Latest / Bloomberg Intelligence / Saudi Aramco IPO Will Happen When Pigs Fly: Kilduff

Transcript

Saudi Aramco IPO Will Happen When Pigs Fly: Kilduff · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Oil
• 0:31
  Speaker 1: prices and Saudi aramco It's initial public offering. Here to
• 0:35
  Speaker 1: tell us more is John Kilda, founding partner of Again Capital.
• 0:39
  Speaker 1: John always a pleasure. Where do you want to begin
• 0:41
  Speaker 1: the direction of oil prices or the direction of Saudi
• 0:44
  Speaker 1: Aramco's initial public offering. Good morning, Tim, It's always great
• 0:48
  Speaker 1: to be on with you as well. Thank you. Um.
• 0:50
  Speaker 1: I think you know, just so you know folks at home,
• 0:52
  Speaker 1: I know we're seeing the price of gasoline rise pretty
• 0:56
  Speaker 1: swiftly now over the past several weeks, and I guess
• 0:59
  Speaker 1: just to talk about how we're seeing the oil market
• 1:01
  Speaker 1: and gasoline prices react to the imposition or reimposition of
• 1:06
  Speaker 1: sanctions on Iran, and that's going to occur on November four.
• 1:09
  Speaker 1: International oil companies are already starting to stop buying Iranian
• 1:13
  Speaker 1: oil so that puts the scramble on for other supplies
• 1:18
  Speaker 1: from other countries, which is tightening up the global market.
• 1:22
  Speaker 1: So that's part of what we're seeing. W t I
• 1:24
  Speaker 1: price has got as high as seventy seven dollars a
• 1:26
  Speaker 1: barrel last week, they've fallen all the way back to
• 1:29
  Speaker 1: seventy four, just below seventy four here on on developing
• 1:34
  Speaker 1: things in this market. It's going to be a very
• 1:36
  Speaker 1: volatile winter PIM as we get into the end of
• 1:38
  Speaker 1: the year in terms of the supply demand balance, based
• 1:41
  Speaker 1: upon several things, including whether or not China and India
• 1:44
  Speaker 1: continue to buy Iran oil and whether or not the
• 1:47
  Speaker 1: US actually gives some countries a break and allows them
• 1:51
  Speaker 1: to continue to buy Iran oil. John, is the price
• 1:54
  Speaker 1: of oil moving higher visa v your comments to do
• 1:57
  Speaker 1: with the Iranian oil sanction driven by speculators bidding up
• 2:03
  Speaker 1: the price or is there a real lack of supply
• 2:08
  Speaker 1: right now? I have to say it's sort of buy
• 2:11
  Speaker 1: it now while it's relatively cheap, given what you're sort
• 2:15
  Speaker 1: of breaking down and seeing in the market. As we
• 2:18
  Speaker 1: get into the peak part of the Northern Hemisphere winter,
• 2:21
  Speaker 1: which is the peak global demand period. PIM I know
• 2:24
  Speaker 1: we talked about the summer driving season here in the US,
• 2:26
  Speaker 1: but that's really the peak. And when you do the numbers,
• 2:29
  Speaker 1: considering where the saddie production is at a record level,
• 2:32
  Speaker 1: Russian oil production at a record level and probably tapped
• 2:35
  Speaker 1: out at this point, uh, it's looking like a crunch,
• 2:38
  Speaker 1: a supply crunch, and so that's what got this market
• 2:41
  Speaker 1: really bit up. A lot of the other Wall Street
• 2:43
  Speaker 1: analysts are really up their price targets for a year end.
• 2:46
  Speaker 1: There's several hundred dollar barrel calls. I'm not in that camp.
• 2:49
  Speaker 1: I don't think it will get that bad, but that
• 2:51
  Speaker 1: that's what's sort of on the table. There's a real
• 2:53
  Speaker 1: buying fervor that came into this market. What number are
• 2:56
  Speaker 1: you looking at if you're not looking at a hundred
• 2:58
  Speaker 1: dollars a barrel? I think Brent crude oil, which is
• 3:02
  Speaker 1: at eighty three right now, will not get much higher
• 3:05
  Speaker 1: than ninety if it even gets there. And I don't
• 3:08
  Speaker 1: see w T I getting much higher than uh eight
• 3:12
  Speaker 1: over to eighty five at most. Why is that? Why?
• 3:15
  Speaker 1: Just maybe explain your your reasoning well, because I think
• 3:19
  Speaker 1: there was some question as to whether or not Saudi
• 3:21
  Speaker 1: Arabia in particular, would come across with more barrels, and
• 3:24
  Speaker 1: they already are and there they have apparently have come
• 3:27
  Speaker 1: together with the Russians to supply this market sufficiently. Also
• 3:31
  Speaker 1: to what's not being focused on as much is the
• 3:33
  Speaker 1: demand picture, which is being called at the question now
• 3:36
  Speaker 1: because of the troubles in China. Because of the troubles
• 3:39
  Speaker 1: and a lot of the emerging markets who are getting
• 3:41
  Speaker 1: crushed by the rise in the dollar because they have
• 3:43
  Speaker 1: to pay for their crude oil in dollars, so they're
• 3:46
  Speaker 1: they're already paying the kind of prices that we saw
• 3:48
  Speaker 1: back in two thousand and eight when oil prices got
• 3:50
  Speaker 1: to a hundred and forty seven dollars a barrel for
• 3:52
  Speaker 1: w t I. So there's a real demand crimp coming
• 3:55
  Speaker 1: and it's going to be more US supply too as
• 3:57
  Speaker 1: we turned the corner into nineteen. Okay, so you look
• 4:00
  Speaker 1: can at ninety tops for brand eight five for West
• 4:03
  Speaker 1: Texas intermediate crude. I want to get your thoughts on
• 4:07
  Speaker 1: natural gas just for a moment before we go to
• 4:09
  Speaker 1: sout of your ram coat. Tell us about the trajectory
• 4:11
  Speaker 1: of natural gas and what we can expect during the winter.
• 4:16
  Speaker 1: Natural gas prices have gone parabolic to the upside, tim Um.
• 4:20
  Speaker 1: And that is because we are staring down a supply
• 4:23
  Speaker 1: deficit going into the winter of about lower in terms
• 4:27
  Speaker 1: of storage versus last year in the five year average.
• 4:30
  Speaker 1: It's going to make for an incredibly volatile price picture
• 4:34
  Speaker 1: for this winter. We could be staring down supply shortages
• 4:38
  Speaker 1: if the winter is at all cold, and these prices
• 4:41
  Speaker 1: will probably spike uh markedly. They could double, if not
• 4:45
  Speaker 1: triple from here. There are three or so a unit
• 4:48
  Speaker 1: right now on the first visit of the polar vortex
• 4:51
  Speaker 1: for example, if if from when we get one. Well,
• 4:54
  Speaker 1: just to note that natural gas prices are higher by
• 4:57
  Speaker 1: more than four on the Nymex today at three dollars
• 5:01
  Speaker 1: and twenty seven cents per million BTU. How hard you
• 5:04
  Speaker 1: got a price target there for that gas. Let's say
• 5:06
  Speaker 1: even the future contracts I think you know, December January
• 5:12
  Speaker 1: future contracts, futures contract uh could see upwards of at
• 5:17
  Speaker 1: least seven to nine dollars. Seven to nine dollars, Yes, wow,
• 5:22
  Speaker 1: that is gonna hurt a lot. And Tim, I'm I'm low.
• 5:24
  Speaker 1: I've seen estimates out there in the twelve to twenty
• 5:27
  Speaker 1: dollar range. So that's the space to watch. All right, well,
• 5:30
  Speaker 1: we certainly are going to watch that with you and John.
• 5:32
  Speaker 1: Now to turn your attention to Saudi A Ramco and
• 5:35
  Speaker 1: a potential initial public offering. What do you make of
• 5:39
  Speaker 1: the timetable? Is it really going to happen? Uh? No,
• 5:44
  Speaker 1: I think pigs will fly before that company gets I
• 5:47
  Speaker 1: p o tim Um this is uh, you know, more
• 5:50
  Speaker 1: just prideful talk from Mohammed bin Salman, the young crown
• 5:54
  Speaker 1: Prince who who desperately wants to sort of make his
• 5:57
  Speaker 1: mark on the world by getting Saddi Ramco on a
• 6:00
  Speaker 1: on a public exchange outside the Kingdom. Uh, it's just
• 6:04
  Speaker 1: not going to happen. I mean, there's there's there's really
• 6:06
  Speaker 1: just too much in the way of patronage and other
• 6:09
  Speaker 1: disclosure issues for a Ramco that's just gonna prevent it
• 6:13
  Speaker 1: from you know, meeting the listing requirements of New York
• 6:16
  Speaker 1: or London or even Hong Kong for that matter. Um.
• 6:19
  Speaker 1: This they're doing a different deal right now where they're
• 6:22
  Speaker 1: where they're sort of monetizing um A Ramco by having
• 6:25
  Speaker 1: them by the Sabbok, which is the large petro chemical
• 6:29
  Speaker 1: or plastics maker in the Kingdom. They want them to
• 6:31
  Speaker 1: buy a seventy dollar steak in that in s that
• 6:35
  Speaker 1: the petro chemical company. That's right, and you know that
• 6:39
  Speaker 1: that will give Mohamed and Psalman the thirty billion or
• 6:42
  Speaker 1: so that he wants to play with. Um, but you know,
• 6:45
  Speaker 1: the the Kingdom's conduct, you know, in the region, and
• 6:49
  Speaker 1: other things that are going on, including uh, this mysterious
• 6:52
  Speaker 1: disappearance of a noted journalist um Jamal Kashogi who went
• 6:57
  Speaker 1: to the Saudi consulate in Turkey and has not been seen. Uh,
• 7:01
  Speaker 1: it's gonna be uh. These Keys kinds of actions are increasing,
• 7:04
  Speaker 1: not decreasing. There's still hundreds, if not more than that
• 7:07
  Speaker 1: of princes and other royalty locked up in the Kingdom,
• 7:11
  Speaker 1: and it's just not a suitable investment climate. That's that's
• 7:15
  Speaker 1: that's emerging there. So to try to list a Ramco
• 7:19
  Speaker 1: is gonna be a very difficult proposition and he's certainly
• 7:21
  Speaker 1: not going to get the two trillion dollar valuation that
• 7:24
  Speaker 1: he's looking for right now. Best I've seen is anywhere
• 7:28
  Speaker 1: from eight hundred million, uh to one trillion. Wow. All right, well,
• 7:32
  Speaker 1: thanks very much for being with us. John Kilduff is
• 7:35
  Speaker 1: founding partner of Again Capital. Talking about the crude markets
• 7:40
  Speaker 1: and what's happening to the price of oil. Our next
• 7:53
  Speaker 1: guest is Joel Stern. He is the chairman and the
• 7:56
  Speaker 1: chief executive officer of Stern Value Management. And Joel has
• 8:01
  Speaker 1: someone of a unique perspective because not only is he
• 8:05
  Speaker 1: an active academic teaching in business schools around the world,
• 8:10
  Speaker 1: but he is also the founder and chief executive of
• 8:13
  Speaker 1: Stern Value Management, which has, over the course of many years,
• 8:18
  Speaker 1: created a variety of methodologies for companies to follow in
• 8:23
  Speaker 1: order to increase their economic value. And we're here to
• 8:27
  Speaker 1: talk about the economic value of the United States. Joel Stern,
• 8:30
  Speaker 1: thanks for coming in to our Bloomberg Interactive Brokers. Let's
• 8:35
  Speaker 1: begin with a look at interest rates. I want you
• 8:39
  Speaker 1: to talk about is there a link between the level
• 8:44
  Speaker 1: of interest rates and the performance of the stock market. Well,
• 8:49
  Speaker 1: you and I have been frands for about five years,
• 8:52
  Speaker 1: and over that time I've pulled your ear so many
• 8:55
  Speaker 1: times about interest rates. Maybe you should answer the question
• 8:59
  Speaker 1: instead of me. It here goes, I'll give you my
• 9:01
  Speaker 1: best shot. Interest rates are a function of two things.
• 9:06
  Speaker 1: One is the strength of the U. S economy and
• 9:09
  Speaker 1: the other is the expected rate of inflation. So if
• 9:13
  Speaker 1: interest rates are rising because of inflation rising. And people
• 9:18
  Speaker 1: have been talking about that now for months, saying, oh, oh,
• 9:21
  Speaker 1: we better watch out for the coming inflation. I got news.
• 9:24
  Speaker 1: There's something else that can help us with all of this,
• 9:27
  Speaker 1: and that is the gold price. And here's the reason why.
• 9:30
  Speaker 1: The gold price is a function of the real US
• 9:33
  Speaker 1: interest rate that is afty and knockout inflation. Now we
• 9:37
  Speaker 1: know that interest rates have been rising, forget about the
• 9:39
  Speaker 1: fit five year notes, two year notes, tend year notes,
• 9:43
  Speaker 1: thirty year notes, things that are not controlled by the
• 9:45
  Speaker 1: Federal Reserve. They can try to control it. They can
• 9:48
  Speaker 1: try to control it, but in the end, it's up
• 9:51
  Speaker 1: to what's really taking place in the economy. If the
• 9:53
  Speaker 1: economy inflation rate is rising, then I got news the
• 9:57
  Speaker 1: gold price will be heading north south. But guess what
• 10:02
  Speaker 1: the gold price is falling. How can that be happening.
• 10:06
  Speaker 1: And the answer is, if the real interest rate rises,
• 10:09
  Speaker 1: that's native inflation. That is actually a good sign for
• 10:13
  Speaker 1: both the economy and for a low rate of inflation.
• 10:18
  Speaker 1: And that's what's been happening. So when I sit down
• 10:20
  Speaker 1: in the evening and I either listen to Bloomberg or
• 10:24
  Speaker 1: listen to some other news, I don't worry at all.
• 10:28
  Speaker 1: How come? All I have to do is take a
• 10:30
  Speaker 1: look at what the gold price is doing. And guess what.
• 10:33
  Speaker 1: Over the last three days, the doao has been getting
• 10:37
  Speaker 1: wett really badly, over two points a day now percentage
• 10:41
  Speaker 1: why it's not I but it's still a significant thing.
• 10:44
  Speaker 1: But guess what's been happening. The gold price has been falling,
• 10:49
  Speaker 1: which means the reason interest rates are rising is as
• 10:53
  Speaker 1: a signal to the rest of the world that the
• 10:56
  Speaker 1: United States is the place to invest money. This is
• 10:59
  Speaker 1: the place to um why non inflationary growth. That's what's
• 11:04
  Speaker 1: happening alright, non inflationary growth. Yeah. Does this have a
• 11:11
  Speaker 1: political element because usually in the next paragraph of every
• 11:17
  Speaker 1: investment newsletter is some prognostication about the mid term election.
• 11:23
  Speaker 1: Of course, of course, because some of the policies that
• 11:27
  Speaker 1: the president has been following leave a lot to be desired.
• 11:30
  Speaker 1: Do you think he looked for this disaster to take
• 11:33
  Speaker 1: place on the Supreme Court? Of course not. And did
• 11:36
  Speaker 1: the Democrats look forward to I guess they did. They
• 11:39
  Speaker 1: were enjoying themselves. And it looks like the House of
• 11:41
  Speaker 1: Representatives could well fall to the Democrats because of the
• 11:44
  Speaker 1: Kavanaugh experiences, all bad, all bad. But today, unfortunately, with
• 11:49
  Speaker 1: the polarization, unfortunately almost everything is politics. There is some
• 11:55
  Speaker 1: element of politics there. And what are we supposed to expect.
• 11:59
  Speaker 1: We've been having this problem now for twenty years already.
• 12:02
  Speaker 1: Would would a Democrat controlled House have a deleterious effect
• 12:10
  Speaker 1: on your perspective when it comes to the trajectory of
• 12:14
  Speaker 1: the U. S. Economy? And what's the reason? Because if
• 12:18
  Speaker 1: they get the House, then they're gonna want to the House,
• 12:20
  Speaker 1: the Senate, and the presidency in just two years. So
• 12:23
  Speaker 1: what will they do. They'll stop Trump from doing anything
• 12:26
  Speaker 1: that would benefit the Republicans and in other ways if
• 12:29
  Speaker 1: until now, the Republicans have controlled both houses of Congress,
• 12:33
  Speaker 1: and so when Trump says, look at all these wonderful
• 12:36
  Speaker 1: things I have done, well, there's no doubt he's right.
• 12:40
  Speaker 1: All the things that he has done he has done
• 12:42
  Speaker 1: principally because he was in control. But over the next
• 12:45
  Speaker 1: two years, if they lose the House, the Democrats will
• 12:48
  Speaker 1: be fighting with the Republicans on everything. But isn't that
• 12:51
  Speaker 1: necessarily good for business? That nothing will get done to
• 12:54
  Speaker 1: the extent that they will be able to digest all
• 12:57
  Speaker 1: of the changes that have taken place in the last
• 12:59
  Speaker 1: two year years. You know, the left is that. My teacher,
• 13:03
  Speaker 1: as you know, was the late Milton Friedman, and Milton
• 13:06
  Speaker 1: says it would be a good thing if the houses
• 13:09
  Speaker 1: in Congress were in different parties hands, so that nothing
• 13:12
  Speaker 1: would get done, and that way we could keep the
• 13:14
  Speaker 1: government small instead of it getting out of control. Did
• 13:18
  Speaker 1: I enjoy that? Hey? Listen. When I got to the
• 13:20
  Speaker 1: University of Chicago, I was a left wing liberal. He
• 13:24
  Speaker 1: made me into a right wing liberal. So the answer
• 13:27
  Speaker 1: is everything matters. They'll be fighting like crazy because the
• 13:31
  Speaker 1: Democrats cannot believe what happened in sixteen and they'll be
• 13:35
  Speaker 1: doing everything to undo it. Let's talk about one of
• 13:38
  Speaker 1: the key areas of the Trump administration's push, and this
• 13:42
  Speaker 1: has to do with trade and trade tariffs. Well, I'm
• 13:46
  Speaker 1: a compulsive free marketeer. I mean why because what we
• 13:52
  Speaker 1: learned at the University of Chicago so important is to
• 13:56
  Speaker 1: ask ourselves questions about things we think for granted. So
• 14:00
  Speaker 1: whenever something would come up, I would analyze it first
• 14:04
  Speaker 1: through Milton's eyes, then through my own eyes. And my father,
• 14:07
  Speaker 1: of course, would say, what's happening to you in Chicago?
• 14:11
  Speaker 1: Because the family was left wing liberal and that's just
• 14:14
  Speaker 1: the way it was uh for generations. Okay, But the
• 14:17
  Speaker 1: question is this, what is likely to take place between
• 14:21
  Speaker 1: now and the next year. I think the Dow was
• 14:24
  Speaker 1: going to be very strong, still continuing strong, and the
• 14:26
  Speaker 1: Mark is going to do very well no matter what
• 14:30
  Speaker 1: happens to trade. I'll tell you why. My position on
• 14:33
  Speaker 1: the trade thing is this. I'm against any tariffs. I'm
• 14:37
  Speaker 1: against export subsidies, I'm against import quotas. By the way,
• 14:41
  Speaker 1: the highest quality cotton in the world is on the
• 14:44
  Speaker 1: west coast of Africa. The only way we can get
• 14:46
  Speaker 1: it here. They sell it to the Chinese and then
• 14:49
  Speaker 1: Ralph Floren makes it in China and sends it back here.
• 14:52
  Speaker 1: Isn't that terrible? Why are we going through all of
• 14:54
  Speaker 1: this RIGAMAROLEA doesn't make any sense? Now, how do I
• 14:57
  Speaker 1: feel about it? I'm in favor of Trump's position. Why,
• 15:01
  Speaker 1: because these people have been ripping us off for as
• 15:03
  Speaker 1: long as he was talking about it. He is correct
• 15:05
  Speaker 1: about that, and he is an excellent negotiator, and he
• 15:08
  Speaker 1: will figure out a way to get the EU to
• 15:11
  Speaker 1: let our foods go in there. He'll make sure the
• 15:14
  Speaker 1: Chinese capitulate. It's it's going to be in their interest
• 15:17
  Speaker 1: to capitulate. When it's all over, everybody will be claiming
• 15:20
  Speaker 1: credit for the good things that I have taken place.
• 15:22
  Speaker 1: All well, we'll have to see what happens, but I
• 15:24
  Speaker 1: want to thank you very much for your views. Joel
• 15:27
  Speaker 1: Stern is the chairman and the chief executive officer of
• 15:31
  Speaker 1: Stern Value Management. The Brazilian real has gained nearly four
• 15:41
  Speaker 1: percent against the US dollar since the vote on Sunday
• 15:46
  Speaker 1: that saw a far right former military man win nearly
• 15:49
  Speaker 1: half the votes in Brazil's presidential election. Now, this is
• 15:54
  Speaker 1: just the first round of the elections. They will have
• 15:58
  Speaker 1: a runoff vote later this month. Here to tell us
• 16:00
  Speaker 1: more about the situation in Brazil is Dan Cancel, Managing
• 16:04
  Speaker 1: editor for Latin America for Bloomberg, and he joins us
• 16:08
  Speaker 1: from sal Paolo. Dan tell us the details about the
• 16:12
  Speaker 1: election results. Yeah, good morning. Um. You know, heading into
• 16:17
  Speaker 1: the to the vote, the polls were showing uh, as
• 16:20
  Speaker 1: you said, the far right conservative former army captain j R. Bilsonado,
• 16:25
  Speaker 1: we're showing him ahead. Um, but he's his performance Sunday
• 16:29
  Speaker 1: was stronger than expected. Um. There was even the first
• 16:32
  Speaker 1: print you know had him at, so he needed more
• 16:36
  Speaker 1: than fifty two to win an outright. He ended up
• 16:39
  Speaker 1: at about um and his closest rival, who who will
• 16:44
  Speaker 1: go to the runoff with him, was at for Nanda.
• 16:48
  Speaker 1: So beyond the presidential result, there was a huge impact
• 16:52
  Speaker 1: on on his candidates that we're running for Congress and
• 16:57
  Speaker 1: for for governor positions. So basically if you were on
• 17:00
  Speaker 1: his ticket, you you you got swept into power and
• 17:03
  Speaker 1: a lot of these these posts. Can you tell us
• 17:06
  Speaker 1: some of the policy changes that the Bosonaro is looking
• 17:11
  Speaker 1: for if indeed he becomes the next president of Brazil? Sure? Yeah,
• 17:16
  Speaker 1: I mean the market, as you mentioned, you know, has
• 17:19
  Speaker 1: rallied off off the result. A lot of their hopes
• 17:22
  Speaker 1: are pinned on one guy, which is the the economic
• 17:25
  Speaker 1: advisory is called Paolo gettys Um. He has a degree
• 17:28
  Speaker 1: from the University of Chicago. He seemed to be as
• 17:32
  Speaker 1: one of the more kind of liberal minds in in
• 17:34
  Speaker 1: in Brazil who's keen on on privatizing most uh, you know,
• 17:38
  Speaker 1: state companies shrink in the size of the state, UM
• 17:42
  Speaker 1: pushing through you know, an aggressive pension reform, So that
• 17:46
  Speaker 1: would be kind of best case scenario for the market. UM.
• 17:49
  Speaker 1: But of course, his relationship with Gets is relatively new. Um,
• 17:53
  Speaker 1: he's been in Congress Bolsonado for nearly three decades, hasn't
• 17:57
  Speaker 1: done much to be honest as a lawmaker, and no
• 17:59
  Speaker 1: one really those kind of uh you know, where he
• 18:03
  Speaker 1: hopes to take the economy. So it's quite uncertain, like
• 18:06
  Speaker 1: there are there are hopes that that they'll go in
• 18:08
  Speaker 1: the right direction. But uh, you know, if he gets
• 18:11
  Speaker 1: into a into a battle with his economic advisor at
• 18:14
  Speaker 1: some point the guy leaves, it would be kind of
• 18:16
  Speaker 1: floating down stream without a paddle. Okay, Dan, I'm gonna
• 18:19
  Speaker 1: ask you three topics. Will go take one by one
• 18:22
  Speaker 1: and it just give me a couple of points. And
• 18:25
  Speaker 1: what you think people need to most understand about? Number one?
• 18:28
  Speaker 1: The economy in Brazil? What's going on there? Yeah, it's
• 18:32
  Speaker 1: just been muddling. You know. It's it's gonna be a
• 18:34
  Speaker 1: little better than one percent this year. Um, Basically you
• 18:38
  Speaker 1: have these big reforms on on the horizon that need
• 18:41
  Speaker 1: to get done in order to grow more than than
• 18:44
  Speaker 1: their potential, which Goldman puts it something like two to
• 18:46
  Speaker 1: three percent. Right now, Okay, tell us about corruption. Uh So, Bulsonado,
• 18:52
  Speaker 1: you know ran on a big anti corruption platform. He
• 18:55
  Speaker 1: beat the Workers Party has been in power since you
• 18:58
  Speaker 1: know two two, um, basically on the back of saying
• 19:02
  Speaker 1: everyone's corrupt and we need to clean up the system,
• 19:04
  Speaker 1: blow up Congress and and beat the establishment. So in
• 19:08
  Speaker 1: some ways this is a step towards uh ousting some
• 19:11
  Speaker 1: of the most corrupt sectors in Congress. We just don't
• 19:14
  Speaker 1: know what him and his party will do in terms
• 19:16
  Speaker 1: of cleaning up corruption going forward, all right, Topic number three,
• 19:20
  Speaker 1: crime and a crime wave that's been hitting Brazil. Yeah,
• 19:24
  Speaker 1: so last year, it's been reported, you know, widely, was
• 19:27
  Speaker 1: was the most deadlier in terms of homicides. There was
• 19:30
  Speaker 1: sixty four thousand homicides in a country of about two
• 19:33
  Speaker 1: million people. UM. Bolsonado's big, big platform has been crime
• 19:38
  Speaker 1: and uh, you know, attacking crime, uh, basically giving police
• 19:43
  Speaker 1: the right to shoot to kill if needed. Um. And
• 19:46
  Speaker 1: so you know, a lot of the people, even if
• 19:48
  Speaker 1: they didn't like what you said about you know, gay's
• 19:52
  Speaker 1: women or other minorities, I think he's tough on crime,
• 19:55
  Speaker 1: then he's worth a vote. Well in that very context
• 19:59
  Speaker 1: that you talk about, the comments that he's made about
• 20:01
  Speaker 1: members of the constituency that even voted for him, he's
• 20:04
  Speaker 1: a seven term congressman and from the Amazon to the
• 20:09
  Speaker 1: beaches of Rio de Janeiro, he won votes even among
• 20:13
  Speaker 1: groups he insulted. How did he do that? So again,
• 20:18
  Speaker 1: I mean, you know, people, I spoke to several people
• 20:21
  Speaker 1: who who even didn't even know a lot about, you know,
• 20:24
  Speaker 1: what he's done as a congressman, but see him as
• 20:26
  Speaker 1: somehow an outsider, like you said, even though, like you
• 20:28
  Speaker 1: just said, he's been in Congress for years. But he's
• 20:31
  Speaker 1: someone that is not from one of the major parties.
• 20:35
  Speaker 1: He's someone that is saying, uh, you know, we've been
• 20:38
  Speaker 1: too soft on criminals. You know, drug traffickers and and
• 20:41
  Speaker 1: and petty crime taken over the country and we need
• 20:45
  Speaker 1: to really get tough on crime. And so you know
• 20:47
  Speaker 1: that has been his his biggest message and one that's
• 20:50
  Speaker 1: resounded the most with people. What role has social media
• 20:55
  Speaker 1: taken in this campaign? Yeah, it's been huge. I mean,
• 20:58
  Speaker 1: you know, depending on you know, which party backs you
• 21:02
  Speaker 1: usually dictates how much TV time you get. During the
• 21:05
  Speaker 1: campaigns um and Billsonato had very little time on TV
• 21:10
  Speaker 1: or radio, but he had the biggest following on Facebook.
• 21:14
  Speaker 1: He's got like forty three million followers. He was doing
• 21:16
  Speaker 1: a lot of Facebook lives. You may recall he was
• 21:19
  Speaker 1: stabbed during a campaign event, so he did a lot
• 21:21
  Speaker 1: of this stuff from a hospital bed. Um. He had
• 21:24
  Speaker 1: a big grassroots kind of organization behind him that was
• 21:28
  Speaker 1: very active, you know, both the positive side in terms
• 21:31
  Speaker 1: of pushing some of his messages and then the negative side,
• 21:34
  Speaker 1: which are kind of you know, they were calling the
• 21:35
  Speaker 1: trolls and the bots that that were very aggressive and
• 21:38
  Speaker 1: insulting his his opponents. And just quickly, when is the runoff?
• 21:42
  Speaker 1: It's later this month, right, yeah, October, so we'll have
• 21:47
  Speaker 1: about three weeks. There will be a few more debates
• 21:49
  Speaker 1: that we hope will both candidates will participate in, and yeah,
• 21:54
  Speaker 1: by the end of the month will have a new president.
• 21:56
  Speaker 1: Well done. Thanks very much for being with us. Dan
• 21:58
  Speaker 1: Cancel is managing at it there for Latin America for Bloomberg,
• 22:02
  Speaker 1: joining us from sal Powell. The topic now is biotechnology,
• 22:18
  Speaker 1: how to invest in biotech successfully joining us now as
• 22:23
  Speaker 1: someone who's managed to do it. Eli Kasden is managing
• 22:26
  Speaker 1: partner of Kasiden Capital and he joins us now. Eli,
• 22:29
  Speaker 1: thanks very much for being with us. I just want
• 22:32
  Speaker 1: to mention a couple of companies as examples Magenta Therapeutics,
• 22:37
  Speaker 1: grit Stone, Neon Therapeutics, blue Point Blueprint. Rather, these are
• 22:42
  Speaker 1: all companies that you and your firm invested in while
• 22:46
  Speaker 1: they were private companies and they have since gone public.
• 22:50
  Speaker 1: Can you offer a little bit of insight into your
• 22:53
  Speaker 1: thinking and strategy for how do you identify the companies
• 22:58
  Speaker 1: to invest in? Sure? Thanks Tim for having me on
• 23:02
  Speaker 1: and and uh, it's a it's a good question. UM.
• 23:06
  Speaker 1: We you know, are are sort of hunt for good companies.
• 23:10
  Speaker 1: Begins by UM thinking about new market opportunities for technology,
• 23:16
  Speaker 1: whether it's UH sequencing, DNA sequencing technologies, or diagnostic technologies
• 23:23
  Speaker 1: or in the cases you mentioned, technologies that create new
• 23:27
  Speaker 1: medicines for patients UM that don't have good options. UM.
• 23:33
  Speaker 1: So it begins there and and we we immerse ourselves
• 23:36
  Speaker 1: in the dynamics of the markets, try to understand what
• 23:40
  Speaker 1: it means to to be a good company, what the
• 23:43
  Speaker 1: technologies you need. And at the end of the day,
• 23:47
  Speaker 1: what we've learned is the biggest determinant of success are
• 23:51
  Speaker 1: the people. And so once we find all those vectors, UM,
• 23:55
  Speaker 1: and we find a great group of people behind a
• 23:58
  Speaker 1: company will invest and occasionally that that company that we've
• 24:02
  Speaker 1: identified is private, and so we've created in the partnership
• 24:06
  Speaker 1: flexibility to invest in private companies. UM. I will say,
• 24:11
  Speaker 1: we hope never to do it, and so we really
• 24:13
  Speaker 1: want to be investing in public companies. But in the
• 24:15
  Speaker 1: life of the fund, we've done it about fifty times. Okay.
• 24:19
  Speaker 1: The reason I asked that question is to kind of
• 24:20
  Speaker 1: set us off on this path to explore some of
• 24:23
  Speaker 1: the more recent trends in healthcare and biotechnology. And I'm
• 24:28
  Speaker 1: wondering if you could speak about all of the research,
• 24:31
  Speaker 1: the oncology, cancer research that is going on and where
• 24:35
  Speaker 1: you see the industry right now. I mean, it is
• 24:39
  Speaker 1: a it's just an amazing time in life science broadly
• 24:44
  Speaker 1: UM and cancer specifically. UM cancer is a molecular disease
• 24:49
  Speaker 1: by definition, meaning there's some error in the DNA that
• 24:53
  Speaker 1: in different ways allows cells to grow out of control,
• 24:56
  Speaker 1: resulting in in uh menached other organs, and dysfunction. And
• 25:02
  Speaker 1: so for the last thirty five for years, we've been
• 25:04
  Speaker 1: trying to understand that the technologies have improved and increasingly
• 25:10
  Speaker 1: we're able to create drugs that that fight it. UM.
• 25:14
  Speaker 1: Two of the companies you you mentioned their strategies actually
• 25:17
  Speaker 1: are to stimulate the immune system to do its job,
• 25:21
  Speaker 1: which is generally is fighting cancer and all of us.
• 25:24
  Speaker 1: But in in some people it UM, the cancer is
• 25:28
  Speaker 1: able to evade or trick the immune system and so
• 25:30
  Speaker 1: it can't do its job. And so two of the
• 25:32
  Speaker 1: companies you mentioned, Gridstone and neon Um, are both trying
• 25:37
  Speaker 1: to develop personalized immunotherapy solutions to to fight cancer UM.
• 25:43
  Speaker 1: Others like Magenta recognized that UM having sort of bone
• 25:49
  Speaker 1: marrow transplants can really reboot sort of faulty immune systems,
• 25:55
  Speaker 1: uh in the in the case you've described in cancer UM.
• 25:58
  Speaker 1: And so while those are very effective UM, the treatments
• 26:03
  Speaker 1: the conditioning to to make room for these new bone
• 26:05
  Speaker 1: marrow transplants can be very toxic and and limit the
• 26:09
  Speaker 1: application of many patients. So they're trying to make it
• 26:12
  Speaker 1: easier for patients to receive curative bone marrow transplant. Tell
• 26:17
  Speaker 1: us a little bit more about gene editing technology and
• 26:20
  Speaker 1: how that is attracting either your attention or how people
• 26:24
  Speaker 1: can follow it in a in a specific way. Yeah,
• 26:28
  Speaker 1: I think I think one way to think about this
• 26:30
  Speaker 1: whole field is that you know, um uh, it's all
• 26:34
  Speaker 1: an engineering challenge the human body is the the most
• 26:39
  Speaker 1: complex machine we know, and for a long time we
• 26:43
  Speaker 1: could not figure out how to understand it, let alone
• 26:47
  Speaker 1: tinker with it. UM. We're getting better and better at
• 26:50
  Speaker 1: understanding it, and there are now tools UM to tinker
• 26:54
  Speaker 1: with the gene editing being one where this error that
• 26:57
  Speaker 1: we identify in the molecular code it causes in the
• 27:01
  Speaker 1: case of cancer cells to grout control. We now have
• 27:04
  Speaker 1: tools to go in and start to rewrite that uh
• 27:09
  Speaker 1: broken code and make it, you know, incorrected, so that
• 27:12
  Speaker 1: the cells UH are functioning properly. That's you know, that's
• 27:17
  Speaker 1: the ideal. It's still very very complex to do, and
• 27:20
  Speaker 1: some companies have developed new technologies that have the potential
• 27:24
  Speaker 1: to allow you do that. UM. And still early and
• 27:27
  Speaker 1: still very hard, but it's we're getting much better. Give
• 27:32
  Speaker 1: you about thirty seconds. What is the biggest mistake you
• 27:35
  Speaker 1: find when you meet non expert investors in biotechnology? It's
• 27:42
  Speaker 1: very simple. At the end of the day, it's management, management, management,
• 27:45
  Speaker 1: and so people invest in technologies. But forget that very
• 27:49
  Speaker 1: few molecules jumped off the medical bench and ended up
• 27:53
  Speaker 1: in your medicine cabinet all on their own. There's a
• 27:55
  Speaker 1: thousands of decisions made by hundreds of people, and you
• 27:59
  Speaker 1: should always be in resting in the people. Well done.
• 28:01
  Speaker 1: Thanks very much for being with us. Eli Hasden, Managing
• 28:05
  Speaker 1: Partner at Kasden Capital, speaking about investing in biotechnology stocks,
• 28:11
  Speaker 1: private as well as public entities. Thanks for listening to
• 28:18
  Speaker 1: the Bloomberg P and L podcast. You can subscribe and
• 28:21
  Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast
• 28:25
  Speaker 1: platform you prefer. I'm pim Fox. I'm on Twitter at
• 28:29
  Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo. It's one
• 28:32
  Speaker 1: before the podcast. You can always catch us worldwide on
• 28:35
  Speaker 1: Bloomberg Radio