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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple card playing Android

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Speaker 2: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 2: you get your podcasts, or watch us live on YouTube.

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Speaker 3: All right, top of the top.

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Speaker 4: Go.

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Speaker 1: Kind of thing today is Wall Street returns to a

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Speaker 1: T plus one stock trading after a century Only in Bloomberg.

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Speaker 1: When people read that kind of story, and maybe I'll

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Speaker 1: find one other person that cares about this, Larry Tapp,

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Speaker 1: He's head of market Structure a Bloomberg Intelligence. Larry, can

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Speaker 1: you explain to us what is going on here? To

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Speaker 1: explain it? Like I'm five years old, because when I

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Speaker 1: started the business, I think it was T plus seven.

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Speaker 1: That was a gentlemanly timeframe. Now it's T plus one.

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Speaker 1: What's going on?

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Speaker 5: Not a problem, Paul? Yeah, you know, starting today, securities

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Speaker 5: traded today will actually settle tomorrow instead of on on Thursday.

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Speaker 5: So what that means is that we buy I buy

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Speaker 5: Apple today, and on tomorrow tomorrow, I get the shares

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Speaker 5: in my account and my broker takes the payment out

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Speaker 5: of my out of my account. Now for most retail

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Speaker 5: it's not going to be that big an issue. It's

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Speaker 5: much more of an institutional issue where the securities in

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Speaker 5: cash don't reside at the broker, where they reside at

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Speaker 5: a third party custodian, and that becomes a little more complicated.

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Speaker 6: So how does it become complicated? Like it seems like

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Speaker 6: a pretty straightforward thing, right, So where do the problems lie?

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Speaker 5: Well, there are there are problems will lie in four

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Speaker 5: or five different areas. The biggest problem is with foreign exchange.

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Speaker 5: So let's just say I am Aberdeen and I'm located

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Speaker 5: in Scotland or wherever, or in London. If they buy Apple,

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Speaker 5: they're going to have to actually send over currency pounds

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Speaker 5: and convert that to dollars and pay for that. The

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Speaker 5: problem is that currency takes two days to settle in

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Speaker 5: standard currency settlement, whereas the securities will settle in one day.

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Speaker 5: So if they buy Apple today, will have to pay

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Speaker 5: for the securities tomorrow. But if they send over pounds

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Speaker 5: to pay for that to cover that, the pounds won't

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Speaker 5: actually get converted to dollars till Thursday, which means they

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Speaker 5: won't have the cash there on time, which means they

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Speaker 5: either have to finance that purchase, or they have to

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Speaker 5: move the cash earlier, or they have to instead of

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Speaker 5: using Swift or CLS, which is the currency settlement system,

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Speaker 5: they actually have to call somebody and say, hey, let's

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Speaker 5: do this on an emergency basis and get this taken

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Speaker 5: care of. And so that's an issue. The second it

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Speaker 5: has to do with securities lending. So if my security

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Speaker 5: is of my apples out on loan, they have to

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Speaker 5: get that back so that I can actually make sure

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Speaker 5: that can get delivered. Now, Apple's probably not a big

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Speaker 5: issue there, but if it's hard to borrow security, it

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Speaker 5: might be much more difficult to find the securities, you know,

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Speaker 5: if I've lent them out to try to collect a feed,

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Speaker 5: getting them back maybe a little bit more problematic. Other

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Speaker 5: issues which impact actually everybody in the US is the

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Speaker 5: allocation confirmation process. So if I'm FIDELI or if I'm

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Speaker 5: a big asset manager, I'm not buying one hundred or

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Speaker 5: two hundred shares of Apple. I'm probably buying one hundred

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Speaker 5: thousand or a million shares of Apple. Trays these days

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Speaker 5: don't necessarily occur in these big blocks like they used to.

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Speaker 5: They get broken up into algos and they get executed

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Speaker 5: in hundred share increments. That said, the und share increments

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Speaker 5: don't settle immediately. They have to be badged up. We

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Speaker 5: have to create an average price. There's a lot of

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Speaker 5: manual or at least what used to be manual effort

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Speaker 5: involved in managing that, and the process just needs to

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Speaker 5: be sped up. And the close out time is generally

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Speaker 5: nine nine PM for that, and so they have between

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Speaker 5: you know, four and nine to get all that operational

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Speaker 5: stuff done and that just takes, you know, takes time

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Speaker 5: sometimes when when it you know, becomes harder to add

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Speaker 5: all this stuff up and average price it out and

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Speaker 5: break them up into the transactions. Because it's probably not

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Speaker 5: a million shares of Apple for one fidelity account. It

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Speaker 5: could be you know, ten different portfolios that are buying

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Speaker 5: Apple and it has to be broken up into you know,

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Speaker 5: ten little clumps. And there are a couple of other issues,

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Speaker 5: but those are the big ones.

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Speaker 1: So given all that, why is a SEC doing this

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Speaker 1: is simply because from a technological perspective, they can, well.

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Speaker 5: The SEC can do a lot of things, but increasingly

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Speaker 5: people are suing the SEC, so there they can't do

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Speaker 5: anything they want. I think the issue here revolves around

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Speaker 5: the Robinhood issue back in January of twenty twenty one,

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Speaker 5: where they got a margin call to come up with

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Speaker 5: three billion dollars to cover all the memestock buying. And

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Speaker 5: so there's an old saying in the back office that

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Speaker 5: nothing good ever happens between trading and settlement date. So

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Speaker 5: the challenge there is that if for whatever reason, XYZ

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Speaker 5: broker goes bankrupt, you know, you know on one day,

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Speaker 5: the shorter the settlement period is, the more likely that

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Speaker 5: those transactions get paid for and they don't have to

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Speaker 5: be funded by you know, the industry, because right now

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Speaker 5: what happens is all these transactions washed through the DTCC.

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Speaker 5: The DTCC, the depository trust guarantees settlements. So if God forbid,

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Speaker 5: a broker goes down, you know, the other side of

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Speaker 5: the isn't broken. But to do that they have to

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Speaker 5: take margin from virtually the whole industry. And so if

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Speaker 5: you shorten the settlement cycle, the risk of failure goes down,

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Speaker 5: and so the amount of margin that you have to

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Speaker 5: put up to guarantee those trades goes down, and so

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Speaker 5: it just takes less risk, It takes risk out of

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Speaker 5: the settlement system.

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Speaker 6: So Larry, with that in mind, how long are we

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Speaker 6: going to know? At what point when we know if

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Speaker 6: T plus one is working or the difficulties are cropping up,

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Speaker 6: when are we going to know that?

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Speaker 5: Well, it depends on who we is, the brokers and

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Speaker 5: the custodians and the folks involved that the transactions will

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Speaker 5: know pretty quickly, you know. The problem is that data

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Speaker 5: to the rest of the public probably won't be known

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Speaker 5: for a while. And where we expect to see problems

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Speaker 5: occur would be in the fail numbers. So if if, if,

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Speaker 5: if I have to, if I'm a European, if I

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Speaker 5: go back up, I'm Aberdeen, and I have to pay

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Speaker 5: for Apple and the US and my payment doesn't come

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Speaker 5: in two things Leiter happen. One is that I'll have

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Speaker 5: to borrow cash from my bank, in which case we

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Speaker 5: may never know about it because it's it'll just be

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Speaker 5: wind up being a loan from X y Z bank

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Speaker 5: to Aberdeen. Or two, the securities will fail and then

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Speaker 5: the fail numbers come out on a delayed basis, so

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Speaker 5: we won't know what the fails wind up going up

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Speaker 5: for a couple of weeks. And so that's where and

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Speaker 5: so and the third issue is that if all hell

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Speaker 5: breaks loose and we have a real problem, that'll be

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Speaker 5: known in the back offices before anything. And the question is,

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Speaker 5: you know what kind of transparency will we get out

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Speaker 5: of it. Maybe we'll know some stuff from the Federal

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Speaker 5: Reserve if things go drastically awry, or the d DCC,

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Speaker 5: your CEFMA. But they're going to have to They're gonna

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Speaker 5: have to publish that information. It's not like something that

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Speaker 5: we could see on a screen on the Bloomberg screen, right,

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Speaker 5: A lot of that stuff is fairly private data.

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Speaker 1: All right, Larry, We're gonna to leave it there. Great stuff.

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Speaker 1: Larry tab head of market Structure Bloomberg Intelligence. He is

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Speaker 1: on top of He is the leading voice in the

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Speaker 1: marketplace a back all these markets actually work. This is Bloomberg.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on applecard Play and Android

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Speaker 2: Outo with the Bloomberg Business app. You can also listen

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Speaker 2: live on Amazon Alexa from our flagship New York station.

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Speaker 2: Just say Alexa, play Bloomberg eleven thirty Alex.

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Speaker 1: This is how it was described to buy. Our next

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Speaker 1: guest to me the first time I met him. The

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Speaker 1: biggest company you never heard of?

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Speaker 4: For me?

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Speaker 1: Love that My man was I this is a fifty

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Speaker 1: billion this is Arthur J. Gallagher and Company. It's an

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Speaker 1: insurance company. I don't anything about insurance, and maybe that

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Speaker 1: has some something to do with it. But it's fifty

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Speaker 1: four billion dollars in market cap. I mean, it's up

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Speaker 1: ten percent this year of the stock, up twenty three

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Speaker 1: percent over the trailing twelve months. It just up into

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Speaker 1: the right every year. Why haven't I paid it more

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Speaker 1: attention to this one? But thank you.

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Speaker 6: It's like a family business.

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Speaker 4: I know.

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Speaker 1: Great grandfather Pac Allagher joins this year, great grandson of

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Speaker 1: the founder. He's the chief executive officer of Gallagher Insurance.

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Speaker 1: Pat talk to us about your company. You're based on Chicago.

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Speaker 1: Talk to us about a typical customer of yours and

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Speaker 1: a typical piece of business you do for your customers.

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Speaker 1: What are you guys really focusing on these days?

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Speaker 4: Well, first of all, pall we're not an insurance company,

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Speaker 4: so we don't take risks. We're insurance programs.

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Speaker 1: So much rights.

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Speaker 4: And it was my grandfather start of the company, not

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Speaker 4: my great grandfather. But anyway, every single day we get

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Speaker 4: up and we talk to customers about what the things

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Speaker 4: are that they are facing them that could cause real

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Speaker 4: disaster in their business. So this can be a business

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Speaker 4: as large as any of the largest companies in America

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Speaker 4: with professional risk management staff, all the way down to

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Speaker 4: the smallest of companies that you know in neighborhood, and

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Speaker 4: each of these businesses faces all kinds of complex risk

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Speaker 4: that's becoming more complex as we sit here. We never

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Speaker 4: ever thought of cyber ten years ago. Cyber is a

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Speaker 4: huge risk. Everybody's concerned about it. I tell our production

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Speaker 4: for us, if you're talking to the largest company in America,

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Speaker 4: or you're talking to someone who owns nothing more than

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Speaker 4: a sundry shop, they've got to be concerned about this.

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Speaker 4: And now you add AI to that, and so you

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Speaker 4: see the world everywhere. On top of that, of course,

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Speaker 4: you've got climate change and weather related issues that are

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Speaker 4: happening across the world, which is one of the reasons

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Speaker 4: why you see such a difficult time, for instance, getting

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Speaker 4: homeowners insurance in places like southern southern Florida. The point

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Speaker 4: is that every single company, every single organization out there,

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Speaker 4: faces these risks. What do they do with them. Insurance

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Speaker 4: plays one role. The other part of a broker's role

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Speaker 4: is to say, there's some things that aren't ensurable, Now,

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Speaker 4: how do we deal with that? What are the things

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Speaker 4: we do to help you control that. So we look

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Speaker 4: at a full spectrum of risk for a client and say,

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Speaker 4: these are the things that we can do to help

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Speaker 4: you deal with that as you go forward, and that

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Speaker 4: is incredibly valuable. We have a survey that we're just

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Speaker 4: finalizing the details on now. We talked to about one

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Speaker 4: thousand business owners across America and it's interesting to me

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Speaker 4: because it really is a finger on the pulse. They're

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Speaker 4: very concerned about weather related issues. Oh yeah, weather has

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Speaker 4: all of a sudden gone from something that's important on

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Speaker 4: the coasts to something that's important everywhere. I mean, I

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Speaker 4: grew up in the Midwest. We never had tornadoes in

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Speaker 4: the fall. Now that's normal. So just unfortunately a week

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Speaker 4: ago in Iowa there was a terrible school So people

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Speaker 4: are worried about that. They're worried about tech.

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Speaker 6: So how many how many? So what kind of customers

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Speaker 6: come to you and you say and they're like I

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Speaker 6: can't get coverage on this, or like I need coverage

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Speaker 6: on this, but I can't get it, or how has

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Speaker 6: that conversation evolved just in the last five years.

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Speaker 4: Oh, it's huge, So let's let's first of all, a

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Speaker 4: big part of what we do is help people take

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Speaker 4: their own risk. So that can take the form of

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Speaker 4: a large client creating a self insured platform where we

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Speaker 4: ensure excess of large deductibles. It can also go on

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Speaker 4: all the way to the middle market where groups band

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Speaker 4: together to form captive insurance companies. So the first the

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Speaker 4: first line of defense, of course, is to look at

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Speaker 4: all this and say what's insurable. Okay, you've got plants

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Speaker 4: in Iowa, You've got plants in Naples, Florida. How's that

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Speaker 4: going to shake out? What's that going to look like. Secondly,

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Speaker 4: you've got workers. You have to ensure the worker's compensation.

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Speaker 4: Those types of things you check off the list first.

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Speaker 4: Then you come back and say, these things either shouldn't

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Speaker 4: be or can't be insured. And there, Alexis really is

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Speaker 4: really the point of differentiation, because that's where we bring

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Speaker 4: an expert in to your point. If you ask anybody

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Speaker 4: out in the marketplace, not everything's insurable. Who's going to

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Speaker 4: help me? If you happen to be a builder. That's

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Speaker 4: a different answer than if you happen to be a school,

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Speaker 4: school district or university. So you have to have people

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Speaker 4: that talk that language, and that is really what differentiates us.

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Speaker 4: It's not just about quoting insurance.

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Speaker 1: And you're a global business. Talk to us about the

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Speaker 1: business here in the US versus maybe some of the

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Speaker 1: other bigger markets outside the US.

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Speaker 4: So we are global business. We like to say that

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Speaker 4: any account of any size, located anywhere in the world,

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Speaker 4: we can do and we can be helpful too. If

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Speaker 4: you look at the United States, though, we have a

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Speaker 4: very interesting business here in that it's incredibly fragmented right now.

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Speaker 4: We have thirty thousand competitors. Those aren't people, those are firms.

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Speaker 4: So in your local community, you know, you drive by

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Speaker 4: main Street and you'll see Jones Insurance that's a competitor

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Speaker 4: of ours. So it goes from those thirty thousand in

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Speaker 4: business insurance, the top one hundred went all the way

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Speaker 4: down to thirty five million, thirty six million in revenue.

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Speaker 4: We did about ten billion last year and the other

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Speaker 4: twenty nine nine hundred are smaller than that. So it's

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Speaker 4: just incredibly fragmented business with professionals of all sizes and

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Speaker 4: sorts around the country. That we have a very strong

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Speaker 4: platform of acquisitions and we bring those people in, we

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Speaker 4: don't want them to leave us. We feel that one

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Speaker 4: plus one can equal five. Paul, you're in your community,

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Speaker 4: you know your people. You're very good at insurance. But

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Speaker 4: when we bring our capabilities in, when we bring our

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Speaker 4: data and analytics. Now that big account in town, that

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Speaker 4: large contractor the large university that you knew you had

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Speaker 4: to stay away from, let's go get it together. And

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Speaker 4: if that energizes you, you'll be a great fit for

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Speaker 4: our acquisition team.

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Speaker 1: You're going to sell insurance, No, but it's people I

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Speaker 1: know that so insurance do fair very well. And you

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Speaker 1: spend a lot of time on the golf course too,

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Speaker 1: which I don't figure out that business.

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Speaker 4: Oh ok, yeah, we are recruiting Paul.

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Speaker 1: By the way, I think exactly what is a typical

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Speaker 1: acquisition for you guys. Is there a typical size you

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Speaker 1: like or is there a typical revenue.

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Speaker 4: Number you like? Well, we're not afraid to do large deals,

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Speaker 4: and in the last ten years we've done a number

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Speaker 4: that have reached that billion mark and we're very proud

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Speaker 4: of that. But really if you go back to my

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Speaker 4: comment about size of the availability in the United States,

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Speaker 4: and this is mirrored globally. Most of the people who

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Speaker 4: are out there that are private are smaller. And by

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Speaker 4: that I mean our average acquisition size is probably somewhere

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Speaker 4: around ten million in revenue. Okay, it's probably owned by

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Speaker 4: two or three entrepreneurs, may have started at their dining

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Speaker 4: room table, or their parents may have started it. They've

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Speaker 4: grown the business to a great size for them in

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Speaker 4: their local community. To your point, Paul, they make a

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Speaker 4: very good living, and yet at the same time, if

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Speaker 4: they want to stay in touch with what's happening in

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Speaker 4: the future, AI, cyber data analytics, et cetera, they need

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Speaker 4: a partner. And that's what we bring. And again back

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Speaker 4: to the point that we don't synergize out costs and

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Speaker 4: say come in here, get rid of everybody. We just

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Speaker 4: want your book of business. We want to take that

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Speaker 4: platform and really expand it.

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Speaker 1: That thirty seconds left, Pat, just how's your year been

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Speaker 1: so far?

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Speaker 2: Years?

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Speaker 4: Looking great? Thank you very much. The last five years

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Speaker 4: have been terrific, and we look at the future and

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Speaker 4: we're just getting started.

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Speaker 1: All right, sounds good to me. The insurance business is

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Speaker 1: a good business. They all tell me that, but I

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Speaker 1: just don't understand it.

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Speaker 3: To be honest, I buy a lot of it. Yeah,

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Speaker 3: I was gonna say, we buy a lot of it.

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Speaker 3: This is very true.

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Speaker 1: Yeah, I thought a lot of Pat Gallagher. He's the

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Speaker 1: chief executive officer of Gallagher Insurance. Joining Slive here on

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Speaker 1: a Bloomberg Interactive Brokers studio. Again, this is a large

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Speaker 1: insurance brokerage firm, so I have to make sure I

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Speaker 1: get that correct. Matt Palosol always on top of me

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Speaker 1: about that. But I'm just looking at the revenue. Ten

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Speaker 1: billion dollars of revenue, so it's just really extraordinary.

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Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on fo card playing Android

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Speaker 2: outo with the Bloomberg Business app. Listen on demand wherever

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Speaker 2: you get your podcasts, or watch us live on YouTube.

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Speaker 1: All right, let's check in with guy. He's pretty good

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Speaker 1: on tech Space, He's okay, he's not bad. On Rock

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Speaker 1: run our senior technology anelsts for Bloomberg Intelligence. On Rock,

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Speaker 1: I was kind of paraphrasing what I think you're gonna

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Speaker 1: say about this report that you know their iPhone shipments

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Speaker 1: are up at gajillion percent here in the latest period.

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Speaker 1: But talk to us about this data coming out of China.

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Speaker 1: How reliable is it and how predictive is it? And

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Speaker 1: if it's up fifty percent in the latest period, why

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Speaker 1: isn't Apple stock up a lot more today?

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Speaker 3: Yes, that's a very good question, Paul, And again I

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Speaker 3: have nothing against the people who collect this data and

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Speaker 3: figure it out, but this is the way I looked

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Speaker 3: at it. In jan and Feb this data was down

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Speaker 3: I think minus thirty five minus forty percent or so,

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Speaker 3: and then when Apple reported their quarter, they said, you

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Speaker 3: know what, mainland China, our iPhone revenue grew. So there

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Speaker 3: is not that direct correlation between the two numbers. And

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Speaker 3: it could be because there are times when Apple you know,

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Speaker 3: sells phone, but it's stuck in the inventory channel in between.

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Speaker 3: Then they put out a sale and then gets cleared up.

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Speaker 3: So it's a question of timing not so much. But

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Speaker 3: the big thing for us is that there is there

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Speaker 3: was a downdraft of negative news coming out of China.

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Speaker 3: It's turned positive two months in a row, so that's

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Speaker 3: a good news. Seems more like a cyclical issue to me.

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Speaker 3: Than a structural problem people giving away Apple phones not

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Speaker 3: buying it, So that's not the case. So that's a

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Speaker 3: good news. So I think, you know, from an overall

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Speaker 3: point of sentiment point of view, I think this is

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Speaker 3: good news for Apple that China, which in our view

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Speaker 3: is the most important market for them over the next

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Speaker 3: three to five years, and we are not going to

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Speaker 3: see you know, let's say eurobar declining share. I think

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Speaker 3: it's it's going to be okay over the next few years,

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Speaker 3: even if it goes ups and down. So that's really

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Speaker 3: the big takeaway for us. DAR.

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Speaker 6: So can I call this a nothing burger? No, that's

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Speaker 6: not true because I say that because you didn't hear it.

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Speaker 6: But Paul was guessing you would call this data a

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Speaker 6: nothing burger. But you're being too polite about it.

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Speaker 3: I think done a wrong So sentiment vice think about it.

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Speaker 3: The only thing that we've been hearing for almost a

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Speaker 3: year now that people don't want to buy iPhones in China,

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Speaker 3: it's because of the government and nationalism and so many

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Speaker 3: all things. And I think this one tells us that's

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Speaker 3: not the case. People are strapped for cash and if

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Speaker 3: they get a good deal on a phone, they'll buy it.

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Speaker 3: So what do I expect. I expect Apple to go

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Speaker 3: out and do more promotional activities over the next few

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Speaker 3: months to try and sell more products into the market. Now,

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Speaker 3: not every market is different. Apple's not known to give

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Speaker 3: a lot of discounts globally, but if that's what they

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Speaker 3: have to do in China, that's what.

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Speaker 5: They have to do, all right, fair enough.

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Speaker 6: But let's go to the discounts though for a second.

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Speaker 6: So even if we don't say, take this data as gold,

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Speaker 6: but just directionally, Apple and discounts tend not to go together,

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Speaker 6: at least in my mind. What do you make of that?

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Speaker 3: Yeah, I think this is a new thing for Apple,

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Speaker 3: and again they're probably grinding their teeth and not liking it.

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Speaker 3: But you know what, they have the rest of the

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Speaker 3: world to make up for it. In the US, for example,

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Speaker 3: people are liking to buy the higher end model, the

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Speaker 3: pro model. That helps margins, that helps the adage selling price.

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Speaker 3: So if they have to give a little bit up

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Speaker 3: to gain market share in China, I think they should

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Speaker 3: do it because you don't want to be branded as

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Speaker 3: somebody a second player in China out there, which is

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Speaker 3: you know, in our view, the most important market for

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Speaker 3: growth for Apple. Otherwise what's going to happen is you're

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Speaker 3: not going to see any growth in China. For that matter,

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Speaker 3: their top line growth is not going to grow, and

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Speaker 3: that's not good for the stock. Also, and ra' talk to.

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Speaker 1: Us about India. What is it as a percentage of

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Speaker 1: Apple's business today and what do you think it can

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Speaker 1: be five, six, seven years from now.

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Speaker 3: Yeah, so in our view, apples very small, less than

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Speaker 3: five percent. In fact, when you we have done a

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Speaker 3: lot of work on the number of shipments in India,

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Speaker 3: Apple's market share is you know, less than five percent.

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Speaker 3: But here's the kicker. Ninety five percent of the phones

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Speaker 3: don't even qualify for to be in the Apples you

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Speaker 3: could say ecosystem, which means they're under three hundred dollars.

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Speaker 3: As the Indian economy grows, as the middle class becomes

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Speaker 3: more affluent, I think Apple's going to be a winner

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Speaker 3: over here. But think about it this way. When we

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Speaker 3: look at the US with per capita income of let's

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Speaker 3: say sixty five seventy thousand dollars, somewhere in that realm,

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Speaker 3: China is around twelve and a half thousand dollars. India

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Speaker 3: is about two thousand, twenty five hundred dollars. So when

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Speaker 3: you look at these three ecosystems, I think I think

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Speaker 3: when we look at that growth driver from five years onwards,

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Speaker 3: that's where you know, India comes in and there's a

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Speaker 3: massive market there for Apple. But that's not going to

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Speaker 3: happen next year or the.

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Speaker 6: Year after, right, that's sort of a structural change, et

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Speaker 6: cetera in the market. I don't round what else are

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Speaker 6: you working on right now?

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Speaker 3: I think the biggest thing right now is what happens

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Speaker 3: at WWDC and whether that's going to be enough to

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Speaker 3: sustain this. You know, I would say optimism that we

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Speaker 3: have seen in Apple for the first time, I would

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Speaker 3: say in the last eighteen months, because we all knew

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Speaker 3: China was a problem. We saw that in the numbers,

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Speaker 3: sales numbers and not very strong. But AI has that

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Speaker 3: outside potential to go out and spur the next sale

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Speaker 3: off phones. Why because there is a massive amount over

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Speaker 3: forty three percent of the phones our iPhone twelve and below,

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Speaker 3: which is old phones with lower you know, you could

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Speaker 3: say RAM, memory and other things. Now for if they

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Speaker 3: go out and say I have really cool features coming

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Speaker 3: into the phone, you got to go find a way

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Speaker 3: to upgrade it. Now, if some he has a fourteen

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Speaker 3: or a fifteen, they're most likely not going to upgrade it.

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Speaker 3: But if you have something and I can iPhone ten,

435
00:22:05,400 --> 00:22:07,879
Speaker 3: iPhone eleven, there may be a reason enough for you

436
00:22:07,960 --> 00:22:11,879
Speaker 3: to upgrade it. So that really brings a new fresh

437
00:22:12,400 --> 00:22:15,520
Speaker 3: you could say life and Apple, and that's really important.

438
00:22:15,560 --> 00:22:18,480
Speaker 3: On June tenth, when they get this developer conference.

439
00:22:18,600 --> 00:22:23,200
Speaker 1: All right, I'm sitting on an Apple iPhone eleven. When

440
00:22:23,240 --> 00:22:23,879
Speaker 1: do I upgrade?

441
00:22:24,880 --> 00:22:27,640
Speaker 3: You should update it in the winter when the sixteen

442
00:22:27,720 --> 00:22:30,000
Speaker 3: comes out or whatever the name they give that phone,

443
00:22:30,000 --> 00:22:33,080
Speaker 3: because it should have a faster processor, it should have

444
00:22:33,160 --> 00:22:35,840
Speaker 3: a lot more memory. They'll just make things easier for you.

445
00:22:35,960 --> 00:22:37,639
Speaker 3: You can watch your golf shows in a little bit

446
00:22:37,920 --> 00:22:38,480
Speaker 3: easier way.

447
00:22:38,880 --> 00:22:39,280
Speaker 2: Very good.

448
00:22:39,320 --> 00:22:41,639
Speaker 1: Now, Tim Cook's sixty three, I'm gonna s whitch gears

449
00:22:41,640 --> 00:22:44,000
Speaker 1: on you? Is there any push for this guy to

450
00:22:44,280 --> 00:22:47,920
Speaker 1: put out a succession plan of note or things just

451
00:22:48,000 --> 00:22:50,760
Speaker 1: going so well at Apple that nobody's pushing for that.

452
00:22:51,880 --> 00:22:55,520
Speaker 3: See, Tim's done well. The Apple's done very well under Tim.

453
00:22:56,040 --> 00:22:58,040
Speaker 3: I have no way of predicting what he's going to leave,

454
00:22:58,200 --> 00:23:01,639
Speaker 3: but I really I mean, in my view, if you

455
00:23:01,760 --> 00:23:06,320
Speaker 3: were to somehow ring fence the China business. Apple alone

456
00:23:06,480 --> 00:23:09,159
Speaker 3: is a company that I think, you know, can do

457
00:23:09,840 --> 00:23:12,240
Speaker 3: can do good by itself. It doesn't really need a

458
00:23:12,320 --> 00:23:15,439
Speaker 3: massive charismatic leader in order to you know, come up

459
00:23:15,480 --> 00:23:18,159
Speaker 3: with that. This is a company with a global brand,

460
00:23:18,280 --> 00:23:21,480
Speaker 3: the products people love, people trust the products, and the

461
00:23:21,600 --> 00:23:24,800
Speaker 3: install base is very loyal. I mean, we think somewhere

462
00:23:24,840 --> 00:23:27,359
Speaker 3: in the mid nineties people can keep the phones. They

463
00:23:27,400 --> 00:23:30,600
Speaker 3: don't go out and change into a new ecosystem. I

464
00:23:30,680 --> 00:23:34,639
Speaker 3: think this is a phenomenal business. But you know, you

465
00:23:34,800 --> 00:23:37,359
Speaker 3: do need certain innovation, but not to the level you

466
00:23:37,440 --> 00:23:39,120
Speaker 3: need in other technology companies now.

467
00:23:39,160 --> 00:23:40,480
Speaker 6: But I wonder if you just need a really good

468
00:23:40,640 --> 00:23:43,000
Speaker 6: China ambassador within that company.

469
00:23:44,119 --> 00:23:46,280
Speaker 3: Yeah, I mean Tim's has been. Tim has been an

470
00:23:46,320 --> 00:23:49,080
Speaker 3: amazing China ambassador. If you go back, even the days

471
00:23:49,119 --> 00:23:52,520
Speaker 3: when we had China Tarraff wars, Apple really you know,

472
00:23:52,720 --> 00:23:55,639
Speaker 3: skated unhurt from there. Now. The only issue we have

473
00:23:55,720 --> 00:23:57,720
Speaker 3: been having in the last two three years is supply

474
00:23:57,840 --> 00:24:00,680
Speaker 3: chain problems in China because of COVID. Then after that

475
00:24:00,880 --> 00:24:03,680
Speaker 3: the consumers slow down and then a little bit negative

476
00:24:03,800 --> 00:24:05,680
Speaker 3: you know, you could say fights between the US and

477
00:24:05,760 --> 00:24:08,960
Speaker 3: China and that has had an impact on Apple. But

478
00:24:09,119 --> 00:24:10,760
Speaker 3: you know, in our view, if there is there is

479
00:24:10,840 --> 00:24:13,800
Speaker 3: the way to ring fact that I would say risk.

480
00:24:14,480 --> 00:24:16,600
Speaker 3: You know, Apple, Apple is a good company to look.

481
00:24:16,480 --> 00:24:18,639
Speaker 1: At all right, Honro, thanks so much for joining us

482
00:24:18,640 --> 00:24:22,200
Speaker 1: on a rock run a senior technology anaels Bloomberg Intelligence.

483
00:24:22,320 --> 00:24:27,639
Speaker 1: Just looking at the FA function for Apple revenue, the

484
00:24:27,760 --> 00:24:31,640
Speaker 1: forecast for their September twenty fourth or fiscal twenty four

485
00:24:31,720 --> 00:24:34,720
Speaker 1: year three hundred and eighty seven billion dollars of revenue,

486
00:24:35,640 --> 00:24:38,720
Speaker 1: net income, one hundred and one billion dollars in free

487
00:24:38,840 --> 00:24:41,760
Speaker 1: cash flow of one hundred and four billion dollars.

488
00:24:41,880 --> 00:24:42,680
Speaker 3: Look a lot of money.

489
00:24:42,840 --> 00:24:44,280
Speaker 6: That's like they make a lot of money.

490
00:24:50,800 --> 00:24:54,640
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

491
00:24:54,760 --> 00:24:57,680
Speaker 2: weekdays at ten am Eastern on Apple, card Play and

492
00:24:58,080 --> 00:25:01,040
Speaker 2: rout Auto with the Bloomberg Business. You can also listen

493
00:25:01,200 --> 00:25:04,280
Speaker 2: live on Amazon Alexa from our flagship New York station,

494
00:25:04,680 --> 00:25:07,400
Speaker 2: Just say Alexa play Bloomberg eleven thirty.

495
00:25:08,440 --> 00:25:10,920
Speaker 6: We also take a view of Bloomberg ne EF. It's

496
00:25:10,920 --> 00:25:15,560
Speaker 6: Bloomberg New Energy Finance. They're a research center within Bloomberg

497
00:25:15,680 --> 00:25:20,240
Speaker 6: that covers commodities, power, transport, industry, buildings, AG sectors, technology,

498
00:25:20,280 --> 00:25:23,639
Speaker 6: sustainable issues, all to help businesses and companies kind of

499
00:25:23,760 --> 00:25:26,120
Speaker 6: learn how they can transition as we move to net

500
00:25:26,240 --> 00:25:28,639
Speaker 6: zero at some point. And today we're going to take

501
00:25:28,640 --> 00:25:31,520
Speaker 6: a look at offshore wind here in the US. It's

502
00:25:31,560 --> 00:25:34,440
Speaker 6: been a real nightmare, particularly here on the East Coast.

503
00:25:34,520 --> 00:25:36,960
Speaker 6: In some ways it makes sense, big ocean, lots of wind.

504
00:25:37,000 --> 00:25:39,639
Speaker 6: Stick a turbine in there, boom you have renewable power.

505
00:25:40,000 --> 00:25:42,359
Speaker 6: The issue, though, is many of the issue has been

506
00:25:42,480 --> 00:25:45,600
Speaker 6: in pricing. The contracts that were signed didn't account for

507
00:25:45,680 --> 00:25:47,560
Speaker 6: the massive amount of inflation that we've seen in the

508
00:25:47,600 --> 00:25:49,359
Speaker 6: last couple of years, and a lot of projects have

509
00:25:49,480 --> 00:25:52,800
Speaker 6: then been canceled. So the question really is what happens now,

510
00:25:52,880 --> 00:25:56,520
Speaker 6: particularly as inflation comes down. Oliver metcalf is head of

511
00:25:56,600 --> 00:25:59,040
Speaker 6: Wind research at BNF and he joins US now in

512
00:25:59,080 --> 00:26:02,080
Speaker 6: the Interactive Brokers studio. Ali, thanks for joining me, appreciate

513
00:26:02,320 --> 00:26:04,760
Speaker 6: thanks for having me on. So I just sort of

514
00:26:04,800 --> 00:26:08,240
Speaker 6: set up with the problem was where are we now

515
00:26:08,480 --> 00:26:08,720
Speaker 6: with that?

516
00:26:10,240 --> 00:26:12,520
Speaker 7: Well, it's been a difficult last twelve months for the

517
00:26:12,640 --> 00:26:15,800
Speaker 7: US off your wind industry. We saw around nine gigawatts

518
00:26:15,920 --> 00:26:18,800
Speaker 7: of off take contracts, so contracts for the generation of

519
00:26:18,840 --> 00:26:21,680
Speaker 7: these projects get canceled. That's around a third of the

520
00:26:21,800 --> 00:26:24,159
Speaker 7: contracts that were signed in total for the US off

521
00:26:24,240 --> 00:26:26,879
Speaker 7: your Wind pipeline. You mentioned there it was because the

522
00:26:26,960 --> 00:26:30,320
Speaker 7: high inflation, high interest rates have really hit the technology

523
00:26:30,359 --> 00:26:34,480
Speaker 7: as well. So it's a really capitally intensive technology and

524
00:26:34,680 --> 00:26:37,040
Speaker 7: so a higher cost of financing hits off your Wind

525
00:26:37,160 --> 00:26:41,160
Speaker 7: especially hard compared with other technologies. We're beginning to see

526
00:26:41,160 --> 00:26:43,920
Speaker 7: a bit of a turning of the fortunes. So we're

527
00:26:43,960 --> 00:26:47,200
Speaker 7: seeing the first couple of commercial scale off your wind

528
00:26:47,240 --> 00:26:49,520
Speaker 7: projects start to come online in the US. One has

529
00:26:49,520 --> 00:26:51,960
Speaker 7: already come online off the coast of New York, and

530
00:26:52,040 --> 00:26:55,080
Speaker 7: one that will feed Parento Massachusetts is under construction at

531
00:26:55,080 --> 00:26:58,120
Speaker 7: the moment. So some good stories beginning. And we're also

532
00:26:58,200 --> 00:27:01,679
Speaker 7: seeing states willing to adjust this obvioslete mechanisms to account

533
00:27:01,720 --> 00:27:04,040
Speaker 7: for some of the pain that projects have been feeling recently.

534
00:27:04,520 --> 00:27:08,680
Speaker 7: So offer developers more protection in the contracts they off take,

535
00:27:08,720 --> 00:27:11,760
Speaker 7: contracts they're offering, and just simply higher prices that these

536
00:27:11,840 --> 00:27:13,720
Speaker 7: these developers need to make their return.

537
00:27:14,200 --> 00:27:16,879
Speaker 1: So talk to us about just wind research. How is

538
00:27:16,960 --> 00:27:21,040
Speaker 1: wind I'm sorry, wind power? How is that from an

539
00:27:21,040 --> 00:27:25,800
Speaker 1: efficiency perspective versus solar and versus other stuff that's out there.

540
00:27:25,880 --> 00:27:27,880
Speaker 1: How competitors is wind.

541
00:27:28,520 --> 00:27:30,880
Speaker 7: So you get kind of higher productivity from a wind

542
00:27:30,920 --> 00:27:35,200
Speaker 7: turbine compared with a solar panel and that and that's

543
00:27:35,200 --> 00:27:38,280
Speaker 7: even more productive offshore, and so offshore wind you have

544
00:27:38,400 --> 00:27:41,960
Speaker 7: more consistent, more consistent wind speeds, stronger winds as well.

545
00:27:42,480 --> 00:27:44,840
Speaker 7: So that means kind of if you imagine a wind

546
00:27:44,880 --> 00:27:47,159
Speaker 7: turbine operating one hundred percent of the time, that's kind

547
00:27:47,160 --> 00:27:50,600
Speaker 7: of the theoretical maximum. You can get between forty to

548
00:27:50,720 --> 00:27:54,960
Speaker 7: sixty percent of that generation typically on a wind project.

549
00:27:55,440 --> 00:27:58,000
Speaker 7: Now that sixty percent isn't too far off the kind

550
00:27:58,040 --> 00:28:01,800
Speaker 7: of percentage we could see from a kind of conventional generator,

551
00:28:02,080 --> 00:28:03,359
Speaker 7: a gas or a cold plant.

552
00:28:03,840 --> 00:28:06,119
Speaker 6: Oh really, what about like nuclear? It's a nuclear a

553
00:28:06,200 --> 00:28:06,800
Speaker 6: lot better than that.

554
00:28:07,160 --> 00:28:09,200
Speaker 7: Nuclear is much harder to ramp up and down, and

555
00:28:09,320 --> 00:28:12,080
Speaker 7: so they tend to operate completely as base loads. So

556
00:28:12,160 --> 00:28:15,080
Speaker 7: you get really high what we call capacity factors for nuclear.

557
00:28:15,160 --> 00:28:17,080
Speaker 7: So it's operating almost all the time if it's if

558
00:28:17,080 --> 00:28:17,840
Speaker 7: it's part of the mix.

559
00:28:18,080 --> 00:28:20,720
Speaker 6: So you mentioned so part of the issue is the

560
00:28:21,040 --> 00:28:24,240
Speaker 6: off take contract. So basically, if I'm a developer, you know,

561
00:28:24,400 --> 00:28:26,440
Speaker 6: Paul goes and says, okay, I'm gonna buy this win

562
00:28:26,520 --> 00:28:28,080
Speaker 6: from you for this amount of time. He's going to

563
00:28:28,119 --> 00:28:29,959
Speaker 6: pay me this, which gives me clarity on the how

564
00:28:30,000 --> 00:28:32,240
Speaker 6: I can go and invest that money. But my costs

565
00:28:32,280 --> 00:28:35,119
Speaker 6: go up and I'm kind of left naked at that point.

566
00:28:35,760 --> 00:28:38,880
Speaker 6: How is that being resolved? You mentioned subsidies, but like

567
00:28:39,160 --> 00:28:42,080
Speaker 6: what else? Because that gap is very unpredictable. And I

568
00:28:42,120 --> 00:28:45,880
Speaker 6: remember talking to Siemens North America ahead about that and

569
00:28:45,920 --> 00:28:48,200
Speaker 6: they're like, we took on all the commodity risk and

570
00:28:48,240 --> 00:28:51,320
Speaker 6: they're trying to change that now because they're not commodity traders.

571
00:28:51,040 --> 00:28:51,960
Speaker 3: But like, how do you do that?

572
00:28:52,480 --> 00:28:52,600
Speaker 4: Well?

573
00:28:52,680 --> 00:28:56,280
Speaker 7: Yeah, that is that unpredictability that hit developers especially hard.

574
00:28:56,840 --> 00:28:59,600
Speaker 7: So in the previous contracts, there's ones I was talking

575
00:28:59,600 --> 00:29:02,760
Speaker 7: about the got canceled. There was very little adjustment in

576
00:29:02,840 --> 00:29:05,760
Speaker 7: the contract price to account for moving commodity prices to

577
00:29:05,800 --> 00:29:08,400
Speaker 7: account for inflation. So that's the kind of thing that

578
00:29:08,480 --> 00:29:11,600
Speaker 7: states are building into these contracts now to kind of

579
00:29:11,640 --> 00:29:14,400
Speaker 7: better share the risk between a state which is buying

580
00:29:14,440 --> 00:29:18,320
Speaker 7: the power and the developer that's building the project. So

581
00:29:18,520 --> 00:29:22,400
Speaker 7: we're seeing kind of these prices getting index to CPI

582
00:29:22,600 --> 00:29:26,280
Speaker 7: for example, to certain kind of producer price indexes and

583
00:29:26,360 --> 00:29:29,640
Speaker 7: to certain commodity prices to make sometimes a one time

584
00:29:29,680 --> 00:29:31,560
Speaker 7: adjustment from when you agree to that price to when

585
00:29:31,600 --> 00:29:36,560
Speaker 7: you're actually securing finance, and sometimes you see that adjustments

586
00:29:36,600 --> 00:29:38,600
Speaker 7: accounting for inflation right throughout the life.

587
00:29:38,440 --> 00:29:39,920
Speaker 3: Of the project. That's interesting.

588
00:29:40,200 --> 00:29:41,800
Speaker 7: That's the kind of structure we see in lots of

589
00:29:41,880 --> 00:29:44,400
Speaker 7: other countries that have managed to build large scale off

590
00:29:44,480 --> 00:29:48,200
Speaker 7: your wind projects globally, and so yeah, from the off

591
00:29:48,240 --> 00:29:51,080
Speaker 7: your wind industry's perspective, it's good to see that happening

592
00:29:51,120 --> 00:29:51,880
Speaker 7: in the US as well.

593
00:29:52,280 --> 00:29:54,800
Speaker 1: Talk to us about you mentioned the project off the

594
00:29:54,840 --> 00:29:57,360
Speaker 1: coast of New York. Talk to us about the economics.

595
00:29:57,400 --> 00:29:59,920
Speaker 1: How much does it cost to build that thing? Hoop

596
00:30:00,080 --> 00:30:02,720
Speaker 1: hate for it, and just the economics.

597
00:30:03,720 --> 00:30:07,120
Speaker 7: So that is a project called South Fork. It was

598
00:30:07,240 --> 00:30:11,000
Speaker 7: the kind of the first commercial scale offshore wind project

599
00:30:11,040 --> 00:30:14,720
Speaker 7: in the US that was significantly more expensive than a

600
00:30:14,800 --> 00:30:19,160
Speaker 7: project we expect to see getting installed today. That's partly

601
00:30:19,240 --> 00:30:21,560
Speaker 7: because it was it was almost like a proof of concept.

602
00:30:21,680 --> 00:30:24,840
Speaker 7: So up until then, there are only seven operational offshore

603
00:30:24,880 --> 00:30:27,080
Speaker 7: wind turbines off the coast of the US so far.

604
00:30:27,720 --> 00:30:30,040
Speaker 7: So this is the first kind of larger scale project

605
00:30:30,720 --> 00:30:34,400
Speaker 7: for one of the newer projects you're probably looking between

606
00:30:34,440 --> 00:30:36,959
Speaker 7: two point eight to three billion dollars for a one

607
00:30:37,000 --> 00:30:39,480
Speaker 7: gigawap project, which is a really big off your wind firm,

608
00:30:40,240 --> 00:30:42,680
Speaker 7: almost ten times the size of that early kind of

609
00:30:42,720 --> 00:30:45,600
Speaker 7: commercial scale project that just came off the coast of

610
00:30:45,840 --> 00:30:49,640
Speaker 7: New York. So these are a really sizeable infrastructure investments.

611
00:30:49,720 --> 00:30:54,360
Speaker 6: Yeah, what part is the hardest? Because it seems to

612
00:30:54,440 --> 00:30:58,200
Speaker 6: me that you know, moving the energy from offshore to

613
00:30:58,440 --> 00:31:01,160
Speaker 6: the grid on land, like you kind of like build

614
00:31:01,200 --> 00:31:03,880
Speaker 6: a transmission line for that, Like that seems really hard

615
00:31:03,920 --> 00:31:07,480
Speaker 6: and dangerous. And then I also hear of the transmission

616
00:31:07,600 --> 00:31:10,560
Speaker 6: plug shortages, so basically the thing you need to actually

617
00:31:10,760 --> 00:31:13,640
Speaker 6: plug that wind into the grid, there's a shortage of that,

618
00:31:14,000 --> 00:31:15,240
Speaker 6: and then you've got to build it. And there's all

619
00:31:15,240 --> 00:31:17,920
Speaker 6: the raw material costs that come at actually building the turbine.

620
00:31:18,160 --> 00:31:20,240
Speaker 6: Where's the biggest price increases?

621
00:31:21,720 --> 00:31:24,560
Speaker 7: Well, I mean we saw a lot of price increases

622
00:31:24,600 --> 00:31:27,720
Speaker 7: across the board over the last couple of years. Actually,

623
00:31:27,720 --> 00:31:29,280
Speaker 7: when you look at a lot of commodity prices that

624
00:31:29,320 --> 00:31:33,200
Speaker 7: are important for manufacturing of wind turbines, cables, that kind

625
00:31:33,200 --> 00:31:34,960
Speaker 7: of thing, a lot of those raw material costs have

626
00:31:35,040 --> 00:31:38,000
Speaker 7: come down. What we've seen is turbine prices have remained

627
00:31:38,000 --> 00:31:42,080
Speaker 7: stubbornly high. Wind turbine makers were hit just as hard

628
00:31:42,160 --> 00:31:45,640
Speaker 7: by rising costs, rising inflation, and many of them were

629
00:31:45,680 --> 00:31:49,160
Speaker 7: having to deliver on contracts said signed at cheaper rates

630
00:31:49,560 --> 00:31:52,080
Speaker 7: in this higher priced environment. So that means many of

631
00:31:52,280 --> 00:31:54,480
Speaker 7: the kind of major wind turbine makers have suffered a

632
00:31:54,520 --> 00:31:57,160
Speaker 7: lot over the last couple of years, and so they're

633
00:31:57,240 --> 00:32:00,440
Speaker 7: maintaining higher prices to kind of have a bit of

634
00:32:00,480 --> 00:32:04,040
Speaker 7: a buffer on their margin, trying to regain kind of

635
00:32:04,200 --> 00:32:07,480
Speaker 7: stronger margins. But that means that developers are left paying

636
00:32:07,600 --> 00:32:09,800
Speaker 7: higher prices for the turbines despite the fact that some

637
00:32:09,920 --> 00:32:11,680
Speaker 7: of these input costs have started coming down.

638
00:32:12,000 --> 00:32:15,640
Speaker 1: Who makes these big tribune things in the ocean, So.

639
00:32:15,920 --> 00:32:21,040
Speaker 7: That's companies like Vestas Seamen's Energy. Ge is a big

640
00:32:21,200 --> 00:32:28,640
Speaker 7: US player and so those I recently spun out. I

641
00:32:28,680 --> 00:32:31,000
Speaker 7: mean so also it is one of the one of

642
00:32:31,040 --> 00:32:33,840
Speaker 7: the companies that builds builds the project, so one of

643
00:32:33,880 --> 00:32:36,480
Speaker 7: the biggest project developers globally. But there'll be the guys

644
00:32:36,520 --> 00:32:39,520
Speaker 7: putting in the orders with your likes of Vestas Gemen.

645
00:32:40,760 --> 00:32:42,959
Speaker 1: I mean, how do you build these things? I mean,

646
00:32:43,000 --> 00:32:43,959
Speaker 1: how do you install them?

647
00:32:45,000 --> 00:32:47,040
Speaker 3: Difficulty difficult. It's tough.

648
00:32:47,360 --> 00:32:49,880
Speaker 1: Build them on land, ship them out there, then just

649
00:32:50,240 --> 00:32:52,320
Speaker 1: plug them in the sand. I mean, how does this work?

650
00:32:52,600 --> 00:32:55,160
Speaker 7: So most of what's getting built at the moment is

651
00:32:55,200 --> 00:32:57,320
Speaker 7: bottom fixed off your wind. So you go out there,

652
00:32:57,600 --> 00:33:00,080
Speaker 7: you build a foundation that's fixed to the seabed, and

653
00:33:00,120 --> 00:33:01,720
Speaker 7: then you come out and you build the turbine on

654
00:33:01,760 --> 00:33:03,640
Speaker 7: top of that. So you build up the tower and

655
00:33:03,720 --> 00:33:06,760
Speaker 7: then component by component kind of build the big fan.

656
00:33:06,720 --> 00:33:08,720
Speaker 3: You can see at the top, I know.

657
00:33:09,240 --> 00:33:11,640
Speaker 6: And then also how do you then that question is

658
00:33:11,720 --> 00:33:14,840
Speaker 6: like if something happens and it gets broken, like how

659
00:33:14,880 --> 00:33:16,480
Speaker 6: do you fix it? Like what's it like when you

660
00:33:16,600 --> 00:33:18,640
Speaker 6: go off shore? I mean, what happens when one of

661
00:33:18,680 --> 00:33:21,560
Speaker 6: these things dies? Just like what's the shelf life of

662
00:33:21,640 --> 00:33:23,280
Speaker 6: a turbine? And how do you recycle it?

663
00:33:23,320 --> 00:33:24,120
Speaker 5: I don't, we haven't.

664
00:33:24,160 --> 00:33:25,080
Speaker 3: We don't know that yet.

665
00:33:25,280 --> 00:33:28,120
Speaker 7: Yeah, well, well going to your question on what happens

666
00:33:28,120 --> 00:33:30,520
Speaker 7: when it goes wrong or how you construct it. You

667
00:33:30,640 --> 00:33:33,400
Speaker 7: need really specialized vessels to build these things. So they

668
00:33:33,440 --> 00:33:35,920
Speaker 7: call them jack up vessels. So their vessels that kind

669
00:33:35,920 --> 00:33:39,560
Speaker 7: of have legs that they they extend down into the seabed.

670
00:33:40,200 --> 00:33:42,680
Speaker 7: Jacks up the vessels, So it's sitting kind of above

671
00:33:42,760 --> 00:33:45,160
Speaker 7: the water, so you've got a solid platform by which

672
00:33:45,200 --> 00:33:47,280
Speaker 7: to install the components, or if something goes wrong, to

673
00:33:47,920 --> 00:33:49,920
Speaker 7: send it out there, take off one of the components

674
00:33:49,960 --> 00:33:53,080
Speaker 7: and replace it with a fixed one. But these are

675
00:33:53,120 --> 00:33:55,520
Speaker 7: really specialized vessels. They cost a lot of money to build.

676
00:33:55,720 --> 00:33:58,280
Speaker 7: Our estimates around three hundred to five hundred million dollars,

677
00:33:59,120 --> 00:34:01,040
Speaker 7: and there's a shortage of these things globally at the

678
00:34:01,040 --> 00:34:04,960
Speaker 7: moment to kind of specialized vessels to install the foundations

679
00:34:05,000 --> 00:34:07,520
Speaker 7: and then and then the turbines. So if you're a developer,

680
00:34:07,560 --> 00:34:10,360
Speaker 7: you're struggling to find those slots where you can secure vessels.

681
00:34:11,040 --> 00:34:13,680
Speaker 7: And if something goes wrong on a recently installed project

682
00:34:13,719 --> 00:34:16,759
Speaker 7: with one of these big, big new turbines, then you

683
00:34:16,880 --> 00:34:19,200
Speaker 7: might struggle to get a vessel to come in and

684
00:34:19,280 --> 00:34:20,600
Speaker 7: do that, do that replacement work.

685
00:34:20,840 --> 00:34:23,399
Speaker 1: Oh cool, Yeah, I mean those engineer people, I don't

686
00:34:23,480 --> 00:34:24,400
Speaker 1: understand them. They're different.

687
00:34:24,440 --> 00:34:26,560
Speaker 6: I mean, it's amazing. Yeah, that's amazing, and we think

688
00:34:26,560 --> 00:34:29,680
Speaker 6: it's all such an easy fix and it's most definitely not. Ali.

689
00:34:29,719 --> 00:34:31,840
Speaker 6: Thanks a lot, Ali, Markalf he's joining us head of

690
00:34:31,920 --> 00:34:35,399
Speaker 6: win research over at you know those super interesting Thank

691
00:34:35,440 --> 00:34:35,920
Speaker 6: you so much.

692
00:34:36,280 --> 00:34:40,879
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693
00:34:41,000 --> 00:34:44,640
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694
00:34:44,800 --> 00:34:47,759
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695
00:34:47,880 --> 00:34:51,080
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696
00:34:51,200 --> 00:34:54,200
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