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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along

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Speaker 1: with my co host of Bonnie Quinn. Every business day

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Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,

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Speaker 1: along with essential market moving news. Find the Bloomberg Markets

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Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,

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Speaker 1: and on Bloomberg dot com. A big new player with

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Speaker 1: lots of money and sophistication has entered the game, and

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Speaker 1: it's probably not going away. That's what Jim Bianco, our

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Speaker 1: next guest, says, Wall Street never saw the Redators coming.

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Speaker 1: To Bianco as president of Bianco Research and Bloomberg Opinion columnist,

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Speaker 1: Jim just first of all, on today's action. Are the

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Speaker 1: rehdators sort of retreating just a little bit into their

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Speaker 1: corners in preparation for something else big? Or they just

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Speaker 1: now sort of having executed their plan for game stop?

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Speaker 1: Are they sort of just retreating in general? I think

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Speaker 1: that the retreating from the trade um they won. The

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Speaker 1: announcement was yesterday when we found out that the gigantic

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Speaker 1: short in the in game stock and some of these

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Speaker 1: other stocks was covered by the hedge funds. The hedge

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Speaker 1: funds took a big loss. They walked away, and now

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Speaker 1: the short squeeze is ending, and so that they're all

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Speaker 1: exiting the trade right now, and they're exiting presumably in a

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Speaker 1: a big loss. Dave Portnoy texting, are sending out a

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Speaker 1: tweeting he lost seven hundred thousand dollars on the mean

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Speaker 1: stocks here. This is I mean, the retail investors are

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Speaker 1: getting crushed here, aren't they. No, they're not getting crushed.

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Speaker 1: There are some that are losing. Portnoy loss some money,

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Speaker 1: but that's not a big loss for him. He'll be back,

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Speaker 1: you know, probably with a bigger gainer loss by the

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Speaker 1: end of the week if you follow him like like

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Speaker 1: I do closely. Um, a lot of the a lot

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Speaker 1: of the buying on all the way up to the top,

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Speaker 1: which we found out now was a shortcover. It wasn't

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Speaker 1: necessarily retailed. Look, if the answer is there's seven point

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Speaker 1: five million people in Reddit that some of those people

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Speaker 1: lose with the market with this stock going down. Yes,

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Speaker 1: So if you're asking us the perfection in the trade, um, no,

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Speaker 1: there isn't. But if you said, here's a group of

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Speaker 1: hedge funds, here's a group of retail traders who did

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Speaker 1: better the retail traders by far did better in this episode.

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Speaker 1: The masters of the Universe got hurt a lot worse

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Speaker 1: in this trade than the retail traders. Yeah, Jim, how

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Speaker 1: do they not see this coming? I mean some of

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Speaker 1: them are definitely in there on those reddits, uh you

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Speaker 1: know sub breddits. I was communicating with one, you know,

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Speaker 1: very large hedge fund manager last week and he actually said,

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Speaker 1: it's really shocking a swarm of small investors overpowering any

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Speaker 1: sense of value. These were his words. How do they

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Speaker 1: not see this coming? I think the problem is the

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Speaker 1: word collusion. Look when the stock got over to a

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Speaker 1: of the float, I think it's illegal. It's a short,

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Speaker 1: it's a naked short. But even if it isn't illegal, Uh,

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Speaker 1: it is very poor risk management by a lot of

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Speaker 1: these hedge funds to have that bigger short. Why they

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Speaker 1: have that bigger short because they all looked at each

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Speaker 1: other and let me let me not men sports. Is

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Speaker 1: Goldman Sachs gonna stick it to us? Is another hedge

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Speaker 1: fund gonna stick it to us? Is JP Morgan gonna

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Speaker 1: stick it to us? No, none of them are going

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Speaker 1: to stick it to us. So it's not imprudent to

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Speaker 1: run that kind of risk, and then they said, who

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Speaker 1: out there is going to figure this out and stick

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Speaker 1: it to us? And we found out who because if

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Speaker 1: you go on the Reddit boards, they talked exactly about

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Speaker 1: the Starting in October, they identified Melvin Capital as being

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Speaker 1: the big short and when the uh when when the

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Speaker 1: short does? Report came out by Citron Research two weeks ago.

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Speaker 1: They literally said, this is the this is the event.

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Speaker 1: Right now, let's go. We've got them because they're at

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Speaker 1: maximum squeeze potential. I think when Michael Lewis whites the book,

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Speaker 1: he's gonna call this. Now, we've got the greatest trade

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Speaker 1: that's ever been done. So jim um. Some of these

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Speaker 1: meme stocks, if you will, all to MidCap, relatively thin floats, um,

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Speaker 1: big short positions, easy to squeeze. Re surprised to see

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Speaker 1: the Reddit traders going to something like a commodity like silver, Yeah,

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Speaker 1: I was surprised by that. Um. That doesn't seem to

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Speaker 1: be kind of their modus operandi. And there is some

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Speaker 1: debate on Reddit whether or not they're actually doing that

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Speaker 1: as well too. But even if it is silver, it

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Speaker 1: isn't silver. You know one of my favorite movies, it's

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Speaker 1: a hunt for Red October when the torpedo missed the

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Speaker 1: boat moving around in the ocean. That's the Reddit traders

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Speaker 1: looking for another target. So there'll be another chapter to

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Speaker 1: this story. I don't know if it will be next

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Speaker 1: week or in three months, but this crowd is still

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Speaker 1: out there unless the I would say before the last

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Speaker 1: two weeks, we've been seeing this coming. When Buffets sold

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Speaker 1: his airlines, it was no less than Dave Portnoy who

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Speaker 1: led the charge that said Buffett is old and he's

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Speaker 1: past his prime. Let's all up the airlines. They doubled

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Speaker 1: in a month. Portantly made a ton of money off

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Speaker 1: that trade back then, and the airlines are even higher.

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Speaker 1: They bought the work from home stocks that weren't in

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Speaker 1: the indexes. They bought Tesla one up and then got

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Speaker 1: into the SMP. They've even been playing the cryptocurrencies, so

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Speaker 1: they've been largely winning at this Now. I'm not saying

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Speaker 1: they're gonna win forever, but what they've been doing is

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Speaker 1: they've been looking at Wall streets practices, which has a

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Speaker 1: little bit of collusion. This is the kind of the

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Speaker 1: way we all do this, and they've been gaming their

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Speaker 1: system over and over again and taking advantage of it.

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Speaker 1: Wall Street is going to have to change the way

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Speaker 1: they do money. We're never going to see another big

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Speaker 1: short interest in a stock like this again as we

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Speaker 1: move forward, because the fear is there now that somebody

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Speaker 1: will stick it to us if we ever do it. Jim,

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Speaker 1: are you concerned on the effect that this will have

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Speaker 1: on short setters and short sellers making their research available

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Speaker 1: for everybody to view. I mean, in a sense, the

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Speaker 1: short sellers were the little guy for a long time,

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Speaker 1: and they were the people that were sticized by some

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Speaker 1: in the market, and they were the people that were,

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Speaker 1: you know, putting themselves out there, not saying that they

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Speaker 1: were all, you know, heroes or Robin hoods themselves. Let's

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Speaker 1: you know, let's make that very very clear. But some

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Speaker 1: of them did have excellent research and they were willing

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Speaker 1: to share it with the world, and it can't have

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Speaker 1: been all bad, no. I agree. Short selling is a

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Speaker 1: critical function in the market, and the guys like Jim

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Speaker 1: Chainos Marcotis, they are been very very good at identifying

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Speaker 1: literally fraudulent companies and explaining why they've been fraudulent through

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Speaker 1: research reports, and profiting off of that. That is a

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Speaker 1: very valuable service. But then there were these smash and

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Speaker 1: grab type of short sellers that kind of got in

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Speaker 1: the way, and like I said, the other institutions didn't

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Speaker 1: put a stop to it until retail did. And now

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Speaker 1: all short sellers have been tarnished. And I think that

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Speaker 1: at the end of the day, that's not a good thing.

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Speaker 1: It is still a valuable function that was a little overdone,

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Speaker 1: that's finally getting pulled back from the frost. But if

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Speaker 1: if the Jim chanos Is marcutis Is of the world

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Speaker 1: have to go into hiding now or witness protection programs

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Speaker 1: because of this, I don't think in the long run

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Speaker 1: this has benefits all of us. Jim, do you expect

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Speaker 1: any regulatory oversight to grow out of this from Washington

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Speaker 1: or the SEC um. We've heard some rumblings. I hope

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Speaker 1: there is, but I think they're looking in the wrong place.

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Speaker 1: I think they need to start with their short selling rules.

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Speaker 1: One of the reasons the SEC was invented in ninety

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Speaker 1: three was abuse of short selling in the nine crash,

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Speaker 1: and they still after ninety years, can't seem to get

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Speaker 1: it right. I hope that they start looking there at

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Speaker 1: that and I think maybe they should start looking at

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Speaker 1: the institutional community too, Is there a little bit of

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Speaker 1: coordination or collusion going on there as well? That's in

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Speaker 1: some cases like the famous you know idea spanners at

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Speaker 1: the hedge funds old that's not really legal for them

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Speaker 1: to do that. But we've done whole showtime shows called

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Speaker 1: billions about this because such an accepted practice right now

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Speaker 1: on Wall Street. I hope they looked there as opposed

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Speaker 1: to how do we how do we restrict and restrain

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Speaker 1: these message boards? They weren't the problem. They identified the problem, right. Hey, Jim,

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Speaker 1: thanks so much for joining us. We always appreciate getting

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Speaker 1: your perspective on markets. Jim Bianco, President of Bianco Research

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Speaker 1: and Bloomberg Opinion Calumnis. You can read all of Jim's

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Speaker 1: work and all of the Bloomberg opinion columnists at Bloomberg

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Speaker 1: dot com, Slash Opinion or O P I N. Go

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Speaker 1: on the terminal. Lizza Chapman joins us now. She is

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Speaker 1: a venture capital reporter here at Bloomberg. And the reason

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Speaker 1: we want to talk to Lizette is because we have

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Speaker 1: been waiting for robin Hood to go public, potentially in

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Speaker 1: May of this year or so. Lizette have the events

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Speaker 1: of the last few weeks changed robin hoodsplans at Alls

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Speaker 1: absolutely had thrown a real wench in um kind of

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Speaker 1: how they approach the public markets. If anything, it's made

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Speaker 1: it much more pressing because they realize that they do

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Speaker 1: need these extra capital requirements. So, you know, while before

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Speaker 1: they were looking at an I p O or I

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Speaker 1: p O or some type of way to go public,

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Speaker 1: you know, early to late spring, now they're they're not

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Speaker 1: even really talking about the timing as much as they

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Speaker 1: are that yes, we need to go public, not a

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Speaker 1: matter necessarily of when, but as why, and so as

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Speaker 1: they resolved this recent hubub um, you know they'll be

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Speaker 1: they'll be looking at um exactly how to go public. Yeah, Liz,

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Speaker 1: is their talk or what is the level of talk

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Speaker 1: about a spack? A spack to me might be a

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Speaker 1: way to consider it, could be could get them into

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Speaker 1: the public market sooner, perhaps with less scrutiny. Um, what

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Speaker 1: are they thinking about us back? That's a great point,

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Speaker 1: and a lot of companies have definitely availed themselves as

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Speaker 1: that like last year was all time record high. It

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Speaker 1: was more last year than it was I think in

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Speaker 1: the past twenty years combined. So it's definitely top of talks.

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Speaker 1: But right now, to be honest, this is a you know,

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Speaker 1: this is a you know, small but fast growing company.

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Speaker 1: Um it is. They say that they are profitable. Um

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Speaker 1: you know, that's what we've been told. According to sources

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Speaker 1: familiar um back is one of the options. Um so

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Speaker 1: is a direct listing, which is what palat here and Spotify.

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Speaker 1: You may remember they've done that previously. So those are

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Speaker 1: two other options that they're also talking and thinking about.

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Speaker 1: But but to be honest, you know, there so they've

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Speaker 1: been so focused on just dealing with this crisis right now.

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Speaker 1: I mean they raised you know, they were able to

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Speaker 1: raise they had to raise one billion dollars in a

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Speaker 1: span of twelve hours, and that that number increased to

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Speaker 1: three point four billion over the course of seventy two hours,

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Speaker 1: just to you know, create that comfort and make sure

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Speaker 1: that they could continue trading regularly against But that has

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Speaker 1: been their primary focus up until now. Now. Who knows. Yeah,

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Speaker 1: for sure, they definitely want to, you know, keep working

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Speaker 1: beautifully so that people don't lose trust or face. In

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Speaker 1: Robin Hood, Lizzat we were just speaking with somebody who

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Speaker 1: mentioned the game stuff. Probably should have tried to buy

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Speaker 1: Twitch at some point, and we know, of course that

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Speaker 1: Amazon boa Twitch for less than a billion dollar or is.

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Speaker 1: But we did get Uber making another acquisition today for

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Speaker 1: one point one billion dollars. Not the alcohol startup Drizzly.

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Speaker 1: Talk to us about this pricing. I mean, essentially, this

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Speaker 1: is literally an alcohol delivery service. Is it worth one

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Speaker 1: point one billion dollars? Well, I'm sure that the investors

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Speaker 1: who last um backed in twent seventeen and valued at

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Speaker 1: at seventies three millions according to pitch Book, I'm sure

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Speaker 1: they are popping champaign today and ordering a plenty of

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Speaker 1: things by Drizzly or other means, because that is one

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Speaker 1: heck of a return. So sent three million, not even

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Speaker 1: three years, barely three years ago. Yeah, exactly, So, I mean,

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Speaker 1: you know, and that's kind of the way the venture

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Speaker 1: capital game is played, right, You only need one really

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Speaker 1: great company to knock it out of the park to

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Speaker 1: make up for all the other losses. Um. You know

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Speaker 1: what Uber guests with this is um. You know, they

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Speaker 1: get to expand their alcohol delivering They were doing it

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Speaker 1: for four through Postmates, which you remember they acquired uh

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Speaker 1: last year for two point six billions and they were

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Speaker 1: able to do it through a corner shop, which was

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Speaker 1: their acquisition in Mexico. But this is a really big

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Speaker 1: push doubling down, maybe even tripling down and delivery boost

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Speaker 1: sales or through the roof. During the pandemic, um, you know,

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Speaker 1: Drizzly itself said that their sales were up four above

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Speaker 1: historical levels, um back in May, and UM, you know,

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Speaker 1: I think many people can say that that, you know,

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Speaker 1: alcohol consumption is up historically, so you know this this

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Speaker 1: this is a chance for Uber to really dig down

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Speaker 1: into delivery because, as we've talked about before, it's ride

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Speaker 1: hailing service. It's just been decimated by the pandemic. So

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Speaker 1: people are shut in, people are ordering food, you know,

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Speaker 1: and and now booze and um. They can also do

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Speaker 1: uh pharmaceuticals or pharmacy, uh, you know, items and also packages.

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Speaker 1: So this is part of Uber's overall shift to just say, look, guys,

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Speaker 1: we're not gonna do flying cars. Are not going to

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Speaker 1: do um, you know, flying flying tax these are electric scooters.

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Speaker 1: Were just going to do delivery and rides and darn it,

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Speaker 1: we're going to turn a profit this year. So that's

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Speaker 1: their focus. Hey, was that how what's the mood out

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Speaker 1: there in Silicon Valley as it relates to doing deals

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Speaker 1: raising capital. How much does the pandemic slow things down? Oh? Man,

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Speaker 1: I don't know. I've been you know, kind of cloistered away.

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Speaker 1: Silicon Valley is more of a of an idea, I

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Speaker 1: think to send an actual location. So I've been working

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Speaker 1: from home since since March. But I can tell you

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Speaker 1: from talking to early stage investors, UM, some of them

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Speaker 1: say that that their deal flow is higher than it's

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Speaker 1: ever been, and the numbers back that up. You know,

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Speaker 1: even though they're not doing all these deals in in

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Speaker 1: you know, over coffees and over drinks and networking, all

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Speaker 1: that stuff has gone. Yet last year was the highest

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Speaker 1: amount of venture capital on on record. And we also saw, um,

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Speaker 1: you know, the most of the megafunding deals, the massive

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Speaker 1: million plus deals that pumps that total um, you know,

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Speaker 1: to an all time I So to your answer, you know,

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Speaker 1: to your question, what's the mood, Um, it's busy. I

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Speaker 1: think people are just grinding it through, still getting deals done.

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Speaker 1: They're doing it on zoom, they're doing it and called um.

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Speaker 1: But um, you know, we're still very much affective on

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Speaker 1: the pandemic here as we are in other parts of

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Speaker 1: the nation. Hey, Lozette, thank you so much for joining us.

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Speaker 1: We really appreciated getting your thoughts there on some interesting

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Speaker 1: news coming out of the valley there with Uber and

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Speaker 1: UH with Robin Hood as well. Listen Lazette Chapman, venture

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Speaker 1: capital reporter for a Bloomberg News in are based out

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Speaker 1: in San Francisco. Well, one of the industries that was

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Speaker 1: certainly disrupted by the pandemic was retail. The acceleration of

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Speaker 1: the migration from bricks and mortar to e commerce just

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Speaker 1: really proceeded during this pandemic and continues to do so.

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Speaker 1: Let's get the latest on kind of where we are

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Speaker 1: in the retail environment here. We do that with Tay Lopez.

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Speaker 1: He's executive chairman and CEO of Retail e Commerce Ventures

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Speaker 1: based in Miami, Florida. Ty, thank so much for joining us.

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Speaker 1: Give us a sense of kind of where we are

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Speaker 1: in the retail landscape now, you know, bricks and mortar

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Speaker 1: versus e commerce. How are the retailers adapting? Yeah, I

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Speaker 1: mean it's still a slow burn, slow transition. Hard to

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Speaker 1: teach old dogs new tricks, as they say, so I

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Speaker 1: don't see them changing fast enough to allay the you know,

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Speaker 1: coming tidal wave that they're starting to feel. So yeah,

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Speaker 1: that's the short answer in my opinion. So, Ty, what

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Speaker 1: brands are you using a potential targets? Well, you know,

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Speaker 1: usually the bankruptcy and so on the first quarter they

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Speaker 1: slowly ramp up. People tried to make it through and

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Speaker 1: watch how the holidays, you know, November, December, Black Friday did.

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Speaker 1: So I expect it to ramp up a little bit

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Speaker 1: in the second quarter. It's usually snow slow. Now, Um,

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Speaker 1: French Escas was one that was for sale. We did

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Speaker 1: not go after that one. It's starting to heat up

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Speaker 1: a little bit. People are realizing, hey, we can buy

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Speaker 1: these distressed brands. Um, the last thing we bought with

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Speaker 1: Stein Martin radio shack in November and in November, so

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Speaker 1: we'll see what's coming up. Everybody's kind of, like I said,

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Speaker 1: they're saying, can we make the switch? Can we do

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Speaker 1: it fast enough? And I think when the audited financials

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Speaker 1: come out from the fourth quarter of last years when

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Speaker 1: you'll start seeing bigger decisions being made about the bankruptcy

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Speaker 1: or selling. So t is your strategy to kind of

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Speaker 1: identify high quality brands, brands that really have good value

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Speaker 1: in the marketplace, but for whatever reason, did not manage

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Speaker 1: that transition from physical to e commerce and then get

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Speaker 1: that brand by that brand, acquire that brand and try

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Speaker 1: to do it yourself. Yes, exactly what we're looking for

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Speaker 1: is brands that are not distressed breaking the order that

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Speaker 1: was distressed. So if we think the brand itself is distressed,

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Speaker 1: we're less interested. We've passed on various brands in the

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Speaker 1: last six months. Sometimes you know, I'm just down being

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Speaker 1: too busy, but sometimes we felt like, you know, that

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Speaker 1: brand doesn't have much power. But when you look at

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Speaker 1: something like stein Mart, for example, radio Shack, people still

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Speaker 1: stop shopping their dress bomb here one. It's just the

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Speaker 1: economics of the scores is what was distressed. And since

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Speaker 1: we don't really take stores on that, that segmentation of

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Speaker 1: distress doesn't bother us at all. What about Game Stop?

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Speaker 1: What kind of reputation does that brand have these days? Wow,

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Speaker 1: that's a great clash hit. I would say, you know,

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Speaker 1: if you look at the origin the Game Stop, it's

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Speaker 1: this chewy co founder coming on the board and kind

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Speaker 1: of bringing life that he can revive the brand. I read,

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Speaker 1: I forget the name. I read yesterday an act of

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Speaker 1: a shareholder or a consultant who told them two years ago,

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Speaker 1: you should have bought Twitch. You know, that would have

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Speaker 1: been to play because that transitions you. Not only it's

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Speaker 1: not e commerce, but it puts you in that world

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Speaker 1: that you should be. And so I think games stopped.

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Speaker 1: They have to do more. They have to have to

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Speaker 1: be some fundamental changes. Um. I can't speak to it

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Speaker 1: because I haven't researched much, but I thought I was

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Speaker 1: an interesting quote. If they had, you know, made that

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Speaker 1: Twitch acquisition several years ago, maybe they wouldn't be so

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Speaker 1: distressed right now. So I think it's it's one on

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Speaker 1: the brink. It can be turned around maybe, but it's teetering,

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Speaker 1: you know, so we'll see. Ty. What's the status of

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Speaker 1: Brooks Brothers. That was a big brand at the beginning

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Speaker 1: of this pandemic. I believe filed for bankers if it

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Speaker 1: certainly challenged. Yes, a company called a b G Authentic

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Speaker 1: Brands Group out of New York. I thought, I'm not

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Speaker 1: mistaken made that made that acquisition. They do a little

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Speaker 1: bit different than us. Um, really well run business makes

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Speaker 1: a lot of money backed by black Stones or black

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Speaker 1: Rocks already, and they buy things that they focused on

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Speaker 1: licensing revenue. So they felt for us Brookstone as our

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Speaker 1: Brooks brothers. Um, you know, we didn't. We didn't understand

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Speaker 1: how we can add as much value. But they buy

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Speaker 1: it for the global licensing rights. And so I think

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Speaker 1: that happened about four or five months ago that they

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Speaker 1: made the acquisition. I think it was if I'm not

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Speaker 1: mistaken publicly, it was in the three hundreds. Wow. What's

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Speaker 1: interesting talk to us about fundraising? Is it an easy

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Speaker 1: time for fundraising? It feels like there's so much cash

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Speaker 1: out there. I mean, so many stacks and so much

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Speaker 1: you know, so many signals of frost really across this market.

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Speaker 1: Are you seeing that tie or people coming to you

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Speaker 1: to to to hunt your money? Uh? You know, but

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Speaker 1: I want to say coming to us the instantly hand

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Speaker 1: us money. But um, there is an element I'm reading

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Speaker 1: rereading Robert Schiller's book A Rational Exuberant. That's a good

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Speaker 1: one for everybody to reread. The Noble Applies winner wrote

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Speaker 1: it a while ago. But um, we raise money uniquely.

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Speaker 1: We're not a fund or a holding company. We mostly

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Speaker 1: raised from a network. We've kind of built this kind

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Speaker 1: of group club of high network that credited investors. So

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Speaker 1: most of what we do is with this group of

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Speaker 1: hundreds of credit investors who directly have relationships with us.

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Speaker 1: But we are yes. I mean, the spack world is

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Speaker 1: going to be fascinating because all these facts for and

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Speaker 1: they have to eventually, you know, find a target or

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Speaker 1: give the money back. So I think it is an

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Speaker 1: interesting time. It's relatively easy to raise. But you know,

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Speaker 1: one thing that you start to push up against the

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Speaker 1: paradox of choice investors go, there's so much we at

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Speaker 1: tact and there's so much to do they do, and

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Speaker 1: there's so much to talk about. Time we'll have to

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Speaker 1: do it again soon to talk more about all of this.

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Speaker 1: Tayl Opez of Retail e Commerce Adventures, thank you. Let's

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Speaker 1: switch gears now to Global Oil ex on mobile. It

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Speaker 1: pledged to safeguard it's mammoth dividend after posting its first

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Speaker 1: annual loss in at least forty years, a show of

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Speaker 1: defiance by an oil driller besieged by activist investors, lawmakers

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Speaker 1: and climate change campaigners. Let's get the latest on that.

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Speaker 1: We could do that with Fernando Vallier, oil and gas

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Speaker 1: analyst for Bloomberg Intelligence Fernando talked to us about Exon Mobile.

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Speaker 1: Here a brutal, brutal year for them, but they're keeping

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Speaker 1: the dividend. That's right, Paul. They're they're maintaining their fifteen

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Speaker 1: billion dollar dividend, but at the sacrifice of restoring their

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Speaker 1: their peer leading returns. Excellent has been the leader UH

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Speaker 1: in returns on capital for the sector for several years,

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Speaker 1: but since eighteen it lost its ground, first to Totel

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Speaker 1: and now to Chevron, and it is maintaining its evidence

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Speaker 1: but flashing growth in the projects that were supposed to

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Speaker 1: bring it back towards the head of the line. UM.

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Speaker 1: You see the target for the Permian, for example, one

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Speaker 1: of its ground jewels going from one point two million

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Speaker 1: barrels by seven hundred thousand barrels a day UM. So

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Speaker 1: the growth is really slowing down, and some of its

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Speaker 1: other key pillars from as as soon as March of

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Speaker 1: last year. But poor New Guinea and Mozambique also falling.

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Speaker 1: By the wayside as it prefers to to funnel money

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Speaker 1: towards the dividend as opposed to showing up. It's UH.

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Speaker 1: It's falling production and returns on capital. What made them

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Speaker 1: make that decision. It was that there was too much

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Speaker 1: risk in hanging on for some of these plays to

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Speaker 1: to pay off. UM. I think it's primarily a concern

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Speaker 1: that cutting its dividend will drive away some of its

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Speaker 1: shareholder base. It is a retail focused shareholder base that's

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Speaker 1: really for uh important that for whom the dividend is

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Speaker 1: very important. So there's a concern that if they do

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Speaker 1: eventually cut the dividend, there would be a movement away

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Speaker 1: from the stock, and then that would consequently impact it's

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Speaker 1: cost the capital. My view is that by continuing to

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Speaker 1: pay such a large dividend and not addressing its following

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Speaker 1: return on capital, the sustainability of that dividend in the

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Speaker 1: long term is coming into under question. Forna talk to

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Speaker 1: us about Exxon's results for first annual loss in forty years.

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Speaker 1: What's the story. Well, the story is again uh, just

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Speaker 1: fallen margins that were coming along before this as they

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Speaker 1: continue to over invest. But obviously the pandemic taking its

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Speaker 1: toll on the on returns both in the upstream and

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Speaker 1: on the refining and chemicals segment. Chemicals has been the strongest,

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Speaker 1: but even that we're closer to the ten year lows

428
00:23:55,960 --> 00:23:59,280
Speaker 1: on margins than we are to to to the highs

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00:23:59,320 --> 00:24:03,160
Speaker 1: that we saw in Need seventeen and and again that's

430
00:24:03,240 --> 00:24:08,000
Speaker 1: driven a massive gap in their balance sheet and a

431
00:24:08,040 --> 00:24:11,320
Speaker 1: significant cash outflow. Excellent also took a nineteen and a

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00:24:11,359 --> 00:24:16,000
Speaker 1: half billion dollar impairment on assets in the US on

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00:24:16,040 --> 00:24:18,960
Speaker 1: the natural gas side, and also Western Canada and Argentina

434
00:24:19,200 --> 00:24:22,320
Speaker 1: place that they had under development that are now outside

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00:24:22,320 --> 00:24:25,480
Speaker 1: of their scope. Just generally for an under the price

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00:24:25,480 --> 00:24:28,240
Speaker 1: of oil today is pretty high, up on the three

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00:24:28,280 --> 00:24:31,600
Speaker 1: percent and above fifty a barrel for w C I

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00:24:31,840 --> 00:24:34,040
Speaker 1: is that just a factor of the weather, natural gas

439
00:24:34,040 --> 00:24:35,720
Speaker 1: prices going up, and so wonder is there more at

440
00:24:35,760 --> 00:24:40,560
Speaker 1: play here? Well, there's been cuts in production, widespread cuts

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00:24:40,640 --> 00:24:43,280
Speaker 1: in production. The question is at this price, how much

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00:24:43,320 --> 00:24:46,200
Speaker 1: of it is restored? And we see, for example, as

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00:24:46,240 --> 00:24:49,159
Speaker 1: I mentioned in Canada, Canada is now backed up above

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00:24:49,240 --> 00:24:53,040
Speaker 1: pre pandemic levels, as Alberta removed quotas UH is. The

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00:24:53,119 --> 00:24:57,560
Speaker 1: US shale producers also increasing the amount of completion crews

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00:24:57,600 --> 00:25:00,440
Speaker 1: on the field, so we'll see higher production in there.

447
00:25:00,840 --> 00:25:03,680
Speaker 1: And then there's a question on how long Saudi Arabia

448
00:25:03,760 --> 00:25:06,520
Speaker 1: and other members of OKAY plus we'll stick to their

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00:25:06,600 --> 00:25:11,199
Speaker 1: quota as and production quotes cut. If prices remain at

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00:25:11,200 --> 00:25:14,439
Speaker 1: this level. Uh, there is always a prisoner's dilemma that

451
00:25:14,480 --> 00:25:16,520
Speaker 1: you don't want to be the guy that cuts too

452
00:25:16,640 --> 00:25:21,119
Speaker 1: much and drives prices higher. So eventually we expect some

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00:25:21,240 --> 00:25:23,920
Speaker 1: of that production to come back online. We've also had

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00:25:23,960 --> 00:25:27,239
Speaker 1: Libya reopening their ports, so we're going to see some

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00:25:27,280 --> 00:25:30,200
Speaker 1: production there picked back up in the next couple of weeks.

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00:25:32,359 --> 00:25:35,760
Speaker 1: All right, Fernando, thank you for that much. Appreciate the

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00:25:35,840 --> 00:25:39,919
Speaker 1: input there. Fernando Valet joining us there and Paul. It

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00:25:40,040 --> 00:25:42,239
Speaker 1: is quite stunting to see oil black about fifty five

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00:25:42,240 --> 00:25:44,440
Speaker 1: dollars a barrel. It's been in the forties for as

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00:25:44,480 --> 00:25:46,399
Speaker 1: long as I remember now. Yeah, And you know, we

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00:25:46,400 --> 00:25:48,680
Speaker 1: always talk about and we talk about a commodity top

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00:25:48,680 --> 00:25:51,920
Speaker 1: hat supplying demand, and it just feels like this commodity

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00:25:51,960 --> 00:25:53,760
Speaker 1: is driven by the demand side of the equation a

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00:25:53,800 --> 00:25:56,800
Speaker 1: little bit more in this market. People expecting, uh, you know,

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Speaker 1: good news on the COVID virus and reopening the economy,

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00:26:00,640 --> 00:26:02,080
Speaker 1: and this is you know, certainly at the top of

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Speaker 1: a reopening trade for many investors. Yeah, for sure. Once

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Speaker 1: again thanks to Fernando Valet. Oil and Gas analyst for

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Speaker 1: Bloomberg Intelligence. Thanks for listening to Bloomberg Markets podcast. You

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00:26:14,359 --> 00:26:17,920
Speaker 1: can subscribe and listen to interviews at Apple Podcasts or

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00:26:17,960 --> 00:26:21,320
Speaker 1: whatever a podcast platform you prefer. I'm Bonnie Quinn, I'm

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00:26:21,359 --> 00:26:23,960
Speaker 1: on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm

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00:26:23,960 --> 00:26:26,600
Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can

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Speaker 1: always catch us worldwide at Bloomberg Radio