1 00:00:00,240 --> 00:00:11,480 Speaker 1: Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 2 00:00:11,560 --> 00:00:13,640 Speaker 1: with Scarletfoo and Paul Sweeney. 3 00:00:13,720 --> 00:00:15,840 Speaker 2: How do you think the FED is looking at tariffs? 4 00:00:15,960 --> 00:00:17,160 Speaker 2: The uncertainty of terriffs. 5 00:00:17,280 --> 00:00:19,720 Speaker 3: Let's take a look at the sectors and how they performed. 6 00:00:19,760 --> 00:00:22,440 Speaker 2: A lot of investors getting whipsaled every day by news events, 7 00:00:22,520 --> 00:00:24,520 Speaker 2: breaking market headlines. 8 00:00:24,000 --> 00:00:26,239 Speaker 1: And corporate news from across the globe. 9 00:00:26,280 --> 00:00:28,800 Speaker 3: Could we see a market disruption of market event? 10 00:00:28,960 --> 00:00:31,000 Speaker 2: So people just too exuberant out there? 11 00:00:31,120 --> 00:00:33,640 Speaker 3: You see some so called low quality stocks driving this 12 00:00:33,760 --> 00:00:34,520 Speaker 3: short term rally. 13 00:00:34,560 --> 00:00:39,360 Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 14 00:00:39,520 --> 00:00:41,440 Speaker 1: YouTube and Bloomberg Originals. 15 00:00:42,400 --> 00:00:44,720 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 16 00:00:44,720 --> 00:00:47,239 Speaker 2: business stories impacting Wall Street and the global markets. Each 17 00:00:47,280 --> 00:00:49,160 Speaker 2: and every week, we provide end up research and data 18 00:00:49,200 --> 00:00:50,880 Speaker 2: on some of the two thousand companies in one hundred 19 00:00:50,880 --> 00:00:53,680 Speaker 2: and thirty industries our analysts cover worldwide. Today, we'll look 20 00:00:53,720 --> 00:00:56,520 Speaker 2: at why the computer tech company Oracle reported disappointing cloud 21 00:00:56,760 --> 00:00:58,880 Speaker 2: sales last quarter. Plus, we'll look at how the one 22 00:00:58,880 --> 00:01:02,120 Speaker 2: trillion dollar conglomerate for Ruture Hathaways preparing for the retirement 23 00:01:02,160 --> 00:01:05,080 Speaker 2: of CEO Warren Buffett. At first, we begin with a 24 00:01:05,080 --> 00:01:09,680 Speaker 2: survey from Bloomberg Intelligence entitled AI's Cross Industry Disruption. It 25 00:01:09,760 --> 00:01:13,840 Speaker 2: dives into how various industries are approaching AI implementation. It's 26 00:01:13,880 --> 00:01:16,280 Speaker 2: also the largest study of c suite executives that BI 27 00:01:16,440 --> 00:01:19,520 Speaker 2: has conducted. From more on this guest host Christine Keino 28 00:01:19,560 --> 00:01:22,720 Speaker 2: and I were joined by Matthew Bloxham Bloomberg Intelligence tech Analysts. 29 00:01:22,920 --> 00:01:25,600 Speaker 2: We first asked Matt to break down this BI survey. 30 00:01:26,080 --> 00:01:30,319 Speaker 4: So this was a big survey we did, polling the 31 00:01:30,440 --> 00:01:33,639 Speaker 4: views of six hundred and four c suite executives across 32 00:01:33,640 --> 00:01:36,319 Speaker 4: the range of industries across the world. Where do you 33 00:01:36,400 --> 00:01:38,520 Speaker 4: kind of get trying to get a sense on how 34 00:01:38,560 --> 00:01:42,720 Speaker 4: corporates are assessing the current AI situation and what they 35 00:01:42,720 --> 00:01:45,320 Speaker 4: think is going to do to their businesses over the 36 00:01:45,360 --> 00:01:47,360 Speaker 4: next kind of two to three years. So we kind 37 00:01:47,360 --> 00:01:50,920 Speaker 4: of looked at the motivations for AI investment, what it 38 00:01:50,960 --> 00:01:53,120 Speaker 4: could do to headcount, well they're expecting in terms of 39 00:01:53,280 --> 00:01:56,320 Speaker 4: revenue and profit uptick. And we had some kind of 40 00:01:56,320 --> 00:01:59,919 Speaker 4: interesting results out of the survey, you know, not surprise, 41 00:02:00,360 --> 00:02:03,280 Speaker 4: perhaps AI is very much at the top of the 42 00:02:03,280 --> 00:02:08,760 Speaker 4: c suite agenda. Something like thirty six percent of those 43 00:02:08,840 --> 00:02:11,560 Speaker 4: polls said it was their top strategic priority. In another 44 00:02:11,600 --> 00:02:14,640 Speaker 4: forty seven percent said it was within the top three 45 00:02:16,360 --> 00:02:20,600 Speaker 4: strategic objectives for them. When we looked and asked about 46 00:02:20,840 --> 00:02:26,040 Speaker 4: the main objectives behind their AI strategies, what came out 47 00:02:26,120 --> 00:02:31,440 Speaker 4: top was improving operational efficiency, which was number one with 48 00:02:31,680 --> 00:02:34,560 Speaker 4: forty seven percent of the respondents, and in second place 49 00:02:34,919 --> 00:02:39,239 Speaker 4: was boosting a revenue at twenty one percent. Interestingly, headcount 50 00:02:39,320 --> 00:02:42,560 Speaker 4: cuts were quite low down the pecking order. Only thirteen 51 00:02:42,680 --> 00:02:46,520 Speaker 4: percent of respondents put that as their top priority, and 52 00:02:46,600 --> 00:02:49,760 Speaker 4: actually it was the highest ranked in terms of the 53 00:02:49,880 --> 00:02:54,120 Speaker 4: least priority. So I think it's interesting that companies are 54 00:02:54,120 --> 00:02:57,880 Speaker 4: looking to boost productivity, but they're not afraid to make 55 00:02:57,960 --> 00:03:02,400 Speaker 4: investments both in technology and headcount in the near term 56 00:03:02,480 --> 00:03:05,600 Speaker 4: to kind of release those opportunities. And actually, on a 57 00:03:05,639 --> 00:03:10,480 Speaker 4: three year view, sixty two percent of respondents said they 58 00:03:10,520 --> 00:03:14,679 Speaker 4: expect AI to lead to an increase in headcount over 59 00:03:14,720 --> 00:03:17,320 Speaker 4: the next three years, an increase, not a decrease, and 60 00:03:17,360 --> 00:03:19,960 Speaker 4: the average increase they're looking at is about four percent. 61 00:03:20,600 --> 00:03:23,320 Speaker 4: So that kind of flies in the face a little 62 00:03:23,320 --> 00:03:24,320 Speaker 4: bit of you know, a lot of the kind of 63 00:03:24,400 --> 00:03:29,480 Speaker 4: headlines we see about job cuts. I think overall, corporate 64 00:03:29,600 --> 00:03:32,280 Speaker 4: see the need to invest more in staff, you know, 65 00:03:32,320 --> 00:03:36,640 Speaker 4: to rule out their AI strategies in the coming years. Yeah. 66 00:03:36,720 --> 00:03:39,080 Speaker 5: Yeah, well, Matt, you mentioned thirty six percent of C 67 00:03:39,160 --> 00:03:42,000 Speaker 5: suites now rank AA as their top priority. That number 68 00:03:42,000 --> 00:03:44,840 Speaker 5: actually strikes me as a little low. I would have 69 00:03:44,880 --> 00:03:47,280 Speaker 5: thought it would be at least half of the people's survey. 70 00:03:47,360 --> 00:03:49,280 Speaker 5: But what do you think, is that something that's just 71 00:03:49,600 --> 00:03:52,560 Speaker 5: set to grow in future surveys as really kind of 72 00:03:52,640 --> 00:03:56,560 Speaker 5: AI becomes central to a lot of companies workflows these days. 73 00:03:57,840 --> 00:03:59,760 Speaker 4: Yeah, I think so. I mean, you know, obviously, if 74 00:03:59,800 --> 00:04:01,640 Speaker 4: you if you add the forty seven percent that set, 75 00:04:01,680 --> 00:04:03,720 Speaker 4: it's in the top three. I mean, you know, an 76 00:04:03,720 --> 00:04:07,920 Speaker 4: overall top three priority gives you the kind of majority 77 00:04:07,960 --> 00:04:11,440 Speaker 4: of the respondents. And obviously companies do have to wrestle 78 00:04:11,480 --> 00:04:13,840 Speaker 4: with lots of other issues too. You know that there 79 00:04:13,920 --> 00:04:17,039 Speaker 4: is going on in the world beyond AI, and obviously 80 00:04:17,240 --> 00:04:21,440 Speaker 4: trade policy is another big thing that's probably on the 81 00:04:21,800 --> 00:04:24,880 Speaker 4: radar for a lot of these companies too. So yeah, 82 00:04:24,920 --> 00:04:27,440 Speaker 4: you know, maybe it will kind of inch up, But 83 00:04:27,520 --> 00:04:30,240 Speaker 4: I think you've given that aggregate, you know, age percent 84 00:04:30,279 --> 00:04:36,000 Speaker 4: plus in the top three. Probably what you'd expect to see, Matthew. 85 00:04:35,640 --> 00:04:37,440 Speaker 2: How about return on investment here? That's kind of what 86 00:04:37,480 --> 00:04:39,840 Speaker 2: the street's starting to ask for now. We know these 87 00:04:39,880 --> 00:04:43,400 Speaker 2: companies can spend big money on AI, but what's the 88 00:04:43,440 --> 00:04:44,400 Speaker 2: return for shareholders? 89 00:04:45,000 --> 00:04:47,360 Speaker 4: Yeah, I think that's still very opaque. And actually, when 90 00:04:48,000 --> 00:04:53,400 Speaker 4: we asked the respondents to flag the biggest roadblocks they 91 00:04:53,400 --> 00:04:59,920 Speaker 4: could see to AI deployment, the investment needed in AI, 92 00:05:00,640 --> 00:05:03,920 Speaker 4: and the question marks around the return on investment, we're 93 00:05:03,960 --> 00:05:06,880 Speaker 4: definitely up there amongst some of the most important concerns 94 00:05:07,720 --> 00:05:13,000 Speaker 4: that respondents have, alongside data security and clean data. We 95 00:05:13,080 --> 00:05:16,680 Speaker 4: didn't ask much of the most specific ROI expectations cause 96 00:05:16,680 --> 00:05:18,159 Speaker 4: we just kind of get the sense that it's a 97 00:05:18,160 --> 00:05:22,840 Speaker 4: bit too early to get an accurate read on that. 98 00:05:22,920 --> 00:05:25,479 Speaker 4: I think most companies are still kind of at a 99 00:05:25,560 --> 00:05:28,680 Speaker 4: relatively early stage of their AI trials. You know, lots 100 00:05:28,720 --> 00:05:31,680 Speaker 4: of them have moved out of the kind of testing lms, 101 00:05:31,760 --> 00:05:34,200 Speaker 4: they're into pilot phases, some of them are even moving 102 00:05:34,200 --> 00:05:36,760 Speaker 4: into scale deployment. I think it's fair to say a 103 00:05:36,760 --> 00:05:38,840 Speaker 4: lot of them are not really quite sure yet what 104 00:05:38,920 --> 00:05:41,279 Speaker 4: the return is going to be and how quick it's 105 00:05:41,279 --> 00:05:44,000 Speaker 4: going to come. And obviously it's kind of a bigger 106 00:05:44,440 --> 00:05:47,880 Speaker 4: issue for the wider tech sector. And you mentioned Oracle 107 00:05:47,960 --> 00:05:50,600 Speaker 4: as a kind of barometer for the kind of broader 108 00:05:51,040 --> 00:05:54,479 Speaker 4: pulse on AI, and I think the twenty twenty six 109 00:05:54,600 --> 00:05:56,360 Speaker 4: is going to be a really crucial year for kind 110 00:05:56,360 --> 00:05:59,919 Speaker 4: of what corporates make of the midterm ROI. And you know, 111 00:06:00,080 --> 00:06:02,560 Speaker 4: if they don't see a big ROI, then that's probably 112 00:06:02,560 --> 00:06:05,800 Speaker 4: going to slow the pace of revenue growth, and that's 113 00:06:05,839 --> 00:06:07,479 Speaker 4: going to have a knock on effect to the levels 114 00:06:07,480 --> 00:06:10,240 Speaker 4: of investment we're seeing made by the likes of Oracle 115 00:06:10,520 --> 00:06:12,719 Speaker 4: and Open Eye on the revenues that bringing in. 116 00:06:12,960 --> 00:06:15,799 Speaker 2: All right, thanks to Matthew Bloxam Bloomberg Intelligence tech analyst. 117 00:06:16,240 --> 00:06:18,800 Speaker 2: We move next to some news in the biotech space. 118 00:06:19,080 --> 00:06:21,040 Speaker 2: This week, we heard that the Food and Drug Administration 119 00:06:21,120 --> 00:06:25,400 Speaker 2: is investigating whether COVID nineteen vaccines caused deaths in adults. 120 00:06:25,520 --> 00:06:27,680 Speaker 2: It's part of a safety review that earlier here to 121 00:06:27,800 --> 00:06:30,840 Speaker 2: just be focused on children, and the investigation comes at 122 00:06:30,839 --> 00:06:33,680 Speaker 2: a time when US Health and Human Services Secretary Robert F. 123 00:06:33,760 --> 00:06:37,560 Speaker 2: Kennedy Junior is upbending long standing guidance for a wide 124 00:06:37,640 --> 00:06:40,760 Speaker 2: range of vaccines. From more on this guest host Christina 125 00:06:40,800 --> 00:06:43,760 Speaker 2: Quino and I were joined by Sam Fazzelli, Bloomberg Intelligence 126 00:06:43,800 --> 00:06:47,800 Speaker 2: director of Research for Global Industries and a senior pharmaceuticals analyst. 127 00:06:48,120 --> 00:06:49,920 Speaker 2: We first asked Sam to break down what we know 128 00:06:49,920 --> 00:06:51,400 Speaker 2: about the FDA's investigation. 129 00:06:51,960 --> 00:06:54,080 Speaker 6: We don't know anything. Right. Last week we heard that 130 00:06:54,080 --> 00:06:58,320 Speaker 6: they've got data that shows that there were ten children's deaths. 131 00:06:58,440 --> 00:07:01,680 Speaker 6: Where's the data? Show us? Right? They go and use 132 00:07:02,080 --> 00:07:05,000 Speaker 6: this thing called VERSE, the Vaccine Adverse Events Reporting System, 133 00:07:05,360 --> 00:07:08,120 Speaker 6: which is totally voluntary. I can go on there and 134 00:07:08,240 --> 00:07:12,400 Speaker 6: say I had chicken nuggets just around the time as 135 00:07:12,480 --> 00:07:16,040 Speaker 6: my COVID shot and I had that allergic reaction, and 136 00:07:16,120 --> 00:07:18,200 Speaker 6: they go, oh okay, oh dear, So I can put 137 00:07:18,200 --> 00:07:21,240 Speaker 6: that on there right in order to do an analysis 138 00:07:21,280 --> 00:07:23,400 Speaker 6: of that database, which we as endless try and do, 139 00:07:23,440 --> 00:07:27,080 Speaker 6: which is very complicated because you need all the case background, 140 00:07:27,280 --> 00:07:29,720 Speaker 6: who was that patient, what happened to them? You need 141 00:07:29,760 --> 00:07:33,000 Speaker 6: to do the work. Fine, I believe that they've done 142 00:07:33,000 --> 00:07:36,960 Speaker 6: the work. Show us where's the transparency there here? I'm 143 00:07:36,960 --> 00:07:39,520 Speaker 6: pretty sure I don't know for a fact that they're 144 00:07:39,600 --> 00:07:42,760 Speaker 6: using the same system. Do you see people? I mean, 145 00:07:42,800 --> 00:07:45,280 Speaker 6: of course, that's a ridiculous question for us falling over 146 00:07:45,480 --> 00:07:47,680 Speaker 6: and dying in the streets after getting COVID shots all 147 00:07:47,720 --> 00:07:50,200 Speaker 6: the time. There are the relevant there are issues that 148 00:07:50,280 --> 00:07:52,080 Speaker 6: happen a lot of people to take COVID just these 149 00:07:52,160 --> 00:07:56,160 Speaker 6: days are the elderly, which by definition have a higher 150 00:07:56,200 --> 00:08:00,640 Speaker 6: probability of complications that in general. So we need to 151 00:08:00,760 --> 00:08:02,600 Speaker 6: keep an eye on this. I want to see the 152 00:08:03,200 --> 00:08:07,240 Speaker 6: data and I want it properly scrutinized. Let us do that. 153 00:08:08,480 --> 00:08:11,200 Speaker 5: Yes, well, I mean, obviously, I guess it seems like 154 00:08:11,200 --> 00:08:15,560 Speaker 5: it's in the earth that it is investigation. But I 155 00:08:15,560 --> 00:08:18,080 Speaker 5: mean walk is to kind of the potential impact of this, 156 00:08:18,320 --> 00:08:22,480 Speaker 5: right I Potentially you could affect public health policy, and 157 00:08:22,520 --> 00:08:26,960 Speaker 5: then potentially that will have some bearing on how companies 158 00:08:27,440 --> 00:08:30,440 Speaker 5: move forward, I especially the vaccine providers presumably. 159 00:08:30,960 --> 00:08:33,200 Speaker 6: Yeah, I mean so two or three things can happen. 160 00:08:33,200 --> 00:08:35,160 Speaker 6: The if you can say, well, actually we didn't find 161 00:08:35,160 --> 00:08:37,560 Speaker 6: the link, because it just says that they're looking at it. 162 00:08:38,120 --> 00:08:39,720 Speaker 6: Number two, they say we found the link, We're going 163 00:08:39,760 --> 00:08:42,520 Speaker 6: to put a black box morning into COVID vaccines. Fine, 164 00:08:42,559 --> 00:08:46,679 Speaker 6: that reduces people, that increases people's hesitancy potentially, Or they 165 00:08:46,679 --> 00:08:48,360 Speaker 6: can go and say we want to take it off 166 00:08:48,400 --> 00:08:51,079 Speaker 6: the market. I don't think they'll do that. But let's say, 167 00:08:51,160 --> 00:08:53,720 Speaker 6: let's get there. There are two companies that are most 168 00:08:53,800 --> 00:08:56,640 Speaker 6: exposed to this. Why is there? Of course has is 169 00:08:56,640 --> 00:08:58,880 Speaker 6: one of the companies that sell the vaccine, but I mean, 170 00:08:58,880 --> 00:09:01,320 Speaker 6: you know, there's a lot more going on, right. The 171 00:09:01,360 --> 00:09:04,040 Speaker 6: ones that are much more leveraged to the vaccines are 172 00:09:04,080 --> 00:09:08,920 Speaker 6: Moderna and BioNTech. What I find interesting is a Moderna 173 00:09:09,040 --> 00:09:11,360 Speaker 6: who is much more leveraged to it because they're silly 174 00:09:11,480 --> 00:09:15,199 Speaker 6: in themselves. They have a less of a cash cushion 175 00:09:15,280 --> 00:09:18,120 Speaker 6: than BioNTech has. Let's say, the end of the year 176 00:09:18,160 --> 00:09:20,479 Speaker 6: this year is seven billion dollars in the bank. Biontics 177 00:09:20,480 --> 00:09:23,640 Speaker 6: are eighteen billion dollars in the bank, and yet that's 178 00:09:23,679 --> 00:09:25,600 Speaker 6: the Biotic share price that gets hit post And I 179 00:09:25,640 --> 00:09:30,120 Speaker 6: don't understand why Moderna is more exposed because that cash 180 00:09:30,160 --> 00:09:32,600 Speaker 6: cushion is lower. So if your revenue the drops, then 181 00:09:32,600 --> 00:09:34,320 Speaker 6: you're going to have an issue. Of course, they've been 182 00:09:34,440 --> 00:09:37,439 Speaker 6: very good at cost management, so that's where I think 183 00:09:37,440 --> 00:09:41,000 Speaker 6: this could end up if it goes really the wire 184 00:09:41,040 --> 00:09:43,600 Speaker 6: and they go, right, we're not going to suggest this anymore, 185 00:09:43,600 --> 00:09:46,240 Speaker 6: which would be I think a tragedy for the US. 186 00:09:46,400 --> 00:09:50,079 Speaker 2: So Sam, we've got we've been ten months into this administration. 187 00:09:50,280 --> 00:09:53,280 Speaker 2: We've got a US Health and Human Services Secretary, Robert F. Kennedy. 188 00:09:53,360 --> 00:09:56,320 Speaker 2: We've been X number of months into his leadership. How 189 00:09:56,400 --> 00:10:00,320 Speaker 2: is how are farmer companies and biotech companies trying to 190 00:10:00,400 --> 00:10:04,160 Speaker 2: work with this new administration because there's a lot of 191 00:10:04,360 --> 00:10:05,920 Speaker 2: one to argue, there's all, you know, a lot of 192 00:10:05,920 --> 00:10:06,520 Speaker 2: headbutting there. 193 00:10:06,559 --> 00:10:10,000 Speaker 6: Potentially it doesn't look like people are that worried about it. 194 00:10:10,120 --> 00:10:14,040 Speaker 6: But I promise you if I went on our anonymous 195 00:10:14,160 --> 00:10:17,160 Speaker 6: drug chat with clients, about two thousand people on it, 196 00:10:18,480 --> 00:10:22,080 Speaker 6: and I asked, how worried are you, I tell you 197 00:10:22,280 --> 00:10:25,240 Speaker 6: that no one's going to say zero. There are There's 198 00:10:25,280 --> 00:10:28,040 Speaker 6: always this background and worry. Right. The thing is the 199 00:10:28,080 --> 00:10:30,199 Speaker 6: sector is doing well. Only this week so far we've 200 00:10:30,200 --> 00:10:32,680 Speaker 6: had close to two billion dollars of money raised from 201 00:10:32,720 --> 00:10:35,839 Speaker 6: companies with good data that's driven the share pricess of 202 00:10:36,280 --> 00:10:39,920 Speaker 6: this is between five and six companies. So the sectors thriving. 203 00:10:40,720 --> 00:10:43,200 Speaker 6: We need to make sure the FDA is in a 204 00:10:43,240 --> 00:10:45,960 Speaker 6: place that will have very clear guideline at of people 205 00:10:46,120 --> 00:10:48,600 Speaker 6: know what they're dealing with and not get advice today 206 00:10:48,600 --> 00:10:50,560 Speaker 6: that in six months they go, well, whatever we said, 207 00:10:50,600 --> 00:10:52,920 Speaker 6: then we don't we have a different view now, right, 208 00:10:53,520 --> 00:10:56,640 Speaker 6: So that is a problem and there is something to 209 00:10:56,679 --> 00:10:59,640 Speaker 6: worry about there. Let's hope that twenty twenty six becomes 210 00:10:59,679 --> 00:11:04,120 Speaker 6: a lot more stable for the FDA with logical, scientific 211 00:11:04,240 --> 00:11:05,119 Speaker 6: based decisions. 212 00:11:06,360 --> 00:11:08,280 Speaker 5: Yeah, well, Sam, you know, speaking of the sector is 213 00:11:08,320 --> 00:11:09,880 Speaker 5: doing overall. But what do you think is going to 214 00:11:09,920 --> 00:11:13,880 Speaker 5: be the key differentiator amongst the companies between the successes 215 00:11:13,960 --> 00:11:17,160 Speaker 5: and I guess the less successful in twenty twenty six. 216 00:11:18,120 --> 00:11:20,920 Speaker 6: It's always been the same clinical data. Get me a 217 00:11:21,000 --> 00:11:24,679 Speaker 6: drug that's showing me clean data. Don't give me press 218 00:11:24,720 --> 00:11:27,240 Speaker 6: releases with some cut off the data, and the next 219 00:11:27,240 --> 00:11:30,000 Speaker 6: press release is a different cut of the data. Publish 220 00:11:30,160 --> 00:11:32,840 Speaker 6: dator take it to medical conferences. The reason these companies 221 00:11:32,880 --> 00:11:35,240 Speaker 6: are up, most of them and have been able to 222 00:11:35,320 --> 00:11:37,640 Speaker 6: raise money is that that they've been very transparent with 223 00:11:37,679 --> 00:11:41,559 Speaker 6: their data they presented. You can analyze it. Some more 224 00:11:41,600 --> 00:11:44,160 Speaker 6: transparent or some of them are presenting a medical conferences 225 00:11:44,160 --> 00:11:47,079 Speaker 6: like the ones we just had ash the American Societical Hematology. 226 00:11:47,440 --> 00:11:51,120 Speaker 6: That is what drives this sector. Give me good clinical data. 227 00:11:51,120 --> 00:11:53,559 Speaker 6: Of course, M and A is great because they come 228 00:11:53,600 --> 00:11:55,079 Speaker 6: and you get a price and you decide to share. 229 00:11:55,120 --> 00:11:58,400 Speaker 6: Price goes there. But it's clinical data that is that 230 00:11:58,480 --> 00:12:00,480 Speaker 6: data that gets them to being taken out our. 231 00:12:00,400 --> 00:12:03,280 Speaker 2: Thanks to Sam Fazzelli, Bloomberg Intelligence, Director of Research for 232 00:12:03,280 --> 00:12:07,120 Speaker 2: Global Industries and senior pharmaceuticals analysts. Coming up, we'll look 233 00:12:07,160 --> 00:12:10,040 Speaker 2: at why the restaurant and gift shop chain Cracker Barrel 234 00:12:10,240 --> 00:12:12,720 Speaker 2: cut its sales outlook for the year. You're listening to 235 00:12:12,720 --> 00:12:16,200 Speaker 2: Bloomberg Intelligence on Bloomberg Radio, providing in research and data 236 00:12:16,240 --> 00:12:18,520 Speaker 2: on two thousand companies and one hundred and thirty industries. 237 00:12:18,720 --> 00:12:21,439 Speaker 2: You can access Bloomberg Intelligence via Bigo on the terminal. 238 00:12:21,520 --> 00:12:23,840 Speaker 2: I'm Paul Sweeney and this is Bloomberg. 239 00:12:28,160 --> 00:12:32,680 Speaker 1: This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney 240 00:12:33,000 --> 00:12:34,480 Speaker 1: on Bloomberg Radio. 241 00:12:34,880 --> 00:12:37,240 Speaker 2: We move next to some earnings in the tech sector. 242 00:12:37,360 --> 00:12:40,120 Speaker 2: This week, the computer tech company Oracle posted quarterly cloud 243 00:12:40,120 --> 00:12:43,280 Speaker 2: sales that missed analyst expectations. This suggests that it will 244 00:12:43,280 --> 00:12:46,040 Speaker 2: take longer than expected for the company's recent huge AI 245 00:12:46,120 --> 00:12:48,080 Speaker 2: bookings to pay off. For more on all of this, 246 00:12:48,160 --> 00:12:50,160 Speaker 2: guest's hosts Isabel Lee and I were joined by Anna 247 00:12:50,240 --> 00:12:53,480 Speaker 2: rag Rana, Bloomberg Intelligence technology analysts. We first asked him 248 00:12:53,520 --> 00:12:57,079 Speaker 2: to give us his take on Oracle's results so there were. 249 00:12:57,000 --> 00:12:58,840 Speaker 7: A few thanks to keep in mind. You know, the 250 00:12:58,920 --> 00:13:02,920 Speaker 7: number one thing is cloud infrastructure growth consensus was sixty 251 00:13:03,000 --> 00:13:05,559 Speaker 7: nine percent. They came at sixty six. I know it's 252 00:13:05,600 --> 00:13:09,120 Speaker 7: a very big number. However, in the cloud world, missing 253 00:13:09,160 --> 00:13:10,959 Speaker 7: by even one percentage point. 254 00:13:11,160 --> 00:13:11,680 Speaker 2: Is not good. 255 00:13:11,760 --> 00:13:13,679 Speaker 7: So that's first thing. But you know, there's a very 256 00:13:13,679 --> 00:13:16,120 Speaker 7: logical reason about it. Everybody can see the backlock, so 257 00:13:16,160 --> 00:13:18,240 Speaker 7: it's not as if they don't have a business there. 258 00:13:18,520 --> 00:13:21,240 Speaker 7: But converting that backlog into sales is an issue. Everybody 259 00:13:21,240 --> 00:13:23,880 Speaker 7: knows that there is a capacity constraints out there, whether 260 00:13:23,920 --> 00:13:26,880 Speaker 7: it's data center, whether it's networking, et cetera. Power is 261 00:13:26,880 --> 00:13:29,280 Speaker 7: a very big issue for example. So that's one area 262 00:13:29,280 --> 00:13:31,160 Speaker 7: of it. But although I would say the management did 263 00:13:31,160 --> 00:13:33,319 Speaker 7: not harp on it as much as we would wanted 264 00:13:33,320 --> 00:13:37,120 Speaker 7: them to be that to explain why the growth can 265 00:13:37,160 --> 00:13:39,960 Speaker 7: improve going forward. So that's one factor. But I think 266 00:13:40,000 --> 00:13:42,400 Speaker 7: the biggest question is something that we had discussed earlier 267 00:13:42,440 --> 00:13:45,679 Speaker 7: also is everybody is questioning that out of their big backlock, 268 00:13:45,720 --> 00:13:48,480 Speaker 7: which is over five hundred billion right now, three hundred 269 00:13:48,480 --> 00:13:51,520 Speaker 7: plus billion of that comes from OpenAI. Now open ai 270 00:13:51,559 --> 00:13:54,840 Speaker 7: currently or the order book is from open Ai. By 271 00:13:54,840 --> 00:13:57,040 Speaker 7: the end of this year, open ai will have a 272 00:13:57,040 --> 00:14:00,400 Speaker 7: revenue rund it of about twenty billion. So everybody is saying, okay, 273 00:14:00,480 --> 00:14:02,960 Speaker 7: well tell me, if you have revenue of twenty billion, 274 00:14:03,600 --> 00:14:05,320 Speaker 7: how are you going to spend three hundred billion just 275 00:14:05,360 --> 00:14:07,920 Speaker 7: with Oracle? So there's a big question mark. But then 276 00:14:07,960 --> 00:14:10,080 Speaker 7: your question is, well, why didn't this happen when they 277 00:14:10,160 --> 00:14:13,200 Speaker 7: first announced it? Well, their bottle was at the top 278 00:14:13,240 --> 00:14:15,960 Speaker 7: at that point, and right now Google's Gemini has caught up, 279 00:14:16,000 --> 00:14:19,080 Speaker 7: So people don't know what will open AI's future look 280 00:14:19,160 --> 00:14:21,000 Speaker 7: like two years from now, three years from now, and 281 00:14:21,040 --> 00:14:23,960 Speaker 7: so forth. So there are multiple factors that are going 282 00:14:24,000 --> 00:14:27,000 Speaker 7: into this equation. And not to mention that capex is 283 00:14:27,040 --> 00:14:29,840 Speaker 7: going to go up by fifteen billion, so thirty five 284 00:14:29,880 --> 00:14:33,160 Speaker 7: billion going to fifty billion. So it's a big, big, 285 00:14:33,600 --> 00:14:37,000 Speaker 7: you know, change across four or five different vectors that 286 00:14:37,040 --> 00:14:38,160 Speaker 7: are having an impact. 287 00:14:38,400 --> 00:14:41,680 Speaker 8: So the cloud strategy of Oracle continues to evolve. What 288 00:14:41,760 --> 00:14:44,320 Speaker 8: is the next major inflection point for you when you 289 00:14:44,360 --> 00:14:49,720 Speaker 8: see these cloud companies really move towards more AI driven efforts. 290 00:14:50,200 --> 00:14:52,080 Speaker 7: So the big thing is that five hundred billion of 291 00:14:52,120 --> 00:14:55,200 Speaker 7: backlock needs to bleed into revenue. For that, they need 292 00:14:55,240 --> 00:14:58,280 Speaker 7: to open new data center. But even to open new 293 00:14:58,320 --> 00:15:01,360 Speaker 7: data center, they need more cash. So the big catalyst 294 00:15:01,400 --> 00:15:03,960 Speaker 7: for them is they need to go out. Most likely 295 00:15:04,000 --> 00:15:06,840 Speaker 7: they need to create a special purpose vehicle where they 296 00:15:06,840 --> 00:15:10,600 Speaker 7: can raise funds with the help of private equity investors, 297 00:15:10,640 --> 00:15:14,120 Speaker 7: private credit and basically you know, keep that off Oracle's 298 00:15:14,160 --> 00:15:18,160 Speaker 7: balance sheet, and that will help pacify this fears that 299 00:15:18,200 --> 00:15:21,160 Speaker 7: they actually have a way to finance this big order 300 00:15:21,200 --> 00:15:21,840 Speaker 7: book that they have. 301 00:15:22,320 --> 00:15:24,680 Speaker 2: All right, look, well you mentioned open AI. Can you 302 00:15:24,760 --> 00:15:27,400 Speaker 2: re fresh my memory? Because I have no idea where 303 00:15:27,440 --> 00:15:29,960 Speaker 2: do they get their money that they like? Where are 304 00:15:30,000 --> 00:15:32,480 Speaker 2: they getting the money to? I don't do all this stuff. 305 00:15:33,160 --> 00:15:35,800 Speaker 7: So the single biggest is the consumer app right now, 306 00:15:35,920 --> 00:15:38,240 Speaker 7: That's where most of the money is coming in because 307 00:15:38,480 --> 00:15:40,400 Speaker 7: you know, if you want the best model, you're going 308 00:15:40,440 --> 00:15:42,200 Speaker 7: to pay twenty dollars a month. I mean, you can 309 00:15:42,200 --> 00:15:44,600 Speaker 7: get the free version of it. But that's one area. 310 00:15:44,640 --> 00:15:46,920 Speaker 7: They have over nine hundred million users right now, but 311 00:15:47,000 --> 00:15:49,080 Speaker 7: only a small portion of them are paying customers. So 312 00:15:49,120 --> 00:15:52,600 Speaker 7: that's one. Second is if you as a company, let's 313 00:15:52,600 --> 00:15:55,680 Speaker 7: say you're you know, let's call a hypothetical bank and 314 00:15:55,720 --> 00:15:59,080 Speaker 7: you're creating a chat pot which needs intelligence or in 315 00:15:59,280 --> 00:16:02,640 Speaker 7: large language, more, you're going to use APIs from open 316 00:16:02,680 --> 00:16:06,520 Speaker 7: Ai and that gets embedded intelligence into whatever system that 317 00:16:06,560 --> 00:16:10,120 Speaker 7: you're creating, your chatboard, but that becomes smarter. They get 318 00:16:10,160 --> 00:16:12,520 Speaker 7: paid from that. So those are the two I think 319 00:16:12,600 --> 00:16:15,800 Speaker 7: big elements or the big sources of revenue for them. 320 00:16:16,080 --> 00:16:19,560 Speaker 7: And there is a huge you could say, looking ahead, 321 00:16:20,000 --> 00:16:23,160 Speaker 7: all the enterprises around the world will have some intelligence 322 00:16:23,160 --> 00:16:25,960 Speaker 7: into their code applications and they're going to use model 323 00:16:26,000 --> 00:16:29,160 Speaker 7: from somebody, whether it's Google, whether it's Entropic, whether it's 324 00:16:29,200 --> 00:16:29,640 Speaker 7: open Ai. 325 00:16:29,920 --> 00:16:32,840 Speaker 2: Our thanks to Ana rog Rana, Bloomberg Intelligence technology analyst. 326 00:16:33,120 --> 00:16:36,400 Speaker 2: We move next to some news at Berkshire Hathaway. This week, 327 00:16:36,480 --> 00:16:39,240 Speaker 2: the firm annows a handful of leadership changes, including the 328 00:16:39,280 --> 00:16:43,080 Speaker 2: retirement of its longtime chief financial officer, Mark Hamberg. This 329 00:16:43,200 --> 00:16:45,720 Speaker 2: comes as the one trillion dollar conglomerate prepares for the 330 00:16:45,760 --> 00:16:49,480 Speaker 2: retirement of CEO and billionaire investor Warren Buffett. For more 331 00:16:49,520 --> 00:16:51,560 Speaker 2: on this, co host Scarlo fil and I were joined 332 00:16:51,560 --> 00:16:54,960 Speaker 2: by Matthew Palasola, Bloomberg Intelligence senior analysts covering the P 333 00:16:55,320 --> 00:16:58,400 Speaker 2: and C insurance industry. Your first AaTh Matthew to talk 334 00:16:58,440 --> 00:17:00,840 Speaker 2: to us about some of the turner on we're seeing 335 00:17:00,880 --> 00:17:01,680 Speaker 2: at Berkshire. 336 00:17:02,120 --> 00:17:04,720 Speaker 9: So the big news I think the bigger news of 337 00:17:04,760 --> 00:17:08,560 Speaker 9: the announcements was Todd Colmbs, the one of the investment 338 00:17:08,560 --> 00:17:12,639 Speaker 9: deputies and CEO of Geico, is moving to JP Morgan. 339 00:17:13,000 --> 00:17:15,400 Speaker 9: So I don't know if that was a plan thing 340 00:17:15,920 --> 00:17:19,399 Speaker 9: or what, but that seems like an, you know, kind 341 00:17:19,400 --> 00:17:22,920 Speaker 9: of an unwelcome shake up in light of Buffett leaving 342 00:17:22,960 --> 00:17:26,159 Speaker 9: at the end of the year. I would say his 343 00:17:26,640 --> 00:17:30,520 Speaker 9: investment track record at Berkshire not very transparent. They don't 344 00:17:30,560 --> 00:17:33,400 Speaker 9: really tell you what the investment managers are doing aside 345 00:17:33,400 --> 00:17:35,879 Speaker 9: from Buffett, so you know, I think many of the 346 00:17:35,920 --> 00:17:38,439 Speaker 9: big moves are made by Buffett anyway. And I actually 347 00:17:38,480 --> 00:17:43,480 Speaker 9: do think that Geico had some issues with loss costs 348 00:17:43,480 --> 00:17:45,440 Speaker 9: going up, so the cost of car accidents was going 349 00:17:45,520 --> 00:17:49,000 Speaker 9: up a lot. Combs's reaction was to like cut a 350 00:17:49,000 --> 00:17:52,240 Speaker 9: lot of costs and shed a lot of policies, which 351 00:17:52,280 --> 00:17:54,359 Speaker 9: is actually the opposite of what I thought Berkshire would do. 352 00:17:54,400 --> 00:17:56,480 Speaker 9: I thought they'd kind of ride it out and maybe 353 00:17:56,520 --> 00:17:59,800 Speaker 9: gain some market share. And I do think Progressive handle 354 00:17:59,840 --> 00:18:02,760 Speaker 9: that environment a little bit better, so I think it 355 00:18:02,800 --> 00:18:05,119 Speaker 9: will be a manageable loss. But probably the biggest. 356 00:18:04,760 --> 00:18:07,439 Speaker 3: News, yeah, Todd Coms. We should mention was already a 357 00:18:07,480 --> 00:18:11,439 Speaker 3: JP Morgan board member, so he had a relationship with 358 00:18:11,480 --> 00:18:14,080 Speaker 3: the bank and he's going to be advising Jamie Diamond 359 00:18:14,080 --> 00:18:18,160 Speaker 3: and other senior JP Morgan leaders on strategic issues. Let's 360 00:18:18,200 --> 00:18:21,840 Speaker 3: talk a little bit about the changes that involve a 361 00:18:21,880 --> 00:18:24,719 Speaker 3: new General Council position over at Berkshire as well. So 362 00:18:25,080 --> 00:18:27,960 Speaker 3: this is a brand new position that they're creating versus 363 00:18:28,040 --> 00:18:29,920 Speaker 3: I guess in the past they just relied on the 364 00:18:30,080 --> 00:18:30,920 Speaker 3: daid outside. 365 00:18:30,640 --> 00:18:34,520 Speaker 9: Help outsourced it, I believe to a firm that was 366 00:18:34,720 --> 00:18:40,000 Speaker 9: associated with Charlie Munger. You know, not a huge deal, 367 00:18:40,040 --> 00:18:41,840 Speaker 9: I don't think. I mean, I think it makes sense 368 00:18:41,880 --> 00:18:44,199 Speaker 9: for them to have their own GC. Why not I 369 00:18:44,200 --> 00:18:47,760 Speaker 9: mean Berkshire Hathaway. I think really the outsourcing was in 370 00:18:47,800 --> 00:18:49,879 Speaker 9: part due to it being you know, related to the 371 00:18:49,880 --> 00:18:53,639 Speaker 9: company anyway. So I think it's important. Obviously they're going 372 00:18:53,680 --> 00:18:56,560 Speaker 9: to face tons of legal issues across all of their companies, 373 00:18:56,600 --> 00:18:58,800 Speaker 9: and I think, you know, probably each one has their 374 00:18:58,800 --> 00:19:01,359 Speaker 9: own individual but it would be uh, probably makes a 375 00:19:01,400 --> 00:19:02,919 Speaker 9: lot of sense to have this all roll up to 376 00:19:02,920 --> 00:19:03,640 Speaker 9: someone at the top. 377 00:19:04,240 --> 00:19:07,240 Speaker 2: What's the call, what's the sentiment out there on the street. 378 00:19:07,080 --> 00:19:09,080 Speaker 9: It's tough because you can look at it and say, 379 00:19:09,520 --> 00:19:11,960 Speaker 9: out of their core competencies, are they going to do 380 00:19:12,000 --> 00:19:15,880 Speaker 9: any of that any better? Now, right, you've got Buffett 381 00:19:15,920 --> 00:19:18,000 Speaker 9: going away. You've got a g Chain who is in 382 00:19:18,080 --> 00:19:22,120 Speaker 9: charge of the insurance operations. He's he's getting old, he's 383 00:19:22,160 --> 00:19:24,280 Speaker 9: been selling a lot of stocks and maybe he leaves 384 00:19:25,280 --> 00:19:28,080 Speaker 9: and he was kind of the magic sauce behind a 385 00:19:28,119 --> 00:19:31,119 Speaker 9: lot of the insurance business. So you know, you've kind 386 00:19:31,119 --> 00:19:35,440 Speaker 9: of got these two titans of the company perhaps being 387 00:19:35,440 --> 00:19:37,120 Speaker 9: gone and saying, well, how could they be good as 388 00:19:37,119 --> 00:19:40,080 Speaker 9: good in investing or as good at the insurance business. 389 00:19:40,280 --> 00:19:42,280 Speaker 9: And it would be tough to say that they would be. 390 00:19:42,320 --> 00:19:44,679 Speaker 9: But when you have Able coming in, it was a 391 00:19:44,680 --> 00:19:47,320 Speaker 9: positive sign of some shake up. And maybe you know 392 00:19:47,359 --> 00:19:50,720 Speaker 9: his strength is he's not Buffett. Well, his weaknesses he's 393 00:19:50,760 --> 00:19:53,520 Speaker 9: not Buffet also, right, but his strength is he doesn't 394 00:19:53,560 --> 00:19:55,359 Speaker 9: have to do things the same way, and you know, 395 00:19:55,400 --> 00:19:58,199 Speaker 9: perhaps he takes a different lookie capital allocation. So I 396 00:19:58,240 --> 00:20:00,720 Speaker 9: think the street's hopeful that we see some more capital 397 00:20:00,800 --> 00:20:02,120 Speaker 9: allocation come out of Berkshire. 398 00:20:02,200 --> 00:20:05,880 Speaker 2: All right, thanks to Matthew Pallizola, Bloomberg Intelligence Senior insurance analyst. 399 00:20:06,200 --> 00:20:08,640 Speaker 2: We move next to some news at the American restaurant 400 00:20:08,640 --> 00:20:11,480 Speaker 2: and gift shop chain Cracker Barrel this week the change 401 00:20:11,520 --> 00:20:13,600 Speaker 2: that it expects sales for the current fiscal year to 402 00:20:13,680 --> 00:20:17,240 Speaker 2: fall faster than it previously forecast. This suggests Cracker Barrel 403 00:20:17,359 --> 00:20:20,000 Speaker 2: brand is hurting from the firestorm that erupted following its 404 00:20:20,000 --> 00:20:23,280 Speaker 2: attempts to use a new streamline logo. The company also 405 00:20:23,359 --> 00:20:25,600 Speaker 2: planned to update its dining rooms to give them a 406 00:20:25,640 --> 00:20:28,520 Speaker 2: more modern feel. For more on all of this, guest 407 00:20:28,520 --> 00:20:31,080 Speaker 2: host Christine Aquino and I were joined by Michael Haylen, 408 00:20:31,280 --> 00:20:35,080 Speaker 2: Bloomberg Intelligence Senior restaurant and food service analyst. First asked 409 00:20:35,080 --> 00:20:37,720 Speaker 2: Michael to break down Cracker Barrow's most recent earnings report. 410 00:20:38,280 --> 00:20:41,960 Speaker 10: Guidance was cut, and this was their fiscal first quarter, 411 00:20:42,080 --> 00:20:46,720 Speaker 10: so it's always tough to have a guidance revenue and 412 00:20:47,400 --> 00:20:52,000 Speaker 10: EBITDAC cut after your first report. But they hadn't seen 413 00:20:52,520 --> 00:20:57,200 Speaker 10: a bounce yet in their traffic post logo change, controversy 414 00:20:57,240 --> 00:21:01,040 Speaker 10: and everything that went along with it, you know, on 415 00:21:01,080 --> 00:21:04,160 Speaker 10: the positive side, they said, you know, traffic has now 416 00:21:04,280 --> 00:21:08,120 Speaker 10: steadied at this down ten to eleven percent level, which 417 00:21:08,160 --> 00:21:10,080 Speaker 10: is translating into a you know, a down a mid 418 00:21:10,200 --> 00:21:14,720 Speaker 10: single digit same store sales. You know, so if you're 419 00:21:15,000 --> 00:21:18,680 Speaker 10: if you're a glass half full investor, you're saying that, 420 00:21:18,760 --> 00:21:23,399 Speaker 10: you know, after the stabilization comes in improvement. You know, 421 00:21:23,440 --> 00:21:26,879 Speaker 10: their new guidance has a pretty wide range. So the 422 00:21:26,920 --> 00:21:29,680 Speaker 10: low end of the range is assuming no improvement through 423 00:21:29,760 --> 00:21:32,919 Speaker 10: year end, which we think could be sounds pretty conservative 424 00:21:32,960 --> 00:21:35,040 Speaker 10: to us, you know, and then on the higher end 425 00:21:35,400 --> 00:21:40,520 Speaker 10: they would see a gradual slow improvement in traffic going forward. 426 00:21:40,640 --> 00:21:43,080 Speaker 10: So what are they going to do? You know, it's 427 00:21:43,119 --> 00:21:46,520 Speaker 10: it's going to be a continue to be about improving 428 00:21:46,520 --> 00:21:50,159 Speaker 10: the operations, right. That's been you know, a key tenant 429 00:21:50,240 --> 00:21:54,000 Speaker 10: under under CEO Julie Messino. It's also going to be 430 00:21:54,040 --> 00:21:56,879 Speaker 10: food innovation. It's going to be Southern favorites, it's going 431 00:21:56,920 --> 00:21:59,920 Speaker 10: to be twists on old classics. It's going to bring 432 00:22:00,119 --> 00:22:03,760 Speaker 10: be bringing back items that people love and want to 433 00:22:03,760 --> 00:22:07,080 Speaker 10: see return to the menu. But I think what really 434 00:22:08,000 --> 00:22:12,879 Speaker 10: stood out is their willingness to listen more closely to 435 00:22:13,000 --> 00:22:16,960 Speaker 10: their customers. I think that's a big key point of 436 00:22:17,000 --> 00:22:20,960 Speaker 10: focus for them moving forward after the controversy that they suffered. 437 00:22:21,480 --> 00:22:23,560 Speaker 5: Well, Michael, So in terms of what are they going 438 00:22:23,640 --> 00:22:26,440 Speaker 5: to do right, it seems as a cutting capex is 439 00:22:26,560 --> 00:22:28,359 Speaker 5: a part of the plan. Is that something that you 440 00:22:28,440 --> 00:22:32,120 Speaker 5: think wood single discipline or does it actually risk slowing 441 00:22:32,160 --> 00:22:34,159 Speaker 5: to turn around even more? 442 00:22:35,520 --> 00:22:38,920 Speaker 10: Well, they're going to still refresh the stores. What they're 443 00:22:39,040 --> 00:22:43,760 Speaker 10: cutting back on is a more extensive remodel, which was 444 00:22:45,640 --> 00:22:49,080 Speaker 10: in tandem with the logo change, which was something that 445 00:22:49,240 --> 00:22:50,600 Speaker 10: was angering customers. 446 00:22:50,920 --> 00:22:51,120 Speaker 2: Right. 447 00:22:51,240 --> 00:22:56,879 Speaker 10: So I think the capex change is probably you know, 448 00:22:56,960 --> 00:23:00,880 Speaker 10: the lowered capex is probably smart. But they're gonna continue 449 00:23:00,920 --> 00:23:03,600 Speaker 10: to refresh their stores. They're gonna continue to give them 450 00:23:03,640 --> 00:23:06,000 Speaker 10: a fresh coat of pain, improve floors where they need 451 00:23:06,040 --> 00:23:08,320 Speaker 10: to clean up the bathrooms, things of that nature that 452 00:23:08,600 --> 00:23:11,240 Speaker 10: nobody's gonna get up in arms over. 453 00:23:12,040 --> 00:23:14,640 Speaker 2: I'm actually surprised in hindsight that maybe this manager team 454 00:23:15,040 --> 00:23:17,119 Speaker 2: kept their jobs there. I mean, this was a real 455 00:23:17,840 --> 00:23:22,399 Speaker 2: self inflicted wound there. What's the shareholder's been saying. Has 456 00:23:22,400 --> 00:23:23,280 Speaker 2: it been any pushback? 457 00:23:23,720 --> 00:23:26,800 Speaker 10: Yeah, So listen, Julie Messino. The you know that you 458 00:23:26,840 --> 00:23:30,240 Speaker 10: make a great point, Paul and Julie Messino. The reason 459 00:23:30,280 --> 00:23:32,560 Speaker 10: why I believe she's still there is that she was 460 00:23:32,600 --> 00:23:35,320 Speaker 10: doing a great job until this controversy hit. You know, 461 00:23:35,359 --> 00:23:40,440 Speaker 10: this is a chain that had been bleeding traffic for years. Right, 462 00:23:40,520 --> 00:23:43,320 Speaker 10: They've been really struggling for a long time to bring 463 00:23:43,359 --> 00:23:48,399 Speaker 10: in younger consumers, right, and she had shown pretty good 464 00:23:48,480 --> 00:23:54,160 Speaker 10: success over the twelve months leading into the logo change. 465 00:23:54,240 --> 00:23:57,400 Speaker 10: Same store sales at the restaurants were up five percent 466 00:23:58,480 --> 00:24:02,200 Speaker 10: in the August quarter. So I think that's why the 467 00:24:02,520 --> 00:24:06,919 Speaker 10: proxy fight kind of failed, the attempt to remove her 468 00:24:06,920 --> 00:24:09,479 Speaker 10: from the board failed, and why she still has her 469 00:24:09,560 --> 00:24:12,840 Speaker 10: job right now is that this chain was a mess 470 00:24:12,880 --> 00:24:15,600 Speaker 10: prior to her arrival, and she was showing some pretty 471 00:24:15,600 --> 00:24:18,200 Speaker 10: good progress up until August o. 472 00:24:18,280 --> 00:24:20,800 Speaker 2: Right, thanks to Michael halein Bloomberg Intelligence, senior restaurant and 473 00:24:20,800 --> 00:24:23,520 Speaker 2: food service analyst coming up. But look at how earnings 474 00:24:23,520 --> 00:24:26,280 Speaker 2: at the food and beverage company Campbell's were impacted by 475 00:24:26,280 --> 00:24:29,760 Speaker 2: the holiday season. You're listening to Bloomberg Intelligence on Bloomberg Radio, 476 00:24:29,960 --> 00:24:32,479 Speaker 2: providing in depth research and data on two thousand companies 477 00:24:32,480 --> 00:24:34,960 Speaker 2: and one hundred and thirty industries. You can access Bloomberg 478 00:24:35,000 --> 00:24:37,720 Speaker 2: Intelligence via Bigo on the terminal. I'm Paul Sweeney, and 479 00:24:37,800 --> 00:24:38,800 Speaker 2: this is Bloomberg. 480 00:24:47,040 --> 00:24:51,560 Speaker 1: This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney 481 00:24:51,920 --> 00:24:53,200 Speaker 1: on Bloomberg Radio. 482 00:24:53,880 --> 00:24:55,720 Speaker 2: We moved next to the quarterly earnings for the food 483 00:24:55,720 --> 00:24:59,000 Speaker 2: and beverage company Campbell's, known for its iconic soups and snacks. 484 00:24:59,240 --> 00:25:01,640 Speaker 2: This week, the company reported first quarter earnings that beat 485 00:25:01,640 --> 00:25:05,720 Speaker 2: analysts expectations. This was positive largely thanks to some holiday 486 00:25:05,760 --> 00:25:08,359 Speaker 2: inventory build by retailers. For more on this and her 487 00:25:08,359 --> 00:25:10,639 Speaker 2: outlook on packaged foods, Scarlett and I were joined by 488 00:25:10,680 --> 00:25:15,400 Speaker 2: Deanna Pain Bloomberg Intelligence Consumer staples analysts. We first asked 489 00:25:15,800 --> 00:25:19,200 Speaker 2: about Campbell's two businesses, that snacks business and the meals 490 00:25:19,200 --> 00:25:20,359 Speaker 2: and beverages portfolio. 491 00:25:20,760 --> 00:25:23,679 Speaker 11: You know, for meals and beverages, there's some headwinds on 492 00:25:24,320 --> 00:25:28,160 Speaker 11: ready to serve soup, whereas broth and condensed soup, which 493 00:25:28,200 --> 00:25:32,359 Speaker 11: is usually used in cooking, is improving. You know, you 494 00:25:32,440 --> 00:25:35,120 Speaker 11: have V eight, which is not really it's a brand 495 00:25:35,119 --> 00:25:39,000 Speaker 11: that is not really doing that well. So you do 496 00:25:39,280 --> 00:25:40,199 Speaker 11: well to me. 497 00:25:40,320 --> 00:25:42,600 Speaker 2: To me, that's like my healthy eating for the day. 498 00:25:42,720 --> 00:25:44,879 Speaker 2: When I drink a little one in the morning, when you're. 499 00:25:44,720 --> 00:25:46,040 Speaker 3: On a plane, you'll get a VA and you're like, 500 00:25:46,080 --> 00:25:46,640 Speaker 3: I'm good. 501 00:25:46,480 --> 00:25:47,280 Speaker 4: I'm good, I'm good. 502 00:25:47,920 --> 00:25:50,200 Speaker 2: Workout, no need to go to the gym exactly. 503 00:25:50,440 --> 00:25:55,680 Speaker 11: So, but it's still facing some headwinds for snacks. It's 504 00:25:55,720 --> 00:25:59,160 Speaker 11: it's kind of I found out odd because there seems 505 00:25:59,200 --> 00:26:02,240 Speaker 11: to be a buyer cation of the consumer trends. Here. 506 00:26:02,640 --> 00:26:07,760 Speaker 11: You have salty snacks being you know, challenged by people 507 00:26:07,840 --> 00:26:11,639 Speaker 11: trying to eat healthier, reducing their sodium, but then you 508 00:26:11,720 --> 00:26:15,480 Speaker 11: have cookies outperforming. So I guess it's the salad with 509 00:26:15,520 --> 00:26:16,520 Speaker 11: the fries. 510 00:26:16,600 --> 00:26:17,880 Speaker 3: All right, which I love. 511 00:26:17,960 --> 00:26:21,399 Speaker 2: By the way, Yes, yeah, absolutely. Campbell Wills agreed to 512 00:26:21,400 --> 00:26:24,000 Speaker 2: take a forty nine percent stake in Lot Regina. What 513 00:26:24,160 --> 00:26:26,120 Speaker 2: is law Regina? What's Campbell's trying to do here? 514 00:26:26,400 --> 00:26:30,320 Speaker 11: Yeah, so that is the supplier for REOs, which they 515 00:26:30,359 --> 00:26:34,280 Speaker 11: bought it a year or so ago, and that it 516 00:26:34,359 --> 00:26:37,080 Speaker 11: makes it kind of like have a little bit more 517 00:26:37,119 --> 00:26:40,960 Speaker 11: control on the supply side. There has been some headwinds 518 00:26:41,000 --> 00:26:45,320 Speaker 11: on this brand because tomatoes are being exported or imported 519 00:26:45,400 --> 00:26:48,720 Speaker 11: to the United States, so they have to face some tariffs. 520 00:26:48,720 --> 00:26:51,720 Speaker 11: So you know, with this, they're they're trying to not 521 00:26:51,760 --> 00:26:53,960 Speaker 11: only off sat tyres, but have a little bit more 522 00:26:53,960 --> 00:26:56,160 Speaker 11: on the on the supply chain, have a little bit 523 00:26:56,200 --> 00:26:56,920 Speaker 11: more control on that. 524 00:26:57,119 --> 00:26:59,840 Speaker 2: Here's my Raios story. I mean, it's it for people 525 00:26:59,880 --> 00:27:01,639 Speaker 2: to art in New York City. It's a very famous 526 00:27:01,640 --> 00:27:03,560 Speaker 2: restaurant in New York. It's very difficult to get a 527 00:27:03,600 --> 00:27:06,800 Speaker 2: table there, to get a reservation. On my thirty years 528 00:27:06,800 --> 00:27:09,560 Speaker 2: of Wall Street, I've asked people to take me. Who 529 00:27:09,560 --> 00:27:12,560 Speaker 2: I know go there to take me. I haven't gone once. Really, Yeah, 530 00:27:12,600 --> 00:27:15,200 Speaker 2: I mean it's impossible. Like I never asked people to 531 00:27:15,240 --> 00:27:17,320 Speaker 2: take me out on their great golf course. I just 532 00:27:17,359 --> 00:27:19,400 Speaker 2: wait for the invite to come. But for REO's, I've 533 00:27:19,440 --> 00:27:21,520 Speaker 2: actively tried to get and haven't gotten through. 534 00:27:22,320 --> 00:27:25,720 Speaker 3: Anyone who has an invite into Rio's, let possible, you know. 535 00:27:26,160 --> 00:27:28,080 Speaker 3: You know I did actually get to eat there. We 536 00:27:28,200 --> 00:27:30,800 Speaker 3: ordered take out during the pandemic when there's do take out. Yeah, 537 00:27:30,800 --> 00:27:32,439 Speaker 3: so that was my one time I got to eat. 538 00:27:32,320 --> 00:27:32,920 Speaker 6: Right, very good. 539 00:27:33,040 --> 00:27:35,440 Speaker 3: But Diana, I want to ask you about, of course, 540 00:27:35,480 --> 00:27:39,840 Speaker 3: the controversy that surrounded Campbell's. Just last month, there was 541 00:27:39,880 --> 00:27:41,679 Speaker 3: an executive he was a vice president of the IT 542 00:27:42,000 --> 00:27:45,920 Speaker 3: department who talked about how the company's products are being 543 00:27:45,960 --> 00:27:49,399 Speaker 3: made for poor people and you know, had some disparaging 544 00:27:49,440 --> 00:27:53,679 Speaker 3: remarks about some of the employees, the Indian employees. Is 545 00:27:53,960 --> 00:27:56,680 Speaker 3: that something that's going to cast a pall over Campbell's. 546 00:27:56,720 --> 00:27:58,959 Speaker 3: I mean, do you see any long term effects from that? 547 00:27:59,320 --> 00:28:03,439 Speaker 11: Well, they did not address that during the call, but 548 00:28:03,560 --> 00:28:07,119 Speaker 11: I think it's it might be a short term headwind 549 00:28:07,320 --> 00:28:11,720 Speaker 11: if there's any boycott happening. I don't I'm not necessary 550 00:28:11,800 --> 00:28:14,080 Speaker 11: I don't necessarily think that there's going to be one. 551 00:28:14,359 --> 00:28:17,879 Speaker 11: It's just one executive, and the company went ahead and 552 00:28:18,440 --> 00:28:20,359 Speaker 11: kind of tried to put on record that they're not 553 00:28:20,520 --> 00:28:25,000 Speaker 11: necessarily agreeing with what he said, So it's you know it, 554 00:28:25,520 --> 00:28:28,280 Speaker 11: I don't necessarily see that as a significant headwind for 555 00:28:28,320 --> 00:28:28,880 Speaker 11: the company. 556 00:28:29,400 --> 00:28:32,320 Speaker 2: Package good companies. I kind of think of them kind 557 00:28:32,320 --> 00:28:36,120 Speaker 2: of a GDP top line growth story at best. What's 558 00:28:36,119 --> 00:28:37,800 Speaker 2: the twenty twenty six out for your companies? 559 00:28:37,960 --> 00:28:38,080 Speaker 8: Are? 560 00:28:38,080 --> 00:28:39,840 Speaker 2: What are investors looking for? 561 00:28:40,320 --> 00:28:43,960 Speaker 11: So for twenty six, they're hoping that there's some light 562 00:28:44,000 --> 00:28:48,280 Speaker 11: at the end of the tunnel in terms of volume growth. Again, 563 00:28:48,360 --> 00:28:50,960 Speaker 11: it might be a second half of the year story 564 00:28:51,000 --> 00:28:56,520 Speaker 11: because comps get a lot easier going forward, but you know, 565 00:28:56,640 --> 00:28:59,560 Speaker 11: profitability seems to be a little bit more difficult because 566 00:28:59,600 --> 00:29:02,680 Speaker 11: they have tariffs, they have to contend, costs steal are 567 00:29:02,720 --> 00:29:06,080 Speaker 11: a little bit higher, specific specifically on the employee side, 568 00:29:06,360 --> 00:29:10,000 Speaker 11: and there's also marketing that they have to do because 569 00:29:10,040 --> 00:29:14,160 Speaker 11: they want to spur growth and pricing is not necessarily 570 00:29:14,240 --> 00:29:17,800 Speaker 11: the you know, the only lever that they have. 571 00:29:17,760 --> 00:29:19,680 Speaker 3: To But you know, I think about Campbell's and other 572 00:29:19,720 --> 00:29:22,520 Speaker 3: packaged foods companies and how much competition they must face 573 00:29:22,560 --> 00:29:26,440 Speaker 3: from private label products. I go to the supermarket, I'm 574 00:29:26,440 --> 00:29:28,040 Speaker 3: going to get the check and brought that's cheapest, and 575 00:29:28,080 --> 00:29:30,120 Speaker 3: it's usually the ones sold by the supermarket and not 576 00:29:30,200 --> 00:29:33,520 Speaker 3: Campbell's or anyone else's. So that's I mean. And for 577 00:29:33,720 --> 00:29:36,320 Speaker 3: private label, you don't need to do any marketing exactly, 578 00:29:36,800 --> 00:29:38,760 Speaker 3: So what is there how do they counter that? 579 00:29:39,440 --> 00:29:42,800 Speaker 11: Well, more marketing. They're they're trying to work with the 580 00:29:43,360 --> 00:29:46,680 Speaker 11: with the retailers to position themselves in the best part 581 00:29:46,720 --> 00:29:50,640 Speaker 11: of the shelf to be able to move that product. Yeah, well, 582 00:29:50,760 --> 00:29:55,960 Speaker 11: obviously retailers have to contend with increasing their private label perenetration. 583 00:29:56,080 --> 00:29:58,440 Speaker 11: At the same time have a good relationship with this 584 00:29:59,000 --> 00:30:03,000 Speaker 11: national brand, so they're not necessarily want them to go 585 00:30:03,080 --> 00:30:06,400 Speaker 11: against you know, the products. So they're trying to there's 586 00:30:06,440 --> 00:30:10,320 Speaker 11: some negotiations happening and usually you know, when I speak 587 00:30:10,320 --> 00:30:13,640 Speaker 11: to retailers, because I do cover Canadian retailers, they mentioned 588 00:30:13,680 --> 00:30:16,280 Speaker 11: that they tried to expand their private label into white 589 00:30:16,360 --> 00:30:20,880 Speaker 11: spaces not necessarily served by national brands, So you're while 590 00:30:20,920 --> 00:30:25,520 Speaker 11: your minds might see some you know, condensed soup private label, 591 00:30:25,920 --> 00:30:30,600 Speaker 11: it's not as as intricate or better quality than probably Campbell's. 592 00:30:31,360 --> 00:30:35,480 Speaker 2: Thanks to Diano Rossero pea Bloomberg Intelligence consumer staples analysts 593 00:30:35,880 --> 00:30:38,560 Speaker 2: on Bloomberg Intelligence, we often look at research from Bloomberg 594 00:30:38,600 --> 00:30:41,840 Speaker 2: and EF previously known as New Energy Finance. They're the 595 00:30:41,840 --> 00:30:44,680 Speaker 2: team at Bloomberg that tracks and analyzes the energy transition 596 00:30:45,000 --> 00:30:49,400 Speaker 2: from commodities to power, transport, industries, buildings, and agricultural sectors. 597 00:30:49,640 --> 00:30:52,400 Speaker 2: This week, we took a look at the renewable fuels business. 598 00:30:52,720 --> 00:30:55,560 Speaker 2: According to bn EF, last year, the US imported over 599 00:30:55,640 --> 00:30:58,640 Speaker 2: eight hundred million gallons of biodiesels, but this year we're 600 00:30:58,640 --> 00:31:01,000 Speaker 2: on track to import just ten percent of that. The 601 00:31:01,080 --> 00:31:04,120 Speaker 2: US is now the largest producer of biofuels in the world. 602 00:31:04,400 --> 00:31:07,080 Speaker 2: For more, I was joined by Anna Davies, Bloomberg bn 603 00:31:07,080 --> 00:31:10,240 Speaker 2: EF head of Renewable Fuels. I first asked Anna to 604 00:31:10,280 --> 00:31:13,840 Speaker 2: break down what biofuels are and how that business has 605 00:31:13,960 --> 00:31:15,560 Speaker 2: changed under the new Trump administration. 606 00:31:15,880 --> 00:31:18,440 Speaker 12: So when we say renewable fuels, we're mostly meaning biofuels 607 00:31:18,440 --> 00:31:20,520 Speaker 12: at the comment, and these are things you might be 608 00:31:20,560 --> 00:31:23,320 Speaker 12: familiar with, like ethanol and biodiesel that are mixed into 609 00:31:23,320 --> 00:31:26,680 Speaker 12: your gas or diesel streams. There's some new ones coming 610 00:31:26,680 --> 00:31:30,480 Speaker 12: as well. There's one called renewable diesel, which unlike biodiesel, 611 00:31:30,520 --> 00:31:33,320 Speaker 12: it's basically identical to fossil diesel, but just made from 612 00:31:33,360 --> 00:31:36,360 Speaker 12: crops or waste speed stalks. So that means you can 613 00:31:36,440 --> 00:31:39,200 Speaker 12: basically substitute it one for one into your diesel stream 614 00:31:39,320 --> 00:31:41,360 Speaker 12: and you don't have to worry about engine performance and things. 615 00:31:41,480 --> 00:31:44,720 Speaker 12: And then also there's a bio version of jet fuel 616 00:31:44,720 --> 00:31:46,120 Speaker 12: called sustainable aviation fuel. 617 00:31:46,320 --> 00:31:48,600 Speaker 2: All right, all right, so I've heard of those. Now 618 00:31:48,600 --> 00:31:50,720 Speaker 2: my minderstanding is we do produce some of that stuff 619 00:31:50,760 --> 00:31:52,800 Speaker 2: here in the US, but we also import a lot. 620 00:31:52,920 --> 00:31:54,840 Speaker 2: So how's that whole world changing? 621 00:31:55,040 --> 00:31:57,080 Speaker 12: Yes, so we produce a lot of it at home, 622 00:31:57,120 --> 00:32:00,360 Speaker 12: and we're growing our production. Ethanol is the biggest, but 623 00:32:00,480 --> 00:32:03,440 Speaker 12: there's a growing segment of these drop in fuels that 624 00:32:03,480 --> 00:32:07,000 Speaker 12: I mentioned, like jet fuel and renewable diesel. We produce 625 00:32:07,040 --> 00:32:08,520 Speaker 12: a decent amount of that here in the US, and 626 00:32:08,560 --> 00:32:10,960 Speaker 12: we're increasing the capacity to do so. There's a lot 627 00:32:10,960 --> 00:32:13,880 Speaker 12: of old oil refineries actually in California and the Gulf 628 00:32:13,920 --> 00:32:17,040 Speaker 12: Coast that they're converting to take in biofeedstocks rather than 629 00:32:17,040 --> 00:32:19,680 Speaker 12: fossil fuel feedstocks. But we also import a lot of 630 00:32:19,680 --> 00:32:23,560 Speaker 12: these fuels. Nest Days a big producer in Singapore and Rotterdam, 631 00:32:23,600 --> 00:32:25,280 Speaker 12: and a lot of that gets imported here for use 632 00:32:25,320 --> 00:32:26,000 Speaker 12: in our markets. 633 00:32:26,280 --> 00:32:29,280 Speaker 2: So do we need imports though? Because I'm just looking here, 634 00:32:29,400 --> 00:32:31,280 Speaker 2: you know, I guess last year we imported over eight 635 00:32:31,400 --> 00:32:34,240 Speaker 2: hundred million gallons of biodiesels. This year we're on track 636 00:32:34,280 --> 00:32:36,760 Speaker 2: to import just ten percent of that. Yeah, wow, is 637 00:32:36,800 --> 00:32:38,160 Speaker 2: that just tariffs? 638 00:32:38,600 --> 00:32:43,880 Speaker 12: This is policy policy changes the US. The main reason 639 00:32:43,920 --> 00:32:46,440 Speaker 12: biofuels get off the ground anywhere is due to policy, 640 00:32:46,520 --> 00:32:49,160 Speaker 12: because otherwise they wouldn't. The economics on their own don't work. 641 00:32:49,200 --> 00:32:51,560 Speaker 12: Biofields are more expensive than their fossil counterparts, so you 642 00:32:51,640 --> 00:32:55,200 Speaker 12: usually need some policy to incentivize them. The US has 643 00:32:55,600 --> 00:32:59,600 Speaker 12: a main policy called the Renewable Fuel Standard, which obligates 644 00:32:59,640 --> 00:33:02,640 Speaker 12: refine to blend in certain amounts of biofuels into their 645 00:33:02,840 --> 00:33:06,560 Speaker 12: refining streams. We also have tax incentives, and we've kind 646 00:33:06,560 --> 00:33:08,760 Speaker 12: of both of those have now been changed in the 647 00:33:08,800 --> 00:33:11,240 Speaker 12: last year or so, which is really causing the market 648 00:33:11,280 --> 00:33:14,600 Speaker 12: to whiplash. In the tax incentive side, of things. There 649 00:33:14,640 --> 00:33:16,840 Speaker 12: used to be a tax incentive called the Blenders Tax Credit, 650 00:33:16,880 --> 00:33:19,400 Speaker 12: which was basically one dollar per gallon for all biofuels 651 00:33:19,440 --> 00:33:22,840 Speaker 12: in the US, and that's a pretty attractive offer. It's 652 00:33:22,880 --> 00:33:25,080 Speaker 12: been it ended in twenty twenty four, and it's been 653 00:33:25,120 --> 00:33:28,880 Speaker 12: replaced by the Clean Fuel Producers at tax credit or 654 00:33:28,880 --> 00:33:31,640 Speaker 12: the forty five Z. Now that tax credit is a 655 00:33:31,640 --> 00:33:34,480 Speaker 12: sliding scale based on your emissions, and most biofuels aren't 656 00:33:34,520 --> 00:33:36,280 Speaker 12: zero emissions, so they still have sum so they don't 657 00:33:36,280 --> 00:33:39,440 Speaker 12: get the full dollar value anymore. And now only domestically 658 00:33:39,480 --> 00:33:42,400 Speaker 12: produced fuels are eligible for that tax credit, so imports 659 00:33:42,400 --> 00:33:44,760 Speaker 12: no longer get it. And then on top of that, 660 00:33:44,800 --> 00:33:49,280 Speaker 12: the volume obligation is currently being set by the Environmental 661 00:33:49,320 --> 00:33:52,560 Speaker 12: Protection Agency, that's the agency that oversees this program, and 662 00:33:52,600 --> 00:33:56,240 Speaker 12: they have proposed a volume for twenty twenty six and 663 00:33:56,240 --> 00:33:59,280 Speaker 12: twenty seven that's quite aggressive, that's quite strong. It would 664 00:33:59,280 --> 00:34:02,160 Speaker 12: basically require hire all of the US capacity to be 665 00:34:02,840 --> 00:34:07,000 Speaker 12: operational in producing fuels and likely also either imported fuels 666 00:34:07,080 --> 00:34:10,239 Speaker 12: or feedstocks, because we need to actually meet that be 667 00:34:10,280 --> 00:34:11,719 Speaker 12: able to produce that somehow. 668 00:34:12,200 --> 00:34:16,600 Speaker 2: Well, this administration is definitely pro farmer, like all that 669 00:34:16,640 --> 00:34:18,439 Speaker 2: kind of stuff, some of the feedstocks you would put 670 00:34:18,600 --> 00:34:21,640 Speaker 2: put into renewable energy. So that's a good thing, right, 671 00:34:22,120 --> 00:34:22,600 Speaker 2: It is a. 672 00:34:22,520 --> 00:34:24,680 Speaker 12: Good thing, that is I think one of the reasons 673 00:34:24,680 --> 00:34:27,680 Speaker 12: for a lot of these changes is to promote domestic 674 00:34:27,680 --> 00:34:33,400 Speaker 12: soybean oils use in biofuels. The challenge is that only 675 00:34:33,480 --> 00:34:37,040 Speaker 12: works if you have access to US soybeans. So, for instance, 676 00:34:37,080 --> 00:34:40,080 Speaker 12: a lot of the biodiesel production, those conventional biodiesel facilities, 677 00:34:40,080 --> 00:34:43,239 Speaker 12: they're located in the Midwest, right near soybean farms, right 678 00:34:43,280 --> 00:34:46,160 Speaker 12: near crushing capacity, so it's relatively easy for them to 679 00:34:46,239 --> 00:34:48,680 Speaker 12: use soybean oil. But a lot of these newer facilities 680 00:34:48,719 --> 00:34:52,080 Speaker 12: producing renewable diesel or jet fuel are located in California 681 00:34:52,120 --> 00:34:54,239 Speaker 12: or the Gulf Coast, and there it's much harder. You'd 682 00:34:54,239 --> 00:34:56,480 Speaker 12: have to bring it in by rail, and there's not 683 00:34:56,560 --> 00:34:58,919 Speaker 12: much capacity there, and it's a lot easier to bring 684 00:34:58,920 --> 00:35:02,400 Speaker 12: a shipment full of waste oil from China, say, than 685 00:35:02,440 --> 00:35:05,240 Speaker 12: to even get access to the soybeans. So it's unclear 686 00:35:05,280 --> 00:35:06,840 Speaker 12: of those facilities we'll be able to switch. 687 00:35:07,760 --> 00:35:11,480 Speaker 2: So I was at a Bloomberg Philanthropy sponsored conference at 688 00:35:11,520 --> 00:35:14,880 Speaker 2: the Plaza Hotel a couple of months ago talking about 689 00:35:14,880 --> 00:35:18,840 Speaker 2: this transformation evolution into cleaner energy, and the guests we 690 00:35:18,960 --> 00:35:24,279 Speaker 2: had on non US guests, international guests, their basic message was, Hey, 691 00:35:24,840 --> 00:35:27,240 Speaker 2: we being the rest of the world, We're moving forward 692 00:35:27,239 --> 00:35:30,120 Speaker 2: with this stuff. We're not slowing down or stopping us. 693 00:35:30,160 --> 00:35:32,399 Speaker 2: If you want to come along, that's great. If you don't, 694 00:35:32,560 --> 00:35:34,840 Speaker 2: that's great too. Is that kind of how the world's 695 00:35:34,880 --> 00:35:37,239 Speaker 2: thinking about it, at least in the short term it is. 696 00:35:37,320 --> 00:35:41,000 Speaker 12: I think everybody is taking a bit aback by it 697 00:35:41,040 --> 00:35:44,200 Speaker 12: because the US has generally had the most attractive incentives. 698 00:35:44,280 --> 00:35:46,000 Speaker 12: You can stack all these credits and you get an 699 00:35:46,000 --> 00:35:48,560 Speaker 12: attractive number that can kind of bridge that cost gap. 700 00:35:49,080 --> 00:35:50,880 Speaker 12: But there is a lot of policy momentum in the 701 00:35:50,880 --> 00:35:53,200 Speaker 12: rest of the world moving forward rather than back, and 702 00:35:53,239 --> 00:35:54,840 Speaker 12: so you can see a lot of the shift happening. 703 00:35:54,880 --> 00:35:58,279 Speaker 12: For instance, Europe, the EU and the UK both instituted 704 00:35:58,360 --> 00:36:01,480 Speaker 12: a sustainable aviation field mandate this year, so we anticipate 705 00:36:01,520 --> 00:36:05,080 Speaker 12: a lot of those volumes from Singapore might flow that way. 706 00:36:05,400 --> 00:36:08,239 Speaker 12: Singapore itself has a new staff mandate, so they might 707 00:36:08,239 --> 00:36:10,400 Speaker 12: even keep the volumes at home. And then China is 708 00:36:10,440 --> 00:36:13,640 Speaker 12: an interesting one to watch because they're building a lot 709 00:36:13,640 --> 00:36:16,840 Speaker 12: of new capacity to produce these fuels, so it's unclear 710 00:36:16,880 --> 00:36:19,080 Speaker 12: whether their feedstocks will go elsewhere or if they'll keep 711 00:36:19,120 --> 00:36:21,360 Speaker 12: a lot of it domestically for increasing their own production. 712 00:36:21,960 --> 00:36:24,560 Speaker 2: Our thanks to Anna Davies, Bloomberg bn EF, Head of 713 00:36:24,640 --> 00:36:27,800 Speaker 2: Renewable Fuels. That's this week's edition of Bloomberg Intelligence on 714 00:36:27,800 --> 00:36:30,520 Speaker 2: Bloomberg Radio, providing in depth research and data on two 715 00:36:30,520 --> 00:36:33,440 Speaker 2: thousand companies and one hundred and thirty industries. And remember 716 00:36:33,520 --> 00:36:35,799 Speaker 2: you can access Bloomberg Intelligence via b I go on 717 00:36:35,840 --> 00:36:38,719 Speaker 2: the terminal ump Paul Sweeney, Stay with us. Today's stop 718 00:36:38,719 --> 00:36:42,759 Speaker 2: stories and global business headlines are coming up right now