1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,560 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,360 Speaker 1: at Bloomberg dot com slash podcast. The narrative here as 7 00:00:22,400 --> 00:00:24,919 Speaker 1: it relates to rates here in the US is pretty clear. 8 00:00:24,960 --> 00:00:27,760 Speaker 1: The Federal Reserve is job number one is fighting inflation, 9 00:00:27,840 --> 00:00:31,159 Speaker 1: aben raising rates to do that. The question is, you know, 10 00:00:31,200 --> 00:00:33,200 Speaker 1: kind of when will they stop? Where will they stop? 11 00:00:33,479 --> 00:00:35,200 Speaker 1: And a lot of folks are saying, let's talk about 12 00:00:35,200 --> 00:00:38,960 Speaker 1: the European markets, in the UK markets, what's going on there? 13 00:00:38,720 --> 00:00:41,400 Speaker 1: We touch base with Hugh Worthington. He's a European rate 14 00:00:41,440 --> 00:00:44,920 Speaker 1: strategist for Bloomberg Intelligence based in in London. Hugh, thanks 15 00:00:44,960 --> 00:00:48,280 Speaker 1: so much for joining us here. Give us your sense 16 00:00:48,320 --> 00:00:50,200 Speaker 1: of kind of what you're seeing there in the UK 17 00:00:50,320 --> 00:00:54,440 Speaker 1: and Europe in terms of the rate environment. What are 18 00:00:54,440 --> 00:00:57,080 Speaker 1: you seeing over there? Well, I think I think the 19 00:00:57,600 --> 00:00:59,920 Speaker 1: situation in the UK he's putty more and not like 20 00:01:00,080 --> 00:01:03,040 Speaker 1: sports going on in the US. The UK has been 21 00:01:03,280 --> 00:01:05,440 Speaker 1: hiking rates for some time. It's been you know, it's 22 00:01:05,480 --> 00:01:09,040 Speaker 1: it's got its self fairly well down the curve in 23 00:01:09,120 --> 00:01:12,880 Speaker 1: terms of of of kind of negative of exiting the 24 00:01:12,880 --> 00:01:15,520 Speaker 1: negative interestrate policy. But the ECB does seem to be 25 00:01:15,720 --> 00:01:18,400 Speaker 1: lagging still a little bit, and I think there's there's 26 00:01:18,400 --> 00:01:21,679 Speaker 1: concerns that you know, they they they're they're still behind 27 00:01:21,680 --> 00:01:25,440 Speaker 1: the curve and their their focus is a primary focus 28 00:01:25,440 --> 00:01:27,000 Speaker 1: on inflation. They don't have a dual man they like 29 00:01:27,040 --> 00:01:29,200 Speaker 1: the said just for example, and I think that there's 30 00:01:29,240 --> 00:01:32,280 Speaker 1: there's a definite sign of the changing attitude there. There's, 31 00:01:32,400 --> 00:01:33,880 Speaker 1: if you like, the Germans seems to be much more 32 00:01:33,920 --> 00:01:37,360 Speaker 1: in control of the ECB and the focus very much 33 00:01:37,360 --> 00:01:39,800 Speaker 1: remains on fighting inflation and it's going to continue that way, 34 00:01:39,840 --> 00:01:41,880 Speaker 1: I think, and I think they're they're basically the latest 35 00:01:41,880 --> 00:01:43,280 Speaker 1: things they've been saying is that they are going to 36 00:01:43,319 --> 00:01:45,319 Speaker 1: be hiking in December and they're going to keep going 37 00:01:45,600 --> 00:01:47,640 Speaker 1: and they're going to keep hiking into restrictive policy. And 38 00:01:47,680 --> 00:01:49,400 Speaker 1: it may well be that they're they're still doing that 39 00:01:50,040 --> 00:01:52,480 Speaker 1: whilst people like the FED in the Bank of England 40 00:01:52,480 --> 00:01:55,200 Speaker 1: may well be starting to ease off a little bit Well, 41 00:01:55,320 --> 00:01:58,360 Speaker 1: that's interesting to me because on the one hand, you 42 00:01:58,440 --> 00:02:01,320 Speaker 1: have these odds of recession, the US specifically going to 43 00:02:02,120 --> 00:02:06,200 Speaker 1: three really ramping up, but those arts have been quite strong, 44 00:02:06,280 --> 00:02:07,680 Speaker 1: I want to say, for at least a year now 45 00:02:07,720 --> 00:02:11,040 Speaker 1: in Europe. Why would they keep hiking. Isn't just to 46 00:02:11,120 --> 00:02:15,760 Speaker 1: perhaps close the divergence between the ECB and the FED 47 00:02:15,800 --> 00:02:18,600 Speaker 1: and other central banks, or is there a real fundamental 48 00:02:18,720 --> 00:02:21,160 Speaker 1: reason behind it? Well, I think I think they're they're 49 00:02:21,240 --> 00:02:23,839 Speaker 1: very concerned that they know they forget the e CV 50 00:02:24,000 --> 00:02:27,400 Speaker 1: is still printing cash to buy bonds back in as 51 00:02:27,400 --> 00:02:30,440 Speaker 1: early as as late as June, so they were still 52 00:02:30,880 --> 00:02:34,640 Speaker 1: being very accommodatated when things were being being much more 53 00:02:34,680 --> 00:02:38,320 Speaker 1: strictive elsewhere. Also, you've definitely got some things that are 54 00:02:38,320 --> 00:02:40,959 Speaker 1: happening in Europe which happened happened for many, many years. 55 00:02:41,760 --> 00:02:44,320 Speaker 1: There's later stage on wages out from the funny enough 56 00:02:44,320 --> 00:02:46,680 Speaker 1: in Central Bank of Ireland, on wage growth in places 57 00:02:46,720 --> 00:02:49,640 Speaker 1: like Germany, wage's running at something like seven percent, and 58 00:02:49,639 --> 00:02:51,960 Speaker 1: those sort of thing as you haven't seen for fifty years. 59 00:02:52,080 --> 00:02:54,079 Speaker 1: And it's very hard to know that they think that 60 00:02:54,240 --> 00:02:56,200 Speaker 1: the ECB is going to get their inflasi and target 61 00:02:56,200 --> 00:02:58,840 Speaker 1: back down to two percent when German wages are running 62 00:02:58,840 --> 00:03:00,720 Speaker 1: a nomenal wage worth's running at that sort of level. 63 00:03:00,760 --> 00:03:03,280 Speaker 1: So they are basically saying that they are going to 64 00:03:03,320 --> 00:03:06,520 Speaker 1: be having to be hiking into a restrict into restrictive territory. 65 00:03:06,560 --> 00:03:08,959 Speaker 1: And obviously they look sort of worryingly behind the curve 66 00:03:09,000 --> 00:03:11,800 Speaker 1: and a rate bill look low in Europe compared to 67 00:03:12,919 --> 00:03:16,600 Speaker 1: what they are in the English tax and sphere. Also, 68 00:03:16,639 --> 00:03:18,440 Speaker 1: I think, you know, definitely QT is definitely going to 69 00:03:18,480 --> 00:03:20,200 Speaker 1: be on the agenda there as well, and that's going 70 00:03:20,240 --> 00:03:23,880 Speaker 1: to be something which is gonna be probably restrictive for 71 00:03:23,880 --> 00:03:26,359 Speaker 1: the yields and maybe something which means it can keep 72 00:03:26,440 --> 00:03:29,160 Speaker 1: yields curves pretty steep. In the UK and Europe. There's 73 00:03:29,160 --> 00:03:30,960 Speaker 1: a lot of issues that needs to be done to 74 00:03:31,040 --> 00:03:34,400 Speaker 1: meet in particular things like the energy subsidies that are 75 00:03:34,680 --> 00:03:37,080 Speaker 1: being put in place to help the economies in the 76 00:03:37,080 --> 00:03:40,880 Speaker 1: wake of you know, Cuton's illegal actions in Ukraine. Yeah, 77 00:03:40,880 --> 00:03:42,280 Speaker 1: that's kind of where I want to go here. I mean, 78 00:03:42,600 --> 00:03:45,960 Speaker 1: you know, the US are our recession discussion is generally 79 00:03:46,680 --> 00:03:50,000 Speaker 1: if it happens in twenty three, you know, how short 80 00:03:50,040 --> 00:03:51,920 Speaker 1: will it be, how shallow will it be? That tends 81 00:03:51,920 --> 00:03:54,840 Speaker 1: to be the discussion narrative talk to us about kind 82 00:03:54,840 --> 00:03:58,760 Speaker 1: of as European banks continue to tighten, what's the recession 83 00:03:59,000 --> 00:04:02,600 Speaker 1: discussion over there? Well, I think I think the UK 84 00:04:02,680 --> 00:04:05,960 Speaker 1: probably is already in recession um and we're expecting a 85 00:04:06,000 --> 00:04:09,320 Speaker 1: pretty long, if if relatively shallow procession, not to not 86 00:04:09,560 --> 00:04:11,880 Speaker 1: such a hard recession like I was in two thousd 87 00:04:11,880 --> 00:04:14,360 Speaker 1: and eight. But it looks the Bank of England and 88 00:04:14,400 --> 00:04:17,840 Speaker 1: the and and the Office of the Responsibility in the 89 00:04:17,920 --> 00:04:21,240 Speaker 1: last week's statement in in in the UK Parliament was 90 00:04:21,279 --> 00:04:23,760 Speaker 1: expecting pretty much a recession to last all next year 91 00:04:23,800 --> 00:04:25,599 Speaker 1: as well. So it's going to be pretty long and 92 00:04:25,600 --> 00:04:28,480 Speaker 1: pretty painful, but it maybe not as as as sharp 93 00:04:28,520 --> 00:04:30,280 Speaker 1: as it was in two thousand and eight. And it's 94 00:04:30,279 --> 00:04:32,080 Speaker 1: a very much going to be a similar situation. I 95 00:04:32,120 --> 00:04:35,599 Speaker 1: suspect um in in Europe and in particular in Europe 96 00:04:35,600 --> 00:04:37,919 Speaker 1: this time around Germany is going to be leading their 97 00:04:37,960 --> 00:04:40,720 Speaker 1: work the way down and obviously in the past prices 98 00:04:40,760 --> 00:04:42,800 Speaker 1: in Europe it hasn't been Germany's. It's been hits it hard. 99 00:04:42,800 --> 00:04:44,080 Speaker 1: But it looks like Germany is going to be the 100 00:04:44,560 --> 00:04:48,599 Speaker 1: you know, the main the main impact will be in 101 00:04:48,600 --> 00:04:53,520 Speaker 1: Germany probably next year. I suspect we have about literally 102 00:04:53,560 --> 00:04:56,200 Speaker 1: thirty seconds here. When does QT start for the e 103 00:04:56,279 --> 00:04:58,800 Speaker 1: c B. I think they're lands it in in December. 104 00:04:59,080 --> 00:05:01,799 Speaker 1: I'm not sure they'll they'll and in terms of active sales, 105 00:05:01,839 --> 00:05:05,160 Speaker 1: but it'll just be basically not letting, not reinvesting bonds 106 00:05:05,160 --> 00:05:07,159 Speaker 1: as they roll off, and that's obviously gonna matter. An 107 00:05:07,200 --> 00:05:10,880 Speaker 1: aflot was already very very high issuance needs and that's 108 00:05:10,880 --> 00:05:12,720 Speaker 1: going to be keeping pressure on nels and spreads high 109 00:05:12,760 --> 00:05:17,320 Speaker 1: in Europe. All right, you great stuff, As always, always 110 00:05:17,320 --> 00:05:22,000 Speaker 1: appreciate getting your perspective the UK European rates outlook. Uh 111 00:05:22,000 --> 00:05:25,360 Speaker 1: there Hugh Worthington European rates strategies for Bloomberg Intelligence. He's 112 00:05:25,400 --> 00:05:29,880 Speaker 1: based in our London office, Queen Victoria Street, extraordinary building 113 00:05:30,480 --> 00:05:33,000 Speaker 1: in the city of London, just spectacular. Our brand new 114 00:05:33,040 --> 00:05:36,080 Speaker 1: headquarters over there opened up a few years ago. Good stuff. 115 00:05:36,240 --> 00:05:40,040 Speaker 1: Looking at the markets here, uh the pound one spot 116 00:05:40,120 --> 00:05:43,960 Speaker 1: one eight on your sterling and Europe above parody here. 117 00:05:44,440 --> 00:05:46,920 Speaker 1: Remember we were below parody several weeks ago. One spot 118 00:05:47,000 --> 00:05:51,280 Speaker 1: zero two seven eight on US euro ten year treasuries. 119 00:05:51,320 --> 00:05:54,520 Speaker 1: Talking about rates ten years up thirteen thirty seconds, pushing 120 00:05:54,560 --> 00:05:57,520 Speaker 1: that yield down to three point seven seven percent on 121 00:05:57,600 --> 00:06:03,160 Speaker 1: your ten year treasury. It's not a little education now 122 00:06:03,200 --> 00:06:05,880 Speaker 1: shout we Stephen Kramer, he's the CEO of Bright Horizons. 123 00:06:05,880 --> 00:06:08,640 Speaker 1: That's a New York Stock Exchange traded company the symbols 124 00:06:08,720 --> 00:06:11,200 Speaker 1: b F, A M. You put that into your Bloomberg 125 00:06:11,279 --> 00:06:15,000 Speaker 1: terminal Education services company. The company also offers a child 126 00:06:15,040 --> 00:06:18,640 Speaker 1: and other dependent care solutions as part of their employee benefits. 127 00:06:18,760 --> 00:06:22,200 Speaker 1: We work with them, you do, Bloomberg Bloomberg works, We do. 128 00:06:22,240 --> 00:06:24,680 Speaker 1: That's what I mean. Yeah, if you, you know, have 129 00:06:24,720 --> 00:06:28,320 Speaker 1: an emergency and you need childcare, an unexpected emergency, or 130 00:06:28,360 --> 00:06:31,120 Speaker 1: if you just um, you know, have if you're sick 131 00:06:31,160 --> 00:06:35,320 Speaker 1: and you need childcare, fail step into help. Oh cool, excellent? Uh, Stephen, 132 00:06:35,360 --> 00:06:36,880 Speaker 1: thanks so much for joining us here. Talk to us 133 00:06:36,880 --> 00:06:39,400 Speaker 1: about Bright Horizons. What are you guys up to these days. 134 00:06:39,400 --> 00:06:43,240 Speaker 1: What's your strategy over the next several years to drive 135 00:06:43,279 --> 00:06:46,480 Speaker 1: your growth. It's a pleasure to be here. Thank you 136 00:06:46,520 --> 00:06:49,680 Speaker 1: for including me, and thank you obviously to Bloomberg for 137 00:06:49,720 --> 00:06:53,640 Speaker 1: being a great client over many years. Our strategy remains 138 00:06:53,680 --> 00:06:56,719 Speaker 1: the same as it always has been. We are very 139 00:06:56,760 --> 00:07:00,839 Speaker 1: focused on working with our employer clients to support UH 140 00:07:00,880 --> 00:07:04,520 Speaker 1: their employees. UH to integrate their work in their life. 141 00:07:05,040 --> 00:07:07,719 Speaker 1: We do that through the provision of on site chold 142 00:07:07,760 --> 00:07:11,040 Speaker 1: care centers. We provide backup child care as you just outlined, 143 00:07:11,400 --> 00:07:14,080 Speaker 1: and elder care, and then in addition to that, we 144 00:07:14,160 --> 00:07:18,840 Speaker 1: support organizations and their employees with workforce education. And so 145 00:07:19,200 --> 00:07:23,040 Speaker 1: certainly we continue to see great demand across our services 146 00:07:23,080 --> 00:07:27,200 Speaker 1: and continue to focus on being across those services and 147 00:07:27,240 --> 00:07:30,800 Speaker 1: also continuing to operate in multiple geographies across the globe. 148 00:07:31,400 --> 00:07:32,920 Speaker 1: So what kind of growth are you looking at? I 149 00:07:32,960 --> 00:07:35,960 Speaker 1: can imagine that employers now as they do things like 150 00:07:36,120 --> 00:07:42,880 Speaker 1: expand um UH parental leave policies and look to offer 151 00:07:43,240 --> 00:07:46,800 Speaker 1: more solutions for for daycare and elder care, UM, they 152 00:07:46,800 --> 00:07:51,360 Speaker 1: can attract better candidates UM if they have you know, 153 00:07:51,440 --> 00:07:53,800 Speaker 1: bright horizons working with them. So what kind of growth 154 00:07:53,800 --> 00:07:57,240 Speaker 1: are you looking at? Yeah, so we we continue to 155 00:07:57,280 --> 00:07:59,920 Speaker 1: focus our growth with our employer clients, and you're right, 156 00:08:00,440 --> 00:08:04,160 Speaker 1: as they continue to recognize all the challenges that their 157 00:08:04,160 --> 00:08:08,200 Speaker 1: employees are facing with childcare and other dependent care needs 158 00:08:08,240 --> 00:08:12,640 Speaker 1: as well as in workforce education. UM, we continue to 159 00:08:12,640 --> 00:08:16,080 Speaker 1: expand our client base, we continue to expand the utilization 160 00:08:16,120 --> 00:08:20,680 Speaker 1: of our services, and ultimately that propels our growth forward. UH. 161 00:08:20,880 --> 00:08:25,320 Speaker 1: Each and every year. Is it quantifiable? Yeah, So in 162 00:08:25,640 --> 00:08:28,800 Speaker 1: typical times we were growing at sort of call it 163 00:08:28,880 --> 00:08:32,960 Speaker 1: eight to ten per um. We had a major dislocation 164 00:08:33,000 --> 00:08:36,280 Speaker 1: obviously in COVID UH. And so back in March and 165 00:08:36,320 --> 00:08:40,160 Speaker 1: April we closed eight percent of our centers. Obviously saw 166 00:08:40,240 --> 00:08:44,440 Speaker 1: a significant degradation UM in UH, in our revenue as 167 00:08:44,480 --> 00:08:47,080 Speaker 1: well as the services that we deliver UM. We are 168 00:08:47,520 --> 00:08:50,640 Speaker 1: at this point continuing to grow at a much faster 169 00:08:50,760 --> 00:08:54,320 Speaker 1: clip against the comps of the prior two years. But 170 00:08:54,400 --> 00:08:56,640 Speaker 1: we expect in the long term that our growth algorithm 171 00:08:56,720 --> 00:09:00,640 Speaker 1: will come back into UH that more normalized place UH 172 00:09:00,640 --> 00:09:03,520 Speaker 1: and continue on on that starting in the next year 173 00:09:03,600 --> 00:09:06,680 Speaker 1: or two. So, Steve and I gotta imagine, like many 174 00:09:06,760 --> 00:09:10,000 Speaker 1: many many businesses and industries, you were dramatically impacted by 175 00:09:10,440 --> 00:09:14,760 Speaker 1: the pandemic. How have you your discussions with your clients 176 00:09:15,160 --> 00:09:17,920 Speaker 1: kind of evolved over the last several years as we 177 00:09:18,000 --> 00:09:19,680 Speaker 1: come out on the other send, the other end of 178 00:09:19,679 --> 00:09:23,880 Speaker 1: this pandemic. Yeah, So there has been a great awakening 179 00:09:24,400 --> 00:09:27,400 Speaker 1: among employers. I call it a great renaissance among employers 180 00:09:27,960 --> 00:09:30,679 Speaker 1: recognizing that they need to lean in more heavily than 181 00:09:30,720 --> 00:09:34,960 Speaker 1: they ever have. And so in the current situation where 182 00:09:35,000 --> 00:09:37,960 Speaker 1: there's a war for talent, or even in a scenario 183 00:09:38,120 --> 00:09:42,560 Speaker 1: where employers are just simply looking for UM, you know, 184 00:09:42,679 --> 00:09:46,280 Speaker 1: supports that allow for productivity of their employees. UM. There 185 00:09:46,320 --> 00:09:50,200 Speaker 1: has been great receptivity towards the services we offer. UM. 186 00:09:50,240 --> 00:09:53,080 Speaker 1: I think it's well understood that through the pandemic UM 187 00:09:53,240 --> 00:09:57,080 Speaker 1: you know, somewhere between ten and of child care centers 188 00:09:57,240 --> 00:10:00,880 Speaker 1: across the US permanently closed, and so there is an 189 00:10:00,920 --> 00:10:04,280 Speaker 1: expectation among employers that there will continue to be a 190 00:10:04,400 --> 00:10:08,920 Speaker 1: great imbalance between supply and demand, and so employers are 191 00:10:08,960 --> 00:10:12,080 Speaker 1: looking to lean in and support their employees to provide 192 00:10:12,080 --> 00:10:15,600 Speaker 1: better access, higher quality, and more affordable care. UH. And 193 00:10:15,640 --> 00:10:18,640 Speaker 1: then on the backup side, we've seen really significant growth 194 00:10:19,240 --> 00:10:24,959 Speaker 1: because again, UH, employees have really needed those extra supports 195 00:10:25,120 --> 00:10:28,400 Speaker 1: as some of the supports that were generally available to 196 00:10:28,440 --> 00:10:31,880 Speaker 1: them in their community have really dried up. Well. What 197 00:10:32,200 --> 00:10:34,600 Speaker 1: are the kind of challenges that you face in terms 198 00:10:34,600 --> 00:10:38,920 Speaker 1: of childcare and elder care? I imagine it's a business 199 00:10:39,040 --> 00:10:45,080 Speaker 1: that is rife with regulation. UM. Compliance must be difficult, 200 00:10:45,400 --> 00:10:48,680 Speaker 1: and UM, you know, you've got to have a certain 201 00:10:48,720 --> 00:10:51,720 Speaker 1: amount of sensitivity as well for both of those UM, 202 00:10:51,800 --> 00:10:56,360 Speaker 1: but for both both those demographics. Yeah, so I certainly think, um, 203 00:10:56,520 --> 00:10:59,440 Speaker 1: you know that there is a strong regulation. I think 204 00:10:59,440 --> 00:11:02,640 Speaker 1: there are um you know, a maniacal focused on health 205 00:11:02,679 --> 00:11:05,679 Speaker 1: and safety and other things that we do, and over 206 00:11:05,760 --> 00:11:09,440 Speaker 1: thirty five years have really perfected in terms of making 207 00:11:09,440 --> 00:11:12,160 Speaker 1: sure that what we're delivering every day is high quality 208 00:11:12,200 --> 00:11:15,719 Speaker 1: and meeting the needs of those who we serve. I 209 00:11:15,720 --> 00:11:19,640 Speaker 1: would say the biggest challenge is around workforce. So there 210 00:11:19,760 --> 00:11:23,840 Speaker 1: is a significant shortage of teachers, and we see that 211 00:11:23,920 --> 00:11:26,920 Speaker 1: across all the geographies in which we operate, but specifically 212 00:11:26,920 --> 00:11:30,079 Speaker 1: acute here in the US, where their pre COVID was 213 00:11:30,280 --> 00:11:34,480 Speaker 1: a shrinking pool of talented people going into early childhood 214 00:11:34,559 --> 00:11:39,240 Speaker 1: education that was exacerbated in the pandemic. And so I 215 00:11:39,240 --> 00:11:41,920 Speaker 1: would say our biggest challenge is really on the workforce 216 00:11:41,920 --> 00:11:46,240 Speaker 1: side in terms of attracting um, you know, talent into 217 00:11:46,280 --> 00:11:49,240 Speaker 1: the field and then ultimately to bright horizons. So how 218 00:11:49,240 --> 00:11:51,920 Speaker 1: difficult is it then to uphold margins because I can imagine, 219 00:11:52,480 --> 00:11:55,760 Speaker 1: you know, um, teachers are going to be wanting substantial 220 00:11:55,840 --> 00:12:02,439 Speaker 1: hourly salaries and parents are going to want to pay 221 00:12:02,559 --> 00:12:06,520 Speaker 1: less than what dollars a month, But that that puts 222 00:12:06,520 --> 00:12:09,800 Speaker 1: you in a tight spot. Yeah, no, for sure, I 223 00:12:09,800 --> 00:12:12,680 Speaker 1: mean certainly. We have always looked to be at the 224 00:12:12,679 --> 00:12:15,040 Speaker 1: top of the market in terms of the pay that 225 00:12:15,080 --> 00:12:19,319 Speaker 1: we provide to the heroes in our classrooms are teachers, uh, 226 00:12:19,360 --> 00:12:22,559 Speaker 1: and so over the last several years, we have accelerated 227 00:12:22,559 --> 00:12:26,760 Speaker 1: wage increases pretty significantly. Um to quantify it, it's been 228 00:12:26,800 --> 00:12:30,800 Speaker 1: more than to our teachers over the last several years 229 00:12:30,920 --> 00:12:35,960 Speaker 1: and so um. Obviously, working families struggle to afford the 230 00:12:36,040 --> 00:12:39,720 Speaker 1: investment in early childhood education, but the reality is is 231 00:12:39,800 --> 00:12:43,839 Speaker 1: expensive to deliver, and so we have always relied upon 232 00:12:44,160 --> 00:12:48,920 Speaker 1: our employer clients to help their employees to offset some 233 00:12:49,000 --> 00:12:52,120 Speaker 1: of the costs of childcare. And that's really what makes 234 00:12:52,120 --> 00:12:55,439 Speaker 1: our model unique, right, which is our employer clients lean 235 00:12:55,520 --> 00:12:59,840 Speaker 1: in and provide subsidy so that their employees are not 236 00:13:00,120 --> 00:13:03,680 Speaker 1: responsible for the full cost of childcare and the full 237 00:13:03,679 --> 00:13:07,200 Speaker 1: cost of delivering that childcare, and ultimately that becomes an 238 00:13:07,240 --> 00:13:11,040 Speaker 1: important benefit to them for working at companies like Bloomberg. 239 00:13:11,559 --> 00:13:14,040 Speaker 1: All right, good stuff, I really appreciate you taking a time. 240 00:13:14,240 --> 00:13:16,640 Speaker 1: Stephen Kramer, CEO of Bright Horizons again in New York 241 00:13:16,640 --> 00:13:19,560 Speaker 1: stock has changed listed company b f A M is 242 00:13:19,559 --> 00:13:22,920 Speaker 1: a symbol to type into your Bloomberg terminal there. So, uh, 243 00:13:23,360 --> 00:13:26,800 Speaker 1: you're a user, Yeah, well we can. It's a great 244 00:13:27,040 --> 00:13:31,199 Speaker 1: service that Bloomberg um offers. You know, the interesting thing 245 00:13:31,559 --> 00:13:33,840 Speaker 1: the comparison I make is between what the system in 246 00:13:33,880 --> 00:13:36,400 Speaker 1: Germany and here, right, because I just moved back. I 247 00:13:36,440 --> 00:13:39,800 Speaker 1: pay more in taxes here than I did in Germany, really, 248 00:13:39,920 --> 00:13:44,960 Speaker 1: but childcare was free there, so they had doublic daycarees 249 00:13:45,240 --> 00:13:49,839 Speaker 1: with organic food and musicians and farm field trips over there, 250 00:13:50,280 --> 00:13:52,559 Speaker 1: and here it's like two or three grand a month 251 00:13:53,559 --> 00:13:58,480 Speaker 1: for the basics, right, parent contrast, not saying which one 252 00:13:58,520 --> 00:14:01,559 Speaker 1: is better, but just comparing tressed all right, sp of 253 00:14:01,679 --> 00:14:03,720 Speaker 1: eight tens of one percent. We'll take that on a 254 00:14:03,760 --> 00:14:12,520 Speaker 1: holiday Tuesday. This this bood bern get a little bit 255 00:14:12,559 --> 00:14:14,560 Speaker 1: of a deal here, and it really got my attention. 256 00:14:14,920 --> 00:14:18,640 Speaker 1: So chen Or Society General is doing a deal with 257 00:14:18,679 --> 00:14:21,440 Speaker 1: Alliance Bernstein. Alliance Bernstein is one of the combination of 258 00:14:21,480 --> 00:14:23,880 Speaker 1: two of the best names I think in the US 259 00:14:24,000 --> 00:14:28,280 Speaker 1: global finance. Jonathan Tyson's his senior analyst European banks for 260 00:14:28,400 --> 00:14:31,880 Speaker 1: Bloomberg Intelligence. He's based in London. He joins us, Hey, John, 261 00:14:31,920 --> 00:14:34,160 Speaker 1: you know the story that we've heard over and over 262 00:14:34,200 --> 00:14:36,080 Speaker 1: and over again over the years is kind of the 263 00:14:36,160 --> 00:14:41,320 Speaker 1: European banks retrenching, pulling back. I'm thinking credits Swiss Deutsche Bank. 264 00:14:41,400 --> 00:14:44,960 Speaker 1: But what does suck Gen doing well? I mean, you're 265 00:14:44,960 --> 00:14:48,680 Speaker 1: completely right, and sockd In has only just finished about 266 00:14:48,720 --> 00:14:50,880 Speaker 1: three years of a lot of disposals there in mind, 267 00:14:50,920 --> 00:14:55,080 Speaker 1: they sold their stake in the Monday to UM Credittal, 268 00:14:55,160 --> 00:14:59,200 Speaker 1: they sold lix Source creditcal next to the number of businesses, 269 00:14:59,480 --> 00:15:03,840 Speaker 1: but um they are pretty strong in equities and prime services, 270 00:15:04,000 --> 00:15:06,880 Speaker 1: of which castext is probably not the strongest part of it. 271 00:15:07,240 --> 00:15:09,520 Speaker 1: So I think they're trying to do what BMP did 272 00:15:09,520 --> 00:15:12,120 Speaker 1: with x mat UM and they've picked a very good franchise. 273 00:15:12,120 --> 00:15:15,240 Speaker 1: I agree with you at Alliance UM and Bernstein Research. 274 00:15:16,680 --> 00:15:19,240 Speaker 1: So what does this mean? Are they going to be 275 00:15:19,240 --> 00:15:23,400 Speaker 1: moving pushing to move market share higher? UM is chen 276 00:15:23,640 --> 00:15:26,960 Speaker 1: making a play here? Are they an aggressive dealmaker? Now? 277 00:15:28,480 --> 00:15:32,800 Speaker 1: Oh no. But basically the outgoing CEO who who leaves 278 00:15:32,920 --> 00:15:34,680 Speaker 1: may have next. He has been there for fifteen years, 279 00:15:34,840 --> 00:15:37,160 Speaker 1: a lot of ups and downs. The new guy coming 280 00:15:37,200 --> 00:15:41,480 Speaker 1: in is ex corporate investment banking and clearly a lot 281 00:15:41,560 --> 00:15:44,840 Speaker 1: of the restruction has been done. But if you look 282 00:15:44,840 --> 00:15:47,240 Speaker 1: at say their equities division, they've beaten for the last 283 00:15:47,240 --> 00:15:48,960 Speaker 1: six quarters and I don't think any bank's done that, 284 00:15:49,360 --> 00:15:51,840 Speaker 1: so they would have pretty good franchise there. He's making 285 00:15:51,840 --> 00:15:54,680 Speaker 1: his mark. He's confirming that sock Jan as the European 286 00:15:54,920 --> 00:15:58,400 Speaker 1: player and a global equities player wants to play. And 287 00:15:58,440 --> 00:16:00,720 Speaker 1: as I say, I think they've looked at BEMP did 288 00:16:00,760 --> 00:16:03,320 Speaker 1: with nex Han over a few years, eventually buying in 289 00:16:04,080 --> 00:16:05,960 Speaker 1: a year or so ago, and the strength of their 290 00:16:06,000 --> 00:16:07,960 Speaker 1: franchise there, and they're trying to do the same thing. 291 00:16:08,320 --> 00:16:10,200 Speaker 1: They have said. We don't think there'll be that many 292 00:16:10,840 --> 00:16:13,000 Speaker 1: job cuts. There's not that much of an overlap, probably 293 00:16:13,040 --> 00:16:16,640 Speaker 1: nine hundred staff in total across the two businesses. Um 294 00:16:16,680 --> 00:16:19,160 Speaker 1: it's suspensible move. And in terms of how they're paying 295 00:16:19,160 --> 00:16:22,160 Speaker 1: for it, I mean banks are actually profitable again, so 296 00:16:22,200 --> 00:16:23,920 Speaker 1: that they're paying for it by using up some of 297 00:16:23,960 --> 00:16:26,320 Speaker 1: the capital they're generating. You know what I thought was interesting. 298 00:16:26,640 --> 00:16:31,840 Speaker 1: Um So soft Gen takes fift Alliance Bernstein gets the 299 00:16:31,880 --> 00:16:36,520 Speaker 1: CEO position, um and they're going to be headquartered in London. 300 00:16:37,120 --> 00:16:40,480 Speaker 1: Why headquartered in London? Five years ago we thought maybe 301 00:16:40,480 --> 00:16:44,040 Speaker 1: that was going to shift as a as a financial hub, 302 00:16:44,440 --> 00:16:46,760 Speaker 1: you know, to the continent, or maybe more business would 303 00:16:46,800 --> 00:16:48,760 Speaker 1: come back here to New York. But is it still 304 00:16:48,800 --> 00:16:51,640 Speaker 1: just so attractive that when you're there you can get 305 00:16:51,680 --> 00:16:55,560 Speaker 1: the best talent. Well, I think it's time zones. Um. 306 00:16:55,600 --> 00:16:59,840 Speaker 1: It is also language, as you say, the Bernstein research 307 00:17:00,520 --> 00:17:04,359 Speaker 1: quite US heavy, very English speaking, and also the uk 308 00:17:04,520 --> 00:17:06,959 Speaker 1: IS is doing everything you can with the kind of 309 00:17:06,960 --> 00:17:10,600 Speaker 1: watering down post Brexit, etcetera, to make this as a 310 00:17:10,720 --> 00:17:13,560 Speaker 1: nicer place to be a bank as possible. We were 311 00:17:13,640 --> 00:17:16,080 Speaker 1: even looking at things like tweaking Bank Aponus as we've 312 00:17:16,080 --> 00:17:20,399 Speaker 1: removed the cap so there's no reason to rush anything. 313 00:17:20,440 --> 00:17:22,119 Speaker 1: And I mean this is they've got five years to 314 00:17:22,160 --> 00:17:24,919 Speaker 1: buy the remaining four nine. This is a a thing that 315 00:17:24,920 --> 00:17:26,399 Speaker 1: we've done in a hurry. But I think at a 316 00:17:26,480 --> 00:17:28,520 Speaker 1: starting point it makes sense to me in London given 317 00:17:28,560 --> 00:17:36,000 Speaker 1: the the US An American English speaking component of Burnstein. So, Jonathan, 318 00:17:36,000 --> 00:17:38,440 Speaker 1: you've covered all the European banks here, this seems a 319 00:17:38,520 --> 00:17:40,760 Speaker 1: little bit of, you know, out of step with some 320 00:17:40,840 --> 00:17:43,280 Speaker 1: of the other ones. Does this suggest that maybe some 321 00:17:43,400 --> 00:17:47,720 Speaker 1: others European banks may be looking to maybe increase through 322 00:17:47,760 --> 00:17:51,440 Speaker 1: your U S exposure. Um, maybe thinking that twenty three 323 00:17:51,480 --> 00:17:54,840 Speaker 1: will be a better year for the financial markets. Not 324 00:17:54,960 --> 00:17:56,720 Speaker 1: at all. No, I think well, this is though, this 325 00:17:56,800 --> 00:17:57,960 Speaker 1: is a bank that's come to the end of a 326 00:17:58,000 --> 00:18:01,240 Speaker 1: very long and painful restructuring okay, torture bank, and it's 327 00:18:01,240 --> 00:18:04,040 Speaker 1: looking at the businesses is doing well in it is profitable, 328 00:18:04,040 --> 00:18:06,439 Speaker 1: it's generating capital, it's got more capital than it needs. 329 00:18:06,760 --> 00:18:10,080 Speaker 1: So it's sort of building out in the franchises. Another 330 00:18:10,080 --> 00:18:12,320 Speaker 1: franchise has got a l d S. You've probably never 331 00:18:12,359 --> 00:18:14,240 Speaker 1: heard of it, but it's pretty much the biggest leasing 332 00:18:14,280 --> 00:18:16,880 Speaker 1: company in Europe um and it's going great guns. That's 333 00:18:16,880 --> 00:18:20,040 Speaker 1: another business that they are building out via acquisition. The 334 00:18:20,080 --> 00:18:23,080 Speaker 1: ext franchise. They used to be very very strong and derivatives, 335 00:18:23,440 --> 00:18:26,440 Speaker 1: remember the French blew up massively in one Q twenty. 336 00:18:26,600 --> 00:18:29,359 Speaker 1: They've got through that. They've got revenues right back again. 337 00:18:29,400 --> 00:18:31,680 Speaker 1: This unit is supposed to make about three billion next year, 338 00:18:31,760 --> 00:18:34,679 Speaker 1: so that they're just sort of moving on to the 339 00:18:34,720 --> 00:18:38,640 Speaker 1: next CEO and consolidating in the businesses that they're good at. 340 00:18:39,640 --> 00:18:42,280 Speaker 1: When when you talk to your institutional investor clients these days, 341 00:18:43,040 --> 00:18:46,960 Speaker 1: what is there kind of outlook for kind of European 342 00:18:47,119 --> 00:18:51,520 Speaker 1: and UK banks? Well, I mean the thing is we've 343 00:18:51,520 --> 00:18:53,959 Speaker 1: been waiting for ten years for revenue to start going up. 344 00:18:53,960 --> 00:18:56,560 Speaker 1: They started going up. Rates went up that interesting and 345 00:18:56,640 --> 00:19:01,199 Speaker 1: went up. Then Ukraine invason happened. It's has begun to 346 00:19:01,200 --> 00:19:02,600 Speaker 1: look through it. But the fact is we can see 347 00:19:02,640 --> 00:19:04,760 Speaker 1: the peak of the rate cycle now. So they're now 348 00:19:04,800 --> 00:19:08,080 Speaker 1: worrying about the downturn and quite how badly bad debt 349 00:19:08,480 --> 00:19:10,399 Speaker 1: is going to impact the banks. And we have an 350 00:19:10,440 --> 00:19:14,240 Speaker 1: accounting standard that's reasonably new and pretty untried and untested. 351 00:19:14,280 --> 00:19:17,120 Speaker 1: So they're a little bit skeptical, world more bullish, were 352 00:19:17,119 --> 00:19:19,600 Speaker 1: comfortable that the banks will weather this and actually report 353 00:19:19,680 --> 00:19:22,200 Speaker 1: double digit r o e s, which if you've looked 354 00:19:22,200 --> 00:19:24,120 Speaker 1: at European banks for the last ten of fifteen years, 355 00:19:24,119 --> 00:19:26,280 Speaker 1: you can't even remember the last time you saw that 356 00:19:27,480 --> 00:19:31,520 Speaker 1: and did thirty seconds Jonathan. Brexit Did it kill the 357 00:19:31,560 --> 00:19:33,439 Speaker 1: city of London? Do you think? Or it's just a 358 00:19:33,520 --> 00:19:38,040 Speaker 1: minor blip. It hasn't helped um And hopefully the new 359 00:19:38,080 --> 00:19:41,160 Speaker 1: government is going to stop kind of the UK and 360 00:19:41,600 --> 00:19:46,760 Speaker 1: the ECB being at war about things like euroclearing and derivatives, 361 00:19:47,000 --> 00:19:50,520 Speaker 1: so hopefully the hospitalities will cease or the least softened. 362 00:19:50,600 --> 00:19:53,680 Speaker 1: But no, it didn't, it didn't help all right, good stuff, 363 00:19:53,720 --> 00:19:56,520 Speaker 1: Jonathan Tyce. He covers all the European and UK banks 364 00:19:56,520 --> 00:19:58,800 Speaker 1: for Bloomberg Intelligence. He's been doing it for decades. One 365 00:19:58,800 --> 00:20:02,000 Speaker 1: of the best in the city of London, so he's 366 00:20:02,000 --> 00:20:04,400 Speaker 1: seen it all. But I mean he gets some masters 367 00:20:04,520 --> 00:20:09,320 Speaker 1: in classics, literature and linguistics from I don't Oxford Cambridge 368 00:20:09,320 --> 00:20:13,200 Speaker 1: one of those super duper banker major and then you 369 00:20:13,280 --> 00:20:16,399 Speaker 1: got classics and then you go to financial services. I 370 00:20:16,440 --> 00:20:18,960 Speaker 1: just don't get it. But he is a really really 371 00:20:19,000 --> 00:20:21,639 Speaker 1: good banks I would get some massive I would guess 372 00:20:21,640 --> 00:20:25,960 Speaker 1: a double digit percentage of successful bankers majored in classics classics. 373 00:20:25,960 --> 00:20:27,280 Speaker 1: All right, I'll take your word for they love it. 374 00:20:27,320 --> 00:20:29,960 Speaker 1: That's why I always hedge funds have like Greek god names. 375 00:20:33,080 --> 00:20:36,000 Speaker 1: Let's talk energy here. Yesterday, as John was just mentioning 376 00:20:36,040 --> 00:20:38,760 Speaker 1: today we got w t I crude oil eight cents. 377 00:20:38,760 --> 00:20:41,920 Speaker 1: We had a seven handle yesterday which got my attention. 378 00:20:42,560 --> 00:20:49,399 Speaker 1: Got gasoline prices unleaded regular. Yeah that I'm going to 379 00:20:49,520 --> 00:20:52,359 Speaker 1: tell you that's not good for your engine. Yeah that's 380 00:20:52,760 --> 00:20:55,640 Speaker 1: your car was engineered to tank ninety one octane. Alright, 381 00:20:55,680 --> 00:21:00,760 Speaker 1: so it's cheaper. Yeah, I know the long run, it's 382 00:21:00,800 --> 00:21:03,560 Speaker 1: not Do you love your car question? Yes you do? 383 00:21:04,119 --> 00:21:06,800 Speaker 1: And will you be able to replace it. No, MW 384 00:21:07,040 --> 00:21:08,960 Speaker 1: does not make those anymore. Right, I'll take better care 385 00:21:08,960 --> 00:21:11,639 Speaker 1: of it. But diesel is the issue here, and I 386 00:21:11,640 --> 00:21:14,080 Speaker 1: want to talk to much more important fuel for the 387 00:21:14,080 --> 00:21:17,200 Speaker 1: global economy. Exactly right, Scott Levin, senior Energy and industrial 388 00:21:17,200 --> 00:21:20,439 Speaker 1: analysts for Bloomberg Intelligence Joints us Hey. Scott talked to 389 00:21:20,480 --> 00:21:22,919 Speaker 1: us about diesel. I mean, I don't put it in 390 00:21:23,000 --> 00:21:26,200 Speaker 1: my car. I don't like the sound diesel engines make. 391 00:21:26,800 --> 00:21:29,520 Speaker 1: But it's big, it's great, it's a great sound. Talk 392 00:21:29,560 --> 00:21:32,440 Speaker 1: to us about diesel UH fuel Scott House concerns should 393 00:21:32,440 --> 00:21:36,240 Speaker 1: we be Yeah, you have kind of a unique phenomenon 394 00:21:36,320 --> 00:21:39,520 Speaker 1: going on with right now. And if you look at 395 00:21:39,560 --> 00:21:44,040 Speaker 1: your local gas station, you'll see a gap of close 396 00:21:44,119 --> 00:21:48,639 Speaker 1: to two dollars gallon in some places between diesel and gasoline. 397 00:21:48,680 --> 00:21:52,959 Speaker 1: And that's abnormally large, obviously, and the primary reason for that, 398 00:21:53,000 --> 00:21:58,800 Speaker 1: I think is unusually low inventories of diesel weren't less 399 00:21:58,800 --> 00:22:01,960 Speaker 1: than half of or we typically are this time of year. 400 00:22:02,960 --> 00:22:05,360 Speaker 1: UH for diesel fuel, and diesel fuel is much more 401 00:22:05,359 --> 00:22:09,879 Speaker 1: commonly used to fuel trucks and the industrial economy at large. 402 00:22:10,480 --> 00:22:14,679 Speaker 1: Is also used in the Northeast as a source of 403 00:22:14,800 --> 00:22:18,960 Speaker 1: heating oil. And so it's that uh, that phenomenon with 404 00:22:19,119 --> 00:22:25,080 Speaker 1: inventories and getting additional supply to the Northeast in particular 405 00:22:25,800 --> 00:22:28,399 Speaker 1: that is coming up the works and driving a spike 406 00:22:28,440 --> 00:22:32,040 Speaker 1: in diesel prices and causing some concern uh coming into 407 00:22:32,080 --> 00:22:34,840 Speaker 1: the winter months where you know, you could have harshal 408 00:22:34,960 --> 00:22:38,720 Speaker 1: weather and some very uncomfortable people unless we get some 409 00:22:38,760 --> 00:22:42,520 Speaker 1: additional supply cooking well. And in other countries, diesel is 410 00:22:42,640 --> 00:22:46,840 Speaker 1: very common as personal transport fuel. You know, UM, a 411 00:22:46,840 --> 00:22:51,400 Speaker 1: lot of people drive diesel engine cars in Europe. That's 412 00:22:51,440 --> 00:22:55,000 Speaker 1: not really the case in the US. UM. And I 413 00:22:55,000 --> 00:22:58,040 Speaker 1: guess it doesn't matter as much because Europe has public transportation. 414 00:22:58,400 --> 00:23:02,800 Speaker 1: But how how hardcore is the knock on effect going 415 00:23:02,840 --> 00:23:05,919 Speaker 1: to be in terms of shipping costs? You know, we 416 00:23:05,920 --> 00:23:09,080 Speaker 1: we see shipping costs coming down broadly, but if diesel 417 00:23:09,240 --> 00:23:14,199 Speaker 1: is short, I can imagine UM truckers and you know, 418 00:23:14,720 --> 00:23:19,400 Speaker 1: UM boat vessel operators are gonna have to raise prices. Yeah. 419 00:23:19,680 --> 00:23:23,240 Speaker 1: It's gonna definitely provide an underlying support, uh for for 420 00:23:23,280 --> 00:23:27,359 Speaker 1: the transportation industry at large. Uh, more so in Europe, 421 00:23:27,359 --> 00:23:29,199 Speaker 1: as you point out, than in the US. But in 422 00:23:29,240 --> 00:23:33,240 Speaker 1: both places, uh, And there's a somewhat regional phenomenon here 423 00:23:33,320 --> 00:23:36,879 Speaker 1: in that Europe is going through its own um energy 424 00:23:36,920 --> 00:23:41,080 Speaker 1: supply crunches, you know, uh, knock on effect of the 425 00:23:41,200 --> 00:23:46,400 Speaker 1: Russian invasion in Ukraine, and so they've been trying to 426 00:23:46,440 --> 00:23:51,560 Speaker 1: resolve their own uh crunch uh in terms of diesel 427 00:23:51,680 --> 00:23:54,919 Speaker 1: natural gas, which can also be used as sources of 428 00:23:54,920 --> 00:23:58,639 Speaker 1: heating fuel over there. So whereas that's potentially or in 429 00:23:58,680 --> 00:24:02,080 Speaker 1: the past has been a source of supply and could 430 00:24:02,119 --> 00:24:04,200 Speaker 1: be used to alleviate some of the pressure that we're 431 00:24:04,200 --> 00:24:06,959 Speaker 1: seeing in the US northeast this year, that is not 432 00:24:07,000 --> 00:24:09,800 Speaker 1: the case clearly this year as uh. You know, the 433 00:24:09,840 --> 00:24:14,320 Speaker 1: European countries in general have been building up inventories uh 434 00:24:14,400 --> 00:24:18,400 Speaker 1: in advance of a supply crunch for this winter, so 435 00:24:18,680 --> 00:24:20,800 Speaker 1: you know, a knock on effect there. But yes, this 436 00:24:20,960 --> 00:24:26,560 Speaker 1: certainly underpins higher pricing for the transportation sector in general 437 00:24:27,000 --> 00:24:29,320 Speaker 1: and maybe helps them overcome some of the cost pressure 438 00:24:29,320 --> 00:24:31,680 Speaker 1: that they're seeing on the labor side. Hey, Scott, you know, 439 00:24:31,720 --> 00:24:36,000 Speaker 1: whenever I hear about energy shortages, whether it's diesel or not, 440 00:24:36,160 --> 00:24:40,119 Speaker 1: gas or gasoline, my first response is just crank up 441 00:24:40,160 --> 00:24:42,399 Speaker 1: the refineries. What's the big deal? Go down to Texas 442 00:24:42,400 --> 00:24:44,960 Speaker 1: and Louisiana and get those things going. But that's not 443 00:24:45,000 --> 00:24:47,440 Speaker 1: the case. Is it tells what the refining situation is 444 00:24:47,480 --> 00:24:53,720 Speaker 1: in this country. Yeah, you know, unfortunately, in this instance, 445 00:24:53,760 --> 00:24:58,280 Speaker 1: with diesel being the issue, us refining is much more 446 00:24:58,359 --> 00:25:02,280 Speaker 1: geared toward gasoline than diesel. I think you get to 447 00:25:02,640 --> 00:25:06,000 Speaker 1: uh gallons out of every barrel for every gallon of 448 00:25:06,080 --> 00:25:10,880 Speaker 1: diesel that you produce here, So the uh, the cracks 449 00:25:10,880 --> 00:25:15,359 Speaker 1: are are skewed more towards gasoline than diesel inherently in 450 00:25:15,440 --> 00:25:19,520 Speaker 1: this country. And from a gasoline standpoint, yeah, we're higher, 451 00:25:19,600 --> 00:25:22,679 Speaker 1: certainly higher than then we'd like to see, you know, 452 00:25:22,800 --> 00:25:26,120 Speaker 1: at four dollars a gallon or there about, but uh, 453 00:25:26,320 --> 00:25:29,879 Speaker 1: not abnormally high, certainly nothing like we're seeing in the 454 00:25:29,920 --> 00:25:34,040 Speaker 1: diesel market right now. And uh, you know that's kind 455 00:25:34,040 --> 00:25:38,560 Speaker 1: of consistent with eighty dollar crude or thereabouts. And so 456 00:25:39,200 --> 00:25:41,720 Speaker 1: we have not seen much of a push to increase 457 00:25:41,760 --> 00:25:45,240 Speaker 1: refining capacity within the country. If anything, what we need 458 00:25:45,240 --> 00:25:47,000 Speaker 1: to do is make it easier to get from one 459 00:25:47,040 --> 00:25:50,000 Speaker 1: place to another from the existing refineries that we have, 460 00:25:50,160 --> 00:25:52,840 Speaker 1: and it's typically the Gulf coast that serves the majority 461 00:25:52,840 --> 00:25:55,800 Speaker 1: of the Eastern seaboard, So make it easier. How do 462 00:25:55,840 --> 00:25:59,399 Speaker 1: you mean, like more pipelines or more ships? How do 463 00:25:59,440 --> 00:26:01,880 Speaker 1: you make it these year to transport? Yeah, so we'll 464 00:26:01,920 --> 00:26:05,200 Speaker 1: start with the pipelines. Pipelines is an obvious way, and 465 00:26:05,520 --> 00:26:11,120 Speaker 1: we have an administration obviously that is ah against pipeline construction, uh, 466 00:26:11,320 --> 00:26:14,520 Speaker 1: particularly as it relates to hydrocarbons, and so Mountain Valley 467 00:26:14,520 --> 00:26:16,520 Speaker 1: Pipeline is still on hold. That's one of the big 468 00:26:16,560 --> 00:26:20,080 Speaker 1: conduits along the Eastern Seaboard that has been on hold 469 00:26:20,160 --> 00:26:24,720 Speaker 1: pending resolution of environmental permits. And then you know, if 470 00:26:24,720 --> 00:26:27,280 Speaker 1: we were to look at shipping, uh, it's the Jones Act. 471 00:26:27,320 --> 00:26:30,320 Speaker 1: The Jones Act requires uh, you know, the ships that 472 00:26:30,400 --> 00:26:34,679 Speaker 1: carry crewed uh with the area to be h on 473 00:26:34,800 --> 00:26:38,520 Speaker 1: US flag ships and there are a significant limitations there. 474 00:26:38,680 --> 00:26:41,240 Speaker 1: So you have transportation bottlenecks that are really making the 475 00:26:41,320 --> 00:26:43,480 Speaker 1: situation more Yeah. I think we need somebody needs to 476 00:26:43,480 --> 00:26:45,359 Speaker 1: look at that Jones Act. I keep hearing about that 477 00:26:45,400 --> 00:26:47,560 Speaker 1: all the time. And when we think about not having 478 00:26:47,680 --> 00:26:50,840 Speaker 1: fuel in the Northeast, what's up with that? So anyway, 479 00:26:50,880 --> 00:26:55,159 Speaker 1: Scott Levine, senior Energy and Industrial analysts for Bloomberg Intelligence. 480 00:26:58,040 --> 00:27:01,360 Speaker 1: Markets moving higher today, lower volant, but move on. Higer 481 00:27:01,400 --> 00:27:03,359 Speaker 1: we'll take the green on the screen. Let's check in 482 00:27:03,400 --> 00:27:06,760 Speaker 1: on what we should be doing in these markets. Tom Mantion, 483 00:27:07,040 --> 00:27:10,360 Speaker 1: he is a managing director at UBS Private Wealth Management. Hey, Tom, 484 00:27:10,359 --> 00:27:12,120 Speaker 1: you know, we're thanks so much for joining us here. 485 00:27:12,119 --> 00:27:13,840 Speaker 1: We're you know, we're ten percent or so off the 486 00:27:13,840 --> 00:27:17,040 Speaker 1: bottom here in s What are you telling your clients 487 00:27:17,040 --> 00:27:20,120 Speaker 1: these days? You know what I think the next three 488 00:27:20,160 --> 00:27:22,600 Speaker 1: to six months do you have to still understand that 489 00:27:22,640 --> 00:27:26,760 Speaker 1: we're going to remain volatible. We're gonna watch every fat 490 00:27:27,680 --> 00:27:30,119 Speaker 1: governor speak. We're gonna listen to what they say. We're 491 00:27:30,119 --> 00:27:33,680 Speaker 1: gonna parse every single word and look for clues as 492 00:27:33,720 --> 00:27:37,240 Speaker 1: to win. The set is going to stop. But at 493 00:27:37,240 --> 00:27:42,240 Speaker 1: the you know, I think the heavy lifting is behind us, right, 494 00:27:42,280 --> 00:27:46,000 Speaker 1: So I think next three to six months be defensive. 495 00:27:46,680 --> 00:27:52,560 Speaker 1: Look for value. I think Staples, healthcare, energy, defense, infrastructure, 496 00:27:52,800 --> 00:27:58,000 Speaker 1: income plays. But but somewhere in you've got to think inflection. Right, 497 00:27:58,040 --> 00:28:00,159 Speaker 1: things are going to change. By the way, as on 498 00:28:00,240 --> 00:28:03,280 Speaker 1: the side, don't you wish fewer of them would speak? 499 00:28:03,680 --> 00:28:05,760 Speaker 1: I mean, you've been in this industry, You've been at 500 00:28:05,800 --> 00:28:08,399 Speaker 1: UBS for like twenty years. You were Mother Meryl before 501 00:28:08,400 --> 00:28:12,800 Speaker 1: that for ten um. It didn't always used to be 502 00:28:12,960 --> 00:28:16,800 Speaker 1: like this, Every single FED speaker offers a different opinion, 503 00:28:17,080 --> 00:28:21,199 Speaker 1: moving the markets each time. Yeah, it can't be good, 504 00:28:22,440 --> 00:28:24,800 Speaker 1: you know, I don't don't forget. We used to watch 505 00:28:24,840 --> 00:28:29,000 Speaker 1: the briefcase. Remember Alan Greenspan had his briefcase and whether 506 00:28:29,040 --> 00:28:32,879 Speaker 1: it was thick or sin you know, So a little 507 00:28:32,880 --> 00:28:35,840 Speaker 1: bit of this has been almost my entire thirty year career. 508 00:28:37,680 --> 00:28:41,680 Speaker 1: It never ceases to amaze me, how how one word 509 00:28:42,560 --> 00:28:47,200 Speaker 1: can move a market, you know, three in either direction. 510 00:28:47,240 --> 00:28:53,480 Speaker 1: I think the longer term investors here can find opportunities 511 00:28:53,520 --> 00:28:55,560 Speaker 1: in those moments. So do you have do you have 512 00:28:55,640 --> 00:28:59,160 Speaker 1: clients who say, like Tom, enough of this macro crap, like, 513 00:28:59,200 --> 00:29:02,120 Speaker 1: give me some of them up research. It seems like 514 00:29:02,160 --> 00:29:05,360 Speaker 1: no one cares about companies. Well, you know, and I 515 00:29:05,400 --> 00:29:09,840 Speaker 1: think this is definitely two has completely shown you that 516 00:29:09,920 --> 00:29:13,640 Speaker 1: earnings matter, right, And I think we've seen that in 517 00:29:13,680 --> 00:29:17,760 Speaker 1: the last few weeks where stocks that didn't have a 518 00:29:17,800 --> 00:29:20,400 Speaker 1: good things to say, didn't do a good job, have 519 00:29:20,600 --> 00:29:24,400 Speaker 1: been punished severely by this market. And then stocks that 520 00:29:24,400 --> 00:29:27,719 Speaker 1: that have done well and have navigated what has been 521 00:29:27,720 --> 00:29:31,360 Speaker 1: a very difficult year from an interest rate and inflation perspective, 522 00:29:31,680 --> 00:29:34,120 Speaker 1: certainly with supply chains those companies that have done well 523 00:29:34,160 --> 00:29:37,040 Speaker 1: have been rewarded. So there are there are names on 524 00:29:37,080 --> 00:29:39,520 Speaker 1: the board that are up this year and up significantly. 525 00:29:39,560 --> 00:29:43,760 Speaker 1: And I think being positioned the right way has helped. 526 00:29:45,000 --> 00:29:46,479 Speaker 1: But you know, you're not going to get it right 527 00:29:46,520 --> 00:29:48,440 Speaker 1: every single time. But I do agree with you. I 528 00:29:48,440 --> 00:29:52,320 Speaker 1: think I think thinking macro is helpful, but you need 529 00:29:52,320 --> 00:29:54,240 Speaker 1: to bring it back down a reality every once in 530 00:29:54,280 --> 00:29:57,040 Speaker 1: a while. And Tom, you mentioned financials is a sector 531 00:29:57,080 --> 00:29:59,200 Speaker 1: you like. I mean, do I want to own kind 532 00:29:59,200 --> 00:30:02,360 Speaker 1: of the big money center global banks, the JP Morgans cities, 533 00:30:02,400 --> 00:30:04,560 Speaker 1: or do I want to go maybe regional banks who 534 00:30:04,560 --> 00:30:07,760 Speaker 1: may benefit more from a you know, you know, an 535 00:30:07,760 --> 00:30:10,680 Speaker 1: economic kind of reopening as we get through whatever recession 536 00:30:10,680 --> 00:30:14,280 Speaker 1: we're gonna have in twenty three. Yeah, I love that, 537 00:30:14,440 --> 00:30:17,239 Speaker 1: you know, whatever recession we're gonna have in three I 538 00:30:17,240 --> 00:30:19,440 Speaker 1: think people have been talking about recession now for it 539 00:30:19,480 --> 00:30:22,480 Speaker 1: seems like a year and a half um and it 540 00:30:22,560 --> 00:30:25,240 Speaker 1: hasn't it hasn't yet occurred. I think you need to 541 00:30:25,280 --> 00:30:27,800 Speaker 1: own both. I think the I think the big money 542 00:30:27,800 --> 00:30:32,520 Speaker 1: centers have have hail winds here. I think the regionals 543 00:30:32,600 --> 00:30:36,080 Speaker 1: also have tail winds. Obviously, I think that there's some 544 00:30:36,080 --> 00:30:40,760 Speaker 1: some regional risk to certain industries UH that that that 545 00:30:40,840 --> 00:30:43,200 Speaker 1: may or may not do well in a in a 546 00:30:43,240 --> 00:30:46,520 Speaker 1: recession in three given the type of recession that we're 547 00:30:46,520 --> 00:30:51,080 Speaker 1: having UH or or may have. You know, nothing is 548 00:30:51,120 --> 00:30:54,560 Speaker 1: a fed up complete But I like I like both 549 00:30:54,560 --> 00:30:58,360 Speaker 1: sectors here. I also think staples in healthcare and and 550 00:30:58,400 --> 00:31:01,480 Speaker 1: obviously we've seen some some positive and negative earnings reports 551 00:31:01,480 --> 00:31:03,400 Speaker 1: in the healthcare sector. So you need to be really 552 00:31:03,440 --> 00:31:05,960 Speaker 1: smart about what you want to own UH and why. 553 00:31:06,360 --> 00:31:08,920 Speaker 1: But I do think there are some at least for 554 00:31:08,920 --> 00:31:11,400 Speaker 1: the next three to six or nine months, some some 555 00:31:11,400 --> 00:31:14,880 Speaker 1: some places I hate to use the word hide, but 556 00:31:15,240 --> 00:31:17,920 Speaker 1: some places to be defensive. If people want to be 557 00:31:17,960 --> 00:31:20,280 Speaker 1: If investors want to put more risk on the table, 558 00:31:20,640 --> 00:31:22,440 Speaker 1: what do you think about going outside of the US? 559 00:31:22,560 --> 00:31:24,360 Speaker 1: I mean, I'm assuming most of your clients are here 560 00:31:24,400 --> 00:31:27,880 Speaker 1: in America. UM, but with the dollar it had climbed 561 00:31:27,920 --> 00:31:30,200 Speaker 1: to such amazing heights. I mean, what an opportunity to 562 00:31:30,200 --> 00:31:35,960 Speaker 1: you to invest elsewhere. Certainly you can look to a pack, 563 00:31:36,080 --> 00:31:39,440 Speaker 1: you can look to Europe. But if you're worried about 564 00:31:39,480 --> 00:31:42,400 Speaker 1: the US being in a recession in three, I think 565 00:31:42,400 --> 00:31:45,000 Speaker 1: you've got to be much more concerned about what's happening 566 00:31:45,160 --> 00:31:47,880 Speaker 1: in Europe. I think the geopolitics on the in the 567 00:31:47,960 --> 00:31:52,200 Speaker 1: European continent or are significantly more dangerous than that than 568 00:31:52,280 --> 00:31:55,160 Speaker 1: they are domestically here in the U. S. So, uh, 569 00:31:55,200 --> 00:31:58,520 Speaker 1: they obviously have a significant energy crisis that's going to 570 00:31:58,600 --> 00:32:02,640 Speaker 1: take some take a while to work out, and and 571 00:32:02,720 --> 00:32:06,240 Speaker 1: that is that is uh, you know, if we can 572 00:32:06,320 --> 00:32:08,960 Speaker 1: control inflation here with the said to be much more 573 00:32:08,960 --> 00:32:14,880 Speaker 1: difficult for the ECB to control inflation with with energy 574 00:32:14,960 --> 00:32:20,480 Speaker 1: costs not being impacted by the economic situation, but but 575 00:32:20,640 --> 00:32:24,600 Speaker 1: outside factors. Alright, Tom, good stuff, appreciate you're checking in 576 00:32:24,640 --> 00:32:28,240 Speaker 1: with us. Tom Menteon, he's managing director UBS, a Wealth 577 00:32:28,240 --> 00:32:31,240 Speaker 1: of Management. He's up in Stanford, Connecticut. I think about 578 00:32:31,240 --> 00:32:34,480 Speaker 1: a huge operation up there in Stanford, huge trading floor there. Yeah, 579 00:32:34,680 --> 00:32:36,520 Speaker 1: I'm not en sure if they still use it. Also, 580 00:32:36,560 --> 00:32:39,760 Speaker 1: our second Fairfield grad in the same number of days, 581 00:32:39,880 --> 00:32:41,880 Speaker 1: is that right? Alright? But then he went to Wharton 582 00:32:42,120 --> 00:32:44,920 Speaker 1: instead of Duke. Yeah, Well, what what are you gonna do? 583 00:32:45,080 --> 00:32:47,160 Speaker 1: What do you call it? The Fuqua School, the Fuqua 584 00:32:47,240 --> 00:32:50,880 Speaker 1: School of Business, Fuqua, Yeah, JB. Fuqua, one of the 585 00:32:50,920 --> 00:32:54,600 Speaker 1: first um kind of like consolidator kind of guys. He 586 00:32:54,760 --> 00:32:57,560 Speaker 1: was a. You think some of those big companies back 587 00:32:57,560 --> 00:32:59,960 Speaker 1: in the sixth seas and seventies that owned multiple businesses. 588 00:33:00,160 --> 00:33:02,600 Speaker 1: I feel like off the tongue a little bit easier. 589 00:33:02,600 --> 00:33:08,240 Speaker 1: It does, it does so, but we'll see. Well, the 590 00:33:08,360 --> 00:33:12,760 Speaker 1: United Nations COP seven conference just finished up a few 591 00:33:12,800 --> 00:33:15,680 Speaker 1: days ago. It was a two week conference where leaders 592 00:33:15,680 --> 00:33:18,200 Speaker 1: small over the world got together to talk about climate 593 00:33:18,240 --> 00:33:21,520 Speaker 1: and sustainability and all that good stuff. And Bloomberg Intelligence 594 00:33:22,040 --> 00:33:24,680 Speaker 1: send our expert over their Shaheen contractor. She has an 595 00:33:24,680 --> 00:33:27,840 Speaker 1: E S G research analyst at Bloomberg Intelligence. She joins 596 00:33:27,880 --> 00:33:30,520 Speaker 1: us live in our Bloomberg Interactive Broker studio because she 597 00:33:30,560 --> 00:33:32,720 Speaker 1: doesn't phone it in. She comes to the office, which 598 00:33:32,720 --> 00:33:37,120 Speaker 1: she gets a gold star for UM. So she's triple 599 00:33:37,160 --> 00:33:39,600 Speaker 1: triple mint, as Tom Keane would say. So Sheen, what 600 00:33:39,640 --> 00:33:42,280 Speaker 1: are some of the takeaways that you had from the 601 00:33:42,320 --> 00:33:45,440 Speaker 1: COPY seven conference. So, first, full thank you for the 602 00:33:45,440 --> 00:33:50,600 Speaker 1: good stuff. But the COP conference was it was, at 603 00:33:50,680 --> 00:33:53,280 Speaker 1: least being my first time that it was amazing. I 604 00:33:53,280 --> 00:33:56,520 Speaker 1: think it's two weeks. You know, when people descended about 605 00:33:56,560 --> 00:34:01,160 Speaker 1: one thing. Mikey bakeaways were first, you know. On the ground, 606 00:34:01,720 --> 00:34:05,520 Speaker 1: the most divided topic was around carbon markets. The companies 607 00:34:05,600 --> 00:34:08,520 Speaker 1: using offsets to basically offset their own emissions. That was 608 00:34:08,560 --> 00:34:14,000 Speaker 1: the most divided topic. The other frustration was this gap 609 00:34:14,160 --> 00:34:16,880 Speaker 1: we had and I mentioned this before, around companies carbon 610 00:34:16,920 --> 00:34:20,480 Speaker 1: reduction goals and no real plan to do that on 611 00:34:20,520 --> 00:34:24,040 Speaker 1: the ground. As we progressed towards the end, many many 612 00:34:24,080 --> 00:34:27,360 Speaker 1: people called it a disappointing cop mainly because of the 613 00:34:27,400 --> 00:34:30,920 Speaker 1: mitigation aspect. We didn't build on emission reductions that we 614 00:34:31,000 --> 00:34:34,439 Speaker 1: already established last year in Glasgow. Why what what? Why 615 00:34:34,520 --> 00:34:37,640 Speaker 1: didn't we get there? And are we sticking at least 616 00:34:38,040 --> 00:34:41,920 Speaker 1: to the commitments we made in Glasgow? Apparently there was 617 00:34:41,960 --> 00:34:44,400 Speaker 1: a fight to stick to that. A lot of the 618 00:34:44,440 --> 00:34:47,640 Speaker 1: things were debated that we had already established in Glasgow, 619 00:34:47,680 --> 00:34:52,480 Speaker 1: which I thought was interesting. This year, what's being said 620 00:34:52,640 --> 00:34:56,000 Speaker 1: is there was a lot of sort of roadblocking from 621 00:34:56,000 --> 00:34:58,560 Speaker 1: a lot of the oil rich countries like Saudi Arabia 622 00:34:58,680 --> 00:35:01,440 Speaker 1: to actually push things of the finish line. That was 623 00:35:01,480 --> 00:35:05,279 Speaker 1: the main roadblock this year. So but in the end 624 00:35:05,600 --> 00:35:08,920 Speaker 1: there was some kind of communic a right, So in 625 00:35:09,000 --> 00:35:12,440 Speaker 1: the end were we able to save CAP twenty six 626 00:35:12,680 --> 00:35:15,960 Speaker 1: at cap we were able to maintain it, I believe, 627 00:35:16,000 --> 00:35:18,000 Speaker 1: I mean the way we went beyond that is the 628 00:35:18,440 --> 00:35:21,080 Speaker 1: is the establishment of this loss and Damage Fund, which 629 00:35:21,120 --> 00:35:25,320 Speaker 1: was really groundbreaking. It's basically the more developed countries creating 630 00:35:25,360 --> 00:35:28,720 Speaker 1: a fund and paying some of the more less developing 631 00:35:28,760 --> 00:35:32,440 Speaker 1: countries for the for the adaptation of climate and mitigation. 632 00:35:32,800 --> 00:35:34,839 Speaker 1: That was the main thing that came out. That's more. 633 00:35:35,360 --> 00:35:38,280 Speaker 1: That's less on the emission reductions, right, it's about money. China. 634 00:35:38,800 --> 00:35:42,120 Speaker 1: Is China involved in CUP twenty seven? Are they? Are 635 00:35:42,160 --> 00:35:45,399 Speaker 1: they constructive? Are they supportive? What are they? They sort 636 00:35:45,440 --> 00:35:48,839 Speaker 1: of I think they sort of laid low this one 637 00:35:48,880 --> 00:35:50,920 Speaker 1: and Cup compared to last year, where they came out 638 00:35:51,000 --> 00:35:54,480 Speaker 1: with a little more fanfare. This year was a lot 639 00:35:54,520 --> 00:35:59,080 Speaker 1: more about the Middle East. Okay, so what's the Where 640 00:35:59,080 --> 00:36:00,759 Speaker 1: do we go next year? By the way, it next 641 00:36:00,800 --> 00:36:04,360 Speaker 1: year is Dubai Dubai Okay. They don't come to Detroit 642 00:36:04,440 --> 00:36:07,640 Speaker 1: or Cleveland, do they? I don't. I don't know, but 643 00:36:07,680 --> 00:36:11,120 Speaker 1: that would be great. Columbus could host. Columbus could but Detroit. 644 00:36:11,280 --> 00:36:15,680 Speaker 1: As you know, I am an avowed fan of the 645 00:36:15,719 --> 00:36:19,000 Speaker 1: Ohio State University, but I love Detroit. It's such a 646 00:36:19,040 --> 00:36:22,399 Speaker 1: great city gearhead um and for conferences as well. It's 647 00:36:22,440 --> 00:36:26,719 Speaker 1: really ideal UM in terms of the big cops. I 648 00:36:26,719 --> 00:36:30,200 Speaker 1: feel like Glasgow got a lot of attention and charmel 649 00:36:30,280 --> 00:36:34,640 Speaker 1: shake not so much. Why is that? I think a 650 00:36:34,680 --> 00:36:38,240 Speaker 1: lot more was achieved in Glasgow in terms of actual 651 00:36:38,320 --> 00:36:43,960 Speaker 1: mitigation of emissions. Paris was obviously the biggest. I think 652 00:36:43,960 --> 00:36:46,319 Speaker 1: that's when you know the country has decided to put 653 00:36:46,680 --> 00:36:50,680 Speaker 1: nationally determined contributions, ago is it around their emissions um 654 00:36:50,719 --> 00:36:53,480 Speaker 1: This one sort of built off that, but the biggest 655 00:36:53,480 --> 00:36:56,440 Speaker 1: one was this loss, this loss and damage fund for sure. 656 00:36:56,800 --> 00:36:59,160 Speaker 1: So what is the role of the United States in 657 00:36:59,600 --> 00:37:03,160 Speaker 1: these efforts year to year to year? So it's it's 658 00:37:03,160 --> 00:37:05,400 Speaker 1: an effort of all the countries right to the Conference 659 00:37:05,400 --> 00:37:08,480 Speaker 1: of parties. They come in and they negotiate basically, and 660 00:37:08,800 --> 00:37:11,560 Speaker 1: the end goal every country has to agree on it. 661 00:37:11,640 --> 00:37:14,200 Speaker 1: And that's really the big challenge. You come in knowing 662 00:37:14,280 --> 00:37:16,279 Speaker 1: what your country wants, but you don't know what the 663 00:37:16,280 --> 00:37:19,960 Speaker 1: other one wants. That's really a negotiation between everyone. So 664 00:37:20,480 --> 00:37:23,600 Speaker 1: the idea this year, the groundbreaking move is that the 665 00:37:23,800 --> 00:37:28,080 Speaker 1: rich countries who have benefited from, you know, destroying the 666 00:37:28,200 --> 00:37:32,640 Speaker 1: environment are going to pay the developing nations who have 667 00:37:32,760 --> 00:37:35,560 Speaker 1: been hurt. Is that the idea, Yes, they established a 668 00:37:35,680 --> 00:37:37,680 Speaker 1: fund which is and this is the first time that 669 00:37:37,719 --> 00:37:41,880 Speaker 1: agenda came on too. Sort of discussions. They established a fund. 670 00:37:41,880 --> 00:37:43,960 Speaker 1: Now the workings of the fund, how much food bay 671 00:37:44,000 --> 00:37:47,520 Speaker 1: is all that will be established over the next hill 672 00:37:47,960 --> 00:37:50,320 Speaker 1: before we head into the by That's that's what I 673 00:37:50,400 --> 00:37:56,040 Speaker 1: understand so far. Okay, So what what was some of 674 00:37:56,040 --> 00:37:59,239 Speaker 1: the more optimistic expectations going in to top twenty seven 675 00:37:59,280 --> 00:38:04,480 Speaker 1: that maybe we're not fulfilled? Well, the biggest expectation is, 676 00:38:04,520 --> 00:38:07,760 Speaker 1: you know, continued emission reductions. We all see these reports 677 00:38:07,800 --> 00:38:10,320 Speaker 1: about us being you know, far off what we really 678 00:38:10,400 --> 00:38:13,960 Speaker 1: need to be in terms of temperature alignment. The expectation 679 00:38:14,000 --> 00:38:18,160 Speaker 1: as we build more of those goals, more countries update 680 00:38:18,239 --> 00:38:21,480 Speaker 1: their goals to meet sort of the baddest baras aligned 681 00:38:21,680 --> 00:38:25,479 Speaker 1: um sort of temperature benchmark. And that didn't happen. So 682 00:38:25,800 --> 00:38:28,200 Speaker 1: what are the takeaways for investors? What do you bring 683 00:38:28,200 --> 00:38:33,120 Speaker 1: back to Bloomberg intelligence that's actionable. So the biggest takeaway 684 00:38:33,160 --> 00:38:36,760 Speaker 1: from me is primarily around these again these companies carbon 685 00:38:36,800 --> 00:38:39,680 Speaker 1: reduction goes. What do they actually mean for a company's investment? 686 00:38:39,760 --> 00:38:43,080 Speaker 1: So what the UK did is actually interesting. During cop 687 00:38:43,160 --> 00:38:44,880 Speaker 1: they announced that they have this new plan. If a 688 00:38:44,920 --> 00:38:47,600 Speaker 1: company has a goal, they actually have to have a 689 00:38:47,600 --> 00:38:49,239 Speaker 1: plan to meet it, and there's a lot we can 690 00:38:49,280 --> 00:38:51,000 Speaker 1: do with that. We can establish, you know, is it 691 00:38:51,040 --> 00:38:53,720 Speaker 1: and PB positive, Is it and P be negative given 692 00:38:53,760 --> 00:38:57,239 Speaker 1: different carbon prices, given different scenarios. And I think that's 693 00:38:57,280 --> 00:39:01,440 Speaker 1: the biggest question we have today. And that kind of 694 00:39:02,520 --> 00:39:06,040 Speaker 1: discourages greenwashing because that means the company can't just come 695 00:39:06,040 --> 00:39:09,480 Speaker 1: out and say, hey, we're gonna be carbon and but 696 00:39:09,560 --> 00:39:12,520 Speaker 1: they have no idea how exactly. And we need that 697 00:39:12,560 --> 00:39:16,200 Speaker 1: to domin financial impact, like we've done this great example 698 00:39:16,360 --> 00:39:18,279 Speaker 1: of S S A B where we find that the 699 00:39:18,800 --> 00:39:21,719 Speaker 1: carbon goal is MPV positive only in a high steel price, 700 00:39:21,800 --> 00:39:24,560 Speaker 1: high carbon price environment and otherwise it's not. So we 701 00:39:24,640 --> 00:39:28,239 Speaker 1: need insights like that that's actionable. What are the incentives 702 00:39:28,280 --> 00:39:32,240 Speaker 1: for US companies to go green? So well? The Inflation 703 00:39:32,280 --> 00:39:35,560 Speaker 1: Reduction Act that we we saw recently puts a lot 704 00:39:35,600 --> 00:39:38,680 Speaker 1: of subsidies, puts a lot of tax breaks onto you know, 705 00:39:38,760 --> 00:39:43,200 Speaker 1: clean energy, onto renewable fuels. Um that would be the 706 00:39:43,239 --> 00:39:46,200 Speaker 1: biggest sort of incentive. I think over the long term, 707 00:39:46,239 --> 00:39:49,040 Speaker 1: if you imagine some kind of carbon price and regulation 708 00:39:49,120 --> 00:39:52,360 Speaker 1: that comes in, it is cost positive. It is efficient 709 00:39:52,480 --> 00:39:55,279 Speaker 1: to have these things in place for your bottom line. 710 00:39:55,760 --> 00:39:58,239 Speaker 1: Mr I don't. I don't know if investors are buying it. 711 00:39:58,320 --> 00:40:00,160 Speaker 1: I mean, that's still a lot of skepticism out there, 712 00:40:00,320 --> 00:40:02,479 Speaker 1: that is in the US and YopE. I think where 713 00:40:02,520 --> 00:40:06,200 Speaker 1: you have a more study regulator mechanism by the EU 714 00:40:06,680 --> 00:40:09,080 Speaker 1: emission training scheme, you do see a cost. It's a 715 00:40:09,160 --> 00:40:11,719 Speaker 1: very substantial cost to company. We're skeptical. The thing is, 716 00:40:11,760 --> 00:40:14,880 Speaker 1: Paul and I are skeptically. I know, I know that before, 717 00:40:15,719 --> 00:40:18,239 Speaker 1: but we love having you on the show exactly. So 718 00:40:18,280 --> 00:40:22,000 Speaker 1: that's why we're like, hey, Shaheen, convince us, but we're 719 00:40:22,040 --> 00:40:24,040 Speaker 1: neither one to do it. All right, she can contracted 720 00:40:24,120 --> 00:40:26,719 Speaker 1: great stuff E s G. Research channels for Bloomberg Intelligence 721 00:40:26,719 --> 00:40:30,279 Speaker 1: back from Egypt, the Top twenties seven conference there and 722 00:40:30,320 --> 00:40:37,520 Speaker 1: again they're always needs pretty cool locales. Thanks for listening 723 00:40:37,560 --> 00:40:41,040 Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen 724 00:40:41,080 --> 00:40:45,360 Speaker 1: to interviews with Apple Podcasts or whatever podcast platform you prefer. 725 00:40:45,760 --> 00:40:49,719 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three. 726 00:40:50,080 --> 00:40:52,640 Speaker 1: Pet On Ball Sweeney I'm on Twitter at pt Sweeney. 727 00:40:52,680 --> 00:40:55,359 Speaker 1: Before the podcast, you can always catch us worldwide at 728 00:40:55,360 --> 00:40:56,120 Speaker 1: Bloomberg Radio