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 --> 00:00:22,479 Speaker 1: at Bloomberg dot com slash podcast. All right, let's talk cars, Matt, 7 00:00:22,720 --> 00:00:26,360 Speaker 1: how about that? Okay? CarMax And when we talk cars, 8 00:00:26,360 --> 00:00:28,280 Speaker 1: we talked to Kevin Tyne and he's the car dude 9 00:00:28,280 --> 00:00:32,320 Speaker 1: at Bloomberg Intelligence. He's been covering the auto industry, uh forever. 10 00:00:33,360 --> 00:00:35,199 Speaker 1: All right, So Kevin talked to us about the used 11 00:00:35,240 --> 00:00:38,440 Speaker 1: car business. I understand, during the pandemic, the values of 12 00:00:38,680 --> 00:00:42,320 Speaker 1: used cars shot through the roof because Detroit wasn't making 13 00:00:42,400 --> 00:00:44,960 Speaker 1: any cars because they were shut down. Now it's coming down. 14 00:00:45,600 --> 00:00:49,279 Speaker 1: Is that what we're seeing at CarMax. Yeah, So what 15 00:00:49,360 --> 00:00:55,760 Speaker 1: you had was uh, retailers, especially the used only is 16 00:00:55,880 --> 00:01:01,880 Speaker 1: like CarMax or Carbon Room Shift companies like that, overpaying 17 00:01:01,920 --> 00:01:07,200 Speaker 1: for their inventory. Prices fall and now you're stuck basically underwater. 18 00:01:07,240 --> 00:01:10,520 Speaker 1: And that's what's being worked through right now, and it's 19 00:01:10,520 --> 00:01:16,120 Speaker 1: gonna impact all the all the new and used vehicle retailers. 20 00:01:16,160 --> 00:01:17,920 Speaker 1: And when I say new and used, I mean the 21 00:01:18,040 --> 00:01:21,200 Speaker 1: full line dealerships you know, your automations and pen skis 22 00:01:21,200 --> 00:01:24,320 Speaker 1: that also do used cars UM are going to feel 23 00:01:24,360 --> 00:01:26,400 Speaker 1: this pain. They won't feel it as bad as they 24 00:01:26,480 --> 00:01:28,760 Speaker 1: used only guys because they had nowhere else to go 25 00:01:29,800 --> 00:01:35,920 Speaker 1: but to acquire off lease vehicles expensively, and then as 26 00:01:35,959 --> 00:01:38,640 Speaker 1: the bottom sell out of pricing a little bit. We're 27 00:01:38,640 --> 00:01:41,640 Speaker 1: certainly not back to where we were pre pandemic. But 28 00:01:41,720 --> 00:01:44,280 Speaker 1: now you're selling things that you overpaid for, and that's 29 00:01:44,319 --> 00:01:47,199 Speaker 1: the window we're in right now. Well, you can't sell 30 00:01:47,240 --> 00:01:51,440 Speaker 1: the things you overpaid for is the problem because the 31 00:01:51,480 --> 00:01:55,200 Speaker 1: way I read the CarMax release, because rates are so 32 00:01:55,320 --> 00:01:57,880 Speaker 1: high and you know, people who typically would be in 33 00:01:57,920 --> 00:02:02,400 Speaker 1: the market can't afford the payment, that has to play 34 00:02:02,440 --> 00:02:04,920 Speaker 1: into that has to play through to the new car 35 00:02:05,600 --> 00:02:08,720 Speaker 1: UM sales as well, doesn't it because rates aren't any lower, Well, 36 00:02:08,720 --> 00:02:11,200 Speaker 1: they are, they are lower. Sorry, for a new car, 37 00:02:11,240 --> 00:02:12,520 Speaker 1: you get a lower rate than you do for a 38 00:02:12,600 --> 00:02:14,960 Speaker 1: used car, but they're not they're not as low as 39 00:02:15,000 --> 00:02:18,600 Speaker 1: they were. Right, We're not looking at zero percent, We're 40 00:02:18,639 --> 00:02:20,840 Speaker 1: not looking at one point nine percent. We're not looking 41 00:02:20,880 --> 00:02:23,560 Speaker 1: at two point nine percent that we previously had been seeing. 42 00:02:23,639 --> 00:02:27,200 Speaker 1: Now we're looking at more like six for most people, 43 00:02:27,400 --> 00:02:31,000 Speaker 1: seven eight percent. So isn't aren't new cars going to 44 00:02:31,040 --> 00:02:34,080 Speaker 1: get hit as well with these higher rates? Sure? Yeah, 45 00:02:34,120 --> 00:02:37,600 Speaker 1: but but supply is much more constrained on the new 46 00:02:37,680 --> 00:02:40,120 Speaker 1: vehicle side. But really that was that's exactly it, right. 47 00:02:40,160 --> 00:02:43,480 Speaker 1: You had this this confluence of events where you had 48 00:02:45,040 --> 00:02:48,639 Speaker 1: retailer is overpaying for inventory. You had money was cheap 49 00:02:48,680 --> 00:02:51,200 Speaker 1: and easy at the time, and then it's not right. 50 00:02:51,240 --> 00:02:53,600 Speaker 1: So prices were high and then they're not, and rates 51 00:02:53,600 --> 00:02:55,880 Speaker 1: were low and then they're not, and and that's what 52 00:02:56,000 --> 00:02:58,240 Speaker 1: this window is. But it's not you know, and I 53 00:02:58,280 --> 00:03:02,080 Speaker 1: think you know, on as far as pricing goes, and 54 00:03:02,240 --> 00:03:06,720 Speaker 1: especially in the used vehicle market, I think this works 55 00:03:06,760 --> 00:03:10,360 Speaker 1: its way through the system because we're not doing leasing 56 00:03:10,440 --> 00:03:12,359 Speaker 1: like we used to. You know, a lot of these 57 00:03:13,000 --> 00:03:16,040 Speaker 1: vehicles that are coming back or came back from lease 58 00:03:16,400 --> 00:03:21,160 Speaker 1: in two we're twenty nineteen leases, which were pre pandemic. 59 00:03:21,800 --> 00:03:25,040 Speaker 1: So what you had was, you know, we're looking back 60 00:03:25,120 --> 00:03:28,960 Speaker 1: at nineteen now three years ago, you had seventeen million 61 00:03:29,080 --> 00:03:32,800 Speaker 1: units being sold. Thirty to some odd percent were leased, 62 00:03:33,440 --> 00:03:36,960 Speaker 1: So in two, are used vehicle market was supplied by 63 00:03:36,960 --> 00:03:41,800 Speaker 1: like five point three million off lease vehicles. Now, as 64 00:03:41,840 --> 00:03:44,760 Speaker 1: we move out and we look at what happened in 65 00:03:44,840 --> 00:03:50,320 Speaker 1: two projecting forward to because most leases are three years, 66 00:03:50,880 --> 00:03:52,880 Speaker 1: you know, we're not even going to do a fourteen 67 00:03:52,920 --> 00:03:57,320 Speaker 1: million this year and lease penetration is about eight So 68 00:03:57,680 --> 00:04:02,560 Speaker 1: that supply that feeds they used vehicle market in two 69 00:04:02,680 --> 00:04:06,040 Speaker 1: goes from five point three million to about two point 70 00:04:06,120 --> 00:04:10,200 Speaker 1: five million. So as we go out further, I think 71 00:04:10,320 --> 00:04:13,640 Speaker 1: used car prices stay very firm because we're just not 72 00:04:13,680 --> 00:04:15,440 Speaker 1: going to have the supply like we used to from 73 00:04:15,480 --> 00:04:18,599 Speaker 1: the off lease market. Are there manufacturers? Are the Gems 74 00:04:18,640 --> 00:04:20,360 Speaker 1: and the Fords of the world in the Volkswagens, Are 75 00:04:20,400 --> 00:04:23,520 Speaker 1: they producing as many as they want right now? Are 76 00:04:23,520 --> 00:04:26,960 Speaker 1: they still constrained? Well? As many as they want? But 77 00:04:27,000 --> 00:04:29,680 Speaker 1: they don't want to produce that many right So inventory 78 00:04:29,720 --> 00:04:34,600 Speaker 1: now is about one point seven million to start December. 79 00:04:34,640 --> 00:04:37,119 Speaker 1: To put that in context, historically it would be about 80 00:04:37,200 --> 00:04:40,920 Speaker 1: four millions. So it's not the nine hundred thousand that 81 00:04:41,000 --> 00:04:44,360 Speaker 1: we saw at at the bottom, you know, about a 82 00:04:44,440 --> 00:04:46,839 Speaker 1: year ago, but it's certainly not what it used to be. 83 00:04:47,000 --> 00:04:50,240 Speaker 1: So I think that window for the new vehicle market 84 00:04:50,279 --> 00:04:53,039 Speaker 1: is exactly where manufacturers are trying to figure out where 85 00:04:53,040 --> 00:04:55,520 Speaker 1: do we want to be so that we're not we're 86 00:04:55,520 --> 00:05:00,400 Speaker 1: not sacrificing margin and pricing, but we're not leaving sales 87 00:05:00,720 --> 00:05:05,479 Speaker 1: on the table either. Alright, So in terms of the 88 00:05:05,520 --> 00:05:09,240 Speaker 1: new car deliveries, production and deliveries, how close are we 89 00:05:09,400 --> 00:05:13,600 Speaker 1: to normal? Well, our normal? I think next year is 90 00:05:13,600 --> 00:05:15,839 Speaker 1: going to be about fifteen million units, and I think 91 00:05:15,880 --> 00:05:20,360 Speaker 1: that's a healthy normal. I think the seven still constrained 92 00:05:20,839 --> 00:05:25,560 Speaker 1: or not? No, I don't think so, because look, Matt, 93 00:05:25,680 --> 00:05:27,800 Speaker 1: if you look at it this way, if you think 94 00:05:27,839 --> 00:05:30,279 Speaker 1: about a volume number as the end all be all 95 00:05:30,760 --> 00:05:35,120 Speaker 1: seventeen point five million units in sixteen, average price was 96 00:05:35,240 --> 00:05:38,719 Speaker 1: thirty five thousand dollars, that pool of revenue is actually 97 00:05:38,760 --> 00:05:41,480 Speaker 1: smaller than it would be in a fifteen million unit 98 00:05:41,520 --> 00:05:45,840 Speaker 1: market in three at forty seven thousand dollars per unit. 99 00:05:46,279 --> 00:05:48,560 Speaker 1: So if you want to look at volume, you can say, well, 100 00:05:48,600 --> 00:05:50,080 Speaker 1: it's not as great as it used to be, But 101 00:05:50,120 --> 00:05:52,360 Speaker 1: if you're looking at the revenue pool, it's actually better. 102 00:05:52,560 --> 00:05:57,240 Speaker 1: Are people buying cars at dollars or unit that's the average, 103 00:05:57,640 --> 00:06:00,560 Speaker 1: that's the average. And now, by the way, and now, 104 00:06:00,640 --> 00:06:02,360 Speaker 1: by the way, with a six or seven or eight 105 00:06:02,400 --> 00:06:04,920 Speaker 1: percent loan, right because most people don't buy cars all 106 00:06:04,960 --> 00:06:09,040 Speaker 1: cash and it's in kevinet, Does the industry believe that's sustainable? Yeah, 107 00:06:09,080 --> 00:06:14,000 Speaker 1: it is, Yeah, because because right that, the automakers are 108 00:06:14,000 --> 00:06:16,760 Speaker 1: saying that, hey, look if you and look, here's the 109 00:06:16,839 --> 00:06:21,200 Speaker 1: risk if if you want to look, Ford and GM 110 00:06:21,240 --> 00:06:26,719 Speaker 1: are in the fifty two thousand range. Mercedes BMW, which 111 00:06:26,760 --> 00:06:28,320 Speaker 1: used to be in that range are now up in 112 00:06:28,320 --> 00:06:31,640 Speaker 1: the sixties and seventies. So automakers are saying, like, hey, 113 00:06:31,680 --> 00:06:35,240 Speaker 1: the stuff we can't make money on, uh, we don't 114 00:06:35,240 --> 00:06:37,919 Speaker 1: want to be in it. And that's why inventory is 115 00:06:37,960 --> 00:06:40,360 Speaker 1: half of what it used to be, why transaction prices 116 00:06:40,360 --> 00:06:43,320 Speaker 1: are so much higher, because not every sale was a 117 00:06:43,320 --> 00:06:46,440 Speaker 1: good sale, and they've gotten out of the bad sale business. Well, 118 00:06:46,480 --> 00:06:48,360 Speaker 1: I'm hoping that one of those auto guys is going 119 00:06:48,400 --> 00:06:50,960 Speaker 1: to blink in cave and start ramping up production and 120 00:06:51,440 --> 00:06:55,000 Speaker 1: screw up the entire market but making horrible models for 121 00:06:55,080 --> 00:06:58,279 Speaker 1: rental fleets and just pushing them out there. No, that's 122 00:06:58,279 --> 00:07:01,279 Speaker 1: not okay, it's not it for the industry, right, Kevin Tynon, 123 00:07:01,960 --> 00:07:04,320 Speaker 1: Everything I know about the auto industry, the economically the 124 00:07:04,320 --> 00:07:06,359 Speaker 1: auto industry. I learned from Kevin Tynan. He's our Bloomberg 125 00:07:06,400 --> 00:07:10,920 Speaker 1: Intelligence auto analyst breaking it down here. Carmack's tough numbers. 126 00:07:10,960 --> 00:07:17,040 Speaker 1: Stock down seven. Let's scan for stocks here. Let's do 127 00:07:17,040 --> 00:07:18,880 Speaker 1: it on a down day. Maybe we can find some 128 00:07:18,880 --> 00:07:21,880 Speaker 1: some bargains out there. We're gonna roundtable this thing like 129 00:07:21,960 --> 00:07:24,960 Speaker 1: we like to do. Phil Palumbo, CEO and founder of 130 00:07:24,960 --> 00:07:28,280 Speaker 1: Plumbo Wealth Management, joins us as well as David Kat's 131 00:07:28,600 --> 00:07:32,680 Speaker 1: Matrix Asset Advisors, UH joins us as well. So Phil, 132 00:07:32,760 --> 00:07:35,920 Speaker 1: let's start with you here. I mean, you know, I've 133 00:07:35,960 --> 00:07:39,760 Speaker 1: got twenty two in my rear view. Let's forget about it. Equities, 134 00:07:39,800 --> 00:07:42,880 Speaker 1: fixed income, it was a disaster. What do I do 135 00:07:42,960 --> 00:07:47,400 Speaker 1: for three? What are you telling your clients? Okay, So 136 00:07:47,440 --> 00:07:49,400 Speaker 1: I've been very vocal that I have been selling on 137 00:07:49,440 --> 00:07:51,320 Speaker 1: any type of rips all year this year because the 138 00:07:51,320 --> 00:07:53,240 Speaker 1: bear market was going to be persistent. Now I'm a 139 00:07:53,280 --> 00:07:56,080 Speaker 1: buyer in the pain that we're gonna feel coming intree. 140 00:07:56,480 --> 00:07:59,240 Speaker 1: So yes, why I use buying pain together? Right? So 141 00:07:59,320 --> 00:08:01,320 Speaker 1: the pain part is the Feds are going to continue 142 00:08:01,360 --> 00:08:03,840 Speaker 1: to step on the gas until he gets what he wants. 143 00:08:03,880 --> 00:08:05,720 Speaker 1: And he's going to get what he wants right in 144 00:08:05,800 --> 00:08:10,000 Speaker 1: terms of bring inflation down. And also the so the 145 00:08:10,000 --> 00:08:12,000 Speaker 1: bi side of the equation is the strength of the 146 00:08:12,000 --> 00:08:15,800 Speaker 1: consumer job markets. Height Jold numbers over ten million, and 147 00:08:15,880 --> 00:08:18,880 Speaker 1: they have their flushwood cash right through the COVID. That 148 00:08:18,920 --> 00:08:21,960 Speaker 1: stimulus money is still there. So with that, how do 149 00:08:22,000 --> 00:08:25,400 Speaker 1: you measure that phil Because we've we've been hearing um 150 00:08:25,560 --> 00:08:29,440 Speaker 1: bankers tell us that those savings are being depleted. There's 151 00:08:29,560 --> 00:08:32,040 Speaker 1: there's so many different types of articles out there that 152 00:08:32,080 --> 00:08:34,200 Speaker 1: are saying six hundred billion or a trillion. It's aggregate 153 00:08:34,240 --> 00:08:36,200 Speaker 1: savings that that we look at from the FED, and 154 00:08:36,240 --> 00:08:38,600 Speaker 1: based on those numbers, there's a trillion dollars that's still 155 00:08:38,679 --> 00:08:40,440 Speaker 1: left started with two trillion beginning a year or at 156 00:08:40,440 --> 00:08:43,240 Speaker 1: the trillion can others are saying six hundred billion or more. 157 00:08:43,520 --> 00:08:46,679 Speaker 1: Just remember about that number though, right the low income household, 158 00:08:46,760 --> 00:08:50,000 Speaker 1: middle income household, they already spent that money. It's the 159 00:08:50,120 --> 00:08:53,600 Speaker 1: upper tier, higher income earners where they still have that money. 160 00:08:53,640 --> 00:08:55,400 Speaker 1: They don't have that much of a present propensity to 161 00:08:55,440 --> 00:08:58,240 Speaker 1: spend money, but they do have that money and it's available, 162 00:08:58,280 --> 00:09:01,040 Speaker 1: and it's gonna provide a cushion under what I believe. 163 00:09:01,240 --> 00:09:04,000 Speaker 1: I think we get a mild recession in three. And 164 00:09:04,040 --> 00:09:08,599 Speaker 1: that's the whole by the Paine trade that I'm talking about. Sorry, David, Yeah, no, 165 00:09:08,800 --> 00:09:11,719 Speaker 1: So David, you know what do you think about that? Um? 166 00:09:11,760 --> 00:09:15,800 Speaker 1: I get the premise, but it just seems like the 167 00:09:15,800 --> 00:09:18,600 Speaker 1: markets have trouble believing the Fed, and every time the 168 00:09:18,679 --> 00:09:22,600 Speaker 1: Fed reminds markets the path it's on, we come crashing 169 00:09:22,640 --> 00:09:27,280 Speaker 1: back down again. Right, But we do believe that the 170 00:09:27,280 --> 00:09:31,000 Speaker 1: Fed is getting its job done. Inflation is definitely breaking. 171 00:09:31,080 --> 00:09:33,200 Speaker 1: So there will be a meeting, whether it's the next 172 00:09:33,200 --> 00:09:36,120 Speaker 1: meeting or the meeting thereafter, where the Fed says, Okay, 173 00:09:36,200 --> 00:09:38,560 Speaker 1: we've raised rights enough. Now we're just gonna watch. And 174 00:09:38,600 --> 00:09:40,280 Speaker 1: at that point, we think the market is going to 175 00:09:40,400 --> 00:09:43,360 Speaker 1: look beyond the Fed, look at the economy, and look 176 00:09:43,360 --> 00:09:47,719 Speaker 1: at beyond the possible recession towards six to twelve months out. Generally, 177 00:09:48,080 --> 00:09:51,840 Speaker 1: stocks will rally as you enter or as you're in 178 00:09:51,880 --> 00:09:55,000 Speaker 1: a recession. So we think with the markets sell off 179 00:09:55,000 --> 00:09:58,400 Speaker 1: in two, that we've discounted a lot of the negatives, 180 00:09:58,600 --> 00:10:00,960 Speaker 1: and we think if you look to tw the twenty three, 181 00:10:01,240 --> 00:10:05,040 Speaker 1: that the market's going to start to discount the negative's lesson, 182 00:10:05,080 --> 00:10:07,280 Speaker 1: start to discount some of the positives and stocks have 183 00:10:07,440 --> 00:10:11,079 Speaker 1: very meaningful upside for here, so we'd be buying, um, 184 00:10:11,200 --> 00:10:13,640 Speaker 1: you know, into this current sell off, you want to 185 00:10:13,679 --> 00:10:16,320 Speaker 1: turn the volume down. We think six to twelve months 186 00:10:16,320 --> 00:10:18,320 Speaker 1: out of stocks are going to be meaningfully higher, and 187 00:10:18,360 --> 00:10:20,600 Speaker 1: there are a lot of great stock prices, really good 188 00:10:20,640 --> 00:10:24,040 Speaker 1: businesses at low valuations that we would just buy and 189 00:10:24,120 --> 00:10:29,560 Speaker 1: turn down the news. So so, Amazon is a company 190 00:10:29,600 --> 00:10:32,640 Speaker 1: that's a great business, but it's always been really richly priced. 191 00:10:32,679 --> 00:10:34,120 Speaker 1: If you look at it now on a price to 192 00:10:34,160 --> 00:10:36,400 Speaker 1: sales or price to ebita basis, it's at a five 193 00:10:36,480 --> 00:10:39,800 Speaker 1: year low, So we like that. Google on technology also 194 00:10:39,880 --> 00:10:44,079 Speaker 1: sixteen times next year's earnings. PayPal is a really good company, 195 00:10:44,120 --> 00:10:47,440 Speaker 1: good growth prospects at sixteen times next year's earnings. And 196 00:10:47,480 --> 00:10:50,599 Speaker 1: then on a more traditional value type of stocks, we 197 00:10:50,720 --> 00:10:55,920 Speaker 1: like Bank of New York, truest Te, Connectivity, Metronic. So 198 00:10:55,960 --> 00:10:58,440 Speaker 1: they're really good businesses out there. Those businesses are all 199 00:10:58,640 --> 00:11:01,000 Speaker 1: like ten eleven times things. When you can do that, 200 00:11:01,280 --> 00:11:03,800 Speaker 1: you're gonna do very well if you have a twelve 201 00:11:03,840 --> 00:11:07,760 Speaker 1: month time frame. They phil you know, we talked to 202 00:11:07,800 --> 00:11:11,640 Speaker 1: fixed income investors. They say two was the worst year 203 00:11:11,880 --> 00:11:15,080 Speaker 1: on record. Is it time to buy bonds here in 204 00:11:15,080 --> 00:11:17,800 Speaker 1: twenty three, yeah, I think is gonna be bit the 205 00:11:17,880 --> 00:11:19,960 Speaker 1: best year on record for fixed income. I think what 206 00:11:19,960 --> 00:11:23,880 Speaker 1: you're gonna see in three is peak inflations. In peak 207 00:11:23,960 --> 00:11:28,160 Speaker 1: rates are in peake dollars in dollar declines, and with 208 00:11:28,200 --> 00:11:31,920 Speaker 1: that you're gonna see bonds rally and rip. You know again, 209 00:11:31,960 --> 00:11:34,120 Speaker 1: I think one of the biggest rips we're gonna see 210 00:11:34,120 --> 00:11:37,640 Speaker 1: in history coming into three. So so I would be 211 00:11:37,880 --> 00:11:41,280 Speaker 1: a buyer even on long duration treasuries which we own 212 00:11:42,120 --> 00:11:45,920 Speaker 1: um within our portfolios, and intermediate term duration treasuries. I 213 00:11:45,920 --> 00:11:48,679 Speaker 1: think those investments going at thee I think you can 214 00:11:48,720 --> 00:11:50,920 Speaker 1: perform really well. So where do you see rates? Then? 215 00:11:53,000 --> 00:11:55,160 Speaker 1: I always say you could overshoot the upside, and I 216 00:11:55,200 --> 00:11:56,920 Speaker 1: feel like we already did that. So I think that 217 00:11:57,000 --> 00:11:59,400 Speaker 1: the peak number is is already in. I don't see 218 00:11:59,480 --> 00:12:01,520 Speaker 1: us going to a five handle on the ten year. 219 00:12:01,559 --> 00:12:03,760 Speaker 1: I think you're at four and a quarter right around 220 00:12:03,760 --> 00:12:05,920 Speaker 1: there peak. Yeah, exactly, So I think that I think 221 00:12:05,920 --> 00:12:08,360 Speaker 1: that peak numbers in going back to what what what 222 00:12:08,440 --> 00:12:10,760 Speaker 1: David just said in terms of the FED, I do 223 00:12:10,840 --> 00:12:12,679 Speaker 1: think the Fed is going to press along more than 224 00:12:12,800 --> 00:12:16,400 Speaker 1: market dispen stink um. So for that reason, it's possible 225 00:12:16,440 --> 00:12:19,120 Speaker 1: we can break the recent peak. I think the odds 226 00:12:19,120 --> 00:12:21,600 Speaker 1: are very low because I think the job as you see, 227 00:12:21,640 --> 00:12:25,080 Speaker 1: as we start to see things go through, as we're 228 00:12:25,080 --> 00:12:26,640 Speaker 1: gonna see inflation come down, I think the FED is 229 00:12:26,679 --> 00:12:29,120 Speaker 1: going to be satisfied and then eventually, just like David said, 230 00:12:29,120 --> 00:12:33,560 Speaker 1: will stop. So, David, one of the sectors that you 231 00:12:33,600 --> 00:12:35,800 Speaker 1: know defined the logic here, or not define logic, but 232 00:12:35,840 --> 00:12:38,880 Speaker 1: certainly defined the weak market in two has been energy. 233 00:12:39,160 --> 00:12:41,719 Speaker 1: Is that played out in your perspective, awards are more 234 00:12:41,800 --> 00:12:44,400 Speaker 1: room to go on the energy trade here. I'm looking 235 00:12:44,400 --> 00:12:46,679 Speaker 1: at w T a crude oil here about seven eight 236 00:12:46,679 --> 00:12:50,800 Speaker 1: bucks a barrel. So we think oil prices can drift 237 00:12:50,840 --> 00:12:52,960 Speaker 1: a little bit higher. But we think oil stocks have 238 00:12:53,080 --> 00:12:54,920 Speaker 1: discounted a lot of the good things. If you look 239 00:12:54,960 --> 00:12:58,960 Speaker 1: at the last seven years, oil stocks have lagged behind 240 00:12:59,080 --> 00:13:03,160 Speaker 1: the oil price on an annual basis. This year oil 241 00:13:03,280 --> 00:13:05,880 Speaker 1: prices are basically flat to maybe up five or ten 242 00:13:05,960 --> 00:13:11,000 Speaker 1: percent UM where is the oil stocks are up fifty 243 00:13:11,520 --> 00:13:13,520 Speaker 1: So we're not looking for a repeat next year. We'd 244 00:13:13,520 --> 00:13:16,480 Speaker 1: be taking some profits in oil stocks. We also would 245 00:13:16,480 --> 00:13:18,959 Speaker 1: be taking profits in consumer stables, which also had a 246 00:13:19,040 --> 00:13:21,439 Speaker 1: great year this year. Um, you know they're at the 247 00:13:21,480 --> 00:13:24,720 Speaker 1: higher end of their valuation ranges, and we'd be redeploying 248 00:13:24,760 --> 00:13:30,160 Speaker 1: into technology, communications services, UM, some medical technology, and the 249 00:13:30,200 --> 00:13:36,960 Speaker 1: banking group. Interesting. So consumer staples taking profits now is 250 00:13:36,960 --> 00:13:39,240 Speaker 1: is a fascinating move because if we do go into 251 00:13:39,840 --> 00:13:42,080 Speaker 1: a recession. I know a lot of people are saying 252 00:13:42,080 --> 00:13:44,840 Speaker 1: we already are in a recession, but consumers seem very confident. 253 00:13:44,880 --> 00:13:47,959 Speaker 1: If we do go into a recession, those consumers are 254 00:13:48,000 --> 00:13:52,520 Speaker 1: likely to buckle down and only buy what they need. Right. Well, 255 00:13:52,720 --> 00:13:54,480 Speaker 1: it's not a question that people are going to buy 256 00:13:54,559 --> 00:13:58,000 Speaker 1: less Kelly cereals or General Mill cereals, or or or 257 00:13:58,040 --> 00:14:01,040 Speaker 1: Pepsi snacks. It's a question that the stock box would 258 00:14:01,120 --> 00:14:03,960 Speaker 1: generally sell at about sixteen times earnings are now at 259 00:14:03,960 --> 00:14:07,600 Speaker 1: about twenty two times earnings. So we think that they 260 00:14:07,640 --> 00:14:10,120 Speaker 1: discounted the recession, you know, whether we're in one now 261 00:14:10,200 --> 00:14:12,240 Speaker 1: or we're going to be in one in a few months. 262 00:14:12,520 --> 00:14:15,080 Speaker 1: And as the market starts to look beyond the recession, 263 00:14:15,080 --> 00:14:17,880 Speaker 1: they're going to say, Okay, the consumer staples did their job. 264 00:14:17,920 --> 00:14:20,520 Speaker 1: They got us through the difficult stock market. Now let's 265 00:14:20,600 --> 00:14:22,680 Speaker 1: use them as a source of funds. We just think 266 00:14:22,720 --> 00:14:25,560 Speaker 1: the businesses are gonna slow, not that they're going to crash, 267 00:14:25,600 --> 00:14:27,840 Speaker 1: but rather the valuations are at the higher end of 268 00:14:27,880 --> 00:14:29,800 Speaker 1: the range. We think they're going to regress to the mean, 269 00:14:30,080 --> 00:14:31,840 Speaker 1: and there are lots of things that are the lower 270 00:14:31,920 --> 00:14:33,760 Speaker 1: end of the range, and we think that's where the 271 00:14:33,760 --> 00:14:35,560 Speaker 1: money is going to go. It's a it's a good point. 272 00:14:35,680 --> 00:14:37,800 Speaker 1: And Phil, I wonder if I could get your take 273 00:14:37,840 --> 00:14:43,359 Speaker 1: on valuations because it's such a fascinating piece of the equation. 274 00:14:43,800 --> 00:14:47,160 Speaker 1: Um where do you see evaluations next year? Investors have 275 00:14:47,240 --> 00:14:50,680 Speaker 1: to recognize that anytime you go into a recession, typically 276 00:14:50,720 --> 00:14:52,560 Speaker 1: in the middle of the recession on averages, where the 277 00:14:52,600 --> 00:14:54,600 Speaker 1: market will bottom and what leads the market out of 278 00:14:54,640 --> 00:14:57,840 Speaker 1: the bottom is technology. So, like David said, I agree 279 00:14:57,840 --> 00:14:59,520 Speaker 1: that I think I think when investors, you know, staples 280 00:14:59,600 --> 00:15:02,160 Speaker 1: right now are rich because the anticipation of a recession, 281 00:15:02,280 --> 00:15:06,520 Speaker 1: so valuations got really high. So rebalance that into the 282 00:15:06,560 --> 00:15:08,880 Speaker 1: technology sector, which he has gotten crushed and there could 283 00:15:08,920 --> 00:15:10,720 Speaker 1: be more pain to to be had in that sector. 284 00:15:11,240 --> 00:15:14,080 Speaker 1: But as you start the dollar course average into that sector. 285 00:15:14,080 --> 00:15:17,000 Speaker 1: There's some great businesses right now that are trading at 286 00:15:17,040 --> 00:15:20,280 Speaker 1: really great multiples and a great example that and David mentioned, 287 00:15:20,280 --> 00:15:23,120 Speaker 1: it's something that is on our list to buy is Google. Right, 288 00:15:23,120 --> 00:15:24,840 Speaker 1: I've always want to be a big ownering Google, and 289 00:15:24,880 --> 00:15:26,840 Speaker 1: I think you know now is a great opportunity to 290 00:15:26,880 --> 00:15:30,680 Speaker 1: forward multiple is extremely attractive, free cash flow is one 291 00:15:30,720 --> 00:15:32,240 Speaker 1: of the best I've ever seen within the business. To 292 00:15:32,280 --> 00:15:36,040 Speaker 1: return on investment capital is and it's a and it's 293 00:15:36,040 --> 00:15:38,400 Speaker 1: a growing business. And it's down right now because the 294 00:15:38,440 --> 00:15:41,239 Speaker 1: ads spend. Right eight percent of the business is advertising, 295 00:15:41,560 --> 00:15:43,880 Speaker 1: so it's trading down because of that. But again, once 296 00:15:43,920 --> 00:15:47,640 Speaker 1: we rebound a trough out with the economy and get 297 00:15:47,640 --> 00:15:49,320 Speaker 1: on the get out on the other side of this, 298 00:15:49,640 --> 00:15:51,800 Speaker 1: Google is going to be a winner and other type 299 00:15:51,840 --> 00:15:54,760 Speaker 1: of technology stocks. You gotta be forward thinking as an investor. 300 00:15:54,800 --> 00:15:56,600 Speaker 1: You can't just say, Okay, recession is coming, let me 301 00:15:56,640 --> 00:15:58,880 Speaker 1: just load up in staple stocks. You know that trade 302 00:15:58,920 --> 00:16:00,720 Speaker 1: is done already. It's it's want to move on and 303 00:16:00,880 --> 00:16:03,440 Speaker 1: get ready for the recovery. I think the news today 304 00:16:03,480 --> 00:16:07,640 Speaker 1: on Google is uh YouTube, which Google owns, agrees on 305 00:16:07,680 --> 00:16:11,200 Speaker 1: a deal for the NFL Sunday ticket two billion dollars, 306 00:16:11,520 --> 00:16:14,480 Speaker 1: so taking away from direct TV. So that's huge, But wait, 307 00:16:14,600 --> 00:16:16,640 Speaker 1: does that mean you get all the games? All the games? 308 00:16:17,120 --> 00:16:19,720 Speaker 1: So it's only two billion dollars for that, Yeah, for 309 00:16:19,840 --> 00:16:22,640 Speaker 1: a year, So it's pretty good. All right, guys, thanks 310 00:16:22,640 --> 00:16:24,800 Speaker 1: so much for joining us. That was the big news 311 00:16:24,840 --> 00:16:27,320 Speaker 1: I thought this morning. You know, Sunday Ticket, which was 312 00:16:27,360 --> 00:16:30,200 Speaker 1: on Direct TV for years and years, is now on Google. 313 00:16:30,240 --> 00:16:32,960 Speaker 1: So we're going tech. Philip Palumbo, CEO and founder of 314 00:16:32,960 --> 00:16:34,880 Speaker 1: Plumbo Wealth Management, thanks so much for joining us. In 315 00:16:34,960 --> 00:16:38,600 Speaker 1: David Kat's with Matrix Asset Advisors. Those guys agree too often. 316 00:16:38,920 --> 00:16:41,120 Speaker 1: They're pretty good, yeah, but they agree with each other. 317 00:16:41,200 --> 00:16:44,480 Speaker 1: We need to get get we can find that because 318 00:16:44,480 --> 00:16:47,120 Speaker 1: I mean we got There's a lot of bears out there, um, 319 00:16:47,240 --> 00:16:48,920 Speaker 1: folks that are just saying, hey, how can I buy 320 00:16:48,920 --> 00:16:51,880 Speaker 1: stocks in front of a recession? But uh, both Phil 321 00:16:51,920 --> 00:16:54,480 Speaker 1: and David saying, hey, that's kind of priced into the 322 00:16:54,520 --> 00:17:00,240 Speaker 1: market here, um, and we've got room to go. Thread 323 00:17:00,280 --> 00:17:04,480 Speaker 1: headline crossing the Blueberg terminal. Uh. Matt Guggenheim's Scott Miner 324 00:17:04,640 --> 00:17:09,200 Speaker 1: has died. Person familiar says uh, and we see it. 325 00:17:09,480 --> 00:17:15,639 Speaker 1: We have a report from the company that he died yesterday, Wednesday, 326 00:17:15,920 --> 00:17:19,200 Speaker 1: December one, from a heart attack during his regular workout. 327 00:17:19,240 --> 00:17:21,639 Speaker 1: He was sixty three years old. Scott Minored was a 328 00:17:21,680 --> 00:17:26,480 Speaker 1: founding partner global Chief Investment Officer and chairman of Guggenheim Partners. 329 00:17:26,480 --> 00:17:29,040 Speaker 1: So one of the leaders, one of the leading voices 330 00:17:29,160 --> 00:17:32,840 Speaker 1: on Wall Street passed away unexpected. Yeah, absolutely, one of 331 00:17:33,359 --> 00:17:37,679 Speaker 1: um early the oracles that we talked to, well, we 332 00:17:37,720 --> 00:17:40,960 Speaker 1: try to talk to on a regular basis, and who 333 00:17:41,560 --> 00:17:46,119 Speaker 1: has so much depth in terms of his knowledge on 334 00:17:46,240 --> 00:17:53,359 Speaker 1: everything from fixed income UM to equities to crypto. And 335 00:17:55,320 --> 00:17:58,280 Speaker 1: it's just far too he's far too young, sixty three 336 00:17:58,359 --> 00:18:02,639 Speaker 1: years old, and he shaped UM Googgenheim together with Mark Walter. 337 00:18:02,720 --> 00:18:05,440 Speaker 1: Let's bring in Tom Keene right now, who interviewed got 338 00:18:05,480 --> 00:18:11,719 Speaker 1: minored countless times. And um, Tom, what are your immediate thoughts? 339 00:18:11,760 --> 00:18:15,000 Speaker 1: I mean, really a fixed income guru in a way. Yeah, 340 00:18:15,200 --> 00:18:18,199 Speaker 1: I would go further than that. And that what we 341 00:18:18,400 --> 00:18:21,200 Speaker 1: loved about I can't believe I'm talking in the past tense. 342 00:18:21,240 --> 00:18:25,120 Speaker 1: What we loved about Mr Minord was he approached this 343 00:18:25,600 --> 00:18:29,679 Speaker 1: differently than most strategists, differently than most traders, and that 344 00:18:29,800 --> 00:18:35,879 Speaker 1: this guy was at heart a certified public accountant and 345 00:18:35,960 --> 00:18:39,720 Speaker 1: that made him hugely unique And the one I would 346 00:18:39,760 --> 00:18:45,200 Speaker 1: really lean on on this at this terrific shock and 347 00:18:45,200 --> 00:18:48,160 Speaker 1: and just sadness. If you will love Scott Minor dying 348 00:18:49,119 --> 00:18:54,520 Speaker 1: is the era of Bob Diamond, of the era of trading, 349 00:18:55,040 --> 00:18:58,720 Speaker 1: and it was back in the nineties with lots of volatility, 350 00:18:58,840 --> 00:19:01,639 Speaker 1: particularly Scott's were I believe at the time it was 351 00:19:01,680 --> 00:19:05,800 Speaker 1: at Morgan Stanley on European Credit, and he just approached 352 00:19:05,840 --> 00:19:09,359 Speaker 1: it totally differently as he does on our FED show 353 00:19:09,680 --> 00:19:13,080 Speaker 1: every FED meeting. He approaches it totally differently, and that 354 00:19:13,160 --> 00:19:16,280 Speaker 1: was the value that we saw. We have to remind 355 00:19:16,320 --> 00:19:19,399 Speaker 1: ourselves this is a guy who walked away from Wall 356 00:19:19,440 --> 00:19:23,000 Speaker 1: Street like you did. Uh, Paul Sweeney at thirty seven 357 00:19:23,080 --> 00:19:26,600 Speaker 1: years old. Yeah, it's you know, he he made it. 358 00:19:27,040 --> 00:19:28,960 Speaker 1: He made it interesting. I'm just as you mentioned Tom 359 00:19:29,280 --> 00:19:32,480 Speaker 1: starting on as an accountant Price Waterhouse, then what the 360 00:19:32,520 --> 00:19:35,879 Speaker 1: Continental Bank, Assault Lake and Meryll Lynch, Morgan Stanley, Credit 361 00:19:35,960 --> 00:19:40,320 Speaker 1: Swiss before going to Googgenheim Capital and becoming their chief 362 00:19:40,359 --> 00:19:44,360 Speaker 1: investment officer than chairman and managing partner. He could retire. 363 00:19:44,520 --> 00:19:49,760 Speaker 1: I mean, he's so smart and again so different and 364 00:19:49,880 --> 00:19:52,600 Speaker 1: his his brain works. So I have to talk in 365 00:19:52,600 --> 00:19:55,600 Speaker 1: the present tense. I can't get to the past tense 366 00:19:55,600 --> 00:19:59,840 Speaker 1: with Mr Miner that that there's such an acute and 367 00:20:00,200 --> 00:20:04,040 Speaker 1: different analysis. That's what made him valuable. Not only do 368 00:20:04,119 --> 00:20:07,720 Speaker 1: all those firms, but you know they understood he didn't 369 00:20:07,760 --> 00:20:11,639 Speaker 1: have to work. I mean, he was independently wealthy in 370 00:20:11,640 --> 00:20:16,439 Speaker 1: his late thirties into his forties, and uh kept wandering 371 00:20:16,520 --> 00:20:18,600 Speaker 1: back to Wall Street as he did when they set 372 00:20:18,640 --> 00:20:22,840 Speaker 1: up a wonderfully successful because it wasn't about work for him. 373 00:20:23,240 --> 00:20:27,679 Speaker 1: He thought of the markets, finance, economics the way normal 374 00:20:27,680 --> 00:20:29,600 Speaker 1: people think about sports. And by the way, he thought 375 00:20:29,600 --> 00:20:31,840 Speaker 1: about sports a lot as well. So this was just 376 00:20:31,960 --> 00:20:35,040 Speaker 1: part of his life, which is why he was such 377 00:20:35,040 --> 00:20:39,520 Speaker 1: a pleasure to talk to about, you know, these issues. 378 00:20:40,240 --> 00:20:45,200 Speaker 1: And he was so thoughtful because he lived um Wall 379 00:20:45,280 --> 00:20:50,000 Speaker 1: Street and uh, you know the rates story and his 380 00:20:50,080 --> 00:20:56,080 Speaker 1: takes were always um so fascinating because they weren't consensus. Tom. Uh, 381 00:20:56,359 --> 00:20:58,439 Speaker 1: what's it been like having him on the Fed? The 382 00:20:58,440 --> 00:21:02,280 Speaker 1: Fed decides it's a you and Bramo and Pharaoh. Every 383 00:21:02,720 --> 00:21:06,159 Speaker 1: FED meeting, stay late into the afternoon and talked to 384 00:21:06,160 --> 00:21:09,159 Speaker 1: Scott and we usually spend the next day playing you know, 385 00:21:09,240 --> 00:21:11,760 Speaker 1: sound bites of what he told you. Well, it was 386 00:21:11,800 --> 00:21:14,520 Speaker 1: great because it mixed up so well with the other thinking, 387 00:21:14,560 --> 00:21:17,520 Speaker 1: you know, where the surveillance is completely focused on critical 388 00:21:17,560 --> 00:21:21,640 Speaker 1: thinking skills and they can be different. And Mohammad Hilarion 389 00:21:21,720 --> 00:21:25,600 Speaker 1: has a certain framework from his legitimate PhD work in 390 00:21:25,680 --> 00:21:31,000 Speaker 1: game theory. And Diane Swunk has that classic economic analysis 391 00:21:31,000 --> 00:21:34,480 Speaker 1: of the University of Michigan. And again what Scott Minor 392 00:21:34,600 --> 00:21:41,240 Speaker 1: brought was this almost it appeared slow motion analysis of 393 00:21:41,280 --> 00:21:44,639 Speaker 1: looking at the transactions, whether it was economic policy like 394 00:21:44,680 --> 00:21:47,600 Speaker 1: the FED or the bond market. Here the statement now 395 00:21:47,640 --> 00:21:53,040 Speaker 1: out from Guggenheim Mark Walter Matt Miller, as you mentioned quote, 396 00:21:53,040 --> 00:21:55,240 Speaker 1: I have known Scott for over thirty years. We were 397 00:21:55,280 --> 00:21:57,879 Speaker 1: partners much of that time. Scott was a key innovator 398 00:21:58,600 --> 00:22:01,520 Speaker 1: and thought leader who was in trumental in building Guggenheim 399 00:22:01,560 --> 00:22:05,200 Speaker 1: Investments into the global business it is today. He will 400 00:22:05,240 --> 00:22:09,600 Speaker 1: be greatly missed by all condolences or with his husband, 401 00:22:09,640 --> 00:22:13,560 Speaker 1: family and loved ones as as well. So a statement 402 00:22:13,600 --> 00:22:16,960 Speaker 1: from Guggenheim there on on this shock. There's no other 403 00:22:17,000 --> 00:22:19,920 Speaker 1: way to put Guggenheim in their statement is obviously they're 404 00:22:19,960 --> 00:22:23,480 Speaker 1: trying to uh calm the concerns with some of their clients, 405 00:22:23,480 --> 00:22:26,959 Speaker 1: saying Guggenheim has implemented its succession plan, which is designed 406 00:22:26,960 --> 00:22:30,760 Speaker 1: to deal with unexpected events. Guggenheim Investments has nine employees, 407 00:22:30,760 --> 00:22:35,159 Speaker 1: more than three or fifty of whom our investment professionals. So, uh, Googgenheim, 408 00:22:35,240 --> 00:22:37,359 Speaker 1: you know, trying to make clear to their clients that 409 00:22:37,480 --> 00:22:39,800 Speaker 1: it is you know, business will continue to go. But 410 00:22:39,840 --> 00:22:41,720 Speaker 1: the fact is, and I'm sure Mark would tell you 411 00:22:41,760 --> 00:22:46,679 Speaker 1: as well a Scott Minor, it is really irreplaceable. You know. 412 00:22:46,720 --> 00:22:52,160 Speaker 1: If I think about um, the great commentators that I've 413 00:22:52,200 --> 00:22:54,399 Speaker 1: been watching on surveillance for the last I don't know, 414 00:22:54,480 --> 00:22:59,080 Speaker 1: ten fifteen years, He's among a handful of people that 415 00:22:59,119 --> 00:23:01,640 Speaker 1: I'm always excited did to watch that I always stopped 416 00:23:01,640 --> 00:23:03,880 Speaker 1: to turn up the volume four, that I always remember 417 00:23:03,920 --> 00:23:06,480 Speaker 1: what he said that I always, you know, use in 418 00:23:06,560 --> 00:23:10,280 Speaker 1: my show the next day. Um, and I get what 419 00:23:10,520 --> 00:23:13,240 Speaker 1: Mark and Guggenheim are saying. We have a succession plan, 420 00:23:13,560 --> 00:23:22,960 Speaker 1: but he is an irreplaceable. Uh. Personally, look at the 421 00:23:23,040 --> 00:23:26,719 Speaker 1: lead in this story. The data are so important. Steph 422 00:23:26,840 --> 00:23:30,680 Speaker 1: were once instructed to have no facial expressions when walking 423 00:23:30,720 --> 00:23:32,440 Speaker 1: the reports into the West wing of the White House, 424 00:23:32,440 --> 00:23:35,000 Speaker 1: and yet a surge in trading last week and the 425 00:23:35,080 --> 00:23:38,919 Speaker 1: minutes before the release of the Consumer Price Index, closely 426 00:23:38,920 --> 00:23:42,600 Speaker 1: watched US inflation measure spurred concerns The figures fell into 427 00:23:42,640 --> 00:23:48,840 Speaker 1: the wrong hands. The reporter uh that read Pickert, along 428 00:23:48,880 --> 00:23:51,640 Speaker 1: with a colleague at Christopher Condon, reported that read, thanks 429 00:23:51,680 --> 00:23:55,360 Speaker 1: so much for joining us here. What happened here? I mean, 430 00:23:55,920 --> 00:23:57,960 Speaker 1: this is a fascinating article that you have on the 431 00:23:57,960 --> 00:24:02,320 Speaker 1: Bloomberg terminal talking about some surge and trading um, just 432 00:24:02,400 --> 00:24:06,600 Speaker 1: the minutes before that CPI data was released, right, And 433 00:24:06,600 --> 00:24:08,879 Speaker 1: and it's important to say that that we don't know 434 00:24:08,920 --> 00:24:13,199 Speaker 1: what happened. We saw some you know, unusual buying of 435 00:24:13,320 --> 00:24:17,199 Speaker 1: treasury features in a time where typically there's not a 436 00:24:17,200 --> 00:24:21,480 Speaker 1: lot of treading. And essentially folks got ahead of that 437 00:24:21,920 --> 00:24:24,679 Speaker 1: rally that we saw when the inflation data came in 438 00:24:24,800 --> 00:24:28,160 Speaker 1: lower than expected or you know, better than expected. And 439 00:24:28,560 --> 00:24:31,840 Speaker 1: so this story is kind of meant to look at 440 00:24:32,240 --> 00:24:35,560 Speaker 1: what the timeline leading up to those releases look like, 441 00:24:36,240 --> 00:24:40,520 Speaker 1: because you know, quite a few people do see this report. Um. 442 00:24:40,560 --> 00:24:44,520 Speaker 1: But it's a really tightly controlled process and it's you know, 443 00:24:44,600 --> 00:24:47,240 Speaker 1: kind of like clockwork in terms of how it moves 444 00:24:47,280 --> 00:24:50,720 Speaker 1: through this process, who all sees it, um, the types 445 00:24:50,760 --> 00:24:53,360 Speaker 1: of agreements that people are are sworn to in terms 446 00:24:53,400 --> 00:24:57,800 Speaker 1: of not sharing this information, um. And so the point 447 00:24:57,840 --> 00:25:00,919 Speaker 1: of this article was really to inform people from you know, 448 00:25:00,960 --> 00:25:03,080 Speaker 1: about a week ahead of the report up until the 449 00:25:03,160 --> 00:25:07,080 Speaker 1: minutes right before. Who really sees and touches this highly 450 00:25:07,119 --> 00:25:12,639 Speaker 1: sensitive information And so it could be I mean, it 451 00:25:12,680 --> 00:25:17,240 Speaker 1: could be that someone just made a big bet, a 452 00:25:17,359 --> 00:25:20,000 Speaker 1: very prescient bet, at the right time. I'm sure you 453 00:25:20,040 --> 00:25:21,600 Speaker 1: want to be if you're making that kind of bet, 454 00:25:21,640 --> 00:25:25,080 Speaker 1: trading in the minutes before the release, not you know, 455 00:25:25,200 --> 00:25:28,480 Speaker 1: days before or weeks before, um and then getting out 456 00:25:28,560 --> 00:25:33,480 Speaker 1: right away. Uh. But it looks suspicious because we don't 457 00:25:33,520 --> 00:25:37,480 Speaker 1: see that kind of movement. We haven't seen it at 458 00:25:37,480 --> 00:25:41,280 Speaker 1: the release of other reports right exactly. And you know, 459 00:25:41,560 --> 00:25:44,720 Speaker 1: given the timing of it and picking the right direction 460 00:25:44,800 --> 00:25:48,640 Speaker 1: of it on an indicator that economists have been persistently, 461 00:25:49,000 --> 00:25:51,720 Speaker 1: frankly wrong on, there's only two directions, so you've got 462 00:25:51,720 --> 00:25:54,040 Speaker 1: a pretty good chance of getting the pretty good chance. 463 00:25:54,480 --> 00:25:57,720 Speaker 1: But whoever, whoever, whatever, whoever made those trades, they turned 464 00:25:57,720 --> 00:26:00,000 Speaker 1: out to be quite profitable. So we really wanted to 465 00:26:00,119 --> 00:26:02,959 Speaker 1: do our due diligence here. And you know, something that 466 00:26:03,000 --> 00:26:06,479 Speaker 1: was really interesting in terms of looking into kind of 467 00:26:06,520 --> 00:26:09,280 Speaker 1: what this process looks like, UM is you know, in 468 00:26:09,320 --> 00:26:11,960 Speaker 1: the lead, you know, my colleague Chris Condon talked to 469 00:26:12,000 --> 00:26:13,760 Speaker 1: someone who you know, used to work at the c 470 00:26:13,960 --> 00:26:16,400 Speaker 1: e A and she was even saying, you know that 471 00:26:16,640 --> 00:26:20,200 Speaker 1: they because they knew reporters were outside, they really tried 472 00:26:20,240 --> 00:26:22,960 Speaker 1: to not have facial expressions when they were walking this data. 473 00:26:23,160 --> 00:26:27,200 Speaker 1: There's a lot of secure transfers of this data. Um, 474 00:26:27,240 --> 00:26:30,680 Speaker 1: there's all kinds of rules about who can see it 475 00:26:30,800 --> 00:26:33,960 Speaker 1: and win and UM, it was really amazing. I mean 476 00:26:34,400 --> 00:26:37,399 Speaker 1: a former BLS commissioner, So the BLS, the Bureau of 477 00:26:37,440 --> 00:26:40,720 Speaker 1: Labor Statistics is who produces this report. And you know 478 00:26:40,800 --> 00:26:44,120 Speaker 1: she mentioned that, you know, when she was commissioner UM 479 00:26:44,480 --> 00:26:47,320 Speaker 1: several years ago, I had a big reports that they 480 00:26:47,400 --> 00:26:50,199 Speaker 1: used to not even let maintenance staff empty the trash 481 00:26:50,280 --> 00:26:54,960 Speaker 1: cans um for fear of folksing the numbers early. So 482 00:26:55,320 --> 00:26:58,120 Speaker 1: it was a really interesting one. Is a really interesting 483 00:26:58,119 --> 00:27:02,880 Speaker 1: story to report out. So is there any formal review 484 00:27:02,880 --> 00:27:05,320 Speaker 1: of this trading activity? Is the SEC looking into it 485 00:27:05,440 --> 00:27:07,040 Speaker 1: or what kind of where does it standard? Because this 486 00:27:07,119 --> 00:27:10,720 Speaker 1: kind of trading is traceable in the past, authorities have 487 00:27:10,760 --> 00:27:15,600 Speaker 1: found needles in bigger haystacks. Yeah, so you know, we 488 00:27:15,640 --> 00:27:18,920 Speaker 1: did reach out to both the SEC and the cftc UM. 489 00:27:18,960 --> 00:27:23,840 Speaker 1: The SEC UM sadly declined to comment on whether the 490 00:27:23,920 --> 00:27:27,320 Speaker 1: exist since or non existence of a possible investigation, and 491 00:27:27,359 --> 00:27:30,200 Speaker 1: the CFTC declined to comment. UM, but both of those 492 00:27:30,240 --> 00:27:34,840 Speaker 1: regulators could have authority to kind of investigate any potential 493 00:27:34,880 --> 00:27:37,800 Speaker 1: attempts to manipulate the treasuries market. That you know, I 494 00:27:37,840 --> 00:27:40,919 Speaker 1: think what's studying about this kind of just whole story 495 00:27:40,960 --> 00:27:45,439 Speaker 1: and conundrum is it's really captured the attention of market 496 00:27:45,480 --> 00:27:48,880 Speaker 1: participants because of how odd it was and how closely 497 00:27:48,880 --> 00:27:52,040 Speaker 1: watched this measure is UM. And so it's certainly something 498 00:27:52,080 --> 00:27:55,800 Speaker 1: that kind of we're trying to report out as thoroughly 499 00:27:55,840 --> 00:27:58,199 Speaker 1: as we can, and hopefully we'll have more stories on 500 00:27:58,240 --> 00:28:00,320 Speaker 1: in the future as we try to dig into this 501 00:28:00,359 --> 00:28:02,840 Speaker 1: a little bit more, because you know, right now it's 502 00:28:03,280 --> 00:28:06,840 Speaker 1: it's it's really unclear what what actually happened. We the 503 00:28:06,920 --> 00:28:09,439 Speaker 1: government has said that there was no leak. UM, the 504 00:28:09,440 --> 00:28:14,320 Speaker 1: BLS has said that their systems weren't compromised in any way. UM, 505 00:28:14,359 --> 00:28:18,280 Speaker 1: we don't know if someone was somehow managed to scrape 506 00:28:18,320 --> 00:28:21,440 Speaker 1: the data off of BLS is data at website early 507 00:28:21,720 --> 00:28:24,120 Speaker 1: or something like that, and you know, we don't know 508 00:28:24,160 --> 00:28:26,399 Speaker 1: if there was a leak. It's just it's kind of 509 00:28:26,400 --> 00:28:29,080 Speaker 1: amazing that we how little we kind of know about 510 00:28:29,800 --> 00:28:31,919 Speaker 1: what could have happened here, or it might have just 511 00:28:32,000 --> 00:28:34,720 Speaker 1: been a really good bet. As you said, all right, Red, 512 00:28:34,840 --> 00:28:37,359 Speaker 1: you're the U S Economy reporter. We had a GDP 513 00:28:37,840 --> 00:28:40,520 Speaker 1: number come out today, pretty darn good, three point two 514 00:28:40,800 --> 00:28:43,400 Speaker 1: the third reading. What's up? I think it was the 515 00:28:43,440 --> 00:28:47,680 Speaker 1: third reading, So it's I mean, unless unless we're really 516 00:28:47,680 --> 00:28:49,600 Speaker 1: bad at measuring this stuff, it has to be pretty 517 00:28:49,600 --> 00:28:51,720 Speaker 1: close to in line with the last two readings, right, 518 00:28:51,760 --> 00:28:53,400 Speaker 1: But then it was a little bit i mean stronger 519 00:28:53,400 --> 00:28:56,440 Speaker 1: than expected. What did you take from that? Yeah, So, 520 00:28:56,440 --> 00:28:59,720 Speaker 1: so basically the main thing that moved this this number 521 00:28:59,880 --> 00:29:03,160 Speaker 1: is that you saw UM stronger business investment and stronger 522 00:29:03,160 --> 00:29:08,200 Speaker 1: consumers spending, and the consumer spending upward revision really reflected 523 00:29:08,720 --> 00:29:11,400 Speaker 1: UM bringing in some new services data and showed that 524 00:29:11,480 --> 00:29:15,000 Speaker 1: services spending was you know, better than expected in the quarter. 525 00:29:15,560 --> 00:29:18,680 Speaker 1: And what what I find really interesting about this is 526 00:29:19,280 --> 00:29:23,440 Speaker 1: it really shows that, you know, the economy really re 527 00:29:23,560 --> 00:29:27,320 Speaker 1: accelerated in the second half of the year, and we've 528 00:29:27,320 --> 00:29:31,160 Speaker 1: really seen that across quarterly data as well as monthly data. 529 00:29:31,280 --> 00:29:33,840 Speaker 1: And it's kind of this unique moment where we're in 530 00:29:34,320 --> 00:29:38,080 Speaker 1: where you know, everything was slowing down, and it seems 531 00:29:38,120 --> 00:29:40,680 Speaker 1: to be speeding back up again. All right, great stuff. 532 00:29:40,960 --> 00:29:43,920 Speaker 1: Read Picker U s economy reporter and editor for Bloomberg News, 533 00:29:44,320 --> 00:29:48,160 Speaker 1: former reporter at The Cavalier Daily. At u v A, 534 00:29:51,680 --> 00:29:53,760 Speaker 1: it's talk energy. I'm talking at w T I crude 535 00:29:53,760 --> 00:29:56,640 Speaker 1: oil here, seventy eight dollars a barrel kind of holding 536 00:29:56,680 --> 00:30:00,360 Speaker 1: steady here. Um, but boy, down from that high earlier 537 00:30:00,360 --> 00:30:02,360 Speaker 1: New year of about one twenty. But a lot of 538 00:30:02,360 --> 00:30:04,280 Speaker 1: people are still bullish on the energy space show. I 539 00:30:04,320 --> 00:30:07,080 Speaker 1: kind of feel like I missed my opportunity quite frankly. 540 00:30:07,240 --> 00:30:10,360 Speaker 1: Those stocks have ripped uh this year. Let's talk to uh, 541 00:30:10,600 --> 00:30:12,600 Speaker 1: somebody who does a lot of this energy stuff, Danny 542 00:30:12,680 --> 00:30:15,880 Speaker 1: Rice the Fourth. He's our a C director for Rice 543 00:30:16,000 --> 00:30:20,480 Speaker 1: Acquisition Corporation. Danny, thanks so much for joining us here. 544 00:30:21,080 --> 00:30:23,080 Speaker 1: What are you guys doing at RICE these days? I'm 545 00:30:23,120 --> 00:30:27,200 Speaker 1: assuming you're acquiring energy assets. Yeah, Paul Matt, great to 546 00:30:27,200 --> 00:30:29,520 Speaker 1: be with you guys. Um. So, we we formed Rice 547 00:30:29,560 --> 00:30:32,760 Speaker 1: Acquisition Corps about a year and a half ago, really 548 00:30:32,840 --> 00:30:36,560 Speaker 1: charged with the mandate of going to find in taking 549 00:30:36,560 --> 00:30:40,680 Speaker 1: public a private company that's developing, um what we call 550 00:30:40,760 --> 00:30:49,920 Speaker 1: the energy trifecta which is clean, low cost, reliable power. So, uh, 551 00:30:50,160 --> 00:30:54,000 Speaker 1: what are we talking about in that sense, um gas, 552 00:30:54,240 --> 00:30:58,320 Speaker 1: natural gas. Well, we're really looking at everything. I think 553 00:30:58,360 --> 00:31:01,600 Speaker 1: what we've really seen over the last couple of is 554 00:31:01,640 --> 00:31:05,320 Speaker 1: consumers and companies they've become a lot more just environmentally conscious, 555 00:31:05,360 --> 00:31:08,040 Speaker 1: and they're starting to say, not only do I want 556 00:31:08,040 --> 00:31:10,800 Speaker 1: my energy to be low cost and reliable, which is 557 00:31:10,840 --> 00:31:12,960 Speaker 1: how it's been for the last hundred years, but they're 558 00:31:12,960 --> 00:31:14,520 Speaker 1: all of a sudden us saying we want it to 559 00:31:14,520 --> 00:31:16,760 Speaker 1: be clean, we want it to be low carbon, we 560 00:31:16,800 --> 00:31:19,479 Speaker 1: wanted to have load and no emissions. And so we 561 00:31:19,480 --> 00:31:21,800 Speaker 1: were really tasked with that mandate of going and finding 562 00:31:21,800 --> 00:31:26,560 Speaker 1: a private company across the entire energy space that's developing 563 00:31:26,720 --> 00:31:29,920 Speaker 1: some really novel exciting stuff to be able to deliver 564 00:31:30,000 --> 00:31:34,120 Speaker 1: that energy trifecta. And so we're actually taking in public 565 00:31:34,160 --> 00:31:36,840 Speaker 1: a company called net Power, and what net Powers developed 566 00:31:36,840 --> 00:31:40,600 Speaker 1: as an entirely new power generation process that uses natural 567 00:31:40,600 --> 00:31:44,320 Speaker 1: gas to create power to create electricity. But in their 568 00:31:44,400 --> 00:31:49,320 Speaker 1: really novel patented process, it captures nearly of the emissions 569 00:31:49,440 --> 00:31:52,719 Speaker 1: from net power generation cycle. And so not only can 570 00:31:52,760 --> 00:31:55,640 Speaker 1: we deliver that low cost, reliable energy that typically comes 571 00:31:55,640 --> 00:32:00,360 Speaker 1: from fossil fields, but now it automatically becomes clean because 572 00:32:00,360 --> 00:32:03,240 Speaker 1: of those low emissions as a result of this patented 573 00:32:03,280 --> 00:32:05,680 Speaker 1: process that the company has invented over the course of 574 00:32:05,720 --> 00:32:10,120 Speaker 1: the last twelve years. So my immediate thought, especially if 575 00:32:10,160 --> 00:32:15,720 Speaker 1: I think of Texas is fracking um here in the Northeast. 576 00:32:15,960 --> 00:32:18,240 Speaker 1: It hasn't got such a great reputation. How do you 577 00:32:18,280 --> 00:32:22,040 Speaker 1: sell that? Yep, So it's it's quite interesting. So I 578 00:32:22,040 --> 00:32:25,400 Speaker 1: actually got my start in the shale patch. I started 579 00:32:25,400 --> 00:32:27,360 Speaker 1: a company back in two thousand and seven with my 580 00:32:27,400 --> 00:32:29,680 Speaker 1: brothers called Rice Energy, and over the course of the 581 00:32:29,720 --> 00:32:32,000 Speaker 1: next ten years, we grew it into one of the 582 00:32:32,040 --> 00:32:36,080 Speaker 1: largest natural gas producers in this country, primarily from shale development. 583 00:32:36,520 --> 00:32:38,360 Speaker 1: And I think one of the interesting things if you 584 00:32:38,400 --> 00:32:41,880 Speaker 1: look at shale development, particularly for natural gas here in 585 00:32:41,880 --> 00:32:44,560 Speaker 1: the United States, we have an amazing abundance of it, 586 00:32:45,080 --> 00:32:47,520 Speaker 1: and not only an amazing abundance of it, but it's 587 00:32:47,520 --> 00:32:50,360 Speaker 1: actually a lower carbon intensity than coal. And so what 588 00:32:50,440 --> 00:32:52,880 Speaker 1: we saw over that ten year period from seven to 589 00:32:52,960 --> 00:32:56,080 Speaker 1: eight team as we saw natural gas actually starting to 590 00:32:56,160 --> 00:32:59,280 Speaker 1: replace coal for power generation, and in the course of 591 00:32:59,280 --> 00:33:01,960 Speaker 1: doing so, we had she saw a reduction in US 592 00:33:02,000 --> 00:33:05,040 Speaker 1: c O two emissions and for us that really sparked 593 00:33:05,080 --> 00:33:07,760 Speaker 1: this idea of if we can find ways to decarbonize 594 00:33:07,800 --> 00:33:11,440 Speaker 1: natural gas even more, that actually becomes the most impactful 595 00:33:11,440 --> 00:33:15,960 Speaker 1: way to achieve our climate ambitions, both here domestically but 596 00:33:16,120 --> 00:33:19,320 Speaker 1: also internationally. I think it's important for people to understand 597 00:33:21,000 --> 00:33:24,640 Speaker 1: of World CEO two emissions comes from natural gas and 598 00:33:24,640 --> 00:33:27,560 Speaker 1: coal fired power generation, and so that's really the market 599 00:33:27,560 --> 00:33:31,440 Speaker 1: opportunity that we're really going after with net powers technology 600 00:33:31,560 --> 00:33:34,840 Speaker 1: is to be able to eliminate the emissions from the 601 00:33:34,920 --> 00:33:38,719 Speaker 1: eighteen thousand coal and gas fired power plants really powering 602 00:33:38,760 --> 00:33:41,480 Speaker 1: the world today. So, Daniel, one of the things I think, 603 00:33:41,680 --> 00:33:43,600 Speaker 1: at least I've learned over the last a couple of 604 00:33:43,680 --> 00:33:46,160 Speaker 1: years and maybe just thinking about the energy crisis in 605 00:33:46,240 --> 00:33:50,720 Speaker 1: Europe precipitated in part by the war in Ukraine, is Okay, 606 00:33:50,760 --> 00:33:53,240 Speaker 1: we all want to get to a green energy grid, 607 00:33:53,720 --> 00:33:56,520 Speaker 1: but it's going to take a while, and in interim 608 00:33:56,600 --> 00:33:59,760 Speaker 1: we need to have plenty of oil and gas and 609 00:34:00,000 --> 00:34:03,080 Speaker 1: liquified natural gas. We gotta have the fossil stuff, maybe 610 00:34:03,120 --> 00:34:06,200 Speaker 1: not maybe not the coal. But how do you how 611 00:34:06,200 --> 00:34:08,080 Speaker 1: do you think about it? How did the folks in 612 00:34:08,120 --> 00:34:12,919 Speaker 1: your energy world think about that? Yeah? And I think 613 00:34:12,920 --> 00:34:15,560 Speaker 1: this gets back to exactly why why net power is 614 00:34:15,760 --> 00:34:19,040 Speaker 1: really really special is I think forever everybody said we 615 00:34:19,080 --> 00:34:22,279 Speaker 1: need access to low cost, reliable energy. And then when 616 00:34:22,360 --> 00:34:24,680 Speaker 1: when this clean movement really started to pick up, as 617 00:34:24,800 --> 00:34:28,480 Speaker 1: people started to say there is an environmental impact, um 618 00:34:28,600 --> 00:34:31,480 Speaker 1: global warming is real and it's really because of just 619 00:34:31,520 --> 00:34:34,960 Speaker 1: the CEO two in the atmosphere, people pivoted really quickly 620 00:34:34,960 --> 00:34:36,880 Speaker 1: to saying we need clean energy and we need to 621 00:34:36,920 --> 00:34:40,240 Speaker 1: phase possible fuels a step. And I think what's started 622 00:34:40,280 --> 00:34:45,200 Speaker 1: to come to the root everybody's realization is clean energy 623 00:34:45,400 --> 00:34:48,960 Speaker 1: just is not there on the cost for the reliability 624 00:34:48,960 --> 00:34:51,600 Speaker 1: side to be able to replace fossil fuels. And so 625 00:34:51,840 --> 00:34:54,880 Speaker 1: our approach to being able to play a role in 626 00:34:54,880 --> 00:34:59,160 Speaker 1: this energy transition isn't focusing on wind or solar like 627 00:34:59,200 --> 00:35:01,919 Speaker 1: a lot of other folks. We're not really focusing on batteries. Well, 628 00:35:02,520 --> 00:35:04,919 Speaker 1: we're really focusing on and what net power is really 629 00:35:04,920 --> 00:35:07,400 Speaker 1: focusing on is fossil fuels are going to be with 630 00:35:07,520 --> 00:35:11,480 Speaker 1: us for a very long time. It's o of total 631 00:35:11,560 --> 00:35:13,400 Speaker 1: energy use in the world today, and that's just the 632 00:35:13,440 --> 00:35:16,600 Speaker 1: reality of where we are. And so for us, we said, 633 00:35:17,000 --> 00:35:19,400 Speaker 1: if we really want to achieve the climate goals we have, 634 00:35:19,560 --> 00:35:25,200 Speaker 1: we have to find ways to decarbonize coal, oil, natural gas, 635 00:35:25,640 --> 00:35:28,799 Speaker 1: and so with net power, the technology allows us to 636 00:35:28,880 --> 00:35:32,520 Speaker 1: capture all of the emissions from natural gas. And so 637 00:35:32,560 --> 00:35:36,000 Speaker 1: as we continue to see natural gas playing a larger 638 00:35:36,160 --> 00:35:39,120 Speaker 1: larger role in the power mix as it continues to 639 00:35:39,160 --> 00:35:42,520 Speaker 1: displace coal, being able to put that natural gas into 640 00:35:42,560 --> 00:35:46,960 Speaker 1: a net power plant captures over of the emissions. And 641 00:35:47,000 --> 00:35:49,280 Speaker 1: when you look at it on a heads up basis 642 00:35:49,360 --> 00:35:52,680 Speaker 1: on just the total carbon intensity versus wind, versus solar, 643 00:35:52,800 --> 00:35:56,640 Speaker 1: versus hydro versus nuclear, you name it net power on 644 00:35:56,680 --> 00:36:00,719 Speaker 1: a carbon intensity basis per unit of energy produced, it's 645 00:36:00,760 --> 00:36:05,000 Speaker 1: as low as any of them. How much still has Sorry, 646 00:36:05,360 --> 00:36:08,919 Speaker 1: I was just thinking of the pricing volatility that we've seen, 647 00:36:09,080 --> 00:36:13,680 Speaker 1: especially in Europe. Obviously it's been more um uh, it's 648 00:36:13,680 --> 00:36:15,839 Speaker 1: been more severe than it has here, but we've seen 649 00:36:16,239 --> 00:36:19,440 Speaker 1: real volatility in these markets as well. How much does 650 00:36:19,480 --> 00:36:22,839 Speaker 1: that matter to you to net power? Well, so that's 651 00:36:22,840 --> 00:36:25,480 Speaker 1: the beauty of net power is the feedstock for this 652 00:36:25,560 --> 00:36:28,879 Speaker 1: power generation process is natural gas. And if you look 653 00:36:28,920 --> 00:36:31,920 Speaker 1: at just domestically here in the United States, natural gas 654 00:36:31,920 --> 00:36:35,160 Speaker 1: prices are lower here than anywhere else in the world, 655 00:36:35,400 --> 00:36:37,960 Speaker 1: and quite frankly, they could be lower. Right. I think 656 00:36:37,960 --> 00:36:40,000 Speaker 1: we really just need more infrastructure to be able to 657 00:36:40,000 --> 00:36:42,480 Speaker 1: get this natural gas to market. And I think that's 658 00:36:42,480 --> 00:36:44,399 Speaker 1: where a little bit of the catch twenty two is 659 00:36:44,400 --> 00:36:47,160 Speaker 1: is there's a lot of reluctance to build new natural 660 00:36:47,200 --> 00:36:51,879 Speaker 1: gas infrastructure because natural gas has these emissions, especially visit administration, right, 661 00:36:51,920 --> 00:36:54,080 Speaker 1: I mean we've we've heard from a number of people 662 00:36:54,680 --> 00:36:58,239 Speaker 1: on this program that that infrastructure just isn't coming from 663 00:36:58,239 --> 00:37:01,920 Speaker 1: a Biden administration. Yeah. And I think that's what's so 664 00:37:01,960 --> 00:37:05,520 Speaker 1: exciting about net power is it really is a paradigm 665 00:37:05,520 --> 00:37:08,879 Speaker 1: shift for people's perception of natural gas because I think 666 00:37:08,880 --> 00:37:10,880 Speaker 1: it's it's not about labels, it's not about what is 667 00:37:10,920 --> 00:37:13,520 Speaker 1: the fuel source. It's really about what's the carbon intensity 668 00:37:13,520 --> 00:37:15,799 Speaker 1: of this fuel source. And I think the thing that 669 00:37:15,880 --> 00:37:19,280 Speaker 1: net power is able to unlock is all of a sudden, 670 00:37:19,520 --> 00:37:23,720 Speaker 1: natural gas is transformed into a very very low emission 671 00:37:23,840 --> 00:37:27,040 Speaker 1: power generation source. And if and if we're able to 672 00:37:27,120 --> 00:37:30,160 Speaker 1: leverage the cost and reliability of natural gas and pair 673 00:37:30,200 --> 00:37:33,080 Speaker 1: it with you know, how clean it becomes with net power, 674 00:37:33,680 --> 00:37:37,399 Speaker 1: that should in a way start to unlock and really 675 00:37:37,520 --> 00:37:41,280 Speaker 1: enable further development of natural gas and using is this fuel, 676 00:37:41,480 --> 00:37:44,760 Speaker 1: but only because it becomes this low emission fuel source 677 00:37:45,440 --> 00:37:48,800 Speaker 1: with net power. So when we think about natural gas, 678 00:37:49,239 --> 00:37:51,000 Speaker 1: I think of it just in the context most recently 679 00:37:51,120 --> 00:37:55,120 Speaker 1: of liquefying it and sending across the Atlantic Ocean to Europe, 680 00:37:55,160 --> 00:37:59,120 Speaker 1: which is starving for fuel. Give us just your understanding 681 00:37:59,280 --> 00:38:04,680 Speaker 1: of where that global infrastructure is for liquefied natural gas. Yeah, 682 00:38:04,719 --> 00:38:06,520 Speaker 1: so Europe, I mean Europe is in a bit of 683 00:38:06,560 --> 00:38:09,440 Speaker 1: a predicament right. Um, For the longest time, they've been 684 00:38:09,480 --> 00:38:12,160 Speaker 1: dependent on Russia for their sources of natural gas, and 685 00:38:12,160 --> 00:38:14,359 Speaker 1: now all of a sudden they're saying, we need to 686 00:38:14,440 --> 00:38:18,279 Speaker 1: show up our resources for natural gas for more trustworthy counterparties. 687 00:38:18,719 --> 00:38:21,840 Speaker 1: There's probably no more trustworthy counterparty in the United States. 688 00:38:22,520 --> 00:38:24,680 Speaker 1: And it gets back to we have such an abundance 689 00:38:24,719 --> 00:38:27,760 Speaker 1: of natural gas that we've really unlocked over the course 690 00:38:27,800 --> 00:38:30,160 Speaker 1: of the last ten years. And it's really really low 691 00:38:30,200 --> 00:38:33,200 Speaker 1: cost gas too, and so it's we're able to produce 692 00:38:33,200 --> 00:38:36,120 Speaker 1: more natural gas here than the United States is consuming today, 693 00:38:36,320 --> 00:38:38,239 Speaker 1: and so we have an abundance of it which is 694 00:38:38,400 --> 00:38:43,120 Speaker 1: primed for export to Europe. And I think the thing 695 00:38:43,160 --> 00:38:45,360 Speaker 1: that really makes net power play an active role in 696 00:38:45,400 --> 00:38:49,319 Speaker 1: all of that because Europe still has very ambition, very 697 00:38:49,320 --> 00:38:53,000 Speaker 1: ambitious climate reduction goals, right, and so they're saying, I 698 00:38:53,120 --> 00:38:56,759 Speaker 1: need the reliability and affordability of natural gas, but if 699 00:38:56,760 --> 00:38:59,120 Speaker 1: I compare that up with net power, in that l 700 00:38:59,200 --> 00:39:02,719 Speaker 1: MG that's being liquefied and transported to Europe can then 701 00:39:02,760 --> 00:39:05,320 Speaker 1: go into a net power plant, all of a sudden, 702 00:39:05,360 --> 00:39:07,680 Speaker 1: we have the reliability coming from the US l G, 703 00:39:08,320 --> 00:39:11,239 Speaker 1: but now we have the carbon entity that is on 704 00:39:11,360 --> 00:39:14,360 Speaker 1: par with wind and solar, and so we can achieve 705 00:39:14,760 --> 00:39:18,960 Speaker 1: our energy needs while also achieving our climate goals. And 706 00:39:19,000 --> 00:39:22,640 Speaker 1: I think that's I think those those examples like that 707 00:39:22,760 --> 00:39:24,480 Speaker 1: are are are some of the reasons why you know, 708 00:39:24,520 --> 00:39:27,800 Speaker 1: net power is quite unique. But I think in addition 709 00:39:27,840 --> 00:39:31,080 Speaker 1: to being unique, like there's a huge responsibility because this 710 00:39:31,160 --> 00:39:33,680 Speaker 1: is the only type of technology out there that can 711 00:39:33,719 --> 00:39:37,799 Speaker 1: do this. Um Alright, So it's that's good stuff, Danny. 712 00:39:37,800 --> 00:39:39,520 Speaker 1: We're gonna have to leave it. They're good stuff, Danny. 713 00:39:39,600 --> 00:39:43,080 Speaker 1: Rice the fourth the Rice Acquisition Corps, that's a spack 714 00:39:43,600 --> 00:39:47,960 Speaker 1: recently emerge with net Power LLC. It's a go public 715 00:39:48,000 --> 00:39:52,040 Speaker 1: merger special so doing some stuff on the energy space. 716 00:39:56,000 --> 00:39:59,879 Speaker 1: What a world wind Wait, just six hours through Wash 717 00:40:00,000 --> 00:40:02,680 Speaker 1: and in d C for President Zelinsky of Ukraine. And 718 00:40:02,719 --> 00:40:04,719 Speaker 1: here a couple of headlines that I think captured Zlinsky 719 00:40:04,719 --> 00:40:08,680 Speaker 1: wins applause, aid in half day dash through Washington and 720 00:40:08,840 --> 00:40:12,240 Speaker 1: zom Bloomberg, and also on Bloomberg, Zolinsky insists the Congress 721 00:40:12,360 --> 00:40:16,239 Speaker 1: US aid for Ukraine is not charity. So when we talked, 722 00:40:16,320 --> 00:40:20,239 Speaker 1: geopolitics and military issues are number one voice that we 723 00:40:20,280 --> 00:40:24,440 Speaker 1: strive forwards. James Servitis, he was retired admiral with the U. S. Navy. 724 00:40:24,560 --> 00:40:26,440 Speaker 1: He was there for thirty seven years. He couldn't get 725 00:40:26,480 --> 00:40:30,720 Speaker 1: another job, served as fifteen Commander in US European Command 726 00:40:30,719 --> 00:40:34,279 Speaker 1: in NATO's sixteenth Supreme Allied Commander in Europe. Admiral, thank 727 00:40:34,320 --> 00:40:36,400 Speaker 1: you so much for joining us once again. What is 728 00:40:36,440 --> 00:40:41,280 Speaker 1: your take away what you heard from President Zelinsky yesterday? 729 00:40:42,840 --> 00:40:46,040 Speaker 1: I thought he did an excellent job. And let's face it, 730 00:40:46,200 --> 00:40:50,759 Speaker 1: he had uh four separate audiences he had to speak to. 731 00:40:51,200 --> 00:40:54,800 Speaker 1: He spoke to us here as Americans. In the overriding 732 00:40:54,880 --> 00:40:58,960 Speaker 1: message I got was one of gratitude. Appropriately um, he 733 00:40:59,040 --> 00:41:02,320 Speaker 1: was speaking to the Europeans, and I think his message 734 00:41:02,440 --> 00:41:08,280 Speaker 1: was one of solidarity between the United States the European Union, 735 00:41:08,400 --> 00:41:12,360 Speaker 1: the two biggest contributors to Ukraine, as well as his 736 00:41:12,480 --> 00:41:17,960 Speaker 1: own people audience number three. Here he needed to reassure them, 737 00:41:18,000 --> 00:41:21,000 Speaker 1: to show them that he had the kind of personal 738 00:41:21,040 --> 00:41:25,240 Speaker 1: connectivity in Washington that could keep this vital aid flowing 739 00:41:25,400 --> 00:41:28,120 Speaker 1: and then forth, and finally, maybe the most important audience 740 00:41:28,880 --> 00:41:33,400 Speaker 1: is in Moscow, in the Kremlin, and there it's a message, 741 00:41:33,440 --> 00:41:36,799 Speaker 1: I would say, of defiance and scorn. I think, uh, 742 00:41:37,000 --> 00:41:41,759 Speaker 1: it was a big performance, but I thought Zealinsky delivered. 743 00:41:41,960 --> 00:41:46,400 Speaker 1: I was captivated by his words. His ability to convey 744 00:41:46,520 --> 00:41:50,280 Speaker 1: the emotion as well as the situation on the ground 745 00:41:50,360 --> 00:41:53,840 Speaker 1: as well as the stakes really quite extraordinary. So I 746 00:41:53,880 --> 00:41:57,319 Speaker 1: thought he did a very good job. How are they 747 00:41:57,400 --> 00:41:59,560 Speaker 1: doing in terms of the situation on the ground, How 748 00:41:59,560 --> 00:42:03,800 Speaker 1: would you judge the progress that the Ukrainians have made 749 00:42:03,880 --> 00:42:08,000 Speaker 1: in pushing back this Russian offensive? Yeah, I think it's 750 00:42:08,360 --> 00:42:12,120 Speaker 1: a tale of two wars, if you will. One war 751 00:42:12,200 --> 00:42:16,360 Speaker 1: is the ground war, and here the Ukrainians are winning. 752 00:42:16,640 --> 00:42:19,600 Speaker 1: They are pushing back the Russians. As you say, they've 753 00:42:19,640 --> 00:42:23,800 Speaker 1: taken back a big chunk of the territory that Russia 754 00:42:24,440 --> 00:42:28,520 Speaker 1: tried to invade and annex just ten months ago, eleven 755 00:42:28,560 --> 00:42:31,160 Speaker 1: months ago, Um, so they're kind of winning on the 756 00:42:31,160 --> 00:42:34,239 Speaker 1: ground with our help and support, of course, But the 757 00:42:34,320 --> 00:42:37,319 Speaker 1: second war is the air war, and here I think 758 00:42:37,360 --> 00:42:40,960 Speaker 1: the Russians are winning simply because the Ukrainians don't have 759 00:42:41,200 --> 00:42:44,600 Speaker 1: all the technology, all the tools they need to really, 760 00:42:45,040 --> 00:42:49,600 Speaker 1: as President Zelinsky often says, closed the skies of Ukraine. 761 00:42:49,760 --> 00:42:55,000 Speaker 1: So that's why you heard yesterday such importance. But on 762 00:42:55,080 --> 00:42:58,920 Speaker 1: the delivery of this Patriot battery, it's one of many 763 00:42:59,040 --> 00:43:01,680 Speaker 1: systems that are going to be flowing toward the Ukrainians 764 00:43:01,719 --> 00:43:05,200 Speaker 1: to help them in this air war. If we can 765 00:43:05,200 --> 00:43:09,200 Speaker 1: shut down Putin's ability to simply bomb at long range, 766 00:43:09,520 --> 00:43:12,319 Speaker 1: let the Ukrainians continue on the ground the way they are. 767 00:43:12,800 --> 00:43:18,319 Speaker 1: I like the Ukrainians chances Admiral will Patriot missiles by themselves, 768 00:43:18,960 --> 00:43:22,400 Speaker 1: you know, kind of shut off the air wharfer for Russia. 769 00:43:22,640 --> 00:43:28,399 Speaker 1: Or does the Ukraine need planes and trained pilots? How 770 00:43:28,400 --> 00:43:32,680 Speaker 1: does that play out? UM? I go with yes, they 771 00:43:32,719 --> 00:43:38,600 Speaker 1: need aircraft combat aircraft. Two paths available on the table 772 00:43:38,760 --> 00:43:42,319 Speaker 1: right now. One is mid twenty nine's they already have 773 00:43:42,440 --> 00:43:45,160 Speaker 1: pilots who are trained to fly the mid twenty nine 774 00:43:45,600 --> 00:43:49,600 Speaker 1: Those are old Soviet era aircraft or in the inventory 775 00:43:49,760 --> 00:43:53,319 Speaker 1: of Poland, and the polls have indicated they're willing to 776 00:43:53,360 --> 00:43:56,040 Speaker 1: give those to the Ukrainians. They'd like to get the 777 00:43:56,160 --> 00:44:00,640 Speaker 1: US to help Poland buy back fit f its teams 778 00:44:00,719 --> 00:44:04,640 Speaker 1: from the US. A second solution would take a bit longer, 779 00:44:05,040 --> 00:44:07,560 Speaker 1: but it would be the US F six team, not 780 00:44:07,680 --> 00:44:12,360 Speaker 1: a terribly complex aircraft. We could train the Ukrainians in 781 00:44:12,520 --> 00:44:15,920 Speaker 1: how to fly it in Ramstein Air Force Base, for example, 782 00:44:15,920 --> 00:44:19,160 Speaker 1: in Germany and provide them those F six teams. I 783 00:44:19,160 --> 00:44:24,440 Speaker 1: think Patriot is necessary but not sufficient to close those guys. 784 00:44:24,480 --> 00:44:29,279 Speaker 1: They're going to ultimately need more combat aircraft. I'm gonna ask, 785 00:44:29,880 --> 00:44:33,440 Speaker 1: I guess a political question without really taking a side, 786 00:44:33,520 --> 00:44:37,160 Speaker 1: but um in the in the in that imposing it, 787 00:44:37,200 --> 00:44:39,560 Speaker 1: I guess I kind of am the President. Biden said, 788 00:44:39,600 --> 00:44:42,200 Speaker 1: the American people are with you every step of the way, 789 00:44:42,280 --> 00:44:44,440 Speaker 1: and we will stay with you. We will stay with 790 00:44:44,480 --> 00:44:47,919 Speaker 1: you for as long as it takes. Is it fair 791 00:44:48,000 --> 00:44:50,920 Speaker 1: for the President to say this so soon after pulling 792 00:44:50,920 --> 00:44:56,880 Speaker 1: out of Afghanistan? Yeah, well, I was thinking about that yesterday. 793 00:44:57,040 --> 00:45:03,720 Speaker 1: How our Afghan allies must receive those words directed towards 794 00:45:03,760 --> 00:45:07,200 Speaker 1: the Ukrainians. And I think it is a very fair 795 00:45:07,200 --> 00:45:12,160 Speaker 1: criticism to make the Biden administration that they chose to 796 00:45:12,320 --> 00:45:19,040 Speaker 1: withdraw quite abruptly from Afghanistan and now have gone all 797 00:45:19,120 --> 00:45:22,000 Speaker 1: in on Ukraine. And we could have a long conversation 798 00:45:22,040 --> 00:45:25,759 Speaker 1: about the differences and why that has unfolded. But I 799 00:45:25,760 --> 00:45:29,000 Speaker 1: think it is a very valid criticism in this case. 800 00:45:29,080 --> 00:45:33,239 Speaker 1: What we need to do, my view, is stay very 801 00:45:33,320 --> 00:45:36,840 Speaker 1: strong with Ukrainians, UM, and we're going to have to 802 00:45:36,920 --> 00:45:40,880 Speaker 1: work to overcome some of the lingering concern that we 803 00:45:41,080 --> 00:45:47,120 Speaker 1: raised by that abrupt poll out from Afghanistan. Admiral unfair question, 804 00:45:47,160 --> 00:45:49,239 Speaker 1: but I'll ask you anyway, how do you really think 805 00:45:49,239 --> 00:45:54,360 Speaker 1: this plays out and over what time frame? Um? Really, 806 00:45:54,440 --> 00:45:57,320 Speaker 1: I can give an answer in two words, nobody knows 807 00:45:58,000 --> 00:46:00,880 Speaker 1: and uh, you know, the great st experts in the 808 00:46:00,920 --> 00:46:05,600 Speaker 1: world with the deepest military knowledge how this one's gonna 809 00:46:05,680 --> 00:46:09,080 Speaker 1: play out. But I'll give you my best guess. I 810 00:46:09,120 --> 00:46:12,840 Speaker 1: think that over the next six to twelve months, both 811 00:46:12,880 --> 00:46:20,080 Speaker 1: sides are going to run out of ammunition, fresh troops, enthusiasm, 812 00:46:20,120 --> 00:46:23,520 Speaker 1: and I think you're gonna see a movement towards some 813 00:46:23,680 --> 00:46:29,240 Speaker 1: kind of negotiation. In our job here in the United 814 00:46:29,280 --> 00:46:31,880 Speaker 1: States is too and I think the President said this 815 00:46:31,960 --> 00:46:35,520 Speaker 1: yesterday is to give the Ukrainians the tools to put 816 00:46:35,560 --> 00:46:39,400 Speaker 1: them in the best possible position at the negotiating table. 817 00:46:39,840 --> 00:46:45,600 Speaker 1: So I think that wars ultimately ended negotiation almost every time. 818 00:46:45,719 --> 00:46:48,839 Speaker 1: This one will as well, all right, James Servides, thank 819 00:46:48,880 --> 00:46:51,879 Speaker 1: you so much for joining us. We always appreciate your perspective, 820 00:46:52,239 --> 00:46:55,440 Speaker 1: your experience, and your time. James Servites, retired admiral with 821 00:46:55,480 --> 00:46:57,680 Speaker 1: the U. S. Navy, served as a fifteenth Command in 822 00:46:57,760 --> 00:47:02,400 Speaker 1: US European Command in NATO, sixteenth Supreme Allied Commander in Europe, 823 00:47:02,440 --> 00:47:05,160 Speaker 1: so certainly has the chops uh to give us the 824 00:47:05,160 --> 00:47:11,680 Speaker 1: breakdown on what's going on in Ukraine. Thanks for listening 825 00:47:11,680 --> 00:47:15,160 Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen 826 00:47:15,200 --> 00:47:19,480 Speaker 1: to interviews at Apple Podcasts or whatever podcast platform you prefer. 827 00:47:19,880 --> 00:47:24,279 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller. P 828 00:47:24,480 --> 00:47:27,080 Speaker 1: On Fall Sweeney I'm on Twitter at pt Sweeney. Before 829 00:47:27,080 --> 00:47:29,920 Speaker 1: the podcast, you can always catch us worldwide at Bloomberg 830 00:47:30,000 --> 00:47:30,239 Speaker 1: Radio