WEBVTT - OPEC Unlikely To Entertain White House's Output Request: Ellen Wald 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.720 at Bloomberg dot com slash podcast. Dr Ellen Wald joins 0:00:22.760 --> 0:00:25.800 as president of Transversal Consulting, which is also a Senior 0:00:25.840 --> 0:00:30.280 Fellow at Atlantic Council and a Bloomberg Opinion contributor. So, Ellen, 0:00:30.320 --> 0:00:32.920 thanks so much for joining us here again. A President 0:00:32.960 --> 0:00:37.120 Biden asking or suggesting to OPEC plus UH to maybe 0:00:37.120 --> 0:00:39.600 pump some more oil to bring the price down. What's 0:00:39.600 --> 0:00:41.360 going on there? And what do you think OPEC plus 0:00:41.400 --> 0:00:44.320 is going to do? Yeah, honestly, I don't think that 0:00:44.360 --> 0:00:47.320 OPEC plus is going to take this request all that 0:00:47.560 --> 0:00:50.919 seriously at this point, because there's so much else at 0:00:50.920 --> 0:00:54.880 play here other than OPEC plus is production, and in fact, 0:00:54.880 --> 0:00:58.720 ope plus just increased production by four thousand barrels a 0:00:58.800 --> 0:01:01.240 day in August and their ending to increase by another 0:01:01.320 --> 0:01:05.040 four hundred thousand barrels a day in September and increases 0:01:05.120 --> 0:01:07.679 of four hundred thousand barrels a day every month through 0:01:08.200 --> 0:01:11.480 December and even beyond. So I don't think OPEC is 0:01:11.520 --> 0:01:14.680 going to be particularly receptive to this. I think that 0:01:15.120 --> 0:01:17.640 that you know, they're going to say, well, look if 0:01:17.680 --> 0:01:20.000 gasoline prices are up in the US, where the other 0:01:20.080 --> 0:01:24.080 factors demand is up. Um, there's also been issues with 0:01:24.400 --> 0:01:26.960 supply chains. Some of there aren't enough truckers and to 0:01:27.160 --> 0:01:31.319 some areas have seen um problems with gasoline prices because 0:01:31.520 --> 0:01:34.560 they just can't get enough gasoline. But the US as 0:01:34.600 --> 0:01:37.520 a whole has plenty of gasoline well on those kind 0:01:37.560 --> 0:01:40.160 of supply and demand balances, which is the end of 0:01:40.160 --> 0:01:42.560 the day, is basically what the oil market comes down to. 0:01:42.600 --> 0:01:47.000 You why do we expect that everything, all the adjustment 0:01:47.000 --> 0:01:49.480 has to come from the supply side, especially considering the 0:01:49.520 --> 0:01:53.200 delta variant that could in theory way on demand. I mean, 0:01:53.240 --> 0:01:56.040 could we get a correction of oil prices to a 0:01:56.120 --> 0:01:58.280 lower rate not because we need to pump more, but 0:01:58.320 --> 0:02:02.280 because people aren't gonna want as much oil well exactly. 0:02:02.320 --> 0:02:05.040 And also you have to look at things seasonally as well. 0:02:05.200 --> 0:02:08.520 Summertime is at the time of highest gasoline demand in 0:02:08.560 --> 0:02:11.519 the US. And after labor Day it typically drops off 0:02:11.600 --> 0:02:15.680 quite a bit. So we're already almost through the summer. UM, 0:02:15.720 --> 0:02:18.800 You've already got schools going back in session throughout the South, 0:02:18.919 --> 0:02:21.520 so gasoline demand will probably be down there, and then 0:02:21.520 --> 0:02:24.519 one school gets back in session in the North, we're 0:02:24.560 --> 0:02:29.040 generally see gasoline consumption drop. So it's you know, there's 0:02:29.080 --> 0:02:32.000 also other issues that play, Like the United States were 0:02:32.120 --> 0:02:35.880 down about two million barrels a day of our own production. UM. 0:02:35.919 --> 0:02:38.760 Part of that is due to oil companies not wanting 0:02:38.760 --> 0:02:41.600 to produce, wanting to be more conservative and pay down debt. 0:02:41.840 --> 0:02:44.680 But other issues include the fact that the Biden administration 0:02:44.720 --> 0:02:49.720 itself has this moratorium on issuing new leases to drill 0:02:49.800 --> 0:02:53.040 on federal land, and that attitude is making a lot 0:02:53.120 --> 0:02:57.000 of producers very hesitant to expand production that could help 0:02:57.040 --> 0:03:00.639 alleviate higher gas prices. ELM. When we talk to you, 0:03:00.680 --> 0:03:02.760 I always like to get your opinion on Russia because that, 0:03:03.120 --> 0:03:06.079 to me, from a supply perspective, is, you know, one 0:03:06.080 --> 0:03:08.000 of the wild cards out there. What are we hearing 0:03:08.040 --> 0:03:11.640 from the Russians these days? You know, it's interesting that 0:03:11.680 --> 0:03:14.680 you say that because UM, last week the e I 0:03:14.760 --> 0:03:18.200 A numbers showed that the US imported a lot of 0:03:18.280 --> 0:03:23.200 Russian oil and more Russian oil than they generally generally import, 0:03:23.280 --> 0:03:26.200 and so um we haven't had, you know, a formal 0:03:26.240 --> 0:03:29.360 statement come out of Russia yet, but there was a 0:03:29.440 --> 0:03:32.840 report on the I think he came from from spot 0:03:32.919 --> 0:03:37.360 mcnews saying that UM OPEC members haven't discussed US proposal 0:03:37.440 --> 0:03:41.000 for alliance to increased production, but consultations are not ruled out. 0:03:41.040 --> 0:03:43.320 In other words, well, maybe the US wants to join 0:03:43.360 --> 0:03:46.160 OPEC if they think they should have a say so. 0:03:46.360 --> 0:03:48.920 I think we're still waiting to see what Putin has 0:03:48.960 --> 0:03:51.520 to say about this. Well, speaking of Russia, they obviously 0:03:51.600 --> 0:03:54.600 we hald a great deal of influence in OPEC. Plus 0:03:54.680 --> 0:03:57.600 and you know, the price war between the Russian zaddies 0:03:57.760 --> 0:03:59.720 created quite a lot of drama in the oil market 0:03:59.760 --> 0:04:02.280 last year, and then this year there was some issue 0:04:02.320 --> 0:04:06.040 with the UAE in the latest opaque decision. Just talk 0:04:06.120 --> 0:04:09.320 to us about how the dynamics in the cartel are 0:04:09.320 --> 0:04:13.240 working right now? Are they as solid as they once were? Exactly? 0:04:13.280 --> 0:04:16.520 I think the dynamics are a bit more difficult now 0:04:16.680 --> 0:04:20.280 because the particularly because the u a E has really 0:04:20.279 --> 0:04:24.839 been asserting itself and also asserting its own uh financial interests. 0:04:24.960 --> 0:04:28.200 They want to produce more oil and they see that 0:04:28.279 --> 0:04:30.240 this would be better better for them, and so they 0:04:30.240 --> 0:04:33.720 are asserting uh, you know, their leadership within OPEC and 0:04:33.920 --> 0:04:37.520 from the kind of Saudi perspective, the latest OPEC deal 0:04:37.640 --> 0:04:40.960 was really hard fought and they're not going to want 0:04:40.960 --> 0:04:45.160 to do anything to upset that balance that they've finally 0:04:45.800 --> 0:04:49.599 gotten in the group. Dr Ellen Wall, thank you so 0:04:49.680 --> 0:04:51.680 much for joining us. You are one of our go 0:04:51.920 --> 0:04:55.280 to people here on the global energy market, supply and demand. 0:04:55.480 --> 0:04:59.160 It's a fascinating story. Dr Ellen Walled, President of Transversal Consulting, 0:04:59.200 --> 0:05:02.039 also a senior Fellow at the Atlanta Council and a 0:05:02.040 --> 0:05:07.000 Bloomberg opinion contributor, So she's got her hands full, all right. 0:05:07.040 --> 0:05:10.760 We hear a lot of companies talk about being carbon 0:05:10.839 --> 0:05:13.400 neutral or they will be carbon neutral by a certain 0:05:13.480 --> 0:05:17.320 data talking industries like the energy and industry, the airline industry, 0:05:17.320 --> 0:05:19.359 and it just really makes me wonder, what does it 0:05:19.400 --> 0:05:24.440 really mean to be carbon neutral? Dr Ac Rathi Rocky, 0:05:24.760 --> 0:05:29.040 climate energy reporter for Bloomberg Green UH knows and based 0:05:29.080 --> 0:05:32.599 in London, UH action, give us a sense here, what 0:05:32.800 --> 0:05:36.560 does it mean to be carbon neutral because boy, a 0:05:36.640 --> 0:05:39.200 lot of companies and industries are thrown out about and 0:05:39.480 --> 0:05:41.400 this is our big take story of the day. What do, 0:05:41.480 --> 0:05:44.640 what do? What do you have? So the scientific definition 0:05:44.720 --> 0:05:50.200 is rather straightforward, which is an entity if it emits 0:05:50.520 --> 0:05:54.640 x amount of emissions into the atmosphere, then it needs 0:05:54.640 --> 0:05:58.800 to remove that much amount of emissions from the atmosphere. 0:05:59.160 --> 0:06:02.800 So X minor sex equal to zero. That will give 0:06:02.839 --> 0:06:07.520 you a carbon neutral company, entity, country, what you might 0:06:08.040 --> 0:06:11.920 whatever you might want, and a shot. You're basically talking 0:06:11.960 --> 0:06:16.400 about offsetting your carbon emissions. Yet there's some question as 0:06:16.440 --> 0:06:21.039 to whether or not carbon offsets actually work. Yes, So 0:06:21.320 --> 0:06:23.880 the story that we looked at today is a new 0:06:23.920 --> 0:06:27.840 phenomena in the Island gas industry. And essentially these are 0:06:27.920 --> 0:06:31.039 shipments of either oil or most of the time liquefied 0:06:31.120 --> 0:06:35.000 natural gas. And what companies do is sell them as 0:06:35.360 --> 0:06:38.800 carbon neutral shipment um and the waves do it is 0:06:38.839 --> 0:06:41.760 they calculate the amount of emissions that would be generated 0:06:41.880 --> 0:06:44.919 from the production of the fuel to the burning of 0:06:44.960 --> 0:06:48.880 the fuel, and then they buy offsets from the open 0:06:48.920 --> 0:06:53.719 market at really cheap prices. The price that we courte 0:06:53.720 --> 0:06:57.279 in our story is about three dollars a ton um 0:06:57.440 --> 0:07:00.560 and then they are able to use this label to 0:07:00.720 --> 0:07:05.200 say that the said shipment is carbon neutral. But the 0:07:05.279 --> 0:07:09.640 problem is these offsets, which are really dirt cheap, don't 0:07:09.680 --> 0:07:12.760 actually remove carbon dioxide from the air. They do some 0:07:12.840 --> 0:07:15.840 good things, like in the case of our story, uh, 0:07:15.960 --> 0:07:19.520 these offsets were protecting trees in Zimbabwe, and in the 0:07:19.560 --> 0:07:22.800 process of protecting these trees, they were also helping the 0:07:22.840 --> 0:07:27.239 local population branch out and do things that don't require 0:07:27.320 --> 0:07:31.520 more land and yet go economically. But they do not 0:07:31.680 --> 0:07:35.560 remove the carbon dioxide which the liquefied natural gas shipment 0:07:35.840 --> 0:07:40.080 did produce when it was when it was sold and burned. Yeah, 0:07:40.200 --> 0:07:42.520 of shot in your Big Take story. I was fascinated 0:07:42.560 --> 0:07:44.320 by that, you know, the part of the story we 0:07:44.360 --> 0:07:48.960 talked about these villagers were you know, protecting for Just 0:07:48.960 --> 0:07:51.000 tell us about that part of your story there, because 0:07:51.000 --> 0:07:56.320 that was really interesting. So these are a large programs 0:07:56.440 --> 0:08:00.920 that were initially started under the United Nations and stramework. 0:08:01.680 --> 0:08:05.239 The goal was to create a market where rich countries 0:08:05.280 --> 0:08:07.640 which produce a lot of the emissions, like the U 0:08:07.800 --> 0:08:12.880 S or Europe, would find ways to reward developing countries 0:08:13.280 --> 0:08:16.680 that to cut their emissions faster, protect forests, and this 0:08:16.800 --> 0:08:20.640 trading system was supposed to exist to enable the transfer 0:08:20.640 --> 0:08:24.400 of money to help developing countries meet their climate goals, 0:08:24.440 --> 0:08:26.880 because you didn't want them to be in the same 0:08:26.920 --> 0:08:30.760 posilus that the rich country used initially to become richer. 0:08:31.480 --> 0:08:34.400 The trouble is that market never got created because of 0:08:34.520 --> 0:08:38.360 squabbling in the United Nations. What ended up happening instead 0:08:38.679 --> 0:08:43.280 was because these projects were being created. Uh, they created 0:08:43.280 --> 0:08:47.000 a voluntary market to sell these credits. And so within 0:08:47.120 --> 0:08:51.600 that the specific project we looked at, it's called the 0:08:51.679 --> 0:08:56.160 Kariba project UM. And what villages do over there is 0:08:56.480 --> 0:09:01.360 UM they protect the forest from being lost. So in 0:09:01.400 --> 0:09:05.480 two thousand Leabin, for example, UM, about half a percent 0:09:05.559 --> 0:09:08.520 of the forest was being lost every year. And when 0:09:08.559 --> 0:09:11.400 these people came through and started funding the projects, that 0:09:11.640 --> 0:09:15.120 rate felt salty about point two. So there's clearly been 0:09:15.240 --> 0:09:18.160 some impact, but it doesn't mean that they are planting 0:09:18.240 --> 0:09:20.959 extract trees and growing the forest and actually called capturing 0:09:20.960 --> 0:09:23.920 the carbon outside. Well, and how do you how is 0:09:23.960 --> 0:09:26.760 this decided you have to plan x many trees to 0:09:26.840 --> 0:09:29.040 offset x amount of carbon? I mean, how do you 0:09:29.080 --> 0:09:33.080 come up with those values? Yes, very good question and 0:09:33.240 --> 0:09:37.959 really tricky because I think about the way carbon travels. Right, 0:09:38.040 --> 0:09:42.040 Liquefied natural gas is being removed from deep underground where 0:09:42.040 --> 0:09:45.319 it's been sitting for millions of years. It's being then 0:09:45.360 --> 0:09:49.400 burned and put into the atmosphere. Trees, at best, they 0:09:49.400 --> 0:09:52.679 can capture the carbon and only keep it for their lifetime. 0:09:52.760 --> 0:09:55.320 The longest tree probably lives a thousand years, like most 0:09:55.320 --> 0:09:58.680 trees die within a few decades, and when they die, 0:09:59.080 --> 0:10:02.120 they degrade and release the carbon dioxide, so you're not 0:10:02.280 --> 0:10:06.360 replacing one to one. The fossil fuel carbon is an 0:10:06.400 --> 0:10:10.080 additional carbon in the system, whereas the tree carbon really 0:10:10.160 --> 0:10:13.920 just recycles in the system UM, and that's just tree. 0:10:14.040 --> 0:10:16.920 There are other solutions you can apply, such as UM 0:10:18.000 --> 0:10:21.040 using minerals, So you take a type of rock which 0:10:21.040 --> 0:10:23.640 can then react with carbon excel in the air and 0:10:23.679 --> 0:10:27.959 then trap that carbonat side forever as zonk rather than 0:10:28.040 --> 0:10:30.720 any other form, and that would be the equivalent of 0:10:31.080 --> 0:10:34.000 UM the fossil fuel. But when it's a nature based 0:10:34.040 --> 0:10:37.480 solution like the trees, the math is really hard to work. 0:10:37.520 --> 0:10:40.440 And that's why experts told us that just buying a 0:10:40.440 --> 0:10:45.559 few dollars worth of credits for your fossil fuels isn't 0:10:45.640 --> 0:10:48.600 going to make them carbon you so act you know, 0:10:48.920 --> 0:10:50.920 Kayley is a very cynical reporter, or so I'm gonna 0:10:50.920 --> 0:10:53.800 ask the question that she's dying to ask, which is basically, 0:10:53.840 --> 0:10:58.000 do carbon offsets really help stop climate change? Or is 0:10:58.080 --> 0:11:01.360 this just kind of a marketing employ And because I 0:11:01.400 --> 0:11:03.360 am a science reporter, I'll have to give you a 0:11:03.400 --> 0:11:08.040 nuanced answers. So the nwanswer is they help, but not 0:11:08.320 --> 0:11:12.040 as much as we think. So when we buy carbon offsets, 0:11:12.080 --> 0:11:15.200 if we're thinking we're buying one ton of carbon, we 0:11:15.280 --> 0:11:17.600 are not really buying one ton of carbon. We are 0:11:17.640 --> 0:11:21.800 buying probably a fraction of that. And so when corporations 0:11:21.960 --> 0:11:25.000 use carbon off sets to balance their carbon books, that 0:11:25.200 --> 0:11:29.400 is actually, in a way a fictitious transaction. That's happening. 0:11:30.160 --> 0:11:34.840 Carbon offsets or protecting forests is an absolutely key climate solution, 0:11:35.559 --> 0:11:39.480 But buying them through the offset market to be able 0:11:39.520 --> 0:11:42.040 to get rid of your carbon since isn't the way 0:11:42.080 --> 0:11:45.520 to do them. Um, what is the way that system 0:11:45.559 --> 0:11:47.480 needs to be created? And there's a lot of work 0:11:47.520 --> 0:11:52.120 going out around that, but the way carbon neutral commodities 0:11:52.160 --> 0:11:55.160 are being sold is definitely not the solution. All right, 0:11:55.240 --> 0:11:57.400 Dr shot Rothy, thanks so much for joining to really 0:11:57.440 --> 0:12:00.560 appreciate it. The climate and Energy reporter for bloombergreen with 0:12:00.640 --> 0:12:03.280 our big Take story of the day. And I'll tell you, folks, 0:12:03.280 --> 0:12:07.440 these big take stories are phenomenal reporting, great graphics, just 0:12:07.480 --> 0:12:09.559 a great read. And we have them every day here 0:12:09.600 --> 0:12:12.560 on Bloomberg. So go to Bloomberg dot com check those out. 0:12:12.640 --> 0:12:16.120 Some great reporting from our good folks at Bloomberg News. 0:12:19.080 --> 0:12:22.120 You know, when the pandemic hit, we saw corporate America, 0:12:22.360 --> 0:12:25.000 the big, big companies kind of rushed at the capital markets, 0:12:25.040 --> 0:12:26.920 the debt markets, the equity markets, to short up the 0:12:26.960 --> 0:12:29.920 balance sheets, to prepare them for an uncertain future. The 0:12:29.960 --> 0:12:32.600 question was and is still how about some of these 0:12:32.640 --> 0:12:36.360 small and mid size businesses, how do they deal with 0:12:36.640 --> 0:12:40.640 the pandemic and the following economic disruption. Well, Christiamo has 0:12:40.640 --> 0:12:42.920 a front row seat there. He's had a commercial banking 0:12:42.960 --> 0:12:45.800 at TD Bank located in New York. Chris, thanks so 0:12:45.840 --> 0:12:47.520 much for joining us. I'd love to get a sense 0:12:47.559 --> 0:12:52.040 of kind of what your clients, your customers were thinking 0:12:52.080 --> 0:12:54.839 about in the beginning of the pandemic, how they dealt 0:12:54.840 --> 0:12:58.560 with the pandemic um in terms of you know, staying afloat, 0:12:58.679 --> 0:13:01.160 shoring up their businesses ring up their balance sheets. What 0:13:01.240 --> 0:13:04.360 did you see? Yeah, well, thanks Paul, thanks for having me, 0:13:04.440 --> 0:13:07.600 and uh, I think as you opened it up, you know, 0:13:07.800 --> 0:13:10.680 your spot on small businesses had to deal with this 0:13:10.880 --> 0:13:14.760 very differently than large corporations. You know, as you know, 0:13:14.920 --> 0:13:17.760 small business is the backbone of the economy here in 0:13:17.800 --> 0:13:21.960 the US, and many of these smaller companies don't have 0:13:22.040 --> 0:13:26.240 the resources that large corporations have, and you know, we 0:13:26.280 --> 0:13:29.160 saw that they had to really rely on their banks 0:13:29.480 --> 0:13:34.319 and other accountants and attorneys and those types of vendors 0:13:34.840 --> 0:13:38.840 to help them, whether it was access to capital or 0:13:39.520 --> 0:13:43.400 executing on contingency plans as they dealt with this shutdown. 0:13:43.520 --> 0:13:46.240 And you know, I know, you know with us here 0:13:46.280 --> 0:13:49.240 at TD Bank, that's the role we played, um not 0:13:49.400 --> 0:13:52.080 just with being a top ten player in the Triple 0:13:52.160 --> 0:13:56.240 P program where we distributed over a hundred and thirty 0:13:56.720 --> 0:14:02.360 thousand loans with over twelve billion of capital to those clients, 0:14:02.360 --> 0:14:05.960 but really active as that trusted advisor. We talk a lot, 0:14:06.280 --> 0:14:08.760 especially with some of the large banks, about how consumer 0:14:08.840 --> 0:14:11.120 loan demand growth just hasn't really been there because they 0:14:11.200 --> 0:14:13.560 had so much cash patting their pockets after all the 0:14:13.559 --> 0:14:16.440 fiscal stimulus that isn't I know, necessarily the case for 0:14:16.520 --> 0:14:19.720 some of the small businesses. What has loan demand looked 0:14:19.720 --> 0:14:24.800 like post stimulus, post lockdowns? You know, as we recover well, 0:14:25.120 --> 0:14:27.680 you know, loan demand has been a little bit tepid, 0:14:27.880 --> 0:14:29.880 and there has been a lot of stimulus with the 0:14:29.920 --> 0:14:33.880 Triple P program and other programs for businesses too. I 0:14:33.880 --> 0:14:37.680 would say that there's cautious optimism. Many of the businesses 0:14:37.760 --> 0:14:41.480 that we've surveyed or spoke to believe that they're going 0:14:41.560 --> 0:14:45.520 to expand in the near future. They see revenues going up, 0:14:45.960 --> 0:14:49.240 but that pent up demand. Um, you know, there's some 0:14:49.320 --> 0:14:53.040 headwinds there too. You know, there's a shortage on labor. 0:14:53.360 --> 0:14:58.120 We're seeing rising wages, difficulty for small businesses to hire, 0:14:58.760 --> 0:15:02.520 there's a supply cha disruption right now. And then with 0:15:02.560 --> 0:15:05.040 the current delta variant out there, those are some of 0:15:05.080 --> 0:15:08.880 the unknowns that I would say are the cautious part 0:15:08.920 --> 0:15:13.080 of that optimism. I noted. Yeah, you know it's Chris, 0:15:13.120 --> 0:15:17.800 you know, lunchtimes, I'll walk around Midtown here and you know, 0:15:17.840 --> 0:15:22.200 you see obviously a lot of empty retail stores that 0:15:22.200 --> 0:15:26.280 that were there before the pandemic um and that's heartbreaking. 0:15:26.320 --> 0:15:31.240 But you're also seeing, you know, some signs saying coming soon. Um, 0:15:31.280 --> 0:15:34.920 so some new businesses starting to form. What are you 0:15:35.000 --> 0:15:37.720 seeing in terms of that kind of new business formation 0:15:37.760 --> 0:15:39.680 which I know for a bank is a is a 0:15:39.680 --> 0:15:43.000 source of loan growth. Well, you know your observations are 0:15:43.040 --> 0:15:48.360 accurate because new business formation has increased throughout the pandemic. 0:15:48.720 --> 0:15:53.000 Obviously there was some disruption, but anytime there's disruption, you 0:15:53.040 --> 0:15:57.560 know that that creates you know, both challenges but also opportunities. 0:15:57.640 --> 0:16:00.080 And there's a lot of capital on the sideline and 0:16:00.240 --> 0:16:04.160 still and we do see some excess liquidity from the 0:16:04.200 --> 0:16:09.240 stimulus and as people were harvesting cash in preparation, you know, 0:16:09.360 --> 0:16:13.320 during this shutdown. So you know, the entrepreneurial spirit I 0:16:13.320 --> 0:16:16.760 think is still strong and always very resilient. So with 0:16:16.840 --> 0:16:21.040 that disruption, you are going to see new business formations continue. 0:16:21.760 --> 0:16:25.640 Does the delta variant change activity? Have you seen any 0:16:25.720 --> 0:16:28.600 difference over the past couple of weeks as that has 0:16:28.680 --> 0:16:32.200 become you know, a more prominent force in conversation, Yeah, 0:16:32.240 --> 0:16:35.480 I think it will have businesses and entrepreneurs kind of 0:16:35.520 --> 0:16:37.760 pressed the pause button a little bit to see how 0:16:37.800 --> 0:16:42.480 this plays out. Um, there's a lot of obvious unknowns there, 0:16:42.520 --> 0:16:47.480 but there is an effort to deploy the capital that 0:16:47.560 --> 0:16:50.440 they've had through the stimulus and that they saved to 0:16:50.560 --> 0:16:52.640 expand their businesses. But I think they're going to be 0:16:52.680 --> 0:16:58.120 a little bit cautious to see how this plays out. Chris, 0:16:58.120 --> 0:17:02.280 how's the credit quality of your loan book? Look? Here? 0:17:02.360 --> 0:17:06.159 I mean, I've been pleasantly surprised that you know the 0:17:06.520 --> 0:17:08.320 number of bankruptcies. Although we did see a number of 0:17:08.320 --> 0:17:11.000 retail ones early in the pandemic, whether it's Brooks, Brothers 0:17:11.000 --> 0:17:14.800 and others, it seems like the government support has kind 0:17:14.840 --> 0:17:18.280 of really been important, played a big part. How's your 0:17:18.359 --> 0:17:21.000 kind of credit quality and your loan book looked? It's 0:17:21.000 --> 0:17:24.760 actually outperformed what we thought that downside from what our 0:17:24.880 --> 0:17:27.560 risk models would say, and I would say when we 0:17:27.600 --> 0:17:30.360 talked to clients early on in the pandemic when they 0:17:30.359 --> 0:17:36.000 were doing their projections downside projections, the actual performance has 0:17:36.080 --> 0:17:39.680 outperformed what their downside was, whether they took a more 0:17:39.720 --> 0:17:44.920 conservative approach and appropriately so as did h T D 0:17:45.119 --> 0:17:49.399 and many banks. Um, we are seeing that performance um 0:17:49.520 --> 0:17:52.800 be stronger than we anticipated. All right, Chris, thanks so 0:17:52.880 --> 0:17:55.359 much for joining us. We really appreciate getting your thoughts there, 0:17:55.359 --> 0:17:58.439 are getting a good look at small and midsize market 0:17:58.720 --> 0:18:01.399 from a loan perspective. Chris Giammo, head of commercial banking 0:18:01.440 --> 0:18:07.719 for TD Bank, President and is having some week in 0:18:07.920 --> 0:18:12.040 the halls of Congress this week. Billion dollar infrastructure bill, 0:18:12.600 --> 0:18:16.320 three point five trillion dollar budget, uh, kind of winding 0:18:16.359 --> 0:18:19.320 its way through the halls of Congress. Let's get an 0:18:19.520 --> 0:18:22.080 update on kind of how we should be positioning these 0:18:22.200 --> 0:18:27.000 legislative wins. Genie shanon Zano, Bloomberg Politics contributor and a 0:18:27.080 --> 0:18:30.080 professor of political science at Iona College, joins us on 0:18:30.119 --> 0:18:33.920 the phone. Genie, it seems like President Biding can take 0:18:33.960 --> 0:18:37.080 a victory lab pretty soon if he chooses to. What 0:18:37.080 --> 0:18:40.560 do you think he did yesterday? We heard him, you know, 0:18:40.880 --> 0:18:43.680 a little bit upstaged a bit by Governor Cuomo. But 0:18:43.760 --> 0:18:46.119 besides that, the White House was able to take a 0:18:46.160 --> 0:18:49.320 little bit of a victory lap. But they were careful 0:18:49.359 --> 0:18:51.880 to say this is just the first step. The passage 0:18:51.920 --> 0:18:54.399 of the biff, the infrastructure bill you mentioned at about 0:18:54.400 --> 0:18:58.480 one trillion and early this morning, after a long marathon 0:18:58.720 --> 0:19:02.360 voter rama, the passage just on a Democratic line of 0:19:02.400 --> 0:19:07.359 the three point five trillion dollar reconciliation bill. Um, those 0:19:07.400 --> 0:19:10.280 two things they want to take in tandem to the 0:19:10.320 --> 0:19:12.639 House and they want to try to move forward. But 0:19:12.800 --> 0:19:15.520 still at this point he can't quite take that victory 0:19:15.560 --> 0:19:18.760 lap he wants to because it could be maybe fall, 0:19:18.840 --> 0:19:22.280 maybe some people even say early winter before these bills 0:19:22.320 --> 0:19:25.000 get to his desk. So still a ways to go. Yeah, 0:19:25.000 --> 0:19:27.720 So Jennie, let's focus on the House because Nancy Pelosi 0:19:27.840 --> 0:19:30.560 might have her work cut out for her here wrangling 0:19:31.160 --> 0:19:34.240 the different sides of the Democratic Party, the progressive specifically, 0:19:35.240 --> 0:19:37.439 what do you expect will happen in the other chamber. 0:19:38.280 --> 0:19:40.560 That is what we are watching, and as you mentioned, 0:19:40.600 --> 0:19:45.000 it's all about Nancy Pelosi keeping these Democrats together. So 0:19:45.080 --> 0:19:49.040 you have the progressive Democrats who are really focused on 0:19:49.119 --> 0:19:53.080 this reconciliation bill, this big soft infrastructure bill, if you will, 0:19:53.160 --> 0:19:55.600 that's what they want to see past. Yet you've got 0:19:55.640 --> 0:19:58.639 the moderates and again all of these people facing re 0:19:58.760 --> 0:20:02.000 election a too. They want to move forward on the 0:20:02.080 --> 0:20:06.320 hardcore infrastructure, that one trillion dollar bill, and Nancy Pelosi 0:20:06.440 --> 0:20:09.080 so far has been very clear she will not move 0:20:09.160 --> 0:20:12.679 one without the other. Some people say she may maneuver 0:20:12.800 --> 0:20:14.840 a little bit on that so far she has not, 0:20:15.240 --> 0:20:17.800 so that is the big task for Nancy Pelosi. She 0:20:17.920 --> 0:20:21.720 only has a three vote margin, so with anybody peels off. 0:20:21.920 --> 0:20:24.080 And just to give you one example, look at the 0:20:24.080 --> 0:20:27.679 debate over the salt. We have some New Jersey, New 0:20:27.760 --> 0:20:32.120 York representatives saying no salt, no deal. Three of those 0:20:32.119 --> 0:20:34.520 people pull off, and it's dead in the water. You 0:20:34.600 --> 0:20:36.919 flip over to the Senate. And already this morning we 0:20:36.960 --> 0:20:40.320 hear Joe Manchin Kristen Cinema saying three point five trillion 0:20:40.440 --> 0:20:43.959 too big for them and their constituents. So this is 0:20:44.040 --> 0:20:46.360 something of a tight rope that it's going to be 0:20:46.440 --> 0:20:51.040 fascinating to watch, but very perilous for both Nancy Pelosi, 0:20:51.119 --> 0:20:54.359 Chuck Schumer, and of course the White House. No salt, 0:20:54.480 --> 0:20:56.600 no deal. For someone who lives in New Jersey, I 0:20:56.600 --> 0:20:59.639 can I can understand that I'm in New York and 0:20:59.680 --> 0:21:03.040 I and to pactly. So, Gene, is this I mean, 0:21:04.000 --> 0:21:06.440 if you step back and you're the White House, how 0:21:06.520 --> 0:21:09.159 big a win would this be? Or is this something? 0:21:09.480 --> 0:21:10.800 Or is there still more to do? I mean, and 0:21:10.840 --> 0:21:13.080 I'm just wondering is the White House going to take 0:21:13.119 --> 0:21:16.640 this as all right? We really have some strength here 0:21:16.640 --> 0:21:18.760 and we can maybe get some more things done. How 0:21:18.760 --> 0:21:20.480 do you think the White House is venus whole process? 0:21:21.040 --> 0:21:23.720 They have got to be very, very pleased so far 0:21:23.800 --> 0:21:26.119 with how this have gone has gone, and they should 0:21:26.119 --> 0:21:28.720 be applauded. They have not taken a hands off approach. 0:21:28.800 --> 0:21:32.040 Previous White Houses have tried to do that. Let Congress negotiate, 0:21:32.400 --> 0:21:35.960 not this White House. They have been intimately involved. But 0:21:36.080 --> 0:21:38.840 you know, if they are able to do this, this 0:21:38.840 --> 0:21:41.680 will be the biggest change to social welfare in the 0:21:41.800 --> 0:21:44.720 United States since the nineteen sixties. I will be j 0:21:44.880 --> 0:21:48.600 in the Great Society. This would be a monumental shift. 0:21:48.880 --> 0:21:52.679 But again I want to underscore if if both of 0:21:52.720 --> 0:21:55.720 these bills pass in tandem, and again it is a 0:21:55.760 --> 0:21:59.359 perilous path forward, no room to maneuver in the Senate, 0:21:59.359 --> 0:22:02.200 and just three votes in the House. So again, this 0:22:02.320 --> 0:22:06.880 gives any single representative or senator outside voice to say, 0:22:06.920 --> 0:22:09.240 you know what, no salt, no deal, or whatever you 0:22:09.240 --> 0:22:11.679 want to fill in on that blank where the salt is, 0:22:12.080 --> 0:22:14.040 and they can put the brakes on this thing. So 0:22:14.119 --> 0:22:17.760 there's a lot of negotiation going forward. So still and if, 0:22:17.880 --> 0:22:20.639 but if it does indeed all come to fruition, it 0:22:20.680 --> 0:22:24.160 will be a bipartisan win at least for the bipartisan 0:22:24.200 --> 0:22:28.000 package billion dollars of new spending for the president. Well, 0:22:28.160 --> 0:22:31.159 is he likely to get another bipartisan victory or is 0:22:31.200 --> 0:22:33.520 everything else going to be Democrat only from here on out. 0:22:33.960 --> 0:22:37.080 I think it's very, very difficult to imagine that we 0:22:37.119 --> 0:22:40.640 would see him be able to pass, for instance, police reform, 0:22:40.840 --> 0:22:44.440 voting reform, you know, immigration reform, all of these other 0:22:44.560 --> 0:22:48.040 big things he has promised. In the modern presidency, it's 0:22:48.119 --> 0:22:50.840 usually that first year you go big or you go home. 0:22:51.000 --> 0:22:53.480 He's already had COVID if he was able to get 0:22:53.520 --> 0:22:55.879 this huge win for him, But they are going to 0:22:55.960 --> 0:22:59.000 then be face to face with a re election for 0:22:59.119 --> 0:23:02.480 the mid terms, and Republicans feel like they can pick 0:23:02.560 --> 0:23:04.720 up the House and maybe the Senate, so they feel 0:23:04.720 --> 0:23:07.400 the wind at their back on this. Even though nineteen 0:23:07.480 --> 0:23:10.920