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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence

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Speaker 1: with Alex Steinhl and Paul'sweenye.

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Speaker 2: The real app performance has been in US corporate high yield.

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Speaker 3: Are the companies lean enough? Have they trimmed all the fats?

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Speaker 2: The semiconductor business is a really cyclical business.

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Speaker 1: Breaking market headlines and corporate news from across the globe.

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Speaker 3: Do investors like the M and A that we've seen?

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Speaker 4: These are two.

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Speaker 2: Big time blue chip companies.

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Speaker 3: The window between the peak and cut changing super fast.

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Speaker 1: Bloomberg Intelligence with Alex Steinhl and Paul'sweenye on Bloomberg Radio.

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Speaker 2: Today's Bloomberg Intelligence Show, we dig inside the big business

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Speaker 2: stories impacting Wall Street and the global markets.

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Speaker 3: Each and every week we provide in depth research and

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Speaker 3: data on some of the two thousand companies and one

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Speaker 3: hundred and thirty industries our analysts cover worldwide.

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Speaker 2: Today we'll look at how Japan is dealing with rising

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Speaker 2: cases of a flesh eating bacteria X plus.

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Speaker 3: World, Let's go how electric vehicle markets around the world

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Speaker 3: are not all traveling in the same direction or at

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Speaker 3: the same speed in twenty twenty four.

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Speaker 2: But first we dive into the airline industry and Boeing.

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Speaker 2: A Boeing quality inspector recently alleged that the plane maker

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Speaker 2: mishandled and lost track of hundreds of faulty parts, some

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Speaker 2: of which he said may have been installed on new

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Speaker 2: seven three seven maxplanes.

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Speaker 3: The claims were detailed in a complaint by Boeing inspector

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Speaker 3: Sam Mohawk with the Occupational Safety and Health Administration, and

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Speaker 3: they deepen the pressure that Boeing already faces from Washington.

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Speaker 3: The company's under investigation by multiple federal agencies, including the

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Speaker 3: Justice Department.

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Speaker 2: For more on to all Things Boeing, we were joined

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Speaker 2: by George Ferguson Bloomberg Intelligence, senior Aerospace, Defense and Airlines analysts.

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Speaker 3: We first asked George about some of the challenges that

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Speaker 3: Boeing is now facing with its outsourcing strategies.

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Speaker 5: So in that same report, right, they talk about inspections

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Speaker 5: at suppliers, they talk about monitoring quality suppliers better.

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Speaker 4: Yeah, I just think.

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Speaker 5: This is a it's a wholly different industry, right. I

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Speaker 5: think there's a bunch of people that have come to

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Speaker 5: the aerospace world from auto backgrounds and other mass production backgrounds, right,

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Speaker 5: and in those worlds, safety isn't as important. Volume is

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Speaker 5: a lot higher. You can get multiple suppliers to provide

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Speaker 5: products to your production line, you can work cost on

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Speaker 5: those suppliers, and I think that whole game plan is

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Speaker 5: really really difficult to do in aviation. And I think

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Speaker 5: this is part of what we're seeing, right. I think

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Speaker 5: you can outsource, but I think if you outsource, you know,

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Speaker 5: you know, to your supplier base, I think it's still

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Speaker 5: got to be you know, a pretty strong relationship with them,

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Speaker 5: not a combative relationship where it's always about price, because

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Speaker 5: it really matters the quality you get to your line, right,

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Speaker 5: safety is dependent upon it. And so I think what

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Speaker 5: we're finding out as this sort of you know, whole

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Speaker 5: Boeing saga unravels, is outsourcing and banging up your suppliers

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Speaker 5: for price just isn't a winning strategy in aviation.

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Speaker 3: Have they course corrected enough or can?

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Speaker 1: Look?

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Speaker 5: I think they can. Everything can be fixed. I think

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Speaker 5: if you look at their competitors across the pond, Airbus,

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Speaker 5: they're not having these problems. I think Airbus has been

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Speaker 5: less combative with some of their suppliers. They're in the

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Speaker 5: middle of this correction. We know they want to buy

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Speaker 5: Spirit Aerosystems. We're still waiting to hear news on that.

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Speaker 5: There's still, you know, the challenge of getting some of

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Speaker 5: the other companies that Spirit supplies, to name the Airbus

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Speaker 5: probably out of the portfolio so they can recover. It's

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Speaker 5: gonna take some time and it's gonna take a lot

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Speaker 5: of work with their suppliers.

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Speaker 2: So, George, if I think about, you know, rethinking my

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Speaker 2: strategy with my suppliers and maybe focusing less on price

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Speaker 2: competitives maybe a little bit more on quality, does that

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Speaker 2: imply that Boeing's profit margins will be under pressure going forward?

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Speaker 5: I think for sure, right, I think you're you're not

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Speaker 5: going to receive a return to the Boeing margins you

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Speaker 5: saw at the end of last decade. I'm not gonna

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Speaker 5: say in time, perhaps they could get back to that.

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Speaker 5: It's going to take a bunch of work here near

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Speaker 5: term to improve the quality, and that's going to cost money.

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Speaker 5: Plus we already know that some of the business they

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Speaker 5: put in the books, right, they had some challenges delivering

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Speaker 5: into China. That was kind of the one two whammy

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Speaker 5: after they had the grounding of the Max and the crashes.

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Speaker 5: We know they probably sold a bunch of airplanes for

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Speaker 5: some pretty good prices to really core customers like United,

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Speaker 5: like Southwest. So I think that I think both, you know,

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Speaker 5: both on the cost side again, given this correction to

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Speaker 5: improve the supply base, improve production, get capacity rolling again,

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Speaker 5: as well as some of the pricing they gave away

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Speaker 5: on backfill for orders means you're not looking at a

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Speaker 5: Boeing that's going to get those margins fore you through

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Speaker 5: this decade.

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Speaker 3: I think if I look at Boeing stock, then I

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Speaker 3: mean it's down from December. Does that accurately reflect then

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Speaker 3: this tighter profit margin world to sort of revamp and

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Speaker 3: the course correct and that they have.

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Speaker 5: To do so, you know, I think when you look

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Speaker 5: at their valuations, you know, their historical valuations, One, they're

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Speaker 5: really high right now, right because earnings are so low,

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Speaker 5: you know. So I think that there is a little

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Speaker 5: bit of investor look through at this point, you know,

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Speaker 5: on the current problems they have. But whether or not

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Speaker 5: they're properly positioned for the out years right now, I

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Speaker 5: think it's all a function of if they can quickly

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Speaker 5: improve the build rate so they can improve economies of

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Speaker 5: scale and start to get more profitability back into this

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Speaker 5: business and that you know, really remains to be seen.

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Speaker 2: George, you mentioned China. Where is Boeing in terms of

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Speaker 2: getting the seven three seven macs in the air and

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Speaker 2: China kind of how's that business looking in terms of

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Speaker 2: sales and deliveries.

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Speaker 5: So their deliveries going into China, right and uh, it

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Speaker 5: looks to us to largely be deliveries that were you know, built,

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Speaker 5: you know, when the seven three seven was grounded, and

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Speaker 5: they're started to get some of those back into the country.

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Speaker 2: But China's also has this problem now with.

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Speaker 5: The flight recorder that's been authorized by other jurisdictions, including

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Speaker 5: the US. So I mean it feels to me like

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Speaker 5: China's allowing deliveries, but you know, they're still not maybe

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Speaker 5: keen on taking a lot of deliveries from Boeing. I

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Speaker 5: haven't seen a bunch of orders come in from China,

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Speaker 5: you know, for Boeing, And so I would say that

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Speaker 5: relationship still, while it's maybe thawing a bit, is nowhere

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Speaker 5: near where it was in the last decade. And they

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Speaker 5: have their problems too.

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Speaker 4: Right now.

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Speaker 5: I think they don't need as many airplanes, their economy

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Speaker 5: isn't growing as fast. Air travel isn't growing as fast.

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Speaker 5: But I still think that relationship is not in the

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Speaker 5: right place where it should be, where you'd like it

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Speaker 5: to be. I think for Boeing before I let.

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Speaker 3: You go, any word yet on the replacement for Dave Calhoun. Like,

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Speaker 3: how's that going?

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Speaker 4: He laughed?

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Speaker 3: Answer is laughing.

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Speaker 5: Yes, what I hear from news reports is picking up still.

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Speaker 5: But gee, I mean, I don't know, it's been a while.

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Speaker 5: There's a lot of conjecture. It's a hard job. There's

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Speaker 5: probably a lot of people that just aren't willing to

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Speaker 5: take it. I don't know, you know, they got to

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Speaker 5: the end of the year, and so maybe they're going

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Speaker 5: to use it all. I don't know.

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Speaker 3: I mean, and anyone but Larry Culp that you keep

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Speaker 3: hearing about, that's for real.

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Speaker 5: So I don't really track the people that's you know,

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Speaker 5: that's kind of hard for me. I do know, like

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Speaker 5: it said, it's got to be a rock star manufacturing,

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Speaker 5: you know, sort of CEO. I don't know that there's

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Speaker 5: a lot of them left in America. I think we

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Speaker 5: do a lot of outsourcing now, so maybe that makes

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Speaker 5: it a taller order too.

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Speaker 6: I don't know.

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Speaker 2: Our thanks to George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense

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Speaker 2: and Airlines analyst.

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Speaker 3: We move next to big tech and alphabet's Google. Google

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Speaker 3: has faced immense pressure to keep pacing artificial intelligence with

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Speaker 3: Open AI and other companies, and in April of twenty

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Speaker 3: twenty three, the tech giant announced it would combine its

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Speaker 3: two elite AI teams, Google Brain and deep Mind.

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Speaker 2: Google would form what it described as an AI super

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Speaker 2: unit called Google deep Mind. This is the subject of

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Speaker 2: a Bloomberg BusinessWeek story this week entitled Google deep Mind

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Speaker 2: shifts from research lab to AI product factory.

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Speaker 3: For more. We were joined this week by one of

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Speaker 3: the stories authors, Bloomberg Tech reporter Mark Bergan. We first

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Speaker 3: asked Mark about Google's AI strategy.

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Speaker 4: I think, you know, the good way to put their

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Speaker 4: their strategy in some ways is they're trying to longer

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Speaker 4: be in their back foot. But I think that with

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Speaker 4: the past two years and that our story looks at

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Speaker 4: how Google and deep Mind really set the infrastructure and

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Speaker 4: then the base layer for this sort of AI boom

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Speaker 4: that we've had, and then Chatgebt kind of took all

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Speaker 4: the glory in some ways, and so in their playing

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Speaker 4: ketchup in you'd say, not necessarily on the technical side,

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Speaker 4: but there's certainly now you know, chat, scheebt and all

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Speaker 4: iterations from the different companies building language models like anthropic

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Speaker 4: and cohere, they're all sort of threatening Google Search in

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Speaker 4: a way that really hasn't happened in almost two decades,

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Speaker 4: and so their strategy is I would say defensive at

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Speaker 4: this point.

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Speaker 3: How does does it get on the offense? What does

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Speaker 3: it need to do to sort of change that narrative?

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Speaker 4: Yeah, I think you know the story. We looked at

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Speaker 4: a lot about this mergers that they that Google put

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Speaker 4: in place a year ago so they've had out here

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Speaker 4: in London is Deep Mind, which is widely consider like

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Speaker 4: the world's leading AI lab and has for the past

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Speaker 4: decade effectively been the best funded university running in the world.

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Speaker 4: They basically been a research lab. They put out some

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Speaker 4: great breakthroughs like alpha go alpha fold around protein folding,

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Speaker 4: but they've not been deeply integrated and connected with kind

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Speaker 4: of Google's commercial and profit center, Google Brain, which was

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Speaker 4: the competing AI lab or that they also had in

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Speaker 4: California that was a little bit more tied to a

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Speaker 4: lot of the popular Google services, and they've been all

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Speaker 4: merged that for the past year under demosacibus here who

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Speaker 4: runs all of Google AI. It's had kind of a

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Speaker 4: bumby road so far, but I think their plan is

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Speaker 4: to continue to ship things like Gemini their big foundational model,

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Speaker 4: tweak that and start kind of integrating a lot of

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Speaker 4: this research directly into commercial services.

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Speaker 2: Mark what does Google say about that chat GPT and

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Speaker 2: just as a fundamental threat to the core Google search business?

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Speaker 2: How do they respond to that?

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Speaker 4: Yeah, I mean, you know, Google publicly is great about

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Speaker 4: never talking about their rivals by name. Anyways, they say nothing,

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Speaker 4: And I think that something they've talked about for a

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Speaker 4: long time is that sort of their their token phrase

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Speaker 4: that soon they're but cha uses is that the search

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Speaker 4: is the last kind of biggest moonshot for Google. I

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Speaker 4: think they are thinking, and you know, they're thinking a

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Speaker 4: lot about what that search interface looks like. You know,

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Speaker 4: how they're going to adapt to if consumers move to

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Speaker 4: things like Chat, schipt and Gemini. What does that mean

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Speaker 4: for Google Search ads business, which is still the line's

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Speaker 4: share of its revenue. They've had some some clear mishaps.

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Speaker 4: I've looked pretty ugly snaffoos, and since the launch of

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Speaker 4: Gemini or this year, right, like there was that kind

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Speaker 4: of famous incidents where they were some of the responses

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Speaker 4: were encouraging people to put glue on pizza, right, there

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Speaker 4: were these They've described this as sort of like this

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Speaker 4: is kind of early stage in this technology and some

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Speaker 4: stumbles that they've had, but you know, they are the

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Speaker 4: world's leaders in search and this is something where you

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Speaker 4: know they have a lot of deep responsibility to get

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Speaker 4: this right, not just for their business but for people's

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Speaker 4: trust in using Google.

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Speaker 3: Well that's what's so difficult, right, It's like all the

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Speaker 3: technology is changing so fast, but you still need to

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Speaker 3: like do it. So it's it's you're like we're watching

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Speaker 3: it in real time. Paul and I were just talking

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Speaker 3: about a Washington Post article and then talked about how

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Speaker 3: all the AI models cannot answer who won the presidential

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Speaker 3: election in the US in twenty twenty. And I'm just wondering,

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Speaker 3: like how these advanced technologies solve for problems that they're

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Speaker 3: using these large language models, which is basically like, you know,

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Speaker 3: me and Paul talking are regular people talking, does that

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Speaker 3: also mess them up?

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Speaker 4: It reminds me a little bit of it's a slightly

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Speaker 4: different technology obviously, but you know they're In twenty sixteen,

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Speaker 4: Google had this big mess where if there was a

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Speaker 4: popular or there's a blog or this kind of fringe

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Speaker 4: blog that said that if I remember this correctly, it's

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Speaker 4: been a long time, it was that Hiller Clinton won

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Speaker 4: the election in twenty sixteen, right, and that was a

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Speaker 4: top of for briefly and momentarily top of Google News results.

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Speaker 4: And they've dealt with this sort of problem around misinformation,

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Speaker 4: around totally not credible sources being at the top of

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Speaker 4: Google Search. You're seeing problems that are now dealing with.

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Speaker 4: I saw a story about Google images and like consensual porn.

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Speaker 4: I mean, these problems I think are being multiplied because

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Speaker 4: with these tools of that generative AI do, which Google

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Speaker 4: talks a lot of as being revolutionary, it also just

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Speaker 4: makes content production so much easier. And so there's this

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Speaker 4: multitude of content now and Google has been this sort

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Speaker 4: of their primary services to organize this, and that has

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Speaker 4: a lot of messy problems, especially what OpenAI has kind

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Speaker 4: of forced and Microsoft as forced Google is to move

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Speaker 4: a lot faster than they have been in years past,

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Speaker 4: and we've seen some clear stumbles from that.

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Speaker 2: Our thanks to Mark Bergan, Bloomberg Technology Reporter.

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Speaker 3: Coming up, We're going to break down my recent guidance

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Speaker 3: from the home old Leonard disappointed investors.

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Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in

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Speaker 2: depth and data on two thousand companies one hundred and

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Speaker 2: thirty industries. You can access Bloomberg Intelligence be a B I,

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Speaker 2: go on the terminal.

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Speaker 3: I'm Paul Sweeney and amlex Deal and this is Bloomberg.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apocarplay and and broud

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: We move next to the home builder Lenar. This week.

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Speaker 3: The company reported better than expected orders in the second quarter,

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Speaker 3: but it's forecast for deals in the current quarter missed

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Speaker 3: analyst expectations, and Lenar shares fell.

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Speaker 2: After the report, Lenar said that affordability continued to be

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Speaker 2: tested by interest rate movements and simultaneously challenged consumer sentiment.

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Speaker 2: For more on this and the latest in the home

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Speaker 2: building space, we were joined by Drew reading Bloomberg Intelligence

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Speaker 2: US Homebuilding analysts.

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Speaker 3: We first asked Drew for his key takeaways and why

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Speaker 3: investors were so unhappy after Lenar reported its results.

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Speaker 6: It's so much about what's happened with the volumes they

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Speaker 6: deliver good orders. They're up nineteen percent. They maintain their

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Speaker 6: full year guidance for eighty thousand home closings. It has

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Speaker 6: to do with their outlook for gross margin. They guided

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Speaker 6: to about one hundred basis points below what the street

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Speaker 6: was looking for, and as you mentioned, that would require

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Speaker 6: a ramp in the fourth quarter to about twenty five percent. So,

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Speaker 6: like you said, there's definitely some skepticism in their ability

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Speaker 6: to meet their full year outlook. The reason for that

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Speaker 6: is because we saw rates move up as high as

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Speaker 6: seven and a half percent during the quarter. You know,

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Speaker 6: they've come back in a little bit, but we're seeing

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Speaker 6: their need to incentivize buyers remain elevated, and that's what's

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Speaker 6: impacting profitability.

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Speaker 2: So where are we in that activity there? If I'm

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Speaker 2: looking at of seven percent mortgage, what are they going to.

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Speaker 1: Do for me?

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Speaker 6: Yeah, So typically what we're seeing is that the builders

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Speaker 6: will maintain a spread versus the headline rate. So if

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Speaker 6: you're seeing seven and a half percent in the market.

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Speaker 6: Typically you're going to get six percent from a builder.

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Speaker 6: You know, there are some other builders, and depending on

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Speaker 6: the market, depending on how strong the market is, what

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Speaker 6: the man looks like, they could get you into the fives.

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Speaker 6: But obviously that's going to cost them on the gross

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Speaker 6: margin line. So the incentives they're using are certainly working.

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Speaker 6: It's just what's the cost so.

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Speaker 3: That one percent the hundred basis point missed, but then

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Speaker 3: keeping their guidance for gross margin for the year, that

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Speaker 3: must imply that they're looking for rake cuts.

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Speaker 6: Yeah, I think a lot of it has to do

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Speaker 6: with what they're doing on the cost side. One of

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Speaker 6: you know, Lenar's emphasis for their business over the last

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Speaker 6: several years has really been running a more efficient manufacturing

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Speaker 6: based business where they're not necessarily just chasing volume, but

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Speaker 6: they're doing it the right way. They're fine tuning their

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Speaker 6: floor plans, they're pushing back on their suppliers. You have

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Speaker 6: to remember they're one of the second largest builder in

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Speaker 6: the country, but they're one of the only builders who

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Speaker 6: has scale at the national level, so they're able to

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Speaker 6: leverage that and kind of push back a little bit.

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Speaker 6: So certainly some of the benefit that they expect in

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Speaker 6: foro Q, I would assume is going to come from

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Speaker 6: what they're doing on the costs side, as well as

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Speaker 6: fixed leverage from higher deliveries. But nonetheless that's still going

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Speaker 6: to be the focal point for investors is how do

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Speaker 6: they get there?

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Speaker 4: How much?

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Speaker 2: I mean, I remember this back in the beginning of

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Speaker 2: the pandemic, lumber went crazy, Where are we in lumber?

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Speaker 2: And how is that a part of their gross margin?

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Speaker 6: Sure so numbers about ten percent of the cogs for

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Speaker 6: a builders, so it's certainly the most important input costs.

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Speaker 6: As you would expect, you know, lumber prices have come

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Speaker 6: back down a lot, so builders have been benefiting on

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Speaker 6: the margin side. I think we've seen more stabilization of late,

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Speaker 6: perhaps a little rise to the upside, but really lumbers

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Speaker 6: not impacting the business in as significant a way as

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Speaker 6: it was over the last couple of years.

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Speaker 2: What the companies tell you about their expectations for interest rates,

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Speaker 2: mortgage rates, what are they think is going to happen?

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Speaker 6: So I think the expectation broadly is that mortgage rates

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Speaker 6: will start to come in a little bit as we

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Speaker 6: get through the end of the year. I don't think

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Speaker 6: they're managing their business for any you know, significant and

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Speaker 6: dropping rates back to you know, where we were previously.

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Speaker 6: But I think as a builder from a demand perspective,

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Speaker 6: if we get rates coming back to the six and

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Speaker 6: a half percent range, you know, that's that's pretty much

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Speaker 6: a sweet spot for them. You know, we've heard that

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Speaker 6: as you get to five and a half percent, that's

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Speaker 6: really when demand in the market starts to move. So

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Speaker 6: the fact that if we could get to six and

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Speaker 6: a half they're buying down rates one hundred basis points,

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Speaker 6: I think they'll continue to do well. And you know

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Speaker 6: what's interesting is the public builders are kind of at

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Speaker 6: the top of the food chain as it comes to housing.

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Speaker 6: You have to realize they're generating about fifty percent market

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Speaker 6: share compared to call it thirty eight percent prior to

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Speaker 6: the pandemic. Really, so they've really leveraged that lack of

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Speaker 6: inventory in the resale market and the struggles among some

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Speaker 6: of the smaller private piers, and they've capitalized on it.

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Speaker 3: So when you say we have to the five and

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Speaker 3: a half percent is kind of a nice sweet spot.

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Speaker 3: So that implies the Fed funds rate a six and

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Speaker 3: a half percent and the home builders still give that

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Speaker 3: hundred basis point discount. When the Fed funds rate gets

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Speaker 3: to five and a half percent, do the builders still

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Speaker 3: offer that one hundred basis point discount.

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Speaker 6: I think it's going to depend on what the broader

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Speaker 6: macro economic situation looks like. If we get a pool

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Speaker 6: back in rates, you know, a modest pullback, and we

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Speaker 6: are still dealing with a pretty solid labor market, I

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Speaker 6: think that you know, builders will be able to definitely

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Speaker 6: pull back on their use of incentives. I don't know

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Speaker 6: that they'll go away altogether, because at this point that's

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Speaker 6: something that buyers are looking to and it certainly made

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Speaker 6: their product more attractive. If we get a significant pullback

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Speaker 6: in rates and it's because you know, the economic situation

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Speaker 6: has deteriorated further, that's obviously more of a concern and

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Speaker 6: we would see them probably pushing centives even harder.

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Speaker 2: Our thanks to Drew Redding Bloomberg Intelligence at US home

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Speaker 2: building analyst.

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Speaker 3: Moving to Japan, we hear the country is now dealing

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Speaker 3: with rising cases of a disease caused by a rare

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Speaker 3: flesh eating bacteria that can kill people within forty eight hours.

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Speaker 2: Health authorities have reported over one thousand cases of strip

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Speaker 2: to cockle toxic shock syndrome in the first six months

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Speaker 2: of twenty twenty four. At the current rate of infection,

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Speaker 2: experts fear the number of cases in Japan could reach

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Speaker 2: twenty five hundred this year.

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Speaker 3: For more on all this, we turned to one of

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Speaker 3: the experts, Amshidalgia, Senior Scholar at the Center for Health

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Speaker 3: Security at John Hopkins Bloomberg School of Public Health. He's

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Speaker 3: also an infectious disease physician.

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Speaker 2: We first asked Amash to tell us more about the

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Speaker 2: bacterial infection in Japan.

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Speaker 7: Streptococcus is a bacteria that all of us have dealt with.

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Speaker 7: It's the same bacteria that causes strep throat. What can

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Speaker 7: happen though in certain individuals is it can be a

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Speaker 7: much more severe infection where it can cause what we

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Speaker 7: call necrotizing or flesh eating type of skin infections and

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Speaker 7: then also spread systemically and caused multiple different organ systems

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Speaker 7: to shut down. So that's when we use the kind

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Speaker 7: of term toxic shocks, and there would say that bacteria

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Speaker 7: basically disseminates toxins throughout your whole body and it's a

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Speaker 7: very serious illness with high levels of morbidity, immortality.

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Speaker 3: Doctor, is this new or has this always been the case.

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Speaker 7: It's always been the case. What's new is that in

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Speaker 7: Japan post pandemic, they've reported at least two years where

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Speaker 7: they've had higher than normal cases and trying to unravel

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Speaker 7: the mystery of why that change in epidemiology occurred is

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Speaker 7: what's getting headlines right now. But streptococcle toxic shock syndrome

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Speaker 7: has been around forever. It's just this increase in Japan

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Speaker 7: that people are interested in.

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Speaker 2: How do the medical professionals, how are they treating this?

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Speaker 7: So the mainstay is going to be antibiotics, but because

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Speaker 7: it's this systemic toxin disease, we often give other drugs

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Speaker 7: to modulate the immune system, and if there are elements

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Speaker 7: of flesh eating disease going on, they basically have to

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Speaker 7: do extensive surgery to kind of cut ahead of the infection.

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Speaker 3: Oh my god, this sounds terrible. How quickly does this happen?

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Speaker 3: I mean, you know, strap can come on really quickly

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Speaker 3: and it might take you a couple of days to

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Speaker 3: realize that you have it. Like, what's the cycle for this?

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Speaker 7: Well, when you get into that toxic shock syndrome, spiral

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Speaker 7: it's very fast. They can be dramatic, you know, even

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Speaker 7: in an hour can be a major difference in a patient.

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Speaker 7: But it's important remember that not everybody that gets a

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Speaker 7: strep infection is going to get it's still rare. Most

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Speaker 7: people who have a strep infection of their throat or

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Speaker 7: of their skin going to turn out to be kind

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Speaker 7: of a garden variety infection. But it is important for

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Speaker 7: clinicians to keep in mind that if people are getting worse,

439
00:21:07,800 --> 00:21:11,200
Speaker 7: if they're not getting better, if they're more concerning systemic

440
00:21:11,320 --> 00:21:14,000
Speaker 7: symptoms occurring, that they think about this. And it's also

441
00:21:14,000 --> 00:21:15,879
Speaker 7: important for patients to know that as well, that if

442
00:21:15,880 --> 00:21:17,800
Speaker 7: they're not getting better in the expected time, or they're

443
00:21:17,800 --> 00:21:21,160
Speaker 7: taking a turn for the worst when they're already on antibiotics,

444
00:21:21,200 --> 00:21:23,400
Speaker 7: that this is something where they need to seek care immediately.

445
00:21:23,720 --> 00:21:26,480
Speaker 2: Is there any reason why it would be I guess

446
00:21:26,600 --> 00:21:30,919
Speaker 2: localized in Japan here, anything that is unique to that part.

447
00:21:30,800 --> 00:21:33,320
Speaker 7: Of the world, not particularly, I mean, we've seen increases

448
00:21:33,320 --> 00:21:37,320
Speaker 7: in streptococal infections, not necessarily toxic shock causing ones all

449
00:21:37,359 --> 00:21:39,760
Speaker 7: over the different countries. For example, the UK had a

450
00:21:39,840 --> 00:21:42,399
Speaker 7: major issue with this a couple of years ago, and

451
00:21:42,520 --> 00:21:45,040
Speaker 7: it may be having to do with kind of idiosyncrasies

452
00:21:45,080 --> 00:21:47,720
Speaker 7: in the immunity in the population in Japan. Remember, we

453
00:21:47,800 --> 00:21:49,560
Speaker 7: all came through a pandemic where there was a lot

454
00:21:49,600 --> 00:21:52,800
Speaker 7: of social distancing and many of the ordinary infections that

455
00:21:52,840 --> 00:21:57,120
Speaker 7: people get every year were kind of disrupted. And there

456
00:21:57,160 --> 00:21:59,080
Speaker 7: may have been different disruptions in different parts of the

457
00:21:59,119 --> 00:22:03,120
Speaker 7: world and different lens of these infections, and now they're

458
00:22:03,200 --> 00:22:07,040
Speaker 7: kind of coming back to their prior levels and there's

459
00:22:07,080 --> 00:22:09,479
Speaker 7: some catching up to do. There are people who might

460
00:22:09,520 --> 00:22:11,439
Speaker 7: not have had as much immunity because they weren't exposed

461
00:22:11,480 --> 00:22:13,480
Speaker 7: at a low level over the last couple of years,

462
00:22:13,920 --> 00:22:15,520
Speaker 7: or they just might not have been infected. And there's

463
00:22:16,200 --> 00:22:18,040
Speaker 7: a certain number that are going to be expected every

464
00:22:18,119 --> 00:22:21,160
Speaker 7: year in Japan, and because you had a two year lull,

465
00:22:22,080 --> 00:22:25,280
Speaker 7: now it's coming back to baseline levels and that's what

466
00:22:25,320 --> 00:22:27,119
Speaker 7: they're noticing. So this is kind of one of the

467
00:22:27,200 --> 00:22:29,360
Speaker 7: leading hypothesis. But we don't know quite everything for sure

468
00:22:29,400 --> 00:22:31,440
Speaker 7: what's going on in Japan, but that's what I think

469
00:22:31,560 --> 00:22:32,000
Speaker 7: is at play.

470
00:22:32,359 --> 00:22:34,399
Speaker 3: What are the signs you mentioned that if you're on

471
00:22:34,440 --> 00:22:36,480
Speaker 3: antibiotics for strap and you don't get better, but you

472
00:22:36,600 --> 00:22:38,600
Speaker 3: get worse. What are some other signs that people should

473
00:22:38,640 --> 00:22:39,199
Speaker 3: be looking out for.

474
00:22:40,080 --> 00:22:43,800
Speaker 7: Well, so severe a spreading rash that's getting severe, severe pain,

475
00:22:43,840 --> 00:22:45,879
Speaker 7: if there's a rash where the infection might have been,

476
00:22:46,320 --> 00:22:51,960
Speaker 7: anything involving low blood pressure, extreme fatigue, not being clear mentally,

477
00:22:52,600 --> 00:22:55,560
Speaker 7: difficulty breathing, all of those kind of signs that the

478
00:22:55,680 --> 00:22:57,119
Speaker 7: infection is not localized.

479
00:22:58,000 --> 00:23:00,320
Speaker 2: Nic doctor. I remember we should talk to you all

480
00:23:00,359 --> 00:23:02,520
Speaker 2: the time during the pandemic. You're very kind to share

481
00:23:02,560 --> 00:23:04,760
Speaker 2: your time and you know, kind of educate a lot

482
00:23:04,800 --> 00:23:09,080
Speaker 2: of folks on what this virus was, how doctors and

483
00:23:09,119 --> 00:23:12,280
Speaker 2: health professionals were treating it, and then ultimately the vaccine

484
00:23:12,280 --> 00:23:14,920
Speaker 2: and the efficacy of the vaccine. So we again appreciate

485
00:23:15,480 --> 00:23:17,560
Speaker 2: all that time you gave us. Now that we've got

486
00:23:17,800 --> 00:23:20,040
Speaker 2: that in the rear view mirror here, I know one

487
00:23:20,119 --> 00:23:22,080
Speaker 2: of the themes that came out of that was just

488
00:23:22,200 --> 00:23:25,920
Speaker 2: the stress on the healthcare system and the people of

489
00:23:26,040 --> 00:23:28,720
Speaker 2: the healthcare system that doctors and nurses and everybody of

490
00:23:28,760 --> 00:23:31,680
Speaker 2: the work they had to be in the front lines

491
00:23:31,840 --> 00:23:35,840
Speaker 2: during those early months and that year. How are the folks,

492
00:23:35,880 --> 00:23:37,600
Speaker 2: the good folks at Johns Hopkins that you deal with

493
00:23:37,680 --> 00:23:42,800
Speaker 2: in the facilities, how are they doing? Several years on now, well,

494
00:23:42,840 --> 00:23:43,240
Speaker 2: I think.

495
00:23:43,200 --> 00:23:45,520
Speaker 7: That most healthcare systems around the country have kind of

496
00:23:45,560 --> 00:23:49,520
Speaker 7: come to a new normal where there's kind of chronic burnout,

497
00:23:49,720 --> 00:23:54,120
Speaker 7: there are chronic staffing issues where people quite haven't recovered

498
00:23:54,160 --> 00:23:59,520
Speaker 7: from the way that the pandemic altered hospital operations. And

499
00:23:59,720 --> 00:24:01,160
Speaker 7: this is going to be one of the long tails

500
00:24:01,160 --> 00:24:03,800
Speaker 7: of the pandemic. It's not something that you can just

501
00:24:03,880 --> 00:24:06,200
Speaker 7: bounce back from. There wasn't a lot of resiliency built

502
00:24:06,240 --> 00:24:08,320
Speaker 7: into the system, There wasn't a lot of kind of

503
00:24:08,400 --> 00:24:11,720
Speaker 7: slack in it, and the pandemic ate up all that slack,

504
00:24:11,880 --> 00:24:14,400
Speaker 7: and I just think that we're in a situation where

505
00:24:15,600 --> 00:24:18,399
Speaker 7: a lot of people still are carrying those scars around

506
00:24:19,119 --> 00:24:21,199
Speaker 7: of that time when they were overworked, where there were

507
00:24:21,400 --> 00:24:25,960
Speaker 7: concerns about personal protective equipment, where hospitals were crashing, and

508
00:24:26,040 --> 00:24:28,640
Speaker 7: even when you look at the economics of hospitals, we're

509
00:24:28,680 --> 00:24:32,880
Speaker 7: seeing hospitals closed world hospitals really looking at their financial viability,

510
00:24:33,080 --> 00:24:35,960
Speaker 7: hospital bankruptcies. So this was something that took a major

511
00:24:36,000 --> 00:24:38,399
Speaker 7: toll on the healthcare system, just like we expected and

512
00:24:38,480 --> 00:24:41,000
Speaker 7: predicted it would, And this is why it's so important

513
00:24:41,280 --> 00:24:45,760
Speaker 7: to incorporate healthcare preparedness healthcare resiliency into planning for the

514
00:24:45,840 --> 00:24:48,920
Speaker 7: next infectious disease emergency, whatever it might be. This can't

515
00:24:49,080 --> 00:24:51,800
Speaker 7: just be something that we think about when there's a crisis,

516
00:24:51,800 --> 00:24:53,920
Speaker 7: when it's in the headlines. This is something that needs

517
00:24:53,960 --> 00:24:56,440
Speaker 7: to be done kind of with a long term eye

518
00:24:56,480 --> 00:25:01,679
Speaker 7: to the future to make a sustainable way to operate

519
00:25:01,720 --> 00:25:04,080
Speaker 7: hospitals and make emergency prepared and as part of their

520
00:25:04,119 --> 00:25:04,600
Speaker 7: core function.

521
00:25:04,880 --> 00:25:07,760
Speaker 3: How are we doing with COVID? I mean, COVID loves me.

522
00:25:08,200 --> 00:25:11,159
Speaker 3: It doesn't love Paul, but it loves me. How are

523
00:25:11,240 --> 00:25:14,000
Speaker 3: we doing with COVID? What are the cases like? Are

524
00:25:14,040 --> 00:25:16,000
Speaker 3: we going to get vaccinations in the fall for flu

525
00:25:16,200 --> 00:25:17,320
Speaker 3: en covid? What do you think?

526
00:25:18,000 --> 00:25:20,800
Speaker 7: Well, COVID is something that's increased over time in the

527
00:25:20,880 --> 00:25:23,320
Speaker 7: last several weeks or so. But we've seen is this

528
00:25:23,520 --> 00:25:27,360
Speaker 7: virus is endemic, but it continues to mutate and spin

529
00:25:27,440 --> 00:25:29,840
Speaker 7: off new variants that are able to infect us. So

530
00:25:30,000 --> 00:25:32,679
Speaker 7: right now, all across the country, COVID cases are up,

531
00:25:32,920 --> 00:25:35,800
Speaker 7: emergency department visits are up, but its ability to cause

532
00:25:35,840 --> 00:25:39,160
Speaker 7: severe disease, its ability to crush the hospital severely constrained

533
00:25:39,200 --> 00:25:41,359
Speaker 7: because of the immunity and the other tools that we have.

534
00:25:41,840 --> 00:25:44,159
Speaker 7: We will have new vaccines in the fall that are

535
00:25:44,200 --> 00:25:47,600
Speaker 7: better targeted to what's circulating, and that will likely be

536
00:25:47,800 --> 00:25:50,320
Speaker 7: something that's recommended to high risk individuals that they get

537
00:25:50,440 --> 00:25:52,120
Speaker 7: right alongside their flu vaccine.

538
00:25:52,400 --> 00:25:55,080
Speaker 2: Thanks to Ama Schadalgia, senior scholar at the Center for

539
00:25:55,400 --> 00:25:58,480
Speaker 2: Health Security at Johns Hopkins's Bloomberg School of Public Health.

540
00:25:58,680 --> 00:26:02,320
Speaker 3: Coming up on the program versation with Weatherford International CEO

541
00:26:02,440 --> 00:26:04,600
Speaker 3: about the company's turnaround post bankruptcy.

542
00:26:05,040 --> 00:26:08,040
Speaker 2: We're listening to Bloomberg Intelligence on Bloomberg Radio, providing in

543
00:26:08,359 --> 00:26:10,680
Speaker 2: research and data on two thousand companies in one hundred

544
00:26:10,680 --> 00:26:13,719
Speaker 2: and thirty industries. You can access Bloomberg Intelligence via Bigo

545
00:26:13,800 --> 00:26:15,680
Speaker 2: on the terminal, I'll Paul Sweeney.

546
00:26:15,359 --> 00:26:17,400
Speaker 3: And Amlex Steel and this is Bloomberg.

547
00:26:22,280 --> 00:26:26,160
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

548
00:26:26,280 --> 00:26:29,800
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

549
00:26:29,840 --> 00:26:32,560
Speaker 1: Auto with the Bloomberg Business app. You can also listen

550
00:26:32,720 --> 00:26:35,800
Speaker 1: live on Amazon Alexa from our flagship New York station.

551
00:26:36,160 --> 00:26:38,920
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

552
00:26:40,320 --> 00:26:42,760
Speaker 3: We take a look now at the company Weatherford International

553
00:26:42,880 --> 00:26:47,320
Speaker 3: ticker WFRD. Weatherford is an oil services company that also

554
00:26:47,560 --> 00:26:49,200
Speaker 3: has a leg into the energy transition.

555
00:26:49,640 --> 00:26:52,000
Speaker 2: What makes them interesting is that the company went bankrupt

556
00:26:52,080 --> 00:26:55,320
Speaker 2: in twenty nineteen, and in twenty twenty, Weatherford announced several

557
00:26:55,440 --> 00:26:58,280
Speaker 2: changes to its executive leadership team, and its stock has

558
00:26:58,320 --> 00:26:59,040
Speaker 2: since rebounded.

559
00:26:59,200 --> 00:27:02,040
Speaker 3: Weather Firs stock part increase ninety two percent in the

560
00:27:02,080 --> 00:27:04,800
Speaker 3: full year of twenty twenty three, outpacing its peers. So

561
00:27:04,880 --> 00:27:06,520
Speaker 3: for more on the company, we were joined by its

562
00:27:06,560 --> 00:27:08,840
Speaker 3: president and CEO, Garesh Salgram.

563
00:27:09,200 --> 00:27:12,240
Speaker 2: We first asked Garesh where the company is in its turnaround.

564
00:27:12,560 --> 00:27:14,960
Speaker 8: Look, it's been a terrific four years. The team's done

565
00:27:14,960 --> 00:27:17,600
Speaker 8: an incredible job. I think very few people could have

566
00:27:17,720 --> 00:27:21,600
Speaker 8: dreamt where it would be today and what was possible.

567
00:27:21,960 --> 00:27:23,480
Speaker 8: You Know, the way I think about it is, the

568
00:27:23,560 --> 00:27:26,560
Speaker 8: turnaround's mostly done. You know, we've gotten the company out

569
00:27:26,560 --> 00:27:28,840
Speaker 8: of the ditch. We have stabilized everything, We've fixed the

570
00:27:29,080 --> 00:27:32,320
Speaker 8: balance sheet. So the journey so far has been from

571
00:27:32,400 --> 00:27:35,200
Speaker 8: broken to good. The next phase of the journey is

572
00:27:35,240 --> 00:27:37,040
Speaker 8: really the good to great journey. And that's what I'm

573
00:27:37,040 --> 00:27:39,639
Speaker 8: actually very excited about, because if we've been able to

574
00:27:39,720 --> 00:27:41,399
Speaker 8: do all of the things that we've done over the

575
00:27:41,440 --> 00:27:43,719
Speaker 8: past four years with a lot of constraints, a lot

576
00:27:43,760 --> 00:27:46,960
Speaker 8: of shackles. You know, the exciting part is what we

577
00:27:47,080 --> 00:27:47,840
Speaker 8: can do without that.

578
00:27:48,320 --> 00:27:50,960
Speaker 3: So when you go from good to great, does that

579
00:27:51,080 --> 00:27:53,720
Speaker 3: mean like a lot of buybacks and dividends?

580
00:27:53,840 --> 00:27:54,680
Speaker 4: Does that mean? Yeah?

581
00:27:54,680 --> 00:27:55,040
Speaker 9: What is that?

582
00:27:55,680 --> 00:27:58,240
Speaker 8: Look, it's a lot of different things, but ultimately it

583
00:27:58,400 --> 00:28:00,840
Speaker 8: is creation of value, and it's creation of value for

584
00:28:00,920 --> 00:28:03,879
Speaker 8: our customers, for our employees, and most of all for

585
00:28:04,000 --> 00:28:07,000
Speaker 8: our shareholders. But it's doing that with continued focus on

586
00:28:07,280 --> 00:28:11,080
Speaker 8: greater cash generation, which comes from better margins, better improvement

587
00:28:11,280 --> 00:28:14,560
Speaker 8: in the way we manage our networking capital, but also

588
00:28:14,720 --> 00:28:18,240
Speaker 8: ultimately better investments. So our real goal is to make

589
00:28:18,280 --> 00:28:20,280
Speaker 8: sure that we've got world classes that are done on

590
00:28:20,400 --> 00:28:21,240
Speaker 8: invested capital.

591
00:28:21,600 --> 00:28:24,639
Speaker 2: Now that you've I see as an outsider to the

592
00:28:24,760 --> 00:28:26,600
Speaker 2: energy industry, I see a lot of m and a

593
00:28:26,720 --> 00:28:29,040
Speaker 2: activity there, and being a former banker myself, that's what

594
00:28:29,200 --> 00:28:31,480
Speaker 2: hits my radar screen. How do you guys think about

595
00:28:31,560 --> 00:28:34,480
Speaker 2: MNA for your business now that you are on maybe

596
00:28:34,560 --> 00:28:35,800
Speaker 2: firmer footing correct?

597
00:28:35,840 --> 00:28:38,040
Speaker 8: You know, for the first three years, MNA was a

598
00:28:38,080 --> 00:28:40,080
Speaker 8: bad word. You know, Weatherford actually built up on a

599
00:28:40,160 --> 00:28:42,560
Speaker 8: series of acquisitions and a lot of issues with that,

600
00:28:42,760 --> 00:28:45,360
Speaker 8: especially around the lack of integration. So the first three

601
00:28:45,440 --> 00:28:47,480
Speaker 8: years that I've been in the role, we really focused

602
00:28:47,560 --> 00:28:50,840
Speaker 8: on the organic capabilities of the company, building out the portfolio,

603
00:28:51,280 --> 00:28:53,760
Speaker 8: making sure we fix the operating intensity and the rigor

604
00:28:53,800 --> 00:28:55,880
Speaker 8: around the company. But we have now gotten to a

605
00:28:55,920 --> 00:28:59,320
Speaker 8: point where MNA has become a very important salient topic.

606
00:28:59,600 --> 00:29:02,280
Speaker 8: We actually just exercise that muscle for the first time.

607
00:29:02,360 --> 00:29:07,000
Speaker 8: We announced three small acquisitions back in February, so two

608
00:29:07,080 --> 00:29:10,680
Speaker 8: in the wireline technology space, one in a very exciting space,

609
00:29:10,720 --> 00:29:13,640
Speaker 8: and Intervention, which really gives us capability in slaught recovery

610
00:29:13,960 --> 00:29:16,520
Speaker 8: and plug an abandonment, which is a very key part

611
00:29:16,920 --> 00:29:19,320
Speaker 8: of that energy transition. So we've started to do that,

612
00:29:19,680 --> 00:29:21,360
Speaker 8: and I think there will be more to come because

613
00:29:21,400 --> 00:29:23,320
Speaker 8: we've now got a balance sheet that allows us to

614
00:29:23,440 --> 00:29:26,240
Speaker 8: do that, and more importantly, a team that understands the

615
00:29:26,320 --> 00:29:28,720
Speaker 8: importance of integration and is learning how to build that

616
00:29:28,840 --> 00:29:30,520
Speaker 8: into the opening cadence of the company.

617
00:29:30,720 --> 00:29:33,800
Speaker 3: How do your services differ than say one of your competitors,

618
00:29:33,960 --> 00:29:35,760
Speaker 3: and how do you sort of invest for the life

619
00:29:35,840 --> 00:29:37,720
Speaker 3: cycle of a welfare customer.

620
00:29:37,960 --> 00:29:41,120
Speaker 8: Sure so in oilfield services, there's a lot of companies

621
00:29:41,200 --> 00:29:43,640
Speaker 8: that do a lot of things similarly. So we've got

622
00:29:44,360 --> 00:29:47,720
Speaker 8: what differentiates us. We've got a portfolio that provides core

623
00:29:47,880 --> 00:29:52,280
Speaker 8: ofs services, so everything from brilling services to wireline, etc.

624
00:29:52,840 --> 00:29:55,120
Speaker 8: But we're also able to complement that with what we

625
00:29:55,240 --> 00:29:59,680
Speaker 8: call specialty services, things like managed pressure drilling, tubular running services,

626
00:30:00,000 --> 00:30:03,600
Speaker 8: intervention services, etc. That very few, if anyone, has, So

627
00:30:03,760 --> 00:30:07,400
Speaker 8: that combination of broad based services that allow us to

628
00:30:07,440 --> 00:30:09,240
Speaker 8: go toe to toe with the larger peers in the

629
00:30:09,320 --> 00:30:12,520
Speaker 8: sector as well as then these specialty products and specialty

630
00:30:12,600 --> 00:30:15,640
Speaker 8: services give us that differentiation and also allow us to

631
00:30:15,680 --> 00:30:16,560
Speaker 8: have higher margins.

632
00:30:16,880 --> 00:30:18,960
Speaker 2: You know, I keep jogging to alex with oil at

633
00:30:19,000 --> 00:30:20,960
Speaker 2: eighty dollars a barrel. I'm going to drive down to

634
00:30:21,000 --> 00:30:23,720
Speaker 2: Texas and start drilling some holes. I mean, isn't the

635
00:30:23,840 --> 00:30:26,640
Speaker 2: cost like forty bucks in eighty dollars? I can make

636
00:30:26,680 --> 00:30:28,280
Speaker 2: some money there, but I don't see a whole lot

637
00:30:28,280 --> 00:30:30,160
Speaker 2: of drilling activity. What's going to take it for the

638
00:30:30,240 --> 00:30:32,680
Speaker 2: industry to take advantage of these prices here?

639
00:30:32,760 --> 00:30:36,680
Speaker 8: Look, I think the industry has really really embraced this

640
00:30:36,880 --> 00:30:40,200
Speaker 8: concept of delivering returns for shareholders, and so I think

641
00:30:40,240 --> 00:30:43,480
Speaker 8: there's a lot of discipline, especially around managing capital within

642
00:30:43,560 --> 00:30:46,560
Speaker 8: the industry that's further exacerbated by the wave of M

643
00:30:46,600 --> 00:30:48,760
Speaker 8: and A that's happening, which again goes back to driving

644
00:30:48,840 --> 00:30:51,640
Speaker 8: higher returns. So I don't think in the US there's

645
00:30:51,640 --> 00:30:54,480
Speaker 8: going to be necessarily a sea change. You know, at

646
00:30:54,880 --> 00:30:56,880
Speaker 8: the range of oil prices that we are seeing right now,

647
00:30:56,920 --> 00:30:59,240
Speaker 8: which I think in the long term is actually good

648
00:30:59,360 --> 00:31:03,560
Speaker 8: for our especially it creates a balance versus the seesaw

649
00:31:03,600 --> 00:31:05,920
Speaker 8: effect that you see in the cyclicality that we've seen

650
00:31:05,960 --> 00:31:09,200
Speaker 8: in the past. We also have a very robust international market.

651
00:31:09,280 --> 00:31:12,000
Speaker 8: So for Weatherford, less than twenty percent of our revenues

652
00:31:12,040 --> 00:31:14,440
Speaker 8: come from North America. The bulk of it is really

653
00:31:14,480 --> 00:31:18,560
Speaker 8: an international orientation, international leverage, so we see a very

654
00:31:18,600 --> 00:31:20,920
Speaker 8: healthy market. Now the US is still the largest market

655
00:31:20,960 --> 00:31:23,200
Speaker 8: in the world. We see a lot of activity, but

656
00:31:23,480 --> 00:31:26,120
Speaker 8: it is something that is driven by capital discipline by

657
00:31:26,160 --> 00:31:27,480
Speaker 8: our customers, which is a good thing.

658
00:31:27,480 --> 00:31:29,320
Speaker 3: And we have M and A too. Does that eventually

659
00:31:29,440 --> 00:31:32,800
Speaker 3: lead into less business for oral services companies because in theory,

660
00:31:32,960 --> 00:31:35,320
Speaker 3: maybe an Exxon pioneer going to drill ten wells rather

661
00:31:35,360 --> 00:31:35,760
Speaker 3: than twenty.

662
00:31:36,080 --> 00:31:37,720
Speaker 8: Yeah, I think, Look, we are seeing a lot of

663
00:31:37,840 --> 00:31:40,840
Speaker 8: drilling efficiencies, we are seeing the recount go down, But

664
00:31:40,960 --> 00:31:43,160
Speaker 8: I think it all comes down to differentiation. As long

665
00:31:43,200 --> 00:31:46,760
Speaker 8: as companies can differentiate and deliver value to allow our

666
00:31:46,880 --> 00:31:50,600
Speaker 8: customers to make greater headway on their efficiencies to generate

667
00:31:50,680 --> 00:31:52,720
Speaker 8: higher returns. I think they'll always be business again. It

668
00:31:52,800 --> 00:31:54,080
Speaker 8: is the largest market still.

669
00:31:54,560 --> 00:31:56,280
Speaker 2: I mean I'm looking at your income savent, I mean

670
00:31:56,560 --> 00:32:00,280
Speaker 2: roughly half your revenue Eastern Hemisphere, half Western HEMISAE fear

671
00:32:00,520 --> 00:32:02,920
Speaker 2: it gives the economics of both of those, your domestic

672
00:32:03,000 --> 00:32:04,600
Speaker 2: markets versus your international.

673
00:32:04,240 --> 00:32:07,520
Speaker 8: Yeah, you know, Historically North America was a very profitably

674
00:32:07,720 --> 00:32:11,680
Speaker 8: challenged market for us on a profitability basis. Yeah, right,

675
00:32:12,200 --> 00:32:14,720
Speaker 8: So our team's done a fabulous job over the past

676
00:32:15,160 --> 00:32:18,360
Speaker 8: few years really changing the way we run the North

677
00:32:18,360 --> 00:32:22,040
Speaker 8: America business. So today the profitability across all of our geographies,

678
00:32:22,080 --> 00:32:25,200
Speaker 8: all of our regions is pretty much imbalance. So and

679
00:32:25,280 --> 00:32:27,280
Speaker 8: I think, you know, I've always said the litmus test

680
00:32:27,320 --> 00:32:29,280
Speaker 8: of our turnaround has been what's happened in the North

681
00:32:29,320 --> 00:32:33,040
Speaker 8: America market over the past year. We've seen revenues decline

682
00:32:33,080 --> 00:32:35,600
Speaker 8: in North America, but the profitability has actually gone up.

683
00:32:35,960 --> 00:32:39,040
Speaker 8: So that's a real testament to what we've been able

684
00:32:39,080 --> 00:32:41,760
Speaker 8: to do at Weatherford and the opening rigor the opening

685
00:32:41,840 --> 00:32:43,840
Speaker 8: intensity that the team has put in.

686
00:32:44,160 --> 00:32:48,120
Speaker 2: Our thanks to Gresh Saligram, President and CEO at Weatherford International.

687
00:32:48,480 --> 00:32:51,160
Speaker 3: We have something here at Bloomberg called Bloomberg New Energy Finance.

688
00:32:51,240 --> 00:32:55,560
Speaker 3: The idea behind it is to provide data on commodities, power, transport, industries,

689
00:32:55,560 --> 00:32:57,840
Speaker 3: buildings and agriculture plus new technology.

690
00:32:58,200 --> 00:33:01,120
Speaker 2: This week we look at BNF's globe long term forecast

691
00:33:01,200 --> 00:33:03,680
Speaker 2: for electric vehicles for more. We were joined by Corey

692
00:33:03,800 --> 00:33:07,440
Speaker 2: Cantor Bloomberg bn EF lead US electric vehicle analysts.

693
00:33:07,520 --> 00:33:10,360
Speaker 3: We first asked Corey for his key takeaways from bnef's

694
00:33:10,400 --> 00:33:11,400
Speaker 3: recent EV research.

695
00:33:11,840 --> 00:33:14,960
Speaker 9: I think the big takeaway is that EV sales growth

696
00:33:15,200 --> 00:33:18,000
Speaker 9: is happening on evenly across different regions in the world.

697
00:33:18,640 --> 00:33:20,840
Speaker 9: Maybe not a surprising finding if you're following EV's on

698
00:33:20,960 --> 00:33:23,160
Speaker 9: a day to day basis, but moving forward, we expect

699
00:33:23,200 --> 00:33:25,320
Speaker 9: that to be a bit of the same. To give

700
00:33:25,360 --> 00:33:27,320
Speaker 9: you a sense of where we see things going, we

701
00:33:27,480 --> 00:33:29,680
Speaker 9: basically have both the near termout look and a long

702
00:33:29,760 --> 00:33:32,120
Speaker 9: term out look. The near turnout look ends in twenty

703
00:33:32,200 --> 00:33:35,560
Speaker 9: twenty seven, and so what we expect is by twenty

704
00:33:35,640 --> 00:33:38,720
Speaker 9: twenty seven, global passenger EV sales will be about thirty

705
00:33:38,760 --> 00:33:41,840
Speaker 9: million in our base case called the economic transition scenario,

706
00:33:42,400 --> 00:33:44,680
Speaker 9: and a probably a better metric of that is thinking

707
00:33:44,720 --> 00:33:47,880
Speaker 9: about EV share of passenger vehicle sale. So we'll move

708
00:33:47,960 --> 00:33:50,480
Speaker 9: from a world where one in five cars sold is

709
00:33:50,520 --> 00:33:52,480
Speaker 9: electric to a world where one in three is about

710
00:33:52,480 --> 00:33:56,200
Speaker 9: thirty three percent, up from eighteen percent last year. By

711
00:33:56,280 --> 00:33:59,000
Speaker 9: twenty forty, we expect that about seventy three percent of

712
00:33:59,040 --> 00:34:01,240
Speaker 9: all new car sales will be electric, but there's a

713
00:34:01,320 --> 00:34:03,440
Speaker 9: long way to go. And then on the US question,

714
00:34:04,000 --> 00:34:06,160
Speaker 9: always good to compare it, I think to China and Europe.

715
00:34:06,760 --> 00:34:09,840
Speaker 9: US passenger EV's shareff sale last year was around ten percent.

716
00:34:10,320 --> 00:34:12,279
Speaker 9: We expect the next two years to see a bit

717
00:34:12,400 --> 00:34:15,080
Speaker 9: of a slower growth. So only about twelve percent of

718
00:34:15,200 --> 00:34:17,640
Speaker 9: new car sales should be electric this year, rising to

719
00:34:17,719 --> 00:34:21,080
Speaker 9: about twenty nine percent by twenty twenty seven. Seems pretty good,

720
00:34:21,280 --> 00:34:23,000
Speaker 9: but if you look at Europe in China, it's going

721
00:34:23,080 --> 00:34:25,000
Speaker 9: to be much higher there. So by twenty twenty seven

722
00:34:25,080 --> 00:34:28,120
Speaker 9: we expect about sixty percent of new car sales to

723
00:34:28,160 --> 00:34:31,600
Speaker 9: be electric in China and forty one percent in Europe.

724
00:34:31,719 --> 00:34:34,000
Speaker 9: And when we talk about passenger evs at B and

725
00:34:34,040 --> 00:34:37,280
Speaker 9: EF that's both battery electric and plug and hybrid electric vehicles.

726
00:34:37,560 --> 00:34:39,600
Speaker 2: Talked us about this plug in hybrid it feels like

727
00:34:39,600 --> 00:34:42,080
Speaker 2: a lot of folks are suggesting that might be a

728
00:34:42,239 --> 00:34:45,040
Speaker 2: very vible interim step for at least in the US

729
00:34:45,520 --> 00:34:47,320
Speaker 2: in terms of the transition. Ev Is that how you

730
00:34:47,520 --> 00:34:48,560
Speaker 2: think about it, Paul?

731
00:34:48,680 --> 00:34:51,440
Speaker 9: Really good question. I also co wrote the plug and

732
00:34:51,520 --> 00:34:53,680
Speaker 9: hybrid section of the report. We do a kind of

733
00:34:53,719 --> 00:34:55,879
Speaker 9: deep dive which we do with a few different deep

734
00:34:55,960 --> 00:34:58,400
Speaker 9: dives every year, and what we call thematic highlights. I

735
00:34:58,480 --> 00:35:00,840
Speaker 9: think around p Has the question really is.

736
00:35:01,000 --> 00:35:04,840
Speaker 2: Pheaps, yeah, pheat. Pluggin hybrids okay, plug in hybrids okay?

737
00:35:05,400 --> 00:35:07,600
Speaker 9: Is how good are they going to be? If you

738
00:35:07,719 --> 00:35:10,759
Speaker 9: look at the plug and hybrids in China, they're all

739
00:35:10,800 --> 00:35:13,880
Speaker 9: electric mode, meaning they're kind of electric. Mileage they get

740
00:35:13,920 --> 00:35:16,120
Speaker 9: before they have to turn on that gas engine is

741
00:35:16,200 --> 00:35:19,200
Speaker 9: about twice as high in China currently as it is

742
00:35:19,280 --> 00:35:21,840
Speaker 9: in the US. So quite simply, China is making not

743
00:35:21,920 --> 00:35:25,200
Speaker 9: only better fully electric vehicles, but better plug and hybrids.

744
00:35:25,880 --> 00:35:28,680
Speaker 9: We still think that there is some role for pehabs

745
00:35:28,680 --> 00:35:31,680
Speaker 9: to play this decade in markets like the US in Japan.

746
00:35:32,160 --> 00:35:34,520
Speaker 9: But what I've been big on pushing on is the

747
00:35:34,640 --> 00:35:37,160
Speaker 9: product that we're getting today is not necessarily as good

748
00:35:37,160 --> 00:35:39,680
Speaker 9: as it should be. So when you hear automakers say oh, well,

749
00:35:39,719 --> 00:35:41,680
Speaker 9: maybe we'll do more hybrids or do more plug and

750
00:35:41,719 --> 00:35:44,399
Speaker 9: hybrids instead of fully electric vehicles. I think a fair

751
00:35:44,480 --> 00:35:46,959
Speaker 9: response would be to say, well, in Europe and China

752
00:35:47,000 --> 00:35:49,480
Speaker 9: they're getting far more all electric mileage than here, so

753
00:35:49,600 --> 00:35:52,920
Speaker 9: can you deliver some of that more high quality product. Ultimately,

754
00:35:53,239 --> 00:35:55,239
Speaker 9: we do a bunch of different scenario analysis in the

755
00:35:55,280 --> 00:35:58,040
Speaker 9: full report, and one downside of plug in hybrids is

756
00:35:58,120 --> 00:35:59,960
Speaker 9: that if you go down that route and people are

757
00:36:00,000 --> 00:36:02,920
Speaker 9: aren't charging them enough, which is harder to do because

758
00:36:02,960 --> 00:36:05,680
Speaker 9: of the lower all electric range, you could end up

759
00:36:05,719 --> 00:36:07,879
Speaker 9: in a scenario where you're having a lot higher oil

760
00:36:08,320 --> 00:36:11,600
Speaker 9: demand use than if you just switch to fully electric vehicles,

761
00:36:11,600 --> 00:36:13,600
Speaker 9: and that would not be good for your climate targets.

762
00:36:13,840 --> 00:36:16,040
Speaker 3: When do you think the tipping point is when EV's

763
00:36:16,200 --> 00:36:18,959
Speaker 3: become more of mass adoption here in the US.

764
00:36:19,360 --> 00:36:21,719
Speaker 9: So what we've pointed that historically is this idea of

765
00:36:21,840 --> 00:36:25,400
Speaker 9: upfront price parody. We're seeing total cost of ownership parody,

766
00:36:25,480 --> 00:36:29,000
Speaker 9: including fueling already being hit in many different regions in

767
00:36:29,120 --> 00:36:31,400
Speaker 9: terms of upfront costs. It really depends if you're comparing

768
00:36:31,400 --> 00:36:33,960
Speaker 9: apples to apples, right, you see a lot more evs

769
00:36:34,080 --> 00:36:36,680
Speaker 9: in that kind of low forty thousand dollars price range

770
00:36:36,719 --> 00:36:38,800
Speaker 9: now high thirties. I think once you get to the

771
00:36:38,840 --> 00:36:42,759
Speaker 9: low thirty thousand dollars price point. Really, according to our analysis,

772
00:36:42,840 --> 00:36:44,879
Speaker 9: when we're looking at kind of a generic BEV versus

773
00:36:44,920 --> 00:36:47,080
Speaker 9: a generic ice vehicle, we see it happening in the

774
00:36:47,200 --> 00:36:49,439
Speaker 9: US over let's say the next three to four years,

775
00:36:49,840 --> 00:36:52,480
Speaker 9: really twenty twenty six to twenty twenty eight. But really,

776
00:36:52,520 --> 00:36:56,239
Speaker 9: if you're comparing a Tesla Model Y towards a lot

777
00:36:56,320 --> 00:36:59,520
Speaker 9: of its competitor vehicles or Model three, you're getting pretty close.

778
00:37:00,040 --> 00:37:01,719
Speaker 9: But that's where you start to see I think higher

779
00:37:01,760 --> 00:37:04,240
Speaker 9: adoption where you won't have to necessarily have a premium

780
00:37:04,280 --> 00:37:06,279
Speaker 9: and price. You also get a lot of good leasing

781
00:37:06,320 --> 00:37:08,400
Speaker 9: deals today on EV's but it's a bit messier to

782
00:37:08,440 --> 00:37:10,400
Speaker 9: kind of figure that out because you've got dealer markups,

783
00:37:10,440 --> 00:37:14,440
Speaker 9: you've got different rates. But big picture, that upfront price parity.

784
00:37:14,680 --> 00:37:17,600
Speaker 2: How about the charging infrastructure in the United States? To

785
00:37:17,640 --> 00:37:20,080
Speaker 2: what extent is that been holding back the adoption of

786
00:37:20,320 --> 00:37:22,000
Speaker 2: evs here and kind of how do we expect that

787
00:37:22,080 --> 00:37:22,520
Speaker 2: to evolve?

788
00:37:22,800 --> 00:37:25,640
Speaker 9: Yeah, I think that's the biggest difference between Europe and China.

789
00:37:26,360 --> 00:37:29,520
Speaker 9: Our EVY outlook for folks who aren't familiar, has whole

790
00:37:29,560 --> 00:37:32,200
Speaker 9: sections on charging infrastructure, how much investment is going to

791
00:37:32,280 --> 00:37:35,080
Speaker 9: be needed moving forward, but really just taking a base

792
00:37:35,160 --> 00:37:39,360
Speaker 9: level stat TESLA remains the number one provider of charging

793
00:37:39,400 --> 00:37:42,120
Speaker 9: infrastructure here in the US in terms of reliability, in

794
00:37:42,200 --> 00:37:44,520
Speaker 9: terms of number of fast charging stations, and then there

795
00:37:44,600 --> 00:37:46,879
Speaker 9: isn't really a clear cut number two, three, four, five.

796
00:37:47,320 --> 00:37:49,719
Speaker 9: My colleague Ryan Fisher does a bunch of great presentations

797
00:37:49,760 --> 00:37:52,160
Speaker 9: on this, and one of actually the most impressive findings

798
00:37:52,280 --> 00:37:55,160
Speaker 9: is US and Europe actually have a similar amount of

799
00:37:55,400 --> 00:37:58,960
Speaker 9: chargers between the top six kind of charging infrastructure operators,

800
00:37:59,000 --> 00:38:02,120
Speaker 9: but Europe has an addition five hundred operators after that

801
00:38:02,239 --> 00:38:04,879
Speaker 9: that really supply the bulk of the market. So again,

802
00:38:04,920 --> 00:38:06,839
Speaker 9: we want to see more of that infrastructure built out.

803
00:38:06,920 --> 00:38:09,680
Speaker 9: There's been a lot of reporting around the federal funds

804
00:38:09,800 --> 00:38:11,960
Speaker 9: rolling out really slowly because they've had to go through

805
00:38:12,040 --> 00:38:15,359
Speaker 9: state RFPs. But yeah, that's the number one issue holding

806
00:38:15,400 --> 00:38:17,719
Speaker 9: back probably the US market, maybe even moving past the

807
00:38:17,840 --> 00:38:19,080
Speaker 9: upfront cost issue.

808
00:38:19,120 --> 00:38:21,520
Speaker 3: At least with my IC car, right, I can trade

809
00:38:21,520 --> 00:38:23,600
Speaker 3: it in and I can get value for it. Do

810
00:38:23,719 --> 00:38:26,000
Speaker 3: we know how this market evolves for evs?

811
00:38:26,800 --> 00:38:27,000
Speaker 1: Yeah?

812
00:38:27,040 --> 00:38:29,640
Speaker 9: I mean I did a residual value note with the

813
00:38:29,719 --> 00:38:32,560
Speaker 9: team at BADF maybe about two years ago, and the

814
00:38:32,640 --> 00:38:35,120
Speaker 9: market looks so different than that's when Tesla prices were

815
00:38:35,160 --> 00:38:38,920
Speaker 9: going ten to fifteen percent above their kind of selling price.

816
00:38:40,160 --> 00:38:42,520
Speaker 9: And so now you've seen because Tesla brought its prices

817
00:38:42,560 --> 00:38:44,520
Speaker 9: down that residuals for a lot of evs have crashed.

818
00:38:44,520 --> 00:38:46,480
Speaker 9: I think it's going to be something that continues to develop.

819
00:38:46,640 --> 00:38:48,319
Speaker 9: We need to find out how long batteries are going

820
00:38:48,400 --> 00:38:48,680
Speaker 9: to last.

821
00:38:48,800 --> 00:38:49,680
Speaker 3: I don't know that yet.

822
00:38:50,040 --> 00:38:50,560
Speaker 1: It varies.

823
00:38:50,640 --> 00:38:52,480
Speaker 9: I mean, we don't have I think any research here

824
00:38:52,520 --> 00:38:55,160
Speaker 9: where we've said that this is what we find amongst

825
00:38:55,200 --> 00:38:57,120
Speaker 9: all the kind of evs in the market. But right,

826
00:38:57,160 --> 00:38:59,279
Speaker 9: if your battery holds up longer than people expect, you'd

827
00:38:59,360 --> 00:39:01,920
Speaker 9: expect to see me even more residual value. If not,

828
00:39:02,239 --> 00:39:03,960
Speaker 9: you know, you could see more of an issue. But yeah,

829
00:39:04,160 --> 00:39:06,240
Speaker 9: it's an outstanding question, like so much of the space.

830
00:39:06,480 --> 00:39:08,160
Speaker 9: But to your point, Alex, that's why you want to

831
00:39:08,200 --> 00:39:12,080
Speaker 9: see more, you know, look into battery life over time.

832
00:39:12,360 --> 00:39:12,640
Speaker 4: All right?

833
00:39:12,640 --> 00:39:15,560
Speaker 3: Thanks to Corey Kanter Bloomberg, an EF lead US Electric

834
00:39:15,640 --> 00:39:16,400
Speaker 3: Vehicle analyst.

835
00:39:16,880 --> 00:39:21,400
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

836
00:39:21,600 --> 00:39:25,280
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

837
00:39:25,400 --> 00:39:28,360
Speaker 1: ten am to noon Eastern on Bloomberg dot Com, the

838
00:39:28,480 --> 00:39:31,880
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

839
00:39:31,960 --> 00:39:35,120
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840
00:39:35,320 --> 00:39:36,880
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