1 00:00:02,400 --> 00:00:09,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:09,119 --> 00:00:13,320 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:13,320 --> 00:00:15,520 Speaker 1: Eastern on Effo card playing and Broud. 4 00:00:15,320 --> 00:00:17,040 Speaker 2: Auto with the Bloomberg Business App. 5 00:00:17,079 --> 00:00:20,279 Speaker 1: Listen on demand wherever you get your podcasts, or watch 6 00:00:20,360 --> 00:00:22,640 Speaker 1: us live on YouTube. 7 00:00:23,000 --> 00:00:24,599 Speaker 3: And it feels like the worst act test of the 8 00:00:24,640 --> 00:00:27,680 Speaker 3: consumer data is definitely present. So let's get to Dana Peterson, 9 00:00:27,760 --> 00:00:30,560 Speaker 3: chief economist at the Conference Board, on this data. Hey, Dana, 10 00:00:30,600 --> 00:00:33,080 Speaker 3: what was your bigger, biggest takeaway? What's my takeaway from 11 00:00:33,080 --> 00:00:33,920 Speaker 3: the data this morning? 12 00:00:35,080 --> 00:00:37,239 Speaker 4: Sure, definitely the headline dipped and we're kind of at 13 00:00:37,240 --> 00:00:39,080 Speaker 4: the bottom of the range that we've seen over the 14 00:00:39,120 --> 00:00:42,120 Speaker 4: last two years. Much of it was because consumers are a 15 00:00:42,159 --> 00:00:44,680 Speaker 4: little less optimistic when it comes to employment. 16 00:00:45,200 --> 00:00:45,440 Speaker 5: Now. 17 00:00:45,560 --> 00:00:49,720 Speaker 4: The overall net from jobs hard to get versus jobs 18 00:00:49,720 --> 00:00:52,200 Speaker 4: easy to get is still positive, but it's come down 19 00:00:52,200 --> 00:00:54,720 Speaker 4: a lot. And even for expectations, consumers are a little 20 00:00:54,720 --> 00:00:56,920 Speaker 4: bit concerned about whether or not they're going to have 21 00:00:57,160 --> 00:01:00,800 Speaker 4: easy jobs prospects going forward. 22 00:01:02,120 --> 00:01:04,240 Speaker 6: Talk to us a little bit about the transmission mechanism. 23 00:01:04,360 --> 00:01:06,360 Speaker 6: I mean, when do we really think we're going to 24 00:01:06,440 --> 00:01:09,119 Speaker 6: see any evidence in the data from some of these 25 00:01:09,160 --> 00:01:10,440 Speaker 6: cuts we're seeing here out of the FED. 26 00:01:11,840 --> 00:01:13,920 Speaker 4: Sure, well, I mean you're already seeing that mortgage rates 27 00:01:13,920 --> 00:01:15,880 Speaker 4: have been falling for a couple of months now, and 28 00:01:15,920 --> 00:01:19,080 Speaker 4: they really accelerated after the Jackson Hole meeting, and they're 29 00:01:19,120 --> 00:01:21,280 Speaker 4: certainly going to continue to fall, and that the FED 30 00:01:21,400 --> 00:01:24,160 Speaker 4: is cut by fifty basis points. So we will see 31 00:01:24,160 --> 00:01:26,200 Speaker 4: some relief there in the housing market, but it's going 32 00:01:26,280 --> 00:01:28,600 Speaker 4: to take time because again we learn from cashial or 33 00:01:28,600 --> 00:01:32,200 Speaker 4: home price index this morning that prices are still very elevated, 34 00:01:32,480 --> 00:01:37,039 Speaker 4: and hence affordability is still challenged. In terms of the consumer, 35 00:01:37,160 --> 00:01:39,679 Speaker 4: I mean, as far as we know through July, consumers 36 00:01:39,720 --> 00:01:42,360 Speaker 4: continue to spend. They pulled back a little bit in 37 00:01:42,400 --> 00:01:46,400 Speaker 4: retail sales in August, but overall third quarter consumer spending 38 00:01:46,520 --> 00:01:48,840 Speaker 4: is probably going to be positive. So it's really what 39 00:01:49,000 --> 00:01:50,960 Speaker 4: happens in the balance of the year, and we do 40 00:01:51,000 --> 00:01:53,600 Speaker 4: think consumers are going to continue to pull back. However, 41 00:01:53,640 --> 00:01:56,400 Speaker 4: they're still working, and I think that as long as 42 00:01:56,400 --> 00:01:59,960 Speaker 4: consumers are working, they may complain about the job market, 43 00:02:00,280 --> 00:02:02,840 Speaker 4: but they still have some capacity to spend. 44 00:02:05,440 --> 00:02:07,440 Speaker 3: All right, Dana, We appreciate that, thank you very much. 45 00:02:07,480 --> 00:02:09,560 Speaker 3: It's that case shape recovery, but they're spending, but just 46 00:02:09,600 --> 00:02:11,079 Speaker 3: not a time. Basically at the end of the eight 47 00:02:11,200 --> 00:02:14,520 Speaker 3: day Dana Peterson joining us from the conference board. 48 00:02:16,080 --> 00:02:19,960 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 49 00:02:20,040 --> 00:02:23,160 Speaker 1: weekdays at ten am Eastern on applecar Play. 50 00:02:22,919 --> 00:02:25,120 Speaker 2: And Android Auto with the Bloomberg Business. 51 00:02:25,480 --> 00:02:28,320 Speaker 1: You can also listen live on Amazon Alexa from our 52 00:02:28,320 --> 00:02:32,720 Speaker 1: flagship New York station, Just say Alexa Play Bloomberg. Eleven thirty. 53 00:02:34,400 --> 00:02:39,240 Speaker 3: President Biden delivering his final speech at the UN General Assembly, 54 00:02:39,480 --> 00:02:42,040 Speaker 3: making the point that he was elected back in nineteen 55 00:02:42,120 --> 00:02:44,720 Speaker 3: seventy two, so emphasizing his long career. But it was 56 00:02:44,760 --> 00:02:48,280 Speaker 3: a wide ranging speech, Damien, that talked very much about AI, 57 00:02:48,520 --> 00:02:52,360 Speaker 3: the Center holding, peace and stability, ending the war on Gaza, 58 00:02:52,400 --> 00:02:52,960 Speaker 3: as well the. 59 00:02:53,080 --> 00:02:55,120 Speaker 6: Generation of leadership. He alluded to it, so you know, 60 00:02:55,160 --> 00:02:57,440 Speaker 6: it was kind of a farewell party. It's almost it 61 00:02:57,480 --> 00:02:58,960 Speaker 6: almost brings a tear to my eye, Alex, I. 62 00:02:58,960 --> 00:03:00,600 Speaker 3: Mean, think about it, and he said too, that is 63 00:03:00,639 --> 00:03:03,280 Speaker 3: a very very long career. He's seen a lot of 64 00:03:03,360 --> 00:03:07,120 Speaker 3: change within that. But definitely talking about the Center holding, 65 00:03:07,240 --> 00:03:11,120 Speaker 3: talking about democracy, bringing up Venezuela and different choices that 66 00:03:11,240 --> 00:03:14,239 Speaker 3: company that countries can also make as well, and he 67 00:03:14,320 --> 00:03:16,920 Speaker 3: also spent a good amount of time on AI and 68 00:03:16,960 --> 00:03:19,360 Speaker 3: the risks around AI and how to insulate that. So 69 00:03:19,400 --> 00:03:21,440 Speaker 3: let's go from more on that with Nick Wadams. He 70 00:03:21,520 --> 00:03:25,440 Speaker 3: leads up our US national security team for Bloomberg. Nick, 71 00:03:25,639 --> 00:03:27,760 Speaker 3: what did he accomplish in that speech? 72 00:03:29,000 --> 00:03:31,480 Speaker 7: Well, I mean it's a great question, you know. I 73 00:03:31,480 --> 00:03:33,760 Speaker 7: think this was much more of a swan song for 74 00:03:33,919 --> 00:03:38,000 Speaker 7: President Biden looking back on his career. The thing that 75 00:03:38,080 --> 00:03:41,680 Speaker 7: may be most remembered obviously, as he mentioned AI, but 76 00:03:41,920 --> 00:03:47,200 Speaker 7: his plea to other leaders, essentially saying, listen, I decided 77 00:03:47,240 --> 00:03:50,960 Speaker 7: that my country was more important than my own political career, 78 00:03:50,960 --> 00:03:55,080 Speaker 7: and that's why I decided to step down. An admonition 79 00:03:55,240 --> 00:03:58,200 Speaker 7: to many leaders in the hall who have stayed in 80 00:03:58,280 --> 00:04:03,280 Speaker 7: power for decades, A plea for leaders to relinquish power 81 00:04:03,360 --> 00:04:05,640 Speaker 7: if they're no longer fit for office. 82 00:04:07,520 --> 00:04:08,920 Speaker 6: Nick, what do you think if you're sitting in that 83 00:04:09,000 --> 00:04:11,200 Speaker 6: auditorium and you're listening to the president, if you're a 84 00:04:11,240 --> 00:04:14,119 Speaker 6: foreign leader, a foreign head of state, what's your big takeaway? 85 00:04:15,440 --> 00:04:18,920 Speaker 7: Well, I mean a couple of things. One is President 86 00:04:18,960 --> 00:04:22,960 Speaker 7: Biden certainly is he made a joke about how he 87 00:04:23,000 --> 00:04:27,600 Speaker 7: looks only forty, but he certainly looks a little bit older. 88 00:04:27,839 --> 00:04:33,120 Speaker 7: I think though, in a hall where support for Palestinians 89 00:04:34,160 --> 00:04:38,560 Speaker 7: and anger toward Israel is pretty palpable, they are not 90 00:04:38,720 --> 00:04:42,440 Speaker 7: going to be terribly happy with what he said on Gaza. 91 00:04:42,520 --> 00:04:45,640 Speaker 7: He did call for a cease fire now, but every 92 00:04:45,640 --> 00:04:48,599 Speaker 7: indication that the US is going to continue the flow 93 00:04:48,640 --> 00:04:52,279 Speaker 7: of weapons and other support to Israel, So he's not 94 00:04:52,320 --> 00:04:53,159 Speaker 7: going to budge on that. 95 00:04:55,839 --> 00:04:58,080 Speaker 3: So that brings up a good point. Then who was 96 00:04:58,160 --> 00:05:00,520 Speaker 3: he then talking to in that room? 97 00:05:01,360 --> 00:05:05,440 Speaker 7: Well, I mean, you know, he's trying to set an example, 98 00:05:05,640 --> 00:05:09,600 Speaker 7: but I mean this is something that leaders have traditionally 99 00:05:09,680 --> 00:05:12,640 Speaker 7: used to sort of set their agenda for the next 100 00:05:12,760 --> 00:05:16,480 Speaker 7: year on foreign policy. But obviously, given that he is 101 00:05:16,600 --> 00:05:20,039 Speaker 7: essentially a lame duck president at this point, that's not 102 00:05:20,200 --> 00:05:22,599 Speaker 7: something that he's going to be able to do. I mean, 103 00:05:22,640 --> 00:05:24,440 Speaker 7: you know, the other big thing that's going to be 104 00:05:24,480 --> 00:05:28,200 Speaker 7: on everybody's mind in that hall is, Okay, who's next? 105 00:05:28,320 --> 00:05:32,279 Speaker 7: So what would we get Kamala Harris to continue his 106 00:05:32,400 --> 00:05:35,760 Speaker 7: policies or will we have Donald Trump, who you could 107 00:05:35,960 --> 00:05:39,920 Speaker 7: almost be guaranteed would essentially blow up everything that Biden 108 00:05:40,000 --> 00:05:42,560 Speaker 7: did as he looks to chart his course. So you know, 109 00:05:42,640 --> 00:05:46,719 Speaker 7: President Biden very clearly is not making any promises. He 110 00:05:46,760 --> 00:05:49,840 Speaker 7: didn't make any promises in that speech. Wanted to use 111 00:05:49,839 --> 00:05:55,080 Speaker 7: it essentially as a valedictory for his own presidency. 112 00:05:55,200 --> 00:05:56,919 Speaker 6: You know, Nick, I do find it interesting. You know, 113 00:05:56,960 --> 00:05:59,479 Speaker 6: it's the UN General Assembly. Obviously he's going to play 114 00:05:59,520 --> 00:06:02,920 Speaker 6: the foreign policy, but it's what wasn't said, and what 115 00:06:02,960 --> 00:06:04,760 Speaker 6: wasn't said for me is the US economy and lieu 116 00:06:04,800 --> 00:06:06,800 Speaker 6: of this consumer confidence data and some of the recent 117 00:06:06,839 --> 00:06:09,320 Speaker 6: economic prints we've seen on the payroll side. You know, 118 00:06:09,839 --> 00:06:11,680 Speaker 6: is there any read through in your mind the fact 119 00:06:11,720 --> 00:06:14,120 Speaker 6: that he completely didn't even touch the state of the 120 00:06:14,200 --> 00:06:15,360 Speaker 6: US economy and inflation. 121 00:06:16,000 --> 00:06:19,320 Speaker 7: I mean, you know, very very brief mention on on 122 00:06:19,440 --> 00:06:22,960 Speaker 7: the US as like a global leader and the and 123 00:06:23,040 --> 00:06:25,240 Speaker 7: the powerhouse in that way. But I mean, you know, 124 00:06:25,400 --> 00:06:27,560 Speaker 7: I think, for one thing, this is this is a 125 00:06:27,600 --> 00:06:31,960 Speaker 7: speech where President Biden very much sees himself as a 126 00:06:32,000 --> 00:06:36,840 Speaker 7: foreign policy president. He's he's explicit about understands very well 127 00:06:36,880 --> 00:06:40,479 Speaker 7: who who his audience is, and he doesn't feel like 128 00:06:40,560 --> 00:06:44,080 Speaker 7: this is a place where he wants to make that 129 00:06:44,240 --> 00:06:48,919 Speaker 7: case the foreign policy. He's said so many times that 130 00:06:48,960 --> 00:06:52,080 Speaker 7: foreign policy is really a defining element of his own career. 131 00:06:52,120 --> 00:06:54,280 Speaker 7: He mentioned that at the top, so I think it 132 00:06:54,400 --> 00:06:57,159 Speaker 7: was probably more a situation where he was trying to 133 00:06:57,200 --> 00:07:00,280 Speaker 7: read his audience and play to what he sees one 134 00:07:00,279 --> 00:07:02,080 Speaker 7: of his biggest strengths. I mean, when you look at 135 00:07:02,080 --> 00:07:04,200 Speaker 7: the campaign when he was still in the race, he 136 00:07:04,279 --> 00:07:06,719 Speaker 7: was talking about all of his success and foreign policy 137 00:07:06,760 --> 00:07:09,840 Speaker 7: and not even really hitting the economic issues as hard. 138 00:07:09,880 --> 00:07:12,160 Speaker 7: So this is something where he thinks he can take 139 00:07:12,400 --> 00:07:13,679 Speaker 7: a victory left essentially. 140 00:07:14,320 --> 00:07:16,480 Speaker 3: All right, Nick, we really appreciate that. Thank you very much. 141 00:07:16,560 --> 00:07:19,640 Speaker 3: Nick Wadams. He leads our US National Security team for 142 00:07:19,720 --> 00:07:22,600 Speaker 3: Bloomberg News, commenting on President Biden's a final speech to 143 00:07:22,640 --> 00:07:24,320 Speaker 3: the UN General Assembly. 144 00:07:25,800 --> 00:07:29,640 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 145 00:07:29,720 --> 00:07:32,400 Speaker 1: weekdays at ten am Eastern on Affo, car Play and 146 00:07:32,640 --> 00:07:35,480 Speaker 1: rout Otto with the Bloomberg Business app. Listen on demand 147 00:07:35,480 --> 00:07:39,840 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 148 00:07:40,960 --> 00:07:43,320 Speaker 3: I mean, I'm waiting, Damian, I'm waiting for the actual 149 00:07:43,360 --> 00:07:44,559 Speaker 3: stimulus from China. 150 00:07:44,800 --> 00:07:46,720 Speaker 6: Well, you know, I think what's interesting this time around 151 00:07:46,720 --> 00:07:49,080 Speaker 6: is the announced it all at once. China doesn't normally 152 00:07:49,080 --> 00:07:51,600 Speaker 6: do that, and China doesn't normally give you forward guidance. 153 00:07:51,640 --> 00:07:54,560 Speaker 6: In this time, the PBOC governor actually said he's probably 154 00:07:54,560 --> 00:07:56,280 Speaker 6: going to cut rates before the end of the year. Again, 155 00:07:56,400 --> 00:08:00,360 Speaker 6: they don't often do exactly. China, well, the fiscal obviously 156 00:08:00,440 --> 00:08:01,560 Speaker 6: is what we're all waiting for, but I don't even 157 00:08:01,560 --> 00:08:03,440 Speaker 6: know if fiscal stimulus is really what we're waiting for. Again, 158 00:08:03,480 --> 00:08:05,480 Speaker 6: this comes down to the fact that unemployment is so high, 159 00:08:05,480 --> 00:08:08,760 Speaker 6: there so much wealth destruction, So people just don't want 160 00:08:08,760 --> 00:08:10,760 Speaker 6: to spend. It's not about them not having the capacity 161 00:08:10,760 --> 00:08:12,560 Speaker 6: to spend outs, it's about the willingness too. 162 00:08:12,840 --> 00:08:14,880 Speaker 3: Okay, so that monetary isn'tenough, But we definitely look at 163 00:08:14,880 --> 00:08:17,160 Speaker 3: commodities kind of flying on that news. Let's get more 164 00:08:17,200 --> 00:08:20,720 Speaker 3: with Cali Cox, a chief market strategist at Ritholt's Wealth Management. 165 00:08:20,920 --> 00:08:23,520 Speaker 3: She joins us, we're just talking about China and sort 166 00:08:23,560 --> 00:08:26,200 Speaker 3: of that helping the commodity market today. Materials are flying 167 00:08:26,240 --> 00:08:28,080 Speaker 3: high within the S and P. Freeport is the best 168 00:08:28,080 --> 00:08:30,559 Speaker 3: performing stock on the S and P. Is this enough 169 00:08:30,720 --> 00:08:32,480 Speaker 3: from China to really get things moving? 170 00:08:34,360 --> 00:08:36,680 Speaker 8: So sure, Alex, I mean, China isn't a tough spot 171 00:08:36,760 --> 00:08:38,920 Speaker 8: right now, and I mean, like you mentioned, there's a 172 00:08:38,960 --> 00:08:41,760 Speaker 8: dead situation going on over there. Unemployment is still quite 173 00:08:41,880 --> 00:08:45,800 Speaker 8: high even though there is this capacity to spend. So 174 00:08:45,960 --> 00:08:47,839 Speaker 8: it's kind of more of the same from China. I'm 175 00:08:47,880 --> 00:08:49,840 Speaker 8: not sure what it can do on the commodity side 176 00:08:49,880 --> 00:08:52,520 Speaker 8: of things. I mean, obviously China is a major player there, 177 00:08:52,720 --> 00:08:55,600 Speaker 8: but from our perspective, I mean, emerging markets are still 178 00:08:56,559 --> 00:08:59,240 Speaker 8: you know, quite attractive given the slide and the dollar 179 00:08:59,280 --> 00:09:01,640 Speaker 8: that we've seen. But you know, China is the big 180 00:09:01,679 --> 00:09:04,960 Speaker 8: weak spot, and unfortunately it's the biggest part of emergent markets. 181 00:09:07,679 --> 00:09:09,720 Speaker 6: Callie, I've read your latest note when you're talking about 182 00:09:09,720 --> 00:09:12,320 Speaker 6: the tug of war between wages and prices and you 183 00:09:12,480 --> 00:09:13,400 Speaker 6: reference the big Mac. 184 00:09:13,440 --> 00:09:14,760 Speaker 5: Now, I went to McDonald's yesterday. 185 00:09:14,760 --> 00:09:16,480 Speaker 6: I paid fifteen dollars and eighty three cents for a 186 00:09:16,520 --> 00:09:18,760 Speaker 6: twenty piece McNugget that doesn't include the sauce. 187 00:09:19,160 --> 00:09:19,800 Speaker 5: All to us. 188 00:09:19,720 --> 00:09:21,240 Speaker 9: About big nuggets. 189 00:09:21,360 --> 00:09:23,079 Speaker 6: They were really good, actually, but they're smaller. There's the 190 00:09:23,160 --> 00:09:25,720 Speaker 6: mcdugget's even smaller. So what's the read through from the 191 00:09:25,720 --> 00:09:28,840 Speaker 6: price of a big mac today relative to years past? 192 00:09:30,480 --> 00:09:30,800 Speaker 5: Small? 193 00:09:30,840 --> 00:09:32,600 Speaker 8: I have to give a shout out to the economists, 194 00:09:32,600 --> 00:09:35,720 Speaker 8: because the economist has been compiling historical prices of the 195 00:09:35,720 --> 00:09:36,360 Speaker 8: big mac. 196 00:09:36,200 --> 00:09:37,520 Speaker 9: Since nineteen eighty nine. 197 00:09:37,640 --> 00:09:39,800 Speaker 8: But it gives you a really interesting use case on 198 00:09:40,200 --> 00:09:44,080 Speaker 8: you know, measuring exactly how much daily purchases. Now, the 199 00:09:44,080 --> 00:09:46,040 Speaker 8: big bag is not a daily purchase for me, but 200 00:09:46,280 --> 00:09:48,720 Speaker 8: for some people it might be. And it's an item 201 00:09:48,760 --> 00:09:51,040 Speaker 8: that we're all familiar with in the economy, and it 202 00:09:51,080 --> 00:09:54,839 Speaker 8: can also show us how the economy is becoming more affordable, 203 00:09:54,920 --> 00:09:56,880 Speaker 8: even though the price of a big Mac is at 204 00:09:56,880 --> 00:09:58,840 Speaker 8: an all time high, and you know, a lot of 205 00:09:58,840 --> 00:10:01,560 Speaker 8: things in our life are quite ex defensive compared to wages, 206 00:10:01,600 --> 00:10:04,000 Speaker 8: and the big Mac has actually gotten a little cheaper, 207 00:10:04,240 --> 00:10:08,120 Speaker 8: a little more affordable based on the average you know, 208 00:10:08,240 --> 00:10:11,320 Speaker 8: wage per hour worked, you know, over the past year 209 00:10:11,440 --> 00:10:14,640 Speaker 8: or so. 210 00:10:14,640 --> 00:10:17,640 Speaker 3: So, Kelly, based on that, and then the consumer confidence 211 00:10:17,679 --> 00:10:20,600 Speaker 3: that we got today, how does one invest in that 212 00:10:20,760 --> 00:10:24,560 Speaker 3: k shape consumer recovery when we are, though on a 213 00:10:24,679 --> 00:10:26,440 Speaker 3: path of significant rate cuts. 214 00:10:28,040 --> 00:10:31,120 Speaker 8: Consumer confidence today was actually quite worrying. Yeah, I just 215 00:10:31,160 --> 00:10:34,079 Speaker 8: read the details, and we obviously saw a huge shop 216 00:10:34,080 --> 00:10:37,440 Speaker 8: in confidence. For me, the worrying detail was the fact 217 00:10:37,440 --> 00:10:39,720 Speaker 8: that we saw a drop in the evaluation of present 218 00:10:39,800 --> 00:10:43,440 Speaker 8: conditions because for most of the cycle, and to remind everybody, 219 00:10:43,679 --> 00:10:46,680 Speaker 8: confidence is a combination of what people feel right now 220 00:10:46,760 --> 00:10:48,800 Speaker 8: and what people are expecting in the future. That's how 221 00:10:48,800 --> 00:10:52,240 Speaker 8: the Conference board measures it. But the number that we 222 00:10:52,280 --> 00:10:54,720 Speaker 8: got today was mostly driven by a drop in the 223 00:10:54,760 --> 00:10:58,360 Speaker 8: evaluation of present conditions. People don't feel well about what's 224 00:10:58,400 --> 00:11:02,200 Speaker 8: happening now before this, so it was mostly you know, 225 00:11:02,320 --> 00:11:06,240 Speaker 8: souring on expectations. But the fact that president conditions and 226 00:11:06,280 --> 00:11:09,880 Speaker 8: the fact that consumers are worried about what's happening now 227 00:11:10,280 --> 00:11:13,240 Speaker 8: makes me a little more worried about the present situation 228 00:11:13,320 --> 00:11:16,680 Speaker 8: of the job market. And you know how able people 229 00:11:16,760 --> 00:11:19,920 Speaker 8: are to afford these things, even though we've seen a 230 00:11:19,920 --> 00:11:21,520 Speaker 8: pretty solid job market up until now. 231 00:11:24,600 --> 00:11:25,000 Speaker 5: Calori. 232 00:11:25,600 --> 00:11:28,280 Speaker 6: History doesn't often repeat itself, but it does rhyme. And 233 00:11:28,320 --> 00:11:30,040 Speaker 6: so my question for you is, when you and Barrier 234 00:11:30,120 --> 00:11:32,360 Speaker 6: in the war room at Ridthole's Wealth Management, you're looking 235 00:11:32,400 --> 00:11:35,200 Speaker 6: at previous rate cutting cycles, and I believe you highlighted 236 00:11:35,240 --> 00:11:38,640 Speaker 6: eighteen of them. I'm just curious, what cycle does this 237 00:11:38,720 --> 00:11:39,800 Speaker 6: one most remant? 238 00:11:39,880 --> 00:11:41,600 Speaker 5: I mean, what's most reminiscent to you? What does it 239 00:11:41,600 --> 00:11:42,200 Speaker 5: most look like. 240 00:11:43,760 --> 00:11:45,640 Speaker 8: I'd like to think that it's a rate cut cycle 241 00:11:45,679 --> 00:11:48,920 Speaker 8: that won't overlap with a recession. And so far, so good. 242 00:11:48,960 --> 00:11:51,920 Speaker 8: Even though I just mentioned that consumer confidence data has 243 00:11:51,960 --> 00:11:54,840 Speaker 8: me a little worried right now. So, yeah, when Barry 244 00:11:54,880 --> 00:11:57,560 Speaker 8: and I are looking at rate cut cycle data, you know, 245 00:11:57,600 --> 00:11:59,960 Speaker 8: we usually note or we usually separate it at two. 246 00:12:00,000 --> 00:12:02,400 Speaker 8: I mean, rate cuts that happened out of desperation and 247 00:12:02,480 --> 00:12:05,720 Speaker 8: rate cuts that have happened out of celebration. More policy adjustments, 248 00:12:05,720 --> 00:12:09,320 Speaker 8: because the FED has reached its goal on inflation and unemployment, 249 00:12:09,720 --> 00:12:12,280 Speaker 8: so it can take policy back down to normal. And 250 00:12:12,320 --> 00:12:15,959 Speaker 8: so far we think the latter case is what's going on. 251 00:12:16,280 --> 00:12:18,840 Speaker 8: I mean, the job market, of course is stalling, but 252 00:12:19,000 --> 00:12:22,080 Speaker 8: unemployment is still quite low. So right now we feel 253 00:12:22,080 --> 00:12:25,280 Speaker 8: pretty confident that the FED can take this over the line. 254 00:12:25,280 --> 00:12:27,240 Speaker 8: We just hope that the economy can hold out for a. 255 00:12:27,160 --> 00:12:27,840 Speaker 9: Few more months. 256 00:12:30,160 --> 00:12:32,920 Speaker 3: So does that mean by midcaps, small caps or where 257 00:12:32,920 --> 00:12:34,040 Speaker 3: does that land you? 258 00:12:35,640 --> 00:12:37,839 Speaker 8: Well, Alex, we really like small and mad caps. We 259 00:12:37,880 --> 00:12:40,000 Speaker 8: think that there's a lot of opportunity there just because 260 00:12:40,000 --> 00:12:42,080 Speaker 8: they haven't been able to keep up in this full market, 261 00:12:42,360 --> 00:12:44,800 Speaker 8: and you know, speaking of emerging markets, small caps are 262 00:12:44,840 --> 00:12:47,600 Speaker 8: more domestically focused. So if you believe that the US 263 00:12:47,640 --> 00:12:50,320 Speaker 8: economy is the cleanest shirt in a dirty laundry pile, 264 00:12:50,600 --> 00:12:52,280 Speaker 8: then you probably do want to be looking at the 265 00:12:52,280 --> 00:12:55,160 Speaker 8: small and meg paps. But overall, you know, as long 266 00:12:55,280 --> 00:12:58,480 Speaker 8: as the economy stays okay, as long as the job 267 00:12:58,520 --> 00:13:01,160 Speaker 8: market can make it through the next few months, then 268 00:13:01,280 --> 00:13:03,280 Speaker 8: we think that there are a lot of good reasons 269 00:13:03,280 --> 00:13:05,040 Speaker 8: to be buying into this market as long as you 270 00:13:05,080 --> 00:13:06,319 Speaker 8: focus on the right things. 271 00:13:06,960 --> 00:13:08,800 Speaker 3: All right, Kelly, we appreciate it. Thank you so much, 272 00:13:08,880 --> 00:13:12,000 Speaker 3: Kelly Cox joining us there for Matholt's wealth management and 273 00:13:12,080 --> 00:13:14,240 Speaker 3: kind of setting us up. But you know, the consumer 274 00:13:14,280 --> 00:13:17,440 Speaker 3: confidence data, if it continues to deteriorate, right, had to 275 00:13:17,480 --> 00:13:18,880 Speaker 3: small caps and make that good investment. 276 00:13:18,920 --> 00:13:20,920 Speaker 6: How many big macs do you think Calli's really tried 277 00:13:20,920 --> 00:13:22,520 Speaker 6: in the last few years. I mean, I wonder if 278 00:13:22,559 --> 00:13:25,120 Speaker 6: it tastes the same today as it did ten years ago. 279 00:13:25,200 --> 00:13:27,199 Speaker 6: I would bet even with the secret sauce and everything, 280 00:13:27,200 --> 00:13:27,800 Speaker 6: it probably does. 281 00:13:27,840 --> 00:13:29,640 Speaker 3: Okay, So what does that tell you. 282 00:13:29,240 --> 00:13:31,480 Speaker 6: Well, it tells me that you know, somebody's making fat 283 00:13:31,520 --> 00:13:32,120 Speaker 6: margins I e. 284 00:13:32,240 --> 00:13:35,080 Speaker 5: McDonald's, right, but probably to pay Paul. 285 00:13:35,120 --> 00:13:36,880 Speaker 3: What did they just change the ingredients? Because you change 286 00:13:36,920 --> 00:13:38,959 Speaker 3: ingredients and that's cool and you get fresher stuff. We're 287 00:13:39,040 --> 00:13:40,000 Speaker 3: using that they're trying to. 288 00:13:39,880 --> 00:13:42,120 Speaker 5: Like get I know where you're going here. It's not 289 00:13:42,200 --> 00:13:43,479 Speaker 5: farm to table with McDonald's. 290 00:13:43,480 --> 00:13:44,920 Speaker 6: But you know it did taste good. I mean, those 291 00:13:44,960 --> 00:13:46,359 Speaker 6: McDonald's were delicious. 292 00:13:47,000 --> 00:13:49,480 Speaker 3: Oh twenty piece nuggets. I don't even know they had 293 00:13:49,480 --> 00:13:51,880 Speaker 3: twenty piece nuggets anymore. I was like a double cheeseburger 294 00:13:52,160 --> 00:13:53,720 Speaker 3: with Burger King tons of cheese. 295 00:13:53,760 --> 00:13:59,600 Speaker 1: Anyway, you're listening to the Bloomberg Intelligence Podcast. Catch us 296 00:13:59,640 --> 00:14:03,040 Speaker 1: live weekdays at ten am Eastern on applecar Play and 297 00:14:03,040 --> 00:14:05,960 Speaker 1: Android Auto with the Bloomberg Business Act. You can also 298 00:14:06,040 --> 00:14:09,520 Speaker 1: listen live on Amazon Alexa from our flagship New York station, 299 00:14:09,880 --> 00:14:12,880 Speaker 1: Just say Alexa Play, Bloomberg eleven thirty. 300 00:14:13,840 --> 00:14:16,679 Speaker 3: Alex Fielong, Sid Damien Sas Hour. This is Bloomberg Intelligence 301 00:14:16,760 --> 00:14:19,320 Speaker 3: Radio when you're broadcasting to you live from the Earthshot 302 00:14:19,360 --> 00:14:22,320 Speaker 3: Summit right here at the Plaza Hotel in Midtown Manhattan. 303 00:14:22,360 --> 00:14:26,200 Speaker 3: The summit celebrates innovators who are trailblazing solutions to repair 304 00:14:26,280 --> 00:14:29,920 Speaker 3: our planet, and that event is co hosted by Bloomberg Philanthropys. 305 00:14:29,960 --> 00:14:31,720 Speaker 3: We have a great guest I lined up for you, 306 00:14:31,800 --> 00:14:34,000 Speaker 3: sort of connecting the dots between how we go green 307 00:14:34,040 --> 00:14:36,160 Speaker 3: and carbon neutral and how we also pay for it. 308 00:14:36,560 --> 00:14:39,320 Speaker 3: Joining us now is Nadia Calvino, President of the European 309 00:14:39,440 --> 00:14:43,640 Speaker 3: Investment Bank EIB. European Green Deal is huge. There's a 310 00:14:43,640 --> 00:14:45,800 Speaker 3: set of policies that look to meet the European Union 311 00:14:45,800 --> 00:14:48,640 Speaker 3: climate neutral by twenty fifty. You're looking to mobilize over 312 00:14:48,680 --> 00:14:51,040 Speaker 3: one trillion euros in order to do that. 313 00:14:51,440 --> 00:14:54,240 Speaker 9: How's it going, Yes, well, it's going well, it's going well. 314 00:14:54,280 --> 00:14:56,240 Speaker 9: We are on track to meet the target of one 315 00:14:56,280 --> 00:14:59,360 Speaker 9: trillion euros in investment in green finance. More than fifty 316 00:14:59,400 --> 00:15:03,080 Speaker 9: percent of our our annual investments go to the climate transition, 317 00:15:03,160 --> 00:15:05,520 Speaker 9: to the green finance, so as to make it a success, 318 00:15:05,520 --> 00:15:07,960 Speaker 9: a European success, a global success for all of us. 319 00:15:08,000 --> 00:15:10,360 Speaker 3: But why do I keep hearing then that the europe 320 00:15:10,360 --> 00:15:12,520 Speaker 3: has more at the stick approach and the US has 321 00:15:12,560 --> 00:15:14,920 Speaker 3: the carrot approach with the IRA. How did they differ? 322 00:15:15,600 --> 00:15:18,480 Speaker 9: Well, I think that we have a shared endeavor, you know, 323 00:15:18,520 --> 00:15:21,360 Speaker 9: which is to ensure that we do this green transition, 324 00:15:21,440 --> 00:15:23,680 Speaker 9: that we move to an net zero economy, and that 325 00:15:23,720 --> 00:15:27,040 Speaker 9: this is profitable. Well, my side of things is the carrots. 326 00:15:27,080 --> 00:15:30,480 Speaker 9: Actually I am the investor, so we are probably we 327 00:15:30,520 --> 00:15:33,240 Speaker 9: are the largest multilateral development bank in the world. Maybe 328 00:15:33,280 --> 00:15:35,720 Speaker 9: people don't know. With a six hundred billion balance sheet, 329 00:15:36,120 --> 00:15:38,600 Speaker 9: ninety percent of the investments are done in the EU, 330 00:15:39,000 --> 00:15:42,040 Speaker 9: where we are the largest investor in renewables. We're probably 331 00:15:42,040 --> 00:15:44,800 Speaker 9: one of the largest investors in renewables in the in 332 00:15:44,840 --> 00:15:47,720 Speaker 9: the whole world, and right now here in the UN 333 00:15:47,840 --> 00:15:51,160 Speaker 9: General Assembly. Around the General Assembly, I'm having lots of 334 00:15:51,240 --> 00:15:54,840 Speaker 9: meetings exchanges to try to bring that agenda forward with 335 00:15:54,880 --> 00:15:55,960 Speaker 9: a global perspective. 336 00:15:56,200 --> 00:15:59,720 Speaker 6: Well, Nadia, I mean, renewables is a very broad topic, solar, wind, water, 337 00:15:59,800 --> 00:16:02,400 Speaker 6: new nuclear. Talk to us about where you're deploying your 338 00:16:02,400 --> 00:16:05,400 Speaker 6: balance sheet. I mean six hundred billions, a lot of money, well. 339 00:16:05,240 --> 00:16:07,120 Speaker 9: More than fifty percent, as I said, is going to 340 00:16:07,160 --> 00:16:11,680 Speaker 9: climate finance. And this is sustainable infrastructures, This is sustainable transport. 341 00:16:12,080 --> 00:16:16,600 Speaker 9: This is also renewables, wind energy, greeds, solar, and also 342 00:16:16,720 --> 00:16:19,720 Speaker 9: new fuels, the fuels of the future, for example, green hydrogen. 343 00:16:19,960 --> 00:16:24,520 Speaker 9: We're supporting very innovative, large projects, also large traditional infrastructures 344 00:16:24,880 --> 00:16:27,640 Speaker 9: and dynamic startups that are really going to be the 345 00:16:27,640 --> 00:16:31,480 Speaker 9: ones finding the technologies, the breakthrough technologies for all of us. 346 00:16:31,520 --> 00:16:34,040 Speaker 3: I mean we've seen with hydrogen though that a lot 347 00:16:34,120 --> 00:16:37,480 Speaker 3: that it's hard, that green hydrogen particular is quite hard. 348 00:16:37,560 --> 00:16:39,960 Speaker 3: I mean Germany had a sort of backtrack from that, 349 00:16:40,040 --> 00:16:43,560 Speaker 3: in particular with the war in Ukraine. In addition, like 350 00:16:43,600 --> 00:16:47,120 Speaker 3: Oorsied dropped and had to ditch out on a hydrogen project. 351 00:16:47,800 --> 00:16:50,600 Speaker 3: Can you do hydrogen profitably? And how do you do that? 352 00:16:50,680 --> 00:16:52,760 Speaker 9: But we have to, we have to because it is 353 00:16:52,920 --> 00:16:56,440 Speaker 9: can right now, well we are right now. We're investing 354 00:16:56,440 --> 00:16:58,680 Speaker 9: in a number of projects in Europe which are more 355 00:16:58,680 --> 00:17:02,800 Speaker 9: having to do with industry hubs. So we are greening industry, 356 00:17:03,120 --> 00:17:06,240 Speaker 9: highly polluting, highly energy intensive. 357 00:17:05,800 --> 00:17:07,119 Speaker 3: So like as the men industry. 358 00:17:07,119 --> 00:17:11,200 Speaker 9: That yes, and still you know, all these large industry 359 00:17:11,520 --> 00:17:14,640 Speaker 9: so we are we're seeing, for example, close to port 360 00:17:14,680 --> 00:17:16,879 Speaker 9: to Report in the south of Portugal, we're going to 361 00:17:16,880 --> 00:17:19,840 Speaker 9: have a green hydrogen hub, so that's very close to 362 00:17:20,080 --> 00:17:24,119 Speaker 9: traditional industries and we're helping them become green and also profitable. 363 00:17:25,000 --> 00:17:27,280 Speaker 9: Likewise in other parts of Europe. You know, we are 364 00:17:27,640 --> 00:17:30,200 Speaker 9: at the early stages of these new technologies and it 365 00:17:30,280 --> 00:17:32,760 Speaker 9: is only normal you know that some projects fail, that 366 00:17:32,840 --> 00:17:36,560 Speaker 9: some projects are succeeding, and that's that's why we are. 367 00:17:37,040 --> 00:17:39,520 Speaker 9: The European Investment Bank is a public investment bank to 368 00:17:39,560 --> 00:17:42,920 Speaker 9: take the risk, to make sure that patient capital long 369 00:17:43,000 --> 00:17:46,199 Speaker 9: term investors are taking those risks. So that also we 370 00:17:46,240 --> 00:17:49,080 Speaker 9: mobilize private capital and we make this a success. 371 00:17:49,600 --> 00:17:51,919 Speaker 6: Well, you know, other multi level finance institutions, I mean 372 00:17:51,920 --> 00:17:54,520 Speaker 6: development banks out of for example, China, Korea, et cetera, 373 00:17:54,720 --> 00:17:57,480 Speaker 6: have had a very poor track record of deploying capital profitably. 374 00:17:57,520 --> 00:17:59,119 Speaker 6: And you know, I know the IB is different. I 375 00:17:59,119 --> 00:18:01,159 Speaker 6: know the World Bank Group is very very different. And 376 00:18:01,200 --> 00:18:03,960 Speaker 6: I know we're talking about perpetual capital, perpetual investments. But 377 00:18:04,080 --> 00:18:06,239 Speaker 6: the end of the day, you do have to get 378 00:18:06,280 --> 00:18:08,000 Speaker 6: a return on your investment. So talk to us about 379 00:18:08,000 --> 00:18:11,640 Speaker 6: which sectors within the broader renewable space, within the border 380 00:18:11,720 --> 00:18:15,440 Speaker 6: climate space carry the highest return on investment from your perspective. 381 00:18:15,800 --> 00:18:18,400 Speaker 9: Well, actually, we are very profitable. Let me be very clear. 382 00:18:18,440 --> 00:18:20,320 Speaker 9: The fact that we're a public bank doesn't mean that 383 00:18:20,359 --> 00:18:23,320 Speaker 9: I don't have to deliver for a shareholders. So around 384 00:18:23,359 --> 00:18:25,760 Speaker 9: two billion euros we had in profit last year. We've 385 00:18:25,760 --> 00:18:29,240 Speaker 9: been profitable since the bank, since its inception. We have 386 00:18:29,320 --> 00:18:33,200 Speaker 9: a very low, very low level of non performing assets. 387 00:18:33,480 --> 00:18:35,320 Speaker 9: When I say very low, I mean like zero point 388 00:18:35,359 --> 00:18:37,480 Speaker 9: four percent of our assets. Huh. So it is a 389 00:18:37,560 --> 00:18:39,600 Speaker 9: very profitable bank. And what we have is a very 390 00:18:39,680 --> 00:18:43,840 Speaker 9: large balance sheet and very balanced portfolio with large infrastructures 391 00:18:43,880 --> 00:18:48,639 Speaker 9: traditional infrastructures which are very profitable, lower risk and also 392 00:18:48,880 --> 00:18:53,840 Speaker 9: highly risky endeavors like innovative startups or large investments into 393 00:18:53,880 --> 00:18:56,720 Speaker 9: new green technologies. And that's what's allowing us, I think, 394 00:18:56,720 --> 00:18:59,440 Speaker 9: to make a difference in making projects bankable at the 395 00:18:59,520 --> 00:19:00,000 Speaker 9: end of the day. 396 00:19:00,200 --> 00:19:01,919 Speaker 3: So what have you noticed in terms of if you 397 00:19:01,960 --> 00:19:05,040 Speaker 3: support a project that, does it bring in private investors 398 00:19:05,080 --> 00:19:06,440 Speaker 3: in private capital. 399 00:19:06,560 --> 00:19:09,119 Speaker 9: At the end of the day, it does absolutely. You know, 400 00:19:09,160 --> 00:19:11,640 Speaker 9: the European Investment Bank is considered to be a reference 401 00:19:11,680 --> 00:19:15,720 Speaker 9: in terms of technical expertise in some areas for example green, 402 00:19:16,000 --> 00:19:19,280 Speaker 9: for example health. So once the EiV says yes, I'm 403 00:19:19,320 --> 00:19:21,840 Speaker 9: going to invest in this project, immediately a number of 404 00:19:21,880 --> 00:19:22,760 Speaker 9: investors say. 405 00:19:22,800 --> 00:19:25,120 Speaker 5: I join, naddie. I'd love to ask you a question. 406 00:19:25,160 --> 00:19:27,440 Speaker 6: I mean, in my world, the emerging market space, there 407 00:19:27,480 --> 00:19:31,800 Speaker 6: has been an absolute explosion of sustainable finance vehicles and mechanisms, 408 00:19:31,800 --> 00:19:34,160 Speaker 6: you know, green bonds, clean bonds, you name it. 409 00:19:34,400 --> 00:19:35,879 Speaker 5: I'm curious to hear your thoughts about a lot of that. 410 00:19:35,960 --> 00:19:37,679 Speaker 6: I mean, a lot of sovereign nations, a lot of 411 00:19:37,720 --> 00:19:41,120 Speaker 6: countries are issuing dead under this green bond umbrella. 412 00:19:41,600 --> 00:19:42,679 Speaker 5: You know, do you believe in that? 413 00:19:42,720 --> 00:19:44,360 Speaker 6: Do you think they're just green washing or are they 414 00:19:44,400 --> 00:19:47,280 Speaker 6: really deploying that capital in a clean and efficient way. 415 00:19:47,680 --> 00:19:50,200 Speaker 9: We have to ensure, indeed that the green bond standards 416 00:19:50,200 --> 00:19:52,560 Speaker 9: around the world are not green washing, and that that 417 00:19:52,600 --> 00:19:55,159 Speaker 9: should be a top priority. Otherwise, you know, once you 418 00:19:55,200 --> 00:19:58,160 Speaker 9: lose the credibility, then you lose everything in capital markets. 419 00:19:58,200 --> 00:20:00,280 Speaker 9: I don't have to explain it to you. So that's 420 00:20:00,280 --> 00:20:03,400 Speaker 9: why I think we have a very important shared interest 421 00:20:03,480 --> 00:20:06,640 Speaker 9: in having global standards. You know, the taxonomies that are 422 00:20:06,640 --> 00:20:08,760 Speaker 9: being developed in different parts of the world. In Europe 423 00:20:08,760 --> 00:20:11,600 Speaker 9: has been a pioneer in that area. Also, the European 424 00:20:11,640 --> 00:20:14,399 Speaker 9: Investment Bank, by the way, has pioneered green bonds, and 425 00:20:15,320 --> 00:20:17,600 Speaker 9: we have to make sure that those standards are met 426 00:20:17,720 --> 00:20:21,400 Speaker 9: and that green investments are really green, so that we 427 00:20:21,440 --> 00:20:24,280 Speaker 9: make sure that this is providing sufficient finance to close 428 00:20:24,320 --> 00:20:25,120 Speaker 9: the investment gap. 429 00:20:25,440 --> 00:20:28,440 Speaker 3: How do you offset your risk? How do you offset 430 00:20:28,520 --> 00:20:30,879 Speaker 3: risk when you're taking on riskier projects. 431 00:20:31,560 --> 00:20:34,239 Speaker 9: Well, we have a capital base, but generally what we 432 00:20:34,280 --> 00:20:37,200 Speaker 9: do is that we have riskier and less risky projects 433 00:20:37,240 --> 00:20:40,080 Speaker 9: and we mobilize our capital in a very wise manner. 434 00:20:40,119 --> 00:20:43,040 Speaker 9: You know, sometimes our shareholders and say you should take 435 00:20:43,080 --> 00:20:45,360 Speaker 9: on more risk because that's what your capital is for. 436 00:20:45,600 --> 00:20:48,680 Speaker 9: But I think that we have a relatively good balance 437 00:20:48,720 --> 00:20:50,200 Speaker 9: in terms of you give me. 438 00:20:50,119 --> 00:20:52,159 Speaker 3: A balance on that, like what would be considered a 439 00:20:52,160 --> 00:20:54,240 Speaker 3: low risk project, what would be considered a high risk 440 00:20:54,280 --> 00:20:55,080 Speaker 3: For example, well. 441 00:20:55,520 --> 00:20:59,200 Speaker 9: An infrastructure in a European country, that is a low 442 00:20:59,280 --> 00:21:03,560 Speaker 9: risk project. When we are building trains or rolling stock 443 00:21:03,760 --> 00:21:07,000 Speaker 9: or or a metro or port. I mean this is 444 00:21:07,320 --> 00:21:09,600 Speaker 9: I mean we are lending to a sovereign state which 445 00:21:09,640 --> 00:21:13,160 Speaker 9: has a very high rating and this is our shareholders. 446 00:21:13,359 --> 00:21:17,280 Speaker 9: So investments within the EU are considered to be generally 447 00:21:17,440 --> 00:21:20,040 Speaker 9: lower risk. Or for example, we do also through the 448 00:21:20,080 --> 00:21:22,760 Speaker 9: financial sector, we do lending to SMEs in Europe that 449 00:21:22,880 --> 00:21:26,320 Speaker 9: is very proable, profitable, lower risk. Then if we are 450 00:21:26,320 --> 00:21:28,960 Speaker 9: investing in a very large project one billion, two billion 451 00:21:29,000 --> 00:21:33,160 Speaker 9: project in green hydrogen as you were seeing, you know, I'd. 452 00:21:33,000 --> 00:21:34,640 Speaker 5: Like to take a variation on that question. 453 00:21:34,680 --> 00:21:36,400 Speaker 6: That's important because you're right, it's a lot of these 454 00:21:36,400 --> 00:21:39,800 Speaker 6: small medium enterprises. They're the ones who are actually proactively 455 00:21:39,840 --> 00:21:42,439 Speaker 6: you know, taking risk in the market. What sort of 456 00:21:43,160 --> 00:21:47,400 Speaker 6: risk hedges, transmission vehicles, carbon credits, offsets can they take 457 00:21:47,400 --> 00:21:49,560 Speaker 6: advantage of it? I mean, what's available to them to 458 00:21:49,560 --> 00:21:51,720 Speaker 6: help offset their risk in the space. 459 00:21:52,200 --> 00:21:55,359 Speaker 9: But what we do is we provide guarantees and portfolio 460 00:21:55,400 --> 00:21:59,840 Speaker 9: guarantees or other sort of financial support to the banks 461 00:22:00,040 --> 00:22:03,159 Speaker 9: so that they can lend to SMEs with lower interest rates. 462 00:22:03,280 --> 00:22:07,320 Speaker 9: That's basically what we do and again that allows us 463 00:22:07,359 --> 00:22:10,720 Speaker 9: to reach a large share of European SMEs. And there, 464 00:22:10,760 --> 00:22:15,680 Speaker 9: for example now investing in green technologies energy efficiency thanks 465 00:22:15,680 --> 00:22:18,000 Speaker 9: to the support of the European Investment Bank. I don't 466 00:22:18,040 --> 00:22:20,399 Speaker 9: know if many of them know it, you know, because 467 00:22:20,400 --> 00:22:22,639 Speaker 9: they go to a bank, a commercial bank, and but 468 00:22:23,240 --> 00:22:26,320 Speaker 9: you know, although they are they have to signal in 469 00:22:26,359 --> 00:22:30,160 Speaker 9: their loans that this is supported by the European Investment Bank. 470 00:22:30,200 --> 00:22:32,280 Speaker 9: I don't know if they always do. But the fact 471 00:22:32,320 --> 00:22:34,000 Speaker 9: of the matter is the EiV is one of the 472 00:22:34,080 --> 00:22:36,600 Speaker 9: key elements that is driving the European economy. 473 00:22:37,600 --> 00:22:42,240 Speaker 3: Where does natural gas fall into this? For you guys, well, 474 00:22:42,240 --> 00:22:42,560 Speaker 3: we have. 475 00:22:42,600 --> 00:22:44,240 Speaker 9: To get away from natural gas. 476 00:22:44,240 --> 00:22:45,439 Speaker 3: Right if need it. 477 00:22:45,520 --> 00:22:48,960 Speaker 9: So it gets hard, I understand, and we all understand. 478 00:22:49,119 --> 00:22:51,240 Speaker 9: We are in the midst of that transition. But if 479 00:22:51,240 --> 00:22:53,080 Speaker 9: there is one thing that we have learned due to 480 00:22:53,119 --> 00:22:56,520 Speaker 9: the war in Ukraine is that we cannot be dependent 481 00:22:56,800 --> 00:22:59,840 Speaker 9: on Russia. And starting with Russia, but other parts of 482 00:22:59,840 --> 00:23:04,120 Speaker 9: the world, be it talking about energy cheap, other elements 483 00:23:04,119 --> 00:23:06,600 Speaker 9: of the of the supply chain, critical row materials. You know, 484 00:23:06,960 --> 00:23:09,840 Speaker 9: Europe has to stand up on its two feet and 485 00:23:09,920 --> 00:23:12,639 Speaker 9: become independent when it comes to energy. That's that's a 486 00:23:12,680 --> 00:23:13,960 Speaker 9: clear idea I think. 487 00:23:13,920 --> 00:23:16,199 Speaker 6: You know, I want to talk about economic disparity, but 488 00:23:16,240 --> 00:23:18,520 Speaker 6: more in terms of the type of partners you choose 489 00:23:18,560 --> 00:23:20,480 Speaker 6: to go into business with, right the types of banks, 490 00:23:20,480 --> 00:23:23,080 Speaker 6: you know, I think of the Brookfields, the Blackstones, the 491 00:23:23,119 --> 00:23:25,760 Speaker 6: macquarie Is, you know, these big infrastructure investors, the Morgans 492 00:23:25,800 --> 00:23:26,280 Speaker 6: and analysts. 493 00:23:26,560 --> 00:23:27,920 Speaker 5: You know, does that matter? 494 00:23:28,040 --> 00:23:31,200 Speaker 6: Like, you know, can you partner with smaller banks, medium 495 00:23:31,240 --> 00:23:33,520 Speaker 6: sized banks, international banks? I mean how often do you 496 00:23:33,600 --> 00:23:35,320 Speaker 6: do that? Or do you kind of stick to the 497 00:23:35,359 --> 00:23:36,720 Speaker 6: people you know and love best. 498 00:23:36,920 --> 00:23:40,119 Speaker 9: No, we partner with a lot of financial institutions around 499 00:23:40,119 --> 00:23:42,880 Speaker 9: the world. Of course, we do a very serious check 500 00:23:43,000 --> 00:23:46,639 Speaker 9: when it comes to not only the financial strength of 501 00:23:46,680 --> 00:23:52,000 Speaker 9: the counterparties, but also compliance and reputational risks. And also 502 00:23:52,040 --> 00:23:56,440 Speaker 9: we are investing through funds, investment funds. We have a subsidiary, 503 00:23:56,440 --> 00:23:59,560 Speaker 9: the European Investment Fund, which is partnering with private investment 504 00:23:59,560 --> 00:24:03,560 Speaker 9: funds to then mobilize these other sort of venture capital 505 00:24:03,600 --> 00:24:06,200 Speaker 9: and quasi capital investments. 506 00:24:06,200 --> 00:24:08,359 Speaker 3: What's the thing that you guys are most excited about 507 00:24:08,440 --> 00:24:11,480 Speaker 3: right now, either some kind of technology or a certain 508 00:24:11,520 --> 00:24:14,360 Speaker 3: type of project that you feel like has real potential 509 00:24:14,400 --> 00:24:16,520 Speaker 3: that can really unlock other opportunities. 510 00:24:17,160 --> 00:24:19,840 Speaker 9: Well, I think there are two areas where let me 511 00:24:19,880 --> 00:24:22,359 Speaker 9: focus on what I have been discussing here in New York, 512 00:24:22,600 --> 00:24:25,840 Speaker 9: because back in Luxembourg there we discuss many others. 513 00:24:25,480 --> 00:24:27,240 Speaker 5: Going on behind closed doors. Here. 514 00:24:27,480 --> 00:24:30,080 Speaker 9: Indeed, that's why I'm going to give you a sneak review. 515 00:24:30,640 --> 00:24:34,920 Speaker 9: Now we have been discussed. There's nothing so revolutionary or surprising. 516 00:24:34,920 --> 00:24:41,119 Speaker 9: But actually I've been discussing. We've been discussing four main subjects. Green, climate, health, 517 00:24:41,359 --> 00:24:43,240 Speaker 9: that's a big issue. I think that there's a lot 518 00:24:43,240 --> 00:24:47,520 Speaker 9: of interest in health. Multilateral development institutions working as a system. 519 00:24:47,840 --> 00:24:51,000 Speaker 9: We're working better than ever. We're cooperating with the World Bank, 520 00:24:51,040 --> 00:24:54,000 Speaker 9: African Development Bank, Asian Development Bank, and we want to 521 00:24:54,040 --> 00:24:57,119 Speaker 9: really be giving as much value for money to our 522 00:24:57,160 --> 00:25:01,120 Speaker 9: shareholders in supporting the global economy and investment. And then 523 00:25:01,280 --> 00:25:03,840 Speaker 9: fourth points has been women. I think that there is 524 00:25:03,920 --> 00:25:06,920 Speaker 9: also a lot of There are lots of things going 525 00:25:06,960 --> 00:25:10,119 Speaker 9: on around the world in terms of partnering and networks 526 00:25:10,119 --> 00:25:11,200 Speaker 9: of women, and I think. 527 00:25:11,040 --> 00:25:13,320 Speaker 3: We have to support that that endeavor aal so which 528 00:25:13,359 --> 00:25:16,280 Speaker 3: definitely ties into help also at the same time. All Right, Dadia, 529 00:25:16,320 --> 00:25:18,200 Speaker 3: thanks a lot. We really appreciate that was a wonderful 530 00:25:18,600 --> 00:25:21,560 Speaker 3: sort of beneath the hood look on how you finance 531 00:25:21,600 --> 00:25:24,640 Speaker 3: all of this. Ilmnik, president of European Investment Bank, thank 532 00:25:24,680 --> 00:25:25,160 Speaker 3: you so much. 533 00:25:25,440 --> 00:25:26,720 Speaker 9: Thanks to you, Bye bye bye. 534 00:25:28,320 --> 00:25:32,200 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 535 00:25:32,280 --> 00:25:35,800 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 536 00:25:35,840 --> 00:25:38,639 Speaker 1: Auto with the Bloomberg Business app. You can also listen 537 00:25:38,720 --> 00:25:41,840 Speaker 1: live on Amazon Alexa from our flagship New York station 538 00:25:42,200 --> 00:25:45,240 Speaker 1: Just Say Alexa playing Bloomberg eleven thirty. 539 00:25:46,560 --> 00:25:50,080 Speaker 3: Alex Deo Launchai Damien's That's our Possmuni is in Ireland today. 540 00:25:50,200 --> 00:25:52,879 Speaker 3: We are here at the earth Shot Summit right here 541 00:25:52,880 --> 00:25:55,200 Speaker 3: at the Plaza Hotel in New York City. The summit 542 00:25:55,280 --> 00:25:58,720 Speaker 3: celebrates innovators who are trailblazing solutions to repair our plan 543 00:25:58,800 --> 00:26:01,560 Speaker 3: at The event as co hosted Boomberg Philanthropies, and it 544 00:26:01,680 --> 00:26:04,760 Speaker 3: also brings together world leaders of all ilk to kind 545 00:26:04,800 --> 00:26:07,000 Speaker 3: of get together and try and solve many of the 546 00:26:07,080 --> 00:26:09,280 Speaker 3: crises that we have in our world today, in particular 547 00:26:09,400 --> 00:26:12,680 Speaker 3: climate and one joins us today on set. Robbie Menon 548 00:26:12,720 --> 00:26:15,800 Speaker 3: is Singapore's Climate Action Ambassador, but was also the former 549 00:26:15,880 --> 00:26:18,680 Speaker 3: Monetary Authority of Singapore chief, and he joins us now 550 00:26:18,960 --> 00:26:21,480 Speaker 3: right here on set. Robbie Danien's really excited to talk 551 00:26:21,520 --> 00:26:24,399 Speaker 3: to you because he's an emerging markets credit guy. So 552 00:26:24,520 --> 00:26:26,359 Speaker 3: let's just start with some ego for a second. What 553 00:26:26,440 --> 00:26:27,960 Speaker 3: did you think of what China did today? 554 00:26:29,600 --> 00:26:30,920 Speaker 10: Sorry? What did China do today? 555 00:26:32,400 --> 00:26:33,840 Speaker 5: Yeah? Right, it's a great point. 556 00:26:34,080 --> 00:26:36,760 Speaker 6: Let's talk about the nominal effect of exchange rate in Singapore. Now, 557 00:26:36,760 --> 00:26:39,600 Speaker 6: I'm just kidding seriously, you're here, you're in these closed 558 00:26:39,640 --> 00:26:42,360 Speaker 6: door meetings, you're at this conference, you're talking about climate change, 559 00:26:42,400 --> 00:26:45,000 Speaker 6: you're talking about economies. But your former role as the 560 00:26:45,080 --> 00:26:47,800 Speaker 6: head of the Monetary Authority of Singapore, you know, you 561 00:26:48,440 --> 00:26:51,159 Speaker 6: set policy. What is that like in a world now 562 00:26:51,200 --> 00:26:53,800 Speaker 6: that the FED has decided to cut rates by fifty 563 00:26:53,880 --> 00:26:54,440 Speaker 6: basis points? 564 00:26:54,480 --> 00:26:55,840 Speaker 5: You think Singapore comes next. 565 00:26:55,840 --> 00:26:58,240 Speaker 3: And China unleash is a stimulus package that's it? 566 00:27:00,200 --> 00:27:03,000 Speaker 10: Well, well, I've been a bit removed from that scene 567 00:27:03,040 --> 00:27:05,640 Speaker 10: for quite a while now. So but if I were 568 00:27:05,720 --> 00:27:08,159 Speaker 10: to reflect back two years ago when we were all 569 00:27:08,240 --> 00:27:12,840 Speaker 10: facing a surge in inflation globally, and the conventional view 570 00:27:12,880 --> 00:27:16,000 Speaker 10: at that time, which I subscribed to, also was that 571 00:27:16,680 --> 00:27:20,800 Speaker 10: given how low interest rates were and how easy and 572 00:27:21,040 --> 00:27:25,280 Speaker 10: accommodative monetary policies have been for ten years, the catch 573 00:27:25,359 --> 00:27:28,680 Speaker 10: up to tighten rates to bring down this inflation is 574 00:27:28,760 --> 00:27:31,760 Speaker 10: going to be unprecedented. And indeed, the heights in rates 575 00:27:31,800 --> 00:27:34,520 Speaker 10: and the tightening of monetary policy, including in Singapore through 576 00:27:34,560 --> 00:27:40,920 Speaker 10: the exchange rate, was quite significant, and I thought this 577 00:27:41,280 --> 00:27:43,840 Speaker 10: was going to come at the cost of a severe 578 00:27:43,880 --> 00:27:48,920 Speaker 10: slowdown in economic growth and rise in unemployment. I'm talking globally, right, 579 00:27:50,080 --> 00:27:52,920 Speaker 10: and this has been the case in all previous instances. 580 00:27:54,640 --> 00:27:58,480 Speaker 10: I think looking back, we've done not too badly. We've 581 00:27:58,600 --> 00:28:03,959 Speaker 10: avoided major recession in the major economies. There hasn't been 582 00:28:04,000 --> 00:28:07,239 Speaker 10: any sizeable increase in unemployment, the labor market has been 583 00:28:07,320 --> 00:28:11,520 Speaker 10: quite resilient, and surely, but surely, you know, we've been 584 00:28:11,600 --> 00:28:14,960 Speaker 10: bringing down inflation. I think this is a credit to 585 00:28:15,080 --> 00:28:17,359 Speaker 10: many of my ex colleagues in the central banking world. 586 00:28:18,560 --> 00:28:21,800 Speaker 10: I will not comment on specific policy moves, which as 587 00:28:21,840 --> 00:28:24,720 Speaker 10: the one they made recently, but I think we should 588 00:28:24,720 --> 00:28:27,639 Speaker 10: step back and see we actually did not too badly. 589 00:28:27,840 --> 00:28:29,240 Speaker 10: It could have been much worse. 590 00:28:29,760 --> 00:28:32,359 Speaker 9: To be able to ease this early, But. 591 00:28:33,840 --> 00:28:35,040 Speaker 5: That itself is the right move. 592 00:28:35,119 --> 00:28:37,320 Speaker 10: I would not comment, but the fact that we were 593 00:28:37,320 --> 00:28:41,720 Speaker 10: even having this conversation or easing about stimulus, when not 594 00:28:41,800 --> 00:28:44,480 Speaker 10: too long ago we were fighting inflation. It has come down, 595 00:28:44,600 --> 00:28:46,640 Speaker 10: so I think this has been quite remarkable. 596 00:28:47,640 --> 00:28:50,440 Speaker 3: And this also brings sort of the question of climate 597 00:28:50,560 --> 00:28:53,760 Speaker 3: action and financing that part of the market as well, 598 00:28:53,840 --> 00:28:56,200 Speaker 3: because part of the conversation here in the US with 599 00:28:56,280 --> 00:28:59,680 Speaker 3: the Inflation Reduction Act is that that in essence is inflationary, 600 00:29:00,240 --> 00:29:02,960 Speaker 3: and that the more money that every country spends on 601 00:29:03,120 --> 00:29:05,960 Speaker 3: greeting stuff, the more you're going to create sort of 602 00:29:05,960 --> 00:29:08,840 Speaker 3: an inflation bubble. Is that true? From where you sit? 603 00:29:10,680 --> 00:29:12,840 Speaker 10: I think that that is going to be at best 604 00:29:12,920 --> 00:29:18,360 Speaker 10: quite short term. Some stimulus through any new investments going 605 00:29:18,400 --> 00:29:22,320 Speaker 10: into an area of scarcity will create some price pressures 606 00:29:22,360 --> 00:29:26,960 Speaker 10: and demand pressures against limited supply. But the objective of 607 00:29:26,960 --> 00:29:29,280 Speaker 10: the Inflation Reduction Act as it is, as is the 608 00:29:29,840 --> 00:29:33,200 Speaker 10: objective of similar packages in every other country, is to 609 00:29:33,280 --> 00:29:37,120 Speaker 10: expand the supplying capacity. Is to expand the supply capacity 610 00:29:37,200 --> 00:29:40,720 Speaker 10: for renewables, for cleaner technologies and so on. So yes, 611 00:29:40,840 --> 00:29:43,360 Speaker 10: in the short term that capacity has not increased, you 612 00:29:43,400 --> 00:29:46,640 Speaker 10: will get momentary increase in inflation and price pressures as 613 00:29:46,680 --> 00:29:49,520 Speaker 10: you put in demand. But when the supply capacity increases, 614 00:29:49,800 --> 00:29:54,800 Speaker 10: that stabilized. So as with any industrial transformation or restructuring, 615 00:29:55,240 --> 00:29:57,840 Speaker 10: there will be short term price effects, but that should 616 00:29:57,840 --> 00:30:00,239 Speaker 10: even out once a supply and demanded back. In one thing, 617 00:30:00,240 --> 00:30:03,640 Speaker 10: there's anything inherently inflationary in these packages. 618 00:30:03,800 --> 00:30:07,160 Speaker 6: In Singapore's key position along the malacostraight, it sits between 619 00:30:07,320 --> 00:30:09,960 Speaker 6: two of the largest polluting countries on the planet, that 620 00:30:10,080 --> 00:30:13,120 Speaker 6: being China and India. Talk to us about your location 621 00:30:13,240 --> 00:30:16,520 Speaker 6: in the world, your geostrategic location. How are you addressing 622 00:30:16,720 --> 00:30:20,320 Speaker 6: those two nations their cability to enact climate change. 623 00:30:22,320 --> 00:30:27,000 Speaker 10: I think both China and India have huge potential to 624 00:30:27,080 --> 00:30:32,400 Speaker 10: address a climate challenge, particularly with respect to mitigation and 625 00:30:32,520 --> 00:30:36,960 Speaker 10: renewable energy. The countries are large. We often forget that 626 00:30:37,200 --> 00:30:41,640 Speaker 10: China is installing more renewable capacity each year than the 627 00:30:41,720 --> 00:30:44,600 Speaker 10: rest of the world put together. India's a close second. 628 00:30:46,080 --> 00:30:49,880 Speaker 10: So these two countries, in terms of their geography, are 629 00:30:49,920 --> 00:30:53,840 Speaker 10: well endowed to deploy clean energy, but they're going to 630 00:30:53,880 --> 00:30:56,719 Speaker 10: take time, because what we forget is that energy demand 631 00:30:56,800 --> 00:31:00,280 Speaker 10: in these countries is also increasing rapidly. The energy consumption 632 00:31:00,400 --> 00:31:03,080 Speaker 10: per capita in China and India, it's a fraction of 633 00:31:03,160 --> 00:31:06,840 Speaker 10: that in the West, and there are still many villages 634 00:31:07,000 --> 00:31:11,480 Speaker 10: without access to electricity. So even as they install solar capacity, 635 00:31:11,760 --> 00:31:14,840 Speaker 10: they're having to build cold plants and keep their fossil 636 00:31:14,840 --> 00:31:17,840 Speaker 10: fuel plants running to meet that, which is why they're going. 637 00:31:17,760 --> 00:31:18,479 Speaker 2: To take longer. 638 00:31:19,640 --> 00:31:22,160 Speaker 10: But surely they will get there because of the inherent 639 00:31:23,200 --> 00:31:26,600 Speaker 10: capacity for renewable energy. Actually, where I worry more is 640 00:31:26,640 --> 00:31:33,120 Speaker 10: Southeast Asia because similar situation, rapid growth and energy demand, 641 00:31:33,240 --> 00:31:37,200 Speaker 10: rise of middle class urbanization, people having access to electricity. 642 00:31:37,760 --> 00:31:40,080 Speaker 5: In Indonesia, Philippines, Vietnam. 643 00:31:39,920 --> 00:31:43,680 Speaker 10: Yes, all the countries around US, including US, we are 644 00:31:44,320 --> 00:31:51,320 Speaker 10: in many ways alternative energy disadvantaged. Singapore particularly so because 645 00:31:51,320 --> 00:31:55,440 Speaker 10: we're a small island city state. Imagine New York, you know, 646 00:31:55,640 --> 00:32:00,480 Speaker 10: deploys clean energy entirely within the city. But even in 647 00:32:00,520 --> 00:32:03,360 Speaker 10: the countries that are relatively well endowed, they do have 648 00:32:03,520 --> 00:32:07,840 Speaker 10: challenges with great for instance, is forested mountainous Laying those 649 00:32:07,880 --> 00:32:12,160 Speaker 10: transmission lines is not easy, not straightforward, and the distribution 650 00:32:12,520 --> 00:32:17,600 Speaker 10: of renewable energy capacity is very uneven geographically across Southeast Asia. 651 00:32:17,640 --> 00:32:19,840 Speaker 10: So I think that's a very bigger challenge might be. 652 00:32:20,280 --> 00:32:23,680 Speaker 3: What about financing? We have like thirty seconds left. What's 653 00:32:23,720 --> 00:32:26,520 Speaker 3: the biggest hurdle to financing all of this? Right now? 654 00:32:27,120 --> 00:32:29,600 Speaker 10: There is enough private capital in the world to solve 655 00:32:29,640 --> 00:32:32,920 Speaker 10: the climate crisis. There is enough financing if you look 656 00:32:32,960 --> 00:32:36,240 Speaker 10: at the annual flows of financial assets well in excess 657 00:32:36,520 --> 00:32:39,920 Speaker 10: of the funding gap. The problem is you need to 658 00:32:39,960 --> 00:32:44,680 Speaker 10: find bankable projects at appropriate risk return metrics, and this 659 00:32:44,840 --> 00:32:47,600 Speaker 10: is where you need blended finance with public capital coming 660 00:32:47,680 --> 00:32:51,800 Speaker 10: in to catalyze private capital. That synergistic combination is what 661 00:32:51,960 --> 00:32:54,080 Speaker 10: we need and that will be enough to solve this. 662 00:32:54,760 --> 00:32:56,800 Speaker 3: All right, Rabbie, it was great to check in with you. 663 00:32:56,960 --> 00:32:59,240 Speaker 3: This is a great conversation. Please come back at Rabi 664 00:32:59,320 --> 00:33:01,680 Speaker 3: man in a single or as Climate Action Ambassador plus 665 00:33:02,000 --> 00:33:04,520 Speaker 3: a former Monetary Authority of Singapore Chief. 666 00:33:06,160 --> 00:33:10,000 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 667 00:33:10,120 --> 00:33:13,040 Speaker 1: weekdays at ten am Eastern on applecar. 668 00:33:12,680 --> 00:33:15,400 Speaker 2: Play and Android Auto with the Bloomberg Business app. 669 00:33:15,560 --> 00:33:18,360 Speaker 1: You can also listen live on Amazon Alexa from our 670 00:33:18,400 --> 00:33:22,800 Speaker 1: flagship New York station. Just say Alexa Play Bloomberg eleven thirty. 671 00:33:24,680 --> 00:33:26,840 Speaker 3: Let's get into the market here, guys, you're looking at excellent. 672 00:33:26,920 --> 00:33:29,760 Speaker 3: Stock is up by four tenths of one percent. California 673 00:33:29,800 --> 00:33:33,200 Speaker 3: sues the company over plastic pollution and recycling myth. But 674 00:33:33,320 --> 00:33:36,520 Speaker 3: what it does bring up questions is does recycling actually work? 675 00:33:36,600 --> 00:33:38,360 Speaker 3: And how do you scale it? How is it profitable? 676 00:33:38,400 --> 00:33:40,400 Speaker 3: How do you do it? Greenley while joining us now 677 00:33:40,440 --> 00:33:43,720 Speaker 3: at scott Levine Bloomberg Intelligence senior industry analyst, and he 678 00:33:43,840 --> 00:33:45,880 Speaker 3: joins us now to discuss you just had a recent 679 00:33:45,960 --> 00:33:49,240 Speaker 3: note out that talked about waste companies and how they're 680 00:33:49,360 --> 00:33:52,040 Speaker 3: managing and expanding their recycling operations. 681 00:33:52,920 --> 00:33:54,400 Speaker 9: Is it efficient? Is it good? 682 00:33:55,480 --> 00:33:59,400 Speaker 11: Yeah, it's an evolving story. So I think there's a 683 00:33:59,440 --> 00:34:01,680 Speaker 11: lot of refe clignment that needs to take place for 684 00:34:01,800 --> 00:34:06,240 Speaker 11: this to become a larger business. But yeah, this is 685 00:34:06,280 --> 00:34:10,080 Speaker 11: probably one of the biggest growth areas within the recycling 686 00:34:10,680 --> 00:34:14,640 Speaker 11: and more broadly speaking, the solid waste management business in general. 687 00:34:15,480 --> 00:34:18,360 Speaker 11: So yes, is the is the answer to your question? 688 00:34:18,560 --> 00:34:19,120 Speaker 2: In summary? 689 00:34:21,080 --> 00:34:22,239 Speaker 11: I think what needs to happen. 690 00:34:22,560 --> 00:34:26,040 Speaker 5: Great to see you, Hey, Hey, you doing DamID? No, 691 00:34:26,160 --> 00:34:27,799 Speaker 5: I was going to just I was just gonna how 692 00:34:27,840 --> 00:34:28,960 Speaker 5: you doing. I was just going to ask you. 693 00:34:29,000 --> 00:34:30,960 Speaker 6: I mean, look, let's take a more broader approach to 694 00:34:31,160 --> 00:34:34,160 Speaker 6: the question here about recycling, right, waste management the companies 695 00:34:34,200 --> 00:34:36,840 Speaker 6: that you cover. We have an election coming up in November. 696 00:34:38,000 --> 00:34:42,120 Speaker 6: What works best for your sector? Democrat Republican? What's going 697 00:34:42,200 --> 00:34:44,360 Speaker 6: to be better for waste management in the broader sector 698 00:34:44,400 --> 00:34:44,839 Speaker 6: at large? 699 00:34:45,440 --> 00:34:48,600 Speaker 11: I think conventional wisdom is that Democrats are better. The 700 00:34:49,520 --> 00:34:54,400 Speaker 11: greater regulation requires greater sophistications large companies that generally have 701 00:34:54,680 --> 00:35:00,600 Speaker 11: greater sophistication when it comes to environmental stewardships. So, but 702 00:35:00,719 --> 00:35:03,239 Speaker 11: that said, you know the I think it's not a 703 00:35:03,320 --> 00:35:09,440 Speaker 11: really different answer in either scenario. There are some specialized 704 00:35:10,239 --> 00:35:13,600 Speaker 11: topics within the environmental business where it does make more 705 00:35:13,640 --> 00:35:18,200 Speaker 11: of a difference, like the cleanup of pfas for you know, 706 00:35:18,320 --> 00:35:21,840 Speaker 11: for one example. But but by and large, Democrats generally 707 00:35:22,080 --> 00:35:25,880 Speaker 11: are better for the environmental services industry. And I think 708 00:35:25,920 --> 00:35:26,560 Speaker 11: that's true here. 709 00:35:29,239 --> 00:35:31,800 Speaker 6: So Democrats are better for the environmental services industry, But 710 00:35:31,880 --> 00:35:33,080 Speaker 6: what's better for their stock price? 711 00:35:33,120 --> 00:35:33,400 Speaker 5: Scott? 712 00:35:33,440 --> 00:35:36,560 Speaker 6: I mean, is that really like the mechanism, the transmit 713 00:35:36,800 --> 00:35:39,680 Speaker 6: mission mechanism, the fact that a you know, a democratic 714 00:35:39,719 --> 00:35:42,279 Speaker 6: power power structure is going to basically allow some of 715 00:35:42,320 --> 00:35:45,000 Speaker 6: these companies to extract a higher margin will not really 716 00:35:45,400 --> 00:35:47,600 Speaker 6: translate through into the stock price. I'm just curious to 717 00:35:47,640 --> 00:35:48,960 Speaker 6: hear your thoughts on valuations. 718 00:35:49,440 --> 00:35:51,600 Speaker 11: Yeah, well, the wastetocks has done very well this year. 719 00:35:52,000 --> 00:35:55,480 Speaker 11: Wastetocks tend to do well. Uh, they're late cycle and 720 00:35:55,640 --> 00:35:58,479 Speaker 11: light cyclicals, right, So you compare that to my energy 721 00:35:58,560 --> 00:36:02,080 Speaker 11: services coverage universe, and the waste stocks are blowing them away. 722 00:36:02,719 --> 00:36:04,680 Speaker 11: They were huge out performers in two thousand and eight 723 00:36:04,719 --> 00:36:09,000 Speaker 11: when the economy was cratering, and they were huge underperformers 724 00:36:09,080 --> 00:36:11,040 Speaker 11: when things came mooring back in two thousand and nine. 725 00:36:11,600 --> 00:36:13,239 Speaker 11: So a lot of it kind of relates to the 726 00:36:13,400 --> 00:36:15,759 Speaker 11: macro as far as the solid waste companies concerned. And 727 00:36:15,840 --> 00:36:20,080 Speaker 11: the valuations are at high levels, but I think sustainable 728 00:36:20,239 --> 00:36:23,920 Speaker 11: given the fact that the industry is doing well. Earnings 729 00:36:23,960 --> 00:36:28,320 Speaker 11: performance has been good. As inflation has come in, cost 730 00:36:28,480 --> 00:36:33,760 Speaker 11: inflation has has declined at a faster pace than pricing, 731 00:36:34,160 --> 00:36:36,480 Speaker 11: and so margins have expanded. And so you're seeing a 732 00:36:36,520 --> 00:36:40,160 Speaker 11: lot of good things happening within the waste industry overall, 733 00:36:40,280 --> 00:36:43,399 Speaker 11: and that's led to very strong stock performance in twenty 734 00:36:43,480 --> 00:36:43,920 Speaker 11: twenty four. 735 00:36:46,400 --> 00:36:49,560 Speaker 3: What are the household waste management companies. 736 00:36:50,480 --> 00:36:53,120 Speaker 11: So we've got waste management and Republic Services at the 737 00:36:53,160 --> 00:36:56,279 Speaker 11: top of the list, waste connections as well. It's really 738 00:36:56,320 --> 00:37:02,280 Speaker 11: an oligopoly. You know, the big three probably have about 739 00:37:02,400 --> 00:37:05,760 Speaker 11: forty percent market share. I think publicly traded stocks generally 740 00:37:05,800 --> 00:37:09,840 Speaker 11: have fifty percent market share. Another twenty percent or so 741 00:37:11,040 --> 00:37:14,480 Speaker 11: is with municipal operators like New York City Sanitation Department, 742 00:37:14,560 --> 00:37:17,120 Speaker 11: And of the thirty percent are your mom and pops, 743 00:37:17,120 --> 00:37:19,319 Speaker 11: and they're always going to be out there. But it's 744 00:37:19,360 --> 00:37:22,640 Speaker 11: a fairly consolidated industry, and it's fairly orderly in terms 745 00:37:22,680 --> 00:37:27,360 Speaker 11: of everybody playing well in the sandbox together. Pricing discipline 746 00:37:27,480 --> 00:37:29,640 Speaker 11: generally is held throughout the industry, and that's a lot 747 00:37:29,680 --> 00:37:31,359 Speaker 11: of the reason you've seen the stocks do so well. 748 00:37:34,040 --> 00:37:36,720 Speaker 6: I wonder if you can help me understand also globally, 749 00:37:36,800 --> 00:37:38,680 Speaker 6: especially as it relates to China, who we know is 750 00:37:38,719 --> 00:37:40,920 Speaker 6: a huge consumer of commodities and goods worldwide. 751 00:37:40,960 --> 00:37:42,000 Speaker 5: You know, talk to us about you. 752 00:37:42,040 --> 00:37:46,600 Speaker 6: Know, solid waste recycling and recycling more broadly speaking outside 753 00:37:46,640 --> 00:37:49,200 Speaker 6: of the United States, I mean, what companies dominate that sector. 754 00:37:49,640 --> 00:37:51,920 Speaker 11: Sure, I'm going to use as an opportunity to pivot 755 00:37:52,000 --> 00:37:54,840 Speaker 11: to the recycling theme, which you mentioned at the outset 756 00:37:54,880 --> 00:37:59,160 Speaker 11: as well. And so China, you know, historically had been 757 00:37:59,280 --> 00:38:03,680 Speaker 11: the big dryver of the recycling business for the waste companies. 758 00:38:04,320 --> 00:38:06,640 Speaker 11: The reason for that is because a lot of the biggest, 759 00:38:06,840 --> 00:38:09,279 Speaker 11: the biggest piece of the recycling mix has been big 760 00:38:09,400 --> 00:38:12,560 Speaker 11: brown boxes, and the demand for that has historically come 761 00:38:12,680 --> 00:38:15,680 Speaker 11: from China. China takes our big brown boxes and they 762 00:38:15,719 --> 00:38:18,840 Speaker 11: send them back with TVs or consumer electronics, and so 763 00:38:18,920 --> 00:38:23,440 Speaker 11: they've used the US waste industry or recycling more specifically 764 00:38:23,560 --> 00:38:27,319 Speaker 11: as a source of packaging. Okay, about five years ago, 765 00:38:27,520 --> 00:38:32,640 Speaker 11: China really cracked down on recycling and in fact banned 766 00:38:32,920 --> 00:38:38,320 Speaker 11: imports of US brown boxes UH as an initiative to 767 00:38:38,400 --> 00:38:41,520 Speaker 11: really kind of grow their own recycling business UH and 768 00:38:41,840 --> 00:38:45,240 Speaker 11: also source some of their fiber from other markets. 769 00:38:45,960 --> 00:38:46,080 Speaker 5: UH. 770 00:38:46,280 --> 00:38:50,319 Speaker 11: And so China has become less significant to the US 771 00:38:50,440 --> 00:38:53,400 Speaker 11: recycling business ever since. The US has really had to 772 00:38:53,880 --> 00:38:58,040 Speaker 11: diversify their exports to other markets like India, other sub 773 00:38:58,239 --> 00:39:00,480 Speaker 11: in Southeast Asia as well. So China's become less of 774 00:39:00,520 --> 00:39:04,319 Speaker 11: a driving force within recycling broadly speaking within the last 775 00:39:04,400 --> 00:39:05,080 Speaker 11: five years. 776 00:39:05,120 --> 00:39:08,560 Speaker 3: All right, Scott, Scott, we appreciate it, Scott Levine, joining 777 00:39:08,640 --> 00:39:11,480 Speaker 3: us Bloomberg Intelligence and covers oil services as well as 778 00:39:11,480 --> 00:39:13,560 Speaker 3: the recycling guys, so all the big players. 779 00:39:13,960 --> 00:39:14,560 Speaker 9: This is the. 780 00:39:14,640 --> 00:39:19,480 Speaker 1: Bloomberg Intelligence Podcast, available on Apples, Spotify, and anywhere else 781 00:39:19,520 --> 00:39:22,879 Speaker 1: you get your podcasts. Listen live each weekday, ten am 782 00:39:23,000 --> 00:39:26,600 Speaker 1: to noon Eastern on Bloomberg dot com, the iHeartRadio app 783 00:39:26,800 --> 00:39:29,399 Speaker 1: tune In, and the Bloomberg Business app. You can also 784 00:39:29,560 --> 00:39:32,880 Speaker 1: watch us live every weekday on YouTube and always on 785 00:39:32,920 --> 00:39:33,920 Speaker 1: the Bloomberg terminal