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- [00:00]
Host
Okay, before we get into it, little side note for the IT leaders listening in. I was reading up on a Microsoft Commission survey the other day and learned that teams using Windows 11 Pro PCs report 62% fewer security incidents compared to Windows 10 PCs, including three times fewer firmware attacks. Pretty significant. With security built in, you'll have AI ready it that sets you up for operational efficiency as well as long term resilience. Upgrade to Windows 11 Pro@Windows means business.com
- [00:34]
Cincinnati Insurance Representative
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 so there's
- [01:35]
IBM Representative
a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise proof of how we can help 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,
- [02:07]
Bloomberg Intelligence Announcer
Bloomberg Audio Studios Podcasts Radio news. You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcast us or watch us live on YouTube.
- [02:29]
Host
Getting back to the stock market earnings coming in here. We had Delta put up some decent numbers here, better than decent numbers and the stocks trading up about seven and a half percent here today. So we want to break it down what it means for Delta, what it means for the airlines, how are they dealing with higher fuel costs and what it might look like as we get ready for the summer travel season. George Ferguson helps us out here. He's a senior aerospace, defense and airlines analyst and amateur sailor as well for Bloomberg Intelligence, joining us from Princeton. George, what you learned today from Delta?
- [03:02]
George Ferguson
Well, I guess what we learned first is that as we expected, capacity probably has to come out of this market. I think if fuel prices stay where they are, the airlines all have to drive fares higher. And at higher fares, you're going to have to start to cut capacity. Delta was adding some of the least capacity in 2Q. We were looking at cerium databases to get sort of total number of seats. They're adding to their, their network, they're adding a little bit less than 2%. So they're, they're talking about going to zero growth in 2Q and not being able to recoup all of what they need in fares to get profitability back to what it was last year. The challenge here will be American growing at 3% according to Cirium, and United growing at 8ish, 9ish percent high single digits. So interesting to see what their competitors say about knocking capacity out of the marketplace to try to get pricing power here.
- [04:00]
Interviewer
What does that effort usually look like, George, when they reduce capacity? Is it, I assume it's not from the most profitable routes, but, you know, maybe some routes that are less frequently used or is it regional routes or does every airline approach this differently?
- [04:16]
George Ferguson
No, I think you're, I think you've got it right. Right. Delta already talked about that in the call as well. They'll start to knock out the least profitable routes.
- [04:23]
Host
Right.
- [04:23]
George Ferguson
And we would imagine that means routes where you're competing against, you know, one of your rivals in the marketplace, and so the consumer gets less choice and then ends up having to, to pay a bit more. You know, I think, look, I think some of their international routes are performing pretty well. They, they talked about strength into, into Europe still, so maybe not much out of there. They talked about weakness in New Mexico, especially with some of the unrest we've seen around Mexico. So we probably see cuts in there. My guess is they'll look at the domestic market pretty closely and look where they're flying against competitors and decide what they want to pull and what they want to keep.
- [05:04]
Host
George, to the extent that the airlines are trying to pass along some of their higher fuel costs to customers, what's the price elasticity of a US Flyer these days?
- [05:15]
George Ferguson
That's, that's pretty challenging, right? I think, I think that the price elasticity is going to be less for Delta, American and United with a premium flyer. And if you look at Delta's results, they were, they were, you know, the basic cabin was getting the least amount of capacity gains and fares were starting to turn positive in that basic cabin. But their premium cabins are where or premium seating is where they're showing some of the bigger gains. So I think their elasticity on those premium seats is a lot lower than the elasticity on that basic seat. So what does that mean? That means as we get into earnings season and we get into these carriers that are carrying a lot more economy passengers, I'm more concerned about their earnings in this quarter and going forward. But there's clearly some elasticity on the premium seats as well.
- [06:14]
Interviewer
George, we heard from Delta that they've quantified the cost of higher fuel through June at more than $2 billion. And last month they saw a $400 million spike in fuel costs in just the first two weeks of March. Nevertheless, Delta sticking with its full year forecast. If oil stays at these levels and does not return to its pre war levels of $70 a barrel, do you expect an updated outlook from Delta?
- [06:41]
George Ferguson
That's a good question. Right. They pulled the full year. Now I think if the volatility stays where it is right now, Delta is going to be reticent to give you, you know, sort of full year guidance. Even the guidance for 2Q, it looks, you know, it's, it's, it's got some pretty decent wide variations on it. So you can see that, you know, I think they're reticent to give you even a lot on the quarter. I mean, you know, fuel prices here, we just doubled fuel prices in what, a month, a month and a half in that environment. And that's one of the most important expenses for an airline. Last year it would have been, you know, in the similar quarter been something like 15% of delta revenue. Now it's going to be 30% consumed by fuel. When fuel is bouncing around at these levels of volatility, I think they're going to be really hard pressed to want to give you full year guidance or sort of increase the tightness of their guidance.
- [07:43]
Interviewer
Stay with us. More from Bloomberg Intelligence coming up after this.
- [07:48]
Host
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. And that's public.com market ad paid for by Public Holdings Brokerage services by Public Investing Member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor Crypto Services by ZeroHash all investing involves risk of loss. See complete disclosures@public.com disclosures so there's a
- [08:48]
IBM Representative
lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions. Resolving 94% of common questions, not noise. Proof of how we can help 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 for many
- [09:18]
Podcast Narrator (Cigna Healthcare / Wasabi Ads)
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 him 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.
- [09:49]
Bloomberg Intelligence Announcer
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10aM Eastern on Apple CarPlay and Android Auto with the Bloomberg business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [10:04]
Interviewer
All right, Mary Ross Gilbert is our senior equity analyst covering retail and we want to get to some earnings. It's not often that you have a retail company come out with earnings at this point in the earnings season, but every once in a while it does happen.
- [10:15]
Host
So yeah, the retailers are usually a
- [10:17]
Interviewer
month late, they're usually a monthly and you know, they're, they're off schedule with what the rest of the companies are doing right now. Let's talk about Levi's right now. Because Levi's has boosted its outlook, its direct to consumer strategy appears to be paying off. Mary, tell us a little bit more about what we've learned about Levi's when it comes to its outlook.
- [10:37]
Mary Ross Gilbert
Yeah, so when it comes to its outlook and when you think about the beat in the quarter and what the company said on their earnings call is that the beat was really driven by the the wholesale side of the business. Clearly direct to consumer led growth you know, was up double digits, up about 10%. But when you look at the wholesale business, that was very strong in the quarter and because of that, that's where they got sort of the beat there. But I think that the company has always done a very good job managing investor expectations. We completely expected a beat and raised. And the great news about Levi's, I think is because last year they exited the denizen business. So this was sort of, it's kind of like a private brand that they had with Target. They also exited Dockers. So they, they really got out of businesses that were really dragging down the top line. And so now what you have left is really Levi's and beyond yoga. And it's a great global brand. Resonates well. They have 46 million loyalty customers. They picked up over 2 million just in the, in the first quarter alone. So you're seeing real strength here. Their campaigns are incredible. I'm sure you saw the behind every original, which debuted at the Super Bowl. So it's fabulous. Features Doichi, among other stars in that campaign. And it's going to be a multi year drop. That's kind of like what they did with the Beyonce campaign where you have these series of campaigns and they're really, they're so fun.
- [12:17]
Host
All right, the TV show Love Story, John F. Kennedy Jr. And Carolyn Bessett. How did that relate to Levi's?
- [12:26]
Mary Ross Gilbert
Yeah, so because the character in that film was wearing 517 Levi's. And and also, you know, this is sort of another brand, but Calvin Klein. And so because of that, it's kind of really ignited sales there too. So anytime you can get these benefits, you know, organically, for, for example, Harry Styles wore it, you know, at an award show, along with all the dancers too, wore 501s. So he wore 501s and they all wore 501s. So.
- [12:59]
Bloomberg Intelligence Announcer
Right, right.
- [13:00]
Mary Ross Gilbert
I mean, it's at the heart of culture, if you look around. I was at the golf club Friday night and I saw this very stylish young lady wearing Levi's jeans with heels and, you know, a beautiful blouse and it's like, wow. So, yeah, well, that's kind of everywhere.
- [13:16]
Interviewer
As Alexis was reminding us, the 90s are back and it's a Levi's 517, the men's bootcut jeans that Carolyn Bessette Kennedy, or the character portraying Carolyn Bessette Kennedy was wearing. We should mention as well that the CEO of Levi's will be on Bloomberg Businessweek this afternoon. Michelle Gass will be speaking with Tim Sandwich and Carol Massar. So be sure to tune in for that. Yeah, Mary, these kinds of pop culture sparked, you know, trends for certain jeans. How long do they last for? Is this something just for this quarter or can it go on for a while?
- [13:47]
Mary Ross Gilbert
Oh, no, this can go on for a while. And actually Levi's is known for their campaigns over many decades. You can go back several decades and find some absolutely amazing campaigns that the, the brand has done. So they've always been focused on being right at the center of culture. That's sort of the language or the ethos that they always talk about. And they've always been successful doing that. So, yes, this is going to continue to go on, you know, forever really. And all the other brands are getting involved.
- [14:20]
Host
Stay with us. More from Bloomberg Intelligence coming up after this. 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 Public Holdings Brokerage Services by public investing member FINRA SIPC advisory services by public advisors SEC registered advisor crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures@public.com disclosures.
- [15:24]
IBM Representative
So there's a lot of noise about AI. But time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help 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.
- [15:54]
Podcast Narrator (Cigna Healthcare / Wasabi Ads)
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 where presented by Cigna Healthcare.
- [16:26]
Bloomberg Intelligence Announcer
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [16:41]
Host
2026 is expected to be a year where there's going to be some huge IPOs coming out of AI in particular, but also arguably the biggest of all time is going to be elon Musk and SpaceX. That's coming, folks. Max Chaff, and he follows all things Elon. He's a Bloomberg businessweek senior reporter. He's out in San Francisco here today. Max, what's the latest on potential IPO of SpaceX?
- [17:10]
Max Chaff
Right, so this was a confidential IPO filing last week from SpaceX, Elon Musk's rocket company, which is now also Elon Musk's AI company because in February he merged Space X with X AI, which is which owns Twitter but also makes the chat bot a chatbot that is competitive with anthropic and OpenAI. And what is happening right now is bankers from SpaceX are shopping this thing, trying to take the temperature and the idea is to get this out very quickly. You know, they're talking about as early as June and at valuations that are very high. You know, we've seen a bunch of different reports, but earlier this week Bloomberg said that in some cases talking about valuations over 2 trillion. You know, putting that in perspective, it would make SpaceX, you know, one of the most valuable companies in the world. We are going to see some other big IPOs and I don't think we know for sure which one will be the biggest Anthropic. A lot of good news coming out of that company lately. They are trying to go public and OpenAI as well. So it's kind of a race between these three companies to get out first and go biggest.
- [18:23]
Host
What do we know, Max, about the financials of SpaceXi?
- [18:29]
Max Chaff
Well, we know a little bit because although SpaceX is a private company, it's been private for a very long time. They've done tender offers, the stock has or the equity has traded on secondary markets. This is the company that has done pretty well. Reports suggesting that and Bloomberg Intelligence estimates suggesting revenues just under $20 billion, mostly coming from Starlink, that is the satellite Internet business that SpaceX operates. You also have significant revenue coming from government contracts. SpaceX provides launches for the US government now at $2 trillion though this is, it's a very small company to be worth $2 trillion. So most of the valuation is going to come essentially from the future, which is how Elon Musk always likes it. The latest story from Musk is data centers in space.
- [19:23]
Host
Exactly. How about control here? Elon Musk, is he going to, how will he keep control of this company? Is there maybe a super voting stock being discussed?
- [19:35]
Max Chaff
I believe they're talking about super voting, although I'm not 100% sure on that one. And the truth is it doesn't really matter. Elon Musk doesn't have super voting with Tesla, but he does control it. Because of the kind of unique relationship Elon Musk has with his investors, my assumption is he will get control. He's been fighting for control with Tesla, whether it's through super voting shares or some other mechanism. But yes, the expectation is he is going to run the company as the sole CEO, sole decider, just as it
- [20:07]
Host
is in Tesla is there, you know, I guess among Tesla investors there's also the hope or potential that SpaceX, once it is public, will just roll up and buy Tesla and put all of Elon's toys in one place. What are you hearing about that?
- [20:25]
Max Chaff
Yeah, I think that is widely regarded not just among kind of Tesla investors, not just among Elon Musk's fans but, but you know, also people who are looking at the SpaceX IPO as a strong possibility partly because Musk has kind of hinted at that this data center in space plan involves a massive chip fab, the so called Terrafab, which yesterday Elon Musk announced a partnership with intel, big American chip maker that is a SpaceX Tesla joint venture. You also have this situation where the shareholder bases are going to be pretty similar. You know, SpaceX's IPO they're talking about as, as much as 30%, maybe even more retail shareholders. That's a lot of retail shareholders. That's the, the kind of Elon Musk fan community. Those are of course the same people that hold space Tesla shares. So you know, I, I think one risk here is, is a question of do they have enough money, are there enough of those people to bid up both stocks or are you going to see people selling Tesla shares maybe to buy SpaceX shares? Something like that. And so you could imagine arguments for hey, it'd be simpler. This same CEO we're kind of pushing in the same direction, which is AI, why not just put them together? This will get very messy if Elon Musk actually tries to pull this off because even though Tesla is controlled by Elon Musk, there's still a lot of shareholders. This would be controversial, be a mega inside transaction. There would be questions about valuation. So I think a lot of things would have to fall into place for that to actually happen.
- [22:04]
Bloomberg Intelligence Announcer
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 10am to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.
- [22:30]
Cincinnati Insurance Representative
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 okay tech
- [23:33]
Host
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- [23:47]
Podcast Narrator (Cigna Healthcare / Wasabi Ads)
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