WEBVTT - Oil Infrastructure, Space and Climate Change 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma Waits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:23.799 at Bloomberg dot com. Well, the energy infrastructure in the 0:00:23.800 --> 0:00:26.119 Middle East is certainly getting a lot of attention. There's 0:00:26.120 --> 0:00:28.920 been a lot of attacks over the last several months 0:00:28.960 --> 0:00:32.639 on oil fields, on tankers, just raising the question of 0:00:32.680 --> 0:00:36.600 the vulnerability of that infrastructure and very important source of 0:00:37.080 --> 0:00:39.280 energy in the world. To get a sense of what's 0:00:39.280 --> 0:00:42.000 going on, Welcome Seth Gray. Seth as a president CEO 0:00:42.159 --> 0:00:45.640 of light Bridge Corporation located in Reston, Virginia, joining us 0:00:45.640 --> 0:00:48.159 on the phone. So, Seth, again, we've had a series 0:00:48.479 --> 0:00:51.839 of attacks uh in the Middle East on some of 0:00:51.840 --> 0:00:56.280 the oil infrastructure. How vulnerable do you consider that part 0:00:56.280 --> 0:00:59.960 of the world to be in terms of oil infrastructure. Well, 0:01:00.040 --> 0:01:04.160 really it's vulnerable, which is very sad and very dangerous 0:01:04.200 --> 0:01:07.280 as we see from the drone attacks on the Saudi 0:01:07.319 --> 0:01:10.520 oil fields, as we see on the attacks on the 0:01:10.560 --> 0:01:15.839 Iranian oil tanker. One of the programs we have going 0:01:15.920 --> 0:01:18.560 under the Department of Energy here in this country is 0:01:18.600 --> 0:01:22.640 to improve our grid resiliency so that we have power 0:01:22.720 --> 0:01:26.240 plants that have can have fuel on site and if 0:01:26.280 --> 0:01:29.479 the supply is cut off, they can run for months 0:01:29.560 --> 0:01:33.080 or even years, the greatest of which are the nuclear 0:01:33.120 --> 0:01:36.840 power plants, which have several years of fuel on site. 0:01:36.840 --> 0:01:39.240 So we have supplies are cut off, they could run 0:01:39.720 --> 0:01:43.240 for years. And in particular, as the US is producing 0:01:43.280 --> 0:01:48.639 more oil domestically, the potential cutoffs and supply of oil 0:01:48.720 --> 0:01:52.440 really threatened our allies, including Japan and many others that 0:01:52.520 --> 0:01:57.200 are very dependent on Middle East oil. So you know, 0:01:57.240 --> 0:01:58.920 it's an issue for US and it's an issue for 0:01:58.960 --> 0:02:02.880 our allies. So Seth, considering the fact that your company 0:02:03.120 --> 0:02:06.560 is a nuclear fuel technology company, it's not surprising that 0:02:06.640 --> 0:02:08.800 you'd say, look, it's so important to build that grid. 0:02:08.880 --> 0:02:13.280 But I'm wondering how secure the nuclear grid would be 0:02:13.520 --> 0:02:17.880 or could be, given the fact that clearly energy infrastructure 0:02:18.120 --> 0:02:24.000 is a very very uh big target right now. Yeah, yeah, Well, 0:02:24.120 --> 0:02:29.160 the reactor sites themselves are are very robust, very protected sites. 0:02:29.400 --> 0:02:33.680 With many feet of concrete and steel protecting the facilities. 0:02:34.160 --> 0:02:37.840 And we are moving toward more local grids over time 0:02:37.840 --> 0:02:42.400 in this country too, with small reactors advanced technologies coming out, 0:02:42.919 --> 0:02:46.560 so that rather than just the giant, interconnected electric grids 0:02:46.600 --> 0:02:49.480 that could be attacked, there could be smaller grids which 0:02:49.840 --> 0:02:54.120 provide a level of protection onto themselves. We're also starting 0:02:54.200 --> 0:02:59.399 to electrify the transportation sector with electric cars, with electric buses. 0:03:00.000 --> 0:03:02.440 There are a lot of projections that will increase the 0:03:02.560 --> 0:03:06.480 use of electricity by fifty in the United States in 0:03:06.480 --> 0:03:10.440 the next couple of decades and similarly around the world, 0:03:10.919 --> 0:03:14.280 which puts even more pressure on the electric grid and 0:03:14.360 --> 0:03:19.400 not having the source of energy cut off. So what 0:03:19.440 --> 0:03:24.040 we're seeing there is an opportunity for American innovation, not 0:03:24.240 --> 0:03:28.840 just for domestic markets, but for exports for this advanced 0:03:28.840 --> 0:03:33.240 technology that will produce no carbon as we do move 0:03:33.360 --> 0:03:38.240 to electrify the transportation sector in addition to the traditional 0:03:38.280 --> 0:03:41.320 electricity sectors. SETH just give us a sense of kind 0:03:41.320 --> 0:03:44.680 of the state of nuclear energy in the United States. 0:03:44.680 --> 0:03:48.240 Are we adding plants, are we taking plants offline? What's 0:03:48.280 --> 0:03:49.800 kind of the trend here and how do you think 0:03:49.800 --> 0:03:53.000 that's going to play out well. We're pretty level at 0:03:53.000 --> 0:03:59.720 about one ent of our electricity from nuclear power, and 0:04:00.240 --> 0:04:03.880 we've closed some plants. We have two plants under construction 0:04:03.960 --> 0:04:07.800 in Georgia now, but mostly as the demand for electricity 0:04:07.840 --> 0:04:10.840 has been rising, we've been improving the efficiency of the 0:04:10.880 --> 0:04:15.320 existing plants to stay level at that. Now we're in 0:04:15.440 --> 0:04:18.800 danger of that falling down a bit and losing that 0:04:19.000 --> 0:04:22.560 zero carbon energy from the grid. So we have companies 0:04:22.560 --> 0:04:27.160 like light Bridge bringing new technologies that can better justify 0:04:27.240 --> 0:04:31.360 the economic case of keeping those plants open and building 0:04:31.760 --> 0:04:35.960 new plants. But part of the state domestically is where 0:04:36.000 --> 0:04:39.080 our nuclear companies are and the companies and the supply 0:04:39.240 --> 0:04:42.560 chain for exports, because the international market is bigger than 0:04:42.600 --> 0:04:46.320 the domestic market, and the greatest threats are from Russia 0:04:46.320 --> 0:04:51.000 and China, which together are taking about six of the 0:04:51.000 --> 0:04:54.880 global market and new reactors, and they are doing that 0:04:54.960 --> 0:04:59.200 partly for strategic reasons, for their national security reasons. Setting 0:04:59.480 --> 0:05:03.440 hundred our supply relationships with countries like Turkey where Russia 0:05:03.520 --> 0:05:07.680 is selling reactors too, and that does not necessarily lead 0:05:07.720 --> 0:05:10.200 to good things in Turkey and other places where they're 0:05:10.240 --> 0:05:14.159 selling reactors, So there are national security implications as well 0:05:14.520 --> 0:05:19.080 for Americans competing and winning against Russia and China overseas. 0:05:19.120 --> 0:05:22.479 How expensive or or cheap is what's the relative cost 0:05:22.640 --> 0:05:27.839 of nuclear energy versus say crude. Well, when when you 0:05:28.279 --> 0:05:32.839 levelize the cost of electricity, nuclear power is cheaper. It's 0:05:32.920 --> 0:05:36.400 it's quite a bit cheaper overall from these reactors that 0:05:36.440 --> 0:05:40.360 are already built and are operating. It's the new reactors 0:05:40.360 --> 0:05:43.080 that are being built. They're having problems with the cost 0:05:43.200 --> 0:05:47.440 overruns that are making those expensive. But as we design 0:05:47.480 --> 0:05:51.000 the new advanced reactors and build more of them, and 0:05:51.120 --> 0:05:53.719 we stop building a first of a kind plant, the 0:05:53.839 --> 0:05:57.880 new reactors will also produce cheaper electricity. How much is 0:05:58.200 --> 0:06:01.359 the lack of adoption of nuclear energy in the United 0:06:01.360 --> 0:06:05.640 States relative to some of its competitors competing nations. How 0:06:05.720 --> 0:06:08.279 much does this do just because there's a diversion to 0:06:08.720 --> 0:06:12.520 the word nuclear and the fear that if something happens 0:06:12.600 --> 0:06:17.400 that it could be catastrophic. Well, look, obviously that's part 0:06:17.440 --> 0:06:20.799 of it. In the United States, nuclear is the safest 0:06:20.839 --> 0:06:24.240 industry we have. Nobody has ever died from radiation in 0:06:24.279 --> 0:06:26.960 the history of the industry. Here, even at the only 0:06:27.040 --> 0:06:30.600 accident we ever had at three Mile Island, nobody died, 0:06:30.680 --> 0:06:33.719 nobody was hurt, and in fact, the twin plant on 0:06:33.760 --> 0:06:37.039 the same site kept operating for decades until just a 0:06:37.040 --> 0:06:40.040 few weeks ago when it was closed down. So we 0:06:40.080 --> 0:06:44.160 know how to build and operate these reactors very safely 0:06:44.520 --> 0:06:47.680 so that no one can can be hurt, and with 0:06:47.760 --> 0:06:51.480 the new advanced technologies that are coming, they'll be even 0:06:51.760 --> 0:06:56.760 safer with small underground plants uh where there will be 0:06:56.839 --> 0:07:02.200 no danger to the public. Seth countries are deploying nuclear 0:07:02.320 --> 0:07:06.640 most aggressively. Well right now we're seeing the United Arab 0:07:06.680 --> 0:07:11.080 Emirates about to start opening four nuclear power plants that 0:07:11.120 --> 0:07:14.480 they've been building littill supply about a quarter of their country. 0:07:14.880 --> 0:07:18.440 In terms of exports, Russia is the largest in the 0:07:18.480 --> 0:07:22.800 world right now, followed by China. The UK is making 0:07:22.840 --> 0:07:26.840 a big push to build new reactors, including one potentially 0:07:27.000 --> 0:07:30.600 from China, which shows how China is really impact then 0:07:30.760 --> 0:07:36.480 even our closest allies and UM generally, France has always 0:07:36.480 --> 0:07:40.160 been very strong and nuclear power, and they're they're deploying 0:07:40.240 --> 0:07:42.520 some in their own country as well as in neighboring 0:07:42.560 --> 0:07:46.679 European countries, and actually even two in China. So those 0:07:46.720 --> 0:07:52.120 are the major markets right now, and for US companies 0:07:52.160 --> 0:07:56.320 throughout the supply chains, lots of manufacturing companies, it's important 0:07:56.360 --> 0:07:59.280 that we keep pace and compete with them. Seth Great, 0:07:59.280 --> 0:08:01.040 thank you so much for being with as Seth Gray 0:08:01.040 --> 0:08:18.880 as president, chief executive officer of light Bridge Corporation, There's 0:08:18.880 --> 0:08:21.680 been a feeling that the bigger risk right now to 0:08:21.880 --> 0:08:25.720 markets at any time of central bank support and slowing 0:08:25.800 --> 0:08:30.920 but still positive growth is a trade deal that actually 0:08:31.080 --> 0:08:34.800 encourages people to rush into markets. Morgan Stanley today saying 0:08:35.200 --> 0:08:38.240 don't do it. It hasn't worked before, it won't work 0:08:38.320 --> 0:08:41.480 this time. Let's find out if Steve dou Dash agrees. 0:08:41.520 --> 0:08:45.880 He's president of i HT Wealth Management based in Chicago. Steve, 0:08:46.120 --> 0:08:48.080 do you agree that if there is some sort of 0:08:48.120 --> 0:08:51.520 trade deal that isn't necessarily a signal to just go 0:08:52.040 --> 0:08:57.920 dive back into risk your stocks? Does anyone? Has anyone 0:08:58.000 --> 0:08:59.800 seen the same cycle over and over and over again, 0:08:59.920 --> 0:09:01.640 or it last year or so. They come out and 0:09:01.640 --> 0:09:03.480 they say we got a trade deal or a partial deal, 0:09:03.559 --> 0:09:06.120 we're gonna work out something, and the markets go up 0:09:06.160 --> 0:09:08.360 upper cent or two, and then two weeks later they 0:09:08.400 --> 0:09:10.240 turned around and like, oh no, we're not gonna get 0:09:10.240 --> 0:09:11.960 a trade deal. No one wants to work this out, 0:09:12.240 --> 0:09:15.320 and then the cycle repeats itself over and over. So yes, 0:09:15.400 --> 0:09:18.160 I know they came out with some partial potential plan, 0:09:18.679 --> 0:09:21.480 and then today they didn't surprise anyone, come out and 0:09:21.480 --> 0:09:24.160 say no, maybe we don't have a plan. No one. 0:09:25.040 --> 0:09:26.760 I do not believe right now that we're going to 0:09:26.840 --> 0:09:30.640 see some magical, huge deal worked out overnight or at 0:09:30.720 --> 0:09:33.280 least in the short order, um that answers all those 0:09:33.360 --> 0:09:36.880 questions and gives the market true clarity anytime soon. It's 0:09:36.920 --> 0:09:39.520 too massive of a deal and there's too much political 0:09:39.640 --> 0:09:41.480 drama around it for it to happen in such a 0:09:41.480 --> 0:09:44.200 short period of time. Steve, to what extent, if any, 0:09:44.360 --> 0:09:47.440 do you think that this trade uncertainty is weighing on 0:09:47.520 --> 0:09:52.199 global economic growth? I think it's it's completely been weighing 0:09:52.200 --> 0:09:54.600 on it. If you if you strip out the tax 0:09:54.640 --> 0:09:56.800 break that took place a couple of years ago and 0:09:56.840 --> 0:09:59.920 the market snapping up because of that, you strip that out, 0:10:00.120 --> 0:10:03.560 we've been basically range bound for years now, Over and 0:10:03.600 --> 0:10:06.480 over again, we've not seen any substantial growth. Now that's 0:10:06.520 --> 0:10:09.160 a good thing too. To the extent that you know, 0:10:09.200 --> 0:10:10.959 I know a lot of people are worried about inversion 0:10:11.080 --> 0:10:12.840 right now. I am not buying into that to the 0:10:12.840 --> 0:10:16.240 same extreme extreme, and they're worried about recession that could 0:10:16.240 --> 0:10:18.560 be meant from that, which again I do not believe 0:10:18.600 --> 0:10:22.920 in um. But if things do level off sideways, it's 0:10:22.920 --> 0:10:25.440 not like we have this euphoric high stock market price 0:10:25.760 --> 0:10:29.440 that's built on just you know, emotion. It's been flat 0:10:29.559 --> 0:10:32.680 for years with the exception of that trade tax deal, 0:10:33.000 --> 0:10:35.599 and therefore it's not like we have a huge downside 0:10:35.720 --> 0:10:38.880 risk um posed to it. So what are you buying 0:10:40.520 --> 0:10:43.280 I'm by I personally do believe that they'll eventually get 0:10:43.280 --> 0:10:45.280 some sort of trade deal done over the next few 0:10:45.400 --> 0:10:48.120 six months. Let's just say, because the politics involved, the 0:10:48.120 --> 0:10:50.400 Trump organization does need to win. This is the one 0:10:50.440 --> 0:10:52.560 area that they can control a great deal of it. 0:10:52.880 --> 0:10:55.000 I think the tech sector has been hit the hardest 0:10:55.600 --> 0:10:59.760 due to the trade deal, certainly the semi connector semiconductor 0:10:59.800 --> 0:11:02.360 set or if you want to go high risk, high return, 0:11:02.679 --> 0:11:04.679 I think that's an area where you can overload right 0:11:04.679 --> 0:11:07.439 now with the assumption that something works out, with the 0:11:07.480 --> 0:11:10.800 assumption that we are not sitting in the right before 0:11:10.920 --> 0:11:14.120 recession just because of the inversion that's going on, and 0:11:14.679 --> 0:11:18.520 question cutting into it, yes, and looking at Micron shares 0:11:18.679 --> 0:11:21.920 they're up this year, how do you how do you 0:11:21.960 --> 0:11:25.080 say that they've gotten hit pretty hard from the trade 0:11:25.280 --> 0:11:30.360 wars because, frankly, because they probably should be higher right now, 0:11:30.679 --> 0:11:32.719 and you're in the sample size, just the here to 0:11:32.840 --> 0:11:35.800 day doesn't show how you're looking in the year's past 0:11:35.840 --> 0:11:38.040 when it got hit a lot harder. I think there's 0:11:38.080 --> 0:11:41.280 so much uncertainty in the semiconductor sector right now because 0:11:41.320 --> 0:11:43.720 of the trade war and because of the unknown of 0:11:43.720 --> 0:11:46.520 how that's going to affect a political piece that is 0:11:46.559 --> 0:11:48.440 a part of the day of that deal right now 0:11:48.800 --> 0:11:52.360 that you're seeing restrictions on what the actual return should be. 0:11:52.840 --> 0:11:54.920 We are in the middle of the Internet of everything, 0:11:55.000 --> 0:11:58.720 right Everything is getting computerized. There's only going to be 0:11:58.800 --> 0:12:02.440 needing more and more chips to integrate everything that we 0:12:02.520 --> 0:12:07.280 do in the future. And so you remove that politically 0:12:07.880 --> 0:12:12.480 induced unknown to it, and you have a very strong 0:12:12.559 --> 0:12:16.320 sector in moving forward. So, Steve, how do you feel, 0:12:16.400 --> 0:12:18.480 I guess within the tech sector about the Fang stocks. 0:12:18.480 --> 0:12:20.679 They've been such a big, big driver really over the 0:12:20.760 --> 0:12:23.120 last decade, both on the upside and on the downside. 0:12:23.240 --> 0:12:25.240 I think about the fourth quarter of the fourth quarter 0:12:25.280 --> 0:12:29.079 of last year. Where are you on those names? I 0:12:29.160 --> 0:12:31.959 don't personally, I don't believe in Facebook. I think that 0:12:31.960 --> 0:12:34.360 the business model has been dying and that they're getting 0:12:34.760 --> 0:12:38.560 eaten up by their competition, including themselves in Instagram, and 0:12:38.720 --> 0:12:42.319 therefore generating less revenue UM per click because of it. 0:12:42.880 --> 0:12:46.439 Um the Amazons of the world. I've been on Amazon's 0:12:47.160 --> 0:12:49.880 bandwagon for a decade now. A decade ago people were 0:12:49.880 --> 0:12:54.120 talking about how was overpriced. Everyone uses it more and 0:12:54.160 --> 0:12:56.360 more and it's easier and easier to buy anything at 0:12:56.360 --> 0:12:58.920 any given time. So I know people like the lump 0:12:58.960 --> 0:13:01.520 thing in together as one big thing. It's just not 0:13:01.960 --> 0:13:05.280 Netflix is not the same as Facebook. Uh. Amazon is 0:13:05.280 --> 0:13:07.920 not the same as Google. It was a cute little 0:13:08.000 --> 0:13:10.280 term that people could use for a couple of years there, 0:13:10.520 --> 0:13:11.880 but I think you've got to be a little more 0:13:11.880 --> 0:13:14.559 selective on what you're buying. I believe Facebook is a 0:13:14.640 --> 0:13:17.240 dying business model right now. So am I going to 0:13:17.280 --> 0:13:19.040 look at that It's the same as Amazon, which I 0:13:19.080 --> 0:13:23.560 think is a high growth business model. No very interesting Facebook. 0:13:23.720 --> 0:13:26.640 Just looking at the stock up about this year, um. 0:13:26.679 --> 0:13:28.160 But you know a lot of those tech stocks to 0:13:28.200 --> 0:13:31.199 continue to perform well. Steve Doodash, thanks so much for 0:13:31.240 --> 0:13:33.079 joining us. Steve as a president of I h T 0:13:33.200 --> 0:13:35.920 Wealth Management based in Chicago, giving us his thoughts on 0:13:35.960 --> 0:13:39.800 the market. He does not see a recession. Um, it 0:13:39.920 --> 0:13:42.400 does not. He's not worried about the when we had 0:13:42.440 --> 0:13:45.920 that inverted yield curve several weeks ago. Uh and UH 0:13:46.080 --> 0:13:48.600 I think probably believes on some light deal in the 0:13:48.640 --> 0:13:50.920 next six months. Might all that might be enough with 0:13:51.000 --> 0:14:11.240 a accommodator fed four equities. Well, space is a growth 0:14:11.280 --> 0:14:14.320 of business and it's no longer the sole purview of NASA. 0:14:14.679 --> 0:14:17.520 Investors can actually play it via the E t F market. 0:14:17.520 --> 0:14:19.240 To give us a sense of what's going on in 0:14:19.320 --> 0:14:23.280 the space investing race, we welcome Andrew Shannon, chief executive 0:14:23.280 --> 0:14:25.480 officer of procure a M, joins us here in our 0:14:25.480 --> 0:14:28.640 Bloomberg Interactive Broker studio. Andrew, thanks so much for joining us. 0:14:28.920 --> 0:14:31.880 Real quickly, just tell us what procure a M is 0:14:31.920 --> 0:14:35.240 and how you kind of interact with the space business. So, 0:14:35.320 --> 0:14:38.120 procure a M is a registered investment advisor where we 0:14:38.240 --> 0:14:41.000 launched both our proprietary own ideas for e t s 0:14:41.040 --> 0:14:43.120 as well as help third parties launch their products, and 0:14:43.240 --> 0:14:45.520 UFO is the first product that we've brought to market 0:14:45.920 --> 0:14:48.360 listed on the New York Stock Exchange, launched in April 0:14:48.400 --> 0:14:52.120 of this year. So I'm looking right now at UFO, 0:14:53.280 --> 0:14:56.600 which is obviously a really catchy ticker. And there's obviously 0:14:57.000 --> 0:15:02.320 a lot of intrigue around space exploration in what exactly 0:15:02.360 --> 0:15:05.000 do you invest in? So I think a lot of 0:15:05.000 --> 0:15:07.880 people have wanted to invest in space for a long time, 0:15:08.040 --> 0:15:10.760 and until launching this fund and very recently, it's been 0:15:10.800 --> 0:15:14.080 a fairly difficult space to actually get exposure too. And 0:15:14.160 --> 0:15:17.240 so unless you're an institution making a private uh, you know, 0:15:17.320 --> 0:15:20.040 a private company type of purchase, that there weren't too 0:15:20.080 --> 0:15:23.480 many pure play space companies. But right now this market 0:15:23.520 --> 0:15:26.520 has really expanded and has brought new entrance into the market. 0:15:26.600 --> 0:15:29.680 And what we've seen is that satellite companies are a 0:15:29.840 --> 0:15:32.320 very big driver of this industry, as well as some 0:15:32.400 --> 0:15:35.440 of the traditional aerospace and defense companies, but those aren't 0:15:35.440 --> 0:15:38.160 typically as pure play. So when you're looking at our fund, 0:15:38.200 --> 0:15:42.680 what you're actually getting exposure to is satellite operators and manufacturers, 0:15:43.320 --> 0:15:46.360 launch equipment company, ground station company, as well as other 0:15:46.400 --> 0:15:49.640 companies that are completely reliant upon UM space based systems 0:15:49.640 --> 0:15:51.720 in order to get their services or products to market. 0:15:52.280 --> 0:15:54.840 Space and exploration has changed a lot in my lifetime. 0:15:54.840 --> 0:15:57.480 Remember being a little kid watching the moon landings. Um, 0:15:57.680 --> 0:16:00.920 now it seems like, you know, rockets going up left, right, 0:16:00.960 --> 0:16:02.760 and center, and I don't know who's sending them up there. 0:16:02.760 --> 0:16:04.480 So but give us a sense of how space has 0:16:04.560 --> 0:16:07.400 kind of changed. And it was the purview of kind 0:16:07.400 --> 0:16:10.080 of the US government, maybe the Russian government, NASA, but 0:16:10.160 --> 0:16:13.240 now there's mostly private right right. So in the early 0:16:13.320 --> 0:16:16.320 days you have the the EESA and ROSS, Cosmos and NASA, 0:16:16.400 --> 0:16:19.360 and those government agencies were really the driving force for 0:16:19.400 --> 0:16:22.760 the space economy. And this year, actually the just a 0:16:22.760 --> 0:16:25.280 couple of weeks ago, the numbers came out for the 0:16:25.320 --> 0:16:28.160 two thousand eighteen space industry and it's set a new 0:16:28.200 --> 0:16:33.160 record for itself. Roughly four hundred fourteen billion plus dollars 0:16:33.560 --> 0:16:36.760 um spent on space was and so going over four 0:16:36.840 --> 0:16:38.640 hundred billion for the first time ever. And then you 0:16:38.640 --> 0:16:41.160 look at Morgan Stanley that's been building up research groups 0:16:41.160 --> 0:16:44.280 as well as Bank of America. Morgan Stanley's predicting over 0:16:44.280 --> 0:16:46.880 a trillion dollars by twenty forty. Bank of America sees 0:16:46.960 --> 0:16:51.080 up to two point seven trillion dollar industry by so 0:16:51.120 --> 0:16:53.920 you're looking at a lot of UM analysts out there 0:16:53.920 --> 0:16:56.080 looking to see this this be a continuum trender of 0:16:56.120 --> 0:16:58.200 growth for the broader space industry. So I'm looking right 0:16:58.200 --> 0:17:01.640 now at the assets in UF It's a twelve million 0:17:01.680 --> 0:17:03.840 dollars and I'm wondering what you needed to get up 0:17:03.840 --> 0:17:05.760 to an order for this to be sort of a 0:17:05.760 --> 0:17:10.040 sustainable investment vehicle in itself. So break even for for 0:17:10.160 --> 0:17:12.240 products such as this is in the several tens of 0:17:12.280 --> 0:17:14.920 millions typically UM. But you know right now, we just 0:17:15.000 --> 0:17:17.040 launched this product in April, so to be at twelve million, 0:17:17.080 --> 0:17:19.520 we're pretty happy, given that the summer is typically a 0:17:19.520 --> 0:17:24.000 pretty dead season for growth. How much is the construction 0:17:24.040 --> 0:17:28.399 of an index guided by what investors are asking for 0:17:29.200 --> 0:17:33.399 versus what registered investment advisors are looking to be able 0:17:33.480 --> 0:17:36.560 to provide in terms of, you know, a pitch. That's 0:17:36.560 --> 0:17:39.159 a really good question because I think a lot of 0:17:39.160 --> 0:17:42.160 times you'll see a thematic fund and maybe the name 0:17:42.280 --> 0:17:45.040 is really catchy, and so someone says, oh, it invests 0:17:45.080 --> 0:17:47.520 in this you know, thematic area. I want to own it. 0:17:47.560 --> 0:17:49.280 But when you actually look at the index, and boil 0:17:49.320 --> 0:17:51.720 it down, you're actually getting the exposure that you actually 0:17:51.720 --> 0:17:53.639 wanted to when you invested in that product. So for me, 0:17:53.800 --> 0:17:55.560 looking at the index is one of the first most 0:17:55.560 --> 0:17:59.399 important aspects of building a truly representative thematic product. And 0:17:59.440 --> 0:18:01.680 for this, we actually have a partner who's a former 0:18:01.720 --> 0:18:05.920 director of the Space Foundation. UM has been studying space policy, 0:18:06.119 --> 0:18:09.640 space business, all these various areas as well as the technologies, 0:18:09.800 --> 0:18:12.119 and he actually built this index. So I think what 0:18:12.440 --> 0:18:14.080 he was able to do is get a pretty strong 0:18:14.119 --> 0:18:18.119 representation of what the global publicly traded space industry looks like. 0:18:18.240 --> 0:18:20.120 So you're not going to get every single company because 0:18:20.160 --> 0:18:21.719 some of them are private and some of them are 0:18:21.800 --> 0:18:24.520 maybe smaller or less liquid companies. But when you actually 0:18:24.560 --> 0:18:26.879 look at the breakdown as far as what's driving the 0:18:26.880 --> 0:18:28.920 space economy, a lot of these names are represented in 0:18:28.960 --> 0:18:31.680 the fund today. So the space business is growing, it's 0:18:31.720 --> 0:18:34.760 becoming more and more private. Are you expecting more publicly 0:18:34.800 --> 0:18:37.160 traded companies to come into the marketplace, UM, I would 0:18:37.200 --> 0:18:38.840 certainly like to see that. I think, you know, the 0:18:38.920 --> 0:18:41.359 one getting the most buzz recently on that front is 0:18:41.440 --> 0:18:44.240 Virgin Galactic, which did this, uh this spack kind of 0:18:44.280 --> 0:18:46.720 merger that can bring it out to market, hopefully within 0:18:46.720 --> 0:18:49.200 the next couple of weeks or months um which could 0:18:49.200 --> 0:18:50.960 be a new way for investors to get exposure to 0:18:51.000 --> 0:18:53.640 the space industry. Um. You know, I love to see 0:18:54.119 --> 0:18:57.399 a strong industry that you're constantly seeing acquisitions and I 0:18:57.480 --> 0:18:59.760 p o s and things like that, and you know, 0:18:59.880 --> 0:19:02.400 I hope we're getting closer to that stage. But right now, 0:19:02.720 --> 0:19:04.639 you know, thirty one companies from around the world is 0:19:04.880 --> 0:19:07.520 a pretty um my view, an interesting way to get 0:19:07.520 --> 0:19:10.080 exposure to this industry. Andrew Shannon, thank you so much 0:19:10.119 --> 0:19:13.240 for being with us. Andrew Shannon, the CEO of Procure 0:19:13.440 --> 0:19:17.160 a M and I gotta say UFO brings me back 0:19:17.240 --> 0:19:22.760 to watching Doctor Who, growing up with the tartists and 0:19:22.800 --> 0:19:26.240 with you know, the different the seven different doctors. I 0:19:26.240 --> 0:19:30.280 could geek out. I'm pretty much anything but definitely science 0:19:30.280 --> 0:19:35.160 fiction and face exploration. If we appreciate you being with us. 0:19:49.600 --> 0:19:51.720 There's a lot of back and forth in the political 0:19:51.840 --> 0:19:55.159 sphere when it comes to global warming, climate change and 0:19:55.240 --> 0:19:57.879 some of the steps being taken, but the trend is 0:19:57.920 --> 0:20:00.440 clear when you take a look at business and joining 0:20:00.480 --> 0:20:02.359 us now to discuss that we are very pleased to 0:20:02.359 --> 0:20:05.439 say is Rich Lesser, who is the chief executive officer 0:20:05.600 --> 0:20:08.280 of Boston Consulting Group, which is based in New York. 0:20:08.320 --> 0:20:11.160 But Rich right now is in Munich, Germany. And before 0:20:11.160 --> 0:20:13.720 we talk about climate change, what are you doing in Munich. 0:20:15.280 --> 0:20:17.320 I'm in the middle of hell. It's nice to be 0:20:17.359 --> 0:20:19.080 here with you. I'm in the middle of an around 0:20:19.080 --> 0:20:22.240 the world trip, just visiting clients, doing some meetings around 0:20:22.240 --> 0:20:25.199 the world. So I was in Boston, then Abu Dhabi, 0:20:25.280 --> 0:20:28.480 now here, then off the Asia, then Seattle, then dot Home. 0:20:29.000 --> 0:20:31.840 Sounds pretty exciting. So I want to talk a little 0:20:31.880 --> 0:20:35.919 bit about climate change and what your research has shown 0:20:35.960 --> 0:20:39.440 in terms of the shift that you've been seeing among 0:20:39.480 --> 0:20:45.040 the c suite offices. Sure so, um so so, First 0:20:45.240 --> 0:20:48.520 just the facts and then what we're observing in terms 0:20:48.560 --> 0:20:52.600 of the dialogue. The facts are really clear. The economic 0:20:53.200 --> 0:20:57.120 downside from not addressing climate change is enormous, and we're 0:20:57.200 --> 0:20:59.320 right now not on a one and a half degree path, 0:20:59.440 --> 0:21:02.120 or at two degree path, or on a much higher path, 0:21:02.160 --> 0:21:03.960 depending on who you talked to, three and a half 0:21:04.040 --> 0:21:08.120 or even four degrees. The economic consequences of that are enormous. 0:21:08.240 --> 0:21:11.080 What was fascinating to us starting with what we just 0:21:11.400 --> 0:21:14.400 happened to do in Germany coincidentally and have now expended 0:21:14.440 --> 0:21:18.560 around the world is when you model through the macroeconomic 0:21:18.640 --> 0:21:23.560 impacts of addressing climate change at a macroeconomic level, that actually, 0:21:23.600 --> 0:21:25.840 even if a country does it alone, of course it 0:21:25.880 --> 0:21:28.440 gets better if all of us do it together. The 0:21:29.080 --> 0:21:33.520 macroeconomic case is quite strong. So to take Germany in 0:21:33.560 --> 0:21:36.800 the US, for example, if you were to you could 0:21:36.800 --> 0:21:40.920 improve eight percent of carbon emissions, take down carbon emissions 0:21:40.960 --> 0:21:44.800 in Germany and in the seventies in the US with 0:21:45.040 --> 0:21:49.480 no net negative economic impact um. And that's true in 0:21:49.520 --> 0:21:51.920 many other countries around the world. The last twenty or 0:21:52.000 --> 0:21:55.040 thirty percent to get to net zero by that will 0:21:55.040 --> 0:21:59.520 require technological innovation or have some economic consequence. If we 0:21:59.560 --> 0:22:03.120 can't find that innovation, So then the question is, if 0:22:03.119 --> 0:22:05.680 that's so good, why don't companies just go do this. 0:22:06.480 --> 0:22:08.720 It's because while it may be true at a macro 0:22:08.840 --> 0:22:12.879 economic level that the net impact is slightly positive or 0:22:12.920 --> 0:22:17.280 neutral macro economically for individual sectors, it will clearly be 0:22:17.440 --> 0:22:19.919 very hard in many sectors of the economy. So we 0:22:19.960 --> 0:22:23.959 need governments to set good policy, to create the right incentives, 0:22:23.960 --> 0:22:27.760 ideality to create a market for carbon That will encourage 0:22:27.760 --> 0:22:30.639 companies to take the right action, because sector by sector 0:22:30.680 --> 0:22:32.880 it won't always make sense to do it on their own. 0:22:33.440 --> 0:22:37.800 So the suite executives now realize how much the public cares, 0:22:37.880 --> 0:22:40.439 and I think many companies are getting their arms around 0:22:41.040 --> 0:22:43.920 being much more aggressive on this. So Rich, how difficult 0:22:44.200 --> 0:22:47.320 is it for you and for your clients to push 0:22:47.359 --> 0:22:51.919 through meaningful sustainability issues when President Trump and the U. 0:22:51.960 --> 0:22:54.760 S administration does not appear to be supporting that at all. 0:22:56.800 --> 0:23:01.120