Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence
Speaker 1: with Alex Steina and Paul'sweenye.
Speaker 2: The real app performance has been the US corporate high yield.
Speaker 3: Are the companies lean enough? Have they trimmed all the fats?
Speaker 2: The semiconductor business is a really cyclical business.
Speaker 1: Breaking market headlines and corporate news from across the globe.
Speaker 3: Do investors like the M and A that we've seen?
Speaker 2: These are two big time blue chip companies.
Speaker 3: The window between the peak and cut changing super fast.
Speaker 1: Bloomberg Intelligence with Alex Steinhall and Paul's Wheenye on Bloomberg Radio.
Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big
Speaker 2: business stories impacting Wall Street and the global markets.
Speaker 3: Each and every week we provide in depth research and
Speaker 3: data on some of the two thousand companies and one
Speaker 3: hundred and thirty industries our analysts cover worldwide.
Speaker 2: Today, we'll look at how City Group is trying to
Speaker 2: prevent a departure of wealth.
Speaker 3: Bankers well as well look at why the tailor Best
Speaker 3: Buy is warning of uneven demand for its electronics and appliances.
Speaker 2: But first we begin with the tech media telecom space.
Speaker 3: Recently, president like Donald Trump shows Brendan Carr as the
Speaker 3: new chair of the Federal Communications Commission.
Speaker 2: As Chair, cars priorities include raining in big tech, ensuring
Speaker 2: broadcasters operate in the public interest, and unleashing economic growth.
Speaker 3: For more and what to expect, we were joined by
Speaker 3: Matthew Shettenhelm, Bloomberg Intelligence media litigation analyst.
Speaker 2: We first asked Matthew about the scrutiny a big tech
Speaker 2: will face under the new Trump administration.
Speaker 4: I think in one sense, I think you'll see Congress
Speaker 4: a little less aggressive, it moving forward with data privacy
Speaker 4: type legislation that Democrats tended to promote. But where you're
Speaker 4: going to see the risk and where I think I'm
Speaker 4: prenominantly focused right off the bat is on big tech's
Speaker 4: liability shield. This is a provision of law that's been
Speaker 4: in place since nineteen ninety six that keeps Google and
Speaker 4: Meta and other social media companies from being sued every
Speaker 4: time someone posts something harmful on social media. What you're
Speaker 4: seeing from the conservative side is increasing attacks on that,
Speaker 4: and I think you could see a proceeding at the
Speaker 4: FCC try to really focus and amplify those calls to
Speaker 4: cut into the liability shield that's been so important for
Speaker 4: those companies.
Speaker 3: Does the FCD, FCC can they change it or can
Speaker 3: they just sort of mold it on the sidelines.
Speaker 5: Yeah, that's that's a great question.
Speaker 4: The interesting thing is is this liability shield is tucked
Speaker 4: into the Communications Act that the FCC administers. So during
Speaker 4: the first Trump administration, the FCC took the position, hey,
Speaker 4: we can make rules under this because it's it's.
Speaker 5: In our law.
Speaker 4: We can implement it, but they never got around to
Speaker 4: doing it. I think the Trump administration this time is
Speaker 4: going to try to move ahead with that and say, look,
Speaker 4: we implement the Communications Act, the liability shield is tucked
Speaker 4: in there.
Speaker 5: We can make rules.
Speaker 4: What's changed since then is that the Chevron doctrine has
Speaker 4: been struck down, the Major Questions doctrine has arisen.
Speaker 5: There's a real doubt.
Speaker 4: I'm very skeptical that the FCC can bind the courts
Speaker 4: in how to apply this liability shield. But in some
Speaker 4: ways that's not the point. The point is sort of
Speaker 4: to amplify the idea that courts or that Congress should
Speaker 4: change the shield. And I think that's what you're going
Speaker 4: to see a Brendan car Let FCC do is say, look,
Speaker 4: even if we can't change the liability shield as an agency.
Speaker 4: We're going to tell you how to do that and
Speaker 4: amplify the momentum for Congress or the Supreme Court potentially
Speaker 4: to do it itself.
Speaker 2: So what do we know about the apparent FCC chair,
Speaker 2: Brendan Carr, and what should we expect from a Republican
Speaker 2: controlled FCC. What do we know about that, mister Carr.
Speaker 4: Yeah, so Brendan Carr is the most senior Republican at
Speaker 4: the FCC who knows communications law inside and out. But
Speaker 4: he also knows how to play the politics around the
Speaker 4: FCC better than anyone else there. And so he's going
Speaker 4: to do his best to make sure that he's implementing
Speaker 4: President Trump's agenda. And so while Brendan Carr is a
Speaker 4: traditional sort of free market Republican, he's also very sympathetic
Speaker 4: to the idea that there's sort of a bias against
Speaker 4: conservatives among elite media, and he's very sympathetic to supporting
Speaker 4: President Trump on that message. And so that's why you
Speaker 4: see proceedings like this going after big tech companies, potentially
Speaker 4: going after broadcasters and threatening to take away their licenses.
Speaker 4: So there's going to be a little bit of this
Speaker 4: sort of Okay, let's deregulate the democrats of regulator too much.
Speaker 4: But there's also this concern about bias against conservatives and
Speaker 4: that it's gone too much in that direction, and Brendan
Speaker 4: Carr is going to support both.
Speaker 3: So if I take a look at the actual equities
Speaker 3: that are involved, what does it mean for them? If
Speaker 3: I'm an investor and I'm looking at this, how do
Speaker 3: I price it, how do I model it? How do
Speaker 3: I think about it?
Speaker 5: To me?
Speaker 4: The I mean the biggest risk is you think about
Speaker 4: the liability shield falling away if it goes you know,
Speaker 4: in the most extreme approach, you're you're you're thinking about
Speaker 4: the big social media companies. You're thinking about Meta, you're
Speaker 4: thinking about alphabet, and you're thinking about creating a whole
Speaker 4: new field of litigation with those companies as the targets.
Speaker 4: And so you've seen a couple big settlements from those companies.
Speaker 4: With the liability shield in place, you can think about
Speaker 4: that being amplified many times over with class actions and
Speaker 4: other suits.
Speaker 5: Anytime content that's.
Speaker 4: Posted on the social on social media causes harm in
Speaker 4: the real world, you can think of limitless examples of
Speaker 4: the harm it causes anytime that that there's harm, you
Speaker 4: potentially have a lawsuit. And so I think it sort
Speaker 4: of changes the equation in terms of the cost those
Speaker 4: companies could fail in terms of potential liability if if
Speaker 4: the liability shield were wiped away?
Speaker 2: Will there be looser ownership riggish regulations on media? David
Speaker 2: Zasov from Warner Brothers Discoveries asking.
Speaker 5: Yeah, so, I absolutely So.
Speaker 4: The Republicans at the FCC have historically been, you know,
Speaker 4: they're tired of this idea of media ownership of broadcasters
Speaker 4: that they said, look, there's so much new competition for broadcasters.
Speaker 4: The problem is that there's first this political angle from
Speaker 4: President Trump saying, look they edited my sixty minutes interview wrong,
Speaker 4: And so Brendan Carr at first is kind of latching
Speaker 4: onto that political arguments. Let's go after that first. So
Speaker 4: I think media ownership sort of lurking in the background.
Speaker 4: I think they'll get there after this political noise sort
Speaker 4: of dies down.
Speaker 5: Right.
Speaker 3: Thanks to Matthew Shettenhelm, Bloomberg Intelligence media litigation analyst.
Speaker 2: This week, we focused on a Bloomberg Big Take story
Speaker 2: entitled Amazon prepares to go toe to toe with Nvidia
Speaker 2: in AI hardware.
Speaker 3: You can find it on Bloomberg dot Com and the Terminal,
Speaker 3: and the story looks at how amaz On is loosening
Speaker 3: and Video's grip on the one hundred million dollar plus
Speaker 3: market for AI chips.
Speaker 2: For more on this story, we are joined by Matt Day,
Speaker 2: Bloomberg Technology reporter.
Speaker 3: We first asked Matt for more context on the journey
Speaker 3: that Amazon has gone on when it comes to innovation
Speaker 3: and chips.
Speaker 6: So Amazon gets a lot of credit for inventing the
Speaker 6: cloud computing market and basically rented computing power, data storage
Speaker 6: all over the Internet. What they don't get so much
Speaker 6: credit for is building a lot of the hardware behind it.
Speaker 6: So you go back fifteen years and they started building
Speaker 6: their own servers, their own networking switches. Eventually they got
Speaker 6: onto to silicon to chips themselves. That's where they find
Speaker 6: themselves today is you know, they didn't set out to
Speaker 6: necessarily try to upset in video, but because they've been
Speaker 6: working on machine learning chips for the past you know,
Speaker 6: call it five six years, they have a chip they
Speaker 6: think is arriving at the right time.
Speaker 2: Talk to us about what Amazon's folks in Austin, Texas
Speaker 2: are doing what's going on that down.
Speaker 6: There, So Austin, it's a tech mecha, especially for hardware,
Speaker 6: dating back to IBM and Dell, and Amazon focuses there
Speaker 6: machine learning chip testing there. They're chip engineering down there.
Speaker 6: So myself a colleague paid a visit down there last
Speaker 6: month and there it's really a scrappy vibe. The place
Speaker 6: isn't isn't particularly pristine. There's just stuff strewn all over
Speaker 6: the place, as the story notes. But that's a little
Speaker 6: bit of the Amazon engineering ethos at work, right. They
Speaker 6: don't have to push the limits of performance, they don't
Speaker 6: have to make it real pretty. They just have to
Speaker 6: build a part that works, a part. They can build
Speaker 6: a whole lot of them in a pretty short period
Speaker 6: of time. And so that's what they're trying to do
Speaker 6: now is get those chips out to the data centers
Speaker 6: before the end.
Speaker 7: Of the year.
Speaker 3: Now is the idea that, hey, in video, we don't
Speaker 3: need you anymore at all? Or is it just sort
Speaker 3: of like we can also do this and there's room
Speaker 3: to everyone to play on different levels.
Speaker 6: Yeah, no, not at all about replacing all of Nvidia.
Speaker 6: And if you get any Amazon exec talking about it,
Speaker 6: the first sentence out of their mouth is going to
Speaker 6: be you know, we recognize in video has got a
Speaker 6: great product and it's going to be around for a
Speaker 6: long long time, you know, I said, And I don't
Speaker 6: have any hard numbers in front of me, and Amazon
Speaker 6: folks wouldn't speculate, but I think they'd consider this a
Speaker 6: victory if they could just take some of that some
Speaker 6: of that portion of the Nvidia demand. They already are
Speaker 6: serving today with video chips in their data centers.
Speaker 2: So in Vidia's biggest customers, they're big companies like Amazon,
Speaker 2: like Microsoft, like Alphabet, and all of those customers are
Speaker 2: trying to build their own chips. How is Amazon kind
Speaker 2: of positioned relative to all those players.
Speaker 6: I think one thing Amazon definitely has an advantage over
Speaker 6: its its nearest cloud rival, Microsoft, and that they started
Speaker 6: a lot earlier. Microsoft only started building its chips a
Speaker 6: couple of years ago. Amazon's been doing this since twenty thirteen,
Speaker 6: twenty fourteen, and they all kind of came to the
Speaker 6: same realization, which is that you know, listen, ultimately, a
Speaker 6: data center is just a big computer, right Like we
Speaker 6: think of computers as laptops or maybe a single rack
Speaker 6: of servers. But one of the things that the cloud
Speaker 6: revolution has done is it's allowed these companies to say, Okay,
Speaker 6: wait a minute, how is this going to work if
Speaker 6: instead of one of them in a server, I have
Speaker 6: one hundred thousand of them spread over a data center
Speaker 6: or multiple buildings.
Speaker 7: Right?
Speaker 6: How does the computer work in that situation? And that's
Speaker 6: one of the things that Generative AI and all these
Speaker 6: real hard intensive training runs have kind of forced them
Speaker 6: to do is think about these you know it, sprawling
Speaker 6: data centers as computers in and of themselves.
Speaker 3: Now, you guys went to some of these places where
Speaker 3: they're trying to build these chips. Can you describe what
Speaker 3: it's like, because we're looking at a bazillion dollar company
Speaker 3: in Amazon, right, But the what you described is not that.
Speaker 6: Oh yeah, I looked a little bit like a popour
Speaker 6: rerac at a hardware store, right at a drill press
Speaker 6: in a corner, they had a vacuum sealer and under
Speaker 6: that was one of those slow ovens to kind of
Speaker 6: dry things out dehumidifier.
Speaker 7: Maybe that's not the right word.
Speaker 6: But there's a lot of hardware sitting around, and a
Speaker 6: lot of it's really high tech, a lot of it's
Speaker 6: really expensive, you know, but the Vibe again, was just
Speaker 6: an engineering crew trying to go as fast as they
Speaker 6: can to put chips in the hand of their customers,
Speaker 6: you know, an Amazon's case, that's their own data centers.
Speaker 6: But there's a funny moment while we were there. The
Speaker 6: guy who runs the lab, a guy called Romney Sino,
Speaker 6: was yelling over to a colleague of his basically, what's
Speaker 6: your job, and the job is to ship things to
Speaker 6: data centers.
Speaker 7: Right.
Speaker 6: They're not there to push the limits of engineering. They're
Speaker 6: there to reliably, you know, ship product out and get
Speaker 6: it in the hands of their business customers.
Speaker 2: What are the customers saying about the Amazon chips? How
Speaker 2: are these Amazon chips performing in the market place?
Speaker 6: And so the Amazon has only started just started rolling
Speaker 6: out its latest chip. You know what we know from
Speaker 6: the first version is you know, it's not as good
Speaker 6: as in Nvidia. And that's particularly clear on the software level, right,
Speaker 6: I mean, no matter how good a piece of hardware is,
Speaker 6: if you can't access it with ease, that's going to
Speaker 6: be a problem for you. And that's where Nvidia has
Speaker 6: just a huge advantage. You know, they've got the open
Speaker 6: source community behind them building libraries and tools so that
Speaker 6: almost any AI thing you want to do, you can
Speaker 6: accomplish it on an navidiate ship. And so that's what
Speaker 6: customers have told us is the big hurdle for Amazon.
Speaker 6: You know. Now, Amazon is offering it's early adopter some help.
Speaker 6: They will, you know, send you engineers and help customize
Speaker 6: your work for their chips, but that's not going to
Speaker 6: scale in the long term. They're hoping they can build
Speaker 6: a software package that makes it real easy to use
Speaker 6: their hardware, but they're not there yet.
Speaker 3: Who are the geniuses behind this in Amazon? Where the names?
Speaker 6: So the main one who gets a lot of credit
Speaker 6: for it, and probably doesn't get enough outside of tech
Speaker 6: circles is James Hamilton. He's a longtime engineer at IBM
Speaker 6: and at Microsoft who Amazon poached real early into their
Speaker 6: cloud competing experiment back in two thousand and nine, and
Speaker 6: it was partly his suggestion that the company should get
Speaker 6: into the hardware business. Right He was looking at their
Speaker 6: costs and saying, listen, why are we paying Dell HP
Speaker 6: for all of these servers with a bunch of high
Speaker 6: end functions we don't need. We could build a cheaper
Speaker 6: mousetrap and if it's just good enough for us, then
Speaker 6: we can pass those savings onto our customers. So it
Speaker 6: really started this snowball of just Amazon getting into more
Speaker 6: and more corners of hardware that previously, you know, they
Speaker 6: hadn't really had much interest in, and that's really paid
Speaker 6: off in terms of how profitable the cloud businesses for Amazon.
Speaker 2: Our thanks to Matt Dave, Bloomberg Technology.
Speaker 3: Reporter, coming up a conversation with the CEO of bloom Energy.
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
Speaker 2: depth research and data on two thousand companies and one
Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via
Speaker 2: bi Go on the terminal, Paul Sweet and.
Speaker 3: A Malex Steel and this is Bloomberg.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on applecarplaying nbroud Otto with
Speaker 1: the Bloomberg Business app. Listen on demand wherever you get
Speaker 1: your podcasts, or watch us live on YouTube.
Speaker 3: We moved next to the Banking Space and Citygroup.
Speaker 2: This week we looked at a story on the Bloomberg
Speaker 2: Terminal and at Bloomberg dot Com entitled City Bonuses by
Speaker 2: time for New Wealth boss rush to revamp.
Speaker 3: And looked at how Citygroup's new CEO, Andy sigg Green
Speaker 3: led special retention bonuses for dozens of personnel for more
Speaker 3: and all of this means. We were drawn by Katherine Doherty,
Speaker 3: Bloomberg Finance reporter.
Speaker 2: We first asked Catherine how things are going now for
Speaker 2: Citygroup and it's.
Speaker 8: New CEO, Andy is one year into his new role,
Speaker 8: and he came into it with a lot of difficulties.
Speaker 3: And the basic.
Speaker 8: Infrastructure that City was working with in their wealth division
Speaker 8: was something that had been lagging peers. It was way
Speaker 8: behind in terms of speed execution. And really that was
Speaker 8: something that Andy had focused on right when he came in.
Speaker 8: And upgrading the technology was one thing. Then bringing talent
Speaker 8: was kind of the second pillar to improving the wealth division.
Speaker 8: And keeping talent is the hardest part about building a
Speaker 8: wealth business across Wall Street because it's a very competitive business.
Speaker 8: The pay is oftentimes used as a way to lure
Speaker 8: experienced advisors to competitors, and so not only are you
Speaker 8: trying to focus on keeping that talent, the talent is
Speaker 8: tied to the assets that they're managing for their clients.
Speaker 8: So anytime you lose some big advisors with millions or
Speaker 8: even billions in assets. That's going to affect your business
Speaker 8: moving forward. So Andy had a very big agenda in
Speaker 8: front of him in terms of having to clean up,
Speaker 8: and not just clean up, but then improve cities wealth
Speaker 8: business so that it could truly compete with the big
Speaker 8: peers on Wall Street.
Speaker 2: Yeah, because like when I think of Morgan Stanley, I
Speaker 2: think of wealth management I use, and that's different. When
Speaker 2: I grew up in the business, I thought about them
Speaker 2: as sales and trading and investment banking City I don't
Speaker 2: necessarily think of wealth as part as a kind of
Speaker 2: a growth driver for them. But I know in their
Speaker 2: private bank, which generates two point three billion dollars in revenue,
Speaker 2: it is high touch service for the wealthiest clients, including
Speaker 2: a quarter of the world's billionaires minimum net worth twenty
Speaker 2: five million dollars. So is this a situation for City
Speaker 2: that Jane Fraser has to just put a flag in
Speaker 2: a ground say this is a core business for City
Speaker 2: and we will invest Accordingly.
Speaker 8: Private bank is definitely one of their money makers. You
Speaker 8: can see that in the numbers. But also if you
Speaker 8: think two tiers down, you have City Gold and this
Speaker 8: is clients with avery average monthly balances of at least
Speaker 8: two hundred thousand, So it's definitely not at the private
Speaker 8: bank tier. The private bank tier. Why they're trying to
Speaker 8: keep that part of the wealth business up is because
Speaker 8: that's where the biggest assets are. That's where the revenue
Speaker 8: really gets generated when you have the wealthiest and it's
Speaker 8: not just Americans, it's oftentimes billionaires in Asia. They're really
Speaker 8: focused on growing their business outside of the US, which
Speaker 8: is different from some of the other big Wall Street
Speaker 8: banks that are more US focused in terms of building
Speaker 8: up their own private bank assets. And so City, their
Speaker 8: private bank, I would say, was their strong suit and
Speaker 8: continues to be their strong suit, but it doesn't mean
Speaker 8: that that's going to stay that way. So they really
Speaker 8: have to remain competitive keep their advisors that are catering
Speaker 8: to the wealthiest individuals, not just in the US but
Speaker 8: across the globe.
Speaker 3: Did they lose advisors because they were posed or because
Speaker 3: they let them go because they were revamping it and
Speaker 3: it so it's a combination.
Speaker 8: Just last week we reported that two of City's former
Speaker 8: private bank advisors defected to go to Bank of America.
Speaker 8: Actually in their private bank, which is interesting because that's
Speaker 8: where Andy Sig had come. You worked in the Meryl division.
Speaker 8: But still it's under the Bank of America umbrella and
Speaker 8: those two advisors they brought seven billion of assets that
Speaker 8: they managed. So that was a big kick to City.
Speaker 8: And so when you see that, but it's not i
Speaker 8: would say unique just to City. There's stories like that
Speaker 8: all the time of some of these really big advisors
Speaker 8: bringing their team to a competitor and oftentimes they're just
Speaker 8: looking for it's opportunity and most of the time that
Speaker 8: opportunity is translated and in pay all.
Speaker 3: Right, our thanks to Catherine Doherty, Bloomberg Finance Reporter. We
Speaker 3: move next to the energy space. The fuel cell maker
Speaker 3: Bloom Energy recently signed a landmark supply agreement with American
Speaker 3: Electric Power for up to one gigawatt of fuel cells
Speaker 3: and this marks the latest commercial procurement of fuel cells globally.
Speaker 2: For more and all of this, we were joined by
Speaker 2: k R. Sweetheart, CEO of bloom Energy. We first asked
Speaker 2: k Are how this deal came about.
Speaker 7: So we have being more with data centers for a
Speaker 7: very long time. Now we have over three hundred megawarts
Speaker 7: in multiple data centers, across the country. These are the
Speaker 7: smaller data centers called the edge data centers that are
Speaker 7: located where customers are somewhere in the five to ten
Speaker 7: megawat range in a particular site. So we have transacted
Speaker 7: close to three hundred megawarts, so we are a known
Speaker 7: player to data centers. Now with the hyperscalers, what's the difference,
Speaker 7: it's a much larger data centers. These are now particularly
Speaker 7: more important in terms of growth because of AI and
Speaker 7: the amount of power they need. And currently these hyperscalers,
Speaker 7: as they're growing very fast, the transmission distribution is not
Speaker 7: able to keep up with providing those hundreds of megawarts
Speaker 7: of power right at the site where you need it
Speaker 7: within the time that you need it maybe five to
Speaker 7: six years. They may be able to provide the power,
Speaker 7: but the data center really wants it today, they want
Speaker 7: it now. So we are perfectly under those circumstances because
Speaker 7: our Bloom Energy servers can be deployed in a matter
Speaker 7: of months right where the customer is, thereby not worrying
Speaker 7: about the transmission distribution gridlock and providing that reliable, clean,
Speaker 7: always on power to the data center. So that's the
Speaker 7: reason this happened, and here what happened is the electricity
Speaker 7: provider AEP said, we don't make nuclear power plants, we
Speaker 7: don't make gas turbance, we don't make fuel cells. We're agnostic.
Speaker 7: We'll buy your systems and similar to us using those
Speaker 7: other power sources to provide power to the customer. Here
Speaker 7: we can take your fuel cells and take the power
Speaker 7: you produce and give it to the data center. However,
Speaker 7: the big advantage here is we can put these fuel
Speaker 7: cells right where the data center is, thereby avoiding the
Speaker 7: transmission distribution issue.
Speaker 2: So, Kerry, I mean, just you know, I didn't know
Speaker 2: much about your company before, so just reading up here,
Speaker 2: it's like right company, right place, at the right time,
Speaker 2: with the right technology, and boom. Talk to us about
Speaker 2: how good your fuel cells are. How would I know
Speaker 2: whether your fuel cell is better more productive than say
Speaker 2: a competitor.
Speaker 7: That's a great question. So let me go away from
Speaker 7: fuel cells, just into electricity for the customer. At the
Speaker 7: end of the day, we all provide a service or
Speaker 7: a product to our end customer. That electricity that a
Speaker 7: data center takes has to be clean, it has to
Speaker 7: be always on and reliable. Twenty four to seven. It
Speaker 7: needs to have a pay as you grow characteristic, and
Speaker 7: it needs to be future proofed in terms of sustainability.
Speaker 7: Bloom Energy is one of those solutions that offer all
Speaker 7: of the above no rs. It's the genius of end
Speaker 7: So we are the most efficient way of taking natural
Speaker 7: gas and making electricity out of it without combustone. Because
Speaker 7: we don't compassed, there is no knock socks particulates anything
Speaker 7: going into the atmosphere, so there is no local air pollution.
Speaker 7: And if you look at our system they're like lego blocks.
Speaker 7: You put many of these lego blocks, hundreds of them
Speaker 7: to be able to provide power to a data center.
Speaker 7: If any one of them has to be serviced, you
Speaker 7: can just hot swap them in and out. So the
Speaker 7: reliability and the resiliency of our systems are very high.
Speaker 7: And then you and you can pay as you grow
Speaker 7: data centers. Even though they build a big data center,
Speaker 7: don't start that entire data center on day one. They
Speaker 7: may do one third of the load, and then a
Speaker 7: few months later they may add additional load. As they
Speaker 7: are adding the load, they can add more and more
Speaker 7: of our fuel cells. You can't do that to the
Speaker 7: gas turbine. You can't do that to the nuclear power plant.
Speaker 7: So we bring all these attributes in so I would
Speaker 7: say we are ideally suited for this AI data center market.
Speaker 3: Now, the financial terms were not disclosed. I appreciate that.
Speaker 3: I'm gonna ask about the money a different way. How
Speaker 3: easy was it or difficult was it to come to
Speaker 3: an agreement on price.
Speaker 5: With AEP.
Speaker 7: In this particular case, it was fairly easy to come
Speaker 7: to that agreement. Nothing is easy, but relatively speaking, And
Speaker 7: here is why. There are three parties involved, actually four,
Speaker 7: the data center customer, AP, the public at large where
Speaker 7: this is being installed, and blow energy we were able
Speaker 7: to put together When when for all four of these stakeholders,
Speaker 7: why is.
Speaker 1: That number one?
Speaker 7: Let's start with the public at large with other kind
Speaker 7: of provisions that were being contemplated. The fear of the
Speaker 7: ratepayer was because the hyperscaler is going to get a
Speaker 7: large amount of power from the transmission distribution company, they
Speaker 7: will end up carrying the bill. In this construct, AEP
Speaker 7: made sure none of the costs associated with putting these
Speaker 7: fuel cells and providing that clean power to the data
Speaker 7: center will cost the rate payer any money. So that
Speaker 7: was a win for the ratepayer number two for the
Speaker 7: data center. For the data center, the price of not
Speaker 7: having power on time is significantly greater than the cost
Speaker 7: of power. If you just think about the race in
Speaker 7: AI and who has to get there competitively. So time
Speaker 7: to power was the key metric and they would pay
Speaker 7: a slight premium to be able to get that, and
Speaker 7: that penciled out for AEP. They were able to grow
Speaker 7: their customer base, give them their growth needs without dissenter
Speaker 7: mediating them and having them go to some other state,
Speaker 7: which is what has been happening in places like Virginia
Speaker 7: where data centers are moving away from there because there
Speaker 7: is not enough power. So it was a win for
Speaker 7: AEP in retaining their customer and taking care of their
Speaker 7: customer and making money for Bloom. Whether we in front
Speaker 7: of the meter or behind the meter, it is the
Speaker 7: same thing. Whether we sell it to AP who then
Speaker 7: provides the power for the data center, or we sell
Speaker 7: to the data center and they provide it and they
Speaker 7: take their own power. You know, for us we are
Speaker 7: agnostic because we get to make the sale and we
Speaker 7: get the gross margins on the product.
Speaker 3: All right. Thanks to k R. Shreedhar CEO Bloom Energy
Speaker 3: all right, coming up a look at what's new in
Speaker 3: the renewable fuels market in the US.
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
Speaker 2: research and data on two thousand companies one hundred and
Speaker 2: thirty industries. You can access Bloomberg Intelligence via p I
Speaker 2: go on the terminal.
Speaker 3: I'm Paul Sweeney and am Alex Steel.
Speaker 9: And this is Bloomberg.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business app. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: Each week we look at research from Bloomberg and EF
Speaker 2: previously known as New Energy Finance.
Speaker 3: They're the team at Bloomberg that tracks and analyzes the
Speaker 3: energy transition from commodities to power, transport, industries, buildings, and
Speaker 3: egg sectors.
Speaker 2: This week we took a look at renewable fuels, and
Speaker 2: we're joined by Anna Davies, bnef's head of renewable Fuels.
Speaker 3: We first asked Anna what types of renewable fuel projects
Speaker 3: now exist in the US, so there's.
Speaker 9: A good number of projects in the US nice to
Speaker 9: be here, and there's a wide range. The US is
Speaker 9: the biggest market at the moment, so a lot of
Speaker 9: the projects are based here. A lot of renewable fuels.
Speaker 9: When we talk about renewable fuels, we're really talking about
Speaker 9: basically biofuels at the moment, made from oils like soybean
Speaker 9: oil or even use cooking oil like the excess grease
Speaker 9: from your fryer. The key here is that unlike ethanol
Speaker 9: or biodiesel or biofuels you usually think about, renewable fuels
Speaker 9: are a special term for ones that are drop in ready,
Speaker 9: which means they produce a diesel molecule or jet fuel
Speaker 9: molecule that's basically the same as fossil dieseler jet fuel,
Speaker 9: So you could just blend it one for one into
Speaker 9: your dieseler jet fuel pool. There's no blending limit. It
Speaker 9: can just go in however much you have, So it's
Speaker 9: really cool in that regard. A lot of the projects
Speaker 9: in the US are based, especially out of California. You
Speaker 9: could take an old oil refinery and convert that to
Speaker 9: produce a biooil like a biofeedstock instead of a crude feedstock,
Speaker 9: so that's really common. There's also a lot of projects
Speaker 9: being developed to use other feedstocks, things like corn ethanol,
Speaker 9: because if you think about passenger vehicle fleet going electric,
Speaker 9: you're going to have less demand for gasoline or ethanol,
Speaker 9: so this could be another use for that ethanol in
Speaker 9: the world today.
Speaker 2: I gotta ask the question everybody wants to ask, how
Speaker 2: will the Trump administration impact renewable fuel business?
Speaker 9: That is the million dollar question probably for every clean
Speaker 9: energy sector. I'd say that renewable fuels, compared to a
Speaker 9: lot of the other sectors of clean energy, might be
Speaker 9: a bit better insulated than most because this is a
Speaker 9: sector where it really promotes the agriculture industry by using
Speaker 9: biofuels as a new demand source. It also is a
Speaker 9: way for the oil industry to get a second life
Speaker 9: because they can't take this old refinery and convert it
Speaker 9: into something new. So in that regard, I don't think
Speaker 9: it's going to be completely in the crosshairs. There are ways, though,
Speaker 9: that the Trump administration might have a big impact on
Speaker 9: this sector. One of the big ones is if he
Speaker 9: puts a tariff on used cooking oil from China.
Speaker 2: Or some of the feets used cooking oil from China.
Speaker 5: We do.
Speaker 9: China produces a lot of use cooking oil, a lot
Speaker 9: of fried food. They export the cooking oil to California
Speaker 9: which they can then blend into these refineries. Used cooking
Speaker 9: oil is a really popular feedstock for renewable fuels because
Speaker 9: it has a low carbon intensity. Otherwise it's just wasted,
Speaker 9: right you throw it out, it has to be collected.
Speaker 9: It was collected into it dumped in probably a dump.
Speaker 3: But so we don't have enough used cooking oil here
Speaker 3: in the US as supplement if everything.
Speaker 9: We have a lot. But if you think about replacing
Speaker 9: you know, the diesel or the jet fuel pool, you
Speaker 9: can always use more.
Speaker 3: See So to that point, what is the price spread
Speaker 3: between renewable fuels and traditional fuels? Right now?
Speaker 9: Tie renewable fuel their cheapest are probably two to four times,
Speaker 9: which is a big range, but cheaper than more expensive
Speaker 9: sorry than fossil like jet fuel. And if you talk
Speaker 9: about some of the novel technologies. So one of the
Speaker 9: ways to make these renewable fuels is to take carbon
Speaker 9: dioxide and green hydrogen, which is great because then you're
Speaker 9: not using any biofeedstock that could be up to like
Speaker 9: ten times as expensive as jet fuel. These are pricey
Speaker 9: fuels and they're probably not going to get too much
Speaker 9: cheaper because a lot of it is just the technology needed.
Speaker 2: So but if as an airline, am I mandated to
Speaker 2: use a certain percentage of clean fuel?
Speaker 9: Depends where you are in Europe starting next year, yes
Speaker 9: you are mandated to blend it in. In the US,
Speaker 9: we don't have mandates yet. The biggest is we're doing
Speaker 9: a lot of carrot incentives. So the Inflation Reduction Act
Speaker 9: has a tax credit for producing renewable sustainable aviation fuel
Speaker 9: that would give a discount of about a dollar dollar
Speaker 9: twenty five to these producers. It's not enough to cover
Speaker 9: that bridge that cost. It could bring it down closer.
Speaker 3: Pences, and then if that goes away, then it makes
Speaker 3: it even worse. So what's the best way to low
Speaker 3: or that gap? Is it we need better technology, we
Speaker 3: need scalable technology, or more sourcing.
Speaker 9: I don't think technology is gonna come down too much
Speaker 9: in cost because a lot of the cost technology is
Speaker 9: a big component. But the feedstock is a big component too,
Speaker 9: and it's hard to China exactly, so that could make
Speaker 9: it worse. A lot of it is probably gonna be
Speaker 9: a bit mix of mandates and subsidies. So if you
Speaker 9: have a mandate, sayn you just have to blend a
Speaker 9: certain amount, that's going to cause you know, maybe you
Speaker 9: put a premium on the cost of jet fuel, a
Speaker 9: tax on jet fuel that can cause that price gap
Speaker 9: to close, or if you offer an incentive to produce
Speaker 9: these fuels that can bring it down. There's a lot
Speaker 9: of research being done on new feedstocks, like something like
Speaker 9: cover crops. If you haven't a fueled you could just
Speaker 9: plant a new oil crop in the off season that
Speaker 9: can help retain the soil. You can use the same land.
Speaker 9: You don't have to have this issue of food versus
Speaker 9: fuel land use. But yeah, that's the question is how
Speaker 9: cheap can you get it?
Speaker 2: Our thanks to Annadavis, b n EFS, head of Renewable Fuels, we.
Speaker 3: Move next to the retail space. This week we got
Speaker 3: our from Best Buy and Dick Spoorting Goods.
Speaker 2: Best Buy cut it's full year guidance on sluggish demand
Speaker 2: for electronics and appliances. However, Dickboarding Goods increased its annual
Speaker 2: projections for comparable sales and growth.
Speaker 3: For more on all of this, we are joined by
Speaker 3: Lindsay Dutch, Bloomberg Intelligence Consumer Hardline Senior Analyst.
Speaker 2: We first asked Lindsay for her take on this week's
Speaker 2: results from Dickboarding Goods.
Speaker 10: I think Dick's had a strong quarter, you know, again
Speaker 10: stronger than expected, sort of continuing the trend that we've
Speaker 10: seen earlier this year. You know, they have you know,
Speaker 10: the items that kids these days want in footwear, athletic apparel,
Speaker 10: and their exclusive sort of vertical brands are also doing very,
Speaker 10: very well and that really supported that back to school
Speaker 10: and it gives a lot of optimism when we think
Speaker 10: about holiday and the fourth quarter coming out.
Speaker 3: So I realized that Best Buy and Dick's are different stores,
Speaker 3: but the way you describe dick spoorting goods, it feels
Speaker 3: like it should have been the same for Best Buy
Speaker 3: right back to school. They do have some exclusive items,
Speaker 3: et cetera.
Speaker 6: Why not.
Speaker 10: Yeah, So I think that's a great question, Alex. I think,
Speaker 10: you know, when we think back three months ago, best
Speaker 10: Buy had a great quarter and it was on back
Speaker 10: to school for them. Back to school is a little
Speaker 10: bit more college bias. It does hit a little bit
Speaker 10: earlier in the year then Dix might benefit from and
Speaker 10: the demand for laptops was very strong in the second quarter,
Speaker 10: and you know, best Buy raised their guidance. There was
Speaker 10: strong optimism that we were going to get back to
Speaker 10: growth mode. I still think, you know, there's a possibility
Speaker 10: for a strong holiday for Best Buy laptops did. They
Speaker 10: were up comp sales seven percent in the third quarter,
Speaker 10: but that was overridden by weakness in some of the
Speaker 10: other categories, appliances, home theater being key ones. It sounds
Speaker 10: like they're really leaning into promotions for the fourth quarter
Speaker 10: and really looking to get aggressive with promotion, especially for
Speaker 10: their premium product and things that are exclusive two best
Speaker 10: Buy to really.
Speaker 2: Draw that shopper in. How's it when you talk to
Speaker 2: your retailer companies that you covered, lindsay, what are they
Speaker 2: saying about just this whole holiday season when all is
Speaker 2: said and done, how's it gonna? Are we gonna have
Speaker 2: growth this year? So better than last year? How are
Speaker 2: thy shaking out?
Speaker 1: Really?
Speaker 6: Yeah?
Speaker 10: So growth looks pretty weak. I also think it's divergent
Speaker 10: sort of like last year. So there's some categories that
Speaker 10: are just in a better position. You know, beauty would
Speaker 10: be one of those sports where you know, where Dix
Speaker 10: is playing is also one of those where just demand
Speaker 10: generally is a little bit stronger. And then we have
Speaker 10: other categories that are still on the weaker side, home appliances,
Speaker 10: and some of that still you know, obviously affects best Buy,
Speaker 10: it also affects companies like william Sonoma RH. We also
Speaker 10: have a bifurcation. I think in the consumer, you know,
Speaker 10: a higher in consumer still seems to be holding up
Speaker 10: pretty well. Dix is another benefactor there. You know, their
Speaker 10: customer base is on the higher income side, whereas best
Speaker 10: Buy is probably a little bit more like the average
Speaker 10: of the overall country. So I think, you know, the
Speaker 10: deal days that these companies are rolling out, you know,
Speaker 10: they each have their own strategies on how they want
Speaker 10: to manage that. But as I said, best Buy is
Speaker 10: going to get very aggressive with those deals. The consumer
Speaker 10: high or low income is very value focused, and we
Speaker 10: may have seen a pause, you know, people holding back
Speaker 10: waiting for those deals in the third quarter results.
Speaker 3: Yeah, it's like she's describing me exactly.
Speaker 2: Hey, lindsay, how about from an industry perspective, when I
Speaker 2: if I ever find myself going into store which I
Speaker 2: hope that doesn't happen. Am I going to find the
Speaker 2: stuff I'm looking for?
Speaker 9: Like?
Speaker 2: Has everybody got the inventory they need?
Speaker 9: Here?
Speaker 2: I don't hear too many you know, supply chain stories anymore.
Speaker 10: Yeah, So supply chain, the supply chain woes of COVID
Speaker 10: have sort of gone away, you know. I think you know,
Speaker 10: retailers you maybe a little over a year ago or
Speaker 10: probably over inventoried. I think inventory is in a healthier
Speaker 10: position this year, you know, for the retailer themselves, but
Speaker 10: also for the shopper. And I think that the retailers
Speaker 10: are working really hard to make that in store experience
Speaker 10: a positive one for those that.
Speaker 2: Go in store.
Speaker 10: But there's also a lot of focus online, so that
Speaker 10: online shopper, you know, best Buy is doing doorbusters again
Speaker 10: this year, but it's it's for that in store shopper,
Speaker 10: but also if you are a member and have the app,
Speaker 10: you could also take advantage of that. So they're really
Speaker 10: looking to you know, capitalize on that experience.
Speaker 3: What about tariffs? What was the impact? How do they
Speaker 3: manage it?
Speaker 10: Yes, so best Buy they have talked about, you know,
Speaker 10: as a big picture, as a percent of cogs, about
Speaker 10: sixty percent of their inventory, you know, is manufactured in China.
Speaker 10: That's about the same as where it was in eighteen
Speaker 10: and nineteen. For the products that they have direct control over.
Speaker 10: The exposure is low, and they've sort of managed that down,
Speaker 10: and they discussed on the call that, you know, the
Speaker 10: burden of that cost is really going to be shared
Speaker 10: between the manufacturer, supplier, the retailer, and the possibly the
Speaker 10: consumer if it comes to that. Dick's exposure is pretty low.
Speaker 10: When I look across my coverage, you know, elf Beauty
Speaker 10: stands out. They have eighty percent of their supply chain
Speaker 10: is manufactured in China, very highly exposed. A company like
Speaker 10: that is looking to lean on price increases to sort
Speaker 10: of manage that type of cost.
Speaker 3: All right. Thanks to Lindsay Dutch, Bloomberg Intelligence Consumer Hardline
Speaker 3: Senior Analyst.
Speaker 1: This is the Bloomberg Intelligence podcast, available on apples, Spotify,
Speaker 1: and anywhere else you'll get your podcasts. Listen live each
Speaker 1: weekday ten am to noon Eastern on Bloomberg dot Com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business. You
Speaker 1: can also watch us live every weekday on YouTube and
Speaker 1: always on the Bloomberg Journal