Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanivk. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. We've been watching shares of
Speaker 1: H and R Block hitting a record high, the stock
Speaker 1: nearly doubling this year alone. This is the company reported
Speaker 1: fourth quarter just ADPs that beat revenue was flat, raised
Speaker 1: guide and so for fisical adjusted EPs, and it did
Speaker 1: approve a new buyback of one billion dollars. Really great
Speaker 1: to have back on Bloomberg Business Week once again. Jeff Jones.
Speaker 1: He is president and CEO at H and R Block.
Speaker 1: We'd like to remind everybody that Jeff has had a
Speaker 1: really cool career um including Chief Marketing Officer at Gap Target,
Speaker 1: President of Rideshew her at Uber so really in tune
Speaker 1: with what's going on in terms of the corporate world.
Speaker 1: Jeff joins us via zoom from Kansas City, Missouri. Jeff's
Speaker 1: so nice to have you here. How are you? I'm
Speaker 1: doing great, Carol, good afternoon, and hey Mike, how are
Speaker 1: you guys? Hi? Jeff, Yeah, I had to do. I
Speaker 1: did a double take looking at your stock chart today.
Speaker 1: I was like, Jeff's gotta be the one guy. We've
Speaker 1: been talking about this bear market all year. Jeff's gotta
Speaker 1: be like, are you talking about you know what? It's
Speaker 1: It's really amazing to see the market starting to hear
Speaker 1: our story. And you comment on a Carol, we had
Speaker 1: a great year. Um, we also provided really strong outlook
Speaker 1: and so I think it's a really great combination for
Speaker 1: the company right now. Well, and you have been you know,
Speaker 1: you've had a five year plan. You've been really you know,
Speaker 1: working on small business financial products. A lot of different things.
Speaker 1: Tell us about the quarter in the look ahead. What's
Speaker 1: really driving momentum right now? Jeff, Well, let's start with
Speaker 1: you know, our bread and butter, the core consumer tax business. Um,
Speaker 1: you know, we continue to make improvements in avenue and
Speaker 1: client volume, in market share, and our assistant business really
Speaker 1: demonstrating just how strong that industry is. You know, we
Speaker 1: we talked about going into the pandemic and nineteen coming
Speaker 1: out in twenty two, up in revenue, up in market share,
Speaker 1: up and earnings reducing shares outstanding. So the core consumer
Speaker 1: tax business has been very strong. We had a record
Speaker 1: year in small business UH, and so that means more
Speaker 1: and more small business owners are recognizing our expertise and
Speaker 1: turning us for tax. And then we had a really
Speaker 1: successful initial launch of Spruce, which is our new challenger bank.
Speaker 1: You know, Cheff, the big news in politics this week
Speaker 1: obviously is that Inflation Reduction Act UH. And part of
Speaker 1: that is, UH they want to add UH. I forget
Speaker 1: how many thousands, thousands and thousands of IRS agents. I've
Speaker 1: got to think that's a very big opportunity opportunity for you,
Speaker 1: but also potentially at challenge. I'm just curious how you're
Speaker 1: thinking about the ramp up of the I r S
Speaker 1: enforcement that is embedded in this bill. Well, we've been
Speaker 1: very vocal in support of the I r S receiving
Speaker 1: more funding. UM, you know, they touch more American consumers
Speaker 1: than any other agency, and they have not had the
Speaker 1: resources to be equipped to do that. So we absolutely
Speaker 1: support that. And what we've seen, I guess over history
Speaker 1: is when the I r S steps up enforcement, the
Speaker 1: consumer looks for expertise more and more. You know, keep
Speaker 1: in mind, the stakes for our clients are very high.
Speaker 1: Getting this right matters, getting me every dollar they deserve
Speaker 1: matters whether you're a small business owner, a gig worker,
Speaker 1: or a consumer. And so you know, we're glad they're
Speaker 1: getting more support and we're here to help the customer.
Speaker 1: You know, you did talk jet that you know your
Speaker 1: core businesses the tax services, but you are expanding in
Speaker 1: small business. You mentioned spruce your mobile banking. What kind
Speaker 1: of growth are we seeing on those platforms and do
Speaker 1: you anticipate that there is a time where they are
Speaker 1: as equally as important as your core tax business. Well,
Speaker 1: there's no question there strategically as important today. Of course
Speaker 1: they're earlier stage. We've been in the tax business for decades.
Speaker 1: In small business, we had a record gear we grew
Speaker 1: that business clients five percent on top of four percent
Speaker 1: last year. Uh, and believe there's still lots of upside
Speaker 1: in serving small businesses just looking at the landscape. You know,
Speaker 1: those people that have side hustles, ten ninety nine gig workers.
Speaker 1: They may not consider themselves to be a small business owner,
Speaker 1: but they absolutely have tax and bookkeeping potentially payroll needs, uh,
Speaker 1: just like a small business would. And then we with Spruce,
Speaker 1: we had a fantastic launch. That product has been in
Speaker 1: the market only a handful of months. We've had seven
Speaker 1: major releases of the app since we launched, and right
Speaker 1: now the team is focused on testing customer acquisition our
Speaker 1: outside of tax season and then getting ready to launch
Speaker 1: it in our retail channel next tax season. Obviously, we
Speaker 1: have a very large install base of customers and we
Speaker 1: want to take full advantage of introducing them to Spruce
Speaker 1: next year. Jeff, what was cool about talking to you?
Speaker 1: You talk about small business? You know, it's funny. Our
Speaker 1: colleague on television, Caroline Hyde, she talked about the small
Speaker 1: cap um the Russell doing really well and out performing
Speaker 1: the broader market, and a lot of that has to
Speaker 1: play with kind of domestic businesses here in the US
Speaker 1: maybe upbeat about the outlook in the economy. So I
Speaker 1: love hearing what you have to say about small business.
Speaker 1: I love hearing about Spruce because you get some inside
Speaker 1: into consumers and really kind of maybe how much money
Speaker 1: they've been able to save and so on and so forth.
Speaker 1: Based on what you are seeing based on your business overall,
Speaker 1: would you say, yep, we are headed for a recession
Speaker 1: in the next year, or we're not. If I just
Speaker 1: had to simply call it, I would say we're not
Speaker 1: um but like you all do as well. I mean,
Speaker 1: we're looking at this same data. There are days to
Speaker 1: be optimistic and then the next day you need to
Speaker 1: be cautious. Something that we did and we'll be releasing
Speaker 1: this very soon is for the second year, we're going
Speaker 1: to be publishing what we call the Outlook on American Life.
Speaker 1: And so we aggregate all of the data from all
Speaker 1: of our clients tax returns to find the themes and trends.
Speaker 1: And you know that tax return is really like financial
Speaker 1: d n A. And so we'll be talking about what
Speaker 1: we're seeing with shifts in employment, retirement, saving, spending, UH
Speaker 1: and look forward to maybe sharing that with you all
Speaker 1: of whom we're ready to release it. Look forward to
Speaker 1: it absolutely so in terms of okay, so we're gonna
Speaker 1: look forward to that. You say, not a recession based
Speaker 1: on this, So you said, I mean, listen, investors are
Speaker 1: certainly plowing into your stock. You seem very optimistic. What
Speaker 1: is it that maybe troubles you a little bit? Is
Speaker 1: there some concern about the FED over doing it and
Speaker 1: putting some slow momentum ultimately into the economy. Yeah, I mean, obviously,
Speaker 1: part of our diversification is to participate in different parts
Speaker 1: of the market. In the tax business, you know that
Speaker 1: business over many, many decades has not been sensitive to
Speaker 1: recession because of the obligation we have as American filers.
Speaker 1: In fact, when economic times get tough, the stakes rise,
Speaker 1: that's when our expertise and value really kick in. So
Speaker 1: obviously we have to execute and continue to build on
Speaker 1: the momentum we have. But that business looks different than,
Speaker 1: for example, in our financial products portfolio, where you know,
Speaker 1: if savings rates are lower and maybe credit is starting
Speaker 1: to rise again and every dollar matters and government subsidies
Speaker 1: are gone, then what we have to do with spruces
Speaker 1: make sure people know that product is a almost completely
Speaker 1: fee free product that offers incredible value to help you space,
Speaker 1: end and save and plan. And so we try to
Speaker 1: lean into how our value proposition is helping consumers because
Speaker 1: we know that every dollar really matters, you know, Cheff,
Speaker 1: there's always a debate when a company has a lot
Speaker 1: of cash on hand whether to uh issue a dividend,
Speaker 1: increase that dividend, or to buy back shares. How to
Speaker 1: what the best avenue is to return that cash to shareholders.
Speaker 1: You guys doing a little bit of both, increasing the
Speaker 1: dividends seven also a new share repurchase authorization one point
Speaker 1: to five billion. How do you think about how to
Speaker 1: return that share that capital to shareholders? Is it is
Speaker 1: it best to do a little bit of each like
Speaker 1: like you're doing, or you know, what's the calculus that
Speaker 1: goes into deciding how to do that? Well, Mike, I
Speaker 1: guess i'd also say the first part is investing in
Speaker 1: our business, which we are absolutely doing now. We're able
Speaker 1: to still, Jennifer, generate significant free cash flow to invest
Speaker 1: in dividends and share repurchase because of our expense may
Speaker 1: management discipline where we're essentially self funding our growth to
Speaker 1: create new products like spruce and to invest in wave
Speaker 1: and other things. So once we make those decisions to
Speaker 1: invest in the business, then we're essentially returning the remaining
Speaker 1: free cash flow to investors. We're committed to our dividend.
Speaker 1: We've been growing the dividend, and if you think about
Speaker 1: on a given year, I think, you know, roughly couple
Speaker 1: hundred million dollars to continue to invest in our dividend
Speaker 1: and the rest two to three hundred millions in share
Speaker 1: by back. So because of the profitability of this business,
Speaker 1: I think we're in a unique position to be able
Speaker 1: to really do all three at an effective way. You know, Jeff,
Speaker 1: it's an interesting story in terms of what you guys
Speaker 1: are doing. We have about a minute left here. As
Speaker 1: you guys have been broadening out, expanding services. I mean,
Speaker 1: part of it is so that you can kind of
Speaker 1: you know, not be see so much of kind of
Speaker 1: positive results. Are so much business momentum kind during tax season, right,
Speaker 1: So are you seeing signs of it that there's more
Speaker 1: business throughout the year? Um, yes, But we're not even
Speaker 1: close to being down the road of that journey yet.
Speaker 1: So you know, again, the lions share of our business
Speaker 1: today still happens in tax season. As we serve more
Speaker 1: small businesses, those dates extend, bookkeeping in payroll becomes year round,
Speaker 1: and clearly the goal for Spruce is to be a
Speaker 1: year around financial products business. We're just in the early innings,
Speaker 1: but that's absolutely the strategy. Alright, gotta be really quick
Speaker 1: thirty seconds. We'd like to do this when we've got
Speaker 1: a leader of a company so well known, what keeps
Speaker 1: you up at night, continuing to meet expectations and all
Speaker 1: the growth we've been delivering us. That's what we're up
Speaker 1: to right now. Yeah, and the expectations are pretty high.
Speaker 1: I mean, as we said, the stock is up here
Speaker 1: in two um. Jeff, Always appreciate time with you, and
Speaker 1: interesting to hear how the story at H and R
Speaker 1: Block really continues to evolve. Thank you so much, Really
Speaker 1: appreciate it as well. Bye bye, well Jeff Jones. He
Speaker 1: is president, chief executive officer of H and R Block,
Speaker 1: joining us via zoom from Kansas City, Missouri. As we mentioned,
Speaker 1: the stock really on a tear today following those earning
Speaker 1: stock mike up more than fifteen percent in today's trade
Speaker 1: and again up so far in Yeah. Picked a good
Speaker 1: day to report some good earnings. Exactly. Everyone's ready to
Speaker 1: buy exactly, really some outperformance. You're listening to Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic
Speaker 1: on Bloomberg Radio. Okay, you know it's a big economic day,
Speaker 1: you know it's a big market day. But before we
Speaker 1: get into some of the heavier stories of the day,
Speaker 1: we thought we'd take a little bit of a sports
Speaker 1: time out some of the challenges that are out there,
Speaker 1: legal challenges of players in the Saudi Finance Breakaway pro
Speaker 1: Golf Tour. And then you've got Serena trying to have
Speaker 1: it all, and like we know, it's not easy. It's
Speaker 1: not easy. And I can't imagine trying to play a
Speaker 1: Grand Slam tennis event with a young kid at home.
Speaker 1: I I totally get where she's coming from. And being pregnant. Yeah,
Speaker 1: I don't know. It's hard enough to get there, you
Speaker 1: know otherwise, and let alone with little kids and being pregnant.
Speaker 1: So I feel her pain there a little bit, all right,
Speaker 1: So let's get to Scarlet Food, who is a Bloomberg
Speaker 1: Quick Take correspondent. She is also one of the hosts
Speaker 1: of the Bloomberg Business of Sports radio show and podcast,
Speaker 1: and you can check out the Bloomberger Business Sports Podcast
Speaker 1: every Monday, Wednesday and Thursday at Bloomberg dot com. Or
Speaker 1: wherever you get your podcast. She's in our Studio's so
Speaker 1: nice to have you here, guys. Hi. So let's chart.
Speaker 1: Let's start with this pg A battle against a civil
Speaker 1: war engulf. I mean, every day on the terminal, there's
Speaker 1: a story on it. So tell us the latest in
Speaker 1: the controversy. The latest is that there was a judge
Speaker 1: that sided with the PGA Tour basically because the Saudi
Speaker 1: backed Live Golf tournament UM has been making in roads
Speaker 1: into PGA and of course Greg Norman founded this and
Speaker 1: they poached a lot of PGA players, meaning they've recruited
Speaker 1: a lot PJ players, and they paid them a lot
Speaker 1: of money with bonuses, and just for participating in the
Speaker 1: live golf tournament they make money, more money and many
Speaker 1: instances than they would on the PGA Tour. The PGA
Speaker 1: response to this was you're dead to us now, like
Speaker 1: you can't you can't play on our PGA Tour if
Speaker 1: you're going to join live golf. So three players sued
Speaker 1: the p G a basically under making the argument that's
Speaker 1: acting like a monopoly, right that you know you're suppressing
Speaker 1: our wages, aren't they. I mean it's a good case.
Speaker 1: I think they're not employees of either organization, right, Their
Speaker 1: contractors their freelancers in many ways, Like are their NBA
Speaker 1: players who then go play with other leagues? Didn't they
Speaker 1: used to? There's collective bargaining agreements though, and their employees
Speaker 1: of the NBA slightly different, Right, these are freelancers. But
Speaker 1: in this case, you're talking about Live Golf paying the
Speaker 1: players more than they would have made on p G A.
Speaker 1: So the PGAs being sued for suppressing wages when they
Speaker 1: went to go to the league that plays that pays
Speaker 1: them more money. Why can't they all play both? Uh? Well,
Speaker 1: that this is a battle for the soul of golf.
Speaker 1: I mean, the PGA rests on legacy, see on tradition,
Speaker 1: and Live is coming in as an upstart and you know,
Speaker 1: trying to do things differently. The play is different, and
Speaker 1: of course the funding is different because it's funded by
Speaker 1: the Saudi Arabian government. Well, at the end of the day, Squirrel,
Speaker 1: it doesn't it all get back to TV revenue to
Speaker 1: some degree? I mean I love watching golf on TV
Speaker 1: because it's only really do well, it's only score you
Speaker 1: can actually not forcing you know, you could doze off
Speaker 1: for a little bit and we all right, I have
Speaker 1: to try that, but I prefer a good golf nap.
Speaker 1: But then you hear the crowd revs up and wakes
Speaker 1: you up and you watch the replay. But is there
Speaker 1: any path to live getting on TV and to radioactive?
Speaker 1: Do you think? Politically? Um? I mean it is until
Speaker 1: it isn't right. At some point, enough players will go
Speaker 1: over and people will talk it up and the fact
Speaker 1: that or not the fact the argument that Saudi Arabia
Speaker 1: is greenwashing itself. Right, Um, we'll kind of just fall
Speaker 1: into the background and it'll it'll become whatever the players
Speaker 1: make it to be. If enough players go over, then
Speaker 1: it becomes its own thing. Well, and part of the
Speaker 1: problem is like not part of the problem. I think
Speaker 1: of Jamal ka Jogi, right, the journalist, and you saw
Speaker 1: the business community. Everybody pushed back, and then we've seen
Speaker 1: the business community kind of go back to Saudi Arabia
Speaker 1: like it's interesting, right, I think that part of it.
Speaker 1: I don't know. People talk about it and everyone gets
Speaker 1: asked about it, right, All the players who ever lived
Speaker 1: get asked about it, and you know they've all gotten
Speaker 1: very not comfortable. But there's a whole route where they're like,
Speaker 1: I'm going to talk about that. I'm not going to
Speaker 1: talk about it, And after a while they stopped getting
Speaker 1: asked about it and people just kind of move on.
Speaker 1: So it's going to be fatigued with this this line
Speaker 1: of questioning. After while, we knew we needed more time
Speaker 1: with you, but we've only got about a minute left
Speaker 1: here and we buried the lead. Serena Williams retiring, Yeah,
Speaker 1: this is such a huge deal. Basically, I like how
Speaker 1: you put it. Um, she is basically saying she can't
Speaker 1: have it all right now. She wants to have a
Speaker 1: second kid, and she can't do that while she plays
Speaker 1: tennis professionally, so she's going to hang up her tennis
Speaker 1: sneakers and UM, hearing that right, Because she's been such
Speaker 1: an like for women, for fashional sports, like just incredible.
Speaker 1: She's the highest earning female athlete, I mean, forget tennis player,
Speaker 1: female athlete, and she is a force to be reckoned
Speaker 1: with the twenty three time Grand Slam champion, and she
Speaker 1: basically says, I don't think it's fair. If I were
Speaker 1: a guy, I wouldn't be saying this, writing this, because
Speaker 1: I'd be out there playing and winning while my wife
Speaker 1: was doing the physical labor of expanding our family, and
Speaker 1: she actually drew a comparison to Tom Brady. I was
Speaker 1: reading the story, I was I did not know that
Speaker 1: she was married to the co founder Reddit, Alex Ohanien.
Speaker 1: You know, come on, Alex, time for you to step up.
Speaker 1: And he has been stepping up. He's been a big
Speaker 1: advocate for paid paternity leave. But this doesn't change the
Speaker 1: fact that she had a really difficult pregnancy and she
Speaker 1: suffered from postpartum depression and it was really horrible for her,
Speaker 1: you know, the whole thing of getting back on her
Speaker 1: feet to her pregnancy. So she doesn't want to go
Speaker 1: through that again. Take your biology books, because as all
Speaker 1: long as I know, men still can't have women. I mean,
Speaker 1: I mean, I mean what men can't have me? But
Speaker 1: you're right, in many cases men can't have women either.
Speaker 1: But I don't have any comment on at us. Oh
Speaker 1: my god, Friday can't come too soon. We love you,
Speaker 1: Scarlet Food. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. It's
Speaker 1: a most read, it's a must read. It's the Bloomberg
Speaker 1: Big take today. It's about how Europe's rivers are running dry,
Speaker 1: disrupting eighty billion in trade routes. It really is a
Speaker 1: sign of the unfortunate times. For this really important story,
Speaker 1: we have Bloomberg News Oil Products reporter Jack Whittles. He
Speaker 1: is joining us on the phone from London. Jack, good
Speaker 1: to have you here with Mike Regan and myself. So
Speaker 1: just lay it out the story, which you can find
Speaker 1: on the Bloomberg terminal and Bloomberg dot com slash big tape.
Speaker 1: A lot of information tell us what's going on. Right,
Speaker 1: So it is really hot in Europe. It's been a
Speaker 1: very hot summer and as a result, a lot of
Speaker 1: the river level was extremely low. Probably the most important
Speaker 1: of them is a rhyme that's about eight hundred miles long.
Speaker 1: It starts in the switch out, so it goes all
Speaker 1: the way down through Europe to the North Sea, and
Speaker 1: that is used to ship a lot of really important
Speaker 1: commodity through the continent, so talking energy, coal, gas oil, diesel, gasoline,
Speaker 1: but also stuff like gravels, some men, iron, ore, you
Speaker 1: know everything. And so when these when the water level
Speaker 1: on the Rhine gets really low, the barges that are
Speaker 1: used to transport all this stuff. They can't take on enough,
Speaker 1: they can't take on their full loads of these commodities
Speaker 1: because the more you load, the lower you get in
Speaker 1: the water. And then when the river is really shallow, they'll,
Speaker 1: you know, they'll hit the bottom. So it's the low
Speaker 1: water is really choking off the supply of energy and
Speaker 1: commodities in Europe, just as you know, just as there's
Speaker 1: a war in Ukraine and we've got problems with Russian
Speaker 1: gas supply. So it's it's a little bit of a
Speaker 1: perfect norm at the moment, you know, Jack, this strikes
Speaker 1: me as a very difficult problem to solve, you know,
Speaker 1: save doing a rain dance or something. I don't know
Speaker 1: how you fix this. So I'm wondering is there any
Speaker 1: sort of hope that this problem couldn't be solved or
Speaker 1: is it more a matter of you know, shipping stuff
Speaker 1: via truck and rail instead? How are how are people
Speaker 1: dealing with this? Right? So if there aren't many very
Speaker 1: easy short term solutions for companies, you know you can't
Speaker 1: You're right, you can. You can use rail, you can
Speaker 1: use road. So you know, Switzerland, for instance, gets imports
Speaker 1: some oil products by the rhyme but it kind of
Speaker 1: it doesn't also get through roads and rails, um and pipeline,
Speaker 1: I believe, so companies can do that, but it's it's
Speaker 1: much more expensive, so that's not always great. The economics
Speaker 1: are not always going to look very good on that.
Speaker 1: And the other thing companies can do is they can
Speaker 1: invest in ships that are specifically designed to you to
Speaker 1: go in shallow waters. Idea the chemicals company, they they've
Speaker 1: invested in a couple of ships to do that. But
Speaker 1: it's not easy. And with climate change, I personally think
Speaker 1: it's probably just going to get worse and worse, to
Speaker 1: be honest. Well, and that's where I want to go,
Speaker 1: because this wouldn't be happening. Is it fair for me
Speaker 1: to make this jump if it wasn't for climate change? Right?
Speaker 1: If the rhine is fed by a combination of rain
Speaker 1: and melting glass ears, and the more the you know,
Speaker 1: the lower and lower the glass ears get, and then
Speaker 1: the less they can feed the rhine. I'm I'm not
Speaker 1: a cinc climate scientist, so I'm not going to try
Speaker 1: and say this specific event was pinned down to climate change,
Speaker 1: but in general, that's the way it's going and and
Speaker 1: it's I can only see it getting worse really, Right,
Speaker 1: those alpine glaciers, right, they feed into all of this,
Speaker 1: and we know, kind of to some extent, maybe some
Speaker 1: of that's you know, going away. They're getting smaller. Yeah,
Speaker 1: they're getting smaller and smaller. Jack, I'm wondering where we
Speaker 1: should look for this crisis to sort of have the
Speaker 1: most potential damage. You know, is it a matter of
Speaker 1: you know, BMW Mercedes not being able to produce cars
Speaker 1: at some point because they can't get supplies, or is
Speaker 1: it there's something more acute, you know, like electricity going
Speaker 1: off in Germany. Where where will this really start to
Speaker 1: cause the most problems? Well, as an energy reporter, I
Speaker 1: am convinced it is in the in the energy world
Speaker 1: lass of what you were saying. So you know, Switzerland,
Speaker 1: for instance, it's already said it's gonna it's already said
Speaker 1: it's releasing oil from its strategic reserves. Austria and Hungary
Speaker 1: where during that sort of general neck of the woods
Speaker 1: that also they've also said in recent months that they're
Speaker 1: doing the same. You've had some refinery outages in those
Speaker 1: areas as well, and so you know, the diesel market
Speaker 1: in Europe is already very tight, and we are going
Speaker 1: to lose well in theory, you is going to lose
Speaker 1: supply from Russia in February as well that you sanctioned.
Speaker 1: So on on oil it's tight, and then on any
Speaker 1: and you know, then on power as well. Uniper has
Speaker 1: warned it may have to cut output to the cold
Speaker 1: fired power plants in Germany because the company is struggling
Speaker 1: to get the supplies along the line. So getting that
Speaker 1: coal in to Germany to make the power and just
Speaker 1: the gas gets cut off from Russia. That's another sort
Speaker 1: of more immediate crisis. I would say, well, and I
Speaker 1: do think about it, right, with everything going on, I
Speaker 1: mean that such a kind of tight energy situation because
Speaker 1: of the Russian war in Ukraine. I mean, this is
Speaker 1: just another thing that exacerbates the situation for Europe overall.
Speaker 1: And I think of it interestingly enough, on a day
Speaker 1: when we've had an inflation print and we've seen energy
Speaker 1: prices coming off. But for Europe, it's just another thing
Speaker 1: that adds to some of those inflationary pressures and just access. Yeah,
Speaker 1: I mean it's it's it's too big subfice, right, It's
Speaker 1: war and climate change and there's just no easy. There's
Speaker 1: no easy solutions to these sorts of problems in Europe.
Speaker 1: At the moment, it's it's looking pretty bad, you know, Jack,
Speaker 1: is this sort of fueling the whole debate about alternative
Speaker 1: energy in Europe and especially Germany? Are are people reconsidering
Speaker 1: uh nuclear more aggressively because of this and everything else
Speaker 1: going on in the world. I strongly imagine so. Um.
Speaker 1: You know, I was talking to one one of my
Speaker 1: energy contacts recently and he was saying he was still
Speaker 1: criticizing Germany's decision actually to shut off it's it's nuclear capacity,
Speaker 1: you know, saying what a crazy time to do that.
Speaker 1: And so I think this this will certainly spurred the
Speaker 1: argument in general about renewable was doing it faster because
Speaker 1: nobody knew wants to be reliant on fossil foods, because
Speaker 1: you're at the mercy of other countries and the mercy
Speaker 1: of this sort of infrastructure that doesn't always hold up
Speaker 1: well under climate change. Of course, you also have to
Speaker 1: wonder if you can't get the water to cool the reactors.
Speaker 1: There a whole another issue that just embedded in that too,
Speaker 1: Jack Whittles, do you feel like in five years, ten years,
Speaker 1: your job as an oil products reporter, it'll be a
Speaker 1: different title because we were moved in recently, had a
Speaker 1: fossil fuels and just got about forty seconds left. Yeah yeah, well,
Speaker 1: m I do wonder if I'll be a hydrogen report
Speaker 1: then stuff feel like that's maybe another big important commodity
Speaker 1: coming down the line, especially in Europe, like do you
Speaker 1: know oil demand is ultimately on its way out the
Speaker 1: demanded in other parts of the world, say well, as
Speaker 1: a hydrogen report after a year like this, Jack is
Speaker 1: probably ready to cover entertainment or or something exactly. Jack Wittles,
Speaker 1: thank you so much. Really appreciate your time. I know
Speaker 1: it's little bit later there in London, oil products reporter
Speaker 1: at Bloomberg News joining us on the phone from London.
Speaker 1: As we mentioned, this is among our most read stories,
Speaker 1: but more importantly, it's a Bloomberg big take, and that's
Speaker 1: a story that our editorial team has marked as a
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Speaker 1: Now the you let me drive, no, no, no, I
Speaker 1: want to drive it? Good question. Drive is the Drive
Speaker 1: to the Clothes on Bloomberg Radio. All Right, folks, just
Speaker 1: about ten and a half minutes left in today's trading session.
Speaker 1: Let's not forget too. We've got a big earnings report
Speaker 1: coming out after the closing bell, just a few minutes
Speaker 1: after the close. We're talking about Disney, so we'll be
Speaker 1: looking certainly at their streaming services and a lot more
Speaker 1: and all their moving parts. What it says about the consumer.
Speaker 1: Will break it down with our TV colleagues. In the meantime,
Speaker 1: let's break down as we moved closer to that closing bell.
Speaker 1: Allen Lance is back with us. He's director of research
Speaker 1: at Lance Global dot com, President of Allen BI Lance
Speaker 1: and Associates. He joins us once again on the phone
Speaker 1: from Toledo, Ohio. Alan, you're here with myself and Mike Reagan.
Speaker 1: Tim is off today. Um uppeat day? Where because I
Speaker 1: did about you know, still a hot inflation print, but
Speaker 1: not as hot as somebody, you know, as as most expected.
Speaker 1: And we've seen certainly a risk on trade today. How
Speaker 1: do you see it? I think it's when we're seeing
Speaker 1: Carol or extremes, you know, and now I think there
Speaker 1: might be an overreaction going into you know, a solid
Speaker 1: CPI report and interest rates, you know, um over reaction
Speaker 1: by equities. Yeah yeah, yeah, just like in in April
Speaker 1: and when we talked and commodities were moving up and
Speaker 1: everybody was talking you know, inflation like the nineteen seventies
Speaker 1: and and and you know that you could see that
Speaker 1: that was going to be a peak in commodities and
Speaker 1: and energy and was up as a sector, et cetera.
Speaker 1: I think, you know, now it's it's the other end
Speaker 1: of the spectrum. We're all of a sudden, now one
Speaker 1: CPI report and now you know, inflation is is calm
Speaker 1: and taking care of etcetera. So for some reason investors,
Speaker 1: you know it memes stocks are back and and uh,
Speaker 1: you know, it's just it's just a total exaggeration, just
Speaker 1: like in April that you know, we had inflation like
Speaker 1: the seventies. Now it's uh, you know, no inflation, and
Speaker 1: and uh an upward market. And I would be wary,
Speaker 1: you know, you know, I think there's still pockets to
Speaker 1: make money and and and there's been some good sectors
Speaker 1: to invest in. And I'm glad we did this summer,
Speaker 1: but I wouldn't be chasing you know some of these
Speaker 1: and if you're overexposed, uh, like a lot a lot
Speaker 1: of investors were going into the year, Um, you know,
Speaker 1: I would be reducing risk. Um. So we're not as
Speaker 1: negative as we were going into two. But the higher
Speaker 1: prices and values rise here, the more concerned we'd be,
Speaker 1: you know, Alan obviously, Uh, such an important story this year,
Speaker 1: not only for the inflation and economic side of the equation,
Speaker 1: but market leadership in fact has been the oil price rally. Uh.
Speaker 1: Now coming back to earth. I was reading your latest newsletter.
Speaker 1: You say, you know, if anyone would have stated ten
Speaker 1: years prior that in we would start to make energy
Speaker 1: our most emphasized sector, we would have responded not very likely.
Speaker 1: I think you're probably not alone in those sentiments. But
Speaker 1: how are you thinking about oil, gasoline, energy stocks now
Speaker 1: going forward? That it does seem uh knock on wood,
Speaker 1: that these aggressive price gains and gasoline and oil at
Speaker 1: least for the moments, seem to have come back to earth. Yeah,
Speaker 1: I think that could be an opportunity. So just like
Speaker 1: we're talking earlier, like the you know, might be an
Speaker 1: opportunity to reduce risk, uh, you know, or take some
Speaker 1: profits and and and some of these you know stocks
Speaker 1: that have done so well. Um, you know, energy gets
Speaker 1: hit you know further here. I think over the long
Speaker 1: term there's some select you know opportunities there and and
Speaker 1: we we'd be buyers just like we were the past
Speaker 1: two years in the weakness. So so that's a nice
Speaker 1: thing about this market. It is given you, you know,
Speaker 1: a discipline investor a chance to you know, take advantage
Speaker 1: of these swings. It's just a matter of the swings
Speaker 1: are so much more extreme than you know we ever anticipated.
Speaker 1: And some of that, you know, it's the Russia, Ukraine,
Speaker 1: you know, situation, et cetera. Everything's getting accelerated and the
Speaker 1: supply you know, a side shortage and and items like that.
Speaker 1: So so and that's why you know ninevent type inflation
Speaker 1: you know that was you know built into the cards
Speaker 1: in April. You know, didn't make sense either because we
Speaker 1: knew some of those we were temporary. Um. But you know,
Speaker 1: I I think you know, eventually reality will set in
Speaker 1: back in the market and you'll see that and tion
Speaker 1: is not you know gone forever, and uh, interest rates
Speaker 1: are still going to go up and and you know
Speaker 1: the market will will react and and energy will will
Speaker 1: again move up. So so any weakness into into energy
Speaker 1: quality energy with the income uh and with their current valuations,
Speaker 1: I think it would be a smart move. I also
Speaker 1: noticed you, uh you liking Goldman stocks stock these days?
Speaker 1: What what's the story there? What's got you attracted to Goldman?
Speaker 1: That's funny. You know we we we bought it in
Speaker 1: in November two thousand nine, you know, in the midst
Speaker 1: of the global financial crisis, and we just said, you know,
Speaker 1: anytime you can get Goldman underbook, uh, you know, it's
Speaker 1: a smart move. And and you know this summer it
Speaker 1: was trading underbook again. And and I think you know
Speaker 1: for investors that sometimes you get out of the market
Speaker 1: and you know, get back in, you get worried, and
Speaker 1: then it's it's difficult. So so you've got to use
Speaker 1: these discipline strategies. So when when you get this high quality,
Speaker 1: good good income producers that uh uh you know are cheap,
Speaker 1: you know, take advantage and buy them. And I think
Speaker 1: that that's what we're seeing. I think the financials are
Speaker 1: an area that you know, we'll we'll do well and
Speaker 1: and uh, you know, some areas like H and R
Speaker 1: block you know that we've owned you know for years
Speaker 1: we'd be more inclined to take profits into the spike
Speaker 1: stocks almost double this year in a bad market. And
Speaker 1: let's that's I think you say that. We just talked
Speaker 1: with Jeff Jones, the CEO of H and R Block,
Speaker 1: and that's one of the things we talked about, the
Speaker 1: stock doubling. Would you just take profit because man, what
Speaker 1: a run? Why not? Or is it something more fundamental
Speaker 1: or do you believe fundamentally in the H and R
Speaker 1: Black story. Oh, you know, I think it's a you know,
Speaker 1: it's an interesting story, but just yeah, evaluation wise, Carol,
Speaker 1: you know, we're just gonna be discipline. I'd rather have
Speaker 1: my money in Goldman, you know, or below book than
Speaker 1: an agent or block at the stage. And the things
Speaker 1: that were attracted to us when we first bought it
Speaker 1: at half the price was you know, the income stream
Speaker 1: and and that it was unrecognized on on Wall Street. Well,
Speaker 1: now you know, the cats out of the bag and
Speaker 1: the company is doing well and they did, you know,
Speaker 1: getting into other services that you know, provided high margins,
Speaker 1: so so everything fell into place. So you know, partial
Speaker 1: profit profit taking at least, you know, makes it makes
Speaker 1: a lot of sense. And for investors that are uh,
Speaker 1: you know, more concerned about risk. You know, we're taking
Speaker 1: full profits just from the standpoint that uh uh you know,
Speaker 1: there's definitely a lot more risk and execution now than
Speaker 1: it was, you know, when the stock was half the price.
Speaker 1: Well always, as we say, we really love checking in
Speaker 1: with you, so thank you so much, Allen Lance. He
Speaker 1: is director of Research at LANTS Global dot com, President
Speaker 1: of Allen BI Lance and Associates. Thanks for listening to
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