1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,479 Speaker 1: at Bloomberg dot com slash podcast. I want to follow 7 00:00:22,560 --> 00:00:24,759 Speaker 1: up on that comic I just made of the quote 8 00:00:24,760 --> 00:00:27,320 Speaker 1: there on w T corude oil. You know, one dollars 9 00:00:27,400 --> 00:00:29,920 Speaker 1: sixty cents of barrel seems pretty sticky right about there, 10 00:00:29,960 --> 00:00:33,080 Speaker 1: And you know you think about global energy um and 11 00:00:33,159 --> 00:00:35,080 Speaker 1: it's it's you know, many people have called it a 12 00:00:35,200 --> 00:00:38,959 Speaker 1: crisis situation in Europe in particular. We want to get 13 00:00:39,000 --> 00:00:41,360 Speaker 1: some color on that. We're gonna check in with Jonathan Maxwell, 14 00:00:41,520 --> 00:00:47,200 Speaker 1: CEO and co founder of Sustainable Development Capital l lp UH. 15 00:00:47,320 --> 00:00:50,599 Speaker 1: Sustainable Development Capital operates as an investment banking firm for 16 00:00:50,760 --> 00:00:54,520 Speaker 1: energy efficient project finance. Jonathan, thanks so much for joining 17 00:00:54,640 --> 00:00:57,320 Speaker 1: us here. You know you're based in the UK, I believe, 18 00:00:57,360 --> 00:00:59,840 Speaker 1: and I'd love to get your thoughts of just kind 19 00:00:59,840 --> 00:01:04,000 Speaker 1: of the overview are kind of the energy issues, the 20 00:01:04,120 --> 00:01:08,399 Speaker 1: energy security issues, the energy crisis type of issues that 21 00:01:08,520 --> 00:01:13,280 Speaker 1: Europe is facing now and potentially into the winter, So 22 00:01:13,560 --> 00:01:16,319 Speaker 1: thank you for having me on. I mean, the Russian 23 00:01:16,360 --> 00:01:20,440 Speaker 1: invasion of Ukraine has sparked, well re ignited, i should say, 24 00:01:20,480 --> 00:01:24,399 Speaker 1: an energy crisis in Europe. We've had a very steep 25 00:01:24,760 --> 00:01:29,200 Speaker 1: rise and energy prices in one, low levels of storage, 26 00:01:29,440 --> 00:01:35,399 Speaker 1: low wind production, um so already difficult market background, but 27 00:01:35,480 --> 00:01:37,960 Speaker 1: coming into this year with the Russian invasion of Ukraine 28 00:01:38,319 --> 00:01:43,319 Speaker 1: curtailed supplies of gas coming into Europe. The word that 29 00:01:43,400 --> 00:01:47,080 Speaker 1: I had applied to which I liked was gastastrophe. So 30 00:01:47,120 --> 00:01:50,240 Speaker 1: you know that is the problem, the supply of gas 31 00:01:50,240 --> 00:01:54,800 Speaker 1: from Russia via Ukraine, because that's forty percent ish of 32 00:01:54,840 --> 00:01:59,240 Speaker 1: the whole European gas supply at stake, in fact higher 33 00:01:59,600 --> 00:02:03,120 Speaker 1: earlier in the year from Germany. So you know, that's 34 00:02:03,120 --> 00:02:08,359 Speaker 1: a huge problem for Europe and has created a crisis 35 00:02:08,400 --> 00:02:11,600 Speaker 1: not just in terms of pricing and supply, but also 36 00:02:12,120 --> 00:02:15,200 Speaker 1: trying to find solutions to that problem. You know, how 37 00:02:15,240 --> 00:02:17,200 Speaker 1: how do you replace the natural gas, how do you 38 00:02:17,200 --> 00:02:21,160 Speaker 1: actually provide generation? And what can be the solutions in 39 00:02:21,200 --> 00:02:23,239 Speaker 1: the short media and long term. Well, in every crisis, 40 00:02:23,280 --> 00:02:25,960 Speaker 1: there's an opportunity, right I don't know who said that, 41 00:02:26,000 --> 00:02:29,480 Speaker 1: but um, what what is the opportunity here? I mean, 42 00:02:29,600 --> 00:02:36,720 Speaker 1: is it for just diversifying their resources, you know, diverse, diverse, 43 00:02:36,760 --> 00:02:40,680 Speaker 1: fying their energy providers, or is it for diversifying the 44 00:02:40,800 --> 00:02:45,720 Speaker 1: kind of energy that Europeans use? So you know, as 45 00:02:45,760 --> 00:02:47,880 Speaker 1: with any solution, it's it's going to be a number 46 00:02:47,880 --> 00:02:51,000 Speaker 1: of a number of pollutions to the problem. You know, 47 00:02:51,200 --> 00:02:54,799 Speaker 1: the biggest one, the real fact of life is the 48 00:02:55,200 --> 00:02:57,760 Speaker 1: percent of Europe, like North America, eighty percent of years 49 00:02:57,800 --> 00:03:01,120 Speaker 1: energies or gas and calls. So taking a significant cut 50 00:03:01,240 --> 00:03:04,520 Speaker 1: on gas means it's got to be replaced from somewhere. 51 00:03:04,680 --> 00:03:07,120 Speaker 1: So there are all turns in diversifying sources of natural 52 00:03:07,160 --> 00:03:11,320 Speaker 1: gas supply. In the meantime, Sadly, for decarbonization, Europe has 53 00:03:11,400 --> 00:03:15,200 Speaker 1: leant back on its coal generation, so Germany, Ireland, even 54 00:03:15,200 --> 00:03:18,800 Speaker 1: the UK have got coal. Is up seven percent, says 55 00:03:18,840 --> 00:03:22,200 Speaker 1: the I A European coal demand in Europe driving global 56 00:03:22,200 --> 00:03:25,160 Speaker 1: demand up two peaks not seen since twenty thirteen. So 57 00:03:25,240 --> 00:03:31,400 Speaker 1: diversifying fossil fuel, the opportunity is to try and replace 58 00:03:31,760 --> 00:03:35,360 Speaker 1: those types of that type of generation with cleaner forms 59 00:03:35,400 --> 00:03:39,440 Speaker 1: of generation. Um, the trying to replace that with renewables 60 00:03:39,480 --> 00:03:42,840 Speaker 1: has its own challenges on supply chain, resources and time. 61 00:03:43,280 --> 00:03:45,040 Speaker 1: You know, it takes three or five years to build 62 00:03:45,040 --> 00:03:47,720 Speaker 1: solar and wind on shore. It can take ten to 63 00:03:47,760 --> 00:03:51,280 Speaker 1: fifteen years to build offshore wind in nuclear. So you 64 00:03:51,320 --> 00:03:53,960 Speaker 1: know how you solve the problem in the short run. Actually, 65 00:03:54,200 --> 00:03:57,720 Speaker 1: I think it's a massive opportunity because while we're strut 66 00:03:57,760 --> 00:04:03,360 Speaker 1: spending so much time asking how to replace Russian gas. Actually, 67 00:04:03,360 --> 00:04:06,880 Speaker 1: in the European Commission said if every unit of natural 68 00:04:06,920 --> 00:04:09,000 Speaker 1: gas that we don't buy from Russia, they said, is 69 00:04:09,040 --> 00:04:11,680 Speaker 1: two point six units that we don't have to Sorry 70 00:04:11,760 --> 00:04:13,640 Speaker 1: for every unit of gas that we don't use, there's 71 00:04:13,640 --> 00:04:16,080 Speaker 1: two point six units we don't have to buy from Russia. 72 00:04:16,560 --> 00:04:20,520 Speaker 1: Why it's because we're wasting most of the energy in 73 00:04:20,520 --> 00:04:24,040 Speaker 1: the energy system. There is an enormous amount of inefficiency 74 00:04:24,560 --> 00:04:28,239 Speaker 1: in Europe, about two thirds of energies wasted somewhere between 75 00:04:28,279 --> 00:04:33,200 Speaker 1: the generation, transmission and distribution process. To the opportunity extraordinaries 76 00:04:33,240 --> 00:04:36,640 Speaker 1: about in the US, by the way, So the opportunity 77 00:04:36,720 --> 00:04:39,960 Speaker 1: which is extraordinary is to invest in solutions that reduce 78 00:04:40,160 --> 00:04:43,479 Speaker 1: energy use um and reduce energy demand. So you know, 79 00:04:43,480 --> 00:04:45,720 Speaker 1: what you've seen as a massive response of Europe. They 80 00:04:45,800 --> 00:04:49,400 Speaker 1: had a policy last year which I think frankly they 81 00:04:49,400 --> 00:04:51,440 Speaker 1: were mumbling, but at least it was a policy saying 82 00:04:51,560 --> 00:04:55,039 Speaker 1: energy efficiency first, not second or third, but energy efficiency first. 83 00:04:55,480 --> 00:04:58,400 Speaker 1: But it's now critical there is no solution to the 84 00:04:58,400 --> 00:05:01,240 Speaker 1: problem other than being more efficient, so they have now 85 00:05:01,760 --> 00:05:05,160 Speaker 1: introduced the policy to reduce gas consumption by fift Are 86 00:05:05,200 --> 00:05:09,840 Speaker 1: there companies that are focused on increasing energy efficiency? Big names, 87 00:05:09,920 --> 00:05:13,520 Speaker 1: big projects that we should know there are. There are 88 00:05:14,520 --> 00:05:21,600 Speaker 1: very very large projects being done in aggregate, individual projects 89 00:05:21,600 --> 00:05:25,440 Speaker 1: a smaller ten fifty a hundred megawatts read a hundred 90 00:05:25,480 --> 00:05:30,360 Speaker 1: million dollar projects. So on site solar, on site generation 91 00:05:30,480 --> 00:05:32,880 Speaker 1: even using natural gas, but where you can capture the 92 00:05:32,920 --> 00:05:37,080 Speaker 1: heat co generation it's called so co generation, solar storage, 93 00:05:37,160 --> 00:05:39,479 Speaker 1: ground and surce heat gar firmal. So there is a 94 00:05:39,600 --> 00:05:43,120 Speaker 1: very large marketplace. In fact, the International with New Billenese 95 00:05:43,279 --> 00:05:46,360 Speaker 1: Agency globally says that that market is worth about ten 96 00:05:46,440 --> 00:05:50,760 Speaker 1: trillion dollars compared to say three to five trillion dollars 97 00:05:50,800 --> 00:05:53,600 Speaker 1: of the renewable energy market. So recognizing that so much 98 00:05:53,720 --> 00:05:56,360 Speaker 1: energy is wasted in the global energy system, the i 99 00:05:56,520 --> 00:05:59,080 Speaker 1: e A, the International Video Bill Energy Agency, and the 100 00:05:59,400 --> 00:06:02,760 Speaker 1: growing umber of utilities and specialist companies are targeting the 101 00:06:02,839 --> 00:06:06,440 Speaker 1: energe efficiency and distributed generation space because that is the 102 00:06:06,440 --> 00:06:09,680 Speaker 1: way of delivering lower cost, lower carbon, more relable energy 103 00:06:09,680 --> 00:06:12,039 Speaker 1: into the market. All right, Jonathan, thank you so much 104 00:06:12,080 --> 00:06:15,039 Speaker 1: for that update. We appreciated. I learned something new there 105 00:06:15,040 --> 00:06:18,880 Speaker 1: about the energy inefficiency and how much energy UH is 106 00:06:19,000 --> 00:06:20,880 Speaker 1: lost or wasted between you know, getting out of the 107 00:06:20,920 --> 00:06:24,839 Speaker 1: ground and getting into the home. Jonathan Maxwell, CEO and 108 00:06:24,920 --> 00:06:28,840 Speaker 1: co founder of Sustainable Development Capital. Again, it's operates as 109 00:06:28,880 --> 00:06:33,440 Speaker 1: an investment banking firm for energy efficient project UH finance 110 00:06:38,760 --> 00:06:41,320 Speaker 1: a fandevit. I'm not sure why he's still doing this stuff, 111 00:06:41,320 --> 00:06:44,400 Speaker 1: but he's the chief investment officer of Manetta Group. UH. 112 00:06:45,520 --> 00:06:48,800 Speaker 1: Thank you. Twenty seven billion assets under management, ranked in 113 00:06:48,839 --> 00:06:52,960 Speaker 1: the top ten by barons among independent registered investment advisors, 114 00:06:52,960 --> 00:06:56,760 Speaker 1: So some real real money under management, UH. Efan, thank 115 00:06:56,760 --> 00:06:58,800 Speaker 1: you so much for joining us here. What do you 116 00:06:58,839 --> 00:07:02,599 Speaker 1: make of this, I guess rally in the stock market 117 00:07:02,640 --> 00:07:05,159 Speaker 1: over the last several weeks. Are you buying into it 118 00:07:05,240 --> 00:07:07,120 Speaker 1: or is it just a little bit of a head 119 00:07:07,120 --> 00:07:08,640 Speaker 1: fake and we still need to be cautious. How do 120 00:07:08,680 --> 00:07:12,000 Speaker 1: you think about that? It's really interesting, I mean, the 121 00:07:12,040 --> 00:07:14,720 Speaker 1: market does look now like it has something to prove. 122 00:07:14,760 --> 00:07:17,200 Speaker 1: We're heading towards the best month since the end of 123 00:07:17,280 --> 00:07:20,600 Speaker 1: twenty It comes off the back of a really awful 124 00:07:20,640 --> 00:07:22,760 Speaker 1: start to the years. Look at the SMP when the 125 00:07:22,760 --> 00:07:25,040 Speaker 1: worst starts to the year for the first half in 126 00:07:25,040 --> 00:07:27,880 Speaker 1: a hundred years, so clearly what we were coming off 127 00:07:27,920 --> 00:07:30,400 Speaker 1: the bottom. There has been cash on the sidelines for 128 00:07:30,520 --> 00:07:34,120 Speaker 1: some time. We've seen the assets and money market funds rise, 129 00:07:34,480 --> 00:07:36,560 Speaker 1: so clearly there is still a sense that there is 130 00:07:36,600 --> 00:07:39,520 Speaker 1: really no alternative to being exposed to equities at this time. 131 00:07:39,960 --> 00:07:42,400 Speaker 1: So that's the momentum. Seeing as to whether it's a 132 00:07:42,480 --> 00:07:44,600 Speaker 1: head fake or not, I actually think it has some 133 00:07:44,760 --> 00:07:48,200 Speaker 1: legs this rally because we look at some of the indicators. 134 00:07:48,360 --> 00:07:51,640 Speaker 1: The consumer has very low levels of debt today, we're 135 00:07:51,680 --> 00:07:54,240 Speaker 1: seeing ultimately at a company level, we don't see many 136 00:07:54,280 --> 00:07:57,000 Speaker 1: defaults coming. So even though margins are going to get 137 00:07:57,040 --> 00:07:59,960 Speaker 1: tighter and we're going to see some pressure in terms 138 00:07:59,920 --> 00:08:02,600 Speaker 1: of pricing power and ability to pass through some of 139 00:08:02,600 --> 00:08:05,560 Speaker 1: those prices, there are a lot of quite positive indicators 140 00:08:05,560 --> 00:08:08,800 Speaker 1: and underlying some of this negative momentum, all the headline 141 00:08:08,840 --> 00:08:11,960 Speaker 1: around recession and even when it comes to inflation, yes, 142 00:08:12,040 --> 00:08:15,320 Speaker 1: these two inflation indicators today were positive. That comes off 143 00:08:15,360 --> 00:08:18,680 Speaker 1: the back of our historic high for June. We still 144 00:08:18,760 --> 00:08:22,480 Speaker 1: have to remember that this is still follow on of 145 00:08:22,600 --> 00:08:24,920 Speaker 1: some of the constraints that we've seen come out of COVID. 146 00:08:25,280 --> 00:08:27,640 Speaker 1: The supply chain restrictions are still in there, with a 147 00:08:27,680 --> 00:08:31,440 Speaker 1: little bit of demand destruction happening around the higher prices. 148 00:08:31,480 --> 00:08:35,040 Speaker 1: You see that with oil. So overall, I'm pretty sanguine. 149 00:08:35,080 --> 00:08:38,520 Speaker 1: I'm reasonably optimistic that this market has some legs. Do 150 00:08:38,600 --> 00:08:41,559 Speaker 1: you not expect the Fed to just keep on hiking 151 00:08:41,600 --> 00:08:44,520 Speaker 1: and hiking? I mean three and a half four percent, 152 00:08:44,800 --> 00:08:47,959 Speaker 1: five percent? Is that you think just not going to happen, 153 00:08:48,080 --> 00:08:52,040 Speaker 1: especially if inflation comes down in the growth softense, well 154 00:08:52,120 --> 00:08:55,319 Speaker 1: growth softense, let's face it, Uh, we're in a we're 155 00:08:55,320 --> 00:08:59,640 Speaker 1: in contraction period right exactly. Well, certainly the Fed seems 156 00:08:59,679 --> 00:09:02,200 Speaker 1: to make me it's a confirmation bias that played, but 157 00:09:02,240 --> 00:09:05,079 Speaker 1: it seems to think that already if actions have had 158 00:09:05,120 --> 00:09:08,240 Speaker 1: some effects, it took. It's looking at the weakening markets, 159 00:09:08,640 --> 00:09:11,720 Speaker 1: and Elon Musk agrees. He says more of their prices 160 00:09:11,760 --> 00:09:15,120 Speaker 1: have come down than gone off recently, exactly, So there's 161 00:09:15,120 --> 00:09:18,200 Speaker 1: an indicator. And remember cassy Wood out of that arc 162 00:09:18,320 --> 00:09:21,360 Speaker 1: has had for some time. She's talked with the deflationary 163 00:09:21,400 --> 00:09:25,479 Speaker 1: impulses and markets which are are offsetting the inflationary impulses, 164 00:09:25,600 --> 00:09:28,280 Speaker 1: and those deflationary impulses are why we had no inflation 165 00:09:28,360 --> 00:09:31,120 Speaker 1: for so long. So many of those deflationary impulses have 166 00:09:31,200 --> 00:09:33,960 Speaker 1: not gone away, with the exception of labor. Clearly, we 167 00:09:34,000 --> 00:09:36,920 Speaker 1: saw that labor indication today that's starting to turn around. 168 00:09:37,120 --> 00:09:39,800 Speaker 1: But remember a labor having some price in power is 169 00:09:39,800 --> 00:09:42,760 Speaker 1: a sign that labor is strong, and it's the employment 170 00:09:42,800 --> 00:09:46,200 Speaker 1: picture is strong. Will that be the the buffer that 171 00:09:46,280 --> 00:09:50,160 Speaker 1: prevents the economy from flipping into recession? Maybe even We're 172 00:09:50,200 --> 00:09:52,240 Speaker 1: kind of just in the middle here of this earning 173 00:09:52,360 --> 00:09:55,800 Speaker 1: cycle here, Big tech week this week, and we had 174 00:09:55,800 --> 00:09:58,520 Speaker 1: some really good numbers out of Amazon last night and 175 00:09:58,559 --> 00:10:01,240 Speaker 1: pretty good numbers out of ap All here. What are 176 00:10:01,240 --> 00:10:03,839 Speaker 1: your takeaways here, but that midway through this this earning 177 00:10:03,840 --> 00:10:07,280 Speaker 1: cycle here, I think it's very lumpy. We we did 178 00:10:07,320 --> 00:10:10,240 Speaker 1: see some less positive numbers from Amazon before when it 179 00:10:10,280 --> 00:10:13,319 Speaker 1: looks like they had perhaps that excess inventory or they 180 00:10:13,520 --> 00:10:16,240 Speaker 1: were suffering from supply chain issues. And then the very 181 00:10:16,280 --> 00:10:18,560 Speaker 1: same week we have this canary in the coal mines 182 00:10:18,640 --> 00:10:22,160 Speaker 1: from from Walmart much more less of a perhaps discretionary, 183 00:10:22,160 --> 00:10:25,480 Speaker 1: more of a staple type retail because it is lower end, 184 00:10:25,559 --> 00:10:28,600 Speaker 1: and that that they clearly are seeing a contraction in demand, 185 00:10:28,600 --> 00:10:31,520 Speaker 1: they're seeing high inventories. Target is is in a moment 186 00:10:31,559 --> 00:10:34,880 Speaker 1: of fire sales situation around it's inventories. So that picture 187 00:10:34,920 --> 00:10:38,160 Speaker 1: is still mixed. I think it's really a question of lumpiness. 188 00:10:38,160 --> 00:10:41,319 Speaker 1: Some companies maybe took their lumps earlier and some are 189 00:10:41,360 --> 00:10:43,720 Speaker 1: taking them now, and so I don't actually see that 190 00:10:43,760 --> 00:10:47,840 Speaker 1: there's an overwhelmingly, overwhelmingly clear picture coming out of that. 191 00:10:47,840 --> 00:10:50,199 Speaker 1: In terms of consumer demand, I think we can all 192 00:10:50,240 --> 00:10:52,440 Speaker 1: say that the consumers have said it's stronger than they've 193 00:10:52,440 --> 00:10:55,120 Speaker 1: been in the past since situations like this, because of 194 00:10:55,160 --> 00:10:57,240 Speaker 1: their low debt levels. But they are going to be 195 00:10:57,320 --> 00:11:01,280 Speaker 1: reacting to to these these pricing pressure and they're going 196 00:11:01,320 --> 00:11:05,480 Speaker 1: through reacting to some of their COVID lad largess coming off. 197 00:11:05,920 --> 00:11:08,800 Speaker 1: But you still think there's no other place to be, 198 00:11:08,840 --> 00:11:12,280 Speaker 1: there's no alternative to us docks. Um, what do you 199 00:11:12,320 --> 00:11:16,080 Speaker 1: see happening in bonds and fixed income after they're horrible, terrible, 200 00:11:16,080 --> 00:11:19,640 Speaker 1: no good first half? Yes, exactly. Well, actually that has 201 00:11:19,720 --> 00:11:22,200 Speaker 1: has been a bit of a turnaround too for for years, 202 00:11:22,280 --> 00:11:24,400 Speaker 1: bombs haven't looked like a great place to put money. 203 00:11:24,440 --> 00:11:26,280 Speaker 1: They despite their being in a bond in its bold 204 00:11:26,280 --> 00:11:30,160 Speaker 1: bomb ball market, they have looked like very uninteresting um 205 00:11:30,000 --> 00:11:33,880 Speaker 1: from a return perspective, especially when that return is after inflation. 206 00:11:33,960 --> 00:11:37,800 Speaker 1: Still on a real basis now because of the change 207 00:11:37,800 --> 00:11:39,920 Speaker 1: in rates and a little bit of spread widing, not 208 00:11:39,960 --> 00:11:43,120 Speaker 1: a great deal. We're actually thinking some reasonably compelling yields 209 00:11:43,160 --> 00:11:46,280 Speaker 1: in investment grade and high yield, and even though after 210 00:11:46,440 --> 00:11:49,480 Speaker 1: the high levels of inflations they won't be particularly interesting 211 00:11:49,520 --> 00:11:53,000 Speaker 1: on a real, real basis, they are a huge, hugely 212 00:11:53,000 --> 00:11:55,360 Speaker 1: different from what they were in the past, so there 213 00:11:55,440 --> 00:11:57,720 Speaker 1: is an alternative sequities. But I think ultimately you need 214 00:11:57,760 --> 00:11:59,560 Speaker 1: to be invested across the boards. You need to have 215 00:11:59,679 --> 00:12:04,200 Speaker 1: broad based different by exposure equities, bond and alternatives, and realistate. 216 00:12:04,280 --> 00:12:07,520 Speaker 1: Like your previous plot suggested, there really is no time 217 00:12:07,559 --> 00:12:09,800 Speaker 1: to be too much in cash. A little bit of 218 00:12:09,880 --> 00:12:12,160 Speaker 1: dry powder help all right, Evan, thank you so much 219 00:12:12,160 --> 00:12:15,440 Speaker 1: for joining us. Really appreciate getting your perspective. Efan Devitt, 220 00:12:15,600 --> 00:12:19,480 Speaker 1: chief investment officer of Moneta Group, giving us her thoughts 221 00:12:19,480 --> 00:12:24,199 Speaker 1: on these markets. Group. One of my best friends is 222 00:12:24,240 --> 00:12:28,600 Speaker 1: here Neil Grossman. Uh and just turned sixty five, So 223 00:12:28,720 --> 00:12:32,400 Speaker 1: happy birthday to you, Neil Grossman. I see that you 224 00:12:32,559 --> 00:12:37,880 Speaker 1: got a gold box conjecture cake. What is that? Gold 225 00:12:37,920 --> 00:12:42,480 Speaker 1: box conjecture is one of the oldest unproved mathematical theorems. 226 00:12:42,520 --> 00:12:44,640 Speaker 1: That's something I've been actually working on myself for about 227 00:12:44,679 --> 00:12:47,120 Speaker 1: twenty five years. And there's a painting in our apartment. 228 00:12:47,400 --> 00:12:50,120 Speaker 1: But the conjecture is relatively simple. Number theory is actually 229 00:12:50,200 --> 00:12:54,160 Speaker 1: quite manageable and understandable. So God Christian Goldbach and in 230 00:12:54,200 --> 00:12:56,840 Speaker 1: the late mid sev dred sent the letters of the 231 00:12:56,840 --> 00:13:02,440 Speaker 1: most famous mathematician of his Timelineard Oiler, hypothesizing that every 232 00:13:02,480 --> 00:13:05,920 Speaker 1: even number is the sum of two prime numbers. And 233 00:13:06,040 --> 00:13:07,880 Speaker 1: you can also flip that into one which says that 234 00:13:07,920 --> 00:13:11,079 Speaker 1: every number is the average of two primes. It's neved. 235 00:13:11,520 --> 00:13:13,120 Speaker 1: This is the kind of guy we're dealing with. I 236 00:13:13,120 --> 00:13:16,360 Speaker 1: just wanted to set that up for you. So UM 237 00:13:16,600 --> 00:13:20,440 Speaker 1: physics degree studied a little bit of cosmology under Stephen 238 00:13:20,480 --> 00:13:23,720 Speaker 1: Hawking and Cambridge, and UM has advised that, I said 239 00:13:23,760 --> 00:13:26,439 Speaker 1: the Norwegian Central Bank now he runs t k n 240 00:13:26,480 --> 00:13:34,599 Speaker 1: G Capital and UM discusses economics and policy with FED officials. 241 00:13:34,800 --> 00:13:38,679 Speaker 1: Let's talk about Jerome Pale's meeting on decision, Well, not 242 00:13:38,760 --> 00:13:41,480 Speaker 1: just on Wednesday, but what the FED has been up 243 00:13:41,520 --> 00:13:44,439 Speaker 1: to trying to catch up and trying to catch the curve, 244 00:13:44,559 --> 00:13:47,360 Speaker 1: if you will, because they missed it so badly. Are 245 00:13:47,360 --> 00:13:49,079 Speaker 1: they going to be able to do that without driving 246 00:13:49,160 --> 00:13:52,080 Speaker 1: us into a to stop inflation, without driving us into 247 00:13:52,080 --> 00:13:55,320 Speaker 1: a deep deeper session. I think they're gonna struggle. But 248 00:13:55,360 --> 00:13:57,360 Speaker 1: I don't even think he's trying to catch up. I mean, 249 00:13:57,400 --> 00:14:00,800 Speaker 1: let's be clear a few things. They spent what five 250 00:14:00,880 --> 00:14:03,600 Speaker 1: years or seven years arguing that they needed to push 251 00:14:03,760 --> 00:14:06,440 Speaker 1: inflation a little hot, just to push up the average 252 00:14:06,559 --> 00:14:10,560 Speaker 1: to two percent. You know, he's saying, we want to 253 00:14:10,559 --> 00:14:14,839 Speaker 1: get to a two percent, but he he's years behind. 254 00:14:14,880 --> 00:14:17,520 Speaker 1: If he wants to get back to two percent, averaging 255 00:14:17,720 --> 00:14:20,000 Speaker 1: they got to go to one percent for almost a decade. 256 00:14:20,600 --> 00:14:23,480 Speaker 1: And what's interesting is we'll we'll finish this year having 257 00:14:23,520 --> 00:14:26,480 Speaker 1: average probably six and a half to seven percent for 258 00:14:26,560 --> 00:14:30,080 Speaker 1: two years. If all you do is luck get lucky 259 00:14:30,160 --> 00:14:32,640 Speaker 1: enough to go immediately to two percent and stay there 260 00:14:32,640 --> 00:14:37,360 Speaker 1: ten years in the future, you're still almost twenty percent 261 00:14:37,480 --> 00:14:40,960 Speaker 1: or whatever plus away from what your original target was. 262 00:14:41,600 --> 00:14:44,880 Speaker 1: They've set off distortions that will continue to propagate and 263 00:14:44,920 --> 00:14:48,200 Speaker 1: compound for many years. But you don't hear anybody talking 264 00:14:48,240 --> 00:14:52,520 Speaker 1: about unwinding the impact of what we what's right behind us, 265 00:14:52,560 --> 00:14:55,600 Speaker 1: which is really the problem. They won't right well, they're 266 00:14:55,600 --> 00:14:57,520 Speaker 1: afraid of it. That's what's behind us is all the 267 00:14:57,560 --> 00:15:00,080 Speaker 1: stimulus we had, Well, the stimulus, the stimulus, and and 268 00:15:00,160 --> 00:15:03,760 Speaker 1: and and and and seven and seven or eight percent 269 00:15:03,840 --> 00:15:06,240 Speaker 1: annualized inflation for two years. By the way, it took 270 00:15:06,360 --> 00:15:09,400 Speaker 1: Vulcar post folk, youre pardon me, it was like twenty 271 00:15:09,480 --> 00:15:12,760 Speaker 1: five years before we reached an ambient state of steady 272 00:15:12,840 --> 00:15:15,160 Speaker 1: state of two to two and a half percent inflation. Now, 273 00:15:15,200 --> 00:15:17,920 Speaker 1: it may not be the same this time, but you 274 00:15:17,960 --> 00:15:22,000 Speaker 1: should be expecting that it's going to be a glide 275 00:15:22,160 --> 00:15:25,240 Speaker 1: if they're lucky of a number of years to get 276 00:15:25,280 --> 00:15:27,600 Speaker 1: even close to the tool. So let's talk about that then. 277 00:15:27,720 --> 00:15:30,520 Speaker 1: I mean, as an investor, you have to try and 278 00:15:30,640 --> 00:15:32,600 Speaker 1: figure out what the FED is going to do, not 279 00:15:32,720 --> 00:15:36,240 Speaker 1: what they should do. What do you think we're going 280 00:15:36,280 --> 00:15:38,680 Speaker 1: to see in terms of a terminal rate? Do you 281 00:15:38,720 --> 00:15:40,880 Speaker 1: think they're gonna turn around and start cutting? Are we 282 00:15:40,960 --> 00:15:43,560 Speaker 1: going to see a recession? Are we in one right now? Um, 283 00:15:43,720 --> 00:15:45,600 Speaker 1: we're not in a recession right now. My view, I 284 00:15:45,640 --> 00:15:47,280 Speaker 1: think we were just talking about this. I think you've 285 00:15:47,320 --> 00:15:49,720 Speaker 1: seen two negative quarters of real GDP and I think 286 00:15:49,760 --> 00:15:52,320 Speaker 1: we may see two more. But the difference between what 287 00:15:52,480 --> 00:15:55,560 Speaker 1: we would feel as a recession in a real way 288 00:15:55,640 --> 00:15:58,640 Speaker 1: and what you're seeing statistically is the fact that inflation 289 00:15:59,440 --> 00:16:05,680 Speaker 1: is not and real GDP is nominalist inflation. Nominal GDP 290 00:16:06,000 --> 00:16:09,440 Speaker 1: is very strong still relative to the last Well it's 291 00:16:09,480 --> 00:16:11,040 Speaker 1: not that high, but let's take five or six. It 292 00:16:11,200 --> 00:16:13,680 Speaker 1: was that way last year, but relative to the last 293 00:16:13,680 --> 00:16:16,960 Speaker 1: twenty years, that's still a very strong number. We're still 294 00:16:17,040 --> 00:16:21,400 Speaker 1: at almost historical lows. And unemployment, I do think that 295 00:16:21,520 --> 00:16:24,120 Speaker 1: you have a very Um, you're you're probably likely to 296 00:16:24,200 --> 00:16:26,560 Speaker 1: have a disappointing number this month and maybe even next 297 00:16:26,640 --> 00:16:29,560 Speaker 1: month in employment. But I don't think you're pushing up 298 00:16:29,800 --> 00:16:32,800 Speaker 1: the unemployment rate all that far. But man, if you 299 00:16:32,920 --> 00:16:38,880 Speaker 1: can't have nominal GDP and four or five unemployment after 300 00:16:39,040 --> 00:16:43,680 Speaker 1: spending six trillion of fiscal and doubling the balance sheet 301 00:16:43,720 --> 00:16:47,440 Speaker 1: to eight trillion, what can what can you do? Strows with? Right? Well, 302 00:16:47,600 --> 00:16:50,440 Speaker 1: that's that's that's the problem. We were were were you 303 00:16:50,480 --> 00:16:54,560 Speaker 1: know again, we we basically um borrowed money to keep 304 00:16:54,720 --> 00:16:56,840 Speaker 1: things afloat. You know, on a on a year on 305 00:16:56,960 --> 00:16:59,240 Speaker 1: year comparative basis, it's going to be very hard for 306 00:16:59,320 --> 00:17:02,760 Speaker 1: a while for the economy to compare compare to what 307 00:17:03,360 --> 00:17:07,800 Speaker 1: was the fiscal rainfall of COVID relief. And so you 308 00:17:08,000 --> 00:17:11,040 Speaker 1: you have a natural problem built into the into the 309 00:17:11,119 --> 00:17:14,760 Speaker 1: GDP numbers on top of everything else. And you know, look, 310 00:17:15,040 --> 00:17:17,159 Speaker 1: as long as the balance sheet isn't being reduced, and 311 00:17:17,200 --> 00:17:20,200 Speaker 1: I think this is one of the biggest things out there. Um, 312 00:17:20,600 --> 00:17:23,560 Speaker 1: if they really want to bring inflation down, that balance 313 00:17:23,600 --> 00:17:26,200 Speaker 1: sheet should be going down already, and not slowly. I 314 00:17:26,280 --> 00:17:28,600 Speaker 1: think it's much more effective to deal with the balance 315 00:17:28,640 --> 00:17:31,359 Speaker 1: sheet than they are reducing the balance sheet. You're just saying, 316 00:17:31,480 --> 00:17:33,560 Speaker 1: they just started, but it's slow. Well, they're gonna let it. 317 00:17:33,560 --> 00:17:36,120 Speaker 1: They're not. They're not really selling very much. They're they're 318 00:17:36,200 --> 00:17:38,480 Speaker 1: letting run off much much more. You think they need 319 00:17:38,520 --> 00:17:41,080 Speaker 1: to be more. Well, still, it's still expanding. Actually, right 320 00:17:41,080 --> 00:17:43,040 Speaker 1: in the last few weeks listening, we only have two 321 00:17:43,280 --> 00:17:45,959 Speaker 1: and a half minutes here. What are you doing right 322 00:17:46,000 --> 00:17:48,639 Speaker 1: now in the market? Are you buying stocks after the 323 00:17:48,720 --> 00:17:51,359 Speaker 1: drop that we've just seen. I was here with you. 324 00:17:51,400 --> 00:17:54,119 Speaker 1: A month and a half ago. I bought I've had 325 00:17:54,119 --> 00:17:57,200 Speaker 1: actually had a pretty good I sold yesterday, and what 326 00:17:57,320 --> 00:18:01,399 Speaker 1: I'm looking for, Honestly, I'm not worried about five up 327 00:18:01,480 --> 00:18:03,920 Speaker 1: or down here. I think that either I was thinking 328 00:18:03,920 --> 00:18:07,840 Speaker 1: we get to maybe I'm worried that we're gonna hit 329 00:18:07,880 --> 00:18:10,720 Speaker 1: the fall and there's a lot of people getting excited, 330 00:18:10,720 --> 00:18:13,920 Speaker 1: and all of a sudden we hit October and inflation 331 00:18:14,000 --> 00:18:16,960 Speaker 1: still isn't dropping and you are seeing slowed down. So 332 00:18:17,119 --> 00:18:20,040 Speaker 1: what I'm beginning to do for myself is to buy 333 00:18:20,880 --> 00:18:23,719 Speaker 1: far out of the money, protection and fairly good size 334 00:18:24,080 --> 00:18:26,600 Speaker 1: so in case we have because it's not very expensive volatively, 335 00:18:26,640 --> 00:18:28,760 Speaker 1: although it's little highs come down a lot in case 336 00:18:28,840 --> 00:18:32,040 Speaker 1: we have a catastrophe. That's what I'm really worried about. 337 00:18:32,040 --> 00:18:33,879 Speaker 1: It interest rates. One last thing, if I had to 338 00:18:33,920 --> 00:18:36,920 Speaker 1: be be, I'm a little short bonds now, but not 339 00:18:37,119 --> 00:18:40,159 Speaker 1: very much. I think yield curve steepeners or if you 340 00:18:40,200 --> 00:18:43,000 Speaker 1: want to get technical, yield curve steepeners in forward space 341 00:18:43,800 --> 00:18:46,320 Speaker 1: or where I think you should be doing, because I 342 00:18:46,440 --> 00:18:50,440 Speaker 1: just think there is so much risk yield curve steepeners 343 00:18:50,480 --> 00:18:55,520 Speaker 1: in forward space yet complex here. Well, well, just to 344 00:18:55,600 --> 00:18:57,800 Speaker 1: put a good word in for Bloomberg. One of the 345 00:18:57,880 --> 00:19:00,240 Speaker 1: few systems you can easily use to figure it out. 346 00:19:00,240 --> 00:19:03,159 Speaker 1: It is right in front of you. Bloomberg Technical Analytics 347 00:19:03,240 --> 00:19:05,320 Speaker 1: is fabulous for this type of stuff. We like it 348 00:19:05,400 --> 00:19:07,640 Speaker 1: when people put in a good word for Bloomberg, which 349 00:19:07,680 --> 00:19:10,320 Speaker 1: I will never use any of those things. Probably, I'm like, 350 00:19:10,440 --> 00:19:12,720 Speaker 1: I'm d e S. I'm good to me. The Bloomberg 351 00:19:13,000 --> 00:19:16,680 Speaker 1: terminal is like a Ducati pana gali, you know, V 352 00:19:16,920 --> 00:19:20,800 Speaker 1: four S. I love the bike. I bought the bike, 353 00:19:21,200 --> 00:19:23,720 Speaker 1: and I can extract maybe five to six percent of 354 00:19:23,760 --> 00:19:25,840 Speaker 1: its total. I don't think I don't think you're even close. 355 00:19:25,880 --> 00:19:27,800 Speaker 1: I think it's like sitting on top of a Saturn 356 00:19:27,840 --> 00:19:32,400 Speaker 1: B five. There. All right, that's a better comparison. Neil Grossman, 357 00:19:32,440 --> 00:19:34,400 Speaker 1: thank you so much for joining us here. Neil Grossman, 358 00:19:34,880 --> 00:19:38,359 Speaker 1: t k n G Capital in the Bloomberg Interactive Broker Studio, 359 00:19:38,440 --> 00:19:40,800 Speaker 1: which is huge. You get a gold star for coming in. 360 00:19:40,920 --> 00:19:43,680 Speaker 1: He brought us a bottle of wine. Yeah, we'll pop 361 00:19:43,760 --> 00:19:46,159 Speaker 1: that baby. He made this wine. He made this one 362 00:19:46,200 --> 00:19:49,240 Speaker 1: at the Canoe Hill Vineyard. It's getting a lot of recognition. 363 00:19:49,320 --> 00:19:52,520 Speaker 1: That's like drinking a second growth board dough. I'm excited. 364 00:19:52,600 --> 00:19:54,480 Speaker 1: All right. I don't know what that is, but the 365 00:19:54,520 --> 00:19:57,320 Speaker 1: drink at the where you go out east. All right, Neil, 366 00:19:57,320 --> 00:20:04,919 Speaker 1: thanks so much for joining us here. All right, how 367 00:20:04,960 --> 00:20:09,080 Speaker 1: about this. For a decade, Berlin commended moral and financial 368 00:20:09,119 --> 00:20:12,480 Speaker 1: authority in the European Union, guiding policy and playing bad 369 00:20:12,600 --> 00:20:16,200 Speaker 1: cops to the weaker southern economies. The energy crisis has 370 00:20:16,400 --> 00:20:19,840 Speaker 1: upended that balance. Maria today o joins us. She penned 371 00:20:19,960 --> 00:20:23,359 Speaker 1: those words. She's a European reporter for Bloomberg News and 372 00:20:23,440 --> 00:20:25,720 Speaker 1: she's doing some opinion stuff right now, which is good 373 00:20:25,760 --> 00:20:28,359 Speaker 1: for us. Maria thinks, well, it's not great for us. 374 00:20:28,600 --> 00:20:33,600 Speaker 1: Why because she's she's doing this stint with Bloomberg Opinion, 375 00:20:33,640 --> 00:20:36,119 Speaker 1: which means she hasn't been on Bloomberg TV for like 376 00:20:36,320 --> 00:20:39,399 Speaker 1: three weeks since the point, and we miss her, I know. 377 00:20:39,520 --> 00:20:41,480 Speaker 1: But she gets to spreader wings a little bit and 378 00:20:41,560 --> 00:20:43,800 Speaker 1: do some other stuff. She's so talented. Maria, thanks so 379 00:20:43,920 --> 00:20:45,760 Speaker 1: much for taking the time to join us here. I 380 00:20:45,880 --> 00:20:48,480 Speaker 1: love this piece about Germany. Give us a sense of 381 00:20:49,119 --> 00:20:51,920 Speaker 1: Germany's position in Europe today because it does feel a 382 00:20:51,960 --> 00:20:54,960 Speaker 1: little bit different because you know, this energy crisis is 383 00:20:55,000 --> 00:21:00,239 Speaker 1: really exposing their vulnerability. Yeah, and the ideas and lee 384 00:21:00,359 --> 00:21:03,600 Speaker 1: as that came to mind for me to write this piece. 385 00:21:03,840 --> 00:21:07,119 Speaker 1: It was really the words of the Spanish energy minister 386 00:21:07,280 --> 00:21:10,840 Speaker 1: who came out with a lot of bravado saying, you know, 387 00:21:11,040 --> 00:21:14,239 Speaker 1: Spain did a homework with manager economy in a way 388 00:21:14,280 --> 00:21:18,560 Speaker 1: that is more sustainable, and it's it's words are really 389 00:21:18,640 --> 00:21:21,640 Speaker 1: echoed the way that the Germans used to talk about 390 00:21:21,720 --> 00:21:24,800 Speaker 1: the Southern Europeans to say, you went on this debt 391 00:21:25,080 --> 00:21:28,119 Speaker 1: kind of spiral and you did not manage your finance 392 00:21:28,200 --> 00:21:30,399 Speaker 1: is sustainable and now where we have to come to 393 00:21:30,440 --> 00:21:33,760 Speaker 1: your rescue. So essentially what you see now it's the opposite. 394 00:21:33,880 --> 00:21:37,679 Speaker 1: And the European Commission they get it. The European countries 395 00:21:37,720 --> 00:21:40,159 Speaker 1: are gonna have to lower their energy consumption. It's going 396 00:21:40,200 --> 00:21:42,840 Speaker 1: to be supply but also demand. And what they argued 397 00:21:42,880 --> 00:21:46,440 Speaker 1: that everyone has to cut it down by the Spanish, 398 00:21:46,600 --> 00:21:49,520 Speaker 1: the Portuguese, the Greeks, all of them said that's not 399 00:21:49,560 --> 00:21:52,040 Speaker 1: gonna work. We're not gonna accept one targets for all. 400 00:21:52,400 --> 00:21:54,920 Speaker 1: What I would say, however, and that's all to my piece, 401 00:21:55,000 --> 00:21:57,280 Speaker 1: is that I don't think this is a return to 402 00:21:57,440 --> 00:22:00,800 Speaker 1: the old tensions between the North and the South. I 403 00:22:00,840 --> 00:22:03,080 Speaker 1: don't think they want that a lot of those dynamics 404 00:22:03,200 --> 00:22:05,720 Speaker 1: and did after the pandemic, the joint vaccination and all 405 00:22:05,760 --> 00:22:07,800 Speaker 1: of that. But I do think that this was the 406 00:22:07,960 --> 00:22:11,800 Speaker 1: end of Germany always being right, Germany always be in 407 00:22:11,840 --> 00:22:14,480 Speaker 1: the country that at the table kind of says, listen 408 00:22:14,560 --> 00:22:16,879 Speaker 1: to me, I know what's best for you. Clearly now 409 00:22:17,359 --> 00:22:20,600 Speaker 1: it's obvious that Germany was blind to its own faults 410 00:22:21,119 --> 00:22:23,520 Speaker 1: for a very long time, and everyone else now sees 411 00:22:23,600 --> 00:22:27,159 Speaker 1: it well, either blind or willingly. I mean, um, we 412 00:22:27,280 --> 00:22:31,160 Speaker 1: were talking to somebody I think yesterday about why Germany 413 00:22:31,320 --> 00:22:34,720 Speaker 1: allowed itself to be so dependent on Russian natural gas, 414 00:22:34,800 --> 00:22:37,840 Speaker 1: and he said, you know where former German Chancellor Gerhard 415 00:22:37,880 --> 00:22:40,879 Speaker 1: Schroeder is working these days. He's on the board at 416 00:22:40,920 --> 00:22:44,040 Speaker 1: gas from and he's hanging out at Vladimir Putin's palace. Um. 417 00:22:44,400 --> 00:22:46,520 Speaker 1: You have to wonder. And yesterday I was talking my 418 00:22:46,640 --> 00:22:50,960 Speaker 1: dad actually about this. Uh, how is history gonna judge 419 00:22:51,080 --> 00:22:53,840 Speaker 1: angel a miracle? You know, when Maria, you and I 420 00:22:53,920 --> 00:22:57,120 Speaker 1: were at the G twenty together in um in Hamburg, 421 00:22:57,240 --> 00:23:00,400 Speaker 1: she got a standing ovation and was considered the leader 422 00:23:00,440 --> 00:23:02,680 Speaker 1: of the free world at the time. Now it looks 423 00:23:02,720 --> 00:23:06,520 Speaker 1: like she was in Putin's pocket. Yeah, and you remember 424 00:23:06,600 --> 00:23:08,800 Speaker 1: Matt last year in Berlin at the election, you and 425 00:23:08,920 --> 00:23:12,560 Speaker 1: I were at times critical, you know, we said, for 426 00:23:12,880 --> 00:23:15,040 Speaker 1: all of the time at miracles a woman that kept 427 00:23:15,160 --> 00:23:18,920 Speaker 1: Europe together. There's a lot of issues underneath that have 428 00:23:19,119 --> 00:23:21,840 Speaker 1: not been very nice. You know. Angela Merkel had this 429 00:23:22,000 --> 00:23:26,320 Speaker 1: fundamental view that politics and trade, security and defense, all 430 00:23:26,400 --> 00:23:28,840 Speaker 1: of this could be run separately. It was a huge mistake. 431 00:23:29,040 --> 00:23:32,520 Speaker 1: You can't separate the politics from the trade and your security. 432 00:23:32,520 --> 00:23:35,040 Speaker 1: They're very connected. We also talked about the fact that 433 00:23:35,200 --> 00:23:39,720 Speaker 1: she was someone who at times appeased some of her rivals, 434 00:23:39,840 --> 00:23:43,480 Speaker 1: and not just at home, but also outside Russia Hungary. 435 00:23:43,680 --> 00:23:46,560 Speaker 1: She always had this idea that okay, they're bad guys, 436 00:23:46,800 --> 00:23:50,040 Speaker 1: that it's better to keep them engaged, then pushed them 437 00:23:50,080 --> 00:23:52,480 Speaker 1: in the corner. She was never very forceful. That also 438 00:23:52,560 --> 00:23:54,520 Speaker 1: became an issue. You know, Vladimir Putin could see it. 439 00:23:54,640 --> 00:23:57,840 Speaker 1: The Germans were not really going to go rough on them, 440 00:23:57,880 --> 00:24:00,239 Speaker 1: and then of course the North sting too. I mean 441 00:24:00,280 --> 00:24:02,960 Speaker 1: you remember, up until a few months ago, the Germans 442 00:24:03,040 --> 00:24:05,840 Speaker 1: still we're not willing to say, yes, we're gonna ditch 443 00:24:05,880 --> 00:24:09,200 Speaker 1: it if the Russians invade Ukraine. I think that gave 444 00:24:09,280 --> 00:24:12,240 Speaker 1: Vladimir putting a sense that listen, Germany is not going 445 00:24:12,280 --> 00:24:14,920 Speaker 1: to go all out to help the Ukrainians, so that 446 00:24:15,119 --> 00:24:17,399 Speaker 1: that really was something that they that they had in 447 00:24:18,040 --> 00:24:21,199 Speaker 1: their minds before they invaded Ukraine. I think it's been 448 00:24:21,240 --> 00:24:23,679 Speaker 1: a major wakeup call for the Germans. I think it's 449 00:24:23,720 --> 00:24:26,920 Speaker 1: a huge shock for them. I don't think they even 450 00:24:27,080 --> 00:24:30,240 Speaker 1: realize the impact of this has or the damage that 451 00:24:30,320 --> 00:24:33,360 Speaker 1: has done to the reputation and frankly, met I don't 452 00:24:33,400 --> 00:24:36,440 Speaker 1: even think the Germans understand how big a crisis this is, 453 00:24:36,880 --> 00:24:39,800 Speaker 1: but also just how badly they judged the entire thing 454 00:24:39,880 --> 00:24:42,240 Speaker 1: for fifteen years. I think it's a moment that so 455 00:24:42,400 --> 00:24:44,960 Speaker 1: searching for Germany. But I don't think they're ready to 456 00:24:45,040 --> 00:24:49,000 Speaker 1: eat humble pie yet. By the way, the Europe. By 457 00:24:49,000 --> 00:24:52,120 Speaker 1: the way, this morning, when I heard the French GDP 458 00:24:52,359 --> 00:24:56,320 Speaker 1: numbers and they were better than had been anticipated, my 459 00:24:56,560 --> 00:25:00,359 Speaker 1: first thought was because they had those nuclear reactors at 460 00:25:00,440 --> 00:25:04,520 Speaker 1: full blasts right now, and Germany has decided in its 461 00:25:04,600 --> 00:25:08,440 Speaker 1: wisdom to scrap nuclear power and they're going to go 462 00:25:08,520 --> 00:25:11,960 Speaker 1: through with that. They came out with GDP that was 463 00:25:12,119 --> 00:25:14,640 Speaker 1: less than had been anticipated, and I wonder if we're 464 00:25:14,640 --> 00:25:18,080 Speaker 1: going to see a divide along you know, nuclear lines 465 00:25:18,200 --> 00:25:23,720 Speaker 1: now Maria, where the French GDP continues to outperform, the 466 00:25:23,760 --> 00:25:26,520 Speaker 1: French economy continues to outperform the German economy because the 467 00:25:26,560 --> 00:25:28,719 Speaker 1: Germans are going to have to start rationing and shutting 468 00:25:28,760 --> 00:25:32,320 Speaker 1: down factories um come wintertime, and the French are going 469 00:25:32,359 --> 00:25:35,920 Speaker 1: to be heating their homes with nuclear power. And look 470 00:25:35,960 --> 00:25:38,000 Speaker 1: on Matt. I also think it's the way that you 471 00:25:38,119 --> 00:25:40,680 Speaker 1: frame it is great because it also shows fundamentally that 472 00:25:40,800 --> 00:25:44,159 Speaker 1: for ten years we all repeated and heard and and 473 00:25:44,480 --> 00:25:47,000 Speaker 1: especially something of your bean country. They were told, your 474 00:25:47,080 --> 00:25:49,280 Speaker 1: economy has to be more like the Germans. Look at 475 00:25:49,280 --> 00:25:51,600 Speaker 1: their industry, look at all the things that they make. 476 00:25:51,720 --> 00:25:54,080 Speaker 1: They're very good at that. But you realize that this 477 00:25:54,200 --> 00:25:56,320 Speaker 1: is an economy that was built on very shaky grounds. 478 00:25:56,359 --> 00:25:58,480 Speaker 1: Like it's on the one hand they got a major 479 00:25:58,600 --> 00:26:02,399 Speaker 1: boot by using Brussian gas and then they're exporting a 480 00:26:02,440 --> 00:26:04,879 Speaker 1: lot to China. So look at the Fans the foundations 481 00:26:04,920 --> 00:26:07,160 Speaker 1: of your industry and your egonomy. In the one hand 482 00:26:07,200 --> 00:26:09,400 Speaker 1: we have Russia and the other China. So for ten 483 00:26:09,480 --> 00:26:11,639 Speaker 1: years and the idea that we all heard repeatedly, I 484 00:26:11,680 --> 00:26:13,920 Speaker 1: mean everyone knows some Spanish you have to be more 485 00:26:13,960 --> 00:26:17,399 Speaker 1: like the Germans. Not everyone knows your Spanish, try to 486 00:26:17,480 --> 00:26:21,040 Speaker 1: model yourself after Germany. I think now it's pretty obvious 487 00:26:21,119 --> 00:26:22,840 Speaker 1: for everyone that this is very shaky, and for a 488 00:26:22,920 --> 00:26:26,000 Speaker 1: lot of the other European countries, by the way, they say, Okay, 489 00:26:26,119 --> 00:26:27,879 Speaker 1: we did have a credit bubble, we had a real 490 00:26:28,000 --> 00:26:31,159 Speaker 1: estate bubble, but why is an energy bubble different or 491 00:26:31,200 --> 00:26:33,920 Speaker 1: better than what we did? Right? All right, Maria, that 492 00:26:34,040 --> 00:26:36,960 Speaker 1: is great stuff, A great column out today. I recommend 493 00:26:37,000 --> 00:26:39,119 Speaker 1: folks take a look at that. Uh you can get 494 00:26:39,160 --> 00:26:42,000 Speaker 1: that at Bloomberg dot com, Slash Opinion and also b 495 00:26:42,200 --> 00:26:45,600 Speaker 1: I O P I N go for all the pining 496 00:26:45,640 --> 00:26:50,240 Speaker 1: stuff today covers Europe for Bloomberg News, Bloomberg televis doing 497 00:26:50,280 --> 00:26:54,879 Speaker 1: a stint at Bloomberg Opinion. Some great stuff. Thanks for 498 00:26:54,960 --> 00:26:58,359 Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and 499 00:26:58,520 --> 00:27:02,560 Speaker 1: listen to interviews with Apple Podcasts or whatever podcast platform 500 00:27:02,640 --> 00:27:06,240 Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller. 501 00:27:07,119 --> 00:27:10,280 Speaker 1: Yet I fall Sweeney. I'm on Twitter at pt Sweeney. 502 00:27:10,400 --> 00:27:13,040 Speaker 1: Before the podcast, you can always catch us worldwide at 503 00:27:13,040 --> 00:27:13,800 Speaker 1: Bloomberg Radio.