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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Intelligence

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Speaker 1: with Alex Steinehl and Paul Sweeney.

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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 Steinehl and Paul Sweeney on Bloomberg Radio.

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Speaker 5: I'm Paul Sweeney and I'm Emi Graffeo filling in for

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Speaker 5: Alex Steele.

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Speaker 2: On today's Bloomberg Intelligence Show. We dig inside the big

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

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Speaker 5: Each and every week, we provide in depth research and

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Speaker 5: data on some of the two thousand companies and one

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Speaker 5: hundred and thirty industries our analysts cover worldwide.

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Speaker 2: Today, we'll discuss how patients can now get Eli Lilly's

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Speaker 2: blockbuster weight loss rug at nearly fifty percent discount plus.

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Speaker 5: We'll look at a slew of US retail earnings that

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Speaker 5: are painting a mixed picture of the consumer.

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Speaker 2: But first we dive into the earning from AI giant

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Speaker 2: n Vidia. This week, the chipmaker gave a revenue forecast

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Speaker 2: that fell short of some of the most optimistic analyst expectations.

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Speaker 5: The outlook threatens to tamp down an AI frenzy that

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Speaker 5: has transformed in Vidia into the world's second most valuable company.

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Speaker 2: For more, Emily and I were joined by kun John Sobani,

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Speaker 2: Bloomberg Intelligence senior semiconductor analysts.

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Speaker 5: We first asked Koon John for his take on the

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Speaker 5: company's results.

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Speaker 4: Look, this not enough negatives.

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Speaker 6: Fundamentally, they are a victim of their own recent success

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Speaker 6: and strength and really unrealistic expectations.

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Speaker 5: I'm wondering, this is a company where a lot of

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Speaker 5: their their customers are highly concentrated. Something like forty percent

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Speaker 5: of the customer base is just a few big tech companies.

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Speaker 5: What are the risks associated with that?

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Speaker 6: I mean, the concentration has been a significant risk. It's

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Speaker 6: sort of a double eds. You know, by the function

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Speaker 6: of spending. These customers are the ones who really spend

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Speaker 6: major I app capex dollars, So you do want them

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Speaker 6: to be your biggest customers. Because that's who are really

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Speaker 6: creating the market. At the same time, we have seen

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Speaker 6: signs like over the last two quarters, the cloud players

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Speaker 6: make up about forty five percent of its data center revenue,

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Speaker 6: which is down from its peak of mid fifty percent

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Speaker 6: over last year, so that's a good sign. Over the

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Speaker 6: last few quarters, we have seen enterprises and the consumer

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Speaker 6: internet and vertical companies growing faster for NVDA data center

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Speaker 6: revenues compared to the cloud revenues for NVDA data center,

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Speaker 6: so that's again a good sign. Another third sign that

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Speaker 6: shows that ditaversification is happening and that risk is easy

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Speaker 6: is what we have seen in front of geographical demand perspective.

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Speaker 6: So over the last few quarters, we have seen rest

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Speaker 6: of the world outside of US continue to sustainably keep

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Speaker 6: growing sequentially. In fact, this quarter was the first time

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Speaker 6: we ever saw US decline slightly quarter work quarter.

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Speaker 2: So Kunjan, can those new types, new verticals of customers,

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Speaker 2: can they offset what might be slowing demand from the

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Speaker 2: Amazons of the world, the Googles of the world who

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Speaker 2: are developing their own chips.

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Speaker 6: So we have not seen signs of slowing demand from

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Speaker 6: the Amazons and Googles of the world. You know, when

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Speaker 6: you look at quarter to quarter things can look lumpy,

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Speaker 6: but from a year and perspective, annual perspective, we are

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Speaker 6: not seeing slowing demand. In fact, when we look at

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Speaker 6: these earning seasons, all of these customers beat their capex

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Speaker 6: estimation and guided for more capex spending, most of it

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Speaker 6: going to a Yeah, most of it going to in media. Yes,

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Speaker 6: the risk is there of these customers using their own chips,

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Speaker 6: but that's more of a out year risk. They still

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Speaker 6: do are not slowing down or stopping purchasing in media chips.

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Speaker 5: What do investors need to know about the Blackwell processor lineup?

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Speaker 5: Ian King of Bloomberg News said this is in Nvidia's

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Speaker 5: next big cash cow exactly.

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Speaker 6: I mean, from our perspective, the biggest question or the

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Speaker 6: risk going into the earnings was what's happening with the

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Speaker 6: Blackwell delay? Is it going to ramp? And if so?

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Speaker 6: When I think the comment that Jensen made about seven

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Speaker 6: billion dollars shipment in their fiscal four Q should put

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Speaker 6: a lid on these uncertainty around Blackwell. And yes, Blackwell

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Speaker 6: is supposed to be the next growth driver. Specifically, most

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Speaker 6: of the twenty twenty five growth is hinged on Blackwell's success.

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Speaker 2: Layout for US kind of how the competitive environment looks

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Speaker 2: at their Kunjan. I'm thinking about advanced micro devices, broad coom,

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Speaker 2: maybe to Qualcom to less extent Intel. I guess where

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Speaker 2: are all these competitors here? Why can't they do this stuff?

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Speaker 6: I mean, and Media has almost more than a decade

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Speaker 6: of R and D behind them in this arena. Right,

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Speaker 6: they are the ones who, for the most part, invented GPUs.

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Speaker 6: They have been working on GPUs for like I said,

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Speaker 6: investing in it more than a decade. These other companies

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Speaker 6: that we talked about I have not been investing in

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Speaker 6: this area. So it's not as easy to come in

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Speaker 6: and immediately replace someone who has been ahead of you

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Speaker 6: by multi years. Second, there's a lot other entries to barrier.

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Speaker 6: It's not just about creating comparable chips, their software, system

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Speaker 6: their systems. They're not a chip solution provider anymore. They

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Speaker 6: are a system solution provider. So you don't need a

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Speaker 6: comparable chip. You also need the software, you need the ecosystem,

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Speaker 6: you need the vertical integration and the system integration capabilities.

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Speaker 6: At the same time, they are not just sitting right,

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Speaker 6: they are running much faster than they have in the past.

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Speaker 6: So it's not just about catching up to in Media,

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Speaker 6: which is already two plus years ahead of its closest competitor.

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Speaker 6: It's also trying to catch up when they are even

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Speaker 6: running faster. One example of that is they are now

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Speaker 6: launching new products at a cadence of twelve months. This

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Speaker 6: is unprecedented in the semi conductor world for this complex technology.

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Speaker 6: Usually you see eighteen to twenty four months of a

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Speaker 6: product lon cycle.

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Speaker 2: How about valuation here again, you know, you look at

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Speaker 2: it and it's like seventy times trailing forty five times

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Speaker 2: this year, is thirty times next year? Is this a

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Speaker 2: stock that real, realistically with a straight face you can

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Speaker 2: say to clients is earning its way into its multiple.

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Speaker 6: Also, we look at forward looking multiples and when you

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Speaker 6: still compare it today compared to most of its peers, right,

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Speaker 6: it's still growing faster than most of its peers, even

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Speaker 6: at this large scale, which is very important that people

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Speaker 6: forget when you look at other fundamental metrics, the gross margin,

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Speaker 6: the earnings growth, the free cashual generation still top of

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Speaker 6: the list. So I mean that does demand a certain

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Speaker 6: premium versus its peers, right, And when you look at

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Speaker 6: the other air peers. It doesn't seem that expensive on

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Speaker 6: a relative basis.

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Speaker 5: Give us some final thoughts on is this a market

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Speaker 5: that is only going to be powered by in video

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Speaker 5: or are we going to see more trading days The tech

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Speaker 5: trade is kind of you know, in the green without Invidia.

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Speaker 1: I would say both.

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Speaker 6: I mean you have to really separate out right. We

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Speaker 6: think if if there is fundamental weakness or concern coming

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Speaker 6: out of in media, which did not happen, by the way,

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Speaker 6: we think there will be a broader impact to the market.

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Speaker 6: But in the absence of that, right, there was no

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Speaker 6: real concerns, There was no real flag risks that were

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Speaker 6: macro risks outlined here that the demand is slowing, the

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Speaker 6: spending is slowing. So I believe until and unless we

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Speaker 6: don't see those risks come out, the impact should be

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Speaker 6: limited to Invidia. But when, if, and when we do

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Speaker 6: see those come out, it could spread across.

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Speaker 2: Thanks to Kunjhan Sobani, Bloomberg Intelligence senior semiconductor analysts.

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Speaker 5: We move now to the media space.

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Speaker 2: Pretty sure, David Ellison Skydance Media looks set to become

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Speaker 2: the new owner of Paramount Global.

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Speaker 5: That's after seacrem air. Edgar Bronform Jr. Dropped his bid

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Speaker 5: for Paramount this week. Paramount said it now expects to

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Speaker 5: complete a deal with sky Dance in the first half

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Speaker 5: of twenty twenty five.

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Speaker 2: For More and All This, host Alex Steele and Bailly

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Speaker 2: Lipschaltz were joined by Keitha rung Anathan Bloomberg intelligence analyst

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Speaker 2: on US media.

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Speaker 5: They first asked Etha for her take on the latest news.

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Speaker 7: This one's been a tough one, right, It's not over

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Speaker 7: until it's over. I think Skydance does seem to be,

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Speaker 7: you know, the only bidding party here for Paramount, and

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Speaker 7: you know, the Edgar Braffman bid, and you know, we

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Speaker 7: were talking about this last week, Alex. It was really

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Speaker 7: a little bit of a head scratcher because they made

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Speaker 7: that eleventh hour move. He cobbled together something like twenty

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Speaker 7: outside investors and then when you know, kind of push

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Speaker 7: came to shove, he really couldn't find the equity financing

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Speaker 7: required to back his six billion dollar offer.

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Speaker 8: Am I reading too much into it to question why

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Speaker 8: the eleventh hour offer, Like if if it seemed like

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Speaker 8: there wasn't enough time early, enough time, and you're trying

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Speaker 8: to find people and get funding. It kind of I.

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Speaker 7: Don't know, Yeah, I think, you know, a couple of

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Speaker 7: different things. Maybe he had difficulty kind of finding all

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Speaker 7: the different parties interested. Obviously he didn't you know, there

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Speaker 7: was a ghost shop period that was a forty five

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Speaker 7: day period and he literally submitted it on August twentieth.

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Speaker 7: Then August twenty first was the end of that forty

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Speaker 7: five day go shop period. One could argue that maybe

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Speaker 7: he didn't want to, you know, kind of show his

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Speaker 7: hand too early so that there, you know, would be

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Speaker 7: other parties kind of jumping in. But at the end

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Speaker 7: of the day, you know, he obviously does not have

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Speaker 7: the financial firepower of the Allison family, and that's something

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Speaker 7: I think investors are going to have to come to

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Speaker 7: terms with.

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Speaker 3: So all right, let's just walk it forward. You get Skuidance,

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Speaker 3: gets paramount, et cetera. There were some reports that maybe

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Speaker 3: some of the TV networks I'm assuming Local would be

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Speaker 3: spun off or sold, etc. What are we expecting of

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Speaker 3: that sort to unfold?

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Speaker 7: So they right now have three co CEOs and this

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Speaker 7: kind of structure, this temporary structure, is going to continue

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Speaker 7: till this Guy Dance deal closes, which might happen sometime

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Speaker 7: towards the latter half of twenty twenty five. Until then,

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Speaker 7: what they're really trying to do is number one is

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Speaker 7: make streaming profitable. They already did do that in the

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Speaker 7: second quarter. So they're really kind of cutting down on

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Speaker 7: marketing spend, they're cutting down on content expenses, They're doing

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Speaker 7: everything they can to write the ship. They're also kind

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Speaker 7: of trying to undertake cost cuts across the whole enterprise

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Speaker 7: and get rid of non core assets. So the news

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Speaker 7: that we got about them looking to divest some of

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Speaker 7: their low local TV stations exactly kind of goes to

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Speaker 7: that strategy. You know, they could potentially end up with

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Speaker 7: about five hundred million, I mean about half a billion

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Speaker 7: or a billion dollars for those you know, TV stations. Again,

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Speaker 7: that's going to help them pay down debt. And debt

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Speaker 7: has been a huge problem for Paramount. They have almost

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Speaker 7: about fourteen and a half billion dollars in debt, and

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Speaker 7: that has really kind of complicated the whole story because

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Speaker 7: it you know, they have low ebit, low free cash flow,

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Speaker 7: and then very high debt.

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Speaker 8: And what does the path forward look like. I'm just

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Speaker 8: looking through your latest note kind of looking at strengthening

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Speaker 8: the balance sheet. To your point, more than fourteen a

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Speaker 8: half billion in debt. Market cap is seven point six

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Speaker 8: billion dollars, so you never really want to see numbers

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Speaker 8: that stretched. But what does Ellison's d pockets bring to

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Speaker 8: the table, Like, how does this potentially revamp Paramount if

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Speaker 8: at all?

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Speaker 7: Absolutely, that's that's a great point, Bailey. So I think

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Speaker 7: the main reason that Ellison has been chasing after Paramount

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Speaker 7: for all these months is really his interest in kind

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Speaker 7: of getting his hands on the studio. So he does

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Speaker 7: have a long history with Paramount. They have, you know,

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Speaker 7: the Ellisons have been a co financer on many of

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Speaker 7: the Paramount TV and film projects, most notably a lot

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Speaker 7: of the Tom Cruise movies. So they do kind of

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Speaker 7: know how, you know, that business works. They have a

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Speaker 7: lot of expertise, so they are going to kind of

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Speaker 7: double down on the Paramount studio business. The theatrical business

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Speaker 7: is rebounding nicely, so I think it does make sense

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Speaker 7: for them. And historically, if you just look at Paramount,

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Speaker 7: this is you know, the studio has always kind of

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Speaker 7: been a step child. So it's nice that it's going

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Speaker 7: to now come into focus, and then along with that,

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Speaker 7: you have almost one thousand person animation team that Skuydance

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Speaker 7: is going to bring to Paramount, so really kind of

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Speaker 7: doubling down on the animation business. And this is important

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Speaker 7: because we see studios kind of going deeper and deeper

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Speaker 7: into animation. This is animation is one of the most

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Speaker 7: profitable genres across the whole movie space, so it makes

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Speaker 7: a lot of sense for them to get into that

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Speaker 7: in a bigger way because they can really kind of

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Speaker 7: enhance the profitability of the studio business as a whole.

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Speaker 2: Our Thanks to Githa Ranganathan, Bloomberg Intelligence analyst on US Media.

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Speaker 5: Coming up a conversation with the executive director of the

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Speaker 5: Port of Los Angeles on cargo volumes and the shipping industry.

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

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

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Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via

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Speaker 2: Bigo on the terminal.

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Speaker 5: I'm Paul Sweeney and I'm Emily Graffeo. 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 Applecarplaying and broud Outo

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

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

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Speaker 5: I'm Paul Sweeney and I'm Emily Graffeo filling in for

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Speaker 5: Alex Steele.

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Speaker 2: We move now to the biotech space. This week we

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Speaker 2: heard the pharmaceutical company Eli Lilly is selling vials of

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Speaker 2: its blockbuster weight loss drug to patients at a fifty

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Speaker 2: percent discount to its shots.

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Speaker 5: Patients with a prescription for Zetbound can now purchase a

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Speaker 5: month's supply of single use vials through Lily's direct to

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Speaker 5: consumer site.

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Speaker 2: This is being done to help Eli Lily overcomes supply

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Speaker 2: shortages of its widely popular shots. For more, hosts Alex

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Speaker 2: Stale and Billy Lipschutz were joined by Michael Shaw, Bloomberg

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Speaker 2: Intelligence Senior Pharma analyst.

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Speaker 5: They first asked Michael why it's easier for Eli Lilly

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Speaker 5: to produce vials than actual shots.

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Speaker 4: They're providing a valve for relation. It's something that they've

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Speaker 4: talked about, you know, for a while now on their calls.

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Speaker 9: Now.

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Speaker 4: The reason why these are easier to produce is, you know,

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Speaker 4: the fill and finished capacity, so the capacity needed to

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Speaker 4: actually put the drug in the pens and the capacity

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Speaker 4: needed to manufacture at the pens of the subcutaneous ejection.

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Speaker 4: So overall, I think, you know, the move is you

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Speaker 4: know positive for Lily clearly broadens access or patients access

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Speaker 4: you know, to zet bound and also from you know,

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Speaker 4: compounding pharmacy standpoint. The fact that they improved supply means

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Speaker 4: it could you know, possibly combat you know, competition from

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Speaker 4: you know, companies such as him, Hymns and Hers.

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Speaker 8: Yeah, Lily not so subtly saying that they want to

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Speaker 8: aim to protect patients from quote counterfeit, fake unsafe for

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Speaker 8: untested knockoffs. So how does that impact kind of the

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Speaker 8: business and demand If we're seeing a cheaper version being

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Speaker 8: sold and maybe trying to court some of those Hymns

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Speaker 8: and Hers GLP one users, how does that impact kind

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Speaker 8: of the total addressable market and expectations for sales of

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Speaker 8: zepp out.

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Speaker 4: Well, I think if there's you know, if there's a

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Speaker 4: branded vowel formulation out there and there's obviously guarantees around

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Speaker 4: kind of purity, et cetera, I think that's going to

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Speaker 4: be the preferred choice. The fact that you're introducing these

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Speaker 4: valves into the market, would suggest that, you know, some

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Speaker 4: of that supply burden and supply shortage which is needed

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Speaker 4: for a compounding pharmacy to produce a drug that is

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Speaker 4: on pattern, you know, some of that will be alleviated there.

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Speaker 4: So that's kind of why we think it's positive for Lily.

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Speaker 4: As to whether you know, come to like him and

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Speaker 4: hers will continue producing you know, their versions of the

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Speaker 4: GEO beyond ones, I mean, that remains to be seen.

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Speaker 4: But I imagine if they do, you know, Lily would

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Speaker 4: you know, probably challenge.

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Speaker 3: It when people then do their own shots, like administer it,

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Speaker 3: Like is there a risk in that? Like, well, what

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Speaker 3: what kind of uptake are we expecting from that? Because

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Speaker 3: I would be scared to do it. But maybe that's

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Speaker 3: just me.

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Speaker 4: I mean, I think judging by you know, what we

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Speaker 4: saw for uptake of these compounded drugs, there's clearly a

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Speaker 4: appetite for injectable injections. Now, you know, we look to

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Speaker 4: the diabetes market. You know, some of the incidents used

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Speaker 4: to be injections, So I mean, I think it's not

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Speaker 4: I mean, there's clearly kind of an increased kind of

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Speaker 4: dosing burden associated within these injections, so they're probably not

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Speaker 4: going to be suitable for all, but you know, I

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Speaker 4: think there is going to be an appetite for it.

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Speaker 8: What does this mean for the competitive landscape? So you

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Speaker 8: have Lily, you have Novo. To your point, you have

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Speaker 8: hymns and hers like, is this going to create a

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Speaker 8: pricing war? Am I reading too much into that now?

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Speaker 4: I mean when we look at the I mean, the

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Speaker 4: headlines had fifty percent you know, discount, but we need

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Speaker 4: to remember that, you know, on a net price basis,

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Speaker 4: so you know, after taking account all the rebates and discounts,

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Speaker 4: you know, the pricing is probably you know, fairly similar

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Speaker 4: to the current net prices that we're seeing now at

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Speaker 4: the moment. You know, it's an underpenetrated market. You know,

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Speaker 4: there's massive demand out there, there's tight supply, So I

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Speaker 4: don't think it's gonna you know, change too much in

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Speaker 4: terms of the dynamics between you know, Novo and Lily.

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Speaker 4: I think I think prescribing decisions are you know, less

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Speaker 4: about kind of the profiles of the drug at the

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Speaker 4: moment and more about you know, what is ensured, what

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Speaker 4: can people get their hands on? So near term, I

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Speaker 4: don't see you know that that changing from a lily perspective.

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Speaker 4: You know, as they ramp up supply over the over

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Speaker 4: the midterm of their you know, their pens. You could

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Speaker 4: put GC patients switching from the injectable onto the pen

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Speaker 4: as in when that supply comes on board.

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Speaker 6: All right.

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Speaker 2: Thanks to Michael Schap, Bloomberg Intelligence Senior Parma biotech analyst.

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Speaker 5: We move next to one of the world's busiest seaports

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Speaker 5: and a leading gateway for international trade in North America,

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Speaker 5: the Port of Los Angeles.

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Speaker 2: This week, co hosts Alex Steele and I were joined

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Speaker 2: by Geen Soroka, Executive Director of the Port of Los Angeles.

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Speaker 2: We discussed his forecast for cargo volumes, the shipping industry,

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Speaker 2: and investing in ports moving forward, and we began by

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Speaker 2: asking Gene what the traffic is at the Port of LA.

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Speaker 10: We're up eighteen percent year on year off of very

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Speaker 10: modest comps, but we just crossed the five hundred thousand

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Speaker 10: container unit mark last month and it's only the fourth

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Speaker 10: time in our history we've had more than half a

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Speaker 10: million imports coming through Los Angeles. Big number for US,

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Speaker 10: and it continues the trend that we've seen thus far

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Speaker 10: this year. In addition, exports are now up fourteen consecutive

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Speaker 10: months year on year, So the volume as a whole

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Speaker 10: is really great, based mainly on a strong economy and

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Speaker 10: then some geopolitical issues around around the world that I'm

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Speaker 10: sure we'll talk about.

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Speaker 3: Yeah, So, Gin, I'm curious how much are your customers

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Speaker 3: talking about the geopolitics abroad but also here in the

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Speaker 3: US Anecdotally, I keep hearing that certain companies are just

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Speaker 3: holding back on investments until we get clarity on who's

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Speaker 3: going to be in the White House. Are you seeing

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Speaker 3: any of that.

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Speaker 10: In just about every conversation, alex It is an election

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Speaker 10: year and folks are looking to see and try to

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Speaker 10: hedge as to what type of policies will be in

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Speaker 10: place after inauguration.

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Speaker 11: You've got a protracted labor.

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Speaker 10: Negotiation on the East Coast with the Dock Workers and

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Speaker 10: Employers Association that's coming up for expiry at the end

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Speaker 10: of September. The Panama Canal drought issues have been in

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Speaker 10: the news for well over a year and a half,

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Speaker 10: and the ongoing security concerns in the Red Sea have

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Speaker 10: stymied crossings at the Suez Canal for more than a

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Speaker 10: year as well. All of that put together fractionally, you

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Speaker 10: see cargo coming to the West coast of the United

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Speaker 10: States and specifically Los Angeles in addition to the strength

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Speaker 10: of that economy.

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Speaker 11: That shows where the numbers are going.

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Speaker 2: Heyjean, just last week Bloomberg News published a really in

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Speaker 2: depth big Take story. Now look at your world ports

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Speaker 2: around seaports around the world and how some governments are

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Speaker 2: using them as really strategic tools here because they're becoming

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Speaker 2: so important for global trade. Just for the US, do

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Speaker 2: you feel like our ports are where they need to

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Speaker 2: be in terms of investments capacity or does the US,

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Speaker 2: whether it's a public private partnership, need to invest more.

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Speaker 10: We absolutely need to invest more. But beginning with the

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Speaker 10: Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and

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Speaker 10: now applications that are in front of the Environmental Protection Agency,

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Speaker 10: we've seen a focus on ports over the last three

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Speaker 10: and a half years here in the United States we

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Speaker 10: haven't seen in a generation. We'd like to have this

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Speaker 10: type of federal investment budgeted annually. And I also know

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Speaker 10: that the work here in California under Governor Gavin Newsom

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Speaker 10: has the same bent paying attention to these ports, investing

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Speaker 10: not only in the infrastructure, but digitalization as well as

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Speaker 10: clean and green technologies. This has to continue. But I

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Speaker 10: like the trajectory that we're on right now.

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Speaker 3: Going back to what you were mentioning about customers talking

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Speaker 3: about election uncertainty, what's your best guess as to what

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Speaker 3: happens after that. I'm trying to get a handle on, Like, Okay,

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Speaker 3: now I know who wins the White House. Are we

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Speaker 3: going to see a flood of money coming in like

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Speaker 3: a flood of buying or is it just going to

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Speaker 3: be incremental?

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Speaker 11: Well, Alex take away the politics.

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Speaker 10: The presumptive Republican nominee and now Republican nominee has said

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Speaker 10: he wants to put a ten percent tariff on all

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Speaker 10: three trillion dollars worth of imports that come to the

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Speaker 10: United States, sixty percent on those emanating from China, and

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Speaker 10: potentially sixty percent on automobiles and other products coming out

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Speaker 10: in Mexico. That would change the landscape here at the

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Speaker 10: Port of Los Angeles forever, and it would create inflation.

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Speaker 11: On the Democratic side.

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Speaker 10: What we've seen is a continuation of this teriff regime

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Speaker 10: and get tough on China policy, but in very small

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Speaker 10: targeted ways. What happens to investment after this has to

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Speaker 10: revolve around international and trade policy. What are we going

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Speaker 10: to do to stimulate not only the continuation of that

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Speaker 10: government investment federal and state level, but how we can

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Speaker 10: give confidence to the private sector to invest behind us.

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Speaker 2: Gee, nobody has a better view of China than you.

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Speaker 2: Guys in the Port of Los Angeles. Are the boats

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Speaker 2: still coming? Are they loaded as much? Because there's real

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Speaker 2: concern about the Chinese economy.

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Speaker 10: Yeah, a couple things, Paul. When we concluded calendar year

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Speaker 10: twenty twenty two, fifty seven percent of our business portfolio

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Speaker 10: here in Los Angeles was China cargo, imports and exports.

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Speaker 10: Right now it's about forty three percent. Yet we're still growing.

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00:22:05,160 --> 00:22:07,840
Speaker 10: We've been nimble enough here in Los Angeles to attract

438
00:22:07,840 --> 00:22:10,840
Speaker 10: the cargo in Southeast and South Asia. There are more

439
00:22:10,880 --> 00:22:14,760
Speaker 10: NonStop services being put in place by the shipping lines.

440
00:22:15,240 --> 00:22:17,680
Speaker 11: Speed has always been.

441
00:22:17,800 --> 00:22:21,200
Speaker 10: Our selling point with cargo coming from Asia and distributing

442
00:22:21,240 --> 00:22:24,720
Speaker 10: throughout the country. We keep these NonStop services in place,

443
00:22:24,960 --> 00:22:27,600
Speaker 10: that speed variable remains in our favor.

444
00:22:28,400 --> 00:22:30,520
Speaker 3: What's your biggest problem right now, Gene, Like, what keeps

445
00:22:30,560 --> 00:22:31,080
Speaker 3: you up at night?

446
00:22:31,560 --> 00:22:34,040
Speaker 10: Well, looking across the board, making sure we keep our

447
00:22:34,160 --> 00:22:37,320
Speaker 10: costs in place. And we do that with a relatively

448
00:22:37,400 --> 00:22:40,960
Speaker 10: expensive landscape on how we move cargo. But more volume

449
00:22:41,040 --> 00:22:44,360
Speaker 10: means our unit cost becomes much more competitive, and we're

450
00:22:44,400 --> 00:22:47,240
Speaker 10: trending in that direction nicely. We've got a very complex

451
00:22:47,320 --> 00:22:50,520
Speaker 10: labor landscape. Our dock workers have a contract for another

452
00:22:50,600 --> 00:22:54,000
Speaker 10: five years, but it's the trucker's warehouses folks in it

453
00:22:54,280 --> 00:22:57,960
Speaker 10: and manufacturing. We've got to keep trained up and moving

454
00:22:58,040 --> 00:23:01,480
Speaker 10: with this economy. And then lastly along the regulatory environment.

455
00:23:01,560 --> 00:23:03,560
Speaker 10: Got to make sure the clean air is a priority,

456
00:23:03,840 --> 00:23:07,480
Speaker 10: but making sure that we're balanced, because every four containers

457
00:23:07,480 --> 00:23:09,639
Speaker 10: here in Los Angeles creates a job.

458
00:23:10,320 --> 00:23:13,480
Speaker 2: Interesting, So, Gin, you mentioned some of your partners there,

459
00:23:13,480 --> 00:23:17,440
Speaker 2: whether that or at the docks, the warehouses, the transportation,

460
00:23:17,560 --> 00:23:20,720
Speaker 2: the rails and trucks. How is that supply chain, how

461
00:23:20,760 --> 00:23:24,920
Speaker 2: is that the logistic chain performing in your area these days?

462
00:23:25,440 --> 00:23:28,000
Speaker 10: I look at the vital statistics every morning, and after

463
00:23:28,119 --> 00:23:30,400
Speaker 10: just checking in with you all, I saw that they're

464
00:23:30,440 --> 00:23:33,160
Speaker 10: at or better than where they were pre COVID, with

465
00:23:33,359 --> 00:23:37,120
Speaker 10: one exception. Are on dock rail cargo sitting a little

466
00:23:37,119 --> 00:23:39,800
Speaker 10: bit longer than I would like. We're working very closely

467
00:23:39,840 --> 00:23:43,040
Speaker 10: with both the Union Pacific Railroad and BNSF to make

468
00:23:43,080 --> 00:23:46,800
Speaker 10: sure we have railcars, engine power, and crewing to match

469
00:23:46,920 --> 00:23:48,639
Speaker 10: this surgeon cargo that we have coming.

470
00:23:48,680 --> 00:23:48,960
Speaker 11: Now.

471
00:23:49,520 --> 00:23:52,119
Speaker 10: Nothing sinister is happening on the ground. Just need to

472
00:23:52,200 --> 00:23:55,560
Speaker 10: keep that velocity going so the next ships, of which

473
00:23:55,600 --> 00:23:57,920
Speaker 10: we have fifty six on the way from Asia, can

474
00:23:57,960 --> 00:24:00,840
Speaker 10: be worked expeditiously by our long shore remembers and they

475
00:24:00,960 --> 00:24:04,280
Speaker 10: gotten off into the American economy. And that's with all

476
00:24:04,320 --> 00:24:07,960
Speaker 10: this data, Paul, we see these micro in many spikes

477
00:24:08,040 --> 00:24:10,760
Speaker 10: or changes in the supply chain data, so we can

478
00:24:10,800 --> 00:24:12,960
Speaker 10: act much quicker than we ever have before.

479
00:24:13,240 --> 00:24:15,880
Speaker 5: Our thanks to Gene Soroka, executive director of the Port

480
00:24:15,880 --> 00:24:18,679
Speaker 5: of Los Angeles. Coming up on the program, we'll discuss

481
00:24:18,720 --> 00:24:21,480
Speaker 5: how the impact of a declining recount in the US

482
00:24:21,840 --> 00:24:23,240
Speaker 5: is impacting oil production.

483
00:24:23,560 --> 00:24:26,639
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing indepth

484
00:24:26,680 --> 00:24:28,840
Speaker 2: research and data on two thousand companies and one hundred

485
00:24:28,840 --> 00:24:31,840
Speaker 2: and thirty industries that can access Bloomberg Intelligence via BIGE

486
00:24:32,000 --> 00:24:33,640
Speaker 2: on the terminal. I'm Paul Sweeney and.

487
00:24:33,600 --> 00:24:34,440
Speaker 5: I'm Emily Grafeo.

488
00:24:34,640 --> 00:24:35,400
Speaker 11: This is Bloomberg.

489
00:24:40,080 --> 00:24:43,960
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

490
00:24:44,040 --> 00:24:47,959
Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

491
00:24:48,000 --> 00:24:50,760
Speaker 1: with the Bloomberg Business App. You can also listen live

492
00:24:50,840 --> 00:24:54,040
Speaker 1: on Amazon Alexa from our flagship New York station, Just

493
00:24:54,080 --> 00:24:57,720
Speaker 1: say Alexa Play Bloomberg eleven thirty.

494
00:24:58,600 --> 00:25:01,840
Speaker 5: I'm Paul Sweeney and I'm Grafo filling in for Alex Steele.

495
00:25:02,000 --> 00:25:04,480
Speaker 2: We move next to retail and the health of the consumer.

496
00:25:04,800 --> 00:25:08,040
Speaker 5: This week, we got earnings from retailers Coles, Abercrombie and

497
00:25:08,040 --> 00:25:09,840
Speaker 5: Fitch and Nordstrom, among others.

498
00:25:10,040 --> 00:25:12,320
Speaker 2: For more, guest hosts Michael Reagan and I were joined

499
00:25:12,320 --> 00:25:16,280
Speaker 2: by Mary Ross Gilbert Bloomberg Intelligence Senior Equity Animals. Covering retail,

500
00:25:16,680 --> 00:25:18,760
Speaker 2: we first asked Mary for her take on the most

501
00:25:18,800 --> 00:25:19,520
Speaker 2: recent results.

502
00:25:19,680 --> 00:25:22,199
Speaker 9: I would say mixed results coming out of retailers. So

503
00:25:22,240 --> 00:25:25,800
Speaker 9: for example, on Coals, they missed on the sales line,

504
00:25:26,040 --> 00:25:29,680
Speaker 9: so the comp sales came in down about five percent

505
00:25:30,040 --> 00:25:32,639
Speaker 9: and analysts were expecting down two and a half percent.

506
00:25:33,119 --> 00:25:35,399
Speaker 9: But the good news was that they beat on the

507
00:25:35,400 --> 00:25:39,000
Speaker 9: bottom line and they raised their earnings guidance for the year,

508
00:25:39,480 --> 00:25:42,520
Speaker 9: so they're now expecting something closer to two dollars whereas

509
00:25:42,560 --> 00:25:47,480
Speaker 9: before they are expecting something less than a dollar eighty previously.

510
00:25:47,560 --> 00:25:50,159
Speaker 9: So while that is good news, they do need to

511
00:25:50,160 --> 00:25:54,520
Speaker 9: get the top line right sided. And with Tom Kingsbury

512
00:25:54,840 --> 00:25:58,879
Speaker 9: as the CEO, and he has an amazing track record.

513
00:25:58,920 --> 00:26:01,960
Speaker 9: He's the one who took Burlington from sort of a

514
00:26:02,040 --> 00:26:07,439
Speaker 9: mall based type discount retailer to an off price, fast

515
00:26:07,480 --> 00:26:11,120
Speaker 9: growing company, so there's a lot of faith in him.

516
00:26:11,119 --> 00:26:14,360
Speaker 9: He's bringing in a new categories that so Fara business

517
00:26:14,400 --> 00:26:16,440
Speaker 9: did well. It was up load teens on a comp

518
00:26:16,480 --> 00:26:20,840
Speaker 9: basis with total beauty sales up forty five percent. But

519
00:26:21,000 --> 00:26:24,560
Speaker 9: now we need conversion and yes there's headwinds from the consumer.

520
00:26:25,200 --> 00:26:27,639
Speaker 9: So then if you take it over to Abercrombie on

521
00:26:27,760 --> 00:26:31,359
Speaker 9: the other side of the picture, their customer base for

522
00:26:31,440 --> 00:26:34,680
Speaker 9: both brands, Hollister and the Abercromby and Pitch brands, their

523
00:26:34,680 --> 00:26:37,199
Speaker 9: household income is one hundred to one hundred and fifty thousand,

524
00:26:37,640 --> 00:26:40,800
Speaker 9: not like Cohal's where you're under seventy five in household income,

525
00:26:40,840 --> 00:26:44,240
Speaker 9: and so you really have to be very discerning. So

526
00:26:44,480 --> 00:26:49,280
Speaker 9: an Abercromby is executing very very well and that explains

527
00:26:49,320 --> 00:26:52,320
Speaker 9: why they had double digit increases in comp sales. The

528
00:26:52,359 --> 00:26:55,840
Speaker 9: Abercrombie brand was up twenty one percent on a comp basis,

529
00:26:56,200 --> 00:26:59,720
Speaker 9: and you had a fifteen percent increase on Hollister and

530
00:26:59,760 --> 00:27:02,639
Speaker 9: that on top of double digit increases a year ago.

531
00:27:02,880 --> 00:27:06,240
Speaker 9: So that's a company that's executing very well with just

532
00:27:06,359 --> 00:27:08,760
Speaker 9: great results. And then Nordstrom is sort of in that

533
00:27:08,960 --> 00:27:13,720
Speaker 9: similar category. The sales were a little lighter than consensus estimated,

534
00:27:13,960 --> 00:27:18,840
Speaker 9: but they had strong full price sales. That's very encouraging

535
00:27:19,160 --> 00:27:22,360
Speaker 9: and the fact that the business is actually generating positive

536
00:27:22,440 --> 00:27:26,360
Speaker 9: sales something that we're not seeing really in department stores.

537
00:27:26,480 --> 00:27:28,760
Speaker 12: You know, Mary, if I listen to everything you're saying

538
00:27:28,840 --> 00:27:32,439
Speaker 12: from sort of a macro economics lens, I wonder if

539
00:27:32,440 --> 00:27:35,439
Speaker 12: there's like a big theme to be taken away here,

540
00:27:35,520 --> 00:27:39,479
Speaker 12: you know, excluding sort of the execution hits and misses

541
00:27:39,520 --> 00:27:41,480
Speaker 12: from each company. But it sounds to me like, you know,

542
00:27:41,520 --> 00:27:44,960
Speaker 12: those lower income consumers are struggling a little bit, the

543
00:27:45,000 --> 00:27:47,680
Speaker 12: higher income consumers are still spending. I mean, is it

544
00:27:48,200 --> 00:27:51,119
Speaker 12: is that simple takeaway? Is that too simplified or is

545
00:27:51,160 --> 00:27:53,800
Speaker 12: that really kind of the story that we're is emerging

546
00:27:53,800 --> 00:27:55,560
Speaker 12: from the earning season for retailers.

547
00:27:56,640 --> 00:27:59,480
Speaker 9: Yeah, I think that's fair. And even you know, as

548
00:27:59,480 --> 00:28:01,960
Speaker 9: we get up in to the higher income. They're also

549
00:28:02,040 --> 00:28:04,320
Speaker 9: trying to save money too. I think that you saw

550
00:28:04,359 --> 00:28:07,120
Speaker 9: that in the news out last week with walmartin Target,

551
00:28:07,440 --> 00:28:09,720
Speaker 9: and so a lot of them are taking advantage of

552
00:28:09,760 --> 00:28:12,679
Speaker 9: the better prices there, but that also keeps them in

553
00:28:12,720 --> 00:28:16,840
Speaker 9: a good position to continue spending elsewhere, you know, so

554
00:28:17,000 --> 00:28:20,240
Speaker 9: for things that are more desirable. So yes, I think

555
00:28:20,800 --> 00:28:24,000
Speaker 9: clearly the lower income, lower middle income consumer and even

556
00:28:24,040 --> 00:28:28,840
Speaker 9: middle income consumer is just having a hard time dealing

557
00:28:28,920 --> 00:28:32,960
Speaker 9: with high food and energy prices and that's showing up

558
00:28:33,080 --> 00:28:37,360
Speaker 9: in their very discerning spending. That's exactly what you're seeing, you.

559
00:28:37,280 --> 00:28:39,640
Speaker 12: Know, Mary, I sent my youngest two kids off to

560
00:28:39,680 --> 00:28:42,280
Speaker 12: the school back to school already, we started early in

561
00:28:42,320 --> 00:28:44,320
Speaker 12: the touch in but it got me thinking about that

562
00:28:44,360 --> 00:28:47,800
Speaker 12: whole that really important back to school shopping season, especially

563
00:28:47,800 --> 00:28:50,560
Speaker 12: for you know, your Abercrombie's of the world. What's the

564
00:28:50,680 --> 00:28:52,840
Speaker 12: outlook there, I mean, if you could put, you know,

565
00:28:52,920 --> 00:28:55,080
Speaker 12: break out your crystal ball and tell us what the

566
00:28:55,120 --> 00:28:57,080
Speaker 12: next quarter numbers are going to look like, do you think,

567
00:28:57,720 --> 00:28:59,520
Speaker 12: you know, is there going to be some weakness because

568
00:28:59,520 --> 00:29:01,160
Speaker 12: of all these shoes you're describing.

569
00:29:01,480 --> 00:29:04,400
Speaker 9: Yeah, so it's a good question, I think, once again, well,

570
00:29:04,440 --> 00:29:07,680
Speaker 9: we'll probably have some mixed results. But Abercromby is seeing

571
00:29:08,000 --> 00:29:12,160
Speaker 9: very good reaction to some of the initial categories that

572
00:29:12,200 --> 00:29:15,360
Speaker 9: they have. So for example, in Hollister, they've got their

573
00:29:15,480 --> 00:29:18,959
Speaker 9: collegiate line that they've launched and it's more extended. It

574
00:29:19,000 --> 00:29:22,320
Speaker 9: covers about thirty two universities. If you look at on

575
00:29:22,400 --> 00:29:27,280
Speaker 9: the Abercrome beside, they have the NFL line by Abercrombie

576
00:29:27,280 --> 00:29:29,440
Speaker 9: and they've had that this is the third year running now,

577
00:29:29,480 --> 00:29:32,440
Speaker 9: but each year they extend it further and further because

578
00:29:32,440 --> 00:29:35,120
Speaker 9: the demand is so strong and that's sort of part

579
00:29:35,160 --> 00:29:38,360
Speaker 9: of their strategy. So we are seeing I think good

580
00:29:38,400 --> 00:29:41,240
Speaker 9: results there now as we start to get more media

581
00:29:41,320 --> 00:29:45,000
Speaker 9: coverage of the election uncertainty we have seen in past

582
00:29:45,120 --> 00:29:48,400
Speaker 9: times around this election cycle where there is that uncertainty,

583
00:29:48,440 --> 00:29:53,320
Speaker 9: it can sometimes have an impact on consumer spending, but generally,

584
00:29:53,440 --> 00:29:56,840
Speaker 9: I think it's really going to come down to those

585
00:29:56,880 --> 00:30:01,080
Speaker 9: that are executing and those that are skewing to more

586
00:30:02,360 --> 00:30:06,960
Speaker 9: of a premium consumer or ones with greater discretionary income.

587
00:30:07,240 --> 00:30:10,560
Speaker 5: Our thanks to Mary Ross Gilbert Bloomberg Intelligence senior equity

588
00:30:10,560 --> 00:30:12,400
Speaker 5: analyst covering retail, we have.

589
00:30:12,400 --> 00:30:15,200
Speaker 2: Something here at Bloomberg called Bloomberg New Energy Finance.

590
00:30:15,360 --> 00:30:21,080
Speaker 5: The idea behind it is to provide data on commodities, power, transport, industries, buildings,

591
00:30:21,120 --> 00:30:22,080
Speaker 5: and agriculture.

592
00:30:22,240 --> 00:30:25,280
Speaker 2: Bn EF also talks about how businesses and governments can

593
00:30:25,360 --> 00:30:27,920
Speaker 2: finance and navigate change as we transition to a green

594
00:30:28,000 --> 00:30:28,680
Speaker 2: energy future.

595
00:30:28,840 --> 00:30:31,360
Speaker 5: This week, we looked at US oil supply. There is

596
00:30:31,400 --> 00:30:33,800
Speaker 5: a falling redcount and the question is whether we'll see

597
00:30:33,800 --> 00:30:35,880
Speaker 5: falling oil production moving forward.

598
00:30:36,160 --> 00:30:38,200
Speaker 2: For more, co host Alex Steele and I were joined

599
00:30:38,200 --> 00:30:42,640
Speaker 2: by thy Lu bn EF global oil supply specialist. We

600
00:30:42,680 --> 00:30:45,280
Speaker 2: first asked Ty to talk to us about the impact

601
00:30:45,280 --> 00:30:46,480
Speaker 2: of a declining recount.

602
00:30:46,680 --> 00:30:50,320
Speaker 13: I think the declining ricont in the US that we've

603
00:30:50,360 --> 00:30:52,480
Speaker 13: seen it's not going to have that much that big

604
00:30:52,480 --> 00:30:54,840
Speaker 13: over for the impact as it seems as much as

605
00:30:54,920 --> 00:30:58,320
Speaker 13: the headline numbers suggests. And part of the reasons is because,

606
00:30:58,480 --> 00:31:01,160
Speaker 13: like if shoot a catch the premium where we have

607
00:31:01,400 --> 00:31:05,400
Speaker 13: like the biggest all production region in the US the

608
00:31:05,440 --> 00:31:08,280
Speaker 13: world completions, it's only done about four and a half

609
00:31:08,320 --> 00:31:11,800
Speaker 13: percent compared to the recount which is done about fifteen percent.

610
00:31:12,320 --> 00:31:14,240
Speaker 13: And so and on top of that you have a

611
00:31:14,280 --> 00:31:16,959
Speaker 13: lot of efficiency gains in the sector, so you are

612
00:31:17,040 --> 00:31:20,560
Speaker 13: able to complete a lot more wells with much fewer

613
00:31:20,600 --> 00:31:23,480
Speaker 13: freight crews across the industry. So I think the recont

614
00:31:23,640 --> 00:31:26,160
Speaker 13: number could be a little bit misceding if you're focusing

615
00:31:26,160 --> 00:31:26,680
Speaker 13: too much on that.

616
00:31:27,560 --> 00:31:30,760
Speaker 2: So I'm SPA just just looking at your report here

617
00:31:30,800 --> 00:31:33,760
Speaker 2: and seeing how production in the US continues to increase,

618
00:31:33,800 --> 00:31:35,360
Speaker 2: but maybe at a slower rate.

619
00:31:36,040 --> 00:31:36,400
Speaker 11: I don't know.

620
00:31:37,480 --> 00:31:40,000
Speaker 2: I got WTI Coroyal seventy seven bucks. Why don't I

621
00:31:40,080 --> 00:31:41,760
Speaker 2: drill some more? I can make money. I mean, it

622
00:31:41,760 --> 00:31:43,720
Speaker 2: only costs those guys forty fifty bucks to get it

623
00:31:43,720 --> 00:31:44,600
Speaker 2: out of the ground, right.

624
00:31:44,560 --> 00:31:45,360
Speaker 13: Yeah, yeah, for sure.

625
00:31:45,400 --> 00:31:45,600
Speaker 4: Yeah.

626
00:31:45,600 --> 00:31:47,960
Speaker 13: So when we look at the bricks evens, especially in

627
00:31:48,000 --> 00:31:50,560
Speaker 13: the Perman it's probably around in the low to mid

628
00:31:50,600 --> 00:31:53,320
Speaker 13: forties for their Miden basin, and then for the Delrow

629
00:31:53,400 --> 00:31:55,600
Speaker 13: basin it's probably even lower than that because they produce

630
00:31:55,600 --> 00:31:57,600
Speaker 13: a lot more gas. But part of the reason is

631
00:31:57,600 --> 00:32:01,760
Speaker 13: because the US all patch has really pivoted and transform

632
00:32:01,760 --> 00:32:05,720
Speaker 13: itself in the past couple of years now. Before the pandemic,

633
00:32:06,200 --> 00:32:09,920
Speaker 13: oil producers were very much focused on production growth. But

634
00:32:09,960 --> 00:32:12,960
Speaker 13: after the pandemic, the industry has changed and now they're

635
00:32:12,960 --> 00:32:17,240
Speaker 13: focusing on financial returns. In order to improve the financial returns,

636
00:32:17,280 --> 00:32:19,840
Speaker 13: they have to become more efficient. So in the past

637
00:32:19,920 --> 00:32:23,400
Speaker 13: few years you have seen a lot of cost cutting initiatives,

638
00:32:23,600 --> 00:32:26,960
Speaker 13: a lot of optimizations on logistics and supply chains, a

639
00:32:26,960 --> 00:32:30,320
Speaker 13: lot of investments in infrastructures. So the entire industry has

640
00:32:30,360 --> 00:32:33,040
Speaker 13: become a lot more efficient in the past couple of years.

641
00:32:33,680 --> 00:32:35,760
Speaker 13: And on top of that, they have also become a

642
00:32:35,800 --> 00:32:40,280
Speaker 13: lot more resilient. And what that means is that nowadays

643
00:32:40,360 --> 00:32:43,280
Speaker 13: the USR industry can produce a lot more oil with

644
00:32:43,440 --> 00:32:47,320
Speaker 13: much lower capital investments compared to like just five years ago.

645
00:32:47,880 --> 00:32:48,800
Speaker 5: Also, what are the.

646
00:32:48,760 --> 00:32:51,840
Speaker 3: Cool things that oil companies are doing to extract more

647
00:32:51,880 --> 00:32:54,120
Speaker 3: oil out of rock at the end of the day.

648
00:32:54,160 --> 00:32:56,080
Speaker 3: I mean, I went to a conference but a year ago,

649
00:32:56,360 --> 00:32:58,600
Speaker 3: and everyone was like, ooh, three mile laterals. And what

650
00:32:58,600 --> 00:33:00,920
Speaker 3: that means is you basically drill pipe down and then

651
00:33:00,960 --> 00:33:04,640
Speaker 3: you drill it across the rock basically lateral, and you

652
00:33:05,480 --> 00:33:08,480
Speaker 3: fracture it. And the longer you go, in theory, the

653
00:33:08,560 --> 00:33:11,440
Speaker 3: more rock you'll be able to access, and then in theory,

654
00:33:11,480 --> 00:33:13,440
Speaker 3: the more oil you'll get out of that rock.

655
00:33:13,920 --> 00:33:16,240
Speaker 11: Wow, is that too nerdy?

656
00:33:16,640 --> 00:33:16,720
Speaker 12: No?

657
00:33:16,800 --> 00:33:17,000
Speaker 3: Okay?

658
00:33:17,080 --> 00:33:17,320
Speaker 7: Cool?

659
00:33:17,600 --> 00:33:20,040
Speaker 2: I wonder that frackening is short for fracturing.

660
00:33:20,240 --> 00:33:21,480
Speaker 4: Yes, I didn't know that good job.

661
00:33:22,640 --> 00:33:26,360
Speaker 3: We learned things here at Boomberg Intelligence. So based on that,

662
00:33:26,400 --> 00:33:28,520
Speaker 3: what are the cool technologies that are coming up that's

663
00:33:28,560 --> 00:33:30,480
Speaker 3: going to enable even more oil to come out of

664
00:33:30,480 --> 00:33:30,800
Speaker 3: the rock.

665
00:33:31,320 --> 00:33:34,400
Speaker 13: Yeah, So during these longerleros is definitely like a big

666
00:33:34,440 --> 00:33:38,280
Speaker 13: part of these efficiency gags because you're reducing a lot

667
00:33:38,360 --> 00:33:41,240
Speaker 13: of the service costs when you're teing longer letros, And

668
00:33:41,320 --> 00:33:43,520
Speaker 13: like you said, Alex, you're making a lot more contact

669
00:33:43,560 --> 00:33:46,760
Speaker 13: with the sauce rock, so you can pull out a

670
00:33:46,800 --> 00:33:50,240
Speaker 13: lot more resources from the same well. Had some of these,

671
00:33:50,320 --> 00:33:53,880
Speaker 13: like I guess better practices would be having a lot

672
00:33:53,920 --> 00:33:58,080
Speaker 13: more building out the water handling infrastructure. Some of them

673
00:33:58,080 --> 00:34:00,880
Speaker 13: will be optimizing your fractic size, some of them would

674
00:34:00,880 --> 00:34:03,720
Speaker 13: be let me see what else I'm optimizing your spacing

675
00:34:04,120 --> 00:34:06,680
Speaker 13: between the wells. So a lot of these, like see

676
00:34:06,720 --> 00:34:10,120
Speaker 13: many small things on individually. When they act together, they

677
00:34:10,120 --> 00:34:13,440
Speaker 13: can have a big impact, especially over time. For example,

678
00:34:13,440 --> 00:34:16,480
Speaker 13: one of the big producers in the perman I was

679
00:34:16,520 --> 00:34:18,520
Speaker 13: looking at the data and they were able to reduce

680
00:34:18,600 --> 00:34:22,359
Speaker 13: them courts per the well cause Perletto foot by about

681
00:34:22,400 --> 00:34:27,320
Speaker 13: thirty percent between twenty yes between twenty nineteen and twenty

682
00:34:27,360 --> 00:34:30,600
Speaker 13: twenty four, So there's a huge gains in terms of percentage.

683
00:34:31,040 --> 00:34:33,239
Speaker 2: All right, So I thought, if you go into like

684
00:34:34,000 --> 00:34:36,960
Speaker 2: you find some shale somewhere, don't you don't you do

685
00:34:37,000 --> 00:34:40,400
Speaker 2: your good wells, your easy wells first, and then shouldn't

686
00:34:40,400 --> 00:34:41,960
Speaker 2: the productivity decline over time?

687
00:34:42,239 --> 00:34:45,920
Speaker 13: Yeah, that's exactly pretty mure. We've seen, like like you said,

688
00:34:46,680 --> 00:34:48,920
Speaker 13: in the US, the OI and gas companies. So what they

689
00:34:48,960 --> 00:34:50,680
Speaker 13: do is they drew the best say which first, because

690
00:34:50,680 --> 00:34:52,279
Speaker 13: they want to realize that that person while you have

691
00:34:53,400 --> 00:34:56,360
Speaker 13: better weals. And when we look at the data for

692
00:34:56,400 --> 00:35:00,200
Speaker 13: the past five years, what we're seeing is that all

693
00:35:00,200 --> 00:35:03,000
Speaker 13: production on a well level basis has been declining every

694
00:35:03,040 --> 00:35:05,400
Speaker 13: year for the past three four years, pretty much across

695
00:35:05,400 --> 00:35:09,040
Speaker 13: the board. But what's interesting is that in twenty twenty four,

696
00:35:09,160 --> 00:35:11,239
Speaker 13: the data that are coming in so far is they're

697
00:35:11,239 --> 00:35:14,560
Speaker 13: looking different. Oil production on a well level basis is

698
00:35:14,600 --> 00:35:17,319
Speaker 13: actually better for the weals the camera line in twenty

699
00:35:17,360 --> 00:35:20,080
Speaker 13: twenty four compared to those last year. So what that

700
00:35:20,120 --> 00:35:23,400
Speaker 13: means is that technology improvements could be turning back to tide.

701
00:35:23,560 --> 00:35:26,440
Speaker 13: For this production declined on a well level basis.

702
00:35:26,120 --> 00:35:29,399
Speaker 3: Which is why it's so cool when we talk about

703
00:35:29,440 --> 00:35:33,040
Speaker 3: laterals now we're talking about three miles. That's a lot,

704
00:35:33,400 --> 00:35:36,399
Speaker 3: and a lot can go wrong in three miles. Now,

705
00:35:36,480 --> 00:35:38,719
Speaker 3: just about five years ago, the talk was like, oh, well,

706
00:35:38,760 --> 00:35:41,359
Speaker 3: if you frag here, then you're gonna hurt the rock

707
00:35:41,440 --> 00:35:43,600
Speaker 3: over here, and then it's gonna mess up the oil

708
00:35:43,640 --> 00:35:45,520
Speaker 3: distribution and all that kind of stuff. What are the

709
00:35:45,600 --> 00:35:48,360
Speaker 3: problems that are emerging the longer out we go in

710
00:35:48,400 --> 00:35:49,000
Speaker 3: these rocks.

711
00:35:49,280 --> 00:35:51,440
Speaker 13: I think one of the biggest risk rere factors, Like,

712
00:35:51,440 --> 00:35:53,960
Speaker 13: like you said, if something goes wrong on alex, you

713
00:35:54,080 --> 00:35:57,080
Speaker 13: lose production from three mileth worths worth of flat or

714
00:35:58,200 --> 00:36:01,200
Speaker 13: so that's going to be a big opertun need opportunity

715
00:36:01,239 --> 00:36:03,600
Speaker 13: costs for you. But at the same time, if things

716
00:36:03,640 --> 00:36:06,400
Speaker 13: go right, you can save potentially save a lot of money.

717
00:36:07,080 --> 00:36:10,160
Speaker 13: I think not only during longer ledterals. Some of these

718
00:36:10,160 --> 00:36:14,080
Speaker 13: companies they're actually making U turns under the ground so

719
00:36:14,239 --> 00:36:16,960
Speaker 13: they can yeah, they can stay within the acreage and

720
00:36:17,040 --> 00:36:19,120
Speaker 13: so they can make more contact with the source rock.

721
00:36:19,360 --> 00:36:21,359
Speaker 3: So if you do that, do they you turn into

722
00:36:21,400 --> 00:36:23,360
Speaker 3: another layer of the rock or do you turn in

723
00:36:23,360 --> 00:36:24,400
Speaker 3: the same layer the.

724
00:36:24,440 --> 00:36:25,440
Speaker 13: You turn in the same layer.

725
00:36:25,880 --> 00:36:27,560
Speaker 3: Oh my god, that feels like a lot can go

726
00:36:27,600 --> 00:36:28,080
Speaker 3: wrong there.

727
00:36:28,200 --> 00:36:31,840
Speaker 13: Yeah, Well, what companies are doing that. I remember Metady

728
00:36:32,000 --> 00:36:34,799
Speaker 13: Resources in the permit is doing our U turns on

729
00:36:34,840 --> 00:36:36,520
Speaker 13: the ledterals, and there are a couple other ones. I

730
00:36:36,560 --> 00:36:37,759
Speaker 13: don't become on top of my head.

731
00:36:38,160 --> 00:36:40,400
Speaker 11: Oh man, or is this nerdy enough for you?

732
00:36:40,520 --> 00:36:40,680
Speaker 6: Yeah?

733
00:36:40,719 --> 00:36:41,520
Speaker 11: That's really cool.

734
00:36:41,960 --> 00:36:45,280
Speaker 2: Well, here's my dumb question today. Never other than shale

735
00:36:45,320 --> 00:36:47,600
Speaker 2: oil oil coming from shale, do we still drill old

736
00:36:47,600 --> 00:36:49,520
Speaker 2: fashioned rigs and produce oil that way?

737
00:36:49,760 --> 00:36:50,400
Speaker 13: We do? We do?

738
00:36:50,480 --> 00:36:50,719
Speaker 3: We do.

739
00:36:50,880 --> 00:36:52,440
Speaker 13: We still do that quite a bit. But if you're

740
00:36:52,440 --> 00:36:56,560
Speaker 13: talking about on shore, the productivities of this world is

741
00:36:56,600 --> 00:37:00,000
Speaker 13: probably like ten percent or maybe twenty percent of these

742
00:37:00,080 --> 00:37:03,320
Speaker 13: horizontal wells, So the impact is probably it's definitely a

743
00:37:03,360 --> 00:37:05,320
Speaker 13: lot smaller than the horizontal ones.

744
00:37:05,400 --> 00:37:08,880
Speaker 5: Our thanks to taylou Bnf, global oil supply Specialist.

745
00:37:09,239 --> 00:37:13,759
Speaker 1: This is the Bloomberg Intelligence Podcast, available on apples, Spotify,

746
00:37:13,960 --> 00:37:17,160
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747
00:37:17,200 --> 00:37:20,560
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748
00:37:20,680 --> 00:37:24,080
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749
00:37:24,200 --> 00:37:27,160
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