WEBVTT - COVID Origins, Ohio Train, ETFs, and Goldman (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.760 at Bloomberg dot com slash podcast. Let's go Switch Gears 0:00:22.800 --> 0:00:25.400 to Big Farm. Another deal. There's a lot of things 0:00:25.440 --> 0:00:27.240 I want to talk about here, but this deal came 0:00:27.240 --> 0:00:30.720 out today. Fiser potentially looking at a company by the 0:00:30.800 --> 0:00:33.479 name of Segan. I have no idea what's going on 0:00:33.560 --> 0:00:35.800 here other than bankers are going to get paid. Lawyers 0:00:35.840 --> 0:00:37.800 are going to get paid. So I want to break 0:00:37.800 --> 0:00:40.800 in with Sam Fizzelli, he said, of the European research 0:00:40.800 --> 0:00:43.640 and farmer analyst for Bloomberg Intelligence. So Sam talk to 0:00:43.720 --> 0:00:46.760 us about what is it Segan and Fiser and what's 0:00:46.760 --> 0:00:51.360 going on there? Yeah, Hi, Paul, So I think this is, 0:00:51.840 --> 0:00:55.040 you know, not a surprise that Fiser's looking at companies, 0:00:55.080 --> 0:00:59.120 because you know they in their four QUE results they 0:00:59.120 --> 0:01:03.000 had a slide which showed twenty five billion dollars of 0:01:03.200 --> 0:01:08.000 risk adjusted sales from deals to be done in twenty 0:01:06.920 --> 0:01:13.039 twenty twenty twenty thirty, got that right, ye? So you know, 0:01:13.360 --> 0:01:17.080 and that's a lot of money risk adjusted, which means 0:01:17.200 --> 0:01:20.080 that when you look at a company company, their pipeline 0:01:20.120 --> 0:01:23.160 drugs will have to be taking a notch down. And 0:01:23.280 --> 0:01:25.840 to get twenty five billion dollars with risk adjusted sales, 0:01:25.840 --> 0:01:28.880 you need something like, I don't know, thirty billion, thirty 0:01:28.880 --> 0:01:33.280 five billion of sales. So the point is they need 0:01:33.319 --> 0:01:36.080 to do big deals. And here, although Season is not 0:01:36.160 --> 0:01:39.240 necessarily a big company, today they say two or three 0:01:39.280 --> 0:01:44.120 billion dollars of sales. Expectations on consensus have it going 0:01:44.160 --> 0:01:48.160 up to about nine in twenty thirty. So you know, 0:01:48.640 --> 0:01:52.040 does Fiser need to do this? Yes, something like this anyway, 0:01:52.080 --> 0:01:55.040 does fi Fiser need to do some of the several 0:01:55.080 --> 0:01:58.560 of these years bill fits in? You know, Sam, I'm 0:01:58.600 --> 0:02:00.640 looking at the FA function for Fiser and it just 0:02:00.640 --> 0:02:03.160 blows me away away. And this is obviously a complete 0:02:03.160 --> 0:02:06.520 COVID call. Here. You know, this company had forty billion 0:02:06.560 --> 0:02:09.480 in sales and then in twenty twenty one it doubled 0:02:09.600 --> 0:02:11.240 to eighty billion, and then you know they had one 0:02:11.320 --> 0:02:13.560 hundred billion in twenty twenty two, and then I'm looking 0:02:13.560 --> 0:02:16.160 at the forecast on the FA function, consensus is back 0:02:16.160 --> 0:02:19.200 down to like seventy billion. Run right here. How does 0:02:19.240 --> 0:02:24.280 this company pivot from three year surge in sales and 0:02:24.480 --> 0:02:28.920 profitability from COVID and again, thank them and Moderna very 0:02:29.000 --> 0:02:31.280 very much for the work they did. How does this 0:02:31.360 --> 0:02:36.000 company kind of reset itself in a post COVID world? Yeah, 0:02:36.000 --> 0:02:39.480 with difficulty pulled. If you look at the share price chart, 0:02:39.560 --> 0:02:41.079 you'll see that it's come back all the way down. 0:02:41.280 --> 0:02:44.080 So basically they're not getting a huge amount of credit 0:02:44.160 --> 0:02:47.520 for the cash they generated, because it's very difficult to 0:02:47.960 --> 0:02:49.680 know what is the value of cash. At the end 0:02:49.720 --> 0:02:52.040 of the day, it's all going to be down to 0:02:52.120 --> 0:02:53.440 how good are they going to be in terms of 0:02:53.480 --> 0:02:56.240 the deals they do, And I think a lot of 0:02:56.240 --> 0:02:59.400 people worry that they might overpay and do deals that 0:02:59.520 --> 0:03:04.280 perhaps look optically nice today but they don't actually deliver 0:03:04.360 --> 0:03:07.960 in the long term. So you know, it's much easier 0:03:08.000 --> 0:03:12.160 to value and be interested and have an investment positive 0:03:12.160 --> 0:03:15.000 investment view on a company where top line is growing 0:03:15.600 --> 0:03:19.000 organically and then anything they do is in addition to 0:03:19.120 --> 0:03:22.320 that um But so that that's difficult. I don't know 0:03:22.360 --> 0:03:25.840 how you how people get around this subject. You can 0:03:26.000 --> 0:03:30.600 put certain you know numbers in your model that suggests 0:03:30.720 --> 0:03:33.120 sure if they use the cash right, they can have 0:03:33.160 --> 0:03:35.200 a great story going forward. Well, Sam, you know, it's 0:03:35.240 --> 0:03:37.080 it's interesting. I mean, I know you've been covering these 0:03:37.080 --> 0:03:40.960 farmer companies for decades. You know how much of the 0:03:41.040 --> 0:03:46.440 new drugs that come onto market are Fiser's scientists discovering 0:03:46.480 --> 0:03:51.119 something in their lab versus buying it? Good question? Yeah, 0:03:51.120 --> 0:03:54.000 so it is a good question. And you know what 0:03:54.360 --> 0:03:58.040 they all farmer companies have pretty much a state to 0:03:58.080 --> 0:04:02.000 daim You know, I have very big business development teams 0:04:02.000 --> 0:04:04.960 of trying to get thirty to forty percent of their 0:04:05.040 --> 0:04:10.160 pipelines out sourced externally because they've realized this is a 0:04:10.400 --> 0:04:13.800 huge amount of innovation that goes on externally. And here's 0:04:13.800 --> 0:04:16.400 a little statistic. I'm preparing for a presentation in about 0:04:16.440 --> 0:04:19.839 ten days time. I looked at the biggest drugs in 0:04:19.880 --> 0:04:23.000 twenty twenty two. Seven out of top ten we're from 0:04:23.000 --> 0:04:27.520 where biotech companies. They were unlicensed Bionte. You know, the 0:04:27.560 --> 0:04:32.080 Fiser COVID vaccine came from Bionte. Moderna's vaccine key Truda 0:04:32.160 --> 0:04:35.080 that America's got twenty two billion of sales potentially this year, 0:04:35.160 --> 0:04:37.960 or twenty four billion that came from an acquisition of 0:04:38.000 --> 0:04:42.760 a small biotechy farmer biofarma company in Europe called organ On. 0:04:43.320 --> 0:04:46.680 Which one is that key Truda y Truda, Yeah, twenty 0:04:46.680 --> 0:04:49.520 four billion. Says it is a magic drug for cancer. 0:04:49.800 --> 0:04:52.279 So hopefully you never need it, but if you do 0:04:52.680 --> 0:04:55.720 and it works in you, it works like magic that 0:04:56.600 --> 0:05:01.040 it turns your immune system onto the cancers. Yeah, so 0:05:01.080 --> 0:05:04.159 that's why it's doing twenty four point So that that's interesting. 0:05:04.200 --> 0:05:09.640 So basically seventy percent of the big home runs were 0:05:09.720 --> 0:05:16.840 made by third parties, not the big giant pharma conglomerates, no, 0:05:16.960 --> 0:05:19.359 but but Matt, they did do a lot of the 0:05:19.400 --> 0:05:22.440 work that got them to market. Of course, that's why 0:05:22.600 --> 0:05:25.440 that's why biotech investing sam, I mean, it really is 0:05:25.760 --> 0:05:27.440 not for the faint of heart, right, I mean it 0:05:27.800 --> 0:05:31.360 this drug works and the stock goes crazy, or it 0:05:31.400 --> 0:05:36.480 doesn't work and it does the act exact opposite. Yeah, 0:05:36.520 --> 0:05:39.240 So you need to be able to withstand that that 0:05:39.480 --> 0:05:44.880 risk and also have a proper correct portfolio approach and 0:05:45.000 --> 0:05:47.320 be disciplined, you know, have your rules about what it 0:05:47.360 --> 0:05:49.039 is you like to invest in and why you invest 0:05:49.080 --> 0:05:51.680 in them, stick with them, and then stick with them. 0:05:52.200 --> 0:05:54.359 You know, when you look at the long term, the 0:05:54.440 --> 0:05:58.160 best returns come from companies which perhaps wasn't their first 0:05:58.200 --> 0:06:00.359 drug that got to market. Maybe it was the second 0:06:00.400 --> 0:06:02.880 or third that really made the difference. By the way, Sam, 0:06:02.880 --> 0:06:05.880 in terms of M and A, how much of that 0:06:05.920 --> 0:06:09.600 are we seeing in this high and rising interestate environment? 0:06:09.600 --> 0:06:12.760 I would imagine less. On the other hand, these big 0:06:12.800 --> 0:06:16.480 companies surely have huge war chests of cash and maybe 0:06:16.480 --> 0:06:20.240 don't need to finance everything. Yeah. I mean, remember farma 0:06:20.360 --> 0:06:24.200 is massively cash generative, and you know they can pay 0:06:24.240 --> 0:06:28.359 They can pay equity if needed, right, so their equity 0:06:28.440 --> 0:06:31.239 is pretty much not that different to paying by cash. 0:06:31.279 --> 0:06:35.880 But of course it depends on the target shareholder. So yes, 0:06:35.920 --> 0:06:37.840 you're right, there is there is. The calculation is a 0:06:37.920 --> 0:06:40.920 bit different now, but there's a lot of need. There's 0:06:40.960 --> 0:06:43.640 about two hundred billion dollars of drug sales that are 0:06:43.720 --> 0:06:47.000 coming off patent by twenty thirty. Wow, Sam, what's the 0:06:47.000 --> 0:06:49.560 next biggest i mean post pandemic role. What's the next 0:06:49.560 --> 0:06:51.640 big area for biotech? Do you think to really make 0:06:51.640 --> 0:06:55.599 a difference. Oh, I think it has to be to 0:06:55.640 --> 0:06:57.920 really make a difference. It would be great if they 0:06:57.960 --> 0:07:01.479 can get the more and more of the immune system 0:07:01.520 --> 0:07:05.760 tuned into treating your disease and obviously manages side effects. 0:07:05.760 --> 0:07:07.480 And there's a lot of that going on, and of 0:07:07.480 --> 0:07:09.960 course there's this gene editing going on, so there's a 0:07:10.040 --> 0:07:14.200 lot of work there that could help us. So long 0:07:14.240 --> 0:07:16.920 as we can get the side effects and their safety 0:07:17.000 --> 0:07:22.800 risk under control, that could really revolutionize medicine. See Sam 0:07:22.840 --> 0:07:25.560 goes to these conferences. They're not like the conferences I 0:07:25.600 --> 0:07:27.280 go in the desert or Data Miami where wire we 0:07:27.360 --> 0:07:29.480 plague off and stuff. He goes to these conferences where 0:07:29.480 --> 0:07:32.320 you actually have to work during the weekend. What's the 0:07:32.400 --> 0:07:36.119 next conference coming up? Sam, Well, there's one that I'm sad, 0:07:36.360 --> 0:07:38.480 not sad not to go to on the one hand, 0:07:39.400 --> 0:07:43.200 and that's the American Association for Cancer Research. I think 0:07:43.240 --> 0:07:46.640 that's where I'm guessing here. MODERNA will show us the 0:07:47.720 --> 0:07:53.000 RANNA merc their mRNA vaccine for cancer, which has headlined 0:07:53.040 --> 0:07:55.720 positive data. So let's look at the detail. And the 0:07:55.760 --> 0:07:57.440 next big one would be asking in one of my 0:07:57.440 --> 0:08:00.120 favorite cities. Cha go there, you go? I mean, and 0:08:00.160 --> 0:08:03.080 these guys they actually go work the entire weekend. I mean, 0:08:03.120 --> 0:08:06.040 who does that? Sam Fazzelli held He's head of European 0:08:06.080 --> 0:08:09.160 research for Bloomberg Intelligence. He's our senior farmer analyst who's 0:08:09.160 --> 0:08:10.960 been doing it in the city of London for decades. 0:08:11.240 --> 0:08:14.520 One of the absolute best in the business for Bloomberg Intelligence. 0:08:14.520 --> 0:08:23.200 We're gonna have more coming up. This is Bloomberg, right. 0:08:23.200 --> 0:08:25.320 This is a little awkward. And Matt, you're a CEO 0:08:25.360 --> 0:08:28.440 of a company announced that you're going to step down. 0:08:28.920 --> 0:08:32.720 Your stock goes up ten percent. It happens quite often. 0:08:33.320 --> 0:08:37.240 It is awkward, and yeah, I always feel for the 0:08:37.480 --> 0:08:41.360 incumbent when that happens. But it's a part of market 0:08:41.400 --> 0:08:44.320 life because it does happen all the time. You know. 0:08:44.360 --> 0:08:46.920 Early in my career, I was a star I mean 0:08:47.160 --> 0:08:50.600 star research assistant covering the railroad and trucking industries. And 0:08:50.640 --> 0:08:52.320 I worked for a guy by the name of Tony Hatch. 0:08:52.679 --> 0:08:55.880 He's a consultant and analysts at ABH Consulting. Tony, I know, 0:08:55.960 --> 0:08:59.400 you know these railroad companies inside and out. Tell us 0:08:59.440 --> 0:09:01.720 what's going on Union Pacific. Why would the stock surge 0:09:01.720 --> 0:09:05.560 ten percent when the CEO says he's going to step down? Well, 0:09:05.559 --> 0:09:07.280 first of all, I want to confirm the Yeah, you 0:09:07.280 --> 0:09:10.520 were a star assistant, but what does that mean by 0:09:10.520 --> 0:09:14.240 the way, to being a star research assistant? Means he 0:09:14.280 --> 0:09:17.640 was good to bring on golf forsoms or what. Well, 0:09:18.280 --> 0:09:20.959 since I don't golf, I'm assuming he took my place 0:09:21.000 --> 0:09:22.760 and I was really I would say his number one 0:09:22.800 --> 0:09:27.920 skill exactly there, you figured, I'm kidding Union Pacific, you know, 0:09:28.040 --> 0:09:30.480 on a Sunday, right. The company tried to say this 0:09:30.559 --> 0:09:32.960 was part of a regularly planned issue they've been discussing 0:09:33.280 --> 0:09:36.280 going back in the early last year. So that if 0:09:36.280 --> 0:09:39.240 it's regularly planned, and you have a task force assigned, 0:09:39.280 --> 0:09:42.520 and you've hired and outside, you know, a recruiting firm, 0:09:42.760 --> 0:09:45.280 why would you release this on Sunday. The answer is 0:09:45.320 --> 0:09:48.000 because one of their largest shareholders demanded that they do 0:09:48.040 --> 0:09:50.920 and put out an incredibly sharp letter that talked about 0:09:51.160 --> 0:09:54.440 how Union Pacific, despite having what's well known to be 0:09:54.720 --> 0:09:58.000 the best franchise in the industry, has underperformed all of 0:09:58.000 --> 0:10:00.560 his peers in just about every category. Echo to mention, 0:10:01.080 --> 0:10:04.520 um UP has had a long history of allowing great 0:10:04.559 --> 0:10:07.080 patience for its leadership. Paul. You can remember back to 0:10:07.880 --> 0:10:11.680 the UPSP merger when when that you know, there was 0:10:11.679 --> 0:10:16.120 a disaster, but the management team stayed intact. This time, 0:10:16.160 --> 0:10:18.319 I guess they've made it, made a decision to change. 0:10:18.559 --> 0:10:22.840 It's the second time we've seen the board step in 0:10:23.640 --> 0:10:27.280 over the actions of the CEO of Lance Fritz. They 0:10:27.320 --> 0:10:29.600 did this when they announced they were going PSR. He 0:10:29.679 --> 0:10:32.360 did not make that announcement, really, the board did. And 0:10:32.360 --> 0:10:35.640 then they brought in Jim Venna from Canadian National Fame 0:10:35.960 --> 0:10:39.600 to be the COO to basically supervise their transition to 0:10:39.720 --> 0:10:43.920 this new operating philosophy. It was expected that Venna might 0:10:43.960 --> 0:10:46.720 be making a play for the top job then then, 0:10:46.760 --> 0:10:50.760 being twenty nineteen, he did. He then left and Lance stayed, 0:10:50.840 --> 0:10:54.280 making me think Lance was a pretty good political infighter. 0:10:54.640 --> 0:10:57.679 Now a major shareholder, sor Avna is saying that Jim 0:10:57.760 --> 0:10:59.640 Venas should take the job after all. So it's a 0:10:59.640 --> 0:11:02.560 little of a replay, only this time with a Sunday 0:11:02.559 --> 0:11:05.760 morning surprise that the board has agreed that if not 0:11:06.160 --> 0:11:09.280 coming not taking the advice of their their shareholder too 0:11:09.400 --> 0:11:12.160 with the person they picked, but to make a change. 0:11:12.320 --> 0:11:15.200 It's it's unusual. If you looked at the track record, 0:11:15.240 --> 0:11:17.560 maybe you wouldn't be surprised if you looked at Union 0:11:17.559 --> 0:11:20.640 Pacific's performance. But given the history of this company and 0:11:20.720 --> 0:11:25.200 their longstanding patients and unwillingness to listen outside advice, this 0:11:25.400 --> 0:11:28.760 is highly unusual. So what what can be done at 0:11:28.760 --> 0:11:31.600 a Union Pacific? What are some of these shareholders want 0:11:32.600 --> 0:11:37.559 this company to change and perhaps improvement performance and shareholder returns. 0:11:37.880 --> 0:11:40.040 We well, that's a really interesting thing that you ask 0:11:40.440 --> 0:11:43.400 right now. You know, the the this PSR that that 0:11:43.480 --> 0:11:48.200 precision scheduled railroading has has become a nasty phrase after 0:11:48.240 --> 0:11:51.199 all the labor negotiations. It's even been related to the 0:11:51.240 --> 0:11:53.280 accident in Ohio, though it has of course nothing to 0:11:53.320 --> 0:11:56.520 do with that. But but the idea of bringing in 0:11:56.559 --> 0:11:59.640 an operating guide to solve problems here at Union Pacific, 0:11:59.640 --> 0:12:02.160 and all the railroads had service issues over the last 0:12:02.160 --> 0:12:06.320 eighteen months, although they were almost entirely labor related. That 0:12:06.480 --> 0:12:09.400 is not having enough cruise. This is a gesture where 0:12:09.480 --> 0:12:12.840 Union Pacific is sort of ignoring the wishes of its regulator, 0:12:12.880 --> 0:12:16.320 the Service Transportation Board, which has painted the target of 0:12:16.360 --> 0:12:20.080 all railroad badness, if you will, on Up's back. And 0:12:20.120 --> 0:12:22.760 so if you were to bring in a c OO 0:12:23.160 --> 0:12:26.400 as CEO, you would in essence be saying we are 0:12:26.440 --> 0:12:29.559 a inefficiency driven way to get to share all the 0:12:29.640 --> 0:12:33.120 value rather than a growth driven lance didn't represent really 0:12:33.160 --> 0:12:37.280 either side of this ongoing philosophical debate, and jim Na 0:12:37.440 --> 0:12:40.320 as a person might not want to say he represents 0:12:40.600 --> 0:12:44.200 the operations side, but his resume suggested that. And then 0:12:44.200 --> 0:12:47.520 when he was brought up as the attack guy coming 0:12:47.559 --> 0:12:51.800 at Canadian National a year ago, when Children's Investment Fund 0:12:52.240 --> 0:12:56.040 highlighted him as the successor, they got a lot of 0:12:56.040 --> 0:12:58.480 what they wanted. TCI did, but they did not get 0:12:58.559 --> 0:13:01.640 Jim Venna. One of the thing the TCI allowed to happen, 0:13:01.679 --> 0:13:04.160 as have analysts say, this was a move to pivot 0:13:04.240 --> 0:13:07.560 from growth to back to margin and that is really 0:13:07.600 --> 0:13:10.360 not what shippers want to hear, certainly not what the 0:13:10.440 --> 0:13:13.160 regulators want to hear. What Union Pacific needs to do 0:13:13.240 --> 0:13:15.880 is really take advantage of the many gifts it has. 0:13:16.280 --> 0:13:19.680 It's incredible franchise. It's seemingly never put it all together. 0:13:19.760 --> 0:13:22.760 There isn't a single you know, silver bullet. Oh, if 0:13:22.760 --> 0:13:26.560 they just fix this, they're back. But as you may remember, Paul, 0:13:26.600 --> 0:13:28.840 they you know they have the biggest franchise. You know 0:13:28.880 --> 0:13:32.640 that the connections to Mexico, widely diverse, all of the 0:13:32.640 --> 0:13:35.400 great chemical franchise. Not not that that's a great topic 0:13:35.440 --> 0:13:38.000 for these days, but they really control Texas. I want 0:13:38.000 --> 0:13:42.480 to ask about that, not Texas obviously, but Ohio. First 0:13:42.480 --> 0:13:44.840 of all, for those of us who don't cover the 0:13:44.920 --> 0:13:49.120 railroads for a living, how many big railroad companies are there? 0:13:49.440 --> 0:13:51.000 I mean, it seems to me that there are only 0:13:51.040 --> 0:13:54.559 a handful of them anyway, that operating all of North America, 0:13:54.679 --> 0:13:57.080 so that you are correct, they are essentially you could 0:13:57.080 --> 0:13:59.160 say seven or maybe eight. But in the US there 0:13:59.160 --> 0:14:01.400 are the Big four War in the west, B and 0:14:01.480 --> 0:14:05.839 SAFT that's Berkshire's company, Union Pacific in the east, and 0:14:05.920 --> 0:14:09.720 Norfolk Southern and the Canadians go Transcon up in the 0:14:09.760 --> 0:14:12.760 top and they both drop down through the center. CP 0:14:12.920 --> 0:14:15.240 soon to acquire Kansas City. Southern will go all the 0:14:15.280 --> 0:14:17.480 way to Mexico City. CN goes all the way to 0:14:17.480 --> 0:14:20.320 New Orleans. You have another railroad of some size in Mexico. 0:14:20.400 --> 0:14:22.680 That's really it. But keep in mind you have a 0:14:22.800 --> 0:14:26.440 highly developed highway system. So the rails are often thought 0:14:26.480 --> 0:14:30.080 to be they're called duopolies, and the STBs often used 0:14:30.120 --> 0:14:32.720 the monopoly word, but this is a duopoly that is 0:14:32.800 --> 0:14:37.640 losing share at present in a rising freight market, you know, 0:14:37.760 --> 0:14:41.000 forgetting today's economy, but over the last five years, and 0:14:41.080 --> 0:14:43.440 that shows you the importance of the highway. So yes, 0:14:43.480 --> 0:14:46.440 there are many fewer railroads, but there's the competition for 0:14:46.640 --> 0:14:51.120 freight is stronger rather than weaker. So what needs to 0:14:51.160 --> 0:14:54.000 happen from a regulatory perspective to make sure something that 0:14:54.800 --> 0:14:58.360 we saw in East Palestine, Ohio doesn't happen again? I mean, 0:14:58.400 --> 0:15:02.760 if it's possible or was there lax regulation that led 0:15:02.800 --> 0:15:06.680 to the Norfolk Southern derailment that now seems to have 0:15:06.760 --> 0:15:13.240 poisoned an entire region. So it appears highly and usually 0:15:13.240 --> 0:15:18.200 the National Safety Board and TSB released a preliminary report 0:15:18.240 --> 0:15:21.040 that's unusual, but there was so much heightened demand for 0:15:21.120 --> 0:15:25.000 some kind of answer. That report says that although this 0:15:25.160 --> 0:15:28.840 was a you know, a completely solvable problem, they didn't 0:15:28.840 --> 0:15:32.040 exactly say how. And it appears in Norfolk Southern you 0:15:32.320 --> 0:15:34.440 did all. You played by all of the rules that 0:15:34.480 --> 0:15:37.080 they're supposed to have, including stopping the train when they 0:15:37.160 --> 0:15:40.280 heard there. There will be some changes, most of which 0:15:40.280 --> 0:15:42.680 will not have had any impact had they occurred before 0:15:42.720 --> 0:15:46.280 this accident. In other words, ECB breaks. I'm getting into 0:15:46.280 --> 0:15:48.760 the weeds here, but a new kind of breaking system 0:15:48.840 --> 0:15:51.000 is one of the things some have proposed that has 0:15:51.040 --> 0:15:52.960 no impact. That would have had no impact on this. 0:15:53.440 --> 0:15:56.440 Changing how you label trains likely would have had no 0:15:56.520 --> 0:15:59.560 impact on this. It's not clear the solution of this 0:16:00.040 --> 0:16:04.200 highly unlucky set of circumstances is either letting railroads not 0:16:04.280 --> 0:16:07.200 carry this. Remember they're not allowed to carry these goods, 0:16:07.400 --> 0:16:10.920 they're compelled to carry these goods. So allowing railroads the 0:16:10.920 --> 0:16:14.440 opportunity to say no, to change how the supply chains 0:16:14.480 --> 0:16:17.720 for vinyl chlorider move to, that's some possibility. You know, 0:16:17.720 --> 0:16:21.400 it's not necessarily on the railroad here, since they appeared 0:16:21.400 --> 0:16:24.000 to have played by the regular rules. There is technology 0:16:24.040 --> 0:16:27.760 coming that will have a better system for understanding when 0:16:27.880 --> 0:16:31.000 bearings failed. This was a bearing in a single wheel 0:16:31.000 --> 0:16:33.800 set in one hundred and forty nine car train that failed. 0:16:35.040 --> 0:16:38.280 They were aware it failed just before the accident. New 0:16:38.320 --> 0:16:40.640 technology could come that may allow them to have an 0:16:40.800 --> 0:16:43.680 earlier look at this. But in many cases, I think 0:16:43.680 --> 0:16:45.200 we're going to find this is just a set of 0:16:45.560 --> 0:16:50.880 completely unlucky circumstances, and the crew did the right thing. Afterwards, 0:16:51.080 --> 0:16:53.480 the responders did the right thing. We had no injuries, 0:16:53.480 --> 0:16:56.280 no fatalities, and I think, actually, what will ultimately be 0:16:56.640 --> 0:17:01.280 a solvable although reasonably expensive cleanup process Tony thirty seconds. Here, 0:17:01.280 --> 0:17:03.240 I'm looking at Norfolk Southern. They spend a couple billion 0:17:03.280 --> 0:17:05.679 dollars a year in capital expenditures. There is there a 0:17:05.680 --> 0:17:08.120 credible argument that they don't as an industry spend enough 0:17:08.160 --> 0:17:11.439 on safety. No, the idea here that they they never 0:17:11.520 --> 0:17:13.640 spend enough for people talk about their buybacks and their 0:17:13.640 --> 0:17:16.600 dividends is really kind of it's like it's a populist 0:17:16.760 --> 0:17:20.200 propaganda here. The rail system in the United States got 0:17:20.200 --> 0:17:22.840 a B plus, the freight rail system a B plus 0:17:22.840 --> 0:17:26.240 grade from the American Society Civil Engineers. Highways got a D. 0:17:26.640 --> 0:17:29.400 The alternative of moving these goods you take them off 0:17:29.400 --> 0:17:31.080 the railroad, will they go on the highway? On that 0:17:31.280 --> 0:17:34.879 D rated system by by engineers? Where the railroad spend 0:17:35.240 --> 0:17:38.320 you know, massive amounts on a consistent basis on their network. 0:17:38.760 --> 0:17:41.080 The cars in this case are owned by shippers, but 0:17:41.160 --> 0:17:43.600 they were mostly the newer type of cars. You know, 0:17:43.640 --> 0:17:46.320 there really isn't a case that this was a greed 0:17:46.440 --> 0:17:49.640 over people right issue that's just populism. I just wouldn't 0:17:49.640 --> 0:17:53.359 carry it. Yeah, well, you know, not a choice. Plastics 0:17:53.800 --> 0:17:55.880 is not the key to the It's an option right there. 0:17:56.200 --> 0:17:58.520 All right, Tony, thank you so much. Tony Hatchi is 0:17:58.520 --> 0:18:02.320 a consultant analyst for the transportation industry at ABH Consulting. 0:18:02.320 --> 0:18:04.879 He's been doing it for decades, covering the railroad stocks, 0:18:04.880 --> 0:18:07.720 at trucking stocks, the shipping stocks. Good to get that 0:18:08.200 --> 0:18:13.960 voice on, Jill. Thanks much for joining us here talk 0:18:14.040 --> 0:18:21.639 to us about the why wca's Women's Empowerment ETF sounds fascinating. Sure, sure, 0:18:21.720 --> 0:18:24.680 thanks for having me. Yeah. I was formerly the chief 0:18:24.680 --> 0:18:27.840 Innovation Officer for WYDBCA Metropolitan Chicago and now I'm working 0:18:27.880 --> 0:18:31.879 as an advisor with WYDBC A USA to continue to 0:18:31.920 --> 0:18:35.280 work on the exchange traded fund that we launched in 0:18:35.400 --> 0:18:39.600 twenty eighteen with partnership with Impact Shares, which is a 0:18:39.640 --> 0:18:43.320 nonprofit investment manager. The goal here was to create so 0:18:43.680 --> 0:18:47.200 hang on, Jill, just to be clear, the YWCA itself 0:18:47.840 --> 0:18:53.080 released this ETF. We're the Impact partner, so we eat 0:18:53.880 --> 0:18:57.920 Impact Shares released the ETF. There, the investment manager WYDBCA 0:18:58.000 --> 0:19:00.320 is sort of the consultant on the criteria that are 0:19:00.400 --> 0:19:03.280 used to evaluate the companies m that are focused on 0:19:03.320 --> 0:19:09.040 women's empowerment, policies and practices that companies can can impose 0:19:09.080 --> 0:19:12.480 in their workplace. UM and you know, with with over 0:19:12.520 --> 0:19:15.800 one hundred and sixty years of experience and women's issues, 0:19:16.400 --> 0:19:20.200 the y to BCA lends their leadership, voice, data, knowledge, 0:19:20.480 --> 0:19:24.480 our networks, you know, to really make this an impactful 0:19:24.720 --> 0:19:29.640 investing product. While we use this as an opportunity to 0:19:29.680 --> 0:19:34.120 engage corporations on you know, what policies and practices they 0:19:34.119 --> 0:19:37.960 can implement that will really impact women in the workplace, 0:19:38.359 --> 0:19:41.720 and as a tool to educate UM investors in the 0:19:41.760 --> 0:19:45.440 general public just you know, people in general on the 0:19:45.480 --> 0:19:49.800 importance of these different criteria and how you can make 0:19:49.840 --> 0:19:53.160 an impact with your money. I would guess that number one, 0:19:53.600 --> 0:19:57.480 by a long shot, is having decent maternity leave policies, 0:19:58.240 --> 0:20:00.960 and then I would guess that number two is on 0:20:01.040 --> 0:20:04.440 site daycare and that everything else is way far behind that. 0:20:04.480 --> 0:20:07.880 A am I onto something here? Those are definitely things 0:20:07.880 --> 0:20:12.720 we would like to see corporations and all businesses implement 0:20:12.800 --> 0:20:17.400 in their workforce. But we look at the product itself, 0:20:17.560 --> 0:20:23.639 uses equip research and Equilipe is a gender equity research 0:20:23.640 --> 0:20:27.480 company in the Netherlands and they look at over four 0:20:27.520 --> 0:20:31.000 thousand publicly traded companies. They look at nineteen different criteria 0:20:31.119 --> 0:20:34.560 that empower women in the workplace, and then that information 0:20:34.640 --> 0:20:38.280 is used by morning Star to create the Women's Empowerment Index, 0:20:38.520 --> 0:20:41.720 which is used by Impact Shares for the product itself. 0:20:42.760 --> 0:20:46.640 So the Equilipe criteria look at gender balance in leadership 0:20:46.640 --> 0:20:50.840 in the workplace, equal compensation and work life balance, and 0:20:50.960 --> 0:20:55.000 policies promoting gender equality, as well as an overall commitment 0:20:55.040 --> 0:20:58.200 to women's empowerment and their transparency in that area and 0:20:58.240 --> 0:21:01.280 their accountability in that area. Be nice to see, I mean, 0:21:01.320 --> 0:21:04.640 it will be nice to see the performance because I 0:21:04.640 --> 0:21:08.120 imagine companies that pay closure attention, that do a better 0:21:08.240 --> 0:21:15.480 job of UM, you know, keeping talented and experienced women 0:21:15.520 --> 0:21:19.439 on staff, do better at business. Absolutely. I mean what 0:21:19.480 --> 0:21:22.080 we see through the data is that, you know, companies 0:21:22.119 --> 0:21:26.199 that are inclusive and they incorporate these different criteria, UM 0:21:26.480 --> 0:21:29.880 have great you know, they're they're more they're much more successful. UM, 0:21:29.920 --> 0:21:34.440 they have lower turnover, they have the higher employee satisfaction. UM. 0:21:34.760 --> 0:21:37.480 You know, it's just all the way around. UM and 0:21:37.480 --> 0:21:40.800 and things like, um, you know, we look at paid sickly, 0:21:41.240 --> 0:21:43.760 the gender pay gap, the living wage. I mean, these 0:21:43.760 --> 0:21:47.439 are all things that not only strengthen the women in 0:21:47.480 --> 0:21:49.960 the workforce, but then also have the knock on effect 0:21:49.960 --> 0:21:53.680 to strengthening the companies. Hey, Joe, give us an example 0:21:53.720 --> 0:21:58.080 of one of your holdings and why from your perspective, 0:21:58.200 --> 0:22:02.800 it's in the ETF UM. Well, okay, we have uh, 0:22:02.880 --> 0:22:06.400 let's say, um Ndidia Uh is one of the top 0:22:06.440 --> 0:22:09.639 holdings right now. UM. And you know, if they they 0:22:09.680 --> 0:22:12.920 go out of their way. UM, well, we don't think 0:22:12.920 --> 0:22:15.160 it should be out of their way, but we uh, 0:22:15.200 --> 0:22:18.000 you know, to to really implement um, to be very 0:22:18.000 --> 0:22:21.840 transparent about their pay. Um, their pay Uh, they pay 0:22:21.840 --> 0:22:26.280 a living wage, UM, they have great um uh leaves 0:22:26.280 --> 0:22:29.040 and work options. UM. So these are things that we 0:22:29.040 --> 0:22:32.440 would like to see more companies adopting and employees being 0:22:32.520 --> 0:22:36.480 more informed about so they can you know, ask their 0:22:36.480 --> 0:22:40.000 companies to provide these um these things. We see these 0:22:40.040 --> 0:22:43.200 criteria as sort of a roadmap for both corporate America 0:22:43.280 --> 0:22:45.920 and employees. People. You know, if you're looking for a job, 0:22:46.840 --> 0:22:48.400 these are the things you might want to think about 0:22:48.480 --> 0:22:52.240