Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
It is a battle among I feel like the old and new media titans.
A deal we thought was.
Agreed right, yeah, very much so, and Adela thought was agreed to. And then we've got a hostel off for coming in today, and we've got the White House's Commander in chief, Matt definitely watching.
I mean the target is Warner Brothers Discovery.
That's interesting that President Trump said there may be too much market share here with which by itself, you know, between Netflix and HBO Max isn't a surprise. But then he said he's going to be personally involved in whether or not this gets through regulation. So I think that should be a bit of a concern for Ted Ted Sarandos, who has tried to do everything right I guess of late, but really Netflix is viewed as this globalist, kind of left leaning.
Dare I say woke?
You know, company and entity, and it wants to take over this asset that Donald Trump sued to block a time warner at and T. You know this deal in twenty seventeen, so.
Way back when, right, I remember that?
All right, So let's get to it, because we've got our own Felix to Let, Bloomberg News Media and Entertainment editor. You know, he's the author of It's Not TV, The Spectacular Rise Revolution in Future of HBO.
He's right here in our New York studio.
And then out there at our Bloomberg Intelligence headquarters in Princeton, New Jersey, Bloomberg Intelligence Senior Media Alice get to ringing off on. This is such a cool roundtable. So let's start Felix with you. The detail we got the hostile takeover a bit from Paramount. It does top Netflix's offer. I thought this was a done deal.
It's not necessarily Actually, it does not top the tectives offer because in the Netflix offer, they're spinning off the cable astet, right, so they're not getting the CNN that.
Probably wouldn't want them too. Half.
Yeah, they're both saying that they have the higher offer, and it depends on how you value those cable networks.
Is there a deal that's better, that's preferred Felix, Let's start with you and one more likely to get regulatory clearance.
I mean they're both saying that they both you know, they're pointed to the finger at the other saying, oh, that will.
Never get regulatory approval.
You know.
The paramount is saying essentially that, yeah, Netflix has over three hundred million paying subscribers. If you combine them with HBO Max, you're going to have over four hundred million. That's too much concentrated power to streaming competition.
They have a lot more.
So that's Netflix's argument is that it's not just the competition isn't just between streaming networks at this point, it's competing for people's attention in the living room, which includes things like YouTube, tick talk and then that world. They don't control that much attention share.
Which is a fun argument, but I mean, if this were just a technocratic DOJ decision, they try to take the narrowest view possible, so they're not going to include YouTube and TikTok. Even if Carol, you spent a lot of time consuming content on those two on those things.
Yeah, but and so do I.
In fact, I often choose it over Netflix Prime and HBL. But that's not how the DJ traditionally views these kind of things.
So, Gita, how do they view it and what's more likely to get done? What makes more sense or listen, we're going to be talking about this in the new year.
Yeah, it's it's really anybody's guests right now, Carol. So traditionally, yes, they have taken the most narrowest definition possible. But I think the government also realizes that this whole video marketplace is rapidly changing. I mean Netflix has been the biggest disruptor of the video marketplace to begin with. You know, it's streaming disruptive traditional TV. Now what Netflix is worried about this is how a lot of you investors are kind of viewing this deal is does Netflix actually think
that they can be disrupted by short form entertainment? And that's exactly the point that you know, Felix was bringing up, do we have to broaden the market? And you know, people will argue, yes, we do, because if you kind of look at just share of online video viewing, Netflix and HBO Max combined actually have a lower viewing share than the dominant force, which is YouTube.
I got my math, by the way from you this morning, Etha.
So Gita pointed out that the Netflix bid is twenty seven to seventy five. Plus you had about four dollars which you'll get for the spinoff of the cable assets. It gets you to basically thirty two. That's a little
bit above paramount. But Geita, if Warner Brothers Discovery, because David Zaslov wants to get as much money as he can, right, if they somehow get broken up with by you know, the FTC or the DOJ or whatever, and they get the five point eight billion from from Netflix and then do the paramount deal, which seems like President Trump will be much more in favor of.
Does that end up giving them more money than anything else?
It absolutely does.
And you know, this whole bidding war, I mean, the one person who's really enjoying this I think should be David Zaslav and you know, the Warner Brothers Discovery board. I mean we started we started matt at twelve dollars, you know, that was you know, on September twelfth, and
this is where we've ended up. I think The big worry today, and especially as you kind of see the Netflix stock trading, is that is Netflix really going to be forced to come in with thirty dollars a share because you just kind of look at the optics of the deal paramount seemingly having the better offer, although the deals are different, but you know, just for a first look, it looks like they do have the better offer. So I think investors really concerned right now about whether Netflix
will have to bid up. And that's an even better situation for David Zaslav. So he's laughing all the way to the bank here.
Well, at the screen Time event, Carol, you and Tim were out in California right.
Wanting to go there.
Yeah, because I thought you guys did great coverage and Lucas had a fantastic event, and David Ellison, yes, gave an answer to the question about his family's closeness to President Trump.
We have a good relationship with the administration. And look, I think if you look to that, I do believe other things that have been rumored about right are very large scale players that would effect that could potentially create monopolies obviously in the ecosystem. And again, I think when you look at the lens of consolidation for us, keep going back to it. It's always how do you create
long term value creation? How do you put yourself in a position to produce more content, not less, and how do you ultimately build something that is better for the consumer.
All right, So that is Paramounts Guide and CEO David Ellison, he talked about at Bloomberg screen Time that was back in October. So, Felix, come on back in here. I mean is we also have Affinity Partners Equity firm led behind Jared Kushner, who is of course the son in law of the president. You know, part of paraments hostile takeover a bit for Warner Brothers. So do they have an advantage?
It seems like a lot of things merging that they might.
They haven't set they have an advantage, and having the president's son in law as part of his bid is usually a pretty good sign. But at the same time we see that you know, today Trump came out on Truth Social and you know, complained about the Ellison's management of CBS News in sixty minutes because of the interview where he was criticized in the most recent episodes. So these things can be somewhat fickle, and let's not forget that Paramount has, you know, sort of anti trust issues.
Also these you know, the deal went through with Paramount, that's two Hollywood studios that would be combined to streaming services not as big as Netflix. Granted you'd have multiple news outlets CNN and CBS, so they have their plenty of overlap and in some ways have more overlap than Netflix and Brothers Felix.
Can I ask you though about I mean, you cover the entertainment industry right. I was talking today to Michael Wolfe, he of MTV previously and now Activate, and he says that the content creators, or the creative community, let's say, is much more in favor of the Paramount bid because when you listen to David Ellison's full interview with Lucas Shaw, they seem really focused on creating good original, you know, solid content, like not having AI make sequels of marketing products.
So is that true that the you know that Hollywood wants Paramount to buy it.
I think David Elson has been out there making that pitch. We really support the creative community.
Look at all these.
Concerns already, mister, have grown up watching all the movies and mister.
Top Gun he loves the movie's.
Expensive though, unless it does really well.
You're so rich though, And you.
Know, you have people like James Cameron coming out recently and expressing concern about Netflix, you know, saying that basically, if you look at Netflix's history, they've been very you know, hostile to the notion of long theatrical releases, that this would be kind of the deathbed for Hollywood.
Move and movie theaters. So yeah, Ellison's Ellison.
Man who brought us Avatar that uses a lot of technology. I'm just saying, but go ahead.
Well, you know, saying, hey, we want to see this on the big screen. You need one hundred days in theaters exclusivity for this to be worthwhile. And you know, you're kind of a soccer if you believe Netflix is really going to do that in the long term. Their business is providing entertainment for people, and it's a.
Pretty convincing argument.
It's interesting stuff.
Hey gee, to save forty seconds for you to wrap up?
So I don't know, does this go to I don't even are we in a third round? I mean, Comcast is out right, so like Womdcast is out yet, So what's the timeline we're looking at here?
Ten days, so the tender offer expires in twenty days. The Warner Brothers Discovery Board has ten days to respond to paramounts to see how they want to proceed with this whole tender offer. But they have confirmed receipt of this unsolicited tender from the paramount sky Dance people.
Am I remiss to ask? Does David zoos Love have a job after it with a really good pay package?
He doesn't need one.
He's gonna be so right.
All right?
Stay with us. More from Bloomberg Business Week Daily coming up after this.
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The other thing top of mind, no doubt about it, Matt, is a FED decision, and that may already be factored in when it comes to you if you look at kind of the equity trade today.
So I want to see what I say. It's at the bottom of my mind. It is the FED decisions at the top of your mind. They're going to I do I see three days? Oh my god.
All right, but we're going to get all right. Just put him aside for a second. Let's bring Kevin Gordon.
He's head of macro Research and Strategy SCHWABZT for Financial Research.
It's like, I don't know, keeping cats in control here, Kevin is here right in studio. Kevin, though, is the cut already priced in?
And is it all about kind of what we get in terms of the summary of economic projections and whatever commentary we might get for the new year?
Well, yes, I think if you look at the word function on the terminal and then compare that to.
You love that function.
Yes, pricing you know, for December actually relative to the equity market, if you look at it over the past couple past month, both of those have been neck and neck. So you know, I would say it's fully priced in the sense that you know, every time the probability of a cut is increased sharply, the market's done well, and
vice versa. I think beyond that, you know, one of the one of the reasons I think that we're probably not going to see as many cuts next year is because the inflation backdrop and we're putting out our outlook
at some point later today. But I think that the inflation backdrop is going to be a little bit tree in the sense that there's probably some upside inflation risk from tariffs that are expected to stay high, which have already put upper pressure on goods prices, but also fiscal stimulus coming from the big Beautiful Bill.
And I think still a even if.
It's a wobbly but still relatively resilient labor market that keeps people spending on a month to month basis, if you add all of that together and put it into an equation, I still think you have upside inflation risk plus from a personnel standpoint for the FED. If to keep in mind that two voting members rolling onto the committee, onto the voting committee are the heads of the Cleveland and the Dallas FEDS, and they've been leading much more
hawkish recently. It's Beth Hammick and it's Lori Logan, So I think that needs to be taken into consideration when you think about, especially the emphasis that has been now pushed on individual member commentary. That hasn't been the case up until maybe the past couple of months, where we've been paying so much attention to what each individual member has been saying. Now there's much more focus on that.
So I think for those reasons, you probably don't get as many cuts next years as maybe some people they're expecting.
A narrative around that. What do you think that.
I mean, it's we're looking at with the work function getting down to a terminal rate of three percent even basically, yeah, right between three and three and a quarter right now.
So that's moved up a little bit.
And as we hear so much about the economic growth that we're expecting next year, as we hear so much about the stimulus we're going to get from one big, beautiful bill, I just wonder if it's going to be hard to even go that low because inflation, if you look at CPI, it's going the wrong direction, and it's fifty percent over the Fed's target.
Yeah, we're averaging closer to three percent. That seems to be more like the floor even if you don't go because it's not our expectation that you go back to anything akin to twenty twenty two or twenty twenty three.
I mean, getting close to you know, eight nine percent on CPI barring some major shock is just really not in the car, so we've been there, so this only three percent still hurts well, but exactly so, I think it's seven't gone down right, and you're now four and a half years of the FED being above its target. I think at some point that has to come into the equation and it'll matter in terms of how they set policy.
So really, I mean, this is just.
Them getting closer to neutral what they think of as neutral. If it happens to be the case that inflation pressure is reaccelerating and they're maybe too close to neutral, then you can maybe start talking about a hike. I think it's still a little early for that, but you just have to keep in mind that they've been now so far above their inflation target for so long, and labor has essentially been at target almost the entire time. I
mean four point four percent for unemployment rate. Yes, it's risen over the past year, but it's been number one gradual and number two consistent with a fully employed labor.
Market thirty seconds.
So what does this mean for the equity markets?
I mean, if there's earnings, if there's an economy that's growing, if the labor market doesn't fall apart.
Well, the earnings picture just by itself. I mean, if you look at every sector so far, there's expectations that you're going to get pretty solid earnings growth. For all eleven gift sectors in the S and P, only three are expected to have earnings growth that is slower in twenty twenty six relative to twenty five. So that in and of itself just shows you that it's not just a couple of sectors or even a couple of industries that are carrying the market higher from an earning standpoint.
It really has broadened out.
So we think that from an index perspective, maybe it's not as great because if you don't have the megacaps contributing mostly to the gains, then the index performance might not.
Look great, but you could have relatively.
Healthy breadth under the surface and participation that could mean for maybe a better year for equal weighted relative to cap.
Waight, thanks for coming by, Thanks for having me.
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eas during Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Well, change is a foot at Berkshire at JP Morgan Chase, there's kind of a connection.
Between the two.
We want to get to what you need to know and with us is Shrinatarajan, Bloomberg News Chief Wall Street correspondent, right here in studio along with Bloomberg News US insurance reporter Alex raj Bandari. First up, I want to talk about Berkshire Hathaway. So Alex talk to us about these leadership changes that are going on. It is like the company getting itself ready for what happens post Warren Buffett.
I mean, he's already.
Announced his retirement right but once he's kind of officially off the leadership at the company.
So what we know is Greg Able is taking over our next year in January, and this morning they announced this view of new appointments and some departures as well. The big one and the one that everybody's talking about it we're going to talk about today is Toddcombs, who was one of the two stock pickers for Buffett along with Ted Weschler, and they were managing with Buffett this mammoth two hundred and eighty billion stock portfolio.
So he's gone.
He was also the CEO of Geico.
He's been doing a good job there, and then analysts have been praising the turnaround at Geico that's been struggling in recent years but gaining grounds in the past quarters. But that leaves a question mark as to what's going to happen to the stock portfolio and who's going to manage it Because Buffett no longer in the picture, still less chairman, but not at the helm. That means Able's
going to do it with Weschler. But it's just two people for a big portfolio, and that's a big topic for you know, Buffet watchers and Berkshire fans and investors because they look at what where the investments are going.
Is it fair to use the term exodus or even worse, brain drain right if Warren Buffett's leaving and I didn't get the top job, like I'm out.
So this morning hasn't been only about departures. There's only been some appointments of people that were not in the lights so far but have been elevated to bigger roles. So that's important to point out. But yes, what you say, this raised the question as to how many people we
want to work with Able going forward? And there was an analyst this morning who put out a note right after the appointments to say that he expected more to and over going forward, because it doesn't have the same cachet to work for Able than to work for Buffett.
Before we get to the JP Morgan, why did comes leave Berkshire? How long was he there a while?
He had been there for more than a decade.
It's not been said exactly why he's leaving, but he had deep ties with JP Morgan, so that might be an explanation.
Also, I'm sure they wanted him. I mean, as you say, he was in charge of a massive portfolio. That guy must have been sought after on Wall Street. But just to touch on what's happened at Berkshire, it's so weird. If you put up the shares versus the S and P from April, the S and P takes back off again, right obviously we had the Liberation Day dip from April.
Berkshire Hathaway shares.
Just come down like they've done. It's a mirror image of what the S and P has done. What is the concern about Berkshire Hathaway? Is it that Warren Buffet's finally leaving, is this key man risk?
Well, there was talk when he announced he was retiring that they could be a buffet premium that would evaporate, that could be supporting that thesis. There's also a lot of other questions. You know, I've reported on the earnings in recent quarters and the softening of the economy in general.
Say they play big time into the economy, right exactly, and so not to say that the concerns for the economy are translating directly into the concerns for Berkshire, but there's been some softening of the top line growth and analysts have been, you know, voicing some concerns about that for the future.
The company has had a very rare sale rating from an analyst recently.
Because of all the headways coming the way.
So, yeah, it's a big change, yeah for copy so identified obviously with its founder. All right, so Todd Cooms leaving Berkshire after a decade, let's bring in Streat not a raj on because JP Morgan has hired him Tatus there was a relationship there already.
There were ties tell us about what this news is about, what does this do for JP Morgan? Why is it happening.
Well, Jamie Diamond has been spending a lot of time talking about this national security initiative.
You know of having heard JM.
Diamond over the years, especially in the last twelve to eighteen months, he has been talking about the geopolitical risk. He's been talking about the need to be independent and not dependent on other countries, and he has been putting money where his mouth is. They've talked up this one point five trillion dollar financing commitment in this space that is in any industry where you know, critical supply chain, in electric grade, anything where you would look at it
and say this is important and crucial for America. He's saying, we have to make sure that we're not reliant on any other country. So, in addition to that financing commitment, which is about a fifty percent increase over what they would have anyway done, is what JP Morgan says, they're also putting about ten billion dollars of their own balance sheet capital as direct equity investments, and that's where dot Com comes in, and he will be in charge of
overseeing that investment. He's not an alien to JP Morgan. For nearly nine years up until this announcement, he was on the board of JP Morgan. When he joined the board as the forty something, he was the youngest member of the board, and I checked this morning. As of the time of his departure, he was still the youngest member on the JP Morgan.
Board, which is why I know.
I teased, like, could it have something to do with succession planning? Does it possibly? I mean, this is a guy who's going to have a direct line to Jamie Diamond on not just this but other strategic industry.
Issues, if you will at the firm.
It just I don't know. Look, it's a fair question, and I know I rolled when you asked that question.
I imagine me and my daughters will I will give you a reasoning for that is, at this late stage, if Jamie Diamond had to turn to someone outside of the JP Morgan stable to find a successor, in some ways, that would be considered a failure for Jamie Diamond. Right, he's been there for twenty years at the top. You assume that he's built a strong enough bench that he can.
Pick from anything.
Did he left city or was kind of pushed out came to another.
Firm, Which is why we don't remember much about who was the predecessor to Jamie Diamond. Jamie Diamond certainly does not want to be forgotten. So again, if he were to go this start, it would be completely out of left field, which is why it's not the number one predicted scenario, even though because you asked the question, we will put it in the list of possibilities.
Oh nice, you got seeing the list.
I got the job.
Speaking of big names, the advisors to Todd Coms on this strategic SMI group are I mean masters of the universe, Paul Ryan, Right, Condoleeza, Rice, Robert Gates. Those are just the Washington names. Jim Farley, Michael Dell, who just gave one of the biggest gifts in world history. I mean, these are and Dunwoody huge huge names, isn't Jeff Bezos?
Jeff Bezos good point? Also an important guy?
You miss the most important name of the list.
Well, for me, Jim Farley is the most important guy.
Fit fair enough?
Better not.
But I will also tell you why I'm talking about Jeff Bezos because there's another dot Coms connection here, Because you will remember a few years back Berkshire, JP Morgan and Amazon set out to, shall we say, solve the healthcare problem in the United States, and the connecting factor in those discussions in that venture was dot Coms.
He was critical to that mission.
Of course, about two to three years in they disbanded and they realized that healthcare is a harder problem to solve than just three successful corporations taking a swing at it. But they did make a go of it. And if you consider the top of the house of those three films, Warren Buffett, Jeff Bezos, Jamie Diamond, and tot Coms in the mix, he clearly knew these people well. And that also is another reason you have to assume he has Jamie Diamond's respect.
So in these guys, Alex, just to bring you back in, you cover Berkshire Hathaway, you cover insurance. It's not, you know, operating in a vacuum. They work with the biggest banks in the world on a regular basis, and particularly JP Morgan and Berkshire Hathaway have had a pretty close relationship.
Ye Sweeter said.
Tot Coms was an incremental part of the discussion around the healthcare venture, and insurance and banks are two critical elements of the financial system and they work together to get financing to the economy in different ways, but they do work hand in hand a law.
Hey, that healthcare thing didn't really work out.
Didn't know they had to shut it down after a couple of years.
Well, why is it such a tough nut to crack? It's pretty easy because health care.
Is massive, and it's complicated, and it's political, and it's.
A lot of things. I mean, it seems like it would be pretty simple to solve.
Wow, someone dig mat Miller to Washington. It's pretty easy.
That health care for all the mad Miller twenty twenty eight clds for everyone.
One thing I want to ask you what does Todd Coms bring to JP Morgan?
Well, I mean this investment acumen that has been developing, developing over the years at Berkshire has a stock pick here. He's going to be part of the deployment you know, of the billions of dollars in the economy. That's definitely a big asset for for JP Morgan in that venture.
All Right.
One thing I also want to do shot while we've got you and mcin continue talking about this. But Jamie Diamond, you know, when he speaks anywhere, we're all like woo, you know, kind of awake. He spoke in a panel at Reagan National Defense Form. It was hosted by Bloomberg Caroline High and he's he got into I mean, the whole conversation was talking about defense globally and so on and so forth, but his point bottom line was about Europe and its problem.
So I want to bring that to everybody.
Listen up.
Europe has a problem.
If we ever write a book about how the West was lost, it will be because of the following will because of we didn't get act together here and we go through all the policies here that we didn't have the strongest military in the world and we allowed Europe to fall apart. They have some wonderful things, but they've gone from ninety percent of the GDP of America to sixty five. That's not because America did anything bad to them.
It's their own bureaucracy, their own costs, their own They do some wonderful things on their safety nets, but they've driven business out, they've driven investment out, they've driven innovation out. It's kind of coming back. If they fragment, you know, then you could say that you know that America first will not be around anymore. We it will hurt us more than anybody else because they are a major ally in every single way, including common values, which are really important.
All right, That, of course, was JP Morgan's Jamie Diamond at the Reagan National Defense Form stre I feel like when Jamie talks, we all listen. This was obviously a discussion about defense connections between the US and Europe. Whether it's cockroaches, whether it's stormy sees, whatever, what Jamie says, we take note. How should investors read what he had to say, or what do you think is important there?
Look, at least from the business side of things, he's pointing out what any business executive will point out, that Europe is going through a bit of a challenge and the economic numbers show that. But his broader, bigger point about fragmentation in Europe somehow disbanding the soul America first idea. That's a hard one to follow, but more interestingly, it potentially goes against the kernel in terms of how the
Trump administration perceives Europe. Right now, if you have followed all the commentary and the discourse over the weekend of the last week, in fact, going back to the start of the year, when JD. Vance was at that Munich Security conference and that diet tribe against Europe. It's very clear that the Trump administration wants to take a tough
stance on Europe. And you know, Elon Musk was one of those who said Europe probably has to disband the European Union and it's much easier to deal with every country on their own and they will care for the sovereignity. But it seems to be a very interesting viewpoint that the Trump addmanistician has taken. That's counter to the worldview that has been adopted by the United States since the end of the Second World War.
A real change. Stay with us. More from Bloomberg Business Week Daily coming up after this.
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That brought up Rare Earth.
So that is something that we are talking about a lot this year. It's kind of the land graph I feel of the last year or so. We're talking about the world in a war of sorts to show up their critical mineral assets and just today we saw the German Foreign Minister claiming progress and efforts to secure supplies of rare earths from China, saying the government in Beijing had indicated it would be constructive in handling your p
and orders for the materials and the metals. The New York Times out with a story in how Japan built a rare earth supply chain without China, and then are of course they're all Matt, those public private partnerships and investments that we've seen the US government has been doing to build up its exposure.
Yeah, exactly, investing in companies like John Paulson's company too.
There's a lot of mind.
Ar yeah exactly.
All right, So we want to talk to someone that we've leaned on big time when it comes to this space.
Graceland Baskern.
She's director of Critical Mineral Security Program at the Center for Strategic and International Studies. She's with us from I believe, from washing Middleburg, Virginia.
Oops. I need to read our chat every once in a while.
Yes, you do.
She's from Middleburg, Virginia.
Hey, good to have you back with us, Graceland, And here with Matt and myself, there is a lot going on this land grab. I don't know where are we in this process? And how do you make sense of some of the headlines that are going on. Our country's just kind of figuring out deals and is I don't know, extra production, extra exploration underway.
What a year it has been.
If you had told me at the start of twenty twenty five that rare earth would become the most powerful currency in negotiation in reforming our geopolitical alliances, I wouldn't have believed it.
You know what we've really seen this year.
And remember ahead around the APEC summit there were the third round of negotiations to restore access to rare eers. So we saw them in London, we saw them in Geneva, and then we saw them in South Korea. Since then, the US government has really done two things. You've seen both that acceleration of domestic efforts with the Vulcan deal for rare earths to mine and process those rare earths and get some permanent magnets. But you've also seen upproliferation
of the continued international efforts. So most recently you saw during mbs' state visit from Saudi Arabia that the US Department of War agreed to become a forty nine percent shareholder in a refinery there.
And what's really.
Important is when you look at the spectrum of rareers, we are continuing to drill into two things. Those heavy rarers, right because here in the US we have the second biggest producing rarers mine in the world.
However, they are.
Pretty lightly in doubt on the heavy rarers, and we know that Saudi has bigger deposits of those. This second thing is we're really trying to build our permanent magnet manufacturing capabilities. We do not want to be held hostage any longer than we have to.
Ye, I was going to say, too late.
I talked to Gracelann automotive executives a lot in my side gig here, and they have expressed real concern with the idea that we would ever process rare earth materials, that we would ever refine rarest materials in the US, because a lot of these men and women who work for carmakers have toured the plants in China and say like, I never want to go back there again.
I wouldn't let my family anywhere near there.
It's such a dirty and dangerous job that we simply cannot do that in the United States of America.
What do you think about that.
I don't think we have a choice, quite frankly. And I you know, I'm originally from Detroit. I love our auto manufacturers. But the end of the day, it was the auto manufacturers that stopped manufacturing in May when they had a supply chain disruption. So what we know is that, you know, having a close to home or at home supply chain is no longer an option.
What I would also say to you is challenge the news.
So what is the process?
Like?
Walk us through the process? What makes it so dangerous? So dirty?
And by the way, if I have a vote, they're not doing it in New York, not in my backyard, so I don't know where it's going to be.
Certainly not in your backyard. I would probably agree with that in New York.
Now here's the thing. You've got to mind those rare eers.
And then the process of separation is very pollutions intensive. You're talking about air pollution, waste water, waste gases, et cetera.
It is messy.
But what we also know is that the Chinese way of doing it is not the cleanest way of doing it. Mining and processing today is much cleaner than it was twenty years ago. So when we look at like I was out at MPY Materials Mountain Pass Mind, one of really fascinating things is obviously this mine is in a desert. You have a lot of tension, particularly with the frequency of you know, droughts and wild fires on water. They have a completely closed loop water system that actually keeps
all of that water within the mine. And again that's not a common that's not commonplace in China. So we're actually learning how to innovate and do it cleaner and better than the Chinese have ever been able to.
So in the land grab, if you will, when it comes to critical minerals, I mean, where is everybody at this point? I thought I recently saw a story about just how much the US has progressed in this area in terms of lining up deals.
Absolutely, the US has made a lot of progress. So I want to point to the fact that when we look at some of the bilateral agreements and deals that we've signed this year, you've seen these agreements being made and signed in the context of Japan, Australia, Saudi Arabia, You've seen you're seeing DFC financing our US government financing going to Brazil.
Now.
We're also accelerating our mining production and processing here at home.
So these are all really big steps that we're doing. It.
Are we going to be self sufficient? Secretary bustiness that will be self sufficient? And in two years that's pretty unlikely. We have to remember we're activating a very long term industry. You know, ten years from now will look very different. We're also not talking about a huge market. This is a small market, so two years is a bit over ambitious given how long the timeline to developing these capabilities is.
But we are you know, this year is way ahead of where we were last year.
Gracely and as someone from Detroit, you know how important rare earths are in our automotive production chain.
Is it possible to engineer them out somehow?
And just got thirty seconds?
Yeah, and we're starting to.
I mean, if you look at BMW, they've produced the first engine that doesn't use rareers, right. But the difference is, you know, we're kind of getting to that nascent level of innovation, but to the point that we don't need them seatbelts, steering wheels, door panels. That's still quite a ways away.
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