Stocks Get Hit as Weak Treasury Sale Boosts Yields

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Thirty year yield starting about five percent sign a dimming investor demand.

We've been talking about this a lot.

We saw the move equities came down, but it came after that treasury auction, sixteen billion dollar treasury sale. Lackluster demand moving yields up along the yield curve. But it turns out, Tim, investors are worried about a ballooning deficit.

Yeah, look no further than what's happening on the long end as we speak with yield hire by ten basis points right now. Michael McKenzie is rates reporter for Bloomberg News. He joins us here in the Bloomberg BusinessWeek Studio. You were in here on Monday when we spoke about the ten year briefly or the thirty or rather briefly heading five percent. We've blown past that. What's the signal that's sending. Is it about the spending bill? It's about the tax bill. A lot of it's due to that.

I think it's really interesting on a day when stocks start to take a hit, you don't see really any pullback in the celloff in treasuries. The other reason you think to observe today is that the ten year briefly got above fall sixty. If you think back to last month when Scott Besson stepped in and told Trump, hey, let's do a ninety day delay on tariffs because we're just hitting close to fall sixty on tens. We edged

So does this have to do with you know, I kind of always go back to this, you know, Michael, certainly yourself, A lot of folks at Bloomberg, a lot of people on last kind of get the treasury trade right when things are happening. But I do think about the world at large and like what it means, is

So that's that's that's what we're beginning to look at here, because I think what you're seeing here is if you look at developed world countries, they have aging populations. There is a much greater need now for fun for retirement and medical costs. If you look at a lot of the issue with the US budget at the moment, they don't really want to start attacking and reducing the entitlement spending now because it's just such a huge vote loser.

We Askir Eric Wahlson, Congressional reporter up on the hill watching this big, massive, big, beautiful Bell make its way through Congress.

He said, you know, despite what you might be hearing from the.

White House, it's a defit deficit increasing package, and so netnet folks, it's going to add to the deficit. Michael, thank you really appreciate it. Checking in on that treasury trade are on. Michael mackenzie follows the rates market here at Bloomberg News.

Joining us here in studio.

You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eas during this listen on Apple Karplay and Android Auto with the Bloomberg Business app, or watch.

Us live on YouTube.

The worries that we are seeing play out once again along the treasury market, the treasury curve.

We had an auction that didn't go so well.

Demand was weak there and so you are looking at really the longer end of the year curve bopping up in a big way. We hit about four point six percent on that ten year note. Got a two year note that has been trading around four percent as well, and so there are concerns again about this massive spending that's making its way through Congress has some ways to go, but it also will add to the deficit, and so deficit hawks are not happy about it. Investors on Wall

Yeah, also checking out what's happening. As you peel back the layers of the S and P five hundred, you actually see Apple as the biggest drag on the S and P five hundred right now, followed by Nvidia down one point eight percent, Microsoft, Amazon, Tesla, United Health Group among the biggest decliners as well. I want to bring in Sandy Villary, portfolio manager for Villary and Co. Joining us from New Orleans. This is a four generation family run firm.

Carol.

We speak with Sandy all the time. Sandy, good to have you with us. How are you good?

Thanks Jim, Thanks Carol. Good to hear from you.

Yeah, good to have you join us today. I just want to get your thoughts on how you're looking at what's happening in Washington, because that's really what we're seeing with the market reaction today, at least with that bond auction, that tencent equities tumbling today. What's your view there?

Yeah, I mean very we're very stock focused, but I will say it's impossible not to pay attention to it because just you look at what happened in twenty twenty five so far, all about the tariffs. Now we've got the new bill that's going to certainly increase deficits a little bit. And to your point, we had a you know, the twenty year auction was certainly weaker, and now we're seeing yields back to where we started the year on a four to sixty.

So it's hard to start.

To avoid a lot of what's going on and trying to focus on individual names.

Yeah, exactly. And you've got your villary equity fund. I'm looking at it up about one point six percent on the year. If I look at your balanced fun it is up about three point four percent year to date. How much movement have you guys been making in and out at this point.

Yeah, we started the year very defensive after a really good twenty three and twenty four, especially for the S and P. It's so tech heavy, so we were more defensively positioned. We had some cash, and then when we got into the lows, those early April lows, we started to buy and we got about twenty percent through what we wanted to before the market just v shaped and went right back up. So now we're back to where we started the year, and we're getting more defensive again.

All Right, so let's talk about kind of where you are committing money. And I'm assuming these picks are something that have been recent buys, but you can correct me if I'm wrong or right on that. Republic Services, we're talking about a seventy eight billion dollar market cap company.

We're talking about waste management.

Stock has had quite a run this year, twenty six percent recent buy adding to it lay it out for us.

Yeah, I would still buy it.

This is an incredible business that just as long as people continue to get their garbage collected, we feel good about it.

A mid single digit free cash flow compounder.

They just had a great quarter and they're getting more into recycling. They've got two polymer centers, so fundamentally they're.

Doing everything right.

And it's where I want to be, which is you know, larger cap defensive. So I think it's going to I think it's going to do well throughout the duration of twenty twenty five.

Another name that you like on holding, I own their footwear, their sneakers full disclosure. Full disclosure is not where I'm talking about there, you know, SEEFO like we've had them on, We've talked with them. This stock has been on a tear you're talking about, up about fifty seven percent twenty twenty three, up about one hundred and three percent in twenty twenty four. This year it's up to shy of nine percent. Here again, how long have you owned it? Have you been adding to the position?

Have you where? What are you doing on this one?

Yeah, we bought it frankly, not much longer after the IPO, which is all the way back in twenty twenty one, So we've had it for some time and that's kind of our styles to buy and hold, you know, over time. We did add to it not too long ago, and we still think it's going to do well.

Now.

If you do have a choppy market and things are weaker, this is a great name to add on any weakness. They're just getting started still, in my opinion, probably grow earnings at twenty five percent over the next three years, and they're starting to get into a pail. They're getting more stores out there, probably closer to one hundred, and if you're worried about supply chains, they get about eighty percent through.

Vietnam as opposed to China.

So I just feel like it's still going to be moving in the right direction. And if you get some weakness, you get an opportunity to add to it.

And I would did you buy in early April after it was hit?

This wasn't one that we bought in April, unfortunately, but we.

It's up about sixty percent since there. I didn't either, so I'm with you, but yeah, okay, you didn't.

Yeah we did.

We bought two other names. But what an opportunity anytime you can buy a great company like this, there's still just running on all cylinders. And you know, in our opinions, you just you just you buy it on on weakness.

We just we had other names we wanted to add at the time.

What you said, you added two other names off of the April sell off? What what were they? I'm just curious.

It's interesting.

One one is a company called Pinnacle Financial that is, uh, you know, a bank in Nashville that we really like, and our intention was to take a larger position. We just never got the opportunity to do so. Unfortunately, just because of the V shape, all of a sudden it was traded, you know, just got to a multiple it was a little bit too high, and we added to a little bit of Striker, just knee replacement, hip replacement, probably on the safer side of what was going on

Least the Pinnacle.

Oh okay, So in other words, you did buy Striker at the low, but Pinnacle you saw.

It, wish you had, but hadn't bought it. You didn't buy it.

So not to get into doing but we bought about twenty percent of our position, and then by the time it V shaped, we were sort of boxed out from finishing it.

Okay, So we actually kind of sold.

What we had and we looked at it if we do get more choppiness in the next month or two.

Pool Corporation, you know, I pulled up the dees page on the Bloomberg terminal. It's down a little more than ten percent this year. I actually was expecting it to be lower because I recall late last month the company reported earnings that they essentially said, fiscally, your earnings per share will come in just about what analysts saw. But they did report first quarter earnings per share that came in shy of estimates, in first quarter net sales that

No.

Yeah, So what happened in twenty twenty three they were about about seventy to seventy five thousand new pools built, and now we're down to about sixty two thousand as you closed out twenty twenty four. So about fifteen percent of their business is new pool construction. It does carry higher margins and it's a great part of their business, but two thirds of their business is just repair and maintenance.

Of your swimming pool.

So this is a true, you know, long term hold where as long as people are putting chemicals and chlorine into their swimming pools, they're remodeling and every you know, basically every ten to twelve years, you might have to replaster. These guys are as big as their top ten competitors combined. And so when you get weakness in one little part of their business new pool construction, which is important, and that kind of pushes the stock down to a reasonable evaluation.

Hey, one thing I'm curious stand at this point are you hire in terms of your cash allocations and your funds right now?

Kind of keeping some powder dry?

Lack of a better expression, but often used right in environments where we're not quite sure what's happening next. Are you keeping more money handy and ready to put to work than you normally do.

Yeah, we do have higher cash levels, and we sort of came into twenty twenty five like that, and then we tried to We tried to invest what we could. We just didn't have long enough. We didn't think the whole market malaise would be you know, three days, and so we didn't have enough time to put it to work. But now we we did raise a little bit more cash, and so we are cash heavier than we have been. And it wasn't necessarily that we were worried about valuation

So we go to the sidelines.

We will get a little bit over four percent in money market and just wait for those opportunities and.

Ideally we see him, you know, maybe over a week or summer.

I've heard Warren Buffett say the same thing.

Yeah, no, that's right, and uh it's funny talking about Pool Berkshire Hathway digits. Yeah, I saw there's their position you know, middle of May by about nine hundred thousand shares, so they've become a top five year old.

So good company with those guys.

But yeah, what are your well, what are your you know, people really try to parse through every single thing Warren Buffett has to say at annual meetings and whenever he opens his mouth to try to figure out what exactly he's going to buy next, what are your you know, as a value investor, what are your what's your what are your parameters in an environment such as this to say, okay, I'm ready to get off the sidelines and buy this individual company.

Yeah, and that's where we were, and that those April lows. We've got a laundry list of ten names that that really meet our criteria, which are just having a company that just absolutely dominates their niche and Pool certainly fits that. Build on Semi Republic being the next, you know, the number two player behind waste management, but a really dominant franchise.

That's what we're looking for.

And many times you have to pay up for those types of businesses. But if you get a if you get you know, market uncertainty and things that are going wrong from a macro or a DC standpoint, and you can you can get into one of those businesses.

That's what we always look for if you.

Get we've gotten that sandy market uncertainty, questions.

About the outlook.

I am curious in a day where we're all, you know, seeing nervousness, risk off come back into the equity trade and seeing those yields move up again. An argument that you know, go back ten twenty years. We had concerns about the US federal deficit. So I am curious how that factors into I understand your top stock picker looking

Yeah, I do think as yields pick up, I mean, if yields keep climbing, and you know, I do think that's at the end of the day going to dampen equity returns as those go a little bit higher. You know, I think there's when you look at terrorists and everything else that are going on. I think that causes you know, boards of directors of publicly traded companies to sort of pause on some of the things they may have been doing. And I'm not calling for a recession, but I am

I'm sort of looking, you know, towards the end of the year where I.

Think that that if you looked at a Vanguard value index, I think it could outperform say Vanguard Growth And if you look over the last decade, growth has outperformed value by about seven percent annualized.

I'm also looking for some reversion to the means.

So in general, I'm trying to find those cheaper dominant companies in the market and trying to avoid some of the larger cap expensive you know, mag seven names.

What portion of your assets under management right now do you have in cash?

I'd say in general what probably like fourteen or fifteen percent, And what do you typically higher than we normally are you so what's your normal?

We're probably closer to four or five percent.

Okay, do you anticipate going Look, you can't see the future, none of us can. But just in terms of the way you're thinking about this market environment, do you anticipate getting to that four or five percent level this year? Are you willing to stay on the sidelines until next year?

Now?

We do not like to be this cash heavy.

And again it's not that it's more of a buyer strike, right, we just can't find those companies that are cheap because they've just this rallied on this as V.

Shape or covery that we just had.

So I hope to be, you know, ninety seven percent invested. You know, as we get through the year, we just need to find those those names and put that cash to work. So a bit of an anomaly to be this cash heavy.

Frankly, Sandy, really quickly thirty seconds anywhere along the US Treasury curve that you find attractive or you just staying.

Away at this point.

I know you're in corporates and other things, but I'm just curious when it comes to US treasuries.

Yeah, I would say if we if maybe they rallied a little bit further, maybe we'd get more interested in and picking up some we do have, you know, about twenty five percent of our of our balance fund in corporate bonds.

We like to buy you know, triple B sentle O.

But I mean in terms of treasuries anything in terms of US sovereign Are you just staying away?

No, we're staying away, you know, in our opinion, just looking at corporate versus treasuries, we think you get paid a lot more in corporates versus versus you know, what tends to be risk free, and so we'd like to pick up a little bit more yield by doing a little bit of research and buying some you know, maybe some you know on the lower end of investment grade, you know, corporate debt.

This is exactly what Michael mackenzie told us earlier in our program, like why buy treasuries when you can go and buy from companies?

Totally totally, like it makes sense, right, Hey, Sandy b Well, Sandy Villary, portfolio manager for Villary and Company, Joenning us from New Orleans.

This is the Bloomberg Business Week Daily podcast. Listen live each weekday starting at two pm Eastern on Applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa played Bloomberg eleven thirty.

Well.

We last checked in with Jenny Rook in February of this year. It was in Take Your Time Machine.

Okay.

This was in the midst of a lot of the news about federal money being fooled from universities, a pullback in spending that traditionally goes to research. And what we've heard since then, and what I've noticed since then reading books, reading articles, reading about innovations is a lot of what I've read about is this whatever X can trace its roots back to public funding.

Yeah, it's really important, right, the early development starting in so many federally funded projects. Let's get into it, because you know she's got some thoughts on this. We've talked about this, Jenny, of course. Jenny Brook, founder and managing director of Genoa Ventures. It's a VC firm that investments, as she says, the quote next generation of companies at the convergence of technology and biology. So much going on when you think about that and layer in AI. She

I got to use my finger life three months, but a lot has happened.

It's crazy in the administration and especially things that when we think about funding that goes to universities, different projects, and IH, like, I'm just thinking about it. We're so how much can come out of it that we take for granted today but also creates companies, adds to the economy. Tell us how you are kind of taking all of this in and then your world in terms of investing it.

Now, you're quite right, Thanks for having me back. It's such an important topic, and it does sound like you've been looking into it since I was here last and finding just how much of what gets to market started as basic research funded by the federal government, sometimes decades before it became something that we can benefit from as consumers, as patients, as just regular citizens. So as I've been talking to we talked last time about large well funded universities,

I know I've talked about this book quite a bit over the last couple of weeks, Carol, but we're hoping to get the authors on the program Abundance, Derek Thompson and as reclined. And one thing that I learned in that book was that the inventors of the mRNA vaccine, who won the Nobel Prize in twenty twenty three for mRNA.

Their work in m RNA, they.

Essentially toiled in obscurity for decades. Yes, and that story is more than norm that's right. Then it is the outlier, it seems, and that was something that kind of blew my mind because you have this research being done and it doesn't seem like it's going to amount to anything until it does.

That's right.

That's kind of the world that you live in.

That's kind of the vibe. Yeah, it's why we call it discovery. Development is another thing when now you have something it kind of works, you want to turn it into a product. That's a great place for venture capital to step in. We love to engage early with those companies. But the discovery portion, you often don't know what you're looking for. You're just curious. You're picking things apart, you're turning over rocks.

So how patient are your investors when it comes to this stuff, because you're not you know, investing in an app that has high margins and is going to you know, be a game. If we're thinking about this, like in the last fifteen years of venture capital and what the winners have been, you're not investing in a social media company that Presta has to go viral and become a top app in the app store for example.

Well, certainly the journey for a bio or science based company, a deep tech company being venture backed and then becoming a great exit for LPs, those are very different, and the kind of capital you need and weather regulatory matters, which is another thing we could talk about. Right, those are pretty different versus an app, as you say, but the rules of venture capital are still the same. In seven to ten years, you need to give your LPs back three x net. Now, very few vcs managed to

Hey, one thing I want to ask you, So I just want to rehash for everyone who's listening at this point, because we are seeing markets pretty much.

Hover near their lows of the session.

So we're still down about almost one point eight percent on the S and P five hundred down, about one hundred and five points down, two percent on the Dow Jones Industrial Average. Now's TEK one hundred down about one point six percent down, three hundred and forty three points this, As we've said, really the focus is on the treasury trades we see and yields move up A ten year in it with yield of four fifty eight, so just shy a four point six so that we hit that earlier.

I think most early stage vcs, ourselves included, are already taking a lot of risk, and that is our job right right, well characterized risk that in the long term can deliver outsize returns, and so temporary volatility doesn't change our day to day strategy. Typically, what it does change is the availability of capital to deploy against that strategy.

I would say it makes it tough. Jenny Brook we're talking with.

She is the founder managing director of Genera Adventures, a FEC firm that invests in as. We talked about life sciences companies looking at that cross section between technology and biology.

We talked about the volatility in.

The markets and how it's impacting perhaps you, Jenny, there's a headline that crossed coming from the Wall Street Journal that RFK Junior, of course key in terms of health and human services for the government, chief advisor to the President, expected to criticize vaccines. We saw some movement this week in terms of vaccines that was seen by vaccine makers, Maderna and others that maybe it wasn't as bad as everybody thought it might be in terms of approving vaccines

You are investing where you are investing.

This is a really important question because regulatory of course, is critical to making sure that safe, effective medicines, interventions, foods are regulated get to the public in a timely manner. And so venture capitalists often surprisingly actually embrace regulatory because it's a way to make sure that something gets to market in a way that will be accepted and effective

What in your view, would is the long term implication of this FDA this AHHS under Secretary.

Kennedy, Well, if I knew that would be.

A different capitalist. So you are supposed to know the future.

Yeah, We're supposed to take important and risky bets. So I don't know again what the journey will be. But perhaps one of the upsides to taking these very long term bets is when I think about a company we might invest in today, do I believe we will have a functioning FDA that is science driven and looks at novel medicines and tries to get them to the public in seven to ten years?

I do?

I do we will still have that, right. Will the timelines be different, Will the requirements be different?

Could be? Could be?

One of the things I love about science is that it invites inquery, it invites being tested, It invites discussion amongst people who are trying to work for the same outcomes. So I'm a long term optimist.

Let's say, hey, Jenny, one last question, because one thing that has become a narrative and a trend is investors looking outside the United States for opportunities.

Is that something you are increasingly doing as well?

This is real.

We always look at general, we look globally for the very best opportunities. As you were describing, at this unusual convergence of biointech, and we look broadly outside of healthcare, food industrials. But what I am seeing I just came back from a meeting in Paris focused on industrial bio, which is making industrials like chemicals through bio routes. What I'm seeing is a couple of things. The mood there is lighter than here. For one thing, they're not wrapped up in our drama and.

Shares, not the wine and the good food because everything and.

The cheese and particulous. But there is less willingness to deploy their capital in US companies which had been in the startup space the darlings of the venture capital community. So we're seeing capital shift. And this is true, as you well know, in the public markets as well, up and down, whether it's a startup or a publicly traded leader to Europe.

People have been said it's a rebalance. Everybody was too overexposed to the US. Do you think it's a rebalance or they're saying I'm not so sure. I like the US environment just got about thirty seconds.

I think it's the latter, and I think it's going to make It's a great opportunity for European investors. And European companies to attract some US capital that perhaps wouldn't have looked out outside.

Great perspective, So glad you stop by.

Aganna, thanks for having me.

Always good to have you here.

Jenny Brook, founder and Managing director at Genera Adventures, joining us here in our Bloomberg Interactive Broker Studio.

You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five ease During that listen on Applecarplay and Android Otto with the Blow of Work Business Up, or watch us live on YouTube.

The world is diced and sliced in so many different ways, So you want to know something about rare earth minerals, you just kind of type.

In ani rare earth would you find when you did that?

Okay, there's a store in the terminal, Russia's largest oil producer buying a giant Siberian rare earth deposit, which may become an area of cooperation with the United States. I think that's kind of cool. That's for jo Rosneff, obviously, the state run energy oil company over there. But I just think about there's a lot of jockeying going on right now when it comes to rare earth minerals.

We're seeing that happen in a big way.

Yeah, I think that's fair to say, and that's exactly why we want to bring back Joe Doe. We talk extraction, we talk refining, we talk manufacturing. When it comes to rare earth minerals, the next company knows all about it from A to Z, and it's happening right here, Carol, in the US.

It is, indeed. So let's get to our guest. James Littiski is here. He's co founder, chairman and CEO. It's a three point three billion dollar rare earth companies called MP Materials. It's up about thirty percent year to date, so we just wanted to lay that out. Also with us is Bloomberg News Metal Mining Heavy Machinery reporter Joe Dough. I'm rushing because I want to get to you. I want to get to the guest. Whenever you jump in the studio, I want to rush to you.

Joe.

It's great to have you here.

You said to us, we've talked with you a lot about rare minerals, and he said, we got to talk to this guy.

Tell us why we have to talk to James.

Well, so Jim James Liatinsky, Jim Jim Litinski. He has been running imped Materials now for years. Basically Jim took the old Mountain Pass Molly Corp. Company that had gone to bankruptcy and has turned it into something investable. Jim can kind of give you his you know, one two on everything. But basically they're right at the center of so much of what Donald Trump is focusing on critical minerals,

Jim?

What do you think?

Well, Hi, nice to see you guys, Joe, good to see you again. Yeah, it's certainly a very exciting time for us. As you mentioned, you know, we're the only company in the world, and that includes Chinese industry that has the expertise from the resource all the way through to the magnet. And what I stress again and again when we think about rare earths because it's very topical.

He has rare oaths too.

We could have all the rarests in the world, but if you can't refine them and turn them into magnets, you don't have a solution for the issue.

So, Jim, do you have that solution right now? Because we spoke with Joe a little earlier this year, he reminded us that it kind of doesn't matter if you can extract it here in the US, you've got to be able to refine it. And in some cases, with some of these elements, ninety percent of that is happening in China. What exactly can you do on the refining level here in the US?

So great question.

There are two places in the world that you can refine at scale, the Chinese sphere of influence predominantly China, a little bit Malaysia, and then in California in Mount Pass, California, which is our site. We actually, I think some people would be surprised by this, but we refine today more than half of the concentrate that we produce. So we are refining at scale as we speak, and expanding that rapidly.

So one thing I just want to follow, because I think you guys know this world so well, Jiminto, But I mean, when you say refine at scale, what exactly are you talking about.

I'm just saying if people are listening, like, okay, what does that mean?

You know?

A simple analogy, Carol would be think of oil and gasoline.

Right.

You could get an oil out of the ground, but you can't put it in your car until it's in the form of gasoline. Right, you refine it. In this case, you basically take an ore out of the ground, you concentrate it so it's it's a highly concentrated ore with the rareth in it. But then to get the separated rare earth that you would then turn into a magnet,

Jim, I want to kind of get away from the nerdy science. I know you and I can talk about that all day, but I do want to talk about what does matter to the average person here in the US, which is, you can't do all of this on your own. You cannot. While you might have the full supply chain, you cannot be the sole supplier of critical materials, specifically rare earths and the magnets. You've said that to me

Yeah, sure, thanks, Joe.

Well, it's a great question. We've said all along our mission is to restore the full supply chains to the United States. We've obviously done that in small scale and we're scaling that up, but we really want to be part of a broader solution to eliminate the single point

So, yeah, you know, we'll run that.

I mean, I mean, it's interesting, you're you're you're very much saying it's partners. We don't go it alone. It's not just the United States figuring it out. We'll work

Sure, so, a really important just background context, if we go back about a month ago to Switzerland with the

All right, So it sounds like you're making the argument for why the US government should be involved, But is the government US government? Is there appetite for the US government to be a partner in rare earth projects and doing it from A to Z, from mining to processing to permanent magnet production.

There is no question that the United States government recognizes this, and I think I think that these things take time, but there's no question that they recognize. And Joe was referencing our perspective on the earnings call, which is this is actually very doable. We are, you know, in a very short period of time away from solving this challenge in a large scale, and frankly, MP can lead that effort. And what we said is that MP, you know, we've

Okay, so it sounds like government's involved, they're listening, and we should maybe stay tuned for news. What kind of money is needed to be committed to do the proper buildout in your view, whether it's public private partnership, and just about thirty seconds on that.

Yeah, the really simple answer is we're talking single digit billions. This is a really simple problem to solve. Actually, I jokingly say for the coffee budget on the F thirty five, we probably could have solved the rarer issue.

This is really small.

Wow, And so I do think that the United States government is going to step up. I think you're going to see industry players step up as well, because this is just it's an issue that affects our national security and trillions of dollars of enterprise value, and it's actually a small problem.

You mentioned that we could do this in a short period of time, give us years or some sort of timeline, that we could actually move away from a single point of failure when it comes to this problem.

Well, we're bringing that online now in Texas, right So where I'm sitting is a factory. You all are welcome to come see it, and so we'll be making magnets at scale here at the end of the year. And then the question is what percentage of the industry do we need to satisfy to remove this single point of failure risk, Because we don't need to solve one hundred percent, but we need to do a material percentage.

And so I think the.

Next step would be for us to lead a solution where we're building, you know, something significantly larger and then rinse, repeat to add a number of facilities both here and as we announce with the MoU, potentially in the Saudi Arabia and other places.

So it really is not a huge issue.

It's just an issue that requires capital and execution, right, And.

I think on that point, like it's not just going to be you, it does still require a lot of other actors to come into the space. And I guess the quick follow up again is what are we going to see from the government this year in terms of commitments to help this space, your company and others build out the supply chain on rare earths and permanent magnets.

Well, just to be crystal clear, as we all know, the capital markets can satisfy this problem if the existential issue of the industry is off the table, and the existential issue is Chinese mercantilism, right, is pricing. We've got to get proper functioning economics, proper functioning market economics for the price of these materials and the price of the downstream products. And so those are a variety of ways

Yeah, no doubt about it. Jim really cool. I know we're going to be coming back to Jim Litinski. He's co founder, chairman, CEO of the We're Earth Mining company, so much more than mining, as we know MP materials and of course are thanks always to Joe Doe, Bloomberg News Metal Mining, Heavy Machinery reporter, so we had to talk to him.

We did good stuff.

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