May 29, 2021 • 31 mins
This week, Stinson Dean, Deacon Lumber Company CEO, came back on to talk about why lumber is caught in another market standoff. Jill Carlson, Slow Ventures principal and co-founder of the Open Money Initiative, returned to discuss whether she thinks this is the end of a crypto cycle and why institutions are still buying bitcoin despite the volatility. Caroline had an exclusive interview with Chevron CEO Mike Wirth right after he faced a major rebuke from his shareholders, which voted to back a proposal to reduce emissions from the company’s customers. Then Alex Williams, a research analyst at Employ America, joined to talk about his recent guest post on the Odd Lots blog titled "The Economy Is Booming. Why Don’t Firms Believe It?"
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Episode Transcript
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Speaker 1 (00:08):
Welcome to What Do You Miss? This Week? I'm Joe Wisenthal.
This podcast has some of our favorite interviews from the
Daily Market Clothes show that I co anchor along with
Romaine Bostick in Caroline Hyde What Do You Miss? It's
the perfect way to kick off your weekend. Everyone loved
all of our lumber craze conversation, so we circled back
with Stinson Dean Deacon Lumber Company CEO and lumber market
(00:29):
cash and futures trader, who we spoke with about a
month ago. It looks like things are starting to cool
off a bit in the market, so we asked Stinson,
what has fundamentally changed since the last time we spoke. Yeah,
so I think we're in another market standoff. We kind
of had buyers versus sellers in February and March, and
(00:52):
the sawmills won that standoff clearly in the market RiPP higher,
and I think we're kind of back in that kind
of standoff. So what's different between then and now? And
the things that I've observed Big builders are actually pushing back.
The rhetoric is it's not so much price, it's just
they don't have confidence in the supply. So they're gonna
(01:13):
dial back what they're gonna sell, They're turning away home buyers.
No one's questioning demand. Demand is clearly there, but we're
just running into capacity constraints. UM. So that's different. UM.
The for me, the May futures contract the way it
expired was kind of boring. Like if folks had a
(01:35):
huge need for prompt wood and they had to have
it now like we experienced up to that expiration, that
contract would have shot up because it offers buyers a
chance for physical delivery. And it was flat too week
and we even saw a carry towards end of that
and the spread. And then lastly, if you look at
the spread, and I talked about this last time I
(01:57):
was on that term structure, it's not always a leading
into hater. It's you know, it could take a while
to adjust, but it's it's as a hedger, it's what
I look at. And flat price in the last but
two or three days is gone, limit limit limit off
this bounce. We'll see if it's a dead cat bounce,
I don't know, but the spread has stayed stagnant to
(02:17):
even to even lower the July September future spread chart
and you can see on there that that it hasn't
gone anywhere. Right. It rallied uh during the big flat
price rally that we all know about, but now the
most recent rally, it's not really reacting to it. So
to me, that's just something that's different than the than
(02:38):
the previous rally we've had. And then one more big
point is the big box stores have have taken a
lot of supply UH, and those the big box by direct,
and they don't see the open market and they do
not supply single family homebuilders. So the wood that's that's
on the shelves at home depot does not go to
build homes for the large part, UH. So that that
(03:01):
their seasonal you know, d I Y shoulder carry demand
is peaking. So I expect to see more wood that
was going direct to big box stores get back on
the open market UH and ultimately supply single family homes.
A month or so ago. A lot of people are
also talking UH cents in here about the stumpage fees,
and I guess the idea here that you're not really
(03:21):
seeing the price. I guess at the route UH forgive
the pun going up as much as you're seeing. Of course,
the end product yeah, So the stumpage price of US
southern trees has been stagnant to flat, hasn't risen with
UH lumber prices, but that's because we don't use those
trees to build homes. The stumpets price and there's a
(03:42):
big story here. The stumpage price in Canada UH does
increase and it's in lockstep with the price of lumber,
and it's lagged by three to six months. So what
we're gonna see the second half of the year is
Canadian sawmills, their break evens are gonna go up I
think a hundred dollars per thousand, and if there's still
a tariff, which was announced just before we went on air,
(04:04):
that they're looking at doubling it. And this is a
from what I understand, a procedural review. It wasn't a
new initiative, but now the reviewing potentially ping these tariffs.
So we're looking at break even prices going up to
two hundred dollars per thousand more for the second half
of the second half of the year. So more pressures
to bring the floor higher. Because I'm as big of
(04:25):
a bowl as they come. I'm hired for longer. The
question to me is is how where is the new normal?
And the longer we go at higher prices, we normalize
it and that floor goes higher and higher. So there's
just gonna be upward cost pressures the second half of
the year. So there's another factor, uh that seems to
be a play, which is there might be signs that
(04:46):
this sort of like torrid us housing market as measured
in different ways, is slowing down a little bit. We've
seen new home sales actually come in fair bit weaker
than expected. We've seen talk um We talked to only
Wolve recently who pointed out that the home builders themselves
throttling their demand their builds a little bit for all
(05:07):
kinds of reasons, maybe shortage of space, pushing back, just
slowing down. So on the you know you've been we've
been talking about the supply side. Is the demand side
going to ease up a little bit and then create
a little bit more breathing room here? Uh Ali would
know better than I would, but I suspect yes, I mean,
we're just hitting a capacity constraint. I don't think that's bearish,
(05:29):
but it's not. It's it's not bullish, And there's a difference, Um,
so I do think, you know, homebuilders are going to
have a choice do I do I sell dirt and
try to guess on what that sale price needs to
be and hope my input costs later on are profitable.
I don't think they're willing to do that at an
aggressive scale. So they're just there's just gonna be a
limit on demand and that will that stagnation potentially could
(05:52):
give the supply chain a chance to catch up. And
what does that mean though for some of the folks
who have been trying to trade this market since then,
I mean a lot of still betting on the idea
that if the high price don't necessarily continue, they'll at
least stay high and persist. Yeah, So it goes to
what's happening right now, so that the sawmills are really
sold out into mid June on a very strong forward
(06:15):
sale or order file. So so the second quarter is
is done. Like these mills have had a great second quarter. Um,
there's only a couple of weeks left that they have
to sell production. UM, shipping has improved drastically. We didn't
have the big winter storm that's slowed down rail, So
I think you're gonna see more shipments than sales in
the second quarter, which which will reduce inventories um. But
(06:40):
for me, the thesis of higher for longer. The break
evens are going up for these mills like they won't
have a choice but to keep prices elevated, I think
above six to make any money. Uh. And then the
fact that we've been selling and we're just now seeing
a pushback from builders at lumber that's and that's a
Phobe Canada, that there's a hundred dollars freight added on
(07:02):
to that, and then you know, all the all the
middleman to touch that. So it tells me, you know,
it took sevents, So potentially we could be seeing some
equilibrium and some pushback on the demand side. Well, we
would all love to own a thousand dollar lumber at
this point, which is just the wildest thing to think about.
But that floor, every day it goes higher and higher
as we normalize these high prices. We also caught up
(07:27):
with another Woodrow miss Regular Joe Carlson, principle of Slow
Ventures and co founder of the Open Money Initiative, to
discuss the last few wild weeks for crypto. Jill has
seen a million of these crypto cycles already, and it
goes straight up and then it goes straight back down.
So we started by asking Jill if she thinks this
particular cycle is over look, yeah, to a degree. Easy come,
(07:50):
easy go. I want to take you back. I came
on this show at the beginning of January and we
talked about the bitcoin rally that was happening, and we
talked about how I talked about how I thought that
it was a very healthy price action. It seemed to
be all institutionally driven, and look, I think that that
narrative still holds true. What happened in the interim was
(08:12):
that Elon Musk came in on January nine, tweeted out
about bitcoin and brought in the hordes of retail investors.
And when you have retail and when you have leverage
in the system, you're gonna get these types of moves.
And it's no coincidence that we're now back at roughly
the same price that we were in mid January before
(08:33):
Elon Musk got involved and and brought in all of
this retail interest. Here we are. Yeah, I mean, great point, Jill,
I am curious. So I mean one aspect of this
that a lot of people did talk about was the
idea that companies were putting this on the balance sheet
that had sort of been a catalyst for some of
the rally that we've seen this year. And then of
course with I guess I don't know what you call
(08:53):
a confusion or whatever with regards to whether Tesla is
still holding or not. I'm curious as a whether that
side of the equation is still holding. Are you are
we still anticipating that the companies out there are still
considering using this as a balance sheet asset. Look, yes,
I mean confusion is definitely the right word when it
comes to Tesla and whatever is going on there, So
(09:14):
I won't even try to speak to that. I think
that there's probably a dynamic around them being classified as
an es G stock. I think there's probably dynamics with
the government subsidies that they have to be dependent on
UH and needing to maintain their position, is environmental play
all of that. But the reality is is institutions are
still buying bitcoin. If you look at the data from yesterday,
(09:36):
o TC desks had their biggest outflow meaning institutions buying
that they have seen in three or four months, and
that to me indicates that institutions are still coming in
buying the DEPP. I do think that there is a
real dynamic here in a real sentiment shift around bitcoin
and proof of work tokens. Uh that you know, there
(09:57):
is this environmental concern and that effects sentiments. Intiment has
a real impact on markets, and we'll have a real
impact on new decisions by corporate treacheries, by institutions, certainly
by retail investors as to what to be involved in.
And there is still a reckoning that has to happen
around that. But the narrative around institutions buying does seem
(10:17):
to be holding. Okay, So you know, elon musk aside,
and this is something that I've always found like a
little like been uncomfortable with your industry. Uh. It seems
to me that every time there's a bull market, people
in the crypto space start plugging. Thousands of coins were
recently interviewed Hayden Adams, the founder of unit Swap. Two
(10:38):
thousand coins today, he said, are being added to the
unit swap protocol. Two in three different people this week
made meme coins based on me that traded on pancake swap.
This is this inevitable thing, which is that as the
price goes up suddenly, even though there's only twenty one
million bitcoins, people just flugged the market with supply, all dematedly,
(11:00):
sort of like creating some weight on the market overall. Look,
I I I don't think that that is a fair characterization, Joe, actually,
because I don't think that it's meme coins taking the
air out of the room when it comes to bitcoin. Sure,
maybe a little bit to a degree on the on
the edges around you know, the retail market participants, but
(11:20):
that's not what is you know, that's not comparable supply, right,
but flooding the market just to push back for a second,
one of there's all kinds of different reasons people want
to buy bitcoin. One reason is because they want to
buy an asset that's going up really fast and there's
no principle or tech or anything behind it other than
number go up. And so when numbers go up even
faster on all this other stuff flooding to market at
(11:43):
the margins, does that take away some of the the
enthusiastic for fether to buy at the margins? Yes, I
I will grant you that. I think though that it
takes air out of the room around dogecoin much more
so than it does the likes of bitcoin or etherory um.
And look, I mean, let's not confuse the long tail
of meme coins with the plethora of other assets that
(12:06):
we're now seeing the real utility around, whether it's serimentation
with proof of steak systems, less energy intensive systems, we're
seeing real market demand for these types of alternatives now
for the first time. Do I think that that's a
very real exciting development. Well, but it seems like people
within your industry, the people who understand it, understand that
(12:27):
point that you just made, Jill. For a lot of
the people who are coming into this new there's still
that cloud here. And you mentioned does and Joe mentioned
the two thousand coins being created here. That creates a
cloud here, Jill, and I'm curious as to win you
anticipate that your industry is really going to be able
to kind of you to put that cloud behind you
or get rid of it, or whatever the analogy is.
You're right, I mean, today it's very much still a
matter of doing your own research. And you know, I
(12:49):
think one heuristic, as if the coin is named after
a dog or maybe your favorite news anchor probably don't
invest in no ivory, don't don't do it. But but
you know, I think if you look back at the
nascent days of any market, it's a matter of people
doing their own research. Every market and its earliest days,
(13:10):
going back to the stock market, the pink sheets days
more recently, Um, you know, you don't need to go
back as far as tulips. You look at the development
of market, it goes through this period where they're grifters
and scammers and people looking to make a quick buck,
and it's just a matter of time and market maturity
and education. Let me ask you one more question. We've
had the energy debate, We've talked about it forever. The
(13:33):
other way that crypto consumes real, real, real resources is chips.
And in China already you can't buy hard drives because
of Chia mining and file coin mining and so forth.
Is that still an issue? I mean, there's like it's
just pretty capital intensive stuff that all these new coins
are launching into. Yeah, I mean the proof of space
(13:53):
and time that that Chia uses, for example, I think
is a great example of a more environmentally for leave
version of of what bitcoin tries to achieve. Certainly it
might still be capital intensive, but in order to secure
these networks, you know they're economically incentivized networks, you have
to have that capital outlay in some way, shape or form,
(14:14):
whether that's again through the proof of space and time,
whether that's through stake whatever it is. Personally, I'm very
excited about the alternative of being able to use space
as opposed to compute, which is again obviously less energy intensive. Now,
Caroline had an exclusive interview with Chevron CEO Mike Worth,
(14:35):
right after the executive faced a major rebuke from his
shareholders at Chevron's annual investor Day of the oil Giants.
Investors voted to backup proposal to reduce emissions from the
company's customers over the recommendations of the board, which had
urged shareholders to reject it. Caroline started by asking the
CEO what he made of the vote and of the
intention of the shareholders. On the look across our society
(15:02):
and among all stakeholders, interest in these issues has has
never been higher, and I think the vote reflects that.
It's it's part of an evolving approach to a lower
carbon future. Shareholders want us to succeed. What matters is
how we respond to these challenges together. And so we're
we're working on reducing the emissions of our products as
(15:22):
they're used by our customers. Were offering renewable diesel, renewable
natural gas, renewable base oils and UH and we're working
on things like sustainable aviation fuel in hydrogen UH. And
so we we have emissions in our own operations that
we're working to bring down and making very good progress.
But then also society needs energy. We're an energy company
that provides it, and we're working on the technologies and
(15:44):
the solutions to work across particularly more difficult parts of
the economy UH, to find ways to help bring these
emissions sounds. This is a step on that journey. I
think that's so important to remind people that of cold See,
you know, many of us want to see emissions come down,
but many of us all I want our lights, which
is to work, our conditioning to work, and our energy
is to still run freely. But I'm I'm interested in
(16:05):
whether you feel kind of surprised by the strength of
investor focus on this, because I know you're a man
who wants to promise them returns. Investors want the best
of all worlds. They want to see profitability come from
you bigger returns. But are you surprised by how much
they also really want to focus in on the E
s G part of the equation. Well, I think the
rate of change on E s G has been, um,
(16:28):
you know, has been dramatic. Uh. There were times not
too many years ago where it came up infrequently in
discussions with investors. Today it comes up in every discussion,
and oftentimes it's the first thing that comes up in
a conversation. So I'm not surprised that it's high on
their minds. I meet with investors all year long, and
(16:48):
and this has been a regular topic that we've been
hearing about. And uh, and and you're right, investors do
want to see higher returns. Our industry is one that
has not been in favor with investors because our returns
haven't been as strong as they historically were and and
so we've got work to do. It's why I really
talked to our people about just for words, higher returns,
(17:10):
lower carbon. We need to do both of those. When
I talk to investors about that, they say, that's exactly right,
you're hearing what we're saying. That's what we expect and
that's what we're committed to. Of course, today was rather
extraordinary because x On Mobile was taken on by a
tiny activist investor and has lost to board seats, if
not three to them. It would seem that shil is
also being ordered to slash their own emissions via a
(17:32):
court as well over in the Netherlands. Do you worry
that this will go to the courts as well, not
just your annual general meetings? Well, I I've been in
a board meeting after our annual meetings, so I haven't
seen all the developments that have occurred today. But you know,
this is a very active environment that we find ourselves in. Uh.
There are lawsuits have been fired on very filed on
(17:55):
various aspects of climate around the world, and we don't
believe that's a fruitful way to engage in dialogue on
this issue. We think that they generally distract companies from
the real important work, which is working on technologies, working
on progress and taking actions and ultimately, uh, you know,
(18:16):
the lawsuits haven't really proven to have much merit, and
I don't know how the student and analans today will
play out, but we look for a constructive engagement we
look for to be challenged and and we're taking action
and we intend to take more action to be challenged
by activist investors in particular. How much do you think
there are they a threat to the business model in general,
(18:36):
to to a joined up business model that you provide
in terms of oil and gas. Well, I think activist
investors other investors, they have they want to be heard,
they have a point of view and UH, and look,
we we engage, as I said earlier, with our investors
all year long, and so UH, we're listening, we're engaging.
(18:59):
Were as transparent as we can be. We just issued
a very lengthy report on climate change in our companies
UM resilience in a variety of scenarios. We did an
analysis under very aggressive carbon reduction scenarios to look at
how our company would fare under those. And so investors
of all types are are, you know, focused on this
(19:21):
as we are, And so that's part of UH. It's
part of the environment today for companies that are providers
of energy and UH, and I believe our industry is
part of the solution. We have the technical capability, the
project management capability, the engineering UH acumen UH and the
financial capacity to be part of the solution. And I
think companies across our industry are in fact working very
(19:45):
hard on that, taking different approaches. But that's really where
we should all be focused is how do we find
ways to make progress on this as opposed to find
ways to engage in in conflict. Talking of progress, I
mean your share price, how progress significantly up? I mean
since the lows back in October, you have been able
to be returns in that respect, the fundamentals of the
(20:08):
oil business in particular have improved, prices have rebounded. I'm
interested in as you do double down on your investments.
As you say, is you want to talk about perhaps
finding beneficial ways to dig on on hydrogen. I know
that that's an area that you feel you've got a
unique advantage in, for example, and teaming up with certain
companies there. How do you also return to the investor
(20:28):
base because I know that's something you want to look
and on and and investors analysts Wells Fargo, for example,
trying to say when you might start doing share buybacks.
Is that on the agenda? Well, there's a balance here.
I said earlier that that our objective is to deliver
higher returns in lower carbon and we have to do both.
We can't only do things that are good for shareholders
(20:49):
and ignore sustainabuilding and the environment. That won't last. And likewise,
if all we do is focus on things that are
good for the environment and we don't respond to shareholders
desire to see return, that's not sustainable either. And so
we really have to do both. That has been our
focus for quite some time. And uh we've increased our
dividend for thirty four consecutive years. We came into this
(21:12):
downturn with the strongest balance sheet in the industry, and
we've emerged with the strongest balance sheet. We were able
to do an acquisition to strengthen our portfolio during this downturn,
and we've repurchased shares thirteen in the last seventeen years
because we've been very disciplined with with capital and we've
had the cash to return to shareholders via that. So
our financial priorities have remained the same. We've been consistent, prepared,
(21:34):
and adaptive as we've faced a very dynamic environment. And
I think those are attributes that make a company strong
and it's what rewards shareholders. And so we need to
do both, and we intend to do both. You've intended
to do both. You haven't set yourself exact targets in
times or limiting emissions, but you have outlined how you're
(21:56):
going to invest in getting there and lowering common as
you say that key because of the business. But can
you do that at the same time as perhaps giving
share buybacks as soon as well? We actually have set
targets to reduce emissions. We've set targets to reduce greenhouse
gas emissions from up soil, from gas, from methane, from flaring.
(22:17):
We achieved our targets early. We reset targets for which
is the next Paris stock tank. It's tied to my compensation,
the compensation of our employees. So we are setting targets,
we are reducing emissions in UH, in our operations and UH,
you know, we we do need to do it all.
It's it's not necessarily simple, UH and and finding that balance.
(22:41):
Different people have different opinions about where that is. And
that's really where a lot of this dialogue comes is
at what pace should we reinvest in our core business
and what page should we reinvest in energy transition? At
what pace should we return cash to shareholders? And UH,
and there's there's judgments and there's balance in there and
uh and that's the uh, you know, that's the world
(23:01):
that we're navigating. And it's why this engagement with shareholders
is so important. Will you continue to talk to activists
such as follow this What do you to them if
if that is me? Well, we we had a proposal
from follow this today and uh uh it received a
lot of shareholders support and uh and look they closed
(23:22):
their presentation to us as we're with you, we want
you to be successful. And so I think we need
to engage with all stakeholders and uh and understand their
points of view. When I do that, I find that
there is more common ground uh than people might think
before you walk into the room. And and just because
we can't agree on everything doesn't mean we can't agree
(23:43):
on anything. And so we often find that there's a
lot that we do agree on and then we can
talk about the things where we still have different points
of view. But that's how you make progress. Then we
caught up with Alex Williams, a research analyst at America,
to talk about his recent guest post on the odd
Locked blog titled the economy is Booming. I don't firms
(24:06):
believe it. We talked about bottlenecks. Literally every day we
keep discovering more and more of them, and it seems
like the answer is for companies to invest more, build
out supply chains, and expand their capacity. So we asked
Alex what would stop them from doing that? So the
first problem is that new capacity takes a long time
to come online from the point at which you decide
(24:28):
to invest, and it firms are seeing these high prices
as transitory or temporary shortages. As the economy works itself out,
they may not think that it's worth their while to
pull new capacity together in order to service them. By
the time these you know, investments are up and running,
these price hikes may have passed. And so the memory
(24:49):
of the long period of low demand from two thousand
and eight after until I mean, you know, recently, very
recently um really speaks to the sense that there's no
guarantee that buyers will be there in the long term,
so firms are taking sort of a wait and see
approach to investment. Is there a policy answer therefore, to
(25:12):
help these such companies forget the long period from two
thousand and eight to hear and remember that actually that
sort of demand might be sustained and investment cycles should
be you know, we looked at. So there is some
reason to be optimistic because just today the manufacturers shipments,
inventories and orders investment measure if you exclude defense and aircraft,
(25:37):
has finally passed the high point that it hit in
two thousand UM, showing that there is beginning to be
some investment by these firms. But for the kind of
wide scale overhaul that we need, there needs to be
in understanding that demand will be there, whether through income supports,
through a willingness to let wages rise, through uh, you know,
(25:58):
sort of an expansionary fiscal policy stance towards an investment
and infrastructure build out. All of these will help guarantee
that demand will be there to validate these investments. When
you talk about alex the idea here of a lot
of the government spending. We have obviously a couple of
big proposals here by the Biden administration. The selling point,
it's a relatively salient one, is the idea that this
(26:19):
is an investment rather than just spending, the idea that
it's on point in the future. This sort of pays
us back with regards to GDP growth, job growth, etcetera. Here,
how do you how are we able to sort of
make that link and make that link in a way
that I guess it is valid. Well, I think that
there's almost no way not to make that link, because
(26:40):
in a capitalist economy, all investment is ultimately oriented towards
producing consumer goods and towards servicing consumption. While it might
be politically good to frame things as strictly investment focused
in something like an infrastructure plan, even just ensuring that
you know, poorer Americans are take home more in their
(27:00):
paychecks and seeing higher wages will buy itself ensure that
more investment is brought online. What about interest rate hikes
to just slow down? I mean sure, like, you know,
maybe we can hope businesses invest more and expand and
build out that capacity and needs out these bottlenecks. But
is there like a response to just why don't we
tap the brakes and just use the bottlenecks? So the
(27:23):
trouble with that is is we're already seeing bottlenecks in
a variety of goods. If we raise rates, then it
will cost more to make the investments in capacity that
we would need to alleviate those bottlenecks. If we raise
rates in an attempt to shut demand down, in an
attempt to you know, close off these bottlenecks from opening,
(27:47):
you're essentially leaving a whole lot of investment, a whole
lot of GDP growth, and a whole lot of employment
growth and improvement employment conditions on the table just to
avoid some transitory price spikes. I next, how much is
an investor base a help were hindrance here because how
much the investors want to see returns in terms of
(28:07):
share buybacks, capital put to work in terms of putting
light in their pockets, or how much have you seen
these longer term investors decide that, you know, investments were
either way to go and they're seeing the signs that
they need to meet demand. I think part of the
trick to that is recognizing that a lot of the
crop of managers and a lot of the crop of
people within these companies who would be making these investment
(28:29):
decisions have come up in a world that has really
been structured over the past ten years by systematically low demand.
For some of the younger folks, there's no muscle memory
there for how to do this, And for some of
the older folks, the memory of the nineteen seventies looms
larger than the memory of the nineteen nineties, and so
they may remain a little hesitant as well. So we're
(28:51):
on the precipice, Alex here of a great deal of change.
I guess some of it has already sort of taken
place or started to take place because of the CO crisis.
In our previous show, we talked with a couple of
investors in XX and we talked about the recent victory
to get someone appointed to that board who I guess
it takes a different approach to climate change and wants
to push this company in a in a direction. I
(29:15):
guess that they sort of address some of the climate
change issues. This sort of dovetails, I think quite succinctly
with what we're trying to deal with and how we
get this economy backup and running, and whether we look
at the short term effects or the longer term effects, Alex,
how do you sort of make the case here for
making those longer term uh changes? So I think the
(29:36):
trick is adapting to ecological constraints and building out a
more climate conscious capital stock is going to require an
incredible volume of investment and the thing is is that
that investment creates jobs, which creates a boom, which creates
a need for further investment. The classic Kansian cycle is
something that policymakers can really lean on to not only
(29:59):
justify investments in long term sustainability, but show how the
second order effects of those investments justify the investments themselves
all on their own in terms of an increased standard
of living, better employment, and higher consumer demand. So we
got obviously more news today on the sort of stimulus
infrastructure that theoretically the White House is going to push forward.
(30:21):
Is this word? Is this right? Is this the right
level in your view? And is this the kind of
policy that could maintain sustained effective demand such that the
muscle memory of corporate America changes. I think that there
is a lot to be praised in the stimulus package.
I think that some of it is a little bit
undercut by their lack of willingness to ensure that the
(30:45):
added benefits to unemployment insurance aren't being paid out two
states that are rejecting them because those are such an
easy source of demand in addition to the government as
a source of investment. So I think it's really uh
imperative that you know we match both sides of this
and increased demand alongside increasing investment. As always, more might
(31:09):
be better in bringing out sort of these long dormant
impulses to investing in passive And that's it for what
you missed this week. If you like the show, make
sure to subscribe and rate us an Apple podcast or
wherever you listen to podcast. You can catch our show
every weekday from three thirty to five pm on Bloomberg
(31:32):
TV and from four to five pm on Twitter. Thanks
for listening and have a great week.
Welcome to What Do You Miss? This Week? I'm Joe Wisenthal.
This podcast has some of our favorite interviews from the
Daily Market Clothes show that I co anchor along with
Romaine Bostick in Caroline Hyde What Do You Miss? It's
the perfect way to kick off your weekend. Everyone loved
all of our lumber craze conversation, so we circled back
with Stinson Dean Deacon Lumber Company CEO and lumber market
(00:29):
cash and futures trader, who we spoke with about a
month ago. It looks like things are starting to cool
off a bit in the market, so we asked Stinson,
what has fundamentally changed since the last time we spoke. Yeah,
so I think we're in another market standoff. We kind
of had buyers versus sellers in February and March, and
(00:52):
the sawmills won that standoff clearly in the market RiPP higher,
and I think we're kind of back in that kind
of standoff. So what's different between then and now? And
the things that I've observed Big builders are actually pushing back.
The rhetoric is it's not so much price, it's just
they don't have confidence in the supply. So they're gonna
(01:13):
dial back what they're gonna sell, They're turning away home buyers.
No one's questioning demand. Demand is clearly there, but we're
just running into capacity constraints. UM. So that's different. UM.
The for me, the May futures contract the way it
expired was kind of boring. Like if folks had a
(01:35):
huge need for prompt wood and they had to have
it now like we experienced up to that expiration, that
contract would have shot up because it offers buyers a
chance for physical delivery. And it was flat too week
and we even saw a carry towards end of that
and the spread. And then lastly, if you look at
the spread, and I talked about this last time I
(01:57):
was on that term structure, it's not always a leading
into hater. It's you know, it could take a while
to adjust, but it's it's as a hedger, it's what
I look at. And flat price in the last but
two or three days is gone, limit limit limit off
this bounce. We'll see if it's a dead cat bounce,
I don't know, but the spread has stayed stagnant to
(02:17):
even to even lower the July September future spread chart
and you can see on there that that it hasn't
gone anywhere. Right. It rallied uh during the big flat
price rally that we all know about, but now the
most recent rally, it's not really reacting to it. So
to me, that's just something that's different than the than
(02:38):
the previous rally we've had. And then one more big
point is the big box stores have have taken a
lot of supply UH, and those the big box by direct,
and they don't see the open market and they do
not supply single family homebuilders. So the wood that's that's
on the shelves at home depot does not go to
build homes for the large part, UH. So that that
(03:01):
their seasonal you know, d I Y shoulder carry demand
is peaking. So I expect to see more wood that
was going direct to big box stores get back on
the open market UH and ultimately supply single family homes.
A month or so ago. A lot of people are
also talking UH cents in here about the stumpage fees,
and I guess the idea here that you're not really
(03:21):
seeing the price. I guess at the route UH forgive
the pun going up as much as you're seeing. Of course,
the end product yeah, So the stumpage price of US
southern trees has been stagnant to flat, hasn't risen with
UH lumber prices, but that's because we don't use those
trees to build homes. The stumpets price and there's a
(03:42):
big story here. The stumpage price in Canada UH does
increase and it's in lockstep with the price of lumber,
and it's lagged by three to six months. So what
we're gonna see the second half of the year is
Canadian sawmills, their break evens are gonna go up I
think a hundred dollars per thousand, and if there's still
a tariff, which was announced just before we went on air,
(04:04):
that they're looking at doubling it. And this is a
from what I understand, a procedural review. It wasn't a
new initiative, but now the reviewing potentially ping these tariffs.
So we're looking at break even prices going up to
two hundred dollars per thousand more for the second half
of the second half of the year. So more pressures
to bring the floor higher. Because I'm as big of
(04:25):
a bowl as they come. I'm hired for longer. The
question to me is is how where is the new normal?
And the longer we go at higher prices, we normalize
it and that floor goes higher and higher. So there's
just gonna be upward cost pressures the second half of
the year. So there's another factor, uh that seems to
be a play, which is there might be signs that
(04:46):
this sort of like torrid us housing market as measured
in different ways, is slowing down a little bit. We've
seen new home sales actually come in fair bit weaker
than expected. We've seen talk um We talked to only
Wolve recently who pointed out that the home builders themselves
throttling their demand their builds a little bit for all
(05:07):
kinds of reasons, maybe shortage of space, pushing back, just
slowing down. So on the you know you've been we've
been talking about the supply side. Is the demand side
going to ease up a little bit and then create
a little bit more breathing room here? Uh Ali would
know better than I would, but I suspect yes, I mean,
we're just hitting a capacity constraint. I don't think that's bearish,
(05:29):
but it's not. It's it's not bullish, And there's a difference, Um,
so I do think, you know, homebuilders are going to
have a choice do I do I sell dirt and
try to guess on what that sale price needs to
be and hope my input costs later on are profitable.
I don't think they're willing to do that at an
aggressive scale. So they're just there's just gonna be a
limit on demand and that will that stagnation potentially could
(05:52):
give the supply chain a chance to catch up. And
what does that mean though for some of the folks
who have been trying to trade this market since then,
I mean a lot of still betting on the idea
that if the high price don't necessarily continue, they'll at
least stay high and persist. Yeah, So it goes to
what's happening right now, so that the sawmills are really
sold out into mid June on a very strong forward
(06:15):
sale or order file. So so the second quarter is
is done. Like these mills have had a great second quarter. Um,
there's only a couple of weeks left that they have
to sell production. UM, shipping has improved drastically. We didn't
have the big winter storm that's slowed down rail, So
I think you're gonna see more shipments than sales in
the second quarter, which which will reduce inventories um. But
(06:40):
for me, the thesis of higher for longer. The break
evens are going up for these mills like they won't
have a choice but to keep prices elevated, I think
above six to make any money. Uh. And then the
fact that we've been selling and we're just now seeing
a pushback from builders at lumber that's and that's a
Phobe Canada, that there's a hundred dollars freight added on
(07:02):
to that, and then you know, all the all the
middleman to touch that. So it tells me, you know,
it took sevents, So potentially we could be seeing some
equilibrium and some pushback on the demand side. Well, we
would all love to own a thousand dollar lumber at
this point, which is just the wildest thing to think about.
But that floor, every day it goes higher and higher
as we normalize these high prices. We also caught up
(07:27):
with another Woodrow miss Regular Joe Carlson, principle of Slow
Ventures and co founder of the Open Money Initiative, to
discuss the last few wild weeks for crypto. Jill has
seen a million of these crypto cycles already, and it
goes straight up and then it goes straight back down.
So we started by asking Jill if she thinks this
particular cycle is over look, yeah, to a degree. Easy come,
(07:50):
easy go. I want to take you back. I came
on this show at the beginning of January and we
talked about the bitcoin rally that was happening, and we
talked about how I talked about how I thought that
it was a very healthy price action. It seemed to
be all institutionally driven, and look, I think that that
narrative still holds true. What happened in the interim was
(08:12):
that Elon Musk came in on January nine, tweeted out
about bitcoin and brought in the hordes of retail investors.
And when you have retail and when you have leverage
in the system, you're gonna get these types of moves.
And it's no coincidence that we're now back at roughly
the same price that we were in mid January before
(08:33):
Elon Musk got involved and and brought in all of
this retail interest. Here we are. Yeah, I mean, great point, Jill,
I am curious. So I mean one aspect of this
that a lot of people did talk about was the
idea that companies were putting this on the balance sheet
that had sort of been a catalyst for some of
the rally that we've seen this year. And then of
course with I guess I don't know what you call
(08:53):
a confusion or whatever with regards to whether Tesla is
still holding or not. I'm curious as a whether that
side of the equation is still holding. Are you are
we still anticipating that the companies out there are still
considering using this as a balance sheet asset. Look, yes,
I mean confusion is definitely the right word when it
comes to Tesla and whatever is going on there, So
(09:14):
I won't even try to speak to that. I think
that there's probably a dynamic around them being classified as
an es G stock. I think there's probably dynamics with
the government subsidies that they have to be dependent on
UH and needing to maintain their position, is environmental play
all of that. But the reality is is institutions are
still buying bitcoin. If you look at the data from yesterday,
(09:36):
o TC desks had their biggest outflow meaning institutions buying
that they have seen in three or four months, and
that to me indicates that institutions are still coming in
buying the DEPP. I do think that there is a
real dynamic here in a real sentiment shift around bitcoin
and proof of work tokens. Uh that you know, there
(09:57):
is this environmental concern and that effects sentiments. Intiment has
a real impact on markets, and we'll have a real
impact on new decisions by corporate treacheries, by institutions, certainly
by retail investors as to what to be involved in.
And there is still a reckoning that has to happen
around that. But the narrative around institutions buying does seem
(10:17):
to be holding. Okay, So you know, elon musk aside,
and this is something that I've always found like a
little like been uncomfortable with your industry. Uh. It seems
to me that every time there's a bull market, people
in the crypto space start plugging. Thousands of coins were
recently interviewed Hayden Adams, the founder of unit Swap. Two
(10:38):
thousand coins today, he said, are being added to the
unit swap protocol. Two in three different people this week
made meme coins based on me that traded on pancake swap.
This is this inevitable thing, which is that as the
price goes up suddenly, even though there's only twenty one
million bitcoins, people just flugged the market with supply, all dematedly,
(11:00):
sort of like creating some weight on the market overall. Look,
I I I don't think that that is a fair characterization, Joe, actually,
because I don't think that it's meme coins taking the
air out of the room when it comes to bitcoin. Sure,
maybe a little bit to a degree on the on
the edges around you know, the retail market participants, but
(11:20):
that's not what is you know, that's not comparable supply, right,
but flooding the market just to push back for a second,
one of there's all kinds of different reasons people want
to buy bitcoin. One reason is because they want to
buy an asset that's going up really fast and there's
no principle or tech or anything behind it other than
number go up. And so when numbers go up even
faster on all this other stuff flooding to market at
(11:43):
the margins, does that take away some of the the
enthusiastic for fether to buy at the margins? Yes, I
I will grant you that. I think though that it
takes air out of the room around dogecoin much more
so than it does the likes of bitcoin or etherory um.
And look, I mean, let's not confuse the long tail
of meme coins with the plethora of other assets that
(12:06):
we're now seeing the real utility around, whether it's serimentation
with proof of steak systems, less energy intensive systems, we're
seeing real market demand for these types of alternatives now
for the first time. Do I think that that's a
very real exciting development. Well, but it seems like people
within your industry, the people who understand it, understand that
(12:27):
point that you just made, Jill. For a lot of
the people who are coming into this new there's still
that cloud here. And you mentioned does and Joe mentioned
the two thousand coins being created here. That creates a
cloud here, Jill, and I'm curious as to win you
anticipate that your industry is really going to be able
to kind of you to put that cloud behind you
or get rid of it, or whatever the analogy is.
You're right, I mean, today it's very much still a
matter of doing your own research. And you know, I
(12:49):
think one heuristic, as if the coin is named after
a dog or maybe your favorite news anchor probably don't
invest in no ivory, don't don't do it. But but
you know, I think if you look back at the
nascent days of any market, it's a matter of people
doing their own research. Every market and its earliest days,
(13:10):
going back to the stock market, the pink sheets days
more recently, Um, you know, you don't need to go
back as far as tulips. You look at the development
of market, it goes through this period where they're grifters
and scammers and people looking to make a quick buck,
and it's just a matter of time and market maturity
and education. Let me ask you one more question. We've
had the energy debate, We've talked about it forever. The
(13:33):
other way that crypto consumes real, real, real resources is chips.
And in China already you can't buy hard drives because
of Chia mining and file coin mining and so forth.
Is that still an issue? I mean, there's like it's
just pretty capital intensive stuff that all these new coins
are launching into. Yeah, I mean the proof of space
(13:53):
and time that that Chia uses, for example, I think
is a great example of a more environmentally for leave
version of of what bitcoin tries to achieve. Certainly it
might still be capital intensive, but in order to secure
these networks, you know they're economically incentivized networks, you have
to have that capital outlay in some way, shape or form,
(14:14):
whether that's again through the proof of space and time,
whether that's through stake whatever it is. Personally, I'm very
excited about the alternative of being able to use space
as opposed to compute, which is again obviously less energy intensive. Now,
Caroline had an exclusive interview with Chevron CEO Mike Worth,
(14:35):
right after the executive faced a major rebuke from his
shareholders at Chevron's annual investor Day of the oil Giants.
Investors voted to backup proposal to reduce emissions from the
company's customers over the recommendations of the board, which had
urged shareholders to reject it. Caroline started by asking the
CEO what he made of the vote and of the
intention of the shareholders. On the look across our society
(15:02):
and among all stakeholders, interest in these issues has has
never been higher, and I think the vote reflects that.
It's it's part of an evolving approach to a lower
carbon future. Shareholders want us to succeed. What matters is
how we respond to these challenges together. And so we're
we're working on reducing the emissions of our products as
(15:22):
they're used by our customers. Were offering renewable diesel, renewable
natural gas, renewable base oils and UH and we're working
on things like sustainable aviation fuel in hydrogen UH. And
so we we have emissions in our own operations that
we're working to bring down and making very good progress.
But then also society needs energy. We're an energy company
that provides it, and we're working on the technologies and
(15:44):
the solutions to work across particularly more difficult parts of
the economy UH, to find ways to help bring these
emissions sounds. This is a step on that journey. I
think that's so important to remind people that of cold See,
you know, many of us want to see emissions come down,
but many of us all I want our lights, which
is to work, our conditioning to work, and our energy
is to still run freely. But I'm I'm interested in
(16:05):
whether you feel kind of surprised by the strength of
investor focus on this, because I know you're a man
who wants to promise them returns. Investors want the best
of all worlds. They want to see profitability come from
you bigger returns. But are you surprised by how much
they also really want to focus in on the E
s G part of the equation. Well, I think the
rate of change on E s G has been, um,
(16:28):
you know, has been dramatic. Uh. There were times not
too many years ago where it came up infrequently in
discussions with investors. Today it comes up in every discussion,
and oftentimes it's the first thing that comes up in
a conversation. So I'm not surprised that it's high on
their minds. I meet with investors all year long, and
(16:48):
and this has been a regular topic that we've been
hearing about. And uh, and and you're right, investors do
want to see higher returns. Our industry is one that
has not been in favor with investors because our returns
haven't been as strong as they historically were and and
so we've got work to do. It's why I really
talked to our people about just for words, higher returns,
(17:10):
lower carbon. We need to do both of those. When
I talk to investors about that, they say, that's exactly right,
you're hearing what we're saying. That's what we expect and
that's what we're committed to. Of course, today was rather
extraordinary because x On Mobile was taken on by a
tiny activist investor and has lost to board seats, if
not three to them. It would seem that shil is
also being ordered to slash their own emissions via a
(17:32):
court as well over in the Netherlands. Do you worry
that this will go to the courts as well, not
just your annual general meetings? Well, I I've been in
a board meeting after our annual meetings, so I haven't
seen all the developments that have occurred today. But you know,
this is a very active environment that we find ourselves in. Uh.
There are lawsuits have been fired on very filed on
(17:55):
various aspects of climate around the world, and we don't
believe that's a fruitful way to engage in dialogue on
this issue. We think that they generally distract companies from
the real important work, which is working on technologies, working
on progress and taking actions and ultimately, uh, you know,
(18:16):
the lawsuits haven't really proven to have much merit, and
I don't know how the student and analans today will
play out, but we look for a constructive engagement we
look for to be challenged and and we're taking action
and we intend to take more action to be challenged
by activist investors in particular. How much do you think
there are they a threat to the business model in general,
(18:36):
to to a joined up business model that you provide
in terms of oil and gas. Well, I think activist
investors other investors, they have they want to be heard,
they have a point of view and UH, and look,
we we engage, as I said earlier, with our investors
all year long, and so UH, we're listening, we're engaging.
(18:59):
Were as transparent as we can be. We just issued
a very lengthy report on climate change in our companies
UM resilience in a variety of scenarios. We did an
analysis under very aggressive carbon reduction scenarios to look at
how our company would fare under those. And so investors
of all types are are, you know, focused on this
(19:21):
as we are, And so that's part of UH. It's
part of the environment today for companies that are providers
of energy and UH, and I believe our industry is
part of the solution. We have the technical capability, the
project management capability, the engineering UH acumen UH and the
financial capacity to be part of the solution. And I
think companies across our industry are in fact working very
(19:45):
hard on that, taking different approaches. But that's really where
we should all be focused is how do we find
ways to make progress on this as opposed to find
ways to engage in in conflict. Talking of progress, I
mean your share price, how progress significantly up? I mean
since the lows back in October, you have been able
to be returns in that respect, the fundamentals of the
(20:08):
oil business in particular have improved, prices have rebounded. I'm
interested in as you do double down on your investments.
As you say, is you want to talk about perhaps
finding beneficial ways to dig on on hydrogen. I know
that that's an area that you feel you've got a
unique advantage in, for example, and teaming up with certain
companies there. How do you also return to the investor
(20:28):
base because I know that's something you want to look
and on and and investors analysts Wells Fargo, for example,
trying to say when you might start doing share buybacks.
Is that on the agenda? Well, there's a balance here.
I said earlier that that our objective is to deliver
higher returns in lower carbon and we have to do both.
We can't only do things that are good for shareholders
(20:49):
and ignore sustainabuilding and the environment. That won't last. And likewise,
if all we do is focus on things that are
good for the environment and we don't respond to shareholders
desire to see return, that's not sustainable either. And so
we really have to do both. That has been our
focus for quite some time. And uh we've increased our
dividend for thirty four consecutive years. We came into this
(21:12):
downturn with the strongest balance sheet in the industry, and
we've emerged with the strongest balance sheet. We were able
to do an acquisition to strengthen our portfolio during this downturn,
and we've repurchased shares thirteen in the last seventeen years
because we've been very disciplined with with capital and we've
had the cash to return to shareholders via that. So
our financial priorities have remained the same. We've been consistent, prepared,
(21:34):
and adaptive as we've faced a very dynamic environment. And
I think those are attributes that make a company strong
and it's what rewards shareholders. And so we need to
do both, and we intend to do both. You've intended
to do both. You haven't set yourself exact targets in
times or limiting emissions, but you have outlined how you're
(21:56):
going to invest in getting there and lowering common as
you say that key because of the business. But can
you do that at the same time as perhaps giving
share buybacks as soon as well? We actually have set
targets to reduce emissions. We've set targets to reduce greenhouse
gas emissions from up soil, from gas, from methane, from flaring.
(22:17):
We achieved our targets early. We reset targets for which
is the next Paris stock tank. It's tied to my compensation,
the compensation of our employees. So we are setting targets,
we are reducing emissions in UH, in our operations and UH,
you know, we we do need to do it all.
It's it's not necessarily simple, UH and and finding that balance.
(22:41):
Different people have different opinions about where that is. And
that's really where a lot of this dialogue comes is
at what pace should we reinvest in our core business
and what page should we reinvest in energy transition? At
what pace should we return cash to shareholders? And UH,
and there's there's judgments and there's balance in there and
uh and that's the uh, you know, that's the world
(23:01):
that we're navigating. And it's why this engagement with shareholders
is so important. Will you continue to talk to activists
such as follow this What do you to them if
if that is me? Well, we we had a proposal
from follow this today and uh uh it received a
lot of shareholders support and uh and look they closed
(23:22):
their presentation to us as we're with you, we want
you to be successful. And so I think we need
to engage with all stakeholders and uh and understand their
points of view. When I do that, I find that
there is more common ground uh than people might think
before you walk into the room. And and just because
we can't agree on everything doesn't mean we can't agree
(23:43):
on anything. And so we often find that there's a
lot that we do agree on and then we can
talk about the things where we still have different points
of view. But that's how you make progress. Then we
caught up with Alex Williams, a research analyst at America,
to talk about his recent guest post on the odd
Locked blog titled the economy is Booming. I don't firms
(24:06):
believe it. We talked about bottlenecks. Literally every day we
keep discovering more and more of them, and it seems
like the answer is for companies to invest more, build
out supply chains, and expand their capacity. So we asked
Alex what would stop them from doing that? So the
first problem is that new capacity takes a long time
to come online from the point at which you decide
(24:28):
to invest, and it firms are seeing these high prices
as transitory or temporary shortages. As the economy works itself out,
they may not think that it's worth their while to
pull new capacity together in order to service them. By
the time these you know, investments are up and running,
these price hikes may have passed. And so the memory
(24:49):
of the long period of low demand from two thousand
and eight after until I mean, you know, recently, very
recently um really speaks to the sense that there's no
guarantee that buyers will be there in the long term,
so firms are taking sort of a wait and see
approach to investment. Is there a policy answer therefore, to
(25:12):
help these such companies forget the long period from two
thousand and eight to hear and remember that actually that
sort of demand might be sustained and investment cycles should
be you know, we looked at. So there is some
reason to be optimistic because just today the manufacturers shipments,
inventories and orders investment measure if you exclude defense and aircraft,
(25:37):
has finally passed the high point that it hit in
two thousand UM, showing that there is beginning to be
some investment by these firms. But for the kind of
wide scale overhaul that we need, there needs to be
in understanding that demand will be there, whether through income supports,
through a willingness to let wages rise, through uh, you know,
(25:58):
sort of an expansionary fiscal policy stance towards an investment
and infrastructure build out. All of these will help guarantee
that demand will be there to validate these investments. When
you talk about alex the idea here of a lot
of the government spending. We have obviously a couple of
big proposals here by the Biden administration. The selling point,
it's a relatively salient one, is the idea that this
(26:19):
is an investment rather than just spending, the idea that
it's on point in the future. This sort of pays
us back with regards to GDP growth, job growth, etcetera. Here,
how do you how are we able to sort of
make that link and make that link in a way
that I guess it is valid. Well, I think that
there's almost no way not to make that link, because
(26:40):
in a capitalist economy, all investment is ultimately oriented towards
producing consumer goods and towards servicing consumption. While it might
be politically good to frame things as strictly investment focused
in something like an infrastructure plan, even just ensuring that
you know, poorer Americans are take home more in their
(27:00):
paychecks and seeing higher wages will buy itself ensure that
more investment is brought online. What about interest rate hikes
to just slow down? I mean sure, like, you know,
maybe we can hope businesses invest more and expand and
build out that capacity and needs out these bottlenecks. But
is there like a response to just why don't we
tap the brakes and just use the bottlenecks? So the
(27:23):
trouble with that is is we're already seeing bottlenecks in
a variety of goods. If we raise rates, then it
will cost more to make the investments in capacity that
we would need to alleviate those bottlenecks. If we raise
rates in an attempt to shut demand down, in an
attempt to you know, close off these bottlenecks from opening,
(27:47):
you're essentially leaving a whole lot of investment, a whole
lot of GDP growth, and a whole lot of employment
growth and improvement employment conditions on the table just to
avoid some transitory price spikes. I next, how much is
an investor base a help were hindrance here because how
much the investors want to see returns in terms of
(28:07):
share buybacks, capital put to work in terms of putting
light in their pockets, or how much have you seen
these longer term investors decide that, you know, investments were
either way to go and they're seeing the signs that
they need to meet demand. I think part of the
trick to that is recognizing that a lot of the
crop of managers and a lot of the crop of
people within these companies who would be making these investment
(28:29):
decisions have come up in a world that has really
been structured over the past ten years by systematically low demand.
For some of the younger folks, there's no muscle memory
there for how to do this, And for some of
the older folks, the memory of the nineteen seventies looms
larger than the memory of the nineteen nineties, and so
they may remain a little hesitant as well. So we're
(28:51):
on the precipice, Alex here of a great deal of change.
I guess some of it has already sort of taken
place or started to take place because of the CO crisis.
In our previous show, we talked with a couple of
investors in XX and we talked about the recent victory
to get someone appointed to that board who I guess
it takes a different approach to climate change and wants
to push this company in a in a direction. I
(29:15):
guess that they sort of address some of the climate
change issues. This sort of dovetails, I think quite succinctly
with what we're trying to deal with and how we
get this economy backup and running, and whether we look
at the short term effects or the longer term effects, Alex,
how do you sort of make the case here for
making those longer term uh changes? So I think the
(29:36):
trick is adapting to ecological constraints and building out a
more climate conscious capital stock is going to require an
incredible volume of investment and the thing is is that
that investment creates jobs, which creates a boom, which creates
a need for further investment. The classic Kansian cycle is
something that policymakers can really lean on to not only
(29:59):
justify investments in long term sustainability, but show how the
second order effects of those investments justify the investments themselves
all on their own in terms of an increased standard
of living, better employment, and higher consumer demand. So we
got obviously more news today on the sort of stimulus
infrastructure that theoretically the White House is going to push forward.
(30:21):
Is this word? Is this right? Is this the right
level in your view? And is this the kind of
policy that could maintain sustained effective demand such that the
muscle memory of corporate America changes. I think that there
is a lot to be praised in the stimulus package.
I think that some of it is a little bit
undercut by their lack of willingness to ensure that the
(30:45):
added benefits to unemployment insurance aren't being paid out two
states that are rejecting them because those are such an
easy source of demand in addition to the government as
a source of investment. So I think it's really uh
imperative that you know we match both sides of this
and increased demand alongside increasing investment. As always, more might
(31:09):
be better in bringing out sort of these long dormant
impulses to investing in passive And that's it for what
you missed this week. If you like the show, make
sure to subscribe and rate us an Apple podcast or
wherever you listen to podcast. You can catch our show
every weekday from three thirty to five pm on Bloomberg
(31:32):
TV and from four to five pm on Twitter. Thanks
for listening and have a great week.
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