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Hi everybody and thanks so much for

joining us for this special edition of

Bloomberg Daybreak. I'm John Tucker. The

US stock market closed for the Good

Friday holiday. Coming up this hour,

it's April. Have you done your taxes

yet? Well, the deadline less than two

weeks away and we're going to explore a

few interesting tax related stories.

We'll see how Doge cuts may impact the

IRS this tax season. Plus, we're going

to tell you why some of the nation's

wealthiest corporations owe far less to

the government as a result of President

Trump's overhaul tax code. And attention

chocolate lovers, candy sales, they're

on the decline this Easter holiday. But

first, this is right around the corner.

The next batch of earnings, big banks,

will help kick it all off. And joining

us for this preview, Bloomberg

Intelligence senior US bank analyst

Herman Chan and Bloomberg Intelligence

financials analyst Neil Cypes. Hey guys,

this should be a pretty simple model.

I'm a bank. Uh, I take in deposits, give

the depositors one rate, then I loan

their money out at another rate,

>> and I make up the difference, and that's

how I make money as a bank.

>> That's right.

>> Is it that simple?

>> That's That's right. you're you're

talking about that's the net interest

margin which is like a big bank metric

that everybody focuses on and that is in

essence the core of banking. Uh you make

loans, you take in deposits and you

generate fees from areas like uh wealth

and capital markets.

>> Neil, it's it's not that simple, is it?

Because they have all these other

different lines of businesses that

they've added over the years, investment

banking, etc. so forth, consumer and uh

all sorts of other business divisions.

Right. That's right. And when you when

you look at some of the largest banks

that we're expecting reports from in the

next couple of weeks like a Goldman

Sachs or Morgan Stanley, these are much

more fee oriented type banks. Uh

businesses like you mentioned,

investment banking, trading, asset and

wealth management, many of which can be

steadier type of feebased income

streams. uh and when we look at things

like capital markets which are key

inputs, economic growth which are key

inputs uh to the investment banking type

business, I mean that's one we're

expecting uh a rebound going forward. We

had the Fed that was easing. Uh of

course there's questions around where

we're going from here uh with recent

volatility, but the broad expectation is

there's still an investment banking

rebound on the horizon. We'll have to

sort of reassess and listen in on how

those businesses are performing

particularly in the month of March and

into early April when we get these

results as that's sort of a key tailwind

uh for a lot of these names particularly

at Goldman and Morgan Stanley as we roll

through 2026.

>> Yeah. And Herman Chan who stands out in

one particular area as opposed to the

other banks whether it be investment

banking, the fees generated there or

what other business they're in?

>> Yeah, sure. So for for my banks um

they're more fixed income oriented. So

given their large balance sheets, their

trillion dollar balance sheets on on the

asset side they have

>> just remind us the banks that you cover

for us.

>> So that that's right that would be JP

Morgan, Bank of America, City, Wells

Fargo on on the larger side. So

typically those banks have more fixed

income focus whereas Neil's banks um

which have a smaller balance sheet like

a Goldman and Morgan Stanley are more

equity focused. Um that being said, uh

Goldman and Morgan Stain also have more

M&A um feed generation capabilities just

because of their historical strength in

in that particular business.

>> Yeah, you mentioned that and on the

Bloomberg terminal that everybody looks

at, one of the most popular pages is

something called the league tables.

Who's leading whom in terms of uh

mergers and acquisitions and the fees

they collect? Who's on the top of that

league table, Neil? Yeah. So, for quite

a while, you've seen Goldman at the top

and and you know, Morgan Stanley and JP

Morgan join them as as long

long-standing topics.

>> It's like more it's more important like

brackets for the NCAA.

>> Yeah.

>> Yeah. It's it's very closely followed.

Uh and so we're always monitoring those

trends. And you know, again, when you

think about M&A fees, uh which is small

in the in the world of uh Herman's much

more diversified banks, for Goldman and

Morgan Stanley, it's much more

impactful. And that's one of the

businesses that are, you know, within

the capital markets uh universe is

really expected to see the big step up

uh in 2026. And so, you know, we

actually got a nice early read from one

of the smaller peers uh Jeff whose

quarter I'll note ends at the end of

February. So, it's going to exclude most

of the volatility and the the sort of

trends that we've seen so far in March,

which are going to be most pertinent

with one Q results in the next couple of

weeks. But what Jeffree showed us was at

least the first two months of 2026 were

pretty strong across trading

particularly in equities as well as M&A

and ECM fueled by IPO.

>> What's ECM? You're doing jargon now Neil

>> equity capital markets. Uh so when you

think about companies going public or

issuing stock uh that's the business

that we're looking at and you know

typically what drives that is robust

equity markets. And so prior to again

the past month, uh we've really seen,

you know, equities near all-time highs.

The IPO calendar was starting to funnel

through. Uh so again, it's really going

to be the incremental change of what

we've seen uh over the past month that's

going to be, you know, of biggest focus

uh for the capital markets world with

one Q results.

>> All right, Herman, let's start with your

bank JP Morgan Chase. Uh give us the

overview.

>> Yeah, so we're expecting a really strong

quarter. JP Morgan had just mentioned in

February they had a company update where

they brought in a bunch of analysts and

investors coming in to hear management

speak and they talked about mid- teen

growth in in capital markets and in

investment banking. So really strong

results there. Um on the lending side

from industry data we're seeing really

robust growth um across um commercial

lending is is really the standout. And

that's not only um your typical u you

know smaller middle market but also

large corporate and then something

called lending to non-bank financial

institutions which has been a big focus

for for the for the industry these days.

So all three areas from a commercial

lending standpoint have been really

strong. Um that being said there be some

slowdown in in credit cards given

seasonality in the first quarter but

overall we're expecting a really solid

result for them. You're listening to

Bloomberg Daybreak special edition. I'm

John Tucker and we're talking banks with

Bloomberg Intelligence senior US bank

analyst Herman Chan and Bloomberg

Intelligence financials analyst Neil

Cypes. Neil, you mentioned volatility.

Uh and certainly we've seen a great deal

of volatility. Is volatility good or bad

from for the banks?

>> Yeah. So I think

>> I guess it depends on which particular

business you're talking about.

>> It it certainly does. And so, you know,

Herman mentioned the the guidance from

some of the biggest peers like JP Morgan

calling for mid- teens revenue growth in

the capital markets side of the

business. Uh, that bodess well

particularly for Goldman uh who earns

about half of revenue from trading. Uh,

you know, the remainder from investment

banking and asset and wealth management.

So, when you think about volatility,

volatility tends to be a positive for

the trading businesses. uh you've seen

that across equities and fixed income

products uh in the first quarter. Uh

when you have that volatility though,

it's typically associated with

uncertainty, right? And so there's been

sort of a a darker cloud cast over 2026

in terms of economic growth where the

Fed is heading. Uh when you have a wide

dispersion of potential outcomes and

scenarios, uh that tends to bode well

for institutional clients repositioning

and driving that trading business. When

you think about the capital market side,

the issuance, the capital raising, uh

the M&A, the mergers and acquisitions,

uh the uncertainty can sort of drive

clients to uh perhaps take a pause,

reassess their business operations,

whether or not they want to uh pursue

those types of transactions. So, uh in a

period like this, uh you could see a

potential slowdown. And we've actually

seen a bit of a divergence in terms of

expectations for 2026 where again

trading is getting the boost from

volatility and that's more than

offsetting uh the potential headwinds

that could come down the road for uh

investment banking fees.

>> Uh Herman with your JP Morgan Chase the

CEO there Jamie Diamond has referred to

cockroaches. Um

>> well what did he mean first of all

explain it to everybody.

>> Sure. So cockroaches that that comment

was in relation to some fraud related

activity that happened in the third

quarter of last year. You think of um u

certain companies like uh first brands u

an automotive parts company triricolor

which was a company that lent to

subprime auto borrowers. So those are

the issues that that popped up in the

third quarter that related to fraud.

There was another one that popped up

here in the first quarter uh in the UK

named MFS um that is related to u

residential lending.

>> But uh Jamie was worried about um these

loans going sour and that it could

spread through the industry. Do I have

that right?

>> He's he's saying that these were

fraudulent loans and there might be more

lurking in in private credit and bank.

Does a bank like do they other banks

have to worry about this, you know,

spreading?

>> The lesson learned in the third quarter

was that banks really scrubbed their

balance sheets to see what they really

had if if there were any similar type

exposures and so far we haven't seen any

other than than this MFS issue that

popped up in the first quarter. So that

being said, um there's much more

scrutiny surrounding private credit. So

that's one of the main focuses of

concern within the markets these days is

what are sort of the connections between

private credit and potential problems

there within the broader banking

industry.

>> Yeah. I want to ask you how is just a a

very broad question. How is technology

today changing the banking industry?

>> Yeah. Uh I I think you're seeing it uh

particularly uh pervasive in in

headlines and headline risk that's been

associated with the banks and and wealth

managers alike. uh particularly in the

first quarter as as new AI products are

rolled out from a broad lens threaten to

uh at least disrupt if not

disintermediate

uh at least in the in the more draconian

scenario some of the some of the

traditional processes that we see across

banks and and things like wealth

management have really been in the

crosshairs here um which is a huge

business for Morgan Stanley driving

>> so uh bankers could be replaced by

robots is that what you're saying

>> no and and and frankly our view is is

much more of a human plus AI end state,

a human that's empowered by AI. And I

think that's what you're already seeing

um at the investment banks today is you

know the bankers and the employees are

using AI tools whether third party or

inhouse uh to help boost their

productivity to serve more clients to

generate more revenue and ultimately

boost the fundamental business um that

we know uh is traditional to banks. So

uh ultimately we think it's going to be

a net positive. Uh but I think right now

it's a lot of digestion of how this is

going to shake out, what we're going to

allow AI to actually disrupt and where

it's actually going to uh to come into

these businesses. So um staying tuned to

to what's being rolled out, but uh from

the broad strokes, it it feels positive

to uh business production.

>> Uh Herman, what's the landscape today

that's driving banks to consolidate? We

got about a minute left.

>> Sure. So the it's all about scale. Um,

we have banks like JP Morgan, Bank of

America with trillion dollar balance

sheets and we have about 4,000 banks in

the United States. So, how do you

compete with with the likes of JP

Morgan? How do you compete with the

likes of fintech companies and others

that are encroaching in the traditional

bank space? You need scale to compete to

invest in technology and compliance

issues. So, that's what we're seeing

today. Um, an increase in M&A and just a

smaller industry overall.

>> Guys, thanks very much. Appreciate it.

Our thanks to Bloomberg Intelligence's

Herman Chan and Neil Cypes. And up next,

we'll tell you why Amazon and Walmart

are paying less taxes because of

President Trump's overhaul tax code.

It's 20 minutes past the hour. This is

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Welcome back to this special edition of

Bloomberg Daybreak. I'm John Tucker. The

US stock market closed for the Good

Friday holiday. You have less than two

weeks to get those taxes in. So, we

thought it would be a good time to

explore a couple of tax related stories.

A year after Elon Musk set out to slash

jobs at the IRS, the agency is

struggling to meet demands amid a busy

filing season. For more, we are pleased

to welcome Bloomberg Law reporter Aaron

Slowey. So Erin, if um I got a question

for the IRS, I haven't filed yet. Maybe

I'm a small business owner. Can I get in

touch with them? you should be able to

get in touch with them, but I try and

get in touch with them as soon as

possible and not wait till that April 15

deadline when everyone's rushing to file

because they are they are low in staff

after kind of the Doge cuts from this

this last year.

>> Well, what kind of shape is the IRS in?

First of all, explain to me why Doge

targeted the IRS, which if I'm not

mistaken, collects revenue for the

government.

>> And it wasn't even an IRS targeting. It

was just a federal government abroad

targeting. They offered a like a

resignation offer and more people at the

IRS about 25% of the IRS took it. So it

was a lot more than people expected and

there were huge holes that were left and

now the IRS they also had to deal with

the US government shutdown longest one

in history. So they had a lot to recover

from at the start of the season and some

of the people they tried to hire they

couldn't and training wasn't up to date

up until that point and people are

getting moved from other divisions to

kind of help out with this season. So,

how much of a backlog are they facing

right now because of this? Uh, they're

certainly not, it doesn't sound like

they're up to full staff at this point,

right?

>> They're not up to the staff that they

were in earlier in 2025.

Um, the perfect level of staffing is

kind of a debatable um thing. I think

the IRS CEO will say that they're at the

perfect level right now. But um a big

thing that we're thinking about is kind

of the moving of employees to to

different sectors and what kind of

impact that will have on the backlog

which is in the millions with the

accounts management which basically that

means any question that you have for the

IRS it get kind of put in that bucket

and before the government shutdown that

was projected to be past pandemic levels

and so I imagine with the government

shutdown it's going to be potentially

even worse. So, as an individual uh

taxpayer uh filer, am I going to have to

wait before I get my refund?

>> I think it's going to depend on the type

of filer that you are. If you're

relatively a simple filer, um you file

before the April 15th deadline, I think

you should probably be in the clear. Um,

for the people who have more complicated

returns that usually file for extension

or there's any errors on the returns

that you do file, we'll start to see

those impacts in the summer and as

people start to get phased out that were

seasonal workers, like I think we'll

really start to see the impact then too.

>> Is the IRS up to speed in terms of uh

adopting technology that will, you know,

help the process along?

>> No, the IRS is not up to date. It's been

historically underfunded and that's

something with Doge coming in I think a

lot of people had hoped that they'd

bring in their private sector experience

which I think they are still doing in

some respects. It just takes time and so

a big thing of what Doge talked about

was cutting the workforce and that tech

would replace it but they cut the

workforce before the tech was in place.

So the IRS has a lot of work to do but

they know it and they really need the

funding to help do it.

>> Are they getting it?

>> They are not getting it. They had about

80 billion in funding extra funding to

help modernize from a couple years ago

and each year that has been clawed back

bit by bit. So now they have a lot less.

It was 80 billion now it's about under

25 billion I think at this point and

annual funding is also getting cut as

well which I think we should know more

about this next year's funding shortly

too.

>> The IRS has something called the zero

paper initiative. Uh can you tell us

more about that and how's that how is

that going? So, the IRS wants to get rid

of as much paper as possible. Um, it's I

saw I went to an IRS facility in Austin

a couple years ago and like the amount

of paper and they hand type in each

return. So, it takes a lot of time and

effort and people to get those paper

returns in. So, they're trying to

digitize across the board and that's

been a bipartisan theme. Now, the Trump

administration has its own spin on it

and they're relying heavily on

government contractors to do that too.

And so when a new administration comes

in, they kind of start from scratch

sometimes in some cases. So that was

kind of something that hindered this

zero paper initiative when the B

administration had made some progress.

They're kind of starting over a little

bit now that the Trump administration is

in in the IRS.

>> Have you been able to sort of uh take

the temperature of the employees there?

What what is morale like at the IRS

these days? morale is low, especially at

the lower levels, especially for the

people that were involuntarily moved to

work on help process tax returns. Some

of those people are very highly paid in

terms of government salaries and they're

doing entry level work and so those

people there's low morale. Um, this past

year was I think really tough and

they're having to like manage multiple

workloads. I think at the top levels I

think people are feeling really good

about the IRS CEO and his competency. I

think they wish they had him full-time

cuz he's also the Social Security

Administration Commissioner. Um, so it's

a little bit mixed depending on where

you fall in the hierarchy, but for the

people at the lowest levels of the IRS,

which make up most of it, I think it's

pretty low morale.

>> Does this necessarily mean that I'm less

likely to be audited

>> and that the IRS would like to think

would like to tell you that that is not

the case? But I think something we

talked a lot about last year was are

people going to play the audit lottery

this year knowing that there's less

people to audit you potentially. And so

I think the IRS is going to they say

they're going to rely a lot more on tech

but I think only time will tell and I

think it'll be a couple years before we

know how much people are actually

avoiding paying their taxes.

>> Great. Thanks a lot. Appreciate it. All

right. Thanks to Bloomberg Law reporter

Erin Slowly. While some may be

struggling with higher taxes, a

different story for some of the

country's wealthiest companies. And for

more, we are pleased to welcome

Bloomberg reporter Caitlyn Riley. Uh

Caitlyn, thanks for being with us this

morning. How has the uh President

Trump's one big beautiful bill uh

changed the tax landscape, especially

for the big guys, the big companies?

Well, we saw corporate revenues drop

last year um by about $65 billion

following passage of the big beautiful

bill over the summer. A lot of the um

business tax breaks were retroactive to

um the start or earlier in the year. And

so we saw the corporate tax revenues

Treasury brought in drop quite a bit.

Um, if you compare that to what they

were expected to collect in 2025, it's

it's likely that tax cut is even greater

than the 65 billion we saw revenue drop

from 2024.

>> Uh, are some companies uh better off

than others in terms of the treatment

that they get with the the new tax uh

regulations?

>> Yes. So the law left the 21% corporate

rate in place, but it sped up some

crucial deductions um for that

particularly benefit companies that

either spend a lot of on research and

development or on on capital. And so we

saw big companies in particular benefit

as well as companies in tech and pharma,

manufacturing,

um all of these industries where you're

seeing um a lot invested in machinery

and equipment or research. Um, some of

the companies we saw that paid a lot

less in cash taxes last year compared to

2024 included Amazon and Meta, um,

Walmart, Home Depot, Eli Liy, the list

goes on.

>> Timing has a lot to do with this. Uh,

can you talk about that for us? So, the

two biggest changes we saw or the most

lucrative changes we saw that took

effect last year were to allow companies

to speed up deductions um for

investments they're making in into

research and development here in the US.

Before this law was passed, they had to

spread those out over 5 years. Now, they

can take those that full deduction in

the year they make those investments.

Likewise, we um the bill also sped up

the deductions for purchases like

equipment, machinery, office furniture,

computers, some software, that sort of

thing. Otherwise, those um purchase the

cost of those purchases would have had

to have been deducted over many years.

And so what we are seeing is a big

increase in the tax breaks companies are

able to take this year um or this past

year this year and forward. But as those

companies move those deductions up

rather than spreading them out over

several years, we would expect um some

of these tax cuts to kind of lessen and

level out as you get um further away

from the the laws passage as a lot of

this tax cut is um is frontloaded.

>> Suffice to say, it's really going to

impact the bottom lines for these

companies, right?

>> Yeah. And we're seeing that a lot this

past year. Amazon is paying billions

less um paid billions less in cash taxes

last year. Same with Meta. Um when you

talk to economists and supporters of the

bill um the case they make is that these

breaks allow companies to reinvest that

money in their business and the the hope

is that you see economic growth increase

as a result. The tax foundation I think

estimates that this increases GDP by

about 0.7%

um thanks to these deductions. And so

that is the case Republicans will be

making uh for this bill as they they

head into this year's midterms.

>> Caitlyn, is there some degree of

difficulty tracking this and maybe uh

some questions about the the methodology

uh behind all this? Mhm. So we started

from a point of knowing by how much uh

revenue collected by the government went

down. From there it gets kind of tricky

and you're really reliant on what

companies themselves choose to disclose

or not. Um and so what we did was we

went through SEC filings and earnings

calls to see what companies had chosen

to share um about the impact of the big

beautiful bill on their tax burden. Um

what we still don't have is um you know

any direct attribution from these

companies to like how much of their

decreased uh cash tax payments are due

to the big beautiful veil versus you

know any number of other variables that

go into determining how much they owe in

corporate income tax each year. And so

there is that kind of methodology

challenge where we're very reliant on

what companies choose to share and and

by going through all these filings, we

were able to piece a picture together,

but there are still big questions and

specifics, especially when it comes to

total numbers um that are just difficult

to find. And one thing we definitely ran

into was there were additional companies

where we did see a drop in the in the

cash taxes they paid last year, but

without the companies themselves

specifically attributing that to the big

beautiful bill, we just didn't have

enough um to sort of include them in the

story and and lump them in with this

group because we're so dependent on um

on what they decide to share.

>> Okay, Caitlyn, we'll leave it there.

Great reporting, by the way. They are

thanks to Bloomberg reporter Caitlyn

Riley. Up next, candy sales on the

decline this Easter holiday. 37 minutes

past the hour and this is Bloomberg.

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>> We buy insurance for peace of mind, but

every year millions of claims are

denied. Not because people did anything

wrong, but because their policies

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know every detail. Policy holders rarely

do. That's why My Policy Advocate

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Thank you so much for joining us for

this special edition of Bloomberg

Daybreak. I'm John Tucker. The US stock

market closed for the Good Friday

holiday. We're continuing our look at

tax stories as the IRS deadline

approaches with some wealthy Americans

considering tax shelters to reduce their

overall liability. But what are tax

shelters? How do they work? Who

benefits? Uh for more, we're pleased to

welcome Michael Bologna, a senior tax

correspondent with Bloomberg Tax. Have

you done your taxes yet?

>> I I have done my taxes and I uh did one

of my That's what I would expect from

you. The our tax expert. Uh explain to

us, give me the dummies explanation. Me

being the dummy of a tax shelter. What

is it? Well, I mean the thing you

understand about tax shelters is uh that

there's

a basic thing would be just, you know, a

Roth IRA, I guess, but um that's

certainly an indication of a a legal tax

shelter, something that the um uh that

the IRS uh and the federal government

blesses. But um what I've really done a

lot of reporting on are are tax shelters

which are considered perhaps abusive um

on the uh the fringes of uh legality and

something that might require the IRS to

uh intervene and do some enforcement on.

>> So maybe stretching the law as much as

you can to avoid paying taxes.

>> Right. Right. and and um getting to that

the point where we would say this

something is abusive or not might might

take years for the IRS to investigate

and examine. Uh it it's it's a process,

but uh currently the IRS is is probably

investigating 40 uh abusive tax schemes

uh at least according to some reports by

the GAO. And um and there's probably

even more of them out there uh at any

one moment. It sounds like it takes a

lot of time on the part of the IRS which

has been hampered by, you know, Doge

layoffs to come to the determination

whether a tax shelter is legal or not

legal.

>> Right. Right. It's it's a process. You

would have had to uh have uh a number of

people take a particular tax position.

Uh that would have to go into audit. uh

uh auditor might and then auditor might,

you know, see some real red flags in

there and decide, hey, let's uh kick

this over to the civil uh enforcement

division or the criminal enforcement

division and then you would have to have

some litigation around that that and

then uh there'd have to be some

adjudication by a court. So, it's um

it's a process that can take uh you know

years uh unless the IRS decides to sort

of intervene immediately or the or or

perhaps Congress might intervene more

quickly to say, "Hey, this is this is

something that that's just not tenable

or not within our view of the law."

>> So, if I were going to play the tax

shelter game, it sounds like now's the

time to do it. Well, I mean, the the

truth of the matter is is um it's a very

difficult tax enforcement environment at

the moment. Um like like you said, the

headcount at IRS is roughly down 25%

since um President Trump uh returned to

the White House. Uh in addition to that,

the uh $80 billion that was set aside by

by Congress during the Biden years for

um improving IRS uh enforcement has been

clawed back or a lot of it's been clawed

back. Um and and in addition to that,

the Justice Department recently just

completely dissolved its specialized um

tax division responsible for civil and

criminal tax enforcement. Um, so, so

yeah, I mean, u the federal government

is is is limping into uh this tax

enforcement season for sure.

>> Well, let's talk about uh who's selling

tax shelters. Is this a a lucrative

business?

>> It is. So far as we can tell, I mean,

there's I talked to a certain number of

wealth advisors out in the marketplace

and and several of them have told me

that they are frequently pitched on

different tax schemes uh by by tax

promoters, pe people who spend really

almost all their time just looking at

gaps in the uh federal tax code and

figuring out structures that can fit

between those uh those gaps. and then

and then to begin to sell them to

wealthy individuals and then and then

really uh bulk up those sales over over

a period of time.

>> Are they on the up and up?

>> Well, well, some of the schemes are are

completely legitimate until the IRS

steps in and says, "No, we don't think

this is a valid tax uh position." But

but some of them are are are clearly u

well I don't know clearly but are are

probably illegal and would have to be

stopped at some point.

>> So how do the promoters make money?

>> Uh they usually take a percentage of

whatever tax savings um that they've

pedled to uh a wealthy individual and

and uh their take can be somewhere

between five and 30% of uh whatever

those tax savings might be.

>> That's great. We appreciate it. Our

thanks to Mike Bolognia, senior tax

correspondent with Bloomberg Tax.

>> Sprinkle it with you.

>> Sprinkle it with you. Cover it with

chocolate and a

candy.

The candy.

>> Oh, the candy can.

>> The 1970s hit Candyman by Sammy Davis

Jr. Who remembers that? Well, you may be

seeing a little less of the candyman

this Easter. That's because sales are

projected to drop. For more, we're

pleased to bring in Diana Roseria Pena.

Candy sales declining. Why?

>> Well, Easter sales, uh, Easter candy

sales are set to decline around 5%.

People are just not buying them. Um, you

know, we actually had scanning data

showing the first four weeks of the

season.

>> Oh, explain what scanning data is.

That's just

>> it's it's basically what you go uh to

the cash register and whatever you

scanned and that's the data that they

collect.

>> It's readily available data to people

like for people like you.

>> Uh for people like us. Yes. Um so I mean

obviously it's aggregated so we're not

necessarily going to see you like what a

specific person but um

>> but definitely it's something that you

know people track. uh we get that

information every month and yeah, we're

seeing uh you know in the season it's

pretty soft and we don't necessarily

think it's going to you know recuperate.

>> Uh are we talking about a specific type

of candy, chocolate or peeps?

>> We're talking about Easter dedicated

candy like Peeps uh you know the eggs uh

those those guys pretty much.

>> And what's the reason behind this?

people are being more strategic with

their uh consumption and um you know

while Eastern is pretty is getting

pretty famous uh for adults and there

seems to be a more appetite to celebrate

the season it seems that people are just

not buying as much candy as as they used

to. It's not it's

>> Is it an economic thing or because oh

gasp everybody wants to be healthy these

days or a combination of all these

things or what? I think they're they're

both uh you know I think there's people

that are starting to get tired of the

price increases. Uh we've seen

significant price increases in the

package food um you know industry

overall like you know usually low

singledigit increases is fine but we're

seeing sometimes in the low teen

increase. So people are definitely being

a little bit more conscious about what

they put in put in their basket. Who are

the leading candy manufacturers and what

are they saying? How are they responding

to what you know you just said appears

to be a trend?

>> Yes. Um so Hershey has 67% of the dollar

share for chocolate and lint and Mars

follow that at a high single digit uh

share. And what they're saying is

they're trying to be more competitive.

They're trying not to be as price

competitive because they don't want to

race to the bottom. But that might be

the lever that they have to pull to get

volume to grow again.

>> What is the biggest input cost for these

companies?

>> So, it's obviously chocolate. Uh

chocolate has been, you know, on a tear

in the past year. They've increased.

>> You're talking about cocoa prices.

>> Cocoa prices. Yes. Coco prices have

been, you know, increasing significantly

the past year. It has uh reduced a

little bit. Um, Chocoliers think that

they might be able to see lower prices

going forward. Uh, we'll see with what

happens with with, you know, the

conflict and everything and tariffs and

stuff like that, but it seems that

they're expecting lower cost and that

the hope is that they can able to pass

that through the consumer.

>> Oh, you mentioned tariffs. How have

tariffs impacted the candy business? So

wrapping you know like those uh steel

aluminum like those kind of things

derivative uh of of the supply chain.

Obviously gas prices are starting to to

affect uh that. So you know those are

the kind of things that might might have

to you know they have to pass through to

the consumer.

>> Oh I have to ask you chocolate expert

parenthetically uh my trivia questions.

You know how cocoa plants are

pollinated? I actually don't. Maybe I

should have.

>> I I thought I' I've told you this

though. Uh wild boores running through

the cocoa fields. It's the fleas on the

back of the wild boores that actually

pollinate the cocoa plants. So the next

time you're biting into a chocolate

bunny, just think of think of those poor

fleas that pollinated the cocoa plants.

>> Well, I don't necessarily want to age

myself, but I have tried uh chocolate

with insects on it.

>> Oh, you mean the chocolate covered

insects?

>> Yes. to increase the protein. So that

was like the first wave of the protein

craze.

>> Okay. Well, what's next? The Easter

candy sales data point to softer season,

but you point out this is probably a

trend that's going to continue, right?

>> Well, the way that I see it is that

there's a lot, like I said, there's a

lot more appetite to celebrate the

season, but people are actually uh

planning to buy more on the day after

Easter cuz there's there's a We call

that stale candy.

>> Yes. Uh happy 50% off uh you know candy

season. So um you know the the Ferrerero

survey survey earlier uh this month

indicated that 64% plan to buy candy on

sale the day after Easter. So obviously

that is going to affect sales going

forward

>> and we're going to see deeper

discounting I would imagine.

>> Exactly. Exactly. And that will press

your sales and the margins as well for

the big companies that you mentioned

like Hershey.

>> Yes, for sure. It's something that they

are going to have to be conscious about.

It's it's very difficult. Um, you know,

it's a very difficult trend for packaged

food companies at the moment because,

you know, they have higher costs.

They're trying to appeal to uh a

consumer that is being a little bit more

strategic with their spending. So,

they're going to have to discount. So,

it's it's both on the top and bottom

line. Okay. Uh, at some point we'll do a

deeper dive into the fleas that

pollinate the cocoa plants. Our thanks

to Bloomberg's Diana Roser Pena. We'd

also like to thank Bloomberg

Intelligences Herman Chan and Neil

Cypes. Bloomberg's Caitlyn Riley and

Bloomberg Laws Aaron Slowey and Michael

Bologna. I'm John Tucker. Stay with us.

Top stories and global business

headlines are coming up right now.

We buy insurance for peace of mind, but

every year millions of claims are

denied. Not because people did anything

wrong, but because their policies

quietly excluded what happened. Insurers

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explains where you are vulnerable. They

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policy to protect you, let My Policy

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