1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,240 --> 00:00:12,119 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 3 00:00:12,200 --> 00:00:14,920 Speaker 2: weekdays at ten am Eastern on Apple car Playing and 4 00:00:15,040 --> 00:00:15,840 Speaker 2: Broyd Auto. 5 00:00:15,640 --> 00:00:17,040 Speaker 3: With the Bloomberg Business App. 6 00:00:17,079 --> 00:00:20,279 Speaker 2: Listen on demand wherever you get your podcasts, or watch 7 00:00:20,360 --> 00:00:22,280 Speaker 2: us live on YouTube. 8 00:00:23,239 --> 00:00:26,520 Speaker 4: Molly, A lot of movement here in a commodity's gold off, 9 00:00:26,600 --> 00:00:28,640 Speaker 4: big Bitcoin. 10 00:00:28,360 --> 00:00:31,640 Speaker 5: Ripping, absolutely ripping. So who do we eaty two thousand? 11 00:00:31,840 --> 00:00:32,040 Speaker 3: Yes? 12 00:00:32,240 --> 00:00:32,960 Speaker 6: So who do we talk to? 13 00:00:33,040 --> 00:00:36,920 Speaker 4: We talked to Michael bloone Miami, Mike, Senior Commodity Strategies 14 00:00:36,960 --> 00:00:40,840 Speaker 4: for Bloomberg Intelligence. Safely esconced in Miami. He was doing 15 00:00:40,920 --> 00:00:43,760 Speaker 4: Miami before it was really chic. He was down there early. 16 00:00:44,120 --> 00:00:47,080 Speaker 4: Mike talked to us first about Bitcoin eighty two. We're 17 00:00:47,120 --> 00:00:49,640 Speaker 4: pushing up against eighty three thousand dollars per token. 18 00:00:49,920 --> 00:00:50,640 Speaker 6: What's happening here? 19 00:00:51,680 --> 00:00:54,640 Speaker 7: The world changed last Tuesday and it's almost a perfect 20 00:00:54,840 --> 00:00:58,040 Speaker 7: storm for bitcoin. So think of all the anti bitcoin 21 00:00:58,200 --> 00:01:02,680 Speaker 7: regulation and pushback from the pre Use Administration and Gary Gensler, 22 00:01:03,120 --> 00:01:06,720 Speaker 7: that's completely flipped. It's delightful to see for some of 23 00:01:06,840 --> 00:01:08,800 Speaker 7: us who wrote about this five years ago that any 24 00:01:08,959 --> 00:01:12,240 Speaker 7: US representative or regulator that did not understand that the 25 00:01:12,280 --> 00:01:14,720 Speaker 7: base layer of this place was actually organically went for 26 00:01:14,800 --> 00:01:19,040 Speaker 7: the dollar most widely trading bitcoin cryptos not bitcoin. It's 27 00:01:19,040 --> 00:01:22,760 Speaker 7: actually tether. The dollar token was Finally, it's delightful to 28 00:01:22,800 --> 00:01:25,280 Speaker 7: see them figuring it out. What's really happening in this space. 29 00:01:25,319 --> 00:01:28,840 Speaker 7: So it's nothing but good for bitcoin. The market's getting frothy, 30 00:01:28,959 --> 00:01:30,760 Speaker 7: but it had a good period of six months which 31 00:01:30,800 --> 00:01:33,080 Speaker 7: just hung out. Now it's just taking off and you're 32 00:01:33,120 --> 00:01:36,280 Speaker 7: seeing massive inflows in ETFs. People can get exposed to 33 00:01:36,400 --> 00:01:39,240 Speaker 7: it and it's kind of kicking into the little match. 34 00:01:39,440 --> 00:01:42,240 Speaker 7: Is a digital goal or is leverage stock market? Right now, 35 00:01:42,280 --> 00:01:45,119 Speaker 7: it's stock workers making new high bitcoins, making new high 36 00:01:45,160 --> 00:01:46,680 Speaker 7: bitcoins back to it leadership role. 37 00:01:47,360 --> 00:01:50,320 Speaker 8: Mike, tell me how much of this trade right now 38 00:01:50,480 --> 00:01:54,000 Speaker 8: is dependent on Gary Gensler not being in the SEC 39 00:01:54,840 --> 00:01:56,080 Speaker 8: and it can trump? 40 00:01:56,120 --> 00:01:56,840 Speaker 5: Honestly do that? 41 00:01:58,120 --> 00:02:00,520 Speaker 7: Oh sure, well he's going to be gone within months. 42 00:02:00,880 --> 00:02:04,600 Speaker 7: It's just a question of when. He's very unfavorable SEC chairman. 43 00:02:04,680 --> 00:02:06,320 Speaker 7: He made a lot of enemies on both sides of 44 00:02:06,360 --> 00:02:08,880 Speaker 7: the aisle, but this is just part of what got 45 00:02:08,960 --> 00:02:11,040 Speaker 7: him elected. It's the key thing I think the market's 46 00:02:11,080 --> 00:02:14,880 Speaker 7: figuring out is let's not underestimate this. In Bolden next president. 47 00:02:15,000 --> 00:02:19,600 Speaker 7: He has been re elected by completely decisive election, and 48 00:02:19,720 --> 00:02:21,880 Speaker 7: his mantra everything he said in his campaign, I'd say 49 00:02:21,919 --> 00:02:24,280 Speaker 7: be careful to disagree with. For instance, I'm reading the 50 00:02:24,360 --> 00:02:27,600 Speaker 7: latest book for Robert Leiittheiser, who was his past trade representative, 51 00:02:27,960 --> 00:02:31,680 Speaker 7: and it's called no trade is Free, and we shouldn't 52 00:02:31,680 --> 00:02:33,600 Speaker 7: expect him to do what he says, partly because he 53 00:02:33,600 --> 00:02:36,679 Speaker 7: has carte blanche at least to the midterms, and there's 54 00:02:36,760 --> 00:02:39,560 Speaker 7: still pretty significant trade depthsits So from a commodity standpoint, 55 00:02:39,600 --> 00:02:43,240 Speaker 7: it's very bearish. From a bitcoin standpoint, it's very bullish, 56 00:02:43,280 --> 00:02:45,480 Speaker 7: partly because he tilted over and he got the bitcoin 57 00:02:45,560 --> 00:02:47,480 Speaker 7: people on his side. I don't think he wants to 58 00:02:47,600 --> 00:02:48,160 Speaker 7: upset them. 59 00:02:49,200 --> 00:02:52,480 Speaker 4: Mike, I can't even remember the last time we talked 60 00:02:52,480 --> 00:02:57,840 Speaker 4: about valuation and how you're supposed to value bitcoin. Just 61 00:02:57,919 --> 00:03:00,000 Speaker 4: refresh our memory on how you think about that whole consent. 62 00:03:00,919 --> 00:03:05,440 Speaker 7: Yeah, well, in pectical analysis, so I mean, I like 63 00:03:05,520 --> 00:03:07,919 Speaker 7: to compare it versus gold right now I'm looking at it. 64 00:03:08,000 --> 00:03:11,640 Speaker 7: It's as some hedge fund managers call it, the fastest 65 00:03:11,680 --> 00:03:13,960 Speaker 7: horse in the race. I mean versus all risk acids. 66 00:03:14,240 --> 00:03:16,919 Speaker 7: The risk right now is bitcoins making new record highst 67 00:03:16,919 --> 00:03:19,840 Speaker 7: but it's correlation sixty day correlation to this SMB five 68 00:03:19,960 --> 00:03:22,240 Speaker 7: hundred ato point seven or so is the highest ever 69 00:03:22,440 --> 00:03:25,000 Speaker 7: on the way up, So it's a leading risk acid. 70 00:03:25,080 --> 00:03:28,120 Speaker 7: It's rice for all this optimism about us, you know, 71 00:03:28,600 --> 00:03:31,639 Speaker 7: the Trump election, but markets are so expensive ready versus 72 00:03:31,639 --> 00:03:34,600 Speaker 7: when he was elected twenty sixteen, they were very low. 73 00:03:34,760 --> 00:03:38,160 Speaker 7: Certainly bitcoin was. So there's so many ways, but stocks 74 00:03:38,200 --> 00:03:39,760 Speaker 7: to use is one way to do it. The key 75 00:03:39,840 --> 00:03:42,360 Speaker 7: thing that I like to say is there's definable diminishing 76 00:03:42,480 --> 00:03:46,640 Speaker 7: supply and you can see that by just the code, 77 00:03:46,680 --> 00:03:49,120 Speaker 7: and there's increasing demand and adoption, so over time the 78 00:03:49,160 --> 00:03:51,600 Speaker 7: price must go up. And right now it had a 79 00:03:51,720 --> 00:03:56,240 Speaker 7: major switch flip that this the unexpected election of mister 80 00:03:56,320 --> 00:03:59,360 Speaker 7: Trump has just flipped it over to the bullish spirits 81 00:03:59,360 --> 00:03:59,760 Speaker 7: at the moment. 82 00:04:00,040 --> 00:04:02,240 Speaker 8: Now, this is something I was really surprised to read 83 00:04:02,360 --> 00:04:05,560 Speaker 8: in one of our stories that bitcoin now ranks only 84 00:04:05,760 --> 00:04:08,760 Speaker 8: second to the fossil fuel industry, or rather the crypto 85 00:04:08,840 --> 00:04:12,360 Speaker 8: industry at large, and total money deployed since the twenty 86 00:04:12,480 --> 00:04:16,440 Speaker 8: ten Supreme Court decision that limited funds on campaign political 87 00:04:16,480 --> 00:04:20,440 Speaker 8: spending that's shocking anyone else to think that crypto is 88 00:04:20,560 --> 00:04:23,920 Speaker 8: number two to fossil fuels. Where is all this cap 89 00:04:24,440 --> 00:04:26,240 Speaker 8: campaign influence money coming from? 90 00:04:26,279 --> 00:04:26,440 Speaker 7: Mike? 91 00:04:26,440 --> 00:04:27,800 Speaker 5: Who are the big spenders here? 92 00:04:28,680 --> 00:04:30,279 Speaker 7: So well, I don't know exactly who they are. I mean, 93 00:04:30,440 --> 00:04:33,120 Speaker 7: last time we heard from the bidenminstration, Sam Bankman Freed 94 00:04:33,200 --> 00:04:35,360 Speaker 7: was the number two donator. That didn't work out so well. 95 00:04:35,480 --> 00:04:38,960 Speaker 7: That's why partly the bidenministration pushed back after the collapse 96 00:04:39,000 --> 00:04:41,200 Speaker 7: at the FTX. The bottom line is, let's look at 97 00:04:41,240 --> 00:04:46,920 Speaker 7: an ETPs now ETFs Bitcoin's about ninety two billion. Total 98 00:04:47,080 --> 00:04:49,800 Speaker 7: gold ETPs are about two hundred and thirty billions, so 99 00:04:49,880 --> 00:04:52,520 Speaker 7: let's catching up fast. And remember this Bitcoin's only been 100 00:04:52,560 --> 00:04:55,600 Speaker 7: trading in exchange traded funds for a few years. Gold's 101 00:04:55,640 --> 00:04:58,520 Speaker 7: been almost twenty years in exchange traded funds. So it's 102 00:04:58,760 --> 00:05:02,120 Speaker 7: just the you know, the digital goal is taken on 103 00:05:02,200 --> 00:05:04,239 Speaker 7: the old analog goal, and the question where it stops. 104 00:05:04,279 --> 00:05:07,080 Speaker 7: The way I see it right now is yes, everything 105 00:05:07,200 --> 00:05:09,560 Speaker 7: looks so bullish, it's just a little bit expensive. But 106 00:05:09,640 --> 00:05:12,600 Speaker 7: I published today is bitcoin digital gold or is it 107 00:05:12,760 --> 00:05:15,400 Speaker 7: leverage baiting? Right now? It's much more leveraged version the 108 00:05:15,440 --> 00:05:19,080 Speaker 7: stock market and animal spirits are in full force. 109 00:05:19,720 --> 00:05:22,840 Speaker 4: Uh you mentioned gold, Mike. Gold is down about two 110 00:05:22,880 --> 00:05:26,279 Speaker 4: point three percent today. What's the trade here in gold? 111 00:05:26,400 --> 00:05:28,200 Speaker 4: Is this just a taking some money off the table 112 00:05:28,200 --> 00:05:28,720 Speaker 4: after a big. 113 00:05:28,680 --> 00:05:33,440 Speaker 7: Run, potential lesson of geopolitical risks, the definitive election of 114 00:05:33,480 --> 00:05:37,400 Speaker 7: Donald Trump. Gold was way overdue for a correction of 115 00:05:37,520 --> 00:05:40,480 Speaker 7: already hearing of inklings of mister Putin and mister Trump 116 00:05:40,560 --> 00:05:43,800 Speaker 7: talking this last weekend. And if there's any you know, 117 00:05:44,200 --> 00:05:46,240 Speaker 7: Dayton coming in the world, that's going to be a 118 00:05:46,320 --> 00:05:48,720 Speaker 7: major pressure factor for gold. But in the meantime, gold 119 00:05:48,760 --> 00:05:50,560 Speaker 7: on the one year basis is still up about the 120 00:05:50,600 --> 00:05:52,919 Speaker 7: same as S and P five hundred, around thirty five percent. 121 00:05:53,160 --> 00:05:55,799 Speaker 7: It's way overdue for a correction. I'm looking at twenty 122 00:05:55,920 --> 00:05:58,200 Speaker 7: four to twenty five hundred as good support level as 123 00:05:58,200 --> 00:06:00,360 Speaker 7: it could come back to. It just got way too bensive. 124 00:06:00,600 --> 00:06:03,920 Speaker 7: So at its peak I think that was early October, 125 00:06:04,040 --> 00:06:05,920 Speaker 7: is up thirty nine percent of the year. That would 126 00:06:05,960 --> 00:06:07,840 Speaker 7: have been the best year since nineteen seventy nine. So 127 00:06:07,880 --> 00:06:10,640 Speaker 7: it's a bull market pulling back. But then looking forward, 128 00:06:10,760 --> 00:06:13,320 Speaker 7: if there's much if there's a major shift in what's 129 00:06:13,400 --> 00:06:16,680 Speaker 7: happening in China, I mean, mister Z kind of filtering 130 00:06:16,720 --> 00:06:19,880 Speaker 7: away from President Putin maybe towards the US. That's bad 131 00:06:19,960 --> 00:06:22,280 Speaker 7: for gold, But overall it's the key thing is there's 132 00:06:22,279 --> 00:06:25,520 Speaker 7: still some major geopolitical factors supporting going to the bottom line, 133 00:06:25,560 --> 00:06:29,960 Speaker 7: like say, for gold, is gold will be Gold's major catalyst. 134 00:06:30,040 --> 00:06:32,320 Speaker 7: I think to go hires at some point when we 135 00:06:32,400 --> 00:06:34,640 Speaker 7: see the next bear market in US stock market, maybe 136 00:06:34,720 --> 00:06:36,240 Speaker 7: God help us if that ever happens again. 137 00:06:36,839 --> 00:06:39,120 Speaker 6: All right, Mike, thanks so much for joining us. As always, 138 00:06:39,160 --> 00:06:39,719 Speaker 6: Mike mclohan. 139 00:06:39,760 --> 00:06:43,320 Speaker 4: He's a senior commodity strategist for Bloomberg Intelligence. 140 00:06:43,400 --> 00:06:45,600 Speaker 6: B I go go check out all his research on 141 00:06:45,800 --> 00:06:46,640 Speaker 6: all commodities. 142 00:06:46,880 --> 00:06:49,640 Speaker 4: He covers everything from the sauce, you know, the grains, 143 00:06:49,720 --> 00:06:52,360 Speaker 4: to the metals to the all kinds of stuff, including 144 00:06:52,440 --> 00:06:54,440 Speaker 4: a bitcoin, so he kind of has it all covered there. 145 00:06:56,000 --> 00:06:59,840 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 146 00:07:00,040 --> 00:07:02,880 Speaker 2: weekdays at ten am Eastern on applecar. 147 00:07:02,520 --> 00:07:05,240 Speaker 3: Play and Android Auto with a Bloomberg Business act. 148 00:07:05,400 --> 00:07:08,200 Speaker 2: You can also listen live on Amazon Alexa from our 149 00:07:08,240 --> 00:07:12,640 Speaker 2: flagship New York station, Just Say Alexa Play Bloomberg eleven thirty. 150 00:07:14,480 --> 00:07:18,400 Speaker 4: Kim Farrest joins US founder and chief investment Officer, Boca 151 00:07:18,680 --> 00:07:24,680 Speaker 4: Capital Partners on zoom from Pittsburgh, one of my favorite towns. So, Kim, 152 00:07:24,760 --> 00:07:28,720 Speaker 4: you woke up with your team on Wednesday last week. 153 00:07:29,680 --> 00:07:32,040 Speaker 4: What changed for you guys, if anything? And your outlook 154 00:07:32,120 --> 00:07:34,480 Speaker 4: for markets if anything? If anything? 155 00:07:35,280 --> 00:07:40,840 Speaker 9: If anything, yeah, well, really nothing, because our few is 156 00:07:40,920 --> 00:07:44,280 Speaker 9: the long term. We believe strongly that if you have 157 00:07:44,400 --> 00:07:46,800 Speaker 9: money in the market, it should be in there for 158 00:07:46,840 --> 00:07:48,960 Speaker 9: a minimum of three to five years. You know, you 159 00:07:49,000 --> 00:07:52,200 Speaker 9: can think about harvesting what we do today in three 160 00:07:52,280 --> 00:07:53,840 Speaker 9: to five years, so that. 161 00:07:54,000 --> 00:07:54,320 Speaker 7: Kind of. 162 00:07:55,960 --> 00:07:58,720 Speaker 9: You know, time heals a lot of wounds, we'll just say, 163 00:07:59,360 --> 00:08:02,640 Speaker 9: and makes things better in the long run, and you 164 00:08:02,840 --> 00:08:06,120 Speaker 9: just have to work with what you have. So that's 165 00:08:06,160 --> 00:08:09,640 Speaker 9: what we're doing. And actually nothing changed because we were 166 00:08:09,680 --> 00:08:13,480 Speaker 9: believers in having that Barbell strategy of large cap and 167 00:08:13,640 --> 00:08:18,640 Speaker 9: small cap together. Small cap has been suffering for a 168 00:08:18,800 --> 00:08:22,800 Speaker 9: myriad of reasons, and we're looking at and by small cap, 169 00:08:22,840 --> 00:08:25,080 Speaker 9: I mean companies that have a billion or more in 170 00:08:25,160 --> 00:08:27,960 Speaker 9: market cap. The microcaps were not at all interested in. 171 00:08:28,680 --> 00:08:31,920 Speaker 9: So we think that, you know, the large caps have 172 00:08:32,000 --> 00:08:34,160 Speaker 9: had a great run over the last couple of years, 173 00:08:34,640 --> 00:08:37,600 Speaker 9: and it looks like maybe small cap will have its 174 00:08:37,720 --> 00:08:40,240 Speaker 9: moment in the sun coming up in the next couple 175 00:08:40,280 --> 00:08:40,679 Speaker 9: of years. 176 00:08:41,400 --> 00:08:43,240 Speaker 8: So are you saying him that, like, you're not really 177 00:08:43,320 --> 00:08:45,839 Speaker 8: buying into the Trump trade. You're not out there, you know, 178 00:08:46,040 --> 00:08:48,360 Speaker 8: buying it's on a bitcoin and silling treasuries right now. 179 00:08:49,640 --> 00:08:51,880 Speaker 9: I'm sorry, I couldn't even let you get that out. 180 00:08:52,280 --> 00:08:56,319 Speaker 9: Buying a lot of bitcoin. Well, you know, paint me 181 00:08:56,360 --> 00:09:01,560 Speaker 9: as old fashioned. While I think bitcoin is interesting to watch, 182 00:09:02,120 --> 00:09:03,719 Speaker 9: I don't really know how to value it. 183 00:09:03,840 --> 00:09:04,160 Speaker 2: I don't. 184 00:09:04,240 --> 00:09:08,440 Speaker 9: I heard your guest on the prior segment also kind 185 00:09:08,480 --> 00:09:12,800 Speaker 9: of reflecting that. And my big thing whenever I talk 186 00:09:12,920 --> 00:09:16,959 Speaker 9: to investors that we serve about bitcoin is whenever you 187 00:09:17,000 --> 00:09:19,280 Speaker 9: can pay your taxes with it, I'll pay attention to 188 00:09:19,440 --> 00:09:21,440 Speaker 9: it then because that means it's. 189 00:09:21,320 --> 00:09:22,520 Speaker 6: A real currency. 190 00:09:23,600 --> 00:09:25,800 Speaker 9: Right now, it is not a real currency. 191 00:09:26,760 --> 00:09:29,960 Speaker 4: So Kim, when when you look at the small caps, boy, 192 00:09:30,040 --> 00:09:32,920 Speaker 4: you've got to have a good call on management because 193 00:09:32,960 --> 00:09:35,839 Speaker 4: they have such an outsized influence on kind of just 194 00:09:35,960 --> 00:09:37,360 Speaker 4: kind of how the business develops. 195 00:09:38,679 --> 00:09:40,000 Speaker 6: You how do you do that with some of these 196 00:09:40,000 --> 00:09:40,959 Speaker 6: smaller cap companies? 197 00:09:42,160 --> 00:09:44,960 Speaker 9: Sure, well, first thing, we have time on our side. 198 00:09:45,040 --> 00:09:45,240 Speaker 7: Case. 199 00:09:45,320 --> 00:09:47,480 Speaker 9: I've been doing this for twenty four years and I 200 00:09:47,559 --> 00:09:50,559 Speaker 9: started on the cell side, where my director of research 201 00:09:50,720 --> 00:09:53,360 Speaker 9: encouraged me to have half small cap half large caps. 202 00:09:53,400 --> 00:09:56,360 Speaker 9: So I'm kind of in the groove on this. But 203 00:09:56,480 --> 00:09:59,040 Speaker 9: what I do is I look for several markers. First 204 00:09:59,080 --> 00:10:02,320 Speaker 9: of all, growth is always important. I am not strictly 205 00:10:02,440 --> 00:10:05,319 Speaker 9: a growth manager. I'm growth at a reasonable price, but 206 00:10:05,520 --> 00:10:08,480 Speaker 9: growth has to be there. And how do you get growth, Well, 207 00:10:08,559 --> 00:10:10,839 Speaker 9: you sell more product, and how do you do that 208 00:10:11,240 --> 00:10:14,680 Speaker 9: product marketing? It sounds really boring, but what it really 209 00:10:14,880 --> 00:10:19,079 Speaker 9: is is having a process to understand your client or 210 00:10:19,200 --> 00:10:23,080 Speaker 9: customer and then having a repeatable process where you make 211 00:10:24,400 --> 00:10:27,000 Speaker 9: your product and service to light your customer and they 212 00:10:27,080 --> 00:10:30,120 Speaker 9: come back over and over and over again. And can 213 00:10:30,200 --> 00:10:32,760 Speaker 9: it really be that easy? Yes, it is. It's hard 214 00:10:32,840 --> 00:10:34,400 Speaker 9: to spot and you have to do a lot of 215 00:10:34,480 --> 00:10:37,880 Speaker 9: fundamental research. But that's what we're doing, is looking for 216 00:10:38,040 --> 00:10:42,280 Speaker 9: that kind of perpetual money machine where businesses know what 217 00:10:42,640 --> 00:10:45,880 Speaker 9: clients they serve and every day get up and try 218 00:10:45,960 --> 00:10:47,160 Speaker 9: to serve them the best they can. 219 00:10:47,880 --> 00:10:50,360 Speaker 8: So it's like you've got you know, with earning season 220 00:10:51,160 --> 00:10:53,640 Speaker 8: still going on, we've got the retailers coming up next. 221 00:10:54,120 --> 00:10:55,679 Speaker 8: Just tell me about your view right now of the 222 00:10:55,800 --> 00:10:58,760 Speaker 8: US consumer, the economy, at large. You know, there's been 223 00:10:58,960 --> 00:11:01,360 Speaker 8: all these calls for slow down and it just hasn't 224 00:11:01,400 --> 00:11:04,560 Speaker 8: really been all that noticeable yet, and so. 225 00:11:04,720 --> 00:11:06,920 Speaker 5: Just wondering when you really think that tipping point's going 226 00:11:07,000 --> 00:11:07,320 Speaker 5: to happen. 227 00:11:08,400 --> 00:11:12,040 Speaker 9: Sure, well, I kind of have an unusual view of 228 00:11:12,120 --> 00:11:16,319 Speaker 9: the economy. I think there's a lot of slowness out 229 00:11:16,360 --> 00:11:18,800 Speaker 9: there if you go out and look for it, pretty 230 00:11:18,880 --> 00:11:22,080 Speaker 9: much in people who are in the lower two thirds 231 00:11:22,160 --> 00:11:27,040 Speaker 9: of the economic food chain, we'll just call it. There's 232 00:11:27,080 --> 00:11:30,280 Speaker 9: a lot of stress. If you walk around stores like Walmart, 233 00:11:30,360 --> 00:11:32,480 Speaker 9: you hear a lot of discussions about what we can 234 00:11:32,600 --> 00:11:35,319 Speaker 9: and can't buy as a family, And I think that 235 00:11:35,480 --> 00:11:37,120 Speaker 9: had a lot of influence. 236 00:11:36,720 --> 00:11:37,880 Speaker 6: On the election, right. 237 00:11:38,760 --> 00:11:41,439 Speaker 9: But more importantly, I'm not one of the people that 238 00:11:41,520 --> 00:11:45,000 Speaker 9: are necessarily looking for the next recession either. I think 239 00:11:45,080 --> 00:11:48,240 Speaker 9: we have these slowdowns now. And why do I think that, Well, 240 00:11:48,720 --> 00:11:53,719 Speaker 9: companies have software in place like CRM Salesforce to be 241 00:11:53,800 --> 00:11:57,200 Speaker 9: able to understand what their pipeline is, and then they 242 00:11:57,360 --> 00:12:02,120 Speaker 9: have erp or exotic or very fancy accounting systems that 243 00:12:02,320 --> 00:12:05,280 Speaker 9: let them match the supply and demand. So we have 244 00:12:05,440 --> 00:12:10,839 Speaker 9: seen over the past twenty years very few or no 245 00:12:11,320 --> 00:12:14,559 Speaker 9: recessions that were caused by too much capacity. 246 00:12:14,920 --> 00:12:15,040 Speaker 10: Right. 247 00:12:15,800 --> 00:12:19,040 Speaker 9: Companies are really good about being able to tailor that 248 00:12:19,240 --> 00:12:22,440 Speaker 9: to the conditions. But we do have crisis, and nobody 249 00:12:22,480 --> 00:12:25,679 Speaker 9: can really predict crises very well, or at least the 250 00:12:25,760 --> 00:12:29,720 Speaker 9: timing of them. They may see them coming. So that's 251 00:12:29,760 --> 00:12:31,240 Speaker 9: what I think the economy does. 252 00:12:31,200 --> 00:12:34,320 Speaker 6: Now, right, all right, Kim, thanks so much for joining us. 253 00:12:34,320 --> 00:12:36,480 Speaker 6: Really appreciated as always, Kim Farish. 254 00:12:36,520 --> 00:12:39,760 Speaker 4: She's a founder and chief investment officer Boca Capital Partners 255 00:12:40,480 --> 00:12:43,240 Speaker 4: in from Pittsburgh, PA, one of my favorite towns. 256 00:12:44,640 --> 00:12:48,480 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 257 00:12:48,600 --> 00:12:50,440 Speaker 2: weekdays at ten am Eastern. 258 00:12:50,160 --> 00:12:52,720 Speaker 3: On Apple car Playing and Broun Auto with the Bloomberg 259 00:12:52,800 --> 00:12:53,400 Speaker 3: Business app. 260 00:12:53,480 --> 00:12:56,640 Speaker 2: Listen on demand wherever you get your podcasts, or watch 261 00:12:56,760 --> 00:12:58,000 Speaker 2: us live on YouTube. 262 00:13:00,160 --> 00:13:03,319 Speaker 4: Today, Signia Group said it won't pursue a combination with 263 00:13:03,520 --> 00:13:08,040 Speaker 4: rival Ensure Humana after reports two companies had renewed discussions. 264 00:13:08,080 --> 00:13:10,520 Speaker 4: Signa shares jump by eight point seven at the New 265 00:13:10,600 --> 00:13:13,240 Speaker 4: York market open, while shares in Humanity dropped by six percent, 266 00:13:13,320 --> 00:13:17,040 Speaker 4: So not so much here for this particular deal. 267 00:13:17,559 --> 00:13:19,120 Speaker 6: Glenn Losev Joints is. 268 00:13:19,120 --> 00:13:21,760 Speaker 4: He's a senior Equiano's covering a healthcare services space for 269 00:13:22,360 --> 00:13:25,440 Speaker 4: Bloomberg Intelligency Joints was here in a New York Bloomberg 270 00:13:25,480 --> 00:13:28,839 Speaker 4: Interactive Brokers studio in New York. So Glenn talk to 271 00:13:28,960 --> 00:13:32,080 Speaker 4: us about this deal that did not happen between Signa 272 00:13:32,240 --> 00:13:32,840 Speaker 4: and Humana. 273 00:13:34,320 --> 00:13:37,520 Speaker 11: Yes, so this is the second try. If it wasn't 274 00:13:37,559 --> 00:13:42,320 Speaker 11: the rumor the first time the companies tried to merge 275 00:13:42,800 --> 00:13:47,079 Speaker 11: at the end of last year, it also didn't take 276 00:13:47,160 --> 00:13:53,480 Speaker 11: long to sort of to fall apart. This was the 277 00:13:53,600 --> 00:13:58,280 Speaker 11: last the second time, and you know, we don't exactly 278 00:13:58,400 --> 00:14:02,439 Speaker 11: know what happened, but my view was that the the 279 00:14:02,600 --> 00:14:09,000 Speaker 11: takeout price for Humana the companies will not agree upon, 280 00:14:09,200 --> 00:14:15,320 Speaker 11: and that's probably the reason over the last eleven month 281 00:14:15,600 --> 00:14:19,720 Speaker 11: Humana lost half of its market cap. You know, it's 282 00:14:19,840 --> 00:14:23,280 Speaker 11: very difficult. Obviously Signa is a much better place to 283 00:14:23,880 --> 00:14:26,760 Speaker 11: to sort of to pitch the merger, but also when 284 00:14:26,800 --> 00:14:30,320 Speaker 11: you were trading it twice the market cap just a 285 00:14:30,400 --> 00:14:33,800 Speaker 11: few months ago, you know, it's difficult to agree on 286 00:14:33,920 --> 00:14:35,160 Speaker 11: price and they. 287 00:14:35,120 --> 00:14:38,680 Speaker 8: Couldn't really adjust that at this stage, you know, with 288 00:14:39,720 --> 00:14:43,200 Speaker 8: with Humanis stock now having dropped so much in the meantime, That's. 289 00:14:43,040 --> 00:14:45,440 Speaker 11: What I'm thinking. This is it wasn't confirmed. The only 290 00:14:45,520 --> 00:14:48,960 Speaker 11: thing that Signa said that they're not pursuing the merger, 291 00:14:50,000 --> 00:14:53,840 Speaker 11: but price is probably the reason for it, the agreement 292 00:14:53,920 --> 00:14:54,400 Speaker 11: and the price. 293 00:14:54,440 --> 00:14:54,920 Speaker 3: All right, so. 294 00:14:56,400 --> 00:15:03,040 Speaker 6: Is insurance company? Yes, Humana is a healthcare services provider. 295 00:15:03,240 --> 00:15:07,760 Speaker 11: No, so, Signa and Humana are both health insurance insurance. 296 00:15:08,120 --> 00:15:12,640 Speaker 11: Signa has a huge pharmaceutical benefit manager express Script. If 297 00:15:12,680 --> 00:15:14,920 Speaker 11: you remember they are a few years ago, it's one 298 00:15:15,000 --> 00:15:19,400 Speaker 11: of the top three human and and also seeing that 299 00:15:19,680 --> 00:15:25,480 Speaker 11: focuses more on the commercial business, which is employer employer 300 00:15:25,880 --> 00:15:30,520 Speaker 11: based UH insurance, while Humana is focusing on medicare people 301 00:15:30,560 --> 00:15:31,880 Speaker 11: who are over sixty five? 302 00:15:32,280 --> 00:15:32,640 Speaker 3: Got it? 303 00:15:33,320 --> 00:15:35,480 Speaker 8: And you got to think now, like Signa's sack up 304 00:15:35,520 --> 00:15:38,440 Speaker 8: a good bit today. They've done a lot of share buybacks. 305 00:15:38,600 --> 00:15:40,600 Speaker 8: Would think that that's going to be now the strategy 306 00:15:40,680 --> 00:15:44,080 Speaker 8: going forward back to those Yeah, again, what else do 307 00:15:44,120 --> 00:15:45,600 Speaker 8: you do when you're not about to spend a couple 308 00:15:45,640 --> 00:15:47,360 Speaker 8: billion dollars on another company? 309 00:15:48,160 --> 00:15:53,440 Speaker 11: You you basically yeah, but you're basically they're they're they're 310 00:15:53,480 --> 00:15:59,560 Speaker 11: expanding their UH sort of expanding their pharmacy business UH 311 00:16:00,040 --> 00:16:03,800 Speaker 11: part of the express Script. That's where the tailwans are 312 00:16:04,000 --> 00:16:08,400 Speaker 11: over the next few years, and just stugging along trying 313 00:16:08,480 --> 00:16:12,880 Speaker 11: to you know, cut costs and improve revenue. That's basically 314 00:16:12,960 --> 00:16:13,760 Speaker 11: the business model. 315 00:16:13,840 --> 00:16:14,160 Speaker 10: All right. 316 00:16:14,280 --> 00:16:17,760 Speaker 4: So healthcare investors, they woke up Wednesday morning last week, 317 00:16:19,120 --> 00:16:22,040 Speaker 4: what did the election mean for the health care space? 318 00:16:22,320 --> 00:16:25,520 Speaker 11: So for healthcare space, it's very broad. But for example, 319 00:16:25,560 --> 00:16:31,840 Speaker 11: for health insurance, basically it's Trump's win is positive for 320 00:16:31,960 --> 00:16:36,120 Speaker 11: Medicare advantage companies rule of time sort of like Humana, 321 00:16:36,800 --> 00:16:43,480 Speaker 11: And there's an overhang of for Medicaid insurance companies like 322 00:16:43,600 --> 00:16:48,280 Speaker 11: Stina and Malina because of the work requirements, possibilities and 323 00:16:48,400 --> 00:16:53,960 Speaker 11: about my care, about my care subsidies expiring at the 324 00:16:54,080 --> 00:16:55,840 Speaker 11: end of the end of the. 325 00:16:57,640 --> 00:17:01,280 Speaker 5: Four His presidency is also obviously positive for m and A. 326 00:17:01,600 --> 00:17:04,560 Speaker 8: Any chance that you know, this deal gets revisited again 327 00:17:04,760 --> 00:17:06,920 Speaker 8: or SIGNA maybe has another target. 328 00:17:06,960 --> 00:17:10,359 Speaker 11: There is always a chance for this deal to be 329 00:17:10,480 --> 00:17:11,320 Speaker 11: revisited again. 330 00:17:11,600 --> 00:17:13,760 Speaker 8: We got to give Paul a chance to live out 331 00:17:13,840 --> 00:17:16,200 Speaker 8: his stream here being a healthcare of an a banker. 332 00:17:16,560 --> 00:17:16,720 Speaker 3: Right. 333 00:17:17,040 --> 00:17:26,639 Speaker 11: Over All, overall, managed care industry is facing headwinds. You know, 334 00:17:26,800 --> 00:17:31,560 Speaker 11: costs are going up government that is through the roof, 335 00:17:32,000 --> 00:17:34,040 Speaker 11: so they're not going to get paid as much as 336 00:17:34,080 --> 00:17:39,200 Speaker 11: they did five years ago, so it's a marching contraction possibility, 337 00:17:39,960 --> 00:17:45,720 Speaker 11: so you know, buying another health insurance companies always benefit 338 00:17:46,280 --> 00:17:49,520 Speaker 11: for help for insurance business. Any insurance business. Scale is 339 00:17:49,600 --> 00:17:53,359 Speaker 11: the king for any type of insurance business. So there's 340 00:17:53,400 --> 00:17:56,600 Speaker 11: certainly possibility that they will revisit and maybe a gree 341 00:17:56,640 --> 00:17:57,480 Speaker 11: on the price this time. 342 00:17:57,760 --> 00:17:59,639 Speaker 6: All right, Glennlassa, thank you so much for joining us. 343 00:17:59,640 --> 00:18:02,560 Speaker 4: Glenlaw so he's a senior ecoanas covering the healthcare services 344 00:18:02,640 --> 00:18:06,520 Speaker 4: businesses for Bloomberg Intelligence. You can get his research by 345 00:18:06,560 --> 00:18:09,119 Speaker 4: going b I go on the terminal and then you 346 00:18:09,160 --> 00:18:11,040 Speaker 4: can go down to the healthcare stuff and we got 347 00:18:11,119 --> 00:18:13,720 Speaker 4: it all covered on a global scale. 348 00:18:14,440 --> 00:18:15,919 Speaker 6: So we appreciate gating a few minutes of this time. 349 00:18:15,960 --> 00:18:17,679 Speaker 6: A deal, I guess not happening in. 350 00:18:17,680 --> 00:18:20,240 Speaker 5: The healthcare space, so you'll have to look for another one. 351 00:18:20,480 --> 00:18:21,160 Speaker 6: Yeah, exactly. 352 00:18:21,680 --> 00:18:23,320 Speaker 4: But again it just seems like if a lot of 353 00:18:23,359 --> 00:18:25,000 Speaker 4: these big farmer companies that they can't come up with 354 00:18:25,080 --> 00:18:26,720 Speaker 4: whatever they need to come up with through their R 355 00:18:26,720 --> 00:18:28,439 Speaker 4: and D, they just got to just go on. 356 00:18:28,440 --> 00:18:28,720 Speaker 3: And buy it. 357 00:18:28,800 --> 00:18:31,080 Speaker 5: Yeah, if it's not organic, you know exactly right. 358 00:18:32,600 --> 00:18:36,440 Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live 359 00:18:36,560 --> 00:18:39,480 Speaker 2: weekdays at ten am Eastern on applecar. 360 00:18:39,119 --> 00:18:41,560 Speaker 3: Play and Android Auto with the Bloomberg Business. 361 00:18:42,000 --> 00:18:44,800 Speaker 2: You can also listen live on Amazon Alexa from our 362 00:18:44,840 --> 00:18:49,200 Speaker 2: flagship New York station Just Say Alexa playing Bloomberg eleven thirty. 363 00:18:50,800 --> 00:18:53,160 Speaker 4: All right, Molly Smith sitting in for Alex Steele Paul 364 00:18:53,200 --> 00:18:55,240 Speaker 4: Swhen you were live here in our Bloomberg Interactive Brokers 365 00:18:55,280 --> 00:18:58,320 Speaker 4: studio streaming live on YouTube as well, So go over 366 00:18:58,320 --> 00:19:00,440 Speaker 4: there and check us out. You can search Bloomberg Podcast 367 00:19:00,480 --> 00:19:02,720 Speaker 4: and that's where you will find it. A lot of 368 00:19:02,840 --> 00:19:06,359 Speaker 4: questions being asked by market participants about some of the 369 00:19:06,440 --> 00:19:08,600 Speaker 4: policies that we may see coming out of President like 370 00:19:08,720 --> 00:19:13,199 Speaker 4: Trump's second stint in the White House. David Young joins us. 371 00:19:13,640 --> 00:19:17,480 Speaker 4: He's a president the Public Policy Center at the Conference Board. David, 372 00:19:17,480 --> 00:19:19,440 Speaker 4: thanks so much for joining us here. What are the 373 00:19:19,560 --> 00:19:24,000 Speaker 4: key areas you're looking for or looking at with a 374 00:19:24,320 --> 00:19:27,879 Speaker 4: Republican in the White House, a Republican Senate, and potentially 375 00:19:28,680 --> 00:19:31,520 Speaker 4: a Republican House, how do you think we'll see policy 376 00:19:31,640 --> 00:19:33,080 Speaker 4: ramifications stem from that? 377 00:19:34,200 --> 00:19:36,480 Speaker 3: Yeah? Well, good morning, and thank you again for having 378 00:19:36,560 --> 00:19:36,720 Speaker 3: me on. 379 00:19:36,800 --> 00:19:39,800 Speaker 12: I found the conversation before very interesting and also just 380 00:19:39,880 --> 00:19:42,160 Speaker 12: a side note, as a former division one tennis player 381 00:19:42,680 --> 00:19:47,320 Speaker 12: unfortunately was not six foot one to six three. That 382 00:19:47,520 --> 00:19:51,159 Speaker 12: profession was short lived. But yeah, when we're looking at 383 00:19:51,240 --> 00:19:56,760 Speaker 12: top kind of you know, the initial priorities from a 384 00:19:57,160 --> 00:20:01,200 Speaker 12: Trump two point zero administration, I think the one that 385 00:20:01,400 --> 00:20:03,960 Speaker 12: is talked about most, and you guys were talking about 386 00:20:03,960 --> 00:20:08,080 Speaker 12: it earlier is tariffs. Obviously you guys mentioned this. You know, 387 00:20:08,160 --> 00:20:12,240 Speaker 12: there's this ten plus so ten to twenty percent universal 388 00:20:13,840 --> 00:20:16,320 Speaker 12: tariff that Trump has talked about, but then also the 389 00:20:16,400 --> 00:20:20,840 Speaker 12: sixty percent tariff on China. I think it's also important 390 00:20:20,880 --> 00:20:23,439 Speaker 12: to just mention when we talk about tariffs here there 391 00:20:23,520 --> 00:20:27,920 Speaker 12: is also a direct correlation towards trade, and when we 392 00:20:28,000 --> 00:20:30,879 Speaker 12: start talking about trade, we start talking about trade agreements. 393 00:20:31,000 --> 00:20:34,600 Speaker 12: So upcoming next year will be the renewal should any 394 00:20:34,640 --> 00:20:38,679 Speaker 12: of the three countries, Canada, the US, or Mexico require it, a. 395 00:20:39,359 --> 00:20:41,920 Speaker 3: Renewal or refresh of the US. 396 00:20:41,840 --> 00:20:46,159 Speaker 12: MCA, which I think will have some pretty significant ramifications, 397 00:20:47,200 --> 00:20:52,680 Speaker 12: especially given the role and relationship between Mexico and Canada. 398 00:20:52,760 --> 00:20:57,040 Speaker 12: I describe Mexico increasingly as one of those connector economies, 399 00:20:58,000 --> 00:21:01,560 Speaker 12: so goods come from China Mexico then up through the US. 400 00:21:01,560 --> 00:21:03,760 Speaker 12: So it will be really interesting to see what Trump 401 00:21:03,920 --> 00:21:07,080 Speaker 12: does with regards to that trade agreement and how he 402 00:21:07,200 --> 00:21:14,560 Speaker 12: leverages tariffs beyond Teriff, a couple other areas to mention climate, 403 00:21:15,080 --> 00:21:18,159 Speaker 12: and what he does with biden era of regulation with 404 00:21:18,320 --> 00:21:21,840 Speaker 12: regards to climate, but also beyond just what Biden did 405 00:21:22,760 --> 00:21:26,600 Speaker 12: international trade agreements. So Trump has said that in his 406 00:21:26,760 --> 00:21:30,560 Speaker 12: initial days in office, taking a much closer look at 407 00:21:30,600 --> 00:21:35,520 Speaker 12: the Paris Agreement and potentially leaving that agreement. In addition 408 00:21:35,720 --> 00:21:41,480 Speaker 12: to Terriff's and climate. Obviously the regulatory environment and regulation reform, 409 00:21:42,359 --> 00:21:45,600 Speaker 12: industrial policy, and electric vehicles. I know you guys were 410 00:21:45,640 --> 00:21:49,480 Speaker 12: talking earlier about Tesla. Trump has said that he would 411 00:21:49,560 --> 00:21:56,000 Speaker 12: repeal Biden's electric vehicle mandate. And also there have been 412 00:21:56,040 --> 00:22:00,520 Speaker 12: conversations around the value of the Chipsacks Chips Act versus 413 00:22:00,680 --> 00:22:05,600 Speaker 12: the role and impact of tariffs. Finally, the tax bill. 414 00:22:06,880 --> 00:22:08,600 Speaker 3: And what that means in the year ahead. 415 00:22:08,640 --> 00:22:10,960 Speaker 12: And those are some of the domestic issues I think 416 00:22:11,320 --> 00:22:16,400 Speaker 12: from a foreign policy standpoint, the two that initially jump 417 00:22:16,480 --> 00:22:22,680 Speaker 12: out obviously Russia and Ukraine, and also Israel, Gaza Lebanon, 418 00:22:23,000 --> 00:22:27,040 Speaker 12: the future role of Iran and what Trump decides to 419 00:22:27,160 --> 00:22:32,280 Speaker 12: do with regards to those two issues. I'm not forgetting 420 00:22:32,440 --> 00:22:35,399 Speaker 12: China and Taiwan. I just have left that one to 421 00:22:35,520 --> 00:22:39,680 Speaker 12: the third position because the other two kind of have 422 00:22:39,880 --> 00:22:44,040 Speaker 12: dominated over the last twelve months. But with regards to 423 00:22:44,320 --> 00:22:49,119 Speaker 12: China and Taiwan, it is clear of China's intentions, and 424 00:22:49,240 --> 00:22:53,440 Speaker 12: so you can only anticipate that issue area from a 425 00:22:53,560 --> 00:22:57,119 Speaker 12: foreign policy standpoint getting more and more traction in the 426 00:22:57,240 --> 00:22:57,760 Speaker 12: years ahead. 427 00:22:58,200 --> 00:23:00,760 Speaker 8: Thanks David, that was very comprehensive look at what we're 428 00:23:00,800 --> 00:23:04,639 Speaker 8: going to expect. You know something that in my other 429 00:23:04,800 --> 00:23:07,080 Speaker 8: day job here at Bloomberg, I cover the US economy 430 00:23:07,240 --> 00:23:10,639 Speaker 8: and we take a look at that confidence index that 431 00:23:10,800 --> 00:23:12,920 Speaker 8: your firm puts out every month, and we're going to 432 00:23:13,000 --> 00:23:15,360 Speaker 8: get the latest look at that a little bit later 433 00:23:15,560 --> 00:23:18,760 Speaker 8: this month for the November reading. Just tell me a 434 00:23:18,800 --> 00:23:21,600 Speaker 8: little bit about what your expectations are ahead of that. 435 00:23:21,760 --> 00:23:23,879 Speaker 8: We know it's an index that you know, tends to 436 00:23:23,960 --> 00:23:26,440 Speaker 8: be a bit more tilted toward consumer views of the 437 00:23:26,560 --> 00:23:29,080 Speaker 8: job market. But you know, curious to think, you know, 438 00:23:29,240 --> 00:23:32,440 Speaker 8: especially based on the reactions from the exit polls and 439 00:23:32,560 --> 00:23:36,320 Speaker 8: how consumers were obviously or voters rather were very concerned 440 00:23:36,359 --> 00:23:39,679 Speaker 8: with the economy, how you think that the election results 441 00:23:39,720 --> 00:23:41,240 Speaker 8: might be reflected in the next reading. 442 00:23:42,480 --> 00:23:44,680 Speaker 12: Yeah, so it is interesting and if you look at confidence, 443 00:23:44,680 --> 00:23:46,960 Speaker 12: it's definitely moving. The trend is moving in the right direction, 444 00:23:47,160 --> 00:23:49,639 Speaker 12: but it's it's interesting when you look at the right 445 00:23:49,760 --> 00:23:53,480 Speaker 12: direction and things improving, did that actually relate to how 446 00:23:53,880 --> 00:23:58,000 Speaker 12: voters voted on the day. And there's definitely a degree 447 00:23:58,040 --> 00:24:01,879 Speaker 12: of disconnect. And I think from from Harris's perspective, she 448 00:24:02,040 --> 00:24:06,520 Speaker 12: was unable to convince voters that recent improvements in the economy, 449 00:24:07,560 --> 00:24:13,560 Speaker 12: including the decline in the headline inflation, stronger than expected growth, 450 00:24:14,359 --> 00:24:17,680 Speaker 12: have made a difference in them in kind of voters' lives. 451 00:24:17,760 --> 00:24:20,159 Speaker 12: So number one, there is a disconnect, and I think 452 00:24:20,200 --> 00:24:23,600 Speaker 12: there is also certainly a lag when you start looking 453 00:24:23,760 --> 00:24:28,040 Speaker 12: at what people believe, how they feel, and how they 454 00:24:28,080 --> 00:24:31,280 Speaker 12: actually went out on that day and voted. I think 455 00:24:31,320 --> 00:24:33,879 Speaker 12: that also connects and has shown to you know, if 456 00:24:33,920 --> 00:24:37,680 Speaker 12: it is not the top issue area that affected how 457 00:24:37,720 --> 00:24:41,000 Speaker 12: people voted, it is one of the top two issues, 458 00:24:41,040 --> 00:24:46,800 Speaker 12: which is just economic growth and the economy and in 459 00:24:46,920 --> 00:24:49,040 Speaker 12: terms of how that's playing out on a daily basis. 460 00:24:49,760 --> 00:24:51,080 Speaker 6: David, thank you so much for joining us. 461 00:24:51,160 --> 00:24:53,880 Speaker 4: David Young, he's a president a public policy center at 462 00:24:54,119 --> 00:24:58,200 Speaker 4: the Conference Board, joining us via zoom from Atlanta here. 463 00:24:58,560 --> 00:25:00,720 Speaker 4: So I have to see again the early days of 464 00:25:01,160 --> 00:25:05,399 Speaker 4: president like Donald Trump. His administration, like any administration, is 465 00:25:05,440 --> 00:25:08,120 Speaker 4: first one hundred days or our key to really get 466 00:25:08,240 --> 00:25:12,840 Speaker 4: things done. So we'll see how aggressive mister Trump's administrations 467 00:25:12,880 --> 00:25:14,360 Speaker 4: will be coming out of the gate. 468 00:25:14,440 --> 00:25:19,719 Speaker 2: There you're listening to the Bloomberg Intelligence Podcast. Catch us 469 00:25:19,800 --> 00:25:23,040 Speaker 2: live weekdays at ten am Eastern on applecar. 470 00:25:22,680 --> 00:25:25,400 Speaker 3: Play and Android Otto with the Bloomberg Business App. 471 00:25:25,560 --> 00:25:28,359 Speaker 2: You can also listen live on Amazon Alexa from our 472 00:25:28,440 --> 00:25:33,080 Speaker 2: flagship New York station Just Say Alexa playing Bloomberg eleven thirty. 473 00:25:34,400 --> 00:25:36,480 Speaker 4: Well, Paul Sweeney were live here in our Bloomberg Interactive 474 00:25:36,480 --> 00:25:39,320 Speaker 4: Broker studio. We're streaming live on YouTube, So go over 475 00:25:39,320 --> 00:25:41,560 Speaker 4: to YouTube dot com search Bloomberg Podcast and that's where 476 00:25:41,600 --> 00:25:43,280 Speaker 4: you'll find us. All Right, here's the mistake I make 477 00:25:43,320 --> 00:25:45,520 Speaker 4: when thinking about commercial real estate. 478 00:25:45,600 --> 00:25:46,680 Speaker 6: I just think offices. 479 00:25:47,200 --> 00:25:50,040 Speaker 4: But there's so much fun, which I keep getting schooled 480 00:25:50,080 --> 00:25:53,160 Speaker 4: on it brought in your I knew, I knew multi 481 00:25:53,280 --> 00:25:57,199 Speaker 4: family housing, student housing, warehouses, all that kind of stuff. 482 00:25:58,080 --> 00:26:00,119 Speaker 6: Our next guest can he can kind of help me 483 00:26:00,160 --> 00:26:00,399 Speaker 6: out here? 484 00:26:00,480 --> 00:26:04,040 Speaker 4: Jeff Brown, founder and CEO T two Capital Management, joining 485 00:26:04,119 --> 00:26:06,000 Speaker 4: us from Chicago via that zoom thing. 486 00:26:06,440 --> 00:26:07,480 Speaker 6: Hey, Jeff, talk to us. 487 00:26:07,400 --> 00:26:11,480 Speaker 4: About where you guys at T two ten to traffic 488 00:26:11,640 --> 00:26:12,600 Speaker 4: in commercial real estate? 489 00:26:12,920 --> 00:26:14,560 Speaker 6: What's your area of expertise? 490 00:26:15,640 --> 00:26:16,919 Speaker 10: Sure for starters PLA. 491 00:26:17,000 --> 00:26:20,359 Speaker 13: I appreciate your delineating office from the broader commercial real 492 00:26:20,440 --> 00:26:20,800 Speaker 13: estate mark. 493 00:26:20,840 --> 00:26:23,520 Speaker 10: A lot of people do jump into that pool. Yeah. 494 00:26:23,640 --> 00:26:23,959 Speaker 10: T two. 495 00:26:24,040 --> 00:26:26,560 Speaker 13: We are very focused on the student housing space, on 496 00:26:26,640 --> 00:26:29,200 Speaker 13: the multi family space, and we also run a private 497 00:26:29,240 --> 00:26:30,120 Speaker 13: credit fund as well. 498 00:26:31,240 --> 00:26:34,320 Speaker 8: You know, I find a student housing story so fascinating 499 00:26:34,359 --> 00:26:36,600 Speaker 8: because this is like, you know, we talk about in 500 00:26:36,680 --> 00:26:39,760 Speaker 8: the US economy, this structural shortage of housing, like you know, 501 00:26:39,960 --> 00:26:43,360 Speaker 8: just for like everyday people, single family homes. But it's 502 00:26:43,480 --> 00:26:46,920 Speaker 8: really like in some places, no more evident than on 503 00:26:47,040 --> 00:26:50,080 Speaker 8: a college campus. There's been so many stories about, you know, 504 00:26:50,160 --> 00:26:53,879 Speaker 8: at UCLA, like kids renting out you know, RV's and 505 00:26:54,040 --> 00:26:57,440 Speaker 8: like tryk well really renting out a private person's driveway 506 00:26:57,480 --> 00:26:59,879 Speaker 8: to put the RV so because they can't find a 507 00:27:00,040 --> 00:27:02,600 Speaker 8: place to live. And where I went to school, Syracuse, 508 00:27:03,920 --> 00:27:05,920 Speaker 8: a hotel that was in the middle of campus is 509 00:27:06,000 --> 00:27:09,840 Speaker 8: now fully a dorm and another apartment building bought back 510 00:27:09,920 --> 00:27:10,520 Speaker 8: to be a dorm. 511 00:27:10,800 --> 00:27:14,000 Speaker 5: Anyways, all that to say, where are all these students 512 00:27:14,200 --> 00:27:16,520 Speaker 5: living and where are the opportunities for you guys to 513 00:27:16,600 --> 00:27:17,280 Speaker 5: come in and help. 514 00:27:18,600 --> 00:27:22,280 Speaker 13: Yeah, those are great anecdotes, smallite that are still pervasive today. 515 00:27:23,040 --> 00:27:25,439 Speaker 13: So for us in the student housing space, we're active 516 00:27:25,960 --> 00:27:32,000 Speaker 13: at schools like Purdue, Auburn University down in Alabama, University 517 00:27:32,040 --> 00:27:33,360 Speaker 13: of Tennessee, Georgia Tech. 518 00:27:33,560 --> 00:27:35,960 Speaker 10: So we tend to migrate toward where there's. 519 00:27:35,840 --> 00:27:39,359 Speaker 13: Really explosive enrollment growth, where there's a stem focus, just 520 00:27:39,440 --> 00:27:42,879 Speaker 13: a high demand for students to be there. Ironically, some 521 00:27:42,960 --> 00:27:45,720 Speaker 13: of the anecdotes you just shared about students beingforced to 522 00:27:45,760 --> 00:27:50,320 Speaker 13: live in hotels or just these makeshift apartments on campus 523 00:27:50,440 --> 00:27:53,359 Speaker 13: because of the lack of supply. That has been our 524 00:27:53,440 --> 00:27:56,200 Speaker 13: story at University of Tennessee as well as Purdue. So 525 00:27:56,320 --> 00:27:59,080 Speaker 13: we're benefactors of those as landlords, but hate to be it, 526 00:27:59,160 --> 00:28:01,439 Speaker 13: frankly for the students and those parents. 527 00:28:02,200 --> 00:28:05,280 Speaker 4: You know, in my freshman year at the University of Richmond. 528 00:28:05,920 --> 00:28:08,520 Speaker 6: It was a trailer where you lived. 529 00:28:08,720 --> 00:28:10,200 Speaker 5: Yes, was there not a dorm. 530 00:28:10,359 --> 00:28:12,159 Speaker 6: There was not a dorm. It was a trailer. My 531 00:28:12,240 --> 00:28:14,879 Speaker 6: dad pulls up to unload music. You gotta be kidding 532 00:28:14,920 --> 00:28:17,520 Speaker 6: me for the money turnaround. We had a heck of 533 00:28:17,600 --> 00:28:18,679 Speaker 6: a good time in those trailers. 534 00:28:19,119 --> 00:28:19,879 Speaker 11: We'll just leave it at that. 535 00:28:20,440 --> 00:28:22,200 Speaker 6: The mods down to the University of Richmond. 536 00:28:23,040 --> 00:28:25,160 Speaker 4: Hey, Jeff, if you want to go out and build 537 00:28:25,240 --> 00:28:28,280 Speaker 4: some student housing and multi family housing, where are you 538 00:28:28,320 --> 00:28:28,960 Speaker 4: going to get the money? 539 00:28:28,960 --> 00:28:29,720 Speaker 6: Are banks lending? 540 00:28:31,760 --> 00:28:31,960 Speaker 10: Yeah? 541 00:28:32,760 --> 00:28:35,800 Speaker 13: Thankfully, I would say banks are lending. It's certainly much 542 00:28:35,880 --> 00:28:41,280 Speaker 13: more conservative than probably historical standards. Interestingly, banks, I find 543 00:28:41,320 --> 00:28:44,240 Speaker 13: them uniquely healthy right now. I think so many learn 544 00:28:44,280 --> 00:28:46,240 Speaker 13: to their lessons from the two thousand and eight global 545 00:28:46,280 --> 00:28:50,400 Speaker 13: financial crisis, and they have ratcheted back advanced levels, so 546 00:28:50,480 --> 00:28:53,200 Speaker 13: they just have some decreased exposure. So maybe historically they 547 00:28:53,240 --> 00:28:55,360 Speaker 13: would have been at sixty five or seventy percent of 548 00:28:55,520 --> 00:28:57,880 Speaker 13: cost or value on a project. I think today it's 549 00:28:57,880 --> 00:29:00,240 Speaker 13: pretty customary to be at fifty five or sixty percent 550 00:29:00,280 --> 00:29:02,520 Speaker 13: advanced rates. A lot of buffer for them, but the 551 00:29:02,560 --> 00:29:07,560 Speaker 13: margin for air. So I would say banks are actively lending. 552 00:29:07,640 --> 00:29:10,040 Speaker 13: There the hard part, frankly, and I think I heard 553 00:29:10,080 --> 00:29:11,760 Speaker 13: your prior guests even touch on this. 554 00:29:12,000 --> 00:29:14,320 Speaker 10: The hard part is finding the equity. So if banks 555 00:29:14,360 --> 00:29:16,280 Speaker 10: are at fifty five or sixty percent, where are you 556 00:29:16,320 --> 00:29:16,760 Speaker 10: getting that. 557 00:29:16,800 --> 00:29:20,200 Speaker 13: Other forty or forty five percent of the capital stack 558 00:29:20,280 --> 00:29:23,160 Speaker 13: necessary to take on a project and that's been a 559 00:29:23,200 --> 00:29:25,280 Speaker 13: bit of a Rubis cube, frankly for the past couple 560 00:29:25,280 --> 00:29:27,800 Speaker 13: of years, as interest rates of spiked and capitals retreated 561 00:29:27,840 --> 00:29:28,560 Speaker 13: to the sidelines. 562 00:29:29,320 --> 00:29:31,160 Speaker 8: What do you do when you're looking though, at such 563 00:29:31,200 --> 00:29:35,560 Speaker 8: a constrained labor supply right now in construction, and especially 564 00:29:35,680 --> 00:29:39,600 Speaker 8: with the prospect of this new administration, really, you know, 565 00:29:40,440 --> 00:29:44,000 Speaker 8: rolling back a lot of the immigrant workforce. Is that 566 00:29:44,120 --> 00:29:46,920 Speaker 8: concerning to you of how much more building can really 567 00:29:47,680 --> 00:29:48,920 Speaker 8: happen in the next four years? 568 00:29:50,240 --> 00:29:52,280 Speaker 13: It is, And I'll tell you, going back to the 569 00:29:52,600 --> 00:29:56,440 Speaker 13: student housing aspect of our business, we have bought far 570 00:29:56,560 --> 00:30:00,400 Speaker 13: more existing student housing and did some cosmetic changes properties 571 00:30:00,760 --> 00:30:04,080 Speaker 13: when we have done ground up development, simply because most 572 00:30:04,120 --> 00:30:07,920 Speaker 13: construction costs are They really spiked during COVID and caught 573 00:30:07,920 --> 00:30:09,760 Speaker 13: a lot of attention for supply chain. 574 00:30:09,640 --> 00:30:12,480 Speaker 10: Issues, shortage of labor and other variables. 575 00:30:13,480 --> 00:30:17,280 Speaker 13: Unfortunately, the cost of construction hasn't plausibly come down to 576 00:30:17,360 --> 00:30:20,160 Speaker 13: where it's still viable to build ground up construction. 577 00:30:20,280 --> 00:30:22,200 Speaker 10: Certainly, some folks can get away with it. 578 00:30:22,320 --> 00:30:26,440 Speaker 13: They'll take on lower margin projects thinking that maybe down 579 00:30:26,480 --> 00:30:29,600 Speaker 13: the road the margins will make some sense. But it's 580 00:30:29,640 --> 00:30:33,120 Speaker 13: been very, very tricky to make numbers work in the 581 00:30:33,160 --> 00:30:36,280 Speaker 13: ground up construction, whether it's student multi or any other 582 00:30:36,360 --> 00:30:37,040 Speaker 13: asset class. 583 00:30:37,520 --> 00:30:39,560 Speaker 4: How about you know we talked about student housing, how 584 00:30:39,560 --> 00:30:42,200 Speaker 4: about senior housing? I mean, all we hear about is 585 00:30:42,280 --> 00:30:44,239 Speaker 4: how this population is aging and there's going to need 586 00:30:44,320 --> 00:30:46,600 Speaker 4: to be for more and more senior communities. 587 00:30:46,680 --> 00:30:46,800 Speaker 3: Is that? 588 00:30:46,880 --> 00:30:48,280 Speaker 6: How do you guys think about that business? Have you 589 00:30:48,360 --> 00:30:48,720 Speaker 6: looked at that? 590 00:30:49,920 --> 00:30:52,480 Speaker 13: We've looked at it, We've participated in it, and we've 591 00:30:52,600 --> 00:30:55,760 Speaker 13: kind of we've just paused on it. Frankly, it's a 592 00:30:55,880 --> 00:31:00,360 Speaker 13: very operationally intensive business where you're so dependent on Like 593 00:31:00,720 --> 00:31:02,600 Speaker 13: I said, it's a running business. So we have your 594 00:31:02,680 --> 00:31:06,120 Speaker 13: operator who's handling all the day to day activities. Oftentimes 595 00:31:06,160 --> 00:31:08,720 Speaker 13: there can be a bit of a misalignment between operations 596 00:31:08,800 --> 00:31:11,640 Speaker 13: and ownership and the property. We try to stay away 597 00:31:11,640 --> 00:31:14,480 Speaker 13: from those situations and just stick to what we know best, 598 00:31:14,520 --> 00:31:15,640 Speaker 13: which is student and multi. 599 00:31:17,000 --> 00:31:19,080 Speaker 8: I got to ask you, though, you know something that 600 00:31:19,200 --> 00:31:21,840 Speaker 8: I wonder when I see all of these universities that 601 00:31:21,960 --> 00:31:25,520 Speaker 8: are like busting at the seams with students and nowhere 602 00:31:25,600 --> 00:31:28,720 Speaker 8: to put them, are enrollment rates that much higher? 603 00:31:28,800 --> 00:31:30,600 Speaker 5: Acceptance rates rather that much higher? 604 00:31:30,800 --> 00:31:33,360 Speaker 8: Like I mean, because right now, the sentiment about getting 605 00:31:33,400 --> 00:31:35,720 Speaker 8: a college education has really never been worse. So I 606 00:31:35,880 --> 00:31:39,000 Speaker 8: just wonder are the universities just letting in that many 607 00:31:39,040 --> 00:31:39,600 Speaker 8: more kids? 608 00:31:41,280 --> 00:31:44,880 Speaker 13: A great, great question, Mollie, and I'd say, just like 609 00:31:45,000 --> 00:31:48,360 Speaker 13: Paul did a start off, this segment office doesn't define 610 00:31:48,440 --> 00:31:51,080 Speaker 13: how the commercial real state market is doing. I think 611 00:31:51,120 --> 00:31:54,400 Speaker 13: you really got to be careful with which student housing markets, 612 00:31:54,440 --> 00:31:57,800 Speaker 13: which campuses you're at, before you say a broadbreast. 613 00:31:57,320 --> 00:31:58,880 Speaker 10: Statement about student housing as a whole. 614 00:31:59,360 --> 00:32:03,520 Speaker 13: There are some schools that are seeing our record applications 615 00:32:04,000 --> 00:32:06,040 Speaker 13: and having the choice to make where how do we 616 00:32:06,080 --> 00:32:08,360 Speaker 13: want to go with a record enrollment as well, and 617 00:32:08,440 --> 00:32:10,760 Speaker 13: they got to be mindful of how much supply, how 618 00:32:10,840 --> 00:32:16,120 Speaker 13: much infrastructure alone, classrooms and other space available on campus 619 00:32:16,200 --> 00:32:19,120 Speaker 13: do they have to accommodate the student population. 620 00:32:20,080 --> 00:32:20,360 Speaker 10: So it. 621 00:32:21,840 --> 00:32:25,360 Speaker 13: Is it's very school specific from my perspective, and that's 622 00:32:25,360 --> 00:32:28,920 Speaker 13: where I think Tennessee and produced schools that we're very 623 00:32:29,000 --> 00:32:31,760 Speaker 13: close to. I've done a fantastic job at managing that 624 00:32:32,520 --> 00:32:35,520 Speaker 13: and drawing demand at the schools. Others need to be 625 00:32:35,600 --> 00:32:39,880 Speaker 13: careful and make sure they're not reenacting your experience calling 626 00:32:40,040 --> 00:32:42,680 Speaker 13: and students are rolling up to a trailer show. 627 00:32:42,600 --> 00:32:43,160 Speaker 10: Up on campus. 628 00:32:43,400 --> 00:32:45,160 Speaker 6: Yep, the mods as we call them. 629 00:32:45,360 --> 00:32:47,800 Speaker 4: Jeff Brown, founder and CEU of T two Capital Management, 630 00:32:47,800 --> 00:32:49,520 Speaker 4: thanks so much for joining us there. 631 00:32:51,120 --> 00:32:54,960 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 632 00:32:55,080 --> 00:32:56,920 Speaker 2: weekdays at ten am Eastern. 633 00:32:56,760 --> 00:33:00,000 Speaker 3: On applecar Play and Ron Auto with the Bloomberg Business. 634 00:33:00,520 --> 00:33:03,320 Speaker 2: You can also listen live on Amazon Alexa from our 635 00:33:03,360 --> 00:33:07,320 Speaker 2: flagship New York station, Just Say Alexa playing Bloomberg eleven. 636 00:33:09,400 --> 00:33:11,520 Speaker 6: Mama Smith's sitting in for Alex Steele. I'm Paul Sweeney. 637 00:33:11,560 --> 00:33:13,760 Speaker 4: We're live here in our Bloomberg Interactive Broker Studio and 638 00:33:13,920 --> 00:33:17,400 Speaker 4: we are streaming live on youtubees ahead over YouTube dot 639 00:33:17,440 --> 00:33:18,840 Speaker 4: com search Bloomberg Podcast. 640 00:33:19,000 --> 00:33:21,480 Speaker 6: Every industry. I think everybody out there is trying to 641 00:33:21,480 --> 00:33:22,160 Speaker 6: figure out what. 642 00:33:22,200 --> 00:33:26,760 Speaker 4: Does the second Trump administration mean for my company, my industry, 643 00:33:27,520 --> 00:33:29,760 Speaker 4: you know, and that's certainly true of the energy space. 644 00:33:29,800 --> 00:33:32,680 Speaker 6: And my guess would be drill, baby, drill. 645 00:33:32,760 --> 00:33:33,920 Speaker 5: Two fo words out of my mouth. 646 00:33:34,040 --> 00:33:34,400 Speaker 7: There you go. 647 00:33:34,840 --> 00:33:37,000 Speaker 4: Let's talk to somebody who really thinks about this and 648 00:33:37,080 --> 00:33:40,840 Speaker 4: knows what he's talking about. Ty Lou Oil Market Specialists 649 00:33:40,880 --> 00:33:43,240 Speaker 4: for b n EF joining us here in our. 650 00:33:43,160 --> 00:33:44,720 Speaker 6: Bloomberg Interactive Broker Studio. 651 00:33:45,120 --> 00:33:49,800 Speaker 4: So Ty I would think that a second Trump administration 652 00:33:49,880 --> 00:33:51,080 Speaker 4: would be good for the energy space. 653 00:33:51,160 --> 00:33:53,280 Speaker 6: Is that fair assumption? How do you guys think about it? 654 00:33:53,720 --> 00:33:56,560 Speaker 1: Yeah, Hi Paul, thank you for having me. Yeah, definitely, 655 00:33:56,800 --> 00:34:00,360 Speaker 1: I think the USOL industry and the guess industry can 656 00:34:00,440 --> 00:34:04,000 Speaker 1: benefit from Trumpet administration in the number of ways. I 657 00:34:04,080 --> 00:34:06,840 Speaker 1: think the first half the BED is like a lower 658 00:34:06,920 --> 00:34:11,479 Speaker 1: corporate tax rate. So person see that Trump has mentioned 659 00:34:11,560 --> 00:34:14,120 Speaker 1: has indicated he would like to lower corporate tax rates 660 00:34:14,400 --> 00:34:17,040 Speaker 1: from the current twenty one percent to fifteen percent. So 661 00:34:17,160 --> 00:34:19,440 Speaker 1: if the materializes, that's the way of the BED. That's 662 00:34:19,520 --> 00:34:21,719 Speaker 1: like more money for the industry and for the shareholders. 663 00:34:22,239 --> 00:34:23,439 Speaker 5: What are they going to do with that money? 664 00:34:23,480 --> 00:34:23,600 Speaker 7: Then? 665 00:34:23,600 --> 00:34:26,560 Speaker 5: Are you suggesting it would be share buybacks or whatever? 666 00:34:26,680 --> 00:34:29,279 Speaker 1: Yeah, So there's definitely like a number of options these 667 00:34:29,760 --> 00:34:33,239 Speaker 1: companies can do with this quote unquote extreme money. They can, 668 00:34:33,360 --> 00:34:36,000 Speaker 1: like you said, they can do more buyback for the shares, 669 00:34:36,000 --> 00:34:39,040 Speaker 1: they can issue more dibid and payouts, they can reduce 670 00:34:39,120 --> 00:34:41,640 Speaker 1: the debt, and finally they can always they always have 671 00:34:41,719 --> 00:34:45,359 Speaker 1: the option to funnel some of these money into capital expenditures, 672 00:34:45,440 --> 00:34:49,319 Speaker 1: which ultimately retranslates into more production down the road. 673 00:34:50,000 --> 00:34:53,000 Speaker 4: How about from I mean from the regulatory standpoint, I mean, 674 00:34:53,080 --> 00:34:54,879 Speaker 4: can I go down there now and drill a well, 675 00:34:54,960 --> 00:34:57,640 Speaker 4: can I make a pipeline to take my natural guess 676 00:34:57,760 --> 00:35:00,560 Speaker 4: to corporate Christian wherever it needs to get to. Is 677 00:35:00,600 --> 00:35:03,120 Speaker 4: it going to be easier under a second Trump administration 678 00:35:04,000 --> 00:35:05,640 Speaker 4: to build energy stuff? 679 00:35:06,200 --> 00:35:09,160 Speaker 1: Yeah, I would definitely think so. So under the Barton administration, 680 00:35:09,280 --> 00:35:13,560 Speaker 1: that's the government has imposed a lot of regulations. There 681 00:35:13,600 --> 00:35:16,600 Speaker 1: are team that's unfriendly to the on gas industry. The 682 00:35:16,640 --> 00:35:21,320 Speaker 1: government is issued during rights moratorium they issued they placed 683 00:35:21,400 --> 00:35:26,120 Speaker 1: the pause on energy exports permits, and they also increase 684 00:35:26,280 --> 00:35:28,040 Speaker 1: royalties on federal land leases. 685 00:35:28,560 --> 00:35:28,640 Speaker 6: Uh. 686 00:35:28,840 --> 00:35:30,920 Speaker 1: And I would presume and all of these like we're 687 00:35:30,960 --> 00:35:34,560 Speaker 1: pretty hostile and created a lot of uncertainty to the industry. 688 00:35:34,840 --> 00:35:38,400 Speaker 1: So I would assume I would think that Trump administration 689 00:35:38,520 --> 00:35:41,120 Speaker 1: would remove a lot of these regulations. There are team 690 00:35:41,160 --> 00:35:45,480 Speaker 1: that's onwards to our gas producers. So definitely beneficial from 691 00:35:45,520 --> 00:35:46,120 Speaker 1: that point. 692 00:35:45,920 --> 00:35:50,160 Speaker 8: Of view you mentioned before, you know, increasing capex potentially 693 00:35:50,239 --> 00:35:51,760 Speaker 8: and how that would mean more production. 694 00:35:52,239 --> 00:35:54,200 Speaker 5: Gotta the worry about prices If. 695 00:35:54,200 --> 00:35:56,440 Speaker 8: You are producing so much more, what happens to the 696 00:35:56,480 --> 00:36:01,200 Speaker 8: supply demand equation? There is that already something that drillers 697 00:36:01,239 --> 00:36:03,759 Speaker 8: are thinking about of how much more they might want 698 00:36:03,800 --> 00:36:05,279 Speaker 8: to maybe not go in too much. 699 00:36:05,600 --> 00:36:07,239 Speaker 1: Yeah, that's for sure. So if you look at the 700 00:36:07,280 --> 00:36:11,480 Speaker 1: past ten years, use oil producers have on server occasions 701 00:36:12,040 --> 00:36:14,360 Speaker 1: crashed the AILL process when it decided to turn on 702 00:36:14,480 --> 00:36:17,360 Speaker 1: the production tabs. So they're very cognizange of the risks 703 00:36:17,400 --> 00:36:19,400 Speaker 1: this time around. On top of that, there's like a 704 00:36:19,440 --> 00:36:22,080 Speaker 1: lot of shareholder pressures on these oil and gas companies 705 00:36:22,440 --> 00:36:26,520 Speaker 1: to maintain capital discipline and to increase capital payback. So 706 00:36:26,719 --> 00:36:28,480 Speaker 1: from that sense, I think even though if there's like 707 00:36:28,560 --> 00:36:31,719 Speaker 1: more money to grow around in the industry, it would 708 00:36:31,719 --> 00:36:35,879 Speaker 1: be more much harder for the oil producers to grow 709 00:36:35,960 --> 00:36:39,279 Speaker 1: production the way they did in the past ten years. 710 00:36:39,400 --> 00:36:42,480 Speaker 4: So when did the US become a net exporter like 711 00:36:42,520 --> 00:36:44,960 Speaker 4: twenty sixteen or something like that, I think so, okay, 712 00:36:45,040 --> 00:36:47,880 Speaker 4: so we were a net importer forever, then we became 713 00:36:47,960 --> 00:36:50,760 Speaker 4: thanks to the shell finds, we became. 714 00:36:50,560 --> 00:36:51,640 Speaker 6: A net exporter. 715 00:36:52,239 --> 00:36:55,160 Speaker 4: How does the US oil industry, I'm not sure if 716 00:36:55,200 --> 00:36:57,680 Speaker 4: you can even characterize it or is it just individual companies. 717 00:36:57,719 --> 00:37:02,040 Speaker 4: How does the US oil industry interact with OPEK if 718 00:37:02,080 --> 00:37:02,319 Speaker 4: at all? 719 00:37:02,719 --> 00:37:02,919 Speaker 7: Yeah. 720 00:37:03,040 --> 00:37:06,759 Speaker 1: Yeah, So the way I think about that very competitive, 721 00:37:06,960 --> 00:37:10,560 Speaker 1: like natural competitors against each other. So if if lower 722 00:37:10,640 --> 00:37:14,520 Speaker 1: taxes in the Trump administration materializes, it would definitely make 723 00:37:14,560 --> 00:37:17,480 Speaker 1: the us O patch a lot more competitive. It will 724 00:37:17,520 --> 00:37:21,200 Speaker 1: also the brick given calculations there, and there would be 725 00:37:21,280 --> 00:37:23,440 Speaker 1: more money to grow around. So it would be it 726 00:37:23,440 --> 00:37:26,600 Speaker 1: will make it much harder for OPEC to increase the output, 727 00:37:26,920 --> 00:37:30,760 Speaker 1: so it's going to place OPACK on a more difficult grant. 728 00:37:31,360 --> 00:37:34,960 Speaker 8: You know, something that in part got Donald Trump reelected 729 00:37:35,040 --> 00:37:38,239 Speaker 8: to the White House was the idea of bringing prices down. 730 00:37:38,360 --> 00:37:41,120 Speaker 8: And you know, gas prices obviously a big sticking point 731 00:37:41,239 --> 00:37:44,200 Speaker 8: for a lot of Americans. Gas prices have been coming 732 00:37:44,280 --> 00:37:48,799 Speaker 8: down pretty consistently over the past you know, six months 733 00:37:48,920 --> 00:37:52,040 Speaker 8: or so, down to now like about roughly three dollars 734 00:37:52,080 --> 00:37:54,000 Speaker 8: a gallon on average nationwide. 735 00:37:54,520 --> 00:37:56,840 Speaker 5: What can Trump really do for gas prices? 736 00:37:58,200 --> 00:38:00,400 Speaker 1: Well, when I think about gas prin just there are 737 00:38:00,440 --> 00:38:03,120 Speaker 1: two pieces to it. That's the clude oil price part 738 00:38:03,560 --> 00:38:06,440 Speaker 1: and then the that's the refinery margin part. Now, on 739 00:38:06,480 --> 00:38:09,560 Speaker 1: the refinery margin, there's probably not much a person can 740 00:38:09,640 --> 00:38:13,040 Speaker 1: do to it because you basically have to increase refining 741 00:38:13,080 --> 00:38:15,480 Speaker 1: capacity and that takes years to build out. If you 742 00:38:15,520 --> 00:38:17,520 Speaker 1: want to pray for their part, the outer part would 743 00:38:17,560 --> 00:38:22,239 Speaker 1: be the all price part. Now, if you redo regulations 744 00:38:22,320 --> 00:38:26,200 Speaker 1: make it easier for companies to drew, you can pre rent. Theoretically, 745 00:38:26,239 --> 00:38:29,080 Speaker 1: you can prevent some of the possible price spikes in 746 00:38:29,200 --> 00:38:34,600 Speaker 1: all price in all prices, just because it's less onerous 747 00:38:34,800 --> 00:38:37,359 Speaker 1: for these jurists to put more capital into the ground. 748 00:38:37,719 --> 00:38:40,759 Speaker 1: So in this sense, you can help prices from seeing 749 00:38:40,880 --> 00:38:45,080 Speaker 1: more spikes. But however, I don't think these companies will 750 00:38:45,080 --> 00:38:47,640 Speaker 1: really go out and go all and endure again the 751 00:38:47,680 --> 00:38:49,879 Speaker 1: way they did before for the reasons we talked about before. 752 00:38:50,640 --> 00:38:53,160 Speaker 6: So what's happened to the Russian oil? 753 00:38:53,239 --> 00:38:56,239 Speaker 4: It's been a couple of years now, and if it's 754 00:38:56,239 --> 00:38:58,120 Speaker 4: not going to Germany, where's it going. 755 00:38:59,120 --> 00:39:02,320 Speaker 1: Yeah, so it's not going to the Western European nations, 756 00:39:02,640 --> 00:39:05,520 Speaker 1: and Western nations has placed sanctions on Russian oil. So 757 00:39:05,640 --> 00:39:08,120 Speaker 1: a lot of that has been brought up by unconstries 758 00:39:08,200 --> 00:39:12,000 Speaker 1: like India and China, so they're pretty really benefiting from 759 00:39:12,040 --> 00:39:12,719 Speaker 1: these sanctions. 760 00:39:13,760 --> 00:39:15,359 Speaker 6: So these sanctions aren't really working, are they. 761 00:39:15,680 --> 00:39:19,719 Speaker 1: They will be directing trade flow, the redirecting trade flow, 762 00:39:19,800 --> 00:39:22,640 Speaker 1: and they're making it harder for Russia to ship the 763 00:39:22,719 --> 00:39:26,160 Speaker 1: oils around the world. So it does increase the costs 764 00:39:26,239 --> 00:39:30,080 Speaker 1: on the Russian oil producers. So that's an impact, but 765 00:39:30,200 --> 00:39:32,200 Speaker 1: the impact I feel like it's probably more limited. 766 00:39:32,680 --> 00:39:35,719 Speaker 8: We do import some oil though, right it's not all 767 00:39:36,040 --> 00:39:39,720 Speaker 8: domestically produced, I mean, is that subject to tariffs? 768 00:39:40,480 --> 00:39:44,680 Speaker 1: I well, I think this morning Trump has indicated he 769 00:39:44,719 --> 00:39:47,279 Speaker 1: will accept where we do accept input out of oil 770 00:39:47,280 --> 00:39:51,000 Speaker 1: from Canada just because of the crewe grate that we 771 00:39:51,120 --> 00:39:55,200 Speaker 1: need in the golf coades. It's more fitting for Canadian 772 00:39:55,239 --> 00:39:57,080 Speaker 1: heavier crew dogs. And I think this morning he did 773 00:39:57,160 --> 00:39:59,040 Speaker 1: mention that he's going to exempt some of these crude 774 00:39:59,120 --> 00:40:02,040 Speaker 1: and natural gas US from Canada so he can really 775 00:40:02,160 --> 00:40:05,440 Speaker 1: like doing the very spigical race ways, even though if 776 00:40:05,480 --> 00:40:07,319 Speaker 1: he does in prokes on tariff's all right. 777 00:40:07,320 --> 00:40:09,239 Speaker 4: So I think the takeaway from this conversation is that 778 00:40:09,400 --> 00:40:11,840 Speaker 4: oil companies are going to make more money through lower. 779 00:40:11,719 --> 00:40:13,520 Speaker 5: Tax drill baby Trull. 780 00:40:13,520 --> 00:40:16,280 Speaker 4: Tyler, thank you so much for joining us, TYLERU oil 781 00:40:16,440 --> 00:40:18,360 Speaker 4: market Specialist bn EF. 782 00:40:18,440 --> 00:40:21,240 Speaker 6: I guess our friends down in like Houston, Texas, they're happy. 783 00:40:21,000 --> 00:40:22,839 Speaker 5: About this, Oh, I would think so yeah. 784 00:40:22,920 --> 00:40:24,600 Speaker 8: I mean, we did just have that big take the 785 00:40:24,680 --> 00:40:27,240 Speaker 8: other day about oil and gas being the most productive 786 00:40:27,400 --> 00:40:29,800 Speaker 8: US industry. How to think of like, you know, what 787 00:40:29,960 --> 00:40:32,759 Speaker 8: happens now you're just gonna ramp up the drills even more. 788 00:40:33,080 --> 00:40:35,200 Speaker 4: But they I mean, as you know, Tyler was mentioning 789 00:40:35,239 --> 00:40:37,600 Speaker 4: and other analysts have mentioned that these companies they have 790 00:40:37,680 --> 00:40:38,719 Speaker 4: financial discipline. 791 00:40:38,760 --> 00:40:40,120 Speaker 6: Now they don't just drill, that's right. 792 00:40:40,200 --> 00:40:43,879 Speaker 4: They return cash the shareholders and bond holders, unlike past 793 00:40:43,920 --> 00:40:44,640 Speaker 4: cycles were. 794 00:40:44,560 --> 00:40:47,440 Speaker 5: I was going to say, the twenty sixteen to eighteen years. 795 00:40:47,640 --> 00:40:50,319 Speaker 4: Yeah, so they've I guess they've learned their lesson more 796 00:40:50,719 --> 00:40:53,239 Speaker 4: helpful to their equity holders and their bondholders. 797 00:40:53,600 --> 00:40:58,200 Speaker 2: This is the Bloomberg Intelligence podcast, available on Apples, Spotter, Pye, 798 00:40:58,320 --> 00:41:01,480 Speaker 2: and anywhere else you get your podcast. 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