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

Summary

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

Hosted by Joe Weisenthal and Tracy Alloway, Bloomberg’s Odd Lots delves deep into the intricate and often overlooked facets of finance, markets, and economics. In their year-end episode released on December 30, 2024, Joe and Tracy compile and reflect on the top ten most intriguing insights gleaned from their numerous discussions over the year. Here's a comprehensive summary of their key findings.

---

1. Dynamic Pricing and Data Utilization in Retail: McDonald's App Strategy

Key Insight: The sophistication of price pack architecture is revolutionizing how companies like McDonald's interact with consumers by leveraging granular data to optimize pricing strategies.

Discussion: In an episode featuring Lindsay Owens and David Dyen, Tracy Alloway and Joe Weisenthal explore how McDonald's utilizes its app, developed by Plexure, to implement dynamic pricing based on extensive data analytics. This approach allows McDonald's to personalize discounts and adjust prices in real-time based on factors such as the user's payday schedule, weather conditions, and purchasing behaviors.

Notable Quote:

"If the app knows that you get paid every other Friday, it might give you a $3 McMuffin on Thursday. But when Friday comes and you have some money in your pocket, it might raise it to $4."
– Tracy Alloway [02:50]

Conclusion: This strategy marks the beginning of a trend where companies aim to gather comprehensive data to predict consumer behavior and adjust pricing accordingly, enhancing both customer experience and business efficiency.

---

2. Medicare Fraud and the Kidney Dialysis Program

Key Insight: The dialysis segment within Medicare represents a significant portion of the federal budget and is susceptible to fraudulent activities, highlighting systemic vulnerabilities.

Discussion: Tracy discusses with Joe the exploitation within Medicare’s dialysis program, where fraudulent ambulance services capitalize on a loophole. Despite dialysis being a critical and costly service, fraudulent claims have led to over $7 billion in improper payments over ten years.

Notable Quote:

"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... Now, that's not that much money for a real ambulance, but it's a heck of a lot of money for a taxi."
– Tracy Alloway [06:32]

Conclusion: The discussion underscores the necessity for tighter regulatory measures and sophisticated monitoring systems to curb fraud and ensure that funds are appropriately allocated to genuine medical needs.

---

3. Boeing’s Stagnation in Clean-Sheet Aircraft Design

Key Insight: Boeing's lack of new, entirely original aircraft designs for over two decades poses significant risks to its market leadership and innovation capabilities.

Discussion: Richard Aboulafia highlights Boeing’s decision, as stated by former CEO Dave Calhoun, to forgo clean-sheet designs for the next ten years. This decision could result in a 30-year hiatus between entirely new aircraft models, threatening Boeing’s competitive edge and the retention of specialized engineering talent.

Notable Quote:

"You need something to dream for. You need something that represents the future."
– Joe Weisenthal [10:22]

Conclusion: The potential long gap in innovative aircraft design could lead to loss of market share and diminish Boeing’s ability to attract and maintain a skilled engineering workforce, ultimately impacting the broader aerospace industry's dynamism.

---

4. Ukraine Postal Service’s Digital Transformation Amid War

Key Insight: Amidst the destruction of infrastructure due to conflict, Ukraine’s Postal Service leverages Starlink and generators to maintain and digitize essential services swiftly.

Discussion: Igor Smlyansky, CEO of the Ukraine Postal Service, explains how they implemented a system using Starlink for internet connectivity and generators to operate in war-torn areas. This strategy allows for automatic sorting and digital operations despite the absence of traditional infrastructure, ensuring continuity of postal services.

Notable Quote:

"When you combine Starlink and the generator, you basically are no longer dependent on the central infrastructure and you can provide civilized services right away."
– Igor Smlyansky [13:10]

Conclusion: The innovative use of satellite technology and autonomous power sources demonstrates resilience and adaptability, providing a blueprint for maintaining essential services in conflict zones and disaster-stricken areas.

---

5. Strategies of Professional Sports Gamblers

Key Insight: Professional sports bettors employ sophisticated tactics, including the use of multiple accounts, to evade detection and maximize profitability on betting platforms.

Discussion: Isaac Rose Berman discusses with Joe how professional gamblers often create and use multiple accounts to place bets that appear innocuous initially, thereby avoiding detection algorithms that might restrict their betting activities upon recognizing high-value patterns.

Notable Quote:

"When you open up an account, you place a bunch of bets which look kind of normal. You bet on some NBA... to get on your scent."
– Isaac Rose Berman [16:40]

Conclusion: These practices, while lucrative for skilled bettors, raise concerns about the integrity of online gambling platforms and the broader implications for gambling addiction and fairness in betting markets.

---

6. Indonesia’s Dominance in the Global Nickel Market

Key Insight: Indonesia has emerged as a pivotal player in the global nickel market, driven by strategic partnerships with China and the surge in demand for battery materials essential for electric vehicles (EVs).

Discussion: Michael Widmer from Bank of America elaborates on how Indonesia, in collaboration with China, has rapidly expanded its nickel production capabilities. This development is critical for meeting the raw material demands of the burgeoning EV industry, positioning Indonesia as a central hub for nickel supply.

Notable Quote:

"The Chinese government looked at their... some of those battery raw materials... they did it in lithium, cobalt, and nickel."
– Tracy Alloway [19:19]

Conclusion: Indonesia’s strategic investments and partnerships highlight the shifting dynamics of global supply chains, emphasizing the need for other nations to bolster their own raw material industries to ensure economic and national security.

---

7. The Overreach of Private Credit in the Economy

Key Insight: The expansion of private credit markets is altering the traditional dynamics of debt and finance, potentially obscuring transparency and impacting economic stability.

Discussion: Harvard and Duke law professors Jared Elias and Elizabeth de Fontenay discuss how private credit affects debt valuation and transparency. The lack of real-time pricing and the opaque nature of private credit can distort investment decisions and policy-making, removing critical signals from capital markets.

Notable Quote:

"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 really well functioning set of capital markets to lose those signals."
– Tracy Alloway [24:16]

Conclusion: The rise of private credit necessitates a reevaluation of regulatory frameworks to ensure that transparency and accurate pricing mechanisms are maintained, safeguarding the economy against potential misallocations of capital and systemic risks.

---

8. Volatility in Chicken Wing Prices Due to Production Dynamics

Key Insight: The pricing of chicken wings is highly volatile because they are not a primary product, with their supply hinging on the demand for breast meat, leading to significant price fluctuations.

Discussion: Michael Skipworth, CEO of Wingstop, explains that chicken wings constitute only a small percentage of the bird and their supply is influenced by the breeding focus on breast meat. Consequently, market demand shifts for wings, especially with varying consumer trends, result in price volatility.

Notable Quote:

"The chicken wings themselves represent 6 to 8% of the bird. It's a fall off product. And so why you see so much volatility in the price of wings? It's centered around the overall market for breast meat."
– Michael Skipworth [27:29]

Conclusion: This phenomenon is analogous to financial derivatives, where chicken wings act as a byproduct with independent market dynamics, underscoring the complexities of agricultural economics and commodity pricing.

---

9. Surry County: The Carport Manufacturing Capital of North America

Key Insight: Surry County, North Carolina, has become the central hub for carport manufacturing in North America, illustrating the impact of agglomeration economies on industry specialization.

Discussion: During a visit to Surry County, Joe and Tracy discover its prominence in the carport manufacturing sector. The region’s concentration of suppliers and manufacturers has fostered a specialized industry ecosystem, making it the go-to location for carport production.

Notable Quote:

"Surry county is pretty much the hometown or home place or the birthplace of this type of structure."
– Tracy Alloway [30:11]

Conclusion: The clustering of specialized industries in specific regions like Surry County highlights the benefits of geographic concentration for manufacturing efficiency, innovation, and economic growth within niche markets.

---

10. Evolution of the Nicotine Market and Regulatory Evasion

Key Insight: The nicotine industry has adapted to regulatory crackdowns by innovating product offerings and circumventing FDA regulations, leading to a proliferation of flavored and disposable vaping products.

Discussion: John Coogan, CEO and founder of Lucy Nicotine, discusses how companies like Elf Bar and Puff Bar have maneuvered around FDA restrictions by frequently rebranding and using front companies. This strategy allows them to flood the market with various flavors and disposable vapes, maintaining consumer appeal despite regulatory pressures.

Notable Quote:

"They just said, let's push this product as many places as possible... set up a new company structure and import under a different label."
– John Coogan [31:29]

Conclusion: The nicotine market’s resilience in the face of strict regulations demonstrates the industry's capacity for tactical adaptation, raising questions about the effectiveness of current regulatory frameworks and the long-term implications for public health.

---

Final Thoughts: Joe Weisenthal and Tracy Alloway conclude the episode by reflecting on the diverse and unexpected topics covered throughout the year. From the strategic maneuvers in global commodities markets to the nuanced challenges within private credit and regulatory landscapes, Odd Lots continues to shed light on the undercurrents shaping our economic and financial world.

For more detailed discussions and insights, listeners are encouraged to explore the full episodes and transcripts available at bloomberg.com/oddlots.

Transcript

[Tracy Alloway]

From hobby farmers to weekend gardeners and everyone in between, tractor supply trusts 5G solutions from T Mobile for business to make shopping more personal. Together, we're connecting over 2,200 stores with 5G business, Internet and powering AI so team members can match shoppers with products faster.

[Joe Weisenthal]

You're all set.

[Tracy Alloway]

This is enriching customer experience. This is Tractor Supply with T Mobile for business. Take your business further@t mobile.com now. In today's data driven world, you need.

[Lindsay Owens]

Real data to shape an effective marketing strategy.

[Tracy Alloway]

That's where Ahrefs comes in. Ahrefs is a marketing intelligence platform powered by big data. It shows you exactly what your target audience is searching for and how you measure up to your competitors. Whether you're making day to day marketing.

[Joe Weisenthal]

Decisions or defining your long term digital.

[Tracy Alloway]

Strategy, Ahrefs delivers real time insights that help you grow your brand. Head over to ahrefs.com to get started. That's a h r e f s.com Bloomberg Audio Studios podcasts Radio News hello.

[Lindsay Owens]

And welcome to another episode of the Odd Thoughts podcast. I'm Tracy Alloway.

[Joe Weisenthal]

And I'm Joe Weisenthal.

[Lindsay Owens]

Joe, it's nearly the end of the year. We made it.

[Joe Weisenthal]

This is like year nine, isn't it? No, for real.

[Lindsay Owens]

No, it's true. Next year is gonna be our 10 year anniversary, so we'll have to throw some sort of odd lots event.

[Joe Weisenthal]

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.

[Lindsay Owens]

Yeah. And I think we both did learn quite a lot. And in fact, that is what we are going to talk about today. So we have compiled a list of of the 10 most interesting things that we learned over the past year. So you want to dive into it?

[Joe Weisenthal]

Let's do it. Let's revisit them. Because you know, we do so many episodes in the 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.

[Lindsay Owens]

This will sear at least 10 factoids into your mind forever. Joe.

[Joe Weisenthal]

That's correct.

[Lindsay Owens]

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. From our episode with Lindsay Owens, executive director of the Groundwork Collaborative And David Dyen, the executive editor of the American Prospect, we learned that McDonald's knows when you get paid.

[Tracy Alloway]

So the McDonald's app is put together by a company called Plexure. And Flexure works with Ikea, they work with 7 11, 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, they're aggregating a bunch of data about you. And we had one of the slides from this presentation that Flexure 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. Often, plecture 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, you know, 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 going to 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.

[Lindsay Owens]

Joe, has this scared you off the McDonald's app forever?

[Joe Weisenthal]

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. 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.

[Lindsay Owens]

There are definitely deals to be had on the McDonald's app. But 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.

[Joe Weisenthal]

I agree. I'm still going to download the app. In 2025. I'm going to download the app.

[Lindsay Owens]

Okay.

[Joe Weisenthal]

All right. Here is another clip. Fascinating conversation that we recently had with Jetson leader Luis. He's an econom at Boston University. We were talking about the existence of Medicare fraud and how to detect it. I had not realized just how big kidney dialysis specifically is as part of the federal budget. Take a listen.

[Tracy Alloway]

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.

[Joe Weisenthal]

That's incredible.

[Tracy Alloway]

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. It'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 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 $250 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. And 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% data from the dialysis system. We can see all of these payments, more than $7 billion for non emergency ambulance transportation over the following 10 years.

[Joe Weisenthal]

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. But 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.

[Lindsay Owens]

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, saw this episode and reacted to it on Twitter X he did. So there's that.

[Joe Weisenthal]

So maybe, maybe that'll move the dialogue.

[Lindsay Owens]

All right, next up in our list of the top 10 most interesting things we learned from odd lots, we have the fact that Boeing hasn't built a clean sheet design in about 20 years. And 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 Aboulafia. He is a Managing Director of Aerodynamic Advisory.

[Joe Weisenthal]

This looks like a glide slope towards oblivion, because remember, it's not just the.

[Tracy Alloway]

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.

[Joe Weisenthal]

Launched, since they've last launched a clean sheet design.

[Tracy Alloway]

They'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 2000-30s? I have no idea.

[Joe Weisenthal]

You need something to dream for. You need something that represents the future. And you know, Dave Calhoun, the CEO.

[Tracy Alloway]

At the top of the heap, said about, oh, a year and four months.

[Joe Weisenthal]

Ago that don't worry, we won't be.

[Tracy Alloway]

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. If 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.

[Joe Weisenthal]

Tweaks of existing products, stuff that's already in the pipeline.

[Tracy Alloway]

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.

[Joe Weisenthal]

And that too, of course is a.

[Tracy Alloway]

Significant change in the fabric of your workplace.

[Lindsay Owens]

So that was from our conversation with Richard Abulafia, one of the best aerospace analysts around that I know. And 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.

[Joe Weisenthal]

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 we talk, for example, in other industries about knowledge and talent loss. Nuclear. It comes up a lot. For example, building a new nuclear station. What happens when America's 1 commercial maker of civil aviation jets doesn't have very many people that know how to design a jet? Like, I actually find it to be a chilling fact.

[Lindsay Owens]

No, absolutely.

[Tracy Alloway]

From the Delta sky club. Welcome back, Ms. Klein, to the Jet Bridge. Delta Air lines relies on 5G solutions from T Mobile for business to power operations and serve customers faster. Together we're putting 5G into the hands of ground staff so they can better assist on the go travelers with real time information throughout the airport. This is elevating customer experience. This is Delta Air Lines with T Mobile for business. Take your business further@t mobile.com now. Hi, I'm Ron Kruzewski, chairman and CEO of Stifel Financial Advisors. If you're not growing your practice, you're losing market share. Stifel is a growing entrepreneurial advisor centric firm built for successful advisors like you. Imagine having the resources of the largest wirehouses and the support of the boutique shops, but none of the bureaucracy to get in the way of you serving your clients. At Stifel, it's your business, your book, your clients.

[Joe Weisenthal]

I always tell the advisors we're recruiting.

[Tracy Alloway]

I want you to come to Stifel and double or triple your business. Most of them laugh and shake their heads, but I'm serious. Don't take it from me. Take it from Stifel's number one finish in J.D.

[Joe Weisenthal]

Power'S 2023 U.S. financial Advisor Satisfaction Study.

[Tracy Alloway]

So there's a reason why 148 financial advisors joined Stifel last year. Come join us and find out why. Stifel is the firm where success meets success.

[Joe Weisenthal]

Visit www.choosestiffel.com Stifel Nicholas & Co.

[Tracy Alloway]

Incorporated member SIPC and NYSE.

[Joe Weisenthal]

Our next clip comes from Igor Smlyansky. 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 the post office there. Take a listen.

[Tracy Alloway]

When 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 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. Probably it will run through the field which you need to de mine and then the Russians can bomb it again and it can go off, et cetera. So we are Starlink. You are flexible enough when you combine Starlink and the generator. When you combine the two, you basically no longer dependent on the central infrastructure and you can provide civilized services right away. Not five months after the occupation, not three months after Russian 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, you know, 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.

[Joe Weisenthal]

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. And 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.

[Lindsay Owens]

You know what the best part of this episode was?

[Joe Weisenthal]

What?

[Lindsay Owens]

I think afterwards you started ordering a couple things from Ukraine, right?

[Joe Weisenthal]

That's right. I started buying things on ebay, and a number of them did come through Ukraine, including some used books recently.

[Lindsay Owens]

Yeah, I know, it's kind of crazy that you can order stuff from a war zone, but there we are. The postal service in Ukraine is still working. We'll see whether or not they go 100% digital.

[Joe Weisenthal]

Yeah.

[Lindsay Owens]

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.

[Tracy Alloway]

So another thing that a lot of people do, obviously, is you bet on other people's accounts. You know, 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. I'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 know, you're just. You have to disguise your bets in a way that they don't. They don't see or they don't realize that 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. If 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, like, random times for very large amounts. And it's like, yeah, you know, these. These companies aren't dumb. So the main way is, you know, you. 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.

[Joe Weisenthal]

Expected return for the home team.

[Tracy Alloway]

Exactly, exactly. You 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.

[Lindsay Owens]

Joe, that was pretty funny. And I gotta 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.

[Joe Weisenthal]

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, but 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.

[Lindsay Owens]

Yeah.

[Joe Weisenthal]

That will shrink your sort of deeply, deeply disturbing episode to me.

[Lindsay Owens]

Yeah. Well, they set the odds. They set the terms.

[Joe Weisenthal]

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. And 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.

[Tracy Alloway]

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. And 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, 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. And so the Chinese government looked at their. 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 Indonesians said, well, we have the nickel. And the Chinese said, well, can we invest? And they said, yeah, do come. Let's develop that industry together. And so the Indonesian government then, together with the Chinese, set up industrial parks. And through that industrial park, supported by Chinese money, the nickel industry then developed very, very quickly.

[Joe Weisenthal]

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 it 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.

[Lindsay Owens]

No, it's true. And China here has been incredibly strategic about basically, you know, helping to set up Indonesia's nickel industry and then making sure that they're sort of first in line to get that medal. So, 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 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.

[Tracy Alloway]

They might be largely overstated.

[Lindsay Owens]

There's really no way to know until you exit that investment. And that's exactly how it is on the private equity side, that if a private equity fund buys a portfolio company.

[Joe Weisenthal]

Who on earth knows what that company.

[Lindsay Owens]

Is worth until they actually finally exit that? And there is some misvaluation and so on. That's a 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.

[Tracy Alloway]

Yeah. And so something to think about is the broadly syndicated debt world. In the high yield world of debt incurred, this created this benefit for all of us. And 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, okay, 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, look 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 own 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.

[Lindsay Owens]

Yeah. So I think this is absolutely fascinating because a lot of the concerns that you hear ad nauseam nowadays are this idea that private credit is in a bubble. Right. Like 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.

[Joe Weisenthal]

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 and 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 gotta 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.

[Lindsay Owens]

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. There is that free riding problem.

[Joe Weisenthal]

We are all, we are all the victims of fewer and fewer price makers.

[Lindsay Owens]

Is how I put it. Okay, fair enough.

[Tracy Alloway]

From the Delta sky club. Welcome back, Ms. Klein, to the jet bridge. Delta Air lines relies on 5G solutions from T Mobile for business to power operations and serve customers faster. Together we're putting 5G into the hands of ground staff so they can better assist on the go travelers with real time information throughout the airport. This is elevating customer experience. This is Delta Air Lines with T Mobile for business. Take your business further@t mobile.com now.

[Joe Weisenthal]

Success is more than the final destination.

[Tracy Alloway]

It's a path you take one step at a time. It's discipline, it's teamwork and it's the.

[Joe Weisenthal]

Drive and passion inside of us that.

[Tracy Alloway]

Comes before all recognition. It's what Stifel's been doing for over 130 years.

[Joe Weisenthal]

Quietly yet strategically.

[Tracy Alloway]

Stifel has become one of the fastest growing wealth management and investment banking firms in the country.

[Joe Weisenthal]

Our financial advisors go beyond traditional wealth.

[Tracy Alloway]

Management to provide clients with direct access.

[Joe Weisenthal]

To one of the industry's largest equity.

[Tracy Alloway]

Research franchises and a leading middle market investment bank. Because success is the drive it takes to keep climbing, the passion to keep investing the best of each of us.

[Joe Weisenthal]

Made better by the best in all of us.

[Tracy Alloway]

And that is where success meets success. Start your [e-mail] that's s T-I-F e.

[Joe Weisenthal]

L.Com Stifel Nicklaus & Co.

[Tracy Alloway]

Incorporated member SIPC and NYSE Speaking of.

[Joe Weisenthal]

Prices, it turns out, and this is something that we learned during our three part series called Beak Capitalism. Everyone needs chicken wings. We all love. It turns out that chicken wing prices for various reasons are extremely volatile because by and large, the chicken industry does not price around the wing itself. Take a listen to this part of our conversation that we had with Michael Skipworth, the CEO of Wingstop.

[Tracy Alloway]

Now, the reason you see so much volatility in the price of wings is the reality of the fact that these poultry companies, they are not growing these chickens for the wings. They're setting the size of the flock, how many birds they're going to harvest based on breast meat demand. The chicken wings themselves represent 6 to 8% of the bird. It's a fall off product. And so why you see so much volatility in the price of wings? It clearly is a supply and demand dynamic, but the demand is not what's driving the supply. It's really centered around the overall market for breast meat. And so that's what's created a lot of volatility in that commodity. And there can be years where that spot market hits below $1 a pound and then take a year like 20, 21 after the pandemic where every single brand out there added chicken wings to their menu, you saw that spot market hit an all time high of $3.21 a pound.

[Joe Weisenthal]

Tracy, I love the idea that, you know, there's financial instruments exist and in a way, you know, you get this price of a chicken, and then it's almost like the wing is a derivative of a chicken. Right. A wing is sort of a chicken derivative itself because that's not really where the supply and demand is happening directly with most of the bird. And so then you can get these weird, weird swings in the fall off part of the bird.

[Lindsay Owens]

Yeah. You know, technology needs to solve this with chickens with, I don't know, multiple pairs of wings, then we. Then we'll have plenty of cheap chicken wings.

[Joe Weisenthal]

You're right. This is the solution. We need to innovate our way out of it.

[Lindsay Owens]

All right. Definitely. Check out Beat Capitalism if you haven't, because that was one of my favorite series of the year. Up next. Oh, speaking of favorite series of the year, this is from Richmond Fed president Tom Barkin. We went on the road with him in North Carolina, and we learned a lot, including, you know, what a Fed president learns when he actually goes on all these business trips. But we also learned that Surry county is the carport manufacturing capital of North America.

[Tracy Alloway]

My brother and I have been in this industry over close to 24, 25 years. So almost since it first started back in 99 and 97, actually the beginnings of this industry. But it kind of grew in this area. So Surry county is pretty much the hometown or home place or the birthplace of this type of structure. Now, there's been other structures made out of different tubing, like round tubes, all that. That's on the west coast. But to be square tubing and to go into what we're doing now is different. So it started off and you probably drove by. Even where you live, you see little top and people park their cars or you drive by some kind of dealer that sells outdoor equipment or something. You see a little sign that says a price. Well, that's how it pretty much started.

[Lindsay Owens]

All right. Did that surprise you, Joe, to learn that there's a sort of carport hub in North Carolina?

[Joe Weisenthal]

It surprised me. But then it's like these days it's agglomeration effects in everything.

[Tracy Alloway]

Right.

[Joe Weisenthal]

So you think of any industry where they make anything and there's probably one area that dominates it. But I think both of us had the same reaction when we were driving through Surrey County.

[Lindsay Owens]

It's just carport business.

[Joe Weisenthal]

Carport business, yeah. It was really incredible. And I sort of, when we were going to a carport business, I thought it would be really obvious, you know, which one we were going to. But we probably passed like 5 on the way before we got to the one that we were visiting.

[Lindsay Owens]

Yeah, it's true.

[Joe Weisenthal]

All right. Our last clip of the year comes from an episode we did with John Coogan. He is the CEO and founder of Lucy Nicotine. We sort of talked about the modern history of nicotine because obviously nicotine consumption sort of fell off as cigarettes got less popular. But then it's been surging again, obviously over the last decades, first with Juuls, then other vapes like Elf Bars, the disposable vapes, and now obviously the pouches. Anyway, turns out that these disposable vapes, these very tasty flavored vapes, in part exist because of the FDA's crackdown on Juul. So take a listen to John.

[Tracy Alloway]

It's hard to explain exactly what Elf Bar is because it's kind of a hydra of companies like the IP has been sold so many times, they've rebranded a million times. There's also Puff Bar and Puff Stick. And essentially what these companies do, broadly, I'm not speaking about any particular company, but broadly, the strategy has been to instead of engage with the FDA directly and file the pmta, wait for approval, then market your product. They've just said, let's push this product as many places as possible. Get it into every independent store that maybe doesn't care about the regulatory status of these products. Let's. Let's just flood the market with these products. And if we get shut down, what's going to happen is that we're, we're essentially just have a front company that's just a couple random American citizens that are acting as a front for us in the us. The FDA is not really going to be able to shut them down. They're going to try and shut us down at the ports. All we need to do then is just set up a new company structure and import under A different label. So that's how you see the evolution of these things where, like, I don't even think Elf Bar is on the market anymore. I think it might be called, like, Elf Tac or something.

[Joe Weisenthal]

Yeah, no, there's like a. But they all look the same under, like, different names. And I'm like, is that an Elf?

[Tracy Alloway]

Exactly. So they're all made in the same Shenzhen. Like, the core company behind Elf Bar is Shenzhen Imira Miracle Company, which is a hilarious name, but it's like Miracle. But then also I. Which I think is like an Apple reference. It's very convoluted. But the Shenzhen Miracle Company, they have a massive facility where they make this stuff, and then they just find a new frontman. And I get emails every single day from a new random Gmail account that says, like, puff bar, 500 puffs. Like, would you like to white label this? Because they're looking for someone that has American citizenship, distribution lines, and can order their products and then get them into stores.

[Joe Weisenthal]

Tracy, I love learning about the history of nicotine. I have to say, I have a friend of mine who totally separately happens to be kind of a friend guy I know in the neighborhood who's in the.

[Lindsay Owens]

Is he gonna hear this?

[Joe Weisenthal]

He might. It's all right. A neighbor who's in the nicotine business, and he showed me these Gmail emails that.

[Lindsay Owens]

Oh, so he gets them too.

[Joe Weisenthal]

Yeah, But a lot of the ones that he gets are from companies offering straight up counterfeit Zinn or things like that. And they say, oh, we can make this packet. It looks just like Zyn. We use the same nicotine, et cetera. So I actually think in 2025, there's more to do on the sort of the nicotine and drug supply chain, because I think there's actually a lot more fascinating stuff here.

[Lindsay Owens]

And I also think it's such a perverse regulatory outcome where, you know, Juul kind of went through the process like it was supposed to and then got basically shut down. But Elf Bars have just evaded most of the regulation.

[Joe Weisenthal]

And they taste like cotton candy.

[Lindsay Owens]

Yeah. And you can find them everywhere. And they're in these, like, bright colors. I stopped after listening to this episode.

[Joe Weisenthal]

I'm very impressed.

[Lindsay Owens]

Yeah, thanks.

[Joe Weisenthal]

We're all impressed.

[Lindsay Owens]

Thank you. All right, shall we leave it there?

[Joe Weisenthal]

Let's leave it there.

[Lindsay Owens]

This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

[Joe Weisenthal]

And I'm Jill Wiesenthal. You can follow me at the stalwart Follow our producers, Carmen Rodriguez at Carmen Ermen, Dashiell Bennett at dashbot, and Kalebrooks at Kalebrooks. Thank you to our producer Moses Andam. For more Odd Lots content go to bloomberg.com oddlots where we have transcripts, a blog and a newsletter. You can chat about all of these topics, all 10 of these topics and more 24. 7 in our discord, discord, GG odlots.

[Lindsay Owens]

And if you enjoy Odd Lots if you appreciate us digging out you know 10 interesting things that we learned this year, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, in addition to getting our new daily newsletter, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening.

[Tracy Alloway]

From hobby farmers to weekend gardeners and everyone in between, tractor supply trusts 5G solutions from T Mobile for Business to make shopping more personal. Together we're connecting over 2,200 stores with 5G business Internet and powering AI so team members can match shoppers with products faster. You're all set. This is enriching customer experience. This is Tractor Supply with T Mobile for Business. Take your business further@t mobile.com now. In today's data driven world, you need.

[Lindsay Owens]

Real data to shape an effective marketing strategy.

[Tracy Alloway]

That's where Ahrefs comes in. Ahrefs is a marketing intelligence platform powered by big data. It shows you exactly what your target audience is searching for and how you measure up up to your competitors. Whether you're making day to day marketing.

[Joe Weisenthal]

Decisions or defining your long term digital.

[Tracy Alloway]

Strategy, Ahrefs delivers real time insights that help you grow your brand. Head over to Ahrefs. Com to get started. That's Ahrefs. Com.