Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
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Speaker 1: Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You
Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern Time on Bloomberg Radio or watch us on YouTube
Speaker 1: search Bloomberg Global News. Tim and I have gone through
Speaker 1: some of the headlines, but we just want to remind
Speaker 1: you City Group going back to requiring employees, regardless of
Speaker 1: their vaccination status, to wear masks when they're in the office.
Speaker 1: That's according to a person in the CDC we heard
Speaker 1: for them, Tim advising fully vaccinated and individuals to once
Speaker 1: again staring wearing masks in public, indoor settings and places
Speaker 1: where the virus is spreading rapidly. And we've had a
Speaker 1: ton of companies, particularly the big text based Twitter, Google
Speaker 1: Lift rolling back bringing workers back to the office. The
Speaker 1: big question I think that many people are grappling with
Speaker 1: is how do they make sense of it? If they
Speaker 1: were vaccinated in January February, many people were vaccinated in April.
Speaker 1: Are they going to need a booster with conformation about
Speaker 1: that too? Fortunately? Dr Amish Adalgo, Senior Scholar, an infectious
Speaker 1: disease physician at the Center for Health Security at the
Speaker 1: Johns Hopkins Bloomberg School of Public Health. He joins us
Speaker 1: now on the phone from Pittsburgh, the Johns Hopkins Bloomberg
Speaker 1: School of Public Health, supported by Michael R. Bloomberg, founder
Speaker 1: of Bloomberg LP and Bloomberg Philanthropies. Dr Adalge, I want
Speaker 1: to start with the news that we got from the
Speaker 1: CDC earlier this week that I think was confusing to
Speaker 1: a lot of people. Um, do you think that people
Speaker 1: who live in what the CDC defines as areas of
Speaker 1: concern UH, including New York City, including Arkansas, if they
Speaker 1: have been vaccinated, should they wear a mask indoors. It's
Speaker 1: something that I think should be more left to individual
Speaker 1: discretion for fully vaccinated individuals, because there there may be
Speaker 1: a risk that people who are fully vaccinated and get
Speaker 1: a breakthrough, I should may develop enough viral load that
Speaker 1: they could potentially be contagious, But it's not what's driving
Speaker 1: the pandemic. It's not what's driving transmission in these hot spots.
Speaker 1: So to make a policy in my mind based on
Speaker 1: something that's by the road admission a very rare occurrence,
Speaker 1: doesn't necessarily make make sense to me. I think if
Speaker 1: you're an immunosuppressed person and you've been fully vaccinated and
Speaker 1: you're in a high risk setting, it may make sense
Speaker 1: to wear a mask so that you don't get a
Speaker 1: break through infection. But what we're talking about with break
Speaker 1: through infections are largely clinically insignificant, meaning no symptoms, mild symptoms.
Speaker 1: It's when you walk through a hospital. It's not breakthrough
Speaker 1: infections that you're seeing in the hospital. It's almost exclusively
Speaker 1: people who are not vaccinated. So to me, that doesn't
Speaker 1: really seem congruent, and I think it is confusing, and
Speaker 1: I think it's going to be something that has basically
Speaker 1: only a marginal benefit of any uh when implemented. What
Speaker 1: about so that what's happening in my universe right now
Speaker 1: is people all my friends have kids who are under
Speaker 1: the age of twelve. That's where I am I am
Speaker 1: in life, And what they're wondering is, Okay, well my
Speaker 1: kid can't be vaccinated. Can I actually pass a breakthrough
Speaker 1: infection to my kid? Like? Do I need to start
Speaker 1: wearing a mask at work because that's a risk I
Speaker 1: would not. I think that this is a very very
Speaker 1: low risk. Obviously, if you have a child that has
Speaker 1: to be your asthma or have had a heart transplant,
Speaker 1: for example, you may want to take extra precautions. But
Speaker 1: in general, this is a very rare occurrence and not
Speaker 1: something that I think really makes a major impact on
Speaker 1: how this pandemic is going to unfold. That that being said,
Speaker 1: it's also true that just because children are not vaccinated
Speaker 1: doesn't mean that they're a very heightened risk for severe
Speaker 1: disease with COVID nineteen, especially as you get to those
Speaker 1: younger age groups where COVID nineteen is more like other
Speaker 1: respiratory viruses that they may have that they may face.
Speaker 1: So I think that this comes up to kind of
Speaker 1: parental risk tolerance, and with unvaccinated children that are healthy,
Speaker 1: I think the risk that they get it from a
Speaker 1: vaccinated person and have a have a severe outcome it's
Speaker 1: very very if not completely near zero, doctor Daja, Then
Speaker 1: do you think the CDC made a mistake in coming
Speaker 1: out with that mass guidance. I do think they made
Speaker 1: a mistake. I think what to make a policy based
Speaker 1: on a very rare event occurring and at the same
Speaker 1: time undermined the vaccines in the mind of the vaccine
Speaker 1: hesitant because now they see nothing changes for them if
Speaker 1: they get vaccinated. Really, I think it has set this
Speaker 1: whole thing back because the goal of the vaccines was
Speaker 1: never to block every breakthrough infection. The goal of the
Speaker 1: vaccines was to stop serious disease, hospitalization, and death, and
Speaker 1: as we all know, it's those are The vaccines are
Speaker 1: working tremendously when you use that to measure their success,
Speaker 1: because who's in the hospital unvaccinated people, who are dying
Speaker 1: unvaccinated people. The vaccines are working extremely well. They are
Speaker 1: the solution going back to kind of a primitive masking
Speaker 1: approach when we have a twenty one century solution, the
Speaker 1: vaccine really makes no sense to me. And by their
Speaker 1: own admission, the CDC says this is probably accounting for
Speaker 1: a very very small part portion of the transmission going on.
Speaker 1: So what impact do you think that will have if
Speaker 1: it's only a very small transmission, and especially in those
Speaker 1: places that are hot spots, those people are not going
Speaker 1: to wear masks. They're not going to get vaccinated. And
Speaker 1: I think this is just going to further entrench their
Speaker 1: vaccine hesitancy and confuse everybody else in the rest of
Speaker 1: the country trying to understand if it applies to them
Speaker 1: or not. Although we've done some analysis here at Bloomberg
Speaker 1: and Drew Armstrong has done some reporting that in those
Speaker 1: hot spots where people have been slow to get the vaccine,
Speaker 1: that those numbers are going up. Uh, maybe as a
Speaker 1: result of this heightened awareness. Is there something to be
Speaker 1: said by saying, Okay, we're going back to masks. Things
Speaker 1: are getting a little bit tricky again, that that might
Speaker 1: get more people who were hesitant to get the vaccine
Speaker 1: to get it. Now there has been some uptick in
Speaker 1: vaccination rates in some of those hot spot areas, but
Speaker 1: that occurred before this CDC guidance. And remember we've never
Speaker 1: said that unvaccinated people should be going around inspecting people
Speaker 1: without masks. What particularly is I have a problem. It's
Speaker 1: with the CDC guidance. Who the guidance for vaccinated people
Speaker 1: wondering whether that's the right message to be sending and
Speaker 1: whether the data actually justifies this type of a of
Speaker 1: a reaction based on the fact that it's not likely
Speaker 1: that it is clearly not what's driving driving the pandemic.
Speaker 1: We are in a pandemic, as the CDC director said,
Speaker 1: of the unvaccinated, that's where our focus really should be
Speaker 1: trying to get vaccine uptake up. But I think now
Speaker 1: if you tell somebody that lives in Missouri, if you
Speaker 1: get fully vaccinated, you still have to wear a mask,
Speaker 1: they may not get vaccinated. Remember that we saw a
Speaker 1: big uptick when the CDC changed their guidance, and if
Speaker 1: you're fully vaccinated, you don't have to wear a map.
Speaker 1: So I think that's a lot more problematic. You want
Speaker 1: to get right back to dr amish adalgia infectious disease
Speaker 1: physician and senior scholar John's Hopkins Center for Health Security
Speaker 1: Charlie of course uh, mentioning UH and playing a little
Speaker 1: bit of a sound from another interview from one of
Speaker 1: his colleagues. Um, Dr do what I want to ask
Speaker 1: you is if we didn't have the CDC come out
Speaker 1: and say you've got to start wearing masks, and we
Speaker 1: just kind of kept reopening the economy. Those of us
Speaker 1: who got vaccines going about our business. Could we do
Speaker 1: that and what would be the trajectory of maybe what
Speaker 1: the world might look like, especially since we are seeing
Speaker 1: rising cases and rising hospitalizations in some US hotspots, Like,
Speaker 1: how would it play out? I guess I'm trying to
Speaker 1: understand it exactly the same because it's not vaccinated people
Speaker 1: that are driving hospitalizations. It's not vaccinated people that are
Speaker 1: driving cases. It's the unvaccinated. So the CDC guidance was
Speaker 1: for vaccinated people to wear masks and high risk in
Speaker 1: high risk situations, but they're not the ones driving it.
Speaker 1: So no, I don't think that the CDC guidance is
Speaker 1: going to change the trajectory one way or the other
Speaker 1: because it's not vaccinated people that are causing hospitalizations, as
Speaker 1: we've said multiple times almost universally, it's the unvaccinated that
Speaker 1: are in hospital So no, I don't think this is
Speaker 1: going to make a major a major dent in what's
Speaker 1: going on here. What will make a dent is the
Speaker 1: unvaccinated changing their behavior by either starting to wear masks
Speaker 1: or getting themselves vaccinated, which is the ultimate solution. But
Speaker 1: if we just kept going, we can manage servicing those
Speaker 1: that are unvaccinated who come down with COVID. I think
Speaker 1: the fear is, you know what I'm asking. The fear
Speaker 1: is we go back to where we were a year ago,
Speaker 1: and it sounds like we wouldn't do that, or maybe
Speaker 1: in certain spots of the country. I don't think COVID
Speaker 1: nineteen is a systemic risk of the United States anymore
Speaker 1: because enough high risk people have been vaccinated in many
Speaker 1: parts of the country and most parts of the country,
Speaker 1: so you'll see cases decouple from hospitalizations. There are some
Speaker 1: places like Springfield, Missouri, like Arkansas, like Louisiana where that's
Speaker 1: not the case, so that becomes a regional issue. But again,
Speaker 1: it's not the vaccinated people that are causing that problem.
Speaker 1: It's the unvaccinated people that are spreading it amongst themselves
Speaker 1: and whatever contribution. If there is one of vaccinated people,
Speaker 1: it is a miniscule proportion of what's going on here.
Speaker 1: So restricting what vaccinated people can do on behalf of
Speaker 1: the unvaccinated isn't fair. I don't think it's scientific, because
Speaker 1: if you're fully vaccinated, COVID nineteen is no longer a
Speaker 1: threat to you. You will not get serious disease, hospitalization,
Speaker 1: or death in the period end. The vaccines are are
Speaker 1: doing their job. It's the fact that not enough people
Speaker 1: have taken taken the vaccine that's causing the problem. And
Speaker 1: these breakthrough infections, which were expected, are mostly clinically insignificant,
Speaker 1: have very very mild symptoms, and are not even a
Speaker 1: problem for the people who get those breakthrough infections, And
Speaker 1: the issue has to be focusing on the unvaccinated people
Speaker 1: in those hotspots that don't want to be vaccinated, They
Speaker 1: don't want to wear masks, and that's where our problem is.
Speaker 1: And I think that's how we're gonna progress for some
Speaker 1: time in this two track pandemic, where the Northeast, for example,
Speaker 1: has COVID managed more like a normal respiratory infection, and
Speaker 1: other parts of the country where it's still a disruptive
Speaker 1: effect until more people get vaccinated or the delta variant
Speaker 1: burns itself out by VAT by infecting enough of the population.
Speaker 1: Not a good situation. Yeah, we only have a minute left,
Speaker 1: and I know that a lot of people listening right
Speaker 1: now are thinking about kids, because the people under twelve
Speaker 1: in this country are the ones who are not vaccinated yet.
Speaker 1: What one listener writing and now asking about the real
Speaker 1: risk of mortality and morbidity within within kids. What do
Speaker 1: we know about the latest data. What do we know
Speaker 1: about the numbers? Well, children represent a very very small
Speaker 1: proportion of the morbidity and mortality in terms of hospitalizations
Speaker 1: and death. Yes, there have been kids hospitalized and kids
Speaker 1: have died, but it's as a as a percentage basis,
Speaker 1: it's very very small. And when you get to that
Speaker 1: younger age group, especially less than twelve, it's comparable, if
Speaker 1: not less than what we see with influenza what we
Speaker 1: see with RSV. So I think that's something that's important
Speaker 1: to know is that for younger children that are healthy,
Speaker 1: that don't have asthma, don't have heart disease or heart
Speaker 1: transplants or whatever it might be, this is on par
Speaker 1: with other respiratory viruses that we deal with year in
Speaker 1: and year out. So that gives gives you some cushion there.
Speaker 1: It's very different in younger children versus versus older people.
Speaker 1: That's where we've seen the morbidity immortality. Children tend to
Speaker 1: be spared from the severe effects. Thank you so much.
Speaker 1: Gets back in session exactly. Dr Amish Adalga, infectious disease
Speaker 1: physician and senior scholar at JOHNS Hopkins Center for Health
Speaker 1: Security at the Bloomberg School of Public Health. Of course,
Speaker 1: supported by Michael R. Bloomberg, Founder of Bloomberg LP and
Speaker 1: Bloomberg Philanthropy. You're listening to Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Okay,
Speaker 1: this may rightfully freak you out. It's about the last
Speaker 1: days of the rainforce. Yes, that rainforce so crucial to
Speaker 1: the global environment, species, all of our living beings. It's
Speaker 1: a story in the magazine. It's about how the Brazilian
Speaker 1: Amazon is approaching the point of no return and the
Speaker 1: government there. Tim fanning the flames. Joel Weber's editor for
Speaker 1: Bloomberg Business Week. He's with us in the Bloomberg Interactive
Speaker 1: Broker Studio. Jessica Bryce is senior editor for Latin America
Speaker 1: News at Bloomberg News, and she joins us on the
Speaker 1: phone from South Pallo, Brazil. Joel, we were talking about
Speaker 1: this during the break. I read the story this morning.
Speaker 1: It is something that actually put me in a pretty
Speaker 1: sour and foul mood because it is incredibly depressing the
Speaker 1: Amazon rainforest. It's one of the globe's greatest natural resources.
Speaker 1: In the past forty years, we've lost an area as
Speaker 1: big as California to deforestation. Yeah, this is a gut
Speaker 1: wrenching story. And I can't I kind of can't think
Speaker 1: of something that has bigger global implications than UM losing
Speaker 1: UH the Amazon. And what Jessica's UH story shows is
Speaker 1: that it's actually it's really nuanced. UM. And I think
Speaker 1: that is one thing if you spend some time with
Speaker 1: the story, UM, reading it or or listening to it
Speaker 1: if you prefer, you will come away with some of
Speaker 1: that nuance. And what he ends up doing is walking
Speaker 1: us through some of the characters, UM that are on
Speaker 1: the ground there and and she'll tell us the story
Speaker 1: started as a as a data project and then became
Speaker 1: probably one of the most compelling stories UM I've ever
Speaker 1: published as the editor of Business Week. UM. And you
Speaker 1: know the thing that I think, UM it shows more
Speaker 1: than anything, is that there is a official land grab
Speaker 1: policy that has happening in Brazil, and it's allowing the
Speaker 1: rainforest to basically get turned into grassland that can be
Speaker 1: UM um where cattle can be raised, which is about
Speaker 1: the worst one eight that we can do for the planet,
Speaker 1: as you can imagine. So Jessica, walk us through UM
Speaker 1: where you started this project and what you learned along
Speaker 1: the way. Hi, thanks for having me on this show. Um. Yeah,
Speaker 1: I started the project really looking at the data behind
Speaker 1: DeForest station, trying to figure out, you know, we've been
Speaker 1: struggling with this issue for decades now, and why is
Speaker 1: it still something that we're we're seeing? Why is why
Speaker 1: is it not something that the world is able to
Speaker 1: to stop? Why is the Brazil government not stopping it? Um?
Speaker 1: So I started looking at the data of who's actually
Speaker 1: doing it, and it took me in in place into
Speaker 1: directions that I had never really expected. I mean, it's
Speaker 1: it is such a nuanced story. It is such a
Speaker 1: complicated story. And what it comes down to is, you know,
Speaker 1: the folks on the ground, Uh, for decades, they've been
Speaker 1: told that deforestation is a good thing, that they need
Speaker 1: to deforce the land, and in fact, in some cases, um,
Speaker 1: they were you know, handed plots and if they didn't
Speaker 1: deforce the land, they risk losing those plots. And so
Speaker 1: that culture has really stuck in the Amazon and the
Speaker 1: folks there now, which a lot of them are incredibly poor. Um.
Speaker 1: The governments keeps that policy alive because it helps pump
Speaker 1: this land, this cleared land, into industrial farming operations that
Speaker 1: feed the world. I mean, this is such a big
Speaker 1: part of it, right, supporting the people who live in
Speaker 1: a country and area, right. And so there's as you
Speaker 1: just explained that on one hand, but at the same
Speaker 1: time we're talking about the existence of the global population
Speaker 1: and protecting the rainforest. It's a policy that's not just
Speaker 1: from President Boson Narrow. It's been around for a while.
Speaker 1: It has been a while around for a while. UM.
Speaker 1: During the dictatorship of the really prioritized giving it to
Speaker 1: big landowners, big industry. Um. And then so you have
Speaker 1: this population of people who have been working the lands
Speaker 1: for for generations and they and so when the democracy
Speaker 1: came about, uh, the government decided to give them small
Speaker 1: plots of land. So that was in the constitution. What
Speaker 1: we saw is that two governments prior to Bosonato, they
Speaker 1: moved the needle for they said, okay, so will amnesty
Speaker 1: more recent deforestation, will amnesty bigger deforestation. Now, what the
Speaker 1: government wants to do is sort of take that too, like, uh,
Speaker 1: just a very scary uh, a very scary next step
Speaker 1: and say, Okay, we're going to start amnestying more recent
Speaker 1: deforestation as recently as two thousand and twelve. Boconnado did
Speaker 1: wanted amnesty as recently as two thousand eighteen. Um, but
Speaker 1: we're not even gonna check it. We're gonna do it
Speaker 1: all by satellite UM and so it really opens the
Speaker 1: door to almost sixteen million hectares of of of new
Speaker 1: Amazon land that could be UM amnestyed. Basically, this is
Speaker 1: stolen public land that could be amnestying. Can you make
Speaker 1: the connection for people who live thousands of miles away
Speaker 1: from the Amazon about just why it is so important
Speaker 1: not just for Brazil but for our own health, because
Speaker 1: that was one of the most striking parts of the
Speaker 1: story for me. Right, So, we're reaching a point where
Speaker 1: the Amazon, which has always been considered sort of the
Speaker 1: lungs of the world, it's turning into savannah. It's that
Speaker 1: it's at risk of turning into savannah, and instead of
Speaker 1: of cleaning the earth air, it's actually accelerating climate change
Speaker 1: and in some cases where the burns are the worst,
Speaker 1: it's actually pumping more carbon dioxide into the air than
Speaker 1: it can absorb. Um. Now, if it turns into savannah,
Speaker 1: what happens. We lose ten thousand species are at risk.
Speaker 1: But also the Amazon helps regulate the entire the weather
Speaker 1: patterns here in the in in South America, and South
Speaker 1: America produces a lot of food for the world. UM.
Speaker 1: So you there's there's a combination of factors that are
Speaker 1: really sort of scary. Not only does it you know,
Speaker 1: contribute to climate change, it you know, contributes to more
Speaker 1: pollution in the air, but it also changes our weather,
Speaker 1: our weather patterns in in in a region that makes
Speaker 1: a lot of food for the world. And so it
Speaker 1: is quite shocking what what we're looking at. So let's
Speaker 1: talk about what happens when um uh the rainforest comes down. Um.
Speaker 1: Basically we have it's a story about poor people who
Speaker 1: are moving into the jungle and claiming land, and then
Speaker 1: that land ends up becoming homes and villages over time,
Speaker 1: and then they inherit that that land, and the government
Speaker 1: basically um you know, has that amnesty program that allows
Speaker 1: them to stay there and those those those those homes
Speaker 1: become permanent um places uh. And and really the whole
Speaker 1: thing is about allowing them to raise cattle, right, Jessica,
Speaker 1: because that's the thing that allows them to eventually flip
Speaker 1: it and sell and have have a business. What what
Speaker 1: what are the economics of all that end up looking like?
Speaker 1: And just just have about forty seconds left here, Okay, Yeah,
Speaker 1: So it used to be driven by a lot by
Speaker 1: poor folks, by by poor you know, individual farmers going
Speaker 1: into the Amazon and staking a claim. But what we've
Speaker 1: seen recently in the invasions is that they're very sophisticated.
Speaker 1: And we go into the story about this. You know,
Speaker 1: we did visit in a camp and it's sprouted up
Speaker 1: in five months. It's how you know, there's houses, there's
Speaker 1: a school, there's internet, there's running water, and so the
Speaker 1: poor farmers alone can't uh explain the sheer scale of
Speaker 1: the deforestation that we're seeing. There's money, someone is financing
Speaker 1: some of this um and so so I think that's
Speaker 1: really the kind of the next step in the next
Speaker 1: investigation that we need to do is like who who's
Speaker 1: actually behind a lot of this DeFore station. There's so
Speaker 1: much in this story. Highly recommend you read all of
Speaker 1: it or listen to the story. Jessico, Bryce thank you
Speaker 1: so much. Senior editor for Latin American News at Bloomberg,
Speaker 1: Jill Webber, thank you as well. You're listening to Bloomberg
Speaker 1: Business Week with Carol Masser and Bloomberg Quick Takes Tim
Speaker 1: Stinovik on Bloomberg Radio. All right, you are listening to
Speaker 1: Bloomberg Business Week. Among our most read stories on the
Speaker 1: Bloomberg Today about Nicolas my saying it correctly? Yeah, well,
Speaker 1: it depends like I've heard some people say Tesla differently.
Speaker 1: All right, Nikolas founder and former chairman charged with misleading
Speaker 1: investors stock dropping on the news today. Let's get into
Speaker 1: it with someone who has been covering this company for US.
Speaker 1: Bloomberg News reporter Ed Ludlow. He is in our San
Speaker 1: Francisco bureau um Ed, great to have you here. So
Speaker 1: you know this story really really well. Tell us about
Speaker 1: the latest. Yeah. So, Trevor Milton has been charged by
Speaker 1: New York prosecutors for essentially lying, making misstatements, false statements
Speaker 1: to investors about niko as technology and the progress that
Speaker 1: the company made. Remember, this is a company that was
Speaker 1: founded with the ambition to make fuel cell powered semi
Speaker 1: trucks and battery electric semi trucks and along the way
Speaker 1: all kinds of kind of weird, quirky stuff like the
Speaker 1: Badger pick up which was scrapped eventually, sports vehicles, a
Speaker 1: network of hydrogen fueling stations. Um. And it's not a
Speaker 1: huge surprise. We knew that this investigation by both the
Speaker 1: DJ and the SEC was ongoing, and indeed, the company's
Speaker 1: own internal invest investigation through an outside law firm found
Speaker 1: you know, similar results that he had made misstatements. But
Speaker 1: but it is, you know, a substantive step forward forward
Speaker 1: what's been a roller coaster story and wondering what happens
Speaker 1: to the company. I mean, shares down more than ten
Speaker 1: percent right now. These shares were trading at nearly eighty
Speaker 1: dollars a little over a year ago on June nine.
Speaker 1: It has come fall. It has fallen far and fallen
Speaker 1: relatively quickly. Where does the company go for here? The
Speaker 1: thing is that the company has been separate from Trevor
Speaker 1: Milton for some time. You know, he resigned as executive
Speaker 1: chairman in September of last year. You know, the company
Speaker 1: released a statement pointing out that this investigation or these
Speaker 1: charges are against Trevor Milton, They're not against Nicola Court.
Speaker 1: You know, this is a completely separate Nicolas said that
Speaker 1: they cooperated with the investigation throughout its entire duration, and
Speaker 1: to be fair, you know, Nicola really refocused after Milton left.
Speaker 1: They kind of restructured. They had new executives put in
Speaker 1: place on the management team under the leadership of CEO
Speaker 1: Mark Russell. They scrapped those kind of extra projects that
Speaker 1: were underway, including the Badger pickup and those sports vehicles.
Speaker 1: They narrowed their focus and they are now building slowly
Speaker 1: towards what they originally set out to do, which is
Speaker 1: to build battery electric semis and fuel cell powered semis. So, okay,
Speaker 1: step back. My understanding in the legal documents were some
Speaker 1: reference to some stuff that you did. Is that act
Speaker 1: that's correct? Tell us what that was. Not to make
Speaker 1: you start of the story, but I think this is all,
Speaker 1: you know, important, especially in this environment we live where
Speaker 1: everything is fair game. It points out that this has
Speaker 1: not been a short story. It's been a story that's
Speaker 1: unfolded over a matter of months and years. So we
Speaker 1: reported in June two thousand and twenty that in Nicolas
Speaker 1: kind of coming out moment in two thousand and sixteen,
Speaker 1: December two thousand and sixteen, Trevor Milton was on stage
Speaker 1: with a truck right behind him over his shoulder. It
Speaker 1: was called the Nikola One. It was the first kind
Speaker 1: of big, splashy public presentation of Nicola's efforts to that point.
Speaker 1: It was supposed to be a fuel cell powered truck
Speaker 1: and it was presented to people in the room that
Speaker 1: included investors, interested parties, state officials, and we reported that
Speaker 1: according to sources, the truck just didn't work. It didn't
Speaker 1: have any of the parts actually physically in it that
Speaker 1: would have made it capable of being operable, but it
Speaker 1: never operated anyway. They've never managed to get it to work.
Speaker 1: But here's the thing. Trevor literally stood on stage and
Speaker 1: said that it did work, that it was fully functioning.
Speaker 1: He even joked that they had to chain it down
Speaker 1: to stop people in the audience driving off with it.
Speaker 1: But it never worked. And that was something that at
Speaker 1: the time that we published the story in June June,
Speaker 1: Trevor Milton and Nicola pushed back in a very big
Speaker 1: way against but was later you know, said to be
Speaker 1: true by the company's own investigation, and now by this
Speaker 1: sec Um and New York Southern District investigation as well.
Speaker 1: So what could he face? And you have a new
Speaker 1: story out on the Bloomberg right now that that talks
Speaker 1: about what he can do between now and his trials
Speaker 1: out on one million dollars in bail that's secured by
Speaker 1: two properties that he owns in Utah. He's also promised
Speaker 1: to limit his travel to specific areas and not to
Speaker 1: contact investors other than the ones he has personal relationships with.
Speaker 1: You right, Yeah, he faces both criminal and security civil
Speaker 1: chart is right. You know, this is very serious. He
Speaker 1: has pleaded not guilty. Um, you know, the idea that
Speaker 1: he's pleaded not guilty is not a huge surprise. It's
Speaker 1: fair to say based on his prior comments, his actions,
Speaker 1: his behaviors, the way that he talked about the company
Speaker 1: during his tenure. He has to remain in Utah. He
Speaker 1: is limited in his travel. He is not allowed to
Speaker 1: communicate with investors, for example, under the terms of his bail.
Speaker 1: In your that reference to the story you just made,
Speaker 1: he does own a thirty six million dollar ranch in Utah.
Speaker 1: In fact, I actually spoke to the broker who sold
Speaker 1: him that ranch. He reckons it's now worth about fifty
Speaker 1: million US dollars. You know. It's right there near Salt
Speaker 1: Lake City in the mountains, a beautiful stream running by it.
Speaker 1: It has tennis courts. Uh lucky for him. But the
Speaker 1: reality is these things are slow moving and he is
Speaker 1: going to have to, under the terms of his bail,
Speaker 1: stay in Utah and just wait for the trial to come.
Speaker 1: What about the company? What's the future do we even
Speaker 1: know yet as to mention? Way down from the highs
Speaker 1: that we've seen in the past for this company. What
Speaker 1: is the future? Is there a future? Your credit where
Speaker 1: credit is due. Nicola has established notable partnerships in Europe
Speaker 1: with the Vecho, which is one of the leading heavy
Speaker 1: truck companies in the world. My sources are telling me
Speaker 1: that they are making progress in Old Germany. They have
Speaker 1: a joint venture with a ve Echo to make battery
Speaker 1: electric semi trucks. I'm hearing that the development of that
Speaker 1: is going well. The factory that they're trying to build
Speaker 1: is on target. Remember, those targets have moved several times
Speaker 1: since Trevor Milton left the company, but they are now
Speaker 1: in line with their new targets. Here in the United States,
Speaker 1: they're building a factory from scratch in Coolidge, Arizona. That
Speaker 1: is on track. They're building prototypes of real fuel cell trucks.
Speaker 1: They have a partnership on the technology side with Bosh,
Speaker 1: So there lots of layers of credibility. But what you
Speaker 1: see across Wall Street is that they want to see
Speaker 1: something of substance that this company can eventually moved towards
Speaker 1: generating revenue. I feel like another chapter, but ain't over yet, Ed,
Speaker 1: I feel the same way. I just you know Bloomberg
Speaker 1: any f our colleagues. They see a lot of potential
Speaker 1: for hydrogen of your self powered trucks. The thing is
Speaker 1: the company is still very much in get its act
Speaker 1: together mode. All right, good stuff, as always, Ed Ludlow
Speaker 1: part of the work that was involved in some of
Speaker 1: this complaint to Ed Lulow, West Coast correspondent, Bloomberg News
Speaker 1: from our nine sixties studio in San Francisco Road Journal. Now,
Speaker 1: but you let me drive? No, no, no no, no, please,
Speaker 1: I'll do the road reveal. Excuse me, I don't want
Speaker 1: to drive. Just drive. Good question, trying this drive to
Speaker 1: the globe mull Us Bloomberg Radio. Yeah, I just got
Speaker 1: about ten and a half minutes left in today's trading
Speaker 1: session Friday's Eve, that is Thursday, July twenty nine, Carol
Speaker 1: master to instead of taking our interactive broker's studio, let's
Speaker 1: do the drive to the close with Larry Pitkowski. He's
Speaker 1: managing partner and portfolio manager a good Haven Capital Management
Speaker 1: based in Milburgh, New Jersey, on the phone on this
Speaker 1: Thursday and Larry, I'm looking at the equity trade. Uh,
Speaker 1: we're off our best levels of the session, definitely off
Speaker 1: our lows, but a little bit of a rally on
Speaker 1: a day when there was disappointing economic news. What is
Speaker 1: important to you when you look at how the markets
Speaker 1: are trading, the financial markets. Uh, you know, Carol, we
Speaker 1: at good Haven are really not focused on trying to
Speaker 1: make day to day predictions about the markets. Were really
Speaker 1: focused on looking for a handful of things that we think,
Speaker 1: we understand that we can buy it at active prices
Speaker 1: and be right about the businesses. Uh. Don't expect wonderful
Speaker 1: economic things to happen. Expect whatever you see is kind
Speaker 1: of what you get, and that is how we approach
Speaker 1: the world. So day to day, you know, it's harder
Speaker 1: to find bargains today markets are at elevated levels but
Speaker 1: I have a very complex and sophisticated approach to try
Speaker 1: and address that, which is get up earlier and go
Speaker 1: to bed later, and keep looking and if I don't
Speaker 1: find anything to do, we don't do anything. Marianna Huffington
Speaker 1: might have something to say, because that's going to mess
Speaker 1: up your sleep patterns. I'm just gonna say, I wonder though,
Speaker 1: I mean, the little bits of news that we do
Speaker 1: get each and every day, whether it has to do
Speaker 1: with the economy or economic data or just the spread
Speaker 1: of the delta variant, that that has to at some
Speaker 1: point add up to perhaps the way that uh, you
Speaker 1: change you're thinking about some certain strategy. So so give
Speaker 1: us an example of like the holistic picture of what
Speaker 1: this is all adding up to right now. So and
Speaker 1: where you see the opportunities. Well, let me let me
Speaker 1: step step back for a moment. And I think it's
Speaker 1: a really good question. You know. Uh, I was very
Speaker 1: happy to come back on the show because the last
Speaker 1: time I was here, which was early one. Since then,
Speaker 1: we've completed at the Good Even Fund our best six
Speaker 1: month performance period since we started up, almost bt S
Speaker 1: and P by basis points or so. And in the
Speaker 1: spring of when there was panic and shutdown and whatnot.
Speaker 1: Without being epidemiologists or macro people, we did put a
Speaker 1: lot of cash to work because we felt that looking
Speaker 1: beyond the near term, there were bargains and we were
Speaker 1: investing with the margin of safety and that has served
Speaker 1: us well. From where we sit today, there are obviously
Speaker 1: elevated levels. It's very upsetting to see the delta varian
Speaker 1: in cases spiking. There's human things to worry about, but
Speaker 1: we are very comfortable with the portfolio we have put together.
Speaker 1: We think we have upside and a margin of safety,
Speaker 1: and all we can do is try and take it
Speaker 1: company by company. And you know, also the level of
Speaker 1: stimulus in the system uh and zero interest rates. These
Speaker 1: are unusual conditions and I think about it a lot,
Speaker 1: but it's hard to exactly put into practice how to
Speaker 1: address that. So we'll just try and be stock pickers
Speaker 1: and risk managers. And we want to talk about some
Speaker 1: of your stock picks that you like. But is there,
Speaker 1: just generally speaking, a lot of opportunity when you've got
Speaker 1: energy as a group as a whole up more than
Speaker 1: thirty percent real estates of percent, financials up almost twenty
Speaker 1: five percent, Communication services pick your major industry group. There
Speaker 1: are eleven in the S and P five they're all up.
Speaker 1: Consumer staples is among the worst performers, up only six percent.
Speaker 1: Utilities are up about six percent, but everything else is
Speaker 1: some very strong double digit, you know, twenty thirty percent gains.
Speaker 1: Are there lots of opportunities. There is a lot of
Speaker 1: the opt mis um of what we are seeing in
Speaker 1: one even throughout the end of the year, already priced
Speaker 1: in for a lot of names. I would say two things.
Speaker 1: First of all, for certain industries, earnings are also up dramatically, Okay,
Speaker 1: clearly so, And I think that's something to really take
Speaker 1: into again, including you know, alphabets are you know is
Speaker 1: a top three holding for us. I mean, earnings have
Speaker 1: been up dramatically. We have plenty of other holdings, including
Speaker 1: Lenore and the real estate business. Earnings are up dramatically.
Speaker 1: So in many cases, not all multiples for a lot
Speaker 1: of our holdings are not actually up that dramatically despite
Speaker 1: attractive stock end business performance. But you're asking a very
Speaker 1: good question, which is where what is the market ignoring
Speaker 1: where their pockets of opportunity. And for instance, we've added
Speaker 1: recently to our holding in p G and E which
Speaker 1: is the northern California based utility, which is under new management,
Speaker 1: which has been under a lot of pressure to be
Speaker 1: under a lot of pressure, and there's something we should canize,
Speaker 1: you know, the wildfires Historically in a Karn Dixie wildfire,
Speaker 1: there are people whose lives have been affected, and there's
Speaker 1: brave workers from cal uh Fire who are working on
Speaker 1: this and first responders. But new management. They are led
Speaker 1: by Patty Poppy who had a great track record at
Speaker 1: the MS Energy, Adam Wright who had had a great
Speaker 1: record at Mid American owned by Berkshire good CFO, and
Speaker 1: Chris Foster Joe four Line who came from PSC and
Speaker 1: G in Jersey. You have some new management and I
Speaker 1: think if you listen to what Patty is saying and articulating,
Speaker 1: they've come out of bankruptcy, they have a plan, they
Speaker 1: have a plan to address safety. You have a stock
Speaker 1: price that's trading you know, at a level way below
Speaker 1: on a multiple basis. It's peers and they've got hard
Speaker 1: work in front of them. But I think they're addressing it.
Speaker 1: So Alphabet P. G Enny, give us another company you're
Speaker 1: optimistic about. Well, I tell you we in late January
Speaker 1: early February, Rory, we made all of our purchases and
Speaker 1: a new holding then for us, which was Facebook. I've
Speaker 1: written over the last couple of letters here at what
Speaker 1: I call good Haven two point oh about how this
Speaker 1: whole distinction between valuing growth is a little bit messed up. Okay,
Speaker 1: there is nothing inconsistent in value investing about owning good quality,
Speaker 1: growing companies. You just don't want to pay dramatically high
Speaker 1: multiple for them. In late February, In late January, early February,
Speaker 1: Facebook got down to, you know, to sixty a share
Speaker 1: or so. As there was fear about what was going
Speaker 1: to happen with the new Apple operating system. There was
Speaker 1: this rotation out of growing companies as interest rates went
Speaker 1: up a little bit. And we looked at that and said, well,
Speaker 1: we think we're paying you know, maybe seventeen times earnings
Speaker 1: are so ex cash for what we think is still
Speaker 1: going to be an attractively growing business run by very
Speaker 1: talented management team. And that was a recent purchase that
Speaker 1: is so far, you know, worked out well and I
Speaker 1: think has a long runway to go. Taylor a pit tasky.
Speaker 1: I want to ask you, are you at all concerned
Speaker 1: about the economy, US economy, global economy shutting down again
Speaker 1: because the delta variant, And are you at all making
Speaker 1: any adjustments to investments because of that? You know, Carol,
Speaker 1: I'm concerned about about everything. But I'm always reminded of
Speaker 1: somebody who very smart, who one said to me, Look,
Speaker 1: if you ask most people their macroeconomic view about the future,
Speaker 1: you're learn a lot about the person, but not a
Speaker 1: lot about the future. It's hard to translate certain of
Speaker 1: these concerns about you know, what do you do if
Speaker 1: you think you're going to own something for many years?
Speaker 1: Having said that, Uh, my expectation, if I were forced
Speaker 1: to have one would be that, you know, we would
Speaker 1: not go into a you know, kind of a complete shutdown.
Speaker 1: But anything is possible. And I think we are managing
Speaker 1: money without financial you know, not on margin, without financial leverage,
Speaker 1: because strange things can happen, as we saw sadly in
Speaker 1: the spring of and we want to be able to
Speaker 1: try and take advantage of it for us and our
Speaker 1: fellow shareholders. We only have about twenty seconds left. Um,
Speaker 1: are you worried about some sort of pull back in
Speaker 1: the near future, Larry, pullback would actually be good. Yeah,
Speaker 1: how big of a pullback. I mean, I don't. I
Speaker 1: don't know, and I don't know anybody who can predict
Speaker 1: such things. But if you are at point, If you are,
Speaker 1: I don't, I mean, I'd love to meet somebody, but
Speaker 1: a whole lot easier than maybe you would employ that
Speaker 1: really hard. If I mean so, I'm not. I'm not
Speaker 1: opposed to not working so hard if I thought I
Speaker 1: could yield the right result. But pullback should not be
Speaker 1: for the long term investor. If not, it's not leverage.
Speaker 1: You should You should look forward to some occasional pullbacks. However,
Speaker 1: you're going to find attractive things to buy. Got it, Hey,
Speaker 1: good stuff. Larry Pitkowsky over good Haven Capital Management, joining us.
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast
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