WEBVTT - Daybreak Weekend: US Inflation, Renewable Energy, RBA Decision 0:00:00.280 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:09.960 --> 0:00:13.119 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.119 --> 0:00:16.720 top stories in the coming week from our Daybreak anchors 0:00:16.760 --> 0:00:19.400 all over the world. Straight Ahead on the program, a 0:00:19.480 --> 0:00:22.439 look at some key inflation and retail sales data in 0:00:22.520 --> 0:00:24.959 the US. I'm Maybe Morris in Washington. 0:00:25.040 --> 0:00:27.480 I'm callin hetkit Hay in London, where we're looking at 0:00:27.520 --> 0:00:30.880 Europe's wind energy sector with the Trump administration's roll back 0:00:31.000 --> 0:00:31.920 on maneuables. 0:00:32.200 --> 0:00:34.279 I'm Charlie Pellock with a look at what we can 0:00:34.360 --> 0:00:38.080 expect from the Reserve Bank of Australia when they issue 0:00:38.120 --> 0:00:40.720 their August Great decision next week. 0:00:41.280 --> 0:00:45.320 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:45.320 --> 0:00:49.040 eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:49.520 --> 0:00:53.760 Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 0:00:54.200 --> 0:00:57.440 Sirius XM one twenty one, and around the world on 0:00:57.480 --> 0:01:00.720 Bloomberg Radio, dot Com and the Bloomberg Business. 0:01:00.360 --> 0:01:07.920 Opp Good day to you. I'm Amy Morris. We begin 0:01:08.000 --> 0:01:11.560 today's program with some key economic data in the US. 0:01:11.840 --> 0:01:15.720 We get USCPI data on Tuesday, the Producer Price Index 0:01:15.840 --> 0:01:19.360 is released on Thursday and retail sales data on Friday. 0:01:19.840 --> 0:01:23.000 How is this data going to impact FED policy as 0:01:23.000 --> 0:01:26.520 we move forward? For more, we are joined by Michael McKee, 0:01:26.560 --> 0:01:31.040 Bloomberg International Economics and Policy correspondent Mike always a pleasure 0:01:31.160 --> 0:01:34.000 want to start with PPI and take a peek back 0:01:34.040 --> 0:01:37.360 at this past week which saw some weaknesses revealed in 0:01:37.400 --> 0:01:40.920 the PMI data for July, plus reciprocal tariffs kicked in. 0:01:41.120 --> 0:01:44.000 With all of that in mind, what should we be 0:01:44.080 --> 0:01:46.160 looking for from the PPI coming up? 0:01:47.200 --> 0:01:49.640 Well, we're going to be looking, certainly in terms of 0:01:49.680 --> 0:01:54.480 PPI at whether we have nascent inflation coming from tariffs, 0:01:54.480 --> 0:01:57.280 and we'll be looking at the things within the producer 0:01:57.320 --> 0:02:02.880 price indix that are considered intermediate goods, things that companies 0:02:02.920 --> 0:02:06.000 buy to make other things. And if we see prices 0:02:06.040 --> 0:02:09.320 going up there, which we should, then it'll be a 0:02:09.400 --> 0:02:11.560 question of how much do they go up? Does it 0:02:11.600 --> 0:02:14.320 suggest that we're going to have an outbreak of inflation? 0:02:14.880 --> 0:02:17.400 And when you look at the CPI you're going to 0:02:17.480 --> 0:02:21.200 have the same sort of questions. But therefore finished goods 0:02:21.240 --> 0:02:23.880 for things that consumers are buying, what is it telling 0:02:23.960 --> 0:02:27.680 us about the tariff impact on the economy, and that's 0:02:27.680 --> 0:02:30.160 why I'll have a big effect for the Fed. It 0:02:30.200 --> 0:02:32.399 will matter a lot to the Fed, more than we've 0:02:32.440 --> 0:02:38.120 had most CPI and PPI indicators this year because they 0:02:38.160 --> 0:02:40.959 put everything on hold waiting to see what the inflation 0:02:41.480 --> 0:02:43.160 outcome is from tariffs. 0:02:43.360 --> 0:02:45.320 So these numbers are going to have more of an impact. 0:02:45.360 --> 0:02:48.040 Do you think maybe than normally historically they would. 0:02:48.639 --> 0:02:52.280 Yes, they will have an impact one of two ways. 0:02:52.320 --> 0:02:56.400 Either they will show inflation is picking up, which will 0:02:56.480 --> 0:02:59.520 lead the Fed to be more cautious going into their 0:02:59.520 --> 0:03:02.600 next meeting, or they'll show that things are pretty quiet, 0:03:02.639 --> 0:03:07.360 as the President insists, and the idea that the jobs 0:03:07.360 --> 0:03:12.239 report we had last week shows weakness in the economy 0:03:12.280 --> 0:03:14.440 would give them more license to cut rates. 0:03:14.800 --> 0:03:18.120 Should we bring up the issue of stagflation? Is there 0:03:18.240 --> 0:03:21.080 any risk of a stagflation in our future? 0:03:21.720 --> 0:03:23.680 Well, that's kind of what we're looking at at the 0:03:23.680 --> 0:03:26.720 moment now. The problem is is people tend to think 0:03:26.760 --> 0:03:29.440 of stagflation in the way we had it in the 0:03:29.520 --> 0:03:33.920 nineteen seventies, where inflation was very high and growth was 0:03:34.080 --> 0:03:37.520 very low. But it can just basically mean that the 0:03:37.560 --> 0:03:40.920 economy is not growing particularly fast and inflation is picking 0:03:41.000 --> 0:03:44.920 up a bit, so you could have maybe four percent 0:03:45.640 --> 0:03:49.520 inflation or three and a half percent inflation and growth 0:03:49.600 --> 0:03:51.960 of a half percentage point or something like that, and 0:03:52.040 --> 0:03:55.160 it would still qualify as stagflation. And that's kind of 0:03:55.200 --> 0:03:58.480 what the data are pointing at right now. And we 0:03:58.520 --> 0:04:01.040 say that because of the jobs the fact that they 0:04:01.040 --> 0:04:03.640 were so weak, as a suggestion that maybe consumers won't 0:04:03.680 --> 0:04:08.400 be spending as much money and the economy will slow down. 0:04:09.240 --> 0:04:12.960 And obviously we're watching the CPIPPI to see if there 0:04:13.040 --> 0:04:16.360 is the flation part of stagflation exactly. 0:04:16.960 --> 0:04:20.080 Let's turn to the retail sales figures, then are we shopping? 0:04:20.360 --> 0:04:22.800 What are you watching for from that? Because everything you 0:04:22.920 --> 0:04:25.280 just explained tells me it's sort of all dovetails. 0:04:25.720 --> 0:04:27.679 Well, it's going to be a kind of a weird one, 0:04:28.160 --> 0:04:32.240 as July usually is, because July we have the Amazon 0:04:32.320 --> 0:04:37.159 Prime Days and the other retailers like Walmart who match 0:04:37.240 --> 0:04:42.160 their discounts, and so you could get more people buying 0:04:42.279 --> 0:04:48.599 stuff than we normally would expect under the economic conditions 0:04:48.600 --> 0:04:51.800 that we have. It may not reflect yet that people 0:04:51.880 --> 0:04:55.280 are concerned about the economy and pulling back on their spending, 0:04:55.360 --> 0:04:56.960 because everybody likes a deal. 0:04:57.520 --> 0:05:00.200 Forgive me, but Amazon Prime Days really have that much 0:05:00.200 --> 0:05:01.760 of an impact they can. 0:05:04.160 --> 0:05:08.440 The way they calculate all of this is through dollar volume, 0:05:09.120 --> 0:05:14.640 and the Prime days and the other discounters would be 0:05:14.760 --> 0:05:17.320 charging less. But what ends up happening is a lot 0:05:17.360 --> 0:05:20.039 of people buy stuff they weren't intending to buy that 0:05:20.200 --> 0:05:24.280 isn't necessarily on sale, and so you do get an increase, 0:05:24.320 --> 0:05:27.760 particularly in the category of online shopping, and so that's 0:05:27.760 --> 0:05:31.920 something to keep an eye on. We also are looking 0:05:32.400 --> 0:05:35.480 always looking at gasoline prices, which came down and then 0:05:35.600 --> 0:05:38.680 started going back up again, so those will have an 0:05:38.720 --> 0:05:42.440 impact as well. And we had better than expected auto 0:05:42.480 --> 0:05:46.440 sales in July, so that may also suggest that we're 0:05:46.480 --> 0:05:48.680 going to have a little more strength in retail sales 0:05:49.160 --> 0:05:51.240 than we might otherwise have expected. 0:05:51.440 --> 0:05:53.599 Well, Mike, the President did fire the head of the 0:05:53.600 --> 0:05:57.480 Bureau of Labor Statistics, and the concern there is that 0:05:57.520 --> 0:06:02.080 any suggestion of political bias can and destroy trust, especially 0:06:02.080 --> 0:06:06.600 in these numbers. How important is it for the American people, economists, 0:06:06.720 --> 0:06:09.640 those who watch this data to have trust in these 0:06:09.720 --> 0:06:11.000 numbers that we're going to see. 0:06:11.160 --> 0:06:13.719 Oh, it's vital because we rely on them for so much. 0:06:13.760 --> 0:06:16.400 It's not just me sitting here reading the eco go 0:06:16.680 --> 0:06:20.680 page on the Bloomberg. They're used in adjusting contracts, the 0:06:20.760 --> 0:06:26.360 cost of living. Social security companies make plans on investment 0:06:26.440 --> 0:06:28.560 based on what they think the inflation rate is going 0:06:28.560 --> 0:06:32.560 to be. So they're very important numbers, and obviously they 0:06:32.600 --> 0:06:35.679 matter a lot to the FED, and so being able 0:06:35.760 --> 0:06:39.120 to believe in them is very important. Now we know 0:06:39.240 --> 0:06:46.280 that the numbers have become a little more less accurate, 0:06:46.360 --> 0:06:50.599 but sort of the margin of error has widened because 0:06:50.760 --> 0:06:56.479 they're having much fewer responses to their surveys, and they've 0:06:56.520 --> 0:06:59.880 also cut back the government's Congress and the presidents of 0:07:00.240 --> 0:07:02.599 back on spending on these numbers. So it's been difficult 0:07:02.640 --> 0:07:04.760 for the agencies, but they do their best to produce 0:07:05.240 --> 0:07:10.080 the gold standard of data, and I don't think anybody 0:07:10.160 --> 0:07:14.160 is looking for that to change the way they've set 0:07:14.200 --> 0:07:19.200 it up. The commissioner of the BLS doesn't get into 0:07:19.280 --> 0:07:22.840 the report, so the fact that the President fired somebody 0:07:22.840 --> 0:07:26.200 who's not ultimately actually responsible for the report won't make 0:07:26.280 --> 0:07:28.000 much of a change. So I don't think Wall Street's 0:07:28.040 --> 0:07:30.440 too worried yet. It would be if somebody came in 0:07:30.440 --> 0:07:33.120 and started making major changes in the way they compile 0:07:33.200 --> 0:07:34.640 the data that you'd have to worry. 0:07:34.920 --> 0:07:36.920 Okay, and we're going to leave it there. Michael McKee, 0:07:36.920 --> 0:07:40.960 Bloomberg International Economics and Policy Correspondent, Always a pleasure. Thank 0:07:40.960 --> 0:07:43.440 you so much for your insight. All right, we move 0:07:43.560 --> 0:07:47.080 next to corporate earnings from the networking bellwether Cisco. They 0:07:47.160 --> 0:07:50.360 report earnings after the market close on Wednesday. For more, 0:07:50.400 --> 0:07:54.520 we're joined by Woujin Hoo, Bloomberg Intelligence Senior Technology analyst. 0:07:54.880 --> 0:07:57.880 Woujin what are you looking for from Cisco's earnings report? 0:07:58.320 --> 0:08:01.920 Yeah, thanks for having me on. Look. I am actually 0:08:01.960 --> 0:08:05.400 looking for a fantastic quarter coming out of coming from Cisco. 0:08:05.920 --> 0:08:08.480 There's a couple of high level things that we need 0:08:08.520 --> 0:08:11.880 to take into consideration. The enterprise it spending has been 0:08:11.920 --> 0:08:15.360 a little bit more resilient than I had anticipated, so 0:08:15.440 --> 0:08:17.840 they should easily or I believe they should come at 0:08:17.920 --> 0:08:21.559 least come in the high end of the fourteen point 0:08:21.600 --> 0:08:25.600 five to fourteen point seven billion dollar guidance for the quarter. 0:08:25.960 --> 0:08:30.920 But more importantly, they've actually navigated their tariff situation pretty well, 0:08:31.800 --> 0:08:35.480 so there should be you know, minimal downside risk to 0:08:35.720 --> 0:08:39.720 earning expectations heading into the print. But more importantly, I 0:08:39.760 --> 0:08:42.200 think the focus going into the quarter is going to 0:08:42.200 --> 0:08:45.320 be more along the lines of their guidance for fiscal 0:08:45.320 --> 0:08:49.120 twenty twenty six. You know, their long term guidance there 0:08:49.400 --> 0:08:54.920 is four to six percent, and they have a lot 0:08:54.920 --> 0:08:57.400 of tailwinds to help them go to the top end 0:08:57.480 --> 0:08:59.040 of that guidance range. 0:08:59.160 --> 0:09:01.160 Yeah, I want to ask about that, how they're able 0:09:01.200 --> 0:09:04.520 to maintain stable demand and steady growth in this current 0:09:04.600 --> 0:09:08.200 AI environment because this is the pool everybody's jumping into. 0:09:08.520 --> 0:09:11.840 So how can Cisco maintain all of that set itself apart? 0:09:12.000 --> 0:09:15.000 Is it navigating their own tariff deal or is there 0:09:15.040 --> 0:09:15.520 more to it? 0:09:16.800 --> 0:09:19.520 Well, you know, one one of the things that Cisco 0:09:19.559 --> 0:09:23.000 has done over the past several years since since the 0:09:23.360 --> 0:09:28.520 COVID period is essentially distribute their supply chain to be 0:09:28.800 --> 0:09:32.040 less concentrated outside of China. But a couple of things 0:09:32.040 --> 0:09:36.160 that do help them. They do have some Mexico manufacturing, 0:09:36.559 --> 0:09:39.520 so they can get some cover under the U. S. 0:09:39.600 --> 0:09:41.760 M c A, so some of their products are going 0:09:41.800 --> 0:09:45.000 to be exempt from tariffs. And I think some of 0:09:45.040 --> 0:09:49.600 the new tariff rules that came into you know, the 0:09:49.600 --> 0:09:52.679 the August first deadline, that's going to help them actually 0:09:53.520 --> 0:09:57.720 make their products a little bit more favorable from a 0:09:57.880 --> 0:10:01.560 from a tariff perspective, So net net, they'll they'll be 0:10:01.559 --> 0:10:04.040 fine from a tire perspective. The one thing that I 0:10:04.080 --> 0:10:07.720 will tell you, they're more highly exposed from a revenue 0:10:07.760 --> 0:10:14.559 perspective on enterprise spending. Roughly half their revenue come from 0:10:15.000 --> 0:10:19.760 commercial businesses. Think about your typical small medium businesses with 0:10:19.880 --> 0:10:23.280 over a thousand employees and also your campus networks and 0:10:23.320 --> 0:10:27.079 stuff that you know that connects the the PCs in 0:10:27.160 --> 0:10:31.040 our desk. That really hasn't pulled back at all. If 0:10:31.080 --> 0:10:34.320 I look at other companies, they've actually at least met 0:10:34.360 --> 0:10:37.079 expectations and also beaten expectations. And as a tech bell 0:10:37.120 --> 0:10:40.120 whether I do think that they're going to benefit as well. 0:10:40.760 --> 0:10:43.800 They also have an ongoing relationship with Nvidia. How has 0:10:43.880 --> 0:10:44.320 that helped? 0:10:44.760 --> 0:10:47.760 Yeah, you know, it's it's a it's a new relationship 0:10:47.760 --> 0:10:51.559 that they announced that their users conference. If anything, that 0:10:52.520 --> 0:10:57.040 actually thrust them deeper into the to the AI story. 0:10:57.360 --> 0:10:59.720 A couple of things here. You know, you're not going 0:10:59.800 --> 0:11:04.040 to see the multi billion dollar AI deals coming like 0:11:04.640 --> 0:11:10.120 a Dell or super Micro, but as corporate enterprises get 0:11:10.240 --> 0:11:16.599 into the AI, Cisco and their broad enterprise channel, the 0:11:17.160 --> 0:11:19.400 small medium business as well as enterprises that I just 0:11:19.400 --> 0:11:23.320 spoke about that will actually help Nvidia get into those 0:11:23.360 --> 0:11:29.040 accounts that Nvidia typically cannot get access to. So there 0:11:29.080 --> 0:11:32.280 is a channel relationship that helps. That's one and number two, 0:11:32.360 --> 0:11:36.480 it is symbiotic because there is a networking component in AI. 0:11:36.880 --> 0:11:40.520 Cisco is a networking leader and they can actually get 0:11:41.160 --> 0:11:47.280 Nvidia networking gear with Cisco equipment into a lot of 0:11:47.320 --> 0:11:50.760 these data center as well as enterprise accounts. That will help. 0:11:51.480 --> 0:11:53.320 This is going to be fun to watch those numbers 0:11:53.320 --> 0:11:57.400 coming out on Wednesday. Wou Jinjo, Bloomberg Intelligence Senior technology analyst, 0:11:57.440 --> 0:12:00.080 thank you so much for talking with us about this. Take. 0:12:00.400 --> 0:12:03.360 Coming up on Bloomberg Daybreak weekend, we'll look at Europe's 0:12:03.400 --> 0:12:06.400 wind energy sector and now it's being impacted by the 0:12:06.400 --> 0:12:10.480 Trump administration's roll back on renewables. I'm Amy Morris. This 0:12:10.640 --> 0:12:25.040 is Bloomberg. This is Bloomberg Daybreak Weekend, our global look 0:12:25.080 --> 0:12:28.000 ahead at the top stories for investors in the coming week. 0:12:28.160 --> 0:12:31.559 I'm Amy Morris in Washington. Up later in our program, 0:12:31.720 --> 0:12:34.960 we'll look ahead to a monetary policy decision from the 0:12:35.000 --> 0:12:38.320 Reserve Bank of Australia but first in the coming days, 0:12:38.520 --> 0:12:42.080 the Danish wind turbine maker Vestus will report earnings. It 0:12:42.200 --> 0:12:45.640 is expected to solidify its position as Europe's largest wind 0:12:45.640 --> 0:12:49.920 turbine manufacturer and the world's second largest by shipments. But 0:12:50.000 --> 0:12:53.440 the renewable energy sector faces big political challenges in the 0:12:53.559 --> 0:12:56.480 US and in Europe. For more, let's go to London 0:12:56.559 --> 0:13:00.280 and bring in Bloomberg Daybreak Europe anchor Caroline hepger Amy. 0:13:00.360 --> 0:13:03.959 It's thought that tariff uncertainty will have hit Vestas's orders 0:13:03.960 --> 0:13:07.079 in the second quarter, but that may be an issue 0:13:07.200 --> 0:13:11.840 largely for Europe because paradoxically, Vestus has seen a surge 0:13:11.920 --> 0:13:15.160 in US orders. Has developers rushed to get ahead of 0:13:15.200 --> 0:13:19.400 President Trump's deadline to end certain tax credits for new 0:13:19.640 --> 0:13:24.320 clean energy projects. When Bloomberg spoke to Vestas's CEO Henrik 0:13:24.400 --> 0:13:27.760 Anderson back in May, he had a blunt warning for 0:13:27.880 --> 0:13:33.680 Europe either adopt bolder industrial policy or risk watching business 0:13:33.920 --> 0:13:39.320 drift elsewhere. Anderson noted that the European Union's fragmented approach 0:13:39.360 --> 0:13:43.560 to the sector was jeopardizing the region's chances of achieving 0:13:43.720 --> 0:13:49.239 energy independence and competing against other global manufacturers. He emphasized 0:13:49.240 --> 0:13:53.120 the need to protect and support the wind energy sector 0:13:53.160 --> 0:13:57.240 that Europe has built through its universities and testing sites. 0:13:58.240 --> 0:14:01.080 It's quite interesting and maybe it comes with age. I 0:14:01.120 --> 0:14:04.439 don't know, but I'm saying stay calm because there are 0:14:04.440 --> 0:14:08.000 some of these things that will be probably spontaneous, probably 0:14:08.880 --> 0:14:12.320 fast measures that then will try to find solutions on 0:14:12.520 --> 0:14:16.120 over time. And if I look back and also forward, 0:14:16.360 --> 0:14:18.920 is we have been and we have created factories and 0:14:19.000 --> 0:14:22.080 localization in the US for more than two decades. So 0:14:22.120 --> 0:14:24.160 for somebody to sit here and god a really nerve 0:14:24.160 --> 0:14:27.080 wrecking Monday morning and now on Friday, we're going to 0:14:27.120 --> 0:14:29.480 relocate some of it, that's just not the right thing, 0:14:30.040 --> 0:14:33.720 because whatever we do, we still see the demand cycle 0:14:33.840 --> 0:14:36.880 for entity. We still see the building and the ramp 0:14:36.920 --> 0:14:39.680 up we are doing in the US, and therefore for 0:14:39.760 --> 0:14:43.240 that to suddenly be hit by and I often call 0:14:43.280 --> 0:14:46.680 it a bit the emotional spirit of this And if 0:14:46.720 --> 0:14:50.040 I could encourage still anything out of this, remain a 0:14:50.080 --> 0:14:54.840 bit calm, take some responsibility, because direction of setting for 0:14:55.000 --> 0:14:57.680 your organization needed right now, because they get off in 0:14:57.720 --> 0:15:00.920 the morning, they see news like this and they all 0:15:01.000 --> 0:15:03.520 see the world is coming a bit apart. It's being 0:15:03.560 --> 0:15:06.800 more fragmented, So I think, actually, as CEOs, one of 0:15:06.840 --> 0:15:10.160 the most important thing right now is stick to the direction. 0:15:10.640 --> 0:15:14.280 That was Vestas CEO Henrik Anderson there speaking to Bloomberg's 0:15:14.280 --> 0:15:18.000 Ana Edwards critic group to and Guy Johnson back in May. 0:15:18.440 --> 0:15:22.240 His comments came as the EU is struggling to cut 0:15:22.360 --> 0:15:27.120 carbon emissions whilst more broadly addressing struggling growth and a 0:15:27.240 --> 0:15:31.840 crisis of competitiveness. So what are the challenges that Europe's 0:15:31.880 --> 0:15:36.440 renewable sector face and what do expect from Vestas in particular. 0:15:36.800 --> 0:15:39.880 It's something that I've been discussing with Bloomberg's Climate Change 0:15:39.920 --> 0:15:44.440 and Renewable Energy reporter Will Mathis and Bloomberg Intelligence Equity 0:15:44.480 --> 0:15:49.520 Research Senior Associate Ales master Andrea Well, can I start 0:15:49.600 --> 0:15:50.000 with you? 0:15:50.400 --> 0:15:50.880 What are we. 0:15:51.000 --> 0:15:53.360 Expecting from Vestas's earnings? 0:15:54.680 --> 0:15:58.400 Well, I think we're expecting crucially and the first updates 0:15:58.440 --> 0:16:03.080 since the changes to the American tax law that was 0:16:03.480 --> 0:16:07.240 extremely detrimental to the wind energy sector. It had been 0:16:07.280 --> 0:16:11.160 primed for huge growth because of President Biden's Inflation Reduction Act, 0:16:11.440 --> 0:16:13.760 and then a lot of the support that the wind 0:16:13.800 --> 0:16:16.000 industry was going to get has been paired back. So 0:16:16.000 --> 0:16:18.800 now we're going to get an update from Vestas about 0:16:18.960 --> 0:16:21.760 what does that mean for wind in the US for 0:16:21.800 --> 0:16:26.720 their turbine business there, and also what impact is this 0:16:26.800 --> 0:16:31.040 going to have on costs for electricity for the American market. 0:16:31.680 --> 0:16:34.320 So this is the winding back that President Trump has 0:16:34.360 --> 0:16:39.440 announced around those tax credits for clean energy projects? What 0:16:39.560 --> 0:16:42.520 about them, what we're expecting in terms of orders, especially 0:16:42.560 --> 0:16:47.440 for Germany now that it is focused on investment spending. 0:16:47.960 --> 0:16:51.240 Yeah, I think Germany, especially with onshore wind, has been 0:16:51.480 --> 0:16:53.920 one of the strongest markets. They've really done a lot 0:16:54.040 --> 0:16:58.520 since the energy crisis to restart the onshore wind market 0:16:58.520 --> 0:17:02.160 which had been sort of stagnant for a while. And 0:17:03.520 --> 0:17:06.160 I think that it's going to be an extremely important 0:17:06.160 --> 0:17:09.040 market for Vestas and other wind turbine makers, you know, 0:17:09.119 --> 0:17:10.800 in the next for the rest of this decade. 0:17:12.400 --> 0:17:14.560 And let's say that's a little taste of what we're 0:17:14.600 --> 0:17:17.880 expecting them from Vestas. How important a business is vest 0:17:17.960 --> 0:17:20.359 Us though, actually in Denmark. 0:17:20.480 --> 0:17:24.000 I think it's it's huge. So we're actually in Copenhagen 0:17:24.080 --> 0:17:26.720 a couple of weeks ago, and you know, as soon 0:17:26.760 --> 0:17:29.240 as you land, as you're landing, you see a bunch 0:17:29.280 --> 0:17:34.160 offshore wind farms there's signs everywhere for vestas it's one 0:17:34.160 --> 0:17:38.160 of the key businesses in the region and more importantly 0:17:38.320 --> 0:17:39.440 just in Europe overall. 0:17:39.880 --> 0:17:43.560 Okay, and the environment then for clean energy firms in 0:17:43.640 --> 0:17:47.400 Europe that are doing business with the US given this 0:17:47.480 --> 0:17:50.240 kind of anti renewable Trump administration. 0:17:51.040 --> 0:17:53.919 Yeah, So in the US, like we were saying, we 0:17:53.920 --> 0:17:55.280 were kind of waiting to see what was going to 0:17:55.320 --> 0:17:58.320 happen with the one big, beautiful bill, and now that 0:17:58.359 --> 0:18:01.159 we have clarity, we have orders. It announced for Q 0:18:01.280 --> 0:18:03.359 two or only about one point one gigawatts, but we 0:18:03.480 --> 0:18:06.800 saw that coming in the week since then, we've already 0:18:06.840 --> 0:18:09.280 seen a gigawat worth of orders just in the first 0:18:09.280 --> 0:18:12.359 month of three q and five hundred megawatts so that 0:18:12.520 --> 0:18:15.480 are in the US. So we are seeing that now 0:18:15.480 --> 0:18:17.600 we have at least a bit of certainty even though 0:18:17.600 --> 0:18:19.920 it's not exactly what we wanted that there's still going 0:18:19.960 --> 0:18:21.800 to be a build out in the US. 0:18:22.680 --> 0:18:24.879 So the order flow is coming in and you're starting 0:18:24.920 --> 0:18:28.160 to get a bit more visibility on that in terms 0:18:28.160 --> 0:18:31.880 of how Europe then is thinking about clean energy policy 0:18:31.960 --> 0:18:36.200 given I mean, it's an increasingly sharp elbowed global economy, 0:18:36.200 --> 0:18:40.160 isn't it. It's less cooperative, it's more self sufficient. And 0:18:40.240 --> 0:18:43.119 this big change in the US. How much influence is 0:18:43.119 --> 0:18:45.879 that having. How's Europe thinking about clean energy now? 0:18:46.080 --> 0:18:48.119 So in Europe you can't exactly have something like the 0:18:48.119 --> 0:18:50.400 Inflation Production Act where you can give tax and centerves 0:18:50.440 --> 0:18:54.720 because it is individual states. Yes, however, there are two 0:18:55.119 --> 0:18:58.399 major policy initiatives that have kind of helped spur along 0:18:58.960 --> 0:19:01.639 wind and clear and energy growth overall. So you have 0:19:01.720 --> 0:19:05.600 Repower EU and the europe Win Action Plan, and those 0:19:05.600 --> 0:19:07.520 were really made to kind of cut the red tape 0:19:07.560 --> 0:19:10.320 because a lot of what's stopping wind build out is 0:19:10.359 --> 0:19:13.800 the bureaucracy to get the permits to get these projects going. 0:19:14.000 --> 0:19:17.000 Because overall it only takes one to two years to 0:19:17.040 --> 0:19:19.840 build an onshore wind farm. The biggest part is the 0:19:19.840 --> 0:19:20.720 bureaucracy piece. 0:19:21.240 --> 0:19:22.280 Where's that worst? 0:19:22.440 --> 0:19:25.040 Do you think right now? It's kind of overall, I 0:19:25.040 --> 0:19:27.800 can say where it's getting better. So you know, Denmark 0:19:27.840 --> 0:19:29.200 is trying to cut a lot of that red tape, 0:19:29.720 --> 0:19:31.720 but it's a bit of a double edged sword because 0:19:32.480 --> 0:19:35.240 a lot of countries are also scaling back their offshore segment. 0:19:36.160 --> 0:19:39.320 We see this in the US. The Biden administration had 0:19:39.320 --> 0:19:42.240 a target of thirty gigawatts offshore win by twenty thirty. 0:19:42.840 --> 0:19:44.959 The Trump administration basically came in and shut the door 0:19:45.000 --> 0:19:47.000 on that and we might only get about five gigawatts. 0:19:47.760 --> 0:19:51.520 Okay. Well, in terms of how well Europe's renewable energy 0:19:51.560 --> 0:19:54.719 sector is doing in terms of earnings overall this quarter, 0:19:54.960 --> 0:19:56.800 have there been big takeaways to you? 0:19:58.080 --> 0:20:03.359 I think that a lot of the noise has been 0:20:03.400 --> 0:20:06.120 about what's been happening in the US. It has been 0:20:06.240 --> 0:20:11.200 a huge growth market for renewable energy, especially offshore wind 0:20:11.560 --> 0:20:14.080 in recent years with the Biden administration, and now that's 0:20:14.080 --> 0:20:16.600 been really pulled back. So you know, on the same 0:20:16.680 --> 0:20:20.720 day the Vestas reports or Stead, another Danish renewable energy giant, 0:20:20.760 --> 0:20:25.000 is going to post their results. They've had huge problems 0:20:25.040 --> 0:20:28.320 in the US with cost overruns and now with some 0:20:28.440 --> 0:20:32.439 of their projects essentially just being put on ice, and 0:20:32.480 --> 0:20:34.920 definitely that they have like seabed leases which are just 0:20:35.080 --> 0:20:37.560 areas kind of like a couple of years ago, would 0:20:37.560 --> 0:20:41.520 been considered assets and now they're essentially worthless because there's 0:20:41.600 --> 0:20:46.159 really no pathway to growth. While there's a Republican administration 0:20:46.240 --> 0:20:49.560 in the White House, and that's going to be another 0:20:49.840 --> 0:20:53.600 key view into what does this all mean for European 0:20:53.680 --> 0:20:56.119 companies that have gone big in the US based on 0:20:56.200 --> 0:20:59.600 policy and now are trying to recalibrate and figure out 0:20:59.760 --> 0:21:02.520 what their next steps are in this Trump administration. 0:21:04.960 --> 0:21:08.960 Has there been a rush though to get the to 0:21:09.000 --> 0:21:12.680 get wind power projects actually done and completed because the 0:21:12.720 --> 0:21:15.280 tax credits are going to run out? But it's actually 0:21:15.920 --> 0:21:18.359 in some months, it's basically in a year to two 0:21:18.440 --> 0:21:21.160 years time, right, twenty twenty seven. When so is there 0:21:21.160 --> 0:21:24.560 a rush happening now or has that sort of been abandoned? 0:21:24.720 --> 0:21:26.840 Yeah, I mean that's one of the questions that I'm 0:21:26.840 --> 0:21:29.639 going to be asking Henrik Anderson, the CEO of Vestas, 0:21:29.760 --> 0:21:32.120 is you know, what are you doing to get these 0:21:32.160 --> 0:21:34.760 turbines to your customers as quickly as possible? Because there's 0:21:34.800 --> 0:21:37.480 a lot of people who've had developments that maybe they 0:21:37.480 --> 0:21:39.240 were thinking, oh, I could build this in the next 0:21:39.320 --> 0:21:41.320 five years, and now they're like, oh, I've got like 0:21:41.720 --> 0:21:45.919 two years to get this substantially started, and that's going 0:21:45.960 --> 0:21:48.320 to really depend on the supply of turbines whether they 0:21:48.359 --> 0:21:49.000 can do it or not. 0:21:49.280 --> 0:21:52.639 Yeah, speaking of turbines, I mean I was quite interested 0:21:52.720 --> 0:21:55.560 to read that actually there's also an issue around the 0:21:55.760 --> 0:22:00.000 energy mix for making this massive bit of equipment, right, 0:22:00.160 --> 0:22:02.600 the kind of the energy that it takes to make 0:22:02.680 --> 0:22:06.320 the steel that goes into the wind turbine. So sort 0:22:06.320 --> 0:22:11.680 of wondering also about the energy efficiency and the sustainable 0:22:11.880 --> 0:22:15.240 aspect of vestas his own business or just the business 0:22:15.240 --> 0:22:17.800 of these wind turbine makers. What do you think of that, will? 0:22:18.440 --> 0:22:22.360 I mean, wind turbines are big pieces of steel. Steel 0:22:22.960 --> 0:22:28.760 is emissions intensive industry, but the emissions that are offset 0:22:28.840 --> 0:22:33.000 by using the wind turbine very very quickly compensate for 0:22:33.680 --> 0:22:37.000 the emissions inherent in the machines and the transport of 0:22:37.040 --> 0:22:39.560 getting them to the market because they're also put on 0:22:39.600 --> 0:22:43.680 ships that are powered by oil. But it's something that 0:22:44.400 --> 0:22:47.520 those companies want to address. They are looking into like 0:22:47.600 --> 0:22:51.120 green steel and other things that could bring down their 0:22:51.200 --> 0:22:55.280 carbon footprint, and especially you know, Danish company, sustainability is 0:22:55.400 --> 0:22:59.280 very important there. But for now there are emissions, but 0:22:59.400 --> 0:23:02.680 it is you know, compared to the benefit of replacing 0:23:02.920 --> 0:23:05.879 a qualified power station or a gas power station with 0:23:05.960 --> 0:23:07.560 a wind turbine, you know. 0:23:07.560 --> 0:23:07.960 It's. 0:23:09.280 --> 0:23:14.000 Worth it, easily worth it to spend some emissions on 0:23:14.119 --> 0:23:16.199 making these things to be able to use them in 0:23:16.200 --> 0:23:17.320 the power mix, so the. 0:23:17.280 --> 0:23:20.280 Industry kind of factors it in as it were, So 0:23:20.359 --> 0:23:25.359 that goes to the energy security issue for Europe. Europe's 0:23:25.400 --> 0:23:28.720 recently only had this scare around Iran threatening to close 0:23:28.720 --> 0:23:31.800