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Steel, GDP, Geopolitics, and Lamborghini · 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. Every business day, we bring
0:06
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
0:11
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. I want to get
0:21
Speaker 1: back to the big picture stories that have been swinging
0:25
Speaker 1: this market around, giving us the kind of volatility that
0:27
Speaker 1: we haven't certainly in the rates sector seen in decades,
0:31
Speaker 1: if ever before, And I want to do that with
0:34
Speaker 1: Chris Campbell. He is a senior policy analyst and sorry,
0:41
Speaker 1: he's the chief strategist at Kroll, but he has had
0:44
Speaker 1: a number of other important look at them before. Yeah,
0:50
Speaker 1: former assistant secretary from the US Department of Treasury, he
0:54
Speaker 1: went to FSOCK meetings, former Stack director of the Senate
0:58
Speaker 1: Finance Committee, and so lifetime member the accountl on Foreign Relations.
1:03
Speaker 1: You're basically plugged in on Wall Street and in Washington, Christ,
1:06
Speaker 1: So it's great to have you here in the studio
1:08
Speaker 1: with you. What do you make of the banking turmoil
1:11
Speaker 1: that we've seen in the government response, do you think
1:14
Speaker 1: it's behind us? As I say, the system worked, you know,
1:17
Speaker 1: like their banks will go under um, and you know,
1:21
Speaker 1: companies fail, but uh, and there's going to be an
1:24
Speaker 1: enormous amount of investigations going on, you know as to
1:26
Speaker 1: why the you know, these two banks failed in the
1:29
Speaker 1: United States. But the reality is the federals, federal Federal
1:33
Speaker 1: Federal Reserve and Treasury worked very quickly, very expeditiously, and
1:37
Speaker 1: decisively to make sure that depositors were taken care of,
1:40
Speaker 1: which is the way I think which is important. UM.
1:43
Speaker 1: It stopped a run on banks, which, as you know,
1:46
Speaker 1: is deeply emotional. And so with with that prevention and
1:50
Speaker 1: with the with confidence restored largely, UM, I think that
1:53
Speaker 1: we can now go back to a quote unquote normal system,
1:57
Speaker 1: if you will, where we're actually seen looking at fun
2:00
Speaker 1: mentals for banks and others in the market and uh
2:02
Speaker 1: and judging them on their fundamentals. Should we expand insurance
2:06
Speaker 1: beyond the two hundred and fifty thousand? How problematic is that?
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Speaker 1: It's going to be deeply problematic and very very political
2:13
Speaker 1: in DC. UM. You know, it's you can kind of
2:16
Speaker 1: see the each side where they're going to come out
2:18
Speaker 1: the Democrats, like they're going to say that, uh, you know,
2:20
Speaker 1: two hundred fifty thousand dollars is a lot of money
2:23
Speaker 1: for most Americans. You know, the average American makes about
2:26
Speaker 1: fifty seven thousand dollars a year, So having two unrefty
2:29
Speaker 1: thousand dollars in their bank account, it's just you know,
2:31
Speaker 1: it's it's it's like it's aspirational um and you know,
2:34
Speaker 1: and especially we're talking about savings accounts, right, so yeah,
2:38
Speaker 1: if if hopefully, uh, they can save up that much
2:42
Speaker 1: before retirement, because people live so long now and if
2:44
Speaker 1: you retire at sixty five or seventy, you still got
2:47
Speaker 1: another thirty years to fund. But they'll do it in
2:49
Speaker 1: different accounts. And there are four one ks and there's
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Speaker 1: another issues that are not insured and so and so yeah,
2:54
Speaker 1: like I think that, you know, Republicans will take a
2:56
Speaker 1: different view of this, and so I just it's very deep,
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Speaker 1: very tough to see, especially today's Washington, where there me
3:01
Speaker 1: be can census on on any legislation involving banks, changing
3:05
Speaker 1: Dodd Frank or anything like that in the current environment.
3:08
Speaker 1: But it's de facto done, isn't it. Raising the insurance?
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Speaker 1: I mean, even though they're not going to officially do it. Um,
3:14
Speaker 1: if you have three hundred thousand, then your regional bank
3:17
Speaker 1: goes under, you can count on the government to bail
3:20
Speaker 1: you out. It's clear that the Federal Reserve has used
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Speaker 1: its powers within Dodd, Frank and and supervisor authority to
3:27
Speaker 1: be able to step in and prevent and make sure
3:29
Speaker 1: the depositors will made whole. I think you know, again,
3:33
Speaker 1: you can argue moral hazard or not, but the reality
3:35
Speaker 1: is that that now the Federals Serve has done this.
3:37
Speaker 1: It's now well known that they can, and I think
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Speaker 1: the depositors now I think you know it should have
3:42
Speaker 1: the Commons probably that that that Federserve likely step in
3:45
Speaker 1: in the future. Can I bring up a debt limit
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Speaker 1: with you negotiating on Oh man, are we talking about
3:50
Speaker 1: the debt ceiling? Yeah? We are. I'm so well, we
3:54
Speaker 1: have to don't fortunately or not. I've I've actually negotiated
3:57
Speaker 1: the last twelve of them. So now is that you
4:00
Speaker 1: using that as a point of negotiation over whatever? Is
4:03
Speaker 1: that like playing Russian rule in It's very, very difficult
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Speaker 1: and deeply problematic to suggest that the United States may
4:11
Speaker 1: walk up to the line and actually and not pay
4:13
Speaker 1: our bills. Um, it's you know, it's very and for
4:16
Speaker 1: for the listeners, it's really important to buy. For Kate,
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Speaker 1: this is this is you know, not funding the Post
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Speaker 1: office or the National parks. This is paying back our
4:24
Speaker 1: debt ors our debt and effectively, you know, and I
4:28
Speaker 1: think about this, and I tending which was already approved,
4:31
Speaker 1: was that's correct. Spening has already been improved, and actually
4:33
Speaker 1: it's already been spent. This is debt that we're paying back,
4:36
Speaker 1: and so um, you know, I think it's it really
4:39
Speaker 1: does affect the rate at which Treasury or where I
4:43
Speaker 1: used to work, can sell our our debt U and
4:46
Speaker 1: it'll affect that the amount of that and the confidence
4:49
Speaker 1: of people who buy buying our debt. And so the
4:52
Speaker 1: reality is, and we make quabble over this is the
4:55
Speaker 1: right thing to do or not, But if we you know,
4:57
Speaker 1: the government spends one point three dollars for every dollar
5:00
Speaker 1: takes in, we just we you know, the federal government
5:02
Speaker 1: likes to spend like drug and sailors, um, and they
5:05
Speaker 1: don't they don't balance the budget, and so we we
5:08
Speaker 1: just rely on debt to finance our operations in our
5:11
Speaker 1: in our government and so and so So John and
5:15
Speaker 1: I have covered uh these um impasses. The twenty eleven
5:21
Speaker 1: um one probably the most noteworthy. When we were our
5:25
Speaker 1: credit rating was lowered. You actually were in the room
5:28
Speaker 1: negotiating them UM as you said the last twelve. So
5:32
Speaker 1: this happens fairly often. Now at Kroll you're in a
5:34
Speaker 1: different role where you have to advise your clients on
5:38
Speaker 1: um You know what could happen around this in terms
5:41
Speaker 1: of the economy, in terms of the markets. What are
5:43
Speaker 1: you expecting this time? This will be the hardest one
5:46
Speaker 1: I've ever seen. When first, I'm so grateful that I'm
5:49
Speaker 1: out there. Uh, it's I really believe this is there
5:53
Speaker 1: actually maybe a chance we actually may do a technical
5:56
Speaker 1: default in this in this setting, UM, I really don't
5:59
Speaker 1: know how how you get there. You have we have
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Speaker 1: a president who's unwilling to talk to House Republicans or
6:05
Speaker 1: House Republicans or have made it very clear that they
6:07
Speaker 1: want spending introductions in the package as an overall way
6:12
Speaker 1: to get to yes. And so with that, with those
6:15
Speaker 1: two postures, and we're and we're coming. We're going coming
6:18
Speaker 1: so quickly up to the to the deadline that there's
6:21
Speaker 1: really we're going to quickly come to a time where
6:24
Speaker 1: we're actually going to pass a red line where we can't,
6:27
Speaker 1: you know, because it just takes time to pass things
6:28
Speaker 1: in Congress. Hey, I just want to drain your experience.
6:31
Speaker 1: You were got about thirty seconds, Leff, you were Orange
6:34
Speaker 1: Hatch's right hand man. That mistaken could in an Orange
6:37
Speaker 1: Hatch function in today's Congress, or he'd be an outlier.
6:41
Speaker 1: You know, there's a couple couple I call statesmen left
6:44
Speaker 1: in the in the in the US and the US Congress,
6:47
Speaker 1: but they are a dying breed. And uh, I know,
6:48
Speaker 1: I'm so grateful to have been mentored by him. Um
6:51
Speaker 1: and I really our country would be much better off
6:54
Speaker 1: if we had more and more ore in hatches in
6:55
Speaker 1: the Senate today. Well, it's been awesome to have you
6:57
Speaker 1: in the studio and I hope we can get you
6:59
Speaker 1: back for more time. Chris Campbell, their chief strategist at Kroll,
7:04
Speaker 1: talking us through the bank. Well, we're not going to
7:07
Speaker 1: call it a crisis, right the bank. We camil is
7:11
Speaker 1: the word I think that we've landed on. You're listening
7:15
Speaker 1: to the Team Cancer Live program Bloomberg Markets weekdays at
7:19
Speaker 1: ten am Eastering on Bloomberg dot Com, the I Heart
7:22
Speaker 1: Radio app, and the Bloomberg Business app. We're listening on
7:24
Speaker 1: demand wherever you get your podcast. We have an opportunity
7:30
Speaker 1: to talk about steel right now at David Stickler. He's
7:33
Speaker 1: the CEO of High Bar. It's a newly formed company,
7:37
Speaker 1: comes with a lot of experience though as a CEO
7:40
Speaker 1: former CEO of Big River Steel, and he's in the
7:45
Speaker 1: studio with us right now. So I think it's a
7:46
Speaker 1: great opportunity to get a look at, you know, one
7:50
Speaker 1: of the underlying sort of signals of economic growth or
7:56
Speaker 1: you know, contraction. Thanks so much for joining us, David.
8:00
Speaker 1: What's the steel market like right now? Because it's obviously
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Speaker 1: a primary building block of the economy. Sure, the steel
8:07
Speaker 1: market is if you look historically, it's in very very
8:10
Speaker 1: strong shape. It's been in strong shape for eighteen twenty
8:15
Speaker 1: four months now. But the steel market, when you talk steel,
8:20
Speaker 1: a lot of people look at just half of the equation.
8:23
Speaker 1: They look at what the steel price is. And today
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Speaker 1: seventy percent of the steel in North America is made
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Speaker 1: from recycled scrap metal, all right. Now, that's different where
8:35
Speaker 1: twenty years ago seventy percent was made from iron. Ore
8:39
Speaker 1: and coking coal. So there's been a huge, huge shift
8:43
Speaker 1: in the sustainability of steelmaking. But when you look at
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Speaker 1: steel price, as I said a moment ago, that's just
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Speaker 1: half the equation. It's what's the scrap metal price, And
8:53
Speaker 1: it's really the spread that everybody plays in, and that's
8:56
Speaker 1: where you make your money, the difference between scrap metal
9:00
Speaker 1: and steel. What are the benchmark contracts that you look
9:02
Speaker 1: at to find that price, So you you really in
9:06
Speaker 1: the steel industry, unlike the alunium industry or the oil
9:11
Speaker 1: industry or the gas industry, you don't have a liquid
9:14
Speaker 1: futures market. So you're really looking on a daily monthly
9:19
Speaker 1: basis on what the scrap price is trading at all, right,
9:24
Speaker 1: what you can buy scrap metal for, and then you're
9:27
Speaker 1: trying to add on your margin to set your steel price.
9:30
Speaker 1: And that's really gentleman. What's interesting, Manton John is with
9:35
Speaker 1: scrap metal, there's nothing else to do with it other
9:38
Speaker 1: than make new steel. But they have scrap metal overseas
9:43
Speaker 1: they do. And when I'm buying stuff like that, I
9:46
Speaker 1: would imagine as a purchaser, I'm just looking at, you know,
9:50
Speaker 1: who's the best producer, the best price I can get,
9:53
Speaker 1: And those are two different things, by the way, right,
9:56
Speaker 1: the best producer and the best price you can get
9:58
Speaker 1: are often too very different things. It's hugely different. Now
10:02
Speaker 1: you can buy steel. Steel isn't steel. Steel is not steel.
10:06
Speaker 1: You can buy steel from all the reaches of the
10:10
Speaker 1: globe pretty much. You can buy it from China, you
10:12
Speaker 1: can buy it from Russia, Brazil, India, Japan, Korea, Canada,
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Speaker 1: the US and imported steel certainly is here and will
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Speaker 1: always be here. The difference is the quality and more recently,
10:29
Speaker 1: the environmental sustainability. I will tell you the global average
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Speaker 1: for carbon emissions per ton of steel. For each ton
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Speaker 1: of steel, the world average is one point eight five
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Speaker 1: tons of carbon. All right, one ton of steel one
10:45
Speaker 1: point eight five tons of carbon in the air. The
10:47
Speaker 1: last mill, prior to my high bar effort here, our
10:51
Speaker 1: carbon emissions was point one two three. But how would
10:55
Speaker 1: I know that as the consumer? I mean, does its
10:57
Speaker 1: stamped on the steel lumbered one way? By the way, David,
11:02
Speaker 1: you're not selling steel rebar to John for his home
11:05
Speaker 1: renovation projects. I've got You've got much bigger customers. These
11:11
Speaker 1: are bridge tunnel, airport projects, roadway projects, sixty seventy you know,
11:17
Speaker 1: floor office and condominium towers. And I've heard we are
11:20
Speaker 1: going to do a little bit of infrastructure spending in
11:22
Speaker 1: this control. We certainly are. And what's interesting, since the
11:27
Speaker 1: nineteen sixties, anytime there's been a federal highway dollar used
11:32
Speaker 1: in a project, there's a concept called buy America. The
11:36
Speaker 1: rebar has to be melted, cast enrolled in the United States,
11:42
Speaker 1: all right. Now, That's been around since the nineteen sixties.
11:45
Speaker 1: So when you talk about, hey, can I buy some
11:47
Speaker 1: rebar from Turkey, absolutely you can. But if it's a
11:51
Speaker 1: federal highway project, you're restricted only two US produced rebar
11:58
Speaker 1: And I guess you know, especially with this administration, they
12:02
Speaker 1: probably want to do a better job for the environment.
12:06
Speaker 1: We import as a country like thirty million metric tons
12:10
Speaker 1: of steel every year, but that is incredibly pollutive, right.
12:16
Speaker 1: I'll give you an example. So on the West Coast,
12:19
Speaker 1: there's really no natural home for scrap metal, so it
12:23
Speaker 1: either has to travel east into Chicago, into Arkansas, into
12:28
Speaker 1: the Carolinas where steel a lot of steels produced Texas
12:31
Speaker 1: or gets shipped overseas. So you take your scrap metal
12:34
Speaker 1: off your West coast ports, ship it over to Asia,
12:38
Speaker 1: gets put on a truck that you don't want to
12:40
Speaker 1: be anywhere near, driving behind with all of the pollution
12:43
Speaker 1: coming out of the tailpipe, gets melted in those steel mills.
12:47
Speaker 1: That as I said, one point eight five tons of carbon,
12:50
Speaker 1: you know, per ton of steel put on a truck,
12:53
Speaker 1: put on a ship delivered to the West coast. That
12:57
Speaker 1: is not an environmental fuel both ways is not environmentally sustainable.
13:02
Speaker 1: So so what will you do? You were at Big
13:06
Speaker 1: River Steel, now you're at High Bar. You're focused on recycling,
13:10
Speaker 1: in the in the production. What will you do differently
13:12
Speaker 1: than your competitors? Oh? Number one will be LEAD certified.
13:16
Speaker 1: At Big River we were the world's first LEADS certified
13:20
Speaker 1: scrap metal, recycling, steel production, facility leadership and environmental design
13:27
Speaker 1: and LEAD certification is typically for office buildings, hospital complexes,
13:33
Speaker 1: university building. We have it at the Bloomberg headquarters. When
13:36
Speaker 1: when people heard that we were going to get Big
13:39
Speaker 1: River Steel or attempt to get Big River Steel LEADS certified,
13:42
Speaker 1: they thought we had lost our minds. But we did it.
13:45
Speaker 1: And after two years of operation at Big River Steel,
13:48
Speaker 1: Dommler Mercedes called us up and said, Dave, are you
13:52
Speaker 1: going to be in town in three weeks. I said,
13:54
Speaker 1: well I am. They said, we want to give you
13:56
Speaker 1: our Environmental Supplier of the Year award, and not just
14:00
Speaker 1: for steel, not just in North America. Everything that Donler
14:05
Speaker 1: Mercedes buys plastic, glass, aluminum. Here's a two year old
14:08
Speaker 1: company at that point in time, given our lead certification,
14:11
Speaker 1: given our carbon footprint, and that really makes a difference. Now,
14:15
Speaker 1: what I will tell you is people don't pay more
14:18
Speaker 1: for our steel because it's environmentally sustainable, but everything else
14:22
Speaker 1: being equal, If my steel selling for a thousand bucks
14:25
Speaker 1: delivered in one of my competitors up along the Great
14:28
Speaker 1: Lakes that uses coal and iron ore to make steel
14:31
Speaker 1: selling for a thousand bucks, nine times out of ten
14:34
Speaker 1: will get the order. It's like a tiebreaker when you
14:37
Speaker 1: go to Vegas and the house has, you know, the
14:39
Speaker 1: blackjack tiebreaker. I'll take the tiebreaker. What's the future of
14:43
Speaker 1: the industry. Do you face competition from things like carbon fiber?
14:48
Speaker 1: You're always facing you replacement. You know, for a while
14:51
Speaker 1: it was going to be the cars are all going
14:53
Speaker 1: to be aluminum. The steel industry is going to be
14:55
Speaker 1: on its tail. Talk about an energy intensive deducing aluminum, yeah,
15:01
Speaker 1: can and energy intensive carbon intensive. You know, the one
15:06
Speaker 1: thing about aluminum is you do have you know, a
15:09
Speaker 1: high level of recycling. You're seeing a shift away from
15:14
Speaker 1: plastic bottles to now water and other drinks are being
15:19
Speaker 1: more and more in aluminum cans, aluminium bottles, what have you. So,
15:23
Speaker 1: the aluminum industry is here to stay. It's not going away.
15:25
Speaker 1: But to answer your question, the steel industry, the key
15:30
Speaker 1: is lightweight and strong. All right, lightweight and strong. And
15:36
Speaker 1: thirty years ago steel was you know, half inch thick.
15:40
Speaker 1: It was you know, you couldn't bend it, couldn't press it.
15:43
Speaker 1: It was tough for some of these applications, and aluminum
15:47
Speaker 1: and carbon fiber were quite frankly nipping it the tails
15:52
Speaker 1: of the steel industry. The steel industry, to their credit,
15:55
Speaker 1: has come out with advanced high strength steels, corrosion resists
16:00
Speaker 1: in steels, and really over the last twenty years has
16:04
Speaker 1: just done a complete life cycle change. When I first
16:07
Speaker 1: started this twenty years ago, steelmaking was eighty percent braun
16:12
Speaker 1: twenty percent brains. Today at High Bar and Big River
16:16
Speaker 1: it's ten percent braun ninety percent brains. We have this
16:22
Speaker 1: green market steel. Bloomberg Company Rebar report here available to
16:28
Speaker 1: our terminal customers. Is there do you think enough support
16:33
Speaker 1: for sustainability around this industry. I don't think you'll see
16:37
Speaker 1: a green premium. All right. There's a lot of people
16:40
Speaker 1: in the industry saying you're going to be sustainable, you'll
16:43
Speaker 1: be able to get an extra ten percent for your
16:45
Speaker 1: steel products. I don't believe that. What I believe it's
16:49
Speaker 1: a tiebreaker. If you're the most sustainable, you're going to
16:52
Speaker 1: get the order, everything else being equal. But I do
16:55
Speaker 1: not expect a developer or a builder to pay me
16:58
Speaker 1: a premium because my steal is green. All right, Well,
17:02
Speaker 1: we're gonna be hearing more from you at this roundtable
17:04
Speaker 1: discussion here at Bloomberg. So we're glad you could stop
17:07
Speaker 1: by the radio booth and talk to us because it's
17:10
Speaker 1: a fascinating topic and I think John and I love
17:13
Speaker 1: all the things that are made of steel. No, I'm
17:15
Speaker 1: in the market for rebar for my basement, So keep
17:18
Speaker 1: you in mind. Thank you very much, Thank thank you
17:21
Speaker 1: so much. You're listening to the tape. Ken's a our
17:24
Speaker 1: live program Bloomberg Markets weekdays at ten am Eastern on
17:28
Speaker 1: Bloomberg Radio, the tune in app, Bloomberg dot Com, and
17:31
Speaker 1: the Bloomberg Business app. You can also listen live on
17:34
Speaker 1: Amazon Alexa from our flagship New York station. Just say
17:37
Speaker 1: Alexa play Bloomberg eleven thirty. We want to get right
17:42
Speaker 1: now to James Lanthier. He's a CEO at Mindset Pharma
17:47
Speaker 1: and they have it's it's a business that I am
17:52
Speaker 1: very interested in psychedelics, plant based psychedelics to treat What
17:58
Speaker 1: do you treat James with these psycho delics other than
18:01
Speaker 1: you know, the duldrums? Well, you know, I think we're
18:05
Speaker 1: at a pretty fascinating point. There are a couple of
18:08
Speaker 1: clinical trials that are in their later stages. Um, for
18:13
Speaker 1: for the use of psilocybin, which is a psychoactive component
18:16
Speaker 1: of magic mushrooms rooms exactly three of resistant depression and
18:22
Speaker 1: m DMA to treat PTSD. But there are literally hundreds
18:27
Speaker 1: of clinical trials right now, and uh, you know, academic
18:31
Speaker 1: studies exploring different indications, you know, for psilocybin, DMT, a
18:38
Speaker 1: whole range of different psychedelics. You know. But you are
18:41
Speaker 1: actually so I'll just tell listeners, um, this is a
18:44
Speaker 1: publicly traded company, Mindset Pharma. The ticker is MSSTF. You
18:51
Speaker 1: actually sell like shrooms in ecstasy to clients in Canada. No,
18:56
Speaker 1: we're we're a classic biotech. So what we are doing
19:00
Speaker 1: is we are trying to develop new psychedelic drugs that
19:05
Speaker 1: have been really optimized to make up for some of
19:08
Speaker 1: the shortcomings of the of the known drugs, so that
19:10
Speaker 1: they're gonna work better as medicines. They'll be safer, more predictable,
19:15
Speaker 1: have potentially different durations. So better than like SSRIs the
19:21
Speaker 1: prozacts of the world is what you're saying. Well, better
19:23
Speaker 1: not only than the established therapies. Yeah, absolutely better than
19:27
Speaker 1: the SSRIs, but but better than the psychedelic drugs that
19:31
Speaker 1: we are you know, studying today. So you know, for instance, psilocybin,
19:36
Speaker 1: there's amazing data to show that it can do a
19:38
Speaker 1: really great job of helping people with uh, you know,
19:41
Speaker 1: different depressive disorders, but the durations really long. You have
19:45
Speaker 1: to spend you know, up to eight hours in clinic
19:48
Speaker 1: and be supervised by multiple therapists, and we just think
19:51
Speaker 1: that's not really a very convenient model for you know,
19:54
Speaker 1: either for therapists or you know, or for patients. So
19:57
Speaker 1: we're trying to you know, develop drugs that still you know,
20:01
Speaker 1: have the same benefit are still going to likely induce
20:04
Speaker 1: the same you know, psychedelic experience, but have a shorter duration.
20:08
Speaker 1: All right, since you mentioned startup, I got to ask
20:11
Speaker 1: the obligatory tangential question about funding and how svb's collapse
20:16
Speaker 1: may have affected you or your industry. Well, it hasn't
20:21
Speaker 1: affected mindset. We're in a bit of a unique position.
20:24
Speaker 1: We're the only biotech startup out there that actually has
20:29
Speaker 1: a big pharma collaboration. So we're we're partnered with the
20:33
Speaker 1: development arm of Otsuka Pharmaceuticals, which is a top psychia
20:38
Speaker 1: psychiatric drug company, and they fund the majority of our expenses.
20:43
Speaker 1: I think generally speaking, you know, the psychedelic space has
20:46
Speaker 1: not had a ton of exposure to SVB or you know,
20:51
Speaker 1: any of the other regional banks that have Why is
20:54
Speaker 1: it structured that way? The does big farma not want
20:58
Speaker 1: to touch this or they'd rather have somebody like you
21:00
Speaker 1: and if it is successful, take you over or whatever. Yeah,
21:04
Speaker 1: the I think it's it's it's really more of the latter,
21:08
Speaker 1: you know, we're most of the new drug work is
21:11
Speaker 1: is still at a kind of a pre clinical stage,
21:13
Speaker 1: which is just you know a little bit early for
21:16
Speaker 1: big pharma and so the way that you know a
21:18
Speaker 1: law you know, not only in psychedelics, but you know,
21:21
Speaker 1: a kind of a cross farma now have a lot
21:23
Speaker 1: of these, you know, early stage collaborations where pharma's uh,
21:27
Speaker 1: you know, partner up with promising biotechs that have you know,
21:32
Speaker 1: have some promising kind of early results before they actually
21:35
Speaker 1: you know, go all the way into a licensing partnership. So, um,
21:41
Speaker 1: what could what are you finding in terms of treatments
21:44
Speaker 1: because um, you know, you mentioned the psychedelic experience, and
21:48
Speaker 1: I thought the way people use sila cybin to treat
21:52
Speaker 1: um disorders was through micro dosing. At least that seems
21:57
Speaker 1: to be the kind of trendy way that people are
21:59
Speaker 1: doing it in Silicon Valley and some others here on
22:02
Speaker 1: the East Coast as well. Um, well, what's the most
22:05
Speaker 1: successful way that you're that you found so far? Yeah,
22:08
Speaker 1: I'm really glad you asked that question because it's actually
22:11
Speaker 1: a kind of a common misconception because you do hear
22:14
Speaker 1: a lot about microdosing, but but actually the the the
22:18
Speaker 1: approach that has had you know, the most positive data
22:22
Speaker 1: so far is what we call macrodosing. So you go
22:26
Speaker 1: into a clinic, you take a large dose of a
22:28
Speaker 1: psychedelic drug. You know, it puts you off into a
22:31
Speaker 1: real psychedelic trip for you know, a period of time. Um,
22:36
Speaker 1: and you've got to do it, you know, in clinic
22:38
Speaker 1: under supervision, typically with multiple therapists. Yeah. Yeah, Typically there's
22:45
Speaker 1: there's you know often there's music too, and and uh
22:48
Speaker 1: and it's really interesting. All the data suggests that, you
22:51
Speaker 1: know that that that profound psychedelic experience is really kind
22:56
Speaker 1: of essential to to getting you know, the relief from
23:00
Speaker 1: depressive symptoms. It's almost like a we still don't really
23:04
Speaker 1: fully understand like how this all works, but you know,
23:07
Speaker 1: the assumption is that there's some level of kind of
23:10
Speaker 1: rewiring and it helps, you know, helps give you kind
23:12
Speaker 1: of a break from being stuck in uh, in these
23:16
Speaker 1: negative thought patterns. That's you know, really a hallmark of
23:19
Speaker 1: people who are suffering, you know, badly from depression. How
23:22
Speaker 1: far are you from something prescribable? If you look across
23:27
Speaker 1: the psychedelic space, the drug that's going to get likely
23:31
Speaker 1: get to FDA approval first is going to be MDMA. Uh,
23:35
Speaker 1: psilocybin is going to come and that could be as
23:37
Speaker 1: early as you know, next year. Psilocybin is probably another
23:41
Speaker 1: twelve months behind that. We have a couple of candidates
23:44
Speaker 1: that are just entering, uh you know, clinical trials. Now,
23:47
Speaker 1: are you actually like growing mushrooms in the basement? I mean, went,
23:50
Speaker 1: how does this work? No? This is all this is
23:53
Speaker 1: all synthetic. So the problem with using the mushroom in
23:57
Speaker 1: a therapeutic you know, regulated context, is that the psilocybin
24:01
Speaker 1: content can really vary, you know, wildly, you know, from
24:04
Speaker 1: mushroom to mushroom by as much as you know ten x.
24:08
Speaker 1: So the mushroom, you know, you there's really no way
24:11
Speaker 1: for for physicians to kind of dose it appropriately. You
24:14
Speaker 1: really have to use the synthetic versions, and that's what
24:18
Speaker 1: we're working with. Also, Uh, John, if you haven't been
24:22
Speaker 1: watching The Last of Us, you might not know that
24:24
Speaker 1: fungus can cause a global pandemic, could be world ending.
24:28
Speaker 1: I have no idea what you're telling you about. Which
24:30
Speaker 1: show is the HBO The Last of Us? Um? All right,
24:34
Speaker 1: James the Pleasure from Narcos? Right, yeah, Okay, No, that's
24:38
Speaker 1: pretty cool, James Pleasure talking to you. And I obviously
24:41
Speaker 1: find this, uh topic absolutely fascinating, and you know, I
24:45
Speaker 1: think SSRIs have been fairly successful, but there are obvious
24:49
Speaker 1: drawbacks and side effects, so it would be quite cool,
24:52
Speaker 1: um if you were successful. Great for the mental health
24:56
Speaker 1: of the world. John Lanthier there the CEO at minds
25:00
Speaker 1: at Farm. Sorry, James Lanthier, the CEO of Mindset Farmer.
25:03
Speaker 1: The ticker again is mss TF. This is Bloomberg. You're
25:10
Speaker 1: listening to the team can'cer live program Bloomberg Markets weekdays
25:14
Speaker 1: at ten am, easting on Bloomberg dot com, the I
25:17
Speaker 1: Heart Radio app, and the Bloomberg Business app. We're listening
25:20
Speaker 1: on demand wherever you get your podcast. Hannah Elliott has
25:25
Speaker 1: probably the best job at Bloomberg News. You did no well.
25:29
Speaker 1: I mean I read all everything, she writes, everything, she
25:32
Speaker 1: puts out follower on all social media, and she has
25:37
Speaker 1: just put out a piece on the update the follower
25:41
Speaker 1: to what is my probably favorite car of all time,
25:44
Speaker 1: the Lamborghini evented Door. Hannah, I must tell you that
25:47
Speaker 1: we had a talk it was like last week about
25:50
Speaker 1: Lamborghini's and you were very upset about one model that
25:53
Speaker 1: was I don't know, naturally aspirated but with a turbo
25:57
Speaker 1: charger or whatever. No, is that right? No, it's not
26:00
Speaker 1: the case. What was it. I'm not I'm not in
26:02
Speaker 1: love with the urists. The power train for the Lamborghinists. Yeah,
26:05
Speaker 1: oh yeah, that's fair. I have to say I love
26:08
Speaker 1: the earists. I just had the Performante last week and
26:12
Speaker 1: drove it out to Palm Springs. How for how does
26:17
Speaker 1: that work? How do you hook me up? You know
26:20
Speaker 1: I can help you with that. Um, as Matt said,
26:23
Speaker 1: I agree. I have the best job at at Bloomberg
26:26
Speaker 1: and I had it for um let's call it a
26:28
Speaker 1: long weekend, four days over the weekend. So um it was.
26:32
Speaker 1: It was a great experience. And I really you know,
26:35
Speaker 1: I just drove the Farie par Songua the Ferrari Suv,
26:38
Speaker 1: so it was very interesting to check back to back
26:41
Speaker 1: the Lamborghini Suv versus the Ferrari Suv. I have to
26:44
Speaker 1: say I give the Lambo the edge. Actually, well the Lamb.
26:47
Speaker 1: I mean, look, the Lambo is a great car, But
26:50
Speaker 1: is it just a Porsche Kayen with a different steel
26:54
Speaker 1: on top? They have the same don't they have the
26:56
Speaker 1: floor leader va with the twin turbos and oh sure,
27:01
Speaker 1: but you know, there's a lot more power in the
27:03
Speaker 1: earthst There's a lot more. There's a lot more power
27:06
Speaker 1: in torque, I will say, I mean the performance figures
27:09
Speaker 1: are stronger. It's it's a very cool car. But I
27:12
Speaker 1: just personally I prefer a naturally aspirated engine. But I'm
27:16
Speaker 1: old and there are new things. You're a purist, yeah,
27:18
Speaker 1: I mean, hey, I don't believe it. You're you're a purist.
27:21
Speaker 1: I mean, so that brings me to well, how do
27:23
Speaker 1: you feel about Lamborghini making a hybrid? I feel very
27:26
Speaker 1: good about that. I have. I've always said there's no
27:28
Speaker 1: replacement for displacement, but I think now there is, and
27:32
Speaker 1: that is okay, battery power, because of the instant torque,
27:35
Speaker 1: because of um, just the incredible performance. Tell us about
27:41
Speaker 1: the new car. I can't even pronounce the name. What's
27:42
Speaker 1: the new eventidor the Eventador successor called? So I'm gonna
27:49
Speaker 1: go with Rouelto. Um. You know, some people are saying
27:53
Speaker 1: velto and some people are saying Rouelto. I think Rowelto
27:57
Speaker 1: is a bit easier to say, basically the word. Of course,
28:02
Speaker 1: it's named after a fighting bowl a bull that fought
28:05
Speaker 1: in of s in Spain in Barcelona in the eighteen eighties.
28:08
Speaker 1: John and a lot of our listeners may not know
28:11
Speaker 1: that all, most all Lamborghinis are named after famous bulls.
28:15
Speaker 1: This is this is firmly in line with Lamborghini heritage.
28:19
Speaker 1: So the roualto. That word also means mixed up in Spanish.
28:24
Speaker 1: It can be used to mean mixed up some people
28:27
Speaker 1: even have you even told me, well, it kind of
28:29
Speaker 1: means like scrambled eggs, and that's a very fitting name
28:33
Speaker 1: for a vehicle that combines three electric motors with that
28:39
Speaker 1: V twelve engine. So we've got a mixed up drive
28:43
Speaker 1: train here. It's not really about like you said, this
28:47
Speaker 1: is the successor to the evented door. It's the hybrid function.
28:50
Speaker 1: Is not really about a fuel efficiency because we only
28:54
Speaker 1: get six miles on an all electric charge, so it's
28:59
Speaker 1: it's not about that. It's exactly what you say. It's
29:01
Speaker 1: about instant torque, really um and some really seamless power,
29:08
Speaker 1: which I think sounds fabulous. Who buys this? Oh? I
29:13
Speaker 1: you know what, I expect that Lamborghini will have no
29:17
Speaker 1: problem selling this vehicle. They mister Winkleman, Stefan Winkleman told
29:21
Speaker 1: me that their order books are full through twenty twenty four. So, oh,
29:27
Speaker 1: I forgot to mention. Can we just say the Roberto
29:30
Speaker 1: has a thousand and one horsepower. Yes, so this How
29:34
Speaker 1: could I forget? Um top speed of over two hundred
29:37
Speaker 1: and seventeen miles an hour two point five zero to
29:39
Speaker 1: sixty two. Okay, here's here's my other stupid question. Where
29:43
Speaker 1: do you drive this? It's not going to be on
29:45
Speaker 1: the turnpike. I think you actually could take it right
29:49
Speaker 1: down the turnpike. I mean speeds like well, no, I
29:53
Speaker 1: don't think there are some people who do those speeds,
29:56
Speaker 1: but I think you know, you know, so the numbers,
29:58
Speaker 1: that performance is truly impressive. It's almost as impressive as
30:01
Speaker 1: the Dodge Challenger Demon one seventy but not quite. Design
30:06
Speaker 1: is amazing, I think, Hannah, it's absolutely gorgeous too. What's
30:12
Speaker 1: your take? Yeah, I love it. Okay, so let's get
30:15
Speaker 1: some background. This was the head designers, Mitya Borkert, who
30:19
Speaker 1: we all love. He actually came from Porsche, so he's
30:22
Speaker 1: been at Lamborghini for some time. He led design on
30:26
Speaker 1: this and I love it because it combines elements of
30:30
Speaker 1: heritage Lamborghinis that we've seen. You can see a little
30:33
Speaker 1: bit of a contosh in the front. You can see
30:36
Speaker 1: a bit of a Mercy lago as well. The demensions
30:39
Speaker 1: are a sort of a Diablo size, so I feel
30:44
Speaker 1: like we can see the heritage of Lamborghini. But then
30:48
Speaker 1: also we have really new elements, like a totally exposed
30:51
Speaker 1: engine in the rear, which let's not forget. You know,
30:56
Speaker 1: Bugatti has done that before, but I don't think we've
30:58
Speaker 1: seen that at Lamborghini. So we've got a totally exposed engine,
31:01
Speaker 1: which I think is really cool and still twelve thank god.
31:04
Speaker 1: Exactly exactly, yeah, And we still have these design elements
31:08
Speaker 1: of the shape of a Yum throughout the car, from
31:12
Speaker 1: the led headlights at the front to inside in the
31:16
Speaker 1: cockpit it's oriented in a Y shape to a funneling
31:20
Speaker 1: to the rear. I think it's really really cool. I
31:23
Speaker 1: think it's very cool. As well, n turn off your mic.
31:26
Speaker 1: You can't talk anymore. No, I just as well. I'll
31:29
Speaker 1: turn off back. I'm going to ask one final question.
31:31
Speaker 1: I'll go away because I don't know what I'm talking about.
31:33
Speaker 1: What kind of um looks did you get while driving
31:35
Speaker 1: in the car. What's what's the reaction when you're in
31:38
Speaker 1: this car driving around your neighborhood. Well, I must admit
31:41
Speaker 1: I have not yet driven this vehicle, and I don't
31:44
Speaker 1: think anybody is. They're going to This is the world debut,
31:47
Speaker 1: so we haven't had press drives yet, but my prediction
31:52
Speaker 1: is people are going to love it or hate it,
31:54
Speaker 1: which is pretty much what Lamborghini does. You know, it's
31:57
Speaker 1: a very strong statement. You're you're either on board or not.
32:02
Speaker 1: But I do think one nice thing about this is
32:05
Speaker 1: with that electric powertrain, you can kind of sneak out
32:08
Speaker 1: of your neighborhood without all the belching and popping and
32:11
Speaker 1: growling in the engine, which your neighbors might appreciate. And
32:15
Speaker 1: then once you get on the get on the you
32:17
Speaker 1: know the highway, they're turnpike, then you can turn your
32:20
Speaker 1: engine on. Now, so maybe that'll go over well, well,
32:23
Speaker 1: we'll see it. It'll be here at the New York
32:25
Speaker 1: Auto Show next week, so and Hannah will be here too. Yeah.
32:28
Speaker 1: I have to preface this next comment with a warning.
32:33
Speaker 1: I am a reactionary. I often have very strong feelings
32:39
Speaker 1: about things right away and voice them in a pretty
32:43
Speaker 1: loud tone. Then after thinking about it or debating it
32:47
Speaker 1: or reading it for a while, I realize I'm wrong
32:50
Speaker 1: and I go back. So but at least I do
32:52
Speaker 1: change my opinion. To me this new Ferrari puro sang
32:56
Speaker 1: is the ugliest thing that they've ever aid and it
33:01
Speaker 1: to me, it looks so cheap. I mean, they spent
33:03
Speaker 1: so much money to develop a Mazda MX thirty. I
33:07
Speaker 1: saw that mean too? What what on earth? And yeah,
33:13
Speaker 1: I think in the Alps, which sounds awesome. I'm the
33:16
Speaker 1: powertrain is so cool, but what Yes, this is one
33:19
Speaker 1: reason why I do give the edge to the eurists
33:22
Speaker 1: in terms of SUVs from Lamborghini versus Ferrari. I do
33:27
Speaker 1: think the Earist looks cooler and more in line with
33:29
Speaker 1: Lamborghini heritage. The Ferrari. Yeah, look, it looks better in person.
33:34
Speaker 1: I don't think it photographs very well. I'm not going
33:37
Speaker 1: to argue with you that it's not the greatest looking Ferrari.
33:41
Speaker 1: It's not, you know. I love the roma, the classic
33:44
Speaker 1: lines of the roma. It's so minimal and elegant, and
33:48
Speaker 1: I agree I think they missed it a little bit
33:52
Speaker 1: on the persang way. Um. I don't find it personally.
33:56
Speaker 1: I'm not personally offended by it. I actually think the
33:59
Speaker 1: Ferrari California was the worst calif Ferrari they made because
34:03
Speaker 1: it was so bland and just so boring. Um, at
34:07
Speaker 1: least there's something with the parrosangway. But yeah, you're right,
34:12
Speaker 1: it's not it's not great. I think they pulled some
34:15
Speaker 1: punches that maybe they could have gone a little harder. Yeah,
34:17
Speaker 1: I haven't seen it in person, and as I said,
34:21
Speaker 1: I maybe i'll see it and in a few years
34:23
Speaker 1: fall in love with it. I do love the ff
34:26
Speaker 1: is my favorite Ferrari. Okay, but I just I'm glad
34:30
Speaker 1: they left the power to V twelve there as well,
34:33
Speaker 1: so at least we haven't lost that. And I really
34:36
Speaker 1: look forward to seeing you next week. I'm so glad
34:38
Speaker 1: you're coming to New York Auto Show. And yes, I'm
34:41
Speaker 1: gonna I'll bring John Tucker along. I'm gonna give him
34:44
Speaker 1: a history lesson, a few books to read. I'll tell
34:47
Speaker 1: him to also follow you on Twitter and on Instagram.
34:50
Speaker 1: And thank you for not telling the kitty litter story.
34:53
Speaker 1: Tucker put kitty litter in his car. No, yeah, I
34:57
Speaker 1: mean sprinkled it around. Is this the reef thing? Yeah?
35:02
Speaker 1: Well no, it's spilled gas. Somebody I sent to get
35:05
Speaker 1: gasoline in a can, a five gallon can, came back
35:09
Speaker 1: with three gallons and said, oh, I filled it up
35:11
Speaker 1: with five, so I won't name names. It's actually good.
35:15
Speaker 1: It's a good trick if you need to get it
35:17
Speaker 1: didn't quite work because they refused to park the car
35:19
Speaker 1: in the garage across the stream. In any case, Hannah Elliott,
35:23
Speaker 1: go on the Bloomberg dot Com read her stuff, or
35:25
Speaker 1: go on social media. Hannah, thanks so much for joining us.
35:28
Speaker 1: You're listening to the tape. Catch our live program Bloomberg
35:31
Speaker 1: Markets weekdays at ten am Eastern on Bloomberg Radio, Tuna half,
35:35
Speaker 1: Bloomberg dot Com, and the Bloomberg Business Half. You can
35:38
Speaker 1: also listen live on Amazon Alexa from our flagship New
35:42
Speaker 1: York station. Just say Alexa play Bloomberg eleven thirty. Let's
35:47
Speaker 1: get over to Washington, DC so I can ask one
35:50
Speaker 1: of my favorite Bloomberg intelligence analysts the same question I
35:53
Speaker 1: always ask him about the salt deduction that we so
35:56
Speaker 1: badly need. Nathan Dean joins US senior policy analysts and King.
36:03
Speaker 1: Before you came out, we were comparing property taxes me
36:06
Speaker 1: in New Jersey, Manton, Westchester, so and it's here. It's
36:11
Speaker 1: I mean, I don't know if I can remain solvent
36:14
Speaker 1: until the salt deduction restriction sunsets in twenty twenty five.
36:20
Speaker 1: Why did Donald Trump and the Republicans do this to me?
36:26
Speaker 1: Because unfortunately, for those of you who live in New
36:28
Speaker 1: Jersey and New York, it's just it's easy money to
36:30
Speaker 1: take and pay for something else. And that's the problem
36:33
Speaker 1: with the salt deduction going forward, is that you know,
36:36
Speaker 1: if you're going to give it back, you got to
36:37
Speaker 1: pay for some pay for it somewhere else. And it's
36:40
Speaker 1: easy for the forty eight other states, maybe not California,
36:43
Speaker 1: but it's easy for the book the rest of the
36:45
Speaker 1: states and say, yeah, you know, New York, New Jersey,
36:48
Speaker 1: they've got great pizza and they've got great food and
36:50
Speaker 1: so forth. But you know, we don't we don't need
36:52
Speaker 1: to give them back their salt deduction. So you know,
36:55
Speaker 1: the best I think you could hope for is it
36:56
Speaker 1: just being in the conversation. And I think the policymakers,
37:00
Speaker 1: especially from New Jersey, are really pushing this, so at
37:03
Speaker 1: least you can prepare for that twenty twenty five date.
37:07
Speaker 1: But obviously we'll have a new Congress and a new
37:09
Speaker 1: president and so forth like that. So unfortunately, you're just
37:11
Speaker 1: gonna have to live with your good pizza for the
37:13
Speaker 1: time being, I just you know, the other what I
37:15
Speaker 1: want to do is move to Connecticut where taxes are like,
37:18
Speaker 1: what is it going to be extended? Do you do
37:20
Speaker 1: you think? I mean it's supposed to sunset then, but
37:23
Speaker 1: is there a chance it will be extended? Well? The
37:26
Speaker 1: challenge is is that then you have to decide how
37:28
Speaker 1: are you going to pay for it? And you know
37:31
Speaker 1: it's I mean, will the lack of the deduction continue? Well,
37:36
Speaker 1: And that's my point is is that if you were
37:38
Speaker 1: to say, if you were to bring it back, it's
37:42
Speaker 1: sort of like in an entitlement, it's like, okay, if
37:44
Speaker 1: you you know, once you give it, it's hard to
37:46
Speaker 1: take away. Once it's out there and it's gone, it's
37:49
Speaker 1: hard to bring back. And so you know, I think
37:53
Speaker 1: the best you could hope for at this point is
37:55
Speaker 1: these policymakers to continue to put it into the conversation
37:59
Speaker 1: and for you know, other states. You know, because we
38:02
Speaker 1: haven't seen other states. You know, other states and property
38:06
Speaker 1: values have gone up dramatically since COVID. You know that
38:09
Speaker 1: there are more states that are now impacted by this. Illinois,
38:12
Speaker 1: for example, I think the folks there have already started
38:15
Speaker 1: talking about this as well. So I don't want to
38:18
Speaker 1: be optimistic, but I just want to say that it
38:19
Speaker 1: is part of the conversation and hopefully in two years
38:22
Speaker 1: it's a better resort for those of you in the Northeast.
38:25
Speaker 1: I mean, temporary tax hikes never go away. Let's be honest.
38:30
Speaker 1: And my question is why are taxes in Westchester so
38:36
Speaker 1: much higher? Why are taxes in the state of New
38:39
Speaker 1: York so much higher than every other state? But we
38:42
Speaker 1: I don't need to belabor this point. We need to
38:46
Speaker 1: get to the banks. You know, a lot of people
38:48
Speaker 1: are talking about dougcass again was telling us that he's
38:51
Speaker 1: buying some of these banks have been hit. He thinks
38:53
Speaker 1: a little bit too hard. The reason other people aren't
38:56
Speaker 1: is because they think there's a real regulatory over hang.
39:00
Speaker 1: And Nathan, is it inevitable that we just see a
39:04
Speaker 1: lot more banking regulation come into play. Inevitable but manageable.
39:09
Speaker 1: And what I mean by that is is that this
39:11
Speaker 1: report that's going to come out on May first will
39:14
Speaker 1: essentially have two things that I think investors should really
39:17
Speaker 1: pay attention to. The First one is the special FDIC assessment.
39:20
Speaker 1: You know, yesterday Chairman FDIC Chairman Martin Gruenberg said that,
39:24
Speaker 1: you know, they have to make up the twenty two
39:26
Speaker 1: point five billion dollars that the lost on Silicon Valley
39:30
Speaker 1: Bank and Signature Bank. And it put in perspective the
39:33
Speaker 1: last time the special assessment, or one of the special
39:36
Speaker 1: assessments in two thousand and nine for five point five billion,
39:40
Speaker 1: ended up with a six hundred and seventy five million
39:42
Speaker 1: dollar hit for JP Morgan. And they've already said that
39:44
Speaker 1: they want big banks, or at least not community banks,
39:47
Speaker 1: to pay for it. So that's going to be out
39:50
Speaker 1: via a notice proposed rulemaking. So there's gonna be a
39:52
Speaker 1: lot of time to figure out how that impact works out,
39:55
Speaker 1: but that's important. The other one is the ongoing regulatory matters,
39:58
Speaker 1: and this is where I think you're gonna see what
40:00
Speaker 1: is known as enhanced prudential standards for banks that are
40:03
Speaker 1: one hundred billion in assets and up, so like Huntington
40:06
Speaker 1: Key Corps fifth third examples. And what you're gonna see
40:10
Speaker 1: here is not only just higher capital but tougher liquidity
40:12
Speaker 1: coverage ratios. But I think ultimately that if you were
40:16
Speaker 1: to talk to those hundred billion dollar banks, they'd see
40:18
Speaker 1: in the long run, this is manageable. So I'm not
40:21
Speaker 1: I don't think it's going to be the heavy hand
40:23
Speaker 1: regulatory hit that some people are thinking. Do they get
40:27
Speaker 1: stress tested? The regionals, the smaller banks at some point
40:31
Speaker 1: they do, So it's actually a tiered process, you know.
40:34
Speaker 1: And so banks that are one hundred to two hundred
40:37
Speaker 1: and fifty billion due to stress tests. But this is
40:40
Speaker 1: where the problem with Silicon Valley banking in is Silicon
40:43
Speaker 1: Valley Bank rose from eighty billion to two hundred and
40:46
Speaker 1: eleven billion almost instantly over a year, you know, almost
40:49
Speaker 1: just under two years. And the way that the transition
40:52
Speaker 1: played from the first stress to the next, it was
40:56
Speaker 1: actually gonna be twenty twenty five until their next stress test.
40:59
Speaker 1: And I think that's going to be one one of
41:00
Speaker 1: the solutions you came from the regulators is these banks
41:03
Speaker 1: that are hundred billion and up a lot more stress
41:05
Speaker 1: tests and a lot more tougher stress tests when all
41:07
Speaker 1: this have come up in a stress test, the longer
41:10
Speaker 1: dated whatever they were, you know, yes and no. So
41:15
Speaker 1: you know, I think there is a regulatory issue here.
41:18
Speaker 1: And what I mean by that is I think the
41:21
Speaker 1: regulators and this was the San Francisco Fed plus some
41:24
Speaker 1: of the others were a little hesitant to actually sound
41:27
Speaker 1: the alarm on Silicon Valley Bank. You know, Vice Chairman
41:31
Speaker 1: bar said that he got his first briefing in February,
41:34
Speaker 1: but they said that they've been looking at this. The
41:36
Speaker 1: mria's matters requiring immediate attention had been placed on the
41:39
Speaker 1: bank a year ago. And you know they're Camel's rating,
41:43
Speaker 1: which is this super secret rating that every bank gets
41:45
Speaker 1: and nobody knows what it is. You know, their Camel's
41:48
Speaker 1: rating was three, which is actually bad, but it's a
41:50
Speaker 1: rating of one to five, one being great, five being bad.
41:54
Speaker 1: And if you're going to give the bank of three
41:56
Speaker 1: and their liquidity portion was a two, but then weeks
41:59
Speaker 1: later it's a contagion risk or a systemic risk. My
42:03
Speaker 1: question here is maybe the regulators need to actually get
42:06
Speaker 1: sort of their ducks in a row as well, not
42:07
Speaker 1: just put more regulations. As a depositor, i'd want to
42:10
Speaker 1: know what that index is out and unfortunately this is
42:15
Speaker 1: this is confidential, so the Camel's ratings are never made public.
42:19
Speaker 1: But what I can say is is that you know,
42:21
Speaker 1: in terms of the deposit insurance argument that's going on
42:25
Speaker 1: right now, you've seen several policymakers float the idea of
42:28
Speaker 1: going to a billion dollars. I'm sorry, a million dollars
42:31
Speaker 1: or five million dollars. I don't think there's going to
42:34
Speaker 1: be a congressional solution here. I think what's going to happen, though,
42:37
Speaker 1: is you'll see the Treasury and the FED say that
42:40
Speaker 1: we still have this bank term funding program out there
42:43
Speaker 1: that allows banks to borrow to achieve liquidity so that
42:45
Speaker 1: their deposits are secured. And this program extends up until
42:49
Speaker 1: March of twenty twenty four. But if we're in this
42:51
Speaker 1: situation where you're not comfortable putting your money in a
42:54
Speaker 1: regional bank and it's an election year, don't be surprised
42:57
Speaker 1: if Treasury in the FED just saying, ay, maybe we
42:59
Speaker 1: just need another year of this funding program, all right? Uh?
43:04
Speaker 1: Nathan Dean Bloomberg intelligence analyst. He knows. This guy knows
43:08
Speaker 1: everything about what goes on in Congress. So when it
43:11
Speaker 1: comes time for the debt ceiling to be renegotiated, you
43:15
Speaker 1: don't want to talk about because I could tell you
43:18
Speaker 1: I'm already bored by it. I is it? You know what?
43:21
Speaker 1: I remember when, Nathan, I remember when we were downgraded
43:27
Speaker 1: by SMP. I think it was SMP, and we had
43:33
Speaker 1: we all had, all the anchors had to come in,
43:34
Speaker 1: all hands on deck for a special episode of Bloomberg Whatever,
43:38
Speaker 1: and everyone bought treasuries. We lost our triple A rating
43:43
Speaker 1: and everyone bought treasuries. Nathan Dean from Bloomberg Intelligence talking
43:47
Speaker 1: to us about what's going on in the hallowed halls
43:51
Speaker 1: of Is that actually a show Bloomberg Whatever? I can't
43:53
Speaker 1: remember what it was. That was way back, that was
43:56
Speaker 1: twenty eleven. I had hair. You're listening to the tape.
44:00
Speaker 1: Ken's are live program Bloomberg Markets weekdays at ten am
44:03
Speaker 1: Eastern on Bloomberg Radio, tune in app, Bloomberg dot Com,
44:07
Speaker 1: and the Bloomberg Business App. You can also listen live
44:10
Speaker 1: on Amazon Alexa from our flagship New York station, Just
44:13
Speaker 1: say Alexa play Bloomberg eleven thirty. Really sad news once
44:19
Speaker 1: again with Blackhawk helicopters going down and US military members
44:26
Speaker 1: of the US military perishing in that tragedy. You know,
44:30
Speaker 1: it's a reminder of the sacrifices that are made on
44:33
Speaker 1: a daily, hourly basis by men and women in this
44:36
Speaker 1: country to keep us safe. Absolutely, and we should we
44:40
Speaker 1: do and we should always thank them for their service.
44:44
Speaker 1: One such man is Mick Mulroy. He is a co
44:46
Speaker 1: founder of the Lobo Institute, and he spent many years
44:53
Speaker 1: in the US Marines and infantry officer as well as
44:56
Speaker 1: a paramilitary operations officer at the CIA. Mike, it's always, uh,
45:02
Speaker 1: it's always awful to have to talk about these things. Um,
45:07
Speaker 1: I wonder what your take is on the Blackhawk incident
45:10
Speaker 1: that we that we're looking at now, and is there
45:14
Speaker 1: a problem with this helicopter because it's um, you know,
45:18
Speaker 1: famously had issues in the past. So good to be
45:23
Speaker 1: with you guys, But absolutely, it is hard to talk
45:26
Speaker 1: about these things. You know, obviously, I'm a retiree, I'm
45:29
Speaker 1: a father of a currently serving an Army officer, and
45:32
Speaker 1: every American I'm sure our hearts go out to the
45:36
Speaker 1: families of these these soldiers. The helicopter has had problems,
45:42
Speaker 1: most helicopters do. I'm not I'm a I'm a ground guy,
45:45
Speaker 1: not a pilot, but helicopters are exceedingly difficult to fly,
45:49
Speaker 1: and we fly them at night in the military because
45:52
Speaker 1: that is how we conduct our operations. Our soldiers pilots
45:56
Speaker 1: are incredibly competent, and the equipment generally is too. But
46:00
Speaker 1: this obviously shouldn't have happened, and I think the US
46:03
Speaker 1: Army will do an extensive investigation to determine what exactly
46:08
Speaker 1: happened here. The training is realistic, and the training by
46:11
Speaker 1: its very nature is going to be incredibly dangerous. I
46:14
Speaker 1: mean you know firsthand right it absolutely is. Any training
46:20
Speaker 1: is dangerous, especially when you're using helicopters, especially at night. Again,
46:25
Speaker 1: that's why we train, because we are most effective because
46:28
Speaker 1: we can utilize all of the high technology that we
46:31
Speaker 1: have that they of our adversaries don't. If you think
46:35
Speaker 1: about it, there those pilots are looking down the equivalent
46:38
Speaker 1: of two tubes, which is their nbgs, So it doesn't
46:42
Speaker 1: give you great peripheral vision estially, you can look straightforward,
46:46
Speaker 1: you can turn your head, but it's very it's very restricted.
46:50
Speaker 1: So that might be one of the reasons why this
46:53
Speaker 1: Apparently they ran into each other or they collided, and
46:57
Speaker 1: I think that's one of the things are going to investigate,
46:59
Speaker 1: and then maybe going forward, we can come up with
47:01
Speaker 1: a better night vision system where it doesn't have that
47:04
Speaker 1: kind of utrich all right, Well, as you say, our
47:08
Speaker 1: hearts go out to the families of these soldiers, and
47:11
Speaker 1: as John said, you know it's it's a horrible tragedy,
47:15
Speaker 1: but it does remind us of the sacrifices that are
47:18
Speaker 1: made on a daily basis by the soldiers that the
47:22
Speaker 1: troops that are protecting us and really not just us,
47:26
Speaker 1: kind of the free world. Let me let me ask
47:28
Speaker 1: you in that vein about Evan Gerskovich. Not a soldier,
47:33
Speaker 1: He's a journalist that was detained in Russia and has
47:38
Speaker 1: been accused of espionage. My first thought, Mick was, as
47:43
Speaker 1: someone who reads, you know, spy novels extensively, there's no
47:47
Speaker 1: way that we're going to put a spy embedded with
47:51
Speaker 1: the Wall Street Journal I mean the Journal for example.
47:54
Speaker 1: I wouldn't want to do it, and I can't understand
47:57
Speaker 1: why we would think that. But time and time again
48:00
Speaker 1: in China and now in Russia, these journalists are being
48:04
Speaker 1: sidelined under the accusation that they're spies. What do you
48:08
Speaker 1: what do you make of it? So you're absolutely right,
48:11
Speaker 1: we would not use a journalist to collect intelligence. In
48:15
Speaker 1: the fact, we're legally restricted from doing it. We have
48:17
Speaker 1: been since the nineteen seventies. So there's a zero chance,
48:21
Speaker 1: in my opinion, that any journalists overseas collecting intelligence for
48:27
Speaker 1: the United States. I think this is essentially perhaps they
48:32
Speaker 1: do that, they being China and Russia, so they just
48:34
Speaker 1: assume we do. But it's pretty it's pretty clear that
48:38
Speaker 1: we do not, and you can simply just look it
48:40
Speaker 1: up and see that. I think they're using Evan as
48:44
Speaker 1: a political hostage, and they're going to try to get
48:47
Speaker 1: some of their people out that have been incarcerated in
48:50
Speaker 1: say like Germany for example, that we're actually convicted for
48:54
Speaker 1: real crimes in that case, murder, and I think they're
48:56
Speaker 1: trying to gather enough Americans where we'll actually approach the
49:01
Speaker 1: German government and see if this is possible. So I
49:05
Speaker 1: think that's what it. Then was it a mistake to
49:10
Speaker 1: trade a war criminal for Brittany Grinder? I mean, and
49:14
Speaker 1: the worst part about that is that we left one
49:16
Speaker 1: of our soldiers over there. But was it you know,
49:21
Speaker 1: it was that encouraging to the Russians And now they're
49:24
Speaker 1: trying to do more of this. So I do think
49:28
Speaker 1: that it did encourage them to do more of this. Unfortunately,
49:31
Speaker 1: I don't know what else we would have done. Bertie
49:33
Speaker 1: Griner should have been returned. Obviously, Paul Willen as well.
49:38
Speaker 1: But this is how Russia operates. We probably should do
49:41
Speaker 1: war to keep Americans out of Russia. It is the
49:45
Speaker 1: highest level of Travis and Travel Advisory Level four, which
49:48
Speaker 1: says don't go to Russia. Whether we can do more
49:51
Speaker 1: than that, I don't know. It probably requires legislation, but
49:53
Speaker 1: it does give Russia this opportunity to simply grab Americans,
49:58
Speaker 1: fabricate charges in cars them for years, and then use
50:01
Speaker 1: them as leverage points against US, both to get their
50:05
Speaker 1: people out and potentially other things that they would like
50:09
Speaker 1: to see United States do. Hey, man, can I back
50:11
Speaker 1: up and ask you a really broad question? As co
50:15
Speaker 1: founder Lobo Institute, how do you assess where we are
50:19
Speaker 1: in the world today? Is it a more dangerous place?
50:21
Speaker 1: Is it less dangerous? So, unfortunately, I would say it's
50:26
Speaker 1: getting more dangerous. We're seeing country like Russia who have
50:31
Speaker 1: just decided to completely violate the international rules based order,
50:35
Speaker 1: an order that every country benefits from, but apparently not
50:40
Speaker 1: every country wishes to defend when it comes to another country.
50:44
Speaker 1: I think that's very problematic. China is certainly trying to
50:48
Speaker 1: gain prominence. They are building up their military. We're seeing
50:52
Speaker 1: countries that are on the verge of acquiring nuclear weapons,
50:56
Speaker 1: like Iran. I don't want to be a doomsdayer here,
50:59
Speaker 1: but it's simply the facts that the world is not
51:02
Speaker 1: getting safer and the United States needs to recognize that,
51:05
Speaker 1: and that's part of why we spend so much of
51:08
Speaker 1: our resources on our national defense. And as a citizen,
51:13
Speaker 1: I need to be prepared for, you know, gladly paying
51:17
Speaker 1: more taxes to protect me and my family and advancing
51:20
Speaker 1: my country's interests. I think, well, I don't know that
51:24
Speaker 1: we need to pay more taxes, and I'm not going
51:26
Speaker 1: to advocate for that, but I do think that our
51:29
Speaker 1: defense budget is in line with the threats that we
51:32
Speaker 1: currently face in the world, and to be prepared for
51:36
Speaker 1: things that we don't foresee. You know, it could be
51:38
Speaker 1: a Chinese attempted invasion of Taiwan. It could be Russia
51:42
Speaker 1: going past Ukraine, potentially even into a NATO country, which
51:46
Speaker 1: of course we draw the United States in to that
51:49
Speaker 1: war under Article five of the NATO Treaty. So there's
51:51
Speaker 1: a lot of things that could happen. We need to
51:53
Speaker 1: be ready now and not wait and try to catch
51:56
Speaker 1: up later. And I think that's part of why we
51:59
Speaker 1: do spend someone when it comes to our national offense
52:02
Speaker 1: here our defense budget, what do we do about Iran?
52:06
Speaker 1: I mean, obviously how to deal with Russia and Ukraine
52:10
Speaker 1: as being hotly debated right now, and China is something
52:13
Speaker 1: that we talk about on a regular basis, we don't
52:15
Speaker 1: talk that much about Iran. What what can America do
52:19
Speaker 1: about this, you know, aspiring nuclear power, So that is
52:24
Speaker 1: a really good question. I guess the immediate issue is
52:28
Speaker 1: the level of Iranian attacks that we're sustaining in Iraq,
52:33
Speaker 1: in Syria against our military presence. That's got to stop.
52:38
Speaker 1: And you know, I was just look up the statistics today.
52:41
Speaker 1: We've been hit about eighty times in the last two years.
52:44
Speaker 1: We responded about six. We need to get a lot
52:47
Speaker 1: more strong, stronger in our responses. We need to make
52:50
Speaker 1: them do a calculation that it's simply not worth striking
52:55
Speaker 1: an American facility in either of those countries. So I
52:58
Speaker 1: think that the chairman yesterday, General Melly, was pretty specific
53:02
Speaker 1: about how this is going to escalate as far as
53:05
Speaker 1: our responses if we are hit again, and I think
53:07
Speaker 1: that's good. The other issue is, as you pointed out rightly,
53:12
Speaker 1: they're on the version of getting a nuclear weapon. Most
53:15
Speaker 1: analysts thinks it could take two weeks to get to
53:17
Speaker 1: the level of enrichment to get the typer Ran ammunied,
53:20
Speaker 1: and then a couple of months to actually weaponize and
53:23
Speaker 1: into a deliverable weapon. That's a big problem. There's no
53:27
Speaker 1: easy answers. Should the United States strike when we decided
53:31
Speaker 1: it's that closed. Potentially will Israel strike regardless of whether
53:37
Speaker 1: we want them to or not. Potentially, in fact, they've
53:40
Speaker 1: said they would. So there's a lot of things that
53:42
Speaker 1: could happen in the next few months that could even
53:46
Speaker 1: increase the level of international instability and conflict, and I
53:51
Speaker 1: think that's one of the things we're going to be
53:53
Speaker 1: determining as we go forward. Hopefully Round pulls back from
53:56
Speaker 1: the level of getting a nuclear weapon back into the
53:59
Speaker 1: community nations, but they haven't shown any interest lately to
54:02
Speaker 1: do that. All right, Mick, thanks so much for joining us.
54:05
Speaker 1: Mick mulroy there, co founder of the Lobo Institute, former
54:09
Speaker 1: US Marine and paramilitary operations officer at the CIA as well.
54:16
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
54:19
Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
54:23
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
54:27
Speaker 1: at Matt Miller nineteen seventy three. And I'm fall Sweeney.
54:30
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you
54:33
Speaker 1: can always catch us worldwide at Bloomberg Radio