Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 2: And the x On Mobile.
Speaker 3: Agreed to buy Denberry from four point nine billion. It's
Speaker 3: biggest acquisition in six years. It's a deal that will
Speaker 3: give Xon, which is of course a major integrated oil company,
Speaker 3: major player. It's going to give it the largest network
Speaker 3: of carbon dioxide pipelines in the US. Danbury's key asset.
Speaker 3: I guess I've got thirteen hundred miles.
Speaker 2: DO two pipelines.
Speaker 4: What got my attention today because I was like, what
Speaker 4: are CO two pipelines? We have pipelines that ship around
Speaker 4: CO two. So I started looking into it, and it
Speaker 4: turns out that they use that to pull more oil
Speaker 4: out of old wells. But also they can use these
Speaker 4: pipelines to carry CO two around and put it back
Speaker 4: in the ground.
Speaker 3: Yay, all right, so let's find out the significance of it.
Speaker 3: There's also some news on Shell looking for options to sell.
Speaker 3: I guess it's global renewable power operations with more on
Speaker 3: all of this is our energy guru, Alex Steel. She
Speaker 3: has also Bloomberg TV and Commodities Edge anchor, and she's
Speaker 3: on the phone in New York City, Yes.
Speaker 4: From ten to twelve every weekday.
Speaker 5: Alex, you da, I love the promo.
Speaker 3: Hello Hello, So tell us about the significance of this deal, Alex.
Speaker 5: So, basically, Exon's buying these pipelines, like Matt was just saying,
Speaker 5: and this is really an Inflation Reduction Act play. So
Speaker 5: here's the deal. In the Inflation Reduction Act, there is
Speaker 5: a subsidy where if you're able to put CO two
Speaker 5: in the ground, you get eighty five bucks a ton
Speaker 5: and that comes in the form of a check and
Speaker 5: then eventually it comes in the form of a tax credit.
Speaker 5: So there's a lot of money to be made in
Speaker 5: this and that went a very long way in making
Speaker 5: the storage really viable. Right, So this is what Exon did.
Speaker 5: So they are working on a few projects on the
Speaker 5: golf code. They have three customers, CF Industries, Lend as
Speaker 5: well as new Core that they promise they're going to
Speaker 5: put some of their CO two back in the ground
Speaker 5: and this is going to go a really long way.
Speaker 5: In helping them do all of that net nets.
Speaker 3: That's the deal.
Speaker 4: So let me bring in Kevin Crowley right now, senior
Speaker 4: US oil reporter, Kevin, how serious is this, uh? Putting
Speaker 4: CO two back in the ground in terms of, you know,
Speaker 4: fighting climate change.
Speaker 6: All the majors, all the major bodies really recognize that,
Speaker 6: you know, carbon capture is a key climate change fighting
Speaker 6: technology because there are certain sectors that are really impossible
Speaker 6: to decarbonize without carbon captures, such as cement airlines at
Speaker 6: the moment, you know, refineries, chemical plants, these these type
Speaker 6: type of things, they're always going to emit c O
Speaker 6: two and carbon capture really is the only way to
Speaker 6: to stop that CO two being put into the app However,
Speaker 6: carbon catch has had a very long history of failure,
Speaker 6: and Egxon is really hoping that this acquisition is going
Speaker 6: to is going to help them, help them get it
Speaker 6: right this time, well and help us.
Speaker 3: You know, I'm looking at a exceon mobile right. This
Speaker 3: is a company with alex what three hundred and forty
Speaker 3: two billion expected in revenues this coming year. It's a
Speaker 3: four hundred and twenty two billion dollar market cap. So
Speaker 3: put this in perspective, this deal in their overall business.
Speaker 5: Fair I mean it was. It's a six billion dollar deal,
Speaker 5: I mean five billion dollars. It's their biggest in six years.
Speaker 5: So that's one part of it. But I think it's
Speaker 5: about the future that counts. So they've already committed about
Speaker 5: seventeen billion dollars over the next four years to decarbonize
Speaker 5: their own stuff as well as other company stuff, if
Speaker 5: I just put it that way. So the idea is
Speaker 5: that they're going to be making a lot of money
Speaker 5: on this in the future. Like, is it a viable,
Speaker 5: super awesome business now? Probably not. I spoke to Dan Ammon,
Speaker 5: who runs their low carbon solutions business on that, and
Speaker 5: he's like, we don't make a deal unless it's already profitable.
Speaker 5: How profitable it's going to be? I don't think anyone
Speaker 5: really knows that, because they're going to need to customers
Speaker 5: like see if industries in New Core to come in
Speaker 5: and sign these deals with them. What we do know
Speaker 5: is that this has the opportunity to be a lot
Speaker 5: more profitable than the deals like Shell and BP, who
Speaker 5: been on renewables and now are like, oh God, what
Speaker 5: do I do? The returns aren't there.
Speaker 4: I got to get out of this, and we're seeing
Speaker 4: that today in Shell. I wonder, Kevin, and I'll throw
Speaker 4: this one to you. You know, Exon Mobile famously has
Speaker 4: board members from Engine number one, an activist shareholder that
Speaker 4: hopefully is going to do good for the climate. Is
Speaker 4: this kind of deal, Is this kind of movement, you know,
Speaker 4: bear the hallmark of Engine number one pushing Exon Mobile
Speaker 4: to be a more responsible kind of global citizen.
Speaker 6: I think so. I think it's I think it's inconceivable
Speaker 6: that this would have happened before twenty twenty one, which
Speaker 6: is when those Engine number one directors were elected onto
Speaker 6: the boards. Now, Egxon has this low carbon solutions business,
Speaker 6: which is one of its three main divisions alongside it's
Speaker 6: a it's a big upstream and obviously refining in chemicals.
Speaker 6: So they are they are taking this now a lot
Speaker 6: more seriously than they were, you know, even even three
Speaker 6: years ago. So clearly they are having a big effect
Speaker 6: on the on the on the company strategy.
Speaker 1: Now.
Speaker 6: It may not be as quick as as what some
Speaker 6: environmentalists would like, but I think the hallmarks of a
Speaker 6: Venge number one are definitely here.
Speaker 3: Help me out, guys. I mean, this carbon dioxide has
Speaker 3: to go somewhere, right, and if a if a pipe bursts,
Speaker 3: not a good thing, right, I mean, so, Kevin, there
Speaker 3: are dangers to this strategy.
Speaker 6: Yes, definitely. I mean, the best thing for the environment
Speaker 6: is not to produce the carbon direxide in the first place.
Speaker 6: And that's that's why, that's why a lot of environmentalists
Speaker 6: are actually anti carbon capture because it does it does
Speaker 6: perpetuate the life of the fossil fuels industry. But in
Speaker 6: the event that carbon is being produced, the industry says, well,
Speaker 6: you know, it's much better to capture it and put
Speaker 6: it in the ground. But you're right, there are there
Speaker 6: are a lot of risks associated with that. The industry
Speaker 6: says that carbon can be sequestered in the ground for
Speaker 6: hundreds of thousands of years. Do we know that, we don't.
Speaker 6: It may not, it may not work like that. Pipelines
Speaker 6: also can be can be can be quite dangerous. There
Speaker 6: was a big incident in there early earlier this year
Speaker 6: I think in Mississippi where carbon dioxide pipeline burst and
Speaker 6: was awful for the surrounding community. Lots of hospitalizations, et cetera.
Speaker 6: So this is certainly a strategy not without risk and
Speaker 6: As I said, carbon capture hasn't had the best hasn't
Speaker 6: really worked for the last twenty years. So now eggs
Speaker 6: On is really making a push to really really try
Speaker 6: and make it work this time.
Speaker 4: It's got to be a valuable asset just just because
Speaker 4: this is pipeline that is built. I mean, Alex, you
Speaker 4: know the regulatory the regulatory andronment here. It's not easy
Speaker 4: to build pipelines for anything.
Speaker 5: No, And then that's one of the questions I asked
Speaker 5: dan Am and I was like, why was this better
Speaker 5: to buy than build? It would have cost probably more
Speaker 5: or more importantly taken a lot longer. I read this
Speaker 5: one grade article or survey that said you're looking at
Speaker 5: anywhere from like three to six years to do anything
Speaker 5: like whether.
Speaker 7: It's natural gas, whether it's win any of it takes
Speaker 7: forever to get it done, which is one of the
Speaker 7: main hurdles in the energy transition. Like everyone knows secretly
Speaker 7: you're going to need to put shovels projects in the ground,
Speaker 7: but no one wants to be the first person to
Speaker 7: say that. So this kind of gives them a leg up.
Speaker 7: What is also interesting too, and I wonder, you know,
Speaker 7: if Kevin has thought about this also, is it what
Speaker 7: it means for their oil assets. There was lots of
Speaker 7: rumors circulating that Exam was going to buy Pioneer Natural
Speaker 7: Resources that would have been a straight up pure shale play.
Speaker 7: And I wonder if that like puts it on the
Speaker 7: back burner now or if they can you know, chew
Speaker 7: gum and tie their shoes all at.
Speaker 6: The same time.
Speaker 7: But I wonder if it also sort of takes the
Speaker 7: focus away from that part of the business in terms
Speaker 7: of actually buying that growth too.
Speaker 6: Kevin, what do you think I think Excell can tie
Speaker 6: their shoes and chew gum than you are exactly this is,
Speaker 6: this is exactly exactly there is There is no way
Speaker 6: that this this this compromises or is a trade offs
Speaker 6: all with their oil and gas business. Eggs On is
Speaker 6: one hundred percent all in on oil and gas will
Speaker 6: be for for many decades to come if they they
Speaker 6: are expanding their oil and gas production quite aggressively actually
Speaker 6: all over the world. So I mean, there's Guyana's the
Speaker 6: key example, but there's also Peri and we actually had
Speaker 6: this this week as well. They're sort of targeting final
Speaker 6: investment decision in Mozambique in twenty twenty five or so.
Speaker 6: So you know this is this is the complimentary to
Speaker 6: oil and gas. And of course you know this is
Speaker 6: a company that made record profits last year, so it
Speaker 6: can it can afford to do both.
Speaker 3: You guys are incredible. Thank you so much. Alex Steele,
Speaker 3: Commodity's Edge anchor, Bloomberg Television, of course, the European market
Speaker 3: close on the phone in New York City, and Kevin
Speaker 3: Crawley are thanks to you as well, senior US oil
Speaker 3: reporter at Bloomberg News on Zoom from Houston. Interesting right, yeah,
Speaker 3: fascinating face gives them a pipeline.
Speaker 4: It was one of the first stories I read this morning.
Speaker 4: Very cool stuff.
Speaker 1: If you're listening to the Bloomberg Business Week podcast, catch
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Speaker 3: I don't know if you've seen Matt. I was looking
Speaker 3: at some statistics getting ready for this segment, and so
Speaker 3: we know post pandemic, people were isolated, they were bored,
Speaker 3: a lot of people turned to illegal drugs.
Speaker 4: And that's what I do, and I on board stop.
Speaker 3: The increase in fatalities was fastest from twenty nineteen to
Speaker 3: twenty twenty one, as deaths from overdoses rose. In general,
Speaker 3: opioid overdoses took the lives of eighty thousand Americans in
Speaker 3: twenty twenty one. That's the last year with official final numbers.
Speaker 3: And then we had, of course the reckoning, a big settlement.
Speaker 3: So is like Purdue, McKesson, j and Jay, CBS, Walmart, Walgreens,
Speaker 3: a lot of them, all part of a more than
Speaker 3: fifty billion dollars settlement of opioid claims. So I don't know,
Speaker 3: do you know exactly what's happening with that money?
Speaker 4: It's interesting. I well, I don't know about the money.
Speaker 4: But I spent, as you know, the pandemic in Germany
Speaker 4: and had some skiing accidents and broken bones while I
Speaker 4: was there, you know. And they don't prescribe opioids essentially.
Speaker 4: I mean, they can obviously in terrible cases, but by
Speaker 4: and large, the most powerful drug you're getting for pain
Speaker 4: is ibuprofen. And yeah, as a result, they don't have
Speaker 4: any kind of problem with opioids.
Speaker 2: All right.
Speaker 3: Well, maybe that's a deeper subject or a deeper conversation.
Speaker 4: I mean, that's the end of that conversation. That's how
Speaker 4: long it lasts.
Speaker 3: All right, Well, let's see what Sarah Whaley has to say,
Speaker 3: because she is program manager of the Bloomberg Overdose Prevention
Speaker 3: Initiative at the Johns Hopkins Blueberg School Public Health, as
Speaker 3: you know, supported by Michael R. Bloomberg, founder of Bloomberg
Speaker 3: ELPI and Bluemberg Philanthropies. She z owns youim in Baltimore. Sarah,
Speaker 3: I feel like you bring up the subject of opioids,
Speaker 3: and Matt makes a really good point. It's there's a
Speaker 3: lot to this a.
Speaker 4: Very American problem.
Speaker 3: Well, and I agree. I just had a family member
Speaker 3: who had some surgery and they just kind of threw opioids.
Speaker 3: It's still yes, is nice? So where are we the
Speaker 3: opioid crisis? Can we start there? Yeah?
Speaker 8: So it's it's not a great topic to start off
Speaker 8: with because it's it's unfortunate the opioid crisis continues to
Speaker 8: surge across the country. Like you mentioned, the numbers in
Speaker 8: twenty twenty one are super high. They're four times higher
Speaker 8: than they were in the late nineties when oxycotton hit
Speaker 8: the market and that is because we're in this era
Speaker 8: where the main cause of overdose deaths are synthetic opioids
Speaker 8: like fentanyl and illicitly manufactured fentanyl is more potent than
Speaker 8: heroine and oxycotton, and it's unfortunately what we are finding
Speaker 8: in most street drugs across the country.
Speaker 4: Why do people, I mean, I understand how people get
Speaker 4: hooked on oxies and vicodins and percocets. Ventanyl everybody knows
Speaker 4: is deadly, So why does anyone take fentanyl?
Speaker 8: So when you have a substance use disorder, when you're
Speaker 8: addicted to opioids, there are cravings physiologically within your body,
Speaker 8: and there are drug seeking behaviors, and so even though
Speaker 8: you may know the risk of purchasing drugs on the street,
Speaker 8: you have these cravings and so you do it anyway.
Speaker 3: Why are people, to Matt's point, in Germany, you wouldn't
Speaker 3: get opoioids. Why are we still prescribing them like that
Speaker 3: and giving them out if we know that they're dangerous?
Speaker 8: Yeah, So I think this all goes back to the
Speaker 8: lawsuits that you were talking about and Purdue Pharma, and
Speaker 8: so they're the farmaceutical manufacture of the drug oxycotton, and
Speaker 8: that that drug was prescribed over prescribed in our country
Speaker 8: for quite some time. And that's why these cases are
Speaker 8: coming through our court system right now, is because of
Speaker 8: the role that these companies have played in supplying pain
Speaker 8: pills in our communities.
Speaker 4: It just doesn't make sense that. I mean, Carol, your
Speaker 4: family member had surgery what recently? So they're still doing it.
Speaker 4: I mean, do doctors just take a while to get
Speaker 4: on the same page as you know, you know everyone else.
Speaker 4: Are the doctors still? Are they somehow paid? Do they
Speaker 4: get perks for prescribing these drugs? Do patients just demand them?
Speaker 4: I mean, what's why don't they just stop?
Speaker 6: So?
Speaker 8: I think I think it's a combination of a lot
Speaker 8: of things. Regulations in how we prescribe opioids have changed
Speaker 8: changed in response to kind of what happened in the
Speaker 8: late nineties with with oxycotton. I think there I am
Speaker 8: not a medical provider, so I don't I don't want
Speaker 8: to speak for them, but I do think there is
Speaker 8: still some utility in them. So there is Fentanyl is
Speaker 8: used for patients who are experiencing a lot of pain
Speaker 8: from like cancer and other procedures, So there is utility
Speaker 8: in these pain pills, but they were were widely over
Speaker 8: prescribed for some time.
Speaker 3: Are they not anymore? Do we know that for a.
Speaker 8: Fact things have changed. The number of pills that are
Speaker 8: going out has decreased immensely.
Speaker 4: So what do we do If you've got someone who's
Speaker 4: addicted and isn't able to just stop using, which I
Speaker 4: would think that's what you'd want to do, right, just stop.
Speaker 4: But if somebody says they can't for whatever reason, they're two,
Speaker 4: they love opioids too much, what do you do to
Speaker 4: get them off? Is there some kind of methadone suboxone
Speaker 4: treatment that actually works?
Speaker 8: Yeah, So there's lots of avenues and interventions, and the
Speaker 8: money coming down from these opioid settlements can be used
Speaker 8: or should be used towards these opioid abatement programs, which
Speaker 8: are programs and interventions to treat, prevent, and reduce opioid
Speaker 8: misuse and the harms associated with this misuse. And they
Speaker 8: can be used on programs, for example, overdose reversal medication.
Speaker 8: So we often hear about inn oloxone going to first responders,
Speaker 8: but malaxim should be out in the community for people
Speaker 8: who are at risk of overdosing. So if they do
Speaker 8: take an opioid and they overdose, someone who is near
Speaker 8: them can give them noloxone and save their life. You
Speaker 8: mentioned methadone, so these dollars can also be used to
Speaker 8: increase access to medications for the treatment of opioid use disorder.
Speaker 8: We have three of those medications that are approved by
Speaker 8: the FDA methodone, bupen, orphan, and meltrek zone. And while
Speaker 8: these are very effective treatments, they are currently pretty underutilized
Speaker 8: across the country. So in thinking about how states want
Speaker 8: to spend their settlement money, they could use that money
Speaker 8: to invest in increasing access to these medications. And then
Speaker 8: the other one I just want to quickly mention is
Speaker 8: harm reduction services. So harm reduction is a broad term
Speaker 8: used to describe a spectrum of services to reduce the
Speaker 8: harms associated with drug use. Like you said, it's hard
Speaker 8: to stop using opioids, So harm reduction programs offer safer
Speaker 8: drug use supplies like sterile syringes, but also an array
Speaker 8: of other services like medical supports, behavioral health, and other
Speaker 8: social services. And these harm reduction programs are often the
Speaker 8: first access point to vulnerable populations and the relationships that
Speaker 8: are built by the staff at these programs can really
Speaker 8: help to facilitate entry into other services and ultimately recovery.
Speaker 3: So for someone who's studied this situation, in this epidemic,
Speaker 3: I mean, what do you think is the most effective
Speaker 3: thing we can do to actually really make a difference
Speaker 3: and put an end to this so that I'm not
Speaker 3: talking about an opioid crisis or that isn't or you
Speaker 3: aren't in two years from now, three years from now,
Speaker 3: five years from now.
Speaker 8: I mean, I think a big one is the stigma
Speaker 8: that we have and the lack of understanding of the
Speaker 8: physiological changes that happens when you develop an opioid use disorder.
Speaker 8: And there's still so much much stigma in the community
Speaker 8: that we hold as individuals, but it's also pervasive in
Speaker 8: policies and within the medical system as well. And so
Speaker 8: I think just educating ourselves on opioid use disorder and
Speaker 8: centering ourselves that you know this the eighty six thousand
Speaker 8: people that we lost in twenty twenty one, those are individuals,
Speaker 8: Like that's somebody's son, somebody's daughter and husband, what you know,
Speaker 8: it's an individual and there are things that we can
Speaker 8: do to help and we all kind of have to
Speaker 8: change our mindset in how we approach this crisis.
Speaker 3: All Right, We're gonna leave it on that note. Sarah,
Speaker 3: Thank you so much, Sarah Welle. She's a program manager
Speaker 3: of the Bloomberg Overdose Prevention Initiative over JOHNS. Hopkins Bloomberg
Speaker 3: School of Public Health.
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Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
Speaker 3: Well, someone who's been playing around certainly with threads is
Speaker 3: our own Max Chafkin. He's calumnist for Bloomberg Business Week
Speaker 3: here in our interactive broker studio. He writes about it
Speaker 3: in a story that's in the upcoming new issue, which
Speaker 3: is out on newsstands tomorrow, already online at Bloomberg dot com,
Speaker 3: slash BUSINESSWEEKND on the Bloomberg terminal. So tell us about
Speaker 3: your experience with threads.
Speaker 9: Well, it's nicer than Twitter, I mean, in my experience,
Speaker 9: which probably the best thing you could say for I mean,
Speaker 9: so far to my mind. You know, Facebook has basically
Speaker 9: meta now has been doing this for basically the past decade,
Speaker 9: where you know, Mark Zackerberg's team look out at the
Speaker 9: app universe and figure out find things to copy, and
Speaker 9: they they've copied a lot of things, mostly unsuccessfully. Every
Speaker 9: now and then that they have a hit Stories, which
Speaker 9: is you know, part of Instagram Reels, which we could debate,
Speaker 9: kind of a knockoff on TikTok. Both those have been successful,
Speaker 9: and Threads is kind of in that proud tradition.
Speaker 4: Dude, don't forget Facebook. I mean, I will never forget
Speaker 4: how excited I was to find friends tor and started
Speaker 4: to convince my buddies around the world to sign up.
Speaker 4: And I was kind of bummed out when everyone switched
Speaker 4: over to MySpace and all of that was before Facebook
Speaker 4: even you know, was a glint in its mother's eyes.
Speaker 2: Yeah, no, absolutely, you know.
Speaker 9: And but I think that the what's made Threads, what
Speaker 9: sort of made it successful but also creates kind of
Speaker 9: a bit of a vulnerability, is like you said, it's
Speaker 9: super easy sign up for It's basically Twitter, except you
Speaker 9: sign up through Instagram and it kind of auto populates
Speaker 9: your feed with your Instagram friends, which has made it,
Speaker 9: which has created all this excitement because all these people
Speaker 9: are getting notifications, people are signing up, But once you
Speaker 9: actually get in there, I think it's a little bit empty.
Speaker 9: I don't know what others probably have different experiences, but
Speaker 9: I've been getting all these alerts from people you know,
Speaker 9: so and so followed you, and you click on their
Speaker 9: profile and it's empty and it has this kind of
Speaker 9: manufactured quality to it, which is I think something you
Speaker 9: could you could say a lot about Facebook. Now, on
Speaker 9: the other hand, it doesn't have the kind of crazy
Speaker 9: quality of Elon Musk's Twitter. And I think that's what
Speaker 9: Mark Zuckerberg is betting on, that that you know, Twitter
Speaker 9: has just gotten too weird, too chaotic or whatever, and
Speaker 9: that there is an appeal for you know, Instagram but
Speaker 9: with text.
Speaker 3: So Twitter's disasters, if you will, are kind of providing
Speaker 3: an opportunity for others, including threads.
Speaker 2: Yeah, that's potentially.
Speaker 9: But I think I think that this the figures we're
Speaker 9: seeing in terms of threads, the uptake on threads, so
Speaker 9: it's a one hundred million people signed up in five days,
Speaker 9: which makes it, you know, but by that measure, the
Speaker 9: fastest growing app of all time. I think you need
Speaker 9: to take that with a grain assault because of the
Speaker 9: fact that it's essentially auto populating from this other social network,
Speaker 9: Instagram that has two billion users. So in certain ways
Speaker 9: it's a new app. In other ways, it's just like
Speaker 9: another version of Instagram. And I think it also kind
Speaker 9: of shows a little bit of the weakness that that
Speaker 9: Facebook is dealing with. This what I wrote about in
Speaker 9: this piece, which is that you know, for a couple
Speaker 9: basically for several years, there's been this sort of flattening
Speaker 9: out or even decline and engagement. People are not sharing
Speaker 9: things on social media platforms the way they used to,
Speaker 9: and that's been a problem for years, and with the
Speaker 9: end of the pandemic, it's kind of bringing it to
Speaker 9: the forefront. And so you have things like Threads, which
Speaker 9: is you know, I think Canon probably should be seen
Speaker 9: as an effort to kind of juice Instagram to like
Speaker 9: give people a reason to get back on this thing
Speaker 9: that maybe they're getting a little sick of, and also
Speaker 9: maybe give you know, Meta some other way to get
Speaker 9: people back engaged with its services and maybe away from TikTok.
Speaker 4: I'm curious to know, Carol, what your experience is with
Speaker 4: Twitter because you seem to love it.
Speaker 3: And I like tweet deck. I play a lot more
Speaker 3: on that than I do on Twitter, and because I have,
Speaker 3: although I have to say, I don't love it as
Speaker 3: it as I used it, because my feed is definitely
Speaker 3: things have been mucked around.
Speaker 4: That's what I'm wondering about it. Like I love to
Speaker 4: put stuff out there, but how you consume the information
Speaker 4: that's on it.
Speaker 3: What I do love when there's news happening, Like it's
Speaker 3: just a great place to get a lot of people
Speaker 3: weighing in and I actually feel like it's fairly accurate
Speaker 3: and you get just some really good observations. Having said that,
Speaker 3: I'll sometimes say something and somebody like, hey did you
Speaker 3: see this? And I feel like with financials, like you
Speaker 3: get a lot of good research. So I do like it,
Speaker 3: and I haven't played around with threads.
Speaker 4: You're looking at me, fins, Well, yeah, I mean one
Speaker 4: thing on Instagram.
Speaker 2: One interesting thing about threads is that.
Speaker 3: I like to live life and actually go do things.
Speaker 2: They don't want.
Speaker 9: I mean that that's the kind of thing that they
Speaker 9: actually don't want. You know, they've come out there and
Speaker 9: said they don't want news to be a big part
Speaker 9: of the of the feed, which has you know, implications
Speaker 9: for you know, media outlets and so on who have
Speaker 9: built there, as you say, ecosystems, journalistic ecosystems on Twitter.
Speaker 9: That I think the idea is that they won't exist
Speaker 9: on Threads. And and part of that is because of
Speaker 9: advertising and you know, Facebook Meta. For all their all
Speaker 9: the flaws of these apps, you know, they are very
Speaker 9: good at at serving advertisers, and I think that's part
Speaker 9: of what makes Threads unsatisfying, you know, from a user
Speaker 9: experience standpoint. On the other hand, it could turn into
Speaker 9: a successful business as.
Speaker 3: The Sarah virus's ads are coming, right.
Speaker 2: Yeah, that's definitely the ads are coming.
Speaker 9: There's absolutely no question of that, you know, and they've
Speaker 9: said that, you know, they're gonna that's gonna get worked out.
Speaker 9: But but the idea is to have a place that
Speaker 9: feels safer and and friendlier to to add advertisers than Twitter.
Speaker 2: And also I think, but well the bad guys come,
Speaker 2: well that's the post. Yeah, for sure, that's possible.
Speaker 9: I think you know, the controversy or the it's right now,
Speaker 9: there's no you know, the original Twitter. The thing that
Speaker 9: most people know is this feed of chronological feed of
Speaker 9: things that you post your friends are posting, and Threads
Speaker 9: doesn't have that right now. Maybe they'll have it at
Speaker 9: some point. Right now, it's entirely algorithmic. It's just like
Speaker 9: TikTok for text. So you see, you know, a bunch
Speaker 9: of your friends posts, but then when when that runs out,
Speaker 9: you just see like a steady scroll of influencers.
Speaker 2: Brands and so on. So it's a different thing.
Speaker 9: And I think Facebook is sort of betting that you
Speaker 9: know there, that the sort of Instagram crowd would want
Speaker 9: to share things in a text form.
Speaker 2: I don't know if that's true.
Speaker 9: I don't know if the people who are really good
Speaker 9: at like taking pictures of beautiful landscapes aren't necessarily the
Speaker 9: most creative or clever writers.
Speaker 2: But you know, I suppose we'll see so.
Speaker 4: In terms of advertisers and what they like and don't like. Obviously,
Speaker 4: the controversy and the bad people on Twitter has been
Speaker 4: one problem, or the bad person who owns Twitter has
Speaker 4: been one problem for them. But the other problem, uh
Speaker 4: Facebook and you know Threads, is the api. I know
Speaker 4: that a lot of you know, the industry that likes
Speaker 4: to sweep these platforms for data. Uh, they can do
Speaker 4: it very easily with Twitter's API, and they like Twitter's API.
Speaker 4: They don't love the API that Meta offers. Well.
Speaker 9: I mean the thing is, though, that Musk has been
Speaker 9: cracking down on that, that that API access that made
Speaker 9: Twitter so popular, you know, is now as part of
Speaker 9: Elon Musk's efforts to like, you know, turn this thing
Speaker 9: into a profitable business and make his debt payments, he's
Speaker 9: been you know, uh starting to charge people for.
Speaker 2: This API access. Uh. Facebook Meta, as he said, is
Speaker 2: a closed platform.
Speaker 9: And and you know, we don't know exactly what's happening
Speaker 9: behind the scenes on the threads algorithm, but I think
Speaker 9: it's basically it's probably the same algorithm that's driving you know,
Speaker 9: the rest of the platform. And and the idea again
Speaker 9: is is yeh, is to keep it, like he said,
Speaker 9: kind of keep it inside and and eventually, you know,
Speaker 9: gather as much data as possible.
Speaker 4: You know.
Speaker 9: One challenge that Facebook has had over the last few
Speaker 9: years is people are not sharing as much, which creates problems,
Speaker 9: you know, both in terms of what is it going
Speaker 9: to show you, but also creates problems in terms of
Speaker 9: data collection and like how does it learn things about you.
Speaker 9: So so one opportunity here with this new platform is
Speaker 9: maybe people will start posting stuff again. Maybe they see
Speaker 9: a new app, there's a new form, and it could create,
Speaker 9: you know, further opportunities for targeting. But again, I don't
Speaker 9: think we know for sure whether these one hundred million
Speaker 9: or how many users are on there now are going
Speaker 9: to be to come back.
Speaker 4: Max.
Speaker 3: My big takeaway from your story, which is kind of
Speaker 3: evident in the headline as well, but there was a
Speaker 3: number I took away of the pandemic where we are
Speaker 3: spending less on our devices still six hours forty three
Speaker 3: minutes a day, but slightly lower than twenty seventeen, down
Speaker 3: thirteen minutes. Biggest drop since I guess this company started
Speaker 3: tracking it that you source. But my point is that
Speaker 3: when Facebook or when Twitter and different things were created,
Speaker 3: it was how many years ago, right, And it was
Speaker 3: like internet glow, all kind of new, right, and everybody
Speaker 3: was kind of into it at experiencing it. And at
Speaker 3: this point people have other things that they can do,
Speaker 3: and I just maybe we just don't want it anymore.
Speaker 9: Yeah, well I think we were as money. Maybe we
Speaker 9: just don't want it as much. And and there's more competition,
Speaker 9: and you know, as you said, there was this kind
Speaker 9: of growth in audience and attention that happened so reliably
Speaker 9: and in such an explosive way that I think a
Speaker 9: lot of companies came to see it almost like a
Speaker 9: natural law, like gravity or something. Right, It's just bound
Speaker 9: to happen. And the pandemic, of course made it seem
Speaker 9: even more so. You had people talking about a new normal.
Speaker 10: You know.
Speaker 9: Mark Zuckerberg, you know, was so bought into this that
Speaker 9: he's that he changed the name of the company of
Speaker 9: Meta and started talking to the metaverse. And what's happened
Speaker 9: is you have more competition and less time, and that's
Speaker 9: creating a lot of dislocation, both in terms of social
Speaker 9: media companies.
Speaker 2: You know, we've seen layoffs obviously at.
Speaker 3: Meta streaming services, right streaming.
Speaker 9: Streaming services and news you know, BuzzFeed and Vice, both
Speaker 9: of which really kind of hitched their wagons to to
Speaker 9: these social platforms, have struggled because because the audiences aren't there,
Speaker 9: people are spending less time and and that's creating all
Speaker 9: sorts of problems, you know, across the media landscape.
Speaker 4: One of the things I thought was interesting, as I said,
Speaker 4: I signed up for Threads and then I quit. I think,
Speaker 4: I think I deactivated my account. There was a delete
Speaker 4: at least I know I deleted the app and I
Speaker 4: did something. But I read in the story that there's
Speaker 4: no way to delete your Threads account permanently unless you
Speaker 4: also delete your Instagram account. I know I didn't do that.
Speaker 2: He's got you forever.
Speaker 9: Yeah, so Threads is technically part of Instagram, So yes,
Speaker 9: you can delete the app, but you can't delete your account.
Speaker 9: They've they've said, and I don't know how to take this,
Speaker 9: like whether this is like a real whether this is
Speaker 9: just slip service or what, but they've said they are
Speaker 9: they're looking into ways that you could delete. Come at
Speaker 9: some point maybe you will be able to That was
Speaker 9: probably my favorite line of the whole story.
Speaker 4: Instagram's head Adam Lazeri said the company is looking into
Speaker 4: a way to delete your Threads account separately. Come on,
Speaker 4: I mean, there's, dude, the cool.
Speaker 9: Thing and also maybe the slightly disturbing thing, depending on
Speaker 9: your point of view of Facebook, is this Thread's launch
Speaker 9: really is an opportunity to see all the things that
Speaker 9: Facebook does well in terms of growth, in terms of
Speaker 9: like tricking people or convincing people or enticing people to
Speaker 9: download their apps and create create content, because really it's
Speaker 9: just it's engineered, starting from Instagram until you get on
Speaker 9: there to just sort of like bring you in, and
Speaker 9: then once it's got you, as I said, you know,
Speaker 9: or as you discover it, it's it's hard to get out.
Speaker 9: And that's been kind of like the Mark Zuckerberg playbook
Speaker 9: for a really long time.
Speaker 4: Oh wait, what happens if I delete my Twitter account?
Speaker 4: If I commit Twitter.
Speaker 2: Side the universe?
Speaker 4: Do they do they keep my data? Or do we
Speaker 4: not know?
Speaker 2: I am not sure.
Speaker 9: I think that in general, I mean Twitter has I
Speaker 9: had to monetize the data, so I doubt that the
Speaker 9: data goes away.
Speaker 2: But but you have to have.
Speaker 3: A special place in their storage areas. That's Matt Miller's
Speaker 3: So wait, because you're this amazing journalist, you obviously reached
Speaker 3: out to Twitter. What did they say to you?
Speaker 2: They sent me a poop emoji?
Speaker 4: Abu dude? I mean that guy has been he's prepping
Speaker 4: for a cage fight. He's in great shape. Like, what's
Speaker 4: the deal with this dude?
Speaker 2: Well, he looks great.
Speaker 9: I mean he's you know, he's he's inside of forty
Speaker 9: and I think, you know, there's I'm sure there's some
Speaker 9: psychological things going on, there reasons why people get into
Speaker 9: cage fighting. But I think one thing that I find
Speaker 9: interesting here about this Zuck Elon kind of reality show
Speaker 9: cycle is I think it's a symptom of of the
Speaker 9: way people are getting tired of this stuff. And and
Speaker 9: and you see Elon. I mean, the the big asset
Speaker 9: Twitter has is Elon. It's it's that he is just
Speaker 9: endlessly fascinating. You cannot take your eyes off of him,
Speaker 9: even when he is doing, you know, stuff that is
Speaker 9: you know, abhorring or saying things that are are crazy.
Speaker 9: And and like the fact that Mark Zuckerberg is embracing that,
Speaker 9: to me is strange and suggests that he is trying
Speaker 9: to capture a little bit of that, you know.
Speaker 2: But of course it's double short, and it's.
Speaker 9: It's so different from Zuckerberg's you know, previous brand, So
Speaker 9: it's a little it's hard to know what to make
Speaker 9: of it.
Speaker 3: Well, story, they're never letting go of you.
Speaker 4: I don't mind. Everyone can have me.
Speaker 3: Max Chafkin, thank you, what fun. He is calumnist at
Speaker 3: Bloomberg BusinessWeek. Check out the new issue on newstands tomorrow
Speaker 3: on the Bloomberg and of course at Bloomberg dot com
Speaker 3: Slish BusinessWeek. This is Bloomberg Radio, Marc.
Speaker 11: Journal, you let me drive, honey, please, Gravel, I want
Speaker 11: to drive.
Speaker 6: The question.
Speaker 4: This is the drive to the Globe.
Speaker 1: We should it on on Bluebird Radio.
Speaker 3: All right, everybody, eighteen minutes left in today's trading session.
Speaker 3: Matt Miller wants again eating nerds or something.
Speaker 4: I'm not eating nerds.
Speaker 3: What are you eating?
Speaker 4: It's a healthy nut mix with Look at this to
Speaker 4: be followed by nerds. That's a dried banana. There. It
Speaker 4: doesn't get any healthier than dried banana.
Speaker 3: Their nerds around there anywhere, not here at your desk.
Speaker 2: Maybe.
Speaker 3: All right, let's get to it. We're watching the markets.
Speaker 3: Equities continue to march higher on this Thursday, Lecho and on.
Speaker 3: Let's get to it though. With Doug Sioka, I'm so
Speaker 3: glad to have him back, CEO and partner at Cavar
Speaker 3: Capital Partners. They've got about a billion in assets under management.
Speaker 3: Back with the sun Zoom from Leewood, Kansas. Doug, good
Speaker 3: to have you here. I'm assuming you're not eating any nerds.
Speaker 3: Having said I'm getting hungry though, for nerds or for
Speaker 3: no but let's talk about it. Hey, listen, let's ask
Speaker 3: about Jim Bollard. I don't know, is there a thing
Speaker 3: for you in importance of Jim Bullard stepping down?
Speaker 10: You know, I mean I was happy to see it, actually, Carol,
Speaker 10: And you know, I think just generally change is pretty positive.
Speaker 10: And I know technically there are I guess the term
Speaker 10: limit at fourteen years, but it's a really long time.
Speaker 10: So I think having fresh perspective interwoven, even with more regularity,
Speaker 10: can't be bad. I also think it's exceedingly difficult now
Speaker 10: to come up with something impactful and insightful to share
Speaker 10: with as often as these FED governors and presidents are
Speaker 10: asked to speak, and I think sometimes there comes maybe
Speaker 10: a temptation to make grandiose statements or proclamations, even when
Speaker 10: they are that are necessary, and I always felt like
Speaker 10: Bullard cannot resist that temptation.
Speaker 4: That was actually my takeaway as well. When I first
Speaker 4: read this story and saw that he won't be he
Speaker 4: won't be agreeing to any more speaking engagements from today,
Speaker 4: I was like, phew. He also got into a little
Speaker 4: bit of trouble with that speaking engagements, right because he
Speaker 4: was getting paid for speaking engagements that were kind of private.
Speaker 6: Yeah.
Speaker 10: I don't know the facts on that map, but again
Speaker 10: I know that with Powell as the president and elevating
Speaker 10: kind of communication, the public profile these these fed presidents
Speaker 10: voting or non to me was almost counterproductive. Right when
Speaker 10: you are making policy by consensus and then I get
Speaker 10: the SEP and I get the mysterious anonymous dot plotting,
Speaker 10: but when you come out then and have comments and
Speaker 10: commentary that are inconsistent with like the policy vote and
Speaker 10: then we got to wait for the minutes. I just
Speaker 10: feel like the rhetoric and kind of the court of
Speaker 10: public opinion which monetary policy has been deployed over the
Speaker 10: last several years, I just have found it to be
Speaker 10: counter productive. And again I kind of felt like Jim
Speaker 10: Bulller was one of the lead. It's the kind of
Speaker 10: the lead of baton twirlers in that whole circus.
Speaker 4: Let's put that aside and look at these markets, because
Speaker 4: over forty five hundred on the and you know, we
Speaker 4: continued it. Well, we're at session highs again here, up
Speaker 4: one percent after rallying every single day this week. What's
Speaker 4: good out there, Doug? I mean, why why are we
Speaker 4: so bullish here?
Speaker 9: Yeah?
Speaker 10: You know right now? I mean, obviously tech keeps running,
Speaker 10: and it's it's kind of a combination of three things.
Speaker 10: I mean, or one path least resistance number two fomo
Speaker 10: number three. We're actually seeing like tangible amounts of retail
Speaker 10: money beginning to come into the market. And I think
Speaker 10: commonly people they're like, there's a couturion sell saying Okay,
Speaker 10: here comes retail. Time to get out. Maybe that's when
Speaker 10: retail is a little bit more fully invested, right, Retail
Speaker 10: creates kind of another wave of momentum in the direction
Speaker 10: kind of where the best opportunities have seemed to be identified,
Speaker 10: and momentum itself is a factor, right. I read something
Speaker 10: the other day I thought that was pretty fascinating is
Speaker 10: that even when markets right with the expectation of identifying
Speaker 10: sort of oversold levels or overbought levels, even when the
Speaker 10: NASAQ one hundred historically has been twenty percent above a
Speaker 10: two hundred day moving average, the six to twelve month
Speaker 10: return going forward is still about twenty percent. So I
Speaker 10: think maybe there's some of that that that's playing itself out.
Speaker 10: But certainly the momentum is extremely strong.
Speaker 1: Right now.
Speaker 10: We'll see what happens with earnings next week, right to
Speaker 10: see if that's gonna be an additional tailwinner that's going
Speaker 10: to be an impediment to continuation.
Speaker 3: Have you been buying banks ahead of it?
Speaker 10: You know, we haven't been too aggressive, like in the
Speaker 10: financial side. You know, one of the things, in spite
Speaker 10: of kind of the the calming down on the psychological
Speaker 10: concern about the viabilities of these banks, we really are
Speaker 10: really concerned about, like the ongoing profitability, particularly of the
Speaker 10: regional and smaller banks. Right you have lower loan demand
Speaker 10: just because the economy is generally slowing. Number two, you
Speaker 10: have higher expenses because it's difficult to make that interest
Speaker 10: margin with your cost of financing is going up just
Speaker 10: to be competitive with the prevailing money market rates. And
Speaker 10: number three, you're gonna have more regulation. So it's difficult
Speaker 10: for us to ascertain where we are kind of in
Speaker 10: that profit cycle for the banks in general.
Speaker 4: Carroll, I was actually making a list of pros and
Speaker 4: cons for the banks, and I could only come up
Speaker 4: with cons. And they slow down in deal making, higher
Speaker 4: deposit costs, flighter deposits, higher regulatory costs, too much headcount,
Speaker 4: dropping loan asset values. I mean, I just can't think
Speaker 4: of a pro.
Speaker 10: Yeah, pro's going to be consolidation, man, I mean, which
Speaker 10: maybe gets a little bit more of the specuative side
Speaker 10: of why you want to own one outside the operational value,
Speaker 10: maybe the book value and kind of contributing value, the
Speaker 10: creative capability to be folded into a large organization. I
Speaker 10: feared for like the smaller community bank only because I
Speaker 10: feel what the FED has done, inadvertently or otherwise has
Speaker 10: made it a lot more difficult for them to survivive independently.
Speaker 3: And I guess some of it depends on the economic
Speaker 3: cycle too. I mean, banks are so way down right
Speaker 3: because of all the regional but it.
Speaker 4: Seems like the regulators want a consolidation wave in banks, right,
Speaker 4: I mean, there's over four thousand. They seem to be
Speaker 4: pushing for that. And ironically that could be a good
Speaker 4: thing for the big banks because their investment bankers could
Speaker 4: have some work to do.
Speaker 10: That's true, I mean, and they're looking for work to
Speaker 10: do right now. And obviously, if you read what Golden
Speaker 10: has said in the last couple of quarters, and even
Speaker 10: in kind of the quasi pre announcement. I mean the
Speaker 10: deal flows lower, and I think multiples are contracting. Cost
Speaker 10: of capital's higher. Organ they generally, you know, global economic
Speaker 10: ambiguity is elevated, so you're not seeing a lot of
Speaker 10: deals that are just going to get rubber stamped and
Speaker 10: put through. They're going to require a whole lot of
Speaker 10: kind of heft in that whole banking lineup right now.
Speaker 10: So yeah, they could be to where corporate es guys
Speaker 10: make an introduction, the M and A guys, they get
Speaker 10: a deal done, and then they make a bigger bank,
Speaker 10: and then sixty twelve years from now they deconstruct that
Speaker 10: bank and the bankers get paid again. So maybe that's
Speaker 10: where really to be focused.
Speaker 3: The balance portfolio, it's back.
Speaker 10: It's back. It's back because I mean, both both sides
Speaker 10: of it right are making contributions, and we're spending a
Speaker 10: lot of time right now in kind of the structure
Speaker 10: are fixed income portfolios, and I mean, there's no question
Speaker 10: the yield curve is going to normalize. So we've seen
Speaker 10: kind of a little bit of an attempt to do
Speaker 10: so just this week, and we're of the mind that
Speaker 10: it's going to be a disproportionate adjustment with with the
Speaker 10: front end coming down versus the back end going much higher.
Speaker 10: In this whole we have a long way to go.
Speaker 10: Going back to the Fed rhetoric, it's a bit bizarre
Speaker 10: in my opinion right. I think the Fed needs to
Speaker 10: continue to relax. I don't think they're going to stand
Speaker 10: pat in July. But we have these known lags of
Speaker 10: monetary policy that are taking hold in any time.
Speaker 2: Right.
Speaker 10: Historically, when the Fed funds rate has gone above CPI,
Speaker 10: the fourd OUTLOK twelve months for the bond mark is
Speaker 10: extraordinarily strong. I don't see why that's going to be
Speaker 10: any different this time. But I think the thing is
Speaker 10: more than anything. Just wrap your brain around buying bonds
Speaker 10: in longer dates with shorter yields, and.
Speaker 2: You have the right hand wisdom.
Speaker 3: CEO and Capital Partner's Hunting out the Sand from mccamps
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