WEBVTT - Oil Demand Hopes Crushed By Covid Resurgence: Again's Kilduff 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.240 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.560 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:17.000 --> 0:00:21.120 and on Bloomberg dot com. Well, markets continue to sell 0:00:21.200 --> 0:00:25.239 off even more quantity if you like. Now the s 0:00:25.920 --> 0:00:31.280 is down two and oil is downward than three. Four 0:00:31.320 --> 0:00:33.199 barrel of w T I the perfect time to have 0:00:33.440 --> 0:00:38.000 on John killed off of again Capital John. Why is 0:00:38.040 --> 0:00:43.239 oil selling off so much today? One to punch here today, Lonnie, 0:00:43.479 --> 0:00:47.080 we have a sudden increase, if not full restoration looming 0:00:47.120 --> 0:00:50.120 for Libyan's Libya's oil production. They're going to be going 0:00:50.159 --> 0:00:51.880 up to his high as a million barrels a day, 0:00:51.920 --> 0:00:55.200 probably by the beginning of next month, if not sooner. 0:00:55.640 --> 0:01:00.360 They're already at around six And this all this news 0:01:00.400 --> 0:01:04.840 about the coronavirus outbreaks um, particularly in Europe where there 0:01:04.840 --> 0:01:07.760 were rumors in the market overnight of France, Italy and 0:01:07.760 --> 0:01:11.720 Spain going back to full lockdown, UH, just really crushed 0:01:11.720 --> 0:01:14.640 the sentiment in the oil market. Because with with that 0:01:14.720 --> 0:01:16.880 kind of news, with those kind of developments, you know, 0:01:16.920 --> 0:01:19.120 we're just not going to see the kind of rebound 0:01:19.520 --> 0:01:24.199 in passenger travel in cars and planes anytime soon. John, 0:01:24.240 --> 0:01:26.320 I know, Um and chatting with you in the past, 0:01:26.360 --> 0:01:29.040 it's all about supply and demand here. Everybody's got their 0:01:29.040 --> 0:01:32.200 supply models, everyone has their demand models here. Do you 0:01:32.200 --> 0:01:34.560 have a sense of kind of what's really driving the 0:01:34.640 --> 0:01:38.520 narrative here? Is it more then I constrained outlook on 0:01:38.600 --> 0:01:42.040 demand that's keeping oil where it is right here? Or 0:01:42.240 --> 0:01:47.160 do you think there's an equally important supply discussion. Well, 0:01:47.160 --> 0:01:49.760 you know, we've we've been stalemated obviously around the forty 0:01:49.800 --> 0:01:51.880 dollar barrel mark for a good six months. So I 0:01:51.920 --> 0:01:54.640 mean that the arguments on both sides, I've been kind 0:01:54.640 --> 0:01:56.360 of fears and like I said, you know, you know, 0:01:56.360 --> 0:01:59.200 pushed to a stalemate. I think there were it was 0:01:59.240 --> 0:02:02.480 a growing sent of hopefulness in the oil market, even 0:02:02.520 --> 0:02:05.640 as recently as a week or so ago, when we 0:02:05.760 --> 0:02:08.880 finally got a good gasoline demand number here in the 0:02:08.960 --> 0:02:12.120 US first, when that was near normal unfortunately nine million 0:02:12.120 --> 0:02:16.320 barrels a day. Unfortunately, we've fallen back again precipitously and 0:02:16.400 --> 0:02:22.120 now with this raised coronavirus situation, Um, the sort of 0:02:22.160 --> 0:02:26.280 hopefulness has been snuffed out, and um now we're gonna 0:02:26.280 --> 0:02:29.520 sort of have to hunker down again. We thought, look, 0:02:29.600 --> 0:02:33.280 the Northern Hemisphere winter is the peak demand season on 0:02:33.280 --> 0:02:35.680 a global basis, all the heating fuels that you need 0:02:36.160 --> 0:02:38.359 to get through that. We I think there was a 0:02:38.360 --> 0:02:39.600 lot of sense in the market, a lot of hope 0:02:39.600 --> 0:02:42.040 in the market that that would help stabilize things and 0:02:42.080 --> 0:02:45.040 get us get the market a bit higher. It's given 0:02:45.080 --> 0:02:47.280 what we're seeing with the coronavirus, it's going to remove 0:02:48.000 --> 0:02:50.120 any of the additional demand that goes along with that. 0:02:50.520 --> 0:02:52.359 Now we've got to keep our fingers cross and hope 0:02:52.400 --> 0:02:54.600 things get back to normal by next summer so that 0:02:54.680 --> 0:02:56.799 we can have a really strong driving season. If you 0:02:56.919 --> 0:02:59.960 if you're looking for the industry outlook to improve. How 0:03:00.040 --> 0:03:02.600 was it all messing with OPEC's fans, John, I mean, 0:03:02.840 --> 0:03:06.520 you know, I don't typically have feelings towards the cartels, 0:03:06.639 --> 0:03:08.560 but honestly, if there was any time to have a 0:03:08.600 --> 0:03:10.400 little bit of sympathy for the OPEC members, that would 0:03:10.400 --> 0:03:14.160 be Now I'm with you on that view, Vunny. I'm 0:03:14.200 --> 0:03:18.520 never really rooting for them myself. But uh, and I've 0:03:18.520 --> 0:03:20.919 never rooting for higher prices either. It's just that there 0:03:21.000 --> 0:03:23.040 there's such a cob sort of feeling. But you know, 0:03:23.080 --> 0:03:25.080 this this oil industry, who I have a lot of 0:03:25.080 --> 0:03:27.440 friends and know and and you know, do you like 0:03:27.600 --> 0:03:29.880 very much? I mean it's been left for dead, um, 0:03:29.919 --> 0:03:32.800 But this is this is this is a terrific struggle 0:03:32.880 --> 0:03:35.720 for them. Um. You know, they've they've cut back, you know, 0:03:35.800 --> 0:03:38.440 really as much as they can stand to, especially a 0:03:38.440 --> 0:03:40.240 lot of the countries that are struggling like a rack, 0:03:41.000 --> 0:03:42.720 who are dying to put more oil on the market, 0:03:42.760 --> 0:03:45.280 Russia to a lesser degree. And you know, they were 0:03:45.360 --> 0:03:47.840 kind of counting their blessings as you know, rough as 0:03:47.880 --> 0:03:50.600 this might be to say that that Libya was offline 0:03:50.680 --> 0:03:53.440 due to the civil war there. Now this sudden influx 0:03:53.440 --> 0:03:56.960 of another million barrels from Libya just really upbends their calculus. 0:03:56.960 --> 0:03:59.920 And it's going to be a tough slog, particularly that 0:04:00.000 --> 0:04:04.160 oil sticks, because that's very valuable oil, very much desired 0:04:04.280 --> 0:04:09.080 in in central in Western Europe um, and it gets 0:04:09.080 --> 0:04:11.680 heavily marketed. So they're going to displace a lot of 0:04:11.720 --> 0:04:14.960 the other barrels that are that are in this market. So, John, 0:04:14.960 --> 0:04:17.680 give us an update on the US shell patch. How 0:04:17.839 --> 0:04:23.800 tough our conditions down there out there. I have one 0:04:23.839 --> 0:04:26.320 major oil CEO telling me this is the darkest period 0:04:27.040 --> 0:04:30.520 in the industry you know. Ever, Um, you know they're 0:04:30.520 --> 0:04:34.760 they're struggling, and um, well you're seeing right now though, 0:04:35.000 --> 0:04:37.800 is sort of the seeds being sown to sort of 0:04:38.040 --> 0:04:43.120 rectifier or re constitute what's happening there. And you've seen 0:04:43.279 --> 0:04:46.880 several big mergers over the past two weeks now, Um, 0:04:47.000 --> 0:04:50.279 and you know you've seen a slew of bankruptcies. So 0:04:50.920 --> 0:04:53.679 at some point here the production you know, is gonna 0:04:53.920 --> 0:04:57.400 has it has already stabilized from A from A and 0:04:57.480 --> 0:05:00.080 down from a much higher level, and that's going to 0:05:00.440 --> 0:05:03.320 feed into higher prices down the road here once things 0:05:03.360 --> 0:05:08.440 do recover, John, If you're trying to trade this whole 0:05:08.560 --> 0:05:10.840 era in some way, is there a commodity that you 0:05:11.000 --> 0:05:17.400 buy or that you'd short if in the complex if 0:05:17.400 --> 0:05:20.359 you want to energy, the brightest star on the board 0:05:20.440 --> 0:05:23.480 right now is natural gas. Uh, there's a lot going 0:05:23.560 --> 0:05:26.159 for it there. L n G exports for example, have 0:05:26.320 --> 0:05:29.160 really ramped up again to pre pandemic levels. That's helping, 0:05:29.600 --> 0:05:33.479 as has exports to Mexico and UM again here too, 0:05:33.520 --> 0:05:35.479 we've seen that decline in production is going to be 0:05:35.520 --> 0:05:38.040 more and more constrained supply, particularly if I think if 0:05:38.040 --> 0:05:40.680 we get a Biden administration, a lot of the associated 0:05:40.720 --> 0:05:43.080 gas that gets flared or what have you is going 0:05:43.120 --> 0:05:46.279 to be curtailed, so that that's the brightest commodity on 0:05:46.320 --> 0:05:49.360 the board right now. Beyond that, I think you have 0:05:49.440 --> 0:05:51.880 to sort of take a look at diesel fuel of 0:05:51.960 --> 0:05:55.400 a heating oil contract here, because one thing that has 0:05:55.480 --> 0:05:57.960 helped held up at demand wise is the over the 0:05:58.040 --> 0:06:01.280 road truck traffic. The jet fuel, know, but over the 0:06:01.360 --> 0:06:04.640 road truck traffic, uh, you know is probably the closest 0:06:04.640 --> 0:06:07.560 to normal we have of the several major categories, that 0:06:07.600 --> 0:06:11.279 being gasoline, jet fuel, and diesel fuel. John, you mentioned 0:06:11.520 --> 0:06:16.440 potential Biden uh presidency. What are the folks that you 0:06:16.520 --> 0:06:19.000 talked to? How did they think that would play out? 0:06:19.000 --> 0:06:20.520 If that work to occur, what would that mean for 0:06:20.560 --> 0:06:24.359 the industry? Uh? The senses he won't be a complete 0:06:24.360 --> 0:06:27.800 disaster for the drilling industry or the fracktors for that matter. 0:06:28.000 --> 0:06:29.760 You know, it's it's become too big of a deal 0:06:30.160 --> 0:06:32.279 for the US. I mean, one of the things but 0:06:32.640 --> 0:06:34.360 like to point out is that it was the Obama 0:06:34.400 --> 0:06:38.320 administration that approved or and permitted the export of US 0:06:38.400 --> 0:06:40.760 crude oil, which has climbed to let around three million 0:06:40.800 --> 0:06:43.240 barrels a day on average these days, which has been 0:06:43.279 --> 0:06:46.440 a huge right spot for the industry and really UH 0:06:46.680 --> 0:06:49.760 is propping a lot of the producers up. It's been 0:06:49.839 --> 0:06:52.120 really helpful, and China has stepped up. We are now 0:06:52.240 --> 0:06:55.800 China's number four supplier of foreign crude oil, so that's 0:06:55.800 --> 0:06:57.880 have been a big development. The problem is going to 0:06:57.960 --> 0:07:00.560 be um for what I just talked about in terms 0:07:00.600 --> 0:07:03.680 of natural gas, the flaring um and the and the 0:07:03.720 --> 0:07:06.760 methane associated with fracking some of those wells, but also 0:07:06.839 --> 0:07:10.120 to what the Obama administration really went after where the 0:07:10.240 --> 0:07:14.000 refiners um and and the emissions there and obviously the 0:07:14.360 --> 0:07:17.240 Cafe car fuel standards. So it's sort of that end 0:07:17.280 --> 0:07:21.440 of the operation more downstream that will probably be pinched. 0:07:21.480 --> 0:07:23.800 But you know, we are oversupplied in terms of refineries 0:07:23.880 --> 0:07:28.000 right now anyway, so um they won't be missed. Wow, 0:07:29.200 --> 0:07:31.680 it's an amazing state of affairs, isn't it, John, Tom, 0:07:31.960 --> 0:07:35.400 Thank you. Always fascinating to speak with John killed off 0:07:35.520 --> 0:07:38.240 right Paul. Yeah, it's it's interesting, really tough times for 0:07:38.280 --> 0:07:44.280 those American ship producers. It is a great pleasure now 0:07:44.320 --> 0:07:48.120 to welcome back to the program the CFO of Impossible Foods, 0:07:48.320 --> 0:07:52.840 David Lee joins us after another quarter of considerable effort 0:07:52.880 --> 0:07:56.480 and work. So, David talk to us about why you 0:07:56.480 --> 0:07:58.200 guys are doubling the size of your R and D 0:07:58.480 --> 0:08:03.600 team over the next twelve Well, simply put, our investment 0:08:03.600 --> 0:08:07.200 in research and development is our highest returning investment. It's 0:08:07.640 --> 0:08:11.280 the source of the innovation behind the impossible burger. You 0:08:11.360 --> 0:08:13.679 saw us launch one point oh and then two point 0:08:13.680 --> 0:08:17.320 oh impossible Sausage, and now you're seeing us roll out 0:08:17.480 --> 0:08:23.240 in retail in Asia. Really, innovation and technology is impossible 0:08:23.280 --> 0:08:26.320 food source for growth, and that's why we're doubling down 0:08:26.320 --> 0:08:29.520 on it. So David talked to us about how your 0:08:29.560 --> 0:08:31.840 business has been faring over this last seven eight months 0:08:31.920 --> 0:08:35.800 during the pandemic, How it's uh, how you guys have 0:08:35.800 --> 0:08:40.960 had to adapt. Well, we certainly, like everyone else, has 0:08:41.000 --> 0:08:45.440 been watching headlines rollout seemingly every day about this global pandemic, 0:08:45.480 --> 0:08:48.520 and we certainly don't have a crystal ball. But one 0:08:48.520 --> 0:08:51.320 thing that's clear is we're following where the meat eater 0:08:51.520 --> 0:08:55.319 is going to buy meat. You know, of our consumers 0:08:55.480 --> 0:08:59.040 are hardcore meat eaters. The vast majority of our sales 0:08:59.080 --> 0:09:02.680 are being sourced people who want meat, and as a result, 0:09:02.760 --> 0:09:04.840 we've had to adjust to where they're going, which is 0:09:04.880 --> 0:09:08.040 increasingly you know, shipped direct to their home, which is 0:09:08.040 --> 0:09:11.800 why we launched our direct to consumer business as well 0:09:11.840 --> 0:09:14.960 as frankly in the grocery store. You know, our grocery 0:09:14.960 --> 0:09:18.920 business is now up on x since the beginning of 0:09:18.960 --> 0:09:22.760 the year, where at fifteen thousands grocery locations across the 0:09:22.840 --> 0:09:25.840 United States and Asia, and we're still growing that business. 0:09:26.200 --> 0:09:28.080 So we've really tried to meet the meat eater where 0:09:28.080 --> 0:09:31.560 they where they're buying cool. Well, talk to us about 0:09:32.440 --> 0:09:34.320 the fact that you're not looking for meat eaters and 0:09:34.360 --> 0:09:37.720 you're also competing with many companies that are trying to 0:09:37.720 --> 0:09:42.440 do the same thing now, including plant based companies. Well, 0:09:42.440 --> 0:09:45.720 you know, it's interesting about Impossible Food is that our 0:09:45.800 --> 0:09:48.720 core customer is the meat eater. Our mission is only 0:09:48.760 --> 0:09:51.920 achieved if meat eaters, like me and many others shoes 0:09:52.040 --> 0:09:55.280 and Impossible Burger made entirely from plants versus the thing 0:09:55.320 --> 0:09:58.319 from an animal. Um So As a result, our competition 0:09:58.400 --> 0:10:00.440 is kind of defined by our cust him or set. 0:10:00.440 --> 0:10:03.840 Our customers are meat eaters, and so our primary competition 0:10:03.960 --> 0:10:07.480 is meet from an animal, which is a one point 0:10:07.559 --> 0:10:12.040 seven plus trillion dollar global business. There's plenty of room 0:10:12.120 --> 0:10:16.000 for great brands who are offering better products to compete. 0:10:16.040 --> 0:10:18.400 So so we don't really worry about a lot of 0:10:18.440 --> 0:10:21.839 those other plant based companies because it's a rising tide 0:10:21.920 --> 0:10:24.560 as long as the source of sales, for example, for 0:10:24.720 --> 0:10:29.080 US is from the meat eater. So, David, are you 0:10:29.080 --> 0:10:33.080 finding similar consumer trends outside of the US? I know 0:10:33.120 --> 0:10:36.520 you're in Canada groceries. Uh, you expanded into Hong Kong 0:10:36.520 --> 0:10:39.520 and Singapore. Are you finding similar trends or any differences? 0:10:40.640 --> 0:10:43.680 You Know what's amazing about meat eaters is they love 0:10:43.760 --> 0:10:47.600 meet wherever they are. They make it bespoke and totally 0:10:47.640 --> 0:10:50.600 relevant for their cuisine and their culture, whether they're in Singapore, 0:10:50.760 --> 0:10:54.520 Hong Kong, Macaw, Canada, or the US. Um And so 0:10:54.559 --> 0:10:57.800 what we're seeing is because our products impossible beef meat 0:10:57.840 --> 0:11:00.600 from plants in Asia, for example, really appeal to the 0:11:00.600 --> 0:11:04.480 meat eater, we're seeing the same phenomenal growth there as 0:11:04.520 --> 0:11:07.120 we see here. In North America. You know, our business 0:11:07.200 --> 0:11:10.199 in Hong Kong, for example, is up a hundred and fifty. 0:11:11.160 --> 0:11:16.000 It's up in Singapore and uh, and we're just getting going. 0:11:16.160 --> 0:11:19.640 So that's the thing about meat. It's nearly ubiquitous, and 0:11:19.880 --> 0:11:22.320 it transforms in the hands of one chef into a 0:11:22.400 --> 0:11:25.000 very different cuisine than in the hands of another. And 0:11:25.040 --> 0:11:27.679 I think we're the only plant based company and Impossible 0:11:27.720 --> 0:11:31.480 Foods that has a product that actually transforms the impossible 0:11:31.520 --> 0:11:34.400 burger transforms in the hands of the chef, make it 0:11:34.520 --> 0:11:37.720 rare or well done, or a bowler or a dumpling, 0:11:37.800 --> 0:11:40.880 or about which is why we're excited about our global growth. 0:11:41.920 --> 0:11:45.679 What are your margins, David Well? One of the benefits 0:11:45.720 --> 0:11:48.080 of remaining private is I'm not yet in the business 0:11:48.080 --> 0:11:51.840 of disclosing quarterly results. Can you tell us if you're profitable? 0:11:53.000 --> 0:11:55.880 I can tell you that it's a strategic choice to 0:11:55.920 --> 0:11:59.120 invest in the business. We make money on every unit 0:11:59.240 --> 0:12:01.800 that we make uh. And it's because we use a 0:12:01.840 --> 0:12:04.520 fraction of the resources of the incumbent industry. We just 0:12:04.559 --> 0:12:07.040 need scale to be out or below the cost of 0:12:07.080 --> 0:12:09.760 commodity ground beef and and people are willing to pay 0:12:09.800 --> 0:12:13.359 a bit more for our product because it has no cholesterol, 0:12:13.480 --> 0:12:16.480 less calories, you less fat, but all the protein and 0:12:16.920 --> 0:12:19.880 the impact you want on the world. Um. So for now, 0:12:19.920 --> 0:12:22.040 I can just tell you that we were designed to 0:12:22.040 --> 0:12:25.840 be cost competitive in addition to tasting great. And we'll 0:12:25.840 --> 0:12:29.640 have to wait on specific figures until later when you 0:12:29.679 --> 0:12:33.880 expect to go public. Well, we have not made any 0:12:33.880 --> 0:12:37.280 announcement to be public through auspact despect which seems to 0:12:37.320 --> 0:12:40.280 be very fashionable these days, or through the direct listing 0:12:40.360 --> 0:12:43.160 right po. Um. But you know, we race one point 0:12:43.280 --> 0:12:46.599 five billion dollars of equity and our investors, including CO 0:12:46.800 --> 0:12:51.840 two and CO slid horizons. These investors are sophisticated. They 0:12:51.840 --> 0:12:55.199 expect us to be operating as if we're public anyway. UM. 0:12:55.240 --> 0:12:57.240 So it's a strategic choice. It's one that we're not 0:12:57.320 --> 0:13:00.079 choosing to make today, but it remains an option for 0:13:00.200 --> 0:13:02.440 the company. So curious as to why you brought up 0:13:02.480 --> 0:13:07.000 the words back is, did somebody approach you? Oh? No, no, 0:13:07.120 --> 0:13:09.600 I I read the headlines that you guys felt right, 0:13:09.679 --> 0:13:12.160 and it's very clear we are all living in a 0:13:12.280 --> 0:13:15.800 spack bowl market. Uh and uh. As a result, as 0:13:15.840 --> 0:13:19.280 a as any as any financial professional, wed I'm keeping 0:13:19.280 --> 0:13:23.319 abreast of the changing times. It's remarkable how many announcements 0:13:23.320 --> 0:13:25.600 seemed to be coming up every day about a new 0:13:25.679 --> 0:13:29.640 spac raged or a new spact. These fact consummated. Hey, David, 0:13:29.640 --> 0:13:31.920 thanks so much for joining us. We appreciate it. Always 0:13:31.920 --> 0:13:34.480 love to get an update on your fast growing business. 0:13:34.600 --> 0:13:39.040 David Lee, CFO of Impossible Foods. It's interesting, Vonnie, the 0:13:39.040 --> 0:13:42.880 growth that they're seeing as a target meat lovers. Um. 0:13:42.880 --> 0:13:44.800 I thought they would target, you know, folks that don't 0:13:44.880 --> 0:13:46.960 care for me. But let's go to that big, big market. 0:13:47.040 --> 0:13:48.880 I would like to see the research on that pole, 0:13:48.920 --> 0:13:50.600 to be quite honest, I would I see where they're 0:13:50.880 --> 0:13:53.640 where they're targeting meat lovers and why and who told 0:13:53.679 --> 0:13:55.960 them to and what's the evidence that that's a better 0:13:56.520 --> 0:14:00.000 frame of reference than than plant based lovers. Yeah, exactly 0:14:00.280 --> 0:14:02.600 so uh but interesting growth story. There will be an 0:14:02.600 --> 0:14:06.280 inching I p O when it does come. Well, a 0:14:06.520 --> 0:14:09.800 rough start to the week for financial markets here again, 0:14:09.880 --> 0:14:13.880 no visible movement on fiscal stimulus, and the numbers on 0:14:13.920 --> 0:14:17.160 the pandemic around the world going in the wrong direction. 0:14:17.280 --> 0:14:21.200 Investors trying to discount those new bit new items in 0:14:21.400 --> 0:14:22.920 the market. Let's get a sense of what's going on 0:14:22.960 --> 0:14:25.000 across markets. We can do that with Sarah pon Check 0:14:25.320 --> 0:14:29.320 Bloomberg Cross Asset reporter. Sarah, thanks so much for joining 0:14:29.400 --> 0:14:33.360 us here. Kind of what's the feel this morning here? Um, 0:14:33.440 --> 0:14:35.400 as we start the week's trading, it seems obviously a 0:14:35.520 --> 0:14:38.640 risk off feel what you see in across markets, right, 0:14:38.680 --> 0:14:40.800 glad to be here, certainly a risk off field though 0:14:40.840 --> 0:14:43.080 you look across the major ravages. We have the SMP 0:14:43.160 --> 0:14:45.160 five hundred down nine tenths of a percent, the down 0:14:45.200 --> 0:14:48.280 down more than one percent. The NASDAC, though, is your 0:14:48.320 --> 0:14:52.360 outperformer flat on the morning, and as you mentioned, investors 0:14:52.360 --> 0:14:55.440 are concerned with the resurgence of the virus. US reported 0:14:55.480 --> 0:14:57.840 a record new cases for a second day, adding more 0:14:57.840 --> 0:14:59.960 than eighty five thousand. We continue to see the rest 0:15:00.000 --> 0:15:03.760 surgeons in Europe with record cases in France and Italy. 0:15:04.200 --> 0:15:07.560 With that, we see the stay at home trade re 0:15:07.800 --> 0:15:11.840 emerging and that really asserting itself in the NAZAC out 0:15:11.840 --> 0:15:14.120 performance today. I'll highlight a few stocks if I look 0:15:14.160 --> 0:15:16.800 at the best performers in the Nasdaq as we speak, 0:15:17.280 --> 0:15:21.880 Zoom up three point nine percent, a m D higher, Amazon, 0:15:22.160 --> 0:15:25.840 Docu sign Take two Interactive. These are some of your 0:15:25.920 --> 0:15:28.600 names that really have come to be known as your 0:15:28.640 --> 0:15:31.440 stay at home plays that stand to benefit in a 0:15:31.560 --> 0:15:35.720 quarantine lockdown restricted economy. At the same time, you look 0:15:35.760 --> 0:15:37.480 at your worst performance today in the s and P 0:15:37.600 --> 0:15:40.800 five hundred, many of your cruise lines, for example Carnival 0:15:40.840 --> 0:15:44.160 in Norwegian Royal Caribbean all down more than seven percent 0:15:44.600 --> 0:15:47.240 at the moment. So this trade is clearly filtering through 0:15:47.240 --> 0:15:51.160 the market as COVID nineteen just remains the number one story. 0:15:51.640 --> 0:15:56.800 What really strikes me is oiled back well below barrows. 0:15:56.840 --> 0:15:59.480 So we have cl one which is you know w 0:15:59.600 --> 0:16:03.000 t I here in New York at right, So w 0:16:03.120 --> 0:16:06.200 t I crude oil has really been lodged around that 0:16:06.240 --> 0:16:09.120 forty dollar a barrel mark. And when you think about 0:16:09.120 --> 0:16:12.680 oil prices this year, obviously the demand side of the 0:16:12.760 --> 0:16:17.040 equation is so significant, especially when we think about I 0:16:17.080 --> 0:16:19.640 mean I just mentioned cruise lines, but airlines too if 0:16:19.720 --> 0:16:22.920 they are not resuming activity, the effect that that has 0:16:23.040 --> 0:16:24.920 on oil demand. At the same time, there have been 0:16:24.920 --> 0:16:28.560 some supply concerns to but certainly a daylight today when 0:16:28.560 --> 0:16:33.080 COVID nineteen is really affecting markets, when investors are once 0:16:33.120 --> 0:16:37.000 again considering the fact that this is a true risk. 0:16:37.080 --> 0:16:40.120 It has certainly not gone away. There are possibilities that 0:16:40.160 --> 0:16:43.440 we may see further economic restrictions ahead. What does that 0:16:43.440 --> 0:16:45.600 mean for oil demand and taking a hit? We see 0:16:45.680 --> 0:16:47.840 w T I crude oil right now down two point 0:16:47.920 --> 0:16:50.240 nine percent and Brent down two point eight percent. Two 0:16:51.760 --> 0:16:54.440 Despite this risk off, feel Jack Moss plowing ahead with 0:16:54.480 --> 0:16:57.800 his biggest I p O ever just extraordinary. It is 0:16:57.880 --> 0:17:01.280 pretty unbelievable. And Group is set raise about thirty four 0:17:01.320 --> 0:17:03.960 and a half billion dollars through its I p O 0:17:04.000 --> 0:17:08.160 s both in Shanghai and in Hong Kong. So it's unbelievable, 0:17:08.240 --> 0:17:11.480 going to outpace even Saudio Rampco. When you think about 0:17:11.520 --> 0:17:13.560 the value that this company is going to have, as 0:17:13.560 --> 0:17:16.359 Bloomberg highlights, once it goes public, it's expected to have 0:17:16.359 --> 0:17:19.440 a market value of three hundred and fifteen billion, So 0:17:19.520 --> 0:17:21.960 that is about the same valuation as JP Morgan in 0:17:22.040 --> 0:17:26.360 four times larger than Goldman Sachs. Imagine that. But consider 0:17:26.400 --> 0:17:28.119 the environment that we have seen. Sure, I'm going to 0:17:28.200 --> 0:17:30.159 bring it back to the United States, and we are 0:17:30.200 --> 0:17:31.679 not seeing an I p O in the US for 0:17:31.800 --> 0:17:33.639 and Group. But if you look at the I p 0:17:33.760 --> 0:17:36.119 O E t F this year, so it's sicker I 0:17:36.320 --> 0:17:41.080 p O it is up seventy five percent in twenty 0:17:41.160 --> 0:17:45.560 a year that has been dominated by COVID nineteen restrictions, 0:17:45.680 --> 0:17:48.600 a recession. Uh, we have an election. There are many 0:17:48.680 --> 0:17:51.119 risks and uncertainties. The fact that you have newly public 0:17:51.160 --> 0:17:54.560 companies just soaring is really a sight to see and 0:17:54.600 --> 0:17:59.280 to put that sevent in perspective for you that since 0:17:59.320 --> 0:18:02.439 the I p O e TF has existed since is 0:18:02.480 --> 0:18:07.040 would be the largest yearly gain. And those are your 0:18:07.080 --> 0:18:09.640 two other very strong years only gains and I say 0:18:09.760 --> 0:18:13.119 only a little bit sarcastically gains in the thirty percent range. 0:18:13.520 --> 0:18:16.879 So this will be more than double that. We're also 0:18:16.920 --> 0:18:20.920 saying other places where the virus is resurgent, lower slodacs 0:18:20.960 --> 0:18:23.399 in Germany down two point eight percent, they can forty 0:18:23.400 --> 0:18:25.640 down one point one percent, and you're not so much 0:18:25.760 --> 0:18:28.840 London then just three tenths of percent. Right now, we 0:18:29.080 --> 0:18:31.800 really like, really weighing on German markets right now is 0:18:32.119 --> 0:18:36.560 s a p so that German software giant SAP down 0:18:36.680 --> 0:18:40.639 more than tw at the moment. And this isn't just 0:18:41.240 --> 0:18:44.960 a euro a German story. This really affects the outlook 0:18:45.000 --> 0:18:47.400 for equities around the globe, and I would argue that 0:18:47.400 --> 0:18:49.679 this is playing into the weakness that we're seeing today 0:18:49.680 --> 0:18:52.040 in the U S as well. What happened was they 0:18:52.040 --> 0:18:54.160 cut their full year revenue estimates and they also said 0:18:54.160 --> 0:18:56.560 that a fresh wave of lockdowns would hurt demand through 0:18:56.600 --> 0:19:00.399 the first half of one. Now, think about what we 0:19:00.440 --> 0:19:03.160 are expected to see for the earnings picture for companies 0:19:03.200 --> 0:19:07.000 in one We're supposed to see a pickup again. We 0:19:07.040 --> 0:19:09.960 are supposed to see companies almost resume a sense of 0:19:10.000 --> 0:19:12.000 normalcy or at least be able to deal with the 0:19:12.080 --> 0:19:14.440 virus and get back on track. Well s a p 0:19:14.640 --> 0:19:17.240 is saying that's not the case. They think that lockdowns 0:19:17.240 --> 0:19:20.840 are going to restrain demand and and their business prospects 0:19:20.880 --> 0:19:23.240 into next year. And that makes you really think, well, 0:19:23.480 --> 0:19:26.359 does that mean the E in the pe ratio doesn't 0:19:26.359 --> 0:19:29.879 mean earnings need to come down? For one, just as 0:19:29.920 --> 0:19:34.119 analysts are have started to really grow more optimistic. Essentially, 0:19:34.160 --> 0:19:36.920 we're gonna get a lot of tech earnings this week too, sir, Oh, 0:19:37.000 --> 0:19:38.960 yes we are. It's it's this is the busiest week 0:19:38.960 --> 0:19:42.200 of earning season. So we're entering the third week fifteen 0:19:42.320 --> 0:19:46.920 trillion dollars worth of SMP market cap report this week, 0:19:46.960 --> 0:19:48.960 and I'll give you a bit of the rundown. Tomorrow 0:19:49.000 --> 0:19:53.200 we'll have Microsoft, A m D. We'll also hear from Fiser, Eli, 0:19:53.240 --> 0:19:56.760 Lily mark E. Then Wednesday we have MasterCard and Visa 0:19:57.200 --> 0:20:00.560 very large companies as well. But Thursday is going to 0:20:00.720 --> 0:20:03.840 be quite the day after the bell, Facebook, Amazon, Apple, 0:20:03.880 --> 0:20:07.000 and Google all the same time. Wow, Sarah, you're gonna 0:20:07.000 --> 0:20:08.840 be busy and we're going to see you back here 0:20:08.880 --> 0:20:12.119 again tomorrow. Sarah pons act there cross us a reporter 0:20:12.280 --> 0:20:16.080 at Bloomberg News, covering everything from earnings to Chinese I 0:20:16.200 --> 0:20:18.520 P O, S, T E, t F S too oil. 0:20:19.040 --> 0:20:25.080 She can just do it all. As we approach seasons 0:20:25.080 --> 0:20:30.000 where you typically spend a little bit more money Black Friday, Halloween, Christmas, 0:20:30.400 --> 0:20:33.879 New Year's, let's get the retail take from somebody who 0:20:33.920 --> 0:20:36.400 knows a little bit about what's going on. And Craig Johnson, 0:20:36.640 --> 0:20:40.200 CEO of Customer Growth Partners. So, Craig, you know, every 0:20:40.280 --> 0:20:42.320 day we're reading about more and more retailers that are 0:20:42.359 --> 0:20:46.120 shutting down, going at bankruptcy, disappointing their creditors and so on. 0:20:46.440 --> 0:20:49.360 What is the story out there with with with with 0:20:49.680 --> 0:20:53.960 just retail in general, I suppose, Well, you have to 0:20:54.000 --> 0:20:59.080 realize that UM retail has always been a UM a 0:20:59.240 --> 0:21:02.840 secor with ups and downs. And what happens when you're 0:21:02.840 --> 0:21:07.320 in a down mode like we are right now UM 0:21:07.600 --> 0:21:11.080 or a challenging mode. Uh, the weaker players are going 0:21:11.119 --> 0:21:14.200 to get washed out. And that's what we're seeing. So 0:21:14.920 --> 0:21:17.879 the problem for many retailers is that over the past 0:21:18.080 --> 0:21:22.520 couple or three years they fail to uh right size. 0:21:23.160 --> 0:21:27.840 UH their store fleets with the demand. But now for 0:21:27.960 --> 0:21:32.400 many weaker retailers financially, UH, this has been a forced 0:21:32.520 --> 0:21:36.560 right sizing, which actually will leave the industry healthier. And 0:21:36.600 --> 0:21:39.760 for holidays, we're actually predicting that sales are going to 0:21:39.840 --> 0:21:44.399 be up five. Really jumped out of me. I'm thinking 0:21:44.480 --> 0:21:47.080 just in a you know, the consumer here, we're still 0:21:47.160 --> 0:21:49.920 up ten percent unemployment, we are the pandemic numbers going 0:21:49.920 --> 0:21:52.760 the wrong way in most of the country. Here, what's 0:21:52.920 --> 0:21:56.320 underpinning your I guess I would say surprisingly strong five 0:21:56.960 --> 0:22:02.560