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Speaker 3: Big economic week this week, lots of economic data coming
Speaker 3: down to Pike, including Jobs Day on Friday week at
Speaker 3: the non farm payroll which is now looking for one
Speaker 3: hundred and ninety five thousand jobs. So the Fed's gonna
Speaker 3: have a lot to digest. Let's check in with Ira Jersey,
Speaker 3: Bloomberg Intelligence US interest rate strategists. So, Ira, where do
Speaker 3: you think the FED is as it sits here today
Speaker 3: digesting you know Jolts number, and they're going to get
Speaker 3: a lot more data coming this week. Where do you
Speaker 3: think the Fed is today?
Speaker 4: Ira?
Speaker 5: Yeah, the Fed I think is looking for the opportunity
Speaker 5: to cut interest rates. I think they've made it pretty
Speaker 5: clear that they're done hiking obviously. Japwell just this morning
Speaker 5: reiterated some words. He's at a symposium with two other
Speaker 5: central bank governors out in Europe, and he said, like,
Speaker 5: look that he doesn't want to cut too early. But
Speaker 5: he also doesn't want to cut too late because if
Speaker 5: they cut too early, then they risk inflation reaccelerating, and
Speaker 5: if they cut too late, that could mean that, you know,
Speaker 5: they go into a recession.
Speaker 6: So I think they want to be cautious here.
Speaker 5: I'm still of the opinion that we're not going to
Speaker 5: have enough data that the Fed's going to be able
Speaker 5: to cut before the election. And I think there's other
Speaker 5: reasons in the back of people's minds will never ever
Speaker 5: admit it, but that they want to kind of in
Speaker 5: order to remain independent. They want to stay out of
Speaker 5: the political arena. So you know, they know that things
Speaker 5: are slowing, but they're not slowing quickly enough for them.
Speaker 5: I think to cut in the very near term.
Speaker 1: Yesterday, Morgan Stanley coming out with a note talking about
Speaker 1: steep inner trade into a potential President Trump. Basically, you're
Speaker 1: going to see higher inflation, slower growth, therefore go bet
Speaker 1: on steepeners. Think about that. These calls we're starting to see, well, I.
Speaker 5: Think eventually the curve will be meaningfully steeper. I mean
Speaker 5: the curve is still inverted if depending on where you're looking.
Speaker 5: So if you look at the two year versus ten
Speaker 5: year You know that has moved twenty ish basis points
Speaker 5: from around negative fifty basis points to negative thirty. I
Speaker 5: was actually I'm working on a note right now looking
Speaker 5: at market technicals, at technical analysis, and we're getting pretty
Speaker 5: close to an interesting and interesting technical resistance point. I
Speaker 5: think that that steepeners makes sense and are But the
Speaker 5: problem is, I think you're going to get stopped out
Speaker 5: once or twice if you get in now you know
Speaker 5: we've already steepened a bit.
Speaker 6: Ye, You're We're probably going to.
Speaker 5: Pull back at least at some point, and so there
Speaker 5: might be better entry levels for those types of trades.
Speaker 5: The I think one of the big questions is will
Speaker 5: we see what we've if Donald Trump is elected, will
Speaker 5: we continue to see bear steepeners? Right so, where two
Speaker 5: year yields basically have done nothing, all of this move
Speaker 5: has come from the ten your yield moving higher, and
Speaker 5: that's on the expectation that we'll have higher deficits, that
Speaker 5: we might have higher inflation, that the FED might not
Speaker 5: be as active. But I think at some point we're
Speaker 5: actually going to get the opposite. We're going to get
Speaker 5: what we're going to get. Bull steepeners where you see
Speaker 5: two year yields go down to four and a quarter
Speaker 5: four percent from where they are today, whereas ten year
Speaker 5: yields might not move quite as much even if Donald
Speaker 5: Trump is elected, because what's I think underappreciated by the
Speaker 5: market right now. They're all focused, A lot of people
Speaker 5: focus on the fiscal aspect of what Donald Trump might do,
Speaker 5: but he's also very likely to appoint a more dubvish
Speaker 5: Chair of the Fed and not reappoint Chair Powell. So
Speaker 5: so I think once the market wakes up to that fact,
Speaker 5: I think you could wind up seeing some steepening, but
Speaker 5: the other way, right, so bull steepening as opposed to
Speaker 5: bear steepening.
Speaker 3: I heard you just mentioned debt deficits, and we've heard
Speaker 3: that more and more of the last several weeks and months.
Speaker 3: But quite frankly, I've been hearing about the you know,
Speaker 3: the US debt concerns my entire life more I could
Speaker 3: really care.
Speaker 6: Well, they care a little bit, right.
Speaker 5: So, the way that I look at at Paul is
Speaker 5: as the debt burden grows and we're now at or
Speaker 5: above depending on how you count the deficit above, the
Speaker 5: debt is now bigger than GDP is. Sell offs will
Speaker 5: be more pronounced, and in rallies will be somewhat more limited,
Speaker 5: but we'll still rally. Right, So, if the inflation is lower,
Speaker 5: the economy is lowing, and the Federal Reserve is cutting
Speaker 5: interest rates, we will see treasury yields lower than they
Speaker 5: are you know, at the start of that environment.
Speaker 6: Right.
Speaker 5: So if we do have, in fact, a recession in
Speaker 5: twenty twenty five and inflation coming down and the FED
Speaker 5: cutting one hundred and fifty basis points, then interest rates
Speaker 5: are going to be lower, full stop.
Speaker 6: I think the reason.
Speaker 5: Why the debt burden isn't as big of a deal
Speaker 5: in countries like the US or indeed Japan, if you
Speaker 5: just look at Japan and you know how much debt
Speaker 5: that they have, their debt burden is way higher than
Speaker 5: ours in terms of the size of the economy is
Speaker 5: two things. One is that there's always a back up buyer, right,
Speaker 5: so the central banks can buy the debt if they
Speaker 5: really need to, if there's any kind of liquidity problems.
Speaker 5: There's other issues with that, right where you wind up
Speaker 5: having too much money in the system and too many
Speaker 5: reserves and that might cause inflation. But the other thing
Speaker 5: is is that all of our debt is in dollars, right,
Speaker 5: and we have dollars, so credit risk in countries like
Speaker 5: the US and like Japan, we don't have to worry
Speaker 5: about it. We don't have a lot of external debt.
Speaker 5: It denominates in other currencies, So we're not going to
Speaker 5: have a currency crisis or a credit crunch like you know,
Speaker 5: like Brazil had, or Argentina had, or Russia had back
Speaker 5: twenty years ago.
Speaker 6: That's just not a possibility.
Speaker 5: The risk is that we have to inflate our way
Speaker 5: out of it, and that's I think one of the
Speaker 5: issues that a lot of people are concerned about.
Speaker 1: Well said in good distinction there for sure, All right,
Speaker 1: before we let you go, what's your call for Friday?
Speaker 5: Well, I don't forecast non farm payrolls, but non farm
Speaker 5: payrolls is is I don't, that's WOGS groups mandate, But
Speaker 5: payrolls is by far the most important number to the
Speaker 5: treasury market. And keep in mind, like with with the
Speaker 5: holiday on Thursday and the weekend on Friday, it's very
Speaker 5: likely that trading desks are not going to be fully stabbed.
Speaker 5: So if we do get any kind of surprise, you
Speaker 5: could get either, you know, a really outsized move just
Speaker 5: because there's lack of risk takers kind of in the
Speaker 5: office and trading on.
Speaker 3: It real quick. How disappointed should we be that the
Speaker 3: US men's team did not make it out of the
Speaker 3: round of Stace?
Speaker 1: That's why I thought he was booked by the way.
Speaker 5: I mean, I'm very disappointed quite frankly, But it was
Speaker 5: all about the game against Panama, not so much Orguay.
Speaker 6: We I mean, one nil.
Speaker 5: Against the Orguay is actually a pretty solid result against
Speaker 5: a good team. I mean, obviously you'd want it. We
Speaker 5: wanted to draw or win, and that would have obviously
Speaker 5: put us through if we had won. So it's the
Speaker 5: Panama game that we have to really, you know, assess
Speaker 5: what went wrong. I mean, we know a red card
Speaker 5: early on in the game was the reason. But we
Speaker 5: need to be disappointed here that we didn't make it
Speaker 5: out of group all right?
Speaker 1: Fair enough? Literally and I read this, I thought of you, Ira,
Speaker 1: which means something in the eventually, I'll think about sports.
Speaker 1: I don't know, Ira Jersey, Bloomberg Intelligence GPUs Interest Rate Strategist.
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Speaker 2: Just say Alexa playing Bloomberg eleven thirty.
Speaker 3: Mary, let's go to our c suite discussion today. Ben
Speaker 3: Glitklitch Joints and Ceiz, the CEO of Element Solutions. ESI
Speaker 3: is a ticker. So I put an ESI ticker into
Speaker 3: my Bloomberg terminal. I hit des, which is the most
Speaker 3: widely used function every day on the Bloomberg terminal for
Speaker 3: description says it's a specialty chemicals company. I don't think so, Ben.
Speaker 3: I think Bloomberg got it wrong here. You know, the
Speaker 3: especially a chemel's company. That's not really what you guys do,
Speaker 3: is it. What is it that you get to do
Speaker 3: a SI.
Speaker 7: I'd hate to be in Bloomberg studio and say Bloomberg's
Speaker 7: got it wrong. We think about ourselves as a chemical
Speaker 7: technology company. So our company provides chemical solutions, process solutions
Speaker 7: that really enable outcomes for our customers and our supply chains.
Speaker 7: We're not selling a material, We're selling a process that
Speaker 7: enables the performance of high end electronics.
Speaker 1: So what is okay? So we use your stuff in
Speaker 1: highland electronics or not even that simple.
Speaker 7: So when you think about a typical chemical company, you're
Speaker 7: selling a material that has a chemical formula like commonium,
Speaker 7: like commonium or a titanium dioxide.
Speaker 2: Sure right.
Speaker 7: What we sell is a process that, for instance, turns
Speaker 7: a piece of plastic into a printed circuit board. So
Speaker 7: electronics rely on our material processes for their performance. When
Speaker 7: you think about evolution in computing power, higher end semiconductors
Speaker 7: require more complex solutions. It's not just the materials, it's
Speaker 7: the way they're used, the applications, and then the formulas.
Speaker 7: And that's what we do. We work with our customers
Speaker 7: to develop those solutions, not just in the lab, but
Speaker 7: how they're used in our customers manufacturing processes to deliver
Speaker 7: the performance that allows for breakthroughs like AI.
Speaker 3: Well, my specialty chemicals analyst who I hired, he's in
Speaker 3: with some questions here today, But I guess the real
Speaker 3: question is you just reported some numbers, raised your outlook
Speaker 3: for twenty four what's driving your business today?
Speaker 7: So there were two reasons that we raised our outlook.
Speaker 7: The first is margins, So we sell value. Our products
Speaker 7: are not cost plus, they're based on the value proposition
Speaker 7: to our customers, and so when our cost go up,
Speaker 7: we're able to pass that through, and when cost go down,
Speaker 7: as they have over the past nine months or so,
Speaker 7: we get to keep that and so profitabilities improved. But
Speaker 7: the real more exciting driver is traction in advanced electronics,
Speaker 7: and so all of these AI applications are lifting the
Speaker 7: electronics ecosystem and we have a lot more value in
Speaker 7: those applications, and so we're seeing pretty significant demand acceleration here,
Speaker 7: coming off of a very deep trough in the electronics
Speaker 7: market that we saw in twenty twenty three.
Speaker 1: Who are your customers?
Speaker 7: So we sell to the breadth of the electronics hardware
Speaker 7: supply chain. So we are selling the materials used to
Speaker 7: make printed circuit boards, as I said before, So that's
Speaker 7: printed circuit board fabricators. We are selling the materials that
Speaker 7: are used to make semiconductors, so that's semiconductor fabricators, and
Speaker 7: then we're selling materials that are used.
Speaker 6: To put them together.
Speaker 7: Think about assemblers. Increasingly, though, we have a seat at
Speaker 7: the table with OEMs and OSATs. So OSATs are the
Speaker 7: packagers and the test shops. Companies like Nvidia and amcorn
Speaker 7: AMD who were not actually making any of the hardware.
Speaker 7: They're designing it. And as they have more innovation requirements
Speaker 7: to get more computing power in smaller spaces, they're asking
Speaker 7: more from material suppliers, so they're sharing their technology roadmaps,
Speaker 7: which we then go into the lab and innovate to solve.
Speaker 7: So it's customized solutions for these supply chains. They're not
Speaker 7: direct customers, they're specifiers and they're driving business our way.
Speaker 7: So we're the only company in our industry with is
Speaker 7: breadth of capabilities.
Speaker 3: So I'm looking at your company. ESI is the ticker, folks.
Speaker 3: It's got a market cap of six point five billion dollars.
Speaker 3: Stocks up sixteen percent year to date, up forty percent
Speaker 3: over the trailing twelve months. Pe multiple looking forward about
Speaker 3: the eighteen nineteen times I look at your business. Forty
Speaker 3: percent of your business is the industrial and specialty chemicals business.
Speaker 3: Thoughts of spin that out and just be a focus
Speaker 3: on pure play on the electronics side.
Speaker 7: So what we do in that business is very similar
Speaker 7: to what we do in electronics, just with different customers.
Speaker 7: So our customers in this case automotive companies come to
Speaker 7: us to help solve problems around plating on plastic. So
Speaker 7: the hood ornament on your car looks like metal. It's
Speaker 7: a piece of plastic with a thin coating of chrome
Speaker 7: or nickel. That's our process. Now they might want that
Speaker 7: nickel to be matt they might want that nickel to
Speaker 7: be shiny, they might want that nickel to remove certain materials.
Speaker 7: We work in our labs to solve those problems for
Speaker 7: our customers as well. So this is a great business
Speaker 7: with great customer intimacy, interesting growth drivers, and generates a
Speaker 7: lot of cash. They fit, they fit.
Speaker 1: This might be a really silly question, who are your competitors?
Speaker 7: So we compete with different companies in different.
Speaker 6: Pockets of our business.
Speaker 7: So I said before that we're the only company in
Speaker 7: our market with his breadth of solutions, and that's a
Speaker 7: very important point of differentiation. Some companies are able to
Speaker 7: provide similar solutions to make a printed circuit board, others
Speaker 7: can provide similar solutions to put chips onto boards, but
Speaker 7: no one can speak to the breadth of what we do.
Speaker 7: And increasingly, the way these materials interact is important to performance,
Speaker 7: and so that gives us a real leg up against
Speaker 7: our competitors in our circuit board business. We compete with
Speaker 7: a company called at Tech that's part of MKS Instruments.
Speaker 7: We compete with DuPont in certain areas. We compete with
Speaker 7: really strong technical companies in Japan, but no one competes
Speaker 7: with the breadth of what we do, and that is
Speaker 7: giving us a real advantage in today's market.
Speaker 3: A lot of folks feel like AI has been hyped,
Speaker 3: that the demand is so much new incremental demand for spending,
Speaker 3: it's just maybe taken from other buckets it or something.
Speaker 3: How do you think about the ultimate demand for AI
Speaker 3: going forward and what does it mean for your business?
Speaker 7: Yeah, so AI is a huge demand driver for the
Speaker 7: long term in the electronics market, and that may have
Speaker 7: fits and starts, but the history of electronics hardware is
Speaker 7: there's always a next thing. We went from desktops to
Speaker 7: laptops to mobile phones to smartphones, and when you do
Speaker 7: those transitions, you don't stop using the legacy tech. It's
Speaker 7: all additive. What AI is is is electronics hardware moving
Speaker 7: from being a support tool to being a decision maker.
Speaker 7: And the addressable market for that is gigantic because eventually
Speaker 7: we're going to replace things like forklift operators with boxes
Speaker 7: and smartphones, which were the last big thing. We're sort
Speaker 7: of capacitated by the human population. People don't need two phones.
Speaker 7: Industrial automation doesn't have that. That's ceiling and we're still
Speaker 7: going to have our smartphones and they're going to be
Speaker 7: AI enabled, but then we're going to have industrial automation.
Speaker 7: It's all additive and so AI over the long term.
Speaker 7: I don't believe it's being hyped in the short term perhaps,
Speaker 7: but when you look at the price point for some
Speaker 7: of these GPUs, clearly there's a huge amount of demand
Speaker 7: that's outs driven supply that This is.
Speaker 1: My favorite question, do you know yet how cyclical the
Speaker 1: AI business part is going to be?
Speaker 7: So in the semiconductor market, there are two drivers of cyclicality.
Speaker 7: There's price and volume. Right, our business is driven by volume.
Speaker 7: It doesn't matter the price point of the semiconductor, just
Speaker 7: the number of chips that are being made. And price
Speaker 7: is the more volatile of those two variables. Because the
Speaker 7: new fab opens, a bunch of new supply comes online,
Speaker 7: the prices comes down, so there is cyclicality. There's less
Speaker 7: cyclicality in our business. There's cyclicality in electronics broadly defined,
Speaker 7: but it's cyclicality around an upward trend, right, So there's
Speaker 7: going to be air pockets and demand. We've seen it
Speaker 7: in the mobile phone market for example. Last year was
Speaker 7: a very difficult year, but it's coming back and the
Speaker 7: peak is in front of us, not behind us. For electronics,
Speaker 7: and so certainly there'll be cyclicality. I would say more
Speaker 7: in price than volume. AI and its applications are going
Speaker 7: to be a big volume driver for many years from here. Again,
Speaker 7: look at the price points of these chips. But it's
Speaker 7: cyclicality around a very positive trend. God about forty five
Speaker 7: seconds left. M and A to what extent is that
Speaker 7: a part of your growth strategy. We're very excited to
Speaker 7: deploy the strong cash flows this business generates. We have
Speaker 7: modest capital requirements, so we convert EBITDA our earnings into
Speaker 7: cash very efficiently. We're very idded to toplay those cash
Speaker 7: flows behind the business to add capabilities to support our
Speaker 7: customers and drive growth. There is an opportunity for incremental
Speaker 7: M and A within our businesses very attractive returns and
Speaker 7: to support what will be pretty compelling organic growth in
Speaker 7: the near term.
Speaker 1: All right, Ben, we appreciate it. Thank you very much. Ben,
Speaker 1: Ben Clickich, CEO of Element Solutions, working to be an
Speaker 1: ai so electronics provider solution company, nailed it. Yeah, okay,
Speaker 1: I'm going to work on that. I'm going to definitely
Speaker 1: work on that one.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 2: weekdays at ten am Eastern on Apple card Playing and
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Speaker 2: wherever you get your podcasts, or watch us live on YouTube.
Speaker 1: Okay, let's get to the big news of the Supreme
Speaker 1: Court over the last few days. It wasn't just the
Speaker 1: Trump Community trial. It was also the Supreme Court changing
Speaker 1: the Chevron Doctor and the Chevron deference, which basically means
Speaker 1: that state that federal agencies don't necessarily interpret laws that
Speaker 1: goes to the courts now and that could have a
Speaker 1: big ramification for lots of different agencies, and in particular
Speaker 1: when it comes to ESG in climate. So Andrew John Stevenson,
Speaker 1: BI Bloomberg Intelligence Senior ESG Climate analyst joins us now
Speaker 1: from DC walk us through how maybe the Chevron deference
Speaker 1: has helped the EPA or has led the EPA to
Speaker 1: make certain decisions that now may be in doubt.
Speaker 6: Sure.
Speaker 4: So we had the If you think about the Clean
Speaker 4: Air Act, that's the biggest thing the ep has ever done.
Speaker 4: It started in nineteen seventy with one document that said, basically,
Speaker 4: go to it. We need to reduce the amount of
Speaker 4: air pollution in the air. We need a lot of
Speaker 4: different levers to pull to make that happen. We're kind
Speaker 4: of deferring to experts to do that. Go at it.
Speaker 4: And they did it for about twenty years. And then
Speaker 4: they had another revision the Clean Air Act too, and
Speaker 4: that's the one that we're enjoying today with when they
Speaker 4: basically said, you did a decent job, let's keep going,
Speaker 4: let's keep driving down the air pollution. And you know,
Speaker 4: here we are today with the cleanest air we've seen
Speaker 4: in you know, since the early nineteen hundreds basically, So.
Speaker 6: It's been very, very successful.
Speaker 3: Yeah I'm not that old, but I remember first going
Speaker 3: the Los Angeles earlier in my career and you could
Speaker 3: see the smog. Literally it was brown, it was orange,
Speaker 3: kind of funky. Now, you rarely have ever have any
Speaker 3: problems out there, So I kind of have been a
Speaker 3: fan of the EPA all right. Given to Chevron ruling
Speaker 3: what does it mean for climate in your part of
Speaker 3: the world. What's the mean for the energy industry?
Speaker 6: Sure?
Speaker 4: So, I mean it's troubling on a couple fronts. The
Speaker 4: first is with respect to the oil and gas industry.
Speaker 4: They have the big oil companies have done it basically
Speaker 4: a fantastic job of driving down a big chunk of
Speaker 4: their pollution from methane. So methane is really the thing
Speaker 4: that you really want to address when it comes to
Speaker 4: the oil and gas industry, which is just sort of
Speaker 4: leaking natural gas into the atmosphere. And the bigger companies
Speaker 4: have done a fantastic job, but the smaller companies, basically
Speaker 4: are the private companies haven't moved on it. And so
Speaker 4: the leadership we've seen from Exon Mobile and others has
Speaker 4: been really, you know, got transformative in terms of what's
Speaker 4: happening for the bigger companies. But unless the EPA does
Speaker 4: work to kind of push along the rest, and we're
Speaker 4: talking about still half of the production comes from small
Speaker 4: companies that are private, we're not going to get anywhere
Speaker 4: near where we need to go on from an emission
Speaker 4: standpoint from the oil and gas industry. So that's sort
Speaker 4: of one the second is really with respect to the
Speaker 4: power sector. So the power sector, we need more power.
Speaker 4: We've basically gone from having a coma power growth over
Speaker 4: the last decade and now because of AI and EVS,
Speaker 4: we have power demand somewhere around two and a half
Speaker 4: percent a year and that has to be filled with something.
Speaker 4: And it looks like gas is going to be a
Speaker 4: candidate in the next several years because there's just so
Speaker 4: much demand that needs to come online. And there was
Speaker 4: a ruling at least from the APA that the gas
Speaker 4: companies that they were going to build a new power
Speaker 4: plant would have to capture that gas, and that doesn't
Speaker 4: look like it's going to happen. So because of the ruling,
Speaker 4: so we have growth, which is obviously challenging from an
Speaker 4: environmental perspective, but it's really going to affect our overall
Speaker 4: emission standpoint as a country going forward.
Speaker 1: I mean, the power coma that was actually a great
Speaker 1: I'm going to steal that. I hope that's okay. So
Speaker 1: you were ESG climate analyst, So that's environmental, social and governance.
Speaker 1: Does the social and governance part of your job get
Speaker 1: affected by the Supreme Court decision?
Speaker 6: Well?
Speaker 4: So, people, some of the people think of the environmental
Speaker 4: it does conclude chemicals and things like that. Obviously that's
Speaker 4: going to be a bigger problem the social If you
Speaker 4: think about health, that's really what's going to happen with
Speaker 4: respect to this ruling.
Speaker 6: So we are going to have poor health.
Speaker 4: I mean, the ability for judges to make decisions that
Speaker 4: are very complicated. I mean you're talking about I mean
Speaker 4: I just mentioned the Clean Air Act. That's a fifty
Speaker 4: year project with thousands of people working on it to
Speaker 4: have an opinion on how to get from A to B.
Speaker 4: And we are now expected to have judges have an
Speaker 4: opinion that is just wildly professional in a number of areas,
Speaker 4: and that includes things like PF the kind of forever chemicals.
Speaker 4: So that's going to affect health and food safety. So
Speaker 4: there's a lot of things on that side that are
Speaker 4: going to be affected as well.
Speaker 3: So do we have any experience on kind of how
Speaker 3: this works outside of the regulatory agencies?
Speaker 6: Are the judges?
Speaker 3: Are they making reasonable rulings when applicable?
Speaker 4: So yeah, I mean the pushback was that these are
Speaker 4: the judges and the agencies, there's no interaction, and there's
Speaker 4: quite a bit that goes on and I think the
Speaker 4: agency will only win about seventy percent of the time.
Speaker 4: So the judges actually have had input into this, but
Speaker 4: you're really relying and it can swing both ways. Which
Speaker 4: is the really kind of conterintuitive part is that you
Speaker 4: could have a judge that the sides it needs to
Speaker 4: be more or stringent, right, so it can go in
Speaker 4: different directions. And I mean it's ultimately been deferred to
Speaker 4: the Chevron defense and they say, okay, we'll let the
Speaker 4: agencies deal with it. And now we have that kind
Speaker 4: of open air, open terrain. So it's very difficult to
Speaker 4: see how things move as smoothly and in such an
Speaker 4: organized fashion as we've had previously.
Speaker 1: Yeah, because the other side will say, we'll judges do
Speaker 1: this all the time, like they're ruling on different cases
Speaker 1: that they don't have an expertise about all the time.
Speaker 1: What's the difference for the companies that you cover? Which
Speaker 1: companies will be the most impacted?
Speaker 4: So the companies that are really if you think about
Speaker 4: what's going on with the growth of you let's just
Speaker 4: talk about power for a second. The companies that are
Speaker 4: really taking up a challenge with respect to you know,
Speaker 4: power demand going up and dealing with it. Really on
Speaker 4: a kind of the clean energy front, there's two benefits.
Speaker 4: You get paid for capex right when you're a utility company.
Speaker 4: So the more of that capex that goes into renewables
Speaker 4: and grid and things like that, you get basically one
Speaker 4: hundred percent of that money is you can you know,
Speaker 4: earn a return on it, whereas if you build a
Speaker 4: gas plant you only get about half that because half
Speaker 4: of the cost of the plant is in fuel and
Speaker 4: you don't get paid for that as a utility. So
Speaker 4: the companies like Constellation Energy are still expected to do
Speaker 4: very well next Era Energy because of the IRA are
Speaker 4: getting very strong incentives to continue to produce as much
Speaker 4: clean energy as they can, and they're going to if
Speaker 4: you look at their stock prices, they've reflected that in
Speaker 4: the last little bit. But from the other side of
Speaker 4: the equation, which is the oil and gas industry, the
Speaker 4: leaders are already the leaders, you know, and they've performed
Speaker 4: exceptionally well. If you look at the group that is
Speaker 4: the lowest methane producers have done very very well against
Speaker 4: the other guys.
Speaker 1: All Right, we got to leave it there. Really appreciated
Speaker 1: Andrew John Stevenson, BI Senior ESG Climate analyst joining us.
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Speaker 3: We've got the Olympics coming up this summer in Paris.
Speaker 1: How cool was that going to be?
Speaker 3: But good luck trying to get a hotel room there
Speaker 3: or trying to get accommodations anywhere. You know, who would
Speaker 3: know about this stuff? Airbnb Dave Stevenson joins us. He's
Speaker 3: the chief business officer for Airbnb. Dave talked to us
Speaker 3: about your business in Paris for this summer. What are
Speaker 3: you guys seeing?
Speaker 8: Yeah, Hi, Paul Alex, thanks for having me super excited
Speaker 8: about the Olympics this summer. And you're seeing hundreds of
Speaker 8: thousands of people from around the world come to Paris
Speaker 8: to stay in airbnbs. They are super excited. It's going
Speaker 8: to be an amazing event.
Speaker 1: Are there any places to stay?
Speaker 2: Like?
Speaker 1: How much you guys making off of people going to Paris?
Speaker 8: You know, one of the great things about having Airbnbs
Speaker 8: in Paris is that the actual the volume of airbnbs
Speaker 8: have gone up pretty dramatically. We have forty percent more
Speaker 8: active listings than we had a year ago. And by
Speaker 8: having those extra listings, we're actually able to keep prices
Speaker 8: reasonable because we're able to add so much capacity to
Speaker 8: the stays there. So there are still places available. You know,
Speaker 8: we're only twenty four days out, but you know, you
Speaker 8: keep booking. There are airbnbs ready for guests to come
Speaker 8: from around the world.
Speaker 1: Yeah, because you know why everyone's leaving Paris. Yeah, all
Speaker 1: the reasons to like, get me out of here, and
Speaker 1: they're going to this out of France anyway. Sorry, go ahead,
Speaker 1: So David, well, it's not bad.
Speaker 8: They're actually able to earn you know, two thousand euros
Speaker 8: on average for a host in Paris, and so yeah,
Speaker 8: many people do leave and share their homes and welcome
Speaker 8: people from other countries to come to the vilops.
Speaker 3: Talk to us about where where you're seeing travelers come
Speaker 3: from to Paris.
Speaker 6: Yeah, it's interesting.
Speaker 8: Some of our top countries are the US, UK and
Speaker 8: actually people from other areas of France coming into Paris
Speaker 8: for the Olympics. We're also seeing some interesting trends where
Speaker 8: people are staying. You know, the Olympics are actually not
Speaker 8: only in Paris, They're kind of spread around the country,
Speaker 8: and so you know, we're seeing people staying in airbnbs
Speaker 8: in Leo where some of the basketball is being played.
Speaker 8: You We're seeing them in Leone where some of the football,
Speaker 8: you know, soccer matches are being played. You're seeing Spaniards
Speaker 8: and Brazilians stan Bordeaux because their national teams will be
Speaker 8: playing soccer out there. So we're not just seeing people
Speaker 8: come in Paris, They're staying in airbnbs all around the country.
Speaker 1: That's interesting. I did not know that you also transition
Speaker 1: recently from CFO to CBO. Is that so chief financial
Speaker 1: officer to chief business officer? How is that?
Speaker 3: Like?
Speaker 1: What how does your job change with that title?
Speaker 6: Yeah?
Speaker 8: No, I'm the chief business Officer. I'm also the head
Speaker 8: of Employee Experience, so the head of HR, which have
Speaker 8: been doing now for three years. But the chief business Officer,
Speaker 8: you know, I'm focused on growth of the company and
Speaker 8: expanding into new and new business areas. So we're expanding
Speaker 8: beyond the kind of core stays business here at Airbnb
Speaker 8: into things like services and experiences over time. And so
Speaker 8: me and my team, that's what we're focused on, growing
Speaker 8: the existing business and expanding into new ones.
Speaker 3: So for just the busines, this is in general, how
Speaker 3: is travel this business? As we crank up here in
Speaker 3: the US for fourth of July, and then of course
Speaker 3: in Europe they have their big travel during the summer,
Speaker 3: particularly August. Give us a sense of kind of where
Speaker 3: you're seeing the business these days.
Speaker 8: Yeah, you know, we're seeing more people travel this summer
Speaker 8: than they ever have before on Airbnb. Continue to see
Speaker 8: great growth, yes, strong growth, especially from your Americans travel
Speaker 8: to Europe. You know, we continue to have a strong dollar,
Speaker 8: which enables strength there, and we're actually seeing you know,
Speaker 8: nice strength and people even traveling from US into Asia.
Speaker 1: US into Asia, okay, which is not rippin' dollar. Yeah,
Speaker 1: you just even go anywhere pretty much. It's what about
Speaker 1: the opposite, is anyone coming to the US. We're making
Speaker 1: any money on Airbnb here in the US anymore?
Speaker 6: Absolutely.
Speaker 8: I mean that people are still traveling from overseas in
Speaker 8: the US. You know, actually the majority of our travel
Speaker 8: still is actually domestic travel in any given country. So
Speaker 8: we're kind of talking a lot about people moving around
Speaker 8: the world, but a lot of the travel is just
Speaker 8: people going. You know, in the US, it's a lot
Speaker 8: of beach destination. You're seeing great traveled down to Florida,
Speaker 8: up onto the East Coast, you know, onto the Jersey
Speaker 8: Shore and other places. So you know, people are still
Speaker 8: tommling out to the beaches to visit with family and
Speaker 8: enjoy the fourth of July.
Speaker 3: Dave, what's a typical or prototypical Airbnb customer look like?
Speaker 8: You know, there we have customers of all kinds. You know,
Speaker 8: it's everything from young gen Z, millennials to families. You know,
Speaker 8: a large number of our people in travel in Airbnb,
Speaker 8: our group travel multiple people travel together because you get
Speaker 8: more space, you might get multiple bedrooms, you have multiple amenities,
Speaker 8: often with a kitchen, you know, maybe.
Speaker 6: A washer and dryer.
Speaker 8: It's one of the things reasons why we've recently launched
Speaker 8: some of these group travel features to enable more people
Speaker 8: to stay together more easily. We have things like shared wishfless,
Speaker 8: shared messaging capability, and that's helping in Paris where over
Speaker 8: fifty percent of the people traveling to the Paris Olympics
Speaker 8: have three or more people, and so group travel is
Speaker 8: a key benefit of staying on Airbnb.
Speaker 1: That's a good point. What are there trends that you're
Speaker 1: you think you're going to be dealing with in twenty
Speaker 1: twenty five, kind of after we get through the Olympics,
Speaker 1: you know, I.
Speaker 8: Think we're going to continue to see strength and travel.
Speaker 8: I think one of the things we've seen since the
Speaker 8: pandemic is that people realize how much they miss being
Speaker 8: able to kind of travel, be with family and friends,
Speaker 8: that experiences are maybe more important than things. I think
Speaker 8: that trend will continue, and we're going to see people
Speaker 8: wanting to spend time with family and friends doing things together.
Speaker 6: So I think that's the big.
Speaker 8: Trend that we'll see in twenty twenty five, continued experiences.
Speaker 1: All right, thank you so very much. We appreciate it.
Speaker 1: Dave Stevenson and Chief business officer over at Airbnb.
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