The 10 Most Interesting Things We Learned on Odd Lots in 2024

0:00Your best bottling plant employs 3 ,300 people. How do you get 3 ,300 people working at peak efficiency? Your best store has reduced waste, water, and energy usage. How do you make every store like your best store? Your best property has every guest raving. How do you make every property like your best property? The answer is Ecolab. Better performance, better outcomes, better impact. Ecolab. Now every location is your best location. For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy.

0:40Giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs, streamline billing and payment, and simplify reporting. EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast.

1:05Bloomberg Audio Studios. Podcasts, radio, news.

1:21Hello and welcome to another episode of the All Thoughts Podcast. I'm Tracy Alloway. And I'm Joe Weisenthal. Joe, it's nearly the end of the year. We made it. This is like year nine, isn't it? No, for real. No, it's true. Next year is going to be our 10 year anniversary. So we'll have to throw some sort of odd thoughts event. Yeah, nothing big right now for nine. But another year, another fascinating year, another year of learning new stuff. I'm really enjoying it. I hope we keep doing it for a while. Yeah. And I think we both did learn quite a lot. And in fact, that is what we are going to talk about today.

1:57So we have compiled a list of the 10 most interesting things that we learned over the past year. So you want to dive into it? Let's do it. Let's revisit them because, you know, we do so many episodes in a year and I forget about some. And in the compilation of this episode, they're like, oh, yeah, I totally forgot about that particular episode. So let's use this time to sort of revisit the odd lots in 2024. This will sear at least 10 factoids into your mind forever, Joe. That's correct. All right. So first on the list, we wanted to do an episode on price pack architecture for a long time. This idea that companies are getting more sophisticated in the prices that they're charging for, you know, different people and different things.

2:39From our episode with Lindsay Owens, executive director of the Groundwork Collaborative, and David Dian, the executive editor of the American Prospect, we learned that McDonald's knows when you get paid. So the McDonald's app is put together by a company called Plexure. And Plexure works with Ikea, they work with 7-Eleven, they work with White Castle. And the reason, as you correctly said, Tracy, that McDonald's gives discounts on the app is because they want to get on your phone. They want to get on your phone and be able to figure out what you're doing on that phone, where you are at particular times of day, what your food preferences are, what your ordering habits are, potentially what you're using to pay for those things and your financial behaviors through that.

3:29They're aggregating a bunch of data about you. And we had one of the slides from this presentation that Plexcher put together that shows how they are using this data. And one of the things that they were using to make predictions about what people would be willing to pay was their payday. So you can imagine how you can use this. If the app knows that you get paid every other Friday, it might give you a$3 McMuffin on Thursday. But when Friday you have some money in your pocket, it might raise it to$4, right? If it knows that it's cold out, it might raise the price of hot coffee. If it knows it's hot out, it might raise the price of a McFlurry.

4:16Often, Plexure combines this data that's within the app, like what they call first-party data, with additional data about you through what is called an identity graph that aggregates both stuff you're doing on the app with your email, with your social media, with your browser, with your subscriptions, with your other app downloads, with your travel history, with your retail history, all of these other things. And the predictive power of that is such that you can pinpoint what you're gonna buy maybe before you even know, and therefore you can target prices accordingly. So I think we're at the beginning of this where they're trying to discount things and get people on the app and get people used to ordering on the app.

5:08Joe, has this scared you off the McDonald's app forever? No, I still feel stupid for not having downloaded the McDonald's app, if I'm being honest, because I do go to McDonald's from time to time and my kids really like it. Don't, you know, it's still a treat. But yes, this reminds me actually that I need to download the McDonald's app because, and just thinking about this episode, I remember there are deals to be had, even with sophisticated pricing, there are deals to be had from a regular person like me that just goes in and pays my credit card. There are definitely deals to be had on the McDonald's app.

5:44But I think this kind of taps into a lot of the frustration that people have with inflation, where it feels like companies might be charging different prices for different people or depending on the specific way you pay. And let's face it, no one wants to do all this like homework and all this like work just to get a slightly cheaper, you know, hamburger. I agree. I'm still going to download the app in 2025. I'm going to download that. OK. All right. Here is another clip. Fascinating conversation that we recently had with Jetson leader Luis. He's an economist at Boston University. We were talking about the existence of Medicare fraud and how to detect it.

6:25I had not realized just how big kidney dialysis specifically is as part of the federal budget. Take a listen. Dialysis patients. There are about a half a million of them. We actually spend, I think you know this, 1 % of the federal budget on the dialysis program. That's incredible. Not 1 % of Medicare. 1 % of the federal budget is the dialysis program. We do not, in general, pay for ambulance rides or taxi rides for these people to go to and from the visits. They are responsible for getting themselves to the clinic every day, three times a week generally for a few hours, and that's in perpetuity.

6:59It's very challenging to get a kidney and therefore to get off of dialysis. So we had this system and this is sort of the canonical Medicare fraud. We we build in a little thing for the few people who need it. And that turns into a loophole through which bad actors drive a truck. So we built in this provision, which is if the only safe way that you can get to the dialysis clinic is in an ambulance, Medicare will pay for an ambulance and they pay for it at a competitive rate for the ambulance companies at, say, two hundred and fifty dollars for a one way ride. Now, that's not that much money for a real ambulance, but it's a heck of a lot of money for a taxi.

7:32And what happened is thousands of firms around the country opened with the express intention not of giving people serious medical care, but of becoming an expensive ambulance taxi and build the government. We have 100 percent data from the dialysis system. We can see all of these payments more than seven billion dollars for non-emergency ambulance transportation over the following 10 years. Tracy, that episode certainly convinced me that setting aside everything else, there still appears to be a lot of waste. I don't mean the dialysis specifically because people need dialysis, et cetera. But the fact that, you know, there's all this fraud associated with it, the taxes, apparently that's been cracked down on.

8:11But there is a lot of money coming out of the federal government and clever people find ways to get it for not delivering a service. That's true. I think look, I think most people would agree that stamping out fraud is probably a good thing. I guess the question is, is that going to be the entirety of it? But Elon Musk saw this episode and reacted to it on Twitter slash X. He did. So there's that. So maybe that'll move the dial. All right. Next up in our list of the top 10 most interesting things we learned from OddLots, we have the fact that Boeing hasn't built a clean sheet design in about 20 years.

8:48And Boeing's recently departed CEO, Calhoun, he basically said the company doesn't have any plans to do so for the next 10 years, all of which means it might be more than a 30-year gap between Boeing building an entirely new aircraft, which is just kind of mind-blowing, like one full adult's lifespan. And this is from Richard Abulafia. He is a managing director of Aerodynamic Advisory. This looks like a glide slope towards oblivion because remember, it's not just the loss of market share. It's also the demographics. Engineering workforces have that muscle memory that needs to be maintained. And it's been since 2004 that they've launched, since they've last launched a clean sheet design.

9:31They've done some good work since. But again, you're talking about an aging engineering workforce that's not attracting new people. Will they have the kind of core skills needed to create a new jet in the 2030s? I have no idea. You need something to dream for. You need something that represents the future. And, you know, Dave Calhoun, the CEO at the top of the heap, said about a year and four months ago that, don't worry, we won't be launching anything new for at least another decade. Other than sheer demoralization and encouraging the competition, I mean, the only way to explain it is that he's the best CEO Airbus could ask for.

10:12If you're an engineer, you hear that. What are you working for exactly? You're coming up with work packages on the basis of, I don't know, minor tweaks of existing products, stuff that's already in the pipeline. You know, it's a tight market for technical labor. You're probably going to be pretty interested in going to work for somebody else. So you might also notice that the demographics are changing because the young and enthusiastic folks who have a future are leaving or not joining. And that too, of course, is a significant change in the fabric of your workplace. So that was from our conversation with Richard Abulafia, one of the best aerospace analysts around that I know.

10:51And it's just kind of, yeah, it's kind of mind-blowing. A 30-year gap between America's premier aerospace company actually designing a clean sheet aircraft. I think it's chilling. In fact, that might have been, to my mind, that stuck with me all year and maybe the most chilling thing we've learned because, you know, we talk, for example, in other industries about knowledge and talent loss, nuclear comes up a lot. For example, building a new nuclear station. What happens when America's one commercial maker of civil aviation jets doesn't have very many people that know how to design a jet? I actually find it to be a chilling fact.

11:28No, absolutely.

11:44Your best bottling plant employs 3 ,300 people. How do you get 3 ,300 people working at peak efficiency? Your best store has reduced waste, water, and energy usage. How do you make every store like your best store? Your best property has every guest raving. How do you make every property like your best property? The answer is Ecolab. Better performance, better outcomes, better impact. Ecolab. Now every location is your best location. How many vendors does it take to meet all your organization's food needs? Just one. EasyCater, the workplace food platform that lets teams order from a huge variety of restaurants, over 100 ,000 nationwide, all through a single vendor.

12:30In addition to all that variety, EasyCater also gives you full visibility of your organization's food spend. with invoicing, centralized reporting, and seamless integration with expense management systems, all on one platform. EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast. Our next clip comes from Igor Smelyansky. He's the CEO of the Ukraine Postal Service, and he talks to us. You know, they used to talk about technological leapfrogging and how EMs went to wireless before they ever had wirelines. Something similar going on with a post office there. Take a listen.

13:08When we talk about deoccupied areas, Russians destroy the entire infrastructure, which means when Ukraine deoccupies these villages for about five to six weeks, you don't have mobile connection. You don't have electricity. But we have to work because you cannot leave people in the vacuum. Not to mention they would operate in Russian rubles and you want to bring them back to Ukraine. So you have to bring them Ukrainian currency. And we are the first company they see. We're trying the best we can to implement automatic sorting lines. Our goal for this year, I know it sounds weird during the war, but we want to be 100 % digital, even when there is no digital, meaning we build a system where in the morning our mail carriers will download through Starlink and generators the data, work during the day, and then upload the data at night, which means, again, we are not dependent on the infrastructure if russians you know shut down the electricity or mobile or anything the starlink has been really a saver to us you won't be able to run internet cables in those areas right i mean it just will be millions of dollars uh probably it will run through the field which you need to demine and then russians can bomb it again and it can go off etc so uh via starlink you're flexible enough then well when you combine starlink and the generator When you combine the two, you're basically no longer dependent on the central infrastructure.

14:30And you can provide civilized services right away. Not five months after the occupation, not three months after Russia destroyed the buildings today. For example, it was in our case. So we rebuilt it. We put up the Starlink generator and we get back to work. So it's like a theory of broken windows. You cannot have that. You should have the services and the Starlink allows you to have that connection to the world. Yeah, that was a really extraordinary fact. Just thinking about how quickly you can rebuild a service that would have taken weeks and weeks or months and months of infrastructure. We did another episode also this year, now that I think about it, about sort of Elon Musk's dominance of the skies and satellites.

15:16And it really is fascinating, I guess, the consequence of that. But one very interesting one is that you can have a whole infrastructure that probably took years to develop and maintain and now in some places replicate at least some of those services almost overnight. You know what the best part of this episode was? What? I think afterwards you started ordering a couple of things from Ukraine, right? That's right. I started buying things on eBay and a number of them did come through Ukraine, including some used books recently. Yeah, I know. It's kind of crazy that you can order stuff from a war zone.

15:51But there we are. The Postal Service in Ukraine is still working. We'll see whether or not they go 100 % digital. Yeah. All right. Next up, this was a pretty fun episode. We spoke with Isaac Rose Berman, who's a professional sports gambler and the author of How Gambling Works newsletter. He talked about how professional sports bettors basically have to trick betting platforms into thinking they're stupid. Take a listen. So another thing that a lot of people do, obviously, is you bet on other people's accounts. You know, you you go and you get your roommate's account, your mom's account, your friend's account, and you're just constantly cycling through different accounts.

16:29I'm not advocating for that. That's against the terms and conditions of these sites. But that's just a reality. And that's how a lot of bettors are able to get down a sufficient amount of volume, especially when they're constantly getting kicked out. And the real thing is that you have to disguise your bets in a way that they don't see or they don't realize what you're doing. And so one of the common ways that sportsbooks identify and profile their customers is based on the first few bets that you place. So one thing that a lot of people do that's really quite silly, in my opinion, is, you go into a book and you bet a bunch of stuff that's pretty obviously a really smart bet.

17:04If you open up an account and you're betting the maximum amount on Bulgarian table tennis and you keep winning, and then I have friends who come to me and they're like, Isaac, why did I get kicked out of this book? And I look at their bet history and they're betting on the most obscure stuff at random times for very large amounts. And it's like, yeah, these companies aren't dumb. So the main way is, you know, when you open up an account, you place a bunch of bets which look kind of normal. You bet on some NBA. Maybe these bets won't have a positive expected return. Bet for the home team. Exactly, exactly.

17:34You know, you're in New York. You want to bet on the Yankees. You place a bunch of bets which in the short run they might lose a little bit of money. But in the long run they'll make you money because they're kind of putting the sportsbook off your scent. Joe, that was pretty funny. And I got to say, I feel like I don't have much promise in terms of actually making money from sports betting. So maybe I should be selling my account to someone. Yeah, open some accounts and rent that out. But seriously, that was a really disturbing episode because I already knew that there's all these problems with online gambling addiction and so forth.

18:03But then the fact that essentially you can't really win because if you're good at it, they'll constrain you so much. And that if you're bad at it, it's sort of deeply, deeply disturbing episode to me. Yeah, well, you know, they set the odds. They set the terms. Yeah. Yeah. So one of the things that's come up a lot as a theme on the podcast this year and the year before and et cetera is with the energy transition, other commodities besides oil are of deep importance and deep geostrategic importance, et cetera. And there are various commodities that go into batteries and other things like that. And so we sort of have to rethink our world map of where the important spots are.

18:42And a really crucial area is Indonesia, which has a dominant grip on the global nickel market in partnership to some extent with China. And we had a great conversation with Michael Widmer, head of metals research at Bank of America on what's going on. When you're looking at the biggest players in the space, it has actually changed a lot. And you mentioned it already at the outset. Historically, when you're looking at it, you had Russia as a big nickel producer, Australia as a big nickel producer, the Philippines were in the fold as well, Canada to some extent too. But what's happened recently is as the energy transition started to take off, market participants were really focused on increasing nickel supply quickly.

19:27And there's one country that just jumped at the industry, and that country is Indonesia. It has the weather type of ore, but it has that in abundance. So it's very easy to actually take it out of the ground. And the Chinese went into Indonesia. They're very innovative also in the production technologies. and managed to take the nickel out that they then needed to drive the EV battery industry. And one of the things that the Chinese government realized very early on is, if you have a strong demand growth for EVs, you also need the raw materials, and particularly the battery raw materials. Without batteries, the EVs don't go very far.

20:05And so the Chinese government looked at where some of those battery raw materials are. They did it in lithium, another battery raw material, they did it in cobalt. and they did also in nickel. And in 2013, the two presidents of China and Indonesia effectively sat together. And the discussion pretty much went like that. The Chinese said, look, we need the nickel. The Indonesian said, well, we have the nickel. And the Chinese said, well, can we invest? And the Chinese said, yeah, do, come. Let's develop that industry together. And so the Indonesian government then, together with the Chinese, set up industrial parks.

20:36And through that industrial park supported by Chinese money, the nickel industry then developed very, very quickly. Tracy, you know, when I listen to these conversations about the sort of global supply chains, global hold on key commodities, let's just put this way. We have some catching up to do. There's a lot of talk in this country about things right now. And maybe there are ways to sort of buffer some of the economic or national security concerns about some of this stuff. But other places have been thinking about this stuff for a long time. No, it's true. And China here has been incredibly strategic about basically, you know, helping to set up Indonesia's nickel industry and making sure that they're sort of first in line to get that medal.

21:19So yeah, quite a long ways to go. All right. Next up, we have Harvard Law School professor Jared Elias and Duke University School of Law professor Elizabeth de Fontenay. They're talking about how private credit has swallowed the economy. And I think the takeaway from this is that private credit is basically already changing the world of debt and the way finance works. So you can have concerns both for the investors themselves and for sort of the broader economy or the broader market. And that's the issue with private credit. We have heard a lot from people about concerns about the marks that people are carrying these private credit loans at and that they might be entirely stale, they might be largely overstated.

22:05There's really no way to know until you exit that investment. And that's exactly how it is on the private equity side that, you know, if a private equity fund buys a portfolio company, who on earth knows what that company is worth until they actually finally exit that? And there is some misvaluation and so on. That's the question is, can we have that both on the equity side and on the debt side. What does that mean for our economy if we are suddenly just very liquid for almost all of the companies? Yeah. And so something to think about is the broadly syndicated debt world and the high yield world of debt created this benefit for all of us.

22:44And that benefit was we could follow the trading crisis of debt in real time and get a sense of where are there problems in our economy? What sectors are in trouble? Like think about COVID-19. So COVID-19 hits, we're all watching, like, what are the debt prices of the big hotel companies telling us about the likelihood those hotel companies go into bankruptcy? Congress and regulators can look at those signals and say, OK, we've got to do something really special for the airlines. We've got to do something really special here. And when the airlines go to Congress and say, we need something special, they can point to their debt prices and say, look what is going on, regulators.

23:20Look what's going on, Congress. Our debt is trading down to zero. like, please, we need special treatment. Investors looking for a deal can say, the debt of this company is trading at a really low level. I think I could do really well if I owned that asset. I'm going to go make that board an offer. And so all of those price signals just disappear from the allocation of capital from policymaking. And I think it poses a real challenge to what are a really well-functioning set of capital markets to lose those signals. Yeah, so I think this is absolutely fascinating because a lot of the concerns that you hear ad nauseum nowadays are this idea that private credit is in a bubble, right?

24:03Like private credit is going to burst and there's going to be this big crash. And people are sort of worried about that scenario sometime in the future. But in the meantime, there's already been an impact on things like transparency about, you know, who actually owns corporations and then the price signals that Jared was talking about. It occurred to me listening to that that there's sort of a – this is adjacent to the question about passive investing and who is putting in the work to setting prices. Because prices, as our guest talked about, are very useful. But it does feel as though the sort of people who are working to set prices that everyone can look at are shrinking because, A, you have all this money going to passive investing.

24:45And then you have some other pool of money going to private market investments in which the marks are really not very known. And so it does sort of make you wonder, like, you know, there is a lot of free riding going on. And at some point, you got to wonder if it'll actually be problematic that there isn't more publicly available pricing. Anyway, it's just something just something I thought of. But it's an interesting sort of theoretical problem to think about. I'm not sure price makers are the real victim is going to be a strong populist platform here. But there is definitely something there.

25:17There is that free riding problem. We are all the victims of fewer and fewer pricemakers is how I put it. Okay, fair enough.