WEBVTT - US Consumer Confidence Falls, Biden UN Speech 0:00:02.400 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.119 --> 0:00:13.320 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.320 --> 0:00:15.520 Eastern on Effo card playing and Broud. 0:00:15.320 --> 0:00:17.040 Auto with the Bloomberg Business App. 0:00:17.079 --> 0:00:20.279 Listen on demand wherever you get your podcasts, or watch 0:00:20.360 --> 0:00:22.640 us live on YouTube. 0:00:23.000 --> 0:00:24.599 And it feels like the worst act test of the 0:00:24.640 --> 0:00:27.680 consumer data is definitely present. So let's get to Dana Peterson, 0:00:27.760 --> 0:00:30.560 chief economist at the Conference Board, on this data. Hey, Dana, 0:00:30.600 --> 0:00:33.080 what was your bigger, biggest takeaway? What's my takeaway from 0:00:33.080 --> 0:00:33.920 the data this morning? 0:00:35.080 --> 0:00:37.239 Sure, definitely the headline dipped and we're kind of at 0:00:37.240 --> 0:00:39.080 the bottom of the range that we've seen over the 0:00:39.120 --> 0:00:42.120 last two years. Much of it was because consumers are a 0:00:42.159 --> 0:00:44.680 little less optimistic when it comes to employment. 0:00:45.200 --> 0:00:45.440 Now. 0:00:45.560 --> 0:00:49.720 The overall net from jobs hard to get versus jobs 0:00:49.720 --> 0:00:52.200 easy to get is still positive, but it's come down 0:00:52.200 --> 0:00:54.720 a lot. And even for expectations, consumers are a little 0:00:54.720 --> 0:00:56.920 bit concerned about whether or not they're going to have 0:00:57.160 --> 0:01:00.800 easy jobs prospects going forward. 0:01:02.120 --> 0:01:04.240 Talk to us a little bit about the transmission mechanism. 0:01:04.360 --> 0:01:06.360 I mean, when do we really think we're going to 0:01:06.440 --> 0:01:09.119 see any evidence in the data from some of these 0:01:09.160 --> 0:01:10.440 cuts we're seeing here out of the FED. 0:01:11.840 --> 0:01:13.920 Sure, well, I mean you're already seeing that mortgage rates 0:01:13.920 --> 0:01:15.880 have been falling for a couple of months now, and 0:01:15.920 --> 0:01:19.080 they really accelerated after the Jackson Hole meeting, and they're 0:01:19.120 --> 0:01:21.280 certainly going to continue to fall, and that the FED 0:01:21.400 --> 0:01:24.160 is cut by fifty basis points. So we will see 0:01:24.160 --> 0:01:26.200 some relief there in the housing market, but it's going 0:01:26.280 --> 0:01:28.600 to take time because again we learn from cashial or 0:01:28.600 --> 0:01:32.200 home price index this morning that prices are still very elevated, 0:01:32.480 --> 0:01:37.039 and hence affordability is still challenged. In terms of the consumer, 0:01:37.160 --> 0:01:39.679 I mean, as far as we know through July, consumers 0:01:39.720 --> 0:01:42.360 continue to spend. They pulled back a little bit in 0:01:42.400 --> 0:01:46.400 retail sales in August, but overall third quarter consumer spending 0:01:46.520 --> 0:01:48.840 is probably going to be positive. So it's really what 0:01:49.000 --> 0:01:50.960 happens in the balance of the year, and we do 0:01:51.000 --> 0:01:53.600 think consumers are going to continue to pull back. However, 0:01:53.640 --> 0:01:56.400 they're still working, and I think that as long as 0:01:56.400 --> 0:01:59.960 consumers are working, they may complain about the job market, 0:02:00.280 --> 0:02:02.840 but they still have some capacity to spend. 0:02:05.440 --> 0:02:07.440 All right, Dana, We appreciate that, thank you very much. 0:02:07.480 --> 0:02:09.560 It's that case shape recovery, but they're spending, but just 0:02:09.600 --> 0:02:11.079 not a time. Basically at the end of the eight 0:02:11.200 --> 0:02:14.520 day Dana Peterson joining us from the conference board. 0:02:16.080 --> 0:02:19.960 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:02:20.040 --> 0:02:23.160 weekdays at ten am Eastern on applecar Play. 0:02:22.919 --> 0:02:25.120 And Android Auto with the Bloomberg Business. 0:02:25.480 --> 0:02:28.320 You can also listen live on Amazon Alexa from our 0:02:28.320 --> 0:02:32.720 flagship New York station, Just say Alexa Play Bloomberg. Eleven thirty. 0:02:34.400 --> 0:02:39.240 President Biden delivering his final speech at the UN General Assembly, 0:02:39.480 --> 0:02:42.040 making the point that he was elected back in nineteen 0:02:42.120 --> 0:02:44.720 seventy two, so emphasizing his long career. But it was 0:02:44.760 --> 0:02:48.280 a wide ranging speech, Damien, that talked very much about AI, 0:02:48.520 --> 0:02:52.360 the Center holding, peace and stability, ending the war on Gaza, 0:02:52.400 --> 0:02:52.960 as well the. 0:02:53.080 --> 0:02:55.120 Generation of leadership. He alluded to it, so you know, 0:02:55.160 --> 0:02:57.440 it was kind of a farewell party. It's almost it 0:02:57.480 --> 0:02:58.960 almost brings a tear to my eye, Alex, I. 0:02:58.960 --> 0:03:00.600 Mean, think about it, and he said too, that is 0:03:00.639 --> 0:03:03.280 a very very long career. He's seen a lot of 0:03:03.360 --> 0:03:07.120 change within that. But definitely talking about the Center holding, 0:03:07.240 --> 0:03:11.120 talking about democracy, bringing up Venezuela and different choices that 0:03:11.240 --> 0:03:14.239 company that countries can also make as well, and he 0:03:14.320 --> 0:03:16.920 also spent a good amount of time on AI and 0:03:16.960 --> 0:03:19.360 the risks around AI and how to insulate that. So 0:03:19.400 --> 0:03:21.440 let's go from more on that with Nick Wadams. He 0:03:21.520 --> 0:03:25.440 leads up our US national security team for Bloomberg. Nick, 0:03:25.639 --> 0:03:27.760 what did he accomplish in that speech? 0:03:29.000 --> 0:03:31.480 Well, I mean it's a great question, you know. I 0:03:31.480 --> 0:03:33.760 think this was much more of a swan song for 0:03:33.919 --> 0:03:38.000 President Biden looking back on his career. The thing that 0:03:38.080 --> 0:03:41.680 may be most remembered obviously, as he mentioned AI, but 0:03:41.920 --> 0:03:47.200 his plea to other leaders, essentially saying, listen, I decided 0:03:47.240 --> 0:03:50.960 that my country was more important than my own political career, 0:03:50.960 --> 0:03:55.080 and that's why I decided to step down. An admonition 0:03:55.240 --> 0:03:58.200 to many leaders in the hall who have stayed in 0:03:58.280 --> 0:04:03.280 power for decades, A plea for leaders to relinquish power 0:04:03.360 --> 0:04:05.640 if they're no longer fit for office. 0:04:07.520 --> 0:04:08.920 Nick, what do you think if you're sitting in that 0:04:09.000 --> 0:04:11.200 auditorium and you're listening to the president, if you're a 0:04:11.240 --> 0:04:14.119 foreign leader, a foreign head of state, what's your big takeaway? 0:04:15.440 --> 0:04:18.920 Well, I mean a couple of things. One is President 0:04:18.960 --> 0:04:22.960 Biden certainly is he made a joke about how he 0:04:23.000 --> 0:04:27.600 looks only forty, but he certainly looks a little bit older. 0:04:27.839 --> 0:04:33.120 I think though, in a hall where support for Palestinians 0:04:34.160 --> 0:04:38.560 and anger toward Israel is pretty palpable, they are not 0:04:38.720 --> 0:04:42.440 going to be terribly happy with what he said on Gaza. 0:04:42.520 --> 0:04:45.640 He did call for a cease fire now, but every 0:04:45.640 --> 0:04:48.599 indication that the US is going to continue the flow 0:04:48.640 --> 0:04:52.279 of weapons and other support to Israel, So he's not 0:04:52.320 --> 0:04:53.159 going to budge on that. 0:04:55.839 --> 0:04:58.080 So that brings up a good point. Then who was 0:04:58.160 --> 0:05:00.520 he then talking to in that room? 0:05:01.360 --> 0:05:05.440 Well, I mean, you know, he's trying to set an example, 0:05:05.640 --> 0:05:09.600 but I mean this is something that leaders have traditionally 0:05:09.680 --> 0:05:12.640 used to sort of set their agenda for the next 0:05:12.760 --> 0:05:16.480 year on foreign policy. But obviously, given that he is 0:05:16.600 --> 0:05:20.039 essentially a lame duck president at this point, that's not 0:05:20.200 --> 0:05:22.599 something that he's going to be able to do. I mean, 0:05:22.640 --> 0:05:24.440 you know, the other big thing that's going to be 0:05:24.480 --> 0:05:28.200 on everybody's mind in that hall is, Okay, who's next? 0:05:28.320 --> 0:05:32.279 So what would we get Kamala Harris to continue his 0:05:32.400 --> 0:05:35.760 policies or will we have Donald Trump, who you could 0:05:35.960 --> 0:05:39.920 almost be guaranteed would essentially blow up everything that Biden 0:05:40.000 --> 0:05:42.560 did as he looks to chart his course. So you know, 0:05:42.640 --> 0:05:46.719 President Biden very clearly is not making any promises. He 0:05:46.760 --> 0:05:49.840 didn't make any promises in that speech. Wanted to use 0:05:49.839 --> 0:05:55.080 it essentially as a valedictory for his own presidency. 0:05:55.200 --> 0:05:56.919 You know, Nick, I do find it interesting. You know, 0:05:56.960 --> 0:05:59.479 it's the UN General Assembly. Obviously he's going to play 0:05:59.520 --> 0:06:02.920 the foreign policy, but it's what wasn't said, and what 0:06:02.960 --> 0:06:04.760 wasn't said for me is the US economy and lieu 0:06:04.800 --> 0:06:06.800 of this consumer confidence data and some of the recent 0:06:06.839 --> 0:06:09.320 economic prints we've seen on the payroll side. You know, 0:06:09.839 --> 0:06:11.680 is there any read through in your mind the fact 0:06:11.720 --> 0:06:14.120 that he completely didn't even touch the state of the 0:06:14.200 --> 0:06:15.360 US economy and inflation. 0:06:16.000 --> 0:06:19.320 I mean, you know, very very brief mention on on 0:06:19.440 --> 0:06:22.960 the US as like a global leader and the and 0:06:23.040 --> 0:06:25.240 the powerhouse in that way. But I mean, you know, 0:06:25.400 --> 0:06:27.560 I think, for one thing, this is this is a 0:06:27.600 --> 0:06:31.960 speech where President Biden very much sees himself as a 0:06:32.000 --> 0:06:36.840 foreign policy president. He's he's explicit about understands very well 0:06:36.880 --> 0:06:40.479 who who his audience is, and he doesn't feel like 0:06:40.560 --> 0:06:44.080 this is a place where he wants to make that 0:06:44.240 --> 0:06:48.919 case the foreign policy. He's said so many times that 0:06:48.960 --> 0:06:52.080 foreign policy is really a defining element of his own career. 0:06:52.120 --> 0:06:54.280 He mentioned that at the top, so I think it 0:06:54.400 --> 0:06:57.159 was probably more a situation where he was trying to 0:06:57.200 --> 0:07:00.280 read his audience and play to what he sees one 0:07:00.279 --> 0:07:02.080 of his biggest strengths. I mean, when you look at 0:07:02.080 --> 0:07:04.200 the campaign when he was still in the race, he 0:07:04.279 --> 0:07:06.719 was talking about all of his success and foreign policy 0:07:06.760 --> 0:07:09.840 and not even really hitting the economic issues as hard. 0:07:09.880 --> 0:07:12.160 So this is something where he thinks he can take 0:07:12.400 --> 0:07:13.679 a victory left essentially. 0:07:14.320 --> 0:07:16.480 All right, Nick, we really appreciate that. Thank you very much. 0:07:16.560 --> 0:07:19.640 Nick Wadams. He leads our US National Security team for 0:07:19.720 --> 0:07:22.600 Bloomberg News, commenting on President Biden's a final speech to 0:07:22.640 --> 0:07:24.320 the UN General Assembly. 0:07:25.800 --> 0:07:29.640 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:07:29.720 --> 0:07:32.400 weekdays at ten am Eastern on Affo, car Play and 0:07:32.640 --> 0:07:35.480 rout Otto with the Bloomberg Business app. Listen on demand 0:07:35.480 --> 0:07:39.840 wherever you get your podcasts, or watch us live on YouTube. 0:07:40.960 --> 0:07:43.320 I mean, I'm waiting, Damian, I'm waiting for the actual 0:07:43.360 --> 0:07:44.559 stimulus from China. 0:07:44.800 --> 0:07:46.720 Well, you know, I think what's interesting this time around 0:07:46.720 --> 0:07:49.080 is the announced it all at once. China doesn't normally 0:07:49.080 --> 0:07:51.600 do that, and China doesn't normally give you forward guidance. 0:07:51.640 --> 0:07:54.560 In this time, the PBOC governor actually said he's probably 0:07:54.560 --> 0:07:56.280 going to cut rates before the end of the year. Again, 0:07:56.400 --> 0:08:00.360 they don't often do exactly. China, well, the fiscal obviously 0:08:00.440 --> 0:08:01.560 is what we're all waiting for, but I don't even 0:08:01.560 --> 0:08:03.440 know if fiscal stimulus is really what we're waiting for. Again, 0:08:03.480 --> 0:08:05.480 this comes down to the fact that unemployment is so high, 0:08:05.480 --> 0:08:08.760 there so much wealth destruction, So people just don't want 0:08:08.760 --> 0:08:10.760 to spend. It's not about them not having the capacity 0:08:10.760 --> 0:08:12.560 to spend outs, it's about the willingness too. 0:08:12.840 --> 0:08:14.880 Okay, so that monetary isn'tenough, But we definitely look at 0:08:14.880 --> 0:08:17.160 commodities kind of flying on that news. Let's get more 0:08:17.200 --> 0:08:20.720 with Cali Cox, a chief market strategist at Ritholt's Wealth Management. 0:08:20.920 --> 0:08:23.520 She joins us, we're just talking about China and sort 0:08:23.560 --> 0:08:26.200 of that helping the commodity market today. Materials are flying 0:08:26.240 --> 0:08:28.080 high within the S and P. Freeport is the best 0:08:28.080 --> 0:08:30.559 performing stock on the S and P. Is this enough 0:08:30.720 --> 0:08:32.480 from China to really get things moving? 0:08:34.360 --> 0:08:36.680 So sure, Alex, I mean, China isn't a tough spot 0:08:36.760 --> 0:08:38.920 right now, and I mean, like you mentioned, there's a 0:08:38.960 --> 0:08:41.760 dead situation going on over there. Unemployment is still quite 0:08:41.880 --> 0:08:45.800 high even though there is this capacity to spend. So 0:08:45.960 --> 0:08:47.839 it's kind of more of the same from China. I'm 0:08:47.880 --> 0:08:49.840 not sure what it can do on the commodity side 0:08:49.880 --> 0:08:52.520 of things. I mean, obviously China is a major player there, 0:08:52.720 --> 0:08:55.600 but from our perspective, I mean, emerging markets are still 0:08:56.559 --> 0:08:59.240 you know, quite attractive given the slide and the dollar 0:08:59.280 --> 0:09:01.640 that we've seen. But you know, China is the big 0:09:01.679 --> 0:09:04.960 weak spot, and unfortunately it's the biggest part of emergent markets. 0:09:07.679 --> 0:09:09.720 Callie, I've read your latest note when you're talking about 0:09:09.720 --> 0:09:12.320 the tug of war between wages and prices and you 0:09:12.480 --> 0:09:13.400 reference the big Mac. 0:09:13.440 --> 0:09:14.760 Now, I went to McDonald's yesterday. 0:09:14.760 --> 0:09:16.480 I paid fifteen dollars and eighty three cents for a 0:09:16.520 --> 0:09:18.760 twenty piece McNugget that doesn't include the sauce. 0:09:19.160 --> 0:09:19.800 All to us. 0:09:19.720 --> 0:09:21.240 About big nuggets. 0:09:21.360 --> 0:09:23.079 They were really good, actually, but they're smaller. There's the 0:09:23.160 --> 0:09:25.720 mcdugget's even smaller. So what's the read through from the 0:09:25.720 --> 0:09:28.840 price of a big mac today relative to years past? 0:09:30.480 --> 0:09:30.800 Small? 0:09:30.840 --> 0:09:32.600 I have to give a shout out to the economists, 0:09:32.600 --> 0:09:35.720 because the economist has been compiling historical prices of the 0:09:35.720 --> 0:09:36.360 big mac. 0:09:36.200 --> 0:09:37.520 Since nineteen eighty nine. 0:09:37.640 --> 0:09:39.800 But it gives you a really interesting use case on 0:09:40.200 --> 0:09:44.080 you know, measuring exactly how much daily purchases. Now, the 0:09:44.080 --> 0:09:46.040 big bag is not a daily purchase for me, but 0:09:46.280 --> 0:09:48.720 for some people it might be. And it's an item 0:09:48.760 --> 0:09:51.040 that we're all familiar with in the economy, and it 0:09:51.080 --> 0:09:54.839 can also show us how the economy is becoming more affordable, 0:09:54.920 --> 0:09:56.880 even though the price of a big Mac is at 0:09:56.880 --> 0:09:58.840 an all time high, and you know, a lot of 0:09:58.840 --> 0:10:01.560 things in our life are quite ex defensive compared to wages, 0:10:01.600 --> 0:10:04.000 and the big Mac has actually gotten a little cheaper, 0:10:04.240 --> 0:10:08.120 a little more affordable based on the average you know, 0:10:08.240 --> 0:10:11.320 wage per hour worked, you know, over the past year 0:10:11.440 --> 0:10:14.640 or so. 0:10:14.640 --> 0:10:17.640 So, Kelly, based on that, and then the consumer confidence 0:10:17.679 --> 0:10:20.600 that we got today, how does one invest in that 0:10:20.760 --> 0:10:24.560 k shape consumer recovery when we are, though on a 0:10:24.679 --> 0:10:26.440 path of significant rate cuts. 0:10:28.040 --> 0:10:31.120 Consumer confidence today was actually quite worrying. Yeah, I just 0:10:31.160 --> 0:10:34.079 read the details, and we obviously saw a huge shop 0:10:34.080 --> 0:10:37.440 in confidence. For me, the worrying detail was the fact 0:10:37.440 --> 0:10:39.720 that we saw a drop in the evaluation of present 0:10:39.800 --> 0:10:43.440 conditions because for most of the cycle, and to remind everybody, 0:10:43.679 --> 0:10:46.680 confidence is a combination of what people feel right now 0:10:46.760 --> 0:10:48.800 and what people are expecting in the future. That's how 0:10:48.800 --> 0:10:52.240 the Conference board measures it. But the number that we 0:10:52.280 --> 0:10:54.720 got today was mostly driven by a drop in the 0:10:54.760 --> 0:10:58.360 evaluation of present conditions. People don't feel well about what's 0:10:58.400 --> 0:11:02.200 happening now before this, so it was mostly you know, 0:11:02.320 --> 0:11:06.240 souring on expectations. But the fact that president conditions and 0:11:06.280 --> 0:11:09.880 the fact that consumers are worried about what's happening now 0:11:10.280 --> 0:11:13.240 makes me a little more worried about the present situation 0:11:13.320 --> 0:11:16.680 of the job market. And you know how able people 0:11:16.760 --> 0:11:19.920 are to afford these things, even though we've seen a 0:11:19.920 --> 0:11:21.520 pretty solid job market up until now. 0:11:24.600 --> 0:11:25.000 Calori. 0:11:25.600 --> 0:11:28.280 History doesn't often repeat itself, but it does rhyme. And 0:11:28.320 --> 0:11:30.040 so my question for you is, when you and Barrier 0:11:30.120 --> 0:11:32.360 in the war room at Ridthole's Wealth Management, you're looking 0:11:32.400 --> 0:11:35.200 at previous rate cutting cycles, and I believe you highlighted 0:11:35.240 --> 0:11:38.640 eighteen of them. I'm just curious, what cycle does this 0:11:38.720 --> 0:11:39.800 one most remant? 0:11:39.880 --> 0:11:41.600 I mean, what's most reminiscent to you? What does it 0:11:41.600 --> 0:11:42.200 most look like. 0:11:43.760 --> 0:11:45.640 I'd like to think that it's a rate cut cycle 0:11:45.679 --> 0:11:48.920 that won't overlap with a recession. And so far, so good. 0:11:48.960 --> 0:11:51.920 Even though I just mentioned that consumer confidence data has 0:11:51.960 --> 0:11:54.840 me a little worried right now. So, yeah, when Barry 0:11:54.880 --> 0:11:57.560 and I are looking at rate cut cycle data, you know, 0:11:57.600 --> 0:11:59.960 we usually note or we usually separate it at two. 0:12:00.000 --> 0:12:02.400 I mean, rate cuts that happened out of desperation and 0:12:02.480 --> 0:12:05.720 rate cuts that have happened out of celebration. More policy adjustments, 0:12:05.720 --> 0:12:09.320 because the FED has reached its goal on inflation and unemployment, 0:12:09.720 --> 0:12:12.280 so it can take policy back down to normal. And 0:12:12.320 --> 0:12:15.959 so far we think the latter case is what's going on. 0:12:16.280 --> 0:12:18.840 I mean, the job market, of course is stalling, but 0:12:19.000 --> 0:12:22.080 unemployment is still quite low. So right now we feel 0:12:22.080 --> 0:12:25.280 pretty confident that the FED can take this over the line. 0:12:25.280 --> 0:12:27.240 We just hope that the economy can hold out for a. 0:12:27.160 --> 0:12:27.840 Few more months. 0:12:30.160 --> 0:12:32.920 So does that mean by midcaps, small caps or where 0:12:32.920 --> 0:12:34.040 does that land you? 0:12:35.640 --> 0:12:37.839 Well, Alex, we really like small and mad caps. We 0:12:37.880 --> 0:12:40.000 think that there's a lot of opportunity there just because 0:12:40.000 --> 0:12:42.080 they haven't been able to keep up in this full market, 0:12:42.360 --> 0:12:44.800 and you know, speaking of emerging markets, small caps are 0:12:44.840 --> 0:12:47.600 more domestically focused. So if you believe that the US 0:12:47.640 --> 0:12:50.320 economy is the cleanest shirt in a dirty laundry pile, 0:12:50.600 --> 0:12:52.280 then you probably do want to be looking at the 0:12:52.280 --> 0:12:55.160 small and meg paps. But overall, you know, as long 0:12:55.280 --> 0:12:58.480 as the economy stays okay, as long as the job 0:12:58.520 --> 0:13:01.160 market can make it through the next few months, then 0:13:01.280 --> 0:13:03.280 we think that there are a lot of good reasons 0:13:03.280 --> 0:13:05.040 to be buying into this market as long as you 0:13:05.080 --> 0:13:06.319 focus on the right things. 0:13:06.960 --> 0:13:08.800 All right, Kelly, we appreciate it. Thank you so much, 0:13:08.880 --> 0:13:12.000 Kelly Cox joining us there for Matholt's wealth management and 0:13:12.080 --> 0:13:14.240 kind of setting us up. But you know, the consumer 0:13:14.280 --> 0:13:17.440 confidence data, if it continues to deteriorate, right, had to 0:13:17.480 --> 0:13:18.880 small caps and make that good investment. 0:13:18.920 --> 0:13:20.920 How many big macs do you think Calli's really tried 0:13:20.920 --> 0:13:22.520 in the last few years. I mean, I wonder if 0:13:22.559 --> 0:13:25.120 it tastes the same today as it did ten years ago. 0:13:25.200 --> 0:13:27.199 I would bet even with the secret sauce and everything, 0:13:27.200 --> 0:13:27.800 it probably does. 0:13:27.840 --> 0:13:29.640 Okay, So what does that tell you. 0:13:29.240 --> 0:13:31.480 Well, it tells me that you know, somebody's making fat 0:13:31.520 --> 0:13:32.120 margins I e. 0:13:32.240 --> 0:13:35.080 McDonald's, right, but probably to pay Paul. 0:13:35.120 --> 0:13:36.880 What did they just change the ingredients? Because you change 0:13:36.920 --> 0:13:38.959 ingredients and that's cool and you get fresher stuff. We're 0:13:39.040 --> 0:13:40.000 using that they're trying to. 0:13:39.880 --> 0:13:42.120 Like get I know where you're going here. It's not 0:13:42.200 --> 0:13:43.479 farm to table with McDonald's. 0:13:43.480 --> 0:13:44.920 But you know it did taste good. I mean, those 0:13:44.960 --> 0:13:46.359 McDonald's were delicious. 0:13:47.000 --> 0:13:49.480 Oh twenty piece nuggets. I don't even know they had 0:13:49.480 --> 0:13:51.880 twenty piece nuggets anymore. I was like a double cheeseburger 0:13:52.160 --> 0:13:53.720 with Burger King tons of cheese. 0:13:53.760 --> 0:13:59.600 Anyway, you're listening to the Bloomberg Intelligence Podcast. Catch us 0:13:59.640 --> 0:14:03.040 live weekdays at ten am Eastern on applecar Play and 0:14:03.040 --> 0:14:05.960 Android Auto with the Bloomberg Business Act. You can also 0:14:06.040 --> 0:14:09.520 listen live on Amazon Alexa from our flagship New York station, 0:14:09.880 --> 0:14:12.880 Just say Alexa Play, Bloomberg eleven thirty. 0:14:13.840 --> 0:14:16.679 Alex Fielong, Sid Damien Sas Hour. This is Bloomberg Intelligence 0:14:16.760 --> 0:14:19.320 Radio when you're broadcasting to you live from the Earthshot 0:14:19.360 --> 0:14:22.320 Summit right here at the Plaza Hotel in Midtown Manhattan. 0:14:22.360 --> 0:14:26.200 The summit celebrates innovators who are trailblazing solutions to repair 0:14:26.280 --> 0:14:29.920 our planet, and that event is co hosted by Bloomberg Philanthropys. 0:14:29.960 --> 0:14:31.720 We have a great guest I lined up for you, 0:14:31.800 --> 0:14:34.000 sort of connecting the dots between how we go green 0:14:34.040 --> 0:14:36.160 and carbon neutral and how we also pay for it. 0:14:36.560 --> 0:14:39.320 Joining us now is Nadia Calvino, President of the European 0:14:39.440 --> 0:14:43.640 Investment Bank EIB. European Green Deal is huge. There's a 0:14:43.640 --> 0:14:45.800 set of policies that look to meet the European Union 0:14:45.800 --> 0:14:48.640 climate neutral by twenty fifty. You're looking to mobilize over 0:14:48.680 --> 0:14:51.040 one trillion euros in order to do that. 0:14:51.440 --> 0:14:54.240 How's it going, Yes, well, it's going well, it's going well. 0:14:54.280 --> 0:14:56.240 We are on track to meet the target of one 0:14:56.280 --> 0:14:59.360 trillion euros in investment in green finance. More than fifty 0:14:59.400 --> 0:15:03.080 percent of our our annual investments go to the climate transition, 0:15:03.160 --> 0:15:05.520 to the green finance, so as to make it a success, 0:15:05.520 --> 0:15:07.960 a European success, a global success for all of us. 0:15:08.000 --> 0:15:10.360 But why do I keep hearing then that the europe 0:15:10.360 --> 0:15:12.520 has more at the stick approach and the US has 0:15:12.560 --> 0:15:14.920 the carrot approach with the IRA. How did they differ? 0:15:15.600 --> 0:15:18.480 Well, I think that we have a shared endeavor, you know, 0:15:18.520 --> 0:15:21.360 which is to ensure that we do this green transition, 0:15:21.440 --> 0:15:23.680 that we move to an net zero economy, and that 0:15:23.720 --> 0:15:27.040 this is profitable. Well, my side of things is the carrots. 0:15:27.080 --> 0:15:30.480 Actually I am the investor, so we are probably we 0:15:30.520 --> 0:15:33.240 are the largest multilateral development bank in the world. Maybe 0:15:33.280 --> 0:15:35.720 people don't know. With a six hundred billion balance sheet, 0:15:36.120 --> 0:15:38.600 ninety percent of the investments are done in the EU, 0:15:39.000 --> 0:15:42.040 where we are the largest investor in renewables. We're probably 0:15:42.040 --> 0:15:44.800 one of the largest investors in renewables in the in 0:15:44.840 --> 0:15:47.720 the whole world, and right now here in the UN 0:15:47.840 --> 0:15:51.160 General Assembly. Around the General Assembly, I'm having lots of 0:15:51.240 --> 0:15:54.840 meetings exchanges to try to bring that agenda forward with 0:15:54.880 --> 0:15:55.960 a global perspective. 0:15:56.200 --> 0:15:59.720 Well, Nadia, I mean, renewables is a very broad topic, solar, wind, water, 0:15:59.800 --> 0:16:02.400 new nuclear. Talk to us about where you're deploying your 0:16:02.400 --> 0:16:05.400 balance sheet. I mean six hundred billions, a lot of money, well. 0:16:05.240 --> 0:16:07.120 More than fifty percent, as I said, is going to 0:16:07.160 --> 0:16:11.680 climate finance. And this is sustainable infrastructures, This is sustainable transport. 0:16:12.080 --> 0:16:16.600 This is also renewables, wind energy, greeds, solar, and also 0:16:16.720 --> 0:16:19.720 new fuels, the fuels of the future, for example, green hydrogen. 0:16:19.960 --> 0:16:24.520 We're supporting very innovative, large projects, also large traditional infrastructures 0:16:24.880 --> 0:16:27.640 and dynamic startups that are really going to be the 0:16:27.640 --> 0:16:31.480 ones finding the technologies, the breakthrough technologies for all of us. 0:16:31.520 --> 0:16:34.040 I mean we've seen with hydrogen though that a lot 0:16:34.120 --> 0:16:37.480 that it's hard, that green hydrogen particular is quite hard. 0:16:37.560 --> 0:16:39.960 I mean Germany had a sort of backtrack from that, 0:16:40.040 --> 0:16:43.560 in particular with the war in Ukraine. In addition, like 0:16:43.600 --> 0:16:47.120 Oorsied dropped and had to ditch out on a hydrogen project. 0:16:47.800 --> 0:16:50.600 Can you do hydrogen profitably? And how do you do that? 0:16:50.680 --> 0:16:52.760 But we have to, we have to because it is 0:16:52.920 --> 0:16:56.440 can right now, well we are right now. We're investing 0:16:56.440 --> 0:16:58.680 in a number of projects in Europe which are more 0:16:58.680 --> 0:17:02.800 having to do with industry hubs. So we are greening industry, 0:17:03.120 --> 0:17:06.240 highly polluting, highly energy intensive. 0:17:05.800 --> 0:17:07.119 So like as the men industry. 0:17:07.119 --> 0:17:11.200 That yes, and still you know, all these large industry 0:17:11.520 --> 0:17:14.640 so we are we're seeing, for example, close to port 0:17:14.680 --> 0:17:16.879 to Report in the south of Portugal, we're going to 0:17:16.880 --> 0:17:19.840 have a green hydrogen hub, so that's very close to 0:17:20.080 --> 0:17:24.119 traditional industries and we're helping them become green and also profitable. 0:17:25.000 --> 0:17:27.280 Likewise in other parts of Europe. You know, we are 0:17:27.640 --> 0:17:30.200 at the early stages of these new technologies and it 0:17:30.280 --> 0:17:32.760 is only normal you know that some projects fail, that 0:17:32.840 --> 0:17:36.560 some projects are succeeding, and that's that's why we are. 0:17:37.040 --> 0:17:39.520 The European Investment Bank is a public investment bank to 0:17:39.560 --> 0:17:42.920 take the risk, to make sure that patient capital long 0:17:43.000 --> 0:17:46.199 term investors are taking those risks. So that also we 0:17:46.240 --> 0:17:49.080 mobilize private capital and we make this a success. 0:17:49.600 --> 0:17:51.919 Well, you know, other multi level finance institutions, I mean 0:17:51.920 --> 0:17:54.520 development banks out of for example, China, Korea, et cetera, 0:17:54.720 --> 0:17:57.480 have had a very poor track record of deploying capital profitably. 0:17:57.520 --> 0:17:59.119 And you know, I know the IB is different. I 0:17:59.119 --> 0:18:01.159 know the World Bank Group is very very different. And 0:18:01.200 --> 0:18:03.960 I know we're talking about perpetual capital, perpetual investments. But 0:18:04.080 --> 0:18:06.239 the end of the day, you do have to get 0:18:06.280 --> 0:18:08.000 a return on your investment. So talk to us about 0:18:08.000 --> 0:18:11.640 which sectors within the broader renewable space, within the border 0:18:11.720 --> 0:18:15.440 climate space carry the highest return on investment from your perspective. 0:18:15.800 --> 0:18:18.400 Well, actually, we are very profitable. Let me be very clear. 0:18:18.440 --> 0:18:20.320 The fact that we're a public bank doesn't mean that 0:18:20.359 --> 0:18:23.320 I don't have to deliver for a shareholders. So around 0:18:23.359 --> 0:18:25.760 two billion euros we had in profit last year. We've 0:18:25.760 --> 0:18:29.240 been profitable since the bank, since its inception. We have 0:18:29.320 --> 0:18:33.200 a very low, very low level of non performing assets. 0:18:33.480 --> 0:18:35.320 When I say very low, I mean like zero point 0:18:35.359 --> 0:18:37.480 four percent of our assets. Huh. So it is a 0:18:37.560 --> 0:18:39.600 very profitable bank. And what we have is a very 0:18:39.680 --> 0:18:43.840 large balance sheet and very balanced portfolio with large infrastructures 0:18:43.880 --> 0:18:48.639 traditional infrastructures which are very profitable, lower risk and also 0:18:48.880 --> 0:18:53.840 highly risky endeavors like innovative startups or large investments into 0:18:53.880 --> 0:18:56.720 new green technologies. And that's what's allowing us, I think, 0:18:56.720 --> 0:18:59.440 to make a difference in making projects bankable at the 0:18:59.520 --> 0:19:00.000 end of the day. 0:19:00.200 --> 0:19:01.919 So what have you noticed in terms of if you 0:19:01.960 --> 0:19:05.040 support a project that, does it bring in private investors 0:19:05.080 --> 0:19:06.440 in private capital. 0:19:06.560 --> 0:19:09.119 At the end of the day, it does absolutely. You know, 0:19:09.160 --> 0:19:11.640 the European Investment Bank is considered to be a reference 0:19:11.680 --> 0:19:15.720