1 00:00:02,720 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,600 --> 00:00:17,880 Speaker 1: Eastern on Apple Coarcklay and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,520 Speaker 1: or watch us live on YouTube. 6 00:00:23,960 --> 00:00:26,400 Speaker 2: Pretty interesting deal out there in a world of energies 7 00:00:26,440 --> 00:00:28,360 Speaker 2: as we think about AI, that's been one of the 8 00:00:28,440 --> 00:00:31,360 Speaker 2: gating issues we've all come to learn that, Okay, you 9 00:00:31,360 --> 00:00:33,000 Speaker 2: can build all these data centers, but you've got to 10 00:00:33,000 --> 00:00:34,319 Speaker 2: figure out how to power them. 11 00:00:34,320 --> 00:00:34,720 Speaker 3: You can't. 12 00:00:34,800 --> 00:00:36,440 Speaker 2: You know, you're going to have to need new and 13 00:00:36,600 --> 00:00:39,880 Speaker 2: flexible energy sources. So here's a piece of news today, 14 00:00:40,000 --> 00:00:43,400 Speaker 2: Chevron signed a twenty year deal with Microsoft to provide 15 00:00:43,720 --> 00:00:48,360 Speaker 2: natural gas fired power for a proposed West Texas data center. 16 00:00:48,920 --> 00:00:51,360 Speaker 2: So that's pretty cool there. Let's get talked to the 17 00:00:51,479 --> 00:00:53,920 Speaker 2: reporter from Bloomberg News on that story. Kevin Crowley, a 18 00:00:53,960 --> 00:00:56,520 Speaker 2: Bloomberg News, a big oil reporter, talk to us about 19 00:00:56,560 --> 00:00:59,080 Speaker 2: this deal here, Kevin, it seems like. 20 00:00:59,040 --> 00:01:01,280 Speaker 3: We've seen what I need to see more and more. 21 00:01:01,120 --> 00:01:03,400 Speaker 2: Of these, and is this kind of the blueprint for 22 00:01:03,520 --> 00:01:04,000 Speaker 2: the future. 23 00:01:05,520 --> 00:01:08,200 Speaker 4: It could be, Yeah, Chevron. Chevron, according this a platform 24 00:01:08,400 --> 00:01:10,120 Speaker 4: for the future. I mean really, it's a new business 25 00:01:10,200 --> 00:01:12,319 Speaker 4: for for them. I mean, as you know, they're a 26 00:01:12,319 --> 00:01:14,440 Speaker 4: big oil and gas company. They're not in the power 27 00:01:14,480 --> 00:01:19,440 Speaker 4: industry until until now. And it's it's it's really to 28 00:01:19,480 --> 00:01:23,200 Speaker 4: take advantage of the very, very cheap and abundant natural 29 00:01:23,240 --> 00:01:28,560 Speaker 4: gas that exists in West Texas. This h this data 30 00:01:28,600 --> 00:01:31,679 Speaker 4: center is being built right in the heart of the 31 00:01:31,680 --> 00:01:34,600 Speaker 4: Permian Basin, which which probably know, is the biggest oil 32 00:01:34,680 --> 00:01:37,840 Speaker 4: field in the country. But with that oil comes a 33 00:01:37,840 --> 00:01:40,720 Speaker 4: lot of natural gas as a as a byproduct, and 34 00:01:40,760 --> 00:01:43,160 Speaker 4: there's actually so much natural gas out there at the 35 00:01:43,200 --> 00:01:48,040 Speaker 4: moment that it it can't be taken away, overwhelms the 36 00:01:48,080 --> 00:01:51,840 Speaker 4: pipeline capacity and and so it's it's it's either burned 37 00:01:51,840 --> 00:01:55,400 Speaker 4: off as waste or it's or companies have to actually 38 00:01:55,440 --> 00:01:57,360 Speaker 4: pay people to to take it away. 39 00:01:57,440 --> 00:01:58,640 Speaker 5: So so Chevron and. 40 00:01:58,640 --> 00:02:02,080 Speaker 4: Microsoft I think we'll well, this is a good competitive 41 00:02:02,120 --> 00:02:05,360 Speaker 4: advantage here. We can use this gas to to build 42 00:02:05,360 --> 00:02:08,239 Speaker 4: a big power plant that will then they will then 43 00:02:08,880 --> 00:02:14,480 Speaker 4: power a data center. The I mean the disadvantage is 44 00:02:15,240 --> 00:02:18,760 Speaker 4: the location here is very very remote. It's about four 45 00:02:18,840 --> 00:02:24,400 Speaker 4: hundred miles west of the Dallas for Fort Worth area. 46 00:02:25,000 --> 00:02:30,320 Speaker 4: But the cheap power is definitely a competitive advantage of 47 00:02:30,360 --> 00:02:30,919 Speaker 4: this project. 48 00:02:31,200 --> 00:02:34,120 Speaker 6: Okay, so it sounds like, you know, it's getting some 49 00:02:34,240 --> 00:02:37,360 Speaker 6: value out of something that would be disposed of any way. 50 00:02:38,639 --> 00:02:39,480 Speaker 3: That sounds great. 51 00:02:39,560 --> 00:02:42,880 Speaker 6: Does that mean that there's no risk, no concern about 52 00:02:44,000 --> 00:02:46,119 Speaker 6: locals to the extent that there are any locals living 53 00:02:46,160 --> 00:02:50,240 Speaker 6: near the premium basin or any nearby communities facing higher 54 00:02:51,440 --> 00:02:52,200 Speaker 6: utility bills. 55 00:02:53,639 --> 00:02:56,920 Speaker 4: No, So Chevron say this is one hundred percent behind 56 00:02:56,960 --> 00:03:01,000 Speaker 4: the meter. So this is the There is no utility 57 00:03:01,639 --> 00:03:03,920 Speaker 4: even connected with this project, So this is this is 58 00:03:03,919 --> 00:03:09,960 Speaker 4: this is purely Chevron building the taking their gas, building 59 00:03:09,960 --> 00:03:13,160 Speaker 4: the power station, and then using that power to to 60 00:03:14,520 --> 00:03:16,800 Speaker 4: for the data center. I mean, it's a very it's 61 00:03:16,800 --> 00:03:20,680 Speaker 4: a very remote, sparsely populated area anyway. But they insist 62 00:03:20,760 --> 00:03:24,480 Speaker 4: that there's absolutely no impact on the on the on 63 00:03:24,520 --> 00:03:27,320 Speaker 4: the local on the local rate payers at all, which 64 00:03:27,360 --> 00:03:30,399 Speaker 4: which I think makes this they stay claim anyway, makes 65 00:03:30,400 --> 00:03:35,400 Speaker 4: this makes this project unique. It's rare for data center 66 00:03:35,440 --> 00:03:39,960 Speaker 4: of this scale to be to not utilize grid power 67 00:03:40,520 --> 00:03:42,280 Speaker 4: or have the involvement of a utility. 68 00:03:42,520 --> 00:03:44,920 Speaker 6: If that's the case, how come we didn't get something 69 00:03:45,000 --> 00:03:46,480 Speaker 6: like this sooner? Why did it take so long. 70 00:03:47,920 --> 00:03:49,880 Speaker 4: These are big projects, they cost they cost a lot 71 00:03:49,880 --> 00:03:52,280 Speaker 4: of money. And and it's and it's new. I mean, 72 00:03:52,360 --> 00:03:55,000 Speaker 4: Chevron is not is not a utility, is not a 73 00:03:55,400 --> 00:03:58,000 Speaker 4: is not a power producer. The other thing I think 74 00:03:58,080 --> 00:04:02,360 Speaker 4: is is so far big tech companies have preferred to 75 00:04:02,360 --> 00:04:07,360 Speaker 4: build data centers near to two larger population centers. And 76 00:04:07,400 --> 00:04:10,560 Speaker 4: the other thing is as well, is early on you know, 77 00:04:10,600 --> 00:04:14,480 Speaker 4: these companies did did prefer to to use to use 78 00:04:14,520 --> 00:04:18,680 Speaker 4: renewables uh and to to lower the emissions of those 79 00:04:18,760 --> 00:04:21,760 Speaker 4: data centers. But now there does seem to be a 80 00:04:21,760 --> 00:04:25,760 Speaker 4: movement towards an actual gas given the given the scale 81 00:04:26,279 --> 00:04:27,719 Speaker 4: that we now see ahead of us. 82 00:04:28,160 --> 00:04:30,040 Speaker 2: Kevin, you got thirty seconds left. Tell us why this 83 00:04:30,120 --> 00:04:31,320 Speaker 2: is a new business for Chevron. 84 00:04:33,000 --> 00:04:34,840 Speaker 4: Chevron's in the oil and gas business. They're not they're 85 00:04:34,880 --> 00:04:37,240 Speaker 4: not in the power business really until now. But they 86 00:04:37,240 --> 00:04:40,840 Speaker 4: think this can, this can diversify their revenue streams, provides 87 00:04:41,120 --> 00:04:43,400 Speaker 4: a bit more, a bit more of a reliable it's 88 00:04:43,440 --> 00:04:45,800 Speaker 4: it's not as it won't be a cyclical as the 89 00:04:46,080 --> 00:04:49,040 Speaker 4: as the oil and gas business, but also takes advantage 90 00:04:49,040 --> 00:04:50,640 Speaker 4: of some of some of their some of their key 91 00:04:50,640 --> 00:04:54,360 Speaker 4: competitive advantages. Chevron's already in the permium. They know how 92 00:04:54,400 --> 00:04:58,080 Speaker 4: to how to build build big projects, and they they 93 00:04:58,120 --> 00:05:02,600 Speaker 4: have the gas, so so I think it's within their 94 00:05:02,640 --> 00:05:05,560 Speaker 4: skill set, you know, unlike some other companies like BP 95 00:05:05,640 --> 00:05:09,840 Speaker 4: and Shell, which which got into power about five or 96 00:05:09,839 --> 00:05:10,719 Speaker 4: six years ago. 97 00:05:12,080 --> 00:05:12,839 Speaker 5: Unsuccessfully. 98 00:05:14,000 --> 00:05:16,920 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this. 99 00:05:20,720 --> 00:05:24,400 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 100 00:05:24,480 --> 00:05:27,880 Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto 101 00:05:27,960 --> 00:05:31,039 Speaker 1: with the Bloomberg Business app. Listen on demand wherever you 102 00:05:31,080 --> 00:05:34,080 Speaker 1: get your podcasts, or watch us live on YouTube. 103 00:05:34,720 --> 00:05:38,160 Speaker 2: It is Monday, which means it's oftentimes merger Monday, and 104 00:05:38,200 --> 00:05:40,920 Speaker 2: it often involves the healthcare industry, and that is exactly 105 00:05:40,960 --> 00:05:44,640 Speaker 2: what happened today. ABBYV agreed to buy appigy Therapeutics for 106 00:05:44,720 --> 00:05:47,640 Speaker 2: ten point nine billion dollars in cash, by the way, 107 00:05:47,720 --> 00:05:51,000 Speaker 2: to bolster its anti inflammatory drug portfolio. If you can't 108 00:05:51,000 --> 00:05:53,039 Speaker 2: make it in the lab, go buy it. That's what 109 00:05:53,080 --> 00:05:55,440 Speaker 2: I know about the form of business. Sam Fazzelli joins 110 00:05:55,480 --> 00:05:57,000 Speaker 2: us here give us a little bit more detail. His 111 00:05:57,000 --> 00:05:59,320 Speaker 2: Director Research for Global Industries. I don't think that title 112 00:05:59,320 --> 00:06:03,080 Speaker 2: exists anymore. We have to update that. Senior Pharmaceuticals analyst 113 00:06:03,240 --> 00:06:06,120 Speaker 2: over there at Bloomberg Intelligence. What's that TV doing here? 114 00:06:06,400 --> 00:06:07,680 Speaker 2: Sam talked to us about this deal. 115 00:06:09,240 --> 00:06:12,200 Speaker 7: Sure, title wise, make a couple of you like, you know, 116 00:06:12,240 --> 00:06:16,040 Speaker 7: I'm how easy with titles. 117 00:06:16,160 --> 00:06:17,520 Speaker 3: Yeah, drug drug. 118 00:06:17,279 --> 00:06:19,400 Speaker 5: Bars, there you go, drug boss. Yes. 119 00:06:19,680 --> 00:06:22,640 Speaker 7: What they're doing here is that they're already the probably 120 00:06:22,680 --> 00:06:27,200 Speaker 7: the biggest player in the space of immunology and inflammation 121 00:06:27,760 --> 00:06:30,480 Speaker 7: through their first day started with him Ira, became the 122 00:06:30,520 --> 00:06:34,640 Speaker 7: biggest drug, and now they've got sky Rizzy and and 123 00:06:34,920 --> 00:06:38,800 Speaker 7: ri in Voke, which are both for either psoriasis or 124 00:06:39,240 --> 00:06:45,159 Speaker 7: authritis pretty much similar kind of related or diseases. Now 125 00:06:45,680 --> 00:06:47,680 Speaker 7: this is you know, we keep talking about obesity one 126 00:06:47,720 --> 00:06:50,120 Speaker 7: hundred billion, blah blah blah. If you add up the 127 00:06:50,200 --> 00:06:52,320 Speaker 7: numbers that app is going to have these two drugs, 128 00:06:52,400 --> 00:06:55,120 Speaker 7: we're approaching well over fifty billion dollars. So you don't 129 00:06:55,160 --> 00:06:57,120 Speaker 7: need to be an obesity to make these kind of 130 00:06:57,520 --> 00:07:00,920 Speaker 7: revenues because there's so many people to suffer on these things. Here, 131 00:07:00,920 --> 00:07:03,880 Speaker 7: they're buying another drug that adds to the portfolio, that 132 00:07:03,960 --> 00:07:07,200 Speaker 7: gives them access to the exema market otherwise known as 133 00:07:07,600 --> 00:07:11,200 Speaker 7: atopic dermatitis, and it's a pretty good fit. Lots of 134 00:07:11,280 --> 00:07:14,160 Speaker 7: questions as opposed to whether it's the right drug to 135 00:07:14,200 --> 00:07:16,920 Speaker 7: have had. Is there another better competitor? But AV has 136 00:07:16,920 --> 00:07:18,520 Speaker 7: spoken they're putting up their cash. 137 00:07:19,400 --> 00:07:21,520 Speaker 6: I mean, Paul might have answered my question here, But 138 00:07:21,640 --> 00:07:23,520 Speaker 6: the fact that it's all cash, does this mean that 139 00:07:23,600 --> 00:07:27,000 Speaker 6: AVI is making this acquisition from a position of strength. 140 00:07:27,040 --> 00:07:28,800 Speaker 6: It's on the offensive in the same way that we 141 00:07:28,840 --> 00:07:32,920 Speaker 6: talk about Eli Lilly making acquisitions from a position of strength. 142 00:07:34,120 --> 00:07:37,120 Speaker 7: Yeah, I mean, scot most farmer companies right now, if 143 00:07:37,120 --> 00:07:40,280 Speaker 7: I look through the list, I can't pick one that 144 00:07:40,440 --> 00:07:44,720 Speaker 7: is having trouble generating cash, even Pfiser, I mean I don't. 145 00:07:44,760 --> 00:07:45,000 Speaker 5: I don't. 146 00:07:45,040 --> 00:07:48,000 Speaker 7: I'm not having a go at Pfizer specifically, but even Pfizer, 147 00:07:48,040 --> 00:07:50,240 Speaker 7: where the share price is halved, is the peaks. 148 00:07:49,920 --> 00:07:51,360 Speaker 5: Of the pandemic. 149 00:07:51,920 --> 00:07:53,640 Speaker 7: We are e ending up with a company that's still 150 00:07:53,680 --> 00:07:57,000 Speaker 7: generating a lot of cash and their leverages are relatively low, 151 00:07:57,080 --> 00:07:58,840 Speaker 7: so they can go and do these things without too 152 00:07:58,920 --> 00:08:04,440 Speaker 7: much trouble. That these guys have thirty zero percent operating margins, 153 00:08:04,560 --> 00:08:08,119 Speaker 7: So these are very cash rich companies and the cash 154 00:08:08,120 --> 00:08:09,280 Speaker 7: speaks volumes. 155 00:08:09,960 --> 00:08:13,360 Speaker 2: So what's what's the next new thing in your world 156 00:08:13,520 --> 00:08:15,400 Speaker 2: send that we need to be focusing on. I mean 157 00:08:15,520 --> 00:08:18,080 Speaker 2: do we still have room to grow in the obesity front? 158 00:08:18,240 --> 00:08:21,120 Speaker 2: Is there breakthroughs in cancer? I know you go to 159 00:08:21,120 --> 00:08:23,480 Speaker 2: all these conferences. What's the next thing that you think 160 00:08:23,520 --> 00:08:25,680 Speaker 2: global wall sheets should be looking at in your space? 161 00:08:26,560 --> 00:08:26,760 Speaker 8: Yeah? 162 00:08:26,800 --> 00:08:30,320 Speaker 7: I mean, Paul, I keep talking about biology is evolving 163 00:08:30,360 --> 00:08:34,600 Speaker 7: at a breakneck speed and it's not just a cliche 164 00:08:34,679 --> 00:08:37,400 Speaker 7: thing to say. At the end of the day, science 165 00:08:37,520 --> 00:08:41,680 Speaker 7: is really really cracking into some of the minuci of 166 00:08:41,760 --> 00:08:44,560 Speaker 7: how these diseases are slightly different from each other. So 167 00:08:44,600 --> 00:08:47,920 Speaker 7: the next big thing is are all of these patients 168 00:08:47,960 --> 00:08:52,400 Speaker 7: suffering from the same reason or biology that's making them movies? 169 00:08:52,679 --> 00:08:54,920 Speaker 7: Is there some subgroups that need to be treated differently? 170 00:08:54,960 --> 00:08:58,120 Speaker 7: So that's one area. Neuroscience is one. Can I plug 171 00:08:58,160 --> 00:09:01,200 Speaker 7: a podcast that we have on bio Vaneguards of Healthcare 172 00:09:01,600 --> 00:09:05,000 Speaker 7: Vandguards of Healthcare a couple. I think it's this week 173 00:09:05,120 --> 00:09:10,319 Speaker 7: or now it was last week that the conversation with 174 00:09:10,400 --> 00:09:14,600 Speaker 7: the head of development at Bristol Myers where we talked 175 00:09:14,600 --> 00:09:17,280 Speaker 7: about this and neuroscience is a big one because the 176 00:09:17,360 --> 00:09:19,760 Speaker 7: brain has been a black box until I mean, it 177 00:09:19,800 --> 00:09:22,160 Speaker 7: still is a bit of a black box compared to immunology, 178 00:09:22,200 --> 00:09:26,000 Speaker 7: for instance, But there's a lot more science and biology 179 00:09:26,040 --> 00:09:28,600 Speaker 7: that's being understood, and therefore that's a frontier that I 180 00:09:28,600 --> 00:09:30,160 Speaker 7: think we're going to see quite a lot of evolution 181 00:09:30,360 --> 00:09:33,160 Speaker 7: and new drugs and ideas coming up in see. 182 00:09:33,160 --> 00:09:36,080 Speaker 6: And one area that I'm really interested in is women's health. 183 00:09:36,200 --> 00:09:40,600 Speaker 6: And we've seen menopause become a very big industry now 184 00:09:40,640 --> 00:09:43,360 Speaker 6: that the FDA has removed the black box warning on 185 00:09:43,440 --> 00:09:47,240 Speaker 6: hormone replacement therapy in the US, we've seen demand for 186 00:09:47,360 --> 00:09:52,040 Speaker 6: these estrogen products, estrogen patches, creams, Gells, skyrocket. 187 00:09:52,120 --> 00:09:54,640 Speaker 3: That's in the US. What does it look like elsewhere 188 00:09:54,640 --> 00:09:57,240 Speaker 3: in Europe, for instance, or in Asia. 189 00:09:57,440 --> 00:10:01,120 Speaker 7: I think x US hasn't been as much of a 190 00:10:01,120 --> 00:10:02,360 Speaker 7: contentious issue here. 191 00:10:03,000 --> 00:10:04,280 Speaker 5: It's to your replacement therapy. 192 00:10:04,320 --> 00:10:07,199 Speaker 7: Of course, everybody worries about taking a hormone for life 193 00:10:07,400 --> 00:10:10,160 Speaker 7: or for an extended period of time. And these are 194 00:10:10,280 --> 00:10:15,360 Speaker 7: active agents, right, so they're not just passive. So you 195 00:10:15,440 --> 00:10:19,120 Speaker 7: do need to be careful with using them and making 196 00:10:19,120 --> 00:10:22,280 Speaker 7: sure you have enough information that suggests that the benefit 197 00:10:22,320 --> 00:10:23,800 Speaker 7: out bays there is kind of thing in this case, 198 00:10:23,840 --> 00:10:26,560 Speaker 7: in HRG case, in the majority of cases it does. 199 00:10:26,960 --> 00:10:31,640 Speaker 7: So Europe has been less problematic for this, and certainly 200 00:10:32,040 --> 00:10:35,720 Speaker 7: instead of taking supplements. People should be taking well tested 201 00:10:35,760 --> 00:10:39,439 Speaker 7: and tried pharmaceuticals. So and I think, but Scarlett, to 202 00:10:39,480 --> 00:10:42,640 Speaker 7: your point, women's health has been one area where I 203 00:10:42,640 --> 00:10:45,840 Speaker 7: don't think there's been enough attention paid to it. Some 204 00:10:45,880 --> 00:10:49,600 Speaker 7: people blame the fact that majority of pharma executives are mailed, 205 00:10:49,600 --> 00:10:50,760 Speaker 7: therefore they don't think about it. 206 00:10:51,080 --> 00:10:52,480 Speaker 5: I don't think you should think like that. 207 00:10:52,720 --> 00:10:55,000 Speaker 7: I think the removal of a black box warning here 208 00:10:55,760 --> 00:10:58,440 Speaker 7: does enable to start thinking, oh, well, maybe we can 209 00:10:58,520 --> 00:11:02,520 Speaker 7: do something more. Now, stay with us. 210 00:11:02,559 --> 00:11:04,800 Speaker 3: More from Bloomberg Intelligence coming up after this. 211 00:11:08,600 --> 00:11:12,280 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 212 00:11:12,360 --> 00:11:15,400 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 213 00:11:15,400 --> 00:11:18,680 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 214 00:11:18,760 --> 00:11:21,840 Speaker 1: you get your podcasts, or watch us live on YouTube. 215 00:11:22,559 --> 00:11:23,440 Speaker 3: M and A Monday. 216 00:11:23,480 --> 00:11:27,360 Speaker 2: We had a big deal in the construction business, the 217 00:11:27,360 --> 00:11:30,319 Speaker 2: building material business. So we're gonna get right to that. 218 00:11:30,400 --> 00:11:36,240 Speaker 2: James Wilcock, Bloomberg UK Politics Reporter. See our h to 219 00:11:36,320 --> 00:11:40,760 Speaker 2: buy rival Arkosa in a building material firm's biggest deal ever. 220 00:11:41,559 --> 00:11:44,080 Speaker 2: So big deal. Spencer, talk to us about this transaction. 221 00:11:44,520 --> 00:11:46,640 Speaker 2: I don't think many people know of these two companies 222 00:11:46,840 --> 00:11:48,400 Speaker 2: talk to us about these companies and what they're trying 223 00:11:48,400 --> 00:11:49,120 Speaker 2: to do with this deal. 224 00:11:50,280 --> 00:11:51,560 Speaker 5: Yeah, yeah, thank you for having me on. 225 00:11:51,640 --> 00:11:54,480 Speaker 9: So c r H one of the largest global materials producers, 226 00:11:54,960 --> 00:12:00,320 Speaker 9: may make aggregates, cemant concrete staff, your presence here in 227 00:12:00,360 --> 00:12:01,920 Speaker 9: the US as well as in Europe. 228 00:12:02,280 --> 00:12:03,880 Speaker 5: We're listed in London. 229 00:12:03,920 --> 00:12:07,360 Speaker 9: Have moved to a US primary listing only increasing their 230 00:12:07,440 --> 00:12:11,200 Speaker 9: US exposure. Like you said, Arcosa a US competitor, large 231 00:12:11,240 --> 00:12:13,520 Speaker 9: in the aggregates business. And then while on the structural 232 00:12:13,640 --> 00:12:18,559 Speaker 9: solution side, so making a variety of infrastructure items, light poles, 233 00:12:19,280 --> 00:12:23,720 Speaker 9: traffic signs, large equipment that goes kind of over highways, roads, bridges, 234 00:12:23,760 --> 00:12:26,040 Speaker 9: things like that, as well as wind turbines. So very 235 00:12:26,120 --> 00:12:29,280 Speaker 9: large combination here this morning. We'll really kind of deep in. 236 00:12:29,360 --> 00:12:31,840 Speaker 9: CICHS is tied to the US as well as our 237 00:12:31,840 --> 00:12:35,400 Speaker 9: aggate's portfolios. So now the largest US aggregates producer about 238 00:12:35,400 --> 00:12:38,400 Speaker 9: two hundred and sixty five million tons per year. A 239 00:12:38,520 --> 00:12:41,400 Speaker 9: very large deal here, the largest in their history. Very inquisitive, 240 00:12:41,400 --> 00:12:44,280 Speaker 9: about thirty eight acquisitions last year alone, but mainly Bolton's 241 00:12:44,320 --> 00:12:46,520 Speaker 9: that was about four billion total. So we're not used 242 00:12:46,520 --> 00:12:48,880 Speaker 9: of seeing these large deals by cich but it's not 243 00:12:49,000 --> 00:12:51,320 Speaker 9: too surprising given that they like to kind of build 244 00:12:51,320 --> 00:12:54,280 Speaker 9: their portfolio through acquisitions and they're not scared of kind 245 00:12:54,280 --> 00:12:56,040 Speaker 9: of dipping their toes into different alleys. 246 00:12:56,679 --> 00:12:59,679 Speaker 5: Very large, wide variety of a portfolio they have. 247 00:13:00,360 --> 00:13:02,559 Speaker 6: So given all this, Spencer, how does this fit in 248 00:13:02,679 --> 00:13:05,360 Speaker 6: with the outlook that you and your team have published 249 00:13:05,360 --> 00:13:08,760 Speaker 6: on global building materials for the second half of this year. 250 00:13:09,160 --> 00:13:11,600 Speaker 3: How does this bigger SEERH fit into it. 251 00:13:12,679 --> 00:13:15,640 Speaker 9: Yeah, so Syrix the largest obviously producer, but really the 252 00:13:15,679 --> 00:13:17,600 Speaker 9: aggregates is kind of where we see the most strength. 253 00:13:17,640 --> 00:13:21,560 Speaker 9: Agrates are very durable material, really used in highways, roads, bridges, 254 00:13:21,600 --> 00:13:25,640 Speaker 9: and then construction because of their the primary ingredient for concrete. 255 00:13:25,720 --> 00:13:27,040 Speaker 5: So this bolster is their portfolio. 256 00:13:27,080 --> 00:13:29,600 Speaker 9: We've seen a lot of competitors move to the US, 257 00:13:29,679 --> 00:13:32,000 Speaker 9: move into the US, a lot of competition on the 258 00:13:32,040 --> 00:13:34,640 Speaker 9: aggregate side, and you see Vulcan and Martin Marietta really 259 00:13:34,720 --> 00:13:37,560 Speaker 9: change their portfolios to be very aggregates focused. You have 260 00:13:37,600 --> 00:13:40,880 Speaker 9: competitors in Mexico like Semex, even Cementos Argos talking about, 261 00:13:41,000 --> 00:13:42,959 Speaker 9: you know, getting their foot in the door with aggregates 262 00:13:42,960 --> 00:13:46,120 Speaker 9: in the US. So acquisitions are becoming very competitive and 263 00:13:46,120 --> 00:13:47,000 Speaker 9: this is CICH. 264 00:13:46,760 --> 00:13:48,360 Speaker 5: Kind of leaning into that. We have a good outlook 265 00:13:48,400 --> 00:13:49,360 Speaker 5: for the agregates as well. 266 00:13:49,600 --> 00:13:52,160 Speaker 9: Allow of this to be infrastructure givens the US obviously 267 00:13:52,760 --> 00:13:55,360 Speaker 9: spending on roads, bridges, and highways near record highs from 268 00:13:55,400 --> 00:13:57,520 Speaker 9: the infrastructure build in twenty twenty one. There's of a 269 00:13:57,520 --> 00:14:00,320 Speaker 9: new built right now coming through that could pass here 270 00:14:00,360 --> 00:14:03,120 Speaker 9: for even more funding, so CH really leaning into that. 271 00:14:03,200 --> 00:14:05,319 Speaker 9: And then you have kind of the solutions side, the 272 00:14:05,360 --> 00:14:08,320 Speaker 9: structural side, which is infrastructure, so you've like the data 273 00:14:08,320 --> 00:14:10,880 Speaker 9: center build out, things like that, and the energy infrastructure 274 00:14:10,880 --> 00:14:13,040 Speaker 9: around that. CH is now a player in that as well, 275 00:14:13,080 --> 00:14:15,000 Speaker 9: so they've said before they're working on over one hundred 276 00:14:15,040 --> 00:14:17,360 Speaker 9: data center projects currently. That's the smaller part of the 277 00:14:17,360 --> 00:14:19,760 Speaker 9: portfolio still, but that's growing and that's got to high 278 00:14:19,800 --> 00:14:21,800 Speaker 9: demand and those are quick turns, so those projects turned 279 00:14:21,800 --> 00:14:25,400 Speaker 9: into shovels in the ground, as you would say, very quickly. 280 00:14:25,600 --> 00:14:27,320 Speaker 5: So it's a good growth avenue for them. But leaning 281 00:14:27,360 --> 00:14:28,920 Speaker 5: into aggregates. 282 00:14:28,280 --> 00:14:31,600 Speaker 9: Not surprising, but given the size of an acquisition historically 283 00:14:31,600 --> 00:14:33,720 Speaker 9: bolt on acquisitions, this is a very large one for them. 284 00:14:34,320 --> 00:14:37,760 Speaker 2: US construction services business here, as you mentioned, there's a 285 00:14:37,760 --> 00:14:41,720 Speaker 2: lot going on out there. Is it a fragmented industry 286 00:14:41,880 --> 00:14:43,880 Speaker 2: is a consolidated industry. What are we going to see 287 00:14:43,880 --> 00:14:44,600 Speaker 2: more deals like this? 288 00:14:44,640 --> 00:14:45,080 Speaker 6: Do you think? 289 00:14:46,320 --> 00:14:46,520 Speaker 5: Yeah? 290 00:14:46,560 --> 00:14:49,160 Speaker 9: The construction services very fragments it, and CH is a 291 00:14:49,200 --> 00:14:51,320 Speaker 9: large player in that. Most like I've mentioned earlier, most 292 00:14:51,320 --> 00:14:53,720 Speaker 9: of the other players are really on the material side. 293 00:14:54,280 --> 00:14:56,560 Speaker 9: Ch is accepted that they want to be the vertically 294 00:14:56,560 --> 00:14:59,600 Speaker 9: integrated player, the largest in the space. So you can 295 00:14:59,800 --> 00:15:03,080 Speaker 9: can you know, kind of contract them for your asphalt paving. 296 00:15:03,240 --> 00:15:05,520 Speaker 9: They will provide the asphalt for that as well the equipment. 297 00:15:05,600 --> 00:15:07,440 Speaker 9: So they want to be the one stop shop for 298 00:15:08,080 --> 00:15:11,760 Speaker 9: their customers. Other producers have moved away from that model. 299 00:15:11,760 --> 00:15:13,920 Speaker 9: You know, they've sold off those businesses, they've moved away 300 00:15:13,960 --> 00:15:16,520 Speaker 9: from the concrete. They really want to focus on aggregates, 301 00:15:16,520 --> 00:15:18,640 Speaker 9: and that's where we see some of the strongest pricing power, 302 00:15:18,880 --> 00:15:22,360 Speaker 9: strongest demand trends, very durable even in down cycles. Aggregates 303 00:15:22,360 --> 00:15:25,240 Speaker 9: can still get pricing growth while you know, concrete, cement, 304 00:15:25,400 --> 00:15:28,520 Speaker 9: asphalt can see pricing declines or flat pricing for years. 305 00:15:28,560 --> 00:15:31,360 Speaker 9: So leaning into that and then what the service is offering, 306 00:15:31,400 --> 00:15:35,200 Speaker 9: kind of their vertically vertical integration really separates them. Still 307 00:15:35,200 --> 00:15:37,960 Speaker 9: traded a discount of their peers on a multiple basis. 308 00:15:38,000 --> 00:15:40,440 Speaker 9: When you look at some of the pure play aggregates 309 00:15:40,520 --> 00:15:42,920 Speaker 9: names just because the demand and the pricing is there, 310 00:15:42,960 --> 00:15:45,040 Speaker 9: and then series do that have that, but they are 311 00:15:45,080 --> 00:15:47,200 Speaker 9: now the largest producer of agates in the US, and 312 00:15:47,240 --> 00:15:50,360 Speaker 9: then they're bolstering their portfolio and they'll continue to acquire. 313 00:15:50,400 --> 00:15:50,960 Speaker 5: It looks like. 314 00:15:52,520 --> 00:15:55,600 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this. 315 00:16:00,000 --> 00:16:03,880 Speaker 1: Listening to the Bloomberg Intelligence podcast. Catch us live weekdays 316 00:16:03,920 --> 00:16:06,800 Speaker 1: at ten am Eastern on Apple, Cocklay and Android Auto 317 00:16:06,920 --> 00:16:09,960 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 318 00:16:10,000 --> 00:16:13,000 Speaker 1: get your podcasts, or watch us live on YouTube. 319 00:16:13,880 --> 00:16:16,760 Speaker 2: Alan Greenspan, the former Federal Reserve chairman, has died at 320 00:16:16,760 --> 00:16:20,480 Speaker 2: the age of one hundred. He served for eighteen years 321 00:16:20,520 --> 00:16:23,320 Speaker 2: as FED chairman. We've been using the morning here to 322 00:16:23,400 --> 00:16:25,560 Speaker 2: chat with members of Global Wall Street to get their 323 00:16:25,600 --> 00:16:27,920 Speaker 2: thoughts on mister green Span and his legacy and his 324 00:16:28,440 --> 00:16:31,040 Speaker 2: term in office. Dennis Lockhart Joints is here, a former 325 00:16:31,080 --> 00:16:35,600 Speaker 2: Atlanta Fed president on Zoom from Atlanta. Dennis, thanks so 326 00:16:35,640 --> 00:16:37,320 Speaker 2: much for joining us here. We'd love to get your 327 00:16:37,320 --> 00:16:41,920 Speaker 2: thoughts on your perception of Chairman Greenspan and his legacy. 328 00:16:43,720 --> 00:16:46,080 Speaker 8: Oh I didn't work with him directly, but I certainly 329 00:16:46,120 --> 00:16:48,960 Speaker 8: heard a lot about him and his style of managing 330 00:16:49,040 --> 00:16:52,840 Speaker 8: the Federal Open Market Committee when when I was there 331 00:16:53,320 --> 00:16:58,480 Speaker 8: at the FED, certainly a great chair eighteen and a 332 00:16:58,520 --> 00:17:03,000 Speaker 8: half years, I would say for fifteen of those eighteen 333 00:17:03,000 --> 00:17:06,440 Speaker 8: and a half years he presided over the great moderation 334 00:17:06,920 --> 00:17:13,360 Speaker 8: and his overall approach to policy was very successful, as 335 00:17:13,400 --> 00:17:19,639 Speaker 8: so often happens, sometimes long periods of success, So the 336 00:17:19,720 --> 00:17:25,760 Speaker 8: seeds of trouble. That's the insight that Hyman Minsky had, 337 00:17:25,800 --> 00:17:28,600 Speaker 8: and I agree with it, and I think in the 338 00:17:28,680 --> 00:17:34,240 Speaker 8: last three years of Alan Greenspan's tenure he may have 339 00:17:34,400 --> 00:17:38,879 Speaker 8: not seen the signs of the coming real estate crisis 340 00:17:38,960 --> 00:17:45,960 Speaker 8: and perhaps relied too heavily on his basic belief in 341 00:17:46,040 --> 00:17:50,200 Speaker 8: the market system and his light touch in terms of regulation. 342 00:17:51,400 --> 00:17:54,040 Speaker 6: Ira Jersey, or chief Interest rate Strategist, was just saying 343 00:17:54,080 --> 00:17:56,600 Speaker 6: that Greenspan understood the markets in a way that more 344 00:17:56,640 --> 00:17:59,879 Speaker 6: recent federal Federal Reserve chairs haven't. 345 00:18:00,440 --> 00:18:03,480 Speaker 3: Do you think that played a role in his, perhaps. 346 00:18:04,520 --> 00:18:06,919 Speaker 6: His tenure, especially in the last three years, laying the 347 00:18:06,960 --> 00:18:09,840 Speaker 6: groundwork for some of the things that happened starting in 348 00:18:09,840 --> 00:18:10,639 Speaker 6: two thousand and seven. 349 00:18:12,040 --> 00:18:15,280 Speaker 8: Yes, I do, and he not only understood the markets. 350 00:18:15,280 --> 00:18:18,639 Speaker 8: I think he understood the economy at a detailed level 351 00:18:19,640 --> 00:18:22,280 Speaker 8: when I was there. As part of his legend was 352 00:18:22,400 --> 00:18:28,760 Speaker 8: that he could recite very arcane data from particular sectors 353 00:18:28,800 --> 00:18:35,359 Speaker 8: a fucking sector or the housing sector. He knew quite 354 00:18:35,440 --> 00:18:43,280 Speaker 8: literally hundreds of data streams or data series intimately and 355 00:18:44,119 --> 00:18:49,240 Speaker 8: really understood the economy. So I think that can sometimes 356 00:18:49,720 --> 00:18:54,680 Speaker 8: breed confidence as things are turning in a way. That's 357 00:18:54,720 --> 00:18:56,640 Speaker 8: what happened, Dennis. 358 00:18:56,680 --> 00:18:58,840 Speaker 2: We now how they knew. Chairman of the Federal Reserve 359 00:18:58,960 --> 00:19:01,760 Speaker 2: Kevin Walsh. The market heard from mister Walsh for the 360 00:19:01,760 --> 00:19:04,400 Speaker 2: first time last week with this statement and with the 361 00:19:04,600 --> 00:19:06,399 Speaker 2: press conference. What was your takeaway? 362 00:19:08,240 --> 00:19:11,640 Speaker 8: I thought he made a strong start to his incumbency 363 00:19:11,680 --> 00:19:16,280 Speaker 8: in the chair's job. I went into the meeting thinking 364 00:19:16,320 --> 00:19:20,080 Speaker 8: he might have to choose between being a change agent 365 00:19:20,480 --> 00:19:27,120 Speaker 8: or being a kind of institutionalist who respected the collaboration 366 00:19:27,400 --> 00:19:33,200 Speaker 8: and the collegiality of the FAED. He managed to, I think, 367 00:19:33,440 --> 00:19:36,960 Speaker 8: serve both of those masters. In his first meeting, he 368 00:19:37,000 --> 00:19:41,720 Speaker 8: was forceful and reaffirming the commitment to bringing inflation down. 369 00:19:42,800 --> 00:19:47,119 Speaker 8: He launched his five task forces. I thought it was 370 00:19:47,520 --> 00:19:50,280 Speaker 8: it got to be almost humorous when he said we 371 00:19:50,320 --> 00:19:53,120 Speaker 8: have a task force for that in the press conference, 372 00:19:54,440 --> 00:19:57,239 Speaker 8: but you know, he showed that he is going to 373 00:19:57,280 --> 00:20:02,160 Speaker 8: try to reform and improve things about the way the 374 00:20:02,240 --> 00:20:07,800 Speaker 8: institution works, but do it in a collaborative way. And 375 00:20:08,480 --> 00:20:12,639 Speaker 8: I thought that was impressive how he was able to 376 00:20:13,080 --> 00:20:15,080 Speaker 8: pull that balancing act off. 377 00:20:15,640 --> 00:20:17,919 Speaker 6: Yeah, in some circles people were saying that there's a 378 00:20:17,960 --> 00:20:20,359 Speaker 6: task for the task force for that was kind of 379 00:20:20,359 --> 00:20:23,439 Speaker 6: a drinking game, or could be a drinking game, albeit 380 00:20:23,480 --> 00:20:26,520 Speaker 6: at about two thirty in the afternoon. When it comes 381 00:20:26,560 --> 00:20:30,959 Speaker 6: to the hawkish hold that we got on Wednesday, there 382 00:20:30,960 --> 00:20:32,840 Speaker 6: are a lot of questions heading into that FED meeting, 383 00:20:32,960 --> 00:20:36,000 Speaker 6: Dennis about whether Kevin Worsh spoke for the committee. He 384 00:20:36,040 --> 00:20:38,400 Speaker 6: definitely spoke for the committee. Did he speak for himself 385 00:20:38,440 --> 00:20:44,520 Speaker 6: you think in being that hawkish. 386 00:20:42,359 --> 00:20:45,400 Speaker 8: Well, one of the things I was watching for as 387 00:20:45,480 --> 00:20:48,800 Speaker 8: we went into the press conference is whether he would 388 00:20:48,880 --> 00:20:51,240 Speaker 8: be clear when he was speaking for the committee and 389 00:20:51,280 --> 00:20:54,240 Speaker 8: clear when he was speaking for himself. And there was 390 00:20:54,280 --> 00:20:56,440 Speaker 8: only one or two incidents where he had to make 391 00:20:56,480 --> 00:21:02,160 Speaker 8: that point clearly, and I think he did it. I 392 00:21:02,200 --> 00:21:05,720 Speaker 8: think that maybe we have to read between the lines 393 00:21:05,760 --> 00:21:10,320 Speaker 8: his choice of not submitting a forecast and a dot 394 00:21:10,760 --> 00:21:15,120 Speaker 8: was speaking for himself. At the same time, he characterized 395 00:21:15,160 --> 00:21:19,199 Speaker 8: the way the committee came out as reflected in the SEP. 396 00:21:20,280 --> 00:21:24,280 Speaker 8: It turned out in this press conference the SEP is 397 00:21:24,280 --> 00:21:26,480 Speaker 8: the only thing we really had that gives you a 398 00:21:26,560 --> 00:21:29,879 Speaker 8: sense of the mind of the committee looking forward, and 399 00:21:29,920 --> 00:21:32,560 Speaker 8: that to me was very clearly hawkish. 400 00:21:33,720 --> 00:21:36,399 Speaker 2: Dennis, we have oil continuing to come down, and a 401 00:21:36,440 --> 00:21:39,480 Speaker 2: lot of folks would say, all right, inflation problems fixing itself. 402 00:21:39,840 --> 00:21:41,879 Speaker 2: Others saying, whoa, whoa, whoa, We've got more. It's more 403 00:21:41,920 --> 00:21:44,320 Speaker 2: than energy out there in terms of inflationary pressures. How 404 00:21:44,320 --> 00:21:47,040 Speaker 2: do you think the FED should look at inflation these days? 405 00:21:48,800 --> 00:21:52,000 Speaker 8: Well, certainly the FED you look at inflation broadly, using 406 00:21:53,760 --> 00:21:58,240 Speaker 8: you know, an approach that's I don't know, more like 407 00:21:59,800 --> 00:22:05,040 Speaker 8: a wide array of inflation data, as opposed to focusing 408 00:22:05,040 --> 00:22:12,720 Speaker 8: on a single data point like PCE core PCE headline. 409 00:22:13,040 --> 00:22:15,639 Speaker 8: My own view is that we should be cautious about 410 00:22:15,680 --> 00:22:21,680 Speaker 8: assuming that oil prices snap back to the pre war levels. 411 00:22:22,280 --> 00:22:24,600 Speaker 8: I think there are a lot of reasons to just 412 00:22:24,680 --> 00:22:29,080 Speaker 8: be concerned and worried that the price pressures will persist 413 00:22:29,960 --> 00:22:34,640 Speaker 8: and conceivably the improvement we've seen in the last few days, 414 00:22:34,680 --> 00:22:39,159 Speaker 8: depending on how the negotiations go, could reverse. So you know, 415 00:22:39,200 --> 00:22:43,040 Speaker 8: I'm being very cautious about predicting that oil prices are 416 00:22:43,040 --> 00:22:44,840 Speaker 8: going to come down and the world is going to 417 00:22:44,880 --> 00:22:48,200 Speaker 8: revert to pre work conditions. 418 00:22:49,880 --> 00:22:54,560 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 419 00:22:54,760 --> 00:22:58,240 Speaker 1: and anywhere else you get your podcasts. Listen live each 420 00:22:58,280 --> 00:23:02,000 Speaker 1: weekday ten am to noon eater on Bloomberg dot com, 421 00:23:02,119 --> 00:23:05,680 Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app. 422 00:23:06,080 --> 00:23:09,040 Speaker 1: You can also watch us live every weekday on YouTube 423 00:23:09,400 --> 00:23:11,680 Speaker 1: and always on the Bloomberg terminal