lisa: i am lisa abramowicz. welcome to "money undercover," which provides valuable insight into alternative investment. we take you inside private debt, equity and real estate. let's get into burning issues, liquidity opening up in private markets after a start to 2020. getting ahead of u.s. elections, a flood of deals and plenty of cash in the coffers and million hangover, why a rares set will break records in sales. sonali basak, natalie wong and

lisa lee. let's begin with sonali. wework, not surprisingly, continues. there is a question of who will finance this company and softbank takes control. trying to get a loan deal done but there is something unique. please explain. sonali: softbank said we work as the co-borrower here. softbank had become intertwined since they got into this deal. softbank has been emerging as somebody that banks want to work with, despite the troubles that have happened, they are seeing portfolio companies, something to look out for next year is doordash. also a portfolio company in the vision fund, working with j.p. morgan for a credit facility here. lisa: softbank is listed as the main borrower. i found this fascinating. they are putting their own money

and name on the block here. how much of a liability is this for softbank in a broad sense? and isolated case of them bringing it into their purview? are they going to bring other portfolios in? sonali: we work is a one-off given how far it has fallen from its peak. as both as you can get to a subsidiary of softbank. for now it is a runoff but softbank will put that much of their own money in for somebody else, you need to keep an eye out on how close other companies get to them. lisa: that brings me to natalie because we have been seeing amazon saying it was going to come to new york, then forget about it, but not really. we are seeing amazon coming to the city and other tech companies. natalie: it is a big change from one it said they were no longer come. now they have announced a 335,000 square foot facility in hudson yards which shows they are committed to growing in new york. even after everything that has

happened. on top of that we had facebook , and google continue to expand in the city. facebook signed a lease for 1.5 million square feet. in hudson yards doubling its presence in new york city. lisa: can you put this in perspective? is this a tiny fraction of overall space in new york city or is it taking on a silicon valley ii feel? natalie: it is taking off. financial services industry takes around 30% of currently occupied space whereas the media and for information take 24%. there is room for tech tenets to pick up, especially with the big -- tech tenants to pick up, especially with the big leases coming into place. lisa: is there a particular city? long island and he was sort of the one with a lot of political pushback. natalie: a lot of them are around hudson yards area, chelsea, midtown manhattan. these are places where they are starting to become more and

more. in manhattan, some looking at brooklyn but i am not sure about queens. lisa: let's get to consolidation. lisa lee has been following that in the loan business. can you give us a lay of the land? lisa l: we have an asset manager with when under billion dollars in assets -- credit advisors which is a direct lender and goldman sachs just merged two others to put aside companies. lisa: what is the advantage of these firms merging? lisa l: it is scale. the money has come into direct lending you want to be able to hold the loans you have found. that is definitely the thought process. goldman sachs in this space will take it to $3.3 billion and give them greater diversity. lisa: do we expect this to be an

ongoing trend of greater consolidation or are we reaching a stasis? lisa l.: mergers beget other mergers. it could be one-off but especially in the place, experts see this as a ripe industry for consolidation. among these, the majority of the fund makes pushing through and advocating difficult but there is room for more. lisa: thank you to you and all of our reporters. here is randy schwimmer, head of origination and capital markets. he is following the loan market and everything happening with this space. i want to talk about the collateralized loan obligations landscape and the view into 2020. it is a soft year. what do you see? randy: we will have softer year. the indicated side with the buckets being full, and b threes being scarce, not wanting to go

triple c. they are conserving cash over the last two months. going to 2020 it looks like based on the secondary price movements in leveraged loans there will be room for them to start investing again. not a lot, but you will see a firmer tone in the overall leverage market. lisa: this is not with respect to investors putting money into new clo's but existing ones collecting cash from the debt they are selling or letting run off. what about investor demand more generally? randy: as the market continues to firm on prices which affects the assets, it will be -- one thing clo formation depends on his triple a, that is been on the higher side this year. it is hard to say where this will go next year. overall deals are getting done. we at churchill have done

minimal market clo's area there will be room for formation which is a positive thing. lisa: you said you think the first quarter will be active with sponsors bringing deals to market. randy: i thought we would coast into the end of the year, spending a nice holiday season. but the yield flow has never been higher, and i think in part talking sponsors, there is a little nervousness about next year in the second half relative to political risk and concerns. my sense is they are trying to get a jump on 2020. the pipeline we are seeing now is geared towards january and february closings. it means they want to make up in time for what could be a slow second half or less certain.

lisa: you are talking about financing for lbo's. randy: it is refinancing, new platforms, add-ons and we are seeing the full range of those deals. lisa: how are the structures of those deals? are they seeing things getting frothy? randy: we are pushing back because things are getting frothy. the hit rate is less than 10% of the deals we look at for that reason. we are trying to be picky. we are succeeding. the leverages and deals we have been doing have been consistent the last several years. we are on alert for deals that are getting levered more than they should be, particularly the cyclicals. lisa: one theme you and i have talked about is direct lenders have been taking over a greater proportion of the business once dominated by the leverage lending area.

syndicated loans are getting pushed aside. do you see that accelerating as a trend? randy: direct lenders are continuing to raise capital and doing larger deals as you commented brilliantly. the thing that, to watch out for as direct lenders get more opacity, the deal size is going -- more capacity the deal size , is going to grow. that is going to cut more into the syndicated products. it will be interesting in the second half of next year to see where the volatility goes relative to political risk. if you see more volatility and uncertainty where the overall markets go, you will see the sponsors kind of going flight to safety which is companies that can get their deal done with a certainty of execution. lisa: randy schwimmer of churchill asset management. we discussed with a power player, elizabeth weindruch.

she is from alternative investments. this is "money undercover" on bloomberg. ♪

lisa: i am lisa abramowicz. this is bloomberg money undercover. time for a power player, a look at the notable names in markets. we have been talking a lot about five equity firms. a growing number of investors are talking about democratizing the market. for more of a sense of what that means we are speaking with elizabeth weindruch. she is the managing director of alternative investment. thank you for being with us. does it mean everybody with a retirement fund is going to have private equity exposure? elizabeth: that is a good question. it has been top of mind for investors for several years now. the primary reason is because private equity markets

consistently outperform the public market. if you look over 10 or 15 years you have an asset class generating strong returns that has traditionally only been available to large institution investors. there are a number of voices saying we should provide access to these types of returns and asset classes in general to your general mom and pop investors. i would say that on the more retail side of things there is a push to make this asset class available but there is a lot of risk involved as well. lisa: a lot of people think the best returns are gone, and people looking to withdraw money for retail funds and the inability to do that with private equity, how much of a risk is that? you see it being an impediment? elizabeth: i see it as a risk. this is something that is coming. it is not something that will take hold in the market in 2020

or in a couple of years subsequent to that. you have issues around pricing, like liquidity. at the same time with more businesses staying private for longer, as well as outperformance in private equity and i agree that returns are compressing but you will -- lisa: i want to shift to the dry powder. we have seen record amounts accumulate. i am wondering, does this mean companies, private equity companies don't know what to do with their money? elizabeth: i don't think it means that. i will say we have $1.2 million in dry powder that is in the in dry powderon

that is in the market today. the capital will get thrown into the market over time. private equity sponsors are raising capital and investing over five to six years. you have to think about coming into the market in a more measured pace. capital overhang is a function of what i say quicker fundraising timelines. it is taking less time to raise capital and large funds getting raised. i would not say there is a problem putting the dollars to work. the money is getting put to work more quickly. lisa: if the money is not put to work, or any firms not returning -- are any firms not returning capital, or if they are not drawing on it, where does it go? elizabeth: it is an interesting question. we don't see issues in sponsors putting the money to work. they can request extensions and give extra time to put that money to work. there are times they can release commitment back to investors. we are seeing a healthy marketplace and i don't think there are issues getting dollars out the door. lisa: i would love your perspective on the first order being active.

do you see that, that people will try to get ahead of the 2020 elections and get deals done early? elizabeth: i would say in our portfolio we are seeing a lot of deal activity and seeing a lot of interesting opportunities. i don't there is a rush to put capital out the door to mitigate future political risk. this is money getting put to work for a long time. if you invest in january versus investing in november, i don't know if it makes much of a difference. political risk is something that is getting talked about a lot lately. as we look at deal flow and transaction activity, the amount of risk is getting priced in. i don't see people rushing to put money out the door to avoid certain political pitfalls. lisa: is your sense a lot of private equity firms are expecting down cycle?

>> if i knew the answer to that question, we would be in a different situation. i would say that we are talking about the fact we are late in the current expansion, late cycle, seeing typical late cycle behavior coming with purchase price multiples, leverage multiples. i think everybody is preparing for some type of downturn but we are not sure when it will be. we have to think about where we are investing the money. we are seeing interesting opportunities in defensive industries as we are hearing the word recession. -- recession resilient. lisa: elizabeth weindruch from bearings. goldman's chair of investment banking. she told us the private equity firms are bracing for such an event. >> every one of our clients is

focused on being prepared for recession. there is a different level depending on their macro view. on the one hand we have clients who are just looking at their capital structures and saying, let me make sure all of my structures are ready in case there is a recession next year and my two plan has to be a four-year plan or three year plan. has to be a five-year plan. lisa: she also mentioned a checklist which doesn't mean it is a sure thing by any means. there is of course the concern they could suffer losses and have a reputational risk but there is also political risk as they amassed more and more capital. they don't want to be called out as being bad actors at the end of the cycle. coming up, one whiskey collector amassing 3900 bottles. we tell you what price tag is being put on them. this is "money undercover" on bloomberg. ♪

lisa: i am lisa abramowicz. this is "bloomberg money undercover." family offices set up by the super rich to manage personal wealth and they are pouring more and more cash into direct lending. kelsey butler joins us now with more. can you give us a sense of the acceleration we have seen with

ultra wealthy families putting money in this space? kelsey: we have definitely seen a ton of family offices going into debt for the same reasons everyone else does. the ultra wealthy are just like us. currently there is 400 family offices that are active. that is up from 130 in 2015. it is picking up steadily. now family offices make up 10% of the investor base. lisa: is there a particular geographic region where it is picking up more? kelsey: it is going on globally. one family office which was a big example in our story, monaco-based -- which invests or planning to invest $15 million a year in private debt. we see people, former los

angeles dodgers owner frank mccourt, jr., he put money into a direct lending and even bill and melinda gates put money into private credit. lisa: what do people think? kelsey: there have been surveys done by one of the biggest trade organizations that said about 50% of private credit managers believe that family offices were -- will continue to put more money to work in this space. lisa: instead of private equity do we have a sense what they are swapping out? kelsey: some of these are using it as a way to diversify their credit portfolios. others are using it as a way to extend entrepreneurial efforts they have already been doing. lisa: thank you for being with us. this is the uk's third richest person and considered the most eligible bachelor.

he is 28 and is suffering some backlash now. tom metcalfe joins us from london. how much is he worth? tom: worth about $12 billion. it makes him one of the more eligible. he is having a rough time at the moment. he has got political leaders attacking him. he is seen as being the embodiment of everything is wrong with the british economy. he is 28 and has got $12 billion largely from inherited property. a lot of companies see this as what they are trying to stop in the economy. lisa: please elaborate about rent tier capitalism and how this man made his money. tom: it wasn't really him. it was six or seven centuries ago.

one of his ancestors was given a lot of land in london. the family has been able to hold onto it ever since. $12 billion, the value of property, how much they make and the common criticism is where is the value? that is somewhat like jeremy corbyn, leader of the opposition party, been attacking him on. saying is this fair by virtue of who your dad is or your great, great, great dad, you are one of the country's richest people? lisa: it is no quiz and we are coincidence that we are talking about this amid the u.k. elections cycle. i am wondering how billionaires have been portrayed by candidates. tom: from all sides they have been in the crosshairs. you had the duke of westborough, you had john ratcliffe, britain's richest person, attacked. there is a chatter about a wealth tax. that is a similar atmosphere here, increasing dismay about the rise of billionaires.

you had the shadow chancellor, john make donald, saying no one deserves to be a billionaire. very similar rhetoric this side of the atlantic as across the pond. lisa: thank you for being with us. it is time for this week's big number. next year a whopping 3900 bottle of scotch collection will hit the auction block including some rarities that may sell for $2 million apiece. it includes an unprecedented number of bottles from storied names. you can tell i am not a huge scotch drinker but this segment where we talk about the different auctions is important to highlight how ultra wealthy individuals are spending their money, giving a sense of the field in the markets now. that does it for us. you can watch each tuesday 1:00 new york, 2:00 in hong kong. from new york, this is bloomberg. ♪ here, it all starts with a simple...

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alix: a tale of two oil giants. saudi aramco successfully less -- lists while chevron takes a write-down. europe gears up to battle climate. new european commission president unveils aggressive climate goals. now, the hard work begins. to flare or not to flare? i sit down with the texas railroad commissioner about ways to deal with national gas and flaring. ♪ alix: i am alix steel. welcome to "bloomberg commodities edge," 30 minutes focusing on the hottest commodities with the smartest voices in the business.

first, we kick it off with spot on. it is our take on the big story. it's a tale of saudi aramco and chevron. joining me is our managing editor of energy and of commodities, and rachel in houston. let's kick it off with aramco. testing a $2 trillion valuation on thursday, when will we get to know the real market value of the company? tina: we've had two full days of trading now. they went up to their daily limit of 10% and today they went up about 5%. for a few brief hours, they were trading at the magical $2 trillion level. that is the level that the saudi crown prince was looking for. where do we go from here? investors have told us they think it will increase and other cash -- by another 10% to 18% in the next week. on the other hand, we got a note today saying get out, it's time

to sell. opinions are all over the place. alix: considering the difficulties the crown prince had bringing this close to $2 trillion valuation, it's impressive they got there. does is do anything to the international listing? tina: there was a pullback and it became a local effort. you see a lot of local money in this. that defeats the purpose of trying to defray the liability and inject new money into saudi arabia that is not oil related. again, you having a lot of your own investors in the kingdom put their money into essentially an oil bet. it's not really accomplishing everything the crown prince set out to accomplish in diversifying the economy. that is an effort that is ongoing and they have gone above and beyond to make this listing in riyadh become incredibly successful so there's a chance to potentially look at international. alix: on the flipside, chevron write-downge

primarily due to its natural gas assets. rachel, can you put this into perspective for us? this huge write-down? rachel: it's pretty big. we saw the majors go big on gas. so far, chevron, it's been an $11 billion headache. if you have been paying attention to u.s. gas prices and the difficulty building pipelines out of appalachia, you would not be be surprised by how hard chevron has been hit. it will be interesting to see what happens to the independent producers in the area that don't have the balance sheet of chevron or diversified assets, because as you've seen, these guys have seen better days. it's a really tough environment for u.s. gas producers. alix: it has shone a huge spotlight on exxon. it is only taking a $2.5 billion

write-down. any read on where that stands? rachel: you saw a mix of opinions. on the one hand, exxon tends to take a bigger view, a more forward-looking view or encompass a bigger future than chevron and they are known for that. maybe they don't have to take as big of a write-down as chevron. but on the other hand, you have people at mizuho saying what about you? alix: the capex plans were released on the high-end. particularly, permian investments will be 10% higher next year. along with permian oil production comes natural gas. it's a vicious catch-22. rachel: especially in the permian, you are seeing companies say, i have too much gas, i don't know what to do with it. i can't connect to a pipeline. the pipeline that was supposed to be the next up on the docket is delayed because of opposition in central texas. it's not a pretty picture for

gas outlook if you have too much of it in the u.s. alix: thank you. as we head to break, goldman's jeff perry weighs in on where he sees gold in 2020. jeff: when we look at the dollarization of central banks, the demand from central banks globally for gold this year is as big as the nixon era. they are eating of 20% of global supplies. our estimates, we did 750 tons as a base can's of central bank buy. dedollarization is why i like gold better than bonds. the bonds will reflect that. -- won't reflect that. ♪ alix: i'm alix steel and this

is bloomberg "commodities edge." time for the data dig.

delve deep into the market trends of the week. first up, we have the oil inventory numbers. you saw a surprise build. small but a surprise. most of the decline was in the midwest but that was offset by higher gulf coast stocks of 5 million barrels. i should point out, stocks are the lowest since 2014. palladium surged to a record this week, topping $1900 per ounce. south african mining companies halted operations in response to the country's power cuts. citi says palladium could go over $2500 over the next six to 12 months. in the ag market, the wheat price got a big bump up in trade optimism. it was the supply and demand picture that was also interesting. the french crop will see the lowest reserves in six years. all of that is on stronger demand. exports are the highest in seven years. now, let's get into the ring. it's flaring versus the climate. shale producers in texas are getting 40 times as many permits for venting natural gas as they did a decade ago. i sat down with the man responsible for those permits,

the head of the texas railroad commission. ryan: we will continue to grant flaring permits because we continue to see development. however, you will see a big drop in the rate. there is a lot less development going on with oil prices being down, less investment in the oil business and a lot of oil producers try to operate within cash flow. because of that we will see less permits. alix: does that mean rigs will get shut down or new investment will not come on? >> rigs are coming off the market. if you look at the last year or last six months, the number of rigs operating in the u.s. and texas has dropped by 200 or 15%. alix: if oil prices stay around 60, does it change? will we have a quick market reaction? >> two things have to change. one is oil prices have to come up. ,ver the next couple of years

it would not surprise me to see $70 per barrel again. however, we're seeing a lot less capital infused into the oil and gas market. companies are getting their balance sheets changed and as a result, even with higher oil prices, there is not as much capital to invest so less drilling operations will go on. alix: have you ever rejected a flaring request? ryan: yes, but you won't see -- however, the important part is to understand you won't see that in the data. when we reject them, the producers see there is something wrong with the permit and they withdraw them before we get to the hearing process. if you look at the data, it says none have been formally rejected but a lot have been withdrawn. alix: i'm confused because the rhetoric six months ago was that the pipelines were going to come on and it would solve everybody's problem in the permian. what did not happen? ryan: we're still waiting on one big pipeline. another 2 billion cubic feet per day of gas capture in place, and another 2 billion cubic foot per day pipeline is coming on the

end of next year. that will solve another problem. the recent rhetoric has been around one specific case. this is something i hope we get to talk about, which is this new permit where a producer was connected to a gathering system that caused a lot of confusion and signaled something to the market that was not accurate. alix: let's talk about that. you talked about x -- who talk about them hooked up and williams is suing you guys saying you're letting them flare but you're not requiring them to connect to the pipeline and that's a bad thing. what is your response? ryan: we're not allowing not forcing them to use the pipeline operator because in the case that came before us, one of two cases, the first one was, you shouldn't allow them to flare. in the case that we heard, the pipeline company was asking for rates that were 10 times the market price for gas. they had a big disagreement in terms of what rates they should be paying. meantime, we were not going to force a producer to pay exorbitant rates. there is another case we haven't

heard yet that is evaluating the rates they should be paying. grant a permit for seven months to allow the producer to continue to flare while we work this out. instead of telling the producer you have to pay these rates or shutdown. that is a very unique case that we almost never see. alix: do you feel you need to consider other things when you wind up declaring a permit? or when dealing with capacity like climate issues and other stuff? different requirements? ryan: on macro scale, we do consider those things. people have asked about the amount of co2 being produced. , we aretate of texas flaring 2% of the gas we produce in the state. that's a small number compared to -- 50 years ago the state was flaring 40% of the gas produced. just in north dakota in 2014 at 2015 they were flaring as much as 20%.

look at places like russia with flaring in the double digits. texas has a very low percentage of its gas that is flaring and the result is, if we produce more gas in texas, that a lower percentage of the gas that is flared. alix: what do you say to the company that says, i'm connecting to this pipeline and i pay this rate but you are allowing them to flare? what do you say to that pushback? ryan: when companies agree to pay a rate, they do that as the pipeline is being connected. they agreed that the rate before they ever get involved. it's very rare that you have the situation where the pipeline company was already connected then they were trying to do a new rate. it's because the company, the producer they had bought the wells from went bankrupt. this is a unique case that almost never happens. alix: that was my interview with the texas railroad commissioner. and it is the end of an era. a billionaire announcing he will step down as chief executive of continental resources.

it is a shale oil producer he founded over 50 years ago. beginning january 1, he will become the executive chairman and be replaced as ceo by the former conocophillips executive and continental board member. he once called opec a toothless tiger and said, i'm not going anywhere, i'm in oil finder and geologist at heart. i have a long history of buying, not selling our stock, and that will not change. to me, that means he is still going to get his hands dirty and he will still want to drill for oil. coming up, the business of brewing beans. we are talking coffee. that's coming up next on "commodities edge." ♪ >> the european green deal is

our new growth strategy. it is a strategy for growth that gives more back than it takes away. and we want to really make things different. we want to be the front runners in climate friendly industries, in clean technology, in green financing. but we also have to be sure that no one is left behind. alix: that was ursula von der leyen's monumental green moment.

the european commission unveiled their aggressive climate targets that will be carbon neutral by 2050 and they raised the reduction target to as much as 55%. the big question is how much money is this going to take? bloomberg economics might have an answer. according to its analysis, it's going to take a 1970's style investment including additional investment of almost 2.5% of gdp which is about 400 billion euros per year and a 10% increase in overall investment over the next 30 years. it will rely heavily on private funding and maybe fiscal rules could be revised to make room for this green investment. speaking of, it's time for the bnef brief, analysis on clean energy, advanced technologies , and commodities. today we found that clean energy investment stalwarts are seeing investments fall. joining me is louisa from bloomberg nef.

when you take a look at that, what does that tell you about who is leading in the clean energy investment? louisa: you are right. investments have shifted from traditional winners. overall investment numbers have dropped by a lot and this has a lot to do with the fact that giants like china, india and brazil saw numbers dropped. china is the main country to blame. the country alone saw investments did by $3.6 billion but we are also seeing exciting news for new markets. this is the case for vietnam, argentina and ukraine, would saw in 2018 record investment levels. alix: we have a chart that shows vietnam and how much the investment has gone up. is that a fair thing to look at? the costs will be so low. what is driving that kind of investment? luiza: vietnam is a remarkable

market to look at. investment has jumped tenfold from 2017, reaching about $6 billion. this was mainly driven by tariffs on clean energy contracts that made, especially the solar market, attractive for developers and investors. alix: who is footing the bill for all of this? luiza: when we look at emerging markets in general, most of the capital is coming from local sources. this is mainly because of china and brazil, who rely a lot on local players. however, something interesting is that last year, we saw foreign investment for clean energy projects peeking in emerging markets with $24 billion. if we look at who is putting the the top investor, not

only in 2018 but also over the past 10 years, they've invested $7.6 billion into energy projects around emerging markets, most of it in latin american nations such as chile, brazil and mexico. about $2 billion in 2018 alone. among the top five for 2018, we also have actis. alix: thank you so much, i appreciate that. let's turn to commodity in chief. we focus on one executive in the commodity world. first, a closer look at some of the challenges in the coffee industry long-term. coffee farmers need more buzz. prices are up 40% since mid-october on deficit concerns. but the industry still suffers from things like overproduction and volatility. industry consolidation putting a lot of control in the hands of two big suppliers, brazil and vietnam, and climate change, which can alter how a crop survives, grows, and tastes. low prices create decade-long

boom and bust cycles that are hard to navigate. take brazil, it is the largest grower and shipper of arabica beans, like the ones starbucks uses aired the crop missed -- uses. the crop missed expectations this year. brazil incentivize farmers to hold beans rather than sell them. the result is a price spike for some buyers. cafe.illy this roaster wants to de-commoditize the industry. long-term supply contracts so growers have cash to innovate, improve genetics and renovate plantations. illy cafe is also one of many roasters that signed a declaration with the international coffee organization, which is exploring a funding vehicle using public and private money to stabilize pricing and production. the market needs a reliable, long-lasting jolt of caffeine.

alix: i recently caught up with asked how much investment is needed. >> it needs to be $1 billion per year in order to create resilience. the problem is how to allow growers the success to finance. alix: what do you do? >> the cost of the producing countries is twice as high as that in the consuming countries. harvests andve access to credit. the solution is to mobilize institutional funds as well as the philanthropic funds and impact investment by simply providing collaterals to the growers's investment. a thing as simple as a long-term supply contracts can represent sufficient collateral in order to allow the grower to access the finance. alix: what are roasters going to

do? what is the ico layout and what is your role in it? andrea: first of all, i think one of the most important strategies is to direct source coffee from growers. traders can facilitate because traders can sell contracts providing full traceability where the coffee comes from and intermediate a contract between the roaster and the grower. this is one way to have a price fixed on a long-term and having a price which can take account the cost of production and not only the spot prices on the stock exchange. this is one tactic. as i said, the long-term contract can also represent the collateral for finance. other things can be that we build a fund, we are now going to investigate the ability for a fund for coffee sustainability.

alix: do you need coffee demand to grow at 2% to make this worth your while? if it drops below that, does that affect how you allocate? andrea: rather than considering the volume increase it would be important to consider the value increase. it would be really necessary in the market in the future to avoid, to fall once again in the low price trap. this 10 year cycle is really detrimental to the industry and it is stupid because of overproduction. if you can better control production and maintain a stable supply and demand. alix: what price do you think is the best? andrea: minimum $1.50 per pound. a price that is really allowing

to cover all cost of production. alix: what is the top? the price you can sustain? andrea: $1.50-$2.00 per pound. that is really allowing to cover all cost of production. to have a decent cash flow for growers so they can improve the plantation and deliver a quality that is good for the consumer to pay a premium. alix: that was my interview with andrea illy. oh tannenbaum, how expensive are thy branches? this year, your christmas tree is going to be more expensive because of a drop in production. growers are struggling to remain profitable as a droughts and other weather disasters increase. that is all bad news for your wallet. christmas prices have increased

since 2008. the average price of a tree is $76 according to industry reports. that does it for "commodities edge," this is bloomberg. ♪ [ electrical buzzing ]

[ dramatic music ] ahhhh! -ahhhh! elliott. you came back!

carol: welcome to "bloomberg businessweek." i'm carol massar. jason: i'm jason kelly. carol: this week, tolkien valley is listening to you. jason: and taking a bite out of lululemon again. turned to helex