Latest / Bloomberg Intelligence / Victory Lap For Amazon: Earnings Beat Estimates Again

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Victory Lap For Amazon: Earnings Beat Estimates Again · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com Slash podcast. Really strong numbers out
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Speaker 1: of a lot of retailers and particularly Amazon last night.
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Speaker 1: Let's bring in our good friend Burt Flickinger, managing director
0:28
Speaker 1: at Strategic Resource Group. He is the go to person
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Speaker 1: on all things retail in Bert. We saw some really
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Speaker 1: impressive numbers out of the e commerce giant last night,
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Speaker 1: didn't We were very impressive numbers And what it really
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Speaker 1: uh synthesizes is Jeff Bezos and to his credit McKenzie Bezos,
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Speaker 1: his first wife, who helped co find the company, really
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Speaker 1: taking a victory lap with six consecutive quarters of beating estimates,
0:59
Speaker 1: significant of late. And the key thing now is Amazon,
1:03
Speaker 1: by this time next year is going to be the
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Speaker 1: biggest retailer worldwide, eclips in Walmart and everyone else. So
1:10
Speaker 1: what is the future like then for investors? I mean,
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Speaker 1: we saw a record EPs, but Jeff Bezos has been
1:17
Speaker 1: known to turn the tap on and turn the tap
1:20
Speaker 1: off in terms of profits. And that's a great, great question,
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Speaker 1: Matt and Uh. For us, the key thing is on
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Speaker 1: tap on and off is Bezos and Amazon are increasing
1:34
Speaker 1: cap acts or capital expenditures by over a hundred year
1:39
Speaker 1: over years. So the number to look at is a
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Speaker 1: hundred and eighty five distribution centers worldwide. They'll have more
1:47
Speaker 1: distribution centers in Walmart and everyone else, more efficient, more
1:52
Speaker 1: effective in What's particularly telling in Amazon's release is that
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Speaker 1: everything solar and sustainable houred. So Amazon's making money from
2:03
Speaker 1: solar and using it to lower prices. And the perfect
2:07
Speaker 1: compare and contrast is Long Beach, where Kroger and others
2:11
Speaker 1: would not pay Hero pay and they would not put
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Speaker 1: solar on the roofs to save money, made money, lower prices,
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Speaker 1: and increased workers wages Amazon does. Kroger's closing up in
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Speaker 1: Long Beach, California, and Amazon's opening it's it's new Amazon
2:27
Speaker 1: Fresh stores there. Uh to take run the table from
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Speaker 1: California to the East coast. But it's just yeah, just extraordinary.
2:37
Speaker 1: I'm wondering about kind of their geographic footprint here, I'm
2:41
Speaker 1: just looking at the p g PGeo function on the
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Speaker 1: Bloomberg terminal gives you a geographic breakdown of the revenue
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Speaker 1: about six in North America International. Then the rest is aws,
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Speaker 1: do you expect Amazon to increased investments is to try
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Speaker 1: to really grow their international footprint? Yeah, Paul, definitely. Amazon's
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Speaker 1: international growth that you're good point is fifty seven percent
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Speaker 1: versus UH overall UH total total corporate growth. And international's
3:14
Speaker 1: going to be a tremendous opportunity as both the COVID
3:18
Speaker 1: nineteen pandemic and combined with the accelerating ice age worldwide,
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Speaker 1: Amazon is just just going to replace shopping centers and
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Speaker 1: shopping malls. And look at Amazon's landing page for Mother's Day,
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Speaker 1: you don't have to go any place to get anything
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Speaker 1: from chocolate, candy to close to tech. Uh. And Amazon
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Speaker 1: International is going to be a big part of the
3:43
Speaker 1: growth story going forward. And Paul, the reason why you're
3:46
Speaker 1: questioning on international is so important is Ali Baba with
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Speaker 1: Singles Day generated thirty point seven billion and one day
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Speaker 1: last year, Amazon Prime in two days generated ten point
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Speaker 1: four billion. So if Amazon is adding two to three
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Speaker 1: more Prime days a year, and then add singles day internationally.
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Speaker 1: Uh Amazon, Amazon can beat everybody uh in in e
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Speaker 1: retail and the one Achilles seal for Amazon right that,
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Speaker 1: right now is food retail, where the cops are still negative.
4:18
Speaker 1: And and as you mentioned the prior segment concerns about
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Speaker 1: the Federal Grade Commission. But it doesn't look like there's
4:24
Speaker 1: any an a trust in the future either. I mean,
4:27
Speaker 1: it's gonna be hard to beat local there. I have
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Speaker 1: here in Berlin occasionally looked at getting food off of Amazon,
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Speaker 1: but it's not as good as we've got local services
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Speaker 1: like Guerrillas that deliver in literally ten minutes, I mean
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Speaker 1: sometimes less than ten minutes um. And I've become addicted
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Speaker 1: to that. I wonder though, in the bigger picture, bur
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Speaker 1: you mentioned at the top that Amazon is going to
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Speaker 1: overtake Walmart as the biggest retailer in the world. The
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Speaker 1: Walton family can't take this lying down, right, Doug McMillan
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Speaker 1: has to do something about it. Walmart's got you know,
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Speaker 1: a million more employees than Amazon, and their market cap
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Speaker 1: is less than a fourth of Amazon. They're trading for
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Speaker 1: three billion dollars. Amazon's trading from one trillion what can
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Speaker 1: Walmart do about this to try and class some of
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Speaker 1: that back. Walmart can win on food, Matt and that's
5:23
Speaker 1: that's Ben Ben, Amazon's on going Achilles Heel and uh Walt,
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Speaker 1: Walmart will be able to deliver to of the US
5:34
Speaker 1: population by the end of this year. So Amazon wins,
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Speaker 1: Walmart wins, Target wins, just about everybody else loses. And
5:42
Speaker 1: and what I like about your Berlin comment is you
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Speaker 1: know better than I do, uh gallery kalpof Karstat. A
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Speaker 1: lot of the department stores have either closed or cut
5:52
Speaker 1: back in Germany and throughout the EU, and Amazon's growing
5:59
Speaker 1: and replacing the bricks and mortar stores. And what's notable
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Speaker 1: your time about Berlin and Europe is Walmart failed with
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Speaker 1: all three formats in continental Europe. So where Walmart's failed, uh, Korea,
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Speaker 1: Germany and elsewhere. Amazon's winning just about everywhere, and we'll
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Speaker 1: continue to win. Yeah. Absolutely. I mean going online is
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Speaker 1: a more pleasant experience than going into a calf off,
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Speaker 1: I'll tell you that. And and a cars dot and
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Speaker 1: they are we see him closing left and right around here. Bert,
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Speaker 1: thanks so much for joining us. Bert Flickings, you're there
6:31
Speaker 1: talking to us about Amazon he's a managing director at
6:34
Speaker 1: Strategic Resource Group. Well here in the United States, the
6:41
Speaker 1: story about the vaccines is a very positive one as
6:44
Speaker 1: vaccine rates continue to increase, and that has a corresponding
6:48
Speaker 1: uh impact on the economy, as economy begins to open up.
6:51
Speaker 1: And of course you you can trast that with what
6:53
Speaker 1: Matt's experiencing in Germany and across Europe. Just you know,
6:56
Speaker 1: it looks like there's several months behind then of course
6:58
Speaker 1: the tragedy that's unfull thing UH in UH India just
7:02
Speaker 1: goes to the importance of getting folks facted up and
7:05
Speaker 1: and all through this process we've been fortunate to speak
7:08
Speaker 1: to experts such as Lauren Sour, the Associate Professor of
7:11
Speaker 1: Emergency Medicine at the Johns Hopkins University. And I should
7:15
Speaker 1: not that the Bloomberg School of Public Health a Johns
7:17
Speaker 1: Hopkins is supported by Michael Arre Bloomberg, founder Bloomberg LP,
7:20
Speaker 1: Bloomberg Philanthropies and this radio and TV operation. Uh Dr
7:24
Speaker 1: Sour thanks so much for joining us here. I guess
7:26
Speaker 1: I want to go to the issue of what we
7:28
Speaker 1: heard recently from the CDC about mass and just you know, behavior,
7:33
Speaker 1: individual behaviors as more and more people get vaccinated in
7:37
Speaker 1: this country. Do you think the messaging is matching what's
7:40
Speaker 1: really going on out there in society. That's a great question.
7:45
Speaker 1: I think there is a little bit of a disconnect.
7:47
Speaker 1: And there's also this sense of, um, you know, we're
7:50
Speaker 1: getting vaccinated, we're doing the work. Now, please let us
7:53
Speaker 1: get out there and get pick our masks off and
7:55
Speaker 1: be free, you know, and I completely understand that, you know,
7:59
Speaker 1: we we do want things to get back to normal.
8:01
Speaker 1: I think, um, there could have been a little more
8:04
Speaker 1: explicit information in that updated CDC guidance on masking that
8:09
Speaker 1: we would have liked to see around, like office usage
8:11
Speaker 1: and things like that. But it is good to see
8:13
Speaker 1: the CDC acknowledging the safety of the outdoor space, especially
8:17
Speaker 1: as we move into summer and people are anxious to
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Speaker 1: get out there to those outdoor restaurants, you know, outdoor settings,
8:23
Speaker 1: um and be with family members who are vaccinated or
8:25
Speaker 1: friends who are vaccinated. Again. You know, it does seem
8:29
Speaker 1: like it's kind of silly to wear a mask outside
8:31
Speaker 1: to begin with, right, it seems very performative, like you're
8:36
Speaker 1: sort of stating your political opinion more than really trying
8:39
Speaker 1: to protect somebody because it's so unlikely to catch the
8:43
Speaker 1: virus in an outdoor setting. Yeah, I mean, I think,
8:48
Speaker 1: you know, the guidance was catching up with the science, right,
8:51
Speaker 1: And so one of the most impressive things that has
8:54
Speaker 1: happened in the last year year and a half is
8:56
Speaker 1: how quickly science has happened and how we're rapidly trying
8:59
Speaker 1: to learn learn about all these different settings about aerosol transmission,
9:02
Speaker 1: about contact transmission, like everything about this virus is new
9:06
Speaker 1: when this pandemic started, and so we know that the
9:10
Speaker 1: sort of regulatory environment and the policy environment has a lag.
9:14
Speaker 1: And so I think this is what we're seeing as
9:16
Speaker 1: policy and guidance catching up with the science and you know,
9:19
Speaker 1: the sort of exactly what you're talking about. The things
9:21
Speaker 1: we see we already feel to be inherent. So the
9:24
Speaker 1: science is there, the policy is catching up, and people
9:27
Speaker 1: can take advantage of that guidance and those recommendations. Uh, Lauren,
9:33
Speaker 1: when do you think we'll know? When will the science
9:35
Speaker 1: come in about perhaps how long these vaccines actually work?
9:41
Speaker 1: Is it six months? Is at twelve months? Is it
9:43
Speaker 1: longer than that? And obviously that will go to what
9:45
Speaker 1: we do, you know, roughly a year from now. I
9:47
Speaker 1: know studies are being done. When do you think that
9:50
Speaker 1: science will be available? Yeah, I think it's already coming in.
9:53
Speaker 1: I mean, I think we're starting to We're watching those
9:56
Speaker 1: first groups of vaccinies who are actually probably on their
10:00
Speaker 1: or dose from from the people who participated in the studies.
10:03
Speaker 1: So they're getting their boosters to see what they're um,
10:06
Speaker 1: you know, what they're waning intibodies look like and UM
10:09
Speaker 1: and that data, those data are coming in right That
10:11
Speaker 1: information is being gathered and analyzed right now as we speak,
10:16
Speaker 1: which is really impressive. I think UM on the on
10:19
Speaker 1: the natural infection side, we're just starting to see that
10:22
Speaker 1: information from our earliest patients, So UM people who so
10:26
Speaker 1: generously contributed their time, their specimens, their clinical data, you know,
10:31
Speaker 1: and participated in those observational studies early in the pandemic
10:34
Speaker 1: and continue to participate UM or helping us to understand
10:39
Speaker 1: what happens after we get infected, or what happens after
10:42
Speaker 1: we get vaccinated, or what happens after we get infected
10:45
Speaker 1: and vaccinated to our immunity. So I think, you know,
10:48
Speaker 1: this summer, we're going to start to see a lot
10:50
Speaker 1: of data pouring in on UM that first year of
10:53
Speaker 1: infection and what it looks like, along with the seasonality
10:55
Speaker 1: of the virus itself. We have a bloomberg opinion UM
11:00
Speaker 1: columnist Kathy O'Neil. She's also a mathematician. She wrote the
11:03
Speaker 1: book Weapons of Math Destruction. She says, like, you know,
11:09
Speaker 1: people are ridiculously worried about this. Once you're vaccinated, and
11:14
Speaker 1: as many other people are vaccinated, as is the case
11:17
Speaker 1: in the US, these solutions are nine point and these
11:22
Speaker 1: are her numbers, nine nine nine nine percent effective. Are
11:27
Speaker 1: we being a little over dramatic at this point? Yeah,
11:32
Speaker 1: I'm not sure. I would say, I'm not sure where
11:35
Speaker 1: those numbers come from. I think, um, we know we
11:38
Speaker 1: have an incredibly a series of incredibly safe and effective vaccines.
11:43
Speaker 1: Plus when you add these additional protective measures, as we
11:46
Speaker 1: get more and more of the population UM protected through vaccine,
11:50
Speaker 1: those numbers do increase. Right that her community starts to
11:53
Speaker 1: build UM. I think some new studies have come out
11:56
Speaker 1: just opink in the last couple of days showing that
11:59
Speaker 1: um AT they're just one dough if you have a
12:01
Speaker 1: reduction and transmission and a reduction in severity. So that's
12:05
Speaker 1: also really exciting to see. But again. You know you
12:08
Speaker 1: want to wait for that cycle, that full cycle of
12:11
Speaker 1: participants early from the early studies to understand what does
12:14
Speaker 1: the ongoing picture of immunity and detection look like in
12:18
Speaker 1: the community. Absolutely, Lauren, thanks so much for joining us.
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Speaker 1: Lauren sour there from the Johns Hopkins School talking about COVID.
12:27
Speaker 1: Let's turn to commodities here. I'm talking soft commodities like corn, soybeans,
12:32
Speaker 1: wet sugarcane. All of these grands are making multi year highs.
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Speaker 1: Let's get a look at underhood what's driving this. We
12:38
Speaker 1: welcome Sell Gilberti, President CEO, ce IO and co founder
12:43
Speaker 1: of two Creemp Trading. They trade these commodities South. Thanks
12:47
Speaker 1: so much for joining us here. I know our discussion
12:49
Speaker 1: is going to go supply demands. So where do you
12:52
Speaker 1: want to go first? As we think about these commodities
12:55
Speaker 1: setting some multi year highs, well, it is supplied demands.
12:58
Speaker 1: So that's um, that's what's driving these highs. Basically, we
13:02
Speaker 1: are using more grains. In the case of corn and soybeans,
13:06
Speaker 1: we're using more grains two years in a row than
13:08
Speaker 1: we produce globally, and so that that's a very big deal.
13:11
Speaker 1: When you see stocks shrinking, your grain stock shrinking, Um,
13:15
Speaker 1: you get higher prices. That says any commodity. It is
13:18
Speaker 1: simply supply to man. What's amazing is that soybean ending
13:23
Speaker 1: stocks and that means what's left over after you grow
13:26
Speaker 1: the whole crop and use everything you're gonna use, there's
13:28
Speaker 1: generally a little bit left. Um. Soybeans are down year
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Speaker 1: on year. The projections corn. This is US US stocks
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Speaker 1: corn down and weak down. This is the inventories inventories
13:39
Speaker 1: that's correct, excess inventories. And that's that's enormous UM. And
13:42
Speaker 1: that's why you've seen these these large price rises usually.
13:46
Speaker 1: I mean, if you have these kind of price gains,
13:48
Speaker 1: I know, farmers like to go out and plant more.
13:51
Speaker 1: Are we going to see supply meat demand? Is? Is this,
13:55
Speaker 1: you know, the transitory inflation that Powell is talking about
13:59
Speaker 1: or these prices here to stay? I think these prices
14:02
Speaker 1: are here to stay for more than one season. They
14:04
Speaker 1: never you know, grains are easy to grow, um, but
14:07
Speaker 1: it does take a full growing season a year, you know.
14:09
Speaker 1: So essentially, when when the the u f d A
14:13
Speaker 1: did kind of drop a bomb on the market in
14:15
Speaker 1: the last day of Marching their annual acreage report where
14:18
Speaker 1: they came in with much lower corn and soybean acres
14:21
Speaker 1: in the United States, and people anticipated we will raise
14:24
Speaker 1: that number a little bit, so you will see these
14:25
Speaker 1: balance sheet estimates that are really tight right now kind
14:29
Speaker 1: of loosen a little. But the bottom line is even
14:32
Speaker 1: factoring in perfect growing weather um, which is a big
14:35
Speaker 1: f around the world, and we're just planning the seeds
14:39
Speaker 1: now that we're counting on to harvest in the autumn.
14:42
Speaker 1: Even with a perfect harvest and a and a good yield,
14:45
Speaker 1: we're still not going to rebuild these supplies. It's going
14:47
Speaker 1: to take at least until next growing season that's autumn
14:51
Speaker 1: in the Northern Hemisphere, in order to get these balance
14:53
Speaker 1: sheets back online. And that's assuming good weather. So did
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Speaker 1: the pandemic play any roll in this? It seems just
15:01
Speaker 1: like a big miss here on people's supply side models
15:06
Speaker 1: and demand models. Um, it's true. The pandemic was really
15:10
Speaker 1: confusing because right when it hit, we assumed we'd use
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Speaker 1: a lot less corn for f F and all, and
15:14
Speaker 1: we did, but the the use of that has come
15:17
Speaker 1: roaring back. People panicked, particularly about the use of wheat.
15:20
Speaker 1: We thought, you know, no more cruise line and no
15:22
Speaker 1: more casinos, no more big parties. And you know, a
15:25
Speaker 1: cruise line will get twenty tons of wheat delivered to
15:27
Speaker 1: it at a time on big palettes because they're making
15:30
Speaker 1: homemade breads and you know the hots and everything for
15:33
Speaker 1: their bars, and people panic. Well guess what, everybody went
15:36
Speaker 1: home and became a home chef. For a while. The
15:37
Speaker 1: number one search on the internet globally was for banana bread.
15:41
Speaker 1: And we actually used the quarter on quarters one of
15:43
Speaker 1: those quarters last year. Yeah, there you go. And and
15:46
Speaker 1: we we use more wheat by one percent according to
15:48
Speaker 1: the Wheat Board or somebody, and and that's a really
15:51
Speaker 1: big deal. We're actually using more, that's the key. We
15:54
Speaker 1: use more grains. The combined use of corn, soybeans, and
15:58
Speaker 1: wheat everything all year and we've we've studied this back
16:01
Speaker 1: to nineteen is either a global record or they just missed.
16:05
Speaker 1: So it's the second highest. It's always rising. So when
16:08
Speaker 1: you have these temporary supply disruptions like lower acres than
16:12
Speaker 1: you expected, like poor weather in Brazil for the for
16:15
Speaker 1: the second crop corn, these are big deals. And that's
16:18
Speaker 1: why we've seen this price appreciation, which should hold more
16:21
Speaker 1: than a year. I've learned more in the last year
16:23
Speaker 1: about different variations of wheat and flour than ever in
16:27
Speaker 1: my life. I've made bread for the first time in
16:30
Speaker 1: my life. I've made pasta for the first time in
16:31
Speaker 1: my life. So you're you're spot on in terms of that,
16:36
Speaker 1: because I'm not somebody who ever spent time in the
16:37
Speaker 1: kitchen before. Are there any softs that um, where supply
16:41
Speaker 1: is just way too high and people didn't didn't use
16:45
Speaker 1: as much as we thought they would. Um, you know,
16:48
Speaker 1: nothing jumps out. I mean people are getting a little
16:51
Speaker 1: nervous about coffee. People that you know, there's enough sugar.
16:55
Speaker 1: That's another interesting thing. The short answer, no, but they're
16:58
Speaker 1: in commodities, especially aggri cultural commodities, there's either enough or
17:02
Speaker 1: there's plenty. We don't ever run out because your price ration.
17:05
Speaker 1: You know, people don't starve because there isn't enough food
17:07
Speaker 1: in the world. They start because of other reasons, politics
17:09
Speaker 1: and logistics. But so look at it this way. When
17:13
Speaker 1: you're having a birthday party at your house and for
17:15
Speaker 1: five people, and you bought the six inch round cake,
17:18
Speaker 1: that's great, and you have plenty and the doorbell rings
17:21
Speaker 1: and five more people come to surprise you when you
17:23
Speaker 1: look at that cake and you go, well, there's enough.
17:25
Speaker 1: That's what we're experiencing right now. There's either enough or
17:28
Speaker 1: there's plenty, and that's why the markets get nervous right away.
17:31
Speaker 1: I mean soybeans in the US, we've gone from a
17:33
Speaker 1: forty eight day excess supply down to a ten day
17:37
Speaker 1: excess supply. That's that's unbelievable. Um, we only have ten
17:41
Speaker 1: days of soybeans left over at the end of this
17:43
Speaker 1: coming year, assuming a good crop and a good harvest.
17:47
Speaker 1: We all know about that. We all know about the
17:48
Speaker 1: lumber prices as well. It's a fascinating story as well.
17:51
Speaker 1: I have to have you back on in the future.
17:53
Speaker 1: Sal Gea Barty, thanks so much for joining us. He
17:55
Speaker 1: is the CEO of two Cream. Now let's talk a
18:02
Speaker 1: little bit with Laura Martin. She's a senior analyst at
18:05
Speaker 1: Needham and Company, coming to us out of Los Angeles.
18:08
Speaker 1: And we've had some pretty big media companies out with
18:13
Speaker 1: earnings and coming out still this week among them. I
18:18
Speaker 1: know Paul has has done some work on a n
18:21
Speaker 1: R and found Laura, you are one of only five
18:25
Speaker 1: out of forty one analysts with an underperformed on Netflix
18:30
Speaker 1: um What disappoints you about the streaming service, Well, we
18:36
Speaker 1: think that they're the fact that a monopolis. They invented
18:39
Speaker 1: the category, and so the people who are entering late,
18:42
Speaker 1: especially in the last twelve months, are doing much more
18:45
Speaker 1: innovative things around, like pricing strategies. For example, um Peacock
18:50
Speaker 1: has a free at three, five dollar and a ten
18:52
Speaker 1: dollar tier. That's a pricing innovation. Bundling. We're like, Disney
18:56
Speaker 1: will give you Disney Plus standalone, but it will also
18:58
Speaker 1: bundle with um Hulu and with the ESPN for at
19:02
Speaker 1: thirteen dollars a month, which is a lower price than
19:04
Speaker 1: the Netflix standard price of fifteen dollars a month. And
19:07
Speaker 1: then we're seeing a lot more cross promotions with other
19:09
Speaker 1: types of assets. So I think there's just a lot
19:12
Speaker 1: more innovation going on in the streamers that came late
19:16
Speaker 1: to the party. Where especially optimistic about Discovery Plus because
19:21
Speaker 1: David jazz Las said on his call that they're getting
19:24
Speaker 1: five dollars for the ad lite service and another five
19:27
Speaker 1: dollars from advertising, so they're actually getting ten dollars, which
19:31
Speaker 1: is more than they're getting for the ad free service,
19:33
Speaker 1: and it's more than they're getting on their linear TV network.
19:36
Speaker 1: So that's actually the best economic model right now. But Laura,
19:39
Speaker 1: none of them have None of those others have Narcos,
19:43
Speaker 1: none of them have the Crown, none of um them
19:46
Speaker 1: have Ozark. I mean there are series on Netflix that
19:50
Speaker 1: you can't live without having seen, and everyone is waiting
19:55
Speaker 1: for the next season, right, No, disagree. I think con
20:00
Speaker 1: quality is necessary but not sufficient because HBO also has
20:04
Speaker 1: that HBO Max and what content? What a lot of
20:07
Speaker 1: these guys now has live sports and if somebody needs
20:10
Speaker 1: to see the NFL, that is must be programming for them,
20:12
Speaker 1: much more important than the Ozarks. So I wish I could.
20:15
Speaker 1: I wish I could get HBO. I live in this
20:17
Speaker 1: small country of eighty million people, and HBO is not
20:19
Speaker 1: available in Germany, but Netflix is. Hey, Laura, you know, actually, well, Matt,
20:25
Speaker 1: just to give you a sense, Laura has been right
20:26
Speaker 1: here on the next Netflix called the stock down five
20:29
Speaker 1: percent year to date versus calling on eleven or twelve
20:31
Speaker 1: percent gain for the SMP. So it's been a good call, Laura.
20:34
Speaker 1: We've also had some of the big internet companies report
20:38
Speaker 1: this week, and I know you've covered this space since
20:40
Speaker 1: its inception, and you have a great feel for the
20:42
Speaker 1: the advertising market. We saw some of the big players
20:45
Speaker 1: like Google and Facebook really do well and put up
20:49
Speaker 1: some blockbuster numbers. But when you go to some of
20:51
Speaker 1: the smaller players like Pinterest and then last night Twitter,
20:54
Speaker 1: not so much. So are we seeing, you know, a
20:57
Speaker 1: creation of a bifurcated digital ad market. We are the
21:02
Speaker 1: all of the big ad tech that I cover, which
21:04
Speaker 1: is Facebook, Alphabet, Amazon, and Apple, all of them over
21:08
Speaker 1: reported dramatically, UM and not only at the top line,
21:13
Speaker 1: they more even more dramatically overperformed usually over performance at
21:18
Speaker 1: the ets line. So what we're seeing is a continued
21:21
Speaker 1: consolidation of revenue into the big fangs, which are which
21:25
Speaker 1: are competing with each other with the best programmers around,
21:28
Speaker 1: in the best innovation around. UM. I mean Twitter is
21:34
Speaker 1: I can't imagine counting Twitter among the others just because
21:38
Speaker 1: it's so small and so niche. UM. But in terms
21:42
Speaker 1: of the big ones, what's the concern? And I see
21:45
Speaker 1: you have a buy on um, Amazon and Apple, but
21:49
Speaker 1: on Facebook you have a hold, you have buy on Google.
21:52
Speaker 1: In terms of these big giant platforms, what's the regulatory concern?
21:58
Speaker 1: So I think regulatory we have a whole hold on
22:00
Speaker 1: Facebook because we see the regulatory concerns most there. I
22:03
Speaker 1: think Facebook has sort of irritated everyone in Washington, d C.
22:06
Speaker 1: Regardless of what side of the aisle you're on, and
22:09
Speaker 1: and in part because I think those people are afraid
22:11
Speaker 1: for their jobs. I think they believe that Facebook moderates
22:14
Speaker 1: content to gause Republican voices, so our conservative voice is
22:21
Speaker 1: what's call it. So I think that that's actually an
22:23
Speaker 1: existential threat to those people's job security. So I think
22:26
Speaker 1: it's most likely to be regulated. Um, I don't really
22:29
Speaker 1: worry that much about either Apple or Amazon particularly. My
22:34
Speaker 1: opinion is that every company sewing Apple, which is Spotify,
22:38
Speaker 1: and um Fortnite, which is Epic Games, and so Facebook
22:43
Speaker 1: just picked a big fight with Apple, will lose. Apple
22:45
Speaker 1: will win because what Apple delivers is one billion unique
22:49
Speaker 1: users and a billion and they have six hundred million
22:52
Speaker 1: subscribers now, so the value they're bringing to consumers at
22:56
Speaker 1: a two thousand dollar price point is sort of second
22:58
Speaker 1: to none. So I leave their platforms will win every
23:01
Speaker 1: regulatory battle. Laura, We've now got just about every one
23:05
Speaker 1: of the traditional media companies that you have long covered
23:08
Speaker 1: on Wall Street is now out with a streaming service.
23:13
Speaker 1: Is it too early to rank winners and losers? Is
23:16
Speaker 1: that reflected in your ratings? How do you think about
23:19
Speaker 1: some of the traditional media players as they try to
23:21
Speaker 1: to morph into you know, kind of streaming first stories, right,
23:25
Speaker 1: So what I would say is this, um, it isn't reflective.
23:28
Speaker 1: So a the industry design at maturity. So let's call
23:31
Speaker 1: that five years in my opinion, will be three services
23:34
Speaker 1: in the upper left that have fifty or sixty million
23:38
Speaker 1: subs each, and those are all the broadcasters as their anchor,
23:41
Speaker 1: tenanted by the broadcasters who have live sports and live
23:44
Speaker 1: news and the pocketbooks to create live original content. So
23:47
Speaker 1: that's Peacock, Paramount Plus and CBS UM and NBC which
23:53
Speaker 1: is no, I'm forgetting one whatever the other broadcaster is,
23:56
Speaker 1: I'm forgetting who it is UM. So those three are
23:59
Speaker 1: gonna win. I do not think Leftflix wins. And in
24:01
Speaker 1: the other quadrant we have specialty or let's call on
24:04
Speaker 1: passion streaming services. I would put Discovery Plus down there,
24:07
Speaker 1: and I put w w E down there in the
24:09
Speaker 1: surfing channel, in the History channel and brick Box. And
24:12
Speaker 1: so I think people on average will take four or
24:14
Speaker 1: five services, of which three are the general entertainment services
24:17
Speaker 1: and then the other you know, one or two per
24:20
Speaker 1: house will be passion services. That's how I think it
24:22
Speaker 1: plays out in the end, and I and I would say,
24:25
Speaker 1: for sure our sell on Netflix tris like that, but
24:27
Speaker 1: I would say we should be probably more positive on Discovery.
24:31
Speaker 1: But this year they're going to have huge losses from
24:33
Speaker 1: peak spending on launching Discovery Plus and the Olympics, which
24:37
Speaker 1: costs them like a fortunate when they have it. Also
24:40
Speaker 1: when I tried to subscribe to here but not available
24:43
Speaker 1: in Germany, these people need to do a little bit
24:45
Speaker 1: more work if they want to access a big market
24:47
Speaker 1: like this. But you don't think, Laura, that we're headed to.
24:50
Speaker 1: You know, somebody's gonna have the brilliant idea to bundle
24:52
Speaker 1: all these streaming services and make a set top set
24:55
Speaker 1: top box and then sell them all together like new cable.
24:58
Speaker 1: Oh I do. I think that's what I Sanity is
25:00
Speaker 1: going to do. I think that's what Comcast will do, um,
25:03
Speaker 1: But I don't think that's what the consumer wants. Paul.
25:05
Speaker 1: The whole reason we debundle, the big big bundle is
25:09
Speaker 1: because people want the choice to individually subscribe for these
25:13
Speaker 1: all right, Laura, real quickly ten seconds. You live in
25:16
Speaker 1: Los Angeles, Walt Disneyland. Disney Land just open today, are
25:20
Speaker 1: you going? Yes, absolutely, as soon as I could get
25:24
Speaker 1: a ticket. They've raised prices again, but much lower attendance
25:27
Speaker 1: is fabulous. There you go, Laura Martin, thank you so much.
25:30
Speaker 1: We appreciate that. Yeah. Absolutely, Laura Martin. She's a senior
25:33
Speaker 1: analysts that need to be company. She's been covering this
25:36
Speaker 1: media space mat for a couple of three decades and
25:38
Speaker 1: just been all over some of the most innovative research
25:41
Speaker 1: out there, as you know, exemplified by her cautious stance
25:44
Speaker 1: on Netflix. Thanks for listening to the Bloomberg Markets podcast.
25:48
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
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Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
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Speaker 1: on Twitter at Matt Miller, pen on Falsewhinnie, I'm on
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Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always
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