1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,560 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,159 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:27,880 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Michael 7 00:00:27,920 --> 00:00:32,360 Speaker 1: Flynn has left the courthouse after entering a guilty plea 8 00:00:32,600 --> 00:00:36,440 Speaker 1: to making false statements to FBI agents. And we did 9 00:00:36,479 --> 00:00:40,160 Speaker 1: get that statement from Flynn's attorney. We also are getting 10 00:00:40,320 --> 00:00:44,040 Speaker 1: a statement from President Trump's lawyer, Ty Cobb. I will 11 00:00:44,040 --> 00:00:47,280 Speaker 1: read the whole thing to you. It is quote today, 12 00:00:47,320 --> 00:00:50,720 Speaker 1: Michael Flynn, a former National security adviser at the White 13 00:00:50,760 --> 00:00:53,920 Speaker 1: House for twenty five days during the Trump administration and 14 00:00:53,960 --> 00:00:57,320 Speaker 1: a former Obama administration official, entered a guilty plea to 15 00:00:57,360 --> 00:00:59,960 Speaker 1: a single count of making a false statement to the FBI. 16 00:01:00,320 --> 00:01:02,760 Speaker 1: The false statements involved mirror the false statements to the 17 00:01:02,800 --> 00:01:06,240 Speaker 1: White House officials, which resulted in his resignation in February 18 00:01:06,319 --> 00:01:09,000 Speaker 1: of this year. Nothing about the guilty plea or the 19 00:01:09,080 --> 00:01:13,080 Speaker 1: charge implicates anyone other than Mr Flynn. The conclusion of 20 00:01:13,120 --> 00:01:15,840 Speaker 1: this phase of the Special Counsel's work demonstrates again that 21 00:01:15,880 --> 00:01:18,880 Speaker 1: the Special Counsel is moving with all deliberate speed and 22 00:01:18,920 --> 00:01:23,160 Speaker 1: clears the way for a prompt and reasonable conclusion. Here 23 00:01:23,200 --> 00:01:26,240 Speaker 1: with us to discuss the process that Mueller is going 24 00:01:26,400 --> 00:01:30,240 Speaker 1: through and to sort of speak about what went into 25 00:01:30,360 --> 00:01:33,640 Speaker 1: or likely went into this plea agreement. As June Grosso, 26 00:01:33,720 --> 00:01:36,319 Speaker 1: host of Bloomberg Law and Bloomberg Beast, thank you so 27 00:01:36,360 --> 00:01:39,120 Speaker 1: much for joining us, Jun, So let's start with with 28 00:01:39,200 --> 00:01:42,240 Speaker 1: just that. I mean, what what do you think reasonably 29 00:01:42,440 --> 00:01:45,120 Speaker 1: went into this plea that we saw today from Michael Flinn. Well, 30 00:01:45,160 --> 00:01:47,040 Speaker 1: I think what you have to look at is the 31 00:01:47,080 --> 00:01:50,880 Speaker 1: fact that he's pleading guilty to one count of lying 32 00:01:50,960 --> 00:01:55,720 Speaker 1: to federal investigators. Even in the information itself it lists 33 00:01:55,720 --> 00:02:00,280 Speaker 1: two separate instances of lying. So this is a very 34 00:02:00,320 --> 00:02:03,040 Speaker 1: good deal for him. It's it's a one felony account 35 00:02:03,080 --> 00:02:05,800 Speaker 1: that's as much as five years. What's happening is he 36 00:02:05,840 --> 00:02:09,160 Speaker 1: has admitted in a statement today he is cooperating with 37 00:02:09,600 --> 00:02:14,040 Speaker 1: Muller and he must have some very important information to 38 00:02:14,440 --> 00:02:17,800 Speaker 1: give him. And he's also it's said that he was 39 00:02:17,960 --> 00:02:22,400 Speaker 1: instructed by people in the transition team to he called 40 00:02:22,400 --> 00:02:26,800 Speaker 1: them before he made these approaches to the Russians. So 41 00:02:26,880 --> 00:02:28,680 Speaker 1: you have to look at what's going on, and remember, 42 00:02:28,680 --> 00:02:31,760 Speaker 1: if you put it in context, two days after this meeting, 43 00:02:32,000 --> 00:02:37,320 Speaker 1: you had former Deputy Attorney General Sally Yates warning the 44 00:02:37,480 --> 00:02:41,480 Speaker 1: Trump White House that Flynn was a security risk, and 45 00:02:41,560 --> 00:02:46,160 Speaker 1: you had after that, you had President Trump allegedly asking 46 00:02:46,280 --> 00:02:49,800 Speaker 1: Jim Comey for that oath of loyalty. So if you 47 00:02:49,840 --> 00:02:51,760 Speaker 1: put all this in context, you can see that he 48 00:02:51,880 --> 00:02:55,520 Speaker 1: is building his case. Well, I'm just wondering, though, what 49 00:02:55,720 --> 00:02:59,360 Speaker 1: this sort of plea deal does to Michael Flynn's credibility, 50 00:02:59,440 --> 00:03:02,079 Speaker 1: because you know how much could people say, well, he's 51 00:03:02,080 --> 00:03:05,440 Speaker 1: gonna say all sorts of stuff because he's trying to 52 00:03:05,440 --> 00:03:07,400 Speaker 1: get his son off, and he's trying to get himself 53 00:03:07,400 --> 00:03:10,960 Speaker 1: a sweet deal, and he has serious charges pending. So yeah, 54 00:03:10,960 --> 00:03:14,079 Speaker 1: he'll throw President Trump under the bus. That's what people 55 00:03:14,120 --> 00:03:16,760 Speaker 1: say that all the time about co operators. And you 56 00:03:16,800 --> 00:03:20,720 Speaker 1: know what, juris believe co operators almost every single time. 57 00:03:21,080 --> 00:03:24,720 Speaker 1: It's not just his word. He's Muller isn't is really 58 00:03:24,800 --> 00:03:27,239 Speaker 1: building such a strong case. He's going to be backed 59 00:03:27,320 --> 00:03:31,200 Speaker 1: up by so many other people, by evidence, by papers 60 00:03:31,720 --> 00:03:35,160 Speaker 1: and this isn't the end um. Mueller is not stopping here. 61 00:03:35,440 --> 00:03:37,680 Speaker 1: So and people, you know, there are there are cases 62 00:03:37,680 --> 00:03:39,760 Speaker 1: where there are murderers. I can think of, you know, 63 00:03:39,800 --> 00:03:43,320 Speaker 1: the mob cases where people get on the stand and 64 00:03:43,320 --> 00:03:46,160 Speaker 1: they admit to killing people. You think of some of 65 00:03:46,200 --> 00:03:48,800 Speaker 1: the famous mob cases, and everyone says, well, who's going 66 00:03:48,800 --> 00:03:51,280 Speaker 1: to believe a co operator? He's he's making a deal. 67 00:03:52,120 --> 00:03:55,840 Speaker 1: But juries believe co operators every day of the week 68 00:03:55,960 --> 00:03:59,920 Speaker 1: in courthouses across the country. June, we were speaking early 69 00:04:00,000 --> 00:04:03,720 Speaker 1: there with Marty Schenker, Bloomberg chief Content Officer, and one 70 00:04:03,720 --> 00:04:06,680 Speaker 1: of the things he brought up is that, uh, Robert 71 00:04:06,800 --> 00:04:12,000 Speaker 1: Muller and the investigators and the FBI, they have perhaps 72 00:04:12,120 --> 00:04:16,320 Speaker 1: wire taps, they have a variety of interviews with people 73 00:04:16,360 --> 00:04:20,080 Speaker 1: that we don't know about. So is that apostle is 74 00:04:20,520 --> 00:04:23,359 Speaker 1: the way the case is built? Is that in the 75 00:04:23,440 --> 00:04:27,839 Speaker 1: example of Michael Flynn, you present him with evidence that 76 00:04:27,960 --> 00:04:32,039 Speaker 1: he may not know that you have. The way the 77 00:04:32,160 --> 00:04:35,240 Speaker 1: FBI often operates, and in this instance, it looks like 78 00:04:35,279 --> 00:04:38,680 Speaker 1: that's what happened because he lied to them. The FBI, 79 00:04:38,839 --> 00:04:43,760 Speaker 1: when they interview these people, has information and they asked 80 00:04:43,800 --> 00:04:47,799 Speaker 1: them questions about it. But they withhold some information, they don't. 81 00:04:47,960 --> 00:04:50,520 Speaker 1: They don't give it all at once, and then they 82 00:04:50,560 --> 00:04:53,039 Speaker 1: bring them back and there's a process of going back 83 00:04:53,040 --> 00:04:55,839 Speaker 1: and forth. It can go in different ways. In this case, 84 00:04:55,880 --> 00:04:58,560 Speaker 1: it may have been with his lawyer where they started 85 00:04:58,600 --> 00:05:02,320 Speaker 1: to negotiate and say, look, we have this and here's 86 00:05:02,440 --> 00:05:04,880 Speaker 1: you know, what can you give us. It seems to 87 00:05:04,920 --> 00:05:08,679 Speaker 1: me as if Flynn is giving them a lot, because 88 00:05:08,720 --> 00:05:11,320 Speaker 1: remember it's not just these charges there. They also have 89 00:05:11,880 --> 00:05:17,679 Speaker 1: uh investigations of his his dealings with Turkey, his failure 90 00:05:17,680 --> 00:05:21,240 Speaker 1: to make make statements about being a foreign advisor. They 91 00:05:21,279 --> 00:05:23,200 Speaker 1: have all that, and none of that is here, and 92 00:05:23,240 --> 00:05:27,360 Speaker 1: neither is his son. Remember we've talked before about how 93 00:05:27,400 --> 00:05:30,320 Speaker 1: his son was under investigation and how that might be 94 00:05:30,720 --> 00:05:33,560 Speaker 1: the real button that would push him to cooperate. So 95 00:05:33,760 --> 00:05:37,120 Speaker 1: here's something that I'm trying to understand. How long was 96 00:05:37,160 --> 00:05:41,120 Speaker 1: Michael Flynn cooperating with the Muller investigation. I know we 97 00:05:41,160 --> 00:05:44,520 Speaker 1: don't know exactly, But the reason why I ask is 98 00:05:44,560 --> 00:05:47,600 Speaker 1: because if he's been cooperating with them for months, that 99 00:05:47,680 --> 00:05:52,239 Speaker 1: means that Mueller has been building his case with Flynn's help, 100 00:05:52,480 --> 00:05:55,559 Speaker 1: and all this obviously a speculation for a longer period 101 00:05:55,600 --> 00:05:57,719 Speaker 1: of time. Do you think that this is more recent 102 00:05:57,720 --> 00:06:01,039 Speaker 1: than that, I don't know it. It's months. I think 103 00:06:01,080 --> 00:06:04,080 Speaker 1: that they have been going back and forth and negotiating 104 00:06:04,120 --> 00:06:06,640 Speaker 1: perhaps for months. But you see so on this in 105 00:06:06,680 --> 00:06:10,720 Speaker 1: this indictment, they alleged that he lied on January, so 106 00:06:10,760 --> 00:06:13,320 Speaker 1: you know that at that point he's not cooperating with them. 107 00:06:13,400 --> 00:06:16,240 Speaker 1: Then they have to go through all of what you know, 108 00:06:16,279 --> 00:06:20,640 Speaker 1: federal prosecutors and the FBI does in bringing information forward, 109 00:06:20,760 --> 00:06:23,680 Speaker 1: in trying to show them what what they do is, 110 00:06:23,720 --> 00:06:26,919 Speaker 1: they show you a lot of what they have against you. 111 00:06:26,960 --> 00:06:30,320 Speaker 1: They lay out the case against you, and then you 112 00:06:30,360 --> 00:06:32,600 Speaker 1: either decide, Okay, I'm gonna go to trial on this 113 00:06:32,800 --> 00:06:35,680 Speaker 1: or I'm gonna work with them. And in this case, 114 00:06:35,760 --> 00:06:38,360 Speaker 1: he said, I'm going to work with them. And then 115 00:06:38,400 --> 00:06:41,440 Speaker 1: what will happen is as this goes along, he'll they'll 116 00:06:41,480 --> 00:06:44,240 Speaker 1: see how much his cooperation is worth, how much does 117 00:06:44,279 --> 00:06:46,640 Speaker 1: he give them, and then he'll come down to the 118 00:06:46,640 --> 00:06:50,880 Speaker 1: point where the the sentencing is done and depending on 119 00:06:50,920 --> 00:06:55,400 Speaker 1: how he cooperates. So based on what he's pleading pleading to, 120 00:06:56,400 --> 00:06:59,440 Speaker 1: do you think that he gave them a lot? Yes, 121 00:07:00,080 --> 00:07:03,400 Speaker 1: a lot, a lot, because this is as I said, 122 00:07:03,760 --> 00:07:07,400 Speaker 1: one count of line of federal which is five years maximum. 123 00:07:07,440 --> 00:07:09,720 Speaker 1: But it's one count and there are two. There are 124 00:07:09,720 --> 00:07:12,600 Speaker 1: two counts right here in the in the information, so 125 00:07:13,000 --> 00:07:15,240 Speaker 1: and and a lot more. And so I think that 126 00:07:15,920 --> 00:07:18,040 Speaker 1: he is going to be a lynch bin. I think 127 00:07:18,040 --> 00:07:20,480 Speaker 1: we're going to see people fall. Remember some of the 128 00:07:20,480 --> 00:07:22,480 Speaker 1: meetings that he was in on, other people were in 129 00:07:22,560 --> 00:07:26,280 Speaker 1: on those meetings with him, so we wasn't alone. So 130 00:07:26,440 --> 00:07:29,000 Speaker 1: this is just the first And I think it's it's 131 00:07:29,040 --> 00:07:31,840 Speaker 1: sort of telling that Mueller did it on a Friday, 132 00:07:31,960 --> 00:07:35,200 Speaker 1: because it it takes the news cycle through the weekend. Well, 133 00:07:35,360 --> 00:07:37,160 Speaker 1: the other thing that's telling is he's doing it on 134 00:07:37,240 --> 00:07:39,920 Speaker 1: the friday that the GOP is holding their tax But 135 00:07:39,960 --> 00:07:42,280 Speaker 1: I don't know that's deliberate. But well, we'll be talking 136 00:07:42,320 --> 00:07:45,080 Speaker 1: about that throughout the day. And what this does him 137 00:07:45,320 --> 00:07:48,200 Speaker 1: to those GOP efforts that you have to wonder whether 138 00:07:48,240 --> 00:07:51,000 Speaker 1: they can pass this bill right right well and and 139 00:07:51,040 --> 00:07:55,640 Speaker 1: just quickly. June Grosso Prosecutor Brandon Van Grack said in 140 00:07:55,760 --> 00:07:58,640 Speaker 1: court that quote, a very senior member of the transition 141 00:07:58,680 --> 00:08:03,160 Speaker 1: team directed Michael Flynn to contact the Russian ambassador at 142 00:08:03,240 --> 00:08:06,880 Speaker 1: one point that will come back and hurt somebody, Yes, 143 00:08:07,400 --> 00:08:10,559 Speaker 1: who and the question is who is that transition member. 144 00:08:10,600 --> 00:08:15,360 Speaker 1: Did that transition member have a direct line to President Trump? 145 00:08:15,480 --> 00:08:18,120 Speaker 1: Or you know, you have to see that we only 146 00:08:18,160 --> 00:08:23,040 Speaker 1: see one little part. He is connecting all kinds of things, 147 00:08:23,120 --> 00:08:26,040 Speaker 1: and they probably have a huge board up or several 148 00:08:26,120 --> 00:08:29,440 Speaker 1: huge boards around their offices with the connections. Thank you 149 00:08:29,560 --> 00:08:33,000 Speaker 1: very much, June A. Grosshow, host of Bloomberg Law and 150 00:08:33,160 --> 00:08:40,720 Speaker 1: Bloomberg Best, joining us now as Marty Shanker, chief content 151 00:08:40,760 --> 00:08:43,960 Speaker 1: officer for Bloomberg. Marty, what do we know at this point? 152 00:08:44,080 --> 00:08:47,960 Speaker 1: And just how serious is this? It's pretty serious? Uh, 153 00:08:48,160 --> 00:08:51,040 Speaker 1: And as the markets are reflecting for the first time 154 00:08:51,240 --> 00:08:54,400 Speaker 1: in quite a while, it poses a serious threat to 155 00:08:54,640 --> 00:08:58,240 Speaker 1: the President of the United States, Donald Trump. And that 156 00:08:58,800 --> 00:09:02,800 Speaker 1: Michael Flynn is reporting in his plea agreement that he's 157 00:09:02,840 --> 00:09:06,559 Speaker 1: going to cooperate with the Mueller investigation. Well, it's almost 158 00:09:06,600 --> 00:09:08,720 Speaker 1: as if you can watch the VIX and figure out 159 00:09:08,760 --> 00:09:11,319 Speaker 1: how important is the news. The VIX is now up 160 00:09:11,400 --> 00:09:18,000 Speaker 1: nearly thirty percent. Marty after, was anybody not expecting a 161 00:09:18,080 --> 00:09:21,560 Speaker 1: plea deal? No, I mean I think that it was 162 00:09:21,600 --> 00:09:24,960 Speaker 1: a question of when, rather than whether we knew that 163 00:09:25,720 --> 00:09:30,560 Speaker 1: um Bob Mueller had Uh interviewed Michael Flynn, and that 164 00:09:30,600 --> 00:09:33,720 Speaker 1: he had made some statements which were at odds with 165 00:09:33,760 --> 00:09:38,560 Speaker 1: what he told the FBI. UM, the question was the timing, uh, 166 00:09:38,600 --> 00:09:44,280 Speaker 1: And the idea would be that he would UH regent 167 00:09:44,320 --> 00:09:47,320 Speaker 1: agreement that would keep his charges to a minimum. And 168 00:09:47,360 --> 00:09:52,000 Speaker 1: in fact, there was some thought that his son himself 169 00:09:52,040 --> 00:09:54,679 Speaker 1: would be indicted, and that at least for now has 170 00:09:54,720 --> 00:09:57,400 Speaker 1: not happened. So was the questions was that part of 171 00:09:57,440 --> 00:10:00,760 Speaker 1: the agreement. So the fact that Bob Muller has come 172 00:10:00,800 --> 00:10:04,360 Speaker 1: forward today with and what the guilty ply means he's 173 00:10:04,400 --> 00:10:08,320 Speaker 1: ready to move forward with his investigation moving forward. And 174 00:10:08,400 --> 00:10:11,920 Speaker 1: this this is important also, Marty, the time frame going 175 00:10:11,960 --> 00:10:14,440 Speaker 1: forward from Mueller because a lot of people were wondering, 176 00:10:14,480 --> 00:10:16,440 Speaker 1: you know, is he moving slowly as he moving quickly? 177 00:10:16,800 --> 00:10:18,800 Speaker 1: It seems like there's been a lot behind the scenes 178 00:10:18,840 --> 00:10:21,839 Speaker 1: to get to this point with Michael Flynn. Uh. How 179 00:10:21,960 --> 00:10:24,199 Speaker 1: quickly could things accelerate at this point? I mean, could 180 00:10:24,240 --> 00:10:27,880 Speaker 1: we see another charge come out within the next few weeks? Well, 181 00:10:28,360 --> 00:10:31,440 Speaker 1: you know, first of all, there's no reason why not 182 00:10:31,800 --> 00:10:35,880 Speaker 1: why he couldn't do a superseding indictment of Michael Flynn 183 00:10:35,920 --> 00:10:39,839 Speaker 1: should he feel he is not cooperating fully. With his investigation, 184 00:10:39,960 --> 00:10:42,960 Speaker 1: superseding superseding in typeming, can you just explain what that is? Well, 185 00:10:43,000 --> 00:10:45,960 Speaker 1: I mean, just because he's pled guilty to one charge 186 00:10:46,040 --> 00:10:48,760 Speaker 1: does not mean he can come forward with more charges. 187 00:10:49,320 --> 00:10:53,280 Speaker 1: Should hate Mike Flynn or anyone else failed to provide 188 00:10:54,000 --> 00:11:00,559 Speaker 1: uh full and transparent accounting of what happened during that transition. 189 00:11:00,679 --> 00:11:04,600 Speaker 1: So um, this sort of guarantees that Michael Flynn will 190 00:11:04,640 --> 00:11:08,280 Speaker 1: fully cooperate lest he faced further charges if for some 191 00:11:08,320 --> 00:11:12,480 Speaker 1: reason he stops. But the the documents that that were 192 00:11:12,520 --> 00:11:16,680 Speaker 1: filed in court that explained the details of the Pola 193 00:11:16,800 --> 00:11:19,480 Speaker 1: agreement make it quite clear that Mike Flynn is ready 194 00:11:19,520 --> 00:11:24,640 Speaker 1: to testify against senior administration officials that they had established 195 00:11:24,720 --> 00:11:29,840 Speaker 1: contact with the Russians before Donald Trump officially became president, 196 00:11:30,440 --> 00:11:34,559 Speaker 1: which could constitute a violation of the Logan Act. Well, apparently, 197 00:11:34,840 --> 00:11:37,160 Speaker 1: Uh and Martin, you tell us this is wrong. Speaking 198 00:11:37,240 --> 00:11:40,360 Speaker 1: in court as part of the plea agreement, Flynn said 199 00:11:40,360 --> 00:11:43,120 Speaker 1: that Trump's team asked him to make contact with Russians 200 00:11:43,120 --> 00:11:46,200 Speaker 1: and that he told incoming administration what he was doing. 201 00:11:47,000 --> 00:11:51,480 Speaker 1: And just to mention in context, there's a statement that's 202 00:11:51,480 --> 00:11:56,439 Speaker 1: been released by Lieutenant Cheneral Uh Michael Flynn and just 203 00:11:56,640 --> 00:11:59,559 Speaker 1: part of it. He talks about the painful UH many 204 00:11:59,600 --> 00:12:03,839 Speaker 1: months false accusations of trees, treason, and other outrageous acts. 205 00:12:03,920 --> 00:12:07,200 Speaker 1: He says, such false accusations are contrary to everything I 206 00:12:07,200 --> 00:12:10,120 Speaker 1: have ever done and stood for. But I recognize that 207 00:12:10,160 --> 00:12:13,200 Speaker 1: the actions I acknowledged in court today were wrong, and 208 00:12:13,240 --> 00:12:15,600 Speaker 1: through my faith in God, I'm working to set things right. 209 00:12:15,679 --> 00:12:18,079 Speaker 1: My guilty plea and agreement to cooperate with the Special 210 00:12:18,120 --> 00:12:21,160 Speaker 1: Counsel's Office reflected decision I made in the best interests 211 00:12:21,200 --> 00:12:25,360 Speaker 1: of my family and our country, except full responsibility for 212 00:12:25,520 --> 00:12:30,679 Speaker 1: my actions. Is this going to spur? Do you believe 213 00:12:31,000 --> 00:12:36,040 Speaker 1: any other individuals to come forward who are perhaps not 214 00:12:36,200 --> 00:12:40,720 Speaker 1: necessarily the focus of Robert Mueller's investigation, because if one 215 00:12:40,800 --> 00:12:44,160 Speaker 1: person knows something, you've got to think that there are 216 00:12:44,200 --> 00:12:47,160 Speaker 1: other people in the same room. Well, but you know, 217 00:12:47,280 --> 00:12:49,439 Speaker 1: we have we and others have reported to over the 218 00:12:49,559 --> 00:12:52,959 Speaker 1: last few months that various members of the Trump transition team, 219 00:12:53,200 --> 00:12:55,120 Speaker 1: some who are still in the White House, some who 220 00:12:55,120 --> 00:12:57,480 Speaker 1: have left the White House, Straw and Spicy or for instance, 221 00:12:57,880 --> 00:13:04,319 Speaker 1: have been interviewed by Mueller. So it was probably uh 222 00:13:04,520 --> 00:13:07,280 Speaker 1: people's descriptions of what it's like to be interviewed by 223 00:13:07,280 --> 00:13:11,760 Speaker 1: the FBI. Are quite chilling. It's a moment where you 224 00:13:11,840 --> 00:13:15,680 Speaker 1: have you you have to make sure that you're telling 225 00:13:15,679 --> 00:13:19,040 Speaker 1: the absolute truth because you don't do not know what 226 00:13:19,120 --> 00:13:23,120 Speaker 1: Bob Mueller knows. Um, don't forget the FBI is conducting 227 00:13:23,120 --> 00:13:27,160 Speaker 1: this investigation. They have there's reports of you know, wire 228 00:13:27,200 --> 00:13:33,800 Speaker 1: tap surveillance, they have audio of conversations. So, um, there 229 00:13:33,800 --> 00:13:36,720 Speaker 1: has already been many, many people who have already been 230 00:13:36,760 --> 00:13:40,840 Speaker 1: interviewed by Mueller. Could there be more? It's possible, And 231 00:13:40,880 --> 00:13:44,240 Speaker 1: we have no indication whatsoever that is actually interviewed the 232 00:13:44,280 --> 00:13:46,800 Speaker 1: President of the United States. In fact, we've been told 233 00:13:46,840 --> 00:13:51,360 Speaker 1: just the opposite that that that has not taken place. Marty, Uh, 234 00:13:51,679 --> 00:13:53,880 Speaker 1: just real quick here, I want to get your take 235 00:13:54,080 --> 00:13:57,439 Speaker 1: on how important this whole development is for the g 236 00:13:57,559 --> 00:13:59,280 Speaker 1: ob tax plan. And the reason why I say that 237 00:13:59,360 --> 00:14:02,959 Speaker 1: is because markets are continuing to sell off. The S 238 00:14:03,000 --> 00:14:04,600 Speaker 1: and P five hund just bounced back a little bit, 239 00:14:04,640 --> 00:14:06,920 Speaker 1: but the dollar has continue to fall U ten your 240 00:14:06,960 --> 00:14:09,080 Speaker 1: yields still down as well as thirty year yield. So 241 00:14:09,160 --> 00:14:11,280 Speaker 1: I'm just wondering, I mean, does this throw a kink 242 00:14:11,559 --> 00:14:14,840 Speaker 1: into the Republican agenda or is this a side show. No, 243 00:14:15,440 --> 00:14:18,440 Speaker 1: it could slow things down. No, And you know, we 244 00:14:18,480 --> 00:14:22,720 Speaker 1: can speculate wildly about what happens next, but I think 245 00:14:22,760 --> 00:14:26,520 Speaker 1: the markets are now focused on what does President Trump do? 246 00:14:26,520 --> 00:14:31,480 Speaker 1: Does he remain silent? There's been speculation over months of 247 00:14:31,640 --> 00:14:34,240 Speaker 1: what he would do with Robert Mueller once he gets 248 00:14:34,280 --> 00:14:37,520 Speaker 1: closer to the White House. He doesn't. You know, there's 249 00:14:37,520 --> 00:14:40,560 Speaker 1: a controversy of whether he could fire Bob Mueller. We 250 00:14:40,640 --> 00:14:43,320 Speaker 1: think he probably can't, but he can set in motion 251 00:14:43,320 --> 00:14:46,800 Speaker 1: a process in which he could remove him. And that 252 00:14:47,160 --> 00:14:50,480 Speaker 1: is I think what the markets are concerned about. That 253 00:14:50,520 --> 00:14:54,920 Speaker 1: would create a constitutional crisis and everything gets put on hold, 254 00:14:54,960 --> 00:14:59,400 Speaker 1: including the tax bill. And just also to add that 255 00:14:59,520 --> 00:15:02,960 Speaker 1: Michael Flynn. The charges that are being talked about has 256 00:15:03,000 --> 00:15:06,840 Speaker 1: to do with conversations between Flynn and the Russian ambassador. 257 00:15:06,920 --> 00:15:15,440 Speaker 1: Thanks very much, Marty Schenker, Bloomberg Chief Content Officer. Tax 258 00:15:15,560 --> 00:15:19,560 Speaker 1: overhaul in Washington, How does it affect corporations? So let's 259 00:15:19,560 --> 00:15:21,840 Speaker 1: find out more from Joel Stern. He is the chairman, 260 00:15:21,880 --> 00:15:25,240 Speaker 1: chief executive officer of Stern Value Management and he joins 261 00:15:25,320 --> 00:15:27,680 Speaker 1: us here in our eleven three oh studios. Joel, thank 262 00:15:27,680 --> 00:15:30,160 Speaker 1: you for coming in. You know One of the things 263 00:15:30,160 --> 00:15:32,680 Speaker 1: I wanted to just begin by putting out to you 264 00:15:33,280 --> 00:15:38,280 Speaker 1: is your thoughts about the tax deductibility of the interest 265 00:15:38,360 --> 00:15:42,760 Speaker 1: expense when corporations issue debt, and I'm wondering if you 266 00:15:42,760 --> 00:15:46,280 Speaker 1: could speak to that. But also you've spoken about the 267 00:15:46,320 --> 00:15:50,280 Speaker 1: money that companies think about spending when they look at 268 00:15:50,320 --> 00:15:54,400 Speaker 1: research and development, and how we seem to have rules 269 00:15:54,400 --> 00:15:58,600 Speaker 1: and regulations that really contradict what we really are trying 270 00:15:58,640 --> 00:16:01,640 Speaker 1: to achieve. Is that it is I think maybe we 271 00:16:01,640 --> 00:16:03,440 Speaker 1: should set up with the second instead of the first. 272 00:16:03,920 --> 00:16:07,240 Speaker 1: Firms invest money in R and D intel billions right 273 00:16:07,320 --> 00:16:12,240 Speaker 1: every year, CoA Cola building brand value, Goldman Sachs, training 274 00:16:12,240 --> 00:16:16,080 Speaker 1: and developing their people. These are called intangible assets. And 275 00:16:16,120 --> 00:16:17,960 Speaker 1: so what the accountants do with this is they write 276 00:16:18,000 --> 00:16:21,840 Speaker 1: it off immediately. Peter Drucker, the great management guru and 277 00:16:21,840 --> 00:16:25,200 Speaker 1: professor at Claremont College, he had a very interesting comment 278 00:16:25,280 --> 00:16:27,440 Speaker 1: in one of his books. It's called out of sight, 279 00:16:27,520 --> 00:16:30,880 Speaker 1: out of mind. What gets measured gets managed. What that 280 00:16:30,920 --> 00:16:33,680 Speaker 1: means is that if people are spending money as they 281 00:16:33,720 --> 00:16:36,840 Speaker 1: should on these things, how is the board of directors 282 00:16:36,840 --> 00:16:40,240 Speaker 1: going to hold them accountable in future years for earning 283 00:16:40,240 --> 00:16:43,440 Speaker 1: a proper return? On that investment if the investment doesn't 284 00:16:43,440 --> 00:16:46,000 Speaker 1: show up on the balance sheet. Okay, that's a very 285 00:16:46,000 --> 00:16:48,720 Speaker 1: big thing with me, and I work with my clients 286 00:16:48,760 --> 00:16:50,640 Speaker 1: to try to show them what they need to do. 287 00:16:51,080 --> 00:16:53,320 Speaker 1: That is, they need to have their own balance sheet 288 00:16:53,360 --> 00:16:55,720 Speaker 1: and their own income statement where they then can hold 289 00:16:55,760 --> 00:16:58,760 Speaker 1: their people accountable properly. That's that's the answer to that. 290 00:16:58,760 --> 00:17:01,160 Speaker 1: That that part of the issue, and the research the issue. 291 00:17:01,160 --> 00:17:04,199 Speaker 1: I bring this up because research and development costs do 292 00:17:04,359 --> 00:17:06,640 Speaker 1: not when you spend money as a corporation on research 293 00:17:06,640 --> 00:17:10,520 Speaker 1: and development, that does not look good on the balance sheet. Well, 294 00:17:11,040 --> 00:17:19,360 Speaker 1: why the accountants claim they're being conservative by assuming that 295 00:17:19,400 --> 00:17:23,640 Speaker 1: those investments don't work out? Is that sensible? The most 296 00:17:23,680 --> 00:17:26,280 Speaker 1: important thing to do is to follow the trail of 297 00:17:26,359 --> 00:17:28,720 Speaker 1: cash and say the people, we're going to give you 298 00:17:28,760 --> 00:17:31,480 Speaker 1: this cash in the firm to to to manage people, 299 00:17:31,480 --> 00:17:34,040 Speaker 1: to build brand value and the like, but we have 300 00:17:34,119 --> 00:17:36,800 Speaker 1: to hold you accountable for delivering on the investment. Otherwise, 301 00:17:37,119 --> 00:17:39,480 Speaker 1: everybody can ask for money. Wouldn't you ask for money 302 00:17:39,480 --> 00:17:41,439 Speaker 1: if nobody said to you, you'd have to tell us 303 00:17:41,480 --> 00:17:43,560 Speaker 1: what you did with it and how well you did it. 304 00:17:43,600 --> 00:17:46,000 Speaker 1: Seems to me it's just wrong. That's all I want 305 00:17:46,000 --> 00:17:47,600 Speaker 1: to I want to move to the first part of 306 00:17:47,880 --> 00:17:52,119 Speaker 1: Pam's question, because that's a very current with respect to 307 00:17:52,160 --> 00:17:54,919 Speaker 1: the tax plan that does plan to limit some of 308 00:17:55,200 --> 00:17:59,720 Speaker 1: the tax deductibility of interest payments that companies pay, and 309 00:17:59,760 --> 00:18:04,080 Speaker 1: I'm wondering at that level, we are seeing some language 310 00:18:04,080 --> 00:18:06,840 Speaker 1: that would even have a bigger effect than previously expected 311 00:18:07,119 --> 00:18:11,280 Speaker 1: on highly leveraged companies with respect to the lack of deductibility. Here, 312 00:18:11,520 --> 00:18:14,159 Speaker 1: I'm just wondering, what do you expect the consequences to 313 00:18:14,200 --> 00:18:16,000 Speaker 1: be should the bill get passed. I mean, does this 314 00:18:16,040 --> 00:18:19,239 Speaker 1: mean that highly leveraged companies are going to have a 315 00:18:19,320 --> 00:18:21,760 Speaker 1: harder time refinancing? Does it mean that they're gonna not 316 00:18:23,160 --> 00:18:26,639 Speaker 1: take on as much leverage? Let me step back from this. 317 00:18:27,200 --> 00:18:31,360 Speaker 1: There's a huge problem here. If the emphast is tax deductible. 318 00:18:32,400 --> 00:18:36,720 Speaker 1: Professors of finance everywhere teach that for every one dollar 319 00:18:36,800 --> 00:18:40,399 Speaker 1: that affirm borrows, the value of their shares goes up 320 00:18:40,400 --> 00:18:43,560 Speaker 1: by whatever the tax rate is times that dollar. So 321 00:18:43,640 --> 00:18:46,480 Speaker 1: let's assume the tax rate was at the corporate level. 322 00:18:46,720 --> 00:18:48,720 Speaker 1: It is close to that if you include city and state, 323 00:18:48,760 --> 00:18:51,720 Speaker 1: by the way, so let's assume it. That means for 324 00:18:51,840 --> 00:18:54,520 Speaker 1: every one dollar of that on the balance shade, the 325 00:18:54,560 --> 00:18:58,720 Speaker 1: market value of the shares is higher by So this 326 00:18:58,760 --> 00:19:01,480 Speaker 1: is a very appealing thing. What stop, what what wide 327 00:19:01,760 --> 00:19:04,880 Speaker 1: companies have lots more leverage? The answer, what about the 328 00:19:04,960 --> 00:19:08,000 Speaker 1: associated bankruptcy risk on the other side of the equation. 329 00:19:08,280 --> 00:19:11,000 Speaker 1: We call it the cost of financial distress. So we're 330 00:19:11,000 --> 00:19:14,200 Speaker 1: balancing the cost of financial distress against the benefits of 331 00:19:14,240 --> 00:19:17,719 Speaker 1: the tax benefit. Just extrapolating out here, this is This 332 00:19:17,800 --> 00:19:23,840 Speaker 1: is really important because if companies borrowing boost stock prices, 333 00:19:23,920 --> 00:19:28,640 Speaker 1: and companies are disincentivized from borrowing due to the tax plan, 334 00:19:28,720 --> 00:19:31,880 Speaker 1: since they won't be uh, it won't be treated as beneficially. 335 00:19:32,119 --> 00:19:35,920 Speaker 1: If they reduced leverage, that will give less of a boom. Yes, 336 00:19:36,440 --> 00:19:39,520 Speaker 1: it's even worse than that at least. So the most 337 00:19:39,560 --> 00:19:42,720 Speaker 1: interesting thing about this is that if the Trump tax 338 00:19:42,760 --> 00:19:46,639 Speaker 1: bill is approved as we expected with the numbers that 339 00:19:46,640 --> 00:19:50,960 Speaker 1: I've been telling, it means that the tax benefit of 340 00:19:51,040 --> 00:19:54,440 Speaker 1: debt has now been reduced by say, close to half, 341 00:19:55,240 --> 00:19:58,439 Speaker 1: and maybe the risk of bankruptcy on the other side 342 00:19:59,160 --> 00:20:02,359 Speaker 1: overwhelm the tax spent of it. Say you say to me, 343 00:20:02,440 --> 00:20:05,320 Speaker 1: give me an example. How about all of the highly 344 00:20:05,359 --> 00:20:09,760 Speaker 1: cyclical industries that have very high fixed uprating expenses. So 345 00:20:09,840 --> 00:20:13,240 Speaker 1: there's their profits in cash are very volatile over time. 346 00:20:13,520 --> 00:20:16,879 Speaker 1: I got news those companies better look at this very carefully. 347 00:20:17,119 --> 00:20:22,560 Speaker 1: I'm talking about cement, I'm talking about steel, aluminum, glass, 348 00:20:23,480 --> 00:20:27,400 Speaker 1: industrial machinery, machine tools, textiles. These are companies that are 349 00:20:27,560 --> 00:20:31,120 Speaker 1: very volatile during the business cycle. And my prediction is 350 00:20:31,400 --> 00:20:34,360 Speaker 1: that if they don't examine this very carefully, a lot 351 00:20:34,720 --> 00:20:37,119 Speaker 1: more of those companies are likely not to make it 352 00:20:37,160 --> 00:20:40,960 Speaker 1: through the next recession. So when you look at the 353 00:20:41,040 --> 00:20:45,800 Speaker 1: details as much as you can of the tax overhaul bill, uh, 354 00:20:45,840 --> 00:20:48,320 Speaker 1: what would you like to see in it? And what 355 00:20:48,400 --> 00:20:50,600 Speaker 1: would you like to see out of it? Okay, let 356 00:20:50,600 --> 00:20:52,840 Speaker 1: me say it again. That's a great question. But my 357 00:20:52,920 --> 00:20:57,320 Speaker 1: brain does not function the way us does. Here's my suggestion. 358 00:20:58,000 --> 00:20:59,959 Speaker 1: I think companies have got to take a look at 359 00:21:00,040 --> 00:21:02,320 Speaker 1: this risk versus reward, which is now going to be 360 00:21:02,400 --> 00:21:04,679 Speaker 1: much less Okay, And what they've got to say to 361 00:21:04,720 --> 00:21:07,840 Speaker 1: themselves is what are my alternatives? Now, there is an 362 00:21:07,840 --> 00:21:11,680 Speaker 1: alternative and it's used of all places in South Africa. 363 00:21:11,760 --> 00:21:13,640 Speaker 1: Can you believe that I just came back from Cape 364 00:21:13,640 --> 00:21:16,919 Speaker 1: Town for some good c Gucci with my my grandkids? Okay, 365 00:21:16,920 --> 00:21:18,560 Speaker 1: three and four years old. They're going to be happy 366 00:21:18,560 --> 00:21:21,439 Speaker 1: to hear that. But listen to this. They used preferred 367 00:21:21,480 --> 00:21:25,200 Speaker 1: stock there, and they use it actively. What is preferred stock? 368 00:21:25,760 --> 00:21:29,240 Speaker 1: It's non tax deductible debt. It's a non tax deductible debt. 369 00:21:29,480 --> 00:21:32,919 Speaker 1: And the same time, uh, there's no bankruptcy risk. And 370 00:21:33,000 --> 00:21:35,640 Speaker 1: so the companies that I just just described, the six 371 00:21:35,720 --> 00:21:38,399 Speaker 1: or seven industries that are clearly volatile, they are the 372 00:21:38,400 --> 00:21:40,760 Speaker 1: ones who should say to themselves, it's time for us 373 00:21:40,760 --> 00:21:43,119 Speaker 1: to take a real hard look at this because we 374 00:21:43,160 --> 00:21:45,600 Speaker 1: don't want bailouts. We don't want more of what we 375 00:21:45,640 --> 00:21:47,520 Speaker 1: had back in oh seven, aw eight, o nine. We 376 00:21:47,520 --> 00:21:50,160 Speaker 1: don't want that. But we want people to do things sensibly. 377 00:21:50,480 --> 00:21:52,120 Speaker 1: Do I think the tax coat is a good thing? 378 00:21:52,280 --> 00:21:54,879 Speaker 1: I sure do. Hey, listen, right now, we're growing at 379 00:21:54,880 --> 00:21:58,200 Speaker 1: three plus. The tax bill goes through, it'll be over four. 380 00:21:59,040 --> 00:22:01,280 Speaker 1: That's why the stock mark it is so strong, and 381 00:22:01,680 --> 00:22:04,680 Speaker 1: r OTC return on capital is going right through the roof. 382 00:22:04,840 --> 00:22:06,679 Speaker 1: We're going to the economy is going to be so 383 00:22:06,720 --> 00:22:09,080 Speaker 1: strong next year. You're gonna have to hold my feet 384 00:22:09,119 --> 00:22:11,840 Speaker 1: down for me to say to you, can you believe 385 00:22:11,960 --> 00:22:14,280 Speaker 1: what happened here? All because of this, we're gonna have 386 00:22:14,280 --> 00:22:16,680 Speaker 1: to hold his feet down him. You know. I will 387 00:22:16,680 --> 00:22:20,400 Speaker 1: say though, just really quick ten seconds preferred shares. If 388 00:22:20,440 --> 00:22:22,680 Speaker 1: companies do start to issue a lot more of those 389 00:22:22,760 --> 00:22:26,240 Speaker 1: in lieu of debt, the net benefit to stocks will 390 00:22:26,280 --> 00:22:28,760 Speaker 1: be less, right, yes, But on the other hand, the 391 00:22:28,800 --> 00:22:31,960 Speaker 1: bankruptcy risk for the companies that do use this will 392 00:22:32,080 --> 00:22:34,520 Speaker 1: mitigate that loss and value, so they might go up 393 00:22:34,520 --> 00:22:38,359 Speaker 1: in credit worthiness. And yeah, right, absolutely fascinating. Thank you 394 00:22:38,440 --> 00:22:40,360 Speaker 1: so much for joining us. This is truly a very 395 00:22:40,359 --> 00:22:43,920 Speaker 1: helpful perspective. Joel Stern, who is chairman and chief executive 396 00:22:43,920 --> 00:22:47,520 Speaker 1: officer of Stern Value Management based in New York, just 397 00:22:47,640 --> 00:22:58,800 Speaker 1: back from some in South Africa. Him, there was a 398 00:22:58,880 --> 00:23:00,919 Speaker 1: story that really caught my I today about an m 399 00:23:00,960 --> 00:23:05,120 Speaker 1: I T study that suggests that the US vastly overstates 400 00:23:05,400 --> 00:23:08,439 Speaker 1: it's oil output forecasts. And here to talk about the 401 00:23:08,440 --> 00:23:12,639 Speaker 1: implications of this study is Mark Rossano, energy analyst for 402 00:23:12,680 --> 00:23:15,959 Speaker 1: Bloomberg Intelligence. Mark, thank you so much for joining us. 403 00:23:15,960 --> 00:23:18,320 Speaker 1: Can you just walk us through this study and explain 404 00:23:18,400 --> 00:23:22,160 Speaker 1: the implications for the price of crude? Sure, so, thanks 405 00:23:22,160 --> 00:23:26,640 Speaker 1: for having me. Uh. The biggest implication is really the 406 00:23:26,720 --> 00:23:29,320 Speaker 1: methodology in which the e I A is trying to 407 00:23:29,480 --> 00:23:33,280 Speaker 1: project what the production numbers will be. You know, given 408 00:23:33,280 --> 00:23:37,320 Speaker 1: the fact that it's hard to dictate what is technology 409 00:23:37,320 --> 00:23:39,080 Speaker 1: going to be four years out, what are things going 410 00:23:39,119 --> 00:23:42,240 Speaker 1: to look like? So the M I T study really 411 00:23:42,320 --> 00:23:45,960 Speaker 1: kind of honed in on a proper or at least 412 00:23:45,960 --> 00:23:49,399 Speaker 1: a regression that will help us kind of identify what 413 00:23:49,520 --> 00:23:52,040 Speaker 1: the growth will look like. You know. The problem when 414 00:23:52,040 --> 00:23:54,920 Speaker 1: you look at the overall study itself though, is it's 415 00:23:55,040 --> 00:23:57,480 Speaker 1: it's using the baking, which is you know, just given 416 00:23:57,480 --> 00:23:59,800 Speaker 1: the size of the data set, it makes it a 417 00:23:59,800 --> 00:24:03,199 Speaker 1: lot easier. But when you think of where the growth 418 00:24:03,240 --> 00:24:05,240 Speaker 1: is going to originate and come from on a go 419 00:24:05,359 --> 00:24:08,280 Speaker 1: forward basis, it's really going to be the Permian. So 420 00:24:08,400 --> 00:24:11,840 Speaker 1: when you think of things from the perspective of you know, 421 00:24:11,880 --> 00:24:14,320 Speaker 1: baking versus Permian, you know, the baking is measured in 422 00:24:14,400 --> 00:24:17,280 Speaker 1: hundreds of feet, with the Permian measured in thousands of feet. 423 00:24:17,520 --> 00:24:19,919 Speaker 1: I mean, just think of three freedom towers sitting on 424 00:24:20,000 --> 00:24:22,200 Speaker 1: top of each other. I mean, that's what we're working 425 00:24:22,200 --> 00:24:26,960 Speaker 1: worth working with in West Texas. So realistically, I think 426 00:24:26,960 --> 00:24:30,639 Speaker 1: it's a very good way of of analyzing and looking 427 00:24:30,680 --> 00:24:33,240 Speaker 1: at things going forward. But then the problem is, how 428 00:24:33,240 --> 00:24:37,600 Speaker 1: do we take that and extrapolated out into West Texas. 429 00:24:38,080 --> 00:24:40,159 Speaker 1: I'm probably gonna get myself in trouble here, but I'm 430 00:24:40,240 --> 00:24:43,840 Speaker 1: quoting you, so we'll both be in trouble. Longer is better. 431 00:24:44,640 --> 00:24:47,280 Speaker 1: And this has to do as you just described, with 432 00:24:47,400 --> 00:24:52,080 Speaker 1: the technology that is allowing horizontal drilling in some cases 433 00:24:52,119 --> 00:24:54,840 Speaker 1: to go to four miles. As a recent story that 434 00:24:54,880 --> 00:25:00,600 Speaker 1: Eclipse Resources drilled the horizontal well in Ohio that is 435 00:25:00,760 --> 00:25:06,560 Speaker 1: nearly four miles in length. That is I mean, that's astounding. 436 00:25:06,600 --> 00:25:11,240 Speaker 1: And also Chesapeake Energy, Exxon Mobile, Continental Resources, they've all 437 00:25:11,359 --> 00:25:16,160 Speaker 1: broken that three mile mark. How can a study from 438 00:25:16,320 --> 00:25:19,879 Speaker 1: m I T not take notice of the fact that 439 00:25:19,920 --> 00:25:24,080 Speaker 1: you are now drilling wells that are four miles long 440 00:25:24,240 --> 00:25:27,600 Speaker 1: horizontally well. And that's the thing is is looking at 441 00:25:27,720 --> 00:25:30,760 Speaker 1: what is the overall spacing, how many stages are there, 442 00:25:30,800 --> 00:25:33,399 Speaker 1: and what is the cost. So you have to factor 443 00:25:33,440 --> 00:25:36,560 Speaker 1: in on a geological level. You know what kind of 444 00:25:36,800 --> 00:25:40,080 Speaker 1: um hydrocarbon are we going for? Is it natural gas? 445 00:25:40,119 --> 00:25:42,480 Speaker 1: Is that heavy oil is a light oil? Because each 446 00:25:42,520 --> 00:25:45,080 Speaker 1: one has their own pitfalls when it comes down to 447 00:25:45,160 --> 00:25:48,720 Speaker 1: geography and uh and well construction. So if you look 448 00:25:48,760 --> 00:25:51,879 Speaker 1: at the what the has been achieved within the Marcellus 449 00:25:51,880 --> 00:25:54,520 Speaker 1: in the Utica up in that northeast region. You know, 450 00:25:54,560 --> 00:25:58,000 Speaker 1: we've seen significant gains in terms of length and cutting 451 00:25:58,040 --> 00:26:01,040 Speaker 1: costs as well as sand stings, just in terms of 452 00:26:01,080 --> 00:26:04,200 Speaker 1: prop in and we've been able to replicate that pretty 453 00:26:04,280 --> 00:26:08,000 Speaker 1: much across the country to increase the amount of recoveries. 454 00:26:08,520 --> 00:26:10,720 Speaker 1: And that's a big cost savings, right because you said that, 455 00:26:10,760 --> 00:26:14,359 Speaker 1: you know, if you do a ten thousand foot lateral well, 456 00:26:15,240 --> 00:26:18,560 Speaker 1: that's twenty less in cost than if you do to 457 00:26:19,119 --> 00:26:23,240 Speaker 1: five thousand uh foot wells. Correct. So when you look 458 00:26:23,280 --> 00:26:25,760 Speaker 1: at it from the perspective of going forward, you know 459 00:26:25,840 --> 00:26:28,480 Speaker 1: you want to consolidate your acreage. You're starting to see 460 00:26:28,520 --> 00:26:31,480 Speaker 1: that and and have the ability to to do those 461 00:26:31,520 --> 00:26:35,280 Speaker 1: longer laterals. So as you start to stack the different pays, 462 00:26:35,320 --> 00:26:37,680 Speaker 1: and just by looking at the different shale locations within 463 00:26:37,720 --> 00:26:42,160 Speaker 1: the Permian, you know you have and this unencumbered growth 464 00:26:42,600 --> 00:26:45,359 Speaker 1: that will only really be impeded by the takeaway, not 465 00:26:45,480 --> 00:26:47,800 Speaker 1: so much by the production. And I just want to 466 00:26:47,880 --> 00:26:51,520 Speaker 1: underscore message from a listener Harry Shapiro at Shapiro Capital 467 00:26:51,560 --> 00:26:55,800 Speaker 1: saying those are gas versus oil wells. Correct. Correct. So 468 00:26:55,920 --> 00:26:58,040 Speaker 1: the difference is at this point when you're looking at 469 00:26:58,080 --> 00:27:02,240 Speaker 1: the actual hydrocarbon, natural gas flows freer and and it's 470 00:27:02,280 --> 00:27:05,080 Speaker 1: easier to get out. So when you think about as 471 00:27:05,160 --> 00:27:08,600 Speaker 1: the molecule itself becomes more complex, which is, you know, 472 00:27:08,640 --> 00:27:10,919 Speaker 1: the baking has a little bit heavier oil where the 473 00:27:10,920 --> 00:27:13,400 Speaker 1: Permian is a little bit lighter. We should be able 474 00:27:13,400 --> 00:27:18,000 Speaker 1: to see more uplift by replicating some of the technologies 475 00:27:18,080 --> 00:27:20,560 Speaker 1: just as we learn more and more. I mean, we've 476 00:27:20,560 --> 00:27:25,080 Speaker 1: had three iterations of well well structures and recipes within 477 00:27:25,119 --> 00:27:29,760 Speaker 1: the Permian and each one has grossly outperformed the previous 478 00:27:29,800 --> 00:27:32,719 Speaker 1: just given the knowledge base that we've been able to develop. 479 00:27:33,000 --> 00:27:36,760 Speaker 1: So mark real quick, thirty seconds. It sounds like you're 480 00:27:36,840 --> 00:27:39,720 Speaker 1: thinking that the m I T study is compelling, but 481 00:27:40,160 --> 00:27:43,040 Speaker 1: US shell production is going to go strong. Yes, and 482 00:27:43,040 --> 00:27:45,440 Speaker 1: it's just a matter of your You have to take 483 00:27:45,520 --> 00:27:48,600 Speaker 1: that type of the methodology that was used and try 484 00:27:48,680 --> 00:27:52,760 Speaker 1: to replicate that into something where the data set isn't 485 00:27:52,760 --> 00:27:55,359 Speaker 1: as strong, just because we're still very early stages in 486 00:27:55,359 --> 00:27:58,720 Speaker 1: the Permian. And once we start to continue those those 487 00:27:58,720 --> 00:28:01,439 Speaker 1: recipes and learn more or we'll be able to do 488 00:28:01,600 --> 00:28:04,679 Speaker 1: more with less. Thanks very much for being with us, 489 00:28:04,680 --> 00:28:08,280 Speaker 1: a pleasure, really interesting stuff. Marca Rosano is our Energy 490 00:28:08,320 --> 00:28:12,320 Speaker 1: analyst for Bloomberg Intelligence. I encourage you to read his 491 00:28:12,359 --> 00:28:17,000 Speaker 1: work on the Bloomberg Thanks for listening to the Bloomberg 492 00:28:17,000 --> 00:28:19,679 Speaker 1: P and L podcast. You can subscribe and listen to 493 00:28:19,720 --> 00:28:24,240 Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 494 00:28:24,640 --> 00:28:28,240 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 495 00:28:28,240 --> 00:28:31,560 Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast. 496 00:28:31,600 --> 00:28:34,200 Speaker 1: You can always catch us worldwide on Bloomberg Radio