WEBVTT - Victory Lap For Amazon: Earnings Beat Estimates Again 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.000 at Bloomberg dot com Slash podcast. Really strong numbers out 0:00:23.000 --> 0:00:26.160 of a lot of retailers and particularly Amazon last night. 0:00:26.239 --> 0:00:28.960 Let's bring in our good friend Burt Flickinger, managing director 0:00:28.960 --> 0:00:32.320 at Strategic Resource Group. He is the go to person 0:00:32.360 --> 0:00:35.920 on all things retail in Bert. We saw some really 0:00:35.960 --> 0:00:38.600 impressive numbers out of the e commerce giant last night, 0:00:38.640 --> 0:00:42.560 didn't We were very impressive numbers And what it really 0:00:42.960 --> 0:00:50.160 uh synthesizes is Jeff Bezos and to his credit McKenzie Bezos, 0:00:50.240 --> 0:00:53.080 his first wife, who helped co find the company, really 0:00:53.120 --> 0:00:59.520 taking a victory lap with six consecutive quarters of beating estimates, 0:00:59.520 --> 0:01:02.600 significant of late. And the key thing now is Amazon, 0:01:03.200 --> 0:01:05.039 by this time next year is going to be the 0:01:05.040 --> 0:01:10.280 biggest retailer worldwide, eclips in Walmart and everyone else. So 0:01:10.920 --> 0:01:13.720 what is the future like then for investors? I mean, 0:01:13.840 --> 0:01:17.360 we saw a record EPs, but Jeff Bezos has been 0:01:17.400 --> 0:01:20.039 known to turn the tap on and turn the tap 0:01:20.080 --> 0:01:25.520 off in terms of profits. And that's a great, great question, 0:01:25.560 --> 0:01:29.720 Matt and Uh. For us, the key thing is on 0:01:29.920 --> 0:01:34.080 tap on and off is Bezos and Amazon are increasing 0:01:34.200 --> 0:01:39.120 cap acts or capital expenditures by over a hundred year 0:01:39.200 --> 0:01:44.080 over years. So the number to look at is a 0:01:44.160 --> 0:01:47.840 hundred and eighty five distribution centers worldwide. They'll have more 0:01:47.920 --> 0:01:52.000 distribution centers in Walmart and everyone else, more efficient, more 0:01:52.040 --> 0:01:57.920 effective in What's particularly telling in Amazon's release is that 0:01:58.000 --> 0:02:02.960 everything solar and sustainable houred. So Amazon's making money from 0:02:03.000 --> 0:02:07.640 solar and using it to lower prices. And the perfect 0:02:07.680 --> 0:02:11.280 compare and contrast is Long Beach, where Kroger and others 0:02:11.280 --> 0:02:14.960 would not pay Hero pay and they would not put 0:02:15.000 --> 0:02:18.840 solar on the roofs to save money, made money, lower prices, 0:02:18.880 --> 0:02:23.040 and increased workers wages Amazon does. Kroger's closing up in 0:02:23.080 --> 0:02:27.079 Long Beach, California, and Amazon's opening it's it's new Amazon 0:02:27.200 --> 0:02:31.960 Fresh stores there. Uh to take run the table from 0:02:32.040 --> 0:02:37.480 California to the East coast. But it's just yeah, just extraordinary. 0:02:37.520 --> 0:02:41.040 I'm wondering about kind of their geographic footprint here, I'm 0:02:41.040 --> 0:02:43.600 just looking at the p g PGeo function on the 0:02:43.600 --> 0:02:45.960 Bloomberg terminal gives you a geographic breakdown of the revenue 0:02:46.000 --> 0:02:50.600 about six in North America International. Then the rest is aws, 0:02:51.400 --> 0:02:54.840 do you expect Amazon to increased investments is to try 0:02:54.880 --> 0:03:02.200 to really grow their international footprint? Yeah, Paul, definitely. Amazon's 0:03:02.240 --> 0:03:06.040 international growth that you're good point is fifty seven percent 0:03:06.200 --> 0:03:13.880 versus UH overall UH total total corporate growth. And international's 0:03:14.639 --> 0:03:18.200 going to be a tremendous opportunity as both the COVID 0:03:18.280 --> 0:03:23.440 nineteen pandemic and combined with the accelerating ice age worldwide, 0:03:23.840 --> 0:03:28.679 Amazon is just just going to replace shopping centers and 0:03:29.160 --> 0:03:33.760 shopping malls. And look at Amazon's landing page for Mother's Day, 0:03:34.000 --> 0:03:36.720 you don't have to go any place to get anything 0:03:37.080 --> 0:03:41.000 from chocolate, candy to close to tech. Uh. And Amazon 0:03:41.120 --> 0:03:43.120 International is going to be a big part of the 0:03:43.160 --> 0:03:46.240 growth story going forward. And Paul, the reason why you're 0:03:46.320 --> 0:03:50.120 questioning on international is so important is Ali Baba with 0:03:50.240 --> 0:03:54.720 Singles Day generated thirty point seven billion and one day 0:03:54.840 --> 0:03:58.520 last year, Amazon Prime in two days generated ten point 0:03:58.600 --> 0:04:01.720 four billion. So if Amazon is adding two to three 0:04:01.760 --> 0:04:05.680 more Prime days a year, and then add singles day internationally. 0:04:06.200 --> 0:04:11.320 Uh Amazon, Amazon can beat everybody uh in in e 0:04:11.560 --> 0:04:15.680 retail and the one Achilles seal for Amazon right that, 0:04:15.880 --> 0:04:18.760 right now is food retail, where the cops are still negative. 0:04:18.839 --> 0:04:22.320 And and as you mentioned the prior segment concerns about 0:04:22.320 --> 0:04:24.800 the Federal Grade Commission. But it doesn't look like there's 0:04:24.839 --> 0:04:27.360 any an a trust in the future either. I mean, 0:04:27.400 --> 0:04:29.920 it's gonna be hard to beat local there. I have 0:04:30.279 --> 0:04:33.960 here in Berlin occasionally looked at getting food off of Amazon, 0:04:34.600 --> 0:04:37.560 but it's not as good as we've got local services 0:04:37.560 --> 0:04:40.880 like Guerrillas that deliver in literally ten minutes, I mean 0:04:40.920 --> 0:04:44.239 sometimes less than ten minutes um. And I've become addicted 0:04:44.279 --> 0:04:47.520 to that. I wonder though, in the bigger picture, bur 0:04:47.640 --> 0:04:49.840 you mentioned at the top that Amazon is going to 0:04:49.960 --> 0:04:54.039 overtake Walmart as the biggest retailer in the world. The 0:04:54.080 --> 0:04:57.120 Walton family can't take this lying down, right, Doug McMillan 0:04:57.160 --> 0:05:00.440 has to do something about it. Walmart's got you know, 0:05:00.480 --> 0:05:06.280 a million more employees than Amazon, and their market cap 0:05:06.520 --> 0:05:09.600 is less than a fourth of Amazon. They're trading for 0:05:09.640 --> 0:05:15.200 three billion dollars. Amazon's trading from one trillion what can 0:05:15.240 --> 0:05:18.080 Walmart do about this to try and class some of 0:05:18.120 --> 0:05:23.520 that back. Walmart can win on food, Matt and that's 0:05:23.880 --> 0:05:29.400 that's Ben Ben, Amazon's on going Achilles Heel and uh Walt, 0:05:29.560 --> 0:05:33.920 Walmart will be able to deliver to of the US 0:05:34.000 --> 0:05:37.839 population by the end of this year. So Amazon wins, 0:05:37.880 --> 0:05:42.000 Walmart wins, Target wins, just about everybody else loses. And 0:05:42.000 --> 0:05:45.279 and what I like about your Berlin comment is you 0:05:45.320 --> 0:05:49.359 know better than I do, uh gallery kalpof Karstat. A 0:05:49.400 --> 0:05:52.880 lot of the department stores have either closed or cut 0:05:52.920 --> 0:05:59.080 back in Germany and throughout the EU, and Amazon's growing 0:05:59.080 --> 0:06:02.279 and replacing the bricks and mortar stores. And what's notable 0:06:03.040 --> 0:06:07.479 your time about Berlin and Europe is Walmart failed with 0:06:07.520 --> 0:06:13.680 all three formats in continental Europe. So where Walmart's failed, uh, Korea, 0:06:14.000 --> 0:06:18.120 Germany and elsewhere. Amazon's winning just about everywhere, and we'll 0:06:18.120 --> 0:06:22.320 continue to win. Yeah. Absolutely. I mean going online is 0:06:22.360 --> 0:06:24.960 a more pleasant experience than going into a calf off, 0:06:25.000 --> 0:06:26.680 I'll tell you that. And and a cars dot and 0:06:26.720 --> 0:06:29.440 they are we see him closing left and right around here. Bert, 0:06:29.440 --> 0:06:31.800 thanks so much for joining us. Bert Flickings, you're there 0:06:31.800 --> 0:06:34.560 talking to us about Amazon he's a managing director at 0:06:34.560 --> 0:06:41.839 Strategic Resource Group. Well here in the United States, the 0:06:41.960 --> 0:06:44.320 story about the vaccines is a very positive one as 0:06:44.400 --> 0:06:47.640 vaccine rates continue to increase, and that has a corresponding 0:06:48.160 --> 0:06:51.359 uh impact on the economy, as economy begins to open up. 0:06:51.360 --> 0:06:53.440 And of course you you can trast that with what 0:06:53.560 --> 0:06:56.120 Matt's experiencing in Germany and across Europe. Just you know, 0:06:56.200 --> 0:06:58.200 it looks like there's several months behind then of course 0:06:58.800 --> 0:07:02.240 the tragedy that's unfull thing UH in UH India just 0:07:02.320 --> 0:07:05.839 goes to the importance of getting folks facted up and 0:07:05.839 --> 0:07:08.520 and all through this process we've been fortunate to speak 0:07:08.560 --> 0:07:11.640 to experts such as Lauren Sour, the Associate Professor of 0:07:11.640 --> 0:07:15.160 Emergency Medicine at the Johns Hopkins University. And I should 0:07:15.200 --> 0:07:17.040 not that the Bloomberg School of Public Health a Johns 0:07:17.080 --> 0:07:20.280 Hopkins is supported by Michael Arre Bloomberg, founder Bloomberg LP, 0:07:20.320 --> 0:07:24.360 Bloomberg Philanthropies and this radio and TV operation. Uh Dr 0:07:24.440 --> 0:07:26.640 Sour thanks so much for joining us here. I guess 0:07:26.720 --> 0:07:28.760 I want to go to the issue of what we 0:07:28.880 --> 0:07:33.800 heard recently from the CDC about mass and just you know, behavior, 0:07:33.840 --> 0:07:37.120 individual behaviors as more and more people get vaccinated in 0:07:37.120 --> 0:07:40.800 this country. Do you think the messaging is matching what's 0:07:40.800 --> 0:07:45.160 really going on out there in society. That's a great question. 0:07:45.240 --> 0:07:47.320 I think there is a little bit of a disconnect. 0:07:47.320 --> 0:07:50.080 And there's also this sense of, um, you know, we're 0:07:50.080 --> 0:07:53.080 getting vaccinated, we're doing the work. Now, please let us 0:07:53.320 --> 0:07:55.560 get out there and get pick our masks off and 0:07:55.880 --> 0:07:58.960 be free, you know, and I completely understand that, you know, 0:07:59.040 --> 0:08:01.000 we we do want things to get back to normal. 0:08:01.120 --> 0:08:04.400 I think, um, there could have been a little more 0:08:04.400 --> 0:08:09.120 explicit information in that updated CDC guidance on masking that 0:08:09.160 --> 0:08:11.440 we would have liked to see around, like office usage 0:08:11.440 --> 0:08:13.800 and things like that. But it is good to see 0:08:13.800 --> 0:08:17.240 the CDC acknowledging the safety of the outdoor space, especially 0:08:17.280 --> 0:08:19.520 as we move into summer and people are anxious to 0:08:19.520 --> 0:08:22.600 get out there to those outdoor restaurants, you know, outdoor settings, 0:08:23.040 --> 0:08:25.240 um and be with family members who are vaccinated or 0:08:25.280 --> 0:08:29.040 friends who are vaccinated. Again. You know, it does seem 0:08:29.080 --> 0:08:31.920 like it's kind of silly to wear a mask outside 0:08:31.960 --> 0:08:35.960 to begin with, right, it seems very performative, like you're 0:08:36.040 --> 0:08:39.720 sort of stating your political opinion more than really trying 0:08:39.760 --> 0:08:43.480 to protect somebody because it's so unlikely to catch the 0:08:43.559 --> 0:08:48.040 virus in an outdoor setting. Yeah, I mean, I think, 0:08:48.280 --> 0:08:51.240 you know, the guidance was catching up with the science, right, 0:08:51.280 --> 0:08:54.040 And so one of the most impressive things that has 0:08:54.080 --> 0:08:56.360 happened in the last year year and a half is 0:08:56.760 --> 0:08:59.600 how quickly science has happened and how we're rapidly trying 0:08:59.640 --> 0:09:02.960 to learn learn about all these different settings about aerosol transmission, 0:09:02.960 --> 0:09:06.680 about contact transmission, like everything about this virus is new 0:09:06.840 --> 0:09:10.160 when this pandemic started, and so we know that the 0:09:10.520 --> 0:09:14.040 sort of regulatory environment and the policy environment has a lag. 0:09:14.120 --> 0:09:16.240 And so I think this is what we're seeing as 0:09:16.280 --> 0:09:19.000 policy and guidance catching up with the science and you know, 0:09:19.080 --> 0:09:21.280 the sort of exactly what you're talking about. The things 0:09:21.320 --> 0:09:24.160 we see we already feel to be inherent. So the 0:09:24.200 --> 0:09:27.400 science is there, the policy is catching up, and people 0:09:27.520 --> 0:09:33.320 can take advantage of that guidance and those recommendations. Uh, Lauren, 0:09:33.400 --> 0:09:35.640 when do you think we'll know? When will the science 0:09:35.840 --> 0:09:41.120 come in about perhaps how long these vaccines actually work? 0:09:41.240 --> 0:09:42.920 Is it six months? Is at twelve months? Is it 0:09:43.200 --> 0:09:45.520 longer than that? And obviously that will go to what 0:09:45.559 --> 0:09:47.880 we do, you know, roughly a year from now. I 0:09:47.960 --> 0:09:50.080 know studies are being done. When do you think that 0:09:50.120 --> 0:09:53.559 science will be available? Yeah, I think it's already coming in. 0:09:53.640 --> 0:09:56.120 I mean, I think we're starting to We're watching those 0:09:56.160 --> 0:09:59.800 first groups of vaccinies who are actually probably on their 0:10:00.080 --> 0:10:03.320 or dose from from the people who participated in the studies. 0:10:03.360 --> 0:10:06.400 So they're getting their boosters to see what they're um, 0:10:06.440 --> 0:10:09.640 you know, what they're waning intibodies look like and UM 0:10:09.679 --> 0:10:11.880 and that data, those data are coming in right That 0:10:11.960 --> 0:10:16.120 information is being gathered and analyzed right now as we speak, 0:10:16.160 --> 0:10:19.600 which is really impressive. I think UM on the on 0:10:19.640 --> 0:10:22.880 the natural infection side, we're just starting to see that 0:10:22.920 --> 0:10:26.800 information from our earliest patients, So UM people who so 0:10:26.920 --> 0:10:31.240 generously contributed their time, their specimens, their clinical data, you know, 0:10:31.320 --> 0:10:34.640 and participated in those observational studies early in the pandemic 0:10:34.720 --> 0:10:38.679 and continue to participate UM or helping us to understand 0:10:39.200 --> 0:10:41.960 what happens after we get infected, or what happens after 0:10:42.000 --> 0:10:45.319 we get vaccinated, or what happens after we get infected 0:10:45.360 --> 0:10:48.680 and vaccinated to our immunity. So I think, you know, 0:10:48.760 --> 0:10:50.440 this summer, we're going to start to see a lot 0:10:50.440 --> 0:10:53.320 of data pouring in on UM that first year of 0:10:53.360 --> 0:10:55.800 infection and what it looks like, along with the seasonality 0:10:55.800 --> 0:11:00.400 of the virus itself. We have a bloomberg opinion UM 0:11:00.600 --> 0:11:03.880 columnist Kathy O'Neil. She's also a mathematician. She wrote the 0:11:03.880 --> 0:11:09.080 book Weapons of Math Destruction. She says, like, you know, 0:11:09.480 --> 0:11:14.679 people are ridiculously worried about this. Once you're vaccinated, and 0:11:14.840 --> 0:11:17.480 as many other people are vaccinated, as is the case 0:11:17.480 --> 0:11:22.160 in the US, these solutions are nine point and these 0:11:22.160 --> 0:11:27.440 are her numbers, nine nine nine nine percent effective. Are 0:11:27.559 --> 0:11:32.400 we being a little over dramatic at this point? Yeah, 0:11:32.440 --> 0:11:35.200 I'm not sure. I would say, I'm not sure where 0:11:35.200 --> 0:11:37.960 those numbers come from. I think, um, we know we 0:11:38.080 --> 0:11:42.920 have an incredibly a series of incredibly safe and effective vaccines. 0:11:43.040 --> 0:11:46.160 Plus when you add these additional protective measures, as we 0:11:46.240 --> 0:11:50.040 get more and more of the population UM protected through vaccine, 0:11:50.360 --> 0:11:53.080 those numbers do increase. Right that her community starts to 0:11:53.160 --> 0:11:56.640 build UM. I think some new studies have come out 0:11:56.760 --> 0:11:59.120 just opink in the last couple of days showing that 0:11:59.559 --> 0:12:01.680 um AT they're just one dough if you have a 0:12:01.720 --> 0:12:05.200 reduction and transmission and a reduction in severity. So that's 0:12:05.240 --> 0:12:08.080 also really exciting to see. But again. You know you 0:12:08.080 --> 0:12:10.600 want to wait for that cycle, that full cycle of 0:12:11.000 --> 0:12:14.880 participants early from the early studies to understand what does 0:12:14.880 --> 0:12:17.959 the ongoing picture of immunity and detection look like in 0:12:18.000 --> 0:12:21.040 the community. Absolutely, Lauren, thanks so much for joining us. 0:12:21.120 --> 0:12:24.920 Lauren sour there from the Johns Hopkins School talking about COVID. 0:12:27.520 --> 0:12:32.679 Let's turn to commodities here. I'm talking soft commodities like corn, soybeans, 0:12:32.720 --> 0:12:36.360 wet sugarcane. All of these grands are making multi year highs. 0:12:36.440 --> 0:12:38.720 Let's get a look at underhood what's driving this. We 0:12:38.720 --> 0:12:43.280 welcome Sell Gilberti, President CEO, ce IO and co founder 0:12:43.360 --> 0:12:47.559 of two Creemp Trading. They trade these commodities South. Thanks 0:12:47.559 --> 0:12:49.680 so much for joining us here. I know our discussion 0:12:49.760 --> 0:12:52.000 is going to go supply demands. So where do you 0:12:52.000 --> 0:12:54.960 want to go first? As we think about these commodities 0:12:55.040 --> 0:12:58.680 setting some multi year highs, well, it is supplied demands. 0:12:58.720 --> 0:13:02.440 So that's um, that's what's driving these highs. Basically, we 0:13:02.520 --> 0:13:06.240 are using more grains. In the case of corn and soybeans, 0:13:06.240 --> 0:13:08.559 we're using more grains two years in a row than 0:13:08.600 --> 0:13:11.720 we produce globally, and so that that's a very big deal. 0:13:11.720 --> 0:13:15.760 When you see stocks shrinking, your grain stock shrinking, Um, 0:13:15.880 --> 0:13:18.600 you get higher prices. That says any commodity. It is 0:13:18.640 --> 0:13:22.920 simply supply to man. What's amazing is that soybean ending 0:13:23.040 --> 0:13:26.160 stocks and that means what's left over after you grow 0:13:26.200 --> 0:13:28.400 the whole crop and use everything you're gonna use, there's 0:13:28.400 --> 0:13:32.000 generally a little bit left. Um. Soybeans are down year 0:13:32.040 --> 0:13:35.360 on year. The projections corn. This is US US stocks 0:13:35.559 --> 0:13:39.040 corn down and weak down. This is the inventories inventories 0:13:39.080 --> 0:13:42.760 that's correct, excess inventories. And that's that's enormous UM. And 0:13:42.800 --> 0:13:45.920 that's why you've seen these these large price rises usually. 0:13:46.080 --> 0:13:48.720 I mean, if you have these kind of price gains, 0:13:48.760 --> 0:13:51.120 I know, farmers like to go out and plant more. 0:13:51.160 --> 0:13:55.360 Are we going to see supply meat demand? Is? Is this, 0:13:55.559 --> 0:13:59.720 you know, the transitory inflation that Powell is talking about 0:13:59.800 --> 0:14:02.600 or these prices here to stay? I think these prices 0:14:02.640 --> 0:14:04.560 are here to stay for more than one season. They 0:14:04.920 --> 0:14:07.280 never you know, grains are easy to grow, um, but 0:14:07.480 --> 0:14:09.520 it does take a full growing season a year, you know. 0:14:09.600 --> 0:14:13.000 So essentially, when when the the u f d A 0:14:13.160 --> 0:14:15.160 did kind of drop a bomb on the market in 0:14:15.200 --> 0:14:18.760 the last day of Marching their annual acreage report where 0:14:18.760 --> 0:14:20.960 they came in with much lower corn and soybean acres 0:14:21.000 --> 0:14:24.200 in the United States, and people anticipated we will raise 0:14:24.280 --> 0:14:25.920 that number a little bit, so you will see these 0:14:25.920 --> 0:14:29.560 balance sheet estimates that are really tight right now kind 0:14:29.560 --> 0:14:32.120 of loosen a little. But the bottom line is even 0:14:32.160 --> 0:14:35.320 factoring in perfect growing weather um, which is a big 0:14:35.400 --> 0:14:39.080 f around the world, and we're just planning the seeds 0:14:39.120 --> 0:14:42.240 now that we're counting on to harvest in the autumn. 0:14:42.440 --> 0:14:45.280 Even with a perfect harvest and a and a good yield, 0:14:45.520 --> 0:14:47.480 we're still not going to rebuild these supplies. It's going 0:14:47.480 --> 0:14:50.080 to take at least until next growing season that's autumn 0:14:51.360 --> 0:14:53.840 in the Northern Hemisphere, in order to get these balance 0:14:53.880 --> 0:14:57.520 sheets back online. And that's assuming good weather. So did 0:14:57.560 --> 0:15:01.200 the pandemic play any roll in this? It seems just 0:15:01.240 --> 0:15:06.000 like a big miss here on people's supply side models 0:15:06.040 --> 0:15:10.000 and demand models. Um, it's true. The pandemic was really 0:15:10.040 --> 0:15:12.760 confusing because right when it hit, we assumed we'd use 0:15:12.760 --> 0:15:14.280 a lot less corn for f F and all, and 0:15:14.320 --> 0:15:16.960 we did, but the the use of that has come 0:15:17.080 --> 0:15:20.760 roaring back. People panicked, particularly about the use of wheat. 0:15:20.800 --> 0:15:22.640 We thought, you know, no more cruise line and no 0:15:22.720 --> 0:15:25.360 more casinos, no more big parties. And you know, a 0:15:25.400 --> 0:15:27.520 cruise line will get twenty tons of wheat delivered to 0:15:27.600 --> 0:15:30.760 it at a time on big palettes because they're making 0:15:30.880 --> 0:15:33.160 homemade breads and you know the hots and everything for 0:15:33.200 --> 0:15:36.000 their bars, and people panic. Well guess what, everybody went 0:15:36.040 --> 0:15:37.800 home and became a home chef. For a while. The 0:15:37.920 --> 0:15:41.000 number one search on the internet globally was for banana bread. 0:15:41.240 --> 0:15:43.400 And we actually used the quarter on quarters one of 0:15:43.400 --> 0:15:46.400 those quarters last year. Yeah, there you go. And and 0:15:46.600 --> 0:15:48.800 we we use more wheat by one percent according to 0:15:48.840 --> 0:15:51.680 the Wheat Board or somebody, and and that's a really 0:15:51.680 --> 0:15:54.400 big deal. We're actually using more, that's the key. We 0:15:54.600 --> 0:15:58.400 use more grains. The combined use of corn, soybeans, and 0:15:58.400 --> 0:16:01.360 wheat everything all year and we've we've studied this back 0:16:01.400 --> 0:16:05.520 to nineteen is either a global record or they just missed. 0:16:05.560 --> 0:16:08.440 So it's the second highest. It's always rising. So when 0:16:08.480 --> 0:16:12.680 you have these temporary supply disruptions like lower acres than 0:16:12.720 --> 0:16:15.920 you expected, like poor weather in Brazil for the for 0:16:15.960 --> 0:16:18.200 the second crop corn, these are big deals. And that's 0:16:18.200 --> 0:16:20.960 why we've seen this price appreciation, which should hold more 0:16:21.000 --> 0:16:23.840 than a year. I've learned more in the last year 0:16:23.960 --> 0:16:27.520 about different variations of wheat and flour than ever in 0:16:27.560 --> 0:16:30.080 my life. I've made bread for the first time in 0:16:30.120 --> 0:16:31.840 my life. I've made pasta for the first time in 0:16:31.880 --> 0:16:36.000 my life. So you're you're spot on in terms of that, 0:16:36.040 --> 0:16:37.880 because I'm not somebody who ever spent time in the 0:16:37.960 --> 0:16:41.240 kitchen before. Are there any softs that um, where supply 0:16:41.440 --> 0:16:45.240 is just way too high and people didn't didn't use 0:16:45.280 --> 0:16:48.240 as much as we thought they would. Um, you know, 0:16:48.680 --> 0:16:51.040 nothing jumps out. I mean people are getting a little 0:16:51.040 --> 0:16:54.360 nervous about coffee. People that you know, there's enough sugar. 0:16:55.000 --> 0:16:58.320 That's another interesting thing. The short answer, no, but they're 0:16:58.360 --> 0:17:02.200 in commodities, especially aggri cultural commodities, there's either enough or 0:17:02.200 --> 0:17:05.080 there's plenty. We don't ever run out because your price ration. 0:17:05.520 --> 0:17:07.800 You know, people don't starve because there isn't enough food 0:17:07.800 --> 0:17:09.960 in the world. They start because of other reasons, politics 0:17:09.960 --> 0:17:13.400 and logistics. But so look at it this way. When 0:17:13.440 --> 0:17:15.280 you're having a birthday party at your house and for 0:17:15.320 --> 0:17:17.320 five people, and you bought the six inch round cake, 0:17:18.200 --> 0:17:21.359 that's great, and you have plenty and the doorbell rings 0:17:21.359 --> 0:17:23.159 and five more people come to surprise you when you 0:17:23.200 --> 0:17:25.080 look at that cake and you go, well, there's enough. 0:17:25.600 --> 0:17:28.440 That's what we're experiencing right now. There's either enough or 0:17:28.480 --> 0:17:31.040 there's plenty, and that's why the markets get nervous right away. 0:17:31.160 --> 0:17:33.560 I mean soybeans in the US, we've gone from a 0:17:33.680 --> 0:17:37.560 forty eight day excess supply down to a ten day 0:17:37.680 --> 0:17:41.400 excess supply. That's that's unbelievable. Um, we only have ten 0:17:41.520 --> 0:17:43.679 days of soybeans left over at the end of this 0:17:43.760 --> 0:17:46.520 coming year, assuming a good crop and a good harvest. 0:17:47.320 --> 0:17:48.600 We all know about that. We all know about the 0:17:48.640 --> 0:17:51.280 lumber prices as well. It's a fascinating story as well. 0:17:51.320 --> 0:17:53.080 I have to have you back on in the future. 0:17:53.080 --> 0:17:55.520 Sal Gea Barty, thanks so much for joining us. He 0:17:55.720 --> 0:18:02.040 is the CEO of two Cream. Now let's talk a 0:18:02.080 --> 0:18:05.440 little bit with Laura Martin. She's a senior analyst at 0:18:05.520 --> 0:18:08.639 Needham and Company, coming to us out of Los Angeles. 0:18:08.840 --> 0:18:13.760 And we've had some pretty big media companies out with 0:18:13.840 --> 0:18:18.639 earnings and coming out still this week among them. I 0:18:18.680 --> 0:18:21.280 know Paul has has done some work on a n 0:18:21.440 --> 0:18:25.399 R and found Laura, you are one of only five 0:18:25.880 --> 0:18:29.800 out of forty one analysts with an underperformed on Netflix 0:18:30.440 --> 0:18:36.280 um What disappoints you about the streaming service, Well, we 0:18:36.359 --> 0:18:39.280 think that they're the fact that a monopolis. They invented 0:18:39.280 --> 0:18:42.480 the category, and so the people who are entering late, 0:18:42.720 --> 0:18:45.600 especially in the last twelve months, are doing much more 0:18:45.680 --> 0:18:50.760 innovative things around, like pricing strategies. For example, um Peacock 0:18:50.840 --> 0:18:52.880 has a free at three, five dollar and a ten 0:18:52.960 --> 0:18:56.640 dollar tier. That's a pricing innovation. Bundling. We're like, Disney 0:18:56.640 --> 0:18:58.920 will give you Disney Plus standalone, but it will also 0:18:58.960 --> 0:19:02.560 bundle with um Hulu and with the ESPN for at 0:19:02.600 --> 0:19:04.600 thirteen dollars a month, which is a lower price than 0:19:04.600 --> 0:19:07.359 the Netflix standard price of fifteen dollars a month. And 0:19:07.359 --> 0:19:09.720 then we're seeing a lot more cross promotions with other 0:19:09.880 --> 0:19:12.680 types of assets. So I think there's just a lot 0:19:12.720 --> 0:19:15.879 more innovation going on in the streamers that came late 0:19:16.280 --> 0:19:21.560 to the party. Where especially optimistic about Discovery Plus because 0:19:21.640 --> 0:19:24.359 David jazz Las said on his call that they're getting 0:19:24.400 --> 0:19:27.720 five dollars for the ad lite service and another five 0:19:27.760 --> 0:19:30.960 dollars from advertising, so they're actually getting ten dollars, which 0:19:31.000 --> 0:19:33.080 is more than they're getting for the ad free service, 0:19:33.160 --> 0:19:36.119 and it's more than they're getting on their linear TV network. 0:19:36.200 --> 0:19:39.320 So that's actually the best economic model right now. But Laura, 0:19:39.400 --> 0:19:43.400 none of them have None of those others have Narcos, 0:19:43.480 --> 0:19:46.600 none of them have the Crown, none of um them 0:19:46.640 --> 0:19:50.800 have Ozark. I mean there are series on Netflix that 0:19:50.840 --> 0:19:54.959 you can't live without having seen, and everyone is waiting 0:19:55.000 --> 0:19:59.840 for the next season, right, No, disagree. I think con 0:20:00.280 --> 0:20:04.600 quality is necessary but not sufficient because HBO also has 0:20:04.680 --> 0:20:07.359 that HBO Max and what content? What a lot of 0:20:07.359 --> 0:20:10.240 these guys now has live sports and if somebody needs 0:20:10.280 --> 0:20:12.800 to see the NFL, that is must be programming for them, 0:20:12.880 --> 0:20:15.200 much more important than the Ozarks. So I wish I could. 0:20:15.359 --> 0:20:17.080 I wish I could get HBO. I live in this 0:20:17.160 --> 0:20:19.520 small country of eighty million people, and HBO is not 0:20:19.600 --> 0:20:25.040 available in Germany, but Netflix is. Hey, Laura, you know, actually, well, Matt, 0:20:25.119 --> 0:20:26.720 just to give you a sense, Laura has been right 0:20:26.720 --> 0:20:29.120 here on the next Netflix called the stock down five 0:20:29.119 --> 0:20:31.600 percent year to date versus calling on eleven or twelve 0:20:31.600 --> 0:20:34.720 percent gain for the SMP. So it's been a good call, Laura. 0:20:34.720 --> 0:20:38.440 We've also had some of the big internet companies report 0:20:38.600 --> 0:20:40.440 this week, and I know you've covered this space since 0:20:40.440 --> 0:20:42.960 its inception, and you have a great feel for the 0:20:42.960 --> 0:20:45.880 the advertising market. We saw some of the big players 0:20:45.960 --> 0:20:49.119 like Google and Facebook really do well and put up 0:20:49.119 --> 0:20:51.240 some blockbuster numbers. But when you go to some of 0:20:51.240 --> 0:20:54.000 the smaller players like Pinterest and then last night Twitter, 0:20:54.560 --> 0:20:57.639 not so much. So are we seeing, you know, a 0:20:57.880 --> 0:21:02.320 creation of a bifurcated digital ad market. We are the 0:21:02.480 --> 0:21:04.600 all of the big ad tech that I cover, which 0:21:04.680 --> 0:21:08.560 is Facebook, Alphabet, Amazon, and Apple, all of them over 0:21:08.640 --> 0:21:12.720 reported dramatically, UM and not only at the top line, 0:21:13.200 --> 0:21:18.520 they more even more dramatically overperformed usually over performance at 0:21:18.560 --> 0:21:21.280 the ets line. So what we're seeing is a continued 0:21:21.320 --> 0:21:25.520 consolidation of revenue into the big fangs, which are which 0:21:25.560 --> 0:21:28.160 are competing with each other with the best programmers around, 0:21:28.160 --> 0:21:33.399 in the best innovation around. UM. I mean Twitter is 0:21:34.480 --> 0:21:38.320 I can't imagine counting Twitter among the others just because 0:21:38.320 --> 0:21:42.400 it's so small and so niche. UM. But in terms 0:21:42.400 --> 0:21:45.160 of the big ones, what's the concern? And I see 0:21:45.200 --> 0:21:49.159 you have a buy on um, Amazon and Apple, but 0:21:49.280 --> 0:21:52.359 on Facebook you have a hold, you have buy on Google. 0:21:52.600 --> 0:21:57.080 In terms of these big giant platforms, what's the regulatory concern? 0:21:58.440 --> 0:22:00.280 So I think regulatory we have a whole hold on 0:22:00.280 --> 0:22:03.359 Facebook because we see the regulatory concerns most there. I 0:22:03.440 --> 0:22:06.320 think Facebook has sort of irritated everyone in Washington, d C. 0:22:06.560 --> 0:22:09.280 Regardless of what side of the aisle you're on, and 0:22:09.280 --> 0:22:11.320 and in part because I think those people are afraid 0:22:11.320 --> 0:22:14.680 for their jobs. I think they believe that Facebook moderates 0:22:14.800 --> 0:22:21.000 content to gause Republican voices, so our conservative voice is 0:22:21.040 --> 0:22:23.680 what's call it. So I think that that's actually an 0:22:23.680 --> 0:22:26.480 existential threat to those people's job security. So I think 0:22:26.480 --> 0:22:29.800 it's most likely to be regulated. Um, I don't really 0:22:29.840 --> 0:22:33.879 worry that much about either Apple or Amazon particularly. My 0:22:34.000 --> 0:22:38.000 opinion is that every company sewing Apple, which is Spotify, 0:22:38.160 --> 0:22:43.200 and um Fortnite, which is Epic Games, and so Facebook 0:22:43.240 --> 0:22:45.879 just picked a big fight with Apple, will lose. Apple 0:22:45.920 --> 0:22:49.240 will win because what Apple delivers is one billion unique 0:22:49.359 --> 0:22:52.560 users and a billion and they have six hundred million 0:22:52.600 --> 0:22:56.040 subscribers now, so the value they're bringing to consumers at 0:22:56.040 --> 0:22:58.840 a two thousand dollar price point is sort of second 0:22:58.880 --> 0:23:01.360 to none. So I leave their platforms will win every 0:23:01.359 --> 0:23:05.360 regulatory battle. Laura, We've now got just about every one 0:23:05.359 --> 0:23:08.040