Latest / Bloomberg Intelligence / The Bottom Line Is California Won't Allow PG&E To Fail

Transcript

The Bottom Line Is California Won't Allow PG&E To Fail · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg P and L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Let's
• 0:27
  Speaker 1: talk about pg n E, the California utility. The shares,
• 0:32
  Speaker 1: as Greg Jarrett just mentioned, higher right now by more
• 0:35
  Speaker 1: than thirty nine percent. Joining us here in the Bloomberg
• 0:38
  Speaker 1: Interact of Brokers Studios to lend his expertise is Kit Kneale.
• 0:43
  Speaker 1: He is our senior industry analyst for the world of Utilities. Kit,
• 0:48
  Speaker 1: thank you very much for being here. Total liabilities for
• 0:52
  Speaker 1: p G and E. What kind of number are we
• 0:55
  Speaker 1: talking about? Thirty billion? And I think that's the right
• 0:58
  Speaker 1: range from last year plus this year. That's a lot
• 1:01
  Speaker 1: of money. That's more money, twice as much money as
• 1:06
  Speaker 1: the invested equity in p G n E, twice as
• 1:10
  Speaker 1: much as the annual revenues for pg n E. So
• 1:13
  Speaker 1: it you know, when you look at it that way,
• 1:16
  Speaker 1: you get a sense of just you know how you're
• 1:20
  Speaker 1: between a rock and a hard place when you're saying
• 1:22
  Speaker 1: they have to pay all of this if they did well.
• 1:25
  Speaker 1: So let's just take a step back. What is p
• 1:28
  Speaker 1: G n e S responsibility in the fires that are
• 1:31
  Speaker 1: currently ravage in California. In California, they have this rule
• 1:36
  Speaker 1: called inverse condemnation, and the courts have held that if
• 1:41
  Speaker 1: a utility equipment is in any way involved in a fire,
• 1:46
  Speaker 1: that the utility is totally responsible for all the damages
• 1:50
  Speaker 1: in the fire. They can't argue that somebody else had
• 1:52
  Speaker 1: partial responsibility, or some homeowners should have done this, or
• 1:56
  Speaker 1: some highway department should have done that. They just have
• 1:59
  Speaker 1: to pay it all. So that's been the real crunch
• 2:02
  Speaker 1: that makes the California situation UH different than a hurricane
• 2:06
  Speaker 1: in Florida, for example, where there's a long history of
• 2:10
  Speaker 1: people saying, obviously the utility didn't cause this, so you know,
• 2:15
  Speaker 1: we have to help them pay it back. The California
• 2:19
  Speaker 1: legislature has a voice in all of this, right, that's right.
• 2:24
  Speaker 1: The California legislature, the governor, UH, the regulatory Commission. So
• 2:30
  Speaker 1: all those are really kind of the three major UH
• 2:34
  Speaker 1: state folks that are going to decide how this works out.
• 2:39
  Speaker 1: And the legislature has already done something where they've indicated
• 2:43
  Speaker 1: that the regulators are supposed to consider whether, basically whether
• 2:49
  Speaker 1: utility is going to go bankrupt if it pays all
• 2:51
  Speaker 1: of the liabilities that might be assigned to it. So
• 2:54
  Speaker 1: the legislature has said, hey, regulators, uh, you know, don't
• 3:00
  Speaker 1: you have to pass off some of the of the
• 3:04
  Speaker 1: liabilities or these guys can't survive financially. And yesterday we
• 3:10
  Speaker 1: saw the head regulator in California re emphasizing that point,
• 3:14
  Speaker 1: and that gave stockholders a kind of new lease on
• 3:18
  Speaker 1: life and and bond holders as well from Penny. With
• 3:21
  Speaker 1: the bonds surging and price, I have to wonder pg
• 3:24
  Speaker 1: NY knows that it has California hostage here. It is
• 3:27
  Speaker 1: the biggest utility, biggest energy providers, so you know they're
• 3:31
  Speaker 1: not going to be allowed to fail. The fact that
• 3:33
  Speaker 1: they drew down their entire credit line and basically said
• 3:37
  Speaker 1: all right, we're at risk of bankruptcy now forced their hands. No. Well,
• 3:41
  Speaker 1: I think, uh, it's a good question whether they're they're
• 3:47
  Speaker 1: that tough and cynical to be playing it that way.
• 3:50
  Speaker 1: You know, they're they're not. They're not hedge fun guys, right,
• 3:53
  Speaker 1: you know, they're not necessarily uh, they're kind of hopefully
• 3:56
  Speaker 1: running it for the long term. And also the reality is,
• 4:00
  Speaker 1: you know there's an example, Well, if if they're running
• 4:04
  Speaker 1: it is for the long term, I want to come
• 4:06
  Speaker 1: in there, because if they are, they're not doing a
• 4:09
  Speaker 1: very good job. And it's mean in terms of what
• 4:12
  Speaker 1: sort of taxpayers are on the hook for in California,
• 4:14
  Speaker 1: they're not gonna be allowed to fail. They're they're struggling
• 4:18
  Speaker 1: for sure, But look at the end of the day,
• 4:21
  Speaker 1: even if it's the utility's fault, I mean, even if
• 4:24
  Speaker 1: they did something drastically wrong. There's a couple of realities
• 4:28
  Speaker 1: that California has to do with. One is the people
• 4:31
  Speaker 1: got burned out have to get compensated in some way,
• 4:34
  Speaker 1: so that could be in the multiple billions of dollars.
• 4:37
  Speaker 1: The other is you have to sooner or later have
• 4:40
  Speaker 1: a financially viable utility. So to say, even if you
• 4:45
  Speaker 1: say it's their fault, to say, well, they have to
• 4:48
  Speaker 1: pay twenty or thirty billion dollars doesn't compute because then
• 4:52
  Speaker 1: you don't have a utility that can continue to operate.
• 4:56
  Speaker 1: Kit if you just for the sake of argument, put
• 5:00
  Speaker 1: aside all of the inverse condemnation liabilities, the potential fifteen
• 5:08
  Speaker 1: billion whatever it is, what's the financial operation of p
• 5:13
  Speaker 1: g N like Well, aside from that, the financial operation
• 5:17
  Speaker 1: is fine. But you know, keep in mind, regulated utilities
• 5:22
  Speaker 1: are entirely the creatures of the regulators, So their profitability,
• 5:29
  Speaker 1: their cash flow is completely dependent on what the regulators say.
• 5:32
  Speaker 1: It is. So if the regulators raise rates, then their
• 5:35
  Speaker 1: earnings and cash flow go up. If they cut rates,
• 5:38
  Speaker 1: they go down. If the regulators say, you don't have
• 5:41
  Speaker 1: to pay these apparent liabilities, then you don't if you
• 5:45
  Speaker 1: do so. So when people say, well, what's the company
• 5:49
  Speaker 1: really worth? Aside from all of this, it completely you know,
• 5:53
  Speaker 1: it completely depends on what happens with the regulators and
• 5:57
  Speaker 1: whether they want to let it go bank rupted or not.
• 6:00
  Speaker 1: That's that's the end of the the end of the
• 6:03
  Speaker 1: day what you have, and right now regulators are saying,
• 6:06
  Speaker 1: we don't want you to go bankrupt. Kit Connolledge, thank
• 6:08
  Speaker 1: you so much for being with us. Kit Connolledge's senior
• 6:10
  Speaker 1: Industrials and Utilities analyst with Bloomberg Intelligence PG and E
• 6:15
  Speaker 1: has more than twenty two billion dollars of debt. Their
• 6:18
  Speaker 1: prices on those bonds are rising today, although PAM I
• 6:21
  Speaker 1: do have to wonder going forward if perhaps bond investors
• 6:25
  Speaker 1: are not going to be as forgiving with some of
• 6:26
  Speaker 1: these companies that can whip them around with different proclamations,
• 6:30
  Speaker 1: if there is a situation like this that occurs. Brexit
• 6:36
  Speaker 1: has been on the brink for a long time, but
• 6:38
  Speaker 1: things seem to be heating up with the potential deal collapsing.
• 6:42
  Speaker 1: Theresa May now Prime Minister of the United Kingdom, trying
• 6:45
  Speaker 1: to retain her control over Parliament and get this sort
• 6:50
  Speaker 1: of deal through before the deadline. Joining us now, Brandon Brown,
• 6:53
  Speaker 1: chief economist and head of economic research at Mitsubishi UFJ Securities,
• 6:57
  Speaker 1: joining us here in our eleven three oh Studios Brunday,
• 7:00
  Speaker 1: Can we just talk about what the pound is currently
• 7:03
  Speaker 1: pricing in what scenario our markets saying seems most likely
• 7:07
  Speaker 1: right now? There are two scenarios, and I think the
• 7:10
  Speaker 1: main scenario it's being priced in is that somehow this
• 7:14
  Speaker 1: appeasement deal is going to get through, and most likely
• 7:19
  Speaker 1: it'll get through because there will be some cross of
• 7:21
  Speaker 1: crossing of our support from the Labor Party um to
• 7:25
  Speaker 1: support the deal despite for Brexit opposition, with Brexiteer opposition
• 7:29
  Speaker 1: within the Conservative Party, and why Labor would support the
• 7:31
  Speaker 1: deal is that if the Conservatives go along with this,
• 7:35
  Speaker 1: they are a major risk of losing a lot of
• 7:38
  Speaker 1: our nationalists working class support and this will probably sink
• 7:42
  Speaker 1: for Conservative Party for the next generation. So Labor would
• 7:44
  Speaker 1: really do well out of it. And in many ways
• 7:47
  Speaker 1: I think what the pound is pricing in it is
• 7:49
  Speaker 1: suspecter of a far left government under Mr Corbin. Now
• 7:52
  Speaker 1: there is a there is a better scenario, scenario number two,
• 7:57
  Speaker 1: where Churchillian type figure maybe that an exaggeration emerges in
• 8:02
  Speaker 1: in some sort of leadership challenge in the next few weeks,
• 8:05
  Speaker 1: says that enough is enough. The Europeans have treated us terribly.
• 8:10
  Speaker 1: They haven't ready sat down in good faith and negotiated,
• 8:13
  Speaker 1: and the best we can do is reach some interim
• 8:15
  Speaker 1: and deal for the next year and then we're away,
• 8:17
  Speaker 1: out out and under w t O rules, and that
• 8:21
  Speaker 1: would salvage a Conservative party possibly or rarely a lot
• 8:25
  Speaker 1: of nationalists support, and they may even win a general
• 8:28
  Speaker 1: election one year down the road. Well, the French Finance
• 8:32
  Speaker 1: minister said earlier today that well, he said that British
• 8:37
  Speaker 1: politicians who campaigned for Brexit, he described them quote as liars.
• 8:44
  Speaker 1: Does that help May actually reach an agreement with her
• 8:49
  Speaker 1: own party as well as with Parliament. Absolutely not. But
• 8:53
  Speaker 1: if you ask me what the main failure in the
• 8:56
  Speaker 1: homemade strategy has been, it has been right from a start,
• 8:59
  Speaker 1: not doing everything possible to get a US deal, because
• 9:04
  Speaker 1: once they realize that the Europeans were going to be
• 9:06
  Speaker 1: totally obdurate, as they have been in Germany and France,
• 9:09
  Speaker 1: the obvious strategy was to take the advantage of an
• 9:13
  Speaker 1: anti German president of the United States, anti EU, pro
• 9:17
  Speaker 1: British to do a deal and fundamentally aligned Britain with
• 9:22
  Speaker 1: all American interests and policies in the Middle East and
• 9:24
  Speaker 1: everywhere else. And May has totally failed to do that instead,
• 9:28
  Speaker 1: in fact, she's gone for the opposite. She's been backing
• 9:31
  Speaker 1: m mercle on Iran and all these other issues that
• 9:34
  Speaker 1: purposely to annoy President Trump. So I want to shift
• 9:37
  Speaker 1: focus from Europe to the United States because what's moving
• 9:41
  Speaker 1: markets today in in large part is FED Vice chair
• 9:45
  Speaker 1: Rich Clarida his comments about getting to neutral and the
• 9:49
  Speaker 1: possibility of perhaps raising rates less frequently than previously thought
• 9:54
  Speaker 1: because of some of the head winds to growth and
• 9:56
  Speaker 1: the fact that you are seeing a little bit of
• 9:58
  Speaker 1: slowing given that you just wrote this book, the Case
• 10:01
  Speaker 1: against two percent inflation, Do you think that the FED
• 10:05
  Speaker 1: needs to slow down now and not hike very much
• 10:08
  Speaker 1: at all to get to neutral in order to sort
• 10:11
  Speaker 1: of normalize, or do you think that there's still room
• 10:14
  Speaker 1: to run. We'll let me say one or two things.
• 10:16
  Speaker 1: Nobody knows what neutral interest rates, let alone Federal Reserve officials.
• 10:20
  Speaker 1: And secondly, nobody knows where we are in the business cycle.
• 10:24
  Speaker 1: If you study any fifty or hundred year period or
• 10:26
  Speaker 1: twenty year period, the record of Federal Reserve fine tuning
• 10:30
  Speaker 1: and knowing exactly where we are in the business cycle
• 10:32
  Speaker 1: is appalling, and probably at the moment, with a cheerlead
• 10:36
  Speaker 1: leader for Trump Economics as the chief of the FED,
• 10:38
  Speaker 1: he's probably tending to exaggerate the strength of the economy.
• 10:42
  Speaker 1: I mean, my view is that the growth cycle upturn,
• 10:45
  Speaker 1: which started in the early two thousand and sixteen in
• 10:49
  Speaker 1: the US and globally under the influence of radically easy
• 10:53
  Speaker 1: monetary policy, has become tired, and most likely the global
• 10:58
  Speaker 1: growth slow down out iv United States has now been
• 11:01
  Speaker 1: joined by the United States. That is a dangerous period
• 11:04
  Speaker 1: because growth cycle slowdowns do sometimes go into recessions and
• 11:08
  Speaker 1: sometimes do bring about asset inflation. So we are at
• 11:11
  Speaker 1: a dangerous moment. I just want to note that your
• 11:13
  Speaker 1: new book is entitled The Case Against two percent Inflation
• 11:18
  Speaker 1: From negative Interest Rates to a twenty one century gold Standard.
• 11:24
  Speaker 1: Do you see that happening? Well, A century is a
• 11:27
  Speaker 1: long time in twenty one century? What what I what
• 11:31
  Speaker 1: I do think is that the two percent inflation standard
• 11:36
  Speaker 1: is going to blow apart sooner than most people think,
• 11:39
  Speaker 1: even although there's not any effective political opposition to it.
• 11:42
  Speaker 1: And it's probably going to blow apart because in risk
• 11:45
  Speaker 1: global slow that global slow slow down, inflation everywhere is
• 11:49
  Speaker 1: going to be well below target, including in the United States.
• 11:52
  Speaker 1: I think the next phase of monetary development is going
• 11:56
  Speaker 1: to be currency war. It's going to be monetary a
• 12:00
  Speaker 1: new period of monetary chaos in the way of the
• 12:02
  Speaker 1: US will react to a global slowed down global slow
• 12:06
  Speaker 1: down is going to be stepping up quite justifiably action
• 12:11
  Speaker 1: against current its manipulators in Europe, Japan, and China. We
• 12:15
  Speaker 1: look forward to you in the future guiding US through
• 12:17
  Speaker 1: those issues. Thank you very much. Dr Brendan Brown. He
• 12:20
  Speaker 1: is the chief economist and head of economic research for
• 12:23
  Speaker 1: Mitsubishi UFJ Securities. He's also the author of the case
• 12:27
  Speaker 1: against two percent inflation from negative interest rates to a
• 12:31
  Speaker 1: one century gold standard. We have an expert in the
• 12:38
  Speaker 1: world of food, Adnan Durrani. He is the founder and
• 12:42
  Speaker 1: the chief executive of Saffron Road and he has a
• 12:45
  Speaker 1: diverse and storied list of experiences in the food industry.
• 12:50
  Speaker 1: For example, he managed to sell what was at the
• 12:54
  Speaker 1: time the second largest bottled water company in the Northeast.
• 12:58
  Speaker 1: It was acquired by cot Averages. I'm speaking about Vermont
• 13:01
  Speaker 1: Pure and Crystal Rock. And he joins us here in studio.
• 13:05
  Speaker 1: Thank you very much for being here. Thank you very
• 13:07
  Speaker 1: much for having me. It's honor to be on your show.
• 13:09
  Speaker 1: Tell us a little bit about halal food and Saffron
• 13:15
  Speaker 1: foods and how this all came together. Give us a
• 13:17
  Speaker 1: little of your history. Sure so, uh, I'm kind of,
• 13:21
  Speaker 1: I guess, both a serial immigrant and a serial entrepreneur.
• 13:25
  Speaker 1: And this started with the idea of the Silk Road,
• 13:27
  Speaker 1: which was you know, went all the way from Italy
• 13:30
  Speaker 1: to Asia and celebrated a hundred different cultures on that road,
• 13:34
  Speaker 1: and so we thought, let's create a journey. Let's create
• 13:36
  Speaker 1: a brand around Royal cuisines where they can be used
• 13:38
  Speaker 1: as an enlightenment tool to bring together people of different faiths,
• 13:42
  Speaker 1: different ethnicities, different cultures and celebrate their cuisines. And so
• 13:46
  Speaker 1: the zafron was the main spice used on the Fron Road.
• 13:49
  Speaker 1: So that's how it really came together as kind of
• 13:51
  Speaker 1: a social model. And halal food, you know, is is
• 13:54
  Speaker 1: a huge business outside US. It's a two trillion dollar
• 13:57
  Speaker 1: industry outside US. And halal has to do with not
• 14:00
  Speaker 1: only how was it harvested, but how the animals treated
• 14:03
  Speaker 1: while they were living. It's very similar to kosher. But
• 14:06
  Speaker 1: we knew that there was a very strong demographic in
• 14:08
  Speaker 1: US for that, and that's why we launched that. That's
• 14:10
  Speaker 1: not our core consumer necessarily, it's one of the elements
• 14:13
  Speaker 1: of our brand. Well, yeah, that's what I was gonna say.
• 14:14
  Speaker 1: When I think of Saffron Road, I think of major supermarkets,
• 14:18
  Speaker 1: I think of whole foods, I think of you know,
• 14:20
  Speaker 1: aisles where it's not just people who are looking for
• 14:23
  Speaker 1: halal food, but they're looking for Middle Eastern food. They're
• 14:27
  Speaker 1: looking for Indian food. So can you talk a little
• 14:29
  Speaker 1: bit about your distribution, your expansion, especially now as there's
• 14:33
  Speaker 1: a more nationalistic tone in the United States. Very good question, Lisa. Yes,
• 14:37
  Speaker 1: we started out obviously serving the Helala community, which is
• 14:40
  Speaker 1: around six or eight million American Muslims. Very educated. It's
• 14:43
  Speaker 1: not like you have in Europe sent higher education than
• 14:46
  Speaker 1: the average American as well as very high income. So
• 14:49
  Speaker 1: it's it's really when you think about your technology engineers
• 14:52
  Speaker 1: and all of that, that's really the demographic that's here.
• 14:55
  Speaker 1: So that's a marketer's dream, right, But our consumers are
• 14:59
  Speaker 1: not even ha consumers. There are consumers that are part
• 15:02
  Speaker 1: of the natural organic movement or what we call NASH
• 15:04
  Speaker 1: natural Organic, sustainable, healthy living lifestyle today. Food in our opinion,
• 15:10
  Speaker 1: especially millennials who are about sixty or seventy pc of
• 15:13
  Speaker 1: our demographic, look at food tribes and so we're part
• 15:16
  Speaker 1: of this natural organic food tribe. And this is my
• 15:18
  Speaker 1: fourth food company in the natural organic sector. One of
• 15:20
  Speaker 1: them was Stony Field Farms yogurt I mean I for
• 15:23
  Speaker 1: thirty years have been devoted to businesses that are social
• 15:26
  Speaker 1: responsible to the environment, and so we say journey to
• 15:29
  Speaker 1: better and what we mean by that is journey to
• 15:31
  Speaker 1: better ethical values around food. Journey that's a better for
• 15:35
  Speaker 1: the farmer's journey that's better for the the animals of livestock,
• 15:38
  Speaker 1: and journey that's better for the food system that brings
• 15:41
  Speaker 1: you really healthy food. So since that's our starting point,
• 15:44
  Speaker 1: we were able to distribute nationally. We're in twenty thousand
• 15:47
  Speaker 1: stores all over the country, all fifty states. We're the
• 15:49
  Speaker 1: only national hall band as well. But that's because of
• 15:52
  Speaker 1: our standards. Uh. You know, Whole Foods was our initial partner.
• 15:55
  Speaker 1: We were the first uh non JEMO verified TROS and
• 15:58
  Speaker 1: nottre in the world. We're the first certified humane entree
• 16:01
  Speaker 1: in the world. So what we were doing was really
• 16:02
  Speaker 1: trying to lift and elevate the ethical values around food
• 16:06
  Speaker 1: that's offered in the supermarkets today. There are many legacy
• 16:10
  Speaker 1: brands that are having trouble in the food aisle and
• 16:13
  Speaker 1: in the what I would call the frozen case, the
• 16:16
  Speaker 1: frozen aisle, because frozen food it doesn't it gets a
• 16:20
  Speaker 1: bad rap. But you've been very successful in that line
• 16:24
  Speaker 1: with your entrees, with your balls, you make it very
• 16:27
  Speaker 1: clear no antibiotics. Ever, how is that business doing and
• 16:31
  Speaker 1: tell us how yours is different than many of the
• 16:34
  Speaker 1: well known legacy brands. Sure, that's a very good point, Biman.
• 16:38
  Speaker 1: What's happened in the food industry, And having been in
• 16:40
  Speaker 1: this industry thirty years, I never thought I'd see this
• 16:43
  Speaker 1: happen in my entire lifetime. But last year, Boston Consulting
• 16:47
  Speaker 1: Group in IRI but out of study that said that
• 16:49
  Speaker 1: forty of the growth of the eight hundred billion dollar
• 16:52
  Speaker 1: food and beverage industry is coming from small brands. That
• 16:55
  Speaker 1: was a shocker. That was a wake up call. It
• 16:58
  Speaker 1: was a wow moment. I think for the big CP Geese,
• 17:00
  Speaker 1: they're not succeeding because they haven't pivoted into this category
• 17:05
  Speaker 1: in a mindful, authentic way. What we do is we
• 17:08
  Speaker 1: don't just you know, we don't just come up with
• 17:10
  Speaker 1: these certifications as a marketing element, although it's a smart
• 17:14
  Speaker 1: marketing element if you're authentic to it, it's because that's
• 17:17
  Speaker 1: that's our value system. And so millennials today are very viral.
• 17:21
  Speaker 1: They go online, they check out everything about the brand,
• 17:24
  Speaker 1: they check out everything about the products. So you have
• 17:26
  Speaker 1: to be bulletproof in terms of transparency, which a lot
• 17:28
  Speaker 1: of big CPGs aren't. We've been able to disrupt and
• 17:31
  Speaker 1: become a modern challenger brand. We single handedly lifted whole
• 17:34
  Speaker 1: food sales in frozen National Organic for the last four
• 17:37
  Speaker 1: years about a year um and most of the other
• 17:41
  Speaker 1: brands were suffering terribly. Now a lot of the big brands,
• 17:44
  Speaker 1: the CPGs have started to pivot into this category and
• 17:46
  Speaker 1: they're getting zoomer. Package goods companies have started to really
• 17:50
  Speaker 1: pivot into this category in a in a good way,
• 17:52
  Speaker 1: and they are cleaning up their products. That's part of
• 17:55
  Speaker 1: our mission right is to really it's also to bring
• 17:58
  Speaker 1: them along, you know, to really change the foods system
• 18:00
  Speaker 1: because a lot of what they're looking at us through
• 18:02
  Speaker 1: the river view mirror. We keep looking forward how to
• 18:04
  Speaker 1: completely lift our standards every year. You know, when you
• 18:07
  Speaker 1: talk about being sustainable, I think about some of the
• 18:10
  Speaker 1: effects of climate change that we've seen recently. Has there
• 18:13
  Speaker 1: been anything yet that has forced you to change your
• 18:16
  Speaker 1: supply chains as a result to UH as a result
• 18:20
  Speaker 1: of change in weather. Absolutely, we're always looking for partners,
• 18:25
  Speaker 1: whether it's the farms resourced from or whether it's a
• 18:28
  Speaker 1: particular vendors that we choose that are dedicated to the
• 18:31
  Speaker 1: same values that we're dedicated to so for example, UH,
• 18:33
  Speaker 1: we we have a line of very successful organic snacks,
• 18:36
  Speaker 1: chickpie snacks. We're the only ones that are fair trade certified.
• 18:40
  Speaker 1: We have a dark chocolate and dark chocolate chai. I
• 18:42
  Speaker 1: brought them for you and him to try to sample. UH.
• 18:46
  Speaker 1: We also look very carefully at what are their standards
• 18:49
  Speaker 1: around UH labor, what are their standards and their facilities,
• 18:53
  Speaker 1: and we do audits on them. So we're very careful
• 18:55
  Speaker 1: with that. We also think that you know, we we've
• 18:58
  Speaker 1: been changing our packaging and there's a big movement towards
• 19:00
  Speaker 1: more environmental packaging as well. Is the is the halal
• 19:05
  Speaker 1: food more expensive? Because we talk about organic food being
• 19:09
  Speaker 1: more expensive than non organic food. Is there a real
• 19:12
  Speaker 1: price point difference? Halal is not quite there yet because
• 19:16
  Speaker 1: kosher is um because when the Kosher certifiers and the
• 19:20
  Speaker 1: Ruth scholars came here, they did a wise thing for
• 19:23
  Speaker 1: years ago, they set some standards. Right now, there's a
• 19:26
  Speaker 1: lot of different standards. I think halala still in early stages,
• 19:29
  Speaker 1: even though it's a pretty huge market. UM. So I
• 19:32
  Speaker 1: think once they set those standards will start to see
• 19:35
  Speaker 1: the price movement upward. But right now there's a slight premium.
• 19:37
  Speaker 1: It's not really that significant. The more significant is really
• 19:40
  Speaker 1: the natural organic sustainability. Thank you so much for being
• 19:44
  Speaker 1: with us. Really a pleasure having you at Non Drani,
• 19:48
  Speaker 1: founder in chief executive of Saffron Road, long time entrepreneur
• 19:52
  Speaker 1: and uh and traveler, and and really the flavor is
• 19:55
  Speaker 1: getting into stores around the country and around the world.
• 19:59
  Speaker 1: Paym Definitely interesting to sort of see how even if
• 20:03
  Speaker 1: there is sort of more protectionist rhetoric, there is an
• 20:06
  Speaker 1: ex more expansive taste for different cultural foods. So that's
• 20:10
  Speaker 1: something that is sort of a uniting factor topic Brexit.
• 20:17
  Speaker 1: UK Prime Minister Theresa May has just named the pro
• 20:20
  Speaker 1: Brexit Stephen Barkley as her new Brexit secretary. He his
• 20:25
  Speaker 1: remit will be to concentrate on preparing legislation, while talks
• 20:30
  Speaker 1: between the European Union and the United Kingdom will be
• 20:33
  Speaker 1: handled by May's team in her Downing Street office. Now,
• 20:37
  Speaker 1: this basically strips the Brexit Department of a key part
• 20:42
  Speaker 1: of its job. Here to tell us more about what's
• 20:44
  Speaker 1: going on with Brexit is Terres Raphael Bloomberg Opinion editor. Terres,
• 20:50
  Speaker 1: a pleasure to have you with us. Coming to us
• 20:52
  Speaker 1: from London. Your most recent column about Brexit says, the
• 20:56
  Speaker 1: problem isn't Theresa May, it's Brexit. What do you mean, Well,
• 21:01
  Speaker 1: it's not to say that Theresa May hasn't made a
• 21:04
  Speaker 1: whole lot of mistakes in the last two years since
• 21:08
  Speaker 1: triggering uh, well year and a half since since triggering
• 21:12
  Speaker 1: Article fifty. But you know, the the key problem here
• 21:16
  Speaker 1: is that Britain has to make some pretty big compromises
• 21:19
  Speaker 1: if it wants both access to EU markets and the
• 21:24
  Speaker 1: um you know, freedom from EU rules and institutions. It
• 21:28
  Speaker 1: really can't have both. Now, May's mistake was sort of
• 21:31
  Speaker 1: telling both remainders and levers that they could have mostly
• 21:34
  Speaker 1: what they wanted, and not quite being clear with them
• 21:37
  Speaker 1: that that there would be some tough decisions to be made.
• 21:40
  Speaker 1: And now you know that time has run out. She's
• 21:42
  Speaker 1: got a deal back from Brussels. Everyone is upset about it. Yes,
• 21:46
  Speaker 1: everybody is upset about it. Does that mean it's a
• 21:48
  Speaker 1: good deal? Um, I don't think. I don't think anyone
• 21:52
  Speaker 1: can really call it a good deal. What what we
• 21:54
  Speaker 1: could say about is it's probably the best she's going
• 21:57
  Speaker 1: to get and it is far preferable UH to have
• 22:00
  Speaker 1: this deal than to have no deal at all, because
• 22:02
  Speaker 1: no deal at all, um is you know, it's a
• 22:05
  Speaker 1: disaster for the UK economy. It literally means, you know,
• 22:09
  Speaker 1: planes don't take off unless um, there are some very
• 22:12
  Speaker 1: last you know, minute agreement's made. It means you know,
• 22:16
  Speaker 1: stockpiling medicines. Um. It's a whole lot of uncertainty and
• 22:20
  Speaker 1: a and a whole lot of grief. So you know,
• 22:22
  Speaker 1: this is this is a deal that you use offering. Uh,
• 22:25
  Speaker 1: they don't want to talk any further about it. There
• 22:27
  Speaker 1: may be some very marginal concessions left to be wrung out.
• 22:31
  Speaker 1: Some in May's cabinet are now working to see if
• 22:33
  Speaker 1: they can go and try to salvage this in a
• 22:36
  Speaker 1: way they could sell it to Parliament. But this is
• 22:38
  Speaker 1: pretty much as good as it gets for her now.
• 22:40
  Speaker 1: And the question is can she sell it to her parliament.
• 22:43
  Speaker 1: Based on your reporting and your conversations with people close
• 22:48
  Speaker 1: to the whole Brexit negotiations, do you believe that Brexit
• 22:51
  Speaker 1: is being used as a political weapon against the Prime
• 22:55
  Speaker 1: minister and that, as you said earlier, this is as
• 22:59
  Speaker 1: good as it gets and she was handed a pretty
• 23:02
  Speaker 1: lousy hand of cards to play. She did not call
• 23:06
  Speaker 1: the Brexit referendum. Did she know? And in fact she
• 23:10
  Speaker 1: was a Remained supporter. She wasn't an enthusiastic Remains supporter.
• 23:15
  Speaker 1: But once that vote, um, you know, was decided, it
• 23:18
  Speaker 1: went for Leave and she became Prime Minister. She said,
• 23:21
  Speaker 1: I'm going to deliver the best Brexit I can. I mean,
• 23:23
  Speaker 1: there's no doubt this is political Dominique rob her Brexit secretary, resigned,
• 23:29
  Speaker 1: having taken the job to negotiate the deal, having stayed
• 23:32
  Speaker 1: on while that deal was being negotiated, having accepted while
• 23:36
  Speaker 1: she presented it to cabinet, And you know, there are
• 23:39
  Speaker 1: a lot of people out there think, well, you know,
• 23:41
  Speaker 1: he he resigned thinking that it's not going to go
• 23:44
  Speaker 1: through Parliament and he wants to be party leaders. So
• 23:47
  Speaker 1: they're political machinations mixing with this huge generational, historical, uh
• 23:53
  Speaker 1: decision change that Britain is going through. So it's it's
• 23:56
  Speaker 1: very hard to separate the two. And it's, you know,
• 23:59
  Speaker 1: kind of what complicates the whole thing. British public opinion.
• 24:03
  Speaker 1: Give us a window onto what the British population thinks. Okay,
• 24:08
  Speaker 1: so the public opinion seems to have been shifting recently,
• 24:12
  Speaker 1: and there was a poll out recently that showed an
• 24:15
  Speaker 1: eight point shift towards remaining. So if you were to
• 24:18
  Speaker 1: have a straight in out vote right now, uh, many
• 24:22
  Speaker 1: people think that it would go the opposite way, and
• 24:25
  Speaker 1: maybe by a larger margin than eight. The problem with
• 24:28
  Speaker 1: that is you don't really know what people are going
• 24:30
  Speaker 1: to do until you call a vote and you have
• 24:32
  Speaker 1: a campaign and a lot there's a growing sort of
• 24:35
  Speaker 1: chorus of voices saying, let's have a second vote. But
• 24:38
  Speaker 1: what do you ask? Do you put a remain option
• 24:42
  Speaker 1: on the ballot, and that would be you know, completely
• 24:46
  Speaker 1: unacceptable to brexitters, who said, well, you know, the people
• 24:50
  Speaker 1: have already told us what they want, they want out.
• 24:52
  Speaker 1: We can't then ignore the first vote. So do you
• 24:55
  Speaker 1: put a deal or no deal option on the ballot,
• 24:58
  Speaker 1: in which case Parliament and says, well, what if they
• 25:01
  Speaker 1: vote no deal? It's always possible because you don't know
• 25:04
  Speaker 1: how this is going to play out in campaign, So
• 25:06
  Speaker 1: it's a tricky question. I think it's not impossible it
• 25:09
  Speaker 1: will get to another referendum, but I don't really see
• 25:11
  Speaker 1: the way through now, given the difficulty and figuring out
• 25:14
  Speaker 1: what's on that ballot. Just give you about twenty seconds
• 25:17
  Speaker 1: terres Tony Blair coming out today talking about Brexit. He
• 25:21
  Speaker 1: says it's the worst of both worlds. Does that help
• 25:24
  Speaker 1: Theresa May at all? PIM Tony Blair would get a
• 25:27
  Speaker 1: standing ovation if he was on Capitol Hill right now.
• 25:30
  Speaker 1: He has not loved in Britain. Um, it's there's actually
• 25:33
  Speaker 1: a real it's almost when he speaks out, Um, it
• 25:38
  Speaker 1: really hurts his cause. Uh, maybe that's mellowing a little
• 25:41
  Speaker 1: bit of a Former Prime Minister John Major has also
• 25:43
  Speaker 1: been speaking out, but I'm not sure it helps that much.
• 25:46
  Speaker 1: Thank you very much for being with us as always,
• 25:48
  Speaker 1: Terres Raphael Bloomberg Opinion Editor. Once again, the news is
• 25:52
  Speaker 1: that Prime Minister Theresa May will be taking direct control
• 25:57
  Speaker 1: of Rexit negotiations. Thanks for listening to the Bloomberg P
• 26:02
  Speaker 1: and L podcast. You can subscribe and listen to interviews
• 26:05
  Speaker 1: at Apple Podcasts, SoundCloud or whatever podcast platform you prefer.
• 26:09
  Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm
• 26:13
  Speaker 1: on Twitter at Lisa abramowits one before the podcast. You
• 26:16
  Speaker 1: can always catch us worldwide on Bloomberg Radio.