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Speaker 2: One of the names Abigail was talk to us about
Speaker 2: was Boeing, And we want to figure out are these
Speaker 2: folks going to be getting back to work because they
Speaker 2: need planes to come off, you know the line, they
Speaker 2: need the cash flow, they need to get.
Speaker 3: Folks back to work.
Speaker 2: George Ferguson covers all of the aerospace, all the defense,
Speaker 2: and all the airlines for Bloomberg Intelligence. So, George, it
Speaker 2: seems like the union's representatives have agreed to a deal
Speaker 2: with Boeing. What do you think the actual workers are
Speaker 2: going to do when they vote?
Speaker 4: So, I think we're getting closer.
Speaker 5: Look, I think what thirty five percent is the increase
Speaker 5: over four years. Still, I think subs some of the
Speaker 5: other union agreements we've seen in the marketplace.
Speaker 4: You know what, like the port workers.
Speaker 5: But I would note that Textron had a similar strike
Speaker 5: by its machinists out in Wichita, Kansas. I'm not sure
Speaker 5: if you get through they're very often Paul were aware
Speaker 5: of that, but they just came back to they agreed
Speaker 5: to come back to work. It was kind of a
Speaker 5: sub thirty percent increase over four years. So my guess is,
Speaker 5: you know that the shore workers probably or the port
Speaker 5: workers probably set the high end of the of the
Speaker 5: mark these Wichita machinists for Textra and probably set the
Speaker 5: lower end. Boeing probably lived somewhere in the middle of
Speaker 5: the thirty five.
Speaker 4: Sounds about right.
Speaker 5: Workers have been out on strike for about a month now, right,
Speaker 5: So my guess is that finances are probably starting to look.
Speaker 4: Challenge at some of those those household I.
Speaker 5: Think Kelly Orperg, you know, pulled out the Hey, we're
Speaker 5: gonna raise twenty five billion dollars in cash and we're
Speaker 5: ready to go the distance. So I think those combinations
Speaker 5: and then throwing some of the four to one K
Speaker 5: money at them, right, there was some plus ups on
Speaker 5: how much they would match the four O one K.
Speaker 4: I think some initial.
Speaker 5: You know, incentives on the four to one K. I
Speaker 5: think they're pretty close, although I note that the union
Speaker 5: leadership wouldn't endorse it.
Speaker 4: From everything I've read, they they're just.
Speaker 5: Passing along this offer from Boeing to the workers, you know,
Speaker 5: for for a vote.
Speaker 4: My guess is this is pretty close.
Speaker 5: I think they might make it here, but I guess
Speaker 5: we'll get we'll get a chance to see by Wednesday,
Speaker 5: you know how cranky the union is and how much
Speaker 5: more they want.
Speaker 4: But it seems like it's pretty close.
Speaker 6: George, how important is an end to this strike for
Speaker 6: Boeing and just broader sentiment there. I mean, shares are
Speaker 6: down about thirty nine percent you're today, Yeah, it's.
Speaker 4: Huge, right.
Speaker 5: I think if it doesn't get agreed to, I think
Speaker 5: Boeing almost needs to raise money anyways. I guess it
Speaker 5: might help them decide what amount of cash you.
Speaker 4: Need to raise.
Speaker 5: You know, I'm hearing stories that the supply chain still
Speaker 5: building at the rates prior to the strike. You know,
Speaker 5: components are stacking up on their you know, on their
Speaker 5: loading docks. I think the longer it goes, the harder
Speaker 5: it is to restart the line. The longer it takes
Speaker 5: to restart the line, and the longer it takes to
Speaker 5: generate cash. And I think Kelly Orpberg would prefer not
Speaker 5: to go to the equity markets for a lot of
Speaker 5: money and prefer not to have to draw down any
Speaker 5: additional debt, not that they've said they would do that
Speaker 5: at this point.
Speaker 4: So it's very important for the turnaround.
Speaker 5: And again, timing is crucial to keeping the supply chain
Speaker 5: I think healthy and ready to go.
Speaker 2: George talked to us about I know in the past
Speaker 2: you've you know, educated us about the cash and how
Speaker 2: the cash comes.
Speaker 3: In and cash leaves a company like Boeing.
Speaker 2: And it's it's tied pretty tightly to those seven three
Speaker 2: seven jets leaving the floor.
Speaker 3: How quickly can they restart it?
Speaker 2: And where do you think the build modes for that
Speaker 2: seven thirty seven jet will.
Speaker 3: Be and what do they need to be.
Speaker 5: Yeah, so, I mean they need to get that jet
Speaker 5: up into the into the mid forties and fifties.
Speaker 4: I think it's going to take them, you know.
Speaker 5: I think even if the strike ended today, I think
Speaker 5: they're not going to hit sort of you know, the
Speaker 5: forty ish Their target was thirty eight by the year end.
Speaker 5: I don't think they're going to hit maybe a forty
Speaker 5: ish level until midyear next year.
Speaker 4: They ought to be.
Speaker 5: Driving up towards towards fifty maybe hopefully by the end
Speaker 5: of next year if this strike ended relatively soon. You know,
Speaker 5: by comparison air buses competitor airplane the eight three twenty
Speaker 5: that's being built right now in the mid forties, you know,
Speaker 5: they're driving higher into the into the the they hope
Speaker 5: to be driving higher to the mid sixties think over
Speaker 5: the next year. So it hasn't gone as well for
Speaker 5: them as they like, but their competitor product is doing
Speaker 5: much better. This that is the cash cow for the company.
Speaker 5: Defense is really you know, back on its heels right
Speaker 5: now because of some of these big fixed price contracts
Speaker 5: they signed that are that are out of water, which
Speaker 5: makes it that much more important to get the seven
Speaker 5: thirty seven rolling off lines. And just I think an
Speaker 5: interesting point of comparison if you look at Poeing's inventory
Speaker 5: level last time we saw it too q eighty five
Speaker 5: billion dollars of inventory on their balance sheet. Their competitor
Speaker 5: airbus was in the mid forty level billion dollars, So
Speaker 5: you could tell that's just an example of how bloated
Speaker 5: that inventory level is and how much they can unlock
Speaker 5: as they start to deliver airplanes. But again seven thirty
Speaker 5: seven is the is the key to that, and they
Speaker 5: want to keep market share in that airplane too.
Speaker 6: Speaking of market Chare, I did want to get your
Speaker 6: take on how investors are thinking about Boeing. I mean,
Speaker 6: of course it's had a really troubled year when we
Speaker 6: think about twenty twenty four, but as you mentioned, they
Speaker 6: have Airbus as a competitor, but not too many competitors
Speaker 6: out there. So how do investors think about this when
Speaker 6: they're thinking about Boeing and its longevity?
Speaker 5: I think some of you know, what you've seen today
Speaker 5: in the stock price gives you a sense investors know
Speaker 5: it's a you know, it's a duopoly. And look, you know,
Speaker 5: we've been doing some work recently on the backlogs. And
Speaker 5: if you looked at Airbus's backlog for the competing airplane
Speaker 5: in the A three twenty I was just talking about
Speaker 5: competing to the seven thirty seven.
Speaker 4: You know, we think it's probably ten years of backlog
Speaker 4: in that airplane right now.
Speaker 5: Right so even if you stepped into Airbus's sales office,
Speaker 5: I'm sure it doesn't go, you know, all the way
Speaker 5: full out for ten years, because there's some airlines that'll
Speaker 5: come in and deliver or sorry, order out for a decade,
Speaker 5: but you're probably into the twenty thirties before you get
Speaker 5: that airplane.
Speaker 4: So if you when you're.
Speaker 5: Thinking about Boeing and you're thinking about the market share
Speaker 5: risks around this, striking the problems they've had, at least
Speaker 5: right now, if you want an airplane Boeing, you know
Speaker 5: it's probably your best place to buy a narrowbody, single
Speaker 5: aisle airplane, the seven thirty seven. So it's not like
Speaker 5: anybody's walking away with this business while Boeing is having
Speaker 5: their problems. I think investors know that the Chinese are coming,
Speaker 5: you know, they Comac the C nine one nine that's
Speaker 5: a narrowbody, single aisle airplane like the A three twenty
Speaker 5: seven thirty seven that's just rolling out into fleets in China.
Speaker 5: Now last week looked, I think there was eight or
Speaker 5: ten of them. They don't get the service out of
Speaker 5: them per day that Boeing and Airbus do. They get
Speaker 5: about half, so they're still sort of you know, they're
Speaker 5: still up coming up the learning curve, learning how to
Speaker 5: support that airplane in the marketplace. So that's no replacement yet,
Speaker 5: but that will move insize inside China in their fleets
Speaker 5: that's been a very important market for Boeing an airbus,
Speaker 5: and then it'll start to expand into that developing world
Speaker 5: around China. Bowling at Airbus I think would really like
Speaker 5: to get you know, they'd like to build at the
Speaker 5: at the highest rates possible, build their cash flows and
Speaker 5: come out with successor products in the twenty thirties and
Speaker 5: forties that stay ahead of the Chinese and keep them
Speaker 5: from taking significant market share. But again going back to
Speaker 5: your initial question, it's still a two airplane builder world.
Speaker 5: We don't see him Braier really getting into this business.
Speaker 5: So right now the narrow body the larger air commercial
Speaker 5: aircraft game. So it's really still a two manufacturer business
Speaker 5: and investors know that, and I think that's what, you know,
Speaker 5: what's leading to some of the action today.
Speaker 2: Well, I can see the fleet aging right before my eyes.
Speaker 2: I flew back from Charleston last week, Alex Steele and
Speaker 2: I did, and the seven thirty seven still had like
Speaker 2: the old card reader to get a TV show. I mean,
Speaker 2: that's like twenty year old tech technology.
Speaker 3: So I told I blame George for all that. He's
Speaker 3: got to get these people back to work.
Speaker 2: George Ferguson, Thanks for joining us there. George Ferguson's senior Aerospace,
Speaker 2: Defense and Airlines analyzes our go to person and all
Speaker 2: things as it relates to aerospace and airlines. He's a
Speaker 2: Bloomberg Intelligence then in Princeton. But it just seems like,
Speaker 2: you know, you think about I can just see all
Speaker 2: the you know, the stuff coming into the Boeing factory
Speaker 2: to make the plane and just sitting there and piling up,
Speaker 2: piling and appiling up because the line, the construction line,
Speaker 2: that the manufacturing line is not not running.
Speaker 6: So and I wonder how many people are still looking
Speaker 6: at what plane they're taking for flights. As you remember
Speaker 6: months back, things were falling apart and people were apprehensive,
Speaker 6: they were nervous about getting on Boeing planes. So I'm
Speaker 6: curious how many people are still shopping around when it
Speaker 6: comes to flights there.
Speaker 3: I never did that, and I always felt like you did.
Speaker 6: Guilty as charged, okay, because.
Speaker 2: I always I feel like the seven thirty seven Max
Speaker 2: is now the safest plane right because it's gone through
Speaker 2: so much.
Speaker 3: Testing in review, But I don't know, I mean, it's
Speaker 3: continue to do.
Speaker 2: Yeah, any of the USA or the Western airlines generally speaking,
Speaker 2: you know the safety.
Speaker 7: Is what it is.
Speaker 3: I think we feel pretty good about that.
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Speaker 3: Let's turn back to the US markets here again.
Speaker 2: Yes, and p I'm kind of down about five points now,
Speaker 2: off about one hundred and forty five and nasdak up
Speaker 2: twenty five. We check him with Phil Orlando, Federator at Hermes.
Speaker 2: He is our go to guys we think about some
Speaker 2: of these markets. He's a chief US equity market strategist
Speaker 2: and head of the client portfolio group there. Hey, Phil,
Speaker 2: I don't know if you saw this, but Goldman sachs
Speaker 2: out with the note saying, you know, if you think
Speaker 2: about the SMP over the next ten years, think about
Speaker 2: low single digit returns as opposed to what we've seen
Speaker 2: over the past ten years, which have been much better.
Speaker 2: When you see some a note like that, how do
Speaker 2: you kind of digest that well?
Speaker 7: I mean, Goldman's probably right, We've had such a phenomenal
Speaker 7: recovery in equities coming out of the depths of the pandemic,
Speaker 7: you know, four years ago, four and a half years ago,
Speaker 7: and just over the last year or so, that how
Speaker 7: much of this has borrowed from the returns that you
Speaker 7: might expect over the next decade. So Goldman, you know,
Speaker 7: adjusting their capital market assumptions and saying, you know, mid
Speaker 7: single digits over the next ten years probably feels right,
Speaker 7: particularly in light of the fact that we're you know,
Speaker 7: sitting here with thirty six trillion dollars in federal debt
Speaker 7: and a total debt to GDP ratio of one hundred
Speaker 7: and twenty five percent. Those numbers aren't sustainable, and you've
Speaker 7: got to believe that at some point Washington's going to
Speaker 7: find religion on trying to step away from the sugar
Speaker 7: high that we've seen over the last couple of years,
Speaker 7: with all of this massive amount of spending that'll have,
Speaker 7: you know, potentially a deleterious impact on economic growth and
Speaker 7: ultimately equity prices. So directionally, I don't disagree with what
Speaker 7: Goldman said. The case for active management, though, is that
Speaker 7: what you want to do, is you want to find
Speaker 7: good firms, good managers, good products that can do better
Speaker 7: than you know, the average. You know, those top quartile
Speaker 7: performers that will you know, will will help you generate
Speaker 7: the returns that you need for your you know, college
Speaker 7: funds or retirement funds or whatever else.
Speaker 6: Well, Phil, let's talk rates. Of course, we just got
Speaker 6: that jumbo rate cut just what felt like yesterday, and
Speaker 6: then here we're turning and we're going to be having
Speaker 6: another meeting in a matter of weeks. What do you
Speaker 6: expect to come out of that meeting? Of course, I know,
Speaker 6: as you flag just a month later after that last cut,
Speaker 6: we're seeing an economy that could be seen as reaccelerating
Speaker 6: and a labor market that has strengthened. What does this
Speaker 6: mean for markets? Do we see a rally continuing after
Speaker 6: this next meeting? And what do you expect from the
Speaker 6: next meeting to come?
Speaker 7: So to take half a step back, we were surprised
Speaker 7: by the pace of the fifty basis point raycut that
Speaker 7: the said gave us in September eighteenth. We think that
Speaker 7: the FED needs to sort of get back to you know,
Speaker 7: that quarter point level November seventh, December eighteenth, and then
Speaker 7: looking out over the next year and a half a
Speaker 7: quarter point cut per quarter, and that would take us
Speaker 7: down to a terminal value of the funds rate, let's
Speaker 7: say by the middle of calendar twenty sixth, at about
Speaker 7: three percent. We think that's a reasonable pace. And then
Speaker 7: to your point, given the seeming reacceleration that we've seen
Speaker 7: in the US economy over the last month or so
Speaker 7: and sort of the sticky nature of inflation, in the
Speaker 7: fact that the labor market in September was actually surprisingly strong.
Speaker 4: You know.
Speaker 7: Raphael Bostik, for one, the president of Atlanta FED, made
Speaker 7: a comment, I guess was last week where he said,
Speaker 7: you know what, maybe we should just skip November and
Speaker 7: you know, come back in December and see where we're at.
Speaker 7: So our view is that that the fifty we saw
Speaker 7: in September was probably a little too aggressive, and given
Speaker 7: sort of the tone of the economic data we've seen
Speaker 7: over the last month or so, you know, ratcheting back
Speaker 7: to a more conservative quarter point pace is probably more realistic.
Speaker 2: Phil We're just starting to get into the real teeth
Speaker 2: of the earnings season here. What have we seen so
Speaker 2: far from the big banks that have reported in and
Speaker 2: what do you think the market needs to see earnings
Speaker 2: wise from the corporate America.
Speaker 7: Well, the earnings haven't been bad. We're probably up four
Speaker 7: percent or so year every year, which is fine. We're
Speaker 7: probably gonna end up beating expectations as we usually do.
Speaker 7: But importantly, the earning season is going to be slower
Speaker 7: than the eleven or twelve percent year on year earnings
Speaker 7: we saw in the second quarter. And I think that's
Speaker 7: consistent with our soft landing thesis. We're not going negative,
Speaker 7: We're just gonna slow down, you know, sort of a
Speaker 7: trend to pace that that's you know, above zero, but
Speaker 7: nowhere near as hot as the double digit pace that
Speaker 7: we you know, we we saw in previous quarters.
Speaker 6: So expectations for this earning season are low. Does that
Speaker 6: support a further rally when we're looking at equities more
Speaker 6: broadly coming out of this earning season, Well, you.
Speaker 7: Know, we've seen a backup in treasury yields. From three
Speaker 7: fifty three sixty, we're up to you know, north of
Speaker 7: four to ten. Now, remember, price earnings ratios are inversely
Speaker 7: proportionate with the direction of inflation and interest rates. So
Speaker 7: the backup and yields suggested multiple should price earnings ratio
Speaker 7: should be contracting. Yet the stock market hit another, you know,
Speaker 7: all time record high last week. You've got stocks trading,
Speaker 7: the S and P trading at a forward multiple north
Speaker 7: of twenty one times on next year's earnings. We're estimating
Speaker 7: two hundred and seventy five dollars for S and P
Speaker 7: next year. Yet the appropriate pe on stocks, given what
Speaker 7: treasury yields are, is probably south of eighteen times earning.
Speaker 7: So you've got a valuation gap right now, you know,
Speaker 7: of about twenty percent in round numbers. In my mind,
Speaker 7: the market's extraordinarily enthusiastic here. It's looking through and discounting
Speaker 7: very favorable federal reserve behavior, very favorable election results, very
Speaker 7: favorable trajectory of economic roles and inflation. There's a lot
Speaker 7: of enthusiasm built in here that you know, maybe we
Speaker 7: ought to see a little bit of a pullback.
Speaker 2: All right, Phil, thanks so much for that. I always
Speaker 2: appreciate getting your thoughts on these markets.
Speaker 3: It's Phil Orlando.
Speaker 2: He's a chief equity market strategist and head of the
Speaker 2: client portfolio MANAFIT team at Federated Hermes.
Speaker 3: Zooming it in there from New York.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 3: Normal Linda sitting in for Alex Steel. I'm Paul Sweeney.
Speaker 3: We're live here in our Bloomberg Interactive Broker Studio.
Speaker 2: We are streaming live on YouTube as well, so heitover
Speaker 2: to YouTube dot com search Bloomberg Podcast and that's where
Speaker 2: you will find us. Tensions in the Middle East, the
Speaker 2: military conflict in the Middle East still front and center
Speaker 2: for markets. We like to get some smart internal voices
Speaker 2: as well as external voices. And that brings us to
Speaker 2: our next guest, Ned Lazarius, Associate Professor of International Affairs
Speaker 2: at George Washington University, joining us via zoom from Washington, DC. Professor,
Speaker 2: thanks so much for joining us here. I'm just not
Speaker 2: sure what next steps are there in the Middle East.
Speaker 2: I guess one of them is what or how Israel
Speaker 2: will respond to the missile attack on Israel, as well
Speaker 2: as I guess a potential attack on Netahu's home.
Speaker 3: Where are we in that discussion?
Speaker 8: Well, you're quite right, this is a multi front war
Speaker 8: now with active multiple active fronts, with Israeli troops fighting
Speaker 8: in Gaza for over a year now, fighting on the
Speaker 8: ground in southern Lebanon, as well as continuing airstrikes north
Speaker 8: to the Dahia neighborhood of Beirutz, which is the Hesbalah stronghold.
Speaker 8: We are still seeing missiles fired from Iraq from Yemen
Speaker 8: from around the region, and we are waiting to see
Speaker 8: what will be the Israeli response to the massive, second
Speaker 8: massive Israel sorry Iranian missile barrage on Israel. We also,
Speaker 8: as you know, there was a recent leak of potential
Speaker 8: Israeli target plans that was leaked from the United States.
Speaker 8: I believe there's now a secret meeting going on or
Speaker 8: top secret meeting going on in Congress to discuss what
Speaker 8: happened and try to identify the source that seems to
Speaker 8: have leaked to the telegram social media Israeli planned that
Speaker 8: were shared with the United States, and it's possible that
Speaker 8: that source has more documents that may come to light
Speaker 8: as well, so that may throw a wrench in Israeli plans.
Speaker 8: If the plans that were leaked are accurate, It's all
Speaker 8: unclear as has been the case throughout this war. The
Speaker 8: only things that seem to be well known or that
Speaker 8: Israel intends to strike back at Iran, that there has
Speaker 8: been a tremendous amount of coordination and discussion with the
Speaker 8: United States, given the sensitivity of our electoral calendar, with
Speaker 8: our election coming up in just over two weeks.
Speaker 6: Well, as you mentioned, we do have a presidential election
Speaker 6: in just a matter of weeks. In the US is
Speaker 6: hopeful for a cease fire before then, and it's been
Speaker 6: reported that the Secretary of State Anthony Blincoln is said
Speaker 6: to visit Israel among other countries in the area starting today,
Speaker 6: and this one his eleventh visit in the region since
Speaker 6: last October. Can you speak a bit more about how
Speaker 6: the US is playing a role.
Speaker 8: Blincoln is headed there almost Hochstein, the President's Special envoy,
Speaker 8: who has been back and forth between Lebanon, Israel, and
Speaker 8: Washington for months is there again this week. They're making
Speaker 8: every effort to i think, at least keep it from
Speaker 8: spiraling further out of control and to try and manage
Speaker 8: Israel's responses in line with US interests. But they certainly
Speaker 8: cannot control events, as we've seen events there, you know,
Speaker 8: are beyond anyone's control, and even include surprises such as
Speaker 8: the killing of Hamas leader Yehia Sinoar less than a
Speaker 8: week ago, who was killed by Israeli regular infantry troops
Speaker 8: who did not know that it was him. And this
Speaker 8: is a massively important event which may eventually help turn
Speaker 8: the course of the war. I do not expect a
Speaker 8: ceasefire before the US election. There is just simply too
Speaker 8: much going on. It's too escalated of a conflict at
Speaker 8: the moment. As you said, we were waiting for Israel's
Speaker 8: response to the Iranian attack. It is possible, not unthinkable,
Speaker 8: that Israel would delay until after the US election, but
Speaker 8: I would say that that seems less likely, and once
Speaker 8: Israel responds, then there will be an Iranian response. So
Speaker 8: a ceasefire, a total ceasefire on all the fronts, is
Speaker 8: not in evidence, and I think the probably the Biden
Speaker 8: administration is aware of that and is making every effort
Speaker 8: to keep this from against spiling out of control or
Speaker 8: escalating in a way that is contrary to US interests.
Speaker 8: The US has set up a special air defense battery,
Speaker 8: the Thaad Missile Battery, which Secretary of Defense Austin has
Speaker 8: announced is now on the ground in Israel. He didn't
Speaker 8: say whether it's operational, but obviously that's the plan, and
Speaker 8: I assume that it will be shortly and that's to
Speaker 8: help defend against further Iranian missile attacks.
Speaker 2: What are the end games for Israel now? Just in
Speaker 2: a year, it's gone from the initial strategy of neutralized
Speaker 2: hamas and get the hostages back to I.
Speaker 3: Don't know what it is now.
Speaker 2: Have they articulated what their endgame is here on this
Speaker 2: much broader front.
Speaker 8: Well, I think there are two levels to this. So
Speaker 8: one is the Israeli defense establishment, the state, the broader strategy,
Speaker 8: and one is the prime minister, Prime Minister Nataniao, who
Speaker 8: has his own political interests which may well be guiding
Speaker 8: some of his decisions and often put him at odds
Speaker 8: with his own defense establishment. I think that the in
Speaker 8: terms of the broader Israeli interest, I think that right
Speaker 8: now Israel has been on the offensive. After many months
Speaker 8: when it seemed that victory was you know, a ridiculous
Speaker 8: idea and that you know, things were not going well
Speaker 8: from an Israeli military point of view, Israel has been
Speaker 8: on the offensive. It's dealt severe blows to Hasbalah and
Speaker 8: to Hamas, and it has, you know, with help from
Speaker 8: the United States and regional allies, absorbed two massive Iranian attacks.
Speaker 8: Israel has killed you know, the leaders of Hamas Hasbola.
Speaker 8: So this has actually been, from an Israeli military point
Speaker 8: of view, the most productive period of the war. And
Speaker 8: I think that a goal is really to damage Hezbollah
Speaker 8: and Hamas as much as possible before the US election.
Speaker 8: I do think that they're sensitive to our role calendar
Speaker 8: and looking at that and thinking that after that election
Speaker 8: they may need to recalibrate, so they're trying to get
Speaker 8: all the blows in they can before that.
Speaker 2: Exactly, all right, Ned, thank you so much for joining us.
Speaker 2: Ned Lazarus, Associate Professor of International Affairs at George Washington University,
Speaker 2: giving us the latest out of the Middle East, a broadening.
Speaker 3: Conflict that we've witnessed over the past twelve months ago.
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Speaker 2: Normal Linda sitting in for Alex steel On Paul Sweeneyer
Speaker 2: live here in our Bloomberg Interactive Broker Studio. We are
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Speaker 3: Our next guest.
Speaker 2: It's been trialing all over the place Dubai Berlin, so
Speaker 2: we're gonna get some fresh color about what's going on
Speaker 2: in Global Wall Street. And Barry joins us. She is
Speaker 2: the founder and managing partner of Thread Needle. Joining us
Speaker 2: live here in our Bloomberg Interactive Broker Studio. Dubai A
Speaker 2: bunch of technology people.
Speaker 3: What were you doing in Dubai?
Speaker 9: Well, it was the world's biggest tech and investor startup conference,
Speaker 9: unbelievable scale, six hundred six hundred six and a half
Speaker 9: thousand companies, two hundred thousand tech executives and really leading
Speaker 9: a lot of the conversations around AI is at hype?
Speaker 9: Where are we in terms of cybersecurity and applications of AI? So, Paul,
Speaker 9: it was just a really interesting way of seeing where
Speaker 9: the energy around tech is going, and more specifically in
Speaker 9: the rest of the world, not just us entrepreneurs, but
Speaker 9: really getting a sense, what's the Middle East doing, what's
Speaker 9: Asia doing, and how is policy and government action meeting the.
Speaker 6: Private Sticking with tech, you're focus on the private side.
Speaker 6: I know you mentioned and recently invested in the software
Speaker 6: business that's focused on streamline contractor assessments. When they come
Speaker 6: to your house, I'll put in new HVAC systems. What
Speaker 6: are you seeing there? Can you talk a bit more
Speaker 6: about that?
Speaker 7: Sure?
Speaker 9: Well, Laura, I look at the tech sector a lot
Speaker 9: and talk about stocks out here at Bloomberg, and I've
Speaker 9: recently been getting wired with the rallies that if I
Speaker 9: thought that it was getting a little thin in terms
Speaker 9: of the air out there valuation wise, it's even more so,
Speaker 9: even more the case over the last couple of weeks,
Speaker 9: and so I've been looking a lot more at these
Speaker 9: sort of niche software as service businesses where people like
Speaker 9: the service Nows of the world, which is terrific company
Speaker 9: but extremely expensive. If you look at the multiples in
Speaker 9: that business right now, where that could be the choir
Speaker 9: of choice as it looks to roll up some of
Speaker 9: these niche businesses. So that's the kind of place I'm
Speaker 9: looking at HVAC. I'm a believer that there's a big
Speaker 9: CAPEX replacement cycle coming as you know, global warming continues,
Speaker 9: and those kinds of businesses I think will win over
Speaker 9: the long term.
Speaker 2: So and at this tech conference in Dubai, talk to
Speaker 2: us about kind of the discussion around regulation, because you know,
Speaker 2: just historically the last fifty years, you is how to
Speaker 2: relatively light touch on regulating the tech industry, and one
Speaker 2: can say that was maybe the reason why tech while
Speaker 2: Silicon Valley is Silicon Valley, can't say that about Europe
Speaker 2: broadly defined. How do they think about the next wave
Speaker 2: of technology to the Europeans today or maybe other parts
Speaker 2: of the world Asia, Do they think differently about regulatory control?
Speaker 9: I think quite differently. I think there's a core part
Speaker 9: of commonality though, and I think the core part of
Speaker 9: commonality is looking at how technology is going to impact
Speaker 9: national security. I think if you look at that specific point,
Speaker 9: the US, Europe, the Middle East, Asia are all aligned,
Speaker 9: which is trying to make sure that tech flourishes but
Speaker 9: doesn't pose as much of the risk that we fear
Speaker 9: when it comes to national security. That being said, you're
Speaker 9: right that EU has been leaning in in terms of
Speaker 9: AI regulation. What I saw in the United Arab Emirates
Speaker 9: and what I've seen in Singapore two actually is quite different,
Speaker 9: and it's less about regulation and it's more about government
Speaker 9: partnership with the private sector. In both of those nations,
Speaker 9: there's a really concerted effort by government aidencies to spend
Speaker 9: their money with startups and to take the risk on
Speaker 9: businesses that otherwise don't yet necessarily have the credibility of
Speaker 9: the track record to win those government contracts of their
Speaker 9: own volition, and they're leaning in to try and take them.
Speaker 9: They will take some of the tech risk, but will
Speaker 9: enable them to flourish as a result that I haven't
Speaker 9: seen quite so much in the US.
Speaker 6: How are you thinking about energy and secular consumer growth?
Speaker 6: But what's the play there? I mean, let's talk sotout
Speaker 6: East Asia, well.
Speaker 9: Southeast Asia. I find really fascinating and this really goes back,
Speaker 9: Nora to some time I spent in Singapore, in Taiwan
Speaker 9: and in Korea towards the end of last year, and
Speaker 9: there's been the secular shift in those nations where the
Speaker 9: middle class is rising and rising. You know, we've talked
Speaker 9: so much about the rise of the Chinese middle class
Speaker 9: consumer over the last twenty years. If you now look
Speaker 9: at these other Asian markets. You're seeing that happening with
Speaker 9: a plumb as well. And one of the key things
Speaker 9: that's so fascinating there is this particular demographic is really
Speaker 9: hungry for homegrown brands, and they're really hungry for homegrown
Speaker 9: travel and homegrown experiences. And so that I think is
Speaker 9: a little bit different where you saw the Chinese consumer
Speaker 9: hungry for Western brands, right, So, I think that shift
Speaker 9: for local and that shift for regional is a little
Speaker 9: bit different and provides opportunity.
Speaker 2: I know, you invest both in public securities and private securities.
Speaker 2: One could argue that public valuations are maybe too expensive
Speaker 2: for some people, so they're trying to look for opportunities
Speaker 2: in private. How do you think about valuations in public
Speaker 2: versus private, particularly in the tech sector.
Speaker 9: I do think that the public market at this point
Speaker 9: is throftly. I think it's been that way for a while.
Speaker 9: I think there are some really specific companies that have
Speaker 9: got great secular tailwinds. I think those interesting places for tech.
Speaker 9: But this rising tide has lifted all tech shifts. Has
Speaker 9: been quite worrying to me for a while. When I
Speaker 9: look at the private sector, whether it's in tech or
Speaker 9: it's sort of tech adjacent industries trying to adopt tech
Speaker 9: more quickly than before. I've been a long time private investor,
Speaker 9: and we haven't seen the pace, specifically of private equity
Speaker 9: activity I think, come back quite as much as we
Speaker 9: thought it would in twenty twenty four. That I think
Speaker 9: in twenty twenty five will change, and I think we're
Speaker 9: going to see more of a shift towards private market activity.
Speaker 9: I personally see more value there now than I do
Speaker 9: in the public markets, and so I think that's an
Speaker 9: interesting place to play in the next eighteen to twenty
Speaker 9: four months.
Speaker 6: What sectors are you favoring right now.
Speaker 9: I've always been a fannuner of business services, and I've
Speaker 9: always liked companies that have had really good opportunity to
Speaker 9: play the outsourcing wave now. In Pau's question on tech,
Speaker 9: the kinds of software businesses I like are outsourced solutions,
Speaker 9: whether it's things like Salesforce or palow outer networks right
Speaker 9: these are domain experts using tech to enable companies to
Speaker 9: outsource their non core competencies. I like that too in
Speaker 9: traditional businesses. I like that in terms of things like
Speaker 9: uniform outsourcing businesses like Centils, which have tended to do
Speaker 9: well really sort of no matter the macro environment. Those
Speaker 9: are the kinds of places I've enjoyed looking at now.
Speaker 3: So I also know you were in your notes that
Speaker 3: you were in Berlin for the World Department Store Summit. Yeah. Hey,
Speaker 3: I didn't know there was such a but I'm glad
Speaker 3: that there is.
Speaker 2: Yeah, And so I guess we're talking retail of the consumer,
Speaker 2: all that type of stuff.
Speaker 3: What are some of your takeaways from that event?
Speaker 9: You know it was the energy in Europe was really sad,
Speaker 9: to be honest, Paul, at that particular time, and Germany
Speaker 9: in particular. Not all parts of Europe polacy are the same.
Speaker 9: But the European consumer market domestically, it's been hit by
Speaker 9: continued inflation.
Speaker 4: Right.
Speaker 9: We've seen the fact of that in the sense we've
Speaker 9: seen more aggressive rate cuts happening from the ECB than
Speaker 9: we've seen here. We have seen consumer sentiment over there
Speaker 9: slow down much more dramatically than in other places, and
Speaker 9: we've seen the absence of the tourists from traditionally core
Speaker 9: markets like Russia, like the Middle East, like China. For Europe.
Speaker 9: When you look at the consumer though, again in other places,
Speaker 9: and it's fascinating. MasterCards is really interesting presentation with some
Speaker 9: great data on where they're seeing international tourists travel and
Speaker 9: where they're spending their money once they get there. And
Speaker 9: again it's the Asian tourists from Korea, from Taiwan, from
Speaker 9: Malaysia out there spending their money causing some really interesting
Speaker 9: patents and growth. Also from the United Arab Emirates, from
Speaker 9: Saudi Arabia, from Kutur, you know, the Middle East. Also,
Speaker 9: the consumer seems to be very robust at the moment.
Speaker 6: How would you compare that to here in the US
Speaker 6: when we think about consumer activity.
Speaker 9: Yeah, you know, I think the US, Nora, I look
Speaker 9: at that and I never cease to be amazed at
Speaker 9: how bifurcated the consumers in the US, where you've got
Speaker 9: the middle you know, the sort of upper a quartile
Speaker 9: and beyond of the middle class in the US actually
Speaker 9: doing very well. Right. They've continued to see their net
Speaker 9: worth increase, They've continued to see asset inflation support their
Speaker 9: consumer habits. You see that in terms of credit cards spending.
Speaker 9: You see that in terms of certain parts of niche
Speaker 9: specialty retail holding up a lot better. Where I actually
Speaker 9: see a difference this time. You know, if you go
Speaker 9: look at back at prior cycles, places like the dollar
Speaker 9: stores or the national visions of the world tended to
Speaker 9: do really well. And so when we weren't so sure
Speaker 9: here it looked like the consumer sentiment was beginning to break.
Speaker 9: At the end of last year, I started to buy
Speaker 9: those stocks, looking at history and saying, oh, I've seen
Speaker 9: this before. I was wrong. By the way, those names
Speaker 9: have actually done very poorly. They're not serving lower income
Speaker 9: demographic with the same success as they used to, and
Speaker 9: I think that just shows how compressed that demographic is.
Speaker 9: It also shows how their spending habits are changing. And
Speaker 9: so I do worry that that bifurcation has got implications
Speaker 9: that haven't yet shaken out in terms of the success
Speaker 9: of certain kinds of retail here.
Speaker 2: How do you think about opportunities just geographically maybe US
Speaker 2: versus Europe versus Asia, and absolutely different growth rate's, probably
Speaker 2: different valuation parameters. Where are you guys finding the most
Speaker 2: opportunities these days?
Speaker 9: Well, I just also in this sort of this bias
Speaker 9: of coming back from the sort of global tour, I
Speaker 9: do like businesses that have got really international exposure to
Speaker 9: some of those markets. We've talked about the high growth
Speaker 9: parts of the Middle East and Asia, but I do
Speaker 9: like them where they've got the US halo of quality
Speaker 9: and transparency and visibility around them. So two areas where
Speaker 9: I've tried to lean into. One's a little bit more controversial.
Speaker 4: Ups.
Speaker 9: I like logistics businesses. We've been in a freight procession.
Speaker 9: I did buy FedEx on that fifteen percent dip that
Speaker 9: we saw, and I think ups it's one of the
Speaker 9: world's biggest logistics companies. It does have exposure to a
Speaker 9: Chinese recovery, it's going through its restructuring. I like that
Speaker 9: global exposure, and I hope at least that we've come
Speaker 9: to a bit of a stabilization in the decline of
Speaker 9: the domestic business we've seen with Amazon compression, it took
Speaker 9: up the United States postal office. The other one, I
Speaker 9: would say back nor to your question earlier around what
Speaker 9: am I seeing in terms of different consumer patterns. One
Speaker 9: thing that is consistent globally about the consumer is they're
Speaker 9: looking for experiences. They really are leaning into spending more
Speaker 9: and more experiences, disproportionately more so than stuff. And so
Speaker 9: a company that I like that's leaning into this is Hilton.
Speaker 9: Hilton I think has got you know, some valuation upside.
Speaker 9: It's an asset light business. The streets upgraded some of
Speaker 9: its price outlooks. What I like about Hilton is they've
Speaker 9: really gotten the message on the rise on some of
Speaker 9: these markets like Bahrain for example, like other parts of Asia.
Speaker 9: And you know, one hundred and sixty five properties opened
Speaker 9: under the banner in Q two. More is coming or
Speaker 9: see the full run rate effect that in twenty twenty five.
Speaker 9: And again, those regional middle class consumers are hungry to
Speaker 9: stay at quality properties and they want to do it locally.
Speaker 3: And thank you so much for joining us. Really appreciate it.
Speaker 2: Love getting your global view and coming back from some
Speaker 2: of your recent travels. And Berry, she's a founder and
Speaker 2: managing partner at Thread Needle. Joining us live here in
Speaker 2: our Bloomberg Interactive Brokers Studio level.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: Auto with the Bloomberg Business. You can also listen live
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Speaker 1: say Alexa Play Bloomberg eleven thirty.
Speaker 2: All right, normal, Linda sitting in for Alex steel On
Speaker 2: Paul Swiney. You're live here on our Bloomberg Interactive Brokers studio.
Speaker 2: We're streaming live on YouTube as well. A great Bloomberg
Speaker 2: Opinion column piece out today by mister Tim O'Brien. Trump
Speaker 2: goes all in on discord. Will voters follow him? Fascinating question.
Speaker 2: Tim O'Brien joins his senior executive editor Bloomberg Opinion joins
Speaker 2: us here on a Bloomberg Interactive Brokers student. The world
Speaker 2: knows what former President Donald Trump is. He is not
Speaker 2: going to change for anyone. Will he have the same
Speaker 2: support that he had or to pass several cycles I e.
Speaker 2: Seventy five million people voting for him? He can count
Speaker 2: on that, Kenny.
Speaker 10: I think he probably can. I mean, I think you know,
Speaker 10: the issues from the beginning has always been that middle swath.
Speaker 10: I'm saying nothing original here, but independent and moderate voters
Speaker 10: in the Swing States again to decide who the next
Speaker 10: president is.
Speaker 8: I think.
Speaker 6: I mean, when we think about Trump supporter is what
Speaker 6: differences have you seen in terms of those who rally
Speaker 6: behind him in this campaign versus previously? Have you seen
Speaker 6: more of an influx of individuals that are coming in
Speaker 6: and you.
Speaker 10: Know, we're really struck. Where it really struck me is
Speaker 10: when I was at the RNC in Milwaukee, and you know,
Speaker 10: Trump's base hates the media, they hate critics, and it's
Speaker 10: generally a pretty hostile environment. I've been to other Trump
Speaker 10: rallies and events, and at the RNC there was much
Speaker 10: less of that. It was they were writing very high
Speaker 10: at the time because they'd arrived. They were no longer
Speaker 10: the outsiders storming the gates. They have acquired power and
Speaker 10: are fairly certain how they want to now use it.
Speaker 10: And so I think there's more a sense of a
Speaker 10: rival and certainty among his supporters about what they'll do
Speaker 10: with the mandate he has given them. And I think that,
Speaker 10: you know, in my perspective, that's a dangerous thing. So
Speaker 10: I think it's a profoundly anti democratic and intolerant movement.
Speaker 2: What's happened to the GOP, the Republican Party that my
Speaker 2: father grew up with since World War Two and that
Speaker 2: I grew up with, is that gone forever?
Speaker 4: Yeah?
Speaker 10: You know, I grew up in the Midwest around traditional
Speaker 10: Republicans and traditional defined by you know, I think people
Speaker 10: who believed in judicial restraint, robust national security, fiscal probity,
Speaker 10: et cetera, et cetera. And I think those are all
Speaker 10: wonky bread and but are policy issues that have been
Speaker 10: replaced by movement culture issues defined around gender, race. I
Speaker 10: think avoidance and engagement with the outside world beyond the
Speaker 10: borders of the United States, and and and paranoia about
Speaker 10: the other. And it's it's proven to be a very
Speaker 10: effective path to power, So I think it's going to
Speaker 10: be with us for some time.
Speaker 6: I mean, can you speak to what aspects of what
Speaker 6: Trump stands for speaks to certain pockets of the Republican community,
Speaker 6: whether that be the affluent and finances well, I.
Speaker 10: Mean I think there are you know, like both within
Speaker 10: both parties. There are multifaceted members of both, you know,
Speaker 10: both parties. I think for working class Republicans, Trump is
Speaker 10: a guardian and against demographic and economic changes that they
Speaker 10: feel threatens their well being and their standing in the
Speaker 10: world socially and economically. I think are affluent Republicans, there's
Speaker 10: always been this idea that taxes wind up being pickpocketing
Speaker 10: more than anything else, because they don't need the help
Speaker 10: from the government that other members of society. Do You
Speaker 10: can have a debate around the virtues of that argument,
Speaker 10: but I think that's where they stand, and to a
Speaker 10: certain extent, I think they're willing to digest anything Trump
Speaker 10: says or does as long as he does that for them.
Speaker 2: So there is some concern there of I think some
Speaker 2: note out there in society that if former President Trump
Speaker 2: were to win again in this November, how he'll perform
Speaker 2: he'll behave once in office, and there are some concerns
Speaker 2: and fears about that behap behavior. How do you think
Speaker 2: that is as a risk perhaps.
Speaker 10: Well, I mean, you know, I've never believed that Donald
Speaker 10: Trump is a strategist. I think it's a mistake to
Speaker 10: have the word strategy in the same sentence with.
Speaker 3: As his name.
Speaker 10: But I think that he is a profoundly emotional and
Speaker 10: this frankly sensationalistic man, and he prides himself in that
Speaker 10: kind of emotional connection with his voters. And he's clearly
Speaker 10: been on a revenge tour. You don't have to be
Speaker 10: particularly insightful to know what he's planning on doing. He
Speaker 10: wants to weaponize the Department of Justice and the military
Speaker 10: against perceived enemies American citizens and critics. That is against
Speaker 10: the Constitution and is against the standards we've all lived with.
Speaker 10: I think he is intent on doing that. I think
Speaker 10: he wants to withdraw the US from the world, whether
Speaker 10: that's in East Asia, in the Middle East, or in
Speaker 10: Eastern Europe, and I think that that poses threats for
Speaker 10: national security.
Speaker 6: Have you noticed any differences in terms of tolerance in
Speaker 6: this election as we think about the controversy that comes
Speaker 6: out of rhetoric from Trump. Have you noticed that people
Speaker 6: have become a bit more tolerant of some of the
Speaker 6: controversial things that he says, and they may have been before.
Speaker 10: You know, what I think is that this has always
Speaker 10: been with us. You know, this is a country that
Speaker 10: was founded in a revolution. We fought a civil war
Speaker 10: to preserve the unity of the country. We have had
Speaker 10: all sorts of historical grotesqueries against indigenous people's, slaves, women,
Speaker 10: et cetera, et cetera, and have tried to work those out.
Speaker 10: It's one of the strengths in the United States is
Speaker 10: that we've tried to work through those differences. Few countries
Speaker 10: globally been able to. But I think all of the
Speaker 10: animosities and ugly thoughts that attend to those moments have
Speaker 10: always been with us, and I think the difference in
Speaker 10: the Trump moment is it's been made transparent by social media,
Speaker 10: and he's made it okay for us to entertain the
Speaker 10: worst angels round nature. And I think that he's challenging
Speaker 10: us to really examine what the United States is about
Speaker 10: and where we want to take it.
Speaker 3: Tim, thanks so much for joining us.
Speaker 7: Thank you.
Speaker 3: I appreciate it.
Speaker 2: Tim O'Brien, he's a senior executive editor for Bloomberg Opinion.
Speaker 2: He's got a wonderful piece out on the Bloomberg terminal today.
Speaker 2: You can also get it at Bloomberg dot com. That's out
Speaker 2: there as well. As we approach I guess fifteen days to.
Speaker 3: The election, so for some of us that can't come
Speaker 3: too soon. I kind of like for shorter periods.
Speaker 8: You know.
Speaker 3: It's kind of a you know, European.
Speaker 6: Style Last race.
Speaker 3: Yeah, kind of pretty interesting.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: Say Alexa, playing Bloomberg eleven thirty.
Speaker 3: Nor of Linda.
Speaker 2: She's sitting in for Alex steel On Paul Sweeney. We're
Speaker 2: live here in a Bloomberg Interactive Broker studio streaming live on.
Speaker 3: YouTube as well. An EF.
Speaker 2: We love our folks at Bloomberg n EF because they
Speaker 2: are the team within Bloomberg that tracks and analyzes the
Speaker 2: energy transition.
Speaker 3: So they are go to folks here.
Speaker 2: Chris Ganomski Joints is here at lead nuclear analyst for
Speaker 2: bn EF. Hey, Chris, talk to us about nuclear here
Speaker 2: because I'm seeing your first note here blooming away. For
Speaker 2: the first time since two thousand and seven, there are
Speaker 2: no nuclear reactors under construction in the US. Wow, talk
Speaker 2: to us about where we are with that technology, because
Speaker 2: I feel like it's got to be part of the
Speaker 2: transition somehow.
Speaker 11: You know, think about a football team or a basketball
Speaker 11: team and you're sitting your best player on the bench,
Speaker 11: and there's a lot of issues with regards to nuclear energy,
Speaker 11: but it is a very, very robust technology that can
Speaker 11: provide the twenty four to seven type of base load
Speaker 11: power that many customers are looking for and interested in having.
Speaker 11: We are, for the first time since two thousand and
Speaker 11: seven without a reactor under construction, which is very, very discouraging,
Speaker 11: especially in the context of the fact that China has
Speaker 11: got something like twenty seven to twenty eight reactors under
Speaker 11: construction and Russia is building twenty two or twenty three
Speaker 11: reactors around the world in six different countries. So what
Speaker 11: has happened to the US nuclear industry. We've kind of
Speaker 11: dropped the ball on large reactor construction. And there's a
Speaker 11: lot of hope and a lot of cheerleading that some
Speaker 11: of these advanced reactors are being developed by a whole
Speaker 11: slew of companies will carry the day and provide an
Speaker 11: alternative nuclear solution.
Speaker 6: Talk us through just how long it takes to license
Speaker 6: and build a lot of these large reactors.
Speaker 11: So though the AP one thousand that was built in
Speaker 11: Vogel at a budget a cost of thirty four billion dollars,
Speaker 11: it took about fifteen years to license and build, and
Speaker 11: that's quite a long period of time. What utility executive
Speaker 11: is going to look around and says, listen, let me
Speaker 11: grab another one of these and spend that type of
Speaker 11: cash and wait that long, especially since the new technologies
Speaker 11: intermittent renewables are coming on and they provide an alternatives
Speaker 11: and there's a lot of change in the utility industry
Speaker 11: and the electric power industry, and hence it becomes a
Speaker 11: pretty risky proposition to place a bet billions of dollars
Speaker 11: for a technology that's not going to come and return
Speaker 11: investment for several different years. And there's several examples not
Speaker 11: only in the US, but also in Europe where this
Speaker 11: is going on.
Speaker 2: Some of these smaller modular reactors that we hear about,
Speaker 2: that kind of seems like a reasonable solution to me.
Speaker 2: I don't have to build this monster, you know, generator.
Speaker 2: I do something smaller for maybe you know, much lower cost,
Speaker 2: presumably cheaper all the kind of stuff.
Speaker 11: Well, the question is that we anticipate that those reactors
Speaker 11: may be more expensive on a per kilowide basis, but
Speaker 11: the risk that they present to a utility executive deciding
Speaker 11: to invest this technology is less. You can build them sequentiously,
Speaker 11: sequentially so that you get a cash flow after the
Speaker 11: first one is up and running and now you're building
Speaker 11: the second one, as opposed to waiting the many years
Speaker 11: to get that. We anticipate that licensing and building an
Speaker 11: SMR will take about five to six years. Two years
Speaker 11: in the licensing process and three or four years optimistically
Speaker 11: for construction. We don't anticipate any of these advanced reactors
Speaker 11: coming online in North America until twenty thirty.
Speaker 6: How does this compare internationally?
Speaker 11: Well, the US is a leader in the development of
Speaker 11: advanced reactors and SMRs. There's only two SMRs that operate
Speaker 11: around the world, one in China, one in Russia, and
Speaker 11: only two under construction, one in China and allegedly in Russia.
Speaker 11: They're supposed to break around soon. We have a very
Speaker 11: interesting development in Wyoming with terror Power developing or replacing
Speaker 11: a coal plant with an advanced reactor, which is very,
Speaker 11: very exciting. But they have not received a construction permit
Speaker 11: for that reactor yet and they're still doing preliminary work,
Speaker 11: and we anticipate that coming online around the twenty thirties.
Speaker 2: What's the feeling within the halls of Congress about this
Speaker 2: power source? Is there any support for nuclear power or
Speaker 2: is ideologically divided or where are we on this?
Speaker 11: It's certainly changing from being very very questionable and very
Speaker 11: very nervous about it to be more accepting of the
Speaker 11: technology because they realize the certain advantages of nuclear power.
Speaker 11: I live in a solar powered house in California. I
Speaker 11: get all of my electricity from solar energy. But when
Speaker 11: you think about empowering a large city or so, you
Speaker 11: need something more than just intermittent renewables. Renewables are very
Speaker 11: good solution for part of the problem, but they're not
Speaker 11: a solution for the entire problem. So to displace some
Speaker 11: of the fossil fuel that we see being used now,
Speaker 11: we need to have a clean, carbon free source of
Speaker 11: nuclear power. SMRs have greater flexibility, easier to bring online,
Speaker 11: and hopefully they'll have a role to play in the future.
Speaker 6: Well, let's talk about AI. We think about data centers
Speaker 6: and the demands there, and when we think about nuclear
Speaker 6: supplying these data centers. I know you mentioned that this
Speaker 6: should be a pretty much a post twenty thirty phenomenon,
Speaker 6: apart from the revival of Three Mile Island by twenty
Speaker 6: twenty eight. Can you talk a bit more about that, Yes.
Speaker 11: I'd be There are several studies that suggest that there's
Speaker 11: a tremendous demand growth for nuclear power between now and
Speaker 11: twenty thirty. There are some questions will that growth continue
Speaker 11: after twenty thirty or will plateau for a while. I
Speaker 11: wish I could say that there'll be a solution from
Speaker 11: the advanced nuclear community before twenty thirty. But if it is,
Speaker 11: it's just going to be first of a kind, one
Speaker 11: or two reactors, and the challenge is developing a supply
Speaker 11: chain that can deliver a fleet of these advanced reactors
Speaker 11: to really respond to the growing demand for electricity from
Speaker 11: the data centers.
Speaker 3: Hi, Chris, thank you so much for joining us. Chris Kadomski.
Speaker 2: He is the lead nuclear analyst for b NFBNF. They
Speaker 2: are the team within Bloomberg that tracks and analyzes the
Speaker 2: energy transition.
Speaker 3: They do great, great work.
Speaker 2: They have extraordinary data, a lot of proprietary data for
Speaker 2: the BNF folks as well.
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