1
00:00:13,320 --> 00:00:16,360
Speaker 1: This is Wall Street Week. I'm David Weston bringing you

2
00:00:16,600 --> 00:00:20,959
Speaker 1: stories of capitalism, whether it's DEI or electric vehicles or

3
00:00:20,960 --> 00:00:24,360
Speaker 1: the rush to southern Florida. Every week we see some

4
00:00:24,520 --> 00:00:27,720
Speaker 1: crowded trades getting reversed. We tell the story of what

5
00:00:27,840 --> 00:00:32,000
Speaker 1: happens when the bandwagon everyone jumped on suddenly slows down.

6
00:00:32,560 --> 00:00:36,360
Speaker 1: And Drill Baby Drill is another theme of the Trump administration.

7
00:00:36,840 --> 00:00:39,440
Speaker 1: But it's not at all clear that the oil companies

8
00:00:39,560 --> 00:00:43,600
Speaker 1: and their shareholders will be joining in the chant. But

9
00:00:43,680 --> 00:00:46,040
Speaker 1: we begin with the big story of the week for

10
00:00:46,080 --> 00:00:46,960
Speaker 1: Global Wall Street.

11
00:00:47,320 --> 00:00:50,120
Speaker 2: You see weaker growth but higher inflation they kind of

12
00:00:50,120 --> 00:00:53,440
Speaker 2: offset and also, frankly, a little bit of inertia when

13
00:00:53,479 --> 00:00:56,240
Speaker 2: it comes to changing something in this highly uncertain environment.

14
00:00:56,600 --> 00:00:59,040
Speaker 2: You know, I think there is a level of inertia

15
00:00:59,040 --> 00:01:00,920
Speaker 2: where you just say, maybe I'll day where I am.

16
00:01:01,240 --> 00:01:04,840
Speaker 2: Inflation has started to move up now, we think, partly

17
00:01:04,840 --> 00:01:08,800
Speaker 2: in response to tariffs, and there may be a delay

18
00:01:08,840 --> 00:01:11,560
Speaker 2: in further progress over the course of this year. It

19
00:01:11,600 --> 00:01:14,000
Speaker 2: can be the case that it's appropriate sometimes to look

20
00:01:14,040 --> 00:01:17,280
Speaker 2: through inflation if it's going to go away quickly without

21
00:01:17,319 --> 00:01:20,800
Speaker 2: action by us, if it's transitory, and that can be

22
00:01:20,840 --> 00:01:25,200
Speaker 2: the case in the case of tariff inflation. I think

23
00:01:25,200 --> 00:01:30,680
Speaker 2: that would depend on the tariff inflation moving through fairly quickly,

24
00:01:30,720 --> 00:01:34,040
Speaker 2: and would depend critically as well on inflation expectations being

25
00:01:34,360 --> 00:01:35,000
Speaker 2: well anchored.

26
00:01:35,560 --> 00:01:39,039
Speaker 1: Larrus Sommerso Harvard is our special contributor here on Wall

27
00:01:39,040 --> 00:01:39,559
Speaker 1: Street Week.

28
00:01:42,240 --> 00:01:44,240
Speaker 3: He should be focused on the fact that we had

29
00:01:44,280 --> 00:01:48,960
Speaker 3: a shock that pushed inflation up and growth down, and

30
00:01:49,440 --> 00:01:53,440
Speaker 3: that's a bad supply shock, that's a self inflicted wound,

31
00:01:53,840 --> 00:01:56,120
Speaker 3: and it tells us that policy is moving in the

32
00:01:56,160 --> 00:02:01,040
Speaker 3: wrong direction, and it's a shot against the bat of

33
00:02:01,080 --> 00:02:05,840
Speaker 3: the Trump tariff policies, which clearly have materially changed the

34
00:02:05,920 --> 00:02:08,800
Speaker 3: picture in a way that the FED is seeing both

35
00:02:08,800 --> 00:02:14,359
Speaker 3: as more uncertain and more problematic on both their key objectives.

36
00:02:15,560 --> 00:02:17,760
Speaker 1: I was struck by the fact that in the projections,

37
00:02:18,120 --> 00:02:21,040
Speaker 1: the growth projections were taken down not just for twenty five,

38
00:02:21,080 --> 00:02:23,600
Speaker 1: but twenty six and twenty seven as well. On the

39
00:02:23,600 --> 00:02:27,000
Speaker 1: inflation side, it was really mainly in twenty five, And

40
00:02:27,080 --> 00:02:30,560
Speaker 1: you heard chair Pal say maybe the effects are transitory,

41
00:02:30,639 --> 00:02:32,000
Speaker 1: using that word we've heard before.

42
00:02:33,440 --> 00:02:37,720
Speaker 3: I would have thought the chairman would retire the words translittory.

43
00:02:38,440 --> 00:02:44,560
Speaker 3: That is perhaps the most notoriously ill chosen phrase of

44
00:02:44,600 --> 00:02:48,760
Speaker 3: his excellent seven and a half year run as FED chair,

45
00:02:49,400 --> 00:02:55,120
Speaker 3: and so I was astonished to see him resurrect that

46
00:02:55,400 --> 00:02:59,280
Speaker 3: concept he might turn out to be right, particularly if

47
00:02:59,280 --> 00:03:04,040
Speaker 3: the economy suffers a recession. It's conceivable that the economy

48
00:03:04,040 --> 00:03:07,360
Speaker 3: won't suffer a recession and he'll turn out to be right,

49
00:03:07,880 --> 00:03:10,400
Speaker 3: but it's certainly not something that I would want to

50
00:03:11,639 --> 00:03:15,799
Speaker 3: bank on. There's another point that I think most observers

51
00:03:15,840 --> 00:03:19,040
Speaker 3: have missed, which is if you look at the dot plot,

52
00:03:19,560 --> 00:03:24,120
Speaker 3: the median, the person in the middle on interest rates

53
00:03:24,680 --> 00:03:29,680
Speaker 3: has not changed. That's what everybody's highlighted. But the average,

54
00:03:30,040 --> 00:03:33,600
Speaker 3: if you just take an average of everybody's forecast, that's

55
00:03:33,680 --> 00:03:37,880
Speaker 3: moved up a fair amount in the last few months,

56
00:03:38,440 --> 00:03:42,520
Speaker 3: reflecting the fact that with these tariffs, with the inflation

57
00:03:42,680 --> 00:03:46,400
Speaker 3: they're bringing, there's less confidence on the part of the

58
00:03:46,440 --> 00:03:48,480
Speaker 3: FED that they're going to be able to cut rates,

59
00:03:49,080 --> 00:03:54,840
Speaker 3: even as there's a prediction of more cyclical weakness in

60
00:03:54,920 --> 00:04:00,240
Speaker 3: the economy. So this is clearly a more worrying picture

61
00:04:00,440 --> 00:04:03,920
Speaker 3: than we had in December. And there's only been one

62
00:04:03,960 --> 00:04:10,200
Speaker 3: important change, and that's been the change in tariff policy,

63
00:04:10,240 --> 00:04:14,040
Speaker 3: and more broadly, the political approach to economics.

64
00:04:14,880 --> 00:04:17,320
Speaker 1: One of the themes throughout what cher Pal had to

65
00:04:17,320 --> 00:04:20,520
Speaker 1: say was uncertainty. Because there's the concern about what is

66
00:04:20,680 --> 00:04:23,679
Speaker 1: being done, there's also the concern about what we don't

67
00:04:23,720 --> 00:04:26,479
Speaker 1: know around the corner. We have an enormous uncertainty. What

68
00:04:26,520 --> 00:04:29,200
Speaker 1: does that do to the economic machinery in and of itself?

69
00:04:30,200 --> 00:04:36,560
Speaker 3: Nothing good. Look, the task of policy is to reduce uncertainty.

70
00:04:36,680 --> 00:04:43,560
Speaker 3: The task of policy is to give confidence about sustainability.

71
00:04:44,480 --> 00:04:50,720
Speaker 3: When policy makers are confidently promising a stock market boom

72
00:04:51,520 --> 00:04:55,680
Speaker 3: when they come in and then they deliver the tenth

73
00:04:56,040 --> 00:05:00,960
Speaker 3: eleventh fastest correction in the last seventy five last century,

74
00:05:02,480 --> 00:05:05,560
Speaker 3: one of the fastest corrections in the last century. And

75
00:05:05,640 --> 00:05:09,479
Speaker 3: then they discover that they think the economy needs some

76
00:05:09,600 --> 00:05:13,400
Speaker 3: kind of detox, and they don't give any indication of

77
00:05:13,440 --> 00:05:18,880
Speaker 3: whether it's going to end, and they vow unprecedented levels

78
00:05:19,040 --> 00:05:24,200
Speaker 3: of protection to be declared on a date in the future.

79
00:05:24,920 --> 00:05:32,400
Speaker 3: That is introducing uncertainty, not reducing uncertainty. And I think

80
00:05:32,440 --> 00:05:34,760
Speaker 3: that's really quite dangerous.

81
00:05:35,600 --> 00:05:38,040
Speaker 1: I am Structlarry that as we talk about what the

82
00:05:38,040 --> 00:05:41,200
Speaker 1: Federal Open Market Committee did, we're talking about the White

83
00:05:41,200 --> 00:05:45,640
Speaker 1: House almost exclusively and talk about more broadly what we

84
00:05:45,680 --> 00:05:47,440
Speaker 1: are seeing coming out of the White House, how it

85
00:05:47,480 --> 00:05:50,200
Speaker 1: is affecting, could affect the economy. For example, this week

86
00:05:50,400 --> 00:05:53,120
Speaker 1: we had the President say I'm going to dismiss to

87
00:05:53,360 --> 00:05:57,400
Speaker 1: sitting FTC commissioners even though they're an independent agency, a

88
00:05:57,440 --> 00:06:00,880
Speaker 1: concern that might extend into the federals. What are the

89
00:06:00,960 --> 00:06:04,200
Speaker 1: ramifications throughout the government and the economy of the actions

90
00:06:04,200 --> 00:06:04,719
Speaker 1: we're seeing.

91
00:06:05,160 --> 00:06:12,280
Speaker 3: Let me speak very directly, David, we are not there yet,

92
00:06:13,680 --> 00:06:19,520
Speaker 3: but every week for the last two months, the risk

93
00:06:20,360 --> 00:06:27,640
Speaker 3: of an attempt to impose authoritarianism in the United States

94
00:06:28,240 --> 00:06:33,960
Speaker 3: have gone up. The dismissals that you mentioned are one example.

95
00:06:34,560 --> 00:06:42,480
Speaker 3: The lawless cutbacks of spending are another example. The impositions

96
00:06:42,520 --> 00:06:50,159
Speaker 3: and threats to universities with no process, nothing of what

97
00:06:50,400 --> 00:06:56,560
Speaker 3: is required in Title six law is another example. The

98
00:06:56,760 --> 00:07:03,040
Speaker 3: steps with respect to expelling people who are here without

99
00:07:03,080 --> 00:07:07,880
Speaker 3: the process protections contained in law are another example. The

100
00:07:08,400 --> 00:07:14,120
Speaker 3: assertion that if the president does it to help the

101
00:07:14,160 --> 00:07:21,960
Speaker 3: country save the country, it can't be illegal is another example.

102
00:07:22,080 --> 00:07:29,200
Speaker 3: The flirtation with fascists abroad, such as the AfD in

103
00:07:29,280 --> 00:07:34,320
Speaker 3: Germany by the Vice President is yet another example, and

104
00:07:34,400 --> 00:07:39,680
Speaker 3: there are many more. We have not crossed a rubicon

105
00:07:39,920 --> 00:07:46,520
Speaker 3: yet where court orders are being defied. That hasn't happened yet,

106
00:07:47,400 --> 00:07:54,440
Speaker 3: but we are getting much closer to that rubicon. The

107
00:07:54,440 --> 00:07:57,800
Speaker 3: so called Overton window of things that are seen as

108
00:07:57,960 --> 00:08:04,640
Speaker 3: possible and imaginable broaden, and ultimately that is going to

109
00:08:04,760 --> 00:08:11,200
Speaker 3: be alarming for what America is and therefore potentially going

110
00:08:11,280 --> 00:08:16,160
Speaker 3: to do grave damage to our economy and the worlds.

111
00:08:16,640 --> 00:08:21,119
Speaker 3: We are not there quite yet, but I have to say,

112
00:08:21,400 --> 00:08:28,880
Speaker 3: what was a possible concern two months ago now seems

113
00:08:28,960 --> 00:08:36,920
Speaker 3: to me to be a genuinely alarming prospect, and that

114
00:08:37,200 --> 00:08:45,840
Speaker 3: should disturb and worry every investor, and our country's leaders

115
00:08:46,040 --> 00:08:51,959
Speaker 3: in the business and financial community, who know how much

116
00:08:52,360 --> 00:08:58,080
Speaker 3: they have depended on the rule of law, should be

117
00:08:59,080 --> 00:09:09,079
Speaker 3: organized to resist what could be a extraordinarily damaging long

118
00:09:09,160 --> 00:09:15,600
Speaker 3: term change in policy. It takes decades to grow afarce

119
00:09:16,480 --> 00:09:20,920
Speaker 3: and a few minutes to burn it down. Something like

120
00:09:20,960 --> 00:09:25,000
Speaker 3: that is true with respect to our nation's credibility and

121
00:09:25,120 --> 00:09:29,640
Speaker 3: commitment to rule of law. And so I do not

122
00:09:29,880 --> 00:09:35,040
Speaker 3: remember in the last fifty years a more alarming moment

123
00:09:35,720 --> 00:09:40,560
Speaker 3: in terms of the approach that the US government is

124
00:09:40,720 --> 00:09:44,559
Speaker 3: taking to our democratic institutions.

125
00:09:45,760 --> 00:09:48,680
Speaker 1: One way that President Trump says he'll get inflation down

126
00:09:48,920 --> 00:09:52,240
Speaker 1: is by producing more oil, but those doing the producing

127
00:09:52,280 --> 00:09:54,800
Speaker 1: aren't so sure they want to go that way, no

128
00:09:54,800 --> 00:09:58,800
Speaker 1: matter what regulatory relief comes their way. That's next on

129
00:09:58,880 --> 00:10:15,200
Speaker 1: Wall Street Week. This is a story about irony. For years,

130
00:10:15,200 --> 00:10:18,600
Speaker 1: the oil industry complained about all those federal regulations that

131
00:10:18,720 --> 00:10:22,000
Speaker 1: kept them from pumping more into the market. Now they

132
00:10:22,040 --> 00:10:24,600
Speaker 1: have a president who wants to give them what they've wanted.

133
00:10:25,000 --> 00:10:27,520
Speaker 1: And our colleague Alex Steel has the story of why

134
00:10:27,640 --> 00:10:29,959
Speaker 1: they may be having second thoughts.

135
00:10:34,240 --> 00:10:36,800
Speaker 4: As the Rolling Stone say, you can't always get what

136
00:10:36,840 --> 00:10:40,120
Speaker 4: you want. And President Trump wants energy companies to produce

137
00:10:40,200 --> 00:10:40,760
Speaker 4: more oil.

138
00:10:41,800 --> 00:10:44,960
Speaker 3: We will bring prices down, fill our.

139
00:10:44,880 --> 00:10:46,760
Speaker 5: Strategic reserves up.

140
00:10:46,720 --> 00:10:51,320
Speaker 3: Again right to the top, and export American energy all

141
00:10:51,440 --> 00:10:52,640
Speaker 3: over the world.

142
00:10:53,280 --> 00:10:56,240
Speaker 6: It's called Drill, Baby, Drill.

143
00:10:56,880 --> 00:10:59,400
Speaker 4: One of the pillars of President Trump's economic plan is

144
00:10:59,480 --> 00:11:03,600
Speaker 4: ramping up US energy production. Pump a lotta oil, lower

145
00:11:03,640 --> 00:11:07,280
Speaker 4: gasoline prices, people have more money. City says that oil

146
00:11:07,320 --> 00:11:09,880
Speaker 4: at sixty dollars a barrel and the US economy could

147
00:11:09,880 --> 00:11:12,200
Speaker 4: see as much as one hundred billion dollars of a

148
00:11:12,240 --> 00:11:13,240
Speaker 4: deflation impulse.

149
00:11:13,880 --> 00:11:16,120
Speaker 7: I always say people may not know their atm PIN

150
00:11:16,240 --> 00:11:18,719
Speaker 7: number or their anniversary, But they know to the scent

151
00:11:19,040 --> 00:11:22,120
Speaker 7: what gasoline prices are that day. And it's really because

152
00:11:22,120 --> 00:11:24,360
Speaker 7: it's the only price that we see written in ten

153
00:11:24,400 --> 00:11:25,280
Speaker 7: foot high letters.

154
00:11:25,640 --> 00:11:28,760
Speaker 4: The problem is people might want lower oil prices, but

155
00:11:28,880 --> 00:11:31,439
Speaker 4: oil producers want returns.

156
00:11:31,440 --> 00:11:34,040
Speaker 7: The end of the day, oil is a business. Companies

157
00:11:34,080 --> 00:11:37,840
Speaker 7: have to make investment decisions based on what they think

158
00:11:38,040 --> 00:11:40,600
Speaker 7: is a price that they will be able to achieve

159
00:11:40,640 --> 00:11:42,559
Speaker 7: for this product that the that they bring on.

160
00:11:43,160 --> 00:11:45,840
Speaker 4: Sadram is the chief economist of traffic Gura, one of

161
00:11:45,840 --> 00:11:48,880
Speaker 4: the biggest commodity trading companies in the world, and it's

162
00:11:48,920 --> 00:11:50,640
Speaker 4: his job to forecast prices.

163
00:11:51,400 --> 00:11:54,440
Speaker 7: Dallas Federal Reserve just recently did a survey of the

164
00:11:54,480 --> 00:11:57,720
Speaker 7: companies within its region, mainly the oil producer, so asking

165
00:11:57,880 --> 00:12:01,200
Speaker 7: what do you think you know average break even prices

166
00:12:01,240 --> 00:12:04,720
Speaker 7: are for their different plays, and ultimately the lowest one

167
00:12:04,760 --> 00:12:07,880
Speaker 7: came in at about sixty dollars, So really, you know,

168
00:12:07,920 --> 00:12:10,880
Speaker 7: anything at sixty or below is really going to then

169
00:12:11,440 --> 00:12:15,120
Speaker 7: impact decision making and the profitability of these investments. Even

170
00:12:15,160 --> 00:12:18,040
Speaker 7: when oil prices averaged eighty dollars last year, over the

171
00:12:18,040 --> 00:12:20,840
Speaker 7: course of the entire year, really crude oil production really

172
00:12:20,840 --> 00:12:22,800
Speaker 7: only grew about two hundred thousand barols a day. So

173
00:12:22,840 --> 00:12:25,080
Speaker 7: that's telling you that even at eighty dollars, which is

174
00:12:25,160 --> 00:12:28,200
Speaker 7: a much higher price than that range, companies are not

175
00:12:28,440 --> 00:12:30,280
Speaker 7: deploying a huge amount of capital.

176
00:12:31,800 --> 00:12:35,720
Speaker 4: This time, oil companies will prioritize shareholders' returns over most

177
00:12:35,720 --> 00:12:38,520
Speaker 4: everything else, Unlike last time when things ended with a

178
00:12:38,520 --> 00:12:42,920
Speaker 4: spectacular crash and oil prices, bankruptcies and burned investors.

179
00:12:43,200 --> 00:12:45,880
Speaker 8: We were all caught up into Wall Street and the

180
00:12:45,960 --> 00:12:49,240
Speaker 8: multiples that were being paid. It's like it reminds me

181
00:12:49,320 --> 00:12:51,760
Speaker 8: of the tech side now. And so it was the

182
00:12:51,800 --> 00:12:54,640
Speaker 8: same thought process that went through our minds back and

183
00:12:55,360 --> 00:12:59,240
Speaker 8: called it the tw ten twenty nineteen time period, pione

184
00:12:59,240 --> 00:13:03,280
Speaker 8: irustrating at ten times sibadah back in twenty.

185
00:13:02,880 --> 00:13:05,400
Speaker 9: Twelve to the fifteen time period.

186
00:13:05,960 --> 00:13:08,960
Speaker 4: Scott Chatfield was CEO of Pioneer Natural Resources for over

187
00:13:09,000 --> 00:13:11,480
Speaker 4: twenty years until he sold the company to Exon Mobile

188
00:13:11,480 --> 00:13:15,120
Speaker 4: for sixty billion dollars. He's one of the original wildcatters,

189
00:13:15,200 --> 00:13:18,960
Speaker 4: a risk taker who drills for oil in unproven areas.

190
00:13:19,600 --> 00:13:21,680
Speaker 6: What led to the.

191
00:13:21,559 --> 00:13:24,600
Speaker 4: Massive amount of exploration and development like was it also

192
00:13:24,720 --> 00:13:25,320
Speaker 4: cheap money.

193
00:13:25,480 --> 00:13:27,880
Speaker 8: We went public in nineteen ninety one. The reason you

194
00:13:27,880 --> 00:13:31,160
Speaker 8: go public is to be able to raise capital. We

195
00:13:31,280 --> 00:13:35,040
Speaker 8: ended up raising probably five to six billion, probably more

196
00:13:34,640 --> 00:13:39,160
Speaker 8: than top one or two percent of all public independence,

197
00:13:40,360 --> 00:13:44,880
Speaker 8: to acquire opportunities to grow. And then eventually the shareholder,

198
00:13:44,960 --> 00:13:48,760
Speaker 8: said Scott, and the rest of the independence, live within

199
00:13:48,840 --> 00:13:52,600
Speaker 8: your cash flow. So create a free cash flow model

200
00:13:53,240 --> 00:13:59,240
Speaker 8: that returns US dividends, returns US buybacks and live within

201
00:13:59,280 --> 00:14:02,440
Speaker 8: that cash flow to be able to do the move forward.

202
00:14:03,360 --> 00:14:06,360
Speaker 4: Sheffield and others like billionaire Herald Ham were credited with

203
00:14:06,400 --> 00:14:10,320
Speaker 4: the innovation, technology, and perseverance that led to the shale revolution,

204
00:14:10,640 --> 00:14:14,480
Speaker 4: unleashing a flood of American oil into global markets.

205
00:14:14,679 --> 00:14:18,280
Speaker 5: You know that going in there's a certain amount of

206
00:14:18,360 --> 00:14:22,280
Speaker 5: risk there, but if you could also be rewarded greatly.

207
00:14:23,600 --> 00:14:25,560
Speaker 5: But you know, we took a lot of risk with

208
00:14:25,720 --> 00:14:30,760
Speaker 5: the Bukan one point three million acres, and so you

209
00:14:30,800 --> 00:14:33,320
Speaker 5: know that paved the way, that paved the future.

210
00:14:34,040 --> 00:14:35,840
Speaker 4: In two thousand and eight, oil prices spiked to one

211
00:14:35,920 --> 00:14:38,320
Speaker 4: hundred and forty dollars a barrel and mostly stayed between

212
00:14:38,320 --> 00:14:41,000
Speaker 4: eighty and one hundred. Between twenty ten and twenty fourteen,

213
00:14:42,160 --> 00:14:46,200
Speaker 4: capital markets were wide open and companies took advantage. US

214
00:14:46,200 --> 00:14:49,120
Speaker 4: independence raised a whopping three hundred and seventy one billion

215
00:14:49,160 --> 00:14:50,120
Speaker 4: dollars in debt.

216
00:14:50,320 --> 00:14:52,520
Speaker 7: We had Arab spring, you know, so we were in

217
00:14:52,560 --> 00:14:54,360
Speaker 7: the one hundred hundred and ten one hundred and twenty

218
00:14:54,360 --> 00:14:57,000
Speaker 7: dollars range. So at that point people were saying, great

219
00:14:57,040 --> 00:14:59,760
Speaker 7: future barrels at those prices. But with a break even

220
00:14:59,800 --> 00:15:04,560
Speaker 7: that is, you know, fifty dollars, that spread is enormously profitable.

221
00:15:05,520 --> 00:15:08,760
Speaker 4: The oil came fast, as did the cash, and neither lasted.

222
00:15:09,400 --> 00:15:12,280
Speaker 4: US shale has a quick initial production and a steep

223
00:15:12,280 --> 00:15:15,480
Speaker 4: production decline. When shale oil is first produced, it's like

224
00:15:15,520 --> 00:15:18,000
Speaker 4: the opening of a fire hydrant, a ton of oil

225
00:15:18,040 --> 00:15:21,760
Speaker 4: really fast. Once that initial flows subsides, the oil slows down.

226
00:15:22,280 --> 00:15:24,480
Speaker 4: In order to keep the same net amount of oil flowing,

227
00:15:24,560 --> 00:15:27,360
Speaker 4: producers needed to keep pouring money into new wells.

228
00:15:27,680 --> 00:15:32,040
Speaker 5: You had to produce basically just holding leases, so you

229
00:15:32,320 --> 00:15:35,680
Speaker 5: had to drill so it wouldn't know whether you locked

230
00:15:35,720 --> 00:15:39,520
Speaker 5: it or not or wanted to. But you know, you're

231
00:15:39,680 --> 00:15:44,560
Speaker 5: trying to perfect those leases that you've taken on. So

232
00:15:45,800 --> 00:15:49,680
Speaker 5: did that always serves your holders? I think it did,

233
00:15:49,800 --> 00:15:53,920
Speaker 5: because you just preserving the future forum, But some of

234
00:15:54,000 --> 00:15:57,560
Speaker 5: them didn't see that they wanted a media free terms.

235
00:15:58,040 --> 00:15:59,400
Speaker 4: When oil prices crumbled.

236
00:15:59,640 --> 00:16:02,440
Speaker 7: The part he ended, I think the washout really was

237
00:16:02,520 --> 00:16:05,440
Speaker 7: that drop in twenty fourteen. So we went very rapidly

238
00:16:05,480 --> 00:16:08,240
Speaker 7: from about one hundred and ten dollars down to at

239
00:16:08,240 --> 00:16:10,080
Speaker 7: one point I think it was the low was about

240
00:16:10,080 --> 00:16:14,240
Speaker 7: twenty eight dollars, right, So imagine any industry that where

241
00:16:14,280 --> 00:16:17,200
Speaker 7: that happens, but in particular in a capital heavy, capital

242
00:16:17,240 --> 00:16:20,840
Speaker 7: intensive industry that has long lead times where you have

243
00:16:20,920 --> 00:16:23,720
Speaker 7: to invest over a period of years, that obviously, really,

244
00:16:23,840 --> 00:16:25,880
Speaker 7: you know, was the reckoning behind.

245
00:16:25,560 --> 00:16:29,960
Speaker 4: That equity is tanked. The XOP, which tracks publicly traded

246
00:16:30,080 --> 00:16:33,040
Speaker 4: US oil and gas producers, lost over ninety percent from

247
00:16:33,080 --> 00:16:35,920
Speaker 4: its peak in twenty fourteen to trough in twenty twenty.

248
00:16:36,280 --> 00:16:38,840
Speaker 4: High yield spiked almost twenty two percent, and there are

249
00:16:38,880 --> 00:16:40,640
Speaker 4: more than two hundred bankruptcies.

250
00:16:41,040 --> 00:16:43,680
Speaker 7: We came down very, very sharply, to the point where

251
00:16:44,000 --> 00:16:46,160
Speaker 7: we weren't just below break even, we were getting to

252
00:16:46,800 --> 00:16:49,600
Speaker 7: what we call cash costs, so basically just the amount

253
00:16:49,640 --> 00:16:52,440
Speaker 7: to keep the lights on. There was certainly a lot

254
00:16:52,480 --> 00:16:54,760
Speaker 7: of loss of shareholder value, which is why I think

255
00:16:54,760 --> 00:16:58,000
Speaker 7: shareholders are now saying, if you're making money, I prefer

256
00:16:58,040 --> 00:16:58,680
Speaker 7: you return it to me.

257
00:16:58,760 --> 00:17:02,920
Speaker 4: Now, older pressure can be stubborn, and so is economics.

258
00:17:03,320 --> 00:17:06,240
Speaker 7: I think ultimately it is inflation across everything. So whether

259
00:17:06,280 --> 00:17:09,560
Speaker 7: it is materials, whether it is labor. You know, you're

260
00:17:09,560 --> 00:17:11,920
Speaker 7: starting to see those things move higher, and I think

261
00:17:12,160 --> 00:17:15,119
Speaker 7: ultimately also you're seeing a lack of that talent coming

262
00:17:15,200 --> 00:17:17,679
Speaker 7: into the industry. We also then look at what's happening

263
00:17:17,720 --> 00:17:21,720
Speaker 7: around increased cost around steel, you know, potentially teriffs having

264
00:17:21,880 --> 00:17:24,040
Speaker 7: impact and all that starting to add up.

265
00:17:24,720 --> 00:17:27,080
Speaker 4: There are things that could help producers drill at fifty

266
00:17:27,119 --> 00:17:31,080
Speaker 4: dollars oil, lower taxes, less regulation, cheaper federal land leases,

267
00:17:31,200 --> 00:17:34,960
Speaker 4: and less perceived hostility from the government. Natasha Kaneva is

268
00:17:35,000 --> 00:17:36,919
Speaker 4: Global head of Commodities at JP Morgan.

269
00:17:37,240 --> 00:17:39,400
Speaker 10: We do believe that it can't happen. So, first of all,

270
00:17:39,400 --> 00:17:41,240
Speaker 10: the fifty dollars is a target. Yes, at the moment,

271
00:17:41,280 --> 00:17:43,240
Speaker 10: if you look at the break events, they at about

272
00:17:43,280 --> 00:17:46,640
Speaker 10: fifty five dollars. What the administration can do they can

273
00:17:46,680 --> 00:17:49,320
Speaker 10: bring the cost of production, the cost of drilling lower.

274
00:17:49,600 --> 00:17:51,840
Speaker 10: So we actually believe that forty five is the new

275
00:17:51,840 --> 00:17:54,199
Speaker 10: fifty five. So we believe that they can bring the

276
00:17:54,200 --> 00:17:57,359
Speaker 10: cost of drilling by about ten dollars lower.

277
00:17:58,040 --> 00:18:01,199
Speaker 4: CANEVA gets there in three ways, lower royalty fees on

278
00:18:01,240 --> 00:18:04,520
Speaker 4: production on federal land, corporate tax reduction to fifteen percent

279
00:18:04,560 --> 00:18:08,040
Speaker 4: on things produced domestically, and bringing back the bonus appreciation

280
00:18:08,200 --> 00:18:10,919
Speaker 4: from the twenty seventeen Tax Cuts and Jobs Act. This

281
00:18:11,040 --> 00:18:14,439
Speaker 4: lets businesses deduct one hundred percent of certain capital investments

282
00:18:14,720 --> 00:18:17,520
Speaker 4: that alone could cut break events by nine dollars.

283
00:18:17,960 --> 00:18:20,159
Speaker 10: Se Yes, they have this additional ten dollars. What they

284
00:18:20,160 --> 00:18:22,639
Speaker 10: can decide is they can say, okay, we'll pay ourselves

285
00:18:22,680 --> 00:18:25,200
Speaker 10: more diffidend, we'll increase the divent deal, who increase the

286
00:18:25,240 --> 00:18:27,399
Speaker 10: buyback or all other things that they can do. Is

287
00:18:27,440 --> 00:18:29,240
Speaker 10: this money, or they can say half of that actually

288
00:18:29,280 --> 00:18:32,080
Speaker 10: will go into the ground and will increase production. So

289
00:18:32,160 --> 00:18:34,080
Speaker 10: this we don't know. What we're saying is that we

290
00:18:34,160 --> 00:18:35,200
Speaker 10: believe it's doable.

291
00:18:36,160 --> 00:18:38,399
Speaker 4: CANEVI says, you don't need to spend that much money

292
00:18:38,440 --> 00:18:39,560
Speaker 4: to produce more oil.

293
00:18:39,840 --> 00:18:42,480
Speaker 10: All our numbers are showing that one million dollars spent

294
00:18:42,600 --> 00:18:46,200
Speaker 10: today versus twenty fourteen gives you about eighty six percent

295
00:18:46,280 --> 00:18:49,080
Speaker 10: more production. So pretty much you are doubling production through

296
00:18:49,080 --> 00:18:50,000
Speaker 10: efficiency gains.

297
00:18:50,960 --> 00:18:53,960
Speaker 4: The math says producers can drill more worth less now

298
00:18:54,040 --> 00:18:55,840
Speaker 4: shareholders have to let them.

299
00:18:56,160 --> 00:18:58,639
Speaker 7: Now, maybe it takes a change on the part of

300
00:18:58,680 --> 00:19:01,760
Speaker 7: shareholders to then say, actually, what we do want is

301
00:19:01,800 --> 00:19:05,520
Speaker 7: to go back to production growth because production growth obviously

302
00:19:05,600 --> 00:19:08,480
Speaker 7: ultimately is that's future revenue that's coming in. And I

303
00:19:08,520 --> 00:19:11,080
Speaker 7: think we've been in this period where they're not valuing

304
00:19:11,240 --> 00:19:14,960
Speaker 7: that production growth and partly maybe because of concerns around

305
00:19:15,000 --> 00:19:15,959
Speaker 7: peak oil demand.

306
00:19:16,280 --> 00:19:20,840
Speaker 4: So if President Trump could incentivize long term oil demand

307
00:19:20,880 --> 00:19:22,520
Speaker 4: growth past twenty thirty.

308
00:19:22,880 --> 00:19:25,360
Speaker 7: That might change things. Whoever's in the White House has

309
00:19:25,400 --> 00:19:27,679
Speaker 7: a bigger impact on the demand side of the equation

310
00:19:27,760 --> 00:19:29,159
Speaker 7: than on the supply side of the equation.

311
00:19:30,000 --> 00:19:32,919
Speaker 4: If more oil production isn't the answer, an alternative for

312
00:19:33,000 --> 00:19:34,960
Speaker 4: President Trump might be gas.

313
00:19:34,720 --> 00:19:35,439
Speaker 1: Baby gas.

314
00:19:36,000 --> 00:19:38,480
Speaker 4: In a recent speech at the premier energy conference Sarah

315
00:19:38,560 --> 00:19:41,879
Speaker 4: Week in Houston, Texas, the Secretary of Energy Chris Wright

316
00:19:42,000 --> 00:19:46,080
Speaker 4: mentioned LNG or gas eight times and oil only twice.

317
00:19:46,320 --> 00:19:49,439
Speaker 4: It was a fiery speech that had industry leaders abuzz.

318
00:19:49,920 --> 00:19:55,639
Speaker 11: President Trump immediately ended the pause on LNG export permits. Today,

319
00:19:55,680 --> 00:19:59,440
Speaker 11: I can announce our fourth action in this regard improving

320
00:19:59,480 --> 00:20:03,080
Speaker 11: the Dell and Offshore Louisiana LNG export terminal.

321
00:20:04,240 --> 00:20:07,200
Speaker 4: Oil gets all the headlines, while US natural gas production

322
00:20:07,400 --> 00:20:09,720
Speaker 4: also sits at a record one hundred and seven billion

323
00:20:09,760 --> 00:20:12,760
Speaker 4: cubic feet a day of ninety percent since two thousand

324
00:20:12,760 --> 00:20:13,040
Speaker 4: and eight.

325
00:20:13,359 --> 00:20:16,080
Speaker 10: It's called bessence. The three point plan is considering. Yes,

326
00:20:16,080 --> 00:20:18,280
Speaker 10: it's about three million barrels podet of oil coil and

327
00:20:18,359 --> 00:20:20,800
Speaker 10: grows between now and then of twenty twenty eight, so

328
00:20:20,880 --> 00:20:23,280
Speaker 10: we actually believe the two numbers closer to four million

329
00:20:23,320 --> 00:20:26,320
Speaker 10: barrels podet of oilcoiling. Majority of that would be done

330
00:20:26,040 --> 00:20:28,399
Speaker 10: by the gas. Actually it's not by the oil, but

331
00:20:28,480 --> 00:20:29,000
Speaker 10: by the guess.

332
00:20:30,000 --> 00:20:32,439
Speaker 4: It's a lot harder to export natural gas. You have

333
00:20:32,480 --> 00:20:34,199
Speaker 4: to freeze it in order to ship it, with a

334
00:20:34,200 --> 00:20:38,000
Speaker 4: similar process on the importer side. Those facilities are expensive

335
00:20:38,040 --> 00:20:40,600
Speaker 4: to build, but more and more coming online, helping to

336
00:20:40,640 --> 00:20:44,760
Speaker 4: expand America's potential. By twenty thirty, the US should have

337
00:20:44,840 --> 00:20:47,400
Speaker 4: over two hundred and fifty million metric tons of LERG

338
00:20:47,560 --> 00:20:51,119
Speaker 4: export capacity a year based on current regulatory approvals.

339
00:20:51,680 --> 00:20:53,520
Speaker 9: I think AILERG has a great future.

340
00:20:53,800 --> 00:20:57,320
Speaker 8: It could be more focused on inngls liquids and could

341
00:20:57,320 --> 00:20:58,280
Speaker 8: be more focused on.

342
00:20:58,200 --> 00:21:01,720
Speaker 9: The natural gas side. Is the ol side. We don't

343
00:21:01,720 --> 00:21:03,680
Speaker 9: have many all plays left in this country.

344
00:21:05,040 --> 00:21:07,960
Speaker 4: The biggest problem for producers, either oil or gas is

345
00:21:07,960 --> 00:21:11,199
Speaker 4: infrastructure moving the hydrocarbon from the well head to the

346
00:21:11,200 --> 00:21:14,800
Speaker 4: Gulf coast or your local utility. The permitting process is

347
00:21:14,880 --> 00:21:18,080
Speaker 4: pretty much hated by all energy folks, oil, gas and

348
00:21:18,119 --> 00:21:19,000
Speaker 4: renewable alike.

349
00:21:19,359 --> 00:21:21,880
Speaker 10: Permitting as difficult for many different reasons, but to one

350
00:21:21,880 --> 00:21:24,399
Speaker 10: of them, it's not in my backyard. And because of that,

351
00:21:24,480 --> 00:21:27,199
Speaker 10: there is a lot of those environmental considerations that need

352
00:21:27,280 --> 00:21:30,040
Speaker 10: to be solved for and decide exactly how you approach that.

353
00:21:30,800 --> 00:21:33,359
Speaker 4: Many pipelines have been scrapped or held up in courts

354
00:21:33,359 --> 00:21:36,440
Speaker 4: for years, leading to bizarre pricing like twenty dollars gas

355
00:21:36,520 --> 00:21:38,720
Speaker 4: in the Bronx versus three dollars gas in Chicago.

356
00:21:39,200 --> 00:21:39,880
Speaker 9: It's crazy.

357
00:21:39,960 --> 00:21:43,920
Speaker 5: I mean, you get some markets that you know, even

358
00:21:44,000 --> 00:21:48,040
Speaker 5: get into a negative market. If you can't get your

359
00:21:48,119 --> 00:21:51,960
Speaker 5: product market, it does distort it in a lot of

360
00:21:52,040 --> 00:21:56,600
Speaker 5: different ways, and it also distorts it to the consumers.

361
00:21:56,880 --> 00:21:59,720
Speaker 4: We think away from build a drill, baby drill, what's

362
00:21:59,720 --> 00:22:02,080
Speaker 4: something better? Is it gas baby gas? Is it dig

363
00:22:02,119 --> 00:22:03,880
Speaker 4: baby dig? Is it build baby build?

364
00:22:04,000 --> 00:22:06,399
Speaker 10: The reality of that that if we want to achieve

365
00:22:06,440 --> 00:22:09,600
Speaker 10: all those targets that the Trump administration put force, Yes,

366
00:22:09,640 --> 00:22:12,000
Speaker 10: and it's a lot of that bring inflation down. Yes,

367
00:22:12,280 --> 00:22:14,720
Speaker 10: we have particular objectives in terms of trade, we have

368
00:22:14,800 --> 00:22:19,400
Speaker 10: particular objectives in terms of geopolitics. So it's definitely droll

369
00:22:19,440 --> 00:22:23,440
Speaker 10: baby drill. It's definitely dig baby dig. It's produced, baby produced.

370
00:22:23,520 --> 00:22:24,919
Speaker 10: We have all of that in the ground, but we

371
00:22:24,960 --> 00:22:25,960
Speaker 10: need to be able to move that.

372
00:22:27,440 --> 00:22:30,000
Speaker 4: Maybe the rolling Stones were right. You can't always get

373
00:22:30,000 --> 00:22:33,040
Speaker 4: what you want, but if you try, sometimes you'll find

374
00:22:33,280 --> 00:22:35,840
Speaker 4: you get what you need. And in this case, what

375
00:22:35,920 --> 00:22:39,080
Speaker 4: we just might need is more gas drilling and pipelines

376
00:22:39,119 --> 00:22:44,480
Speaker 4: instead of oil. In that case, everyone wins shareholders, President Trump, and.

377
00:22:44,480 --> 00:22:50,680
Speaker 1: US coming up getting on the bandwagon just as it's

378
00:22:50,720 --> 00:22:54,040
Speaker 1: coming to a halt, We bring you the ironic story

379
00:22:54,080 --> 00:23:06,600
Speaker 1: of three trends, Electric vehicles, DEI, and moving to Southern Florida.

380
00:23:08,800 --> 00:23:12,399
Speaker 1: This is a story about getting on the bandwagon, something

381
00:23:12,440 --> 00:23:15,679
Speaker 1: that feels so good when everyone is doing it, but

382
00:23:15,800 --> 00:23:20,960
Speaker 1: that may get awkward when people start jumping off. Electric vehicles, Diversity,

383
00:23:21,000 --> 00:23:24,080
Speaker 1: equity and inclusion, and moving to Southern Florida have all

384
00:23:24,200 --> 00:23:27,000
Speaker 1: had their time in the sun, but all are now

385
00:23:27,040 --> 00:23:29,080
Speaker 1: seeing some shade coming their way.

386
00:23:30,720 --> 00:23:34,840
Speaker 12: The historical track record for automotive startups in the United

387
00:23:34,840 --> 00:23:39,640
Speaker 12: States is extremely bad. The only two American car companies

388
00:23:39,720 --> 00:23:42,959
Speaker 12: in history that have not gone backrupt are Ford and Tesla.

389
00:23:43,680 --> 00:23:48,840
Speaker 1: Traditional automakers followed elon Musk embedding big on evs. In

390
00:23:48,880 --> 00:23:51,520
Speaker 1: twenty twenty one, GM announced that it would end production

391
00:23:51,600 --> 00:23:54,880
Speaker 1: of all of its gas and diesel powered vehicles by

392
00:23:54,920 --> 00:23:58,760
Speaker 1: twenty thirty five and go fully electric by twenty forty.

393
00:23:59,160 --> 00:24:04,800
Speaker 13: Well, I think of car companies were responding with enthusiasm

394
00:24:05,080 --> 00:24:07,080
Speaker 13: and hope for the new vehicles.

395
00:24:07,240 --> 00:24:11,200
Speaker 1: Mary Nichols is a believer in evs. During her tenure

396
00:24:11,240 --> 00:24:15,359
Speaker 1: as the chair of California's Air Resources Board, she implemented

397
00:24:15,400 --> 00:24:18,600
Speaker 1: the state's landmark greenhouse gas emission standards.

398
00:24:18,880 --> 00:24:24,560
Speaker 13: Here in California, the sales rates are almost equal now

399
00:24:24,640 --> 00:24:29,560
Speaker 13: to gasoline powered vehicles. In other places, the penetration is

400
00:24:29,600 --> 00:24:30,600
Speaker 13: going more slowly.

401
00:24:31,240 --> 00:24:34,560
Speaker 1: As much as California may be the EV leader, the

402
00:24:34,600 --> 00:24:37,080
Speaker 1: rest of the country doesn't seem to be keeping up.

403
00:24:37,960 --> 00:24:41,240
Speaker 1: It turns out that the EV bandwagon needs some support

404
00:24:41,359 --> 00:24:44,840
Speaker 1: from an infrastructure for charging the cars that just isn't

405
00:24:44,840 --> 00:24:45,600
Speaker 1: there yet.

406
00:24:45,760 --> 00:24:47,760
Speaker 13: It's just that the hope had been that they would

407
00:24:47,760 --> 00:24:53,679
Speaker 13: really overtake gasoline vehicles faster than they did, and it

408
00:24:53,760 --> 00:24:56,879
Speaker 13: turned out that there was more reluctance on the part

409
00:24:57,000 --> 00:25:00,280
Speaker 13: of people, especially in parts of the country where they

410
00:25:00,320 --> 00:25:05,320
Speaker 13: don't have the infrastructure in place for supporting those vehicles,

411
00:25:05,920 --> 00:25:11,399
Speaker 13: particularly where the electric utilities didn't step up as fast

412
00:25:11,560 --> 00:25:17,320
Speaker 13: to provide charging, where building owners in some cases were reluctant.

413
00:25:17,720 --> 00:25:22,000
Speaker 13: It takes a lot of changes in the system to

414
00:25:22,720 --> 00:25:26,520
Speaker 13: match what has been achieved over one hundred years.

415
00:25:26,840 --> 00:25:30,960
Speaker 1: BNF estimates that the fourteen automakers who set ambitious EV

416
00:25:31,119 --> 00:25:34,920
Speaker 1: goals for twenty thirty have trimmed back their expectations from

417
00:25:34,960 --> 00:25:38,320
Speaker 1: twenty seven million vehicles that year to twenty three point

418
00:25:38,440 --> 00:25:41,600
Speaker 1: seven million. One of those pumping the brakes on evs

419
00:25:41,720 --> 00:25:44,920
Speaker 1: is Ford, which shelved its plans for an all electric

420
00:25:45,119 --> 00:25:49,400
Speaker 1: three to row SUV last year. CEO Jim Farley took

421
00:25:49,480 --> 00:25:52,200
Speaker 1: us through some of the challenges several months ago.

422
00:25:52,359 --> 00:25:52,560
Speaker 10: Well.

423
00:25:52,560 --> 00:25:55,000
Speaker 14: First of all, the electric market in the US is

424
00:25:55,000 --> 00:25:57,240
Speaker 14: about eleven percent of the market. In California, it's the

425
00:25:57,280 --> 00:26:00,399
Speaker 14: third of the sales, so it's a huge market, growing

426
00:26:00,440 --> 00:26:04,280
Speaker 14: really fast and competitively globally. I think what's happened is

427
00:26:04,320 --> 00:26:07,560
Speaker 14: we're in the mainstream customer and the mainstream customer is

428
00:26:07,640 --> 00:26:09,399
Speaker 14: totally different than the early adopters.

429
00:26:09,560 --> 00:26:10,440
Speaker 9: They're really adopters.

430
00:26:10,480 --> 00:26:12,679
Speaker 14: We didn't need to convince them to go charge, or

431
00:26:12,760 --> 00:26:15,720
Speaker 14: they didn't really worry about resale value. But the customers

432
00:26:15,760 --> 00:26:18,760
Speaker 14: now do and that means on us we have to

433
00:26:18,800 --> 00:26:20,000
Speaker 14: really transform our.

434
00:26:19,880 --> 00:26:23,160
Speaker 1: Cost And now it's not just the lack of charging

435
00:26:23,200 --> 00:26:26,280
Speaker 1: stations that's slowing the move to evs. We have a

436
00:26:26,320 --> 00:26:29,399
Speaker 1: new administration in Washington that appears to be reversing the

437
00:26:29,480 --> 00:26:31,320
Speaker 1: nation's pro EV policy.

438
00:26:31,480 --> 00:26:32,280
Speaker 3: We ended the.

439
00:26:32,440 --> 00:26:38,480
Speaker 8: Last administrations in saying electric vehicle mandate saving our auto

440
00:26:38,520 --> 00:26:41,879
Speaker 8: workers and companies from economic destruction.

441
00:26:42,160 --> 00:26:45,720
Speaker 13: It's a trend that I think is well underway and

442
00:26:45,880 --> 00:26:49,960
Speaker 13: it's going to continue. I do think that the election

443
00:26:50,480 --> 00:26:54,880
Speaker 13: sent a message that in some states in particular, this

444
00:26:54,920 --> 00:27:00,200
Speaker 13: is like a political issue, which certainly is not helpful

445
00:27:01,000 --> 00:27:06,359
Speaker 13: for any industry. I don't think vehicles are partisan. I

446
00:27:06,400 --> 00:27:10,439
Speaker 13: don't think there are Democrat or Republican vehicles. You're just

447
00:27:10,480 --> 00:27:13,040
Speaker 13: looking for the best vehicle that you can get for

448
00:27:13,119 --> 00:27:14,040
Speaker 13: your money.

449
00:27:14,600 --> 00:27:18,920
Speaker 1: Whether powered by electricity or gasoline. The bandwagon of DEI

450
00:27:19,240 --> 00:27:22,200
Speaker 1: was moving full speed ahead in much of corporate America

451
00:27:22,240 --> 00:27:25,639
Speaker 1: when Blackrock CEO Larry Fink wrote to shareholders in twenty

452
00:27:25,680 --> 00:27:29,359
Speaker 1: twenty one that he had a quote long term strategy

453
00:27:29,440 --> 00:27:33,480
Speaker 1: aimed at improving diversity, equity and inclusion. Four years later,

454
00:27:33,720 --> 00:27:36,679
Speaker 1: I think was writing to BlackRock's staff saying it was

455
00:27:36,840 --> 00:27:40,159
Speaker 1: quote committed to creating a culture that welcomes diverse people

456
00:27:40,440 --> 00:27:44,959
Speaker 1: and perspectives, but acknowledging quote significant changes to US legal

457
00:27:45,040 --> 00:27:47,760
Speaker 1: and policy environment related to DEI.

458
00:27:48,760 --> 00:27:51,080
Speaker 15: Now, the real question is what are the policies and

459
00:27:51,119 --> 00:27:54,320
Speaker 15: practices that organization should have in place in order for

460
00:27:54,359 --> 00:27:57,520
Speaker 15: the organization to function effectively. And we spent a lot

461
00:27:57,560 --> 00:28:01,560
Speaker 15: of time talking to employees and looking at trends across corporations.

462
00:28:02,200 --> 00:28:06,119
Speaker 1: Tracy Sitsman is Professor of Management at the University of Colorado, Denver,

463
00:28:06,440 --> 00:28:10,320
Speaker 1: and has studied DEI policies throughout corporate America, why we

464
00:28:10,400 --> 00:28:13,359
Speaker 1: have them, and which ones work and don't work.

465
00:28:13,920 --> 00:28:16,720
Speaker 15: And the clear and consistent trend that we're seeing is

466
00:28:16,760 --> 00:28:20,119
Speaker 15: that employees want to work for an employer that's authentic

467
00:28:20,400 --> 00:28:22,480
Speaker 15: in their approach to dealing with their employees.

468
00:28:23,240 --> 00:28:26,160
Speaker 1: Sitzman's studies have led her to the conclusion that whether

469
00:28:26,280 --> 00:28:29,480
Speaker 1: a DEI program makes a company run better and ultimately

470
00:28:29,520 --> 00:28:32,639
Speaker 1: make more money depends on how it is done.

471
00:28:33,040 --> 00:28:35,960
Speaker 15: One of the most popular programs for enhancing diversity and

472
00:28:35,960 --> 00:28:38,760
Speaker 15: inclusion has been diversity training, and this is an example

473
00:28:38,800 --> 00:28:41,480
Speaker 15: of a program that can work really well or can

474
00:28:41,560 --> 00:28:45,640
Speaker 15: undermine our workforce. People work hard, they diversify the workforce

475
00:28:45,840 --> 00:28:50,320
Speaker 15: and it's successful. By contrast, many corporations implement diversity and

476
00:28:50,360 --> 00:28:53,560
Speaker 15: inclusion training and they have a legal undertone as part

477
00:28:53,600 --> 00:28:57,280
Speaker 15: of the training, so they teach people just how questionable

478
00:28:57,360 --> 00:29:00,920
Speaker 15: their behavior can become before it as the line to

479
00:29:01,000 --> 00:29:04,760
Speaker 15: being illegal. And when we implement training with an illegal undertone,

480
00:29:05,080 --> 00:29:08,719
Speaker 15: it actually results in people this behavior becoming more questionable.

481
00:29:09,120 --> 00:29:12,920
Speaker 1: But can a program targeting diversity, equity, and inclusion succeed

482
00:29:13,320 --> 00:29:17,640
Speaker 1: without focusing on identity politics, without setting targets to become

483
00:29:17,680 --> 00:29:20,880
Speaker 1: a form of quotas. Robbie Starbuck is a faith based

484
00:29:20,880 --> 00:29:24,200
Speaker 1: investor who has championed the cause of cutting back on

485
00:29:24,320 --> 00:29:25,400
Speaker 1: DEI programs.

486
00:29:26,160 --> 00:29:29,200
Speaker 16: Even if you wanted to pretend DEI was ultimately a

487
00:29:29,200 --> 00:29:31,320
Speaker 16: good thing, how can we do the things that we

488
00:29:31,400 --> 00:29:34,560
Speaker 16: proclaim to want to do without violating the law. And

489
00:29:34,600 --> 00:29:35,680
Speaker 16: at the end of the day, if you look at

490
00:29:35,680 --> 00:29:39,600
Speaker 16: these policies like racial quotas for hiring, it's not possible.

491
00:29:39,640 --> 00:29:41,520
Speaker 16: You can't have a racial quota for hiring and not

492
00:29:41,600 --> 00:29:45,360
Speaker 16: violate the law. But therein lies the real core of

493
00:29:45,360 --> 00:29:48,240
Speaker 16: almost every DEI policy in America is that we should

494
00:29:48,240 --> 00:29:49,920
Speaker 16: look at people and judge them by their skin tone,

495
00:29:49,920 --> 00:29:52,280
Speaker 16: which is diametrically opposed to the ideas of the civil

496
00:29:52,320 --> 00:29:55,160
Speaker 16: rights movement, which was that we're not supposed to judge

497
00:29:55,200 --> 00:29:57,200
Speaker 16: people by their skin tone. We're actually supposed to look

498
00:29:57,200 --> 00:29:59,920
Speaker 16: at them as an individual and say, your value lies

499
00:30:00,080 --> 00:30:02,560
Speaker 16: and your actions, what you can do, your merit, and

500
00:30:02,720 --> 00:30:04,120
Speaker 16: so that's what we want to see.

501
00:30:04,320 --> 00:30:07,800
Speaker 1: Sitzman may not favor quotas, but she readily admits that

502
00:30:07,840 --> 00:30:11,880
Speaker 1: it's awfully hard to drive diversity, equity, and inclusion without

503
00:30:11,920 --> 00:30:13,880
Speaker 1: setting numerical targets.

504
00:30:14,560 --> 00:30:17,720
Speaker 15: What strategic goal would you set in a corporation where

505
00:30:17,720 --> 00:30:20,200
Speaker 15: you would not measure it. It just doesn't make sense right.

506
00:30:20,240 --> 00:30:23,480
Speaker 15: Without a goal, without some numbers behind something, we don't

507
00:30:23,560 --> 00:30:26,880
Speaker 15: know how well we're doing, and therefore we're not going

508
00:30:26,920 --> 00:30:30,120
Speaker 15: to be managing the process towards hitting that target.

509
00:30:30,280 --> 00:30:34,040
Speaker 1: In addition to the bandwagons heading toward Eves and DEI,

510
00:30:34,560 --> 00:30:37,719
Speaker 1: a third movement was wall Street's migration south to the

511
00:30:37,800 --> 00:30:42,320
Speaker 1: Sunnier and less regulated pastures of Miami. It began earlier,

512
00:30:42,520 --> 00:30:45,160
Speaker 1: but when the pandemic hit in twenty twenty, its speed

513
00:30:45,200 --> 00:30:48,920
Speaker 1: picked up. From twenty twenty to twenty twenty one, Florida

514
00:30:48,960 --> 00:30:53,000
Speaker 1: experienced the largest uptick in registered independent advisors and broker

515
00:30:53,040 --> 00:30:56,360
Speaker 1: dealers of any state, and by twenty twenty two it

516
00:30:56,400 --> 00:31:01,040
Speaker 1: had become home to Elliott Management, citadel Icon Capital, and

517
00:31:01,240 --> 00:31:05,000
Speaker 1: expanded footprints from the likes of JP Morgan. Michael Schoe

518
00:31:05,240 --> 00:31:08,480
Speaker 1: is a luxury real estate developer with properties in Miami

519
00:31:08,760 --> 00:31:09,600
Speaker 1: and New York.

520
00:31:10,080 --> 00:31:13,440
Speaker 6: What's interesting because that moment in Miami was an extremely

521
00:31:13,480 --> 00:31:20,320
Speaker 6: surreal experience. You'd have billionaires roaming around North Bay Road,

522
00:31:20,560 --> 00:31:23,920
Speaker 6: you know, Palm Island, Star Island, looking for homes and

523
00:31:24,000 --> 00:31:26,200
Speaker 6: literally willing to pay anything just to find a house

524
00:31:26,240 --> 00:31:30,120
Speaker 6: on the water. Because the idea was nobody with means

525
00:31:30,160 --> 00:31:31,800
Speaker 6: wanted to stay at home, locked up here in New

526
00:31:31,880 --> 00:31:35,680
Speaker 6: York City. And obviously today, you know, hindsight, things haven't

527
00:31:35,720 --> 00:31:38,200
Speaker 6: really worked out exactly like that. People moved to Miami.

528
00:31:38,760 --> 00:31:41,040
Speaker 6: Mammy turned to be a real city because you have

529
00:31:41,160 --> 00:31:45,200
Speaker 6: now real restaurants, you have real people, you have education,

530
00:31:45,840 --> 00:31:48,840
Speaker 6: you have culture there. But it didn't take the place

531
00:31:48,840 --> 00:31:51,480
Speaker 6: of New York. Like a lot of people predicted.

532
00:31:51,600 --> 00:31:54,280
Speaker 1: The growing pains come in the form of lack of schools,

533
00:31:54,640 --> 00:31:56,840
Speaker 1: unfinished offices, and traffic.

534
00:31:57,280 --> 00:31:59,600
Speaker 6: So there's there's lack of schools in Miami, there's no

535
00:31:59,640 --> 00:32:03,600
Speaker 6: doubt of it, and that's kind of the main issue.

536
00:32:03,840 --> 00:32:08,120
Speaker 6: Infrastructure depends where right Miami Beach. Sections of Miami Beach

537
00:32:08,160 --> 00:32:11,680
Speaker 6: are okay, but because you have houses there, there's not

538
00:32:11,800 --> 00:32:17,120
Speaker 6: real main infrastructure issues. The infrastructure issues really became more

539
00:32:17,120 --> 00:32:21,880
Speaker 6: apparent in transportation. Crossway didn't have enough planes, There was

540
00:32:21,920 --> 00:32:24,440
Speaker 6: a lot of traffic, There was congestion because the amount

541
00:32:24,480 --> 00:32:27,120
Speaker 6: of cars all of a sudden in Miami. People that

542
00:32:27,160 --> 00:32:30,400
Speaker 6: are coming to work in Miami is something that Miami

543
00:32:30,400 --> 00:32:33,680
Speaker 6: has not experienced, and the acceleration of growth was so

544
00:32:33,840 --> 00:32:37,040
Speaker 6: quick that they did not have the infrastructure. They're catching

545
00:32:37,120 --> 00:32:39,560
Speaker 6: up now, but again now less people are working there,

546
00:32:39,640 --> 00:32:42,960
Speaker 6: So both the infrastructure is catching up, but we're seeing

547
00:32:43,040 --> 00:32:46,640
Speaker 6: less people there, at least on a permanent base from

548
00:32:46,640 --> 00:32:47,719
Speaker 6: what we thought we're going to have.

549
00:32:48,240 --> 00:32:50,880
Speaker 1: You know, post COVID, I wonder the role of demographics

550
00:32:51,040 --> 00:32:54,200
Speaker 1: and people moving in both the commercial side, the office

551
00:32:54,400 --> 00:32:57,000
Speaker 1: and also the residential that you're involved in. Because if

552
00:32:57,040 --> 00:32:59,760
Speaker 1: you look at the numbers, overall, California is losing people,

553
00:33:00,000 --> 00:33:04,200
Speaker 1: Illinois is losing people, New York losing google, Florida gaining people,

554
00:33:04,360 --> 00:33:06,600
Speaker 1: Texas gaining people. Does that tell you something about those

555
00:33:06,640 --> 00:33:07,480
Speaker 1: real estate markets?

556
00:33:07,640 --> 00:33:10,080
Speaker 6: Well, yes or no, because it depends who you're gaining.

557
00:33:10,120 --> 00:33:13,600
Speaker 6: Because if we're talking about commercial real estate, the reality

558
00:33:13,720 --> 00:33:17,280
Speaker 6: is are we losing the companies that are we losing

559
00:33:17,320 --> 00:33:20,320
Speaker 6: the workforce that's here, or are you losing you know,

560
00:33:20,400 --> 00:33:23,719
Speaker 6: people that are retired and not working and decided it's

561
00:33:23,840 --> 00:33:27,000
Speaker 6: territory tie in Florida because taxes. The tax situation is

562
00:33:27,040 --> 00:33:29,040
Speaker 6: better there, which is a lot of the reason that

563
00:33:29,160 --> 00:33:31,560
Speaker 6: you're seeing, you know, people move out of New York

564
00:33:31,600 --> 00:33:35,400
Speaker 6: and California is you know that there's obviously tax incentive

565
00:33:35,440 --> 00:33:37,280
Speaker 6: to move to some of the to some of the

566
00:33:37,280 --> 00:33:39,960
Speaker 6: southern states. So I don't think we're seeing we're not

567
00:33:40,000 --> 00:33:43,120
Speaker 6: seeing the movement of the true workforce.

568
00:33:43,680 --> 00:33:46,240
Speaker 1: Those moving to Miami may have gotten a better climate,

569
00:33:46,640 --> 00:33:49,280
Speaker 1: but they weren't looking for much different in the spaces

570
00:33:49,280 --> 00:33:49,920
Speaker 1: they occupy.

571
00:33:50,600 --> 00:33:53,200
Speaker 6: So the difference between Tennessee and Miami and New York,

572
00:33:53,440 --> 00:33:55,840
Speaker 6: you know, and again, as such, FOE operates only the

573
00:33:55,840 --> 00:33:58,880
Speaker 6: super prime real estate. So for us, we focus on

574
00:33:59,000 --> 00:34:02,720
Speaker 6: the psychographic the tenant, and in our mind, the psychographic

575
00:34:02,800 --> 00:34:06,160
Speaker 6: of a JP. Morgan, Okay, is no difference in New

576
00:34:06,240 --> 00:34:08,439
Speaker 6: York than it is in Mammie. Maybe the office needs

577
00:34:08,480 --> 00:34:10,720
Speaker 6: are a bit different, a little bit more outdoor space

578
00:34:10,960 --> 00:34:14,120
Speaker 6: in Mammi. There's that desire to have kind of indoor

579
00:34:14,160 --> 00:34:18,920
Speaker 6: outdoor spaces. But the reality is that you don't change

580
00:34:18,920 --> 00:34:23,080
Speaker 6: your mindset from a service perspective, from a space perspective,

581
00:34:23,719 --> 00:34:25,839
Speaker 6: from an environment because you're in Miami or New York

582
00:34:25,920 --> 00:34:26,600
Speaker 6: or in San Francisco.

583
00:34:26,640 --> 00:34:29,239
Speaker 1: To that effect, whether it's picking up stakes and moving

584
00:34:29,280 --> 00:34:33,040
Speaker 1: to Miami, or ditching our gas powered cars, or changing

585
00:34:33,040 --> 00:34:36,319
Speaker 1: the very nature of our workforce. There's all sorts of

586
00:34:36,400 --> 00:34:40,359
Speaker 1: good ideas out there, ideas that may make sense, But

587
00:34:40,400 --> 00:34:42,799
Speaker 1: no matter how good the idea, it pays to have

588
00:34:42,840 --> 00:34:46,560
Speaker 1: a pretty good sense where that bandwagon is headed before

589
00:34:46,600 --> 00:34:50,880
Speaker 1: we jump onto it. That does it for us here

590
00:34:50,880 --> 00:34:53,640
Speaker 1: at Wall Street Week, I'm David Weston. See you next

591
00:34:53,640 --> 00:35:01,000
Speaker 1: week for more stories of capitalism.

592
00:35:01,000 --> 00:35:01,760
Speaker 10: It also