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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moven news.

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Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com Slash podcast.

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Speaker 1: Talk about the global energy. We've been calling out the

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Speaker 1: price of WTI crude oil, you know, for the last

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Speaker 1: several months, as it's moved off of it's low, and

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Speaker 1: he's now up another one point four percent today for

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Speaker 1: WTI crude just under ninety three dollars or barrel, and

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Speaker 1: it's getting a lot of people as it does when

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Speaker 1: we see big moves talking about alternatives to oil. One

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Speaker 1: of those is nuclear. Seth Gray joins us. He's a

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Speaker 1: president and chief executive officer light Bridge Corporation. That's a

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Speaker 1: nastac trade. It's company ltbrs at ticker to put in there. Seth,

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Speaker 1: thanks so much for joining us here in our Bloomberg

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Speaker 1: Interactor Brooker Studio. What is light Bridge Corporation? What do

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Speaker 1: you guys do? What's your strategy?

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Speaker 3: Look, our main activities are. We are designing advanced fuels

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Speaker 3: that will work in the existing reactors as well as

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Speaker 3: the newcoming small ones that we're talking.

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Speaker 1: So we're talking nuclear nuclear.

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Speaker 3: Fuel fuel, so fuel you put inside the reactors. The

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Speaker 3: reactors won't work without it. But this is a reimagined,

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Speaker 3: for the first time, new better fuel for the reactors.

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Speaker 3: We're partnering with Idaho National Laboratory to develop and test it,

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Speaker 3: and this will improve the safety of the reactors and

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Speaker 3: the economics of the reactors dramatically, as well as the

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Speaker 3: non proliferation and can allow reactors to load follow with

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Speaker 3: renewables on a zero carbon grid.

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Speaker 2: How safe can they be? I just got finished watching Chernobyl,

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Speaker 2: which is terrifying, and I know I'm one of the

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Speaker 2: last people to watch it. But before that, I watched

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Speaker 2: Inside Bill Gates' Brain and I thought it was really

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Speaker 2: a fantastic cell for the nuclear industry. He seems to

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Speaker 2: have found a very safe solution to creating nuclear energy.

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Speaker 4: Right.

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Speaker 3: What's happening now is companies like terror Power that Bill

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Speaker 3: Gates is the chairman of and light Bridge, our company,

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Speaker 3: are developing newer, much safer technologies that literally physically cannot

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Speaker 3: have an accident like Chernoybyl. These are very different, extremely

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Speaker 3: safer technologies. The light Bridge fuel runs one thousand degrees

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Speaker 3: celsius cooler in reactors than the current fuel and actually

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Speaker 3: will produce more power while doing it, and just extremely safe.

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Speaker 1: Set reset kind of the world energy grid for US,

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Speaker 1: where is nuclear power today in the US, and then

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Speaker 1: maybe in other parts of the world. Is it on

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Speaker 1: the ascendency or is it still facing a lot of headwinds.

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Speaker 3: It's on the ascendancy. The polling in most countries shows

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Speaker 3: nuclear has about two thirds favorable or strongly favorable support,

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Speaker 3: and the people who work in nuclear don't believe that,

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Speaker 3: and that we're seeing new nuclear reactors being finished in Georgia,

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Speaker 3: in the United States, ordered in many countries, we're seeing

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Speaker 3: rapid development of these small reactors and advanced fuel like

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Speaker 3: what light Bridge is doing. And it's partly for climate reasons,

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Speaker 3: but I think the stronger driver right now is energy security.

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Speaker 3: Countries that either want to get off relying on Putin's

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Speaker 3: fossil fuels, or it turns out whoever supplies them with

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Speaker 3: fossil fuels they tend not to trust, and being able

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Speaker 3: to get off that is a good thing. And you

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Speaker 3: know you just mentioned the one percent you know, increase

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Speaker 3: in oil prices, it will translate to about one percent

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Speaker 3: price increase in a lot of expenses, including gasoline. That

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Speaker 3: doesn't happen in nuclear it's very level pricing. A one

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Speaker 3: percent increase in uranium price would result in a tiny,

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Speaker 3: tiny fraction of one percent of increase in a nuclear

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Speaker 3: power price.

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Speaker 2: But it's the startup costs that are what terrifies everyone.

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Speaker 3: Right, Yes, in in terms of if you're building one

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Speaker 3: or two, Yes, if you're building four, By the time

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Speaker 3: you get to the third one, those issues are done.

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Speaker 3: The United States built over one hundred large reactors, you know,

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Speaker 3: most of them on schedule, on budget. The United Arab

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Speaker 3: Emirates just built four pretty much on schedule on budget.

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Speaker 3: China is, Russia is, France built almost sixty of them

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Speaker 3: on schedule on budget. So yes, it's like building a bridge.

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Speaker 3: If it's a one of a kind thing, the engineering,

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Speaker 3: the complex construction can go over but you build several

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Speaker 3: of them, that's not the case. And with these small reactors,

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Speaker 3: where much of them will be factory built, you could

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Speaker 3: build them like seven thirty sevens, very large numbers and

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Speaker 3: really know the timeframes and costs.

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Speaker 1: Talk to us about those smaller reactors. I guess I've

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Speaker 1: heard about them just over the last several years. Tell

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Speaker 1: me what are they, how are they different, and what's

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Speaker 1: kind of their purpose?

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Speaker 3: Well, right now, the typical nuclear actor is one thousand

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Speaker 3: megawats electric power. Small reactors under the US government definition

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Speaker 3: are three hundred megawats are smaller, and some go way

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Speaker 3: smaller than that, so say less than a third the

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Speaker 3: size of the current reactors to even much smaller than that.

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Speaker 3: So first of all, you could get them small enough

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Speaker 3: that you could have dedicated power to critical facilities like

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Speaker 3: military bases, data centers, oil refineries, et cetera. So if

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Speaker 3: someone shuts down the electric grid, you don't lose the

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Speaker 3: military base, etc. Another factor is that because so much

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Speaker 3: of them are factory built and shipped to the site,

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Speaker 3: you have very good quality control, can build them much cheaper,

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Speaker 3: much faster, and they're just using more advanced, more modern

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Speaker 3: technology on safety, so that even with situations like you've

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Speaker 3: seen where a reactor will lose water that kind of thing,

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Speaker 3: these reactors could not harm anybody literally.

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Speaker 5: You know.

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Speaker 3: It looks like even if they lived across the street

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Speaker 3: from the plant.

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Speaker 1: Are they are we building them in the US now

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Speaker 1: we are.

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Speaker 3: Going too soon. New Scale is working with Idaho National

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Speaker 3: Laboratory to deploy one at Idaho National Laboratory. The company

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Speaker 3: you mentioned, Terror Power with Bill Gates is looking at

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Speaker 3: deploying at least one in Wyoming. X Energy is looking

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Speaker 3: at deploying in Texas to power down chemical plants, and

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Speaker 3: there are several others that are looking at near term

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Speaker 3: and probably the first will actually be nearby. G Hitachi

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Speaker 3: deploying one at Ontario Power Generation in Canada.

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Speaker 1: Okay, so I know the nuclear energy policy. Someone is

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Speaker 1: in New York this week. What's the number one issue?

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Speaker 3: Yeah, yeah, and I was pleased to speak there yesterday,

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Speaker 3: and the number one is shoe there, I'd say, ostensibly

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Speaker 3: is climate change, and that's what John Kerry spoke about

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Speaker 3: in his keynote yesterday as part of Climate Week. But

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Speaker 3: with President Zelenski about to arrive here in New York

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Speaker 3: and speak at some events here too, I think energy

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Speaker 3: security is really dominating and we're hearing more and more

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Speaker 3: about that at the conference too, not just climate.

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Speaker 2: I wonder when everybody started adding a second you to

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Speaker 2: the word nuclear. Have you noticed that even George Bush

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Speaker 2: says nuclear?

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Speaker 4: Yeah?

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Speaker 2: Yeah, where's that come from?

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Speaker 1: Well?

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Speaker 3: I think it came from George Bush originally, but it

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Speaker 3: kind of stuck. So it's an American thing. I don't

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Speaker 3: hear that in other countries.

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Speaker 1: All right, Seth, thanks so much for joining us. Seth Gray,

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Speaker 1: President and chief executive officer of light Bridge Corporation lt

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Speaker 1: BR is a ticker to load into your Bloomberg terminal.

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Speaker 5: You're listening to the team ken'shur Live program Bloomberg Markets

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Speaker 5: weekdays at ten am Eastern on Bloomberg dot com, the

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Speaker 5: iHeartRadio app, and the Bloomberg Business App, or listen on

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Speaker 5: demand wherever you get your podcasts.

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Speaker 1: There's just a lot of folks out there doing some

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Speaker 1: really good work about just alternative energies in general. One

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Speaker 1: of them is Jonathan Maxwell. He's the CEO and co

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Speaker 1: founder of Sustainable Development Capital, and he has also has

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Speaker 1: got a new book out scene right here, got a

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Speaker 1: new book out the Edge, How competition for resources is

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Speaker 1: pushing the world and it's climate to the brink and

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Speaker 1: what we can do about it. Jonathan, thanks so much

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Speaker 1: for joining us here on our Bloomberg Interactive Broker's studio.

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Speaker 1: What's the big message for you when you're getting you

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Speaker 1: know you here. It's Climate Week in New York, it's

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Speaker 1: United Nations General Assembly. I gotta think energy, Given what's

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Speaker 1: happening in the world is front and center. What's what's

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Speaker 1: the message you bring to your clients.

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Speaker 6: So some people might say the clean energy transitional sustainability

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Speaker 6: isn't going so well, okay, by most eighty two percent

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Speaker 6: of the world is gas and coal in terms of

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Speaker 6: its energy. So the message I bring is that not

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Speaker 6: only do we need to figure out, which is the

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Speaker 6: mainstream piece, how to get more clean energy into the system,

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Speaker 6: but we've got to figure out how we can start

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Speaker 6: wasting two thirds to three quarters of the energy in

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Speaker 6: the system in the first place. So much of the

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Speaker 6: gas and the oil is love.

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Speaker 1: Before, right, Yeah, because the inefficiencies is your thing, right,

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Speaker 1: This is exactly.

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Speaker 6: Inefficience is my thing. Because the world weighs seventy five

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Speaker 6: percent of its energy, half of the food, and the

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Speaker 6: third of the water.

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Speaker 2: Is there a cool scientific term for energy that's wasted

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Speaker 2: and used.

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Speaker 6: Its energy losses, losses of primary energy, energy waste. Some

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Speaker 6: of the best work in the world has done here

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Speaker 6: in the United States by the Lawrence Livermore National Laboratory.

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Speaker 6: They run an energy flow chart. You show how much

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Speaker 6: energy comes into the US economy, how much survives. On

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Speaker 6: the other side, you lose about two thirds of the

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Speaker 6: energy and it's mostly heat. So you talked about nuclear

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Speaker 6: power stations. It's great producing power from a nuke plant,

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Speaker 6: but if you're dumping the heat, then it's only operating

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Speaker 6: at thirty eight percent efficiency. If you've got a gas

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Speaker 6: turbine which is driving electricity onto the grid and it's

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Speaker 6: dumping the heat, it's delivering forty to fifty percent efficiency.

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Speaker 2: But at least the nuclear isn't creating a carbon footprint, right.

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Speaker 6: But yes, but you're wasting the heat, and so yeah.

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Speaker 2: I understand. But the thing is other energy sources create

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Speaker 2: carbon dioxide, which contributes to global warming, right as we

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Speaker 2: are told. I don't care if nuclear dumps ninety five

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Speaker 2: percent of its energy as long as it doesn't contribute

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Speaker 2: to global warming.

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Speaker 7: Right.

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Speaker 5: Yeah.

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Speaker 6: So there are three things and one dimension and that

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Speaker 6: they're deditional to think about. So the first is carbon.

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Speaker 6: That's a really important thing to solve for. The second

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Speaker 6: is cost. How much does it actually cost? Total life

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Speaker 6: cycle and actually saving energy is the cheapest possible way,

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Speaker 6: especially if you're dumping two thirds of it. The third

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Speaker 6: is resilience and availability, and that brings us into the

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Speaker 6: last point, like how reliable. Clear is very reliable when

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Speaker 6: you put it on the grid. It can run what

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Speaker 6: they call baseload, But the problem is how long. So

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Speaker 6: here's the last point. Time. So we all talk about

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Speaker 6: transitioning the energy system, but it's going to take decades

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Speaker 6: and trillions of dollars and we're going to do it.

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Speaker 6: And that's what Janet Yellen is talking about tomorrow in

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Speaker 6: General Assembly, and we celebrate that. What I'm saying is

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Speaker 6: in the meantime it's just as important and it can

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Speaker 6: be done if not to waste the energy in the meantime.

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Speaker 2: And that's what is the most efficient source of energy

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Speaker 2: for running our homes and businesses and cars.

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Speaker 6: So the most efficient source of energy for running cars

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Speaker 6: is electricity. It's about seventy five percent efficient compared to

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Speaker 6: about fifteen to thirty.

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Speaker 2: Well, but that electricity comes from many different sources of energy.

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Speaker 2: Read it could come from nuclear, come from dirty core.

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Speaker 6: So most efficient way of generating energy for electricity it

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Speaker 6: is if you can use the heat as well as

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Speaker 6: producing the electricity. So cogeneration using wastegot is natural gas

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Speaker 6: even but as long as you're using their heat, nuclear

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Speaker 6: as long as you're using their.

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Speaker 2: Heat, So nuclear with a turbocharger.

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Speaker 6: Essentially nuclear with a heat recovery system, and then using

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Speaker 6: that heat and then in an industry needs a tremendous

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Speaker 6: amount of heat as well as power. And the last

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Speaker 6: point I'd make is we always talk about energy as

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Speaker 6: if it's electricity. Do you know how much of the

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Speaker 6: world's energy is electricity?

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Speaker 2: Wow?

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Speaker 6: Wow, Well the rest it's heat and transport fuel. So

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Speaker 6: here we are in the United States. The United States

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Speaker 6: loses seventy eight percent of the primary energy and other

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Speaker 6: way to the oil that goes into transport.

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Speaker 2: That's the number one told us yesterday, Paul that the

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Speaker 2: growth in demand for electricity over the last twenty years,

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Speaker 2: or the growth in production, has been zero, which I

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Speaker 2: thought was fascinated. I would have imagined it's exponentially larger.

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Speaker 6: Well, actually, you know Whatentially, if you look at where

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Speaker 6: electricity ends up, it ends up in the home largely,

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Speaker 6: so domestic our homes are very significant uses of energy.

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Speaker 6: Business and industry to something almost nothing in transport yet, right,

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Speaker 6: So if you then put everything into the energy system,

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Speaker 6: the big piece is we've got a big problem with

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Speaker 6: heat and transport. That's the piece that needs to be solved.

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Speaker 6: Seventy five percent of all of this energy solution is

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Speaker 6: addressable through making more efficient solutions for buildings, industry, and

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Speaker 6: transport generate energy where you need it.

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Speaker 2: So you say heat, are you talking about hvactis in general.

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Speaker 6: I'm talking about h fact high temperature process heat. I'm

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Speaker 6: talking about cooling steel mill, cement plants and very high

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Speaker 6: temperature heat cooling. There's more growth in demand for cooling

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Speaker 6: by twenty thirteen, then the whole demand for energy and

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Speaker 6: India put together. You know, data Center's massive public buildings

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Speaker 6: in the country. I come from from my funny accent

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Speaker 6: for UK. Fourteen percent of the UK's energy goes used

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Speaker 6: by the public sector. The biggest part of it's the

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Speaker 6: hospitals and they use again as much heating and cooling

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Speaker 6: as they do electricity, and they waste most of it.

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Speaker 1: What are some of the technologies that you've seen or

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Speaker 1: that you're funding that go this energy waste issue recovery?

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Speaker 6: Yeah, So recovering things that would otherwise be wasted, so

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Speaker 6: you can you can generate a natural gas even you

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Speaker 6: use it in natural gas on site, but use if

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Speaker 6: you're on site. You can use the heat for power, sorry,

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Speaker 6: heat for heating. If you're taking a blast furnace, you

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Speaker 6: can take which we do. We take the waste gases

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Speaker 6: from the blast furnace and recycle them into power and steam.

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Speaker 8: For steel mills.

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Speaker 6: You can put solar on your rooftop, not just at home,

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Speaker 6: but a massive scale in commercial industrial applications, and there's

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Speaker 6: almost no transmission and distribution loss, and you can match

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Speaker 6: your loads well. If you pair it up with batteries.

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Speaker 6: You can do heat efficiently by putting heat pumps in

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Speaker 6: industrial applications. I've been doing this job for fifteen sixteen

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Speaker 6: years of on site energy generation. The biggest innovation I

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Speaker 6: was dealing with eleven twelve years ago was the LED

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Speaker 6: light barb. All of a sudden, you could save ninety

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Speaker 6: percent of the energy with an asset that worked twenty

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Speaker 6: percent sorry, twenty times longer. But on site energy generation

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Speaker 6: is a massive part of the solution. By the way,

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Speaker 6: if you don't stop wasting all of this energy, I'm

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Speaker 6: afraid there's no point making all the new stuff, however

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Speaker 6: green it is, if we're just dumping the existing energy

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Speaker 6: networked out.

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Speaker 2: Well, don't tell anybody that.

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Speaker 6: We have to do both. We have to go as

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Speaker 6: fast as possible in generating clean energy and at the

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Speaker 6: same time, but to the same level of effort and

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Speaker 6: the same level of investment, we have to invest in

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Speaker 6: efficiencies and improvement is happening, it's just starting. I have

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Speaker 6: to celebrate the United States on this one, compared to

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Speaker 6: my country. At the moment, the United States, about twenty

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Speaker 6: percent of the Inflation Production Act is designated for things

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Speaker 6: I would broadly define as on site generation or efficiency.

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Speaker 6: The European Commission has a massive policy called energy efficiency first.

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Speaker 1: That's because if you.

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Speaker 6: Remember when Russia last invaded Ukraine, when the annexed Crimea,

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Speaker 6: the Europeans came out and said, well, for every unit

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Speaker 6: of ass we don't use is too and half we

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Speaker 6: don't need to buy from Russia. So Ever, since then,

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Speaker 6: although they mumbled it, until last year, the European Commission

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Speaker 6: had been quite serious about energy efficiency. It's now in

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Speaker 6: the number one policy the UK needs to get serious today.

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Speaker 6: There is actually finally a message from the Chancellor looking

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Speaker 6: at ways of addressing this. But this is the largest, fastest,

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Speaker 6: cheapest source of greenhouse gas emissions, the biggest way of

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Speaker 6: cutting costs in the economy, and a huge The great

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Speaker 6: news is I'm not here talking about becking for subsidies.

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Speaker 6: I'm talking about getting something done that's good for business,

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Speaker 6: good for the economy. Actually, I think it's the greatest

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Speaker 6: economic opportunity that I know.

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Speaker 1: That's all right, Jonathan, great stuff. I knew once you

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Speaker 1: start talking. I know this guy, Jonathan Maxwell, CEO and

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Speaker 1: co founder of Sustainable Development Capital.

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Speaker 5: You're listening to the tape cans are Live program Bloomberg

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Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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Speaker 5: flagship New York station, Just say Alexa, play Bloomberg eleven thirty.

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Speaker 1: Not surprisingly, climate change and natural disasters are at the

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Speaker 1: forefront of concerns among corporate executives, and we want to

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Speaker 1: get a handle on that, so we check in with

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Speaker 1: Pat Gallagher. He's the CEO of Gallagher Insurance. It is

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Speaker 1: on the New York Stock Exchange listed company a JG

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Speaker 1: is the ticker. It is a fifty billion dollar market

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Speaker 1: cap company. It's starts up twenty four and a half

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Speaker 1: percent year to date. It's a fifty two week high

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Speaker 1: and it's up seven tens to one percent today. Pat,

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Speaker 1: thanks so much for joining us here. I know you

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Speaker 1: guys recently conducted a survey of one thousand US business

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Speaker 1: owners to understand kind of how they're thinking about risk.

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Speaker 1: What are some of the key takeaways you found.

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Speaker 4: Well, first of all, it is no surprise that the

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Speaker 4: business owners are incredibly concerned about climate change and weather

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Speaker 4: related issues. And so when you think about what's happened

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Speaker 4: just in the past week or two with Lee coming

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Speaker 4: up these coasts, we kind of escaped a major hit,

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Speaker 4: but those things continue to rack the business community. In fact,

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Speaker 4: I think we estimate the first half natural causes first

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Speaker 4: half of the year caused about one hundred and thirty

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Speaker 4: eight billion dollars of losses. And if you're a business person,

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Speaker 4: you know that's a lot of businesses being impact that's

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Speaker 4: a lot of homes being impacted by natural disasters. So

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Speaker 4: that really is one of the main concerns of business

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Speaker 4: people We interviewed about a thousand clients, all of them

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Speaker 4: privately owned. So this is not the professional risk management community.

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Speaker 4: These are the people day in and day out that

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Speaker 4: make a living by running businesses, and they are concerned

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Speaker 4: about their risk management needs, which they should be.

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Speaker 2: I wonder, sorry, I wonder if there's a difference. Well,

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Speaker 2: they're concerned, but are they doing anything about it? Is

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Speaker 2: there anything they can do about it?

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Speaker 4: Yes, there is, and that's I think a really good point.

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Speaker 4: The fact is that there's a lot they can do

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Speaker 4: about it, and risk management and the ability to counsel

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Speaker 4: with them and to give them some advice is a

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Speaker 4: huge part of what we're all about out Insurance is

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Speaker 4: just really one piece of what we do for a client,

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Speaker 4: and in fact, we start with that premise that insurance

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Speaker 4: plays a role in your risk management. But your risk

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Speaker 4: management is not just we buy insurance, and it should

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Speaker 4: be what can we do? Where do we locate plants,

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Speaker 4: where do we move trucks? How do we react when

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Speaker 4: a storm is coming? What is our disaster recovery planning?

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Speaker 4: We help on all of that. So when something happens

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Speaker 4: that's really a major disaster, how do we get you

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Speaker 4: back up in business as quickly as possible. Insurance plays

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Speaker 4: a role in all of that, but it's.

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Speaker 1: Not the be all and end all, right, So from

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Speaker 1: the insurance perspective, I mean, you know, it's interesting, Pat,

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Speaker 1: I see a lot of companies relocating to It seems

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Speaker 1: like everybody and the Brothers going down to Florida. But boy,

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Speaker 1: it'd be a tough place to base a business given

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Speaker 1: all the challenges they're facing from you know, all the

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Speaker 1: weather issues down there. What do you see when you

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Speaker 1: talk to some of these smaller mid sized businesses about

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Speaker 1: kind of how they really try to incorporate that into

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Speaker 1: kind of their future.

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Speaker 4: Well, first of all, I think it's really important enough

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Speaker 4: that not all the midsized businesses across America are moving

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Speaker 4: to Florida, and they're not moving to Texas. They're in

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Speaker 4: business because the communities they're in need them. Whether they're

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Speaker 4: construction companies or real estate owners, or whether they're food companies,

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Speaker 4: whatever it is, they're in locations because there's business opportunities there.

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Speaker 4: So first of all, you've got to start with the

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Speaker 4: premise that not all companies either have the same exposures

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Speaker 4: are the same. Way to mitigate those exposures. You have

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Speaker 4: to really personalize this and you have to sit down

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Speaker 4: with a client and understand where are they operating, what

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Speaker 4: business is it in. We happen to be privileged to

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Speaker 4: be very very expert at about thirty to fifty areas

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Speaker 4: of business. So take hotels, or take real estate, or

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Speaker 4: religious or not for profit or construction. In these areas,

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Speaker 4: we really know that business. So we can sit down

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Speaker 4: and it's a different set of exposures for the person

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Speaker 4: that has to be a contractor in Naples versus the

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Speaker 4: person who's as a contractor or real estate owner in Chicago.

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Speaker 4: And these businesses are literally global, but they're across the

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Speaker 4: interviewed businesses were across the United States, and you start

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Speaker 4: with saying, okay, what are your exposures your No, two

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Speaker 4: businesses are exactly the same, and no two business owners

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Speaker 4: have the exact same appetite for risk. I'll give you

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Speaker 4: an example. I can take a large auto dealer in

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Speaker 4: the town that I live in, Glenview, Illinois, on one

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Speaker 4: side of town and have a large auto dealer on

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Speaker 4: the other side of town owned by different families. Those

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Speaker 4: families will have a different appetite for risk. How much

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Speaker 4: of the lot exposure for Hale, does one want to

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Speaker 4: take versus the other? And you have to sit down

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Speaker 4: with the owner and say, all right, you know, what

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Speaker 4: is your personal balance sheet, what is your appetite? How

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Speaker 4: do we mitigate that? What do you do when you

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Speaker 4: see a storm coming? What is the coverage that you

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Speaker 4: need to take care of that open lot? How much

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Speaker 4: are you going to have out there, how much are

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Speaker 4: you going to be able to move indoors, et cetera.

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Speaker 4: And that varies across industries, and it varies across geographies.

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Speaker 4: And that's the starting point for someone like Gallagher, who

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Speaker 4: then says at the end point, now let's buy this

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Speaker 4: insurance to cover the things that you can't mitigate. And

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Speaker 4: I think that's a really important function that a lot

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Speaker 4: of people don't understand about the responsibility that the brokers

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Speaker 4: have for their commercial clients.

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Speaker 2: By the way, in terms of Gallagher, can you keep

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Speaker 2: premium increases across coverage across geography in line with inflation?

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Speaker 2: I know we've been doing some stories about, for example,

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Speaker 2: automotive insurance rising double digits every month for the past

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Speaker 2: twelve so the inflation is there, but everywhere else, I mean,

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Speaker 2: you know, your cost to repair or replace is going

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Speaker 2: to be higher with inflation. So do you do you

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Speaker 2: see the increases in premiums as well? Do you have

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Speaker 2: that pricing power?

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Speaker 4: Well, no, we don't have pricing power because recall we

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Speaker 4: are brokers. We take no risk. So our job is

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Speaker 4: to help that insured figure out number one, how to

438
00:23:09,800 --> 00:23:12,199
Speaker 4: mitigate their own risk and then number two, how to

439
00:23:12,240 --> 00:23:15,560
Speaker 4: properly buy insurance. And that means that in order to

440
00:23:15,640 --> 00:23:18,040
Speaker 4: keep that pricing or to keep that cost at the

441
00:23:18,119 --> 00:23:21,159
Speaker 4: level that it should how much should they retain? How

442
00:23:21,240 --> 00:23:23,480
Speaker 4: much of a deductible so they should have So let

443
00:23:23,480 --> 00:23:26,280
Speaker 4: me put it in personal line standards. Do you want

444
00:23:26,320 --> 00:23:28,600
Speaker 4: to take a five hundred dollars deductible on your personal

445
00:23:28,600 --> 00:23:32,440
Speaker 4: lines or a five thousand dollars deductible? Well, different people

446
00:23:32,480 --> 00:23:35,200
Speaker 4: will take different amounts, and that has a direct impact

447
00:23:35,280 --> 00:23:38,000
Speaker 4: on the cost of your personal lines, whether it's your

448
00:23:38,040 --> 00:23:41,760
Speaker 4: auto insurance, your homeowners same is true in business. So

449
00:23:41,880 --> 00:23:44,240
Speaker 4: if you have the personal balance sheet to be able

450
00:23:44,320 --> 00:23:46,720
Speaker 4: to take more risk, you can mitigate the cost to

451
00:23:46,800 --> 00:23:49,879
Speaker 4: the premium that you're going to pay to a third party.

452
00:23:50,320 --> 00:23:52,440
Speaker 4: And we're very very good at that, whether it be

453
00:23:52,480 --> 00:23:55,560
Speaker 4: putting together group captives, whether it be putting together self

454
00:23:55,560 --> 00:23:59,119
Speaker 4: insurance programs, or whether it simply be saying, look, the

455
00:23:59,160 --> 00:24:01,440
Speaker 4: best place for you to get your insurance is this

456
00:24:01,520 --> 00:24:05,760
Speaker 4: first dollar policy written by XYZ Insurance Company. But we

457
00:24:05,960 --> 00:24:10,040
Speaker 4: don't actually have pricing power. Our job is to help

458
00:24:10,160 --> 00:24:12,520
Speaker 4: that person who doesn't live day in and day out

459
00:24:12,520 --> 00:24:16,679
Speaker 4: in the market get the best deal. And right now,

460
00:24:16,840 --> 00:24:22,679
Speaker 4: you're absolutely right. The cost of ensuring people is terrifically

461
00:24:22,760 --> 00:24:23,920
Speaker 4: impacted by inflation.

462
00:24:24,520 --> 00:24:27,480
Speaker 1: And so for it I mean is inflation, is the

463
00:24:27,600 --> 00:24:31,560
Speaker 1: rates insurance companies can charge. Is that relegated by the state.

464
00:24:31,600 --> 00:24:34,040
Speaker 1: Is that regulated by the state, and so therefore you

465
00:24:34,119 --> 00:24:35,080
Speaker 1: have to work with the state.

466
00:24:36,400 --> 00:24:38,439
Speaker 4: So it depends on the line of coverage, and it

467
00:24:38,480 --> 00:24:42,560
Speaker 4: depends on the state. So in most states personal lines,

468
00:24:42,640 --> 00:24:46,640
Speaker 4: in particular automobile rates are regulated. Okay, and you see

469
00:24:46,640 --> 00:24:48,800
Speaker 4: a conflict going on right now that I think most

470
00:24:48,800 --> 00:24:50,440
Speaker 4: of your listeners will be aware of. In the state

471
00:24:50,480 --> 00:24:53,280
Speaker 4: of California, a lot of companies have said, look enough,

472
00:24:53,280 --> 00:24:55,960
Speaker 4: we're not going to write here. And part of that

473
00:24:56,119 --> 00:24:59,360
Speaker 4: is the loss picture the wildfires and the hurt that

474
00:24:59,440 --> 00:25:02,320
Speaker 4: the the threats that they have just in terms of those,

475
00:25:02,920 --> 00:25:04,960
Speaker 4: but a lot of it also is simply saying, look,

476
00:25:05,000 --> 00:25:08,920
Speaker 4: we have inflation, the cost to repair is significant. We

477
00:25:08,960 --> 00:25:11,359
Speaker 4: need to file for rate increases, we need to base

478
00:25:11,480 --> 00:25:15,040
Speaker 4: rate change in order to cover these costs, where you

479
00:25:15,040 --> 00:25:17,960
Speaker 4: have a political system that makes that difficult to do.

480
00:25:18,520 --> 00:25:21,760
Speaker 4: You finally have a break point in California where some

481
00:25:21,880 --> 00:25:25,320
Speaker 4: carriers have said I just can't write anymore here, and

482
00:25:25,400 --> 00:25:30,080
Speaker 4: that's a real problem politically, and it is on those

483
00:25:30,119 --> 00:25:33,360
Speaker 4: lines of coverage that everybody has to buy. Now, when

484
00:25:33,359 --> 00:25:35,840
Speaker 4: you leave that and you go to a commercial concern,

485
00:25:36,400 --> 00:25:39,639
Speaker 4: then you do have some lines of coverage that are regulated.

486
00:25:39,640 --> 00:25:42,920
Speaker 4: But you also have a pressure release valve we refer

487
00:25:43,080 --> 00:25:46,320
Speaker 4: to as the excess and surplus market, and that allows

488
00:25:46,400 --> 00:25:49,880
Speaker 4: insurance to be quoted on a free form, free to rate.

489
00:25:50,400 --> 00:25:53,200
Speaker 4: So that allows me to sit for the commercial client

490
00:25:53,240 --> 00:25:56,560
Speaker 4: and say, don't buy that from the regulate identity. Let

491
00:25:56,560 --> 00:25:58,240
Speaker 4: me structure this for you differently.

492
00:25:58,440 --> 00:25:58,800
Speaker 8: Got it.

493
00:25:59,119 --> 00:26:02,960
Speaker 4: So the answer your question is, yes, there's a heavy

494
00:26:03,040 --> 00:26:06,760
Speaker 4: dose of regulation. It varies by geography, it varies by

495
00:26:06,840 --> 00:26:07,760
Speaker 4: line of coverage.

496
00:26:07,880 --> 00:26:10,480
Speaker 1: All right, Pat, great stuff has always Pat Gallagher, he's

497
00:26:10,520 --> 00:26:15,119
Speaker 1: the CEO of Gallagher Insurance. But that's a tough business

498
00:26:15,119 --> 00:26:17,240
Speaker 1: for me to really understand it always has been. But

499
00:26:17,480 --> 00:26:19,560
Speaker 1: fortunately there are people out there who kind of get it.

500
00:26:20,160 --> 00:26:22,200
Speaker 1: Gallagher Insurance, it's a New York stock change list of

501
00:26:22,240 --> 00:26:25,320
Speaker 1: company A jay G is the ticker. Some wee can

502
00:26:25,320 --> 00:26:26,560
Speaker 1: load that in the Bloomberg terminal.

503
00:26:27,520 --> 00:26:30,880
Speaker 5: You're listening to the Team Ken's are Live program Bloomberg

504
00:26:31,000 --> 00:26:34,359
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot com,

505
00:26:34,440 --> 00:26:37,600
Speaker 5: the iHeartRadio app and the Bloomberg Business app, or listen

506
00:26:37,640 --> 00:26:39,760
Speaker 5: on demand wherever you get your podcasts.

507
00:26:41,560 --> 00:26:44,160
Speaker 1: All right, we got Joe Mysek in studio, but it's

508
00:26:44,240 --> 00:26:46,520
Speaker 1: not Friday. So why is Joe Mysek, who covers all

509
00:26:46,520 --> 00:26:49,399
Speaker 1: the municipal bond stuff for Bloomberg News. Why is he

510
00:26:49,440 --> 00:26:52,920
Speaker 1: in there? Because he wrote a BusinessWeek column, a story

511
00:26:53,320 --> 00:26:55,639
Speaker 1: that went back to his work on a little book,

512
00:26:56,359 --> 00:26:58,520
Speaker 1: this little edition he had to this book called The

513
00:26:58,560 --> 00:27:01,080
Speaker 1: Bonfire of the Vanities, and if you haven't read it,

514
00:27:01,160 --> 00:27:05,760
Speaker 1: go back. It is the definitive Wall Street book of

515
00:27:05,960 --> 00:27:11,280
Speaker 1: the great decade that was the nineteen eighties. Absolutely that

516
00:27:11,320 --> 00:27:13,840
Speaker 1: came after, that came after, and Liarys Poker is very

517
00:27:13,840 --> 00:27:15,560
Speaker 1: good because and that's also a great one.

518
00:27:15,720 --> 00:27:16,920
Speaker 2: Barbarians at the Gate.

519
00:27:16,840 --> 00:27:20,560
Speaker 1: Also a great one. That came after Tom Wolf, author

520
00:27:20,600 --> 00:27:23,080
Speaker 1: of Bonfire of the Vanities, and Joe actually kind of

521
00:27:23,280 --> 00:27:25,880
Speaker 1: was part of that. Joe mysec tell us about kind

522
00:27:25,880 --> 00:27:29,479
Speaker 1: of how you what small part you played in working

523
00:27:29,720 --> 00:27:31,840
Speaker 1: or kind of working with or helping Tom Wolf, the

524
00:27:31,880 --> 00:27:33,240
Speaker 1: author of Bonfire the Vanities.

525
00:27:33,720 --> 00:27:37,760
Speaker 7: Oh, that was a that was a pricing pricing business.

526
00:27:38,400 --> 00:27:44,960
Speaker 7: At one point, Sherman McCoy, the Star Bond salesman, is

527
00:27:45,040 --> 00:27:47,439
Speaker 7: working on a transaction and I was looking at the

528
00:27:47,480 --> 00:27:52,119
Speaker 7: galleys and you know, there was a reference there and

529
00:27:52,200 --> 00:27:58,000
Speaker 7: instead of referring to the coupon and maturity, there was

530
00:27:58,600 --> 00:28:03,720
Speaker 7: a reference to maturity, and it's like, what about those thirteens?

531
00:28:04,280 --> 00:28:06,879
Speaker 7: What about those thirteen years? And I said, you know,

532
00:28:06,880 --> 00:28:09,960
Speaker 7: I called Tom up and I said, you know, I

533
00:28:10,000 --> 00:28:13,359
Speaker 7: think what they do is really talk about the coupon

534
00:28:13,920 --> 00:28:16,000
Speaker 7: and the maturity here, you know, like the tens of

535
00:28:16,080 --> 00:28:18,960
Speaker 7: thirty six or something like that. And he said, okay,

536
00:28:19,080 --> 00:28:21,640
Speaker 7: what would it be? I said, all right, smart guy.

537
00:28:21,920 --> 00:28:25,120
Speaker 7: I had to go get the Monroe calculator out and

538
00:28:25,320 --> 00:28:27,760
Speaker 7: we kind of backed into it and it's the ten

539
00:28:27,880 --> 00:28:29,359
Speaker 7: tens of whatever.

540
00:28:29,520 --> 00:28:31,320
Speaker 1: So you're helping Tom Wolf with a little boy way

541
00:28:31,359 --> 00:28:32,000
Speaker 1: those rates.

542
00:28:32,320 --> 00:28:35,720
Speaker 2: That's him throwback already ten percent, Yes.

543
00:28:36,040 --> 00:28:41,160
Speaker 1: Exactly, united fragrance. So again, big big book there on

544
00:28:41,160 --> 00:28:44,160
Speaker 1: Wall Street in the eighties, Tom woff is there's a

545
00:28:44,160 --> 00:28:45,720
Speaker 1: film coming out about him, isn't there?

546
00:28:46,320 --> 00:28:51,080
Speaker 7: Yes, there is Radical Wolf by Richard Dewey, And it

547
00:28:51,200 --> 00:28:54,240
Speaker 7: is a documentary about Tom Wolf.

548
00:28:54,640 --> 00:28:56,120
Speaker 8: And it's funny, Michael.

549
00:28:56,160 --> 00:28:59,360
Speaker 7: It's based on a Michael Lewis article in Vanity Fair

550
00:28:59,520 --> 00:29:04,520
Speaker 7: back in two twenty fifteen, and Michael Lewis went to

551
00:29:04,520 --> 00:29:07,560
Speaker 7: the New York Public Library where Tom Wolf has sold

552
00:29:07,600 --> 00:29:10,880
Speaker 7: his papers and kind of dove in and look around

553
00:29:11,000 --> 00:29:13,920
Speaker 7: a little bit and and wrote about it, and then

554
00:29:14,080 --> 00:29:16,880
Speaker 7: wrote about going out and seeing Tom Wolf in Southampton.

555
00:29:17,560 --> 00:29:17,920
Speaker 8: Uh.

556
00:29:17,960 --> 00:29:21,520
Speaker 7: And it's it's just a it's a fascinating piece of work.

557
00:29:21,520 --> 00:29:25,480
Speaker 7: And Dewey points out, well, actually Lewis points out that

558
00:29:25,480 --> 00:29:30,040
Speaker 7: that Wolf really became quite a performer. And Dewey points

559
00:29:30,040 --> 00:29:34,480
Speaker 7: out that that he he accumulated one hundred and fifty

560
00:29:34,600 --> 00:29:41,640
Speaker 7: hours of a film, not including interviews he performed, and

561
00:29:42,280 --> 00:29:46,880
Speaker 7: more than three thousand still photos, so you could see

562
00:29:46,920 --> 00:29:47,840
Speaker 7: Tom loved the camera.

563
00:29:48,440 --> 00:29:51,520
Speaker 1: Yeah, and he became I mean Tom Wolf became a

564
00:29:51,560 --> 00:29:54,600
Speaker 1: player himself. I mean, you know, just all around the Hampton,

565
00:29:54,880 --> 00:29:58,040
Speaker 1: New York City, all that, all that kind of stuff.

566
00:29:58,160 --> 00:30:01,800
Speaker 2: Yes, indeed, Well, I will never forget reading The Electric

567
00:30:01,840 --> 00:30:03,000
Speaker 2: kool Aid Acid Tests.

568
00:30:03,320 --> 00:30:03,600
Speaker 5: Yep.

569
00:30:03,840 --> 00:30:08,280
Speaker 2: That was like my first foray into the world of

570
00:30:08,320 --> 00:30:11,240
Speaker 2: the Grateful Dead and kind of the Hell's Angels. And

571
00:30:11,280 --> 00:30:15,400
Speaker 2: I think that's probably the book that made him initially famous, right,

572
00:30:16,040 --> 00:30:20,200
Speaker 2: But then he had so many hits after that. He

573
00:30:20,240 --> 00:30:23,800
Speaker 2: wrote The Right Stuff, which became a movie. Obviously Bonfire

574
00:30:23,880 --> 00:30:28,560
Speaker 2: the Vanities became a movie as well. He must be

575
00:30:28,640 --> 00:30:32,160
Speaker 2: one of the biggest, most successful American authors.

576
00:30:32,360 --> 00:30:35,120
Speaker 7: Well, I would say though he was certainly the most

577
00:30:35,480 --> 00:30:40,239
Speaker 7: probably the most interviewed and photographed of American writers, and

578
00:30:40,280 --> 00:30:43,000
Speaker 7: that includes Hemingway and Mark Twain.

579
00:30:43,240 --> 00:30:47,280
Speaker 1: Gorvadal So you actually went to this vault right in

580
00:30:47,280 --> 00:30:50,640
Speaker 1: then your public library? Oh oh, and what were you

581
00:30:50,640 --> 00:30:51,080
Speaker 1: looking for?

582
00:30:51,440 --> 00:30:54,280
Speaker 7: You know? I was looking for this for the the

583
00:30:54,320 --> 00:30:58,400
Speaker 7: origin of the quote. There's a there's a quote in

584
00:30:58,440 --> 00:31:05,960
Speaker 7: The Bonfire of the Vanities and Sherman McCoy's little daughter Campbell. Yeah,

585
00:31:06,480 --> 00:31:10,240
Speaker 7: bon Bond salesman h Campbell McCoy says, Daddy, what do

586
00:31:10,280 --> 00:31:14,880
Speaker 7: you do? She's like six, I think or seven? Uh,

587
00:31:14,920 --> 00:31:18,200
Speaker 7: And I got daddy, willly what do you do? And

588
00:31:18,240 --> 00:31:20,920
Speaker 7: he's fumbling around, and all of a sudden, his wife,

589
00:31:21,080 --> 00:31:25,520
Speaker 7: Judy says, no, no, I got this uh. And and she says, well, well, Daddy.

590
00:31:25,520 --> 00:31:29,280
Speaker 7: What daddy does is, uh, he slices the cake and

591
00:31:29,320 --> 00:31:32,880
Speaker 7: he hands it out and to different people, and Daddy

592
00:31:32,920 --> 00:31:33,960
Speaker 7: gets to keep the crumbs.

593
00:31:34,840 --> 00:31:38,520
Speaker 8: So Sherman is humiliated. Uh. And you know, later on

594
00:31:38,840 --> 00:31:40,560
Speaker 8: like crumbs, well, because.

595
00:31:40,320 --> 00:31:42,960
Speaker 1: He thinks he's the master of the universe.

596
00:31:45,080 --> 00:31:47,440
Speaker 7: So I was in search of this of this quote,

597
00:31:47,440 --> 00:31:51,080
Speaker 7: and I remember Tom Wolf told me over dinner at

598
00:31:51,120 --> 00:31:53,479
Speaker 7: Ben Benson's. I asked Hi about his who came up

599
00:31:53,520 --> 00:31:56,360
Speaker 7: with that? It was a very felicitous way of describing

600
00:31:56,680 --> 00:32:02,080
Speaker 7: what bond salesman do. Uh, And he said Desmond Fitzgerald.

601
00:32:02,560 --> 00:32:05,040
Speaker 7: And I, you know, I kind of I wanted, you know,

602
00:32:05,160 --> 00:32:08,360
Speaker 7: I tucked that away. And then last year I was

603
00:32:08,400 --> 00:32:12,480
Speaker 7: searching around to write a column and I said, gee,

604
00:32:12,480 --> 00:32:15,240
Speaker 7: I wonder if I could find this that's home Wolf papers.

605
00:32:16,200 --> 00:32:18,800
Speaker 7: And you know I didn't find that, but I found

606
00:32:18,840 --> 00:32:19,480
Speaker 7: something else.

607
00:32:20,600 --> 00:32:21,160
Speaker 2: What was it?

608
00:32:22,400 --> 00:32:30,600
Speaker 7: Well, you know, Sherman McCoy begins as a writer. The

609
00:32:30,720 --> 00:32:34,600
Speaker 7: role this series in Rolling Stone, you know, goes on

610
00:32:34,680 --> 00:32:38,280
Speaker 7: for like twenty seven episodes or twenty four episodes, and

611
00:32:38,720 --> 00:32:42,160
Speaker 7: Sherman requires a writer of and his famous book is

612
00:32:42,200 --> 00:32:46,640
Speaker 7: called A Man in Slices, And of course later on

613
00:32:46,720 --> 00:32:49,120
Speaker 7: he writes a novel. Tom wolf writes a novel called

614
00:32:49,160 --> 00:32:52,479
Speaker 7: A Man in Full anyway, a Man in Slices. So

615
00:32:52,640 --> 00:32:56,440
Speaker 7: I'm looking through Tom Wolfe's papers, and in February of

616
00:32:56,520 --> 00:33:00,680
Speaker 7: nineteen eighty four, the headmaster of his school, and Christopher

617
00:33:00,720 --> 00:33:00,880
Speaker 7: is and.

618
00:33:00,920 --> 00:33:03,960
Speaker 1: Rich Richmond know it well, writes a letter and.

619
00:33:03,960 --> 00:33:06,920
Speaker 7: Says, hey, you know the Tom Wolfe had been, as

620
00:33:06,920 --> 00:33:14,360
Speaker 7: you pointed out, or a successful author. He uh, he

621
00:33:14,440 --> 00:33:17,120
Speaker 7: had been a trustee for Saint Christoph of Saint Christo's

622
00:33:17,400 --> 00:33:18,440
Speaker 7: for about ten years.

623
00:33:19,160 --> 00:33:21,080
Speaker 1: So get in touch with a certain.

624
00:33:20,920 --> 00:33:21,560
Speaker 8: So he wants it.

625
00:33:21,760 --> 00:33:24,720
Speaker 7: So, so George McVay, who's the headmaster, says, could you

626
00:33:24,720 --> 00:33:29,000
Speaker 7: get in touch with this guy, Kirk Maturne, who is

627
00:33:29,040 --> 00:33:31,840
Speaker 7: then Atlizard freyer Uh, because he just gave us a

628
00:33:31,920 --> 00:33:39,040
Speaker 7: very nice contribution and we're ramping up our endowment fundraising. Okay,

629
00:33:39,160 --> 00:33:45,480
Speaker 7: great Tom does. Now Tom is already writing Bonfire the Vanities,

630
00:33:46,120 --> 00:33:50,920
Speaker 7: but he writes a very nice letter to Kirk maturn

631
00:33:51,200 --> 00:33:56,400
Speaker 7: Kirk maturn sends back a letter on the Blizard stationary saying, wow,

632
00:33:56,680 --> 00:33:58,080
Speaker 7: so nice of you to write.

633
00:33:57,880 --> 00:34:00,560
Speaker 8: Me, Thank you so much, and you know.

634
00:34:00,720 --> 00:34:05,640
Speaker 7: Discusses their various lives and how they've what they do,

635
00:34:06,200 --> 00:34:09,520
Speaker 7: and invites Tom to lunch at twenty one. Yea he

636
00:34:09,680 --> 00:34:13,399
Speaker 7: now shuddered. Twenty one He and about five other guys, well,

637
00:34:13,440 --> 00:34:15,640
Speaker 7: he says, Wall Street guy says, I'm not gonna put

638
00:34:15,640 --> 00:34:16,400
Speaker 7: you on a podium.

639
00:34:16,680 --> 00:34:18,200
Speaker 8: It's just an informal watch.

640
00:34:18,880 --> 00:34:24,800
Speaker 7: So Tom goes has this fabulous time, writes some return like, wow,

641
00:34:24,840 --> 00:34:28,880
Speaker 7: your friends were terrific and they introduced me to this

642
00:34:30,200 --> 00:34:33,040
Speaker 7: place that you know, I couldn't imagine this whole.

643
00:34:32,800 --> 00:34:35,800
Speaker 1: World of Wall Street and so therefore I'm going to

644
00:34:35,880 --> 00:34:40,040
Speaker 1: change Sherman McCoy from a writer to a.

645
00:34:38,920 --> 00:34:43,239
Speaker 7: Banker and a bond salesman. And just and I saw this,

646
00:34:43,600 --> 00:34:46,920
Speaker 7: it was taking place, and you know, the papers themselves

647
00:34:46,960 --> 00:34:51,440
Speaker 7: are they're organized, but not tremendously so, so you really

648
00:34:51,520 --> 00:34:54,040
Speaker 7: have to you know what's going on here. Oh, here's

649
00:34:54,040 --> 00:34:56,719
Speaker 7: another letter from Kirk mcturn and it's setting up and

650
00:34:56,880 --> 00:34:59,640
Speaker 7: appointments for Tom, including.

651
00:34:59,800 --> 00:35:04,160
Speaker 8: The UH Treasury auction at I want to say.

652
00:35:03,920 --> 00:35:07,040
Speaker 1: Solon Brothers sure the biggest bond desk on the four

653
00:35:07,080 --> 00:35:09,799
Speaker 1: and as his side. I worked for Kirk Return at

654
00:35:09,880 --> 00:35:13,279
Speaker 1: Paine Webber my first job part of rotation, so it

655
00:35:13,280 --> 00:35:15,560
Speaker 1: all comes full circle and he had me. I did

656
00:35:15,560 --> 00:35:17,880
Speaker 1: my first bond trade at the behest of me.

657
00:35:18,000 --> 00:35:20,160
Speaker 2: Do you think your kids are going to appreciate I

658
00:35:20,200 --> 00:35:25,680
Speaker 2: mean the historical stuff that like people that you rubbed elbows.

659
00:35:26,080 --> 00:35:31,360
Speaker 1: They have a couple they will Now they're creating their

660
00:35:31,400 --> 00:35:33,480
Speaker 1: own history. They could care less about what I did.

661
00:35:33,920 --> 00:35:37,040
Speaker 5: You're listening to the tape Cat's are live program Bloomberg

662
00:35:37,080 --> 00:35:40,719
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

663
00:35:40,760 --> 00:35:43,960
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business app.

664
00:35:44,000 --> 00:35:46,839
Speaker 5: You can also listen live on Amazon Alexa from our

665
00:35:46,840 --> 00:35:52,040
Speaker 5: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

666
00:35:52,640 --> 00:35:55,160
Speaker 2: I am excited to talk to Berner Hoyer, who's just

667
00:35:55,200 --> 00:35:57,600
Speaker 2: come into the studio here. He is the president of

668
00:35:57,640 --> 00:36:02,600
Speaker 2: the European Investment Bank, which is one of the biggest

669
00:36:02,840 --> 00:36:07,200
Speaker 2: extra national supernational lenders in the world. They are the

670
00:36:07,239 --> 00:36:12,759
Speaker 2: development arm of the European Union and so Wierner, thanks

671
00:36:12,800 --> 00:36:15,480
Speaker 2: so much for joining us. You invest I mean, for example,

672
00:36:15,520 --> 00:36:20,640
Speaker 2: I imagine you financed the eused green transition as well as

673
00:36:20,840 --> 00:36:25,399
Speaker 2: I wonder do you have an interest in financing the

674
00:36:25,440 --> 00:36:27,440
Speaker 2: defense industry of the European Union.

675
00:36:28,800 --> 00:36:30,480
Speaker 9: Not really, we do quite a bit and when it

676
00:36:30,520 --> 00:36:35,000
Speaker 9: comes to dual use activities and technology promotion. But we

677
00:36:35,040 --> 00:36:37,520
Speaker 9: are not indirectly involved into arms of ammunition.

678
00:36:38,000 --> 00:36:41,120
Speaker 2: I'm just because of the Russian invasion of Ukraine and

679
00:36:41,160 --> 00:36:42,920
Speaker 2: we have Zelenski here.

680
00:36:43,000 --> 00:36:46,560
Speaker 9: We are very highly engaged in Ukraine. There's two reasons.

681
00:36:46,640 --> 00:36:48,680
Speaker 9: Number one, we of course active in Ukraine since the

682
00:36:48,719 --> 00:36:52,319
Speaker 9: independence of Ukraine. But in twenty fourteen we did a

683
00:36:52,320 --> 00:36:55,239
Speaker 9: step change because I said at that time, guys, this

684
00:36:55,640 --> 00:36:58,640
Speaker 9: guy is not going to stop in Crimea, so this

685
00:36:58,680 --> 00:37:00,440
Speaker 9: will go on. And then we stopped our business in

686
00:37:00,520 --> 00:37:04,080
Speaker 9: Russia and diverted the funds who are available for Russia

687
00:37:04,120 --> 00:37:07,560
Speaker 9: to the neighboring countries, to Moldova, Georgia, in particular to Ukraine.

688
00:37:07,960 --> 00:37:11,160
Speaker 9: So when the war started, we were already there and

689
00:37:11,200 --> 00:37:12,920
Speaker 9: we could beef up our activities there.

690
00:37:13,239 --> 00:37:15,120
Speaker 2: So what kind of activities are those? I mean, what

691
00:37:15,280 --> 00:37:18,359
Speaker 2: are you investing in there? And I guess you take

692
00:37:18,400 --> 00:37:20,920
Speaker 2: equity stakes, you lend money, You have a number of

693
00:37:20,960 --> 00:37:22,440
Speaker 2: different transmission maas you.

694
00:37:22,360 --> 00:37:26,160
Speaker 9: Are a project finance here, so we invest into concrete

695
00:37:26,200 --> 00:37:29,520
Speaker 9: projects and sometimes we are a little bit diverted because

696
00:37:30,200 --> 00:37:32,640
Speaker 9: we see the military needs and all these things. But

697
00:37:32,719 --> 00:37:35,400
Speaker 9: it's also an absolute necessity to keep the economy running,

698
00:37:35,640 --> 00:37:38,600
Speaker 9: and the Ukrainians are doing a fantastic job under the

699
00:37:38,640 --> 00:37:42,279
Speaker 9: circumstances under which they live, and that means the infrastrcture

700
00:37:42,320 --> 00:37:44,560
Speaker 9: must work if you want to keep the economy rolling.

701
00:37:44,600 --> 00:37:50,759
Speaker 9: Your bridges, your railroads, public transportation systems must work, and

702
00:37:50,840 --> 00:37:53,360
Speaker 9: this is the key area of our activities. Also the

703
00:37:53,400 --> 00:37:56,440
Speaker 9: health sector, which is vital in the best sense of

704
00:37:56,520 --> 00:37:59,480
Speaker 9: the world, so we are very active in this field

705
00:37:59,520 --> 00:38:03,040
Speaker 9: as well. Just restored the finance the restoration of the

706
00:38:03,040 --> 00:38:06,560
Speaker 9: destroyed hospital in Odessa, So these are very important projects.

707
00:38:06,960 --> 00:38:12,440
Speaker 1: The reconstruction eventual reconstruction in Ukraine. How do you envision

708
00:38:12,480 --> 00:38:14,640
Speaker 1: the role of the European Investment Bank.

709
00:38:15,239 --> 00:38:18,799
Speaker 9: Well, I think as far as the European Union will

710
00:38:18,800 --> 00:38:20,719
Speaker 9: be involved, we will have to be involved quite a bit

711
00:38:20,800 --> 00:38:24,000
Speaker 9: as well, and probably we are in a certain way

712
00:38:24,000 --> 00:38:26,560
Speaker 9: in the lead. On the other hand, what I insist

713
00:38:26,640 --> 00:38:30,919
Speaker 9: on now is there is no possibility, no responsible possibility,

714
00:38:30,960 --> 00:38:34,240
Speaker 9: to wait for the end of the military confrontation before

715
00:38:34,280 --> 00:38:37,200
Speaker 9: you begin with your reconstruction, because what is needed now

716
00:38:37,280 --> 00:38:40,759
Speaker 9: is keep the economy rolling, keep the tax revenues coming in,

717
00:38:41,120 --> 00:38:44,360
Speaker 9: keep the agricultural sector being able to export, and not

718
00:38:44,480 --> 00:38:48,200
Speaker 9: overlooking the fact that Ukraine is also a very interesting

719
00:38:48,640 --> 00:38:54,120
Speaker 9: partner country for industry. So these support for these support

720
00:38:54,160 --> 00:38:56,520
Speaker 9: measures for Ukraine must take place now and not once

721
00:38:57,160 --> 00:38:59,919
Speaker 9: one day. Hopefully the ink under a peace treaty is dry.

722
00:39:00,480 --> 00:39:02,520
Speaker 2: How is the EIB financed?

723
00:39:02,680 --> 00:39:04,399
Speaker 1: Do you sell bonds or.

724
00:39:04,640 --> 00:39:07,759
Speaker 9: We sell bonds. We are selling between seventy and one

725
00:39:07,880 --> 00:39:11,520
Speaker 9: hundred billion euros IIB bonds per year, considered part of them,

726
00:39:11,520 --> 00:39:13,600
Speaker 9: by the way, green bonds nowadays. We were the pioneers

727
00:39:13,600 --> 00:39:17,200
Speaker 9: and the issuings of green bonds, and so this is

728
00:39:17,360 --> 00:39:19,600
Speaker 9: the basis of what we are doing. The capital endowment

729
00:39:19,640 --> 00:39:23,120
Speaker 9: of the bank is big, but in comparison to our

730
00:39:23,200 --> 00:39:26,319
Speaker 9: lending ridiculous. We have never seen more than twenty five

731
00:39:26,320 --> 00:39:29,360
Speaker 9: billion euros in cash from our she elders, but we

732
00:39:29,440 --> 00:39:33,960
Speaker 9: have a portfolio of almost six hundred billion euros. So

733
00:39:34,040 --> 00:39:36,440
Speaker 9: the leverage effect is enormous, and that is due to

734
00:39:36,520 --> 00:39:39,600
Speaker 9: the trust of the private the capital markets in the bank.

735
00:39:39,680 --> 00:39:43,879
Speaker 9: And it's a technical experience. We are an engineering bank,

736
00:39:44,000 --> 00:39:50,279
Speaker 9: bank that is endowed with fantastic people from science and technology,

737
00:39:50,640 --> 00:39:53,160
Speaker 9: and this makes sure for the investors who give us

738
00:39:53,200 --> 00:39:57,000
Speaker 9: their money that we invest into bankable but also technologically

739
00:39:57,040 --> 00:39:58,040
Speaker 9: doable projects.

740
00:39:58,200 --> 00:40:00,280
Speaker 2: By the way, the EIB was one of the first

741
00:40:00,800 --> 00:40:05,520
Speaker 2: I guess supernational organizations to I'm pretty sure and correct

742
00:40:05,520 --> 00:40:08,080
Speaker 2: me if I'm wrong Werner to issue a bond on

743
00:40:08,120 --> 00:40:11,400
Speaker 2: the blockchain or to use issue a digital bond.

744
00:40:11,840 --> 00:40:15,560
Speaker 9: In essence, yes, we are always trying to pioneer in

745
00:40:15,800 --> 00:40:19,160
Speaker 9: these fields. And it's fascinating. When we issued the first

746
00:40:19,160 --> 00:40:22,000
Speaker 9: green bonds and made sure that what labeled green is

747
00:40:22,080 --> 00:40:24,839
Speaker 9: green and there is no green cheating or something like this,

748
00:40:26,000 --> 00:40:28,120
Speaker 9: I think we were considered lunatic. And now this, this

749
00:40:28,239 --> 00:40:30,600
Speaker 9: market is a trillion dollars heavy.

750
00:40:30,800 --> 00:40:33,120
Speaker 1: Well what is I know, you guys refirst with the

751
00:40:33,120 --> 00:40:35,560
Speaker 1: green bonds, what is that market conditions like today?

752
00:40:36,760 --> 00:40:41,000
Speaker 9: Well, it is the market. The market's partners are very,

753
00:40:41,080 --> 00:40:47,480
Speaker 9: very interested in this because it serves their own sustainability,

754
00:40:48,400 --> 00:40:52,800
Speaker 9: not only image but reality. And nowadays everybody who invests

755
00:40:52,800 --> 00:40:56,240
Speaker 9: in anything, into anything in Europe must be in line

756
00:40:56,280 --> 00:40:57,279
Speaker 9: with these principles.

757
00:40:57,960 --> 00:41:01,680
Speaker 2: In terms of the IR, I mean a lot of

758
00:41:01,680 --> 00:41:07,239
Speaker 2: Europeans were unhappy about the kind of subsidizing and almost protectionist.

759
00:41:07,640 --> 00:41:11,680
Speaker 2: I guess you could use that word bent of this legislation.

760
00:41:12,280 --> 00:41:13,600
Speaker 2: Do you have an answer to that?

761
00:41:13,920 --> 00:41:14,480
Speaker 1: In Europe?

762
00:41:15,480 --> 00:41:20,000
Speaker 9: Well, the mixed feelings. Number one, I'm happy that under

763
00:41:20,000 --> 00:41:24,760
Speaker 9: President Biden, the US has three detected climate change and sustainability,

764
00:41:24,800 --> 00:41:28,000
Speaker 9: so this is very positive andredent. Biden takes the entire

765
00:41:28,000 --> 00:41:31,120
Speaker 9: economy along. On the other hand, I'm not naive, and

766
00:41:31,160 --> 00:41:33,640
Speaker 9: it comes to the sortion of competition then is something

767
00:41:33,640 --> 00:41:36,160
Speaker 9: that affects US seriously. So we need to come to

768
00:41:36,200 --> 00:41:38,600
Speaker 9: common terms for the United States of America. But I

769
00:41:38,640 --> 00:41:41,640
Speaker 9: don't believe that trade war is the brightest thing to

770
00:41:41,719 --> 00:41:47,120
Speaker 9: do now. It's more about finding synergies and taking all

771
00:41:47,160 --> 00:41:48,160
Speaker 9: the challenges together.

772
00:41:48,640 --> 00:41:51,239
Speaker 2: In fact, I was talking to Ola Collenius yesterday who

773
00:41:51,360 --> 00:41:55,440
Speaker 2: was saying we was making similar statements saying that we

774
00:41:55,520 --> 00:41:59,600
Speaker 2: really need to support global trade as well in order

775
00:41:59,680 --> 00:42:02,040
Speaker 2: to kind of lift all of the boats right or

776
00:42:02,080 --> 00:42:02,840
Speaker 2: to grow the pie.

777
00:42:03,280 --> 00:42:04,520
Speaker 9: I completely agree.

778
00:42:04,480 --> 00:42:09,920
Speaker 2: But right now the EU is looking into I guess

779
00:42:10,000 --> 00:42:12,520
Speaker 2: ways if I'm going to say it without kind of

780
00:42:12,560 --> 00:42:16,719
Speaker 2: camouflaging it, to block the import of Chinese electric vehicles

781
00:42:16,920 --> 00:42:19,760
Speaker 2: to Europe, does that concern.

782
00:42:19,440 --> 00:42:22,080
Speaker 9: You, Well, it would concern me if it would be

783
00:42:22,120 --> 00:42:24,480
Speaker 9: so simple. I mean, Vice President Dombroskis of the European

784
00:42:24,480 --> 00:42:27,200
Speaker 9: Commission is right now on his way to China to

785
00:42:27,560 --> 00:42:30,040
Speaker 9: come to a reasonable terms with the Chinese. And I

786
00:42:30,080 --> 00:42:34,360
Speaker 9: think there is between Europe and the United States, but

787
00:42:34,400 --> 00:42:38,200
Speaker 9: also between Europe and China, some commonality of interests, and

788
00:42:38,280 --> 00:42:39,120
Speaker 9: we should go for that.

789
00:42:39,520 --> 00:42:42,080
Speaker 1: Because one of the things I know about, obviously the

790
00:42:42,360 --> 00:42:46,080
Speaker 1: economies of Germany and other large European economies is perhaps

791
00:42:46,239 --> 00:42:51,799
Speaker 1: a very strong trade relationship with China. Where do you

792
00:42:51,840 --> 00:42:53,919
Speaker 1: guys fit into that? How do you think about that?

793
00:42:54,640 --> 00:42:58,000
Speaker 9: Well, what we have learned from the terrible experience with

794
00:42:58,080 --> 00:43:01,120
Speaker 9: the Ukraine War is that you better stay away from

795
00:43:01,440 --> 00:43:04,960
Speaker 9: being too dependent on somebody, whether it's in security from

796
00:43:05,040 --> 00:43:08,239
Speaker 9: one partner, whether it's from trade from one partner, or

797
00:43:08,280 --> 00:43:11,359
Speaker 9: when it's from the provision of critical raw materials from

798
00:43:11,400 --> 00:43:14,120
Speaker 9: another one. So we have to diversify in every aspect,

799
00:43:14,400 --> 00:43:16,160
Speaker 9: and that's the lesson we have learned.

800
00:43:17,160 --> 00:43:20,880
Speaker 2: I wonder about the green investment here in this country.

801
00:43:21,360 --> 00:43:27,080
Speaker 2: ESG has become a negative term attached to any investment vehicle,

802
00:43:27,200 --> 00:43:28,920
Speaker 2: but that's not the case in the rest of the

803
00:43:28,920 --> 00:43:32,640
Speaker 2: world and do you expect to make real returns on

804
00:43:32,680 --> 00:43:36,000
Speaker 2: these investments, I guess is the most important question outside

805
00:43:36,000 --> 00:43:37,160
Speaker 2: of the climate issue.

806
00:43:38,040 --> 00:43:40,880
Speaker 9: Well, for us, that's key. I mean, we are dependent

807
00:43:41,000 --> 00:43:45,279
Speaker 9: totally on the financial markets which give us their resources.

808
00:43:45,320 --> 00:43:47,799
Speaker 9: They trust us, They trust us because they know we

809
00:43:47,840 --> 00:43:51,399
Speaker 9: are engineers and scientists driven bank So we make sure

810
00:43:51,440 --> 00:43:54,759
Speaker 9: that a project that goes through our due diligence is bankable,

811
00:43:55,440 --> 00:43:58,040
Speaker 9: is technologically feasible, and then at the end of the

812
00:43:58,120 --> 00:44:01,520
Speaker 9: day it brings returns lucrative and I think we should

813
00:44:01,560 --> 00:44:04,120
Speaker 9: always I mean in view of the time times where

814
00:44:04,160 --> 00:44:07,160
Speaker 9: we talk about dooms scenarios from morning tonight, we tend

815
00:44:07,160 --> 00:44:09,319
Speaker 9: more to the can do approach and say yes, if

816
00:44:09,320 --> 00:44:11,839
Speaker 9: we develop the right technologies and yes we can do that,

817
00:44:12,080 --> 00:44:13,920
Speaker 9: then we should be able to meet these challenges.

818
00:44:13,960 --> 00:44:18,640
Speaker 2: We were just talking about sustainable energy with somebody who

819
00:44:18,760 --> 00:44:22,160
Speaker 2: runs a nuclear fuel company, and I know a lot

820
00:44:22,200 --> 00:44:27,400
Speaker 2: of people consider nuclear power to be safe and clean.

821
00:44:27,480 --> 00:44:29,840
Speaker 2: Now that isn't really the view from Germany.

822
00:44:30,800 --> 00:44:33,160
Speaker 9: Well from Germany it's a different view. I mean the

823
00:44:33,239 --> 00:44:35,920
Speaker 9: politically it is also divided issue and the same goes

824
00:44:35,960 --> 00:44:38,520
Speaker 9: for the European Union. So as a bank that is

825
00:44:38,560 --> 00:44:41,760
Speaker 9: dependent upon the support of its shoulders, which are totally

826
00:44:41,760 --> 00:44:44,520
Speaker 9: split on this issue. I don't take my head out.

827
00:44:44,560 --> 00:44:46,840
Speaker 9: The statutes of the Bank do not keep us from

828
00:44:47,440 --> 00:44:50,279
Speaker 9: the financing these things. In reality, we have never done it.

829
00:44:50,440 --> 00:44:53,040
Speaker 9: What we have done is said a lot is investing

830
00:44:53,080 --> 00:44:59,759
Speaker 9: into safety, security and into dual use opportunities.

831
00:45:00,320 --> 00:45:02,920
Speaker 1: Just real quick, your successor what can you tell us

832
00:45:02,920 --> 00:45:04,440
Speaker 1: about a potential successor?

833
00:45:04,600 --> 00:45:07,080
Speaker 9: Well, I can only say one thing. I leave the

834
00:45:07,120 --> 00:45:09,200
Speaker 9: bank with a very very good feeling. After twelve years,

835
00:45:09,239 --> 00:45:12,320
Speaker 9: my mende is running out. The Member States have proposed

836
00:45:12,320 --> 00:45:16,000
Speaker 9: five outstanding candidates. I'm very proud that we've brought the

837
00:45:16,000 --> 00:45:18,359
Speaker 9: bank to a place where people of this caliber are

838
00:45:18,440 --> 00:45:20,040
Speaker 9: interested in taking the lead.

839
00:45:20,200 --> 00:45:21,800
Speaker 1: Do you think there needs to be a woman president?

840
00:45:22,080 --> 00:45:25,799
Speaker 9: That would be wonderful, But of course we have beautiful,

841
00:45:25,960 --> 00:45:29,480
Speaker 9: not beautiful, but perfectly excellent gentlemen in the race as well.

842
00:45:29,520 --> 00:45:32,040
Speaker 9: So I don't take anything.

843
00:45:31,640 --> 00:45:34,000
Speaker 2: About a liberal in the European sense. I know Lindner

844
00:45:34,040 --> 00:45:36,280
Speaker 2: said he wants continuity, and you're an FTP.

845
00:45:37,239 --> 00:45:39,640
Speaker 9: Liberals are always good people, all.

846
00:45:39,600 --> 00:45:43,080
Speaker 1: Right, Erner Hoyer, thanks so much. Erner Hoyer, President European

847
00:45:43,120 --> 00:45:47,080
Speaker 1: Investment Bank, Thanks.

848
00:45:46,800 --> 00:45:50,239
Speaker 2: For listening to the Bloomberg Markets podcast. You can subscribe

849
00:45:50,280 --> 00:45:54,040
Speaker 2: and listen to interviews at Apple Podcasts or whatever podcast

850
00:45:54,040 --> 00:45:57,640
Speaker 2: platform you prefer. I'm Matt Miller. I'm on Twitter at

851
00:45:57,680 --> 00:45:59,880
Speaker 2: Matt Miller nineteen seventy three.

852
00:46:00,200 --> 00:46:03,239
Speaker 1: Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast,

853
00:46:03,280 --> 00:46:05,759
Speaker 1: you can always catch us worldwide at Bloomberg Radio