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The Month in Retail, China's Rare Earth Metal Export Ban · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
0:04
Speaker 1: my co host Matt Miller.
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Speaker 2: Every business day we bring you interviews from CEOs, market pros,
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Speaker 2: and Bloomberg experts, along with essential market moving news.
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Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever
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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
0:21
Speaker 1: Right now, let's talk about the retailers the consumer. The
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Speaker 1: consumer's dealing with a tremendous amount of inflation out there,
0:28
Speaker 1: potentially a recession on the horizon. How's that impacting what
0:31
Speaker 1: folks are actually buying out there in the stores. Mariy
0:33
Speaker 1: Shore joins us ES as a senior equity analyst for
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Speaker 1: Columbia thread Needle Investments. Mari, thanks so much for joining
0:40
Speaker 1: us here. I mean, we're kind of getting the summer doldoens,
0:43
Speaker 1: but it's not gonna be too soon. We'll be talking
0:44
Speaker 1: about back to school and the holidays. Just give us
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Speaker 1: your overview of kind of how retailers are doing, how
0:50
Speaker 1: the consumer's doing out there in the malls of America.
0:54
Speaker 3: Yeah, thanks so much for having me again. I think overall,
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Speaker 3: we continue to see the consumer across income segment coming
1:02
Speaker 3: under additional pressure, and I think that's really following a
1:06
Speaker 3: couple of years of elevated food inflation really catching up
1:10
Speaker 3: with people. On top of that, lower tax refunds, lower
1:14
Speaker 3: snap benefits are weighing on the low end consumer. So
1:18
Speaker 3: we've really seen the slowing across the board. And when
1:23
Speaker 3: we really dissect the different categories of PCE spend, we
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Speaker 3: continue to see the consumer spending more on services over goods,
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Speaker 3: and within goods, more on needs over onants. So I
1:37
Speaker 3: think it's a lot more of the same, a lot
1:40
Speaker 3: of the same themes that we have been talking about continuing.
1:45
Speaker 3: The quarter to date trends for many retailers are not
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Speaker 3: good and that places additional risk on their sales assumptions
1:53
Speaker 3: for the back half the year, especially as you said,
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Speaker 3: if we do enter a recession.
1:58
Speaker 4: If you do look at the fifty two week high
2:01
Speaker 4: list in May, lots of consumer oriented stocks on that
2:05
Speaker 4: so Clorox, Hershey's, Pepsical, Most and Cores. You also want
2:09
Speaker 4: to look at the discretionary side of things McDonald's, AutoZone bookings,
2:13
Speaker 4: d R. Horton, I want to get your thoughts on
2:16
Speaker 4: how you view this when it comes to the equity
2:19
Speaker 4: market and how you're advising clients to potentially position at
2:23
Speaker 4: this point.
2:25
Speaker 3: Yes, absolutely, it's a great question. And you know, some
2:28
Speaker 3: of those names that you talked about are more geared
2:31
Speaker 3: towards services like eating out and travel, which are still
2:36
Speaker 3: two very strong areas within consumer. Outside of that, you
2:40
Speaker 3: mentioned a lot of the staples companies, and we continue
2:43
Speaker 3: to see better results from those companies as consumers are
2:48
Speaker 3: forced to spend more on needs as I was saying,
2:52
Speaker 3: and so what we're trying to do really is basket
2:57
Speaker 3: our holdings between some of the more defense of names
3:00
Speaker 3: that are holding in better in a weakening macro backdrop,
3:06
Speaker 3: but also coupling that with higher beta names that in
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Speaker 3: some cases have exposure to China or categories as you mentioned,
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Speaker 3: like eating out, travel, even parts of I would say
3:20
Speaker 3: the athletic complex like Nike and Lulu Lemon that continue
3:24
Speaker 3: to show very strong results.
3:27
Speaker 1: So Mark, talk to us about I guess one of
3:31
Speaker 1: the things I noticed during the some of the earnings
3:34
Speaker 1: from the consumer products companies, whether it's Coco Cola or
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Speaker 1: Procter and Gamble, their ability to pass along price increases
3:40
Speaker 1: I was pretty impressive to maintain margin. How long can
3:43
Speaker 1: you continue to do that.
3:45
Speaker 3: It's a great question, and food historically has been a
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Speaker 3: category that has had very little pricing power, of course,
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Speaker 3: very competitive, lots of risk of substitution and trade down
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Speaker 3: to private label, and it's really been several years of
4:01
Speaker 3: double digit inflation in some of these categories.
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Speaker 1: You know.
4:05
Speaker 3: Now we've seen food at home inflation slow to the
4:08
Speaker 3: high single digit range, but shockingly, we continue to see.
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Speaker 5: The consumer absorb that.
4:14
Speaker 3: You know, some of the companies are starting to talk
4:17
Speaker 3: about signs of trade down and private label gaining share,
4:21
Speaker 3: but for the most part, the consumer is really absorbing
4:25
Speaker 3: these higher costs, and I think in large part it
4:28
Speaker 3: does reflect behavioral changes both during and post pandemic, where
4:33
Speaker 3: people are spending more time at home, eating more at home,
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Speaker 3: you know, more focused on health and wellness, and you know,
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Speaker 3: the additional benefits that eating at home can offer versus
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Speaker 3: eating out. And so for that reason, I think overall
4:50
Speaker 3: we are a lot more positive on these companies being
4:52
Speaker 3: able to maintain pricing and not see huge negative volume
4:58
Speaker 3: offsets to that, both in terms of the staples companies
5:02
Speaker 3: and the staples retailers.
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Speaker 4: So then is the worst past when it comes to
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Speaker 4: the margin pain when it comes to these consumer focused companies.
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Speaker 3: It's a great question, and it really varies by category.
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Speaker 3: What I would say is for a lot of the
5:18
Speaker 3: more discretionary exposed retailers that I focus on, even though
5:23
Speaker 3: we are seeing margin tailwinds from lower freight costs and
5:30
Speaker 3: in some cases lower markdowns, unfortunately shrink has become a
5:35
Speaker 3: much bigger headwind that all of these companies have had
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Speaker 3: to deal with, and I think they're all working very
5:41
Speaker 3: hard to try to combat it. And then in addition,
5:45
Speaker 3: because of unfavorable category mix, so in other words, people
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Speaker 3: buying more food versus apparel is a real negative for
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Speaker 3: broader companies, and so unfortunately that's an incremental margin headwind
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Speaker 3: that these companies are having to face. So overall, I
6:07
Speaker 3: would say, still lots of moving pieces on the margin line,
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Speaker 3: and it really varies by category and brand in terms
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Speaker 3: of who is best able to pass along the facing.
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Speaker 1: So, Maria, you know, let's stuck on the luxury side
6:23
Speaker 1: of the retail space. If I walk down Fifth Avenue
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Speaker 1: or Madison Avenue today, I will see lots of European
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Speaker 1: tours and hopefully they're spending money. But what I won't
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Speaker 1: see is Chinese tourists yet, when do you expect because
6:37
Speaker 1: that's such a big part of the global luxury market,
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Speaker 1: is a purchasing power of Chinese consumers, when do you
6:43
Speaker 1: expect that to really be seen.
6:46
Speaker 3: That's a great question. Unfortunately, the resumption of international travel
6:51
Speaker 3: out of China has been very slow, right, and that
6:54
Speaker 3: has been a big issue for European luxury companies, even
6:59
Speaker 3: for some beauty companies like Essay Lauder that are more
7:02
Speaker 3: exposed to travel retail. And it seems like, you know,
7:08
Speaker 3: this recovery post COVID in China is just taking a
7:11
Speaker 3: lot longer than anyone expected. So it could be you know,
7:16
Speaker 3: another six to twelve months before we really start to
7:19
Speaker 3: see that consumer come back in a bigger way. You know.
7:22
Speaker 3: In the meantime, these companies are all seeing still pretty
7:27
Speaker 3: strong business in China. In Europe, the business is actually
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Speaker 3: surprisingly resilient, and a lot of the companies have talked
7:36
Speaker 3: about the return of the Middle Eastern tourists, which has helped.
7:40
Speaker 3: But in North America, you know, even despite the return
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Speaker 3: of some European tourism, unfortunately, the business has weakened for
7:48
Speaker 3: a lot of luxury companies. Whether that be you know,
7:52
Speaker 3: the luxury department stores that we know like the Facts
7:55
Speaker 3: of the World, or even some of the luxury e
7:59
Speaker 3: comma businesses like a far a far Thatch for instance,
8:03
Speaker 3: or you know the European luxury companies that have exposure
8:07
Speaker 3: to North America. They've all talked about a slowdown and
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Speaker 3: that really speaks to you know, the first point that
8:13
Speaker 3: I was making, which is that across income segment, we
8:18
Speaker 3: are seeing the consumers coming under additional pressure. And remember
8:22
Speaker 3: a lot of these categories too, were surprisingly strong during
8:27
Speaker 3: the pandemic, and so I think part of the slowdown
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Speaker 3: more recently just reflex going up against a couple a
8:34
Speaker 3: couple of years of more difficult comparisons.
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Speaker 1: All right, Mary, thank you so much for joining us.
8:40
Speaker 1: Marie Shuore, senior equity analysts, Columbia Thread Need to Investments,
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Speaker 1: giving us a broad overview what's happening with the consumer
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Speaker 1: out there, both in terms of retail sales and just
8:49
Speaker 1: consumer products in general. So generally, you know, the consumer
8:54
Speaker 1: seems pretty darn strong, given that those inflation headwinds and
8:58
Speaker 1: then maybe some economic slowdown future.
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Speaker 4: Also looking at the ratio of equal we discretionary versus staples,
9:03
Speaker 4: it stops hitting a low, but as you know, discretionary
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Speaker 4: really been driven by home builder stocks as well this year.
9:08
Speaker 6: Paul, Absolutely, you're listening to the teenth Ken's a live
9:13
Speaker 6: program Bloomberg Markets weekdays at ten am Eastern on Bloomberg
9:17
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9:19
Speaker 7: The Bloomberg Business App, or listen on demand wherever you
9:22
Speaker 7: get your podcasts.
9:25
Speaker 1: Just meting here with Paul Swinging and a Bloomberg and
9:27
Speaker 1: Actor broker studio here. Looking at the SPX, the standard
9:30
Speaker 1: pores five hundred. We quote it all the time. It's
9:32
Speaker 1: up ten percent year to date. Let me take the
9:35
Speaker 1: spy that has the sp five hundred equal weight index
9:40
Speaker 1: that's actually down zero point five percent year to date,
9:43
Speaker 1: showing you, you know, the real what's really driving this
9:46
Speaker 1: market index is higher which your.
9:48
Speaker 4: Handful of namesake tech names.
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Speaker 1: So really I don't recall it ever being like that,
9:54
Speaker 1: but that kind of to me just goes to a
9:55
Speaker 1: lack of breath in this market I know for a
9:57
Speaker 1: lot of them.
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Speaker 4: Actually, it's the fourth biggest divergent when you're looking at
10:01
Speaker 4: megacap versus the equal weight.
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Speaker 1: That makes I just haven't seen it that much. So
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Speaker 1: Sam Dunlop. Maybe he has. He's a CIO at Angel
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Speaker 1: Oak Capital Advisors. So, Stam, what's that tell you when
10:13
Speaker 1: you look at the s p X versus the s
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Speaker 1: p Y, big, big divergence there.
10:19
Speaker 8: Yeah, you know, absolutely the divergence and the surge that
10:23
Speaker 8: we've seen notably intact this year has been you know,
10:27
Speaker 8: pretty extraordinary. Uh. But you know where we tend to
10:30
Speaker 8: focus or in the fixed income markets and particularly related
10:35
Speaker 8: to residential mortgage backed securities, and today's data, particularly the
10:39
Speaker 8: case Shiller index, you know, kind of really corroborated our
10:43
Speaker 8: view that housing in particular is really beginning to stay
10:46
Speaker 8: laws here, which is a real positive, particularly for mortgage
10:50
Speaker 8: backed securities.
10:51
Speaker 4: So Sam, how are you advising clients to position at
10:54
Speaker 4: this moment?
10:58
Speaker 8: Yeah, So, you know, we really think that we are
11:01
Speaker 8: at near peak policy and peak volatility, particularly as it
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Speaker 8: relates to the FED and the aggressive path that we've
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Speaker 8: seen clearly thus far to tamp down the aggressive inflation
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Speaker 8: we saw, you know, on the heels of of COVID.
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Speaker 8: But we see that that peak policy really nearing here
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Speaker 8: and taking advantage of the extraordinary elevated levels of implied
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Speaker 8: interest rate volatility, which in our opinion is set to
11:27
Speaker 8: decline here as the FED reversus course really in the
11:31
Speaker 8: second half of this year, which we think will be
11:33
Speaker 8: a real positive for mortgage backed securities and taking advantage
11:37
Speaker 8: of the extremely high yields that investors can capture today,
11:41
Speaker 8: just given the historically widespread and as well as just
11:45
Speaker 8: all in you know, high current yields in today's environment.
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Speaker 4: Sam, I knew earlier this year you were predicting potentially
11:51
Speaker 4: a brief recession in the US. Do you still think
11:54
Speaker 4: that's going to happen.
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Speaker 8: Yeah, you know, we're still in the recession camp, particularly
11:59
Speaker 8: for the second half of this year, as I mentioned earlier,
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Speaker 8: as we're really reaching in our view, peak policy and
12:05
Speaker 8: peak volatility here, really on the heels of the recent
12:10
Speaker 8: bank crisis that we saw clearly in March. In the
12:14
Speaker 8: first quarter of this year, we see that really tightening
12:17
Speaker 8: lending conditions notably, and you'll begin to see that really
12:21
Speaker 8: filter through in the growth data in the latter part
12:24
Speaker 8: of twenty twenty three. Really see the pausing and potentially
12:28
Speaker 8: easing here late this year and into early next.
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Speaker 1: Sam, talk to us about kind of the credit quality
12:35
Speaker 1: you're seeing out there and some of the portfolios. Given
12:38
Speaker 1: this big move up in mortgage rates.
12:43
Speaker 8: Absolutely, you know that the credit quality has been pretty extraordinary, Paul.
12:48
Speaker 8: You know, the level of delinquencies and residential mortgage backed
12:51
Speaker 8: securities is really hovering at historic lows. You haven't seen
12:55
Speaker 8: a real uptick in delinquencies, just given how robust the
12:58
Speaker 8: labor market is, given our expectation that we will have
13:01
Speaker 8: a recession later this year, that would naturally cause an
13:05
Speaker 8: uptick and unemployment. But what we feel really good about
13:09
Speaker 8: is again back to you know, today's case Shiller numbers,
13:12
Speaker 8: it's just the stability of home prices.
13:14
Speaker 6: Uh.
13:15
Speaker 8: Clearly, you know, not a crash in home prices. We expect,
13:18
Speaker 8: you know, a stabilization here.
13:20
Speaker 7: Uh.
13:21
Speaker 8: So an uptick in delinquencies would would create, you know,
13:24
Speaker 8: an uptick and potential defaults and mortgages in particular.
13:28
Speaker 5: Uh.
13:28
Speaker 8: But given that they're backed by you know, the ultimate house,
13:31
Speaker 8: the ultimate collateral of the US house, in our expectation
13:34
Speaker 8: that those remain uh stable here just given a historically
13:38
Speaker 8: tight supply of US housing. Uh, we we think the
13:41
Speaker 8: credit really holds up quite well amid the recession that
13:45
Speaker 8: we expect again later this year.
13:47
Speaker 4: What are you hearing from clients at this point are
13:49
Speaker 4: what are they concerned about? What are they maybe less
13:51
Speaker 4: fearful of after this year's rally.
13:53
Speaker 8: Obviously in the equity market, Yeah, absolutely, you know, I
13:56
Speaker 8: think everyone, you know, particularly in tiss income, is despite
14:00
Speaker 8: the historic outflows that you saw in twenty twenty two,
14:04
Speaker 8: you've seen very little inflows, particularly in the active fixed
14:07
Speaker 8: income in twenty twenty three. You know, in our view
14:10
Speaker 8: and talking to clients is the vast majority of the world,
14:14
Speaker 8: whether you know you're in Madrid, or you're in Stockholm,
14:17
Speaker 8: or you're in Atlanta or New York, the vast majority
14:21
Speaker 8: of fixed income investors seem to be hiding out on
14:23
Speaker 8: the front end of the T bill curve and money
14:25
Speaker 8: market funds, especially amid the recent bank crisis that we've seen. So,
14:30
Speaker 8: you know, while most investors clearly expect that we may
14:35
Speaker 8: be near you know, peak policy here that you know,
14:38
Speaker 8: the undeniable opportunity on the front end is hard to
14:42
Speaker 8: argue against that in our view. You know, really, as
14:44
Speaker 8: I mentioned earlier, would recommend taking advantage of extending out
14:48
Speaker 8: the curve and taking advantage of the historically widespreads and
14:52
Speaker 8: mortgage backed securities and particularly longer duration fixed income here
14:56
Speaker 8: to lock in these high current fields and widespreads.
15:00
Speaker 1: So I'm looking at the Bloomberg US MBS index total
15:04
Speaker 1: return value, and the good news is it's up zero
15:06
Speaker 1: point sixty three percent. And that's a good news versus
15:09
Speaker 1: last year when all the fixing income was really underwater.
15:13
Speaker 1: But it lacks some of the other parts of the
15:14
Speaker 1: fixed income space this year. So what's your call an
15:17
Speaker 1: NBS kind of relative to other places I could put
15:20
Speaker 1: my money in fixed income?
15:22
Speaker 8: Yeah, absolutely, Paul. You know, NBS is really that the
15:25
Speaker 8: big headwind this year, as I mentioned earlier, has just
15:27
Speaker 8: been this huge surge that we saw and implied interest
15:29
Speaker 8: rate volatility, you know, given the FED went nineteen times
15:34
Speaker 8: and as implementing you know, QT and earnest here that
15:37
Speaker 8: has caused an uptick in volatility. We thought that we
15:40
Speaker 8: were really kind of reaching you know peak implied interest
15:44
Speaker 8: rate volatility amid the guilt crash of PLATE last year.
15:47
Speaker 8: But you saw it subsequently surge again in the first quarter,
15:51
Speaker 8: you know, amid our kind of owned guilt crash here
15:53
Speaker 8: in the US. It just came home to roost in
15:55
Speaker 8: the US banks that that caused all to surge. To
15:59
Speaker 8: you know, near term highs. When volatility serves up, that
16:02
Speaker 8: puts a lot of pressure on mortgage backed security spreads
16:05
Speaker 8: as investors that are long mortgages are naturally short short volatility, UH,
16:10
Speaker 8: given that you know, the option to pre pay from
16:13
Speaker 8: the underlying borrowers. And so that's been a headwind uh
16:16
Speaker 8: for for mortgages this year is you know, the surge
16:20
Speaker 8: and volatility and elevated levels of volatility has kept spreads
16:24
Speaker 8: historically wide. And you've also just seen clearly, you know,
16:27
Speaker 8: a big retreat of the of the big buyer base,
16:30
Speaker 8: particularly post COVID is quantitative tightening is let's have fed
16:35
Speaker 8: on the sidelines clearly and shrinking the investment portfolio of
16:38
Speaker 8: their mortgage backed securities holdings, as well as banks, UH.
16:41
Speaker 8: Given the recent crisis and some of the al m
16:44
Speaker 8: issues that post banks face, they've been you know, have
16:48
Speaker 8: not been buying nearly as much mortgage backed securities and
16:51
Speaker 8: in fact they've been selling. So you've had the headwind
16:54
Speaker 8: of both volatility as well as the retreat of the
16:57
Speaker 8: of the buyer base and banks and and and UH
16:59
Speaker 8: and the owning over sixty percent really putting ahead wind here.
17:03
Speaker 8: But we see it a huge opportunity in diploma a
17:06
Speaker 8: focus for patient investors.
17:08
Speaker 1: All right, Sam, thanks so much for joining us. Appreciate
17:10
Speaker 1: getting your thoughts there. Sam Dunlop, He's the CIO at
17:13
Speaker 1: angel Oak Capital Advisors, focusing on the mortgage backed securities market. Again,
17:19
Speaker 1: some headwinds out there with obviously the rising interest rates.
17:22
Speaker 1: You're listening to the tape.
17:24
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17:41
Speaker 1: Let's stalk commodities right now, Jess best thoughts. Switch it up.
17:44
Speaker 1: Rare earth commodities are rare earth metals, so we can
17:47
Speaker 1: do that with our next guest, Doctor Luisa Moreno. She
17:50
Speaker 1: is the president of Defense Metals Corporation. Defense Metals is
17:53
Speaker 1: one of the biggest mineral exploration companies in the world
17:56
Speaker 1: that focuses on the acquisition of rare earth mental deposits
18:00
Speaker 1: commonly used in the electric power market, military and national security.
18:05
Speaker 1: Doctor Marina, thank you so much. For joining us here.
18:08
Speaker 1: Talk to us about rare earth and how important they
18:12
Speaker 1: are to a lot of these new technologies, whether it's
18:15
Speaker 1: electric vehicles or whatever. Where do we find this stuff?
18:18
Speaker 1: Is that whole supply chain a big risk for us
18:23
Speaker 1: going forward?
18:25
Speaker 9: Yes, yes it is. Thank you for having me so China.
18:29
Speaker 9: That's control, as you said, significant percentage of the mining
18:33
Speaker 9: as well as the processing and the production of the
18:36
Speaker 9: final product. And they go in everything that you can imagine.
18:39
Speaker 9: So they used infertilizers. They also use I think one
18:42
Speaker 9: of the most important applications right now is to make magnets,
18:47
Speaker 9: the strongest known magnets, and they go into permanent magnet
18:53
Speaker 9: motors used in electric vehicles. They also go in these
18:57
Speaker 9: magnets they used in mrin machines for thredmaging. They used
19:01
Speaker 9: in winterbines. But you also find them in computers and
19:08
Speaker 9: the compounds of the earth. You could also use them
19:12
Speaker 9: in many other medical applications as well as LED lights
19:16
Speaker 9: and so forth. It's endless applications really.
19:19
Speaker 4: So they are continue.
19:23
Speaker 9: They are critical for defense, so hence the name defense metals.
19:26
Speaker 9: So they are using missiles and you know, night vision
19:30
Speaker 9: goggles and many other defense applications and military applications as well.
19:34
Speaker 4: What I wanted to know is just how dependent is
19:37
Speaker 4: the US on China when it comes to these rare
19:40
Speaker 4: earth elements?
19:43
Speaker 9: Right, So, China minds sixty percent or so of the
19:48
Speaker 9: of the total of the total rare earth. The US
19:51
Speaker 9: currently minds about forty thousand of the estimated say three
19:56
Speaker 9: hundred thousand tons, but they line it, they concentrate the
20:02
Speaker 9: minerals to make it I guess easier to process and
20:06
Speaker 9: for transportation and all of that extent to China. So
20:10
Speaker 9: highly dependent, that is the answer. So the not just
20:14
Speaker 9: the West, the world really highly dependent on on this
20:19
Speaker 9: on China for for this, for this, for this material.
20:22
Speaker 1: We'll give the rising geopolitical tensions between China and the
20:25
Speaker 1: West and the US in particular. How at risk is
20:30
Speaker 1: the West here is it? Is there an opportunity to
20:33
Speaker 1: maybe are there is there an intentive to try to
20:35
Speaker 1: source these minerals from other parts of the world.
20:39
Speaker 9: Yes, so we do have some production and refinery out
20:43
Speaker 9: of China and production of metals out of China as well,
20:47
Speaker 9: but probably not sufficient for for everything. Because even if
20:55
Speaker 9: we are able to say, purchase some of these elements
21:00
Speaker 9: from say Malaysia. So there's a Linus corporation. They mine
21:06
Speaker 9: in Australia in the process in Malaysia. So even if
21:09
Speaker 9: you're able to get them, you still you know, as
21:13
Speaker 9: far as getting them in electric vehicles is still you
21:17
Speaker 9: still need to build a supply chain, and we are
21:20
Speaker 9: just in the process of doing that. I my understanding
21:24
Speaker 9: is that the US government as well as getting in
21:26
Speaker 9: government UH and Australian government and you are looking to
21:32
Speaker 9: to fund a supply chain for the rears and other
21:34
Speaker 9: strategic metals. And there are several companies, chemical companies interested
21:39
Speaker 9: in building separation facilities.
21:41
Speaker 1: And so forth.
21:41
Speaker 9: So the supply chain has to be built, but first
21:45
Speaker 9: we need to mine them in a higher higher amount.
21:50
Speaker 4: Let's say, talk to us about the talent shortage that
21:53
Speaker 4: the rare earth industry actually faces right now.
21:57
Speaker 9: It is it is significant given that China has been
22:04
Speaker 9: the main country producing earth for a long time and
22:09
Speaker 9: refining them and producing and products. You know, we do
22:13
Speaker 9: not have that talent outside. You know, in the West,
22:18
Speaker 9: there is some in ages I mentioned perhaps Vietnam, in Thailand,
22:23
Speaker 9: there's some processing, some metal making Japan as well, but
22:28
Speaker 9: in the West that is not much production downstream, downstream
22:34
Speaker 9: processing and production of these metals or magnets. So we
22:39
Speaker 9: will have to develop that talent and it will take time.
22:45
Speaker 1: So what is the policy of China about exporting these
22:48
Speaker 1: rare earth minerals right now?
22:52
Speaker 9: Right now, it's just an internal policy. So a while ago,
22:56
Speaker 9: back in two thousand and five, they start putting quarters
22:59
Speaker 9: and then there was challenges, you know, the the US,
23:03
Speaker 9: Europe and other countries. They basically filed a complaint in
23:09
Speaker 9: the World Trade Organization against China, which China lost, and
23:13
Speaker 9: then they stopped the quarters. But they have production quarters
23:18
Speaker 9: internally where they tell, you know, companies how much to produce,
23:23
Speaker 9: and the government have been acquiring percentages of this, of this,
23:28
Speaker 9: of this, of these companies and merging them. So they
23:31
Speaker 9: have internally a very strong control over the production of
23:36
Speaker 9: the earth and how much is produced.
23:39
Speaker 1: Could they outright just ban the exports, and then the
23:42
Speaker 1: rest of the world's really in a difficult spot.
23:46
Speaker 9: If if we upset them seriously, they might It's it's
23:51
Speaker 9: it's definitely a possibility, but it has to be something
23:55
Speaker 9: really significant, I think, like war. But otherwise I don't
24:02
Speaker 9: think they would do that. They would have a lot
24:04
Speaker 9: to lose as well, because they, as I said, they
24:10
Speaker 9: produce a lot of the products and products and they
24:13
Speaker 9: sell them around the world as well, and obviously they
24:15
Speaker 9: consume them as well for many of the advanced technologies
24:20
Speaker 9: that they produce.
24:21
Speaker 4: What are you monitoring when it comes to the legislation
24:24
Speaker 4: in the US. I know last month there was a
24:26
Speaker 4: bipartisan bill that was introduced to offer basically a tax
24:30
Speaker 4: credit for establishing rare earth magnet production in the US.
24:35
Speaker 4: What are you seeing on this front?
24:38
Speaker 9: I think that's really really good. However, in order to
24:43
Speaker 9: make magnets, you know, assuming that you know how to
24:47
Speaker 9: make them and you have the right team to do that, first,
24:51
Speaker 9: the only issue is where you're going to get your alloys.
24:54
Speaker 9: And to make alloys you need the metals, and where
24:57
Speaker 9: are these metals being made? And to make this metal
25:00
Speaker 9: you need to mind them and make ox sites first,
25:03
Speaker 9: So again we have to think about the supply chain.
25:06
Speaker 9: In the US, you do mind them, but currently MP
25:09
Speaker 9: Materials is not yet processing them into chemical compounds and
25:14
Speaker 9: separating them, which is the second stage, and definitely not
25:18
Speaker 9: making metals, and as far as I know, they're not
25:20
Speaker 9: making alloys either. So all of those steps have to
25:23
Speaker 9: be concluded before you can make magnets.
25:27
Speaker 1: You know, if I'm in the tech industry, I want
25:29
Speaker 1: to send it, you know, kind of a person over
25:32
Speaker 1: there to kind of smooth things out. I send Tim
25:34
Speaker 1: Cook from Apple. Who do I send for rare earth minerals?
25:39
Speaker 8: Sorry?
25:39
Speaker 9: Can you ask that question again?
25:40
Speaker 1: I mean, if I'm in the tech industry and I
25:42
Speaker 1: want to send an emissary to China, I send Tim Cook,
25:45
Speaker 1: the CEO of Apple Computer. Is there somebody that rare
25:48
Speaker 1: Earth's business that can go over to China and say, hey,
25:50
Speaker 1: can we be friends?
25:53
Speaker 8: Oh? Wow?
25:54
Speaker 9: Yes, I guess the folks from MPY Materials. They multi
25:59
Speaker 9: billion dollar market up to one of the largest rarest
26:03
Speaker 9: companies in the world. There are not many, right, Well,
26:06
Speaker 9: there are many, but mostly in China. Yes, so outside
26:10
Speaker 9: China they're not that many.
26:12
Speaker 1: There's not that many.
26:13
Speaker 5: Can well not not.
26:15
Speaker 9: They're not producing there is that part of the problem.
26:18
Speaker 1: Yeah, all right, Doctor Louis and Moreno, thank you so
26:20
Speaker 1: much for joining us. Uh. Doctor Moreno is a president
26:23
Speaker 1: of Defense Metals Corporation.
26:26
Speaker 9: Uh.
26:26
Speaker 1: This is a company that focuses on the rare earth
26:30
Speaker 1: mineral deposits and they're used in electric power vehicles. They're
26:33
Speaker 1: used in militarily applications, national security, so a big, big
26:37
Speaker 1: issue and unfortunately, uh for many in the West, they're
26:43
Speaker 1: dependent upon China for sourcing and supplying those rare earth's minerals.
26:47
Speaker 1: So definitely a challenge for a number of industry so
26:50
Speaker 1: it's worth keeping on top of that.
26:53
Speaker 7: You're listening to the Team Cancer Live program Bloomberg Markets
26:57
Speaker 7: weekdays at ten am Eastern on Bloomberg dot Com, the
27:00
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27:03
Speaker 7: demand wherever you get your podcasts.
27:07
Speaker 1: I want to get right to our c suite conversation today,
27:09
Speaker 1: Randall Atkins, CEO of Ramico Resources. Randall, describe it, Ramico Resources.
27:16
Speaker 1: You guys are in the coal business. Describe what you
27:18
Speaker 1: do in your company.
27:20
Speaker 5: Sure, we're actually in the metallurgic coal business, which is
27:24
Speaker 5: used to make steel, distinguished from the thermal coal business,
27:28
Speaker 5: which is used for power. We also recently announced a
27:33
Speaker 5: very significant discovery of an extremely large rare earth deposit
27:38
Speaker 5: at one of our properties in Wyoming, so we soon
27:41
Speaker 5: hope to be also in the critical mineral business.
27:44
Speaker 4: Who are you a key supplier to.
27:47
Speaker 5: We are a key supplier to both the domestic and
27:51
Speaker 5: international steel industry. We sell to about twenty countries overseas
27:58
Speaker 5: and also supply coking coal to virtually all of the
28:03
Speaker 5: North American steel markets.
28:05
Speaker 1: So metallurgical coal again, I'm sorry, metallurgical coal used in
28:11
Speaker 1: steel making. Talk to us about the trends in that business.
28:14
Speaker 1: What are you seeing? What have you seen the last
28:16
Speaker 1: couple years? What's your outlook?
28:18
Speaker 7: Sure?
28:19
Speaker 5: So, I have a sort of a one liner which
28:22
Speaker 5: I use, which is the met coal is a proxy
28:25
Speaker 5: for steel. Steel is a proxy for a nation's GDP.
28:29
Speaker 7: So as the.
28:30
Speaker 5: Overall economy moves, so does the steel industry. Obviously, at
28:35
Speaker 5: the moment, the steel industry, as is the domestic and
28:39
Speaker 5: most international economies, suffering from the twin bouts of both
28:44
Speaker 5: an inflationary situation over the past eighteen months as well
28:48
Speaker 5: as the recessionary winds that are blowing at the moment.
28:53
Speaker 5: So the steel industry is muted at the moment domestically, Basically,
29:00
Speaker 5: sales and metallogic coal have similarly fallen a softer pattern
29:05
Speaker 5: than certainly last year.
29:06
Speaker 4: If the steel industry is muted right now, what does
29:09
Speaker 4: that tell us about the direction of the US economy
29:12
Speaker 4: in particularly.
29:15
Speaker 5: Well, the steel industry is always a leading indicator. You know,
29:19
Speaker 5: most of the steel used in the US coast for
29:21
Speaker 5: things such as cars, pipes, construction. You know, if you
29:27
Speaker 5: just go down that list, I think cars are frankly
29:30
Speaker 5: still having a reasonably strong market, but certainly pipes used
29:35
Speaker 5: in the oil industry and construction are very muted at
29:38
Speaker 5: this point in time. So I think to that extent,
29:42
Speaker 5: met coal is a bit of a leading indicator as
29:44
Speaker 5: well in that same regard.
29:46
Speaker 1: So are you seeing that in your orders from your
29:48
Speaker 1: steel customers that just ordering less coal.
29:53
Speaker 5: Well, the steel industry has sort of various seasons to it.
30:00
Speaker 5: This is what's called a shoulder season, which really goes
30:04
Speaker 5: through the middle part of the summer and then they restock.
30:07
Speaker 5: So this is the point in the year when typically
30:11
Speaker 5: coal demand is a little softer than normal, but it
30:14
Speaker 5: picks up during the summer and then also increases throughout
30:17
Speaker 5: the fall during.
30:19
Speaker 4: Those softer months. How does that impact your company as
30:22
Speaker 4: well as the industry overall.
30:26
Speaker 5: Well, it basically we calibrate our production to meet our
30:30
Speaker 5: demand requirements, so that during the softer periods we were
30:36
Speaker 5: producing slightly lower than typically but usually What we also
30:40
Speaker 5: do is have a sales book which accounts for that,
30:44
Speaker 5: so that we will sell domestically on an annual basis
30:48
Speaker 5: and will sell internationally on a spot basis. So really
30:51
Speaker 5: the trigger is the spot sales internationally in softer periods.
30:56
Speaker 1: So with so many industries going green really thinking about
31:01
Speaker 1: their economic footprint, how does that impact your company your business?
31:06
Speaker 8: Well, interestingly, we are kind of.
31:10
Speaker 5: A forerunner in the coal industry and that for a
31:13
Speaker 5: number of years we have been doing research on how
31:16
Speaker 5: coal can be used and really the carbon within coal
31:20
Speaker 5: could be used to make advanced products, carbon products and materials.
31:25
Speaker 5: So our basic business in the metallergic coal business. Of course,
31:28
Speaker 5: steel is used for things such as windmills, solar farms,
31:33
Speaker 5: et cetera. But we've also branched out. As I mentioned,
31:36
Speaker 5: we have a rare earth project that we're getting started
31:40
Speaker 5: in Wyoming. We also have patents on about sixty different
31:44
Speaker 5: types of uses of coal for making carbon products from
31:49
Speaker 5: things such as graphene, graphite, carbon fibers, things of that nature.
31:54
Speaker 4: It's interesting that you're bringing up sort of the rare
31:57
Speaker 4: earth metals. We actually had a guest on earlier that
32:00
Speaker 4: into that I was curious as far as when you
32:02
Speaker 4: have maybe potential exposure toward China or other areas in
32:06
Speaker 4: the global economy, how that impacts your business if you
32:08
Speaker 4: are seeing economies like that slowing.
32:12
Speaker 5: Sure well, certainly China is not only the largest producer
32:16
Speaker 5: of metallurgic coal, but also the largest user of metallurgic coal. Typically,
32:21
Speaker 5: the United States does not sell a lot of met
32:24
Speaker 5: coal into China. That really has done mostly from Australia.
32:29
Speaker 5: Having said that, the market pricing that is set in
32:34
Speaker 5: the Asian markets between that trade between Australia and China
32:38
Speaker 5: certainly has a major impact on what pricing is around
32:43
Speaker 5: the world. So to the extent that that pricing has
32:46
Speaker 5: been lower this year, that certainly is translated into the
32:49
Speaker 5: Atlantic metearolurgic coal markets, which is what we sell into.
32:54
Speaker 1: So render, how do you grow your business? Is it
32:57
Speaker 1: taking share away from competitors in terms of supplying coal
33:01
Speaker 1: to the steel industry. Is it new lines of business?
33:05
Speaker 1: Is it new markets? How do you grow your business
33:07
Speaker 1: going forward?
33:08
Speaker 5: Well, it's a little bit of all of the above. Certainly,
33:13
Speaker 5: all coals are not created equal, and so you know
33:17
Speaker 5: the type of metallurgic coal we produce has certain quality
33:20
Speaker 5: and qualitative advantages to certain customers. So we find our
33:25
Speaker 5: niches there. But we grow our business really in a
33:28
Speaker 5: couple of ways. One, of course, we are really the
33:31
Speaker 5: only domestic coal company which is dramatically increasing its production.
33:37
Speaker 5: We plan to basically double in size over the next
33:40
Speaker 5: three to four years. And we're also the only one
33:43
Speaker 5: that is branching out into new uses of carbon, as
33:48
Speaker 5: I mentioned earlier, for such things as critical minerals as
33:51
Speaker 5: well as carbon products.
33:53
Speaker 1: Just real quickly, Randall, where do you source your coal?
33:55
Speaker 5: Typically where your minds our minds are in the sort
34:00
Speaker 5: of southern Appalachian area down around southern West Virginia and Virginia.
34:05
Speaker 5: Uh And as I mentioned, we also have a rarest
34:08
Speaker 5: play that is out in Wyoming in sort of the
34:10
Speaker 5: Powder River basin.
34:12
Speaker 1: Interesting, all right, really interesting business, Randall Atkins, thank you
34:15
Speaker 1: so much for joining us. Random actins. It's a CEO
34:18
Speaker 1: Ramaco Resources, It's a Nasdaq traded stock n e TC
34:22
Speaker 1: met Coal is when I take away from that, he's
34:25
Speaker 1: had a long career and of course I think the
34:28
Speaker 1: highlight of his career is he got his undergraduate degree
34:30
Speaker 1: from Duke University. You know, so set up for some
34:33
Speaker 1: good stuff there. But you know, you think about that,
34:36
Speaker 1: the coal business. It's just where's the future of coal? Well,
34:39
Speaker 1: I guess, you know, for for power, not so much, uh,
34:42
Speaker 1: but for perhaps the metallurgrical coal used in steel. Maybe
34:46
Speaker 1: still you know, some good growth there.
34:47
Speaker 4: And these rare earth minerals that keep coming up in
34:50
Speaker 4: our conversations, Pap.
34:51
Speaker 1: They keep coming up in their conversation. Uh so we'll see,
34:54
Speaker 1: but it's an interest conversation. You don't talk coal very often,
34:57
Speaker 1: but we do. This is Bloomberg. You're listening to the tape.
35:00
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35:04
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35:08
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35:18
Speaker 1: Jess met Paul Sweeney here in the Bloomberg Interactive Brokers Studio.
35:21
Speaker 1: I want to get right to our next guest entrant conversation.
35:24
Speaker 1: I believe doctor Maureen Dunn, president and CEO of Autism
35:28
Speaker 1: Community Ventures, joins us. Doctor Doun, thanks so much for
35:31
Speaker 1: taking the time to join us. Could you just educate
35:34
Speaker 1: us what you are doing at Autism Community Ventures.
35:38
Speaker 10: Yeah, Hi, thank you so much for having me. Yeah so,
35:41
Speaker 10: I've I've spent most of my career trying to help
35:47
Speaker 10: neurodivergent job seeker achieve opportunities that are consistent with their
35:52
Speaker 10: still levels. And I've done that in a number of
35:55
Speaker 10: different ways than looking forward to our conversation, how.
36:00
Speaker 4: Many US adults are diagnosed with autism?
36:06
Speaker 10: Yeah so, I first of all, I say, I do
36:09
Speaker 10: a lot of work in neudiversity more generally, so you know,
36:15
Speaker 10: the nerve in which encompasses, you know, beyond autism, ADHD,
36:19
Speaker 10: dyslexia descracts and in a few So in the US
36:21
Speaker 10: there's over sixty million people that fall under that umbrella.
36:25
Speaker 10: So fifteen to twenty percent of the global population falls
36:28
Speaker 10: under the nerd division umbrella. But with autism in particular,
36:33
Speaker 10: it's according to the statistics by the CDC that it's
36:38
Speaker 10: been increasing dramatically, especially over the last ten years, and
36:45
Speaker 10: just recently there's you know, been another communication from the
36:50
Speaker 10: CBC that it's it's also increased. I think it's about
36:55
Speaker 10: one in thirty five people.
36:56
Speaker 1: Now, So what I mean we of autism give us
37:01
Speaker 1: other I guess neurodiversification issues or challenges that are common
37:06
Speaker 1: out there in the community that may be a challenge
37:09
Speaker 1: for employers to try to get their heads around.
37:13
Speaker 10: Sure, yeah so, and just for context, nerve diversification, it's
37:17
Speaker 10: the concept I've brought up in a number of my
37:20
Speaker 10: prior keynotes, and so the how to think about that,
37:24
Speaker 10: I mean, obviously your versification is an important concept right
37:29
Speaker 10: for portfolio management, for investment, and so the idea there
37:33
Speaker 10: is that you know when when, and a lot of
37:35
Speaker 10: research supports this is then when all minds in a
37:38
Speaker 10: group are highly correlated in terms of their experiences, in
37:40
Speaker 10: terms of their cognitive tendencies, analytical skills, perceptual skills, that
37:44
Speaker 10: the potential for overlapping cognitive and conceptual blind stops became
37:48
Speaker 10: a real risk. And so the idea of nerd of
37:50
Speaker 10: diversification is ahead against that risk. And I personally think that,
37:54
Speaker 10: especially the looking at the labor shortage that we have
37:59
Speaker 10: and you know, the future work in terms of innovation
38:01
Speaker 10: and creativity being paramount, that employers should be really interested
38:07
Speaker 10: in including more neurodivision workers. In terms of challenges, there
38:12
Speaker 10: was a UK study back in twenty twenty from the
38:15
Speaker 10: Institute of Leadership and Management that showed over fifty percent
38:19
Speaker 10: of employers openly admitted that they would not hire a
38:23
Speaker 10: nerdiversion job seekers. So there's a lot of challenges that
38:26
Speaker 10: unfortunately have nothing to do with the ability or skill
38:30
Speaker 10: of a nerdiversent person to do the work if given
38:34
Speaker 10: the opportunity, But it has a lot to do with
38:37
Speaker 10: some un built biases the ways in which the interview
38:40
Speaker 10: processes work that could disadvantage the neurodiversion workers. There's a
38:44
Speaker 10: lot of issues that can become obstacles to successful employment.
38:50
Speaker 4: What do companies need to do to truly make things
38:54
Speaker 4: more inclusive for neurodivergent people.
39:00
Speaker 10: The work that I do, there's you know, I think
39:03
Speaker 10: it's important to go beyond the sort of more superficial
39:09
Speaker 10: training of Okay, let's tick the boxes here. We have
39:12
Speaker 10: you know, X number of neurodiversion people that that we've hired.
39:16
Speaker 10: It's important to really work on organizational culture in a
39:20
Speaker 10: deeper way. And so some of the things that I
39:22
Speaker 10: do is, you know, we uh, we organize in university
39:26
Speaker 10: friendly company audits, just getting the whole organization to see
39:33
Speaker 10: the value of different kinds of minds working together, you
39:38
Speaker 10: know that sort of you know, going beyond You could
39:41
Speaker 10: start with a value statement, but then you know, going
39:44
Speaker 10: beyond that, right, so that getting everyone on the same
39:46
Speaker 10: page where okay, we really value different kinds of minds
39:49
Speaker 10: coming to the table and we see why this is
39:51
Speaker 10: so important for our organization, and then going beyond that
39:55
Speaker 10: so that the actual practices on a daily basis support
40:00
Speaker 10: that value.
40:01
Speaker 4: What companies or industries stand out to you at this
40:04
Speaker 4: point that are doing it right so far?
40:08
Speaker 10: Yeah, it's an interesting question. So there has been a
40:10
Speaker 10: lot of activity, especially like autism at work programs. I know,
40:16
Speaker 10: JP Morgan has one where they've done some research and
40:19
Speaker 10: they showed that their autistic employees were actually forty eight
40:22
Speaker 10: percent faster ninety two percent more productive than their nerds
40:26
Speaker 10: are typical peers that were hired for the same jobs.
40:29
Speaker 10: But I'd also say that in my work I've found,
40:33
Speaker 10: you know, I have so many stories and I'm actually
40:36
Speaker 10: working on a book that's been released by Wiley early
40:40
Speaker 10: early next year where I have did you know, did
40:44
Speaker 10: a lot of interviews with people around the world, and
40:48
Speaker 10: one of the things that's come out a lot is
40:51
Speaker 10: that there's a lot of innovators and entrepreneurs even that
40:55
Speaker 10: are NERD diversions, but there's a there's a percentage of
40:59
Speaker 10: them that would have preferred to have a job and
41:03
Speaker 10: have applied you know, two hundreds, sometimes thousands of jobs,
41:07
Speaker 10: but couldn't get through that interview process, even though a
41:09
Speaker 10: lot of them have PhDs and you know, are really
41:12
Speaker 10: distinguished people and then ended up being successful entrepreneurs. So
41:18
Speaker 10: there's it's it's an interesting dynamic where I think there's
41:24
Speaker 10: there's a lot of movement, there's a lot more awareness
41:27
Speaker 10: of the skills and the talents that nerdivision people bring
41:29
Speaker 10: to the table, but I think there is more that
41:33
Speaker 10: can be done for companies to really understand how to
41:37
Speaker 10: best include them and retain that talent that could be
41:41
Speaker 10: really important, you know, also to the to that company's future.
41:45
Speaker 10: Thinking about again going back to like all this research
41:47
Speaker 10: about nerdivision people being a hedge against group think, right,
41:52
Speaker 10: we know that so many of the business failures end
41:55
Speaker 10: up being because there was no one at the table
41:57
Speaker 10: there that saw the risks or or you know, frankly
42:01
Speaker 10: was willing to take riskler social status to bring up
42:05
Speaker 10: the risks that they saw and that's you know, that's
42:07
Speaker 10: could be really important. I think I think there's this
42:10
Speaker 10: definitely something that employers should be taking seriously going forward.
42:15
Speaker 1: All right, Doctor Maureen Dunn, thank you so much for
42:18
Speaker 1: joining us doctor Maureen Dunn as a president and CEO
42:20
Speaker 1: of Autism Community Ventures. We appreciate getting a few minutes
42:24
Speaker 1: of her time here.
42:25
Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can
42:28
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever
42:32
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
42:36
Speaker 2: at Matt Miller nineteen seventy three.
42:39
Speaker 1: And I'm fall Sweeney. I'm on Twitter at pt Sweeney.
42:41
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42:44
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