Steel, GDP, Geopolitics, and Lamborghini

at Bloomberg dot com slash podcast. I want to get back to the big picture stories that have been swinging this market around, giving us the kind of volatility that we haven't certainly in the rates sector seen in decades, if ever before, And I want to do that with Chris Campbell. He is a senior policy analyst and sorry, he's the chief strategist at Kroll, but he has had

a number of other important look at them before. Yeah, former assistant secretary from the US Department of Treasury, he went to FSOCK meetings, former Stack director of the Senate Finance Committee, and so lifetime member the accountl on Foreign Relations. You're basically plugged in on Wall Street and in Washington, Christ, So it's great to have you here in the studio with you. What do you make of the banking turmoil that we've seen in the government response, do you think

it's behind us? As I say, the system worked, you know, like their banks will go under um, and you know, companies fail, but uh, and there's going to be an enormous amount of investigations going on, you know as to why the you know, these two banks failed in the United States. But the reality is the federals, federal Federal Federal Reserve and Treasury worked very quickly, very expeditiously, and decisively to make sure that depositors were taken care of,

which is the way I think which is important. UM. It stopped a run on banks, which, as you know, is deeply emotional. And so with with that prevention and with the with confidence restored largely, UM, I think that we can now go back to a quote unquote normal system, if you will, where we're actually seen looking at fun mentals for banks and others in the market and uh and judging them on their fundamentals. Should we expand insurance

beyond the two hundred and fifty thousand? How problematic is that? It's going to be deeply problematic and very very political in DC. UM. You know, it's you can kind of see the each side where they're going to come out the Democrats, like they're going to say that, uh, you know, two hundred fifty thousand dollars is a lot of money

for most Americans. You know, the average American makes about fifty seven thousand dollars a year, So having two unrefty thousand dollars in their bank account, it's just you know, it's it's it's like it's aspirational um and you know, and especially we're talking about savings accounts, right, so yeah, if if hopefully, uh, they can save up that much before retirement, because people live so long now and if you retire at sixty five or seventy, you still got

another thirty years to fund. But they'll do it in different accounts. And there are four one ks and there's another issues that are not insured and so and so yeah, like I think that, you know, Republicans will take a different view of this, and so I just it's very deep, very tough to see, especially today's Washington, where there me be can census on on any legislation involving banks, changing Dodd Frank or anything like that in the current environment.

But it's de facto done, isn't it. Raising the insurance? I mean, even though they're not going to officially do it. Um, if you have three hundred thousand, then your regional bank goes under, you can count on the government to bail you out. It's clear that the Federal Reserve has used its powers within Dodd, Frank and and supervisor authority to be able to step in and prevent and make sure

the depositors will made whole. I think you know, again, you can argue moral hazard or not, but the reality is that that now the Federals Serve has done this. It's now well known that they can, and I think the depositors now I think you know it should have the Commons probably that that that Federserve likely step in in the future. Can I bring up a debt limit with you negotiating on Oh man, are we talking about the debt ceiling? Yeah? We are. I'm so well, we

have to don't fortunately or not. I've I've actually negotiated the last twelve of them. So now is that you using that as a point of negotiation over whatever? Is that like playing Russian rule in It's very, very difficult and deeply problematic to suggest that the United States may walk up to the line and actually and not pay our bills. Um, it's you know, it's very and for for the listeners, it's really important to buy. For Kate, this is this is you know, not funding the Post

office or the National parks. This is paying back our debt ors our debt and effectively, you know, and I think about this, and I tending which was already approved, was that's correct. Spening has already been improved, and actually it's already been spent. This is debt that we're paying back, and so um, you know, I think it's it really does affect the rate at which Treasury or where I used to work, can sell our our debt U and it'll affect that the amount of that and the confidence

of people who buy buying our debt. And so the reality is, and we make quabble over this is the right thing to do or not, But if we you know, the government spends one point three dollars for every dollar takes in, we just we you know, the federal government likes to spend like drug and sailors, um, and they don't they don't balance the budget, and so we we just rely on debt to finance our operations in our in our government and so and so So John and

I have covered uh these um impasses. The twenty eleven um one probably the most noteworthy. When we were our credit rating was lowered. You actually were in the room negotiating them UM as you said the last twelve. So this happens fairly often. Now at Kroll you're in a different role where you have to advise your clients on um You know what could happen around this in terms of the economy, in terms of the markets. What are you expecting this time? This will be the hardest one

I've ever seen. When first, I'm so grateful that I'm out there. Uh, it's I really believe this is there actually maybe a chance we actually may do a technical default in this in this setting, UM, I really don't know how how you get there. You have we have a president who's unwilling to talk to House Republicans or House Republicans or have made it very clear that they want spending introductions in the package as an overall way to get to yes. And so with that, with those

two postures, and we're and we're coming. We're going coming so quickly up to the to the deadline that there's really we're going to quickly come to a time where we're actually going to pass a red line where we can't, you know, because it just takes time to pass things in Congress. Hey, I just want to drain your experience. You were got about thirty seconds, Leff, you were Orange Hatch's right hand man. That mistaken could in an Orange Hatch function in today's Congress, or he'd be an outlier.

You know, there's a couple couple I call statesmen left in the in the in the US and the US Congress, but they are a dying breed. And uh, I know, I'm so grateful to have been mentored by him. Um and I really our country would be much better off if we had more and more ore in hatches in the Senate today. Well, it's been awesome to have you in the studio and I hope we can get you back for more time. Chris Campbell, their chief strategist at Kroll,

talking us through the bank. Well, we're not going to call it a crisis, right the bank. We camil is the word I think that we've landed on. You're listening to the Team Cancer Live program Bloomberg Markets weekdays at ten am Eastering on Bloomberg dot Com, the I Heart Radio app, and the Bloomberg Business app. We're listening on demand wherever you get your podcast. We have an opportunity to talk about steel right now at David Stickler. He's

the CEO of High Bar. It's a newly formed company, comes with a lot of experience though as a CEO former CEO of Big River Steel, and he's in the studio with us right now. So I think it's a great opportunity to get a look at, you know, one of the underlying sort of signals of economic growth or you know, contraction. Thanks so much for joining us, David. What's the steel market like right now? Because it's obviously

a primary building block of the economy. Sure, the steel market is if you look historically, it's in very very strong shape. It's been in strong shape for eighteen twenty four months now. But the steel market, when you talk steel, a lot of people look at just half of the equation. They look at what the steel price is. And today seventy percent of the steel in North America is made from recycled scrap metal, all right. Now, that's different where

twenty years ago seventy percent was made from iron. Ore and coking coal. So there's been a huge, huge shift in the sustainability of steelmaking. But when you look at steel price, as I said a moment ago, that's just half the equation. It's what's the scrap metal price, And it's really the spread that everybody plays in, and that's where you make your money, the difference between scrap metal

and steel. What are the benchmark contracts that you look at to find that price, So you you really in the steel industry, unlike the alunium industry or the oil industry or the gas industry, you don't have a liquid futures market. So you're really looking on a daily monthly basis on what the scrap price is trading at all, right, what you can buy scrap metal for, and then you're trying to add on your margin to set your steel price.

And that's really gentleman. What's interesting, Manton John is with scrap metal, there's nothing else to do with it other than make new steel. But they have scrap metal overseas they do. And when I'm buying stuff like that, I would imagine as a purchaser, I'm just looking at, you know, who's the best producer, the best price I can get, And those are two different things, by the way, right, the best producer and the best price you can get

are often too very different things. It's hugely different. Now you can buy steel. Steel isn't steel. Steel is not steel. You can buy steel from all the reaches of the globe pretty much. You can buy it from China, you can buy it from Russia, Brazil, India, Japan, Korea, Canada, the US and imported steel certainly is here and will always be here. The difference is the quality and more recently, the environmental sustainability. I will tell you the global average

for carbon emissions per ton of steel. For each ton of steel, the world average is one point eight five tons of carbon. All right, one ton of steel one point eight five tons of carbon in the air. The last mill, prior to my high bar effort here, our carbon emissions was point one two three. But how would I know that as the consumer? I mean, does its stamped on the steel lumbered one way? By the way, David, you're not selling steel rebar to John for his home

renovation projects. I've got You've got much bigger customers. These are bridge tunnel, airport projects, roadway projects, sixty seventy you know, floor office and condominium towers. And I've heard we are going to do a little bit of infrastructure spending in this control. We certainly are. And what's interesting, since the nineteen sixties, anytime there's been a federal highway dollar used

in a project, there's a concept called buy America. The rebar has to be melted, cast enrolled in the United States, all right. Now, That's been around since the nineteen sixties. So when you talk about, hey, can I buy some rebar from Turkey, absolutely you can. But if it's a federal highway project, you're restricted only two US produced rebar And I guess you know, especially with this administration, they probably want to do a better job for the environment.

We import as a country like thirty million metric tons of steel every year, but that is incredibly pollutive, right. I'll give you an example. So on the West Coast, there's really no natural home for scrap metal, so it either has to travel east into Chicago, into Arkansas, into the Carolinas where steel a lot of steels produced Texas

or gets shipped overseas. So you take your scrap metal off your West coast ports, ship it over to Asia, gets put on a truck that you don't want to be anywhere near, driving behind with all of the pollution coming out of the tailpipe, gets melted in those steel mills. That as I said, one point eight five tons of carbon, you know, per ton of steel put on a truck, put on a ship delivered to the West coast. That is not an environmental fuel both ways is not environmentally sustainable.

So so what will you do? You were at Big River Steel, now you're at High Bar. You're focused on recycling, in the in the production. What will you do differently than your competitors? Oh? Number one will be LEAD certified. At Big River we were the world's first LEADS certified scrap metal, recycling, steel production, facility leadership and environmental design and LEAD certification is typically for office buildings, hospital complexes,

university building. We have it at the Bloomberg headquarters. When when people heard that we were going to get Big River Steel or attempt to get Big River Steel LEADS certified, they thought we had lost our minds. But we did it. And after two years of operation at Big River Steel, Dommler Mercedes called us up and said, Dave, are you going to be in town in three weeks. I said, well I am. They said, we want to give you our Environmental Supplier of the Year award, and not just

for steel, not just in North America. Everything that Donler Mercedes buys plastic, glass, aluminum. Here's a two year old company at that point in time, given our lead certification,

given our carbon footprint, and that really makes a difference. Now, what I will tell you is people don't pay more for our steel because it's environmentally sustainable, but everything else being equal, If my steel selling for a thousand bucks delivered in one of my competitors up along the Great Lakes that uses coal and iron ore to make steel selling for a thousand bucks, nine times out of ten will get the order. It's like a tiebreaker when you go to Vegas and the house has, you know, the

blackjack tiebreaker. I'll take the tiebreaker. What's the future of the industry. Do you face competition from things like carbon fiber? You're always facing you replacement. You know, for a while it was going to be the cars are all going to be aluminum. The steel industry is going to be on its tail. Talk about an energy intensive deducing aluminum, yeah, can and energy intensive carbon intensive. You know, the one thing about aluminum is you do have you know, a

high level of recycling. You're seeing a shift away from plastic bottles to now water and other drinks are being more and more in aluminum cans, aluminium bottles, what have you. So, the aluminum industry is here to stay. It's not going away. But to answer your question, the steel industry, the key is lightweight and strong. All right, lightweight and strong. And thirty years ago steel was you know, half inch thick. It was you know, you couldn't bend it, couldn't press it.

It was tough for some of these applications, and aluminum and carbon fiber were quite frankly nipping it the tails of the steel industry. The steel industry, to their credit, has come out with advanced high strength steels, corrosion resists in steels, and really over the last twenty years has just done a complete life cycle change. When I first started this twenty years ago, steelmaking was eighty percent braun twenty percent brains. Today at High Bar and Big River

it's ten percent braun ninety percent brains. We have this green market steel. Bloomberg Company Rebar report here available to our terminal customers. Is there do you think enough support for sustainability around this industry. I don't think you'll see a green premium. All right. There's a lot of people in the industry saying you're going to be sustainable, you'll be able to get an extra ten percent for your steel products. I don't believe that. What I believe it's

a tiebreaker. If you're the most sustainable, you're going to get the order, everything else being equal. But I do not expect a developer or a builder to pay me a premium because my steal is green. All right, Well, we're gonna be hearing more from you at this roundtable discussion here at Bloomberg. So we're glad you could stop by the radio booth and talk to us because it's a fascinating topic and I think John and I love

all the things that are made of steel. No, I'm in the market for rebar for my basement, So keep you in mind. Thank you very much, Thank thank you so much. You're listening to the tape. Ken's a our live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty. We want to get right

now to James Lanthier. He's a CEO at Mindset Pharma and they have it's it's a business that I am very interested in psychedelics, plant based psychedelics to treat What do you treat James with these psycho delics other than you know, the duldrums? Well, you know, I think we're at a pretty fascinating point. There are a couple of

clinical trials that are in their later stages. Um, for for the use of psilocybin, which is a psychoactive component of magic mushrooms rooms exactly three of resistant depression and m DMA to treat PTSD. But there are literally hundreds of clinical trials right now, and uh, you know, academic studies exploring different indications, you know, for psilocybin, DMT, a whole range of different psychedelics. You know. But you are actually so I'll just tell listeners, um, this is a

publicly traded company, Mindset Pharma. The ticker is MSSTF. You actually sell like shrooms in ecstasy to clients in Canada. No, we're we're a classic biotech. So what we are doing is we are trying to develop new psychedelic drugs that have been really optimized to make up for some of the shortcomings of the of the known drugs, so that they're gonna work better as medicines. They'll be safer, more predictable, have potentially different durations. So better than like SSRIs the

prozacts of the world is what you're saying. Well, better not only than the established therapies. Yeah, absolutely better than the SSRIs, but but better than the psychedelic drugs that we are you know, studying today. So you know, for instance, psilocybin, there's amazing data to show that it can do a really great job of helping people with uh, you know,

different depressive disorders, but the durations really long. You have to spend you know, up to eight hours in clinic and be supervised by multiple therapists, and we just think that's not really a very convenient model for you know, either for therapists or you know, or for patients. So we're trying to you know, develop drugs that still you know, have the same benefit are still going to likely induce the same you know, psychedelic experience, but have a shorter duration.

All right, since you mentioned startup, I got to ask the obligatory tangential question about funding and how svb's collapse may have affected you or your industry. Well, it hasn't affected mindset. We're in a bit of a unique position. We're the only biotech startup out there that actually has a big pharma collaboration. So we're we're partnered with the development arm of Otsuka Pharmaceuticals, which is a top psychia psychiatric drug company, and they fund the majority of our expenses.

I think generally speaking, you know, the psychedelic space has not had a ton of exposure to SVB or you know, any of the other regional banks that have Why is it structured that way? The does big farma not want to touch this or they'd rather have somebody like you

and if it is successful, take you over or whatever. Yeah, the I think it's it's it's really more of the latter, you know, we're most of the new drug work is is still at a kind of a pre clinical stage, which is just you know a little bit early for big pharma and so the way that you know a law you know, not only in psychedelics, but you know, a kind of a cross farma now have a lot of these, you know, early stage collaborations where pharma's uh,

you know, partner up with promising biotechs that have you know, have some promising kind of early results before they actually you know, go all the way into a licensing partnership. So, um, what could what are you finding in terms of treatments because um, you know, you mentioned the psychedelic experience, and I thought the way people use sila cybin to treat

um disorders was through micro dosing. At least that seems to be the kind of trendy way that people are doing it in Silicon Valley and some others here on the East Coast as well. Um, well, what's the most successful way that you're that you found so far? Yeah, I'm really glad you asked that question because it's actually a kind of a common misconception because you do hear a lot about microdosing, but but actually the the the approach that has had you know, the most positive data

so far is what we call macrodosing. So you go into a clinic, you take a large dose of a psychedelic drug. You know, it puts you off into a real psychedelic trip for you know, a period of time. Um, and you've got to do it, you know, in clinic under supervision, typically with multiple therapists. Yeah. Yeah, Typically there's there's you know often there's music too, and and uh

and it's really interesting. All the data suggests that, you know that that that profound psychedelic experience is really kind of essential to to getting you know, the relief from depressive symptoms. It's almost like a we still don't really fully understand like how this all works, but you know, the assumption is that there's some level of kind of rewiring and it helps, you know, helps give you kind of a break from being stuck in uh, in these

negative thought patterns. That's you know, really a hallmark of people who are suffering, you know, badly from depression. How far are you from something prescribable? If you look across the psychedelic space, the drug that's going to get likely get to FDA approval first is going to be MDMA. Uh, psilocybin is going to come and that could be as early as you know, next year. Psilocybin is probably another twelve months behind that. We have a couple of candidates

that are just entering, uh you know, clinical trials. Now, are you actually like growing mushrooms in the basement? I mean, went, how does this work? No? This is all this is all synthetic. So the problem with using the mushroom in a therapeutic you know, regulated context, is that the psilocybin content can really vary, you know, wildly, you know, from mushroom to mushroom by as much as you know ten x. So the mushroom, you know, you there's really no way

for for physicians to kind of dose it appropriately. You really have to use the synthetic versions, and that's what we're working with. Also, Uh, John, if you haven't been watching The Last of Us, you might not know that fungus can cause a global pandemic, could be world ending. I have no idea what you're telling you about. Which show is the HBO The Last of Us? Um? All right, James the Pleasure from Narcos? Right, yeah, Okay, No, that's

pretty cool, James Pleasure talking to you. And I obviously find this, uh topic absolutely fascinating, and you know, I think SSRIs have been fairly successful, but there are obvious drawbacks and side effects, so it would be quite cool, um if you were successful. Great for the mental health of the world. John Lanthier there the CEO at minds at Farm. Sorry, James Lanthier, the CEO of Mindset Farmer.

The ticker again is mss TF. This is Bloomberg. You're listening to the team can'cer live program Bloomberg Markets weekdays at ten am, easting on Bloomberg dot com, the I Heart Radio app, and the Bloomberg Business app. We're listening on demand wherever you get your podcast. Hannah Elliott has probably the best job at Bloomberg News. You did no well.

I mean I read all everything, she writes, everything, she puts out follower on all social media, and she has just put out a piece on the update the follower to what is my probably favorite car of all time, the Lamborghini evented Door. Hannah, I must tell you that we had a talk it was like last week about Lamborghini's and you were very upset about one model that was I don't know, naturally aspirated but with a turbo charger or whatever. No, is that right? No, it's not

the case. What was it. I'm not I'm not in love with the urists. The power train for the Lamborghinists. Yeah, oh yeah, that's fair. I have to say I love the earists. I just had the Performante last week and drove it out to Palm Springs. How for how does that work? How do you hook me up? You know I can help you with that. Um, as Matt said, I agree. I have the best job at at Bloomberg and I had it for um let's call it a long weekend, four days over the weekend. So um it was.

It was a great experience. And I really you know, I just drove the Farie par Songua the Ferrari Suv, so it was very interesting to check back to back the Lamborghini Suv versus the Ferrari Suv. I have to say I give the Lambo the edge. Actually, well the Lamb. I mean, look, the Lambo is a great car, But is it just a Porsche Kayen with a different steel on top? They have the same don't they have the floor leader va with the twin turbos and oh sure, but you know, there's a lot more power in the

earthst There's a lot more. There's a lot more power in torque, I will say, I mean the performance figures are stronger. It's it's a very cool car. But I just personally I prefer a naturally aspirated engine. But I'm old and there are new things. You're a purist, yeah, I mean, hey, I don't believe it. You're you're a purist. I mean, so that brings me to well, how do you feel about Lamborghini making a hybrid? I feel very

good about that. I have. I've always said there's no replacement for displacement, but I think now there is, and that is okay, battery power, because of the instant torque, because of um, just the incredible performance. Tell us about the new car. I can't even pronounce the name. What's the new eventidor the Eventador successor called? So I'm gonna go with Rouelto. Um. You know, some people are saying velto and some people are saying Rouelto. I think Rowelto

is a bit easier to say, basically the word. Of course, it's named after a fighting bowl a bull that fought in of s in Spain in Barcelona in the eighteen eighties. John and a lot of our listeners may not know that all, most all Lamborghinis are named after famous bulls. This is this is firmly in line with Lamborghini heritage. So the roualto. That word also means mixed up in Spanish.

It can be used to mean mixed up some people even have you even told me, well, it kind of means like scrambled eggs, and that's a very fitting name for a vehicle that combines three electric motors with that V twelve engine. So we've got a mixed up drive train here. It's not really about like you said, this is the successor to the evented door. It's the hybrid function. Is not really about a fuel efficiency because we only get six miles on an all electric charge, so it's

it's not about that. It's exactly what you say. It's about instant torque, really um and some really seamless power, which I think sounds fabulous. Who buys this? Oh? I you know what, I expect that Lamborghini will have no problem selling this vehicle. They mister Winkleman, Stefan Winkleman told me that their order books are full through twenty twenty four. So, oh, I forgot to mention. Can we just say the Roberto has a thousand and one horsepower. Yes, so this How

could I forget? Um top speed of over two hundred and seventeen miles an hour two point five zero to sixty two. Okay, here's here's my other stupid question. Where do you drive this? It's not going to be on the turnpike. I think you actually could take it right down the turnpike. I mean speeds like well, no, I don't think there are some people who do those speeds, but I think you know, you know, so the numbers, that performance is truly impressive. It's almost as impressive as

the Dodge Challenger Demon one seventy but not quite. Design is amazing, I think, Hannah, it's absolutely gorgeous too. What's your take? Yeah, I love it. Okay, so let's get some background. This was the head designers, Mitya Borkert, who we all love. He actually came from Porsche, so he's been at Lamborghini for some time. He led design on this and I love it because it combines elements of heritage Lamborghinis that we've seen. You can see a little bit of a contosh in the front. You can see

a bit of a Mercy lago as well. The demensions are a sort of a Diablo size, so I feel like we can see the heritage of Lamborghini. But then also we have really new elements, like a totally exposed engine in the rear, which let's not forget. You know, Bugatti has done that before, but I don't think we've seen that at Lamborghini. So we've got a totally exposed engine, which I think is really cool and still twelve thank god.

Exactly exactly, yeah, And we still have these design elements of the shape of a Yum throughout the car, from the led headlights at the front to inside in the cockpit it's oriented in a Y shape to a funneling to the rear. I think it's really really cool. I think it's very cool. As well, n turn off your mic. You can't talk anymore. No, I just as well. I'll turn off back. I'm going to ask one final question. I'll go away because I don't know what I'm talking about.

What kind of um looks did you get while driving in the car. What's what's the reaction when you're in this car driving around your neighborhood. Well, I must admit I have not yet driven this vehicle, and I don't think anybody is. They're going to This is the world debut, so we haven't had press drives yet, but my prediction is people are going to love it or hate it, which is pretty much what Lamborghini does. You know, it's a very strong statement. You're you're either on board or not.

But I do think one nice thing about this is with that electric powertrain, you can kind of sneak out of your neighborhood without all the belching and popping and growling in the engine, which your neighbors might appreciate. And then once you get on the get on the you know the highway, they're turnpike, then you can turn your engine on. Now, so maybe that'll go over well, well, we'll see it. It'll be here at the New York Auto Show next week, so and Hannah will be here too. Yeah.

I have to preface this next comment with a warning. I am a reactionary. I often have very strong feelings about things right away and voice them in a pretty loud tone. Then after thinking about it or debating it or reading it for a while, I realize I'm wrong and I go back. So but at least I do change my opinion. To me this new Ferrari puro sang is the ugliest thing that they've ever aid and it to me, it looks so cheap. I mean, they spent so much money to develop a Mazda MX thirty. I

saw that mean too? What what on earth? And yeah, I think in the Alps, which sounds awesome. I'm the powertrain is so cool, but what Yes, this is one reason why I do give the edge to the eurists in terms of SUVs from Lamborghini versus Ferrari. I do think the Earist looks cooler and more in line with Lamborghini heritage. The Ferrari. Yeah, look, it looks better in person. I don't think it photographs very well. I'm not going to argue with you that it's not the greatest looking Ferrari.

It's not, you know. I love the roma, the classic lines of the roma. It's so minimal and elegant, and I agree I think they missed it a little bit on the persang way. Um. I don't find it personally. I'm not personally offended by it. I actually think the Ferrari California was the worst calif Ferrari they made because it was so bland and just so boring. Um, at least there's something with the parrosangway. But yeah, you're right, it's not it's not great. I think they pulled some

punches that maybe they could have gone a little harder. Yeah, I haven't seen it in person, and as I said, I maybe i'll see it and in a few years fall in love with it. I do love the ff is my favorite Ferrari. Okay, but I just I'm glad they left the power to V twelve there as well, so at least we haven't lost that. And I really look forward to seeing you next week. I'm so glad you're coming to New York Auto Show. And yes, I'm gonna I'll bring John Tucker along. I'm gonna give him

a history lesson, a few books to read. I'll tell him to also follow you on Twitter and on Instagram. And thank you for not telling the kitty litter story. Tucker put kitty litter in his car. No, yeah, I mean sprinkled it around. Is this the reef thing? Yeah? Well no, it's spilled gas. Somebody I sent to get gasoline in a can, a five gallon can, came back with three gallons and said, oh, I filled it up with five, so I won't name names. It's actually good.

It's a good trick if you need to get it didn't quite work because they refused to park the car in the garage across the stream. In any case, Hannah Elliott, go on the Bloomberg dot Com read her stuff, or go on social media. Hannah, thanks so much for joining us. You're listening to the tape. Catch our live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, Tuna half,

Bloomberg dot Com, and the Bloomberg Business Half. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty. Let's get over to Washington, DC so I can ask one of my favorite Bloomberg intelligence analysts the same question I always ask him about the salt deduction that we so badly need. Nathan Dean joins US senior policy analysts and King. Before you came out, we were comparing property taxes me

in New Jersey, Manton, Westchester, so and it's here. It's I mean, I don't know if I can remain solvent until the salt deduction restriction sunsets in twenty twenty five. Why did Donald Trump and the Republicans do this to me? Because unfortunately, for those of you who live in New Jersey and New York, it's just it's easy money to take and pay for something else. And that's the problem with the salt deduction going forward, is that you know, if you're going to give it back, you got to

pay for some pay for it somewhere else. And it's easy for the forty eight other states, maybe not California, but it's easy for the book the rest of the states and say, yeah, you know, New York, New Jersey, they've got great pizza and they've got great food and so forth. But you know, we don't we don't need to give them back their salt deduction. So you know, the best I think you could hope for is it

just being in the conversation. And I think the policymakers, especially from New Jersey, are really pushing this, so at least you can prepare for that twenty twenty five date. But obviously we'll have a new Congress and a new president and so forth like that. So unfortunately, you're just gonna have to live with your good pizza for the time being, I just you know, the other what I want to do is move to Connecticut where taxes are like, what is it going to be extended? Do you do

you think? I mean it's supposed to sunset then, but is there a chance it will be extended? Well? The challenge is is that then you have to decide how are you going to pay for it? And you know it's I mean, will the lack of the deduction continue? Well, And that's my point is is that if you were to say, if you were to bring it back, it's sort of like in an entitlement, it's like, okay, if you you know, once you give it, it's hard to take away. Once it's out there and it's gone, it's

hard to bring back. And so you know, I think the best you could hope for at this point is these policymakers to continue to put it into the conversation and for you know, other states. You know, because we haven't seen other states. You know, other states and property values have gone up dramatically since COVID. You know that there are more states that are now impacted by this. Illinois, for example, I think the folks there have already started

talking about this as well. So I don't want to be optimistic, but I just want to say that it is part of the conversation and hopefully in two years it's a better resort for those of you in the Northeast. I mean, temporary tax hikes never go away. Let's be honest. And my question is why are taxes in Westchester so much higher? Why are taxes in the state of New York so much higher than every other state? But we I don't need to belabor this point. We need to

get to the banks. You know, a lot of people are talking about dougcass again was telling us that he's buying some of these banks have been hit. He thinks a little bit too hard. The reason other people aren't is because they think there's a real regulatory over hang. And Nathan, is it inevitable that we just see a lot more banking regulation come into play. Inevitable but manageable.

And what I mean by that is is that this report that's going to come out on May first will essentially have two things that I think investors should really pay attention to. The First one is the special FDIC assessment. You know, yesterday Chairman FDIC Chairman Martin Gruenberg said that, you know, they have to make up the twenty two point five billion dollars that the lost on Silicon Valley

Bank and Signature Bank. And it put in perspective the last time the special assessment, or one of the special assessments in two thousand and nine for five point five billion, ended up with a six hundred and seventy five million dollar hit for JP Morgan. And they've already said that they want big banks, or at least not community banks, to pay for it. So that's going to be out via a notice proposed rulemaking. So there's gonna be a lot of time to figure out how that impact works out,

but that's important. The other one is the ongoing regulatory matters, and this is where I think you're gonna see what is known as enhanced prudential standards for banks that are one hundred billion in assets and up, so like Huntington Key Corps fifth third examples. And what you're gonna see here is not only just higher capital but tougher liquidity coverage ratios. But I think ultimately that if you were to talk to those hundred billion dollar banks, they'd see

in the long run, this is manageable. So I'm not I don't think it's going to be the heavy hand regulatory hit that some people are thinking. Do they get stress tested? The regionals, the smaller banks at some point they do, So it's actually a tiered process, you know. And so banks that are one hundred to two hundred

and fifty billion due to stress tests. But this is where the problem with Silicon Valley banking in is Silicon Valley Bank rose from eighty billion to two hundred and eleven billion almost instantly over a year, you know, almost just under two years. And the way that the transition played from the first stress to the next, it was actually gonna be twenty twenty five until their next stress test.

And I think that's going to be one one of the solutions you came from the regulators is these banks that are hundred billion and up a lot more stress tests and a lot more tougher stress tests when all this have come up in a stress test, the longer dated whatever they were, you know, yes and no. So you know, I think there is a regulatory issue here. And what I mean by that is I think the regulators and this was the San Francisco Fed plus some of the others were a little hesitant to actually sound

the alarm on Silicon Valley Bank. You know, Vice Chairman bar said that he got his first briefing in February, but they said that they've been looking at this. The mria's matters requiring immediate attention had been placed on the bank a year ago. And you know they're Camel's rating, which is this super secret rating that every bank gets

and nobody knows what it is. You know, their Camel's rating was three, which is actually bad, but it's a rating of one to five, one being great, five being bad. And if you're going to give the bank of three and their liquidity portion was a two, but then weeks later it's a contagion risk or a systemic risk. My question here is maybe the regulators need to actually get sort of their ducks in a row as well, not

just put more regulations. As a depositor, i'd want to know what that index is out and unfortunately this is this is confidential, so the Camel's ratings are never made public. But what I can say is is that you know, in terms of the deposit insurance argument that's going on right now, you've seen several policymakers float the idea of going to a billion dollars. I'm sorry, a million dollars or five million dollars. I don't think there's going to

be a congressional solution here. I think what's going to happen, though, is you'll see the Treasury and the FED say that we still have this bank term funding program out there that allows banks to borrow to achieve liquidity so that their deposits are secured. And this program extends up until

March of twenty twenty four. But if we're in this situation where you're not comfortable putting your money in a regional bank and it's an election year, don't be surprised if Treasury in the FED just saying, ay, maybe we just need another year of this funding program, all right? Uh? Nathan Dean Bloomberg intelligence analyst. He knows. This guy knows

everything about what goes on in Congress. So when it comes time for the debt ceiling to be renegotiated, you don't want to talk about because I could tell you I'm already bored by it. I is it? You know what? I remember when, Nathan, I remember when we were downgraded by SMP. I think it was SMP, and we had we all had, all the anchors had to come in, all hands on deck for a special episode of Bloomberg Whatever, and everyone bought treasuries. We lost our triple A rating

and everyone bought treasuries. Nathan Dean from Bloomberg Intelligence talking to us about what's going on in the hallowed halls of Is that actually a show Bloomberg Whatever? I can't remember what it was. That was way back, that was twenty eleven. I had hair. You're listening to the tape. Ken's are live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, tune in app, Bloomberg dot Com,

and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty. Really sad news once again with Blackhawk helicopters going down and US military members of the US military perishing in that tragedy. You know, it's a reminder of the sacrifices that are made on a daily, hourly basis by men and women in this

country to keep us safe. Absolutely, and we should we do and we should always thank them for their service. One such man is Mick Mulroy. He is a co founder of the Lobo Institute, and he spent many years in the US Marines and infantry officer as well as a paramilitary operations officer at the CIA. Mike, it's always, uh,

it's always awful to have to talk about these things. Um, I wonder what your take is on the Blackhawk incident that we that we're looking at now, and is there a problem with this helicopter because it's um, you know, famously had issues in the past. So good to be with you guys, But absolutely, it is hard to talk about these things. You know, obviously, I'm a retiree, I'm a father of a currently serving an Army officer, and every American I'm sure our hearts go out to the

families of these these soldiers. The helicopter has had problems, most helicopters do. I'm not I'm a I'm a ground guy, not a pilot, but helicopters are exceedingly difficult to fly, and we fly them at night in the military because that is how we conduct our operations. Our soldiers pilots are incredibly competent, and the equipment generally is too. But this obviously shouldn't have happened, and I think the US Army will do an extensive investigation to determine what exactly

happened here. The training is realistic, and the training by its very nature is going to be incredibly dangerous. I mean you know firsthand right it absolutely is. Any training is dangerous, especially when you're using helicopters, especially at night. Again, that's why we train, because we are most effective because we can utilize all of the high technology that we

have that they of our adversaries don't. If you think about it, there those pilots are looking down the equivalent of two tubes, which is their nbgs, So it doesn't give you great peripheral vision estially, you can look straightforward, you can turn your head, but it's very it's very restricted.

So that might be one of the reasons why this Apparently they ran into each other or they collided, and I think that's one of the things are going to investigate, and then maybe going forward, we can come up with a better night vision system where it doesn't have that kind of utrich all right, Well, as you say, our hearts go out to the families of these soldiers, and as John said, you know it's it's a horrible tragedy, but it does remind us of the sacrifices that are

made on a daily basis by the soldiers that the troops that are protecting us and really not just us, kind of the free world. Let me let me ask you in that vein about Evan Gerskovich. Not a soldier, He's a journalist that was detained in Russia and has been accused of espionage. My first thought, Mick was, as someone who reads, you know, spy novels extensively, there's no way that we're going to put a spy embedded with the Wall Street Journal I mean the Journal for example.

I wouldn't want to do it, and I can't understand why we would think that. But time and time again in China and now in Russia, these journalists are being sidelined under the accusation that they're spies. What do you what do you make of it? So you're absolutely right, we would not use a journalist to collect intelligence. In the fact, we're legally restricted from doing it. We have

been since the nineteen seventies. So there's a zero chance, in my opinion, that any journalists overseas collecting intelligence for the United States. I think this is essentially perhaps they do that, they being China and Russia, so they just assume we do. But it's pretty it's pretty clear that we do not, and you can simply just look it

up and see that. I think they're using Evan as a political hostage, and they're going to try to get some of their people out that have been incarcerated in say like Germany for example, that we're actually convicted for real crimes in that case, murder, and I think they're trying to gather enough Americans where we'll actually approach the German government and see if this is possible. So I think that's what it. Then was it a mistake to

trade a war criminal for Brittany Grinder? I mean, and the worst part about that is that we left one of our soldiers over there. But was it you know, it was that encouraging to the Russians And now they're trying to do more of this. So I do think that it did encourage them to do more of this. Unfortunately, I don't know what else we would have done. Bertie Griner should have been returned. Obviously, Paul Willen as well. But this is how Russia operates. We probably should do

war to keep Americans out of Russia. It is the highest level of Travis and Travel Advisory Level four, which says don't go to Russia. Whether we can do more than that, I don't know. It probably requires legislation, but it does give Russia this opportunity to simply grab Americans, fabricate charges in cars them for years, and then use them as leverage points against US, both to get their people out and potentially other things that they would like to see United States do. Hey, man, can I back

up and ask you a really broad question? As co founder Lobo Institute, how do you assess where we are in the world today? Is it a more dangerous place? Is it less dangerous? So, unfortunately, I would say it's getting more dangerous. We're seeing country like Russia who have just decided to completely violate the international rules based order, an order that every country benefits from, but apparently not every country wishes to defend when it comes to another country.

I think that's very problematic. China is certainly trying to gain prominence. They are building up their military. We're seeing countries that are on the verge of acquiring nuclear weapons, like Iran. I don't want to be a doomsdayer here, but it's simply the facts that the world is not getting safer and the United States needs to recognize that, and that's part of why we spend so much of

our resources on our national defense. And as a citizen, I need to be prepared for, you know, gladly paying more taxes to protect me and my family and advancing my country's interests. I think, well, I don't know that we need to pay more taxes, and I'm not going to advocate for that, but I do think that our defense budget is in line with the threats that we currently face in the world, and to be prepared for things that we don't foresee. You know, it could be

a Chinese attempted invasion of Taiwan. It could be Russia going past Ukraine, potentially even into a NATO country, which of course we draw the United States in to that war under Article five of the NATO Treaty. So there's a lot of things that could happen. We need to be ready now and not wait and try to catch up later. And I think that's part of why we do spend someone when it comes to our national offense here our defense budget, what do we do about Iran?

I mean, obviously how to deal with Russia and Ukraine as being hotly debated right now, and China is something that we talk about on a regular basis, we don't talk that much about Iran. What what can America do about this, you know, aspiring nuclear power, So that is a really good question. I guess the immediate issue is the level of Iranian attacks that we're sustaining in Iraq, in Syria against our military presence. That's got to stop. And you know, I was just look up the statistics today.

We've been hit about eighty times in the last two years. We responded about six. We need to get a lot more strong, stronger in our responses. We need to make them do a calculation that it's simply not worth striking an American facility in either of those countries. So I think that the chairman yesterday, General Melly, was pretty specific about how this is going to escalate as far as our responses if we are hit again, and I think that's good. The other issue is, as you pointed out rightly,

they're on the version of getting a nuclear weapon. Most analysts thinks it could take two weeks to get to the level of enrichment to get the typer Ran ammunied, and then a couple of months to actually weaponize and into a deliverable weapon. That's a big problem. There's no easy answers. Should the United States strike when we decided it's that closed. Potentially will Israel strike regardless of whether we want them to or not. Potentially, in fact, they've

said they would. So there's a lot of things that could happen in the next few months that could even increase the level of international instability and conflict, and I think that's one of the things we're going to be determining as we go forward. Hopefully Round pulls back from the level of getting a nuclear weapon back into the community nations, but they haven't shown any interest lately to do that. All right, Mick, thanks so much for joining us.

Mick mulroy there, co founder of the Lobo Institute, former US Marine and paramilitary operations officer at the CIA as well. 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 I'm fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio