Private Lending Underwriting Post COVID-19 with Ted Koenig

Ted Koenig, CEO of Monroe Capital, joined Ryan Morfin on the Non-Beta Alpha Podcast to discuss private lending underwriting post COVID-19.
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Ryan Morfin:

Welcome to Non-Beta Alpha. I’m Ryan Morfin. Now, today’s episode, we have Ted Koenig, CEO of Monroe Capital, talking to us about private credit underwriting post-COVID. This is Non-Beta Alpha.

Ryan Morfin:

(singing)

Ryan Morfin:

Ted, welcome to the show. Thanks for joining us today.

Ted Koenig:

Thanks for having me, Ryan. It’s a pleasure.

Ryan Morfin:

We really appreciate you talking to our viewers about especially private credit. It’s been on a tear for the last decade, secular trend of capital flowing into private credit. How has the industry in Europe change from pre-COVID to post-COVID as relates to just fundraising credit and performance?

Ted Koenig:

I think you have to look back at kind of what is private credit and why is it been responsible for the single largest growth and asset class allocations over the last 10 years? Really what happened was it started in the financial crisis back in 2008. Alternative investments were a small part of overall portfolio allocation, both institutional and high net worth retail. What’s happened is that in the crisis, everything converged and was correlated. When you look at bonds, look at stocks, real estate, private equity, all asset classes converged and became correlated with losses other than one specific asset class and that was private credit.

Ted Koenig:

Private credit is loans to middle market companies, large middle market companies, small middle market companies, non-traded, illiquid loans. Those were loans to companies that held up in the financial crisis and paid good returns. And then post financial crisis as institutional investors really led the trend in growing asset class, high net-worth retail investors followed. So, you had a 10-year history of a lot of wind at the back in this asset class, and all it does is generate return. It’s a current return asset class 8 to 10% current returns. We’ve done 10% now for about 20 years with our institutional investors, our retail investors, high net worth ROIAs. There’s a place in the portfolio for it.

Ted Koenig:

So, if you look at a portfolio allocation, the old days it was 60/40, 60 bonds, 40 stocks, everybody went to sleep and went away. Today, it’s 20, 30, 40% alternatives. You can’t invest anymore in fixed income treasuries because they’re paying 40, 50 basis points from a 10-year treasury. You can’t pay your bills if you’re an institution or a family office on those returns. So, it’s gotten a lot more interest. It’s popping up in everyone’s portfolios. So, that’s where we were when we got into COVID. COVID isn’t too dissimilar from the financial crisis that’s caused a dislocation. It’s caused a dislocation on an industry-by-industry basis, company-by-company basis.

Ted Koenig:

If you look at a lot of industries, most healthcare, cloud services, retail, most retail that was consumer products, toilet paper, cleaning solutions, Lysol, you couldn’t get enough of that stuff. The market’s been really hot. On the other hand, you got a whole bunch of industries that have suffered because they’ve had business interruption, closures. So, private credit mirrors that. The private credit firms are generally in 50% or less loan-to-value. So, it’s a lot different than a private equity investment when you’re buying into companies that have 10, 12, 14 times price earnings multiple. We’re coming into those deals, but we’re coming in at 40%, 50%, 60% loan-to-value. So, we’re the safer attachment point. That’s really the key is safety, capital preservation, and return.

Ryan Morfin:

Have a lot of the executives in the credit space… For the troubled industries, is their amendments to covenants coming, or how are they going to work through some of this unprecedented demand destruction in industries that at no fault of the management team, just were dealt a deck of cards that nobody was really underwriting for?

Ted Koenig:

Yeah, that’s a good question. There’s really two different situations when it comes to that. One is good company, bad luck, bad economics, bad market. Then those situations, what happens is the lender sit down with the company, company management, private equity sponsors, try to work through the problem. It generally is a short-term problem. It’s a working capital issue. It’s a liquidity issue. Usually, there’s covenant violations. We’ve done that in a bunch of our companies.

Ted Koenig:

We have 508 companies in our portfolio. Those types of situations, we work with the sponsors, work with management, figure out a way to waive covenants, reset covenants, maybe delay an interest payment, delay a principal payment from Q1 to Q2, Q2 to Q3 and figure out a way to work proactively with the company. That’s bucket one.

Ted Koenig:

Bucket two companies are companies that are just endemically in a bad place either industry situation, capital stack. We’ve got some companies that were purchased at 12 times, price earnings multiple, refinanced at five, six times. Today, it looks like a 25 times price earnings multiple and 20 times leverage ratio. Those companies, whether they’re airlines, whether they’re hotel leisure, dental practice management roll ups, podiatry roll ups, elective surgery, elective medical procedures, these are endemically troubled businesses today because people, consumers are going. They’re not buying. Those companies have a different issue.

Ted Koenig:

They have capital stack issues, they have capital structure issues. In those situations, we’re sitting down with the ownership and we’re trying to rightsize the capital structure. Very often there’s some hard conversations with private equity sponsors about stepping up and cleaning up the capital stack, putting more money and to rightsize the company. There, I think you’re going to see over the next few quarters, some valuation challenges. A lot of these private equity firms had a pretty good run the last three or four years. Deals were getting done, multiples kept increasing, private equity firms were selling to other private equity firms. It’s a much different situation now in a lot of these industries.

Ryan Morfin:

I’ve heard from other folks in the private credit side that as an industry, and I know it’s not allocated across different firms equally, but up to one third of their portfolios have some type of impact to earnings from COVID. Would you agree with that, or how do you size kind of the trouble of the global portfolio from kind of your conversations with peers in the industry?

Ted Koenig:

Yeah, I talk a lot to other CEOs that run companies in our space. I will tell you that the newer players, the last two or three or four year guys, that got into the space to tended to move into areas that were the hot areas and these tended to be a lot of these practice management, elective surgeries. They tended to be a lot of these health clubs. I mean Orangetheory and Pure Barre, Bar Method. Gold’s Gyms, a lot of these fitness businesses were the rage over the last couple of years. That’s where a lot of the money went, from PE dollars. A lot of restaurant deals actually got done the last few years. All of these industries have gotten hit pretty hard by COVID.

Ted Koenig:

So, I would expect a lot of the firms that have heavy concentration in these industries to be playing defense now, mostly for the next six months, even into 2021. The firms that are tending to play more often, so the firms that have been in this business for a while and have seen the cycles that have steered clear from a lot of the concentrations and anomalies in this business. I mean our business again, you have to remember, private credit is a business. That’s capital preservation.

Ted Koenig:

Our goal is not to hit home runs. Our goal is to hit singles and collect income every quarter. Firms that have taken that approach will hit singles, will collect their income, will go on. They have a well-diversified portfolio, well diversified by industry, well diversified by sponsor, well diversified by geographic region. Those are the types of firms I think that you’ll see play offense the rest of this year. A lot of our peers are going to be playing defense.

Ryan Morfin:

Because of that, the newer vintage managers, you think they’re going to have a harder time raising later vintage funds. I mean, there’ll be consolidation in the space again.

Ted Koenig:

Yeah, it always happens. I mean, we’ve been doing this for quite a while. I look back at the.com crash in the early 2000s. I look back at the financial crisis in 2008. The same thing happens. For the two, three years following the financial disruption, we have the greatest single investment opportunity, vintage for performance. The challenge is those same two to three years are the hardest possible times to raise money, because institutions tend to be out over their skis, or their allocations tend to be upside down. The same thing happens with the retail investors, it’s a lot more emotional decision. People tend to clam up.

Ted Koenig:

What we’re seeing across the board is the institutions that have been partners with us for a long time are actually technically getting more involved in the space and going deeper. A lot of the registered investment advisors that have come onto the platform over the years are seeing that and following suits and increasing allocations right now, because I think 2020 and 2021 will be really good vintages from private credit. The reason why is because a lot of players are sidelined right now. Leverage is down on new deals, pricing is up. So, from a risk return standpoint, I’m getting a much better risk return today that I was six months ago when we were in a highly competitive and overheated environment.

Ryan Morfin:

You mentioned this prior and like you said, the institutions that know you guys and trust you guys long term are doubling down tactically, but you mentioned that institutions are allocating more into alt and alt income, how are they looking at that? Because I think there’s still a disparity between what I’ll call retail capital markets and institutional capital markets. The institutional folks, they know 60/40 model’s dead. How do you view the right kind of alt allocation from your conversations with institutional money managers?

Ted Koenig:

I’ll tell you, everyone does it a little different, but I’ll tell you some common themes. The common themes are traditional fixed income is pretty much dead today. Universities, hospitals, healthcare institutions, pension funds, they can’t hit their 7, 8% annual reinvestment expense burden by investing in traditional fixed income. That’s out the window. High yield bonds, that used to be the other piece of it. Public high yield bonds, the pricing there has come down, but worse yet is covenants have gone away. Documentation has been really destroyed to the borrower favor, and leverage multiples are very high. So, both of those dynamics have pushed traditional fixed income investors into these alternatives. So, we’re seeing more real estate. We’re seeing more private equity, infrastructure.

Ted Koenig:

Private credit is probably leading the pack in terms of allocation. To give you just some idea, historically, we saw public pension funds with 2, 3% allocations to private credit. Then it went to 5, 6% then 10%. We’re seeing between 15 and 20% allocations now in public pension funds and private credit. That means that there’s probably 30 to 40% alternatives, because private credit’s picking up almost half of the alternative allocations in these public plans, and it’s still secret. It’s been a good place to invest over the years, but it generates returns. Somehow, these plans have to hit their 70% bogeys. There’s very few places in the market today where you can do that on a consistent basis without taking big capital preservation risk.

Ryan Morfin:

That increase in allocation, how do you balance you that view that it’s because companies are staying private longer, so they want private credit solution; or is it that the institutional investors want to go lower into the real economy and to that small and medium sized enterprise capital stack?

Ted Koenig:

It’s a combination, Ryan. I think of two things. One is safety. If you look at your loss given default, private credit’s probably the best place because you’re at the very top of the capital stack, you’re senior secured first lien loans. That’s better than mezzanine, that’s better than junior secure, that’s better than equity. It’s better than any other place on the stack. So, if you start with a safety capital preservation view, you default into private credit. Number two, they need consistent returns. They’re building portfolio models for 10 years, 20 years, 30 years.

Ted Koenig:

Think about insurance companies, they’re writing insurance today on 30-year-old people with the intention that that policy is going to come due 35, 40 years. They need certainty as much as they can in terms of planning for that. They don’t want to be subject to macro market swings. They don’t want to have market manipulation. They don’t want to see OPEC do something in oil, China do something with respect to trade. It’s the one place that you can hide out. Middle market, smaller middle market private credit, it’s US denominated dollars, it’s US system. It’s US customers. It’s US supply chain. There’s no foreign currency or hedging risk.

Ted Koenig:

So, if you think about it, it’s almost a perfect bubble for investing in a capital preservation current yield if you want to try and fix as many variables as you can. As we’ve watched, the large Fortune 1000 companies, they’re subject to all kinds of import-export issues, supply chain issues, currency issues, inflation, deflation in certain markets. It’s just more complicated. That’s not to say you don’t invest there, but what’s happening is the institutional market and I’m watching the retail, the high net worth and the ROIAs. ROIAS tend to follow institutions.

Ted Koenig:

If you look at over the years over the last 20 years, registered investment advisors and high net worth investors, family offices follow institutions, and that’s what’s happening in the market today. The largest single increase on a percentage basis for us right now, new capital dollars coming in, is coming in from the high net worth, retail investor, accredited, non-accredited in the market. So that’s where I see the big growth rate for the asset class.

Ryan Morfin:

A lot of your funds I know are private and you also have a public BDC. There’s been a lot of volatility, just to the beta correlation, I guess, of maybe, the overall market and then the BDCs. I mean, what are your thoughts on some of the volatility we’ve seen in the public space as a sector not to name any names, but what are your thoughts that are driving kind of the volatility in that space?

Ted Koenig:

Interest rates is one. I think, COVID is another. Anytime in the public markets, again, you’re going to see movements, what you should be focusing on those is dividend yields. You’re still seeing double digit dividend yields in the space, in the BDC space. That’s the one place that there really hasn’t been any real dividend compression. You do see some volatility and some pricing, but that tends to be more market driven. I tell people, once you decide to be a current yield investor, focus on what’s important, which is the current yield. Don’t get bollixed up by what happens month to month in terms of the stock prices and some of this, because stock prices move for reasons that a lot of smart people don’t understand.

Ted Koenig:

If you’d have told me that all the car rental agencies and the airlines wouldn’t be flying, restaurants are closing, autos aren’t selling, nobody’s going to hotels and the stock market is up, past where we started on all this, I’ll tell you, “You’re crazy. There’s not a chance in hell.” But the government keeps pumping money into investment grade bonds and equities and that’s what happens. You can’t beat the Fed at this game. At some point, the air is going to let out of the system and a lot of people are going to be disappointed. So, I tend to look at value, look at price earnings, look at yield.

Ted Koenig:

The nice thing about the BDCs and other yield stocks is you’re getting yield. A lot of people today are able to pick up good prices, because there’s been some trading off in this market. That’s because the government stopped supporting non-investment grade or the segment. If you go and want to buy a bunch of AT&T bonds, you’re going to see that that hasn’t moved because the government bought most of them two weeks ago. So, it’s really a question of where the opportunities are for investors. I tell a lot of people stick to your knitting. Make sure you’ve got a good diversified portfolio, but make sure you got some good current income, because that’s going to get you through the rough patches.

Ryan Morfin:

Yeah, I think the Fed put is somewhat real, but I guess the question is if they’re going to continue to inject steroids into the economy, strategically, what’s going to happen to credit spreads? Do you think as they start to peel off the high yield market, they’re going to gap out or do you think there’s enough capital out there looking for that income, like you said, to sustain and absorb the new issuance?

Ted Koenig:

Well, again, public stuff, high yield, investment grade is a little different than the private. The public stuff, I think you’re going to see the government continue to support at least through the election, because the goal there is always been to prop the markets up as much as possible. We’ll see what happens after the election in November. But in the non-investment grade space, in the private credit space, I think you’re seeing some really good value because it’s a supply and demand issue. Fundraising is harder.

Ted Koenig:

A lot of the new players are going to hiccup, I think. You’re not going to see as much as many new entrants. So, we’re seeing already 100 to 200 basis points of spread differential just in the last 60 days in our business, and I like that. If we like something at all 550, 600 three, four months ago. I like it more at all 700, 750 today.

Ryan Morfin:

What are your thoughts on the economy today? I mean, where are we and where do you think interest rates go from here?

Ted Koenig:

Well, two questions, where are we? It depends where you’re sitting and what window you’re looking out of. If you’re looking into an Orangetheory or into a Hilton Hotel or a Delta Airlines or American Airlines, it doesn’t look so good. If you’re looking at Amazon or you’re looking at the guys that make Lysol or Clorox, the world looks pretty good today. So, it’s really a question I think of where you’re sitting. I think you have to take that into consideration because this crisis, this pandemic, this economic disturbance is different than the last one.

Ted Koenig:

The last one was a Wall Street-led problem that affected mostly Wall Street. This is a Main Street’s problem that’s affecting the consumer. The consumer is not going to come back as quickly as Wall Street did last time, and the banks did last time. The consumer I believe is going to take a lot longer. They’re going to be much more careful. They’re going to think twice about where they’re putting discretionary dollars. We’ve already seen discretionary purchases, higher end retail, vacations, things like that, pretty much evaporate. It’s going to be a while I think, well into 2021 until you start to see the consumer coming back. So, anything that’s consumer focused, from an economy standpoint, is going to be more challenged.

Ted Koenig:

On a business side, software companies, cloud management companies, logistics supply chain companies are all doing well and going to do better, because companies are going to be managing more efficiently. So, that’s from an economy standpoint. Interest rates, I think we’re stuck.

Ted Koenig:

I hate to say this, but I think the United States is finally coming around to the rest of the world. We do a lot of business with institutional investors in Asia, in Europe, in the Middle East. The investors in Asia and Europe had been conditioned to pretty much zero interest rates now for the last two, three years. I mean, in Germany, they’re selling hundred-year bonds for practically zero, zero return. There’s negative interest rates throughout most of Asia. I never thought I would say that there’s a possibility that we’d see negative interest rates in the US. But I think for the foreseeable future, we’re going to see very, very low interest rates.

Ted Koenig:

So, what that’s going to do, it’s going to spur two things. One, it’s going to spur yield search. So, whether it’s pension funds, insurance companies, high net worth individuals, family offices, they’re going to search for yield. That’s going to be a much more important element of the portfolio allocations. Number two, I think you’re going to see more aggressive risk taking. That’s not a great thing, but I think risk taking drives stock market valuations. It certainly drives certain sectors of investments, not in a good way either. I think that keeping rates down pushes money into risk taking assets. I don’t think that’s good long term for us.

Ryan Morfin:

Yeah, it’s interesting. November’s going to determine a lot. I mean, I think it’s going to determine if globalization is dead or not, and if the supply chain comes back to the States. If it does come back, the banking sector and the Fed are going to have to finance what could be trillions of dollars of infrastructure that have to be rerouted new capital flows, if a trade war turns into a financial war. It’s going to be interesting to see. I think you hit on an earlier just to what extent can QE Infinity go on without having solvency risk. I mean, what is your thoughts? I mean, debt to GDP is exorbitant in Japan. Are we headed there as a country do you think?

Ted Koenig:

I think we almost have to. I’m not a big believer of this again. I don’t think that you managed whether you’re a family, whether you’re a business or an organization, you kind of live within your means. But what we’ve done as a country is we’ve just been throwing money at problems. We just continue to print money here. The first series of it was this PPP money that companies took, and it didn’t solve a problem. What it did is it created kind of a kind of a short-term welfare issue for businesses. Maybe it was some balance sheet repair for companies, which serve the short-term need, but it didn’t solve the long-term problem. Then, we’re coming out now quietly with capital in certain industries to support companies.

Ted Koenig:

My long-term question is are we making companies more efficient? Are we making business more efficient, or are we rewarding inefficiency? Are companies going to be less competitive later because they’ve been asleep at the switch? So, I think that long term, we’re going to move much more towards the rest of the world with higher debt to GDP, which is it’s not great from a savings economy standpoint. It’s going to open up our most vulnerable and our safety net population to much more higher risk than otherwise would be. That’s where you start to have more social issues, and then we’ve just seen pieces of it.

Ted Koenig:

I mean, I’m in Chicago. A lot of people in New York, L.A., Boston, Dallas, some of the bigger cities, you’re starting to see the effects of what happens when you continue to pump money into kind of investment grade businesses and higher debt to GDP without solving the social issues. Whoever is in the next administration, I think that’s going to be a challenge how to do that, and still maintain incentives for investments for businesses. That’s the biggest I think challenge we have that the smart guys can figure out. In my world, I just get paid to generate return. I just have to focus on generating return for institutional clients or high net worth clients, so they can do what they need to do.

Ryan Morfin:

Yeah, Wall Street’s been bailed out a few times. I think Main Street’s trying to scratch their head and saying, “Wait, well, if we’re the ones getting crippled, most of unemployment is at the called the entry-level service industries. What about us?” So, I think it’s going to be interesting to see how that plays out in November. Switching gears a little bit to just more of kind of personal leadership standpoint. How have you guys changed your business or how have you changed? You lead a pretty big organization. What have you guys done differently to keep organizations up or keep communication up across your organization?

Ted Koenig:

It’s kind of a funny story. So, about a year ago, I had the leaders of a variety of groups in my organization operations, treasury, compliance, underwriting, they came in. They told me that, “We’re in a new world. What we had to do was we had to readjust our thinking as employers and allow people to work remote.” We had to go to a flexible work schedule where everybody had the opportunity to take one day a week or so and work remote. To show you how with it I was, I said, “No.” I said, I don’t think that’s going to work. I don’t think it’s feasible, and it’s not the right thing to do for the company.”

Ted Koenig:

So, to show you how much I know, since the first week of March now, three to three and a half months, almost four months, I got 100% of my organization working remote. We’re funding a couple hundred million dollars probably a week. As I said, we’ve got 508 companies in our portfolio that we’re managing. We’re fundraising. We’re probably going to raise $3 to $4 billion here across the world over the next six months. So, everything has been proceeding. We had a business continuity plan that was our backup plan. That if something happened and we couldn’t be in the office, everybody worked in remote. Every group had teams, supervisors kind of met, lead with the teams. The teams met every day.

Ted Koenig:

Much to my chagrin, I will tell you that seems to be working okay. Everybody’s in remote locations, working at home. I’ve come to the office a few times a week just because I like to be in the office. If people need me, they know where I am. But other than that, I’m working remote as well. Most of the people we do business with are working remote. Whether it’s the biggest pension funds in Korea or Abu Dhabi, Dubai, Frankfurt, Munich, Helsinki, or the US, everyone’s gotten used to it.

Ted Koenig:

Now my concern’s the opposite, I’m going to have trouble getting people back to the office is what I’m concerned about and when can we do it. We’re on a voluntary work from home. I will tell you that about 1% of our people have made the voluntary decision to come into the office. So, we have to kind of figure out the next phase of this, which I’m hoping, we can get to here hopefully by September, and we can kind of figure it out. But I’ll tell you, I don’t think New York, Wall Street’s going to be back before the end of the year with that. I’m already talking to lots of the big distribution companies and technology companies and everyone’s talking about 2021. We’re only in July for God’s sake of 2020.

Ted Koenig:

So, people are talking about six months. Again, Amazon and Google and Facebook, they’ve told their employees, “Don’t even think about coming back until 2021.” So, I think that from a productivity standpoint, from a personal standpoint, I’m looking the eye kind of person, I do business, I want to see people. I want to look them in the eyes, and it’s really hard to do that using a lot of the remote technology even as good as these video conference calls are, webcams. We put out $3 to $4 billion a year. I like to have my people visit companies, meet people, kick tires, and it’s hard to do that in this environment.

Ryan Morfin:

Yeah. Now, there’s definitely going to be a diminishing return to culture as well on the workplace. I mean, it’s hard to train new younger staff remotely, harder to hire people. Sam Zell, another great Chicagoan said, “It’s impossible to motivate through a modem,” or at least he hasn’t seen it yet. We’ll have a whole new set of management issues coming up in the next six months, I’ve got a feeling of people saying “No, this is working out for me.” Are there any bright spots in the economy, the US economy that leave you with silver linings?

Ted Koenig:

Yeah, I think I think our distribution, our supply chain is getting better and we needed to. I mean, I think that over the years, we were lax in that area from an industry standpoint. A number of industries has gotten reliant on imports, and we didn’t do what we needed to do here from an infrastructure standpoint. So, if you look at the one area that’s become much more efficient and in-demand is industrial distribution. You look at any big city, whether it’s Chicago, Dallas, L.A., the hottest real estate has been industrial real estate. It’s because of distribution. So, that’s getting better, rails are getting better, over the road is getting better. More and more technology is going into that. So, I think those are areas, they’re getting better.

Ted Koenig:

The challenge is those don’t generate big jobs. That’s an efficiency business. That’s not a job business. The big job creators, those are companies that have had challenges, I think, in COVID. The retail markets, the restaurant markets, the leisure market, those are areas that hire and retain and pay your wages. It’s almost underground economies. You don’t see that all time. You asked me what’s the one biggest concern I’ve got, the bright spot is we’ve gotten much more efficient on distribution logistics. The downside is, is I think it’s come at the expense of job creation. We’ve got to fix that somehow, but we’ve got to find an alternative because all those jobs are consumers and all those consumers spend money. Our economy can’t function without those consumers spending money.

Ryan Morfin:

Yeah, 70% of our GDP is consumption. So, we’re counting on them to come back to the economy, but until there’s a game plan, which doesn’t seem to be is on our way now, it’s going to be a bumpy road to recovery.

Ted Koenig:

That’s been my biggest gripe, is that we’ve pumped money into industries and the stock market, bond markets, but there really hasn’t been a lot of thought, I think, in my opinion again, about the job side of this. That’s something that for whatever reason, the people in the know, either they don’t have the experience, or they haven’t been involved in Middle America or mainstream America or they don’t really understand it. But until they get that right, we’re not going to fix this thing.

Ryan Morfin:

Yeah, the way we look at the CARES Act was it bought people a few months to get their head wrapped around what it means to close down the economy for an entire quarter. But now that we’ve got our heads wrapped around that, now it’s time to get back to work, creating jobs. I think we’ve got a steeper climb than we expect, but I think we’ll get there. So, what are you doing to read right now or educate yourself on what’s going on in the world? Any books that you picked up or plan to pick up over the summer that you’d want to recommend?

Ted Koenig:

Yeah. I tend to not read as much books, I tend to read publications, local publications. I read the European publications, newspapers, cities, Munich, Frankfurt. I like to read what’s going on in Asia. We’re doing more and more in Australia now. Australia’s like Canada, it’s socialized. Basically, it’s socialized worker pension. We manage a fair amount of money. So, what I’m trying to do is understand what is happening in different parts of the world, so that we can dissect that and maybe put best practices to work here. So, I try to do that. Phil Knight wrote a good book, if people want to read what it was like to be an entrepreneur. The Shoe Dog is a pretty good book. I read that only because I told my kids that it’d be a good read form. So, I want to get out ahead of that.

Ted Koenig:

But at the end of the day, I’m really focused on what others are doing that we can adopt, because everyone’s got the same challenges. The Asia has been a much longer-term economic slowdown than we have. I think we’re going to a lot more like Europe going forward than we do like Asia. It’s a very low growth, slow growth, low interest rate environment. It’s caused some challenges. If you look at what’s happening in particularly in Southern Europe with risk taking, there’s a lot of bad loans in that system right now, because people were speculating. I don’t want to see that happen here. But as long as interest rates stay low, we’re almost forcing people to make speculative investment.

Ryan Morfin:

Well, Ted, thanks for joining us and stay safe. We’d love to have you back in a few months’ time to see how the credit markets are playing out. We appreciate you joining us today.

Ted Koenig:

Sure thing. Thanks, Ryan. Best of luck to you guys and everything you guys are doing.

Ryan Morfin:

Thanks so much. Thanks for watching Non-Beta Alpha. Before we go, please remember to like and subscribe on Apple Podcasts and our YouTube channel. This is Non-Beta Alpha and now you know.

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Ryan Morfin: Welcome to Non-Beta Alpha. I'm Ryan Morfin. On today's episode, we have Pini Althaus, CEO of USA Rare Earth, talking to us about the supply chain glut in rare earth minerals. This is Non-Beta Alpha.

Ryan MorfinPini, Welcome to the show. Thank you for coming on today.

Pini AlthausThank you for having me, Ryan. Good to be here.

Ryan Morfin: So you're an investor and a miner in rare earth minerals. Can you share with our listener base, what are rare earth minerals? Why are they important and why is there a geopolitical race going on globally?

Pini AlthausYeah, I mean, rare earths are an extremely ubiquitous part of all advanced manufacturing or technology manufacturing today's day and age. Several years ago, I had not heard too much about rare earths myself. I was not that familiar with it and being involved in this sector, in this company, for the past few years has given me an education of course. And I mean, I was sad to hear that 50% of all imports into the United States contain are earth elements and it runs the gamut from consumer electronic devices that we use every day. Our cell phones, our laptops, most communication devices, medical equipment. So there's a tie with COVID, which we can touch on at your discretion. Electric vehicles, defense equipment. So pretty much anything or everything high tech today has a rare earth element or critical minerals contained within them.

Ryan MorfinAnd what are some of the names of some of the more important rare earth? I know there's lithium for batteries, but what else is considered in this category, critical?

Pini Althaus: Yeah, so lithium is a separate category to battery material. The rare earths are 17 rare earths. The four, let's call it, key rare earths that we're focused on at our company, the four rare earths that go into the permanent magnets. And these are the magnets that are found, there are a number of them in your back of your cell phone or an iPad. But if you look at an F35 striker jet, you've got about a ton of rare earth magnets in those. And we've got two heavy rare earths and two light rare earths is part of the permanent magnets. You've got dysprosium, ytterbium are the heavies, and then you've got neodymium, praseodymium as the two light rare earths. So those would be key rare earths that are the focus.

Ryan MorfinAnd you use these in, I guess, in military applications as well, but historically, where has the United States sourced the rare earth for supply chain?

Pini AlthausYeah. And that's the shocking part. We've been securing those materials from China. So China controls the rare earth sector and has done so for the past 30 years or so. And it was a significant misstep on the part of the United States, allowing China to have this control. And actually this wasn't a question of China coming in and doing anything nefarious as far as stealing IP or anything. The US government made a conscious decision about 30 years ago to allow China to come to the United States and acquire the processing capabilities for rare earths. So just as part of some background, you've got the rare earth materials containing various mining projects, but once you extract them, you have to then process them and they go through certain phases before they get to the magnet phase. And China, the thought process was let China do the mining, let China do the processing.

Pini AlthausWe don't need to do that here. And we'll buy the materials from China cheaply and the premier of China at the time, Deng Xiaoping made the comment, he said, "The Middle East has oil. China has rare earths." And unfortunately we weren't smart enough to understand what he was saying. And the Chinese understood that the future of manufacturing is going to revolve around control of the rare earth and critical mineral supply chain. So if you think about it today, Ryan, we cannot build... Forget about consumer electronics and medical equipment. We cannot build the equipment that the US Pentagon or the US armed forces require, whether it's F35 fighter jet, Tomahawk cruise missile, communications equipment, without going to China and obtaining those materials. And it's obvious to all that this should be extremely alarming. We've seen China use this as a weapon, if you will, as far as how it interacts with other countries back in 2010, when there was a dispute between China and Japan on the East China Sea.

Pini AlthausSo China cut off rare earth exports from Japan for 40 days. Japan obviously being a significant user of rare earth elements for their high-tech manufacturing sector, that was stopped after 40 days. But in fact, it was President Obama that first made the United States aware of this, formed a division within the Department of Defense to handle this issue, but not much has happened. And we continue to be relying on China for these materials. And what has been made about trade war with China and whether the trade war is really the impetus for China withholding rare earth exports. And that is a huge misnomer. Whilst China had been talking or implying that they would cut off rare earth exports, the truth of the matter is that China, under it's made in China, 2025 mandate, its belt and road initiatives and others. And you seem to control the critical minerals and rare earth supply chain so that it can continue its dominance as a manufacturer or a global supplier of these materials and finished products.

Pini Althaus: It's the backbone of its economy. And in fact, China has become a net importer of rare earths from different countries like Miramar and others. So with that, they are decreasing the exports to countries like the United States, Japan and others.

Ryan Morfin: And was it ever a risk that the Chinese were going to turn off the exports of rare earth to the US during the trade war? How close were we to that? And was that ever some saber rattling that went down during trade negotiations?

Pini AlthausYeah, I think it was saber rattling. I think it would be paramount to an act of war. I can't say with any authority that that would not happen, but it would be probably, aside from war itself, it would be one of the most significant acts of war cutting the United States off from the ability to procure rare earths. But that being said, I mean, if you look at, as an analogy, the oil and gas sector and the reliance of the United States had for many, many years on OPEC countries to supply us with the oil. And we had embargoes and we had price manipulation by OPEC. This is far more significant given the ubiquity of where these rare earths go. And yes, we're always under the threat that China can cut off exports under the guise of a trade war or for any other nefarious reasons.

Pini AlthausBut I think even more importantly, to just as the natural run of the course of things with regards to their business and their desire to maintain themselves as the global leader in manufacturing and exporting of goods, China is in a position now where it actually requires these materials for their own domestic consumption and can legitimately cut off rare earth exports by stating that they need it for manufacturing and that would actually be somewhat correct. So we're in an extremely dangerous position here with this reliance on China. And it wouldn't just be China. If it was another country, it would be similar issues, not to the same extent, but reliance on one country for these materials is dangerous.

Ryan Morfin: And it's been mentioned in the past that in 2010, China flooded the market to really kill all the competitors in the rare earth mining industry. Where was the World Trade Organization during this period? And how did that play out and how does that set the chess board for China to run the tables?

Pini Althaus:

Yeah. So the WTO stepped in when China cut off rare earth exports from Japan, I think it lasted for about 40 days because the US and Japan protested the WTO, and they stepped in and China resumed exports. While I'm not an expert on these trade matters, one thing that I am aware of is that one of the reasons why China had to resume the export of rare earths was it did not legitimately need all the rare earths for domestic consumption. So therefore it was a nefarious act, if you will, to cut off rare earth exports. Now that has changed, which means China have to cut off rare earth exports today, they have a legitimate case to say that they require these materials. There's a shortage of these materials and they require them for their own domestic purposes. It is the backbone of their economy and there's very little we could do about this today, which is why it's becoming an even more urgent issue.

Ryan Morfin:

And the US government started stockpiling some of these after that incident. Can you talk a little bit about what DOD and DOE has done to start making sure that there's not a critical supply shortage going forward, and is it enough?

Pini Althaus:

Yeah, again, there is a national defense stock pile, and there are materials still that the United States needs to procure in order to shore up its stockpile. There are magnets, the finished magnet products as well, the United States government needs to stockpile. Again, there's a limited amount that the United States government has. It requires approval from Congress, whether it's in the NDAA or other approvals from Congress, to allocate monies for the national defense stock pile of these materials. That being said, there's no endless supply of these materials. And unfortunately, the apparatus, the way it's set up right now with the US government, it's going to continue to require having a secure supply chain of those materials for many, many years to come. So it's not a question of stockpiling for 10 or 20 years, and then this complacency and saying, we'll kick the can down the road. But keep in mind as well, Ryan, that US government accounts for low single digits of overall rare earth imports into the United States.

Pini Althaus:

We're talking about defense contractors, we're talking about the manufacturing sector. The direct impact this has on the economy, jobs, the automotive sector, and others is significant. So it's not just limited to the United States government. If you look at over the past couple of weeks, the sanctions that China have put on Raytheon, Boeing, Lockheed, et cetera. I mean, the question is where are they going to get those materials? And if we go beyond that, you need rare earths for the 5G network. Now that Huawei has been banned from installing the network, not only in the US but other countries, we have to have the ability to get a secure supply of these materials as well. Which currently, again, trying to control the hundred percent. So it runs across the board, both for government, defense and manufacturing in this country.

Ryan Morfin:

Well, and so help me paint a picture for our audience. Does China have all the mines for rare earth, or they're the only ones who started mining it? Or are their mines globally dispersed and nobody's been doing the actual infrastructure to do the mining?

Pini Althaus:

Yeah. So finding rare earth projects or rare earth elements is not the difficult part. It's finding them in significant quantities that makes a project economically viable. And part of that consideration are the environmental rigors that companies in the West have to adhere to. And China, even by their own admission, have had a complete disregard for mining these materials and even for processing these materials. And in fact, just the last week or so, the BBC did an expose on this, 60 Minutes has done an expose on this. But the Chinese have not denied this and have talked about cleaning up their act, but it has an effect on the bottom line for what the costs of mining and processing are if you have no environmental standards to adhere to. So China have exploited those rare earth projects they have, primarily in inner Mongolia, and have brought a number of projects online and quite quickly, and in a significant way, with a complete disregard for the environment.

Pini Althaus:

So it was seen as an environmental no-no in the West for many years. Now, what's happened over the past few years is you're starting to see rare earth projects in different parts of the world sprout up. You've got the Mountain World project in Australia owned by Linus, which is a producer of Nd and Pr, neodymium and praseodymium. So two of the light rare earths. They may have some heavy rare earths coming online at some point in time. And you've got Arafura, which is another company in Australia that we're working with to assist them with their processing so they don't have to send the materials to China for processing. But really these are a drop in the bucket for what the requirements are for the United States. And certainly what the requirements are for allied countries, the EU, et cetera. So there is a race, if you will, worldwide to start bringing projects online. The Chinese are very active in trying to secure assets outside of China.

Pini Althaus:

So in Africa. They have ownership of a project in Greenland. So there is somewhat of a race. The Australian government has stepped in and has started limiting the ability for China to own, or have ownership in, or off takes for the Australian rare earth projects. And that's part of the strategic Alliance between Australia and the US. Canada, similar thing as well. There are a number of projects that are looking to come alive, but these projects are, for the most part, will take many, many years to come online. We have to expedite the process. We have to assist with a [inaudible 00:14:41] supply chain and the domestic rare earth sector, because previously investors have been scared off by things like China flooding the market, which is not a possibility at this point in time, given that China can't actually afford to flood the market. They are already very heavily subsidizing their mine to magnet supply chain there.

Pini Althaus:

This is more now a case of being able to get production from non-Chinese sources so that the United States and allies have a viable, secure supply chain of these materials. And it's a concern worldwide. We speak to governments all over the world, and we're all facing the same issue. Some more than others, especially countries like Japan, that don't have their own rare earth projects there and are reliant on Australia where they've made some investments there. And in the United States, they've made an investment recently in Africa. So there is this race, if you will. And I think we've got a five-year window here to at least stand up a few projects worldwide. Otherwise we've lost this race and we will be dependent on China for many, many years to come. And Ryan, it's a bit of a hypocrisy. If you look at it where you've got materials going through clean, green energy applications, like electric vehicles, wind turbines, et cetera.

Pini Althaus:

That we're sourcing these materials from China, where they've, again by their own admission, has been complete environmental devastation to water bodies around these mines and processing facilities, to the communities. People have been getting sick around these projects yet we're putting these materials into our electric vehicles or wind turbines. It makes no sense at all. And people are starting to wake up to this. And that's why the sector is starting to see a lot of support come out of Congress and bi-partisan support. And in fact, it's one of the only bi-partisan issues right now in Washington. And it's good to see that some things decided to move in the right direction.

Ryan Morfin:

And is there a special process? You talk about the expense, is it really difficult to mine these? You have to go through a special chemical process to extract and clean and purify. Is it a lot harder than, say, gold or silver or some of the other, we'll call, more traditional elements?

Pini Althaus:

Yeah. It's all about the processing to some extent. So if you look at MP Materials in California, which used to be Molycorp before they went through their bankruptcy. They are a miner of Cerium and Lanthanum, which are two of the light rare earths, the lower valued light rare earths. Given that they do not currently have processing technology, they are sending those materials to China for processing where China is tariffing those heavily. Linus is also, they're doing their processing work in Malaysia and elsewhere. So it's really about the processing at this stage. One of the things that we've done, after we put out our PDA last year with our upgraded resource, which now includes a significant amount of lithium. We make a decision that, based on the test work that we had done around our processing methodology, that we were not going to send our materials to China. That it's paramount for us to do this work in the United States and in a collaborative effort as well.

Pini Althaus:

We've been asked by some of our investors, "Well, why would you be looking to help other projects with their processing?" And the answer is simple. There's no one project or one company that's going to put China out of business or make a dent, or somehow be able to take care of the overall demand worldwide for rare earths and critical minerals. And it's very important for us to have processing capability in the West. So that was the impetus for us opening up our own rare earth and critical minerals processing facility earlier this year, which we did in Wheatridge, Colorado. And in fact, we've made some significant progress on the method that we're using for this. And we're starting to collaborate with Australian companies, Canadian companies. We're currently talking to a group over in Europe as well, because this has to be a collaborative effort.

Ryan Morfin:

How does Europe solve for these problems? Do they have this better under control than the US?

Pini Althaus:

No, they're in a far worse position than we are. The EU commission recently put out a report, I think, a couple of months ago that the requirement for rare earths is going to increase tenfold within a short period of time. Lithium 18 times. They don't really have rare earth projects. Again, there are the Greenland projects, which people have heard in the news recently. Those need to further development work so they don't have rare earth projects ready to come online there. There are a couple of lithium projects that are spread around Europe, but for the most part, Europe is in an even more precarious position. If you look at Germany with the auto manufacturers, you look at the big companies like ThyssenKrupp and others, all these countries and companies are looking for alternatives to China, because we've already seen in the news about China withholding or reducing exports of some of these rare earths that are required for these industries.

Ryan Morfin:

And you mentioned earlier the regulatory posture of the US makes it difficult to mine. Is it becoming a more bi-partisan issue that we need to maybe relax some regulation around the mining exercise, to incentivize private sector to come in and start producing this? Or is the Republican party versus the Democratic party on two separate pages of music?

Pini Althaus:

Yeah. Good question, Ryan. I mean traditionally the Republican party is obviously being more pro-mining and in favor of less regulation when it comes to these things. With regards to our project, we're on Texas state land. So we don't trigger federal environmental permitting at this point in time. And obviously Texas being Texas, a mining state and oil and gas state, things are a lot easier in Texas than they are on projects on federal land where the Bureau of Land Management controls the environmental process around that. But the thing is here, and I don't want to step into what other companies are doing, et cetera, but we do need to be reasonable about allowing projects to come online if they're adhering to environmental standards that are acceptable worldwide. And what we do know, is that China is destroying the environment and cities and water bodies around their mines and processing facilities.

Pini Althaus:

We have standards here in the United States, and I think what we need to do is make it easier for companies to mine, while at the same time protecting the environment. And there are ways to do that. And we're definitely seeing buy-in from Congress, from both sides, with regards to looking how we can stand up a secure supply chain. And, obviously under the Obama administration, they had very strict regulations when it comes to mining. And that's changed under the Trump administration. Hopefully what we start to see is some normal middle ground that'll allow other projects to come online.

Ryan Morfin:

And typically in these rare earth mines, is it amalgamation of different minerals that are all consolidated together and you have to separate them out? Or do you ever find pure play, Europium, I can't even pronounce some of these. Gadolinium, Cerium. I mean, are they all mixed together and you've got to filter and sift them through, or are they pure play mines?

Pini Althaus:

No, they're generally they have a mix. So they're polymetallic projects. They have a number of different materials. Some projects, you more to what we call the light rare earths like MP in California or Linus in Australia. Our project is actually on the opposite end of the spectrum. We have a very high concentration of heavy rare earths. That being said, we do have to go through a process of separating these materials. But the case of our project where we've got 30 materials. We're not going to produce 30 materials. We're not going to market 30 materials. So what we're doing is we're focusing on the key materials that are marketable, that we need for permanent magnets, lithium as well, and working on the separation and the optimization of those materials in particular. But we're all faced with the same processing challenges and that is something that can't be set.

Pini Althaus:

There's no easy way to do this. There are different technologies that have been used in different parts of the world. So predominantly there's a process called solvent extraction, but it's big, it's bulky, it's not benign. It's a bespoke solution for one particular project. So it doesn't work for feedstock from other projects. What we've done is we're using a processing technology that's actually been around since the 1940s. It was part of the Manhattan Project. It's called continuous ion exchange. In fact, the Chinese use it to increase the purities from 99.99 to four nines, five nines, and even six nines. So for some applications you require higher purity levels. It's a far easier processing method to scale up and to take feedstock from other projects. In fact, we've demonstrated for the Department of Energy that we can take coal waste from Pennsylvania and do high purity separation of rare earths using our processing methods. So it's not a step that can be skipped unless one needs to send it to China for processing, which is not going to help us with our objectives here.

Ryan Morfin:

How many other, we'll call it, going concerns on any other businesses that are doing this, that are trying to, I guess, start the development of these mines. Are you guys one of a few or are you one of many? And is it an international or just a US game? Who's leading the charge at going after this?

Pini Althaus:

Yeah, well, I'd say the Australians are leading it outside of China right now. You've got some really good projects in Australia. Again, more skewed toward the light rare earths. There's one more heavy rare earth project in Australia, which is not yet producing. The United States, you've got MP Materials, you've got Ucore in Alaska, you've got the Bear Lodge project in Wyoming, which is also another light rare earth project. So as far as a heavy rare earth project that looks like it will come online in the near term, that would be our project. In Canada there are a couple of projects there as well, and again, more skewed toward the light rare earths. But we really need to get as many of these projects online as possible. Because again, I don't see it as competition. We all have a problem doing supply agreements or offtake agreements for our materials.

Pini Althaus:

In fact, one of the things that we're going to have to consider is looking at potentially scaling up our production, based on the demand that we're already starting to see. And I think other companies would find that as well. So it's all about the economics of the project. You have projects that were economically viable back in 2012 or rare earth prices with 35% or so higher than they are today, and are not necessarily viable today. So that's the challenge as well, economically viable projects. And we've got to get as many of them online as possible. It takes many, many years. I mean, our project has had over $70 million put into it to get to where we are today, and we're close to getting to the production scenario. It all revolves around processing at this point in time.

Pini Althaus:

We'd be very happy to see another couple of projects come online, because this is extremely important for national security and for the economy as well. I mean, if you think about it, Ryan, if you've got a billion dollars of rare earth materials, that translates into a trillion dollars or I should say trillions of dollars of finished product. So you've got a magnet in your phone there that's worth a couple of dollars and the cell phone's a thousand dollars. And electric vehicles and defense applications even more.

Ryan Morfin:

Yeah, everyone has one of these iPhones now, and there's tremendous amounts of rare earth on the circuit boards here. And I think people take it for granted that that supply chain is not secure right now. So one question for you, there's talk of this maybe medium term to longterm, but there's talk about mining in space. Do you think that's a feasible option in the longterm, medium term? What are your thoughts on that?

Pini Althaus:

No, that's just ridiculous. I mean, we're trying to find ways to make mining on earth economically viable. I think the cost of going up to space would be more than what our capex will be bringing our entire project into production. I mean, we've got about a 350 to $400 million capex to bring 130 year mine life into production. I'm not an aerospace expert, but I think sending a rocket, building a rocket ship and sending it up, I think maybe on the fuel alone, you could bring a couple of projects into production. So unless we have a fortunate situation or an asteroid lands on earth, and fortunate if it lands somewhere where we don't care, I don't see how that happens. And if it's big enough, it's a problem as well. It's nonsense. And even, options aside of the deep sea mining for rare earths, I mean, you've got all sorts of environmental issues around that as well. I think we need to look at projects that we can bring online, that can be done so in an economic way, that can be done so in an environmentally responsible way.

Pini Althaus:

I mean, one of the things that we've done at our project is we've got in excess of 60% of the materials that have come out around top, will have a clean green energy applicability to them. So we're using the benign processing method. We're going to be using renewable energy on site. In fact, we will likely be putting a solar farm on site as well. We've talked to a couple of companies that have approached us about that, and we'll be a net producer of power for the surrounding area. So there are ways to do it which don't affect the environment. Obviously if there's a project that's situated on a sensitive area, that's a unique situation for that specific project. We've seen it with the Pebble project, which is not a rare earth project. The Pebble project in Alaska where their environmental concerns is we've been recognized by both Republicans and Democrats, but we have to be reasonable about the projects that don't have environmental concerns.

Ryan Morfin:

So Pini, in season two, we ask all of our guests a series of six questions. They're usually, yes, no questions, but trying to take a survey of our conversations. And if you want to add a little context to the yes or no, feel free, but here goes the first question. If there was a COVID vaccine available today, would you take it?

Pini Althaus:

Yes.

Ryan Morfin:

Who do you think is going to win the election?

Pini Althaus:

Which election?

Ryan Morfin:

The US election.

Pini Althaus:

Well, I think it looks like Joe Biden's going to win it, but I think what happens, if we go past January six from my understanding is that the house will vote on it and it's one vote per state. But I don't know if I see it getting there at this point in time. I really don't have a crystal ball.

Ryan Morfin:

Third question. What type of economic recovery are we in? What type of shape is it taking? A V-shape, W, U, L?

Pini Althaus:

Yeah, I think 2021 is going to be challenging. I think we've been, and rightly so. I mean, we've had no choice as of almost every other country. We've been printing money for the past year because of COVID. And I think we've got to brace ourselves that, at some point in time, the chickens come home to roost. It was a necessary step. People needed it on an individual level. Businesses needed it as well, but I think we've got to do whatever we can to stimulate the economy, give people confidence to go out and work again, employ people. So I think we've got to watch ourselves, especially in 2021. And I have some concerns, but long-term, I think the approach in the United States is a healthy one.

Ryan Morfin:

During lockdown this summer and quarantine, was there anything in particular that you accomplished that you're particularly proud of?

Pini Althaus:

Yeah. A great amount of family time, which, if you would've asked me a few years ago if I could sit at home and be at home for six months, I would have told you absolutely not. I wouldn't be able to do it for six days, but it has... I'm sure it's done this with a lot of families as well. It's brought families together. We had a baby actually last year on Thanksgiving. So I was doing a lot of travel at the time and thought I wouldn't get to see my daughter in her first year or couple of years too often. And being home with her every day is actually been just the most amazing experience. So thankful at least for some silver lining in COVID.

Ryan Morfin:

Are there any silver linings that you see in the economy going into 2021?

Pini Althaus:

Yeah, I think we've gone through an absolute beating and it looks like we've got the ability to come out of it. And I think that's a testament to how strong the economy was built up in the years preceding COVID. So overall I remain an optimist. I mean, we are a country built on opportunity and going out and making it happen. And we're not a socialist country sitting and waiting for people to send us paychecks or wealth distribution or anything like that. I think the American dream still lives on. I think if you go out and you're willing to work and put your head to it and heart in it, I think we do have the ability to climb out of it. So if we look at what the economy is doing over the past few weeks, it looks like it's starting to rebound. And to me, that's assuring because it could go completely one way as well.

Ryan Morfin:

And the last question is, is there anything that you're watching, or listening to, or reading today that has been impactful on your thinking that you'd like to share with our audience?

Pini Althaus:

Yeah, that's a good question. I think it's been more personal stories. The news, I sort of take that in context or with more than a grain of salt. In some cases stay off the news channels for a number of days at a time, it became quite repetitive. But I think on the personal side, talking to friends, my family's all back home in Australia, they've just come out of 110 day lockdown, which we can't relate to that. It's been very trying on them and seeing the fortitude that they've had to come out of that and stay intact. I think the mental health issues that will come out of COVID are going to have a far longer effect than the economic issues. I think we're going to have to focus on mental health issues in this country for a long time to come.

Pini Althaus:

The impact on kids has been significant with regards to lockdown or remote schooling, et cetera. But to see people come through it. I think it's a testament to people in general and to the country and other countries as well, to see got that fortitude and survival instinct to try to get through whatever adversity we can. So hearing the personal stories, the challenges that people have gone through, I think it's made me a lot more aware of things that I have to be thankful for and where we can help out other people as well. I think we have to be united going forward because there are things...

Pini Althaus:

I think one of the things that COVID has shown us is we can get into this complacency and life goes on and we go one day to the next. And all of a sudden we get hit by something that affects everybody equally. I mean, COVID, whilst there were groups of people, whether it was the elderly or people with underlying health conditions, that got hit the worst. I mean, we all got hit in some form or another. So really, this should be something that unites us, not divides us.

Ryan Morfin:

Well, Pini, I appreciate you coming on today to talk to us a little bit about the supply chain crimp on rare earth and we'll definitely keep an eye on it and would love to have you back in the future.

Pini Althaus:

Thank you, Ryan. Thanks for having me.

Ryan Morfin:

Absolutely. Thank you. Bye-bye. Thanks for watching Non-Beta Alpha. And before we go, please remember to like, and subscribe on Apple podcasts and our YouTube channel. This is Non-Beta Alpha, and now you know.

 

The unique history of a Maryland based distillery and craft secrets on how to make great American Bourbon w/ Admiral Scott Sanders Founder of Tobacco Barn Distillery

The unique history of a Maryland based distillery and craft secrets on how to make great American Bourbon w/ Admiral Scott Sanders Founder of Tobacco Barn Distillery

The unique history of a Maryland based distillery and craft secrets on how to make great American Bourbon w/ Admiral Scott Sanders Founder of Tobacco Barn Distillery

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