1 00:00:02,440 --> 00:00:11,080 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Intelligence 2 00:00:11,160 --> 00:00:12,879 Speaker 1: with Alex Steel and Paul Sweeney. 3 00:00:13,000 --> 00:00:16,240 Speaker 2: The real app performance has been in US corporate high yield. 4 00:00:16,400 --> 00:00:18,759 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:18,800 --> 00:00:22,680 Speaker 2: The semiconductor business is a really cyclical business. 6 00:00:22,120 --> 00:00:25,680 Speaker 1: Breaking market headlines and corporate news from across the globe. 7 00:00:25,760 --> 00:00:28,360 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:28,600 --> 00:00:31,640 Speaker 2: These are two big time blue chip companies. 9 00:00:31,800 --> 00:00:35,440 Speaker 3: The window between the peak and cut changing super fast. 10 00:00:35,560 --> 00:00:40,520 Speaker 1: Bloomberg Intelligence with Alex Steel and Paul Sweeney on Bloomberg Radio. 11 00:00:41,800 --> 00:00:44,159 Speaker 4: I'm Paul Sweeney and I'm John Tucker filling in for 12 00:00:44,240 --> 00:00:44,920 Speaker 4: Alex Steele. 13 00:00:45,080 --> 00:00:47,720 Speaker 2: On today's Bloomberg Intelligence Show. We dig inside the big 14 00:00:47,760 --> 00:00:50,360 Speaker 2: business stories impacting Wall Street and the global markets. 15 00:00:50,400 --> 00:00:52,720 Speaker 4: Each and every week we provide in depth research and 16 00:00:52,800 --> 00:00:55,240 Speaker 4: data on some of the two thousand companies at one 17 00:00:55,320 --> 00:00:58,280 Speaker 4: hundred and thirty industries our analysts cover worldwide. 18 00:00:58,400 --> 00:01:01,360 Speaker 2: Today, we'll look at why the athletic perrol retailer Lululemon 19 00:01:01,560 --> 00:01:03,320 Speaker 2: raised his profit outlook for the full year. 20 00:01:03,480 --> 00:01:05,960 Speaker 4: Plus, We're going to discuss where we are in the 21 00:01:06,120 --> 00:01:08,319 Speaker 4: US with developing the carbon market, but. 22 00:01:08,280 --> 00:01:12,320 Speaker 2: First we dive into information technology. HPE reported better than 23 00:01:12,360 --> 00:01:14,440 Speaker 2: expected second quarter revenue this week. 24 00:01:14,600 --> 00:01:17,200 Speaker 4: The results were fueled by sales of servers built for 25 00:01:17,480 --> 00:01:19,640 Speaker 4: artificial intelligence work for more. 26 00:01:19,720 --> 00:01:21,920 Speaker 2: Co hosts Alex Steele and I were joined by wou Jinho, 27 00:01:22,000 --> 00:01:25,399 Speaker 2: Bloomberg Intelligence senior technology analysts. We first asked him for 28 00:01:25,560 --> 00:01:27,759 Speaker 2: his key takeaways from HPE's earnings. 29 00:01:28,200 --> 00:01:31,040 Speaker 5: I will tell you I don't think many people gave 30 00:01:31,640 --> 00:01:34,200 Speaker 5: heughlet Packard the benefit of the doubt in terms of 31 00:01:34,319 --> 00:01:37,680 Speaker 5: the AI server story. We saw that in the multiple 32 00:01:37,720 --> 00:01:42,479 Speaker 5: relative to Dell, HPE had a multiple less than eight. Dell, 33 00:01:42,720 --> 00:01:46,280 Speaker 5: even with the pullback, was at seventeen. So you know 34 00:01:46,400 --> 00:01:49,200 Speaker 5: they delivered on the story. AI servers doubled on a 35 00:01:49,200 --> 00:01:52,000 Speaker 5: sequential basis, and it seems as if the momentum could 36 00:01:52,000 --> 00:01:53,600 Speaker 5: be carried through into the second half of the year. 37 00:01:53,840 --> 00:01:56,680 Speaker 6: And Woods reading your react note, which is a great 38 00:01:56,720 --> 00:01:58,880 Speaker 6: part of BI folks, You know of a big piece 39 00:01:58,880 --> 00:02:00,280 Speaker 6: of news hits, you want to know what the bi 40 00:02:00,360 --> 00:02:02,160 Speaker 6: analysts are thinking, and they get out with what they 41 00:02:02,200 --> 00:02:04,800 Speaker 6: call or react a quick thought on a big piece 42 00:02:04,800 --> 00:02:07,880 Speaker 6: of news. And your react Wood in your research note said, 43 00:02:08,280 --> 00:02:11,160 Speaker 6: maybe they didn't take this revenue beat far enough in 44 00:02:11,240 --> 00:02:13,359 Speaker 6: their in their guidance going forward, tell us about that. 45 00:02:13,680 --> 00:02:16,560 Speaker 5: Yeah, so if we think about the magnitude of the beat, 46 00:02:16,639 --> 00:02:18,799 Speaker 5: it was about four hundred million dollars in the quarter. 47 00:02:19,120 --> 00:02:21,440 Speaker 5: They only raise the guidance for about by about three 48 00:02:21,520 --> 00:02:24,800 Speaker 5: hundred million, So something doesn't tie here. A couple of 49 00:02:24,800 --> 00:02:28,560 Speaker 5: things I think may have happened was probably networking maybe 50 00:02:28,639 --> 00:02:30,320 Speaker 5: coming in a little bit lighter in the second half, 51 00:02:30,360 --> 00:02:32,680 Speaker 5: which is becoming a drag on the second half growth, 52 00:02:32,840 --> 00:02:35,040 Speaker 5: and that was somewhat to be expected. The one thing 53 00:02:35,080 --> 00:02:37,480 Speaker 5: I will say, and similar to what I said in Dell, 54 00:02:38,040 --> 00:02:40,600 Speaker 5: is that there might be still some conservatism as it 55 00:02:40,639 --> 00:02:44,400 Speaker 5: relates to the AI server sales going into the second 56 00:02:44,400 --> 00:02:46,400 Speaker 5: half of the year. Part of it. They addressed it 57 00:02:46,480 --> 00:02:49,160 Speaker 5: on the call. There's some constraints in terms of the 58 00:02:49,240 --> 00:02:52,360 Speaker 5: data centers where they can put start putting these AI servers. 59 00:02:52,360 --> 00:02:54,200 Speaker 5: And this is something new, and I think this is 60 00:02:54,240 --> 00:02:56,280 Speaker 5: going to be a bigger thing, a bigger deal going 61 00:02:56,320 --> 00:02:59,080 Speaker 5: into twenty twenty five. Are there enough data centers that 62 00:02:59,120 --> 00:03:01,440 Speaker 5: can really support these AI service going forward? 63 00:03:01,840 --> 00:03:02,480 Speaker 3: Will there be? 64 00:03:02,800 --> 00:03:05,520 Speaker 5: I say yes, the cloud guys as well as enterprise 65 00:03:05,600 --> 00:03:08,680 Speaker 5: guys will will eventually figure it out, but it takes 66 00:03:08,720 --> 00:03:09,959 Speaker 5: time to build these out. 67 00:03:10,120 --> 00:03:13,480 Speaker 2: Where do you think HPE should trade relative to Dell? 68 00:03:13,639 --> 00:03:16,040 Speaker 5: You know going forward, Well, there is a leverage issue 69 00:03:16,040 --> 00:03:18,280 Speaker 5: here in terms of the debt that they're taking on 70 00:03:18,720 --> 00:03:21,720 Speaker 5: the pending Juniper deal, they are going to be taking 71 00:03:21,760 --> 00:03:25,560 Speaker 5: on more debt, which is going to anchor the valuation 72 00:03:25,760 --> 00:03:28,840 Speaker 5: just a bit. Dell has a more favorable capital structure 73 00:03:28,840 --> 00:03:31,240 Speaker 5: which helps quite a bit. But I will tell you 74 00:03:31,280 --> 00:03:34,040 Speaker 5: if the AI story really starts to take off relative 75 00:03:34,560 --> 00:03:36,960 Speaker 5: to someone like a Delaware, a super Micro, we could 76 00:03:36,960 --> 00:03:38,880 Speaker 5: start seeing multiples rise a little bit more. 77 00:03:39,360 --> 00:03:42,880 Speaker 3: This might be a super silly question, but as someone 78 00:03:42,880 --> 00:03:45,840 Speaker 3: who has to like input all of these earnings for 79 00:03:45,960 --> 00:03:49,120 Speaker 3: software and for services and enterprise when it comes to AI, 80 00:03:49,720 --> 00:03:52,680 Speaker 3: who is a legit competitor with Hpe? Is it just Dell? 81 00:03:52,880 --> 00:03:55,680 Speaker 3: Are there smaller guys out there that do something similar? 82 00:03:56,640 --> 00:03:59,240 Speaker 5: I'll tell you that that's an excellent question. Right. So 83 00:03:59,440 --> 00:04:01,560 Speaker 5: the three pulicly trade names that compete hut to head 84 00:04:01,600 --> 00:04:05,839 Speaker 5: with Dell are super Micro, Dell, Hpe, and Lenovo. Right, 85 00:04:06,240 --> 00:04:08,880 Speaker 5: But what we heard from a copy text out of 86 00:04:08,920 --> 00:04:12,680 Speaker 5: Taiwan and video striking deals with these white box manufacturers, 87 00:04:13,480 --> 00:04:17,280 Speaker 5: like like a fox cod or a Quanta to directly 88 00:04:17,320 --> 00:04:22,080 Speaker 5: build these AI servers for these clouds. So you are 89 00:04:22,200 --> 00:04:24,800 Speaker 5: going to start seeing heightened competition in the landscape. 90 00:04:25,240 --> 00:04:28,520 Speaker 2: So you know, HPE is this it? I mean in 91 00:04:28,520 --> 00:04:30,440 Speaker 2: the sense that can we sit back and say, I 92 00:04:30,480 --> 00:04:33,919 Speaker 2: think these guys have it. They have an AI product 93 00:04:34,120 --> 00:04:37,800 Speaker 2: in their product lineup, and these guys can, in fact, 94 00:04:37,960 --> 00:04:40,520 Speaker 2: in the long term be players in this business. 95 00:04:40,600 --> 00:04:43,960 Speaker 5: So I think there's just been a The narrative on 96 00:04:44,160 --> 00:04:47,320 Speaker 5: HPE has been a little bit off for quite some 97 00:04:47,360 --> 00:04:49,480 Speaker 5: time now. We have to keep in mind that they've 98 00:04:49,480 --> 00:04:52,760 Speaker 5: been in a super computing game for quite a few years. 99 00:04:53,040 --> 00:04:57,080 Speaker 5: After the acquisition of Kray, now a couple of things 100 00:04:57,080 --> 00:04:59,200 Speaker 5: on the traditional service side, they didn't have the product 101 00:04:59,279 --> 00:05:02,320 Speaker 5: lineup to compete against like a super Micro and Dell. 102 00:05:02,720 --> 00:05:05,920 Speaker 5: But we're still in the early innings. And one thing 103 00:05:05,960 --> 00:05:08,080 Speaker 5: that I will tell you they are going to have 104 00:05:08,120 --> 00:05:11,520 Speaker 5: their discovered conference and schedule to be on stage is 105 00:05:11,720 --> 00:05:14,320 Speaker 5: the CEO of Nvidia, and that should really help prop 106 00:05:14,400 --> 00:05:17,560 Speaker 5: up the product narrative on the AI server side. Look, 107 00:05:17,560 --> 00:05:20,840 Speaker 5: we're still in the early innings, second, third, fourth, fifth inning. 108 00:05:21,200 --> 00:05:22,600 Speaker 5: HPE is going to be in the center of this. 109 00:05:23,120 --> 00:05:26,600 Speaker 3: I am curious how does the first mover advantage thing 110 00:05:26,760 --> 00:05:30,040 Speaker 3: play out? Like, if I'm a company, am I married 111 00:05:30,080 --> 00:05:32,719 Speaker 3: to Dell? How easy is it for me to switch 112 00:05:33,200 --> 00:05:34,960 Speaker 3: when Hpe kind of comes roaring? 113 00:05:35,360 --> 00:05:38,040 Speaker 5: So I want to take it in a different way. Right, 114 00:05:38,120 --> 00:05:40,159 Speaker 5: at the end of the day, it's a hardware, please. 115 00:05:41,080 --> 00:05:43,400 Speaker 5: You know a laptop is a laptop is a laptop, right, 116 00:05:43,600 --> 00:05:46,680 Speaker 5: you know my HP laptop is similar to a Dell laptop, 117 00:05:47,400 --> 00:05:49,600 Speaker 5: and you know it depends on the bells and whistles. 118 00:05:49,839 --> 00:05:52,600 Speaker 5: AI is actually going to be a different animal, especially 119 00:05:52,640 --> 00:05:54,720 Speaker 5: for the corporate enterprise, and you're going to have to 120 00:05:54,760 --> 00:06:00,080 Speaker 5: start wrapping around services around with the hardware itself. There 121 00:06:00,120 --> 00:06:04,000 Speaker 5: are probably three companies that can actually do that, Lenovo, Dell, 122 00:06:04,160 --> 00:06:08,440 Speaker 5: and Hpe, And you'll need the extensive services that can 123 00:06:08,480 --> 00:06:12,880 Speaker 5: help not only supply the hardware, not only supply the 124 00:06:12,960 --> 00:06:18,720 Speaker 5: maintenance and repair, but AI will need ex software expertise 125 00:06:18,880 --> 00:06:22,120 Speaker 5: to help build out these AI models for these corporations. 126 00:06:23,080 --> 00:06:26,040 Speaker 5: And you know there aren't many IT services companies that 127 00:06:26,080 --> 00:06:26,520 Speaker 5: can do that. 128 00:06:26,880 --> 00:06:29,280 Speaker 4: Hpe is one of them thanks to Wouji and Hull 129 00:06:29,320 --> 00:06:32,080 Speaker 4: Bloomberg Intelligence Senior Technology Analyst. 130 00:06:32,360 --> 00:06:34,960 Speaker 2: We next take a look at the Swedish Swiss company a. 131 00:06:35,240 --> 00:06:40,080 Speaker 4: B b ABB is a technology leader in electrification and automation, 132 00:06:40,680 --> 00:06:44,080 Speaker 4: enabling a more sustainable and resource efficient future. 133 00:06:44,240 --> 00:06:47,160 Speaker 2: Guest host Jessman and I were joined by ABB chairman 134 00:06:47,279 --> 00:06:50,480 Speaker 2: Peter Vasser. We first asked Peter where the focus this 135 00:06:50,560 --> 00:06:51,799 Speaker 2: company is these days. 136 00:06:52,279 --> 00:06:56,119 Speaker 7: It's clearly it's the energy transition, which is not only 137 00:06:56,120 --> 00:06:59,039 Speaker 7: the hard to abate tech betas, it's in general the 138 00:06:59,120 --> 00:07:03,960 Speaker 7: move from a more fossile driven energy system into electric 139 00:07:04,640 --> 00:07:08,919 Speaker 7: energy system and there we obviously contribute with our products 140 00:07:08,960 --> 00:07:12,440 Speaker 7: and systems, which gives us energy savings between twenty and 141 00:07:12,480 --> 00:07:15,360 Speaker 7: forty or even fifty percent. So that's one angle. 142 00:07:15,400 --> 00:07:16,240 Speaker 1: The other one is. 143 00:07:16,440 --> 00:07:20,680 Speaker 7: All linked to new technologies around automation and robotics, because 144 00:07:20,720 --> 00:07:24,400 Speaker 7: we are world leading company in both areas, and that 145 00:07:24,480 --> 00:07:28,560 Speaker 7: has to do with the reshuring, bringing things closer home 146 00:07:28,600 --> 00:07:32,160 Speaker 7: again where the markets are, but also in some countries, 147 00:07:32,200 --> 00:07:35,440 Speaker 7: dealing with the demographics because we have less and less 148 00:07:35,480 --> 00:07:39,760 Speaker 7: people working in the working age, and therefore robotics and 149 00:07:39,800 --> 00:07:43,160 Speaker 7: the automation becomes very important. And the last one is AI, 150 00:07:43,360 --> 00:07:48,200 Speaker 7: which will revolutionize obviously all what's related to automation in 151 00:07:48,240 --> 00:07:48,760 Speaker 7: the future. 152 00:07:49,440 --> 00:07:52,200 Speaker 8: We'll talk to us more about what you think is 153 00:07:52,280 --> 00:07:55,880 Speaker 8: the best way to try to scale manufacturing when it 154 00:07:55,920 --> 00:07:58,880 Speaker 8: comes to the EVE charging space. 155 00:07:59,640 --> 00:08:03,640 Speaker 7: Think what we really need on the e moobility side. 156 00:08:03,720 --> 00:08:08,080 Speaker 7: Let me put it this way, is really work on 157 00:08:08,120 --> 00:08:11,080 Speaker 7: two fronts. One is a technical side on the charging side, 158 00:08:11,200 --> 00:08:14,520 Speaker 7: but the other one is also on the user friendliness side, 159 00:08:14,520 --> 00:08:18,320 Speaker 7: so that they become actually more reliable, they are much 160 00:08:18,360 --> 00:08:21,840 Speaker 7: more modern. On the manufacturing side, I think we have 161 00:08:21,960 --> 00:08:26,440 Speaker 7: had clearly in some countries and regions there was some 162 00:08:26,560 --> 00:08:30,560 Speaker 7: scarcity of manufacturing capacity which I think have been sold. 163 00:08:30,680 --> 00:08:33,000 Speaker 7: Was not an issue for ABB in that sense, but 164 00:08:33,120 --> 00:08:34,839 Speaker 7: it's the product evolution which is. 165 00:08:34,880 --> 00:08:35,760 Speaker 1: Very key now. 166 00:08:35,800 --> 00:08:37,880 Speaker 7: On the other side, I think one that should not 167 00:08:38,000 --> 00:08:42,480 Speaker 7: forget that the whole network of electrification needs to be 168 00:08:42,600 --> 00:08:46,120 Speaker 7: up to speed. You cannot just actually consume much more energy. 169 00:08:46,280 --> 00:08:50,200 Speaker 7: You also need to build the transmission lines that the 170 00:08:50,320 --> 00:08:53,640 Speaker 7: power actually comes in. Where we have got let's say 171 00:08:53,679 --> 00:08:57,320 Speaker 7: the charge is installed either for a private passenger cars 172 00:08:57,440 --> 00:09:01,160 Speaker 7: or for busses, ships, trains, whatever you want to call it. 173 00:09:01,440 --> 00:09:03,960 Speaker 7: So I think we need much more infrastructure investments on 174 00:09:04,000 --> 00:09:07,000 Speaker 7: the one side, and really really to actually get to 175 00:09:07,120 --> 00:09:12,560 Speaker 7: EV charging and the passenger cars based on electrification much 176 00:09:12,600 --> 00:09:14,000 Speaker 7: more developed in the future. 177 00:09:14,840 --> 00:09:17,880 Speaker 2: Peter, who are some of your bigger customers that you're 178 00:09:17,880 --> 00:09:19,200 Speaker 2: working with these days. 179 00:09:19,480 --> 00:09:21,400 Speaker 7: We are here in the United States, so we have 180 00:09:21,480 --> 00:09:24,440 Speaker 7: all kinds of our manufacturing companies in that sense. But 181 00:09:24,640 --> 00:09:29,560 Speaker 7: on the industrial side, any any company you can think of, 182 00:09:30,720 --> 00:09:34,120 Speaker 7: which are they are in manufacturing space. For example, they 183 00:09:34,240 --> 00:09:38,559 Speaker 7: use our actification products, they use our automation products. So 184 00:09:38,640 --> 00:09:41,560 Speaker 7: you have all the industrial companies and that's where we 185 00:09:41,640 --> 00:09:44,760 Speaker 7: make the difference. The other side, utilities are very key. 186 00:09:45,040 --> 00:09:47,120 Speaker 7: As I just said, they need to make sure we 187 00:09:47,200 --> 00:09:48,000 Speaker 7: have an off supply. 188 00:09:48,559 --> 00:09:50,960 Speaker 2: And I know I'm just looking at our PGeo function 189 00:09:51,040 --> 00:09:53,600 Speaker 2: where I can see where your revenue comes by geography, 190 00:09:53,679 --> 00:09:56,200 Speaker 2: you're everywhere. You see certain parts of the world that 191 00:09:56,240 --> 00:09:59,959 Speaker 2: are more in front of you know, kind of making 192 00:10:00,240 --> 00:10:01,680 Speaker 2: the transition then some others. 193 00:10:01,960 --> 00:10:04,679 Speaker 7: Yeah, I think I would say that Europe has started 194 00:10:04,720 --> 00:10:08,480 Speaker 7: this rather early with the new Green Deal in Europe, 195 00:10:08,960 --> 00:10:13,000 Speaker 7: but also moving into a very different energy systems paid 196 00:10:13,040 --> 00:10:16,160 Speaker 7: some price with the wars in Russia, so energy prices 197 00:10:16,200 --> 00:10:18,720 Speaker 7: have gone up and that some rethinking has taken place. 198 00:10:19,480 --> 00:10:23,320 Speaker 7: I think here in the US you quite clearly see 199 00:10:23,360 --> 00:10:27,200 Speaker 7: the demand is there in all industries now supported by 200 00:10:28,440 --> 00:10:32,960 Speaker 7: the various acts you have here, either the Inflation Act 201 00:10:33,080 --> 00:10:36,040 Speaker 7: or then also the Industrial Act, and that is driving 202 00:10:36,120 --> 00:10:40,360 Speaker 7: investments now. It's much earlier days than in Europe for example. 203 00:10:40,720 --> 00:10:43,000 Speaker 7: Aha is a little bit of mixed back, I have 204 00:10:43,080 --> 00:10:46,240 Speaker 7: to say. So you see some countries at the leading edge, 205 00:10:46,400 --> 00:10:50,520 Speaker 7: like smaller company countries like Singapore. In China, which is 206 00:10:50,559 --> 00:10:54,120 Speaker 7: our second biggest market after the US, you see actually 207 00:10:54,160 --> 00:10:56,679 Speaker 7: a lot of efforts now being put in place to 208 00:10:57,840 --> 00:11:01,640 Speaker 7: change the electric system in in China, a lot of 209 00:11:01,679 --> 00:11:05,520 Speaker 7: EV cards are coming in and you can see that 210 00:11:05,559 --> 00:11:09,600 Speaker 7: those really are now generating the growth in China by 211 00:11:09,720 --> 00:11:13,880 Speaker 7: city subdued compared to the US at this stage. So indeed, 212 00:11:13,920 --> 00:11:16,720 Speaker 7: we are operating across the world in more than one 213 00:11:16,760 --> 00:11:20,400 Speaker 7: hundred countries. We get good insights. At the moment, the 214 00:11:20,520 --> 00:11:25,200 Speaker 7: driving forces are really the US and Europe, with let's 215 00:11:25,240 --> 00:11:29,080 Speaker 7: say Asia apart from India are lacking somewhat. 216 00:11:29,280 --> 00:11:32,680 Speaker 8: So where else do you go to expand from here? 217 00:11:32,720 --> 00:11:34,480 Speaker 8: When you already are in so many places? 218 00:11:34,760 --> 00:11:37,840 Speaker 7: It's quite clearly US is our key number one market 219 00:11:38,240 --> 00:11:40,880 Speaker 7: and that's where we have a developing We have over 220 00:11:40,920 --> 00:11:43,160 Speaker 7: the last ten years, we have put more than fourteen 221 00:11:43,200 --> 00:11:48,080 Speaker 7: billion dollars into the US in terms of investments. We 222 00:11:48,200 --> 00:11:52,040 Speaker 7: have got forty manufacturing sites in twenty states. We're operating 223 00:11:52,080 --> 00:11:55,280 Speaker 7: in all states with our services, et cetera. So that's 224 00:11:55,320 --> 00:11:58,640 Speaker 7: a key market. We see the electrification market in the 225 00:11:58,760 --> 00:12:01,839 Speaker 7: US as key, but the industrial one which has a 226 00:12:01,920 --> 00:12:06,079 Speaker 7: lot to do with bringing home let's say, manufacturing capabilities 227 00:12:06,120 --> 00:12:10,199 Speaker 7: and capacity. And then the second one is clearly India, 228 00:12:10,240 --> 00:12:13,840 Speaker 7: which at the moment is in terms of growth outstripping 229 00:12:14,559 --> 00:12:17,840 Speaker 7: all other countries in a big way. They are very 230 00:12:17,960 --> 00:12:21,200 Speaker 7: low in manufacturing capacity and that's where a lot of 231 00:12:21,320 --> 00:12:25,560 Speaker 7: investments now for the high end manufacturing goes in. And 232 00:12:25,600 --> 00:12:28,680 Speaker 7: then the third one will be Europe quite clearly as 233 00:12:28,920 --> 00:12:33,160 Speaker 7: the European change Indian energy system, but also the demographic 234 00:12:33,600 --> 00:12:37,560 Speaker 7: issues which we have in Europe which will take out 235 00:12:37,640 --> 00:12:41,960 Speaker 7: about fifty million kind of working people over the next 236 00:12:42,000 --> 00:12:44,800 Speaker 7: ten years and that needs to be replaced by automation 237 00:12:44,960 --> 00:12:47,560 Speaker 7: and robotics. So there's a lot of investments on going there. 238 00:12:48,040 --> 00:12:50,880 Speaker 2: Thanks to Peter Vassar, chairman of ABB, coming. 239 00:12:50,679 --> 00:12:54,520 Speaker 4: Up a look at new carbon offset guidelines from the US. 240 00:12:54,320 --> 00:12:57,120 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 241 00:12:57,400 --> 00:13:00,880 Speaker 2: research and data on two thousand companies and thirty industries. 242 00:13:01,040 --> 00:13:03,840 Speaker 2: You can access Bloomberg Intelligence via big on the terminal. 243 00:13:03,880 --> 00:13:07,079 Speaker 4: I'm Paul Sweeney, Mad, I'm John Tucker. This is Bloomberg. 244 00:13:11,080 --> 00:13:14,960 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 245 00:13:15,040 --> 00:13:18,120 Speaker 1: weekdays at ten am Eastern on AFFL car playing Enroud 246 00:13:18,160 --> 00:13:21,199 Speaker 1: Auto with the Bloomberg Business app Listen on demand wherever 247 00:13:21,320 --> 00:13:24,440 Speaker 1: you get your podcasts, or watch us live on YouTube. 248 00:13:26,040 --> 00:13:28,400 Speaker 4: Oh, Paul Sweeney Ant, I'm John Tucker, filling in for 249 00:13:28,559 --> 00:13:29,240 Speaker 4: Alex Steele. 250 00:13:29,520 --> 00:13:33,320 Speaker 2: We look next at the Canadian athletic apparel retailer Lululemon Athletica. 251 00:13:33,559 --> 00:13:36,040 Speaker 4: Lulu Lemon raised its profit outlook for the full year 252 00:13:36,080 --> 00:13:39,200 Speaker 4: while also beating market expectations for earnings in the first quarter, 253 00:13:39,520 --> 00:13:42,600 Speaker 4: and this came despite investor concerns over the company's slowing 254 00:13:42,720 --> 00:13:43,400 Speaker 4: sales growth. 255 00:13:43,520 --> 00:13:45,240 Speaker 2: For more, guest host John Tucker and I were joined 256 00:13:45,240 --> 00:13:48,840 Speaker 2: by Punham Goyle, senior US retail analyst at Bloomberg Intelligence. 257 00:13:49,040 --> 00:13:52,160 Speaker 4: We first danced Poonham for her key takeaways from Lululemon's 258 00:13:52,160 --> 00:13:52,800 Speaker 4: earnings report. 259 00:13:53,160 --> 00:13:55,320 Speaker 9: So, I think the earnings are better than expected because 260 00:13:55,360 --> 00:13:57,959 Speaker 9: while we do see slowing growth at Lululemon, where it's 261 00:13:57,960 --> 00:14:02,040 Speaker 9: accelerating from the mid teams to low double digits near 262 00:14:02,120 --> 00:14:05,880 Speaker 9: ten percent. There was concern that is that because of 263 00:14:06,000 --> 00:14:09,079 Speaker 9: a slower macro and the fact that lul Lemon is 264 00:14:09,200 --> 00:14:13,640 Speaker 9: losing out to competition Aloyoga, et cetera. We discovered that 265 00:14:13,840 --> 00:14:15,520 Speaker 9: part of that is true, but part of that is 266 00:14:15,640 --> 00:14:17,640 Speaker 9: not true, and I think that's why investors have a 267 00:14:17,679 --> 00:14:18,760 Speaker 9: little more confidence. 268 00:14:19,560 --> 00:14:22,080 Speaker 4: How big is the US market for them? And are 269 00:14:22,160 --> 00:14:23,920 Speaker 4: they selling overseas and how much? 270 00:14:24,920 --> 00:14:27,680 Speaker 9: Yeah, so the US market the America is eighty percent 271 00:14:27,760 --> 00:14:31,360 Speaker 9: of their business. International is twenty percent, with China half 272 00:14:31,440 --> 00:14:31,600 Speaker 9: of that. 273 00:14:32,280 --> 00:14:34,840 Speaker 4: And is demand picking up or slowing in China or 274 00:14:34,920 --> 00:14:36,880 Speaker 4: is it new to the Lulu Lemon market. 275 00:14:37,840 --> 00:14:41,280 Speaker 9: So international was a bright spot this quarter. International sales 276 00:14:41,400 --> 00:14:45,720 Speaker 9: grew about thirty five percent, and within that, China was 277 00:14:45,800 --> 00:14:48,440 Speaker 9: up Mainland China was up forty five percent, So a 278 00:14:48,600 --> 00:14:51,560 Speaker 9: lot of growth there. It's a bright spot for lul Lemon. 279 00:14:51,680 --> 00:14:54,720 Speaker 9: International is part of their three pronged strategy to double 280 00:14:54,800 --> 00:14:58,640 Speaker 9: sales into twenty twenty seven. It's been doing very, very 281 00:14:58,680 --> 00:15:00,040 Speaker 9: well and we expect that to cont. 282 00:15:00,600 --> 00:15:02,600 Speaker 2: And I'm looking at your research here, Poonam. You're talking 283 00:15:02,600 --> 00:15:05,240 Speaker 2: about you know when you talk about that doubling sales 284 00:15:05,920 --> 00:15:07,480 Speaker 2: to twelve and a half billion, you know by twenty 285 00:15:07,520 --> 00:15:11,360 Speaker 2: twenty six the company and you're saying strong international growth. Okay, 286 00:15:11,400 --> 00:15:14,720 Speaker 2: I get that men's growth. Talk thus about Lululemon and 287 00:15:14,800 --> 00:15:16,960 Speaker 2: Men's I mean, it's just not John and I don't 288 00:15:16,960 --> 00:15:17,560 Speaker 2: know where to go with this. 289 00:15:17,640 --> 00:15:19,400 Speaker 4: Do real men go to Lululemon? 290 00:15:20,360 --> 00:15:24,160 Speaker 9: Is what it's Real men are going to Lululemon. You know, 291 00:15:24,240 --> 00:15:26,720 Speaker 9: it's one of their bright spots right now. And they 292 00:15:26,920 --> 00:15:29,760 Speaker 9: actually think that Men's could become overtime. I think you'll say, 293 00:15:29,840 --> 00:15:32,560 Speaker 9: take some time fifty percent of the business. So there's 294 00:15:32,760 --> 00:15:35,200 Speaker 9: a lot of opportunity in men's. And you know when 295 00:15:35,240 --> 00:15:37,600 Speaker 9: you walk those stores and I looked at the men's inventory, 296 00:15:37,720 --> 00:15:40,840 Speaker 9: it actually looks great. It's not just about outfitting the 297 00:15:40,920 --> 00:15:43,440 Speaker 9: men to go to the gym. It's about outfitting the 298 00:15:43,520 --> 00:15:47,320 Speaker 9: men to go into work with casual, comfortable where that 299 00:15:47,520 --> 00:15:47,840 Speaker 9: they can. 300 00:15:49,960 --> 00:15:52,160 Speaker 4: Everybody who listens to this program of views is on 301 00:15:52,240 --> 00:15:56,520 Speaker 4: YouTube knows Paul is the company fashion place. Yes, if 302 00:15:56,560 --> 00:15:59,560 Speaker 4: you saw somebody in like Lululemon come into the office, 303 00:16:00,120 --> 00:16:01,040 Speaker 4: might be a film. 304 00:16:00,920 --> 00:16:02,680 Speaker 2: It might be a problem. But I'm going to refer 305 00:16:02,720 --> 00:16:04,920 Speaker 2: to to Punum because she knows fashion here and she 306 00:16:05,040 --> 00:16:07,880 Speaker 2: knows what works. So if I'm Lulu Lemon, talk to 307 00:16:08,000 --> 00:16:12,000 Speaker 2: us just about what they're saying about the consumer out there, Punham. 308 00:16:12,920 --> 00:16:14,960 Speaker 9: So the consumer, We've been talking about this for a 309 00:16:15,000 --> 00:16:18,680 Speaker 9: while now. The consumer is selective. They're choosing where to shop, 310 00:16:18,880 --> 00:16:21,200 Speaker 9: when to shop, how to shop, and if they see 311 00:16:21,240 --> 00:16:23,680 Speaker 9: the right product, they are still purchasing it. The one 312 00:16:23,760 --> 00:16:26,440 Speaker 9: thing that struck out during the call was that traffic 313 00:16:26,640 --> 00:16:29,400 Speaker 9: was up in the quarter, which means people are still 314 00:16:29,520 --> 00:16:32,360 Speaker 9: going to lul Lemon. They still have purchase intent. But 315 00:16:32,720 --> 00:16:35,480 Speaker 9: there were some product missteps which they're working to correct 316 00:16:35,520 --> 00:16:37,920 Speaker 9: into the second half of the year, where they didn't 317 00:16:38,000 --> 00:16:40,240 Speaker 9: have the right colors, or they didn't have enough colors 318 00:16:40,240 --> 00:16:42,960 Speaker 9: I should say, they didn't have enough depth and sizes. 319 00:16:43,000 --> 00:16:45,000 Speaker 9: They were running out of the small sizes. So these 320 00:16:45,040 --> 00:16:47,560 Speaker 9: are problems that I would think are execution related and 321 00:16:47,800 --> 00:16:50,080 Speaker 9: are being fixed and can be fixed into the back half. 322 00:16:50,440 --> 00:16:52,720 Speaker 9: So while there is still part of a macro problem, 323 00:16:53,200 --> 00:16:56,280 Speaker 9: the story isn't that Little Lemon people are not going 324 00:16:56,320 --> 00:16:58,560 Speaker 9: to shop there. People still are interested in the apparel. 325 00:16:58,600 --> 00:17:01,160 Speaker 9: They just have to fix the product a little and 326 00:17:01,560 --> 00:17:03,600 Speaker 9: really improve our execution into the back half. 327 00:17:04,000 --> 00:17:07,000 Speaker 4: They're known for form fitting, but just to get back 328 00:17:07,040 --> 00:17:10,040 Speaker 4: to the men's fashion, they have anything for old fat guys. 329 00:17:11,680 --> 00:17:15,480 Speaker 9: Well. Their ABC men's franchise is really popular and it's 330 00:17:15,640 --> 00:17:19,239 Speaker 9: not form fitting. It's about the casual flare and they 331 00:17:19,320 --> 00:17:22,399 Speaker 9: have done very well there. And you don't need to 332 00:17:22,440 --> 00:17:25,320 Speaker 9: wear a tight leggings for men's that's not the appeal there. 333 00:17:25,400 --> 00:17:27,880 Speaker 9: That's for the women. But I'd say even for the woman, 334 00:17:27,960 --> 00:17:30,080 Speaker 9: you know what worked really well in the corner where 335 00:17:30,160 --> 00:17:33,280 Speaker 9: they're loose fitting pants and their biker shorts. So yes, 336 00:17:33,400 --> 00:17:35,840 Speaker 9: leggings is a big business for them, but they are 337 00:17:36,000 --> 00:17:37,840 Speaker 9: broadening that. Eight. 338 00:17:37,920 --> 00:17:39,480 Speaker 2: Let's switch gears just a little bit. I saw it 339 00:17:39,560 --> 00:17:42,680 Speaker 2: yesterday reporting in the Wall Street Journal Punium Dollar Tree 340 00:17:43,560 --> 00:17:46,560 Speaker 2: is among the potential sales spin off of Family Dollar. 341 00:17:46,800 --> 00:17:49,480 Speaker 2: What is going on with the dollar stores here? I 342 00:17:49,640 --> 00:17:52,680 Speaker 2: would have thought that if a part of the consumer 343 00:17:52,840 --> 00:17:56,159 Speaker 2: market is weak and the lower end economically, that perhaps 344 00:17:56,240 --> 00:17:59,520 Speaker 2: that would be good for the dollar stores. But what's 345 00:17:59,560 --> 00:17:59,959 Speaker 2: going on there? 346 00:18:00,680 --> 00:18:04,159 Speaker 9: So they're really two very different types of dollar stories. 347 00:18:04,240 --> 00:18:07,920 Speaker 9: Gen Bartashus covers the space, but from my coverage every 348 00:18:08,040 --> 00:18:11,320 Speaker 9: years ago, I can tell you that dollar Tree targets everyone, right. 349 00:18:11,480 --> 00:18:13,320 Speaker 9: I would shop at Dollar Tree, Paul, You would shop 350 00:18:13,359 --> 00:18:15,720 Speaker 9: a Dollar Tree. You buy that one twenty five item 351 00:18:15,800 --> 00:18:19,800 Speaker 9: there and you go treasure hunt. But a family Dollar customer, 352 00:18:19,960 --> 00:18:22,920 Speaker 9: that's their principal discount store. That is where they buy 353 00:18:22,960 --> 00:18:25,000 Speaker 9: their groceries, that is where they buy their day to 354 00:18:25,080 --> 00:18:28,400 Speaker 9: day needs. So as that customer's wallet is being stretched, 355 00:18:28,760 --> 00:18:30,840 Speaker 9: that business does come into more pressure. 356 00:18:31,280 --> 00:18:34,760 Speaker 4: Thanks to Pootamgoyle, senior US e commerce and retail analysts 357 00:18:34,840 --> 00:18:36,639 Speaker 4: at Bloomberg Intelligence, we have. 358 00:18:36,680 --> 00:18:39,840 Speaker 2: Something here at Bloomberg called Bloomberg New Energy Finance. The 359 00:18:39,920 --> 00:18:43,880 Speaker 2: idea behind it is to provide data on commodities, power, transport, industries, 360 00:18:44,040 --> 00:18:46,240 Speaker 2: building and agriculture and new technology. 361 00:18:46,400 --> 00:18:49,560 Speaker 4: And this week we looked at new carbon offset guidelines 362 00:18:49,600 --> 00:18:53,160 Speaker 4: for the US. US government recently outlined seven key principles 363 00:18:53,200 --> 00:18:56,960 Speaker 4: that US buyers and sellers should follow to responsibly take 364 00:18:57,040 --> 00:18:59,080 Speaker 4: part in the voluntary carbon market. 365 00:18:59,280 --> 00:19:01,080 Speaker 2: For more on what they this means, guest host Jess 366 00:19:01,119 --> 00:19:03,480 Speaker 2: Mettin and I we're joined by Kyle Harrison, head of 367 00:19:03,560 --> 00:19:07,560 Speaker 2: sustainability research at bloomerk n EF. We first asked Kyle 368 00:19:07,640 --> 00:19:09,800 Speaker 2: to talk to us about where we are in the 369 00:19:09,880 --> 00:19:10,960 Speaker 2: developing carbon market. 370 00:19:11,480 --> 00:19:13,600 Speaker 10: So for several decades now, we've had what's called a 371 00:19:13,760 --> 00:19:16,280 Speaker 10: voluntary carbon market. This is where companies can go and 372 00:19:16,320 --> 00:19:19,879 Speaker 10: they can buy verified emission reduction certificates in order to 373 00:19:20,080 --> 00:19:23,520 Speaker 10: achieve a for example, carbon neutrality goal where they're neutralizing 374 00:19:23,560 --> 00:19:25,680 Speaker 10: their emissions, and so they'll go out and they'll buy 375 00:19:25,680 --> 00:19:28,080 Speaker 10: these carbon credits. But the market has gotten a lot 376 00:19:28,119 --> 00:19:30,880 Speaker 10: of criticism over the past couple of years for low 377 00:19:30,960 --> 00:19:31,960 Speaker 10: integrity projects. 378 00:19:32,359 --> 00:19:35,800 Speaker 2: So when a Hollywood sled flies on their private jet 379 00:19:35,840 --> 00:19:37,960 Speaker 2: and say, oh, but I offset it with a carbon footprint, 380 00:19:38,320 --> 00:19:38,920 Speaker 2: what does that mean. 381 00:19:39,280 --> 00:19:41,760 Speaker 10: So they're going out and they're buying these carbon credits, 382 00:19:41,800 --> 00:19:44,000 Speaker 10: and they're investing in a project somewhere else in the 383 00:19:44,040 --> 00:19:47,760 Speaker 10: world that is reducing or removing or avoiding carbon emissions. 384 00:19:48,080 --> 00:19:50,959 Speaker 10: But the challenge has always been the integrity of those investments, right, 385 00:19:51,000 --> 00:19:54,760 Speaker 10: It's been in projects that aren't necessarily leading to decarbonization. 386 00:19:55,359 --> 00:19:57,160 Speaker 10: And so this market has gotten a lot of criticism. 387 00:19:57,600 --> 00:19:59,919 Speaker 10: But there's been a lot of efforts from the privates 388 00:20:00,040 --> 00:20:02,720 Speaker 10: actor specifically over the past couple of years to boost 389 00:20:02,800 --> 00:20:04,880 Speaker 10: that integrity, and now they have support from the US 390 00:20:04,960 --> 00:20:06,480 Speaker 10: government with this announcement last week. 391 00:20:06,920 --> 00:20:08,080 Speaker 8: So what happens next. 392 00:20:08,440 --> 00:20:11,240 Speaker 10: So, as you guys mentioned, it's a big ringing endorsement 393 00:20:11,359 --> 00:20:13,920 Speaker 10: for this market. What the US government did is it 394 00:20:14,000 --> 00:20:17,640 Speaker 10: publicly supported a couple of initiatives, such as the Integrity 395 00:20:17,680 --> 00:20:20,560 Speaker 10: Council on Voluntary Carbon Markets. This is a group of 396 00:20:20,800 --> 00:20:25,200 Speaker 10: non governmental organizations as well as financial institutions and corporations 397 00:20:25,240 --> 00:20:27,760 Speaker 10: that are working and creating their own standards for what 398 00:20:27,840 --> 00:20:30,800 Speaker 10: a good quality carbon credit looks like if you follow 399 00:20:30,960 --> 00:20:34,680 Speaker 10: that Integrity Council principle or that framework. As a corporate buyer, 400 00:20:34,760 --> 00:20:36,720 Speaker 10: I know I can buy those credits and I'm not 401 00:20:36,720 --> 00:20:39,240 Speaker 10: going to get accused of greenwashing, so I can fly 402 00:20:39,400 --> 00:20:41,800 Speaker 10: those flights or I can continue to do business, but 403 00:20:41,880 --> 00:20:45,840 Speaker 10: I can be relying on a tangible, impactful investment into decarbonization. 404 00:20:46,320 --> 00:20:49,080 Speaker 2: You know, folks, the work coming out of BENF I 405 00:20:49,119 --> 00:20:53,000 Speaker 2: think is absolutely the gold plate for this entire industry, 406 00:20:53,880 --> 00:20:56,760 Speaker 2: and we rely upon these folks pretty heavily. Here's just 407 00:20:56,840 --> 00:20:59,239 Speaker 2: some crazy numbers. Every company in the world will need 408 00:20:59,280 --> 00:21:02,400 Speaker 2: carbon credits to achieve net zero goals, and you guys 409 00:21:02,560 --> 00:21:06,320 Speaker 2: benef estimate annual carbon offset demand could reach five point 410 00:21:06,480 --> 00:21:10,240 Speaker 2: nine billion tons of carbon equivalent annually in twenty fifty. 411 00:21:10,560 --> 00:21:13,320 Speaker 2: That's some from one hundred and sixty four million today. 412 00:21:13,480 --> 00:21:15,919 Speaker 2: What industries are going to be getting us there? 413 00:21:16,040 --> 00:21:18,280 Speaker 10: For lack of a better word, as you mentioned, it's 414 00:21:18,320 --> 00:21:20,919 Speaker 10: really every single industry. But really you can look at 415 00:21:20,960 --> 00:21:24,399 Speaker 10: the heaviest emitting sectors as the biggest potential demand sources 416 00:21:24,800 --> 00:21:28,479 Speaker 10: oil and gas companies, metals, and mining industrials. These are 417 00:21:28,560 --> 00:21:32,920 Speaker 10: heavy emitting sectors that can't easily decarbonize. You mentioned airlines before. 418 00:21:33,359 --> 00:21:35,440 Speaker 10: As an airline, how do you reduce your emissions? Do 419 00:21:35,440 --> 00:21:38,320 Speaker 10: you stop flying planes? That's the most tangible way to 420 00:21:38,400 --> 00:21:41,000 Speaker 10: go ahead and do that, right, And so carbon credits 421 00:21:41,000 --> 00:21:44,680 Speaker 10: will be an important part of their decarbonization strategy long term. 422 00:21:45,160 --> 00:21:48,160 Speaker 10: And as you mentioned, demand could reach six billion tons 423 00:21:48,640 --> 00:21:50,840 Speaker 10: to give you a sense of scale, that's around ten 424 00:21:50,920 --> 00:21:54,440 Speaker 10: percent of global carbon dioxide emissions today. So this will 425 00:21:54,480 --> 00:21:57,440 Speaker 10: play a huge role in the global climate change or 426 00:21:57,480 --> 00:21:59,440 Speaker 10: the global fight against climate change in the future. 427 00:22:00,000 --> 00:22:02,959 Speaker 8: So then every company in the world would need carbon 428 00:22:03,000 --> 00:22:05,600 Speaker 8: credits to achieve net zero goals. 429 00:22:05,680 --> 00:22:08,240 Speaker 10: This is how it works exactly, and so you can 430 00:22:08,359 --> 00:22:11,679 Speaker 10: use this analogy with any company, but carbon credits typically 431 00:22:11,680 --> 00:22:13,879 Speaker 10: should only be used as for those emissions or that 432 00:22:14,359 --> 00:22:17,040 Speaker 10: itch that a company can't scratch. Once it's done everything 433 00:22:17,119 --> 00:22:19,879 Speaker 10: it can to reduce what it physically emits as a company, 434 00:22:20,240 --> 00:22:23,280 Speaker 10: it'll have what we call residual emissions somewhere along its 435 00:22:23,359 --> 00:22:26,479 Speaker 10: value chain. That is your perfect universe for carbon credits. 436 00:22:26,680 --> 00:22:28,879 Speaker 10: And the US government was very vocal about this in 437 00:22:28,920 --> 00:22:32,399 Speaker 10: their announcement last week, is that companies shouldn't abandon their 438 00:22:32,440 --> 00:22:36,919 Speaker 10: decarbonization efforts. They should prioritize those efforts, and then they 439 00:22:36,920 --> 00:22:39,879 Speaker 10: should use carbon credits. But those must be reliable carbon credits. 440 00:22:40,200 --> 00:22:42,480 Speaker 10: And so that's kind of where these credits play a 441 00:22:42,600 --> 00:22:44,720 Speaker 10: role towards the end of that value chain. 442 00:22:44,920 --> 00:22:46,440 Speaker 2: All right, I'll tell you why this gets my attention, 443 00:22:46,560 --> 00:22:49,240 Speaker 2: because it's got the intention of Michael R. Bloomberg, the 444 00:22:49,359 --> 00:22:52,520 Speaker 2: founder of Bloomberg LP and this little radio TV station 445 00:22:52,640 --> 00:22:54,520 Speaker 2: thing we got going here. He's out with an editorial 446 00:22:54,920 --> 00:22:57,040 Speaker 2: really kind of calling out the Biden administration saying that 447 00:22:57,080 --> 00:22:59,760 Speaker 2: this new plan might work and it's something we need 448 00:22:59,760 --> 00:23:02,240 Speaker 2: to pay attention to. I mean, is this something that's 449 00:23:02,320 --> 00:23:05,120 Speaker 2: at the whim of whatever administrations in the White House 450 00:23:05,160 --> 00:23:06,919 Speaker 2: at the moment? Not necessarily. 451 00:23:07,720 --> 00:23:10,080 Speaker 10: As I mentioned, right, the private sector is going to 452 00:23:10,160 --> 00:23:12,439 Speaker 10: be the biggest leader and kind of moving this forward 453 00:23:12,480 --> 00:23:16,560 Speaker 10: and spearheading it. It has been financial institutions and corporations 454 00:23:17,119 --> 00:23:18,800 Speaker 10: that have taken the reins and they will continue to 455 00:23:18,880 --> 00:23:21,320 Speaker 10: do so. They will be the biggest demand source, but 456 00:23:21,440 --> 00:23:24,560 Speaker 10: they need to be complemented by strong government support, right, 457 00:23:24,680 --> 00:23:28,200 Speaker 10: and so this endorsement is hugely important, and it's you know, 458 00:23:28,280 --> 00:23:30,520 Speaker 10: obviously it's the Department of Treasury, but it's also the 459 00:23:30,560 --> 00:23:34,200 Speaker 10: Department of Energy. The Department of Energy will be subsidizing 460 00:23:34,240 --> 00:23:37,960 Speaker 10: and investing in early stage carbon removal projects through this initiative. 461 00:23:38,320 --> 00:23:41,119 Speaker 10: And then the Department of Agriculture was also involved and 462 00:23:41,200 --> 00:23:43,960 Speaker 10: they're going to be going ahead and catalyzing and providing 463 00:23:44,080 --> 00:23:47,800 Speaker 10: farmers with subsidies in order to pivot to low carbon farming. 464 00:23:47,960 --> 00:23:51,280 Speaker 10: So it's really a kind of a combined effort that's 465 00:23:51,280 --> 00:23:52,879 Speaker 10: going to be needed both from the government and the 466 00:23:52,920 --> 00:23:56,000 Speaker 10: private sector. But even with an administration change, for example, 467 00:23:56,600 --> 00:23:59,320 Speaker 10: if you still have corporations and financials focused, it'll still 468 00:23:59,359 --> 00:23:59,840 Speaker 10: move this market. 469 00:24:00,800 --> 00:24:02,760 Speaker 8: We really have about a minute left, but talk to 470 00:24:02,840 --> 00:24:06,320 Speaker 8: us about tech companies like Microsoft and their plans when 471 00:24:06,359 --> 00:24:09,720 Speaker 8: it comes to being more active in carbon offsetting today 472 00:24:09,760 --> 00:24:11,880 Speaker 8: and how they really think of where it could continue 473 00:24:11,920 --> 00:24:12,960 Speaker 8: going into twenty fifty. 474 00:24:13,400 --> 00:24:16,520 Speaker 10: Technology companies have always prided themselves on their ability to 475 00:24:16,720 --> 00:24:19,680 Speaker 10: lead in the icebreakers when it comes to decarbonization. So 476 00:24:20,320 --> 00:24:23,359 Speaker 10: tech companies like Microsoft and Google and Amazon, they were 477 00:24:23,359 --> 00:24:26,200 Speaker 10: the first large scale corporations to buy clean energy from 478 00:24:26,280 --> 00:24:29,159 Speaker 10: solar and wind projects for example, it's only natural that 479 00:24:29,240 --> 00:24:31,600 Speaker 10: they're kind of the icebreakers when it comes to voluntary 480 00:24:31,640 --> 00:24:35,879 Speaker 10: carbon markets. You're seeing companies like Microsoft announce huge carbon 481 00:24:35,920 --> 00:24:39,600 Speaker 10: removal deals for these nascent technologies that maybe aren't necessarily 482 00:24:39,640 --> 00:24:42,440 Speaker 10: at scale today, and they're also not competitive from a 483 00:24:42,480 --> 00:24:45,760 Speaker 10: cost standpoint. What those investments will do is that they'll 484 00:24:45,760 --> 00:24:47,960 Speaker 10: bring the cost down and it'll make it more attractive 485 00:24:48,040 --> 00:24:50,480 Speaker 10: and competitive for all those other companies that are out 486 00:24:50,520 --> 00:24:53,920 Speaker 10: there to invest in carbon removal and therefore this voluntary 487 00:24:53,960 --> 00:24:54,520 Speaker 10: carbon market. 488 00:24:54,800 --> 00:24:58,160 Speaker 2: Thanks tot Kyle Harrison, head of Sustainability research at Bloomberg 489 00:24:58,200 --> 00:24:58,879 Speaker 2: an ef. 490 00:24:58,920 --> 00:25:00,560 Speaker 4: Coming up of a program we're going to look at 491 00:25:00,560 --> 00:25:04,920 Speaker 4: how former US Treasury Secretary Steve Manosan is chasing Wall 492 00:25:05,040 --> 00:25:05,840 Speaker 4: Street glory. 493 00:25:06,160 --> 00:25:09,639 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing research 494 00:25:09,720 --> 00:25:11,960 Speaker 2: and data on two thousand companies in one hundred and 495 00:25:11,960 --> 00:25:14,760 Speaker 2: thirty industries. You can access Bloomberg Intelligence via b I 496 00:25:14,840 --> 00:25:16,399 Speaker 2: go on the terminal. I'm Paul Sweeney. 497 00:25:16,480 --> 00:25:19,080 Speaker 4: MAA don John Tucker. This is Bloomberg. 498 00:25:23,280 --> 00:25:27,120 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 499 00:25:27,240 --> 00:25:30,760 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 500 00:25:30,800 --> 00:25:33,520 Speaker 1: Auto with the Bloomberg Business app. You can also listen 501 00:25:33,680 --> 00:25:36,760 Speaker 1: live on Amazon Alexa from our flagship New York station. 502 00:25:37,160 --> 00:25:39,880 Speaker 1: Just say Alexa play Bloomberg eleven thirty. 503 00:25:40,240 --> 00:25:41,080 Speaker 2: Hey there, I'm Paul. 504 00:25:40,960 --> 00:25:43,600 Speaker 4: Sweeney and I'm John Tucker filling in for Alex Steele. 505 00:25:43,880 --> 00:25:47,239 Speaker 2: We move now to energy and Trafagora. Traffagora is one 506 00:25:47,280 --> 00:25:50,520 Speaker 2: of the world's largest suppliers of commodities. 507 00:25:50,119 --> 00:25:53,000 Speaker 4: And this week the company posted the first half profits 508 00:25:53,040 --> 00:25:56,080 Speaker 4: down seventy three percent from a year earlier. This comes 509 00:25:56,119 --> 00:25:59,719 Speaker 4: as the commodity giant adjusted calmer conditions across it's key 510 00:26:00,040 --> 00:26:02,199 Speaker 4: energy and metals Marcus For. 511 00:26:02,280 --> 00:26:04,199 Speaker 2: More on this guest host John Tucker and I were 512 00:26:04,280 --> 00:26:07,800 Speaker 2: joined by Archie Hunter, Bloomberg Commodities reporter. We first asked 513 00:26:07,920 --> 00:26:10,280 Speaker 2: Archie for his take on this week's earnings report. 514 00:26:10,800 --> 00:26:13,240 Speaker 11: It's a big drop off, It's still a huge profit 515 00:26:13,640 --> 00:26:16,520 Speaker 11: as far as the sector goes. Look the commodity trading 516 00:26:16,600 --> 00:26:19,920 Speaker 11: industry is coming out of, and perhaps what the signals 517 00:26:20,000 --> 00:26:21,879 Speaker 11: is the trading industry is coming out of like a 518 00:26:22,000 --> 00:26:26,920 Speaker 11: real real boom time where COVID nineteen and then the 519 00:26:27,119 --> 00:26:29,960 Speaker 11: sort of Russian invasion of Ukraine's really sort of super 520 00:26:30,040 --> 00:26:33,920 Speaker 11: sized volatility, especially in the energy space, that's starting to 521 00:26:34,000 --> 00:26:36,119 Speaker 11: peter out. You know, we're still getting big moves. I 522 00:26:36,200 --> 00:26:39,639 Speaker 11: think you've seen some big moves on gas, but you know, 523 00:26:39,880 --> 00:26:42,600 Speaker 11: it's really not as extreme as it was over the 524 00:26:42,680 --> 00:26:45,320 Speaker 11: past few years. And as a result, you know, whilst 525 00:26:45,400 --> 00:26:48,080 Speaker 11: this is a still really big number historically for a 526 00:26:48,119 --> 00:26:51,240 Speaker 11: company like traffic Eura, you know, there's been a big 527 00:26:51,320 --> 00:26:53,440 Speaker 11: drop off since this time last year. 528 00:26:53,600 --> 00:26:56,760 Speaker 4: So I don't need to cry for commodities traders at 529 00:26:56,800 --> 00:26:57,240 Speaker 4: this point. 530 00:26:58,840 --> 00:27:01,320 Speaker 11: I don't know about that. Look, these companies have made 531 00:27:01,680 --> 00:27:05,600 Speaker 11: extraordinary amounts of money over the past few years, especially 532 00:27:05,720 --> 00:27:08,359 Speaker 11: the biggest companies, and and look, you know, one of 533 00:27:08,400 --> 00:27:11,040 Speaker 11: the interesting things about them is that they're owned by 534 00:27:11,840 --> 00:27:15,399 Speaker 11: the top executives who either trade or are part of 535 00:27:15,920 --> 00:27:17,320 Speaker 11: middle office or back office. 536 00:27:17,880 --> 00:27:19,639 Speaker 4: By the employees essentially, right. 537 00:27:19,800 --> 00:27:23,520 Speaker 11: Yeah, exactly. So, Look, these companies have paid out big dividends, 538 00:27:23,920 --> 00:27:27,880 Speaker 11: big share buybacks, to those shareholders over the past few years. 539 00:27:28,200 --> 00:27:31,080 Speaker 11: They're still doing that, right. Look, traffic Eurer paid out 540 00:27:31,240 --> 00:27:33,640 Speaker 11: I think was over six hundred million in the way 541 00:27:33,720 --> 00:27:37,080 Speaker 11: that it reimburses its shareholders over the first half. So 542 00:27:37,480 --> 00:27:39,080 Speaker 11: that's still a lot of a lot of money for 543 00:27:39,119 --> 00:27:42,960 Speaker 11: the roughly one four hundred people, so relatively few people 544 00:27:43,000 --> 00:27:44,200 Speaker 11: who hold stock in the company. 545 00:27:44,440 --> 00:27:46,600 Speaker 4: So if I'm one of the executives there and I've 546 00:27:46,680 --> 00:27:48,879 Speaker 4: really cleaned up, I'm just going to pack up and 547 00:27:48,960 --> 00:27:51,840 Speaker 4: go go live on an island somewhere, right. 548 00:27:52,000 --> 00:27:55,840 Speaker 11: Yeah, I mean you and I might think that, but look, 549 00:27:56,280 --> 00:27:58,800 Speaker 11: there's definitely some movement happening in the sector. At the 550 00:27:58,840 --> 00:28:01,920 Speaker 11: same time. Look, view owned shares in these companies that 551 00:28:02,040 --> 00:28:04,720 Speaker 11: seem to be doing really well every single year. I think, 552 00:28:05,280 --> 00:28:07,120 Speaker 11: you know, from what we see, a lot of people 553 00:28:07,280 --> 00:28:09,400 Speaker 11: seem to be sticking around as well, right, And look, 554 00:28:09,800 --> 00:28:12,240 Speaker 11: it's still really interesting time to be trading commodities. I 555 00:28:12,240 --> 00:28:14,720 Speaker 11: think what these results show is that, you know, whilst 556 00:28:14,720 --> 00:28:18,000 Speaker 11: it's a big drop off from the last couple of years, 557 00:28:18,280 --> 00:28:21,879 Speaker 11: like historically, you know, Trafficker would make in some of 558 00:28:21,960 --> 00:28:25,120 Speaker 11: its best years before the pandemic, it would make maybe 559 00:28:25,160 --> 00:28:28,240 Speaker 11: a billion a billion dollars would have been an absolutely 560 00:28:28,240 --> 00:28:31,320 Speaker 11: mammoth year, some of its best years, and so you know, 561 00:28:31,520 --> 00:28:34,159 Speaker 11: the company made that in half a year, which just 562 00:28:34,240 --> 00:28:36,200 Speaker 11: goes to show, you know, you know, whilst it's not 563 00:28:36,800 --> 00:28:40,640 Speaker 11: absolutely mammoth as we have seen, it's still very big 564 00:28:40,800 --> 00:28:42,400 Speaker 11: and people are still making a lot of money. 565 00:28:42,800 --> 00:28:44,800 Speaker 2: Archie, I don't know anything about this company, traffic Aer, 566 00:28:45,000 --> 00:28:48,120 Speaker 2: primarily because it's a private company. A. Where is it based? 567 00:28:48,200 --> 00:28:49,600 Speaker 2: And b why is it public? 568 00:28:49,960 --> 00:28:55,640 Speaker 11: So Traffiicura is headquartered in Switzerland, but it's domstald in Singapore. 569 00:28:56,320 --> 00:28:59,479 Speaker 11: A lot of these commodity trading companies are very global 570 00:28:59,520 --> 00:29:04,080 Speaker 11: in their re but can be domiciled in various different jurisdictions. 571 00:29:04,480 --> 00:29:07,600 Speaker 11: Why isn't it public? I think you know that that's 572 00:29:07,640 --> 00:29:09,960 Speaker 11: been a question over the past few years. One is 573 00:29:10,280 --> 00:29:12,719 Speaker 11: that you have to open yourself up to a bit 574 00:29:12,760 --> 00:29:16,000 Speaker 11: more scrutiny. Like Trafficer has a bond, so it does 575 00:29:16,280 --> 00:29:19,520 Speaker 11: publish it's you know, its numbers to the market. But 576 00:29:19,840 --> 00:29:22,479 Speaker 11: I think you know, these these people have been doing 577 00:29:22,560 --> 00:29:25,800 Speaker 11: very well only in the company themselves. Why would they 578 00:29:25,840 --> 00:29:28,920 Speaker 11: need to raise more equity potentially? You know, they're still 579 00:29:28,960 --> 00:29:32,000 Speaker 11: getting huge amounts of money in financing from banks, which 580 00:29:32,040 --> 00:29:35,120 Speaker 11: is really the lifeblood of the trading industry, right. You know, 581 00:29:35,360 --> 00:29:39,400 Speaker 11: companies can buy and sell huge cargoes of oil or 582 00:29:39,480 --> 00:29:42,080 Speaker 11: copper on their own equity, but you know most of 583 00:29:42,160 --> 00:29:45,440 Speaker 11: the time they do it through tapping major banks for 584 00:29:45,680 --> 00:29:46,440 Speaker 11: financing lines. 585 00:29:46,680 --> 00:29:49,840 Speaker 4: Now, who are their customers? Are their customers also the 586 00:29:50,480 --> 00:29:53,440 Speaker 4: end users of these products, and certainly with the boom 587 00:29:53,480 --> 00:29:56,640 Speaker 4: and commodity prices, I would imagine that they've been heard. 588 00:29:57,240 --> 00:29:59,880 Speaker 11: So look, Trafficer noted in it in its results that 589 00:30:00,080 --> 00:30:01,920 Speaker 11: it had some clients that were struggling to deal with 590 00:30:02,400 --> 00:30:05,160 Speaker 11: the higher the normal commodity prices. I think you've got 591 00:30:05,200 --> 00:30:07,400 Speaker 11: to bear in mind that we might look on the 592 00:30:07,640 --> 00:30:11,440 Speaker 11: on the Bloemoe terminal, we might see commodity prices denominated 593 00:30:11,480 --> 00:30:14,600 Speaker 11: in dollars. Look, a lot of buyers, for example, of 594 00:30:14,720 --> 00:30:18,560 Speaker 11: like oil products in emerging markets, aren't buying those commodities 595 00:30:18,600 --> 00:30:20,880 Speaker 11: and dollars. They're buying them in their local currency. And 596 00:30:20,960 --> 00:30:23,160 Speaker 11: the dollar is appreciated, as we know, quite a bit 597 00:30:23,400 --> 00:30:25,480 Speaker 11: over the past a year or so, so you know, 598 00:30:25,600 --> 00:30:28,600 Speaker 11: that's even more expensive, and I think that's what they're 599 00:30:28,600 --> 00:30:31,280 Speaker 11: alluding to there. But look on the whole you can 600 00:30:31,360 --> 00:30:35,000 Speaker 11: see that high prices have started to have an impact 601 00:30:35,080 --> 00:30:39,280 Speaker 11: on demand in some commodities, or perhaps prices of as 602 00:30:39,320 --> 00:30:43,400 Speaker 11: traffic Gura said, and its results, prices for copper overran fundamentals. 603 00:30:43,480 --> 00:30:45,840 Speaker 11: So that's why I know you guys were talking a 604 00:30:45,880 --> 00:30:48,760 Speaker 11: little bit about the becom. You know, copper has retreated 605 00:30:49,600 --> 00:30:51,800 Speaker 11: a little bit over the past couple of weeks, in 606 00:30:51,880 --> 00:30:55,040 Speaker 11: part because I think market analysts feel that it's sort 607 00:30:55,040 --> 00:30:58,040 Speaker 11: of overrun the actual supply and demand dynamics. 608 00:30:58,200 --> 00:31:01,680 Speaker 4: All right. Thanks to Archie Hunter, Commodities Reporter, we. 609 00:31:01,760 --> 00:31:03,560 Speaker 2: Now take a look at one of the Bloomberg Big 610 00:31:03,640 --> 00:31:06,920 Speaker 2: Takes stories featured this week on Bloomberg Intelligence. It focuses 611 00:31:07,040 --> 00:31:10,040 Speaker 2: on former Treasury Secretary Steveh Nuchin, who now leads the 612 00:31:10,080 --> 00:31:12,760 Speaker 2: private equity firm Liberty Strategic Capital. 613 00:31:13,040 --> 00:31:17,120 Speaker 4: The Big Take piece is titled MANUSI Chases Wall Street 614 00:31:17,160 --> 00:31:19,520 Speaker 4: Glory with war chest of foreign money. 615 00:31:19,680 --> 00:31:21,520 Speaker 2: For more, guest host Jess Men and I were joined 616 00:31:21,520 --> 00:31:24,920 Speaker 2: by the story's author, Max Abelson, Bloomberg News Finance reporter. 617 00:31:25,160 --> 00:31:27,840 Speaker 2: We first asked Max for more context on his story. 618 00:31:28,480 --> 00:31:30,640 Speaker 12: This is a story I think at its heart, it's 619 00:31:30,680 --> 00:31:34,360 Speaker 12: really about ambition and what we write about in the story. 620 00:31:34,400 --> 00:31:36,920 Speaker 12: Although I should say, I should say, mess my servant 621 00:31:37,040 --> 00:31:39,720 Speaker 12: I write about it in this story is that you 622 00:31:39,760 --> 00:31:43,160 Speaker 12: know what we saw eight years ago when when Zachmeider 623 00:31:43,200 --> 00:31:46,760 Speaker 12: and I wrote that BusinessWeek profile of Mnuchins as Trump's moneyman, 624 00:31:47,280 --> 00:31:49,320 Speaker 12: you were able to kind of get a snapshot of 625 00:31:49,400 --> 00:31:51,520 Speaker 12: what it looks like when someone tries to take their 626 00:31:51,600 --> 00:31:54,320 Speaker 12: Wall Street wealth and turn it into Washington power. 627 00:31:54,440 --> 00:31:56,040 Speaker 2: And he did that. He was successful. 628 00:31:56,080 --> 00:31:57,920 Speaker 12: You know, people I think look down their nose at it. 629 00:31:57,960 --> 00:31:59,960 Speaker 12: They thought they thought Trump's campaign was ridiculous when he 630 00:32:00,040 --> 00:32:02,600 Speaker 12: when he agreed to do it, they were wrong. Manutia 631 00:32:02,680 --> 00:32:05,440 Speaker 12: really saw something that other people missed, and Trump won, 632 00:32:05,640 --> 00:32:08,440 Speaker 12: he became Treasury secretary. You kind of forget this, But 633 00:32:08,720 --> 00:32:11,440 Speaker 12: people went in and out those four years. Manucha stayed. 634 00:32:11,840 --> 00:32:14,440 Speaker 12: He kept his head down. And what this story is 635 00:32:14,480 --> 00:32:18,560 Speaker 12: about is capturing him as he takes that Washington power 636 00:32:18,720 --> 00:32:22,080 Speaker 12: that he accumulated and he turns it into even more money. 637 00:32:22,120 --> 00:32:24,840 Speaker 12: And it's a story about scale. I mean, this guy 638 00:32:25,040 --> 00:32:28,240 Speaker 12: was an investor beforehand. Now he's a big investor. He's 639 00:32:28,240 --> 00:32:31,040 Speaker 12: got this big war chest of Middle East money. He's 640 00:32:31,080 --> 00:32:33,200 Speaker 12: going for deals that could be kind of like, I 641 00:32:33,240 --> 00:32:35,320 Speaker 12: don't know, it's a little silly to say world historic. 642 00:32:35,440 --> 00:32:37,960 Speaker 12: But if this guy can pull off a deal for TikTok, 643 00:32:38,880 --> 00:32:41,360 Speaker 12: it's going to send him into this echelon of You're 644 00:32:41,400 --> 00:32:42,920 Speaker 12: gonna have to read the story to understand this, but 645 00:32:43,040 --> 00:32:45,600 Speaker 12: you know, not just gorillas, but the senior gorillas of 646 00:32:45,680 --> 00:32:46,440 Speaker 12: global finance. 647 00:32:46,640 --> 00:32:51,120 Speaker 8: TikTok walk us through this about how that's associated with 648 00:32:51,400 --> 00:32:54,720 Speaker 8: how when it comes to this war chest of wealth 649 00:32:54,760 --> 00:32:55,520 Speaker 8: that he's been building. 650 00:32:55,600 --> 00:32:57,200 Speaker 12: Yep, So let me take you back in time. So 651 00:32:57,600 --> 00:33:00,120 Speaker 12: I think you and I spoke back in March, and 652 00:33:00,320 --> 00:33:03,080 Speaker 12: New York Community Bank was I mean, it was mayhem. 653 00:33:03,280 --> 00:33:05,200 Speaker 12: There was news that leaked that New York Community Bank 654 00:33:05,240 --> 00:33:07,320 Speaker 12: really needed capital, and that is not good. If you're 655 00:33:07,360 --> 00:33:10,080 Speaker 12: a bank, you do not want news out saying, you know, 656 00:33:10,240 --> 00:33:13,920 Speaker 12: it'd be a nice to ray some cash. Unbeknownst to 657 00:33:14,000 --> 00:33:16,600 Speaker 12: us at the time when that headline hit, Mnuchin and 658 00:33:16,680 --> 00:33:19,880 Speaker 12: some partners were like basically a day away from investing 659 00:33:19,880 --> 00:33:21,640 Speaker 12: in New York Community Bank, and they decided, you we 660 00:33:21,760 --> 00:33:25,400 Speaker 12: still go forward, and they did. Of course that actually 661 00:33:25,520 --> 00:33:27,440 Speaker 12: on paper, you know what their profits on that New 662 00:33:27,520 --> 00:33:29,760 Speaker 12: York Community Bank deal, they have made a pretty penny 663 00:33:29,800 --> 00:33:32,880 Speaker 12: at least on paper, Like basically doubling their money. But 664 00:33:33,440 --> 00:33:37,440 Speaker 12: a few days after that deal closed, he goes on 665 00:33:37,600 --> 00:33:41,520 Speaker 12: TV and he says, you know what, I'm putting together 666 00:33:41,560 --> 00:33:43,800 Speaker 12: a deal to buy TikTok. I've got a plan. And 667 00:33:43,920 --> 00:33:46,440 Speaker 12: it was weird for a couple of reasons. One because 668 00:33:46,800 --> 00:33:48,680 Speaker 12: New York Community Bank made a lot of sense for 669 00:33:48,720 --> 00:33:51,640 Speaker 12: Steven Mnuchin because he bought do you remember remember One West, 670 00:33:51,800 --> 00:33:54,160 Speaker 12: Remember that bank deal he did. New York Community Bank 671 00:33:54,200 --> 00:33:56,680 Speaker 12: makes sense in that like TikTok. On the other hand, 672 00:33:57,000 --> 00:33:59,160 Speaker 12: you know, the guy invested in Hollywood. People forget about 673 00:33:59,200 --> 00:34:02,520 Speaker 12: that muchin find out some serious blockbusters, including Avatar if 674 00:34:02,560 --> 00:34:06,400 Speaker 12: you saw it. But you know, it's like why TikTok? 675 00:34:06,920 --> 00:34:09,880 Speaker 12: And I think the way he sees it is according 676 00:34:09,880 --> 00:34:12,160 Speaker 12: to interviews with people who aren't working on that deal 677 00:34:12,200 --> 00:34:14,200 Speaker 12: with him, but no him, well, it's like he's got 678 00:34:14,280 --> 00:34:16,520 Speaker 12: an edge and when it comes to national security matters, 679 00:34:16,560 --> 00:34:19,520 Speaker 12: and don't forget TikTok is now by law, the Chinese 680 00:34:19,600 --> 00:34:22,560 Speaker 12: parent companies essentially gonna have to sell it. So he 681 00:34:22,640 --> 00:34:24,759 Speaker 12: thinks he's got an edge with national security and then 682 00:34:24,800 --> 00:34:27,680 Speaker 12: also with deal making. On the other hand, his fund 683 00:34:27,760 --> 00:34:29,480 Speaker 12: is like maybe three billion dollars or so it is 684 00:34:29,600 --> 00:34:31,759 Speaker 12: going to take a lot more than that to buy 685 00:34:31,880 --> 00:34:33,880 Speaker 12: TikTok here in the States. We're going to be watching 686 00:34:33,960 --> 00:34:35,560 Speaker 12: to see if what kind of partners he can bring 687 00:34:35,600 --> 00:34:37,920 Speaker 12: together and if he buys his first ever you know, 688 00:34:38,200 --> 00:34:39,200 Speaker 12: social media empire. 689 00:34:39,520 --> 00:34:42,799 Speaker 2: All right, I senior reporting Max, Mister Mnutchen made about 690 00:34:42,840 --> 00:34:45,840 Speaker 2: thirty visits to the Middle Eastern nations while in office. 691 00:34:46,320 --> 00:34:49,680 Speaker 2: That's around as many as is European and Asian visits combined. 692 00:34:49,719 --> 00:34:52,080 Speaker 2: So we spent a lot of time there when in office. 693 00:34:52,480 --> 00:34:54,719 Speaker 2: Is that getting translating into some investors in his fund? 694 00:34:54,880 --> 00:34:56,840 Speaker 12: I think I think that's really a key question. So 695 00:34:56,960 --> 00:34:59,320 Speaker 12: out of fairness, I just want to cite his spokesperson, 696 00:34:59,360 --> 00:35:02,320 Speaker 12: a guy by the of Devon O'Malley, who liked to 697 00:35:02,360 --> 00:35:04,000 Speaker 12: say to me while I was reporting the story that 698 00:35:04,719 --> 00:35:08,080 Speaker 12: those thirty visits, according to him, are like different legs 699 00:35:08,200 --> 00:35:10,960 Speaker 12: of just nine trips to a region that he describes 700 00:35:11,000 --> 00:35:13,879 Speaker 12: as is like, you know, highly strategically important. O'Malley would 701 00:35:13,880 --> 00:35:17,000 Speaker 12: say that Nusian was advancing US foreign policy economic interests, 702 00:35:17,120 --> 00:35:19,520 Speaker 12: not going to collect money. But I think as a 703 00:35:19,560 --> 00:35:23,080 Speaker 12: matter of historical record, you can see Mnusian going to 704 00:35:23,680 --> 00:35:25,799 Speaker 12: the United Arab Emirates. You could see him going to Cutter, 705 00:35:25,840 --> 00:35:28,160 Speaker 12: you can see him going to Saudi Arabia. And you know, 706 00:35:29,120 --> 00:35:31,680 Speaker 12: I'm talking about not just at his time at when 707 00:35:31,719 --> 00:35:33,840 Speaker 12: he was Treasury secretary, but certainly in the months after that. 708 00:35:34,320 --> 00:35:36,319 Speaker 12: And what does he end up with. He ends up 709 00:35:36,360 --> 00:35:38,440 Speaker 12: with a fund, as I say, about three billion dollars, 710 00:35:38,520 --> 00:35:40,560 Speaker 12: and a lot of that money is coming from the 711 00:35:40,560 --> 00:35:43,160 Speaker 12: Middle East. These are essentially the deepest pockets in the world, 712 00:35:43,239 --> 00:35:47,160 Speaker 12: the sovereign wealth funds essentially. And you know, if you're 713 00:35:47,200 --> 00:35:49,960 Speaker 12: an investor, that means that you get to play with 714 00:35:50,080 --> 00:35:53,040 Speaker 12: some pretty fun money. He's gonna need some more money 715 00:35:53,120 --> 00:35:55,040 Speaker 12: than that if he wants to do TikTok, but it 716 00:35:55,160 --> 00:35:58,040 Speaker 12: means that it's turned him into a essentially a private 717 00:35:58,080 --> 00:35:59,959 Speaker 12: equity investor on a really big scale. 718 00:36:00,200 --> 00:36:03,600 Speaker 8: Where else does he have his eyes on next beyond TikTok? 719 00:36:04,000 --> 00:36:04,200 Speaker 5: Well? 720 00:36:04,600 --> 00:36:07,000 Speaker 12: I had some fun reporting on the story. Not as 721 00:36:07,040 --> 00:36:08,960 Speaker 12: much fun as that famous picture of him holding up 722 00:36:09,000 --> 00:36:09,359 Speaker 12: the cash. 723 00:36:09,480 --> 00:36:11,120 Speaker 8: I feel like we all remember that photo of the 724 00:36:11,200 --> 00:36:12,520 Speaker 8: cash that it. 725 00:36:12,600 --> 00:36:15,560 Speaker 12: Was more fun. But I had fun looking at cybersecurity. 726 00:36:16,040 --> 00:36:20,200 Speaker 12: Not only did Liberty take over an entire cybersecurity company. Rather, 727 00:36:20,239 --> 00:36:22,440 Speaker 12: it's a mobile security platform. It's called Simperium. I don't 728 00:36:22,440 --> 00:36:25,280 Speaker 12: know if you've heard of that. But he has plowed 729 00:36:25,360 --> 00:36:28,920 Speaker 12: money into cyber Reason, Contrast Security, Blue Voyant, and these 730 00:36:28,920 --> 00:36:31,319 Speaker 12: are some interesting cybersecurity startups, and I want to tell 731 00:36:31,360 --> 00:36:33,800 Speaker 12: you not all of them have been a pretty picture. 732 00:36:34,280 --> 00:36:36,560 Speaker 12: Liberty about twenty million shares of satell Logic for like 733 00:36:36,680 --> 00:36:38,719 Speaker 12: seven fifty each. You know, back in twenty twenty two 734 00:36:39,440 --> 00:36:41,439 Speaker 12: was below a dollar twenty the last time I checked. 735 00:36:41,800 --> 00:36:44,640 Speaker 12: And then there's cyber Reason that was supposed to be 736 00:36:44,719 --> 00:36:47,760 Speaker 12: worth like billions of dollars when he made his investment. 737 00:36:48,239 --> 00:36:50,840 Speaker 12: The valuation now is said to be like three hundred 738 00:36:50,880 --> 00:36:53,160 Speaker 12: million dollars. You do not want that order, you know, 739 00:36:53,239 --> 00:36:55,160 Speaker 12: you're supposed to invest when it's worth three hundred million 740 00:36:55,160 --> 00:36:57,920 Speaker 12: dollars and then sell when it's worth billions. So manuchen 741 00:36:58,200 --> 00:37:00,799 Speaker 12: is you know, it's been really fun sort of take 742 00:37:00,840 --> 00:37:02,040 Speaker 12: me a snapshot of ambition. 743 00:37:02,160 --> 00:37:03,120 Speaker 4: But I want to be clear with you. 744 00:37:03,560 --> 00:37:06,640 Speaker 12: It's not a story of like these waltzing into becoming 745 00:37:06,680 --> 00:37:08,880 Speaker 12: a multi billionaire. It's going to be much more interesting 746 00:37:09,040 --> 00:37:10,800 Speaker 12: and a little bit more up and down than that. 747 00:37:11,200 --> 00:37:14,000 Speaker 2: Is he in it just for the money, or does 748 00:37:14,040 --> 00:37:15,760 Speaker 2: he want to be thought of in the same sense 749 00:37:15,800 --> 00:37:18,600 Speaker 2: as Julian Robertson at George Soros as some of those 750 00:37:18,880 --> 00:37:20,000 Speaker 2: big legendary names. 751 00:37:20,120 --> 00:37:22,200 Speaker 12: Thank you for asking that, you know his old boss 752 00:37:22,239 --> 00:37:24,759 Speaker 12: at Omen Sachs. John Corzine said to me, look, Max, 753 00:37:24,960 --> 00:37:26,879 Speaker 12: money's nice. I get it, I get it, but it's 754 00:37:26,920 --> 00:37:28,960 Speaker 12: more than that. I was actually kind of moved by 755 00:37:29,000 --> 00:37:31,680 Speaker 12: something John Corzin said to me, because don't forget Corsin 756 00:37:31,760 --> 00:37:33,959 Speaker 12: after running Goldman. Yeah, I mean I think I believe 757 00:37:34,000 --> 00:37:35,799 Speaker 12: you're a New Jersey or one one of you two 758 00:37:35,840 --> 00:37:39,239 Speaker 12: live in New Jersey. They're both right. You know, Corzine 759 00:37:39,280 --> 00:37:41,920 Speaker 12: managed to do the same thing. He went from finance 760 00:37:42,000 --> 00:37:44,040 Speaker 12: into government and he was successful. He was a senator, 761 00:37:44,120 --> 00:37:47,040 Speaker 12: he's a governor. Corzine said that there's this feeling of 762 00:37:47,160 --> 00:37:50,120 Speaker 12: being important and being at that table. Once you're at 763 00:37:50,200 --> 00:37:52,880 Speaker 12: that table of global influence, it is really hard to 764 00:37:52,960 --> 00:37:54,480 Speaker 12: leave it. Corsiin said to me, you know, this whole 765 00:37:54,520 --> 00:37:55,879 Speaker 12: quote didn't make it into the story, but he said, 766 00:37:55,920 --> 00:37:59,279 Speaker 12: you know, some people are programmed that they leave that 767 00:37:59,440 --> 00:38:02,799 Speaker 12: table of global importance and global influence and they're able 768 00:38:02,840 --> 00:38:04,480 Speaker 12: to go do something else. You know, It's like I 769 00:38:04,600 --> 00:38:07,680 Speaker 12: like gardening on weekends. You know and some people some 770 00:38:07,920 --> 00:38:11,600 Speaker 12: people want more influence and want more opportunity and want 771 00:38:11,640 --> 00:38:14,719 Speaker 12: to be more engaged and can't disengage. And I think 772 00:38:14,800 --> 00:38:16,240 Speaker 12: that helps explain Stephen MANUCI. 773 00:38:16,560 --> 00:38:18,680 Speaker 2: Thanks to Max Abelson, Bloomberg News Financial Reporter. 774 00:38:18,920 --> 00:38:19,520 Speaker 8: This is the. 775 00:38:19,600 --> 00:38:24,399 Speaker 1: Bloomberg Intelligence Podcast, available on Apples, Spotify, and anywhere else 776 00:38:24,440 --> 00:38:27,799 Speaker 1: you get your podcasts. Listen live each weekday, ten am 777 00:38:27,920 --> 00:38:31,560 Speaker 1: to noon Eastern on Bloomberg dot com, the iHeartRadio app 778 00:38:31,719 --> 00:38:34,359 Speaker 1: tune In, and the Bloomberg Business app. You can also 779 00:38:34,480 --> 00:38:37,800 Speaker 1: watch us live every weekday on YouTube and always on 780 00:38:37,880 --> 00:38:38,880 Speaker 1: the Bloomberg terminal