SpaceX IPO Demands Investor Trust in Musk’s Entangled Empire | Bloomberg Businessweek

Added: 2026-06-10

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[00:00:11]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 Stenbec on Bloomberg Radio. All right, now to what we know will already be one of the most talked about stories in business and market events of 2026.

[00:00:38]No doubt about it. And that is the Friday initial public offering of SpaceX. In today's Bloomberg Big Take, the team of Dana Hull and Carmen Aoya report that the SpaceX IPO is a bet on Elon Musk's vision of an industrial empire combining hardware, software, and artificial intelligence. It is also an investor bet and trust in what is Elon's entangled empire. There are a lot of moving parts when you get down to it.

[00:01:03]Individual who's uh responsible for kind of tracking all of these different parts is Dana Hall. She's Bloomberg News senior reporter. She's a part of the team that keeps an eye on all things Elon. She joins us from San Francisco.

[00:01:14]Donna, good to have you here with Emily and myself. We've talked to you a lot over the years about the interesting empire that is all Elon's. Um, when you think about this, is this an interesting moment in time and as you said requires a lot of investor trust in these visions that maybe have yet to fully pan out by Elon Musk?

[00:01:37]>> Yeah, I think that's right, Carol. And what we're seeing or what I'm seeing is that the companies are starting to converge around AI. You know, if you go back 10, 15 years, they were very different companies. Tesla was trying to make electric cars and bring them into the mainstream. SpaceX was focused on reusable rockets, but like Tesla and SpaceX have achieved those initial goals and now the mission has really changed.

[00:02:00]They are both pitching themselves as AI companies and they need each other. They and they have all this overlap now. So they're coordinating on building a chip fab. Um you know like there's just so many ways in which they are working together and overlapping. If you command F Tesla in the SpaceXs S1 it is astonishing how many times the name Tesla comes up in that filing. So I just think we're seeing more and more overlap more sharing of resources sharing of engineering talent. And then the big question is okay at what point do these two companies merge right? like let's get through the SpaceX IPO first and see where the valuation settles. But I think everyone kind of is wondering, you know, is are SpaceX and Tesla going to emerge?

[00:02:42]If so, when? What kind of timeline? And then who would acquire who?

[00:02:46]>> I'm wondering if you could kind of just talk through why the entanglement of the companies is something that investors need to be thinking about. Before you came on, Carol and I were just talking about like how are these two stocks going to trade? you know, is an investor in Tesla going to sell out of Tesla and buy SpaceX? Like, why are we all focused on the fact that these companies are are are very meshed together?

[00:03:12]>> I think it's because it raises a real big question about valuation. Like for the SpaceX valuation, which is so high and as there's been some reporting just in the last hour about it being, you know, it being overs subscribed, so many things have to go right. like the Starship rocket has to work in order to get the the orbital data centers up in space and like so there's just a lot writing on on that whole plan and then as it becomes a bigger company with all of these entanglements you know remember it acquired XAI which in turn had acquired X which used to be Twitter like you're hiding things like Grock within this bigger company and so how do you figure out the revenue for those business units it just gets a little murkier Um, and then with Tesla, as we have reported, like one in five Cybert trucks sold in the fourth quarter went to SpaceX and Elon's other companies.

[00:04:03]So, what is the true demand for that vehicle? Is that vehicle going to stay in the lineup? So, you know, there's just a lot of I don't want to say robbing Peter to pay Paul. I think there's just a lot of synergies, a lot of overlaps, and getting to the true valuation for investors is just going to be in increasingly tricky.

[00:04:21]>> I always think about that, right? And and you guys go into it so well, Dana, in this story about like the accounting between all of these companies and whether or not we have a really clear view of the transactions between the different companies and the value and then go back to the valuations. I mean, do we have a real clear picture? Is that part of also investor concerns?

[00:04:43]>> It's getting it's getting clearer. Uh so it used to be that the the Tesla filings were the only way where you know like the first thing I would look at was related party transactions. Well now because of the SpaceX S1 which has been amended at least twice like they are starting to put a a number value on you know what did they spend on these cyber trucks. So you are getting a little bit more insight there. But you know some uh research shops like Morning Star they came out with a really good analysis and they think that the SpaceX valuation is more like 780 million. So >> there are definitely some skeptics out there about whether this whole vision is all going to work. And uh you know I think for so long what we saw in the public markets was Tesla was the public company the most valuable auto company in the world and a lot of people saw SpaceX wrongly as like Elon's little side project and like now it's all coming to fruition where like SpaceX is the company that Elon founded in 20 2002. It has been a private company for 24 years. They don't really need to do fundraising. Like they are self fundraising, but as Elon said in his interview with Jamie Diamond last week, they're about to embark on a massive growth phase and they need capital for that. So, you're going to see the dynamic switch where SpaceX is going to come out of this IPO with a higher valuation than Tesla. What that means for investors in Tesla, I'm not really sure. But um but like SpaceX is going to be the bigger company if everything goes well on Friday.

[00:06:14]>> It's kind of wild, right?

[00:06:15]>> That is really wild. And Dana, this is something that you touched on really early on in the big take here that the Musk potentially didn't want to go public. I mean, he's been pretty vocal about uh the limitations of running a public company when you have such long-term goals. What What changed in Musk's mind?

[00:06:39]>> Yeah. So, I've always I mean, that's why that's why I was surprised by this. I mean, because I remember when Musk tried to take Tesla private in 2018 and he hates running a public company. like he finds quarterly earnings calls tiresome and he has a much longer time horizon and you know he he just doesn't think in that in those ways but the way to understand Elon is he will always solve for the limit what he calls the limiting factor so right now what is the limiting factor to you know realizing this vision of getting orbital data centers into space and getting Starship flying is it's money so he's like I you know I'm finally taking SpaceX public because the time is right. I need a lot of money.

[00:07:24]Um, and then the other limiting factor is chips, which is why he's embarking on this crazy project to build this chip fab. Um, but yeah, I mean, I think he's he, you know, he's he's got a good sense of market timing and you're seeing a lot of excitement around this IPO. I have no idea what Friday is going to look like, but you know, people who have invested in Elon throughout the years have made a fortune and that includes employees of his companies and their families. And so, you know, you're just going to see a lot of um I think, you know, investors see a lot of upside. I mean, there's there's definitely a lot of risk, too, but like the risk is part of the allure, right? Like he is willing to he has like a risk profile that's way higher than any other CEO.

[00:08:07]>> Yeah. It's just kind of wild. Um, if he pulls it off, what? We've just got about 30 seconds. I mean, if he pulls all of this off, Dana, >> what will he have?

[00:08:18]>> There's no precedent in history for anyone to be to run two publicly traded trillion plus dollar companies simultaneously as the CEO >> and largest shareholder of both. I mean, it's just like we have no template for what that looks like. Uh, it's just going to be fascinating to see. I do imagine that at some point they might merge, >> right? So then he only has to run one company. I'm just going to say um you rock always. Bloomberg News senior reporter Dana Hol joining us from San Francisco. Check it out. This story on the Bloomberg.

[00:08:52]Stay with us. More from Bloomberg Business Week Daily coming up after this.

[00:09:00]You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2:00 to 5:00 Eastern.

[00:09:06]>> Listen on Apple CarPlay and Android Auto with the Bloomberg Business App >> or watch us live on YouTube. So, Google, keep in mind, was one of Anthropic's earliest investors, repeatedly buying equity in the AI firm. And as Emily mentioned, it's increasingly now backstopping the financing that underpins those data centers for the startup. So, underscoring that complex business ties among the handful of largest tech companies pouring money into AI. Folks, it's AI's world and we're just revolving around it. And that brings us to our next guest. Let's get to it with former US Secretary of Commerce Gino Rayondo. She served as the 40th US Secretary of Commerce and 75th Governor of the state of Rhode Island.

[00:09:45]She joins us from Washington DC.

[00:09:47]Secretary Roando, so nice to have you here with Emily and myself. I want to get right to it because I feel like every conversation we talk about artificial intelligence, the buildout, the spend, but increasingly about the impact on the labor force globally and here in the United States. You recently responded to a comment on X by Meta Platform's vice chairman Dina Powell.

[00:10:07]She was announcing Meta's launch of a program to provide paid training, certification, and a job for Americans of all backgrounds to be part of building American leadership in the world. your response. You say many Americans face a catch 22. They need training to get a new higherp paying job, but they can't go without pay to attend a training course and that this initiative aims to solve this problem with paid apprenticeships and credentials that lead to actual available goods, good jobs I should say.

[00:10:36]When it comes to AI and the impact on jobs, how do you see it? And is Meta on the right track?

[00:10:43]>> Yeah. Well, first of all, good afternoon and thank you for having me. Um I I am an AI forward person. I think that the US does and needs to continue to lead in this global AI competition. And that means of course being ahead with the technology, but it also means having a strategy for people, right? I mean, we're not going to win the global AI race if we have great technology and sky-high unemployment. And so I think it's time for the country to get very serious about changing the way we support people when they change jobs and the way we train people. And the thing that I like about um because we have to bring all Americans along. We can this cannot just be AI for the big tech and and not bring everyone along. And so with this announcement, as I understand, um, you know, what Meta is doing here, that the thing I really liked about it was they're paying people while they do the training. And I know from when I was governor, I was a real a leader in a lot of these apprenticeship and and training programs. People can't afford to do a six-w week or sixmon training program and not get paid, right? they're not going to finish that training program.

[00:12:00]So the to the extent I've heard about this, like you said, I read about it yesterday, I think it's first, I think it's good that companies in America are stepping up to say, let's get innovative and try to support workers, but I think it's important to say we're going to pay you while you get trained, and if you graduate and if you get your credential, there will be a job at the end of that training.

[00:12:23]>> Secretary, you wrote a guest essay for the New York Times earlier this year.

[00:12:27]was entitled, "America cannot withstand the economic shock that's coming." What do you think the country, the Trump administration, and lawmakers from both parties really need to do to address this very much feared economic and um labor disruption that AI is expected to unleash?

[00:12:48]>> We have to prepare for it. I think it is a transition. I do believe AI will create new jobs. Every technology has created disruption and job loss. But over time, new jobs, new industries, many many many many millions of jobs in our economy today did not exist even, you know, 20, 30 years ago. So I I think we're going to get to that place.

[00:13:16]However, there will be a transition and I worry that during that transition, if we're not thoughtful and purposeful, too many Americans could be on the losing end of that transition. And so, we need to get very serious right now and create new training initiatives like the one we're talking about. But that is not enough. Training is not enough. We need new incentives for companies to redeploy people. We need new, you know, like a new safety net to help people transition from one job to the next. And so I think this calls for some pretty urgent action with the government, with employers. You know, it's an all hands-on deck moment to create a people strategy to get us through this transition.

[00:14:01]You know, it's a US race. It's a global race. And I think about what China is doing. They made um some steps today in terms of being allin and they do things differently as we know in China. Um, Secretary Mondo, so I'm just curious if we don't get this right in terms of how we are approaching it and protecting our labor force, but at the same time making sure that we are making the right investments and moves when it comes to AI when you've got China and the government in their deep pocket. Um, will that put potentially the US at a disadvantage in many ways?

[00:14:33]>> Yes, it will. I've spent uh as as much time as anyone thinking about how to protect America from China and how to compete with China technologically, economically, militarily. And we need to do both. Uh I I personally oppose, you know, overregulating AI or regulating the technology to a point that it would stifle innovation. I again I want America to to lead. However, I also would oppose putting our blinders on and letting AI out into the world without a plan for our workforce because truthfully, if we do that and if we wound up with extremely high unemployment, we won't win the AI race with China. We won't. We will then have >> political unrest, economic unrest, deep recession, and frankly a regulatory backlash. So I see no other alternative than to do both to win on the technology but to to innovate on the the the workforce models and the transition models and the support models.

[00:15:46]We can do it. America has consistently risen to the challenge in the face of these big challenges before and if everybody works together we can do it again. You talk about America leading when it comes to AI. That means we need really great leadership. Uh Boston Globe today reporting that you are no longer considering running for president in 2028. What do you want to see from a presidential candidate and could you possibly reconsider your own ambitions?

[00:16:12]>> Uh I'm smiling because no matter what interview I do that it inevitably gets to that question. people have said to me they want a leader like you when it comes to the >> that's that's very kind and that is you know uh years away which in politics might as well be decades. Look since I've been out of government this is the issue I've been focused on. I'm I am uh fortunate to have the credibility in the business community. I was a secretary of commerce when AI when chat GBT was released. So I have, you know, great credibility with all the tech leaders. I I believe in bipartisanship. I work with Republicans and Democrats. So what I'm focused on is how do I work um really at the state level where things can happen with governors of both parties, you know, with companies like listen, it's in no company's interest to have a deep recession and 15% unemployment. So any CEO, a CEO today has to do two things.

[00:17:15]Implement AI and and get in the boat to figure out a people transition. And so that's what I'm devoting my time and attention to because I think it's what the country needs and I think I'm well positioned to work on that issue.

[00:17:27]>> We know you have to run 20 seconds. Then what do you think we need though in a presidential candidate considering the AI backdrop and all that's facing us?

[00:17:33]Real quickly, >> a serious person. a serious person who can work with anyone, will work with anyone, go anywhere, do whatever it takes to solve Americans problems, uh, rebuild the middle class and revive the American dream, which is work hard, get ahead, um, including in business. All right, going to leave it there. The door is always open. We'd love to talk to you further, so come back whenever. Um, Gina Raando, 40th US Secretary of Commerce, of course, under President Biden and the 75th governor of the state of Rhode Island. Stay with us. More from Bloomberg Business Week Daily coming up after this.

[00:18:15]You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2:00 to 5:00 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App or watch us live on YouTube. In the meantime, we want to continue with AI. Uh, Philip's 11th annual Future Health Index. It is out now. It examines how AI is already changing the way clinicians work, how they deliver care, and manage pressure across the health care system. Now, among its findings, how healthcare executives are discovering that AI just isn't about cost savings. So, let's get into it. Jeff Dulo is CEO at Phillips North America. It is the largest regional market and division of the Dutch health tech company giant Philips Envy. Those ADRs trade in the US.

[00:18:58]They're down about 3% year to date. As we said, Jeff's joins us in here in studio. Welcome. Welcome. How are you?

[00:19:03]>> I'm wonderful. Thanks for having me.

[00:19:05]>> Well, it's good to have you here. We do feel like we are spending so much time talking about AI. It's just coming into every aspect of our world. Tell us though about the study that you guys do.

[00:19:14]It is your 11th annual. What it's all about, who you talk to, and what are some of the findings?

[00:19:19]>> Well, thank you for having Carol. I want to set the table here very quickly because what I talk to healthcare CEOs uh on a weekly basis and the the same three things always are are are putting pressure on that system as you said uh they're delivering more care longer to people that are living longer and that complex complexity of that care is increasing so that's actually putting stress on the system they have staff shortages which continue to persist and got worse post pandemic and then the cost of delivering that care is actually continuing to go up so all those three things are really putting stress on the system but the opportunity that we see is AI I in healthcare is becoming quite of age where a year ago in this study roughly 20,000 people 2,000 clinicians 18,000 patients uh and and what we saw from year to year is they've gone from experimenting and piloting an AI uh applications to much more broad adoption and impact impact in time back they can spend with patients impact in quality diagnosis and impact in uh well-being and they've been very clear about that in the study. what do those AI applications in healthcare actually look like in practice?

[00:20:24]>> So, I'll I'll give you a a simple uh a simple example that everybody can relate to. So, the average physician in this study said that they're getting five more patients per week because of tools that they're deploying in their practice. So, when I go to my general practitioner, >> I get maybe 10 or 15 minutes if I'm lucky with him and most of that time it's sitting on the keyboard asking me questions, right? What we're seeing is they're getting the chance to ambient speak what they're talking that dialogue. It's translating it into the medical record. So, what they're doing is they're spending time looking you in the eye, asking you more questions.

[00:20:56]That's better for more patients they can see because they're spending quality time in the room or maybe even more patients like we're like we're seeing.

[00:21:04]>> Doctors feel or medical professionals, Jeff, feel that we are just barely scratching the surface when it comes to AI and healthcare? Yeah, I I I the a prudent approach is good because you want to make sure that you have responsible AI deployment and we're we're hugely as a tech company, we want to make sure it's responsible, but I I actually think where the scraps at the table and the feast is yet to come.

[00:21:23]>> What do you think that feast looks like?

[00:21:25]>> So, take the life of a radiologist. So, the average radiologist has to work all day, sees patients, u maybe do procedures, then they take all these studies, 200 studies home at night, and they have to go the go through these studies. That's pajama time, right? It's there. That's long days for radiologists >> which makes me always nervous as a radiologist who might be tired.

[00:21:42]>> Exactly.

[00:21:43]>> And reading my like I I >> Exactly. So you have these long days.

[00:21:47]They're stressful.

[00:21:47]>> And I know there's great doctors out there so I don't want to dis >> No, but the system is not meant for them to have balance. And so what we're seeing is AI in the in the work in the pathway the whole if you if you don't think of AI as a bunch of point solutions that do discrete things in healthcare, it has to fit to the radiologist. It has to fit into their workflow. So, I can I can scan somebody with great AI much faster. I get it into their workflow. I can determine who the most important person is to look at. I can find the slices in their scan that are the most important things to look at and even recommend, we think it looks like this. You should look right here.

[00:22:18]If you can do that at scale for 200 studies a day, you're dramatically improving quality of life. That radiologist in the study, a third of them say they take a lot less work home and they're suffering less burnout and they're just charged in their in their balance. That also adds to quality exactly like you're saying. I also feel like um the data that is input right like there's just more data sets that scans can be compared against whether it's an MRI right like do you know what I'm saying that >> we have we have way more data anybody can use but AI can use it right and I'll give you an example >> but I mean when they're comparing scans right that's something that might be overlooked again not dissing anybody professionally but when you've got just hard cold data that's what they're looking at >> in the study it'll say roughly half of the physicians that use AI as a as a buddy or as a check are actually more confident in the ability to make their own diagnosis because of the buddy check. And a quarter of them are saying that it's significant improvement in their in the result that they deliver.

[00:23:19]They're miss they're not missing medical uh issues. They're not misidentifying and they're not missing things. And that's from the physicians themselves that are saying it's actually helping them have higher quality diagnostic which if you're dealing with something like cancer potential this is a big deal.

[00:23:33]>> How do you kind of I guess help the physicians who maybe see you know an introduction of a new technology as just another thing that they have to deal with on top of their already busy day?

[00:23:46]Like do you get push back from maybe I'm trying to think of some of those old school doctors who still you know do everything by hand. They still have paper notes. they still have all their files uh you know in a in a paper form.

[00:23:57]This is a pretty advanced technology to have to implement.

[00:23:59]>> I go I go back to this triple threat the fact that there are not enough people to do the work today and they're burning out the ones that are doing it. And so we actually find in most of the larger health systems there's a huge appetite to embrace this if we're doing the design along the clinical workflow. The the challenge is we t in the industry typically have thrown technology at people and said digest it and the workflow has to change. We're not doing that at Phillips. We walk alongside our c our customers. I'm I work with most of the all the largest health systems in in the US and Canada and we're working alongside them. So when we're designing it, we're having them in mind. The beauty of AIdriven tooling is that it can actually do the work uh if in the process that they're in. We can we can adapt to do the work. That's a lot different than deploying software and complex things that you have to learn screens and all that. All that goes away. And that's that's really the promise. That's not this magic blackbox thing. That's actually happening today in some of the leading L system.

[00:24:50]>> So where do you see it all going? like what do you in terms of generative AI and how what role do you see in like I don't know in the next 3 to 5 years like do you have a feel of of how dramatic the impact is?

[00:25:02]>> Well, I I think >> or what are you hearing from the doctors that you talk to?

[00:25:06]>> I think it's it's a journey that will be rightly done with some conservativism.

[00:25:10]Again, the operational aspects of of clinical practice will have dramatic improvement. That's going to give staff back time to be with patients. And I think you're going to get a better workforce and you may even draw people into the practice because they actually have these tools that help them be >> better at what they do and they continue to have better balance.

[00:25:29]>> The sky's is the limit. Uh but we we want to make sure when it comes to generative AI that we're really thoughtful about uh not getting over our skis and allowing hallucinations because trust is the number one thing. If we build trust with clinicians and we do it in the right way, that embrace and that selfch check process actually improves the quality of the output. I met with a bunch of CEOs here in New York last night. Yeah. Uh really really top-notch institutions and they're actually telling us in six months the quality of the generative AI algorithms that they're building is is improving itself at a rate they didn't anticipate. So again I I think uh do it where there's high trust, build that trust with clinicians, design it around the workflow uh and then you'll really get better adoption. And we're seeing that we're seeing year to year we're seeing a massive improvement in adoption of tooling that is giving life back to a community that joined the practice to serve other people.

[00:26:18]>> Right?

[00:26:18]>> So it's exciting time.

[00:26:20]>> Okay. So in maybe 3 to 5 years is the artificial intelligence actually going to be making clinical decisions. I.e. you can go as a patient into a doctor's office and instead of actually seeing the doctor there's there's not a human involved. Essentially the AI is giving you the diagnosis and telling you. I >> I think it would be foolhardy to think about what could be in 3 to 5 years because the rate of innovation is so fast. What I can tell you is we believe as a technology company that decisions always land with the physicians and so we want to augment that physician with as much of the nonvalue ad work and as much of the diagnostic quality they can so that they can make the best decision clinically for their patients. And I I wouldn't I can't see how that'll change in the near future. Jeeoff, what does it mean for the devices that you guys whether it's MRIs or CAT scans or sonog like the devices the medical equipment?

[00:27:10]How does it impact you guys as a company and how you have to think about >> incorporating AI or is it kind of pretty easy?

[00:27:18]>> It's interesting. We've made the step to become more of a productivity company than a product company. I mean it's a pretty big leap in this business. We think the beauty of uh orchestrating a workflow for for healthcare concerns is where we want to be. It's not about the products anymore. And so when we think of like our patient monitoring journey, we're thinking about how do I have uh a monitoring persistent monitoring experience across every aspect of where a patient could be in a healthare system even at home. And so we're building these platforms around radiology around cardiology and cardiovascular intervention and around patient monitoring from home to hospital to home where we give hospitals that rich data and that that physiological data from patients. We think of it as the software layer or the platform that you can start to build these AI algorithms into specific. Exactly. Right.

[00:28:04]>> Think about the apps on your iPhone.

[00:28:05]Oversimplified, but think about apps on your iPhone, right? You you plug the apps in that do certain things, but the platform itself, and that's that's where we've really moved our R&D.

[00:28:14]>> Hey, listen. We'd be remiss. We've only got about a minute and a half left here, but I got to ask you about the macro.

[00:28:18]Um, you see a lot your company obviously is global. You're in charge of the North American unit. Um, how would you describe the business environment and the consumer side of things?

[00:28:28]>> Uh, actually pretty strong for both, at least for Phillips in the in the consumer segments we're in. We're seeing double digit growth across the globe, particularly strong here in North America. Uh, consumer um demand has actually gone up for us and we've got a great portfolio uh in the in the health system side. Again, we've seen double digit growth last year where uh I think we've consistently outpaced the industry uh for some time. But about the industry itself, we see strong demand because of all the things we've been talking about.

[00:28:54]We're pivoting to be less about the product and more about productivity. And I think that's going to be a game changer for health systems. That's long-term demand.

[00:29:00]>> What how are you guys using AI at your company? So we're deploying it everything from our financial systems to my commercial operations to contract management our services portfolio so that we can uh deploy agents to look at uh systems uh health systems uh products that we have in the field to be able to do automatic determination of like a root cause and a and a and a and a correction path. We're we're as committed internally to driving productivity uh and and efficiency so that we can grow with our customers um at at at pace.

[00:29:29]>> Yeah, it's kind of fast. We're all in.

[00:29:30]>> You got to practice what you preach. I know. You got to eat your own dog food.

[00:29:33]That's right.

[00:29:34]>> That's exactly. Jeff Dulo, he is CEO at Phillips North America. Thank you so much. Really appreciate it. Yeah, we appreciate it.

[00:29:41]>> Stay with us. More from Bloomberg Business Week Daily coming up after this.

[00:29:49]You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2:00 to 5:00 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App or watch us live on YouTube.

[00:30:03]And we're talking about the precious metal gold which fell below $4,000 and 300 an ounce after Israel and Iran agreed to end attacks. Cityroup also lowered its 3-month target Carol for gold to $4,000 an ounce, citing the likelihood of a rate hike. And since a high back in late January, gold is down 21%. Our next guest has a front seat to it all. John McCcluskey is president, CEO, and co-founder of Alamos Gold, joining us from the New York Stock Exchange. The stock is down about 11% year to date, but more than doubled last year and is up about 400% in the last four years. John, welcome.

[00:30:44]>> Thank you. Nice to be here.

[00:30:45]>> Thank you for joining us. So, tell us about kind of what you see driving the gold market right now and what's next.

[00:30:51]Well, quite a lot changed um after the uh war broke out against Iran and uh that has really um been the big influence on the whole dynamic of the way gold's been trading. Oil prices soared higher. Uh gold prices came off and um and frankly the the back and forth it seems that you know at one point the market is anticipating peace and then the market anticipates uh perhaps not peace. you know, is it a truce? Is the truce over? That kind of uh uncertainty has uh certainly influenced the way that people have been trading both uh both gold and oil. And so in the short term, it's um a very very difficult uh market to predict.

[00:31:37]>> Yeah, I totally hear you. Well, it is interesting. Anybody who runs a company right now has to deal with some really big macro issues. when you look at this White House, do you have um a line of communication to get a better idea of kind of what's still coming at us and and trying to get an idea of some of those macro conditions that in particular are going to impact your company?

[00:31:58]>> Well, we certainly do. We we keep a very close watch on things. Uh I think we're we're we're well informed, but the reality is that your your safest position in a market like this is to just have very very wide margins and and we do. you know, we're we're a lowcost producer at these gold prices. Uh we're we're generating phenomenal uh free cash flow from operations. Um you know, we're um our our all-in sustaining costs are around $1,600 an ounce. And gold, even after the pullback, is still trading north of $4,200 an ounce. So, you know, we have very very healthy margins and um the the company's very profitable and it's uh it's one of the fastest growing gold mining companies in the world. U all our assets are in very politically safe uh jurisdictions. The majority of our assets are in Ontario, Canada. We also have an asset in Mexico and and and one in uh in Manitoba, Canada. But these these are very safe places to operate.

[00:32:56]There's they're safe places to build build reserves and we've been aggressively building reserves over the last few years. So, you know, our business remains very very sound and um and I don't really anticipate any problems whatsoever in that front. But in terms of you know trying to predict where the gold price is going that is uh quite difficult to do in the short term.

[00:33:19]But if you take a long-term chart on gold like a 5year chart or a 10-year chart we're very clearly in a a bull market and the channel is still very very definitely in uh in the upward direction. Um, I recently attended the Bank of America Meil Lynch conference in uh in Miami and um their chief uh economic forecaster is calling for over $6,000 gold and that's not typical in the market. Generally the banks take relatively conservative positions on >> on commodities like gold, but I would say that that's more indicative of where things are going than anything else.

[00:33:57]>> So that longer term bull market in gold, what is it telling you about the macro environment? Because often times investors look to gold as a a safe haven, a place that they want to go when they don't want to buy anything else.

[00:34:12]Well, I think what it tells you is that in the short term, a lot of the things that the that we're dealing about, a lot of the things that are dominating the current news cycle, they're going to they're going to go away. Eventually, the war in Iran will end. I think it really has to end. It's the smart move for everybody. It's it's smart for the United States. It's smart for Iran. That war should end. And um and when it does, then what will happen? Then this whole dynamic that's been driving oil that that will disappear. Oil prices should should gravitate down. Gasoline prices for for Americans who will be voting in the upcoming midterms, those gasoline prices are going to probably come come back down again. Um and frankly, gold prices in that context will go back up again. And I think the focus is going to be on um much more on uh domestic policy. what's going on in terms of of the debt situation in the US. Uh what are um what are Americans going to be uh dealing with in their in their day-to-day lives? And and um I I think that ultimately is is where people are going to be focused.

[00:35:18]>> What worries you when you thought think about US debt, what's what Americans are facing in their lives and and how it might impact what what you guys are doing?

[00:35:29]Well, there's that's kind of a loaded question because on the one hand, um what what is is sort of dominating u American politics right now and what what's dominating the economic picture for the United States isn't necessarily having a direct bearing on on what we do, what what our business is, right?

[00:35:50]>> I I think that um >> you know what what Americans have to contend with is the fact that nobody is interested in in cutting the cost of government. um expenditures just seem to rise and rise and rise. Like interest now is uh the the number one cost for any government. It's exceeded like a trillion dollars uh a year. That that's never been the case before. The the deficit continues to grow and almost a trillion dollars every every 100 days. I mean, the these are crazy these are crazy numbers. And you know what would concern Americans is will anybody ever address that problem? And if not, what will be the fate of the dollar? I I I think that is of concern to Americans and I think that's one of the reasons why gold price uh is doing well, why the why the gold commodity is doing well and the gold price is going up >> because there will be more demand for gold and there's a very limited amount of gold. Demand for that will continue to rise and people will be buying gold not just as some sort of temporary offset in their investment portfolio but as a store of value for the long term.

[00:36:56]John, so do you think we're at this moment in time? I mean, we've had a lot of conversations here around this table about, you know, dollar dominance or not so much and yet folks keep reminding me um you know that the US market is so deep, the dollar, you know, dollar-based assets have so much liquidity and again the depth of the market so that you continue to see kind of international investments and and interest. But in general, the dollar, do you think in terms of dollar dominance, that era is definitely over and it's just a case it's going to be different? And I'm not saying it just falls off a cliff, but it's it's a different world going forward.

[00:37:33]>> Yeah, that that's quite the point. I the dollar dominance is by no means over. I think the do dollar is still very clearly the predominant currency in the world. It's still the world reserve currency. But to ignore the fact that um that the do dollar is being undermined by government policy is to ignore the obvious. And I think to ignore the fact that other countries in the world are losing confidence in the dollar is also to ignore the obvious. That clearly is happening. And as the one indicator of that I guess you could say is you know countries that were hold like China for example, Japan that were holding um US treasuries like in excess of uh a trillion dollars in in US treasuries.

[00:38:18]They've reduced that exposure and they've bought gold and that that goes to show you that there is a a fundamental shift. It doesn't take place overnight. It's take play takes place over time. But where do you want to be in terms of the long the long term in in that trade? I think you want to if you're thinking more long term, I think you want to reduce your risk to the fallout that might come as that that debt situation just continues to escalate and escalate and and and investors have to be thinking that way.

[00:38:52]>> Well, maybe one way to control that debt situation would be a higher rate um higher interest rates. I mean, John, how would higher interest rates impact your business?

[00:39:05]>> Well, higher interest rates are generally not good for gold because um typically what happens is, you know, there's a an opportunity cost to holding gold as gold does not pay uh a dividend.

[00:39:16]I I one of the primary reasons why I think gold equities make a lot of sense is because equities like Alamo's gold, we do pay a dividend. We we doubled our uh dividend in the first quarter.

[00:39:26]um you know you you can in other words have exposure to gold uh and uh basically make up for the opportunity costs that you would uh generally lose if you held the metal by holding by holding the gold equity but in the main you know when when people think of gold and owning the metal rather than equities you know they're thinking about that so rising interest rates usually mean uh people will shift from the commodity gold into treasuries ries and other interestbearing instruments. That that's an obvious thing. But the the question is, you know, are interest rates going to be rising in an inflationary environment. You know, what will be the the uh ultimate impact of this war the longer it continues? And I I think that very clearly there are inflationary pressures uh coming to bear and that is not going away. So will the rising interest rates be enough to counter >> the inflationary pressures and that that inflation is an undermines the value of the dollar.

[00:40:30]That's what that's what makes it all difficult to predict.

[00:40:33]>> John, we've got to run. Thank you so much though. John McCcluskey. He's president, CEO, and founder co-founder of Alamos Gold.

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