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Israel, Oil Merger, Airlines, and Drug Development · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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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 1: Let me get the latest from what is happening in
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Speaker 1: Israel in that part of the world today. We're fortunate
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Speaker 1: to be joined by Ambassador Alone Pinkas, former Israel General
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Speaker 1: Counsel in New York, former chief of staffs to two
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Speaker 1: foreign ministers, so certainly well versed in what is happening
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Speaker 1: in that part of the world. Ambassador, thanks so much
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Speaker 1: for joining us here. I guess over here in the US,
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Speaker 1: we've seen lots of news reporting about massing of troops
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Speaker 1: and materiel on the borders with Gaza. Can you give
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Speaker 1: us the latest update, how where the situation is today
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Speaker 1: and how do you think it might have unfold over
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Speaker 1: the next several days.
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Speaker 3: Well, thank you for having me to start with. Here's
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Speaker 3: the here's the story. There's been an an amassing of
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Speaker 3: as you as you correctly pointed out to of ground troops, tanks, artillery, infantry,
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Speaker 3: armored infantry, and so on and so forth, supported by
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Speaker 3: attack helicopters and what have you, mostly on the way
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Speaker 3: on the northern and eastern parts of the gases trap.
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Speaker 3: Now everyone assumes that you know a ground operation. A
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Speaker 3: large scale ground operation is therefore a foregun conclusion. So
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Speaker 3: let me put three question marks next to that. First,
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Speaker 3: there is the US President Biden, Defense Secretary Lloyd Austin,
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Speaker 3: and Secretary of State Anthony Blincoln, all three of which
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Speaker 3: very politely but very adamantly warned Israel of the complications
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Speaker 3: that will be inevitable if it so chooses to mount
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Speaker 3: a massive ground operation, with Biden even going further in saying, tante,
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Speaker 3: gentlemen with older ladies, and gentlemen if older respect, with
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Speaker 3: older respect. You need to have an exit strategy, You
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Speaker 3: need to have a political goal. What is your strategy here?
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Speaker 3: What is your political goal? And I'm not sure that
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Speaker 3: Israel has an answer for that. The second question mark
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Speaker 3: pertains to the fate of two hundred and twenty two hostages,
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Speaker 3: of which at least thirty three or babies and or
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Speaker 3: toddlers a ground operation could endanger them. A ground operation
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Speaker 3: could seal their fate in the most negative consequence and
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Speaker 3: the most negative circumstances. So I don't know necessarily that
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Speaker 3: a ground operation is conducive to secure their release. The
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Speaker 3: third question mark is whether orn Israel has and I
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Speaker 3: don't know the answer to that, to be honest, whether
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Speaker 3: or not Israel has sufficient and adequate intelligence, sufficient and
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Speaker 3: adequate what we call target a target back who are
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Speaker 3: you going to hit, where are you going to hit
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Speaker 3: it with? How much force committed to that objective? And
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Speaker 3: you take all these three question marks and you understand
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Speaker 3: why there has been amassing of troops but not yet
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Speaker 3: a ground operation.
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Speaker 2: I wonder about the aid that's being delivered to Gaza.
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Speaker 2: You know, the world media seems to be pressing for more,
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Speaker 2: and apparently Gaza is about to run out of fuel.
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Speaker 2: Israel continues to point out that, hey, when fuel trucks
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Speaker 2: go over there, Hamas takes them right away, So they
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Speaker 2: would essentially be delivering fuel directly to the enemy to
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Speaker 2: fuel the war effort against them.
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Speaker 1: How do they deal with that.
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Speaker 3: It's it's a it's a major problem because that fuel
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Speaker 3: is used for the generators who are then used for
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Speaker 3: the launching of the sum of the rockets that Hamas
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Speaker 3: and the Islamic jiha It's sister organization have.
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Speaker 2: Of course, they also need fuel to run desalinization plants
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Speaker 2: and hospitals.
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Speaker 3: Right exactly.
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Speaker 4: That was my second.
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Speaker 3: On the other hand, that same fuel, which is a
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Speaker 3: fungible commodity is used for hospitals, is used for the salonization,
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Speaker 3: as you mentioned correctly. And so the idea is that
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Speaker 3: only a limited number of convoys will go in, most
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Speaker 3: through the southern tip of the Gaza Strip, which actually
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Speaker 3: borders Egypt rather than Israel, but that the red cross
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Speaker 3: the un the Egyptians, and in some instances Israel will
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Speaker 3: monitor what's going in and who's receiving. What happens once
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Speaker 3: it crosses the the border of the Gate Defence whatever
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Speaker 3: and gets into Gaza, and as you mentioned, can be
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Speaker 3: taken over by Hamas is a problem, and that's part
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Speaker 3: of this humanitarian on crisis that is quietly but surely
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Speaker 3: brewing in Gaza. So that's that's going to be a
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Speaker 3: major jury, on top of which President Biden himself has
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Speaker 3: repeatedly asked that Israel allow for a continuous inflow of
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Speaker 3: humanitarian eight, including that gasoline, including that funeral.
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Speaker 1: So, Ambassador, I mean, I'm just not sure what the
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Speaker 1: catalyst is for a next step other than some significant
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Speaker 1: breakthrough on the hostage front. What do you believe or
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Speaker 1: what are most observers I guess expecting of the next
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Speaker 1: several days.
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Speaker 3: Well, okay, you know again, what is the political goal here?
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Speaker 3: The political goal is to eradicate Hamas. Then practically Israel
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Speaker 3: needs to take over the entire Gaza Strip, which is
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Speaker 3: two point two million people in a very narrow and
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Speaker 3: very densist in fact place on Earth. So that's a problem.
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Speaker 3: So what you should be looking in the next few
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Speaker 3: days is whether or not Israel clarifies what its political
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Speaker 3: end is, what political objective is. If it is less
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Speaker 3: than dismantling Hamas, then you will see a smaller scale
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Speaker 3: ground operation. But bear in mind, and you know, anyone
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Speaker 3: who's listening to us should bear in mind that there
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Speaker 3: are various kinds and various scopes of a ground operation.
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Speaker 3: It could be small incursions by smaller units, it could
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Speaker 3: be medium size incursions the other in and out, go in, destroy,
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Speaker 3: get out, and it could in fact be cutting the
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Speaker 3: Gaza Strip in half, leaving the southern part where most
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Speaker 3: of the population is right now intact and fighting Hamas
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Speaker 3: in the north. Now, there is another major consideration that
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Speaker 3: we haven't even discussed yet, which deserves a completely different
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Speaker 3: segments obviously, and that is the likelihood of escalation. The
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Speaker 3: more escalation, the more power, the more firepower is used
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Speaker 3: in Gaza, the more likely it is that it will
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Speaker 3: expand or spread into Lebanon or Chrisbala armed with nearly
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Speaker 3: one hundred thousand, much more precise rockets and empowered, emboldened
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Speaker 3: and supported by Iran. So this is a you know,
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Speaker 3: this is a series of bad choices that need.
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Speaker 5: To be made.
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Speaker 1: So just thirty seconds left, Ambassador, what is the status
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Speaker 1: with Lebanon right now?
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Speaker 3: Well, there's there's a ping pong of an extreme change
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Speaker 3: of fire going on for the last ninety six hours,
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Speaker 3: for the last four days. You know, my my biggest
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Speaker 3: stuff fear is that there will be an escalation as
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Speaker 3: a result of a miscalculation, That someone will think that
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Speaker 3: someone is planning something that the other side didn't really plan,
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Speaker 3: and the response would be disproportionate, and that would entail
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Speaker 3: a similar or equal disproportionate response and before you know it,
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Speaker 3: held breaks loose right now, right now, everyone is poking everyone,
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Speaker 3: but it's not it's not an escalatory yet. By the way,
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Speaker 3: I know, we don't work out of time. That's the
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Speaker 3: reason why President Biden sent the Gerald for the USS
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Speaker 3: Gerald carrier group.
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Speaker 1: Ye, very good, ambassador, Thank you so much for taking
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Speaker 1: the time. Ambassador Alone Pinkus, former israel A General counsel
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Speaker 1: in New York.
8:54
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8:59
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9:09
Speaker 7: We welcome now our Bloomberg TV audience and radio listeners.
9:12
Speaker 7: It is the second major oil deal in just the
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Speaker 7: past few weeks, and this is a big one, Chevron
9:17
Speaker 7: announcing a fifty three billion dollar all stock deal to
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Speaker 7: buy Hess. And we're joined now by the two men
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Speaker 7: behind it, Mike Worth, Chevron Chairman and CEO, and John Hess,
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Speaker 7: Hess Corporation CEO. Gentlemen, thank you so much. What a pleasure,
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Speaker 7: no joke. This is the only question I'm getting today. Well,
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Speaker 7: the toy trucks from Hess continue to be available at
9:36
Speaker 7: Christmas time.
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Speaker 8: Yeah, so you know, not all of you in suspense. Yes,
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Speaker 8: they will, Okay, back next year is going to be
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Speaker 8: the sixtieth anniversary of the Hestoid truck. We sell them
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Speaker 8: on the internet and we continue, we intend to continue
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Speaker 8: selling them.
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Speaker 9: So I gotta ask, I didn't know about these trucks beforehand.
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Speaker 9: Was it part of the deal? Is there some line
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Speaker 9: in the deal about the trucks? Was it part of
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Speaker 9: the negotiation?
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Speaker 8: Let me put it this way, Mike and I came
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Speaker 8: to a mutually agreeable understanding. Need to continue selling the trucks.
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Speaker 9: That's a yes.
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Speaker 7: That has been Actually yes, been two CEOs. So Mike
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Speaker 7: walkers through Actually how this deal did come about. We
10:08
Speaker 7: heard earlier that you guys been talking for a couple
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Speaker 7: of years, and I'm really curious as to why now
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Speaker 7: is the right time to make this happen.
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Speaker 4: Well, we have been talking for a while.
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Speaker 10: There's a terrific alignment between the two companies, our portfolios,
10:21
Speaker 10: the cultures of the company and the people, and particularly
10:25
Speaker 10: as it has his development in Guiana has continued to
10:28
Speaker 10: be de risked and progress. What was at one point
10:32
Speaker 10: in time kind of a wider gap in valuation has
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Speaker 10: narrowed and the stocks of the two companies have traded
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Speaker 10: into a range where it works for both of us.
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Speaker 10: And so now's the time that those circumstances have come together.
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Speaker 10: But for quite some time we've seen the fit and
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Speaker 10: the appeal and been.
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Speaker 7: Working on this, which I'm just so curious John, because
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Speaker 7: on the call, it seemed like some analysts were intimating
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Speaker 7: the Hey, did you get a high enough price?
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Speaker 4: Sure?
10:55
Speaker 7: And also you're doing things very well in Guyana, and
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Speaker 7: I appreciate it's also the back and etc. But we
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Speaker 7: just spoke Gaiana. You guys are already crushing it, like
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Speaker 7: why do you need Chevron?
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Speaker 8: Yeah, well, it's a great question. I think some context
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Speaker 8: would be important. Our stock for the last five years
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Speaker 8: was the number one total shareholder return in the industry,
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Speaker 8: whether it's independent or whether it's major oil company. Last
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Speaker 8: year our stock went up ninety four percent, number two
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Speaker 8: on the SMP. So we've already created a lot of value.
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Speaker 8: At the same time, now that the pricing got in
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Speaker 8: arrange that would work both for Chevron and work for Hess,
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Speaker 8: we think we came up with a win win. Hess
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Speaker 8: brings Chevron growth in resource growth in production, growth in
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Speaker 8: cash flow. Chevron brings Hess financial strength in terms of
11:43
Speaker 8: a diversity of world class assets, in terms of sterling
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Speaker 8: balance sheet, and in terms of industry leading cash returns,
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Speaker 8: and when you put the two together, you create the
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Speaker 8: premier oil and gas company position for the energy transition.
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Speaker 9: Mike, what I'm hearing here is that this is a
12:02
Speaker 9: great fit. Could you do this on your own? Could
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Speaker 9: you build what Hess has built from the ground up?
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Speaker 9: Is it easier to buy than build right now?
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Speaker 10: Well, Look, this is about long term growth and long
12:17
Speaker 10: term value, which is what we're always seeking. Hess has
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Speaker 10: a unique portfolio that actually strengthens our portfolio with some
12:24
Speaker 10: things we're always trying to do. We're always out exploring,
12:26
Speaker 10: we're looking for new findes. Gianus the biggest discovery in
12:30
Speaker 10: more than a decade in this industry. It's just a
12:33
Speaker 10: unique and compelling asset, and so it would be difficult
12:37
Speaker 10: for us to do on our own. We continue to explore,
12:40
Speaker 10: we'll continue. Everybody in our industry is looking for these things.
12:43
Speaker 10: But this was a great opportunity for us to join
12:45
Speaker 10: a partnership that's done a terrific job in developing this asset.
12:48
Speaker 10: But also the other assets in the Hess portfolio are
12:51
Speaker 10: ones that will be additive for us as well, the
12:53
Speaker 10: back in the deep water Gulf of Mexico Southeast Asia.
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Speaker 10: And so it's a very nice fit at a portfolio level,
12:59
Speaker 10: nice fit at a culture level, and we're going to
13:01
Speaker 10: create more value for shareholders.
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Speaker 7: Yeah, so let's get to the boggin part too. So
13:04
Speaker 7: how important is the balcon going to be in your portfolio?
13:06
Speaker 7: Because clearly the rhetoric apter this deal was it's all
13:08
Speaker 7: about Guiana, right, Like, that's this deep water, it's amazing,
13:11
Speaker 7: the costs are solo is going to be awesome. Well,
13:13
Speaker 7: where's the balcon in this?
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Speaker 4: Well, Balcon's very important.
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Speaker 10: We've got a big shale business already right with positions
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Speaker 10: of the Permian, the DJ Basin. We're the largest producer
13:22
Speaker 10: and Hess has been doing a great job in the
13:24
Speaker 10: baking for a long time. That's really where this all began.
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Speaker 10: And so for us, it's about adding another scaled position
13:30
Speaker 10: in shale that is performing very well. We can bring
13:33
Speaker 10: whatever expertise we may have. We're working on technologies to
13:36
Speaker 10: improve recovery and learn from our new colleagues at Hess.
13:40
Speaker 10: We were doing things in a basin when we went
13:42
Speaker 10: to the DJ we learned some things that we hadn't
13:44
Speaker 10: been doing in the Permian that made us better. I'm
13:46
Speaker 10: certain the same thing will happen here. So it's absolutely
13:48
Speaker 10: an important part of the transaction.
13:50
Speaker 9: Tony took about the price narrowing. You started off far
13:53
Speaker 9: apop bidosk kind of widespread, Kate Man, what bruls it in?
13:57
Speaker 9: What facts has allowed you to bring that understanding between
14:01
Speaker 9: the two films together.
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Speaker 8: Well, you know, the gap in shareholders recognizing our value.
14:08
Speaker 8: We weren't getting credit for this eleven billion barrels of
14:11
Speaker 8: oil equivalent resource.
14:13
Speaker 4: That we had in the market.
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Speaker 9: Narraed the gap for you, Yes.
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Speaker 8: Exactly, and then it got to the point where it
14:19
Speaker 8: got to the wind zone for Mike and the wind
14:21
Speaker 8: zone for us. And you know, you also got to
14:23
Speaker 8: remember this is a stock for stock deals, So some
14:25
Speaker 8: people would say, well, geez, you're selling it, and we're
14:28
Speaker 8: not selling for cash. We're staying invested. Our family is
14:31
Speaker 8: going to be a long term shareholder of Chevron, and
14:33
Speaker 8: we're happy about it, and we think there's going to
14:35
Speaker 8: be a lot of upside to come in addition to
14:38
Speaker 8: which our own dividend is going to go from a
14:40
Speaker 8: dollar seventy five a share to six dollars a share
14:43
Speaker 8: and next year six fifty a share. So you're getting
14:45
Speaker 8: the benefit of growth and asset value with growth, and
14:49
Speaker 8: cash with turns. And that's a magic formula. And I
14:51
Speaker 8: think it'll be the best oil company to own and
14:53
Speaker 8: actually the best oil company to work for.
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Speaker 7: I have to say, you guys seem to get along
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Speaker 7: quite well. You don't al Wes see that with the
15:00
Speaker 7: oil mergers. How did you guys first start this conversation
15:05
Speaker 7: like years ago?
15:05
Speaker 9: What what was that?
15:06
Speaker 7: Was it like you guys at a Sarah Week dinner
15:08
Speaker 7: like chatting?
15:09
Speaker 9: What was it like?
15:10
Speaker 10: It was actually the dinner, but it wasn't at sarah Wick,
15:13
Speaker 10: it was at another location. But look, John and I
15:15
Speaker 10: have been friends. We've been great admirers of hess. I've
15:18
Speaker 10: been a great admirer of John for many, many years,
15:22
Speaker 10: and it was a very natural evolution, I think, as
15:24
Speaker 10: we're both looking to improve our businesses and create value
15:27
Speaker 10: for our Shareholder's been a nice conversation. As John said,
15:30
Speaker 10: in the beginning, the market wasn't recognizing the potential in
15:34
Speaker 10: the Guiana acid in particulars that's been de risked and
15:37
Speaker 10: as we get closer and closer to this cash flow inflection,
15:40
Speaker 10: we really did move into this zone. But it's been
15:43
Speaker 10: very it's been a very friendly discussion along the way
15:46
Speaker 10: like it and by the way, you haven't mentioned yet,
15:48
Speaker 10: but we look forward to John joining Chevron's board of
15:51
Speaker 10: directors and continuing to exert influence over the strategy of
15:54
Speaker 10: our company. And he's got key relationships with partners and
15:58
Speaker 10: governments around the world that will continue to benefit from us.
16:01
Speaker 8: And also, if I can, you know, Mike and I'm
16:03
Speaker 8: known as each other through the industry for years. I
16:07
Speaker 8: have a lot of respect for him. I think he's
16:09
Speaker 8: the best CEO in the energy industry, one of the
16:11
Speaker 8: best in the United States. So have a lot of
16:14
Speaker 8: respect for him.
16:14
Speaker 7: So it wasn't succession things for Hess. It was a
16:17
Speaker 7: lot of succession.
16:18
Speaker 8: No, No, we were actually prepared to continue as an
16:21
Speaker 8: independent That's what our history is. We're celebrating our ninetieth
16:25
Speaker 8: anniversary as a company this year. We have the best
16:28
Speaker 8: hand in the business, the best growth portfolio the business,
16:30
Speaker 8: and we're just executing the strategy go forward.
16:32
Speaker 5: But you know, Chevron.
16:34
Speaker 8: Brings forward that diverse portfolio of assets, strong balance sheet,
16:39
Speaker 8: as well as high cash returns. And you put those
16:41
Speaker 8: strains together with our growth trains, you really create I'd say,
16:46
Speaker 8: you know, the premier energy company that's out there, Mike.
16:48
Speaker 9: There aren't many assets like Hess out there, but there
16:51
Speaker 9: are a lot of assets out there. And I hate
16:52
Speaker 9: to sort of ask this question or day when you
16:54
Speaker 9: doing a massive deal, what have you done yet? Is
16:56
Speaker 9: this an industry that is going to continue to consolidate.
16:58
Speaker 9: We've just seen two really big deals in as many
17:01
Speaker 9: weeks that can't be by accident.
17:03
Speaker 10: Well, I can only speak to our deal, and this
17:06
Speaker 10: is the right deal for us. We actually did another
17:07
Speaker 10: deal earlier this year. So for us, integrating is very important.
17:12
Speaker 10: To do a transaction, you actually to create value. You
17:14
Speaker 10: need to bring the companies together, the people. You need
17:17
Speaker 10: to continue to operate safely and deliver to your customers.
17:20
Speaker 10: And so our focus for the next you know, several months,
17:24
Speaker 10: if not longer, is really about execution and executing well
17:28
Speaker 10: in the long of time. You know, our industry has
17:31
Speaker 10: grown through organic and inorganic activity every time our company
17:35
Speaker 10: has done the same. And I do think you know,
17:37
Speaker 10: in the future, there potentially could be other things, but
17:39
Speaker 10: that's that's not here and now that's further down the
17:42
Speaker 10: road for sure.
17:42
Speaker 7: Do you guys think that oil's going to stay volatile
17:45
Speaker 7: and trade above one hundred hundred and fifty. I'm not
17:47
Speaker 7: going to John, because I feel like maybe you can
17:49
Speaker 7: talk more about what you really think the oil price
17:51
Speaker 7: is going to be. Now.
17:52
Speaker 8: Look, you know, in the short term there's a direct
17:55
Speaker 8: correlation between world oil inventories and price. World inventories are
18:00
Speaker 8: drawing at about a million barrels a day this quarter. As
18:03
Speaker 8: you get to next year, do we think demand's going
18:05
Speaker 8: to grow maybe a million and a half barrels a
18:07
Speaker 8: day barring a worldwide recession. Hopefully we don't get there.
18:10
Speaker 8: I know they are all kinds of geop political events,
18:12
Speaker 8: be it in the Ukraine or be it in the
18:15
Speaker 8: levent that are going on right now, tragic events. But
18:19
Speaker 8: taking that factor out, you know, we think the market's
18:22
Speaker 8: going to be tight and the supply side of the
18:24
Speaker 8: equation is going to have to run fast to keep
18:26
Speaker 8: up with the demand side. Shales no longer the swing producer.
18:29
Speaker 8: Saudi Arabia and Opek are They're going to keep the
18:32
Speaker 8: market stabilized. But I think the real issue for the
18:35
Speaker 8: world to understand is that oil and gas are needed
18:37
Speaker 8: for decades. They're key to an affordable, just and secure
18:41
Speaker 8: energy transition. I think the conflict in Ukraine put a
18:46
Speaker 8: shining light on energy security. And at the end of
18:49
Speaker 8: the day, you know, oil and gas are strategic industry
18:53
Speaker 8: for our country in terms of jobs twelve million jobs,
18:56
Speaker 8: more than automotive direct and indirect, in terms of electricity
19:00
Speaker 8: costs two to three times less than they are in
19:03
Speaker 8: Europe and most of Asia, and ultimately national security. We're
19:07
Speaker 8: energy independent Europe by seventy percent of their oil, China
19:10
Speaker 8: buy seventy percent of their oil, so we have a
19:13
Speaker 8: real strength. We should be leaning into it for economic prosperity,
19:18
Speaker 8: but also national security.
19:19
Speaker 9: Mike, isn't that the real message from this deal? You
19:21
Speaker 9: could have done a deal in the energy transition space,
19:24
Speaker 9: you didn't. You did this deal. Isn't the message coming
19:27
Speaker 9: from this that the industry is now to point where
19:33
Speaker 9: it is going to invest in the future, That the
19:35
Speaker 9: energy transition story is of interest, but it's not the
19:39
Speaker 9: only area of interest. That this is an industry the
19:42
Speaker 9: country that the world still needs to rely on. You
19:46
Speaker 9: could have done other deals, you did. This one isn't
19:48
Speaker 9: that the message that comes.
19:49
Speaker 10: From this, well, I'd put it a little differently, Gay.
19:51
Speaker 10: We have done other deals.
19:52
Speaker 4: Yeah.
19:52
Speaker 10: Earlier this quarter we closed on the largest green hydrogen
19:56
Speaker 10: manufacturing and storage facility that will be built in the
19:59
Speaker 10: United States. We're the second largest renewable fuels producer in
20:02
Speaker 10: the US and we're expanding our production capacity there. So
20:06
Speaker 10: we are doing the other deals. But I think the
20:09
Speaker 10: point that John's making is really important. We need to
20:12
Speaker 10: continue to invest in the energy system that supplies the
20:14
Speaker 10: world today, even as we're investing in one that can
20:17
Speaker 10: integrate into that and help produce the carbon intensity tomorrow.
20:20
Speaker 10: We believe the future of energy is lower carbon. We
20:23
Speaker 10: believe these new technologies will play a greater role, and
20:26
Speaker 10: we continue to invest. So I don't think you should
20:28
Speaker 10: read this as a lack of commitment to the energy transition.
20:31
Speaker 10: But we need to invest in what the world runs
20:33
Speaker 10: on today. This makes us a stronger producer. It takes
20:36
Speaker 10: two great American companies and brings them together, which is
20:39
Speaker 10: good for national security and economic security. And we're committed.
20:42
Speaker 10: Both of our companies are committed to a lower carbon
20:44
Speaker 10: energy system.
20:46
Speaker 7: Mike, speaking of are you able to pump more in
20:49
Speaker 7: Venezuela right now, and we be investing more in Venezuela
20:51
Speaker 7: because of some sanction relief.
20:54
Speaker 10: So we have seen production in our ventures in Venezuela
20:57
Speaker 10: increase this year from around fifty five and barrels a
21:00
Speaker 10: day when the year began to something between one hundred
21:03
Speaker 10: and one hundred and fifty today, and we've been gradually
21:05
Speaker 10: seeing that come up. We've recently seen some further actions
21:10
Speaker 10: by the US to reduce some of the sanctions on Venezuela.
21:14
Speaker 10: This is a slow moving story.
21:17
Speaker 7: It's sustainable, though, Like if you increase to one fifty,
21:19
Speaker 7: can you hold it there?
21:20
Speaker 10: I think we can as long as we can operate
21:22
Speaker 10: the way we're operating today, and some of these constraints
21:24
Speaker 10: have been taken off of us, and the Venezuelan industry
21:29
Speaker 10: has been under pressure for a variety of reasons for
21:32
Speaker 10: the last couple of decades, and turning that around will
21:34
Speaker 10: take time and it will take investment. So I wouldn't
21:37
Speaker 10: expect this to be something that goes up dramatically, but yes,
21:40
Speaker 10: we've seen some steady improvement and we're looking to try
21:44
Speaker 10: to continue that.
21:45
Speaker 7: Gentlemen, thank you so much. We could talk forever, but
21:47
Speaker 7: We'll let you guys go. It's been a very long day. Mike.
21:50
Speaker 7: We're at Chevron chairman and CEO and John hess Has Corporation.
21:53
Speaker 7: Cee you congrats on the merger.
21:54
Speaker 11: Guys.
21:55
Speaker 4: Thank you.
21:55
Speaker 6: You're listening to the take can to our live program
21:58
Speaker 6: Bloomberg Markets. He's at ten am Eastern on Bloomberg Radio,
22:02
Speaker 6: the tune in app, Bloomberg dot Com, and.
22:04
Speaker 4: The Bloomberg Business app.
22:06
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22:08
Speaker 6: flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
22:15
Speaker 11: R J.
22:15
Speaker 1: Gallow he's at that Federated Hermes thing. I first met
22:18
Speaker 1: the Federated folks out in Pittsburgh. That's kind of where
22:21
Speaker 1: they hang out. But they're all over the place these days. Hey, RJ.
22:24
Speaker 1: We see Bill Ackman here says he's covered his bond
22:27
Speaker 1: short amid mounting global risk. Did you notice that? And
22:32
Speaker 1: kind of what's that? Do you have any comment there?
22:35
Speaker 4: Well, so even.
22:36
Speaker 12: Gets a lot of attention in the market, and you know,
22:39
Speaker 12: more attention than r J. Gallow A Federated Hermes and
22:42
Speaker 12: that makes sense. But I would note that we have
22:45
Speaker 12: Federated Hermes have been leaning along and we've been wrong.
22:50
Speaker 12: The bond market sell off has taken on sort of
22:53
Speaker 12: a life of its own. It's knocking down all kinds
22:56
Speaker 12: of financial assets. Stocks are looking at bonds an awful
22:58
Speaker 12: lot these days. I can't say I'm surprised that Bill
23:01
Speaker 12: Ackman's comment. I mean, there's one sentence that is very,
23:05
Speaker 12: very very brief, but it tells you what he's thinking.
23:08
Speaker 12: I do think the geopolitical situation has deteriorated sharply for
23:12
Speaker 12: obvious reasons, and the prospect of a wider conflict, you know,
23:17
Speaker 12: bringing in many different parties. You know, typically when when
23:20
Speaker 12: things like this happen, it should be friendly to treasury prices.
23:24
Speaker 12: So far, we've only had brief moments of that, and
23:28
Speaker 12: there could be more to come. It's hard to be
23:30
Speaker 12: short treasuries when there's so much geopolitical risk and so
23:33
Speaker 12: many potential directions this could go.
23:35
Speaker 2: But it's hard to be long, especially duration, when you
23:40
Speaker 2: know little swings in yield can mean a huge swing
23:45
Speaker 2: in the price, and we're seeing big swings in yields, right,
23:49
Speaker 2: So how do you deal with that?
23:52
Speaker 12: It's a great point. I mean, now, first of all,
23:55
Speaker 12: remember just some some bond math the The fact that
23:59
Speaker 12: yields have risen has taken the duration on the US
24:02
Speaker 12: Treasury Index to five seventy two. Last back in May,
24:07
Speaker 12: it was six thirty nine. You know, that's these are
24:11
Speaker 12: positively convect instruments, right. So the fact of the matter
24:16
Speaker 12: is is that the duration passive duration of the index
24:19
Speaker 12: has gotten shorter because yields have gone higher. That doesn't
24:23
Speaker 12: necessarily insulate you from price loss, but you're losing at
24:27
Speaker 12: lesser and lesser velocity as a result. So but we're
24:31
Speaker 12: not focusing as much on that as much as we
24:33
Speaker 12: are the fundamentals that we think are apt to erode.
24:37
Speaker 12: The economy has been red hot. It is obviously clear
24:40
Speaker 12: employment strong. There's very few signs of the consumer fading.
24:45
Speaker 12: Just yet, we think it's a matter of time that
24:49
Speaker 12: the diminishment of that COVID area access savings pressure on
24:53
Speaker 12: small businesses much much higher borrowing costs all over the economy.
24:59
Speaker 12: You know, the rules of economics have not been revoked.
25:02
Speaker 12: The time frame and the lags are difficult this time.
25:06
Speaker 12: But we still think we will manifest itself in a
25:08
Speaker 12: slower economy and we'll get some relief from these current
25:12
Speaker 12: bond yields, and yield should retrace somewhat lower over the
25:15
Speaker 12: next three to six months, so we're stilling.
25:17
Speaker 2: We've got to be slower than five percent, which is
25:19
Speaker 2: what we're hearing in terms of third quarter guestimates and
25:22
Speaker 2: even for Q four some forecasts. My question on the
25:26
Speaker 2: consumer is, clearly the consumer is going to spend down savings,
25:33
Speaker 2: and clearly the consumer is putting more on credit cards
25:36
Speaker 2: and we're seeing delinquencies pop up. But is that more
25:39
Speaker 2: than you know it usually is or are we just
25:42
Speaker 2: getting back to pre COVID levels.
25:46
Speaker 12: No, it's a great question, and we recently had a
25:48
Speaker 12: webcast with some colleagues, Orlando and Linda Distil, who talked
25:51
Speaker 12: to you guys sometimes both TV and radio, and we
25:54
Speaker 12: were trying to sort of back up and look at
25:56
Speaker 12: the whole picture for the consumer, because the bottom line is,
25:58
Speaker 12: even though there are negative some of which we just
26:01
Speaker 12: touched on, the unemployment rate is low, real personal incomes
26:05
Speaker 12: relative to the now lower level of inflation, albeit stole
26:08
Speaker 12: north of two, but lower than it was, real personal
26:10
Speaker 12: incomes have gone up. When you think about the benefits
26:14
Speaker 12: to savers from having very safe liquid assets like money
26:18
Speaker 12: market funds, which We manage plenty of them here at
26:20
Speaker 12: federated hermes. People in the hir income brackets who have
26:24
Speaker 12: plenty of savings and aren't pulling it all down to
26:26
Speaker 12: spend are benefiting from low risk, real returns. So there
26:30
Speaker 12: are tailwinds to the consumer. We are not calling for
26:34
Speaker 12: a collapsing consumer, and that's not the case at all.
26:37
Speaker 12: I think what we're going to see is that the
26:39
Speaker 12: median household, maybe even up to the top twenty percent
26:43
Speaker 12: of households. Everybody but the top twenty percent is probably
26:45
Speaker 12: going to fade enough so that the economic momentum coming
26:48
Speaker 12: out of what will be a very strong print for
26:50
Speaker 12: Q three GDP is going to slow down. That the
26:53
Speaker 12: economy is not about to tank, but it's going to slow,
26:56
Speaker 12: and that's going to be good news for the FED
26:58
Speaker 12: in their broader effort to still get in going down.
27:01
Speaker 12: Then you throw in the geopolitical risk, the sentiment destroying
27:04
Speaker 12: challenges that occur from wars happening across different parts of
27:09
Speaker 12: the world. We think that the economy is going to slow,
27:12
Speaker 12: the net impact on the consumer is a negative enough
27:15
Speaker 12: not for them to collapse, but to fade from what
27:17
Speaker 12: has been a breakneck pace of spending.
27:20
Speaker 4: Hey, RJ.
27:20
Speaker 1: When I look at the Bloomberg Index browser, I n
27:23
Speaker 1: go for those sitting in front of a terminal. I
27:25
Speaker 1: see the only place in the US fixed income that's
27:28
Speaker 1: in the green this year is US corporate high yield
27:31
Speaker 1: up three point nine percent. Do I stay with that trade?
27:34
Speaker 1: Do I add to it? Or do I say, boy,
27:36
Speaker 1: maybe I should redeploy high yield here?
27:39
Speaker 12: Yeah, I have an ull screen on my launch pat
27:42
Speaker 12: year that I've built, and it's just a sea of red,
27:45
Speaker 12: and the greens that show up are few and far
27:47
Speaker 12: between leverage loans or another space that actually has some
27:51
Speaker 12: positives in both of those cases, leverage loans and US
27:54
Speaker 12: high yield. To your question, you know that's a credit
27:57
Speaker 12: intensive asset, not a duration intensive one. So it makes
28:00
Speaker 12: sense that with the economy surprising to the upside, surprising everyone,
28:04
Speaker 12: including Chairman Powell. He said it last week. Everyone's been
28:07
Speaker 12: surprised by the economy's performance in this calendar year. It's
28:10
Speaker 12: been great for higher, higher credit risk assets. It's been
28:15
Speaker 12: terrible for duration, low credit risk assets that are an
28:18
Speaker 12: interest rates sensitive. We think that should start to flip
28:21
Speaker 12: the script. We are underweight high yield, we are underweight loans.
28:26
Speaker 12: We believe that the slowing economy, small business bankruptcies are
28:29
Speaker 12: on the rise, the accumulative impact of the tight ning
28:32
Speaker 12: of monetary conditions to include what are likely collapsing commercial
28:36
Speaker 12: real estate values in office space, all of these factors
28:39
Speaker 12: are going to catch up and they're going to reward
28:42
Speaker 12: higher quality bonds over lower quality bonds. So we're underweight
28:45
Speaker 12: high yield and underweight leverage loans at this point. That
28:47
Speaker 12: has not been the right call up to this point,
28:50
Speaker 12: but we're looking forward to.
28:52
Speaker 1: That turning around. Hey RJ, for better worse, some my
28:54
Speaker 1: co host is a native of the great State of Ohio,
28:58
Speaker 1: so of course I have to ask you, Oh no,
29:01
Speaker 1: how real. Look at I see here, boy, your Michigan
29:05
Speaker 1: Wolverings look like the team to beat this year. Tell
29:08
Speaker 1: us about it.
29:09
Speaker 12: That was a beatdown of Michigan State. I mean that
29:11
Speaker 12: was I almost felt bad for the Green and White.
29:14
Speaker 1: So you guys, I mean this is gonna be it.
29:16
Speaker 1: I mean, this looks like maybe the best Michigan team
29:17
Speaker 1: in a long time.
29:19
Speaker 12: Oh yeah, yeah, no, it's very exciting to watch, you know,
29:22
Speaker 12: very talented team. I watched football a lot, but I
29:26
Speaker 12: don't know if you want me to expound any further
29:27
Speaker 12: than that, No, we'll.
29:28
Speaker 1: Leave it because so you're gonna come in. I'll tell you.
29:30
Speaker 9: I'll tell you what.
29:31
Speaker 2: I love it when Michigan has a strong team, and
29:34
Speaker 2: I'm sure they love it when Ohio State is a
29:37
Speaker 2: big competitor, like that's what makes it fun. When you
29:40
Speaker 2: don't know who's going to win the game, When when
29:42
Speaker 2: the boys really have to give it.
29:44
Speaker 1: They're all right, you know, we're looking for it to
29:46
Speaker 1: We're looking forward to that game at the end of
29:47
Speaker 1: the year Michigan. Okay, all right, very good.
29:51
Speaker 4: R J.
29:51
Speaker 1: Gallagho Federated at Armies.
29:54
Speaker 6: You're listening to the Team Ken's Are Live program, Bloomberg
29:57
Speaker 6: Markets weekdays at ten am Easter, Blueberg dot Com, the
30:01
Speaker 6: iHeartRadio app, and the Bloomberg Business app, or listen on
30:04
Speaker 6: demand wherever you get your podcast.
30:08
Speaker 1: We welcome Elizabeth Hurt. She's a professor of political science
30:11
Speaker 1: at Northwestern University. Professor, thanks so much for joining us here.
30:15
Speaker 1: I mean a lot of us. I'm going to say,
30:17
Speaker 1: not just here in the US, but around the world.
30:20
Speaker 1: I don't think we have a full appreciation of the
30:22
Speaker 1: stark differences between Israel and the Palestinians that manifest itself.
30:28
Speaker 1: With all this attention we've seen over the decades, where
30:31
Speaker 1: do you where's the starting point for us to try
30:34
Speaker 1: to get an understanding there?
30:37
Speaker 11: Thanks for having me, Good morning to all your listeners
30:40
Speaker 11: and viewers. Listen. It's a really good question, and I
30:42
Speaker 11: think it's not one that's very easy to answer because
30:45
Speaker 11: there are many different starting points. One of the most
30:47
Speaker 11: common starting points would be to simply begin with Zionism,
30:51
Speaker 11: with the founding of the idea that the Jewish people
30:54
Speaker 11: in Europe, this is a European movement, should have their
30:57
Speaker 11: own homeland and that homeland would ensure they're safe in
31:00
Speaker 11: the face of persecution and violence by Europeans in the
31:04
Speaker 11: nineteenth century. So this goes back to the nineteenth century.
31:07
Speaker 11: We can fast forward to the end of World War II.
31:09
Speaker 11: We know about the horrors of the Holocaust. People were
31:13
Speaker 11: in Jewish people were in desperate search of a homeland,
31:16
Speaker 11: and the British, who were controlling the region that we
31:19
Speaker 11: now know of as Israel Palestine, declared through the Balfour
31:23
Speaker 11: Declaration that the Jewish homeland would have the support and
31:27
Speaker 11: sanction of the British imperial power. And it wasn't long
31:30
Speaker 11: before Israel declared independence as a state on the mid
31:35
Speaker 11: May fourt to May nineteen forty eight, and since then
31:38
Speaker 11: it has been slowly but surely expressing its authority and
31:44
Speaker 11: control and sovereignty over what we now know as Israel
31:47
Speaker 11: and Palas. And these lands are contested and have been
31:50
Speaker 11: contested since the first Jews started arriving.
31:53
Speaker 1: So, you know, a lot of people think, and I
31:57
Speaker 1: have thought in.
31:58
Speaker 2: The past, that Israel, that the Israelis came in there
32:01
Speaker 2: and took over Palestine, like there was a country there
32:06
Speaker 2: called Palestine and that was okay, moved into by Israel.
32:09
Speaker 2: But actually that's not the case. Right there, what was
32:12
Speaker 2: there before the Israelis went in, So this was.
32:16
Speaker 11: We did not have the sovereign state system, and this
32:18
Speaker 11: was kind of the days of empire, and so we
32:20
Speaker 11: had Originally it was an Ottoman province. What we now
32:23
Speaker 11: know as Palestine was an Ottoman province, which is like
32:26
Speaker 11: a state in the Ottoman Empire. That state. When the
32:30
Speaker 11: Ottoman Empire fell after World War One, it was basically disassembled,
32:35
Speaker 11: it ceased to exist. A rump state came into being.
32:38
Speaker 11: That was Turkey. That is what the kind of the
32:40
Speaker 11: inheritor of the Ottoman Empire, and the British colonial authorities
32:45
Speaker 11: took over what was then called Mandatory Palestine, which was
32:49
Speaker 11: an area that was under the authority of the British
32:52
Speaker 11: colonial powers, and Mandatory Palestine was then ruled by the
32:57
Speaker 11: British until after the Second World War went they gave
33:00
Speaker 11: up authority over the territory and Israel declared independence with
33:07
Speaker 11: the express support of the British authorities in the Balfour Declaration.
33:13
Speaker 11: That's the quick history. So no country named Palestine, but
33:17
Speaker 11: there was Palestine.
33:18
Speaker 2: Well, and there were Palestinian people. Are they I mean,
33:22
Speaker 2: are they Jordanian?
33:25
Speaker 11: They're actually Palestinian people. Many of the Palestinian people, after
33:29
Speaker 11: Israel was founded the State of Israel in nineteen forty eight,
33:32
Speaker 11: were forced from their homes and they had to leave
33:36
Speaker 11: their historic villages and towns and communities, and many of
33:39
Speaker 11: them did go to Jordan, and many went to other
33:42
Speaker 11: surrounding countries and became refugees, and many of them are
33:45
Speaker 11: still living in refugee camps in the surrounding countries today.
33:48
Speaker 11: They are Palestinian Jordanians, but they are not just Jordanians.
33:54
Speaker 11: So these countries are inventions of western colonial powers and
33:59
Speaker 11: the lines that were drawn to divide them one from
34:01
Speaker 11: another are relatively recent, but the peoples have been there
34:04
Speaker 11: for a very long time.
34:06
Speaker 1: Professor, I don't even know if there's an answer here.
34:09
Speaker 1: But if I were to if is there an independent
34:13
Speaker 1: consensus about who should get the land? I mean independently,
34:19
Speaker 1: if you just look at them, I don't know. Is
34:21
Speaker 1: there any consensus?
34:23
Speaker 11: No, right, And that's why I know there is no consensus,
34:27
Speaker 11: and that's why I we're seeing so much violence today.
34:29
Speaker 11: The only way we're going to reach an end to
34:31
Speaker 11: this horrific violence, which is taking innocent lives. I think
34:34
Speaker 11: we can all agree and we can all condemn and
34:37
Speaker 11: settle around the consensus that innocent lives should not be taken,
34:40
Speaker 11: Civilians should not be killed, children should not be murdered.
34:44
Speaker 11: That's the consensus. How do we get there? Who we
34:47
Speaker 11: have to share the land? I think that now that's
34:50
Speaker 11: where there is no consensus. Who does the land belong to?
34:52
Speaker 11: Who has the right to govern it, Who has the
34:54
Speaker 11: legitimate authority over its people to define it, write its
34:58
Speaker 11: laws and right its constitutions, aim the state. That's what's contested,
35:02
Speaker 11: and no there is no consensus, but there are two
35:04
Speaker 11: peoples and there is one land, so there's this violence
35:07
Speaker 11: is going to continue until there's some kind of resolution
35:10
Speaker 11: that's reached.
35:11
Speaker 2: How much of this is based in religion, I mean,
35:15
Speaker 2: it's it seems like if you pulled that those beliefs
35:19
Speaker 2: out that some you know, magical being gave you or
35:24
Speaker 2: this person or that person a piece of land, we
35:27
Speaker 2: wouldn't have these these wars.
35:31
Speaker 11: That's a good question. I wish it were the case
35:34
Speaker 11: that were just a matter of belief, but the attachments
35:38
Speaker 11: and the stakes and the ramifications of this conflict run
35:44
Speaker 11: much farther and wider than just belief. They are about
35:49
Speaker 11: control of the economies, control of water, control of access
35:54
Speaker 11: to ports, control of historical sites that have religious but
35:58
Speaker 11: also political and social connotations that run back centuries. So
36:03
Speaker 11: we can't really disentangle the religious aspect. For sure, it
36:06
Speaker 11: heightens the tension, but it's really not the only factor
36:09
Speaker 11: at play.
36:10
Speaker 1: Do we know to what extent the Palestinian people wherever
36:15
Speaker 1: they are the West Bank Aza, to what extent do
36:18
Speaker 1: they support Hamas Because it seems like you could get
36:22
Speaker 1: these two peoples together and say you get your land,
36:25
Speaker 1: We're gonna split this land up, and it's nobody's gonna
36:29
Speaker 1: be really happy, but this is the way it's going
36:30
Speaker 1: to be, and it's the best for everybody. But then
36:32
Speaker 1: Hamas comes in and really makes it difficult. So what's
36:35
Speaker 1: the level of support for Hamas and Hezbola amongst some
36:38
Speaker 1: of the Palestinians.
36:40
Speaker 11: The level of support for Hamas and Hezbola has been
36:43
Speaker 11: increasing as a result of the fact that Israel has
36:48
Speaker 11: continued to build and support settlements in the West Bank. So,
36:52
Speaker 11: in other words, your idea of giving each side some
36:55
Speaker 11: land and calling it a day is a great idea,
36:58
Speaker 11: and that was tried in the nineteen ninety news it's
37:00
Speaker 11: called the Oslo Accords. Neither side was particularly happy and
37:05
Speaker 11: neither side cooperated, and so what we have there were
37:08
Speaker 11: unaddressed issues that we have today that is an increasingly
37:11
Speaker 11: expansionist Israel. In other words, it's it's getting bigger and bigger,
37:15
Speaker 11: taking more and more land, and the Palestinians are increasingly desperate,
37:20
Speaker 11: frustrated and lashing out. So we're seeing a support rising
37:24
Speaker 11: support for Hamas. However, support for Hamas is quite low
37:28
Speaker 11: historically among the Palestinians. Palestinians don't want this violence either.
37:32
Speaker 11: I mean, who would, No one does exactly.
37:34
Speaker 1: This is just it's just incredibly you know, just just.
37:39
Speaker 2: It's complex, which is why it's great to have someone
37:41
Speaker 2: like professor Hurd, who studied government at Wesley and international
37:46
Speaker 2: finance at Yale, political science at Johns Hopkins to put
37:49
Speaker 2: these disciplines together and help us figure things out.
37:52
Speaker 6: Very good.
37:52
Speaker 1: Elizabeth Herd, Chair of Religious Studies and professor of political
37:54
Speaker 1: science at Northwestern.
37:55
Speaker 6: You're listening to the tape cans Are Line program Bloomberg
37:59
Speaker 6: Markets Weekday said ten am Eastern on Bloomberg Radio, the
38:02
Speaker 6: tune in app, Bloomberg dot Com.
38:04
Speaker 4: And the Bloomberg Business app.
38:05
Speaker 6: You can also listen live on Amazon Alexa from our
38:08
Speaker 6: flagship New York station, Just say Alexa, play Bloomberg eleven.
38:12
Speaker 1: Thirty Fraser Alkinson.
38:15
Speaker 2: In fact, they they're the first ones really to go
38:17
Speaker 2: electric because the municipalities need to show their green creds.
38:22
Speaker 2: And I mean, frankly, there's so many buses and you know,
38:28
Speaker 2: sort of mass transit vehicles on the road that it's
38:32
Speaker 2: better for all of us if they're not spewing out
38:35
Speaker 2: nasty things from the exhaust pipe.
38:38
Speaker 1: Absolutely Fraser Atkinson joins, I ceased to see Green Power
38:41
Speaker 1: Motor Company. It's a public traded company. Gp is as symbol.
38:46
Speaker 1: Talk to us first of all, Fraser, thanks so much
38:48
Speaker 1: for joining us, really appreciate it. Can you tell us
38:50
Speaker 1: what you guys do a Green Power what's your play
38:52
Speaker 1: in the EV space?
38:55
Speaker 13: Well, thanks for having us on your show, and we're
38:59
Speaker 13: we're we're focused on the medium and heavy duty space,
39:03
Speaker 13: which is quite different than the traditional light duty automotive.
39:08
Speaker 5: Those vehicles tend to.
39:09
Speaker 13: Be used less than an hour a day, and our
39:13
Speaker 13: vehicles are on average use twelve fourteen, sixteen hours a day,
39:18
Speaker 13: and we even have a few deployments where they're used
39:21
Speaker 13: twenty four hours a day and they do top charging
39:24
Speaker 13: in the early hours of the morning. So that's the
39:27
Speaker 13: space that we're focused on, and it's been a little
39:32
Speaker 13: slower to.
39:34
Speaker 5: Catch on, but we're finding.
39:36
Speaker 13: That it's got some serious legs for both the current
39:42
Speaker 13: and the future.
39:43
Speaker 2: Frazer, how do you juice those vehicles up for such
39:49
Speaker 2: industrial use? I mean I would think, you know, most
39:53
Speaker 2: electric vehicles have range of a few hours and then
39:57
Speaker 2: you've got to plug them in for many more. How
40:01
Speaker 2: do you make sure that these electric buses have enough
40:05
Speaker 2: energy to do their duty well.
40:08
Speaker 13: Most of the applications we're involved with tend to be
40:14
Speaker 13: lower speed and lots of stops and starts, which is
40:17
Speaker 13: absolutely ideal for an EV In terms of charging are
40:22
Speaker 13: the Class four vehicles, which is our largest volume seller
40:28
Speaker 13: both in terms of passenger cargo and as well the
40:31
Speaker 13: Type A school bus is that that particular set of
40:36
Speaker 13: vehicles we can either charge with a Level two or
40:40
Speaker 13: a DC fast charge, So we're very flexible and can
40:44
Speaker 13: be compatible with what the requirements might be what a
40:49
Speaker 13: customer might need from the use of that vehicle.
40:53
Speaker 1: So where do you make these electric school buses.
40:57
Speaker 13: Well, we've got we use contract manufacturers, similar to what
41:02
Speaker 13: Apple does with their various products. All of our products
41:06
Speaker 13: are designed and final assembly in the United States. We
41:13
Speaker 13: recently opened a facility in West Virginia that was courtesy
41:17
Speaker 13: of the state of West Virginia bought the facility for
41:20
Speaker 13: our use, and that is going to be our focus
41:26
Speaker 13: for our Type A, the smaller school bus, and the
41:29
Speaker 13: Type D, the larger school bus. Where we see demand
41:34
Speaker 13: across the board for both of those products.
41:37
Speaker 2: Is demand now starting to pick up exponentially. I mean,
41:42
Speaker 2: you've been at green Power since twenty ten, so you've
41:45
Speaker 2: seen a solid thirteen years of this business. Does it
41:50
Speaker 2: look a lot different in the last couple of years
41:52
Speaker 2: than it did to you for the first decade.
41:55
Speaker 13: Well, the early years, there literally were no medium or
41:59
Speaker 13: heavy duty the electric buses that have been deployed. The
42:02
Speaker 13: first one was twenty eleven twenty twelve, and that was
42:08
Speaker 13: with a company that had already generated deliveries and sales
42:14
Speaker 13: in other jurisdictions. So the industry is really only ten
42:18
Speaker 13: years old or ten plus. And the early years, the vehicles,
42:25
Speaker 13: the batteries were too heavy, the range wasn't able to
42:28
Speaker 13: satisfy even the most basic duty cycle. All that's changed
42:34
Speaker 13: to where now we can handle probably ninety five ninety
42:38
Speaker 13: six percent of almost all duty cycles for medium or
42:43
Speaker 13: heavy duty truck or bus, and that's really helped fuel
42:48
Speaker 13: the interest in electrifying fleets, and then combined with money
42:52
Speaker 13: and mandates at both the federal and the state level
42:57
Speaker 13: where certain operators are required to electrify fleets within certain
43:02
Speaker 13: time periods, has really created incredible tailwinds for the whole
43:08
Speaker 13: industry as well as our company.
43:10
Speaker 1: Fraser talk to us about kind of the sales process here.
43:13
Speaker 1: When you go to a school district, just describe for
43:16
Speaker 1: us how the sales process goes.
43:20
Speaker 13: Typically, they'd like the school districts.
43:23
Speaker 5: Are very hands on. They like to see, see and
43:27
Speaker 5: touch the vehicle.
43:28
Speaker 13: They like to have their various groups know whether it's
43:31
Speaker 13: the maintenance group, whether it's the drivers group, the trustees,
43:38
Speaker 13: that you really have to answer any questions that their
43:43
Speaker 13: constituents have.
43:44
Speaker 5: So we tend to do.
43:46
Speaker 13: A lot of ride in drives or demonstrations of the vehicles,
43:50
Speaker 13: and often those aren't just one or twice, but there
43:54
Speaker 13: are multiple occasions. And once a particular organization isisfy that yes,
44:00
Speaker 13: this is the vehicle that they can see they want
44:04
Speaker 13: to move forward with, then depending on the state, some
44:08
Speaker 13: states require dealers be involved in the process, others allow
44:12
Speaker 13: us to go direct. We have a real mix in
44:15
Speaker 13: terms of our go to market strategy. But then we're
44:18
Speaker 13: engaged in terms of, you know, essentially the big picture question,
44:24
Speaker 13: which is how are they going to pay for it?
44:26
Speaker 13: And school districts are not organizations that have a lot
44:29
Speaker 13: of money. So it's the recent funding that has come
44:32
Speaker 13: in both federally and with certain states that has really
44:36
Speaker 13: fueled the excitement and the electrification around school buses.
44:41
Speaker 1: So I want to get a sense. I'm just looking
44:43
Speaker 1: at your financial statements to your fraser, how do you
44:45
Speaker 1: fund your growth? I see you know, your public traded company,
44:49
Speaker 1: but a market cap of only seventy one million dollars,
44:52
Speaker 1: you know, several million dollars, a debt on the balance
44:54
Speaker 1: and iba the negative. How do you fund your growth?
44:59
Speaker 13: Well, our business model, we've had success in generating a
45:04
Speaker 13: gross profit on every cell or not every cell, but
45:08
Speaker 13: the combined cells of our vehicle every quarter, which is
45:12
Speaker 13: actually pretty unique, and that most of our competition is
45:16
Speaker 13: still operating with a gross profit loss. In other words,
45:19
Speaker 13: every vehicle they sell, they're actually selling at a loss
45:23
Speaker 13: before any of their expenses. And our growth has been
45:27
Speaker 13: such that we are getting closer and closer to that
45:31
Speaker 13: important break even from a cash flow point of view.
45:35
Speaker 13: We also had built up our inventory that post. When
45:40
Speaker 13: we went and did our nastac Ipo in the fall
45:44
Speaker 13: of twenty twenty, we were able to move from building
45:48
Speaker 13: vehicles pursuingto customer orders to where we're actually able to
45:51
Speaker 13: build into inventory, and that was critical in getting some
45:54
Speaker 13: of the larger deals that we are now delivering into
45:59
Speaker 13: so in our most recent quarter, our inventory actually was
46:03
Speaker 13: lower in terms of the overall amount that we had
46:07
Speaker 13: in inventory because we've been able to shift to deliveries
46:13
Speaker 13: and fulfilling orders.
46:15
Speaker 4: That as a.
46:17
Speaker 13: Result of being able to show that we had the
46:20
Speaker 13: ability to satisfy the various order requirements, and we've been
46:27
Speaker 13: a low cost operator, we've been able to manage our
46:30
Speaker 13: numbers so that our expenses compared to our peers are
46:33
Speaker 13: substantially less, so we don't have a large financial requirement.
46:38
Speaker 13: And lastly, we did have an ATM, or do have
46:42
Speaker 13: an ATM in place.
46:43
Speaker 5: We haven't drawn on it because we haven't needed it.
46:47
Speaker 13: But in the early part of twenty twenty three, as
46:51
Speaker 13: we're going through that inventory growth, we were able to
46:56
Speaker 13: take down about five million dollars off our ATM.
47:00
Speaker 1: Okay, interesting story, a really interesting story. Looks like potentially
47:03
Speaker 1: some growth there going forward as maybe see some inflation
47:07
Speaker 1: Reduction Act money come into the play.
47:08
Speaker 6: You're listening to the tape Cat's our live program, Bloomberg
47:11
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47:15
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47:17
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47:18
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47:26
Speaker 1: Let's continue our c Suite conversation. This time we're going
47:29
Speaker 1: to focus on the healthcare space, big pharma, biotechnology, therapeutics,
47:34
Speaker 1: all that good stuff. For that, We're joined by Joel Lewis.
47:37
Speaker 1: He's the CEO and president of Gallaxton Therapeutics. It's a
47:40
Speaker 1: publica trade stock on nastac. Ga l T is the
47:45
Speaker 1: symbol there. Joel, thanks so much for joining us here.
47:47
Speaker 1: Talks about what you guys are working on over at
47:50
Speaker 1: Galatin Therapeutics.
47:53
Speaker 14: Hi, Matt, Hi Paul, thank you for having me today.
47:55
Speaker 14: We pronounced the galactin therapeutic Actually.
47:58
Speaker 1: We thank you A yeah. Yeah.
48:01
Speaker 14: We are a late stage biotech company. We're conducting a
48:05
Speaker 14: large global pivotal trial. It's a Phase two B three
48:08
Speaker 14: trial in nash zorosis. Yeah yeah, So, I think when
48:16
Speaker 14: people think about cirrhosis, they normally immediately go to sorosis
48:20
Speaker 14: caused by alcohol. Actually, the fastest growing segment of this
48:26
Speaker 14: patient population is getting zerosis from fatty liver disease. So
48:33
Speaker 14: NASH is sort of the technical term for fatty liver disease,
48:37
Speaker 14: non alcoholics, theado appatitis, I won't say that again, We'll
48:40
Speaker 14: just call fatty liver disease. And again there's there's a large,
48:45
Speaker 14: a huge, growing patient population. We are specifically focused on
48:50
Speaker 14: patients who have progressed all the way to soorhosis.
48:54
Speaker 1: So talk to us about I guess that the treatment.
48:57
Speaker 1: How does your therapeutic work here?
49:01
Speaker 14: Okay, So, we have a carbohydrate molecule that actually targets galectin,
49:08
Speaker 14: specifically galectin three, which has been associated with many inflammatory diseases,
49:15
Speaker 14: and when you think about soorrhrosis, it's the ultimate inflammation
49:18
Speaker 14: that eventually leads to scar tissue. Our mechanism of action
49:23
Speaker 14: we actually target activated macrophases, which is where galactin is produced,
49:30
Speaker 14: and we reduce the over expression of galactin three when
49:35
Speaker 14: people have sorosis and reduce. When you reduce that protein,
49:43
Speaker 14: you give the Your livers are very regendative organ actually,
49:46
Speaker 14: and you give it a chance to heal.
49:48
Speaker 1: How how big is this market do you think? I know,
49:51
Speaker 1: you guys size these markets out pretty closely.
49:54
Speaker 14: So so and and I don't need everybody to take
49:57
Speaker 14: just my word for it. So I was listening to
49:59
Speaker 14: the fact You Liver Foundation, which is a patient advocacy group,
50:02
Speaker 14: that the estimate is that one third of the world
50:06
Speaker 14: population has fatty liver. And now when you say that,
50:11
Speaker 14: it's not fatty liver disease, it's just fat in their liver.
50:14
Speaker 1: So statosis is what it's.
50:16
Speaker 14: Called the medical term, and out of that patient, out
50:20
Speaker 14: of that potential patient group. Right now, in the US,
50:23
Speaker 14: the estimate from insurance reibursement is sixteen million, more than
50:28
Speaker 14: sixteen million patients. We've seen estimates higher because obviously not
50:32
Speaker 14: everybody's insured. So we've seen estimates of up to twenty
50:35
Speaker 14: eight million people who actually have fatty liver disease that's
50:39
Speaker 14: progressed to NASH and of those patients, one to two
50:43
Speaker 14: million of them will develop zorosis.
50:46
Speaker 1: So what do I guess what we've heard a lot
50:49
Speaker 1: about in the marketplace in the healthcare space over the
50:51
Speaker 1: last several months are these GLP one drugs of zempic,
50:54
Speaker 1: for example, How does that influence your part of the market.
51:00
Speaker 14: Yeah, and I heard your podcast when you guys talked
51:02
Speaker 14: about that back in August with Steven, So Yeah, obviously
51:07
Speaker 14: there's a big drive in most of the companies in
51:10
Speaker 14: the NASH space are targeting early stage fatty liver disease,
51:15
Speaker 14: and clearly, you know, patients that lose weight have a
51:19
Speaker 14: good chance to not progress to sorosis. The issue is,
51:23
Speaker 14: you know, I don't see how that all of those
51:26
Speaker 14: drugs are going to be so pervasive in the market.
51:29
Speaker 14: They're always going to be a set of patients that
51:32
Speaker 14: developed sorosis from fatty liver disease. And by the way,
51:36
Speaker 14: we happen to be doing our study in sorosis caused
51:40
Speaker 14: by fatty liver disease, but we do believe that this
51:42
Speaker 14: mechanism of action will work with all soerotic patients. And
51:45
Speaker 14: sorosis is caused by many things, including alcohol, including hepatitis.
51:50
Speaker 14: That's a much bigger problem in Asia than here. But
51:52
Speaker 14: we believe that this will always be a big patient population.
51:55
Speaker 14: And again, just so everybody knows, the only treatment for
51:59
Speaker 14: sorosis is liver transplant. There are no treatments for cirrhosis.
52:04
Speaker 14: And just to give everybody an idea, we do about
52:08
Speaker 14: nine thousand liver transplants a year in the US. I
52:12
Speaker 14: think people think that number is much bigger.
52:14
Speaker 1: Yep, Sore, where are you in the development of your therapeutics.
52:20
Speaker 14: So we are conducting our Phase two B three adaptive
52:25
Speaker 14: pivotal trial. We expect data in Q four of next year.
52:31
Speaker 14: It's an interim analysis, but if we repeat the results
52:34
Speaker 14: that we achieved in our phase two program, we will
52:39
Speaker 14: be seeking an accelerated approval at that point in time.
52:44
Speaker 1: So what's an endgame for your company and companies like
52:48
Speaker 1: yours at You know, I'm not super familiar with the
52:50
Speaker 1: healthcare space, but it seems like every Monday we have
52:52
Speaker 1: a bunch of M and A trades where big farmer
52:54
Speaker 1: company buys out a smaller farmer company to get access
52:57
Speaker 1: to their therapeutics or their drugs. Is that a typical
53:00
Speaker 1: Is that an exit for a company like yours?
53:02
Speaker 14: I think most biotech companies have that as their exit strategy.
53:10
Speaker 14: There's there's clearly a segment of the biotech industry that
53:14
Speaker 14: wants to develop the drug themselves that that is not
53:18
Speaker 14: our exit strategy. That you know, to do that, you
53:20
Speaker 14: have to have large marketing departments and big big departments
53:25
Speaker 14: that are looking at how you're going to price the
53:26
Speaker 14: drug and all those things. So so yeah, that would
53:29
Speaker 14: be you know, either either licensed the the ip or
53:34
Speaker 14: partner in some other way with pharma or a sale.
53:37
Speaker 1: And this is not just for older people. I mean,
53:39
Speaker 1: I hear when we talk about fatty liver disease, it's
53:41
Speaker 1: also for children as well, right.
53:44
Speaker 14: So, so so there there is fatty liver disease in children.
53:49
Speaker 14: They don't develop zorosis, right, Okay, so so so yes,
53:52
Speaker 14: I would I would say that that there is a
53:56
Speaker 14: growing problem with fatty liver disease in children. And certainly
54:03
Speaker 14: we have some peers in the space that are looking
54:05
Speaker 14: at those things, but we are so we are really
54:08
Speaker 14: focused on the end stage of this disease where we
54:11
Speaker 14: believe there's the greatest medical need.
54:13
Speaker 1: All right, very good, Joel Lewis, thank you so much.
54:15
Speaker 1: We appreciate it. CEO and president of Galectin Therapeutics, again,
54:18
Speaker 1: g Alt is the ticker to load into your Bloomberg
54:21
Speaker 1: terminok At that NaSTA quote's about one hundred million dollars
54:24
Speaker 1: in market cap, up seventy five percent year to date.
54:26
Speaker 1: So maybe some optimism out there in the street for
54:29
Speaker 1: this drug and this treatment.
54:32
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
54:35
Speaker 2: subscribe and listen to interviews at Apple Podcasts. Or whatever
54:39
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
54:43
Speaker 2: at Matt Miller nineteen seventy three.
54:46
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54:48
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54:51
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