WEBVTT - Teva CEO: We Have Capability To Distribute Vaccine In U.S. 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.240 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from ceo, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:17.000 --> 0:00:22.000 and on Bloomberg dot com. Tiva Pharmaceuticals reported earnings this morning. 0:00:22.040 --> 0:00:24.480 The stock is off about seven point four percent today's 0:00:24.480 --> 0:00:26.480 trading eleven dollars and eighty six cents a share. But 0:00:26.600 --> 0:00:30.000 here today the stock is not nearly Let's break down 0:00:30.280 --> 0:00:33.159 the earnings and the key issues facing Tiva Pharmaceuticals. We 0:00:33.200 --> 0:00:37.520 do that today with Corese Schultz, CEO of Tiva Pharmarmaceuticals. 0:00:37.760 --> 0:00:39.599 Cour thanks so much for joining us here. Let's kick 0:00:39.600 --> 0:00:41.440 it off, get right to it. Talk to us about 0:00:41.640 --> 0:00:44.000 your earnings for the most recent period and your outlook 0:00:44.000 --> 0:00:47.440 for this year. Thanks Paul, great to be with you 0:00:47.520 --> 0:00:50.400 and Monny. I think the earnings report for the fourth 0:00:50.440 --> 0:00:52.559 quarter is a really solid one, and I think the 0:00:52.600 --> 0:00:56.120 whole report for twenty is also very solid. You could say, 0:00:56.160 --> 0:00:59.200 we had, of course, lots of operational challenges due to 0:00:59.240 --> 0:01:03.440 the COVID nineteen pandemic pandemic, but in all manufacturing sites, 0:01:03.520 --> 0:01:06.600 in our whole logistical network, we managed to overcome it. 0:01:07.080 --> 0:01:09.640 Basically serve the two on a million patients we serve 0:01:09.720 --> 0:01:13.520 every day without Generics in a pretty steady way, and 0:01:13.680 --> 0:01:17.400 supporting healthcare systems worldwide. At the same time, we managed 0:01:17.440 --> 0:01:20.080 our cost well, so they were down for the third 0:01:20.160 --> 0:01:24.920 year in a row. We managed to increase our earnings slightly, 0:01:24.920 --> 0:01:28.040 which was also positive. And then we continue to pay 0:01:28.080 --> 0:01:31.600 down debt. And I'm shure you know by now over 0:01:31.640 --> 0:01:34.280 the last three years, I've been paying down the two 0:01:34.520 --> 0:01:38.160 ten billion dollars and we'll continue to do so in 0:01:38.160 --> 0:01:40.360 in this year and in the common years. So all 0:01:40.400 --> 0:01:44.080 in all, we've stabilized the business. Yes, core of favorable 0:01:44.240 --> 0:01:46.360 credit markets for sure. I want to ask you about 0:01:46.400 --> 0:01:50.120 that more in a moment, But first, the vaccine distribution 0:01:50.160 --> 0:01:51.920 in Israel has been among the best in the world, 0:01:52.120 --> 0:01:55.640 and you've obviously been very much part of that. How 0:01:55.720 --> 0:01:58.120 does that continue and have you have you plans to 0:01:58.160 --> 0:02:03.120 expand that internationally if you advice for other countries. So 0:02:03.160 --> 0:02:05.800 it's absolutely correct that we are taking care of the 0:02:05.840 --> 0:02:09.840 whole logistical side of the vaccination program in Israel. So 0:02:09.960 --> 0:02:14.079 basically picking up the cargo from the cargo plane signated 0:02:14.080 --> 0:02:20.080 our chio logistics center, repacking, ensuring freezing and cooling and distribution, 0:02:20.520 --> 0:02:22.840 making sure it gets out to the four hundred vaccination 0:02:22.919 --> 0:02:25.960 centers in Israel, and that it's the right amount that 0:02:26.040 --> 0:02:28.360 gets to the right center at the right time. All 0:02:28.600 --> 0:02:31.960 all of course to ensure that we have a maximum 0:02:32.040 --> 0:02:36.800 utilization of the vaccines that Israel is receiving from FIFER 0:02:36.919 --> 0:02:40.280 and from Moderna at at the current important time. So 0:02:40.520 --> 0:02:43.400 we have great i'd say, insight into how that works 0:02:43.480 --> 0:02:46.080 right now, I would say the only country where we 0:02:46.120 --> 0:02:49.840 really have an operational capability to to help out in 0:02:49.880 --> 0:02:52.240 the same way would probably be in the U s 0:02:52.280 --> 0:02:55.880 where we have the distributor company called and and we'll 0:02:55.919 --> 0:02:59.320 be more than happy to help out the distribution. We're 0:02:59.320 --> 0:03:02.880 not currently law, but but who knows, maybe in the 0:03:02.919 --> 0:03:04.919 common months there will be a role for us to 0:03:04.960 --> 0:03:11.960 play there to secure fastness effective distribution of vaccines relevant locations. 0:03:12.000 --> 0:03:14.760 So UH core Tiva is one of the Farmer Circle 0:03:14.800 --> 0:03:17.079 companies that is being sued by the US as relates 0:03:17.080 --> 0:03:20.520 to the opioid crisis. Also, company is part of an 0:03:20.560 --> 0:03:24.120 alleged drug fixing. Cartel talk to gives an update on 0:03:24.160 --> 0:03:26.720 these legal issues, because I'm not reading some Wall Street research. 0:03:27.080 --> 0:03:30.400 They do weigh on the stock. What's the latest, Yeah, 0:03:30.600 --> 0:03:35.200 So the latest on the opioid litigation is really that 0:03:35.240 --> 0:03:38.120 we more than a year ago agreed to a framework 0:03:38.240 --> 0:03:42.360 with the states and the plane of lawyers that represent 0:03:42.440 --> 0:03:46.480 the subdivision, so counties, citizen and so on, and unfortunately 0:03:46.520 --> 0:03:49.840 we have not sort of got across the finishing line 0:03:49.880 --> 0:03:53.360 and we don't have the framework settlement turned into firm settlements. 0:03:53.680 --> 0:03:56.240 We did this together with four other companies, the three 0:03:56.240 --> 0:04:00.000 big distributors in Johnson and Johnson, and nobody has reached 0:04:00.400 --> 0:04:03.880 the point where, you know, everybody signs a firm settlement. 0:04:04.080 --> 0:04:06.760 One of the reasons is that we have fifty states involved, 0:04:07.120 --> 0:04:10.680 we have fift planning lawyers, five companies, and even though 0:04:10.720 --> 0:04:12.800 each company does their own settlement at the end of 0:04:12.840 --> 0:04:15.640 the day, it has just proven difficult to get everybody 0:04:15.680 --> 0:04:18.920 to sort of sit down and do the final details. 0:04:18.960 --> 0:04:22.719 And it has not helped that the COVID nineteen pandemic 0:04:22.760 --> 0:04:27.159 has delayed basically all trials, so all the trials that 0:04:27.200 --> 0:04:30.040 could have been trigger points by motivating people to get 0:04:30.040 --> 0:04:33.440 the framework into a firm settlement. All these trials have 0:04:33.520 --> 0:04:37.000 been delayed and they're still being delayed due to COVID nineteen, 0:04:37.120 --> 0:04:41.720 so I'm very optimistic that the actual framework will be implemented. 0:04:42.040 --> 0:04:45.279 We are offering free generics box and for all states. 0:04:45.680 --> 0:04:49.480 That's a key product in sort of treating overdose, so 0:04:49.520 --> 0:04:53.159 basically reducing deaths from overdoses, which is a key concern 0:04:53.240 --> 0:04:57.760 of course, in the phase of the substance misuse among 0:04:57.920 --> 0:05:01.719 the American population. The other companies are basically offering cash 0:05:01.839 --> 0:05:05.880 that can be used to help get people off their 0:05:05.920 --> 0:05:09.760 situation with substance abuse. So the only good solution for 0:05:09.800 --> 0:05:12.680 the American public is, of course, as this framework gets 0:05:12.720 --> 0:05:15.760 into a firm settlement, and I hope this will happen. 0:05:15.800 --> 0:05:18.520 I'm optimistic it will happen, but I'm a little doubtful 0:05:18.520 --> 0:05:20.920 about the timing, simply due to the fact that there 0:05:21.000 --> 0:05:24.800 is no legal pressure on the parties to get signed 0:05:24.880 --> 0:05:28.400 on the door line. So speak yeah, well, we'll definitely 0:05:28.400 --> 0:05:31.719 continue to follow that one. Finally, Core, you talked about 0:05:31.839 --> 0:05:35.440 the credit markets. Obviously they're hugely favorable for likes of Tever. 0:05:35.960 --> 0:05:39.000 In fact, yields now lower than when they were still 0:05:39.400 --> 0:05:42.320 rated investment grade by ratings agencies before it have it 0:05:42.400 --> 0:05:45.039 became a fallen angel? Do you continue to just raise 0:05:45.760 --> 0:05:47.640 raise money on the credit markets to pay down debt? 0:05:49.279 --> 0:05:51.760 So we only raised money, you could say, when we 0:05:51.800 --> 0:05:53.760 have to, because we're paying down debt out of our 0:05:53.800 --> 0:05:56.520 operational cash throw as we go along. We did that 0:05:56.640 --> 0:05:59.080 last year with roughly two billion. We're going to do 0:05:59.240 --> 0:06:02.240 this year with a bit more than two billions. And 0:06:02.320 --> 0:06:05.120 the next time where we really need to refinance, that 0:06:05.320 --> 0:06:08.200 is in two thousand twenty three, or that's the ditch 0:06:08.160 --> 0:06:12.159 stack of two thousand twenty three, that's about around four billion. 0:06:12.240 --> 0:06:14.839 That's more than what we expect our operational cash flow 0:06:14.880 --> 0:06:16.960 will be. So we will look like to do a 0:06:17.000 --> 0:06:19.760 refinancing about a year from now, where we will look 0:06:19.800 --> 0:06:23.479 at refinancing two thousand twenty three and potentially some of 0:06:23.520 --> 0:06:27.720 two thousand twenty five. All right, well we have to 0:06:27.720 --> 0:06:29.400 say goodbye to you there, but thank you very much 0:06:29.480 --> 0:06:31.880 for giving us some of your time today earnings day 0:06:31.920 --> 0:06:35.400 and then always always such a busy day. That's Coral 0:06:35.520 --> 0:06:39.400 Schultze is a pharmaceuticals a CEO, joining us there after 0:06:39.839 --> 0:06:45.839 an excellent earnings season. You know, coming off of those 0:06:46.240 --> 0:06:49.960 march loads of last year, the sps of about seventy five, 0:06:50.880 --> 0:06:52.640 and a lot of folks are starting to get worried 0:06:52.680 --> 0:06:55.320 about a bubble. And when you see stories like the 0:06:55.360 --> 0:06:58.680 game stop and all the spacks coming out, just adding 0:06:58.720 --> 0:07:01.240 to the concerns about are we a bubble? Uh? In 0:07:01.320 --> 0:07:04.080 this particularly in the equity markets. Let's chat about that 0:07:04.120 --> 0:07:06.960 with Jim Paulson. He's a chief investment strategist for the 0:07:07.000 --> 0:07:10.360 Louthhole Group. Joining us on the phone from Minneapolis, Minnesota. Jim, 0:07:10.400 --> 0:07:12.560 thanks so much for joining us again here again a 0:07:13.640 --> 0:07:16.920 extraordinary move off the march lows here. How are you 0:07:17.000 --> 0:07:21.080 viewing the markets right here? Yeah, Paul, thanks for having 0:07:21.080 --> 0:07:25.480 me today. Yeah, I am. I think that you know, 0:07:25.520 --> 0:07:28.360 there's certainly a lot of the indicators, sentiment indicators and 0:07:28.560 --> 0:07:33.600 like have certainly come up a fair amount and should 0:07:33.760 --> 0:07:37.080 could certainly bring in will bring sometime this year correction. Uh, 0:07:37.800 --> 0:07:40.240 I think we we could get at least one of those. 0:07:40.280 --> 0:07:41.880 I think it's going to come a little later, but 0:07:42.520 --> 0:07:45.880 I think that's very possible. But this this narrative that's 0:07:45.880 --> 0:07:48.920 out there, it's gotten really strong. This the idea of 0:07:49.960 --> 0:07:54.600 the bubble major market mania bubble that's developing, it will 0:07:54.800 --> 0:07:58.640 resolve the collapse like the dot com collapse. I think 0:07:58.680 --> 0:08:03.760 that's got really low probability. Um. Yes, we've we've come 0:08:03.800 --> 0:08:06.960 up a lot from them March lows. But but if 0:08:07.000 --> 0:08:08.920 you look at over the last year, we might be 0:08:09.000 --> 0:08:13.400 up fifteen over the last three years, I think we've 0:08:13.440 --> 0:08:18.960 analyzed around thirteen. And during the last two years, for example, 0:08:18.960 --> 0:08:22.880 of twenty four months, roughly this this SP five hundred 0:08:22.880 --> 0:08:27.200 has suffered to cline in late eighteen and thirty four 0:08:27.280 --> 0:08:30.720 percent decline last year. I just can't tell you another 0:08:30.760 --> 0:08:34.199 period where we ended up in a bubble during the 0:08:34.280 --> 0:08:36.600 twenty after twenty four month period where we had two 0:08:36.640 --> 0:08:40.679 really nasty our markets almost over the same time period. 0:08:40.960 --> 0:08:44.200 And then if you look more broadly, Paul Um you 0:08:44.240 --> 0:08:49.800 know Russell large value UH international markets have gone nowhere 0:08:49.840 --> 0:08:52.840 for the last three years. There's still roughly flat and 0:08:52.920 --> 0:08:57.480 until November small caps hadn't moved higher. So I think 0:08:57.480 --> 0:09:01.560 it's overblown, I really do. You know. One of the 0:09:01.559 --> 0:09:07.640 things that presses me is talk about the Greenspan put well, 0:09:08.600 --> 0:09:11.800 we've got a vaccine. Put how much you're going to 0:09:11.880 --> 0:09:15.480 sell this market off when you know that by faller 0:09:16.080 --> 0:09:18.600 or so by the end of this year, there's pandemic 0:09:18.640 --> 0:09:20.560 is gonna wind down a lot more. We've got a 0:09:20.640 --> 0:09:24.440 policy put, We've got another trillion dollar stimulus for MEEF 0:09:24.480 --> 0:09:27.720 package coming. It seems like every month, how much you're 0:09:27.720 --> 0:09:29.920 gonna sell off in the face of that, We've got 0:09:29.920 --> 0:09:33.120 an earning revival put going on earn These estments are 0:09:33.160 --> 0:09:35.520 coming up every day, and we've gotta we've got a 0:09:35.520 --> 0:09:38.840 bubble watch put. Can we really have a bubble when 0:09:38.840 --> 0:09:40.719 so many are worried about it? I don't know. Those 0:09:40.720 --> 0:09:43.199 are the things I throw out. I guess, for how 0:09:43.240 --> 0:09:46.240 long can the federal Reserve and fiscals TOI met a 0:09:46.320 --> 0:09:50.160 slash pandemic relief keep the demand coming for these companies. 0:09:50.200 --> 0:09:52.360 I mean, you walk around any major city right now 0:09:52.400 --> 0:10:00.800 and it's absolutely it's terrifyingly bare well. The lonnie I, 0:10:00.240 --> 0:10:02.439 I personally don't know if we need a lot of 0:10:02.440 --> 0:10:05.520 our stimulus. That one of the things that's greatly underestimated 0:10:06.240 --> 0:10:08.280 is that there's about a one year to two year 0:10:08.360 --> 0:10:12.240 lag and historically between when stimulus is introduced and when 0:10:12.240 --> 0:10:14.880 it starts to really impact the economy. So we're going 0:10:14.920 --> 0:10:16.920 to get a lot of juice from what we started 0:10:16.920 --> 0:10:20.679 to introduce last year, let alone the new stuff we're 0:10:20.720 --> 0:10:23.559 bringing now into the party. And at the end of 0:10:23.600 --> 0:10:29.680 the day, Um, the real issue is reopening and it's stimulus. 0:10:29.679 --> 0:10:32.880 Can't really do that, but we're going to get that. 0:10:33.000 --> 0:10:35.120 I mean, the biggest stimulus in the room isn't the 0:10:35.120 --> 0:10:38.320 fiscal policy or monetary policy. It's a shot in the 0:10:38.480 --> 0:10:42.360 arm because by you know, if you think that sentiments 0:10:42.400 --> 0:10:45.320 too giddy right now in the investment markets, what's it 0:10:45.320 --> 0:10:48.640 gonna be like on VC day when we declare victory 0:10:48.679 --> 0:10:52.560 over COVID in the fall and there's gonna be heard 0:10:52.720 --> 0:10:55.920 that's fascinated and they are free to roam again and 0:10:56.320 --> 0:11:02.920 taking entertainment and social interaction demand. That will be spin. 0:11:03.040 --> 0:11:05.240 I mean, people are going to feel a palatable route. 0:11:05.320 --> 0:11:07.319 Do you should rethink this whole vaccine thing? Jim? What 0:11:07.360 --> 0:11:12.000 do you think? So? Jim? Where are you in terms 0:11:12.080 --> 0:11:16.320 of are you in this rotation play that's worked so 0:11:16.360 --> 0:11:19.080 well for investors released since September? Kind of you know, 0:11:19.120 --> 0:11:21.640 maybe on the margin, lightning up on the Apples and 0:11:21.640 --> 0:11:24.400 the Amazons of the world and and looking for some 0:11:24.440 --> 0:11:26.440 of those cyclical names, maybe some of the small cap 0:11:26.559 --> 0:11:29.679 names that in fact would and will benefit from a 0:11:29.840 --> 0:11:32.240 reopening here. How do you feel about that? Where where 0:11:32.240 --> 0:11:38.360 are you? Yeah? I definitely, uh, we've been overweighted what 0:11:38.480 --> 0:11:42.880 I call broader marketplace or UH at least since the 0:11:42.960 --> 0:11:45.360 middle last year or so. But you know, I would 0:11:45.360 --> 0:11:51.560 include you know, small caps, cyclicals, UH value stocks, high 0:11:51.600 --> 0:11:56.240 beta and international markets in that mix. I definitely want 0:11:56.280 --> 0:11:59.760 to be overweighted there, but I wouldn't exactly I be 0:12:00.000 --> 0:12:02.320 their way to tack the new era. But I don't 0:12:02.320 --> 0:12:05.000 think I totally get out of it. I think it's 0:12:05.000 --> 0:12:09.040 going to continue. It's gonna underperform, probably, but it's gonna 0:12:09.240 --> 0:12:13.199 continue to participate, and it holds you up on bad days, 0:12:13.480 --> 0:12:15.520 you know, if it really the cyclicals and those more 0:12:15.600 --> 0:12:20.160 violably broader marketplace have greater volatility, and on those days, 0:12:20.200 --> 0:12:22.560 if you own some new era, it's gonna hold you up. 0:12:22.600 --> 0:12:24.640 So I own some of both. One of the things 0:12:24.679 --> 0:12:28.200 I'd say, Paul is that what I found consumer confidence 0:12:28.280 --> 0:12:33.600 is still very depressed. And Tavanni's point, you know, people 0:12:33.600 --> 0:12:36.800 still feel pretty concerned about where we're at here. But 0:12:37.240 --> 0:12:40.240 if we are going to get people vaccinated here, I 0:12:40.280 --> 0:12:44.000 think consumer confidence is going to rally even more. And 0:12:44.080 --> 0:12:47.839 what I found is a very close relationship between improvements 0:12:47.840 --> 0:12:51.720 in main street confidence and what happens to these broader 0:12:51.760 --> 0:12:55.280 marketplaces like small caps and and I think there's still 0:12:55.360 --> 0:12:56.800 quite a bit of that ahead of us when you 0:12:56.840 --> 0:12:58.960 look ahead over the next year. Well, I'm looking forward 0:12:58.960 --> 0:13:01.600 to speaking to you throughout this whole process. No doubt 0:13:01.600 --> 0:13:03.960 it's going to be a fascinating year. Thanks for joining today. 0:13:04.040 --> 0:13:06.560 Jim Pulls in a CEE IO at the loose Hold Group. 0:13:09.320 --> 0:13:13.000 The second impeachment trial of former President Trump really gets 0:13:13.080 --> 0:13:17.640 underway today. Let's get the latest with June Grasso, Bloomberg 0:13:17.760 --> 0:13:20.440 News legal analyst, host of Bloomberg Law. You can hear 0:13:20.480 --> 0:13:23.559 that weeknights at ten pm Wall Street Time on Bloomberg Radio. 0:13:23.640 --> 0:13:25.559 Joining us on the phone, June, talk to us a 0:13:25.600 --> 0:13:28.720 little bit about what we can expect from the actual 0:13:28.880 --> 0:13:33.600 trial aspect here going forward. Well, what's going to happen 0:13:33.679 --> 0:13:37.600 today is probably starting out the same as yesterday, which 0:13:37.640 --> 0:13:41.160 is there were going to be a video presentation of 0:13:41.840 --> 0:13:44.840 what happened during the riot, and you can expect that 0:13:44.920 --> 0:13:48.439 the house managers are going to lay out their case 0:13:48.559 --> 0:13:52.439 in chronological order, so you're going to see a mix 0:13:52.559 --> 0:13:56.960 of talking and video, and they're hoping that this will 0:13:57.360 --> 0:14:01.120 sort of bring the senators back to that minute when 0:14:01.160 --> 0:14:05.640 they faced the crowd and proved to them that President 0:14:05.679 --> 0:14:10.880 Trump should be guilty of of inciting the crowd. Are 0:14:10.880 --> 0:14:14.000 we absolutely certain that the time has passed when we 0:14:14.080 --> 0:14:17.960 might actually have witnesses as that decision come and gone 0:14:18.000 --> 0:14:20.760 at this point June, Well, the decision hasn't been made 0:14:20.800 --> 0:14:25.240 about witnesses, but the feeling is from all the reporting 0:14:25.680 --> 0:14:28.840 that there is probably not going to be any witnesses 0:14:29.360 --> 0:14:32.880 because basically of the time factor, you have both sides 0:14:32.920 --> 0:14:36.600 wanting this to end quickly. The Democrats want Joe Biden 0:14:36.600 --> 0:14:38.560 to be able to get on with his agenda, and 0:14:38.560 --> 0:14:42.080 they also want to present a concise case unlike the 0:14:42.160 --> 0:14:45.440 last time, and the Republicans just wanted to be over. 0:14:45.640 --> 0:14:48.200 But I think they're going to be missing. The House 0:14:48.240 --> 0:14:50.480 managers are going to be missing an element of their 0:14:50.560 --> 0:14:54.000 case if they don't have witnesses, because we don't know 0:14:54.320 --> 0:14:59.440 what president former President Trump's reactions to the riot are. 0:14:59.600 --> 0:15:02.880 We would have to hear that from witnesses, and also 0:15:03.000 --> 0:15:05.720 the delay he took in doing anything to stop it, 0:15:05.880 --> 0:15:10.040 and that goes to his intent and connects him to 0:15:10.240 --> 0:15:13.880 the crowd. And that's the important part of their case 0:15:13.920 --> 0:15:16.240 and the hard part. They have to connect him to 0:15:16.400 --> 0:15:20.080 what happened. And that's bold, sorry jump in, but that's 0:15:20.120 --> 0:15:23.960 what I find astonishing. So you can understand how Republicans 0:15:23.960 --> 0:15:26.480 may not want witnesses, but I'm not quite sure why 0:15:26.480 --> 0:15:29.480 the House managers don't want witnesses so badly. I know, 0:15:29.560 --> 0:15:31.800 you join you say that it's the it's the Biden 0:15:32.000 --> 0:15:36.480 agenda and so on, but you know, well, no, I 0:15:36.880 --> 0:15:40.720 definitely think that they should have some witnesses. I think 0:15:40.760 --> 0:15:43.800 that they're afraid that it will get into For example, 0:15:43.840 --> 0:15:46.080 if you have a witness, then you have then the 0:15:46.080 --> 0:15:48.760 other side is going to call a witness, so it 0:15:48.800 --> 0:15:51.640 will drag it out. But I mean, look at Clinton's 0:15:51.680 --> 0:15:54.920 impeachment trial, there were witnesses, and right now the Democrats 0:15:54.960 --> 0:15:57.120 are in control. There were no witnesses at the last 0:15:57.120 --> 0:16:00.640 impeachment trial of Donald Trump because they are Publicans were 0:16:00.640 --> 0:16:04.040 in control and didn't want witnesses. So you know, from 0:16:04.080 --> 0:16:08.040 my way of thinking, witnesses on at least one the 0:16:08.160 --> 0:16:12.800 issue of President Trump's intent would really go a long way. 0:16:12.840 --> 0:16:16.240 But also maybe the Democrats the House managers are thinking, well, 0:16:16.640 --> 0:16:19.800 nothing is going to get seventeen Republicans to vote with us, 0:16:19.840 --> 0:16:23.560 so why drag it out. It's hard to tell, June, 0:16:23.560 --> 0:16:28.040 what do you think the Republican or the defendants defense 0:16:28.120 --> 0:16:33.040 in fact will be? What a good question, Paul, because 0:16:33.080 --> 0:16:35.560 I didn't necessarily get an answer. Yes, I know. The 0:16:35.640 --> 0:16:39.080 problem was, you know, yesterday what should have been a 0:16:39.160 --> 0:16:41.680 day that was fairly easy for them because they could 0:16:41.680 --> 0:16:45.240 have made legal arguments, even though the legal arguments weren't strong. 0:16:45.360 --> 0:16:48.200 What we saw that and it sort of echoed what 0:16:48.280 --> 0:16:50.920 their brief was. Their first brief was you know, filled 0:16:50.920 --> 0:16:53.520 with errors. There was a typo on the first page, 0:16:53.880 --> 0:16:58.040 and it was very disjointed. And so the defense yesterday 0:16:58.160 --> 0:17:03.160 from Mr Caster, I mean, was rambling, almost nonsensical at times, 0:17:03.640 --> 0:17:07.400 and with the second lawyers shown there were conflicting arguments. 0:17:07.440 --> 0:17:09.600 It was, you know, it was too soon to try 0:17:09.640 --> 0:17:14.080 President Trump. There wasn't enough procedure, he didn't have any time. 0:17:14.280 --> 0:17:16.320 But then it was too late to try him because 0:17:16.320 --> 0:17:19.400 he was out of office, and there were factual mistakes 0:17:19.440 --> 0:17:22.640 about the timeline of impeachment. So I mean, I suppose 0:17:22.720 --> 0:17:25.920 what their best argument will be is what the hardest 0:17:26.000 --> 0:17:29.520 part of the House Manager's cases, which is proving that 0:17:30.119 --> 0:17:34.879 connecting President Trump to the actual assault on the capital, 0:17:35.200 --> 0:17:37.560 and that is I mean, that's going to be tough. 0:17:37.600 --> 0:17:39.679 If this for a criminal case, which it's not. I 0:17:39.680 --> 0:17:41.960 don't think you could prove that beyond a reasonable doubt 0:17:41.960 --> 0:17:44.560 with the kind of evidence they have. Now it's not 0:17:44.640 --> 0:17:46.960 a criminal trial, and the as we've seen before, the 0:17:47.000 --> 0:17:50.160 senators can do whatever they want. But I think that 0:17:50.160 --> 0:17:52.439 that element is going to be something that the defense 0:17:52.480 --> 0:17:55.640 can really focus on. You know President Trump speech, yes 0:17:55.720 --> 0:17:58.720 it was, it was heated, but he also said, which 0:17:58.800 --> 0:18:00.600 isn't played very much. What there was also a part 0:18:00.600 --> 0:18:02.359 of that speech, because I listened to the whole thing 0:18:02.359 --> 0:18:05.840 where he said, let's go to the capitol, let's march peacefully. 0:18:06.000 --> 0:18:08.560 There was one there was one sentence about marching peaceful. 0:18:08.600 --> 0:18:11.880 They could take that sentence and use that to make 0:18:11.960 --> 0:18:15.040 their case that he did not want them to storm 0:18:15.080 --> 0:18:17.320 the capitol. He had no idea that this was going 0:18:17.359 --> 0:18:20.320 to happen. And since there'll be no witnesses, most likely 0:18:20.800 --> 0:18:22.640 they may be able to make a good argument out 0:18:22.640 --> 0:18:24.240 of that. I mean, they have a case to make. 0:18:24.640 --> 0:18:27.560 Very very briefly, do introducing some of these new videos 0:18:27.640 --> 0:18:31.119 or anything. Does that help with state cases or d 0:18:31.200 --> 0:18:34.159 A cases down the line in any way. Well, I 0:18:34.160 --> 0:18:38.639 think that those videos are what the federal prosecutors and 0:18:38.680 --> 0:18:41.480 the FBI have been looking at to try to and 0:18:41.520 --> 0:18:44.760 they've been charging people based on those videos. I mean 0:18:44.760 --> 0:18:47.480 you'll see a charge and you'll see what the charges 0:18:47.520 --> 0:18:50.320 and then you see the video of that person doing 0:18:50.440 --> 0:18:54.520 something like throwing, you know, breaking through barriers. So yes, 0:18:54.560 --> 0:18:57.159 those videos are going to be used. And that's tough 0:18:57.320 --> 0:19:01.160 evidence to get by. It's very hard to say, for example, oh, 0:19:01.240 --> 0:19:03.679 I didn't take this out of I didn't steal anything 0:19:03.680 --> 0:19:05.679 from the capital when there's a picture of you, you know, 0:19:05.880 --> 0:19:09.160 walking out with the podium of Jesse Pelosi. So I mean, 0:19:09.280 --> 0:19:11.280 that is really tough to have it. I expect a 0:19:11.320 --> 0:19:13.159 lot of play deals and I think the fans are 0:19:13.200 --> 0:19:16.159 going to try to flip a lot of people. June, 0:19:16.200 --> 0:19:19.160 we have to leave it there, but thank you so much, 0:19:19.280 --> 0:19:21.560 and of course we'll be tuning into Bloomberg Law for 0:19:21.600 --> 0:19:27.240 further updates. Kristin Bryant is a Bloomberg opinion columnists covering 0:19:27.280 --> 0:19:30.680 industrial companies, also spacks and so much more. But he's 0:19:30.720 --> 0:19:34.399 written a great column on Elon Musk's bitcoin bet. He 0:19:34.480 --> 0:19:37.960 says it's a bean encounter as a nightmare. Chris, thanks 0:19:37.960 --> 0:19:42.639 for joining. So the backstory is that Ellen decided to 0:19:42.640 --> 0:19:46.119 put eight thirty billion dollars worth of Tesla's cash, not 0:19:46.200 --> 0:19:49.359 his own cash, but Tesla's cash into bitcoin, and of 0:19:49.400 --> 0:19:53.159 course we saw a variety of responses. So many of them, 0:19:53.200 --> 0:19:55.800 as you can imagine, were absolutely thrilled with this idea, 0:19:55.880 --> 0:19:58.840 and you know, recommended other companies do the same. But 0:19:59.080 --> 0:20:04.600 what say you, was that advisable? M hm? So, to clarify, 0:20:04.760 --> 0:20:06.760 a one and a half billion dollars of Tesla's cat 0:20:06.800 --> 0:20:09.159 has gone into the bit climates is still an awful 0:20:09.200 --> 0:20:12.359 lot in the context of Tesla's overall cash balance of 0:20:12.400 --> 0:20:18.080 about nineteen billion, and yes, obviously a very risky approach 0:20:18.280 --> 0:20:22.080 given how volatile bitcoin is. But the point of my 0:20:22.160 --> 0:20:25.200 column is to focus on on a rather geeky point, 0:20:25.240 --> 0:20:30.000 which is how you account for bitcoin, because cryptocurrencies are 0:20:30.040 --> 0:20:34.000 still so new that the accounting authorities haven't yet developed 0:20:34.040 --> 0:20:36.159 sort of real standards to how this is done, or 0:20:36.160 --> 0:20:38.639 at least the ones that they have sort of imposed 0:20:38.680 --> 0:20:43.000 on on bitcoin is sort of pretty outdated, and the 0:20:43.040 --> 0:20:45.560 accounting of the bitcoin is going to cause Tesla all 0:20:45.640 --> 0:20:51.200 kinds of problems, as I can explain. Um, the chief 0:20:51.240 --> 0:20:54.560 problem is this, Essentially, if the price of bitcoin falls, 0:20:54.640 --> 0:20:57.080 then Tesla will have to book an impairment that this 0:20:57.280 --> 0:20:59.720 price goes back up again. It's not allowed to write 0:20:59.800 --> 0:21:02.600 up the value of its bitcoin holding, so in a sense, 0:21:02.640 --> 0:21:07.160 it can only lose Chris here. You know, as we've 0:21:07.160 --> 0:21:10.520 seen companies, obviously the line item on the balance sheet 0:21:10.560 --> 0:21:15.720 is cash and marketable securities. Bitcoin arguably is I guess 0:21:15.600 --> 0:21:17.840 it's a marketable security, but it's a very violatile one, 0:21:17.880 --> 0:21:21.640 as you point out in your column here. Um, so 0:21:21.800 --> 0:21:24.680 what is a company like Tesla going to do here? 0:21:24.720 --> 0:21:28.359 Because the marketer market on this thing is crazy given 0:21:28.400 --> 0:21:33.160 the volatility. So what do they do? Do they hedge it? Well, 0:21:33.160 --> 0:21:36.000 that's a good question. I think they didn't say anything 0:21:36.000 --> 0:21:38.600 about hedging. Would be very surprised if they hedge it. 0:21:38.640 --> 0:21:40.840 I mean, obviously a lot of companies do hedge their 0:21:40.880 --> 0:21:44.200 foreign currency exposure. But it seems to me like tesser 0:21:44.320 --> 0:21:46.800 Is is making an outright bet here on on the 0:21:46.840 --> 0:21:50.720 price of bitcoin. Um, what they're gonna have to do 0:21:50.840 --> 0:21:54.280 is is classify as an intangible asset on on the 0:21:54.320 --> 0:21:57.359 balance sheet rather than lump it in with their cash 0:21:57.400 --> 0:22:00.679 holdings or as a financial investment. And as I say, 0:22:00.720 --> 0:22:03.600 well that that might end up doing, unfortunately, is hurting 0:22:03.640 --> 0:22:06.600 Tadler's earnings because you might have an odd situation where 0:22:06.720 --> 0:22:09.840 let's say the price of bitcoin is sold by one third, 0:22:09.880 --> 0:22:14.800 which is historically you know, not unlikely, incredibly volatile acid 0:22:15.760 --> 0:22:19.720 um Keadler having bought one and a half billion dollars work, 0:22:19.960 --> 0:22:23.159 would have to book a five hundred million dollar lost 0:22:23.200 --> 0:22:26.480 against its holdings that quarter, which obviously, you know, for 0:22:26.480 --> 0:22:29.280 a company that still isn't that profitable, would actually be 0:22:29.480 --> 0:22:33.439 quite problematic. Now, of course, analysts would be able to 0:22:33.480 --> 0:22:35.920 look at the market price and say all that, actually 0:22:36.000 --> 0:22:38.479 the price of bitcoin is has now gone back up 0:22:38.520 --> 0:22:41.439 again and and and so this is uh, you know, 0:22:41.880 --> 0:22:46.160 only a paper loss. Nevertheless, my point is that, um, 0:22:46.200 --> 0:22:47.720