WEBVTT - Flattened Yield Curve Signals a Fed Policy Error, Jersey Says 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.440 Along with my co host Lisa A. Bramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg p m 0:00:20.680 --> 0:00:31.200 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. 0:00:31.200 --> 0:00:33.760 Before we do anything, we consult with Ira Jersey, are 0:00:33.840 --> 0:00:38.520 interest rate strategist for Bloomberg Intelligence, and he joins us. Now. Ira, 0:00:38.640 --> 0:00:41.840 in one of the most recent pieces I have read 0:00:42.080 --> 0:00:46.120 that there's a variety of different type their variety of 0:00:46.120 --> 0:00:50.239 flattening types when it comes to the yield curve, and 0:00:50.320 --> 0:00:52.320 I'm wondering, what's that there. I thought, you know, I 0:00:52.360 --> 0:00:56.720 thought flat is flat, but apparently not. Yeah. So, so 0:00:56.760 --> 0:00:59.840 there's basically two ways that the curve can can change, 0:01:00.000 --> 0:01:03.000 and one way is during market selloffs, and the other 0:01:03.000 --> 0:01:06.880 way is during market rallies and um and and what 0:01:06.880 --> 0:01:09.520 what what? When you look at the history of interest 0:01:09.640 --> 0:01:12.480 rates and what the curves none versus the economy, what 0:01:12.600 --> 0:01:15.720 you find is that it's really when you get bare flattening, 0:01:15.760 --> 0:01:17.520 and that's the type of flattening that we've had now 0:01:17.959 --> 0:01:21.400 that's preceded economic slowdowns. But when you get UM, when 0:01:21.400 --> 0:01:23.959 you get both flattening, so flattening for example, like we 0:01:24.000 --> 0:01:27.560 had inn when the Fed was buying long end bonds 0:01:27.600 --> 0:01:29.680 and you wound up getting a very flat yield curve 0:01:29.720 --> 0:01:34.080 as well, that tended that type of flattening actually tends 0:01:34.080 --> 0:01:36.039 to be good for the economy. So it's basically that 0:01:36.080 --> 0:01:38.880 you have low interest rates, people are um. People are 0:01:38.880 --> 0:01:42.360 trying to stimulate the economy by um by taking advantage 0:01:42.360 --> 0:01:44.399 of those low interest rates. But when the curve flattens 0:01:44.400 --> 0:01:46.679 while the front end is selling off, it's it's not 0:01:46.800 --> 0:01:49.400 so good. So you know, there is a reason for 0:01:50.080 --> 0:01:52.200 kind of a little bit of concern with the the 0:01:52.600 --> 0:01:55.200 yield curve being as flat as it is. And quite frankly, 0:01:55.640 --> 0:01:58.360 just from a technical perspective, we're sitting right on top 0:01:58.440 --> 0:02:01.760 of a very important technical level four UM for the 0:02:01.800 --> 0:02:04.880 two year versus ten year treasury curve. Okay, So in 0:02:04.920 --> 0:02:08.960 other words, for all of the enthusiasm we hear about stocks, 0:02:09.040 --> 0:02:12.840 all the optimism, the yield curve to you is sending 0:02:12.960 --> 0:02:16.360 an ominous message that traders need to pay attention to. 0:02:17.160 --> 0:02:19.440 That is saying that the U. S economy is slowing 0:02:19.520 --> 0:02:22.880 down and is heading towards some kind of downturn. Well, 0:02:23.400 --> 0:02:26.680 so it takes a long there's long leads here. So 0:02:26.960 --> 0:02:29.840 when the yield curve gets to zero gets to flat, 0:02:29.960 --> 0:02:32.399 what you've experienced over the last forty years or so 0:02:33.000 --> 0:02:35.680 was sometime within the next two to four years. So 0:02:35.880 --> 0:02:39.360 again long long leg there. Within two to four years, 0:02:39.360 --> 0:02:42.280 you tend to get an economic slowdown. But you know, 0:02:42.280 --> 0:02:45.440 it's not the curve itself that's causing that. It's you know, 0:02:45.480 --> 0:02:47.880 the reason why we get this bare flattening is because 0:02:48.200 --> 0:02:51.200 front and interest rates are being increased by the Federal Reserve. 0:02:51.360 --> 0:02:54.440 So um, so it's really the policy error. So it's 0:02:54.440 --> 0:02:58.160 really the actions of the central bank that is causing 0:02:58.240 --> 0:03:01.560 the curve to flatten, and that's where, um you wind 0:03:01.639 --> 0:03:03.920 up getting the slow down in the economy. Get you know, 0:03:03.960 --> 0:03:05.840 one of the impacts and effects of that, and kind 0:03:05.840 --> 0:03:07.400 of the canary in the coal mine might be the 0:03:07.480 --> 0:03:10.680 flattening curve. But it's um But like I mentioned, the 0:03:10.680 --> 0:03:13.000 curb being flat in and of itself isn't necessarily bad. 0:03:13.120 --> 0:03:15.680 It's the way that it flattens and why, and that's 0:03:15.960 --> 0:03:17.920 that's the policy are part of this, all right, so 0:03:18.120 --> 0:03:21.120 policy error from the Fed, of course, UH, FED Chair 0:03:21.200 --> 0:03:23.880 jin Yellen is going to step down as soon as 0:03:23.960 --> 0:03:28.400 the appointed next FED Chair, Jerome Powell, is confirmed and 0:03:28.480 --> 0:03:32.320 sworn in early next year. I'm wondering, given the fact 0:03:32.320 --> 0:03:34.440 that Chair Yellen is going to be departing, and given 0:03:34.520 --> 0:03:39.920 the vacancies already a mug among the FED governors, can 0:03:39.960 --> 0:03:43.560 we really even have visibility into the path of the 0:03:43.560 --> 0:03:45.920 Fed's rate hikes next year? I mean, presumably that the 0:03:46.200 --> 0:03:50.120 sort of policy error here is that they're hiking too fast. Yeah, 0:03:50.120 --> 0:03:52.360 that that's exactly right. And I know that the market 0:03:52.360 --> 0:03:54.600 thinks that they're hiking too fast or that they'll hike 0:03:54.640 --> 0:03:56.960 too much, one or the other. But either way it 0:03:57.000 --> 0:03:58.920 would be that would be a policy error, and it 0:03:59.040 --> 0:04:01.240 you know, it's hard to judge what the future Fed's 0:04:01.280 --> 0:04:02.680 going to be. We're going to get a whole lot 0:04:02.680 --> 0:04:05.280 of new governors. We already have a number of new 0:04:05.360 --> 0:04:07.240 members of the f O m C in in the 0:04:07.320 --> 0:04:12.120 form of of several presidents who have been appointed recently. UM, 0:04:12.160 --> 0:04:14.600 and you're gonna get a new a new vice chair 0:04:14.640 --> 0:04:18.320 of the Federal Open Market Committee when UM, when new 0:04:18.400 --> 0:04:21.400 York Fed President Dudley retires at the end of next 0:04:21.440 --> 0:04:25.920 year resigns um sometime next year, so so we really 0:04:25.920 --> 0:04:28.680 don't know exactly what future monetary policy will bring. So 0:04:28.720 --> 0:04:31.560 that's one reason why listening to the confirmation hearings of 0:04:31.640 --> 0:04:34.719 Jerome Powell and uh you know who the who the 0:04:34.760 --> 0:04:38.360 President picks as the next vice chair, those two seats 0:04:38.360 --> 0:04:42.120 in particular will probably be very important for um for 0:04:42.240 --> 0:04:44.760 what the future monetary policy is. What will they be 0:04:44.800 --> 0:04:46.680 more dubbish, will they be more hawkers, or will they 0:04:46.680 --> 0:04:49.000 stay the course like it's you know, we can all 0:04:49.000 --> 0:04:52.080 make speculations, but in reality, I don't think anyone quite 0:04:52.160 --> 0:04:54.320 knows at this point. I just want to go back 0:04:54.360 --> 0:04:56.520 to something you talked about having to do with this 0:04:56.600 --> 0:05:00.440 flattening of the yield curve and your analysis at last 0:05:00.480 --> 0:05:03.960 time that this offered itself. We saw a lot of 0:05:04.000 --> 0:05:07.080 bond buying by the Federal Reserve, by the Central Bank, 0:05:07.279 --> 0:05:10.400 and that's not taking place now. Now, that's right, And 0:05:10.440 --> 0:05:13.360 in fact, you know, the Federal Reserve is um already 0:05:13.400 --> 0:05:17.040 starting to allow its portfolio to run off, and starting 0:05:17.040 --> 0:05:20.320 in price February or March next year, the Treasury Department 0:05:20.400 --> 0:05:23.360 is going to have to start issuing more bonds, partially 0:05:23.440 --> 0:05:26.440 due to um to this extra supply that the Fed's 0:05:26.480 --> 0:05:28.600 not going to be buying every every month when they 0:05:28.640 --> 0:05:31.480 have maturities, but also because there's going to be higher 0:05:31.520 --> 0:05:35.040 deficits starting next year, um just because Medicare and sort 0:05:35.080 --> 0:05:37.159 of security payments are going to go up, and and 0:05:37.240 --> 0:05:40.560 the potential for additional deficits based on on the budget 0:05:40.560 --> 0:05:43.359 that Congress passed recently, which could add another hundred and 0:05:43.360 --> 0:05:47.160 fifty billion dollars of potential supply into the market. So 0:05:47.160 --> 0:05:49.560 so there is going to be this, uh, this supply. 0:05:50.160 --> 0:05:51.560 I don't want to call it fear, but there is 0:05:51.560 --> 0:05:53.520 going to be certainly a supply push which is going 0:05:53.520 --> 0:05:57.080 to have to be absorbed, and that could certainly affect prices, 0:05:57.160 --> 0:05:59.919 and where and how it affects those prices will be 0:06:00.080 --> 0:06:03.640 determined by what bonds the Treasury Department decides the issue. 0:06:03.839 --> 0:06:06.760 So will this be a good empirical test that if 0:06:06.800 --> 0:06:11.479 stock prices continue to move higher or are higher. Let's 0:06:11.480 --> 0:06:17.360 say in that the argument that stock prices moved because 0:06:17.440 --> 0:06:22.360 of this extra liquidity from central banks, that theory would 0:06:22.400 --> 0:06:27.200 be tossed out the window if we saw prices accelerate. Well, 0:06:27.240 --> 0:06:29.960 I think you know, liquidity is is a strange is 0:06:29.960 --> 0:06:32.600 a strange thing. I think one of the things is 0:06:32.720 --> 0:06:35.719 that you've you've seen now more recently, the fact that 0:06:35.800 --> 0:06:38.159 you don't need all the liquidity from the FED reserve 0:06:38.200 --> 0:06:40.279 for the economy to run. I mean, basically, what the 0:06:40.320 --> 0:06:42.680 Fed did when they did all the bond buying, did 0:06:42.680 --> 0:06:45.440 all the quantitative easing, was to try and jump start 0:06:45.480 --> 0:06:47.479 the economy. It was kind of like you know, putting 0:06:47.760 --> 0:06:51.159 a doctor putting on the the you know, the A 0:06:51.279 --> 0:06:53.680 D and and trying to you know, kick start your heart. 0:06:53.800 --> 0:06:56.159 That's basically what queue is. But now you know, the 0:06:56.200 --> 0:06:59.600 economy is pumping on its own and it doesn't necessarily 0:06:59.640 --> 0:07:01.880 need all the accommodation that it's had. Now. The problem 0:07:01.920 --> 0:07:04.640 is is that if you pull that accommodation out too quickly, 0:07:05.040 --> 0:07:08.040 you have a detrimental effect. And that's I think the worry, 0:07:08.080 --> 0:07:11.120 and that's that's that's really going to be Powell's um. 0:07:11.440 --> 0:07:15.120 The challenge for the power Powell set is not removing 0:07:15.120 --> 0:07:18.720 accommodation too fast that you really stifled the economy and 0:07:18.760 --> 0:07:21.080 you wind up hurting things like corporate profits and the 0:07:21.200 --> 0:07:25.080 like were real quick, which yield curve Do you look 0:07:25.120 --> 0:07:28.960 at so so you know the one that has the 0:07:29.000 --> 0:07:32.040 best um, the best correlation to the economy is the 0:07:32.160 --> 0:07:35.560 two year versus tenure treasury yield curve. UM. No, that 0:07:35.560 --> 0:07:37.760 that's the main one. All right, Ira, Jersie, thank you 0:07:37.800 --> 0:07:52.440 so much for joining us. As always, well, the U 0:07:52.640 --> 0:07:55.320 S is suing to stop a T and T S 0:07:55.400 --> 0:07:59.720 takeover of time Warner. There are all sorts of suspicions 0:07:59.800 --> 0:08:02.680 and rumors that the Department of Justice is doing this, 0:08:03.200 --> 0:08:07.200 uh due to CNN and President Trump's contentious relationship with that. 0:08:07.280 --> 0:08:10.640 These have not been proven, and in fact, some are 0:08:10.680 --> 0:08:14.520 saying that this lawsuit by the d o J resembles 0:08:14.720 --> 0:08:20.040 classic antitrust cases that are pretty much routine. Here to 0:08:20.040 --> 0:08:22.720 talk about it and put it into perspective is Jennifer Ree, 0:08:22.760 --> 0:08:26.480 senior litigation analyst for Bloomberg Intelligence. She joins us in 0:08:26.480 --> 0:08:30.280 our eleven three oh studios. Jennifer, is this a routine 0:08:30.440 --> 0:08:33.840 antitrust case? You know? No, I would not call it 0:08:33.920 --> 0:08:37.200 a routine antitrust case. I would call it a routine 0:08:37.480 --> 0:08:40.240 theory of harm. And I think the big difference there 0:08:40.360 --> 0:08:44.000 is that theories of harm from a vertical deal are 0:08:44.080 --> 0:08:47.920 talked about in discussed. Um. Sometimes they come up and 0:08:47.960 --> 0:08:50.920 they get resolved in mergers with behavioral remedies. But the 0:08:50.960 --> 0:08:53.760 reason I say it's not necessarily a routine case is 0:08:53.800 --> 0:08:57.120 because we haven't seen actual litigation to try to block 0:08:57.200 --> 0:09:00.240 this kind of deal in a very very long time time. 0:09:00.280 --> 0:09:03.240 And it's really kind of a departure from you know, 0:09:03.320 --> 0:09:05.960 D O J precedent in history, and so it is. 0:09:06.040 --> 0:09:08.559 It is surprising, and I think that's why these political 0:09:09.200 --> 0:09:13.120 ideas are kind of haunting this. Okay, so the political 0:09:13.200 --> 0:09:18.720 ideas are haunting this, uh potential combination. I have to 0:09:20.360 --> 0:09:24.120 assume that somebody in the Council's office at a T 0:09:24.320 --> 0:09:28.760 and T sat down with Mr Stevenson, the CEO, even 0:09:28.880 --> 0:09:33.000 before they decided to make this attempt public, to go 0:09:33.120 --> 0:09:35.600 over some of these issues. Do you think that this 0:09:35.720 --> 0:09:38.280 was something that was discussed and then said, oh no, 0:09:38.360 --> 0:09:41.360 we'll get over it or what do you how does 0:09:41.520 --> 0:09:44.000 how does that work? And you're talking about in advising 0:09:44.040 --> 0:09:46.400 the companies as whether they face risk, you know, I mean, 0:09:46.440 --> 0:09:48.680 that's what's really tough here. My guess is that the 0:09:48.679 --> 0:09:51.720 outside lawyers said, look, there there always can be some 0:09:51.760 --> 0:09:54.319 harms that come from vertical deals. But look for fifty years, 0:09:54.360 --> 0:09:56.800 they've been treated in one way. So you will likely 0:09:56.840 --> 0:09:58.880 be able to close this deal, but you'll likely have 0:09:58.960 --> 0:10:01.920 to agree to a consent order, a settlement where you 0:10:02.520 --> 0:10:05.439 moderate your conduct, where you agree that after you emerged 0:10:05.559 --> 0:10:07.880 you will behave in a certain way. You're probably going 0:10:07.920 --> 0:10:09.800 to have to make those agreements. But with that, we 0:10:09.840 --> 0:10:13.120 think you'll be able to close. That's likely the legal 0:10:13.120 --> 0:10:16.160 opinion that they got. Yeah, so then they went with 0:10:16.200 --> 0:10:19.839 that and the Department of Justice kind of turned things 0:10:20.240 --> 0:10:23.160 on their head. I want to talk about the precedent 0:10:23.240 --> 0:10:26.520 this sets. You know, if this is a departure from 0:10:26.559 --> 0:10:30.040 the norm, what does this mean about a deal, uh, say, 0:10:30.080 --> 0:10:34.280 like the Tribune at Sinclair Broadcasting merger. I mean that 0:10:34.360 --> 0:10:38.120 combination would give the company access to seventy two percent 0:10:38.280 --> 0:10:41.760 of the American television audience. Are you expecting this deal 0:10:41.920 --> 0:10:44.480 to get the same kind of scrutiny from the Department 0:10:44.480 --> 0:10:46.800 of Justice? You know, I think that's a great question 0:10:46.840 --> 0:10:49.400 because it will be so interesting to see how that's treated. 0:10:49.720 --> 0:10:52.480 It gives some clue as to whether politics have weighed 0:10:52.480 --> 0:10:54.560 in on the A T and T Time Warner deal 0:10:54.640 --> 0:10:57.880 because Sinclair theoretically we we assume as a friend to 0:10:57.920 --> 0:11:01.439 this administration or the administrations of friend to Sinclair. And 0:11:01.760 --> 0:11:03.920 if you look at the way past similar deals have 0:11:04.000 --> 0:11:06.840 been treated, I would expect that they'd have to divest 0:11:07.000 --> 0:11:10.480 sell off at least ten stations, ten stations in ten 0:11:10.520 --> 0:11:12.760 different markets, but possibly even a few more, but at 0:11:12.840 --> 0:11:16.960 least divest in ten markets. If we this would follow 0:11:17.080 --> 0:11:19.800 the precedent that's been set in similar deals to the 0:11:19.800 --> 0:11:22.920 Sinclair Tribune deal. If we don't see that, then it 0:11:23.000 --> 0:11:28.520 makes this all look more political. I'm struggling here also, 0:11:28.679 --> 0:11:36.800 because typically Republican administrations have been more allowing of big deals. 0:11:36.800 --> 0:11:41.280 That's sort of the assumption that mergers have an easier 0:11:41.320 --> 0:11:47.600 time getting through under Republican administrations. Is that an inaccurate impression? 0:11:47.640 --> 0:11:50.120 And if it's not, how does this square with that? 0:11:50.640 --> 0:11:53.040 You know, that's a very accurate impression. And I think 0:11:53.040 --> 0:11:54.880 there are a lot out there that had that impression, 0:11:54.880 --> 0:11:57.520 because if you remember, just about a month ago or so, 0:11:57.640 --> 0:12:01.439 Senator Elizabeth Warren was asking for this new head of 0:12:01.480 --> 0:12:03.760 antitrust at the d o J to recuse himself from 0:12:03.800 --> 0:12:06.400 this deal, and she is against this deal. She has, 0:12:06.880 --> 0:12:09.920 you know, vocalized her her opinion about it, So obviously 0:12:10.000 --> 0:12:11.920 what she was thinking is that he would also just 0:12:12.000 --> 0:12:13.800 sign on the dotted line to get let this go 0:12:13.880 --> 0:12:17.480 forward as well. I think most of the antitrust community 0:12:17.559 --> 0:12:20.440 is very surprised by this for that reason, and and 0:12:20.440 --> 0:12:23.119 and that is why you hear people talking about politics 0:12:23.120 --> 0:12:26.240 and politics weighing in, because this just seems so out 0:12:26.280 --> 0:12:28.880 of the ordinary, well out of the ordinary or not. 0:12:29.200 --> 0:12:33.200 CNN and Time Warner, they are all content providers, right, 0:12:33.240 --> 0:12:37.120 they don't actually own any of the distribution assets. That 0:12:37.240 --> 0:12:39.959 is where a T and T comes in. That's right. 0:12:40.200 --> 0:12:43.520 So what is the anti true? What is the argument, 0:12:43.559 --> 0:12:46.840 if you can make it, what's the antitrust argument that says, no, 0:12:47.080 --> 0:12:50.800 you're a distribution company, We don't want you owning the 0:12:50.920 --> 0:12:55.760 content that would then be distributed on your pathways as 0:12:55.760 --> 0:12:58.920 well as those of your competitors. The argument that's been 0:12:58.920 --> 0:13:01.280 made here is an economic argument, and it is that 0:13:01.840 --> 0:13:04.800 by they get added leverage by owning the content, it 0:13:04.840 --> 0:13:07.240 will give them the freedom to raise the price survival 0:13:07.280 --> 0:13:11.160 distributors because either they make more money by raising the price, 0:13:11.400 --> 0:13:14.079 or if these distributors refuse to pay that and they 0:13:14.080 --> 0:13:16.880 have a blackout of their of their television stations. Then 0:13:16.960 --> 0:13:19.360 some of those subscribers will be lost to that distributor 0:13:19.400 --> 0:13:20.720 and we'll come over to a T and T. So 0:13:20.800 --> 0:13:23.560 in the long run they'll benefit from it. Does that 0:13:24.280 --> 0:13:26.720 mean that the next step would be to go after 0:13:26.760 --> 0:13:30.600 a company like Comcast to divest the or split the 0:13:30.720 --> 0:13:35.440 content producing division from the distribution division. Now, I don't 0:13:35.520 --> 0:13:37.920 think that that that the anti drest agencies would do 0:13:37.960 --> 0:13:40.720 that at this point unless there is some evidence or 0:13:40.760 --> 0:13:43.240 some reason that they want to investigate the company for 0:13:43.280 --> 0:13:46.640 potential anti competitive conduct at this point. All right, thanks 0:13:46.760 --> 0:13:49.959 very much for being with us sharing the updates. This 0:13:50.040 --> 0:13:52.200 is a story that's going to keep on giving. Indeed, 0:13:52.200 --> 0:13:56.960 thank you very much. Jennifer resurstigation analyst for Bloomberg Intelligence, 0:13:57.200 --> 0:13:59.920 speaking about a T and T S attempt to acquire 0:14:00.320 --> 0:14:04.000 Time Warner and push back from the US Justice Department. 0:14:17.600 --> 0:14:20.680 Uh Denver is going to get a hyperloop or rather 0:14:21.080 --> 0:14:24.600 hyperloop inspired system, and the person who is going to 0:14:24.680 --> 0:14:28.520 build it is Brogan. Ben Brogan, founder and chief executive 0:14:28.560 --> 0:14:32.160 officer of Rivo based in Los Angeles, California, and he 0:14:32.240 --> 0:14:37.560 joins US now. Brogan is an early Space X engineer 0:14:37.600 --> 0:14:40.920 and is working on making it quicker for people to 0:14:40.960 --> 0:14:44.760 get from one major hub to another. Brogan, thank you 0:14:44.800 --> 0:14:47.240 so much for joining us. Can you give us a 0:14:47.320 --> 0:14:50.280 sense of what exactly it is that you are working 0:14:50.280 --> 0:14:55.200 on in Denver? Absolutely? Thank you in the good morning. Um, yeah, 0:14:55.240 --> 0:14:58.960 so it is century. So I figured let's get some 0:14:59.000 --> 0:15:03.120 more century technology into transportation. So what we're designing is 0:15:03.160 --> 0:15:07.440 an integrated vehicle system that works in enclosed environment. Um. 0:15:07.520 --> 0:15:08.960 So it is kind of like a hyper loop, and 0:15:09.000 --> 0:15:11.800 that we have a dedicated roadway or guideway that we 0:15:11.840 --> 0:15:15.000 move our vehicles, but we do not operate in a vacuum. 0:15:15.200 --> 0:15:17.720 And we're focused more on kind of regional and super 0:15:17.760 --> 0:15:22.440 regional travel of kind of unlocking traffic and cities. Is 0:15:22.480 --> 0:15:25.120 what we want to do with this new technology. Can 0:15:25.160 --> 0:15:27.120 you give us some idea of the cost of this 0:15:27.200 --> 0:15:31.360 new technology, because there's been some estimates that well, I know, 0:15:31.440 --> 0:15:34.360 for example, Elon Musk when he first put forth the 0:15:34.440 --> 0:15:38.480 hyper loop concept that was back in I think the 0:15:38.560 --> 0:15:41.440 cost was estimated at around eleven and a half million 0:15:41.480 --> 0:15:45.480 dollars per mile of hyper loop. How have you costed 0:15:45.480 --> 0:15:49.160 this out? Uh, well, we think we're gonna be far 0:15:49.280 --> 0:15:51.640 cheaper than than other forms of the hyper loop. You know, 0:15:51.680 --> 0:15:54.240 one of the things by eliminating the vacuum, of course, 0:15:54.280 --> 0:15:57.840 it eliminates the the operating cost, eliminates some of the 0:15:57.880 --> 0:16:00.680 capital costs. It doesn't eliminate the and cost. It brings 0:16:00.720 --> 0:16:04.600 them down. It brings down the capital costs and of 0:16:04.640 --> 0:16:07.600 course makes it much more safer. So we have a 0:16:07.600 --> 0:16:10.480 partner in Denver. Region four seventy is a toll road 0:16:10.520 --> 0:16:12.480 that moves a lot of people around the region. Already. 0:16:13.360 --> 0:16:15.480 With our system, we can move more people on a 0:16:15.480 --> 0:16:18.160 given lane of road. Uh, and I'll talk a little 0:16:18.160 --> 0:16:21.200 bit about more about that in a second, but uh, 0:16:21.400 --> 0:16:24.000 we're gonna be operating our system at the same cost 0:16:24.200 --> 0:16:26.760 or lower as the current toll road, so it should 0:16:26.760 --> 0:16:28.920 be very very low cost and everyone will be able 0:16:28.920 --> 0:16:32.560 to use it. Can you help me picture in my 0:16:32.680 --> 0:16:36.400 head what this looks like. So it's an enclosed space 0:16:36.720 --> 0:16:40.080 and you go in your own car, or you go 0:16:40.160 --> 0:16:43.080 in a car that is sort of resting on some 0:16:43.160 --> 0:16:48.120 kind of magnetic track, and it goes to a certain 0:16:48.160 --> 0:16:50.720 place and goes two hundred miles per hour? Am I butchering? 0:16:50.760 --> 0:16:54.600 This is that? Basically? No, it's it's also so okay, 0:16:54.760 --> 0:16:57.800 if you've seen um, maybe some of the images of 0:16:58.120 --> 0:17:01.880 classic hyper LUPSI above grade or in tunnels. We can 0:17:01.880 --> 0:17:04.560 do both of those. But a EVA was also designed 0:17:04.560 --> 0:17:07.000 to work on an existing lane of freeway. So what 0:17:07.080 --> 0:17:08.840 we can do is we can put our own technology 0:17:08.920 --> 0:17:11.760 right down on the roadway. We do put an encapsulation 0:17:11.880 --> 0:17:14.359 over it so it keeps the weather off, it keeps 0:17:14.400 --> 0:17:18.320 tree branches, soda bottles. Basically allows us to short circuit 0:17:18.320 --> 0:17:21.520 ourselves to level five autonomy. So inside the system, uh, 0:17:21.600 --> 0:17:24.640 you can drive your own vehicle onto a sleigh. That way, 0:17:24.680 --> 0:17:26.639 you can take your own stuff on the bother of 0:17:26.640 --> 0:17:28.359 a fourteen month old so I can assure you we 0:17:28.359 --> 0:17:30.280 have a lot of stuff in our car. I don't 0:17:30.280 --> 0:17:32.439 always want to take a lift, so you can do that. 0:17:32.480 --> 0:17:34.159 You can put your surfboard or your skis in it 0:17:34.640 --> 0:17:37.160 um and you can zip you know, in our infrastructure 0:17:37.160 --> 0:17:38.800 and then drive your own car in the last mile. 0:17:38.880 --> 0:17:41.639 There's we have multiple products. We also have what we 0:17:41.680 --> 0:17:44.119 call super Metro, sort of like a metro style product 0:17:44.119 --> 0:17:46.960 that carries groups of people that can have beyond bicycles 0:17:47.040 --> 0:17:50.400 or pedestrians. We also have a palette zipper UM and 0:17:50.480 --> 0:17:52.639 so wherever we have our infrastructure, there's gonna be some 0:17:52.640 --> 0:17:54.760 dedicated places where you you load and get on it 0:17:54.760 --> 0:17:57.320 and then yeah, you you end up moving fully autonomously 0:17:57.680 --> 0:17:59.840 and two winter miles an hour. Um, you know to 0:18:00.080 --> 0:18:02.600 the portals closest to your final destination. Is it? Is 0:18:02.640 --> 0:18:05.040 it magnetic? Is it is it wind? Are you just 0:18:05.080 --> 0:18:07.640 being sucked as quickly as possible to the other side? 0:18:07.720 --> 0:18:11.200 I mean, what what is this? No? No, no, there's uh, 0:18:11.240 --> 0:18:15.480 there's no giant sucking sound. Um, it is magnetic levitation 0:18:15.520 --> 0:18:18.640 and propulsion. So linear electric motors are used in roller 0:18:18.680 --> 0:18:21.639 coasters today they're using aircraft launch systems. So we're just 0:18:21.680 --> 0:18:25.720 optimizing it for our application on the roadway. UM, we 0:18:25.760 --> 0:18:29.119 do levitated high speeds that both enables the high speed itself. 0:18:29.160 --> 0:18:31.639 What also means it's a super smooth ride because we 0:18:31.640 --> 0:18:33.919 can actively control that, so it would literally be as 0:18:33.920 --> 0:18:37.000 smooth as sitting in the chair. Um. So you know, 0:18:37.040 --> 0:18:39.280 we're just taking some of these twenty century technologies and 0:18:39.280 --> 0:18:43.239 really focusing. You know, as populations urbanized, more people are 0:18:43.280 --> 0:18:46.320 moving to cities. Traffic is a major problem. So what 0:18:46.359 --> 0:18:47.960 we want to do is do more with less. So 0:18:48.080 --> 0:18:51.120 our focus is on getting more vehicles on a given 0:18:51.200 --> 0:18:53.760 lane of infrastructure. That's the key. Just to put a 0:18:53.800 --> 0:18:57.639 quick number to that, given freeway, depending on which standard 0:18:57.680 --> 0:19:00.480 you use, can move about two thousand to thirty hundred 0:19:00.520 --> 0:19:03.720 vehicles per lane per hour. The Rebo system to move 0:19:03.760 --> 0:19:06.639 twenty thousand vehicles per lane per hours. This idea that 0:19:06.680 --> 0:19:11.600 you can enable regional mobility with less infrastructure. I hate 0:19:11.600 --> 0:19:13.680 to keep harping on the on the money, but I'm 0:19:13.720 --> 0:19:15.879 but I'm wondering how much money have you have you 0:19:15.960 --> 0:19:18.560 raised so far to do this or how much money 0:19:18.600 --> 0:19:22.800 has the Colorado Department of Transportation put into this partnership. 0:19:23.680 --> 0:19:26.760 So yeah, So the the study that we've announced, we 0:19:26.840 --> 0:19:30.000 formed a public private partnership. Uh see dot put in 0:19:30.040 --> 0:19:32.960 about Colorade Department Transportation put in about two hundred thousand 0:19:33.000 --> 0:19:35.760 dollars for the first phase of this study. Uh And 0:19:35.760 --> 0:19:38.159 and if we're successful, then then we like to to 0:19:38.160 --> 0:19:40.840 to go a little further with that. M Our Companies 0:19:40.880 --> 0:19:43.480 privately funded. We're gonna be dealing our series A uh 0:19:43.520 --> 0:19:45.040 coming up, and I'd be happy to come back on 0:19:45.080 --> 0:19:47.639 the show and announce that. But we do have a 0:19:47.640 --> 0:19:51.160 team of of over forty people, mostly engineers, really world 0:19:51.200 --> 0:19:54.320 class talent from from all the most you know, technically 0:19:54.359 --> 0:19:58.359 impressive companies and universities around the world. Amazing team. Where 0:19:58.440 --> 0:20:01.119 is this being tested? Is there a place where someone 0:20:01.160 --> 0:20:05.000 could go and actually see something that was built? Because 0:20:05.000 --> 0:20:07.639 I know that the hyper loop that Elon Musk has 0:20:07.640 --> 0:20:10.800 put together, I believe that there's a test center in Nevada. 0:20:11.560 --> 0:20:15.119 What you want to built a test hyper loop in Hawthorne, California, 0:20:15.200 --> 0:20:17.760 and there's a private company that built a test system 0:20:17.800 --> 0:20:20.200 in Nevada. We are going to be doing that, so 0:20:20.359 --> 0:20:23.080 you know in Los Angeles where our engineering headquarters is, 0:20:23.080 --> 0:20:25.879 we're doing competent level work. Mind you were only you know, 0:20:25.960 --> 0:20:29.000 nine months old as a company, and we did announced 0:20:29.040 --> 0:20:31.679 also a test site in Denver, So we will be 0:20:31.720 --> 0:20:34.280 doing system level testing and we're gonna have shovels in 0:20:34.320 --> 0:20:36.520 the ground for our own test site in Q one 0:20:36.520 --> 0:20:39.800 of next year. You have been you're only around for 0:20:39.880 --> 0:20:42.000 nine months and you've got a fourteen month old. You 0:20:42.080 --> 0:20:46.640 must have had a crazy year. It's crazy good but yes, 0:20:46.720 --> 0:20:51.200 crazy um real quick? In your company? Are the actual 0:20:51.320 --> 0:20:54.679 builders part of the company or are you going to 0:20:55.359 --> 0:20:59.960 contract out that work? And is there enough uh, those 0:21:00.080 --> 0:21:05.560 types of workers to actually construct something like this? Oh? Um? 0:21:05.560 --> 0:21:08.560 So you know our company is really a technology company. 0:21:08.600 --> 0:21:12.159 As we move into projects, we're all about the partner ecosystem. 0:21:12.160 --> 0:21:14.480 We've partnered with a Coom, the world's number one design 0:21:14.520 --> 0:21:17.680 construction firm, on this never project. We have other partners 0:21:17.680 --> 0:21:20.879 in different places around the world. Um, so we'll be 0:21:20.920 --> 0:21:23.639 building out a workforce in Denver that's going to be 0:21:23.680 --> 0:21:25.880 a Revo employees, but it will also be a workforce 0:21:25.880 --> 0:21:27.919 in Denver that will be supporting the project. So the 0:21:27.960 --> 0:21:31.680 project will be separate from our balance sheet. All right, Well, 0:21:31.880 --> 0:21:35.120 we look forward to learning more about it and perhaps 0:21:35.160 --> 0:21:37.320 even getting a ride on it when it is built. 0:21:37.359 --> 0:21:39.280 Thank you very much for being with us. A. Brogan 0:21:39.400 --> 0:21:42.639