WEBVTT - Eco Slowdown Impacting Oil More Than Supply Crunch 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel Podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma Waits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor, find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 Podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:23.239 at Bloomberg dot com. Oil markets these days have been 0:00:23.400 --> 0:00:26.079 a story of push and pull. We have on one 0:00:26.120 --> 0:00:29.640 side the possible supply disruptions coming from the Iranian us 0:00:30.040 --> 0:00:34.000 UH disputed over the nuclear development. You have the situation 0:00:34.000 --> 0:00:37.120 in Libya. On the other side, you have the prospect 0:00:37.159 --> 0:00:40.479 for even slower global growth in the face of rising 0:00:40.520 --> 0:00:43.960 trade tensions. Here to help us understand why it is 0:00:44.000 --> 0:00:46.639 that the slowing global growth is what's winning out right now, 0:00:46.640 --> 0:00:49.800 with prices now at their lowest since early March, is 0:00:49.880 --> 0:00:54.000 Dr Ellen Walled, President of Transversal Consulting, a nonresident Senior 0:00:54.040 --> 0:00:57.560 Fellow at the Atlantic Council's Global Energy Center, as well 0:00:57.600 --> 0:01:00.360 as a contributor to Bloomberg Opinion, and she is in 0:01:00.520 --> 0:01:03.920 studio today in our Bloomberg Atta Active Broker Studios. So 0:01:03.960 --> 0:01:05.880 thank you so much for being here. So let's start 0:01:05.880 --> 0:01:09.399 with that. Why is it that the global slowdown is 0:01:09.440 --> 0:01:12.680 the story that's taking pre eminence over this other, very 0:01:12.680 --> 0:01:15.400 real idea of a supply disruption. I think the big 0:01:15.440 --> 0:01:19.160 reason here is that a lot of the news and 0:01:19.240 --> 0:01:22.240 the headlines are really all about the global slowdown. They're 0:01:22.280 --> 0:01:25.120 all about every every other day we get a new 0:01:25.360 --> 0:01:29.720 headline of another economic indicator showing that global growth is 0:01:29.760 --> 0:01:33.040 slowing down. Economic growth is slowing down, trade tensions are 0:01:33.400 --> 0:01:36.600 making everything worse. And then meanwhile, on the other side, 0:01:36.640 --> 0:01:42.759 we're hearing that Iranian exports are significantly lower, Thanezuela isn't 0:01:42.760 --> 0:01:46.000 exporting anywhere old to the United States. We've got problems 0:01:46.040 --> 0:01:49.200 in Russia, I mean real serious issues with this pipeline 0:01:49.200 --> 0:01:53.720 that have really dampened down Russian oil production. And yet 0:01:53.760 --> 0:01:56.920 at the same time, everything is just it's all the 0:01:56.960 --> 0:02:01.040 demand story. So we've got definitely a supply crunch, and 0:02:01.120 --> 0:02:04.800 yet we're seeing markets they're only paying attention to demand. 0:02:05.200 --> 0:02:07.919 Where will if where will we see it in the data? 0:02:08.080 --> 0:02:11.000 The supply issue that you're talking about, well, we're seeing 0:02:11.000 --> 0:02:13.680 it right now. First of all, looking at what's happening 0:02:13.680 --> 0:02:16.880 in Iran is keeping a really close eye on this 0:02:17.280 --> 0:02:21.440 because exports really seem to cut off right at the 0:02:21.480 --> 0:02:24.360 beginning of May. But now we're actually seeing some tankers 0:02:24.360 --> 0:02:28.280 coming up into Iranian ports filling with oil, keeping a 0:02:28.440 --> 0:02:30.639 very close eye on them. We do know that Iran 0:02:30.720 --> 0:02:34.480 has exported about three million barrels of oil to Syria, 0:02:34.639 --> 0:02:36.959 believe it or not, and that data comes from Tanker 0:02:37.000 --> 0:02:40.600 Trackers dot Com. And it seems like they're basically using 0:02:40.600 --> 0:02:43.440 Syria as a holding ground for their oil because they 0:02:43.560 --> 0:02:45.840 filled up all their other storage containers and that oil 0:02:45.880 --> 0:02:49.359 has to go somewhere. Uh, And so we needed we're 0:02:49.400 --> 0:02:51.720 waiting basically on data to show is this oil going 0:02:51.760 --> 0:02:54.799 to go to China and is it going to enhance 0:02:54.960 --> 0:02:58.160 and really inflate the tensions that are already going on 0:02:58.240 --> 0:03:01.120 in that region. That's really interest saying actually and raises 0:03:01.160 --> 0:03:03.680 a whole other spectrum of conflict that I hadn't worried about, 0:03:03.720 --> 0:03:05.840 but I will start to worry about now. I guess 0:03:05.840 --> 0:03:07.480 that one question I have is do you think that 0:03:07.560 --> 0:03:10.519 markets are wrong, that they're paying attention to the wrong thing, 0:03:10.680 --> 0:03:14.200 and that the potential supply disruptions really are perhaps the 0:03:14.240 --> 0:03:17.880 most dominant of these two factors, I think if we 0:03:17.880 --> 0:03:22.000 weren't seeing these constant headlines and fears about demand, we 0:03:22.120 --> 0:03:26.640 definitely see oil prices going up now because of of 0:03:26.680 --> 0:03:29.400 what we're seeing in terms of these supply issues. We're 0:03:29.440 --> 0:03:31.640 also it's not sure. I mean, it does look like 0:03:31.680 --> 0:03:35.119 OPEC wants to rule over its supply reduction agreement. It's 0:03:35.120 --> 0:03:37.920 not sure, but it does. It does look like that, 0:03:37.960 --> 0:03:41.200 and that would normally send send prices up. So I 0:03:41.240 --> 0:03:44.000 do think that that we are seeing some some issues there, 0:03:44.400 --> 0:03:48.680 and um, this obsession with demand and with economic flu 0:03:48.760 --> 0:03:51.840 down is really just keeping prices down. So you mentioned 0:03:51.920 --> 0:03:54.040 Russia talk to us about that. I understood there was 0:03:54.080 --> 0:03:56.840 they had some issues with their pipelines, some contaminated oil. 0:03:57.200 --> 0:03:59.560 How severe is it and how quickly can they fix 0:03:59.600 --> 0:04:01.720 it and get a ramped back up. Well, it's actually 0:04:01.760 --> 0:04:04.520 a lot more severe than we were led to believe initially. 0:04:05.000 --> 0:04:07.480 When we first heard about this, it was in April. 0:04:07.840 --> 0:04:11.640 There were some refineries in Eastern Europe that were reporting 0:04:11.880 --> 0:04:15.119 that they were receiving contaminated oil and uh, they really 0:04:15.160 --> 0:04:18.080 it's very very bad to put this in their refinery equipment, 0:04:18.120 --> 0:04:21.760 so they really can't process that oil and they said, oh, 0:04:21.800 --> 0:04:24.200 two weeks, it'll be fixed. Well, it turns out that, 0:04:24.440 --> 0:04:27.120 you know, now we're looking at well into June before 0:04:27.160 --> 0:04:30.040 they completely fixed this problem because they have to basically 0:04:30.040 --> 0:04:33.880 clean out the entire pipeline. Meanwhile, Russia has actually cut 0:04:33.920 --> 0:04:36.680 back on its production. Believe it or not, in Russia 0:04:36.760 --> 0:04:40.200 was the one of the few countries in this Opeque 0:04:40.320 --> 0:04:44.800 agreement that hadn't cut to its promised amounts. Now they're 0:04:44.839 --> 0:04:48.520 actually below the quota that they've agreed upon just because 0:04:48.600 --> 0:04:51.400 of this contamination issue, and so we're definitely going to 0:04:51.480 --> 0:04:54.200 see it go on into June. It's possible, could it 0:04:54.240 --> 0:04:59.560 could effect supplies even after June. What are you expecting 0:04:59.560 --> 0:05:02.680 about the PECK meetings? People have speculated that they will 0:05:02.720 --> 0:05:06.120 continue with the output cuts that have been planned, despite 0:05:06.240 --> 0:05:09.599 the potential disruptions to supply. Is that you're expecting, I'm 0:05:09.640 --> 0:05:12.479 that's that's the expectation, is that they will roll over 0:05:12.720 --> 0:05:15.159 basically the the agreement as is. Although today we did 0:05:15.160 --> 0:05:19.520 hear news that Russia is looking for increased flexibility. It's 0:05:19.520 --> 0:05:21.960 not not entirely clear what that means, but that could 0:05:21.960 --> 0:05:24.680 definitely throw a wrench in their plans. Combined with the 0:05:24.680 --> 0:05:27.000 fact that Russia is also looking for flexibility in terms 0:05:27.040 --> 0:05:29.880 of scheduling. They want to move the date of the 0:05:29.920 --> 0:05:31.800 OPAQU meeting, which is now for the end of June. 0:05:31.839 --> 0:05:34.600 They want to move it to July because the Russian 0:05:34.600 --> 0:05:37.400 Oil minister can't make it in June. And this is 0:05:37.440 --> 0:05:41.599 causing a big consternation amongst the opaque countries because they 0:05:41.640 --> 0:05:44.320 they see it as this is their OPEC meeting. Russia 0:05:44.360 --> 0:05:46.520 is not even a member. Why should they move the 0:05:46.600 --> 0:05:48.960 date of their meeting for this country that's not even 0:05:49.240 --> 0:05:51.240 part of OPEC. And I think it's exposing some of 0:05:51.279 --> 0:05:54.360 the larger cracks in OPEC that have to do with 0:05:54.560 --> 0:05:56.720 the fact that they've basically kind of sold their soul 0:05:56.800 --> 0:05:58.960 to the Russians. He can't make it, what's he gonna 0:05:58.960 --> 0:06:04.440 be doing? Going on the case? I has the energy guy, 0:06:04.800 --> 0:06:08.440 what's what? What's more pressing? What's I learned that he 0:06:08.760 --> 0:06:10.440 can't make the meeting, But then we also learned that 0:06:10.480 --> 0:06:13.680 they're storing oil in Syria. So Dr ellen Wall, thank 0:06:13.720 --> 0:06:15.479 you so much. You always have great information on the 0:06:15.480 --> 0:06:18.560 global oil markets. We appreciate you coming in. Dr Walden's 0:06:18.600 --> 0:06:22.320 president of Transversal Consulting also nonresident Senior Fellow at the 0:06:22.320 --> 0:06:25.760 Atlantic Council's Global Energy Center, and of course a Bloomber 0:06:25.960 --> 0:06:42.800 opinion contributor. Well amid rising trade tensions, the equity markets 0:06:42.839 --> 0:06:45.360 are off approximately five percent from recent highs. So the 0:06:45.440 --> 0:06:48.039 question many investors are asking is whether whether this is 0:06:48.080 --> 0:06:50.920 a healthy dip or something more. To help us to 0:06:50.920 --> 0:06:53.080 answer that question, we welcome our next guest, David Diets, 0:06:53.279 --> 0:06:56.760 David's founder, president and chief investment strategists of Point View 0:06:56.839 --> 0:07:01.320 Wealth Management, located in the happening metropolis of a New Jersey. David, 0:07:01.360 --> 0:07:04.160 thanks so much for joining us. So again, let's just 0:07:04.160 --> 0:07:07.040 start real basic here. Is this a healthy pullback in 0:07:07.080 --> 0:07:09.359 the market or is it something more fundamental than investors 0:07:09.360 --> 0:07:11.600 need to be concerned about. Well, truth be told, no 0:07:11.640 --> 0:07:14.080 one knows for sure, but certainly this is the type 0:07:14.080 --> 0:07:18.160 of pullback which we see every single year, often multiple times. 0:07:18.200 --> 0:07:20.640 I mean to put this into context, We're up about 0:07:20.680 --> 0:07:24.000 thirteen pcent year to date. We're down five percent this month, 0:07:24.000 --> 0:07:27.679 but that's five percent off all time highs. So although 0:07:28.200 --> 0:07:31.720 everything bears watching, this is not a crisis by by 0:07:31.720 --> 0:07:34.160 a long shot. Let's take a listen to what Morgan 0:07:34.200 --> 0:07:36.160 Stanley is James Gorman had to say about it. He 0:07:36.200 --> 0:07:39.880 was speaking with Blueberg's Tom mackenzie, and honestly, he was 0:07:39.920 --> 0:07:43.800 talking about how the risk is is the equity markets 0:07:43.840 --> 0:07:48.240 have more downside than upside, but that the magnitude is 0:07:48.280 --> 0:07:53.080 not so big. Would you agree, well, um, you know, certainly, 0:07:53.320 --> 0:07:56.800 I do think that further risk to the downside, of course, 0:07:56.960 --> 0:07:59.480 but you know, let's put into context here. I think 0:08:00.080 --> 0:08:02.560 three key things are driving this market right now. One 0:08:02.680 --> 0:08:05.560 is a very strong economy. We just got an affirmation 0:08:05.640 --> 0:08:08.880 basically of a three print on US GDP for the 0:08:08.880 --> 0:08:11.840 first quarter. We've got the lowest unemployment since the Vietnam 0:08:11.880 --> 0:08:14.720 War era. We've got super low interest rates, which makes 0:08:14.720 --> 0:08:17.960 affordability for house building capital expenisher is great. What's the 0:08:17.960 --> 0:08:20.800 big problem, of course, is the trade talks with China. 0:08:21.280 --> 0:08:23.880 We don't know. Since that tweet and May five, everything 0:08:23.920 --> 0:08:26.320 starts to unravel. But if one tweet can undo it, 0:08:26.400 --> 0:08:30.480 quite frankly, another queek could put this um put this 0:08:30.600 --> 0:08:34.280 back together again. So you know, we think one should 0:08:34.320 --> 0:08:37.480 be selectively still buying in this market. What are we 0:08:37.600 --> 0:08:40.559 buying selectively in this market? Then? You know, I would 0:08:40.559 --> 0:08:44.240 say two sectors. One is generally tech stocks, because I 0:08:44.320 --> 0:08:48.440 do think that there are secular, not just cyclical tail 0:08:48.480 --> 0:08:52.400 winds behind this sector where it's almost imperative for banks 0:08:52.520 --> 0:08:55.480 everyone in this economy to get the latest and greatest 0:08:55.520 --> 0:08:58.880 to keep up with productivity and be competitive. Second, of course, 0:08:58.920 --> 0:09:02.280 I think with the before you move on from tech, 0:09:02.400 --> 0:09:04.480 because everybody wants to be a tech company right now, 0:09:04.520 --> 0:09:07.160 and everybody calls themselves a tech company and their tech 0:09:07.200 --> 0:09:11.080 areas that are doing well in tech areas uber that aren't. 0:09:11.360 --> 0:09:13.480 So I'm just wondering, what are you talking about when 0:09:13.520 --> 0:09:17.880 you're talking about buying tech. Well, certainly you want selectivity. Um, 0:09:18.160 --> 0:09:22.080 there are many many tech names which are short on earnings, 0:09:22.280 --> 0:09:25.640 high evaluation, and we would we would be steering clearer 0:09:25.720 --> 0:09:29.079 that the one we'd be setting today would be Intel. Um. 0:09:29.840 --> 0:09:34.520 Why Intel? Because Intel is like the world's largest microprocessor manufacturer. 0:09:34.800 --> 0:09:37.160 And now that we have artificial intelligence, now that we 0:09:37.160 --> 0:09:38.960 have the Internet of Things, now that we're soon going 0:09:39.000 --> 0:09:42.720 to have autonomous driving, microprocessors are going everywhere. They're the 0:09:42.760 --> 0:09:46.120 company that's best position to handle all that. Meanwhile, you 0:09:46.120 --> 0:09:48.880 have evaluation that you can stomach. Is trading at about 0:09:48.880 --> 0:09:52.600 ten times earnings, it's about forty five. That's down from sixties, 0:09:52.640 --> 0:09:56.360 so you have almost pull back. This is a great 0:09:56.520 --> 0:09:58.960 entry point for these long term trends. So one of 0:09:58.960 --> 0:10:01.280 the names that and now you've mentioned in the past 0:10:01.880 --> 0:10:05.160 is Wells Fargo, and it's in a sector that, uh, 0:10:05.240 --> 0:10:07.600 you know, I think investors are very uncertain about number 0:10:07.600 --> 0:10:09.360 one in terms of the big global financials, and then 0:10:09.440 --> 0:10:13.760 number two it's got some companies specific issues, reputational issues, 0:10:13.800 --> 0:10:18.400 management issues. What makes you uh bullish on Wells Fargo. Well, 0:10:18.520 --> 0:10:23.160 let's let's start with the macro's. Financials are the sector 0:10:23.320 --> 0:10:27.080 that is always poised to do better and never seems to. 0:10:27.440 --> 0:10:29.320 And I think one of the big culprits right now 0:10:29.480 --> 0:10:32.800 is very low interest rates. Now, um, of course we're 0:10:32.840 --> 0:10:35.440 seeing the interest rates at the lowest points since fall 0:10:35.520 --> 0:10:39.040 of two thousand and seventeen. My guess is, with just 0:10:39.120 --> 0:10:41.760 a little bit of constructive progress on China, those interest 0:10:41.840 --> 0:10:43.520 rates are going to move back up. We're seeing some 0:10:43.720 --> 0:10:45.959 movement in the right direction today and that's going to 0:10:46.080 --> 0:10:49.679 improve net interest margins. So financials very cheap. Now, if 0:10:49.720 --> 0:10:52.120 we get just a little bit more of a net 0:10:52.160 --> 0:10:54.680 interest margin, I think banks are gonna do well. Now, 0:10:54.679 --> 0:10:57.320 why Wells Fargo? So there's a bad news and a 0:10:57.360 --> 0:11:00.960 good news. The good news is that is probably the 0:11:01.000 --> 0:11:05.320 best franchise in my view in America today. It's coast 0:11:05.360 --> 0:11:09.080 to coast. It's focusing on that middle market. Uh Lending 0:11:09.320 --> 0:11:12.560 is focusing on retail banking. It had one of the 0:11:12.679 --> 0:11:16.480 largest share of those sticky f d I c ensured 0:11:16.600 --> 0:11:19.800 low cost deposits that do not move, and they've steered 0:11:19.840 --> 0:11:22.600 clear the more volatile capital markets. So that's the good news. 0:11:22.600 --> 0:11:25.320 The bad news, of course, is they are basically without 0:11:25.320 --> 0:11:28.080 a leader. They have an interim uh corporate lawyer as 0:11:28.120 --> 0:11:31.280 a leader. Um Jamie Diamond had some very negative comments 0:11:31.400 --> 0:11:33.440 about that just a couple of days ago. He happens 0:11:33.480 --> 0:11:36.120 to be a competitor, and uh so, I would I 0:11:36.120 --> 0:11:39.880 wouldn't expect anything less. Um So, I think if you 0:11:39.960 --> 0:11:44.360 get a well known, prestigious someone from the outside coming 0:11:44.400 --> 0:11:46.640 in who sets the right tone, I think you can 0:11:46.640 --> 0:11:49.840 get a significant pop in that stock. And again, while 0:11:49.840 --> 0:11:52.079 you're waiting, have a close to four percent dividend on 0:11:52.120 --> 0:11:56.400 a stock that wasn't January of last year six now 0:11:56.440 --> 0:11:59.839 it's below fifties too. About another stock, Pecks see the 0:12:00.160 --> 0:12:05.640 shares down forty one percent going back since the end 0:12:05.679 --> 0:12:09.840 of what are you seeing here? I wish our prescription 0:12:09.880 --> 0:12:13.959 drug prices were down um, But here's here's what I see. 0:12:14.040 --> 0:12:17.640 First of all, you've got the macro situation here where 0:12:18.040 --> 0:12:21.199 politicians of both sides of the aisle are beating on healthcare. 0:12:21.360 --> 0:12:24.040 They want prices to be lower. Now that we're entering 0:12:24.040 --> 0:12:27.400 the political season, there's some radical calls for single pair 0:12:27.760 --> 0:12:32.240 um healthcare system. All of that would be potential uncertainty, 0:12:32.240 --> 0:12:35.679 if not a negative, and all healthcare stocks are down. CVS, 0:12:35.760 --> 0:12:38.280 I think is a sure survivor not more than a survivor. 0:12:38.280 --> 0:12:41.640 A winner is really three companies and one. You've got 0:12:41.679 --> 0:12:44.880 a coast to coast pharmacy operation close to ten thousand 0:12:44.920 --> 0:12:49.360 stores making about one point four billion prescriptions a year. Then, 0:12:49.400 --> 0:12:53.040 of course they've got a great uh pharmacy benefits management 0:12:53.080 --> 0:12:56.839 the form of care Mark. But now they vertically integrated 0:12:56.880 --> 0:13:00.120 with the acquisition of Aquis of Etna, which gives them 0:13:00.120 --> 0:13:03.720 twenty million insurance customers. So one of the problems right 0:13:03.720 --> 0:13:05.839 now is, believe it or not, that merger has not 0:13:06.040 --> 0:13:09.800 been finally approved. Even though government authorities signed off on it, 0:13:09.800 --> 0:13:11.720 still hasn't be signed off by a judge who wants 0:13:11.760 --> 0:13:13.760 to take a second look. Now, if all the parties 0:13:13.760 --> 0:13:15.840 to say go ahead, I think once that judge makes 0:13:15.880 --> 0:13:18.120 the right decision, that stock moves higher. But isn't there 0:13:18.200 --> 0:13:21.480 just just for healthcare, there's just always this overhang of gee, 0:13:21.520 --> 0:13:24.360 what are the politicians gonna be saying? What are the government? Regulation? 0:13:24.440 --> 0:13:26.560 Just seems like it's always in the crosshairs and there's 0:13:26.600 --> 0:13:29.680 so much overhang just from news about regulation. Yeah, you know, 0:13:29.720 --> 0:13:32.200 it's a great point. Certainly we have seen that before 0:13:32.320 --> 0:13:35.360 with proposal for Hillary Care, with proposals in the first 0:13:35.400 --> 0:13:38.760 couple of years the Obama administration. But what happens is ultimately, 0:13:39.080 --> 0:13:41.400 and I believe it's a case now prices now we 0:13:41.480 --> 0:13:45.480 reflect that kind of dismal outlook where it can't catch 0:13:45.480 --> 0:13:48.440 a break and the politicians are being at the end 0:13:48.440 --> 0:13:51.559 of the day, we want the best healthcare possible. The 0:13:51.679 --> 0:13:56.080 UM population is growing worldwide, there's there's demand, and I 0:13:56.160 --> 0:13:59.520 think ultimately UM it will become business as usual and 0:13:59.520 --> 0:14:02.120 stock since we'll move higher. David Dits, thank you so 0:14:02.200 --> 0:14:04.760 much for being with us here. David Diets is founder, 0:14:04.840 --> 0:14:08.439 president and chief investment strategist at Point View Wealth Management. 0:14:08.679 --> 0:14:25.920 In Summit, New Jersey, Paul, we talk a lot about 0:14:25.960 --> 0:14:29.680 the data that a lot of websites collect and the 0:14:29.760 --> 0:14:31.720 question is what can you do with it? And yelp 0:14:31.760 --> 0:14:35.000 has taken away to use it to try to indicate 0:14:35.240 --> 0:14:37.840 what the economy, how which shape the economy is in 0:14:38.000 --> 0:14:42.360 Joining us now is Carl Bolic, data Science editor at YELP. Carl, 0:14:42.600 --> 0:14:44.720 so happy to have you here in our Bloomberg Interactive 0:14:44.760 --> 0:14:47.360 broker studios. Full disclosure. Carl and I went to high 0:14:47.360 --> 0:14:49.640 school together and worked on the school paper together. I'm 0:14:49.720 --> 0:14:53.920 so glad to see you breaking stories. Yeah, exactly, um, 0:14:54.000 --> 0:14:59.000 lots of them. So, Carl, what exactly is yelps economic average. 0:14:59.760 --> 0:15:04.680 It's a benchmark of the local economy and it brings 0:15:04.680 --> 0:15:09.120 together thirty different really important but also really specific sectors 0:15:09.160 --> 0:15:14.160 in yelp across our most important really areas of the economy, 0:15:14.200 --> 0:15:18.480 which are restaurants and food, nightlife, shopping and services, which 0:15:18.480 --> 0:15:20.760 are really to us, the backbone of the local economy. 0:15:20.880 --> 0:15:23.920 So we've chosen thirty. I'm sure you and your listeners 0:15:23.920 --> 0:15:26.480 could recognize that number is like maybe a crucial number 0:15:26.560 --> 0:15:30.560 for benchmarks of of economic health and market strength. And 0:15:30.840 --> 0:15:33.360 you know it has it has a long history, and 0:15:33.400 --> 0:15:35.720 it allows us to really cover the breadth of these 0:15:35.800 --> 0:15:39.760 kinds of businesses. So what makes your indicator unique? Do 0:15:39.800 --> 0:15:42.880 you think relter to what's out there in the market. Yeah, 0:15:42.920 --> 0:15:45.480 so there there's lots of economic indo cares out there. 0:15:45.560 --> 0:15:50.120 We really saw an opportunity to look at something close 0:15:50.160 --> 0:15:54.120 to real time, very specific, very granular from a business 0:15:54.160 --> 0:15:58.080 type level, and then also very granular from a geographical level. 0:15:58.480 --> 0:16:01.920 So you know, we are aggreg aiding anonymized you know, 0:16:01.960 --> 0:16:07.000 consumer behavior and business activity down to you know, like 0:16:07.160 --> 0:16:09.720 not just this is a restaurant, not just this is 0:16:09.760 --> 0:16:12.280 a Chinese restaurant, but this is a sexualan restaurant. So 0:16:12.480 --> 0:16:15.520 really being able to dig deep into what is happening 0:16:15.640 --> 0:16:18.920 on a very specific level with enough volume because of 0:16:18.920 --> 0:16:21.040 our tens of millions of users every month on the 0:16:21.080 --> 0:16:23.520 app and tens of millions on desktop, to be able 0:16:23.520 --> 0:16:25.360 to really say something about a lot of different parts 0:16:25.360 --> 0:16:27.560 of the local economy. I love this, by the way, 0:16:27.560 --> 0:16:29.800 because we do talk a lot about what people are 0:16:29.800 --> 0:16:31.960 going to do with data. And just for a little background, 0:16:31.960 --> 0:16:34.320 so carlbi Alec, probably you've read him as the numbers 0:16:34.320 --> 0:16:35.920 guy on the Wall Street Journal back in the day, 0:16:35.960 --> 0:16:38.200 and then you worked at five thirty eight UM and 0:16:38.480 --> 0:16:41.320 you've done a lot of work with numbers, and I'm 0:16:41.360 --> 0:16:45.880 wondering whether you're seeing anything with these economic indicators that 0:16:46.280 --> 0:16:49.080 are somewhat at odds at the main story that we 0:16:49.200 --> 0:16:52.520 keep hearing, which is steady growth, strong consumer. What are 0:16:52.520 --> 0:16:56.360 you seeing right now? Yeah, we're seeing a mixed picture. 0:16:56.400 --> 0:16:59.880 So we we introduced the up economic average looking back 0:17:00.240 --> 0:17:05.280 at the fourth quarter and saw a decline, so so 0:17:05.480 --> 0:17:07.520 it looked like a slump or the start of a slump. 0:17:08.119 --> 0:17:12.399 And then for the last quarter, we saw you know, 0:17:12.400 --> 0:17:17.240 a slight rally, pretty moderate, mostly flat, and some weakness 0:17:17.240 --> 0:17:19.800 in a few key categories. So I think we we've 0:17:19.800 --> 0:17:23.000 been deviating a bit from the overall story, which I 0:17:23.040 --> 0:17:26.159 think has to do a lot with the sort of 0:17:26.160 --> 0:17:27.959 the real time nature of our data, but also like 0:17:28.000 --> 0:17:31.160 our our really laser focus on the kinds of local 0:17:31.240 --> 0:17:34.600 economic experiences that you have in person with with the 0:17:34.640 --> 0:17:37.280 service provider in a store. So which areas you're seeing 0:17:37.280 --> 0:17:39.960 a slow down? Yeah, so in this past quarter, in particular, 0:17:40.040 --> 0:17:43.959 autos we're weak and uh, you know, it's something that 0:17:43.960 --> 0:17:46.199 we've been tracking for a while. We've been interested in 0:17:46.640 --> 0:17:49.080 sort of what the effect is of the shift from 0:17:49.080 --> 0:17:53.600 owning cars to too renting cars to you know, renting 0:17:53.600 --> 0:17:56.000 a driver in a car for twenty minutes for a 0:17:56.080 --> 0:17:57.919 ride around town. Like what that might be doing to 0:17:57.960 --> 0:18:00.520 some of these core sectors that rely on people owning 0:18:00.520 --> 0:18:03.240 and using their cars a lot, needing various services, needing 0:18:03.240 --> 0:18:06.399 to buy new cars or used cars. And it looks 0:18:06.400 --> 0:18:08.800 like across a lot of different categories we're seeing a 0:18:08.880 --> 0:18:12.040 slump there. And then in retail, which again is the 0:18:12.119 --> 0:18:15.080 part of retail that is that in person experience going 0:18:15.119 --> 0:18:18.560 into the store, we're seeing weakness, especially in sort of 0:18:18.600 --> 0:18:20.600 tech retail, where I think a lot of the activity 0:18:20.640 --> 0:18:24.080 is moving online. So Carl, how about regionality. Are you 0:18:24.119 --> 0:18:28.840 seeing differences regionally from some of your data coming in, Yeah, 0:18:28.880 --> 0:18:34.760 it's it's a great question. It really depends on the sector. Like, overall, 0:18:35.119 --> 0:18:37.760 the regions are moving roughly in line with each other, 0:18:37.840 --> 0:18:41.040 but in some areas, certain kinds of restaurants are stronger. 0:18:41.600 --> 0:18:44.960 You know, there's different demands for home services depending on 0:18:44.960 --> 0:18:47.000 what part of the country you're in. So we are 0:18:47.000 --> 0:18:50.919 seeing those kinds of differences, but generally the regional pictures 0:18:51.000 --> 0:18:52.760 tracking the national one to a way that I didn't 0:18:52.840 --> 0:18:54.960 expect going into this. I thought we would see more 0:18:55.040 --> 0:18:57.879 regional differences. We do see bigger differences at the city 0:18:57.960 --> 0:19:00.520 level and the metro area level. I want to talk 0:19:00.560 --> 0:19:04.200 about how you use the data that Yelp collects, because 0:19:04.240 --> 0:19:08.560 there's sort of the activity in terms of ordering through 0:19:08.720 --> 0:19:11.639 Yelp or you know, reviewing through Yelp. What do you 0:19:11.760 --> 0:19:15.360 what do you pull for the economic average? Yeah, so 0:19:15.560 --> 0:19:18.679 we basically looked at everything. We looked at the full gamut. 0:19:18.720 --> 0:19:20.760 I mean there, as you say, there's so many different 0:19:20.760 --> 0:19:24.240 ways that people interact with businesses, and they all show 0:19:24.359 --> 0:19:26.879 some kind of consumer interest. Some of them are very 0:19:26.880 --> 0:19:29.600 specific to one sector, like the restaurant space in the 0:19:29.640 --> 0:19:33.119 case of ordering food. So we looked at like, what 0:19:33.320 --> 0:19:36.520 is the combination of these that best matches what we 0:19:36.600 --> 0:19:40.800 think is, you know, the overall consumer activity on the platform. 0:19:41.000 --> 0:19:43.520 And so we went with that measure. Well, but I 0:19:43.520 --> 0:19:45.479 guess one question that I have is how do you 0:19:45.520 --> 0:19:49.840 measure something that's qualitative, that's subjective like reviews. I mean, 0:19:49.840 --> 0:19:52.720 do you do you take that into That's a great question, right, 0:19:52.760 --> 0:19:56.520 Like is a higher rating an indicator? Yeah? For this measure, 0:19:56.640 --> 0:19:59.320 we were really just looking at at interest So if 0:19:59.359 --> 0:20:03.360 you went to a business page on yell to leave 0:20:03.400 --> 0:20:05.399 a two star review because you had an experience that 0:20:05.440 --> 0:20:08.600 disappointed you, that would still count as go as consumer 0:20:08.640 --> 0:20:10.800 activity from the point from a purely economic point of 0:20:10.840 --> 0:20:14.880 view of you likely transacted with that business. For other studies, 0:20:14.920 --> 0:20:17.600 we do. We do think a lot about ratings and 0:20:18.040 --> 0:20:20.439 when ratings are going up, is that indicating an overall 0:20:20.480 --> 0:20:23.320 increase in quality or is that a change in you know, 0:20:23.359 --> 0:20:27.480 consumer psychology and their propensity to leave negative reviews. So 0:20:27.600 --> 0:20:30.399 it's it's definitely something that we consider. And if we 0:20:30.480 --> 0:20:32.040 if we do see a rise in ratings that we 0:20:32.080 --> 0:20:35.360 think reflects uh an increase in sort of the quality 0:20:35.400 --> 0:20:38.520 of the consumer experience, then we think that's an important 0:20:38.560 --> 0:20:41.879 thing to capture, but is not normally capture in economic indicators. 0:20:42.000 --> 0:20:44.919 So you capture I'm thinking good jillions of pieces of 0:20:45.000 --> 0:20:47.080 data from all the users of a Yelp and they're 0:20:47.080 --> 0:20:49.639 coming at you all time, unstructured. How often do you 0:20:49.840 --> 0:20:53.639 release your number, your index number, your output? Is this 0:20:53.800 --> 0:20:56.240 a daily thing a quarterly thing? So right now it's 0:20:56.280 --> 0:20:59.440 quarterly and we release it within typically within the month 0:20:59.480 --> 0:21:03.520 after after the quarter. We do want to become more 0:21:03.560 --> 0:21:05.960 frequent and faster, and we're working on that. You know, 0:21:05.960 --> 0:21:09.399 we're being very careful as well, because we want to 0:21:09.440 --> 0:21:13.920 release something that reflects, you know, the real underlying consumer behavior, 0:21:14.000 --> 0:21:17.560 and there are quarterly trends that we want to kind 0:21:17.560 --> 0:21:20.080 of remove, and it's easier to adjust on a quarterly 0:21:20.160 --> 0:21:22.920 level than a monthly level. So we're thinking about how 0:21:22.960 --> 0:21:24.959 we're going to do this more frequently, but we certainly 0:21:24.960 --> 0:21:28.359 have the data to do it, and it's in our roadmap. Cool, 0:21:28.440 --> 0:21:30.119 Carl Bi Aleck, thank you so much for joining us, 0:21:30.119 --> 0:21:34.119 car back data science editor, former newspaperman in high school 0:21:34.560 --> 0:21:40.800 for Yellow with the Economic Average, So very cool. Exactly, 0:21:57.119 --> 0:21:59.760 I want to turn our attention to a story that 0:22:00.119 --> 0:22:03.400 has left me and Paul if I dare speak for you, 0:22:03.440 --> 0:22:07.640 scratching our heads. So basically, a top Justice Department official 0:22:07.760 --> 0:22:11.080 or several of them, are hoping for T Mobile and 0:22:11.240 --> 0:22:15.360 Sprint to lay the groundwork for a new wireless carrier 0:22:15.720 --> 0:22:18.439 in order to go through with their merger, which is 0:22:18.600 --> 0:22:21.280