1 00:00:02,520 --> 00:00:10,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business Week, 2 00:00:10,800 --> 00:00:14,640 Speaker 1: Daily reporting from the magazine that helps global leaders stay 3 00:00:14,680 --> 00:00:18,759 Speaker 1: ahead with insight on the people, companies, and trends shaping 4 00:00:18,760 --> 00:00:23,720 Speaker 1: today's complex economy. Plus global business finance and tech news 5 00:00:23,760 --> 00:00:27,720 Speaker 1: as it happens. The Bloomberg Business Week Daily Podcast with 6 00:00:27,880 --> 00:00:31,720 Speaker 1: Carol Masser and Tim Stenebeck on Bloomberg Radio. 7 00:00:32,240 --> 00:00:35,159 Speaker 2: All right, so let's get to certainly a story that 8 00:00:35,159 --> 00:00:37,320 Speaker 2: we've been talking about a lot, and it feels like 9 00:00:37,360 --> 00:00:39,599 Speaker 2: two companies got together and they said, let's do more 10 00:00:39,640 --> 00:00:42,600 Speaker 2: for longer. Bloomberg's Mark German found out that Broadcom and 11 00:00:42,680 --> 00:00:45,840 Speaker 2: Apple will extend their tie up in an expanded partnership 12 00:00:45,880 --> 00:00:48,400 Speaker 2: to twenty thirty one on products that will find their 13 00:00:48,440 --> 00:00:51,840 Speaker 2: way into quote multiple generations of Apple products. So let's 14 00:00:51,840 --> 00:00:53,920 Speaker 2: get to it. He is here in studio, made his 15 00:00:53,960 --> 00:00:56,480 Speaker 2: way to the East coast. He is Mark German, of course, 16 00:00:56,480 --> 00:00:58,960 Speaker 2: Bloomberg News Managing Editor for Global Consumer Tech. Good to 17 00:00:58,960 --> 00:00:59,440 Speaker 2: have you here. 18 00:00:59,680 --> 00:01:01,360 Speaker 3: Thanks hearing me on the easier past. 19 00:01:01,520 --> 00:01:04,280 Speaker 2: Yeah, it's great, and there's stuff going on. What is 20 00:01:04,319 --> 00:01:06,600 Speaker 2: going on? These guys have been working together for a while. 21 00:01:06,959 --> 00:01:12,480 Speaker 4: Yeah, well, speaking of phones, Uh, Broadcom. They make chips, 22 00:01:12,520 --> 00:01:14,960 Speaker 4: all sorts of chips, and Apple and Broadcom have worked 23 00:01:14,959 --> 00:01:19,720 Speaker 4: together for decades at this point on wireless components. So 24 00:01:19,959 --> 00:01:21,720 Speaker 4: for a long time, to get your phone to connect 25 00:01:21,720 --> 00:01:23,800 Speaker 4: to Wi Fi or to connect to Bluetooth, you were 26 00:01:23,880 --> 00:01:26,920 Speaker 4: using what's called the combined Wi Fi Plus Bluetooth chip 27 00:01:27,120 --> 00:01:29,880 Speaker 4: made by Broadcom, and Apple was the biggest buyer of 28 00:01:29,920 --> 00:01:33,360 Speaker 4: this chip. It was the biggest revenue source for Broadcom. 29 00:01:33,440 --> 00:01:35,640 Speaker 4: But a few years ago Apple decided it's going to 30 00:01:35,720 --> 00:01:37,319 Speaker 4: go on its own path. They're going to develop their 31 00:01:37,360 --> 00:01:40,200 Speaker 4: own Wi Fi Plus a Bluetooth module. It's called the 32 00:01:40,319 --> 00:01:43,360 Speaker 4: N one. It's now in the latest iPhones, leatest iPads, 33 00:01:43,400 --> 00:01:45,720 Speaker 4: latest Max. They're going to bring it to more devices, 34 00:01:45,760 --> 00:01:48,840 Speaker 4: and so Broadcom got designed out of the iPhone. But 35 00:01:49,040 --> 00:01:51,520 Speaker 4: starting in twenty twenty three, in order to keep broad 36 00:01:51,520 --> 00:01:55,520 Speaker 4: come around, they created a technology it's called an RF filter. 37 00:01:55,960 --> 00:01:58,559 Speaker 4: It's a component that works with the cellular modem. Because 38 00:01:58,560 --> 00:02:01,040 Speaker 4: as you also know, Apple has op Qualcom for the 39 00:02:01,080 --> 00:02:04,080 Speaker 4: most part, and it's now building their own modem, so 40 00:02:04,120 --> 00:02:07,200 Speaker 4: they're there for this small filter component. But now the 41 00:02:07,240 --> 00:02:11,160 Speaker 4: partnership is expanding again to something really timely and really important. 42 00:02:11,440 --> 00:02:14,239 Speaker 4: That's a six chips. Now, ACIK chips is a type 43 00:02:14,240 --> 00:02:17,040 Speaker 4: of circuit, a type of silicon that's really geared towards 44 00:02:17,160 --> 00:02:20,600 Speaker 4: a single purpose. Now, what is a big piece of 45 00:02:20,639 --> 00:02:23,040 Speaker 4: machinery that you need that has a single purpose? 46 00:02:23,320 --> 00:02:25,280 Speaker 3: An AI server. It's all about AI. 47 00:02:25,760 --> 00:02:27,519 Speaker 4: And so they didn't come out and say this in 48 00:02:27,560 --> 00:02:30,359 Speaker 4: their press release, they said this is for multiple new 49 00:02:30,400 --> 00:02:34,160 Speaker 4: generations of Apple products. If you consider an Apple Intelligence 50 00:02:34,160 --> 00:02:37,240 Speaker 4: and Apple AI server to be a product, then fine. 51 00:02:37,320 --> 00:02:38,920 Speaker 4: But what I'm telling you is that's what it is. 52 00:02:39,000 --> 00:02:41,359 Speaker 2: Wait, so are they now all of a sudden Apple 53 00:02:41,600 --> 00:02:43,240 Speaker 2: going to be spending a lot of money and kind 54 00:02:43,240 --> 00:02:45,360 Speaker 2: of building out their AX But like, help me understand 55 00:02:45,400 --> 00:02:46,040 Speaker 2: what this means. 56 00:02:46,160 --> 00:02:50,040 Speaker 4: So for Apple Intelligence, there's really two ways that this 57 00:02:50,160 --> 00:02:55,840 Speaker 4: AI processes. There's on device AI models and there's cloud models. 58 00:02:56,200 --> 00:02:58,680 Speaker 4: Now the cloud model has now been split up starting 59 00:02:58,760 --> 00:03:00,720 Speaker 4: later this year's part of the new series. You have 60 00:03:00,800 --> 00:03:04,119 Speaker 4: the Apple Cloud, which they call Private Cloud Compute. These 61 00:03:04,160 --> 00:03:07,400 Speaker 4: are Mac chips, the M two Ultra chips that they 62 00:03:07,440 --> 00:03:11,040 Speaker 4: really released in twenty twenty three. Those chips are running 63 00:03:11,120 --> 00:03:14,560 Speaker 4: in servers to power the AI features in the cloud, 64 00:03:14,560 --> 00:03:17,960 Speaker 4: the more advanced AI features. As an aside they're splitting that. 65 00:03:18,000 --> 00:03:20,320 Speaker 4: So you're gonna have the Apple servers, then you've got Google, 66 00:03:20,400 --> 00:03:23,480 Speaker 4: you've got Nvidia, et cetera, et cetera. But just think 67 00:03:23,520 --> 00:03:25,280 Speaker 4: of it this way. There's on device and there's cloud 68 00:03:25,919 --> 00:03:28,760 Speaker 4: for cloud. The chips are starting to get a little dated. 69 00:03:28,840 --> 00:03:31,880 Speaker 4: The M two it's from three years ago. Apple's now 70 00:03:31,919 --> 00:03:35,560 Speaker 4: working on a new server chip. It's called Baltra, right. 71 00:03:35,600 --> 00:03:38,320 Speaker 4: They name all these chips internally after islands, maybe the 72 00:03:38,360 --> 00:03:42,400 Speaker 4: island Tim is at and they are working on this 73 00:03:42,440 --> 00:03:44,760 Speaker 4: new chip. They're going to deploy it twenty twenty seven, 74 00:03:44,800 --> 00:03:48,760 Speaker 4: twenty twenty eight, and the ASIK technology in there is 75 00:03:49,080 --> 00:03:53,240 Speaker 4: has been developed by Broadcom, and they have multiple generations 76 00:03:53,240 --> 00:03:56,240 Speaker 4: of these new AI servers planned. And what's unique about 77 00:03:56,280 --> 00:03:58,720 Speaker 4: these AI servers is that the current version is the 78 00:03:58,760 --> 00:04:00,960 Speaker 4: same as that top end Mac that you have in 79 00:04:01,000 --> 00:04:03,600 Speaker 4: the Mac studio. That's ther most powerful desktop. The one 80 00:04:03,640 --> 00:04:05,720 Speaker 4: they're going to be deploying at the end of twenty 81 00:04:05,760 --> 00:04:09,600 Speaker 4: twenty seven has four times the power of the M 82 00:04:09,680 --> 00:04:13,280 Speaker 4: five Ultra, which is coming to the Mac desktop later 83 00:04:13,320 --> 00:04:15,520 Speaker 4: this year, and Broadcom is going to help power that. 84 00:04:15,720 --> 00:04:19,000 Speaker 4: And Apple's got a long roadmap ahead of subsequent servers. 85 00:04:19,160 --> 00:04:21,919 Speaker 4: So they are still doing a law on device for AI. 86 00:04:22,680 --> 00:04:25,320 Speaker 4: But Apple knows that the real goods are what's powered 87 00:04:25,320 --> 00:04:27,159 Speaker 4: by the cloud, and so that's why you need that 88 00:04:27,200 --> 00:04:27,920 Speaker 4: new technology. 89 00:04:28,279 --> 00:04:32,839 Speaker 5: Okay, so this was Apple needed Broadcom's help or Broadcom 90 00:04:32,920 --> 00:04:35,120 Speaker 5: needed a new partnership with Apple. 91 00:04:35,400 --> 00:04:40,200 Speaker 4: It's I mean, Apple needed Broadcom right to get this 92 00:04:40,520 --> 00:04:44,640 Speaker 4: up and running. But Broadcoms, certainly for its bottom line, 93 00:04:45,279 --> 00:04:49,480 Speaker 4: probably needed a new relationship with Apple because they Apple 94 00:04:49,560 --> 00:04:53,200 Speaker 4: was their biggest growth driver and revenue source, and they 95 00:04:53,279 --> 00:04:56,000 Speaker 4: had been designed out for Wi Fi and Bluetooth. And 96 00:04:56,080 --> 00:04:59,440 Speaker 4: so kudos to Broadcom and good for their shareholders and 97 00:04:59,480 --> 00:05:01,679 Speaker 4: investors what have you that they were able to figure 98 00:05:01,680 --> 00:05:04,720 Speaker 4: out a way to get back Apple's business for something 99 00:05:04,720 --> 00:05:06,040 Speaker 4: that's really pertinent right now. 100 00:05:06,000 --> 00:05:07,520 Speaker 2: Mark, what does it mean in terms of the Apple 101 00:05:07,560 --> 00:05:08,880 Speaker 2: AI story too. 102 00:05:09,279 --> 00:05:11,440 Speaker 4: Well, what you're seeing right now is a shift more 103 00:05:11,480 --> 00:05:14,520 Speaker 4: to cloud based processing versus the on device Processing on 104 00:05:14,600 --> 00:05:16,719 Speaker 4: device is great for processing, but it's not so great 105 00:05:16,720 --> 00:05:19,720 Speaker 4: for functionality. Cloud is much more performant. 106 00:05:20,200 --> 00:05:22,440 Speaker 2: Okay. Does that mean also, then Apple's going to be 107 00:05:22,480 --> 00:05:23,840 Speaker 2: spending more in terms of. 108 00:05:24,040 --> 00:05:26,719 Speaker 4: I believe that Apple will be spending more on AI. 109 00:05:27,240 --> 00:05:30,400 Speaker 4: I believe Apple will be spending considerably more on AI, 110 00:05:30,520 --> 00:05:33,160 Speaker 4: but nowhere near with these hyperscalers and the Metas and 111 00:05:33,200 --> 00:05:35,840 Speaker 4: Googles of the world are spending because they do have 112 00:05:35,880 --> 00:05:38,839 Speaker 4: that split, and a lot of it is going to 113 00:05:38,880 --> 00:05:42,479 Speaker 4: be relying on outside vendors and outside parties. So they 114 00:05:42,560 --> 00:05:44,800 Speaker 4: do a lot of in house serve infrastructure, and they 115 00:05:44,839 --> 00:05:48,440 Speaker 4: do a lot of licensing or paying other data farms 116 00:05:48,440 --> 00:05:48,720 Speaker 4: for this. 117 00:05:48,880 --> 00:05:50,719 Speaker 2: Is it safe to say that when Apple says I 118 00:05:50,839 --> 00:05:54,520 Speaker 2: need outside data farms or whatever, they're going to get 119 00:05:54,560 --> 00:05:58,640 Speaker 2: it well or competing with everybody. 120 00:05:58,240 --> 00:06:02,120 Speaker 4: They're competing, yeah, right. Traditionally Apple has had extreme amounts 121 00:06:02,120 --> 00:06:04,640 Speaker 4: of pricing power. They've had extreme amounts of power over 122 00:06:04,680 --> 00:06:07,000 Speaker 4: the supply chain and different partners. And what you've seen 123 00:06:07,080 --> 00:06:09,000 Speaker 4: from the memory shortage is that Apple just does not 124 00:06:09,040 --> 00:06:11,840 Speaker 4: have that clout or credibility that they once had. They're 125 00:06:11,880 --> 00:06:14,839 Speaker 4: just one of the guys now they're not the at 126 00:06:14,880 --> 00:06:15,520 Speaker 4: the front of the line. 127 00:06:15,560 --> 00:06:16,560 Speaker 2: It's pretty remarkable. 128 00:06:16,680 --> 00:06:17,760 Speaker 3: Let's talk about product. 129 00:06:18,080 --> 00:06:21,120 Speaker 5: Before the show started, I had mentioned that I saw 130 00:06:22,040 --> 00:06:25,000 Speaker 5: there was an iPhone that was added to the America 131 00:06:25,000 --> 00:06:28,880 Speaker 5: two fifty time capsule, which is just so pertinent and 132 00:06:28,920 --> 00:06:32,240 Speaker 5: telling about kind of you know, the influence that Apple has. 133 00:06:32,320 --> 00:06:33,880 Speaker 3: But if this. 134 00:06:33,839 --> 00:06:37,200 Speaker 5: Were maybe three years from now, what products would they 135 00:06:37,200 --> 00:06:38,240 Speaker 5: be putting in? 136 00:06:38,320 --> 00:06:40,000 Speaker 3: That's my segue here too. 137 00:06:40,160 --> 00:06:42,359 Speaker 4: First thing I will say, planning what I will tell you. 138 00:06:42,400 --> 00:06:44,359 Speaker 4: But the first thing I will say, you know that 139 00:06:44,400 --> 00:06:47,880 Speaker 4: phone's going to explode, right like having a lithium ion 140 00:06:47,960 --> 00:06:52,920 Speaker 4: battery in a very warm and closed space for the 141 00:06:53,000 --> 00:06:54,280 Speaker 4: next two hundred and fifty years. 142 00:06:54,400 --> 00:06:55,920 Speaker 3: Hey, you can't even have it in a checked bag 143 00:06:55,920 --> 00:06:56,600 Speaker 3: and an airplane. 144 00:06:57,440 --> 00:07:00,479 Speaker 4: Fair fair, But that phone's going to explode, I would 145 00:07:00,520 --> 00:07:02,800 Speaker 4: guess within two decades, three decades. 146 00:07:04,120 --> 00:07:06,320 Speaker 2: So somebody to take this through. Maybe it doesn't have 147 00:07:06,360 --> 00:07:06,920 Speaker 2: a battery in it. 148 00:07:07,000 --> 00:07:08,000 Speaker 3: They protect the I don't know. 149 00:07:08,000 --> 00:07:10,600 Speaker 4: Maybe they took no it does because they said, I 150 00:07:10,680 --> 00:07:12,840 Speaker 4: read the document for it that Apple put together. They said, 151 00:07:12,960 --> 00:07:15,120 Speaker 4: we've preloaded the notes app with a bunch of information 152 00:07:15,120 --> 00:07:18,280 Speaker 4: about Apple's history and whatnot. So let's say it doesn't explode, 153 00:07:18,280 --> 00:07:20,960 Speaker 4: which it will. The technology is going to be so 154 00:07:21,080 --> 00:07:24,160 Speaker 4: different in two hund and fifty years that I don't know. 155 00:07:24,160 --> 00:07:26,280 Speaker 4: Are there going to be outlets in two fifty years? 156 00:07:26,360 --> 00:07:28,800 Speaker 4: Is it going to be the same. USBC is not 157 00:07:28,840 --> 00:07:30,720 Speaker 4: going to be a thing one way or another. This 158 00:07:30,720 --> 00:07:33,240 Speaker 4: thing is not turning on and they'll be lucky if 159 00:07:33,240 --> 00:07:36,160 Speaker 4: it doesn't destroy everything else in the box that with it. 160 00:07:36,160 --> 00:07:36,680 Speaker 6: It's the end. 161 00:07:36,800 --> 00:07:38,480 Speaker 4: Anyways, if they were going to be packing this thing 162 00:07:38,520 --> 00:07:43,080 Speaker 4: in three years, perhaps we would see smart glasses in there, 163 00:07:43,800 --> 00:07:46,880 Speaker 4: which is Apple's biggest priority right now. It's a program 164 00:07:46,960 --> 00:07:51,679 Speaker 4: code named N fifty. These are in house, in house design, 165 00:07:51,800 --> 00:07:57,560 Speaker 4: in house branded, supposedly fashionable smart glasses with oval shaped 166 00:07:57,760 --> 00:08:02,480 Speaker 4: vertically oval shaped cameras, a computer vision camera, a standard camera. 167 00:08:02,920 --> 00:08:05,640 Speaker 4: They're looking to compete with Meta for something they believe 168 00:08:05,680 --> 00:08:11,520 Speaker 4: internally is higher quality, better made, better battery, better components. 169 00:08:11,880 --> 00:08:13,640 Speaker 4: They think it looks nicer. I don't know how they're 170 00:08:13,640 --> 00:08:16,480 Speaker 4: going to beat the ability to partner with brands like 171 00:08:16,520 --> 00:08:19,640 Speaker 4: Prada and ray Ban, all Theesler Lexaka brands that Meta 172 00:08:19,680 --> 00:08:21,960 Speaker 4: has in its back pocket. But the Apple brand is 173 00:08:22,000 --> 00:08:25,000 Speaker 4: still very strong, and the goal there isn't just to 174 00:08:25,040 --> 00:08:28,560 Speaker 4: release smart glasses. It's to do to the glasses market 175 00:08:28,720 --> 00:08:31,360 Speaker 4: with the Apple Watch did to the watch market ten 176 00:08:31,440 --> 00:08:34,800 Speaker 4: years ago. The watch market basically had I would say 177 00:08:35,040 --> 00:08:38,720 Speaker 4: three tiers, right. You had the bottom tier watches where 178 00:08:38,760 --> 00:08:41,600 Speaker 4: you can buy watches between I don't know, twenty bucks 179 00:08:41,640 --> 00:08:45,040 Speaker 4: and one hundred bucks, mid tier watches where you can 180 00:08:45,120 --> 00:08:48,160 Speaker 4: buy watches between two hundred and eight hundred dollars. They 181 00:08:48,160 --> 00:08:50,400 Speaker 4: need the super high tier, the roll EXAs that protects 182 00:08:50,400 --> 00:08:52,760 Speaker 4: the aps of the world. Tens of thousands, hundreds of 183 00:08:52,800 --> 00:08:56,160 Speaker 4: thousand of dollars north of that. That market actually got hotter. 184 00:08:56,400 --> 00:08:59,560 Speaker 4: As we know through COVID. The twenty dollars to eighty 185 00:08:59,600 --> 00:09:01,960 Speaker 4: dollar watch market really wasn't impacted like the low end 186 00:09:02,000 --> 00:09:06,160 Speaker 4: time exes of the world, but that mid tier market, right, 187 00:09:06,640 --> 00:09:09,840 Speaker 4: those all got absolutely crushed. People don't go out and 188 00:09:09,880 --> 00:09:13,240 Speaker 4: buy watches under one thousand dollars anymore. That are not 189 00:09:13,400 --> 00:09:16,720 Speaker 4: smart watches. And so what Apple wants to do is 190 00:09:16,840 --> 00:09:20,240 Speaker 4: take do the same thing to glasses. 191 00:09:21,440 --> 00:09:23,760 Speaker 2: We shall see. I'll tell you I ended up like 192 00:09:23,800 --> 00:09:28,440 Speaker 2: everybody bought an Apple. Not everybody, but well I would 193 00:09:28,480 --> 00:09:31,920 Speaker 2: expect well. He is Mark German. He's a Bloomberg News 194 00:09:31,920 --> 00:09:34,200 Speaker 2: Magic editor for Global Consumer Tech. Check him out on 195 00:09:34,200 --> 00:09:38,160 Speaker 2: the Bloomberg Stay with Us More from Bloomberg Business Week 196 00:09:38,240 --> 00:09:39,920 Speaker 2: Daily coming up after this. 197 00:09:44,000 --> 00:09:47,880 Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch 198 00:09:47,960 --> 00:09:50,600 Speaker 1: us live weekday afternoons from two to five eas during 199 00:09:50,840 --> 00:09:54,440 Speaker 1: listen on Applecarplay and Android Auto with the Bloomberg Business 200 00:09:54,480 --> 00:09:57,480 Speaker 1: app or watch us Live on YouTube. 201 00:09:57,960 --> 00:10:00,720 Speaker 2: Well, it feels like folks are home in again on 202 00:10:00,760 --> 00:10:03,719 Speaker 2: the hyperscalers. Feels that way based on some of the 203 00:10:03,760 --> 00:10:06,760 Speaker 2: Wall Street chatter. Just this morning, two voices on Bloomberg's 204 00:10:06,760 --> 00:10:09,040 Speaker 2: surveillance weighing in on why it might be time for 205 00:10:09,080 --> 00:10:12,240 Speaker 2: the hyperscalers to shine again. Here's Max Kettner, he's chief 206 00:10:12,320 --> 00:10:16,440 Speaker 2: multi asset strategist over at HSBC Holdings, on Bloomberg TV's 207 00:10:16,440 --> 00:10:20,160 Speaker 2: surveillance again this morning. Mike Wilson, who leads Morgan Stanley's 208 00:10:20,160 --> 00:10:22,760 Speaker 2: team of strategist He also joined the surveillance team again 209 00:10:22,920 --> 00:10:23,480 Speaker 2: this morning. 210 00:10:24,200 --> 00:10:26,920 Speaker 7: Give him that drawdown on the hyperscale US. The expectations now, 211 00:10:26,920 --> 00:10:28,959 Speaker 7: I'm much much lower, was starting from a much much 212 00:10:29,000 --> 00:10:31,920 Speaker 7: lower base. I do worry that people once again are 213 00:10:31,920 --> 00:10:34,160 Speaker 7: too neutral, a little bit too much on the sidelines, 214 00:10:34,480 --> 00:10:37,880 Speaker 7: too worried about things going wrong. And actually we are 215 00:10:37,880 --> 00:10:40,280 Speaker 7: getting a bit of a summer meltop into into July 216 00:10:40,320 --> 00:10:40,800 Speaker 7: and August. 217 00:10:40,840 --> 00:10:43,319 Speaker 8: I expect the hyperscalers now to stabilize. That's what's going 218 00:10:43,360 --> 00:10:44,920 Speaker 8: on in the last couple of weeks, and the semic 219 00:10:44,960 --> 00:10:47,599 Speaker 8: counterstacks are going to are going to correct. That's a 220 00:10:47,640 --> 00:10:50,439 Speaker 8: good development. That doesn't mean the CAPEC cycle is over, 221 00:10:51,000 --> 00:10:53,360 Speaker 8: but that ebbing and flowing between the two is a 222 00:10:53,480 --> 00:10:55,520 Speaker 8: natural kind of governing factor. 223 00:10:56,200 --> 00:10:58,240 Speaker 2: Just some of the things that make this market so interesting. 224 00:10:58,240 --> 00:11:02,040 Speaker 2: That Max Kettner over at HSBC, Mike Wilson of Morgan 225 00:11:02,120 --> 00:11:06,560 Speaker 2: Stanley again earlier on Bloomberg TV Surveillance, everyone watching the 226 00:11:06,600 --> 00:11:08,360 Speaker 2: run up and chips we just talked about with our 227 00:11:08,480 --> 00:11:11,800 Speaker 2: Ed Ludlow Skhiinez getting ready for its US listing on Friday. 228 00:11:12,559 --> 00:11:14,240 Speaker 2: We want to get into though, what we feel like 229 00:11:14,360 --> 00:11:17,040 Speaker 2: is the evolving AI story. Ed is here with us 230 00:11:17,040 --> 00:11:18,880 Speaker 2: in studio, and then we want to bring in long 231 00:11:18,920 --> 00:11:22,040 Speaker 2: time investor Rudina Cesari. She's founder and managing partner at 232 00:11:22,080 --> 00:11:24,760 Speaker 2: Last Week Ventures. She invests in companies where AI is 233 00:11:24,760 --> 00:11:28,000 Speaker 2: the core architectural foundation, and so she's been thinking about 234 00:11:28,000 --> 00:11:32,000 Speaker 2: the next generation of winners. She joins us from Boston. Hey, 235 00:11:32,440 --> 00:11:35,200 Speaker 2: great to have you here, Redina, with Emily and of 236 00:11:35,200 --> 00:11:39,480 Speaker 2: course with Ed. I'm curious about you know how this 237 00:11:39,600 --> 00:11:43,080 Speaker 2: conversation around AI continues to evolve. We are now talking 238 00:11:43,120 --> 00:11:45,960 Speaker 2: so much about the memory names. How do you see it? 239 00:11:47,520 --> 00:11:50,800 Speaker 9: Oh, hello, Carolyn, good to see everyone. I think fundamentally, 240 00:11:51,120 --> 00:11:55,200 Speaker 9: we are seeing the overall demand for AI related infrastructure 241 00:11:55,160 --> 00:11:57,400 Speaker 9: and all the way up to the application layer continue 242 00:11:57,440 --> 00:12:00,400 Speaker 9: to be strong. And in my view, the ifs that 243 00:12:00,440 --> 00:12:04,120 Speaker 9: we are seeing in the market reflect the scarcity or 244 00:12:04,160 --> 00:12:08,640 Speaker 9: overestimation of scarcity along the value chain. So on the 245 00:12:08,679 --> 00:12:12,000 Speaker 9: point around Nvidia and others, are we seeing the correction 246 00:12:12,160 --> 00:12:16,319 Speaker 9: because we expected more scarcity, While on the hyperscalers, are 247 00:12:16,320 --> 00:12:19,640 Speaker 9: the evaluations coming back because it's becoming a lot easier 248 00:12:19,640 --> 00:12:24,000 Speaker 9: to track the sources of revenue that displays will have. 249 00:12:24,160 --> 00:12:26,600 Speaker 9: And oh, by the way, we think of the hyperscalers 250 00:12:26,640 --> 00:12:30,800 Speaker 9: as that sort of fundamental layer, the software infrastructure layer, 251 00:12:30,920 --> 00:12:33,480 Speaker 9: but each of them are much more vertically integrated with 252 00:12:33,520 --> 00:12:37,199 Speaker 9: their own chips. So in many ways, we're seeing the 253 00:12:37,240 --> 00:12:40,760 Speaker 9: market move toward vertically integrated players from the cheap layer 254 00:12:40,800 --> 00:12:44,800 Speaker 9: all the way to the foundation models rather than just 255 00:12:45,080 --> 00:12:48,040 Speaker 9: the CAPEX spend. I don't know that we're out of 256 00:12:48,080 --> 00:12:53,120 Speaker 9: the capex demand. I think that's a multi multicycle, multi 257 00:12:53,160 --> 00:12:57,000 Speaker 9: year level of demand. I do think that perhaps we're 258 00:12:57,040 --> 00:13:00,560 Speaker 9: correcting a bit for the overestimation of scars. 259 00:13:01,160 --> 00:13:03,400 Speaker 5: You mentioned revenue, and I'm curious Redina, if you can 260 00:13:03,440 --> 00:13:06,160 Speaker 5: talk a little bit more about just how critical it 261 00:13:06,240 --> 00:13:10,040 Speaker 5: is for investors like you to be able to pinpoint 262 00:13:10,200 --> 00:13:14,360 Speaker 5: whether the spending on a AI is actually translating into 263 00:13:15,120 --> 00:13:17,920 Speaker 5: tangible revenue, whether we've seen that yet. 264 00:13:19,120 --> 00:13:21,680 Speaker 9: Thank you, Emily. I think it's interesting because I'm a 265 00:13:21,840 --> 00:13:24,560 Speaker 9: very early stage investor, so I often say I back 266 00:13:24,600 --> 00:13:27,560 Speaker 9: to brilliant researchers out of the lab and we build 267 00:13:27,559 --> 00:13:32,000 Speaker 9: out a monetization plan. If anything, I would bifurcate between 268 00:13:32,440 --> 00:13:37,120 Speaker 9: the next gen application layer AI companies where not only 269 00:13:37,160 --> 00:13:40,600 Speaker 9: are we seeing revenue, but the scale from zero to 270 00:13:41,280 --> 00:13:45,199 Speaker 9: multimillion hundreds of millions millions is a matter of months 271 00:13:45,720 --> 00:13:48,480 Speaker 9: rather than a matter of years. So, if anything, we 272 00:13:48,559 --> 00:13:53,600 Speaker 9: are seeing acceleration now. Beneath that two fundamental questions, why 273 00:13:54,080 --> 00:13:57,559 Speaker 9: is it, Because especially on the enterprise side and even consumers, 274 00:13:57,760 --> 00:14:00,680 Speaker 9: we are all experimenting and trying a lot of thinks. Thus, 275 00:14:00,800 --> 00:14:03,760 Speaker 9: is the revenue sustainable or is it a leaky bucket? 276 00:14:04,240 --> 00:14:07,680 Speaker 9: Second question, though, is really pertaining to the adoption of 277 00:14:07,720 --> 00:14:12,880 Speaker 9: AI more systematically. So I've been moved beyond the I'm 278 00:14:12,880 --> 00:14:16,360 Speaker 9: going to experiment with this in house build tool or 279 00:14:16,400 --> 00:14:21,160 Speaker 9: with the chat function of Claude or ch GPT to 280 00:14:21,320 --> 00:14:25,240 Speaker 9: something more serious. In that case, we're seeing AI demand 281 00:14:25,240 --> 00:14:29,440 Speaker 9: for AI products to become much more of a important 282 00:14:29,440 --> 00:14:32,480 Speaker 9: component not just the tech stack of enterprises, but do 283 00:14:32,480 --> 00:14:34,880 Speaker 9: their actually business models and go to markets. 284 00:14:35,000 --> 00:14:37,600 Speaker 10: You know, Ridina, what's interesting about what you and the 285 00:14:37,640 --> 00:14:40,480 Speaker 10: team a Glass Wing are looking at. It's so timely 286 00:14:40,520 --> 00:14:43,440 Speaker 10: for today with this Morgan Stanley Hyperscala story. So you 287 00:14:43,440 --> 00:14:46,800 Speaker 10: are looking at AI native SaaS various layers of the 288 00:14:46,840 --> 00:14:49,800 Speaker 10: software stack. Every time I speak to one of the 289 00:14:49,800 --> 00:14:53,640 Speaker 10: CEOs at the hyperscalers, I always ask them, you seem 290 00:14:53,680 --> 00:14:56,560 Speaker 10: to be pitching and working on the same kinds of 291 00:14:56,600 --> 00:15:01,360 Speaker 10: technologies that your customers already do you know, so how 292 00:15:01,360 --> 00:15:04,400 Speaker 10: do you respond to that? The idea that the hyperscale is, 293 00:15:04,560 --> 00:15:07,040 Speaker 10: you know, the cloud computing companies that's called them, what 294 00:15:07,080 --> 00:15:09,160 Speaker 10: they actually are are going to want to offer the 295 00:15:09,200 --> 00:15:12,600 Speaker 10: same tools that you might back at that early stage. 296 00:15:13,800 --> 00:15:16,600 Speaker 9: So the under thank you, ed, The underlying question is 297 00:15:16,640 --> 00:15:20,680 Speaker 9: where is the mode for the startups relative to the incumbents. 298 00:15:20,720 --> 00:15:24,200 Speaker 9: And I think the mode depends. Some of it has 299 00:15:24,240 --> 00:15:27,960 Speaker 9: to do with, you know, vertical plays. You know, I 300 00:15:28,360 --> 00:15:31,680 Speaker 9: recently back a company called Modern Industrials. They are developing 301 00:15:31,680 --> 00:15:35,760 Speaker 9: an end end demand planning for distributors of lumber and 302 00:15:35,800 --> 00:15:40,360 Speaker 9: building materials, very very specific, tens of billions type of 303 00:15:40,360 --> 00:15:43,360 Speaker 9: opportunity a year in terms of the revenue that can generate. 304 00:15:43,440 --> 00:15:47,120 Speaker 9: But if Microsoft or Anthropic or open AI are going 305 00:15:47,200 --> 00:15:50,880 Speaker 9: to that level of specificity, we have something to worry about. 306 00:15:51,520 --> 00:15:54,120 Speaker 9: By the same token, who will be their customers? So 307 00:15:54,440 --> 00:15:57,160 Speaker 9: they have to draw a line to your various question 308 00:15:57,680 --> 00:16:01,240 Speaker 9: around where am I going to stop competing with my customers? 309 00:16:01,720 --> 00:16:04,240 Speaker 9: And oh, by the way, is their value in being 310 00:16:04,360 --> 00:16:07,680 Speaker 9: highly highly specialized? My view is that there isn't. A 311 00:16:07,760 --> 00:16:11,200 Speaker 9: value doesn't necessarily lie in the models. It actually lies 312 00:16:11,240 --> 00:16:15,360 Speaker 9: in the highly specific, albeit not as well data sets, 313 00:16:15,600 --> 00:16:18,800 Speaker 9: which then you know, deliver much you know, superior outputs. 314 00:16:18,840 --> 00:16:21,480 Speaker 2: I would say if I'm I'm a pharmaceutical maker or 315 00:16:21,520 --> 00:16:23,520 Speaker 2: like in the medical field, right, and like I would 316 00:16:23,520 --> 00:16:25,240 Speaker 2: say that I want a data set that I'm going 317 00:16:25,280 --> 00:16:28,400 Speaker 2: to play with and that's very related to my field. 318 00:16:28,520 --> 00:16:29,960 Speaker 2: I don't need to know about the rest of the 319 00:16:29,960 --> 00:16:31,880 Speaker 2: stuff that some of the large language models are doing. 320 00:16:32,000 --> 00:16:35,880 Speaker 10: Yeah, or they or Redina they you know, something you 321 00:16:35,880 --> 00:16:38,240 Speaker 10: said in the moment goes really interesting. You are backing 322 00:16:38,480 --> 00:16:41,440 Speaker 10: not companies necessarily will wait work out the business plan 323 00:16:41,520 --> 00:16:45,320 Speaker 10: later you're backing the researchers out of the lab and 324 00:16:45,400 --> 00:16:48,120 Speaker 10: like that. That applies at the late stage as well, right, 325 00:16:48,120 --> 00:16:52,800 Speaker 10: the founder led thesis. But those people also have specialisms, Right, 326 00:16:52,880 --> 00:16:55,880 Speaker 10: does it matter to you if they have a core 327 00:16:55,920 --> 00:17:01,479 Speaker 10: team of not just computer scientists, but in biobiology, biochemistry, 328 00:17:01,480 --> 00:17:01,960 Speaker 10: et cetera. 329 00:17:03,320 --> 00:17:06,520 Speaker 9: So let me part what I intended with what I shared. 330 00:17:06,920 --> 00:17:09,680 Speaker 9: In the case of the modern industrial I'm very much 331 00:17:09,720 --> 00:17:13,520 Speaker 9: going in with a very clear understanding of how it's monetized, 332 00:17:13,560 --> 00:17:16,399 Speaker 9: what's the ROI for the customers. So in many ways 333 00:17:16,400 --> 00:17:20,240 Speaker 9: that's extremely tangible and very clear around the term pricing, 334 00:17:20,280 --> 00:17:24,800 Speaker 9: competitive dynamics. My earlier comment related more to the what 335 00:17:24,880 --> 00:17:28,919 Speaker 9: I would call frontier tech. So we've already achieved what 336 00:17:28,960 --> 00:17:32,119 Speaker 9: we have achieved with the large language models. What comes next? 337 00:17:32,400 --> 00:17:35,000 Speaker 9: You know, we back a company called Recursive AI. It's 338 00:17:35,040 --> 00:17:39,240 Speaker 9: about the models correcting themselves to get around the next 339 00:17:39,240 --> 00:17:42,000 Speaker 9: set of issues like hallucination and other problems that the 340 00:17:42,080 --> 00:17:45,320 Speaker 9: large language models have. There is a whole paradigm of 341 00:17:45,440 --> 00:17:50,280 Speaker 9: neo labs and new researchers that are bypassing in many 342 00:17:50,320 --> 00:17:55,520 Speaker 9: ways the capabilities of the current incumbents. Think about liquid AI, 343 00:17:56,280 --> 00:17:59,840 Speaker 9: multi multi, multi billion dollar company. They're actually doing all 344 00:17:59,840 --> 00:18:03,400 Speaker 9: the assessing at the edge is actually a whole different 345 00:18:03,640 --> 00:18:07,000 Speaker 9: sort of way to bypass the need that we currently 346 00:18:07,040 --> 00:18:10,400 Speaker 9: have on compute. So in those cases, you solve one 347 00:18:10,440 --> 00:18:13,320 Speaker 9: of the compute problems or the energy problem, or the 348 00:18:14,200 --> 00:18:18,080 Speaker 9: sort of the performance of the models, and then you 349 00:18:18,160 --> 00:18:20,600 Speaker 9: worry about monetization. So it's not pining the sky. All 350 00:18:20,880 --> 00:18:23,800 Speaker 9: the smart people and someday they will deliver something. It 351 00:18:23,840 --> 00:18:26,720 Speaker 9: has a purpose, but you might not know the pricing 352 00:18:26,840 --> 00:18:28,880 Speaker 9: kind of like how many of us would have guessed 353 00:18:28,880 --> 00:18:31,919 Speaker 9: that pure consumption pricing was going to be the model? 354 00:18:32,000 --> 00:18:32,919 Speaker 9: Does that make sense? 355 00:18:33,119 --> 00:18:35,720 Speaker 10: What one contemporary difference though, is that that group of 356 00:18:35,720 --> 00:18:38,960 Speaker 10: three or four people can raise a billion dollars out 357 00:18:38,960 --> 00:18:41,520 Speaker 10: of the gate or several hundred million dollar seed round 358 00:18:41,880 --> 00:18:45,440 Speaker 10: at crazy valuation based on the value of their own 359 00:18:45,480 --> 00:18:50,240 Speaker 10: intellectual capital. How does glass Wing even participate in early 360 00:18:50,280 --> 00:18:51,320 Speaker 10: stage valuations? 361 00:18:51,400 --> 00:18:51,720 Speaker 1: Like that? 362 00:18:52,600 --> 00:18:56,679 Speaker 9: Very good questions. So our core product is actually, you know, 363 00:18:56,800 --> 00:19:00,399 Speaker 9: the more typical precedes in stage rounds. We have a 364 00:19:00,440 --> 00:19:03,640 Speaker 9: pool of capital and a product called access checks where 365 00:19:03,640 --> 00:19:05,880 Speaker 9: we write you know, small one to two million dollar 366 00:19:06,000 --> 00:19:09,359 Speaker 9: access checks in these gigantic rounds to have a seat 367 00:19:09,359 --> 00:19:11,520 Speaker 9: at the table, to have a seat to the ecosystem, 368 00:19:11,560 --> 00:19:14,480 Speaker 9: to support the founders and participate for you know, with 369 00:19:14,600 --> 00:19:17,640 Speaker 9: those that actually make it big. So while our core 370 00:19:17,800 --> 00:19:20,240 Speaker 9: checks are focused on building the companies from the ground 371 00:19:20,320 --> 00:19:23,080 Speaker 9: up in the more typical fashion that you think of 372 00:19:23,119 --> 00:19:26,040 Speaker 9: early stage venture, we absolutely get access to the big 373 00:19:26,080 --> 00:19:28,240 Speaker 9: guys and it's important there are benefits for both. 374 00:19:28,400 --> 00:19:30,320 Speaker 2: Hey, speaking of the big guys, I just got time 375 00:19:30,359 --> 00:19:32,520 Speaker 2: for maybe one or two more last questions. I'm thinking 376 00:19:32,520 --> 00:19:35,240 Speaker 2: about SpaceX, which does go into the NASTAQ one hundred 377 00:19:35,480 --> 00:19:39,000 Speaker 2: at the end of trading today Xai, Like, what's your 378 00:19:39,240 --> 00:19:42,520 Speaker 2: thought about that company, which seems to be to some 379 00:19:42,600 --> 00:19:46,080 Speaker 2: extent coming from behind, but it's got certainly deep, deep pockets. 380 00:19:48,240 --> 00:19:51,399 Speaker 9: It's emerging more and more. I think, you know, in 381 00:19:51,440 --> 00:19:53,920 Speaker 9: many ways, I think of Elan's companies as all being 382 00:19:54,040 --> 00:19:58,119 Speaker 9: an intertwined with one holding and the holding being alone himself. 383 00:19:58,400 --> 00:20:00,439 Speaker 9: I think it'll be interesting to do to see what 384 00:20:00,440 --> 00:20:03,280 Speaker 9: he does with Xai vis a vis SpaceX, and maybe 385 00:20:03,320 --> 00:20:06,840 Speaker 9: even what happens with Tesla. Eventually they are catching up. 386 00:20:06,920 --> 00:20:10,960 Speaker 9: I think performance has improved them to be perfectly honest 387 00:20:11,240 --> 00:20:14,160 Speaker 9: in the in the circles that sort of are leveraging 388 00:20:14,280 --> 00:20:17,399 Speaker 9: the most cutting edge models. X Ai is starting to 389 00:20:17,440 --> 00:20:21,000 Speaker 9: become a real contender. Definitely coming from behind, though. 390 00:20:21,119 --> 00:20:23,320 Speaker 2: Are people are talking more about x Ai. 391 00:20:23,320 --> 00:20:25,160 Speaker 11: Yeah, more than before. 392 00:20:25,160 --> 00:20:28,960 Speaker 10: Increasingly Cursor, right, like the Cursor acquisition moving so quickly, 393 00:20:29,000 --> 00:20:31,800 Speaker 10: people pay close attention because it's such a widely used tool, 394 00:20:32,119 --> 00:20:32,840 Speaker 10: all right, and. 395 00:20:32,840 --> 00:20:36,840 Speaker 9: Yet even with Cursor, now you know the next generation 396 00:20:37,000 --> 00:20:40,719 Speaker 9: saying we're bypassed Cursor. So things are moving so very fast. 397 00:20:41,000 --> 00:20:45,400 Speaker 9: What becomes I go back to what becomes sustainable versus 398 00:20:45,920 --> 00:20:47,240 Speaker 9: what is the flavored de jure? 399 00:20:47,280 --> 00:20:50,680 Speaker 2: We shall see you know, and it's fascinating too. Redina, 400 00:20:50,720 --> 00:20:53,400 Speaker 2: thank you so much. Readina Necessary, founder and managing partner, 401 00:20:53,480 --> 00:20:56,320 Speaker 2: Glass Being Ventures. We always appreciate your your view. I 402 00:20:56,400 --> 00:20:58,000 Speaker 2: have to I have to say, and more and more 403 00:20:58,000 --> 00:21:01,119 Speaker 2: conversations I have with folks where company are using a 404 00:21:01,119 --> 00:21:04,320 Speaker 2: lot of different lms. They're saying they're starting to get 405 00:21:04,359 --> 00:21:07,000 Speaker 2: more discretionary in terms of who's got access to what 406 00:21:07,040 --> 00:21:08,480 Speaker 2: because there is a cost well real quick. 407 00:21:08,480 --> 00:21:10,760 Speaker 10: The reason people loved Cursor is you could swap in 408 00:21:10,840 --> 00:21:14,040 Speaker 10: anthropic open Ai Gemini model and change it. Now Elon 409 00:21:14,119 --> 00:21:16,280 Speaker 10: owns it. They're going to be allowed to do that. 410 00:21:16,280 --> 00:21:17,040 Speaker 10: It's a big question. 411 00:21:17,200 --> 00:21:19,040 Speaker 2: It is a big question. Hey, listen, I'm so glad 412 00:21:19,040 --> 00:21:20,560 Speaker 2: you're here. This week. We're going to reach out to 413 00:21:20,560 --> 00:21:23,040 Speaker 2: you a bunch of course, our Ed Ludlow. Catch them 414 00:21:23,040 --> 00:21:28,480 Speaker 2: on Bloomberg Tech eleven am on Bloomberg Television. Stay with us. 415 00:21:28,640 --> 00:21:31,680 Speaker 2: More from Bloomberg Business Week Daily coming up after this. 416 00:21:35,640 --> 00:21:39,520 Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch 417 00:21:39,600 --> 00:21:42,240 Speaker 1: us live weekday afternoons from two to five e's During 418 00:21:42,280 --> 00:21:45,720 Speaker 1: this listen on Applecarplay and Android Auto with the Bloomberg 419 00:21:45,760 --> 00:21:48,720 Speaker 1: Business app, or watch us live on YouTube. 420 00:21:49,640 --> 00:21:52,080 Speaker 2: Hey. Among our most read stories on the Bloomberg Today, 421 00:21:52,119 --> 00:21:55,119 Speaker 2: Saudi Arabia making big reductions to its main crew to 422 00:21:55,119 --> 00:21:57,919 Speaker 2: oil price for buyers in Asia, selling barrels at a 423 00:21:57,960 --> 00:21:59,919 Speaker 2: discount for the first time since it embarked on a 424 00:22:00,080 --> 00:22:03,040 Speaker 2: price war in twenty twenty. As a surge of global 425 00:22:03,080 --> 00:22:07,440 Speaker 2: supply is heightening competition to find buyers, State producer Saudi 426 00:22:07,480 --> 00:22:11,480 Speaker 2: Aramca will lower Arab light oil for next month by 427 00:22:11,520 --> 00:22:14,440 Speaker 2: eleven dollars a barrel to one fifty below the regional benchmark. 428 00:22:14,600 --> 00:22:16,200 Speaker 2: This is according to a price list that they put 429 00:22:16,240 --> 00:22:19,960 Speaker 2: out today. The retreat though, underscoring the speed that we've 430 00:22:20,000 --> 00:22:23,879 Speaker 2: seen with Persian golf producers that have really ramped up 431 00:22:23,880 --> 00:22:26,080 Speaker 2: flows through the strait of hormones after an interim US 432 00:22:26,080 --> 00:22:28,200 Speaker 2: around deal. I mean, this is something Emily. I think 433 00:22:28,240 --> 00:22:31,160 Speaker 2: it happened faster than we thought. We've seen either more 434 00:22:31,160 --> 00:22:32,800 Speaker 2: oil come out on the market. I think we were 435 00:22:32,840 --> 00:22:37,960 Speaker 2: concerned about the repairing the rebuild as a result of 436 00:22:37,960 --> 00:22:39,560 Speaker 2: the US war in Iran, but it does feel like 437 00:22:39,560 --> 00:22:41,040 Speaker 2: there's a lot more oil that's come through. 438 00:22:41,240 --> 00:22:44,760 Speaker 5: Yeah, and you're seeing there was already pressure on prices 439 00:22:44,840 --> 00:22:46,200 Speaker 5: already after the. 440 00:22:46,000 --> 00:22:48,040 Speaker 3: Ceasefire, oil prices were coming down. 441 00:22:48,040 --> 00:22:50,600 Speaker 5: You have to wonder how much more now this is 442 00:22:50,600 --> 00:22:53,320 Speaker 5: going away on global oil markets. And I think we 443 00:22:53,400 --> 00:22:55,560 Speaker 5: have a perfect guest to talk about all of this, Carol. 444 00:22:55,640 --> 00:22:57,280 Speaker 2: We have a great guest, and we do see both 445 00:22:57,600 --> 00:23:01,520 Speaker 2: WTI and bright Cruit slightly lower today, slid about thirty 446 00:23:01,560 --> 00:23:04,280 Speaker 2: percent since mid May, so we've seen quite a pullback. 447 00:23:04,440 --> 00:23:06,720 Speaker 2: Doctor ellen Wald is the voice that we wanted to 448 00:23:06,760 --> 00:23:09,800 Speaker 2: talk to. She's President of Transversal Consulting, Senior Fellow at 449 00:23:09,800 --> 00:23:13,239 Speaker 2: the Atlantic Council. She's also the Audi author excuse me 450 00:23:13,320 --> 00:23:16,080 Speaker 2: of Saudi Inc. It was published in twenty eighteen. It 451 00:23:16,200 --> 00:23:19,320 Speaker 2: detailed the history of what was is. I don't know 452 00:23:19,320 --> 00:23:21,760 Speaker 2: if it still is the most profitable company in the world. 453 00:23:21,800 --> 00:23:24,560 Speaker 2: We're talking about Sadi Aramco. Ellen is with us once 454 00:23:24,600 --> 00:23:28,960 Speaker 2: again at Boca Raton, Florida. Ellen, you are the voice 455 00:23:28,960 --> 00:23:30,800 Speaker 2: that we wanted to talk to. What's your read on this? 456 00:23:30,880 --> 00:23:33,200 Speaker 2: Is it a surprise? Does it make sense in terms 457 00:23:33,200 --> 00:23:35,960 Speaker 2: of what we're seeing out of Saudi Arabia and Sadi Aramco. 458 00:23:37,080 --> 00:23:41,080 Speaker 6: So I think it's interesting, mostly because Aramco has traditionally 459 00:23:41,119 --> 00:23:44,159 Speaker 6: done most of its business, you know, in Asia and. 460 00:23:44,359 --> 00:23:45,440 Speaker 3: Long term contracts. 461 00:23:45,480 --> 00:23:49,679 Speaker 6: So they've got long term contracts for crude with Chinese refineries, 462 00:23:49,760 --> 00:23:54,560 Speaker 6: Chinese petro chemicals, Korean Japanese, They've got a lot of 463 00:23:54,600 --> 00:23:57,520 Speaker 6: their kind of long term contrects. They've got that basically 464 00:23:57,560 --> 00:24:00,840 Speaker 6: locked up. And so what will really seeing here, I 465 00:24:00,840 --> 00:24:04,840 Speaker 6: think is a very temporary situation in which there's a 466 00:24:04,880 --> 00:24:07,480 Speaker 6: lot of crude oil that needs to move out of 467 00:24:07,480 --> 00:24:11,600 Speaker 6: the Persian Gulf basically to get things unplugged and get 468 00:24:11,600 --> 00:24:14,280 Speaker 6: things moving again. So you had oil that was sitting 469 00:24:14,560 --> 00:24:17,200 Speaker 6: in tankers, you know, that had already basically been you know, bought, 470 00:24:17,280 --> 00:24:19,439 Speaker 6: that was just waiting to go, and we've seen a 471 00:24:19,440 --> 00:24:22,080 Speaker 6: lot of that start to get moving out of the Gulf. 472 00:24:22,080 --> 00:24:24,639 Speaker 6: But now we're seeing oil that's basically sitting in storage 473 00:24:24,680 --> 00:24:28,080 Speaker 6: tanks on shore storage that also needs to get moving. 474 00:24:28,200 --> 00:24:30,240 Speaker 6: And they've got to get this stuff moving in order 475 00:24:30,280 --> 00:24:34,040 Speaker 6: to get back to you know, what we call normal business. Remember, 476 00:24:34,040 --> 00:24:37,080 Speaker 6: we're also seeing you know, a lot of declines in 477 00:24:37,160 --> 00:24:41,879 Speaker 6: terms of gasoline, diesel and other petrochemical and other petroleum 478 00:24:41,880 --> 00:24:44,439 Speaker 6: products in the Middle East. They've got to get this 479 00:24:44,560 --> 00:24:47,399 Speaker 6: stuff unplugged so that they can get back to selling 480 00:24:47,440 --> 00:24:50,440 Speaker 6: these other cargoes as well, if that's possible, to move 481 00:24:50,480 --> 00:24:51,919 Speaker 6: them out of the straight and form moves. And so 482 00:24:52,320 --> 00:24:55,479 Speaker 6: the lower price I think reflects a lot of that 483 00:24:55,720 --> 00:24:58,560 Speaker 6: backup that they've got to lower the price enough to 484 00:24:58,720 --> 00:25:02,600 Speaker 6: make it, you know, to make it likely that Asian 485 00:25:02,640 --> 00:25:05,399 Speaker 6: buyers will snap up these cargoes, and also to make 486 00:25:05,440 --> 00:25:08,879 Speaker 6: it worthwhile to charter a tanker to go into the 487 00:25:08,920 --> 00:25:11,800 Speaker 6: Persian golf collect this stuff and get out, because that 488 00:25:11,960 --> 00:25:15,119 Speaker 6: is in no way assured. That process is still very 489 00:25:15,240 --> 00:25:16,840 Speaker 6: much up in the air, and so I think that 490 00:25:16,960 --> 00:25:19,800 Speaker 6: this is not necessarily something that we're going to see 491 00:25:19,800 --> 00:25:22,280 Speaker 6: happen in the long term. This is a temporary thing 492 00:25:22,520 --> 00:25:26,560 Speaker 6: just to get that market unplugged, so to say. 493 00:25:26,760 --> 00:25:29,680 Speaker 5: Okay, so you have to imagine though, right that if 494 00:25:29,720 --> 00:25:33,560 Speaker 5: one producer is cutting prices, that's going to weigh on 495 00:25:33,760 --> 00:25:35,960 Speaker 5: global oil markets more broadly, right. 496 00:25:36,560 --> 00:25:39,080 Speaker 6: Exactly, And it is weighing on global or a market 497 00:25:39,160 --> 00:25:41,720 Speaker 6: is more broadly, But it doesn't necessarily indicate that we're 498 00:25:41,760 --> 00:25:44,240 Speaker 6: in some sort of oil glut. It's sort of like 499 00:25:44,240 --> 00:25:46,639 Speaker 6: there's a glut in the Middle East because there's a 500 00:25:46,680 --> 00:25:49,160 Speaker 6: backup getting things out, and that does. 501 00:25:49,080 --> 00:25:53,760 Speaker 3: Impact prices all over the place. But for example, you know, 502 00:25:53,880 --> 00:25:54,679 Speaker 3: someone who's. 503 00:25:54,440 --> 00:25:58,840 Speaker 6: Trying to sell oil in you know, say Houston, or 504 00:25:58,880 --> 00:26:01,800 Speaker 6: sell it in the Goal of Mexico isn't going to 505 00:26:01,840 --> 00:26:04,439 Speaker 6: have the same tanker issues as someone in Sadi Arabia, 506 00:26:04,520 --> 00:26:08,440 Speaker 6: so they can command higher price, not necessarily as high 507 00:26:08,440 --> 00:26:11,280 Speaker 6: as as they would like to on the market, but 508 00:26:11,840 --> 00:26:14,040 Speaker 6: you know, because what's going on and one place does 509 00:26:14,080 --> 00:26:17,040 Speaker 6: affect prices elsewhere, but they don't face the same issues, 510 00:26:17,560 --> 00:26:19,880 Speaker 6: you know, getting a tanker in and out, for example. 511 00:26:19,960 --> 00:26:23,280 Speaker 6: So we're really just seeing a lot of disconnect in 512 00:26:23,320 --> 00:26:25,320 Speaker 6: the market. You know, we're also seeing these issues with 513 00:26:25,440 --> 00:26:29,400 Speaker 6: gasoline and diesel gasoline prices are much higher than oil 514 00:26:29,440 --> 00:26:32,280 Speaker 6: prices would indicate they should be. And that's really because, 515 00:26:32,800 --> 00:26:35,840 Speaker 6: you know, we don't have enough refining capacity for the oil, 516 00:26:36,119 --> 00:26:40,919 Speaker 6: and so they can't reduce their prices until, you know, 517 00:26:40,960 --> 00:26:43,680 Speaker 6: either we get all of these kind of kinks worked 518 00:26:43,680 --> 00:26:46,440 Speaker 6: out of this system or we see war refining capacity 519 00:26:46,440 --> 00:26:47,080 Speaker 6: come online. 520 00:26:47,160 --> 00:26:49,159 Speaker 2: So Ellen, it isn't like a bigger story of Sadi 521 00:26:49,160 --> 00:26:51,960 Speaker 2: Aramco or are they as powerful as they were when 522 00:26:51,960 --> 00:26:53,560 Speaker 2: you wrote that book back in twenty eighteen. 523 00:26:54,520 --> 00:26:57,400 Speaker 6: They're extremely powerful. They've made a lot of money off 524 00:26:57,400 --> 00:26:59,560 Speaker 6: of this crisis. I mean, it's not ideal for them. 525 00:27:00,119 --> 00:27:03,920 Speaker 6: They prefer to have oil prices fairly stable. They prefer 526 00:27:04,000 --> 00:27:06,680 Speaker 6: to sell their oil and you deliver it to their 527 00:27:06,880 --> 00:27:10,760 Speaker 6: customers with great regularity. They would prefer not to have 528 00:27:11,080 --> 00:27:15,120 Speaker 6: you know, had to have cut production. But overall, this 529 00:27:15,280 --> 00:27:18,639 Speaker 6: price cut is probably not seen as a as a 530 00:27:18,720 --> 00:27:21,160 Speaker 6: major blow for them. I mean, there was a point 531 00:27:21,160 --> 00:27:23,359 Speaker 6: where they were selling cargoes for over one hundred and 532 00:27:23,400 --> 00:27:26,440 Speaker 6: forty dollars a barrel, So they've made plenty of money. 533 00:27:26,640 --> 00:27:28,400 Speaker 6: I think what they like to do is get things 534 00:27:28,440 --> 00:27:31,639 Speaker 6: back to where they were. They'd like to be pumping 535 00:27:31,680 --> 00:27:34,720 Speaker 6: more oil producing more products, selling those cargoes on, you know, 536 00:27:34,800 --> 00:27:37,280 Speaker 6: get the supply, change money again. And if they have 537 00:27:37,359 --> 00:27:40,239 Speaker 6: to cut the price on their oil to get it 538 00:27:40,320 --> 00:27:42,320 Speaker 6: out there, to get China to buy it, to get 539 00:27:42,359 --> 00:27:44,560 Speaker 6: to make it worthwhile for trying to buy it just 540 00:27:44,600 --> 00:27:47,640 Speaker 6: so they can fix the plumbing, so to speak, then 541 00:27:47,840 --> 00:27:51,560 Speaker 6: they see that as worthwhile because really for the long run, right, 542 00:27:51,920 --> 00:27:54,520 Speaker 6: how long does it take to get the plumbing fixed? 543 00:27:54,720 --> 00:27:56,880 Speaker 3: Essentially, like, are we talking about a couple of weeks here? 544 00:27:57,000 --> 00:27:59,920 Speaker 2: If you tried to call a plumber, it takes a while. 545 00:28:01,000 --> 00:28:04,760 Speaker 6: That is definitely the question. It could take several months, 546 00:28:04,760 --> 00:28:08,040 Speaker 6: it could take less. It's the market is incredibly resilient, 547 00:28:08,080 --> 00:28:10,080 Speaker 6: but it also depends on a lot of factors, such 548 00:28:10,080 --> 00:28:12,800 Speaker 6: as whether China is going to be enticed by these 549 00:28:12,840 --> 00:28:16,560 Speaker 6: lower prices and willing to you know, remember China cut 550 00:28:16,600 --> 00:28:19,720 Speaker 6: between four and five million barrels that it was importing. 551 00:28:19,760 --> 00:28:21,760 Speaker 6: It's China going to say, hey, these are great prices, 552 00:28:21,800 --> 00:28:24,320 Speaker 6: so we're just going to you know, send those tankers 553 00:28:24,320 --> 00:28:27,000 Speaker 6: in and you know, whatever happens, We'll see what happens. 554 00:28:27,000 --> 00:28:29,359 Speaker 6: We're willing to take the chance because the price is 555 00:28:29,359 --> 00:28:31,800 Speaker 6: so good, or are they going to be more hesitant. 556 00:28:32,000 --> 00:28:34,560 Speaker 6: Are they going to get back to, you know, producing 557 00:28:34,600 --> 00:28:36,840 Speaker 6: a lot of gasoline and selling it around Asia or 558 00:28:36,880 --> 00:28:39,840 Speaker 6: are they going to be more hesitant. That's that's definitely 559 00:28:39,880 --> 00:28:42,800 Speaker 6: one factor. And so the same thing is is with Iran. 560 00:28:43,760 --> 00:28:45,840 Speaker 6: Are they going to clear the mines from the main 561 00:28:46,000 --> 00:28:48,560 Speaker 6: quarter in the straight up forom moves and will that 562 00:28:48,600 --> 00:28:50,560 Speaker 6: be able to be used to reliably, say in a 563 00:28:50,600 --> 00:28:54,000 Speaker 6: month or are we stuck with these you know, Iranian 564 00:28:54,600 --> 00:28:57,080 Speaker 6: northern lanes and American southern lanes. 565 00:28:57,280 --> 00:28:58,800 Speaker 2: Ellen, I have to jump in just because we got 566 00:28:58,840 --> 00:29:01,560 Speaker 2: thirty seconds left here. I'm curious about China because they 567 00:29:01,600 --> 00:29:04,600 Speaker 2: are of course so important in terms of being a 568 00:29:04,640 --> 00:29:07,760 Speaker 2: buyer of oils and in particular randy and oil. But 569 00:29:07,880 --> 00:29:10,480 Speaker 2: they have shown that they want to move towards make 570 00:29:10,480 --> 00:29:13,400 Speaker 2: a greener transition even more quickly. And this has happened 571 00:29:13,400 --> 00:29:16,360 Speaker 2: before where nations don't want to be dependent on another 572 00:29:16,400 --> 00:29:19,480 Speaker 2: country for oil and China doesn't make its own. So 573 00:29:19,920 --> 00:29:22,440 Speaker 2: are we just going to see more of that just quickly? 574 00:29:22,480 --> 00:29:24,840 Speaker 6: Well, I think we've seen that China is not dependent 575 00:29:25,160 --> 00:29:28,960 Speaker 6: on foreign oil for necessarily. They managed to cut their 576 00:29:29,000 --> 00:29:32,400 Speaker 6: imports by a lot and still maintain economic function. But 577 00:29:32,480 --> 00:29:35,800 Speaker 6: I don't think the answer is because of green improvements. 578 00:29:35,960 --> 00:29:38,120 Speaker 2: All right, all right, good stuff as always, Thank you 579 00:29:38,160 --> 00:29:40,040 Speaker 2: so much. You're a jem. Thanks for coming on on 580 00:29:40,080 --> 00:29:43,360 Speaker 2: this Monday, Doctor ellen Wald, President of Transversal Consulting, Senior 581 00:29:43,400 --> 00:29:46,080 Speaker 2: Fellow at the Atlanta Council. Her book back in twenty eighteen, 582 00:29:46,280 --> 00:29:50,520 Speaker 2: Saudi Inc. Stay with us. More from Bloomberg Business Week 583 00:29:50,600 --> 00:29:52,280 Speaker 2: Daily coming up after this. 584 00:29:56,280 --> 00:30:00,320 Speaker 1: You're listening to the Bloomberg Business Week Daily podcast, just 585 00:30:00,440 --> 00:30:02,920 Speaker 1: live weekday afternoons from two to five these during this 586 00:30:03,120 --> 00:30:07,000 Speaker 1: listen on Applecarplay and Android Otto with the Bloomberg Business app, 587 00:30:07,200 --> 00:30:09,480 Speaker 1: or watch us live on YouTube. 588 00:30:09,880 --> 00:30:11,520 Speaker 2: But what we do want to talk about is what's 589 00:30:11,560 --> 00:30:13,920 Speaker 2: been going on in terms of weather, and leave it 590 00:30:13,960 --> 00:30:16,240 Speaker 2: to our green team to always be on it. We 591 00:30:16,280 --> 00:30:18,240 Speaker 2: did have a headline over the weekend the largest US 592 00:30:18,280 --> 00:30:23,160 Speaker 2: grid PJM saying it likely hit record demand on July second. 593 00:30:23,240 --> 00:30:25,680 Speaker 2: I'm not surprised by that based on what we've seen 594 00:30:25,720 --> 00:30:28,480 Speaker 2: in terms of weather, and I got to say that 595 00:30:28,640 --> 00:30:33,160 Speaker 2: much of the US just came out of a sweltering 596 00:30:33,320 --> 00:30:37,080 Speaker 2: long holiday weekend. The July fourth holiday weekend, an intense 597 00:30:37,120 --> 00:30:40,560 Speaker 2: heat dome bore down, straining power grids prompting the cancelation 598 00:30:40,640 --> 00:30:44,120 Speaker 2: of many events. We saw that on July fourth, parades 599 00:30:44,160 --> 00:30:48,360 Speaker 2: and different things either delayed or canceled completely. Washington, d 600 00:30:48,520 --> 00:30:51,040 Speaker 2: C Saw a high of one hundred and two fahrenheit 601 00:30:51,120 --> 00:30:54,920 Speaker 2: thirty nine celsius on Saturday. That is a new local 602 00:30:55,000 --> 00:30:56,520 Speaker 2: record for the date. And I feel like when it 603 00:30:56,560 --> 00:31:00,320 Speaker 2: comes to weather and climate, we are constantly talking superls 604 00:31:00,400 --> 00:31:01,680 Speaker 2: a new records. 605 00:31:01,680 --> 00:31:05,360 Speaker 5: And we're all living, you know, this really big time here. 606 00:31:05,720 --> 00:31:10,200 Speaker 5: Our Bloomberg Green team, though, is tracking this degree by degree, 607 00:31:10,480 --> 00:31:12,680 Speaker 5: and they're all with reporting on why the extreme heat 608 00:31:12,960 --> 00:31:17,000 Speaker 5: isn't the only climate impact shocking scientists. And I gotta say, Caro, right, 609 00:31:17,000 --> 00:31:20,640 Speaker 5: it's not just extreme heat. We had like an extreme winter, yeah, 610 00:31:20,680 --> 00:31:22,680 Speaker 5: just as several months ago. So we're going to talk 611 00:31:22,680 --> 00:31:25,560 Speaker 5: about all of this right now with Bloomberg News Sustainability 612 00:31:25,760 --> 00:31:30,320 Speaker 5: editor Eric Ronston joining us in studio. Okay, so I 613 00:31:30,400 --> 00:31:33,240 Speaker 5: want to talk about like what has been going on 614 00:31:33,360 --> 00:31:36,080 Speaker 5: because we've been hearing about global warming for quite some time. 615 00:31:36,120 --> 00:31:37,640 Speaker 3: But this is taking on a new phase. 616 00:31:38,400 --> 00:31:40,440 Speaker 11: I think that's right. I think it is taking on 617 00:31:40,480 --> 00:31:44,360 Speaker 11: a new phase. It's funny if you ask the simple question, 618 00:31:45,360 --> 00:31:49,280 Speaker 11: is anybody surprised by global warming. No, not really, And 619 00:31:49,320 --> 00:31:51,760 Speaker 11: the reason for that is because on a global level 620 00:31:51,880 --> 00:31:56,000 Speaker 11: and then on a global long term level, then projections 621 00:31:56,040 --> 00:31:59,520 Speaker 11: have been the same for decades. But what's always been 622 00:31:59,560 --> 00:32:02,480 Speaker 11: harder to do is to project what's going to happen, 623 00:32:02,600 --> 00:32:06,440 Speaker 11: like decade to decade or country to country. And because 624 00:32:06,480 --> 00:32:09,520 Speaker 11: that's always been so hard to do, we're getting surprises 625 00:32:09,640 --> 00:32:13,400 Speaker 11: all over the place and temperatures and rainfall and drought. 626 00:32:14,280 --> 00:32:17,239 Speaker 11: And that's what our story focus is on, is this 627 00:32:17,320 --> 00:32:18,840 Speaker 11: kind of new era of surprise. 628 00:32:19,240 --> 00:32:21,920 Speaker 2: Yeah, right, Like we've been talking about this for a 629 00:32:21,920 --> 00:32:24,320 Speaker 2: long time. You guys have been reporting on it too, 630 00:32:24,680 --> 00:32:28,320 Speaker 2: Like it is the severity of things that keep coming 631 00:32:28,320 --> 00:32:32,520 Speaker 2: out stories and I do wonder, you know, what is 632 00:32:33,200 --> 00:32:36,240 Speaker 2: the macro response to all of this That as even 633 00:32:36,440 --> 00:32:41,520 Speaker 2: scientists who understand this are getting surprised, doesn't mean folks 634 00:32:41,560 --> 00:32:43,240 Speaker 2: are taking it more seriously. I mean, you and I, 635 00:32:43,280 --> 00:32:45,160 Speaker 2: we've all are. We've sat around this table and just 636 00:32:45,200 --> 00:32:50,680 Speaker 2: talked about the political pressure on talking about climate change, 637 00:32:50,720 --> 00:32:53,280 Speaker 2: Like it's I feel like we're not talking about as much. 638 00:32:53,360 --> 00:32:55,440 Speaker 2: We are still reporting, but I feel like some of 639 00:32:55,440 --> 00:32:57,000 Speaker 2: our conversations. 640 00:32:56,280 --> 00:32:58,880 Speaker 11: We may be talking about it less, but more people 641 00:32:58,960 --> 00:33:03,560 Speaker 11: are talking about it, and I mean one almost glib 642 00:33:03,600 --> 00:33:06,080 Speaker 11: way of thinking about it is like twenty years ago, 643 00:33:06,160 --> 00:33:09,880 Speaker 11: a generation ago, scientists would talk about you know, extreme heat, 644 00:33:09,960 --> 00:33:13,520 Speaker 11: extreme precipitation in terms of our models project there will 645 00:33:13,560 --> 00:33:16,760 Speaker 11: be more of this, Like now that conversation is how 646 00:33:16,800 --> 00:33:18,600 Speaker 11: am I going to get everything out of my basement? 647 00:33:18,920 --> 00:33:19,080 Speaker 10: Right? 648 00:33:19,440 --> 00:33:23,600 Speaker 11: Like That's how the conversation has changed. In my own reporting, 649 00:33:23,760 --> 00:33:27,800 Speaker 11: I used to talk to scientists like exclusively and go 650 00:33:27,880 --> 00:33:30,680 Speaker 11: inside their models and see what they thought was going 651 00:33:30,720 --> 00:33:34,680 Speaker 11: to happen. Now I write about insurance and banks because 652 00:33:34,720 --> 00:33:38,200 Speaker 11: the conversation has moved firmly to the private sector, has 653 00:33:38,240 --> 00:33:42,360 Speaker 11: moved firmly to public health and property owners. And that's 654 00:33:42,440 --> 00:33:45,800 Speaker 11: where the macroeconomic picture comes in. You saw you see 655 00:33:45,920 --> 00:33:49,880 Speaker 11: like top US FED officials more recently than you would expect, 656 00:33:50,680 --> 00:33:54,040 Speaker 11: saying that these if these trends continue, and we don't 657 00:33:54,040 --> 00:33:57,400 Speaker 11: have any reason to believe they won't, you know, parts 658 00:33:57,400 --> 00:34:00,000 Speaker 11: of the country are going to become increasingly uninsured. 659 00:34:01,200 --> 00:34:04,480 Speaker 5: I want to get to the economic impact, but just first, 660 00:34:04,520 --> 00:34:08,720 Speaker 5: can you explain how can we have both unprecedented rainfall 661 00:34:09,040 --> 00:34:12,800 Speaker 5: and also record dryness and record heats in the summer? 662 00:34:12,840 --> 00:34:14,919 Speaker 5: And then you know, the coldest winter in New York 663 00:34:14,920 --> 00:34:16,600 Speaker 5: City since twenty fourteen. 664 00:34:18,080 --> 00:34:20,400 Speaker 11: Okay, that's It's a lot of questions. 665 00:34:21,160 --> 00:34:24,040 Speaker 3: Are just the two extremes, you know, right. 666 00:34:24,200 --> 00:34:27,920 Speaker 11: I think I did this. This was stories come from 667 00:34:27,960 --> 00:34:30,040 Speaker 11: weird places, and this is one of the weirdest places 668 00:34:30,040 --> 00:34:32,520 Speaker 11: the story has come from recently? Is I think it 669 00:34:32,560 --> 00:34:36,440 Speaker 11: was in April. I remember I had to turn on 670 00:34:36,520 --> 00:34:41,719 Speaker 11: my heat on a Sunday Northern New Jersey. On Tuesday, 671 00:34:42,280 --> 00:34:45,520 Speaker 11: I turned on the air conditioning, and then on Thursday 672 00:34:45,840 --> 00:34:49,080 Speaker 11: I had to turn the heat back on, and that 673 00:34:49,200 --> 00:34:52,800 Speaker 11: kind of whiplash thing. We're seeing it just about every level. 674 00:34:52,960 --> 00:34:55,560 Speaker 11: Like we're seeing at like the household and community level, 675 00:34:56,120 --> 00:34:59,799 Speaker 11: we're seeing it at the seasonal level. You know, the 676 00:35:00,000 --> 00:35:02,880 Speaker 11: Eastern US earlier this year came off it just like 677 00:35:03,760 --> 00:35:09,239 Speaker 11: incredibly weird heat wave after you know, the previous year 678 00:35:09,280 --> 00:35:13,080 Speaker 11: it was it was quite cold. And so because there's 679 00:35:13,480 --> 00:35:17,600 Speaker 11: it's almost like there's just an increasing metastasizing lack of 680 00:35:17,640 --> 00:35:22,240 Speaker 11: stability in systems that we've relied on for a long time, 681 00:35:22,560 --> 00:35:26,480 Speaker 11: and so crazy things are happening back to back. In 682 00:35:26,520 --> 00:35:29,880 Speaker 11: some cases it's normal. In other cases, they don't understand 683 00:35:29,880 --> 00:35:35,560 Speaker 11: why it's happening. In other cases they know, but yeah, 684 00:35:35,600 --> 00:35:38,480 Speaker 11: surprise is the new normal. I think there's like. 685 00:35:39,000 --> 00:35:40,880 Speaker 2: There's so much in this story, and I highly recommend 686 00:35:40,880 --> 00:35:44,799 Speaker 2: everybody read it. I just want to read something. The 687 00:35:44,800 --> 00:35:46,840 Speaker 2: extra energy trapped in the system seems to be the 688 00:35:46,880 --> 00:35:49,680 Speaker 2: result of the planet reflecting less sunlight back to space. 689 00:35:49,760 --> 00:35:52,279 Speaker 2: That's partly the result of bright white ice turning into 690 00:35:52,360 --> 00:35:55,520 Speaker 2: darker heat absorbing seawater. But the bigger concern is that 691 00:35:55,560 --> 00:35:57,800 Speaker 2: reflective low lying clouds may be going missing. 692 00:35:58,160 --> 00:36:00,799 Speaker 3: I mean I highlighted that part too. We did not 693 00:36:00,840 --> 00:36:02,040 Speaker 3: coordinate that, No, we did not. 694 00:36:02,120 --> 00:36:06,160 Speaker 2: Actually, and so this imbalance. Like we've talked about climate change, 695 00:36:06,200 --> 00:36:07,880 Speaker 2: it's not just getting warmer, all though we are, but 696 00:36:07,920 --> 00:36:10,560 Speaker 2: it's also these extremes in the volatility. But there are 697 00:36:10,680 --> 00:36:15,040 Speaker 2: things that seem to be happening in our environment Eric 698 00:36:15,239 --> 00:36:19,160 Speaker 2: that are making it more difficult for scientists. Their models 699 00:36:19,160 --> 00:36:20,080 Speaker 2: aren't kind of working. 700 00:36:21,280 --> 00:36:24,920 Speaker 11: There's a quote we got in the story, like the 701 00:36:25,000 --> 00:36:27,200 Speaker 11: science has been around for so long and it's changed 702 00:36:27,280 --> 00:36:31,240 Speaker 11: so little, unlike the global scales. We include a quotation 703 00:36:31,400 --> 00:36:35,840 Speaker 11: from the late Wallace Brooker, who was a Columbia scientist. 704 00:36:36,640 --> 00:36:38,839 Speaker 11: He's the guy who in nineteen seventy five, came up 705 00:36:38,880 --> 00:36:42,520 Speaker 11: with the phrase global warming twenty years later, seventy five, 706 00:36:43,000 --> 00:36:43,840 Speaker 11: seventy five. 707 00:36:43,719 --> 00:36:47,200 Speaker 2: Just you know, kind of like the first buy centennial 708 00:36:47,280 --> 00:36:47,680 Speaker 2: or whatever. 709 00:36:47,880 --> 00:36:49,920 Speaker 11: Right, you're right, exactly perfect, we got we got one 710 00:36:49,960 --> 00:36:53,879 Speaker 11: every fifty years. Then in the mid nineties he said, look, 711 00:36:54,080 --> 00:36:57,000 Speaker 11: the climate is an ornery beast, and if you poke 712 00:36:57,080 --> 00:36:59,840 Speaker 11: it a little bit, you're going to get an outsized reaction. 713 00:37:00,360 --> 00:37:04,000 Speaker 11: So that's what we're seeing again at every scale is 714 00:37:04,360 --> 00:37:07,560 Speaker 11: you know, the models that ran you know for decades, 715 00:37:07,719 --> 00:37:13,319 Speaker 11: like successfully on the planetary level, on when when you 716 00:37:13,360 --> 00:37:16,760 Speaker 11: go look at less amount of time in a smaller 717 00:37:16,800 --> 00:37:21,640 Speaker 11: footprint of space, they can't they don't have that granularity, 718 00:37:22,160 --> 00:37:25,000 Speaker 11: and so the hits just keep on coming. 719 00:37:25,040 --> 00:37:27,359 Speaker 3: Unfortunately, we only have about a minute left. 720 00:37:27,360 --> 00:37:29,360 Speaker 5: But you mentioned a lot of your reporting now is 721 00:37:29,600 --> 00:37:32,280 Speaker 5: talking to bankers and insurance firms. 722 00:37:32,320 --> 00:37:33,839 Speaker 3: What are you asking them right now? 723 00:37:35,440 --> 00:37:37,319 Speaker 11: A lot of it has to do with physical risk 724 00:37:37,400 --> 00:37:41,160 Speaker 11: and how we can best understand the physical risks for 725 00:37:41,360 --> 00:37:43,799 Speaker 11: you know, wherever you live or whatever kind of the 726 00:37:43,880 --> 00:37:46,440 Speaker 11: term of investment. We're talking a lot about supply chains. 727 00:37:47,880 --> 00:37:51,960 Speaker 11: Bloomberg Intelligence has some amazing research in terms of like 728 00:37:52,040 --> 00:37:56,160 Speaker 11: the week to week, month to month financial implications of 729 00:37:56,880 --> 00:38:01,160 Speaker 11: bad weather. So that and just like the energy revolution 730 00:38:01,480 --> 00:38:04,839 Speaker 11: is here. You know, we colleagues have done a ton 731 00:38:04,880 --> 00:38:07,560 Speaker 11: of phenomenal reporting in the last few months about how 732 00:38:07,640 --> 00:38:12,799 Speaker 11: the Warren Iran and the subsequent energy price volatility has 733 00:38:12,920 --> 00:38:16,520 Speaker 11: just like convinced country after country and company after company 734 00:38:17,080 --> 00:38:20,520 Speaker 11: they don't want this fossil fuel volatility anymore and they're 735 00:38:20,640 --> 00:38:22,040 Speaker 11: finding clean energy. 736 00:38:22,160 --> 00:38:24,360 Speaker 2: Listen, this goes back to something we talked about Saudia 737 00:38:24,400 --> 00:38:27,479 Speaker 2: Ramco today and you know, the conversation around China saying 738 00:38:27,600 --> 00:38:29,000 Speaker 2: we don't want to be buying this stuff anymore, like 739 00:38:29,000 --> 00:38:31,000 Speaker 2: we're going to figure out how to be energy independent 740 00:38:31,040 --> 00:38:36,879 Speaker 2: but also potentially lean more into greener energy forms. There's 741 00:38:36,880 --> 00:38:38,800 Speaker 2: a lot here. I know we only scratch the surface, 742 00:38:38,840 --> 00:38:41,879 Speaker 2: but seems to be certainly after the weekend, we've had 743 00:38:41,920 --> 00:38:44,799 Speaker 2: a really important story. Thank you so much. Thank you. 744 00:38:44,840 --> 00:38:47,600 Speaker 2: I always always appreciate it. Eric Roston, He's Bloomberg News 745 00:38:47,600 --> 00:38:51,240 Speaker 2: Sustainability editor. It's a lot here. 746 00:38:51,440 --> 00:38:53,800 Speaker 3: There's a lot of and graphics pictures. 747 00:38:53,960 --> 00:38:55,960 Speaker 2: Highly recommend check it out. It's on the Bloomberg and 748 00:38:55,960 --> 00:38:57,480 Speaker 2: at Bloomberg dot com. 749 00:38:57,800 --> 00:39:02,000 Speaker 1: This is the Bloomberg Business Week Daily podcast, available on 750 00:39:02,120 --> 00:39:06,560 Speaker 1: Apple Spotify, and anywhere else you get your podcasts. Listen 751 00:39:06,680 --> 00:39:10,200 Speaker 1: live weekday afternoons from two to five pm Eastern on 752 00:39:10,360 --> 00:39:14,239 Speaker 1: Bloomberg dot Com, the iHeartRadio app, tune In, and the 753 00:39:14,280 --> 00:39:17,560 Speaker 1: Bloomberg Business app. You can also watch us live every 754 00:39:17,560 --> 00:39:21,080 Speaker 1: weekday on YouTube and always on the Bloomberg terminal