Loading summary
Transcript198 lines
- [00:00]
Carol Massar
Is your multi entity management creating more confusion than clarity. You need the Intuit ERP Intuit Enterprise Suite. It's the AI native ERP solution that's powerful, painless and proven. Learn more@intuit.com ERP. If you follow markets, you know the value of long term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day a fire, a loss, a disruption that demands immediate attention. When that happens, what matters isn't just what you planned, it's who shows up. That's where Cincinnati Insurance comes in. For more than 75 years, they've helped individuals and businesses navigate life's toughest moments with care, expertise and personal attention. Together with independent agents, Cincinnati Insurance focuses on relationships, not transactions. Their approach is grounded in experience, follow through and trust built over time. Bad days happen, and when they do, you deserve an insurance partner who understands risk, respects what you've built and is ready to help you move forward. The Cincinnati Insurance companies Let them make your bad day better. Find an independent agent@cin fin.com the thing
- [01:19]
Tim Stankevicius
about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM,
- [01:51]
Carol Massar
Bloomberg Audio Studios Podcasts Radio News
- [01:57]
Tim Stankevicius
this is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Massar and Tim Stanvak on Bloomberg Radio hi everyone.
- [02:21]
Carol Massar
Welcome to the Bloomberg businessweek Week Weekend podcast. Another week where the conflict in the Middle east left markets in a state of flux after threatening that a whole civilization will die if Iran did not reach an agreement by 8pm Tuesday night. That was, of course, from President Donald Trump. He ultimately reached what many would call a fragile ceasefire with Iran, at least for now, easing some fears of a protracted global energy crisis. I gotta say, as we put our show to bed, we Vice President JD Vance, Special Envoy Steve Witkoff and Jared Kushner are leading talks in Pakistan on a lasting peace agreement with Iran. A sticking point in all of it Israel's attacks on Lebanon. As we said, a developing story big time as we wrapped up for the latest on the US War in Iran, head over to the bloomberg and to
- [03:09]
Tim Stankevicius
bloomberg.com also a focus this past week, the release of the minutes from the March Fed meeting. Those detailed a committee closely monitoring how these geopolitical tremors could affect long term inflation outlook and the longer term geopolitical framework and weapons used by nations, increasingly economic ones. We see that in Iran's use of the Strait of Hormuz in the war with the US And Israel. One former State Department sanctions official puts it as Iran using America's playbook against us. He's the author of Choke Points that's All about economic Warfare. He joins us a bit later.
- [03:42]
Carol Massar
Plus earnings season kicking off for real this coming week when the big banks report. However, Levi Strauss and company reported already this past week company defied the odds thanks to direct to consumer sales. The results impressed investors big time. The president and CEO of the company, Michel Goss joins us in just a moment.
- [04:00]
Tim Stankevicius
And the 10 stocks to watch this quarter thanks to our Bloomberg Intelligence team who've identified the most interesting companies from their group of what they call high confidence. Focus ideas we reveal the names and why. For better or for worse, they're worth watching.
- [04:13]
Carol Massar
All of that to come. We begin with the tools of modern warfare. Yes, drones, expensive jets, domes and increasingly economic weapons.
- [04:22]
Tim Stankevicius
In a recent New York Times op Ed, former U.S. state Department and Pentagon official Edward Fishman argued that by closing the Strait of Hormuz for weeks, Iran has secured sanctions relief that in some respects surpasses what it achieved via the 2015 nuclear deal. And while the United States has long weaponized the financial system to advance its geopolitical aims to Iran has now learned to do the same with the world's most vital energy chokepoint. And it has done so by borrowing a playbook developed by the United States.
- [04:50]
Carol Massar
Edward Fishman is senior fellow and director of the Maurice R. Greenberg center for Geoeconomics at the Council on Foreign Relations. He's author of the New York Times bestselling book American Power in the Age of Economic Warfare.
- [05:05]
Edward Fishman
The premise of the book is that we are living in a new age of economic warfare in which these economic and geographic choke points so an economic choke point would be the dollar, where 90% of all foreign exchange transactions go through the single currency, or Chinese rare earth minerals, where 90% of the global supply is refined by a single country. Or a geographic choke point like the Strait of Hormuz where 20% of global oil and gas goes through every single day. Before this war, those have provided countries with unprecedented ability to disrupt the global economy. We thought, I think, or most people thought, that these were weapons that only great powers could deploy like the United States and China. What we've seen in the last month is even a smaller country like Iran can hold the world economy hostage by weaponizing one of these choke points.
- [05:53]
Carol Massar
What are the impacts of such. Of that, of something like that, that kind of switch?
- [05:57]
Edward Fishman
Yeah, I mean, the impacts are quite substantial in that. You know, we used to think that in order to do hard hitting economic warfare, you needed broad international coalitions. Right. You think back to the 1990s when you had the sanctions on Saddam Hussein's Iraq. That was the whole international community, it was the UN and that was a pretty high threshold for action. Right. Because you can only do hard hitting economic warfare if you could get everybody else to agree to it. What Iran has showed is that even a relatively small country, a medium sized power like Iran, just by closing this strait, can again hold the global economy hostage. And they're doing it relatively inexpensively. Right. Just using drones that cost about 20 or $30,000 a pop.
- [06:36]
Carol Massar
Let me just. You also wrote about how the US not the US But Iran. You said if either side in this war has pulled off an act of jiu jitsu, it is Iran, for the first time since 1995, Tehran can sell oil directly to the United States and use the American financial system to collect payment. I mean, this has been a major. No, no, this has been something the US Right, has restricted.
- [06:58]
Edward Fishman
Yes.
- [06:58]
Carol Massar
That's big.
- [07:00]
Edward Fishman
Right. And I think that in some ways there's an interesting echo of the Chinese rare earth embargo last year. You think about it, China in many ways has won the trade war with the United States by virtue of cutting off our access to a choke point. They retaliated. They showed that if you impose pain on the US Economy, you might get the US to back down, even if they're not giving any concessions. Iran, you know, spent years negotiating over its nuclear program. They got some sanctions relief, right. In the 2015 nuclear deal, the US waived secondary sanctions. So they allowed, you know, European banks, Asian banks to go back into Iran, but they didn't allow US Financial institutions to do so. Iran, by weaponizing the Strait of Hormuz for a few weeks, did get the US to actually agree to allow them to use the financial system. So you just think about the lessons from both the Chinese embargo on rare earths and the Iranian cutoff of the Strait of Hormuz. Both showed that when you retaliate against the US when you use choke points to try to hurt the U.S. economy, you actually might get more concessions than through diplomacy.
- [07:59]
Tim Stankevicius
Iran and the United States have long been at odds with one another. And the President likes to talk about how, you know, he's the first president to do this in 47 years, even though others have. Have wanted to. I want you to put your State Department and Pentagon hat back on. Do you think that the reason why other presidents have not gone after Iran the way that this president has is because they knew about the economic power that Iran could have over the Strait of Hormuz?
- [08:24]
Edward Fishman
Oh, yes, yeah. I mean, look, what motivated.
- [08:26]
Tim Stankevicius
Prevented Iran from being attacked in the past?
- [08:28]
Edward Fishman
Yes. I mean, what motivated me to go into government, you know, 20 years ago or whatever was. Was trying to come up with a way to curtail Iran's nuclear program without the use of military force. That was the goal in the Bush administration. It was the goal in the Obama administration. What we did through the nuclear deal, we got a limited deal with Iran. Right. It wasn't perfect. Right. Iran could still support proxies, they could still have missiles that didn't make us feel good, but we didn't fire a single shot. Right. We just used economic pressure. I think the reason that neither the Bush administration nor the Obama administration wanted to start a war with Iran was because you knew that it could go very wrong. Right. And they could close the Strait of Hormuz. I think the thing that is most surprising, though, is even back then when we thought about Iran closing the strait, we thought they would do so by virtue of laying hundreds, if not thousands of these sea mines. And when you lay mines, I mean, they don't discriminate whether you're carrying Saudi oil or Iranian oil. So it would actually shut in Iran's own oil exports. And so we had a little bit of comfort that Iran might not take that step because it would be economically suicidal. But what Iran has done and what I put forward in that New York Times essay is that just by hitting a small number of commercial vessels with these cheap drones and missiles, they changed the risk calculus of the entire global shipping industry. And so they actually asymmetrically closed the strait where no one else's oil gets through, but Iran's oil is getting through, you know, in record numbers in the last few weeks.
- [09:48]
Carol Massar
So as a former, you know, State Department Pentagon official, was our intelligence bad? Like, where.
- [09:55]
Edward Fishman
Look, I mean, the reporting is still coming out on this and, you know, I'm excited to read the tell alls whenever they are published. From what we know so far, it seems like the intelligence actually was pretty good. That, you know, Dan Kaine, the chairman of the Joint Chiefs of Staff, who's clearly a professional, did put the risks on the table. My assumption, if I had to, sort of having been in the Situation Room and sort of how these things play out, my assumption is that Trump was a little overconfident. And by the way, you can understand it if you think about his previous two military operations, Operation Midnight Hammer last June, where this 12 day war, no American casualties, and you take out large parts of Iran's nuclear program. And then even more miraculously, earlier this year, you know, the operation in Caracas where Nicolas Maduro and his wife are picked up and brought a couple miles from here in the Metropolitan Detention center in Brooklyn. I mean, you start thinking maybe that military force is like an easy button. And so my hunch is that he did get pretty good advice from the Chairman of the Joint Chiefs, Dan Kaine. I worked for one of his predecessors, General Marty Dempsey, and those guys are very professional. I think Trump was a little overconfident.
- [11:00]
Tim Stankevicius
So given all of that and what we've seen thus far over the last five weeks, what we've seen out of Iran and the demands that Iran has versus the demands that the US has, is there a chance, in your view, that the US And Israel could exit this conflict and Iran would stop enrichment of nuclear weapons?
- [11:18]
Edward Fishman
I don't think so. I think that we're at a point right now where the choices are we either cut a deal that leaves us worse off than we were before the war started, but prevents us from, you know, potentially getting drawn into a quagmire, or we escalate militarily. I mean, just think about the math for Iran right now, right? They've established control over the Strait of Hormuz. That's something they didn't have before. Right. They're now institutionalizing that, charging up to $2 million a ship. Before this war, there was about 140 ships that went through the Strait of Hormuz every day. If you do the Math, that's about $100 billion in revenue for the Iranian government. They're not going to give that up easily. And so my assessment here is that perhaps that's okay for the US Maybe it's better to cut and run right now, allow Iran to make $100 billion a year by controlling the world's most important geographic choke point. Because the alternative might be worse. Right? The alternative is a ground invasion.
- [12:10]
Carol Massar
Well, is that Possibly, you know, we talk about regime changes and a new way forward for Iran within the region. Is that possibly a way for it to have a new way forward or is that just a way to fund its nuclear ambitions, its weaponry and, you know, its various terrorist groups?
- [12:26]
Edward Fishman
Yeah. I do not see the new Iranian government deciding they don't want nuclear weapons. If anything, interestingly enough, it was actually Ayatollah Khamenei, the now deceased former supreme leader, who. Who was always a little bit lukewarm on nuclear weapons. He definitely wanted to have an option to nuclearize, and that's why they had a full scale enrichment program. So they were trying to become a threshold nuclear state. But there was never an intelligence assessment that he actually decided to build weapons. Right. I mean, they've got fissile material to build 10 bombs and they never actually built them. I mean, with the younger generation in power now, and particularly with the IRGC clearly sort of at the driver's seat, I mean, all evidence suggests that they're the ones who put in Mushtaba Khomeini. Right. They're running the show. They do want nuclear weapons. And you can understand why. I mean, you look at the countries that do have nuclear weapons, like North Korea, they don't get bombed by the US or.
- [13:18]
Carol Massar
So they double down, potentially from here.
- [13:20]
Edward Fishman
I think so, yeah. And that's why I think that I'm not resting easy yet, that this war is over, because I think that the new status quo might be so bad that actually might incentivize more attacks from the US And Israel.
- [13:31]
Tim Stankevicius
Well, on the reporting about what led to this and that will come out, there was that great piece in the New York Times earlier this week. And it had to do with intelligence from Israel that was presented to the President in the Situation Room. And part of that included the Iranian people rising up and potentially taking control of, of the government protests in Iran. Why have they been largely silent during this war?
- [13:56]
Edward Fishman
Look, this is one of the more complicated aspects of analyzing this conflict because I think we need to be clear. The Iranian regime is awful. Right? I mean, just earlier this year, they killed at least 10,000 of their own people who were protesting peacefully in the streets. So we would all be better off, and Iranians probably most of all, if you could get rid of the Islamic Republic. I think the key miscalculation, though, that the Israelis, and I guess in turn the US made was to think that the Islamic Republic was a rather shallow state. Right. That if you just took out the top level of the government, everything would collapse. I think what they showed is that it's actually quite a bit deeper than that. And so I think that right now the prospects for regime change look poor. And just to quickly answer your question about why you don't see more people in the streets, this is a common sort of thing that we see. When you're under bombardment, you have a rally around the flag. People don't want to go out of their homes. They just want to hunker down.
- [14:48]
Carol Massar
Yeah. Real quickly, 25 seconds. Next potential big checkpoint. Is it China, Taiwan, semiconductors?
- [14:55]
Edward Fishman
I think the future choke point that I'm worried about right now is actually clean energy technology. I think one of the easiest bets coming out of this war is American allies in Europe and Asia are going to double down on electric vehicles, batteries, solar panels. And guess what? You know who controls all of those choke points?
- [15:09]
Carol Massar
China. China come back soon.
- [15:11]
Edward Fishman
Anytime.
- [15:12]
Carol Massar
This was fab Eddie Fishman, director of the center for Geoeconomics at the Council on Foreign Relations, the author of the book Choke Points. Check it out. We have. That's why we have him back. If your finance team spends more time finding data than using it. If there's one entity here and one here and one here and one here. If scaling your business feels like starting over, you need the Intuit ERP. Intuit Enterprise Suite is the AI native ERP solution that's powerful, painless and proven. Learn more at intuit.com erp Support for
- [15:50]
Public Representative
the show comes from public. Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash. Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market and paid for by
- [16:34]
Tim Craighead
Public Holdings Brokerage Services by Public Investing
- [16:36]
Public Representative
Member FINRA, SIPC Advisory Services by Public
- [16:39]
Tim Craighead
Advisors SEC Registered Advisor Crypto Services by
- [16:42]
Public Representative
ZeroHash all investing involves risk of loss.
- [16:45]
Tim Craighead
See complete disclosures@public.com disclosures here's a paradox.
- [16:49]
My Policy Advocate Representative
We buy insurance for peace of mind. Yet the very policies we trust can deliver the biggest financial shocks across America. Millions of claims are denied every year, not because people did anything wrong, but because policies quietly excluded the things that happened. The psychology of trust tells us we assume the contract is fair. But in insurance, the information gap is massive. The insurer knows every detail of what's covered. The policyholder rarely does. That's where my policy advocate comes in. For just 27 cents a day, their platform reads your policies and shows you in plain language where you're vulnerable. They're not selling insurance. They don't do that. It's about transparency, giving ordinary people the same understanding insurance companies have had for decades. Because when you know what's really in your policy, you can plan, protect, and avoid surprises. Before you trust your policy to protect you, let my policy advocate tell you what it really says. Visit mypolicyadvocate.com today. Today, peace of mind starts with knowing the truth.
- [17:48]
Tim Stankevicius
Mypolicyadvocate.com you're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [18:09]
Michelle Gass
They are cards down
- [18:13]
Carol Massar
from the Cowboy Carter effect with Beyonce to massive engagement. Fueled by the success of the streaming series Love Story, John F. Kennedy Jr. And Carolyn Bessette, consumers have really been leaning into that timeless 90s era American heritage aesthetic that defines a generation. One brand that really positioned itself at the center of it all. Levi Strauss. And to be fair, I mean, they've been putting jeans on people for what, over a century?
- [18:39]
Tim Stankevicius
Yeah, they know. They kind of know what they're doing when it comes to this stuff.
- [18:41]
Carol Massar
It's amazing how like, right. The cycles. But even my daughter, like, I mean, younger generations are coming back to it.
- [18:48]
Tim Stankevicius
What's old is new again, Carol.
- [18:49]
Carol Massar
I've heard that before.
- [18:50]
Tim Stankevicius
Yeah, so have I. This week, Levi Strauss raised its projections for the year after reporting better than expected quarterly results, fueled by a high stakes strategy to move away from department store shelves and into the hands of consumers.
- [19:01]
Carol Massar
Leading that charge is Michelle Goss, who joined the company as CEO just over two years ago. Michelle joined us right here in our New York studios.
- [19:09]
Michelle Gass
You know, we are seeing momentum across the board, which is around our strategies really picking up and accelerating. So we delivered 9% organic growth, 14% on a reported basis. We are seeing this across geographies, we're seeing this across categories, we're seeing it across genders, across channels.
- [19:27]
Carol Massar
Why is this happening?
- [19:29]
Michelle Gass
Well, you know, it's the brand.
- [19:31]
Carol Massar
Yeah.
- [19:31]
Michelle Gass
It's the product and it's the execution and all of those things are working. And I gotta Tell you, the team is doing a phenomenal job. We're coming off of a solid year last year and it's accelerating right into 2026.
- [19:44]
Carol Massar
Michelle. Denim, though, is such a crowded category. Like I won't go to certain department stores or because it's just too much for me, but I do go to Levi's and I.
- [19:53]
Michelle Gass
Well, thank you for that. You're welcome.
- [19:54]
Carol Massar
You're welcome. And I said to you, coming in, my 23 year old, she's wearing them. That's where she wants to go. You talked about your wife like you are hitting a lot of different demographics. How do you do that? How do appeal to so many?
- [20:07]
Michelle Gass
Yeah, well, I would say it does start with the brand. And we like to say that Levi's operates at the center of culture and we're hitting a new stride with the brand. I mean, the brand has been strong for a long time. Last year it went up a notch. We had this fantastic partnership with Beyonce that moved into a partnership with Shaboozy. And this year we launched our brand campaign at the super bowl. And it was the perfect time because Levi's stadium was hosting the super bowl and we hadn't been on the super bowl in over 20 years. But it wasn't about launching an ad for the super bowl. It was about launching our campaign. And we call it Behind Every Original, which is a global campaign and leans in to what Levi's does best across sports, across fashion and music. And so if you've seen the ad, it really does bring that to life and has artists like Doshi or sga. That's some of the stuff. Great. And, and Rosie, and I like to talk about Rosie because here is this. She was part of Blackpink. 90 million followers and growing. And we're rolling that right into a collaboration with her in Asia. So that is, that is taking off as we speak. And so this is about launching, like I said, a campaign for the year. Looking ahead, we've got World cup coming up that the stadium is. Levi's stadium is hosting. We've got, we have collaborations. You know, we had our collaboration with Nike and Jordan a couple months ago. We had people lining out the doors to get the special collab.
- [21:35]
Tim Stankevicius
Michelle, when you talk about these partnerships with celebrities, with the artists, I know each one of them is different, but in general, are they coming to you or are you identifying them and you're going to them? How organic is it?
- [21:46]
Michelle Gass
It's all of the above. Well, so. And it happens organically. I mean, literally, what, just at the Brits we had Harry Styles dancers all wearing 501s. I mean, this is about being at the center of culture. And the Beyonce partnership that started because she wrote a song called Levi's Jeans, but we've been friends with Beyonce for decades back and back to the 90s. Or Carolyn Bessette wore the 5:17, you know, in Love Story, it's heavily featured and sales are up like 25%.
- [22:17]
Carol Massar
Did that surprise you, like, and when did you first all of a sudden notice, like, we've talked about this on air, the impact of this you.
- [22:23]
Michelle Gass
Yeah, well, the 90s. We've known about the 90s trend for a long time. And in fact, when you go into our stores online, go into our wholesale partners, I mean, that 90s trend is Levi's is all over it from top to bottom. I mean, one of the things we talk about when you ask about what's working, we talk about our two key strategies, which is about becoming a more DTC forward company and also evolving the brand from being about jeans to head to toe. We say denim lifestyle. What does that mean? It means that we want to give you the whole wardrobe. It starts with the jeans, but tops, button downs, jackets, outerwear, dresses, all through the lens of Levi's. But we're playing now in the total apparel space.
- [23:04]
Tim Stankevicius
Michelle, perhaps that's a good segue to talk about the macroeconomic environment and potential disruptions or disruptions you've seen from higher transportation costs as a result of bringing these products from overseas into the US and indeed around the world. What has this macroeconomic backdrop over the last five, six weeks done for you? Your business?
- [23:21]
Carol Massar
Yeah, well, the last year, when I
- [23:22]
Michelle Gass
think about tariffs, it's been a really uncertain time. You know, I take a step back. You think about the company ls Co. We've been around for 170 years. We've weathered lots of storms and navigate and it goes back to who we are as a brand. During times like this, people do. We have to deliver, we have to execute. But they really do go to brands that they trust, that they love. We offer quality, we offer great value, we offer durability. To date, our consumer has proven resilient. I mean, you see that in our numbers. You know, we are bringing them a lot of innovation. I think, you know, if pressures come on the consumer, when that, when the, when the wallets get tighter, you know, we have to up our game, right? Wallets get tighter, we have to work harder. And that's what we're doing. We offer great red tab, right? Down the middle we offer Signature by Levi Strauss, which is an awesome value. That business was up 16%. It's in the twenty twenty five dollar range. And then we offer blue Tab premium Japanese denim. And you know, you can buy a pair of jeans from Lev now at like $200. So we're serving every customer need. But know that we are constantly just making sure that we can address the needs of the consumer in the moment, whatever that moment might be.
- [24:32]
Carol Massar
Love talking fashion, love talking the collaborations. I also though, do love the nitty gritty of like supply chains. And what a company like you that has been around for so long and seen a lot of different market cycles. What is your supply chain and have you kind of spread it around Based on what we've seen, not just in the last year, but even coming off the pandemic, that reminded us that supply chains can be impacted dramatically when they're focused in one area.
- [24:55]
Michelle Gass
Yeah, that's right. We have a robust, very diversified supply chain across many, many countries. We have a really strong team that, that is agile and responsive and so, and these, these relationships with our suppliers go back decades and decades. So we have tremendous partnerships. And as we've navigated things like tariffs, everybody has stepped up to help us, you know, determine what the next steps are there. You know, just to, just to put it out there on tariffs. I mean, everything that we've guided the street includes tariff assumptions on, call it the original reciprocal tariffs at a higher rate at that 20% incremental rate increase. You know, there's been recent news of it going down back to 10%. We haven't baked that into our numbers yet. One could say there's upside. There could mean up to $35 million in EBIT or $0.07 of EPS. But we've held back just knowing that there still is uncertainty out there. As you were, as you were saying,
- [25:50]
Tim Stankevicius
one question we asked outgoing CFO Harmeet Singh in the last year in the wake of tariffs has been about moving production to the United States. He said, no way, that's not happening. Are you sticking by that?
- [25:59]
Michelle Gass
We are sticking by that. Yeah. That is an industry that really has shifted overseas. And, and like I said, because we have these enduring, long lasting relationships, I know we'll be able to navigate whatever's ahead on that front.
- [26:11]
Carol Massar
All right, so you know, a company like you guys, our whole Bloomberg team is like, ask Michelle this, but we're curious about your prospects for reaching 10 billion in revenue five years, seven years. How are you guys thinking?
- [26:23]
Michelle Gass
We have, we have not put A number out there, but date out there
- [26:27]
Carol Massar
and like do you, you can do this momentum and how far can you, you carry it out? Do you feel comfortable?
- [26:32]
Michelle Gass
Yeah, what I, what I can say. And we have, I think it's important to have bold goals. Right. So we put the 10 billion, we've put the 15% EBIT. I think if you look at the progress over the last couple of years, take revenue. We came off of 7% growth last year. That was up from the prior year. This year we're again guiding mid single digits. We just had a blowout quarter at up 9%. So I think it's safe to say that you can count on consistent sustainable growth and then on ebit, on profitability, we're making that March to 15% again. A few years ago we were 9, 10%. Last year about 11 and a half. We put them, we just said we're taking our guide up yesterday to 12%. So you see that sequential progress and you know, five years keep doing that. We'll let you guys do the math. But we're, but we're confident. I mean like I said, the exciting thing we are, you have visibility, the strategies are working. We've made some choices the last couple years. We've, you know, we sold the Dockers brand so that we, we could really focus on the Levi's brand and there's so much opportunity.
- [27:30]
Tim Stankevicius
So certainly fashion is working in your favor right now. But we know the industry is fickle and consumers are fickle. What happens or what do you do rather to make sure that when the trends do change, you move with them?
- [27:42]
Michelle Gass
Yeah, well, as the category leader in denim, let's start there. It's our responsibility to fuel the trends. You know, the denim category is growing, it's accelerating right now I have more denim in my.
- [27:52]
Carol Massar
No, seriously nowadays in my wardrobe that I haven't in a long, long time.
- [27:57]
Michelle Gass
And I, but it's not always like that. But, but I would say though, but this, but this evolution to denim lifestyle or I'll say lifestyle head to toe, that's not all denim, right? It is fine. If you're buying a rib cage, wide leg, pair of jeans, what's the perfect top that goes with it which is going to be different than a low rise.
- [28:15]
Carol Massar
Right.
- [28:15]
Michelle Gass
And so now that we're playing in this broader space space which basically increases our addressable market by 15x, we're playing in that 1 trillion market in apparel that requires focus and discipline. But we really up leveled our capabilities to do that. And you know, if you just Take this last quarter our tops business was up 13%. It's only 20% of our business. So when you think about all that upside. So we now and 40% of our business is non denim. So yeah, that's not just denim anymore for Levi's.
- [28:47]
Carol Massar
So what is the biggest opportunity or categories that are not yet tapped that could be big for you guys?
- [28:52]
Michelle Gass
Yeah, I would say a couple of things. First, when we think about gender, women's is not quite 40% of our business. Last I checked, women's has a big play in the apparel market.
- [29:02]
Carol Massar
Closets a lot bigger than my just saying.
- [29:06]
Michelle Gass
But so there's still that should be at least half our business. So we're expecting tremendous growth there. I was just talking about head to toe. We always will be the leader in bottoms and denim bottoms but tops. So in our business we sell two bottoms to every top. Which by the way that used to be like five bottoms to every top. That should be the other way around. Minimally one to one. That is all white space for us. And then we have amazing growth ahead of us in expansion. You know there's still room to grow in the US but you think about these international markets, in some cases we're just getting started there. So as we look ahead and say how are we going to go from 6 point something to 10 billion? We can chart that out. We feel very confident.
- [29:47]
Tim Stankevicius
Our thanks to Michelle Goss, president and CEO at Levi Strauss. That stock by the way jumping the most in about a year following its results.
- [29:55]
Carol Massar
Still ahead on Bloomberg Businessweek, the 10 companies to watch in the second quarter.
- [29:59]
Tim Stankevicius
Everything from a high end automaker to a sports gambling platform to yes, a big global bank.
- [30:05]
Carol Massar
That list, it's coming up next. This is Bloomberg.
- [30:12]
Public Representative
Support for the show comes from public. Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts. Yep. High yield cash. Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by
- [30:56]
Tim Craighead
Public Holdings Brokerage services by public investing
- [30:58]
Public Representative
member FINRA, SIPC advisory services by public
- [31:01]
Tim Craighead
advisors SEC registered advisor crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures@public.com disclosures here's a paradox.
- [31:11]
My Policy Advocate Representative
We buy insurance for peace of mind. Yet the very policies we trust can deliver the biggest financial shocks. Across America, millions of claims are denied every year, not because people did anything wrong, but because policies quietly excluded the things that happened. The psychology of trust tells us we assume the contract is fair. But in insurance, the information gap is massive. The insurer knows every detail of what's covered. The policyholder rarely does. That's where my policy advocate comes in. For just 27 cents a day, their platform reads your policies and shows you in plain language where you're vulnerable. They're not selling insurance. They don't do that. It's about transparency, giving ordinary people the same understanding insurance companies have had for decades. Because when you know what's really in your policy, you can plan, protect and avoid surprises. Before you trust your policy to protect you, let my policy advocate tell you what it really says. Visit mypolicyadvocate.com today. Peace of mind starts with knowing the truth.
- [32:10]
Tim Stankevicius
Mypolicyadvocate.com deadlines move, plans change and sometimes opportunities pop up out of nowhere. When you need branded gear fast, 4imprint is ready to deliver. 4imprint offers hundreds of promotional products in their 24 hour category. Everything from custom apparel bags and drinkware to writing tools, trade show staples and high tech gear. At 4imprint, they're focused on getting the details right, printing your logo with precision, packing your order with care and shipping it out fast. And it's backed by their 360 degree guarantee. That's four imprints promise your order will show up right on time, just the way you planned it. That's what it means to be four Imprint certain. So if you're prepping for a last minute event or jumping on a big opportunity, you don't have to settle or scramble. With four Imprint, Fast reliable service and peace of mind are built right in. Check out their full 24 hour selection at4imprint.com for Imprint for certain, you're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube. Our Bloomberg Intelligence his team is amazing. You hear from them on our program almost every day. They're all over the world. They're out in the field. They talk to executives and customers. They crunch numbers. They're in the Excel docs. They're listening to those earnings Calls, they're doing everything. They're writing research. You got to see their research.
- [33:37]
Carol Massar
They're a gift, man, to us every day.
- [33:39]
Edward Fishman
Yeah.
- [33:39]
Tim Stankevicius
If you're not new to our program, then you know that each January the team produces this list of 50 companies to watch at the beginning of the year. Tim Craighead is the man behind that list. We're so happy to have him. Tim Craighead, Bloomberg Intelligence Senior European Strategist. He's Director of Research Content. He joins us here in the Bloomberg Interactive Broker studio. Welcome.
- [33:56]
Tim Craighead
Nice to have you to be here.
- [33:58]
Edward Fishman
Okay.
- [33:59]
Tim Stankevicius
The headline is so good. Ferrari's Advil and AI chips. 10 companies to watch. Right now the big question that I think everybody has is how do you
- [34:06]
Carol Massar
like our life in a nutshell?
- [34:07]
Tim Stankevicius
Well, how do you whittle down? How do you whittle down? Yeah, that's except for the Ferrari.
- [34:11]
Michelle Gass
Yeah.
- [34:11]
Carol Massar
Well, okay, that's a minor thing.
- [34:13]
Edward Fishman
Yeah.
- [34:13]
Michelle Gass
Everything else. Yes.
- [34:14]
Tim Stankevicius
How do you whittle this down not just from the 50 companies, companies in January, but from the universe of companies that your team follows?
- [34:21]
Tim Craighead
Yeah. So we cover 2500 plus companies. So it's a lot of companies. And we have a list of ideas we call focus. Ideas that are high conviction, fundamental calls. You know, we think revenue is going here, margins are going there. That is against consensus in some way. Market things differently. And there are catalysts ahead that we think could be triggers to change the market mentality. We've got about 125 of those currently. We zero in on the 50 for the year ahead because there's catalysts coming up in the new year and these 10 are just a subset. It's a different 10. None of these were on the 50. But 10 companies that have got second quarter specific catalyst ahead that we think are important.
- [35:10]
Carol Massar
So do you come to these names, Tim, by doing some, I don't know, algorithm. Algorithm or something or do you have or discussion or a combination of both?
- [35:18]
Tim Craighead
It's a really good question. These are bottom up analyst ideas. Yeah. So you know, you say Ferrari, you have to talk about Ferrari. Mike Dean is our, is our senior European Autos analyst. He has the good fortune of covering everything from Porsche to Ferrari to, you know, Lamborghini within vw. But he sees a new product driven story in Ferrari, has thought about what the implications are for its revenue and its profitability and that's what's. I'm sorry, this is terrible. But driving the idea, speeding to the idea.
- [35:58]
Tim Stankevicius
I love it.
- [35:59]
Carol Massar
No, but you think about it, right? Because the car sector, it's kind of interesting. We've spent so much time talking EVs and other things, but this is certainly higher end and, and you know, so it's product innovation models, but it's also like we've got wealthier consumers out there who have money to spend.
- [36:14]
Tim Stankevicius
Well, they.
- [36:15]
Carol Massar
Or is that part of it?
- [36:16]
Tim Craighead
It is. It's interesting because not to go too much down a rabbit hole, but the European auto sector in particular, which you think you've got Mercedes and BMW and Porsche and Ferrari among others, they had a really great idea coming into 2025 that ended up being a car crash. Sorry, all these puns.
- [36:39]
Carol Massar
Yeah.
- [36:39]
Tim Craighead
Because the world was moving to EVs and lots of investment in it and then not. Yeah. And China was a big customer and then it wasn't. And all of that hit in 2025. Looking here now, we've got an awful lot of costs that have been taken out. The franchises are still quite good. People still buy Beamers, people still buy Ferraris. And those who can buy a Ferrari aren't really impacted by some of the things going on in the world of geoeconomics these days. And they've got a three year wait list on stuff that costs a lot of money.
- [37:16]
Tim Stankevicius
Yeah, it's pretty amazing. Even though the average price has jumped 24% in the past five years, Ferrari mains sold out through 2027.
- [37:23]
Tim Craighead
Not bad.
- [37:24]
Tim Stankevicius
Serious pricing power.
- [37:25]
Tim Craighead
Yeah. And you know the, the F80, which is the new super car that's starting to ramp, and the Lux, the new electric are one of our two of 20 new models coming over the course of the next couple of years. It's an ongoing flow.
- [37:42]
Carol Massar
Where do you want to go next?
- [37:44]
Tim Stankevicius
Do we, do I want to go to Broadcom?
- [37:46]
Carol Massar
Okay, good. I'm glad because we talk a lot about this space AI. Yeah.
- [37:51]
Tim Craighead
Yeah. This one's kind of cool. We've got a, a few different focus ideas that are different flavors of what this one specifically is. And it's about chips. You know, who is the big chip company that everybody focuses on, you know, Nvidia, of course, you know, and it makes the graphic processors that are powering the LLMs. What Broadcom has found that it has are customized, what are called Asics. They're specialized chips that don't train the big LLMs, but they are very task specific and, and are great and a lot cheaper at doing the same thing over and over again. So when you start doing the inferencing or the using of AI for specific tasks, you use their XPU and it's growing Like Weeds, which is really fascinating
- [38:41]
Carol Massar
because the AI conversation if you think about it, what we are we in our third or fourth year of having it and just how it's evolved. And the inferencing is something that we're hearing more and more.
- [38:50]
Tim Craighead
The shift from training to inferencing as companies are actually starting to use this stuff in real business.
- [38:56]
Tim Stankevicius
But like, like Ferrari, there's a new product with this.
- [38:59]
Tim Craighead
Yeah.
- [38:59]
Tim Stankevicius
So there's like a theme.
- [39:00]
Tim Craighead
It's the ongoing development and use of XPUs as inferencing takes off and that is the new product story. The other, not to totally jump if you don't want to, but the other new product, Win, that's interesting. Interesting is Dexcom, which is probably a company that most of your listeners aren't familiar with medical devices. They make glucose monitors for diabetes and it's wearable, which is great. They've had a 10 day model out. So you're talking not pricking your fingers. You know, it's, it's a vast change in, in quality.
- [39:37]
Carol Massar
I know folks who have these monitors, they're game changers.
- [39:40]
Tim Craighead
And the new win that's now ramping is a 15 day, not a 10 day. And so it extends it and it's more profitable for the company.
- [39:47]
Edward Fishman
Yeah.
- [39:48]
Tim Stankevicius
What do you. And of course if you have a 10 day, that gives you a reason to buy that 15 day. The 10 day has changed your life.
- [39:53]
Edward Fishman
Yeah, yeah.
- [39:54]
Tim Stankevicius
50% more time without having to prick your finger.
- [39:57]
Carol Massar
You stay with it. And there is insurance coverage of these monitors. So you think about that in terms of the marketplace.
- [40:04]
Tim Stankevicius
Elizabeth reminding us we had the Dexcom President and CEO Jake Leach on.
- [40:08]
Michelle Gass
We did.
- [40:08]
Tim Stankevicius
Back in January.
- [40:09]
Carol Massar
We did.
- [40:10]
Tim Stankevicius
So if you missed that conversation.
- [40:11]
Carol Massar
Yeah. And it was, it was kind of, it was kind of cool. All right, where do we want to go? So that's new product innovation. You do have like major themes. You have competition, financials.
- [40:19]
Tim Craighead
Let's.
- [40:19]
Tim Stankevicius
Do you want to do competition? What do you want to do?
- [40:22]
Carol Massar
I kind of feel like we should do financials only because we have banks coming up.
- [40:25]
Tim Stankevicius
Okay, so we'll do competition.
- [40:27]
Carol Massar
We have, we have time, but so talk to us because you do have several financials. Deutsche Bank, Japan exchanges, Magellan. So tell us a little bit about the finance.
- [40:34]
Tim Craighead
So, so Deutsche Bank. So these are broad ranging for sure. Touch on various different elements. But you know, one of the things with banks is it's a finger of the pulse of the economy. And Deutsche bank sits in Germany. You know, the, the big stimulus driver for Europe is the German Stimulus package to drive both defense and renewed infrastructure investment. That drives local lending, local business. And it's a good thing for Deutsche Bank. Spreads are also quite wide. Its capital structure is quite strong and we think all of this will flow through into earnings and buybacks that are going to surprise. The Japanese exchange is totally different. You know this is the equivalent of the New York Stock Exchange.
- [41:21]
Carol Massar
Right.
- [41:21]
Tim Craighead
The London Stock Exchange. And the Japanese stock market has been on fire. Much more attention shifting from a global investment perspective in Japan as you all probably talk about from time to time and as trading activity ramps, these guys just benefit at the same time interest rates are actually ratcheting up in Japan. It's a, it's a long term critical story for Japan that plays into these guys because as you trade more, there's a CAT cash cushion that's part of the collateral when you're investing. They earn interest on that cash. And so as trading goes up and the cash expands and interest rates go up, they get a double benefit. That's kind of cool.
- [42:04]
Carol Massar
It does feel like in the last year or two, right. Japan has been the story on fire.
- [42:09]
Tim Craighead
The corporate governance story behind Japanese corporates. It's definitely been driving that bus, but
- [42:15]
Carol Massar
it was a long time.
- [42:16]
Michelle Gass
Yes.
- [42:17]
Tim Stankevicius
And a great reminder to. Like I said, the team is all over the world and the ideas in here are truly global. Magellan is also on that list.
- [42:23]
Edward Fishman
Talk about how that.
- [42:24]
Tim Craighead
Yeah, so that's an asset manager. This falls under the M and A category. They made a big acquisition and it's boosting their assets under management quite quite well. And they've got an 80% payout ratio. That is part of how they manage, you know, their, their financials. That's not in analyst expectations yet. From the standpoint of how the earnings from the new acquisition will flow through into these guys income and will feed through into dividends. We think there's upside accordingly.
- [42:59]
Carol Massar
Is this at all related to Fidelity Magellan or. No, it's completely separate. Sorry.
- [43:05]
Tim Craighead
Australian based. Speaking of being all over the world. Australian based asset management manager.
- [43:11]
Carol Massar
All right, let's go to. I know he's waiting.
- [43:13]
Tim Stankevicius
Yeah, I want to go to competition because you have some really interesting companies in here. Including one in the sports gambling. Indeed that has been.
- [43:20]
Tim Craighead
Do you all talk about prediction market?
- [43:22]
Carol Massar
We do talk about prediction actually. The screen right in front of me is Poly Market about when this war will end.
- [43:28]
Tim Stankevicius
There you are, you can actually access on the terminal. WSL Predict is a great shortcut to the prediction market data and it's aggregated here and it's sort of by like what is most active in terms of contracts. And like you said, the most active. Carol Trump announces the end of military operations against Iran by question mark.
- [43:48]
Tim Craighead
So Anyway, so, so DraftKings. Yeah. Sports betting, which is the issue for
- [43:56]
Tim Stankevicius
DraftKings, that it's on prediction markets.
- [43:58]
Tim Craighead
Well, exactly. And it goes back even to the super bowl period where you're going through the playoffs and there are tons of downloads of Kalshi prediction.
- [44:08]
Carol Massar
Right.
- [44:09]
Tim Craighead
And that scared everybody that DraftKing and its sports betting stuff would suffer. True, the downloads were bigger on Kalshi, but if you look at the installed base, it's still far, far larger. For DraftKing, it's businesses we think going fine and they're also launching their own prediction app. They will, they will be driving better business than everybody thinks is going to run into problems.
- [44:38]
Tim Stankevicius
So that the team thinks that DraftKings will be able to hold a candle to the established prediction markets. Calcium poly market, not publicly traded here in the U.S. correct. Wow.
- [44:48]
Carol Massar
So stock is down more than 30% year to date, we know because of concerns about competition and threats.
- [44:54]
Tim Craighead
Concern of competition and you know, we would expect to see better than the expected earnings coming up in the upcoming period as well as throughout this year. So quite interesting.
- [45:04]
Carol Massar
It's been a fascinating market we talk about all the time.
- [45:07]
Tim Stankevicius
Where else do we go on?
- [45:10]
Tim Craighead
Yeah. So this is one that probably a lot of listeners aren't necessarily familiar with. Chinese company. They are, they are the biggest food deliverer delivery company in China. So you know, you think Uber eats or for me in London, Deliveroo. So that's it. But they've also gotten into other businesses of, of everything from you order groceries and they'll deliver just like Ubereats. They'll also do travel related stuff. So they've extended themselves which on one hand is good, but there's also encroaching competition. Alibaba, which is the biggest of the E commerce companies is getting into this business in particular when it's in that Insta shopping stuff where you get 30, 30 minute delivery. So like immediate delivery of groceries and things like that. We think consensus is underestimating the costs that Meituan is going to be incurring to drive their business forward with increasing competition.
- [46:19]
Carol Massar
So no defense companies, huh?
- [46:22]
Tim Craighead
Not on this.
- [46:23]
Carol Massar
That was interesting.
- [46:24]
Tim Stankevicius
Against consensus, Carol.
- [46:25]
Carol Massar
Against consensus. I know, I know, I know, I know, I know. Yeah, yeah, yeah.
- [46:28]
Tim Craighead
Everybody loves defense right now.
- [46:29]
Carol Massar
They really do. Right. It's just kind of which you know,
- [46:33]
Tim Craighead
makes it interesting especially living in Europe where take a Look at Ryan Matteo and some of these other defense related contractors. They've been on fire.
- [46:43]
Carol Massar
Before you go, just quickly because you are over in London and watching this war, you know, we obviously are covering day to day, what is the, the view, the perspective from there in terms of the impact and what's going on?
- [46:56]
Tim Craighead
Yeah, I mean, I guess a couple things come up come to mind in a nutshell. Number one, this year was set up to be the good year. You actually started to see better economic statistics after a rather blah last year when the US Was doing better. There was the hope and expectation that interest rates were going to be coming down from both the BOE as well as the ecb. You had the stimulus initiative coming through and lots of discussion across other European governments to get behind some of the elements of the infrastructure and defense spending domestically. You know, there's a lot of defense spending going on in Europe because of, you know, what's happened with Russia, Ukraine. But the hope has been that some of that could be done in Europe as opposed to buying from US Contractors. So all of these things were coming together and now, you know, the Iran war takes place and all of that's been thrown out the window. Europe is more exposed to the energy issue and set aside the war. The focus is on how long is the constraint of commercial traffic through the Strait of Hormuz. And that's what the focus is on. And we shall see.
- [48:14]
Carol Massar
Yeah, there's so many, we talk about so many different things in headlines, but it really just comes down to that. And we talk about, right, that's the main leverage for Iran. So you wonder about what kind of conditions they need or guarantee before that they open it up.
- [48:26]
Tim Craighead
So the story is not off the rail for, for Europe, but it's more sensitive and more exposed in many ways than what necessarily is the case here.
- [48:35]
Carol Massar
That's why we often talk about comparison between Brett and WTI because then again,
- [48:40]
Tim Craighead
look at the $5 gasoline prices here and you know, it's not immune.
- [48:44]
Carol Massar
Yeah.
- [48:45]
Tim Stankevicius
Tim Craighead, do not be a stranger. Come hang out with us in the interactive Broker studio.
- [48:49]
Carol Massar
Pleasure time, free time here.
- [48:51]
Tim Stankevicius
Tim Craighead, Senior European Strategist and Director of Research Content for Bloomberg Intelligence. This is the Bloomberg Business Week daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on bloomberg.com, the iHeartRadio app TuneIn and the Bloomberg Business app. You can also watch us live every weekday day on YouTube and always on the Bloomberg terminal. For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations around masculinity can quietly wear men down, often without clear warning signs. In season three of the Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by Cigna Healthcare. These days it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent, secure any agent. Okta secures AI deadlines, shift plans change, and sometimes you just need promo products fast. Turn to 4imprint 4imprint has hundreds of promotional items available with 24 hour turnaround, from custom apparel and drinkware to trade show gear, writing tools and more. And their 360 degree guarantee promises your logo will be printed with care, your order ships fast and it'll show up right and on time. That's the certainty of 4imprint. Check out the full 24 hour selection at 4imprint.com 4imprint. For certain.