WEBVTT - Bloomberg Surveillance TV: September 11th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.440 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.520 --> 0:00:21.440 day for insight from the best in markets, economics, and 0:00:21.440 --> 0:00:24.759 geopolitics from our global headquarters in New York City. We 0:00:24.800 --> 0:00:27.479 are live on Bloomberg Television weekday mornings from six to 0:00:27.560 --> 0:00:31.040 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.240 --> 0:00:33.519 or anywhere else you listen, and as always on the 0:00:33.520 --> 0:00:37.200 Bloomberg Terminal and the Bloomberg Business App. Joining usna's Tiffany 0:00:37.240 --> 0:00:40.479 Wilding of Himco. Tiffany, Welcome to the program. It's there 0:00:40.479 --> 0:00:43.560 a stagflationary light mix coming together here on the data 0:00:43.600 --> 0:00:45.320 that you see. 0:00:46.680 --> 0:00:50.239 Yeah, so I think we're getting what we expected on inflation. 0:00:50.320 --> 0:00:53.600 We're getting some pass through of tariffs. It looks like 0:00:53.680 --> 0:00:59.240 it's predominantly the firming categories are in goods, and otherwise 0:00:59.480 --> 0:01:00.960 things look at a little bit better. I think the 0:01:01.000 --> 0:01:03.840 more concerning news from the data this morning is the 0:01:03.920 --> 0:01:08.479 jumping claims. It's been relatively contained despite the labor market, 0:01:08.600 --> 0:01:11.039 you know, really slowing to a halt over the last 0:01:11.160 --> 0:01:14.600 year and now the jump today looks a little bit 0:01:14.600 --> 0:01:17.080 more concerning, like we're moving out of of just a 0:01:17.080 --> 0:01:20.360 period of you know, very little activity or very little 0:01:20.400 --> 0:01:23.959 hiring or firing, you know, to potentially some more separations. 0:01:23.959 --> 0:01:26.800 And that's certainly that's going to be super concerning. I 0:01:26.800 --> 0:01:29.160 think for the Federal Reserve, you know, I agree with 0:01:29.240 --> 0:01:31.240 Mike McKee. I think over all the data this morning, 0:01:31.280 --> 0:01:35.160 I think confirms a twenty five basis point cut. There's 0:01:35.480 --> 0:01:38.120 probably going to be discussion around fifty, although that's not 0:01:38.200 --> 0:01:40.600 our base case, you know, and I think there's there's 0:01:40.680 --> 0:01:43.600 reasons if you continue to see this kind of momentum 0:01:43.640 --> 0:01:46.080 on the labor market, you know, to get several more 0:01:46.120 --> 0:01:47.280 cuts in the back half of the year. 0:01:47.920 --> 0:01:50.680 Tiffany, What I find interesting about the market reaction is 0:01:50.720 --> 0:01:53.240 that yes, so picking up on this idea that claims 0:01:53.280 --> 0:01:55.960 came in the wrong kind of upside surprises. John was 0:01:56.000 --> 0:01:59.880 saying that the trailing average is picking up at a remarkable, 0:02:00.000 --> 0:02:03.720 alarming speed, but that longer term, we're seeing the tenure 0:02:03.800 --> 0:02:06.559 yield now break below four percent for the first time 0:02:07.160 --> 0:02:09.200 this year. I mean, we're looking at a tenure that 0:02:09.320 --> 0:02:13.480 is also responding. Are you changing your longer term trajectory 0:02:13.680 --> 0:02:16.760 for US growth prospects and the heels some of these 0:02:16.840 --> 0:02:19.160 labor market revisions and the sort of negativity that we're 0:02:19.160 --> 0:02:20.160 seeing from the claims. 0:02:22.160 --> 0:02:24.640 Well, you know, I think that you know, just the 0:02:24.720 --> 0:02:28.160 fact that the US treasury market continues to be a 0:02:28.240 --> 0:02:34.880 hedge for for macroeconomic risks, for riskier asset volatility, you know, 0:02:34.919 --> 0:02:38.280 I think is why you're seeing movements, you know, in 0:02:38.360 --> 0:02:40.960 the longer end of the interest rate curve. You know, 0:02:41.000 --> 0:02:42.919 I think when when we look at you know, sort 0:02:42.919 --> 0:02:46.400 of valuations, you know, we think kind of intermediate sector 0:02:46.680 --> 0:02:51.200 looks attractive here, does still provide risk you know against 0:02:51.200 --> 0:02:54.960 downside protection, you know, And it's something that you know 0:02:55.000 --> 0:02:56.920 that we've we've been very focused on. So it's not 0:02:57.040 --> 0:03:00.000 surprising necessarily to me that you're seeing it in longer 0:03:00.080 --> 0:03:02.160 data and interest rates. You know. I mean, I think 0:03:02.200 --> 0:03:04.280 I think overall on the you know, on the economy side, 0:03:04.320 --> 0:03:06.200 you know, we are really entering this kind of period 0:03:06.240 --> 0:03:10.519 of weakness, potential weakness. You know, we'll see some fiscal 0:03:10.600 --> 0:03:14.440 supports that are offsetting the tariff effects, but they don't 0:03:14.520 --> 0:03:17.640 kick in until you know, the beginning of twenty twenty six, 0:03:18.000 --> 0:03:20.600 you know, call it February March, when when consumers are 0:03:20.600 --> 0:03:24.000 starting to get really big refunds from retroactive tax cuts. 0:03:24.480 --> 0:03:26.799 But until then, we're really kind of in this period 0:03:26.800 --> 0:03:29.320 of weakness. And to us, the question is some of 0:03:29.360 --> 0:03:32.080 these smaller and mid sized businesses that are really having 0:03:32.120 --> 0:03:35.440 to shoulder the effects of tariffs, maybe they're not getting 0:03:35.440 --> 0:03:38.240 as much benefit from the one big beautiful bill tax cuts. 0:03:38.440 --> 0:03:41.520 You know, can they really hold on here without firing people? 0:03:42.120 --> 0:03:44.080 You know, and it seems like, you know, maybe there's 0:03:44.520 --> 0:03:47.280 there's more concern around that, you know, as as we 0:03:47.480 --> 0:03:49.080 as we're as we're watching the data. 0:03:48.960 --> 0:03:51.720 Tiffany wild think of PIMCO. Definitely great to catch up 0:03:51.760 --> 0:03:53.440 with you, and you've got to catch up with clients too, 0:03:53.440 --> 0:03:55.600 So thanks for making sign for us this morning. Let's 0:03:55.640 --> 0:03:57.840 move in the bond market. This data is good for bonds, 0:03:57.920 --> 0:04:01.480 it's questionable for equities. Equity is just about unchanged. We'll 0:04:01.520 --> 0:04:02.920 see if this move sticks. But at the front end 0:04:02.960 --> 0:04:04.680 of the curve we're down six basis points, and as 0:04:04.760 --> 0:04:07.400 Lisa pointed out, we're down across the curve and this 0:04:07.440 --> 0:04:09.400 is largely because of the way the Federal Reserve chairs 0:04:09.400 --> 0:04:12.480 set things up coming into September. He basically told us 0:04:12.480 --> 0:04:15.360 the following that you could have one off effect on inflation, 0:04:15.640 --> 0:04:18.400 but not all at once, and the labor market data 0:04:18.440 --> 0:04:20.960 was concerning him, Which is why we're seeing yields down 0:04:21.000 --> 0:04:23.440 this morning, because there's a much more emphasis on what 0:04:23.480 --> 0:04:24.880 we're seeing on claims. 0:04:24.520 --> 0:04:26.560 And it seems like the idea that you're seeing a 0:04:26.560 --> 0:04:30.240 pickup in layoffs, to Tiffany's point, raises the question of 0:04:30.240 --> 0:04:33.600 how companies are adapting to some of the higher input costs. 0:04:33.720 --> 0:04:36.479 I was looking at some of the specifics here in 0:04:36.520 --> 0:04:39.480 the CPI print. Airline fare is up five point nine 0:04:39.480 --> 0:04:42.440 percent on the monthly basis, So again it talks about 0:04:42.440 --> 0:04:44.760 the K shaped economy and how the FED is trying 0:04:44.760 --> 0:04:47.560 to cater to people who cannot afford to pay that 0:04:47.680 --> 0:04:48.960 those who can are. 0:04:49.160 --> 0:04:52.520 David Kelly of JP Milgan Asset Management standing by David, 0:04:52.520 --> 0:04:54.240 you've been looking at the data. Just when your first 0:04:54.320 --> 0:04:56.400 reaction please, I. 0:04:56.360 --> 0:04:58.960 Think, both of regard to the CPI and with regard 0:04:59.000 --> 0:05:01.600 to the claims, everyone should sort of take a deep 0:05:01.680 --> 0:05:05.800 breath and not overreact to them on claims. Key thing 0:05:05.839 --> 0:05:08.719 to think about is last week was a week that 0:05:08.880 --> 0:05:11.479 contained a Monday bank holiday or a Monday a bank 0:05:11.480 --> 0:05:15.000 holiday called in the UK, but a Monday holiday labor day. 0:05:15.880 --> 0:05:19.440 The unemployment claims data are notoriously bad in a week 0:05:19.480 --> 0:05:21.640 that contains a public holiday. They've just had never figured 0:05:21.640 --> 0:05:24.000 out how to seasonal adjust that properly. So I think 0:05:24.040 --> 0:05:26.400 that's an overshoot on claims, and I would not be 0:05:26.400 --> 0:05:29.760 surprised to see that number come down next week. Now, 0:05:29.920 --> 0:05:32.440 it still fits into a mosaic of a slowing labor market. 0:05:32.520 --> 0:05:34.839 I don't deny that I think the economy is gradually 0:05:34.880 --> 0:05:37.280 grinding into a halt here, but I think that overstates 0:05:37.320 --> 0:05:40.279 the deterioration in the labor market. And then similarly on 0:05:41.040 --> 0:05:44.919 the on inflation, these numbers are very close to in 0:05:44.920 --> 0:05:47.200 line with what we thought. The big surprises were probably 0:05:47.240 --> 0:05:50.600 an increase in motor vehicle repair costs two point four 0:05:50.640 --> 0:05:54.120 percent month over month, and then as East was just saying, 0:05:54.200 --> 0:05:57.240 a five point nine percent increase in airline fairs. But 0:05:57.360 --> 0:05:59.280 remember they felt very sharply over the course of the 0:05:59.279 --> 0:06:01.960 summer as the airline travel was down. Now it's picking up 0:06:02.000 --> 0:06:05.240 again in this case shaped economy, So overall the economy 0:06:05.320 --> 0:06:08.279 is still moving forward slowly. Inflation's gradually going up. The 0:06:08.320 --> 0:06:10.520 economy is gradually slowing down. That's what That's what we 0:06:10.520 --> 0:06:12.040 thought tariffs are going to do. It's going to slow 0:06:12.040 --> 0:06:14.360 growth and it's going to add to inflation. But I 0:06:14.400 --> 0:06:16.200 don't think it's nearly as dramatic as either of these 0:06:16.279 --> 0:06:17.279 numbers suggest this morning. 0:06:17.279 --> 0:06:19.119 Well, David, let's just stay on the labor market story, 0:06:19.120 --> 0:06:20.920 because that seems to feel that the market is moving on, 0:06:21.000 --> 0:06:23.600 at least initially. Do you think the claims data maybe 0:06:23.600 --> 0:06:25.440 overstates the weakness. Do you think they step down in 0:06:25.480 --> 0:06:27.760 payrolls growth overstates the weakness too. 0:06:30.520 --> 0:06:30.680 No. 0:06:30.720 --> 0:06:33.120 I mean we saw the big down revision yesterday that 0:06:33.720 --> 0:06:37.039 or earlier this week. That was not a surprise. No, 0:06:37.120 --> 0:06:39.760 I mean there's there's weakness that The thing is, as j. 0:06:39.920 --> 0:06:42.320 Pallace pointed out, it's a very curious kind of labor 0:06:42.320 --> 0:06:44.880 market because we're having a huge reduction in labor supply 0:06:44.920 --> 0:06:49.239 at the same time. So this does not speak of significant, 0:06:49.760 --> 0:06:52.480 you know, labor markers weakness. I mean, it's still a 0:06:52.520 --> 0:06:55.680 tight marker. It's still hard to find good people. But 0:06:56.360 --> 0:06:58.440 I do think it's it reflects the fact that people 0:06:58.560 --> 0:06:59.760 that businesses don't want. 0:06:59.640 --> 0:07:00.360 To hire here. 0:07:00.480 --> 0:07:03.279 I don't think there's a huge ongoing jump in layoffs, 0:07:03.279 --> 0:07:05.080 but it's getting harder and hard to find a job 0:07:05.120 --> 0:07:07.919 because businesses are just frozen because they don't know what 0:07:08.000 --> 0:07:09.440 the playing field is going to be with regard to 0:07:09.480 --> 0:07:11.440 tariff's going forward. And I think that is, you know, 0:07:12.040 --> 0:07:13.200 that's the biggest thing that I think. 0:07:13.120 --> 0:07:14.720 People are ignoring here, David. 0:07:14.760 --> 0:07:16.800 A lot of people are hoping that things pick up 0:07:17.040 --> 0:07:19.840 in twenty twenty six, that the growth story gets better 0:07:20.200 --> 0:07:22.920 fueled by the right cuts we're about to see. Speaking 0:07:22.920 --> 0:07:25.680 of things, maybe that we underappreciate something you've been talking 0:07:25.720 --> 0:07:28.120 about for a while, this tax bill, the kind of 0:07:28.160 --> 0:07:30.600 stimulatory effect it might have in twenty six. Could you 0:07:30.640 --> 0:07:32.680 just sort of outline that for us this morning. 0:07:33.000 --> 0:07:36.040 Absolutely really important. All these new tax cuts, getting rid 0:07:36.080 --> 0:07:38.840 of the tax on tips over time, increases, standard deduction 0:07:39.000 --> 0:07:41.760 and so forth, the sole tax break, all of them 0:07:41.800 --> 0:07:45.040 were made retroactive to January one, twenty twenty five, but 0:07:45.240 --> 0:07:48.320 the irs is not changed. With holding schedules, that means 0:07:48.320 --> 0:07:50.400 that there's going to be basically a full year's worth 0:07:50.440 --> 0:07:53.040 of refunds on all of those tax breaks kick in 0:07:53.040 --> 0:07:55.400 in the first few weeks of twenty twenty six, or 0:07:55.440 --> 0:07:57.520 first few months or twenty twenty six. That is the 0:07:57.520 --> 0:08:00.760 equivalent of big stimulus checks last year. The average incompact 0:08:00.800 --> 0:08:03.440 three fund is about thirty two hundred dollars. This next 0:08:03.520 --> 0:08:05.120 year in twenty twenty six, we think it's going to 0:08:05.120 --> 0:08:08.480 be over four thousand dollars, seventy percent of households receiving that. 0:08:08.480 --> 0:08:11.000 That is like one big stimulus check, one big lump 0:08:11.080 --> 0:08:13.480 of sugar put into the economy early next year, so 0:08:13.600 --> 0:08:17.120 we can get to the first quarter without slipping into recession. 0:08:17.440 --> 0:08:20.080 There is you know, there'll be some stimulus there, but 0:08:20.120 --> 0:08:22.080 I do think that between now and then the economy 0:08:22.080 --> 0:08:23.400 is going to be slowing in the fourth quarter. 0:08:25.840 --> 0:08:29.280 Stay with us, mul Bloomberg Surveillance coming up after this, 0:08:38.400 --> 0:08:40.960 let's tand to tack Oracle shares hiring the free market 0:08:41.000 --> 0:08:43.920 after gaining the most since nineteen ninety two. On an 0:08:43.920 --> 0:08:47.720 aggressive outlook, vadimas AzaC of the global head of Digital 0:08:47.880 --> 0:08:50.880 Infrastructure at KKR right in the following we're living through 0:08:50.920 --> 0:08:54.120 the largest build out since the Interstate Highway system, a 0:08:54.280 --> 0:08:57.120 ten to fifteen trillion dollar wave to rewire the global 0:08:57.160 --> 0:09:01.880 economy around power, compute, and activity. Vatama joins es now 0:09:01.880 --> 0:09:03.920 for Marko Monitor, Good morning, it's going to see you. 0:09:03.960 --> 0:09:06.360 Thanks for being here. Let's talk about these demand numbers. 0:09:06.480 --> 0:09:09.079 The demand we're seeing is real. Yes, yeah, there is 0:09:09.120 --> 0:09:13.160 still this conversation about a monster misallocation of resources coming together. 0:09:13.400 --> 0:09:14.400 What do you stand on there? 0:09:15.720 --> 0:09:18.560 It is a really the right question to ask. We 0:09:18.640 --> 0:09:22.000 don't see it, honestly. I think if you look at 0:09:22.160 --> 0:09:26.280 the fundamental spent relative to any other indicators from a 0:09:26.320 --> 0:09:31.000 bubble stand perspective, right, I mean, often comparisons and drawn 0:09:31.040 --> 0:09:33.839 to the dot com bubble and you know, other housing bubble, 0:09:33.880 --> 0:09:37.960 et cetera, it doesn't appear so and all of that 0:09:38.080 --> 0:09:42.600 compute that is ultimately being procured is getting consumed and deployed. 0:09:42.920 --> 0:09:45.080 I think the question that you're sort of leading into 0:09:45.280 --> 0:09:49.200 is is there ultimately a business case for AI to 0:09:49.280 --> 0:09:52.200 be made? And I think there are a lot of 0:09:52.240 --> 0:09:56.320 great data points that would suggest, you know, adoption is increasing, 0:09:56.559 --> 0:10:00.520 use cases are increasing, is enabling it? Tromento, There's amount 0:10:00.520 --> 0:10:04.680 across the economy and society generally speaking, but there isn't 0:10:04.679 --> 0:10:07.640 the killer app so to speak, that would suggest that 0:10:08.880 --> 0:10:10.880 the ROI may be justifiable. 0:10:11.280 --> 0:10:13.000 I think the issue for many people as well who 0:10:13.040 --> 0:10:16.079 experienced the dot com bubble, the bust, and the boom 0:10:16.120 --> 0:10:18.199 that followed. Really afterwards, it took a long time to 0:10:18.200 --> 0:10:20.760 find out who the winners were. And to begin with, 0:10:20.880 --> 0:10:22.800 you had to have everyone throwing money at the wall. 0:10:22.679 --> 0:10:23.559 To see what sticks. 0:10:23.880 --> 0:10:25.920 And if we go through this process now there are 0:10:26.000 --> 0:10:28.360 risks involved in that. How do you navigate some of 0:10:28.400 --> 0:10:30.400 those risks at the moment it is? 0:10:30.480 --> 0:10:33.040 It is again another excellent question which you would expect 0:10:33.040 --> 0:10:35.840 on a morning show from you guys. But I think 0:10:35.880 --> 0:10:40.280 you know, our approach at KKR has really been pretty 0:10:40.280 --> 0:10:43.520 simple on discipline, right. I think we focus. We clearly 0:10:43.520 --> 0:10:45.680 are one of the leaders in digital infrastructure and in 0:10:45.720 --> 0:10:48.360 the power ecosystem totality about sixty five billion dollars of 0:10:48.360 --> 0:10:51.280 capital that we've invested in that. Over the last few years, 0:10:52.040 --> 0:10:54.000 we have seen the convergence of those two mega themes, 0:10:54.040 --> 0:10:55.880 which is really interesting. I think we talked about this 0:10:55.920 --> 0:10:59.239 on the previous show, and I think it's now really applicable. 0:10:59.280 --> 0:11:02.040 You're seeing data centers are no longer about rex, it's 0:11:02.080 --> 0:11:05.520 about watts and megawatts of power compute right, They're AI factories, 0:11:06.559 --> 0:11:09.280 And I think that convergence is really in place. So 0:11:09.320 --> 0:11:12.200 I think for us so we've been focusing on core 0:11:12.240 --> 0:11:14.400 and core plus markets for most of our compute. This 0:11:14.559 --> 0:11:18.160 is where ultimately data is being generated and processed by users. 0:11:18.480 --> 0:11:21.839 We focus on high quality customers. We do not chase 0:11:22.520 --> 0:11:27.320 yield on very speculative business models. I think we focus 0:11:27.360 --> 0:11:30.120 on fungibility in the use of these assets. It may 0:11:30.160 --> 0:11:33.120 have been enterprise five years ago, today it's cloud, tomorrow, AI, 0:11:33.200 --> 0:11:36.920 whatever may come next. And we ultimately are not making 0:11:37.000 --> 0:11:41.320 bets on field of dreams sites. It's really trying to 0:11:41.360 --> 0:11:45.080 focus on things that if there is a contract high 0:11:45.160 --> 0:11:49.040 quality counterparty, we start building and deploying capital against that 0:11:49.040 --> 0:11:51.400 that Maybe all of that seems logical, but I'm not 0:11:51.400 --> 0:11:53.719 sure that's universally adopted in the industry, and I think 0:11:53.720 --> 0:11:55.400 we differentiate ourselves in that approach. 0:11:55.640 --> 0:11:58.000 I guess one of the fears in John was alluding 0:11:58.000 --> 0:12:01.040 to it is this idea that everyone gets incredibly leveraged 0:12:01.040 --> 0:12:03.440 to a couple of key names and makes really big 0:12:03.520 --> 0:12:06.960 bets for a long term development at a time where 0:12:06.960 --> 0:12:09.319 we don't have a great deal of visibility into how 0:12:09.360 --> 0:12:11.160 this is going to be adapted, how this is going 0:12:11.200 --> 0:12:14.040 to be really transforming the economy, and frankly, the way 0:12:14.040 --> 0:12:15.920 that we live our everyday lives. So how do you 0:12:16.320 --> 0:12:19.360 hedge that concentration risk at a time where what you 0:12:19.440 --> 0:12:23.280 offer is the balance sheet to really deploy to these 0:12:23.320 --> 0:12:24.800 big blue chip players. 0:12:25.040 --> 0:12:28.719 Yeah, I think you're right. It is almost a Barbell strategy. 0:12:28.960 --> 0:12:30.400 I think if you look at the market and if 0:12:30.400 --> 0:12:32.400 you look at the performance and the haves and have nots, 0:12:32.440 --> 0:12:36.200 it's been sort of that Barbell view. And certainly the 0:12:36.240 --> 0:12:39.640 mag seven are such an incredible driver of the growth. 0:12:40.000 --> 0:12:44.120 Thirty percent of the US spent on AI is driven 0:12:44.160 --> 0:12:47.640 by those three names. Seven hundred billion dollar capex thirty 0:12:47.640 --> 0:12:49.400 five percent a year over year. That's, by the way, 0:12:49.480 --> 0:12:52.360 seven hundred billion is equivalent to the entire spend for 0:12:52.480 --> 0:12:55.520 the fiber buildout in the nineties and we're now spending 0:12:55.559 --> 0:12:57.920 that on an annual basis, which is sort of incredible 0:12:57.920 --> 0:13:00.840 to think about the quantum of dollars. And so I 0:13:00.880 --> 0:13:03.920 think if you look at that, certainly needed the Meg seven, 0:13:04.040 --> 0:13:08.240 all of those names, pristine balance sheets, incredibly free cash 0:13:08.240 --> 0:13:08.960 flow generative. 0:13:09.040 --> 0:13:09.160 Right. 0:13:09.160 --> 0:13:11.840 I think we are looking at certainly trading multiples and 0:13:11.840 --> 0:13:15.320 p racials and spend, but they're not overspending relative to 0:13:15.320 --> 0:13:17.840 the free cash flow that they're generating from either their 0:13:17.840 --> 0:13:22.600 existing core businesses or the convergence of AI integrated within 0:13:22.640 --> 0:13:26.880 their sort of existing business models. So you're right, you 0:13:26.920 --> 0:13:31.160 have a customer concentration, but the customer concentration is in 0:13:31.200 --> 0:13:33.679 fact with the highest quality names that you probably want 0:13:33.800 --> 0:13:35.479 to do if you're investing in infrastructure. 0:13:35.480 --> 0:13:38.120 From our point of view, where's the concentration investment when 0:13:38.120 --> 0:13:41.000 it comes to data centers versus energy production? And this 0:13:41.080 --> 0:13:43.439 is another sort of key question at a time where 0:13:43.480 --> 0:13:46.360 people are building data centers as quickly as they can 0:13:46.760 --> 0:13:48.840 with a question around deep seek and whether we can 0:13:48.920 --> 0:13:51.840 do this more efficiently with smaller data centers and less energy, 0:13:52.240 --> 0:13:54.199 and then we don't have the energy to actually fuel 0:13:54.200 --> 0:13:55.720 those data centers that are getting built. 0:13:55.720 --> 0:13:57.880 So where do you sort of stack up on sort of. 0:13:57.800 --> 0:14:00.199 The dissonance between the development of those. 0:14:00.559 --> 0:14:02.400 And this is why it's such a wonderful time to 0:14:02.440 --> 0:14:04.600 really be alive and doing what we're doing. And certainly, 0:14:04.960 --> 0:14:08.400 you know, an infrastructure investor wouldn't think about being in 0:14:08.440 --> 0:14:12.680 sort of such a growth industry, but it's really incredible. 0:14:12.720 --> 0:14:14.120 I think if you look at a couple of stats, 0:14:14.160 --> 0:14:16.840 we certainly have had stagnated sort of demand growth in 0:14:16.840 --> 0:14:19.600 the US and the power industry for the best twenty years. 0:14:20.040 --> 0:14:23.080 That is now a massive inflection point. Globally, the expectation 0:14:23.200 --> 0:14:25.320 is that data centers will consume something like ten percent 0:14:25.320 --> 0:14:28.880 of global power in the next ten years. By the way, 0:14:28.920 --> 0:14:32.160 that's equivalent to India by two thousand and thirty. So 0:14:32.760 --> 0:14:34.760 if data centers were a country will be third after 0:14:34.880 --> 0:14:38.200 China and US. So certainly power consumption is increasing. There 0:14:38.200 --> 0:14:40.840 are a couple of dueling factors. You do have efficiency 0:14:40.840 --> 0:14:44.359 which is certainly driven by chip manufacturings by algorithms, which 0:14:44.440 --> 0:14:47.840 is incredible. That's ultimately driving the cost of the delivery 0:14:47.840 --> 0:14:50.880 of the compute. So just in eighteen months, if you 0:14:50.880 --> 0:14:53.400 think about the tokens which are being used for I 0:14:53.440 --> 0:14:55.280 think of it, you know, Training for America we talked 0:14:55.320 --> 0:14:59.960 about earlier, it's calories for AI. Token price has gone 0:15:00.280 --> 0:15:03.560 has decreased two hundred eighty x over the last eighteen months, 0:15:03.640 --> 0:15:05.680 which means the adoption is increasing. If you look at 0:15:05.680 --> 0:15:08.800 about token usage has increased four and a half thousand percent, 0:15:09.160 --> 0:15:11.640 So certainly usage is increasing. I think if you just 0:15:11.680 --> 0:15:14.000 go back to your question, I think most of the 0:15:14.000 --> 0:15:16.880 capital today is being spent on data centers, and then 0:15:16.920 --> 0:15:20.600 there is an increased capex being put in grid and 0:15:20.640 --> 0:15:23.320 certainly power generations. So we're starting to see that trend 0:15:23.360 --> 0:15:26.240 line actually converging. But in terms of growth on an 0:15:26.280 --> 0:15:29.040 adjusted basis, it's really been those two that are probably 0:15:29.040 --> 0:15:30.480 the biggest drivers of the. 0:15:30.440 --> 0:15:33.640 Capex is deregulation and getting rid of some of the 0:15:33.680 --> 0:15:36.640 red tape. What comes when when you have to make 0:15:36.680 --> 0:15:39.600 these AI data centers actually keeping up though with that 0:15:39.680 --> 0:15:40.760 capex fend you're. 0:15:40.600 --> 0:15:44.360 Seeing is it is really interesting because sort of from 0:15:44.360 --> 0:15:47.760 a policy perspective, there's two dueling factors that are. 0:15:47.760 --> 0:15:48.600 The collision course. 0:15:48.920 --> 0:15:53.440 One is when the AI race globally, and the second 0:15:53.560 --> 0:15:56.480 is protect the rate payers, which you know in the 0:15:56.600 --> 0:15:58.560 US over the last five years we've seen about twenty 0:15:58.560 --> 0:16:02.680 five percent increase in power price. And I think there 0:16:02.680 --> 0:16:04.920 are a couple of things that are happening and including 0:16:04.960 --> 0:16:07.720 I think elimination of some of the red tape and 0:16:08.760 --> 0:16:11.520 streamlining of approvals, and I think those are great things 0:16:11.560 --> 0:16:13.880 by the administration to help enable the build out of 0:16:13.880 --> 0:16:18.280 this infrastructure. You can just turn power on overnight. It's 0:16:18.320 --> 0:16:20.880 a four or five year cycle to build this infrastructure, 0:16:21.360 --> 0:16:23.920 and I think that is a great step towards that. 0:16:24.080 --> 0:16:28.400 Now we're even cutting through the red tape that is 0:16:28.440 --> 0:16:30.880 helping solve things three four or five years from now. 0:16:31.000 --> 0:16:32.600 We have a gap in the next twenty four to 0:16:32.600 --> 0:16:34.920 thirty six months. So what can be done. I think 0:16:34.920 --> 0:16:38.040 we can optimize the grid. There is dynamic line rating, 0:16:38.080 --> 0:16:41.880 there's investment in superconducting cables which minimizes the loss. There 0:16:41.920 --> 0:16:44.840 is sort of a There are all sorts of innovative 0:16:44.840 --> 0:16:48.040 solutions like the one we just deployed in Texas, where 0:16:48.040 --> 0:16:50.680 you collocate a data center with a power plant. You 0:16:50.720 --> 0:16:54.920 have a way to effectively augment and draw electrons from 0:16:55.000 --> 0:16:57.040 the power plant. You have a way to support the 0:16:57.080 --> 0:17:01.400 grid in cases of emergency. I think innovative solutions like 0:17:01.440 --> 0:17:04.200 that will help bridge us into the next phase when 0:17:04.240 --> 0:17:08.120 we see this massive development cycle of most likely natural 0:17:08.119 --> 0:17:11.040 gas power plants, and of course at some point we'll 0:17:11.040 --> 0:17:14.200 talk about nuclear and nuclear will be five ten years 0:17:14.200 --> 0:17:16.399 from now. I think that's the long game. From a 0:17:16.440 --> 0:17:21.359 carbon carbon efficiency and just a general efficiency of power generation. 0:17:21.720 --> 0:17:24.080 There's a feeling on Wallstreet right now. They're scared of this. 0:17:24.280 --> 0:17:27.400 They're saying, maybe it's gotten over its skis you travel 0:17:27.800 --> 0:17:31.560 to Silicon Valley and there's just absolute object euphoria. Can 0:17:31.560 --> 0:17:33.359 you bridge that gap the idea that everyone's trying to 0:17:33.359 --> 0:17:37.399 poke holes over in New York and in San Francisco, 0:17:37.640 --> 0:17:39.840 people are just running around saying we can't invest enough. 0:17:40.480 --> 0:17:43.159 It's yeah, it is interesting. I do spend time on 0:17:43.200 --> 0:17:48.600 the West Coast quite frequently, and it's incredibly energizing when 0:17:48.640 --> 0:17:50.320 I'm there and coming back and you sort of have 0:17:50.400 --> 0:17:53.120 this wet blanket put a new in terms of all 0:17:53.119 --> 0:17:56.760 the skepticism. But I do think that there is a 0:17:56.800 --> 0:17:58.840 bridge there. I think there is now. I think a 0:17:58.880 --> 0:18:02.800 bridge and understanding of certainly, I think the technology mindset 0:18:02.840 --> 0:18:05.919 of you know, move fast and break things has to 0:18:06.040 --> 0:18:08.600 come and somehow be bridged in terms of building of 0:18:08.600 --> 0:18:12.399 this infrastructure, which is really a very different investment cycle, 0:18:12.520 --> 0:18:15.000 very different risk cycle, and a very different cost of 0:18:15.040 --> 0:18:18.679 capital cycle. And so I do think that we're helping 0:18:18.720 --> 0:18:22.320 bridge that gap and saying this is incredibly obviously exciting, 0:18:22.640 --> 0:18:24.440 but you have to obviously capitalize as. 0:18:24.400 --> 0:18:26.360 An efficient way. And by the way, the quantum of. 0:18:26.320 --> 0:18:28.520 Dollars that we're just discussing, whether it's ten or fifteen 0:18:28.520 --> 0:18:32.919 trillion dollars, the annual spend requires all sorts of different innovative, 0:18:32.960 --> 0:18:35.520 creative and sort of a holistic solutions to help build 0:18:35.520 --> 0:18:38.560 out this infrastructure. I mean, Oracles earnings yesterday, which we 0:18:38.600 --> 0:18:41.160 touched on earlier this morning, were just terrific. It's incredible 0:18:41.160 --> 0:18:43.000 to see that. So you have a half a trillion 0:18:43.080 --> 0:18:45.440 dollars of backlog, and then the news this morning that's 0:18:45.600 --> 0:18:48.800 another three hundred billion of backlog. The numbers are starting 0:18:48.840 --> 0:18:52.400 to sort of seem silly. We're moving from billions to trillions. 0:18:52.520 --> 0:18:55.560 And you know, that amount of infrastructure will require many 0:18:55.600 --> 0:18:58.480 many gigouts of power, many many gigouts of compute. And 0:18:58.480 --> 0:19:02.200 that's why you see, you know, or power companies move 0:19:02.280 --> 0:19:04.399 up on the news. You see the chip manufacturers move 0:19:04.480 --> 0:19:05.879 up on the news, you see data centers move up 0:19:05.920 --> 0:19:08.040 on the news. Because it just suggests that we're still 0:19:08.080 --> 0:19:10.760 in a very early evenings of that investment cycle that 0:19:10.880 --> 0:19:11.520 is taking place. 0:19:12.280 --> 0:19:15.800 Stay with us. More Bloomberg surveillance coming up after this. 0:19:25.040 --> 0:19:28.240 Let's turn to Thomas Show of KPW, a Stifel company, 0:19:28.400 --> 0:19:29.919 for more. Tom, welcome to the program. 0:19:29.920 --> 0:19:31.119 Good good morning, good morning. 0:19:31.240 --> 0:19:33.560 Before we talk about this, let's just talk about what 0:19:33.680 --> 0:19:36.040 day it is you were headquartered in the World Trade 0:19:36.080 --> 0:19:39.359 Center lost sixty seven people that day. I want to 0:19:39.359 --> 0:19:41.160 spend a few moments with you just to think about 0:19:41.240 --> 0:19:43.720 what that day still means to you today, and how 0:19:43.760 --> 0:19:46.760