CarMax, CPI Secrecy, Ukraine, and Scott Minerd (Podcast)

at Bloomberg Intelligence. He's been covering the auto industry, uh forever. All right, So Kevin talked to us about the used car business. I understand, during the pandemic, the values of used cars shot through the roof because Detroit wasn't making any cars because they were shut down. Now it's coming down. Is that what we're seeing at CarMax. Yeah, So what you had was uh, retailers, especially the used only is like CarMax or Carbon Room Shift companies like that, overpaying

for their inventory. Prices fall and now you're stuck basically underwater. And that's what's being worked through right now, and it's gonna impact all the all the new and used vehicle retailers. And when I say new and used, I mean the full line dealerships you know, your automations and pen skis that also do used cars UM are going to feel this pain. They won't feel it as bad as they used only guys because they had nowhere else to go but to acquire off lease vehicles expensively, and then as

the bottom sell out of pricing a little bit. We're certainly not back to where we were pre pandemic. But now you're selling things that you overpaid for, and that's

the window we're in right now. Well, you can't sell the things you overpaid for is the problem because the way I read the CarMax release, because rates are so high and you know, people who typically would be in the market can't afford the payment, that has to play into that has to play through to the new car UM sales as well, doesn't it because rates aren't any lower, Well,

they are, they are lower. Sorry, for a new car, you get a lower rate than you do for a used car, but they're not they're not as low as they were. Right, We're not looking at zero percent, We're not looking at one point nine percent. We're not looking at two point nine percent that we previously had been seeing. Now we're looking at more like six for most people, seven eight percent. So isn't aren't new cars going to

get hit as well with these higher rates? Sure? Yeah, but but supply is much more constrained on the new vehicle side. But really that was that's exactly it, right. You had this this confluence of events where you had retailer is overpaying for inventory. You had money was cheap and easy at the time, and then it's not right. So prices were high and then they're not, and rates were low and then they're not, and and that's what

this window is. But it's not you know, and I think you know, on as far as pricing goes, and especially in the used vehicle market, I think this works its way through the system because we're not doing leasing like we used to. You know, a lot of these vehicles that are coming back or came back from lease in two we're twenty nineteen leases, which were pre pandemic. So what you had was, you know, we're looking back at nineteen now three years ago, you had seventeen million

units being sold. Thirty to some odd percent were leased, So in two, are used vehicle market was supplied by like five point three million off lease vehicles. Now, as we move out and we look at what happened in two projecting forward to because most leases are three years, you know, we're not even going to do a fourteen million this year and lease penetration is about eight So that supply that feeds they used vehicle market in two goes from five point three million to about two point

five million. So as we go out further, I think used car prices stay very firm because we're just not going to have the supply like we used to from the off lease market. Are there manufacturers? Are the Gems and the Fords of the world in the Volkswagens, Are they producing as many as they want right now? Are they still constrained? Well? As many as they want? But they don't want to produce that many right So inventory now is about one point seven million to start December.

To put that in context, historically it would be about four millions. So it's not the nine hundred thousand that we saw at at the bottom, you know, about a year ago, but it's certainly not what it used to be. So I think that window for the new vehicle market is exactly where manufacturers are trying to figure out where do we want to be so that we're not we're not sacrificing margin and pricing, but we're not leaving sales

on the table either. Alright, So in terms of the new car deliveries, production and deliveries, how close are we to normal? Well, our normal? I think next year is going to be about fifteen million units, and I think that's a healthy normal. I think the seven still constrained

or not? No, I don't think so, because look, Matt, if you look at it this way, if you think about a volume number as the end all be all seventeen point five million units in sixteen, average price was thirty five thousand dollars, that pool of revenue is actually smaller than it would be in a fifteen million unit market in three at forty seven thousand dollars per unit.

So if you want to look at volume, you can say, well, it's not as great as it used to be, But if you're looking at the revenue pool, it's actually better. Are people buying cars at dollars or unit that's the average, that's the average. And now, by the way, and now, by the way, with a six or seven or eight percent loan, right because most people don't buy cars all

cash and it's in kevinet, Does the industry believe that's sustainable? Yeah, it is, Yeah, because because right that, the automakers are saying that, hey, look if you and look, here's the risk if if you want to look, Ford and GM are in the fifty two thousand range. Mercedes BMW, which used to be in that range are now up in the sixties and seventies. So automakers are saying, like, hey, the stuff we can't make money on, uh, we don't

want to be in it. And that's why inventory is half of what it used to be, why transaction prices are so much higher, because not every sale was a good sale, and they've gotten out of the bad sale business. Well, I'm hoping that one of those auto guys is going to blink in cave and start ramping up production and screw up the entire market but making horrible models for

rental fleets and just pushing them out there. No, that's not okay, it's not it for the industry, right, Kevin Tynon, Everything I know about the auto industry, the economically the auto industry. I learned from Kevin Tynan. He's our Bloomberg Intelligence auto analyst breaking it down here. Carmack's tough numbers. Stock down seven. Let's scan for stocks here. Let's do it on a down day. Maybe we can find some some bargains out there. We're gonna roundtable this thing like

we like to do. Phil Palumbo, CEO and founder of Plumbo Wealth Management, joins us as well as David Kat's Matrix Asset Advisors, UH joins us as well. So Phil, let's start with you here. I mean, you know, I've got twenty two in my rear view. Let's forget about it. Equities, fixed income, it was a disaster. What do I do for three? What are you telling your clients? Okay, So I've been very vocal that I have been selling on any type of rips all year this year because the

bear market was going to be persistent. Now I'm a buyer in the pain that we're gonna feel coming intree. So yes, why I use buying pain together? Right? So the pain part is the Feds are going to continue to step on the gas until he gets what he wants. And he's going to get what he wants right in terms of bring inflation down. And also the so the bi side of the equation is the strength of the consumer job markets. Height Jold numbers over ten million, and

they have their flushwood cash right through the COVID. That stimulus money is still there. So with that, how do you measure that phil Because we've we've been hearing um bankers tell us that those savings are being depleted. There's there's so many different types of articles out there that

are saying six hundred billion or a trillion. It's aggregate savings that that we look at from the FED, and based on those numbers, there's a trillion dollars that's still left started with two trillion beginning a year or at the trillion can others are saying six hundred billion or more. Just remember about that number though, right the low income household, middle income household, they already spent that money. It's the upper tier, higher income earners where they still have that money.

They don't have that much of a present propensity to spend money, but they do have that money and it's available, and it's gonna provide a cushion under what I believe. I think we get a mild recession in three. And that's the whole by the Paine trade that I'm talking about. Sorry, David, Yeah, no, So David, you know what do you think about that? Um?

I get the premise, but it just seems like the markets have trouble believing the Fed, and every time the Fed reminds markets the path it's on, we come crashing back down again. Right, But we do believe that the Fed is getting its job done. Inflation is definitely breaking. So there will be a meeting, whether it's the next meeting or the meeting thereafter, where the Fed says, Okay,

we've raised rights enough. Now we're just gonna watch. And at that point, we think the market is going to look beyond the Fed, look at the economy, and look at beyond the possible recession towards six to twelve months out. Generally, stocks will rally as you enter or as you're in

a recession. So we think with the markets sell off in two, that we've discounted a lot of the negatives, and we think if you look to tw the twenty three, that the market's going to start to discount the negative's lesson, start to discount some of the positives and stocks have very meaningful upside for here, so we'd be buying, um, you know, into this current sell off, you want to

turn the volume down. We think six to twelve months out of stocks are going to be meaningfully higher, and there are a lot of great stock prices, really good businesses at low valuations that we would just buy and turn down the news. So so, Amazon is a company that's a great business, but it's always been really richly priced. If you look at it now on a price to sales or price to ebita basis, it's at a five year low, So we like that. Google on technology also

sixteen times next year's earnings. PayPal is a really good company, good growth prospects at sixteen times next year's earnings. And then on a more traditional value type of stocks, we like Bank of New York, truest Te, Connectivity, Metronic. So they're really good businesses out there. Those businesses are all like ten eleven times things. When you can do that, you're gonna do very well if you have a twelve month time frame. They phil you know, we talked to

fixed income investors. They say two was the worst year on record. Is it time to buy bonds here in twenty three, yeah, I think is gonna be bit the best year on record for fixed income. I think what you're gonna see in three is peak inflations. In peak rates are in peake dollars in dollar declines, and with that you're gonna see bonds rally and rip. You know again, I think one of the biggest rips we're gonna see

in history coming into three. So so I would be a buyer even on long duration treasuries which we own um within our portfolios, and intermediate term duration treasuries. I think those investments going at thee I think you can perform really well. So where do you see rates? Then? I always say you could overshoot the upside, and I feel like we already did that. So I think that the peak number is is already in. I don't see us going to a five handle on the ten year.

I think you're at four and a quarter right around there peak. Yeah, exactly, So I think that I think that peak numbers in going back to what what what David just said in terms of the FED, I do think the Fed is going to press along more than market dispen stink um. So for that reason, it's possible

we can break the recent peak. I think the odds are very low because I think the job as you see, as we start to see things go through, as we're gonna see inflation come down, I think the FED is going to be satisfied and then eventually, just like David said, will stop. So, David, one of the sectors that you know defined the logic here, or not define logic, but certainly defined the weak market in two has been energy. Is that played out in your perspective, awards are more

room to go on the energy trade here. I'm looking at w T a crude oil here about seven eight bucks a barrel. So we think oil prices can drift a little bit higher. But we think oil stocks have discounted a lot of the good things. If you look at the last seven years, oil stocks have lagged behind the oil price on an annual basis. This year oil prices are basically flat to maybe up five or ten percent UM where is the oil stocks are up fifty So we're not looking for a repeat next year. We'd

be taking some profits in oil stocks. We also would be taking profits in consumer stables, which also had a great year this year. Um, you know they're at the higher end of their valuation ranges, and we'd be redeploying into technology, communications services, UM, some medical technology, and the banking group. Interesting. So consumer staples taking profits now is is a fascinating move because if we do go into

a recession. I know a lot of people are saying we already are in a recession, but consumers seem very confident. If we do go into a recession, those consumers are likely to buckle down and only buy what they need. Right. Well, it's not a question that people are going to buy less Kelly cereals or General Mill cereals, or or or Pepsi snacks. It's a question that the stock box would generally sell at about sixteen times earnings are now at

about twenty two times earnings. So we think that they discounted the recession, you know, whether we're in one now or we're going to be in one in a few months. And as the market starts to look beyond the recession, they're going to say, Okay, the consumer staples did their job. They got us through the difficult stock market. Now let's use them as a source of funds. We just think the businesses are gonna slow, not that they're going to crash, but rather the valuations are at the higher end of

the range. We think they're going to regress to the mean, and there are lots of things that are the lower end of the range, and we think that's where the money is going to go. It's a it's a good point. And Phil, I wonder if I could get your take on valuations because it's such a fascinating piece of the equation.

Um where do you see evaluations next year? Investors have to recognize that anytime you go into a recession, typically in the middle of the recession on averages, where the market will bottom and what leads the market out of the bottom is technology. So, like David said, I agree that I think I think when investors, you know, staples right now are rich because the anticipation of a recession,

so valuations got really high. So rebalance that into the technology sector, which he has gotten crushed and there could be more pain to to be had in that sector. But as you start the dollar course average into that sector. There's some great businesses right now that are trading at really great multiples and a great example that and David mentioned,

it's something that is on our list to buy is Google. Right, I've always want to be a big ownering Google, and I think you know now is a great opportunity to forward multiple is extremely attractive, free cash flow is one of the best I've ever seen within the business. To return on investment capital is and it's a and it's a growing business. And it's down right now because the ads spend. Right eight percent of the business is advertising,

so it's trading down because of that. But again, once we rebound a trough out with the economy and get on the get out on the other side of this, Google is going to be a winner and other type of technology stocks. You gotta be forward thinking as an investor. You can't just say, Okay, recession is coming, let me just load up in staple stocks. You know that trade is done already. It's it's want to move on and

get ready for the recovery. I think the news today on Google is uh YouTube, which Google owns, agrees on a deal for the NFL Sunday ticket two billion dollars, so taking away from direct TV. So that's huge, But wait, does that mean you get all the games? All the games? So it's only two billion dollars for that, Yeah, for a year, So it's pretty good. All right, guys, thanks so much for joining us. That was the big news

I thought this morning. You know, Sunday Ticket, which was on Direct TV for years and years, is now on Google. So we're going tech. Philip Palumbo, CEO and founder of Plumbo Wealth Management, thanks so much for joining us. In David Kat's with Matrix Asset Advisors. Those guys agree too often. They're pretty good, yeah, but they agree with each other. We need to get get we can find that because I mean we got There's a lot of bears out there, um, folks that are just saying, hey, how can I buy

stocks in front of a recession? But uh, both Phil and David saying, hey, that's kind of priced into the market here, um, and we've got room to go. Thread headline crossing the Blueberg terminal. Uh. Matt Guggenheim's Scott Miner has died. Person familiar says uh, and we see it. We have a report from the company that he died yesterday, Wednesday, December one, from a heart attack during his regular workout.

He was sixty three years old. Scott Minored was a founding partner global Chief Investment Officer and chairman of Guggenheim Partners. So one of the leaders, one of the leading voices on Wall Street passed away unexpected. Yeah, absolutely, one of um early the oracles that we talked to, well, we try to talk to on a regular basis, and who has so much depth in terms of his knowledge on

everything from fixed income UM to equities to crypto. And it's just far too he's far too young, sixty three years old, and he shaped UM Googgenheim together with Mark Walter. Let's bring in Tom Keene right now, who interviewed got minored countless times. And um, Tom, what are your immediate thoughts? I mean, really a fixed income guru in a way. Yeah, I would go further than that. And that what we loved about I can't believe I'm talking in the past tense.

What we loved about Mr Minord was he approached this differently than most strategists, differently than most traders, and that this guy was at heart a certified public accountant and that made him hugely unique And the one I would really lean on on this at this terrific shock and

and just sadness. If you will love Scott Minor dying is the era of Bob Diamond, of the era of trading, and it was back in the nineties with lots of volatility, particularly Scott's were I believe at the time it was at Morgan Stanley on European Credit, and he just approached it totally differently as he does on our FED show every FED meeting. He approaches it totally differently, and that was the value that we saw. We have to remind ourselves this is a guy who walked away from Wall

Street like you did. Uh, Paul Sweeney at thirty seven years old. Yeah, it's you know, he he made it. He made it interesting. I'm just as you mentioned Tom starting on as an accountant Price Waterhouse, then what the Continental Bank, Assault Lake and Meryll Lynch, Morgan Stanley, Credit Swiss before going to Googgenheim Capital and becoming their chief investment officer than chairman and managing partner. He could retire. I mean, he's so smart and again so different and

his his brain works. So I have to talk in the present tense. I can't get to the past tense with Mr Miner that that there's such an acute and different analysis. That's what made him valuable. Not only do all those firms, but you know they understood he didn't have to work. I mean, he was independently wealthy in his late thirties into his forties, and uh kept wandering back to Wall Street as he did when they set up a wonderfully successful because it wasn't about work for him.

He thought of the markets, finance, economics the way normal people think about sports. And by the way, he thought about sports a lot as well. So this was just part of his life, which is why he was such a pleasure to talk to about, you know, these issues. And he was so thoughtful because he lived um Wall Street and uh, you know the rates story and his takes were always um so fascinating because they weren't consensus. Tom. Uh, what's it been like having him on the Fed? The

Fed decides it's a you and Bramo and Pharaoh. Every FED meeting, stay late into the afternoon and talked to Scott and we usually spend the next day playing you know, sound bites of what he told you. Well, it was great because it mixed up so well with the other thinking, you know, where the surveillance is completely focused on critical thinking skills and they can be different. And Mohammad Hilarion has a certain framework from his legitimate PhD work in

game theory. And Diane Swunk has that classic economic analysis of the University of Michigan. And again what Scott Minor brought was this almost it appeared slow motion analysis of looking at the transactions, whether it was economic policy like the FED or the bond market. Here the statement now out from Guggenheim Mark Walter Matt Miller, as you mentioned quote, I have known Scott for over thirty years. We were

partners much of that time. Scott was a key innovator and thought leader who was in trumental in building Guggenheim Investments into the global business it is today. He will be greatly missed by all condolences or with his husband, family and loved ones as as well. So a statement

from Guggenheim there on on this shock. There's no other way to put Guggenheim in their statement is obviously they're trying to uh calm the concerns with some of their clients, saying Guggenheim has implemented its succession plan, which is designed to deal with unexpected events. Guggenheim Investments has nine employees, more than three or fifty of whom our investment professionals. So, uh, Googgenheim, you know, trying to make clear to their clients that

it is you know, business will continue to go. But the fact is, and I'm sure Mark would tell you as well a Scott Minor, it is really irreplaceable. You know. If I think about um, the great commentators that I've been watching on surveillance for the last I don't know, ten fifteen years, He's among a handful of people that I'm always excited did to watch that I always stopped to turn up the volume four, that I always remember what he said that I always, you know, use in

my show the next day. Um, and I get what Mark and Guggenheim are saying. We have a succession plan, but he is an irreplaceable. Uh. Personally, look at the lead in this story. The data are so important. Steph were once instructed to have no facial expressions when walking the reports into the West wing of the White House, and yet a surge in trading last week and the minutes before the release of the Consumer Price Index, closely watched US inflation measure spurred concerns The figures fell into

the wrong hands. The reporter uh that read Pickert, along with a colleague at Christopher Condon, reported that read, thanks so much for joining us here. What happened here? I mean, this is a fascinating article that you have on the Bloomberg terminal talking about some surge and trading um, just the minutes before that CPI data was released, right, And and it's important to say that that we don't know

what happened. We saw some you know, unusual buying of treasury features in a time where typically there's not a lot of treading. And essentially folks got ahead of that rally that we saw when the inflation data came in lower than expected or you know, better than expected. And so this story is kind of meant to look at what the timeline leading up to those releases look like,

because you know, quite a few people do see this report. Um. But it's a really tightly controlled process and it's you know, kind of like clockwork in terms of how it moves through this process, who all sees it, um, the types of agreements that people are are sworn to in terms of not sharing this information, um. And so the point of this article was really to inform people from you know, about a week ahead of the report up until the

minutes right before. Who really sees and touches this highly sensitive information And so it could be I mean, it could be that someone just made a big bet, a very prescient bet, at the right time. I'm sure you want to be if you're making that kind of bet, trading in the minutes before the release, not you know, days before or weeks before, um and then getting out right away. Uh. But it looks suspicious because we don't see that kind of movement. We haven't seen it at

the release of other reports right exactly. And you know, given the timing of it and picking the right direction of it on an indicator that economists have been persistently, frankly wrong on, there's only two directions, so you've got a pretty good chance of getting the pretty good chance. But whoever, whoever, whatever, whoever made those trades, they turned out to be quite profitable. So we really wanted to

do our due diligence here. And you know, something that was really interesting in terms of looking into kind of what this process looks like, UM is you know, in the lead, you know, my colleague Chris Condon talked to someone who you know, used to work at the c e A and she was even saying, you know that they because they knew reporters were outside, they really tried to not have facial expressions when they were walking this data.

There's a lot of secure transfers of this data. Um, there's all kinds of rules about who can see it and win and UM, it was really amazing. I mean a former BLS commissioner, So the BLS, the Bureau of Labor Statistics is who produces this report. And you know she mentioned that, you know, when she was commissioner UM several years ago, I had a big reports that they used to not even let maintenance staff empty the trash cans um for fear of folksing the numbers early. So

it was a really interesting one. Is a really interesting story to report out. So is there any formal review of this trading activity? Is the SEC looking into it or what kind of where does it standard? Because this kind of trading is traceable in the past, authorities have found needles in bigger haystacks. Yeah, so you know, we did reach out to both the SEC and the cftc UM. The SEC UM sadly declined to comment on whether the exist since or non existence of a possible investigation, and

the CFTC declined to comment. UM, but both of those regulators could have authority to kind of investigate any potential attempts to manipulate the treasuries market. That you know, I think what's studying about this kind of just whole story and conundrum is it's really captured the attention of market participants because of how odd it was and how closely

watched this measure is UM. And so it's certainly something that kind of we're trying to report out as thoroughly as we can, and hopefully we'll have more stories on in the future as we try to dig into this a little bit more, because you know, right now it's it's it's really unclear what what actually happened. We the government has said that there was no leak. UM, the

BLS has said that their systems weren't compromised in any way. UM, we don't know if someone was somehow managed to scrape the data off of BLS is data at website early or something like that, and you know, we don't know if there was a leak. It's just it's kind of amazing that we how little we kind of know about what could have happened here, or it might have just been a really good bet. As you said, all right, Red,

you're the U S Economy reporter. We had a GDP number come out today, pretty darn good, three point two the third reading. What's up? I think it was the third reading, So it's I mean, unless unless we're really bad at measuring this stuff, it has to be pretty close to in line with the last two readings, right, But then it was a little bit i mean stronger

than expected. What did you take from that? Yeah, So, so basically the main thing that moved this this number is that you saw UM stronger business investment and stronger consumers spending, and the consumer spending upward revision really reflected UM bringing in some new services data and showed that services spending was you know, better than expected in the quarter.

And what what I find really interesting about this is it really shows that, you know, the economy really re accelerated in the second half of the year, and we've really seen that across quarterly data as well as monthly data. And it's kind of this unique moment where we're in where you know, everything was slowing down, and it seems to be speeding back up again. All right, great stuff. Read Picker U s economy reporter and editor for Bloomberg News,

former reporter at The Cavalier Daily. At u v A, it's talk energy. I'm talking at w T I crude oil here, seventy eight dollars a barrel kind of holding steady here. Um, but boy, down from that high earlier New year of about one twenty. But a lot of people are still bullish on the energy space show. I kind of feel like I missed my opportunity quite frankly. Those stocks have ripped uh this year. Let's talk to uh, somebody who does a lot of this energy stuff, Danny

Rice the Fourth. He's our a C director for Rice Acquisition Corporation. Danny, thanks so much for joining us here. What are you guys doing at RICE these days? I'm assuming you're acquiring energy assets. Yeah, Paul Matt, great to be with you guys. Um. So, we we formed Rice Acquisition Corps about a year and a half ago, really charged with the mandate of going to find in taking public a private company that's developing, um what we call

the energy trifecta which is clean, low cost, reliable power. So, uh, what are we talking about in that sense, um gas,

natural gas. Well, we're really looking at everything. I think what we've really seen over the last couple of is consumers and companies they've become a lot more just environmentally conscious, and they're starting to say, not only do I want my energy to be low cost and reliable, which is how it's been for the last hundred years, but they're all of a sudden us saying we want it to be clean, we want it to be low carbon, we

wanted to have load and no emissions. And so we were really tasked with that mandate of going and finding a private company across the entire energy space that's developing some really novel exciting stuff to be able to deliver that energy trifecta. And so we're actually taking in public a company called net Power, and what net Powers developed as an entirely new power generation process that uses natural

gas to create power to create electricity. But in their really novel patented process, it captures nearly of the emissions from net power generation cycle. And so not only can we deliver that low cost, reliable energy that typically comes from fossil fields, but now it automatically becomes clean because of those low emissions as a result of this patented process that the company has invented over the course of

the last twelve years. So my immediate thought, especially if I think of Texas is fracking um here in the Northeast. It hasn't got such a great reputation. How do you sell that? Yep, So it's it's quite interesting. So I actually got my start in the shale patch. I started a company back in two thousand and seven with my brothers called Rice Energy, and over the course of the next ten years, we grew it into one of the largest natural gas producers in this country, primarily from shale development.

And I think one of the interesting things if you look at shale development, particularly for natural gas here in the United States, we have an amazing abundance of it, and not only an amazing abundance of it, but it's

actually a lower carbon intensity than coal. And so what we saw over that ten year period from seven to eight team as we saw natural gas actually starting to replace coal for power generation, and in the course of doing so, we had she saw a reduction in US c O two emissions and for us that really sparked this idea of if we can find ways to decarbonize natural gas even more, that actually becomes the most impactful way to achieve our climate ambitions, both here domestically but

also internationally. I think it's important for people to understand of World CEO two emissions comes from natural gas and coal fired power generation, and so that's really the market opportunity that we're really going after with net powers technology is to be able to eliminate the emissions from the eighteen thousand coal and gas fired power plants really powering

the world today. So, Daniel, one of the things I think, at least I've learned over the last a couple of years and maybe just thinking about the energy crisis in Europe precipitated in part by the war in Ukraine, is Okay, we all want to get to a green energy grid, but it's going to take a while, and in interim we need to have plenty of oil and gas and liquified natural gas. We gotta have the fossil stuff, maybe not maybe not the coal. But how do you how do you think about it? How did the folks in

your energy world think about that? Yeah? And I think this gets back to exactly why why net power is really really special is I think forever everybody said we need access to low cost, reliable energy. And then when when this clean movement really started to pick up, as people started to say there is an environmental impact, um global warming is real and it's really because of just the CEO two in the atmosphere, people pivoted really quickly to saying we need clean energy and we need to

phase possible fuels a step. And I think what's started to come to the root everybody's realization is clean energy just is not there on the cost for the reliability side to be able to replace fossil fuels. And so our approach to being able to play a role in this energy transition isn't focusing on wind or solar like a lot of other folks. We're not really focusing on batteries. Well, we're really focusing on and what net power is really focusing on is fossil fuels are going to be with

us for a very long time. It's o of total energy use in the world today, and that's just the reality of where we are. And so for us, we said, if we really want to achieve the climate goals we have, we have to find ways to decarbonize coal, oil, natural gas, and so with net power, the technology allows us to

capture all of the emissions from natural gas. And so as we continue to see natural gas playing a larger larger role in the power mix as it continues to displace coal, being able to put that natural gas into a net power plant captures over of the emissions. And when you look at it on a heads up basis on just the total carbon intensity versus wind, versus solar, versus hydro versus nuclear, you name it net power on a carbon intensity basis per unit of energy produced, it's

as low as any of them. How much still has Sorry, I was just thinking of the pricing volatility that we've seen, especially in Europe. Obviously it's been more um uh, it's been more severe than it has here, but we've seen real volatility in these markets as well. How much does that matter to you to net power? Well, so that's the beauty of net power is the feedstock for this

power generation process is natural gas. And if you look at just domestically here in the United States, natural gas prices are lower here than anywhere else in the world, and quite frankly, they could be lower. Right. I think we really just need more infrastructure to be able to

get this natural gas to market. And I think that's where a little bit of the catch twenty two is is there's a lot of reluctance to build new natural gas infrastructure because natural gas has these emissions, especially visit administration, right, I mean we've we've heard from a number of people on this program that that infrastructure just isn't coming from

a Biden administration. Yeah. And I think that's what's so exciting about net power is it really is a paradigm shift for people's perception of natural gas because I think it's it's not about labels, it's not about what is the fuel source. It's really about what's the carbon intensity of this fuel source. And I think the thing that net power is able to unlock is all of a sudden, natural gas is transformed into a very very low emission

power generation source. And if and if we're able to leverage the cost and reliability of natural gas and pair it with you know, how clean it becomes with net power, that should in a way start to unlock and really enable further development of natural gas and using is this fuel, but only because it becomes this low emission fuel source

with net power. So when we think about natural gas, I think of it just in the context most recently of liquefying it and sending across the Atlantic Ocean to Europe, which is starving for fuel. Give us just your understanding of where that global infrastructure is for liquefied natural gas. Yeah, so Europe, I mean Europe is in a bit of

a predicament right. Um, For the longest time, they've been dependent on Russia for their sources of natural gas, and now all of a sudden they're saying, we need to show up our resources for natural gas for more trustworthy counterparties. There's probably no more trustworthy counterparty in the United States. And it gets back to we have such an abundance of natural gas that we've really unlocked over the course

of the last ten years. And it's really really low cost gas too, and so it's we're able to produce more natural gas here than the United States is consuming today, and so we have an abundance of it which is

primed for export to Europe. And I think the thing that really makes net power play an active role in all of that because Europe still has very ambition, very ambitious climate reduction goals, right, and so they're saying, I need the reliability and affordability of natural gas, but if I compare that up with net power, in that l MG that's being liquefied and transported to Europe can then go into a net power plant, all of a sudden, we have the reliability coming from the US l G,

but now we have the carbon entity that is on par with wind and solar, and so we can achieve our energy needs while also achieving our climate goals. And I think that's I think those those examples like that are are are some of the reasons why you know, net power is quite unique. But I think in addition to being unique, like there's a huge responsibility because this is the only type of technology out there that can do this. Um Alright, So it's that's good stuff, Danny.

We're gonna have to leave it. They're good stuff, Danny. Rice the fourth the Rice Acquisition Corps, that's a spack recently emerge with net Power LLC. It's a go public merger special so doing some stuff on the energy space. What a world wind Wait, just six hours through Wash

and in d C for President Zelinsky of Ukraine. And here a couple of headlines that I think captured Zlinsky wins applause, aid in half day dash through Washington and zom Bloomberg, and also on Bloomberg, Zolinsky insists the Congress US aid for Ukraine is not charity. So when we talked, geopolitics and military issues are number one voice that we strive forwards. James Servitis, he was retired admiral with the U. S. Navy.

He was there for thirty seven years. He couldn't get another job, served as fifteen Commander in US European Command in NATO's sixteenth Supreme Allied Commander in Europe. Admiral, thank you so much for joining us once again. What is your take away what you heard from President Zelinsky yesterday? I thought he did an excellent job. And let's face it, he had uh four separate audiences he had to speak to. He spoke to us here as Americans. In the overriding

message I got was one of gratitude. Appropriately um, he was speaking to the Europeans, and I think his message was one of solidarity between the United States the European Union, the two biggest contributors to Ukraine, as well as his

own people audience number three. Here he needed to reassure them, to show them that he had the kind of personal connectivity in Washington that could keep this vital aid flowing and then forth, and finally, maybe the most important audience is in Moscow, in the Kremlin, and there it's a message, I would say, of defiance and scorn. I think, uh, it was a big performance, but I thought Zealinsky delivered.

I was captivated by his words. His ability to convey the emotion as well as the situation on the ground as well as the stakes really quite extraordinary. So I thought he did a very good job. How are they doing in terms of the situation on the ground, How would you judge the progress that the Ukrainians have made in pushing back this Russian offensive? Yeah, I think it's a tale of two wars, if you will. One war is the ground war, and here the Ukrainians are winning.

They are pushing back the Russians. As you say, they've taken back a big chunk of the territory that Russia tried to invade and annex just ten months ago, eleven months ago, Um, so they're kind of winning on the ground with our help and support, of course, But the second war is the air war, and here I think the Russians are winning simply because the Ukrainians don't have all the technology, all the tools they need to really, as President Zelinsky often says, closed the skies of Ukraine.

So that's why you heard yesterday such importance. But on the delivery of this Patriot battery, it's one of many systems that are going to be flowing toward the Ukrainians to help them in this air war. If we can shut down Putin's ability to simply bomb at long range, let the Ukrainians continue on the ground the way they are. I like the Ukrainians chances Admiral will Patriot missiles by themselves, you know, kind of shut off the air wharfer for Russia.

Or does the Ukraine need planes and trained pilots? How does that play out? UM? I go with yes, they need aircraft combat aircraft. Two paths available on the table right now. One is mid twenty nine's they already have pilots who are trained to fly the mid twenty nine Those are old Soviet era aircraft or in the inventory of Poland, and the polls have indicated they're willing to give those to the Ukrainians. They'd like to get the US to help Poland buy back fit f its teams

from the US. A second solution would take a bit longer, but it would be the US F six team, not a terribly complex aircraft. We could train the Ukrainians in how to fly it in Ramstein Air Force Base, for example, in Germany and provide them those F six teams. I think Patriot is necessary but not sufficient to close those guys. They're going to ultimately need more combat aircraft. I'm gonna ask, I guess a political question without really taking a side, but um in the in the in that imposing it,

I guess I kind of am the President. Biden said, the American people are with you every step of the way, and we will stay with you. We will stay with you for as long as it takes. Is it fair for the President to say this so soon after pulling out of Afghanistan? Yeah, well, I was thinking about that yesterday. How our Afghan allies must receive those words directed towards

the Ukrainians. And I think it is a very fair criticism to make the Biden administration that they chose to withdraw quite abruptly from Afghanistan and now have gone all in on Ukraine. And we could have a long conversation about the differences and why that has unfolded. But I think it is a very valid criticism in this case. What we need to do, my view, is stay very strong with Ukrainians, UM, and we're going to have to work to overcome some of the lingering concern that we

raised by that abrupt poll out from Afghanistan. Admiral unfair question, but I'll ask you anyway, how do you really think this plays out and over what time frame? Um? Really, I can give an answer in two words, nobody knows and uh, you know, the great st experts in the world with the deepest military knowledge how this one's gonna

play out. But I'll give you my best guess. I think that over the next six to twelve months, both sides are going to run out of ammunition, fresh troops, enthusiasm, and I think you're gonna see a movement towards some kind of negotiation. In our job here in the United States is too and I think the President said this yesterday is to give the Ukrainians the tools to put them in the best possible position at the negotiating table.

So I think that wars ultimately ended negotiation almost every time. This one will as well, all right, James Servides, thank you so much for joining us. We always appreciate your perspective, your experience, and your time. James Servites, retired admiral with the U. S. Navy, served as a fifteenth Command in US European Command in NATO, sixteenth Supreme Allied Commander in Europe, so certainly has the chops uh to give us the breakdown on what's going on in Ukraine. Thanks for listening

to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller. P On Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio