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Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. Carol is on assignment today. This past week, some good news for equities as the US and China reached a temporary truce in their trade war. Also, new inflation data indicated a more limited impact of tariffs, at least for now. In fact, we saw the stock market wipe out its losses for the year midweek. It also prompted US President Donald Trump to again pressure Federal Reserve charge your own
power to lower interest rates. Yet cautious optimism lingers. We're going to dig into that a little bit later. Plus the President's first official overseas visit and to the Middle East. On the agenda, a trillion dollars in deals, AI dreams, and one very shiny private jumbo jet. We break down the Trump administration's relationships with Middle East allies and where Israel stands, plus China's export restrictions of rare earths are
in focus. We speak with the CEO of USA Rare Earth on bringing manufacturing of these strategic mineral Stateside all that to come, We begin, though, with a pulse check on the US consumer US inflation rose by less than forecast in April that led economists to fear that the real effect of tariffs lie in the months ahead. Retail sales decelerated notably in April, reflecting a consumer pullback on
imported goods amid concerns about rising prices from tariffs. Walmart delivered another quarter of solid sales and earnings growth, but caution that tariffs and increasing can turbulence means that even the world's largest retailer expects to raise prices. For the latest economic news, head on over to Bloomberg dot com or check it out on the Bloomberg terminal. And that's exactly where we want to go right now. Let's bring
in Dana Telsey. She's found her CEO and Chief Research Officer of Telsey Advisory Group for Specialty all Things Retail. Dana I want to start with Walmart, even though this is not a company that you particularly follow. One of your colleagues does that. But the company did say that it is going to pass al on costs to consumers,
not yet but soon. We saw shares fall. How do you take the results that we got from the company in the context of what we know about tariffs and also the way that you've been talking about potentially empty shelves in the next couple of weeks.
A couple things, and thank you very much for having me. First of all, if a company like Walmart, with the skies and scale of Walmart is going to raise prices because of the external environment out there, what does it say for all the others? So every one, given the headwinds of carries and costs that are out there, price increases are coming. However, it may be selective. It's not going to be across the board. It'll be called surgical, whatever word you want to use, it'll be surgical in
what it is. But I've even heard we have this price tracker where we've been tracking eighty items and it comes out every Tuesday, same eighty items, and we have seen of the eighty items we track around twenty percent of them have a price have had a price increase each week, and it changes. Sometimes there may be a promotion, sometimes there's an event. But just on a tracker basis, price increases are coming. There's a reason why, in my mind, there has been some pull forward to sales the tracker.
This is fascinating to me that you have this tracker. Is is there a rhyme or reason too the types of products that are being that are increasing in.
Price, Well, we track the same items every week, and it could their legacy items, whether it's a pair of Levi's or it's a Barbie doll, whatever it may be. There isn't a rhyme reason. But what's happening is that we expect when we heard about these tariffs, we need a way to be able to track it. And so this way, look what Walmart just said, prices increases are coming. Let's see what this tracker shows in the next four weeks in terms of pricing.
So it's very interesting, you know the difference that we're seeing in the soft data and the hard data that consumers are saying that they're really pessimistic, but we're not necessarily seeing that yet in hard data. Or earnings reports. Are you do you agree with that thesis or are you seeing pockets in some of these earnings reports that consumers are feeling the pain.
A little bit of each. When you think about where there's been a slow down, luxury brands has been a slow down. You take a look at the high end. LVMH reported a negative three percent same store sales decline. That's typically weaker for an LVMH. You're seeing other companies that are brand leaders at not the luxury price points, but where there's brand leaders, where there's innovation. Look at
the results that came out of Birkenstock. You had a high teen sales increase, you increase the guidance for the year on sales the high end of the previous range seventeen percent plus, and you increase your ajusity. But da, what do they have? They have newness and innovation At the same time I met with Tapestry on Tuesday, I met with Levi's yesterday. Tapestry in Levi's and Birkenstock heritage companies with authenticity that are reinventing their product. You know
what they're doing. They're capturing a younger consumer. And companies like Coach, which is owned by Tapestry, a fifteen percent increase in averaging retail selling price. Why it's new and different?
Emile A and I are smiling right now because on our editorial called Ning, I said, we have to ask Dan about Birkenstock shares are up what six percent? You were on surveillance with Tom Keen and me last week. We asked you to name one company to watch. You said it was Birkenstock. You called this, why are you bullish on Birkenstock?
Because their footwear overall has wide appeal. You have the flywheel of younger customers that are being attracted to the brand. It's not just open toe share sandals, it's closed toed shoes. Also, you look at the expansion opportunities they have with their own stores. They only have around ten stores in the US. They have wholesale accounts who have stores, but of their own. You take a look at Asia, which is a rising market for them. You look at the fact that they
bring in goods they're made in Europe. They yes, they have terif exposure, but not the as significant teriff exposure. And look at their adjustinity. Bitdam Margins, I mean you're in excess to thirty one percent. I don't have many companies that are generating mid to high teen sales increases with increasing EBITDA margins in an environment where there's uncertainty.
But you're seeing a little bit in footwear. You look at some of the other brands, Socony thirty percent increase in sales by Wolverine worldwide, Merrill up in excess to thirteen percent. So newness drives demand.
Yeah, Maryls are having a comeback. I've seen a couple Maryls on the streets of New York City and that.
Was like a shoe that I want, I like to hear.
When I was like a child's But they're coming back, you know.
You know.
I was looking at at the S and P five hundred sectors, the group levels. What was the top performing this year so far?
What's the worst?
Consumer? Staples is one of the best performing groups. Consumer discretionary is one of the worst. How are investors supposed to invest in the consumer space at large? How should they be thinking about kind of the direction of travel when you use.
When you think about exactly the difference with staples and discretionary, staples as essentials, it's what you need, not what you want. And when you think about this environment where we don't know what the price increases is going to be, we've all seen the backward looking data of consumer confidence and so they're being careful. And so with staples, that's careful.
With discretionary, it feels you have spending power. There's always the old adage that goes when the stock market goes up, people feel great and spending can happen when the stock marketing comes down, you know, mind the hatchets, you know, be careful. And so look what we've had over the past two months. That's what you've had. Companies in the
consumer area are reporting first quarter earnings. Now when you look at Walmart and what's to come, if they're saying prices are going up, that's going to be the mantra going forward.
We got to get you to weigh in on Dick's buying foot Locker. What does it say to you? I mean, this is the end of an era for foot Locker. This is a company that's been a public company since nineteen eighty What does this M and A mean to you?
So overall on the M and A, where's the scale and where's the synergies Footlocker on its own is taking a long time to undergo this transformation, even under a well recognized, well respected CEO, Mary Dillon. She came from Alta Right, did great things at Alta ed Stack Basically, you know legacy legacy Dix his father founded it, Lauren Hobart. They basically reinvented what Dix was with Dick's House of Sport. You talk to every real estate landlord. What do they all want Dick's House of Sport?
Why?
Because it brings traffic. What's the difference between Dix and Footlocker. The customer base of Footlocker the eighteen to twenty five year old guy. The customer base at Dix could be more families. What do you get with both of it? And granted the stock is down because the certainty of the execution at Dix's Dix alone was there, and you could basically see the path of growth with House the Sport. Putting it together, there's work to be done, transformation to
be done. With fult Locker gives them more buying power. Let's see what Dix does, because what Edstach says is he's got the vision. He had the vision before with House of sport. Let's see what he can do with fullt locker just thirty second.
Sounds like you're optimistic. This is a good deal.
I think it's the valuation basically at six, six times and seventeen times pe not bad from that spectrum. What is it time length? And can you keep the focus on Dick's and Dick's house of sport while you're integrating foot lockers? The question go forward?
All right, Dana, appreciate you joining us from talk to retail. Not a better voice out there, Dana Telsey, Founder, CEO, chief Research Officer of Telsey Advisory Group, joining us here in the at Bloomberg at BusinessWeek Studio.
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five Easter and listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
President Trump this week toward the Middle East in his first scheduled overseas trip since taking office. Over four days, the President visited Saudi Arabia, the United Arab Emirates, and cutter. He was there for one simple reason to do business and make deals, and it appears to have worked. Saudi Arabia and the UAE unveiled commitments to increase investment with the US by as much as two trillion dollars over
the next decade. In addition, cutter airways placed in order to give Boeing the single biggest deal in the US planemaker's history, not to mention the four hundred million dollar luxury jumbo jet the Qataris reportedly want to give the President as a temporary air force one. The strengthening of ties with Gulf nations have led some to raise alarm
bells about the sphere of influence in the region. For more on US relations with the Middle East and what this means for Israel and China, we caught up with Greg Roman, executive director of the independent nonprofit Middle East Forum.
Well.
I think that what President Trump is looking for his partnership instead of ownership over the region. He expects that there be a quid pro quo between the United States and its trade, commercial, economic, and military relationships with Middle East allies. But there's also some sublayer here that I think the administration needs to be wary of. Where in countries like Saudi Arabia and the United Arab Emirates are looking to foster closer relations with the US, with our businesses,
with our markets. There's other countries like Turkey and Katar, even though he's not potentially visiting Turkey, unlisters that deal with Putin and Zelensky on Thursday that are looking to influence the United States to outstretch their interests to the US's disadvantage. So there's two positive visits here and another one that I would be very aware of when he goes to do greg.
The President saying, you know, now, there are our friends and our allies talking about Saudi Arabia, and I'm just curious, what does being friends and allies really look like going forward between the two and where does that kind of leave the US and its historical allies.
Well, I think that Saudi Arabia and the United States have been historical allies since the meeting at y alt.
I guess every relationship's complicated, but it feels like this one's been a little bit more complicated.
Well, okay, let's go to nine to eleven for a second.
Exactly after eleven, and you had fourteen years of animus between the United States and Saudi kings and princes because of their failure to own up to what was the result in relationship of having cover fur the bin Laden family. But Mohammed bin Salman becomes Crown Prince in twenty fifteen, he quickly starts to reform the kingdom, starts opening up its markets, asking for more investment in the United States, even goes so far as to invest money and the
Israeli let Hedge Fund. For the last decade, MBS has been at the forefront of trying to crystallize and close in relations between the United States and Saudi Arabia. UAE going back to the early nineties, has been in a close defense relationship with the United States since the Gulf War.
But the third country that I mentioned, the Guitaris, that's one that I'm still wary of, considering the fact that they have huge influence operations and even espionage against members of the United States and also people who are even close to Trump's family.
Okay, so let's go there and give us exactly what you're concerned about, especially in the context of a potential gift of a presidential jet.
Well, I think this goes beyond the presidential jet.
I understand why the Defense Department would try to have an interim solution for the lack of Boeing being able to deliver on Air Force one, which is now expected by twenty twenty nine. But I think security considerations will put that aside and the Secret Service won't sign off
on that, even though I understand the token gesture. The larger issue is the forty six to forty seven billion dollars that Guitaris have invested in American higher education k through twelve businesses or university systems, political lobbying to the tent of almost seventy eight million dollars over the past few years, all but the of trying to buy both sides of the political aisle. And I don't think this
is anything that really extends to the administration. But what the Qutaris have done is try to create a white picket fence around their ears of influence on Republicans and Democrats that whichever way American politics go, the Kutaris will be there to win.
So why, I don't know, Maybe this sounds naive. I mean, what is it that we need to be wary most when it comes to extending our relationship throughout the Middle East? I mean, we have relationships, right with other countries, with other regions, there are investments that we encourage. We have a White House and president who is big time encouraging investments by everyone outside the United States into the United States.
So what is it in particular at this moment in time, especially with a nation like Saudi Arabia that is trying to move beyond oil right and kind of extend its economy in different ways, that does require maybe relationships beyond its borders. So I'm just curious what do you think Americans need to be worry about in this relationship as it seems to be deepening.
I think with Plan twenty thirty under MBS in Saudi Arabia, the diversification of Saudi's economy, it'd being a key member of the IMEC, the Israel Sorry India, Middle East Europe Economic Corridor is great in terms of being able to have American companies invited to bid on infrastructure contracts there and to help them diversify it.
It's a net gain for the US and Saudi.
Same thing with the amrodis they've placed their bet on AI. I think the fact they're willing to invest close to a trillion dollars to this with check Tachnaun and his leadership through their ministries for infrastructure and development. It's a
win win for the United States. But the one that I'm worried about is where in the UAE and Saudi Arabia don't have significant military relations with Iran, don't support Kamas, aren't actively supporting Siri and g hottis that Katari trip, the one in which you have a country which hosts one of the most egregious terror organizations to ever commit a tax against Americans, is one that I have to be very wary of because I don't see what the
net gain is for the United States. If anything, it's to our citizens detriment to do any business with them.
We're speaking with Greg Roman, executive director of the Middle East Forum. He joins us from Los Angeles. Greg, I want to dig into what you've described as an influenced campaign of the Katari government, specifically when it comes to higher education and indeed K through twelve here in the US. What can you tell us about what you've found and what you've reported on and really what the goals are of the government of the country.
So if you think about all areas of American educational Excellence, Carnegie Mellon in cyber space, Northwestern in Business, Cornell and Medicine, Georgetown and Diplomacy, Texas A and M and Science and engineering. These are all places where the Katari government has invested hundreds of millions, if not billions of dollars in bringing those campuses and the intellectual property and the professors to Doha.
So if you look at the number amount of students that study at Texas, A and M Doha, it's Iranian students who more than anything constitute the people who are there studying nuclear engineering, physics, applied sciences, and they take that IP which they wouldn't be able to access because the wouldn't get a visa to study in the United States, bring it back to Iran and then contribute to their
nuclear program. Even in k through twelve. Their goal is to try to create a generation of Americans who are sympathetic to Katari foreign policy goals, so that maybe one person from a million who graduate from one of these universities ends up becoming president. That Kataris have their talents enshrined in them and are able to exert their influence
on it. And we see this across business. Dozens of companies, hedge funds, investment funds, all taking Katari money and then when the right time comes, they use that investment and they activate it to have their influence.
So what do you make or what do you believe is the significance of this being President Trump's first plan trip overseas. And you've also served, as I should point out, the political advisor to the Deputy Foreign Minister of Israel. You've worked for the Israeli Ministry of Defense. I mean, how do you think Israel and the Prime and Prime Minister and Yahoo are looking at this trip.
I think that the US is executing its own entry. As much as we elect our president to be able to engage in policies that are pro American. The Israeli government decides what's best for Israel, and more often than not, the policies mesh where there's a strong close relationship between the two. But I think at the same time President Trump is saying, we have to have an America first policy, and that's not at juxtaposition where it's against Israel's interests.
But the net gain for the United States in terms of strengthening its relationship with Arab countries will also be
a positive gain for Israel. We sow the same exact pattern take place in twenty nineteen and then twenty twenty with the process that led to the Abrahamic Courts, and frankly, if I was Prime Minister net and Yahoo, I'd be looking at the dialogue between Mohammed and Salman and President Trump and seeing how close I am now today versus yesterday of having sauty recognition of Israel and economic relations between the two heavyweights in the region.
I am curious do we look back at this moment in time in five years, Greg, and say three years. I always think about this, Is this a moment in time where we are really strongly changing our geopolitical alliances or midterms or new president come three and a half years or so, does that change things potentially again?
I think we're at an inflection point. The abraham Accords was put on ice when President Biden came into office for other reasons where he was trying to seek deeper relations with non Arab Sunni contries with Iran. But now we're basically picking up from where we were in September
and October of twenty twenty. More deals will be signed, trade relationships will be deepened, will finally be able to have an alternative trade corridor to the Chinese Belt and Road policy which has been going through China, Iran, Pakistan, Turkey and onto Europe. And this is I think the reemergence of America as a viable competitor on the global
stage with China embracing our Gulf allies. And at the same time, it's also building closer connections between regional powers that for far too long haven't had the kind of relationship that they should have, whether it's trade, commerce, economy, or military. And President Trump is the glue that's helping cement all this together.
We have thirty seconds left. The President said he wants an Iran deal. He warns it to take the olive branch. Just thirty seconds on Iran while we have you.
The Iranians are going to play President Trump along until they don't say that they're willing to dismantle their uranium and richment infrastructure. I think we're going to get to a point where the Iranians are going to spit in the President's face. I understand why you have to try diplomacy, but at the end of the day, the only way for the Iranians to move forward is to eliminate their newclear program, either by themselves or by an American strike.
Greg fifteen seconds China. Is this all happening as the world, the US increasingly is pushing back against China, and just very quickly.
This is a global push against China. I think Europe in the United States have no daylight between them and engaging the golf is pushing China out of the region, which is something the US should have done for the last five years.
It's a good thing that's happening now.
Greg Grahman, thank you so much, Executive Director of the Middle East Forum, joining us from LA.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on Appleclarplay and Android with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Over the last three decades, Beijing has held an iron grip on the world's supply chain for rare earth elements, controlling nearly sixty percent of rare earth mining operations, more than eighty five percent of processing capacity and more than ninety percent of permanent magnet production. This is all according to the US Department of Commerce, but with cooling tensions in the trade war, China issued export permits to US
buyers for these so called rare earths. Removing these restrictions was a priority for US negotiators because these elements are vital to high tech and defense manufacturing. But even if the US and China do reach an agreement on rare earth export restrictions, it's like that the US can no longer be fully reliant just on China. One solution become a domestic supplier of rare earths. One company in the
United States is working on this. It's USA Rare Earth, roughly eight hundred and forty million dollar market cap magnet manufacturing company with facilities in Texas and Oklahoma. Joshua Ballad is the CEO of USA Rare Earth. I should note we spoke to Joshua last month before the US and China announced their tariff reprieve.
This week, Well, it's affecting us in an interesting way. I mean, we're just getting started, right. We're building a large magnet facility out here in Oklahoma where I am today and for us. What it means is a lot of customers are calling, honestly, because there are few to none of these type of magnet facilities in the US. We're going to be the first and one of the largest domestic magnet facilities here, so we'll get a lot of phone calls, honestly.
So give us an idea of the time frame, like when is it up and running?
What do you have anything to sell them right now?
Yeah?
No, today. What we've done is we've commissioned a lab, so we're prototyping for customers. There's always a qualification process even in you know, times like these that we're commissioning the plant. We're targeting the first quarter of next year, so we're a few months away, but we can at least start working with the customers making the greater magnets that they need, get them comfortable that we're capable, so we can hit production hard as soon as we commission.
What's going to be the output, like how much? I mean we talk about this rare earths and magnets and what they go into and so on and so forth. So give us an idea of what's needed in the US market and what you guys can ultimately supply.
So what's needed in the US market. If you think about the global size of the magnet market today, it's probably around two hundred and fifty thousand or maybe to three hundred thousand tons of magnets per year. In the US outside of China, probably two thirds of that is being used. And if you take the US to twenty five thirty percent, or maybe around fifty thousand tons per magnets, thirty to fifty thousand tons, our facility itself, at our
peak will be building up to five thousand tons. And to put that in perspective, five thousand tons is hundreds of millions of magnets. It's a lot of magnets going out the door for everything from auto supply to tavy manufacturing, to drones and defense, you know, everything across the board.
What will be the price of those magnets in comparison to what folks have been getting out of China.
Probably roughly double. So these tariffs are probably getting things into the realm of what we can manufacture here in the US. You have to realize, especially.
All of that pre tariff. You're saying that pre tiff, it would be double about double of what it was Now, I understand tariff's change the equation, but you're saying it'll be double because why is it more expensive here?
It's more expensive for a couple of reasons. One, it's just more We have none of the supply chain here, so everything has to come from overseas. We have a lot of extra logistical costs and profit being built into the supply chain as it gets here. And also generally our overheads and labor regulations and taxes are much higher here than they are in China, for example. It's just like it is with everything else, and all of that drives up costs and we're just not as efficient. I mean,
we have a lot to learn. We've got to build these factories and really make them efficient here in the coming years so that we can start to really compete in the future.
Where are you sourcing the rare earths right now?
Right now, we're sourcing with our partners and good friends, Australia Strategic Minerals. They're working on a deposit in Australia and they're sourcing out of Vietnam Southeast Asia, and we make the metals in South Korea in order to bring them here to the US. We have no rare earth metal making here in the US either, so we have to do it all overseas until we build up.
Here.
Were you sourcing from China before the tensions earlier this year.
No, we were not, So we did this. We did this off take agreement with them a couple of years ago and they've been our partners since.
And what about when it comes to processing?
So when we think about our deposit, but we're looking to build the first fully domestic rare earth supply chain here in the US. Processing in the US is mostly sent over to China in order to process the minerals that we're getting out of the rock. We've been working on our own processing for our deposital the last few years. So our plan is to process here in the US and Texas on site at our deposit at Round Top Mountain, which is near al Paso in West Texas.
Josh, forgive me if I sound you know, we're all learning about rare earths, who, as we joke, not so rare, but you know, you find them in small quantity, so it takes a while to get them out and so on and so forth. But when you you say processing is at the same as mining, of what you're going to be doing or the processing that is currently in China that actually makes it all usable.
Yeah, the processing is the science to get the minerals out of the rock. So rare earths are not like coal where you go in you have a big vein of coal that you can just dig it out and use it. Rare earths are actually they're in the rock and they're in maybe fifty parts per million or one hundred parts per million or five hundred parts per million.
You have to actually use science and engineering to pull and leach out those minerals from the rock itself in order to process it to create the ore oxides that you use to make metals. So there's an entire science, an engineering outside of the mind itself, which is basically digging, breaking up rock, crushing it, and bleaching it in order to get the mineral. So there's a whole science to it, which right now China has controlled.
You mentioned round top outside of El Paso. What is the goal for getting this online? Because my understanding is in order to process here in the US, we're still years away from seeing that.
Yeah, and we're a few years away too. I mean our goal here at Andrew at a USA Rare Earth is to build our initial pilot plant over the next couple of years. We're getting through the signs of it. We're pretty comfortable on where we're headed. Like many of us, we had dark corners running into the walls a few years ago. You know, as you try to figure out the science around this processing. We made a lot of
great progress. So we're just starting to push forward towards a pilot plant here over the next couple of years, and from there we would build the full mine and processing facilities in Texas. So we're a few years away, but not as far as if you look at a Greenland or a Ukraine that we've been taught talking about a lot in the news in the past months, they're decades away. We're talking about a few years.
So let me clarify. So the magnet facility that you talked about in the first quarter of next year, that's going to actually be providing product or not yet it will.
Absolutely, Yeah, the magnet facility will go online. Okay, Ultimately, ultimately we want our feedstock to come from that deposit in West Texas. But as we start, we'll get we're going to have to get feedstock from overseas, which for US is going to be South Korea specifically working with ks and and other partner.
So the feedstock is what you're saying, is going to take a couple of years to get to.
Yeah, through our deposit. Yeah, can I to have that fully integrated supply chain.
Why haven't we done this in the US? If this was so important, why hasn't this happened sooner rather than later?
Yeah, it's a great question, and the reason why it hasn't If you go back thirty forty years early nineties, there was a vice premiere in China who said, the Middle East has oil, China has rare earths.
Right.
They had a strategy around this for years and they've been very successful at it, auilding a very strong supply chain in China, which we gave up on. They did it more effectively, they did it cheaper. We've known this for years. None of what's happening today as a surprise to any of us in the industry. This was bound to happen. We had one choke point in China, you know, in these heavy rare earth that they focused on this
export control. They control over ninety eight percent of it, I mean they chose these minerals for a specific reason, to say nothing for the fact that they're used in industry such as defense, where we really need them, and so we walked away from it. We were addicted to low costs. We heard from customers prior to all this as well that well, you can't do as cheap as China.
You know, maybe maybe we won't do it. Now suddenly we're getting phone calls again as people realize the value of the risk and having a supply chain completely contingent on one choke point.
Yeah, it's interesting that the US is just realizing this given that this kind of happened to Japan, you know, fifteen years ago or so, with that territorial dispute with I think fishing. So now Japan keeps like this one year supply of some of these rare earths because they didn't want to be at the whim of another country.
What do investors need to understand about your company? Because correct me if I'm wrong, But my understanding is you originally focused on rare earths in particular, but then you've pivoted to becoming a magnet manufacturer. What's the distinction there?
The distinction is magnet manufacturing first of all, is an execution story. So we're building a plant. We know how to build a plant, we know how to build magnets. We just need to produce good quality product for our customers. So it's all about execution. It's a near term event that occur early next year, and then we're going to scale up as quickly as we can after that up to our five thousand tons per year. So it's a
near term story. The deposit, and I should say too on the magnet facility is we're going to be the first, really enlargest diversified facility to focus on the broader market. So there are other magnet facilities in the US today and our peers, but they've been bought by auto manufacturers and are really bespoke for an auto manufacturer. We're really looking to focus on the broader market, which is unique today in the market, will be one of the only ones in one of the first josh.
If tensions ease between the United States and China and tariffs not are not as onerous as we are seeing today, what does that do to your mission? Does it back off? Especially if all of a sudden imports from China in rare earths and magnets are less expensive.
I don't know. I don't think it backs off. I think the world has certainly woken up to the risk inherent in the supply chain. We were already getting interest before this. I think it's heightened now, obviously with tariffs and everything else. So maybe the full supply chain wouldn't move over're right away. We don't need the full supply chain. I'd be happy with ten percent or so. But there's still that risk has been heightened. People understand it. There's
a cost to that risk. They have to diversify, they need to do domestically, and the patriotic play is important today. I think companies are going to want to talk about that. We had our first announcement today the great Smaller Customer, Great customer who wants it for the Patreon play right. They were talking to us well before these.
Terariffs came out with all right, kenn to leave it there, Hey, listen, thank you so much, really appreciate it. Joshua Ballard, he's CEO of US Rare Earth. It's about an eight hundred and forty million dollar market cap company, magnet manufacturing company. We heard more of their mission.
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eastering. Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube Plenty.
Ahead in our second hour of the weekend edition of Bloomberg Business Week, including President Donald Trump's cryptocurrency and the mystery investors buying for seats at an upcoming dinner to promote the Mean coin. Plus former Washington governor and yes, a Democrat, Jay Insley has a way to win over young Trump voters. We'll explain first up this hour, though, two things certainly top of mind for investors investing in
Europe in investing in AI. Earlier this month, Carroll attended the Principal Asset Management Real Estate Investor Conference in Paradise Valley, Arizona. It was a gathering of experts in the industry who gave their perspectives on the macro environment, investment themes, and more. One theme that's certainly on the minds of many real estate investors is that of global opportunities, and particularly whether US policy is pushing investment outside of the US and
instead into other regions such as Europe. Tim Hills, senior executive managing director for US and European clients at Principal Asset Management. He joined Carol in Arizona.
Yeah, our experience in the UK in particular, I would say, right since the liberation Day has been quite frankly, keep calm and carry on, and again I think it's proven out here. We've seen it in the markets overall. I think from a real estate perspective, you know, we continue to see great interest in the strategies that we have. In particular, I think because we're a little bit more
specialized data centers, particularly in Europe. Very attractive student housing be another area that we're looking at as well too, And we actually have seen across Europe some interest in our US strategies as well too, And I think that from our perspective, is a pleasant surprise. And today's announcement I think only served to sort of, you know, put a foundation underneath that.
I'm guessing you're talking Tim to clients on a daily basis. I am just curious what you're hearing. Are they all kind of like, okay, We're going to wait and see where the dost settles. I know, long term are you know, when you think about real estate, it's a longer term investment play, right, so you're not necessarily in and out. But I'm just curious what's kind of the mood the narrative that you're hearing from them.
Yeah, I mean, you're exactly right, one hundred percent. We're basically you know, wait and see. I think a lot of places are.
Even through the month of you know, April, war was so volatile still wait and see.
I would say it was more volatile was the conversations. The first fifteen minutes of every discussion with the client was quite intense, particularly I think in Europe. You know, the doesn't hold the monopula on chaotic governments, and so whether you're in London or Madrid or Paris, they've all had their own challenges and they're just trying to get
a better understanding for us. You just had Seema on the demand for our macro and our insights has arisen dramatically in the month of April, and so having that type of content out there really helps them our clients to check what they're thinking and how they're planning for their portfolios.
Tim, I love that you said that that like other governments have had their own problems, and I think for we as Americans, this is unusual for US yea, the level of volatility and just kind of a different type of administration. Some say maybe that's what the country needs. Some say no. But that perspective of what you're hearing from European investors, is there a lesson or kind of some you know, advice in terms of what we are going through as investors here in the United States.
Yeah, I think so.
For me.
I started working with the teams in Europe about three years ago. So I'm a Midwest born and raised and so it's been a great experience. But I think a lot of it is they are not afraid to laugh at themselves and sort of absorb the situation, and so I think there are some lessons to take away. We don't I think, spend a lot of time laughing at the situation or trying to appreciate what's going on or
the other sides of view. And you know, again, I think the first morning after liberation, I was sitting in London, you know, having a conversation with clients back and forth. It was interesting, but you know, there was no sharp elbows that have come out since then, and again clients are still looking to keep their allocations. They're not moving money away. But I will say there's a booyed confidence I believe across Europe in terms of what that means going forward.
Is there a market that you think with surprise investors, especially when it comes to real estate, that maybe isn't being talked about a lot that is all of a sudden gaining some attention or at least clients are asking about it.
Yeah, I think it's again less market and it's more what asset class within in real estate. I think it's not only real estate, but also infrastructure. Infrastructure really big, and it doesn't matter whether we're talking institutions or you're talking in Europe at the Global Financial Institute private banks. That's a big spot where we're seeing a lot of interest as well.
It's interesting at Cake at Milkin, I think it was George Roberts of KKR, you know, Iconic was talking about infrastructure. I know they have been I think, beefing up some of their efforts in that area, but it's like all of a sudden people are talking about that play in all its different forms.
Yeah.
Yeah, I think It's unique because it matches up for a number of institutional clients, insurance companies, and then for public pensions the LDI space, where you're looking for more long dated paper to be able to match up with those liabilities. And the fact of the matter is when you look at the public fixed income markets, you tend to have a very narrow list of big issuers, and so from a diversification perspective, infrastructure is really interesting.
What are clients asking for in terms of different strategies to play the real estate market? Are they comfortable with the products that are out there? Are they looking for something different? At this point, I would.
Say, you know, the core space has been challenging the last couple of years, and you know, pretty.
Much post pandemic, still dealing with some stuff.
Correct hangover from that perspective, going into the end of Q one, we were starting to see some really good interest coming back into that, you know, indications of interest RFIs that we're putting out out there. You know, into the first two weeks of April, you know that just ground to a halt, and all of a sudden, here we are thirty forty days later, and we're right back into those same conversations again, So I think it's I think it's a pretty broad based interest.
I want to go back to kind of how we started. We've just got about thirty forty seconds left here, Tim, But I mean you have seen you guys have been doing this for I think twenty five years. You've been involved with the bulk of them. In terms of this moment in time when it comes to real estate investing, how do you think about it? Always a different in comparison maybe to other cycles.
Yeah, I mean, we just we had a deep dive on stage this morning talking about the different cycles, whether it's a Savings alone or the GFC. We don't think we're anywhere near that type of depth of concern and where we sit in a really great spot and in terms of returns that we've had since the pandemic, they're really not that bad and really put us in a position to take a step forward.
Why does it feel so bad? Twenty seconds?
Yeah, I don't know.
You won't blame the media that we talk too much about it, but I'm just curious.
I think there's a perception that where interest rates are at that things are dead from that perspective, and quite frankly.
That's not the case.
If we take a look over time, there's correlation there as well.
This was fun. Thank you so much, awesome.
Glad to be here.
Tim Hill, Senior Executive Managing Director US in Europe client Group over at Principle.
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Eleven thirty we stay in Arizona for another conversation, this time discussing real estate infrastructure and more specifically the macro tailwinds leading to more infrastructure development, things like decarbonization prompting a more modern an electrical grid and the Boom and AI bringing about the growth in data center development. Mansy Patel is Senior Managing director and head of Infrastructure DEBT at Principal Asset Management. She joined Carol in Arizona.
It's certainly an exciting time for the sector in the space. I've been in the project finance infrastructure markets for over two decades and then the momentum just in the last year and two years is incredible, both from macrotailwinds of decarbonization, digitalization, demographics, all those shifts creating this natural need tied with exactly what you described on high interest rate environments that create
opportunity sets for investors and clients. And when you think about the macro need, there's a statistic out there of ninety trillion of investment needs over the next fifteen years. Of that, about fifteen trillion of a funding gap. So it's really an incredible time and all the tailwinds are supporting that growth.
I love this said.
I want to ask you. I want to kind of dig into some of what you said. You know, we have a going private newsletter and it said money managers rush to invest in the world's essential plumbing and they talked about all investors, alternative investors they want in on infrastructure.
When you talk about the decarbonization, I think again we get kind of this American perspective, US perspective because of some of the policies coming out of the White House, that that that's it in terms of the green environment. But that's not the case globally, is it.
Now?
I think you're right. I think there's just this natural competitive dynamic of renewable generation and energy transition and even natural gas being part of the energy transition thesis and
into its mid streams. It's pipelines, it's gas generation, it's renewable power, it's batteries, it's sort of all of that together to really modernize the energy and electric grids globally, right, And then also an interest in doing good and the sort of creating a macro environment to support broader policies. And so I think there's a lot of activity and energy and renewables and other sectors. But that's certainly a theme that hasn't slowed down because there's a natural need.
Well, especially when you think about the AI data. Secondary people are talking about nuclear again, right, and it's in a way that we haven't heard in terms of for years. You guys actually did your own research, the Infrastructure Investors LPI Perspective Study for twenty twenty five. It's an annual barometer of investor confidence. Talked just about some of the findings of that research.
You know, it's interesting infrastructure tends to be a safe haven a bit from an investor lens, right, It's a hard asset. It's collateralized its deals that are essential to local economies. It means moose, people's moose goods, water utility, think gives sort of core infrastructure that drives economies. And I think there's just a continued interest in the sector because of the growth and the need and the safe havenness of these assets.
Right.
It's driven by stable, predictable cash flows. And you continue to need airports, you continue to need ports, roads, And it's been proven through the GFC, through the COVID pandemic, the resiliency of the sector really has shined through.
And the money is going to be there. I mean, like it's the investment base. It's also government's committing more money to this, aren't they.
That's right?
Yeah, I mentioned the ninety trillion number of that. When we calculate the funding gap, it's about fifteen trillion dollars of private sector needs, right, and so with the combination of public sector and private sector growth, that should fill that gap.
How much is the global supply chain the conversations we are having so often today, obviously the news that comes out of the White House in terms of TIFFs and trades, but I also think it really started back after the global pandemic, where people were like, wait a minute, our exposure, we've got to kind of broadened out so that we're not so vulnerable. So, yeah, tell us a little bit about pandemic, but then kind of how that has continued.
Yeah, No, we think that it's a sector that's viewed to be recession resilient and ethamic cycle resilient. It's because of what we just talked about in terms of essential assets and the flow of cash. So we think that trends has not slowed down. Away from seaports, which are impacted certainly by global trade, all other sectors are pretty resilient and self sustaining within their geographic location, so we
don't see a dramatic impact. Green Field and development phase ACIDS certainly could have some impact to cost, but beyond that, the resiliency of operating ascids is quite remarkable.
But is there expected mancy that there's it's going to be an additional build of people. You know, we obviously President Trump talks so much about, you know, the investment coming into the United States. Do you guys really expect as you know, talk to Apple, I mean, they slowly were doing things it sounds like in India and all of a sudden they're like, hey, we can supply all the iPhones you need in the United States out of India. Like it felt like it came out of nowhere. But
they've obviously been doing this. But the builds are not easy. It's not like you flip a switch. So do you guys anticipate that that will be part of the real estate play going forward because people are doing redundant global supply ches.
Although that's costly for a company, it is I think there is a blend for both. There's a world where you do have on shoring and there's a world where you do need both, and so we do feel optimistic. You're absolutely right, it's going to take multiple years and decades for the scale of some of these assets to
actually get developed. But that theme is there and the trend is there, and so you think, you know, and that's across the world, right, not just not just here, and so we do think that creates growth and momentum, but it's going to shift a little bit of where capital flows go.
Talk to us a little bit about the finance and capital structure that we're seeing in infrastructure deals today. What do they look like.
Yeah, it's a great question. It's it's become a very creative subsector, I would say, and the sensitive clients. And in private credit more broadly, right, you've got I.
Knew you're going to get a private credit because anytime it's creative, it's private credit.
There's investment grade, traditional long duration insurance capital. Right, That's that's the bread and butter of infrastructure. And then there's a high yield infrastructure universe where there's creativity in terms of subordination solutions on core infrastructure or more technology risk perhaps, or development risk perhaps. So there is a place for every client appetite. In my opinion, depending on duration, needs and targets yields, we can create very bespoke customer solutions.
When it comes to like, you know, I keep asking a lot of your team might not six or twelve months because it's real estate is just such a longer play.
I mean, it sounds like there's optimism first of all, Right, despite the concerns and the volatility that we've seen, it sounds like when it comes to real estate, it's a lot more commer Maybe it is because of those longer term plays and when you're dealing with private credit or private money, right, those investments kind of don't move in and out so much.
There is a little bit more resilience and stickiness to investment thesis, and you're investing into the long duration of these assets. So you're absolutely right the short term volatility, there is just fluidity in that you can pause and you can step back and evaluate, but that doesn't slow down the activity. Anytime there's public market disruption, that tends to help. In terms of private sector.
You said you started and I like to kind of go back, is that you've been doing this for a while, and I love folks that have seen different cycles. How are you thinking about this cycle when it comes to real estate?
Yeah, I think it's from an infrastructure real estate lens infrastructure, Yeah, yeah, from my lens. It's a really incredible time. You mentioned the comments at Milk and I think the growth is there, the need is there, it's essential, and the capital is eager and excited. So it's really the stars aligning for the sector. It's part of the reason Principle has made such a concerted effort into building out this capability and augment what we are already doing in private debt in
a meaningful way. So I think that theme continues and it is quite positive and exciting, I think in the realm of everything else going on.
Right and I think it's safe to say that when it comes to an infrastructure, I mean, they're just projects that just need to be done exactly.
Yes, there's built roads that need cappex there is power needs with the data center build outs in the country. There's just very critical essential needs. Anybody driving or flying in this country is it's appreciative of the capital expenses needed to upgrade some of the infrastructure.
It's funny that you say that. I think about like going through the airports now, certainly in the New York metro area, and it's just for so long that was just so terrible, and then all of a sudden you're like, well, wait a minute, it's finally happening. Yeah, and it's really great stuff. Nancy, thank you so much. Really appreciate it.
Thank you for having me.
Yeah, thank you for actually hosting us. We really appreciate it. Nancy Mittel, Senior Managing Director, head of Infrastructure Debt at Principal Asset Management, here at the Principal of Real Estate conference in Arizona.
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On Monday, Coinbase, the largest crypto exchange in the US, will finally get a seat at Wall Street's main table when it officially joins the S and P five hundred. That announcement this past week let its stock to sore as much as twenty six percent in a single day. Coinbased CEO Brian Armstrong on Bloomberg TV this week reacted to the news.
It means that crypto is here, to say, people are going to have crypto exposure in all their four oh one k's and it points a little bit to I think where the future of financial services is going. Crypto the technology to update the financial system.
So it's a great moment.
That was Coinbase CEO Brian Armstrong. We should note too that this past Thursday of The New York Times reported that coinbase is cooperating with the US SEC on an a agency probe into its previously reported user metrics. Meanwhile, Bloomberg reported that hackers had near constant access to some of Coinbase's most valuable customer data. Since January, Coinbase disclosed that hackers bribed customer representatives to steal the data and then demanded a twenty million dollar ransom to delete it.
Check out the latest on this story on the Bloomberg terminal and at Bloomberg dot Com. Meantime, Robinhood agreed to acquire crypto platform operator Wonderfi. Morgan Stanley's digital asset marketshead is leaving the bank to start his own crypto and digital asset investment fund. Oh and the President is hosting a private dinner on Thursday to promote his Trump meme coin. Needless to say, there is a lot going on in
the world of crypto. We broke down Coinbase and the presidential crypto dinner with Bloomberg News Investigations reporter Anthony Cormier and Bloomberg News Senior editor and Crypto Payments team leader Mike Reagan.
In some ways, it was sort of inevitable that coinbase would get added to the S and P five hundred. If you look at its market cap before the announcement, something like fifty three billion. I mean, that's puts it in the top half of S and P five hundred stocks by market value.
I think what kept it out.
For a while is that Coenbase's earnings can be very volatile post a loss, some quarters big profits, some quoters, smaller profit the other quarter.
So one of the S and P.
Five hundred criteria's criteriu I guess is the word is consistent profitability. You know, they want them to be profitable in the last quarter and they want the trailing four quarters to be profitable for a company.
So you know, there is sort of this.
Rumblings you hear that they got snubbed in the last S and P five hundred reconstitution, but I think it was more likely and we never hear exactly what the SMP committee how they make their decision, but I think they were probably more worried.
About that earnings volatility than anything else.
You know.
That said, it is obviously a much friendlier regulatory environment for coinbase, so a lot of those questions about the case with the SEC have sort of been a watchway.
Yeah, speaking of the friendlier regulatory environment, that was the segue I.
Wanted to use.
Yeah, well, go okay, Well, speaking of the friendlier regulatory environment. I want to bring in Anthony Cormier because he's been doing some reporting around the Trump meme coin, the top Trump crypto buyers who've been vying for dinner seats. This dinner is happening supposedly on May twenty second. You and the team dug into the wall. It's did some digging, found some details about who these folks are, and it's actually not very clear.
No, no, less now than when we started. But we find out we do, we do, we do. We did go hand by one by one through the.
Twenty transparency on someone who's doing something in the crypto world.
Holy no, Well, just to set.
It up, this is the this is the dinner that is happening on May twenty second. It's going to be with the President at his Virginia golf club, and the top holders of his mean coin over a certain period of time would gain access to the dinner.
Top twenty five get to meet him in person, get a special VIP tour. Two and twenty get to have dinner with him in Sterling, Virginia. And as you said earlier, it is quite difficult to know who or what are behind some of these wallets. So we went one by one and learned what we could, and that was that more than half of them are likely foreign. Six of the top twenty five are almost certainly acquired their shares from an exchange that doesn't allow you, doesn't allow Americans
to acquire them. And before I walked in this room, I was going through Twitter looking for all of the people who have posted their invites online to see what we could learn.
What's the law on that? And the reason I bring that up is I think about all of us who go through training, who work at US companies. We go through extensive training about who you do business with. If you're a business deal, a contractor, you've got to know exactly who they are, where the money's coming from, and if there's any any any questions. You don't do it.
Banks do KYC all the time, all your customer stuff. There's anti money leadering programs that in fairness of the President and his is the mean point operators. They are saying that they you have to go through certain steps. We don't know what those steps are right in order to get to this dinner that we don't know what to quote KYCAT watch list you have to avoid to be in this dinner. All of those questions we've posted to the White House, they've thus far refused to answer.
Mike, how are you looking at this as somebody who's covered markets for years. You're now heading up your senior editor, and you're also heading up the crypto team. There's this idea now that the idea of appearance of conflict of interest, you know, has kind of been thrown out the window at this point. It's a question that I asked Eric Trump about when I interviewed him a few weeks ago, and he basically said, you don't have to worry about this.
I never talked to my dad about crypto and crypto policy. But the president does have a hand. He makes money when certain things happen.
Yeah, I mean, I guess gobsmack is the word I got put in just how brazen it really is, you know, and some of the prominent Democrats are screaming from the hilltops, Elizabeth Warren and others, you know, not only about this, but World Liberty Financial. Trump's other crypto project introduced a stable coin, you know, a crypto token that's peg to the dollar.
It was just used in a two.
Billion dollar equity stake from a Dubai fund into finance, which, if you recall, was the crypto exchange that just two years ago, less than two years ago, settled some very major charges with US Justice Department about basically not having an anti anti you know, not having that KYC program in place that Anthony's talking about, or an anti money lundering system in place, or at least not a robust enough one to catch what the government alleged was, you know,
terrorists and all sorts of criminals using that exchange launder money. So, you know, it's just shocking to see that. You know, what you thought were sort of checks and balances in the government don't really matter if the controlling party is on board with the president and willing to give him this type of latitude.
Where's the financial community, and there are everybody and anybody in terms of the financial might globally, certainly in the United States, trillions of dollars right worth of capital assets under management. In the past, crypto has been a topic, but I got to tell you, we talked infrastructure, we talked supply chains, we talked tariffs, we talk private markets,
and we talked democratization of things like private credit. I think we had one interview with someone who's like definitely into crypto in a big way, but I it wasn't a big thing. So where is the financial might and the folks on Wall Street and the big investors, Because who's doing all the activity? Why is crypto? Like is it just the White House?
No?
If you look at especially the SPAC.
Deals being priced recently and being announced, you know, Kenner Fitzgerald, one of their SPACs is teaming up to create basically a company whose main purpose is just to buy bitcoin and keep it on its back.
Nothing can go wrong with the SPAC. I'm just saying, like, like you know, I know there's ETFs and so on and so forth, but I'm just trying to get an idea of the buy in. Where's Anthony, Like, where it's all coming from.
I can speak to institutionals, but doesn't coinbase. Now I'm making the SMP, doesn't that expose like my four O one K yeah to crypto for the first time? And I think that's a really interesting sort of context right here. It feels like a pivotal moment. Right if I'm a consumer and I don't I don't want to take that risk. Now, all of a sudden, I'm don't have a choice. I don't have a choice, right exactly. I think that's really a kind of key moment, right.
I agree with you.
I looked at it like that as well, Anthony. I want to go back to this idea of the dinner and because with the digging that you did into these wallets and you had them, you looked at different exchanges, you tried to identify folks. You said, as you were walking in here, you're actually looking on Twitter to see who's posted invitations? What have you found that's not in this piece, Like what have you reported on over the last few days than what have you've seen?
What We're trying to figure out who is going to actually do the vetting of these people, and we're really keen to know whether this is happening on the Trump private end or the Secret Service end. I think it's a really vital question. The Secret Service is going to have a much different standard potentially than the White House.
Well, when you say vetting perspective, do you mean from a safety perspective the background checks? I mean getting physically close to the president, and especially somebody who's been the target of not one, but two assassination attempts over the last year. I would imagine the Secret Service is very very serious about keeping him protect.
You would think so, But I think the real concern is going to be on the anti money loundering front, right, Like, how much can you know about some of the operators who have bought their way into a personal meeting with the President.
And I.
Don't believe the Secret Service has the kind of tools that someone at like Vincent would in order to understand who's a bad actor and who's not. So I'm curious to know quite a bit more about that.
Yeah, I've seen I've seen one of the invitations to the event, and they are you know you're going to get searched. Your vehicle is going to get searched. So I'm sure you know what is under the control of the Secret Service. To your point is you know they're going to They're going to do their best to protect the president.
But you're right though it's often starts.
I mean I've gone to the White House and they needed stuff up front before I even exactly step down ground, So like you do wonder about what kind of real vetting can they do before they even walk away?
When I reported on the first Trump administration, I had to send my Social Security number to the White House, perhaps to the Secret Service before I even went to the White House.
We don't know if that's the case. We truly don't know.
So Mike, you know, I love what Anthony said about. Okay, guys, democratization, y'all now own some crypto, whether you like it or not, like that is an important turning point and kind of legitimate turning point.
If you will.
It feels like for crypto.
Yeah, our tbd to see.
Yeah, I mean it's it's been, you know, one of a series of sort of events that have further legitimized and brought it more mainstream. You know, I won't comment on whether or not that's a great idea for all of our four own case, but it like.
It or not, here it is.
Coinbase is not only a respectable company, a top you know, they're in the top half of market cap in the S and P five hundred, you know, and I don't think you know, it's it's not the beginning of the crypto exposure for sure, in you know, sort of passive index funds. You know, Tesla owns some crypto. If you look at micro Strategy, which is one of these companies that a lot of these SPACs are just trying to emulate. You know, that is already in the Nasdaq one hundred.
So if you own that, that QQQ index, you want to chuck of that too.
There are a lot of companies that have been out there that have had some really big market caps that have gotten.
I don't know.
I guess time we'll tell on all of this, will wait, Mike reagain, Anthony Cormier, thank you guys so much. What a great chat. You're listening and watching Bloomberg Business Week Daily.
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All right, I do want to point out everybody, just a little bit of a backdrop. Two US science organizations are launching a new climate research initiative after the Trump administration dismissed expert authors of the National Climate Assessment. Now, the initiative will publish peer reviewed manuscripts and climate change in the US, aiming to create a library of information
for government, academia, philanthropy, and business. The effort coming after the Trump administration terminated the contract for staff working on the sixth National Climate Assessment, which was expected to be released next year. We know that there's been a lot of moves pushback when it comes to green initiatives out of the Trump administration. Our next guest, I'm assuming we'll
have some thought and all of this. Joining us Jay Insley, former three term governor of the state of Washington, former member of the US Congress, a twenty twenty Democratic presidential candidate, winner of twenty twenty five Time Earthward and he's also leading the accountability project at the policy and lobbying group of Climate Power, and he joins us from Bainbridge Island, Washington. Great to have you here with US Governor Insley. Thank you, thank you, Thank you.
Appreciate your attention to this topic.
Well, there's a lot of what I talk to you about, because I feel like you are someone who has seen lots of political and economic cycles in the United States. And before we get into jobs and green initiatives and green jobs in particular, the US China relationship, how do you see it, how important is it, and how do you assume it will ultimately have to play out because these are the two largest US economies and they're intertwined.
Well, obviously, there's not much debate about how important this relationship is. And we're all very disturbed and concerned about the President's desire to make life more difficult for Americans by making them forcing them to play pay the Trump Tariff tax, which we know Americans will have to pay if he is successful of imposing these large tariffs. We are all pleased this morning that some news that Trump is already sort of giving up on this ruinous tariff
of one hundred and forty five percent. That's good news, you know, But we shouldn't give him the Nobel Peace Prize because it's like, you, guys, the arson is starting a fire and then he wants credit for being the fire person to put the fire out. He started this fire. We hope it gets put out and that we have more reasonable trade relationships on a reasonable basis. We hope that that will be the case. Haven't hasn't brought out yet.
Having said that, I think both Democrats and Republicans for several years now, and if you think about through the Biden administration, some of the imposed on China were certainly continued through the Biden White House that most on both sides of the political aisle have agreed that the relationship between US and China maybe wasn't a fair one, it wasn't balanced, and so something had to change, especially as China's economic might has changed and grown.
Well, listen, there are some reasonable things you can do, and then you can do absolutely ruinous things. Is throwing a grenade into a relationship, and Trump threw a grenade. And you know, one hundred and forty five percent tariffs means that Americans are going to pay double for products that they're buying from China. And that's a significant thing. And it's already caused of job loss in my state because we're down, you know, the no ships coming in,
no long shoreman jobs, no trucking jobs itself. So yes, there's always a spectrum of action, but I think that what he has proposed would be really ruinous for Americans. Hopefully this will get resolved, that he'll start to see pressure from bond markets as he did the other day, and that this will restrain his madness. We hope that we will be successful in that regard.
I have a little bit of a curve ball here, if I may digress for a moment. Govern you're ready, and well, I don't know how you're going to answer this, because Washington State, I don't believe you have an income tax. Right. You made me think about the arson putting out the fire. You made me think about the salt deduction, right because President Trump and the Republicans capped the salt deduction that had been American policy tax policy for over one hundred
years in twenty seventeen of the TCJA. And now there's a question about whether or not it survives or in what form it does. I wonder what you think about that is a state, As a former governor of a state that doesn't have an income tax, does it seem fair to allow state and local taxes to be deducted?
You know?
Does it avoid double taxation? Or do you think that we should have a cap?
You know, It's something I have really thought that much about. It's one of those things that when you have a disaster looming, you pay less attention to your parochial issues. I will just say I hope it gets worked out. I will say that, and I hope that we don't end up killing clean energy jobs just to finance tax cuts for the rich. That's the thing that I'm focused on. More parochial issues to me are subordinate, and the national
economic climate is so at risk right now. That's what I think we got to pitch attention to.
All Right, So let's go there, because your team did share with us a report from Climate Power, you work with them, and it talks about clean energy jobs in particular created and those that might be clawed back as a result of President Trump's policies, executive actions, tariffs and more.
I will say, coming off of Milkin and some of the discussion that I had with folks when it comes to clean energy, green energy in terms of investing, many said it's going to continue because you know, if you're a global company, you have to think about it on a global level, you have to think about it beyond a four year presidential term. And you know, just companies in many ways, their initiatives will continue going forward. But
what's important about this report? What do you think our Bloomberg audience needs to know?
Well, what I think the audiencies know is that we have to be very optimistic about the clean energy economy. The growth is spectacular. And the reason is is technology is advancing. It's such a rapid clip. The cost of solar energy has come down forty percent in the last ten years. When continue is to come down, we have ten times as much installation as we did ten years ago. So the rate of the the reindustrialization of America through
renewable energies is quite profound. But unfortunately the President, because he has this phobia mania uh you know, he says wind turbines cause cancer, which is just nuts. It just caused jobs all over America. And that ideological fixation has already cost us or jeopardized sixty two thousand jobs in the United States, which is a spectacular way to shoot yourself in the foot. And the thing that's so disappointing to his multiple efforts, I mean these are multiple efforts.
He threw fifteen one hundred people out of work who are building an offshore wind turbines off the East Coast over with twenty four hours notice. And he's doing that by refusing to permit these clean energy sources, by attacking the tax policies that allows these industrial jobs to be created. It's just really killing the number one job creator in the country. Right now is clean energy. So that's really threatening this and this engine of growth. And it doesn't
make any sense whatsoever. You know what, here's the thing is so frustrating. I mean, he talks about he wants energy dominance. Well, if you want energy dominance, you shouldn't sideline some of your best athletes, which are folks building a clean energy economy. And so it's very disturbing, and I hope Congress will stop some of his maniac activities to hurt jobs in this country. Sixty two thousand jobs, a lot of job loss. What about what is right in my state?
A reshoring of manufacturing jobs. Is that not something that you could be optimistic about that you think might benefit you know, the people of Washington State, the people of the United States of America.
Well, there's two separate issues here. I think it's important to keep them distinct. There's the terrif issue that you're thinking of that potentially could get some reshoring. If that
someday could happen, that would be a fine thing. What I'm referring to his efforts to basically needcap these new industries in a dozen different ways, starting with literally shutting down the development and construction of these projects like offshore win, like is a refusal to give permits for solar powers, like his effort to recap the Bondaville Power Administration, which is the group charged with the responsibility of building transmission
lines so we can build these new energy generating capacity, like telling the Pacific Coast we're not going to be able to move forward with offshore wins. So these are two separate issues. And what I'm addressing are the facial attacks on the policies that we know do grow these jobs domestically, including the tax cuts which he and the Republicans are threatening right now to stop the tax breaks to allow these industries to grow, just to give it folks,
to tax cuts for the wealthiest folks amongst us. And that's probably one of the most dangerous things going on right now.
Governor in Isley just got about a minute left here. I mean, what we often find, you know, in terms of coverage of global financial markets is that money tends to go where it makes sense and ultimately, do you have enough favor No, just in terms of you know, if investors can make money, they're going to go there. If it makes sense, investors will continue to commit to green initiatives, and a lot of companies do think it
still makes sense. Might that pick up the slack even if the political environment isn't supportive at this point.
Yeah, listen, climate clean energy, this revolution is going to continue. There's no question about the technology. Is the cost curve coming down? This is going to continue. But these policies that the President wants to embraced in some degrees, Republic and Congress is going to retard that pace of change. And we're in a race right now. Look, we're a race for jobs, We're a race for the climate crisis won't make all our towns burned down on the West too.
We're in a race. We don't want to slow down. We're going to win, but we rather ruin fast rather than slow.
All Right, We're gonna have to leave it on that note. Jay Innsley, thank you so much, former governor of the state of Washington three times, three terms and if remember of the US Congress side joining us here on Bloomberg Business Week. He also leaves the Accountability Project at the policy and lobbying group Climate Power.
And Tape say, beloved in the Pacific Northwest.
I love the Pacific Northwest, having just gone to Seattle. In the last year of pre studying.
GEL like you spent what two or three weeks out west?
Just now well a week.
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