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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: All right, lots of news flow here today, one of

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Speaker 2: which involves the Supreme Court. President elect Trump asked the

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Speaker 2: Supreme Court to halt his hush money sentencing. Nick at

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Speaker 2: the latest on that, Greg Store, he is a Supreme

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Speaker 2: Court reporter for Bloomberg News.

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Speaker 3: He's in Washington, DC. Greg, what do you think the

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Speaker 3: odds are that the Supreme Court will even hear this case?

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Speaker 4: Well, they're not nonexistent, at least when it comes to

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Speaker 4: halting the sentence, which is what Donald Trump is asking

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Speaker 4: for right now. So one of the things he's saying

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Speaker 4: in this filing is there is this notion that the

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Speaker 4: Supreme Court reiterated back in July in that big immunity case,

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Speaker 4: that when we have an issue like presidential immunity, that

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Speaker 4: that gets resolved before lower court proceedings go forward. And

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Speaker 4: Donald Trump is saying, at a minimum, let's put the

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Speaker 4: lower court proceeding, namely, my sentencing on hold while appeals

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Speaker 4: courts consider this immunity question that I'm arguing. And if

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Speaker 4: that's what the Supreme Court does, that almost certainly means

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Speaker 4: Donald Trump won't be sentenced anytime over the next four years.

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Speaker 5: So does that mean that it picks it back up?

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Speaker 5: Sentencing picks back up, like, come four years later.

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Speaker 4: You know, I haven't thought it quite that far along,

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Speaker 4: but it would certainly derail it in a major way.

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Speaker 4: There's also the substantive arguments that Donald Trump is making,

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Speaker 4: which is that, putting aside the timing of the sentence,

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Speaker 4: that I am immune from these charges. Now, these are

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Speaker 4: are just stemming from hust money payments he made to

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Speaker 4: Stormy Daniels, and he was convicted the thirty four counts

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Speaker 4: of hiding what he was doing. And what what Donald

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Speaker 4: Trump says is is that a lot of the evidence,

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Speaker 4: at least some of the evidence that prosecutors used, involved

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Speaker 4: my official acts as president, things that I was saying

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Speaker 4: on say, my official Twitter account, where I'm communicating about

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Speaker 4: matters of public concern. So what Donald Trump is hoping

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Speaker 4: to do is basically halt the sentencing right now and

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Speaker 4: then ultimately win a ruling on that immunity question, which

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Speaker 4: would essentially knock out the charges.

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Speaker 3: What's the smart betting money thinking here? At which way

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Speaker 3: we will the court go?

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Speaker 4: I'm not going to bet on this one. This is

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Speaker 4: of course I.

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Speaker 3: Could betting site that. I'm sure.

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Speaker 6: This is a.

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Speaker 4: Court, of course that ruled for him in a very

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Speaker 4: big way in July when it derailed the case that

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Speaker 4: accused him of trying to overturn his twenty twenty election loss.

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Speaker 4: The court conferred very sweeping immunity on presidents there in

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Speaker 4: a six ' three ruling. And importantly in that ruling,

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Speaker 4: they said you can't even use official acts as evidence

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Speaker 4: of things that a president might have done outside his

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Speaker 4: official capacity. So with that as a backdrop, Trump certainly

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Speaker 4: has a Supreme Court that's going to be very receptive

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Speaker 4: to what he's arguing. Here.

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Speaker 5: Just one more quickie before you go. If he is sentenced,

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Speaker 5: what does that actually look like when he then becomes president? Like,

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Speaker 5: what is that?

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Speaker 4: Yeah, well, one thing will not mean for sure is

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Speaker 4: is prison time. That is something that Judge Marshan has

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Speaker 4: ruled out. So there's not that it will involve you know,

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Speaker 4: a certain amount of continuing process, no doubt. Undoubtedly, Judge

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Speaker 4: Marshawan and Peels. Course, if it goes beyond that would

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Speaker 4: be sensitive to the notion that this is not an

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Speaker 4: ordinary defendant, even though he would be a convicted felon,

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Speaker 4: and that the president does have duties and we'll try

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Speaker 4: to find ways to limit the intrusion on the presidential duties.

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Speaker 5: All right, Greg Store, thanks, Matt, really appreciate it. He's

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Speaker 5: a Bloomberg Senior Supreme Court reporter joining us on President

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Speaker 5: Trump trying to delay the hush money case sentencing with

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Speaker 5: the Supreme Court.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch the program

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Speaker 1: live weekdays at ten am Eastern on Applecarplay and Android

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Speaker 1: Auto with the Bloomberg Business app. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station.

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Speaker 1: Just say Alexa play Bloomberg eleven thirty.

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Speaker 5: This is Bloomberg Intelligence Radio. We are broadcasting to live

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Speaker 5: from Earn after Broker Studio right here in midtown Manhattan.

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Speaker 5: You can also check us out on YouTube as well.

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Speaker 5: So here is our next guest is an energy CEO.

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Speaker 5: The company is crc it's California Resources. Now, this is

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Speaker 5: an oil production company. It definitely has that, but it's

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Speaker 5: also one of the first companies to get a permit

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Speaker 5: from the government to store carbon into rock, a key

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Speaker 5: part of how to decarbonize our society. You got carbon,

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Speaker 5: you put in a rock, it goes away from the

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Speaker 5: from the environment. It also recently closed a deal to

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Speaker 5: become the largest oil and gas producer to capture CEO two,

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Speaker 5: let's get more on this. Francisco Leon is CEO of

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Speaker 5: CRC Francisco. Paul's going to ask it, so I'm just

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Speaker 5: going to.

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Speaker 6: Go first, what do you do?

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Speaker 7: Good morning, Good morning. So we're great intro things for

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Speaker 7: having us. California Resources does energy in California, oil and gas,

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Speaker 7: as you said, power, So we take care of the

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Speaker 7: present needs of California's in terms of providing these products

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Speaker 7: that make our lives better.

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Speaker 8: But we're investing in the future. We're focused on the.

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Speaker 7: What's next, and the what's next is to have a

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Speaker 7: world that's decarbonized. That that's the world that has lower emissions,

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Speaker 7: and we're investing in technologies that ghet us there. And

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Speaker 7: as you pointed out, we received a permit from the

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Speaker 7: Environmental Protection Agency after three years of discussions, data sharing,

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Speaker 7: modeling to be able to safely inject, capture, transport, and

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Speaker 7: inject shield two from industries critical industries that we have

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Speaker 7: in the state, power, cement, refining and store them safely downfall,

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Speaker 7: creating a closed loop, effectively ecosystem that has the same

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Speaker 7: great products but without emissions.

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Speaker 8: So we're really excited. What's a big time.

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Speaker 7: It's a long time coming, big day for California resources,

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Speaker 7: but also a big day for California that wants to

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Speaker 7: lead the nation and the world in environmental leadership.

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Speaker 8: And we're so happy to be the first and we're

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Speaker 8: ready to get to work.

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Speaker 3: So just for the lay people like me, how does

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Speaker 3: carbon caption storage work? Where does this Where do you

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Speaker 3: put this carbon?

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Speaker 8: Yeah, so think about it.

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Speaker 7: So as being an gas company, we extract products from

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Speaker 7: the earth and oil gas and it credates reservoirs that

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Speaker 7: have been created for four thousands, millions of years that

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Speaker 7: have these deposits are great. Also, container storage tanks what

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Speaker 7: we call the bolts, to be able to store things

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Speaker 7: back in there. So as we extract natural gas, we

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Speaker 7: use it for heating, for our power generation, for fertilizer.

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Speaker 7: One of the by products is it as you burn

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Speaker 7: the gas as an example, it creates emissions and CEO two.

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Speaker 7: So what we're planning to do is basically taking going

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Speaker 7: to the reverse, going back and doing taking back to

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Speaker 7: COEO two that's been burned from the gas, capturing it

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Speaker 7: from the point source. So we would go to factories

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Speaker 7: in manufacturing and rather than having the smokesta act that

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Speaker 7: goes up into the atmosphere, we're going to close that

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Speaker 7: loop and we're going to bring that seal to back

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Speaker 7: basically back to where we started, back into the rest

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Speaker 7: of war and fill it back up.

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Speaker 5: Francisco, is this just from your operations or have we

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Speaker 5: struck deals with as you mentioned, hard to abate industries.

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Speaker 8: Both, so we will take care of our own emissions.

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Speaker 7: We have power generations and so we will start with ours,

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Speaker 7: but we struck many deals now over multiple months with

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Speaker 7: industries hard to ebate across the board from other power

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Speaker 7: power plant generations. We're also talking clean hydrogen ammonia plants.

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Speaker 7: We're partnering with another public company called that Power. So

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Speaker 7: it's about making industry better and to better serve our community.

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Speaker 8: So it's across the board.

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Speaker 5: Our insiony to that point, how did pricing come about? Like,

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Speaker 5: if you can tell me what pricing is, that would

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Speaker 5: be super. But if you can't, can you tell me

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Speaker 5: how hard it is to come to a price? Well,

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Speaker 5: you'll capture it and store it and the companies will

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Speaker 5: be willing to pay for it.

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Speaker 7: Right, So it starts with really there's government incentives. The

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Speaker 7: Inflation Reduction Act has a forty five Q code that

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Speaker 7: gives you an incentive. We also have a low carbon

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Speaker 7: fuel standard in California that allows you to stack the credit,

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Speaker 7: and we also pay a carbon tax in California. So

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Speaker 7: if you look at there's a bigger pie in California

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Speaker 7: than the rest of the nation in terms of incentives

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Speaker 7: or avoidance.

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Speaker 8: Of tacks that you can capture.

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Speaker 7: So as you think about it, all these incentives add

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Speaker 7: up to about one hundred and eighty dollars per ton

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Speaker 7: of a capture that you make.

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Speaker 8: Then you have the ability to split that across.

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Speaker 7: The value chain from captured to transport to storage. We

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Speaker 7: really lead with the storage the sub surfaces where our

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Speaker 7: main expertise is. So roughly speaking, it's about a fifty

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Speaker 7: to seventy five dollars per ton to store on the

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Speaker 7: ground is what We've been negotiating with all these counterparties,

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Speaker 7: and that allows us to have a model that has

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Speaker 7: attractive returns.

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Speaker 8: We partner with Brookfield. It's a model that makes money.

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Speaker 7: It gets launched off the ground, allows us to make

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Speaker 7: these big investments and gives us to infrastructure type returns

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Speaker 7: that actually could be also valuable for our shareholders.

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Speaker 8: So the business is just getting started.

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Speaker 7: We're entering into these partnerships and the pricing models starting

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Speaker 7: to take shape. But that's roughly the amounts that we're charging.

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Speaker 5: The most one mare core question Paul, okay, okay, And

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Speaker 5: then well, and then we can go do you keep

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Speaker 5: storing it in the ground or do you recycle it?

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Speaker 5: At some point? Can you reuse it?

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Speaker 7: Our plan is to have minutes storage, so keep it

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Speaker 7: on the ground. We have monitoring devices, stat of the

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Speaker 7: our monitoring devices to make sure it doesn't come back out.

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Speaker 7: So our plan is to grab it from the atmos

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Speaker 7: before it hits the atmosphere and keep it on their

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Speaker 7: ground in our fields.

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Speaker 8: Its permanent storage.

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Speaker 5: Hey, Francisco, thank you so much, really appreciation grad school story.

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Speaker 5: Francisco Lean a CEO of CRC. It's actually Chevron's hydrogen

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Speaker 5: project where you can sort of store hydrogen and then

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Speaker 5: reuse it. So they're more of like the energy storage company.

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Speaker 5: It's not permanent. You reuse it once utility wants that

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Speaker 5: hydrogen back. Just wanted to clarify that.

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Speaker 8: Very good.

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Speaker 3: It's a public and trade a company too.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Coarcklay and Android

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: Alex Steal, Paul Sweeney, we are live here in our

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Speaker 3: Bloomberg Interactive Broker Studio. We're streaming live in YouTube, Soheaver

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Speaker 3: YouTube dot com and startch Bloomberg pot Cast. I think

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Speaker 3: one of the attributes really over the last couple of

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Speaker 3: months a couple of quarters has been strong strong dollar,

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Speaker 3: higher yields despite the FED cutting rate. So it's just

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Speaker 3: been really a reflection of US economic exceptionalism relative to

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Speaker 3: a lot of our trading peers around the world. One

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Speaker 3: of the questions is how do I manage the volatility

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Speaker 3: around all that stuff. Dave Aspell joins his co cio

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Speaker 3: Mount Lucas Management located in Newton, Pennsylvania. Dave, thanks much

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Speaker 3: for joining us here. Again, a lot of folks are

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Speaker 3: marveling at the continued strength of the US dollar. How

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Speaker 3: do you guys think about that? How do you guys

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Speaker 3: trade around that if at all?

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Speaker 6: Yeah, thanks thanks for having me on.

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Speaker 3: Yeah.

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Speaker 9: I think you said it exactly right at the start.

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Speaker 9: It's a US the story of US exceptional exceptionalism.

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Speaker 6: Everywhere.

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Speaker 9: The US is clearly doing better than Europe, it's doing

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Speaker 9: better than Canada, it's doing better than, you know.

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Speaker 6: Than the UK. And I think some of that is.

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Speaker 9: The left or the continued strength due to the policy

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Speaker 9: goals and the stimulus that we've seen, and then there's

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Speaker 9: definitely a Trump bump in forward activity, I think.

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Speaker 6: And for US, you know, we systematically.

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Speaker 9: Trade in in all of these markets, in fixed income

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Speaker 9: markets and currencies, and you know, continued trends for US

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Speaker 9: has been excellent. It's one of the only places you

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Speaker 9: can get short exposure to the fixed income markets where

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Speaker 9: you're benefiting from higher yields, and you know the same

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Speaker 9: thing from currency markets. So this type of volatility is

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Speaker 9: really good for for these strategies.

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Speaker 5: I mean, fair enough, where do you see the most volatility, yields,

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Speaker 5: commodities FX.

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Speaker 6: The most Volatiley. That's a great question.

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Speaker 9: I think being British, I've kind of got a bit

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Speaker 9: of a home bias, but I'd say it's probably it's

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Speaker 9: you know, it's the great British peso again. Today you

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Speaker 9: can see the palms getting whacked. Yields are starting to

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Speaker 9: get a little bit out of control. So I think

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Speaker 9: the dollar and yields, particularly particularly in the UK and

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Speaker 9: Euro Area, I think that's where we're seeing the most

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Speaker 9: volatility today. The pounds that I think at multi year lows,

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Speaker 9: and I think you're almost hitting five percent in ten

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Speaker 9: year ten year guilts.

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Speaker 3: So David just explain to us kind of the trading

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Speaker 3: strategy you guys employ at Mount Lucas.

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Speaker 9: Yeah, so we run systematic trend following strategies. They're one

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Speaker 9: of the one of the sort of the older types

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Speaker 9: of alternative strategies out there. Generally they do well when

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Speaker 9: volatility and markets increases. And what we're doing is we're

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Speaker 9: not trying to predict where markets go. We're just following trends.

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Speaker 9: So if things are going up, then we're long them,

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Speaker 9: and if things are going down then we're short them.

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Speaker 9: You know, you can make it as complicated as you like,

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Speaker 9: but it's route.

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Speaker 6: That's what it's doing.

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Speaker 9: So over the past few years, you've seen the dollar

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Speaker 9: go up, so we've been long the dollar, and you've

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Speaker 9: seen bond prices fall, so have been short bonds. You know,

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Speaker 9: we do this systematically. We reevaluate positions every day. We

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Speaker 9: do it in commodities as well. And what it is

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Speaker 9: is just it's a way to get exposure to volatility,

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Speaker 9: volatility in macro markets. And you know, what we're seeing

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Speaker 9: going forward, particularly with a new administration coming in, is

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Speaker 9: a more volatile world ahead.

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Speaker 5: I love that you said that. You're like, if it

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Speaker 5: goes up, we buy it, it goes down, we sell it. Like,

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Speaker 5: thank you. That's very clear. Now I can understand what

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Speaker 5: are you doing in the commanding market right now, what

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Speaker 5: trends are using we're seeing.

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Speaker 9: We've participated in the gold move. I mean that's continuing

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Speaker 9: to go up. I think there's a lot of uncertainly.

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Speaker 9: I mean it's partly a dollar trade. I think there's

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Speaker 9: partly some geopolitical tension in there, you know, as other

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Speaker 9: countries have been I guess either stockpiling gold or trying

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Speaker 9: to move out of the US dollar as far as

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Speaker 9: they can. But we're seeing gold go up. We've been

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Speaker 9: participating in that. Other areas of the commodity markets have

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Speaker 9: been have been very different, you know. You know some

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Speaker 9: of the some of the energy markets in a natural

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Speaker 9: gas we trade in has generally been going straight down

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Speaker 9: for years, and every now and again it gets cold

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Speaker 9: outside like now and it goes up a little bit.

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Speaker 9: But broadly there's loads of natural gas out there, so

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Speaker 9: you know, we're trading the grain markets as well that

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Speaker 9: those have been moving around. You know, the strategies did

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Speaker 9: really well throughout the period in twenty twenty two through

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Speaker 9: the Ukraine Russia War where grain markets got very tight

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Speaker 9: and grain grain prices went up a lot. And then

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Speaker 9: the best way you solve high prices is with high prices.

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Speaker 9: So what do people do over the next couple of

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Speaker 9: years If we've got really high grain prices, they plant

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Speaker 9: a lot more grain, and then over the last couple

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Speaker 9: of years they've fallen back down again. So we've participated

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Speaker 9: on the long side and participated in the short side.

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Speaker 9: We're pretty agnostic about where things go. As long as

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Speaker 9: it moves, we're happy.

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Speaker 3: I going to ask a technical trading question, when you

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Speaker 3: know the switch from the long side to the cell

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Speaker 3: side on a trade here? I mean, it seems easy

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Speaker 3: to buy stuff on it's going up, But when do

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Speaker 3: I know then's top that one? You guys, how do

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Speaker 3: you guys think about that?

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Speaker 6: Yeah, we do long term trend following.

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Speaker 9: I mean, there's lots of ways you can do it,

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Speaker 9: there's but what we do is we look at we

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Speaker 9: look at a chart of the price, we run a

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Speaker 9: long term moving average through it, and then if you're

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Speaker 9: above the moving average along, if you're below it, you're short.

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Speaker 9: You know, you can do it in different ways, with breakouts,

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Speaker 9: with different look back periods, and different ways to calculate

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Speaker 9: trends or but it's route. They all get you roughly

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Speaker 9: to the same place, right, I mean, if you look

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Speaker 9: at a chart of da AM, it doesn't really matter

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Speaker 9: how you end up which model you use for trend following.

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Speaker 9: You know, when something is moving a lot like that,

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Speaker 9: all of the models get you into the position.

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Speaker 6: It's just what it is is just the.

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Speaker 9: Repeated application of a simple process over time.

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Speaker 5: What do you guys do with the likes of like

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Speaker 5: bitcoin and crypto and stuff.

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Speaker 6: Yeah, we look at it. We try to.

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Speaker 9: We also try a macro fund and we tried to.

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Speaker 9: We tried to include it in there because at some

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Speaker 9: point now there's liquid.

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Speaker 6: Futures markets and you know, it's.

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Speaker 9: Been somewhat sort of blessed by the SEC. We sort

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Speaker 9: of think, well, is it a currency, is it a

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Speaker 9: store of value?

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Speaker 6: You know, probably some.

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Speaker 9: Portion of each of those, So we look to include it.

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Speaker 9: But the futures markets, and they're not as easy to

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Speaker 9: execute as you think in the crypto market. So the

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Speaker 9: currently we lot of look with interest from AFAR, but

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Speaker 9: don't we don't have positions currently.

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Speaker 3: Are you based in Newtown, Pennsylvania.

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Speaker 6: Yeah, that's right, just north of Philly.

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Speaker 3: That is in by the way, folks, if you want

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Speaker 3: a day trip anywhere around the metro NewYork area, that

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Speaker 3: whole part like Newtown, PA, the whole New Hoper awesome,

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Speaker 3: particularly in nice weather.

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Speaker 9: Yeah, that's a right, it's rolling. Bucks County is covered

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Speaker 9: Bridges County.

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Speaker 3: That's home to the Shadfest.

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Speaker 8: Yes in.

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Speaker 3: Yeah, Stockton Shadfest. So I kind of I grew up

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Speaker 3: around there, some beautiful Bucks County. How a brit found

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Speaker 3: his we're there. I have no idea, but good for you.

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Speaker 8: Dave Askepell.

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Speaker 3: We'll have you back on that interesting stuff. Dave Aspell,

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Speaker 3: Co Cio Lucas Management from lovely Newtown, Pennsylvania, home of

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Speaker 3: the George School. A bunch of my buddies went there

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Speaker 3: back in the day.

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