WEBVTT - Inflation, Private Credit, Bob Iger, and Earnings (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day, we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.640 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.720 --> 0:00:24.360 All right, a lot of economic data to digest this 0:00:24.400 --> 0:00:26.760 week on the inflation front, and you know we've got 0:00:26.760 --> 0:00:30.200 the CPI yesterday, PPI today. My guest to take away 0:00:30.240 --> 0:00:32.279 for a lot of folks is pretty darn good as 0:00:32.320 --> 0:00:34.040 it relates to the Federal Reserve. But let's talk to 0:00:34.080 --> 0:00:37.000 somebody who does this stuff for living. Jennifer Lee, Senior 0:00:37.040 --> 0:00:41.560 economists and Managing director at BMO Capital Markets. Jennifer, again, 0:00:41.600 --> 0:00:44.239 a lot of inflation data this week, what is your takeaway? 0:00:46.080 --> 0:00:48.120 First of all, good morning, and thanks for having me on. 0:00:48.159 --> 0:00:50.920 My takeaway is that finally, finally, finally, all of these 0:00:50.960 --> 0:00:54.920 Fed rate hips are making an impact on inflation, bringing 0:00:54.960 --> 0:00:57.040 it down to that what I used to think was 0:00:57.040 --> 0:00:59.760 the elusive two percent target is finally starting to happen. 0:00:59.840 --> 0:01:02.520 By down a two year low for the headline PPI 0:01:02.600 --> 0:01:04.720 we saw this morning. I was just like glancing at 0:01:04.720 --> 0:01:06.600 some of the details, but looks pretty good. 0:01:06.720 --> 0:01:07.319 Only up a. 0:01:07.319 --> 0:01:11.640 Tenth for both the headline and the core and down 0:01:11.640 --> 0:01:13.880 to I think it was like three year lows or 0:01:13.880 --> 0:01:16.680 something for the year of your basis. So again, all 0:01:16.720 --> 0:01:18.679 those FED rate hikes are starting to kick in, and 0:01:18.720 --> 0:01:22.080 we're finally starting to see the fruits of their labor. 0:01:22.360 --> 0:01:24.800 We're finally starting to see it, but we are still 0:01:24.840 --> 0:01:28.199 not at that two percent number. What do you think 0:01:28.280 --> 0:01:31.960 might be the catalyst to finally get us down to 0:01:32.360 --> 0:01:34.080 the FEDS desired inflation rate. 0:01:35.160 --> 0:01:36.800 I think you will have to take well, first of all, 0:01:36.920 --> 0:01:38.520 just in terms of our FED rate outlook. I mean, 0:01:38.520 --> 0:01:42.080 we're still looking for that FED rate hike next or 0:01:42.160 --> 0:01:45.039 in two weeks, I guess on July twenty sixth. You know, 0:01:45.120 --> 0:01:48.559 even though we're seeing this, you know, promising inflation data, 0:01:49.640 --> 0:01:52.800 the fact that we just are still arising, running pretty hot. 0:01:53.200 --> 0:01:56.440 Job demand is still pretty strong, Housing is still has 0:01:56.480 --> 0:01:57.360 already found a footing. 0:01:57.400 --> 0:01:59.080 Business investment is decent. 0:01:59.280 --> 0:02:02.320 Consumer spend took the leave of breather last month, and 0:02:02.360 --> 0:02:05.440 but the month before that they're reading hot as well. 0:02:05.840 --> 0:02:08.440 All that sort of sets the stage I think for 0:02:08.560 --> 0:02:13.320 another rate hike in July, and this slower inflation data 0:02:13.320 --> 0:02:15.880 I think gives them the door to or gives them 0:02:15.919 --> 0:02:19.040 the leewage to sort of talk about moderating the pace 0:02:19.040 --> 0:02:22.040 of rate hikes, needing more time to assess that economic 0:02:22.120 --> 0:02:24.839 landscape that they've been talking about lately, and this will 0:02:24.840 --> 0:02:28.000 do it. And of course, but keeping rates at these 0:02:28.040 --> 0:02:31.359 restrictive levels will help bring down that level back down 0:02:31.440 --> 0:02:34.320 to our inflation back down to two percent eventually. But 0:02:34.639 --> 0:02:37.120 you know, definitely not a rate cut story just yet, all. 0:02:37.080 --> 0:02:39.080 Right, So that's kind of where I think the market's 0:02:39.080 --> 0:02:41.480 probably trying to go. I think the market is probably discounting, 0:02:41.880 --> 0:02:44.080 you know, a July rate hike and then you know, 0:02:44.120 --> 0:02:45.120 a pause again. 0:02:46.040 --> 0:02:46.840 The question then. 0:02:46.720 --> 0:02:49.720 Becomes how long is that pause? And is that a 0:02:49.800 --> 0:02:52.800 twenty twenty four event that we might stay at these 0:02:53.160 --> 0:02:54.040 levels of rates. 0:02:55.160 --> 0:02:57.600 So our again first official pecast is just one more 0:02:57.680 --> 0:03:01.800 rate hike and that will be it again base case, 0:03:01.840 --> 0:03:03.480 but then staying at these levels, and so I don't 0:03:03.480 --> 0:03:05.080 think rate cuts are going to be a story until 0:03:05.120 --> 0:03:08.400 probably mid twenty twenty four. We used to talk about, 0:03:08.400 --> 0:03:10.200 you know, early twenty twenty four for rate cuts. But 0:03:10.240 --> 0:03:12.560 now we're thinking a little bit later, and that's because 0:03:12.560 --> 0:03:17.280 we're also shifting our call for that elusive slow down again. 0:03:18.000 --> 0:03:21.200 So now we're looking for more softer growth. 0:03:20.960 --> 0:03:23.640 In around Q four Q one now, so around that 0:03:23.680 --> 0:03:25.799 trend of the year, as opposed to Q three and 0:03:25.880 --> 0:03:26.240 Q four. 0:03:26.400 --> 0:03:28.360 So you just can't argue with the data. 0:03:28.600 --> 0:03:32.440 It's been very resilient overall, you know, it's again difficult. 0:03:32.040 --> 0:03:34.160 To argue with it. So we're pushing out that that 0:03:34.240 --> 0:03:35.680 slow down a little bit by quarter. 0:03:36.000 --> 0:03:38.640 Yeah, and another thing that you note is that the 0:03:38.800 --> 0:03:41.760 greenback is struggling a little bit following some of this 0:03:41.880 --> 0:03:45.720 economic softness, hitting a fourteen month low. I believe to 0:03:45.720 --> 0:03:49.240 what extent is dollar weakness part of your calculation for 0:03:49.400 --> 0:03:51.240 what our economy is going to look like in the 0:03:51.280 --> 0:03:52.280 second half of the year. 0:03:53.440 --> 0:03:55.880 The US dollar has been or had been running super 0:03:55.920 --> 0:03:58.680 strong up until you know, yesterday, and so we're finally 0:03:58.800 --> 0:04:01.240 going to see that dollar week to start kicking in, 0:04:01.280 --> 0:04:03.480 and we're seeing it. And it's also helping because a 0:04:03.520 --> 0:04:06.600 lot of the other central banks are not yet ready 0:04:06.640 --> 0:04:09.880 to hit the pause button just yet, you know, aside 0:04:09.920 --> 0:04:12.600 from the bank handa, you know, I think we're they're 0:04:12.600 --> 0:04:14.880 probably that's probably it for the Bank Canada for the 0:04:14.960 --> 0:04:18.200 for the rest of this year. RBA looks like they're 0:04:18.200 --> 0:04:19.880 almost done. But you've got the ECB in the Bank 0:04:19.880 --> 0:04:22.160 of England or is still going whole hog on that 0:04:22.240 --> 0:04:26.400 rate tightening front, so that's also going to boost there. 0:04:26.480 --> 0:04:29.479 That's so that's also helping their their currencies the same 0:04:29.520 --> 0:04:30.920 time with the flip with the flip side of the 0:04:30.920 --> 0:04:31.760 weaker greenback. 0:04:32.800 --> 0:04:38.000 So can we take the recession talk off the table 0:04:38.200 --> 0:04:38.600 right now? 0:04:40.800 --> 0:04:43.600 Official recession? Yeah, it's possible. 0:04:43.680 --> 0:04:47.560 I mean, we've always been in that soft, soft landing, 0:04:48.000 --> 0:04:50.560 mild recession, moderate recession camp, but. 0:04:50.560 --> 0:04:52.280 We were never in that hard landing camp. 0:04:52.279 --> 0:04:55.000 And now I means it is quite possible that we 0:04:55.040 --> 0:04:57.080 will see and some people always say, what the heck 0:04:57.080 --> 0:04:57.480 does that mean? 0:04:57.520 --> 0:04:59.560 But you know, no landing. At the very beginning, I 0:04:59.600 --> 0:05:00.600 used to say landing. 0:05:00.360 --> 0:05:02.159 Soft landing, no landing, And it's possible that we could 0:05:02.160 --> 0:05:05.120 start seeing things glide and you know, like nothing is impossible, 0:05:05.160 --> 0:05:07.440 but this is kind of looking more possible. But at 0:05:07.480 --> 0:05:10.279 the same time, the longer they able rates up in 0:05:10.320 --> 0:05:13.800 the in that restricted territory in order to get CPI 0:05:13.880 --> 0:05:16.080 back down to two percent, we will probably need to 0:05:16.160 --> 0:05:18.000 have that breaking in the economy. 0:05:18.120 --> 0:05:20.840 Well, there's the recession for all of us, and then 0:05:20.880 --> 0:05:24.240 there's the markets, right, and they don't always agree. Do 0:05:24.320 --> 0:05:27.800 you envision us seeing a little bit more of a 0:05:27.920 --> 0:05:30.680 risk on trade in the second half of the year 0:05:30.880 --> 0:05:35.120 after the Fed does potentially start to tone down and 0:05:35.279 --> 0:05:38.320 soften the rate height cycle that we're seeing. 0:05:38.880 --> 0:05:40.400 We could see that's a good question. 0:05:40.440 --> 0:05:42.640 So we could see risk on because of the fact 0:05:42.640 --> 0:05:45.760 that the Fed is going to stop start talking about 0:05:45.839 --> 0:05:48.760 leaving rates as is more firmly as opposed to talking 0:05:48.800 --> 0:05:51.720 about needing more time. But at the same time, why 0:05:51.760 --> 0:05:54.360 are they talking about needing more to aura staying on 0:05:54.400 --> 0:05:56.760 hold is because the economy is finally starting to slow 0:05:57.040 --> 0:05:58.360 and again this is when you're going to start to 0:05:58.400 --> 0:06:02.040 see softer data. We're starting to talk about the debt 0:06:02.080 --> 0:06:05.280 recession again, or at least that soft landing coming into 0:06:05.279 --> 0:06:07.279 play in the fourth quarter or so. 0:06:07.279 --> 0:06:09.560 So it's it's gonna be a little a little bit 0:06:09.520 --> 0:06:09.760 of mix. 0:06:09.839 --> 0:06:11.320 I don't know which one is going to oweigh the other, 0:06:11.400 --> 0:06:13.520 because again, yes, it's good news for the markets that 0:06:13.560 --> 0:06:15.720 the Fed's not going to keep tightening, but at least 0:06:15.720 --> 0:06:17.320 at the same time, it's bad news because that means 0:06:17.360 --> 0:06:19.520 the economy is slowing and it's not needed anymore. 0:06:20.520 --> 0:06:24.040 So I guess one of the issues for a lot 0:06:24.040 --> 0:06:26.680 of investors is just kind of you know, we think 0:06:26.720 --> 0:06:29.800 beyond twenty four, I mean, yeah, beyond twenty three into 0:06:29.800 --> 0:06:32.039 twenty four to twenty five, what kind of economic growth 0:06:32.360 --> 0:06:35.720 do you think is reasonable for an economy that has 0:06:35.800 --> 0:06:37.200 dealt with this much inflation? 0:06:38.600 --> 0:06:40.679 So we're probably going to see at least some sub 0:06:41.240 --> 0:06:43.560 below average at least for a little while. So we 0:06:43.640 --> 0:06:46.000 you know, for this year, we have about one point 0:06:46.080 --> 0:06:48.200 seven percent growth, and that was a little bit higher 0:06:48.240 --> 0:06:52.440 than we had originally because of this delayed slow down. 0:06:52.640 --> 0:06:54.960 But for next year, we've got I think it's a 0:06:55.200 --> 0:06:59.000 half percent growth, which is obviously very sluggish. And then 0:06:59.040 --> 0:07:01.080 for the year after we're going to start seeing some 0:07:01.200 --> 0:07:04.080 improvement as the rate cuts start kicking in. But again, 0:07:03.880 --> 0:07:06.440 I think we're probably going to see some sub average 0:07:06.480 --> 0:07:08.240 growth at least over the next few years. 0:07:09.240 --> 0:07:11.920 And where do you think that that sub average growth 0:07:12.000 --> 0:07:16.520 is going to be the most prevalent in the coming years. 0:07:16.440 --> 0:07:18.440 In terms of where? By by country or. 0:07:18.800 --> 0:07:23.480 Yeah, yeah, like in terms of demo and geographic. 0:07:24.040 --> 0:07:26.960 So I think the US will probably be just again 0:07:27.000 --> 0:07:28.720 because America is you know, it's still going to be 0:07:28.720 --> 0:07:32.360 the strongest with all the different positive fundamental factors behind it. 0:07:32.400 --> 0:07:35.640 I think the US will still emerge, probably stronger than 0:07:36.680 --> 0:07:39.040 emerge at a faster pace. I guess from this recept 0:07:39.040 --> 0:07:42.000 from the slowdown than everyone else. The areas where I'm 0:07:42.040 --> 0:07:43.680 going to be a little bit more worried will be 0:07:44.040 --> 0:07:47.000 Europe and the UK, only because you know, they've already 0:07:47.040 --> 0:07:49.000 had the other issues you know that are not related 0:07:49.000 --> 0:07:51.520 to pandemic, you know, like Brexit for example. At the 0:07:51.520 --> 0:07:55.239 same time, you also have higher inflation and higher interest 0:07:55.320 --> 0:07:58.600 rates staying longer higher for longer there, and they're again 0:07:58.640 --> 0:08:01.200 they're still going a whole hog on tightening front. I 0:08:01.240 --> 0:08:03.720 think the ACB minutes today we're alluding to the fact 0:08:03.720 --> 0:08:06.200 that you know, there are more governing Council members from 0:08:06.200 --> 0:08:09.040 the ACV are thinking about September. I think it's a 0:08:09.080 --> 0:08:11.120 bit early, but you know that's something that you know, 0:08:11.160 --> 0:08:14.240 it's becoming more of a reality, possibly in the next 0:08:14.280 --> 0:08:15.080 in the next little while. 0:08:15.480 --> 0:08:18.040 Jennifer, you also got another initial job as claims number 0:08:18.080 --> 0:08:20.720 today came in better than expected, uh and showing a 0:08:20.760 --> 0:08:23.880 decline from from from last week. Again, just another data 0:08:23.920 --> 0:08:26.800 point on what is kind of a very solid labor market. 0:08:26.880 --> 0:08:28.800 What do you make of this labor market? Is this 0:08:28.880 --> 0:08:29.640 surprised you at all? 0:08:29.640 --> 0:08:30.440 The strength. 0:08:32.200 --> 0:08:32.680 Broadly? 0:08:33.040 --> 0:08:35.040 No, And then I mean it's still strong. At the 0:08:35.080 --> 0:08:37.000 same time, it is starting to soften, you know that. 0:08:37.440 --> 0:08:40.280 You know, two hundred thousand, nine thousand increases that we 0:08:40.280 --> 0:08:42.880 saw on perros was still below expected. But like I 0:08:42.880 --> 0:08:45.800 said before, any during any other given year, it's still 0:08:45.800 --> 0:08:48.240 a very solid number. But I think there are still 0:08:48.280 --> 0:08:52.800 some other issues that are coming in play, like again demographics, 0:08:53.000 --> 0:08:57.600 people retire, changing retirement patterns, people retiring earlier, people having 0:08:57.600 --> 0:09:00.720 the fewer kids, you know, so all and of course 0:09:00.760 --> 0:09:02.760 the aging of the of the of the global population. 0:09:02.920 --> 0:09:06.240 All that feeds into tighter lot but labor markets. So 0:09:06.280 --> 0:09:07.720 this is an issue I think that's going to be 0:09:08.000 --> 0:09:09.640 playing on for some time. It's not going to be 0:09:09.679 --> 0:09:12.000 like what we saw earlier, like half a year ago, 0:09:12.200 --> 0:09:14.040 but at the same time, it's not going to be. 0:09:15.480 --> 0:09:18.160 As loose, I guess, as you know, one would expect. 0:09:18.760 --> 0:09:20.439 It was interesting. I was looking at the NFI the 0:09:21.000 --> 0:09:22.400 survey earlier this week. 0:09:22.640 --> 0:09:24.680 I was looking at like over the past decades, Like 0:09:24.720 --> 0:09:27.240 you know, the they were talking about the single biggest 0:09:27.240 --> 0:09:29.959 problem that you're reporting. So over the last decade, I 0:09:30.000 --> 0:09:32.440 think the inflation. Of course it was like up and down, 0:09:32.679 --> 0:09:35.360 but overall it was still pretty modest, being the inflation 0:09:35.400 --> 0:09:36.720 being the number one problem, but. 0:09:37.000 --> 0:09:40.320 Labor market labor quality was like still owned around the. 0:09:40.320 --> 0:09:41.920 Yeah, Jennif're gonna have to wrap it up right there 0:09:41.920 --> 0:09:43.520 just because of the time, but appreciate getting your thoughts. 0:09:43.559 --> 0:09:46.440 Jennifer Lee, Senior economist at BMO Capital Markets. 0:09:46.520 --> 0:09:47.360 This is Bloomberg. 0:09:48.760 --> 0:09:52.640 You're listening to the team can't Live program Bloomberg Markets 0:09:52.640 --> 0:09:55.760 weekdays at ten am Eastern on Bloomberg dot Com, the 0:09:55.840 --> 0:09:58.960 iHeartRadio app and the Bloomberg Business app, or listening on 0:09:59.040 --> 0:10:01.560 demand wherever you good your podcast. 0:10:02.559 --> 0:10:03.920 Tech Talk Today a good one. 0:10:04.360 --> 0:10:09.199 We have folks at Huawei Technologies Steve Geisler, US Chief 0:10:09.240 --> 0:10:15.680 Intellectual Property Council and Andy Perty, Huawei USA Chief Security Officer. 0:10:15.920 --> 0:10:18.240 They joined us for a roundtable in Huawei's twenty twenty 0:10:18.240 --> 0:10:23.240 three Innovation and IP form at its Chinese headquarters today. Steve, 0:10:23.280 --> 0:10:24.839 before we get to kind of what you guys are 0:10:24.880 --> 0:10:28.600 doing at your forum today in Shenzhen, China. Talk to 0:10:28.720 --> 0:10:32.480 Steve what it's like at your company dealing with sanctions, 0:10:32.520 --> 0:10:37.560 just particularly the US. How has that impacted your business? 0:10:39.080 --> 0:10:43.640 So my business, I'm a lawyer within the Huawei corporate family, 0:10:43.840 --> 0:10:46.480 so for me personally, it means more work. 0:10:47.000 --> 0:10:47.400 It does. 0:10:47.440 --> 0:10:50.840 However, me as an American, I have to always be 0:10:50.920 --> 0:10:55.720 mindful of the export control and the distanctions laws. Because 0:10:56.000 --> 0:10:59.000 I work in intellectual property. That does, of course put 0:10:59.000 --> 0:11:02.040 some constraints on me. But by and large, my day 0:11:02.080 --> 0:11:06.480 to day job deals with patents which are publicly known. 0:11:06.559 --> 0:11:09.280 Of course, the word patent means open, so I deal 0:11:09.360 --> 0:11:13.000 with technologies once they've already become public, and I deal 0:11:13.679 --> 0:11:17.280 a lot with licensing with other companies, and so my 0:11:17.440 --> 0:11:20.480 day to day job is not impacted nearly as much 0:11:20.520 --> 0:11:23.880 as if I were, say an engineer working within the 0:11:23.960 --> 0:11:25.440 Huawei corporate family. 0:11:26.080 --> 0:11:28.160 Okay, well, because you're a lawyer, I know that you 0:11:28.200 --> 0:11:30.720 are not going to answer this question, Steven, but just 0:11:30.760 --> 0:11:34.400 to throw it to you, what does Huawe's return to 0:11:34.440 --> 0:11:37.040 the five G phone market look like? And what does 0:11:37.080 --> 0:11:41.040 the smartphone business continue to look like for Huawei given 0:11:41.080 --> 0:11:41.800 these sanctions? 0:11:43.280 --> 0:11:46.160 I will definitely give you the lawyerly answer, but the 0:11:46.160 --> 0:11:48.959 correct answer. My job really is not to predict it. 0:11:48.960 --> 0:11:52.160 It's just to prepare. So if Huawei were to return 0:11:52.200 --> 0:11:54.440 to the five G phone market, I need to make 0:11:54.480 --> 0:11:57.880 sure that we have the licenses in place, such as 0:11:58.360 --> 0:12:02.680 the five G Standard Essential Path licenses with our licensing 0:12:02.720 --> 0:12:05.200 partners to make sure that we would allow for that. 0:12:05.280 --> 0:12:08.640 Quawei previously did have five five G phones, so we 0:12:08.720 --> 0:12:12.200 have most of those patents patent license agreements already in place. 0:12:12.520 --> 0:12:15.719 So I my part, my role in terms of preparation 0:12:16.480 --> 0:12:21.240 for such a contingency is already underway. But in terms 0:12:21.240 --> 0:12:26.520 of predicting and in the sales visibility of our product mix, 0:12:27.000 --> 0:12:29.360 people like Andy certainly can can address that. 0:12:29.440 --> 0:12:30.959 But for me, I prepare. 0:12:31.040 --> 0:12:34.319 I don't predict, all right, so let me job. 0:12:34.520 --> 0:12:36.240 So Andy, let's let's let's bring you in here. 0:12:36.280 --> 0:12:40.120 Andy Purtty, chief Security Officer or Huawei Technologies in the US. 0:12:40.200 --> 0:12:43.120 Talk to us about what you guys are doing, uh 0:12:43.160 --> 0:12:46.000 with this innovation in ip form in Shenzen today. What 0:12:46.040 --> 0:12:47.959 are some of the big products and services you guys 0:12:48.000 --> 0:12:49.079 are talking about here. 0:12:49.760 --> 0:12:52.600 Yeah, this is a part of our bigger effort that 0:12:53.200 --> 0:12:56.800 you touched only with Steve A moment ago. Given the 0:12:56.920 --> 0:12:59.679 situation that we face in the United States and around 0:12:59.679 --> 0:13:03.000 the world, we've been trying to and we've been successful 0:13:03.400 --> 0:13:07.160 at adjusting our business strategy and changing our portfolios with 0:13:07.240 --> 0:13:10.200 a huge historic investment in R and B over twenty 0:13:10.200 --> 0:13:13.520 five percent of our global revenues, so that we can 0:13:13.600 --> 0:13:17.559 customize our products for our carriers, our enterprises, and our consumers. 0:13:17.760 --> 0:13:20.640 But the three key things of technology that we are 0:13:20.679 --> 0:13:25.640 embracing that are part of that are digitalization, intelligence, and 0:13:25.679 --> 0:13:29.240 carbon neutrality. So our focus company has been on connectivity, 0:13:29.280 --> 0:13:35.520 computing devices, intelligent auto solutions, and digitalization of power. And 0:13:35.559 --> 0:13:38.439 you can see that in the example we talk about AI, 0:13:38.559 --> 0:13:42.080 the pengu Ai three dot zero that we're going to 0:13:42.080 --> 0:13:44.600 be talking about in this conference, which is heavily focused 0:13:44.640 --> 0:13:49.240 on weather and the Nature magazine has just issued a 0:13:49.280 --> 0:13:52.240 major article about weather prediction. It's very exciting about how 0:13:52.640 --> 0:13:56.080 AI is making going to make every industry more productive 0:13:56.120 --> 0:13:59.240 and efficient and it's going to reshape all industries with 0:13:59.320 --> 0:14:02.760 a focus is really on industry industry AI. 0:14:03.920 --> 0:14:04.640 So Andy just. 0:14:04.679 --> 0:14:08.880 From the technology standpoint, the commercial standpoint, what are your 0:14:08.920 --> 0:14:12.240 leaders in China telling you about, you know, kind of 0:14:12.280 --> 0:14:15.720 their strategy for dealing with the West, whether as customers, 0:14:15.720 --> 0:14:20.800 as supply chain, what scenario you're operating under, like how 0:14:20.840 --> 0:14:22.480 you create a three to five year business plan. 0:14:23.640 --> 0:14:28.160 Well, as I said, we have, we're leveraging the convergence 0:14:28.200 --> 0:14:33.480 of technologies five G, cloud, censor technology, AI, catalyzing the 0:14:33.560 --> 0:14:36.760 digitalization of industries that we've been working on, and actually 0:14:36.800 --> 0:14:38.600 moving toward five point five G, which is some of 0:14:38.640 --> 0:14:40.800 the other things we're going to be talking about today. 0:14:41.040 --> 0:14:44.040 So we're heavily investing in what we can do in 0:14:44.080 --> 0:14:48.760 terms of develop technologies to help the telecom carriers raise 0:14:48.840 --> 0:14:53.040 their capabilities to supply five G and hopefully five point 0:14:53.080 --> 0:14:57.320 five G, and to help the customers and industry spectors 0:14:57.360 --> 0:15:00.000 around the world, such as you can see the benefits 0:15:00.120 --> 0:15:01.400 the Panglo three dot ZHO. 0:15:02.840 --> 0:15:05.320 So, given that, I'm curious if this kind of overall 0:15:05.360 --> 0:15:08.840 push into IP licensing, does that mean that your focus 0:15:08.920 --> 0:15:13.440 is more on back end technology versus more consumer facing products. 0:15:15.080 --> 0:15:17.240 Steve, you may want to touch on this also, but no, 0:15:17.360 --> 0:15:21.480 it's the smartphone issue has been what was dramatically affected 0:15:21.520 --> 0:15:24.960 the ability of American companies to sell the nonsensitive five 0:15:25.040 --> 0:15:29.000 G five G chips for our phones. So everything else 0:15:29.040 --> 0:15:31.840 we've been emphasizing with the digitalization, and we've been able 0:15:32.240 --> 0:15:36.800 to our enterprise business by thirty percent in twenty twenty two. 0:15:37.680 --> 0:15:41.480 Using the themes of digitalization and digital transformation. We've leveled 0:15:41.480 --> 0:15:44.520 off that drop in our consumer business and we expect 0:15:44.560 --> 0:15:48.360 our carrier business to meet expectations. 0:15:49.760 --> 0:15:51.360 Steve, you have any thoughts there as to kind of 0:15:51.360 --> 0:15:53.480 how you guys are navigating some of the from a 0:15:53.520 --> 0:15:54.320 patent perspective. 0:15:55.800 --> 0:15:59.000 Yeah, so, as any said, so, the IP actually is 0:15:59.000 --> 0:16:02.240 somewhat detached, and that's not completely detachedble we typically are 0:16:02.240 --> 0:16:05.080 going to be patenting the same technologies that would be 0:16:05.120 --> 0:16:08.720 in our product mix. However, just because we don't sell 0:16:08.760 --> 0:16:10.600 a product in the United States does not mean we're 0:16:10.640 --> 0:16:12.240 not going to get a US patent. 0:16:12.360 --> 0:16:13.760 So, for instance, as of the end of. 0:16:13.760 --> 0:16:16.600 Last year, we had one hundred and twenty thousand patents 0:16:16.640 --> 0:16:20.520 globally that were active, including about twenty two thousand active 0:16:20.640 --> 0:16:24.400 US patents. We had about forty thousand Chinese and European 0:16:25.120 --> 0:16:27.400 patents each at the. 0:16:27.360 --> 0:16:28.280 End of last year. 0:16:28.480 --> 0:16:33.200 But in terms of the patenting, we just for instance, 0:16:33.840 --> 0:16:37.000 Wi Fi six, which is the new version of Wi 0:16:37.000 --> 0:16:41.320 Fi that is now being commercialized that's out on the market. 0:16:42.200 --> 0:16:46.760 Quawei has about twenty percent nineteen to twenty percent of 0:16:46.800 --> 0:16:50.560 the standard essential patents that would be used when someone 0:16:50.800 --> 0:16:53.880 is making, using, or selling a Wi Fi six enabled product. 0:16:54.560 --> 0:16:57.000 So that is the type of R and D that 0:16:57.120 --> 0:16:59.800 as And said, we actually have increased R and D 0:17:00.040 --> 0:17:05.120 funding up to twenty three billion US dollars last year alone, 0:17:05.240 --> 0:17:08.080 and so Bawa has no choice but to continue to 0:17:08.280 --> 0:17:12.919 innovate and still has product sales. However, those products sales geographically, 0:17:13.760 --> 0:17:17.600 the footprint has changed since five years ago, and also 0:17:17.680 --> 0:17:21.240 the product mix. There's a different focus for sure within 0:17:21.359 --> 0:17:22.280 various industries. 0:17:22.520 --> 0:17:25.679 Andy, in our final minute with you here, given what 0:17:26.560 --> 0:17:29.960 Stephen was just talking about with ideation and R and D, 0:17:30.119 --> 0:17:32.760 what do your plans look like for five G chip 0:17:32.800 --> 0:17:35.199 procurement domestically in China. 0:17:36.480 --> 0:17:37.400 Well, we have. 0:17:37.400 --> 0:17:41.040 Been continuing to emphasize the diversification our portfolio of our 0:17:41.080 --> 0:17:44.320 supply chain so that we can meet the needs of 0:17:44.359 --> 0:17:48.639 our customers. I don't have any comment yet on the 0:17:48.680 --> 0:17:53.080 explosion of news stories on what we're talked about, but 0:17:53.280 --> 0:17:55.920 we are proceeding on the assumption that we have certain 0:17:55.960 --> 0:17:58.400 limitations and we're going to continue to grow our businesses 0:17:58.440 --> 0:18:01.680 in other areas such as small finding, smart roots, smartboards, 0:18:01.760 --> 0:18:05.920 electric power railway and moving into five point five, which 0:18:05.920 --> 0:18:07.680 is very exciting. Frankly, you know, when you talk about 0:18:07.720 --> 0:18:12.280 the one piece of the technology innovation our leaders of 0:18:12.359 --> 0:18:14.399 Ken who are vice chairman, is estimated we look at 0:18:14.440 --> 0:18:17.119 AID ninety eight percent of all AI is going to 0:18:17.119 --> 0:18:20.640 be industry and some agriculture, and only two percent is consumer. 0:18:20.800 --> 0:18:23.840 And the focus recently has been on consumer, the generated AI, 0:18:24.119 --> 0:18:25.800 but it's going to be much more important than that 0:18:26.119 --> 0:18:26.680 to the world. 0:18:27.760 --> 0:18:29.600 All right, Andy, thank you so much for joining us. 0:18:29.800 --> 0:18:34.120 Andy Purty, chief security officer for Huawei Technologies in Steve Geisler, 0:18:34.320 --> 0:18:37.240 US chief Intellectual Property Council, and I know both of 0:18:37.240 --> 0:18:41.200 these gentlemen got their law degrees from the University of Virginia. 0:18:41.240 --> 0:18:42.240 So wahu wa. 0:18:42.320 --> 0:18:45.440 You're listening to the tape Can's our live program Bloomberg 0:18:45.520 --> 0:18:49.119 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:18:49.160 --> 0:18:51.240 tune in app, Bloomberg dot Com. 0:18:50.960 --> 0:18:52.400 And the Bloomberg Business app. 0:18:52.440 --> 0:18:55.239 You can also listen live on Amazon Alexa from our 0:18:55.280 --> 0:19:00.359 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:19:01.040 --> 0:19:03.840 We're welcoming Randy swimmer into the studio as well. Always 0:19:03.880 --> 0:19:04.720 left chatting with Randy. 0:19:04.760 --> 0:19:06.919 He's co head of senior Lending and he's a senior 0:19:06.920 --> 0:19:09.920 managing director Churchill Asset Management. Randy, one of the many 0:19:09.920 --> 0:19:11.679 reasons we love speaking to you because you're an expert 0:19:11.680 --> 0:19:13.800 in this private credit business out there, which has been 0:19:13.840 --> 0:19:17.040 such a hot market getting lots of capital and has 0:19:17.080 --> 0:19:18.879 really become a big part of the capital market. It's 0:19:18.920 --> 0:19:22.160 really passed since the Great Financial Crisis. How is your 0:19:22.200 --> 0:19:25.600 business today in what appears to be a market that 0:19:26.119 --> 0:19:30.479 is seeing inflation moderate maybe taking the recession story off 0:19:30.560 --> 0:19:31.600 the table a little bit. 0:19:31.640 --> 0:19:32.080 How's that? 0:19:32.119 --> 0:19:34.920 How are you seeing that in your business of directly lending? 0:19:35.040 --> 0:19:37.040 Yeah, first of all, thanks again for having me on. 0:19:37.160 --> 0:19:39.439 So I did some homework just for you, Paul. So 0:19:39.880 --> 0:19:43.679 looked for the first half numbers for our business to 0:19:43.720 --> 0:19:46.520 sort of get a sense for how we're doing. Turns out, 0:19:46.560 --> 0:19:48.960 and we have a senior debt business and a junior 0:19:48.960 --> 0:19:52.040 capital business all with you know, under the Churchill banner. 0:19:52.640 --> 0:19:55.879 We did one hundred and seventy five deals in the 0:19:55.920 --> 0:20:00.320 first half of the year. Okay, five billion dollars across 0:20:00.359 --> 0:20:01.320 those two platforms. 0:20:01.400 --> 0:20:04.479 Right, So, I was like whoa, that's your firm, by 0:20:04.480 --> 0:20:04.960 the way. 0:20:04.880 --> 0:20:09.320 So we're like total committed capital of about forty six billion, 0:20:10.080 --> 0:20:13.200 and then you throw our Arkmont sister company in Europe, 0:20:13.240 --> 0:20:15.840 they're another twenty twenty five billion, so you know. But 0:20:15.960 --> 0:20:18.680 the thing that surprised me a little bit is that 0:20:19.080 --> 0:20:22.359 despite a lot of the softness in M and A 0:20:22.480 --> 0:20:25.159 that we saw on the first half, what's driving our 0:20:25.240 --> 0:20:29.520 deal flow is the kind of migration from public credit 0:20:29.560 --> 0:20:32.560 to private credit because the banks have been a bit 0:20:32.640 --> 0:20:36.080 offline with some of the liquid loans. They don't have 0:20:36.280 --> 0:20:39.960 clearing price, they don't have COLO formation, a lot of 0:20:40.000 --> 0:20:42.840 the cache is coming out of retail funds not going in, 0:20:43.400 --> 0:20:45.080 and so they're a bit offline, and so a lot 0:20:45.080 --> 0:20:46.879 of that activity has come to the direct lender, so 0:20:46.920 --> 0:20:49.439 that's helping us. And then we have the scale we 0:20:49.440 --> 0:20:52.439 can commit you know, four or five hundred million dollars 0:20:52.800 --> 0:20:55.960 per deal and get stuff done. So those combinations of 0:20:56.000 --> 0:20:57.720 things makes it right now pretty attractive. 0:20:58.119 --> 0:21:00.719 So so back when the FED was a zero in 0:21:00.760 --> 0:21:05.400 the ten year, wasn't even at two percent, the demand 0:21:05.440 --> 0:21:09.960 for private credit from investors was very high because a huge, 0:21:10.040 --> 0:21:13.840 huge premium with not a whole lot more risk for 0:21:13.920 --> 0:21:17.800 better returns. Now that you get five percent plus on 0:21:17.960 --> 0:21:21.560 corporates and unis are not that far behind, how does 0:21:21.600 --> 0:21:24.800 that affect your investor base? What are they looking at 0:21:24.880 --> 0:21:27.119 in the world of private credit as a as an 0:21:27.160 --> 0:21:27.800 asset class. 0:21:27.800 --> 0:21:30.640 So Barry, that's exactly the question that comes up at 0:21:30.640 --> 0:21:35.320 these investor meetings, and the answer is that the opportunity 0:21:35.359 --> 0:21:38.960 in private debt is not necessarily a timing thing, because 0:21:39.320 --> 0:21:41.920 to your point, it was very attractive two years ago. 0:21:42.440 --> 0:21:47.040 It's more attractive from a pure yield perspective today relative 0:21:47.080 --> 0:21:50.560 still relative to corporates. The question is how long will 0:21:50.600 --> 0:21:56.119 that attractive corporate and high yield bond trade last. If 0:21:56.240 --> 0:21:58.120 what Paul says, it's true, and we're starting to see 0:21:58.119 --> 0:22:00.320 a little softening in the numbers which we saw today, 0:22:00.720 --> 0:22:02.600 and it looks like the FED might you know, maybe 0:22:02.600 --> 0:22:05.680 they raised once, maybe they you know, maybe once and done. 0:22:05.880 --> 0:22:08.159 Then at some point rates are going to start to 0:22:08.200 --> 0:22:10.399 come down. What's going to happen for investors who are 0:22:10.400 --> 0:22:14.200 looking for long term income streams is they're going to 0:22:14.240 --> 0:22:17.200 see those corporate bond rates start to come back down again, 0:22:17.520 --> 0:22:20.960 and eventually whether it goes back down to where bonds 0:22:20.960 --> 0:22:23.240 were kind of three to four percent the way they 0:22:23.280 --> 0:22:26.560 were two years ago or something in between where they 0:22:26.560 --> 0:22:30.680 are now. It's going to come down. Whereas the illiquidity 0:22:30.880 --> 0:22:34.199 premium that investors in private debt get has been the 0:22:34.280 --> 0:22:38.040 same throughout that period, roughly three hundred basis points. So 0:22:38.080 --> 0:22:41.919 whatever liquid is getting, we're getting three percent more. 0:22:41.760 --> 0:22:45.560 We've been discussing the window that has been opening up 0:22:45.920 --> 0:22:51.240 to extenduration lock in higher rates after the better part 0:22:51.240 --> 0:22:55.000 of a decade of you know, bonds not really generating 0:22:55.040 --> 0:22:59.640 a lot. Suddenly, whether it's private credit or corporates vis 0:23:00.280 --> 0:23:03.200 this whole asset class has become a whole lot more attractive. 0:23:03.640 --> 0:23:05.680 But who knows how long that window is going to 0:23:05.720 --> 0:23:06.200 be open. 0:23:06.040 --> 0:23:09.040 For correct And so the thing about private debt is 0:23:09.040 --> 0:23:13.760 that you can trace the higher yields and better structures 0:23:13.800 --> 0:23:17.159 and all the things that you know back for decades. 0:23:17.520 --> 0:23:21.800 So the opportunity really isn't a timing issue. It's more 0:23:21.840 --> 0:23:25.479 of a strategic issue. You decide that you are going 0:23:25.560 --> 0:23:30.720 to have some part of your portfolio always in private debt. 0:23:30.760 --> 0:23:32.920 And so what we're seeing now with our investors and 0:23:33.080 --> 0:23:36.960 increasing number of them are saying, you know, I want five, ten, fifteen, percent, 0:23:37.000 --> 0:23:40.679 whatever that number is always in my overall portfolio. I 0:23:40.720 --> 0:23:43.520 have room for fixed income, I've got room for public equities, 0:23:43.600 --> 0:23:46.040 I've got room for real estate, but I really want 0:23:46.119 --> 0:23:47.760 some core assets in private debt. 0:23:48.400 --> 0:23:52.120 But does that allocation start to change as people maybe 0:23:52.160 --> 0:23:55.040 get a little bit of FOMO for things like an 0:23:55.040 --> 0:23:56.600 AI rally for example. 0:23:57.400 --> 0:24:02.359 Well, what's happening in the public market is that things 0:24:02.440 --> 0:24:05.119 will come and go depending on where the current trade is. 0:24:05.119 --> 0:24:09.080 To your point, and we saw obviously rally and technology 0:24:09.080 --> 0:24:12.040 stocks and so forth. But what happens is depending on 0:24:12.119 --> 0:24:16.000 what's going on with the rest of the economic climate, 0:24:16.119 --> 0:24:20.280 some of those opportunities tend to fade. We certainly saw 0:24:20.320 --> 0:24:23.240 that with crypto. We've seen that, you know in other areas, 0:24:23.960 --> 0:24:27.520 the Spack rally for example, that we were talking about 0:24:27.560 --> 0:24:30.360 here in the studios a year or two ago. And 0:24:31.000 --> 0:24:33.600 the thing that investors really want to focus on now 0:24:33.800 --> 0:24:38.480 is stability. Okay, so yield is great, but stability of 0:24:38.520 --> 0:24:42.280 income is even more important to them, and so going 0:24:42.359 --> 0:24:45.359 into it with an manager that has a track record 0:24:45.400 --> 0:24:50.080 to deliver these stable, higher returns is probably foremost in 0:24:50.119 --> 0:24:50.480 their minds. 0:24:50.560 --> 0:24:53.160 Right now, what sectors do you guys like these days 0:24:53.160 --> 0:24:55.760 he did a Conjigian transactions in the first six months, 0:24:56.320 --> 0:24:58.159 or some sectors you're you really like here, or some 0:24:58.200 --> 0:24:58.800 of you're invoiding. 0:24:58.880 --> 0:25:01.199 I know you're gonna ask this question, and so I 0:25:01.280 --> 0:25:04.080 went back and that by far and away, it's business 0:25:04.080 --> 0:25:10.320 services because things that companies like landscaping companies. I like 0:25:10.359 --> 0:25:14.360 to use this because regardless of whether building is occupied 0:25:14.480 --> 0:25:17.720 or not, you still have to modilawn, plow the snow, 0:25:18.200 --> 0:25:22.320 had you trim the hedges, and so landscaping escaping companies 0:25:22.320 --> 0:25:25.480 because they have to be there. Twenty four to seven 0:25:25.840 --> 0:25:29.399 alarm companies, same thing. Security businesses, anything where you have 0:25:29.520 --> 0:25:32.200 consistent cash flow and growth over a long period of time. 0:25:32.640 --> 0:25:36.840 Those are the kinds of companies we like. Healthcare, technology, software, 0:25:37.760 --> 0:25:41.240 logistics businesses, anything that requires moving boxes around. Right now, 0:25:41.240 --> 0:25:42.800 I mean, I don't know about you, but my family's 0:25:42.920 --> 0:25:45.920 ordering more boxes, delivering to the front door, and all 0:25:46.040 --> 0:25:50.679 the support, the back office, the middle office related to 0:25:50.800 --> 0:25:52.840 those kinds of businesses are doing well right now. 0:25:54.200 --> 0:25:59.479 Really quite interesting. You know, last year, before we really 0:25:59.600 --> 0:26:03.200 had a firm grasp of exactly how fast and far 0:26:03.720 --> 0:26:07.560 CPI would would fall, a lot of people piled into 0:26:08.240 --> 0:26:11.879 private debt, especially with a lot of younger companies. You 0:26:11.880 --> 0:26:14.840 guys have been around for a long time. I'm wondering 0:26:14.960 --> 0:26:18.080 how you look at the competition in the space and 0:26:18.480 --> 0:26:22.360 how many people kind of top ticked the market last year. 0:26:22.440 --> 0:26:25.960 Yeah, So one of the questions from a credit perspective is, 0:26:26.000 --> 0:26:28.439 you know, did you go in with companies that are 0:26:28.520 --> 0:26:30.600 now hurting as a result of some of the dynamics 0:26:30.640 --> 0:26:33.439 inflation wise you've talked about. And the advantage that we 0:26:33.520 --> 0:26:36.480 have is that we are we invest only with private 0:26:36.520 --> 0:26:39.880 equity backed companies, and so the amount of cash equity 0:26:39.920 --> 0:26:42.560 that they're putting into these businesses is like sixty five 0:26:42.600 --> 0:26:45.639 percent of the total capital structure, which is a record high. 0:26:45.800 --> 0:26:47.320 The other thing is, you know, they have their own 0:26:47.320 --> 0:26:51.840 money at stake. They're helping us to find the best companies, 0:26:51.920 --> 0:26:55.560 and even in that universe, we're still just kind of 0:26:55.560 --> 0:26:57.639 picking the best of the best. So we see a 0:26:57.680 --> 0:27:01.080 thousand deals a year and we do sixty and so 0:27:01.320 --> 0:27:05.000 from that perspective, what we're looking for is to sift 0:27:05.040 --> 0:27:07.119 through the ones that don't have that long track record, 0:27:07.200 --> 0:27:10.200 sift through the ones that are not cyclical, that don't 0:27:10.200 --> 0:27:13.040 have customer concentration. We just turned a deal down this morning. 0:27:13.440 --> 0:27:16.119 Because the business has only been around for five years 0:27:16.960 --> 0:27:19.960 and had customer concentration with three main customers. If you 0:27:20.000 --> 0:27:22.680 lose any one of those three, you're in trouble. So 0:27:22.880 --> 0:27:24.320 our job is to really pick winners. 0:27:24.480 --> 0:27:25.640 I understand your tennis fan. 0:27:26.040 --> 0:27:28.720 Yeah, going to Wimbledon this weekend, are you what are 0:27:28.760 --> 0:27:29.800 you gonna What are you gonna say? 0:27:29.840 --> 0:27:32.159 Women's finals, women's finals, Yes, sir, all right. 0:27:32.200 --> 0:27:35.000 We had one of the semifinals that just got done earlier, 0:27:35.000 --> 0:27:36.480 so we have one finalist in there. 0:27:37.080 --> 0:27:38.840 It's funny. That should be great. That's have you been 0:27:38.880 --> 0:27:39.280 there before. 0:27:39.359 --> 0:27:40.560 I've known this my first time. 0:27:40.600 --> 0:27:41.720 It's awesome. You're gonna love it. 0:27:42.040 --> 0:27:45.200 I'm not playing, but I launch all right, very good. 0:27:45.720 --> 0:27:48.639 H Randy schwimmert cohed of Senior Lendy and he's just 0:27:48.680 --> 0:27:51.040 senior managing director Churchill Asset Management. 0:27:52.320 --> 0:27:55.720 You're listening to the team Can's are live program Bloomberg 0:27:55.760 --> 0:27:58.000 Markets weekdays at ten am Eastern. 0:27:57.840 --> 0:28:00.240 On Bloomberg dot com, the iHeart Radio. 0:28:00.480 --> 0:28:03.360 And the Bloomberg Business app, or listen on demand wherever 0:28:03.400 --> 0:28:04.480 you get your podcast. 0:28:06.400 --> 0:28:09.280 We are really excited about our next guest here because 0:28:09.280 --> 0:28:11.800 we've got Laura Mody coming on. She is the CEO 0:28:11.960 --> 0:28:17.040 and co founder of Bobby. This is an infinite formula company. 0:28:17.680 --> 0:28:20.480 It's organic. They've got some big name investors on the 0:28:20.520 --> 0:28:24.320 list here with Gwyneth Paltrow at twenty two million dollars, 0:28:24.320 --> 0:28:26.520 and we're excited to talk with them, Paul and Barry, 0:28:26.520 --> 0:28:29.760 because they've got some big news for us, this company 0:28:30.440 --> 0:28:34.240 acquiring Nature's One. We don't have the exact details in 0:28:34.320 --> 0:28:36.719 terms of the finances here, but it was a seventy 0:28:36.760 --> 0:28:41.000 million dollar Series C round of funding to acquire Nature's One, 0:28:41.120 --> 0:28:43.400 and this is part of their overall strategy to kind 0:28:43.440 --> 0:28:46.280 of diversify their holdings here. 0:28:46.320 --> 0:28:48.480 So I think we have Bobby. 0:28:48.680 --> 0:28:51.480 We've got Bobby CEO on the phone here, Laura Mody. 0:28:51.480 --> 0:28:54.239 Thank you so much for joining us, Laura, as I 0:28:54.280 --> 0:28:57.120 was just explaining this acquisition of Nature's One. 0:28:57.560 --> 0:28:59.320 How does that acquisition. 0:28:58.960 --> 0:29:04.160 Factor into your our strategic push to increase domestic access 0:29:04.280 --> 0:29:06.760 to infant formula here in the US. 0:29:07.640 --> 0:29:10.720 Yeah, Hi, lovely to be back with you guys again. Look, 0:29:10.880 --> 0:29:14.720 this acquisition is so much greater than Bobby and Nature's One. 0:29:15.240 --> 0:29:18.920 The significance of our two companies coming together is the 0:29:18.960 --> 0:29:22.600 biggest diversification move in the history of USNS and formula 0:29:23.080 --> 0:29:27.880 and after last year's shortage, this is what the industry needs. 0:29:28.000 --> 0:29:31.560 We need more competition, we need more options, and this 0:29:31.600 --> 0:29:33.480 allows us to be able to serve more of the 0:29:33.560 --> 0:29:35.240 market over the coming years. 0:29:36.200 --> 0:29:37.920 So what does Nature's want do? 0:29:38.080 --> 0:29:40.680 So talk to us about this distract what this company 0:29:40.720 --> 0:29:43.440 does and kind of how it dovestail dovetails in with 0:29:43.520 --> 0:29:46.160 kind of your business at Bobby and the baby formula 0:29:46.280 --> 0:29:47.680 delivery business. 0:29:48.320 --> 0:29:52.360 Yeah, so nature is One is actually you know, pioneers 0:29:52.400 --> 0:29:55.560 in the world of organic impurity. They've been around for 0:29:55.560 --> 0:29:59.560 the last twenty six years. They've spent the majority of 0:29:59.600 --> 0:30:02.560 their time and focused on the popular formula. I would 0:30:02.600 --> 0:30:06.239 actually refer to their founder and CEO really as the 0:30:06.280 --> 0:30:09.600 godfather of formula here in the US, an organic formula. 0:30:10.560 --> 0:30:13.920 He had the foresight back in two twenty and nineteen 0:30:14.320 --> 0:30:17.680 to build a state of the art infant formula facility 0:30:17.760 --> 0:30:21.120 in Ohio, and he had no idea what would come 0:30:21.240 --> 0:30:23.200 in twenty twenty two when we were hit with the 0:30:23.320 --> 0:30:26.560 national infant formula shortage. But in twenty twenty two, at 0:30:26.560 --> 0:30:29.880 the end of last year, it got completed and he 0:30:29.960 --> 0:30:33.760 became the first new infant formula facility to be built 0:30:33.800 --> 0:30:35.440 in forty years from the ground up. 0:30:35.320 --> 0:30:36.440 In the US. 0:30:37.200 --> 0:30:41.400 Laura Barry Riddholts here, So it sounds like putting together 0:30:41.480 --> 0:30:45.520 a couple of these parts. You're going for scale so 0:30:45.600 --> 0:30:48.560 that if there is any sort of disruption in the future, 0:30:49.120 --> 0:30:52.400 you'll be able to meet consumer demand. How large do 0:30:52.440 --> 0:30:55.200 you have to be to avoid the sort of problems 0:30:55.480 --> 0:30:58.880 that we saw during the pandemic and the lockdowns. 0:31:00.080 --> 0:31:00.320 Question. 0:31:01.000 --> 0:31:06.280 This is not just about and building one facility and 0:31:06.680 --> 0:31:10.160 calling it a day. We need to build redundancy. This 0:31:10.240 --> 0:31:13.160 industry needs resiliency so that we don't go through this again. 0:31:13.600 --> 0:31:17.200 So today we've been using a contract manufacturer to make 0:31:17.240 --> 0:31:19.480 our product, and we're going to keep doing that. We're 0:31:19.520 --> 0:31:22.120 going to double down with them. We're going to stay 0:31:22.160 --> 0:31:25.880 with them longer while we also build the resiliency to 0:31:25.920 --> 0:31:29.160 get our own facility up and running to also produce 0:31:29.200 --> 0:31:32.800 more products. The downside of last year was that there 0:31:32.880 --> 0:31:37.400 was few facilities making too few products. So when one 0:31:37.440 --> 0:31:40.680 of those facilities is no longer able to produce product, 0:31:40.800 --> 0:31:44.480 we're going to be experiencing a shortage. Now, I will 0:31:44.520 --> 0:31:46.720 admit that Bobby is not going to be the cure 0:31:47.080 --> 0:31:50.520 solution to ensure that we avoid this. But I'm going 0:31:50.560 --> 0:31:53.200 to do my damn best to make sure the Bobby's 0:31:53.240 --> 0:31:55.320 never in the center of another shortage again. 0:31:56.120 --> 0:31:58.120 And as many of our listeners know, we started speaking 0:31:58.160 --> 0:32:01.200 with Laura back in the pandem again when this shortage 0:32:01.200 --> 0:32:02.880 came to the fore and we needed to get real 0:32:03.040 --> 0:32:06.080 smart on the baby formula business real quick, and Laura 0:32:06.160 --> 0:32:08.680 was kind enough to speak with this several times during 0:32:08.720 --> 0:32:10.880 that process. So it's great to see Laura and Bobby 0:32:10.920 --> 0:32:14.040 continue to grow here. So Laar, give us the lay 0:32:14.040 --> 0:32:16.600 of the land today. How have things changed in the 0:32:17.000 --> 0:32:21.520 greater you know, baby formula business as it relates to logistics. 0:32:21.640 --> 0:32:23.360 Are we in a better place today than we were 0:32:23.400 --> 0:32:25.240 you know, a year ago, two years ago? 0:32:26.560 --> 0:32:30.160 Well, i'd like to say chester yesterday's acquisition, we are. 0:32:32.080 --> 0:32:36.880 The shortage itself is beginning to subside, which means shells 0:32:36.920 --> 0:32:40.400 are getting stocked and there's access to more formula, but 0:32:40.480 --> 0:32:44.560 it's spotty, and it's spotty because consumer buying behavior has 0:32:44.600 --> 0:32:47.880 also changed, so there may be some shelves that remain 0:32:47.920 --> 0:32:51.280 out of stock while others are plentiful. What we need 0:32:51.360 --> 0:32:53.520 to do is we need to adjust to this changing 0:32:53.600 --> 0:32:56.440 landscape and consumer behavior, which includes what are the products 0:32:56.480 --> 0:32:58.280 that they need now and where do they need them? 0:32:58.840 --> 0:33:02.040 That I would say is we're still somewhat in a crisis. 0:33:02.080 --> 0:33:05.040 From that respect. The other thing that hasn't changed is 0:33:05.320 --> 0:33:08.080 we're still putting out products from the same few facilities. 0:33:08.960 --> 0:33:10.880 We are not in a position of the country where 0:33:10.920 --> 0:33:14.120 we can turn around and confidently say that it's another 0:33:15.040 --> 0:33:17.840 bacteria hits the facility that we wouldn't be in this again. 0:33:18.040 --> 0:33:20.480 I actually think we are truly one bacteria away from 0:33:20.520 --> 0:33:23.760 having another shortage like last year, and the only way 0:33:23.840 --> 0:33:27.840 to get out of that is through the incentives and 0:33:28.000 --> 0:33:30.640 investment made in further domestic manufacturing. 0:33:32.080 --> 0:33:34.280 In our final couple of minutes with you, Laura, I 0:33:34.320 --> 0:33:36.720 want to switch gears a little bit because I'm so 0:33:37.160 --> 0:33:41.600 interested in your history and your previous life before Bobby, 0:33:41.600 --> 0:33:44.200 when you were working at Google, and you've talked about 0:33:44.320 --> 0:33:47.000 day trading as an important part of your time there 0:33:47.440 --> 0:33:49.480 that helped you to buy your first home, and that's 0:33:49.520 --> 0:33:51.320 why it was so important to you to kind of 0:33:51.560 --> 0:33:55.120 open up investment into Bobby for women in particular, talk 0:33:55.160 --> 0:33:57.840 to me about the other ways that being a trader 0:33:58.200 --> 0:34:00.960 yourself has impacted the way that you run the business. 0:34:03.040 --> 0:34:05.239 Great question. Did not see that coming here. 0:34:06.240 --> 0:34:08.040 I'm a big fan of the Cut because I used 0:34:08.040 --> 0:34:09.680 to work there, so that's where I'm getting that. 0:34:10.640 --> 0:34:16.400 I love it. Look, my passion is really in women 0:34:16.719 --> 0:34:21.280 having financial independence, and I think in a lot of ways, 0:34:21.320 --> 0:34:25.320 whether it's trading or just understanding the financial system, women 0:34:25.360 --> 0:34:28.759 are often left in the dark and behind. It can 0:34:28.840 --> 0:34:31.239 be sometimes seen as an old boys club, whether it's 0:34:31.280 --> 0:34:35.120 from the nomenclature to just the tools that exist. So 0:34:35.400 --> 0:34:38.600 one of my deep passions is making sure that we're 0:34:38.640 --> 0:34:42.719 in we are growing a business to allow women to 0:34:42.719 --> 0:34:44.960 become financially savvy, and you see that in many of 0:34:44.960 --> 0:34:48.920 our practices today. One of those is that I think 0:34:48.960 --> 0:34:51.319 it was in our fundraise for our series day we 0:34:51.440 --> 0:34:54.520 opened up a small portion of the round to allow 0:34:54.560 --> 0:34:58.839 our own customers moms to invest in the business. And 0:34:58.960 --> 0:35:02.640 instead of how having a minimum dollar to be able 0:35:02.640 --> 0:35:05.560 to put in, we actually created a cap that allowed 0:35:05.640 --> 0:35:08.200 several hundred moms to be able to invest in business. 0:35:08.280 --> 0:35:11.560 Yep, that's a fat, I mean fascinating story all around here. 0:35:11.560 --> 0:35:13.400 We're glad we get to stay in touch with you, 0:35:13.480 --> 0:35:15.359 Lara and keep us up today. What's happening in your 0:35:15.360 --> 0:35:18.760 business and your industry? Law Mody, CEO and co founder 0:35:19.080 --> 0:35:20.000 of Bobby. 0:35:19.960 --> 0:35:23.040 You're listening to the tape. Can's our live program Bloomberg 0:35:23.160 --> 0:35:26.759 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:35:26.800 --> 0:35:28.759 tune in app, Bloomberg dot Com, and. 0:35:28.719 --> 0:35:30.040 The Bloomberg Business App. 0:35:30.080 --> 0:35:32.880 You can also listen live on Amazon Alexa from our 0:35:32.920 --> 0:35:38.000 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:35:38.960 --> 0:35:41.280 We'd be streaming on that thing called YouTube. 0:35:41.280 --> 0:35:43.759 Just go to YouTube and search Bloomberg Global News and 0:35:43.760 --> 0:35:45.640 that's you get the video feed there all right. The 0:35:45.680 --> 0:35:48.160 absolute top media analyst on Wall Street in my opinion, 0:35:48.160 --> 0:35:51.000 and it's an informed opinion. Michael nathan SI, founding partner 0:35:51.040 --> 0:35:54.800 and senior Research Channels at Moffat Nathanson joins us via zoom. Michael, 0:35:54.800 --> 0:35:57.600 thanks so much for taking the time. I got to 0:35:57.640 --> 0:36:00.760 start with Disney. You know, back in the day, I 0:36:00.800 --> 0:36:03.600 told a professor Buddy Mine and Harvard Business School, I 0:36:03.640 --> 0:36:06.439 got a case study for you how to really do 0:36:06.600 --> 0:36:10.640 an effective UH succession planning? And that was Bob Ayger 0:36:10.719 --> 0:36:14.040 the Walt Disney Company. I'm thinking the Tom Staggs Jay 0:36:14.120 --> 0:36:16.160 Russolo set up that nice race. 0:36:16.200 --> 0:36:18.080 We thought everybody on the street was happy with it. 0:36:18.120 --> 0:36:19.600 We thought, boy, these are two good people. 0:36:20.160 --> 0:36:23.240 And then it didn't work out, and Bob kept extending 0:36:23.320 --> 0:36:25.520 and extending, and all the executives left and here we 0:36:25.600 --> 0:36:28.439 are again. So what do you make of what's going 0:36:28.480 --> 0:36:29.440 on at Disney? 0:36:30.920 --> 0:36:34.000 Yeah, thanks Paul, pretty nice, nice comments. That really means 0:36:34.000 --> 0:36:37.399 a lot, So thank you for that. There's a lot 0:36:37.440 --> 0:36:40.800 to unpack here, right, So start with where you began, 0:36:40.960 --> 0:36:45.160 which is believe or not. There's there's not a bench 0:36:45.360 --> 0:36:50.600 yes year that's ready to take over leadership. I think 0:36:50.640 --> 0:36:53.120 part of it is that the company is in such 0:36:53.160 --> 0:36:58.360 different businesses in different birth life cycles. Right. So Parks, 0:36:58.800 --> 0:37:02.000 the guys you mentioned stagger In Resulo you know Staggers 0:37:02.040 --> 0:37:05.080 a CFO. Rosulo was the head of Parks. Parks has 0:37:05.080 --> 0:37:08.080 a different type of business model than Media. Now streaming 0:37:08.160 --> 0:37:10.240 is their their big bet is. Streaming is a completely 0:37:10.280 --> 0:37:14.480 different business model. So it's such a broad set of assets, 0:37:15.120 --> 0:37:19.399 and you need someone who's who has got creative sensibilities 0:37:19.480 --> 0:37:23.319 or trustworthiness. It's it's a hard job. But to your 0:37:23.320 --> 0:37:26.200 first point, yeah, it's kind of amazing that this lead 0:37:26.320 --> 0:37:30.520 into it. There hasn't been a bench of emerging candidates 0:37:30.520 --> 0:37:34.520 besides Bob Kaipik in hindsight, was the wrong person. We 0:37:34.920 --> 0:37:39.799 thought that almost right away. So that continues, right the 0:37:39.920 --> 0:37:42.279 hunt for the next executive continues. We've got more time 0:37:42.320 --> 0:37:44.920 on his hands. But that's just part of the story, 0:37:44.960 --> 0:37:45.279 I think. 0:37:45.840 --> 0:37:48.200 And so, Michael, the bigger issue, well not the big issue, 0:37:48.200 --> 0:37:50.760 but the operating issue for Bob Byger and the management 0:37:50.760 --> 0:37:53.839 team is, boy, how do you manage this transition from 0:37:53.920 --> 0:37:57.560 the traditional business where you had cable companies and salt companies, 0:37:58.040 --> 0:38:00.480 you know, giving you a steady profit, to now the 0:38:00.480 --> 0:38:03.439 streaming business where the economics are really uncertain. Let's start 0:38:03.440 --> 0:38:06.600 with ESPN. What would you recommend to Bob Eyer on 0:38:06.600 --> 0:38:07.920 the board that they do with ESPN? 0:38:08.760 --> 0:38:11.400 Yeah, so Paul started ESPN and is right. You know 0:38:11.440 --> 0:38:14.000 when you covered the stock way back when it was 0:38:14.680 --> 0:38:16.320 it was a driver of free cash flow and the 0:38:16.360 --> 0:38:22.399 driver profitability ESPN and you'll laugh if and to us 0:38:22.600 --> 0:38:26.960 a it's really unclear how ESPN could work on a 0:38:26.960 --> 0:38:31.839 standalone basis as a drifting consumer service. Right, the price 0:38:31.880 --> 0:38:34.960 point has to be quite high, the will be more 0:38:35.000 --> 0:38:37.960 seasonal than it is now. We think the best idea 0:38:37.960 --> 0:38:41.080 is to either create a sports only bundle with other 0:38:41.280 --> 0:38:47.040 sports led programmers, or put sport into the Disney plus 0:38:47.040 --> 0:38:49.920 Food bundle. Right, so you either have to go all 0:38:49.920 --> 0:38:53.200 in on sports or use sports strategically. It's unclear at 0:38:53.200 --> 0:38:54.839 this point what Disney wants to do. I think they 0:38:54.880 --> 0:38:58.759 really want to maintain an ESPN brand as a standalone 0:38:58.840 --> 0:39:01.800 APT we think, but even today when Baba's was talking 0:39:01.800 --> 0:39:04.760 about it, it's unclear what the path looks like going forward. 0:39:05.440 --> 0:39:08.920 We studied ESPN for a long time, you know, we 0:39:09.120 --> 0:39:11.720 used to be more sanguine about the future of ESPN, 0:39:12.280 --> 0:39:15.479 but cork cutting has gotten so bad and a cost 0:39:15.480 --> 0:39:18.800 of sports keeps rising that it's not an easy, clear 0:39:19.480 --> 0:39:22.480 answer that you you know, for your question. Our best 0:39:22.560 --> 0:39:25.600 bet is to try to keep the bundle alive by 0:39:25.719 --> 0:39:28.120 shrinking it down to sports only. When hit the bundle, 0:39:29.040 --> 0:39:32.239 what remains the PATV bundle, So shrinking down to sports only. 0:39:32.440 --> 0:39:35.560 So when you talk to institutional investors, Michael just about 0:39:35.960 --> 0:39:40.200 you know, the big media companies, how confident are you 0:39:40.400 --> 0:39:44.800 that they can make this transition broadly speaking, the industry 0:39:45.000 --> 0:39:47.520 to a streaming economic model. Because if I'm an investor, 0:39:47.960 --> 0:39:50.040 I'm like, I just don't know, and as a result, 0:39:50.080 --> 0:39:50.920 I'm not going to invest. 0:39:52.600 --> 0:39:57.319 Yeah for people, So if you're head our work, we 0:39:57.400 --> 0:39:59.960 had a Noe doubt today where my partner Robert Fishman 0:40:00.120 --> 0:40:04.799 covers a lot of media names equated today's linear TV 0:40:05.120 --> 0:40:10.399 to radio and exactly. And it feels like that, right, Paul, 0:40:10.520 --> 0:40:14.520 where the uncerting, the uncerting index is so high for 0:40:14.640 --> 0:40:18.759 the future and the pivot here seems so complicated that 0:40:18.880 --> 0:40:22.200 we're finding just a lack of interest even for Disney. Right, 0:40:22.200 --> 0:40:24.960 So we upgraded Disney when Box came back in ninety, 0:40:25.000 --> 0:40:28.280 Bucks stock went to one twenty. That's our price targets 0:40:28.280 --> 0:40:32.000 back to ninety again. But even Disney has lost kind 0:40:32.000 --> 0:40:35.359 of the goodwill of the instrutional investors that are out there, Right, 0:40:35.400 --> 0:40:38.880 So there's just a lack of interest here, like radio, 0:40:39.360 --> 0:40:42.080 which is a sad commentary. But a lot of this, 0:40:42.239 --> 0:40:44.919 Paul and I've talked over the many years, has been 0:40:44.960 --> 0:40:48.160 self inflicted. Right, didn't have to be this bad. They 0:40:48.239 --> 0:40:52.160 licensed their content to Netflix. They then all pivoted hard 0:40:52.200 --> 0:40:56.080 to streaming without much thought about profitability, and they've killed 0:40:56.080 --> 0:40:58.000 the golden goose. Right, It's really sad, like, there'll be 0:40:58.040 --> 0:41:01.160 a textbook written about how this was. You know, a 0:41:01.160 --> 0:41:03.480 lot of this was self inflicted in terms of the 0:41:03.520 --> 0:41:04.720 wounds in the industry. 0:41:05.320 --> 0:41:06.799 I think in your next life you can write that 0:41:06.960 --> 0:41:09.760 book in your spare time. Michael, Hey, let's talk about 0:41:09.800 --> 0:41:12.279 a name that just jumps out of a lot of investors, 0:41:12.280 --> 0:41:15.680 maybe of some interest, Paramount. What does this company do? 0:41:15.719 --> 0:41:17.680 What does Sherry Redstone really want to do with this company? 0:41:17.680 --> 0:41:19.160 Because you know, we kind of thought that they didn't 0:41:19.160 --> 0:41:22.279 have this scale before. Nothing's changed, maybe even it's become 0:41:22.360 --> 0:41:23.359 more pronounced that risk. 0:41:24.120 --> 0:41:26.200 No, so we and Robert has a we have a 0:41:26.239 --> 0:41:29.719 sell on Paramount. You may be shot to know or 0:41:29.719 --> 0:41:33.080 not know that they generate no pre cash flow and 0:41:33.160 --> 0:41:37.040 they're highly leveraged. And the bullet caase is simply that 0:41:37.080 --> 0:41:39.840 someone is going to buy them. Yeah, you Warren Buffett's 0:41:39.840 --> 0:41:43.080 an investor, and like that's hoss. Like if that's what 0:41:43.160 --> 0:41:45.120 you have as a bullet case, and then we're worried 0:41:45.120 --> 0:41:48.720 about it. We think just they're over leveraged to cable networks, 0:41:49.480 --> 0:41:51.719 the lack of profitability and streaming. 0:41:52.680 --> 0:41:53.319 It's just a. 0:41:53.239 --> 0:41:55.200 Tough hand they have. And I think, you know, they 0:41:55.200 --> 0:41:58.200 just got to give them a quarter, and I think 0:41:58.239 --> 0:42:00.400 if you moved to like this arms dealer or you 0:42:00.480 --> 0:42:04.120 start selling your content, I'm not sure there's a there there. 0:42:04.160 --> 0:42:07.200 At the end of the day, eventually you're seeing Netflix, Amazon, 0:42:07.239 --> 0:42:11.040 Apple make their own content. So maybe they'll buy the 0:42:11.080 --> 0:42:14.919 mission impossible. Maybe they'll buy, you know, the top gun 0:42:14.960 --> 0:42:17.919 from you, but they won't license all your content because 0:42:17.920 --> 0:42:20.520 they don't have to anymore. I think you picked that one, 0:42:20.520 --> 0:42:24.160 and that's a tough handpong. We're quite negative on the 0:42:24.160 --> 0:42:24.759 outcome there. 0:42:25.680 --> 0:42:28.440 Hey, Michael, this is Madison a question about this, and 0:42:28.440 --> 0:42:28.839 it's funny. 0:42:28.880 --> 0:42:30.240 I was talking to my friends last. 0:42:30.120 --> 0:42:33.880 Night who all really hate the paramount app so not 0:42:33.960 --> 0:42:35.799 a great sign for them. But when you look at 0:42:35.800 --> 0:42:39.880 a Netflix in particular, they've really gone all in on 0:42:40.000 --> 0:42:45.080 creating this really cheap reality TV content that can. 0:42:45.600 --> 0:42:47.800 Air for them and does really, really well. 0:42:48.400 --> 0:42:52.520 Disney doesn't really have an option for that necessarily. 0:42:52.560 --> 0:42:54.000 Do you see Disney. 0:42:53.600 --> 0:42:59.040 Going into a cheaper content creation strategy in order to 0:42:59.080 --> 0:43:00.600 compete with the likes Netflix. 0:43:01.640 --> 0:43:05.000 It's funny. We've studied that question by looking at Netflix. 0:43:05.000 --> 0:43:07.480 Netflix the viewership that eight and ten percent of the 0:43:07.560 --> 0:43:11.520 viewership would be unscripted reality every every month, every quarter, 0:43:11.560 --> 0:43:13.759 eight ten percent. It's not a big number, but to 0:43:13.800 --> 0:43:17.520 your point, the stuff they have probably out punches, you 0:43:17.560 --> 0:43:21.879 know what the costs are making it. Disney has National 0:43:22.160 --> 0:43:26.520 Disney Plus, is that Geo Whoo has The Bachelor. Our 0:43:26.600 --> 0:43:28.920 vision is that at some point Disney Plus and Who 0:43:28.920 --> 0:43:32.680 will get combined. Now Geo really hasn't sparked. It looks 0:43:32.719 --> 0:43:36.880 like the same level of engagement that Netflix's reality shows have. 0:43:37.400 --> 0:43:39.160 But we think that at some point when they combined 0:43:39.200 --> 0:43:42.480 Disney Plus and Whulu to your comment, didn't have to 0:43:42.560 --> 0:43:46.720 lean more into unscripted reality. You know, again the Bachelor, 0:43:46.760 --> 0:43:50.440 it's made by warners, but it's it's a good observation. 0:43:51.200 --> 0:43:55.520 The opposite side, Warner Brothers has now Max has great 0:43:55.640 --> 0:43:59.480 HBO stuff and now all the Discovery content. They probably 0:43:59.480 --> 0:44:03.279 have almost too much reality programming there. So as I 0:44:03.280 --> 0:44:06.040 think Netflix has figured out the perfect blend, I think 0:44:06.080 --> 0:44:08.120 to your point, others will have to follow that blend. 0:44:08.719 --> 0:44:11.080 And if there isn't enough headwinds for just strategically for 0:44:11.160 --> 0:44:13.960 the industry, now they've got, you know, potentially a pair 0:44:13.960 --> 0:44:17.640 of strikes, one from the writers and now potentially one 0:44:17.680 --> 0:44:20.560 from the actors. Boy, how big of a problem is 0:44:20.600 --> 0:44:22.480 this for the industry? Michael, do you think these things 0:44:22.520 --> 0:44:23.280 get resolved. 0:44:25.239 --> 0:44:28.760 I think it's a huge problem. I think it's happening 0:44:28.800 --> 0:44:34.759 at a time of great difficulties for the industry, a 0:44:34.880 --> 0:44:39.400 kind of structural change. The directors have settled, the writers 0:44:39.440 --> 0:44:43.200 have not, and the actress likely will go on strike. 0:44:43.880 --> 0:44:45.880 I think it's gonna be really damaging. And the problem, 0:44:45.960 --> 0:44:48.280 I think is that the sides are so far apart, 0:44:48.960 --> 0:44:52.160 given that the writers are still in strike and the 0:44:52.160 --> 0:44:55.520 economicy industry is we've just talked about it really really challenging. 0:44:56.120 --> 0:45:01.120 So I think there needs to be some realization that 0:45:01.440 --> 0:45:04.279 the music common ground here, something has to give. I 0:45:04.360 --> 0:45:06.839 worry that this goes on through the summer is going 0:45:06.880 --> 0:45:09.200 to really affect the fourth quarter and all the new 0:45:09.320 --> 0:45:13.360 programming for broadcasts and some of the broadcast networks that 0:45:13.360 --> 0:45:15.680 we cover will be in a really bad position. And 0:45:15.680 --> 0:45:17.880 it's also going to hurt streaming companies that are looking 0:45:17.880 --> 0:45:20.879 for new, fresh content by the first half of next year. 0:45:21.239 --> 0:45:24.760 But it has real implications here. But it doesn't seem 0:45:24.760 --> 0:45:27.480 to us to be settling anytime. In the fact, feels 0:45:27.480 --> 0:45:30.120 like it could drag on Paul, which is not It's 0:45:30.160 --> 0:45:31.560 not a good outcome for anybody. 0:45:31.680 --> 0:45:34.000 Hey, Michael, just lastly, love to just get your your 0:45:34.040 --> 0:45:36.000 top pick here. What are you guys in your team 0:45:36.080 --> 0:45:37.480 kind of out there with your clients. 0:45:37.520 --> 0:45:41.799 Okay, So in media all separate media and Internet, right, 0:45:41.840 --> 0:45:45.520 so we keep adding coverage, So Robbins Media World, our 0:45:45.560 --> 0:45:48.600 top picks would be Fox because Fox is just sports 0:45:48.600 --> 0:45:51.080 and news, and Disney for a larg term view that 0:45:51.200 --> 0:45:54.680 ninety bucks I share. You know, if Bob Ayer can 0:45:54.920 --> 0:45:58.400 be successful, you know, we think there's thirty dollars of upside, 0:45:58.480 --> 0:46:03.560 So Disney Fox top we have paramounts is short. In Internet, 0:46:03.680 --> 0:46:07.200 we keep pushing Meta has been a really great nice 0:46:07.280 --> 0:46:10.920 year for us and Alphabet because we think the AI 0:46:11.080 --> 0:46:15.400 fears the chat, GPT killing Google Search will overstated. So 0:46:15.960 --> 0:46:19.239 you know, we stay with those behemoth and you know 0:46:19.480 --> 0:46:21.879 that's been an easy call. And we think that there's 0:46:21.920 --> 0:46:25.400 this real dispersion of digital advertisements going to put up 0:46:25.440 --> 0:46:28.120 really nice growth and linear networks going to have a 0:46:28.160 --> 0:46:31.600 early heart iime growing Paul all our radio back when 0:46:31.760 --> 0:46:33.799 when you and I were young, we were younger men. 0:46:34.120 --> 0:46:36.400 That's right, exactly, all right, Michael, thanks for giving us 0:46:36.400 --> 0:46:37.880 a couple minutes of your time. We really appreciate it. 0:46:37.880 --> 0:46:40.840 Michael Nathanson again one of the the the top analysts 0:46:41.120 --> 0:46:42.799 covering the media space, or just in a Wall Street 0:46:42.800 --> 0:46:45.840 and General founding partner senior research analysts at Maffatt Nathanson. 0:46:46.160 --> 0:46:49.239 You're listening to the tape Can's are live program Bloomberg 0:46:49.320 --> 0:46:52.880 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:46:52.960 --> 0:46:55.040 tune in app, Bloomberg dot Com. 0:46:54.760 --> 0:46:56.160 And the Bloomberg Business App. 0:46:56.239 --> 0:46:59.040 You can also listen live on Amazon Alexa from our 0:46:59.040 --> 0:47:03.440 flagship New York's Just Say Alexa playing Bloomberg eleven thirty. 0:47:04.920 --> 0:47:07.439 We had some arnings today Pepsi. I'm a coke guy, 0:47:07.440 --> 0:47:09.319 but I'm just as happy drinking Pepsi. I'll be honest 0:47:09.320 --> 0:47:11.960 with you. I have no real loyalty Ken Shay. He 0:47:12.000 --> 0:47:14.440 does this stuff for a living. He follows all these 0:47:14.480 --> 0:47:17.839 consumer companies. He's a senior equity analyst to Bloomberg Intelligence. Ken, 0:47:17.880 --> 0:47:19.520 thanks so much for joining us here on zoom What 0:47:19.560 --> 0:47:23.960 did you learn from Pepsi today. 0:47:22.480 --> 0:47:26.400 Hi, Paul, Well, we learned again the power of Pepsi's brands. 0:47:26.760 --> 0:47:29.319 You know, I think everyone respects their brands and their 0:47:29.360 --> 0:47:32.640 ability to pass on price increases. But I think there 0:47:32.680 --> 0:47:36.200 may have been some underlying skepticism that it could continue 0:47:36.239 --> 0:47:40.440 for so long, and it has, and you know, the 0:47:40.480 --> 0:47:42.719 second half of the year, the company is mentioning that 0:47:42.760 --> 0:47:44.680 commodity costs may ease a little bit, it may not 0:47:44.719 --> 0:47:48.000 be as aggressive with pricing. I think that's giving people 0:47:48.040 --> 0:47:50.359 a little relief. You know, pricing has been in double 0:47:50.360 --> 0:47:52.680 digit for a while now with this company, but they're 0:47:52.680 --> 0:47:54.719 investing in the brands. So what we learned is that 0:47:54.760 --> 0:47:57.759 the company has really powerful brands. They're not afraid to 0:47:57.880 --> 0:47:59.520 invest in them and price accordingly. 0:48:00.640 --> 0:48:03.800 And to what extent do you see that price power, 0:48:03.960 --> 0:48:06.879 pricing power continuing through the second half of the year, 0:48:06.920 --> 0:48:09.080 because in the last earning cycle they were sort of 0:48:09.080 --> 0:48:12.320 like bragging about their ability to increase prices. 0:48:12.400 --> 0:48:13.480 Is that going to keep happening? 0:48:14.600 --> 0:48:17.319 You that's the million doile of the question. You know, 0:48:17.400 --> 0:48:20.360 I'd be reluctant to bet against them, though, you know, 0:48:20.400 --> 0:48:23.120 this earnings report was their eighteenth beat in a row. 0:48:23.680 --> 0:48:28.920 They have an ability better than their peers to manage 0:48:29.239 --> 0:48:33.680 their volume and pricing such that revenues keep coming in strong. 0:48:34.560 --> 0:48:37.560 They invest quite a bit. Their capecks is a little 0:48:37.600 --> 0:48:40.480 bit higher than their peers, but they invest or a manufacturer, 0:48:40.520 --> 0:48:44.160 they own their bottlers too, They invest in productivity. It's 0:48:44.520 --> 0:48:46.400 really showing in the bottom line. So if they can 0:48:46.440 --> 0:48:49.600 continue that top line strength and can continue to what 0:48:49.640 --> 0:48:52.520 they're doing in the second half, then we're looking at 0:48:53.120 --> 0:48:56.000 you know, another high single digit kind of EPs gain 0:48:56.040 --> 0:48:56.800 in the second half. 0:48:57.239 --> 0:48:59.360 Hey can this there's still any vestages left of that 0:48:59.520 --> 0:49:01.839 old Cold war of years gone past, and they still 0:49:01.840 --> 0:49:04.040 fight for market chair Coke and Pepsi or is it 0:49:04.160 --> 0:49:06.360 kind of fizzled out for lack of a or. 0:49:07.719 --> 0:49:10.799 Well, you know, they they don't speak about it that much, 0:49:10.800 --> 0:49:14.759 PepsiCo market share because they really are a full, you know, 0:49:14.840 --> 0:49:18.280 sweet portfolio beverage company, whether it's the Gator Raye sports 0:49:18.360 --> 0:49:21.920 drinks or now they're investing heavily in energy drinks. The 0:49:22.040 --> 0:49:26.120 juice is still tease now alcoholic beverage, you know, a 0:49:26.560 --> 0:49:29.359 venture with Bustin Beer. It's small, but they don't get 0:49:29.400 --> 0:49:33.600 caught up too much in the carbonate cola aisle share 0:49:33.719 --> 0:49:37.040 like co Cola is much more concentrated in as much. 0:49:39.480 --> 0:49:42.320 All right, we've got like twenty seconds left with you here. 0:49:42.400 --> 0:49:44.920 But in those final twenty seconds, I did want to 0:49:44.920 --> 0:49:46.480 ask you about. 0:49:46.520 --> 0:49:50.640 The downside of the dollar. Do you think Pepsi's incredibly 0:49:50.640 --> 0:49:52.879 excited about that? Or am I overblowing that. 0:49:52.880 --> 0:49:53.319 A little bit? 0:49:54.719 --> 0:49:57.840 No, you're not. I mean is it's been a Kurche's 0:49:57.840 --> 0:50:01.239 been a drag for the last all year two or so. 0:50:02.000 --> 0:50:03.799 You're still seeing a modest drag in the in the 0:50:03.800 --> 0:50:06.520 second half. They may be a little conservative given a 0:50:06.560 --> 0:50:10.560 dollar weakness of late, and we think there's still gonna 0:50:10.560 --> 0:50:13.200 be a slight drag, but we think it's a good 0:50:13.200 --> 0:50:13.799 thing for them. 0:50:13.880 --> 0:50:14.160 You know. 0:50:14.560 --> 0:50:17.080 All that's being equal, Let's drag it better, all. 0:50:17.040 --> 0:50:18.839 Right, Ken, thanks so much for joining us, Ken Shay, 0:50:19.239 --> 0:50:22.040 senior equity analysts. It covers all the consumer products companies, 0:50:22.080 --> 0:50:24.960 a lot of the beverage companies, to tobacco companies, the 0:50:25.000 --> 0:50:27.640 weed company, So he's got the whole portfolio there, and 0:50:27.640 --> 0:50:29.399 we appreciate getting a few minutes of his time there. 0:50:29.600 --> 0:50:32.719 You're listening to the tape Cat's are live program Bloomberg 0:50:32.760 --> 0:50:36.360 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:50:36.440 --> 0:50:38.520 tune in app, Bloomberg dot Com. 0:50:38.200 --> 0:50:39.640 And the Bloomberg Business App. 0:50:39.680 --> 0:50:42.520 You can also listen live on Amazon Alexa from our 0:50:42.520 --> 0:50:48.440 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:50:48.680 --> 0:50:51.600 Madison Mills, Paul Sweene Here in our Bloomberg Interactive Workers studio, 0:50:51.960 --> 0:50:53.800 a little bit of an M and A trade here 0:50:53.880 --> 0:50:56.840 today exce on to by Denbury for four point nine 0:50:56.840 --> 0:51:00.600 billion dollars in CO two pipeline push. Get the latest 0:51:00.640 --> 0:51:04.080 on this transaction. Kevin Crowley joins this senior US oil 0:51:04.120 --> 0:51:05.520 reporter for Bloomberg News. 0:51:05.719 --> 0:51:06.560 Kevin, are you based in? 0:51:06.920 --> 0:51:07.680 Are you in Houston? 0:51:08.960 --> 0:51:09.359 That's right? 0:51:09.440 --> 0:51:09.600 Yep? 0:51:09.719 --> 0:51:13.960 I mean Houston yet where Egxon is just relocated you. 0:51:14.360 --> 0:51:16.320 Okay, how hard is it going to be in Houston today? 0:51:17.800 --> 0:51:18.920 I think it's I think we're going to be a 0:51:18.960 --> 0:51:20.799 one hundred, but it feels like it's more than one 0:51:20.840 --> 0:51:23.120 hundred and ten or so. So we're staying firmly inside 0:51:23.120 --> 0:51:24.480 in the air conditioning. 0:51:24.040 --> 0:51:26.440 And judging by your accent, you're not a Houston native. 0:51:26.520 --> 0:51:28.480 I mean, you don't know you're genetically you're not made 0:51:28.560 --> 0:51:29.680 up for this weather, are you. 0:51:30.640 --> 0:51:34.880 That's that's right, that's right. Once it gets to about eighty, 0:51:34.920 --> 0:51:36.120 I start to start to melt. 0:51:36.560 --> 0:51:39.560 Ha hang out in the air conditioning there, talk to 0:51:39.640 --> 0:51:42.480 us about this Exon deal. What is Denbury and why 0:51:42.600 --> 0:51:45.520 is Exxon sholling out four point nine billion dollars? 0:51:46.520 --> 0:51:48.359 So it's a it's a really interesting deal. It's really 0:51:48.520 --> 0:51:52.160 it's really a low carbon play for for for Exxon, 0:51:52.480 --> 0:51:59.040 Denbury was is a what's called an enhanced oil recovery specialist. 0:51:59.120 --> 0:52:05.080 So they they move, they use carbon dioxide in old 0:52:05.080 --> 0:52:07.560 wells in order to produce more more oil. Now they 0:52:07.600 --> 0:52:10.520 have a key asset here, which is the which is 0:52:10.520 --> 0:52:14.640 a thirteen hundred one hundred mile pipeline network, which is 0:52:14.640 --> 0:52:18.560 the largest carbon dioxide pipeline network in the US. And 0:52:18.640 --> 0:52:23.480 Eggson really wants this pipeline network in order to boost 0:52:23.520 --> 0:52:26.040 its its carbon capture business. It's a really it's a 0:52:26.040 --> 0:52:30.360 really unique asset that Egxons saw as critical to its 0:52:30.400 --> 0:52:33.040 to its whole low carbon strategy, and that's why it's 0:52:33.080 --> 0:52:34.880 really paying this five billion dollars. 0:52:34.880 --> 0:52:37.799 What is a carbon dioxide pipeline? What is it? 0:52:38.040 --> 0:52:41.040 Transfers carbon dioxide? But from where to wear and for 0:52:41.080 --> 0:52:41.439 what reason? 0:52:41.480 --> 0:52:42.200 I don't understand? 0:52:42.239 --> 0:52:45.680 Right, that's right, trans right, it transports carbon dioxide. So 0:52:46.640 --> 0:52:52.280 so Denbury Denbury used to use carbon dioxide to push 0:52:52.400 --> 0:52:56.040 into old oil wells in order to extract crude. This 0:52:56.120 --> 0:52:58.040 is this is a very mature business. It's a very 0:52:58.120 --> 0:53:00.480 reliable business, but it's a very high cost business. And 0:53:00.520 --> 0:53:05.520 actually Denbury got Denbury went bankrupt in twenty twenty and 0:53:05.600 --> 0:53:07.640 so has been on the recovery track for the last 0:53:08.239 --> 0:53:08.800 three years. 0:53:08.800 --> 0:53:09.080 Now. 0:53:09.480 --> 0:53:13.719 With the world's focused now on carbon emissions and particularly 0:53:14.080 --> 0:53:17.879 the passing of the Inflation Reduction Act, these pipelines that 0:53:18.000 --> 0:53:22.080 move carbon dioxide are now being repurposed for carbon capture. 0:53:22.160 --> 0:53:27.120 So Egxon's plan here is to capture carbon emissions along 0:53:27.120 --> 0:53:30.440 the Gulf coasts, which is full of refineries, chemical plants, 0:53:30.480 --> 0:53:34.840 from the biggest concentration of industrial missions in the country. 0:53:35.080 --> 0:53:37.760 They want to capture those carbon emissions, move them along 0:53:37.960 --> 0:53:41.759 the Denbury pipelines and then bury them. 0:53:41.400 --> 0:53:44.879 In the ground, bury carbon dioxide. 0:53:46.360 --> 0:53:48.560 That's right, that's right. It's called carbon it's called carbon 0:53:48.600 --> 0:53:52.960 capture and sequestration. It's the sequestration part of it, which 0:53:53.000 --> 0:53:55.720 is which is where the magic happens really, whereas instead 0:53:55.719 --> 0:54:00.360 of emitting carbon dioxide into the air, you can capture 0:54:00.360 --> 0:54:02.960 it and you can bury it underground where they say 0:54:03.000 --> 0:54:05.919 it will stay forever. So it's it's it's a way 0:54:05.960 --> 0:54:09.640 of it's a way of being able to keep a 0:54:09.680 --> 0:54:14.400 refinery or chemical plant going, but without the without the emissions. 0:54:14.680 --> 0:54:17.439 Okay, so you mentioned the Inflation Reduction Act. 0:54:17.520 --> 0:54:23.279 How much of this acquisition is directly related to that legislation. 0:54:24.520 --> 0:54:28.360 Yes, it's absolutely critical. So I spoke. I spoke to 0:54:28.760 --> 0:54:32.200 the Eggson executive kind of leading this this morning, Dan Aman, 0:54:32.719 --> 0:54:35.960 who used to be at General Motors. He said, he 0:54:36.000 --> 0:54:38.160 said the the Inflation Reduction Act was it was a 0:54:38.239 --> 0:54:41.640 key catalyst. And without the Inflation Reduction Act, I think 0:54:41.680 --> 0:54:43.600 this deal would have been a bit more, a bit 0:54:43.600 --> 0:54:46.320 more challenged. And and what the what the Inflation Reduction 0:54:46.400 --> 0:54:49.000 Act is that does really is it provides tax credits 0:54:49.360 --> 0:54:51.960 for this whole process. I talked about capturing carbon and 0:54:52.000 --> 0:54:55.640 then burying it, and you know Eggson can do this. 0:54:55.920 --> 0:54:58.319 Eggxon think want to do this on a on a 0:54:58.320 --> 0:55:01.879 really large scale, and those tax credits will be really 0:55:01.920 --> 0:55:04.879 critical for Exon to really justify it to their shareholders 0:55:04.960 --> 0:55:08.960 as to as to why they're doing it and to 0:55:09.080 --> 0:55:10.960 ultimately make profits from this process. 0:55:11.480 --> 0:55:14.759 Kevin kind of help us understand the differences to the 0:55:14.760 --> 0:55:17.880 extent there are differences between how maybe some European energy 0:55:17.920 --> 0:55:22.440 companies like British Petroleum or Total view the transition to 0:55:22.520 --> 0:55:26.880 clean energy versus American energy companies like an Exxon Mobile. 0:55:27.239 --> 0:55:29.560 What are the differences in how they're pursuing it, how 0:55:29.600 --> 0:55:30.200 they view it? 0:55:31.640 --> 0:55:34.000 Right, So, there was there was a key split really 0:55:34.000 --> 0:55:36.719 around sort of four to five years ago where the 0:55:37.040 --> 0:55:41.880 European majors, particularly BP, SHELL Total to a lesser extent, 0:55:41.960 --> 0:55:44.279 decided that they were going they were going to go 0:55:44.360 --> 0:55:47.320 hard into renewable energy. They were not going to be 0:55:47.320 --> 0:55:49.120 oil and gas companies anymore, they were going to be 0:55:49.239 --> 0:55:51.200 energy companies, and they were going to really focus on 0:55:51.640 --> 0:55:55.480 things like winds, things like solar become big in power generation, 0:55:56.360 --> 0:56:00.440 whereas the US oil majors were very much slow to 0:56:00.560 --> 0:56:05.480 embrace like zero targets and things like that, and they 0:56:05.960 --> 0:56:08.279 they've decided to really stick much more closely to oil 0:56:08.320 --> 0:56:10.839 and gas, and their low carbon strategies were much more 0:56:10.880 --> 0:56:14.759 about things that they were specifically good at, and eggs 0:56:14.840 --> 0:56:17.080 on C's carbon capture is one of those things, which 0:56:17.120 --> 0:56:20.480 is which which it has unique capability in it. Now 0:56:20.640 --> 0:56:24.080 what's interesting now is we've seen this year in particular, 0:56:24.120 --> 0:56:27.120 the European majors have somewhat sort of pivoted their strategy 0:56:28.280 --> 0:56:31.560 to to come much more closely towards the towards the 0:56:31.680 --> 0:56:34.920 US players, because they found that investing in renewables was 0:56:35.040 --> 0:56:38.080 very very competitive, and that and that the returns were 0:56:38.080 --> 0:56:40.799 really not as good. Is in, there are plenty of 0:56:40.840 --> 0:56:42.680 people who can do wins, there are plenty of people 0:56:42.680 --> 0:56:46.240 who can do solar. There are plenty of existing power 0:56:46.320 --> 0:56:49.600 utilities all across the world. And BP and Shell really 0:56:49.600 --> 0:56:52.840 found that, you know, competing with those large established players 0:56:52.840 --> 0:56:55.600 and specialists in those areas was was not really a 0:56:55.680 --> 0:57:00.000 very high return business model. So they've decided to pivot 0:57:00.080 --> 0:57:03.000 bit more back to oil and gas and focus on 0:57:03.680 --> 0:57:06.240 the low carbon areas where they can add some unique value. 0:57:06.520 --> 0:57:08.400 That's certainly that's certainly Exon strategy. 0:57:08.800 --> 0:57:12.600 It sounds like a critical part of Exon's future proving 0:57:12.680 --> 0:57:15.920 strategy as well. But I'm curious, then, why are we 0:57:16.160 --> 0:57:18.480 seeing a little bit of negativity when it comes to 0:57:18.560 --> 0:57:21.080 the day's trade on the news the stock is down 0:57:21.160 --> 0:57:23.040 by just over two percent at the moment. 0:57:24.360 --> 0:57:26.680 Well, yeah, well they're paying they're paying all in stock, 0:57:26.760 --> 0:57:29.720 so they're playing five billion dollars in stock, So that's 0:57:29.760 --> 0:57:32.520 dilutive for the for the shares. So I think that's 0:57:32.520 --> 0:57:35.360 probably the technical reasons why Exton is trading is trading 0:57:35.400 --> 0:57:35.880 down today. 0:57:35.920 --> 0:57:36.080 Now. 0:57:36.080 --> 0:57:40.960 Exon's been buying back an enormous amount of stock of 0:57:41.040 --> 0:57:43.920 the next eighteen months now. They had a record record 0:57:43.960 --> 0:57:46.400 profits last year, so they're buying back a lot of stock. 0:57:46.480 --> 0:57:50.360 So this obviously dilutes that, that loutes that mechanism. So 0:57:50.400 --> 0:57:52.400 that's that's why eggsll is trading down today. It was 0:57:52.400 --> 0:57:55.160 interesting is Denbury is trading down and normally the acquired 0:57:55.200 --> 0:57:59.240 company would trade up. Some commentary in the in the 0:57:59.240 --> 0:58:02.880 markets that some aolysts think this is higgs on, this 0:58:03.040 --> 0:58:05.440 is paying is paying kind of a too lower price 0:58:06.640 --> 0:58:09.800 for Denbris. So that's that's that's certainly an interesting one 0:58:09.840 --> 0:58:10.200 to watch. 0:58:10.760 --> 0:58:14.960 All Right, So Kevin, you're an Englishman in Houston, but 0:58:15.120 --> 0:58:18.080 in Houston it's energy is business and job one. It's 0:58:18.120 --> 0:58:20.560 business number one. I got w T I crudal oil 0:58:20.880 --> 0:58:23.280 just under seventy six dollars a barrow here a little 0:58:23.280 --> 0:58:24.800 bit of a rally. What is it when you go 0:58:24.840 --> 0:58:29.040 to the local pub equivalent in Houston? What are the 0:58:29.080 --> 0:58:31.560 folks talking about in terms of where they think oil 0:58:31.640 --> 0:58:31.919 is going? 0:58:31.960 --> 0:58:32.800 In terms of the price. 0:58:34.280 --> 0:58:36.520 Everyone thinks it's going up. It's an oil town. It's 0:58:36.560 --> 0:58:39.080 always going up. We think it's going to the moon. 0:58:39.120 --> 0:58:42.360 One hundred dollars, one hundred dollars a barrel. It's it's 0:58:42.480 --> 0:58:45.400 it's just it's just a matter of time. So yeah, 0:58:45.440 --> 0:58:50.120 people people very very very very very very British as usual, 0:58:50.680 --> 0:58:51.960 and I think I think you kind of have to 0:58:52.000 --> 0:58:53.600 be to be in the oil business. It's a it's 0:58:53.600 --> 0:58:56.680 a tough it's a tough business, lots of lots of 0:58:56.680 --> 0:58:59.439 booms and busts. So it's certainly it's certainly the place 0:58:59.480 --> 0:59:01.360 for for optimists. 0:59:01.520 --> 0:59:03.600 How about nat gas, I mean natural gas has been 0:59:03.760 --> 0:59:04.840 a different story. 0:59:04.960 --> 0:59:06.000 What's the feeling about that? 0:59:07.480 --> 0:59:11.000 Yeah, Well, that gas is we've basically got too much 0:59:11.040 --> 0:59:13.560 of it. You know, there's huge amounts of gas comes 0:59:13.600 --> 0:59:15.320 out of comes out of the permium basin, which is 0:59:15.360 --> 0:59:19.520 primarily an oil basin, so natural gas is the essentially 0:59:19.520 --> 0:59:23.320 a byproduct. So so really people are really waiting for 0:59:23.560 --> 0:59:28.720 the liquefied natural gas export facilities along the Gulf coast 0:59:28.720 --> 0:59:33.160 to come online. We had a huge project stanctioned just 0:59:33.240 --> 0:59:38.320 last night actually, Brian Brownsville, South Texas, eighteen point four 0:59:38.360 --> 0:59:42.160 billion dollar project, massive, so that's that's gonna that's going 0:59:42.200 --> 0:59:44.680 to swallow up, so some of this excess gas and 0:59:44.680 --> 0:59:48.040 exports it around the world. There's been three other final 0:59:48.080 --> 0:59:52.560 investment decisions made, two other final investment decisions made on 0:59:52.960 --> 0:59:57.120 such similar facilities this year alone. And really the whole, 0:59:57.440 --> 0:59:59.000 the whole goal of this is to get sort of 0:59:59.080 --> 1:00:02.520 US gas on on the water around the world, you know, 1:00:02.560 --> 1:00:05.240 helping to replace Russian supplies, especially to Europe. 1:00:05.360 --> 1:00:08.640 All Right, great reporting as always, Kevin Crowley, Senior US 1:00:08.640 --> 1:00:10.280 oil reporter for Bloomberg News. 1:00:10.320 --> 1:00:12.400 Again an Englishman in Houston. Good luck with that. 1:00:13.040 --> 1:00:15.560 Before that he was in Johannesburg and then before that 1:00:15.600 --> 1:00:17.560 in London, so he's been all over the place for 1:00:17.600 --> 1:00:18.360 Bloomberg News. 1:00:22.040 --> 1:00:25.160 Thanks for listening to the Bloomberg Markets podcast. You can 1:00:25.160 --> 1:00:28.960 subscribe and listen to interviews at Apple Podcasts or whatever 1:00:29.040 --> 1:00:32.760 podcast platform you prefer. I'm Matt Miller. I'm on Twitter 1:00:32.960 --> 1:00:34.880 at Matt Miller nineteen seventy three. 1:00:35.320 --> 1:00:37.720 And I'm fall Sweeney. I'm on Twitter at pt Sweeney. 1:00:37.840 --> 1:00:40.480 Before the podcast, you can always catch us worldwide at 1:00:40.520 --> 1:00:42.280 Bloomberg Radio.