Latest / Bloomberg Intelligence / Summer Driving Season Will Pump Oil Prices Until Fall: Schenker

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Summer Driving Season Will Pump Oil Prices Until Fall: Schenker · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Now
• 0:33
  Speaker 1: let's turn our attention to Jason Shanker. He is the
• 0:35
  Speaker 1: president and the founder of Prestige Economics. He's also a
• 0:38
  Speaker 1: Bloomberg prophet. He's based in Austin, Texas, currently at the
• 0:41
  Speaker 1: Atlanta FEDS Financial Markets Conference in Emilia Island, and you
• 0:45
  Speaker 1: can follow Jason on Twitter at Prestige e con. Uh. Jason,
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  Speaker 1: where you caught on the back foot by the rise
• 0:54
  Speaker 1: in oil prices? No, we've had an expectation that we
• 0:58
  Speaker 1: would see oil prices rise through the driving season. You know,
• 1:02
  Speaker 1: the unemployment rate we saw it in Friday's report, you know,
• 1:05
  Speaker 1: the lowest we've seen since December two thousand. Strong labor
• 1:08
  Speaker 1: market means we're going to see very strong driving demand
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  Speaker 1: that summer. Uh. The OPEC risks on top the Iranian
• 1:15
  Speaker 1: risks of sanctions on top. That just adds fuel to
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  Speaker 1: a fire that we already expected would be burning. Because
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  Speaker 1: the U s summer driving season is one of the
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  Speaker 1: biggest factors for oil prices during the year seasonally. So
• 1:28
  Speaker 1: I want to get a sense of how much is
• 1:30
  Speaker 1: being baked in about the US withdrawing from the Iran packed.
• 1:35
  Speaker 1: If the US does go ahead and withdraw from the
• 1:38
  Speaker 1: nuclear agreement, do you think the oil prices could rise
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  Speaker 1: much more from here? Well, I think they could. I
• 1:45
  Speaker 1: don't think it's priced in at all. Um. You know,
• 1:48
  Speaker 1: the technicals and fundamentals that we've seen in the market.
• 1:51
  Speaker 1: You know, we're but we watched the thirty day on
• 1:53
  Speaker 1: the hundred day moving averages. We've been above those now
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  Speaker 1: for a little bit. Um. We're above other critical supports,
• 1:59
  Speaker 1: these facts as were already supportive of prices. And you know,
• 2:03
  Speaker 1: while we're seeing a little bit more upside today, and
• 2:06
  Speaker 1: I think we're going to see quite a bit more
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  Speaker 1: moving forward. If we pull out of those that agreement
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  Speaker 1: with a run, you know, we could see five dollars,
• 2:14
  Speaker 1: ten dollars, You could see a spike even higher than that.
• 2:17
  Speaker 1: I don't think it'd be sustained. And I think once
• 2:19
  Speaker 1: we get past the driving season, I think there's downside
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  Speaker 1: risks from higher interest rates, and if the trade UH
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  Speaker 1: factors remain in play, then there's still going to be
• 2:28
  Speaker 1: downstairs there. But we see the sort of bifurcated dynamic
• 2:31
  Speaker 1: of upside through the driving season. This produces more upside,
• 2:35
  Speaker 1: but then in the fall more downside. Jason, how much
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  Speaker 1: is this increase in prices really tied to, let's say,
• 2:41
  Speaker 1: the back and forth between the strength of the US dollar.
• 2:45
  Speaker 1: Not much. I think that really if we look, the
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  Speaker 1: biggest fundamental driver for oil, like all commodities, is that
• 2:53
  Speaker 1: they're bought and not sold. The global economy has been
• 2:56
  Speaker 1: doing quite well, and despite what we've seen in industrial
• 2:59
  Speaker 1: medals for those have been a weaker again, those seasonal
• 3:02
  Speaker 1: dynamics for oil demand. Right now in the spring where
• 3:05
  Speaker 1: we're trading driving season contracts with binaries are ramping up production.
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  Speaker 1: This is a time when you see oil prices rise
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  Speaker 1: typically anyway, and now you've got a bit of a
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  Speaker 1: pressure cooker because these geopolitical risks. So I'm trying to
• 3:17
  Speaker 1: figure out right now. It seems like last year people
• 3:21
  Speaker 1: were saying oil is never gonna get above fifty dollars
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  Speaker 1: in barrel, perhaps get to sixty dollars of barrel. Now
• 3:26
  Speaker 1: we're at seventy dollars of barrel. How much of this
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  Speaker 1: is being driven by the fact that Saudi Arabia really
• 3:31
  Speaker 1: wants to hit that eighty dollars of barrel mark for
• 3:34
  Speaker 1: the Saudi aramco I p O possibly to happen next year. Yeah,
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  Speaker 1: I've seen as eighty dollars thrown around. Whether that's there
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  Speaker 1: you know, their actual explicit target or not that their
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  Speaker 1: explicit target was to push oil inventories to a five
• 3:50
  Speaker 1: year towards the five year average range. That's been the
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  Speaker 1: goal of Opecanano PECK members. It's been clear. Something we've
• 3:56
  Speaker 1: talked to our clients about is that Saudi Arabia is
• 3:59
  Speaker 1: priori ties in balance sheet over income statement. Right, That's
• 4:03
  Speaker 1: what they're doing, will sacrifice selling your fewer barrels now
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  Speaker 1: in order to increase the valuation of our business. That's
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  Speaker 1: very clear. Um upside risk. We've been assessing the price
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  Speaker 1: risk this summer. We would see in the sixty dollar
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  Speaker 1: range with potential spikes to eighty. That's something we were
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  Speaker 1: talking to clients about in December as a risk for
• 4:22
  Speaker 1: the summer, so that definitely becomes a more material risk
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  Speaker 1: now with the geo political situation. That doesn't mean it
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  Speaker 1: will be sustained because the trade risks, global growth and
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  Speaker 1: interest rates will determine what happens once we get past
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  Speaker 1: this summer. But for now, best job market. You know
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  Speaker 1: in eighteen years you're gonna see a lot of people
• 4:41
  Speaker 1: on the road and families driving down from Chicago to
• 4:44
  Speaker 1: Disneyland or the Disney World. Are the kinds of things
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  Speaker 1: that you see driving whale prices in the summer and
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  Speaker 1: driving a lot of other bills too. If you're going
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  Speaker 1: to Disney World. Just saying I want to get I
• 4:56
  Speaker 1: want to I want to get a sense of what
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  Speaker 1: you think of shale drillers and and the prospect of
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  Speaker 1: them really ramping up production in response to the higher price,
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  Speaker 1: meaning that they're basically going to offset some of the
• 5:08
  Speaker 1: demand with just more output. What do you think is
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  Speaker 1: of that? Well, I think there's a couple of things
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  Speaker 1: that you know you still have. On the one hand,
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  Speaker 1: these folks they're looking at the curve, they know the
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  Speaker 1: seasonalities of pricing, and if they're making the drilling decisions,
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  Speaker 1: you know they're still going to have to understand and
• 5:26
  Speaker 1: they deal with those dynamics. So I think that you're
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  Speaker 1: going to see more production, but you know, one bit
• 5:31
  Speaker 1: and twice shy, I think you're gonna see um still
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  Speaker 1: some of this holding back. And I'd say that for
• 5:36
  Speaker 1: the funds that are out there to discussion, there's a
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  Speaker 1: lot of money on the sidelines. There have been very
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  Speaker 1: large funds that have been raised in the last couple
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  Speaker 1: of years. I'm in Texas. I've been talking to a
• 5:46
  Speaker 1: lot of these folks for the last year or so,
• 5:48
  Speaker 1: and they they're still looking for distressed assets. I gotta
• 5:51
  Speaker 1: tell you, seventy bucks of barrel looking for sweetheart deals
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  Speaker 1: with the stressed assets. If that's your mandate, that's going
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  Speaker 1: to be a pretty tough, tough fine for you. Jason,
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  Speaker 1: just quickly, what's the best way for investors to profit
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  Speaker 1: from this rise in oil prices? Well, you know, I
• 6:07
  Speaker 1: think if folks want exposure, then they need to be
• 6:10
  Speaker 1: looking at companies that are producing oil. Um. They also
• 6:13
  Speaker 1: may want to be thinking about the the underlying commodity
• 6:18
  Speaker 1: as well that the price is likely to rise. Those
• 6:20
  Speaker 1: are probably the areas where you're going to see people plays.
• 6:23
  Speaker 1: I want to thanks very much for joining us at
• 6:25
  Speaker 1: Jason Schenker is the president and the founder of Prestige Economics.
• 6:29
  Speaker 1: He's also a Bloomberg profit and you can follow Adjason
• 6:33
  Speaker 1: on Twitter at the Prestige e con. We want to
• 6:50
  Speaker 1: visit now in the world of real estate with Ken Wisenberg.
• 6:53
  Speaker 1: He is a partner in charge of the real estate
• 6:55
  Speaker 1: services group for Eisner Amper and he joins us here
• 6:58
  Speaker 1: in our eleven three oh studious Ken, thanks very much
• 7:01
  Speaker 1: for being with us. The news today, of course, is
• 7:03
  Speaker 1: black Stone agreeing to buy Grammarcy Property Trust. The price
• 7:07
  Speaker 1: tag is seven point six billion dollars. It's a fift
• 7:12
  Speaker 1: premium over the closing price on Friday. Why do you
• 7:16
  Speaker 1: think they're making this move to buy Grammarscy Property Trust.
• 7:20
  Speaker 1: If you look at the overall market for warehouse space UM,
• 7:24
  Speaker 1: it's in high demand because of the increase in online
• 7:27
  Speaker 1: sales and in the next day or same day delivery
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  Speaker 1: requirements that people are expecting. And uh, this is a
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  Speaker 1: good entry for black Stone into this marketplace paying a
• 7:37
  Speaker 1: premium over the current prices, and prices for this kind
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  Speaker 1: of space have been up last year. The reat UM
• 7:45
  Speaker 1: warehouse reach space was up about six where the overall
• 7:48
  Speaker 1: read market was down about eight or nine and they
• 7:51
  Speaker 1: didn't get a big bump um it reads from the
• 7:54
  Speaker 1: Trump tax cuts yet, so this seems to be a
• 7:58
  Speaker 1: very good spot for them to go into. Uh, the
• 8:01
  Speaker 1: spaces and high demand. It will continue to be in
• 8:04
  Speaker 1: high demand for the same day delivery. And also um
• 8:08
  Speaker 1: other industrial uses are on the rise. Companies are bringing
• 8:12
  Speaker 1: operations back into the United States because of the repatriation
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  Speaker 1: tax cut, and you'll see a increase in industrial activity
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  Speaker 1: in the United States in general and warehouse in particular,
• 8:23
  Speaker 1: so reads stating for real estate investment trusts. Just to
• 8:27
  Speaker 1: make that clear, last week, per Logus, the world's largest
• 8:30
  Speaker 1: warehouse owner, agreed to acquire DCT Industrial for nearly eight
• 8:34
  Speaker 1: and a half billion dollars. So you are seeing the
• 8:37
  Speaker 1: consolidation in this space. Can you just talk a little
• 8:40
  Speaker 1: bit about what the differences between a warehouse and a
• 8:42
  Speaker 1: big box store, because frankly, I hear about how warehouse
• 8:46
  Speaker 1: space is in a real great demand, and then you
• 8:48
  Speaker 1: hear about all these suffering malls and you think, well,
• 8:51
  Speaker 1: I mean put two and two together, just make the
• 8:52
  Speaker 1: malls into warehouses and you've got your demand sated. Well,
• 8:56
  Speaker 1: warehouse space generally leases essentially less than retail space. When
• 9:01
  Speaker 1: you look as you know, retail space would it be
• 9:04
  Speaker 1: anywhere depending where it is. So on Fifth Avenue, retail
• 9:07
  Speaker 1: spaces four or five thousan dollars a square foot. In
• 9:10
  Speaker 1: the suburbs that might be you know, hundred dollars of foot,
• 9:13
  Speaker 1: but warehouse space in the suburbs is probably dollars a foot.
• 9:18
  Speaker 1: So it's a huge difference in the square footage. And
• 9:20
  Speaker 1: also if you look at the parking arrangements UM and
• 9:23
  Speaker 1: a big box store in the suburbs, there's a ton
• 9:25
  Speaker 1: of parking UM at a warehouse there isn't. It's basically
• 9:28
  Speaker 1: space for trucks UM. So if they do convert an
• 9:34
  Speaker 1: existing big box store UM into warehouse, they have a
• 9:38
  Speaker 1: lot of extra land available to build additional warehouse space
• 9:41
  Speaker 1: on that property. It could be an interesting play well.
• 9:44
  Speaker 1: And then I guess there has to be some massive
• 9:47
  Speaker 1: realized loss if there is conversion of say a big
• 9:51
  Speaker 1: mall into a warehouse space just because of the smaller
• 9:54
  Speaker 1: price that they can charge. Right right, I don't see
• 9:57
  Speaker 1: a large mall being converted to warehouse a arge mall
• 10:01
  Speaker 1: UM to the extent that it's going to be good
• 10:03
  Speaker 1: doing a redevelopment, will have entertainment, residential and office space
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  Speaker 1: added to it. Um. You might see a reduction in
• 10:10
  Speaker 1: the number of cars over the next ten years due
• 10:12
  Speaker 1: to self driving automobiles. People will not need to have
• 10:16
  Speaker 1: their own cars and going through the mall will be
• 10:18
  Speaker 1: you know, tapping your phone and a car will appear
• 10:21
  Speaker 1: in your driveway. UM. So it's gonna be an interesting
• 10:24
  Speaker 1: um change over the next ten years in terms of technology. UM.
• 10:28
  Speaker 1: I think the malls are going through a repositioning and
• 10:32
  Speaker 1: reimagining today which is really interesting. It's it's an experiential
• 10:37
  Speaker 1: development in malls, um, which I love that word. Uh.
• 10:41
  Speaker 1: And and if if you go down like in Florida
• 10:44
  Speaker 1: is a really great example. So the Ball Harbor Mall
• 10:47
  Speaker 1: was the classy mall. All of the major stores were there,
• 10:51
  Speaker 1: and they're adding restaurants, adding pilates, class studios, palatine bike stores,
• 10:58
  Speaker 1: you know. So it's an experience to go there because
• 11:00
  Speaker 1: you're going to eat, you're going to exercise, you're going
• 11:02
  Speaker 1: to to the to the movies right there. Um. And
• 11:06
  Speaker 1: this good shopping and the you know, the best stores. Um.
• 11:09
  Speaker 1: And that's an experience as opposed to just I'm going
• 11:11
  Speaker 1: to the store to buy address or pair of pants,
• 11:14
  Speaker 1: which you can now do online much easier, public versus private.
• 11:18
  Speaker 1: Better to be a private real estate company these days.
• 11:22
  Speaker 1: UM reads have not had UM huge uptick UM and
• 11:27
  Speaker 1: I'm surprised at that the new tax cuts really favorite
• 11:31
  Speaker 1: reads UM and come from a read is subject to
• 11:34
  Speaker 1: business exclusion UM, so that you're paying the twenty rate
• 11:39
  Speaker 1: on read income UM general dividends or but the corporation
• 11:43
  Speaker 1: pays twenty one, so the effective right there is thirty
• 11:46
  Speaker 1: seven UM. So reads are really have a tax benefit
• 11:50
  Speaker 1: and that hasn't been factored into their pricing. Why do
• 11:52
  Speaker 1: you think that is, UM, I think it's complicated for
• 11:56
  Speaker 1: most people to understand. But you know, for analysts and stuff,
• 11:59
  Speaker 1: they're looking at it, and reads are valued based on
• 12:02
  Speaker 1: the dividend payout UM and and net asset value. But
• 12:06
  Speaker 1: it's it's really the people buying it because of the
• 12:08
  Speaker 1: dividend stream UM. And if interest rates are going up
• 12:13
  Speaker 1: and you get three on a ten year treasury and
• 12:15
  Speaker 1: three on a read, you're not going to pay as
• 12:19
  Speaker 1: much for the REAT. So I want to just ship
• 12:21
  Speaker 1: back to the idea of the warehouse space, and it's
• 12:24
  Speaker 1: a it's a question that Pim raised before the segment
• 12:27
  Speaker 1: where he was saying, you know, are we seeing peak
• 12:30
  Speaker 1: valuations here? Just because we are seeing such premiums bid
• 12:34
  Speaker 1: up for these spaces at this time, you know, there's
• 12:38
  Speaker 1: a lot of money waiting to be placed in the market.
• 12:41
  Speaker 1: The stock market is experiencing significant volatility over the last
• 12:47
  Speaker 1: um ten or eleven months. People look for safe investments
• 12:51
  Speaker 1: or safer investments that have a steady rate of return,
• 12:53
  Speaker 1: and real estate provides that. So you're seeing real estate
• 12:57
  Speaker 1: becoming a much more attractive investment when you look at
• 13:00
  Speaker 1: what's going on in the world in terms of real
• 13:03
  Speaker 1: estate UM affordable housing is in high demand UM housing
• 13:07
  Speaker 1: in generalism and high demand. Hotels have been in high
• 13:10
  Speaker 1: demand UM. Office less so, retail much less so UM
• 13:15
  Speaker 1: the warehouse because of the of the shift in consumer
• 13:19
  Speaker 1: behavior brought about by companies like Amazon, UM, you're seeing
• 13:24
  Speaker 1: the darling of the of the investor real quick. Have
• 13:27
  Speaker 1: we seen rates to rent out warehouse space go up recently? Yes,
• 13:31
  Speaker 1: how much significantly? I don't have the exact statistics, but
• 13:35
  Speaker 1: it's on the rise because demand is on the rise. Fascinating,
• 13:39
  Speaker 1: Thank you so much for being with us. Kennt Weisenberg,
• 13:42
  Speaker 1: partner in charge of the real estate services group for
• 13:44
  Speaker 1: Eisner Amper in New York. We really appreciate you being here,
• 13:48
  Speaker 1: especially on a day when Blackstone is buying Grammar Seat
• 13:53
  Speaker 1: Property Trust. This is the second multi billion taller takeover
• 13:57
  Speaker 1: of a warehouse company is in just the past two
• 14:00
  Speaker 1: weeks fastening Space. We will continue to keep tabs on
• 14:05
  Speaker 1: it customized in souls using three D printing technology. How
• 14:24
  Speaker 1: is it done and what is the goal here? To
• 14:27
  Speaker 1: help us understand this new business adventure is Shamil Hargovin.
• 14:32
  Speaker 1: He is the co founder and the chief executive, along
• 14:35
  Speaker 1: with Hannah Chakrits, the director of product and design for Weaves.
• 14:39
  Speaker 1: That W I I V V. That's W double I
• 14:45
  Speaker 1: double V. Alright, Shamil tell us about we've and the
• 14:49
  Speaker 1: science behind custom made insuls. Hey, Pam, thank you, Yeah, We've.
• 14:56
  Speaker 1: We've effectively taken Meta Greate medical great scan technology, put
• 15:02
  Speaker 1: it on a phone and we're able to now from
• 15:05
  Speaker 1: the comfort of your living room, measure your feet or
• 15:09
  Speaker 1: other body parts and then run that through a system
• 15:12
  Speaker 1: where we customize the product designed for your body. We
• 15:15
  Speaker 1: buy mechanically enhance the product to serve your body, and
• 15:19
  Speaker 1: then ultimately use additive manufacturing in three D printing to
• 15:23
  Speaker 1: print the product in the United States and send it
• 15:25
  Speaker 1: to your door. Chamil, Before we do anything else, we
• 15:30
  Speaker 1: have to get something out of the way. You ran
• 15:32
  Speaker 1: a marathon and flip flops? Is that right? I apologize
• 15:35
  Speaker 1: that was our product engineer, Chris Bellomdia. Yes, okay, I'm
• 15:39
  Speaker 1: just making sure and he lived to see the other day.
• 15:42
  Speaker 1: You know, this is a fascinating issue because this sort
• 15:44
  Speaker 1: of raises a question. Is this the future where you
• 15:47
  Speaker 1: could just get a scan, have clothes or shoes manufactured
• 15:52
  Speaker 1: at a three D printing press that doesn't require that
• 15:54
  Speaker 1: many people there to do it, and then it gets
• 15:57
  Speaker 1: shipped right to you. Is that what we're going to see,
• 15:59
  Speaker 1: say in ten years from now. I'd say sooner than that,
• 16:02
  Speaker 1: but yes, we're here. Um, we're starting with footwear, uh
• 16:07
  Speaker 1: and and and products like orthotics and insoles. But it's
• 16:11
  Speaker 1: just a matter of time before we get is smarter, quicker,
• 16:14
  Speaker 1: and it becomes something increasingly cheaper for everyone to have.
• 16:17
  Speaker 1: So Hannah, come on in here, because I'm trying to
• 16:20
  Speaker 1: figure out the actual process of the three D printing
• 16:24
  Speaker 1: and how you figure how you make it work. Can
• 16:27
  Speaker 1: you just give walk me through what happens once someone
• 16:30
  Speaker 1: submits a scan of their foot to the point when
• 16:33
  Speaker 1: they get the product. Yeah. So it's actually a very
• 16:36
  Speaker 1: simple process. You download our app, you pick the product
• 16:39
  Speaker 1: that you want, and then with just a few photos,
• 16:42
  Speaker 1: we digitally map your your feet and create a three
• 16:46
  Speaker 1: D model of the product that we're building, and then
• 16:48
  Speaker 1: can send that to the three D printer, print the
• 16:51
  Speaker 1: product overnight, and get it to your door in under
• 16:53
  Speaker 1: ten days. So you don't own the three D printing press,
• 16:56
  Speaker 1: we do you do? Okay? So you have a press. Uh,
• 16:59
  Speaker 1: we have a manufacturing facility and San Diego Shamille. What
• 17:04
  Speaker 1: prevents other companies from coming in and doing exactly the
• 17:08
  Speaker 1: same thing? I mean, there are ways to buy orthotics
• 17:11
  Speaker 1: now you can have them custom molded, I guess to
• 17:14
  Speaker 1: your feet. But what prevents someone else from coming in
• 17:17
  Speaker 1: scanning someone's foot and using three D printing technology to
• 17:21
  Speaker 1: offer a competitor. Absolutely. Let's just set a really quick
• 17:24
  Speaker 1: piece of context. What's happening that's accelerating what we're doing
• 17:28
  Speaker 1: for starters is we have scanning technologies and we've got
• 17:31
  Speaker 1: the big players Apple, Intel, Microsoft, Google spending lots of
• 17:35
  Speaker 1: money there on the printing side, ge Hewlett Packard, Carbon
• 17:39
  Speaker 1: three D systems. What we are the leaders at is
• 17:42
  Speaker 1: taking that scan and converting it into a three D
• 17:45
  Speaker 1: printable file, and we do that in a matter of seconds. Uh.
• 17:49
  Speaker 1: And that's the really, that's the patents, that's the technology,
• 17:52
  Speaker 1: that's what we've continues to innovate in. Is it's almost
• 17:56
  Speaker 1: a machine learning meets computer vision meets customization algorithm s
• 18:00
  Speaker 1: and so that that that's our core technology. That's hard
• 18:03
  Speaker 1: to replicate. So I'm just trying to figure out the
• 18:07
  Speaker 1: advantage to the consumer. Clearly, it's because if you do
• 18:11
  Speaker 1: have a custom fit based on your technology, that's an advantage.
• 18:14
  Speaker 1: What about the cost, Hannah, The cost is affordable. But
• 18:18
  Speaker 1: I want to touch on custom again. So the reason
• 18:21
  Speaker 1: we do what we do is is not just because
• 18:24
  Speaker 1: custom is cool. We truly believe that custom fit products
• 18:28
  Speaker 1: will really impact how you move and you feel and
• 18:31
  Speaker 1: you function on a day to day basis. So the
• 18:34
  Speaker 1: Boston Marathon was an extreme example of that, where you
• 18:37
  Speaker 1: have a product that's customed to each of your feet, uh,
• 18:41
  Speaker 1: and it will impact how how you run, not just
• 18:45
  Speaker 1: a marathon, but even how you walk to work, and
• 18:47
  Speaker 1: how you stand and how you can you know, feel
• 18:51
  Speaker 1: how your mood is during the day. So um our
• 18:53
  Speaker 1: goal is feel and function how you move and live
• 18:57
  Speaker 1: UM and you you'll be able to see our sandals
• 19:00
  Speaker 1: for a very accessible price and our insuls from seventy nine.
• 19:07
  Speaker 1: Shamille maybe speak a little bit about the actual library,
• 19:12
  Speaker 1: the database of scanned images that you have, because doesn't
• 19:16
  Speaker 1: that also make it possible for you to then customize
• 19:19
  Speaker 1: it based on what you've done in the past. Absolutely
• 19:22
  Speaker 1: that the data here is is the actual goal mine
• 19:24
  Speaker 1: so to speak. We've has an extremely large repository footwear
• 19:28
  Speaker 1: data we've collected and we actually acquired through one of
• 19:32
  Speaker 1: our acquisitions in sixteen, was right, That's correct, yes, uh.
• 19:37
  Speaker 1: And the idea here is that the more data we have,
• 19:39
  Speaker 1: almost like you know, the search algorithms that the company
• 19:42
  Speaker 1: is trying to bring AI into the world. Either more
• 19:45
  Speaker 1: data you have, the more you're able, uh to kind
• 19:48
  Speaker 1: of get this right in terms of understanding the different
• 19:51
  Speaker 1: form factors and feet you're dealing with. And so this
• 19:54
  Speaker 1: is very critical for our for our company and its longevity.
• 19:58
  Speaker 1: Really interesting Thank you so much both of you for
• 20:00
  Speaker 1: being with us. Chamil Hargovin, co founder and chief executive
• 20:04
  Speaker 1: officer of We've in Seattle, and Hannah Zachritz, director of
• 20:08
  Speaker 1: product and design for the company based in Vancouver, thank
• 20:13
  Speaker 1: you so much. Really interesting and uh it makes me
• 20:16
  Speaker 1: wonder what else will be able to be printed in
• 20:18
  Speaker 1: those three D printers. I've seen houses being printed. I
• 20:22
  Speaker 1: wonder how much they'll be part of our We're not
• 20:24
  Speaker 1: going to help me in a marathon anyway. The Oracle
• 20:41
  Speaker 1: of Omaha spoke and the world listened, and keep speaking
• 20:45
  Speaker 1: and the world keeps listening. We're talking about the Berkshire
• 20:48
  Speaker 1: Hathway Annual shareholder Meeting, which is ongoing. Joining us now
• 20:52
  Speaker 1: is David Dead's founder, president, chief investment strategist at Point
• 20:56
  Speaker 1: View Wealth Management, overseeing about three million dollars in New Jersey. David,
• 21:01
  Speaker 1: thank you so much for being with us. I want
• 21:04
  Speaker 1: to start first with the loss that Berkshire Hathaway reported
• 21:08
  Speaker 1: due to what they called punishing accounting changes. Can you
• 21:13
  Speaker 1: just talk about what these are and whether we should
• 21:15
  Speaker 1: paying attention to that. Yeah, Well, the bottom line is
• 21:18
  Speaker 1: people are not paying attention to that. Um Buffa is
• 21:23
  Speaker 1: always focused on, you know, economic potential and actual earnings
• 21:27
  Speaker 1: on cash invested. These changes in accounting treatment have have
• 21:32
  Speaker 1: no impact on the value of his investment, on the
• 21:35
  Speaker 1: value of his businesses, and so I think it's widely
• 21:38
  Speaker 1: thought that investors and others should disregard these one time
• 21:43
  Speaker 1: accounting issues. David diets rat poison. He talked about rat poison,
• 21:48
  Speaker 1: didn't he? Well, uh, you know, there's a lot of
• 21:53
  Speaker 1: even more colorful language that was used um in Omaha
• 21:58
  Speaker 1: on Saturday. Um, but uh, you know, depending on the topic,
• 22:03
  Speaker 1: but particularly Charlie Munger a man of few words, but
• 22:07
  Speaker 1: they are certainly colorful words that were used to describe
• 22:11
  Speaker 1: all sorts of things, including his uh dislike of cryptocurrencies. Yeah,
• 22:15
  Speaker 1: that's what Warren Buffett said, that bitcoin is is rat poison.
• 22:18
  Speaker 1: Did you find many people there who disagreed with them? Well,
• 22:22
  Speaker 1: you know, not to make that word raised in the
• 22:24
  Speaker 1: hand to argue with him on that, But I think
• 22:26
  Speaker 1: the more important thing really was his reasoning there. And
• 22:29
  Speaker 1: it all goes back for Warren Buffet um and Charlie
• 22:33
  Speaker 1: Munger on productivity. If you have an asset that can
• 22:37
  Speaker 1: do something for you, that can pay off income, that
• 22:41
  Speaker 1: can grow crops which can produce a profit. They're all
• 22:44
  Speaker 1: for that. When you have assets like gold, like cryptocurrencies,
• 22:49
  Speaker 1: which just kind of exists in trade hands, but at
• 22:53
  Speaker 1: the end of the day they don't multiply, they're not fertile,
• 22:56
  Speaker 1: then he is very negative on that, and so he
• 22:59
  Speaker 1: analogy cryptocurrency. They both did to one of the biggest
• 23:03
  Speaker 1: investment the bacles that the world has ever seen, which
• 23:06
  Speaker 1: was the trading of toolip bolts bulbs in the UH
• 23:10
  Speaker 1: seventeenth century over in Amsterdam Um. And so the message
• 23:15
  Speaker 1: was quite clear, steer clear. He added to that in
• 23:19
  Speaker 1: some comments this morning when he asked, well, why is
• 23:21
  Speaker 1: Goldman's Acts going to start trading them? And he said,
• 23:24
  Speaker 1: quite frankly, I think some of the senior people at
• 23:26
  Speaker 1: Goldman's Acts probably share the views I have. But you know,
• 23:29
  Speaker 1: there's a market. The ducks are quacking, so you're gonna
• 23:31
  Speaker 1: make a market dry and makes the money off the activity.
• 23:34
  Speaker 1: Warren Buffett also had some colorful words for Elon Musk. Yeah, exactly, well,
• 23:40
  Speaker 1: I mean, I guess Elon Musk kind of started by
• 23:43
  Speaker 1: calling moat, which is one of the favorite terms that
• 23:46
  Speaker 1: they used to to give you a visual as to
• 23:50
  Speaker 1: the type of protection they'd like to see around their
• 23:52
  Speaker 1: businesses as lame um saying if that's your best defense
• 23:57
  Speaker 1: against marauding armies, you're you're not much good and uh um.
• 24:03
  Speaker 1: There's a lot of chuckling back and forth, but I
• 24:05
  Speaker 1: think there's kind of a misunderstanding as to what a
• 24:09
  Speaker 1: mode is all about. And and they explained how most
• 24:12
  Speaker 1: are your competitive advantage, a reason why the product gear
• 24:17
  Speaker 1: offering will continue to have a market, which is values
• 24:21
  Speaker 1: it above him beyond your cost of production. And I
• 24:24
  Speaker 1: thought it was it was kind of cute at the
• 24:26
  Speaker 1: end when they talked about, well, you can make fun
• 24:29
  Speaker 1: of our moats, but we have a nice moat around
• 24:31
  Speaker 1: Seas Chocolates, which is one of their businesses, which is
• 24:34
  Speaker 1: very big in California of course, where Elon Musk is
• 24:37
  Speaker 1: and kind of challenged in a humorous way. Elon must
• 24:40
  Speaker 1: to uh, you know, overcome the mote that Sees Chocolate
• 24:45
  Speaker 1: has in California. Um. There's been some tweets back in
• 24:48
  Speaker 1: the well from Elon Musk. He's saying he may take
• 24:51
  Speaker 1: them up on the challenge, but I'll have to bet
• 24:53
  Speaker 1: with the Warren and Charlie if there sees Canny enjoys
• 24:56
  Speaker 1: a very great moat, and Elon is not gonna build
• 24:58
  Speaker 1: a touch it. What did he say about Apple, because
• 25:00
  Speaker 1: they did buy one another seventy five million shares in
• 25:03
  Speaker 1: the first quarter, and it turns out that neither of
• 25:05
  Speaker 1: them actually use an iPhone. Yeah, you know, it's kind
• 25:08
  Speaker 1: of odd. I think I think the analysis is that
• 25:12
  Speaker 1: it's more of a consumer good rather than a tech company.
• 25:16
  Speaker 1: And you know, they see people's embrace of the the
• 25:21
  Speaker 1: everything mac and iPhone ecosphere and see recurring revenues coming
• 25:26
  Speaker 1: from that. So that's one thing. Of course, they really
• 25:29
  Speaker 1: like the fact that it was well priced relative to
• 25:33
  Speaker 1: a lot of other tech companies. Is actually priced um
• 25:37
  Speaker 1: uh in terms of price to earnings below the overall market,
• 25:39
  Speaker 1: and when you back out the cash is not being
• 25:42
  Speaker 1: used to create the profits, the price earning creation is
• 25:45
  Speaker 1: even less. And they also liked how Tim Cook thinks,
• 25:49
  Speaker 1: which to cut to the chase means that unneeded capital
• 25:53
  Speaker 1: will be returned to shareholders in the form of stock buybacks,
• 25:57
  Speaker 1: and we just saw increase in the dividend. I think
• 26:00
  Speaker 1: he likes the financial management at Apple, he likes the product,
• 26:05
  Speaker 1: and quite frantically when you're a six hundred billion dollar
• 26:08
  Speaker 1: market cap company like Berkshire Hathaway, you need very large
• 26:12
  Speaker 1: targets to invest in so you don't rock the market
• 26:15
  Speaker 1: or end up controlling it and having a file with
• 26:17
  Speaker 1: the SEC. Of course, Apple fits that bill to a t.
• 26:20
  Speaker 1: I want to thank you very much for being with us.
• 26:22
  Speaker 1: David Diets is the founder of the president and chief
• 26:24
  Speaker 1: investment strategist at Point of View Wealth Management, giving us
• 26:29
  Speaker 1: his take on the Berkshire Hathway annual meeting that took
• 26:31
  Speaker 1: place over the weekend in omah On, Nebraska. Thanks for
• 26:37
  Speaker 1: listening to the Bloomberg P and L podcast. You can
• 26:40
  Speaker 1: subscribe and listen to interviews at Apple Podcasts, SoundCloud, or
• 26:44
  Speaker 1: whatever podcast platform you prefer. I'm pim Fox. I'm on
• 26:48
  Speaker 1: Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
• 26:51
  Speaker 1: It's one before the podcast. You can always catch us
• 26:54
  Speaker 1: worldwide on Bloomberg Radio Bo