WEBVTT - Daybreak Weekend: US Bank Earnings, New Energy Summit, Gold’s Future 0:00:00.320 --> 0:00:07.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.160 --> 0:00:13.119 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.160 --> 0:00:16.160 top stories in the coming week from our Daybreak anchors 0:00:16.280 --> 0:00:19.000 all around the world. Straight Ahead on the program, a 0:00:19.079 --> 0:00:21.760 look at earnings from the biggest banks on Wall Street. 0:00:21.760 --> 0:00:24.440 What they'll tell us about the health of the US economy. 0:00:24.480 --> 0:00:26.200 I'm Nathan Hager in Washington. 0:00:26.360 --> 0:00:29.760 I'm Caroline Hetkin. We away considering how climate change is 0:00:29.880 --> 0:00:31.320 hitting Europe the hottest. 0:00:31.560 --> 0:00:34.800 Plus this week's fresh record for Goal. What's ahead for 0:00:34.880 --> 0:00:37.760 everyone's favorite metal in the final months of the year. 0:00:38.720 --> 0:00:42.760 That's all straight Ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.800 --> 0:00:46.480 eleventh three year, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:47.000 --> 0:00:52.080 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Serrius 0:00:52.280 --> 0:00:55.800 XM one T one, and around the world on Bloomberg Radio, 0:00:55.840 --> 0:00:58.000 dot Com and the Bloomberg Business app. 0:01:03.360 --> 0:01:05.600 Good day to you. I'm Nathan Hager, and we begin 0:01:05.680 --> 0:01:09.400 today's program with earnings from the biggest banks on Wall Street. 0:01:09.560 --> 0:01:12.920 JP Morgan, Chase, Goldman, Sachs, City Group and Wells Fargo 0:01:13.080 --> 0:01:16.080 kickoff big bank earning season with Bank of America and 0:01:16.120 --> 0:01:18.720 Morgan Stanley not too far behind. For more of what 0:01:18.800 --> 0:01:21.800 to expect, we're joined by Alison Williams, Senior analyst for 0:01:21.959 --> 0:01:26.280 Global Banks and Asset Managers at Bloomberg Intelligence. Allison, thanks 0:01:26.280 --> 0:01:28.640 for being with us. Let's just get into it what 0:01:28.680 --> 0:01:31.800 to expect, especially now that we've heard some comments from 0:01:32.120 --> 0:01:35.360 JP Morgan Chase CEO Jamie Diamond himself. What are you 0:01:35.400 --> 0:01:36.760 looking for from the big banks? 0:01:38.240 --> 0:01:41.760 Thanks for having me. Three key things that we're looking 0:01:41.760 --> 0:01:45.280 for for the big banks this week. First, the strength 0:01:45.319 --> 0:01:47.800 of markets is going to translate into further revenue and 0:01:47.840 --> 0:01:50.640 profit momentum, both for the third quarter and the outlook. 0:01:51.080 --> 0:01:53.280 We expect this could be a record year for capital 0:01:53.320 --> 0:01:58.040 markets revenue and that benefits all of the banks, especially Goldman, 0:01:58.120 --> 0:02:02.760 Sachs and Morgan Stanley, but JP Morgan the leader in 0:02:02.920 --> 0:02:07.240 absolute revenue. Second, we have the out of tail wind 0:02:07.600 --> 0:02:11.280 of improving coordinate interest income as RAY expectations are moving lower, 0:02:11.639 --> 0:02:14.280 while loan growth and in particular commercial loan growth is 0:02:14.280 --> 0:02:18.440 picking up. Third, credit remains solid and we will see 0:02:18.480 --> 0:02:22.120 some provisioning We expect for normalization and loan growth, but 0:02:22.240 --> 0:02:27.520 not much change to economic assumptions underlying reserves. So based 0:02:27.520 --> 0:02:32.160 on these three core trends, putting them together, we think 0:02:32.200 --> 0:02:35.680 their earnings could beat with upward revisions to estimates for 0:02:35.720 --> 0:02:38.760 twenty twenty five and twenty twenty six. We are seeing 0:02:38.880 --> 0:02:43.480 some estimate increases for the quarter, some positive revisions going 0:02:43.520 --> 0:02:46.280 into results, but notably when it comes to trading, which 0:02:46.280 --> 0:02:49.120 we think is going to be very strong. Analyst estimates 0:02:49.160 --> 0:02:51.080 do tend to be conservative, so we think there is 0:02:51.240 --> 0:02:52.240 room for upside there. 0:02:52.440 --> 0:02:55.200 Are you looking for any big shifts in market share 0:02:55.320 --> 0:02:58.399 when it comes to trading, because it seems like all 0:02:58.440 --> 0:03:01.079 of these banks are really good going after each other 0:03:01.520 --> 0:03:04.600 on that front, and we have seen this torrid rally 0:03:04.680 --> 0:03:06.440 in the stock market from the April low. 0:03:07.080 --> 0:03:10.639 We do think that the big are going to continue 0:03:10.680 --> 0:03:13.720 to get bigger. So the ship that we've seen over 0:03:13.800 --> 0:03:18.680 time is that, you know, banks like Goldman Sachs, Morgan Stanley, 0:03:18.680 --> 0:03:23.000 and JP Morgan have gained share. We've also seen Bank 0:03:23.080 --> 0:03:26.280 America and City Group gain over the very long term. 0:03:26.680 --> 0:03:29.400 But we think that this is going to be a 0:03:29.480 --> 0:03:32.520 quarter where we see outperformance, especially in the equity trading 0:03:32.560 --> 0:03:36.400 business from Goldman Sachs, who is the leader in that business, 0:03:36.400 --> 0:03:40.080 and absolute revenue Goldman is also the leader in M 0:03:40.160 --> 0:03:41.960 and A and we also expect them to have a 0:03:42.040 --> 0:03:46.880 quarter in that business. One of the key businesses that 0:03:46.880 --> 0:03:50.520 that has been helping the banks is prime brokerage and 0:03:50.680 --> 0:03:54.440 some of the larger hedge funds and the asset levels. 0:03:54.720 --> 0:03:56.280 You know, when we look at some of the largest 0:03:56.320 --> 0:03:59.880 hedge funds and we look at things like record equity 0:04:00.280 --> 0:04:05.000 prices around the globe, we do think that there's going 0:04:05.040 --> 0:04:07.280 to be some help to that business. We also saw 0:04:07.520 --> 0:04:10.840 record trading volume. You know, when we look at the 0:04:10.960 --> 0:04:15.800 underlying trends to trading, the equities trading business should be 0:04:15.840 --> 0:04:19.360 supported by continued strength and prime brokerage we saw some 0:04:19.600 --> 0:04:21.760 record balances last quarter. We think we're going to see 0:04:21.760 --> 0:04:25.680 new records this quarter. We also saw a record in 0:04:26.160 --> 0:04:30.359 US exchange trading volume, so that's a big business for 0:04:30.520 --> 0:04:32.839 the banks. But we're also going to see strength on 0:04:32.839 --> 0:04:35.720 the fixed income side of things, both within rates and 0:04:35.760 --> 0:04:39.880 spread trading. So really broad based strength at the banks 0:04:39.960 --> 0:04:43.960 and we think that that's really going to help all 0:04:44.040 --> 0:04:44.840 the competitors. 0:04:45.400 --> 0:04:47.320 And what are you looking for when it comes to 0:04:47.880 --> 0:04:51.479 commentary from these banks on the resilience of the consumer. 0:04:51.760 --> 0:04:54.920 That has been the driver for this economy, even when 0:04:54.920 --> 0:04:57.719 we're starting to see, you know, cracks in the labor market. 0:04:57.760 --> 0:05:00.360 When you think about banks like Bank of America and 0:05:00.520 --> 0:05:04.080 City Group that have more of a focus on households, 0:05:04.200 --> 0:05:06.839 what could they tell us when it comes to credit quality. 0:05:07.800 --> 0:05:10.760 To your point, we always do get an eye into 0:05:10.760 --> 0:05:14.280 the consumer for these banks. The one interesting thing that 0:05:14.320 --> 0:05:18.279 we're seeing at the industry level is the commercial side 0:05:18.279 --> 0:05:20.599 of low growth picking up. It really has been the 0:05:20.640 --> 0:05:24.080 credit card business that's been driving growth, especially at these 0:05:24.200 --> 0:05:28.120 large banks in recent years. But we are seeing a 0:05:28.160 --> 0:05:31.400 little bit of a shift to that on the commercial side, 0:05:31.400 --> 0:05:34.680 and we do think that that's healthy on the credit 0:05:34.720 --> 0:05:37.000 quality side of things. As I said, I do think 0:05:37.040 --> 0:05:41.000 that we see some normalization, but we don't expect to 0:05:41.080 --> 0:05:45.000 see big changes in economic assumption. So we think that 0:05:45.880 --> 0:05:48.400 the reserve building should be relatively modest. 0:05:49.560 --> 0:05:51.320 And when it comes to banks with a sort of 0:05:51.400 --> 0:05:56.239 a big wealth management focus, I'm thinking of Morgan, Stanley, Goldman, Sachs, 0:05:56.720 --> 0:05:59.200 those kind of firms. Is the bar high for them? 0:05:59.640 --> 0:06:02.080 The bar is high, but we think that they are 0:06:02.080 --> 0:06:06.120 going to deliver on that bar because, as I mentioned, 0:06:06.120 --> 0:06:11.640 we've seen global equity prices and global equity market capitalization 0:06:11.800 --> 0:06:14.080 hit a new record towards the end of September. We've 0:06:14.120 --> 0:06:17.800 seen new highs already in this fourth quarter, and that 0:06:17.960 --> 0:06:23.640 is very good for wealth and banking fees, both for 0:06:23.680 --> 0:06:26.600 the third quarter and the outlook going into this quarter. 0:06:27.360 --> 0:06:30.400 All right, well, we'll see as that big bank earning 0:06:30.480 --> 0:06:35.000 season kicks off early next week. That's Alison Williams with 0:06:35.120 --> 0:06:38.520 US senior analysts for global banks and asset managers at 0:06:38.520 --> 0:06:42.080 Bloomberg Intelligence. Alison, thank you. We move next to earnings 0:06:42.080 --> 0:06:45.920 from some of the regional banks, Citizens Financial, First, Horizon, 0:06:46.040 --> 0:06:51.520 PNC Financial Services. They're among the flood of lenders opening 0:06:51.520 --> 0:06:54.000 their books this week. Let's bring in Herman Chan to 0:06:54.000 --> 0:06:57.240 preview those results. Herman's a senior analyst for US regional 0:06:57.279 --> 0:07:00.000 banks at Bloomberg Intelligence. These banks have been in the 0:07:00.200 --> 0:07:03.080 spotlight Herman. Of course, these results are coming off the 0:07:03.080 --> 0:07:06.040 heels of the fifth Third Bank deal for Co America 0:07:06.080 --> 0:07:07.960 that we all remember so much about. So should we 0:07:08.000 --> 0:07:11.760 be looking for more consolidation chatter when the banks report 0:07:11.800 --> 0:07:12.239 this week? 0:07:12.360 --> 0:07:15.320 I think that's going to be the top question within 0:07:15.400 --> 0:07:18.480 the annas community is which banks are going to be 0:07:18.760 --> 0:07:22.000 acquisitive and which banks potentially are you thinking about selling themselves. 0:07:22.280 --> 0:07:26.360 We've seen, as you mentioned, the Fifth Third co America deal, 0:07:26.600 --> 0:07:28.640 and that comes on the heels of P and C 0:07:28.800 --> 0:07:32.320 buying a bank in Colorado, Club First Bank, which really 0:07:32.360 --> 0:07:36.760 boosts their Denver presence, and also Huntington, which is an 0:07:36.760 --> 0:07:40.120 Ohio based lender that's going into Texas with It's a 0:07:40.200 --> 0:07:44.960 very text deal. So there is definitely some consolidation that's 0:07:45.000 --> 0:07:47.680 brewing and we'd expect that continue going forward. 0:07:47.800 --> 0:07:50.640 And of course Fifth Third and co America are both 0:07:50.760 --> 0:07:54.480 going to be among those banks opening their books. What 0:07:54.520 --> 0:07:57.680 are you expecting specifically from those results? 0:07:58.120 --> 0:08:02.720 Yeah, so Fifth Third specifically has talked about some strong 0:08:02.800 --> 0:08:07.320 lending trend, so that's great to see, and we'd expect 0:08:07.320 --> 0:08:11.400 some further improvement in their top line. What was the 0:08:11.480 --> 0:08:14.680 surprise for a lot of the investment community is that 0:08:14.720 --> 0:08:20.400 Fifth Third mentioned that they are ensineered in this Tricolor bankruptcy, 0:08:20.480 --> 0:08:23.840 so that's going to create a fairly large credit loss 0:08:23.840 --> 0:08:26.320 for them, which will hit the third quarter numbers. We 0:08:26.440 --> 0:08:28.400 view that as more of a one off issue that 0:08:28.840 --> 0:08:32.520 shouldn't reverberate throughout the entire loan book and throughout the industry, 0:08:32.559 --> 0:08:35.560 but it is something that will affect their their three 0:08:35.640 --> 0:08:39.080 key reporting. In terms of America, co America has been 0:08:40.360 --> 0:08:43.120 one of the banks that has taken a bit longer 0:08:43.160 --> 0:08:46.920 to recover from the SVB issues a couple of years back, 0:08:47.000 --> 0:08:50.400 and so they're they're along the way of trying to 0:08:50.440 --> 0:08:52.760 shore up their balance sheet in terms of their deposits 0:08:52.760 --> 0:08:57.760 and deposit repricing and growing loans, but that'll be more 0:08:57.800 --> 0:09:00.920 steady or going forward, and get the fact that they're 0:09:01.120 --> 0:09:03.120 going to do this deal for fifth third, I think 0:09:03.160 --> 0:09:05.600 that's going to be less of a priority for a 0:09:05.600 --> 0:09:07.640 lot of the analysts and investors. 0:09:07.840 --> 0:09:10.880 Are there some other banks reporting this week that could 0:09:10.880 --> 0:09:14.040 be in a similar situation as co America and potentially 0:09:14.120 --> 0:09:16.160 be acquisition targets themselves. 0:09:16.440 --> 0:09:19.440 Yeah, that's a good question. That's one of the things 0:09:19.480 --> 0:09:22.240 that we'll try to suss out. There are banks that 0:09:22.559 --> 0:09:26.520 in our coverage that we think are probably better buyers 0:09:26.559 --> 0:09:30.160 than sellers at this point. So banks like Regents, which 0:09:30.200 --> 0:09:34.280 operates in the Southeast and has a really strong valuation 0:09:34.440 --> 0:09:38.200 multiple that has the currency to really do deals. Another 0:09:38.280 --> 0:09:42.120 bank based in Buffalo, New York, M and T Bank 0:09:42.720 --> 0:09:45.800 also has a track record of doing deals and has 0:09:45.840 --> 0:09:48.560 a strong currency to do deals. So those are the 0:09:48.559 --> 0:09:50.440 ones that I think the market's going to focus on 0:09:50.520 --> 0:09:53.720 in terms of they're going to be the next to 0:09:53.760 --> 0:09:55.439 potentially be inquisitive. 0:09:56.000 --> 0:10:00.520 You mentioned one earlier, PNC Financial talking about their expansion 0:10:00.559 --> 0:10:03.559 plans in the Southwest in particular. Do you expect that 0:10:03.600 --> 0:10:06.000 to show up in the results and bolster the balance sheet? 0:10:06.400 --> 0:10:08.920 At this point, that deal needs to be closed, But 0:10:09.000 --> 0:10:11.320 I think the next question for P and C in 0:10:11.360 --> 0:10:17.360 particular is what's next for them. They've been vocal about 0:10:18.160 --> 0:10:22.080 potentially doubling their balance sheet to over a trillion dollars 0:10:22.080 --> 0:10:26.400 in assets, and this deal, while helpful, it's not going 0:10:26.480 --> 0:10:30.520 to get them there anytime soon. So there's going to 0:10:30.520 --> 0:10:32.679 be some organic growth, but really there's going to be 0:10:32.760 --> 0:10:36.040 more consolidation over the next several years. Where do they 0:10:36.040 --> 0:10:39.560 go next. They've done the deal with First Bank, They've 0:10:39.600 --> 0:10:43.760 acquired BBVA USA, which really is the jump start for 0:10:43.840 --> 0:10:49.000 their south West and Sunbelt expansion into California as well, 0:10:49.520 --> 0:10:53.120 and now what's a coast to coast lenders? So where 0:10:53.120 --> 0:10:54.599 do they grow from here? That's going to be the 0:10:54.679 --> 0:10:55.240 next question. 0:10:55.600 --> 0:10:58.960 Interesting Now, one other big I mentioned earlier has been 0:10:58.960 --> 0:11:02.280 coming off its own deals as well. What are you 0:11:02.320 --> 0:11:04.240 looking for from Citizens? Yeah. 0:11:04.280 --> 0:11:07.280 Citizens has done a string of deals over the past 0:11:07.280 --> 0:11:12.320 few years. They really filled in their market footprint which 0:11:12.400 --> 0:11:14.640 was missing in the New York City metro area with 0:11:14.760 --> 0:11:17.920 Investors Bank Corp. And New Jersey and then they acquired 0:11:18.440 --> 0:11:23.040 the branches from HSBC in the New York City metro area, 0:11:23.200 --> 0:11:29.559 so that really fills out there their traditional Northeast New 0:11:29.600 --> 0:11:34.839 England footprint with the mid Atlantic footprint. So they're comfortably 0:11:34.880 --> 0:11:38.440 at Wisconsin the northeast. And do they expand more outside 0:11:38.480 --> 0:11:42.280 where a lot of the its large competitors have moved 0:11:41.800 --> 0:11:44.959 into the southeast as well, So that's going to be 0:11:45.000 --> 0:11:48.079 a top of mind and a good question for them. 0:11:48.400 --> 0:11:52.839 There's some scuttle but in the investor community if Citizens 0:11:52.880 --> 0:11:55.360 is going to be a seller or a buyer. So 0:11:55.440 --> 0:12:01.000 that's an ongoing question, particularly as larger banks try to 0:12:01.040 --> 0:12:03.480 get bigger to compete with the likes of jpmworking and 0:12:03.600 --> 0:12:03.880 ba AA. 0:12:04.480 --> 0:12:07.680 All right, well, looking forward to regional bank earning season. 0:12:07.720 --> 0:12:10.640 Thank you for this, Herman, Thank you. That's Herman Chan, 0:12:10.880 --> 0:12:15.000 senior analyst for US regional banks at Bloomberg Intelligence. Coming 0:12:15.040 --> 0:12:17.199 up on Bloomberg Day Break weekend, we look at how 0:12:17.280 --> 0:12:21.160 climate change is hitting Europe the hardest. I'm Nathan Hager, 0:12:21.320 --> 0:12:35.880 and this is Bloomberg. This is Bloomberg Daybreak WEEKND our 0:12:35.920 --> 0:12:38.520 global look ahead at the top stories for investors in 0:12:38.559 --> 0:12:41.760 the coming week. I'm Nathan Hager in Washington. Up later 0:12:41.800 --> 0:12:44.600 in our program after a fresh record for gold, what's 0:12:44.640 --> 0:12:47.600 ahead for bullion heading into November. But first in the 0:12:47.640 --> 0:12:51.800 coming days, global climate bankers, forecasters, and government ministers will 0:12:51.840 --> 0:12:55.000 gather in London for the annual New Energy Finance Summit. 0:12:55.280 --> 0:12:58.200 The number of extreme weather events keeps rising and the 0:12:58.320 --> 0:13:02.079 economic damage they cause going up too. With the US 0:13:02.120 --> 0:13:05.040 pushing the EU to stop buying Russian gas and to 0:13:05.120 --> 0:13:08.280 cut back on green regulation, many are asking if the 0:13:08.320 --> 0:13:12.160 continent's green plans for the future are still intact for more, 0:13:12.280 --> 0:13:14.959 let's go to London and bring in Bloomberg Daybreak Europe 0:13:14.960 --> 0:13:16.520 anker Caroline Hepger. 0:13:16.760 --> 0:13:21.199 Nathan, Europe is getting hotter two point four degrees celsius 0:13:21.240 --> 0:13:24.319 hotter than before the Industrial Revolution. That's four and a 0:13:24.360 --> 0:13:28.240 half degrees fahrenheit For our US listeners. That means the 0:13:28.240 --> 0:13:32.040 continent is warming faster than any other region on Earth, 0:13:32.080 --> 0:13:36.320 which in turn is disrupting the continent's weather. It's also 0:13:36.400 --> 0:13:40.200 getting harder to predict when power grids need more energy 0:13:40.240 --> 0:13:44.640 to cope. That hasn't stopped some European politicians from calling 0:13:44.679 --> 0:13:48.240 for the rollback of green pledges as they grapple with 0:13:48.400 --> 0:13:53.240 high costs of living. Greg Jackson is chief executive officer 0:13:53.320 --> 0:13:58.120 of the UK's largest energy retailer, Octopus Energy. He told 0:13:58.200 --> 0:14:01.600 us that's a knock on effect of the shift in America. 0:14:02.160 --> 0:14:05.000 You can't ignore what happened in the US. You know, 0:14:05.240 --> 0:14:08.400 you went from an administration that passed the ira you know, 0:14:08.440 --> 0:14:12.520 one of the biggest commitments to government support for a 0:14:12.679 --> 0:14:16.760 specific set of industries in history world changing to an 0:14:16.760 --> 0:14:20.640 administration that use the phrase drill, baby, drill. I think 0:14:20.680 --> 0:14:24.600 that has really set the tone in a bunch of 0:14:24.640 --> 0:14:28.520 European countries, including the UK, where there is now an 0:14:28.560 --> 0:14:31.040 intense debate about our future of energy. 0:14:31.240 --> 0:14:35.000 That was October's Energy CEO Greg Jackson there on this 0:14:35.040 --> 0:14:39.120 week's Zero podcast, So what does the future of power 0:14:39.200 --> 0:14:42.120 look like? Well, in the next few days, the European 0:14:42.240 --> 0:14:46.720 Union's Energy Commissioner and Portugal's Energy Minister will be joining 0:14:46.760 --> 0:14:51.160 executives right here in London for the annual BNF summit. 0:14:51.600 --> 0:14:53.920 Joining me now as Ben Vickers, who is our chief 0:14:54.160 --> 0:14:57.360 editor of Bloomberg NEF, and Joe Wurtz, our weather and 0:14:57.400 --> 0:15:01.320 climate reporter here in London. Welcome to both the Joe, 0:15:01.320 --> 0:15:04.960 can I start with you? Firstly? We're thinking about climate change. 0:15:05.280 --> 0:15:09.160 Summers in Europe have seen record breaking heat waves with 0:15:09.320 --> 0:15:13.480 really serious consequences. I wonder when you think about your work, 0:15:13.560 --> 0:15:16.480 your job as a weather and climate reporter, how has 0:15:16.560 --> 0:15:17.360 that changed? 0:15:17.960 --> 0:15:19.680 Well, I mean isn't that the joke right that the 0:15:20.040 --> 0:15:22.840 weather is always always changing? You know, my job has 0:15:22.880 --> 0:15:26.760 changed quite a bit, you know really as I started 0:15:26.800 --> 0:15:30.040 as a climate and environment reporter, and increasingly that became 0:15:30.080 --> 0:15:33.880 more and more about extreme weather. And you know, extreme 0:15:33.920 --> 0:15:39.160 weather really shapes how people, businesses, you know, power, energy 0:15:39.200 --> 0:15:44.520 move across the world. It dictates trade, economy and people's lives, 0:15:44.560 --> 0:15:47.480 and that's increasingly you know, the story that that we're 0:15:47.480 --> 0:15:48.080 focusing on. 0:15:48.480 --> 0:15:53.080 Ben, how are Bloomberg's n EF teams looking at this 0:15:53.320 --> 0:15:56.480 changing world? The impact of climate change are kind of 0:15:56.480 --> 0:15:57.720 big big thought? 0:15:58.080 --> 0:15:59.480 Yeah, I was going to say, that's a very very 0:15:59.480 --> 0:16:03.200 big question. So, I mean, basically, what we do. We're 0:16:04.120 --> 0:16:06.520 a data supplier and we do analysis on the back 0:16:06.560 --> 0:16:09.320 of that, and we're looking at the shift in the 0:16:09.360 --> 0:16:13.400 economy's worldwide to basically a lower carbon economy for everyone. Now, 0:16:13.840 --> 0:16:16.280 climate adaptation and climate risk have come to the fall, 0:16:16.600 --> 0:16:19.720 So we're adding new areas of research to help companies 0:16:19.880 --> 0:16:23.560 and policymakers sort of navigate not just the climate risk 0:16:23.760 --> 0:16:25.440 and the need for climate adaptation, but also how to 0:16:25.480 --> 0:16:30.040 keep businesses going, keep them profitable as we go down 0:16:30.280 --> 0:16:32.000 the roots, energy transition. 0:16:31.640 --> 0:16:33.040 Really energy transition. 0:16:33.120 --> 0:16:35.480 Yeah, it's very much a changing picture as well. It's 0:16:35.480 --> 0:16:38.320 not as bad as the weather, but yeah, the shifting. 0:16:38.280 --> 0:16:42.680 Well, thinking about that weather element, Joe. In the winter months, 0:16:42.720 --> 0:16:45.320 Europe has had in the past fears that a sudden 0:16:45.360 --> 0:16:49.120 cold snap would cause gas prices to spike. This in 0:16:49.160 --> 0:16:52.080 amidst all of the other kind of energy challenges that 0:16:52.120 --> 0:16:54.880 we have, is there also a similar concern about that 0:16:54.960 --> 0:16:55.520 this year? 0:16:56.000 --> 0:17:00.720 Yes, absolutely, We've already seen an early season snap. We 0:17:00.840 --> 0:17:03.960 had had a big one in Eastern Europe already, and 0:17:04.080 --> 0:17:07.040 you know, traders and governments are really locked in right now. 0:17:07.080 --> 0:17:10.760 This is basically like cold snap hunting season for for 0:17:10.840 --> 0:17:13.480 governments and traders there. Their eyes are on the forecasts, 0:17:13.560 --> 0:17:17.080 they're they're they're they're watching for any sign that a 0:17:17.160 --> 0:17:20.000 drop in temperatures could really throw off balance the sort 0:17:20.040 --> 0:17:23.520 of fragile state of the energy markets right now, you know, 0:17:23.840 --> 0:17:27.560 increase competition for for for for gas, and so you know, 0:17:27.680 --> 0:17:30.160 any any any deviation there, any any cold snap can 0:17:30.200 --> 0:17:32.360 really raise demand and create ripple effects. 0:17:32.440 --> 0:17:34.560 And gas storage has also been an issue. It's been 0:17:34.600 --> 0:17:37.320 an issue in the UK and across Europe in past winters. 0:17:37.400 --> 0:17:39.280 Is it equally bad this time around? 0:17:39.560 --> 0:17:42.280 So you know, UPE did a did a good job 0:17:42.400 --> 0:17:46.439 stockpiling gas over the summer. It's still that stockpiling was 0:17:46.480 --> 0:17:50.080 below what is is historically the summer you know norm 0:17:50.119 --> 0:17:54.160 for stockpiling, but it did beat some expectations for that stockpiling. 0:17:54.200 --> 0:17:57.720 So they you know, we started the natural gas winter essentially, 0:17:57.720 --> 0:18:00.800 which starts in October. So started that's with about eighty 0:18:00.840 --> 0:18:04.159 three percent of the stockpiles four which was better than 0:18:04.200 --> 0:18:06.160 a lot of people expected, but still not as good 0:18:06.160 --> 0:18:09.080 as it could be. But we've already seen with that 0:18:09.560 --> 0:18:13.040 first cold snap we had recently in Eastern Europe that 0:18:13.680 --> 0:18:17.720 some European countries are already having to tap into that 0:18:17.840 --> 0:18:19.760 gas suppli absolutely. 0:18:20.280 --> 0:18:24.000 Now, of course, there have been incidents of blackouts in Europe, 0:18:24.080 --> 0:18:26.359 and I think this is going to be quite crucial 0:18:26.400 --> 0:18:29.639 when you speak to Portugal's energy minister, who is speaking 0:18:29.720 --> 0:18:32.879 actually at the Bloomberg NEF Summit just in the next 0:18:32.880 --> 0:18:35.520 few days. I'm sure there'll be a lot of interest 0:18:35.600 --> 0:18:38.919 in understanding what she has to say about how the 0:18:38.960 --> 0:18:41.760 country dealt with that blackout. It has been blamed both 0:18:41.800 --> 0:18:45.920 on the power grid and also on renewable energy, and Ben, 0:18:45.960 --> 0:18:48.400 you're going to be interviewing her, what are you going 0:18:48.440 --> 0:18:50.240 to try to ask and find out. 0:18:50.920 --> 0:18:52.640 Well, there's a couple of things. There's obviously the human 0:18:52.680 --> 0:18:54.800 side to this, because being energy minister and waking up 0:18:54.800 --> 0:18:56.959 more morning with the lights off, not just in your 0:18:57.000 --> 0:18:58.760 house or down the street, but across the country. It 0:18:58.800 --> 0:19:01.480 is probably a nightmare. So there's that personal experience of 0:19:01.520 --> 0:19:05.520 finding yourself in the hot seat. And well, three months 0:19:05.600 --> 0:19:09.200 after that April twenty eighth blackout, the minister presented thirty 0:19:09.200 --> 0:19:12.520 one measures to basically address all the problems they've been 0:19:12.520 --> 0:19:15.680 able to identify, and some of those obviously within her remit, 0:19:15.680 --> 0:19:17.400 those are the ones she's trying to address. But there's 0:19:17.400 --> 0:19:22.120 a bigger, bigger issue of interconnections basically between European power markets, 0:19:22.440 --> 0:19:24.400 and for a long time Spain and Portugal have been 0:19:24.440 --> 0:19:28.159 asking France to improve the connections between those countries, and 0:19:28.200 --> 0:19:30.080 there's a sort of a little bit of a tift 0:19:30.119 --> 0:19:33.000 between them and allegations that their interests for the nuclear 0:19:33.000 --> 0:19:35.439 power plants were able to sell their power rather than 0:19:35.480 --> 0:19:37.439 allowing solar from Spain to come in really cheaply and 0:19:37.440 --> 0:19:39.200 so on, So there's a little bit of EU negotiation 0:19:39.280 --> 0:19:41.199 to go on there as well. But they're investing one 0:19:41.280 --> 0:19:44.479 hundred and thirty seven million in their grid to upgrade 0:19:44.560 --> 0:19:47.359 that they're putting in a couple of new power stations 0:19:47.400 --> 0:19:49.919 that are going to light up in January, which are 0:19:49.960 --> 0:19:52.080 what they call they call them black start stations, which 0:19:52.160 --> 0:19:54.520 is basically when everything goes off, these switch on automatically 0:19:54.560 --> 0:19:56.640 and sort of a first line of defense. But there's 0:19:56.680 --> 0:19:58.800 actually quite a thirty one of these measures. So we're 0:19:58.800 --> 0:20:00.159 going to be talking to her a lot about what 0:20:00.240 --> 0:20:00.880 the plans are. 0:20:00.880 --> 0:20:03.080 What the plans are on what she's delivering and how 0:20:03.200 --> 0:20:04.800 quickly and so on. Yes, I think that will be 0:20:04.840 --> 0:20:10.160 really fascinating in terms of though the other major theme 0:20:10.240 --> 0:20:14.080 surely is about the backlash against green energy. I mean 0:20:14.119 --> 0:20:15.960 a little bit of that comes through in the discussion 0:20:15.960 --> 0:20:20.800 around Portugal and the spending required Joe for climate adaptation. 0:20:21.240 --> 0:20:24.040 This is a significant issue in the US. It has 0:20:24.119 --> 0:20:28.280 also rippled across Europe. Is it gaining traction in particular 0:20:28.400 --> 0:20:33.000 parts of Europe or for particular areas in the energy space. 0:20:33.680 --> 0:20:35.560 You know, it really seems to be gaining traction in 0:20:35.920 --> 0:20:38.600 all sorts of different corners across Europe. The context here 0:20:38.680 --> 0:20:43.280 is that Europe's energy grid energy markets are increasingly renewable 0:20:43.359 --> 0:20:46.600 and increasingly rely on the weather. They're dependent on how 0:20:46.640 --> 0:20:49.320 much sun is shining, how much wind is blowing, and 0:20:49.440 --> 0:20:53.320 also comes with all the you know, international competition for 0:20:53.400 --> 0:20:57.680 gas and other factors. Geopolitics can influence the supply side 0:20:57.680 --> 0:21:01.399 of that equation. So you know, increased pressure on all 0:21:01.400 --> 0:21:05.800 those markets are definitely, uh, you know, raising the stakes. 0:21:05.800 --> 0:21:08.720 And in each of these countries, you know, these ambitious 0:21:09.119 --> 0:21:12.919 climate targets that they set up have have really been challenged. 0:21:12.920 --> 0:21:15.159 You know, last month was supposed to be a big milestone, right, 0:21:15.160 --> 0:21:18.280 Europe was supposed to get together and come to this 0:21:18.320 --> 0:21:20.640 big agreement, this final agreement on their on their long 0:21:20.720 --> 0:21:23.240 term twenty forty targets, and and and they kicked that 0:21:23.320 --> 0:21:26.280 can down the road, and and now those countries are 0:21:26.520 --> 0:21:29.640 fighting about that. There's more domestic spending demands on each 0:21:29.640 --> 0:21:32.919 of these countries. In some cases, these countries are wanting 0:21:32.920 --> 0:21:36.080 to siphon off more money for defense spending and things 0:21:36.119 --> 0:21:41.080 like that, and and and and more political uh unease 0:21:41.280 --> 0:21:44.240 with some of the ambitious spending targets that go along 0:21:44.280 --> 0:21:45.639 with these these green goals. 0:21:45.800 --> 0:21:47.520 And if that wasn't enough, you just have to throw 0:21:47.520 --> 0:21:51.520 in artificial intelligence, which we have spent months thinking about, 0:21:51.560 --> 0:21:54.520 you know, the big build out of our sovision intelligence 0:21:54.560 --> 0:21:58.840 the Energy demand ben that is going to also really 0:21:58.960 --> 0:22:02.200 underline some of the difficulties in the energy space. How 0:22:03.080 --> 0:22:04.959 do you think that the impact of AI is going 0:22:05.000 --> 0:22:07.920 to affect your forecast when it comes to power demand? 0:22:08.080 --> 0:22:11.320 How are you thinking about this oncoming technology. 0:22:11.560 --> 0:22:13.840 So there's a mass of amount of interest in the 0:22:13.840 --> 0:22:16.119 impact that AI is going to have on power demand, 0:22:16.320 --> 0:22:20.160 on prices more generally as well for consumers. Yeah, we've 0:22:20.160 --> 0:22:23.680 been looking at what the likely development of AI data 0:22:23.680 --> 0:22:27.679 centers basically the hyperscals, but we're looking at out to 0:22:27.720 --> 0:22:30.920 twenty thirty five the power demand from data centers. We're 0:22:30.920 --> 0:22:32.960