changes as well. 0:14:05.760 --> 0:14:08.640 You know, this was a company that was performing pretty 0:14:08.640 --> 0:14:12.120 poorly under the previous management team. I'm sure there was 0:14:12.240 --> 0:14:17.200 plenty of deadweight in that large company, So not really 0:14:17.200 --> 0:14:17.960 a surprise here. 0:14:18.640 --> 0:14:20.920 What about them cutting all the drinks, like all the 0:14:20.920 --> 0:14:23.960 stuff my daughter likes to order and I was thinking, 0:14:23.960 --> 0:14:25.960 I joke, but really like, she's not gonna want anything 0:14:26.000 --> 0:14:28.520 from Starbucks now, and they're no longer training her as 0:14:28.560 --> 0:14:30.760 a ten year old to then come into Starbucks as 0:14:30.760 --> 0:14:31.440 they get older. 0:14:32.200 --> 0:14:33.040 Is that a bad thing? 0:14:33.600 --> 0:14:36.800 Not for me, but I'm guessing for Starbucks maybe. 0:14:37.080 --> 0:14:39.760 Well, you know, I think what they're trying to get 0:14:39.800 --> 0:14:44.040 back to is what made Starbucks great. How did Starbucks 0:14:44.080 --> 0:14:46.680 get to be you know, tens of thousands of stores 0:14:46.680 --> 0:14:51.280 globally it was it was really by through the espresso, drinks, 0:14:51.320 --> 0:14:54.240 through a great in store experience where the barista knew 0:14:54.320 --> 0:14:56.800 your name right, and and so they're trying to get 0:14:56.840 --> 0:15:01.840 back to a lot of those things. You know, they're 0:15:01.880 --> 0:15:05.480 they're looking for that that core. Guess that's that's coming 0:15:05.480 --> 0:15:08.280 in there multiple times a day and providing them a 0:15:08.320 --> 0:15:11.960 great experience. I think that's a that's a smart path forward. 0:15:12.720 --> 0:15:12.920 Mike. 0:15:12.960 --> 0:15:15.120 You cover the whole restaurant space here. You see the 0:15:15.200 --> 0:15:19.040 different price points. What are you seeing out there? How's 0:15:19.080 --> 0:15:22.920 the consumer doing? From maybe just the data you see 0:15:22.920 --> 0:15:24.160 about restaurant activity. 0:15:25.120 --> 0:15:27.560 Yeah, so last year was a restaurant recession. You know, 0:15:27.640 --> 0:15:30.240 we think things will be a little bit better here 0:15:30.240 --> 0:15:33.400 in twenty twenty five, but it's been choppy kind of 0:15:33.440 --> 0:15:35.720 to start the year. And a big problem has been 0:15:35.760 --> 0:15:39.720 this cold weather. January was the coldest, you know, the 0:15:39.840 --> 0:15:42.560 oldest January in like fourteen years, I think in the 0:15:42.640 --> 0:15:46.240 United States. There was a significant amount of snow throughout 0:15:46.280 --> 0:15:48.720 the United States in January and February. So there's been 0:15:48.720 --> 0:15:51.640 a lot of closed restaurant days, and so it's been 0:15:51.680 --> 0:15:54.080 a choppy start to the year for the restaurant space. 0:15:54.160 --> 0:15:56.160 You know, we think it's going to be better than 0:15:56.160 --> 0:15:59.280 twenty twenty four, but you know, we don't expect the 0:15:59.320 --> 0:16:03.040 gang Busters year, mainly because of inflation still continuing to 0:16:03.560 --> 0:16:05.360 crimp low income consumer spending. 0:16:05.720 --> 0:16:08.400 Yeah, and also you know, for example, coffee prices are 0:16:08.400 --> 0:16:10.400 really high. Egg price is still really high. Like those 0:16:10.440 --> 0:16:13.680 things are pretty sticky. Going back to Starbucks for a second, 0:16:13.840 --> 0:16:17.440 So the CEO, Brian Nicol, took over in September as 0:16:17.480 --> 0:16:21.000 sales were declining. Obviously he's formerly of Chipotle. Do we 0:16:21.120 --> 0:16:23.880 have this playbook from Chipotle and then how it's being implemented, 0:16:23.960 --> 0:16:26.080 say into Starbucks, and if so, kind of where are 0:16:26.120 --> 0:16:26.560 we in that. 0:16:27.960 --> 0:16:31.840 Yeah, it's it's a little bit different but similar, right, 0:16:31.880 --> 0:16:33.600 it's it's going to be number one. It's going to 0:16:33.640 --> 0:16:36.880 be about nailing the operations, and they've worked hard to 0:16:36.960 --> 0:16:39.680 make the jobs easier for the barises. You know, part 0:16:39.720 --> 0:16:42.360 of the reason why they're not offering your daughter's favorite 0:16:42.400 --> 0:16:44.480 drink is because they were difficult to make, right, and 0:16:44.480 --> 0:16:47.240 it's because the barisas really didn't personally want to make them. 0:16:47.920 --> 0:16:53.080 They added labor hours into the into the cafes to 0:16:53.160 --> 0:16:56.640 help boost operations, right, and then from there it's it's 0:16:56.720 --> 0:17:00.720 been spending more on marketing. This company has on invested 0:17:00.800 --> 0:17:04.600 for a very long time on marketing, and now you 0:17:04.640 --> 0:17:07.280 know they've been able to do that. They sell an 0:17:07.359 --> 0:17:12.600 item that's pretty addictive, caffeine, right, but they've under invested 0:17:12.640 --> 0:17:16.200 in marketing for a long time. And Starbucks is starting 0:17:16.480 --> 0:17:19.520 to push the gas pedal on that. And it's they're saying, 0:17:19.560 --> 0:17:22.359 it's they're starting to see better transaction data in the 0:17:22.480 --> 0:17:26.359 US and we're starting to lap some really weak results 0:17:26.400 --> 0:17:29.960 from last year, and so you know, I think they're 0:17:30.000 --> 0:17:32.240 going to start to see some momentum on the top 0:17:32.280 --> 0:17:35.000 line here before Starbucks, especially in the United States. 0:17:35.480 --> 0:17:37.720 All Right, Thanks to Michael Hale and Bloomberg Intelligence Senior 0:17:37.760 --> 0:17:39.119 restaurant and food service analyst. 0:17:39.520 --> 0:17:41.919 We moved next to the news from the tech giant Apple. 0:17:42.320 --> 0:17:44.600 This week, Apple said it we'll hire twenty thousand new 0:17:44.600 --> 0:17:47.560 workers and invest five hundred billion dollars in the US 0:17:47.600 --> 0:17:48.480 over the next four years. 0:17:48.720 --> 0:17:51.320 This comes as Apple seeks relief from President Donald Trump's 0:17:51.320 --> 0:17:53.200 tear off some goods imported from China. 0:17:53.440 --> 0:17:55.680 For more, we were joined by Mark Derman, Bloomberg Chief 0:17:55.680 --> 0:17:57.280 correspondent on Global Technology. 0:17:57.359 --> 0:17:59.960 We first asked Mark how this news came about from Apple. 0:18:00.520 --> 0:18:05.439 During the first Trump administration, Tim Cook other companies were 0:18:05.440 --> 0:18:08.639 obviously very worried about tariffs, right, and so their strategy was, 0:18:09.520 --> 0:18:11.320 we can try to make a deal here. What does 0:18:11.359 --> 0:18:16.479 Trump want? Trump wants his supporters to know or see 0:18:16.520 --> 0:18:20.399 that he's bringing jobs back to the US, bringing money 0:18:20.440 --> 0:18:23.359 back to the US, bringing manufacturing back to the US. 0:18:24.240 --> 0:18:27.280 Apple doesn't want tariffs on the phone, and it wants 0:18:27.280 --> 0:18:29.800 to keep as much phone manufacturing in China as possible. 0:18:30.119 --> 0:18:31.800 We don't have to get into the reasons why there's 0:18:32.359 --> 0:18:35.640 a ton of them. Okay, So you have these two sides, right, 0:18:36.119 --> 0:18:38.280 there is a universe in which both parties can get 0:18:38.320 --> 0:18:41.800 exactly what they want. It's like a trade right, and 0:18:41.880 --> 0:18:48.480 so you saw that strategy in full form Trump for months, obviously, 0:18:48.520 --> 0:18:51.359 the secondministration has been talking again about bringing back jobs, 0:18:51.760 --> 0:18:55.680 has been talking again about moving things to the US, 0:18:55.720 --> 0:18:58.600 has been talking again about extra tariffs some goods from China. 0:19:00.000 --> 0:19:02.680 Aple comes out with the press release We're investing five 0:19:02.760 --> 0:19:05.800 hundred billion dollars in the US over the next four years, which, 0:19:05.840 --> 0:19:07.879