Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
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Speaker 2: Terminal and the Bloomberg Business app. We begin this out
Speaker 2: with stocks coming off the fortieth record high close of
Speaker 2: the year so far, as optimism builds around ray cuts
Speaker 2: in the US and stimulus measures in China. Emily Rowland
Speaker 2: of John Hancock saying, while the risk on environment is
Speaker 2: tempting to leverage up into we would be mindful here
Speaker 2: that a lot of good news is being priced into
Speaker 2: riskier assets.
Speaker 3: Emily joins us for more.
Speaker 2: Emily, more good news, more good news, overnight stimulus measures
Speaker 2: out of China. Is there a reason to buy this
Speaker 2: morning based on that?
Speaker 4: I mean, look one of the biggest risk to being
Speaker 4: underweight China and underweight emerging markets, is that policymakers can
Speaker 4: come through with these big packages. I don't know if
Speaker 4: I'd necessarily call it a bazuka, and it likely needs
Speaker 4: to be followed up by more on the fiscal side.
Speaker 4: But this is creating this risk on rotation or prompting
Speaker 4: it to continue.
Speaker 1: You know, as we see these big moves.
Speaker 4: I think you guys have been making some great points
Speaker 4: this morning about is this actually going to get the
Speaker 4: Chinese consumer off the sidelines. That remains to be seen,
Speaker 4: but certainly this is adding to the momentum and the
Speaker 4: sentiment that's permeating markets right now, which is that everything's
Speaker 4: pretty great.
Speaker 2: Well when you look at the US versus the rest
Speaker 2: of the world, does it change the story for you?
Speaker 3: Is it enough?
Speaker 1: You know, John, it doesn't.
Speaker 4: And it's really amazing to wake up in the morning
Speaker 4: and you see this terrible data out of Germany from
Speaker 4: the IFO to manufacturing. I mean German manufacturing PMI is
Speaker 4: at forty right now, that is in recessionary territory. And meanwhile,
Speaker 4: you know, you look at the DATS and it's up
Speaker 4: one percent.
Speaker 1: So I think Mark it's.
Speaker 4: Globally or really reacting to the FED pivot the fifty
Speaker 4: basis point cut stimulus out of China.
Speaker 1: Again. We want to be fully invested here.
Speaker 4: But we want to be mindful of going over our
Speaker 4: skis and taking risk in a market where you know,
Speaker 4: I know, you've been shaming everybody for saying price for
Speaker 4: perfection all morning, but it is really in the price
Speaker 4: with the S and P five hundred reaching new all
Speaker 4: time highs every day. Underneath the surface, we would suggest
Speaker 4: just being mindful of taking too much risk.
Speaker 5: It's not shaming, Emily. We think that it's a valid phrase.
Speaker 5: It sticks in our minds, which is the reason why
Speaker 5: both John and myself write it down when people.
Speaker 6: Say it, which is frequently.
Speaker 5: I am curious about how difficult it is to remain
Speaker 5: cautious at a time where you see so much risk
Speaker 5: on appetite and a fed that seems to be behind
Speaker 5: part of it.
Speaker 1: At least it's rich, really tough.
Speaker 4: I mean, I think again, we are fully invested, we're
Speaker 4: you know, we're buying high quality stocks and bonds.
Speaker 1: But I think the trickiest time in any.
Speaker 4: Economic cycle to be bare is at the very beginning
Speaker 4: and the very end of it.
Speaker 1: And I think that's what's happening now.
Speaker 4: You know, we think about it like the music's getting
Speaker 4: turned up at the end of every cycle. The music
Speaker 4: gets turned up as inflation comes down the challenges.
Speaker 1: It gets really, really loud.
Speaker 4: Until you start to see initial jobless claims picking up
Speaker 4: and high yield bond spreads widen, and then things change quickly.
Speaker 1: They go quiet, very fast.
Speaker 4: Right now, initial claims are sitting in a low two
Speaker 4: hundred thousand range. High yield bond spreads are three hundred
Speaker 4: and two basis points. They actually dip below three hundred
Speaker 4: basis points after the Feds move last week. So the
Speaker 4: music is still playing. You want to be invested. You
Speaker 4: could see markets continue to see momentum here. Again, it's
Speaker 4: just about making sure bonds are still playing a role
Speaker 4: in your portfolio and leaning into higher quality stocks and
Speaker 4: finding quality at a reasonable price in order to you know, again,
Speaker 4: stay invested and be involved.
Speaker 1: If we do see this market melt.
Speaker 6: Up, let's talk about the bond market.
Speaker 5: But Spoke Investment just put out this to the ten
Speaker 5: year yield is up every day since the Fed cut rates,
Speaker 5: rising fifteen basis points in that period. How do you
Speaker 5: have conviction in the long end of the yield curve
Speaker 5: at a time where this market seems to be suggesting, hinting,
Speaker 5: flirting on the edges with this idea.
Speaker 6: The potentially the more.
Speaker 5: That the Fed cuts now, the more that inflation could
Speaker 5: be stickier even pick up later.
Speaker 4: Yeah, I don't think it's surprising to see this backup
Speaker 4: in the ten year yield. You know, certainly the FED
Speaker 4: supporting the economy with a larger cut is bullish.
Speaker 1: It's risk on. It's another part of the risk on
Speaker 1: puzzle here, you know.
Speaker 4: I think the biggest risk is not necessarily inflation picking up,
Speaker 4: that could be part.
Speaker 1: Of it, but more of a melt up in.
Speaker 4: Markets, which could create more leverage in the financial system.
Speaker 4: If you continue to see again equity markets surging, you
Speaker 4: see that, you know, momentum stocks, bitcoin, you know, low
Speaker 4: quality companies, all kind of participating in this rally. Eventually,
Speaker 4: we do think that an economic contraction plays out. It
Speaker 4: may take some time here, but when you lean into
Speaker 4: higher quality bonds you know.
Speaker 1: That are paying over four percent in yield, you can
Speaker 1: get paid to wait.
Speaker 4: I don't think that the bond market is fully sniffing
Speaker 4: out this inflationary environment. That's likely to see some type
Speaker 4: of contraction, some type of increase in the unemployment rate,
Speaker 4: and it could happen so quickly. I talked to so
Speaker 4: many investors that are waiting to take advantage of higher bondyards.
Speaker 4: They're sitting in money market accounts, and we just ransom
Speaker 4: data that suggests that investors sit in cash for way
Speaker 4: too long. In fact, they sit there until bondyiards are
Speaker 4: already at basement levels, and then they move out on
Speaker 4: the curve and embrace core bonds. We don't want to
Speaker 4: wait too long in order to do that. I think
Speaker 4: getting cash on the sidelines, getting it invested in a
Speaker 4: high quality part of the bond market in the intermediate
Speaker 4: part of the curve makes a.
Speaker 1: Lot of sense right now.
Speaker 2: The normalization of the yield curve will give them a
Speaker 2: little bit of a nuch. Do you think the difference
Speaker 2: between the two and the ten year at twenty basis
Speaker 2: points makes a difference?
Speaker 3: Does that difference need to be launcher than that.
Speaker 4: I don't think anybody is paying much attention to the
Speaker 4: bond market right now in general, given the risk on
Speaker 4: environment that we're seeing.
Speaker 1: But I do think it's enough.
Speaker 4: To start to lean into two higher yielding bonds here again,
Speaker 4: we could continue to see some more volatility and rates.
Speaker 4: By the way, the FED just cut amidst an environment
Speaker 4: where the economic data we're pretty good. You look at
Speaker 4: things like retail sales, industrial production, regional FED surveys. So
Speaker 4: I think we could continue to see some chop and
Speaker 4: yields as the data are still suggesting that we're chugging
Speaker 4: along right now.
Speaker 1: The US economy is doing okay.
Speaker 4: It reminds me a little bit of my son's grades
Speaker 4: right now, like they're okay, but they're not great.
Speaker 1: He's still on the football team kind of thing, you
Speaker 1: know what I.
Speaker 4: Mean, Like we're doing all right, and so I think
Speaker 4: you might have to wait for duration to kick in
Speaker 4: as a tailwind. But again, that income is there as
Speaker 4: you kind of embrace.
Speaker 3: That patience as he watched it this morning.
Speaker 1: I really hope not. I hope he's in math class.
Speaker 2: Only just a funal one me. I'm not going to
Speaker 2: name who this is. I'm just going to share a
Speaker 2: quote with you. This was from earlier this year. We're
Speaker 2: price for perfection of easier policy, continued disinflationary forces, and
Speaker 2: resilient growth versus a bankdrop of US growth continuing to
Speaker 2: beat expectations.
Speaker 3: I won't name in shame anyone.
Speaker 2: Because I think that reflected how a lot of people
Speaker 2: found at the start of the year, and it's the
Speaker 2: last line there, continuing to beat expectations. Do you think
Speaker 2: we can continue to do that in the US labor
Speaker 2: market in the months to come, because it feels like
Speaker 2: that holds the key to a lot of calls.
Speaker 1: The labor market is a tough one.
Speaker 4: I'm going to punt on that just because you guys
Speaker 4: mentioned before the revisions are so critical, so I think
Speaker 4: we need to take those headline numbers with a grain
Speaker 4: of salt, focus on the revisions. But I think you
Speaker 4: know there's a lot of expectations going into this. What
Speaker 4: I'll say is that valuations are never a catalyst for
Speaker 4: a shift in market leadership. You've got to see something
Speaker 4: else change. You have to see the earnings backrop change.
Speaker 4: You have to see the macro regime seeing a shift.
Speaker 4: And by the way, there's more great news. Analysts are
Speaker 4: penciling it four percent year over year earnings growth next
Speaker 4: quarter for the S and P five hundred.
Speaker 1: The bar is really low. It gets much higher from there.
Speaker 4: So in terms of beating expectations, from a fundamental standpoint.
Speaker 1: Yeah, I think we can do it. The bars, well,
Speaker 1: let's enjoy it while we can.
Speaker 2: The bar is Low Young Rowland, Emily Run of John Hancock.
Speaker 2: Thank you appreciate it. So here's the late, says Chinese
Speaker 2: Central Bank, convening a stimulus package, sending stocks to their
Speaker 2: best day in China since twenty twenty. The plan including
Speaker 2: a cut to short term interest rates and a reduction
Speaker 2: of reserve requirements for banks officials. They're also studying sending
Speaker 2: up a market stabilization fund ahead of the move. Comic
Speaker 2: Chartravedi of Goldman Sachs, writing, our China economics team have
Speaker 2: just revised down their twenty four GDP growth forecast to
Speaker 2: four point seven percent from four point nine. As such,
Speaker 2: we expect the Chinese currency to underperform. Come actually joined
Speaker 2: us now from London for more And actually you wrote
Speaker 2: that before this stimulus package, and I have to ask you,
Speaker 2: is this enough to change your mind?
Speaker 7: Look, I think you know, the stimulus is certainly more
Speaker 7: than we expected just a few days ago. So I
Speaker 7: think that's fair and I think that matters. But it
Speaker 7: seems to me more aimed at putting a floor under
Speaker 7: the equity market rather than necessarily buoying the currency. And
Speaker 7: so yes, of course we've had a little bit of
Speaker 7: a currency strength today. We've had more of it in
Speaker 7: the last you know, I would say, you know, a
Speaker 7: month and a half, although I think that has more
Speaker 7: to do with dollar weakness than China specific strength. So
Speaker 7: I think you know, the jury is out. I think
Speaker 7: you know, it's not surprising to see stocks react positively
Speaker 7: to the announcements that you've seen. I still don't think
Speaker 7: a stronger currency is the best way to express a
Speaker 7: view on the developments that have occurred overnight.
Speaker 5: So there is this question about whether the FED is
Speaker 5: opening the door to some sort of stimulus and further
Speaker 5: easing around the world, and whether it creates a relative
Speaker 5: I don't want to say race to the bottom, but
Speaker 5: it gives us a bit of a back drop that could.
Speaker 6: Limit how much dollar weakness there could be. Is that
Speaker 6: kind of your view of things.
Speaker 7: I think that's very much in line with our thinking, right.
Speaker 7: It's the FED is a big deal. The fact that
Speaker 7: they're cutting rates, and they're cutting rates against a backdrop
Speaker 7: that is not recessionary. They're cutting rates to get ahead
Speaker 7: of the curve and support and secure that soft landing.
Speaker 7: That really does allow em central banks and global central
Speaker 7: banks really across the world to join in that easing train.
Speaker 7: You know, easing is coming soon to a central bank
Speaker 7: close to you, and that is going to ultimately limit
Speaker 7: the extent of dollar weakness that you see. What is
Speaker 7: also going to limit it is that ultimately we expect
Speaker 7: the US economy to continue to expand, to continue to
Speaker 7: grow on solid with solid momentum. And actually some of
Speaker 7: the activity data in Europe in China are not that strong.
Speaker 7: China stimulus is very different from the US is stimulus.
Speaker 7: The US cuts came to secure the soft landing. The
Speaker 7: China announcements came in response to some really poor set
Speaker 7: of data. So I think we'd have to see how
Speaker 7: much traction they have, how much the economy is supported.
Speaker 7: But I still don't think we are in a zone
Speaker 7: where you should be arguing for aggressive dollar depreciation.
Speaker 3: That's not our view.
Speaker 5: I have to say, Kamashia, you were listening to a
Speaker 5: nineteen sixty soundtrack when you're writing this piece. Is the
Speaker 5: first cut, the deepest, and slow down. You move too fast,
Speaker 5: Kat Stevens and of course Simon and Garfokl. I am
Speaker 5: wondering when you say is the first cut the deepest,
Speaker 5: which set me off on a sort of humming sphere
Speaker 5: this morning. I do wonder do you think that that
Speaker 5: is the case or is your sort of the dollar
Speaker 5: can't get that much more weak predicated on the idea
Speaker 5: that you could see ongoing fifty basis point rate cuts
Speaker 5: at least in the next six months.
Speaker 7: We've put a lot of effort into our titles. I'm
Speaker 7: glad you enjoyed those, But you know, I think, yes,
Speaker 7: I think that you know we're coming, I think to
Speaker 7: the limits of how much the dollar can weaken just
Speaker 7: by the FED easing. A lot of easing is now
Speaker 7: in the price in the FED cuve. I think you
Speaker 7: know the baton is going to be passed to other
Speaker 7: central banks, to the economic developments across the rest of
Speaker 7: the world. Ultimately, look, I think if we are in
Speaker 7: a world where you know, global growth is okay, the
Speaker 7: FED is cutting aggressively, and equity markets hold up, that's
Speaker 7: a generally dollar weakening environment. But we've always maintained that
Speaker 7: the dollars high valuation is ultimately a feature of the
Speaker 7: strong growth in the US and the real returns you
Speaker 7: get in US assets.
Speaker 1: We don't think that.
Speaker 7: Picture is going to change anytime soon, and therefore we
Speaker 7: think the dollars high valuation will erode only very gradually.
Speaker 8: You say, a key event risk is the election, obviously
Speaker 8: for Asian currencies, which are the most vulnerable potentially to
Speaker 8: Trump tariffs.
Speaker 3: Yeah, I think.
Speaker 7: Look, I think if we have a set of tariffs,
Speaker 7: if we have you know, trade disruptions, that's never good
Speaker 7: for any emerging market or any market really which is
Speaker 7: plugged into the global trading cycle. And a lot of ems,
Speaker 7: you know, have that exposure to global trade. You know,
Speaker 7: I think, you know, if I think of open economies
Speaker 7: like the Korean Wan, but even sort of neighboring economies
Speaker 7: like the Mexican pace, So I think, you know, those
Speaker 7: are the kinds of currencies that could be affected.
Speaker 3: You know.
Speaker 7: China is another one where you know, there's lots of
Speaker 7: you know, talk of tariffs, and we saw those implemented
Speaker 7: in twenty eighteen and twenty nineteen and there was an impact.
Speaker 7: So I think it's the it's the I would say
Speaker 7: open economies of Asia that are more plugged into the
Speaker 7: global trade cycle.
Speaker 3: But then also.
Speaker 7: Perhaps you know Mexico is one which always features on
Speaker 7: the top of the list, is given its exposure to
Speaker 7: US trade.
Speaker 2: We'll talk more about that next time. A clinic from you,
Speaker 2: as always, Commactionatraverdi of Government sanks there. On the latest
Speaker 2: side of China, Let's get to a big story in
Speaker 2: the last few days in this country, the rise of
Speaker 2: artificial intelligence fueling energy amount across the nation's power grid constellations,
Speaker 2: striking a deal with Microsoft to restart the three Mile
Speaker 2: Island nuclear power plant by twenty twenty eight. Former BPCO
Speaker 2: and co founder Beyond met Zero Lord John Branch just
Speaker 2: now Beyond net Zero is responsible for General Atlantic's climate
Speaker 2: growth equity strategy. And it's fantastic to see you've said,
Speaker 2: thanks for being care good to be here. It's amazing
Speaker 2: what's happening in this country. To see a nuclear plant
Speaker 2: be reactivated, restarted, supply energy to a tech firm. How
Speaker 2: big is the scramble for energy in this country.
Speaker 9: It's very big for electricity to power data centers, which
Speaker 9: are being built globally at a rate of one a day,
Speaker 9: and they're very big ones. It's very fast, you know,
Speaker 9: so very big data center nowadays probably can absorb one
Speaker 9: nuclear core, you know, six six to eight hundred megawats.
Speaker 9: So it's better to restart and reuse a nuclear power
Speaker 9: station than build a new one where we're going to
Speaker 9: have to build some new ones until there's a reaction,
Speaker 9: And the reaction is how do you actually reduce the
Speaker 9: power consumption of AI. I think the answer lies in
Speaker 9: the fact that there are two different things going on here.
Speaker 9: One is training, which takes a lot of power, I
Speaker 9: know that from some of our companies, very expensive. And
Speaker 9: then inference, which is what you do to use it
Speaker 9: takes much less power. So people are working on different chips,
Speaker 9: different data centers, and so one day this will probably
Speaker 9: flatten out a bit, but right now it's a lot.
Speaker 3: A big picture.
Speaker 2: Do you think it undermines some of the climate goals
Speaker 2: we have in this country?
Speaker 9: Not necessarily. You know, first of all, we have to
Speaker 9: think about not just this country but the world, and
Speaker 9: so it's a contribution to this country. There will be
Speaker 9: ways of offsetting it, and there are ways of getting
Speaker 9: renewable energy. Part two data centers, So it's a mix
Speaker 9: of things. There's no one solution to this.
Speaker 1: John.
Speaker 5: This is the reason why I was excited to talk
Speaker 5: to you. More than anything. I was looking for some
Speaker 5: optimism because usually when we talk about climate change, you
Speaker 5: hear gloom and doom and sort of existential angst.
Speaker 6: You said that nearly eighty percent.
Speaker 5: Of the technologies that we need to reach net zero
Speaker 5: by twenty fifty are already developed.
Speaker 6: The issue is just capital investment.
Speaker 9: Explain well, cabin investment and cost. Cost and capital investment
Speaker 9: go hand in hand. The more you do of something,
Speaker 9: the cheaper it becomes. So you've got to get started,
Speaker 9: and you've got to figure out how to get some
Speaker 9: form of incentive to get early technologies applied. I'm I
Speaker 9: remain very optimistic. I do think our biggest problem is
Speaker 9: we've spent probably a quarter century discussing the problem and
Speaker 9: doing little about it and actually arguing whether there's a
Speaker 9: problem at all. So we've got about a quarter of
Speaker 9: a century of time to make up. So we've got
Speaker 9: a speed up, which means we need much more money
Speaker 9: going into growing the things that we know that will work,
Speaker 9: and that requires us to have the right incentives in place,
Speaker 9: such as a price for carbon.
Speaker 6: Okay, what are the right things that could work?
Speaker 5: Because we know that just telling people, you know, be
Speaker 5: better about throwing out fewer items, or you know, don't
Speaker 5: use plastic bottles, or some of these sort of lifestyle
Speaker 5: changes are not working.
Speaker 1: They are not resting with people.
Speaker 5: In fact, they are actually causing people to reject it.
Speaker 5: So what are the things that are actually working?
Speaker 9: So the very big thing, which which has to work,
Speaker 9: is not quite working yet is how do you how
Speaker 9: do you take carbon out of hydrocarbons? Because we're going
Speaker 9: to use hydrocarbons for a long time and so capturing
Speaker 9: carbon dioxide and storing it away in different ways, not
Speaker 9: just the old ways that people are thinking and look
Speaker 9: like big refineries, but there are more sophisticated ways I
Speaker 9: think being developed. That's the very big thing to crack.
Speaker 9: The second thing to crack is how do you actually
Speaker 9: use energy? And part of that is energy efficiency, part
Speaker 9: of it's the secular economy. You know what you do
Speaker 9: with old tires for example.
Speaker 3: You know, on a very.
Speaker 9: Big scale, it's doing big things, and then finally it's
Speaker 9: creating new energy. I was in India just a few
Speaker 9: days ago where I was seeing a huge rollout of
Speaker 9: you know, solar plants and wind plants up to five
Speaker 9: hundred gigawa a huge amount will be in place in
Speaker 9: twenty years time, and it's moving today, moving today, John.
Speaker 8: Do you think policy intervention works?
Speaker 9: It has to work. Energy is the whole energy scene
Speaker 9: experience is founded on good policy. You know, there's nothing
Speaker 9: natural about it. So the government has to both inspire
Speaker 9: and avoid the use of energy. So taxes are important,
Speaker 9: but the key is getting them stable and keeping them
Speaker 9: in place all time.
Speaker 6: In the end, it's you.
Speaker 9: Know, if we'd stop people putting carbon in the atmosphere,
Speaker 9: we have to charge them for doing it. And one
Speaker 9: way or another, the IRA or this stuff about carbon
Speaker 9: border adjustment mechanisms, all of these things are designed to
Speaker 9: do just that.
Speaker 8: I look at the eye though, and parts of some
Speaker 8: people say did work. But other parts of things like
Speaker 8: public charging stations, I think they have about two dozen.
Speaker 8: They're spending billions of dollars on this. Should this not
Speaker 8: be left up to capital markets?
Speaker 9: Absolutely, And you know that there are things that misfar
Speaker 9: in all policy. I think one has to be very
Speaker 9: careful in all these areas of big change during the transition.
Speaker 9: Not if I can use the old phrase, make perfection
Speaker 9: the enemy of the good. You know, we've got to
Speaker 9: get on with these things. It's like carbon markets. You know,
Speaker 9: they don't work, but they never work until you start them,
Speaker 9: and so you've got to do a bit and then correct.
Speaker 9: It was the same when I was, you know, in
Speaker 9: the bond markets forty fifty years ago. They didn't really
Speaker 9: work properly. But look at today. So I think I'm
Speaker 9: optimistic as long as we just keep pushing ahead and
Speaker 9: don't allow ourselves to be blindsided by the small look
Speaker 9: at the big picture, which is we've got to get
Speaker 9: rid of carbon dioxide, very simple, and we've got to
Speaker 9: do it quickly.
Speaker 3: We had just to jump in forgive me.
Speaker 2: We had a guest on the program yesterday who said,
Speaker 2: we've managed to reduce some reliance on OPEK, but we've
Speaker 2: increased some reliance on China when it comes to renewables. Now,
Speaker 2: when you were the CEO of BP, we were producing
Speaker 2: something like six million pounds of old day in this country.
Speaker 2: It's now thirteen. We've managed to reduce some reliance on opek.
Speaker 2: Can we do the same thing with renewables with China
Speaker 2: in the same way we did with OPEK and fossil fuels.
Speaker 9: Of course, that's again I come back to my experience
Speaker 9: in India. A few days ago, I went to a
Speaker 9: wind farm. One hundred percent of it was built and
Speaker 9: sourced in India. It wasn't imported from somewhere. So if
Speaker 9: it can be done in one place, it can be
Speaker 9: done another. You know, trade barriers used to be regarded
Speaker 9: as somewhat economically inefficient, but they are what they are,
Speaker 9: and you can get things done.
Speaker 3: What do you investigate with regards to that effort? Right now?
Speaker 9: So we're doing a lot on energy efficiency and energy
Speaker 9: effective circular economy. You know, how do you measure things
Speaker 9: to get more efficient, whether it's supply chains, whether it's
Speaker 9: whether it's how people think about their own carbon reductions.
Speaker 9: So a lot of things like that. We're investing in
Speaker 9: sub so Africa, we're investing in India, variety of things
Speaker 9: like that.
Speaker 5: The difficult part about this is seeing the investment make
Speaker 5: a lot of money at a time where you're reliant
Speaker 5: on incentives to make something work. How much is that
Speaker 5: sort of part of the calculus that you have to
Speaker 5: sort of suspend or just have faith that there will
Speaker 5: be the right policy mix to make some of these
Speaker 5: companies viable.
Speaker 9: So I regard all taxation policy as incentives, all of them,
Speaker 9: and we don't rely on things that are exceptional. We
Speaker 9: just don't. What we believe very firmly is in order
Speaker 9: to get sustainable investment, you have to beat the rest
Speaker 9: of the investment pack. So we invest, for example, for
Speaker 9: twenty five percent IRR, which is what we get, and
Speaker 9: you can do it. You have to be selective. You
Speaker 9: have to go to places where you know that the
Speaker 9: incentive structure is stable and makes sense. Again, I've been
Speaker 9: in plenty of areas in the past when I remember
Speaker 9: being a very post home in Spain where they overdid
Speaker 9: the incentives and everybody knew they overdid the incentives and
Speaker 9: everyone was surprised that they changed them. You can be
Speaker 9: contradictory if you want to be so, but you have
Speaker 9: to be careful about that.
Speaker 2: You know, John always a clinic. It's going to see it.
Speaker 2: Thanks for your time, Sarah, appreciate it. Pleasure Lord jump
Speaker 2: around there beyond net zero. This is the Bloomberg Sevenants podcast,
Speaker 2: bringing you the best in markets, economics, antient politics. You
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Speaker 2: as always, on the Bloomberg Terminal and the Bloomberg Business
Speaker 2: out
Speaker 5: Mm hmm