WEBVTT - Kohl’s, Oracle Earnings , Boeing Troubles 0:00:02.920 --> 0:00:12.600 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 0:00:12.640 --> 0:00:14.360 with Alex Steinhl and Paul Sweeney. 0:00:14.520 --> 0:00:17.720 The real app performance has been in US corporate high yield. 0:00:17.880 --> 0:00:20.200 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.959 The semiconductor business is a really cyclical business. 0:00:23.600 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:31.000 These are two. 0:00:31.040 --> 0:00:33.159 Big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:41.680 Bloomberg Intelligence with Alex Steinehl and Paul Sweeney on Bloomberg Radio. 0:00:43.080 --> 0:00:45.680 Hey everyone, I'm Alex Steele and I'm Jen Ryan filling 0:00:45.680 --> 0:00:46.599 in for Paul Sweeney. 0:00:46.680 --> 0:00:48.320 On today's Bloomberg Intelligence Show. 0:00:48.360 --> 0:00:51.000 We're going to dig inside the big business stories impacting 0:00:51.040 --> 0:00:52.559 Wall Street and the global markets. 0:00:52.680 --> 0:00:55.160 Each and every week we provide in depth research and 0:00:55.240 --> 0:00:57.800 data on some of the two thousand companies and one 0:00:57.880 --> 0:01:00.520 hundred and thirty industries our analysts cover worldorldwide. 0:01:00.560 --> 0:01:02.320 Today, everyone to take a look at how computer tech 0:01:02.320 --> 0:01:04.880 company Oracle is showing progress and it's been to capture 0:01:04.920 --> 0:01:06.319 more of the competitive market. 0:01:06.520 --> 0:01:09.200 Plus we'll discuss how a physics whiz made a fortune 0:01:09.240 --> 0:01:11.040 betting on nature's catastrophes. 0:01:11.120 --> 0:01:12.679 But first, let's take a look at retail. 0:01:12.720 --> 0:01:15.119 You got Department store of Coals reported same store sales 0:01:15.160 --> 0:01:17.200 that fell four point three percent in the fourth quarter. 0:01:17.480 --> 0:01:20.600 That represents a small improvement over the five point five 0:01:20.600 --> 0:01:23.399 percent decline during the prior quarter. It also shows, though, 0:01:23.640 --> 0:01:26.600 that Coles has struggled to attract shoppers during the holiday 0:01:26.600 --> 0:01:27.360 shopping season. 0:01:27.600 --> 0:01:30.000 For more on this, we were joined by Mary Ross, 0:01:30.000 --> 0:01:34.000 Gilbert Bloomberg Intelligence senior equity analyst covering retail, and Mary 0:01:34.000 --> 0:01:36.760 told us she's still optimistic that Coals can boost growth. 0:01:37.240 --> 0:01:40.600 They do have so Fora and I'm sure that so 0:01:40.720 --> 0:01:43.640 Forora carries the brands that you care about. So so 0:01:43.760 --> 0:01:47.840 Fora has been a key driver for Coals, and that's 0:01:47.880 --> 0:01:51.200 the reason why their sales aren't that bad. You know, 0:01:51.200 --> 0:01:53.160 if you look at the comp sales, they fell one 0:01:53.240 --> 0:01:56.480 percent in the quarter at the stores, So total comp 0:01:56.520 --> 0:01:59.560 sales were down four point three percent orders and consensus 0:01:59.560 --> 0:02:04.120 three percent an estimate, but digital sales were down ten percent. 0:02:05.000 --> 0:02:08.600 And now going forward, after we get beyond the first 0:02:08.680 --> 0:02:12.359 quarter in twenty twenty four, we should see the overall 0:02:12.440 --> 0:02:17.040 comp sales do better. One with this so Fora initiative, 0:02:17.400 --> 0:02:21.440 because the comparable sales for so Fora was up twenty 0:02:21.480 --> 0:02:24.560 five percent in the fourth quarter, so we've been seeing 0:02:24.600 --> 0:02:27.839 double digit increases there, so that will help. But there's 0:02:27.840 --> 0:02:30.600 a number of other initiatives, including the news that they're 0:02:30.639 --> 0:02:34.240 going to be putting Babies or Us shops into about 0:02:34.280 --> 0:02:37.640 two hundred stores by the fall, and that really fills 0:02:37.680 --> 0:02:40.640 a void in the market. I'm sure you're aware that. Well, 0:02:40.720 --> 0:02:43.720 what happened with Bye Bye a Baby and what about 0:02:44.080 --> 0:02:46.200 Member Toys r US that used to be a go 0:02:46.240 --> 0:02:49.320 to place when you were expecting or how you know 0:02:49.400 --> 0:02:52.320 a baby. You could go there, get your strollers, get 0:02:52.320 --> 0:02:53.840 all your products there. 0:02:54.200 --> 0:02:57.000 We talk about what's good in their future. It sounds 0:02:57.040 --> 0:02:59.480 like it's a lot of stuff that is not cold. 0:02:59.720 --> 0:03:03.840 It's so far it's babies are us. What's the issue 0:03:04.000 --> 0:03:06.639 with the fundamental core Coals offering. 0:03:07.320 --> 0:03:10.960 So they're revamping the merchandise because that was part of it, 0:03:11.040 --> 0:03:13.880 is just not having the right assortments. So they're redoing 0:03:13.919 --> 0:03:16.960 shoes and they're going to be bringing in sketchers. They 0:03:16.960 --> 0:03:20.400 already have Nike, they have Audi Doos, and now you're 0:03:20.440 --> 0:03:23.359 also going to see them bring in some youth brands, 0:03:23.520 --> 0:03:27.720 So they're going to bring in Quicksilver, Errol, Postall, Madden 0:03:28.280 --> 0:03:31.440 limited to in Roxy, so those are also going to 0:03:31.480 --> 0:03:34.120 be helping on the apparel side. So with the overall 0:03:34.240 --> 0:03:36.920 revamp that they're doing on apparel, and some of their 0:03:36.960 --> 0:03:40.760 private brands are actually they resonate pretty well, like for 0:03:41.000 --> 0:03:44.040 in Babies, they have Jumping Beans that does really well. 0:03:44.640 --> 0:03:47.000 So it's really a host of a lot of things 0:03:47.000 --> 0:03:48.680 that they've done with the stores. If you go in 0:03:48.680 --> 0:03:52.200 them now, they're a lot brighter. The culture there has 0:03:52.320 --> 0:03:55.640 really been boosted. We've noticed a difference just from a 0:03:55.680 --> 0:03:59.560 year ago on how much the stores have been transformed. 0:04:00.080 --> 0:04:00.920 So that's helping. 0:04:01.320 --> 0:04:03.680 Yeah, that's so interesting. When I went and I was 0:04:03.720 --> 0:04:06.320 looking and you know, kids grow like weeds, right, my 0:04:06.400 --> 0:04:08.120 daughter's ninees. I was looking for pants and I was like, 0:04:08.160 --> 0:04:10.240 oh my god, they have Nike. I was like, genuinely 0:04:10.280 --> 0:04:12.920 like it. I had lots of those moments whilst walking around. 0:04:13.400 --> 0:04:14.840 I'm gonna have to check it out. 0:04:15.080 --> 0:04:17.280 Okay, we're listening all the good stuff here. So why 0:04:17.279 --> 0:04:19.599 did Coles give weaker than expected guides for the full year? 0:04:20.160 --> 0:04:22.640 Part of that is because we had a new ruling 0:04:22.680 --> 0:04:26.880 that came out from the Consumer Financial Bureau saying, Okay, 0:04:26.920 --> 0:04:29.080 we're going to cap late fees on credit cards to 0:04:29.120 --> 0:04:32.720 eight dollars. So that's going to have a negative impact 0:04:32.760 --> 0:04:35.719 for department stores generally because they tend to have the 0:04:35.720 --> 0:04:38.520 biggest exposure, and so Coles was one of them. They 0:04:38.600 --> 0:04:43.200 generate a fair amount of income from their credit card portfolio, 0:04:43.520 --> 0:04:46.360 and so they guided that that income will be down 0:04:46.480 --> 0:04:49.440 mid teams and that's about one hundred and thirty five 0:04:49.560 --> 0:04:52.560 ish million is what we're estimating the impact this year. 0:04:52.880 --> 0:04:56.160 And that's not the full year impact. But they introduced 0:04:56.200 --> 0:04:59.480 a co branded card and in twenty twenty five they 0:04:59.480 --> 0:05:01.839 hope to be able the offset the loss of income 0:05:01.880 --> 0:05:03.560 that you know they'll experience. 0:05:04.040 --> 0:05:04.719 But we'll see. 0:05:04.720 --> 0:05:06.600 But that's one of the reasons why you're going to 0:05:06.680 --> 0:05:08.560 see some pressure on the margin's side. 0:05:08.720 --> 0:05:12.000 What's the consumer favorite these days? I mean, you've listed 0:05:12.040 --> 0:05:14.599 all these interesting brands turning up at Coal's, but is 0:05:14.600 --> 0:05:16.520 that enough to get the consumers through the door, or 0:05:16.640 --> 0:05:18.120 you know, can you tell us a little bit more 0:05:18.120 --> 0:05:20.560 broadly about the retail space. Are there other shops that 0:05:20.600 --> 0:05:22.200 consumers are preferring these days? 0:05:22.880 --> 0:05:23.120 Yeah? 0:05:23.160 --> 0:05:25.680 Well, clearly off price. And when you think about what's 0:05:25.720 --> 0:05:28.760 happening here with Coals, they're buying frequently, which is more 0:05:28.760 --> 0:05:31.360 of an off price strategy there all the buying occurs 0:05:31.360 --> 0:05:34.279 on a weekly basis. Tom Kingsbury, who's the CEO. 0:05:35.000 --> 0:05:35.640 He is the. 0:05:35.560 --> 0:05:39.880 One who turned Burlington Stores into the fast growing off 0:05:39.960 --> 0:05:41.560 price retailer. 0:05:41.120 --> 0:05:41.600 That it is. 0:05:42.000 --> 0:05:45.320 He lends a lot of credibility. So yes, you're seeing 0:05:45.320 --> 0:05:48.400 the consumer that's attracted to Coals, they also shop at 0:05:48.400 --> 0:05:51.080 off price, and off price has been a big winner 0:05:51.200 --> 0:05:54.880 for that value consumer. And then other retailers that are 0:05:54.880 --> 0:05:58.839 doing well are those that are executing and really delivering 0:05:58.880 --> 0:06:02.560 on the merchandise. And I'm speaking to apparel retailers like 0:06:02.560 --> 0:06:07.480 an Abercrombie Urban Outfitters with their anthropology and their free 0:06:07.520 --> 0:06:11.400 people brands. So it's really it's kind of a tale 0:06:11.400 --> 0:06:14.880 of two stories. Those that are executing are delivering on results, 0:06:15.440 --> 0:06:18.719 and here we're in a transition phase at Coal's and 0:06:18.760 --> 0:06:20.760 they're hoping to be able to turn the tide of 0:06:20.800 --> 0:06:24.599 declining sales for this department store operator. And they do 0:06:24.680 --> 0:06:28.200 have one benefit. They're off the mall, not in the mall. 0:06:28.520 --> 0:06:31.520 That makes them different, so it's easier you know, to 0:06:31.560 --> 0:06:33.640 get into the parking lot, get into the store and 0:06:33.680 --> 0:06:36.799 get you know, and get out again. So it's easier access. 0:06:37.200 --> 0:06:39.839 And like you pointed out, they have Amazon returns. It's 0:06:39.920 --> 0:06:43.480 not additive to sales, but it does bring in traffic. True, 0:06:43.520 --> 0:06:47.280 and then more importantly, so Fora has been the biggest driver. 0:06:47.520 --> 0:06:50.599 Our Thanks to Mary Ross Gilbert Bloomberg Intelligence senior equity 0:06:50.640 --> 0:06:52.440 analyst covering retail, we. 0:06:52.440 --> 0:06:54.880 Move now to the airline industry and Boeing. So Boeing 0:06:54.920 --> 0:06:57.120 has been dealing with the growing fallout from an early 0:06:57.279 --> 0:07:01.040 January accident that has since plunged the company into crisis, 0:07:01.040 --> 0:07:04.160 and it's also caused Boeing to reduced aircraft deliveries. 0:07:03.880 --> 0:07:04.440 As a result. 0:07:04.600 --> 0:07:07.080 Southwest Airlines announced this week that it plans to cut 0:07:07.120 --> 0:07:10.920 capacity this year, halt most hiring, and review its spending plants. 0:07:11.160 --> 0:07:14.640 And separately, Boeing said that it's aircraft deliveries trailed rival 0:07:14.680 --> 0:07:15.760 Airbus last month. 0:07:15.880 --> 0:07:17.080 So let's get more on all of this. 0:07:17.200 --> 0:07:20.280 We were joined by George Ferguson, Bloomberg Intelligence Senior Aerospace, 0:07:20.360 --> 0:07:23.240 Defense and Airlines analyst, and we asked him how challenges 0:07:23.240 --> 0:07:25.960 of Boeing will impact the US airline market going forward. 0:07:26.280 --> 0:07:29.320 I think that, you know, the Boeing challenges will provide 0:07:29.400 --> 0:07:32.400 a little bit of firmness to the marketplace. But I 0:07:32.440 --> 0:07:34.840 still see, I think a US airline market that looks 0:07:34.840 --> 0:07:38.280 like it has plenty of capacity in it, and I 0:07:38.360 --> 0:07:42.920 still think fares are flatish to maybe going down for 0:07:43.000 --> 0:07:46.600 the year unless Boeing really curtails their deliveries for the year. 0:07:47.160 --> 0:07:50.160 Yeah, it's interesting because if I read this issue about 0:07:50.200 --> 0:07:53.000 Boeing and I read this cut in capacity, but my 0:07:53.080 --> 0:07:54.840 first thought is going to be that that means higher 0:07:54.840 --> 0:07:58.280 prices for consumers. So what accounts for the difference there? 0:07:58.840 --> 0:08:00.920 Well, first of all, I think the US market already 0:08:01.000 --> 0:08:05.240 had sufficient capacity last year. I think we're bouncing back 0:08:05.240 --> 0:08:07.640 from a pandemic. We saw a bunch of sort of 0:08:07.720 --> 0:08:11.600 revenge travel earlier in this bounce back, and that was 0:08:11.720 --> 0:08:14.040 very leisure driven. I don't think we're going to see 0:08:14.080 --> 0:08:17.400 as much of the leisure driven travel this year. Not 0:08:17.480 --> 0:08:19.120 that I got to pay whatever it's going to take 0:08:19.520 --> 0:08:21.560 to get down to Disney, so you'll see it. 0:08:21.640 --> 0:08:23.000 Maybe a smaller. 0:08:22.560 --> 0:08:26.080 Growth amount in leisure and business isn't fully back. 0:08:26.120 --> 0:08:27.000 We know that. 0:08:27.320 --> 0:08:29.920 So we've got twenty nineteen more than twenty nineteen levels 0:08:29.960 --> 0:08:33.880 of capacity in the marketplace, less business and maybe a 0:08:33.920 --> 0:08:37.520 little more leisure. So when I add that all up again, 0:08:37.600 --> 0:08:40.000 I kind of see a market that looks like it's 0:08:40.040 --> 0:08:42.560 got plenty of capacity. If you look at the guidance 0:08:42.600 --> 0:08:46.800 that Southwest gave on revenue per available seat mile, they 0:08:46.960 --> 0:08:50.040 lowered that at this discussion, So it tells me that 0:08:50.080 --> 0:08:52.520 the market is weaker. You know, at this guidance point, 0:08:52.800 --> 0:08:55.199 the market is weaker than they initially thought. 0:08:55.480 --> 0:08:57.600 And at the same time, fuel prices were a little 0:08:57.600 --> 0:08:59.400 bit higher. So what it looks like. 0:08:59.360 --> 0:09:01.520 To me is Southwest numbers are going to come in 0:09:01.640 --> 0:09:05.240 lighter than we expected in one queue. That's not a 0:09:05.280 --> 0:09:08.120 super healthy market. That's on a market that's got so 0:09:08.200 --> 0:09:10.280 much constraint that they can price whatever they want to 0:09:10.400 --> 0:09:12.760 for airline tickets and make lots of profits. 0:09:12.840 --> 0:09:15.599 Okay, so it's a trifecta, Like they do have a 0:09:15.640 --> 0:09:18.360 specific Boeing issue and the fuel prices and then the 0:09:18.360 --> 0:09:22.880 broader softer market that's a general airline issue. United also 0:09:23.360 --> 0:09:26.000 told Boeing to stop building seven thirty seven Max. 0:09:25.840 --> 0:09:29.400 Ten jets for the carrier. That sounds dramatic and bad. 0:09:29.400 --> 0:09:30.520 What does that actually mean? 0:09:31.000 --> 0:09:33.320 You know, I think it sounds like Scott Kirby, the 0:09:33.360 --> 0:09:35.480 CEO of United, is just getting real about what he 0:09:35.520 --> 0:09:37.800 thinks Boeing can deliver in the near term. I guess, 0:09:37.880 --> 0:09:39.959 you know, if you sit around and you kind to 0:09:40.040 --> 0:09:41.600 hope and hope and hope they're going to get the 0:09:41.600 --> 0:09:45.199 Max ten certified, and you wait on those deliveries based 0:09:45.240 --> 0:09:47.719 on that hope, and the certification keeps getting pushed out, 0:09:47.720 --> 0:09:51.480 and it's really hard to plan. So Scott Kirby said, hey, look, 0:09:51.840 --> 0:09:54.440 stop worrying about the Dash ten. Just bring me Dashed on. 0:09:54.559 --> 0:09:57.240 He's saying, look, I just want airplanes. Bring me airplanes. 0:09:57.520 --> 0:09:59.880 I think the market's generally going to be strong for me. 0:10:00.400 --> 0:10:02.719 He's in the premium segment too, right, which I think 0:10:02.720 --> 0:10:05.280 from the guidance we saw from Airlines, premium is holding 0:10:05.360 --> 0:10:05.760 up better. 0:10:06.120 --> 0:10:07.520 So he wants airplanes. 0:10:07.840 --> 0:10:09.439 He wants to go out and find some of those 0:10:09.440 --> 0:10:11.880 three twenty one larger scale from Airbus. 0:10:12.280 --> 0:10:14.280 I think it's okay. I think Scott's being a realist. 0:10:14.520 --> 0:10:16.520 There's a lot of challenges right now at Boeing, and 0:10:16.559 --> 0:10:19.480 it feels to me like certification. 0:10:18.960 --> 0:10:20.480 For the Dash seven and the Dash ten. 0:10:21.000 --> 0:10:23.040 You know, the dashten being the biggest variant of the 0:10:23.040 --> 0:10:26.040 seven thirty seven. There's just almost no way they're going 0:10:26.120 --> 0:10:28.959 to get pushed out longer than what we expect given 0:10:29.000 --> 0:10:31.320 the problems in manufacturing and Boeing right now. 0:10:31.640 --> 0:10:32.200 And what is that? 0:10:32.280 --> 0:10:34.400 So is there any redacross that we should start thinking 0:10:34.400 --> 0:10:35.359 about for Airbus? 0:10:36.240 --> 0:10:39.600 Here's the challenge of this industry right the readacross is. Look, 0:10:39.720 --> 0:10:41.560 Airbus ought to be able to go get a lot 0:10:41.600 --> 0:10:43.720 more orders for its Airbus A three to twenty one. 0:10:44.320 --> 0:10:46.959 But the problem Scott has, and he's a really good 0:10:47.040 --> 0:10:49.960 customer and they're working hard to find him slots, is 0:10:50.000 --> 0:10:52.679 that they probably can't get him three twenty one's for 0:10:52.840 --> 0:10:55.880 four or five years from now. So that doesn't fix 0:10:55.920 --> 0:10:59.720 his near term problems. And customers that would be smaller 0:10:59.720 --> 0:11:02.480 than United have an even larger problem because air Bus 0:11:02.559 --> 0:11:03.880 isn't going to work as hard to try to get 0:11:03.920 --> 0:11:07.880 them into the delivery cadence. The industry is operating at 0:11:08.000 --> 0:11:11.720 sort of max capacity now. It's pushing its supply chains 0:11:11.760 --> 0:11:14.959 to do better, but we just don't see increases of 0:11:15.080 --> 0:11:17.800 you know, build rates kind of more than ten percent 0:11:17.880 --> 0:11:20.720 per year at best. It's really hard to bring up 0:11:20.720 --> 0:11:24.360 that supply chain, So I think the duopoly means that 0:11:24.640 --> 0:11:26.920 Airbus can't really capitalize that well on this. 0:11:27.520 --> 0:11:30.200 If you think about what the challenges are facing Boeing, 0:11:30.600 --> 0:11:32.680 is there much of a difference to the company if 0:11:32.720 --> 0:11:35.240 we get a soft economic landing, a hard economic landing, 0:11:35.320 --> 0:11:36.000 or no landing. 0:11:36.920 --> 0:11:39.560 Honestly, I think for all the air framers there isn't. Right. 0:11:39.640 --> 0:11:43.920 So again, Airbus and Boeing building aircraft at rates much 0:11:44.000 --> 0:11:46.960 lower than the customers are demanding right now. You know, 0:11:47.000 --> 0:11:49.080 customers like Scott Kirby want to come in and buy 0:11:49.120 --> 0:11:51.920 a three twenty one's next three or four years, can't 0:11:51.960 --> 0:11:52.480 get them. 0:11:52.760 --> 0:11:53.800 So I think even in. 0:11:53.800 --> 0:11:58.920 A hard landing, soft landing, no recession environment, these folks 0:11:58.960 --> 0:12:02.440 just keep working on making the supply chain better, so 0:12:02.480 --> 0:12:04.920 the supply chain can put more of the components on 0:12:04.960 --> 0:12:07.920 the factory floor and build more aircraft. 0:12:07.960 --> 0:12:08.720 Although I would. 0:12:08.559 --> 0:12:12.480 Say maybe in a harder economic landing it might free 0:12:12.559 --> 0:12:15.240 up some of the labor that they need and keep 0:12:15.280 --> 0:12:18.560 some of the labor more stable at their suppliers. And 0:12:18.600 --> 0:12:22.319 that's really the challenge right here, is labor at the suppliers. 0:12:22.720 --> 0:12:25.920 Stabilizing it. You need smart people there who've been doing 0:12:26.160 --> 0:12:28.080 the process for a long time, so they do it 0:12:28.160 --> 0:12:31.040 right all the time, know the right processes and procedures. 0:12:31.360 --> 0:12:33.880 All right, our thanks to George ferguson Bloomberg Intelligence and 0:12:33.920 --> 0:12:35.920 your Aerospace, Defense and Airlines analyst. 0:12:36.160 --> 0:12:38.520 Coming up, we'll break down why investors were excited this 0:12:38.559 --> 0:12:40.720 week about the computer tech company Oracle. 0:12:41.040 --> 0:12:43.440 You were listening to Bloomberg Intelligence some on Bloomberg Radio, 0:12:43.520 --> 0:12:46.080 providing in depth research and data on two thousand companies 0:12:46.120 --> 0:12:48.840 in one hundred and thirty industries. You can access Bloomberg 0:12:48.880 --> 0:12:50.760 Intelligence through Bigo on the terminal. 0:12:50.840 --> 0:12:53.880 I'm Alex Steele and I'm Jen Ryan. This is Bloomberg. 0:13:00.960 --> 0:13:04.840 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:13:04.920 --> 0:13:07.600 weekdays at ten am Eastern on Apple car Play and 0:13:07.600 --> 0:13:10.679 Android Auto with the Bloomberg Business app. Listen on demand 0:13:10.679 --> 0:13:15.559 wherever you get your podcasts, or watch us live on YouTube. 0:13:16.000 --> 0:13:18.520 Hey everyone, I'm Alex Steel and I'm Jen Ryan filling 0:13:18.520 --> 0:13:19.480 in for Paul Sweeney. 0:13:19.600 --> 0:13:21.280 We moved next to e SG. 0:13:21.520 --> 0:13:24.520 That's Environmental, Social and Governance Strategy. It's been one of 0:13:24.520 --> 0:13:26.280 the main themes over the past few years. 0:13:26.400 --> 0:13:29.480 And you know Alex Annett thirteen billion dollars was pulled 0:13:29.520 --> 0:13:32.560 last year from US based sustainable funds due to subparer 0:13:32.559 --> 0:13:36.400 investment performance and heightened political scrutiny. That's according to analysts 0:13:36.400 --> 0:13:37.200 at morning Stars. 0:13:37.200 --> 0:13:39.680 So we were joined this week by SEEN contractor Bloomberg 0:13:39.720 --> 0:13:42.040 Intelligence and your ESG strategists, and she took a look 0:13:42.040 --> 0:13:44.719 at ESG ETFs and we first asked her to give 0:13:44.720 --> 0:13:47.080 her outlook for the ETFs in twenty twenty four. 0:13:47.120 --> 0:13:51.040 In the US. We expect to continue it pause now. 0:13:51.320 --> 0:13:53.480 I would say last year was the first time that 0:13:53.600 --> 0:13:56.880 flu is sterne negative. We sought about four billion in 0:13:57.000 --> 0:14:00.559 outfluce for me SG ETFs. Though I will say that 0:14:00.920 --> 0:14:03.480 I don't think that represents some kind of like mass 0:14:03.600 --> 0:14:06.080 exodus from the strategy. And I'm happy to tell you why. 0:14:06.160 --> 0:14:09.360 I just see a pause sort of less outflows but 0:14:09.440 --> 0:14:13.040 also less inflows. If you look at the outflows, most 0:14:13.040 --> 0:14:15.800 of it were from a handful of funds, right, So 0:14:15.880 --> 0:14:18.320 in a world where you have five hundred plus funds, 0:14:18.360 --> 0:14:21.560 if one loses money, and it's really one that's all 0:14:21.640 --> 0:14:25.320 fifty percent of most outflows, it's a change in one 0:14:25.360 --> 0:14:28.480 investor sentiment. It's not like one hundred funds picking up 0:14:28.520 --> 0:14:29.280 and selling off. 0:14:29.920 --> 0:14:33.000 Do you think though money flows more into other areas 0:14:33.040 --> 0:14:36.760 of ESG ETFs, like in Europe whose policy and I 0:14:36.760 --> 0:14:39.480 guess commitment. I mean, I say commitment because we don't 0:14:39.520 --> 0:14:42.440 really know how all the energy transition stuff will shake 0:14:42.480 --> 0:14:44.760 out in terms of allocating capital, but where it seems 0:14:44.760 --> 0:14:47.360 like it's more consistent with messaging. 0:14:46.960 --> 0:14:51.000 One hundred percent. So Europe is still ninety nine percent 0:14:51.040 --> 0:14:54.440 of the ESGTF flows. It's about okay, yeah, it's about 0:14:54.520 --> 0:14:57.240 not the forty billion, and I mentioned US as a 0:14:57.320 --> 0:15:01.080 negative four billions, so very big divide. That being said, 0:15:01.160 --> 0:15:03.560 in terms of strategy, we are seeing a bit of 0:15:03.600 --> 0:15:06.000 a I want to call it an expansion, you know, 0:15:06.160 --> 0:15:09.520 a move to climate, to move to more of the thematics, 0:15:09.600 --> 0:15:10.920 that kind of move. 0:15:11.000 --> 0:15:12.960 I guess could you explain that a little bit more? 0:15:13.040 --> 0:15:15.520 Sure? So, when we think of ESG, I think of 0:15:15.560 --> 0:15:19.680 a broad sort of environmental, social, and governance strategy, all three. 0:15:20.120 --> 0:15:24.000 What I find people concentrating on more now is one 0:15:24.040 --> 0:15:26.640 of the eds or the G right, more of the themes. 0:15:26.680 --> 0:15:29.120 And I think a piece of that in the US 0:15:29.280 --> 0:15:32.440 is this push against the ESG label sort of all 0:15:32.520 --> 0:15:35.480 three combined, which is why it's you know, focusing on 0:15:35.520 --> 0:15:38.520 something simpler like gender or climate things like that. 0:15:38.880 --> 0:15:42.880 Why do you think that in the US ESG ETFs 0:15:42.960 --> 0:15:46.040 haven't been maybe as popular as over in Europe. Is 0:15:46.080 --> 0:15:48.720 it the quality of the ETFs or is it the 0:15:48.760 --> 0:15:50.280 feelings behind ESG. 0:15:51.040 --> 0:15:53.480 So I think it's two things. So first, they were 0:15:53.600 --> 0:15:56.600 very popular about twenty twenty two, I want to say, 0:15:56.600 --> 0:15:59.880 almost as popular as Europe, but overtook Europe a little 0:15:59.880 --> 0:16:03.160 bit in terms of growth. That being said, I think 0:16:03.200 --> 0:16:06.640 the political backlash has had quite a bit of implication on, 0:16:07.280 --> 0:16:11.360 you know, its continued growth. Also, the one challenge in 0:16:11.400 --> 0:16:15.520 the US is that growth has been very concentrated to 0:16:15.560 --> 0:16:18.320 a few investors, which means that just a handful of 0:16:18.320 --> 0:16:20.840 investors put large chunks of money. So what we need 0:16:20.880 --> 0:16:23.440 today is we need a wide investor base, which I 0:16:23.480 --> 0:16:25.960 think is going to slow because of this backlash. 0:16:26.160 --> 0:16:28.040 I wonder if you could talk a little bit about 0:16:28.080 --> 0:16:30.800 the sentiment there in the US, and can you, if possible, 0:16:31.000 --> 0:16:36.400 look ahead past the November election here, depending on who wins, 0:16:36.440 --> 0:16:38.640 who takes the oval office what do you think that 0:16:38.720 --> 0:16:39.720 will do to sentiment. 0:16:40.600 --> 0:16:43.680 I think it's definitely going to be driven by who 0:16:43.680 --> 0:16:46.120 comes into office, but at the same time, also who 0:16:46.160 --> 0:16:49.160 controls some of the states right. And that being said, 0:16:50.000 --> 0:16:52.360 the way I see it is if you have like 0:16:52.400 --> 0:16:54.920 the SEC regulation and you have a number of states 0:16:54.960 --> 0:16:57.600 suing the SEC because of that, that's going to continue 0:16:57.680 --> 0:16:58.920 to have a sort of a little bit of a 0:16:58.960 --> 0:16:59.880 negative backlash. 0:17:00.520 --> 0:17:03.840 Also, I mean, the backlash started before we even the. 0:17:03.800 --> 0:17:07.679 Backlash right the back right. So I think the presidential 0:17:07.800 --> 0:17:10.480 cycle will have some impact. But I think the whole 0:17:11.119 --> 0:17:13.399 sort of backlash has to come down a little bit 0:17:13.520 --> 0:17:15.880 or go in some direction for this to have well 0:17:16.160 --> 0:17:16.800 some impact. 0:17:16.840 --> 0:17:19.000 What do you make of the idea that maybe ESG 0:17:19.240 --> 0:17:22.120 doesn't actually help companies profits like. 0:17:22.359 --> 0:17:26.200 Yeah, I mean, I can't for certain say that ESG 0:17:26.359 --> 0:17:29.440 has proven to outperform. I don't think anybody can say 0:17:29.440 --> 0:17:32.399 that unless they've done some kind of fancy quant analysis. 0:17:32.440 --> 0:17:35.119 We're starting to do that. I think we still have 0:17:35.240 --> 0:17:38.320 too limited a time history of data to actually make 0:17:38.359 --> 0:17:40.840 any kind of implication yet. 0:17:41.040 --> 0:17:44.480 It's interesting, though, because I always understood the support for 0:17:44.560 --> 0:17:48.000 DEI and the support for ESG came in part from 0:17:48.359 --> 0:17:51.439 the new generation of consumers, for millennials who want to 0:17:51.520 --> 0:17:55.359 vote with their pocketbook, and also the diversification that's coming 0:17:55.520 --> 0:17:58.640 in the United States workforce. How does that ply into 0:17:58.680 --> 0:18:01.480 your view that the ESG back clash my fade away 0:18:01.480 --> 0:18:01.720 a bit. 0:18:02.200 --> 0:18:05.280 So I guess I have two opinions there. So my 0:18:05.359 --> 0:18:08.000 one opinion, as we've been saying for years that this 0:18:08.080 --> 0:18:10.960 whole transfer of with is going to happen, we still 0:18:11.000 --> 0:18:14.720 see the ESG investor base as highly institutional and it's 0:18:14.760 --> 0:18:18.200 not very retail based. So in that sense, I haven't 0:18:18.240 --> 0:18:21.360 seen this transfer of money come into effect. Will that 0:18:21.400 --> 0:18:24.120 have at least not in the ESGDF food, Will that 0:18:24.280 --> 0:18:28.000 happen OVID generations and you know over to time period. 0:18:28.680 --> 0:18:31.560 I do think so, but we haven't seen it yet, 0:18:31.600 --> 0:18:33.480 and we've been talking about it for a long time. 0:18:33.840 --> 0:18:37.920 Our thanks to Streen contractor Bloomberg Intelligence senior ESG strategists. 0:18:37.920 --> 0:18:39.399 All right, let's go to tech. Now, look at the 0:18:39.480 --> 0:18:42.600 computer technology company Oracle. At the beginning of the week, 0:18:42.640 --> 0:18:45.360 Oracle reported total sales in the third quarter rose over 0:18:45.400 --> 0:18:48.439 seven percent to thirteen point three billion dollars. That was 0:18:48.560 --> 0:18:50.639 roughly in line with analyst expectations. 0:18:50.720 --> 0:18:53.440 And you know alex Oracle also said that cloud revenue 0:18:53.480 --> 0:18:56.800 jumped twenty five percent and that excited investors. On Tuesday, 0:18:57.119 --> 0:19:00.000 Oracle shares posted their biggest gain in more than two years. 0:19:00.080 --> 0:19:02.879 So we were joined by Brody Ford, Bloomberg Technology reporter, 0:19:02.920 --> 0:19:04.800 and we asked him why the street was so excited 0:19:04.800 --> 0:19:05.960 about Oracles results. 0:19:06.400 --> 0:19:09.040 There's been a big debate over the last year. Can 0:19:09.080 --> 0:19:12.520 Oracle transform from this kind of old school on premise, 0:19:12.720 --> 0:19:15.160 come to your office and install it on your servers 0:19:15.240 --> 0:19:18.760