WEBVTT - Copper Has More Room -- And Momentum -- to Soar, Dudas Says 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:33.720 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well, PIM, 0:00:34.120 --> 0:00:38.120 copper is just surging to a two year high, and 0:00:38.200 --> 0:00:39.600 to get a little bit more of a sense of 0:00:40.000 --> 0:00:42.960 what's behind that, how much it's driving the shares of 0:00:43.080 --> 0:00:47.599 mining companies such as Freeport mcmarn shares up almost fift yesterday. 0:00:47.800 --> 0:00:51.000 Is Mike Judas. He's partner and metals and mining analyst 0:00:51.240 --> 0:00:55.360 Vertical Research based in Stamford, Connecticut. Mike, thanks so much 0:00:55.400 --> 0:00:58.040 for joining us. So why is copper rallying so much 0:00:58.120 --> 0:01:00.560 right now? Lisa and PIM. Great to be with you, 0:01:00.880 --> 0:01:03.160 m I think there are four reasons we've seen copper 0:01:03.240 --> 0:01:06.600 rally strongly over the past couple of weeks. I think 0:01:06.600 --> 0:01:09.280 the first two are macro oriented. You've seen the dollar 0:01:09.560 --> 0:01:13.760 reaching multi month lows, which certainly has been beneficial, and 0:01:14.120 --> 0:01:17.080 you don't dismiss the oil rally. We've seen over the 0:01:17.080 --> 0:01:18.880 past couple of weeks, you've seen a three to four 0:01:18.880 --> 0:01:22.560 dollar move higher and crude that's brought commodity fund money 0:01:22.600 --> 0:01:24.440 into the space, and I think some of that has 0:01:24.520 --> 0:01:28.120 vowed into copper and relative the copper itself, you're getting 0:01:28.160 --> 0:01:31.920 better than expected Chinese demand and data coming out of China, 0:01:31.959 --> 0:01:35.800 which is very important for copper. And finally, there's been 0:01:35.840 --> 0:01:39.560 supply shortfalls throughout two thousand and seventeen. The minors, because 0:01:39.560 --> 0:01:42.160 of the lack of capital spending and lack of expiration, 0:01:42.400 --> 0:01:44.000 have not been able to get as much comperence to 0:01:44.040 --> 0:01:46.720 the market as think people have anticipated. I think all 0:01:46.800 --> 0:01:48.960 that's combined to allow copper to have a really good 0:01:49.000 --> 0:01:51.400 past to three weeks. Do you really think it's set 0:01:51.400 --> 0:01:54.280 to continue, Mike, I mean, I'm looking at Freeport mcmaran, 0:01:54.360 --> 0:01:56.120 and we make a big deal about it because the 0:01:56.120 --> 0:01:58.560 stock goes to almost fifteen bucks a share, but this 0:01:58.600 --> 0:02:02.280 was a fifty dollar a share stop, you know, back when. Also, 0:02:02.920 --> 0:02:05.320 I believe that there was a big strike in Peru 0:02:05.560 --> 0:02:08.799 having to do with copper mining, and the strike is over, 0:02:08.840 --> 0:02:11.840 so maybe we get some more supply. Yeah, it's interesting 0:02:11.880 --> 0:02:14.200 so that when you have a strike and cru some 0:02:14.240 --> 0:02:18.000 people in miners and chillier concerned that that gets over Indonesia, 0:02:18.040 --> 0:02:20.720 which Freeport is very involved with with some of the 0:02:20.800 --> 0:02:25.240 machinations there. Freeports certainly was helped by the copper price 0:02:25.320 --> 0:02:27.600 move the last few days, but I think the market 0:02:27.639 --> 0:02:30.519 is starting to feel a little bit better with negotiations 0:02:30.600 --> 0:02:34.000 the company management of Freeports having with the Indonesian government 0:02:34.000 --> 0:02:36.680 to try to settle that dispute out a new mining 0:02:36.760 --> 0:02:39.600 contract license for Freeports like one of the I think 0:02:39.600 --> 0:02:42.840 it is the largest mine in the world, absolutely, and 0:02:43.080 --> 0:02:46.720 so that the market has been discounting prease severely in 0:02:46.760 --> 0:02:49.200 the valuation of Freeport if they're going to get any 0:02:49.280 --> 0:02:52.200 value for that mine. I think through yesterday's earnings release 0:02:52.240 --> 0:02:55.240 in conference calls, I think Freeport and Immunitiian government seemed 0:02:55.240 --> 0:02:58.160 be getting a little bit better and more discussions to 0:02:58.160 --> 0:03:01.600 to resolve that situation. I think that's also kind of 0:03:01.600 --> 0:03:03.880 helped to pop in Freeport stock. I do want to 0:03:03.919 --> 0:03:05.760 high like him. If you look back in the historical 0:03:05.880 --> 0:03:09.480 part of charts of copper, we have seen four for also, 0:03:09.720 --> 0:03:12.080 so they haven't seen much higher copper prices in the past, 0:03:12.120 --> 0:03:14.640 so not not that we're predicting that here, but I 0:03:14.680 --> 0:03:17.079 do think there's some more momentum and room for copper 0:03:17.120 --> 0:03:21.720 to move higher as deficits. The difference between demand expectations 0:03:21.760 --> 0:03:24.679 supply coming to market are looking to grow over the 0:03:24.760 --> 0:03:27.320 next few years because there's been a lack of capital spending, 0:03:27.320 --> 0:03:30.679 a lack of supply because of the the downslack we've 0:03:30.720 --> 0:03:32.720 witnessed the last few years. You know, Mike, you gave 0:03:32.800 --> 0:03:36.600 a lot of possible reasons for why copper is rallying now, 0:03:36.600 --> 0:03:38.280 and I do just want to point out that the 0:03:38.320 --> 0:03:41.880 shares of Glencore and Newmont have also rallied on the 0:03:41.920 --> 0:03:44.920 back of the of the top in copper. But you know, 0:03:45.360 --> 0:03:48.040 it seems like a pretty delicate balance. I mean, yes, 0:03:48.120 --> 0:03:50.520 it is an increase in demand, but that's one piece 0:03:50.640 --> 0:03:55.000 mixed with just general favorable sentiment rounds commodities right now. 0:03:55.240 --> 0:03:56.960 So I mean, do you think that this is a 0:03:57.040 --> 0:04:01.040 very fickle type of figure that in prices could fall 0:04:01.160 --> 0:04:04.680 substantially in the I mean volatility. I know everybody has 0:04:04.680 --> 0:04:07.320 been concerned about the lack of volatility in the overall 0:04:07.360 --> 0:04:10.920 equity markets, but certainly one thing we do see in 0:04:11.040 --> 0:04:14.800 bodies is volatility. Yes, you know, a bad data point 0:04:14.800 --> 0:04:18.159 out of China, or to this afternoon the FED minutes 0:04:18.200 --> 0:04:20.440 coming out, which you know, the million people going to 0:04:20.480 --> 0:04:23.760 read the teleas on. You know, the dovishniss hawkishness could 0:04:23.800 --> 0:04:25.880 impact some of the near term moves on on some 0:04:25.920 --> 0:04:29.880 of the commodities. But I think generally expectations from investors 0:04:29.880 --> 0:04:33.080 over the past couple of months in May June, we're 0:04:33.080 --> 0:04:36.400 pretty negative going into Q two. We've seen rally and 0:04:36.400 --> 0:04:38.839 the commodity prices, and we've seen you know, the reports 0:04:38.880 --> 0:04:41.719 from the company's being reasonably good, you know, keeping the 0:04:41.800 --> 0:04:44.479 cost down, keeping the capital spending in check. I think 0:04:44.480 --> 0:04:48.200 that's given some investors reason to be more optimistic and 0:04:48.279 --> 0:04:51.000 some of the shorts to cover their positions. Well, I 0:04:51.040 --> 0:04:53.240 want to thank you very much for joining us. Mike 0:04:53.320 --> 0:04:57.719 Judas is metals and mining analysts for vertical research talking 0:04:57.720 --> 0:05:14.159 about copper as well as some mining share. And indeed, 0:05:14.160 --> 0:05:16.680 the Federal Reserve is going to be finishing up their 0:05:16.720 --> 0:05:20.680 today meeting today they are going to give us some 0:05:20.960 --> 0:05:24.120 words of wisdom that we can pass over in detail 0:05:24.200 --> 0:05:27.040 for the next month as we await their next miss 0:05:27.040 --> 0:05:30.240 if Ward McCarthy joins us now he's chief financial economist 0:05:30.520 --> 0:05:34.080 at Jeffreys in Company in New York. And ward, Before 0:05:34.120 --> 0:05:37.120 we talk about what the Fed is expected to say today, 0:05:37.160 --> 0:05:39.440 which is, to be honest, not very much, I want 0:05:39.440 --> 0:05:42.840 to talk about some words of some interesting words from 0:05:42.839 --> 0:05:45.680 President Donald Trump. He was speaking with the Wall Street 0:05:45.720 --> 0:05:49.160 Journal yesterday, UH, and he said that he is considering 0:05:49.240 --> 0:05:53.800 both Gary Cone, who is his chief economic advisor right now, uh, 0:05:53.920 --> 0:05:58.239 in addition to Janet Yellen, to lead the Federal Reserve 0:05:58.440 --> 0:06:00.799 next year. This is going to be the next episode 0:06:00.880 --> 0:06:04.600 of the Fed Chair. Uh. Gary Khane, what do you 0:06:04.680 --> 0:06:07.240 think he would do as FED Chair? Do you think 0:06:07.279 --> 0:06:12.560 that it would translate into a hawkish policy for the country? Well, 0:06:12.600 --> 0:06:15.800 I think that that. Well, first of all, he's a 0:06:15.800 --> 0:06:19.800 big question mark because we really have no history at 0:06:19.839 --> 0:06:24.280 all in terms of what his policy inclinations are. Uh. 0:06:24.480 --> 0:06:29.080 The fact that that Donald Trump has been pushing him 0:06:29.440 --> 0:06:33.960 and also um promoting Jenny Ellen in a sense as 0:06:34.080 --> 0:06:38.080 being a low rate UH FED Chair suggests to me 0:06:38.160 --> 0:06:41.600 that he may be less hawkish than uh he is 0:06:41.720 --> 0:06:45.720 being expected to be, at least in some quarters. All Right, 0:06:45.800 --> 0:06:48.719 So if that's the case, then this is just you know, 0:06:48.760 --> 0:06:51.800 you kind of spin these fantasies, right you kind of say, well, 0:06:52.680 --> 0:06:56.480 so what what Wow, wild fantasy? But I mean, but 0:06:56.839 --> 0:06:59.360 you can't. It's difficult to kind of pin someone down 0:06:59.360 --> 0:07:01.880 obviously if he'd know their views, you know, But what 0:07:02.200 --> 0:07:05.599 is there anything, no matter who is the central bank chief, 0:07:06.040 --> 0:07:09.200 is there something specific that you can point to that 0:07:09.240 --> 0:07:12.960 they should be doing that they are not doing well. 0:07:13.920 --> 0:07:17.840 Jenny Yellen is trying to do everything that I think 0:07:17.920 --> 0:07:20.080 she should do at this point in the sense that 0:07:20.120 --> 0:07:24.520 she's moving rates up to higher levels, although you know, 0:07:24.600 --> 0:07:28.080 maybe not as quickly as the FED could, and she 0:07:28.320 --> 0:07:31.800 is also trying to get the troops in line here, um, 0:07:31.880 --> 0:07:35.320 so they can start balance sheet normalization. But one thing 0:07:35.400 --> 0:07:37.680 that I don't think the FED has focused a lot 0:07:37.720 --> 0:07:40.280 on yet that they're going to have to uh in 0:07:40.320 --> 0:07:43.920 the not too distant future, is that balance sheet normalization 0:07:44.120 --> 0:07:48.320 so far has really just focused on size, and that 0:07:48.480 --> 0:07:52.240 is shrinking the balance sheet. And even in her last testimony, 0:07:52.360 --> 0:07:55.800 Jenny Yellen acknowledged that the FED wants to get back 0:07:55.840 --> 0:07:59.000 to a balance sheet that is all treasuries and other aways, 0:07:59.040 --> 0:08:01.480 get rid of all the more gages, and the plan 0:08:01.640 --> 0:08:04.320 that the FED laid out on June fourteenth will not 0:08:04.440 --> 0:08:07.239 accomplish that. So the Fed's going to have to circle 0:08:07.280 --> 0:08:09.560 back and address this issue at some point. You know, 0:08:09.960 --> 0:08:12.160 you bring up a really important point. And I were Jersey, 0:08:12.160 --> 0:08:15.480 our own interest rate strategist here at Bloomberg was talking 0:08:15.520 --> 0:08:18.320 about the same point. In other words, as we get 0:08:18.320 --> 0:08:21.920 more details from the FED about their balancing normalization, we 0:08:21.920 --> 0:08:26.240 could see an undo amount of volatility and mortgage backed securities. Uh. 0:08:26.360 --> 0:08:30.120 Do you agree? Well? Yeah, well, I don't know what 0:08:30.160 --> 0:08:33.000 you mean by undo, but I certainly think we should 0:08:33.000 --> 0:08:37.760 expect to see more volatility in mortgage backed securities. And 0:08:37.800 --> 0:08:41.520 of course the caps that the FED outlined on June 0:08:40.760 --> 0:08:45.400 four UH are not necessarily binding. Uh. And the FED 0:08:45.520 --> 0:08:49.800 always adds the caveat that they're going to proceed um 0:08:49.920 --> 0:08:52.880 and be data sensitive. So if they did not like 0:08:53.040 --> 0:08:56.280 the way things were unfolding, um, you know, they could 0:08:56.320 --> 0:08:58.320 temper it. Someone I was going to say, they could 0:08:58.320 --> 0:09:01.800 fold it back up. It was about the Let's talk 0:09:01.800 --> 0:09:04.160 about the U S economy for just a moment, because 0:09:04.520 --> 0:09:10.600 unemployment rates are low, inflation low growth while middling. Uh. 0:09:10.760 --> 0:09:12.960 Is there anything that we need to pay attention to 0:09:13.040 --> 0:09:16.480 that we're not looking at? Well? I think in some 0:09:16.679 --> 0:09:20.880 respects maybe we we focus on too many things that uh, 0:09:20.880 --> 0:09:23.720 and that can distract us from the drivers. All right, 0:09:23.760 --> 0:09:26.000 so good point. Tell us what those are? Well, I 0:09:26.040 --> 0:09:28.800 think that the primary things we need to focus on 0:09:28.840 --> 0:09:31.760 are really what what the labor market is doing, because 0:09:32.200 --> 0:09:35.120 that's the heartbeat of the US economy. And the labor 0:09:35.160 --> 0:09:38.600 market continues to do well. Uh. The one missing piece 0:09:38.679 --> 0:09:43.200 continuing to be sustained increase in wage growth, which we 0:09:43.200 --> 0:09:46.480 would love to see because that probably would also boost 0:09:47.040 --> 0:09:50.160 consumer spending. Uh. The other but is that going to happen? 0:09:51.160 --> 0:09:54.920 It is going to happen. Uh. It has been delayed 0:09:54.920 --> 0:10:01.000 this cycle for reasons that I think are fairly numerous, uh, 0:10:01.360 --> 0:10:06.600 ranging anything from demographics to immigration policy. Um. But the 0:10:06.679 --> 0:10:09.400 laws of supply and demand have not been repealed. And 0:10:10.160 --> 0:10:12.600 as we get closer to full employment and we see 0:10:12.679 --> 0:10:18.000 labor market conditions tightening, wage growth is going to happen. Um. 0:10:18.120 --> 0:10:20.840 And we're you know, every day we're closer. We just 0:10:20.880 --> 0:10:23.280 don't know how much closer we are on that front. 0:10:23.559 --> 0:10:26.319 Or do you know? The Federal Reserve has a number 0:10:26.360 --> 0:10:29.960 of mandates that seemed to be floating. It was unemployment 0:10:30.080 --> 0:10:33.800 rates than it was inflation rates. And some people say 0:10:34.000 --> 0:10:38.440 it's asset price UH stability or financial system stability. And 0:10:38.440 --> 0:10:41.760 I'm wondering to what degree do you expect the FED 0:10:42.080 --> 0:10:46.640 today to comment on the elevated prices in the corporate 0:10:46.679 --> 0:10:49.280 bond and the equity markets in the US. And we 0:10:49.280 --> 0:10:52.560 we're seeing right now the extra yield investors are demanding 0:10:52.559 --> 0:10:55.480 to own investment grade corporate bonds in the US plunging 0:10:55.960 --> 0:10:59.760 to about the lowest in the post crisis era. Well, 0:10:59.800 --> 0:11:03.080 I think I do not think they will specifically address 0:11:03.160 --> 0:11:06.360 this in the policy statement today, and of course there's 0:11:06.400 --> 0:11:09.679 no press conference either. But you make a good point, 0:11:09.720 --> 0:11:11.960 and that is that since the FIT has been raising 0:11:12.040 --> 0:11:15.600 rates and talking about drinking the balance sheet UH, financial 0:11:15.640 --> 0:11:19.280 market conditions have actually eased UH, and that is spreads 0:11:19.280 --> 0:11:22.640 of Titan stock market has gone higher, etcetera. And this 0:11:22.760 --> 0:11:26.240 should be a green light for them to continue UH 0:11:26.320 --> 0:11:30.079 down the road towards normalization. The problem is they also 0:11:30.200 --> 0:11:34.840 have two specific UH policy mandates by law, one being 0:11:35.320 --> 0:11:39.320 maximum employment, the other stable inflation. And the inflation pictures 0:11:39.360 --> 0:11:43.400 since February has spooked them somewhat. So I think that 0:11:43.400 --> 0:11:47.280 that has become or the inflation picture has been elevated 0:11:47.360 --> 0:11:50.720 from being kind of a nuance, excuse me, a nuisance 0:11:51.120 --> 0:11:54.440 UH to something that is interfering with their plans at 0:11:54.520 --> 0:11:58.320 least temporarily. What McCarthy, your thoughts on the dollar and 0:11:58.400 --> 0:12:01.400 recent dollar strength going to continue. We're at one sixteen 0:12:01.440 --> 0:12:05.319 against the euro right now. Well, I don't think that 0:12:05.360 --> 0:12:08.560 we'll we'll see any persistent dollar strength. I think what's 0:12:08.600 --> 0:12:11.800 happening now is that the dollar is trying to carve 0:12:11.800 --> 0:12:16.400 out at trading range. We've seen some pretty substantial moves 0:12:17.080 --> 0:12:21.600 in currencies over recent months, and in large part because 0:12:21.640 --> 0:12:26.480 of changes in UH in perspectives on what's happening on 0:12:26.520 --> 0:12:30.280 the political front, and right now the US political situation 0:12:30.520 --> 0:12:34.360 UM is pretty murky. Murky, that's a nice way to 0:12:34.400 --> 0:12:38.400 describe it. Thanks very much, Warden McCarthy. He's our He's 0:12:38.440 --> 0:12:40.840 not a murky economist, but he does put his finger 0:12:40.920 --> 0:12:44.480 on something there. Um, Thanks very much, Chief Financial Economist. 0:12:44.800 --> 0:12:46.720 For jeffreason, I guess we'll just have to wait and 0:12:46.720 --> 0:13:02.760 see what the what the minutes say new diesel and 0:13:02.880 --> 0:13:05.800 petrol cars and vans they're going to be banned from 0:13:05.800 --> 0:13:09.120 the United Kingdom from twenty forty in order to tackle 0:13:09.200 --> 0:13:12.920 air pollution is according to the UK government, and here 0:13:12.960 --> 0:13:16.240 to tell us more. As Jeff Shackleman, renewables reporter for 0:13:16.400 --> 0:13:19.839 Bloomberg joining us from London, Jess boy, I gotta say 0:13:19.840 --> 0:13:23.280 this kind of uh, there's an interesting development and it 0:13:23.400 --> 0:13:27.360 certainly must help companies such as Volvo which are looking 0:13:27.360 --> 0:13:31.360 to really go all electric or all hybrid. That's right? 0:13:31.400 --> 0:13:33.120 How that yes? So, I mean I think if we 0:13:33.240 --> 0:13:36.280 just stepped back a little bit, diesel has really been 0:13:36.360 --> 0:13:38.560 the enemy over the last couple of years since the 0:13:39.040 --> 0:13:43.800 emissions cheating scandal with Volkswagen erupted um and it's just 0:13:43.840 --> 0:13:49.000 become the target of air pollution campaigners as the thing 0:13:49.280 --> 0:13:51.440 that is causing the problem. But as you say, there's 0:13:51.480 --> 0:13:57.680 companies like Volvo, Nissan, UM BMW that are planning to 0:13:58.920 --> 0:14:03.679 lots more electric models that at the tailpipe have zero emissions. 0:14:03.720 --> 0:14:06.000 So this is this is completely on track with with 0:14:06.040 --> 0:14:09.520 what they're planning to do. So just how exactly would 0:14:09.600 --> 0:14:13.000 such a ban work? So the UK says it will 0:14:13.040 --> 0:14:15.440 ban the sale of diesel and gasoline powered cars by 0:14:15.480 --> 0:14:18.800 twenty forty. This comes a couple of weeks after French 0:14:18.880 --> 0:14:22.600 President Emmanuel Macro announced a similar plan. The objective is 0:14:22.680 --> 0:14:27.920 to cut smarg and become a carbon neutral nation. How so, 0:14:28.280 --> 0:14:31.240 what's really interesting about this announcement today is it sending 0:14:31.240 --> 0:14:34.520 a strong signal from ministers and and the announcement two 0:14:34.520 --> 0:14:38.240 weeks go in France that in in twenty five years time, 0:14:38.320 --> 0:14:40.400 twenty five is years time, they don't want to have 0:14:40.720 --> 0:14:44.520 internal engine internal combustion engine cars on the roads. Actually, 0:14:45.240 --> 0:14:47.920 if you look at what the analysts say, we're probably 0:14:47.960 --> 0:14:50.640 not going to have many of those anyway at that 0:14:50.720 --> 0:14:55.280 point because the direction of travel for carmakers like Tesla 0:14:55.840 --> 0:14:59.880 is towards electrics. So Bloomberg New Energy finances that in 0:15:00.000 --> 0:15:04.160 the UK almost of new cars sold in twenty will 0:15:04.200 --> 0:15:06.680 be electric anyway. So you ask how this is going 0:15:06.720 --> 0:15:08.760 to be done, Well, I think probably the markets are 0:15:08.760 --> 0:15:11.000 already doing it themselves. Well, you know, but this is 0:15:11.040 --> 0:15:14.760 interesting because in the US, for example, we saw unprecedented 0:15:15.000 --> 0:15:17.520 auto sales and a lot of the autos that were 0:15:17.520 --> 0:15:21.920 being sold were diesel fuel and not diesel but gasoline 0:15:22.120 --> 0:15:24.640 fueled cars and trucks. I mean, it was sort of 0:15:24.640 --> 0:15:28.960 going the opposite way of electric vehicles. When will we 0:15:29.000 --> 0:15:33.640 see that shift in consumer preference? This this huge shift 0:15:33.760 --> 0:15:37.560 happening in the mobility market, and I expected to happen 0:15:38.000 --> 0:15:41.720 over the next twenty five thirty years. And it's not 0:15:41.840 --> 0:15:46.120 really even just about changing the kind of technology that 0:15:46.240 --> 0:15:50.640 is powering your car. It's also about the uberization of 0:15:50.640 --> 0:15:53.440 of our transport system. People are going to be sharing 0:15:53.520 --> 0:15:56.240 cars a lot more, and there's going to be a 0:15:56.280 --> 0:15:59.760 lot more self driving cars. So there's gonna be this 0:16:00.280 --> 0:16:02.960 gigantic leaps that we can't even really get our head 0:16:02.960 --> 0:16:06.840 around at the moment in terms of how how they 0:16:06.920 --> 0:16:10.680 drive cars. But the thing about the kind of fuels 0:16:10.680 --> 0:16:14.440 that people use is that actually in the UK, where 0:16:14.480 --> 0:16:17.280 we have the largest ease or fleets in Europe, people 0:16:17.320 --> 0:16:19.800 bought these cars in good faith, thinking that they were 0:16:19.880 --> 0:16:23.320 environmentally friendly, and then a few years down the line 0:16:23.800 --> 0:16:27.480 governments realized that they were actually the complete opposite and 0:16:27.480 --> 0:16:30.920 they were causing more damage to the heir than and 0:16:31.000 --> 0:16:34.360 people's lungs than they thought. I just want to ask 0:16:34.400 --> 0:16:36.560 you about the cost of all of this, because I 0:16:36.640 --> 0:16:39.280 understand that the government has said that they are putting 0:16:39.280 --> 0:16:43.160 aside about three thirty million dollars or two hundred and 0:16:43.200 --> 0:16:48.120 fifty million pounds in order to help councils local councils 0:16:48.120 --> 0:16:50.800 tackle emissions. Why do they need the money. I would 0:16:50.800 --> 0:16:53.120 think that people would need the money in order to 0:16:53.160 --> 0:16:55.480 get rid of their old cars that burn foss or 0:16:55.560 --> 0:16:59.480 fuel in order to go electric. Yeah, it's not really 0:16:59.520 --> 0:17:03.080 a huge of money that that they've put aside. So um. Yet, 0:17:03.160 --> 0:17:05.040 what you're suggesting is that there should be a diesel 0:17:05.080 --> 0:17:07.280 scrappage scheme, and that's something that the Mayor of London, 0:17:07.320 --> 0:17:11.440 Sadik Khan, has asked for money for because as you know, 0:17:11.520 --> 0:17:14.000 as I said, you know, people bought these diesel cars 0:17:14.000 --> 0:17:16.000 in good faith thinking they were good for the environment, 0:17:16.359 --> 0:17:19.000 and the government doesn't really want to have to now 0:17:19.080 --> 0:17:21.840 penalize them and say, sorry, guys, you actually turns out 0:17:21.880 --> 0:17:24.200 you're doing a lot of damage to the planet into 0:17:24.280 --> 0:17:26.679 people's health, so you know, you have to get rid 0:17:26.720 --> 0:17:28.919 of that car, so that you know they're helping that 0:17:29.040 --> 0:17:32.399 they've already put they've already set aside money for helping 0:17:32.440 --> 0:17:35.960 taxi drivers, black cab drivers for example, to buy new 0:17:36.000 --> 0:17:40.720 black cabs. Um. But this this headline, um that we're 0:17:40.720 --> 0:17:43.440 talking about, that the ban on on diesel cars is 0:17:43.480 --> 0:17:46.439 actually part of a much bigger air quality strategy that 0:17:46.440 --> 0:17:50.200 they've been forced to put out because the government isn't 0:17:50.240 --> 0:17:52.680 delivering on its air quality plan, and it's been taken 0:17:52.680 --> 0:17:57.439 to court twice by environmental activists and it keeps failing 0:17:57.480 --> 0:18:00.160 to produce a plan that is good enough for tackling 0:18:00.200 --> 0:18:02.840 knights and dark side. And just now this environmental group 0:18:02.880 --> 0:18:04.760 has come out again and said we still don't think 0:18:04.760 --> 0:18:06.399 it's good enough. So there's still a chance we're going 0:18:06.440 --> 0:18:08.160 to see the government back in court for a third 0:18:08.280 --> 0:18:10.760 time if if they don't think this plan is up 0:18:10.760 --> 0:18:13.800 to scratch. Just in the UK, plug in cars are 0:18:13.880 --> 0:18:17.560 still only about one percent of all vehicle sales in 0:18:17.680 --> 0:18:20.679 the country. Um, that's expected to grow to eight by 0:18:21.960 --> 0:18:24.480 What's the sort of threshold. What's the sort of tipping 0:18:24.560 --> 0:18:27.080 point at which we'll see a more widespread adoption of 0:18:27.200 --> 0:18:31.840 plug in vehicles? So I think the real key is UM, Well, 0:18:31.920 --> 0:18:33.760 I guess there's two things. The main one is cost. 0:18:34.840 --> 0:18:37.639 If you turn up at four Court, um, and you 0:18:37.720 --> 0:18:39.840 want to be able to buy an electric car, you 0:18:39.920 --> 0:18:42.240 want to see that it's cheaper on the price tag 0:18:43.040 --> 0:18:45.200 compared to an internal combustion engine, and I think that's 0:18:45.240 --> 0:18:47.280 expect to help it happen about the middle of the 0:18:47.440 --> 0:18:50.200 next century. But the other issue people have is range. 0:18:50.240 --> 0:18:52.440 Anxiety that their battery is going to run out, and 0:18:52.520 --> 0:18:55.560 that's tied into having enough charging stations. And in the UK, 0:18:56.040 --> 0:18:59.640 in London particularly, they're still aren't enough and the ones 0:18:59.680 --> 0:19:02.880 that are there aren't really charging people's cars quickly enough. 0:19:03.000 --> 0:19:05.240 You have to wander off for a couple of hours 0:19:05.280 --> 0:19:08.240 and come back or they're broken. Yeah. Um, so that 0:19:08.640 --> 0:19:10.920 really needs to be sorted out before people feel confident 0:19:11.080 --> 0:19:14.960 enough to buy them and be able to drive long distances. Just, gentlemen, 0:19:15.000 --> 0:19:17.760 thank you so much for joining us. Truly a fascinating 0:19:17.840 --> 0:19:21.080 issue and it'll be interesting to see what legal parameters 0:19:21.160 --> 0:19:23.760 the UK and France put into play to try to 0:19:23.960 --> 0:19:28.000 achieve these targets. Just just Shankleman is renewables and climate 0:19:28.119 --> 0:19:32.000 change reporter for Bloomberg News, coming to us from London. 0:19:45.040 --> 0:19:48.000 All right, let's talk about technology. Let's get our Facebook 0:19:48.040 --> 0:19:50.399 out and find out what's going on with Facebook. We 0:19:50.440 --> 0:19:54.040 have Shira Oviday, our technology columnist, a Bloomberg gad fly 0:19:54.200 --> 0:19:56.959 which has that all fast commentary section and you can 0:19:57.080 --> 0:20:01.639 follow Shira on Twitter at Shira Oviday. Um. I was 0:20:01.680 --> 0:20:04.399 looking at the details for Facebook. This is a company 0:20:04.440 --> 0:20:07.960 that's worth about four hundred and seventy six billion dollars, 0:20:08.040 --> 0:20:10.920 let's say five billion dollars rounding up? Yeah right, why not? 0:20:11.160 --> 0:20:13.920 I mean they'll probably get there anyway. Um, they had 0:20:14.040 --> 0:20:19.359 thirty billion in sales in the year, eleven billion a 0:20:19.600 --> 0:20:22.440 third is net income. They were able to take a 0:20:22.560 --> 0:20:24.840 third of that in sock it away and get this, 0:20:25.040 --> 0:20:29.960 the free cash flow is over twelve billion dollars. Not 0:20:30.040 --> 0:20:32.919 a bad little business that marks there. Oh and everyone 0:20:33.040 --> 0:20:35.680 keeps saying, well, you know, can it continue? Can it continue? 0:20:36.000 --> 0:20:38.600 What is your overday think? Well, I think that is 0:20:38.680 --> 0:20:40.919 exactly the right question, right that if you look at 0:20:40.960 --> 0:20:45.040 what Facebook has done basically from almost zero to one 0:20:45.080 --> 0:20:48.040 of the biggest companies in the world in five years 0:20:48.600 --> 0:20:52.960 and extremely profitable, has been very amazing. But the big question, 0:20:53.040 --> 0:20:56.280 of course, as investors look at Facebook is how much 0:20:56.359 --> 0:20:59.119 more room to grow is there for a company that 0:20:59.200 --> 0:21:01.640 has grown so quickly in such a short period of time. 0:21:01.680 --> 0:21:03.440 And I mean I think that I agree that the 0:21:03.520 --> 0:21:06.520 short term is pretty promising. The longer term is a 0:21:06.640 --> 0:21:09.399 question mark. Well, and just to give this some perspective, 0:21:09.480 --> 0:21:13.920 Facebook shares up more than so far a year to date. 0:21:14.359 --> 0:21:16.600 I imagine we're also going to hear something out of 0:21:16.640 --> 0:21:20.639 Facebook about uh displaying more news and sort of getting 0:21:20.680 --> 0:21:24.760 people out of their uh particular bubbles and expose them 0:21:24.840 --> 0:21:26.720 to more ideas. What do you think is going to 0:21:26.800 --> 0:21:28.639 be said on that? I mean, this is a topic 0:21:28.720 --> 0:21:31.520 that Mark Zuckerberg has been talking about for much of 0:21:31.640 --> 0:21:33.440 this year that he's been on this. I don't know, 0:21:33.480 --> 0:21:34.760 what do you what do you want to call it? 0:21:34.800 --> 0:21:38.240 Like a quasi presidential tour of the United States, meeting 0:21:38.280 --> 0:21:43.000 with regular folks, right to to sort of try to understand, um, 0:21:43.440 --> 0:21:46.360 people in the United States and how they use Facebook 0:21:46.400 --> 0:21:51.119 and how basically to make Facebook a more hospitable place 0:21:51.240 --> 0:21:54.920 for people and communities and groups. And as you said, 0:21:55.040 --> 0:21:57.639 one of the biggest issues for Facebook is how to 0:21:59.040 --> 0:22:01.359 you know, get people out of their little self contained 0:22:01.400 --> 0:22:04.200 bubbles and expose them to news or information or points 0:22:04.240 --> 0:22:07.520 of view that they might not have heard um otherwise 0:22:07.600 --> 0:22:10.439 in their Facebook network. And that is a big topic 0:22:10.520 --> 0:22:12.600 for them. And look, that's a business issue for them too, 0:22:12.720 --> 0:22:16.080 that if people feel like Facebook is this terrible place 0:22:16.160 --> 0:22:19.480 where I just um here people rant about you know, 0:22:19.640 --> 0:22:23.119 Donald Trump, about Hillary Clinton, and then they don't like 0:22:23.280 --> 0:22:26.160 to use Facebook as much. Right, that has business implications 0:22:26.240 --> 0:22:28.080 for Facebook. I was gonna say, then they just go 0:22:28.280 --> 0:22:32.520 use Instagram or what's app? Right, Facebook properties, right, I mean, 0:22:32.760 --> 0:22:35.879 this is the sort of power of Facebook. You know. 0:22:36.840 --> 0:22:39.760 Here's the example that I carry around in my head today. Boeing, 0:22:39.800 --> 0:22:42.040 which we talked about earlier on in the program, has 0:22:42.080 --> 0:22:44.399 a market cap of a hundred and forty billion dollars. 0:22:44.680 --> 0:22:47.080 If Boeing is something happens to Boeing and they stopped 0:22:47.119 --> 0:22:50.159 making plans, everybody will feel it. If someone pulled the 0:22:50.200 --> 0:22:53.440 plug on Facebook, I'm not sure everyone would feel it. 0:22:53.480 --> 0:22:56.440 There'd be another competitor that's got a five billion dollar 0:22:56.520 --> 0:23:00.239 market cap. I mean, it's a very fair point that you, right, 0:23:00.320 --> 0:23:05.359 the different Facebook does not make the most essential things 0:23:05.600 --> 0:23:09.359