WEBVTT - Fed Chair Powell Remains Resolute: Riccadonna, Emons 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 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.680 at Bloomberg dot com slash podcast. It was fed chair 0:00:22.720 --> 0:00:26.360 at Jerome Powell. He's delivering his semi annual Monetary Policy 0:00:26.400 --> 0:00:29.160 report to the Senate Banking Committee, and Matt I think 0:00:29.160 --> 0:00:31.280 that the one takeaway I had here from some of 0:00:31.320 --> 0:00:35.120 his comments to date is that he's cautiously optimistic about 0:00:35.159 --> 0:00:38.760 the economic recovery and feels comfortable with where the FED 0:00:38.880 --> 0:00:40.960 is in terms of rates and in terms of uh 0:00:41.000 --> 0:00:45.000 continued bond buying, and in terms of how well they 0:00:45.040 --> 0:00:47.920 can control inflation as well. He doesn't think it's going 0:00:47.960 --> 0:00:49.400 to be the kind of problem that they won't be 0:00:49.440 --> 0:00:53.160 able to get their hands around. Um. The other's interesting thing, 0:00:53.320 --> 0:00:57.160 I think, and from j Powell, I guess this is characteristic. 0:00:57.600 --> 0:01:01.120 He's staying out of President Biden's way. He tried to 0:01:01.160 --> 0:01:04.720 avoid clashes with President Trump as well, but um, the 0:01:04.760 --> 0:01:08.679 opposite wasn't true. Uh, And maybe I guess I've gotten 0:01:08.760 --> 0:01:11.800 used to the President making comments about the FED chair, 0:01:11.840 --> 0:01:14.880 but I thought it was interesting today in John Pharaoh's 0:01:14.920 --> 0:01:17.679 interview with the new Director of the Council of Economic 0:01:17.720 --> 0:01:22.760 Advisors Brian Deese, Dee wouldn't answer Pharaoh's question as to 0:01:22.800 --> 0:01:26.119 whether Biden had met with Powell yet. He just wasn't 0:01:26.120 --> 0:01:29.160 gonna give any ground. And you know, Pharaoh falled up 0:01:29.200 --> 0:01:33.240 like three times. Um, des wouldn't say. I don't know 0:01:33.280 --> 0:01:36.600 if that's because Biden hasn't met with Chair Powell and 0:01:36.920 --> 0:01:39.680 he feels like that would be an irresponsible message to send, 0:01:39.800 --> 0:01:43.720 or whether um, this is just a new a new 0:01:43.800 --> 0:01:47.520 relationship between a president and a federal chair and a 0:01:47.560 --> 0:01:51.000 big change obviously since the last administration. Or let's get 0:01:51.000 --> 0:01:52.880 a recap of what we did here this morning from 0:01:52.920 --> 0:01:55.360 FED Chairman Chow. We're fortunate to be able to do 0:01:55.400 --> 0:01:57.720 that today, Matt. We've got Carl Ricka Dona, Chief US 0:01:57.760 --> 0:02:02.360 Economists for Bloomberg Economics, and then Emmons, Managing director Global 0:02:02.400 --> 0:02:05.400 macro Strategy at Medley Investors. And let's start with you. 0:02:05.560 --> 0:02:08.840 Carl here, what did you take away from FED Chairman's comments? 0:02:08.880 --> 0:02:12.160 Today any changes in the near intermediate term do you believe. 0:02:13.400 --> 0:02:17.000 Good morning, Paul. Really, the story here is that no 0:02:17.200 --> 0:02:19.880 news is news and in of itself here because it 0:02:19.960 --> 0:02:23.400 shows the FED that is unwavering and its policy stance 0:02:23.960 --> 0:02:27.840 despite the ongoing rise and treasury yields and the improvement 0:02:28.120 --> 0:02:31.160 improving tonally seen in the economic data. So the FED 0:02:31.320 --> 0:02:36.040 is very resolute in its commitment to provide policy accommodation, 0:02:36.120 --> 0:02:41.440 and they're showing no signs of starting to waiver as 0:02:41.480 --> 0:02:45.600 they're being tested with potential signs of an economy that 0:02:45.760 --> 0:02:49.760 really is surging forward with the pretty robust growth. The 0:02:49.840 --> 0:02:52.160 least one I want to make uh you to your 0:02:52.240 --> 0:02:56.720 question is that fast growth does not have to be inflationary. 0:02:56.760 --> 0:02:59.640 And so we can look back to the probably the 0:02:59.680 --> 0:03:04.480 best parallel episode, and that was the hard stop procession 0:03:04.520 --> 0:03:08.399 of two. At that time, it was a FED chair 0:03:08.480 --> 0:03:11.080 Paul Bulker slamming on the brakes of the economy and 0:03:11.120 --> 0:03:14.320 then releasing it. Uh. This time that hard stop is 0:03:14.320 --> 0:03:17.760 not caused by the FED. It's caused by lockdowns related 0:03:17.800 --> 0:03:21.079 to coronavirus, and we can unlock the brake, the economy 0:03:21.120 --> 0:03:24.839 can surge forward. And if nineteen eight three eighty four 0:03:24.840 --> 0:03:27.680 eighty five is a piece of precedent, and I think 0:03:27.720 --> 0:03:29.920 it may be Uh, we did not see a lot 0:03:29.960 --> 0:03:33.200 of inflation during that period. I want to ask Ben 0:03:33.200 --> 0:03:36.240 the question, but before I do, I gotta say hello 0:03:36.280 --> 0:03:39.839 to Carl. It has been so long, man, I've it's 0:03:39.880 --> 0:03:43.440 been since like Bloomberg rewind since I've seen you. And uh, 0:03:43.480 --> 0:03:45.760 it's great to hear your voice. Um, and have you 0:03:45.800 --> 0:03:49.240 on the program. Ben. With that. Ben and I are 0:03:49.320 --> 0:03:53.120 old old friends now we speak on daily basis. Um. 0:03:53.680 --> 0:03:57.080 What Ben? The other thing that that the Fed chair said, 0:03:57.120 --> 0:04:00.560 which you know Carl says, fast growth doesn't have to 0:04:00.600 --> 0:04:06.160 mean inflation. Um, the chair said, look, uh, serious deficits 0:04:06.200 --> 0:04:09.360 don't have to meet I mean inflation anymore. Do you 0:04:09.400 --> 0:04:13.120 think it's a concern at all that we're building up 0:04:13.160 --> 0:04:16.720 such a huge debt to GDP level and that he 0:04:17.000 --> 0:04:19.279 is sitting on such a gigantic balance sheet. Does that 0:04:19.440 --> 0:04:23.720 bother him? Should it? I met a good talk to 0:04:23.800 --> 0:04:26.599 you again. Yeah. I think what he was saying is 0:04:26.680 --> 0:04:30.880 that the link between inflation and deficits has weakened over 0:04:30.880 --> 0:04:33.920 the years, and he did say that it could change, right, 0:04:33.960 --> 0:04:36.719 But I think what he's saying too is that because 0:04:36.800 --> 0:04:40.760 of the twenty five years of disciflationary pressure, therefore the 0:04:40.760 --> 0:04:42.839 link between deficits and inflation is low. And if you 0:04:42.839 --> 0:04:45.080 didn't take that to your question of the debt though, 0:04:45.240 --> 0:04:48.360 and that matters to the economy clearly, I think him 0:04:48.400 --> 0:04:53.000 too probably understands that over time large large debt and 0:04:53.040 --> 0:04:56.279 deficits will drag down the economy again again adding to 0:04:56.400 --> 0:05:00.400 more disciflationary impression rather than inflation impression. And think that's 0:05:00.400 --> 0:05:02.640 just what he, I think, is trying to say with 0:05:02.760 --> 0:05:05.720 that that question. And I think additionally to that that 0:05:06.040 --> 0:05:08.840 the message seems to be overalled. Is the same today 0:05:09.200 --> 0:05:12.120 he didn't respond to a question about the linkage between 0:05:12.160 --> 0:05:15.880 multipolicy and and the asset valuation. So I do think 0:05:15.880 --> 0:05:19.200 that he sees inflation in the ASCID markets not so much, 0:05:19.200 --> 0:05:21.760 you really call me, I just think, you know, I 0:05:21.839 --> 0:05:24.159 never got past econ one oh one, so I'm probably 0:05:24.160 --> 0:05:27.839 the least qualified here. But I have always understood that 0:05:27.920 --> 0:05:32.200 when countries build up huge debts, what they really like 0:05:32.360 --> 0:05:35.840 to do is massively devalue the currency so that they 0:05:35.839 --> 0:05:38.440 don't actually have to pay That. Isn't that, Carl, Do 0:05:38.440 --> 0:05:43.720 you think that's always the plan? Well, Matt, I know 0:05:43.880 --> 0:05:45.960 that you're a rule breaker and you like to be 0:05:46.240 --> 0:05:52.159 the bad boy. So the rules are a little different 0:05:52.200 --> 0:05:54.240 for the U. S. Economy. So in what we would 0:05:54.279 --> 0:05:58.840 call an in country, an average sized economy or country, 0:05:59.240 --> 0:06:03.480 you run into the problems where deficits can be inflationary 0:06:03.680 --> 0:06:08.039 and cause currency devaluation and whatnot. In the U. S economy, 0:06:08.080 --> 0:06:10.760 that's a very unique role. It's the largest economy in 0:06:10.800 --> 0:06:14.360 the world, is the most powerful military in the world, 0:06:14.520 --> 0:06:17.360 and it's also a reserved currency. And so that means 0:06:17.400 --> 0:06:20.360 that in fact, looking back to the last recession, when 0:06:20.360 --> 0:06:23.520 we had the US credit rating downgrade, that actually proved 0:06:23.520 --> 0:06:26.920 a positive for treasury guilds UH and the currency actually 0:06:26.960 --> 0:06:32.200 appreciated because there was a flight of capital into the US. So, well, 0:06:32.279 --> 0:06:36.280 we certainly can't just run willy milly indefinitely higher deficits 0:06:36.279 --> 0:06:39.480 and whatnot. What's happening at the moment is said the 0:06:39.520 --> 0:06:43.840 deficit spending is reducing slack in the economy. In the 0:06:43.920 --> 0:06:45.960 best way for the US economy to be able to 0:06:46.000 --> 0:06:49.400 pay down those debts at some future date is to 0:06:49.440 --> 0:06:52.800 get back to full employment and full capacity as quickly 0:06:52.839 --> 0:06:57.360 as possible. UH. If it's a weak, uh, starved recovery 0:06:57.400 --> 0:07:00.839 like we saw after the O nine recession. Uh, then 0:07:01.120 --> 0:07:04.000 that that puts the economy a much weaker footing to 0:07:04.080 --> 0:07:06.280 make those debt payments. So get back to full employment, 0:07:06.320 --> 0:07:08.840 the tax revenue will come with it, and at that 0:07:08.960 --> 0:07:12.200 point then you can start to look at addressing these 0:07:12.400 --> 0:07:17.160 fiscal imbalances. So so Ben, you know, we're hearing again 0:07:17.200 --> 0:07:20.800 from chairman Palace, as Carl suggested, no surprise, but lower 0:07:20.960 --> 0:07:23.280 for longer. Is there a risk here that the market 0:07:23.360 --> 0:07:25.760 kind of moves past the Fed? Here we've seen a 0:07:25.760 --> 0:07:28.440 little lifting rates, We've seen uh, some steeping in the 0:07:28.520 --> 0:07:31.160 Yeel curve. Does the market kind of moved past where 0:07:31.160 --> 0:07:35.920 the Fed is and is comfortable? Yeah, it is somewhat happening, 0:07:36.600 --> 0:07:38.720 Ball because you know, you look at those rate high 0:07:38.760 --> 0:07:41.480 probabilities in FETs in the futures, right, they have moved 0:07:41.480 --> 0:07:44.880 off And it does show that the market is pricing 0:07:44.880 --> 0:07:49.200 in the recovery aided by the vaccination rollouts as at 0:07:49.240 --> 0:07:51.880 some point that the economy one is fully reopened and 0:07:51.920 --> 0:07:54.800 then it's a closer to full capacity, by which means 0:07:54.840 --> 0:07:58.200 inflation will be in the temporary above targets. And yeah, 0:07:58.240 --> 0:08:00.560 then it pulls forward, as we call it rate hike. 0:08:00.720 --> 0:08:02.520 That's the function of the steeping of the yield curve 0:08:02.600 --> 0:08:06.160 and the rise in nominal and real interest rates, and 0:08:06.200 --> 0:08:08.400 so that could indeed be somewhat ahead of what what 0:08:08.560 --> 0:08:11.440 ultimately the FAT will will do. I will say though, 0:08:11.480 --> 0:08:14.600 that so far it's been viewed as that they're not 0:08:14.760 --> 0:08:16.960 leaning against what the market is doing, and there was 0:08:17.000 --> 0:08:20.120 a question about that in the testimony earlier. Right, How 0:08:20.120 --> 0:08:23.840 the link is between multi policy and asset values. Yeah, 0:08:23.880 --> 0:08:26.440 that's a clear link. But there's also recognition that there's 0:08:26.440 --> 0:08:28.600 a lot of different elements going on at the same 0:08:28.680 --> 0:08:32.160 time in terms of how the recoverage price into the 0:08:32.200 --> 0:08:34.160 inter the financial markets. Right, how we're getting out of 0:08:34.200 --> 0:08:37.480 the pandemic to a full open economy, and it does 0:08:37.559 --> 0:08:40.880 lead to cep Ye curve and some expectation of feature rates. Ben, 0:08:40.920 --> 0:08:42.640 I'm looking at a just thirty seconds here, but I'm 0:08:42.640 --> 0:08:45.800 looking at a couple of charts that you emailed me yesterday. Um, 0:08:45.840 --> 0:08:49.800 if the herd immunity and you know, UM continues to rise, 0:08:49.880 --> 0:08:55.319 infections continue to drop, is the rate hike probability for UM, 0:08:55.360 --> 0:09:00.480 you know, December going to climb substantially? Yeah, that good math. 0:09:00.559 --> 0:09:03.200 It's it's it's definitely there that that's a correlation that 0:09:03.280 --> 0:09:05.600 I think we should take note of that the market 0:09:05.679 --> 0:09:08.800 is implying that it is really the stay at home trade. 0:09:08.840 --> 0:09:11.319 So that speakers we will talk about as being deflated 0:09:11.520 --> 0:09:13.760 today right that rotation is happening out of tech stay 0:09:13.760 --> 0:09:16.280 at home into the opening and I think that's the 0:09:16.400 --> 0:09:19.840 link with that rate high probability. The market is prishing 0:09:19.880 --> 0:09:23.440 in the economies out of the pandemic fully reopens and 0:09:23.480 --> 0:09:26.240 that's steep you curve dam reflects that, and that's where 0:09:26.240 --> 0:09:29.880 the rate type of probability rise comes from. So yes, 0:09:29.920 --> 0:09:32.920 there's a clear link between the reopening trade and the 0:09:33.000 --> 0:09:35.960 rate type probability. Ben, thanks so much for joining us. 0:09:35.960 --> 0:09:37.960 Pleasure to speak to you again. Ben Emmons there from 0:09:38.000 --> 0:09:42.600 Medley Global Advisors and Carl Ruka don are chief US economists. 0:09:42.640 --> 0:09:46.440 Wrapping up the comments from FED chairman Pal of course, 0:09:46.480 --> 0:09:48.400 will continue to bring your headlines from that event which 0:09:48.440 --> 0:09:54.880 is ongoing. Me and Greg we know a lot about 0:09:54.960 --> 0:09:58.560 cars when it comes to drive, trains and design, but 0:09:59.280 --> 0:10:02.680 when it comes to business of producing them. If I 0:10:02.760 --> 0:10:05.320 have a question, I usually call up Ed Ludlow, a 0:10:05.360 --> 0:10:08.960 reporter out in San Francisco. He knows what he's talking about, 0:10:09.000 --> 0:10:13.760 and he got a killer story. Um. Today he got 0:10:13.800 --> 0:10:17.040 the interview with the Lucid CEO, one of the hardest 0:10:17.040 --> 0:10:20.199 properties I gotta say on TV today, ed what did 0:10:20.200 --> 0:10:22.760 you learn? I actually learned quite a lot. You know, 0:10:22.760 --> 0:10:26.360 I followed the company closely for about two years. And 0:10:26.400 --> 0:10:28.640 the thing is, no one's really been interested in Lucid 0:10:29.120 --> 0:10:33.400 until all the spack rumors started right in recent weeks 0:10:33.400 --> 0:10:36.400 and months. But you know, Lucid is a company that 0:10:36.559 --> 0:10:40.040 is run by this guy, Peter Rawlinson, formerly chief engineer 0:10:40.440 --> 0:10:42.600 on Tesla's Model Esque, and for the entirety of the 0:10:42.640 --> 0:10:44.920 time I've known him, which is about three years now, 0:10:45.360 --> 0:10:49.160 he has preached prudence and discipline and patience in bringing 0:10:49.160 --> 0:10:52.199 the car to market. And what we learned is the 0:10:52.280 --> 0:10:54.199 kind of main takeaway from the interview is that during 0:10:54.200 --> 0:10:57.559 the due diligence process with the Churchill Capital spack Michael 0:10:57.640 --> 0:11:00.760 Klein Spack, that it was actually the guy at the spack, 0:11:00.880 --> 0:11:05.160 Michael Cline Klein and Alan Moulally, the former Ford CEO, 0:11:05.200 --> 0:11:09.240 who pushed Lucid to delay production because what they saw 0:11:09.440 --> 0:11:12.000 was a good product, you know, a luxury TV that 0:11:12.040 --> 0:11:15.320 has significant range about five dred and fifteen miles on 0:11:15.360 --> 0:11:18.280 a single charge, but they were worried that Lucid would 0:11:18.280 --> 0:11:21.720 experience the same quality control issues that Tesla went through. 0:11:22.200 --> 0:11:24.720 So that was kind of the biggest and most surprising 0:11:24.760 --> 0:11:27.320 takeaway from the interview. Today, it should be pointed out 0:11:27.400 --> 0:11:32.200 that Malali is I mean, he's the man when it 0:11:32.240 --> 0:11:36.439 comes to this stuff. He built the seven seven seven, 0:11:36.520 --> 0:11:39.320 notwithstanding the recent engine problems, which didn't have anything to 0:11:39.320 --> 0:11:42.600 do with Boeing, and he's the guy who turned around Ford. 0:11:42.679 --> 0:11:45.800 So when Bill Ford's company was, you know, breathing its 0:11:45.880 --> 0:11:49.080 last breath, he called up Alan and he flew in 0:11:49.160 --> 0:11:53.760 and fixed it for him. Right. So it's interesting because 0:11:55.280 --> 0:11:57.720 broadly speaking, if you look at the SPACs that have 0:11:57.760 --> 0:12:00.760 done deals with e vs, what is the one thing 0:12:00.800 --> 0:12:04.559 that they have in common. They have a former automotive 0:12:04.600 --> 0:12:08.439 executive somewhere near the top I'm thinking of course, like 0:12:08.520 --> 0:12:13.079 for example, nikola Um and the spack that took them public, 0:12:13.200 --> 0:12:17.840 they had Steve Gerski, former GM executive. In my conversation 0:12:17.920 --> 0:12:21.400 with Lucid CEO Peter Rolinson's day, he basically said that 0:12:21.440 --> 0:12:24.240 what happened was he took Ala mulally for a test 0:12:24.360 --> 0:12:27.400 drive in the car, and that it was like that 0:12:27.480 --> 0:12:31.400 conversation at the wheel in a pre production prototype that 0:12:31.760 --> 0:12:34.199 kind of brought about this idea that they should take 0:12:34.240 --> 0:12:37.880 their time now. Peter Rawlinson is an experienced was motive 0:12:37.920 --> 0:12:40.600 executive in his own right, you know, prior to Tesla 0:12:40.679 --> 0:12:43.640 he had jobs at Jaguar, Land Rover and other automakers. 0:12:44.120 --> 0:12:47.080 But it's interesting that that he rather than sort of 0:12:47.120 --> 0:12:51.040 going with the new age technology ev approach, there's some 0:12:51.160 --> 0:12:54.960 deference right to the old automotive head about what the 0:12:55.040 --> 0:12:57.720 right course of action, and it kind of echoes this. 0:12:57.920 --> 0:12:59.680 How I've known Peter in the time that I've interviewed 0:12:59.720 --> 0:13:02.280 him the last few years, it is patients and prudence. 0:13:02.679 --> 0:13:04.839 And when we started reporting on the back a lot, 0:13:04.880 --> 0:13:06.760 there's a lot of height from retail investors, a lot 0:13:06.760 --> 0:13:10.559 of excitement from within Lucid and sources about the need 0:13:10.600 --> 0:13:13.560 to get a car to market quickly. It's astonishing how 0:13:13.640 --> 0:13:16.760 quickly that narrative has changed overnight, and we're starting to 0:13:16.760 --> 0:13:21.000 see the red headlines crossing the Bloomberg terminal Regarding this interview, 0:13:21.040 --> 0:13:22.560 and one of the interesting things that came out is 0:13:22.600 --> 0:13:26.920 that the um you know it's the delay was called. 0:13:26.920 --> 0:13:30.200 But as you mentioned by the Churchill spack itself, but 0:13:30.200 --> 0:13:32.840 they're also getting some bridge financing from Saudi Arabia. Tops 0:13:32.920 --> 0:13:36.160 about that. Yes, So the transaction with Churchill won't close 0:13:36.240 --> 0:13:39.480 until sometime in the second quarter, right, And in the meantime, 0:13:39.679 --> 0:13:42.319 Lucid is hiring like crazy and it's trying to get 0:13:42.480 --> 0:13:45.439 its production lines fired up. They need cash. So what 0:13:45.480 --> 0:13:48.040 I'm told is that that's going to simply come from 0:13:48.120 --> 0:13:53.240 saudiast Public Investment Fund six million dollars bridge financing, however 0:13:53.280 --> 0:13:55.720 you want to put it. You know what's really interesting. 0:13:56.000 --> 0:13:57.840 In the run up to this deal, a lot of 0:13:57.880 --> 0:14:02.600 retail traders basically aid this back on speculation. But last 0:14:02.679 --> 0:14:04.679 night in the investor deck, we actually looked under the 0:14:04.720 --> 0:14:08.040 hood and saw what Lucid's plan is, and they're expecting 0:14:08.120 --> 0:14:11.600 negative free cash flow or cash burn of ten billion 0:14:11.720 --> 0:14:15.880 dollars between now and you guys talk about Uber right, 0:14:16.800 --> 0:14:19.280 not not pyem but spread out over that time, Babe, 0:14:19.360 --> 0:14:22.240 you guys, you you guys cover Uber right. You've talked 0:14:22.280 --> 0:14:25.880 about how cash burn with such a significant story around them, 0:14:25.920 --> 0:14:28.160 when would they be profitable and stop kind of growing 0:14:28.520 --> 0:14:31.600 and and think about profitability. Well, if there's one thing 0:14:31.640 --> 0:14:33.960 you learn on this beat, it's the prototypes are easy. 0:14:34.160 --> 0:14:37.080 Production is hard, and it all takes cash. It all 0:14:37.080 --> 0:14:40.160 takes capital, and you know they will have to go 0:14:40.240 --> 0:14:43.680 to the public markets again, um, the capital markets again. 0:14:43.720 --> 0:14:46.360 The Lucid CEO confirmed that during the interview. But but 0:14:46.400 --> 0:14:49.040 what's astonishing is that you know they are some way 0:14:49.280 --> 0:14:52.560 from profits, some way from meaningful revenue as well. And 0:14:52.640 --> 0:14:54.440 it kind of brings it back home that this is 0:14:54.480 --> 0:14:58.120 a pre revenue startup, right despite the eyewatering evaluation. If 0:14:58.120 --> 0:15:01.120 they keep it to ten billion, I'll be shut you know, 0:15:01.240 --> 0:15:04.520 because that's the kind of number that you overrun. I mean, 0:15:04.520 --> 0:15:07.560 it takes a billion dollars to develop a car from scratch. 0:15:07.800 --> 0:15:11.080 And that's if you're already GM or Ford, Right, that's 0:15:11.160 --> 0:15:13.880 if you already know exactly what you're doing, have your 0:15:13.880 --> 0:15:17.920 factories built, etcetera, etcetera. Let me ask you about Rivian, 0:15:18.000 --> 0:15:21.960 because this is the other kind of viable um competitor 0:15:21.960 --> 0:15:24.760 to Tesla. Lucid and Rivian really the only two that 0:15:24.800 --> 0:15:26.560 are likely to bring out a car in the next 0:15:26.920 --> 0:15:31.680 twelve months for sale. And you and Katie Roof and 0:15:32.640 --> 0:15:35.960 a guy with a really cool name. Keel Porter from 0:15:36.000 --> 0:15:38.760 the story about their I I P. Keel Porter is 0:15:38.800 --> 0:15:40.680 such a cool name. It sounds like he should be 0:15:40.720 --> 0:15:46.360 in a movie with Tom Keane and White. Yeah, in anyone. 0:15:46.440 --> 0:15:49.520 In any case, their IPO could come as soon as September. 0:15:49.680 --> 0:15:52.320 It's not a spack, it's legit I P O. Tell 0:15:52.360 --> 0:15:54.680 us about it. Yes, according to sources, that's what we're 0:15:54.680 --> 0:15:57.640 hearing that the Rivian is looking at an I P O. 0:15:57.720 --> 0:16:00.000 It's speaking to bank is they hide and you see 0:16:00.200 --> 0:16:05.720 fo whose former JP Morgan executive in the new year, Um, 0:16:05.840 --> 0:16:08.680 don't forget. Rivan is raised eight billion dollars to date 0:16:08.760 --> 0:16:12.040 from private rounds right with some very big name investors. 0:16:12.280 --> 0:16:15.400 More of ideality t rowe price a lot more. And 0:16:15.880 --> 0:16:18.560 they have been in stealth mode in the truest sense 0:16:18.640 --> 0:16:21.400 of the expression. You know, they really spent several years 0:16:21.440 --> 0:16:23.920 under the radar before going public with their design. Even 0:16:24.400 --> 0:16:27.200 what I'm hearing in Rivian is it's a really similar story. 0:16:27.480 --> 0:16:31.040 Lots of prudence and patients. They have a very big 0:16:31.040 --> 0:16:33.920 workforce of around three and a half thousand. They have 0:16:34.000 --> 0:16:38.760 retrofitted and Mitsubishi factory in Normal, Illinois rather than build 0:16:38.760 --> 0:16:41.400 a factory from scratch like Lucid's done. They have a 0:16:41.440 --> 0:16:43.880 lot and I cannot stress this enough, a lot of 0:16:43.960 --> 0:16:47.640 former Tesla engineers at the very senior level for engineering 0:16:47.680 --> 0:16:51.480 and manufacturing, and on paper they will be the first 0:16:51.520 --> 0:16:53.520 to bring a new EV product to market here in 0:16:53.560 --> 0:16:56.160 the US, a battery electric pickup in June. And I 0:16:56.160 --> 0:16:58.720 think you and I've talked about this map, but Americans 0:16:58.880 --> 0:17:02.880 by light trucks. They don't buy sedans, they don't buy hatchbags. 0:17:03.160 --> 0:17:05.160 People when I talks people about hatchbacks said they didn't 0:17:05.160 --> 0:17:08.320 even know what that is. So you know the anticipation 0:17:08.640 --> 0:17:13.119 right exactly. The anticipation here very top year, and the 0:17:13.160 --> 0:17:15.480 anticipation with Rivan is like, well, here we go a 0:17:15.480 --> 0:17:18.040 battery electric car that is actually in line with what 0:17:18.119 --> 0:17:22.320 Americans like to drive. And Jon ed that drove on 0:17:22.400 --> 0:17:25.840 the long way up with you and McGregor and Charlie Warman. Uh, 0:17:26.000 --> 0:17:28.720 you actually saw that Rivan truck and action. So that's 0:17:28.720 --> 0:17:32.560 a great advertisement advertisement, as you would say, Hey, thanks 0:17:32.600 --> 0:17:34.680 so much for joining us. We appreciate Ed Ludlow, reporter 0:17:34.720 --> 0:17:37.440 for Bloomberg News, joining us from San Francisco from red Headlines. 0:17:37.680 --> 0:17:41.480 Come here across matt Us ready sanctions to punish Russia 0:17:41.520 --> 0:17:44.679 over mal Valley. So it's very interesting in there. So 0:17:44.680 --> 0:17:47.440 we'll have to follow up with that story going forward. 0:17:49.280 --> 0:17:51.480 One of them, I thought the most interesting stories on 0:17:51.520 --> 0:17:54.720 the Bloomberg UM so far this week has been one 0:17:54.920 --> 0:18:00.679 about how Joe Biden will spend more money after this 0:18:00.720 --> 0:18:04.840 one point nine trillion dollar stimulus package on infrastructure, And 0:18:04.840 --> 0:18:07.120 we're gonna bring in Josh Deets to talk a little 0:18:07.119 --> 0:18:11.640 bit about that, his senior portfolio manager at Aberdeen Standard Investments. Typically, 0:18:11.640 --> 0:18:14.600 when I talked to somebody Josh at Aberdeen, UM, there 0:18:14.640 --> 0:18:19.359 in Edinburgh, but you are in New York City, UM, 0:18:19.440 --> 0:18:22.000 which is a place that probably needs a heck of 0:18:22.040 --> 0:18:25.240 a lot more spending than Edinburgh. Where do you think project? 0:18:25.640 --> 0:18:28.359 Where do you? Where do you think Biden? I guess 0:18:28.359 --> 0:18:33.120 Biden famously doesn't like LaGuardia, right, well, who does? Where 0:18:33.119 --> 0:18:37.360 do you think Biden's gonna start? So I think it's 0:18:37.359 --> 0:18:41.240 a combination. Right. When people talk about infrastructure, historically it's 0:18:41.240 --> 0:18:44.560 always been roads and bridges, but we actually think that's 0:18:44.640 --> 0:18:48.160 part of an infrastructure plan. But it's also about modernizing 0:18:48.200 --> 0:18:52.520 the economy, tackling climate change, and address some racial and 0:18:52.640 --> 0:18:57.920 social economic inequalities and part of broadband. Broadband right exactly 0:18:57.960 --> 0:19:00.520 as we're all working from home and our kids are 0:19:00.520 --> 0:19:03.040 in zoom school from home. It shows what an essential 0:19:03.080 --> 0:19:06.040 asset that broadband is currently. So I think it's going 0:19:06.080 --> 0:19:08.040 to be a combination of all of those. It's just 0:19:08.160 --> 0:19:11.960 not gonna be fixing Guardia Airport or the airports in general, 0:19:12.040 --> 0:19:14.280 but that will be part of it. All Right, Well, 0:19:14.359 --> 0:19:16.520 we have a little tunnel connecting New Jersey and New 0:19:16.600 --> 0:19:19.160 York that goes under the Hudson River. We need to 0:19:19.320 --> 0:19:22.160 fix that, uh, Josh, So see what you can do there. 0:19:22.560 --> 0:19:25.439 So talk to us a little bit about you know 0:19:25.520 --> 0:19:29.520 again this uh, this infrastructure bill. It seems like there's 0:19:29.520 --> 0:19:33.960 a little fatigue here on the you know, getting more 0:19:34.000 --> 0:19:37.399 money from Congress in terms of fiscal stimulus. Is there 0:19:37.400 --> 0:19:40.760 a bipartisan support for h kind of a more of 0:19:40.760 --> 0:19:45.720 an infrastructure type of playing Josh. Both Democrats and Republicans 0:19:45.760 --> 0:19:48.200 have talked about it for years, probably the only issue 0:19:48.240 --> 0:19:50.920 they agree on. And I would actually say what we've 0:19:50.920 --> 0:19:54.320 seen now in this one point nine billion ballots stimulus package, 0:19:54.359 --> 0:19:57.600 to me, it's more of a stabilization package. The infrastructure 0:19:57.600 --> 0:20:00.480 plan would actually be a stimulus for the economy because 0:20:00.480 --> 0:20:03.520 there's a multiplier effect and will have growth from that 0:20:03.880 --> 0:20:06.280 rather than just stabilized in the company. And that's why 0:20:06.280 --> 0:20:08.399 I think it's so important. He didn't meet with the 0:20:08.400 --> 0:20:11.159 Republicans a couple of weeks ago to discuss it, and 0:20:11.200 --> 0:20:14.040 I think this was part of his campaign pledged, and 0:20:14.080 --> 0:20:16.000 I think he really wants to get this done sooner 0:20:16.080 --> 0:20:18.520 then later, so we could have possibly have it by 0:20:18.560 --> 0:20:21.280 the stub or possibly the fourth quarter. Don't forget the 0:20:21.280 --> 0:20:24.560 other thing they agree on. AOC and Ted Cruz both 0:20:25.040 --> 0:20:28.280 thought it was stupid for Robin Hood to shut down 0:20:28.320 --> 0:20:31.920 Game Stop buyers UM. In terms of the money, I mean, 0:20:32.200 --> 0:20:35.600 two to three trillion is what you expect, right, So 0:20:36.200 --> 0:20:39.000 if you add that to the one point nine trillion 0:20:39.119 --> 0:20:44.200 support program and the other four and a half trillion 0:20:44.320 --> 0:20:48.399 we've spent, you're already getting towards ten trillion dollars of 0:20:48.480 --> 0:20:51.800 spending in like a four or five year period UM. 0:20:52.119 --> 0:20:55.320 That's got to be some kind of record. It is. 0:20:55.359 --> 0:20:58.040 It's tremendous how much our debt has grown, and it 0:20:58.240 --> 0:21:01.040 is worrisome. I will say the one part about an 0:21:01.040 --> 0:21:04.840 infrastructure package ten and should lead to growth, and it 0:21:04.880 --> 0:21:08.200 wouldn't be all up front like these other packages. This 0:21:08.240 --> 0:21:10.560 would be spent over an eight or ten year period. 0:21:10.800 --> 0:21:13.040 So hopefully we'll have growth and that will help the 0:21:13.160 --> 0:21:15.680 economy and hopefully pay down some of the debt we've 0:21:15.720 --> 0:21:19.320 accumulated over the past few months. All right, Josh, given 0:21:20.080 --> 0:21:23.680 the potential for more fiscal studius, again on the infrastructure side, 0:21:23.920 --> 0:21:28.359 how are you positioning your portfolio? So it's a combination. 0:21:28.400 --> 0:21:31.439 First of all, we view this as a free call option, 0:21:31.480 --> 0:21:34.199 so we were positioning or portfolio currently for what we 0:21:34.240 --> 0:21:37.399 still have expected spending, not from the government, from the 0:21:37.440 --> 0:21:39.840 private side, and a lot has to do with climate 0:21:39.920 --> 0:21:43.000 change and we see growth there. You know, we expect 0:21:43.080 --> 0:21:45.200 ten to twelve per cent or I should say low 0:21:45.240 --> 0:21:49.680 double digit growth and renewables over the next decade um 0:21:49.720 --> 0:21:52.520 to come. Right now, about the three quarters of the 0:21:52.560 --> 0:21:56.680 world judge by g d P has committed to net 0:21:56.760 --> 0:22:00.440 zero emissions, So we think renewables are be a way 0:22:00.480 --> 0:22:04.280 to play the infrastructure and the growth. And another part 0:22:04.320 --> 0:22:08.159 of it is um prepared for five G and we 0:22:08.200 --> 0:22:11.880 believe that macro towers are the most cost effective way 0:22:11.920 --> 0:22:14.399 to deploy wireless spectrum. So I would say in the 0:22:14.400 --> 0:22:16.560 renewable side you like quite a bit. And then from 0:22:16.560 --> 0:22:19.160 the five G and the towers just one other part 0:22:19.240 --> 0:22:21.600