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Speaker 2: Just two days after the latest price cuts from Tesla,
Speaker 2: the ev maker, as you know, we've been talking about
Speaker 2: it here at Bloomberg, raising prices in the US on
Speaker 2: two different models, this time the MODELESSA Model X vehicles.
Speaker 2: And this is coming one day after Tesla stock took
Speaker 2: a dive that was yesterday falling concerns about cutting prices
Speaker 2: that led to a cutting margins. In its latest earnings release,
Speaker 2: we got the details on that operating margins slipping to
Speaker 2: eleven point four percent, a two year low. I feel
Speaker 2: like the strategy at Tesla raising prices, cutting prices everything
Speaker 2: Elon is one of the most unique Harvard Business School
Speaker 2: case studies of all time. So let's get to one
Speaker 2: of the most read stories on the Bloomberg that kind
Speaker 2: of wraps it all together, and it is about how
Speaker 2: Tesla has entered a new era. Joining us with more
Speaker 2: Bloomberg News Global Cars are Craig Trudell joining us on
Speaker 2: the phone from London. Craig, thank you so much. I
Speaker 2: know it's later there in London, so I appreciate getting
Speaker 2: a chance to talk with you. So the new era
Speaker 2: has to do with Tesla and Elon's moving on pricing.
Speaker 2: Tell us about this new era and what it means.
Speaker 3: Yeah, so I think you know, it's been over ten
Speaker 3: years now, right since the Model S launched, and that
Speaker 3: was a car that really sort of shook things up
Speaker 3: for the auto industry. No one really believed that you
Speaker 3: could make a compelling electric car and make any money
Speaker 3: selling it, right, and Tesla has absolutely proven the industry
Speaker 3: wrong in that respect. And they tried to move into
Speaker 3: a new era where they would sell not only compelling
Speaker 3: electric cars, but sell them for the mass markets, and
Speaker 3: they really struggled to pull that off. I think first
Speaker 3: it was because if they were going to to really
Speaker 3: stick to that, they were going to go out of business,
Speaker 3: and so they really were not able to hit the
Speaker 3: thirty five thousand dollars price point that Elon musk long promise.
Speaker 3: And then conveniently the last few years we've seen you know,
Speaker 3: Tesla and the whole industry in this really sort of
Speaker 3: unprecedented situation of no one was making as many cars
Speaker 3: as they had demand for and so you know, they
Speaker 3: could sort of cover for the fact that their mission
Speaker 3: was something they were having trouble accomplishing because everybody was
Speaker 3: jacking up prices.
Speaker 4: Right.
Speaker 3: I think we now are sort of seeing them get
Speaker 3: back to what Musk wanted to do all along, which
Speaker 3: was sell a ton of electric cars. And it's really
Speaker 3: really hard to do that at you know, forty thousand
Speaker 3: dollars plus, right, And so we're seeing the Model three
Speaker 3: come back below that threshold. It looks like the Model
Speaker 3: Why is going to be there in no time, because
Speaker 3: we've seen it fall twenty nine percent in roughly three
Speaker 3: months and we've just never seen anything like that before.
Speaker 5: Is there a bottom craig for the Model Why specifically
Speaker 5: that you could tell us a prediction on that?
Speaker 3: You know, I think I would. I would reckon that,
Speaker 3: you know, in that mid thirty thousand dollars range is
Speaker 3: probably where we end up seeing it. And you know,
Speaker 3: we're we're already seeing you know, in China in particular,
Speaker 3: because they're you know, they've they've got a sort of
Speaker 3: lower cost base there, They've got cheaper batteries. They It's
Speaker 3: just I think another part of this whole equation, right,
Speaker 3: is they have so much capacity that they've added. Just
Speaker 3: in the last year, they went from having two plants
Speaker 3: one in California and one in Shanghai, two, you know,
Speaker 3: in the matter of a matter of a few weeks,
Speaker 3: opening one near Berlin and one in Austin, Texas. And so,
Speaker 3: you know, I think there were only just sort of
Speaker 3: starting to, you know, get our minds around the fact
Speaker 3: that this is a company that has has so added
Speaker 3: to its ability to make cars that that's going to
Speaker 3: mean some significant changes in you know, the price that
Speaker 3: can can command for them.
Speaker 2: So is it a case of craig And it's funny
Speaker 2: because Matt Miller came out of the studio, is like
Speaker 2: a nobody's understanding you know what Tesla's doing at of
Speaker 2: course our car aficionado, but along with you guys. But
Speaker 2: what's interesting is you're saying they're raising prices on their
Speaker 2: higher end where they make the best margins, lowering it
Speaker 2: on the lower end where they don't make their best margins,
Speaker 2: but maybe they make it up on volume. And by
Speaker 2: raising on the higher prices, they ultimately help kind of
Speaker 2: pay for really getting that cheaper model out there among
Speaker 2: quote unquote the masses. I mean, is that kind of
Speaker 2: the strategy.
Speaker 3: It's you know, I think this latest change that they've
Speaker 3: made to you know, bump the model S and X
Speaker 3: up is really hard to understand that you alluded to
Speaker 3: in the intro. It doesn't make a whole lot of
Speaker 3: sense because those two models have just been on the
Speaker 3: steady march downward, and I think, you know, it's it's
Speaker 3: hard for me sometimes I feel like do I have
Speaker 3: Bloomberg brain and I'm just paying too much attention to
Speaker 3: the to the markets. But it really feels to me
Speaker 3: like this may well have been a case of Tesla
Speaker 3: sort of realizing that they may be kind of freaked
Speaker 3: investors out a little bit with how much they've cut
Speaker 3: prices and how much of an effect it's having on
Speaker 3: their margins. That maybe this was sort of a you know,
Speaker 3: throwing the markets at bone to say, we get it,
Speaker 3: we're going to cool it, and here's a little increase
Speaker 3: on models that, by the way, now are just like
Speaker 3: two point five percent of their total deliveries. So they're
Speaker 3: really sort of a rounding error. If it means you know,
Speaker 3: if raising the prices of those a little bit means
Speaker 3: a slow down in orders, so be it. They're kind of,
Speaker 3: you know, not very meaningful to the business at this point.
Speaker 2: Interesting.
Speaker 5: Yeah, it feels like they're kind of competing against themselves
Speaker 5: in that way. But who would you say as Tesla's
Speaker 5: real external competition, Craig.
Speaker 3: Yeah, I mean those the S and the X models
Speaker 3: are you know, were high before these recent little bump
Speaker 3: up bumps up in price.
Speaker 4: Right.
Speaker 3: You really have to pay you know, close to ninety
Speaker 3: thousand dollars now for the Model S. And this is
Speaker 3: a car that again is ten to eleven years old, right,
Speaker 3: And so you know, I think that that sort of
Speaker 3: you know, helps to under helps to sort of explain
Speaker 3: why they've brought the prices down so much. The fact
Speaker 3: that those models are a bit long in the tooth.
Speaker 3: They did make an effort a couple of years ago
Speaker 3: to at least update the interiors of them a little bit.
Speaker 3: That did seem to help, but you know, sort of
Speaker 3: underneath and in the guts of the car there, these
Speaker 3: are pretty old vehicles at this point, and those are
Speaker 3: competing with the likes of Mercedes and BMW where you know,
Speaker 3: and and even higher end electric vehicles the porches of
Speaker 3: the world where you know, I think a lot of
Speaker 3: consumers are more comfortable with build quality and you know,
Speaker 3: sort of craftsmanship than they might be.
Speaker 2: A Tesla, right, and network and easily a network to
Speaker 2: take it to if something goes astray. Hey, so in
Speaker 2: your story you say Tesla abandons Mercedes, or at least
Speaker 2: this is the headline on it, Tesla abandoning Mercedes battle
Speaker 2: to take on the likes of Ford. So this shift
Speaker 2: is meaning that Mercedes, you don't maybe need to be
Speaker 2: so worried. It's other automakers in this shift by Tesla.
Speaker 3: Yeah, I think the luxury players can't totally sort of
Speaker 3: rest easy at this point, right. I think, you know,
Speaker 3: we'll see at some point, although Lord knows when a
Speaker 3: Tesla Roadster that will be another sort of a newer
Speaker 3: model that will you know, command these high prices and
Speaker 3: compete with the luxury players. But I think, you know,
Speaker 3: by going into the you know, thirty thousand or mid
Speaker 3: thirty thousand range that musk seems headed toward, that's really
Speaker 3: not where Mercedes and BMW tend to play, right, And
Speaker 3: Mercedes in particular is very drastically going in the other direction.
Speaker 3: Ola Clinius is really sort of making a push to
Speaker 3: move further up market, focus on AMG, focus on you know,
Speaker 3: big money spinners like the g Wagon, and he's very
Speaker 3: comfortable with that meaning lower volume, but you know, getting
Speaker 3: more value and commanding higher margins. So he's playing a
Speaker 3: very different game than Musk is.
Speaker 6: Well.
Speaker 2: I have to say, Maddie just maybe before she goes
Speaker 2: mid thirty for Tesla not so bad. I mean, it
Speaker 2: really is a lot more manageable, you know, Craig, and
Speaker 2: it does necessarily, you know, probably open up a lot
Speaker 2: more consumers for Tesla. Just got about twenty seconds left here.
Speaker 3: Yeah. Absolutely. I think it's just a question for me
Speaker 3: of you know, what happens to this sort of brand
Speaker 3: value and sort of cachet of Tesla and to whether,
Speaker 3: you know, weather Musk ends up sort of regretting shooting
Speaker 3: himself in the foot a little bit moving for quickly.
Speaker 1: I don't know.
Speaker 2: Yeah, I was trying to think, is it like Apple,
Speaker 2: like who who does have a little bit of a range,
Speaker 2: but they're pretty expensive any kind of Apple device. Craig,
Speaker 2: good stuff, Thank you so much, really appreciate it. Have
Speaker 2: a great week and Bloomberg News Global Cars are Greg
Speaker 2: Trudell joining us on the phone from London.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: It has definitely there been a touch and go week
Speaker 2: for the price of bitcoin. We've seen the benchmark for
Speaker 2: crypto currencies dropping more than seven percent in the past
Speaker 2: two trading days alone. It is, however, up around seventy
Speaker 2: percent this year, so some back and forth, but we've
Speaker 2: been toying around with that thirty thousand dollars mark I
Speaker 2: feel all week. So let's get to it. Because our
Speaker 2: next guest in our weekly look at crypto he sees
Speaker 2: a long bull run for bitcoin with his reasoning is
Speaker 2: Corey Clipston. He is CEO at the Bitcoin Saving zapp
Speaker 2: swan Bitcoin. He does us at the zoom in la Hey, Corey,
Speaker 2: good to have you here with Maddie and myself.
Speaker 7: How are you well? Thank you so much for having
Speaker 7: me on.
Speaker 2: Well, tell us a little bit about what's been going on.
Speaker 2: First of all, in terms of your platform, tell us
Speaker 2: a little bit of idea in terms of activity users.
Speaker 2: Give us an idea of what we're seeing and what
Speaker 2: it tells you maybe about the bitcoin space.
Speaker 8: Yeah, absolutely, Yeah, I mean, first off, thanks so much
Speaker 8: for bringing me here. We're basically a full fledged financial
Speaker 8: service as firm at this point that we started off
Speaker 8: as a bitcoin savings app.
Speaker 7: I guess it's fair to say three years.
Speaker 8: Ago volumes are up dramatically, and it basically is perfectly
Speaker 8: correlated with the onset of the shaky ground that we
Speaker 8: found some of the banks on about five weeks ago.
Speaker 8: It was kind of that March ninth, tenth, eleventh with
Speaker 8: silver Gate and signature in Silicon Valley Bank and then
Speaker 8: kind of roiling over to Europe with Credit Suee.
Speaker 7: And yeah, you mentioned this thesis.
Speaker 8: That I'm kind of developing, and you know, I think
Speaker 8: it's I've been talking about it publicly, but it's actually
Speaker 8: very much for purposes.
Speaker 7: Of running my own company and thinking about.
Speaker 8: Pace of hiring and advancing partnerships and entering new markets
Speaker 8: and rolling out new products and things like that. And
Speaker 8: basically it made me turn very aggressive in our growth
Speaker 8: trajectory and plans. And it's specifically because I think that.
Speaker 7: We have more people than ever.
Speaker 8: In history that are receptive to talking about the merits
Speaker 8: of bitcoin.
Speaker 7: And what it's for.
Speaker 8: And it's cleaning up this false narrative that you saw
Speaker 8: a lot of in call it twenty twenty, twenty twenty one,
Speaker 8: maybe even into twenty twenty two, of bitcoin being a
Speaker 8: near term inflation hedge, which makes really no sense. It's
Speaker 8: not about a hedge against you know, CPI numbers next
Speaker 8: month or even next year. What it really is is
Speaker 8: an inflation hedge in the sense of monetary debasement.
Speaker 7: So it is a hedge.
Speaker 8: Against the credit fiat based system and against money printing
Speaker 8: that sort of inflation. And I think that's true, but
Speaker 8: that really is a long term play.
Speaker 2: So because we only have about six minutes left here
Speaker 2: and forgive me, so if net Neet, your bullish theory
Speaker 2: on bitcoin is what.
Speaker 8: So specifically, I'm bullish on adoption, so number of people
Speaker 8: go up obviously long term, you know, I'm very much
Speaker 8: on record saying I expect a million dollar price for
Speaker 8: bitcoin by the end of the decade. But the path
Speaker 8: that it'll take to get there, I think is anybody's guess. Yeah,
Speaker 8: what I'm talking about is in the past three bowl
Speaker 8: market peaks, there's only been about a four to six
Speaker 8: month window where Google search volumes have been off the
Speaker 8: charts and where a lot of people have been rushing
Speaker 8: in trying to learn about bitcoin and get up to speed.
Speaker 8: And that's, you know, kind of three four to six
Speaker 8: months at the end of twenty thirteen, twenty seventeen, twenty
Speaker 8: twenty one. Yeah, what I think we have here is
Speaker 8: something more like maybe twenty four months where there's a
Speaker 8: receptive audience willing to be, as we call it, orange pilled,
Speaker 8: take the orange pill and get into bitcoin, and everybody's interested,
Speaker 8: and companies are looking at making sure that they have
Speaker 8: enough bitcoin on the sideline to be able to pay
Speaker 8: important vendors and make payroll in the event that their
Speaker 8: bank runs into trouble things like that.
Speaker 5: Well, I want to talk about the volume thing, because
Speaker 5: I keep hearing you mentioned different metrics that show that
Speaker 5: volume is great. We've got a story on the Bloomberg
Speaker 5: terminal and online about how volume for crypto training seemed
Speaker 5: amazing last quarter. But if you isolate just the bitcoin
Speaker 5: dollar trade, parrot shows that volume was among the lowest
Speaker 5: since twenty twenty, and that's, of course amid some of
Speaker 5: the regulatory chatter that's going on. And all of this
Speaker 5: comes as I know, you're very familiar with the Binance
Speaker 5: effect question binance ending it's zero fee trading, Does that
Speaker 5: pullback from binance, which happened just in the month of March,
Speaker 5: decrease some of that volume to you? And to what
Speaker 5: extent are you worried about the impact of binance.
Speaker 8: Not worried at all about the impact of any centralized
Speaker 8: crypto casino, and at least on bitcoin. And again I
Speaker 8: obviously focus on Bitcoin only and don't see much future
Speaker 8: in the long run for any of the off coins
Speaker 8: from a THEEUM on down. But yeah, so I guess
Speaker 8: as far as bitcoin volumes, you know, if you have
Speaker 8: zero fee trading and you give beneficial rates and access
Speaker 8: to market makers so that they can sort of trade
Speaker 8: contra with favorable terms and access versus your customers, like
Speaker 8: Finance's rumored to have done over the past few years, yeah,
Speaker 8: you would see some of those volumes fall off as
Speaker 8: they are forced to see some of that behavior here.
Speaker 7: So I don't think there's any surprise that volumes would
Speaker 7: be down.
Speaker 5: But even in the bitcoin dollar trade we're seeing on
Speaker 5: that pair of volume down. That doesn't concern you.
Speaker 7: Not one bit.
Speaker 8: Yeah, I mean there's still plenty of liquidity and not
Speaker 8: much slippage. If you want to make a large buy,
Speaker 8: you know, you can do t w op or view
Speaker 8: app and still establish your position with almost no slippage
Speaker 8: on any major trading ven you, including SWAN.
Speaker 2: So I just want to sure I'm understanding. So your
Speaker 2: thesis has to do with more people maybe trading out
Speaker 2: of traditional finance and then as a result opting into bitcoin.
Speaker 2: Is that fair?
Speaker 8: I think it's just more and more people recognizing that,
Speaker 8: you know, the truth that bitcoin is the best tool
Speaker 8: for the job of store of value, which is a
Speaker 8: giant asset pile conservatively marked at four hundred trillion, maybe
Speaker 8: aggressively at nine hundred trillion globally.
Speaker 2: But how can you say that considering the volatility that
Speaker 2: we've seen in bitcoin and how high it went and
Speaker 2: how how how hard it fell, how is that to
Speaker 2: be considered a store of value? And ultimately you're always
Speaker 2: going to have a fixed amount, right, So it's you know,
Speaker 2: the dynamics of it is not necessarily like you know,
Speaker 2: a free trading currency.
Speaker 8: So it is a free trading currency. And I think
Speaker 8: we're confusing a couple of things. I said, it's the
Speaker 8: best tool for store of value. It's going to take.
Speaker 8: This is the technological revolution on the order of something
Speaker 8: like steam power or the information revolution or mass production
Speaker 8: or something like that. So it's going to disrupt all
Speaker 8: industries over the course of four to eight decades, just
Speaker 8: like previous technological revolutions. And so when you talk about
Speaker 8: what your expectations are for where bitcoin will eventually end up,
Speaker 8: you have to think about it in terms of what
Speaker 8: percentage of that asset pile that is currently the store
Speaker 8: value asset pile do you think the best tool for
Speaker 8: the job for the job will eventually take over what timeframe?
Speaker 8: So you know, if you think that it's going to
Speaker 8: take twenty percent of that asset pile, then that would
Speaker 8: be eighty trillion dollars.
Speaker 7: You have to.
Speaker 8: Decide like when is it going to take that by
Speaker 8: is it going to be twenty fifty is it going
Speaker 8: to be.
Speaker 7: Twenty thirty five? And then essentially.
Speaker 8: You just have to right size your bet on that future.
Speaker 8: But it's going to be extremely volatile on the way.
Speaker 8: There's absolutely no way it can go in a straight
Speaker 8: line from half a trillion dollars to say ten or
Speaker 8: twenty or thirty trillion dollar.
Speaker 7: Market cap in a straight line.
Speaker 8: It's going to have manias and wild crashes along the
Speaker 8: way as it grows into its rightful place as more
Speaker 8: and more people understand what it is, and one of.
Speaker 5: Those crashes, obviously being FTX SBF regulation is on the way.
Speaker 5: Do you have concerns at all about people getting bullish
Speaker 5: on bitcoin given the risks that we've already seen involved
Speaker 5: in investing in cryptocurrency when you do have bad actors
Speaker 5: in the system like an SBF.
Speaker 8: Yeah, absolutely so. I mean again, the non bitcoin crypto
Speaker 8: space is just ripe with scams. Over ninety nine percent
Speaker 8: of those projects are deliberately set up to be pump
Speaker 8: and dumps, and the remainder that maybe could be honest
Speaker 8: attempts at building something still in the long run won't
Speaker 8: need their own micro currencies. We don't live in a
Speaker 8: barter system, and monetary networks trend toward one. So if
Speaker 8: there is some kind of innovation that comes out of
Speaker 8: the whole DE five blockchain crypto complex that still gets
Speaker 8: used by people and businesses. In the future, it'll use
Speaker 8: whatever the major currency is that dominates the monetary space.
Speaker 8: It'll be dollars in bitcoin, I think, for the rest
Speaker 8: of the century, and we'll see what happens with that battle.
Speaker 7: But that's that's decades off.
Speaker 6: Well.
Speaker 8: But yeah, these centralized players like they brought this regulation
Speaker 8: on themselves, right, This was outright fraud and criminality on
Speaker 8: the part of companies like FTX and Celsius, and it
Speaker 8: was some flavor of that, maybe more toward terrible risk
Speaker 8: management when it comes to Genesis, Gemini, Block five, Voyager
Speaker 8: and some of these other ones that have be have
Speaker 8: cratered and lost their client's money.
Speaker 2: And I think, to be fair, we're still trying to
Speaker 2: figure it all out. Really, Corey, thank you so much.
Speaker 2: Really give us a bunch of stuff to think about.
Speaker 2: Corey Clipston, he's chief executive officer at Swan Bitcoin, as
Speaker 2: he said, really a broader financial platform. Initially started as
Speaker 2: a bitcoin savings app, but they are certainly offering more stuff.
Speaker 2: On the phone from La.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: Just Say Alexa play Bloomberg eleven thirty.
Speaker 2: In the last twenty four hours, the state of Arizona
Speaker 2: rescinded its approval for two new deep water wells for
Speaker 2: a controversial Saudi Arabia owned farm in the desert west
Speaker 2: of Phoenix. This on the heels of a CBS News
Speaker 2: report about farms in western Arizona that are growing alfalfa,
Speaker 2: one of the most water intensive crops in an area
Speaker 2: where there's a shortage of water. CBS noting that some
Speaker 2: farms are fore owned and are shipping the crop to
Speaker 2: Saudi Arabia, where it is legal to grow because it
Speaker 2: takes too much water. Stories about water access to lack
Speaker 2: of and investing in seem to be everywhere. And our
Speaker 2: next guest is the CEO of Eco Lab. It's a
Speaker 2: forty seven billion dollar market cap company that is a
Speaker 2: global provider of water hygiene and infection prevention solutions for
Speaker 2: everyone and everyone in the food, safety, sanitation, and oil
Speaker 2: and gas industries and more. Ecolobe shares by the way,
Speaker 2: up nearly fourteen percent year to date, and we welcome
Speaker 2: the CEO joining us via zoom from Saint Paul, Minnesota,
Speaker 2: where the company is based. Christophe Beck is here with us. Christoph,
Speaker 2: nice to have you here with Maddie and myself. I
Speaker 2: have to say this CBS report, I'm sure you saw
Speaker 2: it or I just feel like there's been a lot
Speaker 2: of reporting about access to water around the country or
Speaker 2: water as an investment. What are you seeing when it
Speaker 2: comes to global water supplies and the conditions of the
Speaker 2: available water to us?
Speaker 9: All good, def and Maddie so are great to be
Speaker 9: with you on a happy Earth Day a little bit early.
Speaker 7: It's going to happen tomorrow.
Speaker 9: Water scarce city is a big issue, and it's one
Speaker 9: that's getting bigger. Climate change is having most of the
Speaker 9: impact on water, and water is having most of the
Speaker 9: impact on climate change as well. When we think about
Speaker 9: it's about twenty thirty, it's expected that we will need
Speaker 9: forty percent more water than what nature can replenish. So
Speaker 9: the problem is big and he's getting bigger, and we
Speaker 9: can see so in places like in California with the
Speaker 9: Colorado River drying up as well, getting challenges as well
Speaker 9: so to feed big cities like Los Angeles. So the
Speaker 9: challenge is big and at the same time for industries, well,
Speaker 9: there is not only no life without water, but there's
Speaker 9: no industry without water as well. And the good news
Speaker 9: is that if we save water, well, we save energy
Speaker 9: as well at the same time, because we need a
Speaker 9: bunch of energy to heat water, to cool water, to
Speaker 9: transport water, to tweat water. And that's why dealing well
Speaker 9: with water ultimately is a very good thing for business
Speaker 9: and for the years.
Speaker 5: Christophf you bring up some of the major water sources
Speaker 5: in the United States, and of course Michigan comes to
Speaker 5: mind in the situation in Flint. I wonder to what
Speaker 5: extent you think that Biden's push on infrastructure and the
Speaker 5: Infrastructure plan could have a positive impact. Does it move
Speaker 5: the needle enough to kind of satisfy you in terms
Speaker 5: of lessening the concerns that you have about the status
Speaker 5: of water infrastructure in the United States.
Speaker 9: Well, let's put it that way. It's a good step
Speaker 9: in the right direction. But interestingly enough, so most of
Speaker 9: the focus today is on a renovating older infrastructure. It's
Speaker 9: a little bit like if we were to renovate older
Speaker 9: phone lines when everybody's using cell phones. So we believe
Speaker 9: in our company since we serve a million of customers
Speaker 9: or around the world and really helping them produce more
Speaker 9: better products with less water. That ultimately so sites, industrial
Speaker 9: park cities will have to become water sufficient and that
Speaker 9: means that there should be in a place that to
Speaker 9: reuse and recycle water. So that's why we need even
Speaker 9: more innovation. Solutions exist, but we need to support companies
Speaker 9: in order to go in that direction and re use
Speaker 9: and recycle water on site and not just in terms
Speaker 9: of distribution, like the example in Flint that you just mentioned.
Speaker 2: Well, what sounds like getting more R and D done
Speaker 2: is something that the Water Equity Global Access Fund might
Speaker 2: certainly help tell us about this. You and a few
Speaker 2: other partners, a few other companies have been partnering on
Speaker 2: this tell us about.
Speaker 9: It absolutely well. The whole idea started a few years
Speaker 9: back when when you looked at the facts and really
Speaker 9: realizing that for the world and for the industries, we
Speaker 9: won't have enough water so to keep growing, which is
Speaker 9: a major issue for industry, for business and for people.
Speaker 9: And we realized that one hured and fifty companies worldwide
Speaker 9: impact a third of the world water consumption. So we
Speaker 9: came together together with the United Nations and saying we
Speaker 9: will create the Water Resilience Coalition, getting those one hundred
Speaker 9: and fifty companies together in order to reach three objective.
Speaker 9: The first one, it's all of us to get to
Speaker 9: net zero, which means that we're using all the water
Speaker 9: that we are using. Second, it's really set to protect
Speaker 9: one hundred basins around the world that are supporting three
Speaker 9: billion people's lives. And the third it's to provide access
Speaker 9: to three hundred million people who do not have access
Speaker 9: to clean water today. And we've partnered with many companies.
Speaker 9: Microsoft was one of the founders together with us. We
Speaker 9: had Cargill, we had Jajo, we had Starbucks as well.
Speaker 9: A lot of companies have joined and one of the
Speaker 9: partners has been water dot Org, a remarkable organization which
Speaker 9: is not a freeland tropic organization. It's investments in order
Speaker 9: to provide water for people who will pay for it.
Speaker 9: But it's less expensive then to go and get water
Speaker 9: in those places where there is no access. So we've
Speaker 9: helped fund that organization. So far, almost four billions so
Speaker 9: have been mobilized to provide access to fifty two million people.
Speaker 7: So the world the Water.
Speaker 9: Access Fund you just mentioned is one additional step in
Speaker 9: that direction.
Speaker 2: Christoph, I have to say, twenty years ago, fifteen years ago,
Speaker 2: you know, wanted to do this documentary and I'm like, guys,
Speaker 2: water it's the next commodity we're all going to be
Speaker 2: fighting over. And everybody's like, oh, come on, We've all
Speaker 2: been like talking about that for years. We're going to
Speaker 2: have plenty of water. It's just like a non event
Speaker 2: here we are. What has changed maybe in the last
Speaker 2: five to ten years when it comes to global water supplies.
Speaker 9: The thing that I've changed are good things. We are
Speaker 9: much more people on the planet. We will be two
Speaker 9: three billion more in the decades to come. We've been
Speaker 9: growing as well. The diets have changed as well, moving
Speaker 9: from most cell based to more proteins, which means meat.
Speaker 9: And to get meat, well you need to feed the
Speaker 9: animals as well. You need more water for it as well.
Speaker 9: So it's driven by the right things, except that human
Speaker 9: being and industries are thinking in a linear way. You know,
Speaker 9: you take the water, you use it, you dump it.
Speaker 9: We should more do it like nature does, which is
Speaker 9: using it in a closed circle. It goes to the
Speaker 9: cloudy trains, it comes back. You use it and you
Speaker 9: work in a psycho. So good changes, but we need
Speaker 9: to rethink the way we manage water in order to
Speaker 9: keep growing.
Speaker 2: Amen. Yeah, and here are one day before Earth Day,
Speaker 2: and really appreciate you and having this conversation. Christoph Beck,
Speaker 2: thank you so much, chief executive officer of the publicly
Speaker 2: held Eco Lab. As we said, a forty seven billion
Speaker 2: dollar market cap company, but really talking about initiatives and
Speaker 2: companies banding together when it comes to water. Joining us
Speaker 2: via zoom from Saint Paul, Minnesota. Yeah, we've had a
Speaker 2: lot of great conversations this week. Tomorrow is Earth Day everybody,
Speaker 2: so birthday. Yeah, and if you're missing the conversations, check
Speaker 2: out our podcast for you're talking about agriculture, water, just
Speaker 2: our environment. We got to care Mother Earth.
Speaker 5: Yeah, it's critical, it's the most important resources we've.
Speaker 2: Got a absolutely all right, This is Bloomberg.
Speaker 1: This is Bloomberg Business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: gloom Wal business finance and tech news. The Bloomberg Business
Speaker 1: Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: You got to put your headphones on for that one,
Speaker 2: mister Webber, Paul Brennan going into the archives. Nice, that's
Speaker 2: an old Pepsi commercial. I don't know, that's a pretty
Speaker 2: old one. Cold Wars they're on again, everybody, although this
Speaker 2: time it's over lemons and limes. So this next story
Speaker 2: in the new rat show, Bloomberg business Week out on newsstands,
Speaker 2: online at Bloomberg dot com, Sash business Week, and also
Speaker 2: of course on the Bloomberg turbel. So let's get to it.
Speaker 2: Brett Pully wrote it. He is Bloomberg News Atlanta bureau chief,
Speaker 2: home to Coca Cola. Brett is on the phone from
Speaker 2: our bureau. There also here the editor of Bloomberg BusinessWeek,
Speaker 2: Jill Weber. Here in our Bloomberg Interactive Brokers studio. First
Speaker 2: Jell Coca Pepsi.
Speaker 10: You know there's a place for both, and funny enough,
Speaker 10: Pepsi is still fighting for that space in the lemon
Speaker 10: lime conversation, which is what we're going to talk about now. Okay,
Speaker 10: I did not know this sprite has this category on
Speaker 10: lock and has basically just like pulled away and it
Speaker 10: looks like the dominant lemon lime flavor, which I found surprising,
Speaker 10: mister Polly, I did not know that Sprite had this
Speaker 10: category on lock. And it was such a lock that
Speaker 10: Pepsi said, you know, we've had this other brands here
Speaker 10: I missed for a while. That is no more, what
Speaker 10: do they bring out?
Speaker 6: Instead?
Speaker 4: They keep trying. That's the thing, Spright, as you've pointed out, dominated, Yeah,
Speaker 4: they've dominated this category for such a long time now,
Speaker 4: and you know it's it's the thing. It's not this time,
Speaker 4: it's not Coco Pepsi, right, it's the it's the on Kola,
Speaker 4: as the other brand famously called. It's seven Up. And
Speaker 4: this lemon lime category that was really created by seven
Speaker 4: Up back in the twenties has for the last oh,
Speaker 4: you know, thirty plus years been dominated by Sprite, which
Speaker 4: has done really an incredible job of focusing some key
Speaker 4: demographics with this lemon lime flavor. You know, they signed
Speaker 4: on early to the whole hip hop culture and really
Speaker 4: penetrated those multi multicultural markets. And we're the big sponsor
Speaker 4: of the NBA, et cetera. And now the new sponsor
Speaker 4: of the NBA is pep sees. The latest entrant in
Speaker 4: this category that they launched earlier this year, which is
Speaker 4: called Starry. So Pepsi had picked up the NBA partnership
Speaker 4: a few years back and put its It's Mountain Dew
Speaker 4: beverage as the NBA primary drink. But just change at
Speaker 4: the story, and of course mountain Dew they dominate their
Speaker 4: category which is highly caffeinated let's just say caffeinated, which
Speaker 4: is caffeinated citrus flavor and lemon lime. The big distinction
Speaker 4: with lemon lime is that it is not caffeinated, and
Speaker 4: that's where sprite this absolutely dominates.
Speaker 10: Okay, so what about seven Up.
Speaker 4: Well, seven Up they're still there. They're still in that category.
Speaker 4: And interestingly seven Up is kind of controlled by two entities.
Speaker 4: In the US, it's controlled by Curing Doctor Pepper, which
Speaker 4: of course makes another cat glory spicy Pepper, and internationally
Speaker 4: seven Up is controlled by PepsiCo. So this has to
Speaker 4: do with some antitrust stuff in the past. But what
Speaker 4: it probably means is that Pepsi COO while they're pushing
Speaker 4: their new products storry very hard in the US, they
Speaker 4: might not do the same in global markets, given the
Speaker 4: fact that they do have seven Up in those markets,
Speaker 4: and of course Sprite is strong in those markets as well.
Speaker 4: The other big big thing is that sprite is so
Speaker 4: strong at the fountains, you know, the stadiums and the
Speaker 4: restaurants and all the places where people pour fountain drinks.
Speaker 4: It's like you almost have to have a good lemon
Speaker 4: lime non caffeinated soda for people who you know, people
Speaker 4: are concerned about other things when it comes to soda. Right,
Speaker 4: they're the health concerns, But there are a lot of
Speaker 4: people who are concerned about two things, the health concerns
Speaker 4: and the caffeine. Maybe they're letting their kids indulge when
Speaker 4: they're at a restaurant or something. They're letting them indulge
Speaker 4: with some soda. G I wanted to be caffeinated. So
Speaker 4: so it's really important to have a lemon lime so
Speaker 4: that you can get those uh those fountain that fountain business.
Speaker 3: Yeah.
Speaker 5: On the health piece, though, Brett, I wonder if they
Speaker 5: wouldn't be better off just launching a sparkling water for
Speaker 5: gen Z because it's seen as like really uncool and
Speaker 5: unhealthy to be drinking soda.
Speaker 2: Gen Z or which one are you?
Speaker 5: I'm a millennial. I'm millennial, but I'll moonlight as a
Speaker 5: gen zer to seem cool, but like, I would never
Speaker 5: drink soda around a younger person than me because I
Speaker 5: would feel like they're judging me.
Speaker 7: You know, I totally hear you, and in fact, you
Speaker 7: don't have to drink soda.
Speaker 10: Yeah, I'm sorry, too.
Speaker 5: Easy, Okay, Brett, But seriously, what's what's the deal?
Speaker 4: You're just gonna say no?
Speaker 6: You know.
Speaker 4: I talked to people on this story, people in the
Speaker 4: business who are competing in trying to figure out how
Speaker 4: to steal some of that market share that that sprite
Speaker 4: has in this category, and there are there are those
Speaker 4: without starts and who say that absolutely it won't be
Speaker 4: this new drink from PepsiCo and it what it will
Speaker 4: be is a drink that comes along that is focused
Speaker 4: on the health concerns the younger, the younger demographic ass
Speaker 4: and that is really the big, big challenge for soda
Speaker 4: companies overall. I mean, the overall consumption is like, you know,
Speaker 4: kind of a bit of a slow melting iceberg, but
Speaker 4: it has been shrinking, so.
Speaker 10: So does so to go down and lemon line stays
Speaker 10: flat or goes up? Like, what is demand like for
Speaker 10: this particular category.
Speaker 4: I think this category I mean, it stayed around about
Speaker 4: around ten percent, looks like for the last decade or so,
Speaker 4: ten percent of overall. So to say, what we see
Speaker 4: happening globally with overall soda sales, however, is that in
Speaker 4: recent years, you know, they've ticked down a couple of
Speaker 4: points and have been trending that way for some time.
Speaker 4: And as a result, you know, will you come out
Speaker 4: with the new Starry or a new drink You're not.
Speaker 4: It's all about market share. It's all about stealing share
Speaker 4: from each other. Right, It's like they've they've penetrated the
Speaker 4: market and that market shrinking, So it's all about stealing share.
Speaker 4: And for Pepsi COO, if a drink like Starry can
Speaker 4: get just like five to ten percent.
Speaker 2: It's not too shabby, right.
Speaker 4: It's not too shabby.
Speaker 2: Can I just say, as you remind us, this is
Speaker 2: Pepsi's fourth stab at the category, so y hat Siera missed.
Speaker 2: There was Slice in eighty four team back in the
Speaker 2: nineteen fifties, and then there were Storm that actually never
Speaker 2: made it to market. So I'm not going to say
Speaker 2: that that bodes well or badly or whatever, but it's
Speaker 2: just a reminder they've been they've been trying to go there.
Speaker 10: Here's a little fact too. Take seventy percent sprite, thirty
Speaker 10: percent coke or so guess what you get?
Speaker 2: What do you get? Gingerl Are you kidding?
Speaker 5: This is a bartender trick. Yes, if a customer asks
Speaker 5: you for ginger ale, you say you have it.
Speaker 2: And you mix the two together. Yes, it's to you guys.
Speaker 2: Never approach Jil Weber.
Speaker 10: You're just like man tips on a Friday.
Speaker 5: What do you do on the weekends. I mixed Briten
Speaker 5: code for my kid.
Speaker 2: Yeah, please kick it up cocktail. Hey, thank you so much, Brett.
Speaker 2: Fun to check in with you and the story. As
Speaker 2: we mentioned, the new is show of Bloomberg Business Week
Speaker 2: at on newsstands as we speak. It's also online on
Speaker 2: the Bloomberg terminal and online at Bloomberg dot com slash BusinessWeek.
Speaker 2: Brot Pulley, he's our Atlanta beer chief out there in Atlanta.
Speaker 2: And of course Joe Webber on fire on this Friday,
Speaker 2: Editor of Bloomberg Business Week, This is Bloomberg Radio.
Speaker 9: Un brother mac.
Speaker 5: A journal.
Speaker 2: How about you let me drive?
Speaker 6: No, no, no, no, who's going to drive?
Speaker 1: Honey?
Speaker 9: Please?
Speaker 7: How do the riding gravels.
Speaker 8: Let's mate, I want to drive.
Speaker 1: It's a good question time. This is the drive to
Speaker 1: the globe dot com me efek well buy around on
Speaker 1: Bluemberg Radio.
Speaker 2: All right, everybody, just about seventeen and a half minutes
Speaker 2: left in today's trading session, getting ready to wrap up
Speaker 2: that Friday trade and the trade for the week. Carol
Speaker 2: Master along with Madison Mills, live in our Bloueberg Interactive
Speaker 2: Brokers studio on YouTube on Blueberg Originals. I want to
Speaker 2: get to our drive through the close on a palm.
Speaker 2: Demani is head of International and Emerging marketsteat at Nouve.
Speaker 2: They've got about one point one trullion in assets under management,
Speaker 2: so they get to see an awful lot when it
Speaker 2: comes to investor thinking. She is with us via zoom
Speaker 2: in New York City on a palm. Son to have
Speaker 2: you here with Maddie and myself. You know, I would
Speaker 2: love to first just start there with a big picture
Speaker 2: from you in terms of what we are seeing, especially
Speaker 2: when it comes to the emerging market economies. We got
Speaker 2: updates on growth, global growth and activity and concerns from
Speaker 2: the IMF and World Bank just last week. How do
Speaker 2: you see it where are we seeing strength, where are
Speaker 2: we seeing weakness? And as a result, we'll get into
Speaker 2: some of the opportunities.
Speaker 6: Thanks for having me, Carolyn Madison. Yeah, emerging markets, right, so,
Speaker 6: I think the growth differential is expected to outpace developed
Speaker 6: markets growth both this year as well as going into
Speaker 6: next year. And although IMF downgraded both developed market and
Speaker 6: emerging markets growth, I think the downgrade was much most
Speaker 6: star in developed markets. So the differential is going to
Speaker 6: be about two and a half percent in favor of
Speaker 6: emerging markets this year, which only expands going into next year.
Speaker 6: And historically, if you look at that differential, that has
Speaker 6: been a driver for inflows into the asset class. Additionally,
Speaker 6: I would say both cyclically and structurally, emerging markets is
Speaker 6: quite under owned compared to historical levels. And there's pretty
Speaker 6: limited net supply in both the sovereign heart currency market
Speaker 6: as well almost a negative net supply in the corporate market.
Speaker 6: So the technicals well vote also quite well for the
Speaker 6: asset class.
Speaker 5: Can you talk a little bit about specifics here? I
Speaker 5: know you have a lot to talk about, but the
Speaker 5: emerging market sector can mean so many different things. Is
Speaker 5: there a specific area or currency that you're looking at
Speaker 5: that's particularly notable to you as potential for upside.
Speaker 6: Yeah, no, you're totally right. Em is such a diverse
Speaker 6: opportunity set. I like to always say, it's not a
Speaker 6: monolithic asset class. It's a very heterogeneous mix of countries
Speaker 6: with different drivers of growth. You know, we can choose
Speaker 6: between sovereigns, corporates, and heart currency, which is US dollar denominated,
Speaker 6: as well as local currency opportunities. And there are as
Speaker 6: many as seventy countries, right that you can actually pick from.
Speaker 6: So some of the countries that we are focused on,
Speaker 6: I like to sort of divide them into three groupings.
Speaker 6: One is stable to improving macro stories such as Mexico
Speaker 6: and India, right, And these both benefit also from this
Speaker 6: new paradigm and the geopolitical space of near shoring or
Speaker 6: French shoring so to speak. They have positive demographic dividend,
Speaker 6: their improving growth inflation pictures, and really they have a
Speaker 6: whole host of corporates, a very dynamic and a robust
Speaker 6: corporate sector for us to choose from. And oftentimes many
Speaker 6: of these companies have lower leverage and higher you know
Speaker 6: net cash flow or our net cash flow positive compared
Speaker 6: to some of their developed market peers, and yet they
Speaker 6: offer a higher sort of yield advantage with the develop
Speaker 6: market counterparts. So that's one of the groups. The other
Speaker 6: group that we like is really, you know, thinking about
Speaker 6: more reformers countries that are in upward rating trajictories such
Speaker 6: as Serbia, where we think there's improved fiscal dynamics and
Speaker 6: there's a strong FDI pipeline. So that's another sort of
Speaker 6: grouping of countries that we do.
Speaker 7: Like.
Speaker 2: Okay, Annapop, can we go back to what you said
Speaker 2: about Mexico and India near shoring front shoring. I'm assuming
Speaker 2: does some of that play have to do with the
Speaker 2: tensions we're seeing between the US and China and you know,
Speaker 2: the pushback that we've seen over the last couple of years.
Speaker 2: It feels like increasingly it gets globalization, and then as
Speaker 2: a result, something like Mexico certainly benefits by its proximity
Speaker 2: to the United States India as another possibility of a
Speaker 2: lower labor workforce at least lower cost to some extent,
Speaker 2: and just having lots of people where they can do it.
Speaker 6: Absolutely, I think you hit it on the spot. Posts
Speaker 6: the pandemic and then further exacerbated by the Russia Ukraine conflict. Right,
Speaker 6: We're sitting in a geopolitical landscape that many countries are
Speaker 6: very focused on making their supply chains quite resilient and
Speaker 6: also in general just diversifying their supply chains. And for
Speaker 6: the US it's a little bit more looking at it
Speaker 6: from a similar values perspective, So they are thinking about
Speaker 6: deepening economic integration with sort of dependable trading partners to
Speaker 6: diversify away from nations that pose geopolitical and security risk
Speaker 6: to their supply chains. And I think that's where India
Speaker 6: comes in, even though it's a lot farther from the
Speaker 6: US by you know, Mexico, clearly closer to home, you know,
Speaker 6: and already benefits with some of the trading links and
Speaker 6: the trade framework that we have in place with them.
Speaker 2: So what does it mean for China as an emerging market?
Speaker 2: Although I always feel mixed. It is an emerging market,
Speaker 2: but it's so much more complex. I feel like in
Speaker 2: terms of opportunities, there is it even on your radar.
Speaker 6: Yes, So I think the way to think about it
Speaker 6: is the China reopening, as chaotic and messy as it
Speaker 6: has been, uh, it is surely and slowly. Uh. The
Speaker 6: recovery is gaining momentum. You know, some of the recent
Speaker 6: indicators that came out also suggested so much that the
Speaker 6: economic rebound as well in place. I think we are
Speaker 6: trying to rather than play just through China, because all
Speaker 6: investments in China almost have to be looked at from
Speaker 6: the US security lens, being a US based investor here,
Speaker 6: and we rather play China through the outbound tourism. So
Speaker 6: countries like you know, Singapore, Thailand, Malaysia may benefit as
Speaker 6: the Chinese start to travel outside again. You know, it's
Speaker 6: going to be more consumption driven this time the recovery,
Speaker 6: and so really thinking about the countries that export in
Speaker 6: terms of manufacturing exports or electronics that would benefit from
Speaker 6: that reopening, such as Korea or Taiwan. And then finally,
Speaker 6: you know, Chinese with the reopening consuming more commodities, and
Speaker 6: so that's the other channel through commodities, which impacts and
Speaker 6: positively a lot of the Latin American economies.
Speaker 2: Well, really appreciate you weighing in. Have a great weekend.
Speaker 2: Anna Palm Domani, she's head of International and Emergency market
Speaker 2: instead over at New Veen. As we mentioned earlier, about
Speaker 2: one point one trillion in assets under management. Joining us
Speaker 2: via zoom from New York City.
Speaker 1: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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