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>> Bruising sell-off in several tech giants

fueling concern that the AI frenzy that

has powered the equity bull market might

be overblown.

>> Yeah, well, we saw the Nasdaq 100

sinking about 3% earlier. The SOX, the

key gauge of chip makers that had

doubled from war-driven lows, sliding

about 7% losses.

>> Now it's down 8.3% since I wrote that

earlier.

>> So, it's really come under a lot of

pressure. And if you take a look at what

happened in terms of the trade

overnight, especially in Asia, South

Korea's Kospi plunging 10% from a

record. But that market is so reliant on

really two, a couple of big names that

have really performed.

>> Manufacturing Company, yeah.

>> Yeah, again, that trade, the chip trade,

and the tech trade. Um, so you're

wondering, is it a reset and new

narrative? I don't know, we'll see what

Amanda Lyons has to say.

>> Amanda Lyons is head of research at

Energy Group Capital. It's a hedge fund

manager focused on energy, natural

resources, and power. Amanda covering

technology there. She joins us from

London. So, is it a fundamental change

to the AI story?

>> Hi. Thanks for having me on. Um,

I don't think we're seeing a change in

that fundamental AI story, but we have

to be a little bit more cautious and

it's a little bit more nervous as these

things happen. I mean, if we look at

what's happened today, the fundamentals

regarding AI haven't really changed.

We've had a few headlines out of Korea

beyond all of the concerns with the

leveraged ETFs. So, we've we've sort of

seen some some headlines with Samsung um

managing to get their HBM 4 revenues up,

which then has some questions on supply

and demand dynamics, but but

fundamentally, things aren't falling off

a cliff.

Um it's more a positioning issue than uh

a fundamental issue at this point.

>> Well, what does it mean if SK Hynix

um according to a local media report,

let's give it some attribution there,

was slowing expansion of AI memory chip

production and shifting emphasis to the

cheaper commodity DRAM. Like, is that

just maybe normal? Like, you know,

they're figuring out what their

customers need. It's not something more

significant or problematic to the AI

spend and trade.

>> Well, I think the first thing to to look

at of the overall supply from that is

it's a mix shift. So, we're having the

the supply dynamic overall doesn't

actually change with that. We're just

shifting it from product A to product B.

Well, I think

>> it less Is it less profitable? And does

it also say something about AI

specifically?

>> Yeah, so the important thing to pick for

me or the the tell for me in this is

that they're acting rationally in a way

you would want a company to do is

they're they're shifting their

production to the most to the highest

margin, the most profitable part. And

this is sort of counter to the narrative

we've been having coming out of these

memory companies pretty much for this

year, where you're having this narrative

of this time the cycle is different.

This time we're seeing more rational.

Whereas actually, when you look at their

behavior, they're still trying to

maximize profitability. And then when

you try and um extrapolate that forward

um to actual supply, although this

headline doesn't change the total amount

of supply in the market, you've got to

assume that you're going to start seeing

increases in supply. And we've already

started hearing comments along those

levels from all of the memory players,

um

which leads you to believe at some point

that supply and demand dynamic shifts

from being massively

um, supply constrained to

an

to too much supply. Um, and that

cyclicality returns to all of these

names and you you kind of don't want to

be in them at the point that happens.

So, we're not there yet, but to me it's

sort of the first part of a warning

sign.

>> Wait, this is just when the Wall Street

Journal reported that Tim Cook said that

Apple's going to raise prices as a

result of

the the higher memory prices. So,

are we are we did we did we peak in this

cycle?

>> Not yet. So, so I don't think we've hit

we've hit that peak yet. I mean, when we

get we get to Micron's earnings tomorrow

night, I think we're going to get a

little bit more color on that and I I

imagine they're going to, um, suggest

that we're not at that peak point yet.

But, the I think the key point is there

is going to be a peak and it does turn

at some point. This isn't the there's

sort of been a change in narrative that

this is a structural thing and we're

going to see peak memory price memory

pricing increasing forever. That that's

just not going to happen. These are

cyclical names. They always have been

cyclical and they will be. The length of

the cycle might be longer, but it's

still a cyclical name. So, in the short

term we can see, um, that memory prices

and we're hearing it across the board

that memory prices are high and have

been increasing and that's why you're

getting that headline from Tim Cook. Um,

and I expect that we'll hear more, but,

um,

will that last forever? Is that going to

continue to happen? No, at some point it

does it does reverse. I just don't think

we're there quite yet. And and Micron

will give us a little bit more

visibility into that tomorrow.

Um,

>> Right.

>> That's what I'm looking for across

across the board.

>> Right. I got to tell you in our reading

this morning, um, what caught our

attention is you talked with members of

our print team and you said I would the

real test is Micron. I would watch the

rate of change in pricing and any change

to CapEx or bit supply guidance far more

closely than the headline beat or miss.

So, it's an important one tomorrow. What

I want to ask you, Amanda, and I kind of

think of our Ian King, who is kind of

our chip guy here

at Bloomberg, someone who's watched the

cycles, reminds us of these cycles that

when it comes to semiconductors, demand

increases, and then it takes a while for

the build, the supplies to meet that

demand, and then you have oversupply,

and then the prices come down. So, this

is what we're seeing. This is to be

expected. We've heard all these

companies saying, "I need more chips. I

need more chips." And so, we're starting

to get the supply, and that's what we're

starting to see.

>> I I I agree with all of that sentiment.

I think that is completely right, and I

expect that to play out. I just don't

think we're we're seeing that supply

coming online to the extent that is sort

of needed perhaps to have that play out

yet. And I think that's the key word.

It's not yet, but it is coming. And I

think that's the difference of where

we're seeing, you know, Micron as an

example, we were at all-time highs

yesterday. You look at that the pullback

it's had today, it doesn't even

register, almost doesn't register on the

chart. It It's just that the rise that

it's had has been so extreme, and that's

across the board in that whole semi

landscape. And you're seeing those

supply increases come, but it takes a

long time to build out that supply. And

at the same time, we're still seeing

demand increasing. At some point, that

reverses. We just It doesn't feel like

we're there quite yet.

>> Amanda, just 30 seconds before we run

out of time. After Micron, what's the

next big thing that investors need to

watch as an indicator of this cycle?

>> I'm watching for the both Anthropic and

OpenAI S-1s to come out, because that

will give us a better idea of this whole

AI trade, and what the underlying

profitability looks like, and does it

have legs?

I think there's going to be a wealth of

information in those S-1s when we

actually get to read them.

>> Interesting.

>> the only one waiting to read those.

>> [laughter]

>> Yeah.

>> We're all marking our calendars and our,

you know,

>> they drop.

>> We can discuss it. When when they come

out, we can come back and discuss it

then.

>> Yeah, we're looking forward to it.

Appreciate it.

>> Yeah, we would love. Amanda, thank you

so much. Amanda Laier, she's head of

research at Energy Group Capital.

>> Stay with us. More from Bloomberg

Businessweek Daily coming [music] up

after this.

You're listening [music] to the

Bloomberg Businessweek Daily podcast.

Catch us live weekday afternoons from

2:00 to 5:00 p.m. Eastern.

>> Listen on Apple CarPlay and Android Auto

[music] with the Bloomberg Business app.

>> Or watch us live on YouTube.

>> Retail sales data for May that showed

that US consumers increased spending

[music] in the month across a broad

range of retailers despite higher energy

gasoline prices.

11 of 13 categories 10 posted increases

with motor vehicle sales rebounding by

1.2% and spending at online retailers

rising for a fifth straight month.

>> Yeah, safe to say pools are not in their

own category, but I think if Mike McKee

were here, he would have some sort of

statistic that he could rattle off all

about the indicator when it comes to

pools. There's certainly something that

some consumers spend on an indicator two

of supply chains, materials, and of

course labor costs.

>> We've got a great guest to talk about

this industry. We welcome Sean Gaddy,

he's president and CEO of the $688

million market cap company Latham Group.

The company's biggest market by revenues

by far is the United States, but also

sales in Canada, Australia, New Zealand,

and elsewhere. He joins us here in

studio. Welcome, welcome. Nice to have

you here.

>> Great to be here. Thank you for having

me.

>> Pools, they sound so simplistic. We get

what they are, um, but tell us about

your business and the different product

lines.

>> Yeah, absolutely. So, Latham is

essentially the number one manufacturing

uh, pool manufacturer in the world. Um,

we've got scale in in both fiberglass

and vinyl pools. And, we also sell auto

covers, which is a safety device that

goes over your pool.

Protects your investment and also

protects the people around the pool and

your family.

>> Biggest area of growth for the company

right now, what is it? Not

geographically, I mean segment-wise.

>> Uh segment-wise, we essentially play

There's two parts in which a pool gets

in. Someone moves into a home, empty

lot, I mean empty space, they want to

put a pool in for recreation. That's the

number one uh market, and then there's a

secondary market, which is single-family

new construction home builders who are

using the pool to help offset the

interest rates that they're buying down.

>> So higher higher rates

>> Yes. So what they say is they they'll

come in and they'll say the standard uh

mortgage is at 6 and 1/2, 7%, they'll

buy it down to

five say 5%, and then they'll put

upgrades in. And one of the upgrades

they'll put in [clears throat] is a

pool.

>> All right, got it. Um

talk to us about the the types of pools.

You guys have something called the Sand

State strategy, um which in your

earnings call showed double-digit sales

gains in fiberglass pools in your

priority Florida market. I got to tell

you, those of us who grew up near pools,

with pools, whatever, uh I remember

mostly either cement

or liner pools. Tell us about

fiberglass. I I'm a boater, and

fiberglass, man, that is tough stuff.

>> It is tough stuff. Um so fiberglass

makes up 25% of the US market. Uh it is

the growing It is the growing uh

substrate that goes into pools. So it's

been taking share every year.

>> So it's like a formed entity, and you

just drop it in?

>> you dig a hole and drop it straight in.

The advantages over over cement, which

is the number that's 50% of the market,

and which we we're going after. And that

happens to be in the Sand States.

Uh you know, 50% share, but it takes

sort of 90 days to 120 days to put in.

For us, you Once the consumer decides, I

want to be in a pool, within 6 days

we're in and out. And that's somewhere

in the

>> 6 days?

>> Yes.

>> 6 days.

>> 6 days. So tremendous advantage, and

then obviously

>> Tim's like, wait a minute, how big is my

backyard and the

>> 100% right.

>> And so so the the the the the

opportunity for Latham the Pool Company

is

a couple of things. One, we've done very

well in the Midwest, Northeast, and

Canada where vinyl is a standard vinyl

liner pools and and fiberglass. When you

think about the the Southern states, the

majority of the of the pools that go in

are are cement. And really it's because

they haven't seen an alternative.

>> But do consumers think about the actual

material or do they say, "I want a

pool?" They call a builder. The builder

has the relationship with you. And

that's how they get that type of

material.

>> engages a dealer or a builder comes into

the kitchen table, sells sells a

product. Because we're the incumbent,

we're still the unknown. So, essentially

we're a new product in the South. And I

say a new product, we've been there for

a couple years, but we are in the new

new and we're spending and investing a

significant amount of marketing in the

Southern markets on our Sand State

strategies. And when you think Sand

State strategies, it's basically Florida

to Southern California.

>> Okay.

>> But we're taking a very targeted

approach on how we get there. So, we're

looking at neighborhoods. So, right now

in Florida, we're looking at

neighborhoods that have a higher

propensity for pools. That is

price of pool, house price of house,

household income, age of home, and size

of the lot. Once we get the right

neighborhoods, we're working with

dealers to go in there and position

fiberglass.

>> Shawn, I want to ask you. I mean

weather, I think you guys talked about

this too

on the call and I think you talked a

little bit about

some weather maybe

I'm looking for my notes here, but maybe

had a little bit of an impact. But I'm

just talk to me about weather in

general. Cold seasons are the start of

like spring cold, can it kill a quarter

or a year for you? And at the same time

climate change where it's getting

hotter,

you know, perversely, is that kind of a

good thing for your business?

>> Yeah, so

one obviously we're cyclical business.

Most of the pool building occurs during

the spring, summer, autumn months.

Uh that's what So, it is a cyclical

business. Generally, where it's cold is

generally our smaller quarter. So, it's

not going to kill the year.

>> Yeah.

>> Uh and when you think about that first

quarter, we basically missed equivalent

to 1 day of shipping.

>> Okay.

>> Okay. So, it's not it wasn't by any

stretch going to impact us to that

degree.

What I love about going into the

southern states is their season's much

longer. And so, when you think about

where it's freezing cold in Connecticut

in March, it's uh Florida and Texas and

Atlanta are ready to go. So, as we

penetrate further into the southern

markets, we'll be able to balance our

business in a much more effective way.

>> What's the typical cost of of

from soup to nuts for a pool?

>> Yeah. So, the basic pool, when you think

about that, the average in North America

across North America is $95,000.

Uh but you can get into a pool anything

from $70,000.

And then, of course, it can go all the

way up to 200 depending the pool you

want and what else you do when you when

you put in the pool. If you do the

landscaping, kitchens, etc.

>> Why is it so expensive? It's basically

dig a hole.

>> [laughter]

>> Hey, if it's that easy, Carol, do it

yourself.

>> No, I'm just Is it the material cost? Is

it labor?

>> It it's uh all of the above. I mean, I I

think in reality uh during COVID,

material costs went up. Obviously, it

and hasn't corrected. Labor definitely

went up and hasn't corrected. Um we do a

lot of the labor in our factories. It's

the advantage of being a fiberglass

pool. So,

>> Is everything done in the US?

>> Everything everything that supplied to

the US is done in the US. So,

fiberglass, because it's quite hard to

freight to a house, you need to be close

to your market, which is one of our

advantages.

Uh and so, when you think about that, uh

we have we have control of the costs, we

have control of the product, and we have

control of the quality. So, it gives us

a great pool.

>> Before we leave, just got 40 seconds.

We're monitoring the president who's on

the ground in Pennsylvania. You seem

like the right person to ask, but the

Washington Monument Reflecting Pool. Why

the heck is there algae? Because

anybody's who's been around a pool, you

throw chlorine, you measure things, you

can fix this.

>> Yeah, 100%. So, it is a it is a water

chemistry thing.

Uh kind of wish we were asked to put in

the pool cuz fiberglass, again, one of

the advantages is nonporous, so algae

doesn't grow in it.

>> But, is it just they need chemicals?

>> Predominantly, it needs chemicals.

>> It's not scratches or things that are

>> It should not be that.

>> So, it should be pretty easy to do.

>> Relatively easy, yeah.

>> Yeah, you just get the chemicals and

test the water, right?

>> There you go. You definitely got to work

on water chemistry.

>> All right. Good stuff. Come back soon.

>> Will do. Love to. Thank you.

>> enjoyed this. Shaun Gadd, he's president

and CEO of Latham Group joining us right

here in studio.

>> You're listening [music] to the

Bloomberg Businessweek Daily podcast.

Catch us live weekday afternoons from

2:00 to 5:00 p.m. [music] Eastern.

Listen on Apple CarPlay and Android Auto

with the Bloomberg Business app. Or

watch us live on YouTube.

>> [music]

>> Here with an insider's perspective when

it comes to AI, and back with us is

Katherine Kostereva. She is CEO and

managing partner at Creatio. It's a

customer relationship management

company. It sells software that

automates workflows using no-code and AI

tools. She joins us once again from

Boston. Um Katherine, it's good to have

you here with us. You know, remind us

again to specifically which lane you

guys play in when it comes to the AI

build and spend.

>> Thank you very much for having me, Carl

and team. Very nice being here again.

So, Creatio is an AI and no-code

platform, and we have out-of-the-box

best-in-class CRM products built on top

of the AI platform. It's an AI native

technology, meaning we combine natively

human-led workflows and agentic

workflows working together in

combination.

>> You've been talking about no-code for

years. I mean, before we were talking

about Claude Code or Codex from OpenAI.

I'm just wondering, is there a need for

for no-code right now when you have

these tools from the

the developers of the frontier models

that can code for you.

>> Brilliant. Brilliant. So, so so think

about So, let's let's talk a little bit

about the platform capabilities today.

It's the beautiful combination of code

and agents. So, you use code and agents

in site creation to build your

applications or workflows. Or if you

need to tweak something like drag and

drop redesign, you use visual no-code

tools. So, these are the part of the

platform when you can combine both code

and agents AI and visual no-code tools

in one application.

>> So, how does it change the game now that

you have the LLM makers

have the ability You know, I'm from my

perspective, I think, okay, well, maybe

it makes it so, you know, you guys were

essentially vibe coding before

we were talking about vibe coding. But

But essentially it

the concern is that software companies

are taking a hit because people can

create their own software as result of

these

Claude code or Codex from OpenAI. Does

that affect you?

>> Okay, sounds great. So, let's let's set

up the stage here. So, first of all, the

vision of the future automation is that

organizations will be working 24/7

in very flat organizational structures

thanks to AI agents.

And let me let me

uncover that. Let's start with types of

workflows that exist today and will

exist in the future as well.

From one end, we are all used to

human-led workflows. Then there are

agentic autonomous workflows that

operate completely independently from

humans. We call them autonomous

workflows, AI autonomous workflows. And

then in the middle, these are hybrid

workflows, combination of human-led and

agentic workflows working together.

That's how we see the future. I will

give you an example. Some very simple

workflows like transactional workflows

when you give a call to a call center,

the expectation your expectation, my

expectation in a couple of years from

now is going to be we we're going to

make a call to any organizations out

there, a bank, credit union, retail

company, whatever it is, and we expect

service 24/7 whenever it's convenient

for us, and we can deliver that through

AI. This is the future of AI and

technology, and this is by the way call

centers, customer service, customer

support are the areas where we see the

biggest penetration and the highest ROI.

To your question about ROI, that's where

ROI comes from.

>> Katherine, but is that your lane?

Because I guess I'm asking because for

me, you know, we all already deal with

kind of digital call centers, right? But

this is kind of amping it up and taking

it to a different level. I get that, but

it doesn't sound like the major

disrupter that requires, you know,

companies like, you know, in the the Mag

7, whether it's SpaceX or

Amazon or Alphabet, like tapping debt

and equity markets and raising billions

and billions of dollars. And that's part

of the trade you have right now today,

taking some of the fluff out of the, you

know, or taking some of the air out of

the AI trade. Um

is that wrong trade in your view? From

what you're seeing that this still makes

sense? Cuz that sounds to me, I get it,

but it doesn't sound as innovative or

disruptive.

>> of Yeah, that's a great question, Carol.

It actually does make a lot of sense to

me personally. I'll give you the example

of our company.

>> I just got about a minute or so left

here.

>> Yeah, I will go very quickly. So,

Creation, for example, is growing around

50% year-over-year revenue top line

growth, very fast growth. We're not

budgeting a single additional person in

our call center and customer service

organization at all for this year.

Although the number of clients is

growing significantly, we're not growing

our employee base at all this year

thanks to AI capabilities. This is a

very simple example. So, we're all in

um on AI for us and most importantly for

our clients.

>> 30 seconds left here. So, does that also

mean that you don't have to hire as

much? So, that's great on the cost side,

but there are those labor implications.

Are are you hiring in different areas as

a result of what you can do with AI?

Just quickly.

>> Yes, absolutely yes. Everything that is

human-led workflows, for example,

analysts, enterprise sales, architects,

that's where we hire.

>> All right, can leave it there.

Katherine, thank you so much. Katherine

is CEO and managing partner at Creatio

joining us from Boston.

>> Stay with us. More from Bloomberg

Businessweek Daily coming up after this.

>> You're listening [music] to the

Bloomberg Businessweek Daily podcast.

Catch us live weekday afternoons from

2:00 to 5:00 p.m. Eastern.

>> Listen on Apple CarPlay and Android Auto

with the Bloomberg Business app.

>> Or watch us live on YouTube.

>> The Chinese Commerce [music] Ministry

added 10 US defense-related firms to its

control list banning exports that could

have a military [music] use to these

companies. Now, the list included two US

rare earth producers. We've talked to

them on air, MP Materials and USA Rare

Earth Inc., which have both received

government equity stakes as part of the

Trump administration's efforts to

essentially de-risk the US rare earth

supply chain away from China. I mean,

the world has awakened to the things

that we need that kind of go into

everything. And you think about

semiconductor production and

>> batteries.

>> Yeah, a lot of anything to do with kind

of electronics.

>> And back with us, Gracelin Baskaran,

director of the Critical Minerals

Security Program at the Center for

Strategic and International Studies. She

joins us this afternoon from Las Vegas.

Gracelyn, good to have you with us. I'm

just curious about your view on on what

China did. What is your read on this?

>> You know, what China's really doing is

reminding us that it has the ability to

flex its muscles and it can impact our

supply chains. In a way, there has been

a sense of normalcy that people have

felt, although not real, that hey, you

know, China has paused restrictions. And

what they're really showing us,

especially following uh tightening G7

cooperation, following significant

investments from uh the US government,

is hey, we still have control. Is it

going to have an immediate impact on a

company like MP Materials? Probably not,

because they've really worked to create

that ex-China supply chain end to end.

>> So, I mean, does it

It's interesting. Um I feel like this

battle that's going on, Gracelyn, and

I'm just increasingly, like I think

about last week, more broadly, you saw

the um Group of Seven countries have

agreed that no single country should

supply more than 60% of their imports of

rare earths by 2030 in an effort to

reduce their reliance on China. Is the

world kind of pushing back and saying,

as a group, folks, we've got to

diversify this. We've got to make sure

that the rest of the world has access to

these critical minerals or these rare

earths. It's really a major pushback

against China. And rightfully so.

>> Critical minerals have become the

linchpin over the last year and a half

of multilateral cooperation. And what we

saw after last year's rare earth export

restrictions was that every country was

impacted by it. So, it became a natural

point of collaboration. Now, of course,

this is a really ambitious goal. Like,

to contextualize this, Japan was first

impacted by rare earth export

restrictions in 2010. And they have

invested intensely into their

diversification journey. But, 16 years

on, they still haven't achieved

reliance. So, it's certainly an

ambitious goal.

>> Hmm.

Where is the US right now in achieving

its goal?

>> The US is early. I mean, what the US has

done is unprecedented in terms of the

billions and billions of dollars it has

allocated to rare earth mining,

processing, and permanent magnet

manufacturing. However, it's no secret

that the industry is very, very

long-term. So, it takes decades to build

those mines. It's still looking at about

5 years before you're into

um ramped up separation. And then again,

a lot of this technology when it comes

to permanent magnets is very early

stage. USA Rare Earth receives um

funding for a pilot uh from Department

of Energy in May 2026. So, it's early

and it's a a long-term undertaking. So,

while we're on the right track, we're

not going to be at self-sufficiency in

the next 2 years.

>> Is the government still all in on this?

>> The government is all in and we've seen

funding and uh investments coming out of

various government agencies, Development

Finance Corporation, Export-Import Bank,

Department of Energy, Department of War.

If you've seen a whole-of-government

approach, it's really been on rare

earths and permanent magnets.

>> There's something interesting going on

between rare earths companies that I'd

I'd love to get your your view on. Um

our own Jacob Lawrence yesterday

reporting that USA Rare Earth is pushing

back against allegations by MP Materials

calling a lawsuit filed by its rival an

attempt to hinder the company's growth.

If you haven't been following this

everybody, the company refuted MP's

claim that USA Rare Earth improperly

obtained and used confidential

information from a former MP employee.

USA Rare Earth said in a filing in the

8th District of the Texas Business Court

on Monday that it will deny each and

every allegation made by MP. Now,

normally I wouldn't ask you about two

companies going after each other, but

these are two companies at the center of

trying to

uh build up a supply chain here in the

US of of critical minerals. I'm curious

if if this is something we should take

seriously or if it's a bit of a sideshow

when it comes to the domestic build-out

of the rare earth supply chain.

>> Look, I mean the first thing that this

underscores is how technologically

advanced this industry is. And what we

have to remember is that a company like

MP Materials has spent years and years

building these capabilities. They've

invested billions into developing kind

of proprietary technologies. So their

competitive edge is coming from this

innovation investment. To now, you know,

undermine that, you have two competing

interests. You have the national

security interest element, which is

saying, "Okay, the country needs more

rare earths." But you also have the the

corporate level interest, which was we

we've invested billions into proprietary

technology, and companies taking that is

not, you know, it's not positive. So

you're seeing that tension exist. So

what it underscores again is that it's

technologically complex, and that there

are going to be companies that operate

within the United States who feel um a

really enormous tension. And we

shouldn't undermine how much money

they've invested into building these

capabilities.

>> You know, one of the things, going back,

Gracelyn, if we can, to China, that

we've seen it in industries before,

where they have dominated and then just

cut prices to make sure they have a

domination of a market, whether it's

been steel or textiles or solar panels.

Um and I just wonder when it comes to

this move by the G7, do we need to see

some kind of, you know, export controls

or price controls or some kind of

pushback against China in order to make

sure that

other nations can build up critical

minerals and rare earth that they can

actually build up that that supply

chain.

>> Ronald Reagan once said, "If you want

more of something, subsidize it. If you

want less of something, tax it." And

what we're doing is looking at both

instruments, right? And I mean, if you

look at it, um doing the price floor

with Lynas for their Malaysia facility,

doing a price floor with MP materials,

doing concessional financing and equity

is really in is that subsidy to get more

of it, right? We want to incentivize the

development of these capabilities. At

the same time, I mean, tariffs are

really important part of that equation

to level the playing field. However, the

complicated reality we sit with is that

we are in a in an economic coercion

structure whereby if we increase our

tariffs, China can retaliate and cut off

access. So, it's a delicate game, but it

would be surprising to see tariffs leave

the the the discussion between the two

countries when it comes to rare earths

and permanent magnets.

>> So, I'm just wondering, you're in Vegas,

right?

>> I am.

>> Is it because you think you can win at

the slot machines and you have a better

chance of that versus your view on the

US? I'm having some fun with you, but

the US actually developing these supply

chains. I mean, I'm just wondering, can

it actually be done? Will it be done?

>> So, I don't gamble because I've never

won. I've worked out that that's just

not something for me, um, because I

always lose money. However, where I am

is the Fastmarkets Lithium Conference

this week, and the price floor

discussion continues. As we know, I

mean, we have a a dual challenge of

trying to keep our western companies

online while also ensuring that they cut

a profit, especially in environment

where demand is lagging. Ultimately, to

get prices up in the long term, it's

going to be increasing demand.

Increasingly, what we're seeing though

is that companies are willing to pay a

secure security premium, whereby

manufacturers are saying, "Okay, at the

risk of having a disrupted supply chain,

where I can't access my material, I

would rather pay more upfront." As we do

that, we reduce the demand for Chinese

minerals. So, while it is complicated in

a high-risk sector, obviously of

geopolitical risks, technology risks,

traditional commodity risks, you are

seeing companies play more proactively

into investing in that security premium.

>> How how politic, you know, we're we talk

we're talking about the midterms cuz

we're just a few months away and there

are primaries happening here in New York

today. Uh I'm I'm just wondering how

companies that are making these

investments right now are are sure that

if there's a new presidential

administration, these investments will

will still be supported by the

government.

>> It's fascinating because one of the

challenges we continually to hear is

that political durability is you know,

is one of the things that companies are

wondering about. Look, the benefit is

that neither party disagrees about

critical minerals. I mean, it is the

most bipartisan um agenda in Washington,

D.C. However, you're also realistically

starting to see um

uh congressional inquiries into certain

transactions. So, you know, it's not

it's very likely especially with the way

midterms are looking like they may shake

out that there will be pushback on

certain transactions. However, what we

don't see uh is that all you know, of

these deals are going to go up in pots.

>> Yeah, it is interesting, right? And you

do wonder from administration to

administration what happens um cuz the

narrative is certainly very strong about

national security and having access to

all of this. Um so glad we could check

in with you. Uh enjoy the conference.

Gracelin Baskaran, she's director of

critical minerals security um there at

CSIS joining us as we said uh from Vegas

again CSIS is the critical um sorry,

Center for Strategic and International

Studies.

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