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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Bramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com Nordstrom. Yesterday,

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Speaker 1: the department store chain announced that it would open a

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Speaker 1: new quote neighborhood hub shop. In other words, this is

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Speaker 1: going to be a store that's smaller and has no merchandise,

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Speaker 1: and they're going to open this on October three in

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Speaker 1: West Hollywood, California. Did not go over well with investors.

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Speaker 1: The shares fell about three on the news. And here

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Speaker 1: to talk about this whole concept of window shopping with

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Speaker 1: no merchandise that could be potentially the new front of

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Speaker 1: retail is Punam Goyle. She is our own analysts that

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Speaker 1: covers Senior. She's our own retail analyst for Bloomberg Intelligence

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Speaker 1: and she joins us. Now, Punam, you know, I actually

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Speaker 1: thought this was not a terrible idea kind of moves

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Speaker 1: to the whole experience, kind of uh focus that a

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Speaker 1: lot of retailers are looking to do. What's the problem here?

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Speaker 1: What was what were investors responding so viscerally to? You know,

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Speaker 1: I don't know if the response yesterday was to this

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Speaker 1: directly or maybe something else, but I agree with you

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Speaker 1: and I think it's actually a neat concept. It's one

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Speaker 1: that more retailers should start thinking about how to drive

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Speaker 1: people in their stores and how to shrink their stories.

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Speaker 1: I mean, a three thousand square foot store versus their

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Speaker 1: typical hundred and forty thousand square foot store, that's uh,

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Speaker 1: you know, a big difference. And these three thousand square

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Speaker 1: footstores can go anywhere. Well, and Punam, can you give

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Speaker 1: us a sense of what these stores might look like,

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Speaker 1: what the experience would be walking in for a customer? Sure? So,

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Speaker 1: you know, you walk into these stores, you get a refreshment,

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Speaker 1: whether it's beer, wine, coffee, whatever it is. You said,

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Speaker 1: A personal stylist greets you. There's eight big dressing rooms.

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Speaker 1: They talk to you, they understand what you like, and

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Speaker 1: then they have you try on a few things, and

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Speaker 1: whatever you like, you can either come back and pick

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Speaker 1: it up later or it can be shipped directly to you.

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Speaker 1: So they'll have merchandise there, but that merchandise is not

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Speaker 1: for sale. Immediately you walk out bagless. I'm just trying

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Speaker 1: to wrap my head around this punam. And I understand,

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Speaker 1: you know, Lisa thinks it's not a terrible idea, that's

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Speaker 1: a great endorsement. Um, But you know, drinking wine, personal tailors.

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Speaker 1: How is all this scalable? How do you do this

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Speaker 1: with a company that's a fifteen billion dollars in sales?

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Speaker 1: You do it because you can have so many of

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Speaker 1: these stores. So nord Storm is coming to New York

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Speaker 1: City in full price store, a flagship store, a flagship store.

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Speaker 1: So why can't and this is really you know, me

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Speaker 1: thinking very out there. Why can't they add a three

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Speaker 1: thousand square foot store in Soho and use the flagship

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Speaker 1: store to fill that demand. They have a hundred and

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Speaker 1: twenty two full line stores. They can go into major

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Speaker 1: shopping destinations and add these smaller stores and use their

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Speaker 1: hubs to fill the demand. So totally, I actually I

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Speaker 1: totally see this, PIM because if you think about it,

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Speaker 1: I enjoy a glass of wine. I want to talk about,

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Speaker 1: you know, what the latest trends are, and try things

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Speaker 1: on and make sure things fit all right before you

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Speaker 1: order it online. And uh, you know, not only that,

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Speaker 1: but putam, is there any discussion about creating other aspects

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Speaker 1: of the experience. I mean, I know that like, for example,

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Speaker 1: the M and M store in Times Square had a

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Speaker 1: very kind of playful environment, or the old fo Schwartz

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Speaker 1: with the the clock and the how did that do? Yeah,

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Speaker 1: and just but that's okay. Well no, I was gonna say,

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Speaker 1: you know, to go back to your point about you know, Okay,

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Speaker 1: so that norths To opens the flagship store in New York,

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Speaker 1: and so they're going to do a smaller square foot

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Speaker 1: maybe a five thousand, three thousand square foot store in Soho. Well,

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Speaker 1: the reason they're not going to make any money there

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Speaker 1: is because it costs four point three million dollars a

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Speaker 1: year for a five thousand square foot storefront in Soho.

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Speaker 1: It's expensive. Everywhere you want to go, it is expensive.

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Speaker 1: But just think about the traffic that they get into

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Speaker 1: those stories and the sales they can get out of

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Speaker 1: that three thousand square foot box. I mean, look, I

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Speaker 1: don't know exactly what these stores are gonna look like,

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Speaker 1: but I would be more than happy to go in

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Speaker 1: for a petty manny and um, look for some clothes

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Speaker 1: while I'm doing that, and try him on, and then

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Speaker 1: walk out and have it sent to my home and

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Speaker 1: walk out without a bag because you don't want to

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Speaker 1: carry a bag everywhere you go anymore. For all the

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Speaker 1: men out there, a manny petty is a manicure pedicure.

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Speaker 1: And I agree with you, But I also think that

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Speaker 1: there has to do uh there there There has to

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Speaker 1: be an advertising element of this as well, right, I mean,

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Speaker 1: if you think about at the four point three million

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Speaker 1: dollars that it costs to have that space, if they

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Speaker 1: have incredible foot traffic, if they have an experience that

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Speaker 1: gets the word at the word out, that seems to

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Speaker 1: be a destination for people, I mean, that's that's advertising.

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Speaker 1: That's worth it for them, right. Yeah. Not every three

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Speaker 1: thousand square foot store will cost them that much money.

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Speaker 1: I mean there are other areas, densely populated areas that

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Speaker 1: they could go into with these smaller footprints that maybe

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Speaker 1: don't cost that much money. All right, So let's let

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Speaker 1: all kidding aside. Though, how many do they intend to have?

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Speaker 1: Any idea how many of these new kinds of formats

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Speaker 1: do they intend to open? And what precludes the competition

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Speaker 1: from opening another small three thousand square foot space right

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Speaker 1: next door. So so far one, Um, no announcements of

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Speaker 1: anything further than that. There maybe one in Toronto, but UM,

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Speaker 1: it's just you know, they haven't announced anything further. I

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Speaker 1: think they're going to test and try, see how it goes,

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Speaker 1: and then we'll hear more. As far as competition, why not,

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Speaker 1: I mean, why isn't everyone thinking of something similar or different?

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Speaker 1: We saw colds just uh, I think over a week

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Speaker 1: ago announced at Amazon coming intent of their stores to showcase,

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Speaker 1: ace test and try Amazon branded goods. So people are

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Speaker 1: thinking retailer, they're thinking outside the box. They're trying to

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Speaker 1: find ways to drive traffic and use the box more productively. Well,

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Speaker 1: I think that it's fascinating. And I imagine that they'll

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Speaker 1: also have people who help, uh style different outfits and

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Speaker 1: looks for people, so there'll be more of that kind

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Speaker 1: of tailor experience as well. Right, Yeah, and then and

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Speaker 1: then you get a fitted to. They have a tailoring

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Speaker 1: service on siting. I mean that's just you know, one

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Speaker 1: stop shop if you're a north Strom shopper or our

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Speaker 1: north Strom potential shopper that you know would be interested

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Speaker 1: in clothes from the ore Shoes put them Goyle, thank

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Speaker 1: you so much for joining us. Put him. Goyle, a

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Speaker 1: senior retail analyst for Bloomberg Intelligence, talking about this new

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Speaker 1: window shopping no merchandise store concept and uh, it's interesting. Nonetheless,

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Speaker 1: it's interesting to see retailers think outside the box and

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Speaker 1: try to uh come up with new experiences in a

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Speaker 1: time when people really do order so much online. Mark

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Speaker 1: Usco has had some harsh words for certain e t

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Speaker 1: F s. He called one slice of the funds one

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Speaker 1: of the worst things ever created. Now he's starting his

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Speaker 1: own e t F. Marc Usco joins us now Marcusco

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Speaker 1: as chief executive officer and chief investment officer of Morgan

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Speaker 1: creekt Capital Management, which oversees almost three billion dollars in

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Speaker 1: Chapel Hill, North Carolina. Mark, So, what convinced you to

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Speaker 1: plow into this territory that you've had such criticism for

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Speaker 1: about in the past few years. Well, at Lisa, you know,

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Speaker 1: I think it's important to note that I've actually never

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Speaker 1: been a critic of E t F as a structure. Yeah,

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Speaker 1: I think I think DTF structure is is quite a

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Speaker 1: good one. What I was critical of is is certain

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Speaker 1: strategies and the one that I did call, you know,

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Speaker 1: maybe the worst invention perpetuated against investors in a long time.

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Speaker 1: With this idea of low volatility, where you buy stock

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Speaker 1: only based on the volatile e of its price, no

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Speaker 1: regard to fundamentals, no regard to how the company performs.

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Speaker 1: It seems like a really bad idea to buy something

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Speaker 1: no matter what the prices and whatever the value is.

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Speaker 1: So the structure of ets IS is a really good one,

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Speaker 1: and I think the biggest reason for us to to

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Speaker 1: kind of crossover is we've been involved in the alternatives

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Speaker 1: world for a very long time, and that basically meant

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Speaker 1: that the SEC said, you know, if you weren't wealthy,

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Speaker 1: you couldn't have access because of all the restrictions against

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Speaker 1: the credited investors and qualified purchasers. So this is the

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Speaker 1: way to bring our styles and strategies that we think

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Speaker 1: are really good ways to manage capital, honed in our

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Speaker 1: endowment experience, into the world of the average investor. So, Mark,

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Speaker 1: will this exchange traded fund? Will it be passive or active?

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Speaker 1: It'd be active, And I think that's a really important point,

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Speaker 1: you know, although I get kind of buggy on this

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Speaker 1: on this word to PIM and that the word passive

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Speaker 1: is kind of a misnomer and that these things aren't passive, right.

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Speaker 1: You know, most of the stocks in the sp SP

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Speaker 1: weren't there thirty years ago. There's been I think turnover.

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Speaker 1: It's just slow active and they're really momentum based strategies

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Speaker 1: because of the capitalization waiting in most of these index ones.

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Speaker 1: So I don't really like the term passive, but you

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Speaker 1: know passive is indexing, and that all the other things.

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Speaker 1: This will definitely be active in the sense that it's

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Speaker 1: going to take our best ideas that we come up

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Speaker 1: with once a year in our our primary themes, and

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Speaker 1: then trade within the year around those those best ideas

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Speaker 1: and try to deliver. You know, we think alpha because

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Speaker 1: to us, alpha is smart. You know, there's this whole

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Speaker 1: thing called smart beta. Beta actually is dumb, not meaning unintelligent,

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Speaker 1: but it's rule based. Alpha is where the smart part

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Speaker 1: of asset management is. So mark you set the best

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Speaker 1: ideas once a year. Correct, Yes, those are the big themes,

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Speaker 1: so kind of ten big themes that we think have

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Speaker 1: you know, about a fifty fifty chance of happening. But

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Speaker 1: if they do happen, they'll present up you big upside

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Speaker 1: return opportunities. You know, this year, a good example would

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Speaker 1: have been short the dollar. Everybody thought the dollar was

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Speaker 1: going up this year. In fact, of those surveyed on

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Speaker 1: Bloomberg and other places thought the dollar was going up.

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Speaker 1: So if you were short the dollars this year, you've

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Speaker 1: made a lot of money. And if you were long

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Speaker 1: the rem and B, which was the opposite of what

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Speaker 1: most people were doing last year. So Mark, currently, what's

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Speaker 1: one of your best ideas? So you know, well, short

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Speaker 1: the dollars is still you know, one of our our

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Speaker 1: top ten ideas. Uh. We also like the idea that

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Speaker 1: that interest rates are going to continue to go down,

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Speaker 1: not up. Uh. You know, everybody thought interest rates we're

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Speaker 1: gonna rally really hard after the Trump victory, and and

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Speaker 1: they did for a few weeks. And they started the

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Speaker 1: year at two sixty an hour down to to sixteen.

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Speaker 1: And that's a surprise to everybody. But are probably our

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Speaker 1: biggest one is this wealth transfer from the developing world.

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Speaker 1: Two I started from the developed world to the developing world.

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Speaker 1: And we think emerging markets are are going to continue

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Speaker 1: to be the place to be. They're gonna have a

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Speaker 1: decade of dominance for the next ten years. And while

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Speaker 1: we think the US market is going to struggle to

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Speaker 1: make any return, um basically be flat for a decade,

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Speaker 1: just like from two thousand to two thousand and ten,

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Speaker 1: we think emerging markets could could compound in the high

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Speaker 1: single digits, even low double digits. Hey, Mark, what happens

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Speaker 1: if one of these ideas goes bust? Well, you know

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Speaker 1: they will, right, I mean, we're not gonna get them,

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Speaker 1: all right. Uh, And that's why it's going to be

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Speaker 1: an actively managed et F. It's great question. Um, so

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Speaker 1: that you know, we we think one of the strengths

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Speaker 1: of of the endowment model. You know we've lived our

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Speaker 1: our whole careers is is the risk management. Focus on

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Speaker 1: risk management, focus on protection of capital first, growth of capital. Second.

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Speaker 1: You know, if you take care of the losses, the

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Speaker 1: gains take care of themselves. The stop loss on each

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Speaker 1: of the positions. I mean, do you say to yourself,

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Speaker 1: all right, if this is that, if this goes down

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Speaker 1: more than seven in the next six months, I'm out

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Speaker 1: of here. Again, really important question. We don't we don't

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Speaker 1: like those rules based stop losses because what we think

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Speaker 1: that does is is it. It tends to what people

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Speaker 1: do is they buy high and they sell low. We

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Speaker 1: rather try to only buy things when there's a margin

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Speaker 1: of safety, so that some decline in price is actually

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Speaker 1: okay and actually gives you an opportunity to buy more

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Speaker 1: of something as long as you're below fair value. So

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Speaker 1: you know, if it turns out that you you know,

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Speaker 1: made a miscalculation on fair value or you know, just wrong,

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Speaker 1: or the trend changes, you know, then you've just got

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Speaker 1: to step to the side. And that that's really more

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Speaker 1: of a judgment call. And that's where I think the

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Speaker 1: difference between active management and passive management really comes to

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Speaker 1: bears is the whole concept of judgment. Passive has no judgment.

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Speaker 1: It's not allowed to have judgment. It has to buy whatever.

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Speaker 1: You know, the rule says it's going to buy no

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Speaker 1: matter what the price, no matter what the value. Well,

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Speaker 1: we're gonna see what happens, right, We're gonna see where

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Speaker 1: your et F is gonna come out, and we'll we'll

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Speaker 1: check in with you to see whether this new uh

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Speaker 1: sort of actively managed e t F will grow to

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Speaker 1: fruition as you describe. Thanks very much, Mark Usko, Chief

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Speaker 1: Executive Officer, and Chief Investment Officer, Morgan Creek Capital Management.

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Speaker 1: I want to bring in John Butler to learn more

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Speaker 1: about the Apple launch. John, in your world, is this

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Speaker 1: you know? Is this like Christmas, Thanksgiving and I don't know,

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Speaker 1: New Year's all rolled into one. Well, it's a big

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Speaker 1: Christmas this year, PIM because we get an extra iPhone

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Speaker 1: under the tree. Um, Apple for the first time in

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Speaker 1: a long time, is coming out with a product line extension,

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Speaker 1: and it's a perfect year to do it because it

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Speaker 1: is the tenth anniversary of the iPhone. The latest rumor

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Speaker 1: and there have been a lot rumors about what it's

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Speaker 1: going to be called, but apparently it's it's going to

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Speaker 1: be called the iPhone ten and Um it's at the

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Speaker 1: very high end of the market, so a lot of

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Speaker 1: people are talking about the high price, the thousand dollar

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Speaker 1: plus price point. But I think I think it comes

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Speaker 1: with a pretty significant redesign. They're taking the home button off.

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Speaker 1: It's a LED screen, so which are beautiful screens by

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Speaker 1: the way, Samsung uses O lead and you get black

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Speaker 1: or blacks and whiter whites. Um, and it's gonna be

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Speaker 1: a large screen, larger than the iPhone seven plus by

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Speaker 1: about point three inches, so they're the screen sizes are

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Speaker 1: getting up there, and I think Apple is positioning it

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Speaker 1: to compete with Samsung's new Note eight, which has actually

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Speaker 1: had a lot of demand for that, so it seems

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Speaker 1: like they have some stiff competition. It does, and it's

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Speaker 1: priced at n fifty dollars, so it's at a similar

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Speaker 1: price point. It's discounted basically, right. But you know, John,

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Speaker 1: I'm sorry, I personally have this visceral reaction to the

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Speaker 1: frenzy that Apple is able to whip everyone up into.

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Speaker 1: Can any other company creates such a glut of just

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Speaker 1: natural advertising, just everyone talking Apple phone, Apple phone, Apple

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Speaker 1: phone all the time? I mean, why is there such

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Speaker 1: an excitement over this? The roots are in Steve Jobs.

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Speaker 1: Like Steve Jobs, you know, with the initial iPhone announcement

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Speaker 1: ten years ago, that was really something. I mean, it

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Speaker 1: was a brand new device. He had basically taken what

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Speaker 1: was up to that point a consumer electronics device and

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Speaker 1: turned it into this appealing accessory. And in the years

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Speaker 1: that followed, of course Jobs did a great did a

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Speaker 1: tremendous job, no pun intend. Well, do you think that

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Speaker 1: this new iPhone will elevate the product to a new level,

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Speaker 1: so they can even be considered a somewhat new innovation, right,

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Speaker 1: because that's that's been one challenge for Apple is that

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Speaker 1: they really haven't come up with a new hit. They

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Speaker 1: have not come up with a new hit. What they're

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Speaker 1: looking to do, Lisa is broaden the category a little bit.

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Speaker 1: So they're going to the ultra high end. There are

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Speaker 1: a premium phone player, but they've never had a true

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Speaker 1: match for the Note Samsung Note eight now um, and

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Speaker 1: so I sort of view this as an important event

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Speaker 1: because you're getting in a typical refresh by the way

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Speaker 1: you get to new phones. We're now getting three, including

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Speaker 1: this high end phone. So I think it's a big deal.

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Speaker 1: And I think all the excitement is reflective of the

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Speaker 1: power of the Apple brand. They really do have a

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Speaker 1: great global brand. Yeah, they also know how to leverage it.

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Speaker 1: I was gonna say, they also do two hundred and

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Speaker 1: three billion dollars in sales a year, So do anything

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Speaker 1: that a company of that size does, you're gonna want

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Speaker 1: to pay attention to it. So the challenge now for

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Speaker 1: Apple is they need to go from hardware innovations to

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Speaker 1: can tell people to upgrade the more software and so

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Speaker 1: what I'm looking for in today's event is what are

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Speaker 1: we getting in the way a new content, new services,

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Speaker 1: um adjacent product markets. I hear we're getting a new

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Speaker 1: watch that is going to be completely free of the iPhone,

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Speaker 1: which this one will tell time terrific. It may tell time.

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Speaker 1: That's we'll see what I mean. I mean, I understand

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Speaker 1: this whole you know ecosystem with Apple and so on,

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Speaker 1: But I I thought that the challenge that Apple really has,

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Speaker 1: never mind the one thousand dollar price tag, but is

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Speaker 1: getting people in China to buy their products. It's getting

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Speaker 1: people in China, which is matured, and now it's getting

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Speaker 1: in India, which I think is a long shot. We

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Speaker 1: did a report taking a close look at that market.

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Speaker 1: The monster portion of that market is at the low

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Speaker 1: end price below two fifty dollars. I think Apple doesn't

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Speaker 1: stand a chance personally. But you know, it's interesting that

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Speaker 1: you focus on content. I wonder how much of this

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Speaker 1: is also geared at creating customer data. There's been a

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Speaker 1: lot of talk about one big benefit that Google and

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Speaker 1: Facebook have over Apple and the long term is that

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Speaker 1: they have amazing access to all of the customer data.

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Speaker 1: Amazon also, where's Apple in this nowhere yet. But that's

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Speaker 1: where the content comes in, right, because if you're producing

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Speaker 1: original programming, or even if you're not producing your own programming,

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Speaker 1: you can benefit from the ad dollars and targeted ad

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Speaker 1: dollars at that based on what you know about your

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Speaker 1: user base. So when you heard Verizon originally give the

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Speaker 1: hard sell on leveraging content at A O, L and Yahoo,

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Speaker 1: they were talking about leveraging what they know about their

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Speaker 1: wireless customers, A T and T is probably going to

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Speaker 1: do the same thing, and Apple is in a great

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Speaker 1: position to do the same. So again I'm looking for

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Speaker 1: new a new maybe streaming video service coming this afternoon. Um,

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Speaker 1: they've made some big hires out of Sony, so they

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Speaker 1: have a great content team. Where's it going now, that's

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Speaker 1: the big question. Just to follow up on what you

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Speaker 1: said about A T and T and Verizon, the chief

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Speaker 1: executive of A T and T, Randall Stevenson, today saying

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Speaker 1: expect the time, want to deal to close by the

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Speaker 1: end of the year. And oh yes, if you're interested

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Speaker 1: in HBO, it'll be free to all wireless customers that

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Speaker 1: have an unlimited plant. So there that's an answer to

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Speaker 1: T Mobile coming out the other day giving free Netflix

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Speaker 1: to people, and so, not to go off on a tangent,

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Speaker 1: but with the talent, But that's the same kind of

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Speaker 1: thing you're talking about with Apple. Yeah, it's okay, you

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Speaker 1: got the device, you're gonna need the content. Yeah. For

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Speaker 1: the telcos, they're dealing with the same market maturity, and

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Speaker 1: it's led to pricing pressure and wireless. How low can

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Speaker 1: you go on price before you hurt yourself? And what

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Speaker 1: do you do instead? You add value to that commoditized

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Speaker 1: service and their owing it with content And so a

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Speaker 1: T and T is merely responding to what T Mobile

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Speaker 1: did by giving Netflix away for free for T Mobile

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Speaker 1: one subs on family plants. How far away are we

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Speaker 1: from peak content? I don't cover content, so that's a

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Speaker 1: tough call, but it's something I'm watching. It's getting to

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Speaker 1: be an awfully crowded market. But it's interesting to see

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Speaker 1: where content is going. It's moved from long form sit

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Speaker 1: in front of the TV in your living room and

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Speaker 1: watch it for an hour, to short form watching it

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Speaker 1: on a smartphone. So in that sense, the ball is

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Speaker 1: moving into Apple's court, not away from it. Yeah, we're

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Speaker 1: all a d D now, John Butler, thank you so

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Speaker 1: much for joining us. Always a pleasure to speak with you.

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Speaker 1: John Butler has senior Telecom Services and Equipment analyst for

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Speaker 1: Bloomberg Intelligence, talking all things Apple, Apple, Apple, Apple, the

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Speaker 1: new iPhone. Let's turn our attention now to infrastructure and

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Speaker 1: utilities when it comes to the aftermath of Hurricane Irma.

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Speaker 1: Joining us as Kit Connledge, he is our senior Industrials

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Speaker 1: and Utilities analysts for Bloomberg Intelligence. He joins us here

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Speaker 1: on our eleven three oh studio. Kit, thanks for coming in.

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Speaker 1: Maybe just give us an update. I was looking at

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Speaker 1: some headlines that said that about six and a half

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Speaker 1: million customers are without electricity, but you brought your spreadsheets

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Speaker 1: and you've got more detailed. Well, the it looks to

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Speaker 1: me like the latest from the grid operator in Florida,

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Speaker 1: UH indicates that we're damned to about five and a

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Speaker 1: half million outages now. So uh, they're obviously getting to

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Speaker 1: the low hanging fruit first, let's put it that way.

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Speaker 1: So the further south you were, the quicker the hurricane

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Speaker 1: went through. So those guys are getting fixed now pretty readily.

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Speaker 1: Presumably the keys are going to have a hard time

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Speaker 1: getting fixed, but there's not that many electric connections and

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Speaker 1: the keys. So um as you fix up Marco Island

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Speaker 1: and up the west coast than FPL completes this, it's work.

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Speaker 1: But the North Central Florida, Florida Power and Light is

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Speaker 1: the one and North Central Florida, where Duke Power Florida

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Speaker 1: is has still a higher percentage of their outages remaining.

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Speaker 1: Can you give us a sense of the scope of

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Speaker 1: what it will take to get power online. Are we

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Speaker 1: talking about down to power lines that need to be

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Speaker 1: just put up and re strong or is there more

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Speaker 1: substantive damage to the infrastructure. From what I've seen, the

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Speaker 1: utilities haven't really determined yet how much uh real deep

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Speaker 1: seated uh problem they're going to have with the infrastructure.

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Speaker 1: It uh you know, the initial things they're indicating seem

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Speaker 1: to be maybe not as bad as could have been expected.

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Speaker 1: So a lot of the power plants, which obviously are uh,

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Speaker 1: if you will, most important, uh don't seem to have

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Speaker 1: been affected. And then you have these things that you

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Speaker 1: uh you call the substations, which are like billion dollar

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Speaker 1: installations that connect high power lines to low power lines.

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Speaker 1: They were raised and they shouldn't have been flooded. That

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Speaker 1: was the purpose of all this work they did in

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Speaker 1: the last ten years. We'll see how well that turns

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Speaker 1: out well and then a kid going forward. This is

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Speaker 1: going to be expensive. And I'm just wondering what the

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Speaker 1: financial condition of UH next eras Flora, Florida Power and

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Speaker 1: like which you were talking about, Tampa Electric, Duke Energy,

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Speaker 1: Florida Southern Companies, Gulf Power, and Georgia Power. I mean,

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Speaker 1: how how are they going to afford this? Well, that's

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Speaker 1: a very fair question. I would say that for next year,

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Speaker 1: and Duke and and the Southern companies subsidiaries and Southern

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Speaker 1: got hit in Georgia Power as well. Of course. UH.

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Speaker 1: Those are all companies in the range of fifty billion

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Speaker 1: market caps. So even uh, you know, a bill in

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Speaker 1: the billions for them, and even assuming they had trouble

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Speaker 1: collecting it from the ratepayers, which in theory they're allowed

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Speaker 1: to do, UH, there's no existential threat to those kind

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Speaker 1: of companies. UM. Tampa Electric has a smaller UH company,

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00:24:16,920 --> 00:24:20,080
Speaker 1: so there may be something there. They're a subsidiary of Amero,

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Speaker 1: which is a Canadian company. Can't Uh. This is going

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Speaker 1: to require, as you mentioned, a lot of work. It's

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Speaker 1: gonna require a lot of people. One estimate by the

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Speaker 1: chief executive of Southern Company, Thomas Fanning. He said that

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00:24:36,040 --> 00:24:40,560
Speaker 1: they might need between fifty and sixty thousand workers from

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Speaker 1: all over the US and Canada in order to actually

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00:24:43,760 --> 00:24:48,919
Speaker 1: rebuild the Florida infrastructure. From from what I've seen the

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00:24:49,040 --> 00:24:52,760
Speaker 1: companies across the country UH putting out and press releases.

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Speaker 1: They're flocking in literally from all over the country and

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00:24:57,119 --> 00:25:01,960
Speaker 1: probably from Canada as well. UH. It's it's a good

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00:25:02,000 --> 00:25:05,920
Speaker 1: thing for the utilities from out of town to do. UH.

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00:25:06,480 --> 00:25:09,239
Speaker 1: Turnabout is fair play if something happens to them they

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Speaker 1: want There's a lot of uh of cooperation and the

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00:25:14,200 --> 00:25:17,720
Speaker 1: utility industry for these kind of natural disasters. They're not

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00:25:17,800 --> 00:25:22,080
Speaker 1: direct competitors here. Once their power lines are down, then

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00:25:22,200 --> 00:25:24,520
Speaker 1: everybody wants to help. Plus they get paid for it,

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00:25:24,640 --> 00:25:28,600
Speaker 1: so it's it all adds up pretty well. But everybody

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00:25:28,640 --> 00:25:31,639
Speaker 1: knows in the industry that it's important to the local

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00:25:31,720 --> 00:25:35,000
Speaker 1: utility to get the power back on. And if you

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Speaker 1: wait more than a week, uh, people start grumbling. And

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Speaker 1: it's not obviously always in your control, but they can

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Speaker 1: empathize because they've all been through this that if you

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00:25:47,560 --> 00:25:52,520
Speaker 1: have problems getting everything connected rapidly, UH people are going

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Speaker 1: to start to complain and that's always bad for utility.

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Speaker 1: Kit Conneledge, thank you so much for joining us. Kick

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Speaker 1: connel Edge is senior Industrials and Utilities Utilities analyst for

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Speaker 1: Bloomberg Intelligence Intelligence if I can speak today, joining us

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Speaker 1: in our Bloomberg eleven three oh studios here in New York.

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Speaker 1: And while it wasn't as bad as we thought, Hurricane

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00:26:12,000 --> 00:26:16,560
Speaker 1: Irma did cause devastation in the Keys, and the Pentagon

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Speaker 1: is now saying that ten thou people still may need

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Speaker 1: to be evacuated from that region. Thanks for listening to

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00:26:25,240 --> 00:26:28,159
Speaker 1: the Bloomberg p m L podcast. You can subscribe and

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00:26:28,200 --> 00:26:32,200
Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast

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00:26:32,200 --> 00:26:35,680
Speaker 1: platform you prefer. I'm pim Fox. I'm on Twitter at

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00:26:35,840 --> 00:26:39,240
Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo. It's one

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00:26:39,480 --> 00:26:42,159
Speaker 1: before the podcast. You can always catch us worldwide on

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00:26:42,200 --> 00:26:43,040
Speaker 1: Bloomberg Radio.