WEBVTT - Oil Pressure Is To The Downside, Ex-Iran: Kilduff 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.640 Along with my co host Lisa Brahma Wicks. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:21.640 at Bloomberg dot com. Let's turn our attention to the 0:00:21.720 --> 0:00:24.599 oil markets. We started the week with a lot of uncertainty, 0:00:24.640 --> 0:00:28.160 a lot of volatility about Mid East and geopolitical tensions. 0:00:28.440 --> 0:00:30.560 Brent crude at one point over this week was at 0:00:30.560 --> 0:00:34.040 seventy one and change. We've backed off pretty significantly from 0:00:34.080 --> 0:00:36.800 there as tensions have ease. Looking at Brent crude right 0:00:36.800 --> 0:00:39.839 now sixty five dollars thirty six cents per barrel, let's 0:00:39.880 --> 0:00:41.800 get a sense of kind of what's going on in 0:00:41.840 --> 0:00:44.479 the oil markets. We welcome John killed Off, founding partner 0:00:44.520 --> 0:00:47.280 of Again Capital, based in New York. So, John, what 0:00:47.280 --> 0:00:50.199 do you make of the volatility that we saw in 0:00:50.240 --> 0:00:54.600 the energy markets this week. Well, things we're looking you know, 0:00:54.720 --> 0:00:58.800 very bleak there. On I guess Wednesday night, uh with 0:00:58.840 --> 0:01:01.840 the Uranian attack. Uh, you know, there was some misinformation 0:01:01.840 --> 0:01:05.200 around the market about potential casualties, if not fatalities, and 0:01:05.240 --> 0:01:07.440 of course you know none of that came to pass. 0:01:07.600 --> 0:01:09.800 So that that's why you got the spike up, because 0:01:09.840 --> 0:01:13.360 it was you get yourself long some oil for protection 0:01:13.400 --> 0:01:15.120 as quickly as you can, and then it came off 0:01:15.160 --> 0:01:19.480 when our worst fears weren't realized, thankfully. So Um, the 0:01:19.520 --> 0:01:22.559 market has now shifted back to being more concerned about 0:01:22.560 --> 0:01:25.880 the relative oversupply in the market and uh, pretty weak 0:01:26.120 --> 0:01:28.840 guests lean demand figured out of the US in this 0:01:28.920 --> 0:01:31.960 week's report from the government. So um, back to more 0:01:32.000 --> 0:01:35.560 normal analysis for now. Yeah, for now being the key 0:01:35.760 --> 0:01:37.959 word here, because I just should know. There was a 0:01:38.000 --> 0:01:41.240 little uptick, a little pairing of losses in the price 0:01:41.240 --> 0:01:44.120 of crewed after the press conference held by a Secretary 0:01:44.160 --> 0:01:47.199 of State Mike Pompeo as well as Treasure Secretary step 0:01:47.240 --> 0:01:50.360 minut To announced new sanctions on Iran, the possible re 0:01:50.600 --> 0:01:55.640 escalation depending on how Iran responds. Is it telling that 0:01:55.720 --> 0:01:58.800 there has not been a bigger move frankly in oil 0:01:58.960 --> 0:02:01.640 throughout all of this, even the fact that there were 0:02:01.680 --> 0:02:04.400 actual missiles flying, right, I mean, it wasn't necessarily just 0:02:04.440 --> 0:02:07.639 as theoretical back and forth of words, things were getting heated. 0:02:07.760 --> 0:02:13.680 In another way, things were getting very heated. And I 0:02:13.680 --> 0:02:16.760 think the oil price at Lesa was off to the 0:02:16.840 --> 0:02:20.160 races the other night, um to the upside, because it 0:02:20.240 --> 0:02:25.119 looked like there was going to be a real escalation. Um. 0:02:25.120 --> 0:02:28.120 And if Iran had gone further than it did, Uh, 0:02:28.960 --> 0:02:31.320 you have to figure that most slightly they're most certainly 0:02:31.360 --> 0:02:34.320 would have been. And finally, you know, real volumes of 0:02:34.360 --> 0:02:37.040 oil would have come off the market, particularly out of 0:02:37.040 --> 0:02:40.519 southern Iraq. That's uh, that's where my focus is. Iraq 0:02:40.639 --> 0:02:43.320 is proving to be the battle ground in this whole thing. 0:02:43.360 --> 0:02:48.359 Unfortunately for those poor people and the Iraqi crude oil 0:02:48.440 --> 0:02:51.080 at a Bassora in the south, a couple of million 0:02:51.080 --> 0:02:54.720 barrels a day is the key element here that gets affected. 0:02:54.880 --> 0:02:57.720 Prices are going to go soaring higher. All right, John, 0:02:57.800 --> 0:02:59.919 Let's assume, and this might not be a fair sumption. 0:03:00.040 --> 0:03:04.200 Let's assume geopolitical tensions remain muted here in the near 0:03:04.320 --> 0:03:07.119 term to intermediate term. Where do you think oil goes here? 0:03:07.120 --> 0:03:09.799 Given a supply and the demand dynamics out there, it 0:03:09.880 --> 0:03:12.799 just seems to be a lot of supply out there. Yeah, 0:03:12.800 --> 0:03:17.000 I mean x RAN. You're looking at at a steady 0:03:17.000 --> 0:03:19.440 sell off here now. Um, you know, we broke down 0:03:19.520 --> 0:03:22.799 through some key levels. Sixty dollars was key support. We 0:03:22.840 --> 0:03:24.800 went through that like a hot knife through butter. The 0:03:24.880 --> 0:03:29.320 next key level is just under fifty eight dollars of barrel. 0:03:29.320 --> 0:03:32.040 That's the two day moving average, and if we can 0:03:32.080 --> 0:03:34.480 break through that, we we could easily then go back 0:03:35.040 --> 0:03:39.120 to the October lows, potentially test fifty two a barrel. 0:03:39.640 --> 0:03:44.400 Once again, the technical setup is such that the chart 0:03:44.520 --> 0:03:47.760 is a message. It got pretty much wrecked by the 0:03:47.800 --> 0:03:51.320 spike higher and then an immediate reversal. So there's a 0:03:51.320 --> 0:03:53.560 lot going against the bowls in the market right now. 0:03:54.520 --> 0:03:57.240 What about other possible disruptions forgetting we're on and I 0:03:57.240 --> 0:03:59.240 remember when we were talking about Libya being a source 0:03:59.280 --> 0:04:03.040 of concern. I remember Venezuela production was a concern for 0:04:03.080 --> 0:04:05.920 a while, given the infrastructure in that country and what's 0:04:05.920 --> 0:04:12.120 going on there. All those things not on the horizon anymore. Well, 0:04:12.440 --> 0:04:14.800 the the issue we have, the market has is that 0:04:15.080 --> 0:04:19.080 even with the Ran and Venezuela pretty much offline, Iran 0:04:19.200 --> 0:04:21.080 is getting some crude oil app to China by the 0:04:21.080 --> 0:04:25.600 way UM. There there's still relative oversupply. The position of 0:04:25.640 --> 0:04:28.159 the United States, the ascendancyats to the number one oil 0:04:28.160 --> 0:04:31.080 producer in the world, and now UH a soaring amount 0:04:31.120 --> 0:04:34.159 of exports. We exported four point six million barrels a 0:04:34.240 --> 0:04:37.880 day UH last two weeks ago during that week, just 0:04:37.920 --> 0:04:41.400 an incredible figure. And UM as a result of that, 0:04:41.480 --> 0:04:44.640 you know that the market keeps getting a sufficient amount 0:04:45.320 --> 0:04:47.800 of supply to the market, if not more than it needs. 0:04:48.120 --> 0:04:51.040 And there's still some cheating within the OPEC group, Nigeria 0:04:51.200 --> 0:04:54.440 in particular, and even with all the strife in Libya, 0:04:54.720 --> 0:04:57.200 their oil keeps getting out. So with all of these 0:04:57.240 --> 0:05:00.400 serial issues UM in the Middle East, now with the 0:05:00.480 --> 0:05:03.479 rack and Iran and the attack on Saudi Arabia in 0:05:03.520 --> 0:05:07.840 the fall, the oil flows haven't been affected by any 0:05:07.839 --> 0:05:10.760 of these things, and the market remains relatively well supplied. 0:05:10.800 --> 0:05:14.040 So the market, the oil price UM is reflective of that. 0:05:14.080 --> 0:05:19.760 There's no tightness, no constraints, UH, just relative oversupply. So 0:05:19.880 --> 0:05:22.520 given that scenario, and given that, let's say you know, 0:05:22.680 --> 0:05:26.159 a a two percent kind of global GDP type of growth, 0:05:26.240 --> 0:05:28.920 where does w T I go? Does it drift down 0:05:28.960 --> 0:05:32.400 close back to fifty that's what it's looking like that 0:05:32.480 --> 0:05:37.279 the growth outlook for isn't really enough to UH to 0:05:37.360 --> 0:05:42.440 support higher prices for sure. You know, maybe some stabilization 0:05:42.520 --> 0:05:44.760 if the Sattie's were decided to cut back more, But 0:05:44.880 --> 0:05:49.360 that is even in jeopardy, particularly because Russia is just 0:05:49.600 --> 0:05:53.279 is about to bolt UH the agreement. It appears that 0:05:53.360 --> 0:05:56.799 they want to be allowed to UH fight for market share, 0:05:56.960 --> 0:06:00.760 continue with their investment capital plans that have been emplaced 0:06:00.800 --> 0:06:03.880 by their by their various companies UM, and operate on 0:06:03.880 --> 0:06:07.359 a more commercial basis. So um, Yes, short answer to 0:06:07.360 --> 0:06:10.599 your question is that it's a downward bias again short 0:06:10.600 --> 0:06:13.240 of a supply disruption that comes from an exogenous event, 0:06:13.920 --> 0:06:16.640 I guess. Then the question becomes, John, how long before 0:06:16.640 --> 0:06:19.719 we start worrying about the financial health of shale producers 0:06:19.720 --> 0:06:22.599 which have been the swing players here. We've seen them 0:06:22.760 --> 0:06:25.520 do really well in terms of bonds and stock prices 0:06:25.839 --> 0:06:28.320 in the wake of the increase in oil prices. How 0:06:28.320 --> 0:06:29.880 far do they have to drop before we have to 0:06:29.880 --> 0:06:33.960 worry about their financial viability? Again, Well, they're definitely on 0:06:34.000 --> 0:06:36.640 the ropes and this is the year to watch them um. 0:06:36.680 --> 0:06:40.720 And it's also the year potentially where the shale miracle 0:06:41.360 --> 0:06:45.760 UH drives up to a degree because as these weaker 0:06:45.800 --> 0:06:48.839 companies either go out of business or merge or get 0:06:48.839 --> 0:06:51.440 picked up by the stronger players, including these including the 0:06:51.480 --> 0:06:56.400 majors like Exxon Mobile. UM, then a new round of 0:06:56.839 --> 0:07:02.040 production discipline could befall the industry and that sector where 0:07:02.080 --> 0:07:06.080 we would see a decline in US production uh instead 0:07:06.080 --> 0:07:10.640 of the rampant and unbridled growth that has sort of 0:07:10.720 --> 0:07:14.480 been the business model in that way, so UM. That 0:07:14.520 --> 0:07:17.600 would also potentially help to stabilize prices down the road, 0:07:17.640 --> 0:07:20.040 but it's not going to be really uh an impact 0:07:20.120 --> 0:07:23.000 on prices to the upside this year. Thank you so 0:07:23.040 --> 0:07:25.480 much for being with us. John Kilduff, founding partner of 0:07:25.560 --> 0:07:29.200 Again Capital, based in New York, talking about the different 0:07:29.240 --> 0:07:31.920 factors that are pushing and pulling on the price of oil. 0:07:41.960 --> 0:07:45.040 Bart van Arc, chief economists at the Conference Board, joining 0:07:45.120 --> 0:07:48.520 us now and you did this annual global CEO survey 0:07:48.640 --> 0:07:52.200 and among the points made here, attracting and retaining talent 0:07:52.560 --> 0:07:57.000 ranked as their top internal concern. If that's the case, 0:07:57.120 --> 0:08:00.840 why our wages not going up more? Yes? Hi, good 0:08:00.840 --> 0:08:02.840 morning these I H I mean that's uh, that's I 0:08:02.840 --> 0:08:05.240 think the conundrum here, right, I mean, we see this 0:08:05.400 --> 0:08:07.720 continuous slow age growth and at the same time we 0:08:07.800 --> 0:08:11.680 see companies, uh, we all complain about talent. It's a 0:08:11.800 --> 0:08:14.440 very highly bifurcated labor market, right, I Mean, on the 0:08:14.440 --> 0:08:17.680 one hand, you know, we see CEOs and spee suite 0:08:17.760 --> 0:08:19.880 leaders in our conference board see suite sure of a 0:08:20.400 --> 0:08:23.600 really put these issues of attracting and retaining talent, how 0:08:23.640 --> 0:08:26.480 to develop a next generation of leaders in order to 0:08:26.560 --> 0:08:29.960 move innovation forward, in order to make that company's more productive, 0:08:30.000 --> 0:08:32.720 improve their performance. And on the other hand, there's just 0:08:32.880 --> 0:08:36.520 lots of junctions and occupations out there where there are 0:08:36.559 --> 0:08:39.320 still plenty of supplying the labor market. See pretty strong 0:08:39.400 --> 0:08:43.520 job growth throughout two thousand nineteen and in two thousand twenty, 0:08:43.920 --> 0:08:45.960 and there are people. There's still plenty people being added 0:08:46.000 --> 0:08:48.480 to the labor markets, so neat for companies to raise 0:08:48.520 --> 0:08:52.680 wages there so part the labor market remains strong, which 0:08:52.720 --> 0:08:56.240 can be a challenge for corporations. What is the number 0:08:56.240 --> 0:08:58.960 one risk your survey came back with here in terms 0:08:58.960 --> 0:09:01.840 of the CEO serving Yeah, so there's a s sweet 0:09:01.880 --> 0:09:05.719 survey by the conference word was done in September October 0:09:05.800 --> 0:09:08.040 last year, So at that time, I think there were 0:09:08.320 --> 0:09:11.080 big concerns about where the economy was was heaving also 0:09:11.160 --> 0:09:12.920 in the United States. Don't forget we were in the 0:09:12.960 --> 0:09:15.840 middle of the trade disputes at that point in time 0:09:15.840 --> 0:09:19.720 and potensial threats of raising tariffs. So recession risk came 0:09:19.800 --> 0:09:24.000 up pretty consistently among the suit leaders as their biggest 0:09:24.040 --> 0:09:26.800 concern going into two thousand and twenty. Now we're a 0:09:26.800 --> 0:09:29.480 few more months down the road. You know, we we 0:09:29.559 --> 0:09:32.120 have a trade phase one deal coming along we all 0:09:32.120 --> 0:09:35.680 hope very very soon. So you can see that has 0:09:35.720 --> 0:09:39.839 helped um businesses become a little bit more confidence. Earlier 0:09:39.880 --> 0:09:43.439 this week, the word releases CEO Confidence indexis is a 0:09:43.559 --> 0:09:46.800 quarterly index, and CEO confidence has been going down for 0:09:46.840 --> 0:09:49.320 about six quarters in a row, but in the last 0:09:49.400 --> 0:09:51.160 quarter it actually began to pick up a little bit, 0:09:51.240 --> 0:09:53.640 still less than fifty, so we still have more negative 0:09:54.200 --> 0:09:56.680 CEOs than positive CEOs, but we're beginning to see a 0:09:56.679 --> 0:10:00.000 little bit of recovery of confidence. So in that sense, 0:10:00.040 --> 0:10:02.560 I think they may be hoping going into a slightly 0:10:02.600 --> 0:10:05.720 better two thousand twenty than two thousand nineties. So this 0:10:05.760 --> 0:10:09.280 recession risk has received somewhat okay. So and this is important, 0:10:09.360 --> 0:10:11.520 especially because as one of the points that that your 0:10:11.520 --> 0:10:14.760 survey found U S C e O S said that 0:10:14.840 --> 0:10:19.480 a recession was their number one concern in and that 0:10:19.600 --> 0:10:23.040 had been their third biggest concern back in. I do 0:10:23.120 --> 0:10:25.520 want to go back to the labor issue and this 0:10:25.600 --> 0:10:29.040 idea of the bifurcation in the market where you have 0:10:29.200 --> 0:10:33.640 skilled and sort of educated workers who are in you know, 0:10:34.000 --> 0:10:37.560 in well demand and they're able to demand their their 0:10:37.559 --> 0:10:39.880 salary as they as they will, or have more bargaining 0:10:39.880 --> 0:10:43.240 power versus the lower end. Can you talk a little 0:10:43.240 --> 0:10:47.040 bit more about what companies said the color they gave 0:10:47.120 --> 0:10:52.120 around the talent shortage that they face. Yeah, it's interesting 0:10:52.160 --> 0:10:55.320 to see where these shortages are, and we see a 0:10:55.320 --> 0:10:57.839 lot of these shortages in sort of more blue color 0:10:57.920 --> 0:11:01.280 type workers, so manufacturing workers and eng years. We of 0:11:01.320 --> 0:11:03.720 course know a lot about the stories about truck drivers 0:11:03.760 --> 0:11:06.319 and train drivers and so on, and these are all 0:11:06.400 --> 0:11:10.840 kinds of jobs occupations where basically people were told at 0:11:10.840 --> 0:11:13.280 the time, you know, don't even go there because you 0:11:13.280 --> 0:11:16.040 know it will be all automated. And we have you know, 0:11:16.280 --> 0:11:19.880 driverless trucks and everything else to all be robotized. And 0:11:19.920 --> 0:11:22.720 now here we are in two thousand twenty, and we're 0:11:22.760 --> 0:11:24.920 seeing that, you know, a lot of people in those 0:11:24.960 --> 0:11:27.720 occupations are all the people are now beginning to massively 0:11:27.760 --> 0:11:31.920 retire and the technology hasn't really proceeded as rapidly, so 0:11:31.960 --> 0:11:34.280 now we suddenly have a shortage because there's too few 0:11:34.320 --> 0:11:37.400 young people coming into those kinds of occupations. So what 0:11:37.480 --> 0:11:40.840 you see in this CEO survey is that people that 0:11:40.840 --> 0:11:43.440 that that SCRET leaders are saying that, you know, things 0:11:43.520 --> 0:11:47.640 like an innovative culture in that company, you know, dealing 0:11:47.679 --> 0:11:50.320 with these kind of disruptions of technology. They feature very 0:11:50.400 --> 0:11:52.560 high on the list of their concerns, so so they 0:11:52.600 --> 0:11:54.439 are more aware than effort that I need to deal 0:11:54.440 --> 0:11:57.079 with this. I guess I'm really struggling with this, and 0:11:57.120 --> 0:11:59.560 I'm sorry that I'm basically asking the same question again. 0:12:00.120 --> 0:12:03.439 But if this is not a training issue, why can't 0:12:03.440 --> 0:12:07.720 you find more people to hire by just offering more pay. Well, 0:12:07.760 --> 0:12:09.880 in a way, it is a training issue in the 0:12:09.960 --> 0:12:12.720 sense that you know, you get people out of school 0:12:12.760 --> 0:12:15.719 who don't have these skills yet in order to deal 0:12:15.760 --> 0:12:18.440 with those new technologies. So it's just very hard to 0:12:18.480 --> 0:12:21.719 find people who companies are comfortable with that they can 0:12:21.760 --> 0:12:23.920 really sort of get them up to speed. So a 0:12:23.960 --> 0:12:27.480 lot of people with lower skills can easily find jobs 0:12:27.480 --> 0:12:29.800 in the services sector of the economy, but these are 0:12:29.840 --> 0:12:32.520 those specific skills that need to be trained within a 0:12:32.600 --> 0:12:36.040 company environment where there's a huge shortage off. So so 0:12:36.160 --> 0:12:38.880 creating an innovation culture and creating a culture in which 0:12:38.920 --> 0:12:41.280 people can improve those skills I think is one of 0:12:41.320 --> 0:12:44.400 the real shortcomings here. Bart van Arc, thanks so much 0:12:44.440 --> 0:12:46.960 for joining us. Bart van Ark, chief ECONMIS for the 0:12:46.960 --> 0:12:49.000 Conference Board, based in yr City, giving us his thoughts 0:12:49.000 --> 0:13:01.520 on the global CEO survey. Following up on those jobs data, 0:13:02.120 --> 0:13:04.040 time to check in with Bloomberg Opinion. We're joined by 0:13:04.120 --> 0:13:08.439 Opinion Commerce Alex web covers our Things European Technology, joining 0:13:08.520 --> 0:13:11.160 us from London. Alex thanks so much for joining us. 0:13:11.160 --> 0:13:15.679 We're seeing in the home food delivery business some consolidation 0:13:15.760 --> 0:13:17.960 going on across the globe. It's actually coming to the 0:13:18.040 --> 0:13:21.360 U S as well. What's going on so in Europe 0:13:21.360 --> 0:13:23.840 and in parts of Asia, we've really seen the number 0:13:24.040 --> 0:13:28.240 of online food delivery platforms reduced. Has been a series 0:13:28.240 --> 0:13:31.040 of mergers and in the UK we've basically got three now. 0:13:31.160 --> 0:13:33.760 In South Korea they have two and likely to go 0:13:33.840 --> 0:13:37.640 down essentially to one, and Germany already has just one. 0:13:37.679 --> 0:13:40.280 Now in the US, you've got four. You've got um, 0:13:40.360 --> 0:13:44.360 grub Hub, door Dash, Postmates, and uber eats, and frankly, 0:13:44.400 --> 0:13:46.880 there is a lot of competition, which is making life 0:13:46.880 --> 0:13:50.360 hard because they are all trying to out discount each other. 0:13:50.559 --> 0:13:54.240 Now yesterday or day for yesterday, we had the Wall 0:13:54.280 --> 0:14:01.400 Street Journal reporting that grub hub was evaluating it's um 0:14:01.760 --> 0:14:06.560 uh strategic options, including a possible sale, and you know 0:14:06.640 --> 0:14:09.520 that would really herald a big move that we've not 0:14:09.600 --> 0:14:11.480 yet seen. In the States. We've seen a couple of 0:14:11.520 --> 0:14:15.000 smaller acquisitions where you know, players with one to three 0:14:15.000 --> 0:14:17.040 four percent market share have been gold up by one 0:14:17.080 --> 0:14:19.880 of the bigger guys, But the bigger guys themselves have largely, 0:14:20.320 --> 0:14:23.320 for the past to three years um stayed in the 0:14:23.360 --> 0:14:26.760 situation they're in. I'm gonna ask a really crazy question, Alex. 0:14:26.800 --> 0:14:28.200 I know this is going to be it's going to 0:14:28.240 --> 0:14:32.960 be a little mind blowing. Can this business make money? Personally, 0:14:33.040 --> 0:14:35.800 I think it's very hard to see how, at least 0:14:35.880 --> 0:14:39.240 in the recent iterations of online food delivery. There are 0:14:39.240 --> 0:14:42.640 two business models here. The first one is that you 0:14:42.720 --> 0:14:46.280 are literally a platform in the truest sense. You you 0:14:46.360 --> 0:14:49.880 are a website or an app which connects the person 0:14:49.920 --> 0:14:52.520 trying the dinner with the restaurant. Now the restaurant then 0:14:52.560 --> 0:14:55.960 takes responsibility for delivering the food with their own careers. 0:14:56.120 --> 0:14:58.480 The second one is what we've seen with uber Eats 0:14:58.480 --> 0:15:00.920 in the US and door d our and in Europe 0:15:00.960 --> 0:15:04.560 in London with companies like deliver U. Those companies own 0:15:04.600 --> 0:15:07.600 the networks of couriers, and the first model, where it's 0:15:07.640 --> 0:15:11.440 purely a platform, is very profitable. They grub Hub was 0:15:11.440 --> 0:15:14.280 built around that model and has existed like that fifteen years. 0:15:14.720 --> 0:15:18.920 It had EBITDA margins of more than twenty the like 0:15:19.040 --> 0:15:21.160 the other guys owning their network and careers, have never 0:15:21.200 --> 0:15:25.280 been profitable, and the path to profitability isn't immediately clear. 0:15:25.960 --> 0:15:27.720 It certainly isn't clear they gonna get there any time 0:15:27.760 --> 0:15:29.800 inside the next two or three years. I really, I 0:15:29.840 --> 0:15:32.200 just want to bring you some headlines just crossing with 0:15:32.240 --> 0:15:35.320 The US is set to impose sanctions on Iran's metal 0:15:35.440 --> 0:15:39.560 exports as well as the nation's leaders. They are expecting 0:15:39.600 --> 0:15:42.680 to unveil these new sanctions today. We are expecting a 0:15:42.720 --> 0:15:46.480 press conference with Mike Papeo and Stephen Manuchin. So they 0:15:46.480 --> 0:15:49.840 will be I expect speaking more in detail about that, 0:15:49.960 --> 0:15:53.080 and we will bring that to you live pol when 0:15:53.120 --> 0:15:56.240 we get it exactly. Um Alex, you mentioned kind of 0:15:56.240 --> 0:15:58.880 the Uber model, the Uber eats models. Even you know, 0:15:58.920 --> 0:16:01.480 among Uber investors, there's a lot of pressure to get 0:16:01.520 --> 0:16:04.320 out of that business. So boy and and they have 0:16:04.440 --> 0:16:07.960 such huge scale, So that suggests that that model may 0:16:08.000 --> 0:16:11.320 never be profitable. It's certainly hard to see how the 0:16:11.600 --> 0:16:13.880 guys in the space tend to make the argument that 0:16:13.960 --> 0:16:17.080 what is now a food delivery business becomes every delivery 0:16:17.080 --> 0:16:19.080 of everything. You know that you are delivering to ues 0:16:19.120 --> 0:16:22.920 with toothpaste and groceries and clothing. You know, Postmates has 0:16:22.960 --> 0:16:26.080 an agreement with Old Navy to deliver a fashion But 0:16:26.520 --> 0:16:30.280 you know, volume doesn't necessarily account for profit, unless, of course, 0:16:30.280 --> 0:16:32.520 you get to the stage where you're ordering televisions and 0:16:32.560 --> 0:16:34.440 you're you're taking a cut of that. Then it becomes 0:16:34.600 --> 0:16:37.120 a little bit more easy to you know, to to 0:16:37.240 --> 0:16:39.160 justify the expense. But you know, is a guy on 0:16:39.200 --> 0:16:41.960 a scooter going to be delivering a television probably not? Um. 0:16:42.960 --> 0:16:45.600 The thing the kind of sticking point with grub pub 0:16:45.600 --> 0:16:48.360 potentially being up for sale. The most ideal or the 0:16:48.400 --> 0:16:50.920 ideal combination would be with one of Uber Eats or 0:16:50.960 --> 0:16:53.360 door Dash. And the problem with that is that the 0:16:53.440 --> 0:16:56.000 biggest investor in both of those companies, Ubeats and door 0:16:56.040 --> 0:16:57.960 Dash is soft Bank, and as we've seen with soft 0:16:58.000 --> 0:17:00.920 Bank around the world, they prefer to have their portfolio 0:17:00.960 --> 0:17:03.480 companies combined with each other. And I can imagine a 0:17:03.520 --> 0:17:07.560 scenario where Um, door Dash, and Uber Eats. Perhaps Uber 0:17:07.640 --> 0:17:09.760 carves out that eats business and lumps it in with 0:17:09.840 --> 0:17:12.200 door Dash. Then you've got three competitors in the space. 0:17:12.240 --> 0:17:14.000 Soft Bank is only back in one of them. So 0:17:14.320 --> 0:17:17.000 Massas on the head of that business, is very happy 0:17:17.440 --> 0:17:20.240 and it leaves door Dash. Sorry, it leaves grub hub 0:17:20.320 --> 0:17:23.520 with a greater competitive threat. Just to be clearer of 0:17:23.560 --> 0:17:25.639 what the news, as grub Hub was reported by the 0:17:25.640 --> 0:17:28.520 Wall Street Journal in New York Post on Wednesday that 0:17:28.560 --> 0:17:31.240 it was considering a potential sale, Grohub has come out 0:17:31.320 --> 0:17:34.560 and said unequivocally it is not running a sale process, 0:17:34.600 --> 0:17:39.040 so denying those allegations and those reports. Still though, there 0:17:39.119 --> 0:17:42.919 is a question about profitability, and ultimately, you know, people 0:17:42.960 --> 0:17:45.639 talk about the Ubers of the world and they say, well, 0:17:45.720 --> 0:17:49.280 if there's enough consolidation amongst some of these rides sharing 0:17:49.440 --> 0:17:52.919 and these is a driving services that they will be 0:17:52.960 --> 0:17:55.919 able to jack up prices. And that's the big question 0:17:56.000 --> 0:17:58.639 with these delivery services, right what kind of pricing power 0:17:58.680 --> 0:18:01.159 do they have even if they have the entire market, 0:18:01.200 --> 0:18:04.240 because people can do the alternative, which is go out 0:18:04.240 --> 0:18:06.920 their front door and go get their food themselves exactly. 0:18:06.960 --> 0:18:10.119 That that that's the huge question that you know, if um, 0:18:10.160 --> 0:18:12.159 if the answer is you only have one competitor in 0:18:12.200 --> 0:18:14.080 a given market and buy a market I mean the 0:18:14.119 --> 0:18:16.920 city of New York or the city of Chicago or London, um, 0:18:17.040 --> 0:18:19.240 and you can one up the prices. Well, I think 0:18:19.320 --> 0:18:21.760 right now, you know, one of the reasons people use 0:18:21.760 --> 0:18:23.280 this stuff is because it's cheap. And the reason it's 0:18:23.320 --> 0:18:25.119 cheap is because they're competing against each other and so 0:18:25.359 --> 0:18:28.359 therefore they're subsidizing the costs. And yet to your point, 0:18:28.359 --> 0:18:30.680 the moment that it becomes less affordable than just cooking 0:18:30.680 --> 0:18:32.439 at home, are people going to try to do it? 0:18:32.640 --> 0:18:34.679 As we've sort of going to continue to do it. 0:18:34.800 --> 0:18:38.119 And you know, people are pretty fickle, um. You know, 0:18:38.160 --> 0:18:41.400 brand loyalty in things like ride hailing or food delivery 0:18:41.400 --> 0:18:45.320 platforms isn't great and um, the moment that a cheaper 0:18:45.320 --> 0:18:48.479 product comes along, they switched to it. The one caveat 0:18:48.480 --> 0:18:50.520 I would also raised to that statement today from grub 0:18:50.600 --> 0:18:52.679 hub the report on Whens. They didn't say they were 0:18:52.720 --> 0:18:56.200 running a sales process. It said they were evaluating strategic options. 0:18:56.200 --> 0:18:58.600 So I don't think it completely leaves them some wiggle room. 0:18:58.640 --> 0:19:01.280 In some ways, it kind it looks like a non 0:19:01.320 --> 0:19:04.960 denial denial. They're denying something which wasn't quite reported. There 0:19:05.000 --> 0:19:07.760 isn't It wasn't reported there's a sales process. It was 0:19:07.760 --> 0:19:10.880 reported that is something they might be considering. So are 0:19:10.920 --> 0:19:13.359 there I know you've looked at this space holistically. Are 0:19:13.359 --> 0:19:16.680 there any markets out there, any countries or any companies 0:19:16.720 --> 0:19:19.600 that are doing kind of the platform where there actually 0:19:19.680 --> 0:19:22.960 are delivering the food on a profitable basis. Yes, I 0:19:22.960 --> 0:19:25.440 mean in Germany takeaway dot Com, which is in fact 0:19:25.480 --> 0:19:27.760 a Dutch company. Um, take away dot Com essentially has 0:19:27.800 --> 0:19:32.920 a monopoly there. Um they had market share, which prompted 0:19:32.920 --> 0:19:35.240 the only other player in the space delivery to leave. 0:19:35.840 --> 0:19:38.159 They have a sort of hybrid model where maybe twenty 0:19:38.560 --> 0:19:42.000 of their deliveries, Um are you know, service by their 0:19:42.000 --> 0:19:46.200 own careers UM and the rest the restaurants delivered themselves 0:19:46.240 --> 0:19:48.879 and so they are able to be very profitable. They 0:19:48.920 --> 0:19:53.720 have literally in the past hour secured um the shareholder 0:19:53.760 --> 0:19:57.159 approval to buy Just Eat in the UK, which has 0:19:57.200 --> 0:20:01.040 a similar business model for a figure about x billion pounds. 0:20:01.359 --> 0:20:02.840 In the UK, it's a bit different because of course 0:20:02.840 --> 0:20:06.679 there's also competition from um Uber Eats and Delivery. But 0:20:06.720 --> 0:20:09.720 in Germany, you know, huge market, a lot of growth 0:20:09.760 --> 0:20:14.040 potential still and they don't have that that competition from 0:20:14.200 --> 0:20:17.560 the the owned courier model, so they have the ability 0:20:17.600 --> 0:20:20.680 to jack up prices to the extent they think it's possible, 0:20:20.920 --> 0:20:23.640 but also eke out some help some you know, generous 0:20:23.640 --> 0:20:26.320 profit margins because they're not having to account for the 0:20:26.320 --> 0:20:28.639 cost of the couriers. We're talking with Alex Weorb but 0:20:28.680 --> 0:20:32.359 European technology calumnist over in London for a Bloomberg opinion. 0:20:32.480 --> 0:20:35.240 And one of the reasons why this particular area, this 0:20:35.440 --> 0:20:38.760 industry has been so interesting is because of heart it's 0:20:38.760 --> 0:20:41.600 gotten in terms of the money poured into it. Door 0:20:41.640 --> 0:20:44.280 Dash is planning an initial public offering for this year. 0:20:45.000 --> 0:20:47.000 We shall see whether they will be able to pull 0:20:47.040 --> 0:20:52.040 it off, especially without proven profitability or a path to profitability. Alex, 0:20:52.240 --> 0:20:54.000 I just want to wrap this up and put it 0:20:54.040 --> 0:20:56.440 a bow around it. You mentioned soft Bank and how 0:20:56.480 --> 0:20:59.360 they own a bunch of these companies. How much has 0:20:59.440 --> 0:21:04.160 soft Bank singleheadedly inflated the valuations of the entire business 0:21:04.200 --> 0:21:08.800 model here of delivering food I mean significantly. So the 0:21:08.880 --> 0:21:13.919 grubhub was the dominant player back in seventeen, had more 0:21:13.960 --> 0:21:18.280 than market share um soft Bank started pouring money into 0:21:18.359 --> 0:21:21.200 door Dash, and then Uber, which was soft Bank backed, 0:21:21.560 --> 0:21:25.800 started expanding um It's Uber Eats offering, and needless to say, 0:21:25.960 --> 0:21:28.080 now we see door dash is the biggest player in 0:21:28.080 --> 0:21:30.200 the US with something like thirty seven per cent market 0:21:30.240 --> 0:21:33.600 share compared to grub hubs, and that is all down 0:21:33.640 --> 0:21:36.240