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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 2: my co host Matt Miller.
Speaker 1: Every business day we bring you interviews from CEOs, market pros,
Speaker 1: and Bloomberg experts, along with essential market Moven News.
Speaker 2: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever
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Speaker 3: Let's get to.
Speaker 2: George Ferguson right now, because he is the expert on
Speaker 2: on aerospace on the airlines.
Speaker 3: He's from Bloomberg Intelligence.
Speaker 2: Georgie, again, we were just saying it just seems like
Speaker 2: Boeing just emerge from the doghouse in the last six
Speaker 2: to twelve months, and here we are yet again. How
Speaker 2: serious is this issue relative to the last seven three
Speaker 2: seven max issue?
Speaker 4: So, I mean, I think if you're talking about the
Speaker 4: other challenges they've had with sort of a rear pressure
Speaker 4: bulkkant problems and vertical stabilizers, I think I put it
Speaker 4: right along the lines, is a very similar issue, and
Speaker 4: it's a lack of attention to detail in the manufacturing process,
Speaker 4: either at Boeing or at their suppliers, especially Spirit Aerosystems.
Speaker 4: It's been really nagging them and they've got to go.
Speaker 4: They've got to get down there at Spirit and they've
Speaker 4: got to help them knit this in the bud and
Speaker 4: stabilize production so they can build all those airplanes they're
Speaker 4: supposed to build this year and continue to recovery.
Speaker 5: If you ask me if it's.
Speaker 4: How is it similar to the mcast problem where the
Speaker 4: two airplanes crashed to the Ethiopian and Malaysian airplane airplanes.
Speaker 4: This doesn't appear right now to be anywhere near as serious.
Speaker 4: I think this will be a singular anominate when we're
Speaker 4: all done. But again, a sign of lack of attention
Speaker 4: to detail in the manufacturing process, which can't go on
Speaker 4: in aerospace.
Speaker 6: Hey, George, give us some size and scope when it
Speaker 6: comes to which airlines fly this model the most and
Speaker 6: how many of these planes are worldwide?
Speaker 4: Yeah, so, I mean this model is relatively sort of
Speaker 4: recently entered into service. There's only about two hundred and
Speaker 4: twenty five flying. The big flyers of them are United
Speaker 4: as you mentioned earlier, Alaska, and then COPA out of Panama,
Speaker 4: and then Aeron Mexico has some of them too. There's
Speaker 4: a bunch of small flyers of them. But Copa is
Speaker 4: another key Boeing customer, right. Copa is an all Boeing
Speaker 4: SEVENTHWTY seventh fleet. They do a great job of helping
Speaker 4: people transit between North and South America.
Speaker 5: Via their hub and Vanama.
Speaker 4: You don't want to take your most important customers off,
Speaker 4: and having quality problems doesn't help that.
Speaker 3: George.
Speaker 2: I'm flying A seven three seven nine hundred from Friday
Speaker 2: from Newark to Aruba, so I want you to take
Speaker 2: care of that for me. Please go check on that
Speaker 2: plane personally, make sure it's all set to go on Friday, because.
Speaker 3: I need that plane to leave here Uba exactly.
Speaker 2: But George, you can't have quality issues in aerospace industry.
Speaker 3: You just can't. It's like a zero tolerance kind of thing.
Speaker 5: Exactly.
Speaker 3: How is this kind of happening here?
Speaker 2: I mean, you know, I mean, I'm just surprised that
Speaker 2: we're having these these types of issues and with this
Speaker 2: kind of you know, kind of it happens, seems more
Speaker 2: than it should.
Speaker 5: Yeah, agreed.
Speaker 4: I think that it's a function of the setup going
Speaker 4: into the pandemic and then.
Speaker 5: And the US labor market, right.
Speaker 4: So, I think we had this MCAS problem with with
Speaker 4: the max they were grounded around the world. If you
Speaker 4: were working at Spiritual Systems are boeing, it was pretty
Speaker 4: depressing times. As you were sort of fixing that problem,
Speaker 4: we went into a pandemic, you know, air travel went
Speaker 4: to zero, almost zero, let's call it.
Speaker 5: And so I think if.
Speaker 4: You were sitting there at spirit Aerosystems working in airplanes,
Speaker 4: you thought this might not be a career.
Speaker 5: That's a long term career.
Speaker 4: So I think they've had a lot of Turnament and
Speaker 4: Bowings had the same and both companies said, look, we've
Speaker 4: got to cut cross. We may need to send some
Speaker 4: senior talent home, you know, give them buyout packages whatever.
Speaker 4: So I think both of these companies have seen a
Speaker 4: lot of turnover in employees, and when you have that,
Speaker 4: you have to train the new ones and it just
Speaker 4: takes a while, right, And so I think both of
Speaker 4: them need to look at their training programs and their
Speaker 4: safety programs and dig deeper on that. I feel like,
Speaker 4: you know, this wasn't something that happened to Airbus, because
Speaker 4: the Airbus didn't go into the pandemic with a problem
Speaker 4: with their primary you know, aircraft, the eight three twenty.
Speaker 5: They're big people.
Speaker 4: Mover, and I think Airbus probably did a better job
Speaker 4: of managing supply chain and the European industry managing supply
Speaker 4: chain challenges during the pandemic, and.
Speaker 5: I think that's why we're here.
Speaker 4: And the US labor market has been really strong, so
Speaker 4: you go on finding on the job pretty easy.
Speaker 5: So going has to get all over this spirit us too.
Speaker 7: George, it's John Tucker. Quick question for you. Will you
Speaker 7: explain what the door plug is? The fuselage comes with
Speaker 7: the ability to put in a door if the configuration
Speaker 7: requires it. How does that work?
Speaker 4: Yes, I mean some of the larger versions of the
Speaker 4: seven thirty seven. Some of the customers can really pack
Speaker 4: them out right. So I think a similar airplane Ryanair
Speaker 4: will get two hundred some people in there. See, you
Speaker 4: need a certain number of exits per number of people
Speaker 4: in the airplane. So if you're maxing it out like
Speaker 4: Ryan Air, you have it. You have an exit door there.
Speaker 4: If you're not maxing it out like Alaska, you know
Speaker 4: the exit door and you put a panel there.
Speaker 5: You don't want to lose any of the space of
Speaker 5: the exit door.
Speaker 7: And the panel of what that's just bolted in, hopefully
Speaker 7: bolted in.
Speaker 4: My understanding, has got four bolts and some other connections
Speaker 4: to keep it attached to the fuselage. So again, as
Speaker 4: it goes down the line, someone probably st to go
Speaker 4: out and make sure that that the panel gets inserted correctly.
Speaker 4: If it's not an airplane that needs that exit door,
Speaker 4: we think that's probably where the problem was is in
Speaker 4: attention to detailing.
Speaker 7: You look at it, you look at the video from
Speaker 7: NTSB and whatever. There's no fracturing, there's no tearing whatsoever
Speaker 7: of the skin of the aircraft.
Speaker 4: Agreed the silver Liner. The silver lining to the story
Speaker 4: is that it does not look like any structural problem.
Speaker 4: Like you said, it looks like a pretty clean breakaway,
Speaker 4: and that indicates to us that it was just either
Speaker 4: the fasteners were faulty, and I think we would have
Speaker 4: seen that in other airplanes by now. I think the
Speaker 4: FA will know that shortly as they do with their inspections,
Speaker 4: or someone didn't fascinate correctly.
Speaker 6: How does that end up more broadly affecting other airliners
Speaker 6: like United, for instance, has the most max nines in
Speaker 6: service around seventy nine. How does that impact United in
Speaker 6: particularly as well.
Speaker 4: Yeah, so the inspection program, I guess is that all
Speaker 4: these will have to be inspected, all these airplanes, and
Speaker 4: so their inspection process is going to take up a
Speaker 4: little bit longer than these are going to take more
Speaker 4: airplanes out of service, hopefully not the you know, North
Speaker 4: to Aruba flights, but we'll see what happens, you know,
Speaker 4: if they need people to fly as I get them.
Speaker 4: There's and so I think another silver lining here is
Speaker 4: that it is the first quarter traditionally a low time
Speaker 4: for travel, and so I think it's less impactful for
Speaker 4: the airlines coming right now.
Speaker 5: But it's going to take United some time. So they're
Speaker 5: going to have to knock down some of the schedule.
Speaker 4: Probably while they get wait for these inspections and wait
Speaker 4: for gudents from the FAA, is what's going to be
Speaker 4: at all clear for the airplane.
Speaker 2: So I know, George, just from reading your research and
Speaker 2: talking to you, that Boeing and Airbus they can't build
Speaker 2: planes fast enough. There's so much demand out there these days.
Speaker 2: So what happens to Boeing's assembly lines today? Are they
Speaker 2: still going full board or are they standing down here?
Speaker 3: What are they doing?
Speaker 6: You know?
Speaker 4: My guess is that they're probably still building today. My
Speaker 4: guess is that, you know, like they said, they're very
Speaker 4: focused in the regulators. They want to see what the
Speaker 4: regulators have to say. They'd probably look closely.
Speaker 5: At this particular station on the line and want to.
Speaker 4: Make sure that it's stable. They could even build seven
Speaker 4: thirty seven eights which don't have this store and wouldn't
Speaker 4: have any limitations at this point.
Speaker 5: So my guess is that their production continues.
Speaker 6: We only have about a minute left, but we are
Speaker 6: approaching earning season. What do you expect as far as
Speaker 6: particularly how this could impact a Boeing when it does
Speaker 6: come out with some of its forward looking guidance.
Speaker 4: Yeah, I mean again, I think if it's an anomaly,
Speaker 4: I would think that Following's guidance on how many airplanes
Speaker 4: they can liver in twenty twenty four would be largely
Speaker 4: unchanged from this. It seems to me like this could
Speaker 4: probably be wrapped up in a couple of weeks.
Speaker 5: Again, you don't like quality problems, but we could probably
Speaker 5: wrapped it in a couple of weeks. Of it's anomaly,
Speaker 5: that's not an anomaly.
Speaker 4: That's when you start knocking down production schedules, knocking down
Speaker 4: expectations for cash flow and profit.
Speaker 5: We don't expect that right now, all.
Speaker 3: Right, George, thanks so much for joining us. George Ferguson.
Speaker 2: He covers all the airspace companies, he covers the airlines
Speaker 2: as well, so top to bottom, he's got his finger
Speaker 2: on the pulse what's happening in that global airspace business.
Speaker 2: And again Boeing shares our down here today as our
Speaker 2: Spirit Airlines as well as one of the suppliers of
Speaker 2: the fusel logs.
Speaker 8: You're listening to the team. Can's a live program Bloomberg
Speaker 8: Markets weekdays at ten am Eastern on Bloomberg dot com,
Speaker 8: the iHeartRadio app, and the Bloomberg business app or listen
Speaker 8: on demand wherever you get your podcasts.
Speaker 6: I want to get straight to our next guest, Paul
Speaker 6: Mark Newton, who is global head of Technical Strategy over
Speaker 6: at Funstrat Global Advisors, and have to point out he's
Speaker 6: been very spot on with his call. So if you
Speaker 6: rewind and think back to the fall of twenty twenty one,
Speaker 6: this was right before the Nazaq one hundred peaked out,
Speaker 6: as well as the Russell two thousand, of course a
Speaker 6: couple months before what happened with the S and P
Speaker 6: five hundred hitting ultimately its record. That was about two
Speaker 6: years ago. But he was already concerned about the trajectory
Speaker 6: of stocks well before a lot of those geopolitical issues
Speaker 6: happened at the beginning of that year, and then also
Speaker 6: had adjusted. He had around a forty seven hundred price
Speaker 6: target for the S and P five hundred, so pretty
Speaker 6: close there we're the S and P five hundred finished
Speaker 6: the year. But Mark, thanks for joining us. It's always
Speaker 6: great speaking with you. I want to get your thoughts
Speaker 6: firstly on what's your outlook for equities this year.
Speaker 9: Thank you, Jess. Happy New year to everybody, and you
Speaker 9: know I am very constructive on equities this year, actually,
Speaker 9: I do believe the S and P will get up
Speaker 9: to fifty one to seventy five. You know, in general,
Speaker 9: it should be a lot easier year for Manny in
Speaker 9: best than last year. And last year was largely you know,
Speaker 9: tech dominated for most of the year in the broader
Speaker 9: market largely it took some time for many other sectors
Speaker 9: to play catch up, and I think we did see
Speaker 9: that in the fourth quarter. My view is that this
Speaker 9: year should allow for a more broad based rally and
Speaker 9: many of these other sectors like financials and healthcare, you know,
Speaker 9: and I think the beginning of the year certainly has
Speaker 9: seen a little bit of a drawdown and some of
Speaker 9: the former leaders for last year certainly a very big
Speaker 9: period of mean reversion. But my bigger call is that
Speaker 9: I think Bonn yields are going to drop this year,
Speaker 9: likely down to three and a quarter percent on the tenure,
Speaker 9: and that markets should have a very good year, and
Speaker 9: that you know, any sort of recession I think is
Speaker 9: going to be postponed at least until twenty twenty five.
Speaker 3: So Mark, you bring up a good point there.
Speaker 2: I mean, when you think about twenty twenty three's performance
Speaker 2: up until kind of October, it was extraordinarily narrow, and
Speaker 2: I know, so for folks that think about the health
Speaker 2: of the market, that's not very healthy because the breath
Speaker 2: of the market advance wasn't great. They got a little
Speaker 2: bit better there in the fourth quarter. How do you
Speaker 2: feel about kind of the breath of that we're seeing
Speaker 2: in the market these days.
Speaker 9: Well, I think the breath recently has been at least
Speaker 9: over the last couple of months, has gotten almost so
Speaker 9: good that it merits, you know, thinking that we probably
Speaker 9: will see some consolidation in the first quarter of this year.
Speaker 9: You know, I don't think we can just continue to
Speaker 9: go straight higher. We have nearly ninety percent of all
Speaker 9: stocks right now above their fifty day moving averages and
Speaker 9: about seventy five percent above their two hundred days. So
Speaker 9: but important to mention that we've seen one of the
Speaker 9: quickest moves from a very low level of breath the
Speaker 9: very high level of breadth in a very short period
Speaker 9: of time. And for me, that's very encouraging towards thinking that,
Speaker 9: you know, we're seeing this broader based recovery in risk
Speaker 9: assets still at a time when a lot of the
Speaker 9: institutional investors are not as enthusiastic about risk assets by
Speaker 9: you know, gauged by cash on the sidelines, or just
Speaker 9: the ongoing wars that we're seeing, and a lot of
Speaker 9: reasons to be concerned, but in general it's a healthy time.
Speaker 9: I just think we probably need some backing and filling with.
Speaker 6: What you're seeing, especially underlying when you're looking at some
Speaker 6: small cop caps that have taken off, especially of the
Speaker 6: past couple of months after getting hit hit hard, not
Speaker 6: just last year, but over the past couple of years.
Speaker 6: And then of course bank stocks which had getten hard
Speaker 6: last spring but had seen obviously a lot of improvement
Speaker 6: over the past two months. Do you think that still
Speaker 6: has legs there? Like what are the technicals telling us
Speaker 6: when it comes to the small caps and some of
Speaker 6: those value corners of the market like banks.
Speaker 9: Yeah, thanks, I do think that small caps have a
Speaker 9: window for outperformances here. A lot of that should be
Speaker 9: predicated on rates pulling back further, which can be helpful
Speaker 9: to this area. As you know, and most investors know.
Speaker 9: You know, the small cap sector has been a very
Speaker 9: difficult spot over the last decade. You know, it's important
Speaker 9: that we saw a brief period in twenty twenty when
Speaker 9: they showed very good outperform, but largely it's been a
Speaker 9: very big time for large cap growth, and I think
Speaker 9: that you know, initially, as we see rates start to
Speaker 9: really accelerate to the downside, that's going to be a
Speaker 9: time when small caps outperform, which is probably a you know,
Speaker 9: six to eight month window. This year, we see some
Speaker 9: decent outperformance financials. You know, that is sort of a
Speaker 9: mixed picture, and I'm not bullish on financials for the year.
Speaker 9: I'm more neutral, but I do think that you know,
Speaker 9: they can work. You know, we've seen the eel curve
Speaker 9: get a lot less inverted, and I think you know,
Speaker 9: through the stress tests we've had over the last decade
Speaker 9: that you know, the bound sheets are in very good shape,
Speaker 9: but you know, still tough for a lot of these
Speaker 9: regional banks. It's going to take some time. We've seen
Speaker 9: a very good move off below's I would argue that's
Speaker 9: probably not the best area for immediate outperformance, but certainly
Speaker 9: i'd be a big buyer on the backing and filling.
Speaker 2: So Mark, the extent of my technical now is the
Speaker 2: rs I phone.
Speaker 6: You know, that's his favorite. I mean Paul's point though,
Speaker 6: with RSI because I know you have your way of
Speaker 6: looking at technicals, but a lot of traders it's not
Speaker 6: just a one day when they're looking at charts. They
Speaker 6: look at weekly, they look at monthly. I think a
Speaker 6: lot of people, especially coming into this year, to Paul's point,
Speaker 6: they kept talking about, hey, these overbought levels, But a
Speaker 6: lot of times when I'm speaking with technicians, they're viewing
Speaker 6: it from other lenses as well. So even though you
Speaker 6: could see RSI, even though it's not still above seventy
Speaker 6: at this point, but if you're looking at the S
Speaker 6: and P or the NAZAG one hundred, you could stay
Speaker 6: above seventy four a while, and that doesn't necessarily mean
Speaker 6: it's a bad thing, right, Yeah.
Speaker 9: That's a very important comment, and I think it's really
Speaker 9: key to really measure investors time frame of investment, their
Speaker 9: risk tolerance, and generally looking you know, you'll hear traders
Speaker 9: say well, it's oversold, it's overbought, But a lot of
Speaker 9: times they're mentioning very very short term time frames. And
Speaker 9: if you look at the larger periods where equities have
Speaker 9: peaked or bottom, that's come when you know weekly or
Speaker 9: monthly RSI have gotten very overbought or oversold, and right
Speaker 9: now we're sort of in a pocket where momentum has
Speaker 9: been very positive. But yet you know, the recent drawdown
Speaker 9: we've had in recent weeks has actually cause r SI
Speaker 9: to pull back from those overbolt levels on a daily
Speaker 9: and actually a weekly basis, so and I'm a little
Speaker 9: more encouraged, you know, I think for the year, just
Speaker 9: because I don't view momentum as being all that overbought
Speaker 9: per RSI. But the divergences are really the most important,
Speaker 9: you know, way to use technical analysis in my view,
Speaker 9: and use momentum. It's not that when things get to
Speaker 9: overbought you want to sell, uh, it's really when you
Speaker 9: see repeated stabs at new highs and prices where momentum
Speaker 9: does not follow and starts to move down, and that
Speaker 9: can be sometimes a warning sign. And really in both
Speaker 9: directions price moves lower, you want to watch for weekly
Speaker 9: or monthly r s I to hold and not make
Speaker 9: new lows. These divergences are really sort of the bread
Speaker 9: and butter of how many technical analysts really use you know,
Speaker 9: r s I.
Speaker 2: How about volume? What's the volume been telling? You know
Speaker 2: in the equity markets and the bond markets recently.
Speaker 9: Well, volume certainly is very important. You know, I would
Speaker 9: view more so on a single stock basis than how
Speaker 9: I look at the markets. There's just a lot of
Speaker 9: ways to measure volume, and particularly all the different you know,
Speaker 9: we've heard about these record inflows and that would seem
Speaker 9: to be a very positive thing, but yet markets have
Speaker 9: been selling off, so volume is probably you know, not
Speaker 9: as helpful for day to day decisions on for investors
Speaker 9: when looking at the broader indsees, but certainly you want
Speaker 9: to see breakouts of stocks happen on good volume and
Speaker 9: you know, pullbacks happening on lesser volume. Those can all
Speaker 9: be very important things to concentrate on.
Speaker 6: I know something too, when it comes to volume can
Speaker 6: be tricky if you're looking at the ARMS index or
Speaker 6: some people when they follow technicals trend. I know it
Speaker 6: spiked above three five actually on December twentieth, but that
Speaker 6: can be a little tricky when you're looking at something
Speaker 6: like that. Is it more just a day to day
Speaker 6: thing that it's more useful than maybe.
Speaker 9: More fun funding. Yeah, that's a great point because the
Speaker 9: trend is very useful and we won't need to go
Speaker 9: into a lot of depth here, but a lot of
Speaker 9: it's about the advances to decliners divided by the advancing
Speaker 9: volume minus declining volume. In general, when you have very
Speaker 9: high volume on the downside, oftentimes that can signal inflection points,
Speaker 9: particularly after a lengthy decline. If all of a sudden
Speaker 9: you see people rushing in to sell and the declining
Speaker 9: volume is very very heavy, that can be important marking bottoms.
Speaker 9: But I would argue precisely the opposite is also true.
Speaker 9: If you have a high trin after an advancing period
Speaker 9: in stocks, we're a huge rally and then a very
Speaker 9: high trin on a reversal. For me, that oftentimes is
Speaker 9: a warning sign. But statistically, look, whenever you look at
Speaker 9: these things going out three months, six month and try
Speaker 9: to measure them, they all say that the market is
Speaker 9: going to go higher, and that's just the upward trending
Speaker 9: nature of the market. So it's more for me on
Speaker 9: a short term basis and just looking at that trin
Speaker 9: when you see, you know, trin readings being above two
Speaker 9: point five, that can be very important literally in both directions.
Speaker 2: All right, Very good, Mark Newton, thanks so much for
Speaker 2: journey us really appreciate it. Mark Newton, he's global head
Speaker 2: of technical strategy, fun Strike Global Advisors, Tom Lee and
Speaker 2: some guys. Are they get some smart people over there?
Speaker 6: Oh yeah, No, they're bringing in a lot of smart talent.
Speaker 3: Yeah.
Speaker 2: Actually, so again, we don't talk technicals as much as
Speaker 2: maybe we should have, but a lot for a lot.
Speaker 6: Of cover technicals, a lot for the US equities, you do.
Speaker 2: That's right, Yeah, exactly, And you're right about them some
Speaker 2: times over the weekend.
Speaker 3: Right, that's funny. And then somehow we talked about them
Speaker 3: on the radio the next week. Isn't that fun? That works?
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Speaker 2: Conversation of the Day. We're gonna talk copper. You gotta
Speaker 2: smelt this thing. I'm not sure, what's smelting we put metal.
Speaker 6: I don't know, doctor copper though, what it means for
Speaker 6: the global economy to gross all the components it goes to,
Speaker 6: especially companies in S and P five hundred industries that
Speaker 6: use chip makers not a big one too.
Speaker 3: You got to talk about it.
Speaker 2: We have the perfect guest here at Roland Herring Joints.
Speaker 2: This he's the CEO of Arubus g a G. It
Speaker 2: is a German company Homburg, Germany. There are some ad
Speaker 2: rs here in the U s A I A G
Speaker 2: Y for the US A d rs I got a
Speaker 2: market cap about three point six billion US dollars rolling.
Speaker 2: Thanks so much for joining us here in our studio.
Speaker 2: Talk to us about the copper, global copper business. How's
Speaker 2: it going, how's business, how's the market? What's happening in
Speaker 2: your world of global copper.
Speaker 10: Yeah, it's so. Copper is the metal of the future.
Speaker 10: It has been the metal of the prospit It's also
Speaker 10: the metal of the future. If you see, the demand
Speaker 10: for copper is just has one direction. It's going up
Speaker 10: because everything which is decarbonization, which is electrification in the end,
Speaker 10: means it needs more copper for handling. Electricity. So we
Speaker 10: see in emobility three times more copper in a car
Speaker 10: than in a conventional car. You see digital you see
Speaker 10: renewable energies and so on. So copper is really the
Speaker 10: perfect metal for the renewable energy sector. And we as
Speaker 10: a Rubis we are the largest producer of copper in Europe.
Speaker 10: We produce around one point one million tons of copper
Speaker 10: cathotes and the major product that we supply is starter
Speaker 10: stock for the cable industry, and cables are everywhere. What
Speaker 10: works today without electric cables and electric supply if it's
Speaker 10: digitalization or even energy supply. So we have a very
Speaker 10: positive business environment already today and I'm very bullish about
Speaker 10: the future, combined also with the circular economy, the recycling part,
Speaker 10: where we're also leading with our technology. So all good
Speaker 10: for Rubism.
Speaker 6: Well, thinking about the mining industry, particularly because they have
Speaker 6: highlighted how vulnerable some of the supply can potentially be.
Speaker 6: Some of that related to some geopolitical issues also different
Speaker 6: public protests that forced one of the biggest copper minds
Speaker 6: to actually close briefly in the last month or two
Speaker 6: because of that. But how does that do you think
Speaker 6: does that impact the outlook for what that means for
Speaker 6: the demand globally for copper, is that something that's more idiosyncratic.
Speaker 10: There is a lot of copper, and the advantage of
Speaker 10: copper is there are many many different minds. So even
Speaker 10: if the big one, if you take this case in Panama,
Speaker 10: will probably refer to even this mine has just a
Speaker 10: small percentage of the global supply, so there's not the
Speaker 10: dependency of the industry and of rubis from one single mind,
Speaker 10: which means we are diversified also for technical reasons, and
Speaker 10: hence we have alternatives really easy to switch on and
Speaker 10: we can compensate for any shortfalls. And it's quite typical
Speaker 10: if you look in the copper industry that there are
Speaker 10: some issues with mines. That's like in large industrial installation,
Speaker 10: you always have challenges. So therefore, in the projections for
Speaker 10: the supply and demand for copper concentrates to the smelter industry,
Speaker 10: there is always a certain disclaimer of minds which have
Speaker 10: some disruption, some technical problems, somewever problems. And if this
Speaker 10: is factored in, you see that the copper concentrate market
Speaker 10: is balanced. That means what the smelters need is being
Speaker 10: supplied by the mining industry, so we have enough supply
Speaker 10: and good quality supply for the way forward.
Speaker 2: Talk to us about your base in Hamburg, Germany. Most
Speaker 2: of your business, it's a global business. But talk just
Speaker 2: about the investment you're making, have made continue to make
Speaker 2: here in the US and Georgia.
Speaker 10: So the investment in Georgia is a big step for
Speaker 10: US to bring this technology of a large recycling plant
Speaker 10: of multi metal recycling materials into the US market. We're
Speaker 10: doing this in Europe and the investment in Georgia is
Speaker 10: part of our one point seven billion dollar investment package,
Speaker 10: and in Georgia alone we're investing about seven hundred and
Speaker 10: fifty million euros. We are investing in strengthening our core business,
Speaker 10: which is multi metal production, recycling and producing multi metals
Speaker 10: all the industrial metals and precious metals, and also growing.
Speaker 10: The second pillar is growing in recycling, where this investment
Speaker 10: in US is the big part of. And the third
Speaker 10: think is sustainability and decarbonization, so investing in renewable energy,
Speaker 10: investing in solar powered energy electricity generation, and also improving
Speaker 10: our environmental footprint even further. So these are the three pillars,
Speaker 10: and US is a very important part of our investment
Speaker 10: package going forward, and it's the first step that we
Speaker 10: are going here to do in Auguster.
Speaker 6: As we talk, so many economists, as you know, came
Speaker 6: into last year so gloomy about the trajectory of where
Speaker 6: US economic growth would be as well as globally. But
Speaker 6: when you look at the direction of copper prices, what
Speaker 6: do you think this tells us about the global economy
Speaker 6: and how healthy it is right now?
Speaker 10: Yeah, so you think about you mentioned this, doctor Copper,
Speaker 10: I thank you. There there's a lot of talk now
Speaker 10: where is the copper price going to be? What we
Speaker 10: need as a as an industry and as a general
Speaker 10: as an economy. We need more supply of copper. It
Speaker 10: has to come from recycling, where we have a major play,
Speaker 10: but also it has to come from additional mining activities
Speaker 10: around the world. There is enough copper in the world,
Speaker 10: and the question is at which incentive level, at which
Speaker 10: pricing level investors are going to spend money to build
Speaker 10: up quite high investment cases for new mining activities. So
Speaker 10: I don't protect any metal prices going forward. I can't
Speaker 10: just be wrong. But the demand is there and the
Speaker 10: demand will grow in the coming years by millions of tons,
Speaker 10: which means there's a good incentive also for a good
Speaker 10: rational for higher copper prices going forward, What.
Speaker 2: Are the top two or three kind of customers you
Speaker 2: have for your company? Just give us a sense of
Speaker 2: who your customers are.
Speaker 10: So the major customers that we have are the cable manufacturers.
Speaker 10: So we are converting the copper that we produce into
Speaker 10: the starter stock for the cable industry, which is called
Speaker 10: wire rot It's a standardized eight millimeters copper wire. And
Speaker 10: companies like the Prismians, like the Koffee Cups, like the Leone's,
Speaker 10: likelike like, they are our major customers for these materials,
Speaker 10: and then they make all kinds of cables for all
Speaker 10: kinds of installations out of.
Speaker 6: Those What are you hearing from your customers right now?
Speaker 6: As far as when it comes to demand.
Speaker 10: It's really interesting. We see an increasing demand from our customers.
Speaker 10: So this electrification, this decombonization, drives our industry, our customers,
Speaker 10: and hence also us. And we are we have a
Speaker 10: first quarter or our fiscal year starts in the first
Speaker 10: of October, so we have a from a demand point,
Speaker 10: a good quarter behind us, and we have some very
Speaker 10: good quarters ahead of us. Given the contracts and the
Speaker 10: discussions that we have customer so our customers, our cable manufacturers. Again,
Speaker 10: that's the major part. They are bullish about the demand
Speaker 10: going forward and they secure capacities for the future.
Speaker 2: Do you have business in China? No, No business in China,
Speaker 2: cause that's a typical for a company.
Speaker 6: I know.
Speaker 2: One of the reasons people are concerned about the German
Speaker 2: economy overall is that they do a lot of business
Speaker 2: with China and the growth just isn't there where where
Speaker 2: What are some of the other areas of the world
Speaker 2: that are that you're investing capital right now?
Speaker 10: So we are investing in Europe, which is our home
Speaker 10: turf as we have started there one hundred and fifty
Speaker 10: six years ago our business in Hamburg. So we investing
Speaker 10: massively in Europe, which is the major part of our
Speaker 10: one point seven and then the US. These are the
Speaker 10: two focus markets, the two focused region we are investing now.
Speaker 3: But we're not a choosing why is.
Speaker 6: That for Europe in the US versus not China?
Speaker 10: Because we have we know first of all, it's markets
Speaker 10: that we know where we have our base and where
Speaker 10: we can grow from and we have very stable conditions
Speaker 10: and also positive outlooks in both regions. That's why we
Speaker 10: are focused. And you have to put it in perspective.
Speaker 10: Urubus is not a giant, it's not a big company.
Speaker 10: We have to put a focus. So to invest one
Speaker 10: point seven billion in crow for our company is a
Speaker 10: big step. It's a big commitment and we have to deliver.
Speaker 10: So we we make this promise and we're going to
Speaker 10: live on this promise. And then I don't exclude any
Speaker 10: other regions at the world at the point in time,
Speaker 10: but in a moment, we have to focus on the US.
Speaker 6: And on Europe, right And is that also part of
Speaker 6: why China's been tightening its grip on copper. Is that
Speaker 6: part of the reason why it's just harder to try
Speaker 6: to invest to your point in that area.
Speaker 10: For China, copper is also a very important metal. If
Speaker 10: you see, they rate copper as one of the indicators
Speaker 10: of progress, and they have invested strategically and driven by
Speaker 10: the government over many many years now into the copper production.
Speaker 10: And China today represents forty five percent of the primary
Speaker 10: copper of the smelting capacity in the world and they
Speaker 10: continue to expand. Yet given this high local capacity, China
Speaker 10: is still an importer of copper of the metal, not
Speaker 10: just concentrate off the metal itself. So the economy in
Speaker 10: China is huge, and also with the major focus on
Speaker 10: renewable energies and also on electric vehicles, their demand is
Speaker 10: going to continue to rise. But they will continue also
Speaker 10: to invest in the industry. So that's that's where where
Speaker 10: they stand.
Speaker 3: Roland, thank you so much for joining us.
Speaker 2: Really appreciate it. Roland hiring CEO of Arubis GAG. They
Speaker 2: are based in Hamburg, Germany, but he's in the States
Speaker 2: here seeing some investors, and I'm going to go down
Speaker 2: to Germany where they're investing a lot of money in
Speaker 2: a plant down there in.
Speaker 3: Where's in Germany?
Speaker 10: In Hamburg?
Speaker 3: Yeah, but where in George? I'm sorry, Augusta, Augusta. There's
Speaker 3: a golf course. There's a golf course here. There's a
Speaker 3: golf course there. All right, we appreciate looking at that.
Speaker 2: Right now, you're listening to the tape.
Speaker 8: Cat's are live program Bloomberg Markets weekdays at ten am
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Speaker 3: You know, there's some legal stuff coming up here.
Speaker 2: Some of these things, their patents don't last very long,
Speaker 2: and there's some stuff going on out there. So we
Speaker 2: figured let's chick in with Rania set Home Managing partner
Speaker 2: set Home Law Growth Ranya talk to us about kind
Speaker 2: of what are some of the issues with these weight
Speaker 2: law drugs is in terms of I don't know patents
Speaker 2: and competition similar drugs out there.
Speaker 3: What are you looking at?
Speaker 6: Well?
Speaker 11: Interestingly enough, Nordisks patent is set to expire in twenty
Speaker 11: twenty six, and companies don't want to wait until twenty
Speaker 11: twenty six, and apparently neither do consumers. And one company
Speaker 11: out of China, Huadong Medical. I apologize if I mispronounced
Speaker 11: that sued in China and one an invalidated Novo nor
Speaker 11: Disks patent. However, Nova nor Drisk is upset about this
Speaker 11: and is currently appealing the decision. So stay tuned to
Speaker 11: determine when generics will be available to all.
Speaker 6: Is there any sort of clear timetable of when that
Speaker 6: could be?
Speaker 11: I couldn't give you a clear timetable. Even in the
Speaker 11: United States, the courts are clogged and busy and things
Speaker 11: take a lot of time. I have no idea, but
Speaker 11: I don't think a year is a long time that
Speaker 11: much I can say, Okay.
Speaker 3: Yeah, buddy, mine's actually talking about the courts being clocked.
Speaker 3: He's an attorney in New Jersey.
Speaker 2: Stuff that has been on his books for like six
Speaker 2: seven years is now just coming to trial because eiy're
Speaker 2: backed up from the pandemic and b thorny judges like
Speaker 2: to have. Judges have been retiring and leaving and they
Speaker 2: haven't approved anyone to come in, so there's just no judges.
Speaker 3: I'm like, you kidding.
Speaker 11: I've experienced that, and it's a terrible conversation to have
Speaker 11: with clients. It's extremely frustrating because we are in the
Speaker 11: business of providing solutions, or trying to provide solutions, and
Speaker 11: there is none and we just have to wait and see.
Speaker 11: Nobody likes to hear that.
Speaker 3: Yeah, exactly, all right.
Speaker 2: So in some of these weight laws drugs, I mean,
Speaker 2: these patents seem kind of short here, but I mean,
Speaker 2: I guess this is gonna be a monstrous market.
Speaker 3: It is a big market.
Speaker 2: It isn't expected to explode here. So what are the
Speaker 2: Novo Nordis of the world trying to do here? Because
Speaker 2: a they're the ones that invested all this money to
Speaker 2: come up with these drugs. What are they doing to
Speaker 2: try to protector their position?
Speaker 11: I guess, well, obviously, you know, they want you to
Speaker 11: wait until twenty twenty six before the generics come out.
Speaker 11: But Astrozenica and other big pharma don't want you to
Speaker 11: wait and are looking at oral medications and apparently they're
Speaker 11: in like early stages and we'll see when they are
Speaker 11: made available. But the most you know, interesting thing that's
Speaker 11: happening right now, at least in my opinion, are these
Speaker 11: compounding pharmacies. So compounding pharmacies are allowed to buy law,
Speaker 11: change formulas and create new drugs for specific patients or
Speaker 11: to assist with shortages. And we do have a shortage,
Speaker 11: apparently it's global. But they're not using approved drugs, so
Speaker 11: the someaglitude, I think that's how it's pronounced. They're using
Speaker 11: a non FDA approved version of it. And at least
Speaker 11: one state, the state of Virginia, is worried that there
Speaker 11: could be some health risks associated with the ingesting of it.
Speaker 2: Is there, I would think the answers yes, But is
Speaker 2: there a black market for these weight low drugs because
Speaker 2: the man has got to be just crazy?
Speaker 11: Oh for sure. And some of them are on the internet.
Speaker 11: You can buy them from abroad. Of course you're not
Speaker 11: quite sure what you're buying, but the bottle or the
Speaker 11: needle looks like it should.
Speaker 6: I wanted to bring up a story that we had
Speaker 6: on the terminal from Bloombergnese reporters Simone Foxmen and Laura
Speaker 6: Nemius last week about how ozempics manias billions and bills
Speaker 6: are coming for taxpayers. So they're writing about how state
Speaker 6: and local governments across the US are grappling with this
Speaker 6: growing problem about how not surprisingly expensive drugs to treat
Speaker 6: diabetes and obesity or threatening to drain their healthcare budgets.
Speaker 6: How do you view this, So, what's the issue here
Speaker 6: here and what could it mean moving forward?
Speaker 11: Well, these drugs are very expensive. I know several people
Speaker 11: who are on it and they're telling me they're spending
Speaker 11: you know, twelve fourteen hundred and plus per month. So
Speaker 11: that's a difficult number to sustain in a long term.
Speaker 11: And these drugs are supposed to be taken in perpetuity,
Speaker 11: so it's not even for a short period of time.
Speaker 11: So I think once drugs become generic and they're more
Speaker 11: widely available and the formulas changed slightly, the costs come
Speaker 11: down because there's they're widely available in the marketplace. So
Speaker 11: I think we're going to be seeing a change in pricing,
Speaker 11: but not until more of these drugs are available.
Speaker 2: Because right now it's I mean, the question is who
Speaker 2: does pay for it?
Speaker 3: I mean, I guess it's.
Speaker 2: The point of I guess Simone's reporting is that it's
Speaker 2: coming back to the States, right Yeah, and.
Speaker 6: It's draining their healthcare budgets, is what they were writing about.
Speaker 2: Yeah, So I don't I mean, on that side, you
Speaker 2: could say, boy, it would be good to get to
Speaker 2: generics as quickly as possible to lower the cost for people,
Speaker 2: because we know the demand is there.
Speaker 3: You know that's true.
Speaker 11: But there's a lot of controversy, and again I'm not
Speaker 11: I don't know what my opinion on this is. I
Speaker 11: haven't really thoroughly given it some thought. But several people
Speaker 11: are taking the drug not because of diabetes. This is
Speaker 11: a diabetic the drug specifically for yes, and there are
Speaker 11: a lot of drugs like Matt Foreman, for example. It's
Speaker 11: used to treat a variety of things. So if this
Speaker 11: drug was initially made to help with a variety of matters,
Speaker 11: or it's now been discovered that it helps with a
Speaker 11: variety of matters, then something, you know, needs to be
Speaker 11: done to assist with the shortage if nothing else.
Speaker 3: Yeah, I mean I saw a story just early on
Speaker 3: on this is the zepic thing.
Speaker 2: This is some something on TV about this one doctor
Speaker 2: Beverly Hills was writing a lot of prescriptions what goodness,
Speaker 2: you know, and they were just looking at people walking
Speaker 2: in and out of his office and they're all the
Speaker 2: beautiful people, but they were still getting all these scripts.
Speaker 6: And you know, it didn't seem to be it's supposed
Speaker 6: to be for people who were diabetic.
Speaker 2: Yeah, diabetic obesity and all these underlying health issues associated
Speaker 2: with that.
Speaker 3: So there's a lot to do from.
Speaker 2: The government perspective, from the inflation, I mean, from the
Speaker 2: insurance perspective, and then also the legal side in terms
Speaker 2: of you know, the patents and generics and compounding pharmacies,
Speaker 2: as you mentioned, a lot to develop here for this market.
Speaker 3: So we'll stay on top of that.
Speaker 2: Of course, Ronnie set Home joins us and we appreciate
Speaker 2: getting her time managing partner at set.
Speaker 3: Home Law Group. So I don't know anybody who's taking these.
Speaker 6: I personally do not. Maybe they do, I just maybe
Speaker 6: they haven't told me that they don't want something like
Speaker 6: dune it under the radarn.
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