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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim

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Speaker 1: Fox along with my co host Lisa Bramowitz. Each day

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Speaker 1: we bring you the most important, noteworthy, and useful interviews

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Speaker 1: for you and your money, whether you're at the grocery

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Speaker 1: store or the trading floor. Find the Bloomberg p m

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Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com.

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Speaker 1: I want to bring in Tom Tucci. He is the

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Speaker 1: head of US Treasury Trading for a CIBC World Markets.

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Speaker 1: They give us some perspective on what is happening in

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Speaker 1: the bond market and its relationship to the value of

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Speaker 1: the US dollar. Tom, always a pleasure, Thanks for being

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Speaker 1: with us. Thank you. Um So, maybe you could just

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Speaker 1: provide a little backdrop for this current market and the

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Speaker 1: performance of the US dollar, because we're seeing a big

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Speaker 1: sell off in bonds today. I mean, looking at the

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Speaker 1: thirty year were down more than a full point right well.

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Speaker 1: Last week we were dominated by what would be risk

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Speaker 1: off and concerns surrounding several unknowns ranging from the hurricane

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Speaker 1: to government shutdowns to geopolitical risk coming out in North Korea.

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Speaker 1: I think some of that has calmed down from now,

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Speaker 1: From now um, but all of it hasn't been resolved.

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Speaker 1: We still don't know the full impact of what's going

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Speaker 1: to happen from the hurricane. We know historically it's provided

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Speaker 1: a bit of a dip in growth, but then it

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Speaker 1: bounce back uh in later quarters. Um. I think the

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Speaker 1: thing that really will be driving the market going forward

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Speaker 1: is really what's coming out of Washington, whether or not

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Speaker 1: we get any kind of tax reform and whether or

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Speaker 1: not they can really show up the death ceiling limit.

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Speaker 1: We're under a temporary order right now that's gonna last

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Speaker 1: us probably between January and February next year, and we

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Speaker 1: need to clean up some of these things. Tom, you're

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Speaker 1: the head of US trading at c ib C. You

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Speaker 1: are overseeing the actual day to day volumes. I'd love

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Speaker 1: to get your take on the feeling in the activity.

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Speaker 1: Is this just sort of humdrum, slow moveing kinds of

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Speaker 1: days where people just are sort of basically doing basic

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Speaker 1: maintenance on their funds. Or are you getting investors from

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Speaker 1: overseas that really have conviction on treasuries one way or another. No,

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Speaker 1: I think from the flow standpoint, overseas investors, particularly out

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Speaker 1: of Asia, are better sellers. They've been long for quite

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Speaker 1: a period of time, and they've been better sellers up

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Speaker 1: around these levels. I think overall, what's happened is if

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Speaker 1: you look at the dynamic of what happened to the

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Speaker 1: market since November, UM, you've reported on it several times,

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Speaker 1: the market price and something coming out of the election,

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Speaker 1: with certain expectations coming out of this administration, and they

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Speaker 1: haven't been able to deliver on any of them for

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Speaker 1: various reasons. And if you look at a chart, basically

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Speaker 1: what we did last week is we rechased all of

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Speaker 1: that sell off, particularly in the long end of the market,

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Speaker 1: and that's despite the Fed tightening a couple of times.

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Speaker 1: So UM. To me, what's happened is people have been

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Speaker 1: positioned for higher rates for quite a long period of time.

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Speaker 1: Things have been moving against them from the inflation scenary front.

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Speaker 1: In other words, inflation has been coming in below trend

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Speaker 1: for six seven months now, the Feds identifying the fact

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Speaker 1: that those are some structural change that they hadn't seen before,

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Speaker 1: and you start to see a little bit of an

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Speaker 1: adjustment as far as expectations in the long run for yields.

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Speaker 1: In other words, they're not going to back up as

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Speaker 1: significant as people had predicted earlier in the year. Right, Tom,

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Speaker 1: what do you think the next big move is UH

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Speaker 1: with yields going higher or lower? Well, to be honest

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Speaker 1: with you, I still think the reality is that until

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Speaker 1: there's a structural change, and what I mean by that

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Speaker 1: is whether the central banks out of Europe, out of

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Speaker 1: the US can really make a dent in reducing their

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Speaker 1: balance sheets, I think it's gonna be very difficult for

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Speaker 1: yields to rise appreciably. UM, there's still a structural demand

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Speaker 1: from the demographics globally of UH, an aging population, and

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Speaker 1: just an underlying demand for yield overall. You see these

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Speaker 1: record numbers of corporate supply coming into the market, were

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Speaker 1: into a new month now and the calendars been pretty heavy,

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Speaker 1: and it's been met with very significant demand. So that

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Speaker 1: yield demand is still there. Until we see something structurally

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Speaker 1: change in the economy, which I think could come out

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Speaker 1: of tax reform and some other things that come out

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Speaker 1: of the government UM and central bank policy shift, is

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Speaker 1: going to be very difficult for bond yields to rise significantly.

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Speaker 1: How's Tom Tucci voting when it comes to raising interest rates?

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Speaker 1: I don't think there's any need to raise interest rates.

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Speaker 1: I think the FED is focused completely on reducing their

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Speaker 1: balance sheet. They want to start to get They've already

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Speaker 1: prepared the market for that. Um I think that will

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Speaker 1: be the thing that will come this month. I don't

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Speaker 1: think they'll they'll tighten again this year. I think the

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Speaker 1: economic data will be fuzzy enough because of the hurricane

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Speaker 1: related activity. It'll it'll sour the economic numbers that are

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Speaker 1: coming out going forward, and I don't think there's any

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Speaker 1: need for them to be raising short term interest rates

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Speaker 1: in here. I think they're better off focused on reducing

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Speaker 1: the balance sheet. Having said that, what happens to the

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Speaker 1: US dollar? It was weakening against all major trading partners,

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Speaker 1: the yen at one eight, eight seven, the euro one nine,

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Speaker 1: and so on. Wondering if you give us your outlet

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Speaker 1: for the dollar, and what does that mean for investor money. Well,

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Speaker 1: I think in general, the only thing that will change

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Speaker 1: for the dollar is if you start to see some

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Speaker 1: other situations happen where the dollar doesn't become the dominant

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Speaker 1: reserve currency. And what I mean by that is you

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Speaker 1: start to see China and Russia, you know, looking at

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Speaker 1: pricing oil in different currencies, not in the dollar. These

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Speaker 1: are long term things that would have to happen. I

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Speaker 1: think overall, the dollars pretty oversold. I think we've had

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Speaker 1: a pretty good run in some of these other currencies,

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Speaker 1: and you'll start to see UM some movement back to

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Speaker 1: a more neutral stance with the dollar firming up some.

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Speaker 1: You know, one thing that I've been thinking a lot

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Speaker 1: about is if you do get a dollar that starts

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Speaker 1: to strengthen again, how much does that disrupt current market positioning?

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Speaker 1: And I was just looking today at the incredible record

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Speaker 1: breaking flows into local currency emerging markets debt, which has

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Speaker 1: basically been a cloaked currency bet on on the weaker dollar.

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Speaker 1: I mean, do you think that could be a disruptive

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Speaker 1: kind of event. Well, I think you know what what

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Speaker 1: you're identifying as people continually looking for almost like an

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Speaker 1: alternative currency, writing you've seen these cryptocurrencies benefits substantially UM.

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Speaker 1: I still don't understand the fundamentals of that, but nonetheless

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Speaker 1: they've it's an alternative currency. I think with what's happened

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Speaker 1: with central banks and the manipulation that's taken place within

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Speaker 1: UM governments, overall, people are looking for what they would

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Speaker 1: consider a safer store of their wealth and I don't

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Speaker 1: I don't know the answer to that. As far as

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Speaker 1: the cryptocurrency is concerned, I don't have enough experience with that.

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Speaker 1: But it's been since the crisis. You've seen that, You've

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Speaker 1: seen money trying to find what it would consider a

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Speaker 1: more secure currency. You saw what happened with the Swiss

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Speaker 1: frank over time during the during the crisis, particularly in

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Speaker 1: the European crisis, and that's what people are more concerned about,

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Speaker 1: the more interested in the stability of the value of

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Speaker 1: their currency. You mentioned, you know, this idea of looking

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Speaker 1: for an alternative to the to the US all are

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Speaker 1: why are they looking for an alternative? I think it's

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Speaker 1: you know what you've what you're faced with. As far

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Speaker 1: as the outlook for the government, the outlook for budget deficits, um,

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Speaker 1: those things that have driven flows and demand from foreign

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Speaker 1: investors into the market. So if you have a little

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Speaker 1: bit of a concern about what's going to happen going

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Speaker 1: forward as far as deficits are concerned, UM, we still

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Speaker 1: haven't delivered on any of the infrastructure promises here. We

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Speaker 1: have a death ceiling issue still. Um. Those kinds of

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Speaker 1: things kind of detour people from having the confidence in

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Speaker 1: investing in the underlying currency. So that that's where I'm saying,

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Speaker 1: there's so many moving parts when it comes to central

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Speaker 1: bank policy and government issues, particularly here in the U

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Speaker 1: s UM, people continue to look for an alternative. Tom Tuci,

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Speaker 1: thank you so much for joining us. Tom Tucci as

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Speaker 1: head of US Treasury. Trading as c i BC World

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Speaker 1: Markets in New York City. Tava Pharmaceutical Industries appears to

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Speaker 1: have ended it's longer search for a chief executive officer

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Speaker 1: today it named h Lundbeck's Car Schultz as its new

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Speaker 1: chief executive officer. And here to tell us what this

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Speaker 1: means for the path forward of this generics maker, I

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Speaker 1: want to bring in Liz krutel Holm Kruto Hallo. She's

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Speaker 1: specialty pharma and biotech analyst for Bloomberg Intelligence in London.

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Speaker 1: And Yakov ben Mella, he's a reporter in Bloomberg in

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Speaker 1: the Tel Aviv office. Liz, I want to start with you.

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Speaker 1: Was this an expected choice? And uh, does this choice

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Speaker 1: of car Schultz give you any sense of the path

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Speaker 1: forward for the company? So this morning's news was definitely

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Speaker 1: not expected. Lundbeck has been having a really great year.

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Speaker 1: Schultz has been able to lead a turnaround there, so

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Speaker 1: he was in a secure a place, so not an

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Speaker 1: expected move for him in terms of his role at Teva.

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Speaker 1: I think it certainly is good from a Teva perspective,

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Speaker 1: as evidenced by the shares today, but you can see

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Speaker 1: that this period of uncertainty is at least behind the

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Speaker 1: company and he is bringing in specialty expertise which will

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Speaker 1: help the branded unit, but the generic unit is not

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Speaker 1: really an area that he has a lot of expertise in,

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Speaker 1: so that is a bit of a surprise. You know, Kobe,

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Speaker 1: I want to bring you in here because I want

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Speaker 1: to if you can explain to people how urgent the

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Speaker 1: situation is at Tava Pharmaceuticals and is there going to

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Speaker 1: be an even greater effort to split the company from

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Speaker 1: its generic versus it's a branded drug business. So yeah,

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Speaker 1: I mean it's certainly been urgent, and that was really

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Speaker 1: as you can see, but in the stock that they

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Speaker 1: will was depressing the stock price. Urgent in the sense

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Speaker 1: that Teva has a huge, huge problem. I think that

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Speaker 1: is about almost twice the side of the the Vali the company,

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Speaker 1: and that's really uh tied the hands of what they

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Speaker 1: can induce to tag. So uh, they needed to get

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Speaker 1: someone on board to to really steer the company, to

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Speaker 1: really set forth a coherent strategy, you know, type of spin. Uh.

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Speaker 1: This is now the fourth to you in five years,

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Speaker 1: and it feels like almost the strategy has been changing

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Speaker 1: lesson right so uh so yeah, so investors are really

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Speaker 1: rewarding type for for getting shorts. From what I'm said,

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Speaker 1: By the way, it's a pronounced car like like a

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Speaker 1: Boston accident when you stay car. Thank you. I appreciate that.

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Speaker 1: I had to ask as well. The chairman. Yeah, he

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Speaker 1: told me how to say today. Um. But but yeah,

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Speaker 1: it's it's it's uh, it's it's well received, and there's

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Speaker 1: a lot of skepticism about the kind of job that

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Speaker 1: you can do. But that's certainly a positive step forward

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Speaker 1: for Enny. You know, Liz, I'd love to get your sense.

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Speaker 1: What is the most logical step forward. Is it to

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Speaker 1: continue to ramp up sales of ass it's in order

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Speaker 1: to pay down some of that debt, which I believe

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Speaker 1: is close to thirty billion dollars, or is it to

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Speaker 1: uh sort of bolster the current generic offerings and make

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Speaker 1: sure that pricing is in line in order to bring

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Speaker 1: back revenue sufficient to grow into the capital structure, so

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Speaker 1: it will be more of the former at this point.

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Speaker 1: So the bigger concerned certainly near term, will be debt

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Speaker 1: paid down. Just based on Teva's covenants, they're required to

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Speaker 1: be at four point to five times net debt to

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Speaker 1: ebataon by end of year and they're currently at four

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Speaker 1: point five six and based on their free cashlew that

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Speaker 1: we've seen so far this year and what we expect

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Speaker 1: in the second half, the only way that they can

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Speaker 1: meet that be through asset sales. So they have mentioned

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Speaker 1: that women's health is on the chopping block as well

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Speaker 1: as their European pain and oncology franchises. Those would pretty

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Speaker 1: much just get them there to reach their covenants by

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Speaker 1: year end, and again they have to close by your end,

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Speaker 1: so that's going to be quite difficult. Uh. And then

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Speaker 1: looking forward to have the risk to their leading product,

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Speaker 1: which is capac Zone for multiple sclerosis, so we expect

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Speaker 1: a generic second half next year, so really they've got

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Speaker 1: that threat coming in which threatens their cash flow even further.

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Speaker 1: So as it sails, are at the top of the

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Speaker 1: list in terms of priorities. On the generic side, there's

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Speaker 1: not much they can do. It's more of the sector

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Speaker 1: wide pressure that we're seeing in the US on price erosion,

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Speaker 1: and that's not expected to let up until about Is

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Speaker 1: there a competitor that you believe Liz will benefit the

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Speaker 1: most from this transition period of Tava, So that that's

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Speaker 1: a good question. I think, you know, most of the

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Speaker 1: generic players are really all on the same boat. You know,

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Speaker 1: a good pier would be someone like Milon, and they've

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Speaker 1: downgraded their guidance for the year, not expecting any new

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Speaker 1: approvals until about as well. On the specialty side, there's

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Speaker 1: really not anyone that would benefit from having a transition

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Speaker 1: at TAVA. There is, you know, of Race in the

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Speaker 1: Migraine market, where Teva is expected to come to market

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Speaker 1: second behind Amina nove Artist. That's expected to be a

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Speaker 1: pretty big market. It could be a seven billion dollar

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Speaker 1: opportunity in the US. So that's potentially a place where

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Speaker 1: if they're not focused on that launch properly appear like Eli,

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Speaker 1: Lily or a small biotech like Elder could take advantage

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Speaker 1: of that. I want to thank you both very much

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Speaker 1: for joining us uh Kobe e Ben Malick is our

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Speaker 1: Bloomberg reporter, and tel Aviv and Liz crud to Hollow,

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Speaker 1: our specialty pharmaceuticals and biotech analysts for Bloomberg Intelligence, joining

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Speaker 1: us from London. There was a report that caught my

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Speaker 1: eye over the weekend. China said that it was going

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Speaker 1: to end sales a fossil fuel powered vehicles in the

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Speaker 1: upcoming years. China is just joining their nations such as

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Speaker 1: the UK and France seeking a phase out vehicles using

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Speaker 1: gasoline and diesel. My question is how much does this

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Speaker 1: shift the landscape profoundly for automakers worldwide. Here to answer

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Speaker 1: that question, hopefully, is Jamie Butter's US autos reporter for

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Speaker 1: Bloomberg News, coming to us from our Detroit bureau. So, Jamie,

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Speaker 1: does this how how big of a deal is this

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Speaker 1: for US car manufacturers? At this point, it's it's not

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Speaker 1: much of a deal at all, right, I mean, it's

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Speaker 1: so far down the road that it's hard to really

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Speaker 1: see how serious the Chinese are with this, you know,

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Speaker 1: as so, I mean, look, I think their goals that

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Speaker 1: there's that they're trying to achieve make perfect sense. They

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Speaker 1: want cleaner air for their cities, they want to reduce

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Speaker 1: their dependence on foreign oil, They want to be technology

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Speaker 1: leaders in ways that are going to be meaningful in

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Speaker 1: the twenty one and centuries. Uh. But you know they've

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Speaker 1: also I been covering China and their auto industry for

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Speaker 1: more than a decade and they, you know, have this

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Speaker 1: policy to reduce the number of automakers that they have

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Speaker 1: and instead they have more brands, more Chinese brands now

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Speaker 1: than they did fifteen years ago. So, you know, we'll see,

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Speaker 1: there's not a date on it. We'll see what they

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Speaker 1: actually put a date. Well, but Jamie, but you know,

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Speaker 1: aside from China's declaration here, which you know you can

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Speaker 1: sort of say, it's sort of unclear. A lot of

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Speaker 1: details have to be worked out. Just the fact that

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Speaker 1: so many countries around the world are focusing on trying

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Speaker 1: to reduce the number of fossil fuel vehicles and giving

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Speaker 1: subsidies to electric vehicle production to me signal some kind

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Speaker 1: of sea change that's going on in the industry. Do

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Speaker 1: you do you think that that is overseating the issue. Well,

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Speaker 1: there's definitely some politics for it. A lot of it

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Speaker 1: comes down to the definitions, right, So we had a

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Speaker 1: lot of it. We got really excited. It is the

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Speaker 1: kind of exciting you know, Volvo and their electrication commitment.

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Speaker 1: But you know, it sounds like electrification means they're going

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Speaker 1: to be making electric vehicles, and they will make some,

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Speaker 1: but most of the Volvos are probably still going to

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Speaker 1: be hybrids technically, even mild hybrids, so more like a

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Speaker 1: Toyota are more like the Honda Insight than a prius

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Speaker 1: Um so I really, you know, kind of what we

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Speaker 1: would consider now like pretty primitive or mild hybrid systems,

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Speaker 1: so a lot of that what we saw of London

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Speaker 1: and Paris. They're more city based, you know, than like

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Speaker 1: the entire country or big you know, the whole of

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Speaker 1: the EU, and so something like a plug in hybrid

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Speaker 1: with the right technology. Some of them are kind of automatic.

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Speaker 1: They run on electric until they run out of battery

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Speaker 1: and then the gas engine turns on to make the

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Speaker 1: electric power run. You can have them some of like

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Speaker 1: Volvo's models or you know, they're more European minded. You

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Speaker 1: can switch them on and off, so you might drive

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Speaker 1: in from the suburb to your job in the city

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Speaker 1: and then when you cross the border you flip it

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Speaker 1: to all electric mode and you drive in electric while

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Speaker 1: you're in the city where the pollution is the worst.

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Speaker 1: And the congestion is the worst. And then when you're

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Speaker 1: coming back, you say, Okay, do I have enough electric

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Speaker 1: power to get me all the way home? Or do

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Speaker 1: I just use the electric until I get out of

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Speaker 1: the city and then you know, use the hybrid system.

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Speaker 1: And so if you to say no, uh no, no,

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Speaker 1: no burning of gas, no burning of diesel, you're just

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Speaker 1: moving it to well, where is the electricity gonna come from?

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Speaker 1: And in China, I mean, like the US electricity keeps

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Speaker 1: getting cleaner and cleaner. We're using gas, natural gas that's

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Speaker 1: pretty efficient of you know, China coal. Um, they don't

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Speaker 1: have the cleanest coal technology and even the cleanest coal

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Speaker 1: technology spits out a lot of carbon. So that's why

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Speaker 1: I guess I'm not sure if they really mean this,

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Speaker 1: and they're saying, you know, later than it's not as

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Speaker 1: meaningful as what we're seeing in London and Paris and

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Speaker 1: even from Volvo, and even the Volvo stuff I think

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Speaker 1: gets largely overblown. Jamie. What effect does the scandal over

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Speaker 1: diesel engines and pollution emissions have on the debate, particularly

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Speaker 1: in Europe about introducing electric vehicles. Oh yeah, I mean

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Speaker 1: you you hear right on it. That's why. I mean,

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Speaker 1: there's two things driving it. Right, You've got the political

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Speaker 1: negatives about diesel um you know, and it's not clear

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Speaker 1: yet you know how widespread the cheating was at the minimum, right,

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Speaker 1: we know the Volkswagen, the world's largest automaker, has admitted

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Speaker 1: they've sold eleven million vehicles with you know, cheating software

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Speaker 1: that polluted many times more than the law allows. So

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Speaker 1: it's a big fight. They still have to meet these

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Speaker 1: environment they still have to meet these environmental regulations. And

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Speaker 1: I'll give you about twenty seconds. Well, so what's next

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Speaker 1: for them? So that's why electric And the other thing

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Speaker 1: is Tesla, right, that doesn't even make money, but because

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Speaker 1: they make electric cars, their stock is values hugely high.

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Speaker 1: So there's a there is some pull and some push,

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Speaker 1: but it's very external. The economics are still a real

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Speaker 1: challenge to make electric cars and make money on in

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Speaker 1: the kind of scale that we need for a China

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Speaker 1: let alone, you know, the US in the whole world. Indeed,

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Speaker 1: well well done, thanks very much, Jamie Butters joining us

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Speaker 1: as our US autos reporter talking about China and its

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Speaker 1: desire to get rid of fossil fuel automobile perhaps, Yeah, right, well, uh,

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Speaker 1: you know how many electric vehicles General Motors is sold

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Speaker 1: in China seven thirty eight. So there's a long way

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Speaker 1: to go. Right now, we're looking at a market that

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Speaker 1: is trying to figure out the path forward. Yes, Irma

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Speaker 1: wasn't as bad as many people expected, but Houston is

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Speaker 1: still trying to dig out after the hurricane that hit them.

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Speaker 1: To give us more perspective and what we can expect

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Speaker 1: for oil prices going forward, Regina Mayor joins us now.

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Speaker 1: She's a global sector leader for Energy and Natural Resources

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Speaker 1: for kpm G based in Houston and Regina. We talked

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Speaker 1: so much about Florida over the past week, but Houston

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Speaker 1: still is digging out, and I would love to get

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Speaker 1: your sense of just you know, where we are in

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Speaker 1: the disruption of gas, in the disruption of crude refining,

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Speaker 1: and uh and where we go forward with the price

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Speaker 1: of oil. Excellent, Well, thank you for having me. Good morning.

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Speaker 1: I think overall Houston's energy business is proving to be

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Speaker 1: incredibly resilient. The production facilities by and large are back online.

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Speaker 1: Many in Corpus and in Texas City, as well as

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Speaker 1: in the ship channel in Houston are at full capacity.

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Speaker 1: Some of the ones that were not at full capacity

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Speaker 1: during the storm. It was in large part due to

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Speaker 1: pipeline limitations and takeaway capabilities and less situt damage that

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Speaker 1: was sustained at the facility. The longer term challenges will

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Speaker 1: be in the Beaumont Port Arth area. My understanding is

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Speaker 1: one or two of the refineries in those locations suffered

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Speaker 1: more damage. They are already seeing gasoline futures edge lower

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Speaker 1: or this morning because the impact of IRMA wasn't as

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Speaker 1: bad as what traders initially thought it would be. Regina,

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Speaker 1: the change in the US energy industry to one that

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Speaker 1: is focused on exports with liquefied natural gas and reversal

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Speaker 1: of pipeline systems, how has that changed, if at all,

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Speaker 1: the reaction and the effects after effects of Hurricane Harvey

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Speaker 1: on the unit on the industry. I don't see that

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Speaker 1: export strategy having had a big impact yet as a

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Speaker 1: result of Hurricane Harvey. Play this forward maybe five years

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Speaker 1: when we have more of the energy export facilities online

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Speaker 1: and we have a much larger refined products export strategy.

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Speaker 1: As Mexico opens up and other other parts of the world,

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Speaker 1: and a Category four or five storm hits the Texas

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Speaker 1: Louisiana Gulf Coast again, then I could see potentially there

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Speaker 1: being global disruption and commodity prices because the US footprint

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Speaker 1: is so strong and growing. But for Harvey, we're not

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Speaker 1: seeing any of those impacts yet. The export overall percentage

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Speaker 1: is relatively negligible, and frankly, production wasn't offline long enough

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Speaker 1: for it to have a material impact on supply. So, Regina,

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Speaker 1: if there wasn't a material impact on supply, let's switch

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Speaker 1: to the demand side. Because there was a big debate

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Speaker 1: about whether the destruction and demand with people holding up

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Speaker 1: in neighbors and friends homes elsewhere outside of Houston, whether

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Speaker 1: that would offset any refining decrease. And it seems like

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Speaker 1: perhaps that is the bigger story here, the destruction in demand.

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Speaker 1: Do you think that that could contribute to lower prices?

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Speaker 1: I do, And like I said, I think from just

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Speaker 1: the market opening today and looking at gasoline, teachers were

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Speaker 1: already seeing that the millions of Ustonians sheltered in place.

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Speaker 1: I personally was holed up in my home for six

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Speaker 1: strain paste with my children, and we did see a

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Speaker 1: significant drop in demand that helps offset some of the

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Speaker 1: supply disruption. So while gasoline prices have gone up. I

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Speaker 1: think it's peak. It was maybe thirty five forty cents

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Speaker 1: um up overall, you know, in terms of historic trends,

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Speaker 1: maybe from a month or a year ago. I think

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Speaker 1: we're back down to about twenty five cents up on average,

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Speaker 1: and we'll see that quickly iron itself out, I believe,

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Speaker 1: and get back to prices that we saw pre storm

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Speaker 1: around that mount Sorry no, no, Regina. Just to go

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Speaker 1: offscript a little bit, because we talked so much about

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Speaker 1: Hurricane m or at least the aftermath of it. It's

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Speaker 1: currently now it's been downgraded to a tropical storm. But

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Speaker 1: where is Houston in the process of rebuilding right now?

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Speaker 1: It's it's interesting to see what's happening in Houston. I

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Speaker 1: mean relatively speaking about Houstonians were not personally affected by

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Speaker 1: the storm, but there is that small percentage who were

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Speaker 1: devastated by it. So it's the communities coming together. So

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Speaker 1: many people lost everything, and in the west side of

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Speaker 1: town you have homes that have been sitting under six

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Speaker 1: to ten feet of water for ten the fourteen days

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Speaker 1: that it creates. The absolute destruction, not just in the

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Speaker 1: parts of the home that we're submerged, but with the

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Speaker 1: belongings that might have been on a second or third story.

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Speaker 1: So the focus has been on getting individuals settled right,

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00:24:14,880 --> 00:24:19,680
Speaker 1: temporary housing, carrying out the damaged parts of their homes,

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00:24:19,720 --> 00:24:23,040
Speaker 1: lots of Houstonians coming together. Um, a lot of folks

433
00:24:23,080 --> 00:24:25,320
Speaker 1: will have to replace everything. But you know, I think

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00:24:25,320 --> 00:24:28,560
Speaker 1: the city is going to have quite a few challenges

435
00:24:28,640 --> 00:24:32,280
Speaker 1: relative to how they take this forward because this type

436
00:24:32,280 --> 00:24:35,879
Speaker 1: of flooding can happen again with the unbridled development that

437
00:24:35,920 --> 00:24:38,800
Speaker 1: the city of Houston is relatively known for. Can we

438
00:24:38,920 --> 00:24:42,679
Speaker 1: continue to have that kind of response? Uh? And major

439
00:24:42,800 --> 00:24:46,439
Speaker 1: roadways were underwater until, you know, just at the end

440
00:24:46,440 --> 00:24:49,320
Speaker 1: of last week. So the city overall is kind of

441
00:24:49,320 --> 00:24:52,000
Speaker 1: getting back to normal for the most part, but there

442
00:24:52,000 --> 00:24:54,679
Speaker 1: are people that have been so substantially affected. And I

443
00:24:54,720 --> 00:24:57,960
Speaker 1: do believe the City of Houston really has to have a, um,

444
00:24:58,000 --> 00:25:00,400
Speaker 1: a heart to heart with itself about how it continues

445
00:25:00,440 --> 00:25:02,760
Speaker 1: to develop and manage its growth to prevent this kind

446
00:25:02,760 --> 00:25:05,879
Speaker 1: of catastrophe from happening in the future. Are there any

447
00:25:06,520 --> 00:25:09,680
Speaker 1: sort of follow ups to let's say, the health effects

448
00:25:09,720 --> 00:25:13,760
Speaker 1: of the flooding and the mixture of chemicals and energy

449
00:25:13,840 --> 00:25:17,160
Speaker 1: pollutants that may in some way get into the water

450
00:25:17,280 --> 00:25:22,000
Speaker 1: system in any way to contain all those kinds of things.

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00:25:22,040 --> 00:25:24,960
Speaker 1: From what I understand and what I've seen in the city,

452
00:25:25,240 --> 00:25:30,440
Speaker 1: there's not a strong concern about long term contaminants. The

453
00:25:30,800 --> 00:25:34,440
Speaker 1: water itself it is. It wasn't clean water. I mean,

454
00:25:34,440 --> 00:25:39,480
Speaker 1: it's sewage. It's it's runoff from all sorts of roadways

455
00:25:39,640 --> 00:25:45,600
Speaker 1: or industrial locations and levies being opened or indeed reservoirs

456
00:25:45,640 --> 00:25:50,000
Speaker 1: being open precisely, and that so that I'm trying to

457
00:25:50,040 --> 00:25:53,280
Speaker 1: get rid of all of that water, uh that it's

458
00:25:53,320 --> 00:25:54,840
Speaker 1: going to have to be. Homes are going to just

459
00:25:54,840 --> 00:25:58,840
Speaker 1: have to be destroyed and restarted if they even do

460
00:25:58,960 --> 00:26:01,480
Speaker 1: rebuild in some of those areas, because frankly, some of

461
00:26:01,520 --> 00:26:03,640
Speaker 1: those homes should never be rebuilt and it should become

462
00:26:03,640 --> 00:26:06,080
Speaker 1: a floodplain against the Bayou so that you don't see

463
00:26:06,119 --> 00:26:09,000
Speaker 1: this kind of destruction in the future. Regina, Do you

464
00:26:09,040 --> 00:26:12,000
Speaker 1: think that there the aftermath of this will also have

465
00:26:12,040 --> 00:26:15,600
Speaker 1: an effect on Houston's position in the energy market, that

466
00:26:16,200 --> 00:26:19,919
Speaker 1: there might be a focus on de emphasizing Houston in

467
00:26:20,040 --> 00:26:25,600
Speaker 1: favor of the of the more Midwestern shale drilling areas.

468
00:26:27,080 --> 00:26:30,639
Speaker 1: I really don't foresee that type of choice being made.

469
00:26:30,680 --> 00:26:33,720
Speaker 1: I think Houston is a diverse economy already and has

470
00:26:33,800 --> 00:26:36,639
Speaker 1: changed substantially from the oil booms and busts in the

471
00:26:36,680 --> 00:26:39,120
Speaker 1: eighties that we saw, Uh, you know. And you've got

472
00:26:39,119 --> 00:26:42,240
Speaker 1: the space center, You've got the healthcare um, you've got

473
00:26:42,280 --> 00:26:45,760
Speaker 1: all kinds of financial services capabilities. It's not just an

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00:26:45,880 --> 00:26:49,800
Speaker 1: energy center. And it's incredibly international. I think its second

475
00:26:49,840 --> 00:26:55,160
Speaker 1: highest concentration of consulates outside of New York. For example,

476
00:26:55,440 --> 00:27:00,640
Speaker 1: very strong performing aren't very strong community based activities. And

477
00:27:00,720 --> 00:27:03,879
Speaker 1: so given all the other pieces, it's centrally located. It's

478
00:27:03,880 --> 00:27:06,800
Speaker 1: got a great airport. I don't see people choosing to

479
00:27:06,840 --> 00:27:10,000
Speaker 1: pull inland and go to a Midland or a Permian

480
00:27:10,200 --> 00:27:13,919
Speaker 1: type of location. And I think the city's energy companies

481
00:27:13,920 --> 00:27:18,120
Speaker 1: are demonstrating a huge commitment to their employees with their rebuilding.

482
00:27:18,720 --> 00:27:21,800
Speaker 1: Many of the large companies are paying for temporary housing there,

483
00:27:21,880 --> 00:27:26,640
Speaker 1: put contract their teams together to do remediation of individual homes.

484
00:27:26,920 --> 00:27:30,520
Speaker 1: They're subsidizing their employees ability to get back on their feet,

485
00:27:30,520 --> 00:27:32,680
Speaker 1: and I think that's going to create loyalty and a

486
00:27:32,720 --> 00:27:35,320
Speaker 1: long term stickiness with the City of Houston. Thank you

487
00:27:35,440 --> 00:27:38,240
Speaker 1: very much for being with us, Regina Mayor is the

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00:27:38,280 --> 00:27:41,680
Speaker 1: Global Sector leader for Energy and Natural Resources for KPMG,

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00:27:42,480 --> 00:27:46,640
Speaker 1: joining us from Houston and giving an update on the

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00:27:46,680 --> 00:27:50,280
Speaker 1: aftermath of Hurricane Harvey that hit the area. You're listening

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00:27:50,280 --> 00:27:55,399
Speaker 1: to Bloomberg MARKETSI pim Fox with Lisa Abramwitz. Thanks for

492
00:27:55,480 --> 00:27:58,720
Speaker 1: listening to the Bloomberg pm L podcast. You can subscribe

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00:27:58,760 --> 00:28:02,320
Speaker 1: and listen to interviews that Apple Podcasts, SoundCloud or whatever

494
00:28:02,400 --> 00:28:05,879
Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter

495
00:28:06,160 --> 00:28:09,680
Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo wits

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00:28:09,720 --> 00:28:12,760
Speaker 1: one before the podcast. You can always catch us worldwide

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00:28:12,800 --> 00:28:13,680
Speaker 1: on Bloomberg Radio.