1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,560 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money. Whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P and L 6 00:00:20,840 --> 00:00:27,040 Speaker 1: Podcast on United States oil growth in oil production in 7 00:00:27,160 --> 00:00:31,000 Speaker 1: Texas and the Permian and Bakan geological regions. They have 8 00:00:31,080 --> 00:00:35,000 Speaker 1: now put US total oil production ahead of Russia for 9 00:00:35,000 --> 00:00:41,200 Speaker 1: the first time since You can credit technology, the shale revolution, 10 00:00:41,479 --> 00:00:44,680 Speaker 1: and lots of money with this advancement. Here to tell 11 00:00:44,760 --> 00:00:47,440 Speaker 1: us more about it is Bethanie McClain, the author and 12 00:00:47,520 --> 00:00:50,040 Speaker 1: contributing editor to Vanity Fair and the author of a 13 00:00:50,080 --> 00:00:54,200 Speaker 1: new book entitled Saudi America, The Truth about Fracking and 14 00:00:54,240 --> 00:00:57,120 Speaker 1: How It's Changing the World. Bethany, thank you very much 15 00:00:57,120 --> 00:01:01,360 Speaker 1: for coming in. Just start off by explaining to people 16 00:01:02,120 --> 00:01:06,840 Speaker 1: what you learned as you made all of the investigations 17 00:01:06,920 --> 00:01:08,920 Speaker 1: to do this book. Because there's been a lot of 18 00:01:08,920 --> 00:01:14,360 Speaker 1: headlines about fracking, the shale revolution, the technology. What did 19 00:01:14,360 --> 00:01:18,280 Speaker 1: you find out after you did all of your investigational work. 20 00:01:18,920 --> 00:01:21,240 Speaker 1: So the thing that obsessed me, the question that obsessed 21 00:01:21,280 --> 00:01:23,600 Speaker 1: me was how it could be true that fracking could 22 00:01:23,600 --> 00:01:26,920 Speaker 1: be changing the world and it is. It's reshaping geopolitics. 23 00:01:27,120 --> 00:01:29,480 Speaker 1: You just saw the numbers you cited, but that the 24 00:01:29,520 --> 00:01:33,560 Speaker 1: industry doesn't make money, that it's on this shaky financial footing, 25 00:01:33,560 --> 00:01:36,200 Speaker 1: and how could both things be true at once? And 26 00:01:36,280 --> 00:01:38,600 Speaker 1: so that's the question I set out to answer. I 27 00:01:38,600 --> 00:01:41,760 Speaker 1: guess what I learned. I came to this broader realization 28 00:01:41,840 --> 00:01:44,400 Speaker 1: that this whole concept of energy and dependence, which has 29 00:01:44,400 --> 00:01:47,560 Speaker 1: been pushed by every president since the nineties seventies, is 30 00:01:47,600 --> 00:01:51,360 Speaker 1: this exalted grand goal we needed to achieve, that it's 31 00:01:51,360 --> 00:01:54,400 Speaker 1: somewhat of a of a fraud today. Um, it doesn't 32 00:01:54,480 --> 00:01:57,880 Speaker 1: make sense as a broad goal. I have to wonder. 33 00:01:58,240 --> 00:02:01,320 Speaker 1: You wrote the first skeptical art goal about Enron back 34 00:02:01,320 --> 00:02:05,920 Speaker 1: in two thousand one. Of course, Enron collapsed under accounting fraud. 35 00:02:06,240 --> 00:02:10,440 Speaker 1: Is there something that is similar about the way that 36 00:02:10,480 --> 00:02:15,600 Speaker 1: the shale story is being told today? It's an interesting question. 37 00:02:15,880 --> 00:02:19,239 Speaker 1: I don't. I suppose there's a certain lack of transparency 38 00:02:19,560 --> 00:02:22,160 Speaker 1: in in shale, but I think you can you can 39 00:02:22,280 --> 00:02:24,560 Speaker 1: figure it out if you delve into the details. I 40 00:02:24,600 --> 00:02:26,840 Speaker 1: actually think it might be the opposite and that the 41 00:02:26,840 --> 00:02:29,160 Speaker 1: problems with the industry are right there on the surface. 42 00:02:29,480 --> 00:02:31,840 Speaker 1: It's pretty easy to tell that the industry doesn't make 43 00:02:31,880 --> 00:02:34,200 Speaker 1: any money. It's just that it's not something we want 44 00:02:34,200 --> 00:02:36,320 Speaker 1: to take into account as we think about it. So 45 00:02:36,320 --> 00:02:38,079 Speaker 1: it's so interesting. We've been talking about this. They used 46 00:02:38,080 --> 00:02:41,560 Speaker 1: to cover debt markets very very closely, and we were 47 00:02:41,600 --> 00:02:44,120 Speaker 1: talking about just this explosion of shale debt that got 48 00:02:44,120 --> 00:02:49,519 Speaker 1: absolutely punished in two thousand two sixteen. Uh, And now 49 00:02:49,520 --> 00:02:52,400 Speaker 1: people are saying, well, the existing companies are in good shape, 50 00:02:52,400 --> 00:02:54,280 Speaker 1: because it was sort of, you know, this was like 51 00:02:54,480 --> 00:02:56,640 Speaker 1: a sort of a sweep of all bad ones and 52 00:02:56,639 --> 00:02:58,960 Speaker 1: the ones that are remaining are strong and healthy. Do 53 00:02:59,000 --> 00:03:00,720 Speaker 1: you think that's true or do you think there's still 54 00:03:00,760 --> 00:03:02,880 Speaker 1: is a lot of fragility. I think there's some truth 55 00:03:02,960 --> 00:03:05,720 Speaker 1: to it. But the wipeout wasn't what it would have 56 00:03:05,800 --> 00:03:09,240 Speaker 1: been because Wall Street was there. Wall Street remained willing 57 00:03:09,240 --> 00:03:12,480 Speaker 1: to finance these companies. Banks remained willing to restructure debt. 58 00:03:12,760 --> 00:03:14,720 Speaker 1: Part of that has to do with the dynamics that 59 00:03:14,760 --> 00:03:17,480 Speaker 1: are keeping the industry going, which is the flood of 60 00:03:17,520 --> 00:03:20,919 Speaker 1: pension fund money into private equity firms and credit hedge funds, 61 00:03:20,919 --> 00:03:23,560 Speaker 1: and the credit hedge funds then invested in the distress 62 00:03:23,639 --> 00:03:26,640 Speaker 1: debt of these of these energy companies, so the money 63 00:03:26,760 --> 00:03:29,639 Speaker 1: was still there, it didn't go away, And I think 64 00:03:29,680 --> 00:03:32,240 Speaker 1: the the the final answer to what you just said 65 00:03:32,280 --> 00:03:34,720 Speaker 1: is that the industry still isn't making money. Um. The 66 00:03:34,760 --> 00:03:37,240 Speaker 1: most recent analysis I saw was a Wall Street Journal 67 00:03:37,240 --> 00:03:39,040 Speaker 1: analysis I think it was either the first or the 68 00:03:39,080 --> 00:03:41,840 Speaker 1: second quarter of two thousand eighteen that only five companies 69 00:03:42,200 --> 00:03:47,800 Speaker 1: produced positive cash flow. Energy companies that specialize in fracking. 70 00:03:48,880 --> 00:03:53,080 Speaker 1: They're valued on how much acreage they have, right, how 71 00:03:53,160 --> 00:03:56,760 Speaker 1: much acreage they have plus how much production they have, 72 00:03:57,360 --> 00:04:01,119 Speaker 1: not on how profitable they are how did we get there? 73 00:04:02,440 --> 00:04:05,000 Speaker 1: So people have been willing to fund shale based on 74 00:04:05,040 --> 00:04:07,840 Speaker 1: this belief that it's going to be profitable one day, 75 00:04:07,920 --> 00:04:10,720 Speaker 1: and so in the absence of real profits, they've come 76 00:04:10,800 --> 00:04:12,920 Speaker 1: up with other ways to value it, which has been 77 00:04:13,080 --> 00:04:16,440 Speaker 1: multiples of acreage looking at production growth. To me, it's 78 00:04:16,560 --> 00:04:19,599 Speaker 1: very reminiscent of the first dot com boom boom, when 79 00:04:19,680 --> 00:04:22,640 Speaker 1: dot com companies were valued as a multiple of eyeballs. 80 00:04:22,680 --> 00:04:26,200 Speaker 1: Because in the absence of traditional measures of profitability, if 81 00:04:26,240 --> 00:04:27,960 Speaker 1: you want to value things, you have to turn to 82 00:04:28,160 --> 00:04:32,440 Speaker 1: non traditional and you have to find something that's positive, right, 83 00:04:32,640 --> 00:04:35,839 Speaker 1: But that's enabled this whole mechanism to work. And it's 84 00:04:35,880 --> 00:04:38,400 Speaker 1: too cynical to call it a daisy chain, but it's 85 00:04:38,440 --> 00:04:41,360 Speaker 1: meant that you can build fat private equity, can fund 86 00:04:41,440 --> 00:04:44,039 Speaker 1: a fracking company and take it public or sell it 87 00:04:44,080 --> 00:04:47,840 Speaker 1: to an already public company, and everybody can make money. 88 00:04:47,880 --> 00:04:50,679 Speaker 1: But that extract money along the way, But that doesn't 89 00:04:50,760 --> 00:04:53,800 Speaker 1: mean in the end that the industry is making money. 90 00:04:54,000 --> 00:04:58,000 Speaker 1: The industry's net debt in was two hundred billion dollars. 91 00:04:58,000 --> 00:05:01,640 Speaker 1: It's increase from two thous five This is according to 92 00:05:01,920 --> 00:05:05,400 Speaker 1: some Columbia University professor's statistics that you cited in a 93 00:05:05,680 --> 00:05:07,520 Speaker 1: recent story that you wrote for The Times. For the 94 00:05:07,520 --> 00:05:10,200 Speaker 1: New York Times, I'm just wondering, can you fast forward 95 00:05:10,200 --> 00:05:13,200 Speaker 1: for us? What is the consequence of the fact that 96 00:05:13,279 --> 00:05:15,960 Speaker 1: these private equity and private debt funds are financing and 97 00:05:16,080 --> 00:05:19,800 Speaker 1: industry that is held up with great esteem from a 98 00:05:19,839 --> 00:05:23,000 Speaker 1: policy perspective, but has not made any money. So I 99 00:05:23,040 --> 00:05:25,200 Speaker 1: think there are two answers to that. One is a 100 00:05:25,200 --> 00:05:28,440 Speaker 1: financial answer, and it worries me. Pension funds around the 101 00:05:28,440 --> 00:05:31,599 Speaker 1: country are in dire shape. They in the absence of 102 00:05:31,600 --> 00:05:35,360 Speaker 1: any returns in traditional fixed income markets. They've started putting 103 00:05:35,360 --> 00:05:38,760 Speaker 1: their money into private equity firms. If the returns aren't 104 00:05:38,760 --> 00:05:40,720 Speaker 1: there at the end of the day, and if the 105 00:05:40,760 --> 00:05:45,520 Speaker 1: daisy chain stops in the private equity portfolios, that's problematic 106 00:05:45,560 --> 00:05:48,039 Speaker 1: for pension funds around around the country, and that's a 107 00:05:48,080 --> 00:05:51,400 Speaker 1: real issue given that they are underfunded anyway. I think 108 00:05:51,440 --> 00:05:53,480 Speaker 1: the broader question, though, is sort of more of an 109 00:05:53,480 --> 00:05:57,120 Speaker 1: existential one, even beyond the financial repercussions of this, which 110 00:05:57,160 --> 00:05:59,560 Speaker 1: is that we're beating our chest about energy and dependence 111 00:05:59,600 --> 00:06:01,600 Speaker 1: and how rate it is that we're now the biggest 112 00:06:01,640 --> 00:06:04,479 Speaker 1: producer of oil, ahead of Russia and Saudi Arabia. But 113 00:06:04,560 --> 00:06:08,120 Speaker 1: what does that really mean if there's a risk to production, 114 00:06:08,400 --> 00:06:12,480 Speaker 1: if the capital dries up and energy is Energy is 115 00:06:12,520 --> 00:06:15,960 Speaker 1: the foundation of national security. World wars have been one 116 00:06:16,000 --> 00:06:19,680 Speaker 1: and lass based on access to energy. It's incredibly important, 117 00:06:20,120 --> 00:06:24,880 Speaker 1: and I don't like seeing short term, short term policy 118 00:06:24,920 --> 00:06:28,120 Speaker 1: and the absence of long term thinking. Just to pick 119 00:06:28,200 --> 00:06:30,599 Speaker 1: up on the figure, Lisa that you mentioned, the two 120 00:06:31,000 --> 00:06:33,479 Speaker 1: billion dollars worth of debt that has been raised in 121 00:06:33,600 --> 00:06:38,320 Speaker 1: order to support the fracking industry. Based on your research, 122 00:06:38,560 --> 00:06:42,680 Speaker 1: would that two billion dollars be better served if it 123 00:06:42,800 --> 00:06:48,880 Speaker 1: was spent investigating new sources of renewable energy. That is 124 00:06:48,920 --> 00:06:51,919 Speaker 1: a really hard question to answer, because I do think 125 00:06:52,000 --> 00:06:54,880 Speaker 1: that unleashing our supply of oil and natural gas has 126 00:06:54,880 --> 00:06:58,360 Speaker 1: had some positives. UM, it's given us leverage, it gives 127 00:06:58,400 --> 00:07:01,520 Speaker 1: Europe leverage, and negotiating with Russia over its supply of 128 00:07:01,600 --> 00:07:05,200 Speaker 1: natural gas. I think that natural gas is actually more 129 00:07:05,520 --> 00:07:09,400 Speaker 1: real than oil is. Um it's it's more economically viable 130 00:07:09,480 --> 00:07:11,840 Speaker 1: than producing oil is. And so there's some really good 131 00:07:11,840 --> 00:07:13,960 Speaker 1: things about this. But one other thing I was really 132 00:07:13,960 --> 00:07:15,880 Speaker 1: struck by and doing this book, where the number of 133 00:07:15,920 --> 00:07:19,400 Speaker 1: smart investors I talked to who are not investing in 134 00:07:19,440 --> 00:07:22,760 Speaker 1: oil and gas anymore because the age of renewables is coming. 135 00:07:22,800 --> 00:07:25,320 Speaker 1: The only question is when, and once we know the 136 00:07:25,360 --> 00:07:28,080 Speaker 1: answer to when, the price of oil will go into 137 00:07:28,120 --> 00:07:31,040 Speaker 1: a cyclical into a secular decline and never recover. That's 138 00:07:31,080 --> 00:07:33,400 Speaker 1: what happened with coal. And so for us to fall 139 00:07:33,480 --> 00:07:36,840 Speaker 1: behind in the race to develop renewables is for us 140 00:07:36,880 --> 00:07:38,840 Speaker 1: to look at the world as it is and not 141 00:07:38,920 --> 00:07:40,840 Speaker 1: the world as it's going to be, and perhaps seed 142 00:07:40,880 --> 00:07:44,840 Speaker 1: American leadership in the world of the future. Bethany McLean, 143 00:07:44,840 --> 00:07:47,480 Speaker 1: thank you so much for coming in really fascinating. Bethany 144 00:07:47,560 --> 00:07:50,760 Speaker 1: McLean is an author and contributing an editor at Vanity Fair. 145 00:07:51,120 --> 00:07:54,400 Speaker 1: Her new book is Saudi America, The Truth about Fracking 146 00:07:54,440 --> 00:07:57,880 Speaker 1: and how It's Changing the World. And she was the 147 00:07:57,920 --> 00:08:01,280 Speaker 1: one who wrote the first skeptical article about and Ron. 148 00:08:01,360 --> 00:08:03,960 Speaker 1: I just want to bring you some breaking headlines Goldman 149 00:08:04,000 --> 00:08:07,960 Speaker 1: Sacks confirming Stephen's share as chief financial officer, also saying 150 00:08:08,120 --> 00:08:12,440 Speaker 1: that they are going to name John Waldron as president. 151 00:08:12,640 --> 00:08:15,760 Speaker 1: This according to The Wall Street Journal. We will bring 152 00:08:15,760 --> 00:08:19,240 Speaker 1: you more throughout the day as that unfold. Coming up 153 00:08:19,280 --> 00:08:23,000 Speaker 1: Bloomberg Politics, Policy, power and Law. I'm Lisa Bramwitz along 154 00:08:23,040 --> 00:08:29,360 Speaker 1: up co host Pim Fox, and this is Bloomberg. Commercial 155 00:08:29,400 --> 00:08:33,440 Speaker 1: Banking in the United States, particularly in the Northeastern regions, 156 00:08:33,559 --> 00:08:35,920 Speaker 1: is our focus. And Don McCree is the vice chairman 157 00:08:35,920 --> 00:08:39,040 Speaker 1: and the head of commercial banking for Citizens Financial Group. 158 00:08:39,320 --> 00:08:42,320 Speaker 1: They're based in Providence, Rhode Island. But Don joins us 159 00:08:42,360 --> 00:08:45,480 Speaker 1: here in our eleven three oh studios, Donn, I gotta 160 00:08:45,520 --> 00:08:49,120 Speaker 1: ask your thirty year veteran of JP Morgan, Right, that's right, 161 00:08:49,200 --> 00:08:51,959 Speaker 1: What what caused you? What is Citizens Bank? For a 162 00:08:52,000 --> 00:08:54,680 Speaker 1: lot of people don't know about Citizens Bank. They know 163 00:08:54,720 --> 00:08:57,520 Speaker 1: about maybe the changes that went on inside the banking 164 00:08:57,520 --> 00:09:00,640 Speaker 1: industry in general. But tell us about Since Bank and 165 00:09:00,679 --> 00:09:02,520 Speaker 1: why you decided that this is where you want to 166 00:09:02,559 --> 00:09:05,160 Speaker 1: hang your hat. So Citizens Bank has been around for 167 00:09:05,200 --> 00:09:08,480 Speaker 1: a very long time. UH in recent years. It was 168 00:09:08,520 --> 00:09:11,920 Speaker 1: part of Royal Bank of Scotland, big British bank, which 169 00:09:11,960 --> 00:09:16,360 Speaker 1: actually experienced difficulty in the financial crisis. It ultimately resulted 170 00:09:16,360 --> 00:09:18,880 Speaker 1: in Citizens Bank going public about four and a half 171 00:09:18,960 --> 00:09:21,920 Speaker 1: years ago. UM. When I looked at the situation at 172 00:09:22,040 --> 00:09:26,200 Speaker 1: at citizens what I saw was an exciting opportunity to 173 00:09:26,240 --> 00:09:28,520 Speaker 1: be part of a ground floor build of a brand 174 00:09:28,559 --> 00:09:32,680 Speaker 1: new independent financial institution. UM. The strategy we've been employing, 175 00:09:32,800 --> 00:09:35,280 Speaker 1: and the strategy that was exciting to me is a 176 00:09:35,320 --> 00:09:39,319 Speaker 1: growth strategy. It's an expansion strategy in terms of client base. 177 00:09:39,720 --> 00:09:42,120 Speaker 1: It's an opportunity to deploy what has been a very 178 00:09:42,120 --> 00:09:45,199 Speaker 1: healthy level of capital UM and it really was an 179 00:09:45,200 --> 00:09:48,560 Speaker 1: opportunity to provide a service level to clients that we 180 00:09:48,600 --> 00:09:51,480 Speaker 1: think is is quite different and quite differentiating. It's an 181 00:09:51,520 --> 00:09:54,520 Speaker 1: interesting time to be in banking right now. I'm just 182 00:09:54,559 --> 00:09:59,079 Speaker 1: thinking about yesterday's Global Financial Service Services Conference hosted by 183 00:09:59,120 --> 00:10:02,240 Speaker 1: Barclays in New York, and it did create a lot 184 00:10:02,240 --> 00:10:04,600 Speaker 1: of concern that perhaps there wouldn't be the same kind 185 00:10:04,600 --> 00:10:07,040 Speaker 1: of loan growth going forward that there has been in 186 00:10:07,040 --> 00:10:09,720 Speaker 1: the past, and this could be a headwind profitability. What's 187 00:10:09,720 --> 00:10:12,120 Speaker 1: your take on that. So, I think the topic of 188 00:10:12,200 --> 00:10:14,640 Speaker 1: loan growth has been in the forefront for for several 189 00:10:14,720 --> 00:10:17,480 Speaker 1: quarters and maybe several years now. Um, there's a lot 190 00:10:17,480 --> 00:10:21,199 Speaker 1: of optimism coming off the tax cuts that the administration 191 00:10:21,559 --> 00:10:23,559 Speaker 1: rolled out almost a year ago now, and a lot 192 00:10:23,559 --> 00:10:26,640 Speaker 1: of expectation that loan growth would be quite robust. It's 193 00:10:26,679 --> 00:10:30,280 Speaker 1: it's been relatively benign. We we actually been growing much 194 00:10:30,360 --> 00:10:32,839 Speaker 1: quicker on the loan line than most of the competition, 195 00:10:32,880 --> 00:10:36,440 Speaker 1: and that's been a result of geographic expansion and client expansion, 196 00:10:36,480 --> 00:10:38,280 Speaker 1: and you have to lower standards as a result. No, 197 00:10:38,720 --> 00:10:40,319 Speaker 1: you know, we really haven't. And I think one of 198 00:10:40,360 --> 00:10:42,680 Speaker 1: the things that every banker will always balance is that 199 00:10:42,800 --> 00:10:46,720 Speaker 1: question of credit and structure and terms and loan growth. 200 00:10:46,720 --> 00:10:49,679 Speaker 1: And we're we have a very disciplined process at the 201 00:10:49,720 --> 00:10:52,240 Speaker 1: bank and we pass on a lot and and yet 202 00:10:52,280 --> 00:10:53,839 Speaker 1: we've been able to grow. So I think what you 203 00:10:53,960 --> 00:10:57,160 Speaker 1: heard at of Barclays yesterday is a continuation of a 204 00:10:57,240 --> 00:11:00,600 Speaker 1: theme which is a real question around how quickly, loans 205 00:11:00,600 --> 00:11:02,640 Speaker 1: are gonna are going to continue to grow in the 206 00:11:02,720 --> 00:11:06,240 Speaker 1: in the marketplace, speak about mergers and acquisitions and how 207 00:11:06,280 --> 00:11:08,640 Speaker 1: companies face the issue of whether they're going to grow 208 00:11:08,760 --> 00:11:11,920 Speaker 1: organically or whether they're going to make acquisitions, and also 209 00:11:12,000 --> 00:11:16,040 Speaker 1: about the abundance or lack there of of suitable candidates 210 00:11:16,040 --> 00:11:20,960 Speaker 1: at a suitable value. So that's a incredibly uh interesting 211 00:11:21,000 --> 00:11:23,640 Speaker 1: story for us. I was on one of your shows 212 00:11:23,640 --> 00:11:26,560 Speaker 1: about six months ago talking about an acquisition that we did, 213 00:11:26,840 --> 00:11:29,320 Speaker 1: which was a company called Western Reserve Partners, which is 214 00:11:29,360 --> 00:11:33,360 Speaker 1: a middle market oriented mergers and acquisition firm. Uh and 215 00:11:33,360 --> 00:11:37,720 Speaker 1: and just a baseline, are client base is about three 216 00:11:37,760 --> 00:11:41,319 Speaker 1: quarters middle market private companies or maybe maybe maybe some 217 00:11:41,600 --> 00:11:44,079 Speaker 1: uh a little bit less than that. UH and R 218 00:11:44,200 --> 00:11:46,080 Speaker 1: M and A practice is really aimed at both the 219 00:11:46,080 --> 00:11:49,720 Speaker 1: private equity firms and those midsized companies. Now in the 220 00:11:49,760 --> 00:11:53,400 Speaker 1: midsize company space, there is extremely robust M and A 221 00:11:53,559 --> 00:11:56,440 Speaker 1: right now, and which where it really drives it is 222 00:11:56,559 --> 00:11:59,559 Speaker 1: the opportunity to grow, as you say, expand someone's business 223 00:11:59,600 --> 00:12:02,439 Speaker 1: by combining with a like trind company. But it's often 224 00:12:02,559 --> 00:12:05,079 Speaker 1: a change of control transaction where a private family is 225 00:12:05,120 --> 00:12:08,640 Speaker 1: selling out of their ownership position. We see a very 226 00:12:08,760 --> 00:12:11,800 Speaker 1: robust POPE pipeline in our business, and we in fact 227 00:12:11,800 --> 00:12:15,800 Speaker 1: do a survey every year of CEOs of our client base, uh, 228 00:12:15,840 --> 00:12:17,959 Speaker 1: and it's kind of spiked at the highest it's ever 229 00:12:18,000 --> 00:12:21,480 Speaker 1: been in terms of desire to transact, buy and sell 230 00:12:21,960 --> 00:12:23,960 Speaker 1: UM Now, M and A obviously takes a long time. 231 00:12:24,320 --> 00:12:27,000 Speaker 1: It's it's it's a you know, often a year long 232 00:12:27,080 --> 00:12:29,600 Speaker 1: process as a company prepares and then sells itself. But 233 00:12:29,920 --> 00:12:31,600 Speaker 1: what we see in our in our business is a 234 00:12:31,640 --> 00:12:33,760 Speaker 1: lot of activity in our pipelines are quite strong. You 235 00:12:33,800 --> 00:12:36,880 Speaker 1: said there, it's a lot of competition. And for your business, 236 00:12:36,920 --> 00:12:39,800 Speaker 1: given the clients that you are targeting, who is your 237 00:12:39,800 --> 00:12:44,120 Speaker 1: biggest competition it's everybody, uh, non banks, non banks and 238 00:12:44,360 --> 00:12:48,120 Speaker 1: large banks firms in other words, because targeting think about 239 00:12:48,320 --> 00:12:51,760 Speaker 1: loan funds, non non bank providers of loan capital UM. 240 00:12:51,840 --> 00:12:55,240 Speaker 1: So it's like direct lending absolutely. And and you know, 241 00:12:56,200 --> 00:12:58,120 Speaker 1: I've been in this business, as you guys said, for 242 00:12:58,160 --> 00:13:00,760 Speaker 1: thirt or five years. There has always been us competition 243 00:13:01,240 --> 00:13:05,560 Speaker 1: UM and it comes in various forms and sizes um 244 00:13:05,640 --> 00:13:08,520 Speaker 1: at at at different points in the cycle. But I 245 00:13:08,559 --> 00:13:12,520 Speaker 1: think you can always combat competitive environments by providing high 246 00:13:12,600 --> 00:13:15,959 Speaker 1: quality service and attention topliance. Is this time difference somehow, 247 00:13:16,679 --> 00:13:18,240 Speaker 1: I don't. I really don't think so. I think I 248 00:13:18,240 --> 00:13:22,240 Speaker 1: think what is a little bit um different UM is 249 00:13:22,360 --> 00:13:25,120 Speaker 1: there is a lack of demand, as you said, for 250 00:13:25,320 --> 00:13:28,640 Speaker 1: capital um in the form of loans across the board. 251 00:13:28,720 --> 00:13:32,040 Speaker 1: So so new money financing is has been running relatively 252 00:13:32,040 --> 00:13:34,400 Speaker 1: low for many years now, So there's a supply and 253 00:13:34,480 --> 00:13:39,720 Speaker 1: demand disequilibrium which is basically creating the more intense competitive environment. 254 00:13:40,360 --> 00:13:42,280 Speaker 1: Speak if you count a little bit about the lending 255 00:13:42,280 --> 00:13:44,839 Speaker 1: that you're doing, particularly when it comes to real estate. 256 00:13:44,880 --> 00:13:48,640 Speaker 1: I note, for example, the chocolate factory in Mansfield in 257 00:13:48,760 --> 00:13:53,000 Speaker 1: mass You've been loaning money also for affordable housing projects. 258 00:13:53,120 --> 00:13:55,199 Speaker 1: Talk a little bit about that side of the business. 259 00:13:55,200 --> 00:13:57,839 Speaker 1: So our real estate businesses is a little over ten 260 00:13:57,840 --> 00:13:59,920 Speaker 1: percent of our overall business right now. I was actually 261 00:14:00,000 --> 00:14:02,959 Speaker 1: with real estate clients in Washington, d C. Yesterday. UM. 262 00:14:03,000 --> 00:14:05,760 Speaker 1: Our approach to real estate is really twofold. One is, 263 00:14:05,880 --> 00:14:08,080 Speaker 1: as you say, we do a lot of community lending 264 00:14:08,480 --> 00:14:11,800 Speaker 1: around our community reinvestment activities, and that's a big part 265 00:14:11,800 --> 00:14:14,719 Speaker 1: of every bank's activities. And then on our mainstream real 266 00:14:14,800 --> 00:14:18,520 Speaker 1: estate business. Our our approaches really to select very strong 267 00:14:18,679 --> 00:14:22,200 Speaker 1: sponsors and very strong developers and travel with those developers 268 00:14:22,200 --> 00:14:24,920 Speaker 1: across the country. So we've been expanding our real estate 269 00:14:24,920 --> 00:14:26,800 Speaker 1: in different parts of the country and it's a business 270 00:14:26,800 --> 00:14:28,600 Speaker 1: we we quite like. It's there's a little bit of 271 00:14:28,640 --> 00:14:31,840 Speaker 1: pressure right now given tariffs and the cost of raw materials. 272 00:14:31,880 --> 00:14:34,160 Speaker 1: But uh, the feedback I got, at least in the 273 00:14:34,240 --> 00:14:37,520 Speaker 1: d C yesterday area yesterday was quite strong. Thank you 274 00:14:37,560 --> 00:14:39,240 Speaker 1: so much for being with us. We'll have to have 275 00:14:39,320 --> 00:14:41,560 Speaker 1: you back in to talk about the confidence and why 276 00:14:41,640 --> 00:14:45,800 Speaker 1: there hasn't been more demand for loans from the private sector. 277 00:14:45,840 --> 00:14:48,200 Speaker 1: Don McCree, vice chairman and head of Commercial Biking, its 278 00:14:48,240 --> 00:14:50,800 Speaker 1: Citizens Financial Group and Providence Rhode Island, but he made 279 00:14:50,800 --> 00:14:53,920 Speaker 1: the trackdown here to New York and our eleven three 280 00:14:53,920 --> 00:14:57,520 Speaker 1: oh studios here at Bloomberg and least Abramoy. It's along 281 00:14:57,560 --> 00:15:00,960 Speaker 1: with my co host Pim Fox is his bomber markets. 282 00:15:04,640 --> 00:15:09,720 Speaker 1: The Turkish Central Bank raises overnight repo rates to pent 283 00:15:09,880 --> 00:15:12,520 Speaker 1: in order to forestall a decline and the value of 284 00:15:12,520 --> 00:15:15,760 Speaker 1: the Turkish lira. Here to tell us more about emerging 285 00:15:15,840 --> 00:15:20,920 Speaker 1: market assets and the ramifications is Vincent Signerella, our global 286 00:15:20,920 --> 00:15:24,400 Speaker 1: market strategist for Bloomberg. He joins us here in our 287 00:15:24,400 --> 00:15:27,280 Speaker 1: eleven three oh studios, Vincent, it's always a pleasure to 288 00:15:27,320 --> 00:15:29,800 Speaker 1: have you here. Is this going to be enough to 289 00:15:29,880 --> 00:15:35,680 Speaker 1: forestall continued declines in value of the Turkish lyra? I mean, 290 00:15:35,720 --> 00:15:38,040 Speaker 1: come on, who's who's kidding? Who is it? This is 291 00:15:38,080 --> 00:15:40,960 Speaker 1: window dressing now always a pleasure as well, Pim, Uh No, 292 00:15:41,120 --> 00:15:44,560 Speaker 1: it's not so much window dressing. This is actually very 293 00:15:44,640 --> 00:15:47,080 Speaker 1: calming for the markets. There was concerned that the central 294 00:15:47,080 --> 00:15:51,000 Speaker 1: bank would back off under pressure from President Urdwan, who 295 00:15:51,040 --> 00:15:53,080 Speaker 1: previously made a statement that race should be going down, 296 00:15:53,160 --> 00:15:56,400 Speaker 1: that up and actually through the market. Really a curve 297 00:15:56,440 --> 00:15:59,760 Speaker 1: ball with that one. And then essentially, uh we had 298 00:16:00,000 --> 00:16:04,080 Speaker 1: a consensus, a very loose consensus, for three fifty basis points. 299 00:16:04,160 --> 00:16:07,880 Speaker 1: So this move to this level is calming for the moment. 300 00:16:08,280 --> 00:16:10,280 Speaker 1: The real question is going to come in the future 301 00:16:10,520 --> 00:16:13,960 Speaker 1: when inflation begins to pick up again. Will the central 302 00:16:13,960 --> 00:16:18,200 Speaker 1: bank respond in the future, because which obviously sounds high 303 00:16:18,200 --> 00:16:21,080 Speaker 1: to us, didn't sound high to me in the eighties. Yeah, 304 00:16:21,200 --> 00:16:22,720 Speaker 1: but you know, I want to go exactly to what 305 00:16:22,800 --> 00:16:25,400 Speaker 1: you just said. What was that all about with everyone 306 00:16:25,640 --> 00:16:27,520 Speaker 1: coming out and saying they should drop rates and then 307 00:16:27,960 --> 00:16:31,080 Speaker 1: just hours minutes after that the central Bank came out 308 00:16:31,120 --> 00:16:34,680 Speaker 1: and so that they were raising rights. I can't honestly 309 00:16:34,720 --> 00:16:37,000 Speaker 1: go into what the President of Turkey was thinking at 310 00:16:37,000 --> 00:16:41,400 Speaker 1: the moment, into his mind. You can't no idea. All right, Well, 311 00:16:41,400 --> 00:16:43,400 Speaker 1: what I do want to ask you about is how 312 00:16:43,480 --> 00:16:45,960 Speaker 1: much is this a turning point or potential turning point 313 00:16:46,040 --> 00:16:49,360 Speaker 1: for the entire complex of em currencies, Because we are 314 00:16:49,400 --> 00:16:52,080 Speaker 1: seeing a rally today, for example, in the South African rand, 315 00:16:52,160 --> 00:16:54,800 Speaker 1: which a lot of people were pointing to as suffering 316 00:16:54,800 --> 00:16:57,560 Speaker 1: the contagion effects of the Turkish larra falling out of bed. 317 00:16:58,000 --> 00:17:00,720 Speaker 1: So is this sort of a sign in Turkey is 318 00:17:00,760 --> 00:17:05,080 Speaker 1: taking its currency crisis seriously and perhaps people will start 319 00:17:05,119 --> 00:17:06,840 Speaker 1: to be a little more confident with emerging markets or 320 00:17:06,920 --> 00:17:08,880 Speaker 1: is that going too far? I think confidence is probably 321 00:17:08,920 --> 00:17:12,720 Speaker 1: a little too far. I think it's definitely a pause. Um, 322 00:17:13,000 --> 00:17:15,960 Speaker 1: Like you said, the czar is higher up one, but 323 00:17:16,000 --> 00:17:18,320 Speaker 1: we're still seeing pressure around the Argentine pay so that's 324 00:17:18,359 --> 00:17:23,040 Speaker 1: down one. Brazil is off the lows of the day, 325 00:17:23,080 --> 00:17:26,280 Speaker 1: but but still down three tents of a percent. But 326 00:17:26,960 --> 00:17:29,320 Speaker 1: we're definitely seeing a little bit of pressure backing off 327 00:17:29,400 --> 00:17:32,639 Speaker 1: that it came back on a touch after Trump's tweet 328 00:17:32,760 --> 00:17:35,000 Speaker 1: that the Wall Street Journal had it wrong that we 329 00:17:35,080 --> 00:17:37,320 Speaker 1: don't need to make a deal with China. China needs 330 00:17:37,359 --> 00:17:39,760 Speaker 1: to make a deal with US, and and some are 331 00:17:39,800 --> 00:17:44,000 Speaker 1: basically looking at this situation with the tariffs is hard 332 00:17:44,040 --> 00:17:46,879 Speaker 1: to believe if you want to bring manufacturing jobs back 333 00:17:46,920 --> 00:17:48,439 Speaker 1: to the United States that these are going to be 334 00:17:48,480 --> 00:17:51,080 Speaker 1: of a temporary nature. They need to be far longer 335 00:17:51,119 --> 00:17:54,760 Speaker 1: and lasting, so that could continue to weigh and and 336 00:17:54,840 --> 00:17:57,879 Speaker 1: potentially continue to weigh on e M. I think, Vincent, 337 00:17:57,920 --> 00:18:00,919 Speaker 1: do you remember the movie Patent? Yeah, okay, you remember 338 00:18:00,960 --> 00:18:04,719 Speaker 1: that scene where Omar Bradley, you know, he's arguing with 339 00:18:04,800 --> 00:18:06,960 Speaker 1: George Patton and he says, you know, I can read 340 00:18:07,000 --> 00:18:10,200 Speaker 1: a map when you look at what Turkey just did 341 00:18:10,760 --> 00:18:14,560 Speaker 1: raising interest rates at the same time that they are 342 00:18:14,560 --> 00:18:19,000 Speaker 1: now requiring companies in Turkey in order to transact all 343 00:18:19,040 --> 00:18:22,720 Speaker 1: of their business in Turkish lira. Doesn't this mean that 344 00:18:22,760 --> 00:18:25,560 Speaker 1: if you want to borrow money in Turkey it now 345 00:18:25,680 --> 00:18:28,520 Speaker 1: costs you a lot more. How does that help the 346 00:18:28,600 --> 00:18:32,840 Speaker 1: underlying economy? Well, it really doesn't help the underlying economy 347 00:18:32,840 --> 00:18:35,760 Speaker 1: in the short term. What what the hope is and 348 00:18:35,800 --> 00:18:38,000 Speaker 1: this is, you know, if if you think back to 349 00:18:38,080 --> 00:18:41,040 Speaker 1: the US and our inflation situation in the eighties. The 350 00:18:41,359 --> 00:18:43,560 Speaker 1: hope is actually to slow the economy. I mean by 351 00:18:43,560 --> 00:18:47,199 Speaker 1: slowing the economy is slow inflation. The idea is you 352 00:18:47,320 --> 00:18:51,200 Speaker 1: need to crush this very steep inflation every trend, even 353 00:18:51,240 --> 00:18:53,240 Speaker 1: if it means to slow the economy down, because you 354 00:18:53,280 --> 00:18:56,160 Speaker 1: can go back to lower rates to stimulate the economy 355 00:18:56,160 --> 00:18:58,560 Speaker 1: in the future. I understand, how is that going to 356 00:18:58,600 --> 00:19:01,120 Speaker 1: make it possible for these comp needs to repay their 357 00:19:01,160 --> 00:19:04,240 Speaker 1: dollar denominated debts and how is that going to make 358 00:19:04,240 --> 00:19:08,720 Speaker 1: it possible for Turkish banks to continue to operate if 359 00:19:08,760 --> 00:19:12,640 Speaker 1: they've extended all these loans to these Turkish companies. Well, 360 00:19:12,640 --> 00:19:15,200 Speaker 1: with the currency improving, it does help the dollar denominated 361 00:19:15,240 --> 00:19:18,760 Speaker 1: debt because the depreciation and the currency is what affected 362 00:19:18,800 --> 00:19:21,639 Speaker 1: that that sovereign And actually, as you mentioned the corporations, 363 00:19:21,680 --> 00:19:24,360 Speaker 1: that's a good point because it's the corporate debt that's 364 00:19:24,400 --> 00:19:27,320 Speaker 1: the issue in Turkey, not as much as the sovereign situation. 365 00:19:27,600 --> 00:19:31,119 Speaker 1: So the the local companies really did need a break 366 00:19:31,240 --> 00:19:34,160 Speaker 1: with the currency in order to help repay that dollar debt. 367 00:19:34,359 --> 00:19:37,720 Speaker 1: The question is doesn't continue the line. Goldman Sactor has 368 00:19:37,760 --> 00:19:40,920 Speaker 1: put out a piece They're looking at five and they say, 369 00:19:41,000 --> 00:19:44,360 Speaker 1: this is the sixty one retracement from the highs of August. 370 00:19:45,080 --> 00:19:47,520 Speaker 1: So if we don't get back below the levels of 371 00:19:47,560 --> 00:19:50,440 Speaker 1: basically six double O and we continue to hold there, 372 00:19:51,080 --> 00:19:53,800 Speaker 1: the markets are likely to try the upside again and 373 00:19:53,800 --> 00:19:56,159 Speaker 1: put some pressure on the government. Vince, you're a former trader. 374 00:19:56,359 --> 00:19:58,560 Speaker 1: You talk with a lot of traders. How many of 375 00:19:58,560 --> 00:20:01,760 Speaker 1: them do you hear actually saying all I'm going into Turkey. No, 376 00:20:02,680 --> 00:20:05,120 Speaker 1: not really, you're like, none of that? Really that many? 377 00:20:05,119 --> 00:20:07,119 Speaker 1: I mean when you when you look at the overall picture, 378 00:20:07,480 --> 00:20:11,840 Speaker 1: you know, the equity indexes UM that track emerging markets, Uh, 379 00:20:11,960 --> 00:20:15,080 Speaker 1: they're better on the day, but still within a down trend. 380 00:20:15,160 --> 00:20:17,359 Speaker 1: That the ticker that I like to look at his 381 00:20:17,600 --> 00:20:20,880 Speaker 1: m x e f UM that's that's up a touch 382 00:20:20,920 --> 00:20:24,640 Speaker 1: on the day, not substantially, and the MSCI Emerging MSCI 383 00:20:24,680 --> 00:20:28,440 Speaker 1: Emerging Market UM stock in this it's off the lows, 384 00:20:28,520 --> 00:20:30,359 Speaker 1: it's taken a bit of a breather, but it's still 385 00:20:30,480 --> 00:20:33,040 Speaker 1: in a nice down channel. So we really need a 386 00:20:33,080 --> 00:20:36,120 Speaker 1: trend break, a nice down channel. In other words, it's 387 00:20:36,119 --> 00:20:38,320 Speaker 1: headed for more losses. Yeah. I don't think unless we 388 00:20:38,720 --> 00:20:42,680 Speaker 1: totally a nice, nice down channel. Me and someone's getting 389 00:20:42,680 --> 00:20:48,400 Speaker 1: their face this year. There you go, Vincent Cignarella. Vincent Signarella, 390 00:20:48,440 --> 00:20:51,000 Speaker 1: thank you so much for joining us. As always, we 391 00:20:51,080 --> 00:20:54,480 Speaker 1: love having you on global markets trategisty for Bloomberg, a 392 00:20:54,520 --> 00:20:57,879 Speaker 1: squawker on the other side, as well as a longtime 393 00:20:57,920 --> 00:21:01,760 Speaker 1: trader who really has that perspective um and has had 394 00:21:01,760 --> 00:21:06,320 Speaker 1: some very astute commentary over the past few months in particular, 395 00:21:06,359 --> 00:21:09,000 Speaker 1: so thank you. Definitely looking at a little bit of 396 00:21:09,000 --> 00:21:11,960 Speaker 1: a bounce, but it is far from calling game over 397 00:21:12,119 --> 00:21:16,520 Speaker 1: on the sell off in e M. We turn our 398 00:21:16,520 --> 00:21:20,480 Speaker 1: attention now to the land of groceries. Shares of Kroger 399 00:21:20,480 --> 00:21:22,600 Speaker 1: down a little bit more than nine. This is the 400 00:21:22,600 --> 00:21:26,880 Speaker 1: biggest decline in six months the supermarket chain, missing analyst 401 00:21:26,960 --> 00:21:31,520 Speaker 1: sales estimates, margins also narrow wing. Here to tell us 402 00:21:31,520 --> 00:21:35,520 Speaker 1: all about it is Matthew Boyle, us retail reporter for Bloomberg, 403 00:21:36,119 --> 00:21:40,639 Speaker 1: and you can follow Matthew on Twitter at biz boil. 404 00:21:40,880 --> 00:21:45,480 Speaker 1: I like that, alright, um, what's going on at Kroger. 405 00:21:45,560 --> 00:21:48,160 Speaker 1: I mean, you know, one day, everything's great. They've got 406 00:21:48,200 --> 00:21:51,840 Speaker 1: new alliances, they've got new joint ventures. You can order 407 00:21:52,320 --> 00:21:55,200 Speaker 1: your groceries picked them up at the store. They've got 408 00:21:55,359 --> 00:21:58,200 Speaker 1: simple truth. I believe the generic brand that the store 409 00:21:58,240 --> 00:22:02,600 Speaker 1: brand that's doing pretty well. What happened, Well, they're doing 410 00:22:02,640 --> 00:22:04,720 Speaker 1: a lot, but a lot of this is going to 411 00:22:04,840 --> 00:22:09,160 Speaker 1: take time, you know, pim. It's very high expectations were 412 00:22:09,200 --> 00:22:12,480 Speaker 1: coming into this quarter. You saw what Walmart and Target did. 413 00:22:12,480 --> 00:22:14,840 Speaker 1: They both had their best sales and in more than 414 00:22:14,880 --> 00:22:17,119 Speaker 1: a decade, so people were getting a little bit you 415 00:22:17,119 --> 00:22:20,640 Speaker 1: know amped up. Um. You know, it's a retail renaissance, 416 00:22:20,680 --> 00:22:22,480 Speaker 1: and it just kind of shows how we go from 417 00:22:22,520 --> 00:22:28,800 Speaker 1: you know, uh ex in retail here. Um. But Kroger 418 00:22:28,960 --> 00:22:31,520 Speaker 1: is doing a lot of the right things. They're remodeling stores, 419 00:22:31,600 --> 00:22:34,480 Speaker 1: you know, they're doing deals when in China with with 420 00:22:34,800 --> 00:22:38,040 Speaker 1: Ali Baba. But you know, these things are expensive. So 421 00:22:38,080 --> 00:22:40,199 Speaker 1: that's why the margins are down. And this is what 422 00:22:40,240 --> 00:22:43,239 Speaker 1: I'm wondering. I mean, investors just simply short term in 423 00:22:43,359 --> 00:22:45,479 Speaker 1: their view, and they don't view any of this as 424 00:22:45,520 --> 00:22:47,280 Speaker 1: positive in the long round, even though it's exactly what 425 00:22:47,320 --> 00:22:49,760 Speaker 1: Kroger a bit of an overreaction and the company was 426 00:22:49,840 --> 00:22:52,920 Speaker 1: frantically sort of you know, qualifying it's saying, well, if 427 00:22:52,920 --> 00:22:55,639 Speaker 1: you take out the impact of the story models, and 428 00:22:55,640 --> 00:22:58,760 Speaker 1: if you take out the impact of the price cuts, 429 00:22:58,800 --> 00:23:01,240 Speaker 1: they had made they same store sales would have been 430 00:23:01,240 --> 00:23:03,159 Speaker 1: over two percent, which so would have beat you know, 431 00:23:03,240 --> 00:23:05,840 Speaker 1: beaten the street. Um, but these days, you know, retail 432 00:23:05,840 --> 00:23:08,960 Speaker 1: investors don't seem to, you know how much patience for 433 00:23:09,160 --> 00:23:12,360 Speaker 1: explanations like that. So you're I think, you know, you're 434 00:23:12,600 --> 00:23:14,720 Speaker 1: it was a bit more pronounced. The share drop was 435 00:23:14,760 --> 00:23:17,320 Speaker 1: a bit more than I had anticipated. But these days 436 00:23:17,320 --> 00:23:20,080 Speaker 1: we're seeing shared declines of eight to ten percent even 437 00:23:20,119 --> 00:23:22,840 Speaker 1: when companies beat estimates. So when you miss, you're going 438 00:23:22,880 --> 00:23:25,240 Speaker 1: to get punished. Do you hear from any analysts or 439 00:23:25,280 --> 00:23:28,000 Speaker 1: any experts who tell you this is an opportunity to 440 00:23:28,080 --> 00:23:30,480 Speaker 1: buy the stock of a company that's got what more 441 00:23:30,480 --> 00:23:35,920 Speaker 1: than actual grocery store outlets in thirty five states? And 442 00:23:36,000 --> 00:23:39,320 Speaker 1: also they operate fine jewelry stores that I did not 443 00:23:39,440 --> 00:23:41,199 Speaker 1: know it. Yeah, I mean, they're all over these They 444 00:23:41,240 --> 00:23:44,080 Speaker 1: own Turkey Hill, you know, they own uh, you know, 445 00:23:44,240 --> 00:23:46,520 Speaker 1: food brands as well, though they're they're currently in the 446 00:23:46,520 --> 00:23:49,960 Speaker 1: process of selling Turkey Hill. But Kroger is a very diversified, 447 00:23:50,040 --> 00:23:53,160 Speaker 1: interesting company. They've got a huge percentage of their sales 448 00:23:53,200 --> 00:23:56,320 Speaker 1: in their own brands, and that's very good for That's 449 00:23:56,320 --> 00:23:59,320 Speaker 1: that simple truth, simple truth, and others. Yeah, yeah, they're 450 00:23:59,320 --> 00:24:01,600 Speaker 1: saying they're they're sales of simple truth. We're in you know, 451 00:24:01,680 --> 00:24:04,280 Speaker 1: double digit games this year, and that's that's very much, 452 00:24:04,520 --> 00:24:07,200 Speaker 1: you know, a good thing for any retailer, because store 453 00:24:07,200 --> 00:24:10,240 Speaker 1: brands are way more profitable than you know, the national 454 00:24:10,280 --> 00:24:12,600 Speaker 1: brands like Kellogg and Campbell. Though, I will just push 455 00:24:12,600 --> 00:24:14,480 Speaker 1: back a little bit. I mean, perhaps what investors are 456 00:24:14,480 --> 00:24:17,480 Speaker 1: seeing is a company that is trying to spend. They 457 00:24:17,520 --> 00:24:20,560 Speaker 1: can keep up with Amazon and the like in the Walmart, 458 00:24:20,920 --> 00:24:23,520 Speaker 1: but it has just a smaller base to work from. 459 00:24:23,600 --> 00:24:25,600 Speaker 1: And that if you have a smaller base at this point, 460 00:24:25,600 --> 00:24:29,280 Speaker 1: even though they are behemoth, you could potentially be be 461 00:24:29,359 --> 00:24:31,639 Speaker 1: really hurt. It's funny, yeah, to kind of say Kroger 462 00:24:31,720 --> 00:24:36,200 Speaker 1: small and exactly the largest traditional supermarket in the nation, 463 00:24:36,280 --> 00:24:38,119 Speaker 1: but yet people looking at them there well you know, 464 00:24:38,480 --> 00:24:39,960 Speaker 1: what do you got? So it does kind of show. 465 00:24:39,960 --> 00:24:41,919 Speaker 1: And it's not just Amazon, it's not just Walmart. It's 466 00:24:41,960 --> 00:24:45,080 Speaker 1: all the little remember that the German discounters on the 467 00:24:45,119 --> 00:24:48,000 Speaker 1: low end, you know, biting and scraping and getting a 468 00:24:48,040 --> 00:24:52,560 Speaker 1: little all these one of those all the you know, 469 00:24:52,640 --> 00:24:54,920 Speaker 1: you you go into an all the store, a lettle store, 470 00:24:54,920 --> 00:24:58,120 Speaker 1: and you go, wow, sausages right next to toasters. I mean, 471 00:24:58,160 --> 00:24:59,639 Speaker 1: but look at what they're done in the UK and 472 00:25:00,040 --> 00:25:01,760 Speaker 1: quite impressive, and they want to do the same here. 473 00:25:02,119 --> 00:25:04,119 Speaker 1: It's so sad that that's what counts for the hunt 474 00:25:04,160 --> 00:25:06,240 Speaker 1: these days. For for humans, it's like to go in 475 00:25:06,400 --> 00:25:12,360 Speaker 1: it's not it's not to have both. This, yeah, Costco 476 00:25:12,400 --> 00:25:15,359 Speaker 1: is more of a treasure hunt, you know where you 477 00:25:15,400 --> 00:25:16,880 Speaker 1: know all the is a bit more of a well 478 00:25:16,920 --> 00:25:19,000 Speaker 1: I'm hunting and look what I found, you know, a 479 00:25:19,040 --> 00:25:22,440 Speaker 1: battery charger, but hey, who I needed one anyway, let's 480 00:25:22,440 --> 00:25:24,840 Speaker 1: pick it up. Could you just expand it? Because as 481 00:25:24,840 --> 00:25:28,639 Speaker 1: I said, I really did not under I underestimated the 482 00:25:28,840 --> 00:25:33,439 Speaker 1: jewelry business at Kroger. Yeah, they've got they've got jewelry stores. 483 00:25:33,880 --> 00:25:35,800 Speaker 1: I mean, Kroger wants you to be going in there 484 00:25:35,840 --> 00:25:38,280 Speaker 1: and you know, all things to all people. If you 485 00:25:38,440 --> 00:25:40,800 Speaker 1: you don't expect to be finding it there in the 486 00:25:40,840 --> 00:25:43,679 Speaker 1: same way that you don't expect to find you know, uh, 487 00:25:43,720 --> 00:25:47,320 Speaker 1: you know, high end diamonds at at a costco um. 488 00:25:47,359 --> 00:25:49,359 Speaker 1: But you know it's there and if it if it 489 00:25:49,480 --> 00:25:52,639 Speaker 1: drives a trip, if it drives an experience, which is 490 00:25:52,680 --> 00:25:55,720 Speaker 1: this buzzword in retail right now, you know everybody wants 491 00:25:55,760 --> 00:25:59,800 Speaker 1: shopping to be an experience. Um, that's a very good thing. 492 00:26:00,480 --> 00:26:06,000 Speaker 1: The various two diamonds. Yeah, Matt Boyle, thank you so 493 00:26:06,040 --> 00:26:07,960 Speaker 1: much for being with us. Matthew Boyle is US retail 494 00:26:07,960 --> 00:26:12,800 Speaker 1: reporter for Bloomberg News. Thanks for listening to the Bloomberg 495 00:26:12,800 --> 00:26:15,480 Speaker 1: P and L podcast. You can subscribe and listen to 496 00:26:15,480 --> 00:26:20,040 Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 497 00:26:20,440 --> 00:26:24,000 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 498 00:26:24,040 --> 00:26:27,320 Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast. 499 00:26:27,359 --> 00:26:30,000 Speaker 1: You can always catch us worldwide on Bloomberg Radio