WEBVTT - FedEx Drops After Pulling Forecast 0:00:01.760 --> 0:00:04.400 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.440 --> 0:00:07.240 Bloomberg Quick Takes Tim Stanabek. We're here every day bringing 0:00:07.280 --> 0:00:09.760 you the latest news from the world to business and finance, 0:00:09.800 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:19.960 analysts in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.200 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot com. 0:00:23.400 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:32.279 YouTube search Bloomberg Global News. Well, talk about Houston. There's 0:00:32.320 --> 0:00:34.960 a problem FedEx shares. As you know, we've been talking 0:00:35.040 --> 0:00:37.880 about how they have tumbled today down uh the most 0:00:37.920 --> 0:00:40.720 and over forty years after pulling its earnings forecast on 0:00:40.840 --> 0:00:44.680 worsening business conditions potentially worrying signed for the global economy. 0:00:44.760 --> 0:00:47.360 And I think about this kind of story twenty four 0:00:47.400 --> 0:00:50.400 hours ago, tim Essentially we just started to break down 0:00:50.640 --> 0:00:53.239 this and I wondered about analysis, especially when it comes 0:00:53.240 --> 0:00:55.800 to our Bloomberg intelligence to you and look at it now. Yeah, 0:00:55.920 --> 0:00:58.800 really eager to speak to Leak Glasgow, Senior transport logistics 0:00:58.800 --> 0:01:01.600 and shipping analysts for Blue Brig Intelligence. Lee joins us 0:01:01.600 --> 0:01:05.120 this afternoon via zoom from Bloomberg Intelligence headquarters in at Princeton, 0:01:05.200 --> 0:01:07.680 New Jersey. Uh. Lee, good to have you with us. 0:01:07.720 --> 0:01:09.560 We were really itching to get you on to talk 0:01:09.560 --> 0:01:12.000 all about this this afternoon. I think the question that 0:01:12.080 --> 0:01:15.319 Carol asked sort of rhetorically earlier was about whether this 0:01:15.400 --> 0:01:18.119 is a company specific story, if it's FedEx specifically, because 0:01:18.120 --> 0:01:20.960 we're seeing it way on certainly other sectors and uh 0:01:21.120 --> 0:01:23.600 peers within the sector. But but take us into what 0:01:23.720 --> 0:01:27.200 exactly the concern is that FedEx has. Yeah, So what 0:01:27.280 --> 0:01:29.880 I would say is it is a company's specific yes, 0:01:29.959 --> 0:01:31.880 and is there a read through for the rest of 0:01:31.920 --> 0:01:35.240 the broader economy a little? And why we say that 0:01:35.400 --> 0:01:37.640 is that, you know, in the release, the company mentioned 0:01:37.640 --> 0:01:41.800 the fact that there are some service challenges in Europe 0:01:41.800 --> 0:01:44.920 and we view that as mostly dealing with the T 0:01:45.040 --> 0:01:48.720 and T integration, coupled with the fact that you know, um, 0:01:48.720 --> 0:01:51.160 Europe is I'm sure you're all aware that Europe having 0:01:51.200 --> 0:01:54.840 some problems with inflation due to high energy costs and 0:01:54.880 --> 0:01:57.360 that's having a major impact in demand. You know, the 0:01:57.440 --> 0:01:59.840 risk of your going into a recession or if they're 0:01:59.880 --> 0:02:01.840 not a recession already is a lot higher than here 0:02:01.880 --> 0:02:04.920 in the US UM and you know that that is 0:02:05.080 --> 0:02:07.800 probably driving some of the weakness that we saw. And 0:02:07.920 --> 0:02:12.480 Express Express revenues came in five percent below expectations for 0:02:12.560 --> 0:02:15.400 the first quarter when they pre announced yesterday. And then 0:02:15.440 --> 0:02:19.040 the margins that you know that they showed the the 0:02:19.080 --> 0:02:23.560 adjusted operating um operating margins were about one point seven percent, 0:02:23.639 --> 0:02:28.040 which is very low relative to history. I mean history, 0:02:28.160 --> 0:02:31.480 historically it's been around about five to six percent UH 0:02:31.520 --> 0:02:34.960 and and so you've seen a real step down in 0:02:35.080 --> 0:02:38.520 margins and it probably has to do with higher costs, UH, 0:02:38.919 --> 0:02:42.360 with the inflationary aspects that we were talking, lower demand, 0:02:42.600 --> 0:02:45.880 and some integration problems at T and T and and 0:02:46.040 --> 0:02:47.960 for some background, you know T and T was an 0:02:47.960 --> 0:02:51.239 acquisition they made two thousand and sixteen, UH and they 0:02:51.280 --> 0:02:53.680 did it so they could be more competitive in Europe 0:02:53.720 --> 0:02:56.959 with UPS and and and Deutsche Post. You know, there's 0:02:57.000 --> 0:02:59.560 still a third when it comes to Europe, but there 0:02:59.560 --> 0:03:01.359 are a lot, you know, a lot closer to the 0:03:01.440 --> 0:03:04.400 number two ups in Europe now. But the problem was 0:03:04.440 --> 0:03:07.040 in two thousand and seventeen there was a huge um 0:03:07.160 --> 0:03:10.760 cyber attack on TNT which rendered it pretty much useless. 0:03:11.000 --> 0:03:13.520 And it wasn't for fed x's capital, the company probably 0:03:13.560 --> 0:03:16.360 wouldn't be around today. And then that couple with a 0:03:16.400 --> 0:03:20.080 couple of management missteps, will call them, really slowed the 0:03:20.120 --> 0:03:23.040 progress of integrating T n T. And then you know, 0:03:23.080 --> 0:03:24.919 we had a pandemic and that threw a wrench and 0:03:25.000 --> 0:03:29.000 everyone's business model. UM. And so we just think that 0:03:29.000 --> 0:03:31.400 that the benefits, if any, are really going to be 0:03:31.480 --> 0:03:35.440 kicked down the road as management tries to properly resource 0:03:35.520 --> 0:03:38.360 its network in the US and in Europe. Hey Ley, 0:03:38.440 --> 0:03:40.920 what does this mean for the company's new CEO, who 0:03:41.000 --> 0:03:44.880 who took over just in June, inherited this and just 0:03:44.960 --> 0:03:48.400 trying to make it right or is this maybe a 0:03:48.480 --> 0:03:53.040 first big stumble? Yeah? So um, you know Roger Subramani 0:03:53.120 --> 0:03:56.960 in UM he's became the CEO and president in June. UM. 0:03:57.000 --> 0:03:59.880 You know, also Richard Smith became the CEO of its 0:04:00.040 --> 0:04:03.880 rest in April. Uh So they're relatively new, shall we say, 0:04:03.960 --> 0:04:06.600 to their role, but they've been long time managers in 0:04:06.760 --> 0:04:09.520 the organization. You know what, I would say that's very 0:04:09.560 --> 0:04:12.040 different than what we're seeing at fed X. Versus UPS. 0:04:12.120 --> 0:04:16.120 You know, in UPS got a new CEO, Carol Toma, 0:04:16.640 --> 0:04:18.560 and she was on the board UM. But you know, 0:04:18.560 --> 0:04:20.640 people were a little skeptical about her because most of 0:04:20.760 --> 0:04:23.000 UPS senior managers will always used to be able to 0:04:23.000 --> 0:04:25.120 say that, you know, my first job was when I 0:04:25.160 --> 0:04:27.520 was in college, loading on loading EPs trucks, and I've 0:04:27.520 --> 0:04:30.080 been there forever. And so she was like, not quite 0:04:30.120 --> 0:04:32.880 an outsider, but kind of an outsider. And she's really 0:04:32.960 --> 0:04:36.039 done a phenomenal job. She's she's been selling off on 0:04:36.120 --> 0:04:39.440 profitable businesses. She sold their less than truckload business off 0:04:39.480 --> 0:04:42.680 to t f I. UM. They're really focused on what 0:04:42.720 --> 0:04:46.640 they're calling better not bigger strategy, which really seems to 0:04:46.680 --> 0:04:49.240 be paying off. And UPS had a sales side event 0:04:49.360 --> 0:04:52.240 on September nine, and they didn't call that any any 0:04:52.360 --> 0:04:56.520 glaring issues. They actually reiterated their two guidance. And that's 0:04:56.520 --> 0:05:00.120 why we think it's mostly a company specific issue for 0:05:00.200 --> 0:05:03.479 fed X versus the broader economy. You know, we'd be 0:05:03.600 --> 0:05:06.000 naive to think, yes, you know, growth has slowed over 0:05:06.040 --> 0:05:09.120 the last three months, but you know, also you know 0:05:09.160 --> 0:05:13.280 fed X is has more of exposure in China, uh, 0:05:13.400 --> 0:05:17.760 and you know the the zero tolerance policy of the 0:05:17.839 --> 0:05:22.359 Chinese government due to COVID have really restricted economic activity 0:05:22.400 --> 0:05:25.039 there and that's gone on longer than I think most 0:05:25.080 --> 0:05:27.520 of us have would have wanted or thought, uh, And 0:05:27.560 --> 0:05:30.440 that's also something weighing on on FedEx's business as well. 0:05:30.600 --> 0:05:32.320 Just want to throw out some numbers. Looking at the 0:05:32.360 --> 0:05:35.000 d e S page on the Bloomberg when you look 0:05:35.000 --> 0:05:39.360 at fed X USOV almost sixty five billion international was 0:05:39.400 --> 0:05:42.680 almost twenty nine. If you pull up ups US is 0:05:42.720 --> 0:05:45.880 about seventy four billion internationals about twenty three. So that 0:05:45.960 --> 0:05:48.520 speaks really to your point. So I mean, when we 0:05:48.520 --> 0:05:51.320 think about ups LEE, that's more of a US play 0:05:51.400 --> 0:05:54.719 domestic play. Yeah. And when I was also in up 0:05:54.800 --> 0:05:57.200 s U p SS one integrated network, so they have, 0:05:57.480 --> 0:06:01.080 you know, an express in domestic business. But you know, 0:06:01.200 --> 0:06:03.919 when someone delivers a package to your house, it's not 0:06:04.000 --> 0:06:08.440 a separate organization. At FedEx. The majority of their packages 0:06:08.520 --> 0:06:11.880 here on the ground network which are independent contractors, or 0:06:11.920 --> 0:06:15.360 their express network, which are employees. A lot of people 0:06:15.400 --> 0:06:18.080 on the street are kind of wondering, you know what 0:06:18.120 --> 0:06:21.839 the rationale for that is and does it truly make sense, uh, 0:06:22.040 --> 0:06:24.440 to not have an integrated network. Well, great, to check 0:06:24.480 --> 0:06:27.640 in with you, Lee Clascow of our Bloomberg Intelligence team. 0:06:27.720 --> 0:06:31.320 You're listening to Bloomberg Business Week with Carol Messer and 0:06:31.400 --> 0:06:35.680 Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. The new 0:06:35.680 --> 0:06:37.800 issue of Bloomberg Business Week out. It is online at 0:06:37.839 --> 0:06:40.400 Bloomberg dot com, slash business Week, on the Bloomberg Terminal, 0:06:40.440 --> 0:06:42.760 and of course on news stands. One story in the 0:06:42.800 --> 0:06:44.920 issue takes a look at the biggest US copper mind 0:06:44.960 --> 0:06:47.800 that may not be able to actually deliver on its 0:06:47.800 --> 0:06:50.680 good stint. We're talking about Rio Tinto's Resolution Project. It's 0:06:50.680 --> 0:06:53.000 got enough of the medal for two seventy five million 0:06:53.080 --> 0:06:56.560 e vs. Some locals say though, it should never be developed. 0:06:56.640 --> 0:06:59.920 The story by Joe Dough. He is Medals and Agricultural 0:07:00.000 --> 0:07:02.359 America's deputy team leader for Bloomberg News. He's with us 0:07:02.400 --> 0:07:05.479 right now in the Bloomberg Interactive Broker's studio. Joel Weber 0:07:05.520 --> 0:07:07.000 is going to be joining us to He's editor of 0:07:07.000 --> 0:07:09.440 Bloomberg Business Week. He's with us in the Bloomberg Interactive 0:07:09.440 --> 0:07:12.720 Broker Studio. Joe, I want to start with you just because, um, 0:07:12.760 --> 0:07:14.880 you know, you got to go visit this mine in Arizona, 0:07:15.080 --> 0:07:17.280 and what was it like? So, I mean, you're in 0:07:17.400 --> 0:07:20.560 Phoenix and you drive about forty five minutes east of 0:07:20.560 --> 0:07:22.680 Phoenix and suddenly you just go from like city to 0:07:22.800 --> 0:07:27.280 desert to like this beautiful, rolling, hilly, uh kind of 0:07:27.360 --> 0:07:29.640 cliffy area, and then you kind of go through this 0:07:30.320 --> 0:07:34.120 crevasse and you enter this beautiful kind of range with 0:07:34.160 --> 0:07:36.920 these rocks and whatnot. And they're at the top of 0:07:36.920 --> 0:07:41.520 all this is this kind of like plane shaft. Right, 0:07:41.560 --> 0:07:44.600 there's a couple of large pieces of iron that have 0:07:44.920 --> 0:07:47.480 clear lifts going down to the ground, and but you 0:07:47.480 --> 0:07:50.840 don't think anything other about it. So that's where the 0:07:50.840 --> 0:07:53.080 actual mine is located. And I said, well, you know, 0:07:53.120 --> 0:07:54.880 I want to go down into it because it's the 0:07:54.960 --> 0:07:57.560 deepest mine in in the Americas. It's about a mile 0:07:57.560 --> 0:07:59.520 and a half DP. So we went all the way 0:07:59.520 --> 0:08:02.040 down there, and you get down there and it's it's 0:08:02.080 --> 0:08:04.200 kind of like, uh, I don't know, you go to 0:08:04.240 --> 0:08:07.240 like a new library, right, it's all concrete and lit 0:08:07.320 --> 0:08:09.720 up by fluorescent lights and everything else. And if you 0:08:09.720 --> 0:08:11.400 didn't know you were a mile a mile and a 0:08:11.440 --> 0:08:12.880 half in the ground, you might think you're like a 0:08:13.200 --> 0:08:17.480 casino or you know, someplace without windows. Uh. But that's 0:08:17.480 --> 0:08:20.720 where it stops because there is no mind being built 0:08:21.320 --> 0:08:23.720 because they don't actually have the right to the land 0:08:23.800 --> 0:08:27.200 right now to build where the actual copper veins are. Right. 0:08:27.240 --> 0:08:28.920 So this is gonna be a copper mine. It's gonna have, 0:08:29.040 --> 0:08:31.600 like you said, be producing the most copper in all 0:08:31.640 --> 0:08:36.600 of North America. And it sits below this uh Native 0:08:36.600 --> 0:08:40.200 American site. It is a campground actually owned by the 0:08:40.240 --> 0:08:44.439 Forest Service, but uh, the San Carlos Apache tribe say, 0:08:44.760 --> 0:08:49.120 this has been our land for time and prepeptuity. That 0:08:49.280 --> 0:08:51.839 I was actually talking to the guy who is one 0:08:51.840 --> 0:08:54.559 of the former Apache leaders who's now leading the kind 0:08:54.559 --> 0:08:56.680 of charge to say, you should not give this land 0:08:56.720 --> 0:08:58.880 over to Rio Tinto. The United States should hold onto 0:08:58.880 --> 0:09:01.920 this land. And yeah, well so there's tension. I want 0:09:01.920 --> 0:09:04.280 to bring Joe Webber into because Joel, you know the 0:09:04.320 --> 0:09:06.200 reason we this is such an important story. As we 0:09:06.200 --> 0:09:09.679 talked so much about electrical vehicles EVS, and we talk 0:09:09.720 --> 0:09:12.200 about Lithian that's so important, but actually copper is really 0:09:12.240 --> 0:09:14.720 important when it comes to EVS and we need a 0:09:14.720 --> 0:09:17.200 lot of it, yes, like so much of it, Like 0:09:17.280 --> 0:09:19.920 you need you need like maybe a big gigantic mind 0:09:19.960 --> 0:09:23.959 with like the biggest deposit in the US may be visited. Yeah, exactly. 0:09:24.080 --> 0:09:26.200 And but you know, I think it does speak to 0:09:26.520 --> 0:09:30.560 when you mentioned some other materials there, some metals, They're like, 0:09:31.200 --> 0:09:33.760 look like the US has really never been at the 0:09:33.800 --> 0:09:36.480 forefront of getting this stuff out of the ground and 0:09:36.880 --> 0:09:39.680 making it be a supply chain that could end up 0:09:39.679 --> 0:09:43.680 in electric vehicles. I think that really changed with the 0:09:43.720 --> 0:09:48.560 new incentives from Washington. And and this shows how, uh, 0:09:48.720 --> 0:09:52.440 there's this reality that has yet to meet where you know, 0:09:52.520 --> 0:09:55.400 we might end up in the future. But but in 0:09:55.400 --> 0:09:58.640 this specific example, it you know, how likely is rio 0:09:58.800 --> 0:10:01.800 tend to gonna be even to get this copper out 0:10:01.840 --> 0:10:06.480 of the ground anytime? Anytimes? I mean, if you assume 0:10:06.600 --> 0:10:08.920 that the United States government does end up approving the 0:10:08.960 --> 0:10:10.959 land swap and it is on hold right now because 0:10:11.000 --> 0:10:13.200 the Biden administration said, wait a minute, we feel like 0:10:13.240 --> 0:10:16.200 some of the licensing wasn't actually done correctly. We feel 0:10:16.200 --> 0:10:18.080 like some of the environment and impact studies were not 0:10:18.120 --> 0:10:20.760 done correctly, so maybe we should redo those. Even if 0:10:20.760 --> 0:10:22.480 they suddenly said, you know what, we're going to reverse 0:10:22.520 --> 0:10:24.960 that and allow for the swap, it would still take 0:10:25.040 --> 0:10:29.720 ten years before Rio Tinto is actually pulling copper or 0:10:29.840 --> 0:10:32.960 up out of the ground. So I mean, it just 0:10:33.000 --> 0:10:36.320 reminds us that mining projects take minimum ten years to 0:10:36.320 --> 0:10:38.640 get up off the ground. And this is the problem 0:10:38.760 --> 0:10:41.680 I was I was saying on Twitter just yesterday. You know, 0:10:41.720 --> 0:10:45.160 the Biden administration has been front and center talking about 0:10:45.160 --> 0:10:49.640 the materials being domestically produced. And even though most people 0:10:49.679 --> 0:10:52.240 don't think, oh, energy transition, we need to talk about 0:10:52.280 --> 0:10:55.480 the minds. And this is like constantly being talked about 0:10:55.480 --> 0:10:58.000 in the White House and being talked about around Congress. 0:10:58.040 --> 0:11:01.360 Everybody's for this, but you get into complexities of this 0:11:01.480 --> 0:11:04.960 situation with resolution, and you see why it is so difficult, 0:11:05.520 --> 0:11:08.560 um and the problem that we have right if we 0:11:08.600 --> 0:11:10.719 truly want to do this at home, we got to 0:11:10.760 --> 0:11:13.720 be ready for understanding it's going to take ten twenty 0:11:13.800 --> 0:11:17.079 years to actually have the ability to do that all domestically. 0:11:17.120 --> 0:11:19.520 Makes me wonder that idea of what two fifths of 0:11:19.559 --> 0:11:23.800 passenger cars carsels to be e vs makes me wonder 0:11:23.840 --> 0:11:25.520 how the heck do we do it, especially if we 0:11:25.559 --> 0:11:28.120 want everything to be made domestically or a lot of it. Right, 0:11:28.320 --> 0:11:30.160 And this wasn't in the story, but I was recently 0:11:30.200 --> 0:11:32.400 having a conversation with a very big trading firm that 0:11:32.520 --> 0:11:36.160 actually trades all these medals, and they said, it's just 0:11:36.280 --> 0:11:39.480 now getting on people's radar exactly how much copper you need. 0:11:39.559 --> 0:11:42.360 And what is in the story is Goldman's most recent 0:11:42.440 --> 0:11:44.840 research says we're not going to hit a deficit for 0:11:44.920 --> 0:11:51.200 three more years, but the price is going to more 0:11:51.240 --> 0:11:54.559 than double for copper. And that's because the market the 0:11:54.600 --> 0:11:57.400 world's going to start. China is very much aware of that, 0:11:57.480 --> 0:12:00.280 and they are the ones also going out there to 0:12:00.360 --> 0:12:04.720 secure off take agreements. And by part of minds in 0:12:04.800 --> 0:12:07.320 all different parts of the world that people like Elon 0:12:07.400 --> 0:12:09.600 Musk say, you know what, maybe we don't want to 0:12:09.600 --> 0:12:12.400 touch that copper mine and the Democratic Republic of Congo, 0:12:12.760 --> 0:12:15.280 maybe we do just want the one that's in Arizona 0:12:15.320 --> 0:12:16.920 that we can trust, or the one that's in Chile 0:12:17.080 --> 0:12:18.800 that we can trust. By the way, there was a 0:12:18.840 --> 0:12:23.000 proposed land swap. What happened there? Uh? So the land 0:12:23.040 --> 0:12:27.320 swap was written into law uh in a bill passed 0:12:28.200 --> 0:12:31.920 during the Obama administration. It was tucked into a defense 0:12:32.640 --> 0:12:35.800 bill of course, so there's debates over did Obama actually 0:12:36.240 --> 0:12:38.360 like this thing? Uh? And then by the end of 0:12:38.400 --> 0:12:41.840 the Trump administration. The Trump administration had enough push going 0:12:41.960 --> 0:12:44.160 from behind the scenes from lobbyists and whatnot. They said, 0:12:44.360 --> 0:12:47.760 let's approve the land swap. Let's go. Biden gets in 0:12:47.760 --> 0:12:51.120 in the first month, and the Forest Service, the U. 0:12:51.160 --> 0:12:53.000 S d A, which actually is in charge of all this, 0:12:53.080 --> 0:12:55.000 come and say, you know, actually we're putting a halt 0:12:55.040 --> 0:12:57.320 on the land swap. And so that's where we are 0:12:57.360 --> 0:13:01.160 at right now. The land swap hasn't happen. Uh. The 0:13:01.200 --> 0:13:04.160 United States government says we still need to do more 0:13:04.240 --> 0:13:06.920 due diligence on this, and of course Rio says, the 0:13:07.000 --> 0:13:09.640 due diligence has been done. We've chosen all the various 0:13:09.640 --> 0:13:13.400 spots around Arizona to give them, uh, to give the 0:13:13.480 --> 0:13:16.880 United States government. Um, so let's get this thing moving on. 0:13:17.040 --> 0:13:19.440 Are there other areas of the United States that have 0:13:19.880 --> 0:13:21.640 copper veins such as this? I know this is the 0:13:21.640 --> 0:13:26.280 biggest potential one. But what what if if Riotinto doesn't 0:13:26.280 --> 0:13:30.680 get access to this? What happens? So where this mine 0:13:30.760 --> 0:13:33.600 is located is actually like for over a hundred years, 0:13:33.600 --> 0:13:35.679 been known as one of the great deposits of copper 0:13:35.800 --> 0:13:38.800 in the world. I asked one of the geologists there 0:13:38.880 --> 0:13:41.839 should I've never thought it was the US, but it's 0:13:41.880 --> 0:13:44.360 I mean right there in Arizona. Right, Arizona is like 0:13:44.480 --> 0:13:48.800 copper Universe. I asked one of the geologists. Why, why, like, 0:13:48.880 --> 0:13:50.800 what's interesting? He showed me this weird map with all 0:13:50.800 --> 0:13:52.600 this crud on it. I said, I don't get this, 0:13:52.640 --> 0:13:54.600 but I do notice this one spot here that makes 0:13:54.640 --> 0:13:56.920 no sense to me. The lines all converge. He goes, 0:13:57.400 --> 0:13:59.520 my job is to make money by getting copper out 0:13:59.520 --> 0:14:01.760 of the ground. What makes me love my job is 0:14:01.800 --> 0:14:04.600 the thing you just pointed out there about the geology, 0:14:04.720 --> 0:14:07.560 and he said, basically, we're still trying to figure out, 0:14:07.600 --> 0:14:10.520 after hundreds of years of looking in this area, what 0:14:10.679 --> 0:14:13.240 happened to the Earth millions of years ago for this 0:14:13.360 --> 0:14:16.120 to be the spot where copper is found. It's in 0:14:16.200 --> 0:14:20.360 Jurassic Park. Just watch them. That's all there, which I 0:14:20.360 --> 0:14:22.400 don't know. I don't know. I only like the first one, 0:14:22.560 --> 0:14:25.320 all right. Our Thanks to Joe doo Middleton, a America's 0:14:25.320 --> 0:14:27.160 deputy team leader of Bloomberg News, this story in the 0:14:27.200 --> 0:14:29.440 new issue of Bloomberg Business Week magazine. It is out 0:14:29.520 --> 0:14:32.080 or thanks to the editor of the magazine, Jill Webber, 0:14:35.200 --> 0:14:39.239 This is Bloomberg Business Week with Carol Masser and Bloomberg 0:14:39.320 --> 0:14:43.240 Quick Takes Tim Stinovic on Bloomberg Radio. Get ready for 0:14:43.280 --> 0:14:47.000 another likely year weather disasters that destroy homes, ruined crops, 0:14:47.000 --> 0:14:49.240 disrupt shipping and threatened lives. Yeah, you thought you were 0:14:49.240 --> 0:14:51.320 going to have a good Friday. Forget about it. It's 0:14:51.320 --> 0:14:53.320 not happening here. Check out today is a big take. 0:14:53.400 --> 0:14:56.000 You can do that by visiting a Bloomberg dot Com 0:14:56.040 --> 0:14:58.160 slash Big Take. Also type and I Big Take on 0:14:58.200 --> 0:15:01.000 the Bloomberg Terminal. We've got Elizabeth Elkin with us. She's 0:15:01.000 --> 0:15:03.560 agricultural reporter for Bloomberg New She's with U right now 0:15:03.560 --> 0:15:06.480 in the Bloomberg Interactive Broker Studio. Elizabeth, I gotta tell 0:15:06.520 --> 0:15:08.720 you it's not just you know, the American West, or 0:15:08.760 --> 0:15:10.800 what's happening in Australia. Over the last few years. We've 0:15:10.800 --> 0:15:14.040 got deadly floods in Pakistan. We've got scorching heat all 0:15:14.120 --> 0:15:16.560 over the western part of the country. In Europe as well, 0:15:16.960 --> 0:15:19.920 we've got torrential rains in Indonesia than the Mega Droute 0:15:19.920 --> 0:15:24.640 in Brazil and Argentina to what's going on, Yeah, absolutely 0:15:24.760 --> 0:15:28.680 absolutely so. La Nina has been the driver behind weather 0:15:28.720 --> 0:15:33.440 disaster since like mid um, and it's all but guaranteed 0:15:33.720 --> 0:15:36.640 that we're going to see another year of Ladina at 0:15:36.680 --> 0:15:39.800 this point. Um. Now, three years of Laddinia in a 0:15:39.920 --> 0:15:43.440 row has only happened like twice since nineteen fifty and 0:15:43.480 --> 0:15:48.640 the last time started in so it's like really rare um. 0:15:48.720 --> 0:15:51.640 And by the time three finishes, the world could see 0:15:51.680 --> 0:15:55.760 one trillion dollars in weather disaster damages for these three 0:15:55.840 --> 0:15:59.800 years of London. So is Landinia getting worse? Like like 0:15:59.840 --> 0:16:02.320 you just said, it doesn't happen a lot, but we 0:16:02.440 --> 0:16:05.080 keep talking about that. The current, the warming of the planet. 0:16:05.440 --> 0:16:09.320 The planet just makes the what we're seeing in terms 0:16:09.320 --> 0:16:11.880 of climate imbalances and the impact on our world. It's 0:16:11.920 --> 0:16:15.240 gotten even worse as a result. Absolutely, Yeah, So I 0:16:15.280 --> 0:16:18.440 would describe it as La Nina is like the driver 0:16:18.680 --> 0:16:22.000 behind all of this weather chaos, but climate change just 0:16:22.200 --> 0:16:25.880 magnifies everything. So like for me, you know, I'm a 0:16:25.880 --> 0:16:27.960 football fan. Um, if I were to give it a 0:16:28.000 --> 0:16:31.280 sports analogy, right, uh, La Nina is like setting the 0:16:31.360 --> 0:16:33.760 rules of the game. It's like how you play, and 0:16:33.760 --> 0:16:35.760 then climate change is like if you put in the 0:16:35.800 --> 0:16:39.040 best quarterback ever and you just watched that guy hurl 0:16:39.120 --> 0:16:42.720 the ball down the field. Right, that's climate change. What's 0:16:42.720 --> 0:16:46.560 the atmospheric phenomenon behind Landina? Like how does it work? 0:16:47.160 --> 0:16:51.360 So I think the atmosphere of the atmospheric phenomenon behind 0:16:51.440 --> 0:16:54.480 Landinia just it ends up making it so that the 0:16:54.520 --> 0:16:58.040 ocean is just a little bit cooler, right, It's just 0:16:58.080 --> 0:17:01.320 a little bit cooler, and that tiny little bit can 0:17:01.400 --> 0:17:04.159 just cause all of these massive weather disasters. And I 0:17:04.200 --> 0:17:06.840 think about right when we have crazy storms like in 0:17:06.880 --> 0:17:09.159 our world, like when there's a real hot and then 0:17:09.200 --> 0:17:11.200 you get hit by a cold front. Like it's right, 0:17:11.240 --> 0:17:15.680 it's the extremes that just magnify everything, whether it's lots 0:17:15.680 --> 0:17:19.400 of rains or an extreme drought. Absolutely absolutely, and then 0:17:19.560 --> 0:17:21.680 you know you end up with things like yeah, the 0:17:22.080 --> 0:17:24.960 droughtout rest, but also like the deadly flog floods in 0:17:25.000 --> 0:17:28.000 Pakistan like we were talking about. Um, you know, I 0:17:28.040 --> 0:17:31.040 know for me, like I love coffee, right, and so 0:17:31.520 --> 0:17:35.760 like problems growing coffee in places like Brazil that's like 0:17:35.840 --> 0:17:38.760 super inflationary. Talk to us about this because agriculture, right, 0:17:38.760 --> 0:17:41.080 we always think about the old economy. You cares about it. 0:17:41.119 --> 0:17:43.879 But like just like with the rail, just with the 0:17:43.960 --> 0:17:47.480 rail strikes, we realized getting stuff around, which seems so old. 0:17:47.520 --> 0:17:50.879 Economy it's important. It's it's how the economy keeps things moving. 0:17:51.200 --> 0:17:54.120 Act like, it's so crucial in so many different ways. 0:17:54.280 --> 0:17:56.320 What are you hearing as you report on this in 0:17:56.320 --> 0:17:59.280 a daily basis and then as it relates to climate change? Yeah? 0:17:59.320 --> 0:18:02.680 Absolutely absolutely. I mean, you know, when I talk to farmers, 0:18:02.960 --> 0:18:06.880 you hear stories about like almond farmers literally ripping out 0:18:06.920 --> 0:18:09.399 their trees because it's so dry, right, and they just 0:18:09.440 --> 0:18:12.520 don't have enough rain year after year, which is a 0:18:12.560 --> 0:18:14.960 real problem for people who like want to eat almonds 0:18:15.080 --> 0:18:17.119 or you know, the things that almond goes into, like 0:18:17.280 --> 0:18:19.679 almond milk and all of that. Like, that's that's going 0:18:19.720 --> 0:18:22.639 to be a real problem. Um, you know, I covered dairy, 0:18:22.760 --> 0:18:25.880 so talking to dairy farmers, dairy farmers are talking about 0:18:25.920 --> 0:18:29.080 whether they can even do what they do in places 0:18:29.080 --> 0:18:32.639 like California anymore over the next you know, decades or 0:18:32.680 --> 0:18:35.080 however long. That's pretty remarkable to think about. I mean, 0:18:35.080 --> 0:18:38.919 California is you know, it's it's it's the agricultural center 0:18:39.080 --> 0:18:42.440 of the United States. It provides so much produce to 0:18:42.720 --> 0:18:44.960 the rest of the country. What does that mean for 0:18:44.960 --> 0:18:49.200 for all of US Americans. Yeah, it is very, very inflationary. 0:18:49.320 --> 0:18:52.320 I mean, you know, as it becomes more expensive to 0:18:52.680 --> 0:18:55.840 grow things, to to grow fruits, to grow vegetables, to 0:18:55.840 --> 0:18:59.960 grow everything else. Um, it just spins down the supple 0:19:00.040 --> 0:19:01.960 Hi Chaine, right, So it becomes more expensive for you 0:19:02.000 --> 0:19:04.600 to buy it. Um. And in the long term, you know, 0:19:04.720 --> 0:19:08.639 there could be issues of like can we even grow 0:19:08.920 --> 0:19:11.480 things in California the way that we have been um, 0:19:11.520 --> 0:19:14.239 And you know you talk about fruits and veggies, but 0:19:14.400 --> 0:19:17.720 it's also like dairy. I mean, California is our number 0:19:17.720 --> 0:19:20.679 one dairy state. R It's like a lot of what 0:19:20.760 --> 0:19:23.280 we grow comes out of this one area that has 0:19:23.400 --> 0:19:26.000 so many problems for us. But as you guys started, 0:19:26.040 --> 0:19:28.159 I think Timmy pointed out, I mean it's a global problem. 0:19:28.200 --> 0:19:30.760 So whether it's the flooding in Pakistan or you know, 0:19:30.800 --> 0:19:33.000 incredible droughts in South America. I mean, we are seeing 0:19:33.000 --> 0:19:36.359 this globally, this these extremes, and and while it's felt 0:19:36.400 --> 0:19:38.600 like a really really rough here, it sounds like, you know, 0:19:38.600 --> 0:19:41.200 get ready for more to come. UM. So important and 0:19:41.280 --> 0:19:43.199 so much a sign of our times. Elizabeth, thank you 0:19:43.200 --> 0:19:46.359 so much, really appreciate it. Elizabeth Elkin, agg reporter here 0:19:46.400 --> 0:19:48.840 at Bloomberg News, joining us in our interactive broker story 0:19:49.440 --> 0:19:51.720 Broker studio. This is our Bloomberg Big Take today. Yeah, 0:19:51.800 --> 0:19:53.720 check it out and I Big Take on the Bloomberg 0:19:53.800 --> 0:20:03.000 terminal and also at Bloomberg dot Com Slash Big Take Journal. Yeah, 0:20:03.080 --> 0:20:06.720 but you let me drive? Oh no, no, no, no no home? 0:20:07.240 --> 0:20:13.880 All right, please, I'll go. I want to drive. It's 0:20:13.920 --> 0:20:23.760 good question. This is the drive to the clothes on 0:20:23.880 --> 0:20:27.480 Bloomberg Radio Tik Talk. Everybody. Ten minutes left in today 0:20:27.520 --> 0:20:29.800 as well, actually nine and a half, let's be exact here. 0:20:29.840 --> 0:20:32.359 We like numbers and like being exact on Bloomberg's about 0:20:32.400 --> 0:20:34.359 nine and a half minutes left in today's trading session, 0:20:34.400 --> 0:20:36.880 getting ready to wrap up what has been a week, 0:20:36.960 --> 0:20:40.080 certainly for the equity trade, a bearish one. We're seeing 0:20:40.119 --> 0:20:43.320