In short
The episode is about (1) the use of “choke points” and economic warfare in the U.S.-Iran conflict, (2) a Levi Strauss earnings/strategy update, and (3) Bloomberg Intelligence’s “10 companies to watch” for Q2.
Guest backgrounds
Edward Fishman, CFR geoeconomics director and author of Choke Points, argues Iran is weaponizing the Strait of Hormuz and the U.S. financial system. Michelle Goss, Levi Strauss CEO, discusses turnaround and growth strategy. Tim Craighead, Bloomberg Intelligence European strategist, explains the methodology behind the 10 stocks to watch.
Key claims/examples
Fishman says Iran’s drone/missile attacks changed global shipping risk calculus and enabled oil sales to the U.S. via the American financial system, surpassing aspects of the 2015 nuclear deal; he compares this to China’s rare-earth embargo. He warns clean-energy supply chains may become future choke points controlled by China. Goss cites 9% organic growth and DTC momentum; Levi’s partnerships include Beyonce and Rosie (Blackpink), plus Super Bowl campaign “Behind Every Original.” Craighead highlights Ferrari product ramp, Broadcom AI ASICs for inferencing, Dexcom’s 15-day glucose monitor, and banks like Deutsche Bank; he also covers DraftKings vs prediction markets and Meituan amid Alibaba competition.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOMiddle East Conflict Impact on Markets
2:41 to 4:50
Exploration of the ongoing Middle East conflict's effect on global markets.
“I got to say, as we put our show to bed, we learned Vice President J.D.”
Lessons from Economic Warfare
4:50 to 6:46
Discussion on the strategic implications of economic choke points in warfare.
“Edward Fishman is senior fellow and director of the Maurice R.”
Iran's Economic Strategies
6:46 to 8:43
Analysis of how Iran uses economic strategies to exert influence globally.
“And I think that in some ways there's an interesting echo of the Chinese rare earth embargo last year.”
U.S.-Iran Relations and Nuclear Issues
8:43 to 11:03
Examination of the complexities in U.S.-Iran relations regarding nuclear weapons.
“But we didn't fire a single shot, right?”
Domestic Reactions to the Conflict
11:03 to 14:02
Insight into the Iranian public's response during the ongoing conflict.
“weeks, what we've seen out of Iran and the demands that Iran has versus the demands that the U.S.”
Analyzing the Iranian Regime and Global Implications
14:02 to 15:10
Explore insights on the Iranian regime's stability and potential global repercussions.
“I mean, just earlier this year, they killed at least 10 ,000 of their own people who were protesting peacefully in the streets.”
Levi Strauss and the 90s Heritage Aesthetic
16:50 to 18:01
Understand how Levi Strauss capitalizes on 90s trends to drive sales.
“You're listening to the Bloomberg Business Week Daily Podcast.”
Levi Strauss' Growth Strategy Under CEO Michelle Goss
18:01 to 19:05
Explore the strategies driving Levi's organic growth across demographics and channels.
“Leading that charge is Michelle Goss, who joined the company as CEO just over two years ago.”
Celebrity Collaborations and Brand Partnerships
19:05 to 20:46
Learn how Levi's collaborates with celebrities to enhance brand visibility.
“Well, I would say it does start with the brand.”
Navigating Economic Challenges in the Apparel Industry
20:46 to 21:50
Discuss the impacts of macroeconomic factors on Levi Strauss' business model.
“Just at the Brits, we had Harry Styles dancers all wearing 501s.”
Show all 24 chapters
Supply Chain Resilience and Strategies
21:50 to 23:34
Delve into Levi's diverse supply chain strategies and responses to disruptions.
“It means that we want to give you the whole wardrobe.”
Revenue Growth and Market Expansion Goals
23:34 to 25:11
Examine Levi Strauss' plans to reach $10 billion in revenue and sustainable growth.
“I also, though, do love the nitty gritty of like supply chains and what a company like you that has been around for so long and seen a lot of different market cycles.”
Opportunities for Growth in Women's Apparel
25:11 to 28:00
Identify potential areas for Levi's growth, especially in women's apparel and international markets.
“So a company like you guys, our whole Bloomberg team is like, ask Michelle this.”
Levi Strauss Growth Potential
28:00 to 28:51
Discussing Levi Strauss' growth opportunities in the market.
“So there's still, that should be at least half our business.”
Ten Companies to Watch
32:02 to 33:38
Exploring the ten companies to watch based on current market catalysts.
“The big question that I think everybody has is, It's like our life in a nutshell.”
Ferrari's Market Position and Future
33:38 to 35:19
Analyzing Ferrari's product innovation and market performance.
“But he sees a new product-driven story in Ferrari, has thought about what the implications are for its revenue and its profitability.”
Broadcom's Role in AI
35:19 to 37:03
Discussing Broadcom's innovative chips and their role in AI applications.
“I'm glad because we talk a lot about this space.”
Dexcom's Impact on Diabetes Management
37:03 to 38:18
Examining Dexcom's glucose monitoring advancements and market implications.
“It's the ongoing development and use of XPUs as inferencing takes off.”
Financial Insights from Deutsche Bank and Others
38:18 to 40:08
Analyzing financial institutions and their economic impacts.
“I kind of feel like we should do financials only because we have banks coming up.”
Competition in the Sports Betting Market
40:08 to 42:00
Discussing competition in sports betting and the performance of DraftKings.
“It does feel like in the last, what, year or two, Japan has just been the story.”
DraftKings vs. Competition Insights
42:00 to 43:11
Explore the competitive landscape of DraftKings and its prediction app.
“And it goes back even to the Super Bowl period where you're going through the playoffs and there are tons of downloads of Calci's prediction.”
Meituan's Business Expansion
43:11 to 43:57
Learn about the growth and challenges of Meituan in China's delivery market.
“So this is one that probably a lot of listeners aren't necessarily familiar with.”
European Defense Spending Context
43:57 to 45:55
Understand the current state of defense spending in Europe amidst global tensions.
“So like immediate delivery of groceries and things like that.”
Impact of Energy Constraints in Europe
45:55 to 46:48
Discuss the implications of energy constraints in Europe due to geopolitical factors.
“So you wonder about what kind of conditions they need or guarantees before that they open it up.”
Transcript
Automatic transcript. May contain errors.0:00Carol Massar:Is your multi-entity management creating more confusion than clarity? You need the Intuit ERP. Intuit Enterprise Suite. It's the AI-native ERP solution that's powerful, painless, and proven. Learn more at intuit.com slash ERP. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day. A fire, a loss, a disruption that demands immediate attention. When that happens, what matters isn't just what you planned, it's who shows up. That's where Cincinnati Insurance comes in. For more than 75 years, they've helped individuals and businesses navigate life's toughest moments with care, expertise, and personal attention.
0:49Carol Massar: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 at c-i-n-f-i-n.com. 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.
1:38Now 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.
2:15with Carol Masser and Tim Stenevek on Bloomberg Radio.
2:20Carol Massar:Hi, everyone. Welcome to the Bloomberg Business Week weekend podcast. Another week where the conflict in the Middle East left markets in a state of flux after threatening that a whole civilization will die if Iran did not reach an agreement by 8 p.m. Tuesday night. That was, of course, from President Donald Trump. He ultimately reached what many would call a fragile ceasefire with Iran, at least for now, easing some fears of a protracted global energy crisis. I got to say, as we put our show to bed, we learned Vice President J.D. Vance, Special Envoy Steve Witkoff, and Jared Kushner are leading talks in Pakistan on a lasting peace agreement with Iran.
2:57Carol Massar:A sticking point in all of it, Israel's attacks on Lebanon. As we said, a developing story big time as we wrapped up. For the latest on the U.S. war in Iran, head over to the Bloomberg and to Bloomberg.com. Also a focus this past week, the release of the minutes from the March Fed meeting. Those detailed a committee closely monitoring how these geopolitical tremors could affect long-term inflation outlook and the longer-term geopolitical framework and weapons used by nations, increasingly economic ones. We see that in Iran's use of the Strait of Hormuz in the war with the U.S. and Israel. One former State Department sanctions official puts it as Iran using America's playbook against us.
3:36He's the author of Choke Points. That's all about economic warfare. He joins us a bit later.
3:42Carol Massar:Plus, earnings season kicking off for real this coming week when the big banks report. However, Levi Strauss and company reported already this past week. The company defied the odds thanks to direct-to-consumer sales. The results impressed investors big time. The president and CEO of the company, Michelle Goss, joins us in just a moment. And the 10 stocks to watch this quarter, thanks to our Bloomberg Intelligence team, who've identified the most interesting companies from their group of what they call high-confidence focus ideas. We reveal the names and why, for better or for worse, they're worth watching.
4:12Carol Massar:All of that to come, we begin with the tools of modern warfare. Yes, drones, expensive jets, domes, and increasingly economic weapons. In a recent New York Times op-ed, former U.S. State Department and Pentagon official Edward Fishman argued that by closing the Strait of Hormuz for weeks, Iran has secured sanctions relief that in some respects surpasses what it achieved via the 2015 nuclear deal. And while the United States has long weaponized the financial system to advance its geopolitical aims, Iran has now learned to do the same with the world's most vital energy choke point. And it has done so by borrowing a playbook developed by the United States.
4:50Carol Massar:Edward Fishman is senior fellow and director of the Maurice R. Greenberg Center for Geoeconomics at the Council on Foreign Relations. He's author of the New York Times bestselling book, Choke Points, American Power in the Age of Economic Warfare. The premise of the book is that we are living in a new age of economic warfare, in which these economic and geographic choke points, so an economic choke point would be the dollar, where 90 % of all foreign exchange transactions go through the single currency, or Chinese rare earth minerals, where 90 % of the global supply is refined by a single country, or a geographic choke point like the Strait of Hormuz, where 20 % of global oil and gas goes through every single day before this war, those have provided countries with unprecedented ability to disrupt the global economy.
5:39We thought, I think, or most people thought, that these were weapons that only great powers could deploy, like the United States and China. What we've seen in the last month is even a smaller country, like Iran, can hold the world economy hostage by weaponizing one of these choke points.
5:53Carol Massar:What are the impacts of something like that, that kind of switch? Yeah, I mean, the impacts are quite substantial. We used to think that in order to do hard-hitting economic warfare, you needed broad international coalitions. You think back to the 1990s when you had the sanctions on Saddam Hussein's Iraq. That was the whole international community. It was the UN. And that was a pretty high threshold for action, right? Because you could only do hard-hitting economic warfare if you could get everybody else to agree to it. What Iran has showed is that even a relatively small country, medium-sized power like Iran, just by closing this strait can, again, hold the global economy hostage.
6:29And they're doing it relatively inexpensively, right? Just using drones that cost about$20 ,000 or$30 ,000 a pop.
6:36Carol Massar:Let me just, you know, you also wrote about how the U.S., not the U.S., but Iran. You said if either side of this war has pulled off an act of jujitsu, it is Iran. For the first time since 1995, Tehran can sell oil directly to the United States and use the American financial system to collect payment. I mean, this has been a major no-no. This has been something the U.S. right has restricted. That's big. Right. And I think that in some ways there's an interesting echo of the Chinese rare earth embargo last year. You think about it, China in many ways has won the trade war with the United States by virtue of cutting off our access to a choke point.
7:14They retaliated. They showed that if you impose pain on the U.S. economy, you might get the U.S. to back down, even if they're not giving any concessions. Iran spent years negotiating over its nuclear program. They got some sanctions relief. In the 2015 nuclear deal, the U.S. waived secondary sanctions. So they allowed European banks, Asian banks to go back into Iran, but they didn't allow U.S. financial institutions to do so. Iran, by weaponizing the Strait of Hormuz for a few weeks, did get the U.S. to actually agree to allow them to use the financial system. So you just think about the lessons from both the Chinese embargo on rare earths and the Iranian cutoff of the Strait of Hormuz.
7:50Both showed that when you retaliate against the U.S., when you use choke points to try to hurt the U.S. economy, you actually might get more concessions than through diplomacy. The Iran and the United States have long been at odds with with one another. And the president likes to talk about how, you know, he's the first president to do this in 47 years, even though others have wanted to. I want you to put your State Department and Pentagon hat back on. Do you think that the reason why other presidents have not gone after Iran the way that this president has is because they knew about the economic power that Iran could have over the Strait of Hormuz?
8:24Oh, yes. Yeah. I mean, look, what motivated... That prevented Iran from being attacked in the past. Yes. I mean, what motivated me to go into government 20 years ago or whatever was trying to come up with a way to curtail Iran's nuclear program without the use of military force. That was the goal in the Bush administration. It was the goal in the Obama administration. What we did through the nuclear deal, we got a limited deal with Iran, right? It wasn't perfect, right? Iran could still support proxies. They could still have missiles. That didn't make us feel good. But we didn't fire a single shot, right?
8:53We just used economic pressure. I think the reason that neither the Bush administration nor the Obama administration wanted to start a war with Iran was because you knew that it could go very wrong, right? And they could close the Strait of Hormuz. I think the thing that is most surprising, though, is even back then, when we thought about Iran closing the strait, we thought they would do so by virtue of laying hundreds, if not thousands of these sea mines. And when you lay mines, I mean, they don't discriminate whether you're carrying Saudi oil or Iranian oil. So it would actually shut in Iran's own oil exports.
9:23And so we had a little bit of comfort that Iran might not take that step because it would be economically suicidal. But what Iran has done, and what I put forward in that New York Times essay, is that just by hitting a small number of commercial vessels with these cheap drones and missiles, They changed the risk calculus of the entire global shipping industry. And so they actually asymmetrically closed the strait where no one else's oil gets through, but Iran's oil is getting through in record numbers in the last few weeks.
9:48Carol Massar:So as a former State Department Pentagon official, was our intelligence bad? Look, I mean, the reporting is still coming out on this, and I'm excited to read the tell-alls whenever they are published. From what we know so far, it seems like the intelligence actually was pretty good. that, you know, Dan Cain, the chairman of the Joint Chiefs of Staff, who's clearly a professional, did put the risks on the table. My assumption, if I had to sort of, having been in the situation room and sort of how these things play out, my assumption is that Trump was a little overconfident. And by the way, you can understand it.
10:23If you think about his previous two military operations, Operation Midnight Hammer last June, where this 12-day war, no American casualties, and you take out large parts of Iran's nuclear program. And then even more miraculously, earlier this year, you know, the operation in Caracas where Nicolas Maduro and his wife are picked up and brought a couple miles from here in the Metropolitan Detention Center in Brooklyn. I mean, you start thinking maybe that military force is like an easy button. And so my hunch is that he did get pretty good advice from the chairman of the Joint Chiefs, Dan Cain. I worked for one of his predecessors, General Marty Dempsey, and those guys are very professional.
10:56I think Trump was a little overconfident. So given all of that and what we've seen thus far over the last five weeks, what we've seen out of Iran and the demands that Iran has versus the demands that the U.S. has. Is there a chance, in your view, that the U.S. and Israel could exit this conflict and Iran would stop enrichment of nuclear weapons? I don't think so. I think that we're at a point right now where the choices are we either cut a deal that leaves us worse off than we were before the war started, but prevents us from potentially getting drawn into a quagmire, or we escalate militarily.
11:32I mean, just think about the math for Iran right now, right? They've established control over the Strait of Hormuz. That's something they didn't have before, right? They're now institutionalizing that, charging up to$2 million a ship. Before this war, there was about 140 ships that went through the Strait of Hormuz every day. If you do the math, that's about$100 billion in revenue for the Iranian government. They're not going to give that up easily. And so my assessment here is that perhaps that's okay for the U.S. Maybe it's better to cut and run right now, allow Iran to make$100 billion a year by controlling the world's most important geographic choke point, because the alternative might be worse, right?
12:08The alternative is a ground invasion.
12:09Carol Massar:Well, is that possibly, you know, we talk about regime changes and a new way forward for Iran within the region. Is that possibly a way for it to have a new way forward? Or is that just a way to fund its nuclear ambitions, its weaponry, and its various terrorist groups? Yeah, I do not see the new Iranian government deciding they don't want nuclear weapons. If anything, interestingly enough, it was actually Ayatollah Khomeini, the now deceased former Supreme Leader, who was always a little bit lukewarm on nuclear weapons. He definitely wanted to have an option to nuclearize, and that's why they had a full-scale enrichment program.
12:45So they were trying to become a threshold nuclear state. But there was never an intelligence assessment that he actually decided to build weapons, right? I mean, they've got fissile material to build 10 bombs, and they never actually built them. I mean, with the younger generation in power now, and particularly with the IRGC, clearly sort of at the driver's seat. I mean, all evidence suggests that they're the ones who put in Mushtaba Kamini, right? They're running the show. They do want nuclear weapons, and you can understand why. I mean, you look at the countries that do have nuclear weapons, like North Korea, they don't get bombed by the U.S.
13:17So they double down potentially from here. I think so. Yeah. And that's why I think that I'm not resting easy yet that this war is over, because I think that the new status quo might be so bad that it actually might incentivize more attacks from the U.S. and Israel. Well, on the reporting about what led to this and that will come out, there was that great piece in The New York Times earlier this week. And it had to do with intelligence from Israel that was presented to the president in the situation room. And part of that included the Iranian people rising up and potentially taking control of the government.
13:51Protests in Iran, why have they been largely silent during this war? Look, this is one of the more complicated aspects of analyzing this conflict, because I think we need to be clear. The Iranian regime is awful, right? I mean, just earlier this year, they killed at least 10 ,000 of their own people who were protesting peacefully in the streets. So we would all be better off, and Iranians probably most of all, if you could get rid of the Islamic Republic. I think the key miscalculation, though, that the Israelis and, I guess, in turn, the U.S. made was to think that the Islamic Republic was a rather shallow state, right?
14:24That if you just took out the top level of the government, everything would collapse. I think what they showed is that it's actually quite a bit deeper than that. And so I think that, you know, right now the prospects for regime change look poor. And just to quickly answer your question about why you don't see more people in the streets, this is a common sort of thing that we see. When you're under bombardment, you have a rally around the flag. People don't want to go out of their homes. They just want to hunker down.
14:48Carol Massar:Yeah. Real quickly, 25 seconds. Next potential big checkpoint, is it China, Taiwan, semiconductors? I think the future choke point that I'm worried about right now is actually clean energy technology. I think one of the easiest bets coming out of this war is American allies in Europe and Asia are going to double down on electric vehicles, batteries, solar panels. And guess what? You know who controls all of those choke points? China. China. Come back soon. Anytime. This was fab. Eddie Fishman, director of the Center for Geoeconomics at the Council on Foreign Relations, the author of the book Choke Points.
15:18Carol Massar:Check it out. We have. That's why we have him back.
15:26Carol Massar:If your finance team spends more time finding data than using it, if there's one entity here and one here and one here and one here, if scaling your business feels like starting over, you need the Intuit ERP. Intuit Enterprise Suite is the AI-native ERP solution that's powerful, painless, and proven. Learn more at intuit.com slash ERP. Where your story starts. Need a vacation? The Apple Vacations foundational sale is here, so you can save up to$150 on your next escape. Book by April 30th for instant savings on trips to Mexico, the Caribbean, Hawaii, Central America, and top U.S. destinations. If you're ready for a break without breaking the bank, save up to$150 at applevacations.com or contact your travel advisor.
16:14Carol Massar:The Apple Vacations, where your story starts. And now the No Panic Party Save, brought to you by Grand Appliance. Your party is safe. Wow, Amy, great party. And the food? Incredible. Thanks. And did I tell you my stove died two days ago? What? Did you panic? Nope. I called Grand Appliance and got a great deal with next day install on the Frigidaire gallery I wanted. Next day? Wow. GrandAppliance.com, right? That's it. My family's shopped there for decades. Shop Grand Appliance. Appliance. Appliance experts since 1930. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 p.m.
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17:12Carol Massar:From the cowboy Carter effect with Beyonce to massive engagement fueled by the success of the streaming series Love Story, John F. Kennedy Jr. and Carolyn Bessette, consumers have really been leaning into that timeless 90s era American heritage aesthetic that defines a generation. One brand that really positioned itself at the center of it all, Levi Strauss. And to be fair, I mean, they've been putting genes on people for, what, over a century. Yeah, they kind of know what they're doing when it comes to this stuff. It's amazing how, like, right, the cycles, but even my daughter, like, I mean, younger generations are coming back to it.
17:47What's old is new again, Carol.
17:49Carol Massar:I've heard that before. Yeah, so have I. This week, Levi Strauss raised its projections for the year after reporting better than expected quarterly results, fueled by a high-stakes strategy to move away from department store shelves and into the hands of consumers. Leading that charge is Michelle Goss, who joined the company as CEO just over two years ago. Michelle joined us right here in our New York studios. You know, we are seeing momentum across the board, which is around our strategies really picking up and accelerating. So we delivered 9 % organic growth, 14 % on a reported basis. We are seeing this across geographies.
18:22Carol Massar:We're seeing this across categories. We're seeing it across genders. Why? We're seeing it across channels. Why is this happening? Well, you know, it's the brand, it's the product, and it's the execution. And all of those things are working. And I got to tell you, the team is doing a phenomenal job. We're coming off of a solid year last year, and it's accelerating right into 2026. Michelle, denim, though, is such a crowded category. Like, I won't go to certain department stores because it's just too much for me. But I do go to Levi's. Well, thank you for that. You're welcome. You're welcome. And I said to you coming in, my 23-year-old, she's wearing them.
18:58Carol Massar:That's where she wants to go. You talked about your wife. You are hitting a lot of different demographics. How do you do that? How do you appeal to so many? Yeah. Well, I would say it does start with the brand. And we like to say that Levi's operates at the center of culture. And we're hitting a new stride with the brand. I mean, the brand has been strong for a long time. Last year, it went up a notch. We had this fantastic partnership with Beyonce. That moved into a partnership with Shibuzy. And this year, we launched our brand campaign at the Super Bowl. And it was the perfect time because Levi's Stadium was hosting the Super Bowl.
19:34Carol Massar:And we hadn't been on the Super Bowl in over 20 years. But it wasn't about launching an ad for the Super Bowl. It was about launching our campaign. And we call it Behind Every Original, which is a global campaign and leans in to what Levi's does best across sports, across fashion, and music. And so if you've seen the ad, it really does bring that to life and has artists like Doshi or SGA, the basketball superstar. Great. And Rosie. And I like to talk about Rosie because here is this, she was part of Blackpink, 90 million followers and growing. And we're rolling that right into a collaboration with her in Asia.
Read the full transcript
20:15Carol Massar:So that is taking off as we speak. And so this is about launching, like I said, a campaign for the year. Looking ahead, we've got World Cup coming up that Levi's Stadium is hosting. We have collaborations. We had our collaboration with Nike and Jordan a couple months ago. We had people lining out the doors to get the special collab. Michelle, when you talk about these partnerships with celebrities, with the artists, I know each one of them is different, but in general, are they coming to you or are you identifying them and you're going to them? How organic is it? It's all of the above. Well, so, and it happens organically.
20:50Carol Massar:I mean, literally what? Just at the Brits, we had Harry Styles dancers all wearing 501s. I mean, this is about being at the center of culture. And the Beyonce partnership, that started because she wrote a song called Levi's Jeans. but we've been friends with Beyonce for decades back in back to the 90s or Carolyn Bessette were the 517s and you know in love story it's heavily featured and sales are up like 25 percent. Did that surprise you like or and when did you first all of a sudden notice like we've talked about this on air the impact of this. Yeah oh well the 90s we've known about the 90s trend for a long time and in fact when you go into our stores online go into our wholesale partners I mean that 90s trend is Levi's is all over it from top to bottom.
21:35Carol Massar:One of the things we talk about when you ask about what's working, we talk about our two key strategies, which is about becoming a more DTC forward company and also evolving the brand from being about jeans to head to toe. We say denim lifestyle. What does that mean? It means that we want to give you the whole wardrobe. It starts with the jeans, but tops, button downs, jackets, outerwear, dresses, all through the lens of Levi's. but we're playing now in the total apparel space. Michelle, perhaps that's a good segue to talk about the macroeconomic environment and potential disruptions or disruptions you've seen from higher transportation costs as a result of bringing these products from overseas into the US and indeed around the world.
22:16What has this macroeconomic backdrop over the last five, six weeks done for your business?
22:20Carol Massar:Yeah, well, I mean - Or the last year when I think about tariffs and stuff too. It's been a really uncertain time. You know, I take a step back, you think about the company, LS &Co, we've been around for 170 years. We've weathered lots of storms and navigate. And it goes back to who we are as a brand. During times like this, people do. We have to deliver. We have to execute. But they really do go to brands that they trust, that they love. We offer quality. We offer great value. We offer durability. To date, our consumer has proven resilient. I mean, you see that in our numbers. You know, we are bringing them a lot of innovation.
22:53Carol Massar:I think, you know, if pressures come on the consumer, when the wallets get tighter, you know, we have to up our game, right? Wallets get tighter, we have to work harder. And that's what we're doing. We offer great red tab, right down the middle. We offer Signature by Levi Strauss, which is an awesome value. That business was up 16%. It's in the$20,$25 range. And then we offer Blue Tab, premium Japanese denim. And, you know, you can buy a pair of jeans from Levi's now at like$200. So we're serving every customer need, but know that we are constantly just making sure that we can address the needs of the consumer in the moment, whatever that moment might be.
23:32Carol Massar:Love talking fashion, love talking the collaborations. I also, though, do love the nitty gritty of like supply chains and what a company like you that has been around for so long and seen a lot of different market cycles. What is your supply chain? And have you kind of spread it around based on what we've seen, not just in the last year, but even coming off the pandemic that reminded us that supply chains can be impacted dramatically when they're focused in one area. Yeah, that's right. We have a robust, very diversified supply chain across many, many countries. We have a really strong team that is agile and responsive.
24:06Carol Massar:And these relationships with our suppliers go back decades and decades. So we have tremendous partnerships. And as we've navigated things like tariffs, everybody has stepped up to help us determine what the next steps are there. You know, just to put it out there on tariffs, I mean, everything that we've guided the street includes tariff assumptions on, call it the original reciprocal tariffs at a higher rate, at that 20 % incremental rate. You know, there's been recent news of it going down back to 10%. We haven't baked that into our numbers yet. One could say that is upside there. Could mean up to$35 million in EBIT or$0.07 of EPS.
24:44Carol Massar:But we've held back just knowing that there still is uncertainty out there, as you were saying. One question we asked outgoing CFO Harmeet Singh in the last year in the wake of tariffs has been about moving production to the United States. He said, no way, that's not happening. Are you sticking by that? We are sticking by that. Yeah, that is an industry that really has shifted overseas. And like I said, because we have these enduring, long-lasting relationships, I know we'll be able to navigate whatever's ahead on that front. All right. So a company like you guys, our whole Bloomberg team is like, ask Michelle this.
25:16Carol Massar:But we're curious about your prospects for reaching$10 billion in revenue. five years, seven years? How are you guys thinking about it? We have not put a number out there or a date out there. But you've got some great momentum. Do you feel like you can take this momentum? And how far can you carry it out? Do you feel comfortable? Yeah, what I can say, and I think it's important to have bold goals, right? So we've put the$10 billion. We've put the 15 % EBIT. I think if you look at the progress over the last couple years, take revenue. We came off of 7 % growth last year. That was up from the prior year.
25:46Carol Massar:This year, we're again guiding mid-single digits. We just had a blowout quarter at up 9%. So I think it's safe to say that you can count on consistent, sustainable growth. And then on EBIT, on profitability, we're making that march to 15%. Again, a few years ago, we were 9%, 10%. Last year, about 11.5%. We just said we're taking our guide up yesterday to 12%. So you see that sequential progress and keep doing that. We'll let you guys do the math, but we're confident. I mean, like I said, the exciting thing we are right now. You have visibility, you feel, right? The strategies are working. We've made some choices the last couple years.
26:23Carol Massar:We've, you know, we sold the Dockers brand so that we could really focus on the Levi's brand. And there's so much opportunity. So certainly fashion is working in your favor right now, but we know the industry is fickle and consumers are fickle. What happens, or what do you do rather, to make sure that when the trends do change, you move with them? Yeah, well, as the category leader in denim, let's start there. It's our responsibility to fuel the trends. You know, the denim category is growing. It's accelerating right now. I have more denim in my, no, seriously. But nowadays. In my wardrobe that I have in a long, long time.
26:57Carol Massar:And I keep buying more. But it's not always like that. But I would say, though, but this evolution to denim lifestyle, or I'll say lifestyle, head to toe, that's not all denim, right? It is, fine, if you're buying a rib cage, wide leg pair of jeans, what's the perfect top that goes with it? Which is going to be different than a low rise. And so now that we're playing in this broader space, which basically increases our addressable market by 15x, we're playing in a$1 trillion market in apparel. That requires focus and discipline, but we really up-leveled our capabilities to do that. And if you just take this last quarter, our Topps business was up 13%.
27:35Carol Massar:It's only 20 % of our business. So when you think about all that upside, and 40 % of our business is non-denim. So it's not just denim anymore for Levi's. So what is the biggest opportunity or categories that are not yet tapped that could be big for you guys? Yeah, I would say a couple things. First, when we think about gender, women's is not quite 40 % of our business. Last I checked, women's has a big play in the apparel market. My closet's a lot bigger than my house. Just saying. So there's still, that should be at least half our business. So we're expecting tremendous growth there. I was just talking about head to toe.
28:14Carol Massar:We always will be the leader in bottoms and denim bottoms, but tops. So in our business, we sell two bottoms to every top, which, by the way, that used to be like five bottoms to every top. That should be the other way around. Minimally one to one. That is all white space for us. And then we have amazing growth ahead of us in expansion. You know, there's still room to grow in the U.S., but you think about these international markets. In some cases, we're just getting started there. So as we look ahead and say, how are we going to go from six point something to 10 billion? We can chart that out.
28:46Carol Massar:We feel very confident. Our thanks to Michelle Goss, president and CEO at Levi Strauss. That stock, by the way, jumping the most in about a year following its results. Still ahead on Bloomberg Businessweek, the 10 companies to watch in the second quarter. Everything from a high-end automaker to a sports gambling platform to, yes, a big global bank. That list is coming up next. This is Bloomberg.
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31:06Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available at public.com slash disclosures. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App or watch us live on YouTube. Our Bloomberg Intelligence team is amazing. You hear from them on our program almost every day. They're all over the world. They're out in the field. They talk to executives and customers. They crunch numbers. They're in the Excel docs.
31:37They're listening to those earnings calls. They're doing everything.
31:39Carol Massar:They're writing research. You've got to see their research. They're a gift man to us every day. Yeah, if you're not new to our program, then you know that each January, the team produces this list of 50 companies to watch at the beginning of the year. Tim Craighead is the man behind that list. We're so happy to have him. Tim Craighead, Bloomberg Intelligence Senior European Strategist. He's Director of Research Content. He joins us here in the Bloomberg Interactive Broker Studio. Welcome. Nice to have you here. Pleasure to be here. Okay, the headline is so good. Ferraris, Advil, and AI chips. 10 companies to watch right now.
32:07The big question that I think everybody has is, It's like our life in a nutshell. Well, how do you whittle down? How do you whittle down? Yeah, that's except for the Ferraris.
32:15Carol Massar:Yeah, well, okay. That's a minor thing. Everything else, yes. How do you whittle this down? Not just from the 50 companies in January, but from the universe of companies that your team follows. Yeah, so we cover 2 ,500 plus companies. So it's a lot of companies. And we have a list of ideas we call focus ideas that are high conviction, fundamental calls. We think revenue is going here, margins are going there, that is against consensus in some way. Market thinks differently. And there are catalysts ahead that we think could be triggers to change the market mentality. We've got about 125 of those currently.
32:55We zero in on the 50 for the year ahead because there's catalysts coming up in the new year. And these 10 are just a subset. It's a different 10. None of these were on the 50. But 10 companies that have got second quarter specific catalysts ahead that we think are important.
33:14Carol Massar:So do you come to these names, Tim, by doing some, I don't know, algorithm or something? Or discussion or a combination of both? It's a really good question. These are bottom-up analyst ideas. So, you know, you say Ferrari. You have to talk about Ferrari. Mike Dean is our senior European autos analyst. He has the good fortune of covering everything from Porsche to Ferrari to Lamborghini within VW. But he sees a new product-driven story in Ferrari, has thought about what the implications are for its revenue and its profitability. And that's what's, I'm sorry, this is terrible, but driving the idea.
34:00Speeding to the idea. I love it.
34:03Carol Massar:No, but you think about it, right? Because the car sector, it's kind of interesting. We've spent so much time talking EVs and other things, but this is certainly higher end. And, you know, so it's product innovation, models, but it's also like we've got wealthier consumers out there who have money to spend. Well, they do. that part of it it is um it's interesting because not to go too much down a rabbit hole but the european auto sector in particular which you think you've got mercedes and bmw and porsche and uh ferrari among others you know they had a really great idea coming into 2025 that ended up being a car crash sorry all these puns um yeah because the world was moving evs and lots of investment in it and then not.
34:49And China was a big customer and then it wasn't. And all of that hit in 2025. Looking here now, we've got an awful lot of costs that have been taken out. The franchisors are still quite good. People still buy Beamers. People still buy Ferraris. And those who can buy a Ferrari aren't really impacted by some of the things going on in the world of geoeconomics these days and they've got a three-year wait list on stuff that costs a lot of money yeah it's pretty amazing even though the average price has jumped 24 in the past five years ferrari mains sold out through 2027 not bad serious pricing power yeah and you know the the f80 which is the new supercar that's starting to ramp and the lux the new electric um are one of or two of 20 new models coming over the course of the next couple of years.
35:44It's an ongoing flow.
35:45Carol Massar:Where do you want to go next? I want to go to Broadcom. Okay, good. I'm glad because we talk a lot about this space. About AI. Yeah. Yeah, this one's kind of cool. We've got a few different focus ideas that are different flavors of what this one specifically is, and it's about chips. Who is the big chip company that everybody focuses on? NVIDIA. Of course. And it makes the graphic processors that are powering the LLMs. What Broadcom has found that it has are customized what are called ASICs. They're specialized chips that don't train the big LLMs, but they are very task-specific and are great and a lot cheaper at doing the same thing over and over again.
36:33So when you start doing the inferencing or the using of AI for specific tasks, you use their XPU, and it's growing like weeds.
36:44Carol Massar:Which is really fascinating because the AI conversation, if you think about it, are we in our third or fourth year of having it and just how it's evolved? And the inferencing is something that we're hearing more and more. Yeah, the shift from training to inferencing as companies are actually starting to use this stuff in real business. But like Ferrari, there's a new product with this. So there's like a theme. It's the ongoing development and use of XPUs as inferencing takes off. And that is the new product story. The other, not to totally jump if you don't want to, but the other new product win that's interesting is Dexcom, which is probably a company that most of your listeners aren't familiar with.
37:25Medical devices, they make glucose monitors for diabetes. And it's wearable, which is great. They've had a 10-day model out. So you're talking not pricking your fingers. It's a vast change in quality. I know folks who have these monitors.
37:43Carol Massar:They're game changers. And the new one that's now ramping is a 15-day, not a 10-day. And so it extends it, and it's more profitable for the company. And, of course, if you have a 10-day, that gives you a reason to buy that 15-day. The 10-day has changed your life. Yeah, yeah. 50 % more time without having to prick your finger. You stay with it. And there is insurance coverage of these monitors. So you think about that in terms of the marketplace. Elizabeth reminding us we had the Dexcom president and CEO, Jake Leach, on. We did. Back in January. We did. So if you missed that conversation, check it out.
38:16Carol Massar:And it was kind of cool. All right, where do we want to go? So that's new product innovation. You do have major themes. You have competition, financials. You want to do competition? What do you want to do? I kind of feel like we should do financials only because we have banks coming up. We'll do competition after. We have time. So talk to us because you do have several financials. Deutsche Bank, Japan Exchanges, Magellan. So tell us a little bit about the financial space. So Deutsche Bank, so these are broad ranging for sure. Touch on various different elements. But one of the things with banks is it's a finger on the pulse of the economy.
38:49And Deutsche Bank sits in Germany. You know, the big stimulus driver for Europe is the German stimulus package to drive both defense and renewed infrastructure investment. That drives local lending, local business. And it's a good thing for Deutsche Bank. Spreads are also quite wide. Its capital structure is quite strong. And we think all of this will flow through into earnings and buybacks that are going to surprise. Nice. The Japanese exchange is totally different. This is the equivalent of the New York Stock Exchange, the London Stock Exchange. And the Japanese stock market has been on fire, much more attention shifting from a global investment perspective in Japan, as you all probably talk about from time to time.
39:38And as trading activity ramps, these guys just benefit. At the same time, interest rates are actually ratcheting up in Japan. It's a long-term critical story for Japan. That plays into these guys because as you trade more, there's a cash cushion that's part of the collateral when you're investing. They earn interest on that cash. And so as trading goes up and the cash expands and interest rates go up, they get a double benefit. So it's kind of cool.
40:08Carol Massar:It does feel like in the last, what, year or two, Japan has just been the story. On fire. The corporate governance story behind Japanese corporates have definitely been driving that bus. But it was a long time. Yes. And a great reminder, too, like I said, the team is all over the world, and the ideas in here are truly global. Magellan is also on that list. Talk about how that fits in. Yeah, so that's an asset manager. This falls under the M &A category. They made a big acquisition. And it's boosting their assets under management quite well. and they've got an 80 % payout ratio that is part of how they manage their financials.
40:49That's not in analyst expectations yet from the standpoint of how the earnings from the new acquisition will flow through into these guys' income and will feed through into dividends. We think there's upside accordingly.
41:03Carol Massar:Is this at all related to Fidelity Magellan or no? It's completely separate. Sorry, I'm just doing it. This is an Australian-based, speaking of being all over the world, Australian-based asset manager. All right. Let's go to, I know he's waiting. Yeah, I want to go to competition because you have some really interesting companies in here, including one in the sports gambling space that has been. Do you all talk about prediction marketing? We do. We talk about prediction marketing. Just, actually, the screen right in front of me is Polymarket about when this war will end. There you are. You can actually access on the terminal WSL predict is a great shortcut to the prediction market data.
41:40And it's aggregated here. And it's sort of by like what is most active in terms of contracts. And like you said, the most active, Carol, Trump announces the end of military operations against Iran by question mark. So anyway, sorry. So draft kings. Yeah. Sports betting. Which is the issue for draft kings that it's on prediction markets. Well, exactly. And it goes back even to the Super Bowl period where you're going through the playoffs and there are tons of downloads of Calci's prediction. Right. And that scared everybody that DraftKings and its sports betting stuff would suffer. True, the downloads were bigger on Calci, but if you look at the installed base, it's still far, far larger for DraftKings.
42:28It's businesses, we think, going fine. and they're also launching their own prediction app, they will be driving better business than everybody thinks is going to run into problems. So the team thinks that DraftKings will be able to hold a candle to the established prediction markets, Calci and Poly market, not publicly traded here in the U.S. Correct. Wow.
42:52Carol Massar:So stock is down more than 30 % year to date. We know because of concerns about competition and threats. Yeah, because of all this concern of competition. And we would expect to see better than the expected earnings coming up in the upcoming period as well as throughout this year. So quite interesting. It's been a fascinating market. We talk about it all the time. Where else should we go? We've made one. Yeah. So this is one that probably a lot of listeners aren't necessarily familiar with. Chinese company. They are the biggest food delivery company in China. So, you know, you think Uber Eats or, for me, in London, Deliveroo.
43:33So that's it. But they've also gotten into other businesses of everything from you order groceries and they'll deliver, just like Uber Eats. They'll also do travel-related stuff. So they've extended themselves, which on one hand is good, but there's also encroaching competition. Alibaba, which is the biggest of the e-commerce companies, is getting into this business, in particular when it's in that instant shopping stuff where you get 30-minute delivery. So like immediate delivery of groceries and things like that. we think consensus is underestimating the costs that meituan is going to be incurring to drive their business forward with increasing competition so no defense companies huh
44:25Carol Massar:not on this list that was interesting against consensus carol against consensus i know i know i know i know yeah yeah everybody loves defense right now they really do right it's just kind of which makes it interesting, especially living in Europe, where take a look at Ryan Mattel and some of these other defense-related contractors. They've been on fire. Before you go, just quickly, because you are over in London and watching this war, we obviously are covering it day to day. What is the view, the perspective from there in terms of the impact and what's going on? I guess a couple things come to mind in a nutshell.
45:03Number one, this year was set up to be the good year. You actually started to see better economic statistics after a rather blah last year when the U.S. was doing better. There was the hope and expectation that interest rates were going to be coming down from both the BOE as well as the ECB. you had this stimulus initiative coming through and lots of discussion across other european governments to get behind some of the elements of infrastructure and defense spending domestically you know there's a lot of defense spending going on in europe because of you know what's happened uh with russia ukraine but the hope has been that some of that could be done in europe as opposed to buying from u.s contractors so all of these things were coming together and now you know the iran war takes place and all of that's been thrown out the window europe is more exposed to the energy issue and set aside the war the focus is on how long is the constraint of commercial traffic through the strait of hormuz and that's what the focus is on um and we shall see yeah there's so many we talk about so many
46:19Carol Massar:different things in headlines but it really just comes down to that yeah and we talk about right That's the main leverage for Iran. So you wonder about what kind of conditions they need or guarantees before that they open it up. So the story is not off the rail for Europe, but it's more sensitive and more exposed in many ways than what necessarily is the case here. That's why we often talk about comparison between Brent and WTI because that oil and tax belt. But then again, look at the$5 gasoline prices here and it's not immune. Yeah, exactly. Tim Craighead, do not be a stranger. Come hang out with us in the Interactive Brokers Studio.
46:53Pleasure. time.
46:54Carol Massar:Great time to hear. Tim Craighead, Senior European Strategist and Director of Research Content for Bloomberg Intelligence. This is the Bloomberg Business Week Daily Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. 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.
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47:56Carol Massar:Apple Vacations, where your story starts. And now the No Panic Party Save, brought to you by Grand Appliance. Your party is safe. Wow, Amy, great party. And the food, incredible. Thanks. And did I tell you my stove died two days ago? What? Did you panic? Nope. I called Grand Appliance and got a great deal with next day install on the Frigidaire gallery I wanted. Next day? Wow. GrandAppliance.com, right? That's it. My family's shopped there for decades. Shop Grand Appliance. Appliance experts since 1930. If you're looking for more flexibility in how you pay for everyday purchases, meet Klarna. Klarna lets you decide whether to pay now, pay later, or spread payments over time.
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