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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple card playing and Broud Auto with the

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Speaker 1: Bloomberg Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: So let's get to the consumer confidence numbers coming in

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Speaker 2: for July at one hundred point three, although you had

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Speaker 2: June revised slightly lower. We're going to get the read

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Speaker 2: now with Dana Peterson, Chief Economists at the Conference Board.

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Speaker 2: I labeled this good but with a question mark. Can

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Speaker 2: you help me understand if this is a good report

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Speaker 2: bad report? What this means? I think it's kind of

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Speaker 2: a mixed report.

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Speaker 3: Yes, the headline ticked up a bit, but if you

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Speaker 3: look over the last two years, it's been basically been

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Speaker 3: moving around in the same range, it's been moving sideway.

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Speaker 3: So and really that headline is made up of five

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Speaker 3: different indicators, including thoughts about business environment, employment, and also income.

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Speaker 3: And certainly when you look at the present situation, consumers

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Speaker 3: are becoming less optimistic about the present situation, and they

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Speaker 3: have been kind of dour on expectations, even though the

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Speaker 3: expectations index ticked up a bit, it's still below eighty,

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Speaker 3: and eighty is kind of a signal of trouble.

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Speaker 4: So what is the history? What does it tell us

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Speaker 4: what consumers are going to actually do.

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Speaker 5: Well?

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Speaker 3: I think it's good to look at the guts of

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Speaker 3: the report where we ask them what are you planning

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Speaker 3: on doing about spending on goods and services? So with

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Speaker 3: respect to goods, for the most part, they are not

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Speaker 3: interested in buying homes or cars.

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Speaker 2: They were a little bit more.

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Speaker 3: Interested in buying appliances and also electronics like PCs and laptops.

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Speaker 3: But when it comes to spending on services, they're definitely downtrading,

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Speaker 3: and they're saying we're going to spend mainly on services

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Speaker 3: we need, not things we want, and we'll go to

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Speaker 3: will stream instead of going to the movies.

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Speaker 2: Oh that's interesting, Okay, So when except for Deadpool obviously,

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Speaker 2: when did you get an indication the survey of when

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Speaker 2: that stops, like how sensitive that reading in terms of

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Speaker 2: spending on services and downtrading might be to a rate

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Speaker 2: cut for example?

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Speaker 6: Well, we look at.

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Speaker 3: These measures on a six month moving average, because from

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Speaker 3: months to month they're pretty voluable, volatile and over the

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Speaker 3: last six months, it continues to weaken in terms of

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Speaker 3: buying durables. That makes sense because we know that durables

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Speaker 3: are expensive and also you have to finance them. We

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Speaker 3: did see in the Q two GDP report a pickup

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Speaker 3: in spending on durables, but I think it was also

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Speaker 3: because prices were lower, so consumers kind of jumped in there.

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Speaker 3: But really we're not seeing much in terms of a

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Speaker 3: big desire to buy durables, and certainly with services, they're

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Speaker 3: buying cheaper services.

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Speaker 2: All right, Danny, we appreciate thanks for the incident analysis. Aanipeterston,

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Speaker 2: chief economist at the Conference Board of joining US. No

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Speaker 2: table saws yet for John Tucker.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on applecar Play and rout

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Speaker 1: Say Alexa, playing Bloomberg eleven.

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Speaker 2: Thirty Alex alongside John Tucker. Paulsweeny is off today. This

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Speaker 2: is Bloomberg Intelligence Radio. We bring you all the top

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Speaker 2: news and business, economics and finance through are lens of

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Speaker 2: our Bloomberg Intelligence folks. They cover two thousand companies and

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Speaker 2: a one hundred and thirty industries all around the world.

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Speaker 2: We also have an amazing print team here at Bloomberg,

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Speaker 2: and they literally cover everything around the world, particularly when

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Speaker 2: it comes to money and politics. What's not to like

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Speaker 2: about that? Combo? Michael Smith is joining us now, senior

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Speaker 2: reporter on Bloomberg's national team is joining us on Ken

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Speaker 2: Griffin spending boatloads of money to put his stamp on

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Speaker 2: Trump's goop. Michael, walk me through what.

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Speaker 7: You learned, Well, what we learned is that Ken Griffin

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Speaker 7: is one of the most influential donors to the Republican

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Speaker 7: Party in America. In the last ten years or so,

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Speaker 7: he's donated almost two hundred and fifteen million dollars to

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Speaker 7: Republican causes and candidates, and this year alone, he's spending

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Speaker 7: tens of millions of dollars to back the Republican primary

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Speaker 7: candidates that he really likes that sort of share his conservative,

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Speaker 7: pro business views and sometimes that sort of clashes with

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Speaker 7: the Republican Party that Trump has has shaped, which is

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Speaker 7: much more populist in orientation.

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Speaker 4: Just to remind everybody who Ken Griffin is where he

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Speaker 4: gets his money from.

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Speaker 7: Yeah, so Ken Griffin is he's He's worth about forty

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Speaker 7: two billion dollars as of late. He's the founder and

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Speaker 7: owner of Citadel, which is a one of the largest

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Speaker 7: hedge fund and securities trading firms on Wall Street in

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Speaker 7: the world. Actually, and he's incredibly influential or in terms

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Speaker 7: of philanthropy, he gives a lot of money to a

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Speaker 7: lot of different causes. And in terms of politics, he's

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Speaker 7: quite outspoken Republican publican uh back or so to speak.

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Speaker 7: And he he he regularly zooms in on political issues

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Speaker 7: that he cares about and he backs it up with

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Speaker 7: his money.

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Speaker 2: Is this just a Trump thing or is this a

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Speaker 2: Republican ticket thing for Ken Griffin.

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Speaker 7: Well, it's really, he says. His goal is to get

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Speaker 7: people who elected, who will govern well, who will get

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Speaker 7: things done along, you know, in the areas that he's

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Speaker 7: that he's really interested in, like defense, promoting the American Dream,

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Speaker 7: he likes to say, which is a whole sort of

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Speaker 7: coterie of of economic policies that he believes in, and

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Speaker 7: not obstructing good legislation like he's he's given the candidates

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Speaker 7: who have challenged a lot of the you know, Freedom

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Speaker 7: Caucus members in the House who have been sort of

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Speaker 7: disruptive over the last few years. He doesn't seem to

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Speaker 7: want that kind of legislature in the Congress, so he's

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Speaker 7: directed his money at candidates along those lines a lot

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Speaker 7: of times. It it jibes with what Trump wants. He's

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Speaker 7: he's backed a lot of Trump endorsed candidates, but not

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Speaker 7: all the time. So he really seems to be forging

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Speaker 7: and says he's forging.

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Speaker 4: His own way. What does he say about Donald Trump

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Speaker 4: or does the money do the talking for him?

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Speaker 7: Well, according to the most recent disclosures that we've been

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Speaker 7: able to find, which are as of this month, actually

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Speaker 7: he hasn't given any money to directly to Trump, and

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Speaker 7: historically he's not He hasn't given money to Trump, and

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Speaker 7: he's you know, but he had you know, it's not

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Speaker 7: he hasn't come out directly against Trump. Uh he says

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Speaker 7: he's still deciding, I think, and still sort of to

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Speaker 7: be to be to be announced whatever stiff he takes

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Speaker 7: by election day. Uh So, but he's been quite careful

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Speaker 7: not to directly financed Trump's campaign, at least so far

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Speaker 7: from what we can see now.

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Speaker 2: It's easy to talk about, you know, Ken Griffin supporting

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Speaker 2: the GOP, but you know there's some billionaires also on

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Speaker 2: the Democratic side that also put a lot of money

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Speaker 2: into these super packs and stuff, right, that's correct.

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Speaker 7: This is not a Republican thing. And ever since, you know,

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Speaker 7: the Supreme Court made some rulings in the mid two

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Speaker 7: thousands that basically allowed individuals or to give as much

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Speaker 7: money as they want to so called super packs. These

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Speaker 7: are political action committees that back a cause or find

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Speaker 7: ways to support candidates. You know, you've got money pouring

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Speaker 7: it from both sides, so this is quite common. And

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Speaker 7: Ken Griffin just happens to be one of the biggest

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Speaker 7: ones on the Republican side.

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Speaker 4: So what's his track record of the candidates received his money?

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Speaker 4: Has he been successful in getting them elected?

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Speaker 7: Well, our reporting shows that he's supported about sixty candidates,

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Speaker 7: either via these massive infuses of money to super packs

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Speaker 7: that in terms support them, or directly as an individual

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Speaker 7: supporting a candidate's campaign. Under federal law, you can give

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Speaker 7: up to sixty six hundred dollars per cycle to a

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Speaker 7: candidate directly, but you can give unlimited amounts in support

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Speaker 7: of a candidate through a pack that targets that campaign.

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Speaker 7: So anyway, he's he's supported about sixty candidates, and roughly

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Speaker 7: two thirds of those have won their election. The others

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Speaker 7: will see what happens.

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Speaker 2: Is he a single issue kind of donor? Like, is

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Speaker 2: there one thing that he really stands for that he's

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Speaker 2: pushing for all the candidates that he's supporting.

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Speaker 7: Kind of thing, Yeah, he says he Well, no, it's

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Speaker 7: not single issue. I would say it's sort of a

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Speaker 7: a package of things. I mean, he cites a number

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Speaker 7: of different things, and you know, in his comments to us,

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Speaker 7: for example, and just sort of through the reporting that

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Speaker 7: we were able to do, you know, securing the borders,

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Speaker 7: halting and reversing inflation, protecting young people from war from

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Speaker 7: going to war, and also encouraging the American dream. So

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Speaker 7: those are pretty sweeping concepts.

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Speaker 5: Yeah, it was like that's not very specific, but sure,

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Speaker 5: but you know so, But that's that's how he describes

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Speaker 5: what he's looking for, and in effect, that's kind of

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Speaker 5: the kind of candidates.

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Speaker 7: You're seeing, traditional conservative Republicans that he believes fit that

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Speaker 7: mold that I just described.

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Speaker 4: And money left over to buy a stegosaurus, and didn't.

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Speaker 2: You buy something in the south of France. Wasn't it

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Speaker 2: a boatload of millions or something? Probably?

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Speaker 7: Yes, he just bought a modest home in Santrepez I

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Speaker 7: think worth more than a million dollars. And he yes,

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Speaker 7: he just bought an auction a complete Stegosaurus skeleton for

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Speaker 7: forty five million dollars.

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Speaker 2: We just don't know if the Stegosaurus is going in

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Speaker 2: his enterpez No.

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Speaker 4: I think he's actually donating that to a museum.

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Speaker 2: Yes, yeah, Michael, he.

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Speaker 7: Is going to exactly he's going to donate to a museum.

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Speaker 2: Michael. We got to leave it there. We really appreciated

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Speaker 2: Michael Smith joining us from the Bloomberg National team. I

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Speaker 2: should put out it's not a big take, my bad,

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Speaker 2: but it is a Bloomberg little Bee, which means it's

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Speaker 2: an exclusive to Bloomberg News. Definitely check it out by

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Speaker 2: Michael Smith and Bill Allison about Ken Griffin and his

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Speaker 2: contributions to the GOP and really shaping that party.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Effo CarPlay and then

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Speaker 1: Broud Auto with the Bloomberg Business app. Listen on demand

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Speaker 1: wherever you get your podcasts. Or watch us live on YouTube.

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Speaker 2: I'm Alex Steel here alongside John Tucker. This is Bloomberg

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Speaker 2: Intelligence Radio. We bring you all the top news and business,

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Speaker 2: economics and finance. There are lens of our Bloomberg Intelligence analysts.

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Speaker 2: They cover two thousand companies and one hundred and thirty

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Speaker 2: industries worldwide. So our next guest is going to give

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Speaker 2: us a great perspective sort of inside the mind of

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Speaker 2: hedge funds and institutional investors and other clients. Joining us

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Speaker 2: now is Sarah Samuel's head of Investment Manager Strategy at NEPC.

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Speaker 2: Any PC is one of the industry's largest independent, full

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Speaker 2: service investment consulting firms. They serve more than four hundred

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Speaker 2: clients with over one point six trillion dollars in assets

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Speaker 2: under advisement. Sarah joins us now. Sarah, great to have

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Speaker 2: you joining us from Boston. Thanks for joining us.

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Speaker 6: Alex, it's great to see you again.

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Speaker 2: Thanks for having me on the show, you bet. I

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Speaker 2: also should point out John Tucker that Sarah wrote a

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Speaker 2: children's book about financial literacy for kids. Really yes, which

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Speaker 2: you know what you and I could probably use.

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Speaker 8: I could probably use that.

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Speaker 2: I definitely could have used.

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Speaker 4: That is still telling kids to save, actually to go a.

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Speaker 6: Step further than saving. It's telling them to be brave,

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Speaker 6: take some risks and try their hand at investing.

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Speaker 4: I think given the current rate environment, you probably have

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Speaker 4: to go out a little.

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Speaker 2: Yeah. Yeah, we'll get to that too, because my daughter

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Speaker 2: very much enjoyed that book. But Sarah, for the pros

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Speaker 2: for the profession in the market, what are people thinking

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Speaker 2: and doing right now?

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Speaker 6: So the big theme that we're seeing among our clients

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Speaker 6: at any PC and we work with endowments and foundations,

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Speaker 6: we work with family offices, we work with public and

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Speaker 6: corporate pension funds, We work with lots of different clients,

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Speaker 6: and we help manage their entire portfolios across private markets,

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Speaker 6: private equity, page funds, and anything publicly traded. So the

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Speaker 6: big theme that we're seeing in our clients' portfolios today

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Speaker 6: is that investors are getting less money back from their

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Speaker 6: private market investments than they had expected and budgeted. And

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Speaker 6: for distributions and dal activity to pick up, we really

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Speaker 6: need to see valuations reset further or for the cost

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Speaker 6: of capital to come down, which we're beginning to see recently.

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Speaker 6: And you know, what we're really telling our clients is

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Speaker 6: that this could be a great time to put capital

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Speaker 6: to work.

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Speaker 4: Okay, So well, let's focus on the liquidity picture right now.

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Speaker 8: What is it?

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Speaker 4: What are the implications?

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Speaker 6: Okay, So when we think about why does liquidity matter,

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Speaker 6: especially from private markets investments, because capital and liquidity for

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Speaker 6: institutional investors is really necessary to fund their operations and

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Speaker 6: to help these institutions achieve their missions. What are their missions?

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Speaker 6: You know, this is something where an endowment will send

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Speaker 6: college kids to school, a hospital system helps take care

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Speaker 6: of the sick, a public fund or a retirement system

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Speaker 6: helps retirees live comfortably. And these big money institutions like

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Speaker 6: public funds, endowments, foundations, family offices, they might have twenty

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Speaker 6: up to forty or maybe even fifty percent of their

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Speaker 6: portfolios and private equity and venture capital and private debt

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Speaker 6: and real assets. And so this drop in liquidity that

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Speaker 6: we've seen, this drop in distributions relative to what they've modeled,

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Speaker 6: is really impacting their ability to support their missions. So

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Speaker 6: why are these exits lower? Why is there less liquidity today?

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Speaker 6: It really has to do with a few things. One

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Speaker 6: is the cost of financing so used to be four

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Speaker 6: to five percent to take on debt, in a lower

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Speaker 6: rate environment for a buyout, for example, and buyout debt

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Speaker 6: is typically floating rate, so now it's eight, nine or

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Speaker 6: ten percent, and that really eats into the profitability of

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Speaker 6: these underlying portfolio companies and buyers and sellers cannot meet

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Speaker 6: on price.

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Speaker 2: So that's a lot though. I wasn't really aware that

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Speaker 2: some of these foundations and family offices have as much

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Speaker 2: as forty percent or more like twenty Okay, maybe less,

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Speaker 2: but forty percent. Does that number change now that they're

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Speaker 2: having a hard time getting those getting their money back?

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Speaker 2: In essence, does it change that they allocate.

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Speaker 6: You might think that they would be backing off. These

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Speaker 6: are really smart investors though, and they're very extremely long

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Speaker 6: term oriented. So one study by Polar Capital found at

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Speaker 6: over eighty percent of investors plan to increase or hold

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Speaker 6: steady their private markets exposure in the next several years.

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Speaker 6: And so investors are showing that they really still believe

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Speaker 6: in private markets. They are getting frustrated with a lack

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Speaker 6: of distributions.

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Speaker 4: Does everybody agree on the valuations?

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Speaker 6: No, no, we do not agree on the valuations. And

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Speaker 6: so we are seeing the m and A market begin

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Speaker 6: to warm up again. As I'm sure you've been talking

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Speaker 6: about on the show, and that's a function of a

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Speaker 6: couple of things. But it's really starting to loosen up

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Speaker 6: this transaction capability in the marketplace. And what's happening is

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Speaker 6: that banks are beginning to re enter the market, which

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Speaker 6: is providing more capital at potentially a lower rate. And

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Speaker 6: there's been a bevy of dollars raise for private debt funds,

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Speaker 6: and private debt has been lending to these portfolio companies

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Speaker 6: at nine or ten percent. Now there's competition for capital.

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Speaker 6: So in a way, there's been a sneaky rate cut

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Speaker 6: just found its way into the cost of debt financing.

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Speaker 6: So it instead of costing nine percent or ten percent

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Speaker 6: to take on debt for these types of strategies, it's

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Speaker 6: more like eight or nine percent. And the cost of

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Speaker 6: financing really has a lot to do with where we're

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Speaker 6: able to exit a company and what we do to

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Speaker 6: agree upon price. So there are a lot of buyers

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Speaker 6: and sellers who are not able to meet in the middle.

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Speaker 6: I believe we're going to get there, but the sellers

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Speaker 6: may need to come down a little bit.

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Speaker 2: This feels like a good moment though, to pivot to

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Speaker 2: your book, So I mentioned that you were a children's

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Speaker 2: book for literacy for kids, Braving Our Savings. Can you

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Speaker 2: tell us like what it's about and how you deal

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Speaker 2: with with savings when it comes to your kids, because man,

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Speaker 2: when she put me to shame, when when she's telling

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Speaker 2: me about this earlier.

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Speaker 6: Well, thank you so much Alex for bringing it up.

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Speaker 6: So the book is called Braving Our Savings and it's

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Speaker 6: a children's book. It's available on Amazon. It's available and

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Speaker 6: giving it away to lots of kids. If you know

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Speaker 6: of any organizations that are serving underrepresented kids, please let

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Speaker 6: me know. But the goal of Braving Our Savings is

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Speaker 6: to empower kids from all economic backgrounds to invest and

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Speaker 6: be brave. And we've had great support from really a

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Speaker 6: trifecta from We've had endorsements from the investment community, so

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Speaker 6: folks at Nasdaq for example, and any PC. We've had

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Speaker 6: lots of partnerships over twenty with nonprofits, and then the

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Speaker 6: pro sports community has really stepped up in endorsing the

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Speaker 6: book like Alex Rodriguez, Kyle Arrington, Brandon Copeland, Jonathan Jones.

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Speaker 6: These are Patriots players and we all know Alex Rodriguez

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Speaker 6: and this has really helped to amplify the message and

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Speaker 6: broaden our reach. So we've given over twenty five hundred

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Speaker 6: books away to kids at this point, and we're just

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Speaker 6: getting started.

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Speaker 4: Where is financial literacy right now? Just how big of

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Speaker 4: a gap is there?

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Speaker 6: Just to it's getting a lot better. So many more

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Speaker 6: states are beginning to have it as an essential. Yes,

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Speaker 6: it is promising, but the reality is that there's a

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Speaker 6: lot of shame and fear around money when you get

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Speaker 6: to the individual family level, and that because it's not

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Speaker 6: taught in schools, it leaves the discussion to the dinner table,

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Speaker 6: and many families just aren't equipped to have these conversations.

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Speaker 6: So we want to sort of expand kids families and

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Speaker 6: become part of them and begin to show them things

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Speaker 6: that maybe their their core tribes aren't able to.

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Speaker 2: But what's so interesting, Sarah, is like you talk about

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Speaker 2: taking risk, like kids investing in stocks like that. I mean,

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Speaker 2: you know, not on like a large scale, but like

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Speaker 2: learning how to not only manage money but make money.

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Speaker 6: That's right, And you know, it's a really important skill

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Speaker 6: to learn. And especially if you come from a place

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Speaker 6: of not having much money as a child, you may

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Speaker 6: be less likely to take risks, which just extends bad

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Speaker 6: cycle and making ends meet, because if you don't take risks,

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Speaker 6: then you may not be able to sort of change,

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Speaker 6: have a step function change. And I've taught seventeen hundred

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Speaker 6: kids alive in the last three months, and I can

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Speaker 6: tell you that they get it, even at a very

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Speaker 6: young age.

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Speaker 4: They talk about day traders.

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Speaker 2: Right, Yeah, that's right.

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Speaker 5: We need to be careful of that.

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Speaker 2: No, no day traders, Like there's still a risk element

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Speaker 2: that we want to protect. But it's super awesome us.

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Speaker 2: Thank you, Sarah, Thanks a lot, We really appreciate it.

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Speaker 2: Thank you for the perspective head of investment Manager Research

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Speaker 2: over at any PC. But also thank you for the book,

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Speaker 2: Sarah Braving Our Savings. I'll be buying one for John

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Speaker 2: Tucker just after the break. Sarah Samuels joining us from Boston, Massachusetts.

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Speaker 2: But it's such an interesting point. I mean, I remember

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Speaker 2: I didn't know anything about budgeting or savings or how

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Speaker 2: to manage anything until I bought like a book in

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Speaker 2: my late twenties. When I was in debt. It was

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Speaker 2: like how to get out of debt? And that's when

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Speaker 2: I started to learn stuffy.

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Speaker 4: I would argue a lot of small business owners don't

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Speaker 4: know it either, especially those like doctors and dentists. They

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Speaker 4: don't teach you business in those schools.

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Speaker 2: Which you really should. And I like the idea that

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Speaker 2: you're actually sort of investing to grow, not just putting

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Speaker 2: money in a city bank savings account, no offensive city bank,

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Speaker 2: but actually like trying to think about wealth in a

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Speaker 2: different way. I thought that was really cool.

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Speaker 8: Great.

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Speaker 2: You know you gotta save up to by that table saw.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays ten am Eastern on applecar Play and Android Otto

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Speaker 1: Amazon Alexa from our flagship New York station Just Say Alexa,

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Speaker 1: playing Bloomberg eleven thirty.

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Speaker 2: Alex Stee alongside John Tucker. Paul Sweeni's off today. It's

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Speaker 2: a Bloomberg Intelligence Radio. We bring you all the top

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Speaker 2: news and business and finance and economics to your lens

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Speaker 2: of our Bloomberg Intelligence folks. They cover two thousand companies

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Speaker 2: and one hundred and thirty industries around the world, and

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Speaker 2: one of them is on a rag run up Bloomberg

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Speaker 2: Intelligence senior technology analyst, and he's joining us to look

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Speaker 2: ahead to Microsoft earnings, but also like what is happening

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Speaker 2: right now? Microsoft is down almost two percent in Nvidia

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Speaker 2: is off by over six percent. Tech is starting to

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Speaker 2: get hit very hard on arag what's going on?

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Speaker 9: So I think if you look at it, you know,

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Speaker 9: since the launch of Chat GPT, you know, a year

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Speaker 9: and a half ago or so almost two years ago,

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Speaker 9: we have seen a massive run up in all technology stocks,

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Speaker 9: except especially the largest and the biggest ones. And what

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Speaker 9: we've sawday and what we've been seeing for the last

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Speaker 9: two to three weeks is just a big rotation from

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Speaker 9: the large cap into the small cap. And I think

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Speaker 9: that's really what's driving a lot of this thing. I

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Speaker 9: don't think there is anything more than that particular element.

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Speaker 4: So what's the key number when Microsoft delivers results, say

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Speaker 4: after the close?

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Speaker 9: Yeah, see Azure cloud growth remains the most important factor

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Speaker 9: for Microsoft when they report tonight. This figure grew thirty

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Speaker 9: one percent last quarter, and streets expecting between thirty and

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Speaker 9: thirty one percent right now. So I think that's the

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Speaker 9: first number we will look for, and the second part

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Speaker 9: would be what kind of guidance they give on the

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Speaker 9: conference call as to what would be this number for

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Speaker 9: next quarter. Frankly speaking, this is the only thing that matters.

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Speaker 9: There is discussions about how much capex is going to

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Speaker 9: go up as well, but I think this is still

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Speaker 9: the most important thing.

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Speaker 8: We need to focus on.

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Speaker 4: What was the contribution to Azure am I saying that

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Speaker 4: right from artificial intelligence?

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Speaker 9: Yeah, so what we have calculated now, remember for Microsoft's case,

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Speaker 9: they do not publicly disclose the dollar number of Azure

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Speaker 9: growth the Azure sales, but they only give the growth rates.

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Speaker 9: What we have done is come to backward calculations is

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Speaker 9: in the last quarter, contribution from all AI was roughly

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Speaker 9: around a billion dollars or which an annualized basis is

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Speaker 9: about four billion dollars. So in terms of the contribution

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Speaker 9: in percentage points, they grew thirty one percent last year

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Speaker 9: last quarter, and out of that seven percentage points of

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Speaker 9: growth was because of AI. So that's another metric we're

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Speaker 9: going to look for, is what kind of contribution they

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Speaker 9: get this time and what could we expect next time.

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Speaker 2: Today the news is that Microsoft is reporting an outage

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Speaker 2: of some office and cloud services. That doesn't feel good

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Speaker 2: into earnings, particularly after the crowd strike incident. Why is

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Speaker 2: this stuff happening?

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Speaker 9: See One of the things is to remember is this

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Speaker 9: thing is so big right now, and they these guys,

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Speaker 9: you know, you could say whether it's a software update

440
00:23:03,880 --> 00:23:05,720
Speaker 9: or cyber attack. I'm not saying in this case it

441
00:23:05,840 --> 00:23:08,479
Speaker 9: is a cyber attack. But there are so much pressure

442
00:23:08,560 --> 00:23:11,280
Speaker 9: on a lot of these larger cloud vendors to make

443
00:23:11,320 --> 00:23:13,800
Speaker 9: sure their services are up and which should be because

444
00:23:13,880 --> 00:23:16,000
Speaker 9: these need to be up ninety nine point ninety nine

445
00:23:16,000 --> 00:23:18,800
Speaker 9: percent of the time because so much depends on it.

446
00:23:18,920 --> 00:23:21,520
Speaker 9: So there is always going to be scrutiny anytime there

447
00:23:21,600 --> 00:23:24,800
Speaker 9: is any disruption in services. But I have a feeling

448
00:23:24,840 --> 00:23:26,840
Speaker 9: that Microsoft will get a lot of questions on the

449
00:23:26,920 --> 00:23:30,200
Speaker 9: car today about not just this outage, but what happened

450
00:23:30,240 --> 00:23:32,960
Speaker 9: with cloud strike and how could let Microsoft let you

451
00:23:33,040 --> 00:23:34,400
Speaker 9: know something like that happen.

452
00:23:35,200 --> 00:23:39,159
Speaker 4: How much does Microsoft depend on other companies like in

453
00:23:39,200 --> 00:23:39,720
Speaker 4: Nvidia for.

454
00:23:39,800 --> 00:23:43,000
Speaker 9: Instance, Well, they do depend on it because at the

455
00:23:43,119 --> 00:23:45,040
Speaker 9: end of the day, if they are getting a lot

456
00:23:45,200 --> 00:23:48,480
Speaker 9: of AI demand coming in let's say from open ai,

457
00:23:48,720 --> 00:23:53,800
Speaker 9: because open AI is back end is Microsoft Clouds infrastructure services,

458
00:23:54,320 --> 00:23:56,560
Speaker 9: if they are not able to get GPUs from Nvidia,

459
00:23:56,680 --> 00:23:59,119
Speaker 9: they can't expand at that same rate at which the

460
00:23:59,200 --> 00:24:02,240
Speaker 9: growth is coming. So there is a bottleneck over there

461
00:24:02,280 --> 00:24:04,680
Speaker 9: when it comes to chip supply, when it comes to

462
00:24:04,880 --> 00:24:08,640
Speaker 9: just the expansion of the data center architecture or the infrastructure,

463
00:24:09,280 --> 00:24:12,400
Speaker 9: those are very important things, and you know that could

464
00:24:12,440 --> 00:24:15,640
Speaker 9: also be a concern for expansion of AI into next year.

465
00:24:16,200 --> 00:24:19,800
Speaker 4: Does at some point they say to themselves, Hey, we

466
00:24:19,880 --> 00:24:22,359
Speaker 4: don't want to be dependent on in video, Let's do

467
00:24:22,480 --> 00:24:25,959
Speaker 4: it ourselves, or is that even a threat in other

468
00:24:26,080 --> 00:24:27,000
Speaker 4: parts of the industry.

469
00:24:28,160 --> 00:24:31,600
Speaker 9: Well, most cloud companies are working on their own chips,

470
00:24:31,640 --> 00:24:34,040
Speaker 9: their own design that works in their own data centers.

471
00:24:34,359 --> 00:24:36,760
Speaker 9: But frankly speaking, at this point in video is the

472
00:24:37,000 --> 00:24:40,320
Speaker 9: person or the company that can give them those GPU

473
00:24:40,440 --> 00:24:43,040
Speaker 9: chips that are needed to train some of these large

474
00:24:43,080 --> 00:24:46,159
Speaker 9: language models down the road. Yeah, anything can happen, but

475
00:24:46,440 --> 00:24:49,280
Speaker 9: that's not you know, you know, unlike just creating a

476
00:24:49,320 --> 00:24:51,639
Speaker 9: new building, this is not that easy. It takes years

477
00:24:51,680 --> 00:24:54,240
Speaker 9: to build up a capacity and even come up with

478
00:24:54,640 --> 00:24:56,440
Speaker 9: anything close to what in Video is doing.

479
00:24:56,920 --> 00:24:59,880
Speaker 2: We heard well is the NBC reported that Delta's sort

480
00:24:59,920 --> 00:25:04,600
Speaker 2: of looking at CrowdStrike for some compensation based on the

481
00:25:04,720 --> 00:25:07,160
Speaker 2: outages and how much money they had to put out

482
00:25:07,920 --> 00:25:11,200
Speaker 2: to manage their clients. Is Microsoft going to see the

483
00:25:11,240 --> 00:25:14,480
Speaker 2: same thing from companies or does Microsoft go to CrowdStrike,

484
00:25:14,560 --> 00:25:16,200
Speaker 2: how does all that interaction work?

485
00:25:17,240 --> 00:25:18,760
Speaker 9: Yeah, this is where the lawyers are going to get

486
00:25:18,800 --> 00:25:22,639
Speaker 9: really creative because Microsoft is much much deeper pockets than

487
00:25:22,680 --> 00:25:24,879
Speaker 9: anybody else out there. And one of the things we

488
00:25:25,000 --> 00:25:27,119
Speaker 9: think what's going to happen down the road, this is

489
00:25:27,160 --> 00:25:30,160
Speaker 9: going to force companies to work with larger vendors because

490
00:25:30,240 --> 00:25:33,120
Speaker 9: they have deeper pockets when it comes to business interruption.

491
00:25:33,520 --> 00:25:35,720
Speaker 9: You know, large companies can go after the likes offt

492
00:25:35,920 --> 00:25:38,920
Speaker 9: you know, whether it's Microsoft or Amazon or Google, if

493
00:25:38,960 --> 00:25:41,520
Speaker 9: they are buying more technology products from them. So we

494
00:25:41,640 --> 00:25:43,600
Speaker 9: think there is going to be a movement, but I

495
00:25:43,680 --> 00:25:45,920
Speaker 9: am dead shure we're going to see so many more

496
00:25:46,000 --> 00:25:49,760
Speaker 9: claims coming in, not just on CrowdStrike, but Microsoft as well.

497
00:25:50,320 --> 00:25:52,200
Speaker 9: Down the road. Now what happens with that, you know,

498
00:25:52,320 --> 00:25:54,679
Speaker 9: that's I'm sure is going to be a lengthy battle.

499
00:25:54,920 --> 00:25:57,280
Speaker 4: If I use their office applications and I want to

500
00:25:57,359 --> 00:26:00,840
Speaker 4: protect myself, do I have to do I get less cloudy?

501
00:26:03,440 --> 00:26:04,040
Speaker 4: Not really.

502
00:26:04,160 --> 00:26:06,040
Speaker 9: In fact, the more you are in public cloud, the

503
00:26:06,119 --> 00:26:08,920
Speaker 9: safer it is, just because the dollar amount of money

504
00:26:09,000 --> 00:26:11,840
Speaker 9: that's going to protect those services, you may be worse

505
00:26:11,880 --> 00:26:14,320
Speaker 9: off if you just have you know, your own device

506
00:26:14,400 --> 00:26:17,040
Speaker 9: without any extra protection on it, and you're you know,

507
00:26:17,400 --> 00:26:21,760
Speaker 9: don't have that level of third party you know, firewalls.

508
00:26:21,240 --> 00:26:24,240
Speaker 2: Protecting it all right, an arag We're really excited to

509
00:26:24,320 --> 00:26:26,159
Speaker 2: see this play out over the next few hours and

510
00:26:26,200 --> 00:26:29,040
Speaker 2: then into earnings. We're looking forward to your analysis on

511
00:26:29,200 --> 00:26:32,919
Speaker 2: that as well as anarag Rana Bloomberg Senior Technology analyst

512
00:26:33,000 --> 00:26:36,359
Speaker 2: for Bloomberg Intelligence, joining us on Microsoft. That's dock heading

513
00:26:36,440 --> 00:26:38,720
Speaker 2: lower into the earnings report, where it's going to be

514
00:26:38,760 --> 00:26:41,600
Speaker 2: about the Azure growth, makeup of AI and then that

515
00:26:41,800 --> 00:26:44,119
Speaker 2: Capex and sort of how all three of them work together.

516
00:26:45,720 --> 00:26:49,560
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

517
00:26:49,720 --> 00:26:53,200
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

518
00:26:53,240 --> 00:26:56,360
Speaker 1: Auto with the Bloomberg Business. You can also listen live

519
00:26:56,520 --> 00:26:59,639
Speaker 1: on Amazon Alexa from our flagship New York station Just

520
00:26:59,720 --> 00:27:02,280
Speaker 1: Say Alexa playing Bloomberg eleven.

521
00:27:04,119 --> 00:27:07,119
Speaker 2: Malex Stee alongside John Tucker PELSWEENI is op today. This

522
00:27:07,240 --> 00:27:09,720
Speaker 2: is Bloomberg Intelligence Radio. We bring you all the top

523
00:27:09,840 --> 00:27:13,280
Speaker 2: news and business and finance and economics and commodities because

524
00:27:13,280 --> 00:27:15,320
Speaker 2: you know me, I love commodities. Looking at the oil

525
00:27:15,359 --> 00:27:17,680
Speaker 2: market here, it's down by over one percent. You also

526
00:27:17,680 --> 00:27:20,960
Speaker 2: have aluminum down by over one percent. Overall, this sector

527
00:27:21,000 --> 00:27:22,879
Speaker 2: has been hit quite hard. I mean, oil is near

528
00:27:22,960 --> 00:27:25,800
Speaker 2: a seven week low. It really does feel like the

529
00:27:25,960 --> 00:27:29,000
Speaker 2: likes we've heard from sey Heineken, the weaker readings over

530
00:27:29,040 --> 00:27:32,439
Speaker 2: in GDP in Germany, all of that circles around China

531
00:27:32,640 --> 00:27:34,680
Speaker 2: and the lack of demand there. There's also, though, some

532
00:27:34,800 --> 00:27:37,480
Speaker 2: still interesting investment opportunities within the sector.

533
00:27:37,560 --> 00:27:37,720
Speaker 5: Here.

534
00:27:37,760 --> 00:27:40,439
Speaker 2: You're just looking at the S and P Energies Index

535
00:27:40,480 --> 00:27:42,239
Speaker 2: over the last six months, it's up a healthy eight

536
00:27:42,280 --> 00:27:44,560
Speaker 2: point six percent, and many say, you know what, the

537
00:27:44,640 --> 00:27:47,919
Speaker 2: commodities may have its moment in the sun right now

538
00:27:47,960 --> 00:27:49,480
Speaker 2: as we head into the back half of the year.

539
00:27:49,800 --> 00:27:51,560
Speaker 2: So you wanted to talk to someone with some money

540
00:27:51,600 --> 00:27:54,600
Speaker 2: in the ground. That's funny money in the ground. Yeah,

541
00:27:54,680 --> 00:27:55,200
Speaker 2: let's go for it.

542
00:27:55,680 --> 00:27:56,200
Speaker 8: Do we like that?

543
00:27:56,760 --> 00:27:58,080
Speaker 2: Cat assets? Real assets?

544
00:27:58,080 --> 00:28:00,480
Speaker 4: All right, We'll let grow Tyler in the ground.

545
00:28:00,560 --> 00:28:03,199
Speaker 2: Tyler Rosenliked is head of natural resource Equities over at

546
00:28:03,240 --> 00:28:05,639
Speaker 2: con and Steers. I hate joined us now in the studio.

547
00:28:05,760 --> 00:28:08,080
Speaker 2: Cone and Steers is the leading global investment manager with

548
00:28:08,160 --> 00:28:12,120
Speaker 2: about eighty point seven billion dollars in assets under management

549
00:28:12,560 --> 00:28:16,520
Speaker 2: that looks to diversified real assets and energy broadly. Tyler, welcome,

550
00:28:16,640 --> 00:28:18,159
Speaker 2: Thank you for having me. What do you make of

551
00:28:18,240 --> 00:28:19,320
Speaker 2: this energy space right now?

552
00:28:19,760 --> 00:28:22,160
Speaker 10: Yeah, you know, we think there's a lot of tension

553
00:28:22,240 --> 00:28:24,600
Speaker 10: going on in global energy today. You know, clearly there's

554
00:28:24,720 --> 00:28:28,320
Speaker 10: questions about long term demand for traditional resources and obviously

555
00:28:28,440 --> 00:28:30,920
Speaker 10: all the growth that we see in alternatives as we

556
00:28:31,000 --> 00:28:33,520
Speaker 10: pursue a global energy transition. You know, when you talk

557
00:28:33,560 --> 00:28:36,000
Speaker 10: about oil prices here and now, you know, one thing

558
00:28:36,040 --> 00:28:37,639
Speaker 10: that we've been spending a lot of time on is

559
00:28:37,960 --> 00:28:40,840
Speaker 10: obviously demand does seem like it's weakening, but we think

560
00:28:40,920 --> 00:28:43,720
Speaker 10: some of the weakness and crude is really more supply related.

561
00:28:44,120 --> 00:28:46,760
Speaker 10: As we look at global oil supplies into twenty twenty five,

562
00:28:47,280 --> 00:28:49,520
Speaker 10: we actually see a lot of supply coming not just

563
00:28:49,600 --> 00:28:52,479
Speaker 10: from OPEC, but from North America and from other non

564
00:28:52,560 --> 00:28:56,640
Speaker 10: OPEC producers like Guyana, like Brazil, like Namibia and so forth.

565
00:28:56,720 --> 00:28:59,800
Speaker 10: So oil feels a little bit challenged here. But we

566
00:28:59,880 --> 00:29:02,440
Speaker 10: all always take a step back and say, people hear

567
00:29:02,480 --> 00:29:04,880
Speaker 10: the word energy and they think oil and oil is

568
00:29:04,920 --> 00:29:07,120
Speaker 10: not the only part of global energy markets going forward.

569
00:29:07,200 --> 00:29:10,080
Speaker 10: I mean, oil is a big driver of production and

570
00:29:10,200 --> 00:29:13,360
Speaker 10: energy supply, but natural gas is growing a lot. Nuclear

571
00:29:13,400 --> 00:29:16,480
Speaker 10: is growing, a lot, alternatives continue to grow, and so

572
00:29:16,840 --> 00:29:18,640
Speaker 10: we think that there's things that look really good and

573
00:29:18,720 --> 00:29:20,400
Speaker 10: things that look a little more challenged as we head

574
00:29:20,400 --> 00:29:20,959
Speaker 10: into next year.

575
00:29:21,560 --> 00:29:24,920
Speaker 4: How much does China control your life as an investor

576
00:29:25,080 --> 00:29:26,560
Speaker 4: in oil and energy?

577
00:29:27,120 --> 00:29:29,920
Speaker 10: You know, it's funny today it's a lot less about

578
00:29:30,000 --> 00:29:32,240
Speaker 10: China as you think about energy, and way more about

579
00:29:32,400 --> 00:29:35,640
Speaker 10: AI and the demand that we see for energy broadly.

580
00:29:35,760 --> 00:29:38,880
Speaker 10: So when you talk about an oil molecule, clearly China

581
00:29:39,000 --> 00:29:40,760
Speaker 10: is a big driver there, But when you're talking about

582
00:29:40,840 --> 00:29:44,600
Speaker 10: energy broadly, it's really about all energy supply and can

583
00:29:44,680 --> 00:29:49,320
Speaker 10: we provide the electricity and the other energy resources that

584
00:29:49,400 --> 00:29:54,600
Speaker 10: we need to satisfy technological advances, to satisfy a rising

585
00:29:54,640 --> 00:29:57,960
Speaker 10: middle class globally, urbanization, desire to travel, and so forth.

586
00:29:58,040 --> 00:30:01,440
Speaker 10: So here and now I think think everybody thinks China

587
00:30:01,480 --> 00:30:04,800
Speaker 10: is slowing, it's really more about, hey, is energy intensity

588
00:30:04,920 --> 00:30:07,760
Speaker 10: changing in other ways and how's that going to drive things?

589
00:30:08,120 --> 00:30:10,400
Speaker 2: And you brought an AI and that in essences, the

590
00:30:10,480 --> 00:30:13,120
Speaker 2: data centers need a lot of energy in order to run.

591
00:30:15,040 --> 00:30:17,960
Speaker 2: I keep reading information that yes, the power demand is

592
00:30:18,000 --> 00:30:21,880
Speaker 2: going to be huge, but we're maybe overestimating that demand

593
00:30:22,200 --> 00:30:25,040
Speaker 2: right now, how do you view it as an investor.

594
00:30:25,520 --> 00:30:28,880
Speaker 10: Yeah, So we think about sort of long term cycles

595
00:30:28,880 --> 00:30:30,560
Speaker 10: as much as we can, and we spend a lot

596
00:30:30,600 --> 00:30:32,440
Speaker 10: of time thinking about what the future of energy is

597
00:30:32,480 --> 00:30:34,680
Speaker 10: going to be, and we start with where demand is

598
00:30:34,720 --> 00:30:36,560
Speaker 10: going to go in the next few decades. So we

599
00:30:36,640 --> 00:30:39,080
Speaker 10: built a model that says, what is energy going to

600
00:30:39,160 --> 00:30:41,520
Speaker 10: demand going to be in twenty forty, And there's only

601
00:30:41,560 --> 00:30:43,560
Speaker 10: three factors that you would care about. The first is

602
00:30:43,720 --> 00:30:46,520
Speaker 10: population growth, Basically, more people in twenty forty means more

603
00:30:46,640 --> 00:30:50,200
Speaker 10: energy consumption. The second would be economic growth, bigger economy,

604
00:30:50,320 --> 00:30:52,959
Speaker 10: more energy consumption. The third one is a trickier one,

605
00:30:53,000 --> 00:30:56,160
Speaker 10: which is the energy intensity of the global economy. Basically,

606
00:30:56,400 --> 00:31:00,320
Speaker 10: how efficient can we be consuming energy to generate economic growth.

607
00:31:00,720 --> 00:31:02,400
Speaker 10: You know, we've been of the view that we are

608
00:31:02,440 --> 00:31:06,640
Speaker 10: going to get a lot more energy efficient. Technology is changing,

609
00:31:06,760 --> 00:31:10,200
Speaker 10: costs are coming down, there's desire from governments and consumers

610
00:31:10,280 --> 00:31:13,400
Speaker 10: to be better users of energy. I'm a little bit

611
00:31:13,440 --> 00:31:15,800
Speaker 10: worried about that assumption, to be honest. It does feel

612
00:31:15,960 --> 00:31:20,080
Speaker 10: like the economic growth is becoming more energy intense as

613
00:31:20,160 --> 00:31:22,360
Speaker 10: a lot of this technology technological growth is going to

614
00:31:22,400 --> 00:31:26,280
Speaker 10: be really high energy usage. So you know, We've thought

615
00:31:26,360 --> 00:31:28,520
Speaker 10: that the demand for energy was going to rise a lot,

616
00:31:29,040 --> 00:31:31,600
Speaker 10: and candidly, we think we might have underestimated it. Now

617
00:31:31,760 --> 00:31:35,080
Speaker 10: there's huge expectations for AI in the short term and

618
00:31:35,200 --> 00:31:38,760
Speaker 10: what that might mean for energy demand. Are those overstated potentially?

619
00:31:39,120 --> 00:31:40,840
Speaker 10: But in the very long term, we think we are

620
00:31:40,880 --> 00:31:43,120
Speaker 10: in an energy addition world. We really need to add

621
00:31:43,120 --> 00:31:44,080
Speaker 10: as much supply as we can.

622
00:31:44,360 --> 00:31:46,960
Speaker 4: Well, we're talking about oil. We're not just talking about energy.

623
00:31:47,040 --> 00:31:50,640
Speaker 4: We're talking about all the other stuff that oil make.

624
00:31:50,960 --> 00:31:53,600
Speaker 4: I brushed my teeth this morning. Oil was in my

625
00:31:53,840 --> 00:31:56,480
Speaker 4: toothpaste and it was used to make my tooth brush.

626
00:31:56,800 --> 00:31:59,680
Speaker 4: And that's just the start of it. I mean, are

627
00:31:59,720 --> 00:32:01,440
Speaker 4: you are you smart enough to tell me what the

628
00:32:01,520 --> 00:32:04,520
Speaker 4: breakdown a barrel of cruity is, how much of that

629
00:32:04,680 --> 00:32:07,080
Speaker 4: is used for energy? And how much is that used

630
00:32:07,120 --> 00:32:11,920
Speaker 4: to produce all the stuff that? Okay, how about you?

631
00:32:12,720 --> 00:32:16,640
Speaker 10: I mean, a lot of oil demand comes from transportation, fuels,

632
00:32:17,360 --> 00:32:20,520
Speaker 10: it's flying, it's driving, it's all that sort of stuff. Clearly,

633
00:32:20,640 --> 00:32:22,120
Speaker 10: there's a lot of it that goes into every other

634
00:32:22,200 --> 00:32:24,720
Speaker 10: product that we use. But when you talk about oil,

635
00:32:24,880 --> 00:32:27,000
Speaker 10: it's not always just the oil barrel, right, You get

636
00:32:27,040 --> 00:32:29,800
Speaker 10: a lot of those petrochemicals from what we call natural

637
00:32:29,840 --> 00:32:34,040
Speaker 10: gas liquids NGLs. When we think about energy again, a

638
00:32:34,080 --> 00:32:36,760
Speaker 10: lot of times the conversation becomes around oil prices. But

639
00:32:37,120 --> 00:32:39,880
Speaker 10: as we think into the future, we think oil demand

640
00:32:40,000 --> 00:32:41,520
Speaker 10: is going to keep growing a little bit and then

641
00:32:41,520 --> 00:32:44,560
Speaker 10: it's sort of plateaus later this decade and declines a

642
00:32:44,560 --> 00:32:47,280
Speaker 10: little bit in the twenty thirties, but huge increase in

643
00:32:47,320 --> 00:32:50,160
Speaker 10: demand for natural gas for all the reasons that you

644
00:32:50,280 --> 00:32:52,160
Speaker 10: laid out in terms of how it's ubiquitous in our

645
00:32:52,200 --> 00:32:54,920
Speaker 10: daily lives. But then also, as you know, global consumers

646
00:32:54,960 --> 00:32:55,720
Speaker 10: consume way more of.

647
00:32:55,720 --> 00:32:56,280
Speaker 8: All this stuff.

648
00:32:57,040 --> 00:32:59,000
Speaker 2: So what do you like right now? Like, what do

649
00:32:59,000 --> 00:32:59,640
Speaker 2: you want to invest in?

650
00:33:00,040 --> 00:33:02,600
Speaker 10: Yeah, so we look at the world as hey, it's

651
00:33:02,680 --> 00:33:04,800
Speaker 10: not just like I said, oil and gas. It's all

652
00:33:04,840 --> 00:33:07,640
Speaker 10: of the energy value chain, which includes both traditional resources

653
00:33:07,720 --> 00:33:10,640
Speaker 10: and alternative resources. And I'd say we see massive winners

654
00:33:10,680 --> 00:33:13,840
Speaker 10: across both sides of the table. On the traditional side,

655
00:33:14,240 --> 00:33:17,880
Speaker 10: we really like us natural gas. We think LNG demand

656
00:33:17,960 --> 00:33:20,120
Speaker 10: as we export to global consumers is going to rise

657
00:33:20,160 --> 00:33:22,360
Speaker 10: a lot in the next few years. We also think

658
00:33:22,400 --> 00:33:24,120
Speaker 10: this supply is going to be a little more curtailed

659
00:33:24,120 --> 00:33:26,280
Speaker 10: into twenty twenty five and twenty twenty six. So we

660
00:33:26,400 --> 00:33:29,360
Speaker 10: like natural gas. We really like the Canadian oil sands,

661
00:33:29,440 --> 00:33:32,720
Speaker 10: where we think it's very low variable cost. They've built

662
00:33:32,760 --> 00:33:36,120
Speaker 10: their businesses to survive sixty dollars oil, and we think

663
00:33:36,160 --> 00:33:38,160
Speaker 10: they're generating a lot of free cash that they're delivering

664
00:33:38,200 --> 00:33:41,560
Speaker 10: to investors. And we also like sort of integrated energy

665
00:33:41,600 --> 00:33:45,280
Speaker 10: companies that are pursuing the energy transition themselves credibly, using

666
00:33:45,360 --> 00:33:47,760
Speaker 10: their existing infrastructure and assets to help sort of drive

667
00:33:47,880 --> 00:33:51,240
Speaker 10: emissions changes. I'd say on the alternative side, we are

668
00:33:51,440 --> 00:33:54,720
Speaker 10: very bullish the companies that are building out the electrification

669
00:33:55,040 --> 00:33:58,400
Speaker 10: assets and infrastructure we need to satisfy the sort of

670
00:33:58,560 --> 00:34:02,440
Speaker 10: upgrowing electricity demand, Companies that build transmission wires and transmission

671
00:34:02,440 --> 00:34:05,120
Speaker 10: lines and so forth. And we're also really bullish nuclear

672
00:34:05,160 --> 00:34:07,040
Speaker 10: in the long run, you know, we do think it's

673
00:34:07,080 --> 00:34:10,120
Speaker 10: going to be about refurbishing existing nuclear assets and building

674
00:34:10,200 --> 00:34:14,920
Speaker 10: new nuclear globally to satisfy the demand for low carbon energy.

675
00:34:15,200 --> 00:34:17,960
Speaker 4: Yeah. You know, Bill Gates just broke ground on his

676
00:34:18,680 --> 00:34:22,040
Speaker 4: nuclear power plant a bit where a Montana I think.

677
00:34:22,080 --> 00:34:24,200
Speaker 10: I remember, I think that's right.

678
00:34:24,280 --> 00:34:28,800
Speaker 4: Yeah, I mean it's a sodium based nuclear power plant,

679
00:34:29,000 --> 00:34:32,160
Speaker 4: which you know, sodium can capture a much more of

680
00:34:32,280 --> 00:34:34,839
Speaker 4: the heat energy that is generated, and you can use

681
00:34:34,920 --> 00:34:38,320
Speaker 4: it as a storage facility as well. So use that

682
00:34:38,520 --> 00:34:39,520
Speaker 4: energy whenever you need it.

683
00:34:39,560 --> 00:34:41,680
Speaker 2: Wait, let me ask you this question, how much petrochemicals

684
00:34:41,719 --> 00:34:43,760
Speaker 2: are in your toothpaste? Because I think you might actually

685
00:34:43,840 --> 00:34:44,040
Speaker 2: know this.

686
00:34:45,080 --> 00:34:48,200
Speaker 4: I believe five point eight seven percent.

687
00:34:48,440 --> 00:34:48,880
Speaker 8: I don't know.

688
00:34:49,920 --> 00:34:52,000
Speaker 2: I was going to totally looking at me screen.

689
00:34:52,040 --> 00:34:54,640
Speaker 4: Where's he getting that from? No, but it is in

690
00:34:54,760 --> 00:34:55,440
Speaker 4: your toothpaste?

691
00:34:55,480 --> 00:34:59,480
Speaker 2: And Tyler, when you talk about integrated companies that are

692
00:34:59,520 --> 00:35:02,320
Speaker 2: really taking the energy transition seriously, well, what's your judgment

693
00:35:02,400 --> 00:35:02,840
Speaker 2: case on that?

694
00:35:03,400 --> 00:35:03,640
Speaker 3: Yeah?

695
00:35:03,800 --> 00:35:06,200
Speaker 10: You know, we think a lot of energy companies are

696
00:35:06,239 --> 00:35:08,359
Speaker 10: genering a lot of cash today, and the opportunity costs

697
00:35:08,400 --> 00:35:10,720
Speaker 10: dot cash is fairly high. Investors are sort of requiring

698
00:35:10,800 --> 00:35:13,320
Speaker 10: it to be paid out in dividends or via stocker purchases.

699
00:35:13,960 --> 00:35:16,719
Speaker 10: But I think what people forget is energy companies own

700
00:35:16,840 --> 00:35:19,640
Speaker 10: hard assets. They might own pipelines in the ground that

701
00:35:19,800 --> 00:35:23,040
Speaker 10: you can convert to move hydrogen, or maybe they're experts

702
00:35:23,080 --> 00:35:26,200
Speaker 10: in developing large scale infrastructure projects, which part of it

703
00:35:26,360 --> 00:35:28,160
Speaker 10: is energy, but part of it is can you deal

704
00:35:28,239 --> 00:35:31,560
Speaker 10: with permitting, can you deal with government regulations? Can you

705
00:35:31,640 --> 00:35:35,279
Speaker 10: finance large, large wind projects and so forth. So for us,

706
00:35:35,360 --> 00:35:38,040
Speaker 10: it's about, hey, what is your competitive advantage? Can you

707
00:35:38,280 --> 00:35:41,239
Speaker 10: utilize your existing labor force or your existing asset base

708
00:35:41,600 --> 00:35:45,480
Speaker 10: to actually pursue alternative investments at a creative returns? And

709
00:35:45,560 --> 00:35:47,600
Speaker 10: we think there are some companies that definitely can. There's

710
00:35:47,640 --> 00:35:50,279
Speaker 10: some that won't. There's some that will do very silly

711
00:35:50,600 --> 00:35:52,759
Speaker 10: m and A. They'll destroy a lot of capital over time.

712
00:35:52,840 --> 00:35:54,840
Speaker 10: But those that get it right we think will be

713
00:35:55,360 --> 00:35:56,600
Speaker 10: great leaders in the next decade.

714
00:35:57,400 --> 00:35:59,920
Speaker 2: All right, Tyler, thanks a lot, really appreciate its super interesting.

715
00:36:00,520 --> 00:36:03,520
Speaker 2: Tyler rosenlike a head of natural resource equities over at

716
00:36:03,600 --> 00:36:05,560
Speaker 2: Conan Steers, we didn't get to this point. But also

717
00:36:05,680 --> 00:36:07,760
Speaker 2: how much of that's going to be dependent on policy

718
00:36:07,800 --> 00:36:10,320
Speaker 2: from governments too, to know that which sort of bets

719
00:36:10,320 --> 00:36:13,160
Speaker 2: you're going to make on the energy edition or transition.

720
00:36:12,920 --> 00:36:15,680
Speaker 4: You're going to have an energy policy or what it

721
00:36:15,840 --> 00:36:16,640
Speaker 4: is in this country.

722
00:36:16,800 --> 00:36:19,600
Speaker 2: Well, for the IRA we have a everything kind of thing.

723
00:36:19,960 --> 00:36:21,840
Speaker 2: Let's throw money in a lot of different things and

724
00:36:22,480 --> 00:36:24,759
Speaker 2: see what sticks, which makes some very nervous because if

725
00:36:24,760 --> 00:36:27,600
Speaker 2: you put things in the wrong area, then you're going

726
00:36:27,640 --> 00:36:30,680
Speaker 2: to be wasting time. Anyway. Much more on that coming

727
00:36:30,760 --> 00:36:32,200
Speaker 2: up all right, Tyler, Thanks live.

728
00:36:33,640 --> 00:36:37,480
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

729
00:36:37,600 --> 00:36:41,120
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

730
00:36:41,160 --> 00:36:43,919
Speaker 1: Auto with the Bloomberg Business App. You can also listen

731
00:36:44,080 --> 00:36:47,120
Speaker 1: live on Amazon Alexa from our flagship New York station.

732
00:36:47,520 --> 00:36:50,280
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

733
00:36:51,520 --> 00:36:53,480
Speaker 2: Let's get back to jet Blue. The stock still holding

734
00:36:53,520 --> 00:36:57,359
Speaker 2: strong here, up by almost twenty percent. It's deepening its

735
00:36:57,440 --> 00:37:00,200
Speaker 2: cost cuts in this turnaround plan that it's going through.

736
00:37:00,280 --> 00:37:00,400
Speaker 6: Right.

737
00:37:00,520 --> 00:37:02,320
Speaker 2: If you can't beat them, join them, and if you

738
00:37:02,440 --> 00:37:04,800
Speaker 2: join them, you're cutting costs. We're going to George Ferguson

739
00:37:04,800 --> 00:37:08,560
Speaker 2: now Bloomberg Intelligence, senior Aerospace, defense and airlines analysts on this.

740
00:37:09,040 --> 00:37:11,279
Speaker 2: Are you surprised by the extent of the stock move

741
00:37:11,320 --> 00:37:12,319
Speaker 2: here based on the news?

742
00:37:13,960 --> 00:37:14,560
Speaker 8: I am a bit.

743
00:37:14,880 --> 00:37:16,880
Speaker 11: So it makes you wonder too if there wasn't some

744
00:37:17,960 --> 00:37:19,960
Speaker 11: a fair amount of short activity in here that's probably

745
00:37:20,000 --> 00:37:22,160
Speaker 11: trying to get out of the way when things move

746
00:37:22,280 --> 00:37:26,239
Speaker 11: this quickly. But still, I think that you know, what

747
00:37:26,440 --> 00:37:30,080
Speaker 11: jet Blue is presenting today is definitely the right way forward, right.

748
00:37:30,120 --> 00:37:34,120
Speaker 11: I mean, it's all about lowering capacity, firming up fares,

749
00:37:35,000 --> 00:37:38,080
Speaker 11: and they already have the mint product, that's a premium

750
00:37:38,160 --> 00:37:41,600
Speaker 11: product that ought to help them bring in some better revenues.

751
00:37:41,719 --> 00:37:44,160
Speaker 11: So I think it's the right way forward. I just

752
00:37:44,160 --> 00:37:46,000
Speaker 11: think the move is probably a little bit dramatic.

753
00:37:46,160 --> 00:37:48,680
Speaker 4: And they've cleared a day on your calendar, George, because

754
00:37:48,719 --> 00:37:52,359
Speaker 4: they've canceled Investor Day. That can't be a good sign.

755
00:37:54,200 --> 00:37:57,640
Speaker 11: Well, yeah, I think when companies have less exciting things

756
00:37:57,680 --> 00:38:01,440
Speaker 11: to talk about, they can investor Day. United can it

757
00:38:01,600 --> 00:38:05,759
Speaker 11: early earlier, you know, before this earnings period. It made

758
00:38:05,800 --> 00:38:09,520
Speaker 11: me think there's something going on. So yeah, agreed, But

759
00:38:10,440 --> 00:38:12,759
Speaker 11: again my guess is we have a lot of the

760
00:38:13,040 --> 00:38:15,400
Speaker 11: bad news out for the airline industry.

761
00:38:15,560 --> 00:38:15,719
Speaker 8: Now.

762
00:38:16,320 --> 00:38:19,440
Speaker 11: It's a function of getting people to cut capacity, which

763
00:38:19,440 --> 00:38:20,880
Speaker 11: you're going to improve fares, and.

764
00:38:20,960 --> 00:38:23,000
Speaker 8: So they may just short of that, they may don't

765
00:38:23,040 --> 00:38:24,480
Speaker 8: have much else to talk about.

766
00:38:24,640 --> 00:38:27,520
Speaker 4: So they increased to fifteen the number of cities where

767
00:38:27,520 --> 00:38:33,480
Speaker 4: they're ending service, and they've already cut more than fifty roots.

768
00:38:33,640 --> 00:38:38,160
Speaker 4: So you know, the growth prospects for this airline aren't

769
00:38:38,200 --> 00:38:38,680
Speaker 4: that great.

770
00:38:40,280 --> 00:38:44,759
Speaker 11: Well, so, and you watch them again defer airplanes, which

771
00:38:44,840 --> 00:38:48,320
Speaker 11: I largely think are all about growth. There's some replacement

772
00:38:48,400 --> 00:38:51,640
Speaker 11: at that, but you wouldn't defer airplanes you needed for replacement.

773
00:38:52,000 --> 00:38:54,080
Speaker 11: So essentially, I think their fleet plant told us too

774
00:38:54,200 --> 00:38:56,960
Speaker 11: that they're not a lot of growth. Yeah, I mean,

775
00:38:57,000 --> 00:38:59,640
Speaker 11: I think we're back to that old question about what

776
00:38:59,760 --> 00:39:01,520
Speaker 11: is up BLU going to be when it grows up?

777
00:39:01,640 --> 00:39:01,759
Speaker 1: Right?

778
00:39:02,560 --> 00:39:05,239
Speaker 11: But I think near term you've got to make sure

779
00:39:05,280 --> 00:39:07,800
Speaker 11: you keep the balance sheet in good shape and and

780
00:39:07,960 --> 00:39:10,600
Speaker 11: get the income statement healthy, and then you can start

781
00:39:10,640 --> 00:39:11,120
Speaker 11: to think.

782
00:39:10,920 --> 00:39:14,040
Speaker 8: About what are your long term options, what do.

783
00:39:14,000 --> 00:39:16,160
Speaker 2: You want to be So you have the top line,

784
00:39:16,200 --> 00:39:18,480
Speaker 2: and then you have the cost cutting measures in the streamlining,

785
00:39:18,520 --> 00:39:21,200
Speaker 2: which is going to wind up helping to support as

786
00:39:21,239 --> 00:39:23,800
Speaker 2: you mentioned, the balance sheet. When do you think that

787
00:39:23,880 --> 00:39:25,480
Speaker 2: they tackle that top line question?

788
00:39:25,640 --> 00:39:29,319
Speaker 8: Then, sorry, I didn't catch that the what line question?

789
00:39:29,440 --> 00:39:33,040
Speaker 2: The top line like actually growing here and becoming the

790
00:39:33,120 --> 00:39:34,200
Speaker 2: company is going to be.

791
00:39:36,120 --> 00:39:38,719
Speaker 11: Well, look, I mean I think this summer again we

792
00:39:38,840 --> 00:39:41,359
Speaker 11: just see too much capacity and so there's there's it's

793
00:39:41,440 --> 00:39:43,239
Speaker 11: going to be really hard to grow that top line.

794
00:39:43,560 --> 00:39:47,160
Speaker 11: I mean, and then you know, with the cuts they're bringing,

795
00:39:48,160 --> 00:39:50,880
Speaker 11: my senses, they don't see this market being ripe to

796
00:39:50,960 --> 00:39:54,759
Speaker 11: be growing strongly and at least strongly right, They're still

797
00:39:54,960 --> 00:39:57,319
Speaker 11: they're still taking aircraft and so they're still they're still

798
00:39:57,400 --> 00:39:59,920
Speaker 11: growing through a certain degree, but they're not looking to

799
00:40:00,080 --> 00:40:02,400
Speaker 11: grow like they were in the past, And it tells me,

800
00:40:03,080 --> 00:40:05,920
Speaker 11: you know, they think this could persist even into I

801
00:40:05,960 --> 00:40:08,080
Speaker 11: guess next year and the years following.

802
00:40:08,680 --> 00:40:10,680
Speaker 8: I think that's a pretty long way to look out. So,

803
00:40:12,640 --> 00:40:15,360
Speaker 8: you know, I'm not sure all.

804
00:40:15,239 --> 00:40:19,319
Speaker 11: The drivers behind cutting things in twenty twenty six, twenty

805
00:40:19,400 --> 00:40:23,319
Speaker 11: twenty seven, But you know, when do they figure out

806
00:40:23,360 --> 00:40:24,920
Speaker 11: what they want to be in the long run and

807
00:40:25,480 --> 00:40:28,279
Speaker 11: how to grow that top line in a large way?

808
00:40:30,440 --> 00:40:32,000
Speaker 8: I don't know, that's a good question. I don't have

809
00:40:32,040 --> 00:40:32,719
Speaker 8: an answer to that one.

810
00:40:33,000 --> 00:40:35,839
Speaker 4: Is Southwest something of a template for Jet Blow?

811
00:40:37,920 --> 00:40:41,000
Speaker 11: I well, you know, I'd argue that Jet Blue is

812
00:40:41,000 --> 00:40:44,920
Speaker 11: already further down the road on premium and on on

813
00:40:45,080 --> 00:40:48,759
Speaker 11: revenue generation than probably Southwest. Southwest to me seems like

814
00:40:48,800 --> 00:40:51,839
Speaker 11: an airline that needs to become more like a full

815
00:40:51,920 --> 00:40:52,640
Speaker 11: service carrier.

816
00:40:52,719 --> 00:40:54,799
Speaker 8: Their costs are just as high.

817
00:40:55,400 --> 00:40:58,600
Speaker 11: They run the entire length of the country right and

818
00:40:59,640 --> 00:41:01,359
Speaker 11: do a bunch of the you know, the near term

819
00:41:01,440 --> 00:41:06,880
Speaker 11: international markets. So to me, I think Southwest started looking

820
00:41:07,000 --> 00:41:09,160
Speaker 11: more towards the full service and has got to sort

821
00:41:09,200 --> 00:41:12,719
Speaker 11: of keep going there. Given their footprint I Jet Blue

822
00:41:12,800 --> 00:41:15,359
Speaker 11: is too small like Jeff Blue is just isn't uh.

823
00:41:15,600 --> 00:41:18,600
Speaker 8: You know, they're a niche carrier. They're not. They're not

824
00:41:18,680 --> 00:41:23,360
Speaker 8: a full service carrier. They you know, East Coast New York.

825
00:41:24,239 --> 00:41:26,400
Speaker 11: Expensive cities in the East Coast they've got they've got

826
00:41:26,480 --> 00:41:27,760
Speaker 11: this niche and it's great stuff.

827
00:41:27,840 --> 00:41:29,759
Speaker 8: But yeah, again, the question is where do you go

828
00:41:29,840 --> 00:41:30,200
Speaker 8: from there?

829
00:41:30,600 --> 00:41:32,839
Speaker 2: All right, George, great stuff, appreciate it. They definitely don't

830
00:41:32,840 --> 00:41:33,600
Speaker 2: want to be compared to.

831
00:41:33,800 --> 00:41:35,680
Speaker 4: Southwest Long Island City.

832
00:41:37,080 --> 00:41:39,080
Speaker 2: There you go, all right, George. I'll be talking to

833
00:41:39,080 --> 00:41:41,880
Speaker 2: you later because Airbus is also reporting earnings in just

834
00:41:42,000 --> 00:41:44,840
Speaker 2: about two hours time. George Ferguson and Bloomberg Intelligence, a

835
00:41:44,960 --> 00:41:47,759
Speaker 2: senior aerospace, defense and airlines analysts, joining us there.

836
00:41:48,080 --> 00:41:52,560
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837
00:41:52,800 --> 00:41:55,640
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838
00:41:55,800 --> 00:41:59,160
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839
00:41:59,480 --> 00:42:02,839
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840
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841
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