1 00:00:02,440 --> 00:00:11,080 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 2 00:00:11,160 --> 00:00:12,880 Speaker 1: with Alex Steel and Paul'sweeny. 3 00:00:13,000 --> 00:00:16,240 Speaker 2: The real app performance has been the US corporate high yield. 4 00:00:16,400 --> 00:00:18,759 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:18,800 --> 00:00:22,599 Speaker 2: The semiconductor business is a really cyclical business. 6 00:00:22,079 --> 00:00:25,680 Speaker 1: Breaking market headlines and corporate news from across the globe. 7 00:00:25,760 --> 00:00:28,360 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:28,600 --> 00:00:32,760 Speaker 2: These are two big time blue chip companies window. 9 00:00:32,440 --> 00:00:34,760 Speaker 3: Between the peak and cut changing. 10 00:00:34,600 --> 00:00:39,040 Speaker 1: Super fast Bloomberg Intelligence with Alex Steel and Paul'sweenye on 11 00:00:39,280 --> 00:00:40,400 Speaker 1: Bloomberg Radio. 12 00:00:42,120 --> 00:00:44,760 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 13 00:00:44,800 --> 00:00:47,320 Speaker 2: business stories impacting Wall Street and global markets. 14 00:00:47,440 --> 00:00:49,400 Speaker 3: Each and every week we provide and up research and 15 00:00:49,479 --> 00:00:51,239 Speaker 3: data on some of the two thousand companies and one 16 00:00:51,320 --> 00:00:53,840 Speaker 3: hundred and thirty industries our analysts cover worldwide. 17 00:00:54,120 --> 00:00:56,640 Speaker 2: Today, we'll look at why trade tensions between the EU 18 00:00:56,760 --> 00:00:58,120 Speaker 2: and China may be escalated. 19 00:00:58,200 --> 00:01:00,920 Speaker 3: Plus we'll discuss how the energy transition will drive a 20 00:01:00,960 --> 00:01:02,920 Speaker 3: significant uptick in demand for metals. 21 00:01:03,080 --> 00:01:06,120 Speaker 2: But first we begin with the computer technology company Oracle. 22 00:01:06,440 --> 00:01:09,240 Speaker 2: This week, Oracle reported fourth quarter results that fell short 23 00:01:09,240 --> 00:01:13,360 Speaker 2: of analyst expectations. But Oracle shares still hit a record high. 24 00:01:13,400 --> 00:01:16,080 Speaker 3: From where we were joined by anorog Rana, Bloomberg Intelligence 25 00:01:16,120 --> 00:01:19,200 Speaker 3: technology analyst. We first asked Anaurag why investors were so 26 00:01:19,360 --> 00:01:20,600 Speaker 3: happy about Oracle. 27 00:01:21,000 --> 00:01:22,800 Speaker 4: I think the biggest thing in our view were the 28 00:01:22,800 --> 00:01:25,399 Speaker 4: two partnerships that were announced, one with Google and one 29 00:01:25,440 --> 00:01:27,119 Speaker 4: with open Ai, you know, from a. 30 00:01:27,080 --> 00:01:28,040 Speaker 5: Future point of view. 31 00:01:28,280 --> 00:01:30,759 Speaker 4: At the same time, we continue to see strong demand 32 00:01:30,840 --> 00:01:33,760 Speaker 4: for the cloud infrastructure business, which has been kind of 33 00:01:33,760 --> 00:01:36,720 Speaker 4: the story on cloud on Oracle for the last you 34 00:01:36,760 --> 00:01:39,559 Speaker 4: could say, eighteen months or so. So that remained strong. 35 00:01:39,920 --> 00:01:42,480 Speaker 4: But remember, prior to going into the quarter, there is 36 00:01:42,560 --> 00:01:45,319 Speaker 4: a lot of noise about software spending slowing down, but 37 00:01:45,400 --> 00:01:47,640 Speaker 4: that's on the application site that's a different kind of 38 00:01:47,640 --> 00:01:51,120 Speaker 4: the business. But on the infrastructure side, where you're hosting 39 00:01:51,160 --> 00:01:55,160 Speaker 4: somebody's you know, application or a workload, that business is 40 00:01:55,160 --> 00:01:57,320 Speaker 4: still doing well. So it's good for Amazon, it's good 41 00:01:57,320 --> 00:02:00,280 Speaker 4: for Microsoft, and now it's actually good for Audio. 42 00:02:00,200 --> 00:02:03,760 Speaker 2: Also, Anura, can we put Oracle into our besket of 43 00:02:03,800 --> 00:02:04,560 Speaker 2: ai stocks? 44 00:02:04,560 --> 00:02:07,520 Speaker 4: Now, yeah, I mean have we been talking about it 45 00:02:07,560 --> 00:02:09,600 Speaker 4: for a while that they would be most likely the 46 00:02:09,639 --> 00:02:13,440 Speaker 4: fourth largest cloud infrastructure vendor down in the future, right 47 00:02:13,480 --> 00:02:17,720 Speaker 4: behind you know, Amazon, Microsoft, Google, and then it'll be Oracle. Now, remember, 48 00:02:18,080 --> 00:02:21,000 Speaker 4: everybody's trying to get the workloads or trying to figure 49 00:02:21,040 --> 00:02:24,079 Speaker 4: out how to put their AI experiments out in the 50 00:02:24,120 --> 00:02:25,880 Speaker 4: cloud desk to see what they can do with it, 51 00:02:26,200 --> 00:02:28,839 Speaker 4: and they're running short of capacity. So when you look 52 00:02:28,880 --> 00:02:31,560 Speaker 4: at a company like Oracle, which has deep pockets, can 53 00:02:31,639 --> 00:02:34,120 Speaker 4: actually afford to spend more. They announced they're going to 54 00:02:34,200 --> 00:02:36,600 Speaker 4: double their capex this year, so that's going to be 55 00:02:36,600 --> 00:02:40,320 Speaker 4: somewhere around fourteen billion dollars or so for the next 56 00:02:40,320 --> 00:02:42,680 Speaker 4: twelve months. I mean, they can spend the money so 57 00:02:42,760 --> 00:02:43,440 Speaker 4: people will. 58 00:02:43,240 --> 00:02:43,760 Speaker 5: Come to them. 59 00:02:44,080 --> 00:02:45,960 Speaker 3: So let me just dumb it down for me here. 60 00:02:46,000 --> 00:02:50,800 Speaker 3: So Microsoft and Google then are using Oracle stuff for 61 00:02:50,880 --> 00:02:55,080 Speaker 3: their AI cloud infrastructure. So all the language model learning 62 00:02:55,160 --> 00:02:57,480 Speaker 3: things that happen, and all the data they're collecting for 63 00:02:57,600 --> 00:02:59,959 Speaker 3: AI goes now to Oracle's hardware software. 64 00:03:01,000 --> 00:03:03,640 Speaker 4: Well think about it that. Let's assume that you know, 65 00:03:03,680 --> 00:03:06,600 Speaker 4: Oracle is an electricity provider, and if for any reason, 66 00:03:06,639 --> 00:03:08,760 Speaker 4: Microsoft feels short of it, they can go out and 67 00:03:08,960 --> 00:03:11,120 Speaker 4: you know, rent some from somebody else. I mean, because 68 00:03:11,280 --> 00:03:14,519 Speaker 4: everybody is getting a lot of workloads or incoming inquiries 69 00:03:14,600 --> 00:03:18,000 Speaker 4: to do things. But they're running shot of capacity, and 70 00:03:18,040 --> 00:03:20,079 Speaker 4: that's where you know they can go out and borrow. 71 00:03:20,240 --> 00:03:22,520 Speaker 4: But when it comes to Google, what they basically are 72 00:03:22,560 --> 00:03:25,720 Speaker 4: doing is they're saying, we have a lot of companies, 73 00:03:25,800 --> 00:03:29,640 Speaker 4: let's say banks and airlines that house their data on 74 00:03:29,760 --> 00:03:32,919 Speaker 4: Oracle's databases. They're going to take their servers and put 75 00:03:32,960 --> 00:03:36,360 Speaker 4: it in Google's cloud data centers. So if anybody wants 76 00:03:36,400 --> 00:03:40,400 Speaker 4: to run you could say, an AI or an mL 77 00:03:40,760 --> 00:03:43,920 Speaker 4: machine learning algorithm, they can then tap into that data 78 00:03:44,080 --> 00:03:47,000 Speaker 4: that's housed into the audicle database so that you know, 79 00:03:47,000 --> 00:03:48,440 Speaker 4: they can run those queries faster. 80 00:03:50,000 --> 00:03:52,360 Speaker 2: Listen to this evaluation story. This is just another one 81 00:03:52,360 --> 00:03:54,760 Speaker 2: that's very much like Nvidia on a terms of valuation, 82 00:03:55,160 --> 00:03:58,320 Speaker 2: trailing Pe on their fiscal twenty twenty four gens May 83 00:03:58,320 --> 00:04:01,760 Speaker 2: thirty first, twenty four reading about thirty six times earnings 84 00:04:01,960 --> 00:04:05,240 Speaker 2: on forward earnings just on their May twenty twenty five 85 00:04:05,680 --> 00:04:08,280 Speaker 2: twenty two times earnings. Oh, I mean, it's another one 86 00:04:08,320 --> 00:04:10,320 Speaker 2: those in video word, this is a company that appears 87 00:04:10,360 --> 00:04:12,920 Speaker 2: to be growing itself into the multiple How do you 88 00:04:12,920 --> 00:04:16,560 Speaker 2: think about valuation here on a rock for the oracles 89 00:04:16,560 --> 00:04:18,240 Speaker 2: of the world, for the videos of the world. Now 90 00:04:18,279 --> 00:04:20,360 Speaker 2: that it seems to like, boy, it's kind of a 91 00:04:20,400 --> 00:04:21,679 Speaker 2: new paradigm here with AI. 92 00:04:22,920 --> 00:04:25,560 Speaker 4: Yeah, when you look at cloud infrastructure companies, you know, 93 00:04:25,600 --> 00:04:28,839 Speaker 4: one could argue that article's slightly cheaper than all the others, 94 00:04:28,839 --> 00:04:32,320 Speaker 4: But at the same time, their cloud infrastructure business is small, 95 00:04:32,480 --> 00:04:35,240 Speaker 4: so small compared to the overall pie, which is not 96 00:04:35,360 --> 00:04:38,400 Speaker 4: growing as much. Remember, after all said and done, for 97 00:04:38,520 --> 00:04:41,960 Speaker 4: next year, article may grow sales let's say, around eleven 98 00:04:42,000 --> 00:04:44,960 Speaker 4: twelve percent someone in that rain, So it's not anywhere 99 00:04:45,040 --> 00:04:47,440 Speaker 4: close to where in video is going to grow, you know, 100 00:04:47,480 --> 00:04:49,240 Speaker 4: their revenues for the next twelve months. 101 00:04:49,320 --> 00:04:51,200 Speaker 2: All right, So let's step back and look at your 102 00:04:51,200 --> 00:04:53,960 Speaker 2: space in general. Here on a rock. When we think 103 00:04:54,000 --> 00:04:56,000 Speaker 2: about I mean, I feel like we're learning something or 104 00:04:56,000 --> 00:05:00,160 Speaker 2: at least iron every day about AI, the cloud, OU, 105 00:05:00,839 --> 00:05:04,320 Speaker 2: the spending associated where the spending's coming from. So, as 106 00:05:04,320 --> 00:05:07,320 Speaker 2: you sit back and you're constructing a basket of AI stocks, 107 00:05:07,720 --> 00:05:10,120 Speaker 2: kind of what would you throw in there kind of 108 00:05:10,360 --> 00:05:11,279 Speaker 2: in order? Would you say? 109 00:05:11,400 --> 00:05:11,919 Speaker 6: Good question? 110 00:05:12,600 --> 00:05:15,040 Speaker 4: Yeah, that's it's a very good question. In fact, everybody's 111 00:05:15,040 --> 00:05:16,920 Speaker 4: trying to figure that out. But when you look at 112 00:05:16,960 --> 00:05:19,680 Speaker 4: the AI basket, you know, the bigger companies on the 113 00:05:19,760 --> 00:05:22,120 Speaker 4: chip side are the first one, So that was Sisennvidia. 114 00:05:22,520 --> 00:05:24,800 Speaker 4: You know, Dell's been a bigger, somewhat of a player 115 00:05:24,800 --> 00:05:27,120 Speaker 4: over there. But when you come to the software side, 116 00:05:27,160 --> 00:05:30,280 Speaker 4: the number one company from an AI exposure is Microsoft 117 00:05:30,320 --> 00:05:32,960 Speaker 4: and that's because of its partnership with open AI. Now 118 00:05:33,000 --> 00:05:35,359 Speaker 4: when you look at you know, the downstream play, it 119 00:05:35,480 --> 00:05:37,680 Speaker 4: is the cloud vendors. Now they have a very small 120 00:05:37,680 --> 00:05:40,560 Speaker 4: portion of their workloads coming from AI, but that's going 121 00:05:40,640 --> 00:05:42,599 Speaker 4: to rise going forward. That's going to be you know, 122 00:05:42,640 --> 00:05:45,560 Speaker 4: the likes of Amazon, Google Cloud, and then Oracle Cloud. 123 00:05:45,839 --> 00:05:49,760 Speaker 4: So these are the infrastructure players, then the application companies. Now, 124 00:05:49,800 --> 00:05:52,720 Speaker 4: these companies are right now experimenting with products. They don't 125 00:05:52,760 --> 00:05:55,520 Speaker 4: really have a full, you know, massive suite out there. 126 00:05:55,680 --> 00:05:58,719 Speaker 4: You know, that's the like of Salesforce or or service 127 00:05:58,839 --> 00:06:02,400 Speaker 4: Now companies that are experimenting with it or will have 128 00:06:02,440 --> 00:06:05,599 Speaker 4: smaller products or newer products coming in. Adobe is actually 129 00:06:05,640 --> 00:06:08,520 Speaker 4: another one that actually stands out for us because they 130 00:06:08,600 --> 00:06:11,480 Speaker 4: have a product that's working very well. We'll see what 131 00:06:11,520 --> 00:06:12,320 Speaker 4: they do about it. 132 00:06:12,520 --> 00:06:14,320 Speaker 3: Oh really, because I feel like, isn't the whole thing 133 00:06:14,360 --> 00:06:17,239 Speaker 3: with Adobe is that they haven't unveiled the right AI 134 00:06:17,360 --> 00:06:19,480 Speaker 3: product or anything along those lines. 135 00:06:20,080 --> 00:06:23,000 Speaker 4: Well, they have one for creating images, So that's doing 136 00:06:23,040 --> 00:06:25,600 Speaker 4: really well. The one, the next one where everybody's waiting for, 137 00:06:25,800 --> 00:06:30,240 Speaker 4: is the AI product that can create videos on the fly. Now, 138 00:06:30,240 --> 00:06:32,880 Speaker 4: the big controversy on Adobe is that, oh, why do 139 00:06:32,960 --> 00:06:34,799 Speaker 4: I need to buy a software when I can create 140 00:06:34,800 --> 00:06:37,960 Speaker 4: these images through you know, let's say chat GPT. But 141 00:06:38,040 --> 00:06:40,640 Speaker 4: it's not just about creating images. First and foremost. When 142 00:06:40,680 --> 00:06:43,000 Speaker 4: you use an Adobe product, you first of all, are 143 00:06:43,040 --> 00:06:46,760 Speaker 4: not worried about copyright issues. Second thing, you really use 144 00:06:46,800 --> 00:06:50,359 Speaker 4: Adobe for editing and the entire workflow process, not just 145 00:06:50,440 --> 00:06:53,440 Speaker 4: creating images. So creating images can be a commodity, but 146 00:06:53,760 --> 00:06:56,400 Speaker 4: editing and actually giving out a big story you still 147 00:06:56,440 --> 00:06:57,360 Speaker 4: need a software for that. 148 00:06:57,800 --> 00:07:00,760 Speaker 2: Our thanks Anna rag Rana, Bloomberg Intelligence to Knowledge Analyst. 149 00:07:00,920 --> 00:07:02,400 Speaker 3: We now take a look at one of the Bloomberg 150 00:07:02,440 --> 00:07:05,359 Speaker 3: Big Take stories featured this week on Bloomberg Intelligence. It 151 00:07:05,400 --> 00:07:08,040 Speaker 3: focuses on the recent exit of talent at the Federal 152 00:07:08,040 --> 00:07:10,160 Speaker 3: Reserve Bank of New York and the piece is titled 153 00:07:10,440 --> 00:07:14,080 Speaker 3: talent exit at Williams New York fed stokes concern on 154 00:07:14,160 --> 00:07:15,280 Speaker 3: its way for more. 155 00:07:15,360 --> 00:07:18,280 Speaker 2: We are joined by Alex Howers, Bloomberg short term interest 156 00:07:18,360 --> 00:07:21,480 Speaker 2: rate reporter. We began by asking what exactly is going 157 00:07:21,520 --> 00:07:22,520 Speaker 2: on at the New York FED. 158 00:07:22,960 --> 00:07:24,840 Speaker 7: What's kind of happened over the last couple of years 159 00:07:24,920 --> 00:07:29,240 Speaker 7: is you've seen an exodus of basically senior management. These 160 00:07:29,240 --> 00:07:31,560 Speaker 7: are people who have been with the bank for decades 161 00:07:32,600 --> 00:07:35,200 Speaker 7: just deciding to exit, either that they retire or that 162 00:07:35,240 --> 00:07:38,080 Speaker 7: they you know, find another opportunity on Wall Street, or 163 00:07:38,200 --> 00:07:41,960 Speaker 7: just really but what's ultimately driving it is the environment 164 00:07:42,240 --> 00:07:45,520 Speaker 7: is just not they have found just not conducive either 165 00:07:45,760 --> 00:07:48,800 Speaker 7: that you know, there's been changes in the bank under 166 00:07:49,160 --> 00:07:52,400 Speaker 7: the leadership of John Williams that they have found, you know, 167 00:07:52,720 --> 00:07:56,160 Speaker 7: doesn't necessarily work for them anymore. And as a result, 168 00:07:56,200 --> 00:07:59,240 Speaker 7: they're leaving. And what people are worried about is the 169 00:07:59,280 --> 00:08:02,760 Speaker 7: so called brand. It leaves a vacuum of people who 170 00:08:02,800 --> 00:08:06,200 Speaker 7: are experienced at fighting crises. Because remember a lot of 171 00:08:06,240 --> 00:08:08,040 Speaker 7: these people have been there. They were there for the 172 00:08:08,040 --> 00:08:10,440 Speaker 7: financial crisis, they were there for the repo market blow up, 173 00:08:10,440 --> 00:08:13,160 Speaker 7: they were there in twenty twenty. Like, they have crisis 174 00:08:13,200 --> 00:08:16,000 Speaker 7: fighting experience, and so you're leaving a lot of that 175 00:08:16,480 --> 00:08:19,160 Speaker 7: knowledge is leaving the bank, but then also just their 176 00:08:19,200 --> 00:08:23,200 Speaker 7: ability and the question of are they ready for whatever's next, 177 00:08:23,280 --> 00:08:23,960 Speaker 7: And that's what. 178 00:08:23,960 --> 00:08:25,320 Speaker 6: People are really concerned. 179 00:08:25,440 --> 00:08:29,480 Speaker 7: Is they're feeling like something severely lacking under the leadership 180 00:08:29,480 --> 00:08:30,160 Speaker 7: of John Williams. 181 00:08:30,360 --> 00:08:32,040 Speaker 3: There's why I love that you wrote this, because Alex 182 00:08:32,120 --> 00:08:35,280 Speaker 3: is usually the person has those really nerdy repo market 183 00:08:35,720 --> 00:08:38,200 Speaker 3: articles where you're like, I know this is important. I 184 00:08:38,240 --> 00:08:39,800 Speaker 3: know I'm going to read it three times and I'm 185 00:08:39,800 --> 00:08:41,520 Speaker 3: still going to understand twenty percent of it and I 186 00:08:41,559 --> 00:08:43,520 Speaker 3: have to email Alex Harris. So thank you for writing 187 00:08:43,520 --> 00:08:46,200 Speaker 3: an article that I understood right off the bat. 188 00:08:46,400 --> 00:08:47,400 Speaker 6: What did they do about that? 189 00:08:47,480 --> 00:08:47,680 Speaker 1: Then? 190 00:08:47,800 --> 00:08:49,679 Speaker 3: I mean, is it as easy as like, hey, we're 191 00:08:49,720 --> 00:08:51,760 Speaker 3: going to offer more work from home? Is it not 192 00:08:51,800 --> 00:08:54,080 Speaker 3: that at all? Is it something very different? 193 00:08:54,640 --> 00:08:55,960 Speaker 6: I think it's very different. 194 00:08:56,080 --> 00:08:58,880 Speaker 7: I think really what people are going to have to 195 00:08:58,880 --> 00:09:01,520 Speaker 7: start looking at is to be a really serious look 196 00:09:01,559 --> 00:09:03,480 Speaker 7: at the role of the New York Fed. You know, 197 00:09:03,559 --> 00:09:07,559 Speaker 7: for some people, they've said, look, Lorie Logan got elevated 198 00:09:07,679 --> 00:09:10,080 Speaker 7: out of the New York Fed to running the Dallas Fed, 199 00:09:10,320 --> 00:09:12,480 Speaker 7: and she's taken a lot of that staff with her. 200 00:09:12,720 --> 00:09:15,160 Speaker 7: She has this experience on the balance sheet. People really 201 00:09:15,200 --> 00:09:17,800 Speaker 7: trust her. So now people are wondering, well, it doesn't 202 00:09:17,840 --> 00:09:20,160 Speaker 7: necessarily have to be New York that carries out you know, 203 00:09:20,200 --> 00:09:23,280 Speaker 7: the implementation of the Fed's policies when it comes to 204 00:09:23,320 --> 00:09:25,920 Speaker 7: their balance sheet, like this could shift to Dallas. 205 00:09:26,640 --> 00:09:27,240 Speaker 6: So people are. 206 00:09:27,120 --> 00:09:30,040 Speaker 7: Starting to ask that question or pose that question. At 207 00:09:30,040 --> 00:09:32,520 Speaker 7: the same time, though, you know, people are pushing back 208 00:09:32,520 --> 00:09:34,680 Speaker 7: and saying, no, no, no, this has to be in New York. 209 00:09:34,720 --> 00:09:36,840 Speaker 7: We need to fix what is happening in New York. 210 00:09:36,880 --> 00:09:39,440 Speaker 7: We need to retain talent in New York because the 211 00:09:39,480 --> 00:09:41,960 Speaker 7: banks are here, and if something happens with the banking system, 212 00:09:42,000 --> 00:09:44,559 Speaker 7: it's much easier to call everyone down to Liberty Street 213 00:09:44,600 --> 00:09:47,000 Speaker 7: and say, hey, get in here, we got to figure 214 00:09:47,000 --> 00:09:49,520 Speaker 7: this out than trying to call people all the way 215 00:09:49,559 --> 00:09:51,400 Speaker 7: down to Dallas and say, hey, we got to figure 216 00:09:51,440 --> 00:09:51,800 Speaker 7: this out. 217 00:09:52,040 --> 00:09:55,319 Speaker 2: So historically the New York Fed has been the branch 218 00:09:55,440 --> 00:10:00,040 Speaker 2: that manages the Treasury's balance sheet, correct buying and selling. 219 00:10:00,440 --> 00:10:02,840 Speaker 7: Well the Fed's balance sheet. So there are whole things 220 00:10:02,840 --> 00:10:05,160 Speaker 7: of treasuries and mbs and such. 221 00:10:05,240 --> 00:10:07,120 Speaker 2: Again, they have traders there and stuff that do this. 222 00:10:07,160 --> 00:10:08,640 Speaker 2: I mean, this is where it happens in New York. 223 00:10:08,920 --> 00:10:12,160 Speaker 7: Well, and you have other like Chicago still has you know, 224 00:10:12,400 --> 00:10:15,680 Speaker 7: market analysis people, they still have all these things coming 225 00:10:15,679 --> 00:10:16,600 Speaker 7: out of the other banks. 226 00:10:16,720 --> 00:10:19,040 Speaker 6: But it is primarily a function of the New York Fed. 227 00:10:19,080 --> 00:10:23,000 Speaker 7: They're tasked with managing their Fed's portfolio. Roberto Pearley is 228 00:10:23,040 --> 00:10:26,520 Speaker 7: the SOMA manager, so he manages the FED securities portfolio. 229 00:10:26,880 --> 00:10:29,720 Speaker 7: You know, so these things, and so the New York Fed, 230 00:10:29,800 --> 00:10:32,560 Speaker 7: really post financial crisis, has just taken on such a 231 00:10:32,640 --> 00:10:36,880 Speaker 7: larger role. They've essentially become like a giant broker dealer 232 00:10:37,200 --> 00:10:39,559 Speaker 7: just given the size and the sheer size of their 233 00:10:39,600 --> 00:10:42,680 Speaker 7: balance sheet. And that's you know, someone like Christopher Whalen 234 00:10:42,800 --> 00:10:45,360 Speaker 7: is making the argument that you don't need an academic 235 00:10:45,440 --> 00:10:48,120 Speaker 7: running the New York Fed. You need someone who's comfortable 236 00:10:48,160 --> 00:10:50,800 Speaker 7: with operations, with the nuts and bolts, and can kind 237 00:10:50,800 --> 00:10:54,440 Speaker 7: of see it from a more markets oriented perspective than 238 00:10:54,480 --> 00:10:55,720 Speaker 7: an academic one. 239 00:10:55,960 --> 00:10:59,120 Speaker 3: So how do they pitch that, Because who's going to 240 00:10:59,160 --> 00:11:01,920 Speaker 3: give up a job Goldman that pays a nice chunk 241 00:11:01,960 --> 00:11:03,760 Speaker 3: of change. Actually, I have no idea how much the 242 00:11:03,760 --> 00:11:05,559 Speaker 3: New York Fed does, but I have to assume it's less. 243 00:11:05,760 --> 00:11:06,560 Speaker 6: How I do it. 244 00:11:06,559 --> 00:11:08,840 Speaker 7: It's like I think, when I last look at the 245 00:11:08,960 --> 00:11:10,720 Speaker 7: annual report from twenty twenty three, I think it's like 246 00:11:10,880 --> 00:11:13,080 Speaker 7: a little over half a million dollars that the president 247 00:11:13,080 --> 00:11:15,080 Speaker 7: of the New York Fed makes but I mean, look 248 00:11:15,400 --> 00:11:19,360 Speaker 7: Beth Hammock, who ran funding, who ran the Goldman Sex fundings. 249 00:11:19,400 --> 00:11:22,360 Speaker 6: Are she's elevated. She's taking the role as the Cleveland 250 00:11:22,360 --> 00:11:23,000 Speaker 6: Fed president. 251 00:11:23,400 --> 00:11:26,600 Speaker 7: You know, Lorie Logan could always you know, people are 252 00:11:26,640 --> 00:11:28,679 Speaker 7: speculating that she could come back to New York and 253 00:11:28,760 --> 00:11:30,760 Speaker 7: run it. You know, these are the kinds of people 254 00:11:30,800 --> 00:11:33,240 Speaker 7: I think that they envision when they're thinking about the 255 00:11:33,320 --> 00:11:37,040 Speaker 7: role and who could possibly you know, helm the New 256 00:11:37,120 --> 00:11:39,719 Speaker 7: York Fed after John Williams, who decides to retire a 257 00:11:39,760 --> 00:11:40,320 Speaker 7: step down? 258 00:11:40,960 --> 00:11:43,800 Speaker 2: Do we have a problem with John Williams? Is that 259 00:11:43,880 --> 00:11:46,800 Speaker 2: a people placing the blame on these departures on John 260 00:11:46,800 --> 00:11:47,520 Speaker 2: Williams and his. 261 00:11:47,480 --> 00:11:50,800 Speaker 7: Style or you know, I think it's a I think 262 00:11:50,840 --> 00:11:53,640 Speaker 7: it's a bit of both. I think, you know, again, 263 00:11:54,040 --> 00:11:56,680 Speaker 7: you know, when we spoke to people, the message was 264 00:11:56,679 --> 00:12:00,800 Speaker 7: always he is a brilliant macro economist, but just ill 265 00:12:00,880 --> 00:12:04,319 Speaker 7: suited for the role. I also think culturally, the other 266 00:12:04,400 --> 00:12:07,280 Speaker 7: sense I got from people is that, you know, culturally, 267 00:12:07,400 --> 00:12:10,360 Speaker 7: it's it's very different than the San Francisco Fed, which 268 00:12:10,400 --> 00:12:12,720 Speaker 7: is what he was running for seven years before he 269 00:12:12,840 --> 00:12:14,440 Speaker 7: came and took the role in New York. 270 00:12:14,760 --> 00:12:15,840 Speaker 6: It's just very different. 271 00:12:15,840 --> 00:12:19,680 Speaker 7: And you know, sometimes culturally people don't fit and that's okay, 272 00:12:20,200 --> 00:12:22,120 Speaker 7: and so that's something to also think about. 273 00:12:22,559 --> 00:12:23,760 Speaker 6: So I think it's a bit of both. 274 00:12:24,000 --> 00:12:26,679 Speaker 7: I think it is somewhat of the of the culture 275 00:12:26,760 --> 00:12:29,560 Speaker 7: and just sort of not meshing. 276 00:12:29,920 --> 00:12:31,679 Speaker 6: You know, they were just sort of ill suited for 277 00:12:31,800 --> 00:12:32,280 Speaker 6: each other. 278 00:12:32,720 --> 00:12:35,520 Speaker 2: Our thanks to Alex Harris, Bloomberg Short Term interst rate Reporter. 279 00:12:35,960 --> 00:12:38,439 Speaker 3: Coming up, we're gonna break down my French President Emmanuel 280 00:12:38,480 --> 00:12:41,240 Speaker 3: Maccron's call for a snap legislative election may be a 281 00:12:41,280 --> 00:12:42,120 Speaker 3: serious gamble. 282 00:12:42,240 --> 00:12:45,440 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 283 00:12:45,480 --> 00:12:47,720 Speaker 2: depth research and data on two thousand companies and one 284 00:12:47,800 --> 00:12:50,679 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 285 00:12:50,760 --> 00:12:53,040 Speaker 2: bi go on the terminal, I'll Paul Swingey. 286 00:12:52,640 --> 00:12:54,720 Speaker 3: And am Alex Steel and this is Bloomberg. 287 00:12:58,920 --> 00:13:02,800 Speaker 1: You're listening to the Blueloomberg Intelligence podcast. Catch us live 288 00:13:02,880 --> 00:13:06,000 Speaker 1: weekdays at ten am Eastern on affocr Play and Android 289 00:13:06,000 --> 00:13:09,120 Speaker 1: Otto with the Bloomberg Business App. Listen on demand wherever 290 00:13:09,160 --> 00:13:13,000 Speaker 1: you get your podcasts, or watch us live on YouTube. 291 00:13:14,080 --> 00:13:17,760 Speaker 3: We move now to politics. French President Manuel Macron recently 292 00:13:17,800 --> 00:13:19,920 Speaker 3: called for a snap legislative election. 293 00:13:20,360 --> 00:13:23,920 Speaker 2: That's after Marine Lippen's far right National Rally Party defeatedt 294 00:13:23,920 --> 00:13:27,160 Speaker 2: Macron's Renaissance Party in European parliament elections. 295 00:13:27,240 --> 00:13:30,840 Speaker 3: The consequences of Macron putting politics above economic stability could 296 00:13:30,880 --> 00:13:33,960 Speaker 3: be profound, and it's the subject of a Bloomberg opinion 297 00:13:33,960 --> 00:13:37,080 Speaker 3: piece this week titled Macron plays Fast and Loose with 298 00:13:37,160 --> 00:13:38,600 Speaker 3: investor Faith for more. 299 00:13:38,679 --> 00:13:40,640 Speaker 2: Guest host Jess Mett and I were joined by the 300 00:13:40,679 --> 00:13:44,439 Speaker 2: story's author, Marcus Ashworth. He's a Bloomberg Opinion columnist covering 301 00:13:44,559 --> 00:13:47,679 Speaker 2: European markets. We first asked Marcus for his reaction to 302 00:13:47,720 --> 00:13:49,199 Speaker 2: what we saw in Europe this week. 303 00:13:49,600 --> 00:13:52,559 Speaker 8: I was thinking that this was a long time coming, 304 00:13:52,679 --> 00:13:56,760 Speaker 8: but it was worse than perhaps everyone, including Macrol, had expected, 305 00:13:57,040 --> 00:13:59,520 Speaker 8: and therefore it put him in a very difficult situation 306 00:13:59,640 --> 00:14:02,960 Speaker 8: with I guess his main opposition pulling more than. 307 00:14:02,800 --> 00:14:06,240 Speaker 5: Twice which his party got. Then he got like fifteen 308 00:14:06,240 --> 00:14:09,520 Speaker 5: percent or something. So though he has another three years 309 00:14:09,559 --> 00:14:10,400 Speaker 5: as president. 310 00:14:10,160 --> 00:14:12,320 Speaker 8: If he wants to, I don't think he'll resign, but 311 00:14:12,360 --> 00:14:14,880 Speaker 8: there was some question about that. He means he won't 312 00:14:14,920 --> 00:14:18,920 Speaker 8: have the ability to equim of Congress to be able 313 00:14:18,920 --> 00:14:21,560 Speaker 8: to do very much. He can still do a lot 314 00:14:21,560 --> 00:14:25,720 Speaker 8: of presidential decrees, but nonetheless it's boxed him in, and 315 00:14:25,760 --> 00:14:29,800 Speaker 8: more importantly, he can't run again by then, you know, 316 00:14:29,800 --> 00:14:32,200 Speaker 8: in by twenty twenty seven, his ten year legacy would 317 00:14:32,200 --> 00:14:35,120 Speaker 8: be pretty poor. So I think what he's decided to 318 00:14:35,280 --> 00:14:40,360 Speaker 8: now is gamble on a political swing which has gone 319 00:14:40,360 --> 00:14:43,240 Speaker 8: to the right wing that perhaps the French people they're 320 00:14:43,320 --> 00:14:45,320 Speaker 8: challenged again, may push. 321 00:14:45,120 --> 00:14:47,400 Speaker 5: Back against that. But the consequence of this. 322 00:14:47,600 --> 00:14:50,480 Speaker 8: Is that the bomb market in particular and the stock 323 00:14:50,520 --> 00:14:53,640 Speaker 8: market and some degree the economy is is going to 324 00:14:53,640 --> 00:14:55,800 Speaker 8: have to take a little bit of a how can 325 00:14:55,840 --> 00:14:59,720 Speaker 8: we say this bit of a shakeup, because politically this 326 00:14:59,800 --> 00:15:03,240 Speaker 8: is a very aggressive move and it also puts into 327 00:15:03,680 --> 00:15:07,600 Speaker 8: very much sharp contrast the financial fiscal situation of France, 328 00:15:07,640 --> 00:15:10,920 Speaker 8: which is rising ever and extorably higher in debt and 329 00:15:10,920 --> 00:15:14,800 Speaker 8: particularly it's budget deficits annual spend is much more than 330 00:15:14,840 --> 00:15:17,320 Speaker 8: it takes in. It's five and a half percent last year, 331 00:15:17,360 --> 00:15:20,920 Speaker 8: which is pretty shocking and not likely dropped much by 332 00:15:20,960 --> 00:15:23,280 Speaker 8: next year. And I think the European Union could put 333 00:15:23,280 --> 00:15:27,400 Speaker 8: it into double secret probation. They call it an emergency 334 00:15:27,440 --> 00:15:30,000 Speaker 8: deficit procedure, but really what it means is there's in 335 00:15:30,000 --> 00:15:33,880 Speaker 8: the sin bin, and that's hugely embarrassing for macn or 336 00:15:33,920 --> 00:15:36,720 Speaker 8: any government. But the point is the rating agency, the 337 00:15:36,760 --> 00:15:39,440 Speaker 8: credit rating agencies we saw S and P at the 338 00:15:39,520 --> 00:15:43,880 Speaker 8: end of May knock France down to double A minus 339 00:15:44,560 --> 00:15:47,560 Speaker 8: Fitch are already there, and movies that came out and 340 00:15:47,560 --> 00:15:50,760 Speaker 8: basically said they're one notch up at double A two, 341 00:15:50,800 --> 00:15:52,600 Speaker 8: but they may be having a look at it. So 342 00:15:52,760 --> 00:15:56,440 Speaker 8: it's all about a worsening credit of France, a worsening 343 00:15:56,520 --> 00:16:00,400 Speaker 8: political regime, which makes the European Union very nervous because 344 00:16:00,520 --> 00:16:03,080 Speaker 8: you know we've seen with the previous situations with Greece 345 00:16:03,120 --> 00:16:05,880 Speaker 8: and Italy that will turn the blind eye to most things. 346 00:16:05,880 --> 00:16:08,800 Speaker 8: But they want everyone to be very much pro Europe 347 00:16:09,400 --> 00:16:11,760 Speaker 8: and Marie La Penn's right wing party, which is the 348 00:16:11,840 --> 00:16:16,320 Speaker 8: National Rally though they no longer argue for Frexit or 349 00:16:16,360 --> 00:16:19,920 Speaker 8: France exit, they once did and then reason pretty. 350 00:16:19,640 --> 00:16:21,160 Speaker 5: Long in Brussels. 351 00:16:21,280 --> 00:16:25,920 Speaker 8: So the last thing they want is a non fully backing. 352 00:16:25,640 --> 00:16:27,920 Speaker 5: Euro style prime minister. 353 00:16:28,360 --> 00:16:31,880 Speaker 8: Even under Mackerel's president that we're out and settling for Brussel. 354 00:16:32,000 --> 00:16:35,920 Speaker 8: That means it's very unsettling for credit rating agencies. Panic panic, panic, 355 00:16:36,000 --> 00:16:39,120 Speaker 8: It means that French debt is perhaps a little bit 356 00:16:39,160 --> 00:16:41,240 Speaker 8: more risky, still pretty safe, but a little bit more 357 00:16:41,280 --> 00:16:43,520 Speaker 8: risk than it was before weekend. 358 00:16:44,080 --> 00:16:47,200 Speaker 3: You were talking about how France has seen a sustained 359 00:16:47,200 --> 00:16:50,640 Speaker 3: deterioration its fiscal position, particularly when you're looking at its debtload. 360 00:16:50,720 --> 00:16:52,600 Speaker 3: How did France get into this position? 361 00:16:53,760 --> 00:16:59,080 Speaker 5: Aha, they spend more than they had. The reason is 362 00:16:59,200 --> 00:17:00,600 Speaker 5: I mean k Kart. 363 00:17:00,440 --> 00:17:03,920 Speaker 8: Was elected on reforming the fiscal situation, and principally one 364 00:17:03,920 --> 00:17:07,359 Speaker 8: of his key things was raising the retirement age, which 365 00:17:07,359 --> 00:17:10,560 Speaker 8: he raised from sort of really sixty sixty two up 366 00:17:10,600 --> 00:17:12,879 Speaker 8: to about sixty four. He wanted to get it up 367 00:17:12,880 --> 00:17:16,239 Speaker 8: to about sixty seven, which for instance where the UK is, 368 00:17:17,560 --> 00:17:21,399 Speaker 8: but massive pushback and the fact he very basically couldn't 369 00:17:21,400 --> 00:17:23,119 Speaker 8: get it through unless he pushed it through by this, 370 00:17:23,440 --> 00:17:26,520 Speaker 8: as I mentioned before, presidential decree worried some of the 371 00:17:26,600 --> 00:17:29,520 Speaker 8: raising aginsties. Then now the fact that he has gotten 372 00:17:29,600 --> 00:17:33,119 Speaker 8: really nowhere of getting stuff through the National Assembly, the 373 00:17:33,240 --> 00:17:36,440 Speaker 8: Parliament or Congress is a really scary situation. 374 00:17:36,640 --> 00:17:38,560 Speaker 5: So you know that means. 375 00:17:38,400 --> 00:17:43,159 Speaker 8: There's even less chance of any form of fiscal improvement, 376 00:17:43,920 --> 00:17:47,520 Speaker 8: of getting that budget deficit down and reducing the overall 377 00:17:47,520 --> 00:17:48,640 Speaker 8: and debtness of France. 378 00:17:49,280 --> 00:17:51,480 Speaker 5: And that's a pretty difficult. 379 00:17:51,080 --> 00:17:55,560 Speaker 8: Situation, complete gridlock because if the national Rally were to 380 00:17:55,800 --> 00:17:58,439 Speaker 8: become the person the party to have the Prime minister 381 00:17:58,480 --> 00:18:02,840 Speaker 8: and try and form some form of coappitatial cohabitation, I 382 00:18:02,880 --> 00:18:05,440 Speaker 8: think it's say English, is that they won't get in it. 383 00:18:05,440 --> 00:18:09,600 Speaker 8: They won't allow any form of spending cuts or anything 384 00:18:09,640 --> 00:18:12,520 Speaker 8: to reduce the benefits that a lot of French people. 385 00:18:13,400 --> 00:18:16,160 Speaker 8: Eight percent of the French economy is state spending. It's 386 00:18:16,200 --> 00:18:20,760 Speaker 8: a very socialist driven state and they don't like their 387 00:18:20,760 --> 00:18:24,120 Speaker 8: benefits getting touched, which means nothing will happen at least 388 00:18:24,119 --> 00:18:28,040 Speaker 8: twenty twenty seven, no improvement on the fiscal outlook. That's 389 00:18:28,200 --> 00:18:31,760 Speaker 8: very bad news for bondholders, for credit radio season, indeed 390 00:18:31,760 --> 00:18:34,040 Speaker 8: probably for European Union cohesion. 391 00:18:34,560 --> 00:18:38,639 Speaker 2: So I know in your column, Marcus, perhaps one of 392 00:18:38,680 --> 00:18:41,320 Speaker 2: the rationales from Mark Crohn's boldness here is that will 393 00:18:41,359 --> 00:18:44,800 Speaker 2: actually force Marine Leapen to maybe reveal what her plans 394 00:18:44,800 --> 00:18:47,120 Speaker 2: for the economy are. What do we know or what 395 00:18:47,160 --> 00:18:47,679 Speaker 2: don't we know? 396 00:18:48,440 --> 00:18:50,720 Speaker 8: Well, we they deliberately a bit like the Labor Party 397 00:18:50,720 --> 00:18:52,040 Speaker 8: it's about to take power in the UK. 398 00:18:52,119 --> 00:18:54,399 Speaker 5: They've been very should we say with. 399 00:18:54,680 --> 00:18:57,879 Speaker 8: Erchet In telling us what they are actually going to 400 00:18:57,920 --> 00:19:02,000 Speaker 8: planning to do, and Marilla Penn has basically said no 401 00:19:02,200 --> 00:19:05,600 Speaker 8: to many things but hasn't told anyone really what they 402 00:19:05,600 --> 00:19:06,240 Speaker 8: are planning to do. 403 00:19:06,359 --> 00:19:09,080 Speaker 5: How you would sort the pension situation out. 404 00:19:09,520 --> 00:19:10,959 Speaker 8: But the one thing we know, if you're sure, they 405 00:19:10,960 --> 00:19:15,639 Speaker 8: are pretty anti immigration, and they are pretty anti the 406 00:19:15,720 --> 00:19:18,920 Speaker 8: pension changes in any other form of benefit changes. So 407 00:19:19,000 --> 00:19:22,280 Speaker 8: it's gonna be almost impossible for the government to stop 408 00:19:22,720 --> 00:19:26,080 Speaker 8: its welfare spending bill, and that you can only mean, 409 00:19:26,119 --> 00:19:29,200 Speaker 8: you know, essentially this would be a deficit and debt 410 00:19:29,800 --> 00:19:32,160 Speaker 8: to GDP ratio negative scenario. 411 00:19:32,359 --> 00:19:33,840 Speaker 5: I would think it'd be very hard for her. 412 00:19:34,359 --> 00:19:37,120 Speaker 8: But you know, Mackerel's gamble is precisely as you laid out, 413 00:19:37,280 --> 00:19:40,320 Speaker 8: is that if they put them in power, at least nominally, 414 00:19:40,520 --> 00:19:42,639 Speaker 8: the Prime Minister doesn't have anything like as much control 415 00:19:42,680 --> 00:19:45,399 Speaker 8: as you would think, but they have ability. 416 00:19:44,920 --> 00:19:46,240 Speaker 5: To try and put some things through. 417 00:19:46,320 --> 00:19:49,280 Speaker 8: If they turn out to be incompetent and they turn 418 00:19:49,359 --> 00:19:51,280 Speaker 8: out not to do what they said they would go 419 00:19:51,320 --> 00:19:54,520 Speaker 8: to do, or anything like this, it would make the 420 00:19:54,520 --> 00:19:57,520 Speaker 8: presdential elections in twenty twenty seven a bit of a little 421 00:19:57,560 --> 00:20:02,800 Speaker 8: bit more anti rally and pros we say Macrols or 422 00:20:02,840 --> 00:20:05,399 Speaker 8: more more centrists. The huge gamble was it could go 423 00:20:05,400 --> 00:20:06,919 Speaker 8: the other way. These guys could turn out to be 424 00:20:07,520 --> 00:20:09,480 Speaker 8: very good in power. And the fact the center rights 425 00:20:09,520 --> 00:20:13,359 Speaker 8: are already talking about maybe teaming up with the National 426 00:20:13,480 --> 00:20:15,720 Speaker 8: Rally of the far right and creating an anti Macron 427 00:20:15,800 --> 00:20:19,320 Speaker 8: coalition that can become very popular, and we could see 428 00:20:19,480 --> 00:20:22,840 Speaker 8: it would be a very stupid gamble that Macrol's taken. 429 00:20:23,000 --> 00:20:24,959 Speaker 8: We just don't know. The point is that either a 430 00:20:24,960 --> 00:20:27,640 Speaker 8: bondholder and indeed, as you seem with the French banks 431 00:20:27,720 --> 00:20:30,920 Speaker 8: like Sockgen got hit really hard. You know, why would 432 00:20:30,920 --> 00:20:32,639 Speaker 8: you want to take the risk and perhaps go to 433 00:20:32,640 --> 00:20:34,760 Speaker 8: somewhere a little bit more safe like Germany or I 434 00:20:34,760 --> 00:20:35,920 Speaker 8: don't know, somewhere else in Europe? 435 00:20:36,040 --> 00:20:36,240 Speaker 9: All right? 436 00:20:36,240 --> 00:20:40,600 Speaker 3: Thanks to Marcus Ashwareth, the Bloomberg opinion columnist covering European markets. 437 00:20:40,240 --> 00:20:42,480 Speaker 2: Staying in Europe this week, you heard that the European 438 00:20:42,600 --> 00:20:46,080 Speaker 2: Union will impose additional tariffs on electric cars shipped from 439 00:20:46,160 --> 00:20:48,960 Speaker 2: China starting next month. This could take levies to as 440 00:20:49,000 --> 00:20:50,320 Speaker 2: much as forty eight percent. 441 00:20:50,640 --> 00:20:53,280 Speaker 3: It's a move that further escalates trade tensions between the 442 00:20:53,320 --> 00:20:55,760 Speaker 3: EU and China, and it also adds to the cost 443 00:20:55,840 --> 00:20:57,360 Speaker 3: of buying an EV For more. 444 00:20:57,359 --> 00:21:00,359 Speaker 2: We were joined by Craig Trudell, Bloomberg Global Ottos Editor. 445 00:21:00,440 --> 00:21:03,080 Speaker 3: We first asked Craig for his take on the tariff increases. 446 00:21:03,560 --> 00:21:07,119 Speaker 10: This is huge news, it was anticipated, but the particulars 447 00:21:07,640 --> 00:21:12,000 Speaker 10: are something that are very fresh. So the European Union 448 00:21:12,080 --> 00:21:15,479 Speaker 10: launched this investigation last year into the extent of the 449 00:21:15,520 --> 00:21:21,120 Speaker 10: subsidization of electric vehicles by China, which are are increasingly 450 00:21:21,359 --> 00:21:24,920 Speaker 10: you know, coming into Europe and you know, really able 451 00:21:24,960 --> 00:21:28,800 Speaker 10: to compete with local manufacturers. There's been concerns about you know, 452 00:21:28,920 --> 00:21:33,720 Speaker 10: Chinese cars being able to undercut companies like Volkswagen and 453 00:21:33,800 --> 00:21:37,840 Speaker 10: Stlantis and Renault. Sa I see, the maker of MG, 454 00:21:37,920 --> 00:21:40,760 Speaker 10: which is a British brand that you know, was was 455 00:21:40,800 --> 00:21:43,399 Speaker 10: sort of brought back from the brink by a state 456 00:21:43,400 --> 00:21:47,600 Speaker 10: owned company in China. Sa I see. They are going 457 00:21:47,640 --> 00:21:50,640 Speaker 10: to be subject to a thirty eight percent additional tariff. 458 00:21:50,640 --> 00:21:53,600 Speaker 10: And MG has really been sort of lighting, you know, 459 00:21:54,080 --> 00:21:56,000 Speaker 10: lighting things on fire here in Europe and in the 460 00:21:56,080 --> 00:21:59,520 Speaker 10: UK in terms of really you know, being able to 461 00:21:59,520 --> 00:22:02,679 Speaker 10: push a lot more volume the last couple of years. 462 00:22:03,160 --> 00:22:06,399 Speaker 10: Another big manufacturer that's going to be subject to a 463 00:22:06,440 --> 00:22:09,960 Speaker 10: substantial TERRAF will bgi Le they of course own Volvo 464 00:22:10,080 --> 00:22:14,080 Speaker 10: and Pollstar and some other big brands. Byd is another 465 00:22:14,160 --> 00:22:18,199 Speaker 10: company that will be subject to seventeen percent additional tariff, 466 00:22:18,840 --> 00:22:21,639 Speaker 10: and the rest of the industry will be subject to 467 00:22:21,680 --> 00:22:25,080 Speaker 10: an a weighted average duty of twenty one percent. 468 00:22:25,560 --> 00:22:28,119 Speaker 2: So talk to us about just the EV market and 469 00:22:28,160 --> 00:22:31,920 Speaker 2: the China's percentage, Like what's China's market share in Europe 470 00:22:31,960 --> 00:22:34,640 Speaker 2: of EV's broadly defined, because you can't find one here 471 00:22:34,640 --> 00:22:35,399 Speaker 2: in the US. 472 00:22:36,080 --> 00:22:38,560 Speaker 10: Yeah, I mean, it's tricky because it of course depends 473 00:22:38,560 --> 00:22:40,280 Speaker 10: a little bit on how you define it. And I 474 00:22:40,280 --> 00:22:42,800 Speaker 10: think one of the things that's really interesting here is 475 00:22:42,840 --> 00:22:46,160 Speaker 10: that it's not necessarily just Chinese companies that are doing 476 00:22:46,240 --> 00:22:49,600 Speaker 10: this importing. The biggest importer as a matter of fact, 477 00:22:49,640 --> 00:22:53,560 Speaker 10: is Tesla. They have the plant in Germany where they 478 00:22:53,560 --> 00:22:56,120 Speaker 10: make Model Wise, but they don't make Model threes there, 479 00:22:56,160 --> 00:22:58,679 Speaker 10: so they've been shipping an awful lot of Model threes 480 00:22:58,720 --> 00:23:02,919 Speaker 10: from their plant in Shanghai. They interestingly are going to 481 00:23:02,960 --> 00:23:07,359 Speaker 10: try to have a lower duty rate and make the 482 00:23:07,520 --> 00:23:11,720 Speaker 10: argument to the Europink Commission that because they've been, you know, 483 00:23:11,760 --> 00:23:17,359 Speaker 10: benefiting less than other manufacturers, you know, from subsidies that 484 00:23:17,720 --> 00:23:20,640 Speaker 10: they should have a sort of commensurate duty rate. Other 485 00:23:20,720 --> 00:23:24,119 Speaker 10: manufacturers are able to make that request and have what's 486 00:23:24,160 --> 00:23:29,720 Speaker 10: called a you know, individually calculated rate, but at this juncture, 487 00:23:29,800 --> 00:23:32,040 Speaker 10: the only company that we know that's asked for that 488 00:23:32,119 --> 00:23:33,200 Speaker 10: and make get it is Tesla. 489 00:23:34,320 --> 00:23:37,239 Speaker 3: Here's what I don't quite understand. I know I'm kind 490 00:23:37,240 --> 00:23:38,840 Speaker 3: of beating my head against all on this one, but 491 00:23:39,160 --> 00:23:41,320 Speaker 3: if the goal is to go green, why wouldn't they 492 00:23:41,359 --> 00:23:43,400 Speaker 3: want to flood the market with a ton of Chinese 493 00:23:43,400 --> 00:23:46,240 Speaker 3: ev imports and get the green stuff going. And I 494 00:23:46,280 --> 00:23:49,760 Speaker 3: appreciate that they want to protect their current manufacturers, but 495 00:23:49,920 --> 00:23:54,520 Speaker 3: you know, importing cheaper evs also spurs competition. So the 496 00:23:54,640 --> 00:23:57,800 Speaker 3: line to thread the needle I find to be very confusing. 497 00:23:59,080 --> 00:24:02,719 Speaker 10: It's absolutely needle threading or or you know, tightrope walking, 498 00:24:02,760 --> 00:24:06,000 Speaker 10: pick your metaphor. And it is a very valid question. 499 00:24:06,160 --> 00:24:09,520 Speaker 10: And depending on who you ask, they're they're doing absolutely 500 00:24:09,560 --> 00:24:12,159 Speaker 10: the right thing here, or or they're really sort of 501 00:24:12,160 --> 00:24:15,760 Speaker 10: shooting themselves in the foot folks in bruskly. The you 502 00:24:15,760 --> 00:24:19,080 Speaker 10: know debate here is is to what extent do you 503 00:24:19,119 --> 00:24:22,280 Speaker 10: know local manufacturers need to be protected from the fact 504 00:24:22,320 --> 00:24:25,640 Speaker 10: that kinda has jumped up out to this huge lead. 505 00:24:25,680 --> 00:24:28,879 Speaker 10: They're dominant in this space. They're able to you know, 506 00:24:28,960 --> 00:24:32,679 Speaker 10: bring electric vehicles to market with much cheaper batteries that 507 00:24:32,720 --> 00:24:36,040 Speaker 10: people can actually afford, and that's been you know, the 508 00:24:36,040 --> 00:24:39,000 Speaker 10: the major you know, sort of pain point for the 509 00:24:39,080 --> 00:24:42,320 Speaker 10: industry is they have not been able to bring prices 510 00:24:42,400 --> 00:24:46,240 Speaker 10: down far enough fast enough for you know, more mass 511 00:24:46,280 --> 00:24:50,040 Speaker 10: market adoption. China has been able to pull that off. Uh, 512 00:24:50,359 --> 00:24:53,199 Speaker 10: you know, in large part European companies have not been 513 00:24:53,240 --> 00:24:55,440 Speaker 10: able to do that. So while you know, we've seen 514 00:24:55,520 --> 00:24:58,880 Speaker 10: quite a bit more momentum in Europe relative to say 515 00:24:58,880 --> 00:25:02,720 Speaker 10: the US, that momentum has really slow of late, particularly 516 00:25:02,760 --> 00:25:05,280 Speaker 10: as we've seen you know, the cost of living crisis 517 00:25:05,320 --> 00:25:09,639 Speaker 10: and inflation really hitting consumers pocketbooks. We've not seen you know, 518 00:25:09,720 --> 00:25:12,480 Speaker 10: the growth rates that you know, just in the last 519 00:25:12,480 --> 00:25:15,840 Speaker 10: few years. We're really eye popping and you know, getting 520 00:25:15,840 --> 00:25:18,920 Speaker 10: a lot of people excited about you know, this transition 521 00:25:19,080 --> 00:25:19,760 Speaker 10: being doable. 522 00:25:20,080 --> 00:25:22,800 Speaker 2: Our thanks to Greig Judell, Bloomberg Global Autos Editor. 523 00:25:23,000 --> 00:25:25,400 Speaker 3: Coming up on the program, a conversation with Next Era 524 00:25:25,640 --> 00:25:28,760 Speaker 3: Energy CEO John Ketchum on how the demand for power 525 00:25:28,880 --> 00:25:30,440 Speaker 3: is dramatically increasing. 526 00:25:30,760 --> 00:25:33,840 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 527 00:25:33,920 --> 00:25:36,080 Speaker 2: depth research and data on two thousand companies in one 528 00:25:36,200 --> 00:25:39,160 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 529 00:25:39,200 --> 00:25:41,680 Speaker 2: b I go on the terminal On'm Paul Sweeney. 530 00:25:41,359 --> 00:25:43,560 Speaker 3: And am Alex Steel and this is Bloomberg. 531 00:25:48,720 --> 00:25:52,600 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 532 00:25:52,680 --> 00:25:56,200 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 533 00:25:56,240 --> 00:25:59,040 Speaker 1: Auto with the Bloomberg Business app. You can also listen 534 00:25:59,119 --> 00:26:02,240 Speaker 1: live on Amazon on Alexa from our flagship New York station, 535 00:26:02,600 --> 00:26:04,600 Speaker 1: Just say Alexa playing Bloomberg. 536 00:26:04,640 --> 00:26:07,800 Speaker 3: Eleven thirty, we begin to look at the company Next 537 00:26:07,840 --> 00:26:11,760 Speaker 3: Era Energy. It's TICKERSNEE. Next Era Energy is a leading 538 00:26:11,760 --> 00:26:14,760 Speaker 3: clean energy company headquartered in Juno Beach, Florida, and it 539 00:26:14,800 --> 00:26:18,800 Speaker 3: provides clean, affordable, reliable electricity to approximately five point eight 540 00:26:18,880 --> 00:26:22,719 Speaker 3: million customer accounts or more than twelve million people across Florida. 541 00:26:22,760 --> 00:26:25,560 Speaker 2: For more on how the demand for power is dramatically increasing, 542 00:26:25,640 --> 00:26:28,280 Speaker 2: we were joined by Next Era Energy President and CEO, 543 00:26:28,400 --> 00:26:31,399 Speaker 2: John Ketchum. We began by asking him more about what 544 00:26:31,480 --> 00:26:32,359 Speaker 2: his company does. 545 00:26:32,600 --> 00:26:36,159 Speaker 11: We're made up of two businesses. One we own the 546 00:26:36,280 --> 00:26:41,560 Speaker 11: nation's largest rate regulated utility Florida Power and Light. And 547 00:26:41,640 --> 00:26:46,960 Speaker 11: two we are the world's leader in renewables when solar 548 00:26:47,600 --> 00:26:51,679 Speaker 11: battery storage a unique combination bringing those two companies together. 549 00:26:51,840 --> 00:26:54,199 Speaker 3: But you still have like nuclear and gas too, right 550 00:26:54,320 --> 00:26:54,560 Speaker 3: like it. 551 00:26:54,840 --> 00:26:57,239 Speaker 2: We do for the utility side, we do so we 552 00:26:57,320 --> 00:26:57,920 Speaker 2: covered all. 553 00:26:58,200 --> 00:27:00,720 Speaker 11: We're in every part of the energy value chain, not 554 00:27:00,800 --> 00:27:04,959 Speaker 11: only a renewables. We have six gigawatts of nuclear and 555 00:27:05,000 --> 00:27:07,119 Speaker 11: we're one of the best operators in the country on 556 00:27:07,160 --> 00:27:10,400 Speaker 11: the nuclear side, and we also own gas fire generation. 557 00:27:10,600 --> 00:27:14,760 Speaker 11: Seventy two percent of our generation fleet in Florida is 558 00:27:14,920 --> 00:27:18,920 Speaker 11: actually natural gas fired. So we view ourselves really as 559 00:27:19,080 --> 00:27:21,840 Speaker 11: a very credible source in being able to advise our 560 00:27:21,880 --> 00:27:25,400 Speaker 11: customers on what the lowest cost option is for generation. 561 00:27:26,240 --> 00:27:30,280 Speaker 2: Owning a utility electric utility in Florida would seem to 562 00:27:30,320 --> 00:27:33,280 Speaker 2: be a tough business with all the weather down there. 563 00:27:33,320 --> 00:27:36,399 Speaker 2: What happens when these storms come through? How do you guys? 564 00:27:36,640 --> 00:27:38,960 Speaker 2: You have to almost be in a constant state of 565 00:27:39,040 --> 00:27:40,720 Speaker 2: emergency almost to be able to react. 566 00:27:40,840 --> 00:27:43,080 Speaker 11: We are battle tested. That's one of the great things 567 00:27:43,080 --> 00:27:46,920 Speaker 11: about our company is that nothing catches us up by surprise, 568 00:27:47,000 --> 00:27:51,119 Speaker 11: and it comes from a culture of continuous improvement and innovation, 569 00:27:51,720 --> 00:27:54,520 Speaker 11: and we practice and we drill, and we've had what 570 00:27:54,640 --> 00:27:58,119 Speaker 11: forty nine hurricanes in the last twenty or thirty years. 571 00:27:58,200 --> 00:28:02,080 Speaker 11: We're never caught by surprise. Company that is used to 572 00:28:02,200 --> 00:28:04,960 Speaker 11: managing through diversity, and that's one of the strengths. 573 00:28:05,119 --> 00:28:08,000 Speaker 3: So you mentioned catch by surprise. So there was an 574 00:28:08,000 --> 00:28:11,439 Speaker 3: investor presentation that you made and you did, were you 575 00:28:11,440 --> 00:28:14,640 Speaker 3: outline your forecast this year through twenty twenty six. You're 576 00:28:14,680 --> 00:28:18,239 Speaker 3: also twenty twenty seven midpoint for profit forecast. That's the 577 00:28:18,280 --> 00:28:22,280 Speaker 3: one that analysts said that falls short of our estimates. Yeah, 578 00:28:22,320 --> 00:28:24,359 Speaker 3: And I guess the question is if data demand and 579 00:28:24,480 --> 00:28:27,000 Speaker 3: data power is going to drive so much demand for 580 00:28:27,080 --> 00:28:30,040 Speaker 3: your stuff, why isn't that midpoint higher. 581 00:28:30,480 --> 00:28:32,600 Speaker 11: Well, here's what we see, and we talked a lot 582 00:28:32,640 --> 00:28:35,840 Speaker 11: about this at the analyst day. There are three things 583 00:28:35,880 --> 00:28:38,760 Speaker 11: that I think really differentiate Next Era as part of 584 00:28:38,800 --> 00:28:41,920 Speaker 11: our value story. One, we're seeing an inflection point and 585 00:28:42,000 --> 00:28:45,080 Speaker 11: power demand. Two, it's going to be met by renewables 586 00:28:45,080 --> 00:28:48,480 Speaker 11: because it's low costs, fast to deploy, and it's clean. 587 00:28:48,600 --> 00:28:51,120 Speaker 11: And no companies better positioned to meet it than we are. 588 00:28:51,720 --> 00:28:55,320 Speaker 11: And our business model has always been what I would 589 00:28:55,320 --> 00:28:58,640 Speaker 11: call a replacement cycle. We were building new renewables to 590 00:28:58,720 --> 00:29:05,320 Speaker 11: replace higher cost coal plants, higher costs, less efficient gas 591 00:29:05,360 --> 00:29:08,880 Speaker 11: fired units, oil fire units. We now have this new 592 00:29:08,960 --> 00:29:12,400 Speaker 11: opportunity that's really emerged in the last six to nine months, 593 00:29:12,960 --> 00:29:16,840 Speaker 11: which is what I call our growth cycle opportunity. It's 594 00:29:16,920 --> 00:29:21,160 Speaker 11: a new demand that has come and it's across industries. 595 00:29:21,240 --> 00:29:24,480 Speaker 11: It's not just data centers get a lot of discussion, 596 00:29:24,560 --> 00:29:29,160 Speaker 11: but it's industrial electrification reshoring to manufacturing as well. But 597 00:29:29,240 --> 00:29:32,720 Speaker 11: when you think about it, we're having all these discussions 598 00:29:32,760 --> 00:29:35,880 Speaker 11: with these customers now. Take data centers, for example, it 599 00:29:35,920 --> 00:29:37,960 Speaker 11: takes two to three years to build a data center, 600 00:29:38,000 --> 00:29:40,920 Speaker 11: so they won't need the power until twenty twenty seven. 601 00:29:41,120 --> 00:29:44,360 Speaker 11: We might sign a contract today, but the power comes 602 00:29:44,360 --> 00:29:46,800 Speaker 11: in twenty seven, which means it contributes in twenty eight. 603 00:29:47,120 --> 00:29:49,960 Speaker 11: And so we're trying to explain to investors, Look, we 604 00:29:50,080 --> 00:29:53,880 Speaker 11: have a tremendous long term growth outlook, but a lot 605 00:29:53,880 --> 00:29:58,600 Speaker 11: of this growth cycle demand is really going to start materializing, 606 00:29:58,720 --> 00:30:02,040 Speaker 11: producing revenues and earn needs in twenty seven, which means 607 00:30:02,080 --> 00:30:04,440 Speaker 11: it really starts to contribute in twenty eight. 608 00:30:04,720 --> 00:30:06,640 Speaker 2: As you walk through mitt On, Manhattan, you probably see 609 00:30:06,680 --> 00:30:09,640 Speaker 2: some empty office space here. I think they all move 610 00:30:09,720 --> 00:30:12,360 Speaker 2: down to your state. Talk to us about how that's 611 00:30:12,400 --> 00:30:15,480 Speaker 2: impacted your business in terms of demand and maybe what 612 00:30:15,560 --> 00:30:17,200 Speaker 2: you have to invest back into your GRIED. 613 00:30:17,400 --> 00:30:19,760 Speaker 11: Yeah, and that's what's great about our business, right is 614 00:30:19,960 --> 00:30:22,920 Speaker 11: the Barbell approach. We've got the nation's leading great regularly 615 00:30:23,080 --> 00:30:26,520 Speaker 11: utility in Florida and the world's leader in renewables in Florida. 616 00:30:26,560 --> 00:30:30,480 Speaker 11: We're seeing tremendous growth over the next twenty years. We're 617 00:30:30,560 --> 00:30:34,320 Speaker 11: projecting a forty four percent increase in GDP. We have 618 00:30:34,360 --> 00:30:38,240 Speaker 11: one thousand people a day moving to the state of Florida. 619 00:30:38,400 --> 00:30:43,160 Speaker 11: Four the five fastest growing metropolitan areas in the United 620 00:30:43,200 --> 00:30:44,880 Speaker 11: States are in Florida. 621 00:30:45,120 --> 00:30:45,560 Speaker 2: Florida. 622 00:30:45,560 --> 00:30:49,360 Speaker 11: We're a country, it would have the fourteenth largest economy 623 00:30:49,520 --> 00:30:53,320 Speaker 11: in the world, and we're there to power all that growth. 624 00:30:53,440 --> 00:30:56,600 Speaker 11: So our growth story is not only about what I 625 00:30:56,720 --> 00:30:59,960 Speaker 11: just discussed about all this renewable demand that we see 626 00:31:00,080 --> 00:31:04,480 Speaker 11: power in AI and industry and manufacturing across the United States, 627 00:31:04,480 --> 00:31:07,640 Speaker 11: but it's also all the growth that we see right 628 00:31:07,680 --> 00:31:09,360 Speaker 11: in our own backyard in Florida. 629 00:31:09,480 --> 00:31:12,480 Speaker 3: Talk to me about rates. So you're going to need 630 00:31:12,520 --> 00:31:14,880 Speaker 3: to invest a lot, right, Like there's maybe an enormous 631 00:31:14,920 --> 00:31:18,320 Speaker 3: investment cycle as you mentioned, like the growth cycle for utilities, right, 632 00:31:18,920 --> 00:31:21,480 Speaker 3: what is it like on the regulated side of going 633 00:31:21,480 --> 00:31:23,280 Speaker 3: back to the government and saying, Okay, guys, I got 634 00:31:23,280 --> 00:31:25,160 Speaker 3: to invest it, You've got to raise the rates. 635 00:31:25,840 --> 00:31:26,120 Speaker 1: Yeah. 636 00:31:26,160 --> 00:31:28,640 Speaker 11: And so what we do is we have done a 637 00:31:28,760 --> 00:31:31,120 Speaker 11: terrific job of taking cost out of our business. So 638 00:31:31,160 --> 00:31:33,680 Speaker 11: when you look at what we've been able to do 639 00:31:33,920 --> 00:31:37,120 Speaker 11: over the last twenty years, our O and M on 640 00:31:37,200 --> 00:31:41,480 Speaker 11: a dollar per megawate hour basis is seventy percent seventy 641 00:31:41,520 --> 00:31:46,240 Speaker 11: percent lower than the national average. That's three billion dollars 642 00:31:46,280 --> 00:31:51,120 Speaker 11: we put in our customer's pocketbook every single year compared 643 00:31:51,160 --> 00:31:54,560 Speaker 11: to an average utility. And we've always been able to 644 00:31:54,560 --> 00:31:59,160 Speaker 11: make really smart capital investment decisions around bringing low cost 645 00:31:59,200 --> 00:32:03,040 Speaker 11: generation in the fold. And the lowest cost generation option 646 00:32:03,200 --> 00:32:06,520 Speaker 11: that we have in Florida is solar and storage. So 647 00:32:06,960 --> 00:32:10,440 Speaker 11: although we're investing more capital, it's actually lowering the bill 648 00:32:10,840 --> 00:32:15,080 Speaker 11: because it's a lot cheaper than other generation alternatives, combined 649 00:32:15,120 --> 00:32:17,840 Speaker 11: with our ability to take cost out with the way 650 00:32:17,880 --> 00:32:18,400 Speaker 11: we operate. 651 00:32:18,480 --> 00:32:21,760 Speaker 2: But for you, from your investors perspective, is a unit 652 00:32:21,800 --> 00:32:24,640 Speaker 2: of power from a renewable source, what's a profit margin 653 00:32:24,720 --> 00:32:27,280 Speaker 2: on that versus maybe an existing source. 654 00:32:28,080 --> 00:32:31,920 Speaker 11: Well, when you think about renewables, I mean renewables, you know, 655 00:32:32,000 --> 00:32:36,240 Speaker 11: have really strong returns and they're low cost, and you 656 00:32:36,320 --> 00:32:39,080 Speaker 11: talked about you know, interest rates, you being one of 657 00:32:39,120 --> 00:32:41,960 Speaker 11: the factors we pass those costs through to our customers. 658 00:32:42,360 --> 00:32:46,520 Speaker 11: And so the cost of wind and solar has gone 659 00:32:46,600 --> 00:32:49,760 Speaker 11: up a little bit as we've seen some pressure you 660 00:32:49,800 --> 00:32:53,080 Speaker 11: know here from the macro environment, So have cost increase 661 00:32:53,200 --> 00:32:57,120 Speaker 11: for every other type of generation. Actually, gas fired generation 662 00:32:57,640 --> 00:33:00,840 Speaker 11: has really gone up in price. So you know, what 663 00:33:00,920 --> 00:33:04,880 Speaker 11: we have seen with gas fire technology is a fifty 664 00:33:04,960 --> 00:33:08,520 Speaker 11: percent increase in the last twelve months. That has not 665 00:33:08,680 --> 00:33:12,400 Speaker 11: happened to renewables, making renewables even lower cost than they've 666 00:33:12,440 --> 00:33:16,200 Speaker 11: ever been on a relative basis to gas turbine options. 667 00:33:16,400 --> 00:33:19,280 Speaker 3: So what I hear is that everything is just more 668 00:33:19,280 --> 00:33:22,480 Speaker 3: expensive because that's the environment that we're in. But because 669 00:33:22,480 --> 00:33:25,840 Speaker 3: you're able to take costs out, the rate payer may 670 00:33:25,880 --> 00:33:28,240 Speaker 3: not get hit as hard. Is that a fair statement? 671 00:33:28,360 --> 00:33:30,280 Speaker 11: That's exactly right. And so what we've been able to 672 00:33:30,320 --> 00:33:34,200 Speaker 11: do in Florida, our bill is thirty seven percent lower 673 00:33:34,200 --> 00:33:37,600 Speaker 11: than the national average thirty seven percent. It's because of 674 00:33:37,600 --> 00:33:40,000 Speaker 11: our ability to take all those costs out of the 675 00:33:40,080 --> 00:33:45,320 Speaker 11: company and also offer them low cost renewable solutions as 676 00:33:45,400 --> 00:33:47,560 Speaker 11: part of the generation mix. And when you put those 677 00:33:47,560 --> 00:33:51,160 Speaker 11: two together, that's how we're able to achieve that thirty 678 00:33:51,240 --> 00:33:54,560 Speaker 11: seven percent lower bill than the rest of the nation. 679 00:33:55,200 --> 00:34:00,560 Speaker 11: That's a really compelling customer value proposition and investor value opposition. 680 00:34:00,760 --> 00:34:03,760 Speaker 2: Our thanks to John Ketchum, President and CEO of next Er. 681 00:34:03,920 --> 00:34:06,600 Speaker 3: Energy, saying with energy, we have something here at Bloomberg 682 00:34:06,600 --> 00:34:09,719 Speaker 3: called Bloomberg New Energy Finance. The idea behind it is 683 00:34:09,760 --> 00:34:14,000 Speaker 3: to provide data on commodities, power, transport, industries, buildings and 684 00:34:14,040 --> 00:34:15,960 Speaker 3: agriculture plus new technology. 685 00:34:16,200 --> 00:34:18,359 Speaker 2: This week we looked at how the energy transition will 686 00:34:18,440 --> 00:34:20,800 Speaker 2: drive a significant uptick in demand for metals. 687 00:34:20,920 --> 00:34:23,759 Speaker 3: Bloomberg and EF estimates six trillion dollars worth of key 688 00:34:23,760 --> 00:34:26,600 Speaker 3: metals will be needed between twenty twenty two and twenty fifty, 689 00:34:26,880 --> 00:34:29,239 Speaker 3: and to reach net zero emissions by mid century that 690 00:34:29,360 --> 00:34:30,840 Speaker 3: number leaps to ten trillion. 691 00:34:31,200 --> 00:34:33,759 Speaker 2: For more, we were joined by Sung at Choi Bloomberg 692 00:34:33,840 --> 00:34:36,960 Speaker 2: BNEF Metals and Mining Analyst. We first to ask Sung 693 00:34:37,120 --> 00:34:39,880 Speaker 2: to comment about the amount of metal that would be 694 00:34:39,960 --> 00:34:41,800 Speaker 2: needed in the energy transition. 695 00:34:41,760 --> 00:34:45,399 Speaker 9: As we progress through the technologies where we shift from 696 00:34:45,760 --> 00:34:49,960 Speaker 9: fossil fuel to clean energy, and with the innovation and technologies, 697 00:34:50,280 --> 00:34:54,040 Speaker 9: especially in the transportation sector and data sector as well 698 00:34:54,080 --> 00:34:57,240 Speaker 9: and power grids more, obviously more metals will be needed 699 00:34:57,280 --> 00:34:59,680 Speaker 9: in order to get the electrons flow. You need metals 700 00:35:00,239 --> 00:35:04,319 Speaker 9: obvious right now, the particular categories of metals that are 701 00:35:04,719 --> 00:35:08,480 Speaker 9: of interest lately is lithium and copper. Those two metals 702 00:35:08,480 --> 00:35:10,760 Speaker 9: are very interesting at this moment. 703 00:35:11,160 --> 00:35:13,759 Speaker 2: Where do we get these metals and is that a 704 00:35:13,800 --> 00:35:15,400 Speaker 2: concern where we do get them? 705 00:35:15,640 --> 00:35:21,040 Speaker 9: Yes, that is a concern. So for me, demand is 706 00:35:21,040 --> 00:35:23,560 Speaker 9: is of a concern, but it isn't too much of concern. 707 00:35:23,800 --> 00:35:26,319 Speaker 9: Supply is more of the concern. The reason for that 708 00:35:26,480 --> 00:35:30,120 Speaker 9: is the reason that I say that is because many 709 00:35:30,120 --> 00:35:33,520 Speaker 9: of the places that have this particular resource such as 710 00:35:33,520 --> 00:35:38,040 Speaker 9: copper and lithium in areas where it has very sensitive 711 00:35:38,760 --> 00:35:42,120 Speaker 9: political and social landscape. And in order to get those 712 00:35:42,200 --> 00:35:45,480 Speaker 9: you know, supply out of the ground right, miners have 713 00:35:45,520 --> 00:35:50,200 Speaker 9: to navigate through those complicated situations. Right For example, just 714 00:35:50,280 --> 00:35:54,279 Speaker 9: starting this year or last end of last year, many 715 00:35:54,280 --> 00:35:57,600 Speaker 9: people podcast that the copper will be in set plus 716 00:35:57,640 --> 00:36:00,400 Speaker 9: for twenty twenty four will be a cur us yah. 717 00:36:00,400 --> 00:36:02,480 Speaker 9: It would be a slight surplus for twenty twenty four, 718 00:36:02,520 --> 00:36:05,480 Speaker 9: there was, there was the expectation. But then at the 719 00:36:06,080 --> 00:36:10,640 Speaker 9: start of this year right in Panama, Cobra Panama was 720 00:36:10,960 --> 00:36:14,920 Speaker 9: shut down for many reasons. Right as a result of that, 721 00:36:14,960 --> 00:36:17,920 Speaker 9: we're experiencing this, you know, run up in copper prices, 722 00:36:18,000 --> 00:36:21,920 Speaker 9: right because there's a dislocation between a copper mince plot 723 00:36:22,120 --> 00:36:23,719 Speaker 9: and the smell of capacity. 724 00:36:24,400 --> 00:36:25,279 Speaker 7: So here is. 725 00:36:25,320 --> 00:36:27,920 Speaker 3: Where I think raises the problem because you're looking at 726 00:36:27,960 --> 00:36:30,919 Speaker 3: a structural shift among metals that are cyclical. So that's 727 00:36:30,960 --> 00:36:33,080 Speaker 3: one area where we were surprised to the upside, and 728 00:36:33,080 --> 00:36:34,440 Speaker 3: now we're going to see a deficit. But then I 729 00:36:34,440 --> 00:36:37,719 Speaker 3: look at lithium, and we knew the ev revolution and 730 00:36:37,760 --> 00:36:39,680 Speaker 3: the batteries we were going to need lithium. So all 731 00:36:39,680 --> 00:36:41,279 Speaker 3: of a sudden the lithium guys, and a lot of 732 00:36:41,320 --> 00:36:43,719 Speaker 3: them are in South America. When game busters are like, 733 00:36:43,800 --> 00:36:45,760 Speaker 3: we need all this lithium. It's going to be awesome. 734 00:36:45,760 --> 00:36:47,160 Speaker 3: The demand's going to be there, and then the price 735 00:36:47,200 --> 00:36:48,960 Speaker 3: is crashed and then they had to shut down some 736 00:36:49,000 --> 00:36:51,520 Speaker 3: of their operations because it wasn't economic anymore. We do 737 00:36:51,560 --> 00:36:53,880 Speaker 3: need the lithium, but we didn't need it that day. 738 00:36:54,239 --> 00:36:55,600 Speaker 6: How do we manage that. 739 00:36:56,080 --> 00:37:00,560 Speaker 9: So you know, with everything, you know, timing is everything, 740 00:37:00,560 --> 00:37:03,880 Speaker 9: but it's really impossible to predict any type of timing 741 00:37:04,000 --> 00:37:07,640 Speaker 9: with any type of investments, right, So copper is in 742 00:37:07,760 --> 00:37:12,040 Speaker 9: this moment right now. For lithium, there was two years ago, right, 743 00:37:12,239 --> 00:37:15,839 Speaker 9: all this hype around you know, electric vehicles use of lithium, 744 00:37:16,239 --> 00:37:19,040 Speaker 9: difficulties in getting lidium, so all the investments poured in 745 00:37:19,040 --> 00:37:21,319 Speaker 9: into lidium space and as a result of that, there's 746 00:37:21,360 --> 00:37:23,799 Speaker 9: currently there is an oversupply issue with lithium. 747 00:37:23,920 --> 00:37:24,080 Speaker 1: Right. 748 00:37:24,600 --> 00:37:30,280 Speaker 9: But despite the oversupply issue, the lithium industry isn't really 749 00:37:30,520 --> 00:37:35,879 Speaker 9: at the cusp of a paradigm shift in technology innovation. Right. 750 00:37:36,280 --> 00:37:40,000 Speaker 9: There's this thing called direct lithium instraction technology where you take. 751 00:37:39,880 --> 00:37:41,600 Speaker 2: The direct lithium extraction. 752 00:37:41,800 --> 00:37:46,479 Speaker 9: Yes, direct lithium distraction technology. So there's two routes where 753 00:37:46,480 --> 00:37:50,640 Speaker 9: you could extract lithium. There's mainly a hard rock with 754 00:37:50,760 --> 00:37:53,239 Speaker 9: theium where you take the spodi up, you mind it 755 00:37:53,600 --> 00:37:56,440 Speaker 9: at the rock and you process it. All The process 756 00:37:56,920 --> 00:38:00,759 Speaker 9: is brian. You take you take the Brian and you 757 00:38:01,080 --> 00:38:02,279 Speaker 9: exchect the lithium out of it. 758 00:38:02,360 --> 00:38:04,879 Speaker 2: But butter think water, yeah, okay, but. 759 00:38:05,719 --> 00:38:09,440 Speaker 9: Using evaporating metive so you basically you're using something like 760 00:38:09,480 --> 00:38:11,560 Speaker 9: to evaporate the water out of it and extract lithium 761 00:38:11,600 --> 00:38:13,759 Speaker 9: and that takes two years. Now d l E or 762 00:38:13,840 --> 00:38:17,919 Speaker 9: dark lithium extraction process, that's gonna bring that lead time 763 00:38:18,000 --> 00:38:22,080 Speaker 9: down to two weeks instead of two years. So main 764 00:38:22,160 --> 00:38:25,839 Speaker 9: competition versus you know, hard rock that is right now, 765 00:38:25,880 --> 00:38:27,440 Speaker 9: that's going to be a you know, game changer for 766 00:38:27,480 --> 00:38:30,280 Speaker 9: the industry where it's gonna actually lower the cost card. 767 00:38:30,600 --> 00:38:33,399 Speaker 9: Right it may load the cost card. It's been too 768 00:38:33,400 --> 00:38:35,440 Speaker 9: early to tell right now, but at the you know, 769 00:38:35,520 --> 00:38:38,319 Speaker 9: at the cost of commercialization of this technology, it may 770 00:38:38,400 --> 00:38:40,480 Speaker 9: loader the cost card and it may you know, change 771 00:38:40,520 --> 00:38:41,320 Speaker 9: the industry forever. 772 00:38:41,719 --> 00:38:44,000 Speaker 3: Our thanks to Sun Choi, Bloomberg, Andy, app Metals, and 773 00:38:44,040 --> 00:38:44,800 Speaker 3: mining Analysts. 774 00:38:45,120 --> 00:38:49,640 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 775 00:38:49,840 --> 00:38:53,040 Speaker 1: and anywhere else you get your podcasts. Listen live each 776 00:38:53,080 --> 00:38:56,440 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com. 777 00:38:56,520 --> 00:38:59,280 Speaker 1: They are your radio app tune In and the Bloomberg 778 00:38:59,320 --> 00:39:02,440 Speaker 1: Business app. You can also watch us live every weekday 779 00:39:02,480 --> 00:39:05,160 Speaker 1: on YouTube and always on the Bloomberg terminal