WEBVTT - Facebook Ad Spending Is Solid Despite Privacy Issues (Podcast) 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel Podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:24.880 at Bloomberg dot com. Well. According to Magna, global internet 0:00:25.079 --> 0:00:29.320 ad spending globally in en was about two fifty billion dollars. 0:00:29.640 --> 0:00:32.920 It's about forty five of global ad spending went to 0:00:33.000 --> 0:00:35.080 the Internet. We're starting to see some of those big 0:00:35.080 --> 0:00:38.479 internet companies report their first quarter earnings. We had some 0:00:38.479 --> 0:00:41.280 good numbers out of Twitter, Stock ran up big time. 0:00:41.320 --> 0:00:43.440 Snap had some pretty good numbers. And after the Clothes 0:00:43.520 --> 0:00:46.440 tonight we have Facebook help us talk about all things 0:00:46.560 --> 0:00:49.680 digital advertising. We welcome back Mark Douglas. Mark is a 0:00:49.720 --> 0:00:53.040 CEO of Steelhouse based in Los Angeles, California. Mark, thanks 0:00:53.040 --> 0:00:56.520 so much for joining us. Boy, business seems pretty good 0:00:56.600 --> 0:00:59.720 for these big digital media companies. What are you thinking 0:00:59.720 --> 0:01:04.400 about Facebook after the close? Yeah? I think Facebook, Um, 0:01:04.480 --> 0:01:06.640 what's going to be really confusing for a lot of 0:01:06.680 --> 0:01:11.319 people is Facebook faces and has face and continues to 0:01:11.360 --> 0:01:14.840 face all this turmoil about privacy and other issues. But 0:01:14.959 --> 0:01:17.480 the bottom line is they don't really have much competition. 0:01:18.080 --> 0:01:21.080 They don't have much competition in terms of what other 0:01:21.200 --> 0:01:24.280 social networks consumers are going to use. Is not just Facebook, 0:01:24.280 --> 0:01:28.400 bails don't Instagram and WhatsApp. And on the advertising side, 0:01:28.400 --> 0:01:31.800 they have even less competition. So we're not seeing at 0:01:31.840 --> 0:01:34.120 field House, we're not seeing any kind of decline in 0:01:34.280 --> 0:01:37.280 spend on Facebook and Instagram. If anything, we're seeing an 0:01:37.280 --> 0:01:40.680 increase in spend on Instagram in particular. Did Twitter kind 0:01:40.680 --> 0:01:43.600 of show us that there is a shift though among 0:01:43.680 --> 0:01:46.800 advertisers that they're willing to pay for quality i e. 0:01:47.280 --> 0:01:51.280 Human beings rather than thoughts, sort of encouraging Facebook to 0:01:51.560 --> 0:01:57.000 possibly uh clear out take accounts or you know, ones 0:01:57.040 --> 0:02:01.480 that kind of come from dubious providence. Um, they're definitely. 0:02:02.360 --> 0:02:05.680 Twitter definitely seems to be investing in making sure that 0:02:05.760 --> 0:02:09.720 all their accounts are valid, they're real humans, Um, things 0:02:09.760 --> 0:02:14.359 like that. The issue there is scale. So as an advertiser, Um, 0:02:14.400 --> 0:02:16.520 it's a lot of work to create ads, it's a 0:02:16.520 --> 0:02:19.080 lot of work to create and manage these campaigns, and 0:02:19.160 --> 0:02:22.799 so Twitter just doesn't have anywhere close to scale as 0:02:22.880 --> 0:02:26.880 Facebook and Instagram. I mean, I think Facebook is eleven 0:02:26.880 --> 0:02:29.240 times bigger, and then when you add Instagram into that, 0:02:29.360 --> 0:02:32.360 then it's you know, you're probably approaching twenty times larger. 0:02:32.840 --> 0:02:34.959 And so they're doing a good job, I think Twitter, 0:02:35.040 --> 0:02:37.160 but they just don't have the scale to really capture 0:02:37.240 --> 0:02:40.720 the advertising dollars and the revenue that that Facebook can. 0:02:41.320 --> 0:02:44.720 You know, speaking of Twitter, it's was reported that Jack Dorsey, 0:02:44.760 --> 0:02:48.240 the CEO of Twitter, met with President Trump yesterday. Boy, 0:02:48.240 --> 0:02:49.440 I would have love to been a fly on the 0:02:49.440 --> 0:02:51.639 wall for that one. What do you think was going 0:02:51.680 --> 0:02:56.200 on there? Um that? I, you know, it's an interesting 0:02:56.680 --> 0:03:00.880 meaning I read about that also, Um, I the strategy 0:03:01.080 --> 0:03:03.840 at Twitter seems to be, UM, don't get blamed for 0:03:03.880 --> 0:03:08.679 the election cycle. The election cycle, so UM seems to 0:03:08.720 --> 0:03:11.560 be part of the strategy. So I think, UM kind 0:03:11.560 --> 0:03:14.880 of being in front of that, UM, this seems like 0:03:14.919 --> 0:03:17.920 maybe it's a party of its strategy or maybe Jack Dorsey, 0:03:18.040 --> 0:03:20.960 you know, just like going to Washington might show well. Ever, 0:03:21.000 --> 0:03:24.560 right now, uh, we are getting some color around it, 0:03:24.639 --> 0:03:27.200 saying that Jack Dorsy was explaining to President Trump that 0:03:27.280 --> 0:03:31.280 some of his eliminated followers were bought, and that was 0:03:31.360 --> 0:03:34.040 part of the issue. I am wondering, from your perspective, 0:03:34.080 --> 0:03:36.440 what you're looking for. If Facebook is such the dominant 0:03:36.440 --> 0:03:38.880 player in the advertising space and doesn't really have a 0:03:38.880 --> 0:03:41.560 whole deal of competition, what do you care? What are 0:03:41.560 --> 0:03:43.840 you looking for in the earnings that will sort of 0:03:44.040 --> 0:03:47.240 indicate to you either the pricing power for advertising or 0:03:47.240 --> 0:03:51.120 whether there's any shift toward any of its competitors. Yeah, 0:03:51.200 --> 0:03:54.760 for years, Facebook's um CPM kind of the cost per 0:03:54.840 --> 0:03:58.840 thousand ads, which is what aver how you price ads 0:03:58.920 --> 0:04:01.640 in the digital ad stace. What has been going up 0:04:01.640 --> 0:04:04.200 for Facebook? I think in recent times it's been kind 0:04:04.200 --> 0:04:07.120 of floating down. Part of that is new markets with 0:04:07.320 --> 0:04:10.440 the pricing is not as strong, But I think part 0:04:10.480 --> 0:04:13.560 of that is Facebook itself, although they don't have a 0:04:13.600 --> 0:04:16.279 lot of competition, the platform itself just doesn't have the 0:04:16.320 --> 0:04:20.000 engagement that it wants at and so I think, you know, 0:04:20.160 --> 0:04:26.320 the general feeling is eventually Facebook as a property is 0:04:26.839 --> 0:04:31.599 just feels like it's on it's a downward slope, and 0:04:31.680 --> 0:04:34.440 I think everyone's trying to look for, you know, kind 0:04:34.440 --> 0:04:36.920 of is that accelrating? When is that? You know, when 0:04:37.000 --> 0:04:39.520 is that going to become a problem, and so that's 0:04:39.560 --> 0:04:41.560 what those kind of metrics would I'd be looking for. 0:04:41.640 --> 0:04:44.320 It's more the long term investment, not the near term. 0:04:44.760 --> 0:04:47.960 So that raises a good question mark if if you know, 0:04:48.240 --> 0:04:51.360 Facebook feels from an advertising perspective and uses perspective maybe 0:04:51.400 --> 0:04:54.720 a little bit mature. To what extent do you think, uh, 0:04:54.839 --> 0:04:58.039 Facebook and pull other levers, whether it's you know, increasingly 0:04:58.279 --> 0:05:03.680 monetizing Instagram, maybe even WhatsApp and Messenger, how successful do 0:05:03.680 --> 0:05:06.520 you think they'll be on pulling those levers? Yeah, I 0:05:06.520 --> 0:05:11.040 think on Instagram, the user growth on Instagram continue appears 0:05:11.040 --> 0:05:14.400 to continue to be strong. That's another metric I'd be 0:05:14.520 --> 0:05:18.320 trying to get some insight into. UM engagement is strong. 0:05:18.440 --> 0:05:21.120 You can just even feel it as an individual, just 0:05:21.440 --> 0:05:24.480 like I know among my friends and yeah, I can 0:05:24.520 --> 0:05:27.760 just just see, you know, kind of how often UM 0:05:27.960 --> 0:05:31.080 Instagram is used. So I think that's you know, kind 0:05:31.120 --> 0:05:33.880 of the saving grace of the company right now. I 0:05:33.920 --> 0:05:37.159 think the other thing is stories. So stories and in 0:05:37.160 --> 0:05:42.000 Instagram are not monetized nearly as effectively as the feed, 0:05:42.160 --> 0:05:45.960 and so one just kind of personal prediction. As someone 0:05:46.000 --> 0:05:48.479 in the ad business, I think stories some of those stories, 0:05:48.480 --> 0:05:50.680 some of the most popular ones will probably be moved 0:05:50.720 --> 0:05:52.680 into the news feed, and they will make them more 0:05:52.760 --> 0:05:55.680 monetize herble. That's not something Facebook has told me. I 0:05:55.800 --> 0:05:58.440 just think that it's a logical step and it's something 0:05:58.480 --> 0:06:00.719 I'd want to see as an appetizer. We're speaking with 0:06:00.720 --> 0:06:04.960 Mark Douglas, chief executive of Steelhouse, who used to run 0:06:05.000 --> 0:06:08.640 the engineering for e Harmony, and Steelhouse is focused on 0:06:08.760 --> 0:06:12.920 AI driven self service advertising sort of targeted ads, and 0:06:13.080 --> 0:06:15.680 I'm just wondering, you know, we are expecting these earnings, 0:06:15.680 --> 0:06:19.120 but just broadening out what's the latest in terms of 0:06:19.240 --> 0:06:24.359 artificial intelligence and targeted ads that you specialize in. Yeah, 0:06:24.360 --> 0:06:26.839 so what's happening in that space is that the ads 0:06:26.839 --> 0:06:30.080 business has traditionally been very human focus. You have media 0:06:30.120 --> 0:06:32.200 buyers and kind of a lot of people involved in 0:06:32.240 --> 0:06:34.359 the ad in the ad buying cycle. But with the 0:06:34.400 --> 0:06:37.719 scale you have now, and especially the movement to connected 0:06:37.839 --> 0:06:42.279 television where people everyone is watching TV on demand, You're 0:06:42.320 --> 0:06:45.200 seeing that the ad buying is now becoming more and 0:06:45.240 --> 0:06:48.560 more automated. And so that's kind of technology we provide, 0:06:48.600 --> 0:06:51.200 I think where the industry is moving to pretty rapidly. 0:06:52.120 --> 0:06:54.120 So Mark, just you mentioned that, you know, there's not 0:06:54.200 --> 0:06:55.920 a lot of I guess it's pretty well known as well, 0:06:55.960 --> 0:06:58.080 that's not a lot of competition in the digital ad space. 0:06:58.120 --> 0:07:00.680 You kind of have Facebook, you have Alpha that to 0:07:00.760 --> 0:07:03.359 what extent do you think Amazon can become a viable 0:07:03.560 --> 0:07:08.159 third player in that space? Amazon is kind of in 0:07:08.200 --> 0:07:12.440 a different place. So the what their ad business has grown, 0:07:12.920 --> 0:07:17.200 um obviously tremendously into multibillion dollar business. But really what 0:07:17.240 --> 0:07:19.720 they did is they started monetizing what they were giving 0:07:19.720 --> 0:07:22.480 away for free. So you went to Amazon, you did 0:07:22.480 --> 0:07:25.400 the search, and you've got the search results, and that 0:07:25.600 --> 0:07:27.920 you know, Amazon didn't charge anyone to be to have 0:07:28.000 --> 0:07:30.720 a higher placement in those search results. And so Amazon 0:07:30.840 --> 0:07:33.360 start a business where now if you want to be 0:07:33.400 --> 0:07:35.280 at the top of the search results, just like on 0:07:35.320 --> 0:07:38.680 a Google search, UM, you can pay for that. UM, 0:07:38.720 --> 0:07:40.240 you can bid on that, you can pay for that. 0:07:40.360 --> 0:07:43.360 I don't really consider that being in in you know, 0:07:43.480 --> 0:07:45.920 kind of like in roads into the app business. I 0:07:45.960 --> 0:07:50.320 just consider that attacks on their retailers essentially that they 0:07:50.360 --> 0:07:54.040 figured out they can charge. But they're starting mentor phase 0:07:54.840 --> 0:07:57.960 UM where they potentially are going to go beyond just 0:07:58.280 --> 0:08:01.680 kind of search results in Amazon and UM and start 0:08:01.760 --> 0:08:06.280 to really compete potentially with Google, and I think also 0:08:06.480 --> 0:08:10.400 because of Amazon Prime connected television, the choices to what 0:08:10.520 --> 0:08:14.400 they start doing running UM selling ads based on Amazon 0:08:14.520 --> 0:08:17.160 Prime and other connected TV is kind of where the 0:08:17.280 --> 0:08:21.920 real competition potentially be. That's the massive shift in digital 0:08:21.920 --> 0:08:25.560 advertising is the shift from linear television to connected television. 0:08:25.680 --> 0:08:29.560 Mark Douglas, chief executive officer of Steelhouse based in Los Angeles, 0:08:29.600 --> 0:08:47.040 Thank you so much for your time. This year has 0:08:47.040 --> 0:08:51.360 been a tremendously good year for US equities, including the 0:08:51.480 --> 0:08:53.960 hospitality sector. I'm looking right now at the sub indext 0:08:54.000 --> 0:08:57.079 for the SMP five hundred focused on hospitality and it's 0:08:57.080 --> 0:09:01.760 returns nearly nine year today joining us to talk about 0:09:02.120 --> 0:09:04.320 the latest and greatest in the industry. We're lucky to 0:09:04.480 --> 0:09:08.040 have Guilda Perez Alvarado. She is chief executive officer of 0:09:08.640 --> 0:09:12.600 j L L Hotels and Hospitalities. J L L Jones 0:09:13.120 --> 0:09:15.760 lang Lassalle is actually one of the biggest in the 0:09:15.800 --> 0:09:20.079 space operating in in the hotel and hospitality sector. I'm 0:09:20.120 --> 0:09:23.079 just wondering, Guilda, what do you think is really behind 0:09:23.200 --> 0:09:25.120 the incredible boom that we've seen, at least in the 0:09:25.160 --> 0:09:28.480 share prices of the hospitality sector so far this year. 0:09:29.600 --> 0:09:33.040 Thanks Lisa, Very happy to be here. Listen, fundamentals are 0:09:33.120 --> 0:09:35.000 very very strong right now. So we're in the tenth 0:09:35.120 --> 0:09:38.280 year of the recovery. We are expecting um for there 0:09:38.320 --> 0:09:41.520 to be positive reugh park growth still. Uh, travel and 0:09:41.559 --> 0:09:45.199 tourism patterns are also very positive. And you know, as 0:09:45.240 --> 0:09:48.079 the economy goes so it dust hotels. We're very much 0:09:48.120 --> 0:09:51.040 related to GDP growth. So what's going on in the 0:09:51.160 --> 0:09:52.959 M and A space here? We see a lot oftentimes 0:09:53.000 --> 0:09:55.520 when a big hotel trades uh, you know, it makes 0:09:55.559 --> 0:09:57.880 front page news. How are the trends M and A 0:09:57.960 --> 0:10:01.160 wise in the hospitality space. It's great question. Listen. We 0:10:01.200 --> 0:10:05.200 are at record level of fundraising activity at the moment um. 0:10:05.240 --> 0:10:09.320 There's more investors, not necessarily hotel investors, but more generalist 0:10:09.320 --> 0:10:13.000 investors looking to make um entryway into our segue into 0:10:13.320 --> 0:10:16.000 the space. I think, um, you know, from an M 0:10:16.000 --> 0:10:20.079 and A activity, consolidation is extremely important. So bigger is better. 0:10:20.640 --> 0:10:24.280 And let's say said, with the level of fundraising that 0:10:24.360 --> 0:10:28.640 we've had right now, people are looking at mean uh 0:10:28.800 --> 0:10:32.000 meaningful ways of the capital deployment at the stage. One 0:10:32.000 --> 0:10:35.199 thing I'm struggling with is. On one hand, people seem 0:10:35.280 --> 0:10:37.839 to be increasingly confident about the economy and the United 0:10:37.880 --> 0:10:41.040 States anyway. I mean, other there seems to be sort 0:10:41.040 --> 0:10:44.080 of a lack of faith in the ongoing strength that 0:10:44.080 --> 0:10:45.559 we've seen in the economy. There are a lot of 0:10:45.559 --> 0:10:47.600 people wondering when are we gonna see the extra session? 0:10:47.920 --> 0:10:50.600 How are you seeing that playing out in the hotel sector? 0:10:50.640 --> 0:10:54.360 Are people increasing their spending on vacations right now or 0:10:54.440 --> 0:10:57.440 they kind of hanging in there, hanging steady, or even 0:10:57.480 --> 0:11:02.040 reducing it in preparation for perhaps some kind of leaner times. Listen, 0:11:02.080 --> 0:11:04.160 I think people are still a bit cautious, but there's 0:11:04.160 --> 0:11:06.400 no you know, there's no indication right now that we're 0:11:06.440 --> 0:11:09.439 heading into a recession, right, So totally agree, But you 0:11:09.480 --> 0:11:11.839 still hear people talking about it. So I have to wonder, 0:11:11.920 --> 0:11:14.160 you know, are you seeing it actually affect business sediment? 0:11:14.280 --> 0:11:17.640 You know, from a business perspective, No, From a travel 0:11:17.679 --> 0:11:21.640 demand pattern no. Um, And I would say from you know, 0:11:21.880 --> 0:11:25.040 hotel I'm an activity, definitely not. What are some of 0:11:25.040 --> 0:11:28.040 the areas you know, eminently you've talked about fresh capital 0:11:28.520 --> 0:11:32.199 chasing hotel properties. Are there certain regions of the world 0:11:32.360 --> 0:11:35.320 that are better hotter than others. Yea, So we just 0:11:35.360 --> 0:11:38.560 wrapped up an investor road show in Asia last week. 0:11:38.640 --> 0:11:40.760 Before that we were in Europe and prior to that 0:11:40.760 --> 0:11:43.560 we were in the Middle East. I would say, um, 0:11:43.600 --> 0:11:47.200 you know, the two most sought after geographies the United 0:11:47.200 --> 0:11:51.400 States in the UK even with Brexit. So what tie 0:11:51.440 --> 0:11:54.679 ups are you expecting or could you see happening in 0:11:54.760 --> 0:11:58.640 terms of activity? Listen, what are people chasing right now? 0:11:58.720 --> 0:12:02.600 So people love resorts, people love select service portfolios. I 0:12:02.600 --> 0:12:04.720 think it's a flight to quality and the reason why 0:12:04.760 --> 0:12:07.320 London and New York continued to be the first and 0:12:07.400 --> 0:12:10.240 second most liquid markets is people want to go in 0:12:10.320 --> 0:12:12.200 and then to your point, Lisa, what happens if they 0:12:12.280 --> 0:12:14.480 have to sell. There's a ton of liquidity here, so 0:12:14.559 --> 0:12:16.840 you can always sell. Okay, we just but I'm wondering 0:12:16.920 --> 0:12:22.200 are their names in terms of what acquiring others are 0:12:22.200 --> 0:12:26.839 we looking at? You know, Hilton? Then they're all very 0:12:26.880 --> 0:12:28.960 active right now. I mean, let's look at what's happened, 0:12:29.080 --> 0:12:31.560 um in the past several months. So you have I 0:12:32.040 --> 0:12:36.120 acquiring six senses. That's a really interesting spotlight into what 0:12:36.120 --> 0:12:38.840 people are focused on with wellness. That's going to be 0:12:38.880 --> 0:12:42.000 really exciting. You have now the concept of the urban resort, 0:12:42.080 --> 0:12:46.040 so they're playing into that. Uh Marryed buying Starwood, Um, 0:12:46.200 --> 0:12:48.079 you know, not too long ago, and we're still seeing 0:12:48.120 --> 0:12:50.680 the benefits of that consolidation. So I do expect more 0:12:50.720 --> 0:12:54.199 to happen, and I think there should be. She's very 0:12:54.920 --> 0:12:58.040 very impression experience. She just come off the road show. 0:12:58.080 --> 0:13:01.520 She's verse. But one thing I want to when I 0:13:01.559 --> 0:13:03.600 read you know about you know, looking at resorts and 0:13:03.600 --> 0:13:06.840 things like that in the website, say, talk about experiential travel. 0:13:07.440 --> 0:13:10.679 What is that isn't traveled by definition and experience? I 0:13:10.720 --> 0:13:14.320 think you're absolutely right. That's a very fancy, um fancy name. 0:13:14.400 --> 0:13:17.520 Right now. It's anything and everything memorable. I think the 0:13:17.600 --> 0:13:20.080 traveler right now it doesn't want a cookie cutter experience. 0:13:20.440 --> 0:13:22.440 And if you look at where people are focused on, 0:13:22.520 --> 0:13:26.800 it's all about you know, experiences, right. That's Airbnb's angle 0:13:26.840 --> 0:13:30.320 into the hotel space, Live like a local, right, it's experience, 0:13:30.960 --> 0:13:33.880 live like a local. I'm just thinking, I mean, you 0:13:33.920 --> 0:13:36.000 show up to the hotel, it isn't there, You're giving 0:13:36.040 --> 0:13:38.360 a tent. I mean that's an experience that's memorable. I mean, 0:13:38.480 --> 0:13:41.280 what's the bar here I'm just wondering. I don't know, 0:13:41.400 --> 0:13:44.520 go figure one real quick question for you. I'm interested 0:13:44.679 --> 0:13:46.480 in some of the areas where there's been a lot 0:13:46.520 --> 0:13:49.280 of hotels built, and thinking of New York City, for example, 0:13:49.840 --> 0:13:52.400 is there evidence that you are seeing some weakening there 0:13:52.600 --> 0:13:55.199 and that that's going to kind of be captain and 0:13:55.280 --> 0:13:58.719 decline the huge wave of supply. I think it's behind us, right. 0:13:58.720 --> 0:14:00.840 There's still more rooms being to of heard in New York, 0:14:00.880 --> 0:14:02.760 but the pace at which those are being delivered is 0:14:02.760 --> 0:14:06.280 definitely way down. UM I would say, yes, investors are 0:14:06.360 --> 0:14:08.960 very much focused on supply growth, but there's markets like 0:14:09.000 --> 0:14:11.480 New York, Boston, San Francisco, London that are going through 0:14:11.600 --> 0:14:15.640 huge transformations in the city from an infrastructure perspective. So 0:14:16.080 --> 0:14:18.840 maybe hotel US get a little bit ahead of themselves. 0:14:19.160 --> 0:14:21.720 But now you have office and you know, all of 0:14:21.760 --> 0:14:25.360 these real estate investment and infrastructure investments supporting more demand. 0:14:26.200 --> 0:14:28.480 Gilda Press Avarado, thank you so much for joining US. 0:14:28.480 --> 0:14:32.120 Guild does A CEO America's Hotel and Hospitality Group for 0:14:32.200 --> 0:14:34.920 j L L joined us on our Bloomberg Interactive Broker studio. 0:14:50.040 --> 0:14:54.040 Twalls Fitzpatrick joining US now Managing director if we're e 0:14:54.160 --> 0:14:57.560 NP a research at sun Trust. Robinson Humphrey coming to 0:14:57.640 --> 0:14:59.800 us from Houston, Texas. Well, thank you so much for 0:14:59.840 --> 0:15:02.840 being with us. So it does appear that Occidental Petroleum 0:15:03.000 --> 0:15:06.480 is starting a bidding war for Anadarko Chevron. Of course, 0:15:06.520 --> 0:15:09.440 the other suitor here, bitter. Who do you think is 0:15:09.480 --> 0:15:14.680 a better potential winner of this fight? Hey, good morning. Yeah, 0:15:15.280 --> 0:15:18.120 it's back to exciting times in the in the oil patch, 0:15:18.600 --> 0:15:21.160 I think, and I think the market is telling us 0:15:21.240 --> 0:15:24.400 it would agree that Chevron is a little bit better 0:15:24.560 --> 0:15:28.960 as a natural fit here. Uh, the acreage overlaps are 0:15:29.080 --> 0:15:32.080 really pretty pretty rock solid. I mean they fit like 0:15:32.120 --> 0:15:36.000 a puzzle. Oxy you know, a fine company of course, 0:15:36.080 --> 0:15:39.320 good permian overlap, but you know, they'd be newer to Colorado, 0:15:39.360 --> 0:15:41.280 they'd be newer to the l n G game, they'd 0:15:41.280 --> 0:15:43.800 be newer to the Gulf of Mexico. So I think 0:15:44.240 --> 0:15:47.240 I think Chevron is a little bit better of of 0:15:47.280 --> 0:15:49.760 a fit. And I think that the market is telling 0:15:49.840 --> 0:15:53.800 us that with with Oxy down call it seven per 0:15:53.840 --> 0:15:58.440 cent since since the news came out, and uh, the 0:15:58.440 --> 0:16:00.480 the e M P Index up about the same, up 0:16:00.520 --> 0:16:02.840 about seven percent as well. So well, what do you 0:16:02.840 --> 0:16:04.920 think Chevron is going to do here, what's the response 0:16:04.960 --> 0:16:07.480 is going to be. I think they have to come 0:16:07.480 --> 0:16:10.400 back at it. I mean, you know, uh Mr Worth 0:16:10.640 --> 0:16:14.560 was was on TV and he pretty pretty definitively said that, 0:16:14.920 --> 0:16:17.440 you know, when we step into a deal, we intend 0:16:17.440 --> 0:16:20.200 to close that deal. Uh, So you know, he laid 0:16:20.200 --> 0:16:21.800 it out there. I think that they have to come 0:16:21.840 --> 0:16:24.560 back with something that being said, you know, looking through 0:16:24.920 --> 0:16:28.200 uh through the finally material, it's clear that that that 0:16:28.480 --> 0:16:33.280 uh Anadarko prefers the Chevron bid UM. So you know, 0:16:33.480 --> 0:16:36.800 do they really have to come back and top seventies 0:16:36.800 --> 0:16:41.160 six uh significantly or can can they match it? And 0:16:41.360 --> 0:16:43.640 uh and maybe the board will go with them. I 0:16:43.680 --> 0:16:45.800 think that they can. I think that they can match it. 0:16:45.880 --> 0:16:49.040 I think that they're in the advantage position again, both 0:16:49.080 --> 0:16:53.040 from a balance sheet perspective obviously, and from a market 0:16:53.080 --> 0:16:56.640 reaction perspective. It's just it's tough for a management team 0:16:56.640 --> 0:16:59.920 when you've underperformed by almost fifteen percent since this new 0:17:00.080 --> 0:17:02.560 is to be able to really dig in your heels. 0:17:03.080 --> 0:17:05.680 So here's what I'm struggling with right now. The fact 0:17:05.800 --> 0:17:08.360 is that most people in the market think that Chevron 0:17:08.400 --> 0:17:10.120 is gonna win this bidding war if it turns into 0:17:10.119 --> 0:17:13.760 a bidding war, So is occidental basically just saying, all right, 0:17:13.840 --> 0:17:17.280 we're gonna punch a hole in our competition by forcing 0:17:17.320 --> 0:17:19.840 them to overpay for this deal. I mean, is that 0:17:19.880 --> 0:17:25.200 basically what's going on here? Um? You know, I think 0:17:25.240 --> 0:17:28.320 they really want it. I really do. UM. You know, 0:17:28.600 --> 0:17:31.320 OXY is they're in a position. They do have great 0:17:31.359 --> 0:17:33.440 acreage in the permium, but they're gonna be thrown off 0:17:33.440 --> 0:17:35.600 a lot of cash going forward, especially from some of 0:17:35.640 --> 0:17:38.119 these international projects that they have, and they want to 0:17:38.119 --> 0:17:41.080 plow it back into something. Uh. So I don't think 0:17:41.119 --> 0:17:44.679 that they're necessarily doing anything to to harm Chevron. I 0:17:44.720 --> 0:17:47.040 think that they want the acreage because they want to 0:17:47.080 --> 0:17:50.280 be able to, uh to feed the free cash flow 0:17:50.320 --> 0:17:52.639 that's coming to them into an asset that's going to 0:17:52.720 --> 0:17:55.880 be able to give them solid or turns Anadarko clearly 0:17:55.920 --> 0:17:58.439 fits that bill. Now you know, I would agree with you. 0:17:58.440 --> 0:18:00.800 I'm a little bit surprised. There's there's plenty of other 0:18:00.840 --> 0:18:04.720 companies that fit that bill for for a similar price tag. So, uh, 0:18:04.720 --> 0:18:07.800 you know, to come back in and to basically you know, 0:18:07.880 --> 0:18:10.840 to be uh call it a bantam weight and you 0:18:10.920 --> 0:18:13.280 decide to to to pop a heavy weight in the 0:18:13.320 --> 0:18:15.280 nose and go for a bidding more. I mean, that 0:18:15.359 --> 0:18:18.960 does seem a little bit aggressive, especially when when the 0:18:19.000 --> 0:18:22.160 e MP space in general is selling at the bottom 0:18:22.280 --> 0:18:25.159 end of its multiple range. So there's there is a 0:18:25.240 --> 0:18:27.800 decent amount of opportunities, a decent amount of folks you 0:18:27.800 --> 0:18:30.119 could go after. So well, let's talk about that a 0:18:30.160 --> 0:18:34.280 little bit. I mean, I'm sure energy bankers are picking 0:18:34.320 --> 0:18:36.600 up the phone this morning and you know, dialing up 0:18:36.640 --> 0:18:39.199 all their clients, trying to get some deals on the table, 0:18:39.280 --> 0:18:41.600 trying to shake the trees a little bit. Do you 0:18:41.600 --> 0:18:44.160 expect a pick up an M and eight or maybe 0:18:44.160 --> 0:18:46.040 this will spark a pick up an M and A 0:18:46.280 --> 0:18:49.840 in the space. Yeah, I think it will. I mean, 0:18:50.280 --> 0:18:51.520 you know, you have a couple of things that are 0:18:51.560 --> 0:18:54.720 happening for the first time in a while. Scale really matters. 0:18:54.800 --> 0:18:56.800 You don't want to be running one or two rigs. 0:18:57.280 --> 0:18:59.879 It's really just not that efficient. But more importantly, for 0:19:00.040 --> 0:19:04.880 evaluation perspective, there's about a two term multiple discrepancy between 0:19:05.320 --> 0:19:07.720 the mid and large cats That obviously makes it a 0:19:07.760 --> 0:19:10.560 little bit easier to pay the premium. Uh, it makes 0:19:10.560 --> 0:19:12.720 a little bit easier to get these deals done because 0:19:12.720 --> 0:19:15.320 you have a little bit of a natural arbitrage, but 0:19:15.400 --> 0:19:19.679 also you your incentives are lining up uh better, you 0:19:19.720 --> 0:19:23.520 have more activists coming into the space and um and 0:19:23.560 --> 0:19:25.240 I know this is a little bit a bracer to some, 0:19:25.400 --> 0:19:28.119 but but the managements are getting pretty big payouts on 0:19:28.160 --> 0:19:31.440 the way out, and honestly, when I talk to investors, 0:19:31.480 --> 0:19:35.760 that's something that they're really encouraged by, somewhat counterintuitively, because 0:19:35.760 --> 0:19:38.920 there's been a feeling that the pay packages are better 0:19:38.960 --> 0:19:41.119 for the management teams than anything they might get on 0:19:41.160 --> 0:19:44.879 the way out, even with the twenty premium. UM. So, actually, 0:19:44.920 --> 0:19:48.119 these investors seem pretty happy to see, uh, these golden 0:19:48.119 --> 0:19:50.520 parachutes coming back because I think it will lubricate the 0:19:50.640 --> 0:19:53.320 M and A just real quickly at twenty seconds. Well, 0:19:53.760 --> 0:19:55.280 give me a couple of names you think could be 0:19:55.480 --> 0:19:57.159 pop up on the screen in terms of M and 0:19:57.200 --> 0:20:00.879 A targets. Yeah, absolutely, I say. If you're looking for 0:20:01.040 --> 0:20:06.040 asset overlap, Noble and PDC are almost perfect overlaps. If 0:20:06.080 --> 0:20:10.719 you're looking for the blessing on the Colorado regulated regulatory stuff, 0:20:11.040 --> 0:20:13.680 it's going to be s r C extraction. And of course, 0:20:13.680 --> 0:20:15.440 if you want to go after the Permian, which is 0:20:15.480 --> 0:20:18.760 where most of the speculation has been. Uh, you'd want 0:20:18.760 --> 0:20:23.320 to look at Pioneer and Parsley. Excellent good names. Thank you. 0:20:23.600 --> 0:20:25.399 I think you know, I think there's going to be 0:20:25.400 --> 0:20:26.639 more M and A is what while we're here in 0:20:26.680 --> 0:20:29.639 this space and interesting to get some names there. Well. Fitzpatrick, 0:20:29.720 --> 0:20:47.440 Managing director for EMP Research at Untrust, Robinson humphreca Well, 0:20:47.440 --> 0:20:49.280 the time has finally come for the market to find 0:20:49.280 --> 0:20:52.480 out just how ugly Tesla's first quarter was. Expectations for 0:20:52.520 --> 0:20:55.080 the period have been lowered sharply in recent weeks, especially 0:20:55.119 --> 0:20:59.440 after disappointing delivery numbers renounced order this month. To get 0:20:59.440 --> 0:21:02.280 the low down, we turned to Liam Denning Energy, Mining 0:21:02.280 --> 0:21:05.120 and commodities columns for Bloomberg Opinion. He joins us here 0:21:05.119 --> 0:21:07.959 in a Bloomberg Interactive Broker studio. Liam, thanks so much 0:21:08.000 --> 0:21:11.200 for joining us. I want to start with the event 0:21:11.400 --> 0:21:14.600 that the company held. Um, I guess yesterday about the 0:21:14.640 --> 0:21:18.320 autonomous vehicle Any news out of that? What was that? 0:21:20.280 --> 0:21:24.239 What was it? Good question? So? UM, I think some 0:21:24.280 --> 0:21:26.520 people are calling it a smoke screen. Don't look at 0:21:26.520 --> 0:21:32.040 my production problems, look at my vehicles. Something something shiny. Well, 0:21:32.160 --> 0:21:34.280 I think, I think any any investor day like that 0:21:34.359 --> 0:21:38.960 with any company is usually geared towards saying, hey, we're 0:21:38.960 --> 0:21:43.320 doing something here that you guys aren't fully appreciating, and therefore, 0:21:43.800 --> 0:21:45.760 you know, you should be valuing our stock higher and 0:21:46.000 --> 0:21:48.680 embed the value of this in the stock, etcetera, etcetera. 0:21:48.920 --> 0:21:53.800 I mean this really matters for for Tesla because remember, 0:21:53.920 --> 0:21:57.560 as these these numbers coming out tonight quite likely to 0:21:57.640 --> 0:22:00.800 show the value of Tesla is all in the multiple, 0:22:00.840 --> 0:22:04.880 it's not really in the earnings. And so if Tesla 0:22:04.880 --> 0:22:09.080 can demonstrate hey, we're actually you know, better at autonomy 0:22:09.119 --> 0:22:12.680 than people give us credit for, that's one way of 0:22:13.359 --> 0:22:16.960