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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
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Speaker 2: Well, the Justice Department is ending a controversial investigation into building renovation cost overrunds by the FED, potentially clearing a path to confirmation for Kevin wars At, his President Trump's pick to be the next chair of the Central Bank. We did have US attorney Jeanine Piro in a social media post earlier today.
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Speaker 3: It's rather lengthy, but we want to highlight this part. She says.
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Speaker 2: Accordingly, I've directed my office to close our investigation as the IG undertakes this inquiry. Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so, Which makes us wonder, wait, is it full steam ahead or not quite yet?
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Speaker 4: All right, Well, maybe not, Maybe we'll see. Bloomberg TV and Radio International comments and policy correspondent Michael McKee joins us here in the Bloomberg Business Week studio.
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Speaker 5: Is it full speed ahead for Kevin Walsh?
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Speaker 3: Well, sounds like not. Maybe.
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Speaker 6: First of all, the person who make that decision is Senator Tom Tillis. We have not heard from him. He's the one who has to drop his objection to the nomination moving forward. And the question is is this enough? Because Carolyn Bessett, the White House Press Secretary, just a short time ago, came out and said this doesn't necessarily mean the investigation is.
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Speaker 5: Over because it's going to the Inspector General.
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Speaker 6: Yeah, she said, it's just changing jurisdictions. And you highlighted the line from Jennin and Piro. So does this give Jay Powell enough confidence because it still seems to leave him with legal jeopardy and Tom Tillis seems to be concerned about the legal jeopardy for j Poul.
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Speaker 5: So will they move forward with this or not?
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Speaker 6: Is this just a stretch by the administration to throw it out there and then sort of say to tell us, well, look, we compromise, and you should. It's hard to know at this point, So help me.
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Speaker 2: Understand and forgive me if I don't know my law and certainly government law. But if Janine Piro does this, she's the US attorney for Washington, d C. Is what she was pursuing, separate from the Inspector General, and so this could be a first step, and now the Inspector General has to weigh in or no, they're connected.
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Speaker 6: Well, here's the way it's been working. Basically, she started an investigation into whether Powell lied to the Senate Banking Committee about the renovations. All the members of the Senate Banking Committee said he did not. Then they started throwing in question about the renovations because they had kind of lost that one prop for their investigation, and so now that's become the focus. She issued subpoenas to the Fed to give them documents about the renovations so they could look for Malfeasa. They didn't have any evidence of it, but they wanted to look for it. And a judge said, no, that's is fishing. You're just doing this on a pretext, and he threw it out. So she didn't really have a case at all. But in July twenty twenty five, when this first became an issue, Jay Powell asked the Inspector General at the FED to look into this. So the Inspector General's been doing an investigation for almost a year now and should have something ready to go in a very short time. Tim Scott put out a statement this afternoon, the Chairman of the Banking Committee, saying that he would like to have a hearing with the IG sometime in the next ninety days and that seems very possible.
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Speaker 5: Now.
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Speaker 6: How all that or if any of that affect whether Tom Tillis will let the nomination go forward, we don't know, but that's kind of where we are right now. It's two separate investigations and one dropped out and is putting the other forward.
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Speaker 4: You know, Stuart Paul Bloomberg Economics was on Bloomberg Intelligence earlier today. It was a great deep dive with Paul and Scarlett Elliott Stein from Blomberg Intelligence was there as well. And one thing that Stuart talked about is the changing way that Senator Tillis has kind of talked about this in recent months, and he's changed his language a little bit about what would and would not constitute, you know, sending this to at least the next step to approval. Does that tell any story about whether this would actually satisfy him without him coming on saying it.
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Speaker 6: I think trying to figure that out would be parsing his words too closely. Basically, he's said until this investigation is over, and he said it in a couple of different ways, and we don't know what over means to him. We do know that Pal said he wasn't going to leave the FED until it's over and final, and so he's basically said, I need to know that I'm not going to be in legal jeopardy going forward and that this needs to be closed out, and right now that does not appear to be the case.
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Speaker 4: I think there also some practical considerations when you're a public servant versus a private citizen, and that has to do with you pays your legal fees.
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Speaker 6: Yes, if this is an investigation into the FED, then the FED is going to pay the legal costs. If it's an investigation in a j pile doing something wrong as a private citizen, then he's responsible for that, and I think that's another reason that he doesn't necessarily want to leave. No, he is not a poor man, so he came from Carlia. He could probably pay most of his lawyer's bills or there might be a go fund me set.
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Speaker 7: Up for him.
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Speaker 6: But the Times Fed, the FED itself is going to be involved in this because the question is, did anybody anything right?
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Speaker 7: Right?
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Speaker 5: Okay?
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Speaker 2: And it's just you know, I think the bigger picture is again a president putting pressure on a federal reserver, U, a central bank.
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Speaker 3: Or fedch Here, Hey, one last question.
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Speaker 2: Looking at the treasury trade today and I'm just looking at the two year net.
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Speaker 3: We did see yields back off.
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Speaker 2: Is it because of this news and the expectation Kevin Walsh will be there and that he may push for lower rates or.
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Speaker 6: Yeah, I think it's a bit of a knee jerk reaction to that. Once the markets get past today's news, they'll be looking at oil prices, they'll be looking at the progress of the war. They'll be looking at inflation. We get data next week on that, and you know, the trade will evolve based on what they think is going to happen to inflation and then what the Fed will do about it.
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Speaker 2: All right, good stuff as always, you know, Friday, Mike McKee.
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Speaker 3: It's become a regular thing because there's always.
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Speaker 5: Something at least it happened in the morning.
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Speaker 6: We all that's what we were saying earlier today. At least it didn't happen at four.
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Speaker 3: O'clock, does right? Okay, start your weekend yet, all right, Mike, thanks so much.
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Speaker 2: Michael McKee of course, Bloomberg TV and Radio International Economics and Policy Correspondent.
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Speaker 3: All right, lots going on in the nation's capital.
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Speaker 2: You know that we're going to dig more into the war a little bit later on this hour, but.
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Speaker 3: Also happening this weekend. The annual Meetings.
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Speaker 2: Celebration often roast of the relationship between the press, the covers the White House, and those including the President, that reside there and are part of the administration.
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Speaker 3: It's always kind of a fun gathering. Uh, well, not always.
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Speaker 4: It depends on your definition of fun. For the first time as President of the President, Donald Trump will be attending, having declined during his first term and last year to attend. This weekend around the dinner, the gay dating app Grinder will host its inaugural White House Correspondents Dinner weekend party, a party Carrol that Political Reports is one for which Democrats and Republicans alike have been clamoring to get an invite.
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Speaker 2: YEP, Political also pointing out in its story about the upcoming event this weekend how Grinder's self described conservative CEO has waded into politics, in particular in the state of California. Joining us right now is Grinder CEO George Arrison. The company, by the way, public has a two and a half billion dollar market cap. George joining us from the nation's capital, obviously getting ready for that event and the White House Correspondence Dinner this weekend.
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Speaker 7: George, it is.
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Speaker 3: Good to have you here on Bloomberg Business Week Daily.
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Speaker 2: You guys obviously a dating platform for the LGBTQ plus community more than fifteen million average monthly active users. But you guys have also been very active when it comes to an equal society, human rights, health and safety for the community.
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Speaker 3: It feels like.
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Speaker 2: Too on that you guys have been working to beef up your presidents when it presents, when it comes to Washington, DC and lawmakers who make policy. So tell us about your mission, your initiatives, and why this party the first one connected and around the White House Correspondence Dinner.
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Speaker 8: Now, thank you so much for having me great great to speak to you.
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Speaker 9: We only hired our first person in DC about a year ago and have been definitely, as you called, beefing up presence in Washington.
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Speaker 8: We don't have a lot of company.
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Speaker 9: Specific issues that we need to deal with, but our users have a lot of issues that we believe we can advocate for. Probably the biggest thing that we spend a lot of time on is HIV treatment and prevention. We help protect funding for HIV testing. For example, through a CDC. About half a million people have gotten a test through the Grinder app that the CDC pays for to test whether they have HIV or not, but a third of those people had never had an HIV test before. So last year when that funding was in question, we were able to lobby Members of Commerce to ensure that funding state. We also have been really actively advocating on behalf of pep FAR, which is a US government plus worldwide program to ensure that there is HIV treatment medications for people in poor countries, and that's saved about thirty million people's lives and continue to fund that is really important and we are really encouraged by how those discussions have gone.
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Speaker 8: So those are some of the issues. We focus on.
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Speaker 9: Access to fertility care and surrogacy for gay couples, it's something that we also really care about and have spent efforts on as well. So those are the type of issues that we focus on. And this event is our coming out party. You know, we've been in DC now actively working for about a year a year and a half, and this seemed like a really great opportunity to have a gathering. Grinders really good at bringing people together, and we thought that having a party at the time when we as you know, this city celebrating the First Amendment, was a really great time to do that. You know, gay rights would not have been possible without the First Amendment, and no country has been as good for gay people as America has been, quite frankly, and so in America would not be possible without the First Amendment as well, Thank you, James Madison, and so celebrating it, I think is something that is really awesome to do and we really sick to host folks at the party tonight.
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Speaker 4: How would you how would you characterize this this administration when it comes to LGBTQ plus rights. I mean, some stuff comes to mind, and it's it's the fighting over the PEP far funding, certainly with the DOGE, with Doge and the government efforts to reduce funding for some of those programs. There's the the president wanting to remove the the the Rainbow flag, the Pride flag from Stonewall here in New York. That's a protected property that that marks historic time for this community. How would you describe this this administration's view when it comes.
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Speaker 9: To what I can say is, Yeah, what I can say is that we've had really good engagement with folks on both sides of the aisle. Obviously, you know, there are a lot of Democrats, for a streete champions of gay rights, and we work very closely with them. But we've also found plenty of folks on the Republican side to work with as well, sometimes broadly and sometimes issues specific. I think, you know, we tend to focus on the positive other the negative, and we want to accomplish the positive things that we can. And I think it would you know, worth saying that there's some really powerful game end this administration who have been really good partners on things to us as well. Yes, there are challenges, there's no question about that, but I think the important thing is to be able to work through those challenges and focus on the things that you can actually accomplish that are positive, and so far we've been you know, we've had a very good reception on both sides of them.
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Speaker 4: I should note that the US has agreed to restore the Pride flag at the Stonewall Monument as of earlier this month, following a court battle.
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Speaker 2: All right, so good to know. And this is what we've seen certainly with this administration. Sometimes you know, a policy or an action or comment comes out, and then sometimes there's some backpedaling. What I do wonder, George, you talk about good engagement on both sides of the political aisle, who in particular, and I'm curious about in the President's inner circle, who you find is very receptive to hearing and listening to you guys.
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Speaker 9: I'm going to not mention any as I don't think that's be the right thing for me to do. But we spend time with folks in the House, in the Senate, in the administration. We've been at the State Department more than once, for example, to talk about pep far We're probably the only group that shows up there to talk about pep farre, not asking for money, but were saying, hey, how can we work with you to ensure that people who should be accessing these medications actually know how to get them. And you know, we do have a very large platform that speaks to people that otherwise are really hard to reach in a lot of these countries because grinders in one hundred and ninety countries, and so in most places where pep far is working, we have users and many of those visits should be on medications, whether it's preventative medications to not get HIV or HIV treatment medications and we can access them, and so how can we work with you to make sure that that happens? And then you know, we work with folks all through the administration, whether it's at the Labor Labor Department, HHS, Treasury, and you know obviously with folks on the hell as well. And the same was true you know in the Biden administration. I for the first revival into DC was when Biden was president, and we had really good conversations with folks in that administration as well.
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Speaker 2: So, you know, we just have about a minute or so leftier and I am curious about the business. Can you tell us we would be remissed not to ask you your publicly held company. I know you're getting ready to report earnings. Can you tell us about the new Grinder Edge subscription tier. We've seen reports of testing the US at five hundred dollars a month with the subscription. What's been the user response? Just quickly got about forty seconds.
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Speaker 9: Yeah, I spoke about that in the shareholder letter last quarter. We are testing a new premium subscription tier. Grinder maintains a very robust free tier, but we have two subscription tiers right now. One's called extraants par Unlimited, and this is a new one that we're building called Edge. It's bringing all our AI features and we're creating a lot of new af it just together into one new tier. It's designed for power users, people who spend the most amount of time on the app, so he's not for everybody, right. And the pricing on that the five nine nine or four nine nine, that's a Canadian Talas pricing. Okay, we're still in testing when what price will land net, but it will be more expensive.
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Speaker 2: Okay, go to leave it there, listen, So appreciate time, good luck, have fun at your party this week, and we really appreciate it.
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Speaker 3: Grinder CEO George Errison joining us.
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Speaker 5: Stay with us.
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Speaker 4: More from Bloomberg Business Week Daily coming up after this.
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Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eastering. Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
00:15:42
Speaker 2: Our next person we're going to talk about drives a Tesla. Lives off the grid in a solar power at home. He built himself on a twelve hundred acre working farm in the Appalachian foothills of eastern Kentucky, not far from Lewis County where he grew up. He calls it the Shire. But his lifestyle doesn't reflect hippy dippy environmentalism. It's an expression of his staunch libertarianism. Where you are talking about the Kentucky Republican Representative Thomas Massey with more on this incredible Bloomberg BusinessWeek story. Some insight into a very influential Republican is Joshua Green, Bloomberg BusinessWeek National correspondent.
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Speaker 3: He joins us from Washington, d C.
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Speaker 2: Josh, of course, author of the number one New York Times bestseller Devil's Bargain. Hey Josh, For those not familiar, who is Republican Representative Thomas Massey. Why does he have a cult following?
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Speaker 10: Really, he's long been one of the most interesting characters in Washington for all the reasons you enumerated an intro there. But the reason he's so interesting now today is that he's one of very few elected Republicans, Republican congressmen willing to kind of openly criticize Donald Trump over things like federal spending, the war in Iraq, trying to hide the Epstein files. He considers himself kind of true Maga, where he would argue that Trump is and as we all know, Trump doesn't like to be criticized, and Trump has decided to go after him and basically try and push Massy out of a job. His primary is coming up in about three weeks three four weeks May nineteenth in Kentucky. There's a Navy seal running against him in the Republican primary. Trump has come out endorsed the Navy seal at Gaullerin spent all his time attacking Massy. But unlike most Republican elected officials who come under fire from Donald Trump, Massey isn't quieting down. And so I went out to Kentucky spent some time with him, spent some time with him in Washington too, and really just kind of got a feel for who the guy is, what he's doing, and why I think this particular Republican primary is so important.
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Speaker 4: So why is he why does he stick to his guns, stick to his philosophy so much in these things?
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Speaker 10: Like other repeat, he is just a true believing libertarian and he always has been, to a degree that even kind of hardcore Washington idiologues you know, in either party, are unwilling to go do. As we said in the intro, he drives to Tesla. He lives in a solar home, you know, not because he's trying to save the earth, but because he doesn't want a power line running into his house. He also, yeah, corporations and government control over him if he didn't do what they liked, you know.
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Speaker 4: I love the details in the story. For a long time, married to his high school sweetheart, they both went to MIT and they you know, started this company together, and he wanted to get back to Kentucky to where they grew up to raise their kids. And it was actually this this issue of wanting to build this home that got him into politics in the first place. Can you talk a little bit about that.
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Speaker 10: Yeah, I mean, Messy is you know, by all accounts, a brilliant guy who, along with his girlfriend, you know, a small town Kentucky folks, got into MIT thrived, you know, they study electrical engineering, started a very successful company, had a family decided they want to move back to Kentucky, and basically Massey got pissed off that the local county where he started building his house was going to get zoned and we're going to put in these new rules. Started showing up at town zoning meetings and really developed kind of a local cult following that became known as Thomas's Angry Mob. Eventually he ran for a local office. The mob backed him. He was very popular. About twelve years ago, congressional seat came open, Massey was one of seven or eight Republicans that ran. He won, and he's kind of been the same character he is today ever since he got to Washington. And oftentimes that meant he was the single vote, you know, against some otherwise popular issue, and that's made him kind of intermittently very unpopular with Republicans with Democrats. But he really is true to his ideals kind of no matter what the cost, and what's so interesting to me about him. The reason we chose now to profile him in BusinessWeek is that I think his race on May nineteenth is also going to be a measure of Trump's politicals strength. Ordinarily, Trump can squash any Republican he doesn't like and put them out of a job. We've seen it time and time and time and time again. But Massey is a popular guy too at his home district. So if he is able to hold on and prevail despite this onslaught from Donald Trump and all of these hedge fund backed superpacks that are coming after Massey, I think that's going to tell us a lot about.
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Speaker 7: Trump's weakening hold on the party.
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Speaker 10: And I think it also might open up room for new voices like Massey's who don't necessarily want to do everything Trump wants to do, or at least want to stick to the original Moga vision and not go off crusading and Iran, you know, buying public having a federal government buy public companies, as Trump has talked about, and that sort of thing.
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Speaker 2: I'm so glad you went there, because you know you write in your story. Ultimately, though, it's also a measure of Trump and his personal power, how Massy does If Massey loses, Josh, should we read that as a barometer that President Trump Trump actually has still a lot of strength here when it comes to the voting public and MAGA in particular.
00:21:04
Speaker 10: Yeah, I think it should certainly, or at least within the confines of the Republican primary electorate. Absolutely. I mean Trump, you know, his poll numbers are kind of plummeting broadly. A new apeopole hasn't been thirty three percent, which is the low I think of either one of his presidencies. There's been some erosion among Republican supporters, but you know, people who consider themselves MAGA, people who voted for Trump in twenty twenty four still tell pollsters that they overwhelmingly support Trump. So it's certainly possible that Massey will lose, and if he does, I think that will send a chill into other Republicans who lately have been a little more willing to stand up to the president than they have there.
00:21:43
Speaker 7: We was a FISA vote that he lost a couple of weeks ago.
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Speaker 10: We saw his US district Attorney Jeanine Powell backing down today from this persecution of FED chairman Jerome Powell. So Republicans are starting to push back. I think if Massey loses, that might cause them to kind of tap the brakes. But on the other hand, if he wins, and if he wins comfortably, I think in Massey thinks it's going to encourage more Republicans to kind of stand out and look out for their own electoral interests rather than just kind of knee jerk following whatever it is that Trump wakes up in the size.
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Speaker 4: I do hear what you're saying, but I think someone Josh could push back and use Marjorie Taylor Green for example, as somebody who didn't succeed in pushing back. And look, she decided not to run, but she faced a lot of criticisms and she still does for speaking out against the president. You mentioned the idea of potential other sort of minie Thomas Massey's waiting in the wings right now.
00:22:33
Speaker 5: Who are some of those names you know?
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Speaker 7: Some of the names I like? I would?
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Speaker 10: I mean, I could point to, you know, people like Don Bacon, Republicans who are known not to be happy about Trump and who have announced their retirement therefore have less political risk that they face in stitting up to him. Another one would be like a Tom Tillis who is held up Kevin Walsh's nomination in the Senate. Anybody who doesn't have to turn around and face Republican voters again this year next year.
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Speaker 8: I mean.
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Speaker 10: One of the interesting things, one of the things that I'm watching on that front are we are right now in the middle of Republican primary season. We've got Kentucky's coming up, We've got Texas Is coming up. Once you get past that Republican primary season, I think it becomes a lot easier for Republicans to say no to Donald Trump because they won't have to face Republican voters in a primary again for another two years right now. However, you know, folks like Massey and Marjorie Taylor Green very limited group that are willing to.
00:23:32
Speaker 7: Kind of step out on that ledge and do it.
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Speaker 10: And as you point out, it basically cost Marjorie Taylor Green her job.
00:23:38
Speaker 7: She jumped before she was pushed.
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Speaker 10: Massey is a fascinating case because he's taking the other path.
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Speaker 7: He's going to go ahead and run for reelection anyway and try to win.
00:23:47
Speaker 2: So interesting, you know, Josh, One of the things I wonder you know, you've obviously followed elections politics for a long time. You wrote about, you know, President Trump getting to the White House in the first place, that first term go round. When you look at this year, unusual to say the least. Venezuela, this war between the US and Iran ongoing. We'll see what happens, certainly this weekend or into the next week or so. But does it look like a president that is thinking about obviously in a second term, thinking about his party and the upcoming midterms, or.
00:24:21
Speaker 3: Is it safe to say that midterms.
00:24:22
Speaker 2: Are still far enough off that a lot can change before them.
00:24:27
Speaker 10: You know, I think the way Trump thinks about his party is that they are there to support him in anything he does. And just because he ran for president originally promising that he would bring down prices, not get entangled in foreign wars, get the government out of the private sector, just because he's turned.
00:24:44
Speaker 7: Around and done the opposite on.
00:24:45
Speaker 10: All those things, I think he expects folks to go along with him in the Republican Party. Many of them have grudgingly, but there are folks like Massy speaking up and saying, hey, you know, I signed up for what you campaigned on, not what you're doing now, and mass anyway, isn't going to sit by quietly while Trump flip flops and changes his position, even if a lot of other Republicans do. And so we'll see is that is that a viable position for an elected Republican to take in the Trump Aaron Washington?
00:25:14
Speaker 7: It hasn't been for a long time, but it might be now. We'll find out in a couple of weeks.
00:25:18
Speaker 2: Hey, Josh, when it comes to MASSI and it's something we talk about a lot. With everything going on, you know, every week, we're you know, touching on Epstein still, how much of the pushback and we've talked about this a lot, whether it's podcasters and so on and so forth, it's because of President Trump's reluctance for so long to release more and more of the Epstein files.
00:25:36
Speaker 3: How much of that plays into Massy's position.
00:25:40
Speaker 10: I think a lot of it plays in the Massy's position. I mean, he is an interesting and kind of a weird guy, very interested in kind of conspiracy theories, that sort of thing. It kind of floods into his libertarian beliefs a little bit. But from menssee standpoint, if you're looking at the Epstein files. Here is this vast, overarching conspiracy of elites and government and business leaders. And you know, we know there was all kinds of wrongdoing going on in the president of the United States, and this Attorney general promised to release all this stuff and they didn't, And so I think it sort of triggers something in Massy that makes him want to kind of keep pushing on this. And look, the fact is this bran On saying he would release these files, he hasn't. He's now pushed out Pam Bondi, his first Attorney General, over her unhappiness over his unhappiness with her performance around these issues. And it's something that really has gained a lot of steam, not only with Massy and Republicans, but as you said, with a broader kind of manisphere podcasting universe doesn't seem to be going away no matter what Trump does. And so that's one of you know, I would say, several political issues that are really bogging Trump down, sinking his approval ratings, and making it easier for internal critics like Massy to kind of emerge, to get their voices out and try and build a more powerful beachhead in the party to start steering it back in the direction that they like it to go.
00:26:59
Speaker 2: Real quickly, as we say, we're living in unusual times. Twenty five seconds, President Trump's going to be at the White House correspondence dinner. Why and just quickly, Why do you think he's going to actually show up this year?
00:27:09
Speaker 7: I don't know. I don't think it's gonna be a love fest. It's probably going to be to harangue the press.
00:27:14
Speaker 11: I myself am not going I get plenty of haranguing right here in my own home from my kids and my wife. OK, so I'm going to be watching it on TV. But yeah, it's going to be interesting to see. I'm sure Trump's not going to be very happy.
00:27:28
Speaker 3: All right, Well, we're happy that you could join us as always.
00:27:31
Speaker 2: Josh Green, Bloomberg Business Week National Correspondent with us from DC.
00:27:35
Speaker 5: Stay with us.
00:27:36
Speaker 4: More from Bloomberg Business Week Daily coming up after this.
00:27:43
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eastering. Listen on Apple, Karplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube.
00:27:56
Speaker 5: We got to keep going with Intel.
00:27:58
Speaker 4: Here shares of more than twenty percent right now, reaching an intra day all time high. The sock surgeing reaching an all time high. It helps that Intel, AMD, armholdings, Rambis, and Qualcom have all been up double digits today on Intel shares hitting their highest level after the company delivered a sales forecast that shattered Wall Street expectations for more. We are joined by Ian King. He's Bloomberg News US semiconductor reporter. He joins us from San Francisco and the Intel story For so long, For so long, you've been writing about this company's turnaround. For so long, you've been joining our program over several different executives talking about this company's turnaround. Is this a moment where it's clear that the company has turned around.
00:28:41
Speaker 12: I think this is a moment where it is showing signs of making progress. Clearly, the forecast is very good, and there's affirmation of what's going on in the market in general. But as it's management said, look, we've still got work to do here. I think we time. The CEO summed it up the best with one of his final comments, which is like, look, a year ago people were talking about whether we could survive or not. Now we're talking about can we get enough supply?
00:29:07
Speaker 2: So wait, yeah, I think that's remarkable talk about a whipsaw.
00:29:11
Speaker 3: I mean, so what happened?
00:29:12
Speaker 2: I mean, this is something we were talking a lot in after the earnings results. Was it because the US government took a position? Is it because it got you know, partnerships deals where money came back into the company and let the Bhutan focus on just running the company not be so worried about maybe financial streets.
00:29:30
Speaker 3: Like what happened in this past year.
00:29:32
Speaker 2: That feels like this company and certainly the narrative around it and certainly the share price around it has really turned around.
00:29:40
Speaker 12: When there were a number of tasks that he faced when he came into this position a year ago. The first one was the balance sheet. The company had too much debt, couldn't afford to do what it wanted to do, and it was struggling. The deals that you mentioned have kind of fixed that there and much batter position there.
00:29:57
Speaker 7: So that's task one. So the largely co completed.
00:30:01
Speaker 12: Task two is to get the execution to get the trains running on time.
00:30:04
Speaker 5: Again.
00:30:06
Speaker 12: You know, we're still working on that right. Some areas are going better than others. The task three was like find a role in AI. They still haven't found a direct competitive product to what in Vidia's doing, but guess what they're actually good at. What they make has become kind of cool again. It's become important in AI, so they're benefiting from that.
00:30:27
Speaker 4: It's not a profitable company at this point, Ian, which is pretty remarkable. Our Markets Live blog pointing out a piece coming from Sebastian Boyd that talks about posting a net loss in the quarter capex of three point six billion dollars, exceeding it's one point one billion dollar cash from operations, which itself, Sebastian rights, wasn't especially impressive. He writes, the most remarkable thing is that it still isn't a profitable company. Investors looking past that. I mean, there's been a lot of companies that haven't reported profits that have done well and find markets for a period of time.
00:31:01
Speaker 5: How do you see this?
00:31:03
Speaker 12: Yeah, I mean, it's not remarkable that it's not a profitable company. It's it's that's old news, right, that's the way the market are looking at this. That has been the case for a while, right, So we're at in theory at this turning point. What has changed is its fundamental demand for the products that it provides. This CPU, this general purpose chip has been kind of on the sidelines, and this AI built out. Now we're being told, actually it's got a bigger role to play. Jensen Wanger in videos said that, AMD have said that, ARM have said that, and all of these stocks are up today because guess what we're getting affirmations, so that that's what's new, that's what people are buying into.
00:31:39
Speaker 4: But he and I think maybe maybe people haven't been following this story as long as you have, might say, wait a second, a company that's worth almost half a trillion dollars, it's a four hundred and five billion dollar market cap right now. It's it's at its highest ever and it's not currently profitable.
00:31:56
Speaker 7: That's right.
00:31:57
Speaker 12: I mean, we're buying on the promise, right, we'll buy on the future. And we've seen a huge rotation recently into this type of company, into this type of product of this as it clearly betting that this is going to be a profitable future for Intel and also for a number of companies. So that's going on. So Intel's got to deliver again. I mean it delivered this quarter. It showed Hey, things are getting better, showed promise. But as you said, I mean the foundry business, that's its factories are still losing an enormous amount of money on an operation level. And to be fair to the management, back to what they said, they said, yeah, we've got work to do. We need big customers. We don't have them yet. When we got them and they want to talk about it, we'll be able to tell you. But right now we don't have them. So yes, it's definitely not all the way fixed.
00:32:43
Speaker 2: So in terms of chips, you mentioned earlier that they still don't have a direct competitor to Nvidia and the type of AAII accelerator right that's made in Nvidia, you know, just the king in the chip industry. Do they need Ian ultimately to have a product that does go head to head with them.
00:33:03
Speaker 12: They've said they do, and they've tried to have them in the past and not delivered anything that was competitive, and they said they're going to take another run at that. So in their own words, yes they do. But for now, everybody loves the CPU. Again, this idea that while we've created all of this software and the AI services, we need to run them and guess what maybe CPUs are kind of good enough to do a lot of the work in terms of, you know, providing these answers to are chat PT, GPT questions or whatever it is we're doing.
00:33:33
Speaker 5: You want to talk Texas instruments, can we go there?
00:33:35
Speaker 2: What was so interesting is when we got ready for earnings Wednesday night, we were thinking, of course about Tesla, we were talking thinking about IBM, and we're like, oh, yeah, Texas Instruments, we'll get to that. They just surprised everybody and that was the stock that just shot up like a rocket.
00:33:51
Speaker 5: Most since two thousand on that Rosie forecast.
00:33:53
Speaker 3: What do we need to know about Texas Instruments?
00:33:56
Speaker 12: I got a couple of things there, and I think you went to both of them. On the one hand, we're seeing very very large stock reactions to these relatively small amounts of news, right, And you've got to remember TI is a very generalist. You know, they're talking about the economy in general, and they were positive. They were like, hey, yeah, things are better than we thought, and we hope they're going to get better. But they weren't like ringing the bell of success and you know, shouting and you know, we'll see how it goes, we'll measure. But in this environment, investors want to be in these stocks, want to buy these companies. They want to ditch the SaaS software companies, and they want to be in these guys.
00:34:31
Speaker 7: And guess what.
00:34:31
Speaker 12: TI gave them a reason to be in TI stock and they took it.
00:34:36
Speaker 10: So ye.
00:34:37
Speaker 4: And I'm going to put you on the spot as I always do, with the cyclical nature of this industry that you've covered for such a long time, and ask you where analysts are saying we are in this cycle.
00:34:50
Speaker 12: I mean, that's the central debate right now, is the argument between hey, you've never seen anything like this. This is a new way of computing, this is a new way of doing things, and we've got a long way to go against the old people like me who would say, well, we've kind of seen these things before. And when things get as poppy as I look now, as you know, the pe ratios are as high as I on now, the growth is seemingly unsustainable. Maybe we're reaching a peak, and that's the debate, and who knows.
00:35:24
Speaker 2: Yeah, pe ratio, I'm just looking at Intel ninety one forward is about just shy of eighty seven in great stuff.
00:35:32
Speaker 3: Always always have a great weekend.
00:35:34
Speaker 2: Ian King the amazing Ian King, US semiconductor reporter at Bloomberg Music.
00:35:38
Speaker 4: Stay with us more from Bloomberg Business Week Daily coming up after this.
00:35:46
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eastering. Listen on Apple Karplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
00:36:00
Speaker 4: Well, our next guest is very familiar to our audience because when she was CEO of Siemens USA, she used to stop by all the time. Now she's CEO of USA Rare Earth. It's the four point seven billion dollar market cap magnet manufacturing company. The company this week agreeing to acquire Brazil's Sarah Verde Group and a two point eight billion dollar cash and stock transaction. It marks one of the largest deals in the rare earth industry.
00:36:21
Speaker 3: Yeah, it's a big deal.
00:36:22
Speaker 2: It's also certainly something that has caught investors the company overall. The stock is up about eighty three percent year to date. So delighted to have with us. Barbara Hompton, she is CEO of USA Rare Earth.
00:36:34
Speaker 3: She joins us from our Washington d c Studio.
00:36:36
Speaker 2: Barbara, it is so nice to be talking with you again. Tell us a little bit about this deal and how it changes the game for you, and again, welcome back to a Bloomberg.
00:36:46
Speaker 13: Business, Carol, Carol Lintim, it is wonderful to be back with you, and this time in this brand new role. Yes, USA rare Earth is becoming the global leader in rare earth. And this transformative acquisition we've announced is with.
00:37:02
Speaker 3: Sarah Verde Group.
00:37:03
Speaker 13: They are the owners and operators of the only mine outside of Asia that produces all for magnetic rare earths, and they have just announced an agreement as well, through a special purpose vehicle backed by the US government and some private investors, for a fifteen year, one hundred percent off take with price floors on all for magnetic rare earths.
00:37:26
Speaker 4: So we talk about you know, we talk about rare and people who are regular audience members of this program, they know seventeen elements essential to evs, wind turbines, military hardware. China still dominates mining processing and magnet production. So does this deal that has these rare earths outside of China, does it change the fact that Western governments are scrambling to support new entrants.
00:37:52
Speaker 13: This makes us a brilliant partner for those governments who are trying to solve this issue.
00:37:57
Speaker 3: Yes, for decades now.
00:37:59
Speaker 13: In nineteen China declared the Mideast has oil, we have rare Earth, and they set about building a monopoly. Now they've used that monopoly against us, and listen, we have what it takes in order to develop our own value chain outside of China, from mining to processing, which is quite frankly one of the trickiest links in the chain, to metal making and ultimately to magnet making. USA Rare Earth has been making moves at every link across that chain to make sure that there is a response. We can grow the business outside of China, but more importantly, over time, we can become the global leader.
00:38:40
Speaker 3: Will you go.
00:38:40
Speaker 2: Deeper, Barbara, because I feel like we're all learning about this. It wasn't something we were talking about a lot two years ago, but we are certainly over the past year. You mentioned the processing that is one of the trickier links in the chain. You mentioned China still dominates when it comes to processing. Is it realistic to think that the US can catch up ever to China when it comes to processing, And how tricky. Is it going to be to undo that link or make that link connected and make it work here.
00:39:08
Speaker 3: In the US?
00:39:09
Speaker 13: This is yeah, this is a matter of investment and yes, indeed, we already have geologists, metallurgists, chemists who have successfully demonstrated separation technologies. You see, when ore or a clay comes out of the ground, it has those rare earth elements in it. Those have to be separated from the rest of the your body, and the process is to do that. Sometimes involve solvents, sometimes they involve ionic exchange. Very well understood chemical processes and it's a matter of building the facilities that will make them. For the next two years, we are going to be on the search for who can.
00:39:47
Speaker 3: Move the fastest.
00:39:48
Speaker 13: And in fact, USA Rare Earth just invested in Charister, a firm in the south of France, very capable of heavy rare earth processing. They're bringing their processing online by the end of this year. We ourselves in our proposal to the Department of Commerce Chips Program Office, we've included processing as a key element of our own operations and in order to first process our own core body at Roundtop in Sierra Blanca, Texas, but also to take third party mixed rare earth concience rate like that which may come out of Sarah Verde.
00:40:24
Speaker 4: You mentioned Charrister, so I want to get more into the acquisitions or investments. So the acquisitions that you've done in a short time less Common Metals last year, that twelve and a half percent stake in Charrister. Now, Sarah Verde, are you going to stay in your lane of nd FEB, which I learned today is neodemium iron boron permanent magnets, which is your core, that's your primary product. Are you going to stay in that lane or are these acquisitions representing you guys expanding a little bit.
00:40:50
Speaker 13: Today we're focused on ndy FEB. Yes, indeed a certain type.
00:40:55
Speaker 3: Of mad learning.
00:40:57
Speaker 13: And you've heard that they're used in everything from semi conductors to our defense articles. Frankly, even into the everyday electronics that we use. They are in everything in our economy. And our focus is going to be to assure that industrial players have access to the supplies they need in case of disruption. Think of in these early days supplying insurance quantities to make sure that in case of disruption people can drive through. But over time we'll be able to pick up production now. There are also magnets that are made with samarium cobalt. That's another form that it has many uses, and we've partnered with folks like Arnold Magnetics in order to make sure that we can first of all serve their needs with metal from our metal making operations, but then also combine our NdFeB magnets with THEIRS for those customers who need access to both.
00:41:51
Speaker 2: Barbara, are you guys done with deals for a while or you anticipate that there's going to be more that you need to do to.
00:41:57
Speaker 3: Kind of build this up.
00:41:58
Speaker 2: I mean, this is a big deal in terms of what the United States needs to do. Lots of money, lots of actions of activity. So is there more acquisitions from you.
00:42:09
Speaker 3: Guys to come?
00:42:10
Speaker 13: Yeah, Carol, you should think about this as a platform for growth.
00:42:13
Speaker 3: This is a platform for growth.
00:42:15
Speaker 13: This market space outside of China has been fragmented all this time.
00:42:19
Speaker 3: There's a lot of friction in the system.
00:42:21
Speaker 13: Great opportunities for companies who have complementary capabilities to come together. Now, with the acquisition of Sarah Verde, we've also brought on Sir Mick Davis and Thras Maritas Thras both of them will be on our board. Thras will join me as president of USA Rare Earth. And you may know them as the power duo who put together Extrata grew in from five hundred million dollars to sixty five billion this in this market space. They recognized years ago that the rare Earth space was ripe for exactly the kind of business approach that they are so adept at handling. I look forward to working with both of them on our overarching strategy.
00:43:02
Speaker 5: Hey, Barbara, we have a couple minutes left.
00:43:03
Speaker 4: There's a lot we want to get to, including some news today, but before we get there, USA Rare Earth received one point six billion dollars in propose funding from the US Department of Commerce in January.
00:43:12
Speaker 5: It's conditional on certain things.
00:43:14
Speaker 4: Should investors expect more support from the US government.
00:43:17
Speaker 13: What you'll see is that together with Sarah Verde, we're supported and working with the Department of Commerce, the Department of War, Department of Energy. We have relationships all across. Sarah Verita announced an acquisition and not an acquisition, an investment by DFC, So clearly there is great government interest in the work that we're doing, and we are happy to see investments that are accelerating our progress across the board. Look for us to be involved in additional engagements with the US government and our allies where we can help scale or accelerate growth.
00:43:54
Speaker 2: So I would say that that's a yes, more money coming, or maybe.
00:44:01
Speaker 13: We are absolutely engaged with all of those who have funds applied to critical minerals.
00:44:05
Speaker 3: You mentioned the US and our allies, and that's where I want to go.
00:44:08
Speaker 2: What do you think about the agreement, Barber that was signed today between the US and EU to coordinate on critical minerals When it comes to price floors, off take agreements and more, well.
00:44:19
Speaker 3: Think about the power of this.
00:44:21
Speaker 13: China has been engaging in practices that artificially drove prices in their favor. Anytime they wanted to, they could drop prices, flood the market, and frankly run businesses out of the marketplace. And so by agreeing to price floors, we're sending long term signals that say there is a market, we want to grow it, it is worthy of investment. Have courage drive through this because what we have to do is, yes, enhance the price floors, make sure that we have a stable business perspective, going forward.
00:44:53
Speaker 3: As we grow, as we scale, then.
00:44:55
Speaker 13: Market dynamics will absolutely take over our time. And I'm thrilled that the EU has stepped forward to join us in the effort.
00:45:03
Speaker 7: Well.
00:45:03
Speaker 4: To follow up on Carol's question there, how should the US and European nations handle price floors?
00:45:10
Speaker 5: How should that work?
00:45:11
Speaker 13: We've been sending our input to the US Trade Representative and others who are working on policies.
00:45:18
Speaker 3: You know, we feel that it's really important.
00:45:20
Speaker 13: That if we can agree that we as collaborative countries are going to join together and agree not to buy those Chinese products that often have been artificially skewed price wise. There's clearly government buying that will take place, and we're in support of the government mandates that are coming along for government contractors. But what's even more important these days is that the buyers of large scale material like ours are looking for non China sources and are recognizing the power of their buying habits. I call it industrial patriots, recognizing that the actions they take will strengthen the market.
00:46:04
Speaker 2: Barbara, really quickly, thirty seconds, have you been looped in on any of the conversations between the Europeans and Americans I mean, given that you guys now own assets in Europe.
00:46:12
Speaker 13: In the US, Yeah, USA Rare Earth colleagues are often invited into conversations and we're more than happy to share our expertise, join in the conversation and help people understand the economic situation we're in and think up potential solutions. We've got to use every tool in the tool belt right now.
00:46:33
Speaker 3: Real quickly.
00:46:33
Speaker 2: Upbeat conversations, stressful conversations, because there's a.
00:46:36
Speaker 3: Real upby upbeat, upbeat.
00:46:38
Speaker 13: I've been so encouraged by how helpful everyone wants to be.
00:46:42
Speaker 2: Well, listen, you are super helpful in coming on explaining the deal, where you guys are, where it's all going, Come back anytime. Really appreciate it. Barbara Hampton, She's the CEO of USA Rare Earth.
00:46:53
Speaker 1: This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and any anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
00:00:32
Speaker 2: Well, the Justice Department is ending a controversial investigation into building renovation cost overrunds by the FED, potentially clearing a path to confirmation for Kevin wars At, his President Trump's pick to be the next chair of the Central Bank. We did have US attorney Jeanine Piro in a social media post earlier today.
00:00:49
Speaker 3: It's rather lengthy, but we want to highlight this part. She says.
00:00:53
Speaker 2: Accordingly, I've directed my office to close our investigation as the IG undertakes this inquiry. Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so, Which makes us wonder, wait, is it full steam ahead or not quite yet?
00:01:11
Speaker 4: All right, Well, maybe not, Maybe we'll see. Bloomberg TV and Radio International comments and policy correspondent Michael McKee joins us here in the Bloomberg Business Week studio.
00:01:21
Speaker 5: Is it full speed ahead for Kevin Walsh?
00:01:24
Speaker 3: Well, sounds like not. Maybe.
00:01:27
Speaker 6: First of all, the person who make that decision is Senator Tom Tillis. We have not heard from him. He's the one who has to drop his objection to the nomination moving forward. And the question is is this enough? Because Carolyn Bessett, the White House Press Secretary, just a short time ago, came out and said this doesn't necessarily mean the investigation is.
00:01:47
Speaker 5: Over because it's going to the Inspector General.
00:01:49
Speaker 6: Yeah, she said, it's just changing jurisdictions. And you highlighted the line from Jennin and Piro. So does this give Jay Powell enough confidence because it still seems to leave him with legal jeopardy and Tom Tillis seems to be concerned about the legal jeopardy for j Poul.
00:02:09
Speaker 5: So will they move forward with this or not?
00:02:13
Speaker 6: Is this just a stretch by the administration to throw it out there and then sort of say to tell us, well, look, we compromise, and you should. It's hard to know at this point, So help me.
00:02:23
Speaker 2: Understand and forgive me if I don't know my law and certainly government law. But if Janine Piro does this, she's the US attorney for Washington, d C. Is what she was pursuing, separate from the Inspector General, and so this could be a first step, and now the Inspector General has to weigh in or no, they're connected.
00:02:40
Speaker 6: Well, here's the way it's been working. Basically, she started an investigation into whether Powell lied to the Senate Banking Committee about the renovations. All the members of the Senate Banking Committee said he did not. Then they started throwing in question about the renovations because they had kind of lost that one prop for their investigation, and so now that's become the focus. She issued subpoenas to the Fed to give them documents about the renovations so they could look for Malfeasa. They didn't have any evidence of it, but they wanted to look for it. And a judge said, no, that's is fishing. You're just doing this on a pretext, and he threw it out. So she didn't really have a case at all. But in July twenty twenty five, when this first became an issue, Jay Powell asked the Inspector General at the FED to look into this. So the Inspector General's been doing an investigation for almost a year now and should have something ready to go in a very short time. Tim Scott put out a statement this afternoon, the Chairman of the Banking Committee, saying that he would like to have a hearing with the IG sometime in the next ninety days and that seems very possible.
00:03:57
Speaker 5: Now.
00:03:57
Speaker 6: How all that or if any of that affect whether Tom Tillis will let the nomination go forward, we don't know, but that's kind of where we are right now. It's two separate investigations and one dropped out and is putting the other forward.
00:04:14
Speaker 4: You know, Stuart Paul Bloomberg Economics was on Bloomberg Intelligence earlier today. It was a great deep dive with Paul and Scarlett Elliott Stein from Blomberg Intelligence was there as well. And one thing that Stuart talked about is the changing way that Senator Tillis has kind of talked about this in recent months, and he's changed his language a little bit about what would and would not constitute, you know, sending this to at least the next step to approval. Does that tell any story about whether this would actually satisfy him without him coming on saying it.
00:04:46
Speaker 6: I think trying to figure that out would be parsing his words too closely. Basically, he's said until this investigation is over, and he said it in a couple of different ways, and we don't know what over means to him. We do know that Pal said he wasn't going to leave the FED until it's over and final, and so he's basically said, I need to know that I'm not going to be in legal jeopardy going forward and that this needs to be closed out, and right now that does not appear to be the case.
00:05:17
Speaker 4: I think there also some practical considerations when you're a public servant versus a private citizen, and that has to do with you pays your legal fees.
00:05:23
Speaker 6: Yes, if this is an investigation into the FED, then the FED is going to pay the legal costs. If it's an investigation in a j pile doing something wrong as a private citizen, then he's responsible for that, and I think that's another reason that he doesn't necessarily want to leave. No, he is not a poor man, so he came from Carlia. He could probably pay most of his lawyer's bills or there might be a go fund me set.
00:05:50
Speaker 7: Up for him.
00:05:51
Speaker 6: But the Times Fed, the FED itself is going to be involved in this because the question is, did anybody anything right?
00:06:01
Speaker 7: Right?
00:06:01
Speaker 5: Okay?
00:06:02
Speaker 2: And it's just you know, I think the bigger picture is again a president putting pressure on a federal reserver, U, a central bank.
00:06:08
Speaker 3: Or fedch Here, Hey, one last question.
00:06:10
Speaker 2: Looking at the treasury trade today and I'm just looking at the two year net.
00:06:13
Speaker 3: We did see yields back off.
00:06:16
Speaker 2: Is it because of this news and the expectation Kevin Walsh will be there and that he may push for lower rates or.
00:06:22
Speaker 6: Yeah, I think it's a bit of a knee jerk reaction to that. Once the markets get past today's news, they'll be looking at oil prices, they'll be looking at the progress of the war. They'll be looking at inflation. We get data next week on that, and you know, the trade will evolve based on what they think is going to happen to inflation and then what the Fed will do about it.
00:06:42
Speaker 2: All right, good stuff as always, you know, Friday, Mike McKee.
00:06:45
Speaker 3: It's become a regular thing because there's always.
00:06:47
Speaker 5: Something at least it happened in the morning.
00:06:49
Speaker 6: We all that's what we were saying earlier today. At least it didn't happen at four.
00:06:53
Speaker 3: O'clock, does right? Okay, start your weekend yet, all right, Mike, thanks so much.
00:06:58
Speaker 2: Michael McKee of course, Bloomberg TV and Radio International Economics and Policy Correspondent.
00:07:03
Speaker 3: All right, lots going on in the nation's capital.
00:07:05
Speaker 2: You know that we're going to dig more into the war a little bit later on this hour, but.
00:07:09
Speaker 3: Also happening this weekend. The annual Meetings.
00:07:12
Speaker 2: Celebration often roast of the relationship between the press, the covers the White House, and those including the President, that reside there and are part of the administration.
00:07:22
Speaker 3: It's always kind of a fun gathering. Uh, well, not always.
00:07:27
Speaker 4: It depends on your definition of fun. For the first time as President of the President, Donald Trump will be attending, having declined during his first term and last year to attend. This weekend around the dinner, the gay dating app Grinder will host its inaugural White House Correspondents Dinner weekend party, a party Carrol that Political Reports is one for which Democrats and Republicans alike have been clamoring to get an invite.
00:07:50
Speaker 2: YEP, Political also pointing out in its story about the upcoming event this weekend how Grinder's self described conservative CEO has waded into politics, in particular in the state of California. Joining us right now is Grinder CEO George Arrison. The company, by the way, public has a two and a half billion dollar market cap. George joining us from the nation's capital, obviously getting ready for that event and the White House Correspondence Dinner this weekend.
00:08:14
Speaker 7: George, it is.
00:08:15
Speaker 3: Good to have you here on Bloomberg Business Week Daily.
00:08:17
Speaker 2: You guys obviously a dating platform for the LGBTQ plus community more than fifteen million average monthly active users. But you guys have also been very active when it comes to an equal society, human rights, health and safety for the community.
00:08:32
Speaker 3: It feels like.
00:08:33
Speaker 2: Too on that you guys have been working to beef up your presidents when it presents, when it comes to Washington, DC and lawmakers who make policy. So tell us about your mission, your initiatives, and why this party the first one connected and around the White House Correspondence Dinner.
00:08:50
Speaker 8: Now, thank you so much for having me great great to speak to you.
00:08:53
Speaker 9: We only hired our first person in DC about a year ago and have been definitely, as you called, beefing up presence in Washington.
00:09:03
Speaker 8: We don't have a lot of company.
00:09:04
Speaker 9: Specific issues that we need to deal with, but our users have a lot of issues that we believe we can advocate for. Probably the biggest thing that we spend a lot of time on is HIV treatment and prevention. We help protect funding for HIV testing. For example, through a CDC. About half a million people have gotten a test through the Grinder app that the CDC pays for to test whether they have HIV or not, but a third of those people had never had an HIV test before. So last year when that funding was in question, we were able to lobby Members of Commerce to ensure that funding state. We also have been really actively advocating on behalf of pep FAR, which is a US government plus worldwide program to ensure that there is HIV treatment medications for people in poor countries, and that's saved about thirty million people's lives and continue to fund that is really important and we are really encouraged by how those discussions have gone.
00:10:02
Speaker 8: So those are some of the issues. We focus on.
00:10:04
Speaker 9: Access to fertility care and surrogacy for gay couples, it's something that we also really care about and have spent efforts on as well. So those are the type of issues that we focus on. And this event is our coming out party. You know, we've been in DC now actively working for about a year a year and a half, and this seemed like a really great opportunity to have a gathering. Grinders really good at bringing people together, and we thought that having a party at the time when we as you know, this city celebrating the First Amendment, was a really great time to do that. You know, gay rights would not have been possible without the First Amendment, and no country has been as good for gay people as America has been, quite frankly, and so in America would not be possible without the First Amendment as well, Thank you, James Madison, and so celebrating it, I think is something that is really awesome to do and we really sick to host folks at the party tonight.
00:11:00
Speaker 4: How would you how would you characterize this this administration when it comes to LGBTQ plus rights. I mean, some stuff comes to mind, and it's it's the fighting over the PEP far funding, certainly with the DOGE, with Doge and the government efforts to reduce funding for some of those programs. There's the the president wanting to remove the the the Rainbow flag, the Pride flag from Stonewall here in New York. That's a protected property that that marks historic time for this community. How would you describe this this administration's view when it comes.
00:11:35
Speaker 9: To what I can say is, Yeah, what I can say is that we've had really good engagement with folks on both sides of the aisle. Obviously, you know, there are a lot of Democrats, for a streete champions of gay rights, and we work very closely with them. But we've also found plenty of folks on the Republican side to work with as well, sometimes broadly and sometimes issues specific. I think, you know, we tend to focus on the positive other the negative, and we want to accomplish the positive things that we can. And I think it would you know, worth saying that there's some really powerful game end this administration who have been really good partners on things to us as well. Yes, there are challenges, there's no question about that, but I think the important thing is to be able to work through those challenges and focus on the things that you can actually accomplish that are positive, and so far we've been you know, we've had a very good reception on both sides of them.
00:12:27
Speaker 4: I should note that the US has agreed to restore the Pride flag at the Stonewall Monument as of earlier this month, following a court battle.
00:12:33
Speaker 2: All right, so good to know. And this is what we've seen certainly with this administration. Sometimes you know, a policy or an action or comment comes out, and then sometimes there's some backpedaling. What I do wonder, George, you talk about good engagement on both sides of the political aisle, who in particular, and I'm curious about in the President's inner circle, who you find is very receptive to hearing and listening to you guys.
00:12:58
Speaker 9: I'm going to not mention any as I don't think that's be the right thing for me to do. But we spend time with folks in the House, in the Senate, in the administration. We've been at the State Department more than once, for example, to talk about pep far We're probably the only group that shows up there to talk about pep farre, not asking for money, but were saying, hey, how can we work with you to ensure that people who should be accessing these medications actually know how to get them. And you know, we do have a very large platform that speaks to people that otherwise are really hard to reach in a lot of these countries because grinders in one hundred and ninety countries, and so in most places where pep far is working, we have users and many of those visits should be on medications, whether it's preventative medications to not get HIV or HIV treatment medications and we can access them, and so how can we work with you to make sure that that happens? And then you know, we work with folks all through the administration, whether it's at the Labor Labor Department, HHS, Treasury, and you know obviously with folks on the hell as well. And the same was true you know in the Biden administration. I for the first revival into DC was when Biden was president, and we had really good conversations with folks in that administration as well.
00:14:12
Speaker 2: So, you know, we just have about a minute or so leftier and I am curious about the business. Can you tell us we would be remissed not to ask you your publicly held company. I know you're getting ready to report earnings. Can you tell us about the new Grinder Edge subscription tier. We've seen reports of testing the US at five hundred dollars a month with the subscription. What's been the user response? Just quickly got about forty seconds.
00:14:34
Speaker 9: Yeah, I spoke about that in the shareholder letter last quarter. We are testing a new premium subscription tier. Grinder maintains a very robust free tier, but we have two subscription tiers right now. One's called extraants par Unlimited, and this is a new one that we're building called Edge. It's bringing all our AI features and we're creating a lot of new af it just together into one new tier. It's designed for power users, people who spend the most amount of time on the app, so he's not for everybody, right. And the pricing on that the five nine nine or four nine nine, that's a Canadian Talas pricing. Okay, we're still in testing when what price will land net, but it will be more expensive.
00:15:09
Speaker 2: Okay, go to leave it there, listen, So appreciate time, good luck, have fun at your party this week, and we really appreciate it.
00:15:17
Speaker 3: Grinder CEO George Errison joining us.
00:15:20
Speaker 5: Stay with us.
00:15:21
Speaker 4: More from Bloomberg Business Week Daily coming up after this.
00:15:28
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eastering. Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
00:15:42
Speaker 2: Our next person we're going to talk about drives a Tesla. Lives off the grid in a solar power at home. He built himself on a twelve hundred acre working farm in the Appalachian foothills of eastern Kentucky, not far from Lewis County where he grew up. He calls it the Shire. But his lifestyle doesn't reflect hippy dippy environmentalism. It's an expression of his staunch libertarianism. Where you are talking about the Kentucky Republican Representative Thomas Massey with more on this incredible Bloomberg BusinessWeek story. Some insight into a very influential Republican is Joshua Green, Bloomberg BusinessWeek National correspondent.
00:16:16
Speaker 3: He joins us from Washington, d C.
00:16:18
Speaker 2: Josh, of course, author of the number one New York Times bestseller Devil's Bargain. Hey Josh, For those not familiar, who is Republican Representative Thomas Massey. Why does he have a cult following?
00:16:30
Speaker 10: Really, he's long been one of the most interesting characters in Washington for all the reasons you enumerated an intro there. But the reason he's so interesting now today is that he's one of very few elected Republicans, Republican congressmen willing to kind of openly criticize Donald Trump over things like federal spending, the war in Iraq, trying to hide the Epstein files. He considers himself kind of true Maga, where he would argue that Trump is and as we all know, Trump doesn't like to be criticized, and Trump has decided to go after him and basically try and push Massy out of a job. His primary is coming up in about three weeks three four weeks May nineteenth in Kentucky. There's a Navy seal running against him in the Republican primary. Trump has come out endorsed the Navy seal at Gaullerin spent all his time attacking Massy. But unlike most Republican elected officials who come under fire from Donald Trump, Massey isn't quieting down. And so I went out to Kentucky spent some time with him, spent some time with him in Washington too, and really just kind of got a feel for who the guy is, what he's doing, and why I think this particular Republican primary is so important.
00:17:43
Speaker 4: So why is he why does he stick to his guns, stick to his philosophy so much in these things?
00:17:50
Speaker 10: Like other repeat, he is just a true believing libertarian and he always has been, to a degree that even kind of hardcore Washington idiologues you know, in either party, are unwilling to go do. As we said in the intro, he drives to Tesla. He lives in a solar home, you know, not because he's trying to save the earth, but because he doesn't want a power line running into his house. He also, yeah, corporations and government control over him if he didn't do what they liked, you know.
00:18:18
Speaker 4: I love the details in the story. For a long time, married to his high school sweetheart, they both went to MIT and they you know, started this company together, and he wanted to get back to Kentucky to where they grew up to raise their kids. And it was actually this this issue of wanting to build this home that got him into politics in the first place. Can you talk a little bit about that.
00:18:42
Speaker 10: Yeah, I mean, Messy is you know, by all accounts, a brilliant guy who, along with his girlfriend, you know, a small town Kentucky folks, got into MIT thrived, you know, they study electrical engineering, started a very successful company, had a family decided they want to move back to Kentucky, and basically Massey got pissed off that the local county where he started building his house was going to get zoned and we're going to put in these new rules. Started showing up at town zoning meetings and really developed kind of a local cult following that became known as Thomas's Angry Mob. Eventually he ran for a local office. The mob backed him. He was very popular. About twelve years ago, congressional seat came open, Massey was one of seven or eight Republicans that ran. He won, and he's kind of been the same character he is today ever since he got to Washington. And oftentimes that meant he was the single vote, you know, against some otherwise popular issue, and that's made him kind of intermittently very unpopular with Republicans with Democrats. But he really is true to his ideals kind of no matter what the cost, and what's so interesting to me about him. The reason we chose now to profile him in BusinessWeek is that I think his race on May nineteenth is also going to be a measure of Trump's politicals strength. Ordinarily, Trump can squash any Republican he doesn't like and put them out of a job. We've seen it time and time and time and time again. But Massey is a popular guy too at his home district. So if he is able to hold on and prevail despite this onslaught from Donald Trump and all of these hedge fund backed superpacks that are coming after Massey, I think that's going to tell us a lot about.
00:20:21
Speaker 7: Trump's weakening hold on the party.
00:20:23
Speaker 10: And I think it also might open up room for new voices like Massey's who don't necessarily want to do everything Trump wants to do, or at least want to stick to the original Moga vision and not go off crusading and Iran, you know, buying public having a federal government buy public companies, as Trump has talked about, and that sort of thing.
00:20:42
Speaker 2: I'm so glad you went there, because you know you write in your story. Ultimately, though, it's also a measure of Trump and his personal power, how Massy does If Massey loses, Josh, should we read that as a barometer that President Trump Trump actually has still a lot of strength here when it comes to the voting public and MAGA in particular.
00:21:04
Speaker 10: Yeah, I think it should certainly, or at least within the confines of the Republican primary electorate. Absolutely. I mean Trump, you know, his poll numbers are kind of plummeting broadly. A new apeopole hasn't been thirty three percent, which is the low I think of either one of his presidencies. There's been some erosion among Republican supporters, but you know, people who consider themselves MAGA, people who voted for Trump in twenty twenty four still tell pollsters that they overwhelmingly support Trump. So it's certainly possible that Massey will lose, and if he does, I think that will send a chill into other Republicans who lately have been a little more willing to stand up to the president than they have there.
00:21:43
Speaker 7: We was a FISA vote that he lost a couple of weeks ago.
00:21:46
Speaker 10: We saw his US district Attorney Jeanine Powell backing down today from this persecution of FED chairman Jerome Powell. So Republicans are starting to push back. I think if Massey loses, that might cause them to kind of tap the brakes. But on the other hand, if he wins, and if he wins comfortably, I think in Massey thinks it's going to encourage more Republicans to kind of stand out and look out for their own electoral interests rather than just kind of knee jerk following whatever it is that Trump wakes up in the size.
00:22:14
Speaker 4: I do hear what you're saying, but I think someone Josh could push back and use Marjorie Taylor Green for example, as somebody who didn't succeed in pushing back. And look, she decided not to run, but she faced a lot of criticisms and she still does for speaking out against the president. You mentioned the idea of potential other sort of minie Thomas Massey's waiting in the wings right now.
00:22:33
Speaker 5: Who are some of those names you know?
00:22:37
Speaker 7: Some of the names I like? I would?
00:22:39
Speaker 10: I mean, I could point to, you know, people like Don Bacon, Republicans who are known not to be happy about Trump and who have announced their retirement therefore have less political risk that they face in stitting up to him. Another one would be like a Tom Tillis who is held up Kevin Walsh's nomination in the Senate. Anybody who doesn't have to turn around and face Republican voters again this year next year.
00:23:02
Speaker 8: I mean.
00:23:02
Speaker 10: One of the interesting things, one of the things that I'm watching on that front are we are right now in the middle of Republican primary season. We've got Kentucky's coming up, We've got Texas Is coming up. Once you get past that Republican primary season, I think it becomes a lot easier for Republicans to say no to Donald Trump because they won't have to face Republican voters in a primary again for another two years right now. However, you know, folks like Massey and Marjorie Taylor Green very limited group that are willing to.
00:23:32
Speaker 7: Kind of step out on that ledge and do it.
00:23:34
Speaker 10: And as you point out, it basically cost Marjorie Taylor Green her job.
00:23:38
Speaker 7: She jumped before she was pushed.
00:23:39
Speaker 10: Massey is a fascinating case because he's taking the other path.
00:23:42
Speaker 7: He's going to go ahead and run for reelection anyway and try to win.
00:23:47
Speaker 2: So interesting, you know, Josh, One of the things I wonder you know, you've obviously followed elections politics for a long time. You wrote about, you know, President Trump getting to the White House in the first place, that first term go round. When you look at this year, unusual to say the least. Venezuela, this war between the US and Iran ongoing. We'll see what happens, certainly this weekend or into the next week or so. But does it look like a president that is thinking about obviously in a second term, thinking about his party and the upcoming midterms, or.
00:24:21
Speaker 3: Is it safe to say that midterms.
00:24:22
Speaker 2: Are still far enough off that a lot can change before them.
00:24:27
Speaker 10: You know, I think the way Trump thinks about his party is that they are there to support him in anything he does. And just because he ran for president originally promising that he would bring down prices, not get entangled in foreign wars, get the government out of the private sector, just because he's turned.
00:24:44
Speaker 7: Around and done the opposite on.
00:24:45
Speaker 10: All those things, I think he expects folks to go along with him in the Republican Party. Many of them have grudgingly, but there are folks like Massy speaking up and saying, hey, you know, I signed up for what you campaigned on, not what you're doing now, and mass anyway, isn't going to sit by quietly while Trump flip flops and changes his position, even if a lot of other Republicans do. And so we'll see is that is that a viable position for an elected Republican to take in the Trump Aaron Washington?
00:25:14
Speaker 7: It hasn't been for a long time, but it might be now. We'll find out in a couple of weeks.
00:25:18
Speaker 2: Hey, Josh, when it comes to MASSI and it's something we talk about a lot. With everything going on, you know, every week, we're you know, touching on Epstein still, how much of the pushback and we've talked about this a lot, whether it's podcasters and so on and so forth, it's because of President Trump's reluctance for so long to release more and more of the Epstein files.
00:25:36
Speaker 3: How much of that plays into Massy's position.
00:25:40
Speaker 10: I think a lot of it plays in the Massy's position. I mean, he is an interesting and kind of a weird guy, very interested in kind of conspiracy theories, that sort of thing. It kind of floods into his libertarian beliefs a little bit. But from menssee standpoint, if you're looking at the Epstein files. Here is this vast, overarching conspiracy of elites and government and business leaders. And you know, we know there was all kinds of wrongdoing going on in the president of the United States, and this Attorney general promised to release all this stuff and they didn't, And so I think it sort of triggers something in Massy that makes him want to kind of keep pushing on this. And look, the fact is this bran On saying he would release these files, he hasn't. He's now pushed out Pam Bondi, his first Attorney General, over her unhappiness over his unhappiness with her performance around these issues. And it's something that really has gained a lot of steam, not only with Massy and Republicans, but as you said, with a broader kind of manisphere podcasting universe doesn't seem to be going away no matter what Trump does. And so that's one of you know, I would say, several political issues that are really bogging Trump down, sinking his approval ratings, and making it easier for internal critics like Massy to kind of emerge, to get their voices out and try and build a more powerful beachhead in the party to start steering it back in the direction that they like it to go.
00:26:59
Speaker 2: Real quickly, as we say, we're living in unusual times. Twenty five seconds, President Trump's going to be at the White House correspondence dinner. Why and just quickly, Why do you think he's going to actually show up this year?
00:27:09
Speaker 7: I don't know. I don't think it's gonna be a love fest. It's probably going to be to harangue the press.
00:27:14
Speaker 11: I myself am not going I get plenty of haranguing right here in my own home from my kids and my wife. OK, so I'm going to be watching it on TV. But yeah, it's going to be interesting to see. I'm sure Trump's not going to be very happy.
00:27:28
Speaker 3: All right, Well, we're happy that you could join us as always.
00:27:31
Speaker 2: Josh Green, Bloomberg Business Week National Correspondent with us from DC.
00:27:35
Speaker 5: Stay with us.
00:27:36
Speaker 4: More from Bloomberg Business Week Daily coming up after this.
00:27:43
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eastering. Listen on Apple, Karplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube.
00:27:56
Speaker 5: We got to keep going with Intel.
00:27:58
Speaker 4: Here shares of more than twenty percent right now, reaching an intra day all time high. The sock surgeing reaching an all time high. It helps that Intel, AMD, armholdings, Rambis, and Qualcom have all been up double digits today on Intel shares hitting their highest level after the company delivered a sales forecast that shattered Wall Street expectations for more. We are joined by Ian King. He's Bloomberg News US semiconductor reporter. He joins us from San Francisco and the Intel story For so long, For so long, you've been writing about this company's turnaround. For so long, you've been joining our program over several different executives talking about this company's turnaround. Is this a moment where it's clear that the company has turned around.
00:28:41
Speaker 12: I think this is a moment where it is showing signs of making progress. Clearly, the forecast is very good, and there's affirmation of what's going on in the market in general. But as it's management said, look, we've still got work to do here. I think we time. The CEO summed it up the best with one of his final comments, which is like, look, a year ago people were talking about whether we could survive or not. Now we're talking about can we get enough supply?
00:29:07
Speaker 2: So wait, yeah, I think that's remarkable talk about a whipsaw.
00:29:11
Speaker 3: I mean, so what happened?
00:29:12
Speaker 2: I mean, this is something we were talking a lot in after the earnings results. Was it because the US government took a position? Is it because it got you know, partnerships deals where money came back into the company and let the Bhutan focus on just running the company not be so worried about maybe financial streets.
00:29:30
Speaker 3: Like what happened in this past year.
00:29:32
Speaker 2: That feels like this company and certainly the narrative around it and certainly the share price around it has really turned around.
00:29:40
Speaker 12: When there were a number of tasks that he faced when he came into this position a year ago. The first one was the balance sheet. The company had too much debt, couldn't afford to do what it wanted to do, and it was struggling. The deals that you mentioned have kind of fixed that there and much batter position there.
00:29:57
Speaker 7: So that's task one. So the largely co completed.
00:30:01
Speaker 12: Task two is to get the execution to get the trains running on time.
00:30:04
Speaker 5: Again.
00:30:06
Speaker 12: You know, we're still working on that right. Some areas are going better than others. The task three was like find a role in AI. They still haven't found a direct competitive product to what in Vidia's doing, but guess what they're actually good at. What they make has become kind of cool again. It's become important in AI, so they're benefiting from that.
00:30:27
Speaker 4: It's not a profitable company at this point, Ian, which is pretty remarkable. Our Markets Live blog pointing out a piece coming from Sebastian Boyd that talks about posting a net loss in the quarter capex of three point six billion dollars, exceeding it's one point one billion dollar cash from operations, which itself, Sebastian rights, wasn't especially impressive. He writes, the most remarkable thing is that it still isn't a profitable company. Investors looking past that. I mean, there's been a lot of companies that haven't reported profits that have done well and find markets for a period of time.
00:31:01
Speaker 5: How do you see this?
00:31:03
Speaker 12: Yeah, I mean, it's not remarkable that it's not a profitable company. It's it's that's old news, right, that's the way the market are looking at this. That has been the case for a while, right, So we're at in theory at this turning point. What has changed is its fundamental demand for the products that it provides. This CPU, this general purpose chip has been kind of on the sidelines, and this AI built out. Now we're being told, actually it's got a bigger role to play. Jensen Wanger in videos said that, AMD have said that, ARM have said that, and all of these stocks are up today because guess what we're getting affirmations, so that that's what's new, that's what people are buying into.
00:31:39
Speaker 4: But he and I think maybe maybe people haven't been following this story as long as you have, might say, wait a second, a company that's worth almost half a trillion dollars, it's a four hundred and five billion dollar market cap right now. It's it's at its highest ever and it's not currently profitable.
00:31:56
Speaker 7: That's right.
00:31:57
Speaker 12: I mean, we're buying on the promise, right, we'll buy on the future. And we've seen a huge rotation recently into this type of company, into this type of product of this as it clearly betting that this is going to be a profitable future for Intel and also for a number of companies. So that's going on. So Intel's got to deliver again. I mean it delivered this quarter. It showed Hey, things are getting better, showed promise. But as you said, I mean the foundry business, that's its factories are still losing an enormous amount of money on an operation level. And to be fair to the management, back to what they said, they said, yeah, we've got work to do. We need big customers. We don't have them yet. When we got them and they want to talk about it, we'll be able to tell you. But right now we don't have them. So yes, it's definitely not all the way fixed.
00:32:43
Speaker 2: So in terms of chips, you mentioned earlier that they still don't have a direct competitor to Nvidia and the type of AAII accelerator right that's made in Nvidia, you know, just the king in the chip industry. Do they need Ian ultimately to have a product that does go head to head with them.
00:33:03
Speaker 12: They've said they do, and they've tried to have them in the past and not delivered anything that was competitive, and they said they're going to take another run at that. So in their own words, yes they do. But for now, everybody loves the CPU. Again, this idea that while we've created all of this software and the AI services, we need to run them and guess what maybe CPUs are kind of good enough to do a lot of the work in terms of, you know, providing these answers to are chat PT, GPT questions or whatever it is we're doing.
00:33:33
Speaker 5: You want to talk Texas instruments, can we go there?
00:33:35
Speaker 2: What was so interesting is when we got ready for earnings Wednesday night, we were thinking, of course about Tesla, we were talking thinking about IBM, and we're like, oh, yeah, Texas Instruments, we'll get to that. They just surprised everybody and that was the stock that just shot up like a rocket.
00:33:51
Speaker 5: Most since two thousand on that Rosie forecast.
00:33:53
Speaker 3: What do we need to know about Texas Instruments?
00:33:56
Speaker 12: I got a couple of things there, and I think you went to both of them. On the one hand, we're seeing very very large stock reactions to these relatively small amounts of news, right, And you've got to remember TI is a very generalist. You know, they're talking about the economy in general, and they were positive. They were like, hey, yeah, things are better than we thought, and we hope they're going to get better. But they weren't like ringing the bell of success and you know, shouting and you know, we'll see how it goes, we'll measure. But in this environment, investors want to be in these stocks, want to buy these companies. They want to ditch the SaaS software companies, and they want to be in these guys.
00:34:31
Speaker 7: And guess what.
00:34:31
Speaker 12: TI gave them a reason to be in TI stock and they took it.
00:34:36
Speaker 10: So ye.
00:34:37
Speaker 4: And I'm going to put you on the spot as I always do, with the cyclical nature of this industry that you've covered for such a long time, and ask you where analysts are saying we are in this cycle.
00:34:50
Speaker 12: I mean, that's the central debate right now, is the argument between hey, you've never seen anything like this. This is a new way of computing, this is a new way of doing things, and we've got a long way to go against the old people like me who would say, well, we've kind of seen these things before. And when things get as poppy as I look now, as you know, the pe ratios are as high as I on now, the growth is seemingly unsustainable. Maybe we're reaching a peak, and that's the debate, and who knows.
00:35:24
Speaker 2: Yeah, pe ratio, I'm just looking at Intel ninety one forward is about just shy of eighty seven in great stuff.
00:35:32
Speaker 3: Always always have a great weekend.
00:35:34
Speaker 2: Ian King the amazing Ian King, US semiconductor reporter at Bloomberg Music.
00:35:38
Speaker 4: Stay with us more from Bloomberg Business Week Daily coming up after this.
00:35:46
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eastering. Listen on Apple Karplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
00:36:00
Speaker 4: Well, our next guest is very familiar to our audience because when she was CEO of Siemens USA, she used to stop by all the time. Now she's CEO of USA Rare Earth. It's the four point seven billion dollar market cap magnet manufacturing company. The company this week agreeing to acquire Brazil's Sarah Verde Group and a two point eight billion dollar cash and stock transaction. It marks one of the largest deals in the rare earth industry.
00:36:21
Speaker 3: Yeah, it's a big deal.
00:36:22
Speaker 2: It's also certainly something that has caught investors the company overall. The stock is up about eighty three percent year to date. So delighted to have with us. Barbara Hompton, she is CEO of USA Rare Earth.
00:36:34
Speaker 3: She joins us from our Washington d c Studio.
00:36:36
Speaker 2: Barbara, it is so nice to be talking with you again. Tell us a little bit about this deal and how it changes the game for you, and again, welcome back to a Bloomberg.
00:36:46
Speaker 13: Business, Carol, Carol Lintim, it is wonderful to be back with you, and this time in this brand new role. Yes, USA rare Earth is becoming the global leader in rare earth. And this transformative acquisition we've announced is with.
00:37:02
Speaker 3: Sarah Verde Group.
00:37:03
Speaker 13: They are the owners and operators of the only mine outside of Asia that produces all for magnetic rare earths, and they have just announced an agreement as well, through a special purpose vehicle backed by the US government and some private investors, for a fifteen year, one hundred percent off take with price floors on all for magnetic rare earths.
00:37:26
Speaker 4: So we talk about you know, we talk about rare and people who are regular audience members of this program, they know seventeen elements essential to evs, wind turbines, military hardware. China still dominates mining processing and magnet production. So does this deal that has these rare earths outside of China, does it change the fact that Western governments are scrambling to support new entrants.
00:37:52
Speaker 13: This makes us a brilliant partner for those governments who are trying to solve this issue.
00:37:57
Speaker 3: Yes, for decades now.
00:37:59
Speaker 13: In nineteen China declared the Mideast has oil, we have rare Earth, and they set about building a monopoly. Now they've used that monopoly against us, and listen, we have what it takes in order to develop our own value chain outside of China, from mining to processing, which is quite frankly one of the trickiest links in the chain, to metal making and ultimately to magnet making. USA Rare Earth has been making moves at every link across that chain to make sure that there is a response. We can grow the business outside of China, but more importantly, over time, we can become the global leader.
00:38:40
Speaker 3: Will you go.
00:38:40
Speaker 2: Deeper, Barbara, because I feel like we're all learning about this. It wasn't something we were talking about a lot two years ago, but we are certainly over the past year. You mentioned the processing that is one of the trickier links in the chain. You mentioned China still dominates when it comes to processing. Is it realistic to think that the US can catch up ever to China when it comes to processing, And how tricky. Is it going to be to undo that link or make that link connected and make it work here.
00:39:08
Speaker 3: In the US?
00:39:09
Speaker 13: This is yeah, this is a matter of investment and yes, indeed, we already have geologists, metallurgists, chemists who have successfully demonstrated separation technologies. You see, when ore or a clay comes out of the ground, it has those rare earth elements in it. Those have to be separated from the rest of the your body, and the process is to do that. Sometimes involve solvents, sometimes they involve ionic exchange. Very well understood chemical processes and it's a matter of building the facilities that will make them. For the next two years, we are going to be on the search for who can.
00:39:47
Speaker 3: Move the fastest.
00:39:48
Speaker 13: And in fact, USA Rare Earth just invested in Charister, a firm in the south of France, very capable of heavy rare earth processing. They're bringing their processing online by the end of this year. We ourselves in our proposal to the Department of Commerce Chips Program Office, we've included processing as a key element of our own operations and in order to first process our own core body at Roundtop in Sierra Blanca, Texas, but also to take third party mixed rare earth concience rate like that which may come out of Sarah Verde.
00:40:24
Speaker 4: You mentioned Charrister, so I want to get more into the acquisitions or investments. So the acquisitions that you've done in a short time less Common Metals last year, that twelve and a half percent stake in Charrister. Now, Sarah Verde, are you going to stay in your lane of nd FEB, which I learned today is neodemium iron boron permanent magnets, which is your core, that's your primary product. Are you going to stay in that lane or are these acquisitions representing you guys expanding a little bit.
00:40:50
Speaker 13: Today we're focused on ndy FEB. Yes, indeed a certain type.
00:40:55
Speaker 3: Of mad learning.
00:40:57
Speaker 13: And you've heard that they're used in everything from semi conductors to our defense articles. Frankly, even into the everyday electronics that we use. They are in everything in our economy. And our focus is going to be to assure that industrial players have access to the supplies they need in case of disruption. Think of in these early days supplying insurance quantities to make sure that in case of disruption people can drive through. But over time we'll be able to pick up production now. There are also magnets that are made with samarium cobalt. That's another form that it has many uses, and we've partnered with folks like Arnold Magnetics in order to make sure that we can first of all serve their needs with metal from our metal making operations, but then also combine our NdFeB magnets with THEIRS for those customers who need access to both.
00:41:51
Speaker 2: Barbara, are you guys done with deals for a while or you anticipate that there's going to be more that you need to do to.
00:41:57
Speaker 3: Kind of build this up.
00:41:58
Speaker 2: I mean, this is a big deal in terms of what the United States needs to do. Lots of money, lots of actions of activity. So is there more acquisitions from you.
00:42:09
Speaker 3: Guys to come?
00:42:10
Speaker 13: Yeah, Carol, you should think about this as a platform for growth.
00:42:13
Speaker 3: This is a platform for growth.
00:42:15
Speaker 13: This market space outside of China has been fragmented all this time.
00:42:19
Speaker 3: There's a lot of friction in the system.
00:42:21
Speaker 13: Great opportunities for companies who have complementary capabilities to come together. Now, with the acquisition of Sarah Verde, we've also brought on Sir Mick Davis and Thras Maritas Thras both of them will be on our board. Thras will join me as president of USA Rare Earth. And you may know them as the power duo who put together Extrata grew in from five hundred million dollars to sixty five billion this in this market space. They recognized years ago that the rare Earth space was ripe for exactly the kind of business approach that they are so adept at handling. I look forward to working with both of them on our overarching strategy.
00:43:02
Speaker 5: Hey, Barbara, we have a couple minutes left.
00:43:03
Speaker 4: There's a lot we want to get to, including some news today, but before we get there, USA Rare Earth received one point six billion dollars in propose funding from the US Department of Commerce in January.
00:43:12
Speaker 5: It's conditional on certain things.
00:43:14
Speaker 4: Should investors expect more support from the US government.
00:43:17
Speaker 13: What you'll see is that together with Sarah Verde, we're supported and working with the Department of Commerce, the Department of War, Department of Energy. We have relationships all across. Sarah Verita announced an acquisition and not an acquisition, an investment by DFC, So clearly there is great government interest in the work that we're doing, and we are happy to see investments that are accelerating our progress across the board. Look for us to be involved in additional engagements with the US government and our allies where we can help scale or accelerate growth.
00:43:54
Speaker 2: So I would say that that's a yes, more money coming, or maybe.
00:44:01
Speaker 13: We are absolutely engaged with all of those who have funds applied to critical minerals.
00:44:05
Speaker 3: You mentioned the US and our allies, and that's where I want to go.
00:44:08
Speaker 2: What do you think about the agreement, Barber that was signed today between the US and EU to coordinate on critical minerals When it comes to price floors, off take agreements and more, well.
00:44:19
Speaker 3: Think about the power of this.
00:44:21
Speaker 13: China has been engaging in practices that artificially drove prices in their favor. Anytime they wanted to, they could drop prices, flood the market, and frankly run businesses out of the marketplace. And so by agreeing to price floors, we're sending long term signals that say there is a market, we want to grow it, it is worthy of investment. Have courage drive through this because what we have to do is, yes, enhance the price floors, make sure that we have a stable business perspective, going forward.
00:44:53
Speaker 3: As we grow, as we scale, then.
00:44:55
Speaker 13: Market dynamics will absolutely take over our time. And I'm thrilled that the EU has stepped forward to join us in the effort.
00:45:03
Speaker 7: Well.
00:45:03
Speaker 4: To follow up on Carol's question there, how should the US and European nations handle price floors?
00:45:10
Speaker 5: How should that work?
00:45:11
Speaker 13: We've been sending our input to the US Trade Representative and others who are working on policies.
00:45:18
Speaker 3: You know, we feel that it's really important.
00:45:20
Speaker 13: That if we can agree that we as collaborative countries are going to join together and agree not to buy those Chinese products that often have been artificially skewed price wise. There's clearly government buying that will take place, and we're in support of the government mandates that are coming along for government contractors. But what's even more important these days is that the buyers of large scale material like ours are looking for non China sources and are recognizing the power of their buying habits. I call it industrial patriots, recognizing that the actions they take will strengthen the market.
00:46:04
Speaker 2: Barbara, really quickly, thirty seconds, have you been looped in on any of the conversations between the Europeans and Americans I mean, given that you guys now own assets in Europe.
00:46:12
Speaker 13: In the US, Yeah, USA Rare Earth colleagues are often invited into conversations and we're more than happy to share our expertise, join in the conversation and help people understand the economic situation we're in and think up potential solutions. We've got to use every tool in the tool belt right now.
00:46:33
Speaker 3: Real quickly.
00:46:33
Speaker 2: Upbeat conversations, stressful conversations, because there's a.
00:46:36
Speaker 3: Real upby upbeat, upbeat.
00:46:38
Speaker 13: I've been so encouraged by how helpful everyone wants to be.
00:46:42
Speaker 2: Well, listen, you are super helpful in coming on explaining the deal, where you guys are, where it's all going, Come back anytime. Really appreciate it. Barbara Hampton, She's the CEO of USA Rare Earth.
00:46:53
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