WEBVTT - BofA Stock Traders Post Record 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.280 --> 0:00:09.840 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 clus technology, politics, economics, all purtnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.599 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week at iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:32.840 YouTube search Bloomberg Global News. Okay, that's it. With Bank 0:00:32.840 --> 0:00:35.680 of America reporting this morning big bank earnings. They are 0:00:35.760 --> 0:00:38.640 done for the quarter. Shares hire by about three point 0:00:38.720 --> 0:00:41.600 nine percent in the wake of that report. The company, 0:00:41.680 --> 0:00:44.760 joining its Wall Street rivals and capitalizing on market volatility, 0:00:44.840 --> 0:00:49.279 will also benefiting from an increase in lending. Joining us 0:00:49.320 --> 0:00:52.519 now is Sally Bakewell, finance team leader at Bloomberg New 0:00:52.600 --> 0:00:55.600 She's with us in the Bloomberg Interactive Broker Studio. Sally, 0:00:55.640 --> 0:00:57.800 great to have you with us. Uh here we are. 0:00:58.000 --> 0:01:00.440 Your sort of busy season for the quarter is just 0:01:00.640 --> 0:01:03.639 wrapping up here, Uh, give us the highlights from Bank 0:01:03.680 --> 0:01:05.880 of America, and then we pulled back and talk about 0:01:06.160 --> 0:01:09.640 the quarter for big banks in justin MANA. Yeah, I 0:01:09.680 --> 0:01:12.280 think Bank of America was very much in line with 0:01:12.319 --> 0:01:15.720 what we saw from most of the bank's last last week. UM. 0:01:16.120 --> 0:01:19.760 We saw that it capitalized on the volatility or the 0:01:19.840 --> 0:01:24.200 volatility that's been exacerbated by the situation in Ukraine. And 0:01:24.240 --> 0:01:26.200 we saw that investment banking took a bit of a 0:01:26.280 --> 0:01:29.399 hit UM because we have this sort of spack regulation 0:01:29.480 --> 0:01:31.959 that has chilled a lot of the deals. UM. And 0:01:32.000 --> 0:01:35.080 then we also saw some glimpses of how the consumer 0:01:35.200 --> 0:01:38.560 is doing UM. And much like some of the other banks, 0:01:38.600 --> 0:01:42.360 we're seeing these trends where consumers are continuing or amping 0:01:42.440 --> 0:01:44.800 up a little bit. They're spending UM, and Bank of 0:01:44.800 --> 0:01:48.600 America gave us a pretty good picture here. UM. We 0:01:48.680 --> 0:01:52.120 know that consumers, for example, they opened one million credit 0:01:52.120 --> 0:01:55.480 cards in the first quarter. UM is spending increase. The 0:01:55.520 --> 0:01:58.560 bank is expecting that its net interest income, which is 0:01:58.600 --> 0:02:01.640 that key metric for banks, is going to grow by 0:02:01.720 --> 0:02:04.920 to sifty million in the second quarter. And that's on 0:02:05.120 --> 0:02:09.119 strong loan and strong deposit growth. So the words from 0:02:09.120 --> 0:02:11.480 the conference calls and the analysts and the media calls 0:02:11.480 --> 0:02:15.320 were very much about the consumers being in robust health. Um, 0:02:15.360 --> 0:02:18.600 they're sitting on a lot of liquidity UM. Delinquencies and 0:02:18.680 --> 0:02:22.200 charge offs are all low. So the picture is pretty strong. 0:02:22.240 --> 0:02:24.040 But I'm sure one of you is going to ask 0:02:24.200 --> 0:02:26.400 ask me now about what the actual you know, what 0:02:26.440 --> 0:02:28.400 the risks are and what the outlook might be. So 0:02:28.440 --> 0:02:31.160 I'll let you do that. Well, go ahead and answer. 0:02:33.760 --> 0:02:35.360 That was probably a better question than I was gonna 0:02:35.360 --> 0:02:37.639 actually have for you anyway, Sally. So, yeah, what did 0:02:37.639 --> 0:02:39.720 we learn about how things look? Well? I think so 0:02:40.080 --> 0:02:43.120 MONI hand today this the Bank of America chief executive officer. 0:02:43.200 --> 0:02:46.040 He did say that consumers are sitting on They're still 0:02:46.120 --> 0:02:48.120 sitting on a lot of the stimulus that they got, 0:02:48.200 --> 0:02:52.600 and that's kind of helping them, um keep current on 0:02:52.639 --> 0:02:55.200 their debt and enabling them to spend a little bit more. 0:02:55.280 --> 0:02:58.799 But I guess the questions remain about what happens when 0:02:58.840 --> 0:03:02.400 that stimulus, that liquidity they do have, starts to drain 0:03:02.919 --> 0:03:06.280 um and they are left just with high inflation UM 0:03:06.480 --> 0:03:09.080 gas prices being higher, and then we have, you know, 0:03:09.120 --> 0:03:14.680 the overall political uncertainty um interest rate hikes. So while 0:03:14.800 --> 0:03:18.520 the snapshot today looks pretty good, UM, it is not 0:03:18.600 --> 0:03:21.760 without some clouds on the horizon. Tell us a little 0:03:21.760 --> 0:03:24.360 bit about loan growth, because I think when the average 0:03:24.560 --> 0:03:28.200 perhaps listener, here's the word debt in a non financial 0:03:28.240 --> 0:03:30.640 market context, it's like that's a bad word, right, But 0:03:30.680 --> 0:03:34.160 if you hear loans or debt in a Bank of 0:03:34.160 --> 0:03:36.800 America has long growth, that's actually a really good sign 0:03:36.840 --> 0:03:39.520 Talk to us a little bit about what that signals. Yeah, 0:03:39.560 --> 0:03:43.240 and that's exactly the right perspective I think on it. Um, 0:03:43.360 --> 0:03:45.800 we we see the banks have said for a long 0:03:45.840 --> 0:03:48.360 time that they're waiting for loan growth to return. And 0:03:48.360 --> 0:03:51.280 again it's been stimulus has been cited as the reason 0:03:51.320 --> 0:03:53.280 that people aren't boring. Again, they've got enough cash in 0:03:53.320 --> 0:03:56.200 their pockets they don't need to. But loan growth is 0:03:56.200 --> 0:03:58.400 really important for the banks because that feeds into this 0:03:58.560 --> 0:04:01.400 net interest income met trick um that is their main 0:04:01.520 --> 0:04:05.280 source of revenue. So it really matters, UM, and if 0:04:05.520 --> 0:04:07.360 they aren't seeing that, they have to look for other 0:04:07.400 --> 0:04:10.280 places where they can get revenue, and it just complicates 0:04:10.320 --> 0:04:13.120 everything for banks. So we have started to see it 0:04:13.200 --> 0:04:16.840 come back. UM. In the first quarter is not completely 0:04:17.480 --> 0:04:21.440 clear easy picture m JP and and consumer loan growth 0:04:21.520 --> 0:04:25.440 is key UM of For example, last week we had 0:04:25.520 --> 0:04:30.400 JP Morgan reporting UM and while they had commercial and 0:04:30.440 --> 0:04:33.800 I think consumer loans up, I think consumer loans without 0:04:33.839 --> 0:04:38.160 credit cards were actually down. So it's not completely clear 0:04:38.240 --> 0:04:42.240 and positive picture. But banks are now finally after sort 0:04:42.279 --> 0:04:45.840 of two years, starting to see loan growth picking up again. UM. 0:04:45.839 --> 0:04:47.960 And that's also really important for them given that we're 0:04:47.960 --> 0:04:50.600 in a rising rate environment, because they'll obviously benefit from that. 0:04:51.040 --> 0:04:52.400 So if we take a step back and we think 0:04:52.440 --> 0:04:54.520 about what you and your team did last week when 0:04:54.520 --> 0:04:56.960 it comes to covering all the other companies that reported 0:04:57.040 --> 0:05:02.080 JP Morgan, Morgan Stanley and well far Agoing more, Uh, 0:05:02.120 --> 0:05:04.480 what's the takeaway for not just the most recent quarter, 0:05:04.600 --> 0:05:06.600 but but how the year looks even beyond looking at 0:05:06.600 --> 0:05:10.960 the consumer what about these companies businesses? UM, I think 0:05:11.600 --> 0:05:17.279 takeaways are pretty there was a pretty solid picture. I 0:05:17.320 --> 0:05:21.880 think there are some nuances to JP Morgan's earnings. UM 0:05:21.920 --> 0:05:25.760 In particular, UM, we saw that JP Morgan, for example, 0:05:25.800 --> 0:05:28.760 it's set aside one point nine billion and it's as 0:05:28.760 --> 0:05:31.839 a kind of reserve PRISIP provision for the bank to 0:05:31.880 --> 0:05:35.479 cover bad debt, and it's cited both the war in 0:05:35.640 --> 0:05:41.240 Ukraine and it also cited kind of recessionary headwinds. Now 0:05:41.279 --> 0:05:43.440 it played that down a lot and said that they 0:05:43.480 --> 0:05:47.080 have to do this under a particular accounting standard. But 0:05:47.200 --> 0:05:51.560 nonetheless it they they it indicates that they see the 0:05:51.600 --> 0:05:55.000 probability of a recession going from sort of very low 0:05:55.120 --> 0:05:59.200 to just low. So UM. I think perhaps one of 0:05:59.240 --> 0:06:03.040 the takeaways from all of the earnings is that there 0:06:03.040 --> 0:06:08.960 are concerns about future growth. Concerns about future growth go ahead, creaty. 0:06:09.440 --> 0:06:11.640 I was going to ask about the training revenue because 0:06:11.640 --> 0:06:13.719 I know you started off talking about volatility and how 0:06:13.760 --> 0:06:15.960 a lot of these companies are really taking advantage of it. 0:06:16.000 --> 0:06:19.479 But what happens when the volatility goes away? Ultimately the 0:06:19.480 --> 0:06:21.839 selling has to stop, right and we only have about 0:06:21.839 --> 0:06:23.920 forty got I mean, that's a great question. And we 0:06:24.240 --> 0:06:27.240 kept thinking that the volatility to volatility would end. UM. 0:06:27.279 --> 0:06:30.279 We had COVID and then as that receded, we thought 0:06:30.279 --> 0:06:33.279 it would end. We then had inflation. UM. We now 0:06:33.320 --> 0:06:39.839 have the Ukraine situation so that it can't be completely sustainable. UM. 0:06:39.920 --> 0:06:44.720 But we haven't had the absolute quiet calm period yet 0:06:44.760 --> 0:06:47.760 where we see them normalize. So you know, big questions 0:06:47.760 --> 0:06:52.080 remain about what actually normalizing means for these banks um 0:06:52.560 --> 0:06:55.320 and trading and their trading businesses which just had a 0:06:55.360 --> 0:06:58.000 bonanza of the quarter. This is why we love having 0:06:58.000 --> 0:07:01.120 you join us. Sally Bigwhell financed Team Lee for Bloomberg 0:07:01.200 --> 0:07:03.080 new Shares a Bank America by the way, now higher 0:07:03.120 --> 0:07:05.800 by four point two percent. Sally's with us in the 0:07:05.880 --> 0:07:10.840 Bloomberg Interactive Brooker Studio in New York. This is Bloomberg 0:07:10.840 --> 0:07:14.520 Business Week with Carol Messer and Bloomberg Quick Takes Tim 0:07:14.560 --> 0:07:18.640 Stenovic on Bloomberg Radio. Well, you all might remember last 0:07:18.720 --> 0:07:21.760 week somebody by the name of Elon Musk, the wealthiest 0:07:21.800 --> 0:07:24.200 person in the world according to the Bloomberg Billionaires Index, 0:07:24.240 --> 0:07:26.960 set down for an extended interview with Chris Anderson of 0:07:27.160 --> 0:07:30.880 TED in Vancouver, and there he talked about a quote 0:07:30.920 --> 0:07:35.160 unquote plan B if his Plan A for taking Tesla 0:07:35.200 --> 0:07:38.160 private doesn't work out. This is something that Max Chafkin, 0:07:38.440 --> 0:07:41.520 features editor at Bloomberg Business Week, writes about. You can 0:07:41.560 --> 0:07:44.080 read Max's story now on the Bloomberg Terminal. Also at 0:07:44.080 --> 0:07:46.840 Bloomberg dot com. Slash A Business Week joining us now 0:07:46.960 --> 0:07:50.280 is editor Joel Webber as well. He is the editor 0:07:50.320 --> 0:07:52.080 of Bloomberg business Week, and he joins us on the 0:07:52.120 --> 0:07:56.960 access line from Brooklyn along with Max. Joel, Uh, before 0:07:56.960 --> 0:07:59.800 we talk about Plan B, we really need to understand 0:08:00.000 --> 0:08:03.960 what's plan as. Yeah, that's a great question. So I 0:08:04.240 --> 0:08:07.680 think we're all still trying to figure that out. But um, 0:08:07.720 --> 0:08:11.440 you know, Ellen obviously has made uh this offer. Uh, 0:08:11.560 --> 0:08:14.200 we'll see if it actually comes to the deal actually 0:08:14.200 --> 0:08:16.360 comes to fruition. In the meantime, you know, the Twitter 0:08:16.600 --> 0:08:19.120 board is opted for a poison pill. So all of 0:08:19.120 --> 0:08:23.120 this very dramatic has played out online, uh since since 0:08:23.160 --> 0:08:26.800 the news broke on on Thursday morning. Um, and you know, 0:08:26.840 --> 0:08:28.520 Max in the middle of it, I'm sort of like, Max, 0:08:28.520 --> 0:08:31.360 what's your taking all of this? And he raises a 0:08:31.400 --> 0:08:34.000 good point, which is, you know, this guy's CEO of 0:08:34.040 --> 0:08:37.440 two publicly traded companies, and you know, like what would 0:08:37.480 --> 0:08:41.240 it be like to have him on a third company? 0:08:41.360 --> 0:08:43.240 You know, like we you know, we don't really know, 0:08:43.320 --> 0:08:47.760 and that that plan A what's it looked like? Max? Yeah, Well, 0:08:47.920 --> 0:08:50.920 as you say, Joel, I mean the previous uh chief 0:08:50.920 --> 0:08:54.680 executive of Twitter was constantly getting hammered by investors for 0:08:54.720 --> 0:08:58.040 having two jobs. Remember Jack Dorsey was the founder of 0:08:58.160 --> 0:09:01.880 co founder of Twitter. Also was uh CEO of Square 0:09:01.960 --> 0:09:04.320 which is now called Block and and and there was 0:09:04.360 --> 0:09:06.400 this whole drama with it with a bunch of activist 0:09:06.400 --> 0:09:08.160 investors over the fact that the two jobs that was 0:09:08.280 --> 0:09:11.720 too many as far as twitters investors are concerned. Elon Musk, 0:09:11.880 --> 0:09:13.760 you know, has something like, you know so many I've 0:09:13.840 --> 0:09:15.760 kind of lost count. Right, you have the two the 0:09:15.800 --> 0:09:18.200 two big ones, plus you have the tunnel thing, you 0:09:18.280 --> 0:09:20.360 have the you know, you have the AI thinks you 0:09:20.400 --> 0:09:23.640 have brain implants. And now he started proposing um to 0:09:23.720 --> 0:09:26.280 take on another job. And I think anyone who who 0:09:26.280 --> 0:09:29.160 watched Um that Ted interview that you that you bring 0:09:29.280 --> 0:09:33.120 up saw, you know, somebody who is very good at, 0:09:33.320 --> 0:09:35.960 you know, generating media attention and getting people to talk 0:09:36.000 --> 0:09:38.520 about him. But but there wasn't really there isn't as 0:09:38.559 --> 0:09:41.040 far as I can tell, any kind of plan um 0:09:41.120 --> 0:09:44.319 either for how Elon Musk will kind of go through 0:09:44.400 --> 0:09:47.040 with this proposed acquisition or what he would do with 0:09:47.080 --> 0:09:52.520 it once he acquires it. Maxie want us through. And 0:09:52.600 --> 0:09:54.320 this is just for the benefit of our listeners what 0:09:54.400 --> 0:09:57.320 a poison pill actually is, because this was referenced multiple 0:09:57.320 --> 0:10:00.840 time in your story. Uh so, yeah, have poison pill 0:10:00.960 --> 0:10:05.280 is basically a way for the Border directors to allow 0:10:05.320 --> 0:10:10.440 other shareholders to acquire shares and essentially dilute, uh, you know, 0:10:10.840 --> 0:10:14.720 dilute the stake of of whoever the attacker is in 0:10:14.720 --> 0:10:17.000 this case, be Elon Musk. And it's it's a way 0:10:17.080 --> 0:10:20.640 to to basically allow the board to keep control of 0:10:20.640 --> 0:10:23.280 the situation and and hopefully as far as they're sort 0:10:23.280 --> 0:10:25.200 of you don't negotiate with Musk and you know, or 0:10:25.200 --> 0:10:27.960 whoever get them to a higher price. UM. This is 0:10:27.960 --> 0:10:31.640 something that's commonly used in UM in these kind of situations. 0:10:31.840 --> 0:10:34.160 And it's also part of what's driving this is because 0:10:34.280 --> 0:10:37.400 Musk's offer, while while it's higher than it will than 0:10:37.440 --> 0:10:40.199 the stock price was when he first you know, started 0:10:40.240 --> 0:10:42.920 investing in Twitter back in March, it's actually quite a 0:10:42.920 --> 0:10:45.360 bit lower than than where the stock was, you know, 0:10:45.440 --> 0:10:48.280 even you know, as as as really as like last fall. 0:10:48.640 --> 0:10:50.960 So so from the Border director's point of view, Elon 0:10:51.040 --> 0:10:53.360 Musk has kind of made a low ball offer, UM, 0:10:53.480 --> 0:10:56.600 and and they want to negotiate, and Musk um it seems, 0:10:56.640 --> 0:10:59.040 you know, rather than trying to negotiate is you know, 0:10:59.400 --> 0:11:02.319 as he does taking this to Twitter and and and um, 0:11:02.400 --> 0:11:04.760 you know, tweeting about the possibility of a tender offer. 0:11:04.760 --> 0:11:08.000 All they didn't seem done anything. Um and and you know, 0:11:08.080 --> 0:11:10.360 suggesting or kind of implying that there might be other 0:11:10.360 --> 0:11:13.520 investors who might join him. But it's all extremely sort 0:11:13.520 --> 0:11:16.280 of theoretical, and it you know, makes for great content, 0:11:16.360 --> 0:11:19.160 but but it's not clear that any of this goes anywhere. Hey, Max, 0:11:19.240 --> 0:11:21.400 I know you did a lot of reporting about Elon 0:11:21.480 --> 0:11:23.720 Musk's early years for your book The con Trary and 0:11:23.720 --> 0:11:26.960 Peter Teal and Silicon Valleys Pursuit of Power. What do 0:11:27.040 --> 0:11:29.640 we know about the way that Elon Musk thinks about 0:11:29.720 --> 0:11:32.440 quote unquote free speech, the way that he perhaps would 0:11:32.440 --> 0:11:35.080 think about rules and regulations when it comes to Twitter 0:11:35.160 --> 0:11:38.560 if he were the person to actually take it over. 0:11:39.880 --> 0:11:44.679 Musk is um has some libertarian tendencies and um, and 0:11:44.720 --> 0:11:47.360 he's he's talked, he talked about them at times. You know. 0:11:47.400 --> 0:11:50.520 On the other hand, Um, he's also somebody who um, 0:11:50.600 --> 0:11:53.200 you know who his sort of main political belief in 0:11:53.240 --> 0:11:55.840 so Fur, you know, has has expressed political beliefs has 0:11:55.840 --> 0:11:59.320 been around climate change, and in particular, you know, government 0:11:59.400 --> 0:12:02.800 support for companies like Tesla that are you know, interested 0:12:02.800 --> 0:12:04.720 in doing something about that, so which is which is 0:12:04.720 --> 0:12:07.000 not very libertarian. I think it's fair to say his 0:12:07.480 --> 0:12:10.720 um political beliefs are are are pretty fuzzy or or 0:12:10.800 --> 0:12:13.199 or you know, this is maybe just not articulated in 0:12:13.200 --> 0:12:15.840 in any kind of like clear way. He's been somebody 0:12:15.840 --> 0:12:18.640 who's been sort of very in favor of helping himself 0:12:18.679 --> 0:12:21.960 and helping his companies and and and starting innovative businesses. 0:12:22.000 --> 0:12:25.160 But but hasn't you know, expressed you know, huge you 0:12:25.200 --> 0:12:28.079 know things on political issues, you know, on free speech. 0:12:28.120 --> 0:12:30.280 I think some of what's going on here with Musk, 0:12:30.520 --> 0:12:33.080 you know, I I think he probably agrees with that 0:12:33.200 --> 0:12:36.199 that general idea. I think he also realizes that there 0:12:36.320 --> 0:12:39.680 is a huge constituency of people out there for this message. 0:12:39.720 --> 0:12:41.880 You know, we're seeing especially on you know, sort of 0:12:41.880 --> 0:12:44.800 like right wing media, right wing talk radio itself and 0:12:44.840 --> 0:12:47.600 so on. There. You know, they're getting very very excited 0:12:47.640 --> 0:12:51.040 about the idea of Elon Musk coming and taking over 0:12:51.080 --> 0:12:53.280 Twitter and making it a free speech social network because 0:12:53.280 --> 0:12:55.880 of course, you know, the subtext is they would allow 0:12:55.920 --> 0:12:57.840 you know, Donald Trump back on the platform, and it 0:12:57.880 --> 0:12:59.880 becomes this kind of um, you know, almost like a 0:13:00.040 --> 0:13:04.239 dog whistle to to get um, you know, get enthusiasm 0:13:04.360 --> 0:13:06.560 from from conservatives. So I think some of that is 0:13:06.760 --> 0:13:08.560 Musk is sort of doing some of that, responding to 0:13:08.600 --> 0:13:11.680 some of that. Remember, he is, you know, an amazing marketer. 0:13:11.800 --> 0:13:14.800 He's somebody who did the impossible with Tesla, where where 0:13:14.840 --> 0:13:16.720 you know, when he started the when he got involved 0:13:16.760 --> 0:13:19.000 in the company, you know, electric cars were seen as 0:13:19.000 --> 0:13:21.440 this kind of wimpy thing that they were not capable, 0:13:21.720 --> 0:13:25.520 and he's you know, created this enormous automaker, you know, 0:13:25.559 --> 0:13:28.400 one of the best selling um cars in the world 0:13:28.440 --> 0:13:31.560 at this point and um, and he's done that by 0:13:31.760 --> 0:13:34.080 by with his amazing marketing. And I think we're seeing 0:13:34.320 --> 0:13:36.240 some of that playing out in real time where where 0:13:36.240 --> 0:13:38.839 Elon must have kind of found a new way to 0:13:38.840 --> 0:13:41.560 to to generate attention and you know, maybe it ends 0:13:41.559 --> 0:13:44.240 with him, um, you know, taking over Twitter or something, 0:13:44.440 --> 0:13:46.800 but it may also just end as another one of 0:13:46.840 --> 0:13:50.800 these you know, crazy uh episodes in the Elon reality show, 0:13:51.840 --> 0:13:54.320 which I guess Max, you know it raises I mean, 0:13:54.320 --> 0:13:56.960 you've you've so elegantly explained sort of master plan and 0:13:57.000 --> 0:14:02.720 there has always been this master plan, right like electrified vehicles, ads, 0:14:02.800 --> 0:14:06.720 solar like it all kind of made sense. How does 0:14:06.760 --> 0:14:09.800 Twitter fit into that? If at all, it doesn't fit 0:14:09.800 --> 0:14:12.200 into it. That's what's so strange about this. I mean, 0:14:12.320 --> 0:14:15.760 Musk has, as you say, Joel, you know, been super 0:14:15.880 --> 0:14:19.080 articulate on the on sort of the subject of of 0:14:19.080 --> 0:14:23.080 of SpaceX and Tesla, and he's he's he's he's been 0:14:23.200 --> 0:14:25.560 he's been very clear that what he's trying to do is, 0:14:25.840 --> 0:14:29.720 you know, accelerate the development of green technologies. That's with 0:14:29.760 --> 0:14:32.960 with Tesla, with SpaceX is rock company. It's um, create 0:14:33.040 --> 0:14:36.920 these capabilities that will help you know, our our civilization, uh, 0:14:37.000 --> 0:14:40.000 survive in the event of something something terrible happening. And 0:14:40.000 --> 0:14:43.080 and those goals you know, are are very lofty and 0:14:43.080 --> 0:14:47.120 and they've gotten you know, his fans very excited with Twitter. 0:14:48.280 --> 0:14:50.640 If you're paying attention to that interview at Ted, you know, 0:14:50.720 --> 0:14:54.520 he tried. He he said that you know, Twitter, if it, 0:14:54.640 --> 0:14:56.240 if it has free speech, it will be able to 0:14:56.280 --> 0:14:59.520 preserve global freedom or something like that. Um And so 0:15:00.240 --> 0:15:02.400 maybe he'll be able to kind of stitch it all together. 0:15:02.720 --> 0:15:06.320 But I think the main reason to be skeptical of Musks, 0:15:06.400 --> 0:15:09.720 ever bail, is that they don't really fit into this 0:15:09.880 --> 0:15:12.240 mass plan. Oh it is a great read, and check 0:15:12.240 --> 0:15:14.840 it out. It's online, It's on the Bloomberg terminal. Max Chafkin, 0:15:14.880 --> 0:15:18.040 Features editor for Bloomberg business Week. He's also the author 0:15:18.040 --> 0:15:20.680 of The Contrarian Peter Teel and Silicon Valley's Pursuit of Power. 0:15:20.960 --> 0:15:24.080 Also Joe Webber, editor at Bloomberg Business Week. You're listening 0:15:24.080 --> 0:15:29.160 to Bloomberg Radio. You're listening to Bloomberg Business Week with 0:15:29.240 --> 0:15:34.520 Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, 0:15:34.520 --> 0:15:37.120 it's not just tax Day, but it's also Earth Month 0:15:37.160 --> 0:15:40.320 because Earth Day is coming up, and we think a 0:15:40.320 --> 0:15:42.600 lot about I think the products that we use, and 0:15:42.640 --> 0:15:45.680 increasingly consumers are thinking about the products that they use 0:15:45.920 --> 0:15:48.120 when it comes to their impact on the environment. And 0:15:48.280 --> 0:15:51.200 one company that was relatively early to the way the 0:15:51.280 --> 0:15:55.000 consumers think is Seventh Generation. They make household and personal 0:15:55.040 --> 0:15:58.000 care products companies. It was it was acquired by Uni 0:15:58.040 --> 0:16:00.640 Lever back in and we're pleased to have back with us. 0:16:00.840 --> 0:16:04.200 Allison Wrightner, she's CEO of Seventh Generation. She joins us 0:16:04.280 --> 0:16:08.040 via zoom from Burlington, Vermont. Alison, how are you hi? 0:16:08.080 --> 0:16:10.760 How are you. Thank you so much for having me back. Hey, 0:16:10.760 --> 0:16:12.400 it's good. Good to have you with us. I do 0:16:12.480 --> 0:16:14.120 want to just quickly say we did try to have 0:16:14.160 --> 0:16:16.680 you last week. There were some problems with the telephone. 0:16:17.080 --> 0:16:19.840 Maybe the cell service in Burlington wasn't so fantastic. So 0:16:19.840 --> 0:16:22.440 we apologize to our viewers and our listeners, and we 0:16:22.480 --> 0:16:24.720 are really glad to have you back with us. Um, 0:16:24.720 --> 0:16:26.200 give us an update on how things are going at 0:16:26.200 --> 0:16:28.600 seventh generation and what you're seeing, because we talk a 0:16:28.640 --> 0:16:31.280 lot about inflation. This is the probably the word that 0:16:31.280 --> 0:16:33.680 I say the most apart from Bloomberg, every single day. 0:16:34.080 --> 0:16:35.720 And I got to ask you, You've been at seventh 0:16:35.720 --> 0:16:39.000 generation for years now, more than a decade, and I'm 0:16:39.000 --> 0:16:43.160 wondering if you've ever seen the raw materials costs that 0:16:43.200 --> 0:16:47.520 go into seventh generation products rise like they are right now. Yeah, 0:16:47.640 --> 0:16:50.120 So if I could have a penny like you for 0:16:50.200 --> 0:16:52.920 every time I've said inflation over the course of the 0:16:53.040 --> 0:16:56.600 last year. It's a kind of a running joke these days. 0:16:56.600 --> 0:16:58.800 But what I will tell you is that we are 0:16:58.880 --> 0:17:01.480 not a mute I think like many companies right now, 0:17:01.600 --> 0:17:04.920 especially in the categories that we operate in, we are 0:17:04.960 --> 0:17:08.760 seeing a true on cost of materials and commodities that 0:17:08.800 --> 0:17:11.920 we've never seen before. UM. But I think for our 0:17:11.960 --> 0:17:15.840 business specifically, UM, we're moving along the same lines as 0:17:15.840 --> 0:17:18.520 our category and our counterparts. So I think we're all 0:17:18.520 --> 0:17:22.000 in this together and for seven times specifically, I think 0:17:22.080 --> 0:17:25.119 what this conversation around how we show up in market 0:17:25.200 --> 0:17:28.440 and the cost of doing business these days has really 0:17:28.440 --> 0:17:31.440 brought to the table an important question around what choices 0:17:31.560 --> 0:17:33.879 do we need to make in order to protect what 0:17:33.960 --> 0:17:38.000 we stand for. We invest significantly in materials like plant 0:17:38.040 --> 0:17:42.200 based ingredients and post consumer recycled materials, all of which 0:17:42.240 --> 0:17:45.120 is an on cost for us, especially in today's environment. 0:17:45.240 --> 0:17:47.560 So we're doing everything we can to make sure that 0:17:47.600 --> 0:17:50.760 our point of difference remains strong and true during these 0:17:50.760 --> 0:17:54.240 really volatile times. Talk to us a little bit about 0:17:54.359 --> 0:17:56.520 the costs of it, because I think when people think 0:17:56.560 --> 0:18:00.800 about green products or organic products, or just products that 0:18:00.800 --> 0:18:03.000 are prepaps mainly the United States and help the environment, 0:18:03.520 --> 0:18:05.840 a lot of people kind of associate that with Okay, 0:18:05.840 --> 0:18:08.320 well that's going to cost more. Talk to us about that. 0:18:08.560 --> 0:18:11.880 Are they wrong to think that? Sure? So I will 0:18:11.960 --> 0:18:14.600 say the strategy of our company is to make sure 0:18:14.720 --> 0:18:18.600 that everyday household materials made with better for you ingredients 0:18:18.640 --> 0:18:22.400 like plant based ingredients are at an accessible price. So 0:18:22.560 --> 0:18:25.399 it's our hope to dispel that myth that you know, 0:18:25.480 --> 0:18:28.080 to buy a natural product means you need to pay more. 0:18:28.560 --> 0:18:30.840 But well, what I will say is that the ingredients 0:18:30.880 --> 0:18:34.119 that we put into our products do cost more than 0:18:34.160 --> 0:18:36.919 the average materials, and the reason why is that they 0:18:36.920 --> 0:18:39.919 haven't scaled yet. Right, So, I think there's more virgin 0:18:39.960 --> 0:18:44.160 plastic available today than post consumer recycled plastic, and so 0:18:44.200 --> 0:18:46.920 our hope is that as these ingredients scale and more 0:18:46.960 --> 0:18:49.880 and more companies are using them, actually the cost would 0:18:49.920 --> 0:18:54.280 go down. Alison, I'm wondering about the equation that you 0:18:54.359 --> 0:18:57.359 and your team do when it comes to rising costs 0:18:57.600 --> 0:19:01.040 and consumer appetite for those rising costs. We talk about 0:19:01.040 --> 0:19:04.800 inflation hating consumers at the gas pump, at the restaurants 0:19:04.800 --> 0:19:06.760 they go to, at the grocery store, and certainly on 0:19:06.800 --> 0:19:09.840 the aisles when they're buying cleaning products. At what point 0:19:10.080 --> 0:19:12.439 do the does the premium that's put on a product 0:19:12.440 --> 0:19:15.879 like seventh generation cause a consumer to think twice and 0:19:16.240 --> 0:19:19.040 go to that one that's not necessarily made with plant 0:19:19.040 --> 0:19:23.360 based ingredients. What's the calculation there. Yeah, so it's it's 0:19:23.400 --> 0:19:25.560 a great question and one that we've spent again a 0:19:25.600 --> 0:19:28.560 lot of time really wrestling with here at seventh Generation 0:19:28.640 --> 0:19:30.720 over the year. And what I will say is our 0:19:30.880 --> 0:19:35.600 number one priority today is the quality of the product itself. Um. 0:19:35.680 --> 0:19:38.680 So when we look at the value equation about our investments, 0:19:38.960 --> 0:19:41.000 I think we look at the full funnel. And so 0:19:41.119 --> 0:19:43.440 for us to make sure that we are keeping our 0:19:43.480 --> 0:19:47.359 products at an approachable price point without sacrificing ingredients, it 0:19:47.400 --> 0:19:50.080 means we might spend a little less on marketing or 0:19:50.080 --> 0:19:52.520 advertising throughout the course of the year, but we know 0:19:52.720 --> 0:19:56.320 our product really stands um and works the way consumers 0:19:56.359 --> 0:20:01.480 expected to. There we go sorry about that else and 0:20:01.520 --> 0:20:04.000 talk to us a little bit about not just your business, 0:20:04.000 --> 0:20:07.480 but businesses broadly. How can they fight against climate change? 0:20:07.480 --> 0:20:10.160 Is there's something that kind of applies or rule thumb 0:20:10.160 --> 0:20:13.720 that applies to business broadly? How, yes, I mean, business 0:20:13.800 --> 0:20:16.320 is going to be what changes our future. I deeply 0:20:16.359 --> 0:20:18.480 believe in that. It's one of the key reasons that 0:20:18.680 --> 0:20:21.120 I came to seven Gen a decade ago is that 0:20:21.359 --> 0:20:24.000 I believe business is the force of good and really 0:20:24.000 --> 0:20:26.800 can drive that change. You know, I think two key 0:20:26.840 --> 0:20:29.920 things that I would that we are looking at right now. One, 0:20:30.119 --> 0:20:32.880 I think um really the call to action in our 0:20:33.000 --> 0:20:36.520 industry to drive concentrated products. And so what I mean 0:20:36.560 --> 0:20:39.360 by that is at home care specifically, there's a ton 0:20:39.359 --> 0:20:41.919 of waste. When you walk down the logic detergent aisle, 0:20:42.000 --> 0:20:44.679 I think you see these big plastic jugs filled with 0:20:44.720 --> 0:20:47.960 water and ingredients, and so we have a huge opportunity 0:20:48.000 --> 0:20:51.880 to really change how consumers behave and buy, and collectively, 0:20:52.000 --> 0:20:55.200 both myself and my competitors make sure that we're driving 0:20:55.200 --> 0:20:59.400