Home Depot’s Sales Fall Short on Lackluster Housing Recovery

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1:48Scarlet Fu:All right. Vildata mentioned Home Depot. So let's get a deeper read on what's going on there and check in with Drew Redding, our U.S. home building analyst, to recap Home Depot's results. And And I mean, Drew, this company is just, no matter what, tethered to rising borrowing costs and consumer sentiment. And both of those are kind of working against it right now. Yeah, so it was a relatively neutral quarter for Home Depot. I think the theme is really stability. You know, they mentioned that during the call that demand is relatively in line with where it was a year ago. They did have a slight miss on same store sales.

2:25But I think what investors will latch on to and get a little bit of comfort with is the fact that they maintained their four-year same-store sales guide. Now, when they initially came out with that, it was calling for growth of zero to 2%. So I do think that they left themselves with a little bit of wiggle room to see how the rest of the year plays out. But to your point, we mentioned stability. That is the case. But what the company is missing is kind of that next catalyst. And it's really housing that continues to remain frozen due to elevated rates. were back up near 6.7%. And that's after getting to a five handle earlier in the year.

3:00And then, as you mentioned, consumer confidence. You know, we've heard this pretty much across the housing ecosystem. And it's that consumers are worried about the outlook for the economy, the outlook for employment, and they're just pausing on these big purchasing decisions. What's your world, Drew, your world of home building and all that kind of adjacent stuff? Let's assume rates are hire for longer. How does your world adapt? I mean, it just seems like if I'm a buyer, I'm a seller, I got it at some point I got to throw in the towel and say, hey, it's been a number of years here. This seems to be the new world here in real estate.

3:34Yeah, it does seem like the level of demand that we're at right now is kind of a floor. We've been bouncing along a 4 million unit annualized rate in the housing market for a couple of years now. The new home market has been relatively stable for a couple of years now. So, you know, there is a certain level of churn that's going to happen regardless of where rates are. Things happen. People get married, they have kids, they need to move. But to your point, I mean, there's still 70 % of mortgage holders out there with a rate at 5 % or below. So without any forced selling activity, there's not a lot of urgency in the market.

4:09Now, from the homebuilders' perspective, what this means is that they're going to continue to have to lean on incentives. That story has been well-documented now that they've been very aggressive in their use of mortgage rate buy-downs to kind of make the math work a little bit better for their buyers. You know, coming into the year, I think there was some hope that, you know, rates were going to come down, they'd be able to take their foot off the gas pedal a little bit. But it looks like at least over the next couple of quarters, they're going to have to continue to offer those concessions to move inventory.

4:36Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. 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. Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds, and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios.

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6:16Scarlet Fu:Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now, and where you want to go. Their broad range of solutions is designed with you in mind, so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools. Looking for tips and advice? Their online resources are always available to give you the solutions you need to help your business thrive.

6:53Scarlet Fu:See how your business can get stronger and go farther with Chase for Business. Learn more at chase.com slash business. Chase for Business, make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. 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. Let's talk a little technology.

7:32You can do that with Caroline Hyde. tech co-anchor she joins us live here in our studio meta cutting some jobs i'm trying to read through the story here my personal opinion is ai is a job destroyer not a job creator i'm going to stick with that one for until somebody proves me wrong what's going on in meta well interestingly to prove to the point the one optimistic note i might on that last view of yours Because MIT recognized a few years ago that if you look back over 60 years, about, I think it's even 40 years, only 60 % of the jobs that currently are existing today didn't exist then. Ah, okay.

8:10So there is hope that we find ingenuity in our lower value human capital. Language matters, folks. That was a good one. Which matters. I'm afraid a CEO who's going to talk out about eradicating jobs, up to 8 ,000 of them over at Standard Chartered and calling it lower value human capital. That's going to hurt for the people out there, I've got to say. But by the by, I'm not in PR. I'm in a different type of communications. But the communications that we're getting from Meta is that tomorrow folks are staying home. If you're working in North America, you sit at home because you're going to learn as to whether you're one of the 10 % who are losing your job.

8:43That's about 8 ,000 people. But before, ahead of that, they're actually reassigning 7 ,000 people to more AI-focused work. So it's sort of a reassignment of the resources that they've got right now, saying that new jobs are going to be related to AI. So here's your new types of roles that you're going to be seeing more broadly, Paul. You're seeing people perhaps moving from the area of social media where they've lent into. And of course, we've known that they've been moving the more hardware-related and augmented virtual reality play. And it's going more into augmented reality glasses, but into more apps and focus on artificial intelligence weaving itself throughout Meta's business model.

9:21So the chief people officer is just saying this is going to be a flatter ecosystem. This is going to be smaller teams. They think it's going to be higher value, more enjoyable work. We'll see what the talent think about that.

9:31Scarlet Fu:Yeah, absolutely. And I believe that there's this whole push towards smaller teams anyway across tech land. Everyone's singing the praises of this idea of keeping things really focused and concentrated. said what that some teams will just be one person if you're an engineer that's not really a team speaking to a young fellow over the weekend 29 years old works in a very big tech company he manages i think a team of like five or six people he says his people with ai now this is in the last six months are much more productive not 10 more not 20 more three times five times 10 times more productive on some of their output metrics it's just crazy it's amazing he says and And I said, OK, I get it.

10:08I get it. Maybe if you're a solo engineer, maybe your team is AI. And I'm just saying that as a young investment banker, for the first three or four years of my job, that can all be done by AI. Yes, you own high value human capital. Don't tell me that.

10:22Scarlet Fu:But having done that, you know how the process works, too. If you haven't done that before, like you're not able to go in there. Hey, make me a high yield pitch book for company XYZ credit rating blank. Boom. Two seconds later, it's out. Then how do you go through it and fact check it? No, then it's correct. Fact check. Like that, make me a pitch book for a high yield deal will take me two or three days. Now it's minutes. Yeah, well, the formatting will certainly be taken care of by AI. That's the most painful part of those pitch books. Caroline, while we have you, I got to ask you about Google creating an AI cloud business with Blackstone.

10:53Is this a joint venture of some sort? It is. And actually Blackstone is putting in most of the money, $5 billion in equity. You leverage that up. It's going to be 25 billion perhaps. We're talking 500 megawatts of compute in the next few years. That's, what is it? One gigawatt is about three quarters of a million homes in terms of energy. So this is a lot of compute. But this is as they really focus in on their TPUs. This is their tensor processing unit. This is their chip that has suddenly made their AI so much more powerful and really impressed the market with vertical integration. Now, Google builds cloud.

11:21They build data centers, but that's expensive. It's nice to get a partner on side to be able to do that heavy lifting for you, not to put it on your balance sheet as they're expanding out their Google cloud offering. And they're setting up basically a new NeoCloud. So watch the shares, the likes of CoreWeave, of Nebius, of these other NeoClouds out there, because it's getting competitive out there, folks. But Alphabet, are they turning to Blackstone because they need Blackstone as a funding source or what? It's a cool deal for Blackstone. I'm wondering why Alphabet's doing it. Yeah, I think it is the money side of things.

11:52Alphabet's already announced that they're going to be, what is it, all told, these four players, whether it's Amazon, Alphabet, Meta, Microsoft are spending up to$750 billion,$725 billion. three quarters of a trillion, let's call it, in 2026. Yes, people have actually applauded Sunil Pichai's decision to up its capital expenditure plans, but it's still a lot of money. It's still a lot of debt that they've got to issue. And so it's nice to know that perhaps the financing of even greater expansion is being taken on by some other players. This is just up, you know, managing to scale even further how much their TPUs and their chips are doing the work.

12:28I mean, I have to say, it's a big move ahead of NVIDIA's numbers tomorrow because just think all these other neoclouds, they use NVIDIA GPUs. 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.

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13:40Scarlet Fu:Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now, and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools. Looking for tips and advice? Their online resources are always available to give you the solutions you need to help your business thrive.

14:17Scarlet Fu:See how your business can get stronger and go farther with Chase for Business. Learn more at chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. Here's a paradox. We buy insurance for peace of mind, yet the very policies we trust can deliver the biggest financial shocks. Across America, millions of claims are denied every year, not because people did anything wrong, but because policies quietly excluded the things that happened.

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15:28Before you trust your policy to protect you, let My Policy Advocate tell you what it really says. Visit MyPolicyAdvocate.com today. Peace of mind starts with knowing the truth. MyPolicyAdvocate.com You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. 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. All right. You know how much we love these big take stories on the Bloomberg Terminal. They're really, really compelling stories. The reporters take a ton of time, a ton of resources to get to the really big details.

16:08And this one's a good one, particularly if you're a fan of this AI story and all the money that's being spent. Met is doing a data center down in Louisiana, like 200. Oh, it's just going to be a big thing. 200 billion dollars, something crazy down there. And our next guest has an awesome story on this. Riley Griffin, tech reporter for Bloomberg News. Of course, you know, she peaked when she graduated from Duke University. Riley, thanks so much for joining us here. Talk to us about Mark Zuckerberg and Meta. They're building this huge facility down in Louisiana. Talk to us about that. Yeah, I mean, the scale of this facility is truly unfathomable, Paul.

16:45I spent weeks going to and from Richland Parish, Louisiana. That's in the northeast corner of the state. It's the Delta region, and it's one that has long-faced economic hardship. Farming right now in the U.S. is a difficult task, particularly if you're farming cotton, as this region does. And Meta is planting a$200 billion data center there. What that looks like is nearly 4 ,000 acres. President Donald Trump has said it will be Manhattan-sized. They are building 10 new natural gas plants just for this data center alone. That's about the energy consumption of New York City on a winter day. And one of the largest private capital deals ever assembled is funding its development.

17:28And that's all before we get to the$200 billion. So it's just a massive, massive project in a very small farming community, which makes for tensions and growing pains. But also, unlike a lot of American cities and suburbs that are pushing back against data centers, this is a community that is cautiously optimistic that it will prove to be an economic lifeline.

17:56Scarlet Fu:So tell us a little bit more about what people told you when you went down to Louisiana and checked in with the locals there, those who would be directly affected by this. Yeah. You know, before I went to Richland Parish, I didn't realize how much of an agriculture story this would be. I spent time with more than 100 people in the region and again and again hearing just how hard it has been to grow cotton, corn, soybean. You know, it really landed with me. These are folks who are losing hundreds of dollars on every acre that they plant. Subsidies aren't making up half of that. There are a lot of bankruptcies.

18:34Small farms don't even exist anymore. and um you know as one person dustin morris who who runs a soybean and corn farm in the parish told me you know the the promise of the land has been broken for a lot of folks they've held land in their family for generations they don't even know how long back they've they've been in the parish and um they're just unable to break even right now so enter meta after years of that You know, a lot of people are trying to get in on the land rush. For now, one family has been the primary beneficiary, but it is a textbook boomtown. Seventy five hundred workers have descended on a community of just twenty thousand that comes with its own challenges.

19:21But folks are optimistic that meta long term will provide some of the economic opportunity that has been lost over the last century. And what I think we're all learning, Raleigh, about data centers is what is one of the gating issues is access to power. Do they have access to power down in rural Louisiana? Well, Louisiana is an oil and gas state. So Energy Louisiana, the utility that is working with Meta on this, has told Meta, use all you want, we'll make more. They are saying that energy won't be the constraint. And they're going to build these 10 new natural gas plants really to serve this one data center.

19:59Six of those are going to be in Richland Parish, just to put that in perspective. So I think Meta has really benefited from picking a place where regulatory hurdles to getting that kind of, you know, fossil fuel generation has been a real boon. And we're seeing that across the board, right, with these mega data centers, hyperscalers, companies like Meta. they're not looking to Northern Virginia anymore. They're looking to the South. They're looking to rural regions where land is abundant. They can get lots of energy. And there are politicians who are willing to clear the red tape. And that's a big part of this story is thinking about Louisiana politicians at the national level, at the local level, at the state level, who really heard Meta and its demands and said, we will do everything it takes.

20:52As one person said, We will move heaven and earth to make this happen for you.

20:57Scarlet Fu:Wow, that is some pretty strong, a pretty strong stance there. What surprised you the most, Riley, as you were doing the reporting for this in terms of I know the scale was something that, you know, kind of blows all our minds. But what took you by surprise? Yeah, I again, coming back to the state of American agriculture, that's not a sector I've actually covered. I've spent many years covering health care and now I cover tech. But to learn more about ag, it feels like you can't tell this story about rural Louisiana without telling a story of agriculture. So that really stuck with me. And just thinking about the long term questions.