WEBVTT - When Will America Get Its $25,000 Electric Car? 0:00:00.600 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.720 --> 0:00:13.960 Week inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.319 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.880 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:25.800 and Tim Stenebeck from Bloomberg Radio. 0:00:27.440 --> 0:00:30.520 Okay, everybody, The good news for consumers wanting to transition 0:00:30.600 --> 0:00:33.600 to an electric vehicle EV prices are falling fast in 0:00:33.640 --> 0:00:36.400 the United States. The not so great news is the 0:00:36.479 --> 0:00:40.519 cheapest models remain far more costly than what other countries 0:00:40.560 --> 0:00:41.280 have to offer. 0:00:41.320 --> 0:00:44.240 Tim, So, where is America's twenty five thousand dollars EV 0:00:44.400 --> 0:00:46.680 and why can't we get there? With more on this 0:00:46.720 --> 0:00:49.239 story on the Bloomberg Today. Back with us is Bloomberg 0:00:49.280 --> 0:00:53.360 News auto reporter Keith Nonton, who joins us from Detroit. Keith, first, up, 0:00:53.400 --> 0:00:58.120 the good news. EV prices around the world and around 0:00:58.160 --> 0:00:59.880 the US they're falling right. 0:01:01.240 --> 0:01:05.360 Yeah, and you know there's no place where they're falling 0:01:05.400 --> 0:01:09.319 farther than China, where BYD sells an V for under 0:01:09.360 --> 0:01:13.800 ten thousand dollars. So that competitive threat is really getting 0:01:14.200 --> 0:01:18.720 the attention of the automakers in America. Who are hustling. 0:01:18.360 --> 0:01:20.520 To try and come up with a twenty. 0:01:20.240 --> 0:01:23.480 Five thousand dollars VS. That's the new bogie. 0:01:23.520 --> 0:01:25.720 Can we come out with a twenty five thousand dollars EV? 0:01:26.360 --> 0:01:28.240 So wait, can they make money on a twenty five 0:01:28.280 --> 0:01:29.160 thousand dollars EV? 0:01:30.720 --> 0:01:34.039 Well, so a couple of things, Carol, They think they can. 0:01:34.120 --> 0:01:36.600 And here's why. One is it's going to be a 0:01:36.640 --> 0:01:41.000 smaller vehicle, so we'll require less battery, and the battery 0:01:41.080 --> 0:01:42.760 is the most expensive. 0:01:42.200 --> 0:01:44.440 Component by far of an EV. 0:01:45.080 --> 0:01:49.080 And because it's priced so low, you would get higher volume. 0:01:49.200 --> 0:01:51.040 So they think the combination. 0:01:50.640 --> 0:01:53.400 Of higher volume and lower battery. 0:01:53.000 --> 0:01:55.880 Costs will lead to profitability. 0:01:56.200 --> 0:01:57.480 In fact, Ford's. 0:01:57.160 --> 0:02:00.000 CEO Jim Farley has said the twenty five thousand dollars 0:02:00.080 --> 0:02:00.880 EV they're. 0:02:01.080 --> 0:02:02.160 Developing that will. 0:02:02.040 --> 0:02:05.240 Come in late twenty twenty six, needs to be profitable 0:02:05.280 --> 0:02:06.240 in its first year. 0:02:06.880 --> 0:02:09.720 So why can BYD do a ten thousand dollars EV. 0:02:09.880 --> 0:02:13.160 Other Chinese automakers do a ten thousand dollars EV. But 0:02:13.160 --> 0:02:15.560 it's such a struggle and such a challenge for US 0:02:15.639 --> 0:02:17.600 automakers to do it. Is it all just because of 0:02:17.680 --> 0:02:18.400 labor costs? 0:02:19.919 --> 0:02:20.119 No? 0:02:20.120 --> 0:02:23.600 No, there's also the government of China that provides absolutely 0:02:23.639 --> 0:02:28.840 free money to those automakers, so government support, full government 0:02:28.880 --> 0:02:31.080 support that would not be legal in the United States 0:02:31.200 --> 0:02:34.080 or other Western countries. There's a lot of what gives 0:02:34.160 --> 0:02:37.160 China the competitive advantage they have, but yeah, they do 0:02:37.240 --> 0:02:40.200 have the lowest labor costs pretty much in the world. 0:02:40.200 --> 0:02:43.200 They're lower than the labor costs in Mexico, and that 0:02:43.280 --> 0:02:44.640 also gives them a big lag up. 0:02:45.120 --> 0:02:47.040 Hey, Keith, one thing I do wonder does it make 0:02:47.080 --> 0:02:50.160 sense that we're it's taken longer to get the cheaper 0:02:50.240 --> 0:02:52.720 EV or the less expensive EV if you will, because 0:02:52.760 --> 0:02:55.680 you know, so many of the automakers came out with, 0:02:55.960 --> 0:02:59.040 you know, some really interesting models that folks like, but 0:02:59.080 --> 0:03:02.880 they were super expensed. Is that logical as we kind 0:03:02.919 --> 0:03:07.440 of transition from you know, or transition, if you will, 0:03:07.480 --> 0:03:10.120 to more evs, that it's it makes sense that they 0:03:10.120 --> 0:03:11.960 were more expensive to begin with, and now we can 0:03:11.960 --> 0:03:14.080 start to think about how we make them less expensive. 0:03:15.160 --> 0:03:15.359 Yeah. 0:03:15.400 --> 0:03:17.560 I think the idea, Carol was, you know, like with 0:03:17.680 --> 0:03:21.160 any new technology, you start at the luxury end and 0:03:21.200 --> 0:03:23.200 then hopefully it trickles down. 0:03:23.600 --> 0:03:26.240 But I think what the automaker's. 0:03:25.600 --> 0:03:29.280 Discovered was coming straight out of the gate with seventy 0:03:29.360 --> 0:03:33.519 eighty one hundred thousand dollars evs really narrowed your market. 0:03:33.560 --> 0:03:36.360 There's only so many people who can afford those sorts 0:03:36.360 --> 0:03:38.800 of vehicles. Maybe they should have been more middle market. 0:03:39.240 --> 0:03:42.520 GM now has an equinox that is EV that is 0:03:42.600 --> 0:03:47.920 more middle markets, a medium sized SUV that will come 0:03:48.000 --> 0:03:50.520 down by the end of this year. Supposedly they're going 0:03:50.560 --> 0:03:53.840 to have a base model that with the government incentive, 0:03:53.880 --> 0:03:56.880 would put it at twenty eight thousand dollars. So you know, 0:03:56.920 --> 0:04:00.000 and as we know, Elon is developing a twenty five 0:04:00.000 --> 0:04:01.560 one thousand dollars EV as well. 0:04:02.320 --> 0:04:06.960 So he says, or so he says, not giving you 0:04:07.000 --> 0:04:08.640 a hard time, but it does seem like he says 0:04:08.640 --> 0:04:11.400 we will publicly. Right, we've all been kind of waiting 0:04:11.400 --> 0:04:14.920 for this mass market Tesla and then reporting and so 0:04:14.960 --> 0:04:16.960 on and so forth. As he's saying something else behind 0:04:16.960 --> 0:04:18.520 closed doors, then. 0:04:18.480 --> 0:04:19.919 That will actually happen. 0:04:20.120 --> 0:04:23.400 Is the robotaxi that he's now talking about, because he 0:04:23.440 --> 0:04:25.360 really wants everybody to view Tesla as. 0:04:25.240 --> 0:04:27.159 An AI company and not an auto company. 0:04:27.640 --> 0:04:31.240 It's the same platform, it's the same vehicle as the 0:04:31.279 --> 0:04:34.240 twenty five thousand dollars Tesla, So it seems to me 0:04:34.320 --> 0:04:36.800 they will produce a twenty five thousand dollars car, some 0:04:36.839 --> 0:04:39.480 of them will have steering wheels, and some of them won't. 0:04:39.640 --> 0:04:42.400 All right, hold your breath for August eighth, is what 0:04:42.440 --> 0:04:45.040 Elon Musk would say, because that's when the unveil is 0:04:45.080 --> 0:04:46.160 supposedly happening. 0:04:46.560 --> 0:04:48.560 Keith, we can't talk to you and not. 0:04:48.520 --> 0:04:51.039 Talk about historical parallels when it comes to what's going 0:04:51.040 --> 0:04:53.360 on with evs in China, because you've been covering the 0:04:53.400 --> 0:04:55.640 auto industry for so many years, and I'm wondering, even 0:04:55.640 --> 0:04:58.400 though we don't see these gpvs coming from China to 0:04:58.440 --> 0:05:02.000 the US and increasingly not looking like Europe either, is 0:05:02.040 --> 0:05:04.640 there still any sort of historical parallel we can look 0:05:04.680 --> 0:05:08.479 at when US automakers have had to react quickly to 0:05:09.080 --> 0:05:12.599 a foreign automaker, maybe Japan in the nineteen eighties nineteen nineties. 0:05:12.640 --> 0:05:16.240 Yes, absolutely, this is the nineteen eighties all over again, 0:05:16.279 --> 0:05:20.000 except on steroids, because while certainly the government of Japan 0:05:20.080 --> 0:05:24.040 supported their automakers, nothing like the government of China supports 0:05:24.080 --> 0:05:27.839 its automakers. So you have this competitive threat coming. And sure, 0:05:27.920 --> 0:05:31.200 Joe Biden's one hundred percent tariffs on Chinese evs can 0:05:31.279 --> 0:05:34.920 keep them out for a while, but ultimately they'll be here, 0:05:35.200 --> 0:05:38.400 just like the Japanese came and the Koreans came. I 0:05:38.400 --> 0:05:41.440 mean before that, the Germans came. Ultimately they will be 0:05:41.520 --> 0:05:45.560 in this market. And that's why the American automakers and 0:05:45.640 --> 0:05:49.159 the European automakers are rushing to catch up. You know 0:05:49.240 --> 0:05:52.200 that Jeep now is owned by Stilantis, which is based 0:05:52.200 --> 0:05:52.760 in Europe. 0:05:52.920 --> 0:05:54.480 They are going to come with this twenty. 0:05:54.279 --> 0:05:57.960 Five thousand dollars Jeep colors Tavaris. Their CEO just sat 0:05:58.000 --> 0:06:01.040 a couple weeks ago. So you know, everyone is rushing 0:06:01.640 --> 0:06:04.680 to be prepared for when the Chinese come into the 0:06:04.680 --> 0:06:05.600 Western markets. 0:06:05.800 --> 0:06:07.680 Hey, you know, Keith, for someone who's watched the auto 0:06:07.720 --> 0:06:10.680 market for a long time and understands it and understands competition, 0:06:11.279 --> 0:06:14.320 does the US market need to be protected a little bit, 0:06:14.400 --> 0:06:17.239 especially when it comes to an EV mass market before 0:06:17.320 --> 0:06:21.600 opening the floodgates, if you will, to foreign competition, Because 0:06:21.600 --> 0:06:23.760 sometimes I wonder if competition gets people to move a 0:06:23.760 --> 0:06:27.440 little quicker in terms of development or so I'm curious 0:06:27.440 --> 0:06:30.560 how you see it understanding development cycles and the markets. 0:06:30.760 --> 0:06:36.200 Absolutely, and tariffs, let's be very clear tariffs are inflationary. 0:06:36.360 --> 0:06:40.359 Ask any economists, they are inflationary. They don't protect the consumer, 0:06:40.760 --> 0:06:43.719 they protect the industry while it gets us act together. 0:06:43.760 --> 0:06:46.560 And that's what's going on here. Detroit made bets on 0:06:46.640 --> 0:06:50.920 big expensive vs. One hundred thousand dollars Hummer evs and 0:06:51.000 --> 0:06:52.880 the F one fifty lightning when you get it all 0:06:52.920 --> 0:06:56.120 tricked out, is way up there. So you know, they 0:06:56.120 --> 0:06:59.920 made bets on big electric vehicles that require big batteries 0:07:00.200 --> 0:07:02.240 to power them, and that turns out to be the 0:07:02.279 --> 0:07:02.839 wrong bet. 0:07:02.920 --> 0:07:04.040 So they need a little. 0:07:03.800 --> 0:07:07.719 Time to scramble to go back to the drawing board 0:07:07.760 --> 0:07:10.160 literally and go down to the low end of the 0:07:10.200 --> 0:07:14.760 market and address the primary concern from mainstream buyers. I 0:07:14.800 --> 0:07:17.240 know we talk a lot about charging infrastructure, and that's 0:07:17.240 --> 0:07:21.800 a legitimate thing. But price, price, price, that's the impediment 0:07:21.840 --> 0:07:22.640 to ev adoption. 0:07:23.080 --> 0:07:25.720 Keith, who's in the US is closest to pulling this 0:07:25.800 --> 0:07:28.040 off right now? Is it Ford? 0:07:28.160 --> 0:07:28.200 Is? 0:07:28.480 --> 0:07:30.640 I know I can't really call Stilantis to US company, 0:07:30.640 --> 0:07:32.400 but they certainly own some US companies. 0:07:32.760 --> 0:07:34.480 Is it GM? Is it Stalantis? Who is it? 0:07:35.800 --> 0:07:38.800 I think it might be GM? I mean Ford's twenty 0:07:38.800 --> 0:07:42.000 five thousand dollars. EV isn't coming until late twenty twenty six. 0:07:42.080 --> 0:07:46.840 GM says they'll have their revived and revised Chevy Bolt 0:07:47.160 --> 0:07:51.320 out next year, and that already was the most the 0:07:51.400 --> 0:07:55.200 cheapest EV on the American market before GM stopped building 0:07:55.240 --> 0:07:56.920 it in December. But they're coming back with the new 0:07:56.960 --> 0:07:59.280 and improved one next year. And as I said, they 0:07:59.280 --> 0:08:02.040 have this Equinix that's out there, so you know, they 0:08:02.080 --> 0:08:03.840 may be the first ones to be out there with 0:08:03.920 --> 0:08:07.640 an EV that starts in the twenties, but everyone is 0:08:07.640 --> 0:08:10.800 going to catch up real quickly. Javares wasn't specific when 0:08:10.800 --> 0:08:12.680 he was talking about the Electric Chief. He just said 0:08:12.680 --> 0:08:16.200 it will come to the US very soon. So you know, 0:08:16.280 --> 0:08:18.280 within the next two years, we're going to see a 0:08:18.280 --> 0:08:22.480 whole bunch of more affordable evs from the US makers. 0:08:22.520 --> 0:08:24.720 Okay, they're not US makers, but I'm wondering where the 0:08:24.760 --> 0:08:27.160 Korean companies and are are with all of these, like 0:08:27.240 --> 0:08:29.680 the Hyundais and the kias well. 0:08:29.800 --> 0:08:32.560 Hundai and Kia have some really nice evs that have 0:08:32.600 --> 0:08:35.280 been popular with consumers and so. 0:08:35.400 --> 0:08:38.719 And you know they don't qualify it, particularly. 0:08:38.360 --> 0:08:40.640 The ones that are made in Korea. For the seventy 0:08:40.640 --> 0:08:44.720 five hundred dollars tax credits. So Hyundai and Kia, which 0:08:44.760 --> 0:08:47.400 is the same company, are just biting the bullet and 0:08:47.440 --> 0:08:50.600 still giving that discount to their to their buyers and 0:08:50.720 --> 0:08:53.560 just taking it out of their high So you know, 0:08:53.679 --> 0:08:57.400 they are being very aggressive and competitive. Hyundai feels like 0:08:58.160 --> 0:09:01.839 they can completely reset their and become an eed maker 0:09:01.880 --> 0:09:02.440 in America. 0:09:02.559 --> 0:09:04.440 Let's just hope the charging systems are ready for this 0:09:04.520 --> 0:09:07.960 mass adoption of Gprev's fingers crossed. I see it at 0:09:08.000 --> 0:09:10.880 the highway stop centers. There's not a lot of places 0:09:10.920 --> 0:09:14.439 necessarily to charge up. Keith Notton always appreciated Bloomberg News 0:09:14.440 --> 0:09:17.360 auto reporter Keith not and jutting us from Detroit. All right, 0:09:17.360 --> 0:09:19.760 we're going to stay with kind of alt energy renewables 0:09:19.800 --> 0:09:22.720 to one of the richest individuals in the world who's 0:09:22.720 --> 0:09:24.680 getting supercharged over nuclear energy. 0:09:24.800 --> 0:09:26.360 On that it's one of our most read stories on 0:09:26.400 --> 0:09:29.600 the Bloomberg terminal about the world's sixth richest person who 0:09:29.640 --> 0:09:32.360 says he's ready to invest billions in nuclear power. 0:09:32.400 --> 0:09:34.160 We are talking about Bill Gates, who made the media 0:09:34.240 --> 0:09:36.319 rounds this past week and talking about his investments in 0:09:36.400 --> 0:09:40.160 nuclear power and got into the political momentum behind Nuclear 0:09:40.400 --> 0:09:42.840 on CBS faced the nation this past weekend. 0:09:43.840 --> 0:09:47.679 Of all the climate related work I'm doing, I'd say 0:09:47.679 --> 0:09:52.480 the one that has the most bipartisan energy clind that 0:09:52.559 --> 0:09:57.640 it's actually this nuclear work. If we unleash the innovation 0:09:57.760 --> 0:10:00.600 power of this country, we tend to lead. And I 0:10:00.640 --> 0:10:03.040 feel great about the support we're getting from the federal 0:10:03.040 --> 0:10:04.600 government in this nuclear space. 0:10:05.120 --> 0:10:06.840 All right, with more on what Bill Gates is up to, 0:10:06.960 --> 0:10:09.439 the political will behind the nuclear power and the rebirth 0:10:09.480 --> 0:10:12.160 of what it seems like nuclear return again to Will Wade. 0:10:12.160 --> 0:10:15.240 He's Bluemberg News Power and Renewables Energy editor right back 0:10:15.280 --> 0:10:17.800 in our studio. So well, good to have you back. 0:10:17.840 --> 0:10:20.280 It feels like this is becoming a weekly thing when 0:10:20.320 --> 0:10:23.640 it comes to nuclear. Bill Gates investing in next generation 0:10:23.800 --> 0:10:27.920 nuclear power a plant project in Wyoming. What do we 0:10:27.960 --> 0:10:29.440 know about it? And why is it next gen? 0:10:30.840 --> 0:10:33.560 Okay, So Bill Gates is invested in this company called 0:10:33.679 --> 0:10:36.960 Terra Power and they're investing or they're developing a new 0:10:37.120 --> 0:10:41.120 kind of nuclear reactors. So traditional reactors use water. The 0:10:41.160 --> 0:10:44.160 fission reaction heats up the water, the water makes steam, 0:10:44.640 --> 0:10:50.360 steam makes electricity. He uses liquid sodium, so it's not water. 0:10:50.440 --> 0:10:55.360 It stays liquid at a much higher temperature, so that 0:10:55.760 --> 0:10:57.800 allows it to use more of the heat from the 0:10:57.800 --> 0:11:00.560 fission reaction, so it's a more efficient type of reaction. 0:11:01.320 --> 0:11:03.560 So it sounds really cool and if it works, it 0:11:03.600 --> 0:11:06.800 will be cool. But what's different if it works, Well, 0:11:07.320 --> 0:11:09.120 he hasn't built it yet, no one. He hasn't built 0:11:09.120 --> 0:11:11.720 it yet. No one's built one yet. But the theory 0:11:11.800 --> 0:11:15.280 is very solid. There's a lot more energy there. It's 0:11:15.440 --> 0:11:18.560 years away from completions, so there's obviously a lot of 0:11:18.640 --> 0:11:21.240 risk between you know. Now, they just broke ground on 0:11:21.360 --> 0:11:23.679 it last week. They don't even have permission from the 0:11:23.760 --> 0:11:27.080 NRC to actually build the reactor part. So yeah, there's 0:11:27.120 --> 0:11:29.600 a lot that still needs to happen. But it's a 0:11:29.720 --> 0:11:32.360 new technology. That's why they call it advanced to nuclear. 0:11:32.720 --> 0:11:34.679 Any other countries doing this right now? 0:11:34.960 --> 0:11:37.240 Oh, there's a lot of companies working countries. There's a 0:11:37.280 --> 0:11:40.599 lot of countries working on advanced nuclear designs. There's a 0:11:40.600 --> 0:11:41.800 lot of companies there's. 0:11:41.840 --> 0:11:43.320 But has anyone pulled it off yet? 0:11:43.679 --> 0:11:43.839 Oh? 0:11:43.920 --> 0:11:47.000 No, No, that's what I'm talking about. No, we're like, 0:11:47.280 --> 0:11:47.640 the thing. 0:11:47.559 --> 0:11:50.600 About nuclear is that it goes for skeptical a little bit. 0:11:50.880 --> 0:11:52.240 Oh, don't be that's okay, or. 0:11:52.240 --> 0:11:53.040 Should we not be that? 0:11:53.200 --> 0:11:53.760 You should be? 0:11:54.000 --> 0:11:56.080 No, you should be. The thing about nuclear is that 0:11:56.120 --> 0:11:58.760 it just goes really slowly. So you can have me 0:11:58.800 --> 0:12:00.840 in here every week, but not lot's going to change 0:12:01.360 --> 0:12:01.960 between them. 0:12:02.280 --> 0:12:04.200 Build a preview from will wait, right. 0:12:04.320 --> 0:12:06.360 But you remind us that some of it has to 0:12:06.400 --> 0:12:09.080 go slowly to make sure that it is safe. It 0:12:09.120 --> 0:12:09.800 is secure. 0:12:10.200 --> 0:12:14.080 Yeah, they nuclear has some risks. This is real, which 0:12:14.120 --> 0:12:17.360 is why they are very careful about how they take 0:12:17.400 --> 0:12:20.280 every step. But all of these things are new designs 0:12:20.320 --> 0:12:22.040 that have to be perfected. I mean, we were just 0:12:22.040 --> 0:12:24.840 talking about all the new evs that they've been around 0:12:24.840 --> 0:12:27.800 for a long long time and they're just getting perfected. 0:12:28.440 --> 0:12:33.160 Why will are people betting on this smaller new type 0:12:33.480 --> 0:12:35.640 as the way to move forward with nuclear rather than 0:12:35.840 --> 0:12:38.679 the proven tech that yes, is expensive, yes, takes years, 0:12:38.679 --> 0:12:39.520 but we know works. 0:12:40.240 --> 0:12:43.200 So the model that people want to get to is 0:12:43.240 --> 0:12:46.480 they call it an SMR, a small modular reactor where 0:12:46.520 --> 0:12:49.480 you can build the pieces in a central factory and 0:12:49.520 --> 0:12:51.560 they're small enough that you can put them in a 0:12:51.559 --> 0:12:53.520 shipping container and deliver them on site and it just 0:12:53.520 --> 0:12:58.480 bolt them together. So once we get the technology perfected, 0:12:58.960 --> 0:13:02.480 which may be is a mid twenty thirties type of thing. 0:13:03.040 --> 0:13:06.040 But if that happens, you just have them turning off 0:13:06.120 --> 0:13:08.440 the assembly line and being delivered. 0:13:08.600 --> 0:13:10.440 Tim's shaking his head. I mean, the timeline and all 0:13:10.520 --> 0:13:12.920 of this, Like I understand we have to be safe 0:13:13.240 --> 0:13:15.679 and careful and secure, but it is it's kind of 0:13:15.800 --> 0:13:18.040 mind blowing when we think about we're watching climate We're 0:13:18.040 --> 0:13:20.559 talking about a killer heat wave which we're going to 0:13:20.600 --> 0:13:22.800 talk about later this hour here in New York, but 0:13:22.880 --> 0:13:26.280 across like six for sixty million Americans this week, and 0:13:26.320 --> 0:13:29.199 we just see the effects of climate change rapidly changing 0:13:29.200 --> 0:13:29.840 our environment. 0:13:29.960 --> 0:13:32.000 And will you got to forgive me being so skeptical 0:13:32.040 --> 0:13:33.960 when it comes to timelines. Here, you're just back from 0:13:34.040 --> 0:13:37.080 Georgia and Vocal four. Sure, and you know, remind us 0:13:37.080 --> 0:13:40.720 about the timeline there for something that had proven technology. 0:13:40.840 --> 0:13:44.320 Yes, the Vocal three and four project, it was just 0:13:44.440 --> 0:13:47.400 completed and the fourth one went online just a couple 0:13:47.480 --> 0:13:50.480 months ago. It was seven years behind schedule. It was 0:13:50.480 --> 0:13:52.840 one hundred and fifty percent over budget. I just did 0:13:52.880 --> 0:13:55.280 the math earlier. It came in about thirty five billion 0:13:55.320 --> 0:13:59.400 something dollars to build these two big reactors. It was 0:13:59.440 --> 0:14:02.120 a painful process, but people are happy that they've got 0:14:02.160 --> 0:14:04.520 it done. They're happy they got it across the finish line. 0:14:05.200 --> 0:14:09.520 Whether it is something that is a motivator to get 0:14:09.559 --> 0:14:11.679 people to do another one, or if it's going to 0:14:11.760 --> 0:14:13.960 scare people away is still the question. 0:14:14.280 --> 0:14:15.880 What do you see? I thought it was interesting Bill 0:14:15.920 --> 0:14:19.960 Gates saying that the country, I feel great about the 0:14:19.960 --> 0:14:23.160 support we're getting from the federal government in this nuclear space. 0:14:23.920 --> 0:14:28.240 What have we seen in terms of the political opinion, 0:14:28.240 --> 0:14:30.480 if you will, on this? I mean, people's opinion is 0:14:30.480 --> 0:14:32.600 certainly one thing. But what we are seeing in terms 0:14:32.640 --> 0:14:35.880 of politics, and we're politicians, and also the federal government, 0:14:36.080 --> 0:14:36.960 how they are weighing in. 0:14:37.200 --> 0:14:37.400 Oh. 0:14:37.840 --> 0:14:41.040 I literally twenty minutes ago, I was watching Jennifer Grohnholm 0:14:41.080 --> 0:14:44.160 at the Energy Secretary do a presentation out in Vegas 0:14:44.200 --> 0:14:47.360 at the Big Conference. She was talking up all of 0:14:47.400 --> 0:14:50.360 the things that the Biden administration done has done. They 0:14:50.360 --> 0:14:53.200 are very supportive of the nuclear industry. They've got the 0:14:53.200 --> 0:14:55.360 production tax credit they came in as part of the 0:14:55.360 --> 0:14:59.000 Inflation Reduction Act. They've got the loan Program's offices trying 0:14:59.040 --> 0:15:01.960 to throw billion and billions of dollars of companies to 0:15:02.040 --> 0:15:05.400 try and develop nuclear power. I've talked to Jiggershaw, the 0:15:05.400 --> 0:15:08.840 guy in charge of the LPO office. He's like literally 0:15:08.880 --> 0:15:11.880 begging people to submit application so he can throw money 0:15:11.880 --> 0:15:12.320 at them. 0:15:12.880 --> 0:15:16.040 Will remind us in terms of the overall power that's 0:15:16.120 --> 0:15:19.240 used by the US when we are on this path 0:15:19.280 --> 0:15:22.720 to net zero, what portion of that will be powered 0:15:22.720 --> 0:15:23.720 by nuclear energy? 0:15:24.720 --> 0:15:27.320 Well, hopefully a lot more. Right now, it's nineteen percent 0:15:27.920 --> 0:15:29.760 that's of the US energy mix. 0:15:29.840 --> 0:15:31.840 This surprises me because I think I thought it just 0:15:31.840 --> 0:15:32.520 had gone away. 0:15:32.640 --> 0:15:35.600 But that's just my Actually, if you look at the 0:15:35.720 --> 0:15:39.520 charts of where nuclear fit, it's been rock steady. It 0:15:39.720 --> 0:15:43.680 it has hardly changed. But their goal is to triple 0:15:43.720 --> 0:15:46.720 it by twenty fifty, which is just a lot. It's 0:15:46.760 --> 0:15:47.880 an enormous amount. 0:15:47.960 --> 0:15:49.560 And we're also using more energy too. 0:15:49.520 --> 0:15:51.440 We're using that's the thing. We are going to start 0:15:51.520 --> 0:15:53.960 using a lot more energy. Like get energy demand in 0:15:54.000 --> 0:15:56.640 the US has been more or less flat for the 0:15:56.680 --> 0:16:00.360 last twenty years, but we're seeing projections to go way 0:16:00.440 --> 0:16:01.160 up in the next. 0:16:01.080 --> 0:16:04.280 Couple of administration. Bill Gate says he's ready to invest 0:16:04.320 --> 0:16:06.920 billions more so, he's ready certainly to do his part. 0:16:07.440 --> 0:16:09.800 Great stuff. Thank you appreciate being able to check in 0:16:09.840 --> 0:16:12.160 once again with Will Wade, He's Bloomberg News Power and 0:16:12.200 --> 0:16:13.800 Renewable Energy editor. 0:16:15.040 --> 0:16:18.600 You're listening to the Bloomberg Business Week podcast. Catch us 0:16:18.640 --> 0:16:21.880 live weekday afternoons from two to five pm Eastern. Listen 0:16:21.920 --> 0:16:24.560 on applecar Play and and brout Auto with a Bloomberg 0:16:24.600 --> 0:16:28.240 Business app, or watch us live on YouTube. 0:16:28.880 --> 0:16:33.960 Sometimes technology innovation and disruption actually involves a company doing 0:16:34.120 --> 0:16:37.920 just that to itself. Enter Google, home to two elite 0:16:37.920 --> 0:16:41.680 AI teams, Google Brain and DeepMind, and disrupting that tim 0:16:41.720 --> 0:16:44.800 by combining it into one AI superunit that it calls 0:16:45.080 --> 0:16:45.960 Google deep Mind. 0:16:46.200 --> 0:16:48.480 Let's get to this Bloomberg BusinessWeek story. You can read 0:16:48.520 --> 0:16:50.800 it on the Bloomberg and at Bloomberg dot com. Slash 0:16:50.880 --> 0:16:54.280 BusinessWeek with more with us in the Bloomberg studio is 0:16:54.480 --> 0:16:58.480 BusinessWeek Technology editor Joshua Brustein, who joins us in New York. So, 0:16:58.560 --> 0:17:01.920 Joshua remind us what these two labs were doing separately 0:17:01.960 --> 0:17:05.280 and why Alphabet, the parent company of Google, decided to 0:17:05.520 --> 0:17:06.200 bring them together. 0:17:06.920 --> 0:17:10.760 Yeah. So Google has for about a decade been pursuing 0:17:10.840 --> 0:17:14.439 AI in various ways, and it has a history of 0:17:14.520 --> 0:17:18.879 kind of doing things very far away from trying to 0:17:18.880 --> 0:17:20.919 make a product out of it and also actually as 0:17:20.920 --> 0:17:24.840 a history of having two competing departments trying to do 0:17:24.840 --> 0:17:28.560 the same thing. So they had a homegrown unit called 0:17:28.600 --> 0:17:31.080 Google Brain, which came out of Google X, which is 0:17:31.119 --> 0:17:34.760 its Moonshot lab, and they spun that out of X 0:17:34.800 --> 0:17:37.560 and started working on some AI products that we're making 0:17:37.600 --> 0:17:40.240 into that we're actually ending up in some of the 0:17:40.240 --> 0:17:44.159 commercial products. And then I believe in twenty fourteen it 0:17:44.280 --> 0:17:50.119 acquired a UK based AI shop called DeepMind, which was 0:17:50.160 --> 0:17:54.320 working on using AI to beat video games, and this 0:17:54.440 --> 0:17:57.120 was seen as sort of a foundation for much more 0:17:57.160 --> 0:18:00.000 ambitious AI projects. 0:18:00.080 --> 0:18:01.960 Maybe years ago people would have heard of deep Mind 0:18:02.000 --> 0:18:05.000 because it was able to beat a human at Go, 0:18:05.880 --> 0:18:08.040 which I think a lot of people when that happened 0:18:08.280 --> 0:18:11.359 they were like, let's go because it's not very popular game. 0:18:11.280 --> 0:18:13.679 In the US my reaction to it. 0:18:13.720 --> 0:18:16.520 But that was also a really seminal moment exact eye 0:18:16.560 --> 0:18:19.920 development like this was seen as like groundbreaking and sort 0:18:19.960 --> 0:18:21.440 of scary for a lot of people at the time, 0:18:21.520 --> 0:18:23.000 like if I can do this, what's next. 0:18:23.000 --> 0:18:25.760 Well, speaking of seminal moments or important moments, open AI's 0:18:25.840 --> 0:18:28.360 own work a paper that they were talking about GPT 0:18:28.560 --> 0:18:31.000 three that was back in twenty twenty a bit of 0:18:31.000 --> 0:18:33.760 a wake up call for Alphabet and Google in terms 0:18:33.760 --> 0:18:34.840 of their own work on AI. 0:18:35.280 --> 0:18:35.480 Yeah. 0:18:35.480 --> 0:18:38.679 Absolutely, So what happened was Google had built some of 0:18:38.760 --> 0:18:43.959 actual the foundational technologies that went into GPT three. They 0:18:44.000 --> 0:18:46.639 built a type of technology called a transformer, which we 0:18:46.640 --> 0:18:48.199 don't have to go into, but you just it is 0:18:48.200 --> 0:18:48.920 the basis. 0:18:48.880 --> 0:18:52.000 So many questions always go ahead by the basis of. 0:18:52.000 --> 0:18:55.199 A lot of the modern large language models. And Google 0:18:55.320 --> 0:18:59.000 read what open ai was doing in twenty twenty and realized, oh, man, 0:18:59.080 --> 0:19:01.560 we are building the science here, but someone else is 0:19:01.560 --> 0:19:04.640 building the products, and that is not where we want 0:19:04.680 --> 0:19:07.439 to be. And so that kind of kicked off a 0:19:08.240 --> 0:19:11.280 you know, a sort of self examination to figure out, like, 0:19:11.280 --> 0:19:13.720 why aren't we doing the things that are actually going 0:19:13.720 --> 0:19:15.800 to make AI work with consumers out. 0:19:15.680 --> 0:19:16.119 In the world. 0:19:16.560 --> 0:19:18.520 So bring us up to speed on where we are today, 0:19:18.560 --> 0:19:21.359 because I think a lot of people probably saw a 0:19:21.400 --> 0:19:24.200 few weeks ago when those viral Google search results went 0:19:24.240 --> 0:19:27.760 around that suggested that people were okay if they were 0:19:27.800 --> 0:19:31.320 to eat rocks, for example. Yeah, because doctors said. 0:19:31.080 --> 0:19:33.000 That was fine, exactly exactly. 0:19:33.640 --> 0:19:34.680 Exclain what happened here. 0:19:34.760 --> 0:19:37.120 So about a year ago, Google ended up combining those 0:19:37.160 --> 0:19:40.239 two labs that we mentioned in an attempt to have 0:19:40.280 --> 0:19:43.560 a more open AI like process to get stuff out 0:19:43.800 --> 0:19:46.040 to you know, really start putting things in front of 0:19:46.080 --> 0:19:50.720 Google customers. The event you're referring to was from a 0:19:52.000 --> 0:19:55.280 particular product that would sort of summarize search results in 0:19:55.520 --> 0:19:56.840 using large language. 0:19:56.480 --> 0:19:59.760 Models, which everybody who's Googled recently has seen this. Yeah, 0:20:00.400 --> 0:20:02.399 this was like, it's the first thing that shows up 0:20:02.440 --> 0:20:04.119 on the page when you search for something, and it 0:20:04.160 --> 0:20:07.880 says this is a lab result. It's experimental, but nonetheless 0:20:07.920 --> 0:20:08.880 oftentimes it's right. 0:20:09.040 --> 0:20:10.879 Yeah, absolutely, they wanted to have some of this. It 0:20:10.960 --> 0:20:13.600 started showing up a lot of people think that, you know, 0:20:13.760 --> 0:20:17.119 chatbots will eventually replace the way that we do Google search, 0:20:17.240 --> 0:20:19.800 and Google's very word about that, obviously, because that's where 0:20:19.840 --> 0:20:23.560 a lot of their revenue comes from. But like all, 0:20:25.040 --> 0:20:28.800 like all large language model based products, it the Google 0:20:28.880 --> 0:20:31.720 product had a tendency to hallucinate, which basically just meets 0:20:31.760 --> 0:20:35.280 make stuff up. They started summarizing the web by taking 0:20:35.320 --> 0:20:37.119 things that were in fact on the Internet, but we're 0:20:37.200 --> 0:20:39.359 not great ideas. I believe one of them was to 0:20:39.359 --> 0:20:40.960 eat rocks. Another one was to put. 0:20:40.800 --> 0:20:44.040 Glue on your pizza. Okay, do not be fair. 0:20:44.080 --> 0:20:48.960 Sometimes they were using the onion as. 0:20:47.240 --> 0:20:49.040 You do not put glue on your pizza. 0:20:49.160 --> 0:20:52.159 Do not eat although, but what if the cheese is 0:20:52.160 --> 0:20:52.640 falling off? 0:20:52.680 --> 0:20:52.960 Carol? 0:20:53.080 --> 0:20:56.119 Do not put glue on your pizza. Okay, just you know, 0:20:56.200 --> 0:20:59.840 use your brain here. Everybody combining the labs. So what 0:21:00.240 --> 0:21:03.399 does Google alphabet? I never know which one to choose. 0:21:03.480 --> 0:21:05.360 But what are they gained by doing that? What might 0:21:05.400 --> 0:21:08.159 they lose? Because sometimes folks say internally they like to 0:21:08.160 --> 0:21:10.720 have different units because they kind of compete against each 0:21:10.760 --> 0:21:13.360 other and everybody gains or everybody smarter because of it. 0:21:13.640 --> 0:21:15.360 So what are they gained by doing this? What might 0:21:15.400 --> 0:21:15.879 they lose? 0:21:16.160 --> 0:21:16.400 Yeah? 0:21:16.440 --> 0:21:19.919 So the thing they were hoping to gain was to 0:21:20.000 --> 0:21:23.719 put everyone who was working on advanced AI within Google 0:21:23.760 --> 0:21:25.840 and get them pulling in the same direction. And that 0:21:25.960 --> 0:21:30.440 direction was to not only be pursuing AI projects that 0:21:30.520 --> 0:21:35.000 might be interesting, but to actually have AI projects that 0:21:35.040 --> 0:21:37.560 would be products sooner than later. 0:21:37.720 --> 0:21:37.960 Yeah. 0:21:37.960 --> 0:21:40.600 So that's what they would gain. And you know, they 0:21:40.640 --> 0:21:43.119 have been releasing products. There have been some pickups, as 0:21:43.160 --> 0:21:45.600 we've talked about. That is par for the course. 0:21:45.760 --> 0:21:46.280 In AI. 0:21:46.320 --> 0:21:49.800 Frankly, the thing that they could lose is that Google 0:21:49.840 --> 0:21:52.359 really has done a lot of the foundational research with AI, 0:21:52.760 --> 0:21:55.919 and they did that by giving by giving researchers a 0:21:55.960 --> 0:21:58.320 lot of freedom to kind of pursue what they wanted. 0:21:58.400 --> 0:22:01.480 They worked on small projects they didn't weren't given you 0:22:01.680 --> 0:22:03.640 commands from on high and. 0:22:03.600 --> 0:22:06.280 You get to more today, right and think about, well, 0:22:06.320 --> 0:22:07.960 really like that free time right to kind of figure 0:22:07.960 --> 0:22:09.000 out what could we maybe. 0:22:08.720 --> 0:22:11.880 Do exactly like the classic Google like twenty percent time 0:22:12.000 --> 0:22:13.600 is you know, it's that's always been part of Google's 0:22:13.600 --> 0:22:16.600 culture to kind of experiment and do things that we 0:22:16.720 --> 0:22:18.200 trust will pay off eventually. 0:22:18.560 --> 0:22:22.160 Search and advertising fundamental to Google's business. I mean, make 0:22:22.200 --> 0:22:24.800 no mistake, this is an advertising company that makes its 0:22:24.840 --> 0:22:25.960 money from advertising. 0:22:26.600 --> 0:22:27.400 But if we think. 0:22:27.240 --> 0:22:30.080 Beyond what alphabet is trying to do when it comes 0:22:30.080 --> 0:22:33.360 to AI, what are the quote unquote moonshots for lack 0:22:33.400 --> 0:22:35.880 of a better term, like, like, yes, we understand that 0:22:36.160 --> 0:22:39.359 it wants to protect its search business, Joshua, but what 0:22:39.440 --> 0:22:40.800 else does it want to do beyond that? 0:22:41.440 --> 0:22:44.280 In a you mean, yeah, I think at this point 0:22:44.280 --> 0:22:46.720 there's a little bit of lack of clarity throughout the 0:22:46.760 --> 0:22:50.600 industry of exactly what the AI business is. It's been 0:22:51.240 --> 0:22:54.760 coming up on two years since the release of chat GPT. 0:22:55.320 --> 0:22:58.000 We've spent a lot of time talking about chatbots. They 0:22:58.000 --> 0:23:00.720 are out there in the world. They are being used 0:23:00.760 --> 0:23:03.920 in various ways, maybe to replace Google Search. I think 0:23:03.920 --> 0:23:07.399 that Google also has some other products and projects that 0:23:07.440 --> 0:23:10.320 we think about as AI that are not kind of 0:23:10.359 --> 0:23:13.959 in the discussion about, you know, like CHATCHYBT. I mean 0:23:14.800 --> 0:23:17.639 Waymo for instance, an enormous AI project. Those things are 0:23:17.720 --> 0:23:22.600 driving around the streets of San Francisco. The Deep Mind 0:23:22.920 --> 0:23:27.160 Lab is working on Alpha Fold, which does a lot 0:23:27.160 --> 0:23:31.199 of work that could be really important healthcare work. But 0:23:31.359 --> 0:23:35.200 right now, like looking for the Google Search sized AI 0:23:35.400 --> 0:23:36.520 business is. 0:23:37.040 --> 0:23:38.960 Not that is not emerged yet. It's not clear. 0:23:39.720 --> 0:23:41.159 This is where we're going, and we just need to. 0:23:41.119 --> 0:23:42.919 Get there, you know, you talk about that. You know, 0:23:43.000 --> 0:23:45.840 ultimately alphabets want wants products that are going to pay 0:23:45.840 --> 0:23:47.720 off for the company, right, that makes sense. They want 0:23:47.800 --> 0:23:49.880 all of this work to kind of have a payoff, 0:23:50.040 --> 0:23:52.800 whether it's in like I said, offerings. Having said that, 0:23:53.080 --> 0:23:55.160 when they were allowing the two labs, right, they were 0:23:55.240 --> 0:23:59.720 kind of you know, offering up certain you know, computing power. 0:23:59.760 --> 0:24:01.960 AI takes a lot of computing power, right, and so 0:24:02.000 --> 0:24:04.639 they kind of had to allocate it too among labs 0:24:04.640 --> 0:24:06.679 and researchers, right, So there was a little bit It 0:24:06.680 --> 0:24:09.679 sounds like almost a competition internally, Like I wonder if 0:24:09.720 --> 0:24:12.280 that was how that played into it, just the practicality 0:24:12.320 --> 0:24:14.919 of hey, guys, this is a lot of computing power. 0:24:14.960 --> 0:24:17.159 So where do we kind of focus our efforts to 0:24:17.440 --> 0:24:18.560 you know, get that payoff. 0:24:18.880 --> 0:24:21.520 Yeah, that's a good point. I think that this is 0:24:21.560 --> 0:24:24.560 actually part of getting at Google to all pull in the. 0:24:24.520 --> 0:24:26.440 Center grown up a Google a little bit. 0:24:26.640 --> 0:24:29.919 Yeah, like you had not only do you have researchers, 0:24:29.960 --> 0:24:32.720 like three researchers doing this, eight researchers doing this, you 0:24:32.840 --> 0:24:35.439 have all of this computing power, and to build a 0:24:35.520 --> 0:24:39.919 model along along the scale of a GPT four or 0:24:39.960 --> 0:24:42.920 Gemini that's Google's model, you need to be using most 0:24:42.960 --> 0:24:44.600 of your computing power, or at least a whole lot 0:24:44.600 --> 0:24:47.399 of it on one thing. And that means having a 0:24:47.440 --> 0:24:49.440 top down structure where you say, this is the one 0:24:49.480 --> 0:24:52.800 thing we want to do. And that's really new compared 0:24:52.800 --> 0:24:54.560 to how Google had been doing things up until a 0:24:54.600 --> 0:24:55.000 year ago. 0:24:55.520 --> 0:25:01.040 So combining these two Labs, Josh, I know that Mark 0:25:01.080 --> 0:25:03.280 Bergen and Julia Love, who wrote the story you edited it, 0:25:04.040 --> 0:25:06.359 spoke to a lot of folks out there about whether 0:25:06.480 --> 0:25:08.800 or not it has been successful thus far. 0:25:09.160 --> 0:25:10.080 What's your read on it. 0:25:11.000 --> 0:25:14.560 I think that Google is one of the leading AI companies. 0:25:14.760 --> 0:25:18.840 They are clearly doing things that keep them in the running, 0:25:19.880 --> 0:25:24.280 and there are things that the market's very unsettled. The 0:25:24.320 --> 0:25:25.520 tech is very unsettled. 0:25:26.280 --> 0:25:26.520 I think. 0:25:26.560 --> 0:25:29.399 An interesting thing actually that's come up with the last 0:25:29.480 --> 0:25:34.639 year under this is up until around that time, people 0:25:34.640 --> 0:25:39.240 inside Google were unsatisfied because it wasn't commercializing things quickly enough. 0:25:39.280 --> 0:25:41.240 There were a lot of researchers who left, even ones 0:25:41.280 --> 0:25:43.920 who did some of the core technology for Google, saying 0:25:44.040 --> 0:25:45.359 I want to go to a startup where we actually 0:25:45.400 --> 0:25:49.040 get a ship product. Now Google shipping product. And there 0:25:49.040 --> 0:25:51.560 are people withinside Google saying why are we doing this? 0:25:51.640 --> 0:25:53.480 It was more fun when we could just work on 0:25:53.520 --> 0:25:55.960 whatever we wanted. So there is a tension here between 0:25:56.520 --> 0:25:58.760 within Google about like what is it you want to do? 0:25:58.880 --> 0:26:00.800 And you're always going to think, well, the grass is greener? 0:26:01.720 --> 0:26:04.600 Interesting, right, like yeah, the payoff? Yeah, I was curious 0:26:04.640 --> 0:26:06.960 about kind of what the mood was internally, So it 0:26:07.000 --> 0:26:08.400 sounds like it's a bit of a mixed bag. 0:26:08.560 --> 0:26:09.879 Yeah, it seems like it all right. 0:26:09.920 --> 0:26:13.119 Great stuff as always in this story by our Bloomberg 0:26:13.119 --> 0:26:15.320 Business Week team, Joshua, thank you so much, really appreciate 0:26:15.560 --> 0:26:18.239 Joshah Brustin, his technology editor at Bloomberg BusinessWeek. You can 0:26:18.280 --> 0:26:21.080 find this story on the Bloomberg and also at Bloomberg 0:26:21.160 --> 0:26:22.000 dot com. 0:26:23.480 --> 0:26:27.320 You're listening to the Bloomberg Business Week podcast. Listen live 0:26:27.440 --> 0:26:30.600 each weekday starting at two pm Eastern on applecar Play 0:26:30.640 --> 0:26:33.520 and Android Auto with the Bloomberg Business App. You can 0:26:33.560 --> 0:26:36.800 also listen live on Amazon Alexa from our flagship New 0:26:36.840 --> 0:26:40.480 York station, Just say Alexa Play Bloomberg eleven thirty. 0:26:42.240 --> 0:26:44.600 Now to sort of the economic outlook. After a big 0:26:44.640 --> 0:26:47.919 week last week where we heard from the Fed, we 0:26:47.960 --> 0:26:50.880 also have this week, Carol, a half dozen FED speakers 0:26:50.880 --> 0:26:53.960 between tomorrow and Friday, we got retail sales, industrial production. 0:26:54.520 --> 0:26:57.480 Let's bring in Francis Donald, global chief economist at Manual 0:26:57.480 --> 0:27:01.359 Life Investment Management, joining us this afternoon from Montreal. I 0:27:01.440 --> 0:27:03.479 mentioned some of the stuff going on this week. The 0:27:03.520 --> 0:27:06.680 big news next week is PCE. But before we get there, 0:27:07.040 --> 0:27:08.679 just give us an idea for how you're looking at 0:27:08.720 --> 0:27:10.920 the economic environment right now post FED. 0:27:12.480 --> 0:27:15.600 Well, we are looking at it very closely. We're actually 0:27:15.680 --> 0:27:18.960 in the middle of our quarterly forecast revisions. And when 0:27:18.960 --> 0:27:21.720 we look at the Fed's forecast, it's almost like they 0:27:22.200 --> 0:27:26.480 didn't see how much better that inflation print was on Wednesday, 0:27:27.080 --> 0:27:29.600 and it's almost as if the Fed's outlook feels stale. 0:27:29.960 --> 0:27:34.600 Thirstday we got another indication that inflation is progressing to 0:27:34.680 --> 0:27:37.119 lose use the Fed's language, and then on Friday we 0:27:37.160 --> 0:27:41.560 had inbore prices which demonstrated again that there's disinflationary pressure 0:27:41.600 --> 0:27:44.639 in the economy. That's good news, and we expect that 0:27:44.800 --> 0:27:50.040 combined with unfortunately deterioration ahead by September, the Fed we'll 0:27:50.040 --> 0:27:51.440 have what it needs to cut. 0:27:52.320 --> 0:27:55.320 Is there something smart though in maybe waiting for PCE 0:27:55.880 --> 0:28:02.000 and just really kind of getting some more certainty, if 0:28:02.040 --> 0:28:04.640 you will, Francis when it comes to the inflation print, 0:28:04.720 --> 0:28:07.720 I mean and making sure. I mean the FED doesn't 0:28:07.720 --> 0:28:10.040 want to be behind the curb, but it also we know, 0:28:10.160 --> 0:28:11.760 doesn't want to do things too early. I know some 0:28:11.760 --> 0:28:14.679 would say it's already behind the curve, but something to 0:28:14.840 --> 0:28:19.600 making sure that, okay, CPI PPI check check, but just 0:28:19.640 --> 0:28:22.440 to really kind of wait maybe for next week, and 0:28:22.720 --> 0:28:25.000 just I don't know if the reports that they get 0:28:25.000 --> 0:28:27.119 before July, I mean, I don't know. It's interesting we 0:28:27.160 --> 0:28:29.160 had a guess before that. Charlie Pellett was talking about 0:28:29.200 --> 0:28:32.280 that maybe you could go away for the summer. Nothing's 0:28:32.280 --> 0:28:34.240 gonna really come to life for the fedal September. 0:28:35.320 --> 0:28:37.320 Yeah, that's exactly how we're looking at it. We're not 0:28:37.359 --> 0:28:39.760 talking about does the FED have enough to cut in July. 0:28:40.000 --> 0:28:42.560 We're just talking about, you know, were we really in 0:28:42.600 --> 0:28:45.160 an inflation scare for the first quarter when those numbers 0:28:45.240 --> 0:28:47.400 were too hot? Was not a trend that was going 0:28:47.440 --> 0:28:50.080 to persist through year end? And what we've seen in 0:28:50.120 --> 0:28:53.160 the last month is some evidence that actually, know tightening 0:28:53.320 --> 0:28:55.840 does work. It does help bring down that year over 0:28:55.920 --> 0:28:59.040 year number. We're not just gonna wait for the PCEE. 0:28:59.200 --> 0:29:02.080 We have three more inflation prints, three more job prints, 0:29:02.160 --> 0:29:05.680 three more retail sprints, actually maybe even four by September. 0:29:05.720 --> 0:29:07.760 And that's why just about everyone is agreed the FED 0:29:07.880 --> 0:29:10.960 is in a holding period until that September number comes. 0:29:11.160 --> 0:29:13.680 But here's a little trick. Actually, we don't really need 0:29:13.720 --> 0:29:16.160 to wait for pcee to come through because we can 0:29:16.240 --> 0:29:21.680 map CPI, PPI and import prices really closely. That's why 0:29:21.720 --> 0:29:25.000 PCE numbers are not really market movers, because they don't 0:29:25.000 --> 0:29:27.600 tend to surprise to the upside or the downside. We 0:29:27.680 --> 0:29:30.640 have the calculation we're going to see the PCE continues 0:29:30.680 --> 0:29:33.960 to decline in the right direction. But you're right, we've 0:29:34.400 --> 0:29:36.960 just gone through the largest price level shop in most 0:29:37.040 --> 0:29:39.040 people's lives. The FED is going to want to be 0:29:39.120 --> 0:29:41.600 absolutely sure, and I think they're going to have to 0:29:41.640 --> 0:29:44.200 see some deterioration in the job market. It's just that 0:29:44.200 --> 0:29:47.239 our forecast includes this deterioration in the job market. That's 0:29:47.240 --> 0:29:49.560 why we feel comfortable with a base case for September. 0:29:49.640 --> 0:29:50.040 Francis. 0:29:50.040 --> 0:29:51.800 How close to two percent are we going to get 0:29:51.800 --> 0:29:53.800 on PCE by the end of the. 0:29:53.840 --> 0:29:57.640 Year's probably not as close as the FED wan. So 0:29:57.920 --> 0:29:59.760 we're kind of believers that we're not going to get 0:29:59.760 --> 0:30:02.280 back to two percent for the next several years, that 0:30:02.320 --> 0:30:04.200 we're going to float between two and two and a 0:30:04.240 --> 0:30:07.880 half percent on a structural basis. One of the reasons 0:30:07.920 --> 0:30:10.600 is that inflation is just not as intrate sensitive as 0:30:10.600 --> 0:30:13.320 it has been for many of our careers certainly for 0:30:13.360 --> 0:30:15.840 the past several decades. The Fed's going to have to 0:30:15.920 --> 0:30:18.959 contend with that. We call it a critical concession. Already 0:30:19.000 --> 0:30:21.200 we're seeing this globally. We've had the Bank of Canada, 0:30:21.240 --> 0:30:24.280 We've had the ECB, we' have likely some more central 0:30:24.280 --> 0:30:27.680 banks this week that we'll cut with inflation above two percent. 0:30:28.360 --> 0:30:30.840 That's not atypical. Central banks tend to cut on the 0:30:30.920 --> 0:30:34.360 way down towards two, not waiting until they arrive. But 0:30:34.440 --> 0:30:36.280 it's an indication as well that they don't want to 0:30:36.320 --> 0:30:39.400 sacrifice jobs, that don't want to create a recession us 0:30:39.480 --> 0:30:41.880 to reach it two percent, which might not be reachable. 0:30:41.960 --> 0:30:44.440 I'm glad to use our word. I mean, can we 0:30:44.480 --> 0:30:47.640 assume that we don't hit a recession anytime soon? I mean, 0:30:47.680 --> 0:30:51.080 it's kind of remarkable where we are and maneuvering that 0:30:51.080 --> 0:30:53.400 we've seen by the US Central Bank that we still 0:30:53.440 --> 0:30:56.040 have a strong job market, although some might debate that 0:30:56.120 --> 0:31:00.720 as well. But are you in your modeling and anticipating 0:31:00.760 --> 0:31:03.400 a recession anywhere in the next six to twelve months. 0:31:04.120 --> 0:31:07.800 We do have two quarters of negative GDP in our outlook. 0:31:07.840 --> 0:31:09.800 We didn't impose that we're not trying to make a 0:31:09.800 --> 0:31:12.360 big opinion that a recession is coming for the US, 0:31:12.600 --> 0:31:14.720 but we can just slow down in the consumer driven 0:31:14.760 --> 0:31:18.320 by its simple econ one on one higher interest rates. Remember, 0:31:18.320 --> 0:31:20.960 it takes two years for that first rate HiPE to 0:31:20.960 --> 0:31:23.680 work its way through the economy completely, and we're just 0:31:23.760 --> 0:31:26.720 two years and a little bit past that first rate hike. 0:31:27.000 --> 0:31:29.200 So we believe that the impact of rate cuts isn't 0:31:29.240 --> 0:31:31.760 behind us, it's in front of us, and so recession 0:31:31.800 --> 0:31:34.520 risk is being underappreciated by markets. At the same time, 0:31:34.760 --> 0:31:38.160 they're two shallow negative GDP prints. If we were disagreeing 0:31:38.200 --> 0:31:40.680 between one and one point five, no one would really 0:31:40.680 --> 0:31:42.520 make a fuss of that. It's just that when you 0:31:42.560 --> 0:31:45.360 talk about two negative GDP prints, suddenly it makes it 0:31:45.400 --> 0:31:48.960 like there's this huge binary outcome recession versus non recession. 0:31:49.000 --> 0:31:51.320 We're just talking about a slow down and growth, which 0:31:51.320 --> 0:31:52.120 the Fed wants. 0:31:52.240 --> 0:31:54.840 Francis, I can't tell what your dog wants. They want 0:31:54.880 --> 0:31:58.040 to slow down or I'm just kidding. 0:31:58.200 --> 0:32:01.040 Uh yeah, so, uh exactly. I think he has strong 0:32:01.120 --> 0:32:04.080 opinions in a really big fan of Bloomberg Radio. 0:32:05.640 --> 0:32:07.760 You know what, he can come on or she can 0:32:07.760 --> 0:32:08.800 come on anytime. 0:32:09.400 --> 0:32:13.640 I mean, Carol bringing back memories of you working from 0:32:13.640 --> 0:32:17.560 home during the pandemics. When Scott would show a little bit. 0:32:17.880 --> 0:32:22.600 Scott was very loud on the show. It's really interesting, Francis. 0:32:22.720 --> 0:32:25.360 I mean, you know, I keep wondering. There's still a 0:32:25.360 --> 0:32:27.600 lot of liquidity out there in the market, so I 0:32:27.640 --> 0:32:30.600 do wonder are we still kind of working? I mean, 0:32:30.640 --> 0:32:32.920 I think we are still working right that liquidity through 0:32:32.960 --> 0:32:35.840 the system, and so we're not really still quite sure 0:32:35.920 --> 0:32:39.160 what the true picture is of our economy post pandemic. 0:32:39.240 --> 0:32:39.880 Is that fair? 0:32:40.640 --> 0:32:43.000 Oh, it's completely fair. And that's one of the big 0:32:43.080 --> 0:32:45.680 challenges with forecasting right now is we're still grappling with 0:32:45.760 --> 0:32:48.720 that pro cyclical government spending and what's the path for 0:32:48.800 --> 0:32:52.000 that ahead. We're still grappling with what exactly are consumer 0:32:52.040 --> 0:32:54.560 is going to spend on and pull back in. We 0:32:54.640 --> 0:32:57.800 know that their consumption basket has changed. We're grappling with 0:32:58.120 --> 0:33:00.800 are their excess savings left? We really have a good 0:33:00.840 --> 0:33:03.880 measurement for that. We know that wealthy individuals have more. 0:33:03.920 --> 0:33:06.360 We know there's less now than a year ago. But 0:33:06.440 --> 0:33:09.280 the entire profession I'm actually writing my midyear outlook right 0:33:09.280 --> 0:33:13.520 now is grappling with how forecasting has changed, how what's 0:33:13.560 --> 0:33:16.719 happened in the past few years to change our biases. 0:33:16.800 --> 0:33:20.440 For example, should we cut later and allow more disinflation 0:33:20.560 --> 0:33:23.400 in the economy. There is no such thing as no 0:33:23.480 --> 0:33:25.680 such thing as a sure thing, even as the Fed's 0:33:25.680 --> 0:33:28.200 Tarker today, I saw the quotes across Bloomberg. It could 0:33:28.200 --> 0:33:30.720 be one cut, he said, or could be zero war two, 0:33:31.040 --> 0:33:33.479 and I thought, well, it's pretty honest and exactly how 0:33:33.520 --> 0:33:35.000 the rest of us are thinking right now. 0:33:35.080 --> 0:33:35.320 Thanks. 0:33:35.320 --> 0:33:38.160 It's data dependent, Carol, We're hear it over and over again. 0:33:38.240 --> 0:33:40.760 Francis thirty seconds. Speaking of the data, Just give us 0:33:40.960 --> 0:33:43.520 your view on the job market right now, at least 0:33:43.520 --> 0:33:46.160 here in the US, because we're we are getting some 0:33:46.160 --> 0:33:48.480 confusing signs that, yes, things are slowing down. But then 0:33:48.520 --> 0:33:50.800 we had, you know, the May payrolls report just blow 0:33:50.840 --> 0:33:51.680 everything out of the water. 0:33:53.160 --> 0:33:56.280 The payrolls did, but the household employment, if you ask households, 0:33:56.320 --> 0:33:59.440 is actually much worse. Consumer confidence is doing really poorly. 0:34:00.000 --> 0:34:01.920 All the big question has been when is everyone going 0:34:01.960 --> 0:34:06.080 to stop talking about normalizing and start talking about weakening 0:34:06.520 --> 0:34:08.560 of the labor market. And I think we're actually on 0:34:08.600 --> 0:34:12.040 that cusp right now. Just about every labor market indicator 0:34:12.120 --> 0:34:15.200 is back to just about before COVID, back to what 0:34:15.239 --> 0:34:18.880 they would call normal levels. But economies don't come halfway 0:34:18.880 --> 0:34:21.759 down the hill and then stop. They have momentum behind them. 0:34:22.040 --> 0:34:24.560 So right now, in level terms, we're doing just fine. 0:34:24.560 --> 0:34:26.719 It's not a labor market to be afraid of. But 0:34:26.800 --> 0:34:29.920 if we continue to see this deterioration in job openings, 0:34:30.040 --> 0:34:33.120 quit levels, hiring rates, it's going to flow into non 0:34:33.120 --> 0:34:35.200 farm payrolls and we're not going to be talking about 0:34:35.400 --> 0:34:37.480 normalizing of the job market. We're going to be talking 0:34:37.520 --> 0:34:40.000 about a softening of the job market that's more concervable. 0:34:40.040 --> 0:34:41.480 Well, that's how I ask you ten seconds. You got 0:34:41.520 --> 0:34:43.200 to be quick. So when we do start to see 0:34:43.200 --> 0:34:45.920 things turn differently for the job market, is it a 0:34:46.000 --> 0:34:49.040 slow turn or is it happen rapidly, very quickly if 0:34:49.080 --> 0:34:49.399 you could. 0:34:49.719 --> 0:34:53.239 It's never slow. Parallogic's exponential. We can only hope that 0:34:53.280 --> 0:34:55.400 it doesn't go to levels as we've seen in the past. 0:34:55.480 --> 0:34:58.760 All right, such, good staff. What's your dog's names? 0:35:00.960 --> 0:35:01.560 Love Louis? 0:35:01.800 --> 0:35:04.640 All right? Listen, great to have both of you with us. 0:35:04.680 --> 0:35:07.959 Presis Donald as Global chief Economist at Manulife Investment Manager, 0:35:08.040 --> 0:35:10.200 joining us from Montrealistic. 0:35:09.760 --> 0:35:13.279 You're listening to the Bloomberg Business Week podcast. Catch us 0:35:13.320 --> 0:35:16.560 Live weekday afternoons from two to five pm Eastern Listen 0:35:16.600 --> 0:35:19.280 on Apple CarPlay and then brout Auto with a Bloomberg 0:35:19.320 --> 0:35:23.879 Business Act or want us Live on YouTube Carol. 0:35:24.040 --> 0:35:26.399 We chatted about it a bit earlier with Will Wade. 0:35:26.400 --> 0:35:28.840 How Bill Gates has said he's prepared to plow billions 0:35:28.840 --> 0:35:31.760 of dollars into a next gen nuclear power plant project 0:35:31.760 --> 0:35:37.040 in Wyoming that's to meet growing US electricity needs. Carbon 0:35:37.080 --> 0:35:39.600 free nuclear power increasingly seen as a key part of 0:35:39.640 --> 0:35:42.960 fighting climate change, and more companies are promoting smaller reactors. 0:35:43.320 --> 0:35:43.560 Yeah. 0:35:43.600 --> 0:35:46.000 Absolutely, and so it's interesting and it really got us 0:35:46.000 --> 0:35:48.960 thinking a little bit more about what we need in 0:35:49.040 --> 0:35:52.839 terms of the labor market to support it. And so 0:35:52.920 --> 0:35:54.440 that kind of gets us to our next guest, who 0:35:54.480 --> 0:35:56.880 says there's a skills gap when it comes to driving 0:35:56.920 --> 0:35:59.000 the transition to net zero with us. 0:35:58.920 --> 0:36:02.600 Is Sudukes, president of Global Public Policy and Economic Graph 0:36:02.680 --> 0:36:03.280 at LinkedIn. 0:36:03.440 --> 0:36:05.680 She joins us from Dublin Ireland Tonight. 0:36:05.960 --> 0:36:09.240 LinkedIn's members generate about five million updates each second, according 0:36:09.280 --> 0:36:12.960 to the company, and the Economic Graph draws insights from 0:36:13.120 --> 0:36:13.840 those updates. 0:36:13.840 --> 0:36:15.279 Su Good to have you with us. How are you. 0:36:16.480 --> 0:36:18.400 I'm good, It's great to be here. Thank you for 0:36:18.440 --> 0:36:18.799 having me. 0:36:18.920 --> 0:36:19.840 Yeah, thanks for joining us. 0:36:19.840 --> 0:36:21.320 Hey, we're going to get to green jobs in just 0:36:21.360 --> 0:36:23.279 a second. But because you're at LinkedIn and you have 0:36:23.360 --> 0:36:25.000 all this data, we got to ask you about the 0:36:25.000 --> 0:36:28.080 greater jobs market, especially here in the United States. What 0:36:28.160 --> 0:36:30.720 is your data tell you about how the job market 0:36:30.760 --> 0:36:31.959 is here in the US right now? 0:36:33.760 --> 0:36:36.400 We have, as you know, over the past couple of years, 0:36:36.480 --> 0:36:39.560 seen a slowdown in hiring. Of course, a lot of sectors. 0:36:39.640 --> 0:36:42.480 That slowdown was coming off the back of the hiring 0:36:42.600 --> 0:36:45.120 frenzy that we saw over the course of the pandemic. 0:36:45.400 --> 0:36:47.840 But over the past couple of months, we have started 0:36:47.880 --> 0:36:52.000 to see some improvements in that slowdown, particularly in some 0:36:52.120 --> 0:36:54.640 key sectors like retail and real estate. 0:36:55.760 --> 0:36:59.680 Interesting, okay, are there certain sectors that you're seeing right 0:36:59.680 --> 0:37:01.920 now that are particularly strong. 0:37:03.800 --> 0:37:07.120 Sectors like that we are seeing some improvement in. And 0:37:07.200 --> 0:37:10.160 a key area where we're seeing high demand is when 0:37:10.200 --> 0:37:13.200 it comes to these green skills and these green jobs. 0:37:13.320 --> 0:37:18.200 There we see hiring in this space outpacing general hiring 0:37:18.360 --> 0:37:20.880 by up to forty four percent. So this is an 0:37:20.920 --> 0:37:23.879 area of real strength. Across the board in the US well. 0:37:23.880 --> 0:37:25.640 So you know, it was interesting on our planning call 0:37:25.719 --> 0:37:28.799 with our producer and team one of the things like 0:37:28.840 --> 0:37:31.560 we started talking what is a green job, What exactly 0:37:31.840 --> 0:37:34.759 is a green job and what are the particular skills 0:37:35.080 --> 0:37:36.920 that are needed for a green job? Love for you 0:37:36.960 --> 0:37:38.479 to kind of digg a little bit deeper into that. 0:37:39.640 --> 0:37:42.400 Yeah, it's a great question. A green job is a 0:37:42.480 --> 0:37:45.560 job whose core focus is combat and climate change. So 0:37:45.680 --> 0:37:50.280 think of jobs like energy engineer, solar panel installer, wind 0:37:50.280 --> 0:37:53.279 turbine technician, and of course to do one of these 0:37:53.280 --> 0:37:56.080 green jobs, you need lots of green skills, their skills 0:37:56.080 --> 0:37:59.560 that are either preserving natural resources or taking pollution out 0:37:59.600 --> 0:38:03.919 of environment. And what's really interesting is that we see 0:38:03.960 --> 0:38:07.560 these green skills of course showing up empowering those green jobs, 0:38:07.760 --> 0:38:10.640 but they're also showing up in a whole range of 0:38:10.680 --> 0:38:16.760 traditional jobs like data scientists, fleet manager, healthcare worker, jobs 0:38:16.760 --> 0:38:20.040 that aren't traditionally thought of green jobs per se, but 0:38:20.239 --> 0:38:22.640 jobs that are going green all the time. 0:38:23.400 --> 0:38:25.799 You argue that there is a skills gap between what 0:38:25.960 --> 0:38:28.360 is needed and what's available right now, What do the 0:38:28.440 --> 0:38:30.879 data tell you about what people don't have in terms 0:38:30.880 --> 0:38:32.520 of qualifications for these jobs. 0:38:33.840 --> 0:38:34.319 That's right. 0:38:34.400 --> 0:38:38.040 What today's research and LinkedIn shows very clearly is that 0:38:38.400 --> 0:38:42.440 Gen Z, a generation that's most concerned about climate change, 0:38:42.640 --> 0:38:46.480 is the generation that's least prepared to fight climate change 0:38:46.480 --> 0:38:50.080 in their careers. Today, only one in twenty Gen Z 0:38:50.480 --> 0:38:53.879 has a green skill, and that means that they are 0:38:54.040 --> 0:38:57.799 not set up to take advantage of the opportunities that 0:38:57.920 --> 0:39:01.600 this transition presents and and work in these roles, both 0:39:01.640 --> 0:39:03.920 those green roles and those roles that are starting to 0:39:03.960 --> 0:39:05.000 go green all the time. 0:39:05.160 --> 0:39:06.920 You know, it's interesting. I always think about go back 0:39:06.960 --> 0:39:08.759 a few years when a lot of the big tech 0:39:08.800 --> 0:39:11.319 companies were worried about coders and not having the right job, 0:39:11.440 --> 0:39:14.120 you know, right workers for what they were going to need, 0:39:14.560 --> 0:39:18.080 and so they were tapping not just colleges, but high 0:39:18.120 --> 0:39:21.440 schools to make sure that they had a pipeline of 0:39:21.560 --> 0:39:25.040 workers for what they needed. Where we seeing kind of 0:39:25.080 --> 0:39:28.360 private public sector or what kind of collaborations are we 0:39:28.400 --> 0:39:30.799 seeing within the green industry to make sure that they've 0:39:30.800 --> 0:39:31.759 got the workers they need. 0:39:33.200 --> 0:39:36.640 We're not seeing enough training, We're not seeing enough collaboration, 0:39:36.719 --> 0:39:40.719 We're not seeing enough of those partnerships. Fully, four in 0:39:41.000 --> 0:39:44.080 five of these gen Z workers are telling us I 0:39:44.080 --> 0:39:45.880 would love to get a job in this space, but 0:39:46.080 --> 0:39:48.400 I don't know where to go to get that training 0:39:48.520 --> 0:39:51.640 and break into those roles. And you're exactly right as 0:39:51.719 --> 0:39:55.520 exactly those kind of partnerships across government and across the 0:39:55.520 --> 0:39:59.160 private sector that we need to see scaled much more 0:39:59.520 --> 0:40:01.719 rolled out at a much faster rate than what we're 0:40:01.719 --> 0:40:04.040 seeing right now, if we're going to get to grips 0:40:04.080 --> 0:40:07.160 with this skills mismatch that we see across the board. 0:40:07.280 --> 0:40:08.759 You know, I'm going back to like what you said 0:40:08.800 --> 0:40:12.200 earlier about a solar panel installer. And you know, we 0:40:12.239 --> 0:40:15.600 have talked here at Bloomberg about people within the construction 0:40:15.719 --> 0:40:18.799 industry or home market, if you will, whether it's a plumber, electrician, 0:40:19.080 --> 0:40:23.279 like they're just not enough out there in terms of 0:40:23.320 --> 0:40:26.080 meeting demand. And I do also wonder that there's kind 0:40:26.080 --> 0:40:28.160 of a view of a lot of the younger generation. 0:40:28.239 --> 0:40:30.080 You're like, I don't want to do that, you know, 0:40:30.160 --> 0:40:32.200 That's not what I want to do. And I do 0:40:32.320 --> 0:40:36.560 also wonder in these green jobs, how many maybe are 0:40:36.880 --> 0:40:38.920 wanting to do something to protect the climate, but they 0:40:39.000 --> 0:40:41.840 don't necessarily want a lot of these jobs. 0:40:43.880 --> 0:40:46.839 What our research is telling us loud and clear, is 0:40:46.840 --> 0:40:50.040 that these young workers they want these jobs, they want 0:40:50.080 --> 0:40:52.640 to get into these worlds. But currently there is this 0:40:52.719 --> 0:40:56.799 skills mismatch, and there is this awareness mismatch, which means 0:40:56.800 --> 0:40:59.840 they're struggling to break into them and their role quite 0:41:00.120 --> 0:41:03.120 right across the board, including the roles that you're talking 0:41:03.160 --> 0:41:06.440 about there, And one of the key things that we 0:41:06.520 --> 0:41:09.480 need to focus on is that for some of these roles, 0:41:09.480 --> 0:41:12.400 for example, to get from being a general installer to 0:41:12.480 --> 0:41:15.319 a solar panel installer, as you say, often that's a 0:41:15.320 --> 0:41:19.840 handful of skills photovoltaics, energy efficiency. And we can get 0:41:19.880 --> 0:41:23.399 these workers this targeted training and get them into these 0:41:23.520 --> 0:41:27.120 roles and accessing these opportunities that are out there today. 0:41:27.200 --> 0:41:29.279 And we know our only grow are going to grow 0:41:29.320 --> 0:41:30.279 tomorrow to. 0:41:30.160 --> 0:41:32.759 What extent or what portion of these jobs that you 0:41:32.800 --> 0:41:37.680 define our quote unquote trades versus quote unquote professional jobs, 0:41:37.719 --> 0:41:41.120 because we're at a trade skills gap here in the 0:41:41.200 --> 0:41:43.080 US right now. I mean, we can't find enough plumbers 0:41:43.120 --> 0:41:47.320 or electricians at this point, So how do we get enough. 0:41:47.160 --> 0:41:51.000 Solar pa There's no yeah, there's no question, but there 0:41:51.040 --> 0:41:54.440 is a huge demand for those kind of workers, right Now, 0:41:54.440 --> 0:41:56.719 there's two key areas. When we look at the fastest 0:41:56.760 --> 0:42:00.000 growing and most in demand green skills in the US, 0:42:00.080 --> 0:42:02.680 there's two categories that jump out at you very quickly. 0:42:03.000 --> 0:42:07.560 The first is in that energy space, including an energy infrastructure. 0:42:07.880 --> 0:42:11.000 So some of the fastest growing in demand skills are 0:42:11.360 --> 0:42:17.920 energy efficiency, solar energy, wind power, energy efficiency. Huge demand there. 0:42:18.239 --> 0:42:21.239 And the second category that we see growing all the time, 0:42:21.320 --> 0:42:24.080 again showing up in the top ten most in demand 0:42:24.080 --> 0:42:27.520 green skills in the US, skills related to the regulation 0:42:27.600 --> 0:42:33.000 and oversight of carbon emissions, so energy audits, carbon credits, 0:42:33.080 --> 0:42:36.080 those kind of skills surging in demand all the time. 0:42:36.120 --> 0:42:39.160 And as you say, in both areas, we are seeing 0:42:39.200 --> 0:42:42.920 this mismatch and this lack of talent coming through despite 0:42:42.960 --> 0:42:45.799 the fact that we know the appetitus there, we know 0:42:45.880 --> 0:42:48.600 the commitment and the passion it's there from these young people. 0:42:48.920 --> 0:42:51.640 We need to tap into that and harness that so 0:42:51.680 --> 0:42:53.640 that we can get to grips with this mismatch. 0:42:53.800 --> 0:42:58.040 So I am wondering, you know, I'm thinking about folks 0:42:58.080 --> 0:43:01.080 who are listening, whether they've got kids, are in college, 0:43:01.160 --> 0:43:04.719 or think about colle how should we be guiding kind 0:43:04.760 --> 0:43:06.080 of the next generation here. 0:43:08.440 --> 0:43:11.040 For three things for these young workers to think about 0:43:11.120 --> 0:43:14.239 us they think about getting these opportunities and open the 0:43:14.320 --> 0:43:17.000 door to these kind of jobs. The first is think 0:43:17.040 --> 0:43:20.040 about your next role. What is that first job that 0:43:20.080 --> 0:43:22.640 you want and how do you use it to activate 0:43:22.680 --> 0:43:26.319 your role in the green economy. Secondly, skills, what are 0:43:26.360 --> 0:43:29.919 the specific skills that you need to get into that role. 0:43:30.200 --> 0:43:33.600 There are a ton of resources out there, including on LinkedIn, 0:43:33.880 --> 0:43:36.759 that can help you gain those skills. And thirdly, think 0:43:36.800 --> 0:43:40.880 about your network. There is a big, vibrant, active community 0:43:40.960 --> 0:43:44.000 out there in LinkedIn that can give you advice, help 0:43:44.040 --> 0:43:46.600 you figure out what skills you need, and help open 0:43:46.680 --> 0:43:48.920 up those doors to you as you think about your 0:43:49.000 --> 0:43:49.840 role in this space. 0:43:49.960 --> 0:43:51.960 Hey, just real quickly twenty seconds. I mean, how many 0:43:51.960 --> 0:43:54.200 of the jobs that are on LinkedIn, how many of 0:43:54.239 --> 0:43:57.360 them are actually green jobs that are out there and open. 0:43:59.239 --> 0:44:02.440 When we lock across the board at the jobs that 0:44:02.480 --> 0:44:06.440 are out there beyond green jobs, it's jobs looking for 0:44:06.520 --> 0:44:09.320 green skills, and that is a very significant and growing 0:44:09.320 --> 0:44:12.240 demand all the time. For example, in the UK today, 0:44:12.840 --> 0:44:16.080 every one in three jobs on our platform is looking 0:44:16.120 --> 0:44:18.400 for a green scale and so that really gives you 0:44:18.440 --> 0:44:21.040 a sense of the scale and extent of the demand 0:44:21.040 --> 0:44:21.640 that's out there. 0:44:21.719 --> 0:44:24.680 All right, that actually is helpful information. All right, Sue Duke, 0:44:24.760 --> 0:44:27.040 thank you so much. Sue is vice president of Global 0:44:27.040 --> 0:44:32.800 public Policy and Economic graph at LinkedIn, joining us from Dublin, Ireland. 0:44:34.280 --> 0:44:37.400 Marco Journal. 0:44:38.400 --> 0:44:39.399 Now about you, let me drive? 0:44:39.920 --> 0:44:41.680 No, no, no, no, who's gone to drive? 0:44:42.760 --> 0:44:43.120 Honey? 0:44:43.239 --> 0:44:45.200 Please out of the riding gravels. 0:44:45.600 --> 0:44:46.960 Let's mate, I want to try it. 0:44:49.239 --> 0:44:50.120 It's a question. 0:44:53.920 --> 0:44:59.880 This is the drive to the globe. We'll bring on Bloomberg. 0:45:00.520 --> 0:45:02.239 All right, everybody, Just about eighteen minutes left in the 0:45:02.280 --> 0:45:05.319 trading session. Charlie Pella just breaking down the trade for you. 0:45:05.320 --> 0:45:07.360 We're pretty much hovering near our best levels of the session. 0:45:07.400 --> 0:45:08.839 It does look like we're going to get what the 0:45:08.880 --> 0:45:12.239 thirtieth record this year on the S and P five 0:45:12.239 --> 0:45:15.920 who's counting? We are, That's what we do. We love 0:45:16.000 --> 0:45:18.359 data points. Let's get to it because we are seeing 0:45:18.400 --> 0:45:21.399 us doc Bulls getting even bolder, Goldman boosting it's year 0:45:21.440 --> 0:45:23.760 end target for the S and P to fifty six hundred. 0:45:24.239 --> 0:45:26.800 That's nothing compared to Evercore. We talked about this with Abigail, 0:45:26.840 --> 0:45:30.160 which updates called a six thousand city meantime, upgraded US 0:45:30.239 --> 0:45:32.640 equities to overweight, so you know, like it's a big 0:45:32.680 --> 0:45:35.440 poker game all in on the US. That's what it 0:45:35.440 --> 0:45:35.920 feels like. 0:45:36.360 --> 0:45:38.400 Let's get into it with Paul Christopher, head of Global 0:45:38.440 --> 0:45:42.399 Investment Strategy over at the Wells Fargo Investment Institute. Paul, 0:45:42.400 --> 0:45:44.120 good to have you with us this afternoon. 0:45:44.160 --> 0:45:44.560 How are you? 0:45:46.120 --> 0:45:46.319 Yeah? 0:45:46.440 --> 0:45:48.319 Good, I'm happy you have to be on the drive home. 0:45:50.000 --> 0:45:52.000 Depending on where you're going, you could be driving to 0:45:52.040 --> 0:45:53.839 lunch too, if you're out there in California. 0:45:54.040 --> 0:45:54.400 True. 0:45:54.760 --> 0:45:56.960 Hey, I'm wondering what you're all in on at the 0:45:57.000 --> 0:46:00.000 Wells Fargo Investment Institute. It certainly seems like investors here 0:46:00.040 --> 0:46:01.640 in the US or around the world are all in 0:46:01.640 --> 0:46:03.680 on US equities. But how are you thinking about things? 0:46:04.600 --> 0:46:07.560 Yeah, we like US equities better than international. We like 0:46:07.680 --> 0:46:11.560 US equities large caps better than mid caps and small caps. 0:46:11.560 --> 0:46:14.000 So we'll play along up to that point, but we'll 0:46:14.000 --> 0:46:17.120 also note things like, you know what, last June, we 0:46:17.160 --> 0:46:20.520 also had a very narrow leadership like we're having this June. 0:46:20.880 --> 0:46:23.759 That the top stocks in the index top ten up 0:46:23.760 --> 0:46:25.920 to about two and a half, and you know, the 0:46:26.000 --> 0:46:28.480 bottom three hundred and fifty down about two and a half. 0:46:29.000 --> 0:46:31.120 So We're going to be a little bit selective. 0:46:30.680 --> 0:46:35.240 Here, So explain that. Carry that one out. What does 0:46:35.520 --> 0:46:37.800 being selective mean in this environment? 0:46:38.520 --> 0:46:39.040 Yeah, I was. 0:46:39.000 --> 0:46:42.520 Hoping you'd asked for the follow So we like things 0:46:42.520 --> 0:46:45.839 that have sectors that have a good long term prospects 0:46:45.840 --> 0:46:48.680 based on what we're seeing in the economy, and that 0:46:48.840 --> 0:46:52.319 really haven't necessarily participated to the same extent as the 0:46:52.360 --> 0:46:55.239 Magnificent seven or ten or five or however many you 0:46:55.280 --> 0:46:57.200 want to count it any on any given day. 0:46:57.480 --> 0:46:58.680 We like industrials. 0:46:58.800 --> 0:47:01.480 Right we're seeing lots of billild out in factories, We're 0:47:01.480 --> 0:47:05.040 seeing build out in data centers. We're expecting a lot 0:47:05.080 --> 0:47:09.080 more building around electric utilities as we get into green energy. 0:47:09.400 --> 0:47:12.200 We like materials as well. You're going to need materials 0:47:12.200 --> 0:47:15.480 for all that building. We like healthcare. We think healthcare 0:47:15.760 --> 0:47:19.879 really the pandemic exposed what we might call a lack 0:47:19.920 --> 0:47:24.000 of capacity. We have another pandemic or even a significant 0:47:24.040 --> 0:47:26.160 health emergency, we're still going to need to be able 0:47:26.200 --> 0:47:30.640 to treat broken knees and append appendice operations. 0:47:30.840 --> 0:47:33.200 So we like health care and we like energy. 0:47:33.280 --> 0:47:36.960 We think probably the green energy future is on its way, 0:47:37.000 --> 0:47:39.800 but not quite here yet, and we're gonna need more 0:47:40.080 --> 0:47:43.560 fossil fuels going forward. So those four really appealed to us, 0:47:43.920 --> 0:47:47.520 especially from a valuation standpoint, but long term investors really 0:47:47.520 --> 0:47:50.120 should pay attention, we think, to the sectors like those, 0:47:50.160 --> 0:47:52.120 and that's that's how we're trying to be selected here. 0:47:52.200 --> 0:47:56.600 Well, I didn't hear from you anything about commercial, about 0:47:56.719 --> 0:47:59.279 technology and communication services just now. 0:48:00.760 --> 0:48:04.280 Yeah, we're neutral those sectors. We like them going forward, 0:48:04.320 --> 0:48:06.959 but in fact, we were overweight them until last June 0:48:07.000 --> 0:48:09.040 and then they really just took off, and we just 0:48:09.040 --> 0:48:12.279 don't like these valuations here. You know, we tend to 0:48:12.320 --> 0:48:17.000 follow that old saying on Wall Street that disruptive technology 0:48:17.080 --> 0:48:20.520 tends to be overestimated in the short run and underestimated 0:48:20.560 --> 0:48:22.520 and appreciated in the long run. 0:48:22.560 --> 0:48:25.319 So we've got reports out there. We like artificial intelligence. 0:48:25.560 --> 0:48:28.359 We just don't think that the companies that are being 0:48:28.360 --> 0:48:30.440 bought right now are necessarily going to be the winners. 0:48:30.480 --> 0:48:32.799 One of my favorite questions to ask clients is do 0:48:32.840 --> 0:48:36.080 you remember what the maker was of the first PC 0:48:36.239 --> 0:48:38.759 you ever owned? I can tell you that the maker 0:48:38.800 --> 0:48:41.360 of mine no longer exists, and that was just a 0:48:41.400 --> 0:48:42.279 few decades ago. 0:48:42.400 --> 0:48:44.720 I think ours was Gateway. Do you remember yours. 0:48:45.280 --> 0:48:46.280 That sounds familiar. 0:48:46.800 --> 0:48:48.560 I don't remember what our first one was. 0:48:49.800 --> 0:48:53.080 You know what's interesting, though, is I believe I'm trying 0:48:53.080 --> 0:48:55.720 to think if it was AMD or Pentium or AMD 0:48:55.880 --> 0:48:56.240 or Intel. 0:48:56.320 --> 0:48:57.919 I mean, I'm sure it was like intell. 0:48:58.560 --> 0:49:00.360 I'm just trying to think of like the internals got me. 0:49:00.719 --> 0:49:01.560 But there is thinking. 0:49:01.760 --> 0:49:04.040 But there is something about well, so what is that 0:49:04.120 --> 0:49:05.919 kind of a warning sign to those who are all 0:49:05.920 --> 0:49:07.120 plowing into Nvidia? 0:49:08.920 --> 0:49:09.080 Well? 0:49:09.160 --> 0:49:11.560 Yes, and and you know, and maybe there's there's a 0:49:11.600 --> 0:49:14.480 certain extent to which even some of these high flying 0:49:14.520 --> 0:49:18.080 tech stocks have become defensives if you think about the 0:49:18.160 --> 0:49:21.560 upcoming elections. If you think about the economy slowing down, Gee, 0:49:21.560 --> 0:49:24.680 should I buy staples or should I buy discretionary ad? 0:49:24.719 --> 0:49:25.319 To heck with it? 0:49:25.440 --> 0:49:27.279 I'm just going to buy something reliable, and I'm going 0:49:27.320 --> 0:49:29.440 to go to tech. I think that's the mindset of 0:49:29.480 --> 0:49:30.319 some investors today. 0:49:30.360 --> 0:49:32.280 Also interesting. 0:49:32.360 --> 0:49:35.520 Okay, I want to think about this from the perspective 0:49:35.719 --> 0:49:40.399 of the Federal Reserve because that's something we watch closely here, 0:49:40.440 --> 0:49:43.440 of course, and I know all certainly investors do. How 0:49:43.440 --> 0:49:45.680 are you thinking about the rate environment right now? Because 0:49:45.719 --> 0:49:48.480 there obviously is a big connection between rates and what 0:49:48.520 --> 0:49:49.520 you're seeing with equities. 0:49:50.920 --> 0:49:53.560 Yeah, Well, the FED has the sort of on the 0:49:53.600 --> 0:49:56.239 one hand, on the other hand, the way good economists 0:49:56.280 --> 0:50:00.000 always do. On the one hand, they've got an economy 0:50:00.080 --> 0:50:01.640 it's slowing nicely for them. 0:50:02.120 --> 0:50:03.959 The whole thing isn't falling into a ditch. 0:50:04.239 --> 0:50:08.600 You've got manufacturing, construction that's strong, a home building is 0:50:08.640 --> 0:50:11.160 still strong. But you've got maybe mortgage rates that are 0:50:11.200 --> 0:50:13.720 too high, and the consumer is under a lot of stress. 0:50:13.920 --> 0:50:15.680 And the longer you keep these rates up here, the 0:50:15.719 --> 0:50:18.640 longer the consumer stays under stress. So you've got good 0:50:18.640 --> 0:50:20.719 things going on, you got bad things going on, And 0:50:20.800 --> 0:50:23.760 probably from the FEDCE perspective, that means that the balance 0:50:23.800 --> 0:50:26.759 between those two means you can afford to wait a 0:50:26.800 --> 0:50:28.879 little longer, and you don't have to feel like you're 0:50:28.880 --> 0:50:31.120 going to drive the economy into a ditch and then 0:50:31.239 --> 0:50:33.280 need five or six rate cuts. 0:50:33.040 --> 0:50:34.759 In a real big hurry. They're going to be able 0:50:34.800 --> 0:50:35.839 to take their time here. 0:50:36.080 --> 0:50:39.520 September is potentially still on the table if we get. 0:50:39.600 --> 0:50:42.200 A weaker inflation readings over the rest of the summer. 0:50:42.360 --> 0:50:44.640 If not, then November and December probably we think there's 0:50:44.680 --> 0:50:46.879 a couple of rate cuts coming this year and then 0:50:46.920 --> 0:50:49.879 potentially more next year. So the problem for the FED 0:50:50.000 --> 0:50:53.080 is that the longer they are patient and the longer 0:50:53.120 --> 0:50:56.280 they leave these rates rates in place, the more pressure 0:50:56.280 --> 0:50:57.320 they put on consumers. 0:50:57.360 --> 0:50:59.320 And that's where it gets a little bit dicey. 0:50:59.360 --> 0:51:01.879 Does the consumer just sort of slowed down and post 0:51:01.960 --> 0:51:06.239 pony expenditures. We've heard stories about people, for example, maybe 0:51:06.239 --> 0:51:09.799 they're not buying the summer where in April. Maybe they're 0:51:09.840 --> 0:51:12.279 waiting until June or July right before they go on 0:51:12.280 --> 0:51:14.120 the trip. Hey, maybe they're getting a little bit more 0:51:14.120 --> 0:51:16.000 selective about where they shop and so forth. 0:51:16.080 --> 0:51:17.600 So that's that's the risk for the FED. 0:51:17.719 --> 0:51:19.600 We are seeing it not even maybe we definitely are 0:51:19.640 --> 0:51:22.000 seeing like some choices being made. Paul having said that, 0:51:22.080 --> 0:51:24.640 you know, I feel like for a while the narrative was, Hey, 0:51:24.640 --> 0:51:27.319 there's all this money sitting on the on the sidelines, 0:51:27.360 --> 0:51:30.120 that's in you know, cash or cash like investments that's 0:51:30.160 --> 0:51:32.319 getting you know, four to five percent right now, and 0:51:32.360 --> 0:51:34.600 wait till that comes into the stock market, you know. 0:51:34.680 --> 0:51:38.800 Our story buyer Alexandra Semenova saying some stock market optimists 0:51:38.840 --> 0:51:41.640 have speculated that that swath of the roughly six trillion 0:51:41.680 --> 0:51:46.520 sitting in money market. You know, maybe we'll not actually 0:51:46.680 --> 0:51:50.680 come in to the market. So it's kind of interesting. 0:51:51.040 --> 0:51:54.120 Is your upbeat out look if you know, in terms 0:51:54.160 --> 0:51:56.560 of the equity play, is it based on more money 0:51:56.760 --> 0:51:58.799 that's been on the sidelines coming in or no. 0:52:00.200 --> 0:52:02.480 We're still seeing more money come in from the sidelines, 0:52:02.480 --> 0:52:05.520 but we're also watching for the potential for liquidity to 0:52:05.600 --> 0:52:09.080 really go away. If we got a nice pullback in stocks, 0:52:09.080 --> 0:52:11.600 that would help do it. The Treasury has a lot 0:52:11.640 --> 0:52:14.359 to say about that in terms of how they raise 0:52:14.480 --> 0:52:17.560 money and how they spend money. April was a down 0:52:17.680 --> 0:52:20.279 month for the treasury, a lot of tax money, a 0:52:20.280 --> 0:52:22.480 lot of I mean spending, a lot of tax money 0:52:22.560 --> 0:52:24.840 coming in. So liquidity goes out of the market and 0:52:24.880 --> 0:52:26.239 the market falters a little bit. 0:52:26.520 --> 0:52:26.759 May. 0:52:26.840 --> 0:52:28.960 In May, the Treasury starts spending again. 0:52:29.120 --> 0:52:32.000 Liquidity comes right back into the economy, and tech stocks 0:52:32.000 --> 0:52:35.480 are flying high again. So we're watching liquidity here very carefully. 0:52:35.640 --> 0:52:37.840 And I don't think that six trillion, to your point, 0:52:38.120 --> 0:52:40.960 does find its way into the equity market. We've been 0:52:41.040 --> 0:52:44.959 watching clients hold lots of cash on the sidelines since 0:52:45.040 --> 0:52:46.560 two thousand and eight, two thousand. 0:52:46.239 --> 0:52:48.239 And nine, all right, good to leave it there, Hy Paul, 0:52:48.280 --> 0:52:50.760 Thank you so much for Christopher, head of Global Investment 0:52:50.800 --> 0:52:55.239 Strategy at West Pargo Investment Institute, joining us from Saint Louis. 0:52:55.480 --> 0:53:00.000 This is the Bloomberg Business Week podcast. I'll at Apple, Spotify, 0:53:00.280 --> 0:53:03.960 and anywhere else you get your podcasts. Listen live weekday 0:53:04.000 --> 0:53:07.640 afternoons from two to five pm Eastern on Bloomberg dot com, 0:53:07.680 --> 0:53:11.000 the iHeartRadio app, tune In, and the Bloomberg Business App. 0:53:11.040 --> 0:53:14.000 You can also watch us live every weekday on YouTube 0:53:14.239 --> 0:53:16.200 and always on the Bloomberg terminal