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 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 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 --> 00:00:32,880 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Joining 7 00:00:32,960 --> 00:00:35,840 Speaker 1: us now, we are very pleased to say, is Jim Anderson. 8 00:00:35,960 --> 00:00:39,240 Speaker 1: He is chief executive officer of Social Flow in New York. 9 00:00:39,880 --> 00:00:43,800 Speaker 1: Just to be fully transparent. Social Flow is a platform 10 00:00:43,920 --> 00:00:47,440 Speaker 1: used by Bloomberg for social media purposes. Jim, thank you 11 00:00:47,479 --> 00:00:50,440 Speaker 1: so much for being here. You've already read the prepared 12 00:00:50,520 --> 00:00:55,600 Speaker 1: statement which Stars has just delivered. From your perspective, one, 13 00:00:55,600 --> 00:00:59,320 Speaker 1: are the most important things that he should address when 14 00:00:59,560 --> 00:01:02,720 Speaker 1: he does get these questions from representatives. Well, I think 15 00:01:02,760 --> 00:01:05,000 Speaker 1: first and foremost, he did exactly what you said. He 16 00:01:05,000 --> 00:01:06,920 Speaker 1: waived the big American flag. He did what you want 17 00:01:06,920 --> 00:01:09,120 Speaker 1: to do. You talk about the possibility and the optimism 18 00:01:09,120 --> 00:01:11,520 Speaker 1: of technology. You know, the story about not having to 19 00:01:11,600 --> 00:01:13,600 Speaker 1: ride a bus for two hours to find out your 20 00:01:13,600 --> 00:01:15,760 Speaker 1: blood results. I mean those are true and authentic stories 21 00:01:15,800 --> 00:01:18,280 Speaker 1: and it's certainly to his interest to try to emphasize 22 00:01:18,280 --> 00:01:19,920 Speaker 1: that and make sure that people don't lose sight of 23 00:01:19,920 --> 00:01:22,760 Speaker 1: the good. That being said, we're about to get the 24 00:01:22,760 --> 00:01:24,840 Speaker 1: rest of the story, right, and they've got a lot 25 00:01:24,880 --> 00:01:27,080 Speaker 1: of things to worry about, whether it be privacy, whether 26 00:01:27,080 --> 00:01:29,679 Speaker 1: it be the alleged bias against conservatives, whether it be 27 00:01:30,080 --> 00:01:33,399 Speaker 1: sort of the EU issues, and just data in general. 28 00:01:33,800 --> 00:01:35,400 Speaker 1: You know, there's a lot of things that I'm sure 29 00:01:35,400 --> 00:01:37,280 Speaker 1: we're about to to hear a lot of fairly pointed 30 00:01:37,360 --> 00:01:40,959 Speaker 1: questions about. But Jim, the whole purpose of the hearing 31 00:01:41,200 --> 00:01:43,760 Speaker 1: isn't excuse me, is not the point of the good 32 00:01:44,120 --> 00:01:47,160 Speaker 1: right right? I mean, the idea is to figure out 33 00:01:47,840 --> 00:01:52,880 Speaker 1: where the data goes. Well, that is absolutely one very 34 00:01:52,880 --> 00:01:55,560 Speaker 1: important thing, and I think ultimately that that data and 35 00:01:55,600 --> 00:01:58,040 Speaker 1: privacy issue is one of the most foundational ones. I'm 36 00:01:58,040 --> 00:01:59,760 Speaker 1: not sure that's going to be the biggest issue. I 37 00:01:59,760 --> 00:02:01,800 Speaker 1: think you're gonna hear a lot about the alleged bias 38 00:02:01,800 --> 00:02:04,200 Speaker 1: against conservatives, and we've talked about that before. This idea 39 00:02:04,240 --> 00:02:07,240 Speaker 1: of shadow banning. If I type in social into Google, 40 00:02:07,240 --> 00:02:09,200 Speaker 1: because I'm the CEO of social Flow, I wanted to 41 00:02:09,240 --> 00:02:12,800 Speaker 1: autocomplete social flow. It's more likely though, to autocomplete social 42 00:02:12,840 --> 00:02:15,400 Speaker 1: security because that's a more common search than Social Flow, 43 00:02:15,440 --> 00:02:17,440 Speaker 1: and so you get these annexies. You believe there's a 44 00:02:17,480 --> 00:02:20,400 Speaker 1: bias when it comes to search results. I don't, actually, 45 00:02:20,400 --> 00:02:22,720 Speaker 1: I truly. First off, you can't prove a negative. I 46 00:02:22,720 --> 00:02:25,240 Speaker 1: can't prove that there's no bias. And again there's billions 47 00:02:25,240 --> 00:02:28,240 Speaker 1: and billions of search results and what really constitutes bias? 48 00:02:28,360 --> 00:02:31,399 Speaker 1: But Google could prove it. I'm not sure Google could 49 00:02:31,400 --> 00:02:33,720 Speaker 1: prove and real, right, because think about your search and 50 00:02:33,760 --> 00:02:36,240 Speaker 1: my search are different, right, it's unless we're using an 51 00:02:36,240 --> 00:02:40,280 Speaker 1: anonymous browser and incognito mode. Google knows a lot about you. 52 00:02:40,360 --> 00:02:42,160 Speaker 1: Google knows a lot about me. So actually, when I 53 00:02:42,160 --> 00:02:45,280 Speaker 1: searched for social it may actually autocomplete Social flow because 54 00:02:45,320 --> 00:02:47,400 Speaker 1: Google knows that I search for Social flow a lot. 55 00:02:47,639 --> 00:02:50,119 Speaker 1: I don't think Google could demonstrably prove that they never 56 00:02:50,200 --> 00:02:53,560 Speaker 1: discriminate against anyone. What do you think is the main issue? 57 00:02:53,600 --> 00:02:56,320 Speaker 1: Is it privacy? I do think it's it's privacy and data. 58 00:02:56,400 --> 00:02:58,480 Speaker 1: And I think we can get look to the EU 59 00:02:58,560 --> 00:03:01,640 Speaker 1: as to what's going on. Different gular Corey Tory construct 60 00:03:01,680 --> 00:03:04,760 Speaker 1: different sort of cultural expectations. But I think that is 61 00:03:04,880 --> 00:03:06,960 Speaker 1: the vanguard of what you're gonna see in the rest 62 00:03:07,040 --> 00:03:10,440 Speaker 1: of the world too, and not just privacy but also antitrust. 63 00:03:10,639 --> 00:03:12,840 Speaker 1: And think about it. So Google is being accused of 64 00:03:12,880 --> 00:03:17,200 Speaker 1: effectively bundling, right, the Android operating system and Google Maps. 65 00:03:17,240 --> 00:03:21,080 Speaker 1: You're you're sort of inappropriately bundling those together. Does anybody 66 00:03:21,080 --> 00:03:23,560 Speaker 1: other than me think that's exactly what happened to Microsoft 67 00:03:23,600 --> 00:03:26,400 Speaker 1: two decades ago? Right? It was Windows operating System and 68 00:03:26,480 --> 00:03:29,079 Speaker 1: Internet Explore. The Department of Justice in the US said 69 00:03:29,080 --> 00:03:32,440 Speaker 1: you're inappropriately bundling those. It took twenty years for Microsoft 70 00:03:32,440 --> 00:03:34,760 Speaker 1: to effectively recover from that, and they've done so quite nicely, 71 00:03:34,800 --> 00:03:37,240 Speaker 1: but in a very different way with cloud computing, etcetera. 72 00:03:37,280 --> 00:03:39,760 Speaker 1: So I think that's that, in some combination of the 73 00:03:39,760 --> 00:03:42,000 Speaker 1: privacy and data are really where you're going to see 74 00:03:42,000 --> 00:03:44,440 Speaker 1: the big focus for Google. I'm not sure though today 75 00:03:44,480 --> 00:03:46,640 Speaker 1: in the testimony that's going to be the big area focus. 76 00:03:46,920 --> 00:03:51,040 Speaker 1: Is there also a necessary focus on the dominance that 77 00:03:51,240 --> 00:03:54,560 Speaker 1: Google has in search? Absolutely? I mean, and I think 78 00:03:54,560 --> 00:03:57,240 Speaker 1: any of those anti trust points is predicated on a 79 00:03:57,280 --> 00:03:59,800 Speaker 1: dominant position. Right that the reason the Microsoft issue was 80 00:03:59,840 --> 00:04:02,000 Speaker 1: so big was they were so dominant. I think that's 81 00:04:02,000 --> 00:04:04,880 Speaker 1: exactly right. Google is incredibly dominant in regard. So the 82 00:04:04,920 --> 00:04:08,200 Speaker 1: implication here in the Microsoft analogy is that there is 83 00:04:08,240 --> 00:04:11,480 Speaker 1: going to be a big effort to break up Google 84 00:04:11,960 --> 00:04:16,680 Speaker 1: for its dominance. Ah, we don't see where political pressure 85 00:04:16,720 --> 00:04:19,120 Speaker 1: comes from. That's a remedy. I'm not I'm not jumping 86 00:04:19,120 --> 00:04:20,640 Speaker 1: all the way to remedy. I think first you have 87 00:04:20,720 --> 00:04:22,560 Speaker 1: to prove that there's an issue, and I think that's 88 00:04:22,560 --> 00:04:24,680 Speaker 1: going to start and continue in the EU. I think 89 00:04:24,680 --> 00:04:26,640 Speaker 1: you're exactly right. I don't see the political pressure in 90 00:04:26,680 --> 00:04:28,719 Speaker 1: the U S building for any kind of breakup anytime 91 00:04:28,720 --> 00:04:31,080 Speaker 1: in the near future. I think that's not in the cards. 92 00:04:31,080 --> 00:04:32,520 Speaker 1: But it's a big world out there. Google is a 93 00:04:32,520 --> 00:04:35,800 Speaker 1: global company, global company, so I think what happens in 94 00:04:35,839 --> 00:04:39,159 Speaker 1: the EU could very well propagate elsewhere, first, you know, 95 00:04:39,200 --> 00:04:41,600 Speaker 1: beyond the US, and then ultimately maybe in a little 96 00:04:41,600 --> 00:04:43,640 Speaker 1: bit of a different political climate back here to the States. 97 00:04:43,960 --> 00:04:46,240 Speaker 1: Is it worth noting that this does not just take 98 00:04:46,360 --> 00:04:50,000 Speaker 1: place on your mobile device, but also on whatever devices 99 00:04:50,080 --> 00:04:53,520 Speaker 1: you use at home, whether they are television monitors or 100 00:04:53,800 --> 00:04:57,160 Speaker 1: PCs or some kind of computer. I think that's exactly right. 101 00:04:57,200 --> 00:05:00,200 Speaker 1: So you know, the Amazon Echo obviously different, come any 102 00:05:00,200 --> 00:05:02,720 Speaker 1: different competitor, and it is worth bringing up. By the way, 103 00:05:02,760 --> 00:05:05,640 Speaker 1: I think one of Google's big risks here is actually 104 00:05:05,640 --> 00:05:08,839 Speaker 1: not necessarily just the government and regulation, but Amazon. So 105 00:05:08,920 --> 00:05:11,279 Speaker 1: Google knows what you search for, Amazon knows what you buy. 106 00:05:11,640 --> 00:05:13,720 Speaker 1: So there aren't a lot of companies that the Google 107 00:05:13,760 --> 00:05:15,839 Speaker 1: is afraid of giving their size and scale. But I'm 108 00:05:15,880 --> 00:05:17,760 Speaker 1: sure they're paying a lot of attention to what Amazon 109 00:05:17,880 --> 00:05:20,200 Speaker 1: is doing. And but but your core point about the devices, 110 00:05:20,240 --> 00:05:22,040 Speaker 1: you know, the connected home everything. It's not just a 111 00:05:22,080 --> 00:05:24,080 Speaker 1: mobile device, it's not just a computer, it's everything that's 112 00:05:24,080 --> 00:05:26,760 Speaker 1: connected to the internet. All right, So you said that 113 00:05:27,240 --> 00:05:29,520 Speaker 1: it's very difficult to prove a negative that there is 114 00:05:29,560 --> 00:05:34,520 Speaker 1: not bias. Can Google prove that it is doing everything 115 00:05:34,560 --> 00:05:37,919 Speaker 1: that it can prevent foreign actors from interfering in elections? 116 00:05:38,200 --> 00:05:39,760 Speaker 1: And that's a tough one as well. I mean, these 117 00:05:39,800 --> 00:05:41,560 Speaker 1: are two sides of the same coin. Right. At the 118 00:05:41,600 --> 00:05:45,880 Speaker 1: same time Google is being criticized for alleged bias against conservatives, 119 00:05:46,120 --> 00:05:48,800 Speaker 1: it's also being accused of not doing enough to protect 120 00:05:48,880 --> 00:05:51,839 Speaker 1: against hate speech. Right And by the way, they're advertisers, 121 00:05:51,839 --> 00:05:53,279 Speaker 1: which is how they make all their money. Are the 122 00:05:53,279 --> 00:05:55,360 Speaker 1: ones who are principally concerned with that who wants they're 123 00:05:55,360 --> 00:05:59,160 Speaker 1: advertising associated with hate speech or potentially offensive videos. Well, 124 00:05:59,400 --> 00:06:01,800 Speaker 1: you know, the the the implication there is that Google 125 00:06:01,839 --> 00:06:04,680 Speaker 1: needs to play a heavier hand and be more controlling 126 00:06:04,760 --> 00:06:07,520 Speaker 1: about the type of speech that's allowed on his platform. 127 00:06:07,560 --> 00:06:10,280 Speaker 1: But when you talk about alleged bias against conservatives, well, 128 00:06:10,320 --> 00:06:12,200 Speaker 1: now you're you're putting your heavy hand to work in 129 00:06:12,240 --> 00:06:14,320 Speaker 1: a in a biased way. And these are issues, I mean, 130 00:06:14,320 --> 00:06:17,000 Speaker 1: they're not technology issues. Their policy issues right, and their 131 00:06:17,080 --> 00:06:20,559 Speaker 1: values issues. So again you can't their First Amendment issues. 132 00:06:20,600 --> 00:06:23,200 Speaker 1: They really are free speech versus you know, hate speech. Right, 133 00:06:23,520 --> 00:06:28,200 Speaker 1: where's the one beginning the other end. As far as 134 00:06:28,320 --> 00:06:31,320 Speaker 1: the hearing is concerned, do you believe that this is 135 00:06:31,400 --> 00:06:35,160 Speaker 1: more of a show for the people asking the questions 136 00:06:35,480 --> 00:06:39,480 Speaker 1: or is this something that Google can really come away 137 00:06:39,520 --> 00:06:42,360 Speaker 1: with with a gold star? Well, I would say it's 138 00:06:42,400 --> 00:06:44,000 Speaker 1: gonna be very tough for them to come away with 139 00:06:44,080 --> 00:06:46,599 Speaker 1: a gold star. I think all political hearings like this 140 00:06:46,720 --> 00:06:49,080 Speaker 1: or congressional hearings to have an element of show, because 141 00:06:49,080 --> 00:06:52,599 Speaker 1: politics is showmanship or show personship. Um, So you know, 142 00:06:52,720 --> 00:06:55,960 Speaker 1: if he can just not avoid making a serious misstep, 143 00:06:55,960 --> 00:06:58,560 Speaker 1: that's probably a win. I do think his prepared remarks 144 00:06:58,560 --> 00:07:01,320 Speaker 1: were sort of merciful short. I mean, so it doesn't 145 00:07:01,320 --> 00:07:03,400 Speaker 1: appear that he's trying to run run out the clock 146 00:07:03,440 --> 00:07:05,680 Speaker 1: strategy to just keep talking until the time is up. 147 00:07:05,839 --> 00:07:08,280 Speaker 1: We'll see whether the question is an answer. You sort 148 00:07:08,320 --> 00:07:10,320 Speaker 1: of follow that, But I thought it was really interesting 149 00:07:10,320 --> 00:07:12,239 Speaker 1: that it was such a short set of prepared remarks. 150 00:07:12,560 --> 00:07:15,360 Speaker 1: What's the one question you'd ask him? I would focus 151 00:07:15,360 --> 00:07:17,880 Speaker 1: on the data and say, well, what are your values? 152 00:07:17,920 --> 00:07:21,480 Speaker 1: What are your policies about data and privacy? And I 153 00:07:21,560 --> 00:07:23,360 Speaker 1: might just stop right there and let let him give 154 00:07:23,360 --> 00:07:25,360 Speaker 1: it as an expansive and answer as he's willing to. 155 00:07:25,720 --> 00:07:27,960 Speaker 1: Thanks very much for being with us. Jim Anderson is 156 00:07:28,000 --> 00:07:31,840 Speaker 1: the chief executive of a social flow and in full disclosure. 157 00:07:31,960 --> 00:07:35,000 Speaker 1: Social Flow is a platform that is used by Bloomberg 158 00:07:35,120 --> 00:07:52,640 Speaker 1: for social media purposes. The price of oil moves higher today. 159 00:07:52,760 --> 00:07:55,960 Speaker 1: It is up more than two percent right now fifty 160 00:07:55,960 --> 00:07:58,320 Speaker 1: two dollars for a barrel of oil on the NYMEX 161 00:07:58,520 --> 00:08:00,800 Speaker 1: natural Gas, though going the other wright down more than 162 00:08:00,880 --> 00:08:03,400 Speaker 1: three and a quarter percent. Here to tell us all 163 00:08:03,400 --> 00:08:06,920 Speaker 1: about the energy complex. Neil Dingman. He is Managing director 164 00:08:07,000 --> 00:08:10,680 Speaker 1: for Energy for sun Trust. Robinson Humphrey also joining us 165 00:08:10,680 --> 00:08:13,200 Speaker 1: here in our Bloomberg Interactor Broker Studios as well as 166 00:08:13,320 --> 00:08:17,680 Speaker 1: Fitzpatrick also managing director as well as and he covers 167 00:08:17,760 --> 00:08:22,240 Speaker 1: exploration and production research for sun Trust Robinson Humphrey. They're 168 00:08:22,280 --> 00:08:25,000 Speaker 1: both from Houston, and we're glad to have them here, 169 00:08:25,080 --> 00:08:27,240 Speaker 1: all right, So you're great to have you, all right, 170 00:08:27,280 --> 00:08:30,000 Speaker 1: So let's just dive right into it. Um fifty two 171 00:08:30,000 --> 00:08:34,000 Speaker 1: dollars a barrel for West Texas, sixty dollars a barrel 172 00:08:34,120 --> 00:08:37,200 Speaker 1: for Brent and you've got that gas you know, under 173 00:08:37,200 --> 00:08:39,200 Speaker 1: four and a half dollars per million b to you, 174 00:08:39,840 --> 00:08:42,360 Speaker 1: what are those prices due to the companies you cover? 175 00:08:42,840 --> 00:08:45,440 Speaker 1: I think for most of us they might say their 176 00:08:45,480 --> 00:08:48,400 Speaker 1: break even. They'll suggest the break even is in the forties. 177 00:08:48,679 --> 00:08:50,480 Speaker 1: But from what we're hearing, when the new budgets come 178 00:08:50,520 --> 00:08:53,720 Speaker 1: out for nineteen, you're gonna see cuts. Um, you've already 179 00:08:53,720 --> 00:08:56,079 Speaker 1: saw who was it earlier this week, just a day 180 00:08:56,120 --> 00:08:58,000 Speaker 1: or two ago. Konico one of the very largest that 181 00:08:58,000 --> 00:09:02,040 Speaker 1: we don't follow, but talk about um single digit growth 182 00:09:02,080 --> 00:09:06,360 Speaker 1: and returning share shareholder valued, and again I think that's 183 00:09:06,360 --> 00:09:09,120 Speaker 1: going to be a common trend, even with our smaller companies. 184 00:09:09,200 --> 00:09:10,880 Speaker 1: I think overall him you're going to see a lot 185 00:09:10,880 --> 00:09:13,640 Speaker 1: more cuts um as long as oil is anything under 186 00:09:13,679 --> 00:09:17,040 Speaker 1: sixty dollars wells, what's the pain point at which E 187 00:09:17,160 --> 00:09:20,199 Speaker 1: m P companies have to start going out of business again? Yeah, 188 00:09:20,360 --> 00:09:22,720 Speaker 1: going out of businesses is tough. You really have had 189 00:09:22,760 --> 00:09:25,480 Speaker 1: the balance sheets improved dramatically since we saw the last 190 00:09:25,520 --> 00:09:28,280 Speaker 1: slug of those rolls through. But I think Neil's right. 191 00:09:28,360 --> 00:09:31,400 Speaker 1: I mean to that point, you had tin oil rigs 192 00:09:31,480 --> 00:09:34,120 Speaker 1: drop out last week. That's the biggest one week dropped 193 00:09:34,120 --> 00:09:37,400 Speaker 1: since we've had in sixteen. So these these year over 194 00:09:37,480 --> 00:09:40,240 Speaker 1: year estimates going into nineteen for US oil growth are 195 00:09:40,320 --> 00:09:44,439 Speaker 1: are almost surely overstated, and probably largely so. Combine that 196 00:09:44,480 --> 00:09:46,640 Speaker 1: with the OPEC plus cuts and a little bit more 197 00:09:46,679 --> 00:09:48,679 Speaker 1: from Iran and Canada, and all of a sudden you're 198 00:09:48,720 --> 00:09:52,480 Speaker 1: in a pretty decent position. So you know, what characterizes 199 00:09:52,520 --> 00:09:54,520 Speaker 1: a company that you want to be buying stock in. 200 00:09:55,320 --> 00:09:57,960 Speaker 1: I think one that has a very low break even 201 00:09:57,960 --> 00:09:59,680 Speaker 1: phim in one that you know, we look at a 202 00:09:59,679 --> 00:10:02,679 Speaker 1: couple like a Magnolia and the Eagle Ford. It's a 203 00:10:02,760 --> 00:10:05,800 Speaker 1: run by the former head of Oxy or Continental or 204 00:10:05,800 --> 00:10:07,960 Speaker 1: Whiting both in the baking. And the type that we 205 00:10:08,040 --> 00:10:10,560 Speaker 1: like is even in the low fifties. We think all 206 00:10:10,600 --> 00:10:13,240 Speaker 1: three can generate free cash flow. To me, it's really 207 00:10:13,240 --> 00:10:16,480 Speaker 1: interesting because as both of you speak, I'm thinking, all right, 208 00:10:16,720 --> 00:10:20,719 Speaker 1: so if OPEC plus is going to be cutting production, 209 00:10:20,960 --> 00:10:24,800 Speaker 1: and then you have riggs already coming off and probably 210 00:10:25,000 --> 00:10:29,520 Speaker 1: cuts to production further in January from US companies, you 211 00:10:29,520 --> 00:10:32,520 Speaker 1: guys both are expecting much higher oil prices. Is that correct? Wells, 212 00:10:33,600 --> 00:10:35,559 Speaker 1: I think I think there's upside from here. I think 213 00:10:35,600 --> 00:10:38,679 Speaker 1: your rally. I mean, look, those those rigs will probably 214 00:10:38,679 --> 00:10:41,360 Speaker 1: go back to work if you cross the sixty threshold again. 215 00:10:41,480 --> 00:10:43,960 Speaker 1: The other thing that you have going on is the 216 00:10:44,000 --> 00:10:46,080 Speaker 1: Midland differential is going to be coming in, So the 217 00:10:46,120 --> 00:10:48,440 Speaker 1: prices that these guys are getting is going to be 218 00:10:48,520 --> 00:10:52,000 Speaker 1: much higher in later and nineteen, even with a flat 219 00:10:52,120 --> 00:10:55,240 Speaker 1: w T I price. So uh, I think that the 220 00:10:55,280 --> 00:10:58,240 Speaker 1: fundamentals are improving for all of these guys. I think 221 00:10:58,280 --> 00:11:01,320 Speaker 1: that the real zations are going to improve for all 222 00:11:01,360 --> 00:11:03,480 Speaker 1: of them. But but to your point, I think you're right, 223 00:11:03,559 --> 00:11:06,760 Speaker 1: you do have more levers that are pressing oil up 224 00:11:06,800 --> 00:11:09,720 Speaker 1: than down. I would agree as well. I think the 225 00:11:09,720 --> 00:11:11,319 Speaker 1: only thing I'm nervous about is if you get a 226 00:11:11,360 --> 00:11:14,400 Speaker 1: snap back and it and it goes up too quickly. Again, 227 00:11:14,400 --> 00:11:16,920 Speaker 1: we've seen that happen. I mean again, we're down almost 228 00:11:17,880 --> 00:11:20,200 Speaker 1: since the first of October. Could we go up as 229 00:11:20,280 --> 00:11:23,720 Speaker 1: quick Probably not, but we certainly could go up very quickly. Well, 230 00:11:23,960 --> 00:11:27,000 Speaker 1: talk about cash flow. If you can free cash flow 231 00:11:27,000 --> 00:11:29,160 Speaker 1: at some of these companies, which ones have it and 232 00:11:29,200 --> 00:11:32,160 Speaker 1: which ones don't, and why would they would? Why would 233 00:11:32,200 --> 00:11:34,640 Speaker 1: that change your decision on what to invest in? Yeah, 234 00:11:34,720 --> 00:11:37,920 Speaker 1: there's there. There's a huge discrepancy across the MP. And 235 00:11:37,960 --> 00:11:41,440 Speaker 1: it's interesting because in this recent pullback, everything's been hit 236 00:11:41,679 --> 00:11:45,480 Speaker 1: relatively universally, and so you have companies like a Highlight 237 00:11:46,040 --> 00:11:49,640 Speaker 1: PDC or or NBL Noble, both of them have double 238 00:11:49,679 --> 00:11:52,960 Speaker 1: digit free cash flow yields in both of them are 239 00:11:52,960 --> 00:11:55,559 Speaker 1: training out less than four times. These are high quality 240 00:11:55,600 --> 00:11:58,240 Speaker 1: companies with little to no debt and a lot of 241 00:11:58,280 --> 00:12:00,520 Speaker 1: free cash flow. Now on the other side, you have 242 00:12:00,559 --> 00:12:02,480 Speaker 1: some small caps and microcaps that are gonna be a 243 00:12:02,520 --> 00:12:06,000 Speaker 1: little bit tighter, but you certainly have enough companies that 244 00:12:06,000 --> 00:12:08,160 Speaker 1: that that fit that mold. They're growing under their own 245 00:12:08,160 --> 00:12:11,000 Speaker 1: power with great assets. So it just I'm curious from 246 00:12:11,000 --> 00:12:13,800 Speaker 1: your perspective, Neil, I'm looking right now at the SMP 247 00:12:13,920 --> 00:12:22,320 Speaker 1: five Energy subsector. It's down a lot. Um. I have 248 00:12:22,400 --> 00:12:24,640 Speaker 1: a feeling you are talking and trying to comfort a 249 00:12:24,640 --> 00:12:27,520 Speaker 1: lot of your clients, to soothe their their tears drive 250 00:12:27,559 --> 00:12:31,040 Speaker 1: them up. Um. What makes you confident that we're going 251 00:12:31,080 --> 00:12:34,160 Speaker 1: to see some stability from here? I think just the 252 00:12:34,200 --> 00:12:36,880 Speaker 1: comments from some OPEC plus I mean, I'm gonna mentioned 253 00:12:36,880 --> 00:12:39,920 Speaker 1: that earlier, and I think by them more than willing 254 00:12:39,960 --> 00:12:41,640 Speaker 1: to come in, and you know, I would call that 255 00:12:41,720 --> 00:12:45,600 Speaker 1: sort of the stabilization you didn't have that prior to sixteen. 256 00:12:45,640 --> 00:12:48,040 Speaker 1: Sixteen was the first time that you saw them in 257 00:12:48,040 --> 00:12:50,440 Speaker 1: a material way come in, and now they're continuing to 258 00:12:50,480 --> 00:12:54,400 Speaker 1: say that both Russia, both Zaudi, etcetera, etcetera. So again, 259 00:12:54,440 --> 00:12:56,440 Speaker 1: I think it's very unlikely if we do go under 260 00:12:56,440 --> 00:12:59,480 Speaker 1: fifty we stay there long. Wells, if you loved energy 261 00:12:59,520 --> 00:13:03,400 Speaker 1: stocks seventy five, sixty five, and fifty five, don't you 262 00:13:03,520 --> 00:13:05,920 Speaker 1: have to really fall in love with them at fifty two. 263 00:13:06,880 --> 00:13:09,040 Speaker 1: I think that's right. And the other thing that that 264 00:13:09,040 --> 00:13:10,920 Speaker 1: that I've note is that you are at multi year 265 00:13:11,000 --> 00:13:14,560 Speaker 1: lows on on multiples, like we've talked about, you have 266 00:13:14,600 --> 00:13:17,480 Speaker 1: a constructive set up in the commodity, both gas and oil. 267 00:13:18,120 --> 00:13:19,880 Speaker 1: So I think I think now is the time to 268 00:13:19,920 --> 00:13:22,800 Speaker 1: be buying. And I think when people sharpen their pencils 269 00:13:22,840 --> 00:13:25,960 Speaker 1: going into January and start building books, you could see 270 00:13:26,000 --> 00:13:28,880 Speaker 1: reversal in these names. When you guys talk to clients 271 00:13:29,160 --> 00:13:33,560 Speaker 1: generally right now, Neil, any optimism whatsoever, very very little. Still, 272 00:13:33,720 --> 00:13:36,360 Speaker 1: they're they're doing the work, but they're they're certainly not there. 273 00:13:36,360 --> 00:13:38,600 Speaker 1: And this is both the big long only mutual funds 274 00:13:38,600 --> 00:13:41,080 Speaker 1: here in town and the hedge funds, and both what 275 00:13:41,120 --> 00:13:43,719 Speaker 1: the mutual funds says, why be an energy if it's 276 00:13:43,720 --> 00:13:46,120 Speaker 1: this volatile and you see tech or retail go up 277 00:13:46,120 --> 00:13:49,880 Speaker 1: every other day, well maybe not go up every other day? 278 00:13:49,880 --> 00:13:53,720 Speaker 1: Thank you so much. Be careful about those sharpened pencils. Yeah, 279 00:13:53,720 --> 00:13:56,520 Speaker 1: the sharpen pencils can be can be daggers, Neil Dingman, 280 00:13:56,840 --> 00:13:58,959 Speaker 1: thank you so much. Wells Flitzpatrick, both of you really 281 00:13:58,960 --> 00:14:01,480 Speaker 1: appreciate you coming in Managing directors in the energy space 282 00:14:01,559 --> 00:14:04,480 Speaker 1: for sun Trust. Robinson Humphrey based in Houston, Texas, but 283 00:14:04,559 --> 00:14:07,520 Speaker 1: coming here to our frigid New York City and our 284 00:14:07,559 --> 00:14:10,480 Speaker 1: eleven three oh studios here joining me and my co 285 00:14:10,640 --> 00:14:30,320 Speaker 1: host and colleague him Fox. The topic now China, the 286 00:14:30,360 --> 00:14:34,360 Speaker 1: Trump administration preparing a series of actions to call out 287 00:14:34,440 --> 00:14:37,720 Speaker 1: Beijing for what it says our China's continued efforts to 288 00:14:37,840 --> 00:14:44,200 Speaker 1: steal America's trade secrets and advanced technologies and compromise sensitive 289 00:14:44,480 --> 00:14:49,000 Speaker 1: government and corporate computers. It's all according to US officials. 290 00:14:49,320 --> 00:14:51,840 Speaker 1: Here to tell us more about the relationship between the 291 00:14:51,920 --> 00:14:55,880 Speaker 1: United States and China is Michael Smart, Managing Director, Rock 292 00:14:56,080 --> 00:15:00,840 Speaker 1: Creek Global Advisors, and previously Mr Art was the Director 293 00:15:00,880 --> 00:15:03,680 Speaker 1: for International Trade and Investment on the staff of the 294 00:15:03,760 --> 00:15:07,040 Speaker 1: National Security Council at the White House, and he's previously 295 00:15:07,120 --> 00:15:11,280 Speaker 1: served as International Trade Counsel on the Democratic Staff of 296 00:15:11,320 --> 00:15:14,960 Speaker 1: the US Senate Committee on Finance. Thank you very much 297 00:15:14,960 --> 00:15:17,400 Speaker 1: for being with us, Michael Smart, What can you tell 298 00:15:17,480 --> 00:15:23,240 Speaker 1: us about the ongoing confrontation and challenges that the relationship 299 00:15:23,280 --> 00:15:26,240 Speaker 1: between the United States and China face? Yeah, well, first, 300 00:15:26,280 --> 00:15:29,800 Speaker 1: I would say it is undoubtedly positive that the two leaders, 301 00:15:29,920 --> 00:15:33,640 Speaker 1: Donald Trump and Chi Jinping agreed uh to avoid further 302 00:15:33,840 --> 00:15:37,600 Speaker 1: escalation for now and agree to have discussions. That's the 303 00:15:37,600 --> 00:15:40,440 Speaker 1: good news. The not so good news is I'm not 304 00:15:40,560 --> 00:15:43,840 Speaker 1: optimistic that they can actually tackle the agenda that the 305 00:15:43,920 --> 00:15:46,960 Speaker 1: US has in mind over the ninety day period they 306 00:15:47,000 --> 00:15:51,200 Speaker 1: set out for themselves. It involves some very difficult issue uh, 307 00:15:51,280 --> 00:15:55,560 Speaker 1: preferential treatment of Chinese data and enterprises. You mentioned, violation 308 00:15:55,640 --> 00:16:00,680 Speaker 1: of intellectual property rights, restriction on foreign ownership of Chinese enterprises. 309 00:16:01,040 --> 00:16:04,480 Speaker 1: This is difficult stuff and I don't think ninety days 310 00:16:04,560 --> 00:16:08,520 Speaker 1: is nearly enough to tackle that. And tweets about auto 311 00:16:08,520 --> 00:16:11,720 Speaker 1: tariffs are really kind of a distraction from the core 312 00:16:11,840 --> 00:16:16,320 Speaker 1: issue of structural reform. That's that's the first point. Well, Michael, 313 00:16:16,360 --> 00:16:18,800 Speaker 1: I actually want to follow up on that. What is 314 00:16:18,920 --> 00:16:21,080 Speaker 1: the primary agenda of the U S mean, is this 315 00:16:21,120 --> 00:16:25,040 Speaker 1: a national security issue? Is this a trade deficit issue? 316 00:16:25,400 --> 00:16:28,200 Speaker 1: You know, what sort of the primary driver here. It's 317 00:16:28,200 --> 00:16:32,520 Speaker 1: a really good question. So the structural reforms are those 318 00:16:32,560 --> 00:16:35,560 Speaker 1: that I mentioned, Those are the ones that U S, 319 00:16:35,600 --> 00:16:39,880 Speaker 1: tr Lightheiser and Leuha will be focused on in their negotiation. 320 00:16:40,360 --> 00:16:43,520 Speaker 1: But I have a real question about whether China has 321 00:16:43,720 --> 00:16:48,320 Speaker 1: enough incentive to make those reforms if the only thing 322 00:16:48,440 --> 00:16:52,480 Speaker 1: on offer is the reduction of US terroiffs. And the 323 00:16:52,600 --> 00:16:56,520 Speaker 1: reason is because they've seen this dispute spread into the 324 00:16:56,600 --> 00:17:00,200 Speaker 1: areas Lisa you just mentioned, which is national security, and 325 00:17:00,240 --> 00:17:03,200 Speaker 1: in these areas they see the potential for even more 326 00:17:03,320 --> 00:17:06,960 Speaker 1: harm UH than UH than comes from the U S tariffs, 327 00:17:06,960 --> 00:17:10,520 Speaker 1: and here I'm talking about export controls, So basically the 328 00:17:10,560 --> 00:17:16,159 Speaker 1: denial of US technologies to Chinese companies, tight restrictions on 329 00:17:16,320 --> 00:17:21,880 Speaker 1: inbound Chinese investment into the United States. UH, the the 330 00:17:21,880 --> 00:17:25,000 Speaker 1: the u S efforts around the world to encourage other 331 00:17:25,119 --> 00:17:30,560 Speaker 1: company countries to keep Chinese telecommunications equip equipment out of 332 00:17:30,600 --> 00:17:34,480 Speaker 1: their infrastructure. These and other efforts are are undertaken by 333 00:17:34,560 --> 00:17:38,800 Speaker 1: national security officials and I think are of concern to 334 00:17:38,880 --> 00:17:41,720 Speaker 1: the Chinese and will and will make the trade negotiation 335 00:17:42,119 --> 00:17:45,760 Speaker 1: more difficult. Michael Smart, if there were to be Justice 336 00:17:45,800 --> 00:17:49,879 Speaker 1: Department moves to announce indictments of hackers suspected of working 337 00:17:49,920 --> 00:17:55,760 Speaker 1: for Chinese intelligence services and participating in espionage campaigns targeting 338 00:17:55,880 --> 00:17:58,720 Speaker 1: US networks, what would that do to the talks? Well, 339 00:17:58,920 --> 00:18:03,879 Speaker 1: certainly it would make them more challenging. But those efforts 340 00:18:04,119 --> 00:18:07,359 Speaker 1: must continue and they must be on a a separate track. 341 00:18:07,440 --> 00:18:12,920 Speaker 1: In the same way the detention and potential extradition of 342 00:18:12,920 --> 00:18:18,080 Speaker 1: of Mrs Mung the cfo UM of Huawei UH. These 343 00:18:18,119 --> 00:18:24,160 Speaker 1: are criminal law enforcement matters, national security matters, UH and UH. 344 00:18:24,280 --> 00:18:28,480 Speaker 1: The timing certainly complicates the early stages of this discussion, 345 00:18:29,119 --> 00:18:31,600 Speaker 1: but I don't expect them to be traded off at 346 00:18:31,600 --> 00:18:34,320 Speaker 1: the negotiating table. You know, Michael Smart, since you did 347 00:18:34,600 --> 00:18:37,679 Speaker 1: serve as international trade counsel and the credit staff of 348 00:18:37,760 --> 00:18:41,000 Speaker 1: the of the U. S. Senate Committee on Finance, I'm 349 00:18:41,040 --> 00:18:45,640 Speaker 1: curious from a partisan perspective your take on what sides 350 00:18:46,080 --> 00:18:50,960 Speaker 1: are are for what trade negotiations, because interestingly, Democratic senators 351 00:18:51,000 --> 00:18:53,919 Speaker 1: have come out in favor of the Huahwei prosecutions. Not 352 00:18:54,000 --> 00:18:56,480 Speaker 1: that it's there say anyway, it's the federal court in 353 00:18:56,520 --> 00:18:59,879 Speaker 1: the Eastern District in Brooklyn, But I'm just wondering, you know, 354 00:19:00,520 --> 00:19:04,760 Speaker 1: what's the common ground here between Republicans and Democrats as 355 00:19:04,800 --> 00:19:08,680 Speaker 1: to how the US China trade relationship has to change. Yeah, 356 00:19:08,760 --> 00:19:12,520 Speaker 1: I think there's a lot of common ground. Um that 357 00:19:12,640 --> 00:19:16,080 Speaker 1: the US can't follow the same policy that it's followed 358 00:19:16,080 --> 00:19:20,480 Speaker 1: in the past of bilateral dialogues and discussions that did 359 00:19:20,520 --> 00:19:24,480 Speaker 1: not produce adequate results, and so I think when they 360 00:19:24,520 --> 00:19:27,600 Speaker 1: see this opportunity, uh, they're going to look for the 361 00:19:27,680 --> 00:19:30,840 Speaker 1: same kinds of results, whether you're a Democrat are Republican, 362 00:19:30,880 --> 00:19:34,639 Speaker 1: getting at structural issues that will improve US access to 363 00:19:34,680 --> 00:19:37,919 Speaker 1: the China market, both in terms of exports, and investment 364 00:19:38,640 --> 00:19:41,639 Speaker 1: for the long term. And I think there is a 365 00:19:41,880 --> 00:19:45,879 Speaker 1: reluctance for the U s simply to be satisfied, you know, 366 00:19:45,920 --> 00:19:50,200 Speaker 1: with a series of Chinese purchases of US goods to 367 00:19:50,280 --> 00:19:53,520 Speaker 1: maybe make a temporary reduction in the trade deficits. They're 368 00:19:53,520 --> 00:19:56,600 Speaker 1: looking for a more substantive deal. Michael, who dropped the 369 00:19:56,640 --> 00:20:00,960 Speaker 1: ball then in not dealing with this earlier? Oh gosh, 370 00:20:01,000 --> 00:20:03,640 Speaker 1: I mean, I think you have to go back twenty years. 371 00:20:03,680 --> 00:20:07,679 Speaker 1: I mean, uh, certainly, when China acceded to the w 372 00:20:07,840 --> 00:20:10,199 Speaker 1: t OH, there was an expectation that they were on 373 00:20:10,280 --> 00:20:15,399 Speaker 1: the trajectory of economic reform. Uh. That changed in the 374 00:20:15,480 --> 00:20:19,119 Speaker 1: late two thousands and became much more state centric. And 375 00:20:19,280 --> 00:20:22,120 Speaker 1: this year will be the first year that the private 376 00:20:22,160 --> 00:20:25,960 Speaker 1: sector has actually contracted as a share of the Chinese economy. 377 00:20:26,240 --> 00:20:28,520 Speaker 1: So lots of people got it wrong and trying to 378 00:20:28,560 --> 00:20:31,720 Speaker 1: see where the Chinese economy was headed. And now we're 379 00:20:31,720 --> 00:20:33,919 Speaker 1: trying to go back and do the reforms that are 380 00:20:33,960 --> 00:20:37,159 Speaker 1: necessary for China to be really part of the international 381 00:20:37,200 --> 00:20:42,560 Speaker 1: trading system. If a if an executive of an American company, 382 00:20:42,800 --> 00:20:47,960 Speaker 1: a chief financial officer, for example, called Michael Smart for 383 00:20:48,119 --> 00:20:51,639 Speaker 1: advice on whether he or she should go on a 384 00:20:51,680 --> 00:20:56,240 Speaker 1: trip to China for business. What would you say? I 385 00:20:56,240 --> 00:20:59,560 Speaker 1: would say, can you postpone that trip to the second quarter. 386 00:20:59,760 --> 00:21:04,640 Speaker 1: I'm mean, it's seriously, I really would I mean, I 387 00:21:04,680 --> 00:21:09,280 Speaker 1: hope that the evidence UH and the case that they 388 00:21:09,320 --> 00:21:13,119 Speaker 1: have against Mrs Mung becomes clear. From the early reports, 389 00:21:13,200 --> 00:21:17,800 Speaker 1: it does appear that she has some individual responsibility for 390 00:21:17,840 --> 00:21:22,920 Speaker 1: the alleged sanctions violations that occurred. If that's true, then 391 00:21:23,560 --> 00:21:26,520 Speaker 1: then the course that the US is taking will be 392 00:21:26,600 --> 00:21:31,320 Speaker 1: seen as justified and and just one off retaliation by 393 00:21:31,320 --> 00:21:34,800 Speaker 1: the Chinese. That will be much harder for them to undertake. 394 00:21:35,160 --> 00:21:37,520 Speaker 1: But we don't know that yet, and so for the 395 00:21:37,600 --> 00:21:39,920 Speaker 1: time being, I would let the waters calm and see 396 00:21:39,920 --> 00:21:41,720 Speaker 1: if you can take care of that business a couple 397 00:21:41,720 --> 00:21:43,919 Speaker 1: of months down the road. And that's certainly the advice 398 00:21:43,960 --> 00:21:45,920 Speaker 1: that a number of big companies are telling their top 399 00:21:45,920 --> 00:21:48,439 Speaker 1: executives right now. Michael Smart, thank you so much for 400 00:21:48,480 --> 00:21:51,000 Speaker 1: being with us. I love your perspective. Michael Smart managing 401 00:21:51,040 --> 00:21:54,520 Speaker 1: director at Rock Creek Global Advisors in Washington, d C. 402 00:21:54,800 --> 00:21:58,240 Speaker 1: He's worked with the Senate on crafting trade policies. So 403 00:21:58,320 --> 00:22:15,920 Speaker 1: coming from a very much in FORO view, I want 404 00:22:15,920 --> 00:22:18,879 Speaker 1: to turn our attention now to the big news of 405 00:22:18,920 --> 00:22:21,199 Speaker 1: at least the beginning of the morning, and that was 406 00:22:21,240 --> 00:22:26,000 Speaker 1: that China is a sensibly moving toward lowering tariffs on 407 00:22:26,240 --> 00:22:29,720 Speaker 1: US made cars that are imported to the nation. Joining 408 00:22:29,760 --> 00:22:31,960 Speaker 1: us down to talk about this is David Welch, Detroit 409 00:22:32,080 --> 00:22:35,160 Speaker 1: bureau chief for Bloomberg. David, how big of a deal 410 00:22:35,359 --> 00:22:39,600 Speaker 1: is this, considering the fact that imports to China's car 411 00:22:39,680 --> 00:22:46,160 Speaker 1: market comprise an infinitesimal part of the cars that they sell. Yeah, 412 00:22:46,400 --> 00:22:48,959 Speaker 1: I've sort of wondered every time there seems to be 413 00:22:49,040 --> 00:22:53,920 Speaker 1: progress with a deal with China and car tariffs, why 414 00:22:54,480 --> 00:22:56,760 Speaker 1: Ford and GM stocks getting nice boost and they both 415 00:22:56,800 --> 00:22:59,640 Speaker 1: an up two or three percent at least today. Uh, 416 00:22:59,680 --> 00:23:02,640 Speaker 1: in a time when they're out of favor. Um, they 417 00:23:02,640 --> 00:23:05,880 Speaker 1: don't sell very much over here over there that's made 418 00:23:05,920 --> 00:23:10,679 Speaker 1: here basically, and really most carmakers are that way because 419 00:23:10,680 --> 00:23:13,679 Speaker 1: the tariffs have always been pretty big. Could they use 420 00:23:13,720 --> 00:23:16,199 Speaker 1: some of their excess capacity maybe and sell it in 421 00:23:16,320 --> 00:23:19,840 Speaker 1: China with lower tariffs? Possibly, but you still have shipping costs, 422 00:23:19,880 --> 00:23:22,960 Speaker 1: You're still looking at a tariff. It's it's not a 423 00:23:22,960 --> 00:23:24,720 Speaker 1: great business. No one's going to build a new plant 424 00:23:24,720 --> 00:23:26,520 Speaker 1: in the US because they can sell all those cars 425 00:23:26,520 --> 00:23:29,199 Speaker 1: in China. It does. It is a big deal for 426 00:23:29,240 --> 00:23:33,919 Speaker 1: the German carmakers, especially BMW. BMW exports more cars from 427 00:23:33,920 --> 00:23:37,040 Speaker 1: the United States than any carmaker and they sell a 428 00:23:37,040 --> 00:23:39,840 Speaker 1: lot of SUVs in China that are made in South Carolina, 429 00:23:40,160 --> 00:23:42,480 Speaker 1: so would certainly help them. It would certainly help DIME 430 00:23:42,520 --> 00:23:45,560 Speaker 1: more with os Mercedes. And that's kind of about it. 431 00:23:46,080 --> 00:23:48,280 Speaker 1: You're really not seeing a lot of cars go that way. 432 00:23:48,680 --> 00:23:52,320 Speaker 1: It's maybe more of a sentiment play where Okay, if 433 00:23:52,359 --> 00:23:55,119 Speaker 1: Trump is happy, maybe who will rattle the saber lesson? 434 00:23:55,440 --> 00:23:59,800 Speaker 1: Do fewer things with UH, with tariffs on other commodities 435 00:23:59,800 --> 00:24:03,399 Speaker 1: of products with other markets. I think maybe that's what's 436 00:24:03,400 --> 00:24:06,920 Speaker 1: going on, David. The majority of the vehicles that are 437 00:24:06,920 --> 00:24:09,679 Speaker 1: made by US automakers that are sold in China are 438 00:24:09,760 --> 00:24:12,400 Speaker 1: made in China, right, right, and usually with a joint 439 00:24:12,440 --> 00:24:15,400 Speaker 1: venture partner, So GM shares about half of its income 440 00:24:15,440 --> 00:24:18,440 Speaker 1: with one of a couple of partners they have UH 441 00:24:19,000 --> 00:24:21,960 Speaker 1: and UH, you know, it just makes more sense to 442 00:24:22,000 --> 00:24:24,040 Speaker 1: do it over there because of the long shipping lines 443 00:24:24,040 --> 00:24:25,760 Speaker 1: and that sort of thing, and the tariffs have always 444 00:24:25,800 --> 00:24:30,080 Speaker 1: made it almost impossible. Cadillacs sold vehicles to start that 445 00:24:30,160 --> 00:24:32,560 Speaker 1: were made in the US, but that was just kind 446 00:24:32,560 --> 00:24:34,879 Speaker 1: of a way to introduce the brand to the Chinese 447 00:24:34,960 --> 00:24:37,760 Speaker 1: consumer while getting plants up and running. They were actually 448 00:24:37,760 --> 00:24:40,919 Speaker 1: going to make the cars over there. Between GM and Ford, 449 00:24:41,119 --> 00:24:46,080 Speaker 1: who potentially benefits more from a potential thawing in Chinese 450 00:24:46,119 --> 00:24:49,680 Speaker 1: tariffs or other restrictions and carmakers from the US going 451 00:24:49,680 --> 00:24:53,880 Speaker 1: to China probably at this point forward because they're they're 452 00:24:53,880 --> 00:24:56,320 Speaker 1: still trying to expand over there. GM got to jump 453 00:24:56,320 --> 00:24:59,359 Speaker 1: by setting up shop in China in the nineties. Uh, 454 00:24:59,400 --> 00:25:02,879 Speaker 1: and and word is also manufacturing vehicles over there. But 455 00:25:02,960 --> 00:25:05,320 Speaker 1: if if the tariff barriers do come down, there are 456 00:25:05,359 --> 00:25:07,840 Speaker 1: other vehicles that they may want to want to send 457 00:25:08,119 --> 00:25:11,560 Speaker 1: from here to there. While they get manufacturing up and running. 458 00:25:11,560 --> 00:25:13,399 Speaker 1: It's not a bad way to test the market and 459 00:25:13,440 --> 00:25:16,159 Speaker 1: see if if consumers over there like a certain model. 460 00:25:16,920 --> 00:25:19,760 Speaker 1: Um and and and so I think given it Forward's 461 00:25:19,800 --> 00:25:23,159 Speaker 1: kind of behind GM in developing the brand, and a 462 00:25:23,160 --> 00:25:26,280 Speaker 1: consumer following in China could help them more. How about Tesla, 463 00:25:26,320 --> 00:25:29,400 Speaker 1: does this really benefit them? It could, although they're talking 464 00:25:29,400 --> 00:25:33,080 Speaker 1: about manufacturing over there, and uh, they've got plans for 465 00:25:33,119 --> 00:25:35,520 Speaker 1: a factory in China underway. But yeah, it certainly would 466 00:25:35,520 --> 00:25:38,399 Speaker 1: help them because even though the cars are already expensive 467 00:25:39,000 --> 00:25:42,520 Speaker 1: um and and wealthier consumers are buying them, are pretty 468 00:25:42,520 --> 00:25:44,240 Speaker 1: big tariffs they've had to pay on things like the 469 00:25:44,280 --> 00:25:48,080 Speaker 1: models and Model three with it, you know, getting up 470 00:25:48,080 --> 00:25:52,119 Speaker 1: to production. I'm sure they'd love to sell cars in China, 471 00:25:52,359 --> 00:25:56,960 Speaker 1: and tariff is still a pretty big disadvantage. But when 472 00:25:56,960 --> 00:25:59,600 Speaker 1: you're one of the few companies selling an all electric car, 473 00:26:00,480 --> 00:26:05,040 Speaker 1: um it certainly would help them kick start things until 474 00:26:05,080 --> 00:26:07,080 Speaker 1: they can get the cash and get everything going to 475 00:26:07,119 --> 00:26:09,119 Speaker 1: get a new factory open running in China. And by 476 00:26:09,160 --> 00:26:11,000 Speaker 1: the way, we know how long it tastes Testa to 477 00:26:11,040 --> 00:26:14,359 Speaker 1: get full production and a new factory going, so they 478 00:26:14,359 --> 00:26:16,440 Speaker 1: could be exporting cars from here for quite a while 479 00:26:16,720 --> 00:26:20,119 Speaker 1: if that was the plan. David Welch, the cars that 480 00:26:20,160 --> 00:26:23,720 Speaker 1: are made by US automobile makers are not necessarily cars 481 00:26:23,800 --> 00:26:26,480 Speaker 1: right there. Pickup trucks, isn't that they make here in 482 00:26:26,480 --> 00:26:29,520 Speaker 1: the United States and support utility vehicles, Yeah, quite a 483 00:26:29,520 --> 00:26:31,679 Speaker 1: few of them. Sure, those the kind of cars that 484 00:26:31,720 --> 00:26:35,399 Speaker 1: the Chinese consumer wants. Chinese consumers aren't buying pickup trucks 485 00:26:35,440 --> 00:26:38,560 Speaker 1: the way Americans do, but SUVs absolutely in a lot 486 00:26:38,600 --> 00:26:41,280 Speaker 1: of ways Chinese consumer tastes are very similar to what 487 00:26:41,520 --> 00:26:45,560 Speaker 1: Americans like before the suv craze. They liked big, long 488 00:26:45,920 --> 00:26:48,920 Speaker 1: sedans and that that was always a truly American thing. 489 00:26:49,359 --> 00:26:51,560 Speaker 1: To go back to the forties, fifties and sixties. Smell 490 00:26:51,640 --> 00:26:54,960 Speaker 1: really fifties and sixties here there were British political cartoons 491 00:26:54,960 --> 00:26:58,160 Speaker 1: about these ridiculously long American sedans, and Chinese have always 492 00:26:58,200 --> 00:27:00,280 Speaker 1: the Chinese consumers always liked the big sit in and 493 00:27:00,280 --> 00:27:03,159 Speaker 1: then when there were many more SUVs available, they started 494 00:27:03,240 --> 00:27:06,280 Speaker 1: latching onto those. And and it's very similar, not not 495 00:27:06,400 --> 00:27:10,119 Speaker 1: quite the urban cowboy pickup market over there, but that 496 00:27:10,200 --> 00:27:14,920 Speaker 1: could develop a construction continues, uh and you know, once 497 00:27:15,000 --> 00:27:18,439 Speaker 1: the economy kind of gets back into overdrive there. But 498 00:27:18,640 --> 00:27:21,200 Speaker 1: it's very much as for utility vehicle market at this point. 499 00:27:21,400 --> 00:27:25,520 Speaker 1: Thanks very much, David Well, Charge Detroit Bureau Chief for Bloomberg. 500 00:27:29,240 --> 00:27:31,760 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 501 00:27:32,119 --> 00:27:36,000 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 502 00:27:36,119 --> 00:27:39,600 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox, I'm 503 00:27:39,640 --> 00:27:43,159 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa 504 00:27:43,200 --> 00:27:46,359 Speaker 1: abramowits one before the podcast. You can always catch us 505 00:27:46,400 --> 00:27:47,960 Speaker 1: worldwide on Bloomberg Radio.