Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence
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Speaker 2: The real ap performance has been in US corporate high yield.
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Speaker 1: Bloomberg Intelligence with Alex Steele and Paul Sweeney 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 take a look at the telecommunications company Comcast
Speaker 2: and how it's benefiting from its theme parks.
Speaker 3: Plus we'll look at how oil and gas companies are
Speaker 3: investing in low carbon technologies.
Speaker 4: Well.
Speaker 2: First, we begin with some news in tech and energy.
Speaker 3: This week, Constellation Energy agreed to sell power from a
Speaker 3: Clinton Nuclear Plan in Illinois to the tech giant Meta Platforms.
Speaker 3: It's a twenty year contract starting in mid twenty twenty seven.
Speaker 2: And this comes as nuclear power has emerged as one
Speaker 2: of the biggest winners from the AI fueled search and
Speaker 2: electricity demand.
Speaker 3: For more on the tech side, we are joined by
Speaker 3: man Deep saying Bloomberg Intelligence in your tech industry analyst,
Speaker 3: and we first ask man Deep why Meta needs this
Speaker 3: deal with Constellation.
Speaker 5: If they're raising their capex, which they did it in
Speaker 5: their last earnings, that capex is going towards you know,
Speaker 5: getting more AI chips, and you know, if you are
Speaker 5: putting more AI chips, you need more power. So clearly
Speaker 5: that is where the shortage is right now. And look,
Speaker 5: if this is an AI supercycle that we all believe
Speaker 5: it is going to be the case, and I think
Speaker 5: you will see a power supercycle as well. And in
Speaker 5: this case, all the higher scalers will be looking to
Speaker 5: procure power for their data centers. I mean, Meta serves
Speaker 5: over three billion monthly active users across their family of apps. Now, granted,
Speaker 5: those users right now are using more CPU compute, but
Speaker 5: if you're rolling out AI tools and LLM searches, you
Speaker 5: need more power for the AI chips, and I think
Speaker 5: that's the intent here.
Speaker 6: And Mandy, let's be honest here.
Speaker 2: I mean, all you tech guys, you Silicon Valley guys,
Speaker 2: you always think you're the smartest guys in the room.
Speaker 6: But let's be honest.
Speaker 2: You guys don't know anything about the oil and gas
Speaker 2: business and the nuclear business. Why is Meta And I'm
Speaker 2: guessing some others are going to kind of get more
Speaker 2: deeply and strategically involved in the energy side of their business.
Speaker 6: Is this a trend here?
Speaker 5: Just look at how far they have come in terms
Speaker 5: of you know, infrastructure, like a company like Google. Not
Speaker 5: only are they designing their own data centers and you know,
Speaker 5: creating their own chips, and now they are you know,
Speaker 5: procuring power to the extent that they want to make
Speaker 5: sure that these AI chips, which can have volatile power needs,
Speaker 5: are most optimized when it comes to the efficiency of
Speaker 5: their infrastructure. And that's why these hyperscalar companies really have
Speaker 5: got so many different aspects to their mode. So it's
Speaker 5: not just about the search algorithm or in the case
Speaker 5: of Meta, you know, their social media knowledge graph. It
Speaker 5: is about the entirety of how they run their infrastructure,
Speaker 5: and that is what is a long term mode, because
Speaker 5: nobody else can operate at the scale at at which
Speaker 5: these hyperscalers are operating right now.
Speaker 3: This is a fun fact in the article Bible Rate
Speaker 3: from Bloomberg. So Meta first of all, has a global
Speaker 3: energy head.
Speaker 6: They have a global energy head. Okay, all right, so
Speaker 6: they do.
Speaker 3: They're really kind of ramping that out, and they were
Speaker 3: looking at proposals. They announced in December they were looking
Speaker 3: at proposals for as much as coore gigawatts of new
Speaker 3: US reactors, and it received fifty from a range of companies,
Speaker 3: including Constellation. To that point, I'm also wondering Mande the
Speaker 3: significance of when they're building data centers and hyperscalers for lllms,
Speaker 3: a large language model and that training versus when they
Speaker 3: have to build stuff for inference, which could be smaller
Speaker 3: and more co located, so closer to the cities, closer
Speaker 3: to our Paul and I have our phone. Does that
Speaker 3: tend to look different than in terms of their power needs.
Speaker 5: Absolutely, And I think so far the market was concentrated
Speaker 5: towards training. Every year you would have a ten times
Speaker 5: larger model, which was more intelligent and it could do
Speaker 5: more in terms of you know, answering your queries. But
Speaker 5: with inferencing your right. I mean, the traffic patterns may
Speaker 5: vary depending on the population, and so if you're serving
Speaker 5: traffic in New York, it's very different from serving traffic
Speaker 5: somewhere else that may not have the same concentration. And
Speaker 5: with that, I think the challenge these companies have had
Speaker 5: is the transfer lines can be upgraded. I mean you need,
Speaker 5: you know, a pretty lengthy review process and the whole
Speaker 5: thing may take years. So right now they are trying
Speaker 5: to procure power wherever they can to offset the increased consumption,
Speaker 5: and some of it may come at the expense of
Speaker 5: power usage for some other purpose. Then you know why
Speaker 5: data center is being prioritized here, and that is what
Speaker 5: will be interesting because with inferencing, the power needs can
Speaker 5: be variable. I mean, one trend we have seen is
Speaker 5: with reasoning, you need more compute, so you know, the
Speaker 5: model is thinking a lot more at the time you
Speaker 5: are putting the prompt in, as opposed to training, where
Speaker 5: all of the training is happening in background over a
Speaker 5: period of a few weeks. So reasoning is per query
Speaker 5: and depending on how complex your query is the model
Speaker 5: is doing more work and that's why it may need
Speaker 5: more power.
Speaker 2: Another data point from this new Bloomberg News article, Meta
Speaker 2: is contracting for more power after the company's total electricity
Speaker 2: consumption nearly tripled from twenty.
Speaker 6: Nineteen to twenty twenty three. So yeah, I guess they
Speaker 6: need some more energy man deposition in the.
Speaker 2: CAPEX numbers for Meta and for these other tech companies,
Speaker 2: or they need to take those CAPEX numbers up even
Speaker 2: more if they're going to get deeper into the energy space.
Speaker 5: I mean, all signs are the CAPEX numbers may continue
Speaker 5: to go up, but right now, the biggest component of
Speaker 5: the CAPEX is still the spend on the GPU chips. Obviously,
Speaker 5: the power needs will take some portion of the CAPEX,
Speaker 5: but it's still not as big as the chips. And
Speaker 5: think of it this way. If you're getting you know,
Speaker 5: twenty thousand Nvidia chips, the cost of keeping them idle
Speaker 5: or not being able to utilize them one hundred percent
Speaker 5: is way higher than anything you are spending in terms of,
Speaker 5: you know, the energy deal that they had. So clearly
Speaker 5: they are focusing on utilizing the chips that they have already,
Speaker 5: and that's why they are proactive with you know, these
Speaker 5: power deals.
Speaker 2: Our thanks to Man Deep Seeing Bloomberg Intelligence senior tech
Speaker 2: industry analyst.
Speaker 3: We recently focused on a Bloomberg Big Take story entitled
Speaker 3: A fatal Tesla crash shows the limits of full self Driving.
Speaker 3: You can find it on Bloomberg dot Com and the Terminal.
Speaker 2: The story looks at how federal regulators are investigating whether
Speaker 2: Tesla's robotaxi system is dangerous even with the human behind
Speaker 2: the wheel.
Speaker 3: From where we were joined by Craig Trudell, Bloomberg Global
Speaker 3: Autos Editor. We first asked Craig to walk us through
Speaker 3: the details of what the issues are with completely autonomous vehicles.
Speaker 7: I guess maybe the thing to start with is the
Speaker 7: Teslas that you can buy today that are on the
Speaker 7: road now are not that right. They are not autonomous.
Speaker 7: You can pay extra for a system called full self driving,
Speaker 7: and yet it's a miss snowmer. It's a system that
Speaker 7: you have to pay attention to at all times. You know,
Speaker 7: if you get into a crash, it is it is
Speaker 7: on you. And we've seen that, you know, play out
Speaker 7: when Tesla customers have you know, tried to come after
Speaker 7: the company. The company says, look, you know, we we
Speaker 7: warned you. We told you that you know, you're you're
Speaker 7: responsible for driving while using this system. The company is
Speaker 7: trying to make this leap, that's been trying to make
Speaker 7: the sleep for years, to eventually get to a point
Speaker 7: where you do not have to to supervise and you know,
Speaker 7: even to take it further than that, you know, take
Speaker 7: the human out from behind the wheel altogether. And we
Speaker 7: hear Musk, you know, talk about that quite a bit
Speaker 7: lately because it's something that they're actually trying to commercialize,
Speaker 7: even just in the next matter of you know, next
Speaker 7: week or so. There's a lot of questions about how
Speaker 7: exactly they intend to do that, whether they can do it,
Speaker 7: especially after he's predicted, you know, year after year that
Speaker 7: they're on the cusp of doing it. And part of
Speaker 7: the reason there are doubts is is because of the hardware.
Speaker 7: And I think that's kind of an important aspect of
Speaker 7: today's story is is this particular crash involves, you know,
Speaker 7: an incident where a driver was using full self driving
Speaker 7: driving into the sun, and that appeared to play a
Speaker 7: part in the crash, which resulted in a fatality, and
Speaker 7: it led to a federal investigation that is ongoing.
Speaker 3: I mean, this is all very much feels as part
Speaker 3: of the growing pains as we kind of understand this
Speaker 3: technology and how it works itself out. So what are
Speaker 3: the steps that Tesla's taking and that the regulators are
Speaker 3: taking at this time.
Speaker 7: Yeah, so you know, we should acknowledge that this incident
Speaker 7: happened in November twenty twenty three. You know, Tesla has
Speaker 7: has changed. They've they've made upgrades both to hardware and software.
Speaker 7: You know, hardware for certain customers, they should say, but
Speaker 7: you know, in terms of their approach to the sensor
Speaker 7: system for their vehicles, Elon Musk has been you know,
Speaker 7: really sort of out on a limb and having this
Speaker 7: you that all you need is cameras and company companies
Speaker 7: that are also in this space. I think the one
Speaker 7: people recognize the most is Weimo, the Google company, and
Speaker 7: they use a mix of camera, radar and wide R
Speaker 7: and their sensor set is much more expensive. It's more extensive.
Speaker 7: You know, these sensors are placed all over the vehicle.
Speaker 7: But you know, the sort of bet here on the
Speaker 7: part of Weimo is that is worth it. It will
Speaker 7: mean this system is safer. What Musk has tried to
Speaker 7: do is go with the cheaper route, go with the
Speaker 7: you know system that he can afford to put in
Speaker 7: every Tesla, and make this bet that you know, he
Speaker 7: can develop his way to autonomy faster by sort of
Speaker 7: leveraging the broader Tesla fleet, even if it means putting
Speaker 7: you know, cars on the road that you know, draw
Speaker 7: scrutiny from federal regulators as to whether or not that
Speaker 7: this is you know, unreasonably unsafe.
Speaker 2: So, Craig, I think Elon Musk is back at the company.
Speaker 6: What does that mean?
Speaker 2: I mean, are you hearing anything like, Okay, now we
Speaker 2: can get back on track.
Speaker 6: Now we can really move forward, maybe at you know,
Speaker 6: higher velocity. What's that mean?
Speaker 7: Yeah? I'm you know, I think it's difficult to tell
Speaker 7: at this point because he's kind of coming back to
Speaker 7: business means coming back to so many businesses, right, and
Speaker 7: so on a day to day yeah, we're you know,
Speaker 7: we're seeing him travel to to his various companies, you know,
Speaker 7: devoting some time and attention to to them. But it's
Speaker 7: not as though he's sort of one hundred percent, uh,
Speaker 7: you know, focusing in on Tesla and neglecting all of
Speaker 7: his other businesses. We see him, you know, regularly engaging
Speaker 7: with you know, users on x about you know, troubleshooting
Speaker 7: problems that they have with that service. You know, I
Speaker 7: would say he is you know, more actively engaging there
Speaker 7: on on teslas and definitely is trying to sort of
Speaker 7: send this signal that you know, okay, it's it's time
Speaker 7: to get back to business here. But whether or not
Speaker 7: that's you know, resulting in sort of tangible changes at
Speaker 7: the company, I think remains.
Speaker 8: To be seen.
Speaker 3: What's the rush for autonomous driving?
Speaker 7: You know, I think forty thousand people die on US
Speaker 7: roads every year, right, and so the rush of course
Speaker 7: is to bend that, you know, to to change that.
Speaker 7: And I think one of the challenges that you have
Speaker 7: if you're a company in this space is we've now
Speaker 7: you know, seen a lot of companies pursue this for
Speaker 7: you know, roughly a decade. That number has not budged.
Speaker 7: So you know, we still have a long way to
Speaker 7: go to where this capability is you know, making putting
Speaker 7: a dent in those figures.
Speaker 9: All right.
Speaker 3: Thanks to Craig Drudell, Bloomberg Global Autos editor coming up
Speaker 3: a conversation with the CEO of Tay Technologies and the
Speaker 3: company's approach to commercial fusion power.
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, but riding
Speaker 2: in depth research and data on two thousand companies in
Speaker 2: one hundred and thirty industries. You can access Bloomberg Intelligence
Speaker 2: via b I go on the terminal.
Speaker 3: I'm Paul Sweeney, an amalk Steel, and this is Bloomberg.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 3: We move next to the telecommunication space.
Speaker 2: The cable provider Comcast recently opened its newest theme park
Speaker 2: in Florida, called Universal Epic Universe. The goal is to
Speaker 2: keep guests staying longer and spending more in the competitive
Speaker 2: Orlando market.
Speaker 3: And according to research from Bloomberg Intelligence, Comcast theme parks
Speaker 3: are poised to become of its most valuable assets, with
Speaker 3: revenue and IBADASA to jump around forty percent from twenty
Speaker 3: twenty four to twenty twenty six.
Speaker 2: For more on what this means, guest host John Tucker
Speaker 2: and I were joined by Githa Rong Andathan Bloomberg, intelligence
Speaker 2: US media analyst, who first asked Githa to talk about
Speaker 2: Universal's new park.
Speaker 8: May twenty second was the grand opening of Epic Universe
Speaker 8: in Florida. This is the first big park that has
Speaker 8: opened in Florida in twenty five years, and it was
Speaker 8: the biggest investment by Comcast in a theme park. They
Speaker 8: spent over seven billion dollars on just this park. So,
Speaker 8: as you said, huge investments by Comcast in their theme
Speaker 8: park business. This is really an area of growth for them,
Speaker 8: especially now that their broadband business is struggling actually quite
Speaker 8: a bit.
Speaker 10: So what is this likely to do for their earnings?
Speaker 8: So, you know, you kind of think about Comcast and
Speaker 8: you think about Disney. For Comcast, so let me start
Speaker 8: with Disney. So for Disney, parks is actually sixty percent
Speaker 8: of their profits. For Comcasts, it's really maybe less than
Speaker 8: six percent. So again for Comcasts, you know, eighty percent
Speaker 8: of their of their money, of their profits still comes
Speaker 8: from the cable business. But really, as we kind of
Speaker 8: think about what their strategy is here and you look
Speaker 8: at all of their portfolio of assets, I mean, we're
Speaker 8: really excited about the theme park business because growth is great,
Speaker 8: returns on investment are great, and this is really a
Speaker 8: fantastic way for comcasts, just like what Disney has done
Speaker 8: with kind of deepening all of those relationships with those
Speaker 8: universal characters. You think of all the ip that they
Speaker 8: have with Minions, with Jurassic Park, now with Wicked, you know,
Speaker 8: and some of the other franchises that they have with
Speaker 8: Harry Potter. You know, this is just such a great
Speaker 8: way to build on that fan engagement.
Speaker 2: How much can the theme park business, how much do
Speaker 2: you think that could be worth for comcasts? Because again
Speaker 2: you mentioned that some of their core businesses, like the
Speaker 2: video business, the tridtional cable business, even the broadband business,
Speaker 2: they're facing some headwinds here. Theme parks are going to
Speaker 2: become more and more important important for investors I think
Speaker 2: going forward. So what do you think the valuation could.
Speaker 8: Be absolutely, Paul, So that's a really really important point
Speaker 8: that you bring up. So you think of the cable business,
Speaker 8: which is really their mainstay. Cable valuations have actually dropped
Speaker 8: pretty significantly over the past few years. We've gone from
Speaker 8: about ten x to around six and a half to
Speaker 8: seven times EBITDA multiple you think about the park business though,
Speaker 8: it's actually quite the opposite. You know, most of the
Speaker 8: some of the pure play pure play park operators are
Speaker 8: treating it about you know, twelve to fourteen times IBADA.
Speaker 8: So again this is an area of growth. You know,
Speaker 8: experiential businesses are seeing this huge upswing. And so we
Speaker 8: think that just based on about five billion in ibitdah,
Speaker 8: which we think Comcasts can get to in a few
Speaker 8: years time, that business could be easily worth you know,
Speaker 8: forty five fifty billion dollars or upwards of that.
Speaker 10: So my takeaway is there are Disney wanna be at
Speaker 10: this point. I got to wonder if like they're going
Speaker 10: to start poaching Disney executives too.
Speaker 8: That's very possible. I mean, right now, there's still a
Speaker 8: pretty small player John when you compare them to Disney.
Speaker 8: So you just kind of think about Disney in terms
Speaker 8: of theme park visitations. We are looking at about one
Speaker 8: hundred and fifty million global visitors to Disney parks every year.
Speaker 8: Compare that to Universal or Comcast sparks it's about sixty million,
Speaker 8: So still much smaller than Disney. But what they're doing
Speaker 8: now is a lot of expansion. So we had this
Speaker 8: new park, Epic Universe, which opened just last week. They're
Speaker 8: actually opening a new park in London in a few
Speaker 8: years time. They're expanding with new properties in Las Vegas
Speaker 8: in Texas. So basically, when you put all of that together,
Speaker 8: we're thinking that they are basically going to expand visitation
Speaker 8: from about sixty million to by fifty percent to about
Speaker 8: you know, eighty to ninety million. So they're really kind
Speaker 8: of closing in on that gap with Disney stepping back.
Speaker 2: The Comcast stock story, I mean, how do people view
Speaker 2: it here, because again, cable TV business just in secular decline.
Speaker 2: The broadband business, which had saved it for a good
Speaker 2: decade or so, that seems to be stalling because a
Speaker 2: competition and the cable networks, I don't know what they're
Speaker 2: doing with them. What do investors think about Comcast.
Speaker 8: Yeah, it's really a tough story right now, Paul, as
Speaker 8: you rightly point out, I mean, broadband is again majority
Speaker 8: of this business is really tough to how broadband does.
Speaker 8: So you know, any stock movements are directly correlated to
Speaker 8: the health of the broadband business, which actually is in
Speaker 8: a very very tough spot right now. So this is
Speaker 8: a business that was gaining about one to two million
Speaker 8: subscribers every year. They are still one of the largest
Speaker 8: broadband providers at about thirty million subscribers in the US,
Speaker 8: but they are going to lose close to about a
Speaker 8: million subscribers this year. As you know, the telecoms kind
Speaker 8: of really intensified competition. So it's really a tough story
Speaker 8: right now. The one thing that we are kind of
Speaker 8: looking at in terms of a positive catalyst is the
Speaker 8: spin off of the cable networks. So this is something
Speaker 8: that they announced last year. It probably happens a little
Speaker 8: bit later this year. They're calling it Versut. What's going
Speaker 8: to be interesting is not just the spin but what
Speaker 8: happens after the spin. So will Comcast really look to
Speaker 8: become kind of this consolidator of media assets and that would,
Speaker 8: I think be a little bit of an interesting story
Speaker 8: in media. But unless they can really revive growth in
Speaker 8: their broadband business, I think it's going to be a
Speaker 8: little bit of a tough sell.
Speaker 10: What's Disney's response to Universal to Comcast?
Speaker 8: So Disney a huge response in terms of what they
Speaker 8: have planned over the next few years. John, So they
Speaker 8: are really kind of doubling down on their parks business. Again,
Speaker 8: this is really the bread and butter for Disney. Sixty
Speaker 8: percent of their profit comes from the parks business. So
Speaker 8: they have about a sixty billion investment planned for parks
Speaker 8: over the next you know, seven to eight years. And
Speaker 8: it's not just the theme park experience, it's you know,
Speaker 8: they're having parks on water, what they call parks on water,
Speaker 8: which are the cruises, and that's a huge investment for them.
Speaker 8: You know, we think that that business basically doubles triples
Speaker 8: revenue as they keep on adding these new cruise ships,
Speaker 8: you know, to their fleet. So are they are doubling
Speaker 8: down on parks as well?
Speaker 5: All right?
Speaker 3: Thanks together, mang An Athen Bloomberg, Intelligence analyst on US Media.
Speaker 2: We've moved next to the energy space this week.
Speaker 3: We looked at a company called Tay Technologies. Tay develops
Speaker 3: commercial fusion power with the cleanest environment profile.
Speaker 2: The company also recently raised more than one hundred and
Speaker 2: fifty million dollars in its latest funding round, exceeding the
Speaker 2: company's initial target for the round.
Speaker 3: For more and what the company is doing, host Paul
Speaker 3: John Tucker and I were joined by Michael Binderbauer, CEO
Speaker 3: of Tay technologies. We began the conversation by asking Michael
Speaker 3: to break down exactly what fusion power is.
Speaker 9: So it's basically what nature does, based right, It keeps
Speaker 9: us our life and energy here on the planet from
Speaker 9: the Sun son any star you look up suffusion reactor
Speaker 9: basically right. So what we're trying to do is to
Speaker 9: replicate that terristrially to make essentially copious power, carbon free,
Speaker 9: clean and sustainable for the future of humanity.
Speaker 2: Where are you in the process at tay So.
Speaker 9: We're very close. We're just one machine a way to
Speaker 9: get to a point where we actually harvest more energy
Speaker 9: than what we're putting into the facility. This has been
Speaker 9: obviously a long journey. It's hard to do terristrially. The
Speaker 9: stars have a lot of gravity. We don't have that.
Speaker 9: We have to use other means, magnets and all sorts
Speaker 9: of things, and as you've probably seen over the last
Speaker 9: few years, has been a playthrow of news inching really
Speaker 9: really close to the goal line across multiple efforts on
Speaker 9: the planet. So we're about a three year way to
Speaker 9: get tonate energy and somewhere early twenty thirties we hopefully
Speaker 9: have a power plant online.
Speaker 3: What would be if you're able to achieve it and
Speaker 3: have a power plant, Like, what is that? Is that
Speaker 3: just tremendous amount of energy with like no footprint.
Speaker 9: Yeah, it's very small footprint. So it's the highest energy
Speaker 9: density fuel you can have, by the factor of five
Speaker 9: to ten, higher than fission. Even it utilizes hydrogen or
Speaker 9: light species that are ubiquitous. So there's infinite fuel supply
Speaker 9: if you will, and you would harvest clean energy out
Speaker 9: of that at probably starting in a scale of a
Speaker 9: gas fired turbine, so something like four or five hundred
Speaker 9: makawatts per plant, and it would literally be able to
Speaker 9: distribute wherever you needed it in the grid.
Speaker 11: Is there?
Speaker 2: Can you talk about the economics surrounding this technology? Gee,
Speaker 2: who would be the who would be the users, the buyers,
Speaker 2: the developers of this technology?
Speaker 9: Yeah, so I think what we're seeing and this gets
Speaker 9: to what we just announced, you know, raising capital. We
Speaker 9: really have a long partnership with Google and they've been
Speaker 9: deep with us on machine learning and tools to help
Speaker 9: make this more efficient and more economic, and in fact,
Speaker 9: they would be a great first off taker for that, right,
Speaker 9: all the hyperscalers, everybody that has high energy, intense applications
Speaker 9: growing at tremendous rates right with a gap between supply
Speaker 9: and demand. Developing is looking for electrons and particularly green electrons.
Speaker 9: So those would be probably the first off takers for
Speaker 9: the technology.
Speaker 10: Oh, I got to ask, what sets you with John Tucker?
Speaker 3: He likes his fusion?
Speaker 10: What sets you apart from ETR in terms of the
Speaker 10: reactor itself, the containment that's act fusion reactor or what?
Speaker 9: Yeah, so good question. So Eater and others are working
Speaker 9: on tokamacs, we actually are not. We're working what you
Speaker 9: see if you have a visual and even have a
Speaker 9: compact machine not the size of gas turbine that can
Speaker 9: make about the same output as those other plants. It's
Speaker 9: much more efficient to uses smaller magnets. There's various tricks
Speaker 9: in the physics that allow you to do that, and
Speaker 9: that brings something that's more compact, cheaper to produce, of course,
Speaker 9: more economic to deploy, easier to maintain, etc. And you
Speaker 9: can essentially centralize these. We think we can build those
Speaker 9: sort of cookie cutter in the factory and deploy on site.
Speaker 9: And the other thing I should add is that sighting
Speaker 9: on this compared to the other nuclear cousin which is fission. Right,
Speaker 9: It is a lot easier. There's no meltdown possibility, there's
Speaker 9: no sort of nuclear accident of substance that people would
Speaker 9: have to worry about. It's truly clean and benign, and
Speaker 9: so you can deploy it where you need it in
Speaker 9: a much more straightforward way.
Speaker 10: And there's no use of beryllium in that reactor, no, No.
Speaker 9: In fact, ours is using hydrogen and boron, both of
Speaker 9: which are light and super ubiquitous.
Speaker 10: Well deterium as the fuel, right.
Speaker 9: So tritium is one fuel cycle that's used by some
Speaker 9: of us in the fusion community, and we can burn
Speaker 9: that too, but we're really focused on hydrogen and boron. Ultimately,
Speaker 9: that turns out that only makes helium, so you have
Speaker 9: no neutrons, you have no radioactivity to speak of. It's
Speaker 9: just a nirvana of energy. Essentially.
Speaker 2: You get ubiguous.
Speaker 9: Fuel in no radioactivity or pollution in the process, totally sustainable,
Speaker 9: and we think it will be competitive from a cost perspective.
Speaker 9: It will be probably starting out midfield in current generation
Speaker 9: asset costs, so you're not as cheap as you know,
Speaker 9: gas or renewables, but you're not as expensive as fision
Speaker 9: is today. Is somewhere in the midfield and then trending down.
Speaker 3: Okay, let's pretend that neither of us understood what any
Speaker 3: of you guys were talking about in terms of brilliant.
Speaker 3: That's why we have him right. He knows a lot
Speaker 3: about a lot of different things. Before we let you go,
Speaker 3: just how hard is it to have gotten to where
Speaker 3: you are?
Speaker 2: Like?
Speaker 3: What has been like the biggest hurdle?
Speaker 4: Oh gosh, it's been an enormous journey. I mean, I
Speaker 4: have aged.
Speaker 9: I started this out at graduate school with my really
Speaker 9: in PhD mantour and then it took us about twenty
Speaker 9: plus years to amalgamate the technology around it. There's a
Speaker 9: lot of esoteric, absolutely extreme things. You've got a master
Speaker 9: power supplies, accelerator technology, diagnostics, feedback loops, you know, use
Speaker 9: a lot of machine learning and AI, a lot of
Speaker 9: that we developed together with Google in the last decade
Speaker 9: that can react on the blink of an eye to
Speaker 9: make changes in what happens inside and do that reliably
Speaker 9: and consistently. And so those are all the technologies we
Speaker 9: now have. So now we're putting in the last machine.
Speaker 4: So it's been a.
Speaker 9: Long journey and developing lots of technology to do that.
Speaker 2: Thanks to Michael Binderbauer, CEO Take Technologies.
Speaker 3: Coming up in the program, we're going to look at
Speaker 3: oil and gas companies and how they're investing in low
Speaker 3: carbon technologies.
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, Umpaul.
Speaker 3: Sweeney, an amlex deal, 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 Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 3: Each week we look at research from Bloomberg and EF
Speaker 3: previously known as New Energy Finance.
Speaker 2: They're the team at Bloomberg that tracks and analyzes the
Speaker 2: energy transition from commodities to power, transport, industries, buildings, and
Speaker 2: agricultural sectors.
Speaker 3: This week we looked at oil and gas companies and
Speaker 3: how they're investing in low carbon technologies.
Speaker 2: For more, we were joined by David Dhugherty, BNEF, head
Speaker 2: of Natural Resources Research.
Speaker 3: We first asked David what US oil companies are thinking
Speaker 3: with regards to investing in fossil fuels and more green
Speaker 3: friendly technologies.
Speaker 4: Yeah, economically friendly is a great choice of word versus
Speaker 4: environmentally friendly. Two separate things sometimes, and the story's very
Speaker 4: different if you're looking at a US major versus a
Speaker 4: European major, and even the technology they'll invest in. In general,
Speaker 4: the group of big oil companies talk about investing about
Speaker 4: seven eight percent in low carbon technologies things like wind, solar,
Speaker 4: carbon capture, renewable fuels. Yeah, and it's plateaued around there
Speaker 4: for the last two three years.
Speaker 3: Yeah, it's something I mean like that. But what we
Speaker 3: learn is that the Trump administration is taking back some
Speaker 3: of the loans and the money that a lot of
Speaker 3: these oil companies are using for some of those projects.
Speaker 3: Xon in particular, they have a project in Texas it's
Speaker 3: going to use hydrogen, and that funding is poof gone.
Speaker 4: Yeah, right, so now what happens? Now? What happens? I mean,
Speaker 4: you know, a tax BIK would be great for somebody
Speaker 4: like an Xcell. They could probably go ahead without it. Arguably,
Speaker 4: the pro oil Trump administration isn't necessarily ticking the boxes
Speaker 4: for the oil companies to the moment, we're seeing these
Speaker 4: tax breaks, we're seeing really low prices, not necessarily all
Speaker 4: down to policy. It's worth highlighting, but not not beautiful.
Speaker 4: If if you're a US oil company, for example, or
Speaker 4: with exposure to US production, particularly on shore shale for example,
Speaker 4: it's not a great time for them. It's not the
Speaker 4: worst time, but it's not a great time.
Speaker 11: Are the European energy companies or are just outside of the
Speaker 11: US energy companies, Are they stepping up and trying to
Speaker 11: fill that void for some more environmental friendly technology because.
Speaker 3: They got so punished.
Speaker 4: For that just like a yep, they made some decisions.
Speaker 4: Maybe I'm not sure they would make again. That said,
Speaker 4: some of the biggest players are still at the European
Speaker 4: with equinor for example, last year wind Solar made a
Speaker 4: comeback that's really interesting. They've got really per cassular stories,
Speaker 4: much lower returns, center of traditionals. So you're definitely seeing
Speaker 4: a split between the US and the European majors for sure,
Speaker 4: But the environment's completely changing for all of them.
Speaker 3: So I hear your point, particularly in the US, like
Speaker 3: then Exon, they can probably still push ahead in Texas
Speaker 3: even without the loan. They might not like it, but
Speaker 3: they can manage it. But a lot of these companies can't.
Speaker 3: So what happens to the projects that are already underway
Speaker 3: to deal with you know, carbon capture, director capture, decarbonization.
Speaker 4: They go looking for more money or they stop.
Speaker 3: Is the money there ex government?
Speaker 4: I think so? I think so, Like this jitter is
Speaker 4: for sure, right, this is a four year window. And
Speaker 4: is it a four year window or is it an
Speaker 4: eight year window? Nobody knows. Nobody's going to bet on
Speaker 4: that or guess, but you know, for the right anything
Speaker 4: will happen for the right price. I guess the is
Speaker 4: the the bottom line. But it's a huge question mark
Speaker 4: for us in the in the next four years for sure.
Speaker 2: But if we have oil down here in the low
Speaker 2: sixties for an extended period of time, what are the
Speaker 2: oil companies? I mean, do they have capital to invest
Speaker 2: back into fossil fuels or do they just give it
Speaker 2: back to shareholder?
Speaker 4: It's a mix. If you look at like the players
Speaker 4: that don't have let's say a family presence, right, you
Speaker 4: know your mom knows, I know, Chevron, Exxon. If you
Speaker 4: think of an EOG or any of those companies that
Speaker 4: don't have less necessarily a like a household name, they've
Speaker 4: got a very different way of operating. At around sixty dollars,
Speaker 4: you're getting into territory where it's going to start to
Speaker 4: hurt a lot of the US shale players. Fifty five
Speaker 4: is where you'll see bock and start to fall out
Speaker 4: of profitability. That will go down, and you're about twelve
Speaker 4: dollars below that for a break even for some something
Speaker 4: in the permium. So there's still space to play. But
Speaker 4: you know, the guidance we're seeing for CAPEX quarter on
Speaker 4: quarter is down about three four percent, whereas production is
Speaker 4: down marginally like one percent. So the impact of the
Speaker 4: actual production will happen a lot later than the CAPEC story.
Speaker 4: But they're starting to, you know, tighten their belt a
Speaker 4: bit when it comes to spend, and we'll see that
Speaker 4: in barrel terms later like more delayed. You will see
Speaker 4: it come through. You're not seeing it yet.
Speaker 3: I also have to wonder too, what winds up happening
Speaker 3: with say offshore projects, so onshore is much more reactive,
Speaker 3: but say Gulf of Mexico, a lot of production is
Speaker 3: going to come online that investment decision was made years ago,
Speaker 3: so you can do nothing about it. But then if
Speaker 3: you're making decisions today with this oil price, looking at
Speaker 3: the curve for twenty twenty seven, twenty eight, that's when
Speaker 3: you get some question marks.
Speaker 4: One hundred percent. Yeah, and that plus like all this
Speaker 4: actual barrel's coming off from OPEC new projects in Guyana
Speaker 4: for example, coming on line and ramping up short term
Speaker 4: looks like pain. Longer term, this investment still needed. Otherwise
Speaker 4: you get into territory of price spikes or causing short supply.
Speaker 4: So it's a really delicate balance for the moment.
Speaker 2: So if I were to go to the oil patch
Speaker 2: down there in Texas, would they be happy today or
Speaker 2: not so much?
Speaker 4: Yeah, it's been worse, and I think we have a
Speaker 4: habit of saying crazy times, crazy times. It's not really
Speaker 4: that crazy at the moment. Sixty dollars if you think
Speaker 4: about it, we had fifty five flat for about what
Speaker 4: two years, just two three years ago, and Texas was booming.
Speaker 4: When you're in Houston, it's flying right. So we're not
Speaker 4: in the territory of fear just yet. And no one
Speaker 4: makes for great headline, but data wise, we're still a
Speaker 4: bit away from the pain, and ushal always surprises to
Speaker 4: the upside when it comes to efficiencies and when it
Speaker 4: comes to how resilient it is.
Speaker 3: Right, and then to your point, the production is only
Speaker 3: down fractionally whereas capex is down more speaks to that point.
Speaker 3: But I feel like the difference this time is that
Speaker 3: oil companies went into this administration super pumped. I mean
Speaker 3: super pumped is actually an understatement.
Speaker 4: Pumped is a great choice, yeah, exactly.
Speaker 3: But then the reality has been so much different. It
Speaker 3: feels like that's the differentiation versus underlying oil price and
Speaker 3: a little confusion. I mean, what was a billion dollars
Speaker 3: the oil industry gave to or the energy industry gave
Speaker 3: to President Trump? And then they're like wait what, So
Speaker 3: it feels like that's a little bit different. There is
Speaker 3: there one form of low capture, a low carbon investment that's.
Speaker 4: Just toast ooh. Green hydrogen csis book cards to justify
Speaker 4: without some form of a tax break, and the knock
Speaker 4: on impact for that's pretty pretty significant if you think
Speaker 4: of it, and things of like e fiels or synthetic fuels,
Speaker 4: all of that is needed to make those things down
Speaker 4: the line. So those two kind of toast the other
Speaker 4: ones wind Solar there could have stune in their ground
Speaker 4: a bit.
Speaker 2: More thanks to David dharerty bn EF, head of Natural
Speaker 2: Resources Research.
Speaker 3: We move next to some news from the financial sector.
Speaker 2: This week, Wells Fargo CEO Charlie Sharp cleared the Federal
Speaker 2: Reserve seven year old cap on assets, allowing the bank
Speaker 2: to grow and compete larger rivals.
Speaker 9: For more.
Speaker 3: In this we were joined by Hannah Levet Bloomberg, senior
Speaker 3: finance reporter.
Speaker 2: First asked, Hannah, how Wells Fargo is now positioned for
Speaker 2: its next stage of growth.
Speaker 12: Yeah, so this has truly been such a long saga
Speaker 12: for them. Like I started covering Wells Fargo more than
Speaker 12: seven years ago, they had just gotten put under this cap.
Speaker 12: At the time, I was still enjoying my mid twenties,
Speaker 12: and you know, now we are no longer there. For
Speaker 12: Charlie Sharf, this means that he can finally play offense.
Speaker 12: He can you know, they're not capped in size to
Speaker 12: their level at the end of twenty seventeen anymore. And
Speaker 12: remember that's been a huge deal for them along the way.
Speaker 12: I mean, some of the businesses that he's marked for
Speaker 12: growth like the trading business most notably that's been constrained
Speaker 12: because it's more balance sheet heavy and they haven't been
Speaker 12: able to allocate that balance sheet because they're restricted. And
Speaker 12: like just for context, JP Morgan, the biggest US bank,
Speaker 12: has grown almost an entire Wells Fargo in terms of
Speaker 12: assets in the time that Wells has been capped.
Speaker 6: Wow, all right, Hanna, I you know a full discorder.
Speaker 2: I have my account with Wells Fargo, but I'm guessing
Speaker 2: the CEO and the management team there they want.
Speaker 6: To do something more than that. They think they can
Speaker 6: do a little bit bigger and better than Paul's and
Speaker 6: needs checking account.
Speaker 2: So what are some of the the businesses you mentioned trading?
Speaker 2: Are there other editors where they think they can really
Speaker 2: grow by allocating more capital there?
Speaker 12: Yeah, absolutely, so the businesses that Charlie Sharff marked for growth,
Speaker 12: you know in this time while he was running the firm,
Speaker 12: but it was still under the cap where investment banking
Speaker 12: and trading and wealth management and credit card. But virtually
Speaker 12: every business aside from mortgage, which they've said they're shrinking.
Speaker 12: And remember Wells Farga used to be huge and mortgage
Speaker 12: at one point they were churning out one in every
Speaker 12: three home loans in the country. Every business other than
Speaker 12: that should grow now, and they have room to do that.
Speaker 12: But I think those businesses where they've already said that
Speaker 12: they're targeting growth, that may be where the earliest moves are.
Speaker 12: You know, we've reported that they're working on a high
Speaker 12: end credit card, so that could be something that people see.
Speaker 12: But yeah, so it really just it goes across all
Speaker 12: of those and beyond now because they don't have this
Speaker 12: constraint anymore, so.
Speaker 3: How quickly can they scale in the other parts of
Speaker 3: their business.
Speaker 12: Yeah, well, it's an interesting question, right because we've seen,
Speaker 12: you know, the tales of banks trying to grow too
Speaker 12: fast and then having you know, a calamitous blow up,
Speaker 12: and so that's something that they definitely want to avoid.
Speaker 12: And Charlie Sharff has talked about that that it's not
Speaker 12: like an on switch day one, but it does give
Speaker 12: them more flexibility so they can you know, the most
Speaker 12: immediate thing is the trading business where they just have capacity,
Speaker 12: but besides that, it's more being able to lean into
Speaker 12: more enthusiastically those growth initiatives that they've already kind of outlined, right.
Speaker 6: So Hannah.
Speaker 2: They now have them regulatory capability to maybe do more,
Speaker 2: to maybe grow a little bit more quickly.
Speaker 6: Did they have the balance sheet to do that? Did
Speaker 6: they have the capital to do that?
Speaker 12: Yeah, they have a ton of excess capital, and that's
Speaker 12: been a theme throughout. I mean even in the earliest
Speaker 12: days of the asset cap like, they couldn't deployed that capital,
Speaker 12: so they gave investors a bigger dividend and more buybacks
Speaker 12: than they were expecting. It was sort of like a
Speaker 12: you wouldn't think that would be the outcome, but it
Speaker 12: was at the time. So they've had excess capital. And
Speaker 12: also because the banks in general were preparing for the
Speaker 12: possibility of tougher capital rules that have not panned out,
Speaker 12: so they were a lot of them been hoarding capital anyway,
Speaker 12: sitting on a bunch of.
Speaker 3: Extra Well, we're seeing in Wall Street it's definitely a
Speaker 3: competition for talent, particularly if you wrap in hedge funds
Speaker 3: as well as huge asset managers are private equity. Can
Speaker 3: Weill's Hargo play in that game.
Speaker 12: Yeah, they already have been. I mean they hired Fernando Rivas,
Speaker 12: who is the head of the Corporate Investment Bank there.
Speaker 12: He was a major hire from JP Morgan, so that
Speaker 12: that was huge for them, and you know they've made
Speaker 12: other hires over the years. Doug Bronstein is there, another
Speaker 12: former JPM executive and he's vice chair. They have very
Speaker 12: summers running wealth, so they have you know, they've been
Speaker 12: able to get talent at the highest level and then
Speaker 12: you know even further down as well.
Speaker 3: All Right, Thanks to Hannah Lovit, Bloomberg Senior Finance Reporter.
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