November 28, 2025 • 34 mins
Join hosts Paul Sweeney and Vonnie Quinn as they discuss markets, the retail space and more on a special edition of the show following the Thanksgiving holiday. They speak with:
- Jeff Chang, President of Vest Financial
- Julie Bornstein, Daydream founder and CEO
- Anddria Clack-Rogers Varnado, Consumer Brands and Retail Expert, GM and Head of Kohler's Consumer Business
- Ryan Peterson, chairman and CEO of Flexport Inc
Bloomberg Intelligence, the research arm of Bloomberg L.P., has more than 400 professionals who provide in-depth analysis on more than 2,000 companies and 135 industries while considering strategic, equity and credit perspectives. BI also provides interactive data from over 500 independent contributors. It is available exclusively for Bloomberg Terminal subscribers.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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Speaker 2 (00:24):
On this Friday after Thanksgiving, Jeff Chang joins us. He's
a president of vest Financial. You know, it's great, Jeff
to have you here. I'm looking at the S and
P five hundred year to date up fifteen percent. I've
got the NASHTAC up twenty percent. Boy, that is solid performance.
I don't care where you are, who you are, What
do you do for twenty twenty six?
Speaker 3 (00:43):
Do you think?
Speaker 4 (00:45):
Yeah, great to be here.
Speaker 5 (00:46):
You know, I still think the biggest driver of growth
is going to be AI. It's also what's interesting now,
it's also going to be the greatest source of volatility.
I mean, you can even see today with the CMB
and data centers like this is really going to be
what's going to be driving the market overall into the
next year. I think also, you know, on a larger basis,
you're kind of weighing between kind of the macro factors, cooling,
(01:11):
inflation AI, but also you know, earnings catching up to
valuations what we've seen today, you know, with multiples being
on the higher end of the spectrum.
Speaker 6 (01:21):
Yeah, so this AI trade, I mean it's definitely changing.
Speaker 7 (01:23):
There's rotation involved, right, I mean, do you still stick
with the nvideos or do you start looking at some
of the other companies like the alphabets now that are
very involved with our TPUs.
Speaker 5 (01:33):
Yeah. I think there's definitely growing competition, but I think
when you look at Nvidia, it's still the bell weather
for AI hardware. You know, from there because when you
look at AI and the foundational parts of it, you're
looking at you know, compute, data centers, networking and cloud
and cooling. Isn't that as well? But I think when
(01:53):
you look at Nvidia, it's sits very kind of right
in the center as far as foundational parts of a
given that you know, one thing is that they've also
if you look at the numbers and four guidance has
been pretty strong. I do think where you start to
see a little bit of volatility is the idea that
competition is coming in. And so if you start to
look at you know, the likes of Microsoft really planting
(02:15):
the flag and cloud, and then like you said, Google
and Alphabet coming in into the AI chip space as well,
So we can't see some volatility there, but mostly the
dominance of Nvidia we'll see is going to be pretty
strong into twenty twenty six.
Speaker 2 (02:29):
Fanny, I think I'm oh for a lifetime trying to
call the top of a bubble.
Speaker 3 (02:33):
You know, I just never.
Speaker 6 (02:35):
Possibly won't even try doing that both.
Speaker 2 (02:37):
I was selling stock Boy cranking at IPO's March of
two thousand with a vengeance and no idea. Yeah, like
five minutes later it was over. So how do you
and how do investors in general? Jeff do you think?
How do you think about a bubble? And are we
in a bubble? Are we at the top of the bubble?
How do you think about that?
Speaker 5 (02:57):
I don't think as far as like you've probably seen
recently in the news of soft Bank and the like
Superior Teal selling their positions in Nvidia, I actually don't
think that's an indication of people getting out due to
a bubble. I think, sure, are the are the AI
stocks in hyper skillers expensive? Yeah? I could you can
make an argument for that, But when you're thinking about
(03:18):
AI and the idea that it might be a bubble.
This is very different than something like you know, if
you were to look at crypto, I would say that
this is a structural shift. Now, selectivity matters where you're
actually going to be in AI. But I think what
we're seeing is a generational shift as far as you know,
because AI is going to diffuse into mainstream as far
(03:39):
as anywhere from logistics to enterprise software, you know, healthcare,
defense is.
Speaker 4 (03:45):
Going to go everywhere there.
Speaker 5 (03:47):
I think where you're seeing a lot of people misunderstanding
is and when we've seen this story play out before,
is the idea that, okay, we've seen a huge amount
of investment into AI, uh you know, and you know,
hundreds of bill dollars, where as in the actual earnings
you're talking to twenty you know, twenty five thirty billion
in actual earnings. But this is where you start to
(04:09):
if you pull back the curtain a little bit. Keep
in mind your earnings is based off of accounting depreciation,
which tends to front load your expenses, and it doesn't
account for the earnings potential over the long term at
least seen this play out before. If you look at
going back, like fiber optics, there are billions of dollars
on front end investment, but we hadn't seen the trillions
(04:30):
of dollars of earnings potential that came out in many
years afterwards. So you know, like they always say, you know,
history doesn't repeat itself, but it does rhyme. I think
what you're seeing here is kind of the fiber optic
Internet type situation. We're really fundamentally changing, you know, how
we do business going forward.
Speaker 7 (04:45):
So you say, the foundation of long term AI is sound,
but where do the revenues come from? And what are
you projecting out in terms of revenue for these companies
that are spending a fortune on AI.
Speaker 5 (04:55):
Yeah, So it like they said, like selectivity matters. So
if you're talking about you know, the Microsoft metals, Metas,
the Googles, and the videos of the world, those they
are going to touch every part of AI, whether or not,
whether or not the earnings are going to be generated
from industrials, whether you know, industrial animation, whether it's going
(05:16):
to be generated from healthcare, they're going to be at
the center. Given that the core foundation being cloud, compute, data.
Speaker 4 (05:23):
Centers, and networking.
Speaker 5 (05:25):
So that's really where if you're looking as a long
term investor, who are where the earnings are more sustainably
and more higher probability of actually realization is.
Speaker 4 (05:37):
Being at kind of that center.
Speaker 5 (05:38):
I think where you start to get a little bit dicey,
is you know, trading on the hype, going for these
types of moonshot type trades where you're looking at small
cap stocks and maybe in small robotics or so on
and so forth. That's where you start to get a
little bit of dicey as far as will we see
that earnings realization to justify the valuations.
Speaker 2 (05:58):
You know, Vonnie, I remember the beginning of this whole
AI discussion maybe three years ago. Gene Monster from deep
Water Asset Management, to me is one of the best
technology analysts on Wall Street. He said, Hey, think about
a continuum of what's important. Let's put electricity like from
zero to one hundred. Electricity he puts it ninety five.
The Internet he puts at seventy AI he put it
(06:21):
like ninety right there. I mean that, So every time
I think about, jeez, maybe we're kind of in a ball.
Speaker 3 (06:26):
I know. He was so right. So, Jeff, where do
we go from here? What's the next way to play it.
Speaker 2 (06:32):
If I've played out my Nvidia trade, maybe I've played
out my Microsoft Microsoft trade on AI. What's the next
leg do you think for this whole investment thesis.
Speaker 5 (06:43):
Yeah, so this is very similar to let's say, in
nineteen ninety nine and two thousand in the tech boom,
that a lot of these pumply traded companies people were
taking kind of bets here and there. I actually believe
if you then really kind of fast forward the tape,
you'll notice that the real winners, the companies that really
want to kind of the Internet boom. The facebooks of
the world, the Netflixes of the world, the Airbnb's of
(07:06):
the world, they weren't around. They were in startup mode.
So I think a lot of folks that are trying
to play the AI trade, a lot of the facebooks
in AI of tomorrow are going to be in venture
They're going to be in early stage or middle stage
startups that are really being able to innovate, move fast,
kind of break things kind of mentality. I think, like
(07:28):
I said, the next wave, it's not publicly traded, especially
in the AI space. I think, like I said, the
foundational parts, like you know, the hyperscalers and the videos
of the world are publicly traded, but I think a
lot of the next wave of software and usage cases
across all industries are actually in private markets right now.
Speaker 7 (07:47):
All right, well, Jeff, we have to leave it there,
but thank you so much for joining us today. And
I know you're in Las Vegas, so if you're putting
anything putting on black today that is best Financial President
and co founder.
Speaker 3 (07:59):
Jeff, stay with us. We're from Bloomberg Intelligence coming.
Speaker 8 (08:02):
Up there for this.
Speaker 1 (08:07):
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.
Speaker 7 (08:21):
So let's bring in our next guest to talk a
little shopping. We have Julie Bornstein. She is the CEO
of Daydream, which is an AI agent for fashion retail
in particular.
Speaker 6 (08:30):
Julie, thank you so much for joining.
Speaker 7 (08:31):
First, just explain a little bit what a fashion agent
for retail can do.
Speaker 6 (08:35):
For me when I go online.
Speaker 9 (08:38):
Yes, well, ultimately the goal is to be a personal
stylist in your pocket.
Speaker 10 (08:42):
Today. What we do is we allow you to let.
Speaker 9 (08:45):
Us know what you're looking for using whatever you want to. Say,
you have a Christmas party with your office in a
bar in New York City, and we can help you
find what you're looking for. We make it easier to shop,
and we also allow you to post a picture and
then we can help you find something that looks like that.
Speaker 3 (09:05):
So I don't know where to go here, Julie.
Speaker 2 (09:08):
But of shoppers say they're using AI tools for holiday shopping.
That's according to a horse pull for MasterCard.
Speaker 3 (09:16):
Are retailers are they ready for that? They are they
trying to take advantage of that? How are they performing here?
Speaker 9 (09:22):
It's early days for the retailers, but they are starting
to learn how to both appear through some of these
different chat surfaces and they are also trying to figure
out how to use AI to make the customer experience
better on their sites. Some of them are doing interesting
things get up, H and M. They're also participating with
(09:42):
us Daydreams. So because we're sort of the first AI
shopping platform, they can partner with us and their show
up as customers are explaining what it is that they're
looking for in a whole new way. Julie.
Speaker 7 (09:54):
We always hear when it comes to AI that is
all about the prompt, right, So what are customers doing
and how should we prompt better?
Speaker 10 (10:02):
It's a great question.
Speaker 9 (10:03):
I mean we see prompts that are everything from I'm
going to a wedding and I want to wear a
pink dress, but all look like a cupcake too. I'm
going to a wedding and I want to wear a
revenge dress in the selt burn. So we have lots
of different kinds.
Speaker 6 (10:18):
I want to see what the hallucinations are for those
of users.
Speaker 10 (10:20):
Yeah, exactly what the cupcake dress looks like.
Speaker 9 (10:24):
People are very creative and the truth is that every
consumers are just learning how to prompt, and so part
of what we do is also give them ideas so
that if they're starting to look, and then once they
get used to it, people will write very long things
with very descriptive details of what they're looking for.
Speaker 2 (10:39):
I've seen some technology use some apps on the iPhone,
take a screenshot of something and then it brings you
right into a shopping environment.
Speaker 3 (10:49):
Talk to us about where that is right now, where
that's going.
Speaker 10 (10:53):
Yeah, that's going to just get better and better.
Speaker 9 (10:55):
I think the idea of being able to screenshot something
on the new iOS allows you to instantly you don't
even have to open an app bring up results from
any of the apps that you have already downloaded. So
if you have Daydream downloaded on your phone and you
screenshot anything from Instagram or as you're walking around and
you see someone wearing something you like, you have the
(11:16):
ability instantly to pull up the results that are closest
to that product, and if that product still exists, you
can get that exact product.
Speaker 10 (11:24):
So it's pretty cool and it's a pretty quick way.
Speaker 9 (11:26):
And what we're seeing is younger generation gen Z is
very higher use case for that. They're just used to
being able to snap anything and then be able to
find what they're looking for.
Speaker 7 (11:38):
So if I screenshot something, it sends a whole load
of information into the background of my phone.
Speaker 6 (11:44):
Is that right?
Speaker 7 (11:45):
That sounds a little dangerous to me. It means I
should probably stop screenshotting things.
Speaker 9 (11:49):
No, it's really if you choose to then use the
search mechanism for it. So in general, screenshots are not
you know, nothing's happening with them until you decide to
do something with that screenshot. So you know, if you're
looking for a product, it's pretty safe.
Speaker 2 (12:04):
So all right, how about this warm but not bulky
coat under three hundred dollars. Where is the AI thingamajig
going to take me?
Speaker 9 (12:16):
Well, on daydream, it's going to take you to a
set of results that match that kind of query, and
then we'll see lots of results from around the web
and we will once you find what you're looking for,
you link out to the brand or the retailer that
sells that product. So similar to the way Google works,
we're basically sort of a search and discovery platform that
(12:36):
then helps you find the retailer to buy from.
Speaker 2 (12:39):
All right, well, in the world of search, it's search
optimization type thing. Is that is there a similar type
thing here in the world of AI.
Speaker 9 (12:48):
So it can depend on what the business model is.
In our case, we are totally focused on finding you
the best product for you that matches both the query
and your personal preferences as we learn about you, and
so it's not an issue of whatever you know, whoever
pays the most gets the way to show you what
their product is. But in some cases, you know, there's
(13:10):
an ad base model.
Speaker 10 (13:11):
Ours is not.
Speaker 7 (13:12):
Julie Open ai on Amazon both made headlines this week
with shopping launches. How are their products different to yours?
Are they compatible to use together or how are you
dealing with that competition.
Speaker 10 (13:23):
We're really excited about it.
Speaker 9 (13:24):
I think in general shopping, you know, this is the
first season where AI is really going to improve the
shopping experience, and it's only going to get better. I
think the fact that they're both doing this is very
validating to us. They're separate, but ours is totally focused
on fashion, and so if you go to either of
those platforms, you'll find that you were kind of generally
across all categories, but a little bit less focused on
(13:47):
a single category. And so shopping and fashion is so
nuanced that, you know, daydream is better for that.
Speaker 2 (13:54):
So, Julie, what are your clients telling you here about
this holiday shopping season. What's the level of optimism because
there are a lot of economic cross currents out there.
Speaker 9 (14:03):
Yeah, that really are I think that this year is
going to be bigger than last year, but probably not
by a huge amount. What we're seeing is that there's
a lot of excitement for all of the sales that
are going on this week for Cyber Week, and so
what we have is a daydream broadcast on It's a
broadcast channel on Instagram where you can actually see all
(14:24):
the brands and all of the offers that they're giving you.
What we know is that a lot of people are
saving the things that they want to buy and coming
back today to go see if they're on sale.
Speaker 7 (14:35):
You have a lot of experience raising money and bringing
companies to market and so on. You sold your previous
company to Pinterest actually, and you've been on the boards
of you know, Sweet Green, Redfin Weight Watchers, so much experience.
What is the environment like now for consumer companies and
raising money.
Speaker 10 (14:52):
It's interesting.
Speaker 9 (14:53):
It's a very strange environment because the role of AI
has kind of thrown everything off, and so I think
every everybody who has an interesting angle with AI is
definitely able to get conversations going. I think that if
you're not doing something with AI right now, it needs
to be a very unique proposition. It is a very
(15:14):
AI focused fundraising environment. Doesn't mean that there aren't other
ideas that are great and out there, but certainly the
fact is that AI can help pretty much every aspect
of building a business right now, and so you want
to be able to show how you have an advantage
leveraging AI that other people don't have, so you have
to figure out what your moat is.
Speaker 7 (15:33):
Julie is partially the reason it's such an AI type
of fundraising environment because all these dollar donors are invested
in AI themselves.
Speaker 9 (15:46):
No, I think it's more because everyone believes it's going
to shape the future, and it's still early, so it's
hard to know exactly how. But if you're not actually
taking advantage of it, it seems like a really missed
opportunity because it will change to the way everyone does work,
from the way employees work, to the way products are made,
to the way supply chains run, to the way consumers
(16:07):
experience a HI.
Speaker 2 (16:09):
So what's the next step here for AI? Do you think, Julie,
is there another natural progression?
Speaker 9 (16:15):
I think that there will be a lot of evolutions
in the models. I also think we'll start to see
over the next year or two a lot more consumer
experience is changing. So we haven't seen a lot of
that yet other than going directly to some of these
new chatbots.
Speaker 10 (16:30):
But if you think about.
Speaker 9 (16:31):
All the things you do in your day to day life,
things will get a little bit smoother and smarter. As
a result of AI, and there will be new businesses
that come along, like Daydream that just make shopping, for example, easier, smoother,
and more personal.
Speaker 2 (16:45):
All right, great stuff, Thank you so much. We really
appreciate Julie Bornstein. She's the founder and CEO at Daydream.
Speaker 3 (16:52):
And stay with us. More from Bloomberg Intelligence coming up
after this.
Speaker 1 (17:00):
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 Now.
Speaker 2 (17:14):
For more on the state of the consumer on this
Black Friday, is Andrea Barnardo, a seasoned business leader and
board director in consumer brands and retail Andrew, thanks so
much for joining us here. What's the mood of retailers
here going into this holiday shopping season? There certainly are
a lot of economic crosswinds out there.
Speaker 11 (17:35):
The retailer is actually quite optimistic, especially compared to where
they were last year. At the beginning of this year,
we thought tariffs and tax cuts would drive consumer behavior,
and while tariffs still remain a big concern, consumers are
also absorbing something much more subtle. The ripple effects of
a shutdown, fewer government services, a cold housing market, and
(17:56):
large company layoffs. So frankly, the eccount of feels contradictory.
But spending is holding, as we've just seen in Q
the Q three earnings reports, they are holding. Households are
more cautious, but customers are still spending in a really
selective way.
Speaker 6 (18:13):
What are they buying.
Speaker 7 (18:14):
Andrea Deloyde is seeing a lower average spend for the
Black Friday Cyber Monday. But you know, these statistics sometimes
can be misleading in the sense that people will continue
to spend or they've already started spending.
Speaker 11 (18:25):
That's such a great question because when we talk about
the contradiction of seeing spending the customers being more selective,
I like to define it as the customer isn't stepping back,
they're really reprioritizing and they're doing a purposeful reallocation. So
when you think about what they're spending on, they're kind
of three big shifts that are happening. One, customers are
moving towards intelligent value. They're looking for things that have function,
(18:49):
meaning utility, longevity, so they can feel like they're really
getting a return on their investment.
Speaker 4 (18:55):
Two their consolidating purchases.
Speaker 11 (18:58):
And so one of the interesting things we've seen is
in some of these QB earnings reports.
Speaker 4 (19:03):
Is where some of the values are going down.
Speaker 11 (19:05):
We are seeing higher ticket prices and higher order values
on top of lower order numbers. And so this means
customers are consolidating purchases, they're sticking with fewer retailers, They're
leaning heavily into loyalty programs and also convenience. And then finally,
customers are shopping to reduce stress.
Speaker 4 (19:24):
They're choosing products.
Speaker 11 (19:25):
And services that save time, that simplify life and add comfort.
Speaker 3 (19:30):
How about availability inventory?
Speaker 2 (19:32):
If I'm going to go out and get my kid
the Gi Joe with the Kung Fu grip, is it
going to be in the stores?
Speaker 4 (19:38):
It will be.
Speaker 11 (19:39):
That's one of the really interesting things that happened this
year with tariffs, a lot of companies pulled.
Speaker 4 (19:44):
Their inventory forward.
Speaker 11 (19:46):
So whether you were planning on a shorter cycle as usual,
they actually said, let's pull inventory for the next year
so we can get goods into stores and online. So yes,
hopefully your kid's toy will be their in store, and
if not, I can tell you. With the improvement in
AI and technology, they are surely going to offer you
something that they think is just as compatible.
Speaker 7 (20:08):
I was speaking to the CEO of a toy company
just on Wednesday, I guess, and he was saying that
a toy that was maybe twenty dollars before the pandemic
is now forty dollars for various reasons. So there was
a pandemic right the supply chain snawfoods, and then inflation
thanks to that, and then inflation from you know, fiscal
spending and so on, and now we're right up to
(20:28):
almost double what it was before.
Speaker 6 (20:30):
Are we seeing that? Are we seeing that kind of
inflation across the board?
Speaker 11 (20:34):
Yes, we are, and it's happening in more categories than other.
So you're mentioning toys, disposables, groceries. We are seeing that
inflation across the board. And to your point, it has
to do with the general inflation. It has to do
with terraiffs because while companies have absorbed some of the
tariff costs, many of them have actually passed.
Speaker 4 (20:52):
It right on to consumers.
Speaker 11 (20:53):
And so this is why consumers are being much more
selective about where they purchase, and related to that, to
trade down or explore alternative options. If it's a commodity item,
they might actually say, let me go explore this other
brand that might be a little bit cheaper, or buy
the generic version of that to help capture some of
that value back.
Speaker 2 (21:13):
What's promotional environment out there these days? Andrea, Am I
going to get deals when I go to the store,
assuming I actually do go shopping.
Speaker 11 (21:22):
You won't get deals. They will be very selective deals.
So as retailers and businesses are looking at their inventory,
they want to be much more precise about what they're promoting.
So they're going to be focused on where do they
have a lot of inventory, what can they replace fast,
what's going discontinued, where.
Speaker 4 (21:39):
Are you going to get that value?
Speaker 11 (21:41):
And even in some areas, they are going to price
promote on items where they know you will add on.
So you won't find full deals across the board. You
won't see fifty percent off side wide as much as
you used to, But what you will see is on
specific categories they're certainly discounting, but at the same time
they will bemting those discounts because they know this is
(22:02):
the holiday season, they know customers are focused on value,
so they're still going to put those select deals right
in front of you, So it feels like the same
velocity as it did in previous years.
Speaker 7 (22:11):
What's popular when it comes to fashion and retail and
department store retail in that sense. Coles for example, reporting
the other day and their strategy under the previous CEO
who was ousted was to focus on fragrances and petits,
and that strategy seems to be working even for the
incoming CEO who's now been made permanent. But it struck
me as odd that suddenly fragrances are very popular.
Speaker 11 (22:34):
They are, and fragrances have to do with that longevity
and value. Customers want something that they know they can
use over time, and so what you'll see is right now,
you'll see purchases in what I call functional tech. So
if you need a new laptop, if you need a TV,
things that you need that will have a long term
value to you, also fragrances and well, and it's something
where you feel like you'll get your return, it will
(22:56):
last over a period of time as well as you
will feel good about yourself. And then finally, there are
other areas in beauty and in luxury, and many of
these retailers, especially those that have multi brand portfolios. We
have seen their luxury brands, whether it's home furnishings or apparel,
actually outperform. And that still goes to the value, which
(23:16):
you don't often see value in luxury. But what happens
is customers think, Okay, at least if nothing else, I
have longevity and I have resale value.
Speaker 2 (23:25):
Hey, Andrew, you say that share of wallet is the
real battle this season, not just traffic.
Speaker 11 (23:30):
What do you mean by that, Well, what we're seeing
is that with these average order values going up, what
customers want is they want to go to a one
stop shop. And so where retailers are competing is they're
adding services, they're adding shipping, they're making sure they're inventory
and logistics are there.
Speaker 4 (23:46):
So that you can add more to your purchase in
one stop.
Speaker 11 (23:50):
One of the big opportunities that I'm seeing is bundling.
We've often heard about bundling when it comes to travel
and dieting, but when it comes to bundling, if you
were able to to talk about a gift set, or
add the pants with the shirt, or combine a whole
set of items, customers always see that as an opportunity.
And so you see that retailers are using that to
increase their ticket values right now.
Speaker 7 (24:12):
Yeah, I love all the words associated with a bundling
and a whole, yeah and unlox my whole today. I
love getting holes, but I never I never seem to
feel to afford them. Andrea, thank you so much for
joining us today. A fun conversation there, and a serious
conversation too with Andrea Vornado, much appreciated consumer brands and
retail experts.
Speaker 3 (24:31):
Stay with us or from Bloomberg Intelligence coming.
Speaker 1 (24:33):
Up there for this, 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.
Speaker 7 (24:52):
Let's talk something that maybe isn't going to be so
calm though in the coming weeks, tariffs taking their toll
on consumers and companies alike. Our next guest says tariffs
are now one of the biggest variables in retail margins.
Joining us to discuss as Ryan Peterson, founder and CEO
of flex Sport, a leader in global supply chain technology. Ryan,
thank you so much for joining I would have thought
(25:13):
that things would have calmed down a little bit. We
have at least some kind of certainty, albeit we're waiting
for a Scolds decision, but we have some kind of
certainty over tariffs at the moment.
Speaker 6 (25:22):
What are supply chains like? Is there's still chaos out
there or are we.
Speaker 7 (25:25):
Getting to some kind of ability to see the future.
Speaker 8 (25:31):
Somewhere in between.
Speaker 12 (25:31):
I think people are getting more used to the fact
that you have to operate and a lot of uncertainty,
and brands are figuring out how to be agile about
it and a lot of different strategies where.
Speaker 8 (25:39):
They can do that.
Speaker 12 (25:40):
But there's still a lot of you mentioned scotis that
that big core case is coming. People are hoping and
praying for a refund and it's actually you know, there's
a lot of variables here. You have to figure out
how much of the duties, how much of the tariffs
do you want to pass through to your customer. Goldman
Sachs reporting about thirty seven percent of the duties are
getting passed through, with nine percent getting forced on the supplier,
(26:04):
and the balance is just hitting earnings for these companies.
So there's that and then even just calculating the duties
is harder than ever before the nature of the stacking tariffs,
where there's all these different tariffs, they just.
Speaker 8 (26:16):
Keep getting layered on each other.
Speaker 12 (26:18):
We've seen more traffic to our tariff simulator on our
website than to the overall website.
Speaker 2 (26:24):
So it's interesting, Ryan, do we think that companies are
going to try to push more of those costs through
going forward as opposed to absorbing them into their P
and L statement.
Speaker 12 (26:38):
You only have two choices kind of. I mean, I
get you can renegotiate things with your factory. That's not
a choice, that's something you're going to always try to do.
And then you have two choices. It's do you pass
it through and or do you eat the costs?
Speaker 8 (26:50):
And the good businesses will pass it through.
Speaker 12 (26:52):
I think that's you know, one of the hallmarks of
a good business is your ability to pass through price increases,
but a lot of companies can't. So may not even
be a choice as much as you'd like to. The
moment you raise your prices, you start to lose demand.
So yeah, then longer term you have some more options
around moving supply chains, but it's become so difficult because
you know it's not just hey, exit China, move your
(27:13):
factory somewhere else. Tariffs on India are just about the
same as China, and they might pop up anywhere in
the world that with the way things have been.
Speaker 7 (27:19):
Going, ryan, are we done with all the avoiding certain
areas because you know, there's a drought in one canal,
and there's war and potentially in another canal, and there's
you know, terrorism in another part of the globe, or you.
Speaker 6 (27:32):
Know, are we back to everyone can ship everywhere?
Speaker 12 (27:37):
I know we're definitely not back to normalcy there. And
the container volumes going through the Suez Canal are still
down about seventy five percent since the HOUTI started to
cut that channel off at the end of a couple
of years ago, and actually just last week created a
poly market on this. Now you can bet on anything
(28:00):
out bet on whether when traffic will return to normal
through the Suez Canal. It's not very it's pretty thinly
traded right now. We'll see if we get some more
signal out of that. But there are some rumors that
will start to come back to life next year and
ships will return, but for now they're going all the
way around Africa and polymarket has me at thirty seven
percent to return in Key one. I think that's free
(28:20):
money I'm taking. That won't happen side of that shore.
Speaker 6 (28:23):
Hey, we're ignoring that part of the conversation. What about
the Panama Canal, Well, Panama's been.
Speaker 8 (28:28):
There ongoing thing ever since they re engineered it.
Speaker 12 (28:30):
So they widened the canal in back in twenty fifteen.
And you know, the Panama Canal runs on fresh water,
so if you widen the canal, more fresh water flows
out of the canal into the ocean than when it
was narrower. And so ever since they've done that with
the same amount of rain, you've now had these periodic
moments where there's just not enough water to operate the canal.
(28:51):
We're currently in a normal period, but a couple of
two years ago it was really bad. They could only
operate about two thirds capacity on that. That's going to
keep coming back unless they spend tens of billions of
dollars re engineering the water flows in the canal, which
I don't I don't think they're gonna be able to do.
Speaker 3 (29:06):
That's on my bucket list to go through the Panama Canal,
it really is.
Speaker 7 (29:10):
I think you're containership wisely then, Paul, because you're not
getting on all of them.
Speaker 2 (29:13):
I know exactly, but I'm ready to do that. Talk
to us about inventory levels, Ryan, I mean, are retailers
are they stocking their usual amount of retail inventory or
are they going a little bit light or what are
they doing?
Speaker 8 (29:27):
No, you could argue they're going the opposite.
Speaker 12 (29:29):
They're going heavy on us here because because not so
much because of the uncertainty of demand, although that always exists,
but because of the tariffs.
Speaker 8 (29:37):
So everybody front loaded.
Speaker 12 (29:38):
You know, these reciprocal tariffs on restive world ended August
twenty ninth, and you had a while, a couple of
months to know that that was coming, and so everybody
brought all their inventory in early. And what it's going
to look like is you can never really predict what's
going to be a hit product and what's not. And
so you're gonna have You're gonna have stock outs on
certain hit products where because it's not much hard to replenish,
(30:00):
you're paying higher duties, and so you're gonna have stockouts
on some of the hit products. And then I suspect
you're going to have quite a bit of overhead of
products that didn't move, and you'll probably see some good
deals coming.
Speaker 8 (30:12):
In the beginning of next year.
Speaker 12 (30:14):
I mean, we may see some right now with Black Friday,
but usually these things play out into the Q one
period once the holidays.
Speaker 8 (30:20):
Are over all.
Speaker 2 (30:21):
Right, Fannie, here's the book recommendation of the day for
you about the Panama Canal, The Path between the Seas
David McCullough.
Speaker 3 (30:28):
Phenomenal book about the history of the.
Speaker 6 (30:30):
Panama and a great writer. I will definitely read that.
Speaker 7 (30:32):
I'm on my twenty second book of the year, which
I guess is good, but.
Speaker 6 (30:37):
So Ryan.
Speaker 7 (30:38):
You know, in terms of shipping companies and em and A,
there was plenty of speculation that ZIM, for example, was
going to.
Speaker 6 (30:47):
Get bought out or whatever.
Speaker 7 (30:48):
That happened a couple of times this year, and some
of these shipping companies have been really having a hard
time of it trying to deal with all of this uncertainty.
Do you have any forecast for us and what we
might see maybe next year in terms of m and
A and consolidation.
Speaker 8 (31:00):
No, I don't really know. We'll see it.
Speaker 12 (31:04):
You know, we see a few of the big companies
executing that strategy. DSV is the biggest right forwarder in
the world. They've been the most inquisitive. But they just
bought dB Schenker and that deals closed, and.
Speaker 8 (31:15):
That is a lot to digest.
Speaker 12 (31:16):
They're going to be you know, it basically doubles their
number of offices around the world, almost doubles their volumes.
So the main acquire is probably off the table for
the next couple of years as they two on that one,
and we'll see. There's you know, there's been a lot
of consolidation. When I started Flexport, there were twenty three
ocean carriers, major ones were down to eleven, and I
(31:38):
don't know there's there may be some mergers, but they've
all in the past that was done out of financial
weakness where they were all kind of struggling.
Speaker 8 (31:46):
Well, they've all put a lot of money on their
balance sheet.
Speaker 12 (31:48):
Over the last few years when the rates were going crazy,
So there's not going to be a lot of the
forced m and a that we saw that drove that consolidation.
We'll see though, maybe there's some interesting strategic opportunities.
Speaker 2 (31:58):
Well, we do have little kasa or pending consolidation in
the railroad industry. Norfolk Southern and Union Pacific do you
think shippers want a transcontinental railroad, Ryan, probably.
Speaker 12 (32:09):
But I don't think they just want one. You get
monopoly powers. They'd like to see more than one. And
that's the challenge. We've only got four railroads in the US,
and if you merged the two and you got two
on the west and two on the east, so you
could end up in a position where you've got two
end to end railroads crossing the country.
Speaker 8 (32:25):
I mean, it makes a lot of sense.
Speaker 12 (32:26):
It's sort of silly to transfer to a different railroad
just because you're crossing the country. But you will see
probably who knows how we'll play out, if the efficiencies
are passed through to the brands, to the people that
are shipping cargo or not, or does it get absorbed
in sort of oligopoly pricing.
Speaker 7 (32:42):
Ryan, When it comes to the different modes of transportation,
so poor its trains, you know, rail shipping, and even
at one point people were flying their cargoes right for
a huge premia. Who are facing the highest premia or
is it the same for everybody across the board?
Speaker 3 (33:01):
Not sure?
Speaker 8 (33:02):
Answer the question in terms of what.
Speaker 7 (33:04):
If you're booking travel for your inventory, does it matter
if you're a toy retailer, or if you're you know,
a clothing retailer, or if you ship furniture, is it
the same price or does it depend on ways?
Speaker 6 (33:18):
And how does that all work? Do you bid on it?
Speaker 7 (33:20):
Is it an auction?
Speaker 12 (33:21):
Your pricing will be about the same no matter what
you're shipping these days, that's the beauty of the container.
Nobody cares what's inside of it as long as it
doesn't you know, catch on fire or anything. But but
the tariffs will be quite different based on the different
uh based on the value of the goods and what's
being shipped. And so there you see big category shifts
where certain products are just really hard.
Speaker 8 (33:42):
Hitting others are totally xempted.
Speaker 12 (33:44):
And the other factor here is if shipping prices go
way up, like a container of furniture only holds about
eight couches something, so a high shipping price there, all right,
hits the pretty hard.
Speaker 2 (33:55):
Rough Leave it there, Ryan, thanks so much for joining
us at Ryan Peterson Founder and see you a flexport.
Speaker 1 (33:59):
This is the Boomberg Intelligence podcast, available on Apple, Spotify,
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or watch us live on YouTube.
Speaker 2 (00:24):
On this Friday after Thanksgiving, Jeff Chang joins us. He's
a president of vest Financial. You know, it's great, Jeff
to have you here. I'm looking at the S and
P five hundred year to date up fifteen percent. I've
got the NASHTAC up twenty percent. Boy, that is solid performance.
I don't care where you are, who you are, What
do you do for twenty twenty six?
Speaker 3 (00:43):
Do you think?
Speaker 4 (00:45):
Yeah, great to be here.
Speaker 5 (00:46):
You know, I still think the biggest driver of growth
is going to be AI. It's also what's interesting now,
it's also going to be the greatest source of volatility.
I mean, you can even see today with the CMB
and data centers like this is really going to be
what's going to be driving the market overall into the
next year. I think also, you know, on a larger basis,
you're kind of weighing between kind of the macro factors, cooling,
(01:11):
inflation AI, but also you know, earnings catching up to
valuations what we've seen today, you know, with multiples being
on the higher end of the spectrum.
Speaker 6 (01:21):
Yeah, so this AI trade, I mean it's definitely changing.
Speaker 7 (01:23):
There's rotation involved, right, I mean, do you still stick
with the nvideos or do you start looking at some
of the other companies like the alphabets now that are
very involved with our TPUs.
Speaker 5 (01:33):
Yeah. I think there's definitely growing competition, but I think
when you look at Nvidia, it's still the bell weather
for AI hardware. You know, from there because when you
look at AI and the foundational parts of it, you're
looking at you know, compute, data centers, networking and cloud
and cooling. Isn't that as well? But I think when
(01:53):
you look at Nvidia, it's sits very kind of right
in the center as far as foundational parts of a
given that you know, one thing is that they've also
if you look at the numbers and four guidance has
been pretty strong. I do think where you start to
see a little bit of volatility is the idea that
competition is coming in. And so if you start to
look at you know, the likes of Microsoft really planting
(02:15):
the flag and cloud, and then like you said, Google
and Alphabet coming in into the AI chip space as well,
So we can't see some volatility there, but mostly the
dominance of Nvidia we'll see is going to be pretty
strong into twenty twenty six.
Speaker 2 (02:29):
Fanny, I think I'm oh for a lifetime trying to
call the top of a bubble.
Speaker 3 (02:33):
You know, I just never.
Speaker 6 (02:35):
Possibly won't even try doing that both.
Speaker 2 (02:37):
I was selling stock Boy cranking at IPO's March of
two thousand with a vengeance and no idea. Yeah, like
five minutes later it was over. So how do you
and how do investors in general? Jeff do you think?
How do you think about a bubble? And are we
in a bubble? Are we at the top of the bubble?
How do you think about that?
Speaker 5 (02:57):
I don't think as far as like you've probably seen
recently in the news of soft Bank and the like
Superior Teal selling their positions in Nvidia, I actually don't
think that's an indication of people getting out due to
a bubble. I think, sure, are the are the AI
stocks in hyper skillers expensive? Yeah? I could you can
make an argument for that, But when you're thinking about
(03:18):
AI and the idea that it might be a bubble.
This is very different than something like you know, if
you were to look at crypto, I would say that
this is a structural shift. Now, selectivity matters where you're
actually going to be in AI. But I think what
we're seeing is a generational shift as far as you know,
because AI is going to diffuse into mainstream as far
(03:39):
as anywhere from logistics to enterprise software, you know, healthcare,
defense is.
Speaker 4 (03:45):
Going to go everywhere there.
Speaker 5 (03:47):
I think where you're seeing a lot of people misunderstanding
is and when we've seen this story play out before,
is the idea that, okay, we've seen a huge amount
of investment into AI, uh you know, and you know,
hundreds of bill dollars, where as in the actual earnings
you're talking to twenty you know, twenty five thirty billion
in actual earnings. But this is where you start to
(04:09):
if you pull back the curtain a little bit. Keep
in mind your earnings is based off of accounting depreciation,
which tends to front load your expenses, and it doesn't
account for the earnings potential over the long term at
least seen this play out before. If you look at
going back, like fiber optics, there are billions of dollars
on front end investment, but we hadn't seen the trillions
(04:30):
of dollars of earnings potential that came out in many
years afterwards. So you know, like they always say, you know,
history doesn't repeat itself, but it does rhyme. I think
what you're seeing here is kind of the fiber optic
Internet type situation. We're really fundamentally changing, you know, how
we do business going forward.
Speaker 7 (04:45):
So you say, the foundation of long term AI is sound,
but where do the revenues come from? And what are
you projecting out in terms of revenue for these companies
that are spending a fortune on AI.
Speaker 5 (04:55):
Yeah, So it like they said, like selectivity matters. So
if you're talking about you know, the Microsoft metals, Metas,
the Googles, and the videos of the world, those they
are going to touch every part of AI, whether or not,
whether or not the earnings are going to be generated
from industrials, whether you know, industrial animation, whether it's going
(05:16):
to be generated from healthcare, they're going to be at
the center. Given that the core foundation being cloud, compute, data.
Speaker 4 (05:23):
Centers, and networking.
Speaker 5 (05:25):
So that's really where if you're looking as a long
term investor, who are where the earnings are more sustainably
and more higher probability of actually realization is.
Speaker 4 (05:37):
Being at kind of that center.
Speaker 5 (05:38):
I think where you start to get a little bit dicey,
is you know, trading on the hype, going for these
types of moonshot type trades where you're looking at small
cap stocks and maybe in small robotics or so on
and so forth. That's where you start to get a
little bit of dicey as far as will we see
that earnings realization to justify the valuations.
Speaker 2 (05:58):
You know, Vonnie, I remember the beginning of this whole
AI discussion maybe three years ago. Gene Monster from deep
Water Asset Management, to me is one of the best
technology analysts on Wall Street. He said, Hey, think about
a continuum of what's important. Let's put electricity like from
zero to one hundred. Electricity he puts it ninety five.
The Internet he puts at seventy AI he put it
(06:21):
like ninety right there. I mean that, So every time
I think about, jeez, maybe we're kind of in a ball.
Speaker 3 (06:26):
I know. He was so right. So, Jeff, where do
we go from here? What's the next way to play it.
Speaker 2 (06:32):
If I've played out my Nvidia trade, maybe I've played
out my Microsoft Microsoft trade on AI. What's the next
leg do you think for this whole investment thesis.
Speaker 5 (06:43):
Yeah, so this is very similar to let's say, in
nineteen ninety nine and two thousand in the tech boom,
that a lot of these pumply traded companies people were
taking kind of bets here and there. I actually believe
if you then really kind of fast forward the tape,
you'll notice that the real winners, the companies that really
want to kind of the Internet boom. The facebooks of
the world, the Netflixes of the world, the Airbnb's of
(07:06):
the world, they weren't around. They were in startup mode.
So I think a lot of folks that are trying
to play the AI trade, a lot of the facebooks
in AI of tomorrow are going to be in venture
They're going to be in early stage or middle stage
startups that are really being able to innovate, move fast,
kind of break things kind of mentality. I think, like
(07:28):
I said, the next wave, it's not publicly traded, especially
in the AI space. I think, like I said, the
foundational parts, like you know, the hyperscalers and the videos
of the world are publicly traded, but I think a
lot of the next wave of software and usage cases
across all industries are actually in private markets right now.
Speaker 7 (07:47):
All right, well, Jeff, we have to leave it there,
but thank you so much for joining us today. And
I know you're in Las Vegas, so if you're putting
anything putting on black today that is best Financial President
and co founder.
Speaker 3 (07:59):
Jeff, stay with us. We're from Bloomberg Intelligence coming.
Speaker 8 (08:02):
Up there for this.
Speaker 1 (08:07):
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.
Speaker 7 (08:21):
So let's bring in our next guest to talk a
little shopping. We have Julie Bornstein. She is the CEO
of Daydream, which is an AI agent for fashion retail
in particular.
Speaker 6 (08:30):
Julie, thank you so much for joining.
Speaker 7 (08:31):
First, just explain a little bit what a fashion agent
for retail can do.
Speaker 6 (08:35):
For me when I go online.
Speaker 9 (08:38):
Yes, well, ultimately the goal is to be a personal
stylist in your pocket.
Speaker 10 (08:42):
Today. What we do is we allow you to let.
Speaker 9 (08:45):
Us know what you're looking for using whatever you want to. Say,
you have a Christmas party with your office in a
bar in New York City, and we can help you
find what you're looking for. We make it easier to shop,
and we also allow you to post a picture and
then we can help you find something that looks like that.
Speaker 3 (09:05):
So I don't know where to go here, Julie.
Speaker 2 (09:08):
But of shoppers say they're using AI tools for holiday shopping.
That's according to a horse pull for MasterCard.
Speaker 3 (09:16):
Are retailers are they ready for that? They are they
trying to take advantage of that? How are they performing here?
Speaker 9 (09:22):
It's early days for the retailers, but they are starting
to learn how to both appear through some of these
different chat surfaces and they are also trying to figure
out how to use AI to make the customer experience
better on their sites. Some of them are doing interesting
things get up, H and M. They're also participating with
(09:42):
us Daydreams. So because we're sort of the first AI
shopping platform, they can partner with us and their show
up as customers are explaining what it is that they're
looking for in a whole new way. Julie.
Speaker 7 (09:54):
We always hear when it comes to AI that is
all about the prompt, right, So what are customers doing
and how should we prompt better?
Speaker 10 (10:02):
It's a great question.
Speaker 9 (10:03):
I mean we see prompts that are everything from I'm
going to a wedding and I want to wear a
pink dress, but all look like a cupcake too. I'm
going to a wedding and I want to wear a
revenge dress in the selt burn. So we have lots
of different kinds.
Speaker 6 (10:18):
I want to see what the hallucinations are for those
of users.
Speaker 10 (10:20):
Yeah, exactly what the cupcake dress looks like.
Speaker 9 (10:24):
People are very creative and the truth is that every
consumers are just learning how to prompt, and so part
of what we do is also give them ideas so
that if they're starting to look, and then once they
get used to it, people will write very long things
with very descriptive details of what they're looking for.
Speaker 2 (10:39):
I've seen some technology use some apps on the iPhone,
take a screenshot of something and then it brings you
right into a shopping environment.
Speaker 3 (10:49):
Talk to us about where that is right now, where
that's going.
Speaker 10 (10:53):
Yeah, that's going to just get better and better.
Speaker 9 (10:55):
I think the idea of being able to screenshot something
on the new iOS allows you to instantly you don't
even have to open an app bring up results from
any of the apps that you have already downloaded. So
if you have Daydream downloaded on your phone and you
screenshot anything from Instagram or as you're walking around and
you see someone wearing something you like, you have the
(11:16):
ability instantly to pull up the results that are closest
to that product, and if that product still exists, you
can get that exact product.
Speaker 10 (11:24):
So it's pretty cool and it's a pretty quick way.
Speaker 9 (11:26):
And what we're seeing is younger generation gen Z is
very higher use case for that. They're just used to
being able to snap anything and then be able to
find what they're looking for.
Speaker 7 (11:38):
So if I screenshot something, it sends a whole load
of information into the background of my phone.
Speaker 6 (11:44):
Is that right?
Speaker 7 (11:45):
That sounds a little dangerous to me. It means I
should probably stop screenshotting things.
Speaker 9 (11:49):
No, it's really if you choose to then use the
search mechanism for it. So in general, screenshots are not
you know, nothing's happening with them until you decide to
do something with that screenshot. So you know, if you're
looking for a product, it's pretty safe.
Speaker 2 (12:04):
So all right, how about this warm but not bulky
coat under three hundred dollars. Where is the AI thingamajig
going to take me?
Speaker 9 (12:16):
Well, on daydream, it's going to take you to a
set of results that match that kind of query, and
then we'll see lots of results from around the web
and we will once you find what you're looking for,
you link out to the brand or the retailer that
sells that product. So similar to the way Google works,
we're basically sort of a search and discovery platform that
(12:36):
then helps you find the retailer to buy from.
Speaker 2 (12:39):
All right, well, in the world of search, it's search
optimization type thing. Is that is there a similar type
thing here in the world of AI.
Speaker 9 (12:48):
So it can depend on what the business model is.
In our case, we are totally focused on finding you
the best product for you that matches both the query
and your personal preferences as we learn about you, and
so it's not an issue of whatever you know, whoever
pays the most gets the way to show you what
their product is. But in some cases, you know, there's
(13:10):
an ad base model.
Speaker 10 (13:11):
Ours is not.
Speaker 7 (13:12):
Julie Open ai on Amazon both made headlines this week
with shopping launches. How are their products different to yours?
Are they compatible to use together or how are you
dealing with that competition.
Speaker 10 (13:23):
We're really excited about it.
Speaker 9 (13:24):
I think in general shopping, you know, this is the
first season where AI is really going to improve the
shopping experience, and it's only going to get better. I
think the fact that they're both doing this is very
validating to us. They're separate, but ours is totally focused
on fashion, and so if you go to either of
those platforms, you'll find that you were kind of generally
across all categories, but a little bit less focused on
(13:47):
a single category. And so shopping and fashion is so
nuanced that, you know, daydream is better for that.
Speaker 2 (13:54):
So, Julie, what are your clients telling you here about
this holiday shopping season. What's the level of optimism because
there are a lot of economic cross currents out there.
Speaker 9 (14:03):
Yeah, that really are I think that this year is
going to be bigger than last year, but probably not
by a huge amount. What we're seeing is that there's
a lot of excitement for all of the sales that
are going on this week for Cyber Week, and so
what we have is a daydream broadcast on It's a
broadcast channel on Instagram where you can actually see all
(14:24):
the brands and all of the offers that they're giving you.
What we know is that a lot of people are
saving the things that they want to buy and coming
back today to go see if they're on sale.
Speaker 7 (14:35):
You have a lot of experience raising money and bringing
companies to market and so on. You sold your previous
company to Pinterest actually, and you've been on the boards
of you know, Sweet Green, Redfin Weight Watchers, so much experience.
What is the environment like now for consumer companies and
raising money.
Speaker 10 (14:52):
It's interesting.
Speaker 9 (14:53):
It's a very strange environment because the role of AI
has kind of thrown everything off, and so I think
every everybody who has an interesting angle with AI is
definitely able to get conversations going. I think that if
you're not doing something with AI right now, it needs
to be a very unique proposition. It is a very
(15:14):
AI focused fundraising environment. Doesn't mean that there aren't other
ideas that are great and out there, but certainly the
fact is that AI can help pretty much every aspect
of building a business right now, and so you want
to be able to show how you have an advantage
leveraging AI that other people don't have, so you have
to figure out what your moat is.
Speaker 7 (15:33):
Julie is partially the reason it's such an AI type
of fundraising environment because all these dollar donors are invested
in AI themselves.
Speaker 9 (15:46):
No, I think it's more because everyone believes it's going
to shape the future, and it's still early, so it's
hard to know exactly how. But if you're not actually
taking advantage of it, it seems like a really missed
opportunity because it will change to the way everyone does work,
from the way employees work, to the way products are made,
to the way supply chains run, to the way consumers
(16:07):
experience a HI.
Speaker 2 (16:09):
So what's the next step here for AI? Do you think, Julie,
is there another natural progression?
Speaker 9 (16:15):
I think that there will be a lot of evolutions
in the models. I also think we'll start to see
over the next year or two a lot more consumer
experience is changing. So we haven't seen a lot of
that yet other than going directly to some of these
new chatbots.
Speaker 10 (16:30):
But if you think about.
Speaker 9 (16:31):
All the things you do in your day to day life,
things will get a little bit smoother and smarter. As
a result of AI, and there will be new businesses
that come along, like Daydream that just make shopping, for example, easier, smoother,
and more personal.
Speaker 2 (16:45):
All right, great stuff, Thank you so much. We really
appreciate Julie Bornstein. She's the founder and CEO at Daydream.
Speaker 3 (16:52):
And stay with us. More from Bloomberg Intelligence coming up
after this.
Speaker 1 (17:00):
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 Now.
Speaker 2 (17:14):
For more on the state of the consumer on this
Black Friday, is Andrea Barnardo, a seasoned business leader and
board director in consumer brands and retail Andrew, thanks so
much for joining us here. What's the mood of retailers
here going into this holiday shopping season? There certainly are
a lot of economic crosswinds out there.
Speaker 11 (17:35):
The retailer is actually quite optimistic, especially compared to where
they were last year. At the beginning of this year,
we thought tariffs and tax cuts would drive consumer behavior,
and while tariffs still remain a big concern, consumers are
also absorbing something much more subtle. The ripple effects of
a shutdown, fewer government services, a cold housing market, and
(17:56):
large company layoffs. So frankly, the eccount of feels contradictory.
But spending is holding, as we've just seen in Q
the Q three earnings reports, they are holding. Households are
more cautious, but customers are still spending in a really
selective way.
Speaker 6 (18:13):
What are they buying.
Speaker 7 (18:14):
Andrea Deloyde is seeing a lower average spend for the
Black Friday Cyber Monday. But you know, these statistics sometimes
can be misleading in the sense that people will continue
to spend or they've already started spending.
Speaker 11 (18:25):
That's such a great question because when we talk about
the contradiction of seeing spending the customers being more selective,
I like to define it as the customer isn't stepping back,
they're really reprioritizing and they're doing a purposeful reallocation. So
when you think about what they're spending on, they're kind
of three big shifts that are happening. One, customers are
moving towards intelligent value. They're looking for things that have function,
(18:49):
meaning utility, longevity, so they can feel like they're really
getting a return on their investment.
Speaker 4 (18:55):
Two their consolidating purchases.
Speaker 11 (18:58):
And so one of the interesting things we've seen is
in some of these QB earnings reports.
Speaker 4 (19:03):
Is where some of the values are going down.
Speaker 11 (19:05):
We are seeing higher ticket prices and higher order values
on top of lower order numbers. And so this means
customers are consolidating purchases, they're sticking with fewer retailers, They're
leaning heavily into loyalty programs and also convenience. And then finally,
customers are shopping to reduce stress.
Speaker 4 (19:24):
They're choosing products.
Speaker 11 (19:25):
And services that save time, that simplify life and add comfort.
Speaker 3 (19:30):
How about availability inventory?
Speaker 2 (19:32):
If I'm going to go out and get my kid
the Gi Joe with the Kung Fu grip, is it
going to be in the stores?
Speaker 4 (19:38):
It will be.
Speaker 11 (19:39):
That's one of the really interesting things that happened this
year with tariffs, a lot of companies pulled.
Speaker 4 (19:44):
Their inventory forward.
Speaker 11 (19:46):
So whether you were planning on a shorter cycle as usual,
they actually said, let's pull inventory for the next year
so we can get goods into stores and online. So yes,
hopefully your kid's toy will be their in store, and
if not, I can tell you. With the improvement in
AI and technology, they are surely going to offer you
something that they think is just as compatible.
Speaker 7 (20:08):
I was speaking to the CEO of a toy company
just on Wednesday, I guess, and he was saying that
a toy that was maybe twenty dollars before the pandemic
is now forty dollars for various reasons. So there was
a pandemic right the supply chain snawfoods, and then inflation
thanks to that, and then inflation from you know, fiscal
spending and so on, and now we're right up to
(20:28):
almost double what it was before.
Speaker 6 (20:30):
Are we seeing that? Are we seeing that kind of
inflation across the board?
Speaker 11 (20:34):
Yes, we are, and it's happening in more categories than other.
So you're mentioning toys, disposables, groceries. We are seeing that
inflation across the board. And to your point, it has
to do with the general inflation. It has to do
with terraiffs because while companies have absorbed some of the
tariff costs, many of them have actually passed.
Speaker 4 (20:52):
It right on to consumers.
Speaker 11 (20:53):
And so this is why consumers are being much more
selective about where they purchase, and related to that, to
trade down or explore alternative options. If it's a commodity item,
they might actually say, let me go explore this other
brand that might be a little bit cheaper, or buy
the generic version of that to help capture some of
that value back.
Speaker 2 (21:13):
What's promotional environment out there these days? Andrea, Am I
going to get deals when I go to the store,
assuming I actually do go shopping.
Speaker 11 (21:22):
You won't get deals. They will be very selective deals.
So as retailers and businesses are looking at their inventory,
they want to be much more precise about what they're promoting.
So they're going to be focused on where do they
have a lot of inventory, what can they replace fast,
what's going discontinued, where.
Speaker 4 (21:39):
Are you going to get that value?
Speaker 11 (21:41):
And even in some areas, they are going to price
promote on items where they know you will add on.
So you won't find full deals across the board. You
won't see fifty percent off side wide as much as
you used to, But what you will see is on
specific categories they're certainly discounting, but at the same time
they will bemting those discounts because they know this is
(22:02):
the holiday season, they know customers are focused on value,
so they're still going to put those select deals right
in front of you, So it feels like the same
velocity as it did in previous years.
Speaker 7 (22:11):
What's popular when it comes to fashion and retail and
department store retail in that sense. Coles for example, reporting
the other day and their strategy under the previous CEO
who was ousted was to focus on fragrances and petits,
and that strategy seems to be working even for the
incoming CEO who's now been made permanent. But it struck
me as odd that suddenly fragrances are very popular.
Speaker 11 (22:34):
They are, and fragrances have to do with that longevity
and value. Customers want something that they know they can
use over time, and so what you'll see is right now,
you'll see purchases in what I call functional tech. So
if you need a new laptop, if you need a TV,
things that you need that will have a long term
value to you, also fragrances and well, and it's something
where you feel like you'll get your return, it will
(22:56):
last over a period of time as well as you
will feel good about yourself. And then finally, there are
other areas in beauty and in luxury, and many of
these retailers, especially those that have multi brand portfolios. We
have seen their luxury brands, whether it's home furnishings or apparel,
actually outperform. And that still goes to the value, which
(23:16):
you don't often see value in luxury. But what happens
is customers think, Okay, at least if nothing else, I
have longevity and I have resale value.
Speaker 2 (23:25):
Hey, Andrew, you say that share of wallet is the
real battle this season, not just traffic.
Speaker 11 (23:30):
What do you mean by that, Well, what we're seeing
is that with these average order values going up, what
customers want is they want to go to a one
stop shop. And so where retailers are competing is they're
adding services, they're adding shipping, they're making sure they're inventory
and logistics are there.
Speaker 4 (23:46):
So that you can add more to your purchase in
one stop.
Speaker 11 (23:50):
One of the big opportunities that I'm seeing is bundling.
We've often heard about bundling when it comes to travel
and dieting, but when it comes to bundling, if you
were able to to talk about a gift set, or
add the pants with the shirt, or combine a whole
set of items, customers always see that as an opportunity.
And so you see that retailers are using that to
increase their ticket values right now.
Speaker 7 (24:12):
Yeah, I love all the words associated with a bundling
and a whole, yeah and unlox my whole today. I
love getting holes, but I never I never seem to
feel to afford them. Andrea, thank you so much for
joining us today. A fun conversation there, and a serious
conversation too with Andrea Vornado, much appreciated consumer brands and
retail experts.
Speaker 3 (24:31):
Stay with us or from Bloomberg Intelligence coming.
Speaker 1 (24:33):
Up there for this, 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.
Speaker 7 (24:52):
Let's talk something that maybe isn't going to be so
calm though in the coming weeks, tariffs taking their toll
on consumers and companies alike. Our next guest says tariffs
are now one of the biggest variables in retail margins.
Joining us to discuss as Ryan Peterson, founder and CEO
of flex Sport, a leader in global supply chain technology. Ryan,
thank you so much for joining I would have thought
(25:13):
that things would have calmed down a little bit. We
have at least some kind of certainty, albeit we're waiting
for a Scolds decision, but we have some kind of
certainty over tariffs at the moment.
Speaker 6 (25:22):
What are supply chains like? Is there's still chaos out
there or are we.
Speaker 7 (25:25):
Getting to some kind of ability to see the future.
Speaker 8 (25:31):
Somewhere in between.
Speaker 12 (25:31):
I think people are getting more used to the fact
that you have to operate and a lot of uncertainty,
and brands are figuring out how to be agile about
it and a lot of different strategies where.
Speaker 8 (25:39):
They can do that.
Speaker 12 (25:40):
But there's still a lot of you mentioned scotis that
that big core case is coming. People are hoping and
praying for a refund and it's actually you know, there's
a lot of variables here. You have to figure out
how much of the duties, how much of the tariffs
do you want to pass through to your customer. Goldman
Sachs reporting about thirty seven percent of the duties are
getting passed through, with nine percent getting forced on the supplier,
(26:04):
and the balance is just hitting earnings for these companies.
So there's that and then even just calculating the duties
is harder than ever before the nature of the stacking tariffs,
where there's all these different tariffs, they just.
Speaker 8 (26:16):
Keep getting layered on each other.
Speaker 12 (26:18):
We've seen more traffic to our tariff simulator on our
website than to the overall website.
Speaker 2 (26:24):
So it's interesting, Ryan, do we think that companies are
going to try to push more of those costs through
going forward as opposed to absorbing them into their P
and L statement.
Speaker 12 (26:38):
You only have two choices kind of. I mean, I
get you can renegotiate things with your factory. That's not
a choice, that's something you're going to always try to do.
And then you have two choices. It's do you pass
it through and or do you eat the costs?
Speaker 8 (26:50):
And the good businesses will pass it through.
Speaker 12 (26:52):
I think that's you know, one of the hallmarks of
a good business is your ability to pass through price increases,
but a lot of companies can't. So may not even
be a choice as much as you'd like to. The
moment you raise your prices, you start to lose demand.
So yeah, then longer term you have some more options
around moving supply chains, but it's become so difficult because
you know it's not just hey, exit China, move your
(27:13):
factory somewhere else. Tariffs on India are just about the
same as China, and they might pop up anywhere in
the world that with the way things have been.
Speaker 7 (27:19):
Going, ryan, are we done with all the avoiding certain
areas because you know, there's a drought in one canal,
and there's war and potentially in another canal, and there's
you know, terrorism in another part of the globe, or you.
Speaker 6 (27:32):
Know, are we back to everyone can ship everywhere?
Speaker 12 (27:37):
I know we're definitely not back to normalcy there. And
the container volumes going through the Suez Canal are still
down about seventy five percent since the HOUTI started to
cut that channel off at the end of a couple
of years ago, and actually just last week created a
poly market on this. Now you can bet on anything
(28:00):
out bet on whether when traffic will return to normal
through the Suez Canal. It's not very it's pretty thinly
traded right now. We'll see if we get some more
signal out of that. But there are some rumors that
will start to come back to life next year and
ships will return, but for now they're going all the
way around Africa and polymarket has me at thirty seven
percent to return in Key one. I think that's free
(28:20):
money I'm taking. That won't happen side of that shore.
Speaker 6 (28:23):
Hey, we're ignoring that part of the conversation. What about
the Panama Canal, Well, Panama's been.
Speaker 8 (28:28):
There ongoing thing ever since they re engineered it.
Speaker 12 (28:30):
So they widened the canal in back in twenty fifteen.
And you know, the Panama Canal runs on fresh water,
so if you widen the canal, more fresh water flows
out of the canal into the ocean than when it
was narrower. And so ever since they've done that with
the same amount of rain, you've now had these periodic
moments where there's just not enough water to operate the canal.
(28:51):
We're currently in a normal period, but a couple of
two years ago it was really bad. They could only
operate about two thirds capacity on that. That's going to
keep coming back unless they spend tens of billions of
dollars re engineering the water flows in the canal, which
I don't I don't think they're gonna be able to do.
Speaker 3 (29:06):
That's on my bucket list to go through the Panama Canal,
it really is.
Speaker 7 (29:10):
I think you're containership wisely then, Paul, because you're not
getting on all of them.
Speaker 2 (29:13):
I know exactly, but I'm ready to do that. Talk
to us about inventory levels, Ryan, I mean, are retailers
are they stocking their usual amount of retail inventory or
are they going a little bit light or what are
they doing?
Speaker 8 (29:27):
No, you could argue they're going the opposite.
Speaker 12 (29:29):
They're going heavy on us here because because not so
much because of the uncertainty of demand, although that always exists,
but because of the tariffs.
Speaker 8 (29:37):
So everybody front loaded.
Speaker 12 (29:38):
You know, these reciprocal tariffs on restive world ended August
twenty ninth, and you had a while, a couple of
months to know that that was coming, and so everybody
brought all their inventory in early. And what it's going
to look like is you can never really predict what's
going to be a hit product and what's not. And
so you're gonna have You're gonna have stock outs on
certain hit products where because it's not much hard to replenish,
(30:00):
you're paying higher duties, and so you're gonna have stockouts
on some of the hit products. And then I suspect
you're going to have quite a bit of overhead of
products that didn't move, and you'll probably see some good
deals coming.
Speaker 8 (30:12):
In the beginning of next year.
Speaker 12 (30:14):
I mean, we may see some right now with Black Friday,
but usually these things play out into the Q one
period once the holidays.
Speaker 8 (30:20):
Are over all.
Speaker 2 (30:21):
Right, Fannie, here's the book recommendation of the day for
you about the Panama Canal, The Path between the Seas
David McCullough.
Speaker 3 (30:28):
Phenomenal book about the history of the.
Speaker 6 (30:30):
Panama and a great writer. I will definitely read that.
Speaker 7 (30:32):
I'm on my twenty second book of the year, which
I guess is good, but.
Speaker 6 (30:37):
So Ryan.
Speaker 7 (30:38):
You know, in terms of shipping companies and em and A,
there was plenty of speculation that ZIM, for example, was
going to.
Speaker 6 (30:47):
Get bought out or whatever.
Speaker 7 (30:48):
That happened a couple of times this year, and some
of these shipping companies have been really having a hard
time of it trying to deal with all of this uncertainty.
Do you have any forecast for us and what we
might see maybe next year in terms of m and
A and consolidation.
Speaker 8 (31:00):
No, I don't really know. We'll see it.
Speaker 12 (31:04):
You know, we see a few of the big companies
executing that strategy. DSV is the biggest right forwarder in
the world. They've been the most inquisitive. But they just
bought dB Schenker and that deals closed, and.
Speaker 8 (31:15):
That is a lot to digest.
Speaker 12 (31:16):
They're going to be you know, it basically doubles their
number of offices around the world, almost doubles their volumes.
So the main acquire is probably off the table for
the next couple of years as they two on that one,
and we'll see. There's you know, there's been a lot
of consolidation. When I started Flexport, there were twenty three
ocean carriers, major ones were down to eleven, and I
(31:38):
don't know there's there may be some mergers, but they've
all in the past that was done out of financial
weakness where they were all kind of struggling.
Speaker 8 (31:46):
Well, they've all put a lot of money on their
balance sheet.
Speaker 12 (31:48):
Over the last few years when the rates were going crazy,
So there's not going to be a lot of the
forced m and a that we saw that drove that consolidation.
We'll see though, maybe there's some interesting strategic opportunities.
Speaker 2 (31:58):
Well, we do have little kasa or pending consolidation in
the railroad industry. Norfolk Southern and Union Pacific do you
think shippers want a transcontinental railroad, Ryan, probably.
Speaker 12 (32:09):
But I don't think they just want one. You get
monopoly powers. They'd like to see more than one. And
that's the challenge. We've only got four railroads in the US,
and if you merged the two and you got two
on the west and two on the east, so you
could end up in a position where you've got two
end to end railroads crossing the country.
Speaker 8 (32:25):
I mean, it makes a lot of sense.
Speaker 12 (32:26):
It's sort of silly to transfer to a different railroad
just because you're crossing the country. But you will see
probably who knows how we'll play out, if the efficiencies
are passed through to the brands, to the people that
are shipping cargo or not, or does it get absorbed
in sort of oligopoly pricing.
Speaker 7 (32:42):
Ryan, When it comes to the different modes of transportation,
so poor its trains, you know, rail shipping, and even
at one point people were flying their cargoes right for
a huge premia. Who are facing the highest premia or
is it the same for everybody across the board?
Speaker 3 (33:01):
Not sure?
Speaker 8 (33:02):
Answer the question in terms of what.
Speaker 7 (33:04):
If you're booking travel for your inventory, does it matter
if you're a toy retailer, or if you're you know,
a clothing retailer, or if you ship furniture, is it
the same price or does it depend on ways?
Speaker 6 (33:18):
And how does that all work? Do you bid on it?
Speaker 7 (33:20):
Is it an auction?
Speaker 12 (33:21):
Your pricing will be about the same no matter what
you're shipping these days, that's the beauty of the container.
Nobody cares what's inside of it as long as it
doesn't you know, catch on fire or anything. But but
the tariffs will be quite different based on the different
uh based on the value of the goods and what's
being shipped. And so there you see big category shifts
where certain products are just really hard.
Speaker 8 (33:42):
Hitting others are totally xempted.
Speaker 12 (33:44):
And the other factor here is if shipping prices go
way up, like a container of furniture only holds about
eight couches something, so a high shipping price there, all right,
hits the pretty hard.
Speaker 2 (33:55):
Rough Leave it there, Ryan, thanks so much for joining
us at Ryan Peterson Founder and see you a flexport.
Speaker 1 (33:59):
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