1 00:00:00,280 --> 00:00:11,480 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Intelligence 2 00:00:11,600 --> 00:00:13,720 Speaker 1: with Alex Steel and Paul Sweeney. 3 00:00:13,800 --> 00:00:17,040 Speaker 2: The real ap performance has been the US corporate high yield. 4 00:00:17,200 --> 00:00:19,520 Speaker 3: Are the companies lean enough? Have they trimmed all the facts? 5 00:00:19,600 --> 00:00:23,239 Speaker 2: The semiconductor business is a really cyclical business. 6 00:00:22,880 --> 00:00:26,599 Speaker 1: Breaking market headlines and corporate news from across the globe. 7 00:00:26,640 --> 00:00:29,080 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:29,280 --> 00:00:32,240 Speaker 2: These are two big time blue chip companies. 9 00:00:32,520 --> 00:00:36,240 Speaker 3: Window between the peak and cunt changing super fast. 10 00:00:36,120 --> 00:00:41,200 Speaker 1: Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio. 11 00:00:42,520 --> 00:00:44,879 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 12 00:00:44,880 --> 00:00:47,200 Speaker 2: business stories impacting Wall Street and the global markets. 13 00:00:47,280 --> 00:00:49,240 Speaker 3: Each and every week we provide in depth research and 14 00:00:49,320 --> 00:00:51,080 Speaker 3: data on some of the two thousand companies and one 15 00:00:51,120 --> 00:00:53,760 Speaker 3: hundred and thirty industries our analysts cover worldwide. 16 00:00:53,800 --> 00:00:56,000 Speaker 2: Today, we'll look at a new joint venture to fund 17 00:00:56,040 --> 00:00:58,360 Speaker 2: artificial intelligence infrastructure in the US. 18 00:00:58,600 --> 00:01:01,040 Speaker 3: Plus we'll discuss how the energy say will be impacted 19 00:01:01,120 --> 00:01:02,760 Speaker 3: under the new Donald Trump administration. 20 00:01:02,960 --> 00:01:04,880 Speaker 2: But first we begin with a streaming space. 21 00:01:05,120 --> 00:01:07,840 Speaker 3: Netflix shares swored to a record high this week after 22 00:01:07,920 --> 00:01:11,360 Speaker 3: streaming Giant reported its biggest quarterly subscriber gain in history. 23 00:01:11,640 --> 00:01:13,880 Speaker 2: For more, we were joined by Keitha Rong Andathen Bloomberg, 24 00:01:13,880 --> 00:01:15,639 Speaker 2: intelligence analyst on US Media. 25 00:01:15,880 --> 00:01:18,920 Speaker 3: We first asked Etha what stood out most in Netflix's earnings? 26 00:01:19,319 --> 00:01:22,319 Speaker 4: Everything, Alex So, I mean, you know, it was not 27 00:01:22,480 --> 00:01:23,760 Speaker 4: just I mean, we knew they were going to have 28 00:01:23,760 --> 00:01:27,520 Speaker 4: a strong quarter, It was just the magnitude of outperformance, 29 00:01:27,600 --> 00:01:30,080 Speaker 4: which was simply stunning. I mean, they added forty one 30 00:01:30,120 --> 00:01:33,560 Speaker 4: million subscribers throughout the year. Just for some context, that's 31 00:01:33,560 --> 00:01:36,240 Speaker 4: more than the total number of subscribers that some of 32 00:01:36,240 --> 00:01:38,520 Speaker 4: the streaming services even have out their peak for instance, 33 00:01:38,520 --> 00:01:41,640 Speaker 4: has less than forty million subscribers. So, I mean, just 34 00:01:41,680 --> 00:01:45,160 Speaker 4: the scale of the business is absolutely astounding. And it's 35 00:01:45,200 --> 00:01:49,920 Speaker 4: that scale which is now on display in every possible area, right, 36 00:01:50,000 --> 00:01:53,320 Speaker 4: whether it's revenue growth, whether it's you know, content cost 37 00:01:53,400 --> 00:01:55,640 Speaker 4: growth and you know cost per subscriber, which is going 38 00:01:55,640 --> 00:01:58,120 Speaker 4: to be significantly less than you know, the revenue growth 39 00:01:58,120 --> 00:02:01,960 Speaker 4: per subscriber. All of that is just you know, execution 40 00:02:02,160 --> 00:02:03,400 Speaker 4: at the highest level. 41 00:02:03,800 --> 00:02:06,000 Speaker 2: So, Keitha, this kind of raises the question to me, 42 00:02:06,120 --> 00:02:08,360 Speaker 2: yet again, how do you think this industry is going 43 00:02:08,440 --> 00:02:11,880 Speaker 2: to shake out? It just seems like there's Netflix. I'll 44 00:02:11,919 --> 00:02:15,320 Speaker 2: give you Disney because it's Disney, but everybody else. Is 45 00:02:15,320 --> 00:02:18,360 Speaker 2: there any room left for any of these other traditional 46 00:02:18,360 --> 00:02:20,440 Speaker 2: media players that are trying to get into the streaming business? 47 00:02:21,440 --> 00:02:24,120 Speaker 4: I mean, Paul, it's going to become more and more difficult. 48 00:02:24,120 --> 00:02:26,400 Speaker 4: I mean, with Netflix getting to that three hundred million 49 00:02:26,440 --> 00:02:31,560 Speaker 4: subscriber milestone, I would say very much built an insurmountable 50 00:02:31,639 --> 00:02:34,400 Speaker 4: lead in in streaming. There's absolutely no doubt about it. 51 00:02:34,800 --> 00:02:38,400 Speaker 4: They are expecting twenty nine percent operating margins. I mean 52 00:02:38,440 --> 00:02:40,639 Speaker 4: we have always you've always posed this question, I mean, 53 00:02:40,680 --> 00:02:43,520 Speaker 4: can Netflix get to that thirty thirty five percent operating margin? 54 00:02:43,560 --> 00:02:44,840 Speaker 4: And it looks like they're going to be able to 55 00:02:44,880 --> 00:02:48,400 Speaker 4: do that very very comfortably. That, you know, leaves us 56 00:02:48,800 --> 00:02:52,120 Speaker 4: to the all important question, can anybody else replicate this playbook? 57 00:02:52,600 --> 00:02:54,839 Speaker 4: Maybe they can, but it's going to take a very 58 00:02:54,880 --> 00:02:56,800 Speaker 4: long time, and I think by that time, Netflix is 59 00:02:56,840 --> 00:02:59,720 Speaker 4: going to be far ahead of you know, rivals, with 60 00:03:00,160 --> 00:03:04,040 Speaker 4: probably you know, forty percent operating margins, tons of free 61 00:03:04,080 --> 00:03:07,600 Speaker 4: cash flow, and maybe even like five hundred million subscribers. 62 00:03:08,040 --> 00:03:10,880 Speaker 3: So what is your question now? So say, we have 63 00:03:10,919 --> 00:03:12,680 Speaker 3: to be discerning and we have to say okay, well, 64 00:03:12,720 --> 00:03:14,600 Speaker 3: well if it's at a record, but you know, it's 65 00:03:14,600 --> 00:03:17,440 Speaker 3: not all amazing and flowers and sunshine and stuff. 66 00:03:17,639 --> 00:03:18,760 Speaker 2: What's that question. 67 00:03:19,720 --> 00:03:21,000 Speaker 5: Except it is all amazing? 68 00:03:21,080 --> 00:03:26,200 Speaker 3: You know, you'll help me, yeah, I mean you It 69 00:03:26,280 --> 00:03:29,040 Speaker 3: is so hard to find something wrong with this report. 70 00:03:29,080 --> 00:03:31,160 Speaker 4: I mean, if you were looking for Okay, is subscriber 71 00:03:31,200 --> 00:03:33,200 Speaker 4: growth going to slow down? Yeah, probably it's going to 72 00:03:33,240 --> 00:03:35,600 Speaker 4: slow down a little bit. But again they've said that 73 00:03:35,600 --> 00:03:38,480 Speaker 4: subscriber growth is going to be the main driver of 74 00:03:38,640 --> 00:03:42,080 Speaker 4: revenue growth in twenty twenty five. Is operating income momentum 75 00:03:42,160 --> 00:03:42,680 Speaker 4: slowing down? 76 00:03:42,720 --> 00:03:45,280 Speaker 5: No, it's not. Are we getting double digit revenue growth? 77 00:03:45,360 --> 00:03:47,240 Speaker 5: Yes we are. Is free cash flow there? 78 00:03:47,280 --> 00:03:47,400 Speaker 6: Oh? 79 00:03:47,520 --> 00:03:48,240 Speaker 5: Yes it is? 80 00:03:48,600 --> 00:03:51,120 Speaker 4: So I mean, okay, yes, I guess the big question 81 00:03:51,240 --> 00:03:53,080 Speaker 4: is what are going to be twenty twenty five is 82 00:03:53,080 --> 00:03:55,520 Speaker 4: all set because you do have that subscriber momentum, you 83 00:03:55,560 --> 00:03:58,040 Speaker 4: do have those price increases that are going to feed 84 00:03:58,080 --> 00:04:00,920 Speaker 4: that revenue growth. So the big question then is, okay, 85 00:04:01,120 --> 00:04:03,480 Speaker 4: but what about twenty twenty six? What about twenty twenty seven? 86 00:04:03,800 --> 00:04:05,920 Speaker 4: So twenty twenty six and twenty twenty seven, I think 87 00:04:05,960 --> 00:04:09,160 Speaker 4: the levers are really going to be the ad growth story, 88 00:04:09,160 --> 00:04:11,880 Speaker 4: and they're putting everything in place this year so that 89 00:04:12,000 --> 00:04:15,840 Speaker 4: advertising becomes a really big, bigger part of the revenue 90 00:04:15,880 --> 00:04:19,800 Speaker 4: equation starting in twenty twenty six, and they have everything 91 00:04:19,839 --> 00:04:21,640 Speaker 4: set to do that. So yes, they did raise their 92 00:04:21,680 --> 00:04:24,960 Speaker 4: prices on the ad tier a little bit just to smidge, 93 00:04:25,040 --> 00:04:27,360 Speaker 4: but again, remember it's only costing you eight dollars a month. 94 00:04:27,400 --> 00:04:29,640 Speaker 4: That's the same as Disney Plus. So again they have 95 00:04:29,720 --> 00:04:33,839 Speaker 4: a lot more I think, cushion to raise prices and 96 00:04:33,880 --> 00:04:37,719 Speaker 4: then to also increase their ad targeting capabilities and to 97 00:04:37,760 --> 00:04:40,080 Speaker 4: really be able to charge advertisers a premium. So I 98 00:04:40,080 --> 00:04:42,960 Speaker 4: think there's just so many different catalysts out there on 99 00:04:43,000 --> 00:04:45,839 Speaker 4: the Horizon Alyx. It's really hard to find any fault 100 00:04:45,839 --> 00:04:47,120 Speaker 4: with their report here. 101 00:04:46,960 --> 00:04:49,640 Speaker 3: Because now, Paul, I feel like it's not about can 102 00:04:49,680 --> 00:04:52,560 Speaker 3: you get streaming stuff for cheaper than you went on cable. 103 00:04:52,600 --> 00:04:55,200 Speaker 3: It's about the contents more interesting and better. And I 104 00:04:55,240 --> 00:04:56,640 Speaker 3: feel like that's a different thing than when I cut 105 00:04:56,680 --> 00:04:57,640 Speaker 3: the cord and say whatever. 106 00:04:57,760 --> 00:05:00,839 Speaker 2: Yeah, And it's what Ethan her research calls virtuous circle. 107 00:05:00,920 --> 00:05:03,000 Speaker 2: The more subscribers you have, the more money you can 108 00:05:03,080 --> 00:05:06,279 Speaker 2: spend on content, which then gets you more subscribers, and 109 00:05:06,279 --> 00:05:08,160 Speaker 2: it goes and goes and goes, so Gith, I think 110 00:05:08,160 --> 00:05:11,320 Speaker 2: the last big area for them to conquer from my perspective, 111 00:05:12,000 --> 00:05:14,160 Speaker 2: and it goes to your point about advertising being longer 112 00:05:14,240 --> 00:05:17,640 Speaker 2: term growth driver is live sports. When are they going 113 00:05:17,680 --> 00:05:19,880 Speaker 2: to step up and jump into the deep end of 114 00:05:19,880 --> 00:05:22,719 Speaker 2: the pool and take a big NFL package, not just 115 00:05:22,760 --> 00:05:25,120 Speaker 2: a couple of days on Christmas, but a season package 116 00:05:25,120 --> 00:05:28,680 Speaker 2: from the NFL, from the NBA, from English Premier soccer. 117 00:05:28,720 --> 00:05:31,360 Speaker 2: There's really no area they can't go. When do you 118 00:05:31,360 --> 00:05:32,200 Speaker 2: think they're going to do that? 119 00:05:33,360 --> 00:05:35,800 Speaker 5: I think that's still a couple of years out, Paul. 120 00:05:35,880 --> 00:05:38,880 Speaker 4: So they obviously know that the live sports strategy is 121 00:05:38,920 --> 00:05:40,960 Speaker 4: working for them, there's no doubt about it. They had 122 00:05:41,040 --> 00:05:43,520 Speaker 4: the two of their biggest events with which were live 123 00:05:43,520 --> 00:05:46,560 Speaker 4: sports events, and you had those records subscriber gains, So 124 00:05:46,600 --> 00:05:50,560 Speaker 4: obviously sports can be a big subscriber acquisition tool. It 125 00:05:50,600 --> 00:05:53,080 Speaker 4: can also turn into a big subscriber attention tool. 126 00:05:53,279 --> 00:05:53,800 Speaker 5: They do have a. 127 00:05:53,800 --> 00:05:55,520 Speaker 4: Couple of things that they've signed up for, so you know, 128 00:05:55,640 --> 00:05:57,960 Speaker 4: WWE is something that they already have for the next 129 00:05:57,960 --> 00:06:00,680 Speaker 4: five years or so. But the next time huge NFL 130 00:06:00,720 --> 00:06:03,080 Speaker 4: package or an NBA package is really going to become 131 00:06:03,160 --> 00:06:05,680 Speaker 4: available it's probably going to be only in another four 132 00:06:05,760 --> 00:06:07,960 Speaker 4: or five years time. In the meantime, you do have, 133 00:06:08,160 --> 00:06:10,080 Speaker 4: you know, a couple of the smaller rights packages. You 134 00:06:10,080 --> 00:06:12,920 Speaker 4: do have UFC, which is coming up for renewal by 135 00:06:12,920 --> 00:06:15,719 Speaker 4: the end of this year. You do have you know, 136 00:06:15,839 --> 00:06:18,120 Speaker 4: Formula one, which is something that they already have a 137 00:06:18,120 --> 00:06:20,479 Speaker 4: pretty deep relationship with kind of given their success with 138 00:06:20,560 --> 00:06:23,320 Speaker 4: Drive to Survive. So again they could go after that. 139 00:06:23,480 --> 00:06:26,159 Speaker 4: They have the Women's World Cup. They already have got 140 00:06:26,200 --> 00:06:29,680 Speaker 4: the rights to that, So it's going to be smaller investments, 141 00:06:29,720 --> 00:06:32,200 Speaker 4: I would think before they really go after that big, 142 00:06:32,240 --> 00:06:34,919 Speaker 4: splashy package, which and by that time they're advertising what 143 00:06:35,000 --> 00:06:36,000 Speaker 4: they all said sorry. 144 00:06:35,760 --> 00:06:37,520 Speaker 3: Which no, I was gonna say. It's interesting. I was 145 00:06:37,520 --> 00:06:39,600 Speaker 3: talking to somebody that were like, I've never watched wrestling 146 00:06:39,640 --> 00:06:42,080 Speaker 3: in my entire life, but or boxing, but I did 147 00:06:42,080 --> 00:06:44,320 Speaker 3: when Mike Tyson was doing it because it was on Netflix. 148 00:06:44,320 --> 00:06:46,440 Speaker 3: Why not? So I also wonder if you're bringing in 149 00:06:46,480 --> 00:06:48,960 Speaker 3: like a whole ye, you're gonna want the really sexy 150 00:06:49,040 --> 00:06:52,200 Speaker 3: NFL package, but do you actually need that in order 151 00:06:52,240 --> 00:06:55,960 Speaker 3: to continue to grow that momentum. It's kind of amazing. 152 00:06:56,000 --> 00:06:57,839 Speaker 3: So just record high after record high, here is that 153 00:06:57,839 --> 00:06:59,560 Speaker 3: what I'm looking at. 154 00:07:00,000 --> 00:07:04,560 Speaker 4: Pre much definitely a very very strong growth trajectory. Obviously, 155 00:07:04,560 --> 00:07:06,599 Speaker 4: we don't have a lot of visibility now going into 156 00:07:06,600 --> 00:07:08,680 Speaker 4: the subscriber numbers because that was the last time that 157 00:07:08,720 --> 00:07:10,880 Speaker 4: they disclosed that, but I think we're still going to 158 00:07:10,880 --> 00:07:12,280 Speaker 4: continue to see. I think what what's going to be 159 00:07:12,320 --> 00:07:15,920 Speaker 4: really interesting is when they start disclosing more advertising related metrics, 160 00:07:16,000 --> 00:07:18,360 Speaker 4: right that is where we need some visibility now. So 161 00:07:18,480 --> 00:07:21,680 Speaker 4: whether they give us a more updated monthly active user 162 00:07:21,760 --> 00:07:24,200 Speaker 4: number the last number that they disclosed was seventy million, 163 00:07:24,440 --> 00:07:26,800 Speaker 4: or whether they actually give us an actual, you know, 164 00:07:26,920 --> 00:07:31,640 Speaker 4: advertising revenue number, those are going to become the goalposts 165 00:07:31,720 --> 00:07:34,280 Speaker 4: I think in the near term our. 166 00:07:34,120 --> 00:07:37,559 Speaker 2: Thanks to KEITHA. Roungnathan, Bloomberg Intelligence analyst on US media. 167 00:07:38,000 --> 00:07:40,080 Speaker 3: We move next to some news in the banking industry. 168 00:07:40,120 --> 00:07:42,320 Speaker 3: We heard the Goldman Sacks is promoting a slate of 169 00:07:42,360 --> 00:07:45,040 Speaker 3: star executives to run its biggest Wall Street business lines 170 00:07:45,040 --> 00:07:46,400 Speaker 3: as part of the firm's revamp. 171 00:07:46,640 --> 00:07:49,960 Speaker 2: For more, we were joined by Todd Gillespie, Bloomberg Finance reporter. 172 00:07:50,160 --> 00:07:53,400 Speaker 3: We first asked taba Goldman Sachs revamp actually means and 173 00:07:53,520 --> 00:07:54,160 Speaker 3: who is. 174 00:07:54,120 --> 00:07:56,400 Speaker 7: Involved to MA see what they weren't necessarily know the 175 00:07:56,480 --> 00:07:58,680 Speaker 7: names outside of the finance industry either. But these are 176 00:07:58,760 --> 00:08:01,400 Speaker 7: big people rising stuff up and comers, many of whom 177 00:08:01,440 --> 00:08:03,560 Speaker 7: have held senior posts at Goldman Sacks for a long 178 00:08:03,600 --> 00:08:06,720 Speaker 7: time already. But the idea of this is creating a 179 00:08:06,720 --> 00:08:11,200 Speaker 7: new layer of management basically and promoting a lot more people. 180 00:08:11,320 --> 00:08:13,920 Speaker 7: Fifteen new names are going to be sitting on Goldman 181 00:08:14,000 --> 00:08:17,080 Speaker 7: Sacks's management committee. That's up from twenty four, so in 182 00:08:17,120 --> 00:08:21,280 Speaker 7: totally talking about a thirty nine person management committee, which 183 00:08:21,360 --> 00:08:25,040 Speaker 7: which is quite an expansion here and now equities will 184 00:08:25,080 --> 00:08:28,480 Speaker 7: have three of its own heads, fixed income business will 185 00:08:28,480 --> 00:08:31,080 Speaker 7: have three of its own heads, and the banking business 186 00:08:31,080 --> 00:08:33,520 Speaker 7: at Goldman Sachs will also have three heads as well. 187 00:08:33,559 --> 00:08:36,840 Speaker 7: And those people will report into heads of each of 188 00:08:36,880 --> 00:08:39,720 Speaker 7: the overarching umbrellas at Goldman Sacks, who then obviously report 189 00:08:39,760 --> 00:08:43,040 Speaker 7: into the c suite there. So you know, it's quite 190 00:08:43,080 --> 00:08:44,120 Speaker 7: a big shift. 191 00:08:44,200 --> 00:08:47,840 Speaker 2: I don't like it. It just layers on another layer 192 00:08:47,920 --> 00:08:50,559 Speaker 2: of management. Where is the value added here is this? 193 00:08:50,840 --> 00:08:52,560 Speaker 2: I read this story which is a great story about 194 00:08:52,600 --> 00:08:54,319 Speaker 2: by the way, and I feel like they're just rewarding 195 00:08:54,320 --> 00:08:55,120 Speaker 2: people with titles. 196 00:08:55,240 --> 00:08:57,000 Speaker 7: That is certainly one of the concerns. But right here, 197 00:08:57,000 --> 00:08:58,640 Speaker 7: you've got to look at the context of the industry, right, 198 00:08:58,679 --> 00:09:01,080 Speaker 7: what is Goldman trying to do with doing this? They're 199 00:09:01,120 --> 00:09:04,960 Speaker 7: trying to rest off, you know, competition from the alternative 200 00:09:05,040 --> 00:09:07,960 Speaker 7: asset management industry there. You know who's already been trying 201 00:09:07,960 --> 00:09:10,680 Speaker 7: to poach top executives from Goldman Sachs. We've had John 202 00:09:10,679 --> 00:09:14,880 Speaker 7: Woldron just last week handed an eighty million dollar retention 203 00:09:15,000 --> 00:09:18,040 Speaker 7: bonus to stay on for another five years, alongside David Solomon, 204 00:09:18,040 --> 00:09:21,120 Speaker 7: who's looking very comfortable in his seat as CEO. So 205 00:09:21,679 --> 00:09:23,680 Speaker 7: you know, the bank is trying to fend off this 206 00:09:23,760 --> 00:09:26,560 Speaker 7: kind of competition from across the street. We all know 207 00:09:26,679 --> 00:09:29,280 Speaker 7: right now that banks are not in as lucrative shape 208 00:09:29,360 --> 00:09:32,480 Speaker 7: right now as private equity firms like Carlisle, like Apollo 209 00:09:32,480 --> 00:09:35,600 Speaker 7: for instance, who have been reported to have approached people 210 00:09:35,640 --> 00:09:38,600 Speaker 7: like Waldron already. So the bank is trying to you know, 211 00:09:38,600 --> 00:09:40,959 Speaker 7: this is a defensive move as much as a promotional 212 00:09:41,000 --> 00:09:41,920 Speaker 7: move for the people inside. 213 00:09:42,040 --> 00:09:44,800 Speaker 3: Does it work, like, does it say shade people enough 214 00:09:44,840 --> 00:09:47,920 Speaker 3: when they're promoted and stuff like it? Find out eighty 215 00:09:47,920 --> 00:09:50,280 Speaker 3: million in Waldron's a different story. But like this class 216 00:09:50,679 --> 00:09:51,840 Speaker 3: coming up, Yeah. 217 00:09:51,679 --> 00:09:52,960 Speaker 7: I mean this is certainly. I mean, this has been 218 00:09:53,000 --> 00:09:54,240 Speaker 7: in the works for a long time. I mean, this 219 00:09:54,280 --> 00:09:56,680 Speaker 7: is a result of a year long or so set 220 00:09:56,720 --> 00:09:59,880 Speaker 7: of discussions right where people know, you know, that they're 221 00:10:00,040 --> 00:10:03,280 Speaker 7: as a restless, very talented, up and coming group of 222 00:10:03,320 --> 00:10:06,000 Speaker 7: executives who want to be recognized. They want to see 223 00:10:06,000 --> 00:10:08,720 Speaker 7: a path forward, and they hope, obviously the Bank hopes 224 00:10:08,720 --> 00:10:10,720 Speaker 7: by doing this they're going to give them that path forward. 225 00:10:11,200 --> 00:10:13,920 Speaker 7: It certainly doesn't end the internal politics, if anything, also 226 00:10:13,960 --> 00:10:16,880 Speaker 7: creates you know, the potential for new tensions and you know, 227 00:10:17,040 --> 00:10:20,040 Speaker 7: new fiefdoms. But we'll see later down the road how 228 00:10:20,040 --> 00:10:20,640 Speaker 7: this plays out. 229 00:10:20,880 --> 00:10:23,199 Speaker 2: What's interesting for a positive for Goldman Sachs is, you know, 230 00:10:23,240 --> 00:10:27,360 Speaker 2: I think early in his tenure CEO Solomon some shaky ground, 231 00:10:27,440 --> 00:10:30,360 Speaker 2: some missteps, and people were, you know, even suggesting maybe 232 00:10:30,400 --> 00:10:32,560 Speaker 2: he's not the right person for the job. The boys, 233 00:10:32,559 --> 00:10:35,839 Speaker 2: he turned that narrative around. He seems he seems from 234 00:10:35,840 --> 00:10:38,040 Speaker 2: the outside very secure in his position. 235 00:10:38,120 --> 00:10:39,880 Speaker 7: Certainly. Paul, Yeah, I mean the past two years have 236 00:10:40,000 --> 00:10:42,040 Speaker 7: been a real turn around for him. I mean we've 237 00:10:42,080 --> 00:10:43,760 Speaker 7: you know, there was a lot of criticism from early 238 00:10:43,840 --> 00:10:46,880 Speaker 7: on for you know, missteps in the you know, the 239 00:10:46,880 --> 00:10:50,080 Speaker 7: retail adventure that Goldman Sachs was was going on with 240 00:10:50,200 --> 00:10:54,600 Speaker 7: Marcus with you know, with this you know JV with 241 00:10:54,600 --> 00:10:57,120 Speaker 7: with Apple. It now has this cards business that it's 242 00:10:57,160 --> 00:10:59,560 Speaker 7: trying to sell off. Now there's a lot of you know, 243 00:10:59,600 --> 00:11:02,559 Speaker 7: speculation about what's going to happen to that. Now, who's 244 00:11:02,600 --> 00:11:06,160 Speaker 7: going to pick up that portfolio? But certainly David Solomon, 245 00:11:06,240 --> 00:11:08,280 Speaker 7: thanks to you know, a bumper cropper earning his results 246 00:11:08,280 --> 00:11:10,440 Speaker 7: that have come out the past year or so, the 247 00:11:10,480 --> 00:11:13,319 Speaker 7: bank is looking on much steadier ground and he's kind 248 00:11:13,320 --> 00:11:17,439 Speaker 7: of consolidated his grip you could say, perhaps over this bank, 249 00:11:17,559 --> 00:11:19,960 Speaker 7: and you know, and he's but he's also you know, 250 00:11:20,040 --> 00:11:22,920 Speaker 7: he's aware that him being in the seat for longer 251 00:11:23,040 --> 00:11:25,360 Speaker 7: will make other people unsettled, you know this, and the 252 00:11:25,360 --> 00:11:27,200 Speaker 7: board is aware of that as well. And that's partly 253 00:11:27,280 --> 00:11:29,560 Speaker 7: the reason for the John Walter in eighty million dollar 254 00:11:29,559 --> 00:11:31,680 Speaker 7: attention bonus that we saw last week, and it could 255 00:11:31,720 --> 00:11:33,640 Speaker 7: explain some of the moves that we're seeing as well. 256 00:11:33,920 --> 00:11:36,400 Speaker 2: All right, thanks to Todd Gillespie, Bloomberg Finance reporter. 257 00:11:36,640 --> 00:11:38,959 Speaker 3: Coming up, we'll discuss Donald Trump's second term as US 258 00:11:39,040 --> 00:11:41,679 Speaker 3: president and what it may end up meaning for his legacy. 259 00:11:41,720 --> 00:11:44,600 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 260 00:11:44,640 --> 00:11:46,679 Speaker 2: depth research and data on two thousand companies in one 261 00:11:46,760 --> 00:11:50,040 Speaker 2: hundred and thirty industuries. You can access Bloomberg Intelligence via Beat. 262 00:11:50,080 --> 00:11:52,120 Speaker 2: I go on the terminal on Paul Swinging. 263 00:11:51,880 --> 00:11:53,960 Speaker 3: And a Malex Steel and this is Bloomberg. 264 00:11:58,400 --> 00:12:02,200 Speaker 8: You're listening to the Bloomberg Intelligence podcast. Catch us live 265 00:12:02,280 --> 00:12:05,080 Speaker 8: weekdays at ten am Easter on Apple car Play and 266 00:12:05,160 --> 00:12:07,920 Speaker 8: the Android Auto with the Bloomberg Business App. Listen on 267 00:12:08,000 --> 00:12:11,199 Speaker 8: demand wherever you get your podcasts, or watch us live 268 00:12:11,280 --> 00:12:12,440 Speaker 8: on YouTube. 269 00:12:13,920 --> 00:12:16,000 Speaker 3: We move now to some big news in the tech space. 270 00:12:16,200 --> 00:12:19,120 Speaker 2: This week, President Donald Trump announced SoftBank, Open Ai and 271 00:12:19,200 --> 00:12:23,160 Speaker 2: Oracle performing a joint venture to fund artificial intelligence infrastructure. 272 00:12:23,360 --> 00:12:26,000 Speaker 3: This includes an initial investment of one hundred million dollars 273 00:12:26,000 --> 00:12:28,040 Speaker 3: and the goal is to speed up the development of 274 00:12:28,080 --> 00:12:29,600 Speaker 3: AI technology for more. 275 00:12:29,720 --> 00:12:33,040 Speaker 2: We're joined by An rag Rana, Bloomberg Intelligence technology analysts. 276 00:12:33,080 --> 00:12:35,439 Speaker 3: We started off by asking the aniog what this announcement 277 00:12:35,520 --> 00:12:37,760 Speaker 3: means for building AI infrastructure in the US. 278 00:12:38,160 --> 00:12:39,920 Speaker 6: We know the funding is going to come, and there's 279 00:12:39,960 --> 00:12:42,800 Speaker 6: a lot of funding coming into AI data centers. Now. 280 00:12:42,840 --> 00:12:45,360 Speaker 6: It has the blessing of the US government. It's going 281 00:12:45,400 --> 00:12:49,200 Speaker 6: to be funded by private equity or private investors. Oracle's 282 00:12:49,240 --> 00:12:51,920 Speaker 6: going to be the biggest cloud provider here, and open 283 00:12:51,960 --> 00:12:53,520 Speaker 6: the I models are going to run on it or 284 00:12:53,600 --> 00:12:55,839 Speaker 6: train on it. So it's a good thing for all 285 00:12:55,880 --> 00:12:59,440 Speaker 6: three of them obviously, but it's also good for AI advancements. 286 00:13:00,040 --> 00:13:03,200 Speaker 6: The interesting part is Oracle is not even the top 287 00:13:03,240 --> 00:13:05,760 Speaker 6: three cloud providers that's out there. You know, it's led 288 00:13:05,800 --> 00:13:09,439 Speaker 6: by Amazon Web Services and then Microsoft and then Google. 289 00:13:10,120 --> 00:13:12,760 Speaker 6: So you know, them getting a piece of this spy 290 00:13:12,920 --> 00:13:14,959 Speaker 6: is a very big deal for them because it's a 291 00:13:15,040 --> 00:13:17,600 Speaker 6: very small business for them right now compared to what 292 00:13:17,760 --> 00:13:19,640 Speaker 6: AWS generates in revenue. 293 00:13:20,240 --> 00:13:23,520 Speaker 2: So how about the other big cloud players, what are 294 00:13:23,520 --> 00:13:25,079 Speaker 2: they thinking not being. 295 00:13:24,920 --> 00:13:27,600 Speaker 6: Yeah, I think the I think if you see the 296 00:13:27,880 --> 00:13:30,320 Speaker 6: when the rumor first came out that this is happening, 297 00:13:30,640 --> 00:13:33,320 Speaker 6: you saw that Microsoft started to you know, trickle down 298 00:13:33,320 --> 00:13:36,880 Speaker 6: a little bit. Because right now, Microsoft is the exclusive 299 00:13:37,320 --> 00:13:40,920 Speaker 6: partner for open AI. Microsoft has outsourced some work to 300 00:13:40,960 --> 00:13:44,640 Speaker 6: Oracle because they can't take care of the whole capacity. Then, 301 00:13:44,800 --> 00:13:48,880 Speaker 6: after the announcement was made, open Ai and Microsoft issued 302 00:13:48,880 --> 00:13:52,360 Speaker 6: a joint press release saying that you know, they're renegotiating 303 00:13:52,360 --> 00:13:56,920 Speaker 6: their own contracts in between and currently their joint venture 304 00:13:57,000 --> 00:14:00,559 Speaker 6: or partnership will be extended into till twenty thirty. Now, 305 00:14:00,559 --> 00:14:05,240 Speaker 6: there are two parts of why open ai uses Microsoft Cloud. 306 00:14:05,240 --> 00:14:07,679 Speaker 6: One is to train their models. Now that's the expensive 307 00:14:07,960 --> 00:14:10,640 Speaker 6: that really where a lot of the capex is going 308 00:14:11,200 --> 00:14:15,520 Speaker 6: in that area. Microsoft will give, you know, allow other 309 00:14:15,720 --> 00:14:18,319 Speaker 6: cloud providers, but they have the right of first refusals, 310 00:14:18,320 --> 00:14:20,840 Speaker 6: which means they will figure out whether they are okay 311 00:14:20,920 --> 00:14:22,800 Speaker 6: with Oracle doing it or not. It seems to me 312 00:14:22,880 --> 00:14:25,280 Speaker 6: that they are doing they're okay with Oracle because they've 313 00:14:25,320 --> 00:14:27,880 Speaker 6: already outsourced some work to Oracle. I don't know if 314 00:14:27,880 --> 00:14:29,440 Speaker 6: it's going to happen or if they're going to share 315 00:14:29,440 --> 00:14:32,320 Speaker 6: that with AWS. We'll see that. But the biggest piece 316 00:14:32,360 --> 00:14:34,840 Speaker 6: of it, the revenue sharing, is if you use open 317 00:14:34,840 --> 00:14:38,480 Speaker 6: ai technology to develop an enterprise application, what we call 318 00:14:38,520 --> 00:14:42,840 Speaker 6: as inferencing revenue from APIs, Microsoft still controls that that's 319 00:14:42,840 --> 00:14:45,960 Speaker 6: going to run on Microsoft Cloud. So Microsoft also got 320 00:14:45,960 --> 00:14:48,080 Speaker 6: the best of it, which is the reason why Microsoft 321 00:14:48,120 --> 00:14:50,440 Speaker 6: is up three percent also in this game today. 322 00:14:50,560 --> 00:14:53,720 Speaker 3: So here's my really dumb question. What are some hurdles here? 323 00:14:53,960 --> 00:14:56,440 Speaker 3: Aka power and permits? 324 00:14:57,600 --> 00:14:59,440 Speaker 6: Yeah, but that's where the government is saying they will 325 00:14:59,440 --> 00:15:02,360 Speaker 6: help you out or help these companies out and taking 326 00:15:02,400 --> 00:15:05,280 Speaker 6: care of it. You know, that is that's not entailed. 327 00:15:05,360 --> 00:15:07,720 Speaker 3: That means like speeding up a permit process, or like 328 00:15:07,800 --> 00:15:10,520 Speaker 3: allowing coal plants to run, Like what does that really entail? 329 00:15:11,360 --> 00:15:14,240 Speaker 6: I think coal plants must be tough because frankly speaking, 330 00:15:14,280 --> 00:15:16,320 Speaker 6: it is very difficult for a cloud provider not to 331 00:15:16,400 --> 00:15:18,520 Speaker 6: use renewable energy. I think there's going to be a 332 00:15:18,560 --> 00:15:21,240 Speaker 6: lot more talk about nuclear. For example, what we heard 333 00:15:21,560 --> 00:15:25,480 Speaker 6: with Microsoft going through, they will build they may build 334 00:15:25,480 --> 00:15:29,000 Speaker 6: their own smaller you know, you could say capacity to 335 00:15:29,120 --> 00:15:31,440 Speaker 6: run some of these things. They have the money to 336 00:15:31,440 --> 00:15:34,640 Speaker 6: fund it obviously. So you know, if it's one hundred 337 00:15:34,680 --> 00:15:37,800 Speaker 6: billion spending, we think maybe twenty twenty five percent of 338 00:15:37,880 --> 00:15:41,560 Speaker 6: that goes towards you know, more tech oriented stuff, whether 339 00:15:41,600 --> 00:15:44,680 Speaker 6: it's chip, whether it's servers, whether it's you know, pipeline 340 00:15:44,880 --> 00:15:48,640 Speaker 6: I mean connecting networking devices and or cloud computing, and 341 00:15:48,720 --> 00:15:50,720 Speaker 6: the rest of that is probably going to go to 342 00:15:51,320 --> 00:15:53,800 Speaker 6: more the building of the data center and you know, 343 00:15:53,840 --> 00:15:56,440 Speaker 6: the cooling units, all that stuff that goes with it. 344 00:15:57,080 --> 00:16:00,000 Speaker 2: So on our When I think of the electric vehicle business, 345 00:16:00,080 --> 00:16:03,160 Speaker 2: I think of a business that China is actually leading 346 00:16:03,200 --> 00:16:06,440 Speaker 2: the way. They are ahead of the US and European 347 00:16:06,480 --> 00:16:10,760 Speaker 2: automakers for AI, which is arguably a much bigger business 348 00:16:10,800 --> 00:16:14,000 Speaker 2: opportunity in a longer term one. Perhaps where is the 349 00:16:14,120 --> 00:16:16,200 Speaker 2: US in terms of a leadership position. It feels like 350 00:16:16,280 --> 00:16:18,120 Speaker 2: we're putting the resources behind it. 351 00:16:19,240 --> 00:16:21,560 Speaker 6: Well, we have in video chips, so that really makes 352 00:16:21,600 --> 00:16:24,640 Speaker 6: a very big difference at this point. One of the 353 00:16:24,640 --> 00:16:26,880 Speaker 6: things we don't know about China is what are they 354 00:16:26,920 --> 00:16:29,200 Speaker 6: doing on the AI side and the government. That's not 355 00:16:29,280 --> 00:16:32,960 Speaker 6: publicly available anywhere, So it's a difficult guess for somebody. 356 00:16:32,960 --> 00:16:35,320 Speaker 6: But one thing is for sure. If you have a 357 00:16:35,320 --> 00:16:38,600 Speaker 6: lot of private money coming in and we have the capacity. 358 00:16:38,640 --> 00:16:41,360 Speaker 6: I mean, as I said, Microsoft itself this year is 359 00:16:41,360 --> 00:16:43,800 Speaker 6: going to spend eighty billion dollars in CAPEX. You know, 360 00:16:43,800 --> 00:16:45,440 Speaker 6: we think it's going to be closer to eighty five. 361 00:16:45,800 --> 00:16:47,680 Speaker 6: So if you look at all these large companies with 362 00:16:47,840 --> 00:16:50,360 Speaker 6: a trillion plus or two three trillion dollar market gap, 363 00:16:50,680 --> 00:16:54,400 Speaker 6: they can raise funds and you know, get a lot 364 00:16:54,440 --> 00:16:57,240 Speaker 6: more AI investments. And now the government is getting involved 365 00:16:57,240 --> 00:16:59,040 Speaker 6: in it. So I mean it's I would say, in 366 00:16:59,080 --> 00:17:02,680 Speaker 6: all directions, seems that US will not let this one slip, 367 00:17:02,920 --> 00:17:04,480 Speaker 6: and it's going to make sure that, you know, we 368 00:17:04,560 --> 00:17:06,080 Speaker 6: remain the dominant force out there. 369 00:17:06,320 --> 00:17:09,240 Speaker 3: Well then speaking of in terms of say Microsoft and 370 00:17:09,280 --> 00:17:11,960 Speaker 3: their capax, maybe hitting eighty five billion, is this it 371 00:17:12,080 --> 00:17:14,080 Speaker 3: was this money that everyone was already planning to spend. 372 00:17:14,119 --> 00:17:16,520 Speaker 3: It was just now packaging a nice little wrapper to everybody. 373 00:17:17,680 --> 00:17:19,879 Speaker 6: Not from Microsoft point of view, because Microsoft is not 374 00:17:19,960 --> 00:17:22,879 Speaker 6: part of this you know, spending ecosystem. So Microsoft is 375 00:17:22,920 --> 00:17:24,800 Speaker 6: going to spend this, but now good part is going 376 00:17:24,840 --> 00:17:27,200 Speaker 6: to be Microsoft may not have to spend this much 377 00:17:27,240 --> 00:17:30,080 Speaker 6: going forward because, as I said, the biggest bulk of 378 00:17:30,119 --> 00:17:34,000 Speaker 6: that spending was going towards helping some of these large 379 00:17:34,040 --> 00:17:37,400 Speaker 6: language model providers train their models on it. Now, if 380 00:17:37,440 --> 00:17:40,240 Speaker 6: that's done with external money, the likes of private equity 381 00:17:40,320 --> 00:17:42,960 Speaker 6: or SoftBank, then Microsoft is not going to take that 382 00:17:43,080 --> 00:17:45,480 Speaker 6: margin head or investors are not going to ask them, 383 00:17:45,680 --> 00:17:48,679 Speaker 6: you know, you're spending eighty billion dollars whereas the corresponding 384 00:17:48,720 --> 00:17:50,879 Speaker 6: eighty billion revenue in it. So I think it really 385 00:17:50,880 --> 00:17:52,520 Speaker 6: helps Microsoft also down the road. 386 00:17:53,400 --> 00:17:57,520 Speaker 2: And to come back a little bit for SoftBank's Masasan here, 387 00:17:58,600 --> 00:17:59,960 Speaker 2: he's back on the think state. 388 00:18:01,160 --> 00:18:04,239 Speaker 6: Yeah, it's been you know, missing hits for him for 389 00:18:04,280 --> 00:18:06,639 Speaker 6: some time. But one thing is for sure. You know, 390 00:18:06,680 --> 00:18:09,560 Speaker 6: the addressable market of everything AI related is going to 391 00:18:09,560 --> 00:18:13,440 Speaker 6: be so large. They specifically mentioned a lot of healthcare initiative. 392 00:18:13,760 --> 00:18:16,720 Speaker 6: If you remember when you look at Larry Allison's acquisition 393 00:18:16,840 --> 00:18:19,399 Speaker 6: of Serner, you know he's spending a lot of his 394 00:18:19,520 --> 00:18:22,679 Speaker 6: personal time trying to fix that healthcare system, which, to 395 00:18:22,720 --> 00:18:25,680 Speaker 6: be very honest, is probably the biggest burden on us 396 00:18:25,760 --> 00:18:29,600 Speaker 6: GDP right now because of the high amount of healthcare 397 00:18:29,840 --> 00:18:31,240 Speaker 6: spending we do as a country. 398 00:18:31,680 --> 00:18:34,960 Speaker 2: Our thanks to Anna rog Rana, Bloomberg Intelligence senior technology analysts. 399 00:18:35,160 --> 00:18:37,200 Speaker 3: This week, we also focus on a Bloomberg Big Take 400 00:18:37,280 --> 00:18:41,119 Speaker 3: story titled Trump Shows he is on competing quests for 401 00:18:41,280 --> 00:18:43,680 Speaker 3: legacy and revenge. You can find this on the Bloomberg 402 00:18:43,800 --> 00:18:45,600 Speaker 3: terminal as well as Bloomberg dot com. 403 00:18:45,640 --> 00:18:48,119 Speaker 2: The story looks at how President Donald Trump's attention is 404 00:18:48,160 --> 00:18:51,760 Speaker 2: divided between policy victories and exacting revenge on those he 405 00:18:51,840 --> 00:18:52,919 Speaker 2: considers his enemies. 406 00:18:53,040 --> 00:18:55,320 Speaker 3: For more, we spoke to the stories author and Nancy Cook, 407 00:18:55,359 --> 00:18:58,199 Speaker 3: Bloomberg Senior national political correspondent. We first asked her to 408 00:18:58,200 --> 00:18:59,800 Speaker 3: walk us through what that story is. 409 00:19:00,640 --> 00:19:03,359 Speaker 9: Well, it's really about sort of these two impulses that 410 00:19:03,440 --> 00:19:06,080 Speaker 9: he has and that his aids are really thinking about 411 00:19:06,160 --> 00:19:08,439 Speaker 9: as he you know, begins his second term in the 412 00:19:08,440 --> 00:19:12,080 Speaker 9: White House, and the first impulse is really to you know, 413 00:19:12,160 --> 00:19:15,000 Speaker 9: govern well, leave a legacy. You know, some of his 414 00:19:15,080 --> 00:19:17,119 Speaker 9: aids for the last few months have been talking about 415 00:19:17,359 --> 00:19:19,080 Speaker 9: sort of wanting him to have as big of a 416 00:19:19,160 --> 00:19:20,560 Speaker 9: legacy as Ronald Reagan. 417 00:19:21,240 --> 00:19:21,439 Speaker 5: You know. 418 00:19:21,480 --> 00:19:25,600 Speaker 9: They want him to preside over a booming economy, energy exploration, 419 00:19:26,680 --> 00:19:29,680 Speaker 9: you know, getting what they see is immigration under control, 420 00:19:30,040 --> 00:19:32,720 Speaker 9: and they really want, you know, his success to be 421 00:19:32,720 --> 00:19:35,719 Speaker 9: built around governing. But there's a whole other crew of 422 00:19:35,840 --> 00:19:40,359 Speaker 9: Trump Maga people who really also want retribution and revenge 423 00:19:40,400 --> 00:19:42,800 Speaker 9: to be a part of that. They want people to 424 00:19:42,840 --> 00:19:46,960 Speaker 9: pay for the investigations that they say Trump endured, They 425 00:19:47,000 --> 00:19:50,200 Speaker 9: want people to pay for, you know, coming after him 426 00:19:50,240 --> 00:19:54,320 Speaker 9: with legal challenges, the Jack Smith investigation, the New York 427 00:19:54,359 --> 00:19:57,440 Speaker 9: hush money case. They want people to pay, and also 428 00:19:57,600 --> 00:20:00,680 Speaker 9: just critics, you know, career government official who maybe raise 429 00:20:00,760 --> 00:20:03,960 Speaker 9: questions about Trump's first term. This crew wants Trump to pay. 430 00:20:04,040 --> 00:20:06,280 Speaker 9: And so the story just really talks about how the 431 00:20:06,320 --> 00:20:10,040 Speaker 9: competing impulses of Trump's first term is going to be 432 00:20:10,040 --> 00:20:12,840 Speaker 9: between sort of wanting to govern well but also wanting 433 00:20:12,880 --> 00:20:15,480 Speaker 9: to get revenge. And I think that a central theme 434 00:20:15,560 --> 00:20:18,399 Speaker 9: of his presidency the second time around will be what 435 00:20:18,520 --> 00:20:19,760 Speaker 9: the balance of that looks like. 436 00:20:20,760 --> 00:20:24,119 Speaker 2: Nancy, do we have any idea who President Trump really 437 00:20:24,280 --> 00:20:26,320 Speaker 2: listens to in the second administration? Seemed like in the 438 00:20:26,320 --> 00:20:30,879 Speaker 2: first administration he had Jared Kushner and Ivanka there. Who's 439 00:20:30,880 --> 00:20:32,480 Speaker 2: got his ear these days? 440 00:20:32,520 --> 00:20:35,040 Speaker 9: Do you think, well, it's a different crew than last time. 441 00:20:35,119 --> 00:20:37,560 Speaker 9: I would say Susie Wiles, who is his chief of 442 00:20:37,600 --> 00:20:39,760 Speaker 9: staff and the first female chief of staff at the 443 00:20:39,760 --> 00:20:44,440 Speaker 9: White House ever, really is hugely respected. You know, he 444 00:20:44,520 --> 00:20:47,400 Speaker 9: really listens to her and really takes her counsel. She's 445 00:20:47,440 --> 00:20:50,720 Speaker 9: worked for him, you know, on and off since twenty sixteen. 446 00:20:50,840 --> 00:20:54,400 Speaker 9: She ran his Florida political operations about the twenty sixteen 447 00:20:54,440 --> 00:20:57,959 Speaker 9: campaign and twenty twenty and then joined him, you know, 448 00:20:58,200 --> 00:21:01,600 Speaker 9: his campaign full time when he, you know, decided to 449 00:21:01,680 --> 00:21:04,360 Speaker 9: run for a third time. They are very close and 450 00:21:04,400 --> 00:21:07,080 Speaker 9: she he does listen to her, and then she has 451 00:21:07,119 --> 00:21:10,359 Speaker 9: a group of very loyal aids around her who worked 452 00:21:10,359 --> 00:21:13,040 Speaker 9: on the campaign. And I feel like, you know, it's 453 00:21:13,040 --> 00:21:16,400 Speaker 9: a pretty well oiled machine, and a lot of those 454 00:21:16,400 --> 00:21:18,760 Speaker 9: people were Florida based, and I would say, it's a 455 00:21:18,760 --> 00:21:22,680 Speaker 9: really different staff than it was for his first administration. 456 00:21:23,080 --> 00:21:25,320 Speaker 3: What kind of legacy do you think President Trump is 457 00:21:25,359 --> 00:21:26,080 Speaker 3: after right now? 458 00:21:26,760 --> 00:21:28,919 Speaker 9: I think right now he's feeling good and he's not 459 00:21:28,960 --> 00:21:31,520 Speaker 9: feeling under attack, and so I think right now he 460 00:21:32,200 --> 00:21:34,359 Speaker 9: you know, is probably a little bit more drawn to 461 00:21:34,400 --> 00:21:36,800 Speaker 9: the Ronald Reagan model. But you have to remember he 462 00:21:36,840 --> 00:21:40,560 Speaker 9: also pardoned fifteen hundred January sixth people, including people who 463 00:21:40,680 --> 00:21:44,240 Speaker 9: violently assaulted police officers that day, and that is also 464 00:21:44,320 --> 00:21:46,919 Speaker 9: part of the revenge. And so I think, you know, 465 00:21:46,960 --> 00:21:49,960 Speaker 9: it's going to vacillate between one and the other. I 466 00:21:50,040 --> 00:21:52,080 Speaker 9: do think that he thinks that he could be a 467 00:21:52,080 --> 00:21:55,160 Speaker 9: better president than people give him credit for. Biden thought 468 00:21:55,200 --> 00:21:58,040 Speaker 9: the same thing, and so we'll have to see what, 469 00:21:58,320 --> 00:22:00,760 Speaker 9: you know, happens over the next four years. He and 470 00:22:00,840 --> 00:22:03,400 Speaker 9: his team are riding high right now. You know, they 471 00:22:03,400 --> 00:22:06,280 Speaker 9: feel like they won all seven battleground states. They put 472 00:22:06,320 --> 00:22:09,240 Speaker 9: together a new coalition, brought some new people into the 473 00:22:09,280 --> 00:22:12,040 Speaker 9: Republican Party, and so I will be curious to see, 474 00:22:12,160 --> 00:22:13,840 Speaker 9: you know, what happens a year from now or two 475 00:22:13,880 --> 00:22:16,679 Speaker 9: years from now when they're not riding as high, or 476 00:22:16,680 --> 00:22:18,840 Speaker 9: when he feels under attack, and what that looks like 477 00:22:18,880 --> 00:22:20,600 Speaker 9: at that point. 478 00:22:20,240 --> 00:22:22,960 Speaker 2: Nancy, what do you think are kind of the to 479 00:22:23,040 --> 00:22:25,080 Speaker 2: do list for the first hundred days. Is this a 480 00:22:25,119 --> 00:22:28,280 Speaker 2: president that views these first hundred days, as other presidents do, 481 00:22:28,320 --> 00:22:30,080 Speaker 2: as a time to really get stuff done. 482 00:22:30,359 --> 00:22:35,439 Speaker 9: He signed a ton of executive orders, everything related to immigration, energy, 483 00:22:36,440 --> 00:22:40,080 Speaker 9: the federal workforce. He's really hitting the ground running. Susie 484 00:22:40,119 --> 00:22:42,960 Speaker 9: Wiles's chief of staff, has told people that she views 485 00:22:43,000 --> 00:22:45,679 Speaker 9: the first one hundred days as kind of an artificial metric. 486 00:22:46,200 --> 00:22:48,840 Speaker 9: They are really looking at the first two years as 487 00:22:48,880 --> 00:22:51,760 Speaker 9: the key time to get things done. That's when we 488 00:22:51,920 --> 00:22:54,840 Speaker 9: know that Republicans will control both the House and Senate. 489 00:22:54,960 --> 00:22:57,960 Speaker 9: You know, the Republicans have total control right now in Washington, 490 00:22:58,440 --> 00:23:00,840 Speaker 9: and I think that they view the two years as 491 00:23:00,840 --> 00:23:02,320 Speaker 9: the key time to get things done. 492 00:23:02,600 --> 00:23:05,240 Speaker 3: Right, So, I was wondering, like, it's really until the midterms, 493 00:23:05,320 --> 00:23:08,480 Speaker 3: right when women things may change. Also, any leverage that 494 00:23:08,520 --> 00:23:11,199 Speaker 3: President Trump may have over individual members that are up 495 00:23:11,200 --> 00:23:13,359 Speaker 3: for reelection that might change as well. 496 00:23:14,640 --> 00:23:16,800 Speaker 9: Yeah, that's absolutely right. And you have to remember he's 497 00:23:16,840 --> 00:23:19,600 Speaker 9: a lame duck president too, you know, he can't serve again, 498 00:23:19,800 --> 00:23:22,840 Speaker 9: and so I think that they view that too as 499 00:23:22,880 --> 00:23:24,840 Speaker 9: part of this calculus of the first two years of 500 00:23:24,880 --> 00:23:27,720 Speaker 9: being very important. But we were already seeing them move 501 00:23:27,800 --> 00:23:30,120 Speaker 9: at a very dizzying pace. And I think that that's 502 00:23:30,160 --> 00:23:33,720 Speaker 9: going to continue immigration deportation. 503 00:23:34,520 --> 00:23:36,280 Speaker 2: How aggressive do you think the president can be here? 504 00:23:37,640 --> 00:23:40,560 Speaker 9: Well, he's already trying. I mean, he's signed executive orders 505 00:23:40,600 --> 00:23:43,520 Speaker 9: to change the asylum process to you know, shut down 506 00:23:43,600 --> 00:23:47,320 Speaker 9: the border via se via you know, national emergency. They 507 00:23:47,320 --> 00:23:51,440 Speaker 9: were canceling immigration appointments that people had already that were 508 00:23:51,720 --> 00:23:54,560 Speaker 9: you know, legal immigration people trying to come here legally. 509 00:23:54,880 --> 00:23:57,400 Speaker 9: And so I think that, you know, Stephen Miller, who 510 00:23:57,440 --> 00:24:00,200 Speaker 9: is sort of the architect of his immigration policy, is 511 00:24:00,359 --> 00:24:02,720 Speaker 9: a deputy chief of Staff in the White House. He 512 00:24:02,760 --> 00:24:05,160 Speaker 9: has a huge amount of power, just like last time, 513 00:24:05,240 --> 00:24:08,679 Speaker 9: and I think that you know, he is telling both 514 00:24:09,200 --> 00:24:12,560 Speaker 9: members of Congress, but also he's telling Trump himself that 515 00:24:12,640 --> 00:24:14,760 Speaker 9: you know, you need to move quickly on immigration. This 516 00:24:14,800 --> 00:24:17,119 Speaker 9: is a quote unquote quick win for US. And so 517 00:24:17,160 --> 00:24:19,280 Speaker 9: I think that they are going to spend a lot 518 00:24:19,320 --> 00:24:21,639 Speaker 9: of time in the first six weeks to two months 519 00:24:22,119 --> 00:24:22,840 Speaker 9: on immigration. 520 00:24:23,640 --> 00:24:28,119 Speaker 2: Our thanks to Nancy Cook, Bloomberg's senior national political correspondent. 521 00:24:27,800 --> 00:24:30,040 Speaker 3: Coming up on the program, a look at corporate earnings 522 00:24:30,040 --> 00:24:31,280 Speaker 3: in the aerospace industry. 523 00:24:31,440 --> 00:24:34,320 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 524 00:24:34,359 --> 00:24:36,760 Speaker 2: depth research and data on two thousand companies and one 525 00:24:36,840 --> 00:24:39,840 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 526 00:24:39,880 --> 00:24:41,880 Speaker 2: b I go on the terminal on Paul. 527 00:24:41,640 --> 00:24:44,119 Speaker 3: Sweeney and amlex Steel and this is Bloomberg. 528 00:24:51,760 --> 00:24:55,320 Speaker 8: You were listening to the Bloomberg Intelligence podcast. Catch the 529 00:24:55,359 --> 00:24:58,719 Speaker 8: program live weekdays at ten am Eastern on Apple car 530 00:24:58,840 --> 00:25:01,640 Speaker 8: Play and the Android Audio with the Bloomberg Business app. 531 00:25:01,720 --> 00:25:04,479 Speaker 8: You can also listen live on Amazon Alexa from our 532 00:25:04,520 --> 00:25:08,679 Speaker 8: flagship New York station, Just say Alexa Play Bloomberg eleven thirty. 533 00:25:09,840 --> 00:25:12,240 Speaker 3: We moved next to the aerospace industry this week. We 534 00:25:12,280 --> 00:25:14,879 Speaker 3: got earnings from American Airlines and GE Aerospace. 535 00:25:15,119 --> 00:25:18,560 Speaker 2: American Airlines forecast at a surprise first quarter loss as 536 00:25:18,560 --> 00:25:21,000 Speaker 2: a carrier works to win back corporate travel after a 537 00:25:21,000 --> 00:25:22,680 Speaker 2: strategic blunder last year. 538 00:25:22,880 --> 00:25:27,439 Speaker 3: Meantime, Genmal Electric Aerospace GE Aerospace exceeded Wallstreet expectations for 539 00:25:27,520 --> 00:25:29,040 Speaker 3: profit and sales in the fourth quarter. 540 00:25:29,359 --> 00:25:31,760 Speaker 2: This comes as the jet engine maker works through supply 541 00:25:31,840 --> 00:25:35,440 Speaker 2: chain limitations and capitalized on a strong maintenance backlog. 542 00:25:35,600 --> 00:25:38,160 Speaker 3: For more We are joined by George Ferguson Bloomberg Intelligence 543 00:25:38,160 --> 00:25:40,280 Speaker 3: senior Aerospace, Defense and Airlines analyst. 544 00:25:40,480 --> 00:25:42,960 Speaker 2: We first asked George for his take on results from 545 00:25:42,960 --> 00:25:43,840 Speaker 2: American Airlines. 546 00:25:44,280 --> 00:25:47,119 Speaker 10: Yeah, so, I mean on an adjusted basis, though, American 547 00:25:47,400 --> 00:25:49,320 Speaker 10: fine and four Q is all about their one Q 548 00:25:49,600 --> 00:25:52,159 Speaker 10: guide and that was guided at a loss compared to 549 00:25:52,240 --> 00:25:57,080 Speaker 10: their peers United in Delta. So I mean, American looks 550 00:25:57,080 --> 00:25:59,000 Speaker 10: like they're just going to add less capacity in the 551 00:25:59,000 --> 00:26:02,360 Speaker 10: first quarter and that's going to make it more difficult 552 00:26:02,400 --> 00:26:07,600 Speaker 10: to manage expenses. Expenses will be higher than peers, and 553 00:26:07,680 --> 00:26:10,720 Speaker 10: so their performance just won't be as good. 554 00:26:11,320 --> 00:26:11,960 Speaker 1: But I guess what I. 555 00:26:11,960 --> 00:26:16,040 Speaker 10: Would say though, is Americans four Q earnings, you know, 556 00:26:16,119 --> 00:26:20,680 Speaker 10: their their revenue growth in all markets looked better than 557 00:26:20,680 --> 00:26:23,399 Speaker 10: their peers on par or better. 558 00:26:23,920 --> 00:26:24,080 Speaker 6: You know. 559 00:26:24,119 --> 00:26:27,480 Speaker 10: So, American a couple of years ago decided on a 560 00:26:27,480 --> 00:26:29,040 Speaker 10: new strategy where they were going to try to do 561 00:26:29,600 --> 00:26:33,520 Speaker 10: less agency ticketing, you know, through travel agencies and such, 562 00:26:33,520 --> 00:26:37,399 Speaker 10: and more direct That kind of backfired. They've they've turned 563 00:26:37,440 --> 00:26:39,880 Speaker 10: that around and they're going back towards a more traditional 564 00:26:40,600 --> 00:26:43,400 Speaker 10: distribution of tickets, and I think it's starting to show 565 00:26:43,480 --> 00:26:46,119 Speaker 10: up in the financials now again. I think four Q 566 00:26:46,480 --> 00:26:49,960 Speaker 10: looked pretty good from a revenue performance, and so I 567 00:26:50,000 --> 00:26:52,080 Speaker 10: would expect that one Q is probably a bit of 568 00:26:52,119 --> 00:26:53,600 Speaker 10: a glitch, as they're just not going to put as 569 00:26:53,680 --> 00:26:56,880 Speaker 10: much capacity in the marketplace manage a little bit higher expenses. 570 00:26:57,240 --> 00:26:59,480 Speaker 10: But I really think that they're closing the gap, and 571 00:26:59,520 --> 00:27:01,960 Speaker 10: we'll get to close the gap with the United and 572 00:27:02,000 --> 00:27:03,920 Speaker 10: Delta as they roll through twenty twenty five. 573 00:27:04,520 --> 00:27:07,159 Speaker 3: So when do they expect them to catch up and 574 00:27:07,200 --> 00:27:10,080 Speaker 3: sort of reverse the mistake that they made, Like when 575 00:27:10,119 --> 00:27:11,879 Speaker 3: does that resolve itself completely? 576 00:27:12,800 --> 00:27:15,080 Speaker 10: So, I mean I was looking, you know, to some 577 00:27:15,160 --> 00:27:18,479 Speaker 10: of the differential and yields, price paid per mile flown 578 00:27:19,200 --> 00:27:22,119 Speaker 10: at the carriers. Delta is still the top dog, but 579 00:27:23,080 --> 00:27:26,119 Speaker 10: Americans only sort of three percent behind. It's always hard 580 00:27:26,119 --> 00:27:28,080 Speaker 10: to figure out exactly when the catchup's. 581 00:27:27,640 --> 00:27:28,160 Speaker 5: Going to occur. 582 00:27:28,600 --> 00:27:30,240 Speaker 10: Is it going to occur in the next couple of quarters. 583 00:27:30,280 --> 00:27:32,280 Speaker 10: Probably not. I think it'll take a while, But I 584 00:27:32,359 --> 00:27:34,879 Speaker 10: bet you they make a lot of progress during twenty 585 00:27:34,920 --> 00:27:37,640 Speaker 10: twenty five. I mean, it's a pretty competitive marketplace. 586 00:27:38,080 --> 00:27:38,840 Speaker 2: There's a fair. 587 00:27:38,680 --> 00:27:41,560 Speaker 10: Amount of overlap. I don't think, you know, Americans hubs 588 00:27:41,560 --> 00:27:44,680 Speaker 10: probably aren't as great as Deltas and United, but I 589 00:27:44,720 --> 00:27:46,520 Speaker 10: would expect they're going to close a good portion of 590 00:27:46,520 --> 00:27:47,880 Speaker 10: that gap this year. 591 00:27:48,160 --> 00:27:50,359 Speaker 2: You know, I'm just looking an evaluation on a pe basis. 592 00:27:50,400 --> 00:27:54,320 Speaker 2: American you know, got an eight handle, United's around ten times, 593 00:27:54,680 --> 00:27:58,879 Speaker 2: Delta is the premium at eleven twelve times. What drives 594 00:27:58,960 --> 00:28:01,520 Speaker 2: the differential evaluation for these three companies. I kind of 595 00:28:01,680 --> 00:28:03,879 Speaker 2: think of them as kind of all kind of the same. 596 00:28:04,359 --> 00:28:06,760 Speaker 2: But the market doesn't, does it? 597 00:28:05,680 --> 00:28:10,280 Speaker 10: It doesn't look I think Delta does have you know, 598 00:28:10,320 --> 00:28:12,960 Speaker 10: as you just pointed out, has the best reputation in 599 00:28:13,000 --> 00:28:17,000 Speaker 10: the group. Again there you know, they're the market leader 600 00:28:17,119 --> 00:28:20,560 Speaker 10: in revenue per mile flown. I think they've done a 601 00:28:20,560 --> 00:28:23,440 Speaker 10: really good job on their loyalty program. I think that's 602 00:28:23,440 --> 00:28:27,399 Speaker 10: probably generating the most revenue of those big three as well, 603 00:28:28,200 --> 00:28:30,960 Speaker 10: and that's really nice, high powered revenue, right, A lot 604 00:28:30,960 --> 00:28:33,240 Speaker 10: of it flows to the bottom line. So Delta is 605 00:28:33,400 --> 00:28:35,680 Speaker 10: clearly the market leader. And again I think it's that loyalty. 606 00:28:36,119 --> 00:28:39,080 Speaker 10: I think there's a real desire to fly Delta. There's 607 00:28:39,080 --> 00:28:41,680 Speaker 10: sort of this Delta cult out there. United has been 608 00:28:41,760 --> 00:28:44,600 Speaker 10: kind of closing that ground. The United has a very 609 00:28:44,640 --> 00:28:49,000 Speaker 10: strong international network and I think we've really seen that 610 00:28:49,080 --> 00:28:53,040 Speaker 10: recently with you know there's very good demand, very strong 611 00:28:53,080 --> 00:28:56,920 Speaker 10: demand to go transatlantic right now Americans. The dollars strong. 612 00:28:57,200 --> 00:28:59,360 Speaker 10: Americans apparently want to go there in the depths of 613 00:28:59,400 --> 00:29:02,240 Speaker 10: winter now, even because we just can't get enough Europe 614 00:29:02,280 --> 00:29:05,960 Speaker 10: after the pandemic. I don't know how long this lasts, 615 00:29:05,960 --> 00:29:08,280 Speaker 10: maybe as long as the dollar is this strong. But 616 00:29:08,320 --> 00:29:10,560 Speaker 10: I think that's been really shining through and United and 617 00:29:10,560 --> 00:29:12,920 Speaker 10: helping them close some of the gap. They still have 618 00:29:13,000 --> 00:29:15,120 Speaker 10: work to do on the loyalty side, and I think 619 00:29:15,160 --> 00:29:18,040 Speaker 10: the domestic side of their network, and America has kind 620 00:29:18,040 --> 00:29:21,160 Speaker 10: of been the laggard. And again I think you know, 621 00:29:21,480 --> 00:29:26,040 Speaker 10: their internationals, especially international indo Europe isn't as good I think, 622 00:29:26,520 --> 00:29:29,160 Speaker 10: and into Asia is much less than those two carriers, 623 00:29:30,040 --> 00:29:32,880 Speaker 10: And America just doesn't have the loyalty program as strong. 624 00:29:32,960 --> 00:29:36,720 Speaker 10: So I think they've been more highly levered than the 625 00:29:36,760 --> 00:29:39,480 Speaker 10: other two because they have gone through fleet refreshes earlier. 626 00:29:39,760 --> 00:29:42,440 Speaker 10: So that's sort of why they're the laggard. But again, 627 00:29:42,480 --> 00:29:45,720 Speaker 10: they all operate in the same marketplace. There are some 628 00:29:45,840 --> 00:29:48,720 Speaker 10: nuances to their hubs, but it's hard to see any 629 00:29:48,720 --> 00:29:51,320 Speaker 10: one of them walking away too far from the others, 630 00:29:51,560 --> 00:29:53,400 Speaker 10: and I think that's why we're seeing this convergence in 631 00:29:53,440 --> 00:29:54,160 Speaker 10: the full service. 632 00:29:54,280 --> 00:29:54,800 Speaker 5: We'll see it. 633 00:29:55,120 --> 00:29:56,800 Speaker 3: George, we have a little over a minute, luck, but 634 00:29:56,800 --> 00:29:58,160 Speaker 3: I didn't want to let you go before we talked 635 00:29:58,160 --> 00:30:00,200 Speaker 3: about GE and what that read through A and their 636 00:30:00,240 --> 00:30:03,560 Speaker 3: aerospace division men for Boeing so strong. 637 00:30:04,240 --> 00:30:07,560 Speaker 10: GE's got, you know, the maintenance business really powering cash 638 00:30:07,600 --> 00:30:12,680 Speaker 10: flow and margins. They guided to next year they show 639 00:30:13,240 --> 00:30:17,440 Speaker 10: cash flow and profit not growing as fast as revenue. 640 00:30:17,760 --> 00:30:19,440 Speaker 10: Story there is. I think you're going to see more 641 00:30:19,480 --> 00:30:22,320 Speaker 10: deliveries out of Boeing and Airbus. We're calling for that. 642 00:30:22,720 --> 00:30:26,200 Speaker 10: New engines are diluted to margins and so that'll take 643 00:30:26,240 --> 00:30:28,400 Speaker 10: a little bit of the shine off that business. But 644 00:30:28,480 --> 00:30:31,320 Speaker 10: everybody's flying everything as long as they can because it's 645 00:30:31,360 --> 00:30:34,440 Speaker 10: hard to get new airplanes because of the supply chain problems. 646 00:30:34,720 --> 00:30:38,040 Speaker 10: And that's really helping to boost that margin income at GE, 647 00:30:38,520 --> 00:30:41,640 Speaker 10: which is you know, well into double digits kind of stuff. 648 00:30:41,640 --> 00:30:42,920 Speaker 2: It's great stuff, all right. 649 00:30:42,920 --> 00:30:46,120 Speaker 3: Thanks to George Ferguson, Bloomberg Intelligence, Senior Aerospace, Defense and 650 00:30:46,160 --> 00:30:49,000 Speaker 3: Airlines analyst. Each week we take a look at research 651 00:30:49,000 --> 00:30:52,400 Speaker 3: from Bloomberg n EF previously known as New Energy Finance. 652 00:30:52,440 --> 00:30:54,760 Speaker 2: They're the team at Bloomberg that tracks and analyzes the 653 00:30:54,880 --> 00:30:59,040 Speaker 2: energy transition from commodities to power, transport, industries, buildings, and 654 00:30:59,120 --> 00:31:00,280 Speaker 2: agricultural sects. 655 00:31:00,360 --> 00:31:01,720 Speaker 3: This week we took a look at what a Trump 656 00:31:01,760 --> 00:31:04,400 Speaker 3: administration means for the energy transition from where we are 657 00:31:04,480 --> 00:31:08,720 Speaker 3: joined by Derek Flackole Bloomberg bn EF's lead US policy analyst. 658 00:31:08,920 --> 00:31:11,680 Speaker 2: We first asked Derek, what's the substance of Trump's recent 659 00:31:11,720 --> 00:31:14,240 Speaker 2: executive orders on energy and if we're in need of 660 00:31:14,280 --> 00:31:15,480 Speaker 2: an energy emergency? 661 00:31:16,120 --> 00:31:19,600 Speaker 11: From a sort of market perspective, the answer would arguably 662 00:31:19,760 --> 00:31:22,480 Speaker 11: be no. Certainly from a supply amount, the US is 663 00:31:22,520 --> 00:31:26,560 Speaker 11: the world's largest producer of oil and gas, there is 664 00:31:26,560 --> 00:31:28,760 Speaker 11: an argument to be made about price, which is certainly 665 00:31:28,760 --> 00:31:32,480 Speaker 11: the basis of the Trump administration's order. But more to 666 00:31:32,520 --> 00:31:35,920 Speaker 11: the point, declaring an emergency doesn't have a sort of 667 00:31:36,040 --> 00:31:38,560 Speaker 11: clear legal basis of restriction. It's a thing that's more 668 00:31:38,640 --> 00:31:40,880 Speaker 11: or less the discretion of the president, so he does 669 00:31:40,920 --> 00:31:43,920 Speaker 11: have the power to declare this. The substantive implications, of course, 670 00:31:44,240 --> 00:31:47,200 Speaker 11: might be somewhat different. There's not a lot of precedent 671 00:31:47,240 --> 00:31:49,280 Speaker 11: for a national energy emergency to close would be the 672 00:31:49,320 --> 00:31:51,640 Speaker 11: nineteen seventies, where there was a large amount of regional 673 00:31:51,640 --> 00:31:55,520 Speaker 11: emergencies declared, there might be some ability to ignore or 674 00:31:55,520 --> 00:31:58,840 Speaker 11: look past normal environmental rules or restrictions that could slow 675 00:31:58,840 --> 00:32:02,040 Speaker 11: the construction of energy project. But of course this would 676 00:32:02,080 --> 00:32:04,640 Speaker 11: require a lot of cooperation with perhaps state and local 677 00:32:04,680 --> 00:32:07,160 Speaker 11: authorities and certainly the private sector to really build anything out, 678 00:32:07,480 --> 00:32:10,200 Speaker 11: and the implications on prices remained to be seen. It 679 00:32:10,240 --> 00:32:11,640 Speaker 11: takes a long time to build anything, and that means 680 00:32:11,640 --> 00:32:13,160 Speaker 11: a long time to have an impact on prices. 681 00:32:13,560 --> 00:32:15,560 Speaker 2: Hey, Derek, just from at that thirty thousand foot level, 682 00:32:15,560 --> 00:32:18,680 Speaker 2: what does a Prince president Trump presidency meet for just 683 00:32:18,760 --> 00:32:22,800 Speaker 2: alternative energy in general, maybe wind in particular. 684 00:32:23,880 --> 00:32:27,680 Speaker 11: Sure, so zooming in on wind there's a bit more 685 00:32:27,800 --> 00:32:30,720 Speaker 11: vulnerability than a lot of other energy sectors because in 686 00:32:31,000 --> 00:32:36,400 Speaker 11: offshore wind there's reliance on federal permits. Everything is basically 687 00:32:36,480 --> 00:32:39,880 Speaker 11: on the federally owned seabed as well as federal leases. 688 00:32:40,160 --> 00:32:42,719 Speaker 11: So those are two different areas where the president has 689 00:32:42,720 --> 00:32:46,680 Speaker 11: a lot of leverage to halt leasing or new construction. 690 00:32:46,920 --> 00:32:49,440 Speaker 11: Trump has already done that with one specific executive order. 691 00:32:50,000 --> 00:32:52,440 Speaker 11: Onshore wind is a little bit different. Unless it's on 692 00:32:52,480 --> 00:32:57,280 Speaker 11: federal land or impacts certain federally regulated waters or endangered species, 693 00:32:57,400 --> 00:32:59,200 Speaker 11: you're not going to need a federal permit for that, 694 00:33:00,120 --> 00:33:02,680 Speaker 11: so that's a bit more limited there. And then when 695 00:33:02,720 --> 00:33:06,040 Speaker 11: you're looking at solar and storage and other factors like that, 696 00:33:07,480 --> 00:33:11,600 Speaker 11: it's not really as affected by Trump's orders. He did 697 00:33:12,080 --> 00:33:14,960 Speaker 11: pause certain forms of funding from the Inflation Reduction Act, 698 00:33:15,000 --> 00:33:17,080 Speaker 11: the Infrastructure Investment and Jobs Act. Those are the sort 699 00:33:17,080 --> 00:33:21,160 Speaker 11: of Biden era signature clean energy subsidy laws. But by 700 00:33:21,160 --> 00:33:23,880 Speaker 11: my understanding, that shouldn't really be affecting the tax credits, 701 00:33:23,880 --> 00:33:26,240 Speaker 11: which are driving a lot of deployment, and state level 702 00:33:26,280 --> 00:33:29,640 Speaker 11: regulation in the power sector, which is a major driver continues. 703 00:33:29,760 --> 00:33:32,080 Speaker 11: You're still going to see demands for clean power for 704 00:33:32,200 --> 00:33:35,880 Speaker 11: utilities in California, Michigan, a wide variety of states, and 705 00:33:35,880 --> 00:33:39,040 Speaker 11: in places that don't have those standards, like Texas, there's 706 00:33:39,120 --> 00:33:42,640 Speaker 11: still a really substantial amount of solar and storage build 707 00:33:42,960 --> 00:33:46,440 Speaker 11: not because of not because of regulations, because of market demand, 708 00:33:46,480 --> 00:33:48,800 Speaker 11: because it's quick to build and provides meets load growth 709 00:33:48,840 --> 00:33:51,560 Speaker 11: pretty quickly. So he can't really stop it, but he 710 00:33:51,600 --> 00:33:53,680 Speaker 11: can slow or complicate it in various ways. 711 00:33:53,760 --> 00:33:55,520 Speaker 3: And I hear you on the tax credits that has 712 00:33:55,560 --> 00:33:57,600 Speaker 3: to take an Act of Congress, but that would be 713 00:33:57,800 --> 00:34:01,880 Speaker 3: pivotal for a lot of these companies. Part though, has 714 00:34:01,960 --> 00:34:06,160 Speaker 3: to do with the deployment of cash. So the Department 715 00:34:06,200 --> 00:34:09,440 Speaker 3: of Loans issued a boatload of money right before. I mean, 716 00:34:09,480 --> 00:34:10,920 Speaker 3: they've been trying to get rid of this money like 717 00:34:10,960 --> 00:34:13,680 Speaker 3: crazy for the last four years. Where is that money now, Like, 718 00:34:13,800 --> 00:34:15,600 Speaker 3: is it just like dry up and go away? Can 719 00:34:15,640 --> 00:34:17,360 Speaker 3: Trump recall any of these loans? 720 00:34:18,400 --> 00:34:21,680 Speaker 11: So recalling that will be pretty tricky. A large amount 721 00:34:21,719 --> 00:34:24,160 Speaker 11: of those loans have now been committed from the Department 722 00:34:24,280 --> 00:34:27,880 Speaker 11: Energy's Loan Program's office. Both an active loan and a 723 00:34:27,880 --> 00:34:31,400 Speaker 11: conditional commitment are considered obligated as I as far as 724 00:34:31,440 --> 00:34:34,840 Speaker 11: my research told me, which means it's basically contractually assigned 725 00:34:34,880 --> 00:34:39,000 Speaker 11: to a private company. That means that it's pretty difficult 726 00:34:39,040 --> 00:34:42,080 Speaker 11: to claw that back. The active loans, of course, are 727 00:34:42,120 --> 00:34:45,080 Speaker 11: even more difficult because once a business is actually enjoying 728 00:34:45,120 --> 00:34:47,560 Speaker 11: the benefits of that you're building a factory or opening 729 00:34:47,600 --> 00:34:51,000 Speaker 11: a mine, it becomes both legally and politically trickier to 730 00:34:51,040 --> 00:34:51,680 Speaker 11: pull that away. 731 00:34:53,239 --> 00:34:57,799 Speaker 2: So when we sit back, Derek, what's the reality here? 732 00:34:57,920 --> 00:35:00,680 Speaker 2: You know you mentioned when where there is some some 733 00:35:00,760 --> 00:35:03,360 Speaker 2: opportunity for the federal government to slow things down, But 734 00:35:03,400 --> 00:35:06,480 Speaker 2: how about other areas of alternatives. Is that going to 735 00:35:06,560 --> 00:35:10,839 Speaker 2: need cooperation of Congress, private sector. How do you think 736 00:35:10,840 --> 00:35:11,480 Speaker 2: that might play out? 737 00:35:12,480 --> 00:35:16,320 Speaker 11: Well, It definitely requires a lot of cooperation on both ends. Firstly, 738 00:35:17,200 --> 00:35:20,280 Speaker 11: from the sort of utility scale deployment side of things, again, 739 00:35:20,320 --> 00:35:23,440 Speaker 11: you're still looking at a lot of state driven demand 740 00:35:23,840 --> 00:35:27,359 Speaker 11: for a build out, either regulatory or market. Secondly, if 741 00:35:27,360 --> 00:35:30,120 Speaker 11: you're trying to really cut the tax credits or slow 742 00:35:30,160 --> 00:35:34,080 Speaker 11: deployment that way, you do need Congress's approval to really 743 00:35:34,120 --> 00:35:37,400 Speaker 11: substantially change the rates. Over the longer term, maybe two 744 00:35:37,440 --> 00:35:40,200 Speaker 11: to three years, you could see Trump reversing some of 745 00:35:40,200 --> 00:35:43,400 Speaker 11: the finalized Biden administration regulations in a way that might 746 00:35:43,440 --> 00:35:46,160 Speaker 11: make these credits harder to access, but that's going to 747 00:35:46,160 --> 00:35:50,200 Speaker 11: take time. And on top of that, in terms of 748 00:35:50,880 --> 00:35:54,280 Speaker 11: other parts of things like you know, oil and gas access, 749 00:35:54,280 --> 00:35:57,440 Speaker 11: things like that, that's going to be driven heavily by 750 00:35:57,760 --> 00:36:01,880 Speaker 11: private sector decision making. Right, lower a bunch of barriers, 751 00:36:02,719 --> 00:36:06,160 Speaker 11: But you can't really say to energy producers, Okay, we're 752 00:36:06,160 --> 00:36:10,640 Speaker 11: going to make you produce at an amount that basically 753 00:36:11,360 --> 00:36:14,680 Speaker 11: reduces your profitability. And one last point, I'll make something 754 00:36:14,680 --> 00:36:17,440 Speaker 11: that ties into all this fossil and non fossil infrastructure 755 00:36:17,880 --> 00:36:20,680 Speaker 11: is permitting reform, and that is mostly going to take 756 00:36:20,680 --> 00:36:23,920 Speaker 11: an Act of Congress. In particular, it's probably going to 757 00:36:23,960 --> 00:36:26,480 Speaker 11: take a sixty votes in the Senate, which means seven 758 00:36:26,480 --> 00:36:29,319 Speaker 11: Democrats coming alongside. You can't really easily fit that into 759 00:36:29,320 --> 00:36:32,080 Speaker 11: a reconciliation bill, which is primarily about tax and spending, 760 00:36:32,239 --> 00:36:35,239 Speaker 11: and it can get you a fifty votes passage in 761 00:36:35,239 --> 00:36:35,600 Speaker 11: the Senate. 762 00:36:35,920 --> 00:36:36,200 Speaker 5: All right. 763 00:36:36,200 --> 00:36:39,000 Speaker 3: Thanks to Derek Flackhole, Bloomberg b Any Apps, Lead US 764 00:36:39,040 --> 00:36:39,920 Speaker 3: policy analyst. 765 00:36:40,480 --> 00:36:44,880 Speaker 8: This is a Bloomberg Intelligence podcast, available on Apple, Spotify, 766 00:36:45,000 --> 00:36:48,279 Speaker 8: and anywhere else you get your podcasts. Listen live each 767 00:36:48,320 --> 00:36:51,440 Speaker 8: weekday ten am to noon Eastern on Bloomberg dot com, 768 00:36:51,480 --> 00:36:54,920 Speaker 8: the iHeartRadio app, tune In, and the Bloomberg Business app. 769 00:36:55,040 --> 00:36:58,080 Speaker 8: You can also watch us live every weekday on YouTube 770 00:36:58,160 --> 00:37:00,000 Speaker 8: and always on the Bloomberg terminal