Bloomberg Host (3:26)

Has the company shed any light on how high they think memory chip prices will go or at least stay? Because this has huge repercussions for manufacturers of laptops and everything else that needs memory chips because all the memory chip makers are too busy putting together high bandwidth memory chips.

Jake Silverman (3:43)

Yeah, they don't really give a lot of details in terms of what their view on pricing is. Ultimately our take is more so that we're probably going to see the peak of the pricing increases on a quarter to quarter basis. That doesn't mean that pricing won't continue to increase at a somewhat more modest rate. But going back to actually what I was talking about earlier with capital spending, the ability to actually increase supply is going to be a really important factor here both in terms of actually how pricing moves around higher or lower, but because there's actually a constraint and the ability to put up additional clean room space, new fab space, there's not going to be a lot of additional supply in the next 12 to 15 months or until the next 12 to 15 months. So as a result we think pricing still has a few more legs to go. Again it's really just more so that we think pricing on a sequential basis, on a monthly basis, quarterly basis will be a lot more modest in terms of the increases than what we've seen before.

Bloomberg Host or Interviewer (4:40)

Jake, who does Micron really compete against day to day today and then in a couple of years going forward. Is it the Nvidias of the world who do they really compete against?

Jake Silverman (4:50)

Nvidia is one of their biggest customers, but I think it was their biggest customer last quarter and a lot of that is for as you mentioned, high bandwidth memory. Really their competition is Samsung, it's SK Hynix and then some extent Sandisk Although DRAM is coming, an increasingly large portion of their business of sandisk really only competes with about 20% of their business.

Bloomberg Host (5:14)

So in that regard Micron has a lot of pricing power. What advantages does Micron offer over a Samsung or SK Hynix?

Jake Silverman (5:23)

Well, I'd say that advantages are tough because they build to spec for the Jet standard Micron. They do also build to Nvidia specs for high bandwidth memory. One of the things though to keep in mind is that the memory market, as I was talking about the cycle before, it's very cyclical. So really the key here is how much cost can they, what's the better cost profile that they can drive relative to their competition while also maintaining that R and D spend to keep up with the increasing demand of their customers, Nvidia being one of them, but also a lot of other hyperscalers who need high bandwidth memory HBM3e but now we're moving to HBM4 so those standards keep going up. So their ability to compete on cost, their ability to compete on things like pin speed that help with bandwidth, their ability to compete with lower power consumption for their products, those are really the keys. But again it is somewhat commodity like market for the products that aren't high bandwidth memory. So it really is competing on costs and the economics of their business.

Bloomberg Host or Interviewer (6:25)

Hey Jake, about 30 seconds left here. I'm just looking at your research note. Customer agreements are now extending out up to five years in some cases. That seems really long. Talk to us about that.

Jake Silverman (6:35)

Yeah, very unprecedented. The company hasn't given us a lot of details. There's not really a lot to say unfortunately right now. But it does seem like these agreements are different than the LTA's we saw just a few years ago during the last downturn or upcycle that ended up in the downturn as things tend to go with Micron. So really what I would say is that this may be something that could reduce some of the cyclicality going forward. We don't expect all agreements to go out five years. Some might go one year, two year, three years. It's going to vary a lot by the customers, the volume, what the products they're acquiring are.

Bloomberg Host (7:04)

Stay with us. More from Bloomberg Intelligence coming up after this.

IBM Representative (7:09)

The thing 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.

Podcast or Ad Narrator (7:40)

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.

Adobe or Cincinnati Insurance Ad Narrator (8:10)

Everyone has been there. Your team's feedback is scattered across emails, chats, and sticky notes. It's a mess, but PDF spaces in Adobe Acrobat gives you one collaborative workspace to streamline every file and comment. So if you need six departments to finally agree on a proposal, do that with Acrobat. Need to turn a mountain of feedback into one plan of action. Do that with Acrobat. Want to stop searching for files and finally get everyone on the same page. Do that, do that, do that with Acrobat. Learn more@adobe.com do that with Acrobat.

Bloomberg Intelligence Podcast Announcer (8:48)

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Aut Burke Business App Listen on demand. Wherever you get your podcasts or watch us live on YouTube.

Bloomberg Host or Interviewer (9:03)

We still got a lot of companies reporting here. Now we're starting to hear from a lot of the restaurant companies. Darden's coming up here, so we want to check in with Michael Halen. Michael Halen, he covers all the restaurant companies for Bloomberg Intelligence. He's based down there in Princeton, one of the big ones. Darden, I think, is about to report here. Mr. Halen, what's, what are you looking for there, Mike?

Michael Halen (9:25)

Yeah, Darden reported this morning it was, it was a strong quarter on the top line. So despite all of the cold weather and snow they had mentioned, you know, 40% of their stores had been closed at some point during the quarter. Despite all that, they still were able to put up 4%. Same store sales comp. The problem with, with the report was that they missed on the bottom line. So despite all of, you know, the traffic they were able to drive into their stores, you know, they didn't really see the operational leverage from it. Right. Beef prices were a big headwind, obviously, in the quarter for Longhorn, which is, which is their second largest chain.

Bloomberg Host (10:11)

So how, how is the company planning to tackle that? Because I'm not sure that beef prices are going to come down anytime soon. This is going to be a persistent cost headwind for them.

Michael Halen (10:22)

Well, you know, the entire commodity complex is starting to become a real concern for these restaurant chains and that's why we've seen them kind of reverse their strong gains of the previous three months. But yeah, so what they're going to do is raise prices and they feel that they can because they have not raised prices much over the, you know, post pandemic period. Right. So they've underpriced competitors, they've understood priced, you know, food away from home, inflation. Right. So they think they have some room. But you know, if we continue to see, you know, elevated gasoline prices, if we see a prolonged conflict in the Middle east, you know, it's really going to weigh on restaurant spending. So, you know, we think they're going to have to be careful raising prices. But it's a, it's an interesting time right now. There's a lot of crosswinds. Right. Like, you know, they are seeing people spend more when they get their refund checks. Refund checks are 10 to 11% higher. Right. But unfortunately the spike in gasoline prices up 30% plus now in just a few weeks is going to eat into some of that spending, you know, excuse the pun, you know, and then just overall inflation is going to cause prices to go higher, which is not a good situation for, you know, stagflation is not a good situation for restaurant consumers. We saw that in the stocks performances last year. Right. When people's budgets get pinched, they spend less at restaurants. Margins get squeezed for the restaurants. It's just a tough climate to operate in.

Bloomberg Host or Interviewer (11:58)

Mike, what are your companies telling you about labor? Labor availability, sustainability. How's the labor side of the equation? Because that's a big part of their cost structure as well.

Michael Halen (12:08)

Yeah, labor's been okay. There's a lot of the companies we cover are seeing a lot less turnover. Wage inflation has been, you know, it looks like about 3% for some of the companies that have reported recently versus, you know, this 4% to 5% range that we've seen since about 2020. So the labor piece of the equation has definitely improved a bit for the companies in our sector.

Bloomberg Host (12:33)

What will you be listening for from the other restaurants that report? Are we going to see similar themes play out for them?

Michael Halen (12:41)

Yeah. So Darden's is a little bit, Darden's a little bit off cycle. So they're the first ones report,

Bloomberg Host or Interviewer (12:50)

you

Michael Halen (12:50)

know, almost into this ne next cycle. Right. So because their quarter ended month late February. Right. So they we have, they're giving us an early read. So when our other names report right. We've gotten a feel for what the first quarter was and what we think it will be is like stronger. Pretty strong considering all of the winter winter weather considering the snow still putting up, pretty solid. Same store sales, you know, over 4% here for Darden. You know, a month ago the question was, you know, really about the top line and how, you know, and how much better things were looking and how much people were going to be spending in their restaurants, how much of those tax refund checks were going to get spent at restaurants. But now I think the questions are going to shift more to the margin side. Right. Like this. Higher gasoline prices mean commodities are higher for longer. Right.

Bloomberg Host (13:52)

Stay with us. More from Bloomberg Intelligence coming up after this.

IBM Representative (13:57)

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.

Podcast or Ad Narrator (14:27)

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.

Adobe or Cincinnati Insurance Ad Narrator (14:57)

Everyone has been there. Your team's feedback is scattered across emails, chats and sticky notes. It's a mess, but PDF spaces in Adobe Acrobat gives you one collaborative workspace to streamline every file and comment. So if you need six departments to finally agree on a proposal, do that with Acrobat. Need to turn a mountain of feedback into one plan of action? Do that with Acrobat. Want to stop searching for files and finally get everyone on the same page? Do that, do that, do that with Acrobat. Learn more@adobe.com do that with Acrobat.

Bloomberg Intelligence Podcast Announcer (15:36)

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay Play and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

Bloomberg Host (15:50)

All right, let's stay with this global theme because FedEx reported results and clearly it's not just a barometer for the US Economy, but really for the global economy at large. Lee Klaskow is our senior transport logistics and shipping analyst and he is joining us to give us a preview of what FedEx is likely to say. So FedEx, Lee, when it comes to FedEx, they have their own issues, right. They've been trying to turn things around, overhaul the business. How much of the results reflect that effort versus what's happening globally?

Lee Klaskow (16:24)

Yeah, I mean, we all have our own issues, but FedEx certainly does have a number of them. And you know, they've been busy trying to restructure their European business and you know, they're kind of combining their ground and express networks and they're kind of going through a transformation right now and they're really hoping that they'll come out of this transformation a more nimble parcel provider that can really take advantage of some of the strong B2B markets that they're going after and higher margin B2C business also as well. You know, volume looks like it's probably going to grow during the earnings. We're not really expecting that much new news because they just had an investor day the other month. But we do expect to get a lot more color about what's going on in the Middle east and how that's going to impact FedEx and its in its business going forward. So that's what, you know, I'm most interested to hear about. You know, the company, like I said, does have a large European operation. You know, the Middle east has become a huge hub for freight between Europe and Asia and that has been dislocated. And so they're obviously dealing with higher costs associated with some of that business. There's lost volumes that will be involved because the area is not safe to fly into. So we expect to get an update on, on how the, you know, the conflict in the Middle east will unfold for carriers like a FedEx.

Bloomberg Host or Interviewer (17:47)

So what's FedEx saying today about just the their business in general in terms of volumes and things like that? I mean, because it's such a bellwether for many parts of the economy, as you well know. What are they saying? Just about core fundamental business trends? Yeah.

Lee Klaskow (18:03)

So, you know, FedEx has two main businesses. The business that we all probably know when you get something at your doorstep, you know, letters going to lawyers offices. And they also have a less than truckload business. They're the largest ltl carrier in the United States. They're actually planning to spin that business.

Bloomberg Host or Interviewer (18:20)

I would say spin that out if I were.

Lee Klaskow (18:22)

They are, they are spinning that out. Where they're doing an analyst day next month. We're excited to attend that and find out more. But you know, that business has been suffering significantly because of the weak industrial economy. I don't need to tell you the ESM has been in contraction territory a lot more than an expansion territory over the last two and a half years. And that's really weighing on that business. But you know, looking pivoting towards, you know, there are larger business, their parcel business, that business has been okay, it's growing. Volumes are growing by low to mid single digits. They're getting pricing in low to mid single digits. The problem that they're facing right now is costs. And they're trying to, you know, kind of, if you will, reduce their overall cost curve to help, you know, drive better margins going forward. And some of the things that, you know, I kind of alluded to earlier, you know, whether it's restructuring their air network, whether it's combining their ground and air network, these things will benefit the company, A, in a better demand environment globally and B, it's going to take time for those benefits to come down to the bottom line.

Bloomberg Host (19:28)

So, Lee, we have FedEx reporting and then UPS will report probably in about another five weeks or so how much of what FedEx tells us, especially when it relates to to global trends, can be applied to ups.

Lee Klaskow (19:42)

I think a lot. You know, they're both very, very similar. They're both going after similar growth businesses. They both want to get more into health care logistics, which is tends to be more profitable. They obviously have their finger on the pulse of the consumer. UPS is tied to a little more to companies like Amazon. You know, they are trying to wind down that business, but you know, they're more tied to it. There are some differences, but I think there's more similarities than there are differences about, you know, what it's going to tell us about the overall economy.

Bloomberg Host or Interviewer (20:14)

Stay with us. More from Bloomberg Intelligence coming up after this.

IBM Representative (20:19)

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.

Podcast or Ad Narrator (20:48)

IBM 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.

Adobe or Cincinnati Insurance Ad Narrator (21:20)

Everyone has been there. Your team's feedback is scattered across emails, chats and sticky notes. It's a mess, but PDF spaces in Adobe Acrobat gives you one collaborative workspace to streamline every file and comment. So if you need six departments to finally agree on a proposal, do that with Acrobat. Need to turn a mountain of feedback into one plan of action? Do that with Acrobat. Want to stop searching for files and finally get everyone on the same page. Do that, do that, do that with Acrobat. Learn more@adobe.com do that with Acrobat.

Bloomberg Intelligence Podcast Announcer (21:58)

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.

Bloomberg Host (22:13)

We had a Fed day yesterday.

Jake Silverman (22:15)

We did, Yeah.

Bloomberg Host or Interviewer (22:15)

I mean, in all the news flow, it kind of gets drowned out a little bit.

Bloomberg Host (22:18)

Yeah. And you know, coming into this, I was just talking with Michael McKee. He was saying that for the most part, he didn't think it would be anything big. You know, a couple of weeks ago, certainly we didn't think it'd be anything big, but some news was made. Certainly Jay Powell making clear that he is in no rush or the committee is in no rush to cut interest rates. Ira Jersey is our Bloomberg Intelligence Chief U.S. interest Rate Strategist. He talks to us about the Fed, about the economy, about rates and where they're headed. What surprised you the most from yesterday's news conference?

Ira Jersey (22:46)

That it was probably the least important of the 17 Central bank meetings this week.

Lee Klaskow (22:51)

That's right.

Ira Jersey (22:53)

You know, the bank of England meeting, obviously is what's really roiled the rates market today. Yeah. So I don't know if it was surprising, but. But I think the clarity that, you know, Jay Powell said that he intends on staying on until Kevin Marsh is confirmed by the Senate. I think that that was something that most people we had speculated about. But the fact that he confirmed that I think is important. Will that have an effect on President Trump and what's his reaction going to be to that? I think is an open question and clearly there's going to be a lot of debate about it. And then the other is his comment which really is what to set the markets off saying that basically oil was going to determine whether or not they cut interest rates again. Right. If oil prices continue to go higher, that they probably wouldn't, wouldn't cut again. And that's, that's where you saw the bear steepening the yield curve. So two year yields going up much faster than longer maturity debt.

Bloomberg Host or Interviewer (23:49)

You mentioned the bank of England. Is the call there, Ira, that they held rates the same but they said, hey, we'll raise them if inflation gets warrants.

Ira Jersey (23:57)

Well, they basically implied 50 basis points of interest rate hikes which you know, the market was pricing in for some chance of an interest rate hike over the next 12 months or so. But to really set the market off. That's why, you know, currently the two year, two year gilt, so two year GBP bonds are, are higher by about 30 basis points, like 29 basis points. I think at the moment they were a little bit higher earlier today. And that's really, is what's roiled the entire US market. When I came in and I sat down in my terminal this morning, two year yields were off. US two year yields were off 17 basis points. You know, now we're only off, you know, four. And this happens pretty regularly. Right. Where you'll see that effectively the tail wagging the dog. Right. Obviously U.S. treasuries are the global benchmark for interest rates. That's still the case. But when you have something that happens in Japan or something that happens in the uk, that really sets off the developed market interest rate complex that filters into U.S. treasuries overnight because people just sell risk and so whatever is liquid and they can sell. But then once you get into US trading hours then you know, I don't want to say cooler heads but, but kind of more rational heads prevail at that point.

Bloomberg Host (25:07)

So how are you rethinking everything now given what Powell said, given what we heard from the body, the ECB this morning as well.

Ira Jersey (25:14)

Yeah, you know, we had thought that the Fed would probably cut interest rates to just below 3%. Just the way that we were thinking about it was, you know, real yield yields. The Fed thinks that the real funds rate should be about 100 basis points plus or minus a little bit. So if inflation is going to be two, two and a quarter, which is what we were implying for the PC deflator for year end that they would be able to cut interest rates down to 3%, more or less. Well, guess what, the inflation situation is far different now than it was before. I don't think they're going to hike because they don't want to necessarily be the impetus for a major recession, but I think that they're going to be be much, much more cautious now in their, in their easing campaign. And if they ease, what would cause them to ease? At this point, it has to be the job market, right? You have to see like negative 100,000 job prints for two or three months. That would certainly scare them and make them probably rethink about a cut again. But when inflation expectations are rising as dramatically as they have the last three weeks, that's going to let them, you know, take their foot off the gas just a little bit.

Bloomberg Intelligence Podcast Announcer (26:16)

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.

Adobe or Cincinnati Insurance Ad Narrator (26:42)

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 these days

Podcast or Ad Narrator (27:43)

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.

Ira Jersey (28:18)

With Voli from iShares.

Podcast or Ad Narrator (28:19)

You get access to both monthly income and growth potential in one simple etf.

Ira Jersey (28:24)

It's the best of both worlds. Discover Bali Ishares Large Cap Premium Income

Podcast or Ad Narrator (28:29)

Active ETF iShares the market is Yours.

Ira Jersey (28:32)

Visit www. Ishares. Com to view perspectives for investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Risks include principal loss and the use

Podcast or Ad Narrator (28:40)

of derivatives, which could increase risks and volatility.

Ira Jersey (28:41)

Monthly income is not guaranteed. Prepared by BlackRock Investments, LLC.