Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Sharks
Speaker 1: What is Sharks? Well? Here to tell us what Sharks
Speaker 1: is and why it matters is Chris mcgleno. He is
Speaker 1: the chief executive officer and the founder. They are based
Speaker 1: in Beverly Hills, California, but he is joining us here
Speaker 1: in our eleven three oh studios. Tell us, Chris, thanks
Speaker 1: for being here. First, thanks for having what exactly is Sharks?
Speaker 1: I understanding that you know the underlying thing right, digital
Speaker 1: marketing and consumer data distribution management platform, but I have
Speaker 1: no idea what that means. So what we do is
Speaker 1: we aggregate data on specific audiences. So we we work
Speaker 1: in certain verticals and then we aggregate data around those verticals.
Speaker 1: So an example is we're in the consumer package good business.
Speaker 1: We aggregate data on people that buy certain types of
Speaker 1: products in big box retailers we aggregate the information about
Speaker 1: those consumers and then we put into put them into silos,
Speaker 1: and then we sell access to that data back to marketers.
Speaker 1: We do that. We do similar thing with uh the
Speaker 1: medical business. We have every doctor in the United States
Speaker 1: map down to their cell phone, to their home computers,
Speaker 1: to their office computers, and then we sell access to
Speaker 1: that data to big pharma companies that want to reach
Speaker 1: those particular on colleges, cardiologists, neurologists, and so on. And
Speaker 1: we have that for around five different verticals that we do.
Speaker 1: How hard is it for you to access the data? Well,
Speaker 1: it takes a long time to build specific data sets
Speaker 1: because you need to build them over time. So we
Speaker 1: when we start a particular vertical, we have to slowly
Speaker 1: start to build them, and we buy a lot of
Speaker 1: data at first, and then data is we begin to
Speaker 1: aggregate the data ourselves, and then we own that data
Speaker 1: and resell it. The reason why I ask because I'm
Speaker 1: thinking about Facebook and the recent data privacy concern issues
Speaker 1: and increasing talk of regulation of the data disclosures. Is
Speaker 1: that going to make your life more difficult or do
Speaker 1: you think that that ship has sailed in the contract
Speaker 1: of people deciding to put their information online for everybody
Speaker 1: in return for getting free access to some of these services.
Speaker 1: I think consumers are more aware about the privacy issues
Speaker 1: now than they ever have been. I think in in
Speaker 1: the past, consumers haven't minded given up their data in
Speaker 1: exchange for free access. But I think now with the
Speaker 1: Equifax and with the UH the Facebook breaches, people are
Speaker 1: very aware of the value of their data. And that's
Speaker 1: why around a year ago, we started working on a
Speaker 1: platform that's going to out consumers to own their own data.
Speaker 1: So you, as a consumer will be able to own
Speaker 1: your own information and then people will access that information
Speaker 1: and you'll get paid for that data. UM it's called
Speaker 1: big Token, so UH big token is a platform. Big
Speaker 1: token dot com is a platform that allows people to
Speaker 1: put their information in validate data, and then as marketers
Speaker 1: want to access that information, they pay to access the data.
Speaker 1: But instead of the money going to the big oracles
Speaker 1: experience axioms of the world, it goes direct to the consumer.
Speaker 1: Let's say Lisa goes to an automobile showroom and she's
Speaker 1: interested in a particular car and decides to take a
Speaker 1: test drive, even goes to an auto show is that
Speaker 1: information can you connect that information with maybe what Lisa
Speaker 1: would do online looking at various automobile products very much.
Speaker 1: So we have a auto vertical, and within our auto vertical,
Speaker 1: we're providing software into the dealership level where if somebody
Speaker 1: comes in and takes a test drive, they put in
Speaker 1: the name, email address, phone number of that consumer. Once
Speaker 1: we have that data, we can pretty much find out
Speaker 1: everything else about the consumer. We can then do a
Speaker 1: cross map between the cell phone the email address, and
Speaker 1: that can help us find your browser. We can find
Speaker 1: multiple devices off of those browsers um and just map
Speaker 1: you in general, and within twenty four hours you can
Speaker 1: start seeing ads for the car that you just tested of.
Speaker 1: I'm really confused because the Facebook results that we just
Speaker 1: got seemed to show that people don't care at all
Speaker 1: about privacy because, uh they showed uh, you know, revenue
Speaker 1: growth that was the most is two thousand fifteen, and
Speaker 1: people seem to be uh flocking to the site regardless
Speaker 1: of any privacy concerns. I'm just wondering, why would anybody
Speaker 1: uh start to go through extra passwords and extra forms, etcetera.
Speaker 1: If they're frankly willing to give away their information and
Speaker 1: data for free, right now because consumers are not aware
Speaker 1: about the amount of money that is being generated off
Speaker 1: of them. How much money per person do you think
Speaker 1: is generated a good consumer living in New York City? Uh?
Speaker 1: And you know you remember, you're being tracked everywhere on
Speaker 1: your phone, So they're tracking you from where you live
Speaker 1: to where you work, So they're watching you from the
Speaker 1: Upper East Side to Bloomberg Studio, and they're tracking everything
Speaker 1: that you're doing, so anywhere anywhere from just on the
Speaker 1: digital advertising side, not the not uh consumer marketing research
Speaker 1: or direct mail or anything like that. Anywhere from two
Speaker 1: hundred to two thousand dollars a month. So it's a
Speaker 1: lot of money. Now, if somebody was going to give
Speaker 1: that money to you, would you go sign up to
Speaker 1: do it? That's why we put big Token dot com
Speaker 1: up and we've had thousands of people sign up to
Speaker 1: for their data. But then what about Amazon or what
Speaker 1: about some of these other companies that can gather this
Speaker 1: for free, They wouldn't then be as willing to pay
Speaker 1: the additional cost to me. Correct, Then you as a
Speaker 1: consumer will start to filter out what you're willing to
Speaker 1: look at. We're going to give you uh browser plug
Speaker 1: ins and tools that are going to help you get
Speaker 1: rid of ads that are not paying to access your information,
Speaker 1: and you might even get a check. You will you.
Speaker 1: I just I have to wonder how much I mean, Amazon, Google,
Speaker 1: these are the Facebook, the data sets that's where they
Speaker 1: live and die. So they've got to be fighting back now.
Speaker 1: I mean, you know, we're at the beginning of this.
Speaker 1: We've been working on it for a year, and uh,
Speaker 1: I think that those companies are about to see big
Speaker 1: competition in this area. They've they've they've owned this data
Speaker 1: set for a long time. Consumers have not fought back
Speaker 1: to own their own data, and now they're going to
Speaker 1: be ready to do that. They they just haven't had
Speaker 1: the tools to be able to do it. They couldn't
Speaker 1: go anywhere, sign up and then start getting getting money. Yeah. Well, um,
Speaker 1: I gotta say I I would love to earn twoth
Speaker 1: asand extras. Um. Chris mcglino, thank you so much for
Speaker 1: joining us. Chris mcgleino, chief executive officer and founder of Sharks,
Speaker 1: a digital marketing and consumer data distribution company which is
Speaker 1: based in Beverly Hills, California. But he decided to come
Speaker 1: to New York to our eleven three, oh Studios. Despite
Speaker 1: the rain and the clouds and the chilly air, the
Speaker 1: leaders of North and South Korea have agreed to pursue
Speaker 1: a peace agreement in historic talks. Here to tell us
Speaker 1: more about this is how Brands Henry Kissinger, Distinguished Professor
Speaker 1: for Global Affairs at the Johns Hopkins University School of
Speaker 1: Advanced International Studies, he joins us from Baltimore. How Brands,
Speaker 1: thank you very much for being with us. What if
Speaker 1: you could just describe what you believe is likely to
Speaker 1: happen next between the leaders of North and South Korea. Well,
Speaker 1: I think what you'll see is that there may be
Speaker 1: some effort to put flesh on the bones of the
Speaker 1: very skeletal agreement that was reached at the summit, which
Speaker 1: was basically aspirational in terms of working toward a formal
Speaker 1: end to the war in the Korean Peninsula and the
Speaker 1: eventual de nuclearization of the peninsula. But those goals are
Speaker 1: quite gauzy right now, and so any next steps would
Speaker 1: have to deal with flushing out the specifics of how
Speaker 1: those goals might be pursued. So how you know there
Speaker 1: we need to whip out the scorecard here, because there
Speaker 1: are a lot of people that are either giving credit
Speaker 1: to President Trump for navigating or pushing Kim John earned
Speaker 1: to this point. People are giving credit to the South
Speaker 1: Korean president. People are giving credit to China, who sort
Speaker 1: of pushed the leaders of North and South Korea to
Speaker 1: this point. In your view, well, really it was the
Speaker 1: leaders of North Korea who pushed the United States and
Speaker 1: South Korea to this point. It was the North Koreans
Speaker 1: who came up with the idea for a meeting between
Speaker 1: Trump and King Young Lum. And one of the really
Speaker 1: difficult analytical points in dealing with this situation is figuring
Speaker 1: out precisely what the North Korean calculus is. There's surely
Speaker 1: a desire to ease the economic pressure from the U
Speaker 1: S sanctions, but there may also be a calculation this
Speaker 1: is simply a smart, tactical way of reducing pressure while
Speaker 1: the North completes its nuclear arsenal. Now, in addition, there
Speaker 1: was a joint statement it's called the Pond John Declaration,
Speaker 1: calling for the restart of reunions of families separated by
Speaker 1: the Korean War. Will that accelerate further agreements? Do you
Speaker 1: think it's useful as an atmospheric and it may lead
Speaker 1: to additional atmospherics in the sense of suspending propaganda broadcasts
Speaker 1: across the border and things like that. It has relatively
Speaker 1: little connection to the more substantive issues at hand, which
Speaker 1: would be the nuclear program and the state of war
Speaker 1: that still exists between the North and the South, but
Speaker 1: it is perhaps hopeful as a sign of of a
Speaker 1: broader thawing between the two countries. You know, Professor, One
Speaker 1: thing that that struck me, aside from the menu, the
Speaker 1: highly symbolic menu of the meeting that took place between
Speaker 1: the North and South Korean leaders, it struck me that
Speaker 1: the whole procession was not broadcast on North Korean television.
Speaker 1: I know this is a small point, but to me,
Speaker 1: it indicated that there was not an opening up of
Speaker 1: North Korea. Was this significant to you and kind of
Speaker 1: what can we look at going forward to know whether
Speaker 1: this is in good faith or not. I think looking
Speaker 1: for an opening up of the North Korean political system
Speaker 1: is probably unrealistic at this point. Uh. The Kim family
Speaker 1: regime is interested first and foremost in its own survival,
Speaker 1: and I think it understands any meaningful opening up of
Speaker 1: the political system would would jeopardize that, and so everything
Speaker 1: that the regime is doing is a tactical move to
Speaker 1: secure its own power. So any opening up of the
Speaker 1: regime would presumably be something that would come much much
Speaker 1: farther down the road and would probably be almost against
Speaker 1: the will of the Kim family. If there is an
Speaker 1: agreement that is reached, what would this do to relations
Speaker 1: between the United States and China, Well, it all depends
Speaker 1: on what the nature of the agreement is. I think
Speaker 1: we're having a little bit of whiplash right now because
Speaker 1: for about a year, the fear of most countries in
Speaker 1: the region and around the world was that the Trump
Speaker 1: administration was going to get the United States into a
Speaker 1: nuclear war with North Korea. I think the fear now
Speaker 1: is that the United States might conclude a deal that
Speaker 1: would have actually be too advantageous to North Korea. And
Speaker 1: so the critical elements from the United States decide will
Speaker 1: to be in will be to ensure that any deal
Speaker 1: with the North doesn't prejudice the US alliance with South
Speaker 1: Korea or the broader US posture in the region. China
Speaker 1: obviously would like to see a different sort of deal,
Speaker 1: one that would lead to a retraction of American presence
Speaker 1: in Northeast Asia. So can you put this into context
Speaker 1: of why then this is so important? Well, this is
Speaker 1: the single this is the crisis spot that is most
Speaker 1: likely to lead to nuclear war. Right now, any conflict
Speaker 1: between the United States and North Korea would be of
Speaker 1: unbelievable lethality even if it did not cross the nuclear
Speaker 1: thresh fold. But from everything we know about North Korean
Speaker 1: military doctrine, it quite easily could escalate into the nuclear realm.
Speaker 1: And so if it is possible to negotiate some sort
Speaker 1: of agreement that would lower tensions, that would be a
Speaker 1: good thing in and of itself. If it's possible to
Speaker 1: do so in a way that leads to the rolling
Speaker 1: back of the North Korean nuclear arsenal, that would also
Speaker 1: be very useful in terms of reducing the nuclear threat
Speaker 1: both to the United States and its allies. That that's said,
Speaker 1: I'm still somewhat skeptical that this is ultimately what will
Speaker 1: come out of this process. Can the United States, Japan,
Speaker 1: and our allies live with a nuclear armed North Korea?
Speaker 1: We would prefer not to, but yes, I think we
Speaker 1: can live with it. If if the alternative were, for instance,
Speaker 1: launching a preventive war to prevent that. The United States
Speaker 1: has confronted the sort of problem for we worried very
Speaker 1: much about what it would mean to face a nuclear
Speaker 1: Soviet Union or a nuclear China during the Cold War,
Speaker 1: and in both cases we were ultimately able to live
Speaker 1: with it, albeit in a very dangerous intense way. And
Speaker 1: I think if we were put to it, we could
Speaker 1: probably do that again. So I want to I want
Speaker 1: to go back to the menu, since it was much
Speaker 1: parsed over and in mouth watering to read about what
Speaker 1: they ate. But what was interesting to me was that
Speaker 1: the menu anger Japan again, the menu that the for
Speaker 1: the feast that North Korean leader and South Korean leaders eight.
Speaker 1: What do you make of that? I don't make a
Speaker 1: lot of it. I think this is probably about the
Speaker 1: seventeenth on the list of things that's most important in
Speaker 1: terms of assessing the prospects of the negotiating process, and
Speaker 1: and so I I you know, this is a region
Speaker 1: where history looms very large, and so there are constantly
Speaker 1: seemingly small issues that are causing frictions between uh, not
Speaker 1: just the US, and it's adversarious, but sometimes between US
Speaker 1: allies and sometimes between Japan and North Korea, and so
Speaker 1: I I think that is is noteworthy and perhaps worth reporting,
Speaker 1: but but probably relatively low on the list of things
Speaker 1: that will determine the success or failure of this initiative.
Speaker 1: So South Korea's shrimp surprise for Donald Trump last year
Speaker 1: and the dessert this time around not the biggest thing
Speaker 1: on your list, How brands, thank you so much for
Speaker 1: joining us, How Brands. Henriette Kisinger, Distinguished professor at Johns
Speaker 1: Hopkins University and a Bloomberg View columnist. Definitely, some of
Speaker 1: the imagery coming out of the Korean Peninsula is really striking,
Speaker 1: of the leaders holding hands, taking one step into the north,
Speaker 1: one step into the south, marking the end to this
Speaker 1: what is it, seven decade long conflict that has been
Speaker 1: keeping a lot of families apart on the Korean peninsula. Yes,
Speaker 1: and that's set to change, at least according to this communication,
Speaker 1: although unclear whether those families will in fact get reunited
Speaker 1: anytime soon. Big tech is driving the train in US
Speaker 1: equity markets these days. And to talk a little bit
Speaker 1: about what we've seen out of earning so far as
Speaker 1: well as what to expect, is Michael Scanlon, portfolio manager
Speaker 1: at Manu Life Asset Management in Boston. He oversees, among
Speaker 1: other funds, the John Hand Balanced Fund, which has about
Speaker 1: nearly two billion dollars of assets. And Michael, I was
Speaker 1: looking and four of your top five biggest holdings in
Speaker 1: that fund Alphabet, Apple, Amazon, and Microsoft. As a result
Speaker 1: of the earnings that we have seen so far, have
Speaker 1: you decided to either add to your current holdings of
Speaker 1: any of those companies or pair some of the some
Speaker 1: of the assets. Well, good morning and thanks for having me.
Speaker 1: So I think when you look at this earnings period,
Speaker 1: you know, there's obviously we had a little bit of
Speaker 1: disappointment out of Google and then essentially very strong results
Speaker 1: out of the rest of the players there. I think
Speaker 1: when you look at the text based you know, whether
Speaker 1: it's these these newer platform companies like a Google or
Speaker 1: a Facebook, I mean, they continue to have these enormous
Speaker 1: secular tail winds. And I think it's also interesting if
Speaker 1: you look at it some of these more what you
Speaker 1: would associate with legacy I T names like Microsoft or Cisco.
Speaker 1: You know, those companies are obviously are also doing quite
Speaker 1: well right now. Has they're been able to manage this
Speaker 1: transition to more of a cloud based can shooting versus
Speaker 1: on premise type systems. Well, Michael, does this mean that
Speaker 1: you wouldn't invest really new money in a technology company
Speaker 1: unless it had a cloud offering? Well, we you know
Speaker 1: that has been a big part of our holdings is
Speaker 1: that you do want to have these companies that are
Speaker 1: aligned with that themes are else you're fighting an enormous headwinds.
Speaker 1: I mean, one name out there that's been struggling quite
Speaker 1: a bit, as Oracle, that's not a name that we
Speaker 1: own in our portfolio, and that's the name where when
Speaker 1: you look at their cloud business, I mean, they're just
Speaker 1: getting laughed by everybody else. So that that that would
Speaker 1: be a tough space to get invested in today. But Michael,
Speaker 1: the reason why I asked is because when we talked
Speaker 1: to a lot of investment managers and we asked them,
Speaker 1: you know when most last time that you rearranged your portfolio,
Speaker 1: they say, actually, we've held it the same for about
Speaker 1: a year. I'm wondering, is it the same with you
Speaker 1: or you know, do you look at these earnings and
Speaker 1: then decide, you know what, uh, Amazon seems like they're
Speaker 1: super solid, let's add more there, and you know, what Apple,
Speaker 1: we're a little bit concerned about the end of the superphone,
Speaker 1: of the supercycle of the smartphones. We're going to pair
Speaker 1: back there. Are you doing any of those calculatations right now?
Speaker 1: So that's a fair question. I mean, that's part of
Speaker 1: managing a portfolio as you get these names that will
Speaker 1: bounce hard after earnings, or they might sell off hard
Speaker 1: after earnings. And maybe that doesn't justify exiting or entering
Speaker 1: new positions, but what you do is trade your names
Speaker 1: up and down in terms of the weight of the portfolio.
Speaker 1: You know, you look at something like Apple over the
Speaker 1: last couple of years, you know that stock has been
Speaker 1: meaningfully higher than it has been today. Uh, And if
Speaker 1: you look at the weight of our portfolio, it has
Speaker 1: moved around in terms of the weight of the portfolio
Speaker 1: over the last twelve months. Michael, in managing the John
Speaker 1: Hancock Balanced Portfolio as well as the Balanced Fund, what
Speaker 1: would you like to see happen in terms of rebalancing
Speaker 1: Because some of the names in the fund have performed
Speaker 1: so well, You've got to maintain a balance so that
Speaker 1: you don't end up with these outsized positions that could
Speaker 1: come back and bite you. Yeah, So we initiated an
Speaker 1: overweight position and energy UH out of the second half
Speaker 1: of last year, and that proved to be a little
Speaker 1: bit early. Yet in the last month or so, it
Speaker 1: seems like that that positioning is starting to come around
Speaker 1: for us. I've had some really outsized winners there in
Speaker 1: terms of names like Conico Phillips or names like sun
Speaker 1: Core and Shell. So those names have been doing quite
Speaker 1: well for US, and I still think that, you know,
Speaker 1: even though they've had a big, meaningful bounce in the
Speaker 1: last couple of months here, I do still think there's
Speaker 1: a long runway there. So when you look at the
Speaker 1: SMP five roughly SMP in the tech sector UH at
Speaker 1: kind of a mid single digit six or seven percent,
Speaker 1: I do think that you're going to see energy to
Speaker 1: continue to work here through the end of the year.
Speaker 1: You know, Michael, I'd love to just zoom out a
Speaker 1: little bit and get your feeling on what the narrative
Speaker 1: should be for this earning season. By some measures, it's
Speaker 1: the biggest volume of earnings beats ever. By others, there
Speaker 1: are huge warning signs that this is perhaps as good
Speaker 1: as it gets. Where do you fall on the different
Speaker 1: narratives that are competing for attention right now. Yeah, it's funny.
Speaker 1: I mean if expectations were very high going into this
Speaker 1: earnings period, but yet if you look at the results,
Speaker 1: I mean, they've blown away the results. I think the
Speaker 1: earnings are. You know, it's been like an eight percent
Speaker 1: surprise on the consensus number this quarter thus far. I
Speaker 1: believe it's the number. And you know, you look at
Speaker 1: some of the things that are going on that you
Speaker 1: could frame as a negative right now, with the ten
Speaker 1: year yield crossing or hovering around three, an oil up meaningfully,
Speaker 1: which is attacks on the U S consumer essentially. Uh.
Speaker 1: You know, I think somebody said it best the other
Speaker 1: day when they said we're all looking for a silver
Speaker 1: bullet and exactly why the market has been weaker than
Speaker 1: would expect. But you know, at the end of the day,
Speaker 1: it's earnings that drive markets, and you might have these
Speaker 1: short periods of disconnect where the market doesn't keep up
Speaker 1: with earnings growth. But I think the SMP five hundred
Speaker 1: here at you know, sixteen and a half, a little
Speaker 1: bit of seventeen times earnings, I think it's very attractive
Speaker 1: and by the end of the year, I do expect
Speaker 1: the market's going to finish higher from here. Michael, you
Speaker 1: mentioned energy, what about other commodities noted investments maybe in
Speaker 1: countries such as Australia. Yeah, so outside of energy, you know,
Speaker 1: we do have a small position in Franco, so we
Speaker 1: have some exposure to gold. Uh. You know, I think
Speaker 1: when you look at the commodity space really right now,
Speaker 1: our focus has been on oil and names that are
Speaker 1: more associated with it because the disconnects between what the
Speaker 1: commodity has done since last summer versus what the stock
Speaker 1: prices have done, and we just feel like that that's
Speaker 1: that's offering us the best risk reward right now. What's
Speaker 1: the most contrarian bet right now? Most contrarian bet right now?
Speaker 1: I guess in Starbucks is a name which we've owned
Speaker 1: in the portfolio for over a year now, probably eighteen
Speaker 1: months or so, and that's the name that reported earnings
Speaker 1: last night. That's the name that continues to be out
Speaker 1: of favor with investors. I do think when you listen
Speaker 1: to the call last night, there was some things that
Speaker 1: a bowl could continue to be positioned around, and that
Speaker 1: the last two months of the first quarter they had
Speaker 1: north of a three percent comp in the US. You know,
Speaker 1: as we look forward through the rest of the year,
Speaker 1: April might be a bit bumpy because it is a
Speaker 1: difficult comp with the unicorn frappuccino that they had year.
Speaker 1: But I think that stock has been very out of
Speaker 1: favor of the multiple is very very compressed to where
Speaker 1: it's been, and obviously it's still a fantastic brand. Shares
Speaker 1: of Starbucks down a little bit more than one and
Speaker 1: a half percent right now. Michael, what happens if a
Speaker 1: ten year stays at three percent? Does that change your
Speaker 1: investment thesis? It doesn't. Uh. You know, it's funny when
Speaker 1: it's obviously a big psychological factor when you get the
Speaker 1: ten year yield up to a big round number like
Speaker 1: three percent that we haven't seen in a while. But
Speaker 1: as I speak to management teams that we own in
Speaker 1: the portfolio or perspective companies that we're thinking about investing,
Speaker 1: I don't hear any of them coming back and saying, well,
Speaker 1: if if the yield hits on the ten year hits three,
Speaker 1: we're doing something different. I mean, it's this is really
Speaker 1: an environment where stock picking matters a lot more going
Speaker 1: forward than it has the last couple of years, and
Speaker 1: you just need to be focused on those companies specific stories. Again,
Speaker 1: I think three percent is more of a psychological number
Speaker 1: more than anything. Thanks very much for being with us.
Speaker 1: Michael Scanlon, Managing Director, portfolio manager, Manual Life Asset Management
Speaker 1: based in Boston, of course, home to Bloomberg One. I
Speaker 1: was six on Boston, Newburyport and thirty and Metro West
Speaker 1: and the South Shore, helping to manage the John Hancock
Speaker 1: Balance Fund and the balanced portfolio. Total assets. He's helping
Speaker 1: be responsible for more than well nearly two billion dollars.
Speaker 1: We've got much more coming up on Bloomberg Market time
Speaker 1: pim Fox my co host Lisa A. Bramwoods. This is Bloomberg.
Speaker 1: XN posted its weakest first quarter of outputs since Chevron,
Speaker 1: the other hand, surpassed every first quarter profit and production
Speaker 1: production estimate out there. As a response, Exon shares down
Speaker 1: three point four percent, while Chevron shares up more than
Speaker 1: one percent. Joining us to understand the tale of two
Speaker 1: gas giants, Fernando Valet, He's oil and gas analyst with
Speaker 1: Bloomberg Intelligence, joining us here in our eleven three oh studios. Fernando,
Speaker 1: can you explain what Excen did wrong and what Chevron
Speaker 1: did right? Sure, hi, guys, good to be here. I
Speaker 1: think there are two key issues with x On. The
Speaker 1: first is you had some uh time timely issues. You
Speaker 1: had the earthquake in Point New Guinea that impacted production.
Speaker 1: You had higher oil prices actually takes some production away
Speaker 1: because you have a production sharing contracts where higher prices
Speaker 1: actually decrease your entitlement volumes. And then part of it
Speaker 1: is just the investment profile. I mean x Son had
Speaker 1: been cartailing investments since the oil price crisis. They cut
Speaker 1: their capex in twent billion dollars, and I think what
Speaker 1: the new CEO has recognized is that that is not
Speaker 1: a sustainable strategy UH and they're they're actually now raising
Speaker 1: their capex the thirty billion dollars going forward, which is why,
Speaker 1: for example, they haven't returned to the buybacks Chevron. On
Speaker 1: the other hand, they had a couple of major projects
Speaker 1: that they've been UH funding for a very long time
Speaker 1: that have finally started to come on stream. Gorgon Look
Speaker 1: of Financial Gas in Australia, wheat Stone also loqu of
Speaker 1: Finance or Gas project in Australia. Both of those projects
Speaker 1: started up in seventeen and they've been ramping and they've
Speaker 1: been a major contributor to both production and the earning
Speaker 1: speed for not the percentage of production that is UH
Speaker 1: that is done by large the large oil companies like
Speaker 1: x On Mobile like share and isn't that going down?
Speaker 1: It was shale was definitely taking UH market share in
Speaker 1: the global oil market. But as your production, as I mentioned,
Speaker 1: a lot of these projects that were funded in the
Speaker 1: twenty uh ten period and they're now coming to fruition,
Speaker 1: they're actually going to help big oil recapture some market share. UH.
Speaker 1: Who's actually seating market share in this time in the
Speaker 1: cycle is OPEC, As you had UH, Saudi Arabia curtail
Speaker 1: that production, Venezuela falling UH and also non US no
Speaker 1: non OPEC. So you had your Columbia as your China's,
Speaker 1: Mexico's or productions going down because these oil prices have
Speaker 1: forced them to cut investments and their aging fields are
Speaker 1: actually going down in production very significantly. Is that why
Speaker 1: investors aren't necessarily interested in the stocks? Because if you're
Speaker 1: not giving back the money to the shareholders, and other
Speaker 1: companies are like Conico Phillips doing a share buy back,
Speaker 1: why would you buy the shares of companies that aren't
Speaker 1: going to reward the shareholder. I think that's that's very
Speaker 1: fair in the short term. I think though, when you
Speaker 1: look at what ex One is doing, there's a recognition
Speaker 1: that their portfolio can't compete with shale, and that's why
Speaker 1: they've gone out there and they've bought UH more, papoint,
Speaker 1: New Guinea, more, Brazilian pre salts, uh they bought Permian assets.
Speaker 1: And so if you look at all the five pillars
Speaker 1: at the outlined in March, all those five pillars have
Speaker 1: been acquired or discovered since their old investments or x
Speaker 1: t O s your Russian oil and gas, your Canadian
Speaker 1: oil sands day don't work in this world anymore. So
Speaker 1: you need to go out and revamp. And it's a
Speaker 1: painful period of recognition, but it's something that I think
Speaker 1: it's necessary for you to compete long term, Irman, and
Speaker 1: you're becoming a going concern. You know, one thing that
Speaker 1: we were talking about before the segment, you were noting
Speaker 1: that it has to do with the composition of the
Speaker 1: underlying assets between Exon and Chevron. Exxon holds about fifty
Speaker 1: of its assets as natural gas produced producing UH utilities,
Speaker 1: whereas Chevron focuses more on oil. Brent crude rose substantially
Speaker 1: the first quarter, whereas natural gas actually declined if you
Speaker 1: look at prices and just wondering has Exon talked at
Speaker 1: all about increasing its exposure to crude or sort of
Speaker 1: changing the mix of its business at all. Yeah, that's something.
Speaker 1: Those five pillars when you look at it, uh, A
Speaker 1: lot of it is uh deep water so Guiana and
Speaker 1: Brazil deep water oil. Uh. And then the other two
Speaker 1: major projects are um Lique Financial Gas which internationally which
Speaker 1: are again oil linked, so they'll they'll help that mix.
Speaker 1: And then the Permian. Uh. So those five pillars will
Speaker 1: definitely change the pricing from being more US gas linked
Speaker 1: into more international pricing and oil and that should help
Speaker 1: their resilience because as you guys probably know, the Marcellist
Speaker 1: and the Permian, they're going to keep our our natural
Speaker 1: gas prices in this country very low for a very
Speaker 1: long time. I want to pick up on what Lisa said,
Speaker 1: having to do with the factors that affect the actual
Speaker 1: price of oil and the way in which fossil fuel,
Speaker 1: whether it be natural gas or shale oil or you know,
Speaker 1: deep water affected. But isn't it also that Venezuela, Mexico
Speaker 1: to the big oil producing regions. You got Pemmics with
Speaker 1: cutbacks in potential farm participation, and then you've got the
Speaker 1: general Venezuela story. Isn't that going to affect the price
Speaker 1: of oil? That that certainly has and that's what we
Speaker 1: were mentioning about OPEC seating market share, uh, with Venezuela
Speaker 1: being one of the you know, going down from almost
Speaker 1: three million barrels to under one point seven million barrels
Speaker 1: a day. Now, UH, Mexico has also had its issues.
Speaker 1: But again when you look at this country going from
Speaker 1: ten to ten point six million barrels a day, there's
Speaker 1: a lot of production coming online and there is a
Speaker 1: question mark of what happens in But I think one
Speaker 1: of the parts that investors sometimes misses that Saudi Arabian
Speaker 1: Russia have both cartail production and so there is some
Speaker 1: spare capacity that can come online, although the man could
Speaker 1: eventually outpaced at depending on oil prices. Thank you very
Speaker 1: much for being with us for Nada vale Is Oil
Speaker 1: and Gas Anithers for Bloomberg Intelligence. You're listening to Bloomberg Markets.
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
Speaker 1: It's one before the podcast. You can always catch us
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