Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Obviously,
Speaker 1: we've been focusing a lot on bitcoin, but one question
Speaker 1: remains supreme. Can bitcoin ever act as a true currency?
Speaker 1: Is it the future of money? Right now? I want
Speaker 1: to bring in Wolfgang Custer. He is chief executive officer, chairman,
Speaker 1: and co founder of fire Apps, which is based in Phoenix, Arizona. Wolfgang,
Speaker 1: thank you so much for joining us. Fire Apps is
Speaker 1: known as a firm that helps companies understand their foreign
Speaker 1: exchange their currency risk. Does your recent focus on bitcoin
Speaker 1: indicate that you consider it a currency? No, I don't.
Speaker 1: I think that while some people may consider it a
Speaker 1: currency um to the point that there's some sort of
Speaker 1: size to it, but reality is that I've been talking
Speaker 1: to a lot of corporate CEOs and CFOs as well
Speaker 1: as treasury departments, and none of them are really with
Speaker 1: the exception of some maybe marketing gimmicks, are really looking
Speaker 1: at bitcoin as a currency that they're going to be
Speaker 1: doing business in. And there really are three reasons for that. Um.
Speaker 1: The first one is that the Federal Reserve Bank itself
Speaker 1: will end up coming out with a digital currency, and
Speaker 1: that's what they're waiting for, and other governments will as well.
Speaker 1: Secondly is there is a Senate Bill twelve forty one
Speaker 1: that has been discussed for over two hours on November
Speaker 1: twenty eight, so very recently, where they're looking to change
Speaker 1: the definition of financial institutions and what that would do.
Speaker 1: If they get what they're looking to get, which is
Speaker 1: pretty likely, it would actually criminalize bitcoin, um and would
Speaker 1: make it who would make the liquidity rather questionable. And
Speaker 1: then we'll go back, Yeah, I know, that's fine, it's
Speaker 1: no perm at home. We can talk about taxation here
Speaker 1: in a little bit, which is the third part that
Speaker 1: the governments will do to really to some degree fight
Speaker 1: bitcoin in that sense. But let's go back to two.
Speaker 1: Then I want to talk about too, just because if
Speaker 1: you criminalized bitcoin that would certainly hamper the meteoric rise
Speaker 1: that we have seen this year. How would it do that? Well,
Speaker 1: it would do that by changing the definition of what
Speaker 1: is a financial institution and what are they allowed to do?
Speaker 1: So how transparent do they have to be? And quite frankly,
Speaker 1: the whole thing on bitcoin, as you well know, is
Speaker 1: that it is based on a blockchain technology, one of
Speaker 1: many blockchain technologies that actually hides who's doing the transactions,
Speaker 1: and the United States government as well as many other
Speaker 1: governments saying that's not acceptable. Okay, I want to go
Speaker 1: back to the first thing that you said too, because
Speaker 1: this is fascinating that the Federal Reserve could come out
Speaker 1: with its own digital currency as soon as next year.
Speaker 1: What does that mean? I mean there is a difference
Speaker 1: between digital currency, which we all use when we use
Speaker 1: credit cards or uh you know, Apple pay or other
Speaker 1: things that are online transactions. It's another thing for it
Speaker 1: to be on blockchain. So what are you talking about
Speaker 1: specifically with the Fed issuing this digital currency. Yes, So,
Speaker 1: what I believe has happened over the last five to
Speaker 1: ten years, if you arguably since two thousand eight, is
Speaker 1: that UM, the people that started cryptocurrencies UM really looked
Speaker 1: at there is an inefficiency in the market, and I
Speaker 1: believe they were right. Their inefficiencies twofold. One is it
Speaker 1: takes two days on average to move from one account
Speaker 1: to another, and two is it's pretty expensive. So what
Speaker 1: they tried to achieve as a currency that is digital
Speaker 1: and immediate, as you're saying, to some degree like credit
Speaker 1: cards are as well as some that are not as expensive.
Speaker 1: And so these inefficiencies need to be embraced by the
Speaker 1: governments and they are interestingly here and even Putent came
Speaker 1: out with that they will issue a crypto ruble in
Speaker 1: January of next year already, So this is pretty imminent.
Speaker 1: Is the fact that, at the end of the day
Speaker 1: is that blockchain can actually use quite exactly opposite the
Speaker 1: way Bitcoin is using it right now. I e. The reason,
Speaker 1: one of the two reasons that Putent wants to do
Speaker 1: this is because he wants to gain better visibility into
Speaker 1: all transactions related to the ruble. The United States will
Speaker 1: end up doing the same thing. This is really fascinating.
Speaker 1: So in other words, it's sort of a blockchain that,
Speaker 1: rather than decentralizing the currency, really centralizes it and gives
Speaker 1: the government visibility into every transaction. Is that correct? That
Speaker 1: is correct? That is my belief, and that's what everything
Speaker 1: is pointing towards and if you look back at of
Speaker 1: the work that's already been done in Washington on this
Speaker 1: on dual ledger technology, it's absolutely confirms that. So the
Speaker 1: Treasure Department, basically, I'm trying to figure out how this
Speaker 1: would work where they remove all paper currency from circulation,
Speaker 1: or they would just have a subset that would be
Speaker 1: used for business transaction transactions and start there. How would
Speaker 1: it work, How would it begin? Yeah, the way I
Speaker 1: envisioned it is it's kind of like the Euro. For
Speaker 1: when the Euro came out. Um, you know, you still
Speaker 1: had for a while Deutsche marks and French franks, and
Speaker 1: then slowly but surely they disappeared and now you can't
Speaker 1: you know, can't use a deutsch mark anymore in Germany,
Speaker 1: but you can use euros. And I anticipate this to
Speaker 1: be very similar. It's going to take time. It's not
Speaker 1: going to be immediately. Digital dollar is here and therefore
Speaker 1: paper currencies are gone, but it is definitely going into
Speaker 1: that direction. If you think about the way we transact today,
Speaker 1: you know, I have dollars in my wallet, I hardly
Speaker 1: ever use them. I certainly use my credit cards or
Speaker 1: other payment methods. And this is going to be the
Speaker 1: same thing. It's going to be better, quicker, faster, yet
Speaker 1: very controlled. And the reason that the United States FED
Speaker 1: isn't going to come out with this in January is
Speaker 1: because they're going to have to build a very secure
Speaker 1: um blockchain that everybody trusts that won't be broken into
Speaker 1: so fire app clients include Google, ericson Pepsi, Nike Accenture,
Speaker 1: and how do they feel about the introduction of a
Speaker 1: cryptocurrency and how do they feel about bitcoin? I think
Speaker 1: that all of them in general, I certainly have NBA,
Speaker 1: so I'm not going to speak to one particular one,
Speaker 1: but all in general have the belief that digital currency
Speaker 1: will actually be good for them. I think it will
Speaker 1: help them transact faster and cheaper. And yet they do
Speaker 1: realize one of the reasons that we're also talking to
Speaker 1: them is that that requires more automation on their parts.
Speaker 1: So as digital currencies are coming abroad and all of
Speaker 1: a sudden, they don't have manual processes that allow them
Speaker 1: to spend two days of settling currencies, it's going to
Speaker 1: be immediate, and so they're looking at what the company
Speaker 1: to do to be ready for this, and how to
Speaker 1: automate these processes which end up streamlining liquidity really to
Speaker 1: that to the point that they will, so it's gonna
Speaker 1: be actually going to be embraced by them and there
Speaker 1: and I'm not hearing anything negative about digital currency. I
Speaker 1: am hearing that for a bitcoin is just too volatile
Speaker 1: to get involved and from a true main mean wolf gangcaster,
Speaker 1: thank you so much for joining as CEO, chairman and
Speaker 1: co founder of fire Apps in Phoenix, Arizona. This is Bloomberg.
Speaker 1: Viagraph is going generic. This is a big moment for
Speaker 1: the millions of people who have been affected by this drug.
Speaker 1: And here to talk about it is John Tozzi. He's
Speaker 1: a healthcare reporter for Bloomberg News and he joins us
Speaker 1: here in our eleven three oh studios. So your piece
Speaker 1: was phenomenal. You basically talked to the creators of viagra
Speaker 1: and about the creation of it. And before we go
Speaker 1: into the implications of it going to naric, can you
Speaker 1: just give us the story behind how they came to
Speaker 1: develop this drug. Sure, this was a drug that Fiser
Speaker 1: was actually investigating for a different purpose back in uh
Speaker 1: the late excuse me eies and early nineties. They were
Speaker 1: looking for treatments for hypertension, high blood pressure, and then
Speaker 1: for chest pain and the compound that they UH you know,
Speaker 1: the chemists that Fiser at a lab in England were developing.
Speaker 1: It didn't really show a lot of effect in those conditions,
Speaker 1: but it did have a side effect UM that they
Speaker 1: decided was worth looking into. So the side effect was
Speaker 1: that it allowed erections to last longer and come more frequently,
Speaker 1: and some of the details were hysterical. One of my
Speaker 1: favorite from this whole thing is UH that the study
Speaker 1: subjects were fitted what was called ridges scan UH and
Speaker 1: given the drug and shown blue movies or movies that
Speaker 1: were soft pornography or hard pornography. At the end of
Speaker 1: the week we had to get the drugs back from
Speaker 1: them anything that was unused. Some of them would not
Speaker 1: give the drug back. This is actually something we heard
Speaker 1: from several researchers we talked to that during trials. All
Speaker 1: along the time when viagra was being developed. You know
Speaker 1: that when you when you test a drug, you can
Speaker 1: only give it for a limited amount of limited period
Speaker 1: until you know that it's not going to be toxic
Speaker 1: for when taken for longer UM and the researchers had
Speaker 1: real trouble getting the drugs back. People didn't want to
Speaker 1: give this up. And I think for Fiser, um, you know,
Speaker 1: this was a condition that didn't really have a pharmaceutical
Speaker 1: treatment before viagra, and that was an indication to them
Speaker 1: of how important could be to the people who would
Speaker 1: take it well and John to that point, Viagara kind
Speaker 1: of changed the conversation about sex on a pretty massive scale.
Speaker 1: I mean, in one case, they're one of the researchers,
Speaker 1: one of the developers was going to go on a
Speaker 1: major television network and they said, what are you going
Speaker 1: to say? And he said he was going to use
Speaker 1: the word erection and they said, no, you can't do that, right.
Speaker 1: I think that was actually not one of the Fiser
Speaker 1: researchers but another doctor, But yeah, that I think. You know,
Speaker 1: it was a period when um, in the culture, Americans
Speaker 1: were becoming more comfortable kind of talking frankly about sexuality, um,
Speaker 1: you know, in a way that you know, decades before
Speaker 1: wasn't really the case. So now that the drug is
Speaker 1: going generic, what are the implications It will be cheaper,
Speaker 1: it will be less of a moneymaker for Fiser, and
Speaker 1: will it become more mainstream or it already has out
Speaker 1: in so mainstream that it really can't really have much more. Yeah,
Speaker 1: I mean I think it's it's hard to tell. I mean,
Speaker 1: the price will go down. That happens whenever there's a
Speaker 1: generic version of the drug. Um. You know. I know
Speaker 1: there's certain in the United Kingdom they're actually applying or
Speaker 1: in the process of trying to have it sold over
Speaker 1: the counter. So I think you know, from the drug manufacturers,
Speaker 1: uh point of view, the um you know, the goal
Speaker 1: is to make it more widely available, more easily available. Um.
Speaker 1: But you know, we'll see what happens with the generic.
Speaker 1: It's unclear how much. Um. You know, the price is
Speaker 1: a barrier to people taking viagara if everybody who wants
Speaker 1: it pretty much has it. One one question that I
Speaker 1: have is from the female side. I mean, it's it's
Speaker 1: one thing for men to have this, but um, there's
Speaker 1: a lot of comedy show is kind of highlighted. Men
Speaker 1: would come home and be very excited and the women
Speaker 1: would say, oh my god. No. Um. So there's a
Speaker 1: question about you know, a allowing women's libido to match
Speaker 1: men's on viagra. Is there any development there with respect
Speaker 1: to a feminine I mean, certainly in the history of viagra.
Speaker 1: That was something that UM people were, you know, that
Speaker 1: was an issue that women were you know, did not
Speaker 1: have a drug that worked. Similarly, Viagra was actually tested
Speaker 1: in women at one point to see if it would work,
Speaker 1: and it didn't show much efficacy. UM. There is at
Speaker 1: least one product on the market intended to UM help
Speaker 1: improve women's libidos. But I think the consensus is that,
Speaker 1: you know, it doesn't have the same um effect, you know,
Speaker 1: the same degree of efficacy that viagra had for men.
Speaker 1: So you know, that's an area of research and science
Speaker 1: that I think is still being investigated. Just real quick,
Speaker 1: can you give us a sense of how big a
Speaker 1: business viagra has been pro visor, Uh, well, we look,
Speaker 1: we looked up the sales over since it was released.
Speaker 1: It's been about thirty six billion in sales UM. That's
Speaker 1: a big number, but it's by no means Fiser's biggest drug. UM.
Speaker 1: So you know, it's an important product, but you know,
Speaker 1: it's interesting the Fiser many fightser veterans we talked to
Speaker 1: you said, you know, it wasn't our biggest product, but
Speaker 1: it's what people knew us. You know, people would find
Speaker 1: out you worked for Fiser and then they'd be like,
Speaker 1: oh viagras um, whereas you know, they didn't have the
Speaker 1: same effect for for lipatour for example. Yeah, people like
Speaker 1: to talk about sex more than blood pressure of it.
Speaker 1: John Tosi, thank you so much for joining us. He's
Speaker 1: a healthcare reporter with Bloomberg News. Many analysts and investors
Speaker 1: have said that companies will just buy back more of
Speaker 1: their shares with the money that they received from the
Speaker 1: tax cuts. Others are saying not so fast. Companies have
Speaker 1: already slowed their stock purchases. Here to hash this argument
Speaker 1: out with us, as Tim Grisky, chief investment officer of
Speaker 1: Solaris Asset Management in New York. Tim, thank you so
Speaker 1: much for joining us. Good morning, Lisa, Good morning. So
Speaker 1: let's talk about where we are with respect to stock
Speaker 1: buy backs, because actually, SMP five hundred companies have announced
Speaker 1: the intention to purchase five hundred sixty eight billion dollars
Speaker 1: of their own shares for the first eleven months of seventeen,
Speaker 1: which is a lot, but it's down timber cent from
Speaker 1: a year ago and on pace to be the first
Speaker 1: decrease since two thousand and eight. That is, according to
Speaker 1: data compiled by Bery Annie Bery n Associate so do
Speaker 1: you think that we're in a slowing down phase for
Speaker 1: the share buy backs. Do you think that they're gonna
Speaker 1: get ramped back up with any tax cut? Well, you know, we,
Speaker 1: as you said, we certainly have seen a slowdown in
Speaker 1: buy backs, but it's not that I don't think you
Speaker 1: can assume that that's going to be what's going to
Speaker 1: happen with these tax savings. We have to differentiate between
Speaker 1: two things here. One is the repatriation of foreign cash
Speaker 1: and the other one is the annual tax savings from
Speaker 1: the lower tax rate. The repatriation is going to be
Speaker 1: a one time benefit to companies, and we think the
Speaker 1: majority of that is probably going to go to stock
Speaker 1: buy backs. Unlikely that that will go to dividend increases
Speaker 1: because it's not going to be repetitive. Some will go
Speaker 1: certainly to any capital spending projects that companies might have.
Speaker 1: But if companies have a good growth prospect from and
Speaker 1: reinvesting inside the company, they're already doing it, especially given
Speaker 1: how low debt is. So in other words, you're saying
Speaker 1: that to the extent that there is going to a
Speaker 1: be a boost from shared by backs, it will be
Speaker 1: a one time thing, largely tied to the cash repatriation?
Speaker 1: Am I understanding that correctly? Exactly? Yeah, so you said
Speaker 1: that better than I do know. Well, I mean, how
Speaker 1: much with with with the with the cash repatriation? One
Speaker 1: big question that I have is haven't we already seen
Speaker 1: that money get repatriated? I mean, you've seen the Apples
Speaker 1: and the Oracles of the world borrowing billions and billions
Speaker 1: of dollars through the debt markets to uh do their
Speaker 1: capital uh re whatever it is that they are doing,
Speaker 1: their giving their money back to their shareholders. Apple has
Speaker 1: like I think, a three hundred billion dollar uh capital
Speaker 1: give back program. I mean, haven't we already seen this? Well,
Speaker 1: we've seen it from a handful of companies, But there's
Speaker 1: still a lot of companies out there with foreign cash
Speaker 1: strandard overseas. Now, a lot of these companies, we think,
Speaker 1: have found ways of actually using that cash overseas, repatriating
Speaker 1: part of it through various schemes uh and and finding
Speaker 1: ways of of of really using that cash and far
Speaker 1: on foreign soil to benefit the company. So we think
Speaker 1: there will be some repatriation, but companies are going to
Speaker 1: have to decide if they want to pay that ten
Speaker 1: percent tax on repatriating those dollars or leave it where
Speaker 1: it is if it's actually returning above that ten penalty. So, Tim,
Speaker 1: do you think that in general the tax plan as
Speaker 1: lead out in the House and send it understanding that
Speaker 1: there will be some changes. Do you think that it
Speaker 1: will stimulate growth materially? You know, we we just don't
Speaker 1: see that. We think if they're growth prospects out there,
Speaker 1: and certainly the economy is growing, it's accelerating growth. Um.
Speaker 1: You know, we think that's already being done by companies already.
Speaker 1: Companies are already putting their money into growth opportunities that
Speaker 1: they have, and there's no reason for them not to
Speaker 1: do that. They can certainly borrow money very inexpensively now
Speaker 1: to um to stimulate any internal growth. Otherwise they're going
Speaker 1: to look to to gift it to their shareholders, either
Speaker 1: through stock buy backs or through increasing dividends. And we
Speaker 1: think the annual tax savings might lead to some nice
Speaker 1: dividend increases. Is that a number of companies. Is there
Speaker 1: any company in particular that you're targeting for a dividend increase? Well,
Speaker 1: I think if you look at some of the old
Speaker 1: economy companies that don't have play other places to put
Speaker 1: their money. I think increasing dividends in those companies which
Speaker 1: will attract a certain type of investor, those dividend income
Speaker 1: loving investors. We think that's where a lot of dividend
Speaker 1: increases might incur occur. Are you changing around your investments
Speaker 1: at all in response? Not? You know, not really, It's
Speaker 1: hard to know what which company is gonna do. What
Speaker 1: are they going to increase dividends? Are they going to
Speaker 1: increase buy backs? Are they going to find some internal
Speaker 1: growth opportunities. It's hard to know at this point. But
Speaker 1: we do know that there are a number of companies
Speaker 1: out there with high tax rates that are going to
Speaker 1: be big beneficiaries, and we have made investments uh in
Speaker 1: those companies. Can you give us any names? Uh? Broad
Speaker 1: Com uh symbols A V G O UH is a
Speaker 1: high taxpayer and we think it's going to really benefit
Speaker 1: it from lower tax rates and real quick. What about bonds?
Speaker 1: Do you think that they're going to get crushed next year? No? Uh,
Speaker 1: you know we're gonna see four percent interest rates. The
Speaker 1: world's going on fire. Investors need bonds, pension funds need bonds.
Speaker 1: H Bonds are not going to go away at all.
Speaker 1: Is it going to be a great place for money.
Speaker 1: I don't think it's going to be anything special, but
Speaker 1: there will be a place for bonds and portfolios. To
Speaker 1: Tim Grisky, thank you so much for joining us. Tim Grisky,
Speaker 1: chief investment Officer of Solaris Asset Management in New York.
Speaker 1: Definitely intriguing about the old economy companies that will increase
Speaker 1: their dividends and attract some shareholders and possibly be looked
Speaker 1: at as even better bonds substitutes and interesting developments. In
Speaker 1: two thousand and fifteen, there was a lot of focus
Speaker 1: on the Baltic Dry Index and how low it was.
Speaker 1: This is an index that measures how much ship owners
Speaker 1: are making to ship dry bulk things like iron ore
Speaker 1: or grains or whatever else is needed in a general economy.
Speaker 1: This year, however, it has surged to the highest since
Speaker 1: early and here to do a victory lap or perhaps
Speaker 1: not he he said it is not his style. John
Speaker 1: woven Smith, president of Genko Shipping, which is based in
Speaker 1: New York, shares up almost sixty two so far this year. So, John,
Speaker 1: how much more do you think that the dry the
Speaker 1: Baltic Dry Index has to rise? And what's behind this, Yes,
Speaker 1: So I think you I think you have to take
Speaker 1: a a step back to where we were over the
Speaker 1: last couple of years, where we had too many ships
Speaker 1: in the market. Um We've always had a pretty robust
Speaker 1: demand situation, but the the the ship owners over built.
Speaker 1: So now we're in a situation where we absorb that
Speaker 1: supply because of increasing demand, but also a lot of
Speaker 1: scrapping um or removing ships from the market over the
Speaker 1: last couple of years. And we're looking forward into two
Speaker 1: thousand and eighteen and we're only going to see one
Speaker 1: to one and a half percent growth in the number
Speaker 1: of ships that are delivering versus a growth of three
Speaker 1: to four percent on the demand side, driven by iron
Speaker 1: ore and coal imports primarily. So this is a two
Speaker 1: sided equation. In other words, there are fewer ships being
Speaker 1: built and there is incrementally more demand coming out of
Speaker 1: different economies. So before we get into your projection of
Speaker 1: how much more the Baltic dry indexs could rise, I'm
Speaker 1: curious which do you think is more important here? I mean,
Speaker 1: in other words, when people point to this increase and
Speaker 1: they say, well, this is the leading indicator that shows
Speaker 1: the global economy is surging, are you saying not so fast.
Speaker 1: This is really kind of a more complicated equation that
Speaker 1: has several different heads. I think there are two things here,
Speaker 1: um one the supply side and dry bulk shipping, meaning
Speaker 1: and then number of ships that are on the water
Speaker 1: on any given day to ship a cargo is probably
Speaker 1: one of the major factors and does drive the market.
Speaker 1: Having said that, if you look at what we're seeing
Speaker 1: on the cargo flow side, we're seeing increased iron ore
Speaker 1: going into China. We're seeing increased coal going into China,
Speaker 1: which is all done on the larger ships. But here's
Speaker 1: the neat thing. It's not just China centric. As we've
Speaker 1: seen in the last couple of years. We've seen a
Speaker 1: recovery in the European steel industry, so increased iron ore
Speaker 1: imports and coking coal going into Europe. We've seen India's
Speaker 1: steel industry recover, so increased coking coal going into India.
Speaker 1: We've seen coal imports into Taiwan, the Philippines, um cement
Speaker 1: into Indonesia in the outcoming out of the US golf.
Speaker 1: On the grain front, soybeans and corn are at all
Speaker 1: time highs. So this is much more of a global
Speaker 1: recovery from what we're seeing for cargo flows. So when
Speaker 1: was the last time that Jenko Shipping saw this degree
Speaker 1: of activity and demand. I would say you'd have to
Speaker 1: go back to probably two thousand fourteen, two thousand thirteen,
Speaker 1: two thousand fourteen, and what what happened in two thousand thirteen. Again,
Speaker 1: we we saw some overbuilding. We have now absorbed all
Speaker 1: of that, and as I said before, it's because of
Speaker 1: high scrapping over the last twenty four months and just
Speaker 1: a complete slow down in the number of ships that
Speaker 1: are that are going on the water. And I'll just
Speaker 1: go back to it, just simple number wise again, you
Speaker 1: look at next year and then two thousand nineteen. The
Speaker 1: supply side of the equation, meaning the number of ships
Speaker 1: that are that are going to come to the water
Speaker 1: is very predictable. And you know because if you're going
Speaker 1: to contract a ship today, that's two years out. So
Speaker 1: for the next two years you have a good visibility
Speaker 1: on the supply side. And we're only going to see
Speaker 1: as I said, one and a half percent fleet growth
Speaker 1: in two thousand eighteen, and some are around one to
Speaker 1: one and a half and two thousand nineteen against a
Speaker 1: backdrop of three to four percent growth on the demand side.
Speaker 1: Those are very favorable numbers going into eighteen and nineteen.
Speaker 1: And that's why I go back to, we're seeing we're
Speaker 1: in the beginnings of the recovery, and we've started to
Speaker 1: see at this quarter fourth quarter. And I dont want
Speaker 1: to pick up on that because we mentioned that JENKO
Speaker 1: is up nearly so far this year, but that follows
Speaker 1: a nearly lost last year and lost the year before.
Speaker 1: So there's a question of you know, we're these just
Speaker 1: these shipping stocks way too beaten up and there was
Speaker 1: way too much demand. Uh, and we're seeing a recovery.
Speaker 1: There's a question of how much we will recover because
Speaker 1: if you look back at the Baltic dry Index going
Speaker 1: back to two thousand and eight and two seven, two six,
Speaker 1: it was still a lot higher than where we are today.
Speaker 1: So do you think that shipmakers will start earning more
Speaker 1: and more or are we close to the peak here? No, Again,
Speaker 1: I go back to I think we're in the first
Speaker 1: instance of the game. Um. This is something that we
Speaker 1: started talking about at the beginning of of two thousand
Speaker 1: and seventeen. UM that we thought that supplying demand fundamentals
Speaker 1: would start to come into balance in the fourth quarter.
Speaker 1: We're now being that and going into next year again
Speaker 1: we see an even rosier picture because the supply side
Speaker 1: of the equation, the number of ships that are being delivered,
Speaker 1: are going to basically be at all time loads at
Speaker 1: one and a half percent. So how are you positioning
Speaker 1: JENKO to take advantage of this upside? So a couple
Speaker 1: of things. One, if you look at um the real
Speaker 1: growth and commodities, it's going to come on the iron
Speaker 1: ore front with an increased iron ore exports going from
Speaker 1: Brazil to China. Valet in particular is projecting another twenty
Speaker 1: five to thirty million tons of iron ore that is
Speaker 1: going to be shipped. And the great thing about Brazil
Speaker 1: to China that's a long haul trade route, so it
Speaker 1: increases to the great thing for shipping owners. Great, No,
Speaker 1: that's that's exactly right, Um. And what's also driving a
Speaker 1: lot of this, which I think is important, is the
Speaker 1: environmental side in China. So China is actually encouraging imports
Speaker 1: of higher grade iron ore, which can only come from seaborn.
Speaker 1: It cannot come domestic suppliers in China, so we're seeing
Speaker 1: domestic supply shrink in China and more seaborn trade of
Speaker 1: iron ore take place. I'm curious what you think about
Speaker 1: the US tax plan and increasing trade tensions between the
Speaker 1: US and other countries. Is that on your radar at all,
Speaker 1: is possibly hampering trade or is that just sort of
Speaker 1: noise for you for dry ball shipping. It really doesn't
Speaker 1: come into play if you think about just the major
Speaker 1: trade routes again, it's Brazil to China, Australia to China
Speaker 1: on the iron ore and coal front, and then you
Speaker 1: have a strong trade in the minor box, whether it
Speaker 1: be cement or soybeans, corn coming out of the US,
Speaker 1: golf going into Europe, going into India, going into China.
Speaker 1: I don't you know, I don't see any trade issues
Speaker 1: with that. China has all the incentive in the world
Speaker 1: to continue growing on the steel production side. Based on
Speaker 1: what you're seeing from the demand side. What country do
Speaker 1: you think has a better economy than many give it
Speaker 1: credit right now? I think the Chinese economy is is strong.
Speaker 1: I mean, I you know, I I go back over
Speaker 1: the last six eight months and I and I think
Speaker 1: that people are finally starting to recognize that iron ore
Speaker 1: imports are really growing at a significant level, and I
Speaker 1: think people failed to grasp the environmental um aspect of
Speaker 1: China and clamping on the pollution and how that is
Speaker 1: actually beneficial to dry ball shipping and the shipping of
Speaker 1: high quality iron ore. John woven Smith, thank you so
Speaker 1: much for joining joining us. He's president of Jenko Shipping,
Speaker 1: which is based in New York. It's very interesting. Thank you,
Speaker 1: Thank you. Thanks for listening to the Bloomberg P and
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