WEBVTT - Israel, Oil Merger, Airlines, and Drug Development 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.720 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.000 --> 0:00:24.079 Let me get the latest from what is happening in 0:00:24.200 --> 0:00:27.120 Israel in that part of the world today. We're fortunate 0:00:27.200 --> 0:00:30.840 to be joined by Ambassador Alone Pinkas, former Israel General 0:00:30.880 --> 0:00:34.279 Counsel in New York, former chief of staffs to two 0:00:34.320 --> 0:00:37.880 foreign ministers, so certainly well versed in what is happening 0:00:37.880 --> 0:00:40.360 in that part of the world. Ambassador, thanks so much 0:00:40.360 --> 0:00:43.320 for joining us here. I guess over here in the US, 0:00:43.360 --> 0:00:46.960 we've seen lots of news reporting about massing of troops 0:00:46.960 --> 0:00:50.440 and materiel on the borders with Gaza. Can you give 0:00:50.479 --> 0:00:53.600 us the latest update, how where the situation is today 0:00:53.600 --> 0:00:55.000 and how do you think it might have unfold over 0:00:55.080 --> 0:00:56.240 the next several days. 0:00:57.160 --> 0:01:01.880 Well, thank you for having me to start with. Here's 0:01:01.960 --> 0:01:05.480 the here's the story. There's been an an amassing of 0:01:05.880 --> 0:01:13.080 as you as you correctly pointed out to of ground troops, tanks, artillery, infantry, 0:01:13.280 --> 0:01:17.800 armored infantry, and so on and so forth, supported by 0:01:17.880 --> 0:01:22.840 attack helicopters and what have you, mostly on the way 0:01:22.920 --> 0:01:27.800 on the northern and eastern parts of the gases trap. 0:01:28.480 --> 0:01:32.959 Now everyone assumes that you know a ground operation. A 0:01:33.080 --> 0:01:39.240 large scale ground operation is therefore a foregun conclusion. So 0:01:39.319 --> 0:01:42.240 let me put three question marks next to that. First, 0:01:42.480 --> 0:01:48.600 there is the US President Biden, Defense Secretary Lloyd Austin, 0:01:48.840 --> 0:01:53.440 and Secretary of State Anthony Blincoln, all three of which 0:01:53.760 --> 0:01:59.240 very politely but very adamantly warned Israel of the complications 0:01:59.280 --> 0:02:03.800 that will be inevitable if it so chooses to mount 0:02:03.880 --> 0:02:08.519 a massive ground operation, with Biden even going further in saying, tante, 0:02:08.800 --> 0:02:12.120 gentlemen with older ladies, and gentlemen if older respect, with 0:02:12.200 --> 0:02:16.120 older respect. You need to have an exit strategy, You 0:02:16.200 --> 0:02:19.840 need to have a political goal. What is your strategy here? 0:02:20.000 --> 0:02:23.080 What is your political goal? And I'm not sure that 0:02:23.120 --> 0:02:26.040 Israel has an answer for that. The second question mark 0:02:26.160 --> 0:02:30.360 pertains to the fate of two hundred and twenty two hostages, 0:02:30.919 --> 0:02:34.640 of which at least thirty three or babies and or 0:02:34.760 --> 0:02:40.120 toddlers a ground operation could endanger them. A ground operation 0:02:40.320 --> 0:02:47.000 could seal their fate in the most negative consequence and 0:02:47.040 --> 0:02:51.520 the most negative circumstances. So I don't know necessarily that 0:02:51.639 --> 0:02:57.320 a ground operation is conducive to secure their release. The 0:02:57.360 --> 0:03:01.400 third question mark is whether orn Israel has and I 0:03:01.400 --> 0:03:03.880 don't know the answer to that, to be honest, whether 0:03:03.960 --> 0:03:08.160 or not Israel has sufficient and adequate intelligence, sufficient and 0:03:08.320 --> 0:03:13.799 adequate what we call target a target back who are 0:03:13.840 --> 0:03:15.640 you going to hit, where are you going to hit 0:03:15.680 --> 0:03:21.079 it with? How much force committed to that objective? And 0:03:21.160 --> 0:03:24.200 you take all these three question marks and you understand 0:03:24.280 --> 0:03:27.640 why there has been amassing of troops but not yet 0:03:27.800 --> 0:03:28.680 a ground operation. 0:03:30.400 --> 0:03:34.280 I wonder about the aid that's being delivered to Gaza. 0:03:35.440 --> 0:03:39.960 You know, the world media seems to be pressing for more, 0:03:40.400 --> 0:03:43.600 and apparently Gaza is about to run out of fuel. 0:03:43.800 --> 0:03:47.280 Israel continues to point out that, hey, when fuel trucks 0:03:47.320 --> 0:03:49.800 go over there, Hamas takes them right away, So they 0:03:49.800 --> 0:03:53.840 would essentially be delivering fuel directly to the enemy to 0:03:53.920 --> 0:03:57.040 fuel the war effort against them. 0:03:57.520 --> 0:03:58.560 How do they deal with that. 0:04:00.040 --> 0:04:02.920 It's it's a it's a major problem because that fuel 0:04:03.360 --> 0:04:06.240 is used for the generators who are then used for 0:04:06.320 --> 0:04:11.080 the launching of the sum of the rockets that Hamas 0:04:11.600 --> 0:04:14.720 and the Islamic jiha It's sister organization have. 0:04:15.080 --> 0:04:18.240 Of course, they also need fuel to run desalinization plants 0:04:18.240 --> 0:04:19.599 and hospitals. 0:04:19.120 --> 0:04:20.760 Right exactly. 0:04:20.800 --> 0:04:21.760 That was my second. 0:04:22.040 --> 0:04:24.480 On the other hand, that same fuel, which is a 0:04:24.520 --> 0:04:30.000 fungible commodity is used for hospitals, is used for the salonization, 0:04:30.160 --> 0:04:34.400 as you mentioned correctly. And so the idea is that 0:04:34.680 --> 0:04:38.839 only a limited number of convoys will go in, most 0:04:38.960 --> 0:04:42.680 through the southern tip of the Gaza Strip, which actually 0:04:43.000 --> 0:04:48.279 borders Egypt rather than Israel, but that the red cross 0:04:48.360 --> 0:04:53.680 the un the Egyptians, and in some instances Israel will 0:04:53.760 --> 0:04:58.600 monitor what's going in and who's receiving. What happens once 0:04:58.680 --> 0:05:03.120 it crosses the the border of the Gate Defence whatever 0:05:04.160 --> 0:05:07.240 and gets into Gaza, and as you mentioned, can be 0:05:07.360 --> 0:05:12.080 taken over by Hamas is a problem, and that's part 0:05:12.120 --> 0:05:17.800 of this humanitarian on crisis that is quietly but surely 0:05:18.600 --> 0:05:20.960 brewing in Gaza. So that's that's going to be a 0:05:20.960 --> 0:05:25.520 major jury, on top of which President Biden himself has 0:05:25.560 --> 0:05:31.280 repeatedly asked that Israel allow for a continuous inflow of 0:05:31.680 --> 0:05:36.080 humanitarian eight, including that gasoline, including that funeral. 0:05:37.040 --> 0:05:39.680 So, Ambassador, I mean, I'm just not sure what the 0:05:39.760 --> 0:05:45.360 catalyst is for a next step other than some significant 0:05:45.400 --> 0:05:49.359 breakthrough on the hostage front. What do you believe or 0:05:49.400 --> 0:05:52.360 what are most observers I guess expecting of the next 0:05:52.360 --> 0:05:53.680 several days. 0:05:54.240 --> 0:05:58.159 Well, okay, you know again, what is the political goal here? 0:05:58.320 --> 0:06:03.560 The political goal is to eradicate Hamas. Then practically Israel 0:06:03.640 --> 0:06:06.200 needs to take over the entire Gaza Strip, which is 0:06:06.240 --> 0:06:09.560 two point two million people in a very narrow and 0:06:09.800 --> 0:06:13.599 very densist in fact place on Earth. So that's a problem. 0:06:13.960 --> 0:06:15.640 So what you should be looking in the next few 0:06:15.720 --> 0:06:18.720 days is whether or not Israel clarifies what its political 0:06:18.880 --> 0:06:22.800 end is, what political objective is. If it is less 0:06:22.839 --> 0:06:26.880 than dismantling Hamas, then you will see a smaller scale 0:06:27.400 --> 0:06:34.040 ground operation. But bear in mind, and you know, anyone 0:06:34.040 --> 0:06:36.800 who's listening to us should bear in mind that there 0:06:36.800 --> 0:06:41.600 are various kinds and various scopes of a ground operation. 0:06:42.200 --> 0:06:45.279 It could be small incursions by smaller units, it could 0:06:45.320 --> 0:06:50.120 be medium size incursions the other in and out, go in, destroy, 0:06:50.360 --> 0:06:53.560 get out, and it could in fact be cutting the 0:06:53.600 --> 0:06:58.560 Gaza Strip in half, leaving the southern part where most 0:06:58.600 --> 0:07:04.920 of the population is right now intact and fighting Hamas 0:07:05.600 --> 0:07:08.919 in the north. Now, there is another major consideration that 0:07:09.000 --> 0:07:12.960 we haven't even discussed yet, which deserves a completely different 0:07:13.000 --> 0:07:19.960 segments obviously, and that is the likelihood of escalation. The 0:07:20.000 --> 0:07:25.000 more escalation, the more power, the more firepower is used 0:07:25.000 --> 0:07:28.960 in Gaza, the more likely it is that it will 0:07:28.960 --> 0:07:35.040 expand or spread into Lebanon or Chrisbala armed with nearly 0:07:35.360 --> 0:07:40.320 one hundred thousand, much more precise rockets and empowered, emboldened 0:07:40.440 --> 0:07:44.520 and supported by Iran. So this is a you know, 0:07:44.600 --> 0:07:48.400 this is a series of bad choices that need. 0:07:48.320 --> 0:07:48.800 To be made. 0:07:50.080 --> 0:07:53.920 So just thirty seconds left, Ambassador, what is the status 0:07:54.040 --> 0:07:55.640 with Lebanon right now? 0:07:57.000 --> 0:08:00.280 Well, there's there's a ping pong of an extreme change 0:08:00.320 --> 0:08:02.920 of fire going on for the last ninety six hours, 0:08:02.920 --> 0:08:08.160 for the last four days. You know, my my biggest 0:08:08.200 --> 0:08:11.880 stuff fear is that there will be an escalation as 0:08:11.920 --> 0:08:15.360 a result of a miscalculation, That someone will think that 0:08:15.440 --> 0:08:18.560 someone is planning something that the other side didn't really plan, 0:08:19.280 --> 0:08:24.320 and the response would be disproportionate, and that would entail 0:08:25.000 --> 0:08:30.120 a similar or equal disproportionate response and before you know it, 0:08:30.200 --> 0:08:34.640 held breaks loose right now, right now, everyone is poking everyone, 0:08:34.720 --> 0:08:38.520 but it's not it's not an escalatory yet. By the way, 0:08:38.800 --> 0:08:40.680 I know, we don't work out of time. That's the 0:08:40.760 --> 0:08:44.840 reason why President Biden sent the Gerald for the USS 0:08:44.960 --> 0:08:45.880 Gerald carrier group. 0:08:46.000 --> 0:08:48.880 Ye, very good, ambassador, Thank you so much for taking 0:08:48.880 --> 0:08:52.760 the time. Ambassador Alone Pinkus, former israel A General counsel 0:08:52.840 --> 0:08:53.600 in New York. 0:08:54.920 --> 0:08:58.760 You're listening to the tap Kenso Live program Bloomberg Markets 0:08:58.800 --> 0:08:59.720 weekdays at ten. 0:08:59.600 --> 0:09:02.120 Am Darren on Bloomberg dot Com. 0:09:01.800 --> 0:09:05.000 The iHeartRadio app and the Bloomberg Business App, or listening 0:09:05.040 --> 0:09:07.160 on demand wherever you get your podcasts. 0:09:09.080 --> 0:09:12.000 We welcome now our Bloomberg TV audience and radio listeners. 0:09:12.080 --> 0:09:14.960 It is the second major oil deal in just the 0:09:14.960 --> 0:09:17.080 past few weeks, and this is a big one, Chevron 0:09:17.080 --> 0:09:20.200 announcing a fifty three billion dollar all stock deal to 0:09:20.280 --> 0:09:22.640 buy Hess. And we're joined now by the two men 0:09:22.679 --> 0:09:25.800 behind it, Mike Worth, Chevron Chairman and CEO, and John Hess, 0:09:26.000 --> 0:09:29.959 Hess Corporation CEO. Gentlemen, thank you so much. What a pleasure, 0:09:30.640 --> 0:09:32.920 no joke. This is the only question I'm getting today. Well, 0:09:32.960 --> 0:09:36.080 the toy trucks from Hess continue to be available at 0:09:36.120 --> 0:09:36.720 Christmas time. 0:09:36.880 --> 0:09:39.520 Yeah, so you know, not all of you in suspense. Yes, 0:09:39.600 --> 0:09:41.600 they will, Okay, back next year is going to be 0:09:41.640 --> 0:09:44.760 the sixtieth anniversary of the Hestoid truck. We sell them 0:09:44.840 --> 0:09:47.760 on the internet and we continue, we intend to continue 0:09:47.760 --> 0:09:48.280 selling them. 0:09:48.360 --> 0:09:50.880 So I gotta ask, I didn't know about these trucks beforehand. 0:09:51.320 --> 0:09:53.720 Was it part of the deal? Is there some line 0:09:53.720 --> 0:09:55.240 in the deal about the trucks? Was it part of 0:09:55.280 --> 0:09:55.880 the negotiation? 0:09:56.520 --> 0:09:58.280 Let me put it this way, Mike and I came 0:09:58.360 --> 0:10:01.640 to a mutually agreeable understanding. Need to continue selling the trucks. 0:10:01.679 --> 0:10:02.160 That's a yes. 0:10:02.559 --> 0:10:05.120 That has been Actually yes, been two CEOs. So Mike 0:10:05.160 --> 0:10:08.560 walkers through Actually how this deal did come about. We 0:10:08.600 --> 0:10:10.360 heard earlier that you guys been talking for a couple 0:10:10.400 --> 0:10:12.480 of years, and I'm really curious as to why now 0:10:12.559 --> 0:10:14.480 is the right time to make this happen. 0:10:14.520 --> 0:10:16.080 Well, we have been talking for a while. 0:10:16.120 --> 0:10:20.679 There's a terrific alignment between the two companies, our portfolios, 0:10:21.000 --> 0:10:25.520 the cultures of the company and the people, and particularly 0:10:25.559 --> 0:10:28.720 as it has his development in Guiana has continued to 0:10:28.720 --> 0:10:32.040 be de risked and progress. What was at one point 0:10:32.120 --> 0:10:35.200 in time kind of a wider gap in valuation has 0:10:35.320 --> 0:10:38.040 narrowed and the stocks of the two companies have traded 0:10:38.080 --> 0:10:39.880 into a range where it works for both of us. 0:10:39.960 --> 0:10:43.520 And so now's the time that those circumstances have come together. 0:10:43.559 --> 0:10:46.040 But for quite some time we've seen the fit and 0:10:46.080 --> 0:10:47.479 the appeal and been. 0:10:47.120 --> 0:10:49.920 Working on this, which I'm just so curious John, because 0:10:50.840 --> 0:10:53.080 on the call, it seemed like some analysts were intimating 0:10:53.080 --> 0:10:54.760 the Hey, did you get a high enough price? 0:10:54.960 --> 0:10:55.240 Sure? 0:10:55.520 --> 0:10:57.839 And also you're doing things very well in Guyana, and 0:10:57.840 --> 0:10:59.640 I appreciate it's also the back and etc. But we 0:10:59.640 --> 0:11:01.720 just spoke Gaiana. You guys are already crushing it, like 0:11:01.920 --> 0:11:02.880 why do you need Chevron? 0:11:03.240 --> 0:11:06.440 Yeah, well, it's a great question. I think some context 0:11:06.520 --> 0:11:10.040 would be important. Our stock for the last five years 0:11:10.200 --> 0:11:13.760 was the number one total shareholder return in the industry, 0:11:13.800 --> 0:11:17.000 whether it's independent or whether it's major oil company. Last 0:11:17.040 --> 0:11:20.560 year our stock went up ninety four percent, number two 0:11:20.600 --> 0:11:23.840 on the SMP. So we've already created a lot of value. 0:11:24.480 --> 0:11:28.160 At the same time, now that the pricing got in 0:11:28.280 --> 0:11:31.400 arrange that would work both for Chevron and work for Hess, 0:11:32.440 --> 0:11:34.920 we think we came up with a win win. Hess 0:11:35.880 --> 0:11:39.439 brings Chevron growth in resource growth in production, growth in 0:11:39.559 --> 0:11:43.840 cash flow. Chevron brings Hess financial strength in terms of 0:11:43.880 --> 0:11:47.800 a diversity of world class assets, in terms of sterling 0:11:47.880 --> 0:11:52.040 balance sheet, and in terms of industry leading cash returns, 0:11:52.040 --> 0:11:54.560 and when you put the two together, you create the 0:11:54.640 --> 0:11:58.600 premier oil and gas company position for the energy transition. 0:12:00.240 --> 0:12:02.680 Mike, what I'm hearing here is that this is a 0:12:02.679 --> 0:12:06.520 great fit. Could you do this on your own? Could 0:12:06.559 --> 0:12:11.679 you build what Hess has built from the ground up? 0:12:12.000 --> 0:12:14.040 Is it easier to buy than build right now? 0:12:14.160 --> 0:12:17.199 Well, Look, this is about long term growth and long 0:12:17.320 --> 0:12:21.000 term value, which is what we're always seeking. Hess has 0:12:21.040 --> 0:12:24.760 a unique portfolio that actually strengthens our portfolio with some 0:12:24.800 --> 0:12:26.760 things we're always trying to do. We're always out exploring, 0:12:26.800 --> 0:12:30.760 we're looking for new findes. Gianus the biggest discovery in 0:12:30.800 --> 0:12:33.360 more than a decade in this industry. It's just a 0:12:33.600 --> 0:12:37.840 unique and compelling asset, and so it would be difficult 0:12:37.880 --> 0:12:40.680 for us to do on our own. We continue to explore, 0:12:40.720 --> 0:12:43.400 we'll continue. Everybody in our industry is looking for these things. 0:12:43.679 --> 0:12:45.640 But this was a great opportunity for us to join 0:12:45.679 --> 0:12:48.840 a partnership that's done a terrific job in developing this asset. 0:12:48.880 --> 0:12:51.640 But also the other assets in the Hess portfolio are 0:12:51.679 --> 0:12:53.640 ones that will be additive for us as well, the 0:12:53.679 --> 0:12:56.320 back in the deep water Gulf of Mexico Southeast Asia. 0:12:56.400 --> 0:12:59.240 And so it's a very nice fit at a portfolio level, 0:12:59.320 --> 0:13:01.280 nice fit at a culture level, and we're going to 0:13:01.280 --> 0:13:02.679 create more value for shareholders. 0:13:02.760 --> 0:13:04.360 Yeah, so let's get to the boggin part too. So 0:13:04.400 --> 0:13:06.520 how important is the balcon going to be in your portfolio? 0:13:06.600 --> 0:13:08.520 Because clearly the rhetoric apter this deal was it's all 0:13:08.559 --> 0:13:11.240 about Guiana, right, Like, that's this deep water, it's amazing, 0:13:11.360 --> 0:13:13.320 the costs are solo is going to be awesome. Well, 0:13:13.360 --> 0:13:14.199 where's the balcon in this? 0:13:14.520 --> 0:13:15.840 Well, Balcon's very important. 0:13:15.960 --> 0:13:18.760 We've got a big shale business already right with positions 0:13:18.760 --> 0:13:22.040 of the Permian, the DJ Basin. We're the largest producer 0:13:22.040 --> 0:13:24.079 and Hess has been doing a great job in the 0:13:24.080 --> 0:13:26.480 baking for a long time. That's really where this all began. 0:13:27.080 --> 0:13:30.199 And so for us, it's about adding another scaled position 0:13:30.320 --> 0:13:33.600 in shale that is performing very well. We can bring 0:13:33.640 --> 0:13:36.520 whatever expertise we may have. We're working on technologies to 0:13:36.559 --> 0:13:40.319 improve recovery and learn from our new colleagues at Hess. 0:13:40.400 --> 0:13:42.600 We were doing things in a basin when we went 0:13:42.640 --> 0:13:44.520 to the DJ we learned some things that we hadn't 0:13:44.520 --> 0:13:46.199 been doing in the Permian that made us better. I'm 0:13:46.200 --> 0:13:48.839 certain the same thing will happen here. So it's absolutely 0:13:48.880 --> 0:13:50.240 an important part of the transaction. 0:13:50.480 --> 0:13:53.240 Tony took about the price narrowing. You started off far 0:13:53.280 --> 0:13:57.319 apop bidosk kind of widespread, Kate Man, what bruls it in? 0:13:57.720 --> 0:14:01.760 What facts has allowed you to bring that understanding between 0:14:01.760 --> 0:14:02.720 the two films together. 0:14:03.040 --> 0:14:07.400 Well, you know, the gap in shareholders recognizing our value. 0:14:08.280 --> 0:14:11.280 We weren't getting credit for this eleven billion barrels of 0:14:11.320 --> 0:14:13.680 oil equivalent resource. 0:14:13.240 --> 0:14:14.480 That we had in the market. 0:14:14.559 --> 0:14:16.000 Narraed the gap for you, Yes. 0:14:16.480 --> 0:14:19.400 Exactly, and then it got to the point where it 0:14:19.440 --> 0:14:21.200 got to the wind zone for Mike and the wind 0:14:21.320 --> 0:14:23.320 zone for us. And you know, you also got to 0:14:23.360 --> 0:14:25.520 remember this is a stock for stock deals, So some 0:14:25.560 --> 0:14:28.200 people would say, well, geez, you're selling it, and we're 0:14:28.200 --> 0:14:31.240 not selling for cash. We're staying invested. Our family is 0:14:31.320 --> 0:14:33.400 going to be a long term shareholder of Chevron, and 0:14:33.440 --> 0:14:35.520 we're happy about it, and we think there's going to 0:14:35.520 --> 0:14:37.920 be a lot of upside to come in addition to 0:14:38.000 --> 0:14:40.720 which our own dividend is going to go from a 0:14:40.760 --> 0:14:43.480 dollar seventy five a share to six dollars a share 0:14:43.480 --> 0:14:45.840 and next year six fifty a share. So you're getting 0:14:45.880 --> 0:14:49.040 the benefit of growth and asset value with growth, and 0:14:49.080 --> 0:14:51.160 cash with turns. And that's a magic formula. And I 0:14:51.200 --> 0:14:53.640 think it'll be the best oil company to own and 0:14:53.720 --> 0:14:55.680 actually the best oil company to work for. 0:14:55.840 --> 0:14:57.520 I have to say, you guys seem to get along 0:14:57.600 --> 0:15:00.240 quite well. You don't al Wes see that with the 0:15:00.280 --> 0:15:04.600 oil mergers. How did you guys first start this conversation 0:15:05.040 --> 0:15:05.640 like years ago? 0:15:05.680 --> 0:15:06.640 What what was that? 0:15:06.800 --> 0:15:08.360 Was it like you guys at a Sarah Week dinner 0:15:08.440 --> 0:15:09.440 like chatting? 0:15:09.440 --> 0:15:10.000 What was it like? 0:15:10.680 --> 0:15:13.480 It was actually the dinner, but it wasn't at sarah Wick, 0:15:13.560 --> 0:15:15.920 it was at another location. But look, John and I 0:15:15.960 --> 0:15:18.800 have been friends. We've been great admirers of hess. I've 0:15:18.800 --> 0:15:21.320 been a great admirer of John for many, many years, 0:15:22.000 --> 0:15:24.520 and it was a very natural evolution, I think, as 0:15:24.520 --> 0:15:27.480 we're both looking to improve our businesses and create value 0:15:27.480 --> 0:15:30.600 for our Shareholder's been a nice conversation. As John said, 0:15:30.600 --> 0:15:34.160 in the beginning, the market wasn't recognizing the potential in 0:15:34.480 --> 0:15:37.080 the Guiana acid in particulars that's been de risked and 0:15:37.120 --> 0:15:39.880 as we get closer and closer to this cash flow inflection, 0:15:40.440 --> 0:15:42.920 we really did move into this zone. But it's been 0:15:43.040 --> 0:15:46.160 very it's been a very friendly discussion along the way 0:15:46.320 --> 0:15:48.920 like it and by the way, you haven't mentioned yet, 0:15:48.920 --> 0:15:51.040 but we look forward to John joining Chevron's board of 0:15:51.080 --> 0:15:54.680 directors and continuing to exert influence over the strategy of 0:15:54.680 --> 0:15:58.560 our company. And he's got key relationships with partners and 0:15:58.760 --> 0:16:01.560 governments around the world that will continue to benefit from us. 0:16:01.920 --> 0:16:03.720 And also, if I can, you know, Mike and I'm 0:16:03.800 --> 0:16:07.320 known as each other through the industry for years. I 0:16:07.360 --> 0:16:09.040 have a lot of respect for him. I think he's 0:16:09.080 --> 0:16:11.160 the best CEO in the energy industry, one of the 0:16:11.200 --> 0:16:14.040 best in the United States. So have a lot of 0:16:14.040 --> 0:16:14.800 respect for him. 0:16:14.840 --> 0:16:17.360 So it wasn't succession things for Hess. It was a 0:16:17.360 --> 0:16:18.160 lot of succession. 0:16:18.440 --> 0:16:21.080 No, No, we were actually prepared to continue as an 0:16:21.080 --> 0:16:25.080 independent That's what our history is. We're celebrating our ninetieth 0:16:25.080 --> 0:16:28.080 anniversary as a company this year. We have the best 0:16:28.080 --> 0:16:30.400 hand in the business, the best growth portfolio the business, 0:16:30.440 --> 0:16:32.480 and we're just executing the strategy go forward. 0:16:32.880 --> 0:16:35.240 But you know, Chevron. 0:16:34.840 --> 0:16:38.960 Brings forward that diverse portfolio of assets, strong balance sheet, 0:16:39.160 --> 0:16:41.680 as well as high cash returns. And you put those 0:16:41.680 --> 0:16:45.880 strains together with our growth trains, you really create I'd say, 0:16:46.080 --> 0:16:48.520 you know, the premier energy company that's out there, Mike. 0:16:48.560 --> 0:16:51.000 There aren't many assets like Hess out there, but there 0:16:51.000 --> 0:16:52.720 are a lot of assets out there. And I hate 0:16:52.760 --> 0:16:54.080 to sort of ask this question or day when you 0:16:54.160 --> 0:16:56.440 doing a massive deal, what have you done yet? Is 0:16:56.440 --> 0:16:58.600 this an industry that is going to continue to consolidate. 0:16:58.640 --> 0:17:01.240 We've just seen two really big deals in as many 0:17:01.280 --> 0:17:02.680 weeks that can't be by accident. 0:17:03.400 --> 0:17:06.119 Well, I can only speak to our deal, and this 0:17:06.160 --> 0:17:07.879 is the right deal for us. We actually did another 0:17:07.920 --> 0:17:12.679 deal earlier this year. So for us, integrating is very important. 0:17:12.720 --> 0:17:14.960 To do a transaction, you actually to create value. You 0:17:14.960 --> 0:17:17.680 need to bring the companies together, the people. You need 0:17:17.720 --> 0:17:20.520 to continue to operate safely and deliver to your customers. 0:17:20.560 --> 0:17:24.320 And so our focus for the next you know, several months, 0:17:24.560 --> 0:17:28.240 if not longer, is really about execution and executing well 0:17:28.920 --> 0:17:31.240 in the long of time. You know, our industry has 0:17:31.280 --> 0:17:35.199 grown through organic and inorganic activity every time our company 0:17:35.240 --> 0:17:37.320 has done the same. And I do think you know, 0:17:37.359 --> 0:17:39.680 in the future, there potentially could be other things, but 0:17:39.760 --> 0:17:42.159 that's that's not here and now that's further down the 0:17:42.200 --> 0:17:42.840 road for sure. 0:17:42.920 --> 0:17:45.320 Do you guys think that oil's going to stay volatile 0:17:45.520 --> 0:17:47.800 and trade above one hundred hundred and fifty. I'm not 0:17:47.840 --> 0:17:49.240 going to John, because I feel like maybe you can 0:17:49.280 --> 0:17:51.200 talk more about what you really think the oil price 0:17:51.320 --> 0:17:52.000 is going to be. Now. 0:17:52.240 --> 0:17:55.040 Look, you know, in the short term there's a direct 0:17:55.080 --> 0:18:00.160 correlation between world oil inventories and price. World inventories are 0:18:00.240 --> 0:18:03.080 drawing at about a million barrels a day this quarter. As 0:18:03.119 --> 0:18:05.000 you get to next year, do we think demand's going 0:18:05.040 --> 0:18:07.320 to grow maybe a million and a half barrels a 0:18:07.359 --> 0:18:10.040 day barring a worldwide recession. Hopefully we don't get there. 0:18:10.080 --> 0:18:12.800 I know they are all kinds of geop political events, 0:18:12.840 --> 0:18:15.439 be it in the Ukraine or be it in the 0:18:15.560 --> 0:18:19.159 levent that are going on right now, tragic events. But 0:18:19.440 --> 0:18:22.320 taking that factor out, you know, we think the market's 0:18:22.359 --> 0:18:24.320 going to be tight and the supply side of the 0:18:24.359 --> 0:18:26.240 equation is going to have to run fast to keep 0:18:26.320 --> 0:18:29.520 up with the demand side. Shales no longer the swing producer. 0:18:29.640 --> 0:18:32.000 Saudi Arabia and Opek are They're going to keep the 0:18:32.040 --> 0:18:35.000 market stabilized. But I think the real issue for the 0:18:35.040 --> 0:18:37.840 world to understand is that oil and gas are needed 0:18:37.880 --> 0:18:41.640 for decades. They're key to an affordable, just and secure 0:18:41.800 --> 0:18:46.440 energy transition. I think the conflict in Ukraine put a 0:18:46.480 --> 0:18:49.560 shining light on energy security. And at the end of 0:18:49.640 --> 0:18:53.560 the day, you know, oil and gas are strategic industry 0:18:53.640 --> 0:18:56.720 for our country in terms of jobs twelve million jobs, 0:18:56.760 --> 0:19:00.840 more than automotive direct and indirect, in terms of electricity 0:19:00.880 --> 0:19:03.080 costs two to three times less than they are in 0:19:03.119 --> 0:19:06.960 Europe and most of Asia, and ultimately national security. We're 0:19:07.080 --> 0:19:10.720 energy independent Europe by seventy percent of their oil, China 0:19:10.720 --> 0:19:13.040 buy seventy percent of their oil, so we have a 0:19:13.080 --> 0:19:17.840 real strength. We should be leaning into it for economic prosperity, 0:19:18.040 --> 0:19:19.600 but also national security. 0:19:19.720 --> 0:19:21.639 Mike, isn't that the real message from this deal? You 0:19:21.640 --> 0:19:24.040 could have done a deal in the energy transition space, 0:19:24.400 --> 0:19:27.280 you didn't. You did this deal. Isn't the message coming 0:19:27.280 --> 0:19:33.440 from this that the industry is now to point where 0:19:33.640 --> 0:19:35.159 it is going to invest in the future, That the 0:19:35.280 --> 0:19:39.000 energy transition story is of interest, but it's not the 0:19:39.000 --> 0:19:42.359 only area of interest. That this is an industry the 0:19:42.400 --> 0:19:46.000 country that the world still needs to rely on. You 0:19:46.040 --> 0:19:48.440 could have done other deals, you did. This one isn't 0:19:48.440 --> 0:19:49.439 that the message that comes. 0:19:49.280 --> 0:19:51.080 From this, well, I'd put it a little differently, Gay. 0:19:51.160 --> 0:19:52.280 We have done other deals. 0:19:52.400 --> 0:19:52.640 Yeah. 0:19:52.680 --> 0:19:55.720 Earlier this quarter we closed on the largest green hydrogen 0:19:56.320 --> 0:19:59.399 manufacturing and storage facility that will be built in the 0:19:59.480 --> 0:20:02.720 United States. We're the second largest renewable fuels producer in 0:20:02.760 --> 0:20:06.439 the US and we're expanding our production capacity there. So 0:20:06.520 --> 0:20:09.040 we are doing the other deals. But I think the 0:20:09.080 --> 0:20:12.200 point that John's making is really important. We need to 0:20:12.240 --> 0:20:14.720 continue to invest in the energy system that supplies the 0:20:14.760 --> 0:20:17.600 world today, even as we're investing in one that can 0:20:17.640 --> 0:20:20.359 integrate into that and help produce the carbon intensity tomorrow. 0:20:20.440 --> 0:20:23.240 We believe the future of energy is lower carbon. We 0:20:23.280 --> 0:20:26.359 believe these new technologies will play a greater role, and 0:20:26.400 --> 0:20:28.520 we continue to invest. So I don't think you should 0:20:28.520 --> 0:20:31.480 read this as a lack of commitment to the energy transition. 0:20:31.920 --> 0:20:33.879 But we need to invest in what the world runs 0:20:33.880 --> 0:20:36.640 on today. This makes us a stronger producer. It takes 0:20:36.680 --> 0:20:39.119 two great American companies and brings them together, which is 0:20:39.119 --> 0:20:42.520 good for national security and economic security. And we're committed. 0:20:42.600 --> 0:20:44.800 Both of our companies are committed to a lower carbon 0:20:44.920 --> 0:20:45.920 energy system. 0:20:46.000 --> 0:20:49.240 Mike, speaking of are you able to pump more in 0:20:49.280 --> 0:20:51.800 Venezuela right now, and we be investing more in Venezuela 0:20:51.880 --> 0:20:53.400 because of some sanction relief. 0:20:54.119 --> 0:20:57.400 So we have seen production in our ventures in Venezuela 0:20:57.680 --> 0:21:00.600 increase this year from around fifty five and barrels a 0:21:00.640 --> 0:21:03.240 day when the year began to something between one hundred 0:21:03.280 --> 0:21:05.879 and one hundred and fifty today, and we've been gradually 0:21:05.920 --> 0:21:10.119 seeing that come up. We've recently seen some further actions 0:21:10.200 --> 0:21:13.920 by the US to reduce some of the sanctions on Venezuela. 0:21:14.440 --> 0:21:17.080 This is a slow moving story. 0:21:17.200 --> 0:21:19.520 It's sustainable, though, Like if you increase to one fifty, 0:21:19.520 --> 0:21:20.480 can you hold it there? 0:21:20.960 --> 0:21:22.800 I think we can as long as we can operate 0:21:22.840 --> 0:21:24.920 the way we're operating today, and some of these constraints 0:21:24.960 --> 0:21:29.640 have been taken off of us, and the Venezuelan industry 0:21:29.640 --> 0:21:31.960 has been under pressure for a variety of reasons for 0:21:32.000 --> 0:21:34.840 the last couple of decades, and turning that around will 0:21:34.880 --> 0:21:37.480 take time and it will take investment. So I wouldn't 0:21:37.480 --> 0:21:40.520 expect this to be something that goes up dramatically, but yes, 0:21:40.600 --> 0:21:44.160 we've seen some steady improvement and we're looking to try 0:21:44.160 --> 0:21:44.800 to continue that. 0:21:45.359 --> 0:21:47.520 Gentlemen, thank you so much. We could talk forever, but 0:21:47.720 --> 0:21:50.000 We'll let you guys go. It's been a very long day. Mike. 0:21:50.040 --> 0:21:53.760 We're at Chevron chairman and CEO and John hess Has Corporation. 0:21:53.840 --> 0:21:54.920 Cee you congrats on the merger. 0:21:54.920 --> 0:21:55.160 Guys. 0:21:55.200 --> 0:21:55.560 Thank you. 0:21:55.560 --> 0:21:58.520 You're listening to the take can to our live program 0:21:58.600 --> 0:22:02.560 Bloomberg Markets. He's at ten am Eastern on Bloomberg Radio, 0:22:02.720 --> 0:22:04.800 the tune in app, Bloomberg dot Com, and. 0:22:04.760 --> 0:22:06.040 The Bloomberg Business app. 0:22:06.119 --> 0:22:08.919 You can also listen live on Amazon Alexa from our 0:22:08.960 --> 0:22:14.080 flagship New York station Just Say Alexa playing Bloomberg eleven thirty. 0:22:15.160 --> 0:22:15.320 R J. 0:22:15.440 --> 0:22:18.000 Gallow he's at that Federated Hermes thing. I first met 0:22:18.040 --> 0:22:21.840 the Federated folks out in Pittsburgh. That's kind of where 0:22:21.840 --> 0:22:24.600 they hang out. But they're all over the place these days. Hey, RJ. 0:22:24.920 --> 0:22:27.840 We see Bill Ackman here says he's covered his bond 0:22:27.840 --> 0:22:31.960 short amid mounting global risk. Did you notice that? And 0:22:32.040 --> 0:22:34.040 kind of what's that? Do you have any comment there? 0:22:35.240 --> 0:22:36.320 Well, so even. 0:22:36.119 --> 0:22:39.520 Gets a lot of attention in the market, and you know, 0:22:39.800 --> 0:22:42.480 more attention than r J. Gallow A Federated Hermes and 0:22:42.520 --> 0:22:45.800 that makes sense. But I would note that we have 0:22:45.880 --> 0:22:49.800 Federated Hermes have been leaning along and we've been wrong. 0:22:50.480 --> 0:22:53.879 The bond market sell off has taken on sort of 0:22:53.880 --> 0:22:56.280 a life of its own. It's knocking down all kinds 0:22:56.280 --> 0:22:58.720 of financial assets. Stocks are looking at bonds an awful 0:22:58.760 --> 0:23:01.880 lot these days. I can't say I'm surprised that Bill 0:23:01.920 --> 0:23:04.880 Ackman's comment. I mean, there's one sentence that is very, 0:23:05.040 --> 0:23:07.879 very very brief, but it tells you what he's thinking. 0:23:08.480 --> 0:23:12.520 I do think the geopolitical situation has deteriorated sharply for 0:23:12.600 --> 0:23:17.000 obvious reasons, and the prospect of a wider conflict, you know, 0:23:17.080 --> 0:23:20.680 bringing in many different parties. You know, typically when when 0:23:20.720 --> 0:23:24.800 things like this happen, it should be friendly to treasury prices. 0:23:24.840 --> 0:23:28.080 So far, we've only had brief moments of that, and 0:23:28.240 --> 0:23:29.879 there could be more to come. It's hard to be 0:23:30.000 --> 0:23:33.240 short treasuries when there's so much geopolitical risk and so 0:23:33.320 --> 0:23:34.960 many potential directions this could go. 0:23:35.640 --> 0:23:40.399 But it's hard to be long, especially duration, when you 0:23:40.440 --> 0:23:45.040 know little swings in yield can mean a huge swing 0:23:45.080 --> 0:23:49.520 in the price, and we're seeing big swings in yields, right, 0:23:49.600 --> 0:23:50.720 So how do you deal with that? 0:23:52.680 --> 0:23:54.440 It's a great point. I mean, now, first of all, 0:23:55.080 --> 0:23:58.919 remember just some some bond math the The fact that 0:23:59.000 --> 0:24:02.520 yields have risen has taken the duration on the US 0:24:02.640 --> 0:24:07.760 Treasury Index to five seventy two. Last back in May, 0:24:07.960 --> 0:24:11.200 it was six thirty nine. You know, that's these are 0:24:11.320 --> 0:24:16.000 positively convect instruments, right. So the fact of the matter 0:24:16.119 --> 0:24:19.200 is is that the duration passive duration of the index 0:24:19.240 --> 0:24:23.480 has gotten shorter because yields have gone higher. That doesn't 0:24:23.520 --> 0:24:27.200 necessarily insulate you from price loss, but you're losing at 0:24:27.320 --> 0:24:31.320 lesser and lesser velocity as a result. So but we're 0:24:31.359 --> 0:24:33.320 not focusing as much on that as much as we 0:24:33.359 --> 0:24:37.600 are the fundamentals that we think are apt to erode. 0:24:37.800 --> 0:24:40.639 The economy has been red hot. It is obviously clear 0:24:40.880 --> 0:24:45.679 employment strong. There's very few signs of the consumer fading. 0:24:45.800 --> 0:24:48.960 Just yet, we think it's a matter of time that 0:24:49.080 --> 0:24:53.679 the diminishment of that COVID area access savings pressure on 0:24:53.760 --> 0:24:58.760 small businesses much much higher borrowing costs all over the economy. 0:24:59.640 --> 0:25:02.960 You know, the rules of economics have not been revoked. 0:25:02.600 --> 0:25:06.080 The time frame and the lags are difficult this time. 0:25:06.119 --> 0:25:08.760 But we still think we will manifest itself in a 0:25:08.880 --> 0:25:12.160 slower economy and we'll get some relief from these current 0:25:12.160 --> 0:25:15.320 bond yields, and yield should retrace somewhat lower over the 0:25:15.320 --> 0:25:17.480 next three to six months, so we're stilling. 0:25:17.200 --> 0:25:19.119 We've got to be slower than five percent, which is 0:25:19.119 --> 0:25:22.760 what we're hearing in terms of third quarter guestimates and 0:25:22.800 --> 0:25:26.760 even for Q four some forecasts. My question on the 0:25:26.800 --> 0:25:32.959 consumer is, clearly the consumer is going to spend down savings, 0:25:33.160 --> 0:25:36.040 and clearly the consumer is putting more on credit cards 0:25:36.080 --> 0:25:38.960 and we're seeing delinquencies pop up. But is that more 0:25:39.119 --> 0:25:42.600 than you know it usually is or are we just 0:25:42.640 --> 0:25:45.440 getting back to pre COVID levels. 0:25:46.680 --> 0:25:48.679 No, it's a great question, and we recently had a 0:25:48.680 --> 0:25:51.560 webcast with some colleagues, Orlando and Linda Distil, who talked 0:25:51.560 --> 0:25:54.439 to you guys sometimes both TV and radio, and we 0:25:54.440 --> 0:25:56.720 were trying to sort of back up and look at 0:25:56.720 --> 0:25:58.800 the whole picture for the consumer, because the bottom line is, 0:25:58.840 --> 0:26:01.439 even though there are negative some of which we just 0:26:01.520 --> 0:26:05.360 touched on, the unemployment rate is low, real personal incomes 0:26:05.440 --> 0:26:08.280 relative to the now lower level of inflation, albeit stole 0:26:08.359 --> 0:26:10.639 north of two, but lower than it was, real personal 0:26:10.720 --> 0:26:14.840 incomes have gone up. When you think about the benefits 0:26:14.880 --> 0:26:18.920 to savers from having very safe liquid assets like money 0:26:18.920 --> 0:26:20.879 market funds, which We manage plenty of them here at 0:26:20.880 --> 0:26:24.199 federated hermes. People in the hir income brackets who have 0:26:24.280 --> 0:26:26.480 plenty of savings and aren't pulling it all down to 0:26:26.520 --> 0:26:30.880 spend are benefiting from low risk, real returns. So there 0:26:30.920 --> 0:26:34.480 are tailwinds to the consumer. We are not calling for 0:26:34.560 --> 0:26:36.800 a collapsing consumer, and that's not the case at all. 0:26:37.040 --> 0:26:38.960 I think what we're going to see is that the 0:26:39.320 --> 0:26:43.040 median household, maybe even up to the top twenty percent 0:26:43.040 --> 0:26:45.840 of households. Everybody but the top twenty percent is probably 0:26:45.880 --> 0:26:48.960 going to fade enough so that the economic momentum coming 0:26:48.960 --> 0:26:50.760 out of what will be a very strong print for 0:26:50.840 --> 0:26:53.720 Q three GDP is going to slow down. That the 0:26:53.720 --> 0:26:56.399 economy is not about to tank, but it's going to slow, 0:26:56.480 --> 0:26:58.080 and that's going to be good news for the FED 0:26:58.440 --> 0:27:00.960 in their broader effort to still get in going down. 0:27:01.160 --> 0:27:04.119 Then you throw in the geopolitical risk, the sentiment destroying 0:27:04.520 --> 0:27:09.320 challenges that occur from wars happening across different parts of 0:27:09.359 --> 0:27:12.359 the world. We think that the economy is going to slow, 0:27:12.400 --> 0:27:14.600 the net impact on the consumer is a negative enough 0:27:15.000 --> 0:27:17.399 not for them to collapse, but to fade from what 0:27:17.480 --> 0:27:19.359 has been a breakneck pace of spending. 0:27:20.000 --> 0:27:20.440 Hey, RJ. 0:27:20.560 --> 0:27:23.080 When I look at the Bloomberg Index browser, I n 0:27:23.280 --> 0:27:25.000 go for those sitting in front of a terminal. I 0:27:25.000 --> 0:27:27.600 see the only place in the US fixed income that's 0:27:28.280 --> 0:27:31.120 in the green this year is US corporate high yield 0:27:31.200 --> 0:27:34.480 up three point nine percent. Do I stay with that trade? 0:27:34.520 --> 0:27:36.160 Do I add to it? Or do I say, boy, 0:27:36.160 --> 0:27:38.880 maybe I should redeploy high yield here? 0:27:39.640 --> 0:27:42.200 Yeah, I have an ull screen on my launch pat 0:27:42.280 --> 0:27:44.480 year that I've built, and it's just a sea of red, 0:27:45.720 --> 0:27:47.760 and the greens that show up are few and far 0:27:47.840 --> 0:27:51.520 between leverage loans or another space that actually has some 0:27:51.560 --> 0:27:54.760 positives in both of those cases, leverage loans and US 0:27:54.800 --> 0:27:57.280 high yield. To your question, you know that's a credit 0:27:57.280 --> 0:28:00.600 intensive asset, not a duration intensive one. So it makes 0:28:00.640 --> 0:28:04.440 sense that with the economy surprising to the upside, surprising everyone, 0:28:04.760 --> 0:28:07.800 including Chairman Powell. He said it last week. Everyone's been 0:28:07.840 --> 0:28:10.760 surprised by the economy's performance in this calendar year. It's 0:28:10.800 --> 0:28:14.960 been great for higher, higher credit risk assets. It's been 0:28:15.080 --> 0:28:18.159 terrible for duration, low credit risk assets that are an 0:28:18.200 --> 0:28:21.560 interest rates sensitive. We think that should start to flip 0:28:21.600 --> 0:28:25.360 the script. We are underweight high yield, we are underweight loans. 0:28:26.119 --> 0:28:29.679 We believe that the slowing economy, small business bankruptcies are 0:28:29.720 --> 0:28:32.520 on the rise, the accumulative impact of the tight ning 0:28:32.560 --> 0:28:36.640 of monetary conditions to include what are likely collapsing commercial 0:28:36.640 --> 0:28:39.600 real estate values in office space, all of these factors 0:28:39.760 --> 0:28:41.680 are going to catch up and they're going to reward 0:28:42.400 --> 0:28:45.200 higher quality bonds over lower quality bonds. So we're underweight 0:28:45.280 --> 0:28:47.560 high yield and underweight leverage loans at this point. That 0:28:47.600 --> 0:28:49.800 has not been the right call up to this point, 0:28:50.600 --> 0:28:52.280 but we're looking forward to. 0:28:52.280 --> 0:28:54.800 That turning around. Hey RJ, for better worse, some my 0:28:54.880 --> 0:28:57.959 co host is a native of the great State of Ohio, 0:28:58.080 --> 0:29:00.920 so of course I have to ask you, Oh no, 0:29:01.200 --> 0:29:05.880 how real. Look at I see here, boy, your Michigan 0:29:05.920 --> 0:29:08.400 Wolverings look like the team to beat this year. Tell 0:29:08.480 --> 0:29:09.000 us about it. 0:29:09.320 --> 0:29:11.600 That was a beatdown of Michigan State. I mean that 0:29:11.640 --> 0:29:13.480 was I almost felt bad for the Green and White. 0:29:14.600 --> 0:29:16.160 So you guys, I mean this is gonna be it. 0:29:16.240 --> 0:29:17.960 I mean, this looks like maybe the best Michigan team 0:29:17.960 --> 0:29:18.680 in a long time. 0:29:19.720 --> 0:29:22.480 Oh yeah, yeah, no, it's very exciting to watch, you know, 0:29:22.640 --> 0:29:26.040 very talented team. I watched football a lot, but I 0:29:26.080 --> 0:29:27.920 don't know if you want me to expound any further 0:29:27.960 --> 0:29:28.560 than that, No, we'll. 0:29:28.520 --> 0:29:30.479 Leave it because so you're gonna come in. I'll tell you. 0:29:30.520 --> 0:29:31.080 I'll tell you what. 0:29:31.240 --> 0:29:34.720 I love it when Michigan has a strong team, and 0:29:34.760 --> 0:29:37.320 I'm sure they love it when Ohio State is a 0:29:37.320 --> 0:29:40.440 big competitor, like that's what makes it fun. When you 0:29:40.480 --> 0:29:42.600 don't know who's going to win the game, When when 0:29:42.640 --> 0:29:44.080 the boys really have to give it. 0:29:44.200 --> 0:29:46.160 They're all right, you know, we're looking for it to 0:29:46.360 --> 0:29:47.760 We're looking forward to that game at the end of 0:29:47.800 --> 0:29:51.360 the year Michigan. Okay, all right, very good. 0:29:51.400 --> 0:29:51.560 R J. 0:29:51.680 --> 0:29:53.120 Gallagho Federated at Armies. 0:29:54.320 --> 0:29:57.720 You're listening to the Team Ken's Are Live program, Bloomberg 0:29:57.800 --> 0:30:01.320 Markets weekdays at ten am Easter, Blueberg dot Com, the 0:30:01.400 --> 0:30:04.520 iHeartRadio app, and the Bloomberg Business app, or listen on 0:30:04.600 --> 0:30:06.520 demand wherever you get your podcast. 0:30:08.800 --> 0:30:11.680 We welcome Elizabeth Hurt. She's a professor of political science 0:30:11.680 --> 0:30:15.120 at Northwestern University. Professor, thanks so much for joining us here. 0:30:15.560 --> 0:30:17.840 I mean a lot of us. I'm going to say, 0:30:17.920 --> 0:30:19.800 not just here in the US, but around the world. 0:30:20.080 --> 0:30:22.880 I don't think we have a full appreciation of the 0:30:22.960 --> 0:30:28.360 stark differences between Israel and the Palestinians that manifest itself. 0:30:28.360 --> 0:30:31.560 With all this attention we've seen over the decades, where 0:30:31.560 --> 0:30:34.520 do you where's the starting point for us to try 0:30:34.520 --> 0:30:35.680 to get an understanding there? 0:30:37.160 --> 0:30:40.000 Thanks for having me, Good morning to all your listeners 0:30:40.040 --> 0:30:42.880 and viewers. Listen. It's a really good question, and I 0:30:42.880 --> 0:30:45.000 think it's not one that's very easy to answer because 0:30:45.000 --> 0:30:47.680 there are many different starting points. One of the most 0:30:47.680 --> 0:30:51.440 common starting points would be to simply begin with Zionism, 0:30:51.520 --> 0:30:54.160 with the founding of the idea that the Jewish people 0:30:54.240 --> 0:30:57.120 in Europe, this is a European movement, should have their 0:30:57.120 --> 0:31:00.280 own homeland and that homeland would ensure they're safe in 0:31:00.320 --> 0:31:03.800 the face of persecution and violence by Europeans in the 0:31:04.040 --> 0:31:06.960 nineteenth century. So this goes back to the nineteenth century. 0:31:07.040 --> 0:31:09.120 We can fast forward to the end of World War II. 0:31:09.760 --> 0:31:13.640 We know about the horrors of the Holocaust. People were 0:31:13.640 --> 0:31:16.160 in Jewish people were in desperate search of a homeland, 0:31:16.680 --> 0:31:19.600 and the British, who were controlling the region that we 0:31:19.680 --> 0:31:23.560 now know of as Israel Palestine, declared through the Balfour 0:31:23.680 --> 0:31:27.320 Declaration that the Jewish homeland would have the support and 0:31:27.360 --> 0:31:30.880 sanction of the British imperial power. And it wasn't long 0:31:30.960 --> 0:31:35.440 before Israel declared independence as a state on the mid 0:31:35.480 --> 0:31:38.320 May fourt to May nineteen forty eight, and since then 0:31:38.800 --> 0:31:44.280 it has been slowly but surely expressing its authority and 0:31:44.320 --> 0:31:47.320 control and sovereignty over what we now know as Israel 0:31:47.360 --> 0:31:50.320 and Palas. And these lands are contested and have been 0:31:50.400 --> 0:31:53.040 contested since the first Jews started arriving. 0:31:53.720 --> 0:31:57.360 So, you know, a lot of people think, and I 0:31:57.440 --> 0:31:58.120 have thought in. 0:31:58.080 --> 0:32:01.120 The past, that Israel, that the Israelis came in there 0:32:01.200 --> 0:32:06.120 and took over Palestine, like there was a country there 0:32:06.360 --> 0:32:09.920 called Palestine and that was okay, moved into by Israel. 0:32:09.960 --> 0:32:12.479 But actually that's not the case. Right there, what was 0:32:12.520 --> 0:32:16.080 there before the Israelis went in, So this was. 0:32:16.200 --> 0:32:18.360 We did not have the sovereign state system, and this 0:32:18.440 --> 0:32:20.680 was kind of the days of empire, and so we 0:32:20.840 --> 0:32:23.760 had Originally it was an Ottoman province. What we now 0:32:23.800 --> 0:32:26.920 know as Palestine was an Ottoman province, which is like 0:32:26.960 --> 0:32:30.400 a state in the Ottoman Empire. That state. When the 0:32:30.400 --> 0:32:34.960 Ottoman Empire fell after World War One, it was basically disassembled, 0:32:35.000 --> 0:32:38.120 it ceased to exist. A rump state came into being. 0:32:38.200 --> 0:32:40.440 That was Turkey. That is what the kind of the 0:32:40.520 --> 0:32:45.440 inheritor of the Ottoman Empire, and the British colonial authorities 0:32:45.480 --> 0:32:49.480 took over what was then called Mandatory Palestine, which was 0:32:49.520 --> 0:32:52.840 an area that was under the authority of the British 0:32:52.920 --> 0:32:57.400 colonial powers, and Mandatory Palestine was then ruled by the 0:32:57.400 --> 0:33:00.640 British until after the Second World War went they gave 0:33:00.800 --> 0:33:07.600 up authority over the territory and Israel declared independence with 0:33:07.800 --> 0:33:12.360 the express support of the British authorities in the Balfour Declaration. 0:33:13.480 --> 0:33:16.160 That's the quick history. So no country named Palestine, but 0:33:17.320 --> 0:33:18.960 there was Palestine. 0:33:18.360 --> 0:33:21.640 Well, and there were Palestinian people. Are they I mean, 0:33:22.720 --> 0:33:23.760 are they Jordanian? 0:33:25.240 --> 0:33:29.480 They're actually Palestinian people. Many of the Palestinian people, after 0:33:29.600 --> 0:33:32.560 Israel was founded the State of Israel in nineteen forty eight, 0:33:32.840 --> 0:33:35.560 were forced from their homes and they had to leave 0:33:36.160 --> 0:33:39.720 their historic villages and towns and communities, and many of 0:33:39.720 --> 0:33:42.360 them did go to Jordan, and many went to other 0:33:42.440 --> 0:33:45.320 surrounding countries and became refugees, and many of them are 0:33:45.360 --> 0:33:48.600 still living in refugee camps in the surrounding countries today. 0:33:48.960 --> 0:33:53.880 They are Palestinian Jordanians, but they are not just Jordanians. 0:33:54.240 --> 0:33:59.000 So these countries are inventions of western colonial powers and 0:33:59.040 --> 0:34:01.160 the lines that were drawn to divide them one from 0:34:01.200 --> 0:34:04.800 another are relatively recent, but the peoples have been there 0:34:04.840 --> 0:34:06.000 for a very long time. 0:34:06.440 --> 0:34:09.359 Professor, I don't even know if there's an answer here. 0:34:09.360 --> 0:34:12.560 But if I were to if is there an independent 0:34:13.560 --> 0:34:19.080 consensus about who should get the land? I mean independently, 0:34:19.640 --> 0:34:21.799 if you just look at them, I don't know. Is 0:34:21.840 --> 0:34:22.759 there any consensus? 0:34:23.960 --> 0:34:26.960 No, right, And that's why I know there is no consensus, 0:34:27.000 --> 0:34:29.160 and that's why I we're seeing so much violence today. 0:34:29.520 --> 0:34:31.680 The only way we're going to reach an end to 0:34:31.719 --> 0:34:34.440 this horrific violence, which is taking innocent lives. I think 0:34:34.440 --> 0:34:37.000 we can all agree and we can all condemn and 0:34:37.040 --> 0:34:39.920 settle around the consensus that innocent lives should not be taken, 0:34:40.280 --> 0:34:43.800 Civilians should not be killed, children should not be murdered. 0:34:44.480 --> 0:34:47.319 That's the consensus. How do we get there? Who we 0:34:47.440 --> 0:34:50.359 have to share the land? I think that now that's 0:34:50.360 --> 0:34:52.640 where there is no consensus. Who does the land belong to? 0:34:52.680 --> 0:34:54.600 Who has the right to govern it, Who has the 0:34:54.840 --> 0:34:58.080 legitimate authority over its people to define it, write its 0:34:58.160 --> 0:35:02.200 laws and right its constitutions, aim the state. That's what's contested, 0:35:02.520 --> 0:35:04.480 and no there is no consensus, but there are two 0:35:04.560 --> 0:35:07.560 peoples and there is one land, so there's this violence 0:35:07.640 --> 0:35:10.120 is going to continue until there's some kind of resolution 0:35:10.200 --> 0:35:10.760 that's reached. 0:35:11.360 --> 0:35:15.120 How much of this is based in religion, I mean, 0:35:15.200 --> 0:35:19.840 it's it seems like if you pulled that those beliefs 0:35:19.880 --> 0:35:23.880 out that some you know, magical being gave you or 0:35:24.680 --> 0:35:27.440 this person or that person a piece of land, we 0:35:27.480 --> 0:35:29.920 wouldn't have these these wars. 0:35:31.640 --> 0:35:34.000 That's a good question. I wish it were the case 0:35:34.000 --> 0:35:38.040 that were just a matter of belief, but the attachments 0:35:38.480 --> 0:35:44.200 and the stakes and the ramifications of this conflict run 0:35:44.560 --> 0:35:48.520 much farther and wider than just belief. They are about 0:35:49.000 --> 0:35:54.280 control of the economies, control of water, control of access 0:35:54.320 --> 0:35:58.759 to ports, control of historical sites that have religious but 0:35:58.880 --> 0:36:03.520 also political and social connotations that run back centuries. So 0:36:03.760 --> 0:36:06.799 we can't really disentangle the religious aspect. For sure, it 0:36:06.880 --> 0:36:09.840 heightens the tension, but it's really not the only factor 0:36:09.880 --> 0:36:10.280 at play. 0:36:10.840 --> 0:36:15.920 Do we know to what extent the Palestinian people wherever 0:36:15.960 --> 0:36:18.400 they are the West Bank Aza, to what extent do 0:36:18.560 --> 0:36:22.640 they support Hamas Because it seems like you could get 0:36:22.640 --> 0:36:25.680 these two peoples together and say you get your land, 0:36:25.920 --> 0:36:29.120 We're gonna split this land up, and it's nobody's gonna 0:36:29.120 --> 0:36:30.680 be really happy, but this is the way it's going 0:36:30.719 --> 0:36:32.560 to be, and it's the best for everybody. But then 0:36:32.600 --> 0:36:35.080 Hamas comes in and really makes it difficult. So what's 0:36:35.080 --> 0:36:38.279 the level of support for Hamas and Hezbola amongst some 0:36:38.320 --> 0:36:39.439 of the Palestinians. 0:36:40.560 --> 0:36:43.279 The level of support for Hamas and Hezbola has been 0:36:43.360 --> 0:36:48.399 increasing as a result of the fact that Israel has 0:36:48.560 --> 0:36:52.319 continued to build and support settlements in the West Bank. So, 0:36:52.360 --> 0:36:54.960 in other words, your idea of giving each side some 0:36:55.120 --> 0:36:58.440 land and calling it a day is a great idea, 0:36:58.480 --> 0:37:00.399 and that was tried in the nineteen ninety news it's 0:37:00.400 --> 0:37:05.239 called the Oslo Accords. Neither side was particularly happy and 0:37:05.600 --> 0:37:08.480 neither side cooperated, and so what we have there were 0:37:08.560 --> 0:37:11.680 unaddressed issues that we have today that is an increasingly 0:37:11.800 --> 0:37:15.200 expansionist Israel. In other words, it's it's getting bigger and bigger, 0:37:15.400 --> 0:37:19.880 taking more and more land, and the Palestinians are increasingly desperate, 0:37:20.000 --> 0:37:24.720 frustrated and lashing out. So we're seeing a support rising 0:37:24.760 --> 0:37:27.839 support for Hamas. However, support for Hamas is quite low 0:37:28.080 --> 0:37:32.359 historically among the Palestinians. Palestinians don't want this violence either. 0:37:32.400 --> 0:37:34.320 I mean, who would, No one does exactly. 0:37:34.640 --> 0:37:39.080 This is just it's just incredibly you know, just just. 0:37:39.239 --> 0:37:41.920 It's complex, which is why it's great to have someone 0:37:41.960 --> 0:37:46.799 like professor Hurd, who studied government at Wesley and international 0:37:46.840 --> 0:37:49.680 finance at Yale, political science at Johns Hopkins to put 0:37:49.719 --> 0:37:52.080 these disciplines together and help us figure things out. 0:37:52.160 --> 0:37:52.440 Very good. 0:37:52.440 --> 0:37:54.760 Elizabeth Herd, Chair of Religious Studies and professor of political 0:37:54.760 --> 0:37:55.719 science at Northwestern. 0:37:55.880 --> 0:37:59.000 You're listening to the tape cans Are Line program Bloomberg 0:37:59.040 --> 0:38:02.640 Markets Weekday said ten am Eastern on Bloomberg Radio, the 0:38:02.719 --> 0:38:04.799 tune in app, Bloomberg dot Com. 0:38:04.480 --> 0:38:05.879 And the Bloomberg Business app. 0:38:05.960 --> 0:38:08.799 You can also listen live on Amazon Alexa from our 0:38:08.800 --> 0:38:13.120 flagship New York station, Just say Alexa, play Bloomberg eleven. 0:38:12.920 --> 0:38:15.280 Thirty Fraser Alkinson. 0:38:15.320 --> 0:38:17.400 In fact, they they're the first ones really to go 0:38:17.440 --> 0:38:21.640 electric because the municipalities need to show their green creds. 0:38:22.120 --> 0:38:26.480 And I mean, frankly, there's so many buses and you know, 0:38:28.120 --> 0:38:32.000 sort of mass transit vehicles on the road that it's 0:38:32.040 --> 0:38:34.799 better for all of us if they're not spewing out 0:38:35.719 --> 0:38:37.719 nasty things from the exhaust pipe. 0:38:38.000 --> 0:38:41.480 Absolutely Fraser Atkinson joins, I ceased to see Green Power 0:38:41.960 --> 0:38:45.000 Motor Company. It's a public traded company. Gp is as symbol. 0:38:46.120 --> 0:38:48.200 Talk to us first of all, Fraser, thanks so much 0:38:48.200 --> 0:38:50.799 for joining us, really appreciate it. Can you tell us 0:38:50.840 --> 0:38:52.840 what you guys do a Green Power what's your play 0:38:52.960 --> 0:38:53.920 in the EV space? 0:38:55.320 --> 0:38:59.200 Well, thanks for having us on your show, and we're 0:38:59.680 --> 0:39:02.760 we're we're focused on the medium and heavy duty space, 0:39:03.480 --> 0:39:07.680 which is quite different than the traditional light duty automotive. 0:39:08.560 --> 0:39:09.759 Those vehicles tend to. 0:39:09.680 --> 0:39:13.080 Be used less than an hour a day, and our 0:39:13.160 --> 0:39:17.359 vehicles are on average use twelve fourteen, sixteen hours a day, 0:39:18.080 --> 0:39:20.840 and we even have a few deployments where they're used 0:39:21.080 --> 0:39:24.440 twenty four hours a day and they do top charging 0:39:24.520 --> 0:39:27.319 in the early hours of the morning. So that's the 0:39:27.320 --> 0:39:32.000 space that we're focused on, and it's been a little 0:39:32.040 --> 0:39:32.799 slower to. 0:39:34.480 --> 0:39:36.640 Catch on, but we're finding. 0:39:36.280 --> 0:39:41.960 That it's got some serious legs for both the current 0:39:42.080 --> 0:39:42.840 and the future. 0:39:43.000 --> 0:39:47.960 Frazer, how do you juice those vehicles up for such 0:39:49.040 --> 0:39:53.680 industrial use? I mean I would think, you know, most 0:39:53.719 --> 0:39:57.719 electric vehicles have range of a few hours and then 0:39:57.760 --> 0:40:01.319 you've got to plug them in for many more. How 0:40:01.320 --> 0:40:04.440 do you make sure that these electric buses have enough 0:40:05.800 --> 0:40:08.760 energy to do their duty well. 0:40:08.800 --> 0:40:13.319 Most of the applications we're involved with tend to be 0:40:14.160 --> 0:40:17.080 lower speed and lots of stops and starts, which is 0:40:17.280 --> 0:40:22.040 absolutely ideal for an EV In terms of charging are 0:40:22.760 --> 0:40:27.800 the Class four vehicles, which is our largest volume seller 0:40:28.520 --> 0:40:31.680 both in terms of passenger cargo and as well the 0:40:31.760 --> 0:40:36.400 Type A school bus is that that particular set of 0:40:36.480 --> 0:40:40.520 vehicles we can either charge with a Level two or 0:40:40.560 --> 0:40:44.640 a DC fast charge, So we're very flexible and can 0:40:44.680 --> 0:40:49.560 be compatible with what the requirements might be what a 0:40:49.600 --> 0:40:52.520 customer might need from the use of that vehicle. 0:40:53.280 --> 0:40:56.520 So where do you make these electric school buses. 0:40:57.600 --> 0:41:02.000 Well, we've got we use contract manufacturers, similar to what 0:41:02.080 --> 0:41:06.040 Apple does with their various products. All of our products 0:41:06.080 --> 0:41:13.439 are designed and final assembly in the United States. We 0:41:13.719 --> 0:41:17.880 recently opened a facility in West Virginia that was courtesy 0:41:17.920 --> 0:41:20.919 of the state of West Virginia bought the facility for 0:41:20.960 --> 0:41:26.160 our use, and that is going to be our focus 0:41:26.239 --> 0:41:29.120 for our Type A, the smaller school bus, and the 0:41:29.160 --> 0:41:34.440 Type D, the larger school bus. Where we see demand 0:41:34.520 --> 0:41:37.040 across the board for both of those products. 0:41:37.719 --> 0:41:42.680 Is demand now starting to pick up exponentially. I mean, 0:41:42.680 --> 0:41:45.839 you've been at green Power since twenty ten, so you've 0:41:45.880 --> 0:41:50.920 seen a solid thirteen years of this business. Does it 0:41:50.960 --> 0:41:52.919 look a lot different in the last couple of years 0:41:52.920 --> 0:41:55.400 than it did to you for the first decade. 0:41:55.640 --> 0:41:59.400 Well, the early years, there literally were no medium or 0:41:59.400 --> 0:42:02.799 heavy duty the electric buses that have been deployed. The 0:42:02.840 --> 0:42:08.279 first one was twenty eleven twenty twelve, and that was 0:42:08.800 --> 0:42:14.000 with a company that had already generated deliveries and sales 0:42:14.120 --> 0:42:18.480 in other jurisdictions. So the industry is really only ten 0:42:18.560 --> 0:42:23.560 years old or ten plus. And the early years, the vehicles, 0:42:25.080 --> 0:42:28.799 the batteries were too heavy, the range wasn't able to 0:42:28.880 --> 0:42:33.400 satisfy even the most basic duty cycle. All that's changed 0:42:34.280 --> 0:42:38.360 to where now we can handle probably ninety five ninety 0:42:38.360 --> 0:42:43.000 six percent of almost all duty cycles for medium or 0:42:43.040 --> 0:42:48.200 heavy duty truck or bus, and that's really helped fuel 0:42:48.360 --> 0:42:52.720 the interest in electrifying fleets, and then combined with money 0:42:52.760 --> 0:42:56.600 and mandates at both the federal and the state level 0:42:57.160 --> 0:43:02.160 where certain operators are required to electrify fleets within certain 0:43:02.200 --> 0:43:08.560 time periods, has really created incredible tailwinds for the whole 0:43:08.600 --> 0:43:10.200 industry as well as our company. 0:43:10.680 --> 0:43:13.399 Fraser talk to us about kind of the sales process here. 0:43:13.400 --> 0:43:16.719 When you go to a school district, just describe for 0:43:16.760 --> 0:43:18.320 us how the sales process goes. 0:43:20.040 --> 0:43:23.960 Typically, they'd like the school districts. 0:43:23.520 --> 0:43:27.080 Are very hands on. They like to see, see and 0:43:27.160 --> 0:43:28.040 touch the vehicle. 0:43:28.120 --> 0:43:31.759 They like to have their various groups know whether it's 0:43:31.840 --> 0:43:38.680 the maintenance group, whether it's the drivers group, the trustees, 0:43:38.719 --> 0:43:43.000 that you really have to answer any questions that their 0:43:43.040 --> 0:43:43.960 constituents have. 0:43:44.760 --> 0:43:46.560 So we tend to do. 0:43:46.520 --> 0:43:50.360 A lot of ride in drives or demonstrations of the vehicles, 0:43:50.920 --> 0:43:54.160 and often those aren't just one or twice, but there 0:43:54.160 --> 0:44:00.799 are multiple occasions. And once a particular organization isisfy that yes, 0:44:00.880 --> 0:44:04.319 this is the vehicle that they can see they want 0:44:04.360 --> 0:44:07.840 to move forward with, then depending on the state, some 0:44:08.000 --> 0:44:12.360 states require dealers be involved in the process, others allow 0:44:12.520 --> 0:44:14.920 us to go direct. We have a real mix in 0:44:15.000 --> 0:44:18.560 terms of our go to market strategy. But then we're 0:44:18.719 --> 0:44:24.640 engaged in terms of, you know, essentially the big picture question, 0:44:24.680 --> 0:44:26.400 which is how are they going to pay for it? 0:44:26.719 --> 0:44:29.719 And school districts are not organizations that have a lot 0:44:29.760 --> 0:44:32.640 of money. So it's the recent funding that has come 0:44:32.680 --> 0:44:36.080 in both federally and with certain states that has really 0:44:36.120 --> 0:44:41.040 fueled the excitement and the electrification around school buses. 0:44:41.600 --> 0:44:43.279 So I want to get a sense. I'm just looking 0:44:43.280 --> 0:44:45.920 at your financial statements to your fraser, how do you 0:44:45.960 --> 0:44:49.240 fund your growth? I see you know, your public traded company, 0:44:49.280 --> 0:44:51.560 but a market cap of only seventy one million dollars, 0:44:52.480 --> 0:44:54.360 you know, several million dollars, a debt on the balance 0:44:54.840 --> 0:44:58.200 and iba the negative. How do you fund your growth? 0:44:59.600 --> 0:45:04.759 Well, our business model, we've had success in generating a 0:45:04.800 --> 0:45:08.040 gross profit on every cell or not every cell, but 0:45:08.120 --> 0:45:12.120 the combined cells of our vehicle every quarter, which is 0:45:12.160 --> 0:45:15.480 actually pretty unique, and that most of our competition is 0:45:16.440 --> 0:45:19.279 still operating with a gross profit loss. In other words, 0:45:19.320 --> 0:45:22.960 every vehicle they sell, they're actually selling at a loss 0:45:23.040 --> 0:45:27.719 before any of their expenses. And our growth has been 0:45:27.800 --> 0:45:30.600 such that we are getting closer and closer to that 0:45:31.480 --> 0:45:34.960 important break even from a cash flow point of view. 0:45:35.680 --> 0:45:40.640 We also had built up our inventory that post. When 0:45:40.680 --> 0:45:44.160 we went and did our nastac Ipo in the fall 0:45:44.280 --> 0:45:47.960 of twenty twenty, we were able to move from building 0:45:48.120 --> 0:45:51.279 vehicles pursuingto customer orders to where we're actually able to 0:45:51.320 --> 0:45:54.640 build into inventory, and that was critical in getting some 0:45:54.760 --> 0:45:58.760 of the larger deals that we are now delivering into 0:45:59.320 --> 0:46:03.040 so in our most recent quarter, our inventory actually was 0:46:03.200 --> 0:46:07.799 lower in terms of the overall amount that we had 0:46:07.800 --> 0:46:12.880 in inventory because we've been able to shift to deliveries 0:46:13.040 --> 0:46:14.520 and fulfilling orders. 0:46:15.600 --> 0:46:17.399 That as a. 0:46:17.360 --> 0:46:20.440 Result of being able to show that we had the 0:46:20.480 --> 0:46:26.719 ability to satisfy the various order requirements, and we've been 0:46:27.120 --> 0:46:30.120 a low cost operator, we've been able to manage our 0:46:30.200 --> 0:46:33.040 numbers so that our expenses compared to our peers are 0:46:33.080 --> 0:46:38.120 substantially less, so we don't have a large financial requirement. 0:46:38.680 --> 0:46:42.000 And lastly, we did have an ATM, or do have 0:46:42.040 --> 0:46:43.080 an ATM in place. 0:46:43.560 --> 0:46:45.719 We haven't drawn on it because we haven't needed it. 0:46:47.120 --> 0:46:50.960 But in the early part of twenty twenty three, as 0:46:51.000 --> 0:46:56.480 we're going through that inventory growth, we were able to 0:46:56.880 --> 0:46:59.720 take down about five million dollars off our ATM. 0:47:00.080 --> 0:47:03.480 Okay, interesting story, a really interesting story. Looks like potentially 0:47:03.480 --> 0:47:07.000 some growth there going forward as maybe see some inflation 0:47:07.080 --> 0:47:08.600 Reduction Act money come into the play. 0:47:08.800 --> 0:47:11.880 You're listening to the tape Cat's our live program, Bloomberg 0:47:11.960 --> 0:47:15.560 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:47:15.600 --> 0:47:17.560 tune in app, Bloomberg dot Com, and. 0:47:17.520 --> 0:47:18.839 The Bloomberg Business App. 0:47:18.880 --> 0:47:21.680 You can also listen live on Amazon Alexa from our 0:47:21.719 --> 0:47:26.080 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:47:26.719 --> 0:47:28.960 Let's continue our c Suite conversation. This time we're going 0:47:29.000 --> 0:47:34.520 to focus on the healthcare space, big pharma, biotechnology, therapeutics, 0:47:34.560 --> 0:47:37.400 all that good stuff. For that, We're joined by Joel Lewis. 0:47:37.400 --> 0:47:40.520 He's the CEO and president of Gallaxton Therapeutics. It's a 0:47:40.520 --> 0:47:45.160 publica trade stock on nastac. Ga l T is the 0:47:45.239 --> 0:47:47.480 symbol there. Joel, thanks so much for joining us here. 0:47:47.520 --> 0:47:50.440 Talks about what you guys are working on over at 0:47:50.480 --> 0:47:52.080 Galatin Therapeutics. 0:47:53.160 --> 0:47:55.399 Hi, Matt, Hi Paul, thank you for having me today. 0:47:55.840 --> 0:47:58.279 We pronounced the galactin therapeutic Actually. 0:47:58.239 --> 0:48:00.680 We thank you A yeah. Yeah. 0:48:01.239 --> 0:48:05.359 We are a late stage biotech company. We're conducting a 0:48:05.440 --> 0:48:08.279 large global pivotal trial. It's a Phase two B three 0:48:08.400 --> 0:48:16.399 trial in nash zorosis. Yeah yeah, So, I think when 0:48:16.400 --> 0:48:20.920 people think about cirrhosis, they normally immediately go to sorosis 0:48:20.960 --> 0:48:26.440 caused by alcohol. Actually, the fastest growing segment of this 0:48:26.520 --> 0:48:32.120 patient population is getting zerosis from fatty liver disease. So 0:48:33.760 --> 0:48:37.000 NASH is sort of the technical term for fatty liver disease, 0:48:37.080 --> 0:48:40.200 non alcoholics, theado appatitis, I won't say that again, We'll 0:48:40.200 --> 0:48:44.720 just call fatty liver disease. And again there's there's a large, 0:48:45.719 --> 0:48:50.359 a huge, growing patient population. We are specifically focused on 0:48:50.520 --> 0:48:53.399 patients who have progressed all the way to soorhosis. 0:48:54.320 --> 0:48:57.680 So talk to us about I guess that the treatment. 0:48:57.680 --> 0:49:00.000 How does your therapeutic work here? 0:49:01.040 --> 0:49:07.920 Okay, So, we have a carbohydrate molecule that actually targets galectin, 0:49:08.560 --> 0:49:15.000 specifically galectin three, which has been associated with many inflammatory diseases, 0:49:15.480 --> 0:49:18.440 and when you think about soorrhrosis, it's the ultimate inflammation 0:49:18.920 --> 0:49:23.160 that eventually leads to scar tissue. Our mechanism of action 0:49:23.320 --> 0:49:30.520 we actually target activated macrophases, which is where galactin is produced, 0:49:30.960 --> 0:49:35.759 and we reduce the over expression of galactin three when 0:49:35.840 --> 0:49:42.120 people have sorosis and reduce. When you reduce that protein, 0:49:43.400 --> 0:49:46.520 you give the Your livers are very regendative organ actually, 0:49:46.520 --> 0:49:47.879 and you give it a chance to heal. 0:49:48.880 --> 0:49:50.960 How how big is this market do you think? I know, 0:49:51.000 --> 0:49:53.520 you guys size these markets out pretty closely. 0:49:54.440 --> 0:49:56.920 So so and and I don't need everybody to take 0:49:57.000 --> 0:49:58.840 just my word for it. So I was listening to 0:49:59.520 --> 0:50:02.839 the fact You Liver Foundation, which is a patient advocacy group, 0:50:02.880 --> 0:50:06.640 that the estimate is that one third of the world 0:50:06.680 --> 0:50:11.480 population has fatty liver. And now when you say that, 0:50:11.560 --> 0:50:14.200 it's not fatty liver disease, it's just fat in their liver. 0:50:14.360 --> 0:50:17.080 So statosis is what it's. 0:50:16.880 --> 0:50:20.399 Called the medical term, and out of that patient, out 0:50:20.400 --> 0:50:23.600 of that potential patient group. Right now, in the US, 0:50:23.960 --> 0:50:28.000 the estimate from insurance reibursement is sixteen million, more than 0:50:28.040 --> 0:50:32.120 sixteen million patients. We've seen estimates higher because obviously not 0:50:32.160 --> 0:50:35.759 everybody's insured. So we've seen estimates of up to twenty 0:50:35.800 --> 0:50:39.040 eight million people who actually have fatty liver disease that's 0:50:39.080 --> 0:50:43.399 progressed to NASH and of those patients, one to two 0:50:43.440 --> 0:50:46.360 million of them will develop zorosis. 0:50:46.920 --> 0:50:49.319 So what do I guess what we've heard a lot 0:50:49.400 --> 0:50:51.400 about in the marketplace in the healthcare space over the 0:50:51.480 --> 0:50:54.600 last several months are these GLP one drugs of zempic, 0:50:54.760 --> 0:50:59.760 for example, How does that influence your part of the market. 0:51:00.480 --> 0:51:02.640 Yeah, and I heard your podcast when you guys talked 0:51:02.640 --> 0:51:07.279 about that back in August with Steven, So Yeah, obviously 0:51:07.360 --> 0:51:09.840 there's a big drive in most of the companies in 0:51:10.680 --> 0:51:15.120 the NASH space are targeting early stage fatty liver disease, 0:51:15.200 --> 0:51:19.400 and clearly, you know, patients that lose weight have a 0:51:19.400 --> 0:51:23.400 good chance to not progress to sorosis. The issue is, 0:51:23.880 --> 0:51:26.480 you know, I don't see how that all of those 0:51:26.600 --> 0:51:29.240 drugs are going to be so pervasive in the market. 0:51:29.239 --> 0:51:32.200 They're always going to be a set of patients that 0:51:32.640 --> 0:51:35.479 developed sorosis from fatty liver disease. And by the way, 0:51:36.120 --> 0:51:40.120 we happen to be doing our study in sorosis caused 0:51:40.120 --> 0:51:42.520 by fatty liver disease, but we do believe that this 0:51:42.640 --> 0:51:45.560 mechanism of action will work with all soerotic patients. And 0:51:45.600 --> 0:51:50.000 sorosis is caused by many things, including alcohol, including hepatitis. 0:51:50.040 --> 0:51:52.239 That's a much bigger problem in Asia than here. But 0:51:52.880 --> 0:51:55.880 we believe that this will always be a big patient population. 0:51:55.960 --> 0:51:59.160 And again, just so everybody knows, the only treatment for 0:51:59.360 --> 0:52:03.759 sorosis is liver transplant. There are no treatments for cirrhosis. 0:52:04.160 --> 0:52:08.120 And just to give everybody an idea, we do about 0:52:08.280 --> 0:52:12.200 nine thousand liver transplants a year in the US. I 0:52:12.239 --> 0:52:14.000 think people think that number is much bigger. 0:52:14.680 --> 0:52:19.320 Yep, Sore, where are you in the development of your therapeutics. 0:52:20.160 --> 0:52:24.920 So we are conducting our Phase two B three adaptive 0:52:25.000 --> 0:52:29.759 pivotal trial. We expect data in Q four of next year. 0:52:31.040 --> 0:52:34.680 It's an interim analysis, but if we repeat the results 0:52:34.680 --> 0:52:39.040 that we achieved in our phase two program, we will 0:52:39.600 --> 0:52:43.879 be seeking an accelerated approval at that point in time. 0:52:44.480 --> 0:52:47.960 So what's an endgame for your company and companies like 0:52:48.000 --> 0:52:50.200 yours at You know, I'm not super familiar with the 0:52:50.200 --> 0:52:52.120 healthcare space, but it seems like every Monday we have 0:52:52.160 --> 0:52:54.479 a bunch of M and A trades where big farmer 0:52:54.520 --> 0:52:57.200 company buys out a smaller farmer company to get access 0:52:57.200 --> 0:52:59.960 to their therapeutics or their drugs. Is that a typical 0:53:00.200 --> 0:53:02.080 Is that an exit for a company like yours? 0:53:02.840 --> 0:53:09.319 I think most biotech companies have that as their exit strategy. 0:53:10.920 --> 0:53:14.319 There's there's clearly a segment of the biotech industry that 0:53:14.440 --> 0:53:18.239 wants to develop the drug themselves that that is not 0:53:18.480 --> 0:53:20.960 our exit strategy. That you know, to do that, you 0:53:20.960 --> 0:53:25.000 have to have large marketing departments and big big departments 0:53:25.000 --> 0:53:26.520 that are looking at how you're going to price the 0:53:26.600 --> 0:53:29.120 drug and all those things. So so yeah, that would 0:53:29.120 --> 0:53:33.600 be you know, either either licensed the the ip or 0:53:34.000 --> 0:53:36.960 partner in some other way with pharma or a sale. 0:53:37.680 --> 0:53:39.560 And this is not just for older people. I mean, 0:53:39.600 --> 0:53:41.879 I hear when we talk about fatty liver disease, it's 0:53:41.880 --> 0:53:43.760 also for children as well, right. 0:53:44.400 --> 0:53:49.400 So, so so there there is fatty liver disease in children. 0:53:49.440 --> 0:53:52.879 They don't develop zorosis, right, Okay, so so so yes, 0:53:52.960 --> 0:53:56.000 I would I would say that that there is a 0:53:56.040 --> 0:54:02.480 growing problem with fatty liver disease in children. And certainly 0:54:03.440 --> 0:54:05.440 we have some peers in the space that are looking 0:54:05.480 --> 0:54:08.440 at those things, but we are so we are really 0:54:08.480 --> 0:54:11.319 focused on the end stage of this disease where we 0:54:11.400 --> 0:54:13.279 believe there's the greatest medical need. 0:54:13.640 --> 0:54:15.560 All right, very good, Joel Lewis, thank you so much. 0:54:15.560 --> 0:54:18.879 We appreciate it. CEO and president of Galectin Therapeutics, again, 0:54:18.960 --> 0:54:21.760 g Alt is the ticker to load into your Bloomberg 0:54:21.800 --> 0:54:24.160 terminok At that NaSTA quote's about one hundred million dollars 0:54:24.160 --> 0:54:26.319 in market cap, up seventy five percent year to date. 0:54:26.400 --> 0:54:28.880 So maybe some optimism out there in the street for 0:54:29.239 --> 0:54:30.760 this drug and this treatment. 0:54:32.840 --> 0:54:35.920 Thanks for listening to the Bloomberg Markets podcast. You can 0:54:35.960 --> 0:54:39.760 subscribe and listen to interviews at Apple Podcasts. Or whatever 0:54:39.840 --> 0:54:43.560 podcast platform you prefer. I'm Matt Miller. I'm on Twitter 0:54:43.760 --> 0:54:45.680 at Matt Miller nineteen seventy three. 0:54:46.120 --> 0:54:48.560 And I'm fall Sweeney. I'm on Twitter at pt Sweeney. 0:54:48.600 --> 0:54:51.319 Before the podcast, you can always catch us worldwide at 0:54:51.320 --> 0:54:53.040 Bloomberg Radio