Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is Bloomberg Business Wait inside from the reporters and
Speaker 2: editors who bring you America's most trusted business magazine, plus
Speaker 2: global business, finance and tech news. The Bloomberg Business Week
Speaker 2: podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.
Speaker 3: To get some economic data this morning. US retail sales
Speaker 3: increased at a firm pace in the month of November,
Speaker 3: bolstered by a surge in car purchases and solid online
Speaker 3: shopping that masked more mixed spending elsewhere. This has came
Speaker 3: from the US Census Bureau. It' said the value of
Speaker 3: retail purchases not adjusted for inflation increased seven tens of
Speaker 3: a percent after upward revisions to the prior to months,
Speaker 3: and if you back out autos, sales climbed a more
Speaker 3: modest two tens of a percent timp That was for
Speaker 3: a second month, okay.
Speaker 4: Separate data today showed US industrial production unexpectedly declined for
Speaker 4: a third month in November on decreases in utility output
Speaker 4: and bing manufacturing output rows less than forecasts. With more
Speaker 4: on the US economic backdrop and what to expect from
Speaker 4: the Fed tomorrow. Back with us is Steven Skanky, chief
Speaker 4: economic advisor at the Wealth Advisor Keell Point. Steve also
Speaker 4: a former US Treasury and White House National Security Council
Speaker 4: staff member, serving during the Nixon, Ford, Carter, and Reagan administrations.
Speaker 5: He joins us this afternoon from Washington, d C.
Speaker 4: Steve, Good as always to see you on the day
Speaker 4: before we hear from the Fed chair. This most recent
Speaker 4: data that Carol and I just mentioned certainly something that
Speaker 4: the members of the Federal Reserve Board of Governors are
Speaker 4: looking at today is today, is tomorrow certainly decided the
Speaker 4: big picture of what comes in January, February, March. That's
Speaker 4: what has investors focused.
Speaker 6: Well, first, thanks thanks for inviting me on as sorry,
Speaker 6: it's great to be with you and answering your question.
Speaker 6: The Marcus certainly think that it's decided as to what
Speaker 6: they're going to do tomorrow, and when you look at
Speaker 6: all the things that they've said, I think it'd be
Speaker 6: a big surprise if they if they didn't cut tomorrow.
Speaker 6: They basically indicated that, and the economic data has been
Speaker 6: supportive of that as well. I mean, the estimate for
Speaker 6: personal consumption expenditure, the Core Index that's come down that
Speaker 6: that's really good news. The employment data was okay but
Speaker 6: not overly strong. And and what you just said about
Speaker 6: retail sales very positive, even with gasoline sales down and
Speaker 6: industrial production more tepet, which which gives the FED a
Speaker 6: little bit more latitude to be confident about not having
Speaker 6: to not cut rates tomorrow.
Speaker 3: Well, and I guess though, to that point, Steve, some
Speaker 3: would suggest, wait, why do we even need a rate cut.
Speaker 3: We've got growth in the United States. The economy still
Speaker 3: seems to be humming along, so why do we need it.
Speaker 6: Well, the biggest concern, Carol, is in the in the
Speaker 6: employment side. You know, the at rate ticked up a
Speaker 6: little bit. The fence projection is that it will it
Speaker 6: will go higher. We'll see what they're some economic projections
Speaker 6: is for tomorrow in terms of the unemployment rate going
Speaker 6: into twenty twenty five. But that's where the fedce principal
Speaker 6: concern is. They're okay with where inflation is, especially since
Speaker 6: it looks like it's starting to come down a little
Speaker 6: bit again, but they don't want to see job losses
Speaker 6: or a weak employment market get ahead of them.
Speaker 3: I also wonder how much of the concern. Though again,
Speaker 3: maybe the argument for not cutting rates is that we
Speaker 3: still have inflationary pressures and there are some concerns about policies,
Speaker 3: tax policies and other by president like Donald Trump that
Speaker 3: could essentially feel some growth and also feel some inflation.
Speaker 6: Well, Carol, you're absolutely right about that. And interestingly, that's
Speaker 6: that's a little bit why I believe that the Fed.
Speaker 6: The FED would be reluctant not to cut when they
Speaker 6: announce tomorrow. They don't want to be seen as anticipating
Speaker 6: the economic result of some of the policies that President
Speaker 6: elect Trump has announced. Obviously tightening up the border deporting posts,
Speaker 6: which was wages up create instability in the jobs market
Speaker 6: and will also send up prices, not only the one
Speaker 6: time price site from the tariff, but also the instability
Speaker 6: that is created in the supply chain, which then contributes
Speaker 6: to ongoing inflation.
Speaker 4: Steve the summary of economic projections. I know certainly investors
Speaker 4: will be focused on that tomorrow.
Speaker 6: What do you expect, Well, I expect that the Fed
Speaker 6: is going to be pretty steady on that. They've they've
Speaker 6: been a little bit more, a little bit less optimistic
Speaker 6: along the way than we would have thought. But certainly
Speaker 6: for the unemployment number to trend toward five percent as
Speaker 6: we get into twenty twenty five. I think that's very realistic,
Speaker 6: even in the labor market that we have right now,
Speaker 6: and on inflation, I think they're just going to go
Speaker 6: Their assumption is going to be as if there were
Speaker 6: no changes in economic policy going forward. And that's just
Speaker 6: part of the dance that they need to be in
Speaker 6: right now so as not to be walking in or
Speaker 6: anticipating or trying to have any commentary about what the
Speaker 6: new Trump administration is likely to do.
Speaker 4: Well, So should we take should we take the summary
Speaker 4: of economic projections tomorrow with an even bigger grain of
Speaker 4: salt than we usually do, just because we don't know
Speaker 4: what the new administration will be able to implement in
Speaker 4: what timeline.
Speaker 3: They're also slippery, right, They can put them out there
Speaker 3: and then they're out there, and then the next day
Speaker 3: something could happen and they just don't apply anymore.
Speaker 6: Right, That's exactly right. And so yes, what they put
Speaker 6: out tomorrow is their thought about if nothing changed, where
Speaker 6: would we be? Yeah, And that's I mean, that's fair
Speaker 6: for what their job is, But in terms of practical
Speaker 6: application or actionable information, it's not particularly helpful.
Speaker 3: As you point out, Hey, listen, one last question before
Speaker 3: you go, you guys kill Points of Wealth Advisor. I
Speaker 3: am curious since the election, as we get ready to
Speaker 3: wrap up the year, which plain vanilla old US docs
Speaker 3: have done just fine for a second year in a row.
Speaker 3: What are you hearing from your clients? Are the kill
Speaker 3: Point clients, what's top of mind for them? Is it
Speaker 3: the new administration?
Speaker 1: Is it?
Speaker 3: I don't know, moving cash into equities? I don't know
Speaker 3: what is it?
Speaker 6: Well, there's a generally positive expectation for twenty twenty five,
Speaker 6: and the data support that as we look forward absent
Speaker 6: some monumental or tectonic change, So that's a positive thing.
Speaker 6: But we certainly encourage clients to have available sooner rather
Speaker 6: than later the amount of cash they think that they're
Speaker 6: going to need to spend in twenty twenty five, so
Speaker 6: that if there is a correction, even if it's short lived,
Speaker 6: that they're not in a position having to sell assets
Speaker 6: when the prices are down.
Speaker 3: All right, Good to know and always good to check
Speaker 3: in with you. Be well, Happy holidays, Marry Christmas. Steve Skanky,
Speaker 3: Chief Economic advisor at the Wealth Advisor, keell Point. Steve
Speaker 3: is a former US Treasury in White House National Security
Speaker 3: Council staff member, and yeah, giving us some insight on
Speaker 3: tomorrow's ED.
Speaker 5: Meeting and looking past tomorrow.
Speaker 4: On Friday morning, we'll hear from Mary Daily seven thirty
Speaker 4: am Wall Street time of the San Francisco Federal Reserve.
Speaker 4: It'll be her first TV interview since the FED meeting,
Speaker 4: so be sure to tune into that Friday morning, seven
Speaker 4: thirty Wall Street Time.
Speaker 5: On Bloomberg TV and radio.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm. Easter Listen
Speaker 2: on Apple car Play and then Broud Auto with a
Speaker 2: Bloomberg Business app, or watch us live on YouTube.
Speaker 3: Well, the US, in case you hadn't noticed, is experiencing
Speaker 3: a surge and power demand, with electricity consumption expected to
Speaker 3: climb almost sixteen percent over the next five years. Why,
Speaker 3: you may ask.
Speaker 5: A few factors?
Speaker 4: Is it because we're all getting EV's I don't think so.
Speaker 5: I could have soon to do with it.
Speaker 4: A few factors and drivers of that demand, including data
Speaker 4: centers evs AI welcome everybody to the New Economy with
Speaker 4: more on what may be the next supply demanded. Balance
Speaker 4: are two killer members of our Bloomberg News team who
Speaker 4: reported out this story. They are Bloomberg Newspower and Renewable
Speaker 4: Energy editor Will Wade, also with Bloomberg News Energy and
Speaker 4: Climate Disasters reporter Josh Saul, both here in our Bloomberg
Speaker 4: BusinessWeek studio. Well, I want to start with you and
Speaker 4: get an idea for consumption and where it exactly is
Speaker 4: coming from. Is it all AI or the push to
Speaker 4: move away from natural gas.
Speaker 5: Or heating and cooling? Is that part of it? You
Speaker 5: know what's coming from?
Speaker 7: It's all of it, and it's all happening all of
Speaker 7: a sudden. So we've seen cloud computing, you know, everyone
Speaker 7: wants to put all your photos and your files up
Speaker 7: in the cloud. That's driving data centers, a lot of
Speaker 7: data centers. And then all of a sudden, the same
Speaker 7: big tech companies are starting to do AI and that's
Speaker 7: an enormous use of power. So we've got data centers
Speaker 7: and then AI data centers, and then we've got the
Speaker 7: push to electrify everything. We want to use electric heating
Speaker 7: in your house instead of gas. We want to use
Speaker 7: electricity for your instead of gasoline. Where you've got factory
Speaker 7: these that are trying to use electricity for industrial heat
Speaker 7: instead of gas or coal. So it's just coming from
Speaker 7: every direction. But the crazy thing is we didn't really
Speaker 7: see this coming until about a year ago. So the
Speaker 7: utilities that build power plants, which takes years, weren't really
Speaker 7: planning for it that effectively. So now there's a potential
Speaker 7: looming shortage of electricity.
Speaker 3: Which makes me wonder should we just stop talking about
Speaker 3: the promise of AI and basically because we're not going
Speaker 3: to have enough power to meet the demand, Like, should
Speaker 3: we just stop it already? Because the expectations, the euphoria
Speaker 3: will is not going to be able to be met
Speaker 3: so easily or quickly, you know what the power demands.
Speaker 7: I'm not so worried about running out of power, like
Speaker 7: you turn on the light switch and there's no electricity
Speaker 7: for the lights. What I'm worried about is people not
Speaker 7: working for clean energy, so we're going to see electricity
Speaker 7: from anywhere they.
Speaker 2: Can get it.
Speaker 7: We've got people building more gas plants than we've seen
Speaker 7: in a long time. We got people that promised to
Speaker 7: shut down coal plants, now they're going let's keep those
Speaker 7: open a little longer. Yeah, Joshua about the gas plants
Speaker 7: a lot.
Speaker 8: Well, tell us about that, right, So there's a concept
Speaker 8: I wanted to bring up because I want to get
Speaker 8: I want to get listeners familiar with it. And it's
Speaker 8: baseload power. So the deal with wind and solar power
Speaker 8: is that it's intermittent, right, It's when the when the
Speaker 8: wind is blowing, when the sun is up, and it's
Speaker 8: very complicated to arrange a grid with a lot of
Speaker 8: clean energy sources because you have to balance the grid
Speaker 8: at all times. And when people wake up in the morning,
Speaker 8: they need the electricity running so they can run their
Speaker 8: appliances and get ready for their day. And sometimes if
Speaker 8: the sun isn't up at that point, that makes it tougher.
Speaker 8: What gas is really good at a big gas power
Speaker 8: plant is that it's baseload power just produces pretty close
Speaker 8: to the same amount of power all the time. Gas
Speaker 8: also produces carbon, which makes it a climate issue, which
Speaker 8: is what Will's talking about. But we had the CEO
Speaker 8: of g Vernova in recently and he basically said, as yeah,
Speaker 8: our wind sales are pretty flat, but our gas business
Speaker 8: is going bananas because they build the big gas turbines
Speaker 8: that uh, that power plants use to generate generate the power,
Speaker 8: and they've increased manufacturing and they're selling huge amounts of
Speaker 8: these gas turbines because that's what data centers want.
Speaker 5: He told us.
Speaker 8: Nobody's planning for anything other than twenty four to seven
Speaker 8: power usage.
Speaker 4: Is there a way that we can offload and by we,
Speaker 4: I mean the United States can offload some of this
Speaker 4: electricity usage, Josh outside of the country where electricity is
Speaker 4: more abundant in the sense, build some of these server
Speaker 4: farms in other places where there isn't an issue on
Speaker 4: the grid.
Speaker 8: It's it's complicated, it's hard to do. I mean with
Speaker 8: with data centers. It's hard because some things that are
Speaker 8: operating on the data center is certainly any anything related
Speaker 8: to national security. And even lots of companies they want
Speaker 8: their they want their data in the US, even in
Speaker 8: you know, you imagine then.
Speaker 6: They're shoring on.
Speaker 3: Shoring is like certainly something that you see with the
Speaker 3: day to centers. They want it nearby.
Speaker 8: Yeah, I mean, imagine a healthcare company. They don't want
Speaker 8: all their data stored in some country that they don't
Speaker 8: necessarily trust, so you run into issues with that. And
Speaker 8: as far as moving other users of power. Can't really
Speaker 8: move homes overseas without moving the family there, obviously, that's complicated.
Speaker 8: And then a big factory. You know, we want the
Speaker 8: big factory here because we want the jobs and we
Speaker 8: want the stuff produced here, so those power demands are
Speaker 8: also on shore.
Speaker 3: There's so many these that are coming to mind. Remind
Speaker 3: us guys about the rules and regulations that are in
Speaker 3: place in terms of carbon emissions, that the kind of
Speaker 3: commitments that companies and individuals or institutions have to abide
Speaker 3: by under the current administration or under the current rules,
Speaker 3: and how a new administration might change some of that.
Speaker 7: Okay, Well, when Biden came into office, he said he
Speaker 7: wanted to have a one clean power grid by twenty
Speaker 7: thirty five, and they set a twenty fifty net zero target.
Speaker 7: But these aren't really binding. These were goals, and I'm
Speaker 7: seeing increasing pessimism about reaching those goals, and.
Speaker 4: They don't even seem very close in the sense of
Speaker 4: years like those are pretty far.
Speaker 7: Up anyway, right, Yeah, But yeah, And we had so
Speaker 7: many companies, especially in like maybe the last five years,
Speaker 7: come out with their own internal net zero goals, and
Speaker 7: a lot of them are like really impressive and really ambitious.
Speaker 7: We're going to you know, utilities that promise to stop
Speaker 7: burning coal, big tech companies that said all of our
Speaker 7: operations are going to be carbon free.
Speaker 5: Yeah, that was before chat GPT.
Speaker 7: That's the problems. So these things were not binding, and
Speaker 7: now we're seeing a lot of companies kind of going
Speaker 7: radio silence on their goals, or some of them are
Speaker 7: just straight out saying, yeah, we're not going to make that.
Speaker 3: Does it matter if it's a global company in other words,
Speaker 3: because it's got a deal by global rules and global regulations,
Speaker 3: or no, not necessarily in terms of hitting carbon emissions,
Speaker 3: you know, reductions.
Speaker 8: The utilities, so the power companies actually producing their power,
Speaker 8: they're here, so their goals are here. We're already seeing
Speaker 8: those get kind of a little eroded around the edges.
Speaker 8: You know, companies saying, well, we said we're going to
Speaker 8: be done with coal by twenty thirty, we're actually going
Speaker 8: to be running these coal plants a little longer, but
Speaker 8: we're still sticking to our twenty fifty net zero goal.
Speaker 8: We're kind of seeing those eroded a little bit. But
Speaker 8: the way one one energy analyst put it to me recently,
Speaker 8: as he said, I mean, unless unless the company's goals
Speaker 8: are tied to some kind of state law, they're not
Speaker 8: really worth the paper they're written on, because they'll just
Speaker 8: keep getting eroded, and then as it gets closer to
Speaker 8: twenty fifty, they'll get you know, maybe maybe completely tossed
Speaker 8: out the window.
Speaker 5: Hey Will, what about nuclear? Where does nuclear come into this?
Speaker 3: Which is something like I feel like in the last
Speaker 3: two years, we all of a sudden here everybody talking
Speaker 3: about nuclear.
Speaker 4: Yeah, but I mean you've spent a lot of time
Speaker 4: business career facilities. Not so easy to just put a
Speaker 4: whole put a shuffle.
Speaker 5: In the ground and build one.
Speaker 8: No, nuclear is great.
Speaker 7: I mean Josh was talking about baseload power. You know
Speaker 7: it's even better for baseload nuclear it runs like ninety
Speaker 7: seven ninety nine percent of the time over the course
Speaker 7: of a year. You know, what's to not create about.
Speaker 7: Nuclear takes years to build. So we've got all of
Speaker 7: these companies seriously, Like the last couple of months, a
Speaker 7: lot of the big temp, big tech companies have announced
Speaker 7: these really big deals to use nuclear power to power
Speaker 7: their data centers in twenty thirty something when they're built,
Speaker 7: because there aren't any extra nuclear power plants laying around
Speaker 7: and it's going to take years to build them, and
Speaker 7: they're working with companies that are developing new technologies, so
Speaker 7: they hope they'll be ready in the next five years,
Speaker 7: but it's you know, there's always the chance they can
Speaker 7: get delayed, so in the meantime there's gonna be a
Speaker 7: lot of gas.
Speaker 3: It's kind of ironic, right, the move to clean energy
Speaker 3: is kind of complicating this process, right in terms of
Speaker 3: wanting as you said, the electrification of so much that
Speaker 3: it's making it difficult to kind of hit these targets.
Speaker 3: And I'm looking at, you know, a headline from today
Speaker 3: California reeling from extreme weathers, the wildfire risks return, and
Speaker 3: they also talk about another atmospheric river up in northern California.
Speaker 3: I mean, as we are talking about this, we continue
Speaker 3: to see it firsthand and increasingly the impact of climate change.
Speaker 3: So I just wonder kind of where this all leads us.
Speaker 7: Yeah, that's that's that's the right question, and the answer is,
Speaker 7: we don't know. We are seeing climate disasters in real time.
Speaker 7: In the summer it's too hot now in the fall
Speaker 7: and the winter, we're getting too much rain, and you're
Speaker 7: NK City, which are like unheard of, like yeah, make
Speaker 7: for great sunsets, but it smells bad and it Yeah,
Speaker 7: we're seeing the climate really has been affected. And that's
Speaker 7: the right question to ask, because yeah, all these factories
Speaker 7: are trying to decarbonize, but then where do you get
Speaker 7: the electricity? You know, the people to point out, Oh,
Speaker 7: you think you're so green because you've got an EV,
Speaker 7: but you're powering it with coal power. So there's a
Speaker 7: lot that has to happen. It's not an easy switch.
Speaker 4: Well, Josh, this is your beat, I mean, your energy
Speaker 4: and climate disasters reporter. So what is the fundamental connection
Speaker 4: between these two things?
Speaker 8: I see it. I see it that of course, the
Speaker 8: factories that produce the things we need for clean energy
Speaker 8: require power, but anything that we produce requires power. So
Speaker 8: I think overall that transition is still good for decarbonization,
Speaker 8: is still good for putting less carbon into the atmosphere
Speaker 8: and hopefully at least not accelerating those kinds of wildfires
Speaker 8: and those other things we're talking about. And I think
Speaker 8: that's more important.
Speaker 4: Than yeah, well, okay, so we'll come on in here
Speaker 4: because you mentioned the grid, and this is something that
Speaker 4: we haven't spent a lot of time talking about the
Speaker 4: health of the grid, and it's sort of this patchwork
Speaker 4: at least here in the United States, where you know
Speaker 4: you have Texas always comes to mind, for example, given
Speaker 4: the freeze that they saw a few years ago in
Speaker 4: the failure of the grid, where does the stability of
Speaker 4: the grid come into the conversation?
Speaker 7: That's another huge issue. A lot of the grid is
Speaker 7: not so stable, you know, a lot of the wires
Speaker 7: have been standing there for years and when a hurricane
Speaker 7: comes through, they get knocked down, saying they want to
Speaker 7: underground the wires because it's more reliable, which is a
Speaker 7: great idea, but expensive. You use the word patchwork. I
Speaker 7: think that's a pretty good word, especially because it's multiple
Speaker 7: systems operated by so many different companies and so many
Speaker 7: different jurisdictions with different rules. It's complicated.
Speaker 3: Well, we know it's like.
Speaker 8: That, Josh.
Speaker 3: I also do wonder is there something else within the
Speaker 3: all the energy space or new energy space that we're
Speaker 3: not talking about. My husband constantly is like, what about
Speaker 3: hydrogen fuel cells? Like that makes sense to me, Like
Speaker 3: I'm just curious, is there something that I don't know
Speaker 3: whether it's in the next year, or next six months
Speaker 3: or next two years that we start talking about that
Speaker 3: might help the situation. And just got about twenty five seconds.
Speaker 8: I think a lot of those things, fusion, hydrogen, a
Speaker 8: lot of those things are pretty far off. I think
Speaker 8: right now it kind of is just back to the
Speaker 8: basics that wind and solar takes a lot of takes
Speaker 8: some pressure off of the grid. Yeah, but yeah, right
Speaker 8: now it just looks like the next year looks like
Speaker 8: just more gas.
Speaker 3: I want to say, are you guys optimistic?
Speaker 5: No, no, no, but you'll be.
Speaker 7: Busy no Thanksgiving, my family asks me, like, what about
Speaker 7: this climate thing? Are we going to solve it? I'm like,
Speaker 7: I hope so, but I'm not optimistic.
Speaker 5: You're just there with the bad news.
Speaker 3: It gets worrisome. Hey guys, you keep us though up
Speaker 3: to speed. Thank you both so much. Will Wade Power
Speaker 3: Renewable Energy editor, and of course Josh Saw Energy and
Speaker 3: Climate Disasters reporter. Here at Bloomberg News, you're.
Speaker 2: Listening to the Bloomberg Business Week podcast. Listen live each
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Speaker 4: It is time for another edition of Bloomberg Plugged in
Speaker 4: your weekly look at evs and Carol has always no
Speaker 4: shortage of goings on when it comes to the world
Speaker 4: at bev's, it's so much going on.
Speaker 5: You pointed out this story to me earlier today. You
Speaker 5: were like, did you see this?
Speaker 3: I'm kind of blown away by this.
Speaker 4: HANDA Nissa are preparing to start negotiations on any possible merger,
Speaker 4: which could ultimately be expanded to include Mitsubishi Motors. This
Speaker 4: is according to a report from the Nick and Japan
Speaker 4: merger designed to help the companies compete against rivals and
Speaker 4: evs such as Tesla and Chinese automakers.
Speaker 3: Listen, I think about this right, What kind of consolidation
Speaker 3: might have to happen in order for all of these
Speaker 3: auto companies to be competitive. We also do want to
Speaker 3: point out that Peter Navarro, who is set to become
Speaker 3: the top trade advisor to President elect Donald Trump, saying
Speaker 3: earlier today on CNBC that policies that have been favorable
Speaker 3: to the EV space may not be around during a
Speaker 3: second Trump White.
Speaker 9: House and then on the demand poll side, what we
Speaker 9: have is first of all those green mandate, that EV
Speaker 9: mandate that is gone.
Speaker 2: That's gone, like the win.
Speaker 9: That's going to help new prices at the price level.
Speaker 3: That of course is Peter Navarro earlier on CNBC. That
Speaker 3: was earlier today on CNBC. Just a reminder, President Biden
Speaker 3: has put into place policies that support the electric vehicle
Speaker 3: space and has called for reductions in carbon emissions. So
Speaker 3: that is some of what the President elect, Donald Trump
Speaker 3: calls the Biden EV mandate.
Speaker 4: Patrick Sullivan as CEO at ev Realty, he watches this
Speaker 4: stuff closely. He's back with us from San Francisco. A reminder,
Speaker 4: ev Realty has seven thousand EV chargers installed. It's built
Speaker 4: seventy supercharger hubs. The focus is on powering commercial fleet's. Patrick,
Speaker 4: good to have you back with us. Remind everybody where
Speaker 4: exactly you play when it comes to the EV ecosystem
Speaker 4: and specifically what types of trucks you're hoping are electrified.
Speaker 10: Sure, well, Carolyn, tim it's nice to be back. It's
Speaker 10: been really quiet on the Western front for DS since
Speaker 10: we spoke in Marsh.
Speaker 5: I'm surprised to be here.
Speaker 10: And tim just to I, I appreciate the flattery. Members
Speaker 10: of my team have built seventy superchargers, superchargers or Tesla's product,
Speaker 10: So I would love to say that I built seventy
Speaker 10: super hubs, but.
Speaker 5: You wouldn't be here right now. You'd be out in
Speaker 5: the field.
Speaker 10: But just as a reminder for what EV reality is
Speaker 10: focused on, we build large scale EV charging hubs principally
Speaker 10: for commercial fleets, so fleets operating medium and heavy duty
Speaker 10: electric trucks are approached. And it's really been consistent from
Speaker 10: the start is to find places on the grid that
Speaker 10: have all the power that those large fleets need to
Speaker 10: secure the power to secure those pieces of property, and
Speaker 10: then to develop them into these logistics hubs.
Speaker 4: And principally well remind us who has the fleets right now,
Speaker 4: because here in New York you see a lot of
Speaker 4: the Amazon Rivian vans. You can see it on the
Speaker 4: screen right now, perfect timing driving around is that a
Speaker 4: customer of yours.
Speaker 5: They are as are the larger trucks.
Speaker 10: And so here in California, where my company is based,
Speaker 10: a lot of the heavier duty or tucks that are
Speaker 10: transitioning first are what's referred to as drayage trucks. So
Speaker 10: these are trucks picking up a container from one of
Speaker 10: the many seaborn or railports in the state taking them
Speaker 10: to warehouses.
Speaker 5: Our hubs also charge sort.
Speaker 10: Of last mile delivery vans and vehicles that are going
Speaker 10: out to a home or a place of business for delivery.
Speaker 4: If people haven't seen a lot of I just want
Speaker 4: to jump in. I'm sorry to keep interrupting, but I
Speaker 4: have so many questions and I'm not going to get
Speaker 4: them all because now Carol has a lot of questions too.
Speaker 4: Who manufactures some of these trucks? If we haven't seen
Speaker 4: them out on the road, who makes.
Speaker 10: These So you're starting to really see them out on
Speaker 10: the road. Here in California. There's over fifteen hundred medium
Speaker 10: and heavy duty sorry, Class seven and Class eight electric
Speaker 10: trucks operating. Some of the biggest manufacturers for those vehicles
Speaker 10: or companies like Volvo, Daimler International pack Car, These are
Speaker 10: the companies that also manufacture the vast majority. I think
Speaker 10: those four in particular are over eighty percent the market
Speaker 10: share for for Class eight trucks, and so these are
Speaker 10: long term established companies that are also now delivering ev
Speaker 10: trucks into the market.
Speaker 3: Patrick, I got to say, I've been listening to you.
Speaker 3: You sound rather subdued. Tell me what your outlook is
Speaker 3: on the EV world. I think we're all trying to
Speaker 3: assess what a new administration means. Joe Biden and his
Speaker 3: administration have certainly put initiatives in place, including capital and
Speaker 3: spending infrastructure that is very supportive of the EV world.
Speaker 3: But how are you looking at a new administration and
Speaker 3: what that might mean for this space and for you
Speaker 3: specifically in your company.
Speaker 10: Sure, so it's look, elections have consequences both sort of
Speaker 10: for individuals as well as companies and industries, and I
Speaker 10: think that certainly the change in the administration is going
Speaker 10: to affect the conversation around EV's. We're seeing it already.
Speaker 10: I think the reality is that we're well past the
Speaker 10: sort of the tipping point for evs generally, but really
Speaker 10: thinking about the larger scale commercial trucks that do the
Speaker 10: work that move sort of the freight's movement, and so
Speaker 10: my philosophy is certainly sitting here in California. Forty percent
Speaker 10: of the seabound freight containerized freight into the United States
Speaker 10: comes through the Port of La and Long Beach. That's
Speaker 10: almost twenty million TuS a year. Half of that is
Speaker 10: consumed here in the state of California. There's a whole
Speaker 10: lot of focus on sort of cleaning up and making
Speaker 10: that supply chain more efficient. That doesn't just mean electric trucks.
Speaker 10: That means more efficient sort of logistics and routing and
Speaker 10: timing for report. But there's a whole lot of really
Speaker 10: important work that is well on its way, certainly here
Speaker 10: in California and frankly across the country. It's just not
Speaker 10: politically in vogue to talk about it too much, right.
Speaker 6: All right?
Speaker 3: So still up, be just real quickly. You're still okay,
Speaker 3: positive at least for the commercial Yeah.
Speaker 10: Do I think that this is certainly going to have consequences?
Speaker 5: Absolutely?
Speaker 10: I think the broader question and it sounds like you
Speaker 10: guys have covered this even earlier today, and some of
Speaker 10: the pieces the implications to seating leadership in EV's generally
Speaker 10: for the US, that's what's consequential. We currently have the
Speaker 10: largest EV manufacturing company on the planet here in the US.
Speaker 5: Why stop now?
Speaker 10: We invented mass production of the vehicle one hundred and
Speaker 10: sixteen years ago. I think it's pretty telling when the
Speaker 10: CEO of Ford Motor Company didn't want to give back
Speaker 10: the EV that he's been driving for the last six months,
Speaker 10: the Chinese EV that he has been driving for the
Speaker 10: last six months because it was fundamentally superior product and
Speaker 10: they're going to eat our lunch.
Speaker 3: Patrick. So I do think, you know, it's interesting listening
Speaker 3: to you. As you said, we've been covering this, we've
Speaker 3: been thinking about alternative energy, what it means under a
Speaker 3: new administration, combat change goals and so on and so forth.
Speaker 3: But it does sound like from what you're saying, there's
Speaker 3: almost a separation in terms of the commercial space, which
Speaker 3: has already made its commitments and it's spending and it's
Speaker 3: going to kind of keep going when it comes to
Speaker 3: probably alt energy and EV vehicles versus maybe what we're
Speaker 3: seeing on the consumer side of things. Is that fair
Speaker 3: help me out in terms of, you know, kind of
Speaker 3: from your vantage point.
Speaker 10: Well, I think it's both. I think really the consumer side, certainly,
Speaker 10: the impact of losing EB tax credit will be will
Speaker 10: be felt. But again, keep in mind, over one fourth
Speaker 10: of all new vehicles so over the first three quarters
Speaker 10: of the year in California have been EV. It's about
Speaker 10: nine percent nationwide, it's twenty five percent in China, it's
Speaker 10: approaching fifteen percent in Europe. I think you're going to
Speaker 10: see that continue. And frankly, those vehicles make sense economically today.
Speaker 10: On the trucking side, I think what is going to
Speaker 10: change and really has been my company's focus from the start.
Speaker 10: You can't convince the commodity business to switch to evs
Speaker 10: if the trucks are ways too expensive and all of
Speaker 10: a sudden, moving goods becomes more expensive, and so this
Speaker 10: transition really has to be economic. It has to make
Speaker 10: sense for the companies. It has to make sense for
Speaker 10: the shippers who are paying the freight rates. It can't
Speaker 10: be done sort of as a subsidy or just because
Speaker 10: it's green.
Speaker 5: And that's where I see.
Speaker 10: I mean, there are freight transport companies here in California
Speaker 10: moving goods that they win on brokerage markets profitably using
Speaker 10: EV trucks. That's really positive when you think about sort
Speaker 10: of science.
Speaker 5: For this industry growth.
Speaker 4: How do you make sense Patrick of Donald Trump's stance
Speaker 4: on evs and what we've heard from members of the
Speaker 4: incoming administration, given that Elon Musk is so close to
Speaker 4: him right now.
Speaker 10: Well, as you said at the start, if I had
Speaker 10: built seventy super charger stations, I probably wouldn't have been
Speaker 10: in the side of the conversation.
Speaker 5: So far to give from me to read into.
Speaker 10: That, look, I think at the end of the day,
Speaker 10: I think that rational, sort of clear headed thinkers are
Speaker 10: going to make smart business decisions, whether it's around like
Speaker 10: duty evs, all of the manufacturing that's been deployed. I
Speaker 10: think there's over one hundred billion dollars of EV battery
Speaker 10: factories under construction right now in places like Georgia and
Speaker 10: South Carolina and Indiana and Kansas and Ohio. I suspect
Speaker 10: those are going to be really important considerations for the administration.
Speaker 10: And certainly mister Musk is building a couple billion dollar
Speaker 10: factory here in Sparks, Nevada to deliver the Tesla Semi,
Speaker 10: which if he does move forward with that will be
Speaker 10: another category killer, and I have to imagine that's part
Speaker 10: of his calculus as well.
Speaker 3: So, I mean, in terms of how you see Patrick,
Speaker 3: his relationship is having the ear of the President elect
Speaker 3: Elon Musk, that is, of Donald Trump, at least for
Speaker 3: the moment, appears to be maybe a positive thing. For
Speaker 3: the EV industry overall.
Speaker 5: I'd like to think so.
Speaker 10: I think obviously Elon has a number of different and
Speaker 10: really interesting business interests beyond just Tesla. But Tesla is
Speaker 10: what allows all of his interests to grow. Uh and
Speaker 10: certainly with the technology that he's pioneered, Like the largest
Speaker 10: car company in the world at least.
Speaker 5: For right now is Tesla.
Speaker 10: That would seem to be a perch that you'd want
Speaker 10: to leverage, not not waste.
Speaker 3: All right, we're gonna leave it there, Patrick, Thank you
Speaker 3: so much. Patrick Sullivans, CEO of ev Realty.
Speaker 6: M brother macome.
Speaker 5: The journal.
Speaker 3: Now about you let me drive?
Speaker 5: Oh no, no, no, no, he's going, Honry please gravel, I
Speaker 5: want to drive.
Speaker 9: It's good question.
Speaker 2: This is the drive to the clothes down.
Speaker 8: Coming well by.
Speaker 5: It on Blueberg Radio.
Speaker 3: All right, TikTok, everybody about tenants left in today's trading session.
Speaker 3: Shortly we're gonna head over to our TV colleagues cutting
Speaker 3: down to the clothes on this Tuesday, December seventeenth. I
Speaker 3: just want to point out that stocks a little bit
Speaker 3: of a move to the upside in the last I
Speaker 3: don't know, ten fifteen minutes. We're still right across the
Speaker 3: board here on those major equity averages. But it seems
Speaker 3: like a little bit of buying here into the clothes.
Speaker 5: Yeah.
Speaker 4: The DAL though down for its longest losing streak going
Speaker 4: back to nineteen seventy eight.
Speaker 3: Yeah, I don't know.
Speaker 5: Does that meant something? You know?
Speaker 3: I think all bets off until we hear from the
Speaker 3: Fed see what they have to say, and then I
Speaker 3: don't know. I think we have to get into the
Speaker 3: new year and find out more about policies. Let's see
Speaker 3: what our next guest has to see to say, Amy Magnatis,
Speaker 3: she's co chief investment officer of Atagenotice Capital out of Jete.
Speaker 5: It's all Greek to me, I think.
Speaker 3: I said it wrong. Say it for us, Tim and
Speaker 3: I have been going back too at a Genos. Thank
Speaker 3: you so much. It's been a little bit of a
Speaker 3: crazy day. Good to have you here with us. There
Speaker 3: is a lot going on, there's a lot of speculation
Speaker 3: about twenty twenty five. With confidence, what do you say
Speaker 3: about the current market environment? And then do you feel
Speaker 3: like you have visibility of kind of where we go
Speaker 3: in twenty twenty five.
Speaker 1: I think we have a little bit of visibility over
Speaker 1: the near term, I think as we get into the
Speaker 1: first quarter of twenty twenty five, it's a little more unclear.
Speaker 1: I guess I would say, so we're pretty positive on
Speaker 1: equities for the short term here. I think from market
Speaker 1: seasonality perspective, it's it's a good backdrop for equities into
Speaker 1: the year end and then also through January. But I
Speaker 1: think as we hit January and we believe the Fed,
Speaker 1: you know, we'll we'll cut here, and I think, uh uh,
Speaker 1: you know, it's to be determined next year whether we'll
Speaker 1: get the full rate cuts that we had anticipated. But
Speaker 1: as you and I think you just mentioned it to
Speaker 1: the just policy uncertainty as we hit into the new year.
Speaker 1: So there's been a lot of let's say, optimism on
Speaker 1: the administration and what could come, you know from maybe
Speaker 1: deregulations pick up and investments deal activity, things like that,
Speaker 1: but we need to see some some follow through on that.
Speaker 1: There'll certainly be some uncertainty as we start debating the
Speaker 1: extension of the tax cuts that we'll have to be
Speaker 1: dealt with at some point in the year. So I
Speaker 1: think we're positive in the short term, but a little
Speaker 1: more concerned as we look a little bit further out
Speaker 1: into twenty twenty five.
Speaker 4: Amy, Carol brought my attention to a fund manager survey
Speaker 4: from Bank of America that says that fund managers have
Speaker 4: been reducing cash holdings to a record low, pouring money
Speaker 4: into US stocks, and that's triggering a metric that Bank
Speaker 4: of America says maybe his signal to sell equities. So
Speaker 4: this contrarian thing that's kind of happening right now.
Speaker 5: Do you see that?
Speaker 1: We do as well.
Speaker 7: So that's one of the we have.
Speaker 1: We look at a number of market indicators here at
Speaker 1: the Genos we called our signal. One of the signal
Speaker 1: factors that's flashing a little bit red for US is
Speaker 1: investor sentiment. And to your point on that report, we're
Speaker 1: seeing massive flows into equity ETF and when you look
Speaker 1: at investor survey data as well, the number of goals
Speaker 1: are increasing, So that is a bit of a red
Speaker 1: flag for US. I do think that market seasonality outweighs
Speaker 1: that in the short term, as I mentioned, maybe through January,
Speaker 1: but that is a concern for US as we get
Speaker 1: into midway through the first quarter, and you know, will
Speaker 1: the market be able to live up to expectations.
Speaker 3: Amy, I do wonder is there kind of a mentality
Speaker 3: out there among investors or even strategists and maybe for
Speaker 3: good reason why that US still kind of the best
Speaker 3: market in town if you look around the globe, because
Speaker 3: there is still growth. We're getting inflation. It seems like,
Speaker 3: you know, certainly way down from where it was a
Speaker 3: year ago. But growth is a big thing, right, a
Speaker 3: big factor that's going to support corporate earnings growth. I
Speaker 3: just I wonder if that's a big part of investor
Speaker 3: thinking and with good reason, and strategist thinking and with
Speaker 3: good reason, And.
Speaker 1: That's our positioning as well. I mean, we've been favoring
Speaker 1: the US all throughout twenty twenty four, and even we
Speaker 1: just shifted some allocations in our portfolio and November post
Speaker 1: selection and actually went underweight US international equity relative.
Speaker 5: To the US.
Speaker 1: And I think one of the to your point, relative
Speaker 1: growth prospects are better in the US. It's a little
Speaker 1: more clarity. I think there's a lot of political uncertainty
Speaker 1: elsewhere as well. Also, I think the administrations are going
Speaker 1: to be a little bit more pro US dollar, and
Speaker 1: so that leads us to be more focused on US
Speaker 1: over international.
Speaker 5: What are some specific sectors that you're optimistic.
Speaker 1: About we are don't have it currently any sector biases,
Speaker 1: I will say we like small cap US stocks right now,
Speaker 1: so that's one of our larger tilt in our portfolio.
Speaker 1: So we think small cap attractive valuations relative to US,
Speaker 1: relative to the large cap equities relative to their own history.
Speaker 1: We small cap companies tend to be more US focused,
Speaker 1: so going to the same point about favoring US over
Speaker 1: international equities, also lower rates would benefit small caps, So
Speaker 1: we like small caps, We like active managers in that space.
Speaker 1: And then we have a couple of thematic exposures that
Speaker 1: we have in our portfolio today. I mentioned not really
Speaker 1: liking you international equities. Of international we kind of view
Speaker 1: Japan as kind of the best house in a bad
Speaker 1: neighborhood there, so we do like Japan. Infrastructure in the
Speaker 1: US is a theme, uh. And then we recently introduced
Speaker 1: a new theme into our portfolios uranium. It's a small position.
Speaker 1: We look to build it over time, but we think
Speaker 1: that's an attractive opportunity for investors as we need increased
Speaker 1: demand for nuclear energy, not only just from just broad
Speaker 1: energy demand, but also the data center growth for AI
Speaker 1: technology needs additional power and nuclear can provide that. And
Speaker 1: we've seen a number of large tech companies come out
Speaker 1: and talk about their plans to add to power somebody's.
Speaker 4: Data centers spent a lot of time talking about this,
Speaker 4: not just today, the last few months.
Speaker 5: It's pretty pretty remarkable.
Speaker 3: I do think, right, I wonder in terms of investment plays,
Speaker 3: like I think, okay, that's going to be a big
Speaker 3: one of twenty twenty five.
Speaker 5: Yeah, there's the energy and the energy infrastructure plays. Yeah, yeah,
Speaker 5: we'll see.
Speaker 4: I mean there's also like the bets that on these SMRs,
Speaker 4: these small modular reactors you know, have not come to
Speaker 4: fruition at this point.
Speaker 5: They haven't been built.
Speaker 3: Amy But does it take a while for that to
Speaker 3: I mean, I can get I understand why people are
Speaker 3: getting excited about nuclear power and so on to power
Speaker 3: all of the AI driven demand. But having said that,
Speaker 3: thirty seconds left here, is it kind of earlier in
Speaker 3: the game to make that investment play or if you
Speaker 3: if you make a bet, you better be patient.
Speaker 8: I think the latter.
Speaker 1: So we are. I think we're a little bit early.
Speaker 1: It is going to take time for this to play out.
Speaker 1: It's expensive, But I do think you want to be
Speaker 1: a little bit ahead of it, but that's why we'll
Speaker 1: look to build it over time and be in positions
Speaker 1: that are i would say more diverse FI so you
Speaker 1: get explosure not only to the uranum minors, but also
Speaker 1: those small modular reactors and other components of the theme.
Speaker 3: Amy, so appreciate checking in with you, Amy mgnatta. She's
Speaker 3: co chief investment officer at Athagenos Capital, joining us from
Speaker 3: Pennsylvania on this Tuesday.
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