1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,560 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,240 Speaker 1: at Bloomberg dot com slash podcast. Let's go to Ira Jersey. 7 00:00:22,280 --> 00:00:26,280 Speaker 1: Ira Jersey, our chief US rate strategists from Bloomberg Intelligences. Right, 8 00:00:26,680 --> 00:00:29,440 Speaker 1: and Ira, what do you think here? I'm calling your 9 00:00:29,480 --> 00:00:33,280 Speaker 1: Federal Reserve? Your Federal Reserve looks at the inflation data 10 00:00:33,320 --> 00:00:35,680 Speaker 1: we got today? What do you think it took away 11 00:00:35,680 --> 00:00:40,280 Speaker 1: from that data? A happy happy holidays guys. Um, last 12 00:00:40,479 --> 00:00:42,479 Speaker 1: last hit of the year here. Um, you know, I 13 00:00:42,720 --> 00:00:45,760 Speaker 1: think the Fed takes away that we're continue to be 14 00:00:45,800 --> 00:00:48,960 Speaker 1: on trend for lower but still not low inflation growth. 15 00:00:49,080 --> 00:00:51,120 Speaker 1: And and when you look at a lot of the 16 00:00:51,200 --> 00:00:54,440 Speaker 1: data today, like like I wanted to crunching some numbers, 17 00:00:54,440 --> 00:00:56,120 Speaker 1: and when you look at the trends just from the 18 00:00:56,200 --> 00:00:59,360 Speaker 1: last three months and things like personal income and then 19 00:00:59,400 --> 00:01:03,120 Speaker 1: you use oaths, the core and the headline PC deflator, 20 00:01:03,320 --> 00:01:06,039 Speaker 1: what you realize is actually real incomes at least at 21 00:01:06,040 --> 00:01:10,160 Speaker 1: the aggregate level, are actually growing now, sow, and that 22 00:01:10,280 --> 00:01:14,360 Speaker 1: the first month we've seen that, because I this morning, 23 00:01:14,400 --> 00:01:18,040 Speaker 1: it's the second month. Um. But yes, it's it's actually 24 00:01:18,319 --> 00:01:20,800 Speaker 1: you know, and and that that might actually be a 25 00:01:21,520 --> 00:01:23,480 Speaker 1: um that I actually might be a worry for the 26 00:01:23,480 --> 00:01:26,840 Speaker 1: Federal Reserve because when you have personal incomes that are 27 00:01:27,000 --> 00:01:30,600 Speaker 1: higher than than inflation than that means that basically your 28 00:01:30,600 --> 00:01:33,319 Speaker 1: real disposable income is higher, and that means people actually 29 00:01:33,319 --> 00:01:35,520 Speaker 1: have more money to spend, which going into the holiday 30 00:01:35,520 --> 00:01:38,360 Speaker 1: season might have been a pretty good, uh, you know, 31 00:01:38,360 --> 00:01:42,399 Speaker 1: pretty good action potentially for for holiday shopping when you know, 32 00:01:42,440 --> 00:01:44,760 Speaker 1: now all of a sudden, for the first time, you know, 33 00:01:44,800 --> 00:01:47,000 Speaker 1: basically in a year and a half that we've seen 34 00:01:47,520 --> 00:01:50,840 Speaker 1: but we've seen incomes higher than than inflation. Um. Now, 35 00:01:50,960 --> 00:01:54,840 Speaker 1: by the way, personal income came in a growth of 36 00:01:54,920 --> 00:01:57,880 Speaker 1: zero point four percent. The estimate was for zero point 37 00:01:57,880 --> 00:02:01,760 Speaker 1: three percent, so take better. Per spending came in with 38 00:02:01,760 --> 00:02:04,960 Speaker 1: the growth zero point one percent the estimates for zero 39 00:02:05,000 --> 00:02:07,960 Speaker 1: point two percent, so a tick worse. If this happened 40 00:02:07,960 --> 00:02:13,840 Speaker 1: in my household, I think my wife would love me again. Yeah, 41 00:02:13,840 --> 00:02:16,960 Speaker 1: and but keeping keep in mind that um, you know, 42 00:02:17,000 --> 00:02:19,000 Speaker 1: it's hard to judge some of these things on a 43 00:02:19,040 --> 00:02:21,800 Speaker 1: one month basis because you know they are seasonally adjusted. 44 00:02:21,800 --> 00:02:24,520 Speaker 1: And when we look at things like spending, UM, you know, 45 00:02:24,639 --> 00:02:28,520 Speaker 1: over the pandemic period, you actually had people, you know, 46 00:02:28,560 --> 00:02:31,359 Speaker 1: buying more online and doing more of their holiday shopping 47 00:02:31,360 --> 00:02:33,720 Speaker 1: in November than you did in December. So so even 48 00:02:33,760 --> 00:02:36,680 Speaker 1: though you know it was only up slightly UM, you know, 49 00:02:36,680 --> 00:02:38,440 Speaker 1: compared to the last couple of years, it was still 50 00:02:38,440 --> 00:02:42,160 Speaker 1: a pretty reasonably robust number UM on a nominal basis 51 00:02:42,240 --> 00:02:45,240 Speaker 1: for for November spending UM. And keep in mind also 52 00:02:45,280 --> 00:02:47,920 Speaker 1: October was revised up attempts, so when when you average 53 00:02:47,960 --> 00:02:51,280 Speaker 1: those out, it was basically as expected UM. And and 54 00:02:51,720 --> 00:02:55,520 Speaker 1: you know importantly UM, you know, with spending UH, you 55 00:02:55,560 --> 00:02:58,840 Speaker 1: know continuing to grow even a little bit UM, you 56 00:02:58,840 --> 00:03:01,760 Speaker 1: know that will continue to booie prices in some sectors 57 00:03:01,760 --> 00:03:05,160 Speaker 1: and in particular services. So so again digging deep into 58 00:03:05,200 --> 00:03:08,680 Speaker 1: this data and looking at things like core services spending 59 00:03:09,120 --> 00:03:11,680 Speaker 1: UH and core good spending, goods prices have just been 60 00:03:11,680 --> 00:03:15,320 Speaker 1: plummeting and goods prices are not growing anywhere near where 61 00:03:15,360 --> 00:03:18,560 Speaker 1: they were earlier in the year. But services spending continue 62 00:03:18,639 --> 00:03:21,720 Speaker 1: and services prices continue to be growing at a reasonably 63 00:03:21,720 --> 00:03:26,040 Speaker 1: good clip. And because services spending and prices tend to 64 00:03:26,040 --> 00:03:29,160 Speaker 1: be stickier. Um, that means that inflation might not come 65 00:03:29,240 --> 00:03:31,240 Speaker 1: down as quickly as the FED would like. And again 66 00:03:31,280 --> 00:03:33,280 Speaker 1: this is the reason why I think that the FED 67 00:03:33,360 --> 00:03:35,600 Speaker 1: might be pretty reluctant to cut interest rates later in 68 00:03:35,640 --> 00:03:38,720 Speaker 1: the year, even if we have a reasonably I gotta say, 69 00:03:38,800 --> 00:03:42,200 Speaker 1: you're singing from the same hymnal as Barry Nap, with 70 00:03:42,200 --> 00:03:44,640 Speaker 1: whom I spoke earlier this morning. Do you know this guy? 71 00:03:44,760 --> 00:03:48,440 Speaker 1: Do you know Berry from I know he's I know 72 00:03:48,480 --> 00:03:50,520 Speaker 1: he's a soccer guy. I mean I talked to you know, 73 00:03:50,560 --> 00:03:52,920 Speaker 1: I know Rick Reader and some other people at AH 74 00:03:53,240 --> 00:03:55,600 Speaker 1: at Black Rock, but I don't know Berry. Yeah, um 75 00:03:55,680 --> 00:03:58,920 Speaker 1: not not not in the I'll get you two guys together, 76 00:03:58,920 --> 00:04:00,720 Speaker 1: you can talk so anymore. Hey, now he's out in 77 00:04:00,800 --> 00:04:02,600 Speaker 1: Veil I know. And so all right, so he went 78 00:04:02,640 --> 00:04:05,400 Speaker 1: to Veil the first drop of a pandemic and he's 79 00:04:05,480 --> 00:04:11,280 Speaker 1: never ever coming back. So anyway, so you know, I 80 00:04:11,320 --> 00:04:12,800 Speaker 1: want to get him. I want to get his take 81 00:04:12,840 --> 00:04:15,960 Speaker 1: if we could one where where does the market expect 82 00:04:16,160 --> 00:04:19,040 Speaker 1: rates to go? Um? You know, we hit florin a 83 00:04:19,160 --> 00:04:22,320 Speaker 1: quarter on the ten year what two months ago about 84 00:04:23,320 --> 00:04:25,880 Speaker 1: and people are asking was that the peak? Was it? Not? 85 00:04:26,160 --> 00:04:29,840 Speaker 1: What what's the consensus for the path of the ten 86 00:04:29,920 --> 00:04:34,680 Speaker 1: year yield? In so so, actually there's there's kind of 87 00:04:34,839 --> 00:04:37,680 Speaker 1: two camps. It's very it's a pretty bifurcated market. Very 88 00:04:37,680 --> 00:04:40,240 Speaker 1: few people think that that the tenure yield are gonna 89 00:04:40,240 --> 00:04:42,279 Speaker 1: stay where they are right now. Um, So you have 90 00:04:42,440 --> 00:04:44,720 Speaker 1: a camp that's led by like Goldman Sachs and and 91 00:04:44,800 --> 00:04:48,480 Speaker 1: some of my my friends over there calling four yields 92 00:04:48,560 --> 00:04:50,240 Speaker 1: upwards of four and a quarter to four and a 93 00:04:50,279 --> 00:04:52,880 Speaker 1: half percent again and making new yield ties in the 94 00:04:52,920 --> 00:04:55,880 Speaker 1: tenure um. I think that's predicated in part on the 95 00:04:55,920 --> 00:04:57,880 Speaker 1: idea that the Fed is actually gonna be too easy 96 00:04:57,960 --> 00:04:59,840 Speaker 1: and that the economy is going to hold up much 97 00:05:00,000 --> 00:05:03,200 Speaker 1: better um than than others think. And and we're probably 98 00:05:03,200 --> 00:05:05,080 Speaker 1: in the other end of the spectrum. Actually we I 99 00:05:05,120 --> 00:05:07,680 Speaker 1: actually think that we're going to see yields below three 100 00:05:07,720 --> 00:05:10,040 Speaker 1: percent by the end of next year, in part because 101 00:05:10,160 --> 00:05:12,760 Speaker 1: not because we're gonna be necessarily in a deep procession 102 00:05:13,200 --> 00:05:15,360 Speaker 1: next year, but that the market is going to price 103 00:05:15,440 --> 00:05:18,440 Speaker 1: for very deep interest rate cuts and and a slower 104 00:05:18,480 --> 00:05:23,240 Speaker 1: economy come five. So it's really a timing issue. And 105 00:05:23,240 --> 00:05:25,520 Speaker 1: and because of that, long term interest rates can fall, 106 00:05:25,600 --> 00:05:28,159 Speaker 1: whereas short term interest rates might um follo at a 107 00:05:28,240 --> 00:05:32,760 Speaker 1: much slower pace just because um, the the the economy, 108 00:05:33,240 --> 00:05:36,240 Speaker 1: the market is going to anticipate very slow growth and 109 00:05:36,320 --> 00:05:39,480 Speaker 1: much lower inflation on a forward basis. Alright, World Cup 110 00:05:39,560 --> 00:05:44,000 Speaker 1: is over? Now what do I do for my soccer fix? Well, 111 00:05:44,080 --> 00:05:47,240 Speaker 1: obviously Wednesday night you missed the MLS Uh, the College 112 00:05:47,240 --> 00:05:50,080 Speaker 1: Super Draft. Um. You know, there were a lot of 113 00:05:50,320 --> 00:05:52,760 Speaker 1: players and from us L League two who were taken 114 00:05:52,760 --> 00:05:56,839 Speaker 1: by MLS teams and um. Unfortunately that the R two 115 00:05:56,839 --> 00:05:59,359 Speaker 1: players that were draft eligible uh and we're on the 116 00:05:59,400 --> 00:06:02,320 Speaker 1: draft list did not get drafted. Um. Although some big 117 00:06:02,320 --> 00:06:04,280 Speaker 1: news about one of them. It will come out in 118 00:06:04,279 --> 00:06:07,360 Speaker 1: the next week or two. Um. But importantly, I think 119 00:06:07,720 --> 00:06:10,560 Speaker 1: you know, for soccer wise, Monday is a Boxing day, 120 00:06:10,600 --> 00:06:13,279 Speaker 1: so there's always a full slate of games in England 121 00:06:13,720 --> 00:06:16,160 Speaker 1: on Boxing Day. So that will be the next the 122 00:06:16,360 --> 00:06:18,880 Speaker 1: next round of fixtures for people to watch fixtures, that's 123 00:06:19,200 --> 00:06:22,239 Speaker 1: games I think their schedule or something I don't know. Alright, 124 00:06:22,240 --> 00:06:25,000 Speaker 1: Ira Jersey he does the interest rate stuff for Bloomberg Intelligence. 125 00:06:25,040 --> 00:06:27,760 Speaker 1: He also is our residence soccer person tells us kind 126 00:06:27,760 --> 00:06:31,280 Speaker 1: of where we need to focus our soccer interests around 127 00:06:31,360 --> 00:06:37,480 Speaker 1: the world. Nathan Dean, senior US policy analyst of Bloomberg 128 00:06:37,520 --> 00:06:41,200 Speaker 1: Intelligence UH, and Joe Matthew most of Bloomberg Sound on. 129 00:06:41,320 --> 00:06:43,080 Speaker 1: Joe's in the studio. As a matter of fact, All 130 00:06:43,120 --> 00:06:46,479 Speaker 1: Star panel. I know, good stuff. I mean they have 131 00:06:46,600 --> 00:06:49,520 Speaker 1: to deal with the sausage making that is Washington, d C. 132 00:06:49,839 --> 00:06:51,400 Speaker 1: And they to let me start with you on on 133 00:06:51,440 --> 00:06:54,320 Speaker 1: the policy side. Isn't there like a big bill winding 134 00:06:54,360 --> 00:06:56,960 Speaker 1: us way through Congress, like about funding the government and 135 00:06:57,000 --> 00:06:59,640 Speaker 1: stuff like that. Give us the latest. Yeah, so you 136 00:06:59,640 --> 00:07:01,760 Speaker 1: know this is the government's spending bill, also known as 137 00:07:01,800 --> 00:07:05,600 Speaker 1: the Omnibus. It's one point seven trillion and overall spending. Uh. 138 00:07:05,640 --> 00:07:07,640 Speaker 1: The Senate's already passed it. The House has to go 139 00:07:07,720 --> 00:07:10,920 Speaker 1: through today and try and get it out. But if 140 00:07:10,960 --> 00:07:13,800 Speaker 1: not that the Senate has given them until December thirty. 141 00:07:13,960 --> 00:07:16,480 Speaker 1: In terms of a short term funding, what this bill 142 00:07:16,520 --> 00:07:19,120 Speaker 1: really does go for markets is really two things. One 143 00:07:19,160 --> 00:07:21,640 Speaker 1: there's the funding angle and then there's the policy writer angle. 144 00:07:21,960 --> 00:07:24,440 Speaker 1: On the funding side, you know, this gives sixties or 145 00:07:24,480 --> 00:07:28,160 Speaker 1: seventy six billion dollars increase to the defense industry. The 146 00:07:28,200 --> 00:07:32,760 Speaker 1: defense industry likes this obviously if they hadn't, uh Secretary 147 00:07:32,760 --> 00:07:35,040 Speaker 1: of Defense that's said earlier this year or earlier this 148 00:07:35,080 --> 00:07:37,320 Speaker 1: month that they were going to be problems other things 149 00:07:37,320 --> 00:07:40,360 Speaker 1: in here, additional eighty billion dollars to speed up the 150 00:07:40,440 --> 00:07:43,560 Speaker 1: Chips Act. So if you're in the semi conductor industry, uh, 151 00:07:43,560 --> 00:07:46,040 Speaker 1: this is actually gonna speed up the fifty two billion 152 00:07:46,080 --> 00:07:48,560 Speaker 1: dollars that they approved earlier. And then on the policy 153 00:07:48,560 --> 00:07:50,800 Speaker 1: writer's side, look, there's tons of policy writers, but the 154 00:07:50,840 --> 00:07:53,640 Speaker 1: one thing that we're really focused on right now is 155 00:07:53,720 --> 00:07:57,360 Speaker 1: it's mandating employers to auto enroll their employees in for 156 00:07:57,640 --> 00:07:59,800 Speaker 1: one case, So if you're a for one key provider, 157 00:08:00,880 --> 00:08:03,520 Speaker 1: there could be quite a bit of increase in assets 158 00:08:03,600 --> 00:08:06,480 Speaker 1: under management because you're gonna be forced to contribute three 159 00:08:06,800 --> 00:08:08,600 Speaker 1: in your first year, all the way up to temper cent. 160 00:08:08,680 --> 00:08:10,360 Speaker 1: So there's a lot of stuff in this bill, but 161 00:08:10,960 --> 00:08:12,360 Speaker 1: we do think it's going to pass and we're not 162 00:08:12,400 --> 00:08:14,760 Speaker 1: gonna have a government show and forced. Well, you mean 163 00:08:14,800 --> 00:08:18,960 Speaker 1: it'll just be automatic unless you opt out. That's that's correct. Okay, Joe, 164 00:08:19,000 --> 00:08:24,120 Speaker 1: how's this playing out politically? I mean, um, the Congress 165 00:08:24,120 --> 00:08:27,360 Speaker 1: seemed to start splitting a little bit in terms of 166 00:08:27,400 --> 00:08:30,120 Speaker 1: support for Ukraine. For example, there were a few Republicans 167 00:08:30,160 --> 00:08:33,880 Speaker 1: who are vocally against at least continuing at these levels. 168 00:08:34,160 --> 00:08:37,199 Speaker 1: And it also strikes me that so much spending I 169 00:08:37,200 --> 00:08:39,840 Speaker 1: think it's one point seven trillion dollars in total, could 170 00:08:39,880 --> 00:08:44,920 Speaker 1: be inflationary. It could be inflationary or stimulative according to some, 171 00:08:45,040 --> 00:08:47,200 Speaker 1: although we tend not to think of budgets that way, 172 00:08:47,280 --> 00:08:50,120 Speaker 1: since you know it's not a stimulus bill. But either way, yes, 173 00:08:50,120 --> 00:08:51,959 Speaker 1: there are a lot of Republicans who are really upset 174 00:08:51,960 --> 00:08:55,280 Speaker 1: about the way this was done. It's not a continuing resolution, 175 00:08:55,440 --> 00:08:58,040 Speaker 1: as as we were just discussing here, this is an omnibus, 176 00:08:58,080 --> 00:09:01,280 Speaker 1: which is which is a which is better um? And 177 00:09:01,320 --> 00:09:04,439 Speaker 1: Republicans scored a couple of major wins here. Mitch McConnell, 178 00:09:04,480 --> 00:09:08,800 Speaker 1: for instance, signed off on this early, having succeeded in 179 00:09:08,840 --> 00:09:12,320 Speaker 1: getting a massive increase in defense spending, in fact, even 180 00:09:12,320 --> 00:09:16,840 Speaker 1: more than was seen for domestic spending. And and he 181 00:09:17,000 --> 00:09:19,120 Speaker 1: was whipping his members early and off and on this. 182 00:09:19,240 --> 00:09:21,240 Speaker 1: You have to remember the period of time that we're 183 00:09:21,240 --> 00:09:24,040 Speaker 1: in right now, is Republicans prepared to take the majority 184 00:09:24,080 --> 00:09:26,920 Speaker 1: in the House. There's a lot of bluster. Kevin McCarthy 185 00:09:27,040 --> 00:09:30,360 Speaker 1: was supposedly whipping against this bill, but if this had 186 00:09:30,360 --> 00:09:33,800 Speaker 1: not passed, that would have been a huge problem for him. 187 00:09:33,840 --> 00:09:35,760 Speaker 1: He was saved by the bell. He doesn't have to 188 00:09:35,800 --> 00:09:38,600 Speaker 1: worry about now crafting a budget in a divided Congress. 189 00:09:38,760 --> 00:09:41,719 Speaker 1: A couple of weeks from now, Hey, Joe asiphrom the 190 00:09:42,400 --> 00:09:44,720 Speaker 1: policy issues when we get back, then, is there a 191 00:09:44,760 --> 00:09:47,440 Speaker 1: postmortem here with a day or two in a rear 192 00:09:47,480 --> 00:09:50,480 Speaker 1: view mirror about the January six committee and kind of 193 00:09:50,520 --> 00:09:52,800 Speaker 1: just give us an update of where we are and 194 00:09:52,840 --> 00:09:56,240 Speaker 1: what might be next steps. Well, they dropped the report 195 00:09:56,360 --> 00:09:58,320 Speaker 1: last night, which is a pretty big deal. This is, 196 00:09:58,559 --> 00:10:01,760 Speaker 1: by the way, that Omnibus four thousand, one fifty pages 197 00:10:01,800 --> 00:10:06,400 Speaker 1: before the amendments. This report is eight hundred and fourteen pages, 198 00:10:06,400 --> 00:10:08,240 Speaker 1: So you guys have a lot of reading to do 199 00:10:08,320 --> 00:10:11,640 Speaker 1: this weekend. Um. Look, it's uh, it's a deep dive 200 00:10:11,760 --> 00:10:14,280 Speaker 1: with a lot of information you've already heard, but it 201 00:10:14,320 --> 00:10:16,679 Speaker 1: also adds more and they're going to continue adding more 202 00:10:16,720 --> 00:10:19,720 Speaker 1: to this report. In terms of the verbate from these 203 00:10:19,760 --> 00:10:23,520 Speaker 1: actual witness interviews, the testimony that we haven't heard were 204 00:10:23,559 --> 00:10:27,080 Speaker 1: seen in their entirety. But there's a list of eleven recommendations, 205 00:10:27,080 --> 00:10:29,240 Speaker 1: and I'll bring you back a couple of days because 206 00:10:29,240 --> 00:10:31,240 Speaker 1: this has been a really busy week. Remember we had 207 00:10:31,240 --> 00:10:34,440 Speaker 1: that final meeting just a few days back in which 208 00:10:34,480 --> 00:10:38,760 Speaker 1: they voted to refer criminal charges against Donald Trump, John Eastman, 209 00:10:38,800 --> 00:10:42,000 Speaker 1: and some others. This is the follow on the final 210 00:10:42,120 --> 00:10:46,079 Speaker 1: document here that they believe is for posterity, the historical 211 00:10:46,120 --> 00:10:48,400 Speaker 1: document people can look back many many years now as 212 00:10:48,400 --> 00:10:52,040 Speaker 1: opposed to the Department of Justice investigation that may well 213 00:10:52,360 --> 00:10:56,480 Speaker 1: end in criminal charges. But the eleven recommendations include one. 214 00:10:56,600 --> 00:10:58,640 Speaker 1: We already checked this box, and it brings us back 215 00:10:58,679 --> 00:11:02,000 Speaker 1: to the Omnibus bill. That's the Electoral count Act that 216 00:11:02,080 --> 00:11:04,800 Speaker 1: clarifies that a vice president does not have authority to 217 00:11:04,880 --> 00:11:08,240 Speaker 1: reject electoral slates. There'll never be another Mike Pence. There'll 218 00:11:08,240 --> 00:11:10,199 Speaker 1: never be another January six, at least the way we 219 00:11:10,240 --> 00:11:12,679 Speaker 1: saw it. Now that this is in there, all right, 220 00:11:12,800 --> 00:11:16,120 Speaker 1: that's so, that's interesting. Eight hundred pages. I'll get to 221 00:11:16,160 --> 00:11:19,760 Speaker 1: that as soon. How many did you say? We're in 222 00:11:19,760 --> 00:11:22,400 Speaker 1: the omnibus four thousand, one hundred fifty five. And it's 223 00:11:22,440 --> 00:11:27,720 Speaker 1: pretty sick that I know that four thousand, four thousand pages. 224 00:11:27,800 --> 00:11:30,719 Speaker 1: Nathan's all over that well, Nathan, here's what last night. 225 00:11:30,920 --> 00:11:33,600 Speaker 1: If it goes, if they're passing around the Congress, does 226 00:11:33,640 --> 00:11:36,800 Speaker 1: anybody can they slip in a few pages about the 227 00:11:36,800 --> 00:11:40,920 Speaker 1: state and local tax deduction? You know, it's funny. They 228 00:11:40,920 --> 00:11:43,800 Speaker 1: had about fifteen amendments in the Senate yesterday. A couple 229 00:11:43,840 --> 00:11:46,320 Speaker 1: of them did pass, so there will be more pages 230 00:11:46,320 --> 00:11:48,200 Speaker 1: than that. And you know, if if you like the 231 00:11:48,240 --> 00:11:51,520 Speaker 1: back room sausage making here. The only reason why the 232 00:11:51,559 --> 00:11:53,360 Speaker 1: House didn't get the vote on it overnight, which was 233 00:11:53,400 --> 00:11:55,960 Speaker 1: the original plan. Everyone was supposed to be gone by now, 234 00:11:56,520 --> 00:11:58,079 Speaker 1: is because this thing is so big they have to 235 00:11:58,120 --> 00:12:01,000 Speaker 1: actually have this transcribed on the parchment, and it takes 236 00:12:01,000 --> 00:12:03,319 Speaker 1: all night to do that. So they didn't actually receive 237 00:12:03,400 --> 00:12:05,800 Speaker 1: the bill until just about now, and then the House 238 00:12:05,840 --> 00:12:07,800 Speaker 1: will do its work to pass this along. All right, 239 00:12:07,880 --> 00:12:10,080 Speaker 1: So Nathan, let's let's be honest here. Let's just, I 240 00:12:10,080 --> 00:12:12,400 Speaker 1: don't know, assume this gets done because if for no 241 00:12:12,440 --> 00:12:15,080 Speaker 1: other reason the House wants to get to the airport, 242 00:12:15,120 --> 00:12:19,720 Speaker 1: and will there be any safe banking in this that no, 243 00:12:19,840 --> 00:12:23,280 Speaker 1: there's not the safe banking and nothing didn't didn't make 244 00:12:23,320 --> 00:12:25,520 Speaker 1: it into the bill. That's a big blow for the 245 00:12:25,640 --> 00:12:27,640 Speaker 1: folks that are invested in m S O s E 246 00:12:27,760 --> 00:12:31,120 Speaker 1: t F and marijuana potstocks. There actually was a writer 247 00:12:31,240 --> 00:12:34,240 Speaker 1: in this bill that prohibits states in the District of 248 00:12:34,320 --> 00:12:38,280 Speaker 1: Columbia from using faralled dollars to actually implement legalization of 249 00:12:38,360 --> 00:12:41,360 Speaker 1: marijuana state initiatives. So this this is gonna go to 250 00:12:41,440 --> 00:12:46,840 Speaker 1: next year the fun police who you know, it was 251 00:12:46,880 --> 00:12:49,760 Speaker 1: probably some Probably there was one person who really wanted 252 00:12:49,760 --> 00:12:51,160 Speaker 1: it in there, and they got it in there. But 253 00:12:51,600 --> 00:12:53,280 Speaker 1: when it comes to safe banking, when it comes to 254 00:12:53,320 --> 00:12:56,600 Speaker 1: pot marijuana and legalization and so forth, I think legislators 255 00:12:56,600 --> 00:12:59,040 Speaker 1: are going to hit a great pause. I don't see 256 00:12:59,120 --> 00:13:02,600 Speaker 1: much momentum going into next year because you know, the House, 257 00:13:02,920 --> 00:13:06,559 Speaker 1: sorry Republican leadership uh showed that they didn't want to 258 00:13:06,600 --> 00:13:10,880 Speaker 1: actually support this. Senator McConnell made a pretty stringent statement 259 00:13:10,880 --> 00:13:13,360 Speaker 1: about that, and you know, I just don't see the 260 00:13:13,400 --> 00:13:17,959 Speaker 1: political capital being used to push this over the line. So, uh, 261 00:13:18,000 --> 00:13:20,240 Speaker 1: it's certainly feasible, it's got to take time to cook. 262 00:13:20,360 --> 00:13:22,800 Speaker 1: It may pass a year from now, but I just 263 00:13:22,840 --> 00:13:26,400 Speaker 1: don't see anybody paying attention to it outside of April 264 00:13:26,400 --> 00:13:29,440 Speaker 1: twenty when all these issues pop up. What's you're taking, Nathan, 265 00:13:29,440 --> 00:13:31,839 Speaker 1: what's your take on salt. Is there any chance it's 266 00:13:31,840 --> 00:13:36,120 Speaker 1: ever coming back? Uh? You know it's And I'm saying 267 00:13:36,120 --> 00:13:38,079 Speaker 1: I'm apologizing to the folks in New New York and 268 00:13:38,120 --> 00:13:40,520 Speaker 1: New Jersey right now, but there are a lot of 269 00:13:40,559 --> 00:13:43,480 Speaker 1: tax issues, and I will say so, really, I don't 270 00:13:43,480 --> 00:13:45,600 Speaker 1: think it's gonna come back, but I will say that 271 00:13:45,640 --> 00:13:48,520 Speaker 1: the Trump air at tax cuts for consumers are going 272 00:13:48,559 --> 00:13:51,599 Speaker 1: to expire in and that means that people who have 273 00:13:51,640 --> 00:13:54,280 Speaker 1: already started talking about what can we do to extend 274 00:13:54,280 --> 00:13:57,360 Speaker 1: those or make those permanent? And you know, I'm sure 275 00:13:57,400 --> 00:14:00,120 Speaker 1: that the great you know, uh policymakers from New in 276 00:14:00,160 --> 00:14:02,560 Speaker 1: New Jersey are going to be inserting a salt into 277 00:14:02,600 --> 00:14:05,960 Speaker 1: those discussions. Hey, Joe, give us a sense of the 278 00:14:06,000 --> 00:14:10,200 Speaker 1: next two years. Are Are we just in mode already 279 00:14:10,240 --> 00:14:13,840 Speaker 1: in Washington? Oh? We are? I mean the idea. Of course, 280 00:14:13,960 --> 00:14:16,280 Speaker 1: we know that Joe Biden's He's gonna be, I believe, 281 00:14:16,360 --> 00:14:19,040 Speaker 1: somewhere very warm with the family, uh the next week, 282 00:14:19,080 --> 00:14:21,000 Speaker 1: and they're gonna be talking about that, and it's expected 283 00:14:21,000 --> 00:14:23,560 Speaker 1: he will announce his candidacy shortly after the holiday. So 284 00:14:23,760 --> 00:14:26,520 Speaker 1: it's on. I mean, Donald Trump's already running. You're gonna 285 00:14:26,560 --> 00:14:28,560 Speaker 1: have Joe Biden out there and that's gonna that's gonna 286 00:14:28,640 --> 00:14:31,400 Speaker 1: drive the conversation. And in this divided government, it's right. 287 00:14:31,440 --> 00:14:34,080 Speaker 1: I mean, there's there's very little that we're going to 288 00:14:34,160 --> 00:14:36,520 Speaker 1: be passing through here. And in terms of the Safe 289 00:14:36,520 --> 00:14:39,360 Speaker 1: Banking Act, that thing passed the House fifteen times ed 290 00:14:39,400 --> 00:14:43,400 Speaker 1: Pearl Mutter is now retiring without safe Banking, which became 291 00:14:43,480 --> 00:14:46,960 Speaker 1: his his career long cause up there. But to get 292 00:14:46,960 --> 00:14:49,960 Speaker 1: that through Mitch McConnell's chamber, and in seeing Kevin McCarthy 293 00:14:50,000 --> 00:14:52,800 Speaker 1: coming in the House, it's highly unlike Wait, Joe, has 294 00:14:52,800 --> 00:14:55,760 Speaker 1: a sitting president ever been primaried? I mean, is is 295 00:14:55,800 --> 00:14:57,880 Speaker 1: it possible that Biden says I'm gonna run and then 296 00:14:57,920 --> 00:15:01,400 Speaker 1: the Democrats put someone else forth? That would be shocking. 297 00:15:01,560 --> 00:15:04,640 Speaker 1: I can't imagine who it would be because you know, look, 298 00:15:04,680 --> 00:15:06,600 Speaker 1: there's a lot of talk about the Democratic bench being 299 00:15:06,600 --> 00:15:09,360 Speaker 1: a little bit thin. Uh. When you start talking about 300 00:15:09,360 --> 00:15:12,320 Speaker 1: the Gavin Newsom's and some of the other players in 301 00:15:12,480 --> 00:15:14,960 Speaker 1: the Democratic Party who might actually be able to stage 302 00:15:15,760 --> 00:15:18,320 Speaker 1: a challenge Pete Buddha Jedge for instance, they could use 303 00:15:18,360 --> 00:15:20,120 Speaker 1: a couple of years to cook. You know that that's 304 00:15:20,120 --> 00:15:23,960 Speaker 1: probably a story we're looking at great stuff. Joe Matthew, 305 00:15:24,080 --> 00:15:27,440 Speaker 1: Washington correspondent and he's host of Sound On that's weekdays 306 00:15:27,480 --> 00:15:29,840 Speaker 1: at five pm Wall Street Time. He's with Bloomberg News 307 00:15:29,880 --> 00:15:34,120 Speaker 1: down in our DC studio. Nathan Dean, he's our senior 308 00:15:34,160 --> 00:15:35,800 Speaker 1: US policy There's a lot of Nathans, and we're going 309 00:15:35,840 --> 00:15:38,440 Speaker 1: back to him. Nathan Dean, senior gust policy analyst who 310 00:15:38,440 --> 00:15:43,000 Speaker 1: actually speaks with great enthusiasm about policy stuff. I don't 311 00:15:43,000 --> 00:15:45,080 Speaker 1: know how he gets that enthusiast, but I'm so glad 312 00:15:45,080 --> 00:15:46,800 Speaker 1: we have him. I'm so glad we have him because 313 00:15:46,800 --> 00:15:49,480 Speaker 1: he's all over that stuff. He's with Bloomberg Intelligence based 314 00:15:49,520 --> 00:15:54,440 Speaker 1: in Washington as well. Brutal, brutal ear for stocks when 315 00:15:54,440 --> 00:15:57,400 Speaker 1: you look in the rear view, brutal year four bonds 316 00:15:57,400 --> 00:15:58,880 Speaker 1: as you look in your rear view. But what area 317 00:15:58,920 --> 00:16:03,000 Speaker 1: that actually ranked in two was energy? I'm like, you know, 318 00:16:03,040 --> 00:16:04,640 Speaker 1: you look at some of these names up fifty six. 319 00:16:05,520 --> 00:16:07,720 Speaker 1: I want to get a sense of have I missed it? 320 00:16:07,880 --> 00:16:10,160 Speaker 1: Did I missed that trade? Or is there still something left. 321 00:16:10,280 --> 00:16:12,440 Speaker 1: We're gonna break it down with David d senior investment 322 00:16:12,440 --> 00:16:16,320 Speaker 1: strategist at Pepack Private Wealth Management and Rob Thummel, portfolio 323 00:16:16,360 --> 00:16:19,720 Speaker 1: manager toward us. Uh, they're joining us on the phone. Rob, 324 00:16:19,760 --> 00:16:22,360 Speaker 1: let's start with you here. Okay, I'm a little late 325 00:16:22,400 --> 00:16:24,840 Speaker 1: to the party, I admit it. Have I missed the 326 00:16:24,960 --> 00:16:27,960 Speaker 1: energy trade here? Not only so, Paul, I think you 327 00:16:28,000 --> 00:16:29,480 Speaker 1: still have plenty of time if you just look at 328 00:16:29,480 --> 00:16:31,680 Speaker 1: the energy stock, you know, and you look at what 329 00:16:31,720 --> 00:16:34,840 Speaker 1: investors want. They want the dividend yields and high free 330 00:16:34,840 --> 00:16:37,040 Speaker 1: cash flow, and the free cash flow yield. The energy 331 00:16:37,080 --> 00:16:40,400 Speaker 1: sectors still probably doubled out of the so and the 332 00:16:40,440 --> 00:16:43,680 Speaker 1: dividend yields probably double or or or maybe triple though 333 00:16:43,760 --> 00:16:46,280 Speaker 1: to the and some in some stocks of the S 334 00:16:46,320 --> 00:16:48,600 Speaker 1: and P five hundreds. So there's still plenty of room 335 00:16:48,640 --> 00:16:52,560 Speaker 1: to run. The sectors still trading a discount to historical norms, 336 00:16:52,640 --> 00:16:54,920 Speaker 1: and and have you know, we'll have delivered some very 337 00:16:54,920 --> 00:16:57,680 Speaker 1: solid earnings into next year. So I still think there's 338 00:16:57,680 --> 00:17:02,600 Speaker 1: a lot of opportunity and energy interesting. So David, how 339 00:17:02,760 --> 00:17:04,720 Speaker 1: what are you? What are your clients? When when I 340 00:17:04,760 --> 00:17:07,840 Speaker 1: think about the energy space, you know, it's back in 341 00:17:07,880 --> 00:17:09,840 Speaker 1: the day when I started, energy was a really really 342 00:17:09,840 --> 00:17:12,080 Speaker 1: big sector. Everybody wanted to talk about it, and then 343 00:17:12,080 --> 00:17:14,239 Speaker 1: it really just shrink in size in terms of make 344 00:17:14,320 --> 00:17:17,560 Speaker 1: up the SMP. How do you and your clients, you know, 345 00:17:17,600 --> 00:17:20,600 Speaker 1: think about energy in the portfolio? Well, so, in the 346 00:17:20,720 --> 00:17:23,840 Speaker 1: last few years, there's no question about it that because 347 00:17:23,840 --> 00:17:27,120 Speaker 1: of the poor performance of energy stocks plus I think 348 00:17:27,200 --> 00:17:31,879 Speaker 1: E s G concerns, energy was not considered to be 349 00:17:32,000 --> 00:17:36,240 Speaker 1: a favorite area in people's portfolios. But quite frankly, we are, 350 00:17:36,400 --> 00:17:39,480 Speaker 1: for the reasons that our other guests talked about, continued 351 00:17:39,520 --> 00:17:42,080 Speaker 1: to be optimistic on the area. I mean, you look 352 00:17:42,119 --> 00:17:46,320 Speaker 1: at the backdrop. The backdrop is policy makers, activists and 353 00:17:46,359 --> 00:17:52,640 Speaker 1: so forth are discouraging further production of of fossil fuels. 354 00:17:52,680 --> 00:17:55,359 Speaker 1: But the fact of the matter is that the production 355 00:17:55,480 --> 00:17:59,440 Speaker 1: decreases I think will be faster than consumers can wean 356 00:17:59,560 --> 00:18:02,920 Speaker 1: themselves off of using fossil fuels for their cars to 357 00:18:03,040 --> 00:18:05,320 Speaker 1: heat their homes. So you're gonna have this mismatch, and 358 00:18:05,400 --> 00:18:08,480 Speaker 1: that typically means prices have to rise higher to even 359 00:18:08,480 --> 00:18:12,879 Speaker 1: out to reduce supply in consuming demand, Rob, what do 360 00:18:12,920 --> 00:18:15,600 Speaker 1: you think about the demand? I mean, this is the 361 00:18:15,640 --> 00:18:17,720 Speaker 1: first time in a long time I can remember that 362 00:18:17,760 --> 00:18:20,879 Speaker 1: we actually have a debate about whether or not demand 363 00:18:20,960 --> 00:18:22,920 Speaker 1: is going to rise or not. There's so many issues 364 00:18:22,960 --> 00:18:27,040 Speaker 1: around energy, um but the main one I guess China. 365 00:18:27,480 --> 00:18:30,720 Speaker 1: Is the reopening gonna boost demand or is everyone they're 366 00:18:30,720 --> 00:18:34,480 Speaker 1: gonna get COVID and they're all going to stay home. Yeah. Yeah, 367 00:18:34,560 --> 00:18:36,840 Speaker 1: And well I think we've we've seen we've seen that 368 00:18:36,840 --> 00:18:39,080 Speaker 1: playbook play out already here in the US a certain extent. 369 00:18:39,160 --> 00:18:41,359 Speaker 1: So probably in the short term there's probably some challenges, 370 00:18:41,400 --> 00:18:44,520 Speaker 1: clearly some challenges in China's as the economy, uh, and 371 00:18:44,760 --> 00:18:47,440 Speaker 1: then people start to open back up. But longer term, 372 00:18:47,480 --> 00:18:49,160 Speaker 1: what you do know is that China is a big 373 00:18:49,240 --> 00:18:52,359 Speaker 1: driver of demand for for for all energy, in particular 374 00:18:52,400 --> 00:18:54,880 Speaker 1: oil and in natural gas to a large extent. So 375 00:18:55,240 --> 00:18:57,800 Speaker 1: if you look into next year, at some point in time, 376 00:18:58,240 --> 00:19:02,879 Speaker 1: you know, to Chinese demand for for oil was actually negative. 377 00:19:02,920 --> 00:19:05,600 Speaker 1: We haven't had negative oil growth UM out of China 378 00:19:05,640 --> 00:19:09,040 Speaker 1: for for decades, and so uh likely see pretty strong 379 00:19:09,040 --> 00:19:12,359 Speaker 1: demand growth at some point in or into four out 380 00:19:12,400 --> 00:19:15,480 Speaker 1: of China, and and that will really be the driver 381 00:19:15,640 --> 00:19:19,480 Speaker 1: of of likely higher oil prices um going forward in 382 00:19:19,520 --> 00:19:23,880 Speaker 1: the next And hey, David, you know when we talk 383 00:19:23,920 --> 00:19:27,240 Speaker 1: about energy and energy stocks, you know, the conversation over 384 00:19:27,240 --> 00:19:29,240 Speaker 1: the last four or five years has had to include 385 00:19:29,520 --> 00:19:33,160 Speaker 1: discussions about e s G, environmental, social, and governance. How 386 00:19:33,160 --> 00:19:35,119 Speaker 1: do your clients think about E s G is a 387 00:19:35,240 --> 00:19:37,720 Speaker 1: front and center for them or is it just you know, 388 00:19:38,320 --> 00:19:41,400 Speaker 1: invest wherever you wherever you get the best returns. Well, 389 00:19:41,680 --> 00:19:45,119 Speaker 1: I think our typical client wants to do well with 390 00:19:45,240 --> 00:19:49,280 Speaker 1: their portfolio if possible. And for many years, of course, 391 00:19:49,440 --> 00:19:51,640 Speaker 1: you know, the tech stocks did so well which had 392 00:19:52,160 --> 00:19:55,200 Speaker 1: higher E s G ratings, and so you could outperform 393 00:19:55,760 --> 00:19:58,280 Speaker 1: and score high on those E s G scores. But 394 00:19:58,400 --> 00:20:00,400 Speaker 1: now what we've seen in the least eighteen on since 395 00:20:00,440 --> 00:20:02,919 Speaker 1: the E s G portfolios are starting to fall short, 396 00:20:03,280 --> 00:20:05,600 Speaker 1: and that's where people are getting a little bit nervous 397 00:20:05,640 --> 00:20:08,199 Speaker 1: here and taking another look at it. I think the 398 00:20:08,240 --> 00:20:11,439 Speaker 1: other thing is this key Russia Ukraine conflict, you know, 399 00:20:11,680 --> 00:20:14,399 Speaker 1: the you know, the question is, of course, is do 400 00:20:14,480 --> 00:20:17,400 Speaker 1: you want to you know, support commodities and so forth 401 00:20:17,400 --> 00:20:21,600 Speaker 1: through things that could in effect support Ukraine? Um and 402 00:20:21,680 --> 00:20:24,600 Speaker 1: how's that going to conflict with your E s G concerns. 403 00:20:24,640 --> 00:20:26,359 Speaker 1: So I think at this point people are getting a 404 00:20:26,359 --> 00:20:28,760 Speaker 1: little bit more neutral on those E s G concerns. 405 00:20:30,480 --> 00:20:34,399 Speaker 1: Are we looking at h are we looking at stock 406 00:20:34,480 --> 00:20:36,920 Speaker 1: prices of the companies that pull this stuff out of 407 00:20:36,920 --> 00:20:39,159 Speaker 1: the ground, refined it and ship it and sell it 408 00:20:39,200 --> 00:20:43,439 Speaker 1: to us. Are they rising or have they risen commensurate 409 00:20:43,520 --> 00:20:49,560 Speaker 1: with UM the underlying commodity rob well so, so that's 410 00:20:49,600 --> 00:20:51,600 Speaker 1: good questions. If you look at oil prices, they're actually 411 00:20:51,600 --> 00:20:53,720 Speaker 1: lower than they were last year. But yet as you highlighted, 412 00:20:53,760 --> 00:20:56,640 Speaker 1: all those stocks across all the energy sector are are 413 00:20:56,720 --> 00:21:01,520 Speaker 1: much higher. UM. So I think we've always wanted as 414 00:21:01,560 --> 00:21:04,560 Speaker 1: investors that there to be a disconnect between the price 415 00:21:05,240 --> 00:21:08,359 Speaker 1: UM and and and the actual stock performance. And then 416 00:21:08,400 --> 00:21:11,119 Speaker 1: what I mean by the commodity price and because you 417 00:21:11,160 --> 00:21:13,440 Speaker 1: know the underlying energy sector is going to be ripped, 418 00:21:13,560 --> 00:21:16,720 Speaker 1: it's really essential. It's going to continue to increase as 419 00:21:16,800 --> 00:21:20,840 Speaker 1: as demand for as really GDP and population grows. And 420 00:21:21,320 --> 00:21:24,119 Speaker 1: these energy companies now that they have just over the 421 00:21:24,200 --> 00:21:27,000 Speaker 1: last couple of years shifted their focus to capital discipline 422 00:21:27,240 --> 00:21:30,720 Speaker 1: and focused on returning money to shareholders, UM, that will 423 00:21:30,760 --> 00:21:33,959 Speaker 1: mean there's less of an emphasis on the commodity price itself, 424 00:21:34,080 --> 00:21:38,000 Speaker 1: especially for stocks like pipeline stocks that that have that 425 00:21:38,040 --> 00:21:41,600 Speaker 1: are less sensitive to commodity price fluctuations in terms of 426 00:21:41,600 --> 00:21:47,280 Speaker 1: their cash lows. Hey, David, as we think about three UM, 427 00:21:47,320 --> 00:21:49,240 Speaker 1: what are you suggesting to your clients in terms of 428 00:21:49,760 --> 00:21:53,439 Speaker 1: on the equity sector allocation. Is it more cyclical like 429 00:21:53,480 --> 00:21:58,440 Speaker 1: maybe an energy investment, or more growthy whether it's technology 430 00:21:58,600 --> 00:22:02,960 Speaker 1: or healthcare. How are you thinking about that at this stage. Yeah, 431 00:22:03,000 --> 00:22:05,960 Speaker 1: that's a great question. You know, fundamentally we're kind of 432 00:22:06,080 --> 00:22:09,560 Speaker 1: bullish actually coming into two thousand twenty three. It's very 433 00:22:09,680 --> 00:22:13,120 Speaker 1: rare to have two negative years back to back. Let's 434 00:22:13,119 --> 00:22:15,640 Speaker 1: look at that, and we do. We do think that, 435 00:22:15,680 --> 00:22:17,760 Speaker 1: you know, interest rations need to be coming down, inflation 436 00:22:17,800 --> 00:22:20,720 Speaker 1: seems to be softening. The FED still probably ultimately they're 437 00:22:20,720 --> 00:22:22,840 Speaker 1: going to be driven by the data and I don't think, 438 00:22:23,480 --> 00:22:25,520 Speaker 1: um the FED is going to dictate the economy. And 439 00:22:25,520 --> 00:22:27,480 Speaker 1: we are also a little bit more optimistic that we're 440 00:22:27,520 --> 00:22:29,480 Speaker 1: not going to have a hard landing in recession. So 441 00:22:29,560 --> 00:22:31,760 Speaker 1: we actually think the energy for all the reasons we've 442 00:22:31,800 --> 00:22:34,720 Speaker 1: talked about, looks good here. But certainly you've got some 443 00:22:34,800 --> 00:22:37,720 Speaker 1: opportunities in some of the growth and text sectors where 444 00:22:37,760 --> 00:22:41,000 Speaker 1: you know, some blue chip names are down. You've got 445 00:22:41,000 --> 00:22:43,080 Speaker 1: to take a look at that as well. Hey, Rob, 446 00:22:43,119 --> 00:22:45,439 Speaker 1: you know, I don't, you know, focus that much on 447 00:22:45,480 --> 00:22:48,399 Speaker 1: the energy space, but I guess what I do know is, Okay, 448 00:22:48,800 --> 00:22:50,720 Speaker 1: the world's moving to e s g But what I 449 00:22:50,800 --> 00:22:53,359 Speaker 1: think we've learned over the past year, maybe it's been 450 00:22:53,400 --> 00:22:57,359 Speaker 1: exacerbated by Ukraine, is we still need the fossil fuels 451 00:22:57,359 --> 00:23:01,280 Speaker 1: and we're probably gonna need them in size were decades, 452 00:23:02,119 --> 00:23:05,239 Speaker 1: you know, plural and and gas is probably the cleanest. Yes, 453 00:23:05,320 --> 00:23:08,600 Speaker 1: you were talking to Danny Rice, Yes um at Rice 454 00:23:08,640 --> 00:23:11,480 Speaker 1: acquisition Carpon. His brother Toby runs EQUT. It was a 455 00:23:11,520 --> 00:23:14,320 Speaker 1: great conversation. So Robert, as an equity investor, how do 456 00:23:14,320 --> 00:23:18,159 Speaker 1: you get conviction about owning energy when man, I'm just 457 00:23:18,200 --> 00:23:21,560 Speaker 1: not sure how the world views this migration to you know, 458 00:23:21,840 --> 00:23:24,400 Speaker 1: green energy. Yeah, well you're talking to the right guy 459 00:23:24,400 --> 00:23:26,440 Speaker 1: in Toby Rice and and we had so so from 460 00:23:26,440 --> 00:23:29,240 Speaker 1: a big picture perspective, you know, EQT is the largest 461 00:23:29,240 --> 00:23:31,720 Speaker 1: producer of natural gas in the US, and we're big 462 00:23:31,720 --> 00:23:34,200 Speaker 1: fans of natural gas in general, and the potential that 463 00:23:34,320 --> 00:23:36,960 Speaker 1: natural gas has, it's been proven to be decarbonizing. That's 464 00:23:37,880 --> 00:23:40,240 Speaker 1: increased use of natural gas displacing coal is part of 465 00:23:40,240 --> 00:23:44,080 Speaker 1: the reason why US carbon dioxide emissions of decline in 466 00:23:44,080 --> 00:23:46,760 Speaker 1: the last ten years. And you know, you can take 467 00:23:46,800 --> 00:23:48,920 Speaker 1: the same playbook and apply it to to China and 468 00:23:49,240 --> 00:23:51,920 Speaker 1: India and and similar things will happen the other The 469 00:23:51,960 --> 00:23:53,840 Speaker 1: other factor in the energy sector is it's not an 470 00:23:53,840 --> 00:23:57,080 Speaker 1: either or, it's a These energy companies that have actually 471 00:23:57,119 --> 00:24:01,639 Speaker 1: stopped resisting, uh, trying to DECARBONI can actually embrace the carbonizing. 472 00:24:01,680 --> 00:24:03,480 Speaker 1: So there's a lot of other interesting things going on 473 00:24:03,880 --> 00:24:07,080 Speaker 1: at the energy companies, in particular with regards to carbon 474 00:24:07,160 --> 00:24:11,919 Speaker 1: capture and hydrogen development, uh, while while they continue to 475 00:24:12,000 --> 00:24:15,280 Speaker 1: provide the essential products that are needed for us to 476 00:24:15,440 --> 00:24:19,560 Speaker 1: continue to to live every day. Alright, So, David, as 477 00:24:19,600 --> 00:24:23,520 Speaker 1: we think about three right here, right now, are your 478 00:24:23,520 --> 00:24:30,520 Speaker 1: clients want you aggressive? Um? Well, they certainly, well, the 479 00:24:31,680 --> 00:24:34,880 Speaker 1: sentiment is not good, but it's my job to lead 480 00:24:34,920 --> 00:24:36,760 Speaker 1: them in the right direction. And I want to be 481 00:24:36,800 --> 00:24:39,600 Speaker 1: aggressive here because I think with the stocks market down 482 00:24:39,640 --> 00:24:43,480 Speaker 1: about with interestry starting to stabilize, people are going to 483 00:24:43,640 --> 00:24:46,480 Speaker 1: do well next year. The time to be a little 484 00:24:46,480 --> 00:24:49,440 Speaker 1: bit more aggressive is when your clients are a little 485 00:24:49,440 --> 00:24:53,040 Speaker 1: bit skittish and quite frankly vice versa. All right, David, 486 00:24:53,040 --> 00:24:56,439 Speaker 1: great stuff, as always really appreciated. David Deet's pepack Private 487 00:24:56,480 --> 00:24:58,639 Speaker 1: Wealth Management A rob real quick. I gotta ask you, 488 00:24:58,840 --> 00:25:02,480 Speaker 1: NBA from Kansas Undergrad and k State, what do you 489 00:25:02,480 --> 00:25:04,600 Speaker 1: do when they play on the football field, who do 490 00:25:04,600 --> 00:25:06,720 Speaker 1: you who do you root for? It's pretty simple, Paul. 491 00:25:06,760 --> 00:25:08,720 Speaker 1: My wife went to the University of Kansas as well, 492 00:25:08,800 --> 00:25:11,879 Speaker 1: so so my allegiance falls with them as a result 493 00:25:11,880 --> 00:25:16,000 Speaker 1: of being married. So it's all good stuff. Smart man. 494 00:25:16,119 --> 00:25:18,840 Speaker 1: We we we understand that. Rob Thummel, Senior Portfolio Manager, 495 00:25:18,960 --> 00:25:21,520 Speaker 1: Managing Director Towardis Capital, joining us with David Diets at 496 00:25:21,520 --> 00:25:24,199 Speaker 1: Pepack Private just getting kind of a overview of the 497 00:25:24,320 --> 00:25:26,439 Speaker 1: energy space point it's been one of those sectors that 498 00:25:26,520 --> 00:25:29,840 Speaker 1: just really had a great year. And it's interesting, is 499 00:25:29,840 --> 00:25:32,240 Speaker 1: Matt pointed out, you know, we've had gas flat, I 500 00:25:32,280 --> 00:25:34,560 Speaker 1: mean oil prices flat year over year, but those stock 501 00:25:34,600 --> 00:25:38,040 Speaker 1: prices are up fifty six, so kind of a decoupling there. 502 00:25:41,240 --> 00:25:43,000 Speaker 1: One of the things that keeps coming back to me 503 00:25:43,600 --> 00:25:46,720 Speaker 1: is but we need like a lot of rare earth 504 00:25:46,840 --> 00:25:49,119 Speaker 1: materials to kind of make the batteries and some of 505 00:25:49,119 --> 00:25:51,320 Speaker 1: these components, and and a lot of folks are even 506 00:25:51,320 --> 00:25:53,600 Speaker 1: telling me that's a risk because a lot of them 507 00:25:53,640 --> 00:25:56,320 Speaker 1: come from Africa and other places that may or may 508 00:25:56,320 --> 00:25:59,560 Speaker 1: not be accessible to us as we may think. Zane Kylin, 509 00:25:59,640 --> 00:26:03,080 Speaker 1: he's a CEO and director of Infinity Stone Ventures. He 510 00:26:03,240 --> 00:26:06,320 Speaker 1: joins us here, Zaying, thanks so much for joining us. 511 00:26:06,320 --> 00:26:09,480 Speaker 1: Tell us what you guys are up to at Infinity Stone. 512 00:26:09,320 --> 00:26:13,159 Speaker 1: Where where do you fit into this equation? Well, no, 513 00:26:13,320 --> 00:26:15,840 Speaker 1: thank you for having me and um Yeah, effectively, I 514 00:26:15,880 --> 00:26:18,199 Speaker 1: think you hit the nail on the head that for 515 00:26:18,240 --> 00:26:22,040 Speaker 1: all of these initiatives that are being funded by government 516 00:26:22,080 --> 00:26:25,560 Speaker 1: incentives and private industry investment and just this whole EV 517 00:26:25,800 --> 00:26:30,240 Speaker 1: pushed towards EV manufacturing and building supply chains in North America, 518 00:26:30,960 --> 00:26:33,120 Speaker 1: there really does need to be a lot more supply 519 00:26:33,760 --> 00:26:36,520 Speaker 1: on the critical mineral space, and that's what we're doing. 520 00:26:36,560 --> 00:26:40,520 Speaker 1: We're we're exploring for critical mineral deposits UM in North America, 521 00:26:40,640 --> 00:26:43,760 Speaker 1: primarily in Quebec and Ontario, UM also in other parts 522 00:26:43,800 --> 00:26:46,080 Speaker 1: of the US as well. But as you said, like 523 00:26:47,080 --> 00:26:49,159 Speaker 1: China and Africa really are kind of the engine of 524 00:26:49,200 --> 00:26:51,800 Speaker 1: growth in the critical mineral space, whether that be lithium 525 00:26:51,880 --> 00:26:54,720 Speaker 1: or rare earth metals, etcetera. All of these medals come 526 00:26:54,880 --> 00:26:59,680 Speaker 1: from primarily Africa China, and if they're not from Africa, 527 00:27:00,000 --> 00:27:02,720 Speaker 1: not from Africa to being refined to China. So I 528 00:27:02,760 --> 00:27:05,159 Speaker 1: think what is that, by the way, Zaying, is that 529 00:27:05,240 --> 00:27:09,199 Speaker 1: the issue so rare earths? I don't know what they are, 530 00:27:09,240 --> 00:27:13,000 Speaker 1: like neodymium or whatever. And lithium and cobalt are more 531 00:27:13,040 --> 00:27:16,360 Speaker 1: of the critical metals that you're talking about. These things 532 00:27:16,640 --> 00:27:20,840 Speaker 1: are not just in abundance in China underground, right, we 533 00:27:20,920 --> 00:27:24,160 Speaker 1: have them here underground. What I understand is that it's 534 00:27:24,200 --> 00:27:28,879 Speaker 1: just that they have the refining capacity in China, and 535 00:27:28,880 --> 00:27:32,639 Speaker 1: we as a country or as a continent, haven't haven't 536 00:27:32,680 --> 00:27:36,160 Speaker 1: invested in that, correct, Yeah, And beyond that, we haven't 537 00:27:36,160 --> 00:27:38,760 Speaker 1: even invested in UM. A lot of the pieces that 538 00:27:38,760 --> 00:27:41,080 Speaker 1: are necessary to even exploit these mineral deposits that we 539 00:27:41,119 --> 00:27:43,760 Speaker 1: do have in North America. But I think every day 540 00:27:43,760 --> 00:27:45,879 Speaker 1: you see this is changing. And with the i R 541 00:27:45,960 --> 00:27:49,880 Speaker 1: A and UM numerous and UM initiatives in Canada as well, 542 00:27:50,320 --> 00:27:52,959 Speaker 1: there's considerable opportunity to invest in these spaces. And you 543 00:27:53,000 --> 00:27:57,080 Speaker 1: hear people like Elon Musk talk about the the lithium 544 00:27:57,080 --> 00:27:59,800 Speaker 1: refinery and Lithium developed a lithium project development or is 545 00:28:00,200 --> 00:28:01,720 Speaker 1: to print money, I think is how you described it 546 00:28:01,760 --> 00:28:04,560 Speaker 1: earlier this year, So explain explain the i RA for 547 00:28:04,600 --> 00:28:09,480 Speaker 1: those listening, that's the Inflation Reduction Act UM, and I 548 00:28:09,520 --> 00:28:13,520 Speaker 1: guess part of that bill allows for tax credit for 549 00:28:13,600 --> 00:28:17,440 Speaker 1: certain electric vehicles, right, what what what are the criteria 550 00:28:17,720 --> 00:28:19,960 Speaker 1: that need to be met in order to get that 551 00:28:20,440 --> 00:28:24,080 Speaker 1: tax credit. Well, so that's one big piece of it 552 00:28:24,160 --> 00:28:25,960 Speaker 1: for sure, is that a lot of the I think 553 00:28:25,960 --> 00:28:29,280 Speaker 1: it's the supermajority of the minerals going into the car 554 00:28:29,560 --> 00:28:34,720 Speaker 1: UM critical minerals that includes lithium, um rarer, nickel, cobolt, 555 00:28:34,720 --> 00:28:38,000 Speaker 1: et cetera, have to be manufactured in countries or have 556 00:28:38,080 --> 00:28:40,640 Speaker 1: to come from countries that UM. The US has friendly 557 00:28:40,680 --> 00:28:45,840 Speaker 1: tradulations with UM, so effectively that means the West and 558 00:28:46,920 --> 00:28:50,000 Speaker 1: really today that's pretty much impossible. There isn't really a 559 00:28:50,040 --> 00:28:52,000 Speaker 1: car today on the road that would actually qualify for 560 00:28:52,040 --> 00:28:55,719 Speaker 1: that in the US. UM. There there's some consideration for 561 00:28:56,400 --> 00:28:59,480 Speaker 1: different vehicles and how they are manufacturing where they're manufactured 562 00:28:59,520 --> 00:29:02,160 Speaker 1: that maybe eligible, but until there's a little bit of 563 00:29:02,160 --> 00:29:04,920 Speaker 1: clarification around those where it's gonna be really tough UM 564 00:29:04,960 --> 00:29:07,840 Speaker 1: to be able to meet that criteria effectively. But kind 565 00:29:07,880 --> 00:29:09,920 Speaker 1: of taking a step forward them that the IRA also 566 00:29:10,000 --> 00:29:14,480 Speaker 1: has a lot of UM provisions and investment for grants 567 00:29:14,520 --> 00:29:17,600 Speaker 1: and tax credits and just direct general investment in companies 568 00:29:17,720 --> 00:29:22,480 Speaker 1: that are developing critical mineral projects. And I think that's 569 00:29:22,520 --> 00:29:25,040 Speaker 1: the big opportunity that we see is that you're not 570 00:29:25,160 --> 00:29:27,400 Speaker 1: only do you need to have the end consumers going 571 00:29:27,440 --> 00:29:29,760 Speaker 1: to see the best that this with tax credits, these 572 00:29:29,760 --> 00:29:34,000 Speaker 1: companies are able to get considerable investment um from government, 573 00:29:34,000 --> 00:29:36,000 Speaker 1: from government spending, and if you look at what's going 574 00:29:36,040 --> 00:29:39,480 Speaker 1: on with rising industrates, etcetera, and kind of the macroeconomic climate, 575 00:29:39,640 --> 00:29:42,520 Speaker 1: there really is no other sector that the government's pouring 576 00:29:42,560 --> 00:29:45,280 Speaker 1: money into like this, And I think if we were 577 00:29:45,280 --> 00:29:47,840 Speaker 1: going into recession, I think it's relatively obvious at this 578 00:29:47,920 --> 00:29:51,520 Speaker 1: point or there's a general consensus around it. I think 579 00:29:51,560 --> 00:29:55,000 Speaker 1: in that environment, you're gonna need to find industries risk 580 00:29:55,080 --> 00:29:59,479 Speaker 1: industries where there's potential for more direct investment, and that's 581 00:29:59,480 --> 00:30:01,680 Speaker 1: where you're gonna be able to drive economic growth. And 582 00:30:01,680 --> 00:30:03,280 Speaker 1: I think that's where also investors are gonna be able 583 00:30:03,280 --> 00:30:07,959 Speaker 1: to see potential outside. So saying at Infinity Stone Ventures, 584 00:30:08,640 --> 00:30:10,840 Speaker 1: what type of investments are you guys making, where are 585 00:30:10,840 --> 00:30:14,960 Speaker 1: you putting your capital? Yes, so we're very focused on 586 00:30:15,200 --> 00:30:18,240 Speaker 1: a number of projects in Quebec and Ontario. Quebeca Ontario 587 00:30:18,560 --> 00:30:21,480 Speaker 1: um are two of the best mining jurisdictions to work 588 00:30:21,520 --> 00:30:23,920 Speaker 1: with working in the world. I think the Fraser Institute 589 00:30:23,960 --> 00:30:26,520 Speaker 1: rates Quebec is number six, in Ontario is number eleven. 590 00:30:26,960 --> 00:30:30,280 Speaker 1: UM just very good rule of law obviously being in Canada. 591 00:30:30,520 --> 00:30:33,880 Speaker 1: But then beyond that, there's really great investment opportunities. And 592 00:30:33,920 --> 00:30:37,480 Speaker 1: then beyond that, we have great mineral deposits and great 593 00:30:37,480 --> 00:30:40,760 Speaker 1: opportunity for exploration. So there's been a number of significant 594 00:30:40,760 --> 00:30:43,480 Speaker 1: discoveries over the past call it two years, and in 595 00:30:43,840 --> 00:30:47,040 Speaker 1: UM Quebec in Ontario, and we see a great opportunity 596 00:30:47,080 --> 00:30:51,160 Speaker 1: to further develop those, invest in those UM, build out resources, 597 00:30:51,360 --> 00:30:53,120 Speaker 1: and then eventually be in a position to build a 598 00:30:53,160 --> 00:30:56,960 Speaker 1: really strong supply chain. You're already seeing UM lithium refineries 599 00:30:56,960 --> 00:31:00,200 Speaker 1: being built in Ontario. You're already seeing big CARBONI Fat Cheers, 600 00:31:00,240 --> 00:31:03,959 Speaker 1: Mercedes and Volkswagon signing deals with Ontario mineral expiration companies 601 00:31:03,960 --> 00:31:06,680 Speaker 1: for supply of lithium to their factor to their factories 602 00:31:06,680 --> 00:31:08,920 Speaker 1: in Germany. And I think you're just going to continue 603 00:31:08,920 --> 00:31:11,080 Speaker 1: to see a lot of these initiatives grow and it 604 00:31:11,120 --> 00:31:14,160 Speaker 1: really is the best spot to be in. So where 605 00:31:14,160 --> 00:31:18,560 Speaker 1: does that UM put in? Finny and Infinity Stone Corp. 606 00:31:18,680 --> 00:31:23,120 Speaker 1: Right now, Infinity UM as the company that you're running, 607 00:31:23,360 --> 00:31:27,479 Speaker 1: and you've got I guess what venture capital rounds behind 608 00:31:27,520 --> 00:31:31,080 Speaker 1: you and UM do you go for an I P O? 609 00:31:31,560 --> 00:31:33,560 Speaker 1: Do you look to tie up with this back? How's that? How? 610 00:31:34,000 --> 00:31:36,560 Speaker 1: What are your future plans like? Yes, so we we 611 00:31:36,600 --> 00:31:41,080 Speaker 1: actually are publicly traded on the Canadian Stock Exchange currently. UM. 612 00:31:41,120 --> 00:31:45,000 Speaker 1: We have raised probably in excess of about six million 613 00:31:45,040 --> 00:31:47,880 Speaker 1: over the past year and a half UM, so it's 614 00:31:47,920 --> 00:31:50,400 Speaker 1: relatively small where we the company just kind of started, 615 00:31:50,520 --> 00:31:52,840 Speaker 1: was formed in January, really kind of start really got 616 00:31:52,920 --> 00:31:55,200 Speaker 1: going in January UM, and we put some money in 617 00:31:55,200 --> 00:31:58,000 Speaker 1: the ground already. We we're after developing two or three 618 00:31:58,040 --> 00:32:01,800 Speaker 1: resources as we speak. UM. Our Rockstone graphite project is 619 00:32:01,840 --> 00:32:04,680 Speaker 1: probably one of the more exciting projects really kind of 620 00:32:04,720 --> 00:32:07,280 Speaker 1: further down the road and development and UM we're doing 621 00:32:07,320 --> 00:32:10,200 Speaker 1: a lot of work to refine that graphic to battery grade, 622 00:32:10,680 --> 00:32:13,360 Speaker 1: all the metal logic, coal work. We've done considerable drilling 623 00:32:13,360 --> 00:32:15,960 Speaker 1: over the past six weeks. UM. And then we have 624 00:32:15,960 --> 00:32:18,280 Speaker 1: another lithium project of Buddha Lithium project that we're also 625 00:32:18,280 --> 00:32:21,960 Speaker 1: actually developing. UM. So yeah, really we are kind of 626 00:32:21,960 --> 00:32:25,000 Speaker 1: our process for the next year is we're gonna raise 627 00:32:25,200 --> 00:32:28,320 Speaker 1: probably another round of capital UM in Q one and 628 00:32:28,320 --> 00:32:30,440 Speaker 1: the next year, and then with that we will be 629 00:32:30,640 --> 00:32:33,440 Speaker 1: uh kind of deploying it more actively. We're also looking 630 00:32:33,440 --> 00:32:37,680 Speaker 1: at bringing in some other projects UM in our investing 631 00:32:37,680 --> 00:32:39,920 Speaker 1: in some other projects in the US. So there's a 632 00:32:39,960 --> 00:32:42,880 Speaker 1: lithium Brian project in Depth Valley that UM we're in 633 00:32:42,920 --> 00:32:45,280 Speaker 1: the midst of negotiating, as well as some other projects 634 00:32:45,440 --> 00:32:47,560 Speaker 1: UM in the U S too. So I think, really 635 00:32:47,560 --> 00:32:49,080 Speaker 1: when you look at kind of the company as a whole, 636 00:32:49,520 --> 00:32:52,480 Speaker 1: we are an investor, we're project generator. We're putting money 637 00:32:52,480 --> 00:32:54,600 Speaker 1: in the ground and all in all of these different 638 00:32:54,600 --> 00:32:58,200 Speaker 1: initiatives across a different sector battery metals, not only lithium, 639 00:32:58,200 --> 00:33:01,440 Speaker 1: but also looking at rare earth and UM and graphite, 640 00:33:01,480 --> 00:33:03,440 Speaker 1: which is the graph it's a big I think, grab 641 00:33:03,480 --> 00:33:06,800 Speaker 1: it's gonna be a big trend going into UM. So, yeah, 642 00:33:06,840 --> 00:33:09,640 Speaker 1: that's stuff all right, Zane, great stuff. Appreciate you taking 643 00:33:09,640 --> 00:33:12,240 Speaker 1: the time here giving us the update. Zaying Kalin. He's 644 00:33:12,240 --> 00:33:15,160 Speaker 1: the CEO and director Infinity Stone Corporation. Looking at the UH, 645 00:33:15,720 --> 00:33:17,960 Speaker 1: you know, the processing of a lot of these rare 646 00:33:18,000 --> 00:33:20,880 Speaker 1: metals that are need for that are needed in you 647 00:33:20,920 --> 00:33:25,760 Speaker 1: know a lot of electric transformation electric vehicles. Think for example, 648 00:33:26,120 --> 00:33:29,560 Speaker 1: some of those UH components are tough to come by, 649 00:33:29,640 --> 00:33:32,120 Speaker 1: tough to process and you want to get a better sourcing. 650 00:33:32,120 --> 00:33:33,960 Speaker 1: That's kind of what I've been hearing from most of 651 00:33:33,960 --> 00:33:35,800 Speaker 1: the folks in that industry, so it's good to get 652 00:33:35,840 --> 00:33:39,600 Speaker 1: Zane's perspective. Thanks for listening to the Bloomberg Markets podcast. 653 00:33:40,000 --> 00:33:43,200 Speaker 1: You can subscribe and listen to interviews with Apple Podcasts 654 00:33:43,320 --> 00:33:47,240 Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm 655 00:33:47,240 --> 00:33:51,280 Speaker 1: on Twitter at Matt Miller three. Pet On Ball Sweeney, 656 00:33:51,320 --> 00:33:53,960 Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you 657 00:33:53,960 --> 00:33:56,360 Speaker 1: can always catch us worldwide at Bloomberg Radio.