Latest / Bloomberg Intelligence / Moderna and Merck Revive mRNA Hopes With Melanoma Success

Transcript

Moderna and Merck Revive mRNA Hopes With Melanoma Success · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
0:10
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
0:14
Speaker 1: Eastern on Apple Coarcklay and Android Auto with the Bloomberg
0:17
Speaker 1: Business App. Listen on demand wherever you get your podcasts,
0:21
Speaker 1: or watch us live on YouTube.
0:24
Speaker 2: When we were in the early early days of the
0:26
Speaker 2: pandemic and we were just it was like early twenty
0:28
Speaker 2: twenty one in this we're starting to get some vaccine
0:31
Speaker 2: discussions and this mRNA technology came to the fore. Sam
0:35
Speaker 2: Fizzelli had to explain it to us like a million
0:37
Speaker 2: times because we didn't really get it, but he was
0:39
Speaker 2: saying it's going to be really helpful in delivering a
0:43
Speaker 2: coronavirus vaccine. He was right, and he said, don't sleep
0:46
Speaker 2: on this scene because you can use the same technology
0:49
Speaker 2: for different therapies, for different parts and different things. And
0:53
Speaker 2: and here you go today with this news with hooking
0:57
Speaker 2: up with merk on a cancer drug starts up one
1:00
Speaker 2: hundred and thirty percent. I mean, this isn't an overcounter
1:03
Speaker 2: pink sheep any stock. This is a twenty five billion
1:05
Speaker 2: market cap. That's not fifty billion market cap in one day.
1:08
Speaker 2: Sam Pazzelli joins is here. He is the chief go
1:11
Speaker 2: to research channels Bloomberg Intelligence for all things healthcare. Sam
1:14
Speaker 2: talk to us about this, what Modera and Merk are
1:17
Speaker 2: doing today, what's kind of the science behind it?
1:21
Speaker 3: Yeah, I mean, Paul, just to say, these are the
1:23
Speaker 3: days that I lived for.
1:25
Speaker 4: Right when something goes right, even though I was really
1:28
Speaker 4: worried about this trial reading out, which is what this
1:31
Speaker 4: trial is taking. Some mutations identify mutations in the tumors
1:38
Speaker 4: of patients who've had them removed. So you have melanoma,
1:41
Speaker 4: you're lucky enough to have been caught early. You do surgery,
1:44
Speaker 4: You debulk the tumor. You use that in their labs
1:47
Speaker 4: and their AI systems, et cetera, to identify what they
1:51
Speaker 4: call neo antigs, things that are more prominent in the
1:54
Speaker 4: tumor cells than not. Put that in a vaccine MRN
1:58
Speaker 4: a vaccine, give that back to the pay and at
2:00
Speaker 4: the same time administer the Murk immuno oncology drug that
2:05
Speaker 4: unleashes t cells if they find those mutations.
2:10
Speaker 3: So why was we were we worried?
2:12
Speaker 4: It's a new technique. It's really hard. This is a
2:15
Speaker 4: disease where you get a lot of good response, even
2:18
Speaker 4: as it is with therapy, with the removal of the tumor,
2:21
Speaker 4: with kytrude itself. This is a head against kytrudae alone,
2:24
Speaker 4: right that the therapy. So and they say, although we
2:28
Speaker 4: haven't seen any numbers that is worked out here. So
2:31
Speaker 4: I think what's going on with MODERNA I'm going to
2:34
Speaker 4: speculate here, right, is that there is some major short covering.
2:37
Speaker 4: That squeeze is quite massive, right, one hundred and thirty
2:40
Speaker 4: five percent last time I looked, you.
2:42
Speaker 3: Seeing it jump in.
2:43
Speaker 4: Other RNA names are tourists, BioNTech up twenty three and
2:48
Speaker 4: a bit percent, because they're all trying to do the
2:50
Speaker 4: same thing.
2:52
Speaker 3: The question really is what how good is this data?
2:54
Speaker 3: We'll find that in the next few months.
2:56
Speaker 4: I'm pretty sure, And then can you say it's got
2:59
Speaker 4: to work in other tumors? And I think that's a
3:02
Speaker 4: bit of a leap of faith.
3:05
Speaker 3: It's going to take some of the Melano way is
3:07
Speaker 3: the easiest step forward. So but still, let's celebrate today.
3:11
Speaker 5: Sam, I'm so curious about the share movement of Maderna.
3:15
Speaker 5: Can you tell me a little bit about whether or
3:17
Speaker 5: not you feel like the share move justifies this news
3:21
Speaker 5: we're looking at Maderna reaching its best day on record.
3:25
Speaker 5: Tell me a little bit more about how you see
3:27
Speaker 5: this movie fitting it.
3:29
Speaker 4: Just just to remember, though, in the heydays of the
3:33
Speaker 4: COVID vaccine, this thing was traded at four hundred. I
3:36
Speaker 4: think even I don't got the chart up here or
3:38
Speaker 4: four hundred, but those were all funny days, weird days, right,
3:42
Speaker 4: Nobody knew how to size this here. There is speculation,
3:46
Speaker 4: a lot of conversation in our industry chat with investors
3:52
Speaker 4: that there's shortcovering going on, and you might just see
3:54
Speaker 4: actually the stocks taking a little bit of a step
3:57
Speaker 4: back from the one hundred and thirty five percent up,
3:59
Speaker 4: that there would be some short covering. I think the
4:02
Speaker 4: better way to look at it and see the impact
4:04
Speaker 4: that this is maybe looking at MERK but even there,
4:06
Speaker 4: I think they could do some short covering and some
4:08
Speaker 4: relief rally that actually maybe MRKA has got the ability
4:11
Speaker 4: to get through this Truda pattern expiring that's coming up.
4:15
Speaker 2: So availability, when do you think this, this new drug
4:20
Speaker 2: or this new application can be approved and get onto
4:24
Speaker 2: the marketplace.
4:25
Speaker 4: I love the way that you struggled with that, Paul,
4:27
Speaker 4: because this is not a drug. It is you go
4:29
Speaker 4: in and you have to have it prepared for you.
4:32
Speaker 4: It takes weeks. They take your tumor, you go home,
4:36
Speaker 4: you get whatever therapy you get, and in the meantime
4:39
Speaker 4: they're trying to identify what's different in your tumor to
4:42
Speaker 4: develop this vaccine for you. So it's a personalized new
4:46
Speaker 4: antigen therapy i NT so individualized invention therapy. So what
4:51
Speaker 4: do we call this? So it's going to be funky manufacturing.
4:55
Speaker 4: I'm pretty sure they'll fix it and figure it out.
4:57
Speaker 4: This is merk we're dealing with, not just modern alone.
5:01
Speaker 3: So that's how this works. And how will it be priced?
5:05
Speaker 3: I don't know.
5:05
Speaker 4: I'm pretty sure depending on the efficacy benefit of the
5:08
Speaker 4: benefit magnitude, they'll price it accordingly.
5:11
Speaker 3: I wouldn't be.
5:12
Speaker 4: Surprised if it comes back at I don't know, three
5:15
Speaker 4: four five hundred thousand dollars a year.
5:18
Speaker 6: Three four five hundred thousand.
5:20
Speaker 3: Yep, that's what these drugs are being launched that these days.
5:23
Speaker 3: I can't tell you for a fashion because the company
5:25
Speaker 3: has never talked about that.
5:26
Speaker 2: So what I mean when you talk about a number
5:29
Speaker 2: like that, how does insurance plan to that?
5:31
Speaker 6: Don't you have to get insurance to buy off on
5:33
Speaker 6: this too.
5:34
Speaker 4: Yeah, it's very hard for insurance to insurance can start
5:37
Speaker 4: and not paying up for your GLP one because the
5:41
Speaker 4: benefit is so far away. But in cancer, they tend
5:44
Speaker 4: to just accept it, right, And that is a conversation
5:47
Speaker 4: that pharma.
5:48
Speaker 3: Companies need to have.
5:49
Speaker 4: At what point do you stop constantly raising the bar
5:52
Speaker 4: on the price?
5:54
Speaker 3: Right now, Let's be honest and fair.
5:56
Speaker 4: Here they are making significant difference to people's ability to
6:01
Speaker 4: live with cancer and live longer.
6:03
Speaker 3: So here the question is I don't know.
6:06
Speaker 4: And that's the price they're going to come out with,
6:07
Speaker 4: But I wouldn't be surprised, especially given how complicated that
6:10
Speaker 4: it is to produce this.
6:12
Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.
6:19
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
6:22
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
6:25
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
6:29
Speaker 1: you get your podcasts, or watch us live on YouTube.
6:33
Speaker 2: Get back to earnings here, luxury goods maker S day
6:36
Speaker 2: Lauder put up some pretty good numbers. The stock is
6:39
Speaker 2: up sixteen percent today, which is a good day. It's
6:42
Speaker 2: still down about six percent year to day, but certainly
6:45
Speaker 2: having a good day.
6:46
Speaker 6: Today.
6:47
Speaker 2: We check in with Debake and she covers all the
6:49
Speaker 2: luxury companies for Bloomberg Intelligence. She's based in London. Here
6:52
Speaker 2: what's going on with sday later? Deb, what'd you take
6:55
Speaker 2: away from their quarterly report?
7:00
Speaker 7: I think that this is the first time that we
7:03
Speaker 7: get a clear indication and confidence that the profit recovery
7:07
Speaker 7: growth program that they set about a couple of years
7:10
Speaker 7: ago under the CEO Stephan Dela Fevary is really coming
7:15
Speaker 7: to fruition. So in fiscal twenty six they have booked
7:19
Speaker 7: the top end of the one point seven billion attributed
7:23
Speaker 7: to the plan overall, and starting fiscal twenty seven they're
7:27
Speaker 7: looking towards the top end of one point two billion.
7:30
Speaker 7: It was one to one point two billion. They're looking
7:32
Speaker 7: towards the top end in terms of that accumulating over
7:35
Speaker 7: the coming year for savings.
7:37
Speaker 3: Now that included things like.
7:39
Speaker 7: Streamlining, general savings and ten thousand job cuts, and the
7:44
Speaker 7: market is expecting and believing now that we can start
7:47
Speaker 7: to see some of that coming through. We looked at
7:50
Speaker 7: the four Q as clear acceleration. On the four Q
7:54
Speaker 7: their constant currency came in a five couple of percent
7:57
Speaker 7: ahead of the market. In particular, half of their business
8:01
Speaker 7: is skincare and that achieved seven percent growth. But not
8:04
Speaker 7: only that, we saw the op margin running from eight
8:07
Speaker 7: point two towards nineteen percent, and so a big rise there,
8:12
Speaker 7: and that's going to help them to deal with the
8:15
Speaker 7: rest of businesses with fragrance and makeup and really get
8:18
Speaker 7: those growth rates up to markets three to five percent.
8:22
Speaker 7: So they're focusing twenty seven on three to five percent,
8:26
Speaker 7: but we think they'll get towards the top end of that.
8:28
Speaker 7: Consensus is on four they upgraded organic outlook sorry, operational
8:35
Speaker 7: outlook for twenty twenty seven and the EPs was well ahead,
8:40
Speaker 7: and I think when we look at twenty twenty seven
8:42
Speaker 7: already we expect about five percent upgrade on EPs and
8:45
Speaker 7: with some contribution running into twenty twenty eight as well.
8:49
Speaker 5: Debor, we're seeing the fourth consecutive quarter of organic growth
8:53
Speaker 5: for Esday Water. Could you break down a little bit
8:55
Speaker 5: in terms of how much you perceive this beat to
8:58
Speaker 5: be a true demand recovery versus the effects of restructuring.
9:05
Speaker 7: So actually, if I look at the top line and
9:08
Speaker 7: the organic growth and the way that that is made up,
9:12
Speaker 7: they're getting you know, they're reporting market share growth by value,
9:18
Speaker 7: so including volume plus price ability for their brands to
9:22
Speaker 7: raise price in mainland China, in Korea, in Japan, and
9:26
Speaker 7: Western Europe in the fourth quarter the rest over the
9:30
Speaker 7: full year, and then also volume growth is positive in
9:33
Speaker 7: the US, and I think with what they have planned,
9:36
Speaker 7: the way they're focused and restructuring, that they'll get that
9:38
Speaker 7: back to value growth too, so being able to command
9:41
Speaker 7: pricing in the US. So it's them, but also if
9:45
Speaker 7: we look at the US, one of the big things
9:46
Speaker 7: we've talked about has been the drag across these luxury
9:50
Speaker 7: goods type of companies, the beauty premium companies on travel retail,
9:54
Speaker 7: and they're saying travel retail is clearly coming back in
9:58
Speaker 7: mainland China and other areas across Asia. It's also moved
10:01
Speaker 7: in to the East and to the West. So we're
10:04
Speaker 7: seeing some of that travel retail also doing well coming
10:08
Speaker 7: from the Americas into Europe, and that is helping to
10:12
Speaker 7: absorb about one and a half to two percent of
10:16
Speaker 7: growth being shaved from the top line from Middle East
10:19
Speaker 7: for all of these companies. So it's some company contribution
10:24
Speaker 7: and also some market synergies and contribution that are coming through.
10:28
Speaker 6: Hey, dev about the thirty seconds left.
10:30
Speaker 2: Are the Chinese consumers are they traveling or are they
10:34
Speaker 2: buying mainly in China, maybe Japan a little bit.
10:37
Speaker 6: Are they traveling to Europe and to the US.
10:40
Speaker 7: We've certainly seen some of the movement to Europe, not
10:44
Speaker 7: to what it was pre twenty nineteen, but certainly better
10:48
Speaker 7: than last year, and we expect that to continue. There's
10:51
Speaker 7: supposed to be some level of momentum in the second
10:54
Speaker 7: half for the US less so some are starting to travel,
10:59
Speaker 7: and there's ex actation that will pick up more in
11:02
Speaker 7: twenty twenty seven.
11:04
Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.
11:12
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch US Live
11:16
Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android
11:19
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
11:22
Speaker 1: you get your podcasts, or watch US live on YouTube.
11:26
Speaker 2: Tarje reported some numbers. I guess they're pretty good. The
11:29
Speaker 2: stocks up five percent today, But ma'am, I didn't. I
11:32
Speaker 2: totally miss this.
11:33
Speaker 6: Stocks up sixty four percent year to date. How did
11:35
Speaker 6: I miss that? I mean target ripping it.
11:38
Speaker 2: Craig Trudelle joins us, We're not talking about autos, despite
11:41
Speaker 2: what the title says on my screen. We're going to
11:43
Speaker 2: talk about just in general news here and target earnings.
11:46
Speaker 2: Talk to us, Craig, what do you just what did
11:48
Speaker 2: the company report here? And why is the street so
11:49
Speaker 2: bullish on this name?
11:51
Speaker 8: Yeah, I think this is a pretty clear story of
11:53
Speaker 8: relatively new CEO, a company that has been really challenged
11:57
Speaker 8: for a few years and has gone through some real
12:00
Speaker 8: issues in terms of sales, having a clear strategy to
12:03
Speaker 8: turn that around, and showing some traction putting up the
12:06
Speaker 8: numbers to get Wall Street more comfortable with it. I
12:08
Speaker 8: think you mentioned sort of Tarja and how you know,
12:12
Speaker 8: this is a company that sort of built a reputation
12:15
Speaker 8: for it's it's home goods and and you know, sort
12:19
Speaker 8: of more discretionary items that may be lost out as
12:23
Speaker 8: as the consumer you know, prioritized, you know, the the
12:27
Speaker 8: items that were sort of musts, you know, groceries. So
12:31
Speaker 8: to see the company sort of making it a more
12:33
Speaker 8: concerted push in that in that department as of you know,
12:37
Speaker 8: just in the last few months, even it seems to
12:40
Speaker 8: be paying some dividends.
12:41
Speaker 5: Here, great back to school shopping right, immediate test for
12:46
Speaker 5: the second half of the year holiday even bigger what
12:49
Speaker 5: would show you, what stat would show you that this
12:52
Speaker 5: turnaround is complete versus in terms of like all of
12:55
Speaker 5: these events that happened in the back half of the year.
12:57
Speaker 8: Yeah, yeah, I mean, I do think it was interesting
13:00
Speaker 8: for all the optimism about the results this morning, you know,
13:03
Speaker 8: we are seeing a bit of a slowdown from one
13:06
Speaker 8: quarter the next in terms of you know, sales increase,
13:09
Speaker 8: so you know, the outlook for the full year, they
13:12
Speaker 8: bump that up a percentage point to five percent. I
13:15
Speaker 8: do think that this is still a story where, you know,
13:18
Speaker 8: it remains to be seen, you know, just how sort
13:21
Speaker 8: of established this turnaround is. But it is going to
13:24
Speaker 8: be really important that the company keep this momentum up.
13:28
Speaker 8: And it's not going to be easy, right, I mean,
13:30
Speaker 8: we're we're hearing from other big box retailers this week.
13:33
Speaker 8: Home Depot and Lows in particular come to mind. I
13:36
Speaker 8: think Home Depot, of those of those two, you know,
13:40
Speaker 8: had much better you know, results than than Low's did
13:44
Speaker 8: this morning, and yet both of them had some real
13:46
Speaker 8: consistent things to say about kind of the state of
13:48
Speaker 8: the American consumer that you know, big home improvement projects,
13:52
Speaker 8: for example, are things that the conditions of that, as
13:55
Speaker 8: home depot put it, are just frozen. So you know,
13:58
Speaker 8: the consumer may not have the sort of latitude to
14:01
Speaker 8: to sort of splash out on back to school like
14:03
Speaker 8: maybe they did years ago.
14:05
Speaker 2: What I've learned just reading about retailers like a Target
14:09
Speaker 2: or Walmart.
14:10
Speaker 6: Is how important management is. I mean, man, I.
14:14
Speaker 2: Mean, so talk to us about this new guy on
14:15
Speaker 2: the new CEO, maybe what he is doing here.
14:18
Speaker 8: Yeah, I mean, I do go back to this grocery store.
14:21
Speaker 8: I think it's going to be interesting to see how
14:23
Speaker 8: that plays out, in particular because you know, you don't
14:26
Speaker 8: necessarily think of Target as being your sort of go
14:28
Speaker 8: to grocer, and you know they're trying.
14:31
Speaker 2: To I don't think about Walmart until Jen bartash Is
14:34
Speaker 2: about ten years ago said.
14:35
Speaker 6: No, the number one supermarket in this country is huge smart.
14:38
Speaker 6: I know that absolutely.
14:39
Speaker 2: Now you are we wouldn't know, yes, Yeah, And Walmart
14:43
Speaker 2: and Costco.
14:43
Speaker 8: You know that these are our two names that have
14:45
Speaker 8: really sort of, you know, kind of taken over that space.
14:48
Speaker 8: And it is interesting to me that Target is both
14:52
Speaker 8: sort of leaning more into that segment of their business
14:55
Speaker 8: and yet sort of taking kind of half steps. They're
14:58
Speaker 8: not wanting to necessarily make the value play that you've
15:01
Speaker 8: seen Walmart make and sort of you know, consistently made
15:06
Speaker 8: over the years, whether or not they can sort of
15:09
Speaker 8: walk this fine line of building that business but also
15:13
Speaker 8: doing so profitably. That seems to be the play here
15:15
Speaker 8: that Fidelki is making, and it's interesting to see the
15:19
Speaker 8: street buy into it.
15:22
Speaker 5: Has targeting your opinion, actually turned the corner on their
15:24
Speaker 5: recovery or help or do we need a couple more quarters?
15:27
Speaker 5: Do investors need a couple more quarters to really prove
15:30
Speaker 5: that twnerund has happened?
15:31
Speaker 8: Yeah, I think, you know, looking at just this year
15:35
Speaker 8: and even just you know, this is a couple of
15:39
Speaker 8: quarters now of real serious traction. I think the thing
15:43
Speaker 8: that's that's of course going to be challenging is is
15:46
Speaker 8: to kind of keep that going after what was a
15:49
Speaker 8: very extended slump. Right, So this is a company that
15:54
Speaker 8: it's not just coming out of of you know, just
15:58
Speaker 8: a couple of bad quarters. This was a few years
16:00
Speaker 8: and this wasn't just issues of of you know, product
16:05
Speaker 8: fit or things like that. I think there was also
16:07
Speaker 8: some some real questions about sort of overall brand damage right,
16:10
Speaker 8: the handling of some of the sort of cultural like
16:14
Speaker 8: moments of the last few years.
16:16
Speaker 3: Uh.
16:16
Speaker 8: Some people, you know, don't come back immediately to a
16:19
Speaker 8: brand after that damage is done.
16:22
Speaker 2: Seeing some reporting from the BBC that Target has revealed
16:24
Speaker 2: it's received almost one billion dollars in tariff refunds. Wow,
16:29
Speaker 2: A that's a big number. B Are other retaillers seeing
16:32
Speaker 2: that too?
16:33
Speaker 8: That is another uh sort of you know, the sort
16:36
Speaker 8: of fly and I guess flying the ointment is is
16:38
Speaker 8: a negative, but this is something that's very much in
16:41
Speaker 8: the mix. And you know, even just last quarter I
16:43
Speaker 8: think was we were starting to see some of this
16:45
Speaker 8: flow through. Uh, and it is making a meaningful difference
16:49
Speaker 8: for retailers. Uh, you know, and to see that this
16:52
Speaker 8: sort of puts in takes across these companies in terms of,
16:55
Speaker 8: you know, how they sort of account for this and
16:58
Speaker 8: what their expectations are going forward. Are still having more
17:01
Speaker 8: to come in terms of what they're able to wrap
17:03
Speaker 8: in quickly.
17:03
Speaker 2: I would have thought that it would have taken years
17:05
Speaker 2: to get that money back, like it does for me
17:07
Speaker 2: and anybody else who tries to get a refund.
17:09
Speaker 8: Yeah. And it may be the case too that we
17:11
Speaker 8: have sort of more refunds to speak of, right in
17:15
Speaker 8: that there are more and more challenges to these various
17:20
Speaker 8: elements of the Trump tariff attempts.
17:23
Speaker 6: Here, stay with us. More from Bloomberg Intelligence coming up
17:27
Speaker 6: after this.
17:31
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
17:35
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
17:38
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
17:41
Speaker 1: you get your podcasts, or watch us live on YouTube.
17:45
Speaker 6: Let's get back to the earnings here.
17:46
Speaker 2: Lows they reported earning, Say cut its outlook for the
17:49
Speaker 2: full year after posting results that missed Wall Street estimates,
17:54
Speaker 2: showing how I stubbornly weak housing market is eroting the
17:57
Speaker 2: home improvement retailers performance. Having not improved my home at all,
18:02
Speaker 2: I would know a hammer from a screwdriver. I'm the
18:04
Speaker 2: last person to talk to. That's why we turned to
18:06
Speaker 2: the pros. Lindsay, Dutch consumer hardline senior analysts at Bloomberg Intelligence.
18:11
Speaker 2: Lindsay talk to us about Low's What are we what
18:13
Speaker 2: are they saying about their business and their.
18:15
Speaker 9: Consumer Hi, Paul, thanks for having me. Yeah, Low's results
18:20
Speaker 9: came in a little bit different than what we saw
18:22
Speaker 9: from Home Depot yesterday, you know, we saw weaker than
18:26
Speaker 9: expected sales and that was really on sort of a
18:29
Speaker 9: weak DIY consumer people like you not looking to improve
18:33
Speaker 9: their goals. Pro spending was solid, but you know, same
18:38
Speaker 9: source of sales zero point two percent increase, you know,
18:42
Speaker 9: you know, very very minimal, when when Low's was really
18:44
Speaker 9: expecting sort of an acceleration in that second quarter from
18:47
Speaker 9: first quarter and it didn't materialize.
18:51
Speaker 5: In your opinion, right, So tell me a little bit
18:53
Speaker 5: more about this vifurcation between Home Depot and Low's. Why
18:58
Speaker 5: one petting better than expected sales? Why under pressure for
19:03
Speaker 5: the other?
19:04
Speaker 9: Yes, I actually think this is one of the most
19:06
Speaker 9: interesting things that came out of getting more details on
19:09
Speaker 9: the results from their earnings call this morning. So with
19:12
Speaker 9: Home Depot, we saw a build in same store sales
19:15
Speaker 9: throughout the quarter, June stronger than May, July stronger than June.
19:20
Speaker 9: For Low's we saw a very weak July. And what
19:25
Speaker 9: it seems to be was the case is, you know,
19:27
Speaker 9: some of Low's's peers, probably including Home Depot though they
19:31
Speaker 9: weren't named specifically, and other home centers, you know, they
19:36
Speaker 9: got those tariff refunds in June. They redeployed them by
19:40
Speaker 9: you know, cutting prices and really trying to draw consumers
19:43
Speaker 9: in for those big July sales events, and Low's probably
19:48
Speaker 9: lost share in the month of July. They saw decline
19:52
Speaker 9: in same store sales with that customer choosing to shop
19:55
Speaker 9: elsewhere for because of their focus on value interest rates.
20:00
Speaker 2: It seems to be we're in a higher for longer environment.
20:03
Speaker 2: How does that impact you know, some of these the
20:05
Speaker 2: lows the home depots of the world. Presumably people aren't
20:08
Speaker 2: going to be buying a lot of houses. How does
20:10
Speaker 2: that impact their business?
20:12
Speaker 9: Right, so, low housing turnover, you know, affordability, you know,
20:16
Speaker 9: those are major factors for these businesses. You know, they're
20:20
Speaker 9: they're awaiting a rebound in that market. We don't know
20:23
Speaker 9: when it will come, but you know, these management teams
20:26
Speaker 9: are telling us that there is strong pent up a
20:29
Speaker 9: demand and so when that rebound found comes, you know,
20:32
Speaker 9: they're they're both pretty well positioned to gain, you know,
20:36
Speaker 9: a piece of that pie. I do think, you know,
20:39
Speaker 9: like there is still some spending happening. You know that's
20:42
Speaker 9: probably coming from higher income consumers. You know, they're doing
20:46
Speaker 9: smaller renovation projects right now. It sounds like our sort
20:49
Speaker 9: of maintenance and repair projects rather than like doing a
20:52
Speaker 9: complete reno. So we're seeing some spending obviously muted that
20:57
Speaker 9: that is causing low growth for both of these companies,
21:02
Speaker 9: but they're both trying to make sure that they're investing today,
21:06
Speaker 9: you know, for that ultimate rebound, so that they can
21:09
Speaker 9: win share and gain spending in the long term.
21:13
Speaker 5: Could you talk a little bit about how inflation concerns
21:15
Speaker 5: and ge political uncertainty is really impacting the consumer as
21:19
Speaker 5: it pertains too lows, What is the reasoning behind their
21:25
Speaker 5: three Q outlook, How does that really work into all
21:28
Speaker 5: of this?
21:30
Speaker 9: Yeah, so, I think what we learned about the consumer,
21:34
Speaker 9: you know, I don't know that there has been a
21:35
Speaker 9: drastic step down, but the consumer is still very focused
21:41
Speaker 9: on value, very selective with where they're spending. So there's
21:46
Speaker 9: not necessarily a major pullback as a result of you
21:49
Speaker 9: know what we've seen so far this year. But you know,
21:52
Speaker 9: consumers are just increasingly becoming more focused and more selective
21:56
Speaker 9: with their spending. You know, we've seen Walmart gaining share
21:58
Speaker 9: with higher income consumers. I think home depots success with
22:03
Speaker 9: their July sales is probably you know, someone who was
22:07
Speaker 9: thinking about upgrading and then they saw a price that
22:09
Speaker 9: they couldn't pass up on something like a grill. So
22:12
Speaker 9: I think that's what we're just seeing is just continued selectivity,
22:16
Speaker 9: maybe getting like slightly more selective, but no like drastic
22:20
Speaker 9: change in that overall consumer picture.
22:24
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
22:29
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,
22:33
Speaker 1: ten am to noon Eastern on Bloomberg dot com, the
22:36
Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You
22:40
Speaker 1: can also watch us live every weekday on YouTube and
22:44
Speaker 1: always on the Bloomberg terminal