Latest / Bloomberg Intelligence / Copper Has More Room -- And Momentum -- to Soar, Dudas Says

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Copper Has More Room -- And Momentum -- to Soar, Dudas Says · 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 Bramowitz. 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. Well, PIM,
• 0:34
  Speaker 1: copper is just surging to a two year high, and
• 0:38
  Speaker 1: to get a little bit more of a sense of
• 0:40
  Speaker 1: what's behind that, how much it's driving the shares of
• 0:43
  Speaker 1: mining companies such as Freeport mcmarn shares up almost fift yesterday.
• 0:47
  Speaker 1: Is Mike Judas. He's partner and metals and mining analyst
• 0:51
  Speaker 1: Vertical Research based in Stamford, Connecticut. Mike, thanks so much
• 0:55
  Speaker 1: for joining us. So why is copper rallying so much
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  Speaker 1: right now? Lisa and PIM. Great to be with you,
• 1:00
  Speaker 1: m I think there are four reasons we've seen copper
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  Speaker 1: rally strongly over the past couple of weeks. I think
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  Speaker 1: the first two are macro oriented. You've seen the dollar
• 1:09
  Speaker 1: reaching multi month lows, which certainly has been beneficial, and
• 1:14
  Speaker 1: you don't dismiss the oil rally. We've seen over the
• 1:17
  Speaker 1: past couple of weeks, you've seen a three to four
• 1:18
  Speaker 1: dollar move higher and crude that's brought commodity fund money
• 1:22
  Speaker 1: into the space, and I think some of that has
• 1:24
  Speaker 1: vowed into copper and relative the copper itself, you're getting
• 1:28
  Speaker 1: better than expected Chinese demand and data coming out of China,
• 1:31
  Speaker 1: which is very important for copper. And finally, there's been
• 1:35
  Speaker 1: supply shortfalls throughout two thousand and seventeen. The minors, because
• 1:39
  Speaker 1: of the lack of capital spending and lack of expiration,
• 1:42
  Speaker 1: have not been able to get as much comperence to
• 1:44
  Speaker 1: the market as think people have anticipated. I think all
• 1:46
  Speaker 1: that's combined to allow copper to have a really good
• 1:49
  Speaker 1: past to three weeks. Do you really think it's set
• 1:51
  Speaker 1: to continue, Mike, I mean, I'm looking at Freeport mcmaran,
• 1:54
  Speaker 1: and we make a big deal about it because the
• 1:56
  Speaker 1: stock goes to almost fifteen bucks a share, but this
• 1:58
  Speaker 1: was a fifty dollar a share stop, you know, back when. Also,
• 2:02
  Speaker 1: I believe that there was a big strike in Peru
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  Speaker 1: having to do with copper mining, and the strike is over,
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  Speaker 1: so maybe we get some more supply. Yeah, it's interesting
• 2:11
  Speaker 1: so that when you have a strike and cru some
• 2:14
  Speaker 1: people in miners and chillier concerned that that gets over Indonesia,
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  Speaker 1: which Freeport is very involved with with some of the
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  Speaker 1: machinations there. Freeports certainly was helped by the copper price
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  Speaker 1: move the last few days, but I think the market
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  Speaker 1: is starting to feel a little bit better with negotiations
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  Speaker 1: the company management of Freeports having with the Indonesian government
• 2:34
  Speaker 1: to try to settle that dispute out a new mining
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  Speaker 1: contract license for Freeports like one of the I think
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  Speaker 1: it is the largest mine in the world, absolutely, and
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  Speaker 1: so that the market has been discounting prease severely in
• 2:46
  Speaker 1: the valuation of Freeport if they're going to get any
• 2:49
  Speaker 1: value for that mine. I think through yesterday's earnings release
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  Speaker 1: in conference calls, I think Freeport and Immunitiian government seemed
• 2:55
  Speaker 1: be getting a little bit better and more discussions to
• 2:58
  Speaker 1: to resolve that situation. I think that's also kind of
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  Speaker 1: helped to pop in Freeport stock. I do want to
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  Speaker 1: high like him. If you look back in the historical
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  Speaker 1: part of charts of copper, we have seen four for also,
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  Speaker 1: so they haven't seen much higher copper prices in the past,
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  Speaker 1: so not not that we're predicting that here, but I
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  Speaker 1: do think there's some more momentum and room for copper
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  Speaker 1: to move higher as deficits. The difference between demand expectations
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  Speaker 1: supply coming to market are looking to grow over the
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  Speaker 1: next few years because there's been a lack of capital spending,
• 3:27
  Speaker 1: a lack of supply because of the the downslack we've
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  Speaker 1: witnessed the last few years. You know, Mike, you gave
• 3:32
  Speaker 1: a lot of possible reasons for why copper is rallying now,
• 3:36
  Speaker 1: and I do just want to point out that the
• 3:38
  Speaker 1: shares of Glencore and Newmont have also rallied on the
• 3:41
  Speaker 1: back of the of the top in copper. But you know,
• 3:45
  Speaker 1: it seems like a pretty delicate balance. I mean, yes,
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  Speaker 1: it is an increase in demand, but that's one piece
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  Speaker 1: mixed with just general favorable sentiment rounds commodities right now.
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  Speaker 1: So I mean, do you think that this is a
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  Speaker 1: very fickle type of figure that in prices could fall
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  Speaker 1: substantially in the I mean volatility. I know everybody has
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  Speaker 1: been concerned about the lack of volatility in the overall
• 4:07
  Speaker 1: equity markets, but certainly one thing we do see in
• 4:11
  Speaker 1: bodies is volatility. Yes, you know, a bad data point
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  Speaker 1: out of China, or to this afternoon the FED minutes
• 4:18
  Speaker 1: coming out, which you know, the million people going to
• 4:20
  Speaker 1: read the teleas on. You know, the dovishniss hawkishness could
• 4:23
  Speaker 1: impact some of the near term moves on on some
• 4:25
  Speaker 1: of the commodities. But I think generally expectations from investors
• 4:29
  Speaker 1: over the past couple of months in May June, we're
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  Speaker 1: pretty negative going into Q two. We've seen rally and
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  Speaker 1: the commodity prices, and we've seen you know, the reports
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  Speaker 1: from the company's being reasonably good, you know, keeping the
• 4:41
  Speaker 1: cost down, keeping the capital spending in check. I think
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  Speaker 1: that's given some investors reason to be more optimistic and
• 4:48
  Speaker 1: some of the shorts to cover their positions. Well, I
• 4:51
  Speaker 1: want to thank you very much for joining us. Mike
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  Speaker 1: Judas is metals and mining analysts for vertical research talking
• 4:57
  Speaker 1: about copper as well as some mining share. And indeed,
• 5:14
  Speaker 1: the Federal Reserve is going to be finishing up their
• 5:16
  Speaker 1: today meeting today they are going to give us some
• 5:20
  Speaker 1: words of wisdom that we can pass over in detail
• 5:24
  Speaker 1: for the next month as we await their next miss
• 5:27
  Speaker 1: if Ward McCarthy joins us now he's chief financial economist
• 5:30
  Speaker 1: at Jeffreys in Company in New York. And ward, Before
• 5:34
  Speaker 1: we talk about what the Fed is expected to say today,
• 5:37
  Speaker 1: which is, to be honest, not very much, I want
• 5:39
  Speaker 1: to talk about some words of some interesting words from
• 5:42
  Speaker 1: President Donald Trump. He was speaking with the Wall Street
• 5:45
  Speaker 1: Journal yesterday, UH, and he said that he is considering
• 5:49
  Speaker 1: both Gary Cone, who is his chief economic advisor right now, uh,
• 5:53
  Speaker 1: in addition to Janet Yellen, to lead the Federal Reserve
• 5:58
  Speaker 1: next year. This is going to be the next episode
• 6:00
  Speaker 1: of the Fed Chair. Uh. Gary Khane, what do you
• 6:04
  Speaker 1: think he would do as FED Chair? Do you think
• 6:07
  Speaker 1: that it would translate into a hawkish policy for the country? Well,
• 6:12
  Speaker 1: I think that that. Well, first of all, he's a
• 6:15
  Speaker 1: big question mark because we really have no history at
• 6:19
  Speaker 1: all in terms of what his policy inclinations are. Uh.
• 6:24
  Speaker 1: The fact that that Donald Trump has been pushing him
• 6:29
  Speaker 1: and also um promoting Jenny Ellen in a sense as
• 6:34
  Speaker 1: being a low rate UH FED Chair suggests to me
• 6:38
  Speaker 1: that he may be less hawkish than uh he is
• 6:41
  Speaker 1: being expected to be, at least in some quarters. All Right,
• 6:45
  Speaker 1: So if that's the case, then this is just you know,
• 6:48
  Speaker 1: you kind of spin these fantasies, right you kind of say, well,
• 6:52
  Speaker 1: so what what Wow, wild fantasy? But I mean, but
• 6:56
  Speaker 1: you can't. It's difficult to kind of pin someone down
• 6:59
  Speaker 1: obviously if he'd know their views, you know, But what
• 7:02
  Speaker 1: is there anything, no matter who is the central bank chief,
• 7:06
  Speaker 1: is there something specific that you can point to that
• 7:09
  Speaker 1: they should be doing that they are not doing well.
• 7:13
  Speaker 1: Jenny Yellen is trying to do everything that I think
• 7:17
  Speaker 1: she should do at this point in the sense that
• 7:20
  Speaker 1: she's moving rates up to higher levels, although you know,
• 7:24
  Speaker 1: maybe not as quickly as the FED could, and she
• 7:28
  Speaker 1: is also trying to get the troops in line here, um,
• 7:31
  Speaker 1: so they can start balance sheet normalization. But one thing
• 7:35
  Speaker 1: that I don't think the FED has focused a lot
• 7:37
  Speaker 1: on yet that they're going to have to uh in
• 7:40
  Speaker 1: the not too distant future, is that balance sheet normalization
• 7:44
  Speaker 1: so far has really just focused on size, and that
• 7:48
  Speaker 1: is shrinking the balance sheet. And even in her last testimony,
• 7:52
  Speaker 1: Jenny Yellen acknowledged that the FED wants to get back
• 7:55
  Speaker 1: to a balance sheet that is all treasuries and other aways,
• 7:59
  Speaker 1: get rid of all the more gages, and the plan
• 8:01
  Speaker 1: that the FED laid out on June fourteenth will not
• 8:04
  Speaker 1: accomplish that. So the Fed's going to have to circle
• 8:07
  Speaker 1: back and address this issue at some point. You know,
• 8:09
  Speaker 1: you bring up a really important point. And I were Jersey,
• 8:12
  Speaker 1: our own interest rate strategist here at Bloomberg was talking
• 8:15
  Speaker 1: about the same point. In other words, as we get
• 8:18
  Speaker 1: more details from the FED about their balancing normalization, we
• 8:21
  Speaker 1: could see an undo amount of volatility and mortgage backed securities. Uh.
• 8:26
  Speaker 1: Do you agree? Well? Yeah, well, I don't know what
• 8:30
  Speaker 1: you mean by undo, but I certainly think we should
• 8:33
  Speaker 1: expect to see more volatility in mortgage backed securities. And
• 8:37
  Speaker 1: of course the caps that the FED outlined on June
• 8:40
  Speaker 1: four UH are not necessarily binding. Uh. And the FED
• 8:45
  Speaker 1: always adds the caveat that they're going to proceed um
• 8:49
  Speaker 1: and be data sensitive. So if they did not like
• 8:53
  Speaker 1: the way things were unfolding, um, you know, they could
• 8:56
  Speaker 1: temper it. Someone I was going to say, they could
• 8:58
  Speaker 1: fold it back up. It was about the Let's talk
• 9:01
  Speaker 1: about the U S economy for just a moment, because
• 9:04
  Speaker 1: unemployment rates are low, inflation low growth while middling. Uh.
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  Speaker 1: Is there anything that we need to pay attention to
• 9:13
  Speaker 1: that we're not looking at? Well? I think in some
• 9:16
  Speaker 1: respects maybe we we focus on too many things that uh,
• 9:20
  Speaker 1: and that can distract us from the drivers. All right,
• 9:23
  Speaker 1: so good point. Tell us what those are? Well, I
• 9:26
  Speaker 1: think that the primary things we need to focus on
• 9:28
  Speaker 1: are really what what the labor market is doing, because
• 9:32
  Speaker 1: that's the heartbeat of the US economy. And the labor
• 9:35
  Speaker 1: market continues to do well. Uh. The one missing piece
• 9:38
  Speaker 1: continuing to be sustained increase in wage growth, which we
• 9:43
  Speaker 1: would love to see because that probably would also boost
• 9:47
  Speaker 1: consumer spending. Uh. The other but is that going to happen?
• 9:51
  Speaker 1: It is going to happen. Uh. It has been delayed
• 9:54
  Speaker 1: this cycle for reasons that I think are fairly numerous, uh,
• 10:01
  Speaker 1: ranging anything from demographics to immigration policy. Um. But the
• 10:06
  Speaker 1: laws of supply and demand have not been repealed. And
• 10:10
  Speaker 1: as we get closer to full employment and we see
• 10:12
  Speaker 1: labor market conditions tightening, wage growth is going to happen. Um.
• 10:18
  Speaker 1: And we're you know, every day we're closer. We just
• 10:20
  Speaker 1: don't know how much closer we are on that front.
• 10:23
  Speaker 1: Or do you know? The Federal Reserve has a number
• 10:26
  Speaker 1: of mandates that seemed to be floating. It was unemployment
• 10:30
  Speaker 1: rates than it was inflation rates. And some people say
• 10:34
  Speaker 1: it's asset price UH stability or financial system stability. And
• 10:38
  Speaker 1: I'm wondering to what degree do you expect the FED
• 10:42
  Speaker 1: today to comment on the elevated prices in the corporate
• 10:46
  Speaker 1: bond and the equity markets in the US. And we
• 10:49
  Speaker 1: we're seeing right now the extra yield investors are demanding
• 10:52
  Speaker 1: to own investment grade corporate bonds in the US plunging
• 10:55
  Speaker 1: to about the lowest in the post crisis era. Well,
• 10:59
  Speaker 1: I think I do not think they will specifically address
• 11:03
  Speaker 1: this in the policy statement today, and of course there's
• 11:06
  Speaker 1: no press conference either. But you make a good point,
• 11:09
  Speaker 1: and that is that since the FIT has been raising
• 11:12
  Speaker 1: rates and talking about drinking the balance sheet UH, financial
• 11:15
  Speaker 1: market conditions have actually eased UH, and that is spreads
• 11:19
  Speaker 1: of Titan stock market has gone higher, etcetera. And this
• 11:22
  Speaker 1: should be a green light for them to continue UH
• 11:26
  Speaker 1: down the road towards normalization. The problem is they also
• 11:30
  Speaker 1: have two specific UH policy mandates by law, one being
• 11:35
  Speaker 1: maximum employment, the other stable inflation. And the inflation pictures
• 11:39
  Speaker 1: since February has spooked them somewhat. So I think that
• 11:43
  Speaker 1: that has become or the inflation picture has been elevated
• 11:47
  Speaker 1: from being kind of a nuance, excuse me, a nuisance
• 11:51
  Speaker 1: UH to something that is interfering with their plans at
• 11:54
  Speaker 1: least temporarily. What McCarthy, your thoughts on the dollar and
• 11:58
  Speaker 1: recent dollar strength going to continue. We're at one sixteen
• 12:01
  Speaker 1: against the euro right now. Well, I don't think that
• 12:05
  Speaker 1: we'll we'll see any persistent dollar strength. I think what's
• 12:08
  Speaker 1: happening now is that the dollar is trying to carve
• 12:11
  Speaker 1: out at trading range. We've seen some pretty substantial moves
• 12:17
  Speaker 1: in currencies over recent months, and in large part because
• 12:21
  Speaker 1: of changes in UH in perspectives on what's happening on
• 12:26
  Speaker 1: the political front, and right now the US political situation
• 12:30
  Speaker 1: UM is pretty murky. Murky, that's a nice way to
• 12:34
  Speaker 1: describe it. Thanks very much, Warden McCarthy. He's our He's
• 12:38
  Speaker 1: not a murky economist, but he does put his finger
• 12:40
  Speaker 1: on something there. Um, Thanks very much, Chief Financial Economist.
• 12:44
  Speaker 1: For jeffreason, I guess we'll just have to wait and
• 12:46
  Speaker 1: see what the what the minutes say new diesel and
• 13:02
  Speaker 1: petrol cars and vans they're going to be banned from
• 13:05
  Speaker 1: the United Kingdom from twenty forty in order to tackle
• 13:09
  Speaker 1: air pollution is according to the UK government, and here
• 13:12
  Speaker 1: to tell us more. As Jeff Shackleman, renewables reporter for
• 13:16
  Speaker 1: Bloomberg joining us from London, Jess boy, I gotta say
• 13:19
  Speaker 1: this kind of uh, there's an interesting development and it
• 13:23
  Speaker 1: certainly must help companies such as Volvo which are looking
• 13:27
  Speaker 1: to really go all electric or all hybrid. That's right?
• 13:31
  Speaker 1: How that yes? So, I mean I think if we
• 13:33
  Speaker 1: just stepped back a little bit, diesel has really been
• 13:36
  Speaker 1: the enemy over the last couple of years since the
• 13:39
  Speaker 1: emissions cheating scandal with Volkswagen erupted um and it's just
• 13:43
  Speaker 1: become the target of air pollution campaigners as the thing
• 13:49
  Speaker 1: that is causing the problem. But as you say, there's
• 13:51
  Speaker 1: companies like Volvo, Nissan, UM BMW that are planning to
• 13:58
  Speaker 1: lots more electric models that at the tailpipe have zero emissions.
• 14:03
  Speaker 1: So this is this is completely on track with with
• 14:06
  Speaker 1: what they're planning to do. So just how exactly would
• 14:09
  Speaker 1: such a ban work? So the UK says it will
• 14:13
  Speaker 1: ban the sale of diesel and gasoline powered cars by
• 14:15
  Speaker 1: twenty forty. This comes a couple of weeks after French
• 14:18
  Speaker 1: President Emmanuel Macro announced a similar plan. The objective is
• 14:22
  Speaker 1: to cut smarg and become a carbon neutral nation. How so,
• 14:28
  Speaker 1: what's really interesting about this announcement today is it sending
• 14:31
  Speaker 1: a strong signal from ministers and and the announcement two
• 14:34
  Speaker 1: weeks go in France that in in twenty five years time,
• 14:38
  Speaker 1: twenty five is years time, they don't want to have
• 14:40
  Speaker 1: internal engine internal combustion engine cars on the roads. Actually,
• 14:45
  Speaker 1: if you look at what the analysts say, we're probably
• 14:47
  Speaker 1: not going to have many of those anyway at that
• 14:50
  Speaker 1: point because the direction of travel for carmakers like Tesla
• 14:55
  Speaker 1: is towards electrics. So Bloomberg New Energy finances that in
• 15:00
  Speaker 1: the UK almost of new cars sold in twenty will
• 15:04
  Speaker 1: be electric anyway. So you ask how this is going
• 15:06
  Speaker 1: to be done, Well, I think probably the markets are
• 15:08
  Speaker 1: already doing it themselves. Well, you know, but this is
• 15:11
  Speaker 1: interesting because in the US, for example, we saw unprecedented
• 15:15
  Speaker 1: auto sales and a lot of the autos that were
• 15:17
  Speaker 1: being sold were diesel fuel and not diesel but gasoline
• 15:22
  Speaker 1: fueled cars and trucks. I mean, it was sort of
• 15:24
  Speaker 1: going the opposite way of electric vehicles. When will we
• 15:29
  Speaker 1: see that shift in consumer preference? This this huge shift
• 15:33
  Speaker 1: happening in the mobility market, and I expected to happen
• 15:38
  Speaker 1: over the next twenty five thirty years. And it's not
• 15:41
  Speaker 1: really even just about changing the kind of technology that
• 15:46
  Speaker 1: is powering your car. It's also about the uberization of
• 15:50
  Speaker 1: of our transport system. People are going to be sharing
• 15:53
  Speaker 1: cars a lot more, and there's going to be a
• 15:56
  Speaker 1: lot more self driving cars. So there's gonna be this
• 16:00
  Speaker 1: gigantic leaps that we can't even really get our head
• 16:02
  Speaker 1: around at the moment in terms of how how they
• 16:06
  Speaker 1: drive cars. But the thing about the kind of fuels
• 16:10
  Speaker 1: that people use is that actually in the UK, where
• 16:14
  Speaker 1: we have the largest ease or fleets in Europe, people
• 16:17
  Speaker 1: bought these cars in good faith, thinking that they were
• 16:19
  Speaker 1: environmentally friendly, and then a few years down the line
• 16:23
  Speaker 1: governments realized that they were actually the complete opposite and
• 16:27
  Speaker 1: they were causing more damage to the heir than and
• 16:31
  Speaker 1: people's lungs than they thought. I just want to ask
• 16:34
  Speaker 1: you about the cost of all of this, because I
• 16:36
  Speaker 1: understand that the government has said that they are putting
• 16:39
  Speaker 1: aside about three thirty million dollars or two hundred and
• 16:43
  Speaker 1: fifty million pounds in order to help councils local councils
• 16:48
  Speaker 1: tackle emissions. Why do they need the money. I would
• 16:50
  Speaker 1: think that people would need the money in order to
• 16:53
  Speaker 1: get rid of their old cars that burn foss or
• 16:55
  Speaker 1: fuel in order to go electric. Yeah, it's not really
• 16:59
  Speaker 1: a huge of money that that they've put aside. So um. Yet,
• 17:03
  Speaker 1: what you're suggesting is that there should be a diesel
• 17:05
  Speaker 1: scrappage scheme, and that's something that the Mayor of London,
• 17:07
  Speaker 1: Sadik Khan, has asked for money for because as you know,
• 17:11
  Speaker 1: as I said, you know, people bought these diesel cars
• 17:14
  Speaker 1: in good faith thinking they were good for the environment,
• 17:16
  Speaker 1: and the government doesn't really want to have to now
• 17:19
  Speaker 1: penalize them and say, sorry, guys, you actually turns out
• 17:21
  Speaker 1: you're doing a lot of damage to the planet into
• 17:24
  Speaker 1: people's health, so you know, you have to get rid
• 17:26
  Speaker 1: of that car, so that you know they're helping that
• 17:29
  Speaker 1: they've already put they've already set aside money for helping
• 17:32
  Speaker 1: taxi drivers, black cab drivers for example, to buy new
• 17:36
  Speaker 1: black cabs. Um. But this this headline, um that we're
• 17:40
  Speaker 1: talking about, that the ban on on diesel cars is
• 17:43
  Speaker 1: actually part of a much bigger air quality strategy that
• 17:46
  Speaker 1: they've been forced to put out because the government isn't
• 17:50
  Speaker 1: delivering on its air quality plan, and it's been taken
• 17:52
  Speaker 1: to court twice by environmental activists and it keeps failing
• 17:57
  Speaker 1: to produce a plan that is good enough for tackling
• 18:00
  Speaker 1: knights and dark side. And just now this environmental group
• 18:02
  Speaker 1: has come out again and said we still don't think
• 18:04
  Speaker 1: it's good enough. So there's still a chance we're going
• 18:06
  Speaker 1: to see the government back in court for a third
• 18:08
  Speaker 1: time if if they don't think this plan is up
• 18:10
  Speaker 1: to scratch. Just in the UK, plug in cars are
• 18:13
  Speaker 1: still only about one percent of all vehicle sales in
• 18:17
  Speaker 1: the country. Um, that's expected to grow to eight by
• 18:21
  Speaker 1: What's the sort of threshold. What's the sort of tipping
• 18:24
  Speaker 1: point at which we'll see a more widespread adoption of
• 18:27
  Speaker 1: plug in vehicles? So I think the real key is UM, Well,
• 18:31
  Speaker 1: I guess there's two things. The main one is cost.
• 18:34
  Speaker 1: If you turn up at four Court, um, and you
• 18:37
  Speaker 1: want to be able to buy an electric car, you
• 18:39
  Speaker 1: want to see that it's cheaper on the price tag
• 18:43
  Speaker 1: compared to an internal combustion engine, and I think that's
• 18:45
  Speaker 1: expect to help it happen about the middle of the
• 18:47
  Speaker 1: next century. But the other issue people have is range.
• 18:50
  Speaker 1: Anxiety that their battery is going to run out, and
• 18:52
  Speaker 1: that's tied into having enough charging stations. And in the UK,
• 18:56
  Speaker 1: in London particularly, they're still aren't enough and the ones
• 18:59
  Speaker 1: that are there aren't really charging people's cars quickly enough.
• 19:03
  Speaker 1: You have to wander off for a couple of hours
• 19:05
  Speaker 1: and come back or they're broken. Yeah. Um, so that
• 19:08
  Speaker 1: really needs to be sorted out before people feel confident
• 19:11
  Speaker 1: enough to buy them and be able to drive long distances. Just, gentlemen,
• 19:15
  Speaker 1: thank you so much for joining us. Truly a fascinating
• 19:17
  Speaker 1: issue and it'll be interesting to see what legal parameters
• 19:21
  Speaker 1: the UK and France put into play to try to
• 19:23
  Speaker 1: achieve these targets. Just just Shankleman is renewables and climate
• 19:28
  Speaker 1: change reporter for Bloomberg News, coming to us from London.
• 19:45
  Speaker 1: All right, let's talk about technology. Let's get our Facebook
• 19:48
  Speaker 1: out and find out what's going on with Facebook. We
• 19:50
  Speaker 1: have Shira Oviday, our technology columnist, a Bloomberg gad fly
• 19:54
  Speaker 1: which has that all fast commentary section and you can
• 19:57
  Speaker 1: follow Shira on Twitter at Shira Oviday. Um. I was
• 20:01
  Speaker 1: looking at the details for Facebook. This is a company
• 20:04
  Speaker 1: that's worth about four hundred and seventy six billion dollars,
• 20:08
  Speaker 1: let's say five billion dollars rounding up? Yeah right, why not?
• 20:11
  Speaker 1: I mean they'll probably get there anyway. Um, they had
• 20:14
  Speaker 1: thirty billion in sales in the year, eleven billion a
• 20:19
  Speaker 1: third is net income. They were able to take a
• 20:22
  Speaker 1: third of that in sock it away and get this,
• 20:25
  Speaker 1: the free cash flow is over twelve billion dollars. Not
• 20:30
  Speaker 1: a bad little business that marks there. Oh and everyone
• 20:33
  Speaker 1: keeps saying, well, you know, can it continue? Can it continue?
• 20:36
  Speaker 1: What is your overday think? Well, I think that is
• 20:38
  Speaker 1: exactly the right question, right that if you look at
• 20:40
  Speaker 1: what Facebook has done basically from almost zero to one
• 20:45
  Speaker 1: of the biggest companies in the world in five years
• 20:48
  Speaker 1: and extremely profitable, has been very amazing. But the big question,
• 20:53
  Speaker 1: of course, as investors look at Facebook is how much
• 20:56
  Speaker 1: more room to grow is there for a company that
• 20:59
  Speaker 1: has grown so quickly in such a short period of time.
• 21:01
  Speaker 1: And I mean I think that I agree that the
• 21:03
  Speaker 1: short term is pretty promising. The longer term is a
• 21:06
  Speaker 1: question mark. Well, and just to give this some perspective,
• 21:09
  Speaker 1: Facebook shares up more than so far a year to date.
• 21:14
  Speaker 1: I imagine we're also going to hear something out of
• 21:16
  Speaker 1: Facebook about uh displaying more news and sort of getting
• 21:20
  Speaker 1: people out of their uh particular bubbles and expose them
• 21:24
  Speaker 1: to more ideas. What do you think is going to
• 21:26
  Speaker 1: be said on that? I mean, this is a topic
• 21:28
  Speaker 1: that Mark Zuckerberg has been talking about for much of
• 21:31
  Speaker 1: this year that he's been on this. I don't know,
• 21:33
  Speaker 1: what do you what do you want to call it?
• 21:34
  Speaker 1: Like a quasi presidential tour of the United States, meeting
• 21:38
  Speaker 1: with regular folks, right to to sort of try to understand, um,
• 21:43
  Speaker 1: people in the United States and how they use Facebook
• 21:46
  Speaker 1: and how basically to make Facebook a more hospitable place
• 21:51
  Speaker 1: for people and communities and groups. And as you said,
• 21:55
  Speaker 1: one of the biggest issues for Facebook is how to
• 21:59
  Speaker 1: you know, get people out of their little self contained
• 22:01
  Speaker 1: bubbles and expose them to news or information or points
• 22:04
  Speaker 1: of view that they might not have heard um otherwise
• 22:07
  Speaker 1: in their Facebook network. And that is a big topic
• 22:10
  Speaker 1: for them. And look, that's a business issue for them too,
• 22:12
  Speaker 1: that if people feel like Facebook is this terrible place
• 22:16
  Speaker 1: where I just um here people rant about you know,
• 22:19
  Speaker 1: Donald Trump, about Hillary Clinton, and then they don't like
• 22:23
  Speaker 1: to use Facebook as much. Right, that has business implications
• 22:26
  Speaker 1: for Facebook. I was gonna say, then they just go
• 22:28
  Speaker 1: use Instagram or what's app? Right, Facebook properties, right, I mean,
• 22:32
  Speaker 1: this is the sort of power of Facebook. You know.
• 22:36
  Speaker 1: Here's the example that I carry around in my head today. Boeing,
• 22:39
  Speaker 1: which we talked about earlier on in the program, has
• 22:42
  Speaker 1: a market cap of a hundred and forty billion dollars.
• 22:44
  Speaker 1: If Boeing is something happens to Boeing and they stopped
• 22:47
  Speaker 1: making plans, everybody will feel it. If someone pulled the
• 22:50
  Speaker 1: plug on Facebook, I'm not sure everyone would feel it.
• 22:53
  Speaker 1: There'd be another competitor that's got a five billion dollar
• 22:56
  Speaker 1: market cap. I mean, it's a very fair point that you, right,
• 23:00
  Speaker 1: the different Facebook does not make the most essential things
• 23:05
  Speaker 1: in the world, but it has two billion users, So
• 23:09
  Speaker 1: there's people who get a lot of value out of those.
• 23:11
  Speaker 1: Airlines are going to probably advertise exactly and right then
• 23:14
  Speaker 1: that it has millions of advertisers who tried to reach
• 23:16
  Speaker 1: customers on Facebook, including right. Problem with Boeing and customers.
• 23:21
  Speaker 1: I mean, conceivably you could make the argument that Amazon
• 23:25
  Speaker 1: doesn't produce much, although they do now and create their
• 23:27
  Speaker 1: increasingly producing more and more products. Uh, now this company
• 23:32
  Speaker 1: is going to report earnings and expectations are extremely high.
• 23:37
  Speaker 1: What could cause people some concern that Amazon is not
• 23:41
  Speaker 1: going to crush everything in its sight, which is basically
• 23:45
  Speaker 1: what it's done so far. I'm very confused about how
• 23:49
  Speaker 1: investors think about Amazon these days, because you see this
• 23:52
  Speaker 1: kind of back and forth where people Amazon has been
• 23:55
  Speaker 1: saying for about a year now that it's investing very
• 23:58
  Speaker 1: heavily in its future, in things like warehouses where it's
• 24:02
  Speaker 1: stores inventory, and in buying movies and television shows for
• 24:08
  Speaker 1: its video service, expanding in places like India, which is
• 24:12
  Speaker 1: going to be this huge e commerce market in coming years.
• 24:16
  Speaker 1: And investors at times seem cool with that, and at
• 24:19
  Speaker 1: times they freak out that profits are crimped because Amazon
• 24:23
  Speaker 1: is spending a lot on these investments. So I'm not
• 24:26
  Speaker 1: actually sure what will happen on Thursday when Amazon reports earnings. Well,
• 24:30
  Speaker 1: I mean, just looking at their shares, they are up
• 24:33
  Speaker 1: more than so far this year, and it's just like, yes,
• 24:37
  Speaker 1: I mean, and you have to wonder how much is
• 24:40
  Speaker 1: this allway just moving moving together? I mean, how much
• 24:42
  Speaker 1: do these companies get sort of washed up in the
• 24:44
  Speaker 1: technological revolution, right rather than their individual strengths. I mean
• 24:48
  Speaker 1: that that has been the sort of anxiety from that
• 24:53
  Speaker 1: we saw in June about tech stocks, right, is that
• 24:55
  Speaker 1: all of these tech stocks are a little bit crowded,
• 24:58
  Speaker 1: that everybody's investing in the same handful of giant tech companies,
• 25:02
  Speaker 1: and maybe there's a risk of kind of overcrowding pushing
• 25:05
  Speaker 1: up these stock prices to unsustainable levels and valuations. Amazon
• 25:09
  Speaker 1: is one of these companies that whose share value makes
• 25:14
  Speaker 1: no sense on any kind of logical basis. That's trades.
• 25:17
  Speaker 1: It's something like sixty times forward earnings or whatever, so
• 25:21
  Speaker 1: that is not logical. But it has been that way
• 25:24
  Speaker 1: for a very long time, and the company, yes a
• 25:27
  Speaker 1: company for a long time. Therefore it should be fine.
• 25:30
  Speaker 1: It should be fine, or maybe it won't be fine.
• 25:32
  Speaker 1: I don't know. Well, he you know, he's just a
• 25:35
  Speaker 1: little factoid, right, you know, anniversary this year for Amazon
• 25:40
  Speaker 1: going public. They went public of May. The price was
• 25:45
  Speaker 1: eighteen dollars a share, and today the shares of Amazon
• 25:49
  Speaker 1: are one thousand, fifty dollars, up more than ten and
• 25:53
  Speaker 1: a half bucks. Again, not a bad little business. And
• 25:55
  Speaker 1: the Jeff Bezos has filled for himself. Twitter, Can you
• 25:59
  Speaker 1: just give us a hint about what we should look
• 26:01
  Speaker 1: for with Twitter? Are they actually figuring out how to
• 26:03
  Speaker 1: make money that they're not figuring out how to make money?
• 26:06
  Speaker 1: It was pretty quick. Twitter right now is in basically
• 26:10
  Speaker 1: a canyon of sadness of its own making. So it's
• 26:14
  Speaker 1: it's stuck in this rut where it sort of stagnated
• 26:19
  Speaker 1: on the number of people using Twitter and only recently
• 26:22
  Speaker 1: has sort of slowly started to add more people who
• 26:25
  Speaker 1: are using Twitter. The problem is that has coincided with
• 26:28
  Speaker 1: a pretty dramatic decline in the company's revenue from advertising,
• 26:34
  Speaker 1: and the company has basically said that's not going to
• 26:36
  Speaker 1: get better, probably until next year at the earliest. So
• 26:40
  Speaker 1: you have the situation where, uh, this is a company
• 26:43
  Speaker 1: that is adding users, but not that quickly. Uh, it's
• 26:47
  Speaker 1: top line is shrinking, it has it is unprofitable and
• 26:51
  Speaker 1: continues to be unprofitable. And so you know, right now
• 26:55
  Speaker 1: Twitter seems kind of stuck. Well maybe they'll be left
• 26:58
  Speaker 1: off the tech train in of sadness. Yeah, Shira Ovida,
• 27:03
  Speaker 1: thank you so much for joining us for this canyon
• 27:05
  Speaker 1: of sadness on this Wednesday. Sierra Ovid is a technology
• 27:09
  Speaker 1: columnist for Bloomberg gad Fly. You can find her work
• 27:13
  Speaker 1: on and I gad Fly on the Bloomberg as well
• 27:16
  Speaker 1: as Bloomberg dot com slash gad Fly. Thanks for listening
• 27:23
  Speaker 1: to the Bloomberg P and L podcast. You can subscribe
• 27:26
  Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever
• 27:29
  Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter
• 27:33
  Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo wits one.
• 27:37
  Speaker 1: Before the podcast, you can always catch us worldwide on
• 27:40
  Speaker 1: Bloomberg Radio