Surveillance: Facebook Worries With Nathanson

The stuff tailing a couple of themes here right now on tech earnings, my essay of the Year Ian Bremer in Foreign Affairs Magazine, and the power in the strength of all these big tech companies, just a fabulous look at where we're heading. And then John fulled that into the power and the strength of Cooper Tino to say no, we make the rules for our users, particularly of iPhones. And then you go to the power and strength and

shock of Snap. John. We witnessed that last week very clearly her at spend at Snap to what degree I don't know, that stock absolutely created and then we start to think about what it would mean for Facebook too. Let's have that conversation now with Michael Nathanson, the founding partner and senior research analyst at Moffatt Nathanson. Michael, let's

start there. I've talked a lot over the last week about the supply chain disruptions, the fact that people might not want to spend because they can't meet the additional demand that spending might deliver. Let's talk about the change of Apple, how much it's surprised the c suite is Snap, and what it might mean later this week for some of the big tap players. Yeah, good morning, Jonathan. I

think that was the story at Snap last week. You know, it was nice to blame supply chains, but I think they didn't They didn't see the risk coming from those Apple changes on privacy protection. They were saying up until the last quarter, things are fine, we have this to not worry, whereas Facebook was warning everyone. So supply chains

definitely hurt autos and iPhone sales and technology sales. But I think that was a convenient excuse for while was probably misunderstanding the risks that Apple or we're bringing to or business. That's the power of it all. Michael is Netflix part of this group. I found it interesting that Dr Bremer left it out of the essay. After Netflix the subscribers. The mystery of streaming, which you cover better

than anyone, is net. Does Netflix have power. Netflix has power because they spend eighteen million dollars a year in content and their strategy is to basically just wifeless shot every new content every day, and it's hard to compete with that. But their business, you know, we've argued the past, doesn't have the same mode as Microsoft, Apple, Facebook, Google, Amazon, Right, they're a different beast, you know, the fang that fang

acronym has being created. They're in it, but I don't think they're in the same business and the same type of mode protection that the other big five have. Um So it's in the conversation, but such a different business model than the other companies. We've got eighteen questions. It's very quickly here Michael Nathans, and before the others jump in, what's your single best buy now out an institutional short term of three years, Which of these myriad of names

is the one that gets you excited? This will surprise you, I'd say Facebook, which is you know, printing results tonight, We're expecting a very tough quarter in terms of forward guide into the Apple effects supplied. Shandon comments is Jonathan was referencing, but the sluck training out of markup multiple next year's numbers, and it seems to us that they're so well positioned even with all those headwinds. Uh, you know, for years and years of double digit top line growth.

So it's Facebook, which I know is counted to a current consensus. This I really think we need to dig into a little bit more. You've got a price target of four hundred and twenty dollars on the Facebook shares, a really significant gain from where we are right now.

And this comes despite some of the disclosures that we're seeing dribbled out from the whistleblower that's been testifying in Washington, d C. What we'll get it to four hundred and twenty dollars share made all of this blowback amid the Apple privacy rules at a time when the shares are simply okay. So, Lisa, I've covered the stock for a while. There are times when you go through these uh intense

spotlights and regulatory and business model pressures. I just think it's going to be quarters and quarters of good top line growth and it's meaning expectations. And I tell you there's been times in the past where we've seen the spotlight from d C and regulators, never whistle blowers before and the stock has powers through because they've got a great business model even with the changes the Apple changes.

If you want to reach people for digital advertising, Facebook is one of two or three places to go, and that's where the growth is coming from. So you know, I know it's not it's not comfortable to recommend Facebook here given all we've learned about the company, but the business model is really really well well protected giving the

long term headwinds started. Tell when is that the industry saying, Michael, you're making a really important point here that last week everyone took us look at what Snap had to say and they said, oh my goodness, any company that relies in advertising digital advertising is going to get sunk by

supply chain disruptions. Are you saying that narrative is completely wrong, that those advertisers will keep advertising and that those companies that have adequately protected against the Apple privacy rules will be the ones that succeed. Yes, I'm not saying that the supply chain risks are not real. I'm not saying that the I d f A Apple changes are not real. But Facebook has spent you know, fifteen months warning us investing in solutions. They have great first party data there

are different business and Snap. Where the weakness was seen at Snap was on app downloads and mobile games. Facebook has ten million advertisers, right, so there's no no doubt in the near term the pressures will be there from Apple changes and supply chain disruptions, however big they are. But Tom's in a three year view. I have a stock training out of mar Multiple that's growing well on

nexis of the market. Seems to me that that's the place you want to invest in, right, So that's the leaves of your concerns and things you've raised or there. I think Facebook has thought about this for a long time now, and they've done things to try to mitigate the damage from from Apple's changes. Michael, let's just finish

on this just quickly. What would it take do you think for advertisers on Facebook to go somewhere else and pull back and say, you know what, this just feels really toxic and that's not a platform I want my company to be a part of anymore. What would it take? Okay? So, Jonathan, there are two types of advertisers their brand advertisers who are there to amplify their their message and their brand and to be around content that they like. I see

that as a big risk. You know that Facebook averages or brand advertisers will leave, but that's a small portion of their ad base. The other the core portions performance advertisers who are putting out messages where they want a response, an app, download a site to visit, or purchase checkout. Um. Until the r o I in turn investment starts to really wane, they will keep spending. They're not there for the branding elements of Facebook. They're there to push a

commerce activity. So John, until that weekends, really weekends, they're gonna spend, right, It's it's supply demand. The problem is there there are not a lot of places to go outside of Facebook to reach that many. And it's more than the Facebook, its Instagram as well. Right, So there's a broad, broad patch up consumers out there who have historically clicked to buy, click to download, click to rent something thanks to Facebook. Right. So until that really weakens,

they have them. That final point is so important, Michael, He's trying to catch up as always, sir, Thank you, Michael Nathanson. There of Moffatt Nathanson, John prea miser, spends eight hours a day on Facebook, right. She joins us now on rights and not on Facebook and head of race strategy at TV Securities Prayer. You can skype this one. It's the Fed black oup areod. The chairman had the last word, the final word. What do we learn from

Chairman poal Prayer? So I think he's managing expectations here that inflation even though they haven't really pulled back from the talk of transitory noticed that he didn't bring it up at all. I think they're telling us that inflation

supply chain issues are gonna last for a while. He didn't talk about hiking sooner though, so I think if the market has repriced the hiking cycles significantly, And what we heard from chair Paul, we also heard that from Secretary Yellin over the weekend, was that inflation supply chain issues are likely to last well into two twenty two. So I think they're trying to tell us, look, this is going to be with us for a while, but and and the fair is going to taper very soon.

So so we expect an announcement next week, but that the hikes are still you know, further out, and the market is absolutely calling the Fed's bluff. I would say global interest rates are calling the central bank bluff and saying that they will be forced in to start hiking much sooner. I actually think that you know, inflation will at some point decelerate next year, at some points apply to you, in issues will go away. We think there's

a lot of labor market slack. So we're actually uh pushing back against this move in front and rates decelerate though to what And this is really the issue as you look at tenure break evens bumping up against the highest since two thousand and five, this idea that people, yes are seeing a lower inflation rate than we are seeing now, but still north of two and a half percent. At what point does the FEDS start to pay attention to that and actually treat that as the right way

to view longer term inflation. Sure, so I think, you know, we've been used to the last twenty years of much lower inflation. Maybe the next decade is going to be a two percent type inflation here, Maybe we're going to be in a two to three percent range. I think what the Fed's going to watch four is these long term inflation expectations, five year five year break events, are they looking unanchored? I think that's an extremely important aspect,

and the other ones got to be wage inflation. You know. I think the big question is has the labor market structurally changed as this great resignation. Is that going to remain or people going to come back? We feel very strongly that people who have left the labor force are going to a lot of them are going to come back. I mean people who have retired, maybe not, but others are going to come back. At some point, those savings

are going to run out. So if we just um, you know, start to stabilize, start to head lower at least uh the rate of wage inflation, I think that could give the FED confidence that there is labor markets lack and you know, raising interest rates to try and solve a supply chain issue is not the solution. Raising rates to solve the labor market being tight. I think absolutely, um you know that will be the response. I think it's going to actually come down to the labor market

slack or their perception exactly. It's right where I wanted to go before you came on air. I was looking at the e C I, the blended folks wage and benefits dynamic, and it really hasn't broken out when you fold in your interest rate work with TV securities economists work. Do you suggest a breakout the true nominal and even positive real wage inflation or can you not say that? Yeah, actually, I'm glad you bring up e C I. We prefer the e c I over the average early learnings because

average earl learnings picking up. You know, when people move jobs, they should uh earn a higher rate. E C I is actually looking at if I've had the same job over the last year, has my wage? Have my wages gone up? So I think this whole idea of how the labor market is structurally changing. I think e CI does a much better job. We think that people are going to return. It just would take a while people have moved. There are frictions in the labor market at

some point when people come back. That e c I is, I would say about a much more comprehensive measure. We don't see wage inflation picking up at all for for a while, which is why we have the first Federate hike only late two thousand twenty three. So I think front end of off the rate market globally, but the particular in the US. I think it's very attractive. I think people should move not take duration risk the Fed's about to paper, but move out from buying tents into

fives threes. I think the FED is a long way here um from hiking interest Do you think we've priced too much into the belly of the curve, right? I? I think so yes. I think we've priced a lot in the front end. That end point of the hiking cycle is not moving higher. I think the market is really confused that the FED might have to start hiking, but can the economy withstand much higher interest rates? Which is why what is surprising to me is the end point of the hiking cycles only one point six one

and a half. I mean, what the FED want to start raising rates? If all they can do is rise you raise it to one and a half, that's what looks odd. So I think the belly may have a little bit more room to rise. That very front end, which is much more about the start of the hiking cycle. I think that is the most miss priced. Pray, thank you, pray Mira Dailey Securities. I guess on the rights market pushing back against the right heights h I mean. Silverman

is equity derivative strategist at RBC Capital Markets. All you need to know is your research notes are really sophisticated and have loads of Greek letters. She looks at the cross moments, skew, crotosis and the rest of it and distills it down to shut up and hold, or shut up and buy or maybe go to cash. She joins, this morning, Amy Wull on rated change and on delta, not the convexity, not the second derivative. You are all

first derivative. This earnings week. Why look, you know this is really the week the market reports, right, so you know you basically have the big megacaptech fan names, and and those five names really make up of the SMP. So the folks who are using options right now, uh Tom, particularly for this Friday's weekly expiration, what are they playing there? Either trying to hedge you know, this movement in touch

which could result in a movement in the market. Um where they're doing it individually, But these make acap names are really driving the market overall because of their size. I want to give our audiences on radio and television, Amy, will the idea here of what is in your research notes. Let's take Apple, we could take any other name, folks, And I want to talk about the delta, the rate of change, and also what you see in the cross moments.

Take Apple now and if somebody wants to go long or somebody wants to hedge their long, how rich is the derivatives market of Apple and folks, Just to be clear, delta is not an airline. Well, it is an airline, but in the context of options, it's also the sensitivity of option price. Uh, two changes in the soft price, and obviously that's what we're looking for, especially when there's an event tom Surprisingly, you know, Apple options are not

that expensive. We compare it to all its comps that are reporting, we compared to the market, we compare it to its own realized utility over time, and heading into those earnings, Apple options are fairly inexpensive. And the other thing is the amount of demand for hedges is actually declining, which we think is interesting, you know, given that it was kind of at the center of the storm around the privacy issues that obviously led into Snap and into

other tech names that we saw last week. So amy taking a step back, does that mean that people are pretty optimistic heading into these tech earnings that basically, uh, they think that a lot of the bad news and the potential discrepancies that have stemming from some of the supply chain disruptions have all been priced in. Yeah, you know when we look to the options market. That was one of my takeaways intoitigular after last week. I'll give

you one example. Snap obviously down, you know, on earnings, but if you actually look to the derivatives market has now gone into skewing version. Just to translate that, that means that demand for calls is now outweighing the demand for puts. That's a fairly abnormal event that isn't always happened in options, and it's signaling kind of an extreme level of bullishness. We're also seeing that in Facebook as well.

We're seeing that in Apple. So you know, look, people can be wrong in the options market just as they are in the stock market, but the sentiment is certainly shifting more bullish ahead of this week. Amy, one of the wonderful things that you do is you track the

correlations and try to understand what the triggers are. And here we are heading into tech earnings at a time when there's increasing bearishness around bonds right about around duration, and typically tech has been viewed as the most duration heavy area. How do you view the correlation with people's view on the rates market with tech sentiment at a

time when they've been posting blockbuster earnings. Yeah, it's a great question, and obviously kind of also the Tenok view related to that is that tech is kind of at the center of this growth versus value trade, just as it is compared to bonds as well. I'll say one thing right now, you know, correlations will tend to break down a little simply because we're going into earnings, which tends to be an extremely id using cradic event. So if there was any time for that dispersion to appear

in the market, it would be now. But I do think that as we head back into year end that becomes something that people watch very closely. Just where tech is compared to the bond related e T s like a T L T H y G and LQUB, can you do them a derivative analysis of the moon shot up we went above eight hundred, down, we went on Tesla, and now up through ninety one. This morning on the shat Scar article, I should notice Mr Jonas at Morgan

Stanley raising his price target as well. Can you Amy, who's Silverman do a Greek letter analysis of something as original as Tesla. I love Tesla from an options respective, and the reason is it's just become its own special animal. You know, we have we have five hundreds with thousand stocks that we watched all the time, Tom and occasionally we just have to put Tesla in its own special bucket. One thing I'll tell you on Tesla right now, it's equist you one of your favorite words like demand for

put protection had been really really high. It dropped a little bit after earnings. But what I think is interesting is it's still pretty high and earnings are over right, So so what what is the market kind of concerned about on Tesla? Just just before I started this call with you, you know, we saw the Hurts announcement on Tesla, so maybe that changes today. Thank you Eric Shatzker for that reporting. And I mean, well, what's so important here?

And folks, I don't want to get to in the weeds here, but if you have a continued hedge value to Tesla, at some point up they have to cover. Is there a convexity opportunity in Tesla where we see

an acceleration higher is busted? Trades are covered yep. So so you know you're you're referring to kind of what people referred to both the gamma hammer or the gamma squeets, where you know, a lot of the times when you see that um inversion in skew right, that call demand again outweighing that put demand its forces dealers who are doing delta hedges on the other side, because dealers are trying to not take directional bets right there, trying to

not take bets on delta. They're simply trying to facilitate people on both sides that there's extreme call buying. You can essentially see more stock up situations because of that that Greek letter gamma, that gamma squeeze that's happening in Tesla. Before we let you go, Amy, i'd love to get a gauge of just how active traders have been going into the earning season. The idea that we've gotten so many of the gains that the year is almost over,

especially as people recalibrate their expectations for FED policy. How much is activity increasing. Is there's this idea that this is the last hurrah, this week of earnings before people basically pack up their bags and go on vacation. Yeah, we've seen a lot of institutional activity. We've seen a lot of hedging in q q ques ahead of this week. I think a lot of that related just simply how large a market cap is recording in this week alone.

Obviously we see the traditional year and hedging, but you know, we have seen a drop off LISA in retail demand. So, you know, retail which was busy trading call options to kind of insane degrees last year during the pandemic, that's dropped off a lot. You know, I think they're busy trading cryptocurrencies now, but you know that activity has lessened much more than it was at this point last year. Ammy,

thank you as O wise Emmy with Silverman. That the wonderful Emmy with Silverman ILLBC Capital Markets on a big wag for big tech. This is really important, folks. Two pages and for the first time in ages, I'm gonna say it's a cover to cover read Foreign Affairs magazine. Dan Kurtz Phelan joined us right now. It's on his wheelhouse China, and it is absolutely spectacular. Let's get to it. Dan, congratulations, So let me start with my essay of the Year

by Dr Bremer of Eurasia Group. He sits there and folds in the technology companies into your international relations, explain the international relations of Amazon. That's right, so so Ian Bremer's contribution here is not just to point out what we all know, which is that tech companies are hugely important, that they are major actors in shaping the world, but they've really risen to the point where they are like

states themselves. And what this means is that when you look at the big players, not just Amazon and Alphabet and Facebook and the American players, but also the big Chinese tech companies and big tech companies elsewhere, which model of tech company wins out in shaping cyberspace is really going to determine the geopolitical future, not just the future

of technology. So it's become a very different game. You went for sales, you put Meerscheimer in the book, and they're always going to move more copies of foreign affairs a gentleman or one after NATO and one after Continental Europe. Is they they faced Russia a decade ago. He's scathing here on the US approach to client to China and says the United States is ignoring realist logic. How realist

is a Biden administration. John Muir Scheimer loves to go after what he sees as the big mistakes of American strategy in American foreign policy over time. What's really remarkable in this essay where he looks back at US China strategy over the past several decades, he calls this the biggest strategic mistake we've made in the history of America's time is a great power. What he sees is this mistake of thinking that China would become more liberal, more

more acquiescent, more like the United States. Instead, as we all know now, the opposite has happens to become more assertive. It's politicalst and is not liberalized, and She Jimping has proved to be of the most kind of assertive Chinese

leader since now. The Biden administration, as we can see and Richard Hassa's essay makes this point, has really kind of into the recognition that started probably lad Obama and really under President Trump, the the idea of China as our main competitor and in some ways the kind of focal point of American foreign policy. The Biden administration's China policy has been very tough, very assertive, very auction some ways. And that's been a change in American FORGM policy that

really goes across both parties. We talk about, you know, partisanship in Washington, but this is probably the most bipartisan policy we have today. What's the goal then, Dan, if this is a new approach for a longer period of time, especially at a time when the trade deficit continues to deepen between the US and China, So you're asking the million dollar question. We've decided that we need to be tougher. We've decided that this is the central challenge for American

foreign policy. But both parties have really struggled to figure out where we go from here. So if we think about what an end state is with China, the Chinese Communist Party is probably not going to go away. Hi Jumping is probably going to be in power for some time to come. We're still going to have to cooperate with on an issues like climate change or of course approaching this massive You and Climate Change conference in in Glasgow in a in a few days. So we need

to find a way to coexist in this world. Even while from the perspective of US foreign policy, you're able to push back on some of these very worrying things that you see from China's own region, within its own borders and globally. So there's this ongoing quest to figure out where this all goes, What what what goal we are aiming for? And I would say that you know, that's that's a question we'll be trying to figure out

on our pages over time. It's also a question that policy makers in US government and the FIND administration and beyond they're gonna be are gonna be really grappling with. Well, the goal for the Facebook state and the state of Amazon is quite clear. It's to make money. And we do see this increasing shift into China despite some of the hardened policy from the United States. As you were talking about earlier, How does the US or how should the US respond in terms of regulating the US busy

this interest over in the China mainland. So this is one of the most interesting elements of that Ian Bremer essay. This this notion that these tech companies are both critical to national power. Right if you look at US China competition, one huge piece of that is who's gonna have the technological edge when it comes to everything from AI uh to um uh, to quantum computing, to cyber tools, and as we all know, the private sector actors are really

really central on that. So even at this moment when these private companies, the ones you mentioned as well as many Chinese companies that have become really really major global presences and various tech sectors, even as they become these huge private sector players, when we talk about US China competition, when we talked about US power, a lot of that comes down to who's developing technology faster, who's developing AI

and quantum computing and everything else. Then I'd be unfair if I didn't ask you of your knowledge back to George Marshall and China of another time and place, give us the Kurts failing once over on Taiwan as it stands now, how should the United States project a modern George Marshall to Taiwan into mainland China. Well, that thank you, Tom for bringing up George Marshall, which is a topic I spent meant many years of my life working on.

When you look at Marshall's approach of China was all about bound so you needed to be um in some ways tough and clear and strong, but also needed to be really aware of risks and limits and and balance those two things. And that's exactly what the US is

trying to do. In Taiwan's day. We can see that China has become much more aggressive at least than its rhetoric when it comes to Taiwan, when it comes to reunification with Taiwan, and the US is trying to on the one hand, project project strength and project a certain commitment, but without going so far as to uh increase tensions even more or encourage risky behavior others. So it really is this really fine balance, and it's a very dangerous situation.

And you can see you have Chinese Chinese planes in the Taiwan straight you have all these commitments. It could escalate it really really quickly. You are advantaged by Elizabeth Economy at the Council on Foreign Relations. She was shockingly pression a number of years ago of the domestic challenges to President ge Why has she not left home? From where you sit and with all your context his president

she threatened by domestic affairs. Well, I'm I'm happy to tell you Tom that will have an essay from Liz Economy and our next issue, which we'll get at some of these problems. Get us out front now, Pharaoh's already I will get will I will give you a preview that we from from outside. It's easy to see jimping as this just incredibly powerful leader who has this hold on Chinese power, on Chinese government in a way that

we haven't seen in a very long time. But when you look at the just array of threats to his power, whether it's demographics, it's environmental stuff, some of the threats the Chinese economy, I mean, you would uh know some of those dimensions better than I. He's got a lot of reason to worry. So he's going into his own party congress next year, trying to secure his own power for another five year term. But he's got a lot

to deal with at home. And you can imagine why if you're sitting in his position, you'd feel a lot of insecurity as you try to reckon with some of those threats. Got to catch hump and pulled on topic of the end that too, don cuts fade in that phone affairs. Ellen Wald has been kind enough to join us many times with the Atlantic Council a senior fellow. Her book Saudi inc Is absolutely absolutely definitive UM in riod ellen right now? What are the new els dissides?

There are lessons learned along the way, and then there's the changing or the percent Shane inge of the change that they can do, particularly in supply. How close are we to a supply adjustment? I think that right now RIAD is very confident that they are progressing along the right path. UM definitely for them. I think that they see um the fact that there is definitely tightness in terms of supply and demand as a positive thing right now.

They were very shell shocked by what happened in, which was we saw Brent hit eighty five dollars a barrel and then under pressure from the US and others, OPEC plus open the taps and the next thing they knew it was December and prices were at fifty dollars a barrel. So they're very much reacting to what happened in and do not want to see a repeat. And that's really the question, Lisa, what do they react to if it isn't the single point price of eighty six dollars barrel?

And what are they looking at in terms of the swing producers? Because ultimately the shale patch had been the swing producer, and now that's being called into question a little bit more. Ellen, how much is that part of the issue that frankly gives Saudi Arabia confidence that they can wait a little longer and not cannibalized demand exactly, I think. And we have to understand that they are

are in close contact. I mean, they maybe not quite as close as the contact between Russia and Saudi Arabia, but they they know, you know, what's going on in the shell patch. They know these CEOs, they understand what their considerations are, and so they have a good sense that, um, yes, we're gonna see some growth in the shell patch, but it's not going to be anything like the kind of explosive growth that we saw in years prior. So I

think they're they're fairly confident about that. One of the things I think they're also looking at is um they are very concerned about the fact that a lot of this climate rhetoric has been hurting investment in fossil fuels, and so having these higher prices right now kind of brings home their point that, yeah, fossil fuels are still a really important part of the energy ecosystem, and I do think they would like to see some of that pressure and that rhetoric abate a bit, especially when it

comes to them despite the fact that they're going all out and making these net zero pledges. At the same time, Ellen, this is really important, and I'd love for you just to basically put a bow on this, the idea that maybe they like the higher price, because frankly, it sends a message to the the energy is sort of efficiency debate, the green energy debate, the idea here that if you want it, you'll have to pay for it. In the meantime, you're gonna see our oil prices continue to go up, exactly.

I don't think it's quite uh an idea of retribution, but I do think that they have been battling with this this climate messaging of saying, yeah, we care about this, Yeah this is a big issue, but at the same time, the alternatives to fossil fuels aren't there. You still need us,

so stop treating us like we're disposable. And so this is an opportunity for them to say, look, now, you know we're not disposable and you need these fossil fuels, so let's, you know, tone down some of the very anti fossil fuel rhetoric, and we saw that with these documents that were released that showed that Saudi Arabia and some other oil producers have been lobbying the UN to try to tone down some of that anti fossil fuel language.

In a new climate report Ellen A Longer Going Far Away, Lisa Bramo was paid for the Offsprings education by picking up West Texas intermediate futures at a large negative statistic. I believe this was April of a year ago. Brent crude maybe never got there, but Brent crude was dirt cheap. How rich or richer or richest is Saudi Arabia in the last year and al f they've made a lot of money and um as they continue to put slightly more barrels on the market each month, they're going to

continue to make more money. And I think that they see in some respects, and they might not voice this out loud, but you know, amongst themselves, I'm sure that they see that this is this is almost in a sense, they're they're right because they have suffered through very low

oil prices. They've done actually quite well throughout a period of very low oil prices, and they undoubtedly want to take advantage of these high prices as they can now with the understanding I think that that they understand it can change very quickly, and especially with these developments in China in terms of another coronavirus outbreak, they're keeping a very close eye on that. Dr Wild, I want you to pretend you're a market economist or oil expert now

at a big Wall Street firm. What is the price statistic for Saudi Arabia of Brent crude and the car are around that where they're satisfied with that as a price. I think they're pretty satisfied with anything between uh, you know, they're they're very happy with over seventy. I think by the time we hit ninety or or triple digits, they may be be getting a bit nervous about some demand destruction. So we're definitely still in the range that they're quite

comfortable with. This has been wonderful, Ellen, Thank you so much. Thank you appreciate it well Atlantic Council and Senior fellow as well. This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment,

and international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course, on the terminal. I'm Tom keene In. This is Bloomerm