Speaker 1: Thanks for joining us for this special edition of Bloomberg Daybreak.
Speaker 1: I'm Nathan Hager. The US market is closed for the
Speaker 1: Thanksgiving Day holiday. Coming up this hour, we will look
Speaker 1: at how the retailers are doing as we approach the
Speaker 1: holiday shopping season beginning with Black Friday. Plus we'll get
Speaker 1: an update on some big antitrust cases, including the Justice
Speaker 1: Department's lawsuit against Google. Also, is there room for seconds
Speaker 1: at the Thanksgiving Feast? We'll look at the ozampic effect
Speaker 1: on the holiday meal. First, though, let's dig into what's
Speaker 1: driving the market and talk about oil, because crude has
Speaker 1: been on quite a ride. We've seen about a thirty
Speaker 1: dollars swing in the price of a barrel this year.
Speaker 1: There are a lot of factors at play, among them
Speaker 1: wars in Ukraine and the Middle East, and of course,
Speaker 1: the ongoing recovery from the pandemic. So for more on
Speaker 1: what's in store for the energy space, we have an
Speaker 1: expert roundtable set up for you. John Kilduff is with
Speaker 1: us on the phone. He is the founding partner at
Speaker 1: a Game Capital, and Stephen Shork is joining us on zoom.
Speaker 1: Stephen is president of the Short Group. Thanks to both
Speaker 1: of you for being with us on this holiday. And
Speaker 1: I'll start with you, John, because it wasn't that long
Speaker 1: ago we were talking about the return of one hundred
Speaker 1: dollars a barrel oil. Now we're quite a ways off
Speaker 1: from that.
Speaker 2: What happened, well, basically, the sum of our worst fears
Speaker 2: for the market just never materialized. With the initiation of
Speaker 2: the Ukraine War foot or was thought to put you know,
Speaker 2: meaningful amounts of Russian supplies of crude oil and refined
Speaker 2: products at jeopardy to be embargoed by the West, but
Speaker 2: they wouldn't be purchased. Meanwhile, they found a home almost
Speaker 2: mediately in China and India and Turkey to a lesser extent.
Speaker 2: And then you know, from there a similar situation here
Speaker 2: with situation in Gaza. Fears about you know, all kinds
Speaker 2: of a parade of horribles, about the straight of Hormos
Speaker 2: getting shut ran getting involved, and meanwhile, really the unfortunate
Speaker 2: situation has been very much contained to Gaza, no regionals
Speaker 2: still and certainly no threat to any supplies of oil.
Speaker 2: So once those geopolitical risk premiums dissolved, we're back to
Speaker 2: dealing with the relative even or oversupply and the worries
Speaker 2: about the main other factor in this market, which is demand,
Speaker 2: and China and the situation with their blackluster economy, their
Speaker 2: property market situation being deteriorating, and of course even Japan
Speaker 2: now showing significant economic weakness and demand for oil.
Speaker 1: Is that how you see things, Steven? Is risk premium
Speaker 1: off the table? Is there risk it returns?
Speaker 3: Yeah? Absolutely no. I'd never even thought risk premium was
Speaker 3: adequately priced in for the few days that we actually
Speaker 3: saw a pop post October seventh, So I am quite
Speaker 3: perplexed that there is no risk premium and in fact
Speaker 3: there's now a discount being priced into the market. It
Speaker 3: is just amazing to me that the market continues to
Speaker 3: ignore what is going on. This is a war, not
Speaker 3: between Israel and Hamas. This is not a military conflict,
Speaker 3: This is not a police action. This is a war.
Speaker 3: This is a war between Israel and let's face it, Iran.
Speaker 3: The Hamas has Belat, the Hutis have all declared war
Speaker 3: on Israel. I eat the West. So that is Iran.
Speaker 3: And the fact that we have forty percent of the
Speaker 3: world's waterborne oil that flows through a forty miles straight
Speaker 3: of Hormuz, and people refuse to factor that in. I
Speaker 3: think the market's taking a tremendous risk. So the theme
Speaker 3: coming into this year was China, China, China, to quote
Speaker 3: our jam Brady here, and with all of that demand
Speaker 3: and you know, China never never materialized. China quite frankly
Speaker 3: to me, looks like Japan's circuit early nineteen nineties. The
Speaker 3: curtain is being pulled back on that regime and on
Speaker 3: that economy. So now going into the new year, there
Speaker 3: are legitimate concerns whether it's China really the tiger of
Speaker 3: the Far East or is it now just a paper tiger.
Speaker 1: He raises an interesting point, John, is this market underpricing
Speaker 1: the potential for risk premium to return and what about
Speaker 1: the fundamentals going into twenty twenty four.
Speaker 2: Well, I think you would need to see a real
Speaker 2: escalation here. I mean for me, and I don't mean
Speaker 2: to be you know, anything less than you know this
Speaker 2: is a horrible situation. But look, Hamas kind of got
Speaker 2: left hanging by Iran and by you know, Hesbala in
Speaker 2: the north. The Hamas thought that these other parties would
Speaker 2: come in on their side and really make this the one,
Speaker 2: make this the situation. And if that had happened then
Speaker 2: what everything Stephen just said, and I would have been
Speaker 2: right on board with that. We would have had material
Speaker 2: amounts of crude oil at risk. And you know, for
Speaker 2: whatever reason that the calculation just wasn't there. I don't
Speaker 2: know whose miscalculation it was. It's saying it sounds like
Speaker 2: it was Hamas's because they're not getting the support right
Speaker 2: now that they expected. They're getting pin pricks sort of
Speaker 2: dust ups in various parts of Syria and other places
Speaker 2: by Iran which they're getting hit back with, but again
Speaker 2: no material amounts of oil. The fundamentals, though, are are interesting,
Speaker 2: and certainly it's going to it's hard to make an
Speaker 2: argument for prices to go much lower because of what
Speaker 2: the Saudi Arabia has been doing with their output policy
Speaker 2: and OPEC plus overall. Once again, o pech plus has
Speaker 2: fallen short of their lofty goals, but the Saudis haven't.
Speaker 2: They have delivered. They're only producing nine million barrels a day.
Speaker 2: Can you imagine that the United States produces thirty percent
Speaker 2: more oil right now than Saudi Arabia does. Yep, that's
Speaker 2: the case, and Sadi exports are down, so you know
Speaker 2: there's a potential for relative tightness emerging. But again, without
Speaker 2: China getting back into a groove of growth, it's hard
Speaker 2: to see prices materially going higher either.
Speaker 1: I think I hear you want to pop in there, Steven.
Speaker 1: What's your view on whether the Saudis continue with these
Speaker 1: supply cuts that we've seen over the last couple of months.
Speaker 3: Oh, yeah, no, No, I'm certainly on board with John
Speaker 3: with regard to offers, the geopolitics that it is a
Speaker 3: wait and see market, right. We know everyone knows that
Speaker 3: risk there, but for no one's willing to price it
Speaker 3: in and therefore we're going to have to wait. It
Speaker 3: certainly is a concern with Saudi Arabia. And let's keep
Speaker 3: in mind the sunny Saudis and the Shiah Persians don't
Speaker 3: necessarily agree on I mean, they really hate one another.
Speaker 3: I mean, let's be honest here, and the fact that
Speaker 3: the Saudis are doing what they can to keep prices
Speaker 3: higher with regard to production. Yeah, I do see that.
Speaker 3: I agree with John. I do see that going forward
Speaker 3: that they are sticking to their guns. And I think
Speaker 3: they're going to continue to stick to their guns because
Speaker 3: when we look at the spread action of difference between
Speaker 3: prices in the near term versus prices longer out along
Speaker 3: the curve. We're going into a situation where we're pricing
Speaker 3: on the front of the curve is signaling to the
Speaker 3: market that it is over supplied relative to demand. I
Speaker 3: want to say in crude oil. You're not seeing that
Speaker 3: dynamic playing out in gasoline, which is very interesting because
Speaker 3: gasoline demand is strong as we know for this holiday
Speaker 3: we're looking at one of the strongest holiday seasons since well,
Speaker 3: certainly in the post COVID start, and so the gas
Speaker 3: lien spreads of tightening, so there seems to be some
Speaker 3: concern with regard to supply in that manner, but the
Speaker 3: overall global market when we see how the spreads have
Speaker 3: really started to come down the front end. OPEK watches
Speaker 3: this stuff, so the formation of the forward curve is
Speaker 3: very important. I'm friends and I work with OPEK. I
Speaker 3: do know they put a lot of emphasis on this. Therefore,
Speaker 3: with the spreads collapsing with Saudi Arabia, if they're going
Speaker 3: to make any move would probably in the new year.
Speaker 3: If the spread state their way, they are, they'll probably
Speaker 3: cut rather than add production. Going into twenty twenty four, is.
Speaker 1: That how you see it as well, John? And if
Speaker 1: Saudi Arabia does continue to cut, does the rest of
Speaker 1: OPEK plus follow?
Speaker 2: The Sadi's have certainly put their shoulder to the wheel
Speaker 2: here that the energy minister Mahan Bensaman, as you know,
Speaker 2: delivered lollipops, and they want a higher price. You know,
Speaker 2: they need to pay for Neome and their other aspirations
Speaker 2: for their country, and they want oil prices closer to
Speaker 2: one hundred. The question I have though, is that are
Speaker 2: we getting closer to the cycle, the point in the
Speaker 2: cycle where the Saddies throw a fit again like they
Speaker 2: did back in two thousand, right before excuse me, twenty twenty,
Speaker 2: right before COVID hit and flooded the market to collapse
Speaker 2: the price to try to squeeze out higher cost producers,
Speaker 2: which they're kind of suffering from right now. Part of
Speaker 2: their problem is the United States with the twelve million
Speaker 2: barrels per day of production and about five million barrels
Speaker 2: per day we're pushing on it anyway of daily crude
Speaker 2: oil exports, so we're making their job a lot harder.
Speaker 2: As the years go by. Here, we'll see if that persists.
Speaker 2: But I do believe the Sattis want higher prices, and
Speaker 2: I do think they're willing to take one or more
Speaker 2: for the team to succeed in that endeavor, and so yes,
Speaker 2: and with Stephen on that that they're more than likely
Speaker 2: to cut right now until they finally throw that fit
Speaker 2: and collapse the market.
Speaker 1: Stephen, what about the impact of central banks and demand?
Speaker 1: Can prices grind higher when we could potentially see interest
Speaker 1: rates fall and the potential for a slow and demand
Speaker 1: depending on how this economy goes into twenty twenty four.
Speaker 3: Yeah, that is a really interesting point, and really I'm perplexed.
Speaker 3: I'm impressed with the US economy when we consider that
Speaker 3: consumer spending is seventy seventy zero percent of the economy,
Speaker 3: and we're looking at eighteen consecutive months of credit card
Speaker 3: debt well over one trillion dollars with interest rates on
Speaker 3: those credit cards at twenty two percent. When we look
Speaker 3: at savings rates that we've all gone through, all of
Speaker 3: the savings that we are the income or the cash
Speaker 3: that was printed by the US government, we no longer
Speaker 3: have those savings. So I don't know where where the
Speaker 3: juice from the consumer is coming from, but it's there.
Speaker 3: So certainly if we do seetea of if rate rises
Speaker 3: have indeed been cut, you know we've seen the end
Speaker 3: of it. I'm skeptical on that, but if we have,
Speaker 3: and to your point, if you do start to see
Speaker 3: interest rates coming back, well, heck, if the US consumer
Speaker 3: can spend in a twenty two percent credit card interest environment,
Speaker 3: you start bringing those down a few hundred bases points,
Speaker 3: then I can see this certainly being a catalyst that
Speaker 3: that will be that next trans next demand driver that
Speaker 3: can certainly propel oil prices higher into the new year.
Speaker 1: Thanks for this look at what could be driving oil
Speaker 1: prices into twenty twenty four. That was Stephen Schork, president
Speaker 1: of the Short Group, joining us on zoom and John Kilduff,
Speaker 1: founding partner at Again Capital, with us on the phone
Speaker 1: on this special Thanksgiving Day edition of Bloomberg Daybreak, and
Speaker 1: straight ahead we'll get you set for Black Friday. We'll
Speaker 1: look ahead to the holiday shopping season with Bert Flickinger
Speaker 1: of Strategic Resource Group. It's eighteen minutes past the I'm
Speaker 1: Nathan Hager, and this is Bloomberg. Welcome back to this
Speaker 1: special edition of Bloomberg Daybreak. The US markets are closed
Speaker 1: for the Thanksgiving holiday. I'm Nathan Hager and retailers, well,
Speaker 1: they're open and entering their most crucial time of the
Speaker 1: year for many. It has already begun with Black Friday
Speaker 1: sales underway. And for more on the kickoff of holiday
Speaker 1: shopping season, we welcome Bert Flickinger, Managing director at Strategic
Speaker 1: Resource Group. Bert, this time of year is always big
Speaker 1: for retail, but how big is this year's holiday shopping season,
Speaker 1: particularly when you think about companies like Walmart warning about
Speaker 1: the consumer outlook heading into next year.
Speaker 4: Nathan, Happy Thanksgiving Day, and there is some concerns with
Speaker 4: Walmart and everyone else that while retail sales will be
Speaker 4: up three to three and a half percent over the
Speaker 4: holiday season and this Black Friday weekend, overall, adjusted for inflation,
Speaker 4: sales are flat and on the Bloomberg terminal the University
Speaker 4: of Michigan consumer sentiments near twelvemonth low and that's all
Speaker 4: due to inflation and sixty percent of people going paycheck
Speaker 4: to paycheck and carrying a lot of consumer debt.
Speaker 1: So does that have you thinking that a lot of
Speaker 1: shoppers are going to be going into more of the
Speaker 1: lower end retail chains as opposed to some of the
Speaker 1: higher end locations.
Speaker 4: Yes, Nathan, the US Department of Commerce is reporting that
Speaker 4: anything's food based, like you said, Walmart, Costco, Kroger will
Speaker 4: do well. But the category dominant areas of the business,
Speaker 4: home improvement, furniture, sporting goods, electronics are all trending down,
Speaker 4: even not before they're adjusted for inflation. So the consumer spending,
Speaker 4: but the consumer's cast in my alma mater, Price Waterhouse
Speaker 4: Coopers said almost all the spending increases are coming from
Speaker 4: the top twenty percent of people in the disposable income ladder.
Speaker 1: So what does that mean when it comes to the
Speaker 1: kind of deals that we're used to seeing on Black Friday.
Speaker 1: If the thinking is that a lot of shoppers are
Speaker 1: looking more toward the lower end more of the staples,
Speaker 1: does that mean we're going to see deeper discounts on
Speaker 1: some of those like consumer tech items that you usually
Speaker 1: think about selling really well around Black Friday and beyond.
Speaker 4: Yes, you'll see better deals because Walmart, Target and others
Speaker 4: are still carrying ten to fifteen percent more inventory than
Speaker 4: they were pre pandemic, and all the retailers really started
Speaker 4: their Black Friday holiday sales programs either right after Labor
Speaker 4: Day or right after Columbus Day or Indigenous People's Day.
Speaker 4: So the deals have been out there for a long
Speaker 4: time and a lot of the people's shopping has already
Speaker 4: been done. So Price Waterhouse Coopers is saying about forty
Speaker 4: two percent of the shopping is going to be done online,
Speaker 4: forty one percent in store, and the remaining seventeen percent
Speaker 4: click and collect. But a lot of the shoppings been completed,
Speaker 4: except at Macy's with the Thanksgiving Day parade right near
Speaker 4: Bloomber's World headquarters doing well, and this is their big
Speaker 4: day is with the Macy's parade as Thanksgiving Day.
Speaker 1: Well, if so much of the shopping has already been
Speaker 1: done even before Black Friday, what kind of impact could
Speaker 1: some of these Black Friday discounts even have.
Speaker 4: Nathan's your excellent point to minimus impact because we're overstored
Speaker 4: in the suburbs and understored in the cities or the
Speaker 4: urban areas. So it's interestingly it's up to the Federal
Speaker 4: Trade Commission and exhibit A is letting Kroger and Albertson's
Speaker 4: merge to protect unionized employers and unionize jobs, and it
Speaker 4: was infirmed by John and Margot Katsmetitis from Cristiiti's and
Speaker 4: Dagostino after they and teammates gave out ten thousand turkeys.
Speaker 4: We talked to Democratic National Committee chair ed Rendell, Governor
Speaker 4: David Patterson, and Senator Malcolm Smith and John and Margot Katsmatitis,
Speaker 4: and they said it's really up to the government to
Speaker 4: let the chains, especially the Krogers of the world that
Speaker 4: are unionized, continue to operate and expand in the urban
Speaker 4: areas as well as suburban and rural areas because Walmart
Speaker 4: and Amazon have been subsidized in the city, and as
Speaker 4: soon as the government subsidies run out, Walmart tends to
Speaker 4: close and exit the urban areas, as they did ignominiously
Speaker 4: in the South and West side of Chicago before this
Speaker 4: twenty twenty three holiday season.
Speaker 1: Speaking with Bert Flickinger, the managing director of Strategic Resource Group,
Speaker 1: how do you expect this particular holiday shopping kickoff to
Speaker 1: compare two years past when we think about so much
Speaker 1: of the consumer running out of excess savings relying more
Speaker 1: on credit cards. How is that going to play out
Speaker 1: when it compares to some past Black Fridays.
Speaker 4: As it plays out, Nathan, it's by now pay later.
Speaker 4: PwC said that fifteen percent of the purchases for this
Speaker 4: Black Friday weekend and small business Saturday and two days
Speaker 4: and Cyber Monday and four days, it's going to be
Speaker 4: buy now, pay later. Fifteen percent of all purchases will
Speaker 4: be that way. And consumers are still taking on credit
Speaker 4: card debt, but sixty three percent of consumers will be
Speaker 4: buying with debit cards, so instant cash to the retailers
Speaker 4: and trying to put less on credit. As interest rates
Speaker 4: of climbed and the average household has seventeen thousand and
Speaker 4: revolving unpaid credit card debt.
Speaker 1: What's the read through to retailer's bottom lines their profit margins.
Speaker 1: If we do see more consumers relying on buy now,
Speaker 1: pay later.
Speaker 4: The retailer's bottom lines will be under pressure because about
Speaker 4: three percent of consumers are defaulting on credit card debt
Speaker 4: of some sort car loans, retail credit card debt, etc.
Speaker 4: So retailers will have a solid sales season flat adjusted
Speaker 4: for inflation, profit will be good but not great. But
Speaker 4: the real concern is the upcoming calendar year going into
Speaker 4: the election cycle of twenty twenty four.
Speaker 1: Yeah, I did want to get into what this holiday
Speaker 1: shopping season kickoff means in terms of momentum for retailers.
Speaker 1: Do you see the momentum growing for retailers once we
Speaker 1: get past this season or are there further headwinds.
Speaker 4: The momentums growing? And interestingly, Nathan, part of it is
Speaker 4: following the Bloomberg terminal. If a company like Bedbath and
Speaker 4: Beyond files for bankruptcy or Toys r Us earlier filed
Speaker 4: for bankruptcy and liquidation, who picks up the business? So
Speaker 4: Macy's and Target have done a terrific job picking up
Speaker 4: the toy business, especially Macy's, which on the Bloomberg Terminal
Speaker 4: reported very good earnings. It's so expensive to feed a
Speaker 4: family of four for over fifty dollars at McDonald's that
Speaker 4: for the first first time in decades, more people are
Speaker 4: buying food at Walmart, Kroger, Costco and cooking and entertaining
Speaker 4: at home because it's unaffordable to go out. So that
Speaker 4: shift in terms of consumers regardless of income, are all
Speaker 4: smart shoppers, and they're shopping more to buy and serve
Speaker 4: and stay at home rather than go out. Where our
Speaker 4: family was one of the largest food service suppliers to
Speaker 4: the restaurant industry and the food service restaurant industry. Nathan
Speaker 4: marks up the food about three hundred percent, marks up
Speaker 4: the beverages about seven hundred percent. First fifteen dollars big
Speaker 4: mac meal at McDonald's. That same meal could be bought
Speaker 4: at Kroger, Costco or Walmart for about a dollar per person.
Speaker 1: So just quickly, it looks like we're hearing a lot
Speaker 1: more thinking about, a lot more picking and choosing for
Speaker 1: this holiday shopping season perhaps than the years past.
Speaker 4: Yes, a lot more cautious, careful shopping. But ultimately, retail
Speaker 4: has gone from four hundred percent overstored fifteen years ago
Speaker 4: to only about one hundred percent overstored. And in the
Speaker 4: urban areas we're twenty to thirty to sometimes forty percent understored.
Speaker 4: So the big opportunities urban retail, and that's where Kroger
Speaker 4: and the unionized companies to locally, Christie and Augustinos and
Speaker 4: Morton Williams and fair Way have done it particularly well.
Speaker 1: All right, Berd Flick and thanks for this. It's Bird
Speaker 1: Flick and Jert managing partner at Strategic Resource Group, and
Speaker 1: still ahead on this Thanksgiving edition of Bloomberg day Break,
Speaker 1: We'll take the pulse of some key antitrust cases in
Speaker 1: a busy year for the Justice Department against corporate America.
Speaker 1: It's thirty five minutes past the hour. I'm Nathan Hager,
Speaker 1: and this is Bloomberg. Welcome back to this special Thanksgiving
Speaker 1: edition of Bloomberg Daybreak. I'm Nathan Hager. Us markets are
Speaker 1: closed for the holiday. Twenty twenty three has been a
Speaker 1: very busy year for the Justice Department. It's in the
Speaker 1: middle of a number of high profile trials aimed at
Speaker 1: limiting consolidation in corporate America. So who better to get
Speaker 1: you caught up on these cases than Bloomberg Intelligence Senior
Speaker 1: Litigation analyst Jennifer reed. Jen thanks for being with us
Speaker 1: on this holiday, taking a bit of a break from
Speaker 1: what has been a very busy time for you, particularly
Speaker 1: thinking about Google and these cases against that company and
Speaker 1: its parent Alphabet. Let's start with the one that's been
Speaker 1: going on for quite a while, with the Justice Department
Speaker 1: taking on Google over its dominance in search. What are
Speaker 1: the allegations there? Where do things stand?
Speaker 5: Yeah, that is a big one, and some are even
Speaker 5: calling that one the antitrust trial of the century. I
Speaker 5: don't know if when all is said and done, all
Speaker 5: that fanfare is going to be worth it. But this
Speaker 5: trial just ended November sixteenth, but closing arguments aren't set
Speaker 5: until early May, so it's going to be some time
Speaker 5: before Yeah. Really, this judge is taking it very seriously.
Speaker 5: There was a lot of evidence introduced in the trial,
Speaker 5: and I think he's going to carefully parse through it
Speaker 5: all before making any decisions and having those closing arguments.
Speaker 5: But here what the DOJ has accused Google of doing
Speaker 5: is illegally maintaining a monopoly in search and a couple
Speaker 5: different search advertising markets because they have these agreements with
Speaker 5: Apple and makers of Android mobile devices where they're spending
Speaker 5: a lot of money twenty six billion you heard in
Speaker 5: twenty twenty two for Google Search to be said is
Speaker 5: the default. So what it means is that if somebody
Speaker 5: buys a phone, they buy an Android phone, and you
Speaker 5: go right in and you go into Safari. Let's say
Speaker 5: Google is set as your default, whether you know it
Speaker 5: or not, whether you like it or not, and you
Speaker 5: do your search and that's what you're using. And so
Speaker 5: they're able to then get all the revenue from the
Speaker 5: advertising that comes up from that search, and the DJ
Speaker 5: is basically saying, look, Google's tied up everything with these agreements,
Speaker 5: and if being in duc duc go can't get in there,
Speaker 5: you know they can't improve because you need the data
Speaker 5: to improve, and you get the data by having more
Speaker 5: and more people do a search on your service.
Speaker 1: And we've had in the course of this case a
Speaker 1: lot of numbers revealed almost reluctantly by the parties involved
Speaker 1: in how much has been spent to keep Google at
Speaker 1: the top of the search list. But when we have
Speaker 1: so much time between the end of the arguments and
Speaker 1: the closing ares in this case, what are we expecting
Speaker 1: from this judge after all this time pouring through all
Speaker 1: the evidence.
Speaker 5: You know, he said himself that he has absolutely no
Speaker 5: idea how he's going to rule, And I suppose that's
Speaker 5: what he should say, because he needs to spend the
Speaker 5: time to look at the precedent and look at all
Speaker 5: the evidence before he makes up his mind. I mean,
Speaker 5: my feeling is that I lean a bit here toward
Speaker 5: the DOJ. I think the DJ introduced really compelling evidence
Speaker 5: that it is very difficult for other search engines to
Speaker 5: be able to develop and be able to compete with Google.
Speaker 5: Having all of these agreements for default, and even though
Speaker 5: people can change that, you know, it's not completely foreclosing.
Speaker 5: You can go in and change your default to BING.
Speaker 5: But they had these experts in behavioral economics that basically
Speaker 5: showed that in many instances, people simply don't change a
Speaker 5: default if they don't know about it, or if they
Speaker 5: have to do some research or work to figure out
Speaker 5: how to do it, they just don't do it. And
Speaker 5: Google's paying twenty six billions, So obviously there's a lot
Speaker 5: of value in being the default.
Speaker 2: Yeah.
Speaker 1: I mean for so many people, Google and Search are
Speaker 1: almost synonymous. I mean, if the Justice Department ends up
Speaker 1: winning out in this case, it's going to be a
Speaker 1: pretty big sea change, not just for the tech industry
Speaker 1: but for the people who use it, wouldn't it.
Speaker 5: Well, you know, it may and it may not. You know,
Speaker 5: you talk about really these trials being so protracted. We
Speaker 5: probably won't get a decision given closing arguments in May
Speaker 5: until i'd say early in the second half of next year.
Speaker 5: And this is only halfway through this process because the
Speaker 5: trial that just ended was only on liability. In other words,
Speaker 5: did Google Elite violate the laws? Did they do something illegal?
Speaker 5: If it is determined that it did, there will be
Speaker 5: a whole second trial on what the appropriate remedy is.
Speaker 5: So you're looking at possibly not even getting an answer
Speaker 5: to that question until late twenty twenty four, maybe early
Speaker 5: twenty twenty five. I doubt a remedy would be so
Speaker 5: drastic as to do something like break up Google, you know,
Speaker 5: force it to sell off Google Search, or sell off
Speaker 5: Chrome or something like that. I suspect it would be
Speaker 5: more like something like sharing the data with rivals or
Speaker 5: creating a choice screen like Google has been forced to
Speaker 5: do in Europe.
Speaker 1: Now, along with this case, with involving the Justice Department,
Speaker 1: Google is facing another matter, a lawsuit from Epic Games.
Speaker 1: Tell us more about where that one stands as well.
Speaker 5: Right, So, this one just started and it's going to
Speaker 5: go through toward the end of December. It is just private.
Speaker 5: We did have state attorneys general involved, but they have
Speaker 5: settled with Google. Basically everybody who was a plaintiff in
Speaker 5: this case except Epic Games has settled the case. And
Speaker 5: what Epic Games really objects to are Googles policies and
Speaker 5: strategies to force buyers of the Android mobile devices to
Speaker 5: download apps through Google's Playstore and not outside of the Playstore,
Speaker 5: and any kind of app purchases or in app purchases
Speaker 5: have to be made through the Playstore and Google services
Speaker 5: that payment. And so what Epic says is this allows
Speaker 5: Google to charge developers really an unfairly high fee every
Speaker 5: time somebody is buying an app. Epic would like access.
Speaker 5: You know, they tried this with Apple. They want to
Speaker 5: be an app store themselves and distribute apps on mobile devices.
Speaker 5: They tried this with Apple. They're now trying this with
Speaker 5: Google to get in there so that they can be
Speaker 5: an app store and they can service the payments themselves.
Speaker 1: Well, the last time Epic tried something like this with
Speaker 1: Apple and ended up losing. Why does it think it
Speaker 1: stands a better chance this time around?
Speaker 2: Right?
Speaker 5: And it mostly lost. There was one little piece and
Speaker 5: which Epic one, but really what it was going for
Speaker 5: it lost. There's some differences. The biggest difference here is
Speaker 5: that Apple's case was before a jury and Google's case,
Speaker 5: I'm sorry, Apple's case was before a judge. Google's case
Speaker 5: is before a jury, and I think that really could
Speaker 5: cause a difference because a judge is going to focus
Speaker 5: on the very technical requirements of what a plaintiff has
Speaker 5: to prove to show illegal monopoly maintenance, and there are
Speaker 5: a lot of technical hurdles the plaintiff has to get over.
Speaker 5: It's difficult to win. A jury may be a little
Speaker 5: less focused on that. You know, if the plaintiffs can
Speaker 5: portray Google as a bully here or doing something unfair,
Speaker 5: you know, maybe that'll sway a jury and they'll focus
Speaker 5: less on whether or not Epics met those technical requirements
Speaker 5: and more on Google's So maybe Epic feels it has
Speaker 5: a better shot here given that they'll be playing to
Speaker 5: a jury and not to a judge.
Speaker 1: As you mentioned, this one's just getting started, so a
Speaker 1: lot more to watch there. But let's turn back to
Speaker 1: the Justice Department. The other big case that it's been
Speaker 1: pursuing is against Jet Blues purchase of Spirit Airlines under
Speaker 1: anti competitive argument. Why does the Justice Department see this
Speaker 1: as anti competitive when you have quite a few much
Speaker 1: bigger airlines that both of these are competing with.
Speaker 5: Yeah, it's so interesting because they really are in the
Speaker 5: scheme of things in the United States, two small airlines
Speaker 5: compared to the legacies. But what the Department of Justice
Speaker 5: is concerned about is that Spirit has a very particular model.
Speaker 5: It's called an ultra low cost carrier, and it offers
Speaker 5: very low fares for an unbundled product. In other words,
Speaker 5: just the fair. If you want to check a bag,
Speaker 5: if you want to drink, if you want some extra
Speaker 5: leg room, you have to pay for all of that. Yeah,
Speaker 5: that's right, right, right exactly, And some people, you know,
Speaker 5: rely on that very low fare in order to visit
Speaker 5: friends or family or go on a vacation. Jet Blue
Speaker 5: is a little bit different. It's kind of a step up.
Speaker 5: It has bigger seats, a little more leg room, a
Speaker 5: few more amenities, and it charges higher prices. And Jet
Speaker 5: Blue spin made no bones about the fact that it
Speaker 5: intends once it buys Spirit to change those planes, reduce
Speaker 5: the seating, and increase the fares. So what the Department
Speaker 5: of Justice is worried about is this ultra low cost
Speaker 5: unbundled option being removed from the market for some consumers
Speaker 5: that depend on it.
Speaker 1: So what is Jet Blue saying to try to assuage
Speaker 1: the Justice Department that this won't be as anti competitive
Speaker 1: as insane?
Speaker 5: Jet Blue has a good argument too, you know, they say, look,
Speaker 5: first of all, we're really small, and we're all struggling
Speaker 5: to fight against compete against the big guys Delta, United
Speaker 5: American Southwest. We also bring down fares. We bring down
Speaker 5: the fares of those really expensive airlines, and we'll be
Speaker 5: able to expand capacity with Spirits planes and Spirits pilots,
Speaker 5: and we'll pull the fares down when we compete more
Speaker 5: vigorously against the big legacy airlines. And that's a pro
Speaker 5: competitive effect. So this is going to be an interesting
Speaker 5: trial where the judge is going to have to really
Speaker 5: look at both have set both sides, you know, the
Speaker 5: anti competitive side and the beneficial side, and decide which
Speaker 5: one outweighs the other.
Speaker 1: And just quickly, Jen, what do you make so far
Speaker 1: of the Justice departments pretty aggressive stance in going after
Speaker 1: what it sees is anti competitive anti monopoly practices.
Speaker 5: It's been good to its word.
Speaker 6: You know.
Speaker 5: When the Biden administration came in, there was an executive
Speaker 5: order in which the administration really encouraged all of the agencies,
Speaker 5: not just DOJ and FTC to enforce the anti trust laws,
Speaker 5: to be you know, to be careful about consolidation and
Speaker 5: industries and do what they could to make the economy
Speaker 5: more competitive. And the DJ said Hey, we're going to
Speaker 5: follow through with that, and you know, it's been good
Speaker 5: to its word. Instead of settling cases that the DOJ
Speaker 5: views as problematic, like was really the primary practice in
Speaker 5: the past, that DJ has brought quite a few lawsuits
Speaker 5: and they are trying to stem the tide of m
Speaker 5: and A activity and to stop what they view as
Speaker 5: anti competitive conduct by dominant firms. So, you know, they've
Speaker 5: had mixed success. They've had some success, they've had some failures,
Speaker 5: but they are doing exactly what they said they would.
Speaker 1: Do, and they've given you a feast of topics to
Speaker 1: take a look at. Thanks for this, Jen, great having
Speaker 1: you on with us. It's Jennifer Ree, senior litigation analyst
Speaker 1: for Bloomberg Intelligence. Still ahead on this special holiday edition
Speaker 1: of Bloomberg day Break, we'll take a look at the
Speaker 1: story that really matters the Thanksgiving feast. How much is
Speaker 1: that turkey and trimming's really costing you this year. It's
Speaker 1: fifty minutes past the hour. I'm Nathan Hager, and this
Speaker 1: is Bloomberger. Welcome back to the special edition of Bloomberg Daybreak.
Speaker 1: I'm Nathan Hager. US markets are closed for Thanksgiving Day
Speaker 1: and we now turn to the story. You're really focused
Speaker 1: on this holiday, your meal, the turkey, the green bean casserole,
Speaker 1: grandma's pumpkin pie. How much is it really costing you
Speaker 1: compared to years past? And how much room is there
Speaker 1: for seconds with many Americans now on appetite suppressing drugs
Speaker 1: like ozempic and wagovy. For some answers. We're joined by
Speaker 1: Dina Shanker, who covers food for Bloomberg News. So this
Speaker 1: must really be your time of year. Dina, thanks for
Speaker 1: being with us. So overall inflation is slowing is the
Speaker 1: Thanksgiving meal following?
Speaker 6: That was not the expectation from Wells Fargo Agrifood Institute's
Speaker 6: report that came out last month. Basically, out of home
Speaker 6: eating is just still more expensive, even if that inflation
Speaker 6: has slowed down. Eating at home is just getting more
Speaker 6: expensive as certain parts of the supply chain remain elevated.
Speaker 6: We've seen, for example, canned foods are way up, and
Speaker 6: that could include your canned pumpkin and your pumpkin pie.
Speaker 6: It could include canned cramp berries. But at the same time,
Speaker 6: ham prices are up to all the while the big centerpiece,
Speaker 6: the turkey. The prediction was for those prices to come
Speaker 6: down compared to the last year, So that is its
Speaker 6: own special reason for coming down, because essentially wholesale prices
Speaker 6: are down from farmers putting too many birds in the barns,
Speaker 6: and then retailers get to lower their price and consumers
Speaker 6: win with lower prices. But we make up for it
Speaker 6: with the other with the sides and everything else that
Speaker 6: we want to eat.
Speaker 1: So I guess we're getting a little bit of a
Speaker 1: balance maybe when it comes to the price of the
Speaker 1: meal compared to years past. But you have to wonder now,
Speaker 1: with so much attention on these GLP ones o Zepic
Speaker 1: with Gooviy, we talk about it all the time, is
Speaker 1: that going to make the Thanksgiving table a little less
Speaker 1: of a spread that it's been in the past.
Speaker 6: So I spoke to a number of people that are
Speaker 6: taking the GLP on drugs and it was really interesting.
Speaker 6: Nobody said they were going to serve like less dishes,
Speaker 6: but some people said they were going to make smaller
Speaker 6: amounts because they're all eating smaller serving. One woman I
Speaker 6: spoke to said, basically, she's going to make that sweet
Speaker 6: potato castrole, She's going to make the green bean castrole.
Speaker 6: But she barely plans on eating it. It's mostly for
Speaker 6: her parents the guests, and she's going to send them
Speaker 6: home with the leftovers. One woman I spoke to told
Speaker 6: me that usually in preparation for Thanksgiving, she spends weeks
Speaker 6: scouring the internet looking for the best recipes, and she's
Speaker 6: just not thinking about it this year. So she's going
Speaker 6: to make everything and she's actually going to even skip
Speaker 6: her shot so that she can enjoy herself after doing
Speaker 6: all that work. But all that time that people spend
Speaker 6: thinking about food and the run up to Thanksgiving, if
Speaker 6: you're on one of these drugs, chances are you are
Speaker 6: not doing all that thinking.
Speaker 1: And obviously one Thanksgiving isn't going to give you a trend.
Speaker 1: But I have to think a lot of grocery stores,
Speaker 1: a lot of these big retailers that sell groceries are
Speaker 1: keeping a really close eye on what happens if there's
Speaker 1: going to be an ozembic impact on their bottom lines
Speaker 1: depending on what we see this Thanksgiving.
Speaker 6: Yeah, I mean, we've been talking to food companies and
Speaker 6: they definitely have their eye on it. One of the
Speaker 6: most interesting points came from Walmart because they have, you know,
Speaker 6: a pharmacy division and a supermarket division, so they are
Speaker 6: able to see the overlap there, and they said that
Speaker 6: the shoppers taking weight loss drugs were buying a little
Speaker 6: bit less food.
Speaker 3: You know.
Speaker 6: Actually, that woman who I just told you about who's
Speaker 6: skipping her shot, she says her sons noticed that her
Speaker 6: house doesn't have the same level of snacks that they
Speaker 6: used to keep around. So it's definitely it really does
Speaker 6: have an impact on the people taking it. I think
Speaker 6: the big question is is how many people are going
Speaker 6: to be taking it at any given time, considering the
Speaker 6: high cost, considering the lack of availability of the drugs
Speaker 6: for everybody who wants them, and then also there are
Speaker 6: side effects from these drugs, and some people don't want
Speaker 6: to stick with them through the side effects, so they
Speaker 6: stop taking them.
Speaker 1: And it's going to be interesting to see just how
Speaker 1: many leftovers there really are after this Thanksgiving. Thanks for this, Dina,
Speaker 1: great having you on with us. That's Bloomberg News Food
Speaker 1: reporter Dina Shanker, and thanks as well to Jenniferree of
Speaker 1: Bloomberg Intelligence, Spurt Flick and Jurr of Strategic Resource Group
Speaker 1: and our Oil Panel, John Kilduff and again Capital and
Speaker 1: Stephen Short of the short group special thanks to you
Speaker 1: as well for joining us on this Thanksgiving holiday. I'm
Speaker 1: Nathan Hager. Stay with us. Today's top stories and global
Speaker 1: business headlines are coming up right now