Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside my co host Matt Miller.
Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market moven news.
Find the Bloomberg Markets Podcast on Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com slash podcast. Let me get the latest from what is happening in Israel in that part of the world today. We're fortunate to be joined by Ambassador Alone Pinkas, former Israel General Counsel in New York, former chief of staffs to two foreign ministers, so certainly well versed in what is happening in that part of the world. Ambassador, thanks so much
for joining us here. I guess over here in the US, we've seen lots of news reporting about massing of troops and materiel on the borders with Gaza. Can you give us the latest update, how where the situation is today and how do you think it might have unfold over the next several days.
Well, thank you for having me to start with. Here's the here's the story. There's been an an amassing of as you as you correctly pointed out to of ground troops, tanks, artillery, infantry, armored infantry, and so on and so forth, supported by attack helicopters and what have you, mostly on the way on the northern and eastern parts of the gases trap. Now everyone assumes that you know a ground operation. A large scale ground operation is therefore a foregun conclusion. So
let me put three question marks next to that. First, there is the US President Biden, Defense Secretary Lloyd Austin, and Secretary of State Anthony Blincoln, all three of which very politely but very adamantly warned Israel of the complications that will be inevitable if it so chooses to mount a massive ground operation, with Biden even going further in saying, tante, gentlemen with older ladies, and gentlemen if older respect, with older respect. You need to have an exit strategy, You
need to have a political goal. What is your strategy here? What is your political goal? And I'm not sure that Israel has an answer for that. The second question mark pertains to the fate of two hundred and twenty two hostages, of which at least thirty three or babies and or toddlers a ground operation could endanger them. A ground operation could seal their fate in the most negative consequence and the most negative circumstances. So I don't know necessarily that
a ground operation is conducive to secure their release. The third question mark is whether orn Israel has and I don't know the answer to that, to be honest, whether or not Israel has sufficient and adequate intelligence, sufficient and adequate what we call target a target back who are you going to hit, where are you going to hit
it with? How much force committed to that objective? And you take all these three question marks and you understand why there has been amassing of troops but not yet a ground operation.
I wonder about the aid that's being delivered to Gaza. You know, the world media seems to be pressing for more, and apparently Gaza is about to run out of fuel. Israel continues to point out that, hey, when fuel trucks go over there, Hamas takes them right away, So they would essentially be delivering fuel directly to the enemy to fuel the war effort against them.
How do they deal with that.
It's it's a it's a major problem because that fuel is used for the generators who are then used for the launching of the sum of the rockets that Hamas and the Islamic jiha It's sister organization have.
Of course, they also need fuel to run desalinization plants and hospitals.
Right exactly.
That was my second.
On the other hand, that same fuel, which is a fungible commodity is used for hospitals, is used for the salonization, as you mentioned correctly. And so the idea is that only a limited number of convoys will go in, most through the southern tip of the Gaza Strip, which actually borders Egypt rather than Israel, but that the red cross the un the Egyptians, and in some instances Israel will
monitor what's going in and who's receiving. What happens once it crosses the the border of the Gate Defence whatever and gets into Gaza, and as you mentioned, can be taken over by Hamas is a problem, and that's part of this humanitarian on crisis that is quietly but surely
brewing in Gaza. So that's that's going to be a major jury, on top of which President Biden himself has repeatedly asked that Israel allow for a continuous inflow of humanitarian eight, including that gasoline, including that funeral.
So, Ambassador, I mean, I'm just not sure what the catalyst is for a next step other than some significant breakthrough on the hostage front. What do you believe or what are most observers I guess expecting of the next several days.
Well, okay, you know again, what is the political goal here? The political goal is to eradicate Hamas. Then practically Israel needs to take over the entire Gaza Strip, which is two point two million people in a very narrow and very densist in fact place on Earth. So that's a problem. So what you should be looking in the next few days is whether or not Israel clarifies what its political end is, what political objective is. If it is less than dismantling Hamas, then you will see a smaller scale
ground operation. But bear in mind, and you know, anyone who's listening to us should bear in mind that there are various kinds and various scopes of a ground operation. It could be small incursions by smaller units, it could be medium size incursions the other in and out, go in, destroy, get out, and it could in fact be cutting the Gaza Strip in half, leaving the southern part where most of the population is right now intact and fighting Hamas
in the north. Now, there is another major consideration that we haven't even discussed yet, which deserves a completely different segments obviously, and that is the likelihood of escalation. The more escalation, the more power, the more firepower is used in Gaza, the more likely it is that it will expand or spread into Lebanon or Chrisbala armed with nearly one hundred thousand, much more precise rockets and empowered, emboldened
and supported by Iran. So this is a you know, this is a series of bad choices that need.
To be made.
So just thirty seconds left, Ambassador, what is the status with Lebanon right now?
Well, there's there's a ping pong of an extreme change of fire going on for the last ninety six hours,
for the last four days. You know, my my biggest stuff fear is that there will be an escalation as a result of a miscalculation, That someone will think that someone is planning something that the other side didn't really plan, and the response would be disproportionate, and that would entail a similar or equal disproportionate response and before you know it, held breaks loose right now, right now, everyone is poking everyone, but it's not it's not an escalatory yet. By the way,
I know, we don't work out of time. That's the reason why President Biden sent the Gerald for the USS Gerald carrier group.
Ye, very good, ambassador, Thank you so much for taking the time. Ambassador Alone Pinkus, former israel A General counsel in New York.
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We welcome now our Bloomberg TV audience and radio listeners. It is the second major oil deal in just the past few weeks, and this is a big one, Chevron announcing a fifty three billion dollar all stock deal to buy Hess. And we're joined now by the two men behind it, Mike Worth, Chevron Chairman and CEO, and John Hess, Hess Corporation CEO. Gentlemen, thank you so much. What a pleasure,
no joke. This is the only question I'm getting today. Well, the toy trucks from Hess continue to be available at Christmas time.
Yeah, so you know, not all of you in suspense. Yes, they will, Okay, back next year is going to be the sixtieth anniversary of the Hestoid truck. We sell them on the internet and we continue, we intend to continue selling them.
So I gotta ask, I didn't know about these trucks beforehand. Was it part of the deal? Is there some line in the deal about the trucks? Was it part of the negotiation?
Let me put it this way, Mike and I came to a mutually agreeable understanding. Need to continue selling the trucks.
That's a yes.
That has been Actually yes, been two CEOs. So Mike walkers through Actually how this deal did come about. We heard earlier that you guys been talking for a couple of years, and I'm really curious as to why now is the right time to make this happen.
Well, we have been talking for a while.
There's a terrific alignment between the two companies, our portfolios, the cultures of the company and the people, and particularly as it has his development in Guiana has continued to be de risked and progress. What was at one point in time kind of a wider gap in valuation has narrowed and the stocks of the two companies have traded into a range where it works for both of us. And so now's the time that those circumstances have come together.
But for quite some time we've seen the fit and the appeal and been.
Working on this, which I'm just so curious John, because on the call, it seemed like some analysts were intimating the Hey, did you get a high enough price?
Sure?
And also you're doing things very well in Guyana, and I appreciate it's also the back and etc. But we just spoke Gaiana. You guys are already crushing it, like why do you need Chevron?
Yeah, well, it's a great question. I think some context would be important. Our stock for the last five years was the number one total shareholder return in the industry, whether it's independent or whether it's major oil company. Last year our stock went up ninety four percent, number two on the SMP. So we've already created a lot of value. At the same time, now that the pricing got in arrange that would work both for Chevron and work for Hess,
we think we came up with a win win. Hess brings Chevron growth in resource growth in production, growth in cash flow. Chevron brings Hess financial strength in terms of a diversity of world class assets, in terms of sterling balance sheet, and in terms of industry leading cash returns, and when you put the two together, you create the premier oil and gas company position for the energy transition.
Mike, what I'm hearing here is that this is a great fit. Could you do this on your own? Could you build what Hess has built from the ground up? Is it easier to buy than build right now?
Well, Look, this is about long term growth and long term value, which is what we're always seeking. Hess has a unique portfolio that actually strengthens our portfolio with some things we're always trying to do. We're always out exploring, we're looking for new findes. Gianus the biggest discovery in more than a decade in this industry. It's just a unique and compelling asset, and so it would be difficult for us to do on our own. We continue to explore,
we'll continue. Everybody in our industry is looking for these things. But this was a great opportunity for us to join a partnership that's done a terrific job in developing this asset. But also the other assets in the Hess portfolio are ones that will be additive for us as well, the back in the deep water Gulf of Mexico Southeast Asia. And so it's a very nice fit at a portfolio level, nice fit at a culture level, and we're going to create more value for shareholders.
Yeah, so let's get to the boggin part too. So how important is the balcon going to be in your portfolio? Because clearly the rhetoric apter this deal was it's all about Guiana, right, Like, that's this deep water, it's amazing, the costs are solo is going to be awesome. Well, where's the balcon in this?
Well, Balcon's very important.
We've got a big shale business already right with positions of the Permian, the DJ Basin. We're the largest producer and Hess has been doing a great job in the baking for a long time. That's really where this all began. And so for us, it's about adding another scaled position in shale that is performing very well. We can bring whatever expertise we may have. We're working on technologies to improve recovery and learn from our new colleagues at Hess.
We were doing things in a basin when we went to the DJ we learned some things that we hadn't been doing in the Permian that made us better. I'm certain the same thing will happen here. So it's absolutely an important part of the transaction.
Tony took about the price narrowing. You started off far apop bidosk kind of widespread, Kate Man, what bruls it in? What facts has allowed you to bring that understanding between the two films together.
Well, you know, the gap in shareholders recognizing our value. We weren't getting credit for this eleven billion barrels of oil equivalent resource.
That we had in the market.
Narraed the gap for you, Yes.
Exactly, and then it got to the point where it got to the wind zone for Mike and the wind zone for us. And you know, you also got to remember this is a stock for stock deals, So some people would say, well, geez, you're selling it, and we're
not selling for cash. We're staying invested. Our family is going to be a long term shareholder of Chevron, and we're happy about it, and we think there's going to be a lot of upside to come in addition to which our own dividend is going to go from a dollar seventy five a share to six dollars a share and next year six fifty a share. So you're getting the benefit of growth and asset value with growth, and
cash with turns. And that's a magic formula. And I think it'll be the best oil company to own and actually the best oil company to work for.
I have to say, you guys seem to get along quite well. You don't al Wes see that with the oil mergers. How did you guys first start this conversation like years ago?
What what was that?
Was it like you guys at a Sarah Week dinner like chatting?
What was it like?
It was actually the dinner, but it wasn't at sarah Wick, it was at another location. But look, John and I have been friends. We've been great admirers of hess. I've been a great admirer of John for many, many years, and it was a very natural evolution, I think, as we're both looking to improve our businesses and create value
for our Shareholder's been a nice conversation. As John said, in the beginning, the market wasn't recognizing the potential in the Guiana acid in particulars that's been de risked and as we get closer and closer to this cash flow inflection,
we really did move into this zone. But it's been very it's been a very friendly discussion along the way like it and by the way, you haven't mentioned yet, but we look forward to John joining Chevron's board of directors and continuing to exert influence over the strategy of our company. And he's got key relationships with partners and governments around the world that will continue to benefit from us.
And also, if I can, you know, Mike and I'm known as each other through the industry for years. I have a lot of respect for him. I think he's the best CEO in the energy industry, one of the best in the United States. So have a lot of respect for him.
So it wasn't succession things for Hess. It was a lot of succession.
No, No, we were actually prepared to continue as an independent That's what our history is. We're celebrating our ninetieth anniversary as a company this year. We have the best hand in the business, the best growth portfolio the business, and we're just executing the strategy go forward.
But you know, Chevron.
Brings forward that diverse portfolio of assets, strong balance sheet, as well as high cash returns. And you put those strains together with our growth trains, you really create I'd say, you know, the premier energy company that's out there, Mike.
There aren't many assets like Hess out there, but there are a lot of assets out there. And I hate to sort of ask this question or day when you doing a massive deal, what have you done yet? Is this an industry that is going to continue to consolidate. We've just seen two really big deals in as many weeks that can't be by accident.
Well, I can only speak to our deal, and this is the right deal for us. We actually did another deal earlier this year. So for us, integrating is very important. To do a transaction, you actually to create value. You need to bring the companies together, the people. You need to continue to operate safely and deliver to your customers. And so our focus for the next you know, several months, if not longer, is really about execution and executing well
in the long of time. You know, our industry has grown through organic and inorganic activity every time our company has done the same. And I do think you know, in the future, there potentially could be other things, but that's that's not here and now that's further down the road for sure.
Do you guys think that oil's going to stay volatile and trade above one hundred hundred and fifty. I'm not going to John, because I feel like maybe you can talk more about what you really think the oil price is going to be. Now.
Look, you know, in the short term there's a direct correlation between world oil inventories and price. World inventories are drawing at about a million barrels a day this quarter. As you get to next year, do we think demand's going to grow maybe a million and a half barrels a day barring a worldwide recession. Hopefully we don't get there. I know they are all kinds of geop political events, be it in the Ukraine or be it in the
levent that are going on right now, tragic events. But taking that factor out, you know, we think the market's going to be tight and the supply side of the equation is going to have to run fast to keep up with the demand side. Shales no longer the swing producer. Saudi Arabia and Opek are They're going to keep the market stabilized. But I think the real issue for the world to understand is that oil and gas are needed for decades. They're key to an affordable, just and secure
energy transition. I think the conflict in Ukraine put a shining light on energy security. And at the end of the day, you know, oil and gas are strategic industry for our country in terms of jobs twelve million jobs, more than automotive direct and indirect, in terms of electricity costs two to three times less than they are in
Europe and most of Asia, and ultimately national security. We're energy independent Europe by seventy percent of their oil, China buy seventy percent of their oil, so we have a real strength. We should be leaning into it for economic prosperity, but also national security.
Mike, isn't that the real message from this deal? You could have done a deal in the energy transition space, you didn't. You did this deal. Isn't the message coming from this that the industry is now to point where it is going to invest in the future, That the energy transition story is of interest, but it's not the only area of interest. That this is an industry the country that the world still needs to rely on. You
could have done other deals, you did. This one isn't that the message that comes.
From this, well, I'd put it a little differently, Gay. We have done other deals.
Yeah.
Earlier this quarter we closed on the largest green hydrogen manufacturing and storage facility that will be built in the United States. We're the second largest renewable fuels producer in the US and we're expanding our production capacity there. So we are doing the other deals. But I think the
point that John's making is really important. We need to continue to invest in the energy system that supplies the world today, even as we're investing in one that can integrate into that and help produce the carbon intensity tomorrow. We believe the future of energy is lower carbon. We believe these new technologies will play a greater role, and we continue to invest. So I don't think you should read this as a lack of commitment to the energy transition.
But we need to invest in what the world runs on today. This makes us a stronger producer. It takes two great American companies and brings them together, which is good for national security and economic security. And we're committed. Both of our companies are committed to a lower carbon energy system.
Mike, speaking of are you able to pump more in Venezuela right now, and we be investing more in Venezuela because of some sanction relief.
So we have seen production in our ventures in Venezuela increase this year from around fifty five and barrels a day when the year began to something between one hundred and one hundred and fifty today, and we've been gradually seeing that come up. We've recently seen some further actions by the US to reduce some of the sanctions on Venezuela. This is a slow moving story.
It's sustainable, though, Like if you increase to one fifty, can you hold it there?
I think we can as long as we can operate the way we're operating today, and some of these constraints have been taken off of us, and the Venezuelan industry has been under pressure for a variety of reasons for the last couple of decades, and turning that around will take time and it will take investment. So I wouldn't expect this to be something that goes up dramatically, but yes, we've seen some steady improvement and we're looking to try to continue that.
Gentlemen, thank you so much. We could talk forever, but We'll let you guys go. It's been a very long day. Mike. We're at Chevron chairman and CEO and John hess Has Corporation. Cee you congrats on the merger.
Guys.
Thank you.
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R J.
Gallow he's at that Federated Hermes thing. I first met the Federated folks out in Pittsburgh. That's kind of where they hang out. But they're all over the place these days. Hey, RJ. We see Bill Ackman here says he's covered his bond short amid mounting global risk. Did you notice that? And kind of what's that? Do you have any comment there?
Well, so even.
Gets a lot of attention in the market, and you know, more attention than r J. Gallow A Federated Hermes and that makes sense. But I would note that we have Federated Hermes have been leaning along and we've been wrong. The bond market sell off has taken on sort of a life of its own. It's knocking down all kinds of financial assets. Stocks are looking at bonds an awful lot these days. I can't say I'm surprised that Bill
Ackman's comment. I mean, there's one sentence that is very, very very brief, but it tells you what he's thinking. I do think the geopolitical situation has deteriorated sharply for obvious reasons, and the prospect of a wider conflict, you know, bringing in many different parties. You know, typically when when things like this happen, it should be friendly to treasury prices. So far, we've only had brief moments of that, and
there could be more to come. It's hard to be short treasuries when there's so much geopolitical risk and so many potential directions this could go.
But it's hard to be long, especially duration, when you know little swings in yield can mean a huge swing in the price, and we're seeing big swings in yields, right, So how do you deal with that?
It's a great point. I mean, now, first of all, remember just some some bond math the The fact that yields have risen has taken the duration on the US Treasury Index to five seventy two. Last back in May, it was six thirty nine. You know, that's these are positively convect instruments, right. So the fact of the matter is is that the duration passive duration of the index
has gotten shorter because yields have gone higher. That doesn't necessarily insulate you from price loss, but you're losing at lesser and lesser velocity as a result. So but we're not focusing as much on that as much as we are the fundamentals that we think are apt to erode. The economy has been red hot. It is obviously clear employment strong. There's very few signs of the consumer fading.
Just yet, we think it's a matter of time that the diminishment of that COVID area access savings pressure on small businesses much much higher borrowing costs all over the economy. You know, the rules of economics have not been revoked. The time frame and the lags are difficult this time.
But we still think we will manifest itself in a slower economy and we'll get some relief from these current bond yields, and yield should retrace somewhat lower over the next three to six months, so we're stilling.
We've got to be slower than five percent, which is what we're hearing in terms of third quarter guestimates and even for Q four some forecasts. My question on the consumer is, clearly the consumer is going to spend down savings, and clearly the consumer is putting more on credit cards and we're seeing delinquencies pop up. But is that more than you know it usually is or are we just getting back to pre COVID levels.
No, it's a great question, and we recently had a webcast with some colleagues, Orlando and Linda Distil, who talked to you guys sometimes both TV and radio, and we were trying to sort of back up and look at the whole picture for the consumer, because the bottom line is, even though there are negative some of which we just touched on, the unemployment rate is low, real personal incomes relative to the now lower level of inflation, albeit stole north of two, but lower than it was, real personal
incomes have gone up. When you think about the benefits to savers from having very safe liquid assets like money market funds, which We manage plenty of them here at federated hermes. People in the hir income brackets who have plenty of savings and aren't pulling it all down to spend are benefiting from low risk, real returns. So there are tailwinds to the consumer. We are not calling for a collapsing consumer, and that's not the case at all.
I think what we're going to see is that the median household, maybe even up to the top twenty percent of households. Everybody but the top twenty percent is probably going to fade enough so that the economic momentum coming out of what will be a very strong print for Q three GDP is going to slow down. That the economy is not about to tank, but it's going to slow, and that's going to be good news for the FED in their broader effort to still get in going down.
Then you throw in the geopolitical risk, the sentiment destroying challenges that occur from wars happening across different parts of the world. We think that the economy is going to slow, the net impact on the consumer is a negative enough not for them to collapse, but to fade from what has been a breakneck pace of spending.
Hey, RJ.
When I look at the Bloomberg Index browser, I n go for those sitting in front of a terminal. I see the only place in the US fixed income that's in the green this year is US corporate high yield up three point nine percent. Do I stay with that trade? Do I add to it? Or do I say, boy, maybe I should redeploy high yield here?
Yeah, I have an ull screen on my launch pat year that I've built, and it's just a sea of red, and the greens that show up are few and far between leverage loans or another space that actually has some positives in both of those cases, leverage loans and US high yield. To your question, you know that's a credit intensive asset, not a duration intensive one. So it makes sense that with the economy surprising to the upside, surprising everyone,
including Chairman Powell. He said it last week. Everyone's been surprised by the economy's performance in this calendar year. It's been great for higher, higher credit risk assets. It's been terrible for duration, low credit risk assets that are an interest rates sensitive. We think that should start to flip the script. We are underweight high yield, we are underweight loans.
We believe that the slowing economy, small business bankruptcies are on the rise, the accumulative impact of the tight ning of monetary conditions to include what are likely collapsing commercial real estate values in office space, all of these factors are going to catch up and they're going to reward higher quality bonds over lower quality bonds. So we're underweight
high yield and underweight leverage loans at this point. That has not been the right call up to this point, but we're looking forward to.
That turning around. Hey RJ, for better worse, some my co host is a native of the great State of Ohio, so of course I have to ask you, Oh no, how real. Look at I see here, boy, your Michigan Wolverings look like the team to beat this year. Tell us about it.
That was a beatdown of Michigan State. I mean that was I almost felt bad for the Green and White.
So you guys, I mean this is gonna be it. I mean, this looks like maybe the best Michigan team in a long time.
Oh yeah, yeah, no, it's very exciting to watch, you know, very talented team. I watched football a lot, but I don't know if you want me to expound any further than that, No, we'll.
Leave it because so you're gonna come in. I'll tell you.
I'll tell you what.
I love it when Michigan has a strong team, and I'm sure they love it when Ohio State is a big competitor, like that's what makes it fun. When you don't know who's going to win the game, When when the boys really have to give it.
They're all right, you know, we're looking for it to We're looking forward to that game at the end of the year Michigan. Okay, all right, very good.
R J.
Gallagho Federated at Armies.
You're listening to the Team Ken's Are Live program, Bloomberg Markets weekdays at ten am Easter, Blueberg dot Com, the iHeartRadio app, and the Bloomberg Business app, or listen on demand wherever you get your podcast.
We welcome Elizabeth Hurt. She's a professor of political science at Northwestern University. Professor, thanks so much for joining us here. I mean a lot of us. I'm going to say, not just here in the US, but around the world. I don't think we have a full appreciation of the stark differences between Israel and the Palestinians that manifest itself. With all this attention we've seen over the decades, where do you where's the starting point for us to try to get an understanding there?
Thanks for having me, Good morning to all your listeners and viewers. Listen. It's a really good question, and I think it's not one that's very easy to answer because
there are many different starting points. One of the most common starting points would be to simply begin with Zionism, with the founding of the idea that the Jewish people in Europe, this is a European movement, should have their own homeland and that homeland would ensure they're safe in the face of persecution and violence by Europeans in the nineteenth century. So this goes back to the nineteenth century. We can fast forward to the end of World War II.
We know about the horrors of the Holocaust. People were in Jewish people were in desperate search of a homeland, and the British, who were controlling the region that we now know of as Israel Palestine, declared through the Balfour Declaration that the Jewish homeland would have the support and
sanction of the British imperial power. And it wasn't long before Israel declared independence as a state on the mid May fourt to May nineteen forty eight, and since then it has been slowly but surely expressing its authority and control and sovereignty over what we now know as Israel and Palas. And these lands are contested and have been contested since the first Jews started arriving.
So, you know, a lot of people think, and I have thought in.
The past, that Israel, that the Israelis came in there and took over Palestine, like there was a country there called Palestine and that was okay, moved into by Israel. But actually that's not the case. Right there, what was there before the Israelis went in, So this was.
We did not have the sovereign state system, and this was kind of the days of empire, and so we had Originally it was an Ottoman province. What we now know as Palestine was an Ottoman province, which is like a state in the Ottoman Empire. That state. When the Ottoman Empire fell after World War One, it was basically disassembled, it ceased to exist. A rump state came into being.
That was Turkey. That is what the kind of the inheritor of the Ottoman Empire, and the British colonial authorities took over what was then called Mandatory Palestine, which was an area that was under the authority of the British colonial powers, and Mandatory Palestine was then ruled by the British until after the Second World War went they gave up authority over the territory and Israel declared independence with the express support of the British authorities in the Balfour Declaration.
That's the quick history. So no country named Palestine, but there was Palestine.
Well, and there were Palestinian people. Are they I mean, are they Jordanian?
They're actually Palestinian people. Many of the Palestinian people, after Israel was founded the State of Israel in nineteen forty eight, were forced from their homes and they had to leave their historic villages and towns and communities, and many of them did go to Jordan, and many went to other surrounding countries and became refugees, and many of them are still living in refugee camps in the surrounding countries today. They are Palestinian Jordanians, but they are not just Jordanians.
So these countries are inventions of western colonial powers and the lines that were drawn to divide them one from another are relatively recent, but the peoples have been there for a very long time.
Professor, I don't even know if there's an answer here. But if I were to if is there an independent consensus about who should get the land? I mean independently, if you just look at them, I don't know. Is there any consensus?
No, right, And that's why I know there is no consensus, and that's why I we're seeing so much violence today. The only way we're going to reach an end to this horrific violence, which is taking innocent lives. I think we can all agree and we can all condemn and settle around the consensus that innocent lives should not be taken, Civilians should not be killed, children should not be murdered. That's the consensus. How do we get there? Who we have to share the land? I think that now that's
where there is no consensus. Who does the land belong to? Who has the right to govern it, Who has the legitimate authority over its people to define it, write its laws and right its constitutions, aim the state. That's what's contested, and no there is no consensus, but there are two peoples and there is one land, so there's this violence is going to continue until there's some kind of resolution that's reached.
How much of this is based in religion, I mean, it's it seems like if you pulled that those beliefs out that some you know, magical being gave you or this person or that person a piece of land, we wouldn't have these these wars.
That's a good question. I wish it were the case that were just a matter of belief, but the attachments and the stakes and the ramifications of this conflict run much farther and wider than just belief. They are about control of the economies, control of water, control of access to ports, control of historical sites that have religious but also political and social connotations that run back centuries. So
we can't really disentangle the religious aspect. For sure, it heightens the tension, but it's really not the only factor at play.
Do we know to what extent the Palestinian people wherever they are the West Bank Aza, to what extent do they support Hamas Because it seems like you could get these two peoples together and say you get your land, We're gonna split this land up, and it's nobody's gonna be really happy, but this is the way it's going to be, and it's the best for everybody. But then Hamas comes in and really makes it difficult. So what's the level of support for Hamas and Hezbola amongst some of the Palestinians.
The level of support for Hamas and Hezbola has been increasing as a result of the fact that Israel has continued to build and support settlements in the West Bank. So, in other words, your idea of giving each side some land and calling it a day is a great idea, and that was tried in the nineteen ninety news it's called the Oslo Accords. Neither side was particularly happy and neither side cooperated, and so what we have there were unaddressed issues that we have today that is an increasingly
expansionist Israel. In other words, it's it's getting bigger and bigger, taking more and more land, and the Palestinians are increasingly desperate, frustrated and lashing out. So we're seeing a support rising support for Hamas. However, support for Hamas is quite low historically among the Palestinians. Palestinians don't want this violence either. I mean, who would, No one does exactly.
This is just it's just incredibly you know, just just.
It's complex, which is why it's great to have someone like professor Hurd, who studied government at Wesley and international finance at Yale, political science at Johns Hopkins to put these disciplines together and help us figure things out.
Very good.
Elizabeth Herd, Chair of Religious Studies and professor of political science at Northwestern.
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Thirty Fraser Alkinson.
In fact, they they're the first ones really to go electric because the municipalities need to show their green creds. And I mean, frankly, there's so many buses and you know, sort of mass transit vehicles on the road that it's better for all of us if they're not spewing out nasty things from the exhaust pipe.
Absolutely Fraser Atkinson joins, I ceased to see Green Power Motor Company. It's a public traded company. Gp is as symbol. Talk to us first of all, Fraser, thanks so much for joining us, really appreciate it. Can you tell us what you guys do a Green Power what's your play in the EV space?
Well, thanks for having us on your show, and we're we're we're focused on the medium and heavy duty space, which is quite different than the traditional light duty automotive.
Those vehicles tend to.
Be used less than an hour a day, and our vehicles are on average use twelve fourteen, sixteen hours a day, and we even have a few deployments where they're used twenty four hours a day and they do top charging in the early hours of the morning. So that's the space that we're focused on, and it's been a little slower to.
Catch on, but we're finding.
That it's got some serious legs for both the current and the future.
Frazer, how do you juice those vehicles up for such industrial use? I mean I would think, you know, most electric vehicles have range of a few hours and then you've got to plug them in for many more. How do you make sure that these electric buses have enough energy to do their duty well.
Most of the applications we're involved with tend to be lower speed and lots of stops and starts, which is absolutely ideal for an EV In terms of charging are the Class four vehicles, which is our largest volume seller both in terms of passenger cargo and as well the Type A school bus is that that particular set of vehicles we can either charge with a Level two or a DC fast charge, So we're very flexible and can be compatible with what the requirements might be what a
customer might need from the use of that vehicle.
So where do you make these electric school buses.
Well, we've got we use contract manufacturers, similar to what Apple does with their various products. All of our products are designed and final assembly in the United States. We recently opened a facility in West Virginia that was courtesy of the state of West Virginia bought the facility for our use, and that is going to be our focus for our Type A, the smaller school bus, and the Type D, the larger school bus. Where we see demand across the board for both of those products.
Is demand now starting to pick up exponentially. I mean, you've been at green Power since twenty ten, so you've seen a solid thirteen years of this business. Does it look a lot different in the last couple of years than it did to you for the first decade.
Well, the early years, there literally were no medium or heavy duty the electric buses that have been deployed. The first one was twenty eleven twenty twelve, and that was with a company that had already generated deliveries and sales in other jurisdictions. So the industry is really only ten years old or ten plus. And the early years, the vehicles, the batteries were too heavy, the range wasn't able to
satisfy even the most basic duty cycle. All that's changed to where now we can handle probably ninety five ninety six percent of almost all duty cycles for medium or heavy duty truck or bus, and that's really helped fuel the interest in electrifying fleets, and then combined with money and mandates at both the federal and the state level where certain operators are required to electrify fleets within certain time periods, has really created incredible tailwinds for the whole
industry as well as our company.
Fraser talk to us about kind of the sales process here. When you go to a school district, just describe for us how the sales process goes.
Typically, they'd like the school districts.
Are very hands on. They like to see, see and touch the vehicle.
They like to have their various groups know whether it's the maintenance group, whether it's the drivers group, the trustees, that you really have to answer any questions that their constituents have.
So we tend to do.
A lot of ride in drives or demonstrations of the vehicles, and often those aren't just one or twice, but there are multiple occasions. And once a particular organization isisfy that yes, this is the vehicle that they can see they want to move forward with, then depending on the state, some states require dealers be involved in the process, others allow us to go direct. We have a real mix in
terms of our go to market strategy. But then we're engaged in terms of, you know, essentially the big picture question, which is how are they going to pay for it? And school districts are not organizations that have a lot of money. So it's the recent funding that has come in both federally and with certain states that has really fueled the excitement and the electrification around school buses.
So I want to get a sense. I'm just looking at your financial statements to your fraser, how do you fund your growth? I see you know, your public traded company, but a market cap of only seventy one million dollars, you know, several million dollars, a debt on the balance and iba the negative. How do you fund your growth?
Well, our business model, we've had success in generating a gross profit on every cell or not every cell, but the combined cells of our vehicle every quarter, which is actually pretty unique, and that most of our competition is still operating with a gross profit loss. In other words, every vehicle they sell, they're actually selling at a loss
before any of their expenses. And our growth has been such that we are getting closer and closer to that important break even from a cash flow point of view.
We also had built up our inventory that post. When we went and did our nastac Ipo in the fall of twenty twenty, we were able to move from building vehicles pursuingto customer orders to where we're actually able to build into inventory, and that was critical in getting some of the larger deals that we are now delivering into so in our most recent quarter, our inventory actually was lower in terms of the overall amount that we had in inventory because we've been able to shift to deliveries
and fulfilling orders.
That as a.
Result of being able to show that we had the ability to satisfy the various order requirements, and we've been a low cost operator, we've been able to manage our numbers so that our expenses compared to our peers are substantially less, so we don't have a large financial requirement. And lastly, we did have an ATM, or do have an ATM in place.
We haven't drawn on it because we haven't needed it.
But in the early part of twenty twenty three, as we're going through that inventory growth, we were able to take down about five million dollars off our ATM.
Okay, interesting story, a really interesting story. Looks like potentially some growth there going forward as maybe see some inflation Reduction Act money come into the play.
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Let's continue our c Suite conversation. This time we're going to focus on the healthcare space, big pharma, biotechnology, therapeutics, all that good stuff. For that, We're joined by Joel Lewis. He's the CEO and president of Gallaxton Therapeutics. It's a publica trade stock on nastac. Ga l T is the symbol there. Joel, thanks so much for joining us here. Talks about what you guys are working on over at Galatin Therapeutics.
Hi, Matt, Hi Paul, thank you for having me today. We pronounced the galactin therapeutic Actually.
We thank you A yeah. Yeah.
We are a late stage biotech company. We're conducting a large global pivotal trial. It's a Phase two B three trial in nash zorosis. Yeah yeah, So, I think when people think about cirrhosis, they normally immediately go to sorosis caused by alcohol. Actually, the fastest growing segment of this patient population is getting zerosis from fatty liver disease. So NASH is sort of the technical term for fatty liver disease, non alcoholics, theado appatitis, I won't say that again, We'll
just call fatty liver disease. And again there's there's a large, a huge, growing patient population. We are specifically focused on patients who have progressed all the way to soorhosis.
So talk to us about I guess that the treatment. How does your therapeutic work here?
Okay, So, we have a carbohydrate molecule that actually targets galectin, specifically galectin three, which has been associated with many inflammatory diseases, and when you think about soorrhrosis, it's the ultimate inflammation that eventually leads to scar tissue. Our mechanism of action we actually target activated macrophases, which is where galactin is produced, and we reduce the over expression of galactin three when
people have sorosis and reduce. When you reduce that protein, you give the Your livers are very regendative organ actually, and you give it a chance to heal.
How how big is this market do you think? I know, you guys size these markets out pretty closely.
So so and and I don't need everybody to take just my word for it. So I was listening to the fact You Liver Foundation, which is a patient advocacy group, that the estimate is that one third of the world population has fatty liver. And now when you say that, it's not fatty liver disease, it's just fat in their liver.
So statosis is what it's.
Called the medical term, and out of that patient, out of that potential patient group. Right now, in the US, the estimate from insurance reibursement is sixteen million, more than sixteen million patients. We've seen estimates higher because obviously not everybody's insured. So we've seen estimates of up to twenty eight million people who actually have fatty liver disease that's progressed to NASH and of those patients, one to two million of them will develop zorosis.
So what do I guess what we've heard a lot about in the marketplace in the healthcare space over the last several months are these GLP one drugs of zempic, for example, How does that influence your part of the market.
Yeah, and I heard your podcast when you guys talked about that back in August with Steven, So Yeah, obviously there's a big drive in most of the companies in the NASH space are targeting early stage fatty liver disease, and clearly, you know, patients that lose weight have a good chance to not progress to sorosis. The issue is, you know, I don't see how that all of those drugs are going to be so pervasive in the market. They're always going to be a set of patients that
developed sorosis from fatty liver disease. And by the way, we happen to be doing our study in sorosis caused by fatty liver disease, but we do believe that this mechanism of action will work with all soerotic patients. And sorosis is caused by many things, including alcohol, including hepatitis. That's a much bigger problem in Asia than here. But we believe that this will always be a big patient population. And again, just so everybody knows, the only treatment for
sorosis is liver transplant. There are no treatments for cirrhosis. And just to give everybody an idea, we do about nine thousand liver transplants a year in the US. I think people think that number is much bigger.
Yep, Sore, where are you in the development of your therapeutics.
So we are conducting our Phase two B three adaptive pivotal trial. We expect data in Q four of next year. It's an interim analysis, but if we repeat the results that we achieved in our phase two program, we will be seeking an accelerated approval at that point in time.
So what's an endgame for your company and companies like yours at You know, I'm not super familiar with the healthcare space, but it seems like every Monday we have a bunch of M and A trades where big farmer company buys out a smaller farmer company to get access to their therapeutics or their drugs. Is that a typical Is that an exit for a company like yours?
I think most biotech companies have that as their exit strategy. There's there's clearly a segment of the biotech industry that wants to develop the drug themselves that that is not our exit strategy. That you know, to do that, you have to have large marketing departments and big big departments that are looking at how you're going to price the drug and all those things. So so yeah, that would be you know, either either licensed the the ip or partner in some other way with pharma or a sale.
And this is not just for older people. I mean, I hear when we talk about fatty liver disease, it's also for children as well, right.
So, so so there there is fatty liver disease in children. They don't develop zorosis, right, Okay, so so so yes, I would I would say that that there is a growing problem with fatty liver disease in children. And certainly we have some peers in the space that are looking at those things, but we are so we are really focused on the end stage of this disease where we believe there's the greatest medical need.
All right, very good, Joel Lewis, thank you so much. We appreciate it. CEO and president of Galectin Therapeutics, again, g Alt is the ticker to load into your Bloomberg terminok At that NaSTA quote's about one hundred million dollars in market cap, up seventy five percent year to date. So maybe some optimism out there in the street for this drug and this treatment.
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 nineteen seventy three.
And I'm fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio