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On Today's Bloomberg Intelligence Show, we dig inside the big business stories impacting Wall Street and the global markets.
Each and every week we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries our analysts cover worldwide.
Today, we'll look at how City Group is trying to prevent a departure of wealth.
Bankers well as well look at why the tailor Best Buy is warning of uneven demand for its electronics and appliances.
But first we begin with the tech media telecom space.
Recently, president like Donald Trump shows Brendan Carr as the new chair of the Federal Communications Commission.
As Chair, cars priorities include raining in big tech, ensuring broadcasters operate in the public interest, and unleashing economic growth.
For more and what to expect, we were joined by Matthew Shettenhelm, Bloomberg Intelligence media litigation analyst.
We first asked Matthew about the scrutiny a big tech will face under the new Trump administration.
I think in one sense, I think you'll see Congress a little less aggressive, it moving forward with data privacy type legislation that Democrats tended to promote. But where you're going to see the risk and where I think I'm prenominantly focused right off the bat is on big tech's liability shield. This is a provision of law that's been in place since nineteen ninety six that keeps Google and Meta and other social media companies from being sued every
time someone posts something harmful on social media. What you're seeing from the conservative side is increasing attacks on that, and I think you could see a proceeding at the FCC try to really focus and amplify those calls to cut into the liability shield that's been so important for those companies.
Does the FCD, FCC can they change it or can they just sort of mold it on the sidelines.
Yeah, that's that's a great question.
The interesting thing is is this liability shield is tucked into the Communications Act that the FCC administers. So during the first Trump administration, the FCC took the position, hey, we can make rules under this because it's it's.
In our law.
We can implement it, but they never got around to doing it. I think the Trump administration this time is going to try to move ahead with that and say, look, we implement the Communications Act, the liability shield is tucked in there.
We can make rules.
What's changed since then is that the Chevron doctrine has been struck down, the Major Questions doctrine has arisen.
There's a real doubt.
I'm very skeptical that the FCC can bind the courts in how to apply this liability shield. But in some ways that's not the point. The point is sort of to amplify the idea that courts or that Congress should change the shield. And I think that's what you're going to see a Brendan car Let FCC do is say, look, even if we can't change the liability shield as an agency. We're going to tell you how to do that and amplify the momentum for Congress or the Supreme Court potentially to do it itself.
So what do we know about the apparent FCC chair, Brendan Carr, and what should we expect from a Republican controlled FCC. What do we know about that, mister Carr.
Yeah, so Brendan Carr is the most senior Republican at the FCC who knows communications law inside and out. But he also knows how to play the politics around the FCC better than anyone else there. And so he's going to do his best to make sure that he's implementing
President Trump's agenda. And so while Brendan Carr is a traditional sort of free market Republican, he's also very sympathetic to the idea that there's sort of a bias against conservatives among elite media, and he's very sympathetic to supporting President Trump on that message. And so that's why you see proceedings like this going after big tech companies, potentially going after broadcasters and threatening to take away their licenses.
So there's going to be a little bit of this sort of Okay, let's deregulate the democrats of regulator too much. But there's also this concern about bias against conservatives and that it's gone too much in that direction, and Brendan Carr is going to support both.
So if I take a look at the actual equities that are involved, what does it mean for them? If I'm an investor and I'm looking at this, how do I price it, how do I model it? How do I think about it?
To me?
The I mean the biggest risk is you think about the liability shield falling away if it goes you know, in the most extreme approach, you're you're you're thinking about the big social media companies. You're thinking about Meta, you're thinking about alphabet, and you're thinking about creating a whole new field of litigation with those companies as the targets. And so you've seen a couple big settlements from those companies.
With the liability shield in place, you can think about that being amplified many times over with class actions and other suits.
Anytime content that's.
Posted on the social on social media causes harm in the real world, you can think of limitless examples of the harm it causes anytime that that there's harm, you potentially have a lawsuit. And so I think it sort of changes the equation in terms of the cost those companies could fail in terms of potential liability if if the liability shield were wiped away?
Will there be looser ownership riggish regulations on media? David Zasov from Warner Brothers Discoveries asking.
Yeah, so, I absolutely So.
The Republicans at the FCC have historically been, you know, they're tired of this idea of media ownership of broadcasters that they said, look, there's so much new competition for broadcasters. The problem is that there's first this political angle from President Trump saying, look they edited my sixty minutes interview wrong, And so Brendan Carr at first is kind of latching onto that political arguments. Let's go after that first. So I think media ownership sort of lurking in the background.
I think they'll get there after this political noise sort of dies down.
Right.
Thanks to Matthew Shettenhelm, Bloomberg Intelligence media litigation analyst.
This week, we focused on a Bloomberg Big Take story entitled Amazon prepares to go toe to toe with Nvidia in AI hardware.
You can find it on Bloomberg dot Com and the Terminal, and the story looks at how amaz On is loosening and Video's grip on the one hundred million dollar plus market for AI chips.
For more on this story, we are joined by Matt Day, Bloomberg Technology reporter.
We first asked Matt for more context on the journey that Amazon has gone on when it comes to innovation and chips.
So Amazon gets a lot of credit for inventing the cloud computing market and basically rented computing power, data storage all over the Internet. What they don't get so much credit for is building a lot of the hardware behind it. So you go back fifteen years and they started building their own servers, their own networking switches. Eventually they got
onto to silicon to chips themselves. That's where they find themselves today is you know, they didn't set out to necessarily try to upset in video, but because they've been working on machine learning chips for the past you know, call it five six years, they have a chip they think is arriving at the right time.
Talk to us about what Amazon's folks in Austin, Texas are doing what's going on that down.
There, So Austin, it's a tech mecha, especially for hardware, dating back to IBM and Dell, and Amazon focuses there machine learning chip testing there. They're chip engineering down there. So myself a colleague paid a visit down there last month and there it's really a scrappy vibe. The place isn't isn't particularly pristine. There's just stuff strewn all over the place, as the story notes. But that's a little
bit of the Amazon engineering ethos at work, right. They don't have to push the limits of performance, they don't have to make it real pretty. They just have to build a part that works, a part. They can build a whole lot of them in a pretty short period of time. And so that's what they're trying to do now is get those chips out to the data centers before the end.
Of the year.
Now is the idea that, hey, in video, we don't need you anymore at all? Or is it just sort of like we can also do this and there's room to everyone to play on different levels.
Yeah, no, not at all about replacing all of Nvidia. And if you get any Amazon exec talking about it, the first sentence out of their mouth is going to be you know, we recognize in video has got a great product and it's going to be around for a long long time, you know, I said, And I don't have any hard numbers in front of me, and Amazon folks wouldn't speculate, but I think they'd consider this a victory if they could just take some of that some
of that portion of the Nvidia demand. They already are serving today with video chips in their data centers.
So in Vidia's biggest customers, they're big companies like Amazon, like Microsoft, like Alphabet, and all of those customers are trying to build their own chips. How is Amazon kind of positioned relative to all those players.
I think one thing Amazon definitely has an advantage over its its nearest cloud rival, Microsoft, and that they started a lot earlier. Microsoft only started building its chips a couple of years ago. Amazon's been doing this since twenty thirteen, twenty fourteen, and they all kind of came to the same realization, which is that you know, listen, ultimately, a data center is just a big computer, right Like we think of computers as laptops or maybe a single rack
of servers. But one of the things that the cloud revolution has done is it's allowed these companies to say, Okay, wait a minute, how is this going to work if instead of one of them in a server, I have one hundred thousand of them spread over a data center or multiple buildings.
Right?
How does the computer work in that situation? And that's one of the things that Generative AI and all these real hard intensive training runs have kind of forced them to do is think about these you know it, sprawling data centers as computers in and of themselves.
Now, you guys went to some of these places where they're trying to build these chips. Can you describe what it's like, because we're looking at a bazillion dollar company in Amazon, right, But the what you described is not that.
Oh yeah, I looked a little bit like a popour rerac at a hardware store, right at a drill press in a corner, they had a vacuum sealer and under that was one of those slow ovens to kind of dry things out dehumidifier.
Maybe that's not the right word.
But there's a lot of hardware sitting around, and a lot of it's really high tech, a lot of it's really expensive, you know, but the Vibe again, was just an engineering crew trying to go as fast as they can to put chips in the hand of their customers, you know, an Amazon's case, that's their own data centers.
But there's a funny moment while we were there. The guy who runs the lab, a guy called Romney Sino, was yelling over to a colleague of his basically, what's your job, and the job is to ship things to data centers.
Right.
They're not there to push the limits of engineering. They're there to reliably, you know, ship product out and get it in the hands of their business customers.
What are the customers saying about the Amazon chips? How are these Amazon chips performing in the market place?
And so the Amazon has only started just started rolling out its latest chip. You know what we know from the first version is you know, it's not as good as in Nvidia. And that's particularly clear on the software level, right, I mean, no matter how good a piece of hardware is, if you can't access it with ease, that's going to be a problem for you. And that's where Nvidia has
just a huge advantage. You know, they've got the open source community behind them building libraries and tools so that almost any AI thing you want to do, you can accomplish it on an navidiate ship. And so that's what customers have told us is the big hurdle for Amazon. You know. Now, Amazon is offering it's early adopter some help. They will, you know, send you engineers and help customize your work for their chips, but that's not going to
scale in the long term. They're hoping they can build a software package that makes it real easy to use their hardware, but they're not there yet.
Who are the geniuses behind this in Amazon? Where the names?
So the main one who gets a lot of credit for it, and probably doesn't get enough outside of tech circles is James Hamilton. He's a longtime engineer at IBM and at Microsoft who Amazon poached real early into their cloud competing experiment back in two thousand and nine, and it was partly his suggestion that the company should get into the hardware business. Right He was looking at their costs and saying, listen, why are we paying Dell HP for all of these servers with a bunch of high
end functions we don't need. We could build a cheaper mousetrap and if it's just good enough for us, then we can pass those savings onto our customers. So it really started this snowball of just Amazon getting into more and more corners of hardware that previously, you know, they hadn't really had much interest in, and that's really paid off in terms of how profitable the cloud businesses for Amazon.
Our thanks to Matt Dave, Bloomberg Technology.
Reporter, coming up a conversation with the CEO of bloom Energy.
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We moved next to the Banking Space and Citygroup.
This week we looked at a story on the Bloomberg Terminal and at Bloomberg dot Com entitled City Bonuses by time for New Wealth boss rush to revamp.
And looked at how Citygroup's new CEO, Andy sigg Green led special retention bonuses for dozens of personnel for more and all of this means. We were drawn by Katherine Doherty, Bloomberg Finance reporter.
We first asked Catherine how things are going now for Citygroup and it's.
New CEO, Andy is one year into his new role, and he came into it with a lot of difficulties.
And the basic.
Infrastructure that City was working with in their wealth division was something that had been lagging peers. It was way behind in terms of speed execution. And really that was something that Andy had focused on right when he came in. And upgrading the technology was one thing. Then bringing talent was kind of the second pillar to improving the wealth division. And keeping talent is the hardest part about building a wealth business across Wall Street because it's a very competitive business.
The pay is oftentimes used as a way to lure experienced advisors to competitors, and so not only are you trying to focus on keeping that talent, the talent is tied to the assets that they're managing for their clients. So anytime you lose some big advisors with millions or even billions in assets. That's going to affect your business
moving forward. So Andy had a very big agenda in front of him in terms of having to clean up, and not just clean up, but then improve cities wealth business so that it could truly compete with the big peers on Wall Street.
Yeah, because like when I think of Morgan Stanley, I think of wealth management I use, and that's different. When I grew up in the business, I thought about them as sales and trading and investment banking City I don't necessarily think of wealth as part as a kind of
a growth driver for them. But I know in their private bank, which generates two point three billion dollars in revenue, it is high touch service for the wealthiest clients, including a quarter of the world's billionaires minimum net worth twenty five million dollars. So is this a situation for City that Jane Fraser has to just put a flag in a ground say this is a core business for City and we will invest Accordingly.
Private bank is definitely one of their money makers. You can see that in the numbers. But also if you think two tiers down, you have City Gold and this is clients with avery average monthly balances of at least two hundred thousand, So it's definitely not at the private bank tier. The private bank tier. Why they're trying to keep that part of the wealth business up is because
that's where the biggest assets are. That's where the revenue really gets generated when you have the wealthiest and it's not just Americans, it's oftentimes billionaires in Asia. They're really focused on growing their business outside of the US, which is different from some of the other big Wall Street banks that are more US focused in terms of building
up their own private bank assets. And so City, their private bank, I would say, was their strong suit and continues to be their strong suit, but it doesn't mean that that's going to stay that way. So they really have to remain competitive keep their advisors that are catering to the wealthiest individuals, not just in the US but across the globe.
Did they lose advisors because they were posed or because they let them go because they were revamping it and it so it's a combination.
Just last week we reported that two of City's former private bank advisors defected to go to Bank of America. Actually in their private bank, which is interesting because that's where Andy Sig had come. You worked in the Meryl division. But still it's under the Bank of America umbrella and those two advisors they brought seven billion of assets that they managed. So that was a big kick to City. And so when you see that, but it's not i
would say unique just to City. There's stories like that all the time of some of these really big advisors bringing their team to a competitor and oftentimes they're just looking for it's opportunity and most of the time that opportunity is translated and in pay all.
Right, our thanks to Catherine Doherty, Bloomberg Finance Reporter. We move next to the energy space. The fuel cell maker Bloom Energy recently signed a landmark supply agreement with American Electric Power for up to one gigawatt of fuel cells and this marks the latest commercial procurement of fuel cells globally.
For more and all of this, we were joined by k R. Sweetheart, CEO of bloom Energy. We first asked k Are how this deal came about.
So we have being more with data centers for a very long time. Now we have over three hundred megawarts in multiple data centers, across the country. These are the smaller data centers called the edge data centers that are located where customers are somewhere in the five to ten megawat range in a particular site. So we have transacted close to three hundred megawarts, so we are a known player to data centers. Now with the hyperscalers, what's the difference,
it's a much larger data centers. These are now particularly more important in terms of growth because of AI and the amount of power they need. And currently these hyperscalers, as they're growing very fast, the transmission distribution is not able to keep up with providing those hundreds of megawarts of power right at the site where you need it within the time that you need it maybe five to six years. They may be able to provide the power, but the data center really wants it today, they want
it now. So we are perfectly under those circumstances because our Bloom Energy servers can be deployed in a matter of months right where the customer is, thereby not worrying about the transmission distribution gridlock and providing that reliable, clean, always on power to the data center. So that's the reason this happened, and here what happened is the electricity provider AEP said, we don't make nuclear power plants, we don't make gas turbance, we don't make fuel cells. We're agnostic.
We'll buy your systems and similar to us using those other power sources to provide power to the customer. Here we can take your fuel cells and take the power you produce and give it to the data center. However, the big advantage here is we can put these fuel cells right where the data center is, thereby avoiding the transmission distribution issue.
So, Kerry, I mean, just you know, I didn't know much about your company before, so just reading up here, it's like right company, right place, at the right time, with the right technology, and boom. Talk to us about how good your fuel cells are. How would I know whether your fuel cell is better more productive than say a competitor.
That's a great question. So let me go away from fuel cells, just into electricity for the customer. At the end of the day, we all provide a service or a product to our end customer. That electricity that a data center takes has to be clean, it has to be always on and reliable. Twenty four to seven. It needs to have a pay as you grow characteristic, and it needs to be future proofed in terms of sustainability. Bloom Energy is one of those solutions that offer all
of the above no rs. It's the genius of end So we are the most efficient way of taking natural gas and making electricity out of it without combustone. Because we don't compassed, there is no knock socks particulates anything going into the atmosphere, so there is no local air pollution. And if you look at our system they're like lego blocks. You put many of these lego blocks, hundreds of them to be able to provide power to a data center. If any one of them has to be serviced, you
can just hot swap them in and out. So the reliability and the resiliency of our systems are very high. And then you and you can pay as you grow data centers. Even though they build a big data center, don't start that entire data center on day one. They may do one third of the load, and then a few months later they may add additional load. As they are adding the load, they can add more and more of our fuel cells. You can't do that to the gas turbine. You can't do that to the nuclear power plant.
So we bring all these attributes in so I would say we are ideally suited for this AI data center market.
Now, the financial terms were not disclosed. I appreciate that. I'm gonna ask about the money a different way. How easy was it or difficult was it to come to an agreement on price.
With AEP.
In this particular case, it was fairly easy to come to that agreement. Nothing is easy, but relatively speaking, And here is why. There are three parties involved, actually four, the data center customer, AP, the public at large where this is being installed, and blow energy we were able to put together When when for all four of these stakeholders, why is.
That number one?
Let's start with the public at large with other kind of provisions that were being contemplated. The fear of the ratepayer was because the hyperscaler is going to get a large amount of power from the transmission distribution company, they will end up carrying the bill. In this construct, AEP made sure none of the costs associated with putting these fuel cells and providing that clean power to the data
center will cost the rate payer any money. So that was a win for the ratepayer number two for the data center. For the data center, the price of not having power on time is significantly greater than the cost of power. If you just think about the race in AI and who has to get there competitively. So time to power was the key metric and they would pay a slight premium to be able to get that, and
that penciled out for AEP. They were able to grow their customer base, give them their growth needs without dissenter mediating them and having them go to some other state, which is what has been happening in places like Virginia where data centers are moving away from there because there is not enough power. So it was a win for AEP in retaining their customer and taking care of their customer and making money for Bloom. Whether we in front of the meter or behind the meter, it is the
same thing. Whether we sell it to AP who then provides the power for the data center, or we sell to the data center and they provide it and they take their own power. You know, for us we are agnostic because we get to make the sale and we get the gross margins on the product.
All right. Thanks to k R. Shreedhar CEO Bloom Energy all right, coming up a look at what's new in the renewable fuels market in the US.
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Each week we look at research from Bloomberg and EF previously known as New Energy Finance.
They're the team at Bloomberg that tracks and analyzes the energy transition from commodities to power, transport, industries, buildings, and egg sectors.
This week we took a look at renewable fuels, and we're joined by Anna Davies, bnef's head of renewable Fuels.
We first asked Anna what types of renewable fuel projects now exist in the US, so there's.
A good number of projects in the US nice to be here, and there's a wide range. The US is the biggest market at the moment, so a lot of the projects are based here. A lot of renewable fuels. When we talk about renewable fuels, we're really talking about basically biofuels at the moment, made from oils like soybean oil or even use cooking oil like the excess grease
from your fryer. The key here is that unlike ethanol or biodiesel or biofuels you usually think about, renewable fuels are a special term for ones that are drop in ready, which means they produce a diesel molecule or jet fuel molecule that's basically the same as fossil dieseler jet fuel, So you could just blend it one for one into your dieseler jet fuel pool. There's no blending limit. It can just go in however much you have, So it's really cool in that regard. A lot of the projects
in the US are based, especially out of California. You could take an old oil refinery and convert that to produce a biooil like a biofeedstock instead of a crude feedstock, so that's really common. There's also a lot of projects being developed to use other feedstocks, things like corn ethanol, because if you think about passenger vehicle fleet going electric, you're going to have less demand for gasoline or ethanol, so this could be another use for that ethanol in the world today.
I gotta ask the question everybody wants to ask, how will the Trump administration impact renewable fuel business?
That is the million dollar question probably for every clean energy sector. I'd say that renewable fuels, compared to a lot of the other sectors of clean energy, might be a bit better insulated than most because this is a sector where it really promotes the agriculture industry by using biofuels as a new demand source. It also is a way for the oil industry to get a second life because they can't take this old refinery and convert it into something new. So in that regard, I don't think
it's going to be completely in the crosshairs. There are ways, though, that the Trump administration might have a big impact on this sector. One of the big ones is if he puts a tariff on used cooking oil from China.
Or some of the feets used cooking oil from China.
We do.
China produces a lot of use cooking oil, a lot of fried food. They export the cooking oil to California which they can then blend into these refineries. Used cooking oil is a really popular feedstock for renewable fuels because it has a low carbon intensity. Otherwise it's just wasted, right you throw it out, it has to be collected. It was collected into it dumped in probably a dump.
But so we don't have enough used cooking oil here in the US as supplement if everything.
We have a lot. But if you think about replacing you know, the diesel or the jet fuel pool, you can always use more.
See So to that point, what is the price spread between renewable fuels and traditional fuels? Right now?
Tie renewable fuel their cheapest are probably two to four times, which is a big range, but cheaper than more expensive sorry than fossil like jet fuel. And if you talk about some of the novel technologies. So one of the ways to make these renewable fuels is to take carbon dioxide and green hydrogen, which is great because then you're not using any biofeedstock that could be up to like
ten times as expensive as jet fuel. These are pricey fuels and they're probably not going to get too much cheaper because a lot of it is just the technology needed.
So but if as an airline, am I mandated to use a certain percentage of clean fuel?
Depends where you are in Europe starting next year, yes you are mandated to blend it in. In the US, we don't have mandates yet. The biggest is we're doing a lot of carrot incentives. So the Inflation Reduction Act has a tax credit for producing renewable sustainable aviation fuel that would give a discount of about a dollar dollar twenty five to these producers. It's not enough to cover that bridge that cost. It could bring it down closer.
Pences, and then if that goes away, then it makes it even worse. So what's the best way to low or that gap? Is it we need better technology, we need scalable technology, or more sourcing.
I don't think technology is gonna come down too much in cost because a lot of the cost technology is a big component. But the feedstock is a big component too, and it's hard to China exactly, so that could make it worse. A lot of it is probably gonna be
a bit mix of mandates and subsidies. So if you have a mandate, sayn you just have to blend a certain amount, that's going to cause you know, maybe you put a premium on the cost of jet fuel, a tax on jet fuel that can cause that price gap to close, or if you offer an incentive to produce these fuels that can bring it down. There's a lot of research being done on new feedstocks, like something like cover crops. If you haven't a fueled you could just plant a new oil crop in the off season that
can help retain the soil. You can use the same land. You don't have to have this issue of food versus fuel land use. But yeah, that's the question is how cheap can you get it?
Our thanks to Annadavis, b n EFS, head of Renewable Fuels, we.
Move next to the retail space. This week we got our from Best Buy and Dick Spoorting Goods.
Best Buy cut it's full year guidance on sluggish demand for electronics and appliances. However, Dickboarding Goods increased its annual projections for comparable sales and growth.
For more on all of this, we are joined by Lindsay Dutch, Bloomberg Intelligence Consumer Hardline Senior Analyst.
We first asked Lindsay for her take on this week's results from Dickboarding Goods.
I think Dick's had a strong quarter, you know, again stronger than expected, sort of continuing the trend that we've seen earlier this year. You know, they have you know, the items that kids these days want in footwear, athletic apparel, and their exclusive sort of vertical brands are also doing very, very well and that really supported that back to school and it gives a lot of optimism when we think about holiday and the fourth quarter coming out.
So I realized that Best Buy and Dick's are different stores, but the way you describe dick spoorting goods, it feels like it should have been the same for Best Buy right back to school. They do have some exclusive items, et cetera.
Why not.
Yeah, So I think that's a great question, Alex. I think, you know, when we think back three months ago, best Buy had a great quarter and it was on back to school for them. Back to school is a little bit more college bias. It does hit a little bit earlier in the year then Dix might benefit from and the demand for laptops was very strong in the second quarter, and you know, best Buy raised their guidance. There was strong optimism that we were going to get back to
growth mode. I still think, you know, there's a possibility for a strong holiday for Best Buy laptops did. They were up comp sales seven percent in the third quarter, but that was overridden by weakness in some of the other categories, appliances, home theater being key ones. It sounds like they're really leaning into promotions for the fourth quarter and really looking to get aggressive with promotion, especially for their premium product and things that are exclusive two best Buy to really.
Draw that shopper in. How's it when you talk to your retailer companies that you covered, lindsay, what are they saying about just this whole holiday season when all is said and done, how's it gonna? Are we gonna have growth this year? So better than last year? How are thy shaking out?
Really?
Yeah?
So growth looks pretty weak. I also think it's divergent sort of like last year. So there's some categories that are just in a better position. You know, beauty would be one of those sports where you know, where Dix is playing is also one of those where just demand generally is a little bit stronger. And then we have other categories that are still on the weaker side, home appliances, and some of that still you know, obviously affects best Buy,
it also affects companies like william Sonoma RH. We also have a bifurcation. I think in the consumer, you know, a higher in consumer still seems to be holding up pretty well. Dix is another benefactor there. You know, their customer base is on the higher income side, whereas best Buy is probably a little bit more like the average of the overall country. So I think, you know, the deal days that these companies are rolling out, you know, they each have their own strategies on how they want
to manage that. But as I said, best Buy is going to get very aggressive with those deals. The consumer high or low income is very value focused, and we may have seen a pause, you know, people holding back waiting for those deals in the third quarter results.
Yeah, it's like she's describing me exactly.
Hey, lindsay, how about from an industry perspective, when I if I ever find myself going into store which I hope that doesn't happen. Am I going to find the stuff I'm looking for?
Like?
Has everybody got the inventory they need?
Here?
I don't hear too many you know, supply chain stories anymore.
Yeah, So supply chain, the supply chain woes of COVID have sort of gone away, you know. I think you know, retailers you maybe a little over a year ago or probably over inventoried. I think inventory is in a healthier position this year, you know, for the retailer themselves, but also for the shopper. And I think that the retailers are working really hard to make that in store experience a positive one for those that.
Go in store.
But there's also a lot of focus online, so that online shopper, you know, best Buy is doing doorbusters again this year, but it's it's for that in store shopper, but also if you are a member and have the app, you could also take advantage of that. So they're really looking to you know, capitalize on that experience.
What about tariffs? What was the impact? How do they manage it?
Yes, so best Buy they have talked about, you know, as a big picture, as a percent of cogs, about sixty percent of their inventory, you know, is manufactured in China. That's about the same as where it was in eighteen and nineteen. For the products that they have direct control over.
The exposure is low, and they've sort of managed that down, and they discussed on the call that, you know, the burden of that cost is really going to be shared between the manufacturer, supplier, the retailer, and the possibly the consumer if it comes to that. Dick's exposure is pretty low. When I look across my coverage, you know, elf Beauty stands out. They have eighty percent of their supply chain
is manufactured in China, very highly exposed. A company like that is looking to lean on price increases to sort of manage that type of cost.
All right. Thanks to Lindsay Dutch, Bloomberg Intelligence Consumer Hardline Senior Analyst.
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