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Ford Shares Climb as Profit-Rich SUVs Drive Outlook Higher · Bloomberg Intelligence

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  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.
• 0:24
  Speaker 2: We'll switch gears. Get back to the earnings front. Ford
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  Speaker 2: stock's up five point seven percent today. Some good numbers here.
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  Speaker 2: Let's break it down with Craig Trudel, Bloomberg Managing Editor,
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  Speaker 2: Global Business Coverage. First question, why aren't you in London?
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  Speaker 2: Did you come back here?
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  Speaker 3: I'm back?
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  Speaker 2: Oh? Okay, okay, talk to us about Ford here. The
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  Speaker 2: stock is hired today.
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  Speaker 4: Yeah.
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  Speaker 3: Ford and GM really consistent across several fronts. I think
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  Speaker 3: the fact that SUVs and pickups have been so strong
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  Speaker 3: in this market, the fact that the Trump administration has
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  Speaker 3: so relaxed emissions standards and fuel economy rules, able to
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  Speaker 3: sort of go a whole hog and sell as many
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  Speaker 3: SUVs and pickups as they possibly can, and that does
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  Speaker 3: a heck of a deals, a sort of heck of
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  Speaker 3: a boost to their bottom line.
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  Speaker 5: What surprised you the most when you look at Ford
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  Speaker 5: and GM and what they've managed to show as they
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  Speaker 5: double down on what works.
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  Speaker 3: Yeah, I think the execution has been strong. I think,
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  Speaker 3: you know, they have been trying to sort of, you know,
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  Speaker 3: pivot in a way that has to be really dramatic
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  Speaker 3: considering the degree of change from one administration to the next.
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  Speaker 3: The fact that the Biden administration wanted these companies to
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  Speaker 3: sell a heck of a lot more electric vehicles, and
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  Speaker 3: they built the plants to do so. They not only
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  Speaker 3: built the car factories to do so, but the battery plants,
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  Speaker 3: and Ford has been trying to sort of, you know,
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  Speaker 3: make lemonade out of lemon in the fact that Americans
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  Speaker 3: were not ready to buy electric vehicles at the rate
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  Speaker 3: everybody was hoping for. Uh. And you know, both of
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  Speaker 3: these companies are trying to sort of maybe turn some
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  Speaker 3: of these battery plants into uh, you know, factories that
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  Speaker 3: can actually make sort of storage units, which we've seen
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  Speaker 3: Tesla turn that into a tidy little business. So I
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  Speaker 3: think there's there's still you know, some some sort of
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  Speaker 3: show there that that we need instead of just tell
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  Speaker 3: that they're going to be able to make that transition,
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  Speaker 3: but that's going to be something that we're going to
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  Speaker 3: watch in in you know, the months and maybe even
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  Speaker 3: years to come.
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  Speaker 2: I mean, if I'm forward in GM, I think I
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  Speaker 2: have to This is just kind of opinion. I think
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  Speaker 2: my strategy has got to be maxim my shareholder value.
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  Speaker 2: The way I do that is making pickup trucks and SUVs,
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  Speaker 2: and my EV strategy has got to be driven by
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  Speaker 2: the marketplace as opposed to policy. If that's the case,
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  Speaker 2: I'm not sure where we're going to get to a
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  Speaker 2: big EV percentage in this country. How are they thinking
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  Speaker 2: about it?
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  Speaker 3: Yeah, I mean I do think it's it's in interesting
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  Speaker 3: that you still do hear Mary Bara you know, say
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  Speaker 3: that that she thinks that that electric vehicles and batteries
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  Speaker 3: are just the better power train. And I think, you know, candidly,
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  Speaker 3: if you sort of drive in my experience, if you
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  Speaker 3: drive you know, the same vehicle, one with a battery
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  Speaker 3: in it and the other with a combustion engine in it,
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  Speaker 3: it's actually a lot of fun to drive an electric vehicle.
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  Speaker 3: The you know, the instant torque and the sort of
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  Speaker 3: you know, get up is actually pretty great. And I
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  Speaker 3: think avoiding you know, the gas pump right now is
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  Speaker 3: also a big positive. So I think they're really stuck
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  Speaker 3: in the situation of of you know, a lot of
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  Speaker 3: consumers still not being ready for this transition, and yet
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  Speaker 3: there is this sort of looming question over you know,
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  Speaker 3: is the rest of the world going to make this
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  Speaker 3: change more successfully and will they be left behind if
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  Speaker 3: they don't figure this out eventually.
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  Speaker 5: You just mentioned you moved back from London. I mean,
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  Speaker 5: looking at the cars on the road, it must be
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  Speaker 5: kind of a shock just to see the transition back
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  Speaker 5: to gas guzzling SUVs everywhere.
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  Speaker 3: I mean the vehicles here. You know, I grew up
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  Speaker 3: in Michigan. I've been around these companies a long time.
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  Speaker 3: Vehicles have always been much bigger here, but it is
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  Speaker 3: a sort of shock to the system to see just
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  Speaker 3: how big, even as someone who's covered this industry a
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  Speaker 3: long time man, these pickups keep getting bigger, and I
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  Speaker 3: think it is also amazing for people who you know,
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  Speaker 3: go from here to London. What I hear from people
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  Speaker 3: you know who do travel to Europe is man, look
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  Speaker 3: at all of these Chinese evs, you know, clonging the
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  Speaker 3: streets of Europe and around London.
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  Speaker 2: No, it's us in the rest of the world. I
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  Speaker 2: don't know how it's going to play out.
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  Speaker 1: Stay with us.
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  Speaker 5: More from Bloomberg Intelligence coming up after this.
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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 Applecarplay and Android Auto
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  Speaker 1: get your podcasts, or watch us live on YouTube.
• 4:56
  Speaker 2: Staying on the earnings beat Visa, our good friends at Visa.
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  Speaker 2: They beat estimates, but they took a five hundred and
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  Speaker 2: sixty three million dollar charge on job cuts. There, let's
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  Speaker 2: get the latest on what's going on with Visa. Dickh Gara,
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  Speaker 2: Bloomberg Intelligence, Global Fintech and Payments Alyst Joints is here.
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  Speaker 2: So what's the takeaway from Visa from your perspective? Diction?
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  Speaker 6: Yeah, Hi there, Nice to be here again. I think
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  Speaker 6: it was a good set of numbers, modest beat on
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  Speaker 6: both top line and bottom bottom line for the third quarter.
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  Speaker 6: Physical third quarter for Visa adjusted EPs was about two
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  Speaker 6: point seven percent ahead of estimates. But I think what
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  Speaker 6: was really notable is all the underlying trends were pretty resilient.
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  Speaker 6: So eighteen percent volume gains, thirty four percent services revenue gain,
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  Speaker 6: I think, and all of that puts Visa in a
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  Speaker 6: very comfortable spot to basically meet their raised fullier twenty
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  Speaker 6: twenty six guidance, which they have raised to low end
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  Speaker 6: of mid teens for EPs growth. I think what I'd
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  Speaker 6: highlight is it really was firing on all finding all engines.
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  Speaker 6: Value added services was three point eight billion dollars revenue
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  Speaker 6: in third quarter, and Visa Direct, which is their consumer
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  Speaker 6: direct point to point money flows, their transactions climb twenty
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  Speaker 6: one percent, and new use cases and partnerships are kind
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  Speaker 6: of keytail wins there. Sorry, one thing if pat remiss
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  Speaker 6: to not point out is the World Cup.
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  Speaker 4: It did.
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  Speaker 6: It did really well for Visa's third quarter numbers, and
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  Speaker 6: management cited very strong volume gains across all categories. So
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  Speaker 6: all the US hosts cities, total card present spent accelerated
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  Speaker 6: transactions were up twenty percent. You have to understand, like
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  Speaker 6: when people are visiting and this is all cross border spend,
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  Speaker 6: which is some of the most lucrative or higher margin
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  Speaker 6: business for the card network, tap to pay transactions where
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  Speaker 6: people are going and using transits, you just have your
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  Speaker 6: card and move on your entertainment, your restaurants spend. All
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  Speaker 6: of that got a nice Kicker, and the banks launched
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  Speaker 6: a lot of programs along as well to kind of
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  Speaker 6: bring in more consumers who are traveling for the World Cup.
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  Speaker 5: Trisha, this is a dumb question, but are those buy now,
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  Speaker 5: pay later companies like Karna competition for Visa? Are they
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  Speaker 5: friends or foes?
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  Speaker 6: So here's how I put it's called it. When I
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  Speaker 6: was covering banks, I actually thought the card networks are
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  Speaker 6: done with just because of all the alternative payment trails
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  Speaker 6: that were coming. Direct fun and bank to bank transfers
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  Speaker 6: were happening. And now BNPL is kind of growing. But
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  Speaker 6: if you pay attention all the buy now, pay later
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  Speaker 6: companies and I cover the sector, their best selling product
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  Speaker 6: is actually a card. So the card networks have very
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  Speaker 6: beautifully managed to embed themselves into the buy now, pay
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  Speaker 6: later ecosystem as well. So while you go to an
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  Speaker 6: Amazon dot com and spend on say Affirm, there a
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  Speaker 6: firm is now giving you a card that you can
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  Speaker 6: go and swipe at a restaurant for your buy now
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  Speaker 6: pay LATA product.
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  Speaker 2: So I'm looking at these stocks Diction, Visa, master Card, Affirm,
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  Speaker 2: I mean, on a trailing twelveth basis, they're all kind
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  Speaker 2: of flatish what's the story in the payment space here.
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  Speaker 6: I think the sector overall is beaten down overall, and
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  Speaker 6: I think if you just look at the card networks,
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  Speaker 6: there somewhere in the middle of that range. The B
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  Speaker 6: to B processors are the worst hit, but I think
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  Speaker 6: there is the overall sector has kind of been doing
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  Speaker 6: poorly in that regard. That said, Visa and MasterCard are
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  Speaker 6: steady as they go, like, these are the most resilient,
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  Speaker 6: solid cash flow businesses along the sector that I cover.
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  Speaker 6: One thing part I would highlight though, and that we've
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  Speaker 6: been getting a lot of questions around that is a
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  Speaker 6: seven percent job cuts that Visa announced yesterday, and people
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  Speaker 6: are like, is that a distress signal? Like, what's going on?
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  Speaker 6: They're doing well, then why are they kind of letting
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  Speaker 6: people go? I would highlight that that's not Visa in distress.
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  Speaker 6: I would read it as modern corporate portfolio management. Visa's
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  Speaker 6: portfolio of work was actually tripled over the last decade.
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  Speaker 6: And what CEO Ryan mcinnonney is doing today, he's trilling
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  Speaker 6: product overhead and monetizing their AI investments.
• 9:18
  Speaker 1: Stay with us.
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  Speaker 5: More from Bloomberg Intelligence coming up after this.
• 9:25
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 9:29
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 9:32
  Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
• 9:35
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 9:39
  Speaker 5: It's all about earnings, and I know that we've got
• 9:41
  Speaker 5: a whole stlew of big tech earnings today and tomorrow.
• 9:44
  Speaker 5: But over in Europe they're focusing on their leading industry,
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  Speaker 5: which is luxury, and the luxury guys are kind of
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  Speaker 5: going in different directions these days.
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  Speaker 2: Hermes and the Gucci folks over there at Caring. I
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  Speaker 2: don't think there's a read through there. I don't know.
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  Speaker 5: Yeah, certainly says something about China. Certainly says something about inflation.
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  Speaker 5: Let's bring in Andrew Felstad. She's our Bloomberg opinion columnist
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  Speaker 5: rating on both. Andrew, just give us an overview. Here.
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  Speaker 5: We had heard from LVMH. Now we're hearing from Amez
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  Speaker 5: and Caring. And I think I mispronounce it Ramaz, because
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  Speaker 5: that's how I how you go, not Hermes in.
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  Speaker 2: Any cases, Federated Hermes in Pittsburgh.
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  Speaker 5: Okay, thank you, This is a dumb American question. Anyway,
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  Speaker 5: Andrea walk us through how the tide seems to be
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  Speaker 5: turning here Formez and Caring, they're going in different directions
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  Speaker 5: than they were before.
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  Speaker 7: Absolutely, So Hamez seems to have spooted the market by
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  Speaker 7: talking about China and saying that China has stabilized, but
• 10:42
  Speaker 7: it's not yet recovered. And I mean this this isn't
• 10:46
  Speaker 7: really that different from what everyone else has been saying.
• 10:50
  Speaker 7: But he taught the CEO Axel Duma, talked about the
• 10:54
  Speaker 7: pork price and he said that obviously we know about
• 10:57
  Speaker 7: the property market, but he said, the pork price is low,
• 11:01
  Speaker 7: and so that's an indication of less confidence. So the
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  Speaker 7: market's really taken this badly and worried about Hermez. Now
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  Speaker 7: at the same time, on the backdrop of Hermez, you've
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  Speaker 7: also just had this sense that the Burke in the
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  Speaker 7: Kelly aren't quite as hot as they used to be.
• 11:20
  Speaker 7: Chanelle has gone a new design and he's been bringing
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  Speaker 7: out some bags that are really really in demand. So
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  Speaker 7: the Hermes and the Burking and the Kelly, typically you
• 11:32
  Speaker 7: can't you can't just go into a store and buy one.
• 11:35
  Speaker 7: You have to put your name in a weight list,
• 11:37
  Speaker 7: all sort of you know, hurdles that you get one
• 11:40
  Speaker 7: or not, and so most people buy them in the
• 11:42
  Speaker 7: secondary market where they cost more, and the premium to
• 11:46
  Speaker 7: the retail price has been falling. So that's scene as
• 11:50
  Speaker 7: a maybe not not a great thing for Hermez. But
• 11:52
  Speaker 7: the what's the other thing that's happened in the last
• 11:55
  Speaker 7: few weeks is that all the footballers have been carrying
• 11:59
  Speaker 7: these you know, giant Hermes bag, the giant Burking's the
• 12:05
  Speaker 7: hack which isn't a Burken but looks like a b
• 12:08
  Speaker 7: looks very much like a Burkan, And I really do
• 12:11
  Speaker 7: think that's actually given home as a new lease of life,
• 12:14
  Speaker 7: because you know, the Berkan was looking a bit tired
• 12:17
  Speaker 7: and suddenly you've got Earling Harland carrying his giant Hermies
• 12:21
  Speaker 7: bag and I think it has helped them. But obviously
• 12:24
  Speaker 7: that's not going to come through in these numbers.
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  Speaker 2: Andrew, just so you know, in this radio studio, we
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  Speaker 2: are not buying that pork as a leading indicator issue. Okay,
• 12:35
  Speaker 2: we just not buying it, but it Andrew, what do
• 12:40
  Speaker 2: we know about the geographic element? Here are certain parts
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  Speaker 2: of the world doing better than than others.
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  Speaker 7: Absolutely, the US is really really on fire when it
• 12:50
  Speaker 7: comes to luxury the stock market wealth up to now. Anyway,
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  Speaker 7: the AI wealth that the US demand is very correlated
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  Speaker 7: with a stock market performance. Now, what is really interesting
• 13:05
  Speaker 7: is that the people that are you know, enjoying all
• 13:08
  Speaker 7: this wealth, and it's natural when you get a big windfull,
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  Speaker 7: you want to treat yourself, and that seems to favor
• 13:15
  Speaker 7: like watches and jewelry rather than a handbag. Maybe you
• 13:18
  Speaker 7: want something that lasts, you want a memento of this,
• 13:21
  Speaker 7: you know, of this wonderful windfall. It's really helping jewelry
• 13:25
  Speaker 7: rather than leather goods. And that's a problem because obviously
• 13:29
  Speaker 7: for brands like Lvia Mahe Carrying, although although Elva Mate
• 13:33
  Speaker 7: has Tiffany and it really you know, it's bread and
• 13:37
  Speaker 7: butter is leather goods, so and they're very profitable. So
• 13:41
  Speaker 7: you really want handbags to come back. But the fact
• 13:43
  Speaker 7: that the US is doing well that's making up the
• 13:46
  Speaker 7: short fall wild China sort of in the dol drums.
• 13:51
  Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
• 13:58
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 14:01
  Speaker 1: weekdays at ten am Eastern on Applecarclay and Android Auto
• 14:05
  Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
• 14:08
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 14:12
  Speaker 2: Okay, the World Cup is over. I think it was
• 14:14
  Speaker 2: a fantastic World Cup. I think everybody was generally pretty happy.
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  Speaker 2: The fans seemed to be happy. The games were good,
• 14:20
  Speaker 2: we had a great finals there, I thought, I don't know.
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  Speaker 2: I think it's important for a lot of companies out there,
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  Speaker 2: none more important than Nike and Adidas. And let's break
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  Speaker 2: that down. Putnam Goyle, senior US e Commerce and retail
• 14:34
  Speaker 2: analyst for a Bloomberg Intelligence put them just kind of
• 14:38
  Speaker 2: kind of scope out for us. For the big name
• 14:41
  Speaker 2: brands that were really associated with this. Nike and Audi
• 14:44
  Speaker 2: dosk talk to us with what it means for them.
• 14:47
  Speaker 4: Yeah, So for both of them, the World Cup is
• 14:49
  Speaker 4: a real big deal because it allows them to come
• 14:52
  Speaker 4: front and center with their fans and consumers alike. So
• 14:55
  Speaker 4: when you think about who has the ball, who has
• 14:58
  Speaker 4: the kids, who has the teams and ma So when
• 15:01
  Speaker 4: we got to the finals, Adidas had the win already,
• 15:03
  Speaker 4: right because both teams were sponsored or wearing Adida skiar.
• 15:07
  Speaker 4: So at the end of it, who won the World Cup?
• 15:10
  Speaker 4: It's Adidas of the at leisure names and that's great
• 15:12
  Speaker 4: brand heat for them. In fact, they came out saying
• 15:16
  Speaker 4: that they had expected in euros a billion from the
• 15:20
  Speaker 4: World Cup kit sales and jerseys, et cetera, and they
• 15:24
  Speaker 4: topped that by fifty percent. So one point five billion
• 15:26
  Speaker 4: euros is what now the number is for the momentum
• 15:30
  Speaker 4: they got from the World Cup, unjust kits and jerseys
• 15:33
  Speaker 4: and gear ahead of it.
• 15:35
  Speaker 2: Yeah, I mean, you know, we had so many games
• 15:37
  Speaker 2: here in the New York metro area that all throughout
• 15:40
  Speaker 2: the city, throughout the tournament here, there were jerseys all
• 15:43
  Speaker 2: over the place and people were really into it.
• 15:45
  Speaker 4: So do these.
• 15:46
  Speaker 2: Companies did they break out how big soccer is for
• 15:49
  Speaker 2: them amongst all their the sports that they were involved
• 15:52
  Speaker 2: with that.
• 15:53
  Speaker 4: You know, I wish I did, but or they did,
• 15:55
  Speaker 4: but they don't, And we don't know by sport how
• 15:59
  Speaker 4: big it is. Just as you can imagine, you know,
• 16:01
  Speaker 4: when you think about the world of sports, soccer is
• 16:04
  Speaker 4: one of the largest watched and played sports in the world.
• 16:07
  Speaker 4: So it definitely does build momentum in terms of their sales,
• 16:10
  Speaker 4: whether it's the cleats, whether it's the apparel, the jerseys,
• 16:13
  Speaker 4: et cetera. The players, they sponsor matter. You know, Messi
• 16:17
  Speaker 4: being in the game for Adidas was a big deal.
• 16:19
  Speaker 4: In Bappe Ford Nike in the top five running was
• 16:23
  Speaker 4: a big deal. And these players also against the teams
• 16:26
  Speaker 4: that they sponsor, really do raise those ability for them
• 16:29
  Speaker 4: and get to draw traffic into their stores and their brands.
• 16:32
  Speaker 2: We have a sense of like, if Adidas wants to
• 16:35
  Speaker 2: sponsor you know, Spain or in Argentina, what that costs them?
• 16:39
  Speaker 2: Do we know that that kind of number.
• 16:41
  Speaker 4: So those contracts vary and they change, and clearly you
• 16:44
  Speaker 4: know it's pain having won the World's Cup, the price
• 16:47
  Speaker 4: tag goes up once the contracts are up for renewal.
• 16:50
  Speaker 4: Right now, what I can tell you is a soccer
• 16:52
  Speaker 4: ball which Adidas has owned in the World Cup for
• 16:54
  Speaker 4: the last I believe twenty five years, is now being
• 16:59
  Speaker 4: likely taken over by Nike in twenty twenty seven, twenty
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  Speaker 4: twenty eight. So it does. So things do change when
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  Speaker 4: contracts expire. But for many of the teams, for many
• 17:07
  Speaker 4: of the players, they do have various lengths of contracts
• 17:11
  Speaker 4: and prices do vary.
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  Speaker 2: How about for Nike, an American company, how did they
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  Speaker 2: fare in a world of global football?
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  Speaker 4: It would have been nice to see Nike versus Adidas
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  Speaker 4: in the final, I must say, but that wasn't the case.
• 17:25
  Speaker 4: They still did well, they were up in third place,
• 17:28
  Speaker 4: so I think they do still gain the brand visibility.
• 17:31
  Speaker 4: In fact, you know some data sources that we look at,
• 17:34
  Speaker 4: Nike was the top searched kit through April through June
• 17:38
  Speaker 4: with the USA averaging more than fourteen thousand weekly searches.
• 17:43
  Speaker 4: So we do think that even though Nike didn't win
• 17:45
  Speaker 4: the World Cup, they were definitely in the running and
• 17:50
  Speaker 4: they were very visible across the board, and having Imbappe
• 17:54
  Speaker 4: and winning third fourth place does still go a long
• 17:56
  Speaker 4: way for them.
• 17:58
  Speaker 2: How about for a brand like Puma, it feels like
• 18:00
  Speaker 2: they've kind of, at least here in the United States
• 18:04
  Speaker 2: a little bit of a lagging behind. Say that the
• 18:06
  Speaker 2: Nikes and the Adidas of the world talk was about Puma.
• 18:10
  Speaker 4: Yeah, so Puma, you know, they're definitely much smaller right
• 18:13
  Speaker 4: when you think about them in the world of sports,
• 18:15
  Speaker 4: and I think they didn't have as many teams as
• 18:18
  Speaker 4: Nike and Adidas have, so they do lag in that front.
• 18:21
  Speaker 4: But I think what worked out well for them on
• 18:23
  Speaker 4: the World Cup was Morocco and Switzerland's quarterfinals, right. I
• 18:26
  Speaker 4: think that really helped them gain visibility and it did
• 18:30
  Speaker 4: prove positive for them. They're undermissed a big turnaround right
• 18:34
  Speaker 4: now with the brand, and they're really trying to find
• 18:36
  Speaker 4: their place. Where does Puma set relative to Aditas and Nike,
• 18:39
  Speaker 4: And I think where they win is in the smaller
• 18:42
  Speaker 4: sports that Adidas and Nike play in but aren't as aggressive.
• 18:45
  Speaker 4: And if you think about cricket, if you think about
• 18:47
  Speaker 4: the f one, right, those are sports where I think
• 18:50
  Speaker 4: Puma has a larger leg up than Nike and Adidas,
• 18:54
  Speaker 4: but they're smaller.
• 18:55
  Speaker 2: In these companies, they're not just sneaker companies. It's a
• 18:57
  Speaker 2: whole ath leisure thing, right. I Mean that's kind of
• 18:59
  Speaker 2: where the market is now defined or how the market's defined.
• 19:03
  Speaker 4: They're not sneaker companies. When you think about Adidas and
• 19:07
  Speaker 4: Nike Alike, you know, yes, sneakers are where they probably
• 19:11
  Speaker 4: get most of their visibility and their player lineups from.
• 19:15
  Speaker 4: But apparel is an important piece of the business. It's growing.
• 19:18
  Speaker 4: But when you think about Nike and Adidas, Nike wins
• 19:21
  Speaker 4: in the footwear race. Right. Nike's shares over twenty percent
• 19:24
  Speaker 4: of the global footwear market, Adidas is around twelve percent,
• 19:27
  Speaker 4: so almost double. But when you look at apparel, they're
• 19:30
  Speaker 4: very comparable. Nikes about ten percent, Adidas about nine percent.
• 19:33
  Speaker 4: So apparel is the opportunity for both of them to
• 19:36
  Speaker 4: step up and really gain margin.
• 19:38
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