WEBVTT - Why Working Women Are At A Tipping Point: Former SBA Head 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.080 at Bloomberg dot com slash podcast. Good Monday Morning from 0:00:23.120 --> 0:00:26.040 the Bloomberg Inactive Broker Studio in New York City and 0:00:26.160 --> 0:00:28.840 points beyond to our worldwide audience. Paul Sweeney with you. 0:00:28.880 --> 0:00:31.760 Matt Miller's out today, but we're joined by Lisa A. 0:00:31.800 --> 0:00:34.520 Bromwi's Lisa, thanks so much for joining us. It's always 0:00:34.520 --> 0:00:36.040 great to be back with you, and it's for a 0:00:36.159 --> 0:00:39.320 really interesting day. Today is International Women's Day, and I 0:00:39.320 --> 0:00:42.720 gotta say, Paul, it couldn't come on a more powerful moment. 0:00:43.000 --> 0:00:45.960 One that has been the She Session where women have 0:00:46.040 --> 0:00:49.559 disproportionately found themselves out of work as a result of 0:00:49.800 --> 0:00:52.280 the pandemic. And this comes as a whole host of 0:00:52.320 --> 0:00:55.360 reasons fuel it. And yet here we are at a 0:00:55.360 --> 0:00:58.120 pivotal moment for women entering the labor force and Karen 0:00:58.160 --> 0:01:01.040 Mills joining us now has vast experience both from the 0:01:01.080 --> 0:01:04.759 female perspective of being an entrepreneur, but also of what 0:01:04.800 --> 0:01:06.960 it is to be in the in the labor market, 0:01:07.000 --> 0:01:09.480 particularly with small business. She's a senior fellow at Harvard 0:01:09.520 --> 0:01:13.080 Business School, the former Small Business Administrator for President Obama 0:01:13.120 --> 0:01:16.240 from two thousand nine to two tho thirteen. Joining us 0:01:16.240 --> 0:01:20.280 from Karen from Boston, not Karen. I apologize, Karen, thank 0:01:20.319 --> 0:01:21.959 you so much for being with us. I just want 0:01:21.959 --> 0:01:26.039 to start with just the vast pain experience in the 0:01:26.080 --> 0:01:31.600 pandemic by women. How deep is the she session. First 0:01:31.600 --> 0:01:34.400 of all, I'm so pleased to be with you today 0:01:34.480 --> 0:01:38.400 because it's International Women's Day and you know we're marking 0:01:38.680 --> 0:01:43.039 this moment, and you ask exactly the right question. Women 0:01:43.120 --> 0:01:47.680 were a lot harder hit by, uh, this pandemic in 0:01:47.800 --> 0:01:51.360 terms of, you know, the economic impact, and that is 0:01:51.440 --> 0:01:54.200 true in two ways that I worry about a lot. 0:01:54.720 --> 0:01:57.280 One is a lot of women dropped out of the 0:01:57.320 --> 0:02:01.080 workforce because of the increased pressures. And the number are tough. 0:02:01.640 --> 0:02:05.760 Two point three million women dropped out one point eight men. 0:02:06.720 --> 0:02:09.280 So you can just see there, you know they're going 0:02:09.360 --> 0:02:12.600 to be more impacted. And we can talk about small 0:02:12.639 --> 0:02:16.360 businesses they've been much harder hit in the smallest and 0:02:16.400 --> 0:02:20.000 the women and minority owned businesses. So that's a problem too, 0:02:20.720 --> 0:02:24.080 all right, So, Karen, as we begin to approach, I 0:02:24.080 --> 0:02:25.480 guess what a lot of people feel like is a 0:02:25.600 --> 0:02:30.639 reopening of the US economy. Here, what can women do 0:02:31.080 --> 0:02:34.440 to try to get back into the market, get back 0:02:34.440 --> 0:02:38.560 into the labor force, get perhaps their businesses back, reopen 0:02:38.639 --> 0:02:43.000 to that type of thing. Well, thank goodness, we passed 0:02:43.919 --> 0:02:47.240 another round of the Small Business Aid the p p 0:02:47.360 --> 0:02:50.919 P around Christmas time, and there's more in this package 0:02:50.919 --> 0:02:55.679 that's going through Congress because small businesses are really devastated. 0:02:56.080 --> 0:02:59.280 And I just looked at these numbers before I came on, 0:02:59.360 --> 0:03:04.480 because women owned businesses, fifty eight percent of them say 0:03:04.480 --> 0:03:07.120 they're running out of cash. They're either out of cash 0:03:07.320 --> 0:03:09.760 or they're about to run out of cash at fifty 0:03:09.800 --> 0:03:14.920 eight compared to of the men owned businesses. And why 0:03:15.000 --> 0:03:17.960 is that? Because a lot of these customer facing businesses 0:03:18.040 --> 0:03:21.600 that had to shut and these very small non employer 0:03:21.680 --> 0:03:25.760 businesses sold proprietorships. This is where the women have gained 0:03:25.840 --> 0:03:28.200 some economic grounds. You know, when I ran the s 0:03:28.240 --> 0:03:32.519 b A, women particularly actually Hispanic women were the fastest 0:03:32.600 --> 0:03:36.560 growing part of our small business world, and now we've 0:03:36.600 --> 0:03:39.640 given them a real setback. So they've got to take 0:03:39.680 --> 0:03:43.040 advantage of every single thing that is out there for 0:03:43.200 --> 0:03:46.200 them because there's a lot of grant money coming out 0:03:46.440 --> 0:03:49.680 through these p p P programs, there's low interest loans, 0:03:49.920 --> 0:03:51.880 and they've got to stay with us because if they 0:03:51.920 --> 0:03:54.720 shut their doors, it's going to take the economy a 0:03:54.840 --> 0:03:59.080 really long time to recover, and it's going to recover disproportionately, 0:03:59.400 --> 0:04:01.760 which we know is a problem. Or you know that 0:04:01.840 --> 0:04:04.240 hurts everybody. Well, Karen, do you talk a little bit 0:04:04.280 --> 0:04:08.160 about why women have suffered so disproportionately. Some people say 0:04:08.200 --> 0:04:12.160 because they have more jobs in certain areas like education 0:04:12.400 --> 0:04:15.840 that have been hit hard, but there's also the childcarrish. 0:04:15.920 --> 0:04:19.680 You can you talk a little about that. Yeah, you know, 0:04:19.920 --> 0:04:23.599 all across um being a woman, you know, trying to 0:04:24.400 --> 0:04:28.920 prosper economically, there are frictions and barriers that you know, 0:04:29.080 --> 0:04:32.479 I hope in my lifetime will get better and go away. 0:04:32.520 --> 0:04:35.159 And it's it's true we've made progress, but I actually 0:04:35.200 --> 0:04:38.360 think we're at the tipping point all of these kinds 0:04:38.360 --> 0:04:41.120 of frictions and barriers where more burdens fall on the 0:04:41.120 --> 0:04:45.359 women and also employers don't do enough. We we know 0:04:45.600 --> 0:04:48.640 right now we need all the women in our workforce, 0:04:48.800 --> 0:04:51.479 and we know we want to create a culture that 0:04:51.640 --> 0:04:54.680 works for them, and we want to create uh, you know, 0:04:54.760 --> 0:04:59.280 help for them because they have children. Having children is 0:04:59.320 --> 0:05:02.280 the absolute the best thing thing. I have three boys, 0:05:02.880 --> 0:05:05.679 best thing ever. But you know, it's a lot of work, 0:05:05.839 --> 0:05:09.360 and especially when they're young. So we need to make 0:05:09.400 --> 0:05:12.960 sure that employers step up and not do this as 0:05:13.000 --> 0:05:16.080 a nice to have. This is a must have if 0:05:16.120 --> 0:05:19.599 you are going to be competitive all right along that front, Karen, 0:05:19.760 --> 0:05:22.680 You know, we see more and more talk, We hear 0:05:22.720 --> 0:05:24.800 more and more talk about diversity from some of the 0:05:24.880 --> 0:05:29.839 larger corporations. Is that real? Is you see real change 0:05:29.839 --> 0:05:32.720 occurring or is it more in the department lip service? 0:05:34.320 --> 0:05:38.200 You know, we're not quite at that inflection point in 0:05:38.279 --> 0:05:41.919 terms of the corporate diversity programs. I just wrote a 0:05:41.960 --> 0:05:44.000 case for Harvard Business School and one of the big 0:05:44.080 --> 0:05:46.560 tech companies, one of them you know whose name you 0:05:46.600 --> 0:05:52.320 say every day and it you know it is really 0:05:52.360 --> 0:05:59.520 focused on doing a real diversity, equity and inclusion program. 0:05:59.600 --> 0:06:02.320 And they're philosophy is that's where they're going to get 0:06:02.360 --> 0:06:05.839 competitive advantage. It was very interesting to go deep in 0:06:05.880 --> 0:06:09.599 this because it was a persuasive argument that if you 0:06:09.640 --> 0:06:12.479 want to make your customers happy, you have to have 0:06:12.800 --> 0:06:16.640 a happy and inclusive workplace. If you want to have 0:06:16.960 --> 0:06:21.599 diverse customers, you want to have a diverse and inclusive 0:06:21.680 --> 0:06:24.400 workplace and people who are not spending any of their 0:06:24.440 --> 0:06:27.200 mind share worrying about am I being left out of 0:06:27.279 --> 0:06:32.000 this meeting for some reason? So I am persuaded that, uh, 0:06:32.160 --> 0:06:35.360 the ones who get it, which is not everybody, will 0:06:35.400 --> 0:06:39.080 have competitive advantage. Interesting, We will follow up on that. 0:06:39.160 --> 0:06:41.520 Karen Mills, thank you so much for joining us. We 0:06:41.560 --> 0:06:45.559 appreciate that. Karen Mills, Senior fellow Harvard Business School, former 0:06:45.600 --> 0:06:49.360 small business administrator for President Obama as well getting her 0:06:49.400 --> 0:06:53.400 thoughts on women in the workplace and the sheet session 0:06:54.120 --> 0:06:57.320 in which women have been hit harder and Karen shared 0:06:57.440 --> 0:07:00.240 some statistics there. Women have been hit harder in terms 0:07:00.240 --> 0:07:03.800 of unappoyment and other economic metrics during this pandemic and 0:07:03.880 --> 0:07:09.040 during the recession, insulting well. In the equity markets, it's 0:07:09.080 --> 0:07:12.080 really been about the rotation trade really since about September 0:07:12.080 --> 0:07:15.400 of last year. Some of those more cyclical sectors such 0:07:15.440 --> 0:07:17.800 as energies such as banking have been out performing some 0:07:17.880 --> 0:07:20.640 of the typical drivers of this market, some of the 0:07:20.720 --> 0:07:24.280 large kept technology names. The question is how much more 0:07:24.560 --> 0:07:26.960 does that trade have left and where should we be 0:07:27.000 --> 0:07:30.120 looking in the markets these days? Lisa Schaalett, she's a 0:07:30.200 --> 0:07:33.520 chief investment officer at Morgan Stanley Wealth Management. She joins us, 0:07:33.560 --> 0:07:37.400 we always appreciate Lisa's opinion. So, Lisa, again, the rotation 0:07:37.440 --> 0:07:39.720 trade has been a really interesting trade for a lot 0:07:39.760 --> 0:07:42.400 of investors. Um, how much more do you think has 0:07:42.480 --> 0:07:49.000 left to go here in that type of portfolio? Look, 0:07:49.080 --> 0:07:52.160 our perspective is that, you know, a lot of these sectors, 0:07:52.160 --> 0:07:56.960 whether we're talking about financials, energy, industrials, infrastructure, you know, 0:07:57.080 --> 0:08:02.760 parts of consumer services and consumer durables have really been 0:08:02.840 --> 0:08:06.640 left behind, not only uh during the recession, but we're 0:08:06.720 --> 0:08:11.280 left behind for the entire last business cycle. Uh. You 0:08:11.320 --> 0:08:15.160 know that we saw from from you know, the post pandemic. Uh. 0:08:15.200 --> 0:08:16.920 And so we think that there's you know, quite a 0:08:16.920 --> 0:08:19.840 lot more to go. And uh, you know, this is 0:08:19.880 --> 0:08:23.960 not simply about economic growth and and that's especially true 0:08:24.040 --> 0:08:28.680 of uh, some of the services, more cyclical services businesses. 0:08:28.720 --> 0:08:30.440 And you know, one of the things that we've talked 0:08:30.440 --> 0:08:33.360 a lot about is that in this new business cycle 0:08:33.440 --> 0:08:38.120 that we're entering, the opportunities for some of these UH 0:08:38.160 --> 0:08:43.720 cyclicals to really embrace and optimize on digitization, optimize on 0:08:43.720 --> 0:08:47.520 some of the lessons learned from the pandemic on contactless 0:08:47.520 --> 0:08:50.800 business models. Means that they're not just going to benefit 0:08:50.880 --> 0:08:53.360 from a pickup in economic growth, but they're gonna pick up, 0:08:53.960 --> 0:08:57.679 uh benefit from a pickup in margins and return on assets. 0:08:57.720 --> 0:09:00.760 I really think some of these companies are gonna, uh, 0:09:00.920 --> 0:09:05.960 you know, see some some very big improvements uh in 0:09:05.960 --> 0:09:11.040 in moving towards asset light business models. Well, here's the tension, though, Lisa, 0:09:11.360 --> 0:09:14.040 is that people see very fast growth, at least in 0:09:14.040 --> 0:09:16.680 the near term, and yet we've got a FED that's 0:09:16.720 --> 0:09:20.040 talking about inflation remaining low. Janet Yellen was speaking at 0:09:20.120 --> 0:09:23.520 MSNBC moments ago and Treasure Secretary, and she said that 0:09:23.600 --> 0:09:26.679 she doesn't think that the stimulus bill will be uh 0:09:26.800 --> 0:09:29.920 something that will cause inflation problems. Do you buy this? 0:09:29.960 --> 0:09:32.360 I mean, isn't there sort of an uncomfortable reality here 0:09:32.360 --> 0:09:38.800 of fast growth yet no inflation, which is sort of unsustainable. Look, 0:09:38.840 --> 0:09:43.320 it's it's it's always a daunting thing to disagree with 0:09:43.320 --> 0:09:46.040 with people like you know, the head of the bed 0:09:46.120 --> 0:09:48.719 and your own fowel, and and certainly do you know 0:09:48.800 --> 0:09:52.000 Janet yelling at at Treasury and so you know what 0:09:52.040 --> 0:09:55.560 my comments are are obviously made with a huge degree 0:09:55.559 --> 0:10:00.200 of humility, uh and respect for for them. Uh. But look, 0:10:00.240 --> 0:10:04.480 I do think that while certainly, uh, there's lots of 0:10:04.520 --> 0:10:07.920 evidence that that some of the inflationary pressures, especially those 0:10:08.000 --> 0:10:12.400 related to the supply chain, um, are are probably going 0:10:12.440 --> 0:10:15.560 to be transitory. And we know that very often, you know, 0:10:15.760 --> 0:10:19.760 big moves we've seen commodity prices are transitory. Uh. The 0:10:19.840 --> 0:10:22.240 reality is that we think that there are some other 0:10:22.360 --> 0:10:26.400 things going on here. Uh. The degree to which fiscal 0:10:26.480 --> 0:10:31.239 stimulus uh, you know, in this recession has gone directly 0:10:31.840 --> 0:10:36.720 uh too small businesses and directly to households is relevant. Um. 0:10:36.760 --> 0:10:41.040 It's coming at a time when there is behavioral pent 0:10:41.160 --> 0:10:46.280 up demand for consumer services, for travel, for leisure, for entertainment, 0:10:46.920 --> 0:10:52.319 and there is household balance sheet capacity to spent. And 0:10:52.400 --> 0:10:57.000 so what's different for us this time is that we 0:10:57.080 --> 0:11:01.839 actually are believers that monetary velocity is going to be 0:11:02.760 --> 0:11:05.120 uh picking up, is going to be one of the 0:11:05.200 --> 0:11:09.320 drivers of inflation. Uh. And we don't think that this 0:11:09.400 --> 0:11:11.880 is going to be a cycle like like uh the 0:11:12.000 --> 0:11:17.959 last one where deleveraging among the banks and deleveraging among 0:11:18.040 --> 0:11:22.440 households prevented money velocity from picking up. And that's why 0:11:22.480 --> 0:11:25.840 you were able to see the Fed print money but 0:11:26.000 --> 0:11:28.880 not have inflation. So that's that's the thing that's different 0:11:28.920 --> 0:11:31.800 to us this time is is fiscal and it's the 0:11:31.920 --> 0:11:36.480 directness of the fiscal right, It's it's not CAx cuts, Lisa. 0:11:36.960 --> 0:11:39.079 I'm gonna let you go. But before I do, how 0:11:39.160 --> 0:11:41.400 high can yields go before it stops the equity rally? 0:11:41.520 --> 0:11:45.880 Just twenty seconds? Uh? Yeah, So unfortunately I probably don't 0:11:45.920 --> 0:11:48.959 have a twenty second answer on that. Uh. As running 0:11:48.960 --> 0:11:50.520 at a time, I wish we had more time with 0:11:50.559 --> 0:11:55.840 your I know, but but look, uh, you know our 0:11:55.960 --> 0:11:59.000 our senses that um, you know this is all about 0:11:59.080 --> 0:12:02.320 equity risk for me. Um. And that means uh that 0:12:02.600 --> 0:12:04.840 you know, rates can continue to go up and not 0:12:05.000 --> 0:12:09.199 hurt stocks if earnings estimates are also going up. Uh. 0:12:09.200 --> 0:12:14.840 And so our our our our our our cents however, 0:12:15.040 --> 0:12:18.720 is that we're reaching a peak and earnings revisions bread 0:12:19.360 --> 0:12:22.839 uh And therefore, you know, any further move higher in rates. 0:12:23.160 --> 0:12:24.600 If we were to get, you know, into the one 0:12:24.720 --> 0:12:29.760 seventy five range, it starts becoming problematic unless unless we 0:12:29.840 --> 0:12:32.800 really can can start looking to two and much much 0:12:32.880 --> 0:12:36.760 higher earnings. So we've got up as the bookcase on 0:12:37.000 --> 0:12:41.199 SMP index. Uh, you know, but but not a lot 0:12:41.240 --> 0:12:44.080 more from here. Lisa Shalit, chief investment officer at Morgan 0:12:44.120 --> 0:12:48.960 Stanley Wealth Management, thank you so much. Let's turn our 0:12:49.000 --> 0:12:52.080 attention to the global energy markets. I'm looking at w 0:12:52.160 --> 0:12:54.559 t I crew here, sixty five dollars, fifty five cents, 0:12:54.960 --> 0:12:57.520 down about fifty five cents today, but of course oil 0:12:57.559 --> 0:13:01.040 has been on a major move higher. A w t 0:13:01.200 --> 0:13:04.000 I we touched almost sixty eight dollars today, so a 0:13:04.040 --> 0:13:09.079 big move, presumably a play on higher global demand going forward. 0:13:09.280 --> 0:13:11.800 And then we also had OPEC kind of holding supply steady. 0:13:11.880 --> 0:13:14.800 Let's get the latest on the global energy markets. We 0:13:14.880 --> 0:13:18.319 do that with Regina Mayor, Global Energy head for KPMG. 0:13:18.800 --> 0:13:22.319 So Regina again, big move up here in global crude. 0:13:22.360 --> 0:13:25.880 What's your takeaway? Well, we're at a nearly two year high. 0:13:25.960 --> 0:13:29.480 We haven't seen prices like this since April, and I 0:13:29.480 --> 0:13:32.800 think we're going to continue to see a pretty buoyant 0:13:32.840 --> 0:13:36.280 price for the next few months. US shale producers are 0:13:36.440 --> 0:13:40.480 committed to staying the course and not radically increasing production, 0:13:40.880 --> 0:13:43.959 and it's sort of a low risk, high reward strategy 0:13:44.000 --> 0:13:47.480 for OPEC plus to pursue to keep the supply out 0:13:47.520 --> 0:13:49.959 of the market and continue to drive the price closer 0:13:50.000 --> 0:13:53.079 to seventy dollars per barrel. They need that oil revenue 0:13:53.120 --> 0:13:56.359 most of them still isn't that doesn't meet their budgetary 0:13:56.400 --> 0:13:58.880 needs for their countries, and so right now they're going 0:13:58.920 --> 0:14:01.760 to play it for as long as possibly can. Although 0:14:01.920 --> 0:14:04.439 you know, the move overnight was really interesting and I'm 0:14:04.440 --> 0:14:07.240 wondering on a larger scale, there were these attacks in 0:14:07.240 --> 0:14:09.599 Saudi Arabian oil production sites that are some of the 0:14:09.720 --> 0:14:11.880 richest in the worlds that I believe produced something like 0:14:11.880 --> 0:14:15.120 seven of all the oil consumed UH any year have 0:14:15.200 --> 0:14:18.760 that capacity, and there was nobody injured, there were no 0:14:18.800 --> 0:14:22.640 production sites actually taken offline, and yet oil prices searched 0:14:22.880 --> 0:14:25.640 in particular, Brent, what do you make of that in 0:14:25.760 --> 0:14:29.560 terms of what it means about the supply demand dynamic. Well, 0:14:29.600 --> 0:14:32.640 I think it means that the market is starting to 0:14:32.640 --> 0:14:36.720 worry about the potential coming together of demand and supply. 0:14:36.920 --> 0:14:38.800 There was a view that we would hit a point 0:14:38.840 --> 0:14:40.920 in the market where things would get pretty tight, that's 0:14:40.960 --> 0:14:44.360 the supply overhang would be gone, demand would return to 0:14:44.800 --> 0:14:47.760 post a pre pandemic levels, and that we would get 0:14:47.760 --> 0:14:51.160 a spike in the crude price. What we're seeing now 0:14:51.360 --> 0:14:54.760 is the reality of that potential coming together. But from 0:14:54.800 --> 0:14:59.400 what I see, the fundamentals don't actually require the price 0:14:59.440 --> 0:15:02.560 to go that high. I think it's still overly frothy 0:15:02.680 --> 0:15:05.200 um and a little bit overly worried because the supply 0:15:05.320 --> 0:15:07.560 of a million and a half barrels per day that 0:15:07.640 --> 0:15:10.240 open plus is currently keeping off the market can pretty 0:15:10.280 --> 0:15:13.320 quickly come back into the market. But again, the industry 0:15:13.520 --> 0:15:16.120 is grateful for the higher price, so we'll take it 0:15:16.160 --> 0:15:19.040 for as long as we can get it. All right, Regina, 0:15:19.440 --> 0:15:21.720 talk to us about our good friends in the US 0:15:21.760 --> 0:15:24.480 shell patch here with w t I, it's sixty bucks 0:15:24.520 --> 0:15:28.200 a barrel. Are they making money? Are they fixing their 0:15:28.240 --> 0:15:32.000 balance sheets? What are they doing here? They're definitely making 0:15:32.080 --> 0:15:34.960 money now. Most of them have even made commitments at 0:15:35.040 --> 0:15:40.400 any dollars over forty per barrel would be would be 0:15:40.480 --> 0:15:44.760 given back to shareholders as UM dividends or being used 0:15:44.840 --> 0:15:48.040 for debt repayments, or being used for stock buy backs, 0:15:48.200 --> 0:15:51.880 so we're talking about it differential. At this point, that's 0:15:51.920 --> 0:15:54.200 a lot of cash that they'll be able to figure 0:15:54.240 --> 0:15:56.040 out what to do with. I think they're going to 0:15:56.120 --> 0:15:58.880 stay the course relative to little to no production increases 0:15:58.960 --> 0:16:01.200 because they've told us to rights to the street that 0:16:01.280 --> 0:16:06.160 they're going to be fiscally disciplined cash preservation, returning those 0:16:06.200 --> 0:16:08.960 dollars to shareholders, and they have to continue to tell 0:16:09.040 --> 0:16:11.560 that story. There may be fringe producers that will get 0:16:11.680 --> 0:16:14.560 pretty excited and try to go drill, baby, drill, but 0:16:14.640 --> 0:16:18.000 I don't think we'll see that in well, and that's 0:16:18.040 --> 0:16:19.640 been kind of the bet right. I mean, a lot 0:16:19.640 --> 0:16:22.600 of people have kind of dismissed the swing production factor 0:16:22.720 --> 0:16:25.680 of shale producers, the idea that they won't come online 0:16:25.720 --> 0:16:28.680 that quickly because they've you know, found light the light 0:16:28.800 --> 0:16:30.920 and I have now production discipline. Do you think that 0:16:31.000 --> 0:16:34.400 there are any signs to challenge that assumption that perhaps 0:16:34.480 --> 0:16:37.240 we could see the shale producers rampant production back up 0:16:37.600 --> 0:16:41.160 far beyond what people are expecting, not in the short term, Lisa, 0:16:41.320 --> 0:16:43.480 because it's not a tap that they can turn on 0:16:43.600 --> 0:16:46.120 and off, and we'd have to start seeing rig counts 0:16:46.160 --> 0:16:49.720 go up pretty dramatically UM and flows coming coming up 0:16:49.720 --> 0:16:52.640 pretty dramatically. We've been study at eleven million barrels per 0:16:52.720 --> 0:16:55.880 day in production in the US UM, but we were 0:16:56.000 --> 0:16:58.720 off two million barrels per day with the storm, and 0:16:58.880 --> 0:17:02.440 so I think we'll stay steady at eleven million barrels 0:17:02.480 --> 0:17:06.119 per day, and I think the industry will stay disciplined 0:17:06.240 --> 0:17:08.840 at least through the next couple of quarters. I'm not 0:17:08.920 --> 0:17:11.480 saying they're gonna stay disciplined even through the end of 0:17:11.520 --> 0:17:14.560 the year, because it's just too hard to resist drilling 0:17:14.640 --> 0:17:17.200 at at a sixty plus dollar per barrel, But that's 0:17:17.240 --> 0:17:20.359 when I think OPEC plus returns that supply to the market, 0:17:20.680 --> 0:17:22.840 so they sort of keep it at this goldilocks price. 0:17:22.920 --> 0:17:25.040 It's not too hot, it's not too cold, and it 0:17:25.160 --> 0:17:30.160 maintains maximum revenue for the OPEC plus. Producers were surprised 0:17:30.480 --> 0:17:33.560 up just quickly surprised by OPEC plus kind of keeping 0:17:33.600 --> 0:17:37.119 supply steady. I was not, actually, I know a lot 0:17:37.160 --> 0:17:39.960 of analysts had predicted that at least a million barrels 0:17:40.040 --> 0:17:42.760 per day would come back. I didn't see the rationale 0:17:42.880 --> 0:17:45.760 for that because they had been I mean, the Saudias 0:17:45.800 --> 0:17:49.399 in particular have demonstrated they have their hand on the 0:17:49.440 --> 0:17:52.960 steering wheel relative to how well they're managing crude price. 0:17:53.040 --> 0:17:55.600 They're not ready to take their hands off the steering 0:17:55.640 --> 0:17:58.240 wheel and lease things up for grabs again. So I 0:17:58.400 --> 0:18:02.800 wasn't surprised, but um I am surprised by the significant 0:18:02.840 --> 0:18:05.840 buoyancy in the price. Regina Mayor, thank you so much 0:18:05.840 --> 0:18:08.320 for being with us. Regina Mayor, Global Energy head at 0:18:08.359 --> 0:18:11.240 KPMG talking about some of the massive greens that we've 0:18:11.280 --> 0:18:14.320 seen in oil prices and really some pretty big swings 0:18:14.359 --> 0:18:17.280 overnight and Paul, it was interesting to see that production 0:18:17.480 --> 0:18:21.080 wasn't taken offline and yet still there was a pretty 0:18:21.119 --> 0:18:24.159 sizeable move, particularly the price of Brent. Yeah, exactly right, 0:18:24.240 --> 0:18:25.879 and we did see that spike in the morning, but 0:18:25.920 --> 0:18:29.560 it's since come back here and again, as Regina was suggesting, 0:18:30.160 --> 0:18:32.800 shale producers are going to keep disciplined. I interesting to 0:18:32.840 --> 0:18:35.480 see to watch throughout the year, at least, she said, 0:18:36.400 --> 0:18:38.639 in the next couple of months. There's a big caveat there. 0:18:38.720 --> 0:18:41.040 She said, you know, the near term is truly the 0:18:41.160 --> 0:18:43.840 near term. Right now we are seeing gains throughout the 0:18:43.880 --> 0:18:47.959 commodity complex as people foresee stronger growth ahead. Right now, 0:18:48.160 --> 0:18:51.399 we are foreseeing more legislation and possibly the passage of 0:18:51.440 --> 0:18:56.680 that one point nine trillion dollars stimulus tomorrow. We're talking 0:18:56.760 --> 0:19:00.720 about vaccines, We're talking about the pandemic almost ended ending. 0:19:00.840 --> 0:19:04.639 We're forgetting the energy crisis in Texas, and yet Elon 0:19:04.760 --> 0:19:07.479 Musk is not. He is working on a potential solution 0:19:07.560 --> 0:19:10.399 despite the fact the energy of energy officials in that 0:19:10.560 --> 0:19:13.640 region tried to peg some of the problems on renewable 0:19:13.760 --> 0:19:16.000 energy sources. Joining us now to tease out all the 0:19:16.080 --> 0:19:19.080 different parts of this evolving story, as Marine Malik, a 0:19:19.119 --> 0:19:22.040 Bloomberg News reporter covering all things energy, Marine, can you 0:19:22.160 --> 0:19:26.360 just start by laying out the energy crisis in Texas 0:19:26.600 --> 0:19:29.600 and how it's been connected to the advent and the 0:19:29.720 --> 0:19:33.960 surge in renewable energies in that state. Yeah, So Texas 0:19:34.320 --> 0:19:39.760 had a widespread generation failure um last month, and where 0:19:39.840 --> 0:19:42.600 you had the state and most of the country is 0:19:42.720 --> 0:19:46.880 mostly reliant on natural gas. Natural gas plants tripped offline 0:19:47.000 --> 0:19:49.879 because they were frozen or they couldn't get fuel, So 0:19:50.520 --> 0:19:54.000 you had, like the US, more reliant on natural gas 0:19:54.080 --> 0:19:58.080 than ever not able to get get gas lay a pipeline. 0:19:58.119 --> 0:20:00.840 And this is we've never seen this tested on this 0:20:01.040 --> 0:20:05.840 level before. Power markets, like the grids Texas, like whichever 0:20:05.920 --> 0:20:09.600 grid do you think about, is mostly geared towards preparing 0:20:09.720 --> 0:20:13.800 for summer. So the demand wasn't was supposed to match 0:20:13.960 --> 0:20:17.760 or maybe even exceed summer demand in in Texas, which 0:20:17.840 --> 0:20:19.919 is amazing just to think about that. You'd have more 0:20:20.000 --> 0:20:22.840 people turning on power in winter than in summer when 0:20:22.880 --> 0:20:25.880 it's like a hundred plus degrees UM. But you had 0:20:25.960 --> 0:20:31.040 generation failure across across the board, like wind generation of froze. 0:20:31.480 --> 0:20:34.720 You had obviously solar when there's no when there's cloud 0:20:34.800 --> 0:20:37.960 coverage and at night you can't get solar panels to work. 0:20:38.240 --> 0:20:41.680 UM and coal piles froze up. And a lot of 0:20:41.720 --> 0:20:45.240 the blame early on was was placed on wind and 0:20:45.600 --> 0:20:49.159 UM and solar because they are intimate and resources. The 0:20:49.280 --> 0:20:53.200 difference is that and and they did see a large 0:20:53.280 --> 0:20:56.240 chunk of generation shut off, But the difference was the 0:20:56.320 --> 0:20:59.880 grid operator was expecting that What has been apparent from 0:21:00.680 --> 0:21:04.000 the last month's events was they now have to rethink 0:21:04.080 --> 0:21:08.280 how to prepare for winter extremes. If there's another repeat. 0:21:09.160 --> 0:21:11.280 All right, So that's kind of a summary, but we 0:21:11.320 --> 0:21:17.720 appreciate that summary of what occurred now in rides elon Musk. 0:21:18.160 --> 0:21:22.399 What is Tesla doing in the Texas energy market? So 0:21:22.720 --> 0:21:25.520 to be fair, um Tesla was likely working on this 0:21:25.680 --> 0:21:28.119 project for a while, but it's interesting we don't know 0:21:28.280 --> 0:21:32.520 exactly what what his intention is. But batteries can play 0:21:32.560 --> 0:21:35.159 several rules. They are seen as a critical part of 0:21:35.600 --> 0:21:40.120 integrated integrating more renewables, and Texas like doesn't have state 0:21:40.240 --> 0:21:43.560 mandates or subsidies. They do like like other states do, 0:21:44.119 --> 0:21:48.040 to integrate a certain amount. So it's really like costs 0:21:48.119 --> 0:21:50.480 for solar and wind have plunged so much. You're seeing 0:21:50.600 --> 0:21:55.239 Texas like adopt these renewable sources in and at an 0:21:55.280 --> 0:21:58.880 accelerating pace. So as you get more intimit and resources, 0:21:59.400 --> 0:22:01.879 you need more batteries to back that up. And so 0:22:02.800 --> 0:22:04.680 there there are a couple of ways at least that 0:22:04.800 --> 0:22:09.040 tests I can can have a role in in this market. 0:22:09.160 --> 0:22:12.120 They can you know, at night, when there's too much 0:22:12.440 --> 0:22:15.199 um wind or or in the day when there's too 0:22:15.320 --> 0:22:19.240 much solar, it sends. They call it the dunker Duck curve. 0:22:19.320 --> 0:22:21.600 When you have too much power and not enough demand 0:22:21.840 --> 0:22:24.600 and it causes prices to collapse. So what we've seen 0:22:24.680 --> 0:22:28.040 battery makers do is come in during those low price 0:22:28.200 --> 0:22:31.920 periods soak up like that extra power um that is 0:22:31.960 --> 0:22:35.000 just sitting there really cheap or even being paid to 0:22:35.160 --> 0:22:38.200 take that power, and they store it in batteries, and 0:22:38.280 --> 0:22:41.119 then when prices are high, like in the evening like 0:22:41.280 --> 0:22:44.040 six to eight pm, when you know, like people like 0:22:44.160 --> 0:22:46.400 the sun is going down and and you have people 0:22:46.440 --> 0:22:48.959 turning on lights like, then they sell it back at 0:22:49.040 --> 0:22:53.960 that point. Batteries can also provide grid stability services, so 0:22:54.200 --> 0:22:58.000 like make sure power is flowing at this like narrow 0:22:58.160 --> 0:23:01.200 range it always has to at the hurts, and provide 0:23:01.240 --> 0:23:04.920 frequency control. So they could play multiple markets. We don't 0:23:04.920 --> 0:23:07.359 know exactly what they're going to do, but there's definitely 0:23:07.400 --> 0:23:10.200 opportunity there well. And the reason why I connected the 0:23:10.280 --> 0:23:13.040 to the energy crisis a couple of weeks ago in 0:23:13.160 --> 0:23:17.000 Texas and these batteries is because they kind of go together, 0:23:17.119 --> 0:23:19.840 this idea that there could be a missing link here 0:23:19.880 --> 0:23:23.200