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
Speaker 2: from our global headquarters in New York City. We are
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Speaker 2: Terminal and the Bloomberg Business App. We begin with our
Speaker 2: top story, the S and P five hundred notching its
Speaker 2: longest winning street since November as Trader's Way the Fed's
Speaker 2: path ahead, Bob Michael of JP Morgan Accid Management letting
Speaker 2: out his timeline right in the following. We expect twenty
Speaker 2: five basis point ray cuts at each FMC meeting in
Speaker 2: twenty twenty four, and then quarterly in twenty five. A
Speaker 2: consistent rate cutting cycle is the essential ingredient in our
Speaker 2: forecast of a soft landing. On just now for more,
Speaker 2: Buck and Mornic, good morning, everything and nothing has changed
Speaker 2: since we last spoke, Because I think we lost spoke
Speaker 2: on federalzerv Decision Day two days before that scary job support,
Speaker 2: which we've all moved on from what's your take on
Speaker 2: where things have been over the last couple of weeks.
Speaker 3: But so much has changed. We were sitting here on
Speaker 3: FED Day and we were saying, just get through this meeting.
Speaker 3: You have a free inter meeting meeting with Jackson Hole.
Speaker 3: You can wait and watch the data and have a
Speaker 3: do over before this September meeting. And here we are
Speaker 3: at Jackson Hole, and they should take the do over.
Speaker 3: They've they looked at the employment data, it's softened up.
Speaker 3: You look at the inflation data, it's come into where
Speaker 3: they would like.
Speaker 4: To see it.
Speaker 3: I would use this Jackson Hole conference to set the
Speaker 3: time frame and expectations for the market. We're going to
Speaker 3: cut rates. This is the shape it's going to take.
Speaker 3: These are the things we're looking at. There's a gift.
Speaker 3: On the other hand, I think they should just do nothing.
Speaker 3: All the data has come their way. They've guided us
Speaker 3: to a feathery soft landing. Just don't mess it up.
Speaker 3: Start cutting rates in September and let's get on with you.
Speaker 2: You're talking about what's needed, the essential ingredient for that
Speaker 2: feathery soft landing, and it's quite a cool Still you're
Speaker 2: looking for three cuts this year at twenty five basis points,
Speaker 2: and then again through twenty twenty five. Just this consistent
Speaker 2: rate cutting cycle you've described. Why is that the essential ingredient?
Speaker 2: Where do you think neutral is? What is restrictive, what's accommodative?
Speaker 2: What do we need for this economy that we have?
Speaker 3: Because inflation has come from here down to here, and
Speaker 3: it's still on that downward trajectory. If you look at
Speaker 3: the three month annualized rate of course CPI and the
Speaker 3: expectation on where a core PC is going to be,
Speaker 3: there's sub two percent. So inflation has come down a lot.
Speaker 3: You're hearing from a lot of the retail marketers. They're
Speaker 3: announcing earnings, there's some consumer pushback on pricing. They're choosier
Speaker 3: about what they're spending on, and that's it the top line.
Speaker 3: So inflation is coming down. You look at the labor market,
Speaker 3: slack has been created. We've got unemployment up at four
Speaker 3: point three percent, we're not at three point four percent.
Speaker 3: You look at wages, Wages dropped from three point nine
Speaker 3: percent year every year to three point six percent year
Speaker 3: every year. If you leave restrictive rates at the level
Speaker 3: they're at currently, then that worsens the labor market, and
Speaker 3: then you've got not a problem with inflation, but the
Speaker 3: pace of disinflation. You've got to start relieving the pressure
Speaker 3: on businesses and households.
Speaker 5: Why do you think that we haven't seen a more
Speaker 5: aggressive slow down then? If this really is because of
Speaker 5: the rates? And I ask this because I was looking
Speaker 5: at data compiled by Evercore, isis Julian and Manuel showing
Speaker 5: that you're seeing the S and P five hundred and
Speaker 5: second quarter a year over year earnings per share growth
Speaker 5: at ten percent, You're seeing profit margins that are expanding.
Speaker 5: How does this scream a market that's on the brink
Speaker 5: of falling off if you don't get those rate cuts
Speaker 5: that are significant.
Speaker 3: Well, there's still a lot of money sloshing around in
Speaker 3: the system. What I'm talking about is slowing down to
Speaker 3: trend and then bringing policy in line with stabilizing growth
Speaker 3: and inflation around trend. What Julian's talking about is, hey,
Speaker 3: there's still a lot of economic activity out there. He's right.
Speaker 3: I was listening to Mary Powell earlier from sun Roun
Speaker 3: she's talking about everyone accessing the wonderfully named Inflation Reduction
Speaker 3: Act to spend and invest in solar. There's all that
Speaker 3: money still in the system. It is creating an underlying
Speaker 3: level of economic activity. It's probably one of the things
Speaker 3: you need to ensure that a soft landing actually occurs
Speaker 3: and you don't have recession.
Speaker 5: So you said that Jay Powell should both do nothing
Speaker 5: but also should sort of telegraph some kind of path
Speaker 5: ahead in the Jacksonville.
Speaker 3: That's what I want. I want a very clear road,
Speaker 3: all right.
Speaker 5: So you want to clear them map, but you don't
Speaker 5: expect him to do it because there's absolutely no advantage
Speaker 5: to him doing that. Okay, So what do you think
Speaker 5: actually could be the roadmap beyond this year that you
Speaker 5: could give with any clarity, Given the fact that you're
Speaker 5: talking about some of that income that people received that
Speaker 5: has helped fuel some of the price inflation, that could
Speaker 5: reprise itself next year depending on some of the policies
Speaker 5: that may or may not be fact that we're hearing
Speaker 5: from both candidates.
Speaker 3: Well, that keeps a twenty seven trillion dollar economy operating
Speaker 3: at twenty seven trillion dollars. That's okay, But how do
Speaker 3: you start building some real growth upon that. You need
Speaker 3: the housing market to reignite again. Clearly there's demand for housing.
Speaker 3: There's a three to four million unit housing shortage in
Speaker 3: the US. You bring down rates, it pulls down mortgage rates.
Speaker 3: That suddenly makes housing affordable again, and you get the
Speaker 3: first time buyers to step in there and all the
Speaker 3: things that you talk about, building decks and stuff like
Speaker 3: that begins to happen. So it's one of the things
Speaker 3: that bringing rates down actually does. It's not that a
Speaker 3: quarter fifty basis point cut doesn't do anything. It actually
Speaker 3: does a lot. A lot of businesses and households fund
Speaker 3: themselves off of the floating rate market.
Speaker 6: Well, when it comes to housing, what about twenty five
Speaker 6: thousand dollars for new homeowners? Also in what you love
Speaker 6: to hear this week but unlikely, is a detailed economic
Speaker 6: plan from Kamala Harris.
Speaker 4: What do you make of what we heard so far?
Speaker 3: I think the DNC is in the same position as
Speaker 3: the FED. The data has come their way in a
Speaker 3: big way and they're well ahead in the polls. So
Speaker 3: just get through this conference with a lot of platitudes
Speaker 3: and euphoria and take that momentum. I don't think we're
Speaker 3: going to see a detailed economic agenda. I think twenty
Speaker 3: five thousand housing credit, it's a great idea. Who ends
Speaker 3: up paying that bill? Does it just get sent to
Speaker 3: the Treasury and there's more funding that comes out? Probably?
Speaker 3: Will it ever get through a split Congress?
Speaker 4: Maybe not. We don't have detailed proposals.
Speaker 6: But he is basically running on the Biden platform and
Speaker 6: Trump was already president before they are incumbents. How do
Speaker 6: you think about twenty twenty five when you think about
Speaker 6: these two individuals potentially being in the White House.
Speaker 3: I think we've gone through periods where the administration has
Speaker 3: had very clear views on what they've want to do.
Speaker 3: But if you have a split Congress, they've got a
Speaker 3: very different mindset and it's very difficult to get legislation through.
Speaker 3: So I think the real focus should be looking at Congress,
Speaker 3: looking at the House, looking at the Senate, and seeing
Speaker 3: how those elections go.
Speaker 4: Let's work through your calls.
Speaker 2: Just to wrap it up, long duration, curve, steepness, stay
Speaker 2: overweight credit. I just want to pick up on the
Speaker 2: duration point. Explore this with Calsie Barrow yesterday. I want
Speaker 2: an idea from you on where you think yields are
Speaker 2: heading this time next year, What kind of yield curve
Speaker 2: are we going to be looking at, What kind of
Speaker 2: numbers are along the bondom?
Speaker 4: What are you looking for?
Speaker 3: So intuitively, I want to say where yields are today?
Speaker 3: The FED has to bring rates down to three and
Speaker 3: a half percent. That's two hundred basis points. That's a lot.
Speaker 3: That's pretty normal in a cutting cycle, and cutting cycles
Speaker 3: are usually coincident with recession. We don't see a recession,
Speaker 3: but a three and a half percent FED funds rate
Speaker 3: is one and a half real That seems to be
Speaker 3: a fair level in the curse price for that. Then
Speaker 3: I look at all the money still sitting in cash
Speaker 3: that's out there. I think of every single client conversation
Speaker 3: I have every day. It doesn't matter if it's institutional
Speaker 3: or it's in a wealth management platform. It doesn't matter
Speaker 3: if it's domestic or international. Everyone is looking for a
Speaker 3: way to get into the bond market and frustrated beyond
Speaker 3: belief because they never got to buy it. Yields a
Speaker 3: five to six percent, and once rates start coming down
Speaker 3: and money market fund returns start to drift lower, that
Speaker 3: money will come in, and that money's not thinking about, Oh,
Speaker 3: I want to buy the ten year, I want to
Speaker 3: put on a two ten steepener or flattener. The market's thinking.
Speaker 3: Put me in an aggregate bond fund. Put me in
Speaker 3: a general muni bond fund. Do you have an income fund? Okay,
Speaker 3: put me in there. What kind of ETF do you have?
Speaker 3: Do you have a core plus etf? Put me in there,
Speaker 3: And that money comes into the market in a big way,
Speaker 3: And asset managers may sit there and say, oh, you know,
Speaker 3: yields are a little rich. I'm going to be underweight
Speaker 3: duration by a quarter of a year. So they're still
Speaker 3: buying six years of duration. They're under by a quarter
Speaker 3: of a year. And that money's coming in, So I
Speaker 3: wear yields could get down to three percent.
Speaker 4: Or even lower.
Speaker 2: Three point zero yep, three point zero on tens on tens.
Speaker 2: Is that process started.
Speaker 3: It's started in just the tiniest drip of ways, which
Speaker 3: I've always turned around, said look where yields are, and
Speaker 3: everyone's telling you, oh, we don't like them. Here, we
Speaker 3: don't like them.
Speaker 4: Here.
Speaker 3: Look how far through the fed funds radar. Look how
Speaker 3: cozy it is at five and a half percent in cash,
Speaker 3: then who the heck is buying to take the entire
Speaker 3: yal curve down through four percent. There's a lot of
Speaker 3: buying of money that's leaking in, but it is not
Speaker 3: come in in earnest. That process hasn't started.
Speaker 4: Bob.
Speaker 2: This was fun, Thank you, sir. Going to catch you.
Speaker 4: Appreciate it, Bob, Michael.
Speaker 2: There JP Morgan as a management with some very interesting
Speaker 2: cause on what isn't happening and will happen in fixed
Speaker 2: income over.
Speaker 4: The next year or so.
Speaker 2: Vice President Kamala Harris looking to rebrand Bidyomics as she
Speaker 2: develops her own economic policy, zeroing in on the middle class.
Speaker 2: She's pledging to expand caps on prescription drug casts, revamp
Speaker 2: child tax credits, and eliminate price scout chick. Mike Pile,
Speaker 2: a former Biden Administration Deputy National Security Advisor for International Economics,
Speaker 2: is currently an economic advisor for Kamala Harris and joined
Speaker 2: US now. Mike is going to see you, sir.
Speaker 4: Great to be here.
Speaker 2: Black Rock also worked in the Vice President's office, so
Speaker 2: you're an experienced guy to ask this first question too.
Speaker 2: There are already some laws around price gouging, particularly at
Speaker 2: the state level across this country. What would a Harris
Speaker 2: administration look to achieve that we don't already have.
Speaker 7: Yes, I think you're right to point to those state laws.
Speaker 7: I think if you look at the principles that the
Speaker 7: Vice president's thinking about when she thinks about it in
Speaker 7: an action like this, you know there are a few.
Speaker 7: You know, One, this has got to be focused on
Speaker 7: the food and grocery industry. Two, this is really about emergencies.
Speaker 7: This is about very acute moments of dislocation, like after
Speaker 7: a hurricane or natural disaster.
Speaker 4: Three.
Speaker 7: Going to build off of those state laws. There are
Speaker 7: forty state laws on the books that go to price
Speaker 7: gouging and emergency situations, Red and blue states alike. That's
Speaker 7: going to be a model for her. You know, she's
Speaker 7: also really focused on bad actors, nefarious actions.
Speaker 4: This is not price controls.
Speaker 7: There is no preset metric or other kind of quantitative
Speaker 7: target she's looking at.
Speaker 4: It's really bad action.
Speaker 7: And lastly, she recognizes that the food industry in general
Speaker 7: is one that needs more competition, and she's going to
Speaker 7: work hard to spur small providers both of food and
Speaker 7: groceries to really work on that competition.
Speaker 2: All let's unpack some of that piece by pace we
Speaker 2: can get into the industry and just the moment, I
Speaker 2: want to talk about the word emergency and how you
Speaker 2: defined it. Would you define the pandemic as an emergency?
Speaker 2: And at what point did the pandemic start and at
Speaker 2: what point did it end? Because I'm just trying to
Speaker 2: work out how this rule might be applied, how people
Speaker 2: might define things going forward.
Speaker 7: Yeah, I mean, I think that the type of emergency
Speaker 7: that we have in mind is much more like an
Speaker 7: acute natural disaster. I think, much more like hurricane, earthquake,
Speaker 7: a very acute dislocation. Obviously, the pandemic at some level
Speaker 7: was everything for two or three years. That's very different
Speaker 7: than a very acute dislocation on the back of a
Speaker 7: natural disaster.
Speaker 6: Does do you or the Vice president right now see
Speaker 6: companies that are price gouging?
Speaker 7: So yeah, I think, like I said, I don't really
Speaker 7: think there are emergency conditions out there. So I think
Speaker 7: it's very hard to say that this is anything that
Speaker 7: would apply in the here and now. I think she
Speaker 7: does look at the food and end grocery industry or at large,
Speaker 7: sees one that in particular places has a good deal
Speaker 7: of concentration, and I think as a result, is really
Speaker 7: focused on spurring competition more broadly, including like I said,
Speaker 7: with small providers both on the agriculture and and grocery side.
Speaker 7: If we can spur more competitions, spur more supply, that's
Speaker 7: going to lead to lower prices for consumers. But that's
Speaker 7: different than going after our bad actors in the course
Speaker 7: of an emergency.
Speaker 6: Speaking of competition, there's a debate within the Democratic Party,
Speaker 6: especially the donor class and the progressives about this exact thing, competition,
Speaker 6: anti trust and whether or not Lena Khan should still
Speaker 6: be the head of the FTC under a Harris administration.
Speaker 6: Where is Kamala Harris the Vice president on that right now?
Speaker 7: So where the vice president is focused over the next
Speaker 7: seventy eight days on unifying the Democratic Party and beating
Speaker 7: Donald Trump.
Speaker 4: That is her core focus.
Speaker 7: I think, you know, she, alongside the president, over the
Speaker 7: last three and a half years, has built a governing
Speaker 7: record across a whole range of issues. She's proud of
Speaker 7: that record, but right now her focus is on prosecuting
Speaker 7: the case for the next seventy eight days.
Speaker 4: Let's talk about the record.
Speaker 6: You briefed her every day as her economic advisor when
Speaker 6: she was vice president before you moved to the west wing.
Speaker 6: At one point, when she was running to be president
Speaker 6: in the primary, she was against racking. Now she says
Speaker 6: she's not healthcare. At one point she's supported to eliminate
Speaker 6: private health insurance. She says she's not. Do you know
Speaker 6: which Kamala Harris we are going to get if she
Speaker 6: becomes president again?
Speaker 7: I would say she has built a three and a
Speaker 7: half year governing track record with the president. If you
Speaker 7: look at issue after issue after issue, she and the
Speaker 7: president have made choices to advance the interests of the
Speaker 7: middle class, to advance the interests of working people in
Speaker 7: this country. I'd say, you know, look at the record
Speaker 7: she's built has vice president sitting in office for the
Speaker 7: last three and a half years. That's the starting point
Speaker 7: for how you should think about how the vice president
Speaker 7: would govern wud she's president.
Speaker 5: There's a question about the feasibility of some of the proposals.
Speaker 5: I'm thinking in particular about the housing market and the
Speaker 5: twenty five thousand dollars subsidies for people to be able
Speaker 5: to make a down payment, as well as adding three
Speaker 5: million homes. A question of whether you can do that
Speaker 5: in such a way that giving money to people for
Speaker 5: down payments won't just prop up prices and lead to
Speaker 5: less affordability. How do you sort of square that circle?
Speaker 7: Yeah, I think the most important thing that you heard
Speaker 7: the Vice President talk about with respect to housing affordability
Speaker 7: is saying, we've got a crisis of building in this country.
Speaker 7: We've got to get more units built. We need to
Speaker 7: be ambitious with respect to what we're going to target
Speaker 7: in terms of eliminating that affordable housing construction gap. And
Speaker 7: we're going to work with builders and developers across the
Speaker 7: country to get units built. We're going to work with
Speaker 7: state and the whole governments to knock down barriers to
Speaker 7: construction to get units built. That is the center of
Speaker 7: her vision. She also recognizes that as we do that,
Speaker 7: it takes time to get tracked, It takes time to
Speaker 7: get momentum, It takes time to get things built, and
Speaker 7: in the meantime, people are still suffering, are still feeling
Speaker 7: that pinch of housing affordability, and something like a buyer's
Speaker 7: credit can make a difference for household struggling to reach
Speaker 7: the middle class.
Speaker 4: In the meantime, while supply ramps up.
Speaker 5: I guess that one question that people have is what
Speaker 5: we saw during the pandemic, was it some of the subsidies,
Speaker 5: some of the money that was sent to people was
Speaker 5: done before some of the products were brought online, which
Speaker 5: is part of the reason why we saw the surgeon inflation.
Speaker 5: How do you sort of get ahead of that type
Speaker 5: of response, given that we've seen the difficulty in building
Speaker 5: homes consistently, the red tape, etc. It just takes time,
Speaker 5: not to mention the lumber costs as well as getting
Speaker 5: enough people to build the homes.
Speaker 7: Yeah again, I mean, I think that's why it was
Speaker 7: so important that you heard the Vice President putting the
Speaker 7: supply story at the beginning of the story of housing affordability.
Speaker 7: I think she's laser focused on recognizing there are barriers
Speaker 7: across this country, Blue states and red states alive to
Speaker 7: getting things built. And whether it's new initiatives to help
Speaker 7: builders and developers work alongside the federal government to get
Speaker 7: things built, whether that's working with statele governments to punch
Speaker 7: through red tape, that's going to be your focus because
Speaker 7: she recognizes that's the key to affordability, and it's going
Speaker 7: to take time and focused energy to get that done.
Speaker 2: Just to Stan on Lisa's line of questioning, Ultimately, there's
Speaker 2: a duration mismatch here between how quickly you can stimulate
Speaker 2: demand and how quickly you can address supply. Will we
Speaker 2: just have to tolerate higher prices in the meantime? Is
Speaker 2: that basically what we're going to see? Isn't that the
Speaker 2: outcome of all of this?
Speaker 7: So I think that these things are meant to work
Speaker 7: in parallel with one another. That supply is going to
Speaker 7: ramp up or going to get traction, There's going to
Speaker 7: be a lot of focus there. At the same time,
Speaker 7: there's a crisis today. Working in middle class families need
Speaker 7: support today, and the Vice President's proposed a way to
Speaker 7: do exactly that.
Speaker 2: We talk about taxes, Sure, what's a good corporate tax
Speaker 2: right for this country?
Speaker 7: I think you saw the Vice president embrace the Biden
Speaker 7: Harris proposal. Twenty percent is the proposal that the Vice
Speaker 7: President supported, alongside what she and the President have already proposed.
Speaker 2: So we move up to twenty eight Is she in
Speaker 2: line with Biden as well on what he would have
Speaker 2: done with the taxes that are set to expire, the
Speaker 2: tax cuts that expire in twenty twenty five.
Speaker 7: Yeah, I think that if you look at if you
Speaker 7: look at the Biden Harris budget, you see a range
Speaker 7: of tax proposals, you see a range of investments, you
Speaker 7: see a range of principles around how the TCGA expiration
Speaker 7: should be handled. And that's something that has a governing
Speaker 7: partner to the President. That the Vice President has embraced.
Speaker 2: Is the deficit and ongoing concern for you and the team.
Speaker 7: I mean, I think you heard from the Vice President
Speaker 7: herself on Friday when she gave her speech. She pointed
Speaker 7: to the fact that when you look at the Trump
Speaker 7: campaign playbook, it's extending and deepening tax cuts for corporations
Speaker 7: in the wealthiest. It is not fully offsetting those with
Speaker 7: a set of sales taxes on imported goods that will
Speaker 7: hurt working families, and as a result, that's going to
Speaker 7: increase and blow up the deficit. On the flip side,
Speaker 7: if you look at the Biden Hair Ferris budget, there
Speaker 7: is net deficit reduction alongside the investments in the middle class,
Speaker 7: and she continues to believe that deficit reduction needs to
Speaker 7: be an important part of the pitch.
Speaker 2: We've run out of ton and we've only scratched the surface.
Speaker 2: Do you think that the Vice president would sit down
Speaker 2: with Bloomberg TV and actually have a conversation about the economy,
Speaker 2: because we'd like to make that happen.
Speaker 7: I think that the Vice President looks to go meet
Speaker 7: voters wherever she can meet them, and there's a lot
Speaker 7: of constraints center time over the next sev of the
Speaker 7: eight days, but she wants to go where the voters are.
Speaker 2: Got to make one interview happen might come on Mike Pile,
Speaker 2: economic advisor to Vice President Kamala Harris. Let's turn to
Speaker 2: energy and the energy sector. The boom and AI spending
Speaker 2: putting a strain on the US electrical grip as companies
Speaker 2: race the supply power for data centers. Mary Powell is
Speaker 2: the CEO of sun Run, a solar rooftop company, and
Speaker 2: says forecasts show the US needing the equivalent of about
Speaker 2: thirty four new nuclear plants over the next five years
Speaker 2: to meet rise in demand. Mary's with us around the
Speaker 2: type of American morning to you, Good morning to you.
Speaker 2: Great to have you with us. First question, what is
Speaker 2: the utility exec doing at the largest rooftop solar installer
Speaker 2: in this Oh?
Speaker 1: Well, what she's doing is helping to change America and
Speaker 1: bring more affordable, resilient energy to homes all across America. So,
Speaker 1: as a utility CEO, way back and I would say
Speaker 1: mid two thousand, two thousand and five, two thousand and
Speaker 1: six era, it was so obvious, so painfully obvious to
Speaker 1: me that the utility grid itself was not a socioeconomics
Speaker 1: solution for the long term for America. With the pressures
Speaker 1: on costs and then climatic events, it was becoming very
Speaker 1: very clear that we were going to end up where
Speaker 1: we are, which is over one hundred billions spent last year,
Speaker 1: trillions on the horizon, with no solution in sight to
Speaker 1: lowering costs for Americans and delivering resilient power.
Speaker 2: Can you talk to us a little bit more about
Speaker 2: the initiatives that you'd like to see deployed to stabilize
Speaker 2: the grid at times when it's super stress, when a
Speaker 2: demand is really really high. What would you like to
Speaker 2: see happen?
Speaker 1: Well, what I'd like to see happen is what we're
Speaker 1: doing expanded dramatically. So again part of why I'm passionate
Speaker 1: about what we do. You know, we just hit a
Speaker 1: million customers that represents a million people with the ability
Speaker 1: to generate and in many cases store that clean energy
Speaker 1: and then supply it back to the grid when it
Speaker 1: needs it. And we are doing that all across America.
Speaker 1: In fact, we just did a proof of concept pilot
Speaker 1: using Ford F one fifty lightnings and showing how if
Speaker 1: you have that plugged into your garage, you can also
Speaker 1: support the grid and help make the grid more affordable
Speaker 1: and resilient for all. So the vision has always been
Speaker 1: the same and it's what I did as a utility CEO,
Speaker 1: is that prove that having distributed generation assets all across
Speaker 1: America can help be the solution for bringing down the
Speaker 1: cost of the grid in the future.
Speaker 5: There's sort of the next essential question we've been talking
Speaker 5: a lot with policymakers, which is how how independent can
Speaker 5: the US be while trying to provide renewable energy that's
Speaker 5: affordable to the United States. A lot of the supplies
Speaker 5: coming from China to create solar panels, to create some
Speaker 5: of the renewable energies. How much does the industry really
Speaker 5: hinge on ongoing access to those materials, to those supplies
Speaker 5: from China.
Speaker 1: Well, there has I mean from a supply chain perspective,
Speaker 1: the story's actually gotten stronger recently, so we're feeling really
Speaker 1: good about robust supply, both in solar and storage, but
Speaker 1: also with the Inflation Reduction Act, as you know, and
Speaker 1: the domestic content adders that are in that. What you're
Speaker 1: seeing is jobs factories expanding in America and so we
Speaker 1: expect to have access to more American made panels in
Speaker 1: the future, and we also are already seeing significant benefits
Speaker 1: in the storage space relative to that. So you know,
Speaker 1: my view is what we do is the ultimate in
Speaker 1: energy independence, and not just for helping America become energy
Speaker 1: and dependent ultimately, but for those consumers.
Speaker 4: I mean, it is really.
Speaker 1: Powerful to have the sense of security, safety, and resilience
Speaker 1: in your own home when you're generating and storing that energy.
Speaker 4: You talk about the IRA.
Speaker 5: There is a sort of pretty massive policy backdrop to this,
Speaker 5: and people think of the Biden administration as being more
Speaker 5: friendly to certain types of renewable energy sources. How vulnerable
Speaker 5: is the industry to some pretty significant policy shifts regardless
Speaker 5: of depending on who gets into the White House.
Speaker 1: You know, from a foundational perspective, let's remember that when
Speaker 1: President Trump signed the extension of the ITC which benefits
Speaker 1: the adoption of solar across America. And what I would
Speaker 1: also say is the Inflation Reduction Act has benefited states
Speaker 1: very broadly. In fact, a group of governors, Republican governors
Speaker 1: just signed a letter saying that they really support the
Speaker 1: you know, continuation of the benefits of the Inflation Reduction
Speaker 1: Act because they're seeing jobs in their states, they're seeing
Speaker 1: the kind of development that was expected with the Inflation
Speaker 1: Reduction Act. So we're feeling that when you're doing something
Speaker 1: that's benefiting Americans, the chances are those that represent Americans
Speaker 1: are going to want to see those incentives continued.
Speaker 6: Have you seen an uptick of Americans putting solar in
Speaker 6: their homes, retrofitting their homes because of the Inflation Reduction
Speaker 6: Act because of these subsidies.
Speaker 4: One hundred percent.
Speaker 1: I mean, what you're seeing is very much in the
Speaker 1: space of low and moderate income, the energy communities, multifamily housing.
Speaker 1: We are absolutely seeing that it opened up the total
Speaker 1: addressable market and you're seeing it become affordable and accessible
Speaker 1: to even more Americans.
Speaker 4: You know, at the end of the.
Speaker 1: Day, our customers are saving money on average, they are
Speaker 1: again having a more energy and dependent, resilient way to
Speaker 1: power their homes and their lives, and that is very powerful.
Speaker 1: So hitting a million customers looks like just the beginning
Speaker 1: from my perspective.
Speaker 6: To Lisa's point though, about the supply chain, what is
Speaker 6: sixty percent tariffs of imports it's coming from China or
Speaker 6: ten percent from around the world.
Speaker 4: What would that mean to your business?
Speaker 1: You know, it wouldn't be a positive move in the
Speaker 1: sense of the overall cost deack. But let's remember that
Speaker 1: actually the panels are relatively when you look at the
Speaker 1: total cost stack, they are actually a smaller percentage of
Speaker 1: the pie. So it is something that we absolutely will
Speaker 1: you know, address and work our way through if we
Speaker 1: have to face that. You know, again, it wouldn't be
Speaker 1: a positive for the industry, but we also look at
Speaker 1: it as something that we've had to deal with in
Speaker 1: the past. We find ways to navigate and move forward.
Speaker 2: Can we finish where we started thirty four nuclear plants
Speaker 2: over the next five years? How did you think we'll
Speaker 2: actually build?
Speaker 4: Maybe none? You know.
Speaker 1: So again, a huge part of why I felt it
Speaker 1: was so important to embrace distributed generation as a utility
Speaker 1: executive is I saw firsthand how hard it was to
Speaker 1: build anything anywhere, and it's not getting easier. Actually, what's
Speaker 1: happening happening is it's getting harder every single year, which
Speaker 1: also means it's getting more expensive because there's even more
Speaker 1: you have to do. So again, I was in a state.
Speaker 1: I built the state's largest wind farm. It was not
Speaker 1: large by energy standards and needs. It took four years
Speaker 1: and a lot of a lot of time and money
Speaker 1: to build it in a state that actually really embraced
Speaker 1: renewable energy. So again, these solutions, these big solutions that
Speaker 1: are needed, are very hard, very expensive, and in many
Speaker 1: many cases, particularly in the world of transmission, they're still
Speaker 1: talking about projects that they were talking about twenty years ago.
Speaker 2: I'm going to walk away from this conversation quite faithful.
Speaker 2: So I give you the opportunity to have a correct
Speaker 2: course if you want. If you say we need thirty
Speaker 2: four new nuclear plants over the next five years to
Speaker 2: meet this rising demand, but also say we might get none,
Speaker 2: what kind of crisis could we see in this country.
Speaker 1: Well, I think what we're going to continue to see
Speaker 1: is we are going to see utilities come to the table,
Speaker 1: for sure. But it is why I also really believe
Speaker 1: that this customer led revolution to a more modern innovative.
Speaker 4: Solution for the fill the gap jet.
Speaker 1: You think so powerful, you know, when you think about it.
Speaker 1: I mean, what we're doing now can power a city
Speaker 1: the size of San Francisco for several hours of a day.
Speaker 1: We are scaling at a level of, you know, in
Speaker 1: solar terms, seven gigawatts a year, and we are installing
Speaker 1: now storage in the context of a couple of gigawatt
Speaker 1: hours a year. So as we scale and as America
Speaker 1: leans into those kinds of innovative technologies one hundred percent,
Speaker 1: they can have a very very powerful impact.
Speaker 2: This feels like an ongun convers sanction, So no toubt
Speaker 2: we'll catch up soon. Thanks for having us, Thank you
Speaker 2: appreciate it. Mary Power there, a CEO of Sunrun. This
Speaker 2: is the Bloomberg Sevenmants podcast, bringing you the best in markets, economics, anngiopolitics.
Speaker 2: You can watch the show live on Bloomberg TV weekday
Speaker 2: mornings from six am to nine am Eastern. Subscribe to
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Speaker 2: and as always on the Bloomberg Terminal and the Bloomberg
Speaker 2: Business out
Speaker 5: Mm hmm.