WEBVTT - APA, TikTok, and Regional Banks 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.600 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.279 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.200 and Bloomberg experts, along with essential market movin news. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.080 you listen to podcasts, and at Bloomberg dot com Slash podcast. 0:00:55.560 --> 0:00:58.880 It's Thursday, so Sunday, you know, Merger Monday. But there's 0:00:58.920 --> 0:01:03.320 a trade out there in the shale business and we've 0:01:03.360 --> 0:01:07.200 seen a lot of consolidation in the patch out there 0:01:07.319 --> 0:01:09.840 in really the last couple of years, and we have 0:01:09.880 --> 0:01:13.800 another deal here APA to buy shale oil driller calland 0:01:13.840 --> 0:01:16.759 Petroleum for four point five billion dollars. And we want 0:01:16.800 --> 0:01:21.399 to talk shale. We talk with Vince Piazza. He is 0:01:21.480 --> 0:01:24.480 our energy analysts for Bloomberg Intelligence. Hey, Vince, I know 0:01:24.520 --> 0:01:28.080 you've been busy recently kind of parsing through all these 0:01:28.240 --> 0:01:31.560 M and A trades in the shale patch here in 0:01:31.600 --> 0:01:34.560 the US. Talk to us about what APA is. What 0:01:34.680 --> 0:01:38.920 is APA doing here with this acquisition of Calent Petroleum. 0:01:39.080 --> 0:01:42.080 Yeah, well, look in the Permian, Paul, and by the way, Paul, 0:01:42.360 --> 0:01:46.240 happy new here to you and yours. What we have 0:01:46.440 --> 0:01:53.480 here is a jump ball for acreage in the Permian. 0:01:53.720 --> 0:01:58.720 And we've seen this across several years. It paused and 0:01:58.760 --> 0:02:02.680 then kicked up again most recently. But this is really 0:02:02.720 --> 0:02:08.280 about larger players looking to gain scale and smaller players 0:02:08.600 --> 0:02:11.959 looking at the environment in front of them. With higher 0:02:12.040 --> 0:02:16.480 rates and big guys getting bigger, there's really not a 0:02:16.520 --> 0:02:19.640 lot of room for them. And you know, we cover roughly, 0:02:19.800 --> 0:02:23.040 we follow roughly fourteen to fifteen names in the Permium 0:02:23.400 --> 0:02:27.240 that are below five hundred thousand net acres and they 0:02:27.280 --> 0:02:30.240 need to do something. They need to do something to 0:02:30.280 --> 0:02:35.200 survive or to put themselves up for sale and callan did. 0:02:35.680 --> 0:02:41.800 And we see this as a continuation of consolidation for 0:02:41.919 --> 0:02:46.200 scale and asset concentration. These guys are selling a commodity. 0:02:46.240 --> 0:02:50.560 There's very little differentiation. The way you gain efficiency, the 0:02:50.600 --> 0:02:55.680 way you gain productivity is to be big, to have scale, 0:02:55.800 --> 0:03:00.680 to have concentration across your region. And in case it's 0:03:00.680 --> 0:03:03.440 the Permian, we've seen a lot of M and A 0:03:03.680 --> 0:03:06.840 in the Permian on the oil side. We haven't seen 0:03:06.960 --> 0:03:09.560 a lot on the gas side. I think that's where 0:03:09.560 --> 0:03:13.040 the real story will be in twenty twenty four. You know, 0:03:13.240 --> 0:03:16.600 natural gas has likely bottomed. In twenty twenty two, we 0:03:16.760 --> 0:03:21.040 should see better conditions, better balances. We should see more 0:03:21.080 --> 0:03:24.360 consolidation in the gas side as well, especially with the 0:03:24.440 --> 0:03:27.480 curve of the way it looks, and we'll probably see 0:03:27.520 --> 0:03:30.760 that more in the Hainesville and also in the Marcellos. 0:03:30.919 --> 0:03:35.240 But what this really tells us is there is scarcity value, right, 0:03:35.280 --> 0:03:40.080 and so you are bidding up smaller operators, MidCap operators, 0:03:40.400 --> 0:03:44.640 operators that were privately sponsored, and the pe shops need 0:03:44.720 --> 0:03:48.200 to monetize these investments to recycle that capital as well. 0:03:48.480 --> 0:03:53.320 So you're seeing small, mid sized pe back names selling out, 0:03:53.680 --> 0:03:57.480 and you're seeing publicly traded names also selling out, especially 0:03:57.520 --> 0:03:59.760 in an environment where you have higher rates. In the 0:03:59.800 --> 0:04:03.880 case accoun, they were one of the higher levered names 0:04:04.720 --> 0:04:07.560 of the companies that we follow. So, you know, I 0:04:07.600 --> 0:04:10.480 think it is reality coming to call on them and 0:04:10.600 --> 0:04:11.800 other smaller operators. 0:04:11.840 --> 0:04:13.960 Yeah, I mean, I'm just you know, Bloomberg, it's got 0:04:13.960 --> 0:04:16.200 some good reporting here, just summarizing what's happened so far. 0:04:16.320 --> 0:04:19.919 Just recently, in October, Excellon Mobile reaches sixty billion dollars 0:04:19.960 --> 0:04:23.359 deal to buy Pioneer Natural Resources. Chevron followed it up 0:04:23.400 --> 0:04:26.200 with a fifty three billion dollar agreement for Hesse Corporation, 0:04:26.240 --> 0:04:28.880 and in December, Occidental Patrolling mcgreed to acquire Crown Rock 0:04:28.960 --> 0:04:31.000 for a ten point eight billion So, Vince, as you say, 0:04:31.279 --> 0:04:33.919 a lot of deals getting done here, talk to us 0:04:33.920 --> 0:04:37.680 about just the natural gas market in general, you know, 0:04:37.720 --> 0:04:39.400 because when we talk about energy, we tend to talk 0:04:39.440 --> 0:04:42.839 about oil more than that gas. Here, talk to about 0:04:42.839 --> 0:04:44.880 where we are in that market today. What's the outlook. 0:04:46.360 --> 0:04:51.080 Well, the outlook right now, just given the backdrop for 0:04:51.200 --> 0:04:55.039 weather and the rather mild temperatures that we've had here 0:04:55.080 --> 0:04:59.200 early on in the winter season, it's been it's been 0:04:59.240 --> 0:05:01.960 a tough go for natural gas. You know, we would 0:05:01.960 --> 0:05:04.480 have thought we would have seen a better bid into 0:05:04.520 --> 0:05:09.320 the winter, but with a very mild December and a 0:05:09.360 --> 0:05:12.440 little bit turning here in January as of cooler at 0:05:12.480 --> 0:05:15.400 tempts settle in. But it's been a pretty tough go. 0:05:16.279 --> 0:05:19.640 But then again, it's better than where we were last year, 0:05:19.800 --> 0:05:24.520 where we saw NAT gas go below two dollars very briefly, 0:05:24.600 --> 0:05:27.320 but we think we're past that point. We think twenty 0:05:27.400 --> 0:05:31.640 twenty four bounces will likely tighten. You know, right now 0:05:31.680 --> 0:05:37.240 we're in this mix of this two sixty two fifty spot, 0:05:37.400 --> 0:05:40.520 but we think that things will improve. There is a 0:05:40.640 --> 0:05:47.359 structural secular trend, and that is toward LNG exports. The 0:05:47.600 --> 0:05:51.440 US has grown its export capacity, it will continue to 0:05:51.520 --> 0:05:56.560 grow this export capacity through twenty twenty through twenty thirty, 0:05:57.040 --> 0:06:00.599 and we think this is a net positive to pull 0:06:01.000 --> 0:06:04.760 the excess capacity that we have in the US into 0:06:05.120 --> 0:06:08.680 the European corridor and in the Asia corridor. You know, 0:06:08.839 --> 0:06:11.520 last year we had a lot of flows go into 0:06:11.520 --> 0:06:16.359 the European corridor, just given the fact of Russia and 0:06:16.400 --> 0:06:19.760 the Ukraine War and what that meant for energy security. 0:06:20.040 --> 0:06:23.040 So the US was a buffer for that. We will 0:06:23.040 --> 0:06:27.120 continue to be a buffer for that. LNG export capacity 0:06:27.240 --> 0:06:30.720 gains will be a structural story that we'll hear more 0:06:30.760 --> 0:06:34.159 of and that will tighten balances for US. In the US. 0:06:34.560 --> 0:06:38.320 You also have gas in the power stack that has 0:06:38.400 --> 0:06:42.240 gain share and that will continue to be stable over 0:06:42.240 --> 0:06:45.320 the next year or so. We will continue to gain 0:06:45.400 --> 0:06:48.240 share there as well on the industrial side. So you 0:06:48.360 --> 0:06:51.360 have both a cyclical story, which is the weather component 0:06:51.960 --> 0:06:54.680 that we can control, but there is also a structural 0:06:54.720 --> 0:06:59.120 component to it that does provide longer term growth for 0:06:59.360 --> 0:07:03.080 natural gas, not just as a transition fuel, not just 0:07:03.200 --> 0:07:08.640 as a bridge fuel, but as a key component within 0:07:09.720 --> 0:07:12.840 the energy complex, the energy portfolio. 0:07:13.640 --> 0:07:16.680 Hey, Vince, you know, it's interesting that the US has 0:07:16.720 --> 0:07:20.520 become a net exporter of oil here and a lot 0:07:20.520 --> 0:07:22.720 of probably a lot of our listeners probably aren't aware 0:07:22.720 --> 0:07:24.640 of that, particularly the ones I kind of remember back 0:07:24.680 --> 0:07:28.360 in the seventies when we had those oil emergencies and 0:07:28.400 --> 0:07:31.559 shocks here, and a lot of that's due to the shale. 0:07:31.640 --> 0:07:34.040 Can you you're the expert on shale, You're the expert 0:07:34.080 --> 0:07:37.080 on fracking. Can you explain to us, when these fractors 0:07:37.520 --> 0:07:39.480 blast in a bunch of this water into the rock, 0:07:39.840 --> 0:07:42.360 what comes out in terms of oil versus natural gas? 0:07:42.400 --> 0:07:43.440 How does that typically work? 0:07:44.560 --> 0:07:47.960 Yeah, So, in a place like the Permium where most 0:07:48.000 --> 0:07:50.520 of the M and A activity is occurring, not only 0:07:50.560 --> 0:07:53.200 do you have your crude oil, but you also have 0:07:53.320 --> 0:07:57.120 what's called associated natural gas or associated gas. You know, 0:07:57.240 --> 0:08:00.280 typically you will have something to the effect of two 0:08:00.400 --> 0:08:03.520 thirds liquids, you know, one third gas. That gas has 0:08:03.560 --> 0:08:07.679 to go someplace, and it has been a big boon 0:08:07.800 --> 0:08:12.600 to a place like the Permian, which is the third 0:08:13.000 --> 0:08:18.640 largest producer of natural gas as a standalone basin, which 0:08:18.680 --> 0:08:20.920 is really incredible when you think about we're really drilling 0:08:21.440 --> 0:08:25.920 for crude oil in that basin. But what we have 0:08:26.040 --> 0:08:29.960 here is a plethora of natural gas, and the export 0:08:30.040 --> 0:08:36.600 market is the most likely area for it to move 0:08:36.640 --> 0:08:39.960 through in order to balance. In order to balance these 0:08:40.120 --> 0:08:44.120 markets in general, no matter where you drill, you're going 0:08:44.160 --> 0:08:48.559 to drill some natural gas if you're drilling for crude 0:08:48.559 --> 0:08:53.160 oil as well. So when we do talk about natural gas, 0:08:53.320 --> 0:08:57.480 it is a default to talk about crude oil as well, 0:08:57.559 --> 0:09:01.080 since that is the driver of what we come up 0:09:01.120 --> 0:09:05.480 with when we also drill for natural gas and oil, 0:09:05.600 --> 0:09:08.600 so it is the thing that stirs the drink for 0:09:08.640 --> 0:09:10.200 the natural gas market as well. 0:09:10.640 --> 0:09:13.120 So you know, I guess we all kind of got 0:09:13.160 --> 0:09:16.240 a little bit more smarter on liquified natural gas when 0:09:16.559 --> 0:09:19.640 Russia did invade Ukraine and that really cut off the 0:09:19.640 --> 0:09:22.840 supply of Russian gas to Europe. And we've got a 0:09:22.840 --> 0:09:24.719 lot of it, but it's not easy to transport. Is 0:09:24.800 --> 0:09:28.199 you got to do this whole liquification process. How is 0:09:28.240 --> 0:09:29.760 that whole part of the industry developing. 0:09:31.160 --> 0:09:36.640 It's developing very rapidly. We're growing capacity. We have become 0:09:36.800 --> 0:09:41.440 a key exporter to only Europe, but also to Asia. 0:09:42.080 --> 0:09:44.800 One thing that is quite key for us here in 0:09:44.840 --> 0:09:47.640 the US. And we saw this last year as well, 0:09:48.040 --> 0:09:52.400 our ability to adapt quickly and move those move those 0:09:52.520 --> 0:09:56.480 molecules into the market that needed it the most. We 0:09:56.480 --> 0:10:00.240 were saved by a relatively warm winter in Asia, were 0:10:00.280 --> 0:10:05.600 able to move those molecules into Europe to help them 0:10:06.160 --> 0:10:12.720 restock their storage. We have here in Europe relatively stout 0:10:12.840 --> 0:10:19.560 storage at well over eighty three percent fulfilled, and so 0:10:20.040 --> 0:10:23.640 for this winter at least, natural gas storage is not 0:10:23.679 --> 0:10:27.080 going to be an issue and We've done an exceptional 0:10:27.160 --> 0:10:29.839 job in the European Union has done an exceptional job 0:10:30.320 --> 0:10:35.920 refilling its capacity to deal with any uncertainty that would occur, 0:10:36.559 --> 0:10:39.880 not only on the warfront, but also in terms of 0:10:40.200 --> 0:10:45.559 weather as well. So natural gas in the US being 0:10:45.600 --> 0:10:50.200 exported to other countries has been a key contributor to 0:10:50.320 --> 0:10:55.120 how we are looking to balance our market here in 0:10:55.160 --> 0:11:01.200 the US. And you know right now, with your being filled, 0:11:03.360 --> 0:11:07.640 the Asia market is looking quite quite attractive, and it 0:11:07.679 --> 0:11:11.800 is more profitable to move those molecules into Asia relative 0:11:11.800 --> 0:11:12.880 to the European market. 0:11:13.240 --> 0:11:15.920 Vince, great stuff, great tortois force there on the energy 0:11:15.920 --> 0:11:19.880 space that guests Vince Piazza, senior industry analyst covering the 0:11:20.000 --> 0:11:23.400 energy space. We've got a great energy team, a global 0:11:23.640 --> 0:11:25.959 energy teams. You have to look at energy on a 0:11:25.960 --> 0:11:29.040 global basis, and that's what Bloomberg Intelligence does. We appreciate 0:11:29.080 --> 0:11:31.280 getting some time from Vince Piazza here again some more 0:11:31.400 --> 0:11:34.280 m and A in the natural gas spase here in 0:11:34.280 --> 0:11:37.440 the US in some of those shale basins, as Vince 0:11:37.520 --> 0:11:39.200 was saying, there's a lot of demand there and there's 0:11:39.200 --> 0:11:42.160 a need for scale, particularly from some of these smaller companies. 0:11:42.200 --> 0:11:46.880 So again saw another deal today APA to Bai shale 0:11:46.920 --> 0:11:51.440 oil driller calend Petroleum for four point five billion dollars. 0:11:51.440 --> 0:11:52.160 So good stuff there. 0:11:53.520 --> 0:11:56.920 You're listening to the team Ken's our line program Bloomberg 0:11:56.960 --> 0:11:59.960 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:12:00.440 --> 0:12:03.560 the iHeartRadio app and the Bloomberg Business App, or listen 0:12:03.640 --> 0:12:05.760 on demand wherever you get your podcasts. 0:12:07.600 --> 0:12:09.880 Here's something that I don't do. I don't TikTok. 0:12:10.360 --> 0:12:10.600 I know. 0:12:10.679 --> 0:12:13.600 It is just a monster of a social media platform, 0:12:13.640 --> 0:12:16.319 particularly with the younger demos, and really a competitive threat 0:12:16.360 --> 0:12:19.200 to a lot of the existing social media platforms out 0:12:19.240 --> 0:12:22.280 there from certainly an advertising perspective and maybe even a 0:12:22.520 --> 0:12:25.760 e commerce perspective. And we've done some research in Bloomberg 0:12:25.800 --> 0:12:28.439 Intelligence on this, Man Deep Singh, he's our senior tech 0:12:28.480 --> 0:12:31.839 analyst for Bloomberg Intelligency. Man's our global tech team, which 0:12:31.880 --> 0:12:33.720 I'll tell you is one of the best tech research 0:12:33.760 --> 0:12:35.040 teams on the street. 0:12:35.200 --> 0:12:35.800 B I go. 0:12:36.679 --> 0:12:38.280 I know I just said that about our energy team, 0:12:38.280 --> 0:12:40.680 but that's also true with our tech team as well. 0:12:40.720 --> 0:12:44.000 We have folks Europe, North America, Asia, pretty much everywhere 0:12:44.040 --> 0:12:45.720 you need to be, So Man Deep, talk to us 0:12:45.760 --> 0:12:49.720 about TikTok here. I mean, my basic knowledge of these 0:12:49.720 --> 0:12:51.880 social media platforms is just get as many people as 0:12:51.920 --> 0:12:53.440 you can on your platform and then to try to 0:12:53.480 --> 0:12:57.240 monetize them by selling advertising, trying to get them to 0:12:57.280 --> 0:13:00.120 buy stuff. What's TikTok strategy here? 0:13:00.559 --> 0:13:03.719 Well, so they've done exactly that in terms of, you know, 0:13:03.800 --> 0:13:07.400 getting to one hundred million daily plus daily active users, 0:13:07.480 --> 0:13:11.520 monetizing the ads a fifteen billion dollar rund rate. And 0:13:11.600 --> 0:13:14.400 there is a real risk the fact that we're going 0:13:14.480 --> 0:13:18.200 into an election year, this company could be banned. We've 0:13:18.240 --> 0:13:19.640 been talking about it forever. 0:13:19.880 --> 0:13:22.560 They ban could be banned in the US, Yes, because 0:13:22.600 --> 0:13:23.640 of its Chinese ownership. 0:13:23.679 --> 0:13:27.440 Big yeah, Okay, yeah, And that's been the case, you know, 0:13:27.720 --> 0:13:31.040 in terms of a risk for the last couple of years. 0:13:31.280 --> 0:13:33.680 Hasn't happened, but we know this is an election year 0:13:33.800 --> 0:13:36.840 and so there will be more focus on that. And 0:13:37.080 --> 0:13:40.240 the fact that they announced this e commerce play, to me, 0:13:40.320 --> 0:13:44.240 it suggests they want to be out there for the 0:13:44.320 --> 0:13:48.599 small businesses because these are the companies that will advertise, 0:13:48.800 --> 0:13:52.280 that will create their storefront on TikTok. And once you 0:13:52.400 --> 0:13:55.480 have merchants on your platform, it gets all the more 0:13:55.520 --> 0:13:58.199 hard to ban such a platform because people are actually 0:13:58.280 --> 0:14:01.840 generating revenues. Strategy that seems to be the play here. 0:14:01.880 --> 0:14:05.480 But we know social commerce hasn't been successful in the US. 0:14:05.559 --> 0:14:09.080 Take a look at Facebook. They tried Facebook shops, Instagram 0:14:09.120 --> 0:14:12.680 shops never really took off. And so the play here 0:14:13.000 --> 0:14:15.640 is something that hasn't worked out in the US because 0:14:15.960 --> 0:14:19.040 the buying behavior of US consumers is very different from 0:14:19.080 --> 0:14:22.200 the Asia consumers where social commerce has been successful. Do 0:14:22.360 --> 0:14:25.160 you in which is the TikTok eqaluent is a two 0:14:25.240 --> 0:14:27.960 hundred billion dollar GMV business in China. 0:14:28.160 --> 0:14:31.200 So social commerce that's a kind of kind of a 0:14:31.240 --> 0:14:33.680 new term for me. But that's basically just taking social 0:14:33.720 --> 0:14:38.400 media users Facebook, whatever in this case TikTok and having 0:14:38.600 --> 0:14:41.920 them and drive I guess e commerce off of that platform, 0:14:41.920 --> 0:14:45.440 getting them to start buying stuff, and then TikTok will make. 0:14:45.400 --> 0:14:49.160 It, yeah, finishing the transaction within your social media app. 0:14:49.200 --> 0:14:51.280 So right now they show you an AD and that 0:14:51.800 --> 0:14:55.600 takes the user traffic to the e commerce website. In 0:14:55.640 --> 0:14:57.720 this case, the experience is in app. 0:14:57.760 --> 0:14:58.840 It makes a ton of sense. 0:14:58.880 --> 0:15:00.920 I mean, it makes for a good buying experience if 0:15:00.920 --> 0:15:03.360 I can do things within the app as opposed to 0:15:03.440 --> 0:15:04.440 going to another app. 0:15:04.480 --> 0:15:07.320 So why hasn't it worked here in the US, do 0:15:07.320 --> 0:15:07.640 you think? 0:15:07.800 --> 0:15:11.120 Because think of how an e commerce website works. You 0:15:11.200 --> 0:15:15.720 need logistics, you need payments, you need sourcing, you need inventory. 0:15:16.080 --> 0:15:19.160 Social media companies aren't doing that, okay, and Amazon is 0:15:19.200 --> 0:15:22.200 doing that. They've built so many warehouses just for doing that. 0:15:22.240 --> 0:15:25.880 They have their own delivery. So e commerce requires all 0:15:25.920 --> 0:15:29.160 these things. And for TikTok they're likely going to partner. 0:15:29.440 --> 0:15:33.160 So they have already partnered with Shopify and Walmart. They're 0:15:33.200 --> 0:15:36.200 gonna look for more partners. Obviously Amazon has done the 0:15:36.240 --> 0:15:39.120 same with other social media companies. Who would have never 0:15:39.360 --> 0:15:42.480 imagined Amazon partnering with Meta and Snapchat. 0:15:42.520 --> 0:15:45.400 They've done that. So what's the we need talk to 0:15:45.520 --> 0:15:48.640 the folks in the e commerce world. What's the feeling 0:15:48.720 --> 0:15:51.760 about the ability of bite Dance slash TikTok to actually 0:15:52.640 --> 0:15:53.960 has some success here in the US? 0:15:54.800 --> 0:15:58.160 Very unlikely at least from my lens, given you know, 0:15:58.720 --> 0:16:02.560 you need to match that Amazon experience that people have 0:16:02.880 --> 0:16:05.560 in the US right two day prime shipping, one day 0:16:05.640 --> 0:16:08.760 prime shipping, and so for them to do it, one 0:16:08.840 --> 0:16:11.040 they need the merchants on the platform. They need to 0:16:11.120 --> 0:16:13.880 offer a lot of stuff. But look, they appeal to 0:16:13.920 --> 0:16:16.960 the younger demographic. We know TikTok appeals to that ten 0:16:17.040 --> 0:16:21.640 to twenty five year olds and they can adopt a 0:16:21.680 --> 0:16:25.360 new platform much more quickly than other consumers. So I 0:16:25.400 --> 0:16:28.880 wouldn't be surprised if they use incentives to drive that 0:16:28.960 --> 0:16:31.600 e commerce shift. But in the end, there is a 0:16:31.640 --> 0:16:34.320 political bend to it, and the reason why they're doing 0:16:34.360 --> 0:16:36.680 it is just to make sure they have a lot 0:16:36.720 --> 0:16:40.040 of small merchants on the platform, which increases their odds 0:16:40.040 --> 0:16:42.120 that they won't be banned in the US. 0:16:42.160 --> 0:16:44.040 All right, So for those folks that aren't really that 0:16:44.160 --> 0:16:48.480 familiar with the business of TikTok, bike Dance, which owns TikTok, 0:16:48.520 --> 0:16:51.320 aims to grow the size of its US e commerce 0:16:51.320 --> 0:16:54.680 business tenfold to as much as seventeen point five billion 0:16:54.720 --> 0:16:56.840 dollars this year, according to people familiar with the matter, 0:16:56.920 --> 0:17:01.200 posing a bigger threat to Amazon Dot So that's laying 0:17:01.240 --> 0:17:01.960 it out there. 0:17:02.160 --> 0:17:04.679 Yeah, I mean, it's an ambitious goal, but we know 0:17:04.840 --> 0:17:08.600 the US e commerce market is huge, so it's still, 0:17:08.680 --> 0:17:11.280 you know, less than five percent of the overall e 0:17:11.280 --> 0:17:13.320 commerce market that's out there. 0:17:13.080 --> 0:17:16.480 And TikTok was last year on track to a master 0:17:16.520 --> 0:17:20.960 around twenty billion in global gross merchandise value, with Southeast 0:17:21.000 --> 0:17:23.680 Asia contributing the bulk of the sales through its platform, 0:17:23.680 --> 0:17:25.840 Bloomberg News reported. So now they're saying, okay, so they 0:17:25.840 --> 0:17:28.560 have a success, Yeah, some success in other parts of 0:17:28.560 --> 0:17:30.280 the world. Now the question is can they do it 0:17:30.320 --> 0:17:32.360 here in the US. Yeah, and you talk to Amazon, 0:17:32.400 --> 0:17:34.399 They're like, they're a fly. We're not even worried about it. 0:17:34.400 --> 0:17:34.960 It's that's the case. 0:17:35.320 --> 0:17:38.200 I think Amazon did pre empt that. So in December 0:17:38.280 --> 0:17:41.800 they announced this partnership with Meta, with Snapchat, with Pinterest. 0:17:42.320 --> 0:17:46.080 That didn't happen so far. So Amazon and the other 0:17:46.119 --> 0:17:50.000 social media platforms want to partner with these e commerce 0:17:50.000 --> 0:17:53.600 platforms because in the end, this is the next leg 0:17:53.720 --> 0:17:57.639 off the offline to online shift, the video shopping, the 0:17:57.720 --> 0:18:00.720 live stream shopping, which you have seen play out in 0:18:00.840 --> 0:18:05.000 China and the Asian regions where TikTok has had some success. 0:18:05.040 --> 0:18:06.639 All Right, I can't let you out of here without 0:18:06.680 --> 0:18:11.240 talking about AI whatever that is generative AI market. This 0:18:11.359 --> 0:18:14.560 is your research, dude. Generative AI market appears set to 0:18:14.600 --> 0:18:18.119 reach one point three trillion by twenty thirty two. What 0:18:18.160 --> 0:18:18.920 are you talking about? 0:18:19.440 --> 0:18:22.640 Well, so what we saw last year was a bumper 0:18:22.880 --> 0:18:25.840 year in terms of what Nvidia showed us, you know, 0:18:25.920 --> 0:18:29.560 their data center sales. So I don't think anyone can 0:18:29.600 --> 0:18:32.280 write off such forecasts now after what we saw with 0:18:32.520 --> 0:18:35.240 video last year. But look, it's going to happen in phases. 0:18:35.320 --> 0:18:38.440 Right now, we are still in that infrastructure phase where 0:18:38.520 --> 0:18:42.280 chip companies are seeing that demand, and more so around 0:18:42.320 --> 0:18:46.080 you know, the accelerator chips, the GPUs. Not every type 0:18:46.080 --> 0:18:49.120 of chip is in demand. Now you're seeing memory companies 0:18:49.160 --> 0:18:52.000 see that AI demand, and gradually you are going to 0:18:52.040 --> 0:18:56.800 see other types of infrastructure really get replaced. Within data centers, 0:18:56.840 --> 0:18:59.960 we are going through a massive data center refresh cycle, 0:19:00.359 --> 0:19:03.520 and then it will trickle through applications. The real disruption 0:19:03.960 --> 0:19:07.679 will be in how we use our application software because 0:19:08.000 --> 0:19:10.600 AI is going to redefine the way we use software. 0:19:10.640 --> 0:19:11.520 And that's the. 0:19:11.880 --> 0:19:14.520 One point three trillion component over ten years. 0:19:15.040 --> 0:19:16.680 Here's some more numbers, because you guys have a lot 0:19:16.680 --> 0:19:19.960 of numbers in your research generative. AI may expand to 0:19:19.960 --> 0:19:23.120 about ten to twelve percent of the total IT hardware, 0:19:23.640 --> 0:19:27.080 software services, AD spending and gaming markets by twenty thirty 0:19:27.080 --> 0:19:31.800 two from less than one percent. Based upon the bi calculations. 0:19:32.160 --> 0:19:35.080 That gives you some sense of kind of the growth here. 0:19:35.280 --> 0:19:38.840 Yeah, and that's the disruptive element. We're not talking about 0:19:38.840 --> 0:19:44.000 companies finding new dollars to put in generative AI. You 0:19:44.040 --> 0:19:47.520 are going to see some existing spend being migrated to 0:19:48.000 --> 0:19:52.640 generative AI for good reasons because of productivity. Copilots make 0:19:52.720 --> 0:19:56.280 you more productive, the workers more productive, and that is 0:19:56.320 --> 0:19:59.000 why companies are going to move some of their existing 0:19:59.040 --> 0:20:00.960 spend towards these any eye tools. 0:20:01.160 --> 0:20:03.440 You guys wrote a research report on this, right, Yeah, 0:20:03.640 --> 0:20:06.040 where can you? I can get a Bloomberg terminal users? 0:20:06.080 --> 0:20:08.439 I mean basically, this report tells you everything you need 0:20:08.480 --> 0:20:12.080 to know about AI. Yeah, get it onto the report, 0:20:12.240 --> 0:20:15.560 sixty page report. BI go gets you to Bloomberg Intelligence. 0:20:15.680 --> 0:20:17.760 That's where you can find it. Yeah, anywhere else for 0:20:17.880 --> 0:20:22.080 like the non subscriber, the non Bloomberg people, Oh, they. 0:20:21.920 --> 0:20:25.720 Could reach out to the media folks, and I'm sure 0:20:25.760 --> 0:20:26.920 they can share something. 0:20:26.800 --> 0:20:29.080 Because I'm telling you, folks, a lot of people, as 0:20:29.080 --> 0:20:31.800 we all know, in twenty twenty three, AI was not 0:20:31.880 --> 0:20:35.720 just the tech story. It was a US global marketplace 0:20:36.000 --> 0:20:37.679 story that you have a lot of the gains we 0:20:37.720 --> 0:20:40.520 saw in the equity markets in twenty twenty three, that 0:20:40.680 --> 0:20:42.359 weight loss drug. So and I know we've got a 0:20:42.359 --> 0:20:45.880 weight loss report out there. The GLP stuff from Sam Fizzelli. 0:20:45.960 --> 0:20:48.760 So again some great stuff coming out of Bloomberg Intelligence. 0:20:48.840 --> 0:20:51.000 Check it out on the Bloomberg terminal, big Man Deep 0:20:51.000 --> 0:20:52.760 saying thank you so much for joining us. He's a 0:20:52.800 --> 0:20:56.520 senior analyst for technology Bloomberg Intelligence. He's in the studio. 0:20:56.560 --> 0:20:59.200 He's in the office on like of some management level 0:20:59.200 --> 0:21:01.600 folks at BI. But take note of that who comes 0:21:01.640 --> 0:21:03.159 in and who doesn't, Man Deep sing. He is our 0:21:03.240 --> 0:21:06.560 senior guy on technology, along with anorog Rana, doing our 0:21:06.560 --> 0:21:07.320 global coverage. 0:21:07.320 --> 0:21:10.200 Here you're listening to the tape. Can's our live program 0:21:10.280 --> 0:21:14.200 Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, 0:21:14.400 --> 0:21:17.080 the tune in app, Bloomberg dot Com, and the Bloomberg 0:21:17.119 --> 0:21:20.240 Business App. You can also listen live on Amazon Alexa 0:21:20.280 --> 0:21:23.600 from our flagship New York station. Just say Alexa play 0:21:23.720 --> 0:21:25.680 Bloomberg eleven thirty. 0:21:26.680 --> 0:21:28.919 All right, let's check in with Ed Harrison. Why do 0:21:28.960 --> 0:21:31.000 we do that? Because he's a senior editor Bloomberg News. 0:21:31.040 --> 0:21:34.200 He's a smart person, has a ton of experience here 0:21:34.240 --> 0:21:36.760 covering the markets, and he's got a great column that 0:21:36.800 --> 0:21:39.080 a lot of people feel like is they must read 0:21:39.440 --> 0:21:43.320 the Everything Risk, a column for Bloomberg News. His latest 0:21:43.320 --> 0:21:45.080 one is this twenty twenty four is risk is a 0:21:45.119 --> 0:21:48.000 hot US economy? What do you mean by that? Ed, 0:21:48.320 --> 0:21:50.320 Senior Editor, Bloomberg News, joins us Ed, what do you 0:21:50.400 --> 0:21:53.840 mean by the twenty twenty four risk is a hot 0:21:54.359 --> 0:21:55.120 US economy? 0:21:56.280 --> 0:21:57.800 Hey? Happy new year to you, by the way. 0:21:57.880 --> 0:21:58.200 Cheers. 0:22:00.040 --> 0:22:03.120 I think the risk is that everyone really is expecting 0:22:03.200 --> 0:22:07.600 soft landing, Yes, but really they're expecting that soft landing 0:22:07.640 --> 0:22:12.040 to be associated with enough softness to get rate cuts. 0:22:12.040 --> 0:22:14.040 In fact, in the bond market, we have one hundred 0:22:14.080 --> 0:22:18.280 and forty basis points of cuts that are being priced in, 0:22:18.600 --> 0:22:21.480 and we're already saying that as soon as March we 0:22:21.520 --> 0:22:24.080 could have a rate cut. That's what the pricing for 0:22:24.160 --> 0:22:28.520