Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well, PIM,
Speaker 1: copper is just surging to a two year high, and
Speaker 1: to get a little bit more of a sense of
Speaker 1: what's behind that, how much it's driving the shares of
Speaker 1: mining companies such as Freeport mcmarn shares up almost fift yesterday.
Speaker 1: Is Mike Judas. He's partner and metals and mining analyst
Speaker 1: Vertical Research based in Stamford, Connecticut. Mike, thanks so much
Speaker 1: for joining us. So why is copper rallying so much
Speaker 1: right now? Lisa and PIM. Great to be with you,
Speaker 1: m I think there are four reasons we've seen copper
Speaker 1: rally strongly over the past couple of weeks. I think
Speaker 1: the first two are macro oriented. You've seen the dollar
Speaker 1: reaching multi month lows, which certainly has been beneficial, and
Speaker 1: you don't dismiss the oil rally. We've seen over the
Speaker 1: past couple of weeks, you've seen a three to four
Speaker 1: dollar move higher and crude that's brought commodity fund money
Speaker 1: into the space, and I think some of that has
Speaker 1: vowed into copper and relative the copper itself, you're getting
Speaker 1: better than expected Chinese demand and data coming out of China,
Speaker 1: which is very important for copper. And finally, there's been
Speaker 1: supply shortfalls throughout two thousand and seventeen. The minors, because
Speaker 1: of the lack of capital spending and lack of expiration,
Speaker 1: have not been able to get as much comperence to
Speaker 1: the market as think people have anticipated. I think all
Speaker 1: that's combined to allow copper to have a really good
Speaker 1: past to three weeks. Do you really think it's set
Speaker 1: to continue, Mike, I mean, I'm looking at Freeport mcmaran,
Speaker 1: and we make a big deal about it because the
Speaker 1: stock goes to almost fifteen bucks a share, but this
Speaker 1: was a fifty dollar a share stop, you know, back when. Also,
Speaker 1: I believe that there was a big strike in Peru
Speaker 1: having to do with copper mining, and the strike is over,
Speaker 1: so maybe we get some more supply. Yeah, it's interesting
Speaker 1: so that when you have a strike and cru some
Speaker 1: people in miners and chillier concerned that that gets over Indonesia,
Speaker 1: which Freeport is very involved with with some of the
Speaker 1: machinations there. Freeports certainly was helped by the copper price
Speaker 1: move the last few days, but I think the market
Speaker 1: is starting to feel a little bit better with negotiations
Speaker 1: the company management of Freeports having with the Indonesian government
Speaker 1: to try to settle that dispute out a new mining
Speaker 1: contract license for Freeports like one of the I think
Speaker 1: it is the largest mine in the world, absolutely, and
Speaker 1: so that the market has been discounting prease severely in
Speaker 1: the valuation of Freeport if they're going to get any
Speaker 1: value for that mine. I think through yesterday's earnings release
Speaker 1: in conference calls, I think Freeport and Immunitiian government seemed
Speaker 1: be getting a little bit better and more discussions to
Speaker 1: to resolve that situation. I think that's also kind of
Speaker 1: helped to pop in Freeport stock. I do want to
Speaker 1: high like him. If you look back in the historical
Speaker 1: part of charts of copper, we have seen four for also,
Speaker 1: so they haven't seen much higher copper prices in the past,
Speaker 1: so not not that we're predicting that here, but I
Speaker 1: do think there's some more momentum and room for copper
Speaker 1: to move higher as deficits. The difference between demand expectations
Speaker 1: supply coming to market are looking to grow over the
Speaker 1: next few years because there's been a lack of capital spending,
Speaker 1: a lack of supply because of the the downslack we've
Speaker 1: witnessed the last few years. You know, Mike, you gave
Speaker 1: a lot of possible reasons for why copper is rallying now,
Speaker 1: and I do just want to point out that the
Speaker 1: shares of Glencore and Newmont have also rallied on the
Speaker 1: back of the of the top in copper. But you know,
Speaker 1: it seems like a pretty delicate balance. I mean, yes,
Speaker 1: it is an increase in demand, but that's one piece
Speaker 1: mixed with just general favorable sentiment rounds commodities right now.
Speaker 1: So I mean, do you think that this is a
Speaker 1: very fickle type of figure that in prices could fall
Speaker 1: substantially in the I mean volatility. I know everybody has
Speaker 1: been concerned about the lack of volatility in the overall
Speaker 1: equity markets, but certainly one thing we do see in
Speaker 1: bodies is volatility. Yes, you know, a bad data point
Speaker 1: out of China, or to this afternoon the FED minutes
Speaker 1: coming out, which you know, the million people going to
Speaker 1: read the teleas on. You know, the dovishniss hawkishness could
Speaker 1: impact some of the near term moves on on some
Speaker 1: of the commodities. But I think generally expectations from investors
Speaker 1: over the past couple of months in May June, we're
Speaker 1: pretty negative going into Q two. We've seen rally and
Speaker 1: the commodity prices, and we've seen you know, the reports
Speaker 1: from the company's being reasonably good, you know, keeping the
Speaker 1: cost down, keeping the capital spending in check. I think
Speaker 1: that's given some investors reason to be more optimistic and
Speaker 1: some of the shorts to cover their positions. Well, I
Speaker 1: want to thank you very much for joining us. Mike
Speaker 1: Judas is metals and mining analysts for vertical research talking
Speaker 1: about copper as well as some mining share. And indeed,
Speaker 1: the Federal Reserve is going to be finishing up their
Speaker 1: today meeting today they are going to give us some
Speaker 1: words of wisdom that we can pass over in detail
Speaker 1: for the next month as we await their next miss
Speaker 1: if Ward McCarthy joins us now he's chief financial economist
Speaker 1: at Jeffreys in Company in New York. And ward, Before
Speaker 1: we talk about what the Fed is expected to say today,
Speaker 1: which is, to be honest, not very much, I want
Speaker 1: to talk about some words of some interesting words from
Speaker 1: President Donald Trump. He was speaking with the Wall Street
Speaker 1: Journal yesterday, UH, and he said that he is considering
Speaker 1: both Gary Cone, who is his chief economic advisor right now, uh,
Speaker 1: in addition to Janet Yellen, to lead the Federal Reserve
Speaker 1: next year. This is going to be the next episode
Speaker 1: of the Fed Chair. Uh. Gary Khane, what do you
Speaker 1: think he would do as FED Chair? Do you think
Speaker 1: that it would translate into a hawkish policy for the country? Well,
Speaker 1: I think that that. Well, first of all, he's a
Speaker 1: big question mark because we really have no history at
Speaker 1: all in terms of what his policy inclinations are. Uh.
Speaker 1: The fact that that Donald Trump has been pushing him
Speaker 1: and also um promoting Jenny Ellen in a sense as
Speaker 1: being a low rate UH FED Chair suggests to me
Speaker 1: that he may be less hawkish than uh he is
Speaker 1: being expected to be, at least in some quarters. All Right,
Speaker 1: So if that's the case, then this is just you know,
Speaker 1: you kind of spin these fantasies, right you kind of say, well,
Speaker 1: so what what Wow, wild fantasy? But I mean, but
Speaker 1: you can't. It's difficult to kind of pin someone down
Speaker 1: obviously if he'd know their views, you know, But what
Speaker 1: is there anything, no matter who is the central bank chief,
Speaker 1: is there something specific that you can point to that
Speaker 1: they should be doing that they are not doing well.
Speaker 1: Jenny Yellen is trying to do everything that I think
Speaker 1: she should do at this point in the sense that
Speaker 1: she's moving rates up to higher levels, although you know,
Speaker 1: maybe not as quickly as the FED could, and she
Speaker 1: is also trying to get the troops in line here, um,
Speaker 1: so they can start balance sheet normalization. But one thing
Speaker 1: that I don't think the FED has focused a lot
Speaker 1: on yet that they're going to have to uh in
Speaker 1: the not too distant future, is that balance sheet normalization
Speaker 1: so far has really just focused on size, and that
Speaker 1: is shrinking the balance sheet. And even in her last testimony,
Speaker 1: Jenny Yellen acknowledged that the FED wants to get back
Speaker 1: to a balance sheet that is all treasuries and other aways,
Speaker 1: get rid of all the more gages, and the plan
Speaker 1: that the FED laid out on June fourteenth will not
Speaker 1: accomplish that. So the Fed's going to have to circle
Speaker 1: back and address this issue at some point. You know,
Speaker 1: you bring up a really important point. And I were Jersey,
Speaker 1: our own interest rate strategist here at Bloomberg was talking
Speaker 1: about the same point. In other words, as we get
Speaker 1: more details from the FED about their balancing normalization, we
Speaker 1: could see an undo amount of volatility and mortgage backed securities. Uh.
Speaker 1: Do you agree? Well? Yeah, well, I don't know what
Speaker 1: you mean by undo, but I certainly think we should
Speaker 1: expect to see more volatility in mortgage backed securities. And
Speaker 1: of course the caps that the FED outlined on June
Speaker 1: four UH are not necessarily binding. Uh. And the FED
Speaker 1: always adds the caveat that they're going to proceed um
Speaker 1: and be data sensitive. So if they did not like
Speaker 1: the way things were unfolding, um, you know, they could
Speaker 1: temper it. Someone I was going to say, they could
Speaker 1: fold it back up. It was about the Let's talk
Speaker 1: about the U S economy for just a moment, because
Speaker 1: unemployment rates are low, inflation low growth while middling. Uh.
Speaker 1: Is there anything that we need to pay attention to
Speaker 1: that we're not looking at? Well? I think in some
Speaker 1: respects maybe we we focus on too many things that uh,
Speaker 1: and that can distract us from the drivers. All right,
Speaker 1: so good point. Tell us what those are? Well, I
Speaker 1: think that the primary things we need to focus on
Speaker 1: are really what what the labor market is doing, because
Speaker 1: that's the heartbeat of the US economy. And the labor
Speaker 1: market continues to do well. Uh. The one missing piece
Speaker 1: continuing to be sustained increase in wage growth, which we
Speaker 1: would love to see because that probably would also boost
Speaker 1: consumer spending. Uh. The other but is that going to happen?
Speaker 1: It is going to happen. Uh. It has been delayed
Speaker 1: this cycle for reasons that I think are fairly numerous, uh,
Speaker 1: ranging anything from demographics to immigration policy. Um. But the
Speaker 1: laws of supply and demand have not been repealed. And
Speaker 1: as we get closer to full employment and we see
Speaker 1: labor market conditions tightening, wage growth is going to happen. Um.
Speaker 1: And we're you know, every day we're closer. We just
Speaker 1: don't know how much closer we are on that front.
Speaker 1: Or do you know? The Federal Reserve has a number
Speaker 1: of mandates that seemed to be floating. It was unemployment
Speaker 1: rates than it was inflation rates. And some people say
Speaker 1: it's asset price UH stability or financial system stability. And
Speaker 1: I'm wondering to what degree do you expect the FED
Speaker 1: today to comment on the elevated prices in the corporate
Speaker 1: bond and the equity markets in the US. And we
Speaker 1: we're seeing right now the extra yield investors are demanding
Speaker 1: to own investment grade corporate bonds in the US plunging
Speaker 1: to about the lowest in the post crisis era. Well,
Speaker 1: I think I do not think they will specifically address
Speaker 1: this in the policy statement today, and of course there's
Speaker 1: no press conference either. But you make a good point,
Speaker 1: and that is that since the FIT has been raising
Speaker 1: rates and talking about drinking the balance sheet UH, financial
Speaker 1: market conditions have actually eased UH, and that is spreads
Speaker 1: of Titan stock market has gone higher, etcetera. And this
Speaker 1: should be a green light for them to continue UH
Speaker 1: down the road towards normalization. The problem is they also
Speaker 1: have two specific UH policy mandates by law, one being
Speaker 1: maximum employment, the other stable inflation. And the inflation pictures
Speaker 1: since February has spooked them somewhat. So I think that
Speaker 1: that has become or the inflation picture has been elevated
Speaker 1: from being kind of a nuance, excuse me, a nuisance
Speaker 1: UH to something that is interfering with their plans at
Speaker 1: least temporarily. What McCarthy, your thoughts on the dollar and
Speaker 1: recent dollar strength going to continue. We're at one sixteen
Speaker 1: against the euro right now. Well, I don't think that
Speaker 1: we'll we'll see any persistent dollar strength. I think what's
Speaker 1: happening now is that the dollar is trying to carve
Speaker 1: out at trading range. We've seen some pretty substantial moves
Speaker 1: in currencies over recent months, and in large part because
Speaker 1: of changes in UH in perspectives on what's happening on
Speaker 1: the political front, and right now the US political situation
Speaker 1: UM is pretty murky. Murky, that's a nice way to
Speaker 1: describe it. Thanks very much, Warden McCarthy. He's our He's
Speaker 1: not a murky economist, but he does put his finger
Speaker 1: on something there. Um, Thanks very much, Chief Financial Economist.
Speaker 1: For jeffreason, I guess we'll just have to wait and
Speaker 1: see what the what the minutes say new diesel and
Speaker 1: petrol cars and vans they're going to be banned from
Speaker 1: the United Kingdom from twenty forty in order to tackle
Speaker 1: air pollution is according to the UK government, and here
Speaker 1: to tell us more. As Jeff Shackleman, renewables reporter for
Speaker 1: Bloomberg joining us from London, Jess boy, I gotta say
Speaker 1: this kind of uh, there's an interesting development and it
Speaker 1: certainly must help companies such as Volvo which are looking
Speaker 1: to really go all electric or all hybrid. That's right?
Speaker 1: How that yes? So, I mean I think if we
Speaker 1: just stepped back a little bit, diesel has really been
Speaker 1: the enemy over the last couple of years since the
Speaker 1: emissions cheating scandal with Volkswagen erupted um and it's just
Speaker 1: become the target of air pollution campaigners as the thing
Speaker 1: that is causing the problem. But as you say, there's
Speaker 1: companies like Volvo, Nissan, UM BMW that are planning to
Speaker 1: lots more electric models that at the tailpipe have zero emissions.
Speaker 1: So this is this is completely on track with with
Speaker 1: what they're planning to do. So just how exactly would
Speaker 1: such a ban work? So the UK says it will
Speaker 1: ban the sale of diesel and gasoline powered cars by
Speaker 1: twenty forty. This comes a couple of weeks after French
Speaker 1: President Emmanuel Macro announced a similar plan. The objective is
Speaker 1: to cut smarg and become a carbon neutral nation. How so,
Speaker 1: what's really interesting about this announcement today is it sending
Speaker 1: a strong signal from ministers and and the announcement two
Speaker 1: weeks go in France that in in twenty five years time,
Speaker 1: twenty five is years time, they don't want to have
Speaker 1: internal engine internal combustion engine cars on the roads. Actually,
Speaker 1: if you look at what the analysts say, we're probably
Speaker 1: not going to have many of those anyway at that
Speaker 1: point because the direction of travel for carmakers like Tesla
Speaker 1: is towards electrics. So Bloomberg New Energy finances that in
Speaker 1: the UK almost of new cars sold in twenty will
Speaker 1: be electric anyway. So you ask how this is going
Speaker 1: to be done, Well, I think probably the markets are
Speaker 1: already doing it themselves. Well, you know, but this is
Speaker 1: interesting because in the US, for example, we saw unprecedented
Speaker 1: auto sales and a lot of the autos that were
Speaker 1: being sold were diesel fuel and not diesel but gasoline
Speaker 1: fueled cars and trucks. I mean, it was sort of
Speaker 1: going the opposite way of electric vehicles. When will we
Speaker 1: see that shift in consumer preference? This this huge shift
Speaker 1: happening in the mobility market, and I expected to happen
Speaker 1: over the next twenty five thirty years. And it's not
Speaker 1: really even just about changing the kind of technology that
Speaker 1: is powering your car. It's also about the uberization of
Speaker 1: of our transport system. People are going to be sharing
Speaker 1: cars a lot more, and there's going to be a
Speaker 1: lot more self driving cars. So there's gonna be this
Speaker 1: gigantic leaps that we can't even really get our head
Speaker 1: around at the moment in terms of how how they
Speaker 1: drive cars. But the thing about the kind of fuels
Speaker 1: that people use is that actually in the UK, where
Speaker 1: we have the largest ease or fleets in Europe, people
Speaker 1: bought these cars in good faith, thinking that they were
Speaker 1: environmentally friendly, and then a few years down the line
Speaker 1: governments realized that they were actually the complete opposite and
Speaker 1: they were causing more damage to the heir than and
Speaker 1: people's lungs than they thought. I just want to ask
Speaker 1: you about the cost of all of this, because I
Speaker 1: understand that the government has said that they are putting
Speaker 1: aside about three thirty million dollars or two hundred and
Speaker 1: fifty million pounds in order to help councils local councils
Speaker 1: tackle emissions. Why do they need the money. I would
Speaker 1: think that people would need the money in order to
Speaker 1: get rid of their old cars that burn foss or
Speaker 1: fuel in order to go electric. Yeah, it's not really
Speaker 1: a huge of money that that they've put aside. So um. Yet,
Speaker 1: what you're suggesting is that there should be a diesel
Speaker 1: scrappage scheme, and that's something that the Mayor of London,
Speaker 1: Sadik Khan, has asked for money for because as you know,
Speaker 1: as I said, you know, people bought these diesel cars
Speaker 1: in good faith thinking they were good for the environment,
Speaker 1: and the government doesn't really want to have to now
Speaker 1: penalize them and say, sorry, guys, you actually turns out
Speaker 1: you're doing a lot of damage to the planet into
Speaker 1: people's health, so you know, you have to get rid
Speaker 1: of that car, so that you know they're helping that
Speaker 1: they've already put they've already set aside money for helping
Speaker 1: taxi drivers, black cab drivers for example, to buy new
Speaker 1: black cabs. Um. But this this headline, um that we're
Speaker 1: talking about, that the ban on on diesel cars is
Speaker 1: actually part of a much bigger air quality strategy that
Speaker 1: they've been forced to put out because the government isn't
Speaker 1: delivering on its air quality plan, and it's been taken
Speaker 1: to court twice by environmental activists and it keeps failing
Speaker 1: to produce a plan that is good enough for tackling
Speaker 1: knights and dark side. And just now this environmental group
Speaker 1: has come out again and said we still don't think
Speaker 1: it's good enough. So there's still a chance we're going
Speaker 1: to see the government back in court for a third
Speaker 1: time if if they don't think this plan is up
Speaker 1: to scratch. Just in the UK, plug in cars are
Speaker 1: still only about one percent of all vehicle sales in
Speaker 1: the country. Um, that's expected to grow to eight by
Speaker 1: What's the sort of threshold. What's the sort of tipping
Speaker 1: point at which we'll see a more widespread adoption of
Speaker 1: plug in vehicles? So I think the real key is UM, Well,
Speaker 1: I guess there's two things. The main one is cost.
Speaker 1: If you turn up at four Court, um, and you
Speaker 1: want to be able to buy an electric car, you
Speaker 1: want to see that it's cheaper on the price tag
Speaker 1: compared to an internal combustion engine, and I think that's
Speaker 1: expect to help it happen about the middle of the
Speaker 1: next century. But the other issue people have is range.
Speaker 1: Anxiety that their battery is going to run out, and
Speaker 1: that's tied into having enough charging stations. And in the UK,
Speaker 1: in London particularly, they're still aren't enough and the ones
Speaker 1: that are there aren't really charging people's cars quickly enough.
Speaker 1: You have to wander off for a couple of hours
Speaker 1: and come back or they're broken. Yeah. Um, so that
Speaker 1: really needs to be sorted out before people feel confident
Speaker 1: enough to buy them and be able to drive long distances. Just, gentlemen,
Speaker 1: thank you so much for joining us. Truly a fascinating
Speaker 1: issue and it'll be interesting to see what legal parameters
Speaker 1: the UK and France put into play to try to
Speaker 1: achieve these targets. Just just Shankleman is renewables and climate
Speaker 1: change reporter for Bloomberg News, coming to us from London.
Speaker 1: All right, let's talk about technology. Let's get our Facebook
Speaker 1: out and find out what's going on with Facebook. We
Speaker 1: have Shira Oviday, our technology columnist, a Bloomberg gad fly
Speaker 1: which has that all fast commentary section and you can
Speaker 1: follow Shira on Twitter at Shira Oviday. Um. I was
Speaker 1: looking at the details for Facebook. This is a company
Speaker 1: that's worth about four hundred and seventy six billion dollars,
Speaker 1: let's say five billion dollars rounding up? Yeah right, why not?
Speaker 1: I mean they'll probably get there anyway. Um, they had
Speaker 1: thirty billion in sales in the year, eleven billion a
Speaker 1: third is net income. They were able to take a
Speaker 1: third of that in sock it away and get this,
Speaker 1: the free cash flow is over twelve billion dollars. Not
Speaker 1: a bad little business that marks there. Oh and everyone
Speaker 1: keeps saying, well, you know, can it continue? Can it continue?
Speaker 1: What is your overday think? Well, I think that is
Speaker 1: exactly the right question, right that if you look at
Speaker 1: what Facebook has done basically from almost zero to one
Speaker 1: of the biggest companies in the world in five years
Speaker 1: and extremely profitable, has been very amazing. But the big question,
Speaker 1: of course, as investors look at Facebook is how much
Speaker 1: more room to grow is there for a company that
Speaker 1: has grown so quickly in such a short period of time.
Speaker 1: And I mean I think that I agree that the
Speaker 1: short term is pretty promising. The longer term is a
Speaker 1: question mark. Well, and just to give this some perspective,
Speaker 1: Facebook shares up more than so far a year to date.
Speaker 1: I imagine we're also going to hear something out of
Speaker 1: Facebook about uh displaying more news and sort of getting
Speaker 1: people out of their uh particular bubbles and expose them
Speaker 1: to more ideas. What do you think is going to
Speaker 1: be said on that? I mean, this is a topic
Speaker 1: that Mark Zuckerberg has been talking about for much of
Speaker 1: this year that he's been on this. I don't know,
Speaker 1: what do you what do you want to call it?
Speaker 1: Like a quasi presidential tour of the United States, meeting
Speaker 1: with regular folks, right to to sort of try to understand, um,
Speaker 1: people in the United States and how they use Facebook
Speaker 1: and how basically to make Facebook a more hospitable place
Speaker 1: for people and communities and groups. And as you said,
Speaker 1: one of the biggest issues for Facebook is how to
Speaker 1: you know, get people out of their little self contained
Speaker 1: bubbles and expose them to news or information or points
Speaker 1: of view that they might not have heard um otherwise
Speaker 1: in their Facebook network. And that is a big topic
Speaker 1: for them. And look, that's a business issue for them too,
Speaker 1: that if people feel like Facebook is this terrible place
Speaker 1: where I just um here people rant about you know,
Speaker 1: Donald Trump, about Hillary Clinton, and then they don't like
Speaker 1: to use Facebook as much. Right, that has business implications
Speaker 1: for Facebook. I was gonna say, then they just go
Speaker 1: use Instagram or what's app? Right, Facebook properties, right, I mean,
Speaker 1: this is the sort of power of Facebook. You know.
Speaker 1: Here's the example that I carry around in my head today. Boeing,
Speaker 1: which we talked about earlier on in the program, has
Speaker 1: a market cap of a hundred and forty billion dollars.
Speaker 1: If Boeing is something happens to Boeing and they stopped
Speaker 1: making plans, everybody will feel it. If someone pulled the
Speaker 1: plug on Facebook, I'm not sure everyone would feel it.
Speaker 1: There'd be another competitor that's got a five billion dollar
Speaker 1: market cap. I mean, it's a very fair point that you, right,
Speaker 1: the different Facebook does not make the most essential things
Speaker 1: in the world, but it has two billion users, So
Speaker 1: there's people who get a lot of value out of those.
Speaker 1: Airlines are going to probably advertise exactly and right then
Speaker 1: that it has millions of advertisers who tried to reach
Speaker 1: customers on Facebook, including right. Problem with Boeing and customers.
Speaker 1: I mean, conceivably you could make the argument that Amazon
Speaker 1: doesn't produce much, although they do now and create their
Speaker 1: increasingly producing more and more products. Uh, now this company
Speaker 1: is going to report earnings and expectations are extremely high.
Speaker 1: What could cause people some concern that Amazon is not
Speaker 1: going to crush everything in its sight, which is basically
Speaker 1: what it's done so far. I'm very confused about how
Speaker 1: investors think about Amazon these days, because you see this
Speaker 1: kind of back and forth where people Amazon has been
Speaker 1: saying for about a year now that it's investing very
Speaker 1: heavily in its future, in things like warehouses where it's
Speaker 1: stores inventory, and in buying movies and television shows for
Speaker 1: its video service, expanding in places like India, which is
Speaker 1: going to be this huge e commerce market in coming years.
Speaker 1: And investors at times seem cool with that, and at
Speaker 1: times they freak out that profits are crimped because Amazon
Speaker 1: is spending a lot on these investments. So I'm not
Speaker 1: actually sure what will happen on Thursday when Amazon reports earnings. Well,
Speaker 1: I mean, just looking at their shares, they are up
Speaker 1: more than so far this year, and it's just like, yes,
Speaker 1: I mean, and you have to wonder how much is
Speaker 1: this allway just moving moving together? I mean, how much
Speaker 1: do these companies get sort of washed up in the
Speaker 1: technological revolution, right rather than their individual strengths. I mean
Speaker 1: that that has been the sort of anxiety from that
Speaker 1: we saw in June about tech stocks, right, is that
Speaker 1: all of these tech stocks are a little bit crowded,
Speaker 1: that everybody's investing in the same handful of giant tech companies,
Speaker 1: and maybe there's a risk of kind of overcrowding pushing
Speaker 1: up these stock prices to unsustainable levels and valuations. Amazon
Speaker 1: is one of these companies that whose share value makes
Speaker 1: no sense on any kind of logical basis. That's trades.
Speaker 1: It's something like sixty times forward earnings or whatever, so
Speaker 1: that is not logical. But it has been that way
Speaker 1: for a very long time, and the company, yes a
Speaker 1: company for a long time. Therefore it should be fine.
Speaker 1: It should be fine, or maybe it won't be fine.
Speaker 1: I don't know. Well, he you know, he's just a
Speaker 1: little factoid, right, you know, anniversary this year for Amazon
Speaker 1: going public. They went public of May. The price was
Speaker 1: eighteen dollars a share, and today the shares of Amazon
Speaker 1: are one thousand, fifty dollars, up more than ten and
Speaker 1: a half bucks. Again, not a bad little business. And
Speaker 1: the Jeff Bezos has filled for himself. Twitter, Can you
Speaker 1: just give us a hint about what we should look
Speaker 1: for with Twitter? Are they actually figuring out how to
Speaker 1: make money that they're not figuring out how to make money?
Speaker 1: It was pretty quick. Twitter right now is in basically
Speaker 1: a canyon of sadness of its own making. So it's
Speaker 1: it's stuck in this rut where it sort of stagnated
Speaker 1: on the number of people using Twitter and only recently
Speaker 1: has sort of slowly started to add more people who
Speaker 1: are using Twitter. The problem is that has coincided with
Speaker 1: a pretty dramatic decline in the company's revenue from advertising,
Speaker 1: and the company has basically said that's not going to
Speaker 1: get better, probably until next year at the earliest. So
Speaker 1: you have the situation where, uh, this is a company
Speaker 1: that is adding users, but not that quickly. Uh, it's
Speaker 1: top line is shrinking, it has it is unprofitable and
Speaker 1: continues to be unprofitable. And so you know, right now
Speaker 1: Twitter seems kind of stuck. Well maybe they'll be left
Speaker 1: off the tech train in of sadness. Yeah, Shira Ovida,
Speaker 1: thank you so much for joining us for this canyon
Speaker 1: of sadness on this Wednesday. Sierra Ovid is a technology
Speaker 1: columnist for Bloomberg gad Fly. You can find her work
Speaker 1: on and I gad Fly on the Bloomberg as well
Speaker 1: as Bloomberg dot com slash gad Fly. Thanks for listening
Speaker 1: to the Bloomberg P and L podcast. You can subscribe
Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever
Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter
Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo wits one.
Speaker 1: Before the podcast, you can always catch us worldwide on
Speaker 1: Bloomberg Radio