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Tesla Estimates Cut Further, Trump Tariffs · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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Speaker 1: or watch us live on YouTube.
0:23
Speaker 2: Stay with Autos for just a moment. Craig Trudella's Bloomberg
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Speaker 2: Global Autos Editor and joins us now Craig. At the
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Speaker 2: same time, we also got the news that Tesla's estimates
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Speaker 2: were cut further by an analyst unquote unprecedented brand damage.
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Speaker 2: What's the conversation with zeitgeist around that right now?
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Speaker 3: I think over here in Europe it's particularly bleak when
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Speaker 3: you look at some of the numbers. Just yesterday we
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Speaker 3: saw the full figures for Tesla and Germany in the
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Speaker 3: first quarter for them to have some you know, some
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Speaker 3: months in the beginning of this year, they were down
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Speaker 3: more than seventy percent. And that's in a country where
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Speaker 3: they where they build vehicles, where you would think that
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Speaker 3: they would perhaps have have built up some goodwill on
1:06
Speaker 3: the basis of employing quite a lot of people outside
1:10
Speaker 3: of Berlin at their factory, and yet for Musk to
1:14
Speaker 3: sort of intervene in the federal election in February in
1:18
Speaker 3: a way that was highly unpopular and for some of
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Speaker 3: the protests that we've seen across the US to also
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Speaker 3: you know carry over here where you know, we've seen
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Speaker 3: dealerships get you know, paint tossed on them, cars you know,
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Speaker 3: set on fire. It's it's really intense the backlash that
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Speaker 3: we've seen against Musk.
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Speaker 4: So Craig, I'm trying to get a sense how much
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Speaker 4: of their sales weakness is due to some of that
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Speaker 4: backlash against Elon Musk versus maybe some of the model
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Speaker 4: why introduction and the change over there of lines. Do
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Speaker 4: we have make any sense as to what's you know,
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Speaker 4: the kind of the percentage between those two.
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Speaker 3: It's it's really difficult.
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Speaker 5: I think we are going to be spending the next
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Speaker 5: you know, probably months, maybe quarters, uh, you know, unpacking
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Speaker 5: what exactly the dynamics are here, because you know, to
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Speaker 5: your point, they did have a sort of you know,
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Speaker 5: self inflicted disruption that I should point out is not
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Speaker 5: unusual in the auto industry, even very experienced you know, carmakers,
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Speaker 5: when they go from one generation of vehicle to the next,
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Speaker 5: they often need to do some retooling and take the factory,
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Speaker 5: you know, down a bit, you know, work on the
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Speaker 5: production lines. Tesla in this case had to do that
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Speaker 5: at all of its factories around the world because they
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Speaker 5: make them model y everywhere, and you know, so that
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Speaker 5: that was a substantial disruption for them in the first
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Speaker 5: quarter that we shouldn't sort of lose sight of. I
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Speaker 5: do think that, you know, it can't be a coincidence
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Speaker 5: that in a place like Germany, where you've seen a
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Speaker 5: Musk poll so poorly, and you know where he so
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Speaker 5: asserted himself so emphatically. You know, you look at those
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Speaker 5: figures and even as you've seen some some weakness for
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Speaker 5: Tesla and other parts of Europe, we haven't seen it
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Speaker 5: be as drastic as we've seen it in Germany. So
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Speaker 5: I think, you know, to your question, I think there's
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Speaker 5: there's absolutely a bit of both, and it's a little
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Speaker 5: bit it's going to take us probably some months, maybe
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Speaker 5: some quarters to sort out, you know, just how much
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Speaker 5: sort of lasting damage has been done here and whether
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Speaker 5: you know they can lure buyers back with this fresh product.
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Speaker 2: I have to say, you know, you look at if
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Speaker 2: you do Tesla equity in the dees. You get all
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Speaker 2: the good information on Tesla right away. You look at
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Speaker 2: a PE ratio is still one hundred and twelve times.
3:27
Speaker 2: You look at the PE ratio of in Nvidia and
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Speaker 2: it's thirty two times, just meaning that it is still
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Speaker 2: incredibly expensive when you look at it from that metric. Hey, Craig,
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Speaker 2: really good perspective. Thank you so very much. Craig Trudel,
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Speaker 2: Bloomberg Global Autos Editor, joining us on the overall impact
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Speaker 2: of terroriffs but really brand reputational damage when it comes
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Speaker 2: to Tesla.
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Speaker 6: Wow.
3:49
Speaker 2: This is a week.
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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
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Speaker 1: you get your podcasts, or watch us live on YouTube's.
4:05
Speaker 4: One of the things we want to do in this
4:06
Speaker 4: Bloomberg Intelligence programs talk to the analysts that Bloomberg Intelligence
4:10
Speaker 4: and talk to us about their sectors.
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Speaker 7: Let's do that right now.
4:13
Speaker 4: With Herman changing all was the regional banks for Bloomberg Intelligence.
4:18
Speaker 2: I was gonna say, it's never good when you see
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Speaker 2: him in studio because it always something is going to
4:21
Speaker 2: be blown up we see Herman. Otherwise when we ignore Herman,
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Speaker 2: it's like, oh, everything's.
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Speaker 7: Fine and kind good.
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Speaker 4: So how do you view from the banks perspective a
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Speaker 4: world where it seems like we're in a trade war here, right?
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Speaker 8: Well, banks are ultimately a reflection of their economies that
4:37
Speaker 8: they operate in, and when the economic expectations are in flux,
4:42
Speaker 8: then typically there's some pain for the banks, and that's
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Speaker 8: where we are today.
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Speaker 1: We have while all the.
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Speaker 8: Bad news has been reflected in the stocks, the fundamental
4:53
Speaker 8: performance is still sort of shaking out. I would say
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Speaker 8: that we're coming up on first qu results in the
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Speaker 8: next couple of weeks, and so we'll get a better
5:03
Speaker 8: picture of guidance changes performance going forward. But right now
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Speaker 8: we're still waiting to see where the shoes going to
5:11
Speaker 8: drop in terms of loan growth, credit quality, et cetera.
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Speaker 2: And that's my question because I understand the big banks
5:16
Speaker 2: getting hit in part because the capital markets are just
5:19
Speaker 2: going to freeze up, Like forget IPOs, M and e's,
5:21
Speaker 2: we're going to put that on the side. Okay, that
5:22
Speaker 2: kind of makes sense, But the regional banks may not
5:24
Speaker 2: have the same kind of exposure, right, and the real
5:26
Speaker 2: economy the hard data is still fine, right, So were
5:29
Speaker 2: you surprised at the extent to which your sector got hit.
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Speaker 8: Every time there's worries about the economy, these bank stocks
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Speaker 8: sort of get hit first and then investors ask questions later.
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Speaker 8: So that's where we are today. Valuations have come down,
5:45
Speaker 8: and there's just a lot of worries about future credit quality,
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Speaker 8: the guidance coming down, loan growth fees coming down, top
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Speaker 8: lines coming down. So there's going to be a lot
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Speaker 8: of revisions going forward if these terrorists do really materialize.
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Speaker 4: So I guess one of the things we're hearing, and
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Speaker 4: we've heard it, you know, all the years we're building
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Speaker 4: up to this tariff day. Now it's just kind of
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Speaker 4: reflected in the financial markets is just I just don't
6:12
Speaker 4: feel like doing anything.
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Speaker 7: I don't know.
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Speaker 4: If I'm a CEO, I don't want to buy a company.
6:16
Speaker 4: If I'm a consumer, I don't want to make that
6:18
Speaker 4: big expenditure from the washing machine or the car or whatever,
6:21
Speaker 4: And that means I probably don't need growth capital, right.
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Speaker 7: So if I'm a bank, I'm probably not writing too
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Speaker 7: many loans these days exactly.
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Speaker 8: And that's actually been happening over the past few years.
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Speaker 8: Given the uncertainty with interest rates first and then regulation
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Speaker 8: under the Biden administration, there was just a lot of
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Speaker 8: demand that was just on the sidelines, and you've seen
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Speaker 8: that reflected in loan growth for the industry. It really
6:44
Speaker 8: hasn't moved a lot over the past couple of years,
6:47
Speaker 8: and the expectations heading into this year was that Donald
6:50
Speaker 8: Trump and the administration was really going to unleash more
6:54
Speaker 8: activity from a deep regulation. But now the trade spats
6:59
Speaker 8: and just the chaos that's happening over the past couple
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Speaker 8: of days, everything really continues to be on the sideline.
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Speaker 2: Something any kind of like regional m and A that
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Speaker 2: we've all been expecting for the last couple of years,
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Speaker 2: that's not going.
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Speaker 7: To happen banks right right exactly.
7:10
Speaker 8: There has been some news that the Discovery Capital wind
7:14
Speaker 8: deal could be pushed through with the dj giving the
7:17
Speaker 8: green light to that. So now we're waiting on the
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Speaker 8: FED and other bank regulators the weigh in, so that
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Speaker 8: could be a good litmus test going forward. But still
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Speaker 8: there's a lot of uncertainty involved.
7:28
Speaker 4: When you see an economy slow down like it. Here's
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Speaker 4: the US economy is doing. Where's the first place you
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Speaker 4: see it from a regional bank. Is it credit quality
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Speaker 4: is slowing loan growth?
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Speaker 7: What do you see it first?
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Speaker 8: Yeah, well it's going to be slowing loan growth and
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Speaker 8: it's going to be sort of the delinquencies, right So
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Speaker 8: these thirty day past new metrics, ninety day past new metrics,
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Speaker 8: so those will start trickling in. And then there's other
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Speaker 8: early warning signs for credit quality that the banks talk
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Speaker 8: about that there's some bank bank parlance, it's called criticized loans.
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Speaker 8: Loans that may not be passed due yet, but the
8:04
Speaker 8: bank knows that there's some problems with the borrower or
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Speaker 8: the project, so they'll flag it as a potential problem.
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Speaker 8: So those are sort of the metrics that we look
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Speaker 8: out for every reporting season.
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Speaker 2: Which banks in your coverage are pretty well set up
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Speaker 2: to manage this kind of environment right now?
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Speaker 8: Yeah, I think the market is telling you some things.
8:24
Speaker 8: We just put up something on MRR looking at the
8:27
Speaker 8: five day performance of the KBW index, and it shows
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Speaker 8: the trust banks like Bank of New York, Mellon Northern
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Speaker 8: Trust holding up fairly well. M and T and P
8:38
Speaker 8: and C are the ones in my region and bank
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Speaker 8: coverage that are holding up very fairly well, and then
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Speaker 8: there are others, smaller regionals that are are faring worse.
8:47
Speaker 9: Can interest bring some breaking news to Yeah, the NASTAQ
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Speaker 9: one hundred just entered a bear market, down twenty percent
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Speaker 9: from it. I know it's just numbers, but.
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Speaker 4: But no, I mean a bear market. We haven't talked
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Speaker 4: out of bear marketing quite some time.
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Speaker 2: But they're numbers, but they're also headlines. Yeah, that's you know,
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Speaker 2: that's part of it too.
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Speaker 7: There's people's iras and the four to one case there.
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Speaker 2: I mean, I'm not looking at that. Who's looking at that?
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Speaker 2: Any of you guys look at that? Look, I'm not
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Speaker 2: one on one care I'm not looking for twenty more years.
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Speaker 6: Just gonna sit there.
9:17
Speaker 2: And that's the story. Okay, And then before I let
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Speaker 2: you go real quick, carman, what is like sort of
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Speaker 2: the the type of bank that's going to struggle the most.
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Speaker 8: Yeah, it's going to be the banks that have still
9:30
Speaker 8: been dinged during the prior regional bank crisis. Probably they'll
9:33
Speaker 8: be in the headline still. So yeah, the banks that
9:36
Speaker 8: have have sort of weathered it, but there's always that
9:38
Speaker 8: recent history that all investors going back to, so banks
9:42
Speaker 8: like Western Alliance and and others that that were sort
9:47
Speaker 8: of teetering during that time probably get pushed a bit
9:50
Speaker 8: more by investors, but we think that they're they're balance
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Speaker 8: sheet and the deposits are really strong going forward.
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Speaker 2: All right, Herman, thanks a lot, really appreciate it. Herman
10:00
Speaker 2: Chan joining us in studio, always good to get your perspective.
10:04
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
10:08
Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto
10:11
Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
10:14
Speaker 1: get your podcasts, or watch us live on YouTube.
10:18
Speaker 2: All right, let's go now to tech and where we
10:21
Speaker 2: are in that market after the big sell up on
10:22
Speaker 2: a rug run a Bloomberg Intelligence and your technology analysts.
10:25
Speaker 2: All right, Honora, what stops the bleeding here for tech?
10:29
Speaker 6: That we need a few more of those announcements that
10:31
Speaker 6: other countries are willing to negotiate as well, because unless
10:34
Speaker 6: that happens, you know, it'll be very tough to figure
10:36
Speaker 6: out where the bottom is in terms of fundamentals for
10:39
Speaker 6: any of these companies.
10:40
Speaker 4: Yeah, Onrack, we had Dan ives in studio earlier this
10:43
Speaker 4: morning on surveillance, and it's by far the most cautious.
10:48
Speaker 4: I've ever heard him in on Granted he's a very
10:50
Speaker 4: bullish analyst by nature, but he's saying, basically, this is
10:53
Speaker 4: a black swan event for technology and you know, unless
10:56
Speaker 4: it changes, you know, this is a long term head
11:00
Speaker 4: win for tech and I guess that kind of goes
11:04
Speaker 4: is there. And he even went to the to the
11:06
Speaker 4: level on a Raja saying he'd be surprised that if
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Speaker 4: many of his companies even provide guidance in the upcoming
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Speaker 4: earnings here, So as you talk to clients, what's the
11:16
Speaker 4: mood at there? Is there anybody saying I feel the
11:18
Speaker 4: bottom here? These are great companies. I can buy him
11:20
Speaker 4: cheap here? What are the conversations like?
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Speaker 6: I think the biggest thing is like how long is
11:26
Speaker 6: this malay is going to last? On the uncertainty side
11:28
Speaker 6: of it, because you know, frankly, if you extrapolate and
11:31
Speaker 6: see what Nazdak has done over the last three years,
11:34
Speaker 6: it has been phenomenal since Chad Gibaut came out. So
11:37
Speaker 6: you know, one could argue there is a lot to
11:39
Speaker 6: give on the price action point of view, but fundamentally
11:42
Speaker 6: these are very strong companies, really amazing balance sheets and
11:46
Speaker 6: also the growth profile down the road, and you know,
11:49
Speaker 6: we talked about the conference and everybody is looking to
11:52
Speaker 6: invest more in more AI related services. So the fundamentals
11:56
Speaker 6: on paper are very good. But what happens is when
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Speaker 6: you have a shock in this system like this, everybody freezes,
12:02
Speaker 6: hiding freezes, spending freezes. So you don't know what to
12:05
Speaker 6: do for the next six months. You don't know whether
12:07
Speaker 6: the revenue decline, how much is it going to be,
12:11
Speaker 6: the margin, you know, pressure because of the tartiffs. So
12:15
Speaker 6: there is so much uncertainty right now, and I think
12:19
Speaker 6: there's a there's a fair point that the guidance is
12:21
Speaker 6: going to be very tough at this point.
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Speaker 2: Oh yeah, tough for everyone. I should point out some
12:24
Speaker 2: more headlines coming out of President Trump saying that's a
12:27
Speaker 2: perfect time perfet shaired j Powell to cut rates. This
12:30
Speaker 2: is as Jay Powell is expected to speak in just
12:32
Speaker 2: about twenty minutes time. That's going to be a fascinating
12:36
Speaker 2: conversation to unfold. That's pretty tough, okay, Anna Rag. When
12:41
Speaker 2: we take a look at earnings estimates for these companies
12:44
Speaker 2: in your tech space, in what part, in what sub
12:47
Speaker 2: sector do they need to rerate more?
12:50
Speaker 6: I think software numbers needs to come down quite a
12:52
Speaker 6: bit and something we you know, did a note a
12:55
Speaker 6: few days ago. We looked at the top fifty software
12:57
Speaker 6: companies and saw that the medium growth rate for those
13:01
Speaker 6: was thirteen point two percent on December thirty first, so
13:04
Speaker 6: that is f FI for calendar twenty five. Just a
13:08
Speaker 6: few days ago that number was twelve point four percent,
13:11
Speaker 6: so less than one percent decline in the expectations of
13:14
Speaker 6: a growth rate. You know, that number needs to come
13:17
Speaker 6: down quite a bit. It needs to come down, you know,
13:19
Speaker 6: well under ten percent at this point before one could
13:22
Speaker 6: say that, Okay, we are at that point where fundamentals
13:26
Speaker 6: are now aligned with where the overall economic situation is.
13:30
Speaker 7: So let's go down and talk about Apple here.
13:33
Speaker 4: It's off another three point six percent today, off twenty
13:36
Speaker 4: one percent year to date.
13:39
Speaker 7: ANAK, Is there any call here on Apple?
13:42
Speaker 4: They're just so and we've known this for years and
13:44
Speaker 4: we've talked about it for years, how so dependent they
13:47
Speaker 4: are on China, but from a supply chain as well
13:49
Speaker 4: as an end market.
13:51
Speaker 7: What's your current view on China in this environment? On Apple?
13:55
Speaker 6: Yeah, I'm really getting worried about how the you know,
13:58
Speaker 6: how consumers will react in China or with this thing,
14:01
Speaker 6: because you know, it's one thing to say that, Okay,
14:04
Speaker 6: my phone buying has been pushed out by three months
14:06
Speaker 6: or six months or so, Okay, the demand comes back
14:09
Speaker 6: next year. You know, it's it's not that big of
14:10
Speaker 6: a deal. But once you really get a bad feeling
14:13
Speaker 6: about a company or a country, that sourness really impacts
14:18
Speaker 6: the fundamentals of it. You know, we have seen what's
14:20
Speaker 6: going on with Tesla and Europe, for example. You don't
14:23
Speaker 6: want Apple to have that same feeling in China where
14:25
Speaker 6: consumer is saying, you know what, I don't want to
14:27
Speaker 6: touch an American brand. I would rather just buy the
14:29
Speaker 6: local one. And that's a very big problem in our
14:32
Speaker 6: view because Greater China region accounts for twenty percent of
14:35
Speaker 6: Apple's revenue.
14:36
Speaker 2: Yeah, and this is what we're talking about. Now, we're
14:37
Speaker 2: not even talking super cycles anymore. I feel like six
14:39
Speaker 2: months ago is like now it's coming. Then it's well,
14:41
Speaker 2: I have wone supercycle. To that point, we've already seen
14:44
Speaker 2: save Ford talking about discounting their cars to get people
14:47
Speaker 2: in the door. Is this going to be a similar
14:49
Speaker 2: case for Apple because they're not a discountery kind of thing.
14:52
Speaker 6: No, I don't think so. I mean, I think, you know,
14:55
Speaker 6: I think the Apple CEO has played it very well
14:57
Speaker 6: when it comes to China. He has gone to China
14:59
Speaker 6: few times, He's been seen with the commerce ministers. He's
15:02
Speaker 6: talking about investing more money here there, and I think
15:06
Speaker 6: he's playing the cards right, because you really don't want
15:08
Speaker 6: the world's you know, most nucrative market for your goods
15:12
Speaker 6: to basically have a very bad feeling about your products
15:15
Speaker 6: because at the end of the day in the US,
15:17
Speaker 6: you know, they really cannot grow much. It's a saturated
15:19
Speaker 6: market for them. Their growth rate will come from emerging markets,
15:22
Speaker 6: whether it's China or in a few years from India.
15:25
Speaker 6: But you know, they really have to play it nicely
15:27
Speaker 6: in China in order to show growth rate over the
15:30
Speaker 6: next three to five years.
15:32
Speaker 4: In terms of overall tech spending on a rag, how
15:35
Speaker 4: elastic is tech spending broadly defined? It is it something
15:39
Speaker 4: that these companies feel like they have to do no
15:41
Speaker 4: matter what, or like advertising. We're just talking to Etherrong
15:45
Speaker 4: andoth and that is very discretionary spending on a part
15:48
Speaker 4: of a company that tech.
15:51
Speaker 6: I think you divided in two categories. One is your
15:53
Speaker 6: growth capex where you're going to invest for newer products,
15:57
Speaker 6: and that will remain the case. You know, AI spending.
15:59
Speaker 6: Let's say somebody is spending you know, one hundred dollars more,
16:02
Speaker 6: they will probably spend ninety five hundred dollars again, that's okay.
16:05
Speaker 6: But the problem comes in now it comes at the
16:07
Speaker 6: expense of something else. You know, you are going to
16:10
Speaker 6: upgrade the PCs in your department. That's not going to happen.
16:13
Speaker 6: You're gonna push it out by six months. Servers, normal
16:16
Speaker 6: software that you use for day to day works. You know,
16:19
Speaker 6: you're going to scale back on some of those elements. Consulting,
16:23
Speaker 6: you know, is off the window at this point. I mean,
16:25
Speaker 6: I'd be very surprised to see consulting. I you know,
16:28
Speaker 6: one could expect layoffs coming in the consulting world over
16:31
Speaker 6: the next few months because if there is no work,
16:34
Speaker 6: you know, these companies are going to count out consultants,
16:36
Speaker 6: you know, whether it's McKenzie, BCG or some of the
16:39
Speaker 6: other services companies. So you have to take money out
16:43
Speaker 6: from one to give it to the other person.
16:44
Speaker 2: I'd say, is there rotation of money or just a
16:46
Speaker 2: non spend of money altogether? Like does one section spend
16:49
Speaker 2: more while the other spends less or is this a
16:52
Speaker 2: true pullback?
16:54
Speaker 6: It was a mix of both. I think reallocation is
16:56
Speaker 6: definitely going to go, but I don't expect you know,
16:59
Speaker 6: if somebody is investing in AI to improve their operations,
17:01
Speaker 6: they're not going to stop that project. But to be
17:04
Speaker 6: very frank that number as a percentage of total spending
17:07
Speaker 6: is still not that big for a large bank or
17:09
Speaker 6: a retail company. It's really the day to day work,
17:12
Speaker 6: and that's where you're going to see. I, you know,
17:14
Speaker 6: anticipating more layoffs coming in over the next one one
17:17
Speaker 6: and a half months from some of these vendors.
17:20
Speaker 2: Oh man, that is a grim prediction on that point.
17:25
Speaker 2: How fast do you think spending could pick up? Like
17:27
Speaker 2: what would be a trigger for reset?
17:30
Speaker 6: You know, the news like viatam. Please give me five
17:33
Speaker 6: or more of those news releases and all of this
17:35
Speaker 6: on turns and everything goes back to normal. Because frankly speaking,
17:38
Speaker 6: this is we are really on a thin line when
17:40
Speaker 6: it comes to business confidence. And I think really the
17:43
Speaker 6: the you know, in our view, these things are really
17:45
Speaker 6: they're playing with fire because once it takes the spiral downturn,
17:49
Speaker 6: it's very difficult to stop it. So if it stops
17:51
Speaker 6: over the next few weeks, I think we have we
17:53
Speaker 6: can see a good end to the year. But otherwise,
17:56
Speaker 6: you know, once the layoff starts, then it's a vicious cycle.
18:00
Speaker 4: So is there any safe names in tech? I mean,
18:04
Speaker 4: is Microsoft the safe name is?
18:06
Speaker 6: That's a very good point, Paul. You know, we have
18:09
Speaker 6: been thinking a lot about it, and you know, discussions
18:11
Speaker 6: we have been having and and you know, with with
18:13
Speaker 6: works like you, we've been saying that companies that are
18:16
Speaker 6: really exposed to the large enterprises, so the Fortune five
18:19
Speaker 6: hundred companies or the Fortune one thousand companies, they will
18:23
Speaker 6: be less impacted than the ones that are impacted to
18:26
Speaker 6: the SMB spending. So I'll give you a very good
18:28
Speaker 6: example here is Shopify. Look at how it's completely been
18:32
Speaker 6: you know, decimated yesterday and today because the bulk of
18:36
Speaker 6: their consumer base or the client base is small and
18:39
Speaker 6: medium businesses. Now somebody like a Microsoft or a Workday
18:43
Speaker 6: that deals primarily with larger companies and larger enterprises a
18:47
Speaker 6: lot less you know, disturbance in their revenue flow, they
18:50
Speaker 6: will also get hit. It's not that they're immune, but
18:53
Speaker 6: it'd be a lot less than somebody like a Shopify.
18:56
Speaker 2: I also have to wonder if this does this change
18:58
Speaker 2: the ROI for AI for example, like you got to
19:01
Speaker 2: prove it harder and faster in this kind of environment.
19:04
Speaker 6: See, one of the things is that's still in the
19:06
Speaker 6: experimentation state. So let's say if a company, if a
19:09
Speaker 6: bank is spending one hundred dollars in technology spending, you know,
19:12
Speaker 6: in total, they're not spending more than a dollar or
19:14
Speaker 6: two dollars in AI. So it doesn't really you know,
19:16
Speaker 6: that doesn't move the needles. It's really the bulk of
19:19
Speaker 6: the big hardware purchases, big computer purchases, that's the one
19:23
Speaker 6: that you know, gets gets pushed.
19:24
Speaker 9: Out all right.
19:26
Speaker 7: On ra grana, thank you so much. We appreciate that.
19:28
Speaker 4: On a rog Rana covers all the technology for Bloomberg Intelligence.
19:32
Speaker 4: Joining us from Chicago via a zoom Here live.
19:37
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
19:40
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19:51
Speaker 4: What we've been trying to do is kind of go
19:53
Speaker 4: industry by injury and see what potential impact could be
19:55
Speaker 4: on a world where there are much higher tariffs in
19:59
Speaker 4: most of the world. One of the areas we want
20:01
Speaker 4: look at now is the media business. It is a
20:04
Speaker 4: global business, and for that we go to KEITHA. Rounganath
20:06
Speaker 4: and she covers the media industry for Bloomberg Intelligence.
20:10
Speaker 7: KEITHA.
20:11
Speaker 4: I mean, I guess where do you see some of
20:13
Speaker 4: the risks to some of these big media companies to
20:16
Speaker 4: their business in a world that appears to be going
20:20
Speaker 4: through some type of trade and dislocation to say the least.
20:24
Speaker 10: Yeah, sure, Paul, So I think in general what we're
20:27
Speaker 10: seeing is, of course, a lot of these media companies
20:29
Speaker 10: are heavily exposed to advertising, television advertising, and television advertising
20:34
Speaker 10: has already kind of been a little bit down in
20:36
Speaker 10: the dumps, and overall we're seeing, you know, kind of
20:39
Speaker 10: consumer confidence shaken up pretty badly. And with that, we're
20:44
Speaker 10: seeing ad projections, so ad growth projections actually come down
20:48
Speaker 10: by quite a bit. So before all of this stuff started,
20:53
Speaker 10: you know, Magnat Global was projecting about five percent increase
20:56
Speaker 10: in US advertising spend for twenty twenty five. Now it's down. Actually,
21:02
Speaker 10: before the tariff News it was down to four percent,
21:05
Speaker 10: and I suspect it could go even lower. So that
21:07
Speaker 10: is going to be a big blow to the bottom
21:09
Speaker 10: lines of a lot of companies like a Warner Brothers
21:11
Speaker 10: or a paramount.
21:12
Speaker 2: So let me just ask a stupid question for you too,
21:15
Speaker 2: smart media people. So I'm Nike. I usually do advertising,
21:19
Speaker 2: say on CBS, I'm making all of this up right,
21:21
Speaker 2: all of a sudden, I'm like, oh my gosh, I'm
21:23
Speaker 2: not being able to sell my product, so I'm going
21:25
Speaker 2: to pull that ad all together. And is that like
21:28
Speaker 2: the logical one plus one plus one equals three trickle down, Kita.
21:32
Speaker 10: That is exactly what it is. We have seen, you know,
21:35
Speaker 10: it's great that you brought up Nike. We've seen commentary
21:38
Speaker 10: from a lot of these consumer facing companies that are
21:41
Speaker 10: saying that they are going to pull back on advertising
21:44
Speaker 10: quite a bit this year, and that's really just a
21:47
Speaker 10: way of them protecting their bottom lines. So we're seeing
21:49
Speaker 10: that commentary actually across the board. We're seeing even you know,
21:53
Speaker 10: digital advertising, and remember digital advertising has kind of been
21:56
Speaker 10: the standout, has been the star of the show, if
21:58
Speaker 10: you will, for so many years now, you know, jumping
22:01
Speaker 10: up every year about fifteen to eighteen percent, and we've
22:04
Speaker 10: seen some pretty soft commentary even for digital advertising. So
22:07
Speaker 10: I think across the board there is definitely a lot
22:09
Speaker 10: of nervousness.
22:11
Speaker 4: How about you know, I think about the Walt Disney
22:12
Speaker 4: Company and even Comcast. The theme park business, which has
22:16
Speaker 4: been such a great business for or It's been a
22:19
Speaker 4: great business just across the board, and Disney's really stepped
22:22
Speaker 4: up its capital spending for that business because they're so
22:24
Speaker 4: bullish on it. But if consumers sentiment is shaky, here
22:29
Speaker 4: is the expectation that they'll see see it in their
22:31
Speaker 4: top line.
22:33
Speaker 10: I think so, Paul, I think this is going to
22:35
Speaker 10: be a real risk for Disney. Remember this is so
22:37
Speaker 10: so important for Disney. Parks make up sixty percent of
22:41
Speaker 10: the company's profits, so absolutely critical to their bottom line. Now,
22:46
Speaker 10: what management did is they already guided to six to
22:49
Speaker 10: eight percent profit growth in the theme park business for
22:52
Speaker 10: this year. But I think they might have spoken too soon.
22:55
Speaker 10: So we've already kind of seen a little bit of
22:57
Speaker 10: softening in terms of theme park trends, and I think
23:01
Speaker 10: it's going to get even more and more difficult as
23:03
Speaker 10: kind of the year progresses. Disney also faces some competition
23:07
Speaker 10: from Comcast actually, because Comcast is opening Epic Universe on
23:11
Speaker 10: on May twenty seconds. So for Disney, it could almost
23:14
Speaker 10: be like a double blow here.
23:16
Speaker 2: Which is so weird because weren't we saying just like
23:18
Speaker 2: a couple quarters ago, Oh, it's great because it's like
23:20
Speaker 2: a one stop shop. You get to go there. You're
23:22
Speaker 2: going to Universal or Comcast, but you're going to go
23:24
Speaker 2: to Disney at the same time. Now that's not the case.
23:27
Speaker 10: Not the case because again there's going to be a
23:29
Speaker 10: lot of pressure on consumer wallets and we've seen some
23:32
Speaker 10: really clever pricing come out of Comcasts. So the way
23:35
Speaker 10: that they're packaging their promotions for you know, Epic Universe
23:39
Speaker 10: is it's a three or a four day package leaving
23:42
Speaker 10: you know, a family like very little time to go
23:45
Speaker 10: to Disney. So they know what they're doing.
23:48
Speaker 7: Is there going to be an analyst day for this
23:49
Speaker 7: new theme park?
23:52
Speaker 10: Not that I've heard.
23:52
Speaker 6: I haven't heard.
23:53
Speaker 4: See, that's what Comcasts and most other companies don't get that.
23:56
Speaker 7: Disney gets Disney.
23:58
Speaker 4: Whenever they do something from like a new crew Ship
24:00
Speaker 4: or open up Shanghai, they have all their investors' annals
24:03
Speaker 4: come and it makes everybody feel good and presumably that's
24:06
Speaker 4: good for your stock.
24:06
Speaker 7: And they know how to play that game. Look like
24:08
Speaker 7: a bribe, yeah, but it's fun. They used to be
24:12
Speaker 7: missing and what's your points?
24:14
Speaker 4: All right, Githa, thank you so much for you appreciate that,
24:16
Speaker 4: Geitha Ranganathan for Bloomberg Intelligence and the best one.
24:19
Speaker 7: Of those I did.
24:20
Speaker 4: It was in Canadian National opened up their tunnel through
24:23
Speaker 4: one of the rocky mountains that cut the trip the
24:25
Speaker 4: trans continent trip by like fifty percent. That we had
24:29
Speaker 4: a multi day rail trip through the Canadian ROCKIESWS.
24:32
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