WEBVTT - UPS Shares Fall, Harris Campaign 0:00:02.920 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence podcast. Catch US live weekdays at ten am 0:00:15.080 --> 0:00:18.079 Eastern on Apple card playing Android Auto with the Bloomberg 0:00:18.120 --> 0:00:21.440 Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.040 or watch US live on YouTube. 0:00:25.000 --> 0:00:26.840 Let's switch gears to logistics. 0:00:26.840 --> 0:00:33.080 Transportation UPS still having some challenges. US misses profit estimates 0:00:33.240 --> 0:00:36.400 amid heavy costs and uneven demand. Can't catch a break 0:00:36.560 --> 0:00:39.640 stock down double digits here, Lee Clasical joins US senior 0:00:39.640 --> 0:00:44.680 transport logistics and shipping analysts for Bloomberg Intelligence. Lee A, 0:00:44.680 --> 0:00:47.120 get another tough quarter for UPS? 0:00:47.440 --> 0:00:48.280 What's the story there? 0:00:50.320 --> 0:00:52.599 You know, I think it's a lot of things. You know, 0:00:52.640 --> 0:00:54.959 they are seeing buying growth, which is good, but that 0:00:55.160 --> 0:00:58.320 mix of growth is not good. What they're seeing is 0:00:58.560 --> 0:01:00.960 their shippers trading down. So if you were going to 0:01:01.000 --> 0:01:03.680 maybe send something via air, maybe you decide to go 0:01:03.840 --> 0:01:06.520 on the ground, which is you know, cheaper and lower margin. 0:01:06.840 --> 0:01:08.680 And then if you're using ground, maybe you're going to 0:01:08.800 --> 0:01:11.120 use one of their products like sure Posts, which is 0:01:11.120 --> 0:01:15.000 like an economy product, which is cheaper and again lower 0:01:15.040 --> 0:01:19.640 margin business. So you are seeing, you know, folks trading down. 0:01:20.160 --> 0:01:21.720 You're also seeing the mix. 0:01:21.560 --> 0:01:27.880 Of B B two B two C outpacing growth of 0:01:28.040 --> 0:01:31.800 B to B. B two C growth was around four percent, 0:01:31.880 --> 0:01:35.039 and B to B growth was down four percent and 0:01:35.160 --> 0:01:35.600 B to B. 0:01:35.800 --> 0:01:40.120 So think like a lawyer sending documents to another lawyer's 0:01:40.160 --> 0:01:43.160 office that business tends to have better margins because of 0:01:43.200 --> 0:01:47.520 the inherent density that follows that business, and density is 0:01:47.560 --> 0:01:51.720 really good for asset intensive networks like ups is. And 0:01:51.760 --> 0:01:54.920 then you also, you know, have another negative mixed impact. 0:01:55.240 --> 0:01:57.800 You had two you know, they called out on their 0:01:57.840 --> 0:02:01.440 call to large e commerce companies. I'm assuming that you know, 0:02:01.480 --> 0:02:05.360 these are companies out of China that are you know, 0:02:05.600 --> 0:02:11.120 are kind of using more economy services, so you're seeing 0:02:11.280 --> 0:02:14.480 a surge in that demand from from there as well 0:02:14.560 --> 0:02:17.680 as addition to the trade down trade that we were 0:02:18.320 --> 0:02:19.400 that I mentioned earlier. 0:02:20.240 --> 0:02:22.760 Is this the trough? Is this sort of the worst 0:02:22.760 --> 0:02:23.520 it's going to get? 0:02:24.720 --> 0:02:29.040 It's a great question. I mean, you know, I think so, 0:02:30.400 --> 0:02:32.720 you know, I think it feels like it's this is 0:02:32.760 --> 0:02:35.239 the worst. I mean, you know, the company has done 0:02:35.320 --> 0:02:40.200 pretty well in terms of meeting expectations or beating expectations. 0:02:40.240 --> 0:02:42.280 This is the first myths since I believe the first 0:02:42.360 --> 0:02:45.320 quarter of twenty twenty. So you know, Carol Toon May 0:02:45.320 --> 0:02:49.040 and her team have been on quite a role. They 0:02:49.080 --> 0:02:52.000 also have some easier comparisons going into the second half. 0:02:52.840 --> 0:02:55.359 You know, some of your listeners might have remembered they 0:02:55.400 --> 0:02:59.480 had a really you know, tough negotiation with their labor unions. 0:03:00.240 --> 0:03:03.320 They had a new contract that was really you know, 0:03:03.480 --> 0:03:06.640 heavily weighted in the first year that gets anniversaried in 0:03:06.720 --> 0:03:10.040 August first, So therefore, you know, those higher labor costs, 0:03:10.080 --> 0:03:15.480 the comparables will ease significantly, you know, after August first, 0:03:16.120 --> 0:03:19.520 so that should provide a better cost for them in 0:03:19.560 --> 0:03:22.919 a third quarter and going forward. Also, you know peak 0:03:22.960 --> 0:03:25.560 seasons here right, You know a lot of the companies 0:03:25.560 --> 0:03:28.519 that we cover are talking about we you know, most 0:03:28.520 --> 0:03:30.799 of them are expecting a real peak season and we're 0:03:30.800 --> 0:03:32.839 not talking about, you know, the peak seasons that maybe 0:03:32.840 --> 0:03:35.720 we've seen the nineteen nineties or early two thousands, but 0:03:35.800 --> 0:03:38.920 you're definitely going to see seasonal increase in demand. And 0:03:38.960 --> 0:03:42.200 that peak season is one of the shortest on record. 0:03:43.040 --> 0:03:46.880 You know, it's around seventeen days between Thanksgiving and Christmas, 0:03:47.200 --> 0:03:53.520 and that will allow ups to implement surcharges because they're 0:03:53.520 --> 0:03:57.320 going to have to you know, get those resources in 0:03:57.360 --> 0:03:59.800 a short amount of time for a short amount of 0:03:59.800 --> 0:04:02.880 time to make sure that you know, they're able to 0:04:03.040 --> 0:04:07.400 deliver at high service levels. So you should see probably 0:04:07.400 --> 0:04:11.760 some good volume I'm sorry, some good demand revenue growth 0:04:11.920 --> 0:04:15.680 in the fourth quarter from those surcharges. So you know 0:04:15.800 --> 0:04:19.360 that coupled with a lot of their cost cutting measurements. Uh, 0:04:19.400 --> 0:04:22.560 they they've they've reduced a lot of heads. You know, 0:04:22.640 --> 0:04:24.120 I think a lot of things are going to turn 0:04:24.200 --> 0:04:27.400 for this company once You're going to see you know, 0:04:27.480 --> 0:04:30.440 that B two B volume return and the company is 0:04:30.480 --> 0:04:33.400 doing a lot of things I think to position itself 0:04:33.520 --> 0:04:37.160 longer term, you know, whether that's you know, focusing on 0:04:37.200 --> 0:04:40.960 the healthcare logistics. Healthcare logistics obviously there's a lot of 0:04:41.040 --> 0:04:44.640 value add there and those margins are pretty high relative 0:04:44.720 --> 0:04:46.839 to you know, someone throwing a package on your porch, 0:04:47.839 --> 0:04:50.359 and so you know, they're really looking to grow that 0:04:50.440 --> 0:04:52.600 business and they want to be a leader in that business. 0:04:53.040 --> 0:04:55.159 Uh And and to be frank, it's it's it's a 0:04:55.200 --> 0:04:59.000 fantastic uh business to be in if you're a logistics provider. 0:05:00.000 --> 0:05:02.719 And then you know they're also trying to do new 0:05:02.760 --> 0:05:06.160 things with or more things, I should say, with what 0:05:06.200 --> 0:05:09.799 we call SMBs, which are small and medium sized businesses. 0:05:10.640 --> 0:05:13.640 You know that tends to have better margins than you know, 0:05:13.680 --> 0:05:17.720 dealing with these super large companies like Amazon, which you know, 0:05:18.320 --> 0:05:21.280 the business is good, but the margins could be better, right. 0:05:21.680 --> 0:05:24.280 You know, I had absolutely no loyalty between these two companies. 0:05:24.320 --> 0:05:28.039 I mean I have actually no loyalty between these two services. 0:05:28.080 --> 0:05:29.760 I mean the FedEx store and the UPS store kind 0:05:29.800 --> 0:05:32.000 of right next to each other in my little strip malls. 0:05:32.080 --> 0:05:34.080 Whichever's got the shorter line, that's kind of where I go. 0:05:34.160 --> 0:05:35.920 But well, you look at the stocks over the last 0:05:35.920 --> 0:05:39.480 five years, UPS is up about seven percent per year. 0:05:39.960 --> 0:05:42.440 FedEx is up almost fourteen percent, so twice the stock 0:05:42.480 --> 0:05:45.719 price performance. So lee from an investor's perspective, you know, 0:05:45.760 --> 0:05:47.880 you got thirty seconds herea what's the difference between these 0:05:47.880 --> 0:05:49.960 two companies from an investor perspective. 0:05:50.600 --> 0:05:53.240 Well, it's interesting. So like on fed X, I think 0:05:53.279 --> 0:05:57.000 they're dealing with more structural issues because that was a 0:05:57.040 --> 0:06:01.000 company that I would say was extremely bloated, you know, 0:06:01.120 --> 0:06:03.640 over the last decade, and they're kind of right sizing 0:06:03.680 --> 0:06:07.839 their network they're both making changes to their networks to 0:06:07.960 --> 0:06:10.679 kind of meet the new demands, you know, that change 0:06:10.680 --> 0:06:15.120 of increase in the home delivery versus you know, delivering 0:06:15.160 --> 0:06:18.039 to lawyers or doctors' offices or corporations. 0:06:18.400 --> 0:06:18.600 You know. 0:06:18.839 --> 0:06:21.920 I think the biggest difference is, you know, there might 0:06:21.960 --> 0:06:26.440 be more margin expansion opportunity at FedEx, just because they're 0:06:26.480 --> 0:06:29.120 starting from a lower base than the new ps. 0:06:29.880 --> 0:06:30.080 You know. 0:06:30.400 --> 0:06:32.880 But you know, these are two what I would consider 0:06:32.960 --> 0:06:37.760 blue chip companies that are you know, should benefit with 0:06:37.920 --> 0:06:41.159 the economy and they should probably be able to grow 0:06:41.240 --> 0:06:45.960 top line well passed Global GDP, just given some of 0:06:45.960 --> 0:06:48.320 the self help things that they have in front of them. 0:06:48.440 --> 0:06:51.159 All right, pley, super appreciated, Thank you so much. With Klasgow, 0:06:51.240 --> 0:06:53.600 he joins us from a Boomberg Intelligence. He covers all 0:06:53.600 --> 0:06:55.880 the logistics and transportation stuff for us. 0:06:57.520 --> 0:07:01.400 You're listening to the Bloomberg Intelligence Pod. Catch us live 0:07:01.480 --> 0:07:05.000 weekdays at ten am Eastern on applecar Play and Android 0:07:05.040 --> 0:07:07.799 Otto with the Bloomberg Business App. You can also listen 0:07:07.920 --> 0:07:11.000 live on Amazon Alexa from our flagship New York station, 0:07:11.360 --> 0:07:14.400 Just Say Alexa, playing Bloomberg eleven thirty. 0:07:15.880 --> 0:07:18.960 Alex Steel alongside Paul Sweeney and John Tucker. Yeah, crude 0:07:18.960 --> 0:07:21.200 really getting hit by weaker China demand. We're going to 0:07:21.200 --> 0:07:23.840 talk about that in the next hour. This is Bloomberg 0:07:23.880 --> 0:07:27.680 Intelligence Radio. We bring you all the top news in business, economics, politics, 0:07:27.680 --> 0:07:31.760 and finance. We are broadcasting to live Interactor Broker Studio 0:07:31.840 --> 0:07:34.520 right here in rainy Midtown Manhattan. The latest news on 0:07:34.560 --> 0:07:37.160 the political front is Kamala Harris now has more than 0:07:37.240 --> 0:07:41.440 enough pledged delegates to clinch the Democratic presidential nomination after 0:07:41.560 --> 0:07:43.960 just a two day blitz that saw the Vice president 0:07:44.240 --> 0:07:48.440 consolidate her parties, backing to challenge Donald Trump in November. 0:07:48.480 --> 0:07:50.120 Want to get more details on all of this with 0:07:50.160 --> 0:07:53.360 Henrietta Trace, Managing partner and director of Economic Policy at 0:07:53.360 --> 0:07:57.960 Beta Partners. Henrietta, now, what happens? What does pledge delegates mean? 0:08:00.080 --> 0:08:02.760 Edge delegates basically means so the field is clear for 0:08:02.840 --> 0:08:06.120 Kamala Harris. She will be the Democratic nominee as expected. 0:08:06.840 --> 0:08:09.840 We will get that confirmed around August seventh. They're going 0:08:09.880 --> 0:08:12.560 to start virtual roll call voting at the DNC in 0:08:12.600 --> 0:08:15.000 the beginning of August and carried through until about the 0:08:15.000 --> 0:08:18.440 seventh when it'll become relatively official, and then we will 0:08:18.480 --> 0:08:22.000 have the convention on the nineteenth around then we should 0:08:22.040 --> 0:08:25.520 get to understand who her vice presidential pick is. So 0:08:25.560 --> 0:08:28.280 it's really all eyes on Democrats for the foreseeable future. 0:08:28.960 --> 0:08:31.120 Henrietta, can you give us a sense of the timing 0:08:31.120 --> 0:08:35.160 associated with the VP pick? Is there any rush to 0:08:35.200 --> 0:08:37.079 get it done sooner rather than later as it relates 0:08:37.120 --> 0:08:39.400 to maybe that virtual role call. 0:08:40.400 --> 0:08:43.600 No, not really and based on what we're seeing from 0:08:43.640 --> 0:08:46.720 the Democratic Party right now. And I would think back 0:08:46.760 --> 0:08:49.360 to know how long it took for President Biden to 0:08:49.559 --> 0:08:52.679 come to the conclusion that he was going to step aside, 0:08:52.720 --> 0:08:57.000 the slow approach that Speaker Meredith Nancy Pelosi took to 0:08:57.240 --> 0:08:59.640 President Biden, the slow approach that. 0:08:59.520 --> 0:09:00.400 The donor took. 0:09:00.520 --> 0:09:05.079 This is all orchestrated, not you know, necessarily on purpose, 0:09:05.120 --> 0:09:08.280 but designed to keep the attention on the democratic process 0:09:08.520 --> 0:09:11.160 that's playing out in the Democratic Party. Make sure that 0:09:11.160 --> 0:09:13.480 they're vetting a lot of these guys, the people that 0:09:13.520 --> 0:09:17.360 they're considering. The governors from the swing states, Mark Kelly 0:09:17.400 --> 0:09:20.280 and Arizona. These are folks that have very low name 0:09:20.360 --> 0:09:23.280 recognition outside of their state. So a lot of the 0:09:23.360 --> 0:09:26.560 vetting process is being done in real time. We're watching 0:09:26.600 --> 0:09:28.400 it all unfold, and I think it's going to take 0:09:28.440 --> 0:09:31.079 the remainder of this month and into the beginning of 0:09:31.160 --> 0:09:34.400 next month. Let's recall that former President Trump announced his 0:09:34.600 --> 0:09:37.840 by pick P pick on the Monday. 0:09:37.520 --> 0:09:38.319 Of his convention. 0:09:38.400 --> 0:09:40.439 I wouldn't be surprised if that's the set of timing 0:09:40.440 --> 0:09:42.320 that we get on the Democratic side as well, which 0:09:42.360 --> 0:09:44.040 means we've got another couple of weeks before we know 0:09:44.120 --> 0:09:45.240 for sure who it's going to be. 0:09:45.920 --> 0:09:49.160 We also keep hearing, you know, these rumors that Republicans 0:09:49.160 --> 0:09:51.880 are talking about. You know, we're hijacking democracy here. This 0:09:52.000 --> 0:09:54.439 is not democratic, which leads me to think, are we 0:09:54.480 --> 0:09:57.160 going to see lawsuits in relation to Kamala Harris being 0:09:57.160 --> 0:09:59.920 on the ballot? Are we going to see lawsuits concerning 0:10:00.120 --> 0:10:03.760 campaign funds? Are we going to see lawsuits preventing her 0:10:03.760 --> 0:10:05.440 from getting on the ballot in certain states? 0:10:05.640 --> 0:10:07.960 Is all of this just talking points? There is any 0:10:07.960 --> 0:10:08.480 of this real? 0:10:09.840 --> 0:10:14.120 No, These are all relatively frivolous lawsuits. The Democratic Party 0:10:14.200 --> 0:10:17.560 has until the convention to name a nominee. Once they do, 0:10:17.760 --> 0:10:20.000 I think the concerns around the democratic process or what 0:10:20.000 --> 0:10:23.400 you're seeing in terms of slow walking endorsements from former 0:10:23.440 --> 0:10:28.320 President Obama from Majority Leader Schumer from Minority Leader Hakeem Jeffries, 0:10:28.800 --> 0:10:32.240 this is Democrats trying to explain to American voters through 0:10:32.240 --> 0:10:35.160 illustration that they're going to take their time and not 0:10:35.280 --> 0:10:39.080 necessarily have an anointment of Kamala Harris. They chose the 0:10:39.160 --> 0:10:42.520 direction that I think was the only conceivable conclusion, which 0:10:42.600 --> 0:10:45.200 was that Kamala Harris, the current Vice President, who you 0:10:45.240 --> 0:10:47.600 know millions of people have already voted for to. 0:10:47.600 --> 0:10:49.280 Go into the White House, is going to be at 0:10:49.320 --> 0:10:49.959 the top of the ticket. 0:10:50.000 --> 0:10:52.520 And the endorsement from President Biden really sealed that when 0:10:52.520 --> 0:10:54.520 he wrote his letter over the weekend. 0:10:54.760 --> 0:10:56.040 So I think that the. 0:10:56.000 --> 0:10:59.640 Direction we're getting from the Democratic Party is clearly indicative 0:10:59.679 --> 0:11:03.520 of La Harris winning the delegation. There was no real primary, 0:11:03.760 --> 0:11:07.240 but the process has been playing out for so long now, 0:11:07.400 --> 0:11:09.440 even though it's only been a couple of weeks, it 0:11:09.480 --> 0:11:11.720 feels like an eternity, and I think the Democratic voters, 0:11:11.760 --> 0:11:15.440 as evidenced by their fundraising numbers, are clearly enthusiastic and 0:11:15.520 --> 0:11:17.400 happy to have Kamala at the top. There was some 0:11:17.440 --> 0:11:19.800 morning console pulling that came out this morning showing the 0:11:19.840 --> 0:11:21.840 Democrats prefer her to be at the top of the ticket. 0:11:21.960 --> 0:11:24.960 Petevodajin was next in line, but she clearly wins the 0:11:24.960 --> 0:11:26.640 majority of the Democratic voters, So I don't think there 0:11:26.640 --> 0:11:30.080 will be an uprising against Kamala from the Democratic voter base. 0:11:30.440 --> 0:11:31.400 And let's talk money. 0:11:31.720 --> 0:11:33.480 Just reading your notes here, I mean, like eighty one 0:11:33.520 --> 0:11:36.439 million dollars was raised just in the twenty four hours 0:11:36.440 --> 0:11:41.079 after President Biden endorsed VP Harris. Here, give us a 0:11:41.120 --> 0:11:43.160 sense of the magnitude of the fundraising and what it 0:11:43.200 --> 0:11:46.600 tells you, I guess about her candidacy and the support 0:11:46.600 --> 0:11:48.400 of the Democratic Party. 0:11:48.800 --> 0:11:49.040 Man. 0:11:49.160 --> 0:11:51.559 I mean, the numbers are staggering in and of themselves. 0:11:51.600 --> 0:11:54.680 They broke Democratic records, presidential records for a twenty four 0:11:54.679 --> 0:11:57.120 hour haul. She's up over one hundred and one million 0:11:57.120 --> 0:12:00.680 dollars as of right now. But the real said is 0:12:00.679 --> 0:12:05.520 the fact that sixty percent of those donors are new 0:12:05.600 --> 0:12:08.559 to the twenty twenty four CYC ball. That is, grassroots 0:12:08.640 --> 0:12:12.520 engagement momentum on par with, if not exceeding, what you 0:12:12.559 --> 0:12:14.880 see on the demo on the Republican side in terms 0:12:14.880 --> 0:12:18.600 of galvanization from Trump supporters. One of the reasons that 0:12:18.640 --> 0:12:21.840 my odds are sixty forty for Trump right now is 0:12:21.880 --> 0:12:24.160 because we don't have any hard data from polling to 0:12:24.280 --> 0:12:26.439 suggest that Kamala Harris has a shot to win in 0:12:26.480 --> 0:12:29.360 the swing states yet, But the fundraising numbers and the 0:12:29.360 --> 0:12:33.120 heat map that you see from the Act Blue campaign 0:12:33.200 --> 0:12:36.480 suggests that those same states that Kamala Harris would need 0:12:36.520 --> 0:12:38.679 to win are the ones that are donating amongst the 0:12:38.760 --> 0:12:39.760 highest mounts. 0:12:40.480 --> 0:12:43.240 What do you think is going to wind up happening? Like, 0:12:43.880 --> 0:12:46.160 how do you game out now? Like what happens in 0:12:46.160 --> 0:12:50.080 November and beyond? I mean, moving sort of money into 0:12:50.160 --> 0:12:52.040 any kind of asset class to been on it now 0:12:52.080 --> 0:12:52.880 seems crazy? 0:12:53.000 --> 0:12:53.880 How do you think about it? 0:12:55.040 --> 0:12:57.839 I really think that investors should focus on the momentum play. 0:12:57.880 --> 0:13:00.000 That is the main focus of my note from Life 0:13:00.040 --> 0:13:03.200 last night. The momentum story is now has been with 0:13:03.240 --> 0:13:07.000 the Republican Party on things that were planned and unplanned. Obviously, 0:13:07.080 --> 0:13:11.440 Trump winning the first presidential debate, you know, getting a 0:13:11.480 --> 0:13:15.720 failed assassination attempt was extraordinarily galvanizing. I think it's insane 0:13:15.720 --> 0:13:17.600 that you know, that's not the number one news story 0:13:17.600 --> 0:13:19.480 of the day. But the reality is, and I talk 0:13:19.520 --> 0:13:23.000 about this with clients a lot, the Republican momentum came 0:13:23.240 --> 0:13:25.880 and is now gone, and now it's all with the 0:13:25.880 --> 0:13:28.840 Democratic Party. And of course it would be ridiculous to 0:13:28.840 --> 0:13:30.720 assume in twenty twenty four that there won't be another 0:13:30.760 --> 0:13:33.360 wrench thrown in the gears here. But for right now 0:13:33.400 --> 0:13:35.920 and for the remainder of this month and next month 0:13:35.960 --> 0:13:38.400 going into the DNC, you know, we haven't even gotten 0:13:38.440 --> 0:13:41.760 to those events yet. So not only is the Democratic 0:13:41.800 --> 0:13:45.120 Party galvanized in a new way that we haven't seen 0:13:45.240 --> 0:13:48.679 for two years, but the groundswell of support, the pent 0:13:48.800 --> 0:13:51.319 up demand is so robust that I suspect it will 0:13:51.360 --> 0:13:55.160 compel Kamala Harris well into August and then into the 0:13:55.160 --> 0:13:58.120 critical months and the final countdown of the election into 0:13:58.200 --> 0:14:01.560 mid September. What's fascinating is twenty four percent of Independence 0:14:01.600 --> 0:14:04.040 don't decide how they're going to vote until after Labor 0:14:04.120 --> 0:14:06.600 Day historically, so even though we're, you know, only one 0:14:06.679 --> 0:14:09.440 hundred days out from the election, there's shockingly. 0:14:10.559 --> 0:14:12.680 There's a shockingly large amount of time still left in 0:14:12.679 --> 0:14:13.120 this race. 0:14:13.480 --> 0:14:16.560 What do you think the I guess the debate strategy 0:14:16.600 --> 0:14:21.680 should be for Kamala Harris and the president former President Bush. 0:14:21.720 --> 0:14:25.400 I mean sorry, I oh, can't go that back that far. 0:14:26.040 --> 0:14:27.800 I think at this point you just got to get 0:14:28.040 --> 0:14:30.680 Trump to the stage. I think that if you read 0:14:30.680 --> 0:14:36.040 his true social pronouncements, he is really definitely attempting to 0:14:36.040 --> 0:14:37.640 move the needle on the debates, and. 0:14:37.600 --> 0:14:39.720 The question is really whether he shows or not. 0:14:40.040 --> 0:14:43.840 I don't think it's optically possible for him not to 0:14:43.880 --> 0:14:47.720 debate the vice president and the ultimate Democratic kick nominee. 0:14:48.240 --> 0:14:51.880 That debate is tentatively set for September tenth. Kamala Harris, 0:14:51.920 --> 0:14:54.160 when she was vice president, has set a couple of dates, 0:14:54.720 --> 0:14:57.080 the twelfth and thirteenth, if I'm not mistaken, of September 0:14:57.080 --> 0:14:59.760 for a vice presidential debate, but the Republican ticket hasn't. 0:14:59.520 --> 0:15:00.520 Committed to any of those. 0:15:00.840 --> 0:15:03.120 I think the American public is going to demand the 0:15:03.160 --> 0:15:05.880 Trump debate Kamala Harris, and I think it would be 0:15:06.120 --> 0:15:07.960 a material show of weakness if you did it. 0:15:08.800 --> 0:15:11.520 Just some breaking news for US, confirmed by AP as 0:15:11.520 --> 0:15:14.240 well as ABC News, the Secret Service Director Kim Cheatle 0:15:14.760 --> 0:15:18.640 has now resigned. This comes, of course, after the attempt 0:15:18.640 --> 0:15:22.680 assassination attempt on president former President Trump's life. 0:15:22.760 --> 0:15:24.480 Henrietta, are you surprised by that news? 0:15:26.120 --> 0:15:28.720 Not really, I'm surprised that it lasted as long as 0:15:28.760 --> 0:15:29.160 it did. 0:15:29.800 --> 0:15:30.960 The Secret Service has come. 0:15:30.880 --> 0:15:35.080 Under fire for years now, and I think in the 0:15:35.440 --> 0:15:38.520 wake of the attempted assassination attempts, which was so shocking 0:15:38.600 --> 0:15:40.240 to so many Americans we haven't seen that, you know, 0:15:40.280 --> 0:15:44.160 in my lifetime, is really something that required a shake 0:15:44.240 --> 0:15:46.960 up at the top. The Republican Party has come out 0:15:47.920 --> 0:15:52.000 very strongly against her and has been very focused on 0:15:52.360 --> 0:15:55.680 the Secret Service. There are investigations that they're waiting for 0:15:55.920 --> 0:15:58.240 with a couple of different deadlines sixty days out from 0:15:58.240 --> 0:16:00.920 now for a thorough account of what went on. 0:16:01.120 --> 0:16:02.720 It makes sense that she would resign. 0:16:03.200 --> 0:16:05.480 Henrietta Trees, thank you so much. We really appreciate it. 0:16:05.520 --> 0:16:08.320 As always Henrietta Trees, she's a managing partner and director 0:16:08.360 --> 0:16:10.760 of Economic Policy at Data Partners, really one of our 0:16:10.840 --> 0:16:13.920 go to voices of all things political, and I think 0:16:13.920 --> 0:16:16.200 we're gonna be talking to her very frequently between now 0:16:16.680 --> 0:16:20.000 and election day, because, as Henrieta said, there's found to 0:16:20.040 --> 0:16:22.560 be more wrenches turned into the whole process. 0:16:22.680 --> 0:16:24.160 And then as an investor, what do you do? 0:16:24.240 --> 0:16:26.680 Gina Martin Adams and Boomberg Intelligence had a great point 0:16:26.720 --> 0:16:31.440 that said that high tax companies have underperformed low tax companies, 0:16:31.440 --> 0:16:33.800 and if you're betting on President Trump, you would probably 0:16:33.840 --> 0:16:37.120 buy high tax companies with the idea that those would 0:16:37.120 --> 0:16:40.000 be cut, that those taxes would be cut. Therefore, maybe 0:16:40.040 --> 0:16:42.360 what we're seeing in the market isn't based on the election, 0:16:42.480 --> 0:16:45.360 but on earnings and fundamentals, which brings us full circle 0:16:45.400 --> 0:16:47.280 back to a day where we get almost six trillion 0:16:47.320 --> 0:16:50.000 dollars at market cap earnings coming out. 0:16:51.480 --> 0:16:55.360 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:16:55.440 --> 0:16:58.160 weekdays at ten am Eastern on Effo, car Playing and 0:16:58.280 --> 0:17:01.640 broun Otto with the Bloomberg Business. Listen on demand wherever 0:17:01.680 --> 0:17:06.040 you get your podcasts, or watch us live on YouTube. 0:17:06.840 --> 0:17:08.920 Let's switch gears in. Let's get right to the media space. 0:17:08.920 --> 0:17:11.200 Are we it's media companies reporting. We're also gonna have 0:17:11.320 --> 0:17:14.040 Google reporting air for the Clothes tonight. Keith Rong and 0:17:14.119 --> 0:17:18.880 Nathan joins us. She is the media analyst for Bloomberg Intelligence. Keith, 0:17:19.119 --> 0:17:21.880 I know we had comcasts today in that stocks shorting down, 0:17:21.960 --> 0:17:25.719 but let's let's go with a winner, a good story. Spotify. Now, 0:17:25.720 --> 0:17:27.920 I'm not a Spotify customer, per se. I'm going to 0:17:28.000 --> 0:17:31.320 venture that John Tucker neither is probably not as. 0:17:31.280 --> 0:17:32.600 Well, because here is his cassette tape. 0:17:32.680 --> 0:17:33.640 Yes, this cassette tapes. 0:17:33.760 --> 0:17:34.120 Very good. 0:17:34.280 --> 0:17:34.920 No, I just. 0:17:34.920 --> 0:17:37.280 Refuse to pay for it when I can get it free. 0:17:37.320 --> 0:17:38.520 No, you have cassette tapes? 0:17:38.760 --> 0:17:41.920 Okay, thank you, Yes, very good. 0:17:42.000 --> 0:17:43.320 I have eight track tapes. 0:17:43.520 --> 0:17:44.680 I have eight tract tape. 0:17:44.680 --> 0:17:46.480 And this is why we love you exactly. 0:17:46.800 --> 0:17:50.159 Keith. It talk to us about Spotify stocks really rallying today. 0:17:51.240 --> 0:17:54.000 Yeah, thank you so much, Paul and Alex. So Spotify 0:17:54.760 --> 0:17:57.600 really blew it out of the park. You're absolutely right there. Up, 0:17:57.640 --> 0:18:00.640 I think now thirteen fourteen percent, and really the number 0:18:00.680 --> 0:18:03.280 here for Spotify, and the main story has not just 0:18:03.359 --> 0:18:07.000 been great subscriber growth, so they've been adding a solid 0:18:07.080 --> 0:18:10.960 five six seven million premium subscribers every quarter. But for them, 0:18:11.000 --> 0:18:13.119 what it really has been over the past few quarters 0:18:13.160 --> 0:18:16.400 has been this inflection and profitability. Remember what we're now 0:18:16.440 --> 0:18:18.760 looking for streamers across the board, and this goes to 0:18:18.840 --> 0:18:21.879 Netflix and everybody else in video streaming, as well as Spotify, 0:18:21.960 --> 0:18:24.159 which is, you know, the main audio streamer with a 0:18:24.200 --> 0:18:27.720 thirty five percent market share. The narrative has really shifted 0:18:27.760 --> 0:18:30.399 now to profitability, and they absolutely blew it out of 0:18:30.400 --> 0:18:33.119 the park. So the gross margin guidance that they had 0:18:33.160 --> 0:18:35.840 given was twenty eight percent. They came in at twenty 0:18:35.960 --> 0:18:38.919 nine percent. But even better was the outlook. So for 0:18:39.000 --> 0:18:41.320 the longest time Spotify was stuck at like a twenty 0:18:41.320 --> 0:18:45.399 five percent gross margin. They were pointing to like longer 0:18:45.520 --> 0:18:47.720 term margins of thirty percent. But looks like they're going 0:18:47.760 --> 0:18:49.400 to be able to hit it right in the third quarter, 0:18:49.440 --> 0:18:51.600 and that's why we see the stock reacting the way 0:18:51.600 --> 0:18:52.040 that it is. 0:18:52.160 --> 0:18:54.199 So did it take anyone else's lunch or this was 0:18:54.240 --> 0:18:59.160 just a really good sort of management cost issue, Yeah. 0:18:58.960 --> 0:19:04.120 It's excellent manage. More importantly, it's also price increases they've done. 0:19:05.119 --> 0:19:08.160 They hadn't taken any price increase alex for more than 0:19:08.200 --> 0:19:12.040 ten years, and then in a span of two years, 0:19:12.080 --> 0:19:15.040 they've raised prices by twenty percent. And that's just because 0:19:15.080 --> 0:19:18.359 they know that people love Spotify. Nobody is going to 0:19:18.440 --> 0:19:21.560 churn from Spotify to let's say, Apple Music or YouTube Music. 0:19:21.600 --> 0:19:24.600 They have a thirty six thirty seven percent share of 0:19:24.640 --> 0:19:27.680 the global audio market and they're just adding so many 0:19:27.720 --> 0:19:30.800 features and so many new verticals that they're able to 0:19:30.840 --> 0:19:33.080 take those price increases. But of course, apart from that, 0:19:33.840 --> 0:19:36.280 you know It's also been a very good story when 0:19:36.280 --> 0:19:38.640 it comes to cost cuts. So they were investing heavily 0:19:38.720 --> 0:19:40.719 in their podcasting business, you know, like with the Joe 0:19:40.840 --> 0:19:44.720 Rogan Show and adding all these other exclusive podcasts. They're 0:19:44.800 --> 0:19:48.359 being much more prudent now on that front, and those 0:19:48.400 --> 0:19:50.400 cost cuts again have really driven profitability. 0:19:50.960 --> 0:19:54.080 How much of their revenue is subscription versus advertising versus 0:19:54.160 --> 0:19:56.879 other these days. 0:19:56.200 --> 0:20:00.280 Almost all of their revenue, Paul, is subscription. It's a 0:20:00.400 --> 0:20:04.520 very Yeah, it's a very very heavy subscription based business. 0:20:04.760 --> 0:20:07.720 They are trying to build the advertising business, but as 0:20:07.720 --> 0:20:10.960 you know, again that takes time. You know, that will 0:20:11.040 --> 0:20:13.800 drive the longer term margin story. But as of right now, 0:20:14.000 --> 0:20:15.640 the mixshift is really subscriptions. 0:20:15.680 --> 0:20:16.520 That's pretty impressive. 0:20:16.560 --> 0:20:18.040 Hey, can I ask you about Comcast and what you 0:20:18.080 --> 0:20:20.520