WEBVTT - Amazon Warns of Slowdown in Cloud Growth 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business. Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:19.880 --> 0:00:22.639 A bit of a roller coaster ride in shares of Amazon, 0:00:22.640 --> 0:00:24.599 from a rally right after earnings to a drop on 0:00:24.640 --> 0:00:27.720 the analys call last night to some selling today, but 0:00:27.720 --> 0:00:30.840 it's definitely off its lows of the session. Amazon though, 0:00:31.000 --> 0:00:33.280 seeing some pressure after warning that growth in its cloud 0:00:33.280 --> 0:00:36.159 computing business is cooling. So let's get into it because 0:00:36.600 --> 0:00:39.720 Amazon is a massive company with a lot of moving parts. 0:00:39.840 --> 0:00:42.040 To break it down, Spencer Soaper is with us Bloomberg 0:00:42.080 --> 0:00:44.880 News Technology and e Commerce reporter on zoom out there 0:00:44.920 --> 0:00:47.879 in Seattle, along with Punham Goyle Senior Alas for e 0:00:47.920 --> 0:00:51.720 commerce eth leisure at leisure excuse me off price retail 0:00:51.760 --> 0:00:54.800 at Bloomberg Intelligence. She is on the phone in New Jersey. Guys, 0:00:54.800 --> 0:00:57.120 thank you so much for being with Mattie me. Spencer 0:00:57.200 --> 0:01:00.520 kick it off for us in terms of the story 0:01:00.520 --> 0:01:02.320 that is Amazon on this Friday. 0:01:03.880 --> 0:01:06.280 Yeah, well yesterday it was a head scratcher. You know, 0:01:06.319 --> 0:01:06.960 we got. 0:01:08.240 --> 0:01:11.000 The earnings release came out after market closed, and there's 0:01:11.000 --> 0:01:11.640 a lot of good. 0:01:11.440 --> 0:01:11.880 News in it. 0:01:11.920 --> 0:01:14.160 You know, they beat pretty much across the board and 0:01:14.160 --> 0:01:16.880 all their businesses more than analysts were expecting, both from 0:01:16.880 --> 0:01:20.399 the cloud computing revenue side, you know, on its e 0:01:20.440 --> 0:01:22.600 commerce business, on its advertising business. 0:01:23.600 --> 0:01:24.959 Everything was looking really good. 0:01:25.400 --> 0:01:28.000 And then about ninety minutes later on the analyst call, 0:01:28.480 --> 0:01:32.199 they divulged that you know, give you know clo cloud 0:01:32.200 --> 0:01:34.320 computing sales are actually slowing down a little bit so 0:01:34.360 --> 0:01:36.600 far in April in the market. 0:01:36.680 --> 0:01:38.760 That really jobs of the market. People got nervous and 0:01:39.200 --> 0:01:40.640 shared started going down from there. 0:01:40.800 --> 0:01:45.720 So it really was a reaction to just the outlook 0:01:45.720 --> 0:01:47.600 of Amazon's cloud computing business. 0:01:47.680 --> 0:01:50.040 Is what the what the market reacted to today put. 0:01:50.040 --> 0:01:52.000 On What was the moment on the earnings call where 0:01:52.040 --> 0:01:55.520 the tenor started to shift from extreme excitement. 0:01:55.120 --> 0:01:59.200 To oh no, I'd agree with sponsor here. You know, 0:01:59.240 --> 0:02:01.240 as soon as they say that there's a five hundred 0:02:01.280 --> 0:02:04.800 pace point acceleration in AWS in the month of April, 0:02:04.920 --> 0:02:07.720 that was it. I mean, that was really the big 0:02:07.840 --> 0:02:10.640 drawback on the earnings column. From there, it didn't matter 0:02:10.680 --> 0:02:11.080 what they. 0:02:11.000 --> 0:02:13.799 Said, well, as I said, like Amazon, massive company, a 0:02:13.840 --> 0:02:16.000 lot of moving parts, some are more important than others, 0:02:16.240 --> 0:02:18.160 bring a lot more in in terms of the top 0:02:18.200 --> 0:02:21.480 and bottom line. Back to you, Spencer for a moment. Cloud, 0:02:21.600 --> 0:02:24.720 I mean, it is so important to Amazon and the story. 0:02:25.760 --> 0:02:28.320 Is there any kind of okay, guys, twenty four hours later, 0:02:28.360 --> 0:02:31.400 a little bit of perspective, there's still it's big. But 0:02:31.440 --> 0:02:33.359 we've all been kind of worried a little bit about 0:02:33.360 --> 0:02:36.400 cloud or is it just a little rough Considering some 0:02:36.440 --> 0:02:40.000 of the other big tech names aka Microsoft and their 0:02:40.040 --> 0:02:42.560 cloud business this week, well. 0:02:42.480 --> 0:02:46.960 There were some questions more broadly about Amazon, you know, 0:02:47.000 --> 0:02:50.120 so there was the slowing the cloud, but also questions 0:02:50.120 --> 0:02:52.840 about whether it could be losing its competitive position and 0:02:52.919 --> 0:02:55.400 even concerns about, you know, what's the fate of like 0:02:55.440 --> 0:02:59.080 the voice activated assistant alexta now that we've got things 0:02:59.080 --> 0:03:02.240 like chat GP and things coming along that have kind 0:03:02.240 --> 0:03:06.600 of relegated the voice activated stuff kind of to the sidelines. 0:03:07.440 --> 0:03:11.720 So yeah, there's there's definitely concerns beyond simply slowing cloud sales. 0:03:11.760 --> 0:03:15.160 But that's still the predominant thing is if businesses are 0:03:15.160 --> 0:03:18.280 cutting or spending and Amazon's saying that, and they're saying, yes, 0:03:18.320 --> 0:03:21.240 our cloud customers are trying to reduce costs or looking 0:03:21.240 --> 0:03:23.800 for other ways to store data that are less expensive. 0:03:24.080 --> 0:03:27.200 We're trying to help accommodate them that basically, this uh, 0:03:27.560 --> 0:03:30.200 this slowdown will persist and could get. 0:03:30.080 --> 0:03:31.800 Worse, all right, guys, And I also want to kind 0:03:31.800 --> 0:03:32.799 of pivot to AI. 0:03:33.000 --> 0:03:33.160 Right. 0:03:33.200 --> 0:03:36.480 This has been the you know words, catch phrases if 0:03:36.520 --> 0:03:38.680 you will, that I feel like in this earning season 0:03:38.680 --> 0:03:41.240 that every CEO to some extent has to drop, especially 0:03:41.240 --> 0:03:42.160 if you're in the tech space. 0:03:42.520 --> 0:03:45.840 So punam in terms of what they had to say. 0:03:45.840 --> 0:03:47.640 And I know you really focus on the retail side 0:03:47.640 --> 0:03:50.520 of the business, but what did we How much was 0:03:51.120 --> 0:03:55.000 Amazon kind of pushed and asked and queried about when 0:03:55.000 --> 0:03:55.840 it came to AI. 0:03:56.920 --> 0:03:59.280 You know, AI is something that they are going to 0:03:59.320 --> 0:04:02.520 continue to put across all of their businesses, So it's 0:04:02.600 --> 0:04:04.280 just not on the cloud side, but also on the 0:04:04.320 --> 0:04:07.360 retail side. AI is very important because if you think 0:04:07.400 --> 0:04:11.400 about how consumers shop, if Amazon can get smarter about 0:04:11.400 --> 0:04:16.159 their search queries about how they pitch product to the customer, 0:04:16.440 --> 0:04:18.800 then that can lead to higher conversion. So I don't 0:04:18.800 --> 0:04:20.920 think AI is just about the cloud. You know, we've 0:04:20.960 --> 0:04:23.680 heard a lot about generative AI and so forth, and 0:04:24.040 --> 0:04:26.960 it's a topic that we think they will definitely push 0:04:27.040 --> 0:04:31.000 hard on along with other retailers in space. Everyone is 0:04:31.000 --> 0:04:34.880 focused on AI just to really use data to make 0:04:34.960 --> 0:04:38.680 better decisions across every piece of the organization, not just 0:04:38.720 --> 0:04:40.400 you know, when it comes to product, but also on 0:04:40.440 --> 0:04:44.080 the back end side, whether it's distribution, logistics, back office, 0:04:44.120 --> 0:04:44.599 et cetera. 0:04:44.960 --> 0:04:46.599 I guess the way I think about it though, is 0:04:46.640 --> 0:04:49.160 that the cloud is sort of the bones that allow 0:04:49.279 --> 0:04:53.800 for the generative AI to do its thing. Spencer, when 0:04:53.800 --> 0:04:56.359 you look at Amazon, Microsoft and Google this week in 0:04:56.440 --> 0:04:59.120 terms of what we learned in earnings, which do you 0:04:59.160 --> 0:05:01.960 feel has has the best bones when it comes to 0:05:02.000 --> 0:05:06.239 the cloud that's needed to run generative AI. 0:05:08.000 --> 0:05:12.159 Well that's the That's the thing that Amazon's CEO Jesse 0:05:12.360 --> 0:05:15.719 was trying to say to analysts last night is Listen, 0:05:15.800 --> 0:05:18.800 all of this stuff runs on the cloud, and Amazon 0:05:18.920 --> 0:05:22.239 is the market leader uh there and has the data 0:05:22.279 --> 0:05:24.520 space and the infrastructure, and it's always tried to position 0:05:24.560 --> 0:05:27.200 itself more as kind of the the back end of 0:05:27.279 --> 0:05:29.760 it and the tools that people could utilize, and that's 0:05:29.760 --> 0:05:33.280 where it's positioning itself now. They don't necessarily not in 0:05:33.360 --> 0:05:36.760 the forefront, but some consumer facing thing that people are using, 0:05:37.160 --> 0:05:42.599 but providing the tools to help sharpen and home these 0:05:42.640 --> 0:05:48.000 technological advancements going forward. But yet folks still seem to 0:05:48.040 --> 0:05:53.640 be a little worried about about Amazon's Amazon's place place 0:05:53.680 --> 0:05:56.320 in it. But I think I think generally the tenor 0:05:56.360 --> 0:05:58.880 on the on the market reaction is more just about 0:05:58.880 --> 0:06:02.440 the basic cloud computing business and just folks businesses in 0:06:02.480 --> 0:06:05.040 general cut cutting their costs, including in their in their 0:06:05.080 --> 0:06:05.880 cloud infrastructure. 0:06:06.000 --> 0:06:07.599 Yeah, it's just kind of interesting because I do feel 0:06:07.640 --> 0:06:11.200 like we're increasingly using more and more cloud space, whether 0:06:11.240 --> 0:06:14.320 it's personally or professionally. Put them come on in on 0:06:14.400 --> 0:06:18.680 the retail side of their business and what we saw there, 0:06:18.720 --> 0:06:20.840 because things have really changed since the pandemic. It's a 0:06:20.839 --> 0:06:22.200 story we've been telling for some time. 0:06:23.279 --> 0:06:25.080 Yeah, you know, the retail side of the businesses and 0:06:25.200 --> 0:06:28.200 mixed it was better than expected this quarter. But I 0:06:28.240 --> 0:06:29.880 think what we have to think about is the one 0:06:29.920 --> 0:06:32.760 P versus three P part of Amazon, and it's the 0:06:32.839 --> 0:06:35.760 three P which continues to show outsized growth and we 0:06:35.760 --> 0:06:39.080 think will be a big driver to GMB going forward. 0:06:39.160 --> 0:06:42.680 For Amazon. You know, buy with Prime is a big 0:06:42.720 --> 0:06:45.239 initiative that they have in place that can really bring 0:06:45.640 --> 0:06:49.279 more sellers using their services onto the platform and just 0:06:49.360 --> 0:06:54.560 open Amazon up to other people. It's been a huge 0:06:54.560 --> 0:06:57.560 success from what we've heard from them, and I think 0:06:57.680 --> 0:07:01.560 it'll just really help them also solve their distribution slash 0:07:01.600 --> 0:07:04.799 warehousing initiatives where they can use some of that space 0:07:05.720 --> 0:07:08.760 non to to non prime merchandise. 0:07:09.360 --> 0:07:11.400 Yeah, and I thought, well, forgive me, and I thought 0:07:11.440 --> 0:07:13.920 the advertising right services business, And I'm not sure if 0:07:13.960 --> 0:07:15.960 this is what you are specifically talking about. I mean, 0:07:16.040 --> 0:07:19.920 this has really been a growth area punam for the company. 0:07:20.680 --> 0:07:23.240 Yeah, advertising is separate from the online piece, but it 0:07:23.600 --> 0:07:26.080 definitely has been an area that they're growing. And keep 0:07:26.120 --> 0:07:29.200 in mind, the advertising business is also a very profitable business, 0:07:29.560 --> 0:07:33.160 so you know there they've said in their shareholding water 0:07:33.480 --> 0:07:36.320 that they want to go after grocery, and grocery is 0:07:37.000 --> 0:07:40.640 laser thin profit margins, low single digits at best, whereas 0:07:40.640 --> 0:07:44.040 the advertising business carries fifty percent plus profit margins. It's 0:07:44.040 --> 0:07:46.640 a lucrative, just like the cloud business, which has very 0:07:46.680 --> 0:07:49.520 high profit margins and contributes almost entirely to all of 0:07:49.600 --> 0:07:50.600 Amazon's profits. 0:07:51.080 --> 0:07:54.120 Yeah, I mean it makes sense then on all of 0:07:54.120 --> 0:07:56.720 those headlines that Amazon was on such a terror after 0:07:56.760 --> 0:08:00.040 the earnings came out yesterday. Spencer, We've got about a 0:08:00.080 --> 0:08:02.520 minute left on this here. I'm wondering when you look 0:08:02.560 --> 0:08:06.560 at today's trade, the share price is basically a little 0:08:06.560 --> 0:08:09.040 bit over where they were at before earnings even came out, 0:08:09.600 --> 0:08:12.000 so still up on the week. But do you think 0:08:12.040 --> 0:08:16.040 that that performance is that justified by the earnings or 0:08:16.400 --> 0:08:19.080 do you think it's a result of Microsoft doing so 0:08:19.160 --> 0:08:21.400 well and then Amazon coming out later? What do you 0:08:21.440 --> 0:08:23.120 make of the trade impact? 0:08:24.320 --> 0:08:26.480 Yeah, I mean basically right back where they started, right 0:08:26.560 --> 0:08:31.160 so there might have been some encouragement among investors based 0:08:31.200 --> 0:08:33.800 on the Microsoft news, and we saw kind of a 0:08:33.840 --> 0:08:36.880 run up as that they progressed in amazon As share 0:08:36.880 --> 0:08:38.800 price before the earnings, and then once they double the 0:08:38.840 --> 0:08:42.520 cloud news a tank. So I mean who knows. But 0:08:42.559 --> 0:08:45.360 the big worry now is does the April slow down 0:08:45.640 --> 0:08:49.520 and cloud sales persist? And that is that just you know, 0:08:50.240 --> 0:08:51.680 a sign of course things to come later. 0:08:51.920 --> 0:08:55.040 Hey guys, really quickly twenty seconds each, Spencer. Did Amazon 0:08:55.120 --> 0:08:56.599 answer all your questions. 0:08:56.200 --> 0:08:58.320 On the call? And if not, what would you have 0:08:58.360 --> 0:08:59.280 wanted to know more about? 0:09:00.800 --> 0:09:01.000 Yeah? 0:09:01.000 --> 0:09:05.079 I mean they addressed they address most things. 0:09:08.480 --> 0:09:11.000 And Punham just real quickly your thoughts too. 0:09:11.679 --> 0:09:13.360 I think they kind of gave a good outline and 0:09:13.360 --> 0:09:15.240 their press release and on their call and all their 0:09:15.320 --> 0:09:18.280 business segments, so they did do a good job of 0:09:18.320 --> 0:09:20.319 explaining it. I'd just love to see what else they're 0:09:20.360 --> 0:09:22.960 going to do on grocery following up on the shareholders letter, 0:09:23.040 --> 0:09:26.280 just the path to how they will make grocery a 0:09:26.320 --> 0:09:28.040 bigger piece of Amazon. 0:09:28.320 --> 0:09:31.040 All right, guys, thank you so much covering all sides 0:09:31.040 --> 0:09:33.920 of Amazon. Spencer Sober Tech and e Commerce reporter at 0:09:33.920 --> 0:09:36.400 Bloomberg News there on Zoom from Seattle, and of course 0:09:36.400 --> 0:09:39.280 our Putam Goyle, senior analysts for e commerce, ath leisure, 0:09:39.360 --> 0:09:42.560 off price retail at Bloomberg Intelligence on the phone in 0:09:42.600 --> 0:09:45.000 New Jersey. As we said, Amazon shares, they're down, but 0:09:45.040 --> 0:09:46.240 they're definitely off their loads. 0:09:46.280 --> 0:09:46.959 Of the session. 0:09:47.480 --> 0:09:51.040 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:51.080 --> 0:09:54.440 live weekday afternoons from three to six Eastern Listen on 0:09:54.480 --> 0:09:58.520 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, 0:09:58.800 --> 0:10:08.280 or watch us live on YouTube. Come on Royal. 0:10:11.520 --> 0:10:14.920 All right, everybody, just catching up on the market clothes 0:10:15.120 --> 0:10:19.240 here with our TV colleagues remain in Scarlett. One of 0:10:19.240 --> 0:10:21.120 the things we did talk about, and we saw some 0:10:21.200 --> 0:10:24.920 really strong outperformance today, was the energy names. Energy stocks 0:10:24.920 --> 0:10:27.360 were the top performing major industry group out of eleven 0:10:27.720 --> 0:10:30.000 in the S and P five hundred today at Exon 0:10:30.320 --> 0:10:33.280 a mobile and Chevron rooping profits not seen since oil 0:10:33.360 --> 0:10:36.160 topped one hundred and forty five dollars in Maryland two 0:10:36.200 --> 0:10:39.160 thousand and eight. It's kind of wild considering where oil 0:10:39.240 --> 0:10:41.439 trades today. So let's get to it a round table. 0:10:41.600 --> 0:10:44.280 Bloomberg News US Oil reporter Kevin Crowley is on the 0:10:44.320 --> 0:10:47.360 phone from Houston. Also with US is Simone Foxman, Blueberg 0:10:47.400 --> 0:10:51.280 News reporter here in our Bloomberg Interactive Brokers studio. A 0:10:51.320 --> 0:10:53.400 lot to get through. Let me just get some initial 0:10:53.440 --> 0:10:56.120 thoughts from you, Simone in terms of what we got 0:10:56.120 --> 0:10:57.319 from these two players. 0:10:57.720 --> 0:11:01.240 Yeah, well, Exon clearly the stand out as opposed to 0:11:01.400 --> 0:11:04.720 Chevron if we're comparing, But both of these oil majors 0:11:04.760 --> 0:11:09.600 beating expectations by a wide margin, and we're seeing profits 0:11:09.640 --> 0:11:12.439 from these companies that we haven't seen since two thousand 0:11:12.480 --> 0:11:14.400 and eight. Remember two thousand and eight, one hundred and 0:11:14.440 --> 0:11:16.800 forty five dollars a barrel. Think about where we are 0:11:16.960 --> 0:11:20.880 with crude right now. We're looking at eighty dollars a 0:11:20.920 --> 0:11:24.440 barrel seventy nine to fifty four at the close for Brent, 0:11:24.600 --> 0:11:28.880 so clearly a different region. Exon seems to have made 0:11:29.160 --> 0:11:31.760 bank a little bit by investing a lot of money 0:11:31.800 --> 0:11:34.760 pre pandemic. That was something that its investors were very 0:11:34.800 --> 0:11:39.280 concerned about. But now now that there's higher oil prices, 0:11:39.320 --> 0:11:42.400 we're seeing a lot of demand. Meanwhile, Chevron, you know, 0:11:42.600 --> 0:11:44.480 the concerning thing here for investors was. 0:11:44.400 --> 0:11:46.160 That production dropped in the first quarter. 0:11:47.480 --> 0:11:49.480 That said, you know, we still ended up for the day, 0:11:49.600 --> 0:11:52.679 so and generally, as you said, energy strong today. 0:11:52.760 --> 0:11:54.560 All right, So Kevin, come on in on this. So 0:11:54.600 --> 0:11:56.640 how is it that they are able to be so 0:11:56.840 --> 0:12:01.200 profitable in a very different, fundamentally oil priced market. 0:12:02.920 --> 0:12:04.560 Well, really, I mean, I think we have to go 0:12:04.600 --> 0:12:06.880 back to the pandemic because both of these companies they 0:12:06.960 --> 0:12:11.599 really cut expenditure a lot during COVID nineteen when we 0:12:11.679 --> 0:12:17.280 all remember crude went negative one day, and really since 0:12:17.800 --> 0:12:22.360 coming out of COVID, obviously we've the demand was rowed back, 0:12:22.440 --> 0:12:25.360 but these company spending levels have not come back as quickly. 0:12:25.360 --> 0:12:27.600 They're actually both both eggs on a chevron are both 0:12:27.640 --> 0:12:30.400 spending a lot less than they were in twenty nineteen 0:12:30.520 --> 0:12:35.079 before COVID. So really you have you have pretty strong 0:12:35.120 --> 0:12:38.520 income from decent commodity prices, but you have that very 0:12:38.520 --> 0:12:43.360 low spending on the and there's been a real hesitancy 0:12:43.559 --> 0:12:49.280 to build, to build major projects around the world, and 0:12:49.000 --> 0:12:52.480 that's why they're really they're really making that making that margin. 0:12:53.000 --> 0:12:54.000 At the moment I. 0:12:54.000 --> 0:12:56.559 Forgot, you know, that the prices went negative, which was 0:12:56.600 --> 0:12:57.200 really crazy. 0:12:57.240 --> 0:12:58.520 It was such a nutty time. 0:12:59.080 --> 0:13:01.760 Kevin continued with us for a moment, because we know 0:13:01.960 --> 0:13:05.400 that it's really important for the energy companies to spend 0:13:05.440 --> 0:13:07.960 and to invest. I mean, at this point, even though 0:13:08.040 --> 0:13:12.120 we're shifting to a renewable world increasingly, we're still largely 0:13:12.160 --> 0:13:15.240 dependent on fossil fuel. So if there isn't a spend, 0:13:15.520 --> 0:13:17.000 that makes me a little nervous about what kind of 0:13:17.000 --> 0:13:18.240 supplies we'll see in the future. 0:13:19.600 --> 0:13:22.199 Yeah, and that's that was that's what was so interesting 0:13:22.200 --> 0:13:25.760 about today. Actually, for the last say three or four years, 0:13:25.760 --> 0:13:27.680 really production growth has been a bit of a dirty 0:13:27.720 --> 0:13:29.920 word in the in the oil business because a it 0:13:30.000 --> 0:13:33.640 means money going out the door, and the energy transition. 0:13:34.400 --> 0:13:36.319 But we're starting to see a bit of a change. 0:13:36.360 --> 0:13:39.640 And you know, we talked about the difference in share 0:13:39.679 --> 0:13:42.720 price performance today between Egxon and Chevron, and it's pretty interesting. 0:13:42.760 --> 0:13:46.920 The reasons why Eggson's been growing production quite strongly Guyana 0:13:46.960 --> 0:13:50.080 and the Permian actually, you know, those those two those 0:13:50.120 --> 0:13:53.600 two regions up forty percent in the in the past year. 0:13:53.640 --> 0:13:56.960 Where Chevron has really been struggling. They've production dropped in 0:13:56.960 --> 0:13:59.560 the first quarter, you know, had some issue had The 0:13:59.559 --> 0:14:02.640 Permian is growing for them, but they've had some issues there, 0:14:03.360 --> 0:14:06.720 and really the Permian forisch everyone is simply making up 0:14:06.760 --> 0:14:09.560 for the clients else elsewhere in the world. So you 0:14:09.600 --> 0:14:13.040 have one company's growing another company that's not. And what's 0:14:13.080 --> 0:14:15.480 interesting now is that the company that's growing ex or 0:14:15.520 --> 0:14:19.000 Mobile is the one that's being rewarded in the stock market. 0:14:19.640 --> 0:14:23.680 I remember a few weeks ago, bp of pivoted their 0:14:23.680 --> 0:14:26.280 strategy to invest a bit more in fossil fuels, and 0:14:26.360 --> 0:14:30.280 the investors also rewarded them. So I think I think 0:14:30.280 --> 0:14:32.920 we're starting to detect a bit of a change of 0:14:33.000 --> 0:14:39.240 sentiment now where the investment community are looking towards towards 0:14:39.280 --> 0:14:43.320 sort of long towards are starting to value growth and 0:14:43.400 --> 0:14:45.960 fossil fuels once again because of those shortages that we've 0:14:45.960 --> 0:14:46.440 talked about. 0:14:46.680 --> 0:14:49.720 Can you simone help me square still we've been talking 0:14:49.760 --> 0:14:52.880 about this, but help me square the barrel price with 0:14:53.000 --> 0:14:54.040 these great earnings. 0:14:54.680 --> 0:14:57.120 I think it's about demands. There are just question marks, 0:14:57.160 --> 0:15:01.040 ongoing question marks about how much demand, whether it's from China, 0:15:01.360 --> 0:15:04.280 whether it's from the US, whether it's from Europe. At 0:15:04.360 --> 0:15:06.480 least in the near term, I think when you look 0:15:06.560 --> 0:15:09.920 farther out, the story kind of changes. But it's this 0:15:10.000 --> 0:15:12.320 question you know that we've been grappling with across the 0:15:12.360 --> 0:15:14.760 economic data. We don't know how strong the consumer is, 0:15:14.800 --> 0:15:17.360 we don't know how much the central banks are going 0:15:17.400 --> 0:15:20.440 to continue hiking rates, most especially the FED, and therefore 0:15:20.440 --> 0:15:23.520 it's very difficult to predict where oil prices go. But 0:15:23.680 --> 0:15:26.480 you know, to what Kevin was saying one thing before 0:15:26.680 --> 0:15:29.840 I mentioned this, Kevin wrote ten bylines today since like 0:15:29.920 --> 0:15:34.280 six fifteen am. And so that is really impressive, Kevin. 0:15:34.080 --> 0:15:35.920 You on the live blog today, as these earnings are, 0:15:36.280 --> 0:15:37.280 it's pretty impressive. 0:15:37.360 --> 0:15:41.720 Yeah, plus live blog not counting that. But I would say, 0:15:41.800 --> 0:15:45.480 you know what he's what he's kind of saying about 0:15:45.560 --> 0:15:50.040 you know, shareholders rewarding investment in a way they haven't before. 0:15:50.800 --> 0:15:52.520 You know, this is kind of the dichotomy as well 0:15:52.560 --> 0:15:56.440 that we are hearing between the IEA, which is a 0:15:56.840 --> 0:16:00.960 major international agency backed by some of the Western countries, 0:16:01.920 --> 0:16:05.840 and OPEK. You know, opek is saying, y'all haven't invested 0:16:05.960 --> 0:16:09.360 enough in natural gas or in oil for a long time. 0:16:09.440 --> 0:16:11.640 That's why we're seeing all the volatility in the market. 0:16:11.960 --> 0:16:15.360 And then here you have there's more consumer consumer related 0:16:15.800 --> 0:16:18.360 organization saying actually. 0:16:18.000 --> 0:16:20.080 It's just you guys. You guys are the issue. 0:16:20.640 --> 0:16:22.920 Well, yeah, and that's a really good point. You know, 0:16:23.560 --> 0:16:25.960 I brought up in the past, you know, having gone 0:16:26.000 --> 0:16:28.920 up to the Baka like several years ago when shale 0:16:29.000 --> 0:16:30.920 and just the amount of drilling that we were doing 0:16:30.960 --> 0:16:33.200 in the United States and everybody was like, look at 0:16:33.200 --> 0:16:35.400 the US, you know, they're becoming energy independent. 0:16:35.720 --> 0:16:37.880 Kevin, where is the United States and all of this? 0:16:39.640 --> 0:16:43.520 Yeah, so the US, the US US is the worl's 0:16:43.520 --> 0:16:47.560 biggest oil producer at the moment because opek Is has 0:16:47.600 --> 0:16:50.000 cut back a little bit. But what's very different to 0:16:50.480 --> 0:16:52.520 now compared with the days when I mentioned you went 0:16:52.560 --> 0:16:55.040 out to the bark and is that companies are being 0:16:55.080 --> 0:16:58.280 much more restrained. They're looking very much at the at 0:16:58.280 --> 0:17:00.680 the future. They're looking at how many and the wells 0:17:00.720 --> 0:17:03.400 they can drill on their acres. They're looking at moderating 0:17:03.480 --> 0:17:06.000 production growth. They're very, very focused on their near term 0:17:06.080 --> 0:17:09.200 cash flows, making sure that they're profitable today rather than 0:17:09.200 --> 0:17:13.440 trying to drill baby drill and just you know, ramp 0:17:13.560 --> 0:17:15.479 up production just for the just for the sake of it. 0:17:15.960 --> 0:17:17.600 So so there's a lot more there's a lot more 0:17:17.600 --> 0:17:22.080 caution in the in the shale patch compared to compared 0:17:22.080 --> 0:17:24.360 to what we saw a few years ago. And that's 0:17:24.400 --> 0:17:28.320 why OPEK now is the fields at Liberty to cut 0:17:28.359 --> 0:17:31.120 production like they did at the beginning of April. They 0:17:31.119 --> 0:17:34.760 cut a million bows a day, and because they no 0:17:34.800 --> 0:17:39.320 longer see that threat, the market share threat from from 0:17:39.359 --> 0:17:42.280 shale and and relics of shell producers are quite happy 0:17:42.359 --> 0:17:46.560 for that. They're happy for OPEC to cut production and 0:17:46.880 --> 0:17:47.679 keep price inside. 0:17:47.920 --> 0:17:52.800 What's the likelihood of more cuts from them? 0:17:53.280 --> 0:17:55.840 The one earlier this this month was a huge surprise, 0:17:56.080 --> 0:18:00.520 so I certainly wouldn't rule anything out. And if it 0:18:00.560 --> 0:18:04.160 hasn't really impacted the market that much, it's definitely big 0:18:04.200 --> 0:18:08.639 concerns over over economic growth, the effect of the effect 0:18:08.720 --> 0:18:12.280 of rising interest rates here in the US and around 0:18:12.280 --> 0:18:15.240 the world. And you know, China was the big It's 0:18:15.240 --> 0:18:17.480 supposed to roar back this year and swallow up a 0:18:17.560 --> 0:18:21.000 huge amount of oil demand. Hasn't really happened yet. People say, 0:18:21.080 --> 0:18:23.000 maybe happen in the second half, but we're not. We're 0:18:23.000 --> 0:18:24.000 not seeing it quite well. 0:18:24.280 --> 0:18:25.840 And we have a story of US oil heading for 0:18:25.880 --> 0:18:29.080 a six monthly drop because as demand outlook worse, and 0:18:29.119 --> 0:18:31.080 so we've seen like the trend line, no doubt about someone. 0:18:31.119 --> 0:18:32.520 You're just back from the Middle East. 0:18:33.000 --> 0:18:34.640 I am, And that's why I'm going to ask about 0:18:34.720 --> 0:18:36.600 natural gas because I was in Klaser, you know, one 0:18:36.600 --> 0:18:39.080 of the world's largest producers of natural gas. Actually this 0:18:39.160 --> 0:18:42.119 is for Kevin. You know, we heard this major bullish 0:18:42.160 --> 0:18:45.720 outlook from some of these oil field contractors SLB, Baker, Hughes, 0:18:45.760 --> 0:18:50.080 Halliburton and a lot of them mentioning how much natural 0:18:50.080 --> 0:18:52.720 gas was going to be part of their business. I 0:18:52.720 --> 0:18:55.240 feel like we heard less of that today from these 0:18:55.280 --> 0:18:57.480 oil majors, even though some of them are moving into 0:18:57.480 --> 0:18:57.959 the space. 0:18:58.400 --> 0:18:59.600 Yeah, what what's the thinking there? 0:18:59.600 --> 0:18:59.800 Why? 0:19:00.119 --> 0:19:01.200 You know, what's your take? 0:19:01.280 --> 0:19:03.120 Kevin just got about twenty seconds. 0:19:04.200 --> 0:19:09.960 Yeah, the majors are interested in gas, but they want 0:19:09.960 --> 0:19:12.119 liquified batual gas. They want the big projects that they 0:19:12.160 --> 0:19:14.800 can ship around the world. They're not too interested in 0:19:15.320 --> 0:19:20.960 the local market for gas because the value is a 0:19:21.000 --> 0:19:23.840 lot lower, but definitely big projects where they can ship 0:19:23.880 --> 0:19:24.760 gas around the world. 0:19:25.680 --> 0:19:27.920 Okay, very got it. 0:19:28.000 --> 0:19:30.400 Kevin, We got to run Kevin Crowley and Simon Foxman, 0:19:30.720 --> 0:19:31.640 so appreciate it. 0:19:31.720 --> 0:19:32.520 This is Bloomberg. 0:19:33.880 --> 0:19:37.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:19:37.480 --> 0:19:41.480 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:19:41.680 --> 0:19:44.960 the Bloomberg Business app, and YouTube. You can also listen 0:19:45.080 --> 0:19:48.160 live on Amazon Alexa from our flagship New York station 0:19:48.640 --> 0:19:51.399 Just Say Alexa playing Bloomberg eleven thirty. 0:19:52.000 --> 0:19:55.399 Well transparency. This next guest came to us because Mattie's 0:19:55.400 --> 0:19:57.560 mom works for this company. She's head of marketing. But 0:19:57.600 --> 0:19:59.840 what we love, Maddie about this when you pitched it 0:19:59.880 --> 0:20:01.280 in and I'm like, we got to talk to them. 0:20:01.480 --> 0:20:03.520 They're a small business. They're in the business of moving 0:20:03.520 --> 0:20:06.600 people around. So in many ways, it's a great indicator 0:20:06.600 --> 0:20:09.800 of the economy, you know, beyond the official statistics like 0:20:09.800 --> 0:20:11.639