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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well,

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Speaker 1: Republicans returning to Washington, they've got to decide whether they

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Speaker 1: are going to set aside or support a bipartisan healthcare bill.

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Speaker 1: It has gained some acceptance in Congress. Indeed, Senate Minority

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Speaker 1: Leader Chuck Schumer said over the weekend that the bill include.

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Speaker 1: The bill's support includes all of the forty eight Senate Democrats,

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Speaker 1: as well as twelve publicly committed Republicans, enough to overcome

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Speaker 1: any filibuster. So is there a chance of some kind

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Speaker 1: of bar bi partisan resolution here? To help us understand

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Speaker 1: the divide that exists between Republicans and Democrats is Ken Stern.

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Speaker 1: He is an author and the former chief executive of NPR,

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Speaker 1: and he's the author of the new book entitled Republican

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Speaker 1: Like Me, How I Left the Liberal Bubble and learned

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Speaker 1: to love the right, and he joins us in our studio,

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Speaker 1: can thank you for being here, thanks for having me

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Speaker 1: on the show. Well, maybe as a jumping off point,

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Speaker 1: this idea that because we're waiting to hear what's gonna

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Speaker 1: happen with any kind of health care legislation, I wonder

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Speaker 1: if you could kind of take that and then explain

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Speaker 1: why you wrote this book and a little bit of

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Speaker 1: your experience learning about different perspectives when it comes to

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Speaker 1: such important issues like healthcare. Yeah, I think it's actually

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Speaker 1: an interesting example. So let me tell you why I

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Speaker 1: wrote the book, and then we'll tie it into healthcare.

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Speaker 1: So I wrote the book because I've become increasingly concerned

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Speaker 1: about the polarization. Um More and more we live in

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Speaker 1: our own world. We don't um communicate with the other side,

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Speaker 1: and we've continued to think a worse than were to

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Speaker 1: the other side. And it actually has relatively little to

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Speaker 1: do with issues issue polarization. How much we disagree hasn't

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Speaker 1: really changed in this country over the last twenty five years.

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Speaker 1: How much we hate the other side has gone off

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Speaker 1: the charts. Um So, so my book is really and

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Speaker 1: and there's a reason for that. The reason has become

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Speaker 1: more divided geographically and demographically. We don't know the other side.

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Speaker 1: When you don't know the other side, it becomes easy

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Speaker 1: to demonize them. Um. So my book was about me

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Speaker 1: leaving my democratic m ward in washing d C. And

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Speaker 1: spending as much time as I could with Republicans where

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Speaker 1: they work, where they pray, where they where they hunt. Uh.

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Speaker 1: And it was an eye opening experience for me. And

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Speaker 1: one of the things I learned along the way is

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Speaker 1: when it comes when you get polarized like this, it's

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Speaker 1: often not about substances, about whether you're winning or losing.

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Speaker 1: There's actually a lot of social science around it doesn't

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Speaker 1: actually matter that actually underlying merits doesn't matter. It's about

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Speaker 1: my side beating your side. And I think that's a

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Speaker 1: lot to do with politics and washing d C. Right now,

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Speaker 1: you can before we get into what you found as

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Speaker 1: you to this trip across the country. I'm wondering whether

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Speaker 1: you are saying that as the chief executive officer, the

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Speaker 1: former chief executive officer of NPR, you think that NPR

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Speaker 1: and other media outlets do perpetuate these ideas well. I

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Speaker 1: think so, So let's that's actually two different issues to

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Speaker 1: talk about. There um. In the broader scheme of things,

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Speaker 1: um um. I think what media, like all people do,

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Speaker 1: they live in their own bubble. Uh, they're in a

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Speaker 1: place they they they tend to perpetuate themselves. They hire

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Speaker 1: people like themselves. Uh, they think like themselves. They have

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Speaker 1: a confirmation bias always going on. And it's not a

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Speaker 1: necessarily intentional thing, but it's an important thing because it

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Speaker 1: terms what's important, who you talk to, what issues you cover.

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Speaker 1: And I think that's why a lot of the country

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Speaker 1: feels locked out of sort of what's called mainstream media. Um.

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Speaker 1: And that's a subtle thing that I think is hard

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Speaker 1: to grapple with, but it's real. The issue I think

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Speaker 1: we found more recently in the Trump era is that

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Speaker 1: media has discovered that conflict play. It's not actually not

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Speaker 1: a really new concept. You know, if it bleeds, it leads.

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Speaker 1: But you know, the best thing that's happened to the

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Speaker 1: New York Times is Trump's attack on the failing New

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Speaker 1: York Times. And the best thing that happens that Trump

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Speaker 1: is the New York Times attacks on him. Um. And

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Speaker 1: there's actually a win win for them and kind of

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Speaker 1: a lose lose for democracy and sort of civility. Well,

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Speaker 1: let's go back to that, because that's those are not

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Speaker 1: things you can legislate. No, I think that's you know, Uh,

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Speaker 1: these are tough things. Um, where does it come from?

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Speaker 1: Based on your trips and your meeting of people? How

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Speaker 1: did what do they say to you in order to

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Speaker 1: explain why they feel the way they do? So I think, Um,

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Speaker 1: it's a it's a challenging question because I think people

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Speaker 1: uh in the flyover states. So let's just be Yeah,

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Speaker 1: I was suppose pick an example, maybe an anecdote or too. Yeah,

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Speaker 1: in Kentucky when you go down and talk to people

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Speaker 1: who are seeing their coal mines closed. Um, you're in Appalachia,

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Speaker 1: which has been essentially an internal colony of the East

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Speaker 1: coast of the United States for a hundred years, where

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Speaker 1: coal mining provided a semblance of of middle class life.

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Speaker 1: And they see the their economy going, they see their

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Speaker 1: hope going, they see opioid addiction on the rise, they

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Speaker 1: see um, their kids, um not having an opportunity. Uh,

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Speaker 1: they get angry. They don't see those stories are told,

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Speaker 1: they hear things like climate changing. They just see sort

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Speaker 1: of their outside clone. The colonial powers from Washington City,

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Speaker 1: New York California shutting them down and shutting them down

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Speaker 1: without really a concern about um their livelihood, and that

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Speaker 1: translates into anger, that translates in the rejection of science,

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Speaker 1: that translates into a whole, a whole gestalt of one

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Speaker 1: side against the other. And you know, you can argue

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Speaker 1: the facts a lot, but the facts matter less than

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Speaker 1: the feelings. Okay, So at a time when the facts

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Speaker 1: matter less than the feelings and you have these sort

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Speaker 1: of increasingly ingrained winner and loser type of mentality that

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Speaker 1: is not easy to resolve, even on the issues. As

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Speaker 1: you point out, what's the path forward? I mean, I'm

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Speaker 1: sure that if you were to sit down with one

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Speaker 1: person who thinks differently from you, who's from a state

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Speaker 1: that's not in your bubble or in a world, you

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Speaker 1: could find commonality because we're human beings. But like from

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Speaker 1: a sort of social level, what's the way forward at

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Speaker 1: a time when Donald Trump is having a Twitter war

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Speaker 1: right now with Bob Quirker, Republican Senator. I don't think

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Speaker 1: there's any easy answers, and I will assure you my

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Speaker 1: book does not have any conclusions that solves the problem.

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Speaker 1: But I think it starts first with um, something I

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Speaker 1: realize a long way, which is we're actually an exceeding

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Speaker 1: in the era of high discourse and high anger, actually

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Speaker 1: an exceedingly moderate people actually talk to people and actually

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Speaker 1: look at the data around the most polarizing issues of

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Speaker 1: the day. People actually move towards the center on abortion,

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Speaker 1: on healthcare, on guns. It's actually an extraordinary amount of commonality.

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Speaker 1: And if you actually and actually sort of telling people

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Speaker 1: that and trying to translate that into the ideas like

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Speaker 1: the other side, or actually, aren't the radicals the other sides?

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Speaker 1: Are people telling us where the radical right? But here's

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Speaker 1: the problem, because we were just talking about how blood cells,

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Speaker 1: you know, and and so if you know, if if

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Speaker 1: the conflict is what people want to read, how do

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Speaker 1: you you know, tell them over and over again you're moderate,

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Speaker 1: You're we're all moderate. We all just want to come ground.

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Speaker 1: I mean, what I just I think that that's the

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Speaker 1: problem is that you know, in a time when everyone's

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Speaker 1: looking for attention, you are seeing you know, increasingly inflammatory rhetoric. Yeah, um,

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Speaker 1: you know, I think there's gotta be uh so before again,

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Speaker 1: tell you I don't have the answers, um uh And

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Speaker 1: you can cook kick me out of the studio for

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Speaker 1: being frustrating. Um. It's also the political parties are part

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Speaker 1: of the problem. And I think one of the things

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Speaker 1: you know, you always hear people complain about the politicians

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Speaker 1: Washington political parties. I'm from Washington. I've never really felt

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Speaker 1: that until this trip, Uh, and understanding how the political

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Speaker 1: parties have actually found progress for themselves fundraising electioneering off

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Speaker 1: of conflict UM. And the example I use is UM

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Speaker 1: sort of odd when it's abortion. UM an area of conflict.

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Speaker 1: But the American opinion and abortion has not changed in

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Speaker 1: fifty years. We've tracted since Roe v. Wade UM. And

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Speaker 1: yet both of the parties are are trumping in the

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Speaker 1: fact that they have the most extreme positions of that.

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Speaker 1: So thank you so much, Ken Stern. Fantastic to to

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Speaker 1: hear what you have to say. Kencern, author and former

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Speaker 1: chief executive officer of NPR, author of the new book

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Speaker 1: Republican Like Me, How I Left the Liberal Bubble and

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Speaker 1: learned to love the right Well. The Chinese Communist Party

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Speaker 1: approved a revised charter enshrining President Jijin Ping's name under

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Speaker 1: its guiding principle. This was a departure from the prior

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Speaker 1: to leaders of China which did not get their names

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Speaker 1: enshrined here. To explain why this is actually a very

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Speaker 1: big deal is John from Her, senior executive editor for Business,

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Speaker 1: Finance and Energy at Bloomberg News. Thank you so much

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Speaker 1: for joining us. So this this is a big deal.

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Speaker 1: Why this is a this is a huge deal. This

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Speaker 1: is one of the most important political developments in China

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Speaker 1: in decades. Essentially, this means that she and Pining, the

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Speaker 1: current president, will be in power and will extend his

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Speaker 1: influence over over Chinese politics, over the economy of the markets,

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Speaker 1: potentially for decades to come. In theory, he was supposed

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Speaker 1: to set down in five years time, but the fact

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Speaker 1: that he is now elevated at the same level as

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Speaker 1: Mout Tongue and Deng Xiaoping in the Chinese constitution means

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Speaker 1: that he has the status that goes way beyond that

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Speaker 1: of any other politician in China thought for the new

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Speaker 1: era of socialism with Chinese special characteristics. That's the phrase,

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Speaker 1: at least the translated phrase. Maybe you could explain what

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Speaker 1: that means, and also in that context that the Communist Party,

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Speaker 1: the party in China sits above the government to a

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Speaker 1: certain extent. That's right. I mean, the key animating thought

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Speaker 1: for all Chinese leaders always is to is to preserve

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Speaker 1: the legitimacy of the party. And it's just it's it's

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Speaker 1: hard to imagine this now, but you know, Chinese leaders

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Speaker 1: have very long memories. They are obsessed with history, and

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Speaker 1: they talk a lot about how if you look at

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Speaker 1: Chinese history, there are regular sort of breaks, revolutions, disruptions

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Speaker 1: like that are are are a pretty sort of constant

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Speaker 1: feature of Chinese history, and they're determined to do everything

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Speaker 1: they can to make sure that the Party stays on

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Speaker 1: top of all of that. And I think, you know

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Speaker 1: what we're seeing now in China, this is she and

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Speaker 1: ping himself talks about the third development of communism and

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Speaker 1: the third step in communism, but I would say telling

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Speaker 1: established it during the revolution. D J. Ping Um sort

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Speaker 1: of you know, created the second wave of of of

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Speaker 1: the of an economic revolution, and now that he is

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Speaker 1: now leading China into a third period where he will

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Speaker 1: restore China as a great power, which is something he

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Speaker 1: spoke about a lot in his speech. So that's you know,

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Speaker 1: you sort of have to parse the language of all

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Speaker 1: of these leaders, but that, I think is what the

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Speaker 1: key messages from this from this congress. But John, can

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Speaker 1: you square the idea that the Communist Party is still

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Speaker 1: at the top, ahead of the government at a time

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Speaker 1: when now j Ping himself, this charismatic leader, is leading

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Speaker 1: the nation. He it seems like he's kind of on

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Speaker 1: top of the Communist Party. Now he's on top of both.

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Speaker 1: I mean he isn't He is the president if you

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Speaker 1: look at his title as the President of China. So

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Speaker 1: his title, actually, if you look at Chinese history, is

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Speaker 1: one of the lesser titles. He's head of state, whereas

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Speaker 1: the really important role is to run the party. So

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Speaker 1: he now runs both. He's head of the military as well,

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Speaker 1: which is another really key When he controlled this is

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Speaker 1: where his power has come from. He controls the three

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Speaker 1: or four most important officers in both the party and

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Speaker 1: the state himself. And he's also been pretty vocal about

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Speaker 1: wanting to be a global economic power and competing and

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Speaker 1: how does the concept of competing in a broad capitalistic

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Speaker 1: economy mesh with communist values. I think that that argument

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Speaker 1: in that debate was probably one one in lass in

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Speaker 1: Beijing many many many years ago. Again, but the way

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Speaker 1: the Chinese leaders look at it they're all about prosperity

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Speaker 1: for the Chinese people. And as then, as Dan Dropping

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Speaker 1: himself once said, it doesn't matter if you have a

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Speaker 1: black cat or a white cat. The most important things

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Speaker 1: that are catch as mice. The way the party leaders

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Speaker 1: will look at it doesn't matter what your ideology is,

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Speaker 1: as long as you are you are raising the tide

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Speaker 1: for the Chinese middle classes, and you are bringing everybody

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Speaker 1: in China up to a certain level of prosperity and

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Speaker 1: sort of undoing what they see as the great sort

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Speaker 1: of economic um sort of backwards steps that China took

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Speaker 1: in the nineteenth twente century. Doesn't matter how you get

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Speaker 1: their most important part is that all you bring as

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Speaker 1: much of society with you as possible. Very important thing

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Speaker 1: to bear in mind as well. In the speech, which

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Speaker 1: we can talk about more if you like, present, she

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Speaker 1: talked a lot about restoring or or addressing imbalances and

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Speaker 1: inequalities in Chinese society. Is not just about economic growth anymore.

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Speaker 1: He's obsessed now with sort of fixing some of the inequalities,

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Speaker 1: both in terms of standards are living and also environmental

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Speaker 1: factors that have been a byproduct of China's economic miracle.

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Speaker 1: Over the last thirty or forty years. By all means,

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Speaker 1: if you if you have other things in the speech

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Speaker 1: that you want to highlight, I mean, I was going

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Speaker 1: to talk about the vote in the Central Committee and

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Speaker 1: how an ally UH, an enforcer really of of j

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Speaker 1: Pink's Andy corruption move, is not going to be part

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Speaker 1: of this. Well, that's right. So Lankie Shan, there was

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Speaker 1: a lot of speculation that he would also he would

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Speaker 1: be restored to the to the Standing Committee. UM. That

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Speaker 1: would have been controversial because there's an unofficial rule in

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Speaker 1: China that once you're over sixty five you need to retire.

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Speaker 1: He's now sixty seven. UM. So there was some speculation

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Speaker 1: that maybe if she had put him, had kept him on,

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Speaker 1: that he would have broken UH with that long standing tradition.

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Speaker 1: He didn't do that. You could possibly arguing again, you know,

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Speaker 1: China is a very opaque place and the governing structures

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Speaker 1: are very opaque. So a lot of this speculation, you

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Speaker 1: could argue that one Key Shan his job was done,

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Speaker 1: like what his job was to clamp down and corruption

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Speaker 1: at the height at the top of the Chinese Party,

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Speaker 1: and in a lot of ways it was one key

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Speaker 1: Shan was she's battering round. He was his instrumental power.

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Speaker 1: It was one key shan that basically put the fear

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Speaker 1: of God into all of the top Chinese leaders, and

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Speaker 1: that was what allowed she to exercise the power that's

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Speaker 1: taken them to the pinnacle of power. Now, thank you

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Speaker 1: very much for spending time with us. Has always looked

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Speaker 1: forward to future visits. So John freyher is senior editor

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Speaker 1: for Senior executivetor for Business, Finance and Energy for a

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Speaker 1: Bloomberg Turn. Attention now to the world of food and

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Speaker 1: restaurants McDon donald, Hippotle, McDonald's today benefiting from what they

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Speaker 1: call their high low menu strategy. Here to tell us

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Speaker 1: more about it, Mike Halin, senior restaurant analysts for Bloomberg Intelligence. Mike,

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Speaker 1: good to have you. What is it? Tell people? What

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Speaker 1: is this high low menu strategy and how's it working

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Speaker 1: for McDonald's. UM. So, it's basically offering a lot of

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Speaker 1: value items, some lower end items. UM. Also, you know

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Speaker 1: the Mike pick two which they do in different combinations.

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Speaker 1: It might be two items for two dollars and fifty

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Speaker 1: cents or four items for four dollars, but offering value

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Speaker 1: and as we know as the you know, largest chain

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Speaker 1: in the world. They can source their product cheap, more

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Speaker 1: cheaply than everyone else, and offer lower price points their

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Speaker 1: customers and still allow their franchisees to make something off

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Speaker 1: of it. And at the same time, on the high end,

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Speaker 1: they're improving the quality of a lot of their items

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Speaker 1: with the signature craft inline of chicken sandwiches and and burgers,

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Speaker 1: and so that's also drawing um new customers or lapse

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Speaker 1: customers into the chain. Um. You know, it's what we

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Speaker 1: call a Barbell strategy kind of in in this fast

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Speaker 1: food industry. One day, Wendy's is another chain that's doing

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Speaker 1: it pretty well, um and also benefiting from it. You know, Mike,

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Speaker 1: I have to confess something. When I see you, I

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Speaker 1: think he ate McMuffin this morning. He ate neg McMuffin

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Speaker 1: this morning because we had a whole the gym. No no, no,

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Speaker 1: not because of that, Because months ago we were talking

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Speaker 1: about how the breakfast menu was really bolstering their sales

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Speaker 1: and getting them, getting them this momentum. But here we are,

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Speaker 1: and it seems like this momentum is here to stay.

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Speaker 1: It's not just the egg McMuffin that we talked about,

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Speaker 1: which you which you liked? Yeah, which I liked. And

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Speaker 1: you know, value was probably the first thing, and operations

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Speaker 1: in the stores, and then right after that was was

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Speaker 1: the all day breakfast. But um, yeah, they they've attacked

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Speaker 1: their problems on a lot of different fronts, um. And

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Speaker 1: you know it's the culmination of all these things that's

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Speaker 1: leading to this very strow momentum. You know you you

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Speaker 1: know I have said it before. You know, you can't

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Speaker 1: turn around an aircraft carrier on a dime. Um, you know.

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Speaker 1: But they've been really aggressive and it's enabled them to

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Speaker 1: to really turn things around a lot faster than anyone expected.

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Speaker 1: How is the the ongoing effort to sell off the

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Speaker 1: units to franchise, you know, franchisees and then just take

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Speaker 1: a percentage of the of the money back. Yeah, they

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Speaker 1: hit their goal or a year ahead of schedule. So um,

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Speaker 1: you know, they've they've been um aggressive, They've they've been

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Speaker 1: um you know, whether it be operations or better food,

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Speaker 1: or with the structure of the company and the refranchising. Um,

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Speaker 1: they've been able to hit their targets and and achieve

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Speaker 1: their goals faster than most expected. So then why are

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Speaker 1: are their shares only up one and a quarter percent today,

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Speaker 1: stocks up fift in the last year. Trees don't grow

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Speaker 1: out of the sky, you know. And I mean there's

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Speaker 1: just huge expectations baked in, right and and so the

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Speaker 1: sames Our sales were um that you know that the

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Speaker 1: strong strange sames Our sales trans across the globe are

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Speaker 1: continuing um. But you know, revenue and EPs was kind

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Speaker 1: of just in line. So you know, um, you know,

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Speaker 1: it's like like I said, stocks don't go off forever,

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Speaker 1: you know, you know, they have to take a breather

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Speaker 1: at some point. You're not just the egg McMuffin at

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Speaker 1: a certain point just can't get any larger for you

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Speaker 1: to have for breakfast. Just too much. You never know,

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Speaker 1: you never you know. In what you describe it, it

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Speaker 1: rings a bell for me. And it it says, you know,

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Speaker 1: high price or higher price and customization and personalization that works, right,

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Speaker 1: the high end of that high low menu, the low

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Speaker 1: end convenience and low cost that works. It's sort of

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Speaker 1: like you're describing the retail industry as well. The high

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Speaker 1: end does well, the low end does well, in the

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Speaker 1: middle just struggles. Yeah, I think that's that's that's a

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Speaker 1: good point. I mean, and you don't really talk about

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Speaker 1: kind of in the middle much because, um, you know,

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Speaker 1: fast casual has kind of destroyed that, right, So like,

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Speaker 1: you know, just getting a decent meal for eight bucks,

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Speaker 1: you know six bucks is you know, is that that

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Speaker 1: doesn't come with table service? No, it's and it's been

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Speaker 1: stolen away by a lot of these fast casual names. So, um,

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Speaker 1: you know, that's why we're doing deep value, and that's

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Speaker 1: why we're trying to improve the high end because we

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Speaker 1: have that competition. You know, POSR has that competition from

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Speaker 1: Task Causual only have to compete. So let's talk about

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Speaker 1: the middle that's suffering. Chipotle, they were for earnings today

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Speaker 1: at four ten pm Wall Street time, and uh, you know,

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Speaker 1: they've been really suffering with a series of illness scandals

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Speaker 1: and others. What are we what are we looking for today?

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Speaker 1: We you know, as always, we're looking at the pace

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Speaker 1: of the same store sales in the traffic recovery, especially

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Speaker 1: since there was another neuro virus outbreak in July in

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Speaker 1: a Virginia store. Uh that that's number one, two and three.

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Speaker 1: You know, there was a five fifty basic point impact

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Speaker 1: for the week following the outbreak. Across the chain. We

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Speaker 1: want to see how um that affects the entire quarter. Uh.

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Speaker 1: And number two would be restaurant margins because there's kind

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Speaker 1: of some conflicting opinions about this. You know, we tend

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Speaker 1: to think that there's still room for pretty significant restaurant

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Speaker 1: margin expansion. UM. Management was very slow to take labor

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Speaker 1: out of the stores. Your sales drop, you have employees

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Speaker 1: just sitting around, you know, so they really needed to

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Speaker 1: take labor out of the stores, and they weren't aggressive

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Speaker 1: about that. So we think we think there's some more

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Speaker 1: um low hanging fruit there. Others might disagree on the street, um,

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Speaker 1: but that's the other thing that that uh, you know,

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Speaker 1: people are gonna look at. And of course Caso and

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Speaker 1: the their impact that impact on same road, cheese on

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Speaker 1: it and Americans will just come funneling in the door. Yeah, clearly.

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Speaker 1: Mike Halin, thank you so much for joining us. Mike

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Speaker 1: Halin is seenior restaurant analysts for Bloomberg Intelligence, joining us

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Speaker 1: here in our living three studios. Gold prices are down

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Speaker 1: today and they've been sort of on a choppy down

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Speaker 1: trajectory over the past week or so. And uh, here

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Speaker 1: to explain what's driving that is, Mike Judas partner and

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Speaker 1: Metals and Mining Analystic Vertical Church Partners based in Stanford, Connecticut. Mike,

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Speaker 1: I want to first just get your view on what

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Speaker 1: the bigger driver of gold prices is right now. Is

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Speaker 1: it the dollar which is starting to strengthen a little bit,

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Speaker 1: or is it the sort of risk on environment which

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Speaker 1: makes people not go to sort of have in trades

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Speaker 1: like gold. Lisa, Good morning, morning pimp. So I would

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Speaker 1: argue that I hate to split the baby here, but

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Speaker 1: it's probably about fifty fifty, maybe weighted more towards the

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Speaker 1: dollar that I would say. Ever since early September when

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Speaker 1: gold peake fifty, Lisa, the dollars bounced about two or

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Speaker 1: three percent against trade weighted and we've seen gold prices

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Speaker 1: retreating kind of in this little a little little near

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Speaker 1: term downward range. But I think the dollar has been

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Speaker 1: a pretty good explanation for it. And secondly, there's been

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Speaker 1: much more risk risk on, not only for the equity markets,

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Speaker 1: no need to explain that with some of the great

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Speaker 1: earnings of being produced this morning, but also when you

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Speaker 1: think about geo political tensions which have kind of up

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Speaker 1: and pushed off for for a bit. Hey, Mike, I'm

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Speaker 1: just wondering if I can drag your attention out to

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Speaker 1: Indonesia for a moment, because I want to get your

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Speaker 1: thoughts about a mine out there. This is the world's

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Speaker 1: largest combination copper gold mine. This is the Grassburg mine,

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Speaker 1: and it's owned or you know, it's currently owned I

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Speaker 1: think fifty one by Freeport mcmaran and the subsidiary of THEIRS,

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Speaker 1: and they're trying to do a deal with the Indonesian

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Speaker 1: government and that's proven a problematic. I just want you

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Speaker 1: to use that as an example to explain to people

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Speaker 1: what it's like to have to invest in a mind,

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Speaker 1: how long it takes to get your money out of

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Speaker 1: the ground after you've spent it. That's a very good observation.

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Speaker 1: And just quickly on on this mine and Indonesia. Grassburg,

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Speaker 1: which is discovered back in the nineties sixties by Freeport

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Speaker 1: mcmaran and UM. It has been the an amazing asset

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Speaker 1: and the largest copper gold deposit. As you mentioned, uh,

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Speaker 1: the government and right now currently Freeport owns stake in

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Speaker 1: the assets, but the Indonesian government is now negotiating with

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Speaker 1: report to grab or to take a fifty stake and

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Speaker 1: buy at a market price to the asset from freeport.

428
00:23:06,840 --> 00:23:09,000
Speaker 1: Um that that's an issue that will work itself out.

429
00:23:09,040 --> 00:23:10,840
Speaker 1: But what it does explain to what it just show

430
00:23:10,920 --> 00:23:14,640
Speaker 1: for investors that where a lot of these base medals

431
00:23:14,920 --> 00:23:17,280
Speaker 1: and and soft medals are located around the world are

432
00:23:17,440 --> 00:23:22,320
Speaker 1: areas where governments need the revenues, need the taxes, and

433
00:23:22,320 --> 00:23:25,359
Speaker 1: there are in areas that have are less developed. And

434
00:23:25,600 --> 00:23:28,200
Speaker 1: the amount of capital that's required to develop a mind

435
00:23:28,200 --> 00:23:31,000
Speaker 1: you can't even replace some like a freeport for for

436
00:23:31,119 --> 00:23:34,080
Speaker 1: anywhere more than several billion dollars. The time it would

437
00:23:34,080 --> 00:23:37,080
Speaker 1: take from the first negotiations of first drill hole to

438
00:23:37,119 --> 00:23:41,200
Speaker 1: when you're producing gold, silver, lead, copper out of the ground.

439
00:23:42,240 --> 00:23:44,320
Speaker 1: You know, at the best, if everything works out well,

440
00:23:44,359 --> 00:23:47,080
Speaker 1: it's uh six seven years and you're talking more like

441
00:23:47,160 --> 00:23:49,520
Speaker 1: eight to ten years from a full mind life cycle.

442
00:23:49,600 --> 00:23:53,119
Speaker 1: So it is a very dicey situation. And uh and

443
00:23:53,200 --> 00:23:56,080
Speaker 1: it's difficult to you know, when you're looking longer term

444
00:23:56,160 --> 00:23:57,840
Speaker 1: it where the new Mind's gonna be built. They're not

445
00:23:57,840 --> 00:24:00,639
Speaker 1: gonna be built in politically safe places and morobably can

446
00:24:00,680 --> 00:24:02,879
Speaker 1: say US Canada, it will be some will be in

447
00:24:02,960 --> 00:24:06,840
Speaker 1: areas around the higher risk tolerance required. Yeah, and it's

448
00:24:06,880 --> 00:24:08,960
Speaker 1: definitely going to be interesting to see what the supplied

449
00:24:08,960 --> 00:24:11,600
Speaker 1: demand kind of dynamic right now, because a lot of

450
00:24:11,600 --> 00:24:14,880
Speaker 1: people have been talking about bitcoin is being sort of

451
00:24:14,920 --> 00:24:20,239
Speaker 1: a century version of that's where I was going with it.

452
00:24:20,440 --> 00:24:22,760
Speaker 1: So you know, people are saying, you know, we conbind

453
00:24:22,880 --> 00:24:24,919
Speaker 1: that while we wait, and people have been using that

454
00:24:24,960 --> 00:24:28,639
Speaker 1: as a proxy, and I'm wondering in some ways of

455
00:24:28,960 --> 00:24:33,000
Speaker 1: whether that reduces gold's appeal as a haven trade because

456
00:24:33,000 --> 00:24:37,600
Speaker 1: people are finding other havens that are decentralized and uncorrelated

457
00:24:37,960 --> 00:24:40,960
Speaker 1: and makes it more of a currency and commodity play

458
00:24:41,000 --> 00:24:44,200
Speaker 1: than it has well. And also it becomes a situation sometimes,

459
00:24:44,280 --> 00:24:47,960
Speaker 1: I think where the marketing or the publicity around bitcoin

460
00:24:48,840 --> 00:24:53,399
Speaker 1: tries to appeal to the retail investor in a way

461
00:24:53,440 --> 00:24:57,240
Speaker 1: that some gold advocates also try to appeal to those

462
00:24:57,280 --> 00:25:01,840
Speaker 1: potential investors by trying to paint paper currency and fiat

463
00:25:01,960 --> 00:25:05,560
Speaker 1: money as being something that will disappear within their lifetime

464
00:25:05,760 --> 00:25:08,240
Speaker 1: or indeed, you know what happens if the world ends,

465
00:25:08,240 --> 00:25:10,800
Speaker 1: You're gonna need something other than money backed by a

466
00:25:10,960 --> 00:25:14,359
Speaker 1: government in order to buy and sell the things you need,

467
00:25:14,680 --> 00:25:17,320
Speaker 1: just to give you some sort of reference points. Gold

468
00:25:17,720 --> 00:25:20,960
Speaker 1: spot gold prices up about ten percent so far this year,

469
00:25:21,080 --> 00:25:24,600
Speaker 1: so not terrible, right, exceeding bonds right, But a lot

470
00:25:24,680 --> 00:25:27,040
Speaker 1: of this has been driven by the commodities rally, A

471
00:25:27,040 --> 00:25:29,000
Speaker 1: lot of it has been driven by the weaker dollar.

472
00:25:29,400 --> 00:25:32,760
Speaker 1: There is an expectation that that weaker dollar will not continue,

473
00:25:32,800 --> 00:25:35,800
Speaker 1: Mike Doodas going forward for the rest of the this

474
00:25:35,920 --> 00:25:38,439
Speaker 1: year and perhaps the next six months out. What do

475
00:25:38,520 --> 00:25:41,520
Speaker 1: you think will sort of be the main driver for prices?

476
00:25:41,560 --> 00:25:44,320
Speaker 1: Do you think that if if the dollar sort of

477
00:25:44,359 --> 00:25:49,440
Speaker 1: stays where it is with respect to it's uh competing currencies,

478
00:25:49,880 --> 00:25:53,440
Speaker 1: where the gold prices go. I think if dollars stays

479
00:25:53,720 --> 00:25:57,600
Speaker 1: where it is, I think gold probably creates bit higher. Um,

480
00:25:57,960 --> 00:26:01,280
Speaker 1: there's still some speculation said and what not only what

481
00:26:01,400 --> 00:26:03,080
Speaker 1: they may do in December, but what a new Fed

482
00:26:03,160 --> 00:26:06,439
Speaker 1: governor Shairman of the said might do for for gold prices.

483
00:26:06,440 --> 00:26:09,120
Speaker 1: So there could be some near term volatility there. But

484
00:26:09,119 --> 00:26:11,919
Speaker 1: but those days where there's I think gold prices drift higher,

485
00:26:12,359 --> 00:26:15,280
Speaker 1: not dramatically higher, as you know, as we can also

486
00:26:15,280 --> 00:26:17,359
Speaker 1: see when you think about gold as a safe haven,

487
00:26:17,680 --> 00:26:19,399
Speaker 1: if the equity markets were to correct, or if the

488
00:26:19,400 --> 00:26:21,880
Speaker 1: bond market spikes a bit here to get some risk

489
00:26:21,960 --> 00:26:25,440
Speaker 1: of trades off the table. What about investing in gold

490
00:26:25,480 --> 00:26:28,159
Speaker 1: stocks right now or even in mining shares? You know,

491
00:26:28,200 --> 00:26:30,240
Speaker 1: we at the cycle. I mean, I keep looking at Freeport.

492
00:26:30,280 --> 00:26:32,040
Speaker 1: I'm sorry of you know, keep banging the table on

493
00:26:32,119 --> 00:26:34,639
Speaker 1: this one. But you know it's fifteen dollars a share

494
00:26:34,720 --> 00:26:37,439
Speaker 1: the stocks of what about thirteen so far? The thirteen

495
00:26:37,520 --> 00:26:40,320
Speaker 1: percent so far this year. It was led left for

496
00:26:40,440 --> 00:26:44,840
Speaker 1: dead year ago, right in January, year ago January, and

497
00:26:45,480 --> 00:26:47,639
Speaker 1: you have made some pretty decent money since then. But

498
00:26:47,720 --> 00:26:50,600
Speaker 1: it has not been a straight shot. No, it has,

499
00:26:50,640 --> 00:26:52,959
Speaker 1: and I think we are we are through the phase

500
00:26:53,040 --> 00:26:55,720
Speaker 1: one of the early recovery cycle in mining, in the

501
00:26:55,760 --> 00:26:58,720
Speaker 1: commodities in general, in the mining stocks in particular, we've

502
00:26:58,760 --> 00:27:01,240
Speaker 1: had some tremendous moves off the bottom to from January

503
00:27:01,280 --> 00:27:04,240
Speaker 1: for two thousand and sixteen. I think report stock has

504
00:27:04,240 --> 00:27:08,760
Speaker 1: been held back by this Indonesian negotiation and the uncertainty

505
00:27:08,760 --> 00:27:11,119
Speaker 1: how it's willing to play out. Once that gets settled,

506
00:27:11,160 --> 00:27:14,760
Speaker 1: I think there's significant upside and Freeport share price because

507
00:27:14,840 --> 00:27:17,960
Speaker 1: copper prices, in our view um look to be very

508
00:27:18,040 --> 00:27:21,240
Speaker 1: supportive to move higher, not just on a near term

509
00:27:21,240 --> 00:27:23,439
Speaker 1: basis of meeting UM a long term basis, as demand

510
00:27:23,480 --> 00:27:25,760
Speaker 1: picks up and the supply issues that we talked about

511
00:27:25,760 --> 00:27:29,679
Speaker 1: tim starts to show up in more detail in two thousand, eighteen,

512
00:27:29,720 --> 00:27:33,919
Speaker 1: nineteen and twenty. When you talk about the supply demand dynamic,

513
00:27:34,480 --> 00:27:37,000
Speaker 1: is are we running out of supplies of the precious

514
00:27:37,000 --> 00:27:41,200
Speaker 1: metals right now? Is demand outstripping what's available? UM, We're

515
00:27:41,200 --> 00:27:44,200
Speaker 1: not running out of supply. Supply is getting more difficult

516
00:27:44,280 --> 00:27:48,639
Speaker 1: to to extract. We had a capital spending decline and

517
00:27:48,760 --> 00:27:50,840
Speaker 1: deficit over the past five or six years of the

518
00:27:50,880 --> 00:27:53,520
Speaker 1: mining industry, and so that that is going to limit

519
00:27:53,560 --> 00:27:55,560
Speaker 1: the amount of new supplies that come into the market.

520
00:27:56,560 --> 00:27:59,520
Speaker 1: What's different about gold versus some other commodities like copper

521
00:27:59,600 --> 00:28:02,800
Speaker 1: letters is that you know, gold is still around above

522
00:28:02,880 --> 00:28:06,440
Speaker 1: ground throughout the world. There's probably ten years worth of

523
00:28:06,480 --> 00:28:11,480
Speaker 1: annual demand in central bank vaults globally, and all the

524
00:28:11,480 --> 00:28:12,960
Speaker 1: goal that's ever been mine in the world is still

525
00:28:13,000 --> 00:28:16,760
Speaker 1: around technically somewhere. So it tries gold prices isn't as

526
00:28:16,840 --> 00:28:19,240
Speaker 1: much supply demand though it does help, but it's much

527
00:28:19,240 --> 00:28:22,800
Speaker 1: more sentiment and from a macro basis, also the inflationary

528
00:28:22,840 --> 00:28:26,080
Speaker 1: expectations and a dollar touch on copper lend and zinc

529
00:28:26,080 --> 00:28:30,119
Speaker 1: and those medals. Um we anticipate demand's gonna supply, and

530
00:28:30,160 --> 00:28:34,760
Speaker 1: that's gonna lead to tighter to higher deficits, higher prices,

531
00:28:34,800 --> 00:28:37,080
Speaker 1: and eventually more investment. But that's gonna take some time

532
00:28:37,080 --> 00:28:39,880
Speaker 1: to come, all right, Thanks very much, Mike Dodass. He

533
00:28:40,040 --> 00:28:43,280
Speaker 1: is a partner Medals and Mining Analysts for Vertical Research,

534
00:28:43,320 --> 00:28:46,600
Speaker 1: speaking about gold and other medals, as well as that

535
00:28:46,720 --> 00:28:50,760
Speaker 1: Grassberg mine that is owned by the company Freeport mcmaran.

536
00:28:53,720 --> 00:28:56,240
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.

537
00:28:56,600 --> 00:29:00,480
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,

538
00:29:00,640 --> 00:29:04,080
Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm

539
00:29:04,120 --> 00:29:07,680
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa

540
00:29:07,720 --> 00:29:10,840
Speaker 1: abramowits one before the podcast. You can always catch us

541
00:29:10,880 --> 00:29:12,480
Speaker 1: worldwide on Bluebirg Radio