WEBVTT - You Can't Issue Debt Forever: State Street's Loh 0:00:02.640 --> 0:00:05.360 Welcome to the Bloomberg Penel Podcast. I'm Paul Sweene. You, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma Waits, each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:21.880 at Bloomberg dot Com. Him Alex steel in Relisa A. 0:00:21.920 --> 0:00:25.479 Brahmowitz today, don't leave your powder dry. That was the 0:00:25.480 --> 0:00:27.560 takeaway from the market from New York Fed President John 0:00:27.560 --> 0:00:30.760 Williams speaking yesterday, and then things got really confusing. The 0:00:30.760 --> 0:00:33.440 New York Fed walks it back. President Trump tweets at 0:00:33.440 --> 0:00:36.640 the Fed's gotta stop with crazy quantitative tightening. Care to 0:00:36.640 --> 0:00:38.159 help us make sense of it all? As Marvin Low, 0:00:38.320 --> 0:00:41.800 global macro strategist First State Street, what did you literally 0:00:41.840 --> 0:00:44.360 make of the last like ten hours from Fed talk? 0:00:44.440 --> 0:00:47.199 You know what I think, Um, we can get a 0:00:47.200 --> 0:00:50.360 sense of how challenged the communication processes for the FED. 0:00:50.680 --> 0:00:53.640 That's the main thing. Um, They're they're cutting, They're cutting 0:00:53.640 --> 0:00:57.400 twenty at least. UM. I think there's a moderate um 0:00:57.560 --> 0:00:59.320 reason to think that it might be a little bit more. 0:00:59.360 --> 0:01:00.840 But really the that they put it out there and 0:01:00.840 --> 0:01:02.440 they didn't realize that it was going to have that 0:01:02.440 --> 0:01:04.080 big give an impact on the market and need to 0:01:04.120 --> 0:01:07.480 walk it back just shows that the communication process that 0:01:07.520 --> 0:01:09.880 they've had since the beginning of the year late last 0:01:09.959 --> 0:01:13.640 year is still an issue. So Marvin, again, as U 0:01:14.120 --> 0:01:16.960 Alex was mentioning, President Trump is out with a number 0:01:16.959 --> 0:01:19.920 of tweets this morning about the FED about their next actions. 0:01:20.440 --> 0:01:22.360 Just give us a sense, how do you think the 0:01:22.400 --> 0:01:25.560 FED deals with all this noise noise coming from the 0:01:25.560 --> 0:01:27.679 President as it relates to their policy making. You know, 0:01:27.880 --> 0:01:30.679 I mean Chairman Powell, you know, ultimately laid it out 0:01:30.680 --> 0:01:32.399 when he went in front of when he went in 0:01:32.400 --> 0:01:35.360 front of Congress. Um. You know, they can't ignore it, 0:01:35.400 --> 0:01:38.120 but ultimately they have a mandate they report to Congress, 0:01:38.120 --> 0:01:40.120 and I think that they do go back and lean 0:01:40.200 --> 0:01:43.400 upon that. Having said that, the amount of pressure that 0:01:43.520 --> 0:01:46.520 Chairman Powell must be facing is intense. So UM, I 0:01:46.520 --> 0:01:48.960 wouldn't say that they can completely ignore it, but you know, 0:01:49.000 --> 0:01:52.120 they do have, um the side of their mandate um 0:01:52.160 --> 0:01:54.760 to help them guide through that process. I'm also really 0:01:54.800 --> 0:01:57.280 interested in the interplay between the FED and the e 0:01:57.360 --> 0:02:00.240 c B s were like officially and then unofficially. I 0:02:00.280 --> 0:02:02.880 feel like it's who can get to the bottom first, 0:02:02.920 --> 0:02:05.280 who can be more dubish, How can they influence their 0:02:05.280 --> 0:02:08.120 currency the most? What kind of pressure is my own 0:02:08.160 --> 0:02:10.520 joggy going to feel on Thursday? Yeah, so you know, 0:02:10.639 --> 0:02:14.880 he's he's certainly um looking towards how he wants his legacy. 0:02:15.840 --> 0:02:19.160 But that's what he is, and we're all jealous of 0:02:19.240 --> 0:02:21.840 him for that. Um. I think the FED, you know, 0:02:21.880 --> 0:02:25.320 certainly has more room to move in this process. That's 0:02:25.360 --> 0:02:27.560 something that the market has been focused on, and the 0:02:27.639 --> 0:02:30.120 ECB will be happy to wait for the FED to 0:02:30.200 --> 0:02:32.800 make its first move and then all the other central 0:02:32.800 --> 0:02:34.959 banks are gonna, you know, have the all clear to 0:02:35.200 --> 0:02:37.120 kind of move in the same direction. So more of 0:02:37.120 --> 0:02:39.520 an at State Street. We're talking about Europe here, but 0:02:39.520 --> 0:02:41.919 as State Street as you think globally, you know, we 0:02:41.960 --> 0:02:46.760 think about the economies in Europe being you know, slowing, dramatically, weaking, 0:02:46.919 --> 0:02:49.880 even Germany's showing signs of weakness. How are you guys 0:02:49.919 --> 0:02:53.440 thinking about allocating assets to Europe in general? Yeah, I mean, 0:02:53.520 --> 0:02:56.480 you know, it's part of the asset allocation process. No, doubt. Um. 0:02:56.520 --> 0:02:58.440 You know, it's a global world. You need a certain 0:02:58.919 --> 0:03:01.440 amount of assets with in there. Um. I think it's 0:03:01.440 --> 0:03:03.120 a function of how you want to move around the 0:03:03.160 --> 0:03:07.240 benchmarks and the European challenges are out there, whether it's 0:03:07.280 --> 0:03:10.120 from a growth perspective, whether it's from their banking system, 0:03:10.360 --> 0:03:12.480 whether it's from the fact that the ECB just doesn't 0:03:12.520 --> 0:03:15.919 have as many bullets. Ultimately, if we are going towards 0:03:15.960 --> 0:03:20.080 this um more looser type of environment, and you know, 0:03:20.120 --> 0:03:22.800 do you really want to put an excess amount of 0:03:22.880 --> 0:03:25.919 your allocation there? And it's it's hard to see wanting 0:03:25.960 --> 0:03:28.760 to um overweight it more than your benchmarks. So when 0:03:28.800 --> 0:03:30.440 it comes to the bondom market, I mean, do you 0:03:30.440 --> 0:03:33.360 feel like we've topped out, that we're at the peak 0:03:33.400 --> 0:03:37.160 of where bond prices can be in Europe? Um? Well, um, 0:03:37.560 --> 0:03:40.600 we're certainly getting there. UM. I think that the e 0:03:40.680 --> 0:03:42.920 c B has already signaled that it's willing to go 0:03:43.240 --> 0:03:46.720 further into negative yields, even um if it does cause 0:03:46.760 --> 0:03:48.960 more problems for the banking system, But it can't go 0:03:49.080 --> 0:03:51.480 that much further. Um. You know, the Fed's certainly has 0:03:51.560 --> 0:03:53.680 much more room if we need to go there. I 0:03:53.680 --> 0:03:57.440 wouldn't say that yields here can't go lower, but certainly 0:03:57.520 --> 0:04:00.000 kind of the relative movement between US yields and really 0:04:00.160 --> 0:04:03.720 the rest of the development market yields is a different 0:04:03.720 --> 0:04:06.320 type of profile. So, Marvin, bringing it back to this 0:04:06.360 --> 0:04:08.360 side of the pond, we're having starting to have some 0:04:08.560 --> 0:04:11.720 more discussions or more heated discussions about the debt ceiling. 0:04:11.880 --> 0:04:13.560 How do you think that plays out over the next 0:04:13.760 --> 0:04:16.560 couple of weeks. I guess it's kind of the time frameer. Yeah, Um, 0:04:16.600 --> 0:04:18.560 you know, it's certainly it's certainly good that they're talking 0:04:18.600 --> 0:04:22.040 about it now. Um. I however, and probably a bit 0:04:22.080 --> 0:04:24.919 skeptical that they can get anything done. So um, you know, 0:04:24.960 --> 0:04:27.839 I would think that we're going to talk about September again, 0:04:27.839 --> 0:04:30.800 and we'll talk about all of the measures that might 0:04:30.880 --> 0:04:33.120 try and get something done before Congress leaves for the 0:04:33.160 --> 0:04:35.359 summer vacation. You think the odds they're pretty low, you 0:04:35.360 --> 0:04:37.719 know what. Um, the fact that they're talking about it 0:04:37.160 --> 0:04:41.279 is positive. I'm just skeptical based on based on how 0:04:41.320 --> 0:04:44.480 our government has kind of functioned. Um, if it does 0:04:44.520 --> 0:04:46.000 get done, it's great. There would be a lot of 0:04:46.000 --> 0:04:49.560 short term issuance because the checking account of the U 0:04:49.640 --> 0:04:51.359 S Government has been drawn down as we've been in 0:04:51.400 --> 0:04:53.279 this debt ceiling, but it winds up being more of 0:04:53.279 --> 0:04:55.200 a short term kind of market type of issue. I 0:04:55.200 --> 0:04:58.119 don't think it's ultimately disruptive. So when is markets actually 0:04:58.160 --> 0:05:01.800 gonna care about the debt ceil um or or just 0:05:01.839 --> 0:05:03.599 the amount of debt that like we're going to have 0:05:03.640 --> 0:05:06.520 to issue to pay off deficit. Oh yeah, the two 0:05:06.520 --> 0:05:10.520 different stories there. Certainly, UM the market. The market will 0:05:10.560 --> 0:05:13.400 care UM if we get to September again and we 0:05:13.480 --> 0:05:15.640 have all these dire warnings that they're not gonna be 0:05:15.640 --> 0:05:18.560 able to pay their debt and the rating agencies get involved, UM, 0:05:18.600 --> 0:05:21.479 I don't expect UM any you know, they'll they'll come 0:05:21.520 --> 0:05:24.240 to they'll come to an agreement. UM. In terms of 0:05:24.400 --> 0:05:28.320 longer term with yields where they are now, UM, I 0:05:28.360 --> 0:05:30.880 think investors are willing to look past the fact that 0:05:30.920 --> 0:05:33.120 we're going to have these record amounts of debt UM. 0:05:33.279 --> 0:05:36.560 I'm not a m MT advocate, but at this point 0:05:36.600 --> 0:05:39.000 there is demand for treasure yields and we've certainly seen 0:05:39.080 --> 0:05:41.279 that UM as we kind of pushed towards these lower levels. 0:05:41.480 --> 0:05:44.280 Where is the m MT argument or discussion these days? 0:05:44.320 --> 0:05:46.120 Is it's I haven't heard about it recently. We have 0:05:46.160 --> 0:05:47.520 to define it, like are we at the place that 0:05:47.600 --> 0:05:49.200 we don't have to define it anymore? Because it's like 0:05:49.240 --> 0:05:54.440 that acculate modern monetary theory. Basically, it says what and 0:05:54.800 --> 0:05:56.240 what does it say? And where are we with it? 0:05:56.400 --> 0:05:59.400 You know, effectively says that UM, governments can issue as 0:05:59.440 --> 0:06:01.440 much as they and we don't really have to worry 0:06:01.480 --> 0:06:04.760 about it, and you can run big deficits and finance 0:06:04.800 --> 0:06:06.640 whatever you want, and there's always gonna be a buyer 0:06:06.720 --> 0:06:11.400 fort um. You know. Certainly the increase in debts that 0:06:11.400 --> 0:06:13.040 we've seen over the last couple of years makes one 0:06:13.080 --> 0:06:15.240 believe that that might be true. But you Q, you 0:06:15.279 --> 0:06:17.840 candid shoot debt forever. UM. You do crowd out, you 0:06:17.920 --> 0:06:21.479 do create an environment where zombie companies are allowed to 0:06:21.520 --> 0:06:25.160 go on longer. There are costs to the economy. UM. 0:06:25.200 --> 0:06:28.440 When we get to the point UM where productivity growth 0:06:28.880 --> 0:06:32.000 and overall growth is is gets to a new normal 0:06:32.040 --> 0:06:33.920 and people worry about it, the amount of debt is 0:06:33.920 --> 0:06:35.600 going to be part of that discussion. Yeah, I'm just 0:06:35.880 --> 0:06:37.760 not buying it. I'm I'm in that camp that's just 0:06:37.800 --> 0:06:40.120 not buying it. But we'll see Marvin low global macro 0:06:40.279 --> 0:06:42.880 strategist State Street based in Boston, but joining us on 0:06:42.880 --> 0:06:46.760 our Bloomberg Interactive Brooker Studio, talking all things FED in 0:06:46.839 --> 0:06:49.240 all things economics. Of course, the FED meets at the 0:06:49.400 --> 0:06:52.560 end of July. Markets certainly looking for at least a 0:06:52.640 --> 0:07:11.640 twenty five basis point cut. This is Bloomberg. Well consumers 0:07:11.680 --> 0:07:16.160 worldwide continued debate energy sources, including fossil fuels, nuclear and 0:07:16.240 --> 0:07:18.960 sustainable sources such as wind and sun I think at 0:07:18.960 --> 0:07:21.840 the latest insight on how nuclear power fits in We 0:07:21.920 --> 0:07:25.480 turn to Seth Gray, President and CEO of Liebridge Corporation 0:07:25.520 --> 0:07:28.480 based in Rest in Virginia. Seth thanks, thanks so much 0:07:28.520 --> 0:07:30.000 for joining us. Just wonder if you could give us 0:07:30.040 --> 0:07:33.160 an update on kind of the status of nuclear power 0:07:33.160 --> 0:07:36.720 in the US right now. Well, Lucile, your power has 0:07:36.760 --> 0:07:40.720 been kind of flat, hasn't been growing, hasn't been falling much, 0:07:40.760 --> 0:07:44.679 has been producing about twenty percent of the nation's electricity 0:07:44.720 --> 0:07:48.080 for some time, and now we're coming to something of 0:07:48.080 --> 0:07:51.640 an inflection point. Are we going to keep renewing the 0:07:51.760 --> 0:07:55.800 licenses of the old plants? Will we build more of those? 0:07:55.960 --> 0:07:59.600 Are are we going to move forward to newer technologies 0:07:59.640 --> 0:08:03.360 for few tools that could really upgrade those older reactors 0:08:03.440 --> 0:08:09.600 and deploy newer, more advanced technologies. And we have plants 0:08:09.640 --> 0:08:12.480 in this country out of four hundred fifty in the world. 0:08:13.040 --> 0:08:17.080 China and Russia are moving aggressively to take the lead 0:08:17.200 --> 0:08:21.200 around the world, and the US is now taking some 0:08:21.520 --> 0:08:25.040 very serious steps in Congress, in the administration, and in 0:08:25.080 --> 0:08:29.120 the companies to make sure that the US competes and 0:08:29.240 --> 0:08:32.880 does very well in those international markets which feed through 0:08:32.920 --> 0:08:39.160 supply chains to manufacturing all across America. So we definitely 0:08:39.200 --> 0:08:42.280 had the Trump administration, UH in some ways want to 0:08:42.280 --> 0:08:45.160 backstop colon nuclear because they want a reliable source of 0:08:45.240 --> 0:08:48.280 energy that sort of stays in storage versus a solar 0:08:48.320 --> 0:08:51.760 and wind um is that legitimate argument, like do we 0:08:51.800 --> 0:08:54.120 really need to backstop nuclear or should we just let 0:08:54.120 --> 0:08:57.400 market forces kind of work their way through the system. Well, 0:08:57.440 --> 0:09:00.640 it's a very legitimate argument to give value you to it. 0:09:00.880 --> 0:09:03.280 What you can do at a coal plant for a 0:09:03.280 --> 0:09:05.280 period of months, and you could do it a nuclear 0:09:05.320 --> 0:09:08.080 plant for a period of many years is have enough 0:09:08.080 --> 0:09:11.720 fuel on the site to run that plant twenty four seven. 0:09:11.840 --> 0:09:15.480 So nuclear reactors can run twenty four seven even if 0:09:15.520 --> 0:09:18.640 trucks or trains can't deliver any fuel to the plant. 0:09:19.200 --> 0:09:22.760 Of course, the renewables can't run when the sun isn't shining, 0:09:22.800 --> 0:09:26.000 the wind isn't blowing, and need to be backed up 0:09:26.000 --> 0:09:31.080 by natural gas, which UM relies on gas flowing through 0:09:31.080 --> 0:09:35.440 the pipelines that could be cut off. So for unquestionable 0:09:35.520 --> 0:09:40.320 electricity deliver seven, you really do need nuclear and or coal. 0:09:40.920 --> 0:09:43.880 Nuclear for for a much longer period could provide it, 0:09:44.480 --> 0:09:47.760 just as it powers our submarines for years. They could 0:09:47.800 --> 0:09:52.760 stay underwater or aircraft carriers because they have nuclear reactors. 0:09:52.760 --> 0:09:56.000 You know, try that with wind power. So so I 0:09:56.040 --> 0:09:59.760 think it's a legitimate argument to give value to reliability 0:09:59.800 --> 0:10:04.640 of electric grid with nuclear power. So, Seth, you mentioned 0:10:04.720 --> 0:10:07.800 so newer technologies that need to come into the nuclear 0:10:07.840 --> 0:10:10.199 power play. UM gives a sense of what some of 0:10:10.240 --> 0:10:14.320 those technologies are maybe kind of where your company fits in, right. 0:10:14.440 --> 0:10:19.480 So light Bridge is developing a new nuclear fuel that 0:10:19.520 --> 0:10:22.400 will work in the existing reactors and new ones. The 0:10:22.480 --> 0:10:26.360 project just recently received its first US Department of Energy 0:10:26.400 --> 0:10:29.559 grant to support the project and help take it forward. 0:10:30.520 --> 0:10:33.880 Our fuel technology is going to make the existing reactors 0:10:34.360 --> 0:10:38.080 much more economical by increasing the power that comes out 0:10:38.080 --> 0:10:42.040 of the plants, running the plants even longer between refuelings, 0:10:43.040 --> 0:10:47.160 dramatically improved the safety, running about a thousand degrees celsius 0:10:47.200 --> 0:10:52.280 about six degrees fahrenheit cooler than the fuel and current reactors, 0:10:52.760 --> 0:10:57.600 and also dramatically enhanced proliferation resistance so that nothing could 0:10:57.600 --> 0:11:01.920 ever be used in a weapons program. And also part 0:11:01.960 --> 0:11:05.680 of the future of nuclear is these smaller reactors. The 0:11:05.760 --> 0:11:08.720 lead there is a company called New Scale, and we're 0:11:08.720 --> 0:11:11.400 starting to work with New Scale to bring our fuel 0:11:11.679 --> 0:11:14.320 to their smaller reactors, which I think will really be 0:11:14.400 --> 0:11:17.640 the lead in the next generation of nuclear reactors deployed 0:11:17.640 --> 0:11:19.840 here and around the world. And a big part of 0:11:19.880 --> 0:11:22.200 that is obviously a cost. Can you walk me through, 0:11:22.320 --> 0:11:24.960 like how much it costs to say, build a new plant, 0:11:25.280 --> 0:11:28.720 maintain your current plant, and then build the modular fleet. 0:11:28.760 --> 0:11:34.680 Basically yeah, yeah, well, basically, the the costs of building 0:11:34.760 --> 0:11:38.080 plants are very expensive when they're first of a kind, 0:11:38.760 --> 0:11:42.000 and then after you build about six or nine of them, 0:11:42.480 --> 0:11:44.800 you're at what some people call nth of a kind. 0:11:44.880 --> 0:11:47.760 You know what they're going to cost going forward. So 0:11:48.080 --> 0:11:51.839 one of the plants that was designed in the US 0:11:52.000 --> 0:11:55.160 by the company that's now Westinghouse and is being deployed 0:11:55.200 --> 0:11:59.120 around the world. The Koreans are working with Westinghouse deploying 0:11:59.120 --> 0:12:03.760 in Abu Dhabi makes megalots of electricity. That's a ton 0:12:03.800 --> 0:12:07.800 of power. Cost about five billion dollars to build. That's 0:12:07.800 --> 0:12:10.600 a pretty solid number. You could you could build those 0:12:10.679 --> 0:12:14.040 kind of reactors or other similar ones for about five 0:12:14.120 --> 0:12:18.959 billion dollars on what you'd call levelized cost of electricity 0:12:19.120 --> 0:12:22.360 out over the cost of the plant, that is cheaper 0:12:22.840 --> 0:12:28.560 than um. Then Cole that that that works very well 0:12:28.559 --> 0:12:32.240 over time. It's obviously a very big upfront cost, but 0:12:32.320 --> 0:12:35.120 then your fuel cat costs for sixty years or even 0:12:35.200 --> 0:12:39.000 eighty years are are very low. Seth You mentioned earlier 0:12:39.080 --> 0:12:41.160 kind of the some of the new technologies that could 0:12:41.559 --> 0:12:45.199 ensure or heighten non proliferation of some of this nuclear technology. 0:12:45.360 --> 0:12:47.800 And we've got some obviously some issues with Iran right now. 0:12:47.840 --> 0:12:49.679 Give us a sense of just kind of the global 0:12:49.720 --> 0:12:55.240 deployment and the safety around deploying a nuclear technologies globally. Yeah, 0:12:55.280 --> 0:12:59.320 So first on Iran, they've suspended some of their obligations 0:12:59.400 --> 0:13:02.560 under the new Clear Deal there enriching uranium a little 0:13:02.559 --> 0:13:05.480 bit higher than they're supposed to. They're making a little 0:13:05.520 --> 0:13:08.400 bit more of it than they're supposed to. They could 0:13:08.480 --> 0:13:12.200 easily step back and go back under those limits. They're 0:13:12.200 --> 0:13:15.720 trying to get European countries to help them work around 0:13:15.920 --> 0:13:19.840 US sanctions, which I think are being very effective on Iran. 0:13:20.679 --> 0:13:24.120 So that's not really too great a warrior on Iran yet. 0:13:24.240 --> 0:13:27.080 I think it's more of a negotiation dance of them 0:13:27.080 --> 0:13:32.680 with Europeans. Nuclear reactors deployed by major companies under safe 0:13:32.720 --> 0:13:36.640 licensing regimes like the US Nuclear Regulatory Commission are the 0:13:36.720 --> 0:13:41.240 safest way of generating power in the world. Nobody has 0:13:41.280 --> 0:13:45.000 ever died from radiation from anything in the reactor in 0:13:45.040 --> 0:13:48.319 the history of the US power and nuclear power industry. 0:13:48.760 --> 0:13:52.760 Even at Fukushima, as great an industrial disaster as that was, 0:13:53.440 --> 0:13:57.160 nobody died from anything nuclear. People died from an earthquake, 0:13:57.200 --> 0:14:00.640 people died from a tsunami, but actually not from anything 0:14:00.679 --> 0:14:04.760 in the reactor. So it's um. It's a very safe 0:14:04.840 --> 0:14:10.640 technology and um in terms of proliferation. The way it's 0:14:10.720 --> 0:14:15.040 handled under the International Atomic Energy Agency oversight is very 0:14:15.080 --> 0:14:17.800 well done, and with light bridges fuel it will be 0:14:17.880 --> 0:14:21.240 even much more non proliferative understood, Seth, great, thank you 0:14:21.280 --> 0:14:23.240 so much for joining us. Set as President CEO of 0:14:23.320 --> 0:14:27.440 light Bridge Corporation, based in Reston, Virginia, bridgeting as we 0:14:27.480 --> 0:14:46.280 think about how different technologies deployed globally. Well, Boeing is 0:14:46.360 --> 0:14:48.960 back in the news. The company plans to report a 0:14:49.040 --> 0:14:52.240 four point nine billion dollar accounting charge related to its 0:14:52.280 --> 0:14:55.320 beleaguered seven thirty seven Max jetliner, and the company also 0:14:55.400 --> 0:14:57.560 said that the plane would return to service in the 0:14:57.640 --> 0:15:01.120 fourth quarter, easing fears that that's timetable could slip into 0:15:01.240 --> 0:15:03.720 next year. To think a little deeper, we welcome our 0:15:03.760 --> 0:15:08.120 next guest, George Ferguson. George is a senior analysts covering aerospace, defense, 0:15:08.200 --> 0:15:10.880 and the airlines for Bloomberg Intelligence. He joins us on 0:15:10.920 --> 0:15:15.080 the phone from Bloomberg Intelligence headquarters in Princeton, New Jersey. George, 0:15:15.120 --> 0:15:17.840 thanks so much for joining us. The stocks up about, 0:15:18.160 --> 0:15:20.240 you know, three point seven percent on the news years 0:15:20.240 --> 0:15:23.920 like a shareholders like this. Yeah, I think I think 0:15:23.960 --> 0:15:27.600 you're right, Paul. I think it starts to put a 0:15:27.600 --> 0:15:31.520 a a cuff or a back limit on when we 0:15:31.520 --> 0:15:34.360 think we see this airplane back in service, and it 0:15:34.400 --> 0:15:37.520 gives investors a number that they can they can look 0:15:37.560 --> 0:15:40.200 at for what the cost is going to be. I mean, 0:15:40.360 --> 0:15:43.960 I think that they're probably being conservative. And the date 0:15:44.000 --> 0:15:46.720 the airplane re enter service, I think Boeing doesn't want 0:15:46.720 --> 0:15:49.080 that date to slip and at least the date that 0:15:49.120 --> 0:15:52.800 they've provided, So my guess is they're probably fairly confident 0:15:52.880 --> 0:15:55.440 the airplane gets back in service. That's in line I 0:15:55.480 --> 0:15:59.080 think with expectations that were in the marketplace for late 0:15:59.160 --> 0:16:05.040 three Q early for for Q entry to service. The 0:16:05.280 --> 0:16:08.560 cost of the airplane being out of service was a 0:16:08.600 --> 0:16:12.640 little bit higher than we expected at Bloomberg Intelligence. Um, 0:16:12.720 --> 0:16:14.960 you know, I think the Bowing probably again put a 0:16:14.960 --> 0:16:18.400 conservative number together here, so it's probably bigger than even 0:16:18.440 --> 0:16:22.440 they expected. And they detail that they it's not going 0:16:22.480 --> 0:16:24.760 to be all cash, so it's not gonna be all 0:16:24.800 --> 0:16:28.080 four point nine billion in dollars. There'll be other types 0:16:28.120 --> 0:16:30.680 of concessions they offer our customers that are will be 0:16:30.720 --> 0:16:32.480 over an extended period of time, and so I think 0:16:32.480 --> 0:16:35.120 now investors have a little more clarity around that, and 0:16:35.160 --> 0:16:37.760 that's part of what you're seeing today. I feel so skeptical. 0:16:37.840 --> 0:16:39.480 I gotta be honest with you. I feel like my 0:16:39.760 --> 0:16:41.560 it's like, what do I want to win the lottery. 0:16:41.560 --> 0:16:43.600 It's kind of the same thing. But let's pretend let's 0:16:43.600 --> 0:16:46.840 pretend that this is correct, Bowing's estimates are correct. Things 0:16:46.840 --> 0:16:50.120 get fixed in the fourth quarter. What's not accounted for 0:16:50.240 --> 0:16:54.960 in the numbers, as in litigation or compensation for airlines, 0:16:55.040 --> 0:16:57.760 et cetera. Yeah, so, I mean, as I read it, 0:16:57.760 --> 0:17:02.200 it looks like the compensation for victims it wasn't in that. 0:17:02.520 --> 0:17:06.560 And you know, we think that's a pretty knowable number. 0:17:06.720 --> 0:17:09.720 It's uh, you know, we think there's maybe a billion 0:17:09.720 --> 0:17:14.360 and a half worth of potential cost of victims um. 0:17:14.520 --> 0:17:16.680 But you know, and and that kind of that kind 0:17:16.680 --> 0:17:19.400 of litigation can drag on for years, and it's it's 0:17:19.400 --> 0:17:22.399 a discussion about what the value of of people are, 0:17:22.440 --> 0:17:26.199 which is a bit of a macab discussion. But I 0:17:26.240 --> 0:17:28.200 don't think that there's I don't think there's a lot 0:17:28.280 --> 0:17:32.120 more that's uh, that's overhanging because of this this grounding, 0:17:32.840 --> 0:17:36.280 unless the grounding gets extended. So George, let's talk about 0:17:36.280 --> 0:17:40.000 the seven max itself. Um, do you expect this the 0:17:40.080 --> 0:17:42.720 next time you go to London Air Show of the 0:17:42.760 --> 0:17:44.520 Paris Airshow? Do you think Boeing is going to have 0:17:44.560 --> 0:17:48.479 success in the years ahead selling this aircraft. I do. 0:17:48.560 --> 0:17:52.800 We've seen key customers that have come out supporting the airplane. Um. 0:17:52.840 --> 0:17:55.680 I think the I A G Letter of intent at 0:17:55.680 --> 0:17:59.760 Paris was was huge um and and the you know 0:17:59.760 --> 0:18:03.760 p but like Willie Walsh, the I A G CEO 0:18:04.080 --> 0:18:06.560 and UH and Ryan air CEO of come out and 0:18:06.680 --> 0:18:10.119 endorse the airplane. That's a strong endorsement. UM So I 0:18:10.160 --> 0:18:14.040 think that uh, this is this has definitely been a 0:18:14.080 --> 0:18:16.920 difficult period for Boeing. But once they get this airplane 0:18:16.960 --> 0:18:19.480 back in the air, provided they have no other problems 0:18:19.480 --> 0:18:21.760 that I think, Look, they've really poured over this airplane. Now. 0:18:21.840 --> 0:18:25.119 My guess is um that that this will fade within 0:18:25.560 --> 0:18:27.639 you know, six months or so. What's going to be 0:18:27.680 --> 0:18:30.000 the hold up? Is it going to be getting past 0:18:30.920 --> 0:18:34.000 regulators compliance? Is it going to be the actual fix itself? 0:18:35.480 --> 0:18:39.760 Um So, I don't think. I think the bigger challenge 0:18:39.760 --> 0:18:43.320 here will be to sell it to global regulators. And 0:18:43.359 --> 0:18:47.520 I think that the I A g Um sale was 0:18:47.600 --> 0:18:50.080 part of that was part of that fix, and I 0:18:50.119 --> 0:18:52.359 think it will be they'll look for airlines in the 0:18:52.400 --> 0:18:55.840 different regions to apply pressure to regulators to at least 0:18:55.840 --> 0:18:59.560 review the airplane so that it can re enter service. Um, 0:18:59.560 --> 0:19:01.359 I think i AG probably got a pretty good price, 0:19:01.359 --> 0:19:03.080 and so they'll be incentive to go to the European 0:19:03.119 --> 0:19:05.280 regulator and say, hey, take a look to the airplane, 0:19:05.320 --> 0:19:07.080 tell us what they've got to do to re ender service. 0:19:07.680 --> 0:19:10.359 I really think that the FAA has poured over this 0:19:10.480 --> 0:19:14.600 airplane now because they don't want their credibility, um, you know, 0:19:14.640 --> 0:19:18.159 further damaged. And so I think given the intensity of 0:19:18.160 --> 0:19:20.360 the f A is probably put into the into the review, 0:19:21.040 --> 0:19:23.280 I think Boeing out to be in in good shape 0:19:23.320 --> 0:19:26.399 to get it get it flying in the US and 0:19:26.480 --> 0:19:29.440 in Europe pretty quickly thereafter, because I think the Europeans 0:19:29.520 --> 0:19:33.480 also they don't want to separate this regulatory regime that 0:19:33.520 --> 0:19:36.600 has sort of relied on each other's, you know, each 0:19:36.640 --> 0:19:40.760 different jurisdictions regulator. I think everybody in the aviation industry 0:19:40.800 --> 0:19:43.080 doesn't want to break that regime where you can rely 0:19:43.240 --> 0:19:46.080 on regulators in the different regions, and so I think 0:19:46.080 --> 0:19:49.640 the Europeans, without a real strong reason not to take 0:19:49.680 --> 0:19:53.440 the airplane back, will will resist your delay. George Ferguson, 0:19:53.480 --> 0:19:55.960 thank you so much. George has a senior aerospace, defense 0:19:55.960 --> 0:19:58.760 and airlines analyst for Bloomberg Intelligence joining us on the 0:19:58.760 --> 0:20:01.199 phone from Princeton, New Jerse, Z, will you get on 0:20:01.200 --> 0:20:03.280 the seven. We're literally going to ask you that question. 0:20:03.440 --> 0:20:07.360 The answer for me is yes, without I think so. 0:20:07.560 --> 0:20:09.280 But like I think I could take a moment, I 0:20:09.280 --> 0:20:11.959 don't think I take my kid on it interesting. I 0:20:12.000 --> 0:20:13.520 just feel like, you know, by the ton of thing 0:20:13.560 --> 0:20:15.400 gets in the air, it's gonna be the safest plane 0:20:15.440 --> 0:20:16.800 in the air given what has had to deal with. 0:20:17.000 --> 0:20:20.040 Let's head over now to Nathan Hagen Studios in Washington, 0:20:20.160 --> 0:20:23.000 d C. To get a check on world and national headlines. 0:20:23.040 --> 0:20:40.040 At Nathan Focus on Munis is brought to you by 0:20:40.200 --> 0:20:44.040 Build America Mutual BAM Green Star Bonds finance projects that 0:20:44.119 --> 0:20:47.480 protect and restore the environment with more renewable energy and 0:20:47.520 --> 0:20:51.760 efficient transportation and buildings. Visit build America dot com slash 0:20:51.800 --> 0:20:56.520 green Star, BAM Building America. When we talk municipal bonds, 0:20:56.520 --> 0:20:58.480 I love to talk about the Puerto Rican market. It 0:20:58.520 --> 0:21:01.679 continues to make news. Looks like Puerto Rico is seeking 0:21:01.720 --> 0:21:05.560 to restructure about twenty seven billion dollars of obligations tied 0:21:05.600 --> 0:21:08.520 to the central government and its mean utility. UH to 0:21:08.560 --> 0:21:10.399 get the latest, we welcome a good friend Joe my 0:21:10.520 --> 0:21:14.800 Sack Joe as editor for Bloomberg Bloomberg Brief for Bloomberg News. 0:21:14.800 --> 0:21:18.040 He joins us here in our Bloomberg Interactive Brokers studio. Joe, 0:21:18.080 --> 0:21:21.320 what is the latest on this ever or never ending 0:21:21.600 --> 0:21:25.479 saga of the Puerto Rican debt situation? Riots in the 0:21:25.520 --> 0:21:30.399 streets this week? It was riots the you know, the 0:21:30.440 --> 0:21:36.320 restructuring we'll go on at some point. Uh, but right 0:21:36.359 --> 0:21:40.760 now the population is restive. It's the only way to 0:21:40.880 --> 0:21:44.720 describe it. And what are they protesting? They are protesting 0:21:44.760 --> 0:21:49.040 almost nine hundred pages of chats that the governor was 0:21:49.080 --> 0:21:53.359 having with his various aids and you know, sometimes pretty 0:21:53.359 --> 0:21:59.280 salty stuff and uh and and in general protesting you know, 0:21:59.320 --> 0:22:02.640 the incompa. It's of government on the island for years 0:22:03.080 --> 0:22:07.920 and corruption. So you know, eventually it just blew up. 0:22:07.960 --> 0:22:11.359 So who knows whether the governor will be able to 0:22:11.359 --> 0:22:15.200 survive it. However, the restructuring goes on, and of course 0:22:15.280 --> 0:22:18.080 this being the muni market, prices of Puerto Rico bonds 0:22:18.119 --> 0:22:20.640