WEBVTT - Stock Slip Before Powell as Yields Rise 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.520 --> 0:00:14.680 Weekdaily reporting from the magazine that helps global leaders stay 0:00:14.720 --> 0:00:18.799 ahead with insight on the people, companies, and trends shaping 0:00:18.800 --> 0:00:23.760 today's complex economy. Plus global business, finance and tech news 0:00:23.800 --> 0:00:27.760 as it happens. The Bloomberg Business Week Daily Podcast with 0:00:27.920 --> 0:00:31.760 Carol Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.400 --> 0:00:34.560 All Eyes on Jackson holl As the FED kicks off 0:00:34.560 --> 0:00:38.120 its Economic Symposium. It's the flagship event for the US 0:00:38.159 --> 0:00:42.479 Central Bank. Vetcher J Powell set to speak tomorrow. Before that, 0:00:42.640 --> 0:00:45.680 former Federal Reserve Governor Betsy Duke was on Bloomberg Surveillance 0:00:45.760 --> 0:00:49.680 earlier today. She gave her expectations for the chair speech 0:00:49.760 --> 0:00:51.760 Friday at the symposium. 0:00:52.360 --> 0:00:55.120 Jay Powell, in terms of his legacy, is looking at 0:00:55.160 --> 0:00:57.960 what happens to his mandate, what happens to inflation, what 0:00:58.120 --> 0:01:01.560 happens to employment, and how well does he manage that. 0:01:01.720 --> 0:01:04.200 It's not any single speech. He's one of fos focus 0:01:04.240 --> 0:01:10.360 primarily on the decision framework and not give any indication 0:01:10.480 --> 0:01:13.440 of where he's leaning for September. Inflation expectations are going 0:01:13.480 --> 0:01:16.080 to be the key over the next year. 0:01:16.160 --> 0:01:16.479 Or two. 0:01:16.959 --> 0:01:19.440 If inflation expectations get out of line, then the FED 0:01:19.480 --> 0:01:20.560 will be very concerned. 0:01:20.760 --> 0:01:24.360 That's Betsy Duke, former FED governor on Bloomberg Surveillance earlier today. 0:01:24.440 --> 0:01:28.240 Joining us now from Jackson Hole, Wyoming is Bloomberg Surveillance 0:01:28.240 --> 0:01:31.560 co host Tom Keen. Tom the event it's supposed to 0:01:31.560 --> 0:01:35.200 be about policy, about economics, about this economy, but happening 0:01:35.200 --> 0:01:38.800 at the same time the Justice Department signaling possible plans 0:01:38.800 --> 0:01:41.680 to investigate Federaliser of Governor Lisa Cook. 0:01:41.720 --> 0:01:43.520 How is that hanging over the event? 0:01:44.600 --> 0:01:47.120 Oh, it's hanging over to exec correct language, There's no 0:01:47.240 --> 0:01:50.200 question about it. You still have the normal cadence of 0:01:50.280 --> 0:01:53.720 Jackson Hole. For example, there's six, seven, eight papers that 0:01:53.760 --> 0:01:57.440 come out. Michael McKee prints them out perfectly, and he 0:01:57.600 --> 0:02:01.880 reads every page of the academic papers. Guess what I 0:02:01.960 --> 0:02:04.880 don't do that. I'm talking to the reporters here gathered, 0:02:05.080 --> 0:02:07.520 and you're right at the top of a pile of topics. 0:02:07.560 --> 0:02:09.000 Here is Lisa Cook. 0:02:09.280 --> 0:02:12.960 So what's what's she's I spoke to Mike earlier. He 0:02:13.000 --> 0:02:17.080 said she's expected to arrive. She hasn't arrived yet. Does 0:02:17.160 --> 0:02:21.360 it does it take away from FED chair Powell's message tomorrow. 0:02:21.400 --> 0:02:24.920 Does it distract from what he says about this economy 0:02:24.919 --> 0:02:27.320 and what he indicates or not about September. 0:02:27.840 --> 0:02:30.040 It's a really fair question. I don't think so. I 0:02:30.040 --> 0:02:31.960 think Michael McHugh is better at this than I am 0:02:32.000 --> 0:02:36.000 would say exactly the same thing. What is different here, 0:02:36.120 --> 0:02:40.320 and our Simon Flint in Singapore absolutely nails it in 0:02:40.400 --> 0:02:44.440 an essay today. What's different here is the hard facts 0:02:44.480 --> 0:02:47.440 of the moment are catching up with the Chairman. I 0:02:47.480 --> 0:02:50.120 don't know if they're rewriting the speech tonight with the 0:02:50.160 --> 0:02:52.760 stars out above the tetons, or maybe they're writing it 0:02:53.080 --> 0:02:56.280 on the airplane. But what is very clear here is 0:02:56.320 --> 0:02:59.160 the hard facts, as mister Flint says, have caught up. 0:02:59.200 --> 0:03:02.320 You have the economic today, you got concern about inflation 0:03:02.639 --> 0:03:04.720 and tim The number one thing I'm launching off the 0:03:04.720 --> 0:03:08.280 Bloomberg year is the thirty year bend. Once again we're 0:03:08.320 --> 0:03:11.560 making a dash up near five percent. That's the kind 0:03:11.560 --> 0:03:15.800 of inflation whispers that have to change the speech. 0:03:16.400 --> 0:03:18.919 Tom Of course, you mentioned the Chairman will speak tomorrow 0:03:19.000 --> 0:03:21.040 at Jackson Hole. Can you just tell us a bit 0:03:21.080 --> 0:03:24.240 more about what attendees are really looking to hear from him. 0:03:24.840 --> 0:03:27.400 It varies every year. There was one year here I'm 0:03:27.440 --> 0:03:30.040 going to say three years ago. I can't remember where 0:03:30.080 --> 0:03:32.800 we were prepared for a fifteen minute twenty minute speech, 0:03:33.120 --> 0:03:36.280 and I believe he spoke for eight minutes. So every 0:03:36.320 --> 0:03:39.720 year is different. I think the pageantry will be here, 0:03:39.880 --> 0:03:43.920 there'll be an international audience here, Christin mcguartier, mister Nagel 0:03:43.960 --> 0:03:46.720 of Germany is here. Bailey of the Bank of England 0:03:46.760 --> 0:03:50.480 scheduled as well. But what's interesting is within the pageantry, 0:03:51.080 --> 0:03:54.240 what do you expect from a speech? And the answer 0:03:54.280 --> 0:03:57.840 is they'll be looking for certain nuances and certain single 0:03:58.040 --> 0:04:00.960 sentences that will be different. You're not going to get 0:04:00.960 --> 0:04:03.360 a lot of is what's he going to do in September? 0:04:03.560 --> 0:04:05.160 That would be rude. He's not going to do that. 0:04:05.200 --> 0:04:05.400 Here. 0:04:05.920 --> 0:04:08.320 You mentioned a lot of those international voices, I mean 0:04:08.360 --> 0:04:11.240 the ECB, We've got Bank of Japan, Emerging Markets. How 0:04:11.240 --> 0:04:13.720 are they playing a part of the conversation this year? 0:04:13.720 --> 0:04:16.640 In particular, Nora, you know my theme. 0:04:16.680 --> 0:04:19.680 You're already stealing my theme as we go to tomorrow 0:04:20.080 --> 0:04:23.960 with Lisa A. Bramo. It's to me the international angle 0:04:24.000 --> 0:04:26.159 here is the importance point. 0:04:26.520 --> 0:04:28.640 William Rhodes Bill Rhoads. 0:04:28.320 --> 0:04:31.919 Of City Group Iconic at City Bank, it's called City 0:04:31.960 --> 0:04:35.479 Bank back then had this great phrase central banker to 0:04:35.560 --> 0:04:38.680 the world. He took it from academics. This is a 0:04:38.839 --> 0:04:43.159 Jackson hole where Jerome Powell is the central banker to 0:04:43.200 --> 0:04:47.839 the world is he defends delicately the way we've done 0:04:47.880 --> 0:04:52.560 banking for years, pushing against President Trump. The theme internationally 0:04:52.600 --> 0:04:56.000 here of central bank independence will be key. 0:04:56.360 --> 0:04:58.440 I think also the theme of labor tom and it's 0:04:58.440 --> 0:05:00.440 something that we've spent a lot of time I'm talking 0:05:00.520 --> 0:05:04.320 about in recent weeks, especially since that shocking report came 0:05:04.360 --> 0:05:07.360 out earlier this month about those numbers for the month 0:05:07.360 --> 0:05:10.400 of July, and it's really shifted the conversation about what 0:05:10.480 --> 0:05:14.240 employment in the United States and what healthy employment numbers 0:05:14.240 --> 0:05:17.159 look like in the United States where borders are closed, 0:05:17.360 --> 0:05:23.000 immigration legal and illegal is down, and growth among American 0:05:23.080 --> 0:05:26.200 families is not what it was a couple generations ago. 0:05:26.320 --> 0:05:28.719 What does that picture look like in terms of reshaping 0:05:28.880 --> 0:05:30.480 the American workforce. 0:05:30.560 --> 0:05:33.120 Well in reshaping the speech as well. It's a movable 0:05:33.160 --> 0:05:35.680 feast right now. Tim. The number one thing is we've 0:05:35.720 --> 0:05:39.040 seen a trend in the data. The conceit is labor 0:05:39.120 --> 0:05:42.599 data always lags. Okay, fine, and we've seen this trend, 0:05:42.960 --> 0:05:47.080 including continuing claims. Today Bramo put out on Twitter, I 0:05:47.240 --> 0:05:50.560 was stuck in an airport somewhere. Bramo put out on 0:05:50.600 --> 0:05:56.039 Twitter that great continuing claims chart which shows this explosion 0:05:56.160 --> 0:05:59.839 up in the weekly data. That's the kind of tea 0:06:00.120 --> 0:06:03.080 leaves that gets have fed the shift. President Trump wants 0:06:03.120 --> 0:06:05.359 them to shift quicker. And let's remember we've got that 0:06:05.520 --> 0:06:09.719 jobs report early September before Mike McKee's in that press 0:06:09.760 --> 0:06:11.760 conference September seventeenth. 0:06:12.360 --> 0:06:14.719 Well, I want to just talk about the energy. I mean, 0:06:14.760 --> 0:06:16.919 you've been to so many of these symposiums. What's the 0:06:17.080 --> 0:06:19.560 energy like on the ground this year? In particular? 0:06:20.480 --> 0:06:23.400 Quiet? First thing I noticed when I walked in. There's 0:06:23.440 --> 0:06:27.279 a whole new quiet tone to the Mike McKinnon. I remember, 0:06:27.320 --> 0:06:30.360 I remember August of seven, which was I think i'll 0:06:30.400 --> 0:06:34.080 say seven days after libor or Ois went out four 0:06:34.160 --> 0:06:37.600 standard deviations. This place was chaos. 0:06:37.920 --> 0:06:39.960 My guess is a lot. 0:06:39.800 --> 0:06:43.200 Of people are coming in tomorrow morning, and tomorrow morning 0:06:43.240 --> 0:06:46.239 here at the Jackson Lake Lodge will not be quiet. 0:06:46.400 --> 0:06:49.280 There'll be a real turnout for the speech. With that said, 0:06:49.320 --> 0:06:52.760 it's one party, academic, but it is one part about 0:06:52.800 --> 0:06:55.760 this attack on the Central Bank by President Trump. 0:06:56.160 --> 0:06:58.240 Tom'm gonna have to leave it there. We're gonna speak 0:06:58.279 --> 0:07:00.320 to you throughout in the next couple of time days. 0:07:00.320 --> 0:07:02.640 Appreciate your time, and we're glad you arrived safely. I 0:07:02.640 --> 0:07:05.240 know it was a long journey to get there. Tom Keen, 0:07:05.279 --> 0:07:08.320 Bloomberg Surveillance co host out there at the Jackson Hole 0:07:08.440 --> 0:07:10.440 Economic Symposium. 0:07:10.800 --> 0:07:11.560 Stay with us. 0:07:11.600 --> 0:07:14.560 More from Bloomberg Business Week Daily coming up after this. 0:07:18.680 --> 0:07:22.560 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:07:22.600 --> 0:07:25.320 us live weekday afternoons from two to five eas during 0:07:25.480 --> 0:07:28.720 listen on Apple Karplay and Android autto with the Bloomberg 0:07:28.800 --> 0:07:32.760 Business app, or watch us live on YouTube well. 0:07:32.760 --> 0:07:35.800 Also watching the economics imposium in Jackson is Ali McCartney, 0:07:35.800 --> 0:07:38.840 Managing director of wealth management and private wealth advisor with 0:07:38.920 --> 0:07:41.680 Alignment Partners at Ubs. She and the team managed just 0:07:41.720 --> 0:07:44.280 over one billion dollars in assets. She joins us from 0:07:44.280 --> 0:07:48.200 Rehoboth Beach, Delaware this afternoon. Ali, good to have you 0:07:48.280 --> 0:07:51.440 back on the program. What do you think Fed Chair 0:07:51.760 --> 0:07:53.440 Jay Powell will communicate tomorrow? 0:07:55.040 --> 0:07:59.120 I think, as usual, you will probably not communicate exactly 0:07:59.200 --> 0:08:01.880 the things that the market is looking for. But I 0:08:01.920 --> 0:08:05.120 think that what he will communicate you just spoke about briefly, 0:08:05.560 --> 0:08:11.400 which is this tension between the dual mandate, specifically that 0:08:11.400 --> 0:08:15.600 they are now looking more at weakening softening data in 0:08:15.640 --> 0:08:20.160 a labor market than they are at long term inflation expectations, 0:08:20.440 --> 0:08:23.760 which although Tom talked about the movement in the thirty year, 0:08:24.160 --> 0:08:27.560 seemed to be quite consistent. The last thing I'll leave 0:08:27.560 --> 0:08:29.760 you with is to remember that last year was in 0:08:29.800 --> 0:08:32.199 a sense of quite an epic meeting, and that that 0:08:32.440 --> 0:08:36.360 was the beginning of the long awaited pivot. I think 0:08:36.400 --> 0:08:41.520 that this meeting will be in a sense less revelatory 0:08:41.559 --> 0:08:42.160 than that one. 0:08:43.080 --> 0:08:45.160 When we look at the market performance this past year 0:08:45.240 --> 0:08:47.480 thus far, it's we have the S and P five hundred, 0:08:47.480 --> 0:08:50.079 that's up about eight percent. Of course, that's a bit 0:08:50.120 --> 0:08:51.920 different from what we saw in the past couple of 0:08:52.000 --> 0:08:55.040 years where we were seeing double digit gains to end 0:08:55.040 --> 0:08:57.240 the year here. So what do you think the market 0:08:57.280 --> 0:09:00.600 really needs to hear to maintain this moment some here 0:09:00.880 --> 0:09:02.840 as we go into the second half of this year. 0:09:04.760 --> 0:09:07.160 So I think we are at we're a bit in 0:09:07.240 --> 0:09:09.640 a bit of a waiting game, right, that's a normal thing. 0:09:09.679 --> 0:09:13.000 In late August, volumes are really low. You know, people 0:09:13.000 --> 0:09:16.160 are on vacation less trading. We also happen to be 0:09:16.480 --> 0:09:20.439 awaiting Jackson Hole on Friday and in video earnings next week, 0:09:20.520 --> 0:09:24.200 in video being the largest contributor from a market cap 0:09:24.280 --> 0:09:27.040 and from an earnings perspective to the S and P 0:09:27.200 --> 0:09:31.120 five hundred, and that being the conversation that is being 0:09:32.360 --> 0:09:35.960 you know, discussed now about you know, has AI pulled 0:09:36.000 --> 0:09:39.000 back which have been driving the market. My sense is 0:09:39.000 --> 0:09:42.760 that from an equity perspective, as you said, we've had 0:09:42.800 --> 0:09:46.160 two twenty plus year return two years of twenty plus 0:09:46.400 --> 0:09:50.199 year returns. We you know, are up thirty percent from 0:09:50.360 --> 0:09:54.480 the tariff day low and ten percent as you said, 0:09:54.520 --> 0:09:56.880 a couple of days ago year to date, and we're 0:09:56.920 --> 0:10:00.400 at multiples that we really have only seen twice in 0:10:00.440 --> 0:10:04.280 my trading life, the first being one very unique day 0:10:04.360 --> 0:10:06.600 during the pandemic and the other during the height of 0:10:06.600 --> 0:10:10.000 the Internet bubble. So you know, what we need, I 0:10:10.040 --> 0:10:13.720 think is stability to keep us in this range and 0:10:13.800 --> 0:10:16.959 going higher. And I think the bull market will remain 0:10:17.000 --> 0:10:19.000 in tac I think it will likely be driven by 0:10:19.000 --> 0:10:22.920 a continued expansion in the AI trade, both in terms 0:10:23.040 --> 0:10:28.960 of infrastructure buys and builds, data and power picks and shovels. 0:10:29.800 --> 0:10:34.560 Both margins going up and productivity going up. And I 0:10:34.600 --> 0:10:37.840 think it will also be very much supported by a 0:10:37.920 --> 0:10:41.160 decreasing interest rate cycle. But we're certainly in a more 0:10:41.200 --> 0:10:43.839 precarious position than we have been in a number of 0:10:43.920 --> 0:10:45.520 years from a multiple perspective. 0:10:45.920 --> 0:10:48.400 Ali, I'm trying to figure this out and I'm hoping 0:10:48.440 --> 0:10:50.240 you can help help out with this. It's something I've 0:10:50.240 --> 0:10:52.200 been thinking a lot about lately, and it's this idea 0:10:52.400 --> 0:10:55.120 of a weakening consumer. And in just a few minutes 0:10:55.120 --> 0:10:58.400 were actually gonna speaking with the CFO of Kava Trisia Tolliver. 0:10:58.800 --> 0:10:59.000 Yeah. 0:11:00.320 --> 0:11:04.120 So Cabstock Film, you know, more than twenty percent in 0:11:04.160 --> 0:11:06.400 a single day last week because the company pulled back 0:11:06.400 --> 0:11:10.560 its guidance, essentially talking about a fogginess with the American 0:11:10.600 --> 0:11:13.760 consumer out there. At the same time, you have these 0:11:14.000 --> 0:11:18.040 high margin AI companies that are essentially just printing money, 0:11:18.160 --> 0:11:20.559 whether we talk about it from an Nvidia perspective, from 0:11:20.559 --> 0:11:24.400 a meta platforms perspective, with margins such as those, what's 0:11:24.440 --> 0:11:26.960 the tension there in a world with a weakening consumer? 0:11:28.800 --> 0:11:31.560 I think you nailed it. I think that bifurcation and 0:11:31.600 --> 0:11:34.640 that tension really exists. I think it exists in terms 0:11:34.679 --> 0:11:38.000 of goods and services. I think it exists in terms 0:11:38.080 --> 0:11:42.679 of consumer discretionary ver staples, and I think it exists 0:11:42.720 --> 0:11:46.439 in terms of, you know, the vast difference in wealth 0:11:46.440 --> 0:11:49.199 and earning potential in this country. So what I am 0:11:49.240 --> 0:11:51.920 seeing in my high end clientele, who are looking at 0:11:52.000 --> 0:11:56.000 portfolios that are the highest they've ever been, and what 0:11:56.040 --> 0:11:59.880 I'm seeing in my own neighborhood is the same. People 0:12:00.080 --> 0:12:04.520 are definitely more reticent to spend, both simply the cost 0:12:04.600 --> 0:12:07.760 of goods and the tiriff implications which we're starting to 0:12:07.800 --> 0:12:11.240 get wind of, are real, and people are going to 0:12:11.320 --> 0:12:14.880 have to make choices and decisions. The consumer has managed 0:12:14.920 --> 0:12:18.400 on all levels to hold up extraordinarily well. It's like 0:12:18.400 --> 0:12:21.880 the little engine that could, but it cannot last forever. 0:12:22.400 --> 0:12:25.200 And so I think that the next number of quarters 0:12:25.240 --> 0:12:27.800 there is going to continue to be exactly what you 0:12:27.920 --> 0:12:32.240 said with this bifurcation. In many ways that you slice 0:12:32.280 --> 0:12:36.680 the data, whether it's demographics, whether it's earnings, whether it's 0:12:36.720 --> 0:12:40.440 sector between the haves and the have nots. 0:12:41.120 --> 0:12:43.240 What are the opportunities here in the market. How are 0:12:43.240 --> 0:12:46.280 you advising your clients? What's the safe have in trade 0:12:46.360 --> 0:12:46.720 right now? 0:12:47.960 --> 0:12:50.800 Yeah? So look, I think all of this year it 0:12:50.880 --> 0:12:53.680 has paid to be diversified, which have not been the 0:12:53.720 --> 0:12:56.760 case in a very long time. So you see right now, 0:12:57.040 --> 0:13:00.959 you see equities that have recovered and gone up no 0:13:00.960 --> 0:13:04.160 matter which area you're looking at and which geography. Largely 0:13:04.600 --> 0:13:07.800 you see gold, which has done its job at protecting 0:13:07.880 --> 0:13:12.120 but also continues to provide upside. And you see fixed 0:13:12.120 --> 0:13:15.480 income you know, ig in the US trading at twenty 0:13:15.520 --> 0:13:18.199 five year tights as people try to get ahead of 0:13:18.600 --> 0:13:23.000 the FED moving down. So there are a lot of opportunities. However, 0:13:23.120 --> 0:13:27.880 each is very expensive. So I think the first is 0:13:27.920 --> 0:13:32.320 to continue to be diversified and even though it feels 0:13:32.520 --> 0:13:36.640 like things are expensive, to continue to be invested. The 0:13:36.679 --> 0:13:39.880 second is to look for areas that still have room 0:13:39.960 --> 0:13:44.240 to grow from a relative perspective, whether that's healthcare, whether 0:13:44.320 --> 0:13:48.719 that's utilities which can also provide some defense, whether that's financials, 0:13:48.720 --> 0:13:51.000 which again are trading high but have a number of 0:13:51.080 --> 0:13:55.240 tailwinds from a regulatory and an interest rate perspective. So 0:13:55.280 --> 0:13:58.720 there most certainly are opportunities out there, but you know 0:13:58.760 --> 0:14:01.680 what we've been finding and especially finding this week, is 0:14:02.120 --> 0:14:05.120 it may not be the time to play all beta 0:14:05.400 --> 0:14:08.320 or buy the SMP. This may be a time to 0:14:08.360 --> 0:14:11.199 be much more discreete and disciplined about what you buy 0:14:11.400 --> 0:14:12.520 and when you buy it. 0:14:13.240 --> 0:14:14.839 We only have about a minute left. 0:14:14.920 --> 0:14:18.000 But I was talking to a colleague a little earlier 0:14:18.040 --> 0:14:21.560 and she sort of explained the sense out in Silicon 0:14:21.640 --> 0:14:25.640 Valley right now when it comes to the AI and 0:14:25.680 --> 0:14:27.800 the AI race and what private companies are doing. And 0:14:27.840 --> 0:14:29.880 she described it as being on this roller coaster, but 0:14:30.560 --> 0:14:32.920 there's this lack of understanding about where we are on 0:14:32.960 --> 0:14:34.840 the roller coaster on the way up, if we're close 0:14:34.880 --> 0:14:36.600 to the top or not are we. 0:14:38.200 --> 0:14:40.680 It's a really great question. And I have found in 0:14:40.720 --> 0:14:42.680 my career, being both on the East Coast and the 0:14:42.680 --> 0:14:45.880 West Coast, that there is always a difference in opinion, 0:14:46.040 --> 0:14:51.320 o bulliance and understanding of various technologies that are coming 0:14:51.400 --> 0:14:54.960 out of Silicon Valley. I think that we probably remain 0:14:55.520 --> 0:15:00.320 in the second early third inning. We are not even 0:15:00.480 --> 0:15:04.040 close to there yet. What I think the major difference 0:15:04.120 --> 0:15:08.920 is by people that live, traffic and work out there, 0:15:09.240 --> 0:15:12.520 is that they are thinking many steps ahead in storms 0:15:12.520 --> 0:15:17.360 of large scale effects on data on businesses, whereas I 0:15:17.400 --> 0:15:19.480 find that my clients and the people that I work 0:15:19.520 --> 0:15:22.880 with on Wall Street, outside of let's say the analyst community, 0:15:23.240 --> 0:15:26.200 are much more focused on sort of large language models 0:15:26.280 --> 0:15:30.080 chat GPT, and that's why I think there is extreme 0:15:30.200 --> 0:15:31.720 room to run in the next decade. 0:15:31.800 --> 0:15:35.120 Alan McCartney, Managing director, Wealth Management and private wealth Advisor 0:15:35.120 --> 0:15:36.640 at Alignment Partners at UBS. 0:15:36.840 --> 0:15:39.320 This is Bloomberg. Stay with us. 0:15:39.400 --> 0:15:47.160 More from Bloomberg Business Week Daily coming up after this. 0:15:47.160 --> 0:15:51.280 This is the Bloomberg Business Week Daily Podcast. Listen live 0:15:51.360 --> 0:15:54.480 each weekday starting at two pm Eastern on Apple Cocklay 0:15:54.480 --> 0:15:57.280 and Android Auto with the Bloomberg Business App. You can 0:15:57.360 --> 0:16:00.800 also listen live on Amazon Alexa from our flagship New 0:16:00.880 --> 0:16:04.600 York station, Just say Alexa Play Bloomberg eleven thirty. 0:16:06.360 --> 0:16:08.680 There's been this renewed interest on rare earths and critical 0:16:08.720 --> 0:16:11.400 minerals as trade attentions between the US and China have 0:16:11.560 --> 0:16:14.160 flared up. On that We've spent quite a bit of 0:16:14.200 --> 0:16:16.280 time over the last few months talking about them with 0:16:16.400 --> 0:16:19.440 CEOs of companies in the space. Jim Litinski over at 0:16:19.560 --> 0:16:22.200 MP Materials, whose company is set to have the Defense 0:16:22.240 --> 0:16:25.120 Department take a four hundred million dollar preferred equity stake. 0:16:25.640 --> 0:16:28.000 For more on rare earths, we're joined by Oliver Friesen, 0:16:28.200 --> 0:16:31.320 CEO at Guardian Metal Resources. It's a London based metals 0:16:31.360 --> 0:16:34.240 exploration and development company. It's looking to bring production of 0:16:34.280 --> 0:16:38.360 tungsten back to the US. Oliver joins US from Toronto. Oliver, 0:16:38.560 --> 0:16:40.880 we've been learning a lot about rares lately. I think 0:16:40.920 --> 0:16:44.480 my geology one oh one professor would be very happy 0:16:44.520 --> 0:16:47.560 with what we've been talking about. We Gary Evans from 0:16:47.680 --> 0:16:50.440 US antimony on last week talking about the importance of 0:16:50.480 --> 0:16:53.520 antimony when it comes to ballistics. That was something that 0:16:53.600 --> 0:16:56.720 was new to me. Your focus is tungsten. Why is 0:16:56.760 --> 0:16:59.840 tungsten important because it's not classified as a rare earth. 0:17:00.640 --> 0:17:02.400 Yeah, well, first of all, thanks for having me on, Tim, 0:17:02.400 --> 0:17:04.520 It's great to be here to talk more about tungsten. 0:17:04.880 --> 0:17:07.640 Funny enough, you mentioned antimony in the use within munitions 0:17:07.640 --> 0:17:10.640 and ballistics. It's the same reason you need tungsten. Tungsten 0:17:10.720 --> 0:17:12.560 is one of the most dense metals on the planet 0:17:12.600 --> 0:17:14.960 and also has the highest melting point, so it's been 0:17:15.040 --> 0:17:17.679 used in the production of munitions for decades and decades 0:17:17.680 --> 0:17:20.720 and decades. Now that's just one small use case, but effectively, 0:17:20.720 --> 0:17:23.400 when you look at the entire critical metals supply chain, 0:17:23.800 --> 0:17:25.960 if even one of those metals isn't there, that can 0:17:26.000 --> 0:17:28.199 shut down manufacturing in the United States of America. So 0:17:28.240 --> 0:17:30.560 it's important that we focus on not only just rare earths, 0:17:30.920 --> 0:17:33.920 which as you mentioned, are very important antimony, but tungsten 0:17:34.160 --> 0:17:37.000 is definitely up there, considering the fact that we're very 0:17:37.000 --> 0:17:40.600 reliant on unfriendly adversaries for global tungsten supplies. 0:17:41.560 --> 0:17:43.600 So I want to talk a bit more about your 0:17:43.680 --> 0:17:46.639 company in particular here which end markets you know, maybe 0:17:46.640 --> 0:17:50.080 eves defense renewables are really driving the most urgency for 0:17:50.160 --> 0:17:51.120 your business right now? 0:17:52.320 --> 0:17:54.760 Yeah, I would say probably the most urgent use cases 0:17:55.000 --> 0:17:58.639 is a cross defense because of that density, it's ubiquitous, 0:17:58.680 --> 0:18:00.800 and it's very important in the productions and ammunitions and 0:18:01.160 --> 0:18:04.000 things like tank armers as well. So really, right now, 0:18:04.040 --> 0:18:06.760 given the geopolitical landscape, we're seeing a huge amount of 0:18:07.520 --> 0:18:10.680 a surgeon demand and increasing demand across the defense industry 0:18:10.720 --> 0:18:13.199 for this metal. But as you pointed out, you know, 0:18:13.240 --> 0:18:15.000 it's not just a defense metal. This is a metal 0:18:15.040 --> 0:18:17.520 that's used in a lot of other industries. Some that 0:18:17.560 --> 0:18:22.080 come to mind aerospace, automotive, green energy is another one. 0:18:22.560 --> 0:18:25.800 It's a really important metal. It's almost irreplaceable in a 0:18:25.800 --> 0:18:28.720 lot of these technologies. So Defense is driving the narrative 0:18:28.760 --> 0:18:30.639 right now. But the same time, you know, we're hearing 0:18:31.080 --> 0:18:33.800 major manufacturers in the United States of America are actually saying, 0:18:34.160 --> 0:18:35.919 we can't get this tungsten. If we don't get it, 0:18:35.920 --> 0:18:36.920 we're going to be shutting down. 0:18:37.200 --> 0:18:39.320 So the Pentagon in July provide it as six point 0:18:39.320 --> 0:18:42.000 two million dollar ward to Golden Metal Resources. It's the 0:18:42.119 --> 0:18:46.040 US unit of your company to perform a pre feasibility 0:18:46.040 --> 0:18:49.520 study for a tungsten mind near Hawthorne, Nevada. Is this 0:18:49.960 --> 0:18:54.000 is this all the financing that you will need? Will 0:18:54.040 --> 0:18:56.040 you need more from the DoD, Will you need more 0:18:56.080 --> 0:18:58.440 from the government? Will you need to raise more? 0:18:59.760 --> 0:19:02.160 Yeah, So it's it's part of the puzzle for sure. 0:19:02.240 --> 0:19:04.560 So that six point two million dollar award that we've 0:19:04.600 --> 0:19:08.240 received from the Department Defense, which obviously we're very grateful 0:19:08.240 --> 0:19:11.040 to the current administration for that award, will cover some 0:19:11.080 --> 0:19:14.800 of the key engineering workstreams as part of that PFS study. 0:19:15.320 --> 0:19:18.040 But you're right, there are other expenditures associated with bringing 0:19:18.080 --> 0:19:22.640 that project and our projects into production. But concurrently with that, 0:19:22.960 --> 0:19:25.040 with that award from the Department of Defense, we raised 0:19:25.359 --> 0:19:29.720 twenty one million dollars US dollars, predominantly with existing shareholders, 0:19:29.720 --> 0:19:32.720 almost all institutional. So we use those funds to then 0:19:32.760 --> 0:19:35.880 cover the other additional costs and all the funding combined. 0:19:36.320 --> 0:19:39.639 Really the focus is on delivering two key tungus and 0:19:39.680 --> 0:19:41.680 minds to the US market, of which it's a metal 0:19:41.720 --> 0:19:44.000 the US has not mined for over a decade. 0:19:44.280 --> 0:19:47.720 Do you need government support when it comes to this project. 0:19:49.840 --> 0:19:50.359 We don't. 0:19:51.200 --> 0:19:53.640 And you know, for instance, we acquired Pilot Mount, which 0:19:53.680 --> 0:19:55.840 is a project that's received the award from the Department 0:19:55.880 --> 0:19:58.640 Defense almost five years ago, so it was a much 0:19:58.640 --> 0:20:01.040 different market than the land Escape was much different. And 0:20:01.080 --> 0:20:03.920 even at that time, we acquired it because we felt 0:20:03.920 --> 0:20:07.520 like it would be an economic tungsten operation. At previous 0:20:07.560 --> 0:20:10.920 pricing norms, which is around three hundred dollars, what's called 0:20:10.960 --> 0:20:13.960 an metric ton unit are about thirty thousand dollars a ton. 0:20:14.440 --> 0:20:17.200 That being said, the price, you know, fast forward five years, 0:20:17.840 --> 0:20:20.880 China has completely banned the exports of all tunks into 0:20:20.880 --> 0:20:23.480 the US market. The price is closer to fifty thousand 0:20:23.520 --> 0:20:26.280 dollars a ton right now. But even at historic norms, 0:20:26.320 --> 0:20:28.680 you know, this project in our projects, we believe makes sense. 0:20:28.960 --> 0:20:31.439 But obviously you know the tailwinds we're seeing now across 0:20:31.520 --> 0:20:34.560 the federal funding landscape, but also permitting gives us that 0:20:34.680 --> 0:20:37.880 much more confidence to push these projects forward and deliver 0:20:38.119 --> 0:20:41.240 minds in America to the US industrial base and defense partners. 0:20:42.280 --> 0:20:43.920 Oliver, let's talk a little bit about China. 0:20:43.960 --> 0:20:44.760 You brought it up here. 0:20:44.880 --> 0:20:47.440 How do you see China's dominance in the rare earth 0:20:47.680 --> 0:20:50.360 processing cheaping your strategy here? 0:20:51.800 --> 0:20:54.000 Yeah, No, it's a really good point, Noraen. I'm glad 0:20:54.000 --> 0:20:56.200 you brought it up, because what what sort of sets 0:20:56.280 --> 0:20:59.200 tungsen apart from you know, the antimonies and the rarest 0:20:59.200 --> 0:21:02.720 says we've discussed, is the fact that the downstream processing 0:21:02.760 --> 0:21:06.520 capacity actually fully exists on US soil. It's one of 0:21:06.560 --> 0:21:09.160 the kind of the very few critical metals of which 0:21:09.200 --> 0:21:11.800 the US has the ability to actually take what's called 0:21:11.800 --> 0:21:15.840 a tungsten concentrate and turn it into actual usable finished 0:21:15.840 --> 0:21:19.320 products for defense and for industry. So the benefit that 0:21:19.400 --> 0:21:21.280 we have is that the only thing missing in the 0:21:21.359 --> 0:21:24.359 US right now is a domestic mind source. You know, 0:21:24.440 --> 0:21:28.280 we import in the US, all of our concentrates from 0:21:28.400 --> 0:21:32.320 other countries, and just to give you a data point, China, 0:21:32.400 --> 0:21:36.800 Russian North Korea combined represent ninety percent of total global 0:21:36.800 --> 0:21:38.960