WEBVTT - Microsoft CEO on Antitrust in Big Tech

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<v Speaker 1>This is Bloomberg Business Week. I'm Carol Masser and I'm

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<v Speaker 1>Bloomberg Quick Takes Tim Stanebeck. We're here every day bringing

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<v Speaker 1>pm Eastern Time on Bloomberg Radio or watch us on

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<v Speaker 1>YouTube search Bloomberg Global News. One of the things that

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<v Speaker 1>we've been watching, certainly we continue to get some earning stories.

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<v Speaker 1>Tim and Mattel reported out after the Clothes you were

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<v Speaker 1>breaking it down. Stock is down about one point seven percent.

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<v Speaker 1>That despite the company coming out and surpassing analysts estimates

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<v Speaker 1>for the fourth quarter, they had a lot of kind

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<v Speaker 1>of beats, if you will, in terms of their metrics.

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<v Speaker 1>I caught up earlier with the chairman CEO of Mattel,

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<v Speaker 1>Enn Cries. He was in l A. We talked about

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<v Speaker 1>a lot of things, and in this excerpt he talks

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<v Speaker 1>about why this quarter is just one step in Mattel's

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<v Speaker 1>long term stret g check it out. This is not

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<v Speaker 1>just about the quarter or the year. It's about a

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<v Speaker 1>multi year turn around that is tracking very well, which

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<v Speaker 1>puts us in a strong position to continue to increase

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<v Speaker 1>profitability and accelerate growth in one and beyond. You know,

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<v Speaker 1>talk to us about that because you know, reading through

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<v Speaker 1>last night some of the research and there are you know,

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<v Speaker 1>folks saying, well, listen, it's really because of the pandemic.

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<v Speaker 1>Families our home, they've had a fine different ways to

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<v Speaker 1>spend time with their families, games, you name it, and kids,

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<v Speaker 1>you know, being at home that parents are spending a

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<v Speaker 1>lot more on toys. Talk to us a little bit

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<v Speaker 1>about what you have been doing to really kind of

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<v Speaker 1>juice some of the brands that have been you know,

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<v Speaker 1>that have been in your portfolio for for a long time.

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<v Speaker 1>The demand driven by COVID is difficult to quantify, as

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<v Speaker 1>the industry was projected to grow even before the pandemic,

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<v Speaker 1>and we believed that much of our overall performance has

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<v Speaker 1>been driven by the work of our organization and by

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<v Speaker 1>the strength of our brands and quality of our products.

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<v Speaker 1>So you know, we relieved the categories where we are

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<v Speaker 1>a global leaders. Vehicles and infant or the pre school

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<v Speaker 1>will continue to perform well and we expect to accelerate

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<v Speaker 1>the growth and increase overall share. Listen, I have grown

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<v Speaker 1>up with Mattel. I'm from a large family, you know.

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<v Speaker 1>Inheriting my older sisters, Barbies was a big thing. And

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<v Speaker 1>then I've got a seventeen year old where I've Bitty

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<v Speaker 1>Baby Kit, Marie Grace. These were all throughout my home. Um,

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<v Speaker 1>so tell me a little bit about some of the brands.

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<v Speaker 1>Talk to me about Barbie. Barbie continue to go from

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<v Speaker 1>strength to strength, up eighteen in the quarter and for

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<v Speaker 1>the year, with retail sales up more than thirty. Barbie

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<v Speaker 1>ended up being the overall number one toy property globally

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<v Speaker 1>for the industry both in the fourth quarter and full year.

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<v Speaker 1>The Barbie Dreamhouse was the number one toy in the

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<v Speaker 1>US in the fourth quarter and the full year. I

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<v Speaker 1>had one of those in my house. I had one

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<v Speaker 1>of those in my so you know exactly what I'm

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<v Speaker 1>talking about. So it's been really, you know, an incredible

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<v Speaker 1>monta year journey for Barbie. UM carrying the flag for

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<v Speaker 1>diversity and plusivity and purposeful play. But you know what

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<v Speaker 1>what is Um, what is interesting is that you know,

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<v Speaker 1>without taking anything away from the incredible success of Barbie,

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<v Speaker 1>this is you know, very much a story about the

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<v Speaker 1>matel playbook, because the Barbie success is driven by the

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<v Speaker 1>same mythodology, same capabilities, uh, same approach UM that we

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<v Speaker 1>that we applied across our entire product offering about brand.

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<v Speaker 1>So it's about brand, purpose, design, lead, innovation, cultural relevance

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<v Speaker 1>and executional accident. There's a reason why you play without toys.

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<v Speaker 1>It's beyond the play system. Our toys carry, you know,

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<v Speaker 1>carry messages. And it's very clear with Barbie, as I

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<v Speaker 1>mentioned earlier, carrying the flag for diversity inclusivity. UM evolved

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<v Speaker 1>in body, ethnicity, storytelling and likewise American Girls one of

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<v Speaker 1>the most rich brands in terms of content and messaging

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<v Speaker 1>about the historical doll figures and teaching and and and

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<v Speaker 1>you know, working with parents as a trusted partner, we

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<v Speaker 1>evolved and developed their children. It was, as you said,

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<v Speaker 1>really a blowout year, a blowout quarter for you guys. Um,

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<v Speaker 1>is this as good as it gets? Well, absolutely not.

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<v Speaker 1>We just announced that we expect to accelerate growth and

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<v Speaker 1>also provided guidance, or I should say, so you know,

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<v Speaker 1>guidance but goals. But twenty two and twenty three, where

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<v Speaker 1>we UH still expect to achieve mids single mid single

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<v Speaker 1>digit digit growth in our top line and and on profitability.

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<v Speaker 1>We also expect to achieve between seven hundred and seventy

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<v Speaker 1>five to eight hundred million dollar IBIDA adjusted IBIDA in one.

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<v Speaker 1>This is following a growth of almost six hundred million

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<v Speaker 1>dollars between two thousand and eighteen to two thousand and twenty,

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<v Speaker 1>and we expect to achieve mid teen UM offered an

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<v Speaker 1>income margin by twenty three. So from where we see today,

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<v Speaker 1>you UM, you know, you should expect to see us

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<v Speaker 1>accelerating our top line growth and continuing to improve profit ability,

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<v Speaker 1>not just in one, but for the two years after that.

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<v Speaker 1>You know what I'm curious to you about is you

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<v Speaker 1>know how important You've heard you talk a lot about,

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<v Speaker 1>you know, growth and director consumer UM. I did a

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<v Speaker 1>lot of buying online UM when I was buying from

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<v Speaker 1>my daughter years ago. E commerce the strength that you've seen,

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<v Speaker 1>does that become an even bigger part of the business

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<v Speaker 1>going forward? I'm curious about that. Yes, this was another

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<v Speaker 1>major driver for US and part of a big part

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<v Speaker 1>of US says. In the quarter and in the year,

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<v Speaker 1>e commerce grew significantly for US and continue to maintain momentum.

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<v Speaker 1>In the fourth quarter we grew, and for the full year,

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<v Speaker 1>we were up at this point online retail and ew

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<v Speaker 1>commerce represents about a third of our retail sales. We

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<v Speaker 1>were the number one manufacturer in e commerce in the

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<v Speaker 1>US in the fourth quarter, and we grew our e

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<v Speaker 1>commerce here in the US in the fourth quarter and

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<v Speaker 1>the full year. All right, And that was matelsa EO

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<v Speaker 1>you know on Cries catching up with him earlier to

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<v Speaker 1>talk about their latest quarter really the outlook, and you

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<v Speaker 1>can hear more of that interviewed him. It's coming up

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<v Speaker 1>on our weekend show. It's also going to be on

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<v Speaker 1>our podcast feed at Bloomberg dot com. But you know,

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<v Speaker 1>he said, obviously they got a kick from the pandemic,

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<v Speaker 1>but they've also been putting some strategies into place to

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<v Speaker 1>really you know, kind of set demand four years to come. Yeah,

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<v Speaker 1>you know, we talk a lot about pandemic trends, and

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<v Speaker 1>I think one pandemic trends that trend that actually makes

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<v Speaker 1>me smile is the idea of parents and grandparents spoiling

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<v Speaker 1>their children because they've been stuck inside and buying them dolls.

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<v Speaker 1>I mean, doll sales surging nine per cent for all

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<v Speaker 1>the pemic I know. And they were struggling a lot

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<v Speaker 1>with Barbie is an American girl, So they definitely think

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<v Speaker 1>it looks like things are back on track. So be

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<v Speaker 1>sure to check out that full interview. This is Bloomberg

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<v Speaker 1>Business Week with Carol Messer and Bloomberg Quick Takes Tim

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<v Speaker 1>Stinovich from Bloomberg Radio. In this latest episode of Bloomberg

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<v Speaker 1>Studio One point Oh, host Emily Chang sits down for

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<v Speaker 1>an exclusive interview with Microsoft CEO Satya Nadela. In this excerpt,

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<v Speaker 1>Nidela discusses anti trust issues facing the tech sector. Take

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<v Speaker 1>a listen. You need to have a business model, um

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<v Speaker 1>that really is aligned with the world doing well. I

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<v Speaker 1>think that's what's being litigated right, which is there are

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<v Speaker 1>certain categories of products where the unintended consequences of the

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<v Speaker 1>growth on that category or lack of competition in it

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<v Speaker 1>creates issues. And so that's what I think people are

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<v Speaker 1>all looking at and saying, hey, what's the fixed for that?

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<v Speaker 1>But I don't think big by itself is bad or

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<v Speaker 1>but competition is good. And every business, in particular the

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<v Speaker 1>businesses that are large and have high scale, the unintended

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<v Speaker 1>consequences of your scale cannot be dealt after the fact.

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<v Speaker 1>They need to be dealt while you're scaling. So when

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<v Speaker 1>it comes to the d platforming of President Trump, Facebook

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<v Speaker 1>or a Twitter, Google or YouTube or Twitch have the

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<v Speaker 1>power to say who we can and cannot hear from,

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<v Speaker 1>and if not, who should. Yeah, I mean, this is

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<v Speaker 1>another one of those places where I think unilateral action

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<v Speaker 1>by individual companies in democracies like ours is just not

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<v Speaker 1>I think long term stable. We do need to be

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<v Speaker 1>able to have framework of laws and norms which are

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<v Speaker 1>societal norms around even internet safety. Uh. And what is

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<v Speaker 1>the public square that really is in a lot indment

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<v Speaker 1>with a thriving democracy. So we just need to get

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<v Speaker 1>to a stable state, uh in that because otherwise, depending

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<v Speaker 1>on any one individual CEO in any one of these

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<v Speaker 1>companies to make calls that are going to really help

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<v Speaker 1>us maintain something as sacred and as important as our

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<v Speaker 1>democracy in the long run is just no way at

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<v Speaker 1>least I, as a citizen, would advocate for now. Slack

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<v Speaker 1>has alleged that Microsoft combining teams into offices anti competitive. Um,

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<v Speaker 1>what's your response to that? How does the landscape change

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<v Speaker 1>now that Slack has been bought by Salesforce and as

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<v Speaker 1>part of this bigger entity. I think both Slack and

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<v Speaker 1>Salesforce have been successful. For example, I always point out

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<v Speaker 1>that when we think about what they were able to do,

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<v Speaker 1>I always ask the question would Slack have even existed

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<v Speaker 1>if it was not for the free access they had

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<v Speaker 1>on top of say the Windows platform. They didn't have

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<v Speaker 1>to call Microsoft, they didn't have to go through any

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<v Speaker 1>of our app stores, they didn't have need any uh,

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<v Speaker 1>you know, off of permission. Compared to any of the

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<v Speaker 1>other platforms that they're available on, we perhaps provide the

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<v Speaker 1>most open platform and Windows and even on Office five

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<v Speaker 1>you can in fact use all of the APIs that

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<v Speaker 1>we expose, integrate with any application, and people use it.

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<v Speaker 1>If you look at even the usage reports, this Slack

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<v Speaker 1>usage and Microsoft three five years, it's so and same

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<v Speaker 1>thing with Salesforce. So the fact that they're combining will

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<v Speaker 1>compete with them, and they will also cooperate with them

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<v Speaker 1>and provide them access to our platforms. And I think

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<v Speaker 1>they should measure it by what type of success they've

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<v Speaker 1>had on top of our platform. You worked at Microsoft

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<v Speaker 1>through its own antitrust battles, You remember what that was like.

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<v Speaker 1>It's been called the Lost Decade, if you will. What

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<v Speaker 1>cultural risks do you believe these companies face, even if

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<v Speaker 1>they're not broken up. What's happening on the inside as

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<v Speaker 1>these investigations play out. So I don't know if there

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<v Speaker 1>are real parallels between what happened with Microsoft and any

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<v Speaker 1>of them, but I would say I think the core,

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<v Speaker 1>as I always go back, is you know, if you

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<v Speaker 1>have a business and a business model where when you

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<v Speaker 1>are doing well around you, people are doing well, and

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<v Speaker 1>that is something that your own employees feel, then I

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<v Speaker 1>think things will work out culturally. When that is not true,

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<v Speaker 1>I think it's very very hard because one of the

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<v Speaker 1>things I feel is, as somebody said, you've got to

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<v Speaker 1>keep it simple. What do you say, what you do,

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<v Speaker 1>and what you think all need to be consistent. You

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<v Speaker 1>can't sort of have a real distance between those three things.

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<v Speaker 1>And that's what at least would be my advice and

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<v Speaker 1>to anybody, and starting with ourselves. All right, That was

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<v Speaker 1>of course Bloomberg Studio at one point, Oh check it out,

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<v Speaker 1>you can see that entire interview that's going to happen

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<v Speaker 1>at five thirty pm Moll Street Time on Bloomberg TV,

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<v Speaker 1>And of course that's host Emily Chang sitting down for

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<v Speaker 1>that exclusive with Microsoft CEO such An Adela, who was

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<v Speaker 1>the cover story for Bloomberg Business Week. Um, I'd have

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<v Speaker 1>to look at I have to pull it out and

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<v Speaker 1>tweet it, but some time ago. But it was a

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<v Speaker 1>really nice deep dive into kind of who he is

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<v Speaker 1>and how his approach has differed from some of the

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<v Speaker 1>other folks who've been or who did run Microsoft. I

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<v Speaker 1>love that answer that he gave to Emily's question about

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<v Speaker 1>Salesforce and Slack teaming up, I mean, without skipping a beat,

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<v Speaker 1>Nidela talks about the Windows platform and the way that

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<v Speaker 1>Slack was able to succeed because it was on the

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<v Speaker 1>Windows platform, and he did say, you know the fact

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<v Speaker 1>that they're combining, we'll compete with them, but we'll also

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<v Speaker 1>cooperate with them, sort of the the frenemies idea with

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<v Speaker 1>these companies. They're also big that they have to work together,

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<v Speaker 1>but you know they're also competitors. Yeah, I mean, this

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<v Speaker 1>is what's interesting about the technology environment, right, Like you

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<v Speaker 1>do have to, you know, work with them, you know,

0:12:41.200 --> 0:12:44.600
<v Speaker 1>work with others, work with your competitors often. Um. But

0:12:44.679 --> 0:12:46.599
<v Speaker 1>it makes for a kind of an interesting environment. And

0:12:46.600 --> 0:12:49.480
<v Speaker 1>you're right he didn't miss abeed Um, that's for sure.

0:12:49.480 --> 0:12:57.520
<v Speaker 1>So check that out that full episode Road Journal. Yeah,

0:12:57.559 --> 0:13:02.559
<v Speaker 1>but you let me drive, no no, no no drug home please,

0:13:02.679 --> 0:13:09.840
<v Speaker 1>I'll do the right drivel. I want to drive, Just drive, baby,

0:13:12.360 --> 0:13:22.600
<v Speaker 1>it's the questions trying. This is the drive to the globe.

0:13:23.360 --> 0:13:26.960
<v Speaker 1>Com Me thanks, we'll drying us down on Bloomberg Radio.

0:13:27.840 --> 0:13:29.560
<v Speaker 1>All right, it is time for the Drive to the close.

0:13:29.640 --> 0:13:32.080
<v Speaker 1>Just about eleven minutes left in today's trading session. It

0:13:32.120 --> 0:13:34.160
<v Speaker 1>does feel like another day where we're just trying to

0:13:34.160 --> 0:13:36.720
<v Speaker 1>take it in, trying to slow it down a little

0:13:36.760 --> 0:13:40.320
<v Speaker 1>bit and see where we go from here in terms

0:13:40.360 --> 0:13:43.160
<v Speaker 1>of inflation, in terms of growth, a lot to get to.

0:13:43.280 --> 0:13:45.760
<v Speaker 1>Let's bring in David Diet's back with us, managing principal

0:13:45.760 --> 0:13:49.800
<v Speaker 1>and senior portfolio strategist at Pepack Private Wealth Management. They've

0:13:49.800 --> 0:13:52.400
<v Speaker 1>got eight billion in assets under management. David once again

0:13:52.760 --> 0:13:55.800
<v Speaker 1>joining us on the phone from Summit, New Jersey. It

0:13:55.960 --> 0:13:58.280
<v Speaker 1>is kind of I don't know, David, We've we've been

0:13:58.280 --> 0:14:01.280
<v Speaker 1>bouncing around the last couple of days kind of quietly,

0:14:01.520 --> 0:14:03.160
<v Speaker 1>what do you I don't know, how do you see

0:14:03.160 --> 0:14:07.000
<v Speaker 1>the market environment right now? Well, we've had a wonderful

0:14:07.280 --> 0:14:11.840
<v Speaker 1>period since the pandemic low March twenty three UM, and

0:14:11.920 --> 0:14:14.800
<v Speaker 1>really for a good reason. We've got UH, you know,

0:14:14.880 --> 0:14:18.000
<v Speaker 1>two vaccines being rolled out now a third one from

0:14:18.080 --> 0:14:21.560
<v Speaker 1>Jane Jay soon to be approved. That's the key factor

0:14:21.600 --> 0:14:25.080
<v Speaker 1>that's gonna drive consumers re engaging with the economy. Of course,

0:14:25.120 --> 0:14:27.480
<v Speaker 1>the Federal Reserve has done the right thing, lowering interest

0:14:27.560 --> 0:14:31.320
<v Speaker 1>rates down to close to zero UM, stabilizing all things

0:14:31.400 --> 0:14:35.480
<v Speaker 1>having to do with credit, giving UH investors tremendous confidence

0:14:35.720 --> 0:14:38.320
<v Speaker 1>corporate earnings, you know, Carol, at the start of TO

0:14:38.560 --> 0:14:43.400
<v Speaker 1>four they're projecting double digit year over year losses. But

0:14:43.600 --> 0:14:46.840
<v Speaker 1>now we may actually have a chance to have our

0:14:46.880 --> 0:14:51.080
<v Speaker 1>first year over year slight gained since the pandemic started.

0:14:51.160 --> 0:14:55.000
<v Speaker 1>So the improvements versus expectations have been wonderful. And that's

0:14:55.000 --> 0:14:58.520
<v Speaker 1>not just on earnings, it's also on sales, and the

0:14:58.520 --> 0:15:00.040
<v Speaker 1>beats have been some of the best we've seen in

0:15:00.240 --> 0:15:02.880
<v Speaker 1>the last decade. Of course, they're putting the finishing touches

0:15:02.880 --> 0:15:05.320
<v Speaker 1>on a fiscal stimulus package which will help the most

0:15:05.400 --> 0:15:08.720
<v Speaker 1>challenged Americans get through this period. So there's a lot

0:15:08.920 --> 0:15:11.720
<v Speaker 1>of tail wind here for the market. What do you

0:15:11.720 --> 0:15:14.360
<v Speaker 1>make of fed chair Palace comments earlier today, quote, we

0:15:14.400 --> 0:15:16.960
<v Speaker 1>are still very far from a strong labor market whose

0:15:17.000 --> 0:15:20.280
<v Speaker 1>benefits are broadly shared. Look, you're talking about the market.

0:15:20.280 --> 0:15:23.680
<v Speaker 1>We've had record highs earlier this week, but still millions

0:15:23.720 --> 0:15:27.400
<v Speaker 1>of Americans struggling to find work. Um. What do you

0:15:27.440 --> 0:15:30.680
<v Speaker 1>make of of what Power commented on earlier today? Well,

0:15:30.680 --> 0:15:33.560
<v Speaker 1>he's absolutely right. We've got a lot to a lot

0:15:33.640 --> 0:15:37.040
<v Speaker 1>to do in terms of getting the rate of unemployment down.

0:15:37.400 --> 0:15:39.640
<v Speaker 1>I think he'd be the first to admit that there's

0:15:39.680 --> 0:15:44.840
<v Speaker 1>a strong role for fiscal stimulus to narrowly target those Americans,

0:15:44.880 --> 0:15:48.320
<v Speaker 1>those main street businesses that are still challenged amid these

0:15:48.320 --> 0:15:53.160
<v Speaker 1>pandemic woes and just lowering interest rates everywhere. Um, is

0:15:53.240 --> 0:15:57.800
<v Speaker 1>kind of a blunt tool to achieve that, although certainly

0:15:57.800 --> 0:16:00.960
<v Speaker 1>a necessary one. We were most focused on his comments

0:16:01.000 --> 0:16:04.960
<v Speaker 1>on inflation. Um, you know, that's the big problem. He

0:16:05.000 --> 0:16:07.640
<v Speaker 1>said he's going to keep that those interest rates down

0:16:07.720 --> 0:16:11.360
<v Speaker 1>low until we're well past the two inflation rate. Well,

0:16:11.560 --> 0:16:13.640
<v Speaker 1>you know, if you look at the commodity market, Tim

0:16:13.920 --> 0:16:17.560
<v Speaker 1>inflation is starting to move with commodities like oil, lumber,

0:16:17.560 --> 0:16:19.880
<v Speaker 1>and corn moving up. And of course the other thing

0:16:19.880 --> 0:16:23.240
<v Speaker 1>I look at is the built in inflation expectations. When

0:16:23.240 --> 0:16:28.360
<v Speaker 1>you look at tips treasury inflation protection securities versus conventional treasuries,

0:16:28.400 --> 0:16:31.560
<v Speaker 1>they're not forecasting two point two over two percent in

0:16:31.640 --> 0:16:34.520
<v Speaker 1>terms of inflation the next ten years. So inflation expectations

0:16:34.560 --> 0:16:38.480
<v Speaker 1>are moving up. So do you anticipate, h David, that

0:16:38.560 --> 0:16:43.440
<v Speaker 1>we could see significant inflation and yet still have millions

0:16:43.480 --> 0:16:48.200
<v Speaker 1>of workers out of work? You know? Unfortunately I've been

0:16:48.200 --> 0:16:50.320
<v Speaker 1>doing this long enough. I saw that in the seventies.

0:16:50.360 --> 0:16:55.680
<v Speaker 1>They called that stag inflation. So it's more than theoretically possible. Um.

0:16:55.840 --> 0:16:59.040
<v Speaker 1>Certainly in the financial markets, in the commodity markets we

0:16:59.080 --> 0:17:01.760
<v Speaker 1>are seeing in inflation. And the spack market, the I

0:17:01.840 --> 0:17:05.480
<v Speaker 1>p O market, the cryptocurrency market we are seeing huge inflation.

0:17:05.600 --> 0:17:08.680
<v Speaker 1>So obviously there there is two economies out there. That's

0:17:08.720 --> 0:17:11.720
<v Speaker 1>one of our concerns here as as a nation. Um.

0:17:11.760 --> 0:17:16.080
<v Speaker 1>But certainly, if the vaccines are successful and people re engage,

0:17:16.119 --> 0:17:18.440
<v Speaker 1>you could see a rush to travel or rush to

0:17:18.520 --> 0:17:20.960
<v Speaker 1>eat out, a rush to to take advantage of a

0:17:20.960 --> 0:17:23.359
<v Speaker 1>lot of things. But that may not be enough to

0:17:23.359 --> 0:17:26.240
<v Speaker 1>get everyone who's most challenged back to work. So certainly

0:17:26.480 --> 0:17:28.760
<v Speaker 1>that is a possibility. So David, where are you seeing

0:17:28.800 --> 0:17:30.760
<v Speaker 1>opportunity right now? I know you have a focus on

0:17:30.800 --> 0:17:34.720
<v Speaker 1>dividend paying stocks, City Group for eyes and XS on um.

0:17:34.960 --> 0:17:38.520
<v Speaker 1>Why are you optimistic there? So you know, I think

0:17:38.760 --> 0:17:41.400
<v Speaker 1>that the next thirty basis points in terms of interest

0:17:41.480 --> 0:17:44.439
<v Speaker 1>rate move is more likely to be up then down.

0:17:44.880 --> 0:17:48.640
<v Speaker 1>And when interest rates move up, of course, the highest

0:17:48.720 --> 0:17:52.080
<v Speaker 1>duration bonds in the market go down the hardest, and

0:17:52.119 --> 0:17:54.679
<v Speaker 1>the short duration go down the least. So if you

0:17:54.840 --> 0:17:58.399
<v Speaker 1>take the analogy to the stock market, growth stocks, where

0:17:58.600 --> 0:18:01.600
<v Speaker 1>they're being valued on earning to be going out years

0:18:01.640 --> 0:18:05.840
<v Speaker 1>if not decades um, maybe have the biggest challenge there.

0:18:05.880 --> 0:18:09.399
<v Speaker 1>In a higher interest rate environment, well, dividend paying stocks

0:18:09.440 --> 0:18:12.840
<v Speaker 1>so called value stocks, where there's more cash flow immediately

0:18:13.200 --> 0:18:15.720
<v Speaker 1>more dividends may actually hold up better. And of course,

0:18:16.000 --> 0:18:19.640
<v Speaker 1>large swaths of the that economy, like for example, financials,

0:18:19.640 --> 0:18:22.960
<v Speaker 1>why actually do better if their most important product, their loans,

0:18:23.000 --> 0:18:26.760
<v Speaker 1>can attract a higher interest rate. So did you say

0:18:26.800 --> 0:18:32.080
<v Speaker 1>specific names forgive me? Yeah? So for me, the quintessential

0:18:32.640 --> 0:18:37.560
<v Speaker 1>um pandemic recovery plate is Exxon Why because you know,

0:18:38.320 --> 0:18:42.840
<v Speaker 1>we didn't use fossil fuels last year because everyone's locked down.

0:18:43.080 --> 0:18:45.600
<v Speaker 1>I mean, just think back to last Thanksgiving. Everyone stay

0:18:45.640 --> 0:18:47.520
<v Speaker 1>at home, and what are we gonna do next Thanksgiving.

0:18:47.520 --> 0:18:49.680
<v Speaker 1>We're gonna see Grandma, we're gonna see the kids, We're

0:18:49.680 --> 0:18:52.560
<v Speaker 1>going to travel, right, and so energy use, I think

0:18:52.560 --> 0:18:56.159
<v Speaker 1>it's going to explode um and and and you know

0:18:56.840 --> 0:18:59.520
<v Speaker 1>a few years ago fossil fuel prices where a hundred

0:18:59.520 --> 0:19:02.159
<v Speaker 1>dollars a barrel. Right now sknocking on sixty and so

0:19:02.280 --> 0:19:04.119
<v Speaker 1>then I'm looking at, well, what if I'm wrong? So

0:19:04.200 --> 0:19:07.400
<v Speaker 1>I'm looking for the biggest publicly trade player out there.

0:19:07.600 --> 0:19:10.040
<v Speaker 1>That would be Exxon, who, by the way, is paying

0:19:10.040 --> 0:19:12.320
<v Speaker 1>a seven point four percent dividend. You have to have

0:19:12.359 --> 0:19:14.600
<v Speaker 1>a very high treasury before you're not gonna be making

0:19:14.600 --> 0:19:18.200
<v Speaker 1>more money with the xcen did um than than the

0:19:18.200 --> 0:19:20.440
<v Speaker 1>than the treasury. And of course, Excellence making all the

0:19:20.520 --> 0:19:24.040
<v Speaker 1>right moves now to protect that dividends slash capital expenditures, which,

0:19:24.080 --> 0:19:27.200
<v Speaker 1>by the way, if all energy producers slash capital expenditures,

0:19:27.240 --> 0:19:31.200
<v Speaker 1>that's gonna reduce supply. That's gonna push up UM prices

0:19:31.240 --> 0:19:33.080
<v Speaker 1>when the demand recovers. Yeah, I was going to ask

0:19:33.080 --> 0:19:35.000
<v Speaker 1>you about that supply demand equazing because I feel like

0:19:35.040 --> 0:19:37.159
<v Speaker 1>pre COVID we were still talking that there was a

0:19:37.200 --> 0:19:39.560
<v Speaker 1>fair amount of supply still in the system. You really

0:19:39.560 --> 0:19:43.199
<v Speaker 1>do think that that gets that dramatically changes when we

0:19:43.280 --> 0:19:47.679
<v Speaker 1>come back. Well, unfortunately, I mean we were you know,

0:19:47.840 --> 0:19:51.000
<v Speaker 1>people have very little confidence as to the continuing demand

0:19:51.000 --> 0:19:54.840
<v Speaker 1>on fossil fuel prices for many reasons, including the political

0:19:54.880 --> 0:19:58.240
<v Speaker 1>winds and so forth. So whatever people were going to

0:19:58.320 --> 0:20:00.480
<v Speaker 1>do in terms of exploration before, they're not going to

0:20:00.600 --> 0:20:03.040
<v Speaker 1>do it now. And so ironically that will have to

0:20:03.119 --> 0:20:06.680
<v Speaker 1>Tennessee to push up prices so that I think, um

0:20:06.800 --> 0:20:09.600
<v Speaker 1>deserve someplace in your portfolio. All Right, we gotta run. Hey, David,

0:20:09.600 --> 0:20:12.360
<v Speaker 1>thank you so much. David. It's managing principal senior portfolio

0:20:12.440 --> 0:20:16.240
<v Speaker 1>strategist over at Pepack Private Wealth Management, aprilion in Assets

0:20:16.359 --> 0:20:20.200
<v Speaker 1>under Management, joining us on the phone from Summit, New Jersey.

0:20:24.080 --> 0:20:26.960
<v Speaker 1>Thanks for listening to Bloomberg Business Week. Download the podcast

0:20:26.960 --> 0:20:29.919
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0:20:29.960 --> 0:20:32.119
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0:20:32.160 --> 0:20:34.800
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0:20:34.800 --> 0:20:36.000
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