WEBVTT - Bloomberg Businessweek Weekend - September 9, 2022 0:00:01.040 --> 0:00:05.400 This is Bloomberg Business Week inside from the reporters and 0:00:05.600 --> 0:00:09.200 editors who bring you America's most trusted business magazine, plus 0:00:09.240 --> 0:00:13.200 global business, finance and tech news as it happened. Bloomberg 0:00:13.240 --> 0:00:16.720 Business Week with Carol Messer and Bloomberg Quick Takes Tim 0:00:16.800 --> 0:00:21.680 Stinovic on Bloomberg Radio. Hi, everyone, Welcome to the weekend 0:00:21.840 --> 0:00:25.600 edition of Bloomberg Business Week. I'm Tim Stinovic. Carol Masser 0:00:25.880 --> 0:00:28.200 is off this week well with Labor Day. Now in 0:00:28.240 --> 0:00:30.120 the rear view mirror, we're going to ask a pair 0:00:30.160 --> 0:00:33.239 of CEOs what to expect from their businesses. Down the 0:00:33.240 --> 0:00:36.880 final stretch of two. The CEO of price Line gives 0:00:36.920 --> 0:00:39.720 us a peek at fall travel trends, and the head 0:00:39.720 --> 0:00:42.960 of Chesapeake Energy provides a pulse check on the global 0:00:43.000 --> 0:00:47.120 gas market amid this ongoing energy crisis. Meantime, with the 0:00:47.200 --> 0:00:49.600 US Open wrapping up this weekend, you'll hear the story 0:00:49.600 --> 0:00:52.440 of how America's biggest tennis tournament nearly left the Big 0:00:52.479 --> 0:00:55.120 Apple and what it took to keep it here. All 0:00:55.120 --> 0:00:57.040 of that to come. We begin with a story from 0:00:57.040 --> 0:00:59.520 Bloomberg Business Week that you can find online and on 0:00:59.560 --> 0:01:02.440 the term and all it centers around Silicon Valley heavyweight 0:01:02.480 --> 0:01:06.040 Peter Teel's growing standoff with the Republican Party. The tech 0:01:06.160 --> 0:01:08.840 entrepreneur had previously teamed up with Donald Trump to help 0:01:08.880 --> 0:01:12.040 win GOP Senate nominations for two ex employees. We're talking 0:01:12.040 --> 0:01:16.080 about j D. Vanson Ohio and Blake Masters in Arizona. Now, 0:01:16.120 --> 0:01:19.959 both candidates faced challenging general elections against wealth funded Democrats 0:01:20.040 --> 0:01:23.039 come November. As their own war chests start to dry 0:01:23.160 --> 0:01:25.760 up from one hy Teal is suddenly tightening the belts 0:01:25.760 --> 0:01:28.880 on these campaigns. Bloomberg Senior Markets reporter Katie Grathel and 0:01:28.880 --> 0:01:31.399 I spoke with Business Week editor Joe Weber and the 0:01:31.400 --> 0:01:34.640 man who wrote the piece columnists for the magazine, Max Chafkin. 0:01:34.920 --> 0:01:38.360 The best here for Teal and I think for a 0:01:38.400 --> 0:01:41.600 lot of these kind of um pro Trump sort of 0:01:41.680 --> 0:01:45.320 horror hard right candidacies, was that there was going to 0:01:45.440 --> 0:01:48.760 be you know, Republican wave election in general, you know, 0:01:48.840 --> 0:01:51.600 mid term elections, the party that's out of powers is 0:01:51.640 --> 0:01:54.520 the one that does well. Um and pulling early on 0:01:54.560 --> 0:01:57.880 in this cycle looked really good for Republicans, really bad 0:01:57.920 --> 0:02:00.800 for Democrats. Joe Binds prov ratings, you know, they crept 0:02:00.840 --> 0:02:02.640 up a little bit, but they were very low going 0:02:02.640 --> 0:02:04.400 back a couple of months ago. And I think the 0:02:04.440 --> 0:02:06.440 thought here was that with somebody like Teal is he's 0:02:06.480 --> 0:02:10.040 going to help push in these kind of neophyte candidates 0:02:10.080 --> 0:02:13.480 who are extremely you know, ideologically hard right, very much 0:02:13.520 --> 0:02:15.880 you know, part of his world, and that you know, 0:02:15.919 --> 0:02:17.920 Mitch McConnell and the Republicans were going to take care 0:02:17.919 --> 0:02:20.560 of the rest because you gotta figure in an election 0:02:20.560 --> 0:02:23.120 where Republicans are expected to do well, that that these 0:02:23.160 --> 0:02:26.000 Republicans Senate candidates will will sort of be dragged along 0:02:26.040 --> 0:02:28.359 with them. But but what's happened is that the environment 0:02:28.360 --> 0:02:33.440 has shifted, Republicans are getting out fundraised by Democrats, and 0:02:33.600 --> 0:02:38.040 you have this standoff where Mitch McConnell and his allies 0:02:38.160 --> 0:02:40.959 are sort of looking at some of these races, races 0:02:41.000 --> 0:02:43.240 that they thought would be well in hand, seeing that 0:02:43.280 --> 0:02:46.200 they're close or that Republicans are even behind, and asking, 0:02:46.480 --> 0:02:48.760 you know, Peter Teal, guy who who put put these 0:02:48.800 --> 0:02:51.240 candidates in the position that they're in, to kind of 0:02:51.280 --> 0:02:53.880 pick up the slack, and Teal so far has said no. 0:02:54.040 --> 0:02:56.639 So we have this kind of very awkward situation. But 0:02:56.960 --> 0:02:59.640 the sort of Republican establishment and this kind of like 0:02:59.680 --> 0:03:02.160 trump best wing, of which Teal is probably the most 0:03:02.160 --> 0:03:04.840 important donor. I mean you've written a ton about Tell 0:03:04.919 --> 0:03:07.440 in your book, and of course studied him for years 0:03:07.520 --> 0:03:10.440 and interviewed so many people around him. How is this 0:03:10.520 --> 0:03:13.440 just straight out of a venture capitalist playbook? Yeah? So, 0:03:13.560 --> 0:03:16.040 I mean Teel's whole thing, and I wrote about this 0:03:16.080 --> 0:03:18.760 column in the column today is is you know, making 0:03:18.919 --> 0:03:25.120 very early investments in kind of high risk, high reward startups, right, 0:03:25.200 --> 0:03:28.000 startups that are likely to fail. He buys in early 0:03:28.160 --> 0:03:31.160 and then you know, later stage investors are are the 0:03:31.200 --> 0:03:33.120 ones who kind of make up take it the rest 0:03:33.160 --> 0:03:35.160 of the way. So you know, going back to you know, 0:03:35.200 --> 0:03:38.320 making the first investment in Facebook co founding palat here, 0:03:38.400 --> 0:03:39.560 but you know a bunch of these kind of like 0:03:39.720 --> 0:03:42.880 super high risk, high reward situations. And I think there's 0:03:42.880 --> 0:03:46.560 a way to look at Master's advance that way. Mitch McConnell. 0:03:46.560 --> 0:03:50.200 Of course, politics as a different sport than investing, and 0:03:50.200 --> 0:03:52.960 and from the sort of mainstream Republican view, the feeling 0:03:53.040 --> 0:03:55.480 is like, look, Peter, tell you stuck us with these 0:03:55.520 --> 0:03:59.520 candidates that are kind of subpar right there, their inexperience, 0:03:59.560 --> 0:04:02.200 they've got lots of baggage. They're not necessarily, you know, 0:04:02.240 --> 0:04:05.400 the most broadly electable candidates, and now here you are. 0:04:05.720 --> 0:04:08.000 I wanted to finish the job, right, And so they're 0:04:08.200 --> 0:04:13.240 they're feeling very much confused, betrayed. Whatever. There's the the 0:04:13.600 --> 0:04:15.960 upshot of this, if things don't go well in these 0:04:16.200 --> 0:04:19.640 races is Peter Teele could get blamed for costing Republicans 0:04:19.640 --> 0:04:21.640 control of the Senate. So in that case it might 0:04:21.640 --> 0:04:24.080 be a bit of an out for the Republican Party. 0:04:24.120 --> 0:04:25.640 But you have a great quote in here from an 0:04:25.640 --> 0:04:30.000 anonymous person who works in Republican politics. I'm quite puzzled 0:04:30.120 --> 0:04:32.240 how you'd arrive at a decision to spend thirty million 0:04:32.279 --> 0:04:35.760 dollars on primaries and zero dollars in a general election. 0:04:36.200 --> 0:04:39.560 What do we know about Teal's VC playbook that might 0:04:39.640 --> 0:04:41.480 give us any sort of hint as to if he 0:04:41.520 --> 0:04:44.160 would start to spend money, what would kind of break 0:04:44.200 --> 0:04:47.360 the damn there? Well, I think the playbook would be 0:04:47.400 --> 0:04:49.760 not to spend any money, right, and that's clearly what 0:04:49.800 --> 0:04:53.839 he's trying to do now. Of course McConnell, partly because 0:04:54.600 --> 0:04:56.839 McConnell's under a lot of pressure, right, you have these 0:04:56.880 --> 0:04:59.680 other races that aren't going well. The money is not unlimited. 0:05:00.040 --> 0:05:03.480 McConnell's calling his bluff, and I think at some point, 0:05:03.720 --> 0:05:06.480 you know, I would expect to heal to pony up 0:05:06.520 --> 0:05:09.040 to some extent, right, go back into his wallet and 0:05:09.160 --> 0:05:11.880 donate a little bit of money. But the thing is 0:05:11.960 --> 0:05:14.960 that if you're a sort of mainstream Republican, the damage 0:05:14.960 --> 0:05:17.760 is being done every day that that he hasn't done 0:05:17.760 --> 0:05:20.640 that right, because we are you know, as him said 0:05:20.680 --> 0:05:22.760 at the top, you know, this is like the home 0:05:22.800 --> 0:05:26.000 stretch of the election. Um. Every day his candidates are 0:05:26.040 --> 0:05:29.360 getting out spent on advertising, and the window to kind 0:05:29.360 --> 0:05:32.640 of turn things around, especially in Arizona, is shrinking. So 0:05:32.839 --> 0:05:35.960 you gotta think he'll will come to the table um. 0:05:36.040 --> 0:05:38.120 But but again he's going to try to limit his 0:05:38.720 --> 0:05:41.560 financial exposure, try to spend as little as he can, 0:05:41.839 --> 0:05:43.359 and try to put as much of this on on 0:05:43.360 --> 0:05:46.480 Mitch McConnell's possible. And you know, I'm curious here, since 0:05:46.839 --> 0:05:50.680 there are opposing candidates in both of these races, what 0:05:50.680 --> 0:05:54.200 what are the Democrats doing or is this just implosion 0:05:54.240 --> 0:05:56.720 on on the GP sid Well, you have a couple 0:05:56.760 --> 0:06:00.320 of a couple of things. One is in Arizona. Uh, 0:06:00.600 --> 0:06:06.360 you have a very well funded incumbent in in Mark Kelly. Um. Uh. 0:06:06.360 --> 0:06:09.320 He's run a very quiet campaign, but he's raised a 0:06:09.320 --> 0:06:11.800 ton of money. Um and and as a result, he's 0:06:11.880 --> 0:06:15.240 he's formidable. UM. Ohio is a little bit different, and 0:06:15.320 --> 0:06:17.599 I say, from the publican point of view, more disappointing, 0:06:17.640 --> 0:06:20.200 because you know, Arizona is a state that Joe Biden won. 0:06:20.440 --> 0:06:23.560 Ohio is the state that Donald Trump won handily. Um. 0:06:24.120 --> 0:06:26.640 The the current holder of that Senate seat won his 0:06:26.960 --> 0:06:29.640 seat by twenty points. So the fact that it's it's 0:06:29.680 --> 0:06:32.559 even close is kind of amazing. That was Bloomberg Business 0:06:32.600 --> 0:06:34.760 Week column, Miss Max Chaffkin. He's also the author of 0:06:34.800 --> 0:06:38.000 the contrarian Peter tile in Silicon Valley's Pursuit of Power. 0:06:38.080 --> 0:06:40.320 The book is out now. Also joining US Business, we 0:06:40.360 --> 0:06:43.440 Get ititor Joe Weber and Bloomberg's Katie Greifeld as well. 0:06:43.520 --> 0:06:46.520 Coming up, why something's still not sitting right for Amazon 0:06:46.560 --> 0:06:50.279 executives five years after the company spent nearly fourteen billion 0:06:50.279 --> 0:06:53.599 dollars to buy Whole Foods. You're listening to Bloomberg Business Week. 0:06:53.920 --> 0:07:06.560 This is Bloomberg. This is Bloomberg Business Week with Carol 0:07:06.600 --> 0:07:10.840 Messer and Bloomberg Quick takes Tim Stinovan from Bloomberg Radio 0:07:12.280 --> 0:07:14.560 Well in the current issue of Bloomberg business Week magazine 0:07:14.560 --> 0:07:16.640 Catch it now. It's on news stands online on the 0:07:16.720 --> 0:07:18.720 terminal of course as well. And then at Bloomberg dot 0:07:18.720 --> 0:07:22.160 com slash a business Week there's an article about five 0:07:22.240 --> 0:07:25.640 years on Amazon is still digesting that thirteen point seven 0:07:25.760 --> 0:07:29.240 billion dollar Whole Foods takeover. The article written by Matt Day. 0:07:29.280 --> 0:07:32.560 It's edited by Joshua Brustein. He is with us on 0:07:32.600 --> 0:07:36.080 the phone right now. Also with us is Joel Weber. 0:07:36.120 --> 0:07:38.480 He is the editor of Bloomberg business Week. He's with 0:07:38.560 --> 0:07:41.360 us in the Bloomberg Interactive Broker studio. Katie and I. 0:07:41.440 --> 0:07:43.360 We're talking about this a few minutes ago. Joel. It 0:07:43.440 --> 0:07:45.200 was sort of like the where were you when you 0:07:45.280 --> 0:07:48.680 heard moment? There were so many jokes about getting avocado 0:07:48.760 --> 0:07:51.560 toast by drone. Yeah, so waiting for that. That's still 0:07:51.720 --> 0:07:53.840 by the way, that's another good Bloomberg Business Week story 0:07:53.920 --> 0:07:58.040 is about that the drones common serializing. But but what's 0:07:58.080 --> 0:08:00.520 going on with John Mackie, the guy who he's gone 0:08:00.560 --> 0:08:05.080 all he's gone exactly, So that co founder of Whole 0:08:05.120 --> 0:08:09.440 Foods UM. Five years ago, Amazon uh went shopping for 0:08:09.440 --> 0:08:12.720 some produce and ended up with Whole Foods UM. And 0:08:13.000 --> 0:08:15.400 you know, I think the point of the story is 0:08:15.440 --> 0:08:17.440 five years on, what was it all about? And that 0:08:17.480 --> 0:08:22.080 was sort of I think, what what interested Matt and uh, 0:08:22.120 --> 0:08:24.640 you know what, Josh to just put it to you, 0:08:25.160 --> 0:08:27.400 what was it all about? And what does Amazon really 0:08:27.400 --> 0:08:29.960 have to show for it? Now? Thirteen point seven billion 0:08:30.000 --> 0:08:34.960 for groceries is more than I usually spent exactly. Um. Yeah, 0:08:35.000 --> 0:08:37.360 I think both five years ago, both Whole Foods and 0:08:37.400 --> 0:08:41.880 Amazon needed something. Whole Foods had built itself up into 0:08:42.480 --> 0:08:45.079 this really big player in the organic grocery market, and 0:08:45.120 --> 0:08:46.840 then everyone else kind of figured out that they could 0:08:46.840 --> 0:08:49.960 do the same thing. And so Whole Foods was UM 0:08:50.160 --> 0:08:52.600 really struggling to figure out what its second act would be. 0:08:53.080 --> 0:08:55.959 UM investors were calling for a shake up, and it 0:08:56.120 --> 0:08:58.760 was just having a lot of trouble in the public markets. Meanwhile, 0:08:58.800 --> 0:09:00.960 Amazon had really been trying to get into groceries and 0:09:01.000 --> 0:09:04.199 grocery delivery, and it thought, you know, by this five 0:09:04.280 --> 0:09:09.040 hundred store chain of grocery stores and really just really 0:09:09.080 --> 0:09:13.120 power up our own entry into the grocery market. Um. 0:09:13.200 --> 0:09:16.080 And five years later, it doesn't seem like Whole Foods 0:09:16.080 --> 0:09:18.680 problems have been solved. Its problems are still mostly the same. 0:09:19.160 --> 0:09:23.320 Amazon also has not taken over groceries, despite the fears 0:09:23.320 --> 0:09:25.760 that it would at that time. And it seems like 0:09:25.840 --> 0:09:28.520 we're largely kind of where we were and not as 0:09:28.640 --> 0:09:31.040 much as happened as we would thought. Well, that's what 0:09:31.080 --> 0:09:33.079 I want to talk about. Five years later, what does 0:09:33.120 --> 0:09:36.920 it Amazon have to show with this purchase. What is 0:09:36.960 --> 0:09:40.280 Whole Foods actually added or subtracted from its bottom line? 0:09:42.720 --> 0:09:45.480 So in terms of its bottom line, the answer is 0:09:45.520 --> 0:09:48.480 that this is not This is one of the slower 0:09:49.120 --> 0:09:52.000 growing parts of Amazon's business. If you look at other 0:09:52.200 --> 0:09:56.520 other aspects of Amazon's business like cloud, cloud computing and 0:09:57.080 --> 0:09:59.920 sort of other real revenue drivers, those have been growing 0:10:00.000 --> 0:10:05.040 faster than the grocery business. Um, and that business is 0:10:05.080 --> 0:10:08.199 also being Uh, it's not just that groceries are going slower, 0:10:08.240 --> 0:10:10.679 it's like they're not even growing as fast as competitors. 0:10:11.240 --> 0:10:14.360 So that just really hasn't taken off. They haven't figured 0:10:14.360 --> 0:10:16.760 out how to combine these two companies in a way 0:10:16.800 --> 0:10:19.680 that helps them compete in the specific market. Okay, so 0:10:20.440 --> 0:10:22.280 one thing though, that it has done is you know, 0:10:22.320 --> 0:10:25.920 if you need to return Amazon products or you know, 0:10:26.040 --> 0:10:31.040 get grocery pickups. There have been some some noteworthy enhancements 0:10:31.080 --> 0:10:35.120 that either you know, either the mergers helped facilitate or 0:10:35.120 --> 0:10:38.400 that maybe Amazon shoppers have gotten out of it. So, 0:10:38.400 --> 0:10:41.920 so what has been on the on the good side here? Yeah, 0:10:41.960 --> 0:10:44.040 so I think the good side is that you know, 0:10:44.120 --> 0:10:49.400 Amazon uh does have a large, uh this large network 0:10:49.400 --> 0:10:51.760 of physical stores um. As I said, there's about five 0:10:52.000 --> 0:10:57.000 d um and it has started to lean on Whole 0:10:57.040 --> 0:11:00.920 Foods the expertise in there to help with Amazon Fresh, 0:11:00.960 --> 0:11:05.080 which is its other chain of grocery outlets. UM. And 0:11:05.640 --> 0:11:09.360 we haven't really seen the fruits of that yet so speak, 0:11:10.440 --> 0:11:13.240 but that could come in the future that you could 0:11:13.240 --> 0:11:16.560 see if if Amazon Fresh really does mature, um and 0:11:16.600 --> 0:11:20.280 turn into something really substantial for the company, that a 0:11:20.320 --> 0:11:22.880 lot of Whole Foods wisdom will have gone into the 0:11:22.920 --> 0:11:26.800 building of that product. It's just not quite um there yet. 0:11:27.040 --> 0:11:28.880 So we mentioned John Mackie. He was the co founder 0:11:28.920 --> 0:11:32.000 of Whole Foods. UM he's moved on retired as of 0:11:32.040 --> 0:11:38.960 September one. Who's in charge of Whole Foods within Amazon now? Yeah, 0:11:39.120 --> 0:11:44.360 so uh he is being taken over by his former CEO, 0:11:45.480 --> 0:11:51.000 former management consultant UM very kind of uh. Mackew was 0:11:51.040 --> 0:11:54.400 known as an as an over as as sort of 0:11:54.400 --> 0:11:59.640 a really big personality UM, whereas his successor is less so. 0:12:00.280 --> 0:12:02.400 Jason Jason Bush is his name. Yea, yeah, I mean, 0:12:02.440 --> 0:12:06.679 I'm I'm sorry. Jason mentioned that UM and his plan 0:12:07.160 --> 0:12:11.040 is kind of to take Whole Foods back to its roots, 0:12:11.160 --> 0:12:13.760 as he says, to try to get back to some 0:12:13.880 --> 0:12:16.800 of like the local produce offerings and doing things that 0:12:16.840 --> 0:12:20.080 makes Whole Foods kind of not feel like an Amazon honestly, 0:12:20.160 --> 0:12:23.199 to feel like not you get the same experience everywhere, 0:12:23.200 --> 0:12:24.920 but you go and you know that your local Whole 0:12:24.920 --> 0:12:30.280 Foods has whatever the produces UM you know in your region. Well, Joshua, 0:12:30.320 --> 0:12:32.600 that's been a big complaint for people who were sort 0:12:32.600 --> 0:12:36.040 of the die hard Whole Foods people before Amazon purchased 0:12:36.040 --> 0:12:38.480 the company. If you go back to you know, the 0:12:38.559 --> 0:12:40.600 roots of this company. It started in Austin, and it 0:12:40.720 --> 0:12:43.640 was kind of this like weird alternative grocery store, right 0:12:43.800 --> 0:12:45.760 and even when it was a publicly traded company, it 0:12:46.120 --> 0:12:48.000 and it made a ton of acquisitions around the country, 0:12:48.240 --> 0:12:50.920 it still was unique because it had that local produce 0:12:50.960 --> 0:12:52.760 and it had that kind of heart to get stuff. 0:12:53.280 --> 0:12:56.000 And I'm wondering. It's funny, you know, when this article 0:12:56.040 --> 0:12:58.640 came out, I saw people tweeting about it who didn't 0:12:58.679 --> 0:13:00.840 work at Bloomberg, and they were saying, the Whole Foods, 0:13:00.880 --> 0:13:02.960 the experience of going to Whole Foods has changed too 0:13:03.080 --> 0:13:05.800 much since Amazon took it on, So you know, I 0:13:05.800 --> 0:13:07.920 don't go there anymore. Is one of the tweets that 0:13:07.920 --> 0:13:10.440 that I saw that tweeted out this story. How is 0:13:10.440 --> 0:13:13.560 Whole Foods physically different because of Amazon? Like what's the 0:13:13.640 --> 0:13:17.959 experience like? Now? Yeah, I think there's two things in 0:13:18.000 --> 0:13:20.880 there that The first that you mentioned about, you know, 0:13:21.520 --> 0:13:23.920 the Whole Foods really feeling different and sort of losing 0:13:23.960 --> 0:13:27.040 that local feel is is that was a complaint before 0:13:27.080 --> 0:13:29.760 the acquisition. And one that I think one of the 0:13:29.800 --> 0:13:33.240 problems that Whole food had and it certainly hasn't been solved. Um. 0:13:33.360 --> 0:13:36.160 Hasn't been solved by Amazon, nor would it really Like 0:13:36.280 --> 0:13:40.440 that's not Amazon's strength. UM. But to your question about 0:13:40.480 --> 0:13:45.520 what's physically different, you know, Amazon has has helped re 0:13:46.400 --> 0:13:49.959 re engineer Whole Foods UH stores a little bit to 0:13:50.120 --> 0:13:52.559 be UM, you know, more focused on delivery. There's a 0:13:52.559 --> 0:13:55.640 lot of delivery pickers in the store people mentioned, which 0:13:55.679 --> 0:13:58.200 I think some people really don't like. You know, You're 0:13:58.240 --> 0:14:00.839 you're trying to shop and there's someone, you know, they're 0:14:00.920 --> 0:14:03.720 like clearly like filling up carts to move along. And 0:14:03.760 --> 0:14:07.080 they've had to dedicate some some space that used to 0:14:07.120 --> 0:14:10.400 be cafes and somewhat for the physical infrastructure around the 0:14:10.400 --> 0:14:13.440 delivery business. So that I think has really changed in 0:14:13.440 --> 0:14:16.120 some of the stores in ways that um, you know, 0:14:16.240 --> 0:14:19.560 long standing customers don't necessarily like. That was the Technology 0:14:19.680 --> 0:14:23.160 editor of Bloomberg Business Week. Josh Brustein, along with Joe Weber, 0:14:23.200 --> 0:14:26.000 the editor of the magazine, and Katie Greifeld read the 0:14:26.160 --> 0:14:28.680 entire story in the Technology section of this week's special 0:14:28.760 --> 0:14:31.960 double issue. It's available online, It's on news stands and 0:14:32.040 --> 0:14:34.960 on the Bloomberg Terminal. Still ahead on Bloomberg Business Week, 0:14:34.960 --> 0:14:37.400 we turn our attention to the energy market and an 0:14:37.400 --> 0:14:40.680 executive who says his company is poised for growth even 0:14:40.720 --> 0:14:43.280 as prices start to come down. We have the leading 0:14:43.640 --> 0:14:47.680 natural gas portfolio in North America, and what is a 0:14:47.800 --> 0:14:51.000 market that needs a lot more natural gas? Chesapeake Energy 0:14:51.040 --> 0:14:53.520 president and CEO Nick de Lasso joins us on the 0:14:53.560 --> 0:15:02.560 other side. This is Bloomberg broadcasting from the financial capital 0:15:02.560 --> 0:15:06.400 of the World, Bloomberg eleven Frio in New York to Washington, 0:15:06.480 --> 0:15:10.560 d C. Bloomberg to Boston, Bloomberg one oh six one 0:15:10.680 --> 0:15:14.120 to San Francisco, Bloomberg nine sixty to the country Sirius 0:15:14.280 --> 0:15:16.880 XM Chado one nine team, and around the globe the 0:15:16.880 --> 0:15:21.160 Bloomberg Business app and Bloomberg Radio dot Com. This is 0:15:21.280 --> 0:15:25.360 Bloomberg Business Week. Gas prices in the US reached a 0:15:25.400 --> 0:15:28.160 record high in mid June, topping five dollars a gallon 0:15:28.680 --> 0:15:31.120 the Auto Club. Triple A reports that prices have since 0:15:31.200 --> 0:15:33.480 dropped from those highs, coming in closer now to three 0:15:33.480 --> 0:15:35.960 dollars and seventy five cents as of the middle of 0:15:35.960 --> 0:15:38.480 this past week. For an update on supply and demand 0:15:38.560 --> 0:15:42.040 and on a portfolio that's looking increasingly attractive to investors, 0:15:42.440 --> 0:15:45.000 Katie Grayfield and I spoke with Nick de Lasso. He's 0:15:45.080 --> 0:15:48.640 president and CEO of Chesapeake Energy. He was elevated from 0:15:48.680 --> 0:15:52.600 CFO back in October one, just eight months after the 0:15:52.640 --> 0:15:56.400 firm exited Chapter eleven bankruptcy, and he says conditions well 0:15:56.600 --> 0:15:59.880 they're continuing to improve. Our team is super excited of 0:16:00.120 --> 0:16:02.240 where we sit in the market today the things we've 0:16:02.280 --> 0:16:06.080 been able to accomplish. We've completed two outstanding acquisitions to 0:16:06.240 --> 0:16:10.520 bolster our inventory in our Haynesville and Marcellus positions. We 0:16:10.560 --> 0:16:15.240 have the leading natural gas portfolio in North America and 0:16:15.320 --> 0:16:18.080 what is a market that needs a lot more natural gas? 0:16:18.120 --> 0:16:20.320 Natural gas has been the story of the energy space 0:16:20.360 --> 0:16:22.560 over the last year, and chest Beak sits in a 0:16:22.560 --> 0:16:25.400 fantastic position to deliver on that well. As part of 0:16:25.440 --> 0:16:28.080 that focus on natural gas, last month, there was some 0:16:28.160 --> 0:16:30.760 news that you were planning to exit your Eagle Forward 0:16:30.840 --> 0:16:35.200 Shale of South Texas investment to double down on natural gas. 0:16:35.240 --> 0:16:37.680 So I have two questions for you. One is how 0:16:37.760 --> 0:16:40.120 is that sale going? And the second question is are 0:16:40.120 --> 0:16:44.400 you looking for one buyer or multiple buyers? Here? Sure? So, 0:16:44.680 --> 0:16:46.600 we did announced last month that we're going to be 0:16:46.640 --> 0:16:49.800 pursuing a sale of our Eagleford sail assets. That's really 0:16:49.840 --> 0:16:53.200 based on the strength of our natural gas portfolio. We 0:16:53.280 --> 0:16:55.960 are just getting that process started, so it will take 0:16:56.040 --> 0:16:57.960 a fair amount of time. Is a really large asset 0:16:58.040 --> 0:17:01.160 with some great characteristics. We do think that because it 0:17:01.240 --> 0:17:03.960 is a really large asset across a pretty wide span 0:17:04.000 --> 0:17:07.000 of geography that they're likely could be more than one 0:17:07.000 --> 0:17:09.120 buyer for that. So what do you end up doing 0:17:09.119 --> 0:17:11.879 with the proceeds then, Well, we have the leading return 0:17:11.920 --> 0:17:15.080 framework in the industry today. We have a base dividend, 0:17:15.160 --> 0:17:18.320 we have a variable dividend that is our free cash flow, 0:17:18.600 --> 0:17:21.040 and we also have a two billion dollar buyback program. 0:17:21.240 --> 0:17:24.880 The proceeds from this, we see is enhancing that overall 0:17:24.920 --> 0:17:28.960 return profile that leads the industry. There's this interesting dance 0:17:29.119 --> 0:17:32.560 or balance that needs to be struck between domestic demands 0:17:33.000 --> 0:17:36.919 and what we're seeing from overseas and exports. Since how 0:17:37.080 --> 0:17:41.600 high does does domestics production need to go to strike 0:17:41.640 --> 0:17:45.000 that balance? So it doesn't need to go a lot higher, uh, 0:17:45.160 --> 0:17:48.840 we need to see continued growth in production in the 0:17:48.920 --> 0:17:52.040 US Today, we've had a big increase in overall demand 0:17:52.040 --> 0:17:55.600 for natural gas. However, we've also seen continued switching away 0:17:55.640 --> 0:17:58.760 from coal, which is fantastic for the environment to see 0:17:58.760 --> 0:18:02.320 the lower carbon resource of natural gas displaced coal. It 0:18:02.359 --> 0:18:05.360 has a huge impact on the g h G intensity 0:18:05.400 --> 0:18:07.960 of energy supply in the United States, and we think 0:18:07.960 --> 0:18:10.199 there's more to be done there. However, it doesn't take 0:18:10.240 --> 0:18:12.480 a whole lot to move the market in natural gas. 0:18:12.480 --> 0:18:15.760 It's a it's a historically volatile commodity. We know that 0:18:15.800 --> 0:18:19.400 when production increases a bit, it can really change the prices. 0:18:19.400 --> 0:18:22.399 So we do expect to see natural gas production increase, 0:18:22.440 --> 0:18:24.439 and we do expect to see prices come down a 0:18:24.440 --> 0:18:26.159 bit as a result of that. How much do you 0:18:26.160 --> 0:18:28.240 expect prices to come down? I mean, is the era 0:18:28.359 --> 0:18:30.919 of two dollar natural gas? Is that over? You know, 0:18:30.960 --> 0:18:34.359 we're really optimistic about long term natural gas prices, but 0:18:34.480 --> 0:18:37.560 today where they sit in the eight nine dollar range 0:18:37.600 --> 0:18:39.320 over the last month, we do think they should come 0:18:39.320 --> 0:18:41.720 down a bit from there. You know, historically we did 0:18:41.760 --> 0:18:44.960 think about natural gas prices settling in and that mid 0:18:45.000 --> 0:18:47.840 twos range. We do think that floor has moved up 0:18:48.080 --> 0:18:51.120 considerably from that and it's never again two dollars. Well, 0:18:51.160 --> 0:18:52.920 I think never again is a hard thing to say. 0:18:53.040 --> 0:18:55.639 Gas will be a volatile commodity and it may have 0:18:55.880 --> 0:18:58.240 dips for short periods of time, but we think that 0:18:58.359 --> 0:19:01.520 general assumed floor should be in the mid threes or 0:19:01.520 --> 0:19:03.480 maybe even approaching for and of course it's hard to 0:19:03.520 --> 0:19:06.760 have this conversation without talking about Europe, where gas prices 0:19:06.760 --> 0:19:10.040 are going crazy right now. What exposure do you have 0:19:10.119 --> 0:19:13.960 to those international prices today? We don't have any direct exposure. However, 0:19:14.000 --> 0:19:16.720 you've seen the prices in the US come up significantly 0:19:17.440 --> 0:19:20.800 as prices around the world have have increased. We've talked 0:19:20.800 --> 0:19:23.640 a lot about l en G and what our resources 0:19:23.680 --> 0:19:26.199 mean to the supply of len G export out of 0:19:26.200 --> 0:19:28.800 the US, and we're really well positioned for that. We 0:19:28.840 --> 0:19:30.960 have a very large position in the Haynesville Shale in 0:19:30.960 --> 0:19:34.040 Louisiana and we can be a really important supplier of 0:19:34.160 --> 0:19:36.000 len G to the world. As a result, I think 0:19:36.040 --> 0:19:38.119 we're all thinking about cybersecurity in the wake of what 0:19:38.160 --> 0:19:42.119 happened at Colonial Pipeline and other things completely unrelated to 0:19:42.160 --> 0:19:44.960 oil and gas. What are you guys doing at Chesapeake 0:19:45.000 --> 0:19:48.119 to make sure your systems are safe from a cybersecurity perspective. 0:19:48.720 --> 0:19:51.560 So we partner with a number of different outside firms 0:19:51.560 --> 0:19:54.159 that help us look at and analyze our systems and 0:19:54.160 --> 0:19:57.560 make sure that they're resilient against attacks. We track all 0:19:57.600 --> 0:20:01.199 of the daily thousands of hits that our systems receive. 0:20:01.560 --> 0:20:04.720 We educate our employees about how to be safe with 0:20:04.760 --> 0:20:09.560 their cybersecurity approach, and the risks that exist in the environment. Uh, 0:20:09.560 --> 0:20:11.119 and so we stay really plugged in on that and 0:20:11.440 --> 0:20:13.720 we take the threat very seriously. We did talk about 0:20:13.760 --> 0:20:16.680 the Eagle Forward sale, wondering if you're looking at any 0:20:16.720 --> 0:20:19.600 sort of acquisitions here. So we've done two acquisitions over 0:20:19.600 --> 0:20:21.800 the last year. It's given us a tremendous length to 0:20:21.840 --> 0:20:24.400 our portfolio that we feel great about. We don't need 0:20:24.440 --> 0:20:27.000 to do anything else on the acquisition side, but we 0:20:27.080 --> 0:20:30.000 do believe in scale. We do believe in consolidation in 0:20:30.000 --> 0:20:32.720 the industry. So if another opportunity comes up that meets 0:20:32.720 --> 0:20:35.399 what we call our non negotiables, which ensure that we 0:20:35.440 --> 0:20:38.520 make our company better through acquisitions, not just bigger than 0:20:38.560 --> 0:20:40.840 we would consider those opportunities in the future. That was 0:20:40.920 --> 0:20:43.880 Nick de Lasso, President and CEO of Chesapeake Energy, with 0:20:43.960 --> 0:20:46.640 me and Katie Greifeld coming up next, we're gonna stay 0:20:46.640 --> 0:20:48.199 in the C suite. We're gonna check in with the 0:20:48.240 --> 0:20:51.520 CEO of Priceline. The online travel platform gives us an 0:20:51.600 --> 0:20:54.760 up close view on how inflation is affecting consumer demand, 0:20:54.800 --> 0:20:58.280 and it provides some tips for vacationing without breaking your budget. 0:20:58.760 --> 0:21:10.239 This is Bloomberg. You're listening to Bloomberg Business Week with 0:21:10.320 --> 0:21:14.920 Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio. 0:21:16.440 --> 0:21:19.040 Web searches for round trip flights more than double view 0:21:19.119 --> 0:21:22.800 over year. Hotel searches well not far behind up in 0:21:22.920 --> 0:21:27.320