Hard To See Coal Rebound Despite Trump's EPA Rollback

the regulatory burden to states. This basically is another way to basically foster the coal industry, as President Trump has promised to do. Here to talk a little bit about that, as Ethan Zindler ahead of America's for Bloomberg any f coming to us from Washington, d c. Ethan, thank you so much for joining us. So can we just start with an overview of what exactly President Trump's administration is

trying to do here. So first and foremost, there was an effort under the Obama administration called the Clean Power Plan that would have set a national goal of reducing CEO two missions from the power sector. The goal was to cut CEO two emissions by twenty thirty. We're very

actually very far along towards that goal already. But the new rule, which was essentially has now been rolled out by the Trump administration UH sets no specific long term goals for CEO two emissions and essentially says states, you guys, go away and figure out how much you want to

do on your own to try to address CEO two reductions. Okay, So just to give a sense, and this is something that you noted that as of the end of last year, the US already achieved pent UH CEO two reductions that had aimed to reach by In other words, it was really ahead of schedule. And I'm wondering how much does President Trump's how much too, is President Trump's actions set

us back or do they have no impact whatsoever. Well, this is one of those stories, and especially someone here in Washington, which is I think you know, gets a lot of attention, justifiably because it represents the perspective of the administration and the way they view climate and frankly, whether they care about climate at all, which is unclear.

But it's very important to put this in the larger context of the trends that are going on in the power sector anyway, And as I mentioned, you know, we've reduced our missions from two thousand five levels already as of your end two thousand seventeen. Our view is that the US power sector will continue to de carbonize. Natural gas is cheap, renewables are cheap, and essentially coal is getting phased out, and frankly, this regulation probably won't change

that in any substantial way. So symbolically it's important, But as far as the market's concerned, UH and as far as the US emissions path is concerned, from the power sector, at least an our view is not likely to make a big difference. Can you give us any update on the coal industry and whether there has been an increased in UH in jobs there or an increase in profitability since President Trump took office. I'm looking right now at Peabody,

for example, one of the big US coal companies. Their shares are up more than this year, so they are beating the broader large indexes. Well, it's all it's all relative to I mean, take a look at where they were.

They were there fair enough and and I think generally speaking, you know, I think there's been plenty of sort of favorable publicity around the coal industry with this administration saying they want to do more things, and they are taking a number of regulatory steps to try to be supportive. But but our general view is that the economics are the economics, and gas is very cheap in the US, and the consensus view is that it's going to stay

cheap for a very long time. Renewable prices have been down substantially, and with the text credits to support them, they also undercut coal. So it's hard to see the US coal power sector making a major rebound regardless of these very US efforts. You know, I want to put you on the spot here and talk about the flip side of of coal and what you're talking about, which is the renewable side solar, uh when other types of

energy production that's considered to be more environmentally friendly. The US had been accelerating the production of those types of energy quite significantly under Obama. I'm wondering has that changed at all, or has the pace of adoption continued to gain steam under President Trump. I would say that, you know, we have seen a bit of a slowing on the renewables build side post Trump um. But I wouldn't directly

attribute that to any actions that he's taken. There have been policies in place that essentially we're due to sunset and we're coming up towards the end of some of those, and that's part of what sort of frontloaded some of the activity, uh, sort of coincidentally into Obama's term. But generally speaking, you know, we continue to see projects get built.

There is support for renewables at the state level on a policy basis, there are tax credits, but most importanly for renewables, the price of the equipment has just come down, particularly for solar, so enormously. I mean, by the end of the year. To put this in context, a solar module sold from a Chinese company will sell for about cents a lot. I realized that means nothing to your listeners, but ten years ago that number was about eight dollars

a lot, ten dollars a lot. So the technological advancements and the cost declines have just been tremendous. Okay, So I'm just wondering going forward, how much can one presidential administration shift the policies and sort of shift the landscape for energy consumption at this point, and how much really is it just the market determining what people use. It's mostly market. I think that the administration can sort of try and steer a ship, but it takes years to

try and make real adjustments. And I would also argue that some of the most important sort of policies that can affect energy, that the course of direction for the power sector, are not ones that an administration can do unilaterally. You would be Congress um. So, for instance, if you really wanted to help the coal industry, the best thing you could do is probably create a new tax credit or subsidy to support that. But that is not something

that the administration can do on its own. It's something Congress needs to help it within um. Despite the fact that Congress seems very inclined to help this administration in a lot of ways, I think people would say that that would be a tough thing to get through even this Congress, and certainly the one that's coming would be less would probably be less inclined to be supportive of something like that, given the fact that the Republican part of the government is expected to lose some seats in

the upcoming interm election. Is that what you're imply Yeah, that does seem to be what people think is going to happen so far. One thing I'm wondering is if you stripped away all subsidies for solar and wind, would those methods of energy production still be economically competitive with the fossil fuels? Yes, in some places, know and others? Is the long, long story short. If the winds are strong enough and the sun shine bright enough, projects are

absolutely cost competitive. We're seeing that in places like Oklahoma and Arizona and other parts of the California and other parts of the world. The other question is how expensive is the existing generation from those fossil sources. Uh. It really varies from different parts of the country. But the long story short is right now renewables are cost competitive in a number of places around the world, including number

of prices in the United States, but not everywhere. And coal with respect to that, is there anything that President Trump can do or that you're watching that will have material impact to support coal unilaterally? I think the Trump administration is trying to do most of the things that

it has within its power to support the coal industry. Um, but it is it is frankly just going to be challenging so long as gas prices remain low um if they frankly, if the administration wanted to do something to sort of artificially raise the cost of um of gas production, I don't know what that step would be, tax or whatever. UM That would probably also helped Cole, but again that's something that Congress would probably have to be involved in.

Ethan Zindler, thank you so much for that wonderful perspective. Ethan Zindler's head of America's for Bloomberg based in Washington, d C. That's Bloomberg and E f uh And definitely an interesting time with some revocation of Obama era environmental rules. How much effective they actually have that remains to be determined. There are some companies that are the the intersection of some of the trade tensions that have been ongoing, and then there's some that face a changing landscape with respect

to new regulations or regulatory rollbacks. Our next guest potentially is at the intersection of both, and that is Mark Vignano. He is chief executive of Commoors, which is based in Wilmington, Delaware. You might know Commors by some of its brands like tef Line, which is sort of means so much to so many people as well as free on Mark. Thank you so much for being with us. So happy to be here. So I want to start with the concept of this company has its business the US and the

rest of its outside of the United States. And I'm wondering, at a time when you do have escalating trade tensions, how have you been affected. Yeah, so if you think about trade, you know, and I know the administration today is really trying to get this level playing field. Um. From from our standpoint, there's lots of ways to deal with that level playing field. One area is something that we are very important to us as the key Galley Agreement.

That ke Galley Agreement is connected to the Montreal Protocol. Basically, it's a business first, a US business first kind of effective trade agreement where American can win. So it's it's allows us to can just lay out when this went into so what it is. We manufacture a refrigent called Optition, which is low the lowest global warming potential refrigerant in

the world, lower global warming than any other refrigerants. Many countries have adopted the Gali Agreement, which allows the use of those in relationship to hfc's or there are traditional refrigerants, and so here in the US, we want to see that adoption happen as well, because it's going to benefit companies like Commor's, companies like Honeywell that actually have developed this molecule and be able to bring it in So you can, jobs are created here in the US because

of it, Manufacturing facilities are being put in place here in the US because of it, and so it's a way for US to be able to utilize US based technology versus Chinese based technology which is in our refrigerants today.

All right, So this is actually really interesting because what it hints at is this idea that if the US tries to go it alone and have a different set of regulations with respect to curbing certain environmentally harmful gases, that perhaps it won't be privy to agreements that will actually foster jobs and opportunities in the US. Is that basically what's it's effectively a business trade agreement that benefits

and creates a win for the US. So you're exactly right, you know, we're going to manufacture that here in the US. It's going to create thousands of jobs because of it, and it's going to be exported to the whole world, but also can be used here in the US at

the same time. So as we talk about trade, you know, it's it's about how do you how do you create free trade for companies like commors, And that's really what we're looking for, Okay, But arguably, I mean, if you're selling this, why does it matter whether the US is involved in those agreements or not, Because the more it's a huge market opportunity here in the US. So of automobiles in Europe already used this refrigerant. About half of

the auto park here in the US uses it. But stationary refrigeration, stationary air conditioning is really a driver for US, and the growth is here in the US. This is really interesting to me. It also makes raises a question of whether a greater proportion of your business has actually gone outside of the US as you've seen some of these other countries adopted. Have you seen the mix of business shift more to UH foreign countries rather than the

US over the bunch. Well, it's interesting because as a as a global company, you know, we we're the world leader in t O two or the world leader in refrigerants, with the world leader in Flora polymers um. But this specific product we're talking about, which is a refrigerant. You know, we think of refrigerants as the old freon, right optition is the new free on, if you will. Most of our sales are outside the US because of adoption of these regulations, and we think this could be a great

opportunity for the US for business purposes. It creates jobs here. It's just not great for the environment. It creates jobs here, and it really rewards the companies that have developed this. So UM, I want to talk a little bit about some other policies that are being implemented or at least trying to be affected across the Trumpetitus straation. Antiregulation has been a huge theme, and we've seen certain regulatory rollbacks, in particular today with proposals to make it easier for

coal companies to exist and thrive. I'm just wondering, in terms of your industry, have you seen a significant regulatory rollback. We haven't. You know, we participate in the chemistry industry, so from that standpoint, we haven't seen a significant rollback. And you know, the way we look at it is, you know, regulation isn't always bad for business. It could be a positive for business. You know, I gave the example of Cagali a second ago, where it could be

a positive. But at the same time, it can also create clarity for a company in terms of how to operate, so you don't have to operate differently state to state. You can operate the same across So we haven't seen significant rollbacks that are affecting us, But to us, regulation, if it's based on science and if it's based on risk, can be very helpful to a company. At the same time, Um, I'm I was interested. I saw a couple of articles

about this pollution SADA. It's been going on with commors and some North Carolina residents about a spill and how much you're getting involved or not. And one thing that I'm wondering is do regulations protect you in a way or if they did roll back some of these regulations, would you change anything about your business? Yeah? For us, you know, um, so you you mentioned the situation that

we're dealing with. What would she take very seriously, Again, we don't believe we have any health hazard, but the community doesn't like things being put into the error into the water, So I don't think it would change the way we operate because We're going to try to operate within the realm of the community and what they want and what they need from that standpoint. But again, when you're looking at a level playing field across the US, it's hard to be able to navigate state to state.

You want to be able to have something that gives you clarity across the whole US as you're operating. That's a really good point and one that I hadn't thought that much about. Thank you so much for being here. It's always it's really a pleasure speaking with you. Mark Vicnano. He is chief executive of Commore's UH, the leading I Guess refrigerant company and UH and creator of Teflon and free on and all of those things and the new free On. It's based in Wilmington, Delaware, but he's here

in our eleven three oh studios. The Year of zero investors do not want to pay anything, and investment firms are realizing to keep said investors they need to offer them free funds and free trading. Evidently here to talk about that. Eric Balcuna, Senior et F analysts for Bloomberg Intelligence.

So Eric to this morning's news. JP Morgan is planning to roll out a mobile brokerage platform next week, including free research as well as some free trading discuss Yeah, and you know, you just hit on one of the things that was buried lead in my opinion, which is free research. That's the department I'm in. So knowing that it's going to start being becoming free hits home for me. This is where we've been going for a while. There's been a lot of startups like robin Hood or robo Advisors.

You know, on the streets you see people offering this stuff already for free, and then you see Vanguard get in and then of course, uh, you know, the big guys are going to follow suit. And the reason is because people want it that way, the customers speak with their with their feet, and for JPM, we're going to

do it. It's especially huge. It reminds me of the Fidelity zero thing, where when you heard Vanguard offering free t F trading, it's like, well that's what they do, they're you know, but you know when Fidelity went zero,

it's like, whoa, aren't they the big active shop. And now here you have JP Morgan, who people just don't associate with that kind of mentality offering free so I think this is equal to the Fidelity announcement in terms of just shaking people to their core in the financial industry. So you said this is what customers want. I also want free housing. I also want, you know, free incredible dinners with my husband, and hey, it would be really nice to have a free manicures. People want a lot

of things free. They don't get them. And my question is how can these firms be offering zero fee funds and zero fee trading? At what point do they make no money as a result. Yeah, it's a good question, and so for let's go for it, just JP Morgan. One way they can do this is by free t F trading. You can sell the order flow to market makers. Um,

and that is worth something. Last year Schwab made, according to Dave rid Or, my colleague, a hundred and fourteen million in selling that order flow of e t F trading and stock trading. Wait, hold on a second, what does that mean? So basically they can sell to a market maker all of the orders that come in. They can then offer that and sell that to a market maker who will then get first DIBs on that order

flow for a very small fee. It might affect the retail client in a basis point, so it's minimal, but if you add all that up, you do get some revenue. It's not a lot though. Some people overestimate this thing of order flow. They all also on the fidelity side with a free fund people overestimate securities lending that is not worth that much either. Both of these cases, these are lost leaders right. What they're really trying to sell you is is loans, credit cards in chaping Works case,

or fidelities case, active mutual funds. They have plenty of products that make a lot of revenue, and so I think they're just reading the writing on the wall and they're going, look, this is the way millennials wanted the a lot of investors who are following them. Let's just go there now, you know, rip the band aid off and we'll work out how to make money in other ways. But I don't really see any other direction this is going to go, because again, this is what the people want.

So tdmre trade right now shares down more than five Charles Schwab shares also sharply down. I'm just trying to figure out, are we going to look at some kind of massive consolidation in the brokerage industry similar to what we have been seeing, or perhaps it needs to frankly escalate to meet analysts expectations in the asset management industry.

I think you have to all signs point to consolidation across the financial industry because of this intense cost obsession, whether it's a cost obsession and expense ratios of funds or for free trading um. You can't live on a couple of basis points alone. Everybody knows that, right, so scale is one way to get cheaper, obviously up selling them on higher price products. The reason you're probably not going to see this kind of mass consolidation right now or in the near term is the market has been

so good to these companies. I just looked at you know, active mutual funds alone have grown assets by seven trillion just in the last ten years on market appreciation alone, no flows. So the market has really helped the financial industry not have to really face this challenge. So I do think if the market gets choppy or goes down, then I think you'll see people sort of looking to

partner up UM and get scale and go cheaper. You know, I have to wonder there's really no free lunch, right, And I have to wonder when you start seeing all of these look no fee UH funds or offerings, there are fees for somebody. Is someone going to bear the brunt of this, either through inefficiencies or extra cars costs elsewhere. Yeah, I think that's the big case here. You have with UH you know this idea of selling order flow, which you know your own money. But again, I don't look.

I know there's a lot of ways to look at this. And what's the catch, right, That's that's what Vanguard that their reaction to Fidelity going to zero fee. But in this case, if you're a disciplined person, it's sort of like your credit card. You know, my wife and I use it a lot, but we pay it back like clockwork. It's more my wife, I'm a little easier, but we pay it back like clock was. Yeah, it's all her.

I get to give her credit. If you can really discipline yourself and and not and resist temptation, I think you can really get basically free exposure and all of your investments and finances for almost nothing. I think they're it's the people who can't control themselves. Maybe you trade a lot and you get more involved in they're in there sort of like universe than they upsell you. You start using options. Next thing you know, they're making a lot of money off you. So I think this is

sort of the same situation here. But discipline will help investors who are looking to enter these free situations. Um, and that's important. Yeah, It's sort of like free drinks in Las Vegas. Right. It's fine for people who are disciplined, but for those heavy gamblers might be tougher. Eric Felt, Senior et F analyst for Bloomberg Intelligence, always with insightful comments today on the race to zero throughout the financial industry.

President Trump is disappointed in Jerome Powell. He said in comments to a number of different outlets that he thought that his FED chair was going to be a cheap money FED chairman, and he is disappointed that he's been raising interest rates. Joining us now to talk about that is Mark Spintel, founder and chief investment officer at Potomac River Capital, as well as Craig Torres Federal Reserve, and

you as economy reporter for Bloomberg News. Thank you both for joining me here from Washington, d C. Craig I want to start with you and just get a sense of what President Trump said and how out of the ordinary it is. Uh. It was uh not that dissimilar to previous remarks he made, which I think is why people are kind of people are investors in particular paying attention, but not really saying this is something new. He's been complaining, it's on everybody's radar. Uh. The question is you know,

what does it do? Um? How does it shape the Federal Reserve? So among the comments was a comment to Reuters where he said, we're President Trump said during this period of time, I should be given some help by the Fed. The other countries are accommodated. Mark, come on in here. I guess that there is a big existential question that this raises about the independence of the Photo Reserve. Jeroan Powell cannot be firement President Trump. Does this matter

at all from an independence angle? I think it does. And uh, and thank you for for the invitation to talk. I I would first point out that, uh, though extreme Powell could be fired by Trump, though the parameters and the reasons are are sort of very narrow. Um, but he could so called Trump up some charges to find cause in Powell's actions. Um, I think I would echo Gregg's point that this is not necessarily unusual presidents going back forty or fifty years, most spectacularly Nixon criticizing his

appointed FED chair Arthur Burns. But I think most presidents have been upset with with FED chairs who are tightening the reins on credit. What makes this somewhat unique is that monetary policy is, by the FED zone measures quite loose accommodative. They talk about that in their statements. So the fact that he's unhappy with loose monetary policy and that he's criticizing his hand picked FED chair is a

bit unusual. This this early into the game. Mark, you co authored a book, The Myth of Independence, How Congress Governs the Federal Reserve. Uh So, clearly your skeptical of FED Federal Reserve independence to begin with. But I'm wondering does this type of rhetoric push the FED further into the domain of politics rather than policy. Indeed, and I think you're talking about a century old institution that sits right here in our town and is very much in

the political sphere. And the book that Sarah Binder and I co author talked a lot about the FEDS relationship with Congress. But I think the way presidents in particular Trump this go around, are putting pressure on on the Federal Reserve and on Chair Powell Powell directly will potentially shape some of the contours and outlooks for interest rates. Again,

we're we're in a tightening cycle. The Fed is still quite accommodative, but they're moving very gradually, uh, and as they get closer to their own definition of neutral, I think it's going to be very interesting to see if they continue that gradual pace, which may be interpreted as just uh, sort of bending a little bit to the

White House's demands. Greg come in here, because we're just weeks away from the September meeting, where the Federal Reserve is widely expected to hike interest rates yet again this year. There is a question of how many more times they

would hike. What data points are they looking at, especially given the fact that the U. S economy by some measures, just growing at the fastest pace since two thive Well, they'll be looking at that, but also that the jobs market continues to be very robust, and perhaps most importantly, that inflation is around their target slightly above actually so you know, the Fed is letting the economy run, but to keep inflation expectations nailed down, Uh, they need to

gradually raise interest rates. However, I would I would agree with Mark that here's an interesting fact. Yes, I think the debate about QUEI during the financial crisis, nobody thought about the politics of it at the time. But if you stand back now, you know and look at it. I think even Bernanke would say there were constraints on doing more than more than they actually did at the time,

and those constraints were political. So it's not like the Fed responds to political pressure, but it does feel constrained by it in terms of what they can do well. And Mark, then I want to turn that back to you because, I mean you could say, in the larger scheme of things that Congress ultimately holds the strings when it comes to the Federal Reserve with confirmation and a number of other measures and sort of controls that it has.

But for all intents and purposes, it's not like J. Powell and other committee members are going to go to Congress people and say, what do you guys think do you think we should raise interest rates? I mean, there is a modicum of independence, and that's not going away correct. And I think the term that Sarah and I adopted in the book was interdependence. And you know, to your point, Lisa,

they're operating in this political sphere. I think the legislative threat is probably a bit far even for President Trump at this point. Um. There there probably isn't indeed in the House as we speak, the Republican Conference is probably more hawkish, uh, certainly more hawkish than the president. So I don't think they would cow tow to the President's demands for cheaper money. Um. But that could change in November.

We could see a Democratic conference in the House. We could see Max Swheet, Maxine waters as ahead of the House Financial Services Committee. But there's very unlikely to be sixty votes in the Senate to reopen the Act. Uh. Not to mention, what would they do? And that goes back, Lisa to your point that I think some threats. He could increase the heat on Powell himself. He could threaten

to fire the FED chair. He could stack some more seats on the committee on the board with more Delvish members, um. And I think the context in the environment is important. We are growing quite quickly. UH. Inflation has ticked above their target and UH and might continue to rise. The capital markets, equities in particular, are very strong. Unemployment is as low as it's been in a generation. And again, monetary policy is still loose, and the president's upset with

with money that isn't cheap enough, Soraig. Given given that backdrop, I was interested in what Atlanta Fed Raphael Bostic said earlier this week or a couple of days ago, anyway where he was speaking. He said, you know, he didn't want to raise interest rates to a point where he inverts the yield curve. Seems like that's very much on Federal Reserve members minds. What do you expect how that influence what they do? Not very much? All right? Then there.

I think the board staff has looked at this and somewhat dismissed it. And I would add this, if Rafael Bostic is so concerned about the yield curve, then he should be arguing that they shorten the maturity of their portfolio and sell those assets a little bit faster. That's really interesting. That's a fascinating point. Other words, step in the yield curve another way, don't just stop hiking interest rates on the short end. Thank you both. Fascinating conversation.

Mark Spindel, founder and Chief investment officer of Potomac River Capital, also the co author of the book The Myth of Independence, How Congress Governs the Federal Reserve, And of course my thanks to Craig Torah's Federal Reserve and US Economy reporter from Bloomberg News who always has fantastic stories. I recommend to read them. Thanks for listening to the Bloomberg P

and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio.