WEBVTT - Saudi Aramco IPO Will Happen When Pigs Fly: Kilduff 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 Abramowitz. 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 --> 0:00:31.040 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Oil 0:00:31.120 --> 0:00:35.320 prices and Saudi aramco It's initial public offering. Here to 0:00:35.360 --> 0:00:38.839 tell us more is John Kilda, founding partner of Again Capital. 0:00:39.200 --> 0:00:41.520 John always a pleasure. Where do you want to begin 0:00:41.600 --> 0:00:44.879 the direction of oil prices or the direction of Saudi 0:00:44.920 --> 0:00:48.319 Aramco's initial public offering. Good morning, Tim, It's always great 0:00:48.320 --> 0:00:50.240 to be on with you as well. Thank you. Um. 0:00:50.280 --> 0:00:52.639 I think you know, just so you know folks at home, 0:00:52.640 --> 0:00:56.240 I know we're seeing the price of gasoline rise pretty 0:00:56.240 --> 0:00:59.120 swiftly now over the past several weeks, and I guess 0:00:59.200 --> 0:01:01.720 just to talk about how we're seeing the oil market 0:01:01.760 --> 0:01:05.959 and gasoline prices react to the imposition or reimposition of 0:01:06.000 --> 0:01:08.680 sanctions on Iran, and that's going to occur on November four. 0:01:09.600 --> 0:01:13.759 International oil companies are already starting to stop buying Iranian 0:01:13.800 --> 0:01:18.720 oil so that puts the scramble on for other supplies 0:01:18.840 --> 0:01:21.880 from other countries, which is tightening up the global market. 0:01:22.240 --> 0:01:24.160 So that's part of what we're seeing. W t I 0:01:24.240 --> 0:01:26.360 price has got as high as seventy seven dollars a 0:01:26.400 --> 0:01:29.319 barrel last week, they've fallen all the way back to 0:01:29.360 --> 0:01:34.319 seventy four, just below seventy four here on on developing 0:01:34.360 --> 0:01:36.119 things in this market. It's going to be a very 0:01:36.200 --> 0:01:38.760 volatile winter PIM as we get into the end of 0:01:38.760 --> 0:01:41.679 the year in terms of the supply demand balance, based 0:01:41.720 --> 0:01:44.720 upon several things, including whether or not China and India 0:01:44.760 --> 0:01:47.480 continue to buy Iran oil and whether or not the 0:01:47.560 --> 0:01:51.160 US actually gives some countries a break and allows them 0:01:51.160 --> 0:01:54.400 to continue to buy Iran oil. John, is the price 0:01:54.440 --> 0:01:57.840 of oil moving higher visa v your comments to do 0:01:57.880 --> 0:02:02.960 with the Iranian oil sanction driven by speculators bidding up 0:02:03.000 --> 0:02:06.560 the price or is there a real lack of supply 0:02:08.960 --> 0:02:11.239 right now? I have to say it's sort of buy 0:02:11.280 --> 0:02:14.959 it now while it's relatively cheap, given what you're sort 0:02:15.000 --> 0:02:18.240 of breaking down and seeing in the market. As we 0:02:18.320 --> 0:02:21.680 get into the peak part of the Northern Hemisphere winter, 0:02:21.760 --> 0:02:23.960 which is the peak global demand period. PIM I know 0:02:24.000 --> 0:02:26.560 we talked about the summer driving season here in the US, 0:02:26.639 --> 0:02:29.160 but that's really the peak. And when you do the numbers, 0:02:29.600 --> 0:02:32.680 considering where the saddie production is at a record level, 0:02:32.760 --> 0:02:35.600 Russian oil production at a record level and probably tapped 0:02:35.600 --> 0:02:38.400 out at this point, uh, it's looking like a crunch, 0:02:38.520 --> 0:02:41.240 a supply crunch, and so that's what got this market 0:02:41.280 --> 0:02:43.360 really bit up. A lot of the other Wall Street 0:02:43.360 --> 0:02:46.440 analysts are really up their price targets for a year end. 0:02:46.440 --> 0:02:49.600 There's several hundred dollar barrel calls. I'm not in that camp. 0:02:49.639 --> 0:02:51.800 I don't think it will get that bad, but that 0:02:51.919 --> 0:02:53.520 that's what's sort of on the table. There's a real 0:02:53.600 --> 0:02:56.280 buying fervor that came into this market. What number are 0:02:56.280 --> 0:02:58.080 you looking at if you're not looking at a hundred 0:02:58.120 --> 0:03:02.799 dollars a barrel? I think Brent crude oil, which is 0:03:02.840 --> 0:03:05.720 at eighty three right now, will not get much higher 0:03:05.720 --> 0:03:08.399 than ninety if it even gets there. And I don't 0:03:08.400 --> 0:03:11.640 see w T I getting much higher than uh eight 0:03:12.919 --> 0:03:15.600 over to eighty five at most. Why is that? Why? 0:03:15.720 --> 0:03:19.000 Just maybe explain your your reasoning well, because I think 0:03:19.000 --> 0:03:21.000 there was some question as to whether or not Saudi 0:03:21.000 --> 0:03:24.560 Arabia in particular, would come across with more barrels, and 0:03:24.600 --> 0:03:27.440 they already are and there they have apparently have come 0:03:27.480 --> 0:03:31.000 together with the Russians to supply this market sufficiently. Also 0:03:31.120 --> 0:03:33.720 to what's not being focused on as much is the 0:03:33.760 --> 0:03:36.360 demand picture, which is being called at the question now 0:03:36.640 --> 0:03:39.760 because of the troubles in China. Because of the troubles 0:03:39.760 --> 0:03:41.360 and a lot of the emerging markets who are getting 0:03:41.360 --> 0:03:43.800 crushed by the rise in the dollar because they have 0:03:43.880 --> 0:03:46.080 to pay for their crude oil in dollars, so they're 0:03:46.120 --> 0:03:48.600 they're already paying the kind of prices that we saw 0:03:48.640 --> 0:03:50.920 back in two thousand and eight when oil prices got 0:03:50.960 --> 0:03:52.760 to a hundred and forty seven dollars a barrel for 0:03:52.880 --> 0:03:55.240 w t I. So there's a real demand crimp coming 0:03:55.320 --> 0:03:57.200 and it's going to be more US supply too as 0:03:57.240 --> 0:04:00.000 we turned the corner into nineteen. Okay, so you look 0:04:00.040 --> 0:04:03.880 can at ninety tops for brand eight five for West 0:04:03.920 --> 0:04:06.960 Texas intermediate crude. I want to get your thoughts on 0:04:07.160 --> 0:04:09.280 natural gas just for a moment before we go to 0:04:09.360 --> 0:04:11.760 sout of your ram coat. Tell us about the trajectory 0:04:11.840 --> 0:04:14.600 of natural gas and what we can expect during the winter. 0:04:16.120 --> 0:04:20.080 Natural gas prices have gone parabolic to the upside, tim Um. 0:04:20.200 --> 0:04:22.839 And that is because we are staring down a supply 0:04:23.040 --> 0:04:27.640 deficit going into the winter of about lower in terms 0:04:27.680 --> 0:04:30.159 of storage versus last year in the five year average. 0:04:30.600 --> 0:04:34.520 It's going to make for an incredibly volatile price picture 0:04:34.600 --> 0:04:38.040 for this winter. We could be staring down supply shortages 0:04:38.440 --> 0:04:41.120 if the winter is at all cold, and these prices 0:04:41.160 --> 0:04:44.920 will probably spike uh markedly. They could double, if not 0:04:45.040 --> 0:04:48.040 triple from here. There are three or so a unit 0:04:48.240 --> 0:04:51.799 right now on the first visit of the polar vortex 0:04:51.880 --> 0:04:54.120 for example, if if from when we get one. Well, 0:04:54.240 --> 0:04:57.200 just to note that natural gas prices are higher by 0:04:57.279 --> 0:05:01.120 more than four on the Nymex today at three dollars 0:05:01.200 --> 0:05:04.520 and twenty seven cents per million BTU. How hard you 0:05:04.560 --> 0:05:06.800 got a price target there for that gas. Let's say 0:05:06.880 --> 0:05:12.719 even the future contracts I think you know, December January 0:05:12.800 --> 0:05:17.000 future contracts, futures contract uh could see upwards of at 0:05:17.040 --> 0:05:21.840 least seven to nine dollars. Seven to nine dollars, Yes, wow, 0:05:22.080 --> 0:05:24.600 that is gonna hurt a lot. And Tim, I'm I'm low. 0:05:24.800 --> 0:05:27.080 I've seen estimates out there in the twelve to twenty 0:05:27.080 --> 0:05:30.000 dollar range. So that's the space to watch. All right, well, 0:05:30.040 --> 0:05:32.840 we certainly are going to watch that with you and John. 0:05:32.880 --> 0:05:35.680 Now to turn your attention to Saudi A Ramco and 0:05:35.800 --> 0:05:39.520 a potential initial public offering. What do you make of 0:05:39.600 --> 0:05:43.760 the timetable? Is it really going to happen? Uh? No, 0:05:44.120 --> 0:05:47.240 I think pigs will fly before that company gets I 0:05:47.360 --> 0:05:50.560 p o tim Um this is uh, you know, more 0:05:50.839 --> 0:05:54.600 just prideful talk from Mohammed bin Salman, the young crown 0:05:54.680 --> 0:05:57.320 Prince who who desperately wants to sort of make his 0:05:57.400 --> 0:06:00.560 mark on the world by getting Saddi Ramco on a 0:06:00.680 --> 0:06:03.880 on a public exchange outside the Kingdom. Uh, it's just 0:06:04.000 --> 0:06:06.200 not going to happen. I mean, there's there's there's really 0:06:06.320 --> 0:06:09.440 just too much in the way of patronage and other 0:06:09.520 --> 0:06:13.040 disclosure issues for a Ramco that's just gonna prevent it 0:06:13.160 --> 0:06:16.159 from you know, meeting the listing requirements of New York 0:06:16.320 --> 0:06:19.640 or London or even Hong Kong for that matter. Um. 0:06:19.839 --> 0:06:22.200 This they're doing a different deal right now where they're 0:06:22.240 --> 0:06:25.680 where they're sort of monetizing um A Ramco by having 0:06:25.760 --> 0:06:29.360 them by the Sabbok, which is the large petro chemical 0:06:29.440 --> 0:06:31.680 or plastics maker in the Kingdom. They want them to 0:06:31.760 --> 0:06:35.240 buy a seventy dollar steak in that in s that 0:06:35.400 --> 0:06:39.000 the petro chemical company. That's right, and you know that 0:06:39.320 --> 0:06:42.200 that will give Mohamed and Psalman the thirty billion or 0:06:42.240 --> 0:06:45.400 so that he wants to play with. Um, but you know, 0:06:45.680 --> 0:06:49.120 the the Kingdom's conduct, you know, in the region, and 0:06:49.200 --> 0:06:52.200 other things that are going on, including uh, this mysterious 0:06:52.240 --> 0:06:57.800 disappearance of a noted journalist um Jamal Kashogi who went 0:06:57.880 --> 0:07:01.000 to the Saudi consulate in Turkey and has not been seen. Uh, 0:07:01.080 --> 0:07:04.320 it's gonna be uh. These Keys kinds of actions are increasing, 0:07:04.440 --> 0:07:07.200 not decreasing. There's still hundreds, if not more than that 0:07:07.440 --> 0:07:11.240 of princes and other royalty locked up in the Kingdom, 0:07:11.600 --> 0:07:15.520 and it's just not a suitable investment climate. That's that's 0:07:15.680 --> 0:07:18.360 that's emerging there. So to try to list a Ramco 0:07:19.040 --> 0:07:21.320 is gonna be a very difficult proposition and he's certainly 0:07:21.360 --> 0:07:24.120 not going to get the two trillion dollar valuation that 0:07:24.240 --> 0:07:27.960 he's looking for right now. Best I've seen is anywhere 0:07:28.000 --> 0:07:32.840 from eight hundred million, uh to one trillion. Wow. All right, well, 0:07:32.920 --> 0:07:35.560 thanks very much for being with us. John Kilduff is 0:07:35.680 --> 0:07:39.760 founding partner of Again Capital. Talking about the crude markets 0:07:40.200 --> 0:07:53.560 and what's happening to the price of oil. Our next 0:07:53.840 --> 0:07:56.080 guest is Joel Stern. He is the chairman and the 0:07:56.160 --> 0:08:00.960 chief executive officer of Stern Value Management. And Joel has 0:08:01.040 --> 0:08:04.960 someone of a unique perspective because not only is he 0:08:05.280 --> 0:08:10.040 an active academic teaching in business schools around the world, 0:08:10.680 --> 0:08:13.320 but he is also the founder and chief executive of 0:08:13.360 --> 0:08:17.800 Stern Value Management, which has, over the course of many years, 0:08:18.160 --> 0:08:23.400 created a variety of methodologies for companies to follow in 0:08:23.760 --> 0:08:27.480 order to increase their economic value. And we're here to 0:08:27.560 --> 0:08:30.520 talk about the economic value of the United States. Joel Stern, 0:08:30.600 --> 0:08:35.880 thanks for coming in to our Bloomberg Interactive Brokers. Let's 0:08:35.960 --> 0:08:39.199 begin with a look at interest rates. I want you 0:08:39.280 --> 0:08:44.200 to talk about is there a link between the level 0:08:44.280 --> 0:08:49.240 of interest rates and the performance of the stock market. Well, 0:08:49.800 --> 0:08:51.720 you and I have been frands for about five years, 0:08:52.440 --> 0:08:55.520 and over that time I've pulled your ear so many 0:08:55.559 --> 0:08:58.840 times about interest rates. Maybe you should answer the question 0:08:59.160 --> 0:09:01.360 instead of me. It here goes, I'll give you my 0:09:01.480 --> 0:09:05.560 best shot. Interest rates are a function of two things. 0:09:06.360 --> 0:09:09.599 One is the strength of the U. S economy and 0:09:09.720 --> 0:09:12.920 the other is the expected rate of inflation. So if 0:09:13.000 --> 0:09:18.120 interest rates are rising because of inflation rising. And people 0:09:18.160 --> 0:09:20.880 have been talking about that now for months, saying, oh, oh, 0:09:21.120 --> 0:09:24.320 we better watch out for the coming inflation. I got news. 0:09:24.760 --> 0:09:26.959 There's something else that can help us with all of this, 0:09:27.559 --> 0:09:29.880 and that is the gold price. And here's the reason why. 0:09:30.440 --> 0:09:33.880 The gold price is a function of the real US 0:09:33.960 --> 0:09:37.160 interest rate that is afty and knockout inflation. Now we 0:09:37.320 --> 0:09:39.880 know that interest rates have been rising, forget about the 0:09:39.920 --> 0:09:43.280 fit five year notes, two year notes, tend year notes, 0:09:43.520 --> 0:09:45.719 thirty year notes, things that are not controlled by the 0:09:45.800 --> 0:09:48.240 Federal Reserve. They can try to control it. They can 0:09:48.280 --> 0:09:51.120 try to control it, but in the end, it's up 0:09:51.160 --> 0:09:53.679 to what's really taking place in the economy. If the 0:09:53.760 --> 0:09:57.679 economy inflation rate is rising, then I got news the 0:09:57.800 --> 0:10:01.480 gold price will be heading north south. But guess what 0:10:02.520 --> 0:10:05.400 the gold price is falling. How can that be happening. 0:10:06.240 --> 0:10:09.760 And the answer is, if the real interest rate rises, 0:10:09.920 --> 0:10:13.800 that's native inflation. That is actually a good sign for 0:10:13.920 --> 0:10:17.360 both the economy and for a low rate of inflation. 0:10:18.000 --> 0:10:20.640 And that's what's been happening. So when I sit down 0:10:20.800 --> 0:10:24.599 in the evening and I either listen to Bloomberg or 0:10:24.760 --> 0:10:28.199 listen to some other news, I don't worry at all. 0:10:28.800 --> 0:10:30.679 How come? All I have to do is take a 0:10:30.720 --> 0:10:33.000 look at what the gold price is doing. And guess what. 0:10:33.559 --> 0:10:37.120 Over the last three days, the doao has been getting 0:10:37.240 --> 0:10:41.720 wett really badly, over two points a day now percentage 0:10:41.760 --> 0:10:44.200 why it's not I but it's still a significant thing. 0:10:44.840 --> 0:10:48.360 But guess what's been happening. The gold price has been falling, 0:10:49.200 --> 0:10:53.160 which means the reason interest rates are rising is as 0:10:53.200 --> 0:10:56.079 a signal to the rest of the world that the 0:10:56.200 --> 0:10:59.400 United States is the place to invest money. This is 0:10:59.440 --> 0:11:04.480 the place to um why non inflationary growth. That's what's 0:11:04.480 --> 0:11:11.480 happening alright, non inflationary growth. Yeah. Does this have a 0:11:11.600 --> 0:11:17.240 political element because usually in the next paragraph of every 0:11:17.520 --> 0:11:23.600 investment newsletter is some prognostication about the mid term election. 0:11:23.920 --> 0:11:27.280 Of course, of course, because some of the policies that 0:11:27.360 --> 0:11:30.480 the president has been following leave a lot to be desired. 0:11:30.880 --> 0:11:33.800 Do you think he looked for this disaster to take 0:11:33.840 --> 0:11:36.520 place on the Supreme Court? Of course not. And did 0:11:36.559 --> 0:11:39.080 the Democrats look forward to I guess they did. They 0:11:39.080 --> 0:11:41.199 were enjoying themselves. And it looks like the House of 0:11:41.280 --> 0:11:44.439 Representatives could well fall to the Democrats because of the 0:11:44.520 --> 0:11:49.640 Kavanaugh experiences, all bad, all bad. But today, unfortunately, with 0:11:49.800 --> 0:11:55.000 the polarization, unfortunately almost everything is politics. There is some 0:11:55.200 --> 0:11:59.040 element of politics there. And what are we supposed to expect. 0:11:59.280 --> 0:12:01.920 We've been having this problem now for twenty years already. 0:12:02.200 --> 0:12:10.439 Would would a Democrat controlled House have a deleterious effect 0:12:10.720 --> 0:12:14.760 on your perspective when it comes to the trajectory of 0:12:14.760 --> 0:12:18.160 the U. S. Economy? And what's the reason? Because if 0:12:18.200 --> 0:12:20.480 they get the House, then they're gonna want to the House, 0:12:20.559 --> 0:12:23.040 the Senate, and the presidency in just two years. So 0:12:23.160 --> 0:12:26.160 what will they do. They'll stop Trump from doing anything 0:12:26.520 --> 0:12:29.080 that would benefit the Republicans and in other ways if 0:12:29.920 --> 0:12:33.240 until now, the Republicans have controlled both houses of Congress, 0:12:33.600 --> 0:12:36.480 and so when Trump says, look at all these wonderful 0:12:36.520 --> 0:12:39.360 things I have done, well, there's no doubt he's right. 0:12:40.080 --> 0:12:42.079 All the things that he has done he has done 0:12:42.160 --> 0:12:45.000 principally because he was in control. But over the next 0:12:45.080 --> 0:12:48.480 two years, if they lose the House, the Democrats will 0:12:48.520 --> 0:12:51.120 be fighting with the Republicans on everything. But isn't that 0:12:51.200 --> 0:12:54.400 necessarily good for business? That nothing will get done to 0:12:54.520 --> 0:12:57.440 the extent that they will be able to digest all 0:12:57.520 --> 0:12:59.600 of the changes that have taken place in the last 0:12:59.640 --> 0:13:03.240 two year years. You know, the left is that. My teacher, 0:13:03.280 --> 0:13:06.760 as you know, was the late Milton Friedman, and Milton 0:13:06.880 --> 0:13:09.480 says it would be a good thing if the houses 0:13:09.520 --> 0:13:12.440 in Congress were in different parties hands, so that nothing 0:13:12.480 --> 0:13:14.719 would get done, and that way we could keep the 0:13:14.800 --> 0:13:18.720 government small instead of it getting out of control. Did 0:13:18.760 --> 0:13:20.800 I enjoy that? Hey? Listen. When I got to the 0:13:20.920 --> 0:13:24.120 University of Chicago, I was a left wing liberal. He 0:13:24.280 --> 0:13:27.640 made me into a right wing liberal. So the answer 0:13:27.840 --> 0:13:31.839 is everything matters. They'll be fighting like crazy because the 0:13:31.920 --> 0:13:34.959 Democrats cannot believe what happened in sixteen and they'll be 0:13:35.080 --> 0:13:38.120 doing everything to undo it. Let's talk about one of 0:13:38.240 --> 0:13:42.240 the key areas of the Trump administration's push, and this 0:13:42.640 --> 0:13:46.880 has to do with trade and trade tariffs. Well, I'm 0:13:46.960 --> 0:13:51.800 a compulsive free marketeer. I mean why because what we 0:13:52.000 --> 0:13:56.199 learned at the University of Chicago so important is to 0:13:56.320 --> 0:13:59.839 ask ourselves questions about things we think for granted. So 0:14:00.160 --> 0:14:03.920 whenever something would come up, I would analyze it first 0:14:04.000 --> 0:14:07.760 through Milton's eyes, then through my own eyes. And my father, 0:14:07.880 --> 0:14:10.560 of course, would say, what's happening to you in Chicago? 0:14:11.280 --> 0:14:14.040 Because the family was left wing liberal and that's just 0:14:14.160 --> 0:14:17.199 the way it was uh for generations. Okay, But the 0:14:17.280 --> 0:14:21.000 question is this, what is likely to take place between 0:14:21.080 --> 0:14:23.960 now and the next year. I think the Dow was 0:14:24.000 --> 0:14:26.800 going to be very strong, still continuing strong, and the 0:14:26.880 --> 0:14:29.640 Mark is going to do very well no matter what 0:14:30.080 --> 0:14:33.680 happens to trade. I'll tell you why. My position on 0:14:33.760 --> 0:14:37.200 the trade thing is this. I'm against any tariffs. I'm 0:14:37.240 --> 0:14:41.160 against export subsidies, I'm against import quotas. By the way, 0:14:41.240 --> 0:14:43.960 the highest quality cotton in the world is on the 0:14:44.000 --> 0:14:46.520 west coast of Africa. The only way we can get 0:14:46.560 --> 0:14:49.160 it here. They sell it to the Chinese and then 0:14:49.280 --> 0:14:51.920 Ralph Floren makes it in China and sends it back here. 0:14:52.480 --> 0:14:54.520 Isn't that terrible? Why are we going through all of 0:14:54.600 --> 0:14:57.480 this RIGAMAROLEA doesn't make any sense? Now, how do I 0:14:57.560 --> 0:15:00.200 feel about it? I'm in favor of Trump's position. Why, 0:15:01.040 --> 0:15:03.200 because these people have been ripping us off for as 0:15:03.240 --> 0:15:05.360 long as he was talking about it. He is correct 0:15:05.400 --> 0:15:08.480 about that, and he is an excellent negotiator, and he 0:15:08.560 --> 0:15:11.520 will figure out a way to get the EU to 0:15:11.680 --> 0:15:14.240 let our foods go in there. He'll make sure the 0:15:14.360 --> 0:15:17.280 Chinese capitulate. It's it's going to be in their interest 0:15:17.320 --> 0:15:20.560 to capitulate. When it's all over, everybody will be claiming 0:15:20.600 --> 0:15:22.360 credit for the good things that I have taken place. 0:15:22.720 --> 0:15:24.760 All well, we'll have to see what happens, but I 0:15:24.840 --> 0:15:27.120 want to thank you very much for your views. Joel 0:15:27.160 --> 0:15:30.800 Stern is the chairman and the chief executive officer of 0:15:31.120 --> 0:15:41.480 Stern Value Management. The Brazilian real has gained nearly four 0:15:41.640 --> 0:15:45.760 percent against the US dollar since the vote on Sunday 0:15:46.160 --> 0:15:49.640 that saw a far right former military man win nearly 0:15:49.760 --> 0:15:54.600 half the votes in Brazil's presidential election. Now, this is 0:15:54.720 --> 0:15:58.080 just the first round of the elections. They will have 0:15:58.200 --> 0:16:00.760 a runoff vote later this month. Here to tell us 0:16:00.800 --> 0:16:04.800 more about the situation in Brazil is Dan Cancel, Managing 0:16:04.960 --> 0:16:08.400 editor for Latin America for Bloomberg, and he joins us 0:16:08.440 --> 0:16:12.040 from sal Paolo. Dan tell us the details about the 0:16:12.120 --> 0:16:17.080 election results. Yeah, good morning. Um. You know, heading into 0:16:17.160 --> 0:16:20.680 the to the vote, the polls were showing uh, as 0:16:20.720 --> 0:16:25.000 you said, the far right conservative former army captain j R. Bilsonado, 0:16:25.560 --> 0:16:29.280 we're showing him ahead. Um, but he's his performance Sunday 0:16:29.360 --> 0:16:32.440 was stronger than expected. Um. There was even the first 0:16:32.520 --> 0:16:36.160 print you know had him at, so he needed more 0:16:36.200 --> 0:16:39.240 than fifty two to win an outright. He ended up 0:16:39.280 --> 0:16:44.520 at about um and his closest rival, who who will 0:16:44.560 --> 0:16:47.800 go to the runoff with him, was at for Nanda. 0:16:48.840 --> 0:16:52.520 So beyond the presidential result, there was a huge impact 0:16:52.760 --> 0:16:56.880 on on his candidates that we're running for Congress and 0:16:57.240 --> 0:17:00.560 for for governor positions. So basically if you were on 0:17:00.640 --> 0:17:03.800 his ticket, you you you got swept into power and 0:17:03.840 --> 0:17:06.359 a lot of these these posts. Can you tell us 0:17:06.560 --> 0:17:11.040 some of the policy changes that the Bosonaro is looking 0:17:11.160 --> 0:17:16.280 for if indeed he becomes the next president of Brazil? Sure? Yeah, 0:17:16.720 --> 0:17:18.919 I mean the market, as you mentioned, you know, has 0:17:19.040 --> 0:17:22.040 rallied off off the result. A lot of their hopes 0:17:22.080 --> 0:17:25.120 are pinned on one guy, which is the the economic 0:17:25.200 --> 0:17:28.639 advisory is called Paolo gettys Um. He has a degree 0:17:28.720 --> 0:17:31.880 from the University of Chicago. He seemed to be as 0:17:32.000 --> 0:17:34.240 one of the more kind of liberal minds in in 0:17:34.480 --> 0:17:38.320 in Brazil who's keen on on privatizing most uh, you know, 0:17:38.440 --> 0:17:41.919 state companies shrink in the size of the state, UM 0:17:42.320 --> 0:17:46.040 pushing through you know, an aggressive pension reform, So that 0:17:46.080 --> 0:17:49.239 would be kind of best case scenario for the market. UM. 0:17:49.480 --> 0:17:53.040 But of course, his relationship with Gets is relatively new. Um, 0:17:53.320 --> 0:17:57.320 he's been in Congress Bolsonado for nearly three decades, hasn't 0:17:57.359 --> 0:17:59.359 done much to be honest as a lawmaker, and no 0:17:59.440 --> 0:18:03.240 one really those kind of uh you know, where he 0:18:03.320 --> 0:18:06.359 hopes to take the economy. So it's quite uncertain, like 0:18:06.440 --> 0:18:08.280 there are there are hopes that that they'll go in 0:18:08.320 --> 0:18:11.000 the right direction. But uh, you know, if he gets 0:18:11.040 --> 0:18:14.239 into a into a battle with his economic advisor at 0:18:14.280 --> 0:18:16.399 some point the guy leaves, it would be kind of 0:18:16.480 --> 0:18:19.320 floating down stream without a paddle. Okay, Dan, I'm gonna 0:18:19.400 --> 0:18:22.120 ask you three topics. Will go take one by one 0:18:22.359 --> 0:18:25.119 and it just give me a couple of points. And 0:18:25.320 --> 0:18:28.680 what you think people need to most understand about? Number one? 0:18:28.960 --> 0:18:32.200 The economy in Brazil? What's going on there? Yeah, it's 0:18:32.200 --> 0:18:34.879 just been muddling. You know. It's it's gonna be a 0:18:34.960 --> 0:18:38.480 little better than one percent this year. Um, Basically you 0:18:38.560 --> 0:18:40.920 have these big reforms on on the horizon that need 0:18:41.000 --> 0:18:43.959 to get done in order to grow more than than 0:18:44.040 --> 0:18:46.320 their potential, which Goldman puts it something like two to 0:18:46.400 --> 0:18:52.520 three percent. Right now, Okay, tell us about corruption. Uh So, Bulsonado, 0:18:52.640 --> 0:18:55.359 you know ran on a big anti corruption platform. He 0:18:55.560 --> 0:18:58.800 beat the Workers Party has been in power since you 0:18:58.880 --> 0:19:02.240 know two two, um, basically on the back of saying 0:19:02.240 --> 0:19:04.240 everyone's corrupt and we need to clean up the system, 0:19:04.480 --> 0:19:07.879 blow up Congress and and beat the establishment. So in 0:19:08.040 --> 0:19:11.520 some ways this is a step towards uh ousting some 0:19:11.680 --> 0:19:14.160 of the most corrupt sectors in Congress. We just don't 0:19:14.160 --> 0:19:16.560 know what him and his party will do in terms 0:19:16.600 --> 0:19:19.680 of cleaning up corruption going forward, all right, Topic number three, 0:19:20.200 --> 0:19:23.920 crime and a crime wave that's been hitting Brazil. Yeah, 0:19:24.000 --> 0:19:26.800 so last year, it's been reported, you know, widely, was 0:19:27.000 --> 0:19:30.119 was the most deadlier in terms of homicides. There was 0:19:30.160 --> 0:19:32.959 sixty four thousand homicides in a country of about two 0:19:33.280 --> 0:19:38.240 million people. UM. Bolsonado's big, big platform has been crime 0:19:38.320 --> 0:19:43.240 and uh, you know, attacking crime, uh, basically giving police 0:19:43.520 --> 0:19:46.320 the right to shoot to kill if needed. Um. And 0:19:46.600 --> 0:19:48.800 so you know, a lot of the people, even if 0:19:48.880 --> 0:19:52.119 they didn't like what you said about you know, gay's 0:19:52.200 --> 0:19:55.560 women or other minorities, I think he's tough on crime, 0:19:55.680 --> 0:19:59.000 then he's worth a vote. Well in that very context 0:19:59.080 --> 0:20:01.520 that you talk about, the comments that he's made about 0:20:01.760 --> 0:20:04.560 members of the constituency that even voted for him, he's 0:20:04.600 --> 0:20:09.080 a seven term congressman and from the Amazon to the 0:20:09.200 --> 0:20:13.000 beaches of Rio de Janeiro, he won votes even among 0:20:13.400 --> 0:20:18.520 groups he insulted. How did he do that? So again, 0:20:18.560 --> 0:20:21.160 I mean, you know, people, I spoke to several people 0:20:21.200 --> 0:20:24.240 who who even didn't even know a lot about, you know, 0:20:24.359 --> 0:20:26.439 what he's done as a congressman, but see him as 0:20:26.480 --> 0:20:28.840 somehow an outsider, like you said, even though, like you 0:20:28.920 --> 0:20:31.600 just said, he's been in Congress for years. But he's 0:20:31.640 --> 0:20:34.560 someone that is not from one of the major parties. 0:20:35.160 --> 0:20:38.280 He's someone that is saying, uh, you know, we've been 0:20:38.320 --> 0:20:41.520 too soft on criminals. You know, drug traffickers and and 0:20:41.720 --> 0:20:45.280 and petty crime taken over the country and we need 0:20:45.359 --> 0:20:47.560 to really get tough on crime. And so you know 0:20:47.800 --> 0:20:50.720 that has been his his biggest message and one that's 0:20:50.720 --> 0:20:54.679 resounded the most with people. What role has social media 0:20:55.240 --> 0:20:58.679 taken in this campaign? Yeah, it's been huge. I mean, 0:20:58.960 --> 0:21:02.119 you know, depending on you know, which party backs you 0:21:02.920 --> 0:21:05.840 usually dictates how much TV time you get. During the 0:21:05.920 --> 0:21:09.800 campaigns um and Billsonato had very little time on TV 0:21:10.600 --> 0:21:14.000 or radio, but he had the biggest following on Facebook. 0:21:14.040 --> 0:21:16.600 He's got like forty three million followers. He was doing 0:21:16.600 --> 0:21:19.320 a lot of Facebook lives. You may recall he was 0:21:19.400 --> 0:21:21.320 stabbed during a campaign event, so he did a lot 0:21:21.359 --> 0:21:24.280 of this stuff from a hospital bed. Um. He had 0:21:24.320 --> 0:21:28.320 a big grassroots kind of organization behind him that was 0:21:28.520 --> 0:21:31.200 very active, you know, both the positive side in terms 0:21:31.200 --> 0:21:33.560 of pushing some of his messages and then the negative side, 0:21:34.000 --> 0:21:35.800 which are kind of you know, they were calling the 0:21:35.880 --> 0:21:38.240 trolls and the bots that that were very aggressive and 0:21:38.320 --> 0:21:42.719 insulting his his opponents. And just quickly, when is the runoff? 0:21:42.760 --> 0:21:46.600 It's later this month, right, yeah, October, so we'll have 0:21:47.200 --> 0:21:49.840 about three weeks. There will be a few more debates 0:21:49.920 --> 0:21:54.400 that we hope will both candidates will participate in, and yeah, 0:21:54.440 --> 0:21:55.879 by the end of the month will have a new president. 0:21:56.080 --> 0:21:58.400 Well done. Thanks very much for being with us. Dan 0:21:58.600 --> 0:22:02.000 Cancel is managing at it there for Latin America for Bloomberg, 0:22:02.600 --> 0:22:18.760 joining us from sal Powell. The topic now is biotechnology, 0:22:18.920 --> 0:22:23.040 how to invest in biotech successfully joining us now as 0:22:23.080 --> 0:22:26.400 someone who's managed to do it. Eli Kasden is managing 0:22:26.480 --> 0:22:29.520 partner of Kasiden Capital and he joins us now. Eli, 0:22:29.640 --> 0:22:32.680 thanks very much for being with us. I just want 0:22:32.720 --> 0:22:36.879 to mention a couple of companies as examples Magenta Therapeutics, 0:22:37.160 --> 0:22:42.399 grit Stone, Neon Therapeutics, blue Point Blueprint. Rather, these are 0:22:42.480 --> 0:22:46.320 all companies that you and your firm invested in while 0:22:46.400 --> 0:22:50.320 they were private companies and they have since gone public. 0:22:50.720 --> 0:22:53.480 Can you offer a little bit of insight into your 0:22:53.560 --> 0:22:57.840 thinking and strategy for how do you identify the companies 0:22:58.040 --> 0:23:02.399 to invest in? Sure? Thanks Tim for having me on 0:23:02.600 --> 0:23:05.639 and and uh, it's a it's a good question. UM. 0:23:06.800 --> 0:23:10.160 We you know, are are sort of hunt for good companies. 0:23:10.280 --> 0:23:16.000 Begins by UM thinking about new market opportunities for technology, 0:23:16.880 --> 0:23:22.880 whether it's UH sequencing, DNA sequencing technologies, or diagnostic technologies 0:23:23.040 --> 0:23:27.399 or in the cases you mentioned, technologies that create new 0:23:27.480 --> 0:23:33.040