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BI Weekend: Nike Turnaround, Airlines Outlook, AWS Growth · Bloomberg Intelligence

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Speaker 1: Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence
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Speaker 1: with Scarletfoo and Paul Sweeney.
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Speaker 2: How do you think the FED is looking at tariffs?
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Speaker 2: The uncertainty of terriffs.
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Speaker 3: Let's take a look at the sectors and how they
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Speaker 3: performed a lot of investors getting whipsaled every day by
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Speaker 1: And corporate news from across the globe.
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Speaker 3: Could we see a market disruption of market event?
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Speaker 2: So people just too exuberant out there?
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Speaker 3: You see some so called low quality stocks driving this
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Speaker 3: short term rally.
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Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio,
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Speaker 1: YouTube and Bloomberg Originals.
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Speaker 2: On today's Bloomberg Intelligence Show, we dig inside the big
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Speaker 2: business story is impacting Wall Street and the global markets.
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Speaker 3: Each and every week we provide in depth research and
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Speaker 3: data on some of the two thousand companies and one
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Speaker 3: hundred and thirty industries are analysts cover worldwide today?
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Speaker 2: Well, look at why you turnaround at the footwear giant
0:56
Speaker 2: Nike is beginning to take hold in North America.
0:58
Speaker 3: Plus a look at why Amazon cloud sales may get
1:00
Speaker 3: a push from AI in twenty twenty six.
1:02
Speaker 2: But first recently on Bloomberg Intelligence, we discussed HBO show Industry.
1:07
Speaker 3: Industry is a high six drama following young graduates competing
1:10
Speaker 3: for careers in a prestigious London investment bank.
1:13
Speaker 2: Now in season four, this year the bank has folded
1:15
Speaker 2: and some of these junior bankers have become power players
1:18
Speaker 2: in finance, business and politics.
1:19
Speaker 3: For more on the show, we sat down with Mickey
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Speaker 3: Down and Conrad k co creators, writers and executive producers
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Speaker 3: of the HBO show Industry. We began by asking Mickey
1:28
Speaker 3: Down about the theme for season four.
1:31
Speaker 4: Wow, what a big question. I think the theme season
1:34
Speaker 4: four is as you said, you know, these kindacters didn't
1:37
Speaker 4: have power, and it was about the recruing power. Now
1:39
Speaker 4: they have power, what do they decide to do with it?
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Speaker 4: And how does it corrupt them? How does it mutate them?
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Speaker 4: And is there a way out of this institution, this life,
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Speaker 4: this industry.
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Speaker 2: You know, I spent thirty five years on Wall Street,
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Speaker 2: you and the many years on a trading desk. You
1:53
Speaker 2: guys get it. I mean you got it. I don't
1:56
Speaker 2: know how you guys did that. Did you guys work
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Speaker 2: on in the financial services before?
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Speaker 5: Conrade? I did?
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Speaker 2: Yeah?
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Speaker 6: After I graduated college. I was. I was a US
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Speaker 6: equity sales guy Morgan Stanley for three years and I
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Speaker 6: was famously when my boss let me go, he said
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Speaker 6: I was the worst salesman he'd.
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Speaker 4: Ever met Wall Street.
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Speaker 6: So it was like, go and do something else because
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Speaker 6: you're pretty useless of this.
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Speaker 2: Well that's a true Wall Street career, yet kind of
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Speaker 2: Wall Street career until you've been fired from Wall Street.
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Speaker 2: That's what I've been there myself. You guys, what's the
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Speaker 2: state of the industry in London these states? I mean,
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Speaker 2: how are people how are the young people feeling in
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Speaker 2: the industry, Because you guys reflect that with your show
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Speaker 2: very well.
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Speaker 4: Well, I think I'll show is a reflection of almost
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Speaker 4: like ten years ago when we were in it, and
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Speaker 4: I feel like people like me and Cornell would never
2:39
Speaker 4: have been all out in the industry.
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Speaker 5: Now.
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Speaker 4: I think it's become a lot more technocratic. We both
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Speaker 4: did art subjects.
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Speaker 6: It's so underqualified you don't believe we were.
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Speaker 4: I'm not a great mathematician, but you speaking to a
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Speaker 4: literature graduate and a theologian.
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Speaker 6: So derivetis exalted.
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Speaker 4: Derivatives were not strong in England? Is that allowed?
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Speaker 3: So there's no room for the arts majors on Global
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Speaker 3: Wall Street anymore. And what's apparent is the show has
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Speaker 3: become less about banking and more about wealth and resources
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Speaker 3: and the leveraging of that.
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Speaker 7: So, sure, Comrad, what are you saying about.
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Speaker 3: Capitalism and how it interacts with politics with media?
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Speaker 6: I don't know. I mean the thing is that as
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Speaker 6: we've written the show, we've realized that more and more
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Speaker 6: we're writing really about the class system in the UK.
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Speaker 6: Who has power, who doesn't have power, who's born into power,
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Speaker 6: and the sort of relative different class ceilings people face.
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Speaker 6: Like I think season one was a kind of experiment
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Speaker 6: because they were the main characters were from such different
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Speaker 6: socioeconomic backgrounds that they were always bumping up against different
3:34
Speaker 6: different ceilings. And then in terms of like me and
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Speaker 6: Mickey never set out every season to say something, did
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Speaker 6: I take about capitalism? Like I think the show is,
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Speaker 6: the show has something to say if you're looking underneath
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Speaker 6: it. It has like a very strong subtext. But like we
3:46
Speaker 6: set out to make eight hours and the most entertaining
3:48
Speaker 6: thing we can, like nine pm on HBO really means something. Still,
3:52
Speaker 6: all we care about is entertaining an audience.
3:53
Speaker 2: Really, how was it getting a show on the air.
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Speaker 2: Of these days, there's so many different platforms to be
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Speaker 2: pitched to a handful of networks and hope for the best.
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Speaker 2: Now you can go anywhere on these streaming platforms. How
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Speaker 2: does that impact from the creator's perspective.
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Speaker 4: Well, I think there's there are fewer options than there
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Speaker 4: were at least five years ago. I think there's been
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Speaker 4: a massive contraction in the industry. I think it's actually
4:15
Speaker 4: much harder to get something on TV than it was
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Speaker 4: when we started. You know, we were two guys x financiers,
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Speaker 4: grandiose term who were given an opportunity to make something
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Speaker 4: on a relatively small budget by the biggest network, most
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Speaker 4: prestigious network. I just think that wouldn't happen now. I
4:28
Speaker 4: think we were No, it's an original show. It's it's
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Speaker 4: not IP driven. We don't have any fat fans to surface,
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Speaker 4: it's not a comic book. That kind of show is
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Speaker 4: just they're few in part between now and there are
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Speaker 4: lots of different training platforms and not different outlets. But
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Speaker 4: I think actually we're just making a lot less stuff.
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Speaker 6: We were really in the right place at the right
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Speaker 6: time when we started developing the show about ten years ago,
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Speaker 6: because it was the real goal rush of team Yeah
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Speaker 6: in terms of the amount of content getting created.
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Speaker 4: Netflix came in.
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Speaker 6: Disrupted the whole model by flooding, flooding the zone with
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Speaker 6: cash and quantity, and we were just in the right
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Speaker 6: place at the right time.
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Speaker 3: Someone you know, Season four is rolling out right when
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Speaker 3: HBO's parent company, Warner Brothers, is in the middle of
5:03
Speaker 3: a drawn out bidding war, something that Paul and I
5:06
Speaker 3: have joked about would make a really worthy Sunday Night
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Speaker 3: series of its own. Were you ever tempted to draw
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Speaker 3: any parallels between the show and the real life drama
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Speaker 3: that's going on to your corporate parent I.
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Speaker 4: Think another HBO show what he did?
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Speaker 6: Yeah, very successful one more emmy than us.
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Speaker 4: Will leave it to them.
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Speaker 7: Yeah, but you know, you could have made it really matter.
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Speaker 4: For instance, for sure, surprisingly they don't consult on something
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Speaker 4: in the other maybe I should.
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Speaker 3: The other thing that I noticed is that you introduced
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Speaker 3: a lot of new characters this season played by American
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Speaker 3: actors Kieran and Shipka, formerly of Mad Men maximin Gilla.
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Speaker 3: He's English, but he plays an American character. Why do
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Speaker 3: you put so much of a focus on Americans? In London,
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Speaker 3: given that you're both British, I mean, and it takes
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Speaker 3: place in London.
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Speaker 7: It's interesting, Well, finance.
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Speaker 4: Is a global industry. I think obviously there's a lot
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Speaker 4: of you know, international people who finance was my experience
5:53
Speaker 4: working in the financial services industry. And the show was
5:56
Speaker 4: originally conceived as a kind of outside the status show.
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Speaker 4: It was about someone coming into an inside world, and
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Speaker 4: you know, that was encapsulated by Harper, who's a black
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Speaker 4: American woman from coming into the UK, which is obviously
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Speaker 4: rigidly class based, and that felt really interesting. We just
6:11
Speaker 4: like to I know, we like a mishmash of voices.
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Speaker 4: I mean, there was some people complain about the show
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Speaker 4: and his accents and an amount of different accents that
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Speaker 4: are in the show, but we just love.
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Speaker 6: I think I'm just thinking of giving an American audience
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Speaker 6: and access point to the show because, as Mickey said,
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Speaker 6: it's very jarg and heavy show. It's loaded with Britishism, slag,
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Speaker 6: British slang, British codes of conduct. We wanted to give
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Speaker 6: Americans a bit of a foothold into what we're trying
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Speaker 6: to do.
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Speaker 2: Just real quickly, who's your audience like what's a typical
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Speaker 2: viewer of your show.
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Speaker 6: I'm talking very wide, very wide in terms of demographically,
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Speaker 6: in terms of age. I mean, i'd say Casus to
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Speaker 6: everyone from eighteen to eighty.
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Speaker 5: Really really does.
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Speaker 4: My ninety four year old grandmother loves it.
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Speaker 7: You guys, email you guys all the time. What's the
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Speaker 7: number one feedback?
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Speaker 5: You're getting us wrong?
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Speaker 4: Or ride or you're getting your ride I could do better.
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Speaker 4: Or it's really become a bit of a recruitment tool.
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Speaker 4: If people was saying that that's the reason they go
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Speaker 4: into wool Street reach, Oh my gosh, that's actually what
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Speaker 4: I wanted.
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Speaker 2: My mine was Wall Street with Michael Douglas.
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Speaker 4: That was mine as well.
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Speaker 2: Our thanks to Mickey Down and Conrad k co creators, writers,
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Speaker 2: and executive producers of the HBO show industry.
7:16
Speaker 3: We move next to the world of sports. With the
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Speaker 3: Super Bowl less than five weeks away, the run up
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Speaker 3: to the Big Game on February eighth could be a
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Speaker 3: key window for sports spreading companies like Draft Kings and FanDuel.
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Speaker 2: According to Bloomberg Intelligence, this time period could allow the
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Speaker 2: companies to expand distribution of the new prediction markets apps
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Speaker 2: available in seventeen States.
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Speaker 3: We're joined by Brian Egger, Bloomberg Intelligence senior gaming and
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Speaker 3: lodging analysts.
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Speaker 2: We first asked Brian about how DraftKings and Fandel have
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Speaker 2: been positioning themselves for the NFL playoffs.
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Speaker 5: Yeah.
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Speaker 8: So, DraftKings and FanDuel, among other things, recently rolled out
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Speaker 8: these prediction market apps which are separate from their sports books.
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Speaker 8: And this is really to could peep our head on
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Speaker 8: against kle Shee and Robinhood and other of these financial
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Speaker 8: firms that offer these event contracts in a number of states.
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Speaker 2: How big is I'm hearing more and more about this
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Speaker 2: prediction market market. How big is this thing?
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Speaker 8: I mean, this is potentially really large. I don't have
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Speaker 8: numbers in front of me, But the key thing is
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Speaker 8: that call she and Robin ad are trying to do
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Speaker 8: this in all fifty states. They're about a dozen states
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Speaker 8: that either told them cease and desist because they effectively
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Speaker 8: are engaging in illegal sports betting according to the states,
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Speaker 8: or a couple of states have warned DraftKings, fandle don't
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Speaker 8: do the same thing if you've got a sports book license.
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Speaker 8: So what DraftKings of Fandal did was try to go
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Speaker 8: into states with this product where they don't operate sports books,
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Speaker 8: they can do prediction markets on politics or entertainment events
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Speaker 8: in any state, but the real issue is with respective sports.
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Speaker 8: That's where they limit themselves.
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Speaker 3: Let me ask you dumb question, and maybe we don't
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Speaker 3: know the answer to this yet. Who is the target
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Speaker 3: audience for a contract and in production market setting versus
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Speaker 3: you know, just a regular parlay or some bet in.
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Speaker 8: Resources of the type of person in terms of the
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Speaker 8: type of area or territory.
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Speaker 7: Uh huh.
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Speaker 8: Think about the fact that you've got mobile sports books
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Speaker 8: in almost thirty states, thirty some odd states, draftings Fandel
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Speaker 8: and twenty five of them other states, big states like
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Speaker 8: Texas and California, they don't have legal sports books and
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Speaker 8: sports betting. That's a logical market for call She and
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Speaker 8: Robinhood to go in there and say you can do
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Speaker 8: these prediction markets and engage in that even though sports
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Speaker 8: betting isn't active and legal in the state. That's really
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Speaker 8: the big.
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Speaker 2: So what Texas and Florida say about that?
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Speaker 9: Right?
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Speaker 8: So, without going through every state, they're about a dozen
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Speaker 8: states that either specifically told cal She and poly Market
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Speaker 8: or Robinhood season Assist don't do this a few others
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Speaker 8: have issued Wetter's warning. Draftings of Fandel do not offer
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Speaker 8: a sports prediction market in a state where you've got
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Speaker 8: a sports bet license. So what Fando and Draftings did
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Speaker 8: is you know, seventeen states for Draftings five or Fandel.
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Speaker 8: They're offering this product in states where they don't have
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Speaker 8: sports books and where sports betting isn't quote legal.
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Speaker 7: Who regulates the sports markets? So it's confused.
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Speaker 8: It's very confusing because the sports book are regulated by
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Speaker 8: state gaming regulatory authorities. The prediction markets are regulated by
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Speaker 8: the CFTC, so it's state versus federal And that's been
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Speaker 8: the argument of Kolch that you know, we're a financial
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Speaker 8: futures contract, we're not sports betting. We are federally regulated.
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Speaker 8: The states have pushed back and said no, this is
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Speaker 8: a form of effectively on licened sports betting, and ultimately
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Speaker 8: I think this heads to the Supreme Court. That's certainly
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Speaker 8: in the view of Elia Steine or litigation analyst.
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Speaker 2: So what are the casino companies say these days are
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Speaker 2: what do they say? Does that impact their sports book
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Speaker 2: and their sports betting and.
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Speaker 8: On the margin to the extent that MGM and Caesars
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Speaker 8: have mobile products. It's very possible to look into this
10:39
Speaker 8: type of product as well. Again in those states where
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Speaker 8: sports betting is at legal, so everyone's going to be
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Speaker 8: thick about it. And the real other other wrinkle is
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Speaker 8: Texas and California once they realize we may not have
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Speaker 8: sports betting. What we have effectively sports betters. If you
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Speaker 8: believe that's what prediction markets are, we might as well
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Speaker 8: legalize it. And so there's a whole bunch of ram
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Speaker 8: of cations to this.
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Speaker 3: What about Native American tribes in states like California in Connecticut,
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Speaker 3: where do they fit it?
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Speaker 8: I mean in California, although sports betting isn't legal in California,
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Speaker 8: the tribes have themselves challenged and through legally the Whites
11:16
Speaker 8: of call She and Robin Hood I don't remember which one.
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Speaker 8: So you know to the extent that tribes have opportunities
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Speaker 8: to operate sports books, which effectively Florida has the Seminole
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Speaker 8: Tribe operating operating hard rock betting site even though draftings
11:30
Speaker 8: and or are not involved. So the tribes very much
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Speaker 8: will care to the extent that this is effectively a
11:36
Speaker 8: competing product as consumers might perceive it.
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Speaker 2: So is betting just going crazy the total dollar amount.
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Speaker 2: I see kids, high school kids having conversations in detail,
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Speaker 2: showing a level of expertise which really blows me away.
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Speaker 2: Kids high school kids, and I don't know, it just
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Speaker 2: doesn't feel it's surprising.
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Speaker 8: And it's also gets very problem at when you have college.
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Speaker 5: Kids college games.
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Speaker 8: Yep, college players. So but yeah, there's a big national
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Speaker 8: draw to that draw to this, and I think the
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Speaker 8: real I don't think draftings of find will get as
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Speaker 8: affected as some might fear in states where they've got
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Speaker 8: a sports book, but in states where they can't operate
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Speaker 8: a sports book. But Kyle she and Robinhood and Polymarket
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Speaker 8: others whore offering prediction markets. That's where I think they
12:25
Speaker 8: see risk as well as opportunity.
12:28
Speaker 3: Are Thanks to Brian Egger, bi's senior Gaming and Lodging analyst,
12:31
Speaker 3: coming up a look at Bloomberg Intelligence's outlook for North
12:34
Speaker 3: American airlines in twenty twenty six.
12:36
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
12:39
Speaker 2: depth research and data on two thousand companies and one
12:41
Speaker 2: hundred and thirty industries.
12:42
Speaker 3: You can access Bloomberg Intelligence via BI go on the terminal.
12:45
Speaker 3: I'm Scarlett Foo and.
12:46
Speaker 2: I'm Paul Sweeney and this is Bloomberg.
12:53
Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
12:58
Speaker 1: on Bloomberg Radio.
13:00
Speaker 2: We move next to research Bloomberg Intelligence recently put out
13:03
Speaker 2: on the floor Giant Nike.
13:04
Speaker 3: According to BI, Nike's turnaround is beginning to take hold,
13:08
Speaker 3: notably in North America, but China remains a challenge for more.
13:11
Speaker 2: We were joined by Punam Goyle, senior US e Commerce
13:14
Speaker 2: and retail analyst at Bloomberg Intelligence.
13:16
Speaker 3: We began by asking Poonam to break down Bei's most
13:18
Speaker 3: recent research.
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Speaker 9: Basically, we think that Nike turnaround is possible. We see
13:23
Speaker 9: finally some light at the end of the tunnel. Their
13:26
Speaker 9: North America business has improved and is going to improve
13:31
Speaker 9: as they rationalize inventories. The issue still is China and
13:35
Speaker 9: the struggle in China we don't think will end anytime soon.
13:40
Speaker 9: In my mind, it's a one to two year turnaround.
13:43
Speaker 9: But that said, if they can get everything else right,
13:46
Speaker 9: which I think they are doing, and we'll get to
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Speaker 9: I do think that Nike's turnaround as well under way
13:53
Speaker 9: and investors will begin to appreciate it.
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Speaker 3: So let's dig into the struggles in China. I mean,
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Speaker 3: you're talking about a long time frame here for things
14:01
Speaker 3: to turn around. Is it just that Nike has lost
14:04
Speaker 3: its appeal to the Chinese consumer? Is it competition that's
14:08
Speaker 3: really stepped up in the last couple of years.
14:12
Speaker 9: So it's a few things. Number One, Nike in the
14:15
Speaker 9: US and other parts of the world is perceived as
14:18
Speaker 9: a more affluent at leisure brand. In China, it is not.
14:22
Speaker 9: What's been happening in China is that Nike has been
14:25
Speaker 9: selling at a discount to clear inventory as the vicious
14:30
Speaker 9: cycle of weaker sales has led to more discounting. So
14:34
Speaker 9: it's more seen as an off price brand that needs
14:36
Speaker 9: to change. They know that needs to change. I think
14:39
Speaker 9: that's the first step in solving the problem. And I
14:42
Speaker 9: think what they will do now and what they've said
14:44
Speaker 9: that they do, and I do believe they will because
14:46
Speaker 9: they did it in the US, is they will clean
14:48
Speaker 9: out that aged inventory. But as we know, that will
14:51
Speaker 9: take time. In the US alone, in the last year,
14:54
Speaker 9: we've seen that it takes anywhere from twelve to eighteen months.
14:57
Speaker 9: The US is finally in a place where in the
15:00
Speaker 9: next three to six months they should be clean. So
15:03
Speaker 9: which is why we think you'll take eighteen months. Once
15:05
Speaker 9: they can do that, the new pipeline of products that
15:08
Speaker 9: they're building, I do think will resonate with shoppers and
15:12
Speaker 9: it will sell at full price. But once again, it's
15:14
Speaker 9: an eighteen to twenty four month turnaround in China in my.
15:18
Speaker 2: View, talk to us about you know, new product development
15:21
Speaker 2: and new product introduction. Are there certain verticals that they're targeting,
15:24
Speaker 2: whether it's running or lifestyle or you know, other types
15:27
Speaker 2: of activities.
15:28
Speaker 9: So running is a core category that they're focused on.
15:31
Speaker 9: They have launched a new innovation in running. Running actually
15:35
Speaker 9: with their new pipeline, has done very well in the US.
15:39
Speaker 9: We saw that running was up nicely, whereas the rest
15:42
Speaker 9: of the business was down slightly to up slightly depending
15:45
Speaker 9: on the quarter that you look at over the last
15:47
Speaker 9: twelve months. We also think that they're focused on sport.
15:50
Speaker 9: So when you think about Nike and if you compare
15:53
Speaker 9: it to audiit US, you know, I think there's a
15:55
Speaker 9: big difference in the way that they're approaching their businesses,
15:57
Speaker 9: which allows both of them to succeed. Nike is focused
16:01
Speaker 9: solely and most importantly on sports and performance, whereas Adidas
16:06
Speaker 9: has owned for the last few years the lifestyle category,
16:11
Speaker 9: and I do think that Nike's focus on sports is
16:14
Speaker 9: the right one and that is where they should be
16:16
Speaker 9: to drive this turnaround.
16:17
Speaker 3: What about TARIFFSNA terrafts is certainly something that affects Nike.
16:22
Speaker 3: I know that Vietnam and the US is research trade deal.
16:25
Speaker 3: Most of the footwear in this country is manufactured in Vietnam.
16:28
Speaker 3: But how is Nike managing through this headwind?
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Speaker 9: So the headwind is here and it's here to stay.
16:34
Speaker 9: Nike has to selectively increased prices to combat the tariff impact.
16:38
Speaker 9: It's also negotiated supply relationships and found efficiencies internal. Just
16:42
Speaker 9: like the rest of the space, Nike isn't alone in
16:45
Speaker 9: the tariff situation. We do think that you know, tariffs
16:49
Speaker 9: will continue to impact margin in twenty twenty six, as
16:53
Speaker 9: well as the shift from DTC to wholesale. The wholesale
16:56
Speaker 9: business is doing better and Nike is more focused on
16:59
Speaker 9: it today because it had lost focus years ago, So
17:03
Speaker 9: that mixshift is negative. That said, as more full price
17:07
Speaker 9: selling takes hold, as we see signs of China improving
17:10
Speaker 9: over the next twelve to eighteen months, those are both
17:13
Speaker 9: areas where they can help to recover lost margin. Twenty
17:18
Speaker 9: twenty six calendar is not a margin story for Nike,
17:21
Speaker 9: It's a top line story. I think twenty twenty seven
17:24
Speaker 9: is where we can start to talk about margin expansion.
17:27
Speaker 2: Put on your discussions with Nike and other consumer products
17:30
Speaker 2: makers and peril makers. What's the consensus today about the consumer?
17:35
Speaker 9: The consumer is mixed. The luxury or the affluent consumer
17:39
Speaker 9: is clearly doing better than the low income consumer. And
17:42
Speaker 9: we do think the consumer will continue to make choices
17:45
Speaker 9: and where they shop. But we think the consumer is
17:48
Speaker 9: looking for fashion, it's looking for newness, it's looking for
17:51
Speaker 9: what's hot in the market. And as long as brands
17:54
Speaker 9: and retailers can be on trend, they will drive sales
17:58
Speaker 9: of those products because that is where the consumer is shopping.
18:01
Speaker 9: On trend product.
18:03
Speaker 3: How much rope Oar investors willing to give Elliott Hill.
18:08
Speaker 9: I mean, I think, like you do need to give
18:10
Speaker 9: him another year. We need to give him six to
18:13
Speaker 9: twelve months to start to see China inventory moderating and
18:17
Speaker 9: the situation beginning to unfold for the rest of the world.
18:21
Speaker 9: I think he's proven that things are becoming stable and
18:25
Speaker 9: that they are on the uptick in twenty twenty six,
18:29
Speaker 9: especially later in twenty twenty six our.
18:31
Speaker 2: Thanks to Punamgoyle, senior US e Commerce and retail analyst
18:34
Speaker 2: at Bloomberg Intelligence.
18:35
Speaker 3: We move next to research that BI recently put out
18:37
Speaker 3: on North American airlines in twenty twenty six.
18:40
Speaker 2: According to BI, slowing capacity growth in the first quarter,
18:42
Speaker 2: including cuts from some low cost carriers, looks set to
18:46
Speaker 2: moderate airfare declines, but weaker economies of scale will likely
18:49
Speaker 2: then gain any benefits to profits.
18:50
Speaker 3: For more, we brought in George Ferguson, our senior Aerospace,
18:53
Speaker 3: defense and airlines analyst.
18:55
Speaker 2: We first asked George about how healthy the airline industry
18:58
Speaker 2: is and what the outlook looks like for twenty twenty six.
19:01
Speaker 10: Look, I think you know, as we get into twenty
19:02
Speaker 10: twenty six, we're looking at schedules. We're seeing a lot
19:05
Speaker 10: of the growth coming from the big full service carriers.
19:08
Speaker 10: United especially continues to sort of pour on the gas
19:11
Speaker 10: here and put a lot of capacity in the marketplace.
19:14
Speaker 10: Delta a bit less than them, America even a bit
19:17
Speaker 10: less than them. We're going to have a Southwest starting
19:20
Speaker 10: to sell premium seats, and everybody's got a plan for
19:24
Speaker 10: bringing more premium seats to the marketplace.
19:26
Speaker 5: So you know, when we just look at the full service.
19:29
Speaker 10: Carriers, we're going to see like three four percent seat
19:33
Speaker 10: growth in the first half from those big full service carriers.
19:36
Speaker 10: I think that means there's probably a risk premium seats
19:40
Speaker 10: are going to start to feel some pressure on fares,
19:43
Speaker 10: and that's been you know, the really big driver of
19:45
Speaker 10: this business, especially for those big full service carriers, has
19:49
Speaker 10: been driving their profitability on the on the you know,
19:53
Speaker 10: economy end. We're seeing spirit airlines there sort of between
19:58
Speaker 10: this world and that world a little bit, which to
20:00
Speaker 10: figure out if they're going to survive, might get bought
20:02
Speaker 10: by frontier. They've dropped a bunch of airplanes. We're seeing
20:05
Speaker 10: some of these carriers cut capacity because of weakness in
20:09
Speaker 10: those seat prices. So I think we'll start to see
20:13
Speaker 10: at least some you know firming up of that of
20:16
Speaker 10: that basic economy as the market tries to get that
20:19
Speaker 10: back in balance.
20:19
Speaker 5: So I think that's what we're going to see in
20:21
Speaker 5: first half of the new year.
20:22
Speaker 3: So it sounds like there's gonna be a surplus of
20:24
Speaker 3: those premium seats and then that leaves big empty hole
20:27
Speaker 3: here for the frontiers.
20:28
Speaker 7: And the spirits.
20:29
Speaker 3: Are they going to be forced to offer also some
20:32
Speaker 3: kind of premium version of what they currently have unoffer.
20:36
Speaker 5: I don't know.
20:37
Speaker 10: I mean, I think everybody's trying to figure out a
20:39
Speaker 10: way to get more premium in their airplane. They're they're
20:42
Speaker 10: not you know, they're not forced, but they want they
20:44
Speaker 10: want that premium travel that's gonna just keep flying through,
20:48
Speaker 10: you know, through good and bad economic times and not
20:51
Speaker 10: have the challenges of inflation on their budget and things
20:53
Speaker 10: like that. So I don't know if they're forced, but
20:56
Speaker 10: we're we're definitely seeing all of them look at ways
20:59
Speaker 10: to increase the price they can get the customer to
21:01
Speaker 10: pay for a seat, whether it's block a middle seat,
21:04
Speaker 10: you know, so it might be three by three kind
21:06
Speaker 10: of airplane.
21:06
Speaker 5: They might block the middle seat.
21:08
Speaker 10: Some of them are talking about putting, you know, more
21:11
Speaker 10: reclined and nicer seats in the front of the airplane.
21:14
Speaker 5: So everybody, I think everybody.
21:16
Speaker 10: Has a plan for how to get more premium in
21:19
Speaker 10: their airplane. And again that's going to mean like everything
21:22
Speaker 10: in the airline business will get off sides on premium
21:25
Speaker 10: before it's all done. I think it begins in the
21:28
Speaker 10: first half. I don't think premium seat prices are going
21:31
Speaker 10: to create Unfortunately, we're not gonna be able to go
21:32
Speaker 10: anywhere really super cheap fly in front of the airplane
21:35
Speaker 10: in the first half of but I don't think it'd
21:37
Speaker 10: be as good as.
21:37
Speaker 5: It was in twenty twenty five.
21:39
Speaker 2: Wages, that's a big cost component for these airlines. I
21:42
Speaker 2: want my pilots happy. I want them feeling like they're
21:45
Speaker 2: well paid. Talk to those about the wage the dynamic in
21:49
Speaker 2: the industry.
21:50
Speaker 10: Yeah, I mean, look, you know, we still see you know,
21:53
Speaker 10: I don't know that I want to call it a shortage,
21:54
Speaker 10: but you know, it's a difficult balance between the number
21:58
Speaker 10: of pilots out there and what's needed by the airlines
22:02
Speaker 10: and the you know, the number of people coming into
22:05
Speaker 10: the industry and getting air transport licenses and things like that,
22:09
Speaker 10: and so the pilots are still decently paid. You know,
22:13
Speaker 10: they came off years decades ago. They just had many,
22:17
Speaker 10: many bad years.
22:17
Speaker 5: There was a surplus of them.
22:19
Speaker 10: So they've been catching up and they got these twenty
22:21
Speaker 10: percent increases in the last couple of contracts. And in
22:24
Speaker 10: the last contract we saw a twenty percent increase and
22:27
Speaker 10: then a four percent, five percent so actually it was
22:29
Speaker 10: a couple, it was a five and a couple of fours.
22:32
Speaker 10: But four percent salary gains increases, they're pretty nice in
22:37
Speaker 10: this economy. And the airlines really can't afford that kind
22:40
Speaker 10: of inflation in their cost base. The pilots are a
22:43
Speaker 10: big part of it, and so they keep rolling out
22:45
Speaker 10: bigger airplanes.
22:46
Speaker 5: And that's another challenge in the marketplace.
22:48
Speaker 10: Right as you put a bigger airplane behind the pilot
22:51
Speaker 10: so you could defray their costs over more seats, you
22:54
Speaker 10: got to fly all those seats into these markets, and
22:57
Speaker 10: sometimes you're discounting more to fill the airplane. So that's
23:00
Speaker 10: a challenge and continues in the new year. We think
23:04
Speaker 10: the airlines would be managing cost inflation there and maintenance
23:08
Speaker 10: and gates everywhere.
23:09
Speaker 3: So wagers a big part of the airlines. Costs the
23:12
Speaker 3: biggest part, but then fuel is the second biggest, or
23:16
Speaker 3: it can be. And Jeff, fuel has actually come down
23:19
Speaker 3: in twenty twenty five. Is that going to continue to
23:21
Speaker 3: be a tailwind in twenty twenty six.
23:24
Speaker 10: So you know, we kind of we looked at it recently,
23:26
Speaker 10: put it out on the Bloomberg Terminal BI Space AI RLN.
23:29
Speaker 10: We did some scenario analysis on this look. I have
23:32
Speaker 10: a hard time seeing fuel prices dip significantly lower than here.
23:36
Speaker 5: But I am no oil man. Right. If I was,
23:40
Speaker 5: i'd own a football team, But.
23:42
Speaker 10: I'm not oil man. I don't necessarily where those prices
23:45
Speaker 10: are going. All I can tell you is if they
23:47
Speaker 10: stick around two dollars, the airlines will get.
23:50
Speaker 5: Airlines had a nice tailwind.
23:51
Speaker 10: From fuel are as fuel prices fell, it buffered their margins.
23:55
Speaker 10: If they stick around two dollars, they probably get a
23:57
Speaker 10: bit of a tailwind in the first core, but they're
24:01
Speaker 10: not going to get a lot of gains from fuel
24:03
Speaker 10: that's not going to buffer their margins.
24:05
Speaker 2: Did the airlines hedge their fuel exposure, because boy, I
24:08
Speaker 2: think I'd be hedging right here if I were CFO.
24:12
Speaker 5: Not anymore.
24:13
Speaker 10: I think every so often they surprise you and so
24:16
Speaker 10: I hear what you're saying, Like, you know, you could
24:17
Speaker 10: see one of those crazy CFOs out there, going, hey,
24:20
Speaker 10: we might as well edge here, could be as good
24:23
Speaker 10: as we get. We saw Southwest do that a number
24:25
Speaker 10: of times in their history and win big. But for
24:28
Speaker 10: the most part recently, what we've seen is almost the
24:31
Speaker 10: entire field does not hedge fuel prices anymore. If you
24:35
Speaker 10: think about it, they kind of sell tickets out six
24:38
Speaker 10: eight weeks, so they have sort of a future commitment
24:40
Speaker 10: for fuel prices out that far. If fuel prices rise dramatically,
24:44
Speaker 10: I think everybody in the marketplace adjusts fares fairly quickly
24:48
Speaker 10: because they're not edged.
24:49
Speaker 5: And so I think you know, when they look.
24:51
Speaker 10: At the pack that they're flying in, maybe the airlines,
24:55
Speaker 10: they think no one else hedging fuel.
24:57
Speaker 5: I'm not going to run the risk to be wrong
24:59
Speaker 5: in a hedge.
25:00
Speaker 3: Stay onhead our thanks to George Ferguson, our in house
25:03
Speaker 3: senior aerospace, defense and Airlines analyst. Coming up, we continue
25:07
Speaker 3: with travel and look at how cruise lines may fare
25:09
Speaker 3: against theme parks next year.
25:10
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio for riding
25:13
Speaker 2: in depth research and data on two thousand companies and
25:15
Speaker 2: one hundred and thirty industries.
25:16
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25:19
Speaker 3: I'm Scarlett Foo and.
25:20
Speaker 2: I'm Paul Sweeney, and this is Bloomberg.
25:30
Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
25:35
Speaker 1: on Bloomberg Radio.
25:37
Speaker 2: Move next to research Bloomberg Intelligence recently put out on
25:40
Speaker 2: cruise lines versus them parks in twenty twenty six.
25:42
Speaker 3: According to BI six Flags and United parks may see
25:45
Speaker 3: more customer visits this year, but this may not equate
25:47
Speaker 3: to in park spending.
25:48
Speaker 2: Cruise line customers, by comparison, are booking longer trips. Further
25:52
Speaker 2: in advance for more on all of this, we were
25:54
Speaker 2: joined by Jody Lorie Bloomberg, intelligence credit analyst.
25:56
Speaker 3: We began by asking Jody to give us an analysis
25:59
Speaker 3: on how cruises are performing.
26:01
Speaker 11: So, the cruise lines always have a dedicated base, but
26:04
Speaker 11: cruising is sort of interesting because it's only two percent
26:07
Speaker 11: of the travel industry. It really is such a small
26:09
Speaker 11: portion of it. Where we've been watching is for those
26:13
Speaker 11: new Dow cruisers, which I don't know if I'm necessarily
26:15
Speaker 11: convinced that they're going as often or they're attracting the
26:19
Speaker 11: new cruisers, but the cruisers are still very much cruising
26:23
Speaker 11: and they're spending more than the average consumer.
26:25
Speaker 3: They're also spending more than the people who go to
26:28
Speaker 3: theme parks, according to your research, and partly that might
26:32
Speaker 3: be because the cruise line industry attracts a different kind
26:35
Speaker 3: of customer than the theme park industry, theme.
26:38
Speaker 7: Parks, skews younger cruises, skew.
26:40
Speaker 3: Older easy, Which would you prefer if you are an operator?
26:44
Speaker 7: Which would you prefer if you're an investor.
26:48
Speaker 11: So we don't make full recommendations, but I will tell
26:51
Speaker 11: you a couple of things based on our research findings.
26:53
Speaker 9: So first of.
26:54
Speaker 11: All, you have to think about how people book cruising
26:57
Speaker 11: versus how they book theme parks.
27:00
Speaker 7: When you're talking about cruises.
27:01
Speaker 11: They book far in advance, they book a year or
27:03
Speaker 11: two well in advance. And what the cruise lines have
27:05
Speaker 11: been doing, particularly post pandemic, is they've been locking people
27:08
Speaker 11: in on the drink packages, on the experiences. They've been
27:12
Speaker 11: giving these steal of deals excursion ideas, and when you
27:15
Speaker 11: get on the boat, it's more expensive. So people say, Okay,
27:19
Speaker 11: I'm going to book my cruise, but I'm also going
27:20
Speaker 11: to book the snorkeling and I'm gonna book this. I'm
27:23
Speaker 11: going to book that, the ones that I definitely want
27:25
Speaker 11: to do. They also book the drink packages, which you know,
27:27
Speaker 11: I think you can go either way on that personally,
27:30
Speaker 11: because I don't think I drink enough, but maybe other
27:32
Speaker 11: people do, and it really sort of just helps their
27:35
Speaker 11: cash flows Now theme parks people book much later. They
27:40
Speaker 11: are younger, they are lower income than the US median household.
27:44
Speaker 11: And the key for them is they can get people
27:47
Speaker 11: in the door. They can get them with season passes,
27:49
Speaker 11: or they can just get them for the one day pass.
27:51
Speaker 11: But they're not necessarily convincing them to spend in park
27:54
Speaker 11: the same way.
27:54
Speaker 7: But there's higher volume in theme park.
27:56
Speaker 11: Right, there's pretty high volume in theme parks. But if
27:59
Speaker 11: they're just paying for the admission, it might not necessarily
28:02
Speaker 11: cover the costs per se. Right, They'll get in the door,
28:05
Speaker 11: but they have high capex. They have high just high
28:08
Speaker 11: costs in general, and they have all the employees that
28:10
Speaker 11: they're paying for.
28:11
Speaker 2: Six Flags, that's a theme park that got some local
28:14
Speaker 2: Jersey flavor. Here six lags Great Adventure. How's the capital
28:18
Speaker 2: structure for these theme parks?
28:21
Speaker 11: They are high capex, so high capital intensive companies.
28:24
Speaker 7: They have high level right, exactly.
28:27
Speaker 11: And similar to cruise lines. So where we sort of
28:30
Speaker 11: see it interesting is theme parks and cruise lines are
28:32
Speaker 11: constantly they have to get the new experience in, right,
28:36
Speaker 11: so they have to spend not just on maintaining their products,
28:39
Speaker 11: so not not just maintaining the ship or maintaining the ride.
28:42
Speaker 11: They also have to get new ones in so people say,
28:45
Speaker 11: I want to go to a Great Adventure because I
28:46
Speaker 11: want to ride Superman, right, So they they do this
28:49
Speaker 11: to get people excited, draw them in so that they're going.
28:52
Speaker 11: I mean, you know, the biggest example that we don't cover.
28:55
Speaker 11: I don't cover Universal or Comcast, but you know, Universal's
28:58
Speaker 11: new theme park was a big drive to Florida. It
29:00
Speaker 11: wasn't as big as expected necessarily, but it's still pretty big.
29:04
Speaker 11: Now if you're talking about the regional theme parks is
29:05
Speaker 11: a little bit more difficult because people aren't necessarily planning
29:10
Speaker 11: these long term vacations around Great Adventure.
29:14
Speaker 3: Do the theme parks attract more domestic consumers than the cruises?
29:19
Speaker 3: I mean, I'm just curious in terms of the sustainability
29:22
Speaker 3: and the stability of your customer base.
29:24
Speaker 11: So it depends on the brand. Because if you look
29:27
Speaker 11: pre pandemic and now going into a few years post pandemic,
29:31
Speaker 11: the cruise lines they segment so Norwegian most of their
29:35
Speaker 11: customer bases US their US customers. When you get to
29:38
Speaker 11: Royal Caribbean, it's a little bit less. It's about so
29:40
Speaker 11: I think it's about eighty percent for Norwegian. I'm doing
29:42
Speaker 11: this off the top of my head memory, but eighty
29:45
Speaker 11: percent Norwegian. You get to about it's like seventy or
29:47
Speaker 11: sixty five for Royal, and then you get to Carnival
29:50
Speaker 11: and it's even less than that.
29:51
Speaker 7: It's closer to half.
29:52
Speaker 11: It's not quite half that are US versus international. They
29:56
Speaker 11: have a much larger international presence. Brian Egger and I
29:59
Speaker 11: my Equit account park. We were on the Aida, which
30:02
Speaker 11: is one of the one of their brands that they
30:05
Speaker 11: market to international customers, specifically in Germany, and it was
30:09
Speaker 11: a one hundred and thirty three round.
30:12
Speaker 7: The world cruise.
30:14
Speaker 11: Nice they were stopping in New York for the day,
30:17
Speaker 11: and they brought a bunch of US on, a bunch
30:19
Speaker 11: of US equity and credit nerds, and took us around
30:22
Speaker 11: the ship and everything was in German, as expected because
30:25
Speaker 11: most of their customers were German. So that's Carnival has
30:28
Speaker 11: a much more diversified customer base if you talk about
30:31
Speaker 11: theme parks, SeaWorld or United Parks as they go by now.
30:35
Speaker 11: Their Florida parks, which make up about half their revenue,
30:39
Speaker 11: is international about ten twenty percent. But when you get
30:43
Speaker 11: to six flags.
30:44
Speaker 7: It's much more domestic.
30:45
Speaker 2: We were off the Amafi coast last fall, oh fancy,
30:49
Speaker 2: and I saw this big yacht thats like either navy
30:52
Speaker 2: blue or black, and I said, what is who owns that?
30:54
Speaker 2: It's the rich Carlton Ritz Carlton. Yes, actually on it
30:59
Speaker 2: just parked.
30:59
Speaker 7: In those are though, I mean in terms of the
31:02
Speaker 7: five hundred people, Yeah, I mean that looked pretty cool.
31:05
Speaker 11: Yeah, that's for the people who want to be on
31:09
Speaker 11: a luxury yacht but don't want to actually own a
31:12
Speaker 11: luxury yacht.
31:12
Speaker 5: Right.
31:13
Speaker 7: The joke about boats is.
31:14
Speaker 11: Bring on another thousand, Right. My mother in law likes
31:17
Speaker 11: to always say that, and that's why it's called boat.
31:20
Speaker 11: So but the uh, you know, the thing about cruising
31:24
Speaker 11: is that there's a perception about who the typical cruiser is. Right,
31:28
Speaker 11: it's the you know, older people who are retired, who
31:32
Speaker 11: likes who like to bring basically the cat skills on
31:35
Speaker 11: the water. But really, I mean it's changed over time.
31:39
Speaker 11: And what's interesting about our credit research and our travel
31:41
Speaker 11: survey that we do every half a year is we're
31:44
Speaker 11: seeing that it's actually really really spread out. If you
31:47
Speaker 11: look into the buckets that we've segmented, it's really, you know,
31:50
Speaker 11: it's one third of each, so it's one third eighteen
31:52
Speaker 11: to thirty four year old one third that like middle
31:55
Speaker 11: aged group and fifty five and older one third, So
31:57
Speaker 11: it's really not specifically the old yea our.
32:00
Speaker 2: Thanks to Jerdy Lourie Bloomberg Intelligence Credit Analysts.
32:03
Speaker 3: We move next to research that Bloomberg Intelligence recently published
32:06
Speaker 3: on the cloud computing platform Amazon Web Services.
32:09
Speaker 2: According to BIAWS, sales can improve in twenty twenty six
32:12
Speaker 2: by twenty two point five percent in constant currency or
32:14
Speaker 2: two hundred basis points above consensus.
32:16
Speaker 3: This would be aided by widening enterprise AI adoption and
32:19
Speaker 3: more data center capacity coming online. A potential ten billion
32:23
Speaker 3: dollars investment in open AI could also be another sales catalyst,
32:27
Speaker 3: assuming it comes with more cloud infrastructure commitments for.
32:29
Speaker 2: More and all. This I was joined by anurag Rana,
32:31
Speaker 2: Bloomberg Intelligence technology analyst. First asked ONNAROG where we are
32:35
Speaker 2: in the growth trajectory of AWS.
32:37
Speaker 12: When you look at DAWs, you know one of the
32:40
Speaker 12: narratives of what the law studios has been that they
32:42
Speaker 12: have been laggered in AI and large portion of data
32:45
Speaker 12: is beco's chagpt before the contract changed with Microsoft was
32:49
Speaker 12: only hosted on Microsoft azured. As the capacity constraints started,
32:55
Speaker 12: Microsoft farmed outside some of that business to COVI even
32:59
Speaker 12: then Auticle and so fourth. But in the most recent agreement,
33:03
Speaker 12: you know, you can see that chat GPD can be
33:05
Speaker 12: hosted in other cloud providers. So that's one area to
33:08
Speaker 12: focus on. But the big thing for AWS is it's
33:12
Speaker 12: an enterprise business. It's not so much a consumer chat operate.
33:16
Speaker 12: So this is the year where we think that thing
33:18
Speaker 12: kicks off. And what we are thinking is the growth
33:22
Speaker 12: rate for AWS improves successively every quarter going into the
33:26
Speaker 12: the end of the year.
33:27
Speaker 2: Has Amazon invested in open ai or any of that
33:30
Speaker 2: type of thing? Is that are they part of those
33:32
Speaker 2: what people refer to as circular deals.
33:35
Speaker 12: So Amazon is not directly invested in open Ai. They
33:38
Speaker 12: have a new contract with them right now. They have
33:41
Speaker 12: invested in Anthropic, So that's an area where you know,
33:44
Speaker 12: when you are partnering with the second largest LM provider.
33:47
Speaker 12: I mean, I'm not counting Google because that's it's part
33:49
Speaker 12: of a big conglomerate, but a pure play you know, vendor,
33:53
Speaker 12: which is Anthropic. So they have invested in that, They
33:55
Speaker 12: partnered with them and we think that actually workloads also
33:59
Speaker 12: go up. We recently did an AI survey and part
34:02
Speaker 12: of what we've found out was software companies are using
34:05
Speaker 12: anthropic more and more, mostly for the coding reasons. And
34:08
Speaker 12: I think if that ACCEL rates, that actually helps out
34:11
Speaker 12: Amazon as well because some of those workloads do get
34:14
Speaker 12: up to AWS. The big part of the AWS story
34:17
Speaker 12: is it is the largest cloud provider. So the successive
34:20
Speaker 12: growth rate or to see a big number jump over there,
34:23
Speaker 12: unlike a Google, you know that has the delta is
34:27
Speaker 12: huge or the growth rates are not the same. But
34:29
Speaker 12: what we think this year some of those enterprise workloads
34:33
Speaker 12: start to flow in as more their capacity comes online.
34:36
Speaker 12: They have invested heavily in data centers and some of
34:39
Speaker 12: that actually shows up this year and that we think
34:43
Speaker 12: is going to help us help them improve their growth rates.
34:46
Speaker 2: So from a competitive landscape position, how do you think
34:48
Speaker 2: of AWS in the AI space?
34:50
Speaker 12: Yeah, so when you look at the traditional space, there
34:53
Speaker 12: quick clear leader. But when you look at the AI
34:55
Speaker 12: infrastructure space, that lead is starting with Microsoft because they
34:59
Speaker 12: got chat cheap to begin with, so that's one. Then
35:02
Speaker 12: you have Google doing very well with their TPU stuff,
35:05
Speaker 12: you know, Oracle and core Vi also getting into that.
35:07
Speaker 12: But Amazon still has a very large portfolio over there.
35:10
Speaker 12: And what we think is going to happen this year
35:12
Speaker 12: is going they have been spending a lot of money
35:14
Speaker 12: to expand that data centers. They're going to get more
35:16
Speaker 12: and more AI infrastructure orders because you know, at the
35:19
Speaker 12: end of the day, they have the capital, they also
35:21
Speaker 12: get the same chips from Nvidia, they have the luxury
35:24
Speaker 12: or they know how to build those data centers and
35:26
Speaker 12: plug these things together. So I think this is the
35:28
Speaker 12: air where they kind of break through from a lot
35:31
Speaker 12: of this narrative of being an AI laggard.
35:33
Speaker 2: And that that's kind of reflected in the stockown rock.
35:35
Speaker 2: I'm just looking at over the trailing twelve months, you know,
35:37
Speaker 2: only up about five percent is the reason because they
35:40
Speaker 2: just haven't necessarily got the full AI you know, kind
35:44
Speaker 2: of win in their sale.
35:45
Speaker 12: No, because they the kind of work that doing is
35:47
Speaker 12: very different. The first phase of AI boom that we
35:51
Speaker 12: have seen is in the consumer app It's in the Chat,
35:53
Speaker 12: GPT and the Gemini. What we have seen they're not enterprises.
35:57
Speaker 12: They're not large banks that are adding more AI capabilities,
36:02
Speaker 12: but we are in that phase of enterprising adding more
36:04
Speaker 12: AI capabilities, and when that happens, you know, they have
36:07
Speaker 12: the large infrastructure, plus they have a lot of the
36:09
Speaker 12: data that these big companies reside in the Amazon ecosystem.
36:14
Speaker 12: I think that's where they benefit the most.
36:16
Speaker 2: I mean it's not very often in the last I
36:18
Speaker 2: don't know, fifteen years where we could say Amazon is
36:21
Speaker 2: cheap or Amazon looks like a good buy relative to
36:24
Speaker 2: its peer set. But I mean, if you have a
36:26
Speaker 2: certain time horizon, is that what the bulls are saying here?
36:29
Speaker 12: Yeah, I think that's where it is that. You know,
36:32
Speaker 12: so far, the narrative has only been about OpenAI and
36:34
Speaker 12: JAGGPT and Microsoft. I think that narrative starts to change
36:38
Speaker 12: this year with more and more enterprise adoption. And you know,
36:41
Speaker 12: you and I talked about it just a few weeks
36:43
Speaker 12: ago that we did in AI survey where enterprises are
36:46
Speaker 12: really looking forward to deploy some of these AI tools internally,
36:50
Speaker 12: and that's not going to happen in isolation. They have
36:52
Speaker 12: to build that on some data framework, some kind of
36:55
Speaker 12: AI framework, and that's where AWS comes.
36:58
Speaker 3: In our thanks to anor Agrana, bloom Intelligence Technology Analyst.
37:01
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