Bloomberg Audio Studios, podcasts, radio news, and Android auto with the Bloomberg Business appum listen on demand wherever you get your podcasts, or watch us live on YouTube.

Bloomberg Audio Studios, podcasts, radio news, and Android auto with the Bloomberg Business appum listen on demand wherever you get your podcasts, or watch us live on YouTube.

What I learned from our next guest years ago, which shocked me and still to this day amazes me. The largest supermarket chain in the United States is.

What I learned from our next guest years ago, which shocked me and still to this day amazes me. The largest supermarket chain in the United States is.

Walmartmart.

Walmartmart.

I never would have guessed that, And now that I think about it, of course it is Jen Bartasha. She's the one that kind of enlightened me on that. When she's Bloomberg Intelligence Senior animost, she covers the retail staples and the package goods companies. So, Jen, I'm thinking in a world of tariffs, and I'm worried about if I'm a retail investor, kind of the margins my retailers like a Walmart might have having the grocery store business as a traffic driver. That's got to be a good thing, is Did we see that in Walmart's numbers today?

I never would have guessed that, And now that I think about it, of course it is Jen Bartasha. She's the one that kind of enlightened me on that. When she's Bloomberg Intelligence Senior animost, she covers the retail staples and the package goods companies. So, Jen, I'm thinking in a world of tariffs, and I'm worried about if I'm a retail investor, kind of the margins my retailers like a Walmart might have having the grocery store business as a traffic driver. That's got to be a good thing, is Did we see that in Walmart's numbers today?

Yeah?

Yeah?

Hi, Paul absolutely saw that in Walmart's numbers. You know, their growth in consumables and grocery mid single digit growth. That means people keep coming back to Walmart to buy their staples, and you know, that's a that's a foundational type of thing because for Walmart, as they get these customers doing that regular, repeat shopping and coming in consistently, it really bodes well for how well they'll be able to retain those customers once all of this market volatility fades and people become a little less price sensitive.

Hi, Paul absolutely saw that in Walmart's numbers. You know, their growth in consumables and grocery mid single digit growth. That means people keep coming back to Walmart to buy their staples, and you know, that's a that's a foundational type of thing because for Walmart, as they get these customers doing that regular, repeat shopping and coming in consistently, it really bodes well for how well they'll be able to retain those customers once all of this market volatility fades and people become a little less price sensitive.

How does Walmart just really in general raise the pressure for competitors? We have Home Depot and Target reporting out soon. How do you think they will fare well?

How does Walmart just really in general raise the pressure for competitors? We have Home Depot and Target reporting out soon. How do you think they will fare well?

You know, I think that Walmart is really uniquely positioned because it arguably has the best view into mainstream America consumer of any retailer out there, because they touch such a huge.

You know, I think that Walmart is really uniquely positioned because it arguably has the best view into mainstream America consumer of any retailer out there, because they touch such a huge.

Number of households.

Number of households.

And so when somebody the size of Walmart says that even their scale is a big enough to fully offset tariffs, the read through on that is with for other retailers who are smaller and have bigger exposure to imported goods is rather dire because you know, you know, Walmart is is the one that is probably best position to whether it because of its scale. But that just means for the smaller guys, it's going to be a really difficult battle, and that there's going to be a lot more price that has to be taken and a lot more operational maneuvering to try to stay competitive in that in that particular set. So Target has a lot of discretionary exposure. Home depot lows they both do as well, So you know it could be difficult season for those retailers.

And so when somebody the size of Walmart says that even their scale is a big enough to fully offset tariffs, the read through on that is with for other retailers who are smaller and have bigger exposure to imported goods is rather dire because you know, you know, Walmart is is the one that is probably best position to whether it because of its scale. But that just means for the smaller guys, it's going to be a really difficult battle, and that there's going to be a lot more price that has to be taken and a lot more operational maneuvering to try to stay competitive in that in that particular set. So Target has a lot of discretionary exposure. Home depot lows they both do as well, So you know it could be difficult season for those retailers.

All right, full disclosure, And John Socker knows this. My last job in this illustrious career of mine will be as a greeter at Walmart. We hope to see. I have never been in one because they don't have near me. Root seventy in Brick that's going to be. It's far the next stop here on this one. Hey, Jen, you mentioned it, and that's kind of where I wanted to go. I can see wal Bart dealing with higher tariffs in pricing because they're Walmart. But how about the mom and pop retailers out there on Main Street USA? How tough is it going to be for them?

All right, full disclosure, And John Socker knows this. My last job in this illustrious career of mine will be as a greeter at Walmart. We hope to see. I have never been in one because they don't have near me. Root seventy in Brick that's going to be. It's far the next stop here on this one. Hey, Jen, you mentioned it, and that's kind of where I wanted to go. I can see wal Bart dealing with higher tariffs in pricing because they're Walmart. But how about the mom and pop retailers out there on Main Street USA? How tough is it going to be for them?

Do you think it's It's incredibly tough, Paul, because you know the mom and pop retailers, it's usually only a handful of employees. It's a very set type of inventory that they carry. They don't necessarily have the ability to flex in and out of different product categories to to lessen the impact of tariffs, because they're usually known for a particular type of product, which is why their customers come to them, and so you know, they're also they're very reliant also on getting goods either directly or through third parties that are that are imported, and so there's just very little room in there in their operations to be able to offset the power of what's come the pricing that's going to come with these tariffs. And we've heard anecdotally small businesses that are just saying they've had to lay off employees already. You know, there could be greater ramifications, you know, in terms of unemployment and things. If small businesses are impacted to a large degree, Should this tariff situation persist for longer than we're expecting?

Do you think it's It's incredibly tough, Paul, because you know the mom and pop retailers, it's usually only a handful of employees. It's a very set type of inventory that they carry. They don't necessarily have the ability to flex in and out of different product categories to to lessen the impact of tariffs, because they're usually known for a particular type of product, which is why their customers come to them, and so you know, they're also they're very reliant also on getting goods either directly or through third parties that are that are imported, and so there's just very little room in there in their operations to be able to offset the power of what's come the pricing that's going to come with these tariffs. And we've heard anecdotally small businesses that are just saying they've had to lay off employees already. You know, there could be greater ramifications, you know, in terms of unemployment and things. If small businesses are impacted to a large degree, Should this tariff situation persist for longer than we're expecting?

Yeah, bring up a good point because they have CFO John David Rainey saying the rage of outcomes is pretty quote extreme, and it is. How has Walmart have they hinted on how they're preparing for it? I mean, we know that they're a good barometer of the US economy and they're really really huge, but they must still be impacted by tariffs.

Yeah, bring up a good point because they have CFO John David Rainey saying the rage of outcomes is pretty quote extreme, and it is. How has Walmart have they hinted on how they're preparing for it? I mean, we know that they're a good barometer of the US economy and they're really really huge, but they must still be impacted by tariffs.

Absolutely, they definitely will be impacted. But part of where their advantage is is that the company has been investing for some time behind technology like AI, and AI has across retail, but especially for those retailers who have had the time and the balance sheet to invest in it gives them a lot of flexibility in their tools for predicting what their need is going to be and for responding quickly to changes in their supply chain. So you know that investment in AI will actually pay some dividends and probably help them navigate the tariff situation more easily. And again that goes back to the smaller players who don't have that kind of technology support or haven't been able to make those investments. Will it'll be harder for them to maneuver in that environment.

Absolutely, they definitely will be impacted. But part of where their advantage is is that the company has been investing for some time behind technology like AI, and AI has across retail, but especially for those retailers who have had the time and the balance sheet to invest in it gives them a lot of flexibility in their tools for predicting what their need is going to be and for responding quickly to changes in their supply chain. So you know that investment in AI will actually pay some dividends and probably help them navigate the tariff situation more easily. And again that goes back to the smaller players who don't have that kind of technology support or haven't been able to make those investments. Will it'll be harder for them to maneuver in that environment.

So Jennifer Kroger are some big, you know, grocery store, and I don't know, craft Food comes in and says, cheese Whiz is going to be ten or fifteen percent higher price to you Kroger because of teriffs. How does that conversation go? Who's got the leverage there? Who eats it, who takes it?

So Jennifer Kroger are some big, you know, grocery store, and I don't know, craft Food comes in and says, cheese Whiz is going to be ten or fifteen percent higher price to you Kroger because of teriffs. How does that conversation go? Who's got the leverage there? Who eats it, who takes it?

Is it?

Is it?

How does that go?

How does that go?

Yeah, it's it's usually a combination of a couple of things. So the first thing is that because the grocers all have private label programs, they are very very well in formed on what cost of ingredients are, which ingredients are being imported, you know, packaging costs. So when a counterpart from a package food company comes to them and says we need to increase prices because of X, Y, and z, the retailer can call them out if they don't see the same pattern that they're being given as an excuse. Now, then there's a collaborative, a collaboration where ultimately both the retailer and the food package the package foo company want to you know, increase the volume sold and make sure that their products are getting in the hands of customers. So when it comes to pricing, usually there can be a bit of a sharing in terms of cost, but most of it does fall into the package food company itself and that comes in the form of having to do promotions you know, or or you know, offering discounts and things like that to make sure that their products are actually moving and that they're generating turnover and that they're then getting some profit out of it.

Yeah, it's it's usually a combination of a couple of things. So the first thing is that because the grocers all have private label programs, they are very very well in formed on what cost of ingredients are, which ingredients are being imported, you know, packaging costs. So when a counterpart from a package food company comes to them and says we need to increase prices because of X, Y, and z, the retailer can call them out if they don't see the same pattern that they're being given as an excuse. Now, then there's a collaborative, a collaboration where ultimately both the retailer and the food package the package foo company want to you know, increase the volume sold and make sure that their products are getting in the hands of customers. So when it comes to pricing, usually there can be a bit of a sharing in terms of cost, but most of it does fall into the package food company itself and that comes in the form of having to do promotions you know, or or you know, offering discounts and things like that to make sure that their products are actually moving and that they're generating turnover and that they're then getting some profit out of it.

Jen, thanks so much for joining us always appreciate it. Always learned something speaking to you. Jen Bartash's senior retail analyst from Bloomberg Intelligence. I mean Jen had a real career at Bloomberg. She was managing departments, managing a bunch of people in global data. And then we asked her, like fifteen years ago, hey, come to Bloomberg Intelligence, that we think you'd be a really good analyst. And she did come over, she accepted, and she's been great, and now she's one of the leading voices on retail. So another success story coming out of Bloomberg Intelligence.

Jen, thanks so much for joining us always appreciate it. Always learned something speaking to you. Jen Bartash's senior retail analyst from Bloomberg Intelligence. I mean Jen had a real career at Bloomberg. She was managing departments, managing a bunch of people in global data. And then we asked her, like fifteen years ago, hey, come to Bloomberg Intelligence, that we think you'd be a really good analyst. And she did come over, she accepted, and she's been great, and now she's one of the leading voices on retail. So another success story coming out of Bloomberg Intelligence.

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

Checking with Mariy Shore. She's a senior Ecodana's a Columbia threadneeder. She's up in Boston. We'd love to talk to he ed when we get the retail sales on her because she really spends a lot of time looking at the retailers, the consumer, that kind of thing, so a real helpful voice to us. Mari what did you make of the retail sales here. I mean, I guess there's some noise here about you know, tariffs, and did that impact kind of how consumers are spending money these days? What did you make of the retail sales number today?

Checking with Mariy Shore. She's a senior Ecodana's a Columbia threadneeder. She's up in Boston. We'd love to talk to he ed when we get the retail sales on her because she really spends a lot of time looking at the retailers, the consumer, that kind of thing, so a real helpful voice to us. Mari what did you make of the retail sales here. I mean, I guess there's some noise here about you know, tariffs, and did that impact kind of how consumers are spending money these days? What did you make of the retail sales number today?

Yes, thanks Paulin Isabelle, thank you for having me. Absolutely you said it better than I could have. The tariffs are definitely creating some monthly noise.

Yes, thanks Paulin Isabelle, thank you for having me. Absolutely you said it better than I could have. The tariffs are definitely creating some monthly noise.

When we look year over.

When we look year over.

Year, the growth has been a little more consistent and actually showed acceleration in April versus March.

Year, the growth has been a little more consistent and actually showed acceleration in April versus March.

But on a month over.

But on a month over.

Month basis, we did see softness in April versus March, given the pull forward that we saw in March ahead of some tariff driven price increases that the consumer anticipated in some big ticket categories like autos. And you know, when I look and really step back and just getting off of Walmart's earnings call, I think their tone on the consumer is very consistent. Obviously, tariffs are creating a lot of noise in the spending trends, but you know, in their words, the consumer is still very focused on value and speed of delivery, and that is what we've been seeing for years now coming out of the pandemic.

Month basis, we did see softness in April versus March, given the pull forward that we saw in March ahead of some tariff driven price increases that the consumer anticipated in some big ticket categories like autos. And you know, when I look and really step back and just getting off of Walmart's earnings call, I think their tone on the consumer is very consistent. Obviously, tariffs are creating a lot of noise in the spending trends, but you know, in their words, the consumer is still very focused on value and speed of delivery, and that is what we've been seeing for years now coming out of the pandemic.

I'm glad you brought up consumer because for Walmart, we saw traffic, which is the number of shoppers less of a boost to the figure than ticket. What does that tell you that maybe there are less shoppers, but they're buying more expensive things or at least higher amount of tickets.

I'm glad you brought up consumer because for Walmart, we saw traffic, which is the number of shoppers less of a boost to the figure than ticket. What does that tell you that maybe there are less shoppers, but they're buying more expensive things or at least higher amount of tickets.

Well, right, So that could either say they're coming in less frequently and when they are in, they're buying a lot more, right, they're stalking up more or to your point, they're buying more expensive things. But we did see relative weakness in their general merchandise category. We saw like their you know, food categories up mid single digits, Health and wellness was up high teams. A lot of that is GLP ones, and general merchandise for them was actually down slightly, which is worse than what we saw in.

Well, right, So that could either say they're coming in less frequently and when they are in, they're buying a lot more, right, they're stalking up more or to your point, they're buying more expensive things. But we did see relative weakness in their general merchandise category. We saw like their you know, food categories up mid single digits, Health and wellness was up high teams. A lot of that is GLP ones, and general merchandise for them was actually down slightly, which is worse than what we saw in.

Q four. And so I think it's a us that the consumer is you know.

Q four. And so I think it's a us that the consumer is you know.

Coming to Walmart for their stock up trip, which is typically what we've seen with Walmart.

Coming to Walmart for their stock up trip, which is typically what we've seen with Walmart.

But you know, I think a lot of that.

But you know, I think a lot of that.

Intra week spend, those like fill in trips that we talk about, you know, I think that the consumer may be doing less of that just given their general caution and uncertainty over what tariffs are going to do to their spending ability in the future.

Intra week spend, those like fill in trips that we talk about, you know, I think that the consumer may be doing less of that just given their general caution and uncertainty over what tariffs are going to do to their spending ability in the future.

Hey, Mari, wh when you speak to the retailers that you talk to across your coverage area, Let's see what's the feeling today in terms of how much they want to pass through to customers versus how much they're willing to kind of take in their margin here.

Hey, Mari, wh when you speak to the retailers that you talk to across your coverage area, Let's see what's the feeling today in terms of how much they want to pass through to customers versus how much they're willing to kind of take in their margin here.

Yeah, it's a great question, and it's so interesting seeing like the uh, you know, the commentary from the retailers versus what we see in the stock market is very different, right, I mean, the stock market is acting as if these tariffs are no big deal. We got some resolution, things are going to be fine. Then you listen to the retailers. I mean you listen to Walmart today. They're talking about, you know, starting now, there will be less product on shelves. They're going to do all they can to try to protect pricing in their value position in faster turn categories like food.

Yeah, it's a great question, and it's so interesting seeing like the uh, you know, the commentary from the retailers versus what we see in the stock market is very different, right, I mean, the stock market is acting as if these tariffs are no big deal. We got some resolution, things are going to be fine. Then you listen to the retailers. I mean you listen to Walmart today. They're talking about, you know, starting now, there will be less product on shelves. They're going to do all they can to try to protect pricing in their value position in faster turn categories like food.

But there's certain.

But there's certain.

Categories like toys, electronics, even some of the textile categories like apparel and soft home where it's going to be really hard for them to absorb the full impact of terraft. So I think, you know, the ten percent rate for a lot of companies is a lot more manageable. When you talk to them about the ten percent we see globally x China, they seem to feel a little bit better about that. I think, you know, the thirty percent in China is still too high, and the margin levels and a lot of the categories that come out of China are very low, and they just do not have the ability to absorb that pricing themselves, share it with their vendors who or their vendor partners, their manufacturing partners.

Categories like toys, electronics, even some of the textile categories like apparel and soft home where it's going to be really hard for them to absorb the full impact of terraft. So I think, you know, the ten percent rate for a lot of companies is a lot more manageable. When you talk to them about the ten percent we see globally x China, they seem to feel a little bit better about that. I think, you know, the thirty percent in China is still too high, and the margin levels and a lot of the categories that come out of China are very low, and they just do not have the ability to absorb that pricing themselves, share it with their vendors who or their vendor partners, their manufacturing partners.

We're also operating on very low margin.

We're also operating on very low margin.

And so it's inevitable that some of that is going to have to come through to higher prices. It's just a question of you know, I think what the retailers are really trying to they're really struggling with now how to think about that trade off between price and volume.

And so it's inevitable that some of that is going to have to come through to higher prices. It's just a question of you know, I think what the retailers are really trying to they're really struggling with now how to think about that trade off between price and volume.

You know, I mean.

You know, I mean.

During the pandemic, as everyone took pricing, we did not see the kind of elasticity of demand that you would typically expect to see when prices move up. And I think how the retailers manage their unit inventories is going to be a huge area of focus for them and for investors during this really volatile period.

During the pandemic, as everyone took pricing, we did not see the kind of elasticity of demand that you would typically expect to see when prices move up. And I think how the retailers manage their unit inventories is going to be a huge area of focus for them and for investors during this really volatile period.

One thing that also caught my edw with Walmart is it said it's online business posted a quarterly profit for the first time. Are you seeing the same trend across the board and what does that tell you?

One thing that also caught my edw with Walmart is it said it's online business posted a quarterly profit for the first time. Are you seeing the same trend across the board and what does that tell you?

No, this is very Walmart specific.

No, this is very Walmart specific.

We have seen in the e commerce space Amazon and Walmart taking incredible share. And so when you listen to Walmart, and they've been kind of alluding to the fact that they were nearing this inflection and profitability for some time, I think it's really coming from two things. That's coming from the scale that they are now seeing as that business has grown so much. And also they've talked about how consumers are increasingly willing to pay for delivery for expedited shipment. So if you're making dinner tonight and you realize you forgot a certain spice, you know, you could pay five dollars to have Walmart deliver it.

We have seen in the e commerce space Amazon and Walmart taking incredible share. And so when you listen to Walmart, and they've been kind of alluding to the fact that they were nearing this inflection and profitability for some time, I think it's really coming from two things. That's coming from the scale that they are now seeing as that business has grown so much. And also they've talked about how consumers are increasingly willing to pay for delivery for expedited shipment. So if you're making dinner tonight and you realize you forgot a certain spice, you know, you could pay five dollars to have Walmart deliver it.

To you in the next hour.

To you in the next hour.

And in those cases, the consumer is more willing to pay for delivery, and I think that's something Walmart had not expected, but it is a key I think part of the reason why they are able to achieve e commerce profitability. They also have, of course, the benefit of the growth in the marketplace and addizing and fulfillment services and membership.

And in those cases, the consumer is more willing to pay for delivery, and I think that's something Walmart had not expected, but it is a key I think part of the reason why they are able to achieve e commerce profitability. They also have, of course, the benefit of the growth in the marketplace and addizing and fulfillment services and membership.

All of which are higher margin and are.

All of which are higher margin and are.

Really starting to move the needle for them as we see with Amazon. But I think Walmart and Amazon are in a league of their own as it relates to what they're seeing in e commerce, both in terms of the growth that they're putting up in that business and the profitability that they're able to achieve.

Really starting to move the needle for them as we see with Amazon. But I think Walmart and Amazon are in a league of their own as it relates to what they're seeing in e commerce, both in terms of the growth that they're putting up in that business and the profitability that they're able to achieve.

Mari, thank you so much for joining us. As always, Mario Sure, Senior Equity aas for Columbia Threadneedle Investment, she's up there in Boston and she joined us. View that zoom thing.

Mari, thank you so much for joining us. As always, Mario Sure, Senior Equity aas for Columbia Threadneedle Investment, she's up there in Boston and she joined us. View that zoom thing.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Colocklay, and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Colocklay, and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

President Trump making lots and lots of news in his trip to the Middle East, lots of economic deals of being announced, big big dollar amounts as well. All that is good for the companies involved, but it does call out Apple a Tim Cook not there with him, as Jensen Wang is in Nvidia also suggesting that Apple should stop moving iPhone production to India. What is that all about? Anurag Rana technologychannels for Bloomberg Intelligence, he covers Apple, he covers all this tech stuff for us in the burgeoning tech capital Chicago, Illinois, anurag Apple computer. They're trying to diversify their supply chain, maybe get a little bit less reliant on China taking some of that over to India. There's a president not like that.

President Trump making lots and lots of news in his trip to the Middle East, lots of economic deals of being announced, big big dollar amounts as well. All that is good for the companies involved, but it does call out Apple a Tim Cook not there with him, as Jensen Wang is in Nvidia also suggesting that Apple should stop moving iPhone production to India. What is that all about? Anurag Rana technologychannels for Bloomberg Intelligence, he covers Apple, he covers all this tech stuff for us in the burgeoning tech capital Chicago, Illinois, anurag Apple computer. They're trying to diversify their supply chain, maybe get a little bit less reliant on China taking some of that over to India. There's a president not like that.

Yeah, we just heard that. In fact, it looks like Apple cannot you know, catch a break right now. We thought that the US China deal would probably put a lot of those fears to rest. But you know, it just looks like that. You know, it's not He's not happy with the Apple moving some of that iPhone facilities to India. Now that is the case because you know, frankly speaking, you do need a low cost labor setup. You do need really large factories and the amount of labor to assemble some of these products. Remember, even in an iPhone, you know, the chip can come from a you know, high cost region, but the assembly of the phone, you know, cannot be done in a high cost region. So I think they are in a bit of a jam as to what to do because we have Bloomberg News reported that they wanted to double their capacity in India to ensure that they don't have to pay the high tariff strate coming out of China. But you know, let's see what Apple does to counter that. You know, our best gut feeling is that they will ramp up the investments in the US and perhaps target more on the higher margin items such as chips or really expensive max But it will be tough for them to do this on the on the iPhone level, frankly.

Yeah, we just heard that. In fact, it looks like Apple cannot you know, catch a break right now. We thought that the US China deal would probably put a lot of those fears to rest. But you know, it just looks like that. You know, it's not He's not happy with the Apple moving some of that iPhone facilities to India. Now that is the case because you know, frankly speaking, you do need a low cost labor setup. You do need really large factories and the amount of labor to assemble some of these products. Remember, even in an iPhone, you know, the chip can come from a you know, high cost region, but the assembly of the phone, you know, cannot be done in a high cost region. So I think they are in a bit of a jam as to what to do because we have Bloomberg News reported that they wanted to double their capacity in India to ensure that they don't have to pay the high tariff strate coming out of China. But you know, let's see what Apple does to counter that. You know, our best gut feeling is that they will ramp up the investments in the US and perhaps target more on the higher margin items such as chips or really expensive max But it will be tough for them to do this on the on the iPhone level, frankly.

But that's the thing. Apple already promised to hire more workers domestically here in the US and spend five hundred billion over the next four years. So you think they will need to add more to that.

But that's the thing. Apple already promised to hire more workers domestically here in the US and spend five hundred billion over the next four years. So you think they will need to add more to that.

Either they need to add more to that or support some of the local manufacturing, perhaps in the chip capacity, or explain to the president how they're doing it in the US a lot more benefits to you know, the local workers, because you know, for President Trump to call him, call him out, you know, out in the open, you know, dost put him in a tough position.

Either they need to add more to that or support some of the local manufacturing, perhaps in the chip capacity, or explain to the president how they're doing it in the US a lot more benefits to you know, the local workers, because you know, for President Trump to call him, call him out, you know, out in the open, you know, dost put him in a tough position.

Right now, What is the Apple strategy here? Because again, we think of some of the quote unquote China exposure. The company that comes to the top of most people's list is Apple because they get twenty percent of their revenue from China. Their supply chain is fully enmeshed in China. And I know we've talked to you, you know, for the last several years about how they can diversify. Here what is the reality in today's world for Apple?

Right now, What is the Apple strategy here? Because again, we think of some of the quote unquote China exposure. The company that comes to the top of most people's list is Apple because they get twenty percent of their revenue from China. Their supply chain is fully enmeshed in China. And I know we've talked to you, you know, for the last several years about how they can diversify. Here what is the reality in today's world for Apple?

See, the reality is the higher value products. So let's say that the chip that they do or they make, you know, those are all designed in the US. It's made by TSMC. Those plants have been shifted, some of them to Arizona. So the higher value products can be done. But frankly speaking, think about it, you know, lower whether it's an air pod or whether it's just an assembly of the phone, it's not that easy to just you know, come up and then make those things in the US. I mean it's they've been trying to perfect that over a twenty year period, across different parts that they get from China. The factories that employs you know, hundreds and thousands of people. You know, it's just not easy to move those I think they will be pushing a lot more on the R and D front over here hiring more local workers to offset some of that actim which means, on the at least over the next few years, there could be some downward pressure on their gross margins, you know, in order to you know, showcase that they are investing heavily in the US.

See, the reality is the higher value products. So let's say that the chip that they do or they make, you know, those are all designed in the US. It's made by TSMC. Those plants have been shifted, some of them to Arizona. So the higher value products can be done. But frankly speaking, think about it, you know, lower whether it's an air pod or whether it's just an assembly of the phone, it's not that easy to just you know, come up and then make those things in the US. I mean it's they've been trying to perfect that over a twenty year period, across different parts that they get from China. The factories that employs you know, hundreds and thousands of people. You know, it's just not easy to move those I think they will be pushing a lot more on the R and D front over here hiring more local workers to offset some of that actim which means, on the at least over the next few years, there could be some downward pressure on their gross margins, you know, in order to you know, showcase that they are investing heavily in the US.

How has it been like as an analyst covering all the tire flip flops and all these big tech companies that are at the mercy of some of Trump's pronouncements that are sometimes really unexpected.

How has it been like as an analyst covering all the tire flip flops and all these big tech companies that are at the mercy of some of Trump's pronouncements that are sometimes really unexpected.

I mean, really listen, it is very tough, and frankly, we're going to see how and if this leads to some kind of demand destruction on any of the you know, and markets we cover. So so far, it doesn't look like it's having an impact on the cell phone market, it doesn't look like it's having an impact on the cloud market. But when you look at something like consulting market, I mean it is having a second degree impact because people or companies are not sure how they're going to be, you know, what kind of economic environment they will see down the road, whether they'll be a recession or not. So there has been an absolute stop and a lot of the consulting work and a consulting related you know, bookings or contracts out there, and I think that's kind of what we are seeing, you know, at least in the overall tech space right now.

I mean, really listen, it is very tough, and frankly, we're going to see how and if this leads to some kind of demand destruction on any of the you know, and markets we cover. So so far, it doesn't look like it's having an impact on the cell phone market, it doesn't look like it's having an impact on the cloud market. But when you look at something like consulting market, I mean it is having a second degree impact because people or companies are not sure how they're going to be, you know, what kind of economic environment they will see down the road, whether they'll be a recession or not. So there has been an absolute stop and a lot of the consulting work and a consulting related you know, bookings or contracts out there, and I think that's kind of what we are seeing, you know, at least in the overall tech space right now.

And Ron, thanks so much for joining us. Always appreciate getting a couple of minutes of your time. On aur Agrana, he's a senior technology analyst for Bloomberg Intelligency and Mandeep saying, kind of lead our global technology research. It is a global technology research team. We've got analysts on the ground North America, Europe and most importantly Asia given where that is in the supply chain there. So on Aurono Mende, manage that business for us. What are you looking at?

And Ron, thanks so much for joining us. Always appreciate getting a couple of minutes of your time. On aur Agrana, he's a senior technology analyst for Bloomberg Intelligency and Mandeep saying, kind of lead our global technology research. It is a global technology research team. We've got analysts on the ground North America, Europe and most importantly Asia given where that is in the supply chain there. So on Aurono Mende, manage that business for us. What are you looking at?

I'm just really kind of I'm surprised because imagine Apple, You're a big company, trillon dollar market cap and the president said shift out of China, so you do that and you go to India and now they saying why are you in India? And I just don't want to be Tim Cook right now.

I'm just really kind of I'm surprised because imagine Apple, You're a big company, trillon dollar market cap and the president said shift out of China, so you do that and you go to India and now they saying why are you in India? And I just don't want to be Tim Cook right now.

Yeah, it could be a tough situation, but all companies are dealing with and trying to adapt. And what thing Tom Keen always says is companies adapt, whether it's a global pandemic, or whether it's trade tensions. Companies adapt, consumers adapt, and that's arguably what the tech industry and global trade will do as well.

Yeah, it could be a tough situation, but all companies are dealing with and trying to adapt. And what thing Tom Keen always says is companies adapt, whether it's a global pandemic, or whether it's trade tensions. Companies adapt, consumers adapt, and that's arguably what the tech industry and global trade will do as well.

This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal

This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal

YAHM

YAHM