WEBVTT - BI Weekend: Google Breakup, 10 Companies to Watch 0:00:00.640 --> 0:00:07.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.600 --> 0:00:14.400 This is Bloomberg Intelligence with Alex Steel and Paul'sweeny. 0:00:14.520 --> 0:00:17.720 The real app performance has been the US corporate high yield. 0:00:17.920 --> 0:00:20.280 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:24.080 The semiconductor business is a really cyclical business. 0:00:23.640 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.280 --> 0:00:29.920 Do investors like the M and A that we've seen? 0:00:30.120 --> 0:00:33.159 These are two big time blue chip companies. 0:00:33.360 --> 0:00:36.960 The window between the peak and cut changing super fast. 0:00:37.120 --> 0:00:42.040 Bloomberg Intelligence with Alex Steel and Paul'sweeny on Bloomberg Radio. 0:00:43.360 --> 0:00:46.120 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:46.120 --> 0:00:48.519 business stories impacting Wall Street in the local markets. 0:00:48.640 --> 0:00:50.880 Each and every week we provide in research and data 0:00:50.920 --> 0:00:52.720 on some of the two thousand companies and one hundred 0:00:52.720 --> 0:00:55.160 and thirty industries our analysts cover worldwide. 0:00:55.240 --> 0:00:57.840 Today, we'll look at why negotiations between Boeing and it's 0:00:57.840 --> 0:00:59.680 striking workers are at an in pass. 0:01:00.040 --> 0:01:02.680 Discuss why Honeywell International is planning to spin off its 0:01:02.720 --> 0:01:04.440 advanced materials division. 0:01:04.760 --> 0:01:07.560 But first we begin with some big news for Alphabet's Google. 0:01:07.760 --> 0:01:10.720 This week, we heard that the US DOJ is considering 0:01:10.760 --> 0:01:13.080 asking a federal judge to force Google to sell off 0:01:13.120 --> 0:01:13.959 parts of its business. 0:01:14.280 --> 0:01:16.120 This will be a historic breakup of one of the 0:01:16.160 --> 0:01:18.880 world's biggest tech companies. For more, we were joined by 0:01:18.880 --> 0:01:21.240 Mandep Singh, Bloomberg Intelligence Senior technost. 0:01:21.400 --> 0:01:24.119 We first asked man Deep what he actually thinks will 0:01:24.120 --> 0:01:25.080 happen now with Google. 0:01:25.440 --> 0:01:29.039 Well, so there are three big lawsuits out there against 0:01:29.120 --> 0:01:32.840 Google in the US, two from DOJ. One is the 0:01:32.920 --> 0:01:37.039 monopoly lawsuit with the lost and that's where we're looking 0:01:37.040 --> 0:01:40.480 at remedies. The other one is also from dj against 0:01:40.520 --> 0:01:44.199 their ad tech business, where the DOJ is looking at 0:01:44.240 --> 0:01:47.000 their at tech stack and how you know, they control 0:01:47.040 --> 0:01:49.800 all parts of the stack. The third one is from 0:01:49.880 --> 0:01:54.800 the you know, different state attorney journals, again targeting their 0:01:54.920 --> 0:01:57.800 at tech business. So when I look at, you know, 0:01:57.920 --> 0:02:02.280 everything that obviously the regulators want to change with Google, 0:02:02.600 --> 0:02:05.520 the ad tech piece is the one which comes up 0:02:05.640 --> 0:02:08.640 over and over again, the fact that they control different 0:02:08.720 --> 0:02:12.040 parts of the as tec. Now in the monopoly lawsuit, 0:02:12.320 --> 0:02:15.680 they're talking about a force breakup of the Chrome business 0:02:15.840 --> 0:02:19.200 or the play store business, Android business. I think it's 0:02:19.360 --> 0:02:22.560 very hard to take out, you know, a single product 0:02:22.560 --> 0:02:24.760 from a company like Google and say this is a 0:02:24.800 --> 0:02:28.359 separate entity. It's just like it's all run or shared infrastructure. 0:02:28.680 --> 0:02:32.239 I can't imagine you know, doing that with Google, and 0:02:32.880 --> 0:02:35.480 you know, doing it successfully in the sense that Android 0:02:35.560 --> 0:02:38.960 can be a separate company. Maybe YouTube, But again with YouTube, 0:02:39.480 --> 0:02:42.320 it's run on that same infrastructure that searches run on. 0:02:42.360 --> 0:02:44.800 So how do you split that infrastructure. It's very hard 0:02:44.800 --> 0:02:46.040 to do it at the product level. 0:02:46.040 --> 0:02:48.200 All right, here's some inside Bloomberg for you. You can get 0:02:48.240 --> 0:02:50.799 really smart on a new piece of information that just 0:02:50.880 --> 0:02:53.200 hit the tape about a company type in the ticker 0:02:53.360 --> 0:02:56.959 g oog L for Google in equity. Then hit BCO 0:02:57.120 --> 0:03:00.560 BICO for Bloomberg Intelligence Company Research, and you get what's 0:03:00.600 --> 0:03:03.040 called a recent event reaction. So I want to know 0:03:03.120 --> 0:03:07.720 immediately what Mandeep Singh thinks about this stuff. And what 0:03:07.800 --> 0:03:10.160 I read I didn't expect to read. We see a 0:03:10.200 --> 0:03:12.600 breakup of Google's add tech business as the most likely 0:03:12.639 --> 0:03:15.040 outcome for remedy in the company's monopoly case with the 0:03:15.120 --> 0:03:17.600 US Justice Department. I thought what I would have read 0:03:17.639 --> 0:03:20.080 is don't worry about it, but this has some teeth. 0:03:20.120 --> 0:03:21.480 Here is what you're kind. 0:03:21.320 --> 0:03:24.799 Of well, because they lost that first lawsuit at the 0:03:24.840 --> 0:03:27.480 dog and the second one the ad tech as well. 0:03:28.080 --> 0:03:31.360 It's very likely that the judge will rule against Google. 0:03:31.680 --> 0:03:34.639 So when you lose the cases, there has to be 0:03:34.760 --> 0:03:38.320 both behavior and structural remedy. And in the case of 0:03:38.440 --> 0:03:42.840 behavior remedy, yeah, they can't make those payments to Apple anymore. 0:03:42.880 --> 0:03:45.840 To be the default search or any other hardware maker, 0:03:46.080 --> 0:03:48.840 they will have to open up Android to offer search 0:03:48.920 --> 0:03:52.240 screens so that you just don't have to use Chrome 0:03:52.840 --> 0:03:55.400 or Google Search. You can use bing Search for example. 0:03:55.520 --> 0:03:59.800 So choice screens is another behavior. But the structural remedy 0:03:59.880 --> 0:04:02.920 in terms of a forced sale, I find it hard 0:04:02.920 --> 0:04:06.160 to believe that the dot will ask them to sell 0:04:06.160 --> 0:04:08.440 a product. It has to be more at the technology 0:04:08.560 --> 0:04:09.240 stack level. 0:04:09.320 --> 0:04:10.360 So when we go to. 0:04:10.360 --> 0:04:12.720 The ad tech stack, maybe that just dumptail with what 0:04:12.760 --> 0:04:15.880 you were saying. So what does control the ad tech 0:04:15.960 --> 0:04:18.360 stack mean when you're talking about Google. 0:04:18.560 --> 0:04:22.960 So think of how an ad exchange works. You have 0:04:23.080 --> 0:04:26.720 the supply side, you know, in terms of the publisher 0:04:26.839 --> 0:04:29.359 ad inventory, and then you have the demand side, the 0:04:29.440 --> 0:04:33.560 advertisers who are buying those ads, and then you have 0:04:33.640 --> 0:04:36.600 the exchange in the middle, who is matching the supply 0:04:36.720 --> 0:04:40.840 and the demand side for ads. Google has products across 0:04:41.160 --> 0:04:44.600 the stack where they have a demand side platform, they 0:04:44.600 --> 0:04:47.839 have a supply side ad platform. They are an online 0:04:47.839 --> 0:04:51.960 exchange and they've built it over the years because they 0:04:52.040 --> 0:04:54.960 made a few acquisitions. Double Click was the most notable 0:04:55.000 --> 0:05:00.000 one where they acquired all the capabilities to really operate 0:05:00.160 --> 0:05:03.480 as an entity that knows everything when it comes to 0:05:03.680 --> 0:05:07.479 digital ads being sold in the marketplace. So they control 0:05:07.560 --> 0:05:10.320 that stack end to end. That's why when you compare 0:05:10.360 --> 0:05:13.720 Google's ad pricing to everyone else out there, they are 0:05:13.760 --> 0:05:17.480 far superior. One they have the best targeting. The other 0:05:17.720 --> 0:05:20.919 is when you're operating a stack where you have the 0:05:21.000 --> 0:05:25.280 dominant product across the different pieces, you have a pricing advantage. 0:05:25.600 --> 0:05:29.320 And that's what you know. The regulators are saying that 0:05:29.440 --> 0:05:32.880 this company controls pretty much everything in the ads stack. 0:05:33.000 --> 0:05:38.039 But the advertisers themselves they're not complaining, of course not. 0:05:38.279 --> 0:05:41.719 I mean they're getting like, who are they protecting? 0:05:41.760 --> 0:05:44.320 This is a solution in search of a problem here 0:05:44.560 --> 0:05:46.960 in my opinion, because I have a competition in this market. 0:05:47.080 --> 0:05:49.479 I think I have competition. I mean, I Google's huge, 0:05:49.880 --> 0:05:51.960 so it's Facebook, and now I've got this little company 0:05:51.960 --> 0:05:56.360 in a Seattle called Amazon. They're monsters advertising player. So 0:05:56.400 --> 0:05:57.440 where's the problem here? 0:05:57.480 --> 0:05:59.839 So it all comes down to how you look at 0:05:59.880 --> 0:06:02.200 the market. If you look at the market the way 0:06:02.200 --> 0:06:05.640 you just described, where Meta is as formidable as Google 0:06:05.720 --> 0:06:09.200 and Amazon is a big third player, then yes there 0:06:09.240 --> 0:06:12.640 is competition. But when you look at certain type of ads, 0:06:12.680 --> 0:06:15.960 whether it's on the desktop or you know the third 0:06:16.000 --> 0:06:19.479 party ads that are going through Google Ad Exchange, these 0:06:19.520 --> 0:06:22.440 companies don't overlap. Like remember, Meta is a walled garden, 0:06:22.960 --> 0:06:26.320 even though it's big in terms of the digital ad advertising, 0:06:26.600 --> 0:06:30.039 it's its own world garden. Amazon is its own world 0:06:30.080 --> 0:06:33.880 garden Google. So these companies have their own swim lanes. 0:06:34.360 --> 0:06:37.320 They are big in terms of the digital ad dollars, 0:06:37.560 --> 0:06:40.279 but they have their own swim lanes. They don't overlap. 0:06:40.320 --> 0:06:43.520 And that's the objection that I think regulators have. 0:06:43.640 --> 0:06:47.400 Okay, so if they wound up, you know, moving around 0:06:47.440 --> 0:06:49.640 that ad tech stack and changing stuff up, what does 0:06:49.640 --> 0:06:51.960 that change look like and how much money could then 0:06:52.080 --> 0:06:52.760 Google lose? 0:06:53.240 --> 0:06:56.239 Well? So Google Search obviously is a two hundred billion 0:06:56.279 --> 0:06:59.200 dollars rund rate business, still the cash cow for Google. 0:07:00.120 --> 0:07:03.039 That's where you know the Google Network piece, which is 0:07:03.360 --> 0:07:06.880 the ads that Google shows on third party platforms. So 0:07:06.920 --> 0:07:10.600 one is Google showing ads on YouTube and their own 0:07:10.640 --> 0:07:14.040 search page. The other is Google showing ad on let's 0:07:14.040 --> 0:07:17.120 say a New York Times or some other publisher. Because 0:07:17.120 --> 0:07:20.679 it's going through the Google Ad Exchange. That's the part 0:07:20.720 --> 0:07:23.520 that can be divested where and it's a thirty two 0:07:23.560 --> 0:07:27.080 billion dollars rundred business. Within that two hundred billion, that's 0:07:27.120 --> 0:07:30.240 the part that's not growing, but you could argue could 0:07:30.280 --> 0:07:32.960 be split up in a way where I think Google 0:07:33.000 --> 0:07:36.080 maybe a smaller search ad business. But at the same 0:07:36.120 --> 0:07:38.960 time that will appease the regulators because they're not controlling 0:07:38.960 --> 0:07:40.600 different parts of the ads tack. 0:07:40.800 --> 0:07:43.280 Our thanks to Man Deep Seeing Bloomberg Intelligence senior tech 0:07:43.320 --> 0:07:44.080 industry analyst. 0:07:44.400 --> 0:07:47.520 Earlier this year, French multi billion dollar brand Perier came 0:07:47.600 --> 0:07:50.640 under scrutiny following the discovery of traces of fecal matter 0:07:50.920 --> 0:07:53.120 in one of the seven wells used to source its 0:07:53.160 --> 0:07:56.560 mineral water. As a result, Perrier owner Nesle said it 0:07:56.600 --> 0:07:59.120 had to close some of its wells in recent months. 0:07:59.480 --> 0:08:03.040 Now, the globe water business is grappling with questions of sustainability. 0:08:03.240 --> 0:08:05.880 It's a subject of a Bloomberg Big Take story entitled 0:08:06.040 --> 0:08:09.520 Perrier Contamination Woes add to three hundred and thirty billion 0:08:09.520 --> 0:08:11.000 dollars sectors hurdles. 0:08:11.360 --> 0:08:13.040 For more we were drawn by one of the story's 0:08:13.120 --> 0:08:17.400 co authors, Dasha afanasch Vieva, a Bloomberg Consumer goods reporter. 0:08:17.760 --> 0:08:20.680 We first asked Dasha to break down her findings from 0:08:20.720 --> 0:08:21.160 the story. 0:08:21.560 --> 0:08:24.680 So at the start of this year, Nesse had to 0:08:24.800 --> 0:08:29.200 admit that it had been illegally filtering its mineral water 0:08:29.520 --> 0:08:32.840 in France and in particular Perier. And the reason why 0:08:32.840 --> 0:08:35.440 it's legal is because mineral water, under French law and 0:08:35.440 --> 0:08:38.400 actually European law, you shouldn't really do much stuff with it. 0:08:38.400 --> 0:08:41.079 It's supposed to be quite natural, whereas they were using 0:08:41.160 --> 0:08:44.520 charcoal filters and using UV filters. So they kind of 0:08:44.559 --> 0:08:47.120 come clean on that because there's a leaked report that 0:08:47.200 --> 0:08:50.480 forces them to and then a few months later there's 0:08:50.480 --> 0:08:54.719 another leaked report that says, well, there's vehical contaminants and 0:08:54.840 --> 0:08:59.880 pesticide contaminants and pfast contaminants in the source the Perier saw. 0:09:00.440 --> 0:09:02.800 And then after that, the other thing that happens is 0:09:02.800 --> 0:09:05.800 that they have to suspend a well because of contaminants. 0:09:06.000 --> 0:09:09.439 So it's all kind of wrapped up in trust issues 0:09:09.840 --> 0:09:13.199 and contaminants. But I'd like to hide like no food 0:09:13.280 --> 0:09:15.360 safety issues and no health issues. 0:09:15.679 --> 0:09:18.200 So how does this evolve? Like how does Perry fix it? 0:09:18.280 --> 0:09:20.320 Like how much is going to cost all that good stuff? 0:09:21.120 --> 0:09:25.280 Yeah, Perry found out back in twenty twenty that it 0:09:25.400 --> 0:09:27.360 was doing this. It was doing the legal filtering. But 0:09:27.400 --> 0:09:30.319 a new boss came in in twenty twenty and realized 0:09:30.360 --> 0:09:32.760 they were doing this filtering and then brought in a 0:09:32.800 --> 0:09:35.360 program to modernize the plant so you wouldn't have to 0:09:35.640 --> 0:09:38.319 do it anymore. And that whole time they were in 0:09:38.400 --> 0:09:43.200 conversation with regulators. They say to upgrade production and also 0:09:43.480 --> 0:09:46.679 get everything shipshape, and they invested in modernizing the plant 0:09:46.840 --> 0:09:50.199 something to the tune of one hundred and fifty million euros. 0:09:50.240 --> 0:09:53.400 So they're saying, now it's all good, nothing to see here, 0:09:54.200 --> 0:09:56.240 but that one well out of seven is still shut, 0:09:56.960 --> 0:09:57.800 it is still suspended. 0:09:57.800 --> 0:10:01.600 I should say this water, this is big business for France. 0:10:01.640 --> 0:10:05.800 Reading your article today, Dasha, the world's biggest bottled water 0:10:05.880 --> 0:10:08.840 exporting country, that be, France has fought hard to preserve 0:10:08.880 --> 0:10:11.040 the integrity and identity of its water with an eye 0:10:11.080 --> 0:10:15.040 on jobs and growth. The industry contributes one billion euros 0:10:15.120 --> 0:10:18.160 each year to France's external trade indirectly or indirectly employees 0:10:18.200 --> 0:10:20.480 about thirty eight thousand people. So this is big business here, 0:10:21.240 --> 0:10:24.199 and I would think the brand value is what it's 0:10:24.240 --> 0:10:26.200 all about here, So they have to be careful, don't they. 0:10:27.400 --> 0:10:29.760 I think it is about the brand value. And Perry 0:10:30.360 --> 0:10:32.800 has had issues with this in the past decades and 0:10:32.840 --> 0:10:36.680 decades ago when there was a benzine contamination, so it 0:10:36.720 --> 0:10:40.760 did this massive recall, a global recall. So it has form. 0:10:40.960 --> 0:10:45.200 And this very product hinges on this premium status and 0:10:45.240 --> 0:10:49.160 on this idea that it's sort of pure and better 0:10:49.200 --> 0:10:52.320 than tap water. So you have to preserve that in 0:10:52.360 --> 0:10:55.320 the eye of the consumer. And maybe the individual consumer 0:10:55.400 --> 0:10:58.120 might not care how you're filtering it. But over time, 0:10:58.200 --> 0:11:01.079 these sort of this trick if you will have news 0:11:01.320 --> 0:11:06.599 definitely tarnishes or can tarnish the brand potentially. 0:11:06.880 --> 0:11:09.400 How big is a business is this? Like I got 0:11:09.440 --> 0:11:11.520 a so to stream at home. You know, we bubble 0:11:11.600 --> 0:11:14.240 up our regular old New York tap water. But talk 0:11:14.280 --> 0:11:15.680 to me about the industry at large. 0:11:16.000 --> 0:11:18.400 It's not a huge business for Nesle, Forinestle, it's only 0:11:18.440 --> 0:11:22.160 three point five percent of revenue. But the industry globally 0:11:22.440 --> 0:11:26.000 is around three hundred and six a billion and growing 0:11:26.040 --> 0:11:29.400 around four percent a year, so it is rather large, 0:11:29.920 --> 0:11:32.160 but as I say, not huge for Nestle. 0:11:32.840 --> 0:11:35.720 So I mean, I guess if you're thinking about a 0:11:35.720 --> 0:11:38.160 green economy, you ask a good question here in the article. 0:11:38.200 --> 0:11:41.240 Does it make ecological sense to transport millions of bottles 0:11:41.240 --> 0:11:44.040 of water, about ninety seven percent of them made from plastic, 0:11:44.320 --> 0:11:47.160 across the globe instead of sourcing it locally. How did 0:11:47.160 --> 0:11:48.160 the French think about that? 0:11:48.559 --> 0:11:51.040 Well, the French would say, our mineral water is super 0:11:51.080 --> 0:11:55.160 special and are amazing tarooa. It's a bit like with wine. 0:11:55.679 --> 0:11:58.440 You know, it comes from this incredible terrowire and we 0:11:58.520 --> 0:12:02.079 have the minerals, we have this heritage of producing it. 0:12:02.360 --> 0:12:05.360 And that's the rut of Perie's marketing. But what Perrier's 0:12:05.360 --> 0:12:09.160 done to protect its future revenue streams is they've said, well, 0:12:09.200 --> 0:12:12.040 we'll have this other whole other product called Maison Perier 0:12:12.440 --> 0:12:15.800 that they can filter how much they want because it's 0:12:15.800 --> 0:12:20.320 not called mineral water, and it's now fronted by Emily 0:12:20.320 --> 0:12:24.440 and Paris active Lily Collins, and it still travels to 0:12:24.520 --> 0:12:26.599 the US. So even if you're making these if you 0:12:26.640 --> 0:12:29.000 think the Taro War French era is so so special. 0:12:29.600 --> 0:12:32.199 If you're filtering the water, you sort of think, well, 0:12:32.200 --> 0:12:34.960 why not just get the water in the US and 0:12:35.040 --> 0:12:37.880 filter it? And the reason is marketing. 0:12:38.240 --> 0:12:41.760 Our thanks to Dasha Afanasieva, Bloomberg Consumer Goods Reporter. 0:12:42.000 --> 0:12:44.520 Coming up, we're going to look at sustainable aviation fuel 0:12:44.559 --> 0:12:46.920 and why it's important and how it's being used. 0:12:47.040 --> 0:12:49.880 We're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:49.920 --> 0:12:52.120 depth research and data on two thousand companies and one 0:12:52.160 --> 0:12:55.160 hundred and thirty industries. You can access Bloomberg Intelligence via 0:12:55.240 --> 0:12:57.520 b I go on the terminal on Paul Sweeney. 0:12:57.200 --> 0:12:59.400 An amlex deal and this is Bloomberg. 0:13:04.160 --> 0:13:08.040 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:13:08.120 --> 0:13:10.839 weekdays at ten am Eastern on Apple car Playing and 0:13:10.960 --> 0:13:13.800 broud Otto with the Bloomberg Business App. Listen on demand 0:13:13.880 --> 0:13:17.959 wherever you get your podcasts, or watch us live on YouTube. 0:13:18.800 --> 0:13:21.959 We move next to the planemaker Boeing. This week, negotiations 0:13:22.000 --> 0:13:24.280 between Boeing and its striking workers broke down. 0:13:24.559 --> 0:13:27.280 Boeing withdrew a contract offer to striking workers that would 0:13:27.320 --> 0:13:29.560 have given them a thirty percent raise over four years. 0:13:29.800 --> 0:13:32.840 The contract also included at boost to retirement benefits. 0:13:33.040 --> 0:13:35.560 The impath leaves Boeing with no clear path forward to 0:13:35.600 --> 0:13:38.440 overcome a month's long strike, and production remains shut down 0:13:38.480 --> 0:13:41.320 at it's key commercial manufacturing based on the US West Coast. 0:13:41.559 --> 0:13:44.160 For more, we were joined by George ferguson Bloomberg Intelligence 0:13:44.160 --> 0:13:46.480 senior Aerospace, defense and airlines analysts. 0:13:46.480 --> 0:13:48.640 We first asked George why he thinks Boeing with through 0:13:48.679 --> 0:13:49.600 its contract offer. 0:13:49.920 --> 0:13:52.520 I think you, if you're at the company, you have to, 0:13:53.400 --> 0:13:56.600 you know, make it look like there's a scarcity. I think, 0:13:56.600 --> 0:13:59.840 to whatever you offer right, so that the employees already 0:13:59.880 --> 0:14:02.800 to jump the next time you give them. I think, 0:14:03.080 --> 0:14:08.200 you know, a decent contract terms, but I don't know 0:14:08.240 --> 0:14:10.560 that it works here, right, So I think that it's 0:14:10.600 --> 0:14:13.520 interesting that they withdrew their offer. But I guess at 0:14:13.520 --> 0:14:16.640 the same time, I'm looking at the dock workers strike 0:14:17.320 --> 0:14:20.160 and they just got an agreement for what sixty percent 0:14:20.240 --> 0:14:22.760 over six years. It looks like ten percent a year 0:14:22.800 --> 0:14:27.000 to me if my mask still works Boeing. Boeing, folks, 0:14:27.040 --> 0:14:30.200 I think rejected a contract there's what thirty percent over 0:14:30.280 --> 0:14:33.960 four years. I think they're probably more highly skilled workers, 0:14:34.000 --> 0:14:38.240 no offense to the dock workers, but manufacturing airplanes a 0:14:38.240 --> 0:14:42.200 little more challenging, I think so. I think sort of 0:14:42.200 --> 0:14:45.160 the withdraws Boeing trying to make it feel scarce. I'm 0:14:45.240 --> 0:14:47.520 not sure that it works, George. 0:14:47.640 --> 0:14:49.240 The more I think about this story, the more I'd 0:14:49.240 --> 0:14:52.040 read about this story, it just doesn't look good from 0:14:52.080 --> 0:14:55.440 a Boeing perspective in terms of leverage here. But if 0:14:55.480 --> 0:14:58.480 I'm the union, if my guys can hit last a 0:14:58.520 --> 0:15:01.120 few more weeks, I can really flick some pain here 0:15:01.160 --> 0:15:05.320 on this company here, which strengthens my position. How do 0:15:05.440 --> 0:15:08.520 the pros think about this negotiation between these two sides? 0:15:09.360 --> 0:15:12.000 Yeah, I mean I agree. I think it's really challenging. 0:15:12.080 --> 0:15:15.800 Like I just said, you know, we've seen other increases 0:15:15.800 --> 0:15:20.160 in the marketplace for union labor higher than what this 0:15:20.280 --> 0:15:23.720 union's asking for. If you're Boeing, you just can't possibly 0:15:23.760 --> 0:15:27.360 be replaced thirty three thousand employees. There's just no way. 0:15:27.800 --> 0:15:31.600 And on top of it, again, there's skilled employees right, 0:15:31.720 --> 0:15:36.600 so they're handmaking aircraft, right, And if you decided you 0:15:36.600 --> 0:15:39.000 were going to backfill and train some, you'd have to 0:15:39.000 --> 0:15:41.640 have people on hand to train the new people coming 0:15:41.680 --> 0:15:45.160 in to make an airplane. Well, it's just it's impossible 0:15:45.560 --> 0:15:48.120 to replace them. And now where I think we're in 0:15:48.160 --> 0:15:51.960 this game of chicken, right where like we've talked about previously, 0:15:52.880 --> 0:15:55.320 Boeing's potentially gonna have a downgrade. But look, I think 0:15:55.320 --> 0:15:58.680 the downgrade doesn't matter as much anyways, Right, it's just 0:15:58.680 --> 0:16:00.840 a credit rating. You can get it back later on. 0:16:01.960 --> 0:16:05.760 This is the recovery of this company. That cash is dwindling. 0:16:06.920 --> 0:16:09.320 They have a lot of airplanes sitting in inventory. They 0:16:09.320 --> 0:16:11.600 need to get back to work, and I think if 0:16:11.600 --> 0:16:13.360 the workers can find a way to hold out, they 0:16:13.360 --> 0:16:14.760 can get a lot of what they've asked for. 0:16:15.720 --> 0:16:18.240 So I understand that. Then Boeing has to front it, right, 0:16:18.280 --> 0:16:21.320 they have to act like they're also playing hardball. How 0:16:21.360 --> 0:16:24.800 long do you think they can really realistically sustain that? 0:16:26.480 --> 0:16:29.600 So, I mean that's the question, right, can Boeing last 0:16:29.720 --> 0:16:32.280 longer than the workers? If the workers can hold out 0:16:32.360 --> 0:16:36.000 multiple months, I don't think the company can hold out 0:16:36.040 --> 0:16:39.640 multiple months. I don't think there's customers that aren't getting airplanes, 0:16:40.000 --> 0:16:42.200 Like air Bus isn't making a lot of hay out 0:16:42.200 --> 0:16:45.920 of this, right, They're having similar problems with their supply chains, 0:16:46.280 --> 0:16:48.480 so it's not like they can surge and take a 0:16:48.480 --> 0:16:51.280 bunch of market share away. But Boeing can't let this 0:16:51.400 --> 0:16:53.520 go on for three or four months, right, that would 0:16:53.560 --> 0:16:56.200 start to hurt I think their market share. I think 0:16:56.200 --> 0:16:59.120 you see customers get in the airbus queue just thinking. Look, 0:16:59.160 --> 0:17:00.800 I just don't know when Boeing is going to write 0:17:00.800 --> 0:17:04.880 this ship and really build airplanes in large numbers anytime soon. 0:17:05.040 --> 0:17:07.320 So I don't think they have a quarter. 0:17:07.400 --> 0:17:08.680 I don't think they have three months. 0:17:09.160 --> 0:17:11.840 How far apart do you think that the two sides are? 0:17:11.880 --> 0:17:15.640 And is there any smart money betting on timing? 0:17:17.359 --> 0:17:21.520 So I don't know. I don't know if what smart 0:17:21.520 --> 0:17:25.679 money's betting on right now. But look, it seems like 0:17:25.720 --> 0:17:28.000 when you pull back your contract and you stop talking 0:17:28.000 --> 0:17:29.919 and the union goes to its corner and they're kind 0:17:29.960 --> 0:17:33.159 of irritated, it seems like something hasn't been set up 0:17:33.200 --> 0:17:35.520 well right. To me, frankly, I think it's just it's 0:17:35.520 --> 0:17:38.280 probably bad negotiating, right, don't you always kind of try 0:17:38.320 --> 0:17:42.120 to engage to a certain degree. So to me, it 0:17:42.160 --> 0:17:45.200 feels like it feels like they're really far apart because 0:17:45.720 --> 0:17:48.280 of just the rhetoric I'm hearing in the press. But 0:17:48.520 --> 0:17:52.239 like again, like a lot of things in life, some 0:17:52.320 --> 0:17:54.520 money can go a long way, can put smiles back 0:17:54.520 --> 0:17:57.600 in people's faces, and so you know, you could be 0:17:57.600 --> 0:18:00.320 surprised overnight if Boeing turns around and sweet and the 0:18:00.359 --> 0:18:02.120 offer and tries to get the deal done. But right 0:18:02.119 --> 0:18:04.359 now it feels like they're a distance apart. 0:18:04.440 --> 0:18:06.760 Well, aside from wages obviously, which is a big one, 0:18:06.960 --> 0:18:09.000 what's another really big sticking point or do you think 0:18:09.000 --> 0:18:10.920 it all just boils down to wages at this point. 0:18:11.840 --> 0:18:13.800 I think a lot of it boils down to wages. 0:18:14.160 --> 0:18:16.600 You know, we have heard that the union wants the 0:18:16.640 --> 0:18:20.600 pension back. I just can't believe they realistically thinking they're 0:18:20.640 --> 0:18:24.040 getting the pension back. But so I gotta believe they're 0:18:24.040 --> 0:18:26.439 looking for a sweetener on the four to one k, 0:18:27.480 --> 0:18:30.840 you know, some sort of added incentive there. And then 0:18:30.840 --> 0:18:33.000 the airplane. I haven't heard a lot of noise about 0:18:33.480 --> 0:18:37.280 negotiation about the next airplane. Again, if I were the union, 0:18:37.760 --> 0:18:40.480 especially if I was a union leadership, the machinist leadership, 0:18:40.840 --> 0:18:44.080 I would want the next Boeing seven thirty seven successor 0:18:44.560 --> 0:18:47.840 built in the Pacific Northwest in plants that machinists are 0:18:47.920 --> 0:18:50.879 working at because that's the life bullet of your union, 0:18:51.040 --> 0:18:52.600 right and that's the life butt. 0:18:52.400 --> 0:18:55.920 Of Boeing our thanks to George Ferguson, Bloomberg Intelligence Senior Aerospace, 0:18:56.040 --> 0:18:57.399 Defense and Airlines analysts. 0:18:57.560 --> 0:18:59.840 Each week we look at research from Bloomberg and e 0:19:00.119 --> 0:19:02.800 F previously known as Bloomberg New Energy Finance. They're the 0:19:02.840 --> 0:19:05.760 team at Bloomberg that tracks and analyzes the energy transition 0:19:05.880 --> 0:19:09.919 from commodities to power, transport, industries, buildings, and the ag sector. 0:19:10.200 --> 0:19:12.600 This se IF, we took a look at sustainable aviation 0:19:12.760 --> 0:19:15.880 fuel from where we were joined by Anna Davies BNEF, 0:19:15.960 --> 0:19:17.280 head of Renewables Fuels. 0:19:17.600 --> 0:19:20.440 We first asked Anna to explain what sustainable aviation fuel 0:19:20.640 --> 0:19:22.040 is and how it's being used. 0:19:22.320 --> 0:19:25.320 What is sustainable aviation fuel? You use it exactly like that. 0:19:25.359 --> 0:19:27.160 You can throw it in your private jet and go 0:19:27.520 --> 0:19:30.000 and it'll work just the same way. Really, it is, 0:19:30.680 --> 0:19:34.200 in its simplest form, molecularly, pretty much identical to fossil 0:19:34.240 --> 0:19:36.080 jet fuel. The only difference is it doesn't come from 0:19:36.119 --> 0:19:40.040 fossil fuels, so mostly it comes at the moment from biofuels. 0:19:40.240 --> 0:19:44.119 So instead of having a crude oil, you're using a biooil, 0:19:44.160 --> 0:19:46.560 so something like soybean oil or use cooking oil, the 0:19:46.640 --> 0:19:49.240 leftover oils from your deep fryer. 0:19:49.359 --> 0:19:52.600 Which would be the issue now, supply or demand when 0:19:52.600 --> 0:19:53.919 it comes to saff that is. 0:19:53.920 --> 0:19:56.160 A very good question, because everybody says we need more, 0:19:56.160 --> 0:19:58.600 there's not enough produced. There's all this demand that we 0:19:58.720 --> 0:19:59.040 need to. 0:19:58.960 --> 0:19:59.920 Replace fossil jet. 0:20:00.200 --> 0:20:02.719 But we have seen both suppliers and actually airlines kind 0:20:02.760 --> 0:20:06.639 of push back roll back their targets right now. The 0:20:06.680 --> 0:20:09.560 problem is it's expensive and nobody is really willing to 0:20:09.600 --> 0:20:12.359 pay it, So we see buyers not quite willing or 0:20:12.359 --> 0:20:14.240 able to step in to take it, and as a result, 0:20:14.240 --> 0:20:16.880 we don't see suppliers able to secure financing to build 0:20:16.880 --> 0:20:17.520 their facilities. 0:20:17.520 --> 0:20:19.840 So how do That's a Chicken and Yan type type 0:20:19.840 --> 0:20:22.520 of thing. How do you think you solve for that? 0:20:22.640 --> 0:20:24.840 Is that bringing the cost of production down? Is it 0:20:24.880 --> 0:20:26.280 trying to stimulate demand somehow? 0:20:26.480 --> 0:20:29.200 So we anticipate the cost of production at p nof, 0:20:29.240 --> 0:20:33.360 We try and calculate and marsh exactly, and we do 0:20:33.359 --> 0:20:35.560 not see the cost coming down to reach parity. Really 0:20:35.720 --> 0:20:37.560