BI Weekend: Novo Pill, Retail Earnings, Restaurant Sales

Summary

Bloomberg Intelligence

Episode: BI Weekend: Novo Pill, Retail Earnings, Restaurant Sales
Date: November 28, 2025
Hosts: Scarlet Fu & Paul Sweeney

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Episode Overview

Scarlet Fu and Paul Sweeney leverage the expertise of Bloomberg Intelligence analysts to break down vital market news and explore company research. This episode centers on a range of topics: the recent setback for Novo Nordisk's Alzheimer's pill, trends in the restaurant sector, standout retail earnings (Kohl’s, Abercrombie & Fitch, Dick’s Sporting Goods, Best Buy), travel budgets into 2026, Cisco’s growth prospects, and evolving FCC policy impacting TV networks. The discussion features expert insights, market trends, and sharp commentary, designed to guide investors and industry watchers.

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Main Topics & Key Insights

1. Novo Nordisk Pill Fails Alzheimer’s Test

Segment: [02:43]–[08:10]

• Context: Novo Nordisk’s pill form of Ozempic (semaglutide) failed to show benefits in slowing Alzheimer’s progression, causing the company’s stock to fall.
• Expert Guest: Sam Fazeli, Bloomberg Intelligence Director of Research, Global Industries & Senior Pharmaceuticals Analyst

Key Points:

• Trials tested semaglutide (GLP-1 drug) in pill form for Alzheimer’s, based on some early observational and animal evidence.
• The trial did not reach efficacy; some secondary “biomarker” effects were noted, but the primary endpoint failed ([03:15]).
• Potential reasons for the failure:
  • Theory may have been flawed, or
  • Pill delivery possibly less effective than injectable forms.
• On future prospects:
  “Who’s going to put the money in to test it?”—Sam Fazeli ([04:22])
  • Other companies (e.g., Lilly, Roche) are pursuing alternative drug mechanisms.
• Market implications: Alzheimer's is a vast and growing market as the population ages. Effective treatments exist to slow, but not stop or reverse, disease progress ([05:25]).
• Timeframe: In the next two–three years, we may see early diagnosis treatments reach market, but costs and access are major hurdles ([07:15]).
• “Try and slow that down to give them another 10, 12, 20 years of dignified life.”—Sam Fazeli on treating mild cognitive impairment ([06:22]).

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2. Restaurant Industry Update

Segment: [08:15]–[13:34]

• Expert Guest: Michael Halen, BI Senior Restaurant & Food Service Analyst

Key Points:

• Fine dining: Strong rebound as high-income consumers, buoyed by assets, continue spending ([08:41]).
• Quick Service (QSR):
  • Weak first half of 2025 due to overaggressive price hikes, leading to customer pushback, especially among lower-income groups.
  • Recovery in second half after renewed focus on value (e.g., McDonald’s dollar menu and new snack wraps) ([09:46]).
  • McDonald’s set to see gains as it laps last year’s E. coli scare.
• Beef prices: Significant cost inflation, putting heavy margin pressure on burger chains/steakhouses ([11:10]).
  • Franchise-heavy models (e.g., McDonald’s, Wendy’s) shield parent companies from beef inflation, shifting burden to franchisees.
• Franchise vs. owned/operated models:
  • Franchising offers stable, predictable earnings and less margin risk.
  • Retaining ownership works better for operations-focused or high-return chains (e.g., Texas Roadhouse, Cava) ([12:32]).

Notable Quote:

• “We love it. It's easier to predict the earnings and the free cash flow. It's a much more steady business model.”—Michael Halen on franchising ([12:32])

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3. Retail Earnings: Kohl’s & Abercrombie & Fitch

Segment: [16:35]–[20:10]

• Expert Guest: Mary Ross Gilbert, BI Senior Equity Analyst, Retail

Key Points:

Kohl’s:

• “They've kind of gone back to the basics…”—Mary Ross Gilbert ([17:05])
• Emphasis on private brands and petite sizing—reversing former leadership’s pivot to more external brands.
• Positive comp sales in the most recent month is encouraging, positioning the chain to possibly break even in Q4.
• Still losing market share to off-price and value chains (e.g., Old Navy, Gap).

Abercrombie & Fitch:

• The Abercrombie brand is cycling high double-digit gains from prior years, causing softer current comps, but still better than expected ([19:00]).
• Hollister (the Gen Z-focused label) is driving momentum, posting double-digit comp increases and compensating for some Abercrombie slowdown.
• Prospects for positive comps in Q4, riding strength from Hollister and strategic brand positioning.

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4. Tech Industry: Cisco’s “Goldilocks” Growth

Segment: [20:21]–[24:24]

• Expert Guest: Woo Chin Ho, BI Senior Technology Analyst

Key Points:

• Cisco’s product upgrade cycle: $43 billion upgrade opportunity could drive outsized growth.
• AI Segment: Revenue could triple to $3B in fiscal 2026 from $1B in 2025; overall company growth expected at the high end of guidance (~7–8% in 2026) ([20:39], [22:07]).
• Financial health: Net cash positive ($20B in debt, $30B in cash). No need to issue new debt for AI expansion ([21:26]).
• Risks: Some exposure to broader tech capex cycles, but AI is still a modest share (6–7%) of total sales.
• Return to shareholders: Active share buybacks and a stable dividend (currently 2%).

Memorable Moment:

• “What’s not to like? Stock buybacks and a dividend yield and an AI story if it works out.”—Woo Chin Ho ([24:15])

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5. FCC, TV Network Ownership, and Trump’s Involvement

Segment: [24:24]–[29:11]

• Expert Guest: Matthew Shelton Helm, BI Media Litigation Analyst

Key Points:

• Trump opposes FCC moves to deregulate TV network ownership caps after Newsmax report, worrying about greater reach for select networks.
• The FCC’s regulation currently restricts any network from reaching >39% of households, but deals under review (e.g., Nexstar’s proposed acquisition of Tegna) could breach that ([25:00]).
• Trump’s influence may force the FCC to stall deregulation, but the policy impact remains to be seen.
• The industry is arguing for relaxed ownership limits, given broadcast’s decreasing influence in a digital-first world, and its competition with unregulated streaming giants ([28:08]).

Notable Quote:

• “I think this FCC wants to deregulate in this space, and I think there’s going to be a pushback against Trump’s view on this.”—Matthew Shelton Helm ([26:19])

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6. Additional Retail Earnings: Dick’s Sporting Goods & Best Buy

Segment: [32:14]–[37:44]

• Expert Guest: Lindsey Dutch, BI Consumer Hardlines Senior Analyst

Key Points:

Dick’s Sporting Goods:

• Strong legacy business in Q3; raised outlook on continued momentum.
• Foot Locker acquisition brings challenges: weak Q4 expected, significant markdowns to clear inventory ([32:51]).
• Nike remains a crucial vendor for Foot Locker, especially in basketball; Dick’s diversifying with newer brands.

Best Buy:

• Q3 beat expectations, driven by mobile and computing sales, with signs of home theater recovery ([35:52]).
• Guidance for Q4 conservative; promotions will be key.
• Expansion into marketplace selling and increased advertising to capture more wallet share.

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7. Travel Budgets & Trends for 2026

Segment: [37:48]–[43:06]

• Expert Guest: Jodi Lurie, BI Senior Credit Analyst

Key Points:

• Two-thirds of surveyed consumers expect to maintain or increase vacation budgets for 2026; however, those who face cost overruns are less likely to expand their budgets ([38:16]).
• Inflation is shaping behavior: more people plan to seek free or low-cost activities if budgets are exceeded.
• Americans are favoring closer destinations—for example, Canada now ranks second for international travel, likely bolstered by events like the World Cup ([39:40]).
• “All-inclusives” and tiered premium products (in cruises, airlines, car rentals) are popular, but “all-inclusive” often comes with extra upcharges for formerly bundled services ([41:28], [42:38]).

Memorable Exchange:

• Paul Sweeney on all-inclusives:
  “If I had, if I knew about the all inclusive, that would have been a savior for me. What are people doing when... I mean, they're not going to Poughkeepsie, they're going to Paris.” ([41:00–41:24])

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Notable Quotes & Moments

• “It would be magic if this thing just helped so many different diseases.”—Sam Fazeli on the broad potential of GLP-1 drugs ([04:46])
• “Franchising eliminates a lot of the operating leverage and thus the risk to your margins out of the business. Right.”—Michael Halen ([12:32])
• “The industry would have an effective argument...broadcasters are left to try to fight with one hand tied behind their back with these, these, you know, ancient FCC rules on the books.”—Matthew Shelton Helm ([28:08])
• “You're only talking about 6 to 7% of total sales. Right. So if the AI story collapses, they're still in very good stuff.”—Woo Chin Ho on Cisco ([23:21])
• “Even though you have something called all inclusives...what every company is doing...is they're all segmenting to give the lower income consumer the ability to say that they traveled and the higher income consumer the ability to travel luxury.”—Jodi Lurie ([41:28–42:31])

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Timestamps for Important Segments

| Segment | Timestamp | |---------------------------------------------------|------------| | Novo Nordisk Pill/Alzheimer's Trial | 02:43–08:10| | Restaurant Industry Trends | 08:15–13:34| | Retail Earnings: Kohl’s & Abercrombie & Fitch | 16:35–20:10| | Cisco’s Growth and AI Story | 20:21–24:24| | FCC/Media Ownership and Trump’s Comments | 24:24–29:11| | Retail Earnings: Dick’s & Best Buy | 32:14–37:44| | Travel & Leisure Budgets for 2026 | 37:48–43:06|

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Conclusion

This week’s Bloomberg Intelligence episode delivers a comprehensive sweep of the landscape for investors, covering pharma setbacks, consumer trends driving restaurants and retailers, tech sector optimism, regulatory tension in the media, and evolving travel patterns. The collective takeaway: uncertainty remains, but pockets of growth and opportunity persist for those tuned in to the data and ready for the risks.

Transcript

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[Scarlet Fu]

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[Paul Sweeney]

How do you think the Fed is looking at tariffs? The uncertainty of tariffs?

[Scarlet Fu]

Let's take a look at the sectors and how they perform.

[Paul Sweeney]

A lot of investors getting whipsawed every.

[Scarlet Fu]

Day by news events, breaking market headlines and corporate news from across the globe. Could we see a market disruption? A market event?

[Paul Sweeney]

People just too exuberant out there?

[Scarlet Fu]

You see some so called low quality stocks driving this short term rally. Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Radio, YouTube and Bloomberg.

[Paul Sweeney]

Originals on today's Bloomberg Intelligence show, we dig inside the big business stories impacting Wall street and the global markets.

[Scarlet Fu]

Each and every week we provide in depth research and data on some of the 2000 companies and 130 industries our analysts cover worldwide.

[Paul Sweeney]

Today we'll look at why the retailer Kohl's rates its full year outlook for the second straight quarter plus A look.

[Scarlet Fu]

At why travelers may be eyeing similar spending for vacations in 2026.

[Paul Sweeney]

But first we move next to some news in the biotech space.

[Scarlet Fu]

This week we heard that a pill version of Danish drugmaker Novo Nordisk Ozempic failed to slow the progression of Alzheimer's in a pair of studies.

[Paul Sweeney]

Novo said this was based on a cognitive assessment for patients who took the medicine. The drug maker will now discontinue a planned one year extension of the studies.

[Scarlet Fu]

As a result, Novo stock plummeted to its lowest in more than four years. We were joined by Sam Fazeli, Bloomberg Intelligence Director of Research for Global Industries and Senior Pharmaceuticals Analyst.

[Paul Sweeney]

We first asked Sam to break down Novo's recent studies is not about obesity.

[Baillie Gifford Representative]

It's about a drug, semaglutide in a pill form that they've tested in Alzheimer's disease. And the theory was, and there was some evidence that people who were the very first version of the GLP1 drug, so Victoza or liraglutide, they had a lower risk of developing Alzheimer's when you looked at historic or retrospective data and there's animal models, etc. So they thought that it's worth a try and it didn't work out. They said that they're seeing some impacts in some biomarkers, etc. And we'll find out next week what biomarkers. But the trial didn't work out. And the question here is, was the theory wrong or is the drug not good enough? Is the pill enough? And we know the pill doesn't do as well in obesity as the injection. Should they have tested the injection?

[Scarlet Fu]

That's a good question. And you mentioned that the ingredient here that we're paying attention to is semaglitude, which I hope I'm pronouncing correctly there. Does that mean that this ingredient and Alzheimer's are just a no go from here on out or does there need to be more testing before we can determine that?

[Baillie Gifford Representative]

Yeah, there needs to be more testing, but who's going to do that? I mean, having failed now, who's going to put the money in to test it? Now, Lilly does have an Alzheimer's business in a completely different with a different set of drugs and they have a more punchy product once weekly with a relatively easily administered pen. That would be interesting to see whether that helps. And you know, sort of you get more, much more drug in the body or maybe redesign it a bit. So it really does depend on how much appetite for risk these companies have. And really now with just over, literally just over trillion dollar market cap, maybe they should give it a go. You know, it would be magic if this thing, it literally would be magic if this thing just helped so many different diseases.

[Paul Sweeney]

Sam, talk to us about just the market for dementia. Alzheimer's is one, one part of it. I would think that's A, it's a big market and B, it's got to be a growing market with people living longer. How do you guys think about it and how do you play it if you're an investor?

[Baillie Gifford Representative]

Yeah, it is a significant societal issue, number one. And I think there are many, not many families who would say that they haven't experienced it if they have older people in their extended family. So the market has humongous potential, but you need drugs that actually treat the disease. Remember, by the time you have Alzheimer's, that is a full blown dementia of the Alzheimer's. It's a bit late. That means there's a lot that's already happened. So you need to go early. Long, expensive trials. And Lilly is doing that with their assets. So fingers crossed, we'll find out in the next two or three years where they're going early with these assets. Roche is doing it too would be beneficial.

[Scarlet Fu]

Right? I mean, the tests with the pill form of Ozempic was definitely a lottery ticket. If it worked, great. If not, we're back to the drawing board. Are there any effective treatments right now against dementia or Alzheimer's?

[Baillie Gifford Representative]

Well, by effective, I mean, it's tough to say, but there are drugs that lower this thing that is viewed as a, as a critical part of the Alzheimer's disease, which is amyloid plaques in your brain. They do lower it. Lilly's got that drug, Biogen's got an equivalent drug. Roche is trying a similar approach. And you do slow down the, the degeneration. You don't stop it, you slow it down. So what we really want is to stop people getting to that degeneration. Try and get them before they have full blown Alzheimer's or dementia. So that's called mild cognitive impairment. Try and slow that down to give them another 10, 12, 20 years of dignified life.

[Paul Sweeney]

So where do you think we are on a timeframe for something like that, Sam? Is that measured in a couple of years or more than that?

[Baillie Gifford Representative]

Well, so Lilly is literally trying that. And we'll find out whether. And they have the better drug in this space. We'll find out whether in the next two or three years. Remember, these things are trials that need to be run until you start seeing A difference. They get to that point and of course then society has to decide, well, how are we going to pay for this? How many people? Because there's a large market, right. How many people are we going to want to treat with the prices of these drugs, whatever they are, even if it's $10,000 a year, right. And they are on their way to becoming worse. And we want to slow that down. You have 10 million people. I mean, this could be, this could be similar in terms of value to the obesity market. But you need the drug to do that. So let's, let's wait and see. And Roche has got a new way of trying to do it and they're going to go again also to phase three to test that out.

[Scarlet Fu]

Our thanks to Sam Fazelli, Bloomberg Intelligence Director of research for Global Industries and senior Pharmaceuticals analyst.

[Paul Sweeney]

We move next to the restaurant industry.

[Scarlet Fu]

Bloomberg Intelligence will release data for November restaurant sales in early December. And according to BI US Restaurant, same store sales rose 7. 10 of 1% in October, but could drop in November because of the government shutdown.

[Paul Sweeney]

For more on the industry, I was joined by Michael Halen, Bloomberg Intelligence senior restaurant and food service analyst. I first asked Michael to talk to us about how restaurants are doing and whether it depends on the segment of the market they're targeting.

[Michael Halen]

That's definitely part of it. We saw that in last month's data. Fine dining had a really nice rebound. And I think part of it is because they're catering to higher income consumers who own assets and are feeling pretty good about things moving forward right now. November is going to be a tough month. There's no doubt about it. The government shutdown has definitely impacted sales and traffic for the chains we cover, especially in the DMV area as well as in the south where there's a lot of government workers. Also last November restaurant sales had a nice boost from the election and so we're going to be lapping tough, tough comp. So November is not looking great, but things should bounce back a little bit here in December. And we're not crazy bullish, but we're more bullish about the first half of next year.

[Paul Sweeney]

Let's start with quick, Quick Service dining. Talk to us about that marketplace. I think back to McDonald's of the world and so on. How's that faring?

[Michael Halen]

Quick Service had a really difficult first half of the year. They were lapping strong comps and they, and they kind of lost their way when it came to value. Right. They just had implemented too big of price increases over the last few years and customers started to push back, especially low income consumers who have been, you know, who are really impacted by inflation to a much greater degree than middle and higher income consumers. So the first half was difficult, but here in the second half of the year things have gotten better largely because they've re established their value propositions. You know, McDonald's has revamped its dollar menu this year. They also reintroduced snack wraps at a $3 price point which have boosted checks by, you know, people adding them on to their orders as well as bringing in some low income consumer traffic. But you know, low income consumers are pulling back at a pretty big rate. You know, we think part of that is the snap benefit pullback. But they've been able to bring in some higher income consumers and middle income consumers. So things are starting to look better. McDonald's especially, I mean McDonald's is going to be lapping the E. Coli or right now is lapping the E. Coli out from last year. And so you know, they're the 800 pound gorilla. And I think good results out of McDonald's over the next few quarters should boost the entire category.

[Paul Sweeney]

How about the cost of beef which you know, consumers complain about across the board. I know companies are dealing with it and what I understand is we're not going to see a material improvement in the cattle herd till maybe 2028. So how does that factor into the profit margins of all these restaurants?

[Michael Halen]

The restaurants that are impacted the most are, you know, burger chains like Shake Shack or steakhouses like Texas Roadhouse that own and operate all of their stores. You know, to your point, beef inflation for these chains is going to be in the mid teens in the fourth quarter. So yeah, yeah, very high. So definitely a lot of margin pressure for those chains. You know, luckily those two chains have driven traffic as of late into the stores which, you know, and driven higher sales and been able to pass along price increases. And that has kind of helped their operating leverage which has helped offset the higher costs for the burger chains. They there's less impact for the chains that we cover for McDonald's, Wendy's, Jack in the Box because they're largely franchise. So then the franchisees are the ones footing the bill for the higher beef costs.

[Paul Sweeney]

Why like, why do not all chains do like the McDonald's franchisee model? What's the benefits of franchising or what's the benefit of owning versus a franchise? I thought I would. I saw the movie. I think I understand the economics of franchising. It seems pretty good.

[Michael Halen]

Listen, the franchise business, that's a great business, you know, and from where I sit as an analyst, you know, we love it. It's easier to predict the earnings and the free cash flow. It's a much more steady business model. Franchising eliminates a lot of the operating leverage and thus the risk to your margins out of the business. Right. But if you are running a full service restaurant chain where operations is very core to your business, think Darden, think Texas Roadhouse. You want to own and operate your stores because you want to have control over those operations. You want to make sure people are to going, getting a good experience and they're just much harder to run than a McDonald's or a Wendy's. And then I'd say on the, on the last case would be somebody like Shake Shack or Wingstop or Cava. You know, when your cash on cash returns are 40, 50, 60%, we don't think it's a bad thing to be greedy and want to open up as many stores as possible.

[Scarlet Fu]

Our thanks to Michael Halen who covers restaurants and food services for Bloomberg Intelligence. Coming up, a look at why the tech company Cisco may be on a golden lock's growth path.

[Paul Sweeney]

You're listening to Bloomberg Intelligence on Bloomberg Radio providing in depth research and data on 2000 companies and 130 industries.

[Scarlet Fu]

You can access Bloomberg Intelligence via bigo on the terminal. I'm Scarlet Fu.

[Paul Sweeney]

And I'm Paul Sweeney and this is Bloomberg.

[Baillie Gifford Representative]

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[Baillie Gifford Representative]

Task to deliver thoughtful capital deployment. It's not about speculating over the short term. It's about understanding the long term opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Baillie Gifford Actual investors Find out [e-mail].

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[Scarlet Fu]

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[Paul Sweeney]

Radio. We move next to more earnings in the retail sector. This week we got third quarter earnings from Kohl's and Abercrombie and Finch. Kohl's raised its full year outlook for the second straight quarter. It's a sign that Chief Executive Officer Michael Bender is helping to stabilize performance at the struggling.

[Scarlet Fu]

Retailer. Separately, Abercrombie and Fitch raised the low end of its full year sales outlook as its Hollister brand continued to gain momentum. We are joined by Mary Ross Gilbert, Bloomberg Intelligence Senior Equity Analyst covering.

[Paul Sweeney]

Retail. We first asked Mary for her take on Kohl's most recent earnings.

[Mary Ross Gilbert]

Report. They've kind of gone back to the basics. What's something something that Kohl's has always been known for. So one is their private brands. So if you think about some of the brands like SO and Juniors Lauren Conrad for Women and they brought those brands back because they actually sacrificed some of those brands under the prior leadership and replaced them with some more name brands like Madden Girl, trying to really attract the junior shopper there. And now that they've brought the private brands back, they've brought back petite sizing which was really important to their customer base now they're really starting to see a recovery, but they're not out of the woods yet, Scarlett, as you pointed out, I mean, they're really cycling three years of declines, but we are seeing encouraging results. And given that they actually turned positive in the latest month, it looks like they could actually reach break even in the fourth quarter, even though they're guiding to a 1.7% comp sales decline. So it's very encouraging to see with Kohl's, again, not out of the woods. And when you look at what's going on with so far, it's now a $2 billion business. And as you were sort of highlighting, they really lost, you know, over the last four years, something like 4 to 5 billion in other categories. So they have lost market share. We think they're losing it to off price and some of the value players in the specialty space, such as Old Navy, you know, a Gap.

[Scarlet Fu]

Brand. Mary, I also want to ask you about Abercrombie and Fitch. It was the darling two years ago because the new CEO found a way to make the brand relevant to a new audience. It was no longer targeting teenage boys, for instance, and really targeting young working women. But it's had a brutal 2025, a lot of concerns about tariffs perhaps, and maybe even a lack of fresh ideas in terms of its offerings. What's the narrative with Abercrombie and Fitch right.

[Mary Ross Gilbert]

Now? Yeah, so Scarlett, with Abercrombie and Fitch, their numbers came in better than expected. So the namesake brand, as you pointed out, I mean, that had been double digit increases over the last three years. So they're cycling those increases and that's why their sales are coming in less than expected. But this quarter the comp sales decline there was about 3.3%. So that was better than expected. And when you look at Hollister, though, Hollister has been coming in ahead of expectations and they've been posting double digit increases. So as you were talking about sort of the millennial women who really love and also the men, but it does tend to favor more of the women on the Abercrombie side. On the Hollister side, which really caters to Gen Z, that has been on fire. And so that's what's helping to kind of overcome the weakness that they're seeing at Abercrombie. But also it's looking like Abercrombie could turn positive in the fourth quarter with a number of the initiatives that they have in place going into the holiday quarter, even though they're cycling some pretty strong gains in the prior year and the year before.

[Scarlet Fu]

That. Our thanks to Mary Ross Gilbert, Bloomberg Intelligence Senior Equity Analyst who covers.

[Paul Sweeney]

Retail. We move next to some research from Bloomberg Intelligence in the tech space. It's titled Cisco and a Goldilocks growth.

[Scarlet Fu]

Path. According to by Cisco may see 2026 sales above the top end of its 5 to 7% target. And this comes as the company balances strong AI growth with networking.

[Paul Sweeney]

Gains. For more on this we are joined by Woo Chin Ho, Bloomberg Intelligence Senior Technology.

[Scarlet Fu]

Analyst. We began by asking Wooj to break down why Cisco's shares have had a good run this.

[Woo Chin Ho]

Year. So there's a couple of things driving it. They're actually a massive $43 billion product upgrade cycle that Cisco will potentially benefit from, which is going to give them outsized growth in their core networking business. But their store has actually been a lot better than I thought. AI is going to be about $3 billion of sales tripling or $3 billion of sales in fiscal 2026 tripling that of 2025. So there are this Goldilocks of good AI story as well as an upgrade cycle.

[Scarlet Fu]

Tailwind. Paul was asking Michael Casper earlier about a lot of the tech companies issuing debt to pay for their AI buildout. What does Cisco's debt profile look like and will it also need to sell bonds to fund everything it's.

[Woo Chin Ho]

Doing? Yeah. Hey Scarlet. So that's one of the great stories about Cisco. I mean they have roughly about $20 billion in debt and roughly $30 billion in cash. So look, they're net cash positive. They don't need to take on debt. If anything, they've been very active buyers of their stock, very good stewards of the cash, strong cash flow profile and if anything, they're using their cash as leverage to build up the inventory for the opportunity that's ahead of.

[Paul Sweeney]

Them. So talk to us about just kind of the growth drivers for this company which what as you look to 2026, what kind of underpins their top line.

[Woo Chin Ho]

Growth. They got it to roughly the top of the top end of their 4 to 6% growth. I think they're going to do roughly about 7 to 8% growth for this year. So if we think about the story itself, tripling from 1 billion to 3 billion, that's going to be the incremental growth that gets you above to the top end of their revenue growth guidance. You know, the way I have networking flashed out right now, the networking business, you know, X AI is growing roughly around 4% and that's probably towards the low end and quite frankly, if the upgrades come in stronger than, a lot better than we think, there's a little bit of upside now, there is a little bit of drag. The security business hasn't been panned out as, as strongly as they hoped primarily because it is going through this business model transition. But you know, it would have been a story at another time. But the two, two stories as well as a core networking upgrade cycle, I mean that's doing very, very well in 26 and if anything, I would argue would probably be better in.

[Scarlet Fu]

2027. Is Cisco part of this whole circular deal making circular funding concern that has investors worried that if one company in this link stops spending or maybe slows down spending, everyone else will get.

[Woo Chin Ho]

Affected to, to some degree? Yes, Scarlet. And that's why I think if you look at some of the stories there, it's one of the safe bets, right? They are, they are exposed to some of the, I would say the hyperscale names but a very small exposure to it as well as some of the, the NEO clouds, they do sell some routing products and some of the sovereigns. Now if that business disappears, you know, the cash flow story is still well intact, right? If I calculate the amount of AI revenue relative to total, total revenue base, we're only talking about, you know, 6 to 7% of total sales. Right. So if the AI story collapse, I mean AI evaporates, they're still in very good stuff.

[Scarlet Fu]

Standing. Not to mention the fact that they pay out a dividend too. I mean it's not a huge one, but a tech company with a 2% dividend yield is something and they've been.

[Woo Chin Ho]

Steadily. The stock was lower. Yeah, the stock was low. Used to be three. So yeah, there you go. I mean, what's not to like? Stock buybacks and a dividend yield and an AI story if it works.

[Paul Sweeney]

Out. Our thanks to Wu Jinho, Bloomberg Intelligence Senior Technology Analyst. We move next to the news in the media space. US President Donald Trump recently said in a social media post that no television networks should be able to.

[Scarlet Fu]

Expand. Trump cited the potential growth of what he considers left wing news outlets. Trump's post was in response to a Newsmax story that said the FCC head Brendan Carr is moving to give television networks massive reach and push through a merger of nexstar Media Group and.

[Paul Sweeney]

Tegna. For more on this, we were joined by Matthew Shelton Helm, Bloomberg Intelligence Media Litigation.

[Scarlet Fu]

Analyst. We began by asking Matthew if he was surprised about President Trump's recent.

[Matthew Shelton Helm]

Comments. It's a moderate surprise, so it's not a Complete surprise, because Newsmax has participated, participated before the FCC and has been one of the few voices that said, don't do this, don't deregulate this space. And what you really see here is President Trump latching onto an article written on Newsmax's platform opposing the easing of this national ownership cap. What's in play here is that there's current FCC regulation says no company can reach more than 39% of U.S. households. And companies like Nexus, Star and Sinclair want to go way beyond 39%. In fact, Nexstar has a pending deal before the FCC. They just filed their application last week to acquire Tegna. That would take them to 70, 80% of the country. And it depends on the FCC deregulating in this space. So Trump latching on to Newsmax's opposition because he's concerned about the TV networks growing larger is a concern. It's a, it's a real risk. I'm not convinced yet that it's going to lead to real FCC policy. I think this FCC wants to deregulate in this space, and I think there's going to be a pushback against Trump's view on.

[Scarlet Fu]

This. Okay, so the FCC is headed by Brendan Carr, who's been very active in making sure that he's out there doing the President's bidding. Are you saying that Brendan Carr is going to defy President.

[Matthew Shelton Helm]

Trump? Yeah. So that's the big question here. The FCC used to operate as an independent agency, meaning even if the President had a view on something, the FCC could, could chart its own course, that doesn't. That's not going to work anymore. The way this FCC is operating. If the President takes a firm view on, on. On something, the FCC is not going to defy it. Because effectively, the President can fire the FCC chairman then, and, you know, there's no, no future job prospect if you defy the President. What I'm not convinced about is, you know, this was one social media post from President Trump and, you know, talking about concerns about letting the broadcast networks, abc, cbs, Fox get bigger. What I think there could be now in, you know, in back channels is some education from the FCC to the White House that says, hey, easing the national ownership cap, it would let Sinclair nextstar get bigger, probably, but it doesn't necessarily mean the broadcast networks will get bigger. There's still an independent check on that even if we ease this cap. So ultimately, if Trump is against this, the FCC is not going ahead with it, in my view. But I think there's still room for Trump's position to evolve on.

[Paul Sweeney]

This. So, I mean, the reality is, I mean, this is an industry, broadcast television industry, that is arguably on life support vis a vis, forget about cable television, which itself is on life support. They survived that onslaught. Now it's just all about digital and social media. And I would think the industry would have an open, would have an effective argument not just to the DOJ, but to the president as.

[Matthew Shelton Helm]

Well. Absolutely. I mean, that's the case that the national association of Broadcasters has made to the FCC that these ownership restrictions, you know, which come from the 1970s or even earlier than that, really make no sense in the world we live in today, where so much video that is consumed doesn't come from, from broadcast, it comes over the Internet and there are no artificial caps on how much those companies can reach. And broadcasters are left to try to fight with one hand tied behind their back with these, these, you know, ancient FCC rules on the books. And the Republicans at the fcc, Brendan Carr included, strongly agree with that message. And so it's going to be, I think, a little bit of a communication effort that needs to happen between the f FCC and the White House to and the real question will be how does that play out? Does Trump's social media post actually translate to real policy? I'm not convinced that it will.

[Paul Sweeney]

Yet. Our thanks to Matthew Shelton Helm, Bloomberg Intelligence Media litigation.

[Scarlet Fu]

Analyst. Coming up, we'll break down corporate earnings at the retailers Kohl's and Abercrombie and.

[Paul Sweeney]

Fitch. You're listening to Bloomberg Intelligence on Bloomberg Radio providing in depth research and data on 2000 companies and 13030.

[Scarlet Fu]

Industries. You can access Bloomberg Intelligence through bigo on the terminal. I'm Scarlet.

[Paul Sweeney]

Fu. And I'm Paul Sweeney and this is Bloomberg. Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long stocks, bonds, options, crypto, it's all there. Plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com paid for by Public Investing. All investing involves the risk of loss, including loss of principal brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by Zerohash. Complete disclosures [e-mail] Disclosures being a.

[Scarlet Fu]

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[Scarlet Fu]

To mypolicyadvocate.com this is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on on.

[Paul Sweeney]

Bloomberg Radio. We move next to more earnings in the retail sector. This week we got third quarter earnings from Dick's Sporting Goods and Best Buy. Dick's Sporting Goods raised its outlook again. However, investors were disappointed by costs related to turning around the Foot Locker chain it.

[Scarlet Fu]

Recently acquired. Separately, Best Buy raised its guidance for the current fiscal year as demand for the latest consumer tech drove revenue and profit.

[Paul Sweeney]

Last quarter. For more on this we were joined by Lindsay Dutch, Bloomberg Intelligence Consumer Hardlines Senior Analyst. Let's start with Dick's Sporting Goods. They raised their outlook again, but I guess investors are focused on I guess some of the costs trying to turn around Foot Locker. Talk to us about Dick's.

[Lindsey Dutch]

Sporting Goods Lindsey the legacy business remained very strong in the third quarter. Strong back to school. Clear demand momentum heading into the fourth quarter, that's where the raised outlook came. It was really for the legacy business. But when we look at Foot Locker, the deal closed early September. The outlook for the fourth quarter is mid to high, single digit, same store sales decline. Dick's is also looking to expedite the turnaround there, which means offloading old inventory, steep markdowns in that fourth quarter, which is going to really hurt the margin as well. So Foot Locker needs a lot of work. Fourth quarter is going to be weak and investors are really looking to see how quickly they can turn that.

[Scarlet Fu]

Business around. Yeah, and probably they'll need to put some money into it as well to reorganize stores and, and freshen up the display. How much of this deal Dick's buying Footlocker was predicated on Nike and what it was doing with this shift back to its wholesale channels and away from solely relying on its direct to consumer offerings and its.

[Lindsey Dutch]

Own stores. So Foot Locker was, I would argue, overexposed to Nike. Several years ago they had been working that exposure down. I think Dick's will remain focused on being diversified just given that their own associated assortment where they're leaning into lots of other brands, new upcoming brands like Hoka and on. They did discuss though that Footlocker will sort of remain sort of a hub for basketball and Nike does have a strong hold in the basketball market. So I expect Nike to be, you know, a strong vendor with Foot Locker. But Dick's is looking to make sure that they have that right assortment, the newest stuff, the hottest lines coming from Nike.

[Paul Sweeney]

And others. What is Dick saying about tariffs in.

[Lindsey Dutch]

Their business? So they are going to feel higher costs in this back half of the year and even into next year. Dick's has, since the pandemic, since they've been able to see sort of an increase in demand for their premium assortment. They're not really a huge discounter for the holiday. They like to sell their product fully through. So I don't expect them to sort of discount. And they have taken prices up selectively, but certainly not across the board. And their higher income consumer is sort of accepting those increases. I think Footlocker is a little bit of a different story and you might see that impact a little bit bigger on that business just because they don't have those premium products and they're already going to need to offload older inventory with steep discounts. So you sort of have that turnaround compounded with these rising costs heading into the next year. Something for them to.

[Scarlet Fu]

Work on. Lindsey, I also want to ask you about Best Buy Consumer electronics retailer had a beat in Ray's quarter. It looks pretty good and it looks like it's on the usual strains, sales of mobile phones and sales of.

[Lindsey Dutch]

Computer equipment. Yeah. So Best Buy had a strong third quarter. Better as a better than expected. As you mentioned, I think, you know, the stock isn't getting a full bump because there is definitely some conservatism and a low guide for the fourth quarter. And investors are trying to figure out, you know, is it just conservatism, are they just worried about the consumer or is there something really there that there's going to be a slowdown in that fourth quarter. But the, the business looks good, demand looks strong. As you mentioned, computing, phones, gaming, all looking solid and they're also seeing an improvement in home theater which is really big because that has been a weaker category for the last couple of years. So if that comes to fruition, I definitely think there will be strength in the.

[Paul Sweeney]

Fourth quarter. So you think about a Best Buy, I mean some of those are big ticket items here and that would suggest that they go to a part of the K shaped economy, maybe that is doing better. Is that a typical Best.

[Lindsey Dutch]

Buy customer? So Best Buy definitely promotions are going to be a big piece of the fourth quarter. They're sort of leaning into those promotional events. That's what worked last year. And I think they're trying to lean into the things that worked last year for this year. And I do think the consumer backdrop is quite similar when we do that that compare. I also they also recently launched a marketplace and they seem to have a stronger focus on marketing and advertising. And so they're really trying to meet the consumer where they are and make sure that Best Buy is top of mind when you're shopping for a wide array of things, not just those big ticket items like TVs or appliances. So they're trying to have a bigger wallet share with consumers across the board and they're leaning on that marketplace and advertising to do it and then hopefully get you into the store and that's where they can bring their customer service and experience.

[Scarlet Fu]

As well. That was Lindsey Dutch, Bloomberg Intelligence Consumer Hardlines.

[Paul Sweeney]

Senior Analyst. We move next to the travel and leisure sector. We recently took a look at a survey from Bloomberg Intelligence entitled Consumers maintain vacation budgets.

[Scarlet Fu]

In 2026. According to the survey, over 2/3 of respondents to buy proprietary travel survey said that they will spend more to go places in 2026, about the same as last year year. And this comes even with rising.

[Paul Sweeney]

Economic concerns. For more on this we were joined by Jodi Lurie, Bloomberg Intelligence senior credit analyst. We first asked Jodi to break down what she learned from.

[Jodi Lurie]

Bi survey. So we do the survey every half a year and so we just got the results out for the most recent one. And what's interesting is that we're seeing more people planning on keeping their budgets the same. But what's more interesting is that if costs exceed budget budgets, fewer people than last year said they'd increase their budget. And that's on the back of them knowing that inflation is a much higher risk for them for.

[Scarlet Fu]

Their portfolio. So in other words, people are making room for time off but they're going to have to scrimp more in order to make it happen because their, their money is not going to take them as far as it.

[Lindsey Dutch]

Used.

[Jodi Lurie]

To. Correct. And Scarlett, I mean I think to piggyback on that, if you look the eating out anticipation of spending is higher this year than last year. And I think that's less a reflection of people wanting to eat out but more that they're expecting eating out is going to be more expensive. And so even though we're seeing people want to spend on paid activities and experiences which could bode well for the cruise lines and the theme parks at the end of the day when costs exceed budgets, more people this year over last year are planning on cutting and looking at free options. So going to the free museums, going to low.

[Scarlet Fu]

Cost options. Well, now that the government is open, D.C. is an option once again. How about in terms of destination, maybe staying closer to home, maybe not going quite as.

[Jodi Lurie]

Far internationally. Yes, and staying closer to home is very, very much key. If we see the data, the international trend is to Canada. Canada bumped up to the second spot. So we saw that in the mid year and it was pretty curious for us particularly because when you look at it the opposite way and we did this analysis a few months ago, Canada is not coming to the U.S. they don't want to come to the U.S. it's too expensive for them. They don't really like the current government situation. And on top of it, I think they're scared about crossing the border and what it means for immigration. So we're seeing Canadians not come to the US and we're seeing a lot of companies comment on that. But we are seeing a lot of Americans go to Canada and I am curious, curious how much and this is going to come in further reports how much of the Canada move is a reflection of the World cup next year. There's a lot of people going To Vancouver, for instance, for the World Cup. I'll actually be there during the World Cup. But not going to the.

[Paul Sweeney]

World Cup. Why? It's like a billion people are going to.

[Jodi Lurie]

Be there. We might be doing a very family friendly cruise.

[Paul Sweeney]

To.

[Scarlet Fu]

Alaska. Nice. It just works out that that's around the same time as the.

[Jodi Lurie]

World Cup. It was.

[Paul Sweeney]

Bad timing. It was bad. Tim, time. All right, talk to me. This is when I go to Aruba. We go to all inclusive. How come I didn't know about this all inclusive thing when I had four.

[Scarlet Fu]

Little kids? I mean, were they, were they, were they a thing.

[Paul Sweeney]

Back then? I don't know, but I mean, I would get the bill, which would be 5 inches thick with like smoothies and chicken fingers and all that kind of crap that they'd eat throughout the day. Four kids, man. If I had, if I knew about the all inclusive, that would have been a savior for me. What are people doing when they, are they willing to still pay up for travel? Because I still hear people going to Europe and stuff like that. I mean, they're not going to Poughkeepsie, they're going to Paris.

[Jodi Lurie]

And things. Yeah, I mean, Japan is certainly a.

[Scarlet Fu]

Popular destination. Strong.

[Jodi Lurie]

Dollar there. Yeah, very much increased. Italy has increased. We're seeing among the upper income level, you know, Portugal and Spain as popular destinations. And I think probably what's even more interesting is on the onboard spending for cruises is still continuing to, to have momentum at the moment. I think where we're watching is when that onboard spending shifts and then the cruise lines, for example, don't get that gravy for cash flow. And to your point, Paul, I mean, even though you have something called all inclusives, even though you have the cruise lines, that they all are considered these package deal, what every company is doing, and we're talking the rental car companies, you know, Avis is doing this to obviously the airlines is they're all doing this, these premium products, these, you know, you do different tiers of products so the add on so you can get the base level, which is really the skeleton package. But anyone from cruise lines to, you know, theme parks to some extent, to the all inclusives, to the airlines, to the rental car companies are all segmenting to give, you know, the lower income consumer the ability to say that they traveled and the higher income consumer the ability to.

[Scarlet Fu]

Travel luxury. And in terms of the add ons, what are these add ons? Are they, you know, things that they used to offer for free.

[Jodi Lurie]

And now charge you for for some of it, it is. So, you know, a good example I have is anecdotally I know that some of the cruise lines that used to not charge to get people into the center of a city, say in Europe, you're on a European cruise, they used to give that for free. Now they say no, you have to be a part of one of our, you know, expeditions, one of our, one of our excursions in order to get that for free. Otherwise, we charge you $20 to get into the center of town in Czechoslovakia and that Czechoslovakia.

[Scarlet Fu]

Czech Republic. Our thanks to Jodi Laurie, Bloomberg Intelligence Senior.

[Paul Sweeney]

Credit analyst. That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on 2,000 companies and.

[Scarlet Fu]

130 industries. And remember, you can access Bloomberg Intelligence via by go on the terminal. I'm.

[Paul Sweeney]

Scarlet Fu. And I'm Paul Sweeney. Stay with us. Today's top stories and global business headlines are coming up.

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