COVID Origins, Ohio Train, ETFs, and Goldman (Podcast)

out today. Fiser potentially looking at a company by the name of Segan. I have no idea what's going on here other than bankers are going to get paid. Lawyers are going to get paid. So I want to break in with Sam Fizzelli, he said, of the European research and farmer analyst for Bloomberg Intelligence. So Sam talk to us about what is it Segan and Fiser and what's

going on there? Yeah, Hi, Paul, So I think this is, you know, not a surprise that Fiser's looking at companies, because you know they in their four QUE results they had a slide which showed twenty five billion dollars of risk adjusted sales from deals to be done in twenty twenty twenty twenty thirty, got that right, ye? So you know, and that's a lot of money risk adjusted, which means that when you look at a company company, their pipeline

drugs will have to be taking a notch down. And to get twenty five billion dollars with risk adjusted sales, you need something like, I don't know, thirty billion, thirty five billion of sales. So the point is they need to do big deals. And here, although Season is not necessarily a big company, today they say two or three billion dollars of sales. Expectations on consensus have it going up to about nine in twenty thirty. So you know,

does Fiser need to do this? Yes, something like this anyway, does fi Fiser need to do some of the several of these years bill fits in? You know, Sam, I'm looking at the FA function for Fiser and it just blows me away away. And this is obviously a complete

COVID call. Here. You know, this company had forty billion in sales and then in twenty twenty one it doubled to eighty billion, and then you know they had one hundred billion in twenty twenty two, and then I'm looking at the forecast on the FA function, consensus is back down to like seventy billion. Run right here. How does this company pivot from three year surge in sales and profitability from COVID and again, thank them and Moderna very very much for the work they did. How does this

company kind of reset itself in a post COVID world? Yeah, with difficulty pulled. If you look at the share price chart, you'll see that it's come back all the way down. So basically they're not getting a huge amount of credit for the cash they generated, because it's very difficult to

know what is the value of cash. At the end of the day, it's all going to be down to how good are they going to be in terms of the deals they do, And I think a lot of people worry that they might overpay and do deals that perhaps look optically nice today but they don't actually deliver

in the long term. So you know, it's much easier to value and be interested and have an investment positive investment view on a company where top line is growing organically and then anything they do is in addition to that um But so that that's difficult. I don't know how you how people get around this subject. You can put certain you know numbers in your model that suggests sure if they use the cash right, they can have a great story going forward. Well, Sam, you know, it's

it's interesting. I mean, I know you've been covering these farmer companies for decades. You know how much of the new drugs that come onto market are Fiser's scientists discovering something in their lab versus buying it? Good question? Yeah,

so it is a good question. And you know what they all farmer companies have pretty much a state to daim You know, I have very big business development teams of trying to get thirty to forty percent of their pipelines out sourced externally because they've realized this is a huge amount of innovation that goes on externally. And here's a little statistic. I'm preparing for a presentation in about ten days time. I looked at the biggest drugs in twenty twenty two. Seven out of top ten we're from

where biotech companies. They were unlicensed Bionte. You know, the Fiser COVID vaccine came from Bionte. Moderna's vaccine key Truda that America's got twenty two billion of sales potentially this year, or twenty four billion that came from an acquisition of a small biotechy farmer biofarma company in Europe called organ On. Which one is that key Truda y Truda, Yeah, twenty four billion. Says it is a magic drug for cancer.

So hopefully you never need it, but if you do and it works in you, it works like magic that it turns your immune system onto the cancers. Yeah, so that's why it's doing twenty four point So that that's interesting. So basically seventy percent of the big home runs were made by third parties, not the big giant pharma conglomerates, no, but but Matt, they did do a lot of the

work that got them to market. Of course, that's why that's why biotech investing sam, I mean, it really is not for the faint of heart, right, I mean it this drug works and the stock goes crazy, or it

doesn't work and it does the act exact opposite. Yeah, So you need to be able to withstand that that risk and also have a proper correct portfolio approach and be disciplined, you know, have your rules about what it is you like to invest in and why you invest in them, stick with them, and then stick with them. You know, when you look at the long term, the best returns come from companies which perhaps wasn't their first drug that got to market. Maybe it was the second

or third that really made the difference. By the way, Sam, in terms of M and A, how much of that are we seeing in this high and rising interestate environment? I would imagine less. On the other hand, these big companies surely have huge war chests of cash and maybe don't need to finance everything. Yeah. I mean, remember farma is massively cash generative, and you know they can pay They can pay equity if needed, right, so their equity is pretty much not that different to paying by cash.

But of course it depends on the target shareholder. So yes, you're right, there is there is. The calculation is a bit different now, but there's a lot of need. There's about two hundred billion dollars of drug sales that are coming off patent by twenty thirty. Wow, Sam, what's the next biggest i mean post pandemic role. What's the next big area for biotech? Do you think to really make a difference. Oh, I think it has to be to

really make a difference. It would be great if they can get the more and more of the immune system tuned into treating your disease and obviously manages side effects. And there's a lot of that going on, and of course there's this gene editing going on, so there's a lot of work there that could help us. So long as we can get the side effects and their safety risk under control, that could really revolutionize medicine. See Sam

goes to these conferences. They're not like the conferences I go in the desert or Data Miami where wire we plague off and stuff. He goes to these conferences where you actually have to work during the weekend. What's the next conference coming up? Sam, Well, there's one that I'm sad, not sad not to go to on the one hand, and that's the American Association for Cancer Research. I think

that's where I'm guessing here. MODERNA will show us the RANNA merc their mRNA vaccine for cancer, which has headlined positive data. So let's look at the detail. And the next big one would be asking in one of my favorite cities. Cha go there, you go? I mean, and these guys they actually go work the entire weekend. I mean, who does that? Sam Fazzelli held He's head of European

research for Bloomberg Intelligence. He's our senior farmer analyst who's been doing it in the city of London for decades. One of the absolute best in the business for Bloomberg Intelligence. We're gonna have more coming up. This is Bloomberg, right. This is a little awkward. And Matt, you're a CEO of a company announced that you're going to step down. Your stock goes up ten percent. It happens quite often. It is awkward, and yeah, I always feel for the

incumbent when that happens. But it's a part of market life because it does happen all the time. You know. Early in my career, I was a star I mean star research assistant covering the railroad and trucking industries. And I worked for a guy by the name of Tony Hatch. He's a consultant and analysts at ABH Consulting. Tony, I know, you know these railroad companies inside and out. Tell us what's going on Union Pacific. Why would the stock surge

ten percent when the CEO says he's going to step down? Well, first of all, I want to confirm the Yeah, you were a star assistant, but what does that mean by the way, to being a star research assistant? Means he was good to bring on golf forsoms or what. Well, since I don't golf, I'm assuming he took my place and I was really I would say his number one skill exactly there, you figured, I'm kidding Union Pacific, you know,

on a Sunday, right. The company tried to say this was part of a regularly planned issue they've been discussing going back in the early last year. So that if it's regularly planned, and you have a task force assigned, and you've hired and outside, you know, a recruiting firm,

why would you release this on Sunday. The answer is because one of their largest shareholders demanded that they do and put out an incredibly sharp letter that talked about how Union Pacific, despite having what's well known to be the best franchise in the industry, has underperformed all of his peers in just about every category. Echo to mention, um UP has had a long history of allowing great

patience for its leadership. Paul. You can remember back to the UPSP merger when when that you know, there was a disaster, but the management team stayed intact. This time, I guess they've made it, made a decision to change. It's the second time we've seen the board step in over the actions of the CEO of Lance Fritz. They did this when they announced they were going PSR. He

did not make that announcement, really, the board did. And then they brought in Jim Venna from Canadian National Fame to be the COO to basically supervise their transition to this new operating philosophy. It was expected that Venna might be making a play for the top job then then, being twenty nineteen, he did. He then left and Lance stayed, making me think Lance was a pretty good political infighter. Now a major shareholder, sor Avna is saying that Jim

Venas should take the job after all. So it's a little of a replay, only this time with a Sunday morning surprise that the board has agreed that if not coming not taking the advice of their their shareholder too with the person they picked, but to make a change. It's it's unusual. If you looked at the track record, maybe you wouldn't be surprised if you looked at Union

Pacific's performance. But given the history of this company and their longstanding patients and unwillingness to listen outside advice, this is highly unusual. So what what can be done at a Union Pacific? What are some of these shareholders want this company to change and perhaps improvement performance and shareholder returns. We well, that's a really interesting thing that you ask

right now. You know, the the this PSR that that precision scheduled railroading has has become a nasty phrase after all the labor negotiations. It's even been related to the accident in Ohio, though it has of course nothing to do with that. But but the idea of bringing in an operating guide to solve problems here at Union Pacific, and all the railroads had service issues over the last eighteen months, although they were almost entirely labor related. That

is not having enough cruise. This is a gesture where Union Pacific is sort of ignoring the wishes of its regulator, the Service Transportation Board, which has painted the target of

all railroad badness, if you will, on Up's back. And so if you were to bring in a c OO as CEO, you would in essence be saying we are a inefficiency driven way to get to share all the value rather than a growth driven lance didn't represent really either side of this ongoing philosophical debate, and jim Na as a person might not want to say he represents

the operations side, but his resume suggested that. And then when he was brought up as the attack guy coming at Canadian National a year ago, when Children's Investment Fund highlighted him as the successor, they got a lot of what they wanted. TCI did, but they did not get Jim Venna. One of the thing the TCI allowed to happen, as have analysts say, this was a move to pivot from growth to back to margin and that is really not what shippers want to hear, certainly not what the

regulators want to hear. What Union Pacific needs to do is really take advantage of the many gifts it has. It's incredible franchise. It's seemingly never put it all together. There isn't a single you know, silver bullet. Oh, if they just fix this, they're back. But as you may remember, Paul, they you know they have the biggest franchise. You know that the connections to Mexico, widely diverse, all of the great chemical franchise. Not not that that's a great topic

for these days, but they really control Texas. I want to ask about that, not Texas obviously, but Ohio. First of all, for those of us who don't cover the railroads for a living, how many big railroad companies are there? I mean, it seems to me that there are only a handful of them anyway, that operating all of North America, so that you are correct, they are essentially you could

say seven or maybe eight. But in the US there are the Big four War in the west, B and SAFT that's Berkshire's company, Union Pacific in the east, and Norfolk Southern and the Canadians go Transcon up in the top and they both drop down through the center. CP soon to acquire Kansas City. Southern will go all the way to Mexico City. CN goes all the way to New Orleans. You have another railroad of some size in Mexico. That's really it. But keep in mind you have a

highly developed highway system. So the rails are often thought to be they're called duopolies, and the STBs often used the monopoly word, but this is a duopoly that is losing share at present in a rising freight market, you know, forgetting today's economy, but over the last five years, and that shows you the importance of the highway. So yes, there are many fewer railroads, but there's the competition for

freight is stronger rather than weaker. So what needs to happen from a regulatory perspective to make sure something that we saw in East Palestine, Ohio doesn't happen again? I mean, if it's possible or was there lax regulation that led to the Norfolk Southern derailment that now seems to have poisoned an entire region. So it appears highly and usually the National Safety Board and TSB released a preliminary report that's unusual, but there was so much heightened demand for

some kind of answer. That report says that although this was a you know, a completely solvable problem, they didn't exactly say how. And it appears in Norfolk Southern you did all. You played by all of the rules that they're supposed to have, including stopping the train when they heard there. There will be some changes, most of which will not have had any impact had they occurred before

this accident. In other words, ECB breaks. I'm getting into the weeds here, but a new kind of breaking system is one of the things some have proposed that has no impact. That would have had no impact on this. Changing how you label trains likely would have had no impact on this. It's not clear the solution of this highly unlucky set of circumstances is either letting railroads not carry this. Remember they're not allowed to carry these goods,

they're compelled to carry these goods. So allowing railroads the opportunity to say no, to change how the supply chains for vinyl chlorider move to, that's some possibility. You know, it's not necessarily on the railroad here, since they appeared to have played by the regular rules. There is technology coming that will have a better system for understanding when bearings failed. This was a bearing in a single wheel set in one hundred and forty nine car train that failed.

They were aware it failed just before the accident. New technology could come that may allow them to have an earlier look at this. But in many cases, I think we're going to find this is just a set of completely unlucky circumstances, and the crew did the right thing. Afterwards, the responders did the right thing. We had no injuries, no fatalities, and I think, actually, what will ultimately be a solvable although reasonably expensive cleanup process Tony thirty seconds. Here,

I'm looking at Norfolk Southern. They spend a couple billion dollars a year in capital expenditures. There is there a credible argument that they don't as an industry spend enough on safety. No, the idea here that they they never spend enough for people talk about their buybacks and their dividends is really kind of it's like it's a populist propaganda here. The rail system in the United States got a B plus, the freight rail system a B plus

grade from the American Society Civil Engineers. Highways got a D. The alternative of moving these goods you take them off the railroad, will they go on the highway? On that D rated system by by engineers? Where the railroad spend you know, massive amounts on a consistent basis on their network. The cars in this case are owned by shippers, but they were mostly the newer type of cars. You know, there really isn't a case that this was a greed

over people right issue that's just populism. I just wouldn't carry it. Yeah, well, you know, not a choice. Plastics is not the key to the It's an option right there. All right, Tony, thank you so much. Tony Hatchi is a consultant analyst for the transportation industry at ABH Consulting. He's been doing it for decades, covering the railroad stocks, at trucking stocks, the shipping stocks. Good to get that voice on, Jill. Thanks much for joining us here talk

to us about the why wca's Women's Empowerment ETF sounds fascinating. Sure, sure, thanks for having me. Yeah. I was formerly the chief Innovation Officer for WYDBCA Metropolitan Chicago and now I'm working as an advisor with WYDBC A USA to continue to work on the exchange traded fund that we launched in twenty eighteen with partnership with Impact Shares, which is a nonprofit investment manager. The goal here was to create so hang on, Jill, just to be clear, the YWCA itself

released this ETF. We're the Impact partner, so we eat Impact Shares released the ETF. There, the investment manager WYDBCA is sort of the consultant on the criteria that are used to evaluate the companies m that are focused on women's empowerment, policies and practices that companies can can impose

in their workplace. UM and you know, with with over one hundred and sixty years of experience and women's issues, the y to BCA lends their leadership, voice, data, knowledge, our networks, you know, to really make this an impactful

investing product. While we use this as an opportunity to engage corporations on you know, what policies and practices they can implement that will really impact women in the workplace, and as a tool to educate UM investors in the general public just you know, people in general on the importance of these different criteria and how you can make

an impact with your money. I would guess that number one, by a long shot, is having decent maternity leave policies, and then I would guess that number two is on site daycare and that everything else is way far behind that. A am I onto something here? Those are definitely things we would like to see corporations and all businesses implement

in their workforce. But we look at the product itself, uses equip research and Equilipe is a gender equity research company in the Netherlands and they look at over four thousand publicly traded companies. They look at nineteen different criteria that empower women in the workplace, and then that information is used by morning Star to create the Women's Empowerment Index, which is used by Impact Shares for the product itself.

So the Equilipe criteria look at gender balance in leadership in the workplace, equal compensation and work life balance, and policies promoting gender equality, as well as an overall commitment to women's empowerment and their transparency in that area and their accountability in that area. Be nice to see, I mean, it will be nice to see the performance because I imagine companies that pay closure attention, that do a better job of UM, you know, keeping talented and experienced women

on staff, do better at business. Absolutely. I mean what we see through the data is that, you know, companies that are inclusive and they incorporate these different criteria, UM have great you know, they're they're more they're much more successful. UM, they have lower turnover, they have the higher employee satisfaction. UM. You know, it's just all the way around. UM and and things like, um, you know, we look at paid sickly,

the gender pay gap, the living wage. I mean, these are all things that not only strengthen the women in the workforce, but then also have the knock on effect to strengthening the companies. Hey, Joe, give us an example of one of your holdings and why from your perspective, it's in the ETF UM. Well, okay, we have uh, let's say, um Ndidia Uh is one of the top holdings right now. UM. And you know, if they they

go out of their way. UM, well, we don't think it should be out of their way, but we uh, you know, to to really implement um, to be very transparent about their pay. Um, their pay Uh, they pay a living wage, UM, they have great um uh leaves and work options. UM. So these are things that we would like to see more companies adopting and employees being more informed about so they can you know, ask their

companies to provide these um these things. We see these criteria as sort of a roadmap for both corporate America and employees. People. You know, if you're looking for a job, these are the things you might want to think about a company having in place. It's I mean, it's so interesting because I come from I've been in Berlin for the last six writers, right, and there they have what seems to me um to be good maternity leave policy and paternity leave and how long is that? Uh, it's

thirteen or fourteen months? Really, and then you know at that age m a kid is allowed to go to daycare what they call quita. Right. But here in America, where we have the worst maternity leave policies, it's like one or two weeks, and then then then you still can't send a kid to daycare or any kind of free education or or babysitting for like five years. It's like the worst of both worlds in this country. And I just imagine that big companies could take advantage of

that and outperform others. I see. Second among your holdings is Amazon, which is interesting because they've had this kind of anti unionist slant. Um, why do you include them so highly? Well, there, it's it's based on their score that they received from a relief on the specific criteria. And you know, we we know they're there shoes with all companies, and not all of them are doing the

most that they can do. In some situations. You know, I hate to say they're the best of the worst because they have the highest score among their peers in their particular sector for these issues. And that doesn't mean that, you know, we let up on those companies that we don't want to see them do more. But the way the index is or the way the products is constructed, now, if they're in the top of their sector based on these different criteria, they become a holding. All right, great stuff,

really appreciated. Jill O'Donovan, chief Innovation Officer the YWCA, I think USA now she's advising on that. And they've got the name of the name of the ETF is the Impact Shares YWC Women's Empowerment ETF and the ticker is WOMN wo MN, so it's pretty easy to remember. And if you go on the Bloomberg you can find out a lot about it as well. Just type d E S and then you can click on the hold things tab to see which companies they are involved in and

you can see how they've done against other ETFs. I think it's a really important tool, you know, in the end, to see how companies do that treat workers better. Yeah, exactly, And I'll be interesting to see post pandemic, when people have had a chance to work from home for multiple years and maybe a hybrid type of arrangement or maybe

just working from home period. Will that put additional pressure on companies to up their game in terms of fraternity care, healthcare and you know just that type of thing right well, and hopefully at the end of the day, companies that do a better job of employing women do a better job of making money, yes, and that puts incentive into the others, right, So I'll have to see how that plays out. But certainly getting a lot of interest here,

maybe even more so post pandemic. Everybody who's interested in the investment banking business, and you can count me at the top of that list. It's going to be paying close attention to what we hear from our good friends at Goldman sax To Markets are having one of their rare investor days where they trot their management teams out in front of investors in analyst and our very on Alison Williams will be there. She's a senior global banks manager,

asset manager analyst at Bloomberg Intelligence. Alison, you've been covering these big investment banks for decades, you know, you know Goldman Sachs first as a competitor to them when you were at Morgan Stanley, now as an analyst at Bloomberg Intelligence. What do you think this management team needs to get across to investors tomorrow. What's their strategy for having this investor day. I think a big part of the investor day will be trying to put some detail behind how

they're going to achieve their medium term targets. So Goldman Sachs, along with some other banks, last year, after a very strong twenty twenty one, raised their profitability targets. Obviously, it was a much different landscape last year, many challenging areas. Fixed in trading was an area of strength, especially for Goldman, and I would say that the cost ratio is really I think where there's going to be a lot of focus. That's that's an area they said they were going to

miss last year. There's a lot of concerns about what they're spending on comp what they're spending to invest, and so I think from a metrics standpoint, we're going to want to hear, you know more about is the sixty percent still a goal and what does that look like for this year? And this unit, the AWM unit, which is I guess their asset and wealth management unit. Is it so awesome? I mean, is it totally better than

everybody else's asset and wealth management units. I think it's it's very different, and I think that is an area where they've executed well, sort of against their plan and obviously in the context of the environment. So you know, the last investor Day they focused on a few big opportunities, or the last investor day was the first investor day, right, the last investor day was the first investor day. It's only the second ever investment day that Goldman Sachs has

been too good previously to have an investor day. If you want to buy the stock, you don't have them tell you why. You figure out why you should buy the stock. But now they're doing the work for you. That should be a sign enough. Well, I think they're trying to give a little bit more detail and to your point, like when when things are going well and steady state, there's less of a need to sort of

put yourself out there in front of investors. I think when they wanted to talk about some of these pivots and give some detail around their strategy. I think that's that's what sort of led to the first Investor Day. So ironic, Alison, you and Paul Shirley. Remember in Liar's Poker, there's a trader at Goldman Sachs who's doing so well that he can come to work without wearing a suit and tie. He comes in with jeans and cowboy boots

and he's allowed because he's doing so well. But at some point he stops making money for the firm and they're like, dude, put on a tire. You're out of here. This is like the investor Day. So so, Alison, And that's by the way, So I mean, I think that happens across Wall Street when people go towards more as casual when things are going well, and then everybody's got to get the suit and tie. Everybody's going to come into the office. And you know, when performance is good,

a lot of things can can be ignored. Right, So, Alison, how about Marcus their consumer banking effort. I'm not sure if it's deemed a failure, but it's defertainly underperformed. Where are they completely pulled the plug on that? If not, how do they position it? So I think there are

elements of the you know, consumer strategy there. I think that they're going to continue the main product which was always sort of a head scratcher that you know, what what what why why they thought it was so special? I don't think anyone else thought it was a unique strategy. I mean it was basically you know, rolling up bounds transfer.

This is something that a lot of it UM card companies did in the nineties, and so it seemed like not really um, you know, it was a little puzzling how they thought that was going to be sort of a differentiator or give them any kind of competitive advantage. And so I think, you know, moving away from that and um and then there are some environmental factors. I get it, by the way, Allison, because at the time I thought, wow, Goldman Sacks. If I bank with Goldman Sacks,

then I must be the very best. Like if I pull out a Goldman Sacks card when we're all vying over who pays for dinner, then I'm the man. You've made it right and and and that and that's that was the idea behind the Apple card as well, Like it's just the cache of having it correct, and that I think is that's something that I think they're going to hold on to, right because in the credit card business, as we said, as I just said, balance transfer is

one strategy. Another strategy is to offer, you know, to provide some sort of cache behind the card. You know, when we look at things like the Platinum card or the staff Are card, there's a lot of benefits, but it's also sort of the cachet of having those types of cards or other types of affinity cards, which kind of I think goes to Apple, where banks will try to leverage off of a strong name or something that you know, the consumers have a strong affinity towards. Hey, Alison,

David Solomon, the chairman and CEO of Goldman SAX. How secure is his position, would you say these days? I think that he has to instill some confidence again in some of the strategy he can't. There are certain things, you know, the investment banking business you can't. You certainly can't blame him for you know the fact that the industry had a significant slide of fees. There were almost

no IPOs last year. But I do think that you know, you can manage to the cost side of things, You can manage terms of your investments, and keep in mind that the consumer business was not hit. You know, that's something that he inherited as a CEO. So um, even though that you know, a lot of fingers point to him that that wasn't necessarily sort of his um, you know, that wasn't that wasn't necessarily his initiative. He sort of

came into that. But I do think that, you know, in terms of managing the cost, managing the investments going forward, he does need to have a bit a little bit more credible path and you know, they do have to think about what they're going to say. Most people, I don't think expect a change in our return targets. It would be a little silly a one year later to reduce those. But I think he does need to provide

a credible path. Um, what about a change at the helm of Goldman when you meet up with all the other super bank analysts, do you guys have like a betting pool on how much longer Solomon's got? I mean, I think that's that's probably not you know, I don't think that's really the main focus at Goldman Sachs. I think that you know, he's there are very good stories going on there if you look at their trading business, I mean, they really have knocked the cover off the

ball in terms of gaining revenue share there. The investment banking too, they've done a good job even though it was a bad year for the industry. The M and A franchise, which is you know, that sort of very associated with the Goldman brand. I mean, I think that's very strong. I think when people think about the leadership across the global investment banks that that's not really the one that people are, you know, necessarily betting on a change.

I think people are looking more towards some of the other banks where there's been long standing leadership and wondering when there's going to be a shift at those banks. All right, Alison, good stuff. I know you'll be downtown at the Goldman Sachs headquarters tomorrow with all the other financial analysts and investors waiting to hear what we're gonna hear from Goldman Sachs with their investor day. Alison Williams. She's a senior global banks and Asset Managers analysts for

Bloomberg Intelligence. She's been doing that for decades. He's got great perspective. Read her stuff on bi Go. A couple of months ago, thanks to Matt Miller's contacts at Ford, I was able to test drive a Ford F one fifty electric truck and boy was it awesome. I was really impressed. But now we've got a Big Take story here that tells you, boy, there's some big issues with where the aluminum comes in this truck, and that's the subject of a Big Take story and a Big Take podcast.

So let's go to West Kasova. He's the host of Bloomberg's Big Take podcast. So West, I just kind of going through this article. It's fascinating reporting as always, fascinating photography, as always, great graphics, and it absolutely warrants being a podcast. Tell us about how Ford makes or gets the aluminum Forward's F one fifty pickup trucks. Yeah, this story is reported by Jessica Price Bryce in South Holli, Brazil and

Sherd Impress in the US. And they looked at was where does the aluminum on this rock of the future, as Ford describes it, the F one fifty lightning? Where does it come from? And they were able to trace back a lot of the aluminum on the truck to a mining and a refinery in the heart of the Amazon in Brazil and down there there are thousands of people who are suing now a refinery saying that the operation is really dirty and it is making them sick,

and that it is destroying the environment. And they trace the supply chain all the way from there up through Canada and then into parts suppliers and then to Ford. So are those parts suppliers only selling this aluminum to Ford or is that is that aluminum only going to Ford because other carmakers obviously use it as well and the material I mean, and is it just for the lightning because Ford's been using a lot of aluminum in

the F one fifty for many years now. Yeah, A lot of the aluminium used in all kinds of products, you know, soft drink cans, other vehicles, a lot of the things we buy because you know, we use a lot of aluminium comes from the same area. And there's a lot of companies, there's a lot of refunders, so it's not just Ford. The reason they focused on Ford where it was a couple of things. One is that supply chains are often kind of black boxes, as they

describe it. It's really hard to find out the origins where stuff comes from, especially when you have a really long supply chain, like all the way from Brazil to the US. And what happened was the lightning was such a big deal when they announced it. Everyone was so proud to be working on it that some of the parts suppliers said, hey, we're supplying our parts to Ford's new trout. And so they were able then to find out, Okay, if these companies were sourcing it to Ford, where did

they get it? And they were able just by looking through an enormous number of records and doing interviews to trace it all the way back. And the other reason they looked at forward was that Ford described this as the truck that could possibly change everything that you have a lot of people ain't Tesla's and maybe they're really thinking about going to net zero in a carbon free future.

But people will buy pickup trucks. They need utility, they want power, and maybe the environmental thing isn't the top of mind. So those people can be persuaded that an electric truck is a good thing. Then you really shift away from gasoline eventually to electric. And so this futuristic trucks seemed like a good place to really look at Okay, so how clean is it? So West who owns this aluminum refinery? It's not forward, right, It's it's another company. No,

it's another company, and it's based in Europe. And the ownership of these companies is really long and involved in you don't want to rot here. But Ford is really just getting these parts from their suppliers. And I should say that the companies themselves, and this is what comes out in the story. The companies are following the laws of Brazil. That laws in Brazil over environmental regulations are pretty weak, and so the companies aren't necessarily breaking the law.

They're following the law. It's just that the laws themselves don't enforce environmental regulations that protect them. The other thing that we should really say here is the reporters went to Ford and said, hey, we've found this out. What do you say? And Ford immediately said, we did not know this and we are now going to investigate this and so we're going to see what Ford Ashley does

about it. They said that they had no idea that the aluminum was coming from the Amazon, and that points up to another problem is that these supply chains are so long that a lot of times your suppliers say yes, it's all certified, but you don't really look to see what about three or four suppliers down the lock right. Well, and when you buy the truck, you probably maybe if you care about the environmental impact, you look at Forward and maybe you look at a couple of their suppliers.

But consumers, obviously you can't go that far either. I'm sure they'll be interested to read this piece. Where's the good aluminum come from? Like, if I don't want to poison people in the Amazon, where should I get my aluminum from? Yeah, this is a really big point, and this is something that I asked both Jessica and Sheridan, the reporters on the story, and they say, you know, like let's say Ford, really they look at this and they say, yeah, we don't want to get our aluminum

from this place anymore. That's problem. There aren't all that many places you can get it. And so the conclusion that they really came to is that you're not gonna just all of a sudden fine new sources of aluminium, especially in the massive someone went Forward would need. You just have to do a better job of making sure the way you're getting a luminium is cleaner and that it's doing better by the environment and not just everybody kind of looking the other way. So what are the

people down there in Brazil really looking for? Are they looking for them to stop production, to clean up production, to change the government rules. So there's all kinds of things wrapped up in this because this has been going on for decades where mining companies had polluted water had you know, of course we've all heard about the deforestation problems of the Amazon, ripping oak trees and kind of

ruining an environment. Allow the water down there was just undrinkable, and some of the companies supply people who live there with bottle bobble water because they can drink the water. It's everything from people saying, you know, their skin is that she too, horrible birth effects that they claim are the result of these environmental practices, and so what they're looking for is redressed to the you know, the things they've already suffered, and also to stop it going forward.

All right, West great stuff, really appreciate it. West Kosovo. He is the moderator for the host of the Bloomberg's Big Take podcasts, and you can check that out wherever you get your podcasts. In this edition talks about you know, sourcing aluminum in Brazil. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three and

on false Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio