1 00:00:01,400 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,120 --> 00:00:06,240 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,240 --> 00:00:10,360 Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts, 4 00:00:10,400 --> 00:00:13,600 Speaker 1: along with essential market moving news. Find the Bloomberg Markets 5 00:00:13,600 --> 00:00:17,000 Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts, 6 00:00:17,000 --> 00:00:20,160 Speaker 1: and on Bloomberg dot Com. Our next guest says, at 7 00:00:20,160 --> 00:00:22,279 Speaker 1: the beginning of the third quarter, investors sit in the 8 00:00:22,400 --> 00:00:27,160 Speaker 1: uncomfortable middle. Her commentary is dotted with words like murky 9 00:00:27,360 --> 00:00:29,479 Speaker 1: and it's generally just a little uncomfortable to read as well. 10 00:00:29,600 --> 00:00:31,920 Speaker 1: Let's bring in Katie Nicks and Cee IO at Northern 11 00:00:31,960 --> 00:00:35,599 Speaker 1: Trust Wealth Management. Katie, when do we get out of 12 00:00:35,600 --> 00:00:39,040 Speaker 1: this murky middle? Good morning, Vonnie. First of all, thank 13 00:00:39,040 --> 00:00:41,000 Speaker 1: you so much for having me. And I think it's 14 00:00:41,000 --> 00:00:44,200 Speaker 1: going to be sometime. I mean, we're being really driven 15 00:00:44,200 --> 00:00:47,960 Speaker 1: by by the coronavirus news and that news seems to 16 00:00:47,960 --> 00:00:50,400 Speaker 1: be going in the wrong direction frankly, so I think 17 00:00:50,400 --> 00:00:53,199 Speaker 1: it's going to keep investors in this middle. And when 18 00:00:53,200 --> 00:00:56,360 Speaker 1: I say middle, I mean in between sort of phase one, 19 00:00:56,440 --> 00:01:00,120 Speaker 1: which is the downturn, to a phase two where you 20 00:01:00,200 --> 00:01:06,160 Speaker 1: have more clarity and confidence frankly in there being a recovery. So, Katie, 21 00:01:06,560 --> 00:01:09,560 Speaker 1: I guess we're to a certain extent this market has 22 00:01:09,600 --> 00:01:12,600 Speaker 1: been back stopped by the US Federal Reserve and just 23 00:01:12,600 --> 00:01:17,560 Speaker 1: an easy monetary policy on a global basis. How concerned 24 00:01:17,600 --> 00:01:20,600 Speaker 1: are you about that being the primary support or primary 25 00:01:20,680 --> 00:01:24,000 Speaker 1: driver of this market? Thanks, Paul. That's a great question. 26 00:01:24,160 --> 00:01:27,920 Speaker 1: And while we're confident that that policy will be there 27 00:01:27,959 --> 00:01:30,920 Speaker 1: and will continue to provide a backstop, I think you know, 28 00:01:31,000 --> 00:01:33,400 Speaker 1: Fed share Powell said it best when he said, you know, 29 00:01:33,520 --> 00:01:38,479 Speaker 1: the FED can provide liquidity, but does not guarantee solvency. 30 00:01:38,560 --> 00:01:42,480 Speaker 1: So the longer that this crisis continues UM, the more 31 00:01:42,720 --> 00:01:47,080 Speaker 1: at risk UM we see not just the economy, but 32 00:01:47,120 --> 00:01:49,720 Speaker 1: potentially even the market. So certainly the FED is going 33 00:01:49,720 --> 00:01:52,680 Speaker 1: to be there to provide the support in this in between, 34 00:01:53,120 --> 00:01:55,680 Speaker 1: but we really are going to have to get past 35 00:01:55,760 --> 00:01:59,200 Speaker 1: this pandemic phase and into an economic recovery so we 36 00:01:59,240 --> 00:02:02,960 Speaker 1: can forestall some of the solvency issues that can result 37 00:02:03,000 --> 00:02:07,080 Speaker 1: from a very prolonged um downturn. Katie, when do we 38 00:02:07,160 --> 00:02:09,960 Speaker 1: see price discovery or if we have seen it, will 39 00:02:10,000 --> 00:02:12,320 Speaker 1: we need to see, you know, the second round of 40 00:02:12,320 --> 00:02:14,640 Speaker 1: price discovery when the FED starts to back off a 41 00:02:14,639 --> 00:02:17,760 Speaker 1: little bit. Well, we don't think the Fed's going to 42 00:02:17,840 --> 00:02:21,120 Speaker 1: back off, um. And actually it's interesting, Um, there's been 43 00:02:21,160 --> 00:02:24,320 Speaker 1: sort of a a leveling off of there had been 44 00:02:24,360 --> 00:02:26,200 Speaker 1: a leveling off of the Fed's balance sheet over the 45 00:02:26,240 --> 00:02:27,799 Speaker 1: last couple of weeks, but we have seen it take 46 00:02:27,880 --> 00:02:30,600 Speaker 1: up um recently. So we don't think the Fed's going 47 00:02:30,639 --> 00:02:32,400 Speaker 1: to back off. And I think you're going to see 48 00:02:32,480 --> 00:02:35,520 Speaker 1: as soon as as there tends to be any price 49 00:02:35,560 --> 00:02:38,560 Speaker 1: discovery in the wrong direction, you'll see a doubling down 50 00:02:38,639 --> 00:02:42,160 Speaker 1: by by policymakers. Um. So we think that, you know, 51 00:02:42,240 --> 00:02:46,320 Speaker 1: that's certainly where we are right now. So okay, so 52 00:02:46,560 --> 00:02:49,800 Speaker 1: as we head into the meat of this earning season, Katie, 53 00:02:50,360 --> 00:02:51,880 Speaker 1: what are you kind of looking for here? I mean, 54 00:02:51,919 --> 00:02:54,280 Speaker 1: I guess the second quarter obviously is a throwaway quarter 55 00:02:54,320 --> 00:02:57,520 Speaker 1: for just about everybody. What are you really looking for? Yeah, 56 00:02:57,560 --> 00:02:59,919 Speaker 1: so it's a throwaway quarter in terms of the act 57 00:03:00,520 --> 00:03:04,040 Speaker 1: results because I think it's just such a wild card. Um. 58 00:03:04,120 --> 00:03:08,040 Speaker 1: So what we're looking for is we're listening to managements 59 00:03:08,120 --> 00:03:10,760 Speaker 1: were we're following the narrative on what they see in 60 00:03:10,880 --> 00:03:15,359 Speaker 1: terms of trends. Um, you know, are they seeing recoveries um, 61 00:03:15,400 --> 00:03:19,480 Speaker 1: are they seeing uh declines? UM, So we're really looking 62 00:03:19,520 --> 00:03:22,800 Speaker 1: to managements into the conference calls frankly to give us 63 00:03:22,800 --> 00:03:26,520 Speaker 1: some guidance. And Frankly, I think you know, as most 64 00:03:26,520 --> 00:03:30,000 Speaker 1: companies have pulled back on on giving forecasts and giving 65 00:03:30,760 --> 00:03:33,720 Speaker 1: estimates to Wall Street, everyone sort of playing playing in 66 00:03:33,760 --> 00:03:36,920 Speaker 1: the dark here. There's no informational advantage for anyone because 67 00:03:36,960 --> 00:03:39,360 Speaker 1: we're all sort of at the mercy of of the 68 00:03:39,800 --> 00:03:45,120 Speaker 1: track of the coronavirus and it's so uncertain. So what 69 00:03:45,240 --> 00:03:48,760 Speaker 1: happens with a portfolio at Northern Coast Wealth Management? I mean, 70 00:03:48,800 --> 00:03:51,880 Speaker 1: have you clients calling up and asking for you to 71 00:03:51,920 --> 00:03:54,760 Speaker 1: be proactive and to find them something a little bit 72 00:03:54,800 --> 00:03:56,920 Speaker 1: different at this time, Katie? Are they generally happy to 73 00:03:56,920 --> 00:03:59,720 Speaker 1: stick with the sort of longer term view that you 74 00:03:59,760 --> 00:04:04,240 Speaker 1: had before the pandemic? So funny, So our clients are 75 00:04:04,280 --> 00:04:07,760 Speaker 1: are are typically very long term oriented, and you know, 76 00:04:07,840 --> 00:04:11,120 Speaker 1: each of our portfolios is customized to each client's unique 77 00:04:11,160 --> 00:04:14,839 Speaker 1: goals and objectives. So our clients have full transparency into 78 00:04:14,880 --> 00:04:17,599 Speaker 1: why their portfolio is designed the way the way that 79 00:04:17,640 --> 00:04:20,159 Speaker 1: it is. And and it's been so interesting because during 80 00:04:20,240 --> 00:04:25,440 Speaker 1: the turmoil of UM of early twenty and into the 81 00:04:25,480 --> 00:04:28,520 Speaker 1: downturn and then obviously into the upturn, our clients were 82 00:04:29,000 --> 00:04:32,120 Speaker 1: very calm, Um, they were very confident in the long 83 00:04:32,240 --> 00:04:35,479 Speaker 1: term portfolio allocation. We didn't get panic phone calls and 84 00:04:35,520 --> 00:04:38,120 Speaker 1: we're not getting them right now. Um. I So I 85 00:04:38,120 --> 00:04:41,920 Speaker 1: think our clients are are are very uncomfortable sitting sitting 86 00:04:41,920 --> 00:04:45,440 Speaker 1: where they are now. That said, the longer that this 87 00:04:45,600 --> 00:04:48,560 Speaker 1: goes on, the more that the news on the pandemic 88 00:04:48,800 --> 00:04:52,120 Speaker 1: um is not in a positive direction, I think we 89 00:04:52,200 --> 00:04:55,880 Speaker 1: are starting to hear a little bit more about risk aversion. Um. 90 00:04:55,960 --> 00:04:58,400 Speaker 1: You know, do I have enough cash and fixed income 91 00:04:58,480 --> 00:05:02,000 Speaker 1: to sustain me through what could be a prolonged period 92 00:05:02,160 --> 00:05:05,719 Speaker 1: of uncertainty here? All right? So Katie, where are you 93 00:05:06,120 --> 00:05:09,480 Speaker 1: seeing the most opportunity here given kind of your economic outlook, 94 00:05:09,560 --> 00:05:14,120 Speaker 1: your outlook for the pandemic. Yeah, so our biggest overweight 95 00:05:14,120 --> 00:05:17,840 Speaker 1: from a tactical position right now is high yield. Um. 96 00:05:18,040 --> 00:05:21,400 Speaker 1: We think that the high old market is well supported. Uh. 97 00:05:21,440 --> 00:05:24,640 Speaker 1: Clearly we see a U shape recovery. We don't see 98 00:05:26,200 --> 00:05:29,880 Speaker 1: another economic downturn, so we do see a recovery over 99 00:05:29,920 --> 00:05:33,599 Speaker 1: a long term time horizon. Default rates have probably been 100 00:05:33,680 --> 00:05:37,560 Speaker 1: overstated in the market. UM. Fallen angel risk has certainly 101 00:05:37,600 --> 00:05:41,279 Speaker 1: been overstated in the market. So we are um pretty 102 00:05:41,279 --> 00:05:44,440 Speaker 1: comfortable with high yield. We are assuming you know, a 103 00:05:44,520 --> 00:05:46,640 Speaker 1: yield to worth here of you know, between six and 104 00:05:46,640 --> 00:05:48,760 Speaker 1: a half and seven percent. That's a pretty good risk 105 00:05:48,760 --> 00:05:52,440 Speaker 1: adjusted return over a twelve month time horizon for for investors. 106 00:05:52,480 --> 00:05:56,120 Speaker 1: So that's where we do see some value here. Katie Nixon, 107 00:05:56,120 --> 00:05:58,760 Speaker 1: thanks so much for joining us. We really appreciate your perspective. 108 00:05:58,839 --> 00:06:02,360 Speaker 1: As always, Katie nicks and, chief investment officer for Northern 109 00:06:02,360 --> 00:06:06,479 Speaker 1: Trust Wealth Management, giving us her thoughts on the market here, 110 00:06:06,520 --> 00:06:08,640 Speaker 1: and that gets uh the good folks at Northern Trust 111 00:06:08,760 --> 00:06:10,920 Speaker 1: Vannie looking for a U shaped recovery and that gives 112 00:06:10,960 --> 00:06:15,279 Speaker 1: them some support for selected areas within high yield. Yes, indeed, 113 00:06:15,320 --> 00:06:18,640 Speaker 1: it's an interesting one really because looking for a little 114 00:06:18,680 --> 00:06:21,520 Speaker 1: extra risk. Had a time when you would just imagine 115 00:06:21,520 --> 00:06:24,240 Speaker 1: that risk would be off the table. But because I've heard, 116 00:06:24,240 --> 00:06:26,960 Speaker 1: as you said, it's all getting back stopped, every part 117 00:06:27,000 --> 00:06:28,880 Speaker 1: of this, it's all getting back You're exactly right, and 118 00:06:29,200 --> 00:06:31,880 Speaker 1: I think backstopping not just equities, but kind of all 119 00:06:32,000 --> 00:06:35,480 Speaker 1: risk assets in general. And as Katie mentioned that default 120 00:06:35,560 --> 00:06:38,479 Speaker 1: risk remains relatively low in the high yield space, so 121 00:06:38,520 --> 00:06:40,880 Speaker 1: they are selectively taking a look there. Well. One of 122 00:06:40,880 --> 00:06:43,160 Speaker 1: the industries to be hit the hardest and certainly the 123 00:06:43,279 --> 00:06:47,160 Speaker 1: earliest from the economic impact of the pandemic was the 124 00:06:47,240 --> 00:06:50,640 Speaker 1: airline business. And now the question is, as the airline 125 00:06:50,760 --> 00:06:54,600 Speaker 1: start to add back flights slowly, to what extent can 126 00:06:54,760 --> 00:06:57,960 Speaker 1: the airlines ever recover, particularly as it relates to the 127 00:06:58,040 --> 00:07:01,240 Speaker 1: business flyer who was his jorically been the backbone and 128 00:07:01,279 --> 00:07:03,479 Speaker 1: the majority of the revenue for most airlines. Get a 129 00:07:03,480 --> 00:07:05,400 Speaker 1: sense of kind of where we are and how this 130 00:07:05,839 --> 00:07:09,279 Speaker 1: might play out, we welcome Brendon Case, Industrial Aerospace and Chemicals, 131 00:07:09,400 --> 00:07:11,680 Speaker 1: team leader for Bloomberg News. Brendan, thanks so much for 132 00:07:11,760 --> 00:07:14,840 Speaker 1: joining us here. You know, I live close to Newark Airport, 133 00:07:14,920 --> 00:07:18,160 Speaker 1: and I can tell you the traffic is still nowhere 134 00:07:18,280 --> 00:07:20,920 Speaker 1: near to what normal flows are. I just don't here 135 00:07:20,920 --> 00:07:23,600 Speaker 1: and see the planes overhead, and I guess that means 136 00:07:24,280 --> 00:07:26,679 Speaker 1: business folks aren't flying as much. They're not getting jumping 137 00:07:26,680 --> 00:07:29,880 Speaker 1: back on those planes, are they. Yeah, that's right. In fact, 138 00:07:29,960 --> 00:07:32,160 Speaker 1: nobody is flying that much these days. And a matter 139 00:07:32,200 --> 00:07:35,280 Speaker 1: of fact, I live close to Dallas Fort Worth Airport. 140 00:07:35,480 --> 00:07:38,480 Speaker 1: Um seeing exactly the same thing as you. Um, there's 141 00:07:38,480 --> 00:07:42,680 Speaker 1: been a big, big, collapse in in flying of all kinds. 142 00:07:42,720 --> 00:07:47,160 Speaker 1: But with this having lasted about four months now, the 143 00:07:47,800 --> 00:07:51,960 Speaker 1: big concern that's emerging for the for for the business 144 00:07:51,960 --> 00:07:55,960 Speaker 1: of airlines in the future is just whether you know 145 00:07:56,120 --> 00:07:59,000 Speaker 1: whether to what extent business travelers will come back. As 146 00:07:59,000 --> 00:08:01,720 Speaker 1: you say, it's always been the backbone of the industry. Um. 147 00:08:01,760 --> 00:08:05,920 Speaker 1: And yet many many of the nation's road warriors have 148 00:08:06,040 --> 00:08:10,320 Speaker 1: just may do with video conferencing or other tools, um 149 00:08:10,520 --> 00:08:13,760 Speaker 1: during the time when they can't travel. At the same time, 150 00:08:13,800 --> 00:08:15,640 Speaker 1: there will have to be some kind of resumption of 151 00:08:15,680 --> 00:08:17,560 Speaker 1: it at some point, right, I mean, how do you 152 00:08:17,760 --> 00:08:24,160 Speaker 1: do enough due diligence by zoom? Is it possible? It's 153 00:08:24,160 --> 00:08:30,200 Speaker 1: probably not possible to replace traveling entirely with something like zoom. 154 00:08:30,240 --> 00:08:34,560 Speaker 1: And I think that everyone agrees that business travel will 155 00:08:34,600 --> 00:08:37,319 Speaker 1: come back from the current levels which are which are 156 00:08:37,400 --> 00:08:41,000 Speaker 1: so low. Um, there's client meetings to be had, there's 157 00:08:41,040 --> 00:08:43,920 Speaker 1: sales to be made, uh, you name it. There's always 158 00:08:43,920 --> 00:08:48,520 Speaker 1: gonna be need for business travel. Um. Whether that gets 159 00:08:48,520 --> 00:08:53,640 Speaker 1: back to levels though, is another question. Entirely, there's sort 160 00:08:53,679 --> 00:08:57,760 Speaker 1: of a gathering consensus that maybe the industry doesn't get 161 00:08:57,760 --> 00:09:01,400 Speaker 1: back to that level, and even the CEO of Delta 162 00:09:01,679 --> 00:09:05,520 Speaker 1: that last week that that maybe the volumes don't come 163 00:09:05,520 --> 00:09:08,400 Speaker 1: back entirely. We should learn more this week with other 164 00:09:08,440 --> 00:09:11,600 Speaker 1: airlines reporting. So, Brendan, what do you think the airlines 165 00:09:11,640 --> 00:09:14,840 Speaker 1: are planning to do to the extent that the business 166 00:09:14,840 --> 00:09:17,439 Speaker 1: travel does not come back to the pre pandemic levels. 167 00:09:17,520 --> 00:09:21,160 Speaker 1: Is simply a function of shrinking their business, shrinking their 168 00:09:21,200 --> 00:09:24,960 Speaker 1: fleets that type of thing. Yeah, I think that probably 169 00:09:25,040 --> 00:09:28,720 Speaker 1: the game plan for the foreseeable future the next couple 170 00:09:28,760 --> 00:09:31,920 Speaker 1: of years UM is probably to become just much smaller 171 00:09:31,960 --> 00:09:34,920 Speaker 1: companies UM, take a lot of cost out. I think 172 00:09:34,960 --> 00:09:38,760 Speaker 1: we'll see a lot of employees leaving, many of them voluntarily. 173 00:09:39,160 --> 00:09:42,200 Speaker 1: Will learn a lot more about involuntary cuts UM in 174 00:09:42,280 --> 00:09:45,600 Speaker 1: October UM, and I think what you'll end up with 175 00:09:45,720 --> 00:09:48,720 Speaker 1: is airlines trying to get to a much smaller cost 176 00:09:48,800 --> 00:09:52,000 Speaker 1: dag UM and perhaps you know, being able to still 177 00:09:52,040 --> 00:09:54,840 Speaker 1: be profitable, but just as as smaller companies compared with 178 00:09:54,880 --> 00:10:00,240 Speaker 1: what they once were. So what airlines will benefit the most, 179 00:10:00,280 --> 00:10:04,480 Speaker 1: do you think, Brendan. Obviously the discount carriers will still 180 00:10:04,520 --> 00:10:07,760 Speaker 1: need to be discount carriers in some way, or do 181 00:10:07,800 --> 00:10:12,439 Speaker 1: we end up with sort of one one tier pricing. Yeah, 182 00:10:12,480 --> 00:10:15,079 Speaker 1: it's a great question. You know. An interesting and interesting 183 00:10:15,160 --> 00:10:18,000 Speaker 1: thing in terms of the way investors to you the 184 00:10:18,080 --> 00:10:23,000 Speaker 1: industry is that Southwest, which of course sort of pioneered 185 00:10:23,000 --> 00:10:26,400 Speaker 1: the discount model UM, is now a little more valuable 186 00:10:26,440 --> 00:10:32,120 Speaker 1: than than than Delta UM, which had always been you know, 187 00:10:32,120 --> 00:10:35,520 Speaker 1: known for a big focus on on business travel UM. 188 00:10:35,559 --> 00:10:38,320 Speaker 1: And I think that probably we will see more of 189 00:10:38,360 --> 00:10:43,920 Speaker 1: a shift to UH. You know that the discount model UM. 190 00:10:43,920 --> 00:10:48,079 Speaker 1: Certainly we won't lose the whole idea of business class 191 00:10:48,160 --> 00:10:53,360 Speaker 1: and and and premium seating UM. But on balance there 192 00:10:53,360 --> 00:10:55,640 Speaker 1: could be less of that in the industry than than 193 00:10:55,800 --> 00:11:00,640 Speaker 1: just you know, Coach Brendan, is there only concerning the 194 00:11:00,640 --> 00:11:03,640 Speaker 1: industry about we might see a major US airline at 195 00:11:03,640 --> 00:11:07,480 Speaker 1: some point go bankrupt should this lower level of travel continue. 196 00:11:08,559 --> 00:11:10,400 Speaker 1: You know, that's always been a concern. In fact, the 197 00:11:10,400 --> 00:11:14,520 Speaker 1: CEO of Boeing no less UH, sounded that warning earlier 198 00:11:14,559 --> 00:11:17,160 Speaker 1: this year. You know, the US government of course stepped 199 00:11:17,160 --> 00:11:21,240 Speaker 1: in with billions dollars of aid UM and the airline 200 00:11:21,320 --> 00:11:27,160 Speaker 1: since then have been caught in costs really aggressively. That said, UM, 201 00:11:27,200 --> 00:11:30,559 Speaker 1: it really just depends on how many passengers come back 202 00:11:30,640 --> 00:11:33,320 Speaker 1: at current levels. I think that there's no way the 203 00:11:33,360 --> 00:11:37,560 Speaker 1: industry could survive in its in its existing configuration. Um. 204 00:11:37,600 --> 00:11:41,800 Speaker 1: The hope would be that sometime by maybe next year, um, 205 00:11:41,920 --> 00:11:44,720 Speaker 1: you know, people start to come back a little more. Um, 206 00:11:44,760 --> 00:11:47,200 Speaker 1: even though the airlines themselves will tell you that they 207 00:11:47,200 --> 00:11:51,600 Speaker 1: don't expect a full recovery for another two or three years. Yeah, 208 00:11:51,720 --> 00:11:54,440 Speaker 1: it's it's really fascinating one because they do say that 209 00:11:54,559 --> 00:11:57,440 Speaker 1: they have military grade air conditioners and so on. But 210 00:11:57,520 --> 00:11:59,760 Speaker 1: you really have to wonder at what point people will 211 00:11:59,800 --> 00:12:02,880 Speaker 1: be comfortable regularly standing in line, going to an airport, 212 00:12:03,080 --> 00:12:06,400 Speaker 1: taking public transportation to and from an airport, and so on. 213 00:12:07,000 --> 00:12:10,360 Speaker 1: Our thanks to you, and we will keep on this. Obviously, 214 00:12:10,400 --> 00:12:14,040 Speaker 1: Brendon Case Industrial Aerospace and Chemicals team leader has a 215 00:12:14,080 --> 00:12:16,360 Speaker 1: lot of work ahead of him. Paul Sweeney, Paul, would 216 00:12:16,360 --> 00:12:18,480 Speaker 1: you be in time to take a flight? You know? 217 00:12:19,000 --> 00:12:20,920 Speaker 1: Not if I have to, I have to, I would, 218 00:12:21,480 --> 00:12:23,800 Speaker 1: But I just don't see that that risk reward right now. 219 00:12:24,440 --> 00:12:26,800 Speaker 1: It just isn't there for me. Yeah, it's and it's 220 00:12:26,800 --> 00:12:28,600 Speaker 1: exactly that, isn't it. It's how much risk are you 221 00:12:28,600 --> 00:12:30,720 Speaker 1: willing to take? And are you willing to you know, 222 00:12:30,760 --> 00:12:35,480 Speaker 1: sort of put another's way and if you know, if 223 00:12:35,520 --> 00:12:37,920 Speaker 1: taking a flight isn't necessary, then, I guess why would 224 00:12:37,960 --> 00:12:41,920 Speaker 1: you even consider doing it differently with the subway system 225 00:12:42,080 --> 00:12:44,560 Speaker 1: or other types of technology, Because at least in flights 226 00:12:44,559 --> 00:12:46,280 Speaker 1: it does seem like the air conditioning systems are a 227 00:12:46,320 --> 00:12:48,559 Speaker 1: little bit higher grade, more military grade and so on. 228 00:12:48,840 --> 00:12:50,680 Speaker 1: I think I'd be even less inclined to take a 229 00:12:50,720 --> 00:12:53,760 Speaker 1: subway right now. Yeah, exactly. And uh, you know, the 230 00:12:53,840 --> 00:12:55,960 Speaker 1: ridership on the MTA is down dramatically and they need 231 00:12:56,000 --> 00:12:59,160 Speaker 1: to help on this next fiscal stimulus plan. Yeah, for sure. 232 00:12:59,720 --> 00:13:01,839 Speaker 1: All we will continue to keep an eye on all 233 00:13:01,840 --> 00:13:06,640 Speaker 1: of the transportation options during this coronavirus and nightmare. This 234 00:13:07,040 --> 00:13:10,439 Speaker 1: is Bloomberg Markets with Paul Sweeney and Bunny Quinn on 235 00:13:10,559 --> 00:13:15,559 Speaker 1: Bloomberg Radio. Let's talk about mask wearing or lack thereof. 236 00:13:15,760 --> 00:13:18,120 Speaker 1: It's just an extraordinary story here. I'm just seeing that 237 00:13:18,160 --> 00:13:22,840 Speaker 1: in France today ordered mandatory mask use in indoor public spaces, 238 00:13:23,280 --> 00:13:26,199 Speaker 1: Hong Kong and Australia titan mask rules. So it seems 239 00:13:26,200 --> 00:13:28,120 Speaker 1: to be a global phenomenon that if you wear a mask, 240 00:13:28,200 --> 00:13:30,840 Speaker 1: and we hear that from the medical professionals and scientists, Uh, 241 00:13:30,960 --> 00:13:33,600 Speaker 1: that is a good way to fight the spread of 242 00:13:33,640 --> 00:13:36,400 Speaker 1: the COVID virus. Yet here in the United States not 243 00:13:36,520 --> 00:13:39,400 Speaker 1: so much the case. It's actually become very politicized. To 244 00:13:39,440 --> 00:13:42,120 Speaker 1: get a sense of kind of what's driving that, we 245 00:13:42,120 --> 00:13:46,360 Speaker 1: welcome Bloomberg Opinion editor Frank Wilkinson, Frank, thanks, thanks so 246 00:13:46,480 --> 00:13:49,040 Speaker 1: much for joining us here. How did this war on 247 00:13:49,280 --> 00:13:53,920 Speaker 1: mask really develop in the US? Well, I think it's 248 00:13:53,920 --> 00:13:57,640 Speaker 1: a pretty complicated phenomenon, so I hesitate to give you 249 00:13:57,640 --> 00:14:01,000 Speaker 1: one answer for that, but uh, obviously it has a 250 00:14:01,160 --> 00:14:08,800 Speaker 1: very significant political component, which stands from President Trump's resistance 251 00:14:08,880 --> 00:14:14,160 Speaker 1: to masks, and it also has a psychological component that's 252 00:14:14,160 --> 00:14:16,720 Speaker 1: a little bit harder to grapple with. I just saw 253 00:14:16,760 --> 00:14:21,240 Speaker 1: something today about a I just saw something today about 254 00:14:21,280 --> 00:14:24,920 Speaker 1: a store in northern California that refuses to serve people 255 00:14:24,920 --> 00:14:29,280 Speaker 1: who wear masks. So this is not about personal notions 256 00:14:29,280 --> 00:14:34,080 Speaker 1: of liberty. This is really about a kind of a 257 00:14:34,120 --> 00:14:40,880 Speaker 1: group political resistance to, you know, to a partisan idea 258 00:14:41,000 --> 00:14:45,280 Speaker 1: in their heads. Will it extend to other things? So 259 00:14:45,320 --> 00:14:48,080 Speaker 1: I think there's a little bit of trepidation out there 260 00:14:48,120 --> 00:14:50,080 Speaker 1: that if we do end up getting a vaccine or 261 00:14:50,120 --> 00:14:53,640 Speaker 1: several vaccines that work, or that may work, that many 262 00:14:53,680 --> 00:14:56,320 Speaker 1: people will decide that they don't want to participate either, 263 00:14:56,360 --> 00:15:00,880 Speaker 1: and that will have an impact on how much they function. Well, 264 00:15:00,920 --> 00:15:04,840 Speaker 1: that's a pretty horrifying prospect um. There obviously is a 265 00:15:04,920 --> 00:15:09,120 Speaker 1: pretty strong anti vax movement in the United States and 266 00:15:09,120 --> 00:15:13,440 Speaker 1: in other countries as well. We have seen UH state 267 00:15:13,480 --> 00:15:17,520 Speaker 1: public health UH facilities be able to deal with that, 268 00:15:17,640 --> 00:15:23,040 Speaker 1: you know, with legislation UH in California, for instance, mandating 269 00:15:23,080 --> 00:15:27,640 Speaker 1: a certain amount of vaccine for kids going to school, 270 00:15:27,720 --> 00:15:30,360 Speaker 1: so they really restrict the number of parents who can 271 00:15:30,400 --> 00:15:34,720 Speaker 1: opt out. And those things are are you know, potentially 272 00:15:34,760 --> 00:15:38,200 Speaker 1: going to come into play here. I don't know exactly 273 00:15:38,440 --> 00:15:41,360 Speaker 1: what the lay of the land will be on that 274 00:15:41,480 --> 00:15:43,600 Speaker 1: we have to see. We don't know who the president 275 00:15:43,600 --> 00:15:46,760 Speaker 1: will be, We don't know what the political context will be, 276 00:15:46,880 --> 00:15:51,960 Speaker 1: so I hesitate to draw conclusions about that yet. So 277 00:15:52,080 --> 00:15:55,720 Speaker 1: it's just something that you're reporting indicates, you know, if 278 00:15:55,800 --> 00:16:01,160 Speaker 1: there were strong, consistent messaging from the White House or 279 00:16:01,200 --> 00:16:03,800 Speaker 1: just from the federal government in general, that this issue 280 00:16:03,800 --> 00:16:05,840 Speaker 1: could have been mitigated somewhat here in the US, or 281 00:16:05,880 --> 00:16:10,360 Speaker 1: resist just the way we're wired here. Well, I think 282 00:16:10,360 --> 00:16:12,120 Speaker 1: there are two things. I think it's the way some 283 00:16:12,160 --> 00:16:15,600 Speaker 1: people are wired, and I think they got reinforcement. Uh 284 00:16:15,760 --> 00:16:18,160 Speaker 1: for that wiring from the President of the United States, 285 00:16:18,160 --> 00:16:23,560 Speaker 1: who obviously is a very significant modeler of behavior. Uh. 286 00:16:23,960 --> 00:16:28,960 Speaker 1: The President even yesterday, in his interview that was broadcast 287 00:16:29,000 --> 00:16:33,000 Speaker 1: with Fox News, was completely all over the map on 288 00:16:33,240 --> 00:16:36,479 Speaker 1: mass saying, you know, they're fine, but he's also resistant 289 00:16:36,520 --> 00:16:40,120 Speaker 1: and Dr Fauci resisted them at first, So he's still 290 00:16:40,200 --> 00:16:43,520 Speaker 1: not giving a clear message about masks. What we have 291 00:16:43,760 --> 00:16:48,280 Speaker 1: seen is they are rising in use, even among Republicans. 292 00:16:48,280 --> 00:16:51,440 Speaker 1: So even in the last few weeks, according to polls, 293 00:16:51,880 --> 00:16:56,360 Speaker 1: you're seeing increased use among Democrats, independence and Republicans. Still 294 00:16:56,440 --> 00:17:01,360 Speaker 1: lowest among Republicans, which points to the partist and problem, 295 00:17:01,400 --> 00:17:06,040 Speaker 1: but it is rising. So somewhere along the line, uh, 296 00:17:06,640 --> 00:17:08,960 Speaker 1: in states in particular, I mean you've got you know, 297 00:17:09,040 --> 00:17:12,560 Speaker 1: Republican governors like the governor of Ohio, who have been 298 00:17:12,680 --> 00:17:15,560 Speaker 1: pretty good on this from the beginning. Uh. So it's 299 00:17:15,640 --> 00:17:18,719 Speaker 1: really more of a problem focused in some areas, like 300 00:17:18,760 --> 00:17:21,400 Speaker 1: the governor of Georgia and in the White House itself. 301 00:17:22,320 --> 00:17:26,240 Speaker 1: So at some point will all of the municipalities, governors, 302 00:17:26,240 --> 00:17:30,320 Speaker 1: mayors and everything be almost forced into making a public 303 00:17:30,800 --> 00:17:33,639 Speaker 1: wearing of the mask. I mean the president finally it 304 00:17:33,640 --> 00:17:36,639 Speaker 1: took a long time. But you know, at an event recently, 305 00:17:36,680 --> 00:17:38,359 Speaker 1: the President did wear a mask and said he had 306 00:17:38,400 --> 00:17:42,040 Speaker 1: no problem with wearing masks. Well, but he clearly does 307 00:17:42,080 --> 00:17:46,080 Speaker 1: have a problem with wearing a mask because he refused 308 00:17:46,080 --> 00:17:47,760 Speaker 1: to do it again, and then again he gave a 309 00:17:47,800 --> 00:17:52,160 Speaker 1: muddled answer to to Fox News. So what we saw 310 00:17:52,480 --> 00:17:59,200 Speaker 1: last week in Georgia was Governor Kemp overriding localities municipalities 311 00:17:59,240 --> 00:18:03,879 Speaker 1: saying they could not enforce a mask plan. So, you know, 312 00:18:04,280 --> 00:18:06,560 Speaker 1: we're not out of the woods on the politics of 313 00:18:06,680 --> 00:18:09,960 Speaker 1: this yet. There are a lot of Republican governors and 314 00:18:11,000 --> 00:18:14,400 Speaker 1: mayors to extend or mayors who are going their own 315 00:18:14,440 --> 00:18:18,960 Speaker 1: way on this, resisting the White House track. But you've 316 00:18:18,960 --> 00:18:22,119 Speaker 1: got the governor of a very large state, Georgia, just 317 00:18:22,240 --> 00:18:28,080 Speaker 1: reinforcing behavior that public health officials pretty much unanimously tell 318 00:18:28,160 --> 00:18:32,320 Speaker 1: us now is very important to contain the pandemic. Yeah, 319 00:18:32,359 --> 00:18:34,480 Speaker 1: it seems like there's needs to be some leadership. I'm 320 00:18:34,600 --> 00:18:36,400 Speaker 1: just not sure at what level because I look look 321 00:18:36,440 --> 00:18:40,320 Speaker 1: at your column, Frank. I mean, even within southern California, 322 00:18:40,359 --> 00:18:43,720 Speaker 1: Orange County, the schools there we're going to reopen and 323 00:18:43,800 --> 00:18:47,400 Speaker 1: you don't have to wear masks, whereas neighboring San Diego 324 00:18:47,520 --> 00:18:50,880 Speaker 1: in Los Angeles, they're not gonna open. So I mean, 325 00:18:50,960 --> 00:18:54,399 Speaker 1: just within that very close regional area of southern California, 326 00:18:54,840 --> 00:18:59,639 Speaker 1: widely different policies. Well, you have widely different politics. You know, 327 00:18:59,720 --> 00:19:07,200 Speaker 1: there's still a pretty strong conservative basis in in Orange County. Um, 328 00:19:07,240 --> 00:19:10,320 Speaker 1: it's changed a lot. A lot of Democrats flip seats 329 00:19:10,320 --> 00:19:15,480 Speaker 1: in Orange County and the Congress in but that particular board, 330 00:19:15,560 --> 00:19:19,800 Speaker 1: which which cannot mandate what happens in Orange County, is 331 00:19:20,200 --> 00:19:24,800 Speaker 1: really offering recommendations. But that particular board is dominated by 332 00:19:24,840 --> 00:19:30,400 Speaker 1: local Republicans, and those Republicans are following the path of 333 00:19:30,600 --> 00:19:33,520 Speaker 1: Donald Trump and and and camp in Georgia and not 334 00:19:34,480 --> 00:19:37,080 Speaker 1: people like the Ohio governor and others who you know 335 00:19:37,200 --> 00:19:42,200 Speaker 1: are really trying to grapple with the problem directly. So 336 00:19:42,400 --> 00:19:44,960 Speaker 1: what about the other countries. I mean, if you know, 337 00:19:45,040 --> 00:19:47,320 Speaker 1: Hong Kong has gone back on lockdown and so on. 338 00:19:47,760 --> 00:19:50,159 Speaker 1: The places like Asia never had a problem wearing masks. 339 00:19:50,200 --> 00:19:54,119 Speaker 1: They were pretty you know, happy to embrace mask wearing 340 00:19:54,240 --> 00:19:57,880 Speaker 1: even in regular times. Do you ever foresee a time 341 00:19:57,920 --> 00:20:00,200 Speaker 1: when that becomes the norm in the United State. It's 342 00:20:01,680 --> 00:20:04,760 Speaker 1: it's hard to see. But I also don't have a 343 00:20:04,880 --> 00:20:07,920 Speaker 1: vision of what kind of pandemics we're going to face 344 00:20:08,040 --> 00:20:12,040 Speaker 1: over the next years. I think it really Again, it 345 00:20:12,119 --> 00:20:14,600 Speaker 1: depends on a couple of things. It depends on the 346 00:20:14,680 --> 00:20:18,480 Speaker 1: health threat, and it depends a lot on the political context. 347 00:20:18,520 --> 00:20:21,880 Speaker 1: I mean, obviously, if George W. Bush were the president 348 00:20:21,960 --> 00:20:25,920 Speaker 1: now or Barack Obama were the president now, they would 349 00:20:25,920 --> 00:20:28,400 Speaker 1: be dealing with this in a very different way than 350 00:20:28,440 --> 00:20:31,720 Speaker 1: Donald Trump. Uh, Donald Trump. I mean, let's just to 351 00:20:31,880 --> 00:20:36,840 Speaker 1: take the basic realities of this situation. For Trump, this 352 00:20:37,400 --> 00:20:42,200 Speaker 1: virus is killing people, it's damaging the economy, and it's 353 00:20:42,320 --> 00:20:49,520 Speaker 1: frankly destroying his reelection campaign, and yet he is unable psychologically, 354 00:20:49,560 --> 00:20:52,520 Speaker 1: appears unable to come to grips with it in any 355 00:20:52,600 --> 00:20:57,320 Speaker 1: kind of reasonable fashion. It is wonderful to speak with you, 356 00:20:57,400 --> 00:21:00,639 Speaker 1: looking forward to the next time. Frank Wilkinson is Bloomberg 357 00:21:00,640 --> 00:21:05,040 Speaker 1: Opinion editor, writes editorials and politics and US domestic policy primarily, 358 00:21:05,119 --> 00:21:07,479 Speaker 1: and his latest one, the War in Masks is another 359 00:21:07,520 --> 00:21:12,040 Speaker 1: lost Cause is out right down. This is Bloomberg Markets 360 00:21:12,040 --> 00:21:16,080 Speaker 1: with Paul Sweeney and Vanny Quinn on Bloomberg Radio. We 361 00:21:16,320 --> 00:21:18,840 Speaker 1: saw that big deal today's Chevron buying Noble for five 362 00:21:18,880 --> 00:21:22,399 Speaker 1: billion dollars effectively. Mike Worth, the CEO, saying, yeah, you know, 363 00:21:22,440 --> 00:21:25,359 Speaker 1: it was an attractive asset at a very attractive price. 364 00:21:25,400 --> 00:21:28,000 Speaker 1: And that reflects the fact that the energy patch, the 365 00:21:28,040 --> 00:21:31,119 Speaker 1: U S energy patch has been hit brutally hard for 366 00:21:31,359 --> 00:21:34,399 Speaker 1: by this pandemic and the economic impact. But we had 367 00:21:34,440 --> 00:21:36,520 Speaker 1: got a little piece of bright news today. In addition 368 00:21:36,560 --> 00:21:39,240 Speaker 1: to that M and A trade Halliburton, the big oil 369 00:21:39,280 --> 00:21:43,359 Speaker 1: services provider, provided some pretty good numbers today, the stocks 370 00:21:43,400 --> 00:21:45,280 Speaker 1: up six percent. To break it all down, we welcome 371 00:21:45,480 --> 00:21:49,800 Speaker 1: Scott Levine. He covers all things energy force for Bloomberg Intelligence. 372 00:21:49,800 --> 00:21:53,040 Speaker 1: So Scott, let's start with Halliburton here, stocks up six percent. 373 00:21:53,200 --> 00:21:55,520 Speaker 1: So I guess the street likes what they heard. What 374 00:21:55,560 --> 00:22:00,399 Speaker 1: were your takeaways? Yeah, I think the news basedly from 375 00:22:00,400 --> 00:22:04,680 Speaker 1: a macro standpoint. You know, while obviously weak in alignment, 376 00:22:04,720 --> 00:22:08,520 Speaker 1: the operating environment probably not weaker than expected. Revenue fell 377 00:22:08,560 --> 00:22:11,320 Speaker 1: short by about a hundred million, but more importantly, from 378 00:22:11,320 --> 00:22:16,240 Speaker 1: an earning standpoint, a pretty big beat, primarily driven by 379 00:22:16,280 --> 00:22:21,119 Speaker 1: cost controls and uh they're decremental margins or the amount 380 00:22:21,160 --> 00:22:24,160 Speaker 1: of earnings UH they lose per dollar of revenue lost. 381 00:22:24,680 --> 00:22:28,960 Speaker 1: UH reflected that cost control decremental margins were only fifteen percent, 382 00:22:29,880 --> 00:22:32,280 Speaker 1: which was lower than expected, so they're about seventy five 383 00:22:32,320 --> 00:22:35,199 Speaker 1: percent of the way through a cost savings program they 384 00:22:35,240 --> 00:22:38,639 Speaker 1: announced in April, which drove the upside of the earnings. 385 00:22:38,760 --> 00:22:41,600 Speaker 1: And equally important, if not more important, the free cash 386 00:22:41,600 --> 00:22:44,760 Speaker 1: flow was a big beat at four hundred and fifty 387 00:22:44,800 --> 00:22:49,120 Speaker 1: six million dollars, reflecting not just the sixty percent reduction 388 00:22:49,160 --> 00:22:52,640 Speaker 1: in capetes year over year, but an increase in operating 389 00:22:52,640 --> 00:22:55,520 Speaker 1: cash flow as well. So, you know, all in much 390 00:22:55,600 --> 00:22:59,639 Speaker 1: better earnings performance and free cash flow performance on a 391 00:22:59,680 --> 00:23:02,440 Speaker 1: sleigh be weak or top line than than was expected. 392 00:23:03,640 --> 00:23:06,040 Speaker 1: How will the two companies be looking at the deal 393 00:23:06,080 --> 00:23:08,399 Speaker 1: that was done today and will either of them be 394 00:23:08,440 --> 00:23:11,639 Speaker 1: in a position at some point to you know, help 395 00:23:11,640 --> 00:23:15,639 Speaker 1: out in terms of consolidation. Yeah. No, I think that 396 00:23:15,800 --> 00:23:19,680 Speaker 1: the market environment in general is pretty still pretty unsettled, 397 00:23:19,840 --> 00:23:23,280 Speaker 1: so I don't expect a lot of m and A 398 00:23:23,480 --> 00:23:27,120 Speaker 1: and attrition while the market is in this period of disruption. 399 00:23:27,640 --> 00:23:31,159 Speaker 1: I would think any dealmaking would likely be opportunistic and 400 00:23:31,640 --> 00:23:35,560 Speaker 1: one off in nature. Uh, but you know, incourage on 401 00:23:35,600 --> 00:23:39,280 Speaker 1: the encouraging side. Uh. The outlook for the second half 402 00:23:39,320 --> 00:23:42,240 Speaker 1: of this year, Uh, you know, a little bit lower 403 00:23:42,240 --> 00:23:47,359 Speaker 1: than I think was initially expected. Haliburton indicated today UH 404 00:23:47,400 --> 00:23:52,800 Speaker 1: that they see international spending down for the full year UH. 405 00:23:52,840 --> 00:23:56,800 Speaker 1: Previously they were expecting down ten UH. North America is 406 00:23:56,840 --> 00:24:00,399 Speaker 1: still expected to be down about fift so MAR generally 407 00:24:00,480 --> 00:24:04,320 Speaker 1: weak or do primarily to weakness in Latin America, but 408 00:24:04,400 --> 00:24:08,320 Speaker 1: the environment seemed to be stabilizing. They do expect the 409 00:24:08,400 --> 00:24:11,760 Speaker 1: rick count to stabilize or bottom in the third quarter, 410 00:24:11,840 --> 00:24:15,399 Speaker 1: and completion activity or pressure pumping or fracking, whatever you 411 00:24:15,440 --> 00:24:17,920 Speaker 1: want to call it, I expect to be up marginally 412 00:24:17,920 --> 00:24:20,159 Speaker 1: in the third quarter as well. So the industry environment 413 00:24:20,200 --> 00:24:23,320 Speaker 1: does seem to be stabilizing, and once it does, albeit 414 00:24:23,359 --> 00:24:25,159 Speaker 1: at very low levels, I think maybe you start to 415 00:24:25,200 --> 00:24:28,879 Speaker 1: see deal activity pick up a bit more. So, Scott, 416 00:24:28,920 --> 00:24:32,840 Speaker 1: if youra these oil SPI oil services providers like Haliburton 417 00:24:32,840 --> 00:24:35,520 Speaker 1: and Schlumberge, which end reports later this week, do you 418 00:24:35,560 --> 00:24:38,280 Speaker 1: just when you see oil crater like we did see 419 00:24:38,280 --> 00:24:40,960 Speaker 1: it back in the March April time frame, we're still 420 00:24:40,960 --> 00:24:43,920 Speaker 1: here at forty dollars on w T I is your 421 00:24:44,000 --> 00:24:46,440 Speaker 1: only strategy there, I means your only course of action 422 00:24:46,520 --> 00:24:50,800 Speaker 1: to just cut your expenses operating expenses and capital expenses 423 00:24:50,880 --> 00:24:54,000 Speaker 1: and cash flow outputs like dividends. Is that really the 424 00:24:54,000 --> 00:24:57,800 Speaker 1: tried and true strategy here, I think it is maybe 425 00:24:57,800 --> 00:25:02,280 Speaker 1: one small caveat Hall and and And And you're hearing Haliburn 426 00:25:02,320 --> 00:25:05,480 Speaker 1: emphasize their investment in digital. Now, obviously they're going to 427 00:25:05,600 --> 00:25:08,639 Speaker 1: crack down on all investments in order to survive the storm. 428 00:25:08,640 --> 00:25:11,160 Speaker 1: That's the most important thing. But the one thing they're 429 00:25:11,200 --> 00:25:15,440 Speaker 1: emphasizing still, and I think you'll hear slumbers A emphasize 430 00:25:15,480 --> 00:25:18,240 Speaker 1: on Friday when they report earnings as well, is the 431 00:25:18,280 --> 00:25:21,719 Speaker 1: longer term commitments to the digital strategy, because they do 432 00:25:21,880 --> 00:25:25,159 Speaker 1: see that as being central to the value proposition that 433 00:25:25,200 --> 00:25:29,399 Speaker 1: they offer the the upstream oil and gas producers in 434 00:25:29,480 --> 00:25:32,080 Speaker 1: order to do what they do more efficiently and productively. 435 00:25:32,520 --> 00:25:34,840 Speaker 1: So I think the idea here is battened down the hatches, 436 00:25:34,880 --> 00:25:39,080 Speaker 1: cut costs UH to the minimum level possible while the 437 00:25:39,200 --> 00:25:43,359 Speaker 1: environment stabilizes. But at the same time, and the investments 438 00:25:43,359 --> 00:25:46,679 Speaker 1: and the focus on the digital drilling and remote drilling 439 00:25:46,720 --> 00:25:49,639 Speaker 1: and all these things that help their customers save money, 440 00:25:50,560 --> 00:25:53,240 Speaker 1: because that, you know, is essentially the reason for being 441 00:25:53,359 --> 00:25:57,440 Speaker 1: is helping oil and gas producers drill, frack and UH 442 00:25:57,680 --> 00:26:01,400 Speaker 1: produce more efficiently. So you know, at the very least, uh, 443 00:26:01,520 --> 00:26:04,520 Speaker 1: you know, commentary to that effect. Uh, you know, while 444 00:26:04,600 --> 00:26:09,520 Speaker 1: they maintain a capital preservation strategy, uh, in anticipation of 445 00:26:09,520 --> 00:26:13,040 Speaker 1: an ultimate recovery Scott, Do these companies watch OPEQUE and 446 00:26:13,040 --> 00:26:16,679 Speaker 1: OPEC plus anymore? Is it a player you know, to 447 00:26:16,720 --> 00:26:18,679 Speaker 1: the extent that it used to be for US companies 448 00:26:18,680 --> 00:26:22,399 Speaker 1: at least? Yeah. No, But it's interesting, uh, you know, 449 00:26:22,520 --> 00:26:26,000 Speaker 1: in that the last couple of years, you know, North 450 00:26:26,080 --> 00:26:29,480 Speaker 1: America has been much more of a focus Foannie. Uh. 451 00:26:29,560 --> 00:26:32,720 Speaker 1: And and we saw you know, an increase, much bigger 452 00:26:32,720 --> 00:26:36,520 Speaker 1: increase in North America eighteen as the industry came out 453 00:26:36,520 --> 00:26:40,480 Speaker 1: of the twenties fifteen sixteen downturn. Last year, you saw 454 00:26:40,560 --> 00:26:45,600 Speaker 1: North America really pulled back even before the COVID nineteen outbreak. 455 00:26:45,880 --> 00:26:47,560 Speaker 1: And I think a lot of this focus on North 456 00:26:47,600 --> 00:26:50,879 Speaker 1: America suggested that OPEC uh an open plus was a 457 00:26:50,960 --> 00:26:55,119 Speaker 1: much more marginal player. Uh, you know, obviously them, you know, 458 00:26:55,160 --> 00:26:59,080 Speaker 1: the initial tussle between Saudi and Arabia and Russia. Uh, 459 00:26:59,119 --> 00:27:01,760 Speaker 1: you know, simultane us with the COVID nineteen outbreak was 460 00:27:01,800 --> 00:27:05,720 Speaker 1: as much a factor in the commodity markets breaking down 461 00:27:05,720 --> 00:27:09,480 Speaker 1: in the industry outlook darkening UH as as was the 462 00:27:10,040 --> 00:27:13,120 Speaker 1: dimmer economic outlook. Now obviously they've gotten on the same 463 00:27:13,480 --> 00:27:16,280 Speaker 1: page since then, and we saw most recently in agreement 464 00:27:16,320 --> 00:27:20,040 Speaker 1: to the start to tape or production cuts UH going 465 00:27:20,119 --> 00:27:23,960 Speaker 1: forward as the economy starts to come out of the 466 00:27:24,280 --> 00:27:27,320 Speaker 1: of the crisis. But UH, I think that does suggest 467 00:27:27,359 --> 00:27:32,080 Speaker 1: that OPEC and OPEC plus is still a very important consortium, 468 00:27:32,200 --> 00:27:35,800 Speaker 1: and probably as North America has pulled back, it's become 469 00:27:35,880 --> 00:27:37,800 Speaker 1: even more the case. So yes, I think of the 470 00:27:37,840 --> 00:27:41,040 Speaker 1: answer your questions. Thank you so much. That is Scott Levine, 471 00:27:41,040 --> 00:27:45,119 Speaker 1: analyst for Bloomberg Intelligence, joining us there on slammerg and Halliburton. 472 00:27:46,600 --> 00:27:50,000 Speaker 1: Thanks for listening to Boomberg Markets podcast. You can subscribe 473 00:27:50,040 --> 00:27:53,600 Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast 474 00:27:53,600 --> 00:27:56,840 Speaker 1: platform you prefer. I'm Bonny Quinn. I'm on Twitter at 475 00:27:56,880 --> 00:28:00,359 Speaker 1: Bonny Quinn. Sweeney I'm on Twitter at pt Sweeney. Before 476 00:28:00,400 --> 00:28:03,560 Speaker 1: the podcast, you can always catch us worldwide at Bloomberg Radio.