WEBVTT - Nvidia Makes $5 Billion Investment into Intel

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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<v Speaker 2>Certainly, the news of the day from a company perspective

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<v Speaker 2>is Intel. We saw early this morning, we saw a

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<v Speaker 2>pretty cool story in Nvidia deciding to buy or invest

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<v Speaker 2>five billion dollars into Intel vis a vis a stock purchase,

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<v Speaker 2>a straight up purchase of common stock there. And that's

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<v Speaker 2>alongside the earlier investment by the US government of a

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<v Speaker 2>ten percent stake in Intel. On the stock reacting favorably

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<v Speaker 2>here today, shares of Intel up about twenty six percent today.

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<v Speaker 2>That sets a new fifty two week high. Stock's up

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<v Speaker 2>fifty seven percent here to date.

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<v Speaker 3>The stock was.

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<v Speaker 2>Really hurting as recently six months ago, but boy, it's

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<v Speaker 2>gotten a couple big shots in the arm as it

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<v Speaker 2>relates to their AI outlook. Let's check in with Man

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<v Speaker 2>Deep Singing. He's a senior tech analyst for Bloomberg Intelligence.

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<v Speaker 2>Mandy Wet, how surprised were you in Silicon Valley when

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<v Speaker 2>we woke up this morning and saw that a competitor

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<v Speaker 2>was going to take a make a five billion dollar investment.

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<v Speaker 3>Yeah, I was expecting something to happen in terms of

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<v Speaker 3>an investment in Intel after the administration took a ten

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<v Speaker 3>percent stake, but an investment from Nvidia that was the

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<v Speaker 3>last thing that I anticipated. So I was more in

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<v Speaker 3>the camp that one of the hyperscalers, whether It's and Amazon,

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<v Speaker 3>did have a partnership with Intel. It was announced back

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<v Speaker 3>in twenty twenty four, so I thought it would be

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<v Speaker 3>one of the hyperscalers that would make an investment. So

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<v Speaker 3>clearly the surprise element was the fact that the partnership

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<v Speaker 3>or the investment wasn't for foundry, but it was more

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<v Speaker 3>chip code design. And look, that's where Nvidia has taken

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<v Speaker 3>share from Intel over the past two years, is Intel

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<v Speaker 3>was a dominant force in data centers with their x

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<v Speaker 3>eighty six architecture. Nvidia with the shift to AI, really

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<v Speaker 3>took share from Intel. And so it is a big

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<v Speaker 3>surprise the fact that they are investing five billion dollars

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<v Speaker 3>and the plan is to develop a co design chip

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<v Speaker 3>for you know, PCs as well as data centers.

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<v Speaker 4>Them better compete against a MD which we see a

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<v Speaker 4>little under pressure today.

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<v Speaker 3>My mind, Nvidia is almost a monopoly in AI chips.

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<v Speaker 4>So the fact that got into trust regulators. Yeah, but

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<v Speaker 4>you know, I when I heard about this deal, I

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<v Speaker 4>just thought irony, right, this tie up between two Silicon

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<v Speaker 4>Valley rivals. But I think it also really underlines the

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<v Speaker 4>power shift. When you think about it, you would have

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<v Speaker 4>thought years ago, well, Intel would be the aggressor here, right,

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<v Speaker 4>But the sort of the tables have turned.

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<v Speaker 3>They have, and look, that's just a function of where

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<v Speaker 3>Intel is at right now, both in terms of their

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<v Speaker 3>foundry positioning as well as you know, the data center

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<v Speaker 3>market share that they have lost. Where they still have

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<v Speaker 3>a dominant share is in PCs and desktops, and that's

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<v Speaker 3>where everyone was anticipating a big refers cycle because of AI.

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<v Speaker 3>At the end of the day, you know, if AI

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<v Speaker 3>was to become pervasive, you know, we'll have to upgrade

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<v Speaker 3>our devices, whether it's PCs or smartphones. And to my mind,

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<v Speaker 3>Intel does have a good chance of being part of

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<v Speaker 3>that refer cycle. So what Nvidia has done is really

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<v Speaker 3>kind of put a stake in that refer cycle where

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<v Speaker 3>if they can develop a code design chip for the

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<v Speaker 3>PCs and laptops. Then that's where it could create another

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<v Speaker 3>line of business similar to gaming. So right now gaming

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<v Speaker 3>is about high single digital percentage of Nvidia's revenue. This

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<v Speaker 3>could be another line of business that they could add

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<v Speaker 3>if this partnership was to result in a product or

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<v Speaker 3>a chip that everyone would want to use.

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<v Speaker 2>All right, Mandy, I'm gonna put my cynical Wall Street

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<v Speaker 2>hat on this is simply I agree with a political

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<v Speaker 2>move by Jensen Wang, the cozy up to the Trump

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<v Speaker 2>administration by co investing alongside the US government and Intel.

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<v Speaker 2>Whether it's a good investment.

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<v Speaker 3>Or not, if five billion dollars is like change for

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<v Speaker 3>a company like in Vidia that's almost generating one hundred

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<v Speaker 3>billion dollars in free cash flow every year right now.

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<v Speaker 2>So there are the clients you talked to, the investage

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<v Speaker 2>you talked to, but they think there is some you know,

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<v Speaker 2>some soft upside to in Nvidia by investing alongside the government.

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<v Speaker 3>I mean, in Vidia right now is taking stakes in

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<v Speaker 3>a lot of companies Corvieve and a lot of neo

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<v Speaker 3>clouds because they want to make big bets. With that

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<v Speaker 3>kind of balance sheet that Nvidia has, they can afford

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<v Speaker 3>to do it. And so this is another one of

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<v Speaker 3>those minority stakes that they took. I don't think they

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<v Speaker 3>have any high expectations here, but still it does help

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<v Speaker 3>them politically.

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<v Speaker 2>I mean, these the numbers are blow me away. With

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<v Speaker 2>the tech companies that Man deep sings that follows this

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<v Speaker 2>year call it, you know the calendar of twenty five

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<v Speaker 2>fiscal year twenty six, one hundred billion dollars of free

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<v Speaker 2>cash flow. Next year one hundred and forty billion dollars

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<v Speaker 2>of free cash flow, free cash This is the stuff

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<v Speaker 2>like literally, we don't know what to do with it.

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<v Speaker 2>So we're either going to give it lders, we're gonna

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<v Speaker 2>I don't know, or we're gonna make or we make

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<v Speaker 2>investments in So there you go.

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<v Speaker 4>But Paul was talking earlier about how he thinks the

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<v Speaker 4>pie is big enough right for for all these players,

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<v Speaker 4>and that not to worry too much about AMD. Is

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<v Speaker 4>this tie up a threat to them? Do you think

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<v Speaker 4>it is?

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<v Speaker 3>If they come up with a product. So, if they

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<v Speaker 3>come up with a chip that can drive a PC

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<v Speaker 3>refresh cycle, it's gonna hurt AMD. But look, these design

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<v Speaker 3>wins take time to result in a product, and strategically, yeah,

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<v Speaker 3>they will develop something. That's why I go back to

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<v Speaker 3>what Amazon and Intel data year back. Did anything change

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<v Speaker 3>after that?

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<v Speaker 5>No good point?

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<v Speaker 4>Is there anybody out there that maybe AMD now should

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<v Speaker 4>start to cozy up to.

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<v Speaker 3>Probably one of the hyperscalers because the hyperscalers are doing

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<v Speaker 3>a lot of their custom chips and if MD is

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<v Speaker 3>part of that ecosystem, that certainly will help drive up

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<v Speaker 3>their order. So I expect them to partner with one

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<v Speaker 3>of the hyperscalers.

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<v Speaker 2>Stay with us. More from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 4>Want to talk supply chain now, and who better to

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<v Speaker 4>do that with than Jeene Soroca, CEO the busiest port

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<v Speaker 4>in the US, the Port of Los Angeles. And guess what,

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<v Speaker 4>he's here on the East coast, right here in our

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<v Speaker 4>New York studios. So Gene, thanks so much for joining us.

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<v Speaker 6>Great to see you, alexis great.

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<v Speaker 4>To see you. I know the LA Port handles a

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<v Speaker 4>lot of international cargo, especially from Asia. I know that

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<v Speaker 4>trade volumes in August were near all time records. Here

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<v Speaker 4>we are mid September. Where do things stand now.

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<v Speaker 6>It's been a roller coaster of a year. When hard

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<v Speaker 6>trade policy comes out, you see a real slowdown in

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<v Speaker 6>cargo flows. Then when that policy is softened and deadlines extended,

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<v Speaker 6>cargo picks up for that window of opportunity, and that's

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<v Speaker 6>what we've seen. But July and August combined are our

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<v Speaker 6>busiest two months in the one hundred and seventeen year

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<v Speaker 6>history of the court. Folks are bringing in inventory before

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<v Speaker 6>the next policy statement may come out, trying to protect

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<v Speaker 6>themselves from the all important year end holiday season for retailers,

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<v Speaker 6>and the parts for American factories are keeping a lower

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<v Speaker 6>but very steady flow.

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<v Speaker 2>So Gene, A lot of people are unsure how tariffs work,

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<v Speaker 2>But the reality is, I believe they occur your port.

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<v Speaker 2>The actual collection of the tariff occurs at.

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<v Speaker 6>On your turf, right That's right, Paul, and a cargo

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<v Speaker 6>container cannot leave the port without that tariff being paid

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<v Speaker 6>by the importer of records to US Customs.

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<v Speaker 2>There's customs office at your port, and what they do

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<v Speaker 2>is collect whatever tariffs may be on any particular good

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<v Speaker 2>and that's how that happens all the time.

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<v Speaker 6>I guess that's exactly right. And LA is the largest

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<v Speaker 6>customs district in the nation. Director Africa Bell runs that

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<v Speaker 6>shop for US Customs and her rank and final members

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<v Speaker 6>are working around the clock just trying to keep up

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<v Speaker 6>with what the tariffs are, how to apply them to

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<v Speaker 6>the shipments and keep the commerce moving.

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<v Speaker 4>It's got to be really confusing for them because I

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<v Speaker 4>just feel like they believe constantly. How many companies, though,

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<v Speaker 4>are really able to pull forward their inventory. Are you

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<v Speaker 4>still seeing that in a big way as we move

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<v Speaker 4>closer to the holiday shopping site?

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<v Speaker 6>Yeah, Alexis, here's the interesting fact. You've got about one

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<v Speaker 6>hundred and twenty five thousand companies that call Los Angeles

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<v Speaker 6>home to import their goods. Over the course of a year,

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<v Speaker 6>no one company has more than a five percent share.

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<v Speaker 6>So we're made up mainly of small to middle sized businesses,

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<v Speaker 6>some of whom are telling me now they're dipping into

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<v Speaker 6>savings to pay these tariffs.

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<v Speaker 2>So our is our customs office in fact keeping up

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<v Speaker 2>with the collection of tariffs on all these additional goods.

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<v Speaker 2>I mean, did they have the manpower to do it all?

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<v Speaker 2>Do they have the facilities to do all, the technology

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<v Speaker 2>to do it all.

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<v Speaker 6>They truly have risen to the occasion, Paul and doing

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<v Speaker 6>a great job. I look at those vital statistics of

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<v Speaker 6>the port through the Port Optimizer every morning, a ninety

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<v Speaker 6>second flash report. Our numbers on velocity are better than

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<v Speaker 6>they were before COVID.

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<v Speaker 5>Wow, you know, I was.

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<v Speaker 4>I think we also those dramatic photos of the cargo

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<v Speaker 4>falling off in Long Beach, not your report, but at

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<v Speaker 4>the Port of Long Beach. I think it highlights also

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<v Speaker 4>what a dangerous job this can be for those workers.

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<v Speaker 4>But I'm just curious, did that have any impact, knockoff

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<v Speaker 4>effect on your report?

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<v Speaker 6>That's right, Alexis.

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<v Speaker 1>You know.

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<v Speaker 6>The first thing is, thank goodness, no one got hurt.

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<v Speaker 6>The men and women of the International Longshore and Warehouse

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<v Speaker 6>Union are on the ground moving all this cargo, and

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<v Speaker 6>thankfully no one was in harm's way. The investigation will continue.

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<v Speaker 6>I was talking to some folks last night at a

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<v Speaker 6>big industry event back in Long Beach. I've been able

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<v Speaker 6>to get their cargo out yet, So the US Coast Guard,

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<v Speaker 6>National Transportation Safety Board are going to take a deep

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<v Speaker 6>look at this. See what the causals are and how

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<v Speaker 6>we can make sure it doesn't get repeated again. But effectively,

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<v Speaker 6>that particular terminal in the port of Long Beach is

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<v Speaker 6>an investigation site, So shipping lines are having a maneuver

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<v Speaker 6>around that as best they can, but no real slowdowns

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<v Speaker 6>because of it.

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<v Speaker 5>Amazing.

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<v Speaker 2>So the economic data seem to suggest that in terms

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<v Speaker 2>of Tariff's questions who pays for it? We know that

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<v Speaker 2>it gets collected at your port by the US Customers Office,

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<v Speaker 2>and then it's a question from that perspective, how much

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<v Speaker 2>gets passed along down the line to the wholesaler, to

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<v Speaker 2>the distributor, to the retailer, and then ultimately to the consumer.

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<v Speaker 2>What's from your view at the port, do you have

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<v Speaker 2>any understanding how that's happening, how that's playing it?

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<v Speaker 6>Yeah, Paul, Three real areas that importers have been focusing on.

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<v Speaker 6>Can I go back to my manufacturer and negotiate a

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<v Speaker 6>little bit on the price and see if we can

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<v Speaker 6>mitigate some mixed effect there? Do I just absorb it

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<v Speaker 6>and try to find efficiencies in my own company. We've

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<v Speaker 6>seen the results from the big auto companies in Detroit

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<v Speaker 6>that hasn't gone well either. Mary Barro announcing big, big

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<v Speaker 6>tariff hits on cost, same thing with Jim Farley over

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<v Speaker 6>at Ford, and then others are saying that they're trying

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<v Speaker 6>to pass on to their customers if they're in the

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<v Speaker 6>factory business manufacturing, or to consumers, and we have seen

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<v Speaker 6>that as well. So it's just kind of a spread

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<v Speaker 6>across those three categories, and I think we'll start seeing

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<v Speaker 6>even more of that hit towards the fourth quarter of

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<v Speaker 6>this year.

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<v Speaker 4>I know that in just a few weeks, if benefit holes,

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<v Speaker 4>we're supposed to be collecting tariffs on Chinese ships that

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<v Speaker 4>call it ports at US ports. I know that President

0:11:36.040 --> 0:11:38.600
<v Speaker 4>Trump's going to be speaking with Jijinping and a phone

0:11:38.600 --> 0:11:44.720
<v Speaker 4>call Friday tomorrow. So how do you guys at the

0:11:44.720 --> 0:11:47.360
<v Speaker 4>port sort of prepare for something like this?

0:11:47.360 --> 0:11:50.600
<v Speaker 6>This is another cost that probably will be passed on

0:11:50.679 --> 0:11:53.400
<v Speaker 6>as well, according to the shipping lines to their importers.

0:11:53.840 --> 0:11:58.160
<v Speaker 6>So right now early days the new penalty fee goes

0:11:58.240 --> 0:12:02.480
<v Speaker 6>into place on October fourteenth, be phased up, but right

0:12:02.520 --> 0:12:05.200
<v Speaker 6>now we are estimating that it could be anywhere from

0:12:05.200 --> 0:12:07.920
<v Speaker 6>about one hundred and twenty five to over three hundred

0:12:07.960 --> 0:12:10.800
<v Speaker 6>dollars per container. The shipping line will pass that to

0:12:10.840 --> 0:12:14.120
<v Speaker 6>the importer of record on these fees. About thirty percent

0:12:14.280 --> 0:12:17.600
<v Speaker 6>of all vessels they call Los Angeles today are built

0:12:17.720 --> 0:12:20.960
<v Speaker 6>or managed from China. There's going to have to be

0:12:21.040 --> 0:12:24.360
<v Speaker 6>some movement around this. Some companies may try to absorb,

0:12:24.440 --> 0:12:28.200
<v Speaker 6>others will shift different vessels into the rotation to avoid

0:12:28.200 --> 0:12:29.640
<v Speaker 6>this penalty as a whole.

0:12:29.800 --> 0:12:32.880
<v Speaker 2>Stay with us. More from Bloomberg Intelligence coming up after this.

0:12:36.400 --> 0:12:40.120
<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:12:40.200 --> 0:12:43.240
<v Speaker 1>weekdays at ten am Eastern on Apple, Cocklay and Android

0:12:43.280 --> 0:12:46.600
<v Speaker 1>Auto with the Bloomberg Business App. Listen on demand wherever

0:12:46.640 --> 0:12:49.920
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0:12:50.880 --> 0:12:54.480
<v Speaker 2>It's been a busy day for the restaurant companies reporting earnings.

0:12:54.720 --> 0:12:57.560
<v Speaker 2>We had Cracker Barer, we had Darted earnings. Check in

0:12:57.640 --> 0:13:00.800
<v Speaker 2>with our expert on the restaurant business, because not only

0:13:00.840 --> 0:13:02.280
<v Speaker 2>is it a view just kind of what's happening out

0:13:02.280 --> 0:13:04.560
<v Speaker 2>there in the restaurant business, but I always view the

0:13:04.600 --> 0:13:06.800
<v Speaker 2>restaurant companies it's a pretty good gauge at how people

0:13:06.840 --> 0:13:09.240
<v Speaker 2>are feeling, consumers are feeling, and how they're spending their money.

0:13:09.240 --> 0:13:12.440
<v Speaker 2>Michael Hallin joins US Senior Restaurant and Food Service analysts

0:13:12.440 --> 0:13:15.880
<v Speaker 2>for Bloomberg Intelligence. Hey, Mike, let's start with maybe some

0:13:15.880 --> 0:13:18.160
<v Speaker 2>some good stuff Darted. What's going on with our friends

0:13:18.160 --> 0:13:18.560
<v Speaker 2>at Darted?

0:13:19.120 --> 0:13:21.480
<v Speaker 5>Yeah, you know Darting. It was an interesting quarter.

0:13:21.600 --> 0:13:29.360
<v Speaker 7>Sales were fantastic, but slightly below, you know, very high expectations,

0:13:29.800 --> 0:13:31.880
<v Speaker 7>and the most interesting part of their report was that

0:13:31.920 --> 0:13:37.079
<v Speaker 7>their margins contracted, largely due to beef costs and Uber

0:13:37.160 --> 0:13:41.680
<v Speaker 7>fees because they did this one million free delivery promotions

0:13:41.720 --> 0:13:45.320
<v Speaker 7>supported by you know, Uber eats marketing dollars, right, and

0:13:45.360 --> 0:13:48.000
<v Speaker 7>so it actually made up five percent of sales, and

0:13:48.000 --> 0:13:52.600
<v Speaker 7>that's very impressive for something that's been instituted, you.

0:13:52.559 --> 0:13:53.640
<v Speaker 5>Know, within a year.

0:13:53.840 --> 0:13:58.360
<v Speaker 7>So, yeah, the margins, you know this, this company has

0:13:58.400 --> 0:13:59.679
<v Speaker 7>best in class margins.

0:13:59.720 --> 0:14:01.600
<v Speaker 5>They've always protected their margins.

0:14:01.600 --> 0:14:04.040
<v Speaker 7>And so seeing a same story of sales gain that

0:14:04.400 --> 0:14:06.439
<v Speaker 7>you know, a very strong same star sales gain without

0:14:06.480 --> 0:14:11.120
<v Speaker 7>the margin expansion, I think shocked some investors today.

0:14:11.440 --> 0:14:14.040
<v Speaker 4>So what are they planning to do to widen those margins?

0:14:14.200 --> 0:14:17.319
<v Speaker 4>I heard the portions might not be as big? Are

0:14:17.360 --> 0:14:20.440
<v Speaker 4>they looking at possibly raising prices.

0:14:20.080 --> 0:14:20.560
<v Speaker 5>On the menu.

0:14:22.440 --> 0:14:26.560
<v Speaker 7>Well, they're going to raise prices, but not too aggressively.

0:14:26.720 --> 0:14:30.800
<v Speaker 7>So they're very careful about increasing their prices. A big

0:14:30.840 --> 0:14:33.960
<v Speaker 7>reason why we think they're outperforming is that they've increased

0:14:33.960 --> 0:14:38.400
<v Speaker 7>their prices a lot less than competitors since the pandemic, right,

0:14:38.440 --> 0:14:41.440
<v Speaker 7>and so they don't want to lose that advantage. So

0:14:41.600 --> 0:14:44.160
<v Speaker 7>they are going to raise prices this year, but it's

0:14:44.240 --> 0:14:47.800
<v Speaker 7>going to be modest and less than peers.

0:14:48.080 --> 0:14:51.920
<v Speaker 5>You know, you mentioned the smaller entrees. That's really a

0:14:51.960 --> 0:14:53.960
<v Speaker 5>move to boost traffic.

0:14:54.120 --> 0:14:56.760
<v Speaker 7>So what they're doing is they're taking seven of their

0:14:56.760 --> 0:15:01.080
<v Speaker 7>popular entrees. They're making an additional a lighter menu with

0:15:01.120 --> 0:15:05.040
<v Speaker 7>those seven items. They're shrinking the portion and they're lowering

0:15:05.080 --> 0:15:08.000
<v Speaker 7>the price, and they're hoping that actually brings in greater

0:15:08.160 --> 0:15:11.760
<v Speaker 7>traffic with low income consumers. So shrinking the size of

0:15:11.800 --> 0:15:15.720
<v Speaker 7>the entrees isn't isn't a major plan in terms of

0:15:15.920 --> 0:15:18.200
<v Speaker 7>saving the margins. With the margins, it's going to be

0:15:18.720 --> 0:15:23.080
<v Speaker 7>you know, executing, right, That's that's what they're known for,

0:15:23.320 --> 0:15:27.320
<v Speaker 7>you know, consistently becoming more productive in their restaurants.

0:15:27.360 --> 0:15:28.840
<v Speaker 5>That's how they're going to try to fund this.

0:15:29.080 --> 0:15:31.840
<v Speaker 7>You know, there will be some slight price increases, and

0:15:31.920 --> 0:15:34.160
<v Speaker 7>they mentioned they could be a little bit more aggressive.

0:15:34.200 --> 0:15:37.800
<v Speaker 7>If you know, the higher beef prices remain stubborn.

0:15:38.280 --> 0:15:41.400
<v Speaker 2>All right, let's move on to my favorite cracker barrel.

0:15:41.520 --> 0:15:45.440
<v Speaker 2>They're still paying the price for some of that rebranding issues.

0:15:45.560 --> 0:15:46.440
<v Speaker 2>What's going on there?

0:15:48.440 --> 0:15:50.520
<v Speaker 5>Yeah, that one, Oh man, it was.

0:15:50.920 --> 0:15:53.360
<v Speaker 7>It's the timing of this, of everything that happened to them,

0:15:53.480 --> 0:15:55.040
<v Speaker 7>is such a shame, because.

0:15:54.960 --> 0:15:56.920
<v Speaker 5>They were recorded a great quarter.

0:15:57.080 --> 0:15:59.280
<v Speaker 7>You know, Same Star sales were up five point four

0:15:59.320 --> 0:16:01.920
<v Speaker 7>percent in the rest truants, a couple hundred basis points

0:16:01.920 --> 0:16:06.400
<v Speaker 7>ahead of the street. But you know, sales have decelerated

0:16:06.440 --> 0:16:13.120
<v Speaker 7>pretty significantly here, you know, since August nineteenth and the

0:16:13.160 --> 0:16:16.480
<v Speaker 7>logo controversy. So you know, the stock is down a

0:16:16.520 --> 0:16:19.840
<v Speaker 7>little bit today. It opened much lower. You know, we

0:16:19.960 --> 0:16:22.120
<v Speaker 7>think Paul was a good one. I thought Julie Messino

0:16:22.200 --> 0:16:23.800
<v Speaker 7>did a great job in the call. I don't think

0:16:23.800 --> 0:16:26.760
<v Speaker 7>there was any panic in her voice. You know. I

0:16:27.080 --> 0:16:31.640
<v Speaker 7>think she's running a steady ship right now. And you know,

0:16:31.680 --> 0:16:34.400
<v Speaker 7>they're focusing on the things that they've been focused on

0:16:34.440 --> 0:16:38.040
<v Speaker 7>from the beginning, which is providing better service and higher

0:16:38.160 --> 0:16:42.160
<v Speaker 7>quality food at a good price point. I would say

0:16:42.240 --> 0:16:45.520
<v Speaker 7>it seems like they may have sandbag guidance as well.

0:16:45.560 --> 0:16:47.600
<v Speaker 7>I think that's a big part of the reason why

0:16:49.080 --> 0:16:52.920
<v Speaker 7>the stock's not down more right, is that they basically

0:16:53.000 --> 0:16:57.480
<v Speaker 7>are extrapolating current traffic trends throughout the rest of the quarter.

0:16:58.920 --> 0:17:00.920
<v Speaker 5>You know when second data.

0:17:00.720 --> 0:17:04.280
<v Speaker 7>That that Bloomberg owns, that that we follow is showing

0:17:04.320 --> 0:17:08.400
<v Speaker 7>that traffic may be stabilizing here over the last over

0:17:08.520 --> 0:17:09.000
<v Speaker 7>last week.

0:17:09.119 --> 0:17:11.520
<v Speaker 5>So I guess we'll see.

0:17:12.160 --> 0:17:12.320
<v Speaker 3>Yeah.

0:17:12.320 --> 0:17:14.520
<v Speaker 4>I mean, the latest CPI report showed that food away

0:17:14.560 --> 0:17:19.119
<v Speaker 4>from home so at restaurants actually outpaced what we're paying

0:17:19.119 --> 0:17:21.320
<v Speaker 4>for food at the supermarket. But I mean, if you

0:17:21.359 --> 0:17:24.119
<v Speaker 4>look at these two reports from Cracker Barrel and Darden restaurants,

0:17:24.280 --> 0:17:26.679
<v Speaker 4>are people eating out less or is that really not

0:17:26.720 --> 0:17:30.040
<v Speaker 4>holding true? When you look at the numbers, they both

0:17:30.080 --> 0:17:33.399
<v Speaker 4>reported five You know, Olive Garden was over five percent,

0:17:33.680 --> 0:17:36.680
<v Speaker 4>Longhorns over five percent, Cracker Barrels over five percent.

0:17:37.200 --> 0:17:40.040
<v Speaker 7>You know, a lot of these stories about the death

0:17:40.080 --> 0:17:43.040
<v Speaker 7>of the consumer I think are overstated. You know, we've

0:17:43.040 --> 0:17:45.520
<v Speaker 7>been saying it all year. Restaurants sales are going to

0:17:45.520 --> 0:17:48.560
<v Speaker 7>continue to be better than they were last year. Second

0:17:48.600 --> 0:17:52.680
<v Speaker 7>half is going to be better than first half. It's

0:17:52.720 --> 0:17:54.879
<v Speaker 7>not an issue to me. The bigger issue is what

0:17:54.920 --> 0:17:56.840
<v Speaker 7>we heard out of Darden. It's inflation.

0:17:57.000 --> 0:17:57.119
<v Speaker 5>Right.

0:17:57.160 --> 0:18:01.760
<v Speaker 7>The Fed just cut rates in an inflationary period, right

0:18:02.400 --> 0:18:04.960
<v Speaker 7>while we're seeing inflation go up, while we're seeing CPI

0:18:05.040 --> 0:18:08.479
<v Speaker 7>and PPI go up, right, and so beef prices are

0:18:08.480 --> 0:18:11.560
<v Speaker 7>stubbornly high. I mean, I look across my Bloomberg monitor

0:18:11.600 --> 0:18:15.000
<v Speaker 7>and MADI prices are up across the board today and

0:18:15.040 --> 0:18:18.800
<v Speaker 7>they've been up for basically this whole year. So you know,

0:18:18.920 --> 0:18:21.639
<v Speaker 7>I think through year end, margins are going to be

0:18:21.680 --> 0:18:23.159
<v Speaker 7>the bigger concern for restaurants.

0:18:23.320 --> 0:18:28.000
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