If Climate Is a Crisis, Keep Gas Prices High

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News present Bond making some comments today about climate change and his policy plans and the absence of congressional action and in keeping with that Tim Bloomberg opinion columnist Edward Reporter making the point that if climate is a crisis, shouldn't we keep gas prices high?

Edward Report. Edwardo Porter joins us now he's a Bloomberg opinion columnist with economic policy and immigration issues, joining us in the Bloomberg Interactive at Broker Studio. EDWARDO. It's good

to have you with us. This is a provocative column because you're essentially saying that old move that President Biden could make is to find a way to put a five dollar a gallon floor on gasoline prices, literally the opposite of what he's trying to do in his world travels to get you know, quote unquote allies to give us more oil. Yeah. I mean the specific number is

not the issue, five for fifty whatever. But what's important to note is that high energy prices, which include high gas prices, are going to be an essential component of any solution to climate change. I mean, if we want to reduce carbon emissions, we have to make carbon fuels

more expensive, and this is an opportunity. Okay, what if you said, just to push back on that a little bit, what if you said, Okay, it's all well and good, but if President Biden were to do something like that, this is such a politically toxic issue that he would get just destroyed and at the polls, because this is the number one issue that Americans care about. Indeed, I feel for the guy. This is a real tough one. But any solution to climate change is going to be

politically very very complicated. I mean we've been we've been debating this issue at least since the Obama administration. And remember what happened to his cap and trade program. It just died in flames, didn't even get to the Senate, um and and and and we've been trying and failing ever since. So the question, yes, there is a very

big political cost to pay. Um, but at some point this argument needs to be made and needs to be turned into policy because there is no other real solution, right or I would go, you know, none of this matters, right if the climate continues to get warmer. I mean, just look at what's going on around the globe, right Like, we debate about higher rates and margins and other stuff

that's you know, uh, stressing us all out. But if the climate continues to warm, and we will have nothing to worry about because we will not be able to exist. I don't mean to get so dark, but right like, this is the crux of the major problem that faces the world right now. All right, but I mean, just look at what's going on in your across Europe just now. And you've had versions of that in Australia, the United States,

and certainly in places like Indian Bangladesh. I mean, the the really the intensity of the climate emergency is amazing in terms of lives lost, crops lost, agricultural yields down, longevity shortened. I mean, the cost of this are are extremely expensive, which is in fact what justifies imposing an economic cost to to mitigate you. You cover Latin America,

you cover you as economic policy, immigration. But I think about what Brazil did back in the seventies, Right, they were brought to their knees because of the energy crisis, and they basically made themselves energy independent, right, going into ethanol, sugar based ethanol. Right, they had to address it because they had to to economically survive. You know, the US has the Europe has higher taxes. When it comes to guesses, what is it that the how come the Europeans did that?

What is it that? The why aren't the US doing is because we've had so much fuel and and you know, fossil fuel based fuels that we don't have to you like, what is it? Yeah, that's a big question. I mean you could answer it in a variety of ways. I think for one, Europe is much more welcoming of higher taxes in the US is in any dimension, right, whether it's taxes on energy, gasoline, or income taxes or whatnot.

They pay a higher tax burden, and they accept it because they get a society that they like with that money. And the United States has always been much more hostile to that. Also, the US has gotten used to very very cheap energy for a long time. I mean it's not just now that gas in Europe is more expensive. It's oh, I mean since I've been around, since I have memory, gas prices in Europe have been way higher

than they are here. Yeah, look no further than Norway, where we've seen gas prices about ten dollars a gallon, despite the fact that the country produces so much energy. Edward, before we let you go, you ransom numbers here, talk about how this would spur innovation for alternatives. I mean, well, basically, what you what happens is the moment that consuming fossil fuels becomes more expensive, you'll have businesses and households looking

for alternative. It's one alternative is to use less energy, but another alternative is defined technologies that use different sorts of energies. And we've seen that. I mean, we see the amount of investment in renewable energies and a new technologies for say energy storage and whatnot has gone is way higher. Uh precisely. I mean it's it's also stimulated by by government subsidies and so forth. But the prospect

of much higher fossil fuel cost is driving this. I mean you even have gas companies, energy companies that are going in to invest in nuclear fusure. Right, they know, they know, well, it's interesting and if you wonder, if you think that it's like, you know, bottomless pits in terms of fossil fuels. Javier blast has a great story

and the Bloomberg talking about Saudi Arabia. They're the world's biggest creed producer and they are nearing their ceiling when it comes to output, right, So it's going to run out. We know that, no doubt about it. Um, we gotta run come back. We loved it so great to check in with Bloomberg Opinion columist Edward or Porta. This is Bloomberg Business Week with Carol Masser and blue Berg Quick Takes Tim Stinovic on Bloomberg Radio. So the Bloomberg Big

Take today. It's also storing the upcoming new issue of Bloomberg Business Week add on newstands tomorrow. Already on the Bloomberg and Bloomberg dot Com Slash business Week. It's about the wonderkin quant turned crypto billionaire and his dominance and expansion in that crypto industry. We're talking about none other than Sam Bankman Freed of ft X. The story by Hannah Miller and Olga careerf As Carol mentioned, it's in

the upcoming issue of Bloomberg Business Week magazine. Check it out though at the Bloomberg Terminal and at Bloomberg dot com slash a business Week. Hannah Miller is digital currencies and venture capital reporter for Bloomberg new She joins us now on the phone from our Palo Alto bureau. Hannah,

really great to have you with us. We've we've talked a little bit in recent days, in recent weeks about the buying spree that Sam Bankman Freed went on over the past couple of weeks as we've seen the crypto industry just collapse or past couple of months, I should say, what are his intentions and helping prop up some of these companies and then buying them as well. Yeah, thanks so much for having so It's been a really exciting

time within the crypto industry. Despite the market downturn, um Sam Bank and Fried has really spotted a lot of opportunities here to just consolidate power over the industry. Um, whether it's striking deals with block Fire or Voyage or Digital. He's really, you know, just spreading his influence within this space.

All right. Remind us for those who are like, wait, who is this dude, because he really is a standout among those who are in this space, because he's he's worth a lot of money, right, he's probably lost somebody. He's still worth a lot. Yeah, he's worth about ten billion dollars currently to our Billionaires Index UM. That's about half of where his wealth was in April. Obviously, still a lot of money. But he's thirties, thirty years old. He's taken the industry by storm. His company's ft X

and Alameda Research have really asserted power within the industry. Uh. They work with a lot of top names. Um f t X is one of the most used crypto exchanges in the world. So he's doing all of this out of the goodness of his heart or right, he just want to dominate and be the industry. A lot of people within the industry see him as cryptos patron saint that he is stepping in bailing out companies out of the goodness of his own heart, but others see a

business motivation here. Um, he's really buying companies on the cheap. Um, he is stepping in, he's helping out. But there's also a huge advantage in expanding his own business and gaining customers all over the world, particularly in the US. It's remarkable. There's a great infographic in here that really shows the web of companies that at this point are connected to f t X, U S f t X and then

Alameda Research, all connected to Sam Bankman Freed. Yeah, I'm wondering more about what Sam is like, and we you know, we've had a lot of reporting around him and some profiles of him. But you know, I think for people who might have seen his conversation yesterday with Matt Levin at the Bloomberg Crypto Summit would see that he was wearing his signature shorts and a T shirt, really dressed on like anyone else there, which has kind of become,

you know, a signature for him. Tell us more about what he's like and who he is and how he got into crypto. Yeah, I know, Um, Sam is always great to talk to. We spoke to him for this story. Um. He is described by people as kind, nerdy, shy, a little bit awkward. UM, but he really has a very

calculating eye when he looks at the industry. UM. He got into crypto trading UM a few years back, really sort of climbed the ranks UM in terms of trading performance with ALAM to research, and he really has become a kind of a cult figure within and within the industry. And he's also pledged to give away most of his vast personal wealth. I just love the shorts and the T shirts. Hey. Um, One thing I found interesting is that, well he's spending and buying and looking to dominate when

it comes to crypto. He's passed on some of the big flops as of late. That's true. UM, we haven't our reporting that he spoke with Terra and Celsius about potential veilouts there, but he ended up passing on both. UM. So it shows that he does have a discriminating eye here. He's not just bailing out whoever. UM. You know, he's looking for advantages. He's looking at how it can help him and his companies. What about when it comes to robin Hood and his investment in robin Hood, because this

one's a little bit different than the other companies. A lot of the companies that he's investment have been interested in those have been in the private markets. But robin Hood, it's probably traded and wow it has gotten beat up. Yeah. No. Um, we reported a few weeks back that he was looking into a potential takeover at robin Hood. Uh. This shows that he has his eyes beyond the crypto industry, that he's looking at sort of more traditional finance players. Um.

As one of my sources said, his ambitions no no bounds. Um. So it's really exciting to see him look at other areas, is um. I mean he's even joked about buying Goldman in the past. That is wild. Well, he wants to do bigger deals. It sounds like, you know, Honna, what is it that we need to understand about this individual? As the crypto space still many who are knowledgeable understand how it works, who are entrenched in this industry say, we're very early on in terms of the impact of

the digital crypto world. So why is it that we need to keep an eye on him and what he does? Well? I think with this current crypto winter, the industry is at a crossroads. A lot of people want the centralized industry where powers in the hands the people. Um that it's based on pure to pure transactions. But Sam's influence and that of FTX shows that there are clear centralized elements here, that there are major players to watch, and that they are going to have continued influence as this

space grows. Speaking of influence, you mentioned that he's been using his personal wealth and he's well, he's he's also pledged to donate the vast majority of his personal wealth. What about when it comes to where he's putting his money politically right now? And if you're reporting, showed you at all what he's thinking when it comes to influence in Washington, well in he was one of the top political donors to Joe Biden during the presidential campaign, uh,

falling right behind Mike Bloomberg. UM. And he's already spoken about his commitments to donating to the Democratic Party for the upcoming election of particularly if Donald Trump runs again. Michael Bloomberg, of course, the founder of Bloomberg LP, Bloomberg Philanthropies, and of course Bloomberg ALP, the home of Bloomberg Radio and Bloomberg Business Week. Um, it is interesting, So I think this is your world. So what are you watching

to see in terms of what he does next? Yeah, so we already know and we reported today that f t X and f u X f t x US are looking to raise more funding UM, which was pretty interesting during this time because I've written a lot about how funding from venture to capitalists has slow um when it comes to crypto. So he is definitely looking to expand. He has also spoken about buying assets from other distress companies,

even targeting bitcoin miners. Is there some nervousness? Just got a few seconds left here, Hannah that though there might be too much consolidation of the crypto world in one person's hands, especially considering that this is an industry that is supposed to be decentralized at its core, it's kind of ironic. What a great deep dive, and it is,

as we said, the Bloomberg Big Take. And of course this is a story in the issue New issue at Bloomberg Business Week, which will be out on newstands but already on the Bloomberg terminal, and you can find it at Bloomberg dot com. Slash Business Week Kindah Miller Digital Currencies and Venture Capital report at Bloomberg News. On the phone from our Palo Alto bureau. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim

Stinovic on Bloomberg Radio. Check it out shares a Biog. They're down about six percent in today's trade following an earnings update this morning. The company dealing with generic competition, and yet tim it did boost its guidance for the year overall. Let's get into it with Mike Browne, managing director and biotech healthcare specialist at a baired Mike this afternoon, joining us on the phone from New York City. Mike, how are you? Um? Great, Carolyn Kim thanks writing me on. Yeah,

thanks so much for joining us. Okay, we've got a few hours to dig into these results. Give us your takeaways from Biogen. Yeah. So, like most biotech stocks, clinical regulatory and strategic updates tend to be more important than quarterly earnings performance. And I think that's what you're seeing

here with Biogen today. So bad. Biotech analyst Briant Scorning, in his preview note for Biogen last week, pointed out there's two main issues that investors are focused on with Biogen, and that's the CEO search, and that's also their Alzheimer's pivotal read out of volcanamat, which is expected in the fall. The lack of positive updates or positive commentary on any of these two seems to be trumping what otherwise was

a really nice beaten raised by Biogen. So interested, m. Yeah, No, it's really interesting that those two things are not actually are outweighing a beaten raised quarter from the company. Yeah.

And I'd also say, you know, if you take a look, you are seeing some general weakness in the larger commercial biotech stocks today as we're seeing kind of a shift, as you mentioned the biotech boom, you're seeing a shift from the safety relative safety of those cash flowing large biotech stocks into some of the riskier areas of the biotech Well well, so wait, so are you saying that there's some overall biotech industry trends that are weighing down

Biogen today? Are saying Biogen is weighing down the overall industry, Yeah, Carol, I think it's a little bit of column an, a little bit of Columby the performance of biogin on their their earnings was strong. It's it's just really uh, you know, those two issues which which need to be resolved, and you know, there wasn't a whole lot of updates on the CEO search and uh for the pivotal Aislezheimer's read out,

which is expecting the fall. You know, the company did point to a broad range of potential outcomes there, which I think, based on conversation with investors, maybe taken as a flame negative. So help us out here, what kind of CEO is needed for Biogen at this point? Like I just remember years ago starting out, you know, when you talked about biotech, it was just like the upstarts, you know, and it's a lot of times there wasn't a lot of uh there's a lot of top line

growth maybe, but not a lot of bottom line growth. Uh. It was tricky. I mean, this is a thirty billion dollar market cap company. So, um, how do we think about these these companies and what kind of CEO is needed to take this company into its next phase. Yeah, I'll have to leave most of the commentary on Biogen going forward to our great biotech analyst Brian scorny, but certainly needs some strong leadership there as far as some

of the stumbles over the past few years. Uh, but I guess only the rest we can touch base and Brian down the road. What about when it comes to the Alzheimer struck, which you pronounced so correctly, and Carol and I have struggled with for months. Yeah, I think you know it's it's similar mechanism to add you holm, which we know how it worked out, But it's a

it's a highly powered study. Uh so you know, Uh, the fact is that if there isn't a fact, they've powered in enough to to have it have some positive read out. But again, the commentary today that they gave was some somewhat pointing to a broader range of potential outcomes. All right, So you are biotech healthcare specialists, So I'm just curious when it comes to the advice that maybe you give to your bigger, broader team. Is biotech a group that you think investors need to be considering at

this point? And and we're specifically, as I mentioned, it's up about over the past month, so that's quite a bump to the upside. Uh. I know there's been some deal flow once again. And you know, when you think about biotech, always think about the big farmer companies where they are looking for growth in particular. So what's the investment play, Mike in your view at this point when it comes to biotech. Yeah, the big question a lot of investors have on this rally is this a bear

market rally or is something that's more sustainable? And I'll say, uh, strateguous. A baired company did some really good macro research on historical kind of biotech bear market bounces and uh, you know, they tend to be very strong and very quick. So it's possibility that that's what we're seeing here in a

cold fade over time. But I'll tell you our fundamental research team that Bared biotech research team did note uh, and the Weekly a couple of weeks ago that short covering, which drove a lot of the initial stages of the rally, can actually lead to institutional buying as people started having fear of missing out. Did I did I miss bottom?

The stocks are still largely cheap. I mean, as much as we bounced off bottom, the XBI is still down roughly or a little bit over fift from its peak in February, so we have seen uh, some inbound calls from clients that suggests that there's some real work being done. It's something that's changed over the past few weeks. And

you've also seen some fund flows shift. Where biotech was bleeding uh fund flows out for much of the year, and over the last month or so, we've seen some pretty positive inflows there, which means there's there's some real buying and biotech and could prove that this is more sustainable. All right, we gotta run. Thank you so much. Mike Prone, managing director and biotech health care Specialists at BAIRED, joining us on the phone in New York City, although he's

typically based in Milwaukee. I'm mac journal Yeah, but you let me drive. Oh no, no, no no, no, honey, please, I'll do the dravels. I want to drive. It's a good question. This is the Drive to the Close music well don on Bluebird Radio. All right, let's get to it. We've just got about ten and a half minutes left in today's trading session, getting ready to wrap up that Wednesday trade, and we've got a new guest with us for the Drive to the Close. Kirk McDonald's portfolio manager

at Argent Capital Management. They've got approximately three point three billion dollars in assets under management. Kirk joining us on the phone from St. Louis Kirk, how are you. I'm doing great and thanctually having me on the show, Curl and Tim, Yeah, it's good to have you with us, help us, help our our investing audience understand where the market is right now. There's this debate going on internally

and externally about capitulation. Where do you fall? So um, thanks for the question, Tim, And as far as capitulation goes, So, the market, you know, had a horrible first half in the MidCap area where I where I work, it had its third worst first half since the inception of the Russell MidCap benchmark. So while capitulation may or may not be upon us when the market is down twenty one six like the Russell MidCap is, it's just an opportunity

for investors like us. So at an Argent Capital Management, we're looking to invest in the right company with positive change, and that huge draw down in the market for us as positive change. We can pick up some companies we've been looking at for a long time at a much lower price. I love the MidCap space we don't really talk about it a lot. I feel like it gets

lost certainly between the big and small caps. But if you look at it, uh, I'm just look at the SMP MidCap four hundred, it's down about this year, SMP five hundred, down almost seventeen percent, and then of course the NASTAC one hundred still uh, you know, down more than both of those industries. How do you think about it? And is a lot of it kind of a US

play here? Yeah, So the mid the MidCap space where I play is really just like anything that gets stuck in the middle, It gets forgotten about and people don't talk about it, and they don't have a middle children. Ask one of my systems on the middle child. I never know who might be listening and if they might get upset. But uh, not having to live through the middle child syndrome myself, but um. But yeah, So with MidCap stocks, one of their advantages is they tend to

be less exposed internationally than large cap stocks. So in the case of you know, we're in right now with the dollar strong um and the US economy in a better position, although you know it's a tenuous position, it's better than some of the international UM economies, the MidCap stocks have a good opportunity here right now to do a better job growing earnings relative for the rest of the their competitors. Where do you think we are in

terms of of of recessions right now? Because I'm looking at your notes that you sent our producer, Paul Brennan and having a hard time understanding you know, where we are in this economy. We've got mortgage rate spiking and of course we've got demand falling for homes but they're remaining expensive. We've got energy prices just skyrocketing, and inflation highest it's been in forty years. Yet the job the workforce is you know, still adding jobs. Where are we Yeah,

so right now? So UM, right now, where the economy is, it's still not technically in a recession whatsoever. UM. And the way we invest here at Argent Capital were really bottom up stock pickers, you know, looking for the right company with positive change. But we do take into account a little bit where we are in the market cycle and we try to be one third invested, you know, for the current market cycle, which has has been an expansion phase lately. That involves more value type of stocks UM.

But the next phase, should it be a recession, would it be more of the the steady growers, the companies that can grow their earnings regardless of where we are in the economic cycle. We keep once they're the portfolio exposed and ready for that type of a change in the cycle. So that's really how we look at it. We're not going to change how we invest based on are we going to have a recession or not prepared for either scenario? Right, So, and you look like you

said bottoms up. So you're looking at names specifically, and you have brought a few with us to chat about. One is the Tickers l Eng we're talking about Sneer Energy based in Houston, stocks up on us so far this year. I get it like the energy play, but they are very much involved in the infrastructure part of it, right, the pipelines. So Chanier isn't the pipeline. So really what

they do is they create the liquefied natural gas. So they build these these huge expensive projects that cost a billion or two billion dollars each the terminals, right, yeah, the terminal so it is delivered by pipeline. So they're more but they are more of the infrastructure play or exactly right. Um, So they charge their customers a combination it's based on the Henry Hub price of natural gas plus a look with faction fee, so they do make more money if the price of natural gas goes higher.

But they're really the play on the fact that in this case, Europe and that's the change that we were looking at, is now needs to switch their natural gas emplier from Russia to other sources, and the United States is a natural play for that. We're a very reliable supplier, one of the biggest producers of natural gas, and Engineer Energy is the world's largest producer of liquefied natural gas. All right, what about Zebra Technology z b r A.

It's a mid cap stock. Um, it's not when we talk about a lot here and you argue that that's your advantage, Yeah, that is absolutely to my advantage. And Zebra is a long term holding of our So the they're the largest producer of bar code scanners and printers um in the world and also r f I detags for tracking inventories. And the positive change for Zebra has been really this move to omni channel retailing. So we like to buy things and I do it every single day.

On my phone, I get it to livered in a day or two, or I sometimes drive by the store and pick it up, you know, in the parking lot. And they now produce software that enables retailers to do that omni channel retailing. And also they produce software and the tracking technology for the distribution centers that all of the online retailers and now the omni channel retailers are

increasingly building as well. And Zebra, you know, really is not well known, but it's around us every single day, and I guarantee you most of us will come in contact to it with two or three times a week. But I have no idea, just as I do myself check out. But I'm curious though it Why is it

down so much almost year to date? Yeah, so Zebra really it's down almost in sympathy with the rest of the tech sector, which was the worst performing sector in the Russell MidCap in the first half of the year, And it's down largely in sympathy with that sort with that sort of a down a lot more though, wouldn't

you say? It is down more? And part of that is I think it had a huge run towards the end of last year and what I saw with some of this docks in my portfolio and in the market in general, the names that had a huge run up at the end of last year, we're the worst performers early this year. But at Argent Capital Management, we really look to own companies for the long term. We have very low turnover about a year, so we're not as

concerned with the fact that Zebra stock prices down. What we're looking at the quality of that business right there, and that the positive change to omnichunnel retailing is going to continue. So Zeber really has a tailwind for sales growth going forward. I was just counting it's up seven from the end of through the end of last year or so. It has had quite a run so you're right, all right, we gotta run uh. So good to check in with you. Thank you so much, Kirk McDonald, Argent

Capital Management. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube. Sarah to Bloomberg Global News