WEBVTT - Equity, Political, and Tech Outlook 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.800 --> 0:00:14.880 This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along 0:00:14.880 --> 0:00:17.240 with Tom Keene. Join us each day for insight from 0:00:17.239 --> 0:00:20.760 the best in economics, geopolitics, finance, and investment. You can 0:00:20.800 --> 0:00:24.439 also watch the show live on YouTube. Visit the Bloomberg 0:00:24.480 --> 0:00:27.760 Podcast channel on YouTube to see the show weekday mornings 0:00:27.760 --> 0:00:30.400 from seven to ten Eastern Remark Global Headquarters at New 0:00:30.480 --> 0:00:33.720 York City. Subscribe to the podcast on Apple, Spotify, or 0:00:33.760 --> 0:00:36.800 anywhere else you listen, and as always on Bloomberg Radio, 0:00:36.840 --> 0:00:39.440 the Bloomberg Terminal, and the Bloomberg Business App. The FED 0:00:39.479 --> 0:00:42.000 cut rates fifty basis points? Was that the right move 0:00:42.080 --> 0:00:42.720 was twenty five? 0:00:42.760 --> 0:00:43.199 I don't know. 0:00:43.440 --> 0:00:45.240 Let's talk to somebody who does this stuff for a living. 0:00:45.640 --> 0:00:48.680 Lauren Goodman at Chief market Strategist and Economists at New 0:00:48.760 --> 0:00:51.320 York Life. She joins us here in studio. Thank you 0:00:51.400 --> 0:00:53.280 very much, Lauren for coming in our studio. 0:00:54.120 --> 0:00:54.520 What do you think? 0:00:54.600 --> 0:00:55.760 What do you make of the FED? Was that the 0:00:55.840 --> 0:00:57.240 right move at fifty basis points? 0:00:57.320 --> 0:00:57.480 Yeah? 0:00:57.520 --> 0:00:59.000 I do think it was the right move. I mean, 0:00:59.760 --> 0:01:02.120 this first cut, it's really just the first step back 0:01:02.160 --> 0:01:05.240 to neutral and so moving as quickly back to neutral, 0:01:05.240 --> 0:01:08.399 where the FED policy isn't constraining the economy is the 0:01:08.480 --> 0:01:10.920 right move if the economy is what you're thinking about, 0:01:10.959 --> 0:01:14.640 and and a labor market that has slowed significantly starting 0:01:14.640 --> 0:01:18.039 to move in that direction, I think makes sense. Now 0:01:19.400 --> 0:01:22.040 when it comes to what is then the next question 0:01:22.120 --> 0:01:24.920 for the markets, I think how far can the FED go? 0:01:25.080 --> 0:01:26.200 What is neutral? 0:01:26.319 --> 0:01:29.600 Is really the next question? And the statement of economic 0:01:29.640 --> 0:01:32.760 projections had a range of just about two to four percent. 0:01:32.880 --> 0:01:36.679 That is the entire range of the US economy, and 0:01:36.760 --> 0:01:39.360 so it's a lot of uncertainty around what happens next. 0:01:39.440 --> 0:01:40.640 And then if you just take a look at that, 0:01:40.680 --> 0:01:43.160 So if you go to four percent, what's the next 0:01:43.160 --> 0:01:45.600 cycle look like? If you get a two percent, what's 0:01:45.600 --> 0:01:48.800 the next cycle look like? And those are very different economies. 0:01:48.640 --> 0:01:52.240 Very different economies. And what I'm seeing among our clients 0:01:52.800 --> 0:01:57.040 is that fifty basis point cut reinvestment risk is now 0:01:57.080 --> 0:01:59.680 the most important, most urgent thing that investors need to 0:01:59.680 --> 0:02:03.160 be thinking about for everything else, Why would you make 0:02:03.200 --> 0:02:07.840 a ton of moves, including FED voting members who are 0:02:07.840 --> 0:02:11.840 making these estimates until you know the outcome of the election. Now, 0:02:12.160 --> 0:02:16.000 election isn't typically the pivot point on how to invest. 0:02:16.400 --> 0:02:18.360 But what we're looking at is an environment where a 0:02:18.400 --> 0:02:21.639 sweep in either direction is likely to mean more spending, 0:02:21.720 --> 0:02:26.920 more inflation, probably more durable rates, also probably more volatility 0:02:26.919 --> 0:02:29.160 as markets are concerned about the level of deficit in 0:02:29.160 --> 0:02:34.600 the US economy. A mixed congress again with whoever's on top, 0:02:34.760 --> 0:02:37.959 that economic trajectory over the next four years looks really different, 0:02:38.040 --> 0:02:40.040 and so the rates environment looks really different. 0:02:40.480 --> 0:02:43.080 All right, So I've got a FED that's cutting What 0:02:43.120 --> 0:02:43.959 do I do to my asset? 0:02:43.960 --> 0:02:44.360 A patient? 0:02:44.400 --> 0:02:47.000 Am I still sixty forty? What am I doing here? 0:02:47.840 --> 0:02:52.840 From my perspective fifty basis point cut? The FED has 0:02:52.960 --> 0:02:55.959 started an easing cycle, and as I mentioned, reinvestment risk 0:02:56.120 --> 0:02:59.359 is an investor's number one priority. So the first thing 0:02:59.400 --> 0:03:02.639 you're doing is thinking about moving out of cash, where 0:03:02.720 --> 0:03:07.200 five five and a half percent easy earning just isn't 0:03:07.240 --> 0:03:10.280 going to be the case anymore, and so moving from 0:03:10.480 --> 0:03:14.520 cash into short duration fixed income really just buying bonds 0:03:14.520 --> 0:03:16.720 in general, I think is where most investors will be 0:03:16.760 --> 0:03:19.480 focused when it comes to equity, though, do you take 0:03:19.600 --> 0:03:23.800 equity risk off the table and also activate that in bonds? 0:03:23.960 --> 0:03:25.800 I think it can make sense for investors who are 0:03:25.800 --> 0:03:29.720 concerned about valuations, you know which sectors are likely to 0:03:29.760 --> 0:03:31.760 win as a result of the election, whatever the case 0:03:31.800 --> 0:03:35.040 may be, taking some of that equity risk and activating 0:03:35.280 --> 0:03:37.560 it in high yield, which is equity like where you 0:03:37.560 --> 0:03:38.160 have a coup bus. 0:03:38.200 --> 0:03:40.440 It's performing fix the come sector this year right. 0:03:40.240 --> 0:03:42.800 Well, precisely, and it's it's because you have an economic 0:03:42.880 --> 0:03:46.400 environment that's constructive and asset class that's higher quality. And 0:03:46.440 --> 0:03:49.760 again investors that are concerned about both valuations and cash rates, 0:03:49.760 --> 0:03:51.240 which are liable to move lower. 0:03:51.280 --> 0:03:53.600 So you've mentioned high yield, but like where on the like, 0:03:53.600 --> 0:03:54.400 how low do you go? 0:03:55.160 --> 0:03:57.120 Oh, strictly high quality? 0:03:57.120 --> 0:03:59.640 When it come high quality high yield precisely, Okay, So 0:03:59.680 --> 0:04:02.400 then what kind of distress might we see in the 0:04:02.440 --> 0:04:04.960 low end. And that's just my other way of asking 0:04:05.040 --> 0:04:06.760 what kind of fault cycle we going to look like? 0:04:07.080 --> 0:04:09.160 Or has that been saved or slash pushed off? 0:04:09.200 --> 0:04:13.440 Again, I'm not convinced that we've reset the cycle. And 0:04:13.520 --> 0:04:15.560 so when it comes to what does a default cycle 0:04:15.600 --> 0:04:20.159 look like for the consumer for companies, mild as a 0:04:20.200 --> 0:04:22.520 result of the support that the economy is seen over 0:04:22.560 --> 0:04:24.159 the past four years, and by that I don't just 0:04:24.240 --> 0:04:27.480 mean strong economic growth, but also the pandemic era programs. 0:04:28.120 --> 0:04:32.640 But in order for lower quality elements of the market, 0:04:32.720 --> 0:04:37.359 your triple c's, and also for small caps asset classes 0:04:37.400 --> 0:04:40.720 that really need a cyclical overturn to outperform, I don't 0:04:40.720 --> 0:04:43.000 think we have seen that reset in the cycle that 0:04:43.040 --> 0:04:46.080 will stoke durable performance. 0:04:45.600 --> 0:04:46.720 In these asset classes. 0:04:47.080 --> 0:04:49.839 Doesn't mean you won't get boosts on days when you know, 0:04:49.920 --> 0:04:52.760 good economic news is good news, but the fact that 0:04:52.760 --> 0:04:55.200 the FED is now focused on the labor market over 0:04:55.440 --> 0:04:58.560 inflation means that we are going to continue to see 0:04:58.600 --> 0:05:01.640 a reactive market where out performance in those asset classes 0:05:01.640 --> 0:05:02.680 I think is short lived. 0:05:03.200 --> 0:05:06.200 All Right, So, as a chief market strategist and economists 0:05:06.200 --> 0:05:09.480 at an insurance company, how much risk do you guys 0:05:09.520 --> 0:05:11.440 take in your equity portfolio or do you just stick 0:05:11.480 --> 0:05:13.920 with the really blue chips? How do you guys allocate? 0:05:14.480 --> 0:05:17.560 Well, just to clarify, I work in the asset manager 0:05:17.600 --> 0:05:19.760 of the insurance company, and so we look, you know, 0:05:19.960 --> 0:05:23.279 we're really looking at a broad client based, institutional, retail, 0:05:23.360 --> 0:05:26.359 et cetera. But when it comes to how do you 0:05:26.400 --> 0:05:30.679 think about you know, let's say, twenty thirty year risks 0:05:31.960 --> 0:05:34.560 this is an environment where you know, you have to 0:05:34.720 --> 0:05:38.400 expect the best you can do. That interest rates inflation 0:05:38.720 --> 0:05:41.880 have reset themselves as a result of the pandemic. That's 0:05:41.960 --> 0:05:44.160 a seed chain, a major change when it comes to 0:05:44.200 --> 0:05:46.920 asset management relative to the conversations we were having five 0:05:47.000 --> 0:05:49.800 years ago. And so the dynamic of you know, in 0:05:49.920 --> 0:05:58.360 a phase of reglobalization, capital intensivity, electrification, that's an environment 0:05:58.400 --> 0:06:00.920 that over the next ten years is likely to lean 0:06:01.080 --> 0:06:02.720 higher inflation, higher rates than. 0:06:02.640 --> 0:06:05.440 That, which also raises the question in the short term though, 0:06:05.880 --> 0:06:08.799 do we expect a resurgence of inflation or demand because 0:06:08.839 --> 0:06:10.960 of the cuts, Like I appreciate that one side of 0:06:10.960 --> 0:06:13.800 the economy will still be struggling, but on the other side, 0:06:13.920 --> 0:06:15.120 does that kind of reignite. 0:06:16.000 --> 0:06:18.960 It's one of the key risk to the market activity 0:06:18.960 --> 0:06:21.040 that we're seeing today, but it's not one that I'm 0:06:21.080 --> 0:06:23.160 worried about yet. And there's a couple of reasons for that. 0:06:23.200 --> 0:06:25.560 The first, you know, the Fed's cutting but still restrictive. 0:06:26.360 --> 0:06:28.760 They weigh, if anything, they may be a little bit 0:06:28.760 --> 0:06:33.560 behind the curve they see inflation really under control. But 0:06:33.640 --> 0:06:35.240 also when I think about you know, we can all 0:06:35.320 --> 0:06:38.680 name different catalysts for growth going sideways or downward. But 0:06:38.760 --> 0:06:40.680 when I think about what would be the catalyst for 0:06:40.720 --> 0:06:44.960 really reaccelerating the economy, We've had revenge spending. We've had 0:06:45.000 --> 0:06:48.200 an incredibly tight labor market. We've had a housing market that, 0:06:48.240 --> 0:06:51.839 despite higher rates, house prices are really high. And so 0:06:51.920 --> 0:06:56.239 though I can see an enormous benefit of rates moving 0:06:56.279 --> 0:07:02.760 lower four variable rate borrowers, household and companies, if you're 0:07:02.760 --> 0:07:06.000 sitting on the precipice of trouble, maybe not even default, 0:07:06.000 --> 0:07:09.120 but just trouble, rates moving lower don't send you off 0:07:09.120 --> 0:07:11.800 on a spending or a capital investments free They have 0:07:11.880 --> 0:07:13.800 you feeling a little bit of relief. 0:07:13.880 --> 0:07:15.880 I don't like fire everybody and like pair back on 0:07:15.920 --> 0:07:17.200 my spending program exactly. 0:07:17.240 --> 0:07:21.360 But the source of reacceleration from my perspective is elusive. 0:07:22.680 --> 0:07:23.400 Do you think that? 0:07:23.520 --> 0:07:23.640 Do you? 0:07:23.680 --> 0:07:25.400 Guys? Look outside of the US and so. 0:07:25.760 --> 0:07:32.800 Where everywhere globally Until the Bank of Japan started its 0:07:32.880 --> 0:07:35.840 rate hiking cycle, this is one of the areas where 0:07:35.880 --> 0:07:38.560 we were the most focused because we see such interesting 0:07:38.640 --> 0:07:42.440 structural change there happening after a couple of decades. Reinvigorating 0:07:42.480 --> 0:07:46.480 capital investment from their companies really a beneficiary of reglobalization. 0:07:47.560 --> 0:07:51.560 But when it comes to the broader global perspective, what 0:07:51.640 --> 0:07:54.200 I think is most important is that here in the 0:07:54.360 --> 0:07:58.000 US and globally, how we think about supply chains. It's 0:07:58.000 --> 0:08:01.120 not a new story, but it's a really, really important 0:08:01.160 --> 0:08:03.960 one because it's one where not just technology, which has 0:08:03.960 --> 0:08:06.640 been such a huge beneficiary of capital investment over the 0:08:06.680 --> 0:08:11.720 last couple of years, but increasingly building repetitive supply chain 0:08:11.760 --> 0:08:14.360 has been a big surge in construction in many countries 0:08:14.360 --> 0:08:17.000 as a result. This is one of the themes. Really 0:08:17.040 --> 0:08:20.640 it's about infrastructure that we're highly interested in globally. 0:08:20.960 --> 0:08:23.760 How bad is China right now? It's not looking great. 0:08:24.640 --> 0:08:26.840 The Mercedes news yesterday really got to me. 0:08:27.040 --> 0:08:33.520 Yeah, it's the Chinese economic model is struggling. It's very, 0:08:33.640 --> 0:08:35.920 very difficult to do what the Chinese government is trying 0:08:35.920 --> 0:08:39.719 to do, which is switch from capital intensivity and more 0:08:39.760 --> 0:08:42.680 towards a consumer driven economy. It takes time, and the 0:08:42.760 --> 0:08:46.760 idea that that could happen without any sort of ebbs 0:08:46.800 --> 0:08:49.600 and flows is unlikely, and we're seeing one of those 0:08:49.640 --> 0:08:53.000 ebbs at the moment. It's a It's one of the 0:08:53.040 --> 0:08:56.839 reasons why when we think about inflation risk especially for 0:08:57.000 --> 0:09:00.760 countries like Europe or regions rather like you up. It's 0:09:00.800 --> 0:09:04.080 difficult to see where that real reacceleration comes from when 0:09:04.080 --> 0:09:07.360 you have a disinflationary or even deflationary pressure from one 0:09:07.400 --> 0:09:08.959 of your, if not your biggest buyer. 0:09:09.800 --> 0:09:11.400 All right, Lauren, thank you so much for joining us. 0:09:11.400 --> 0:09:15.479 Really appreciate it. Lauren Goodwin, chief markets strategists and economist 0:09:15.840 --> 0:09:17.839 at New York Liith. They're not in Madison Square Park 0:09:17.880 --> 0:09:19.960 where I used to work down there, so pretty my 0:09:20.000 --> 0:09:22.080 first shake check I wrote was Madison Square Park. 0:09:22.840 --> 0:09:24.800 It all comes full circle fulla. 0:09:35.320 --> 0:09:37.760 I love focusing on oil as well as the energy transition, 0:09:37.800 --> 0:09:39.880 and the next guest is well positioned to talk about both, 0:09:40.080 --> 0:09:42.800 joining us as Jonathan Maxwell, CEO and co founder of 0:09:42.840 --> 0:09:47.040 Sustainable Development Capital. That firm was found in two thousand 0:09:47.080 --> 0:09:51.080 and seven and is really associated in the sustainability markets 0:09:51.320 --> 0:09:56.439 and it's dedication to move unefficient and decentralized energy solutions. 0:09:56.520 --> 0:09:58.120 My take away in that is that it's investing in 0:09:58.160 --> 0:10:00.600 the energy transition and trying to do all of that profitably, 0:10:00.640 --> 0:10:02.480 which a lot of firms and companies are having a 0:10:02.480 --> 0:10:03.160 hard time doing. 0:10:03.240 --> 0:10:05.920 Jonathan, it's great to have you here. Thanks for joining us. 0:10:05.920 --> 0:10:08.840 You guys have projects pretty much everywhere. You've led energy 0:10:08.840 --> 0:10:12.400 efficiency project investment funds in the UK, Ireland, Singapore, and 0:10:12.440 --> 0:10:15.760 New York, and you operate across many regions of the world. 0:10:16.080 --> 0:10:18.880 What's the favorite thing that you have right now in 0:10:18.920 --> 0:10:20.800 the space that you're most excited about? 0:10:22.080 --> 0:10:24.520 Right So, first of all, great thanks for having me on. 0:10:25.400 --> 0:10:28.720 The favorite thing I have is dealing with the world's 0:10:28.760 --> 0:10:31.800 biggest problem in the energy sector, the dirtiest secrets it 0:10:31.840 --> 0:10:34.480 is that most of it's wasted, Paul, and I've spoken 0:10:34.480 --> 0:10:36.680 about this many times before. So in the US, just 0:10:36.720 --> 0:10:39.720 to give you the numbers, roughly two third, seventy sixty 0:10:39.800 --> 0:10:44.600 seven percent of the US's energy is rejected somewhere through 0:10:44.640 --> 0:10:48.880 the generation of energy, the transmission, the distribution. So things 0:10:49.040 --> 0:10:51.240 I like to do the best is to basically to 0:10:51.600 --> 0:10:55.880 solve that problem. And what we do, for example, most 0:10:55.920 --> 0:10:58.360 of that energy gets lost as heat. So we take 0:10:58.640 --> 0:11:01.760 when we go into industrial process It's like steel mills 0:11:01.760 --> 0:11:05.679 in Indiana. We capture the waste heat that's coming out 0:11:05.720 --> 0:11:09.520 of industrial processes and we recycle it back into power 0:11:09.640 --> 0:11:12.840 and steam so that those that heat doesn't go to 0:11:12.920 --> 0:11:18.960 waste but is instead recycled. We put we instead of 0:11:18.960 --> 0:11:22.000 just capturing carbon from natural gas facilities, we capture the 0:11:22.080 --> 0:11:25.400 heat and we use that to provide heat services. The 0:11:25.400 --> 0:11:27.560 world needs as much heat as it does electricity, in 0:11:27.559 --> 0:11:31.440 fact quite a lot more. So that's my favorite type 0:11:31.480 --> 0:11:35.920 of project. It's basically generating energy for buildings, industry, and transport, 0:11:36.400 --> 0:11:39.760 largely using waste heat or waste gas. And we've got, 0:11:39.800 --> 0:11:42.680 as you say, investments now in ten countries about fifty 0:11:42.679 --> 0:11:47.800 five thousand buildings and industrial facilities connected to our projects. 0:11:48.200 --> 0:11:52.920 It works, it's profitable, and the fuel is effectively recycled 0:11:52.960 --> 0:11:56.560 waste a lot of the time, and that for me 0:11:56.720 --> 0:11:59.560 is one of the greatest, largest, fastest, cheapest sources of 0:11:59.559 --> 0:12:03.320 greenhouse gas emission reductions and sustainable investment. 0:12:03.520 --> 0:12:07.320 Jonathan, We've spoken to you several times now about this, 0:12:07.440 --> 0:12:10.440 you know, kind of recapturing or just limiting wasted energy. 0:12:10.880 --> 0:12:13.679 Where do you find the most receptivity to your arguments, 0:12:13.720 --> 0:12:15.960 to your business thoughts. 0:12:15.600 --> 0:12:19.080 Here, So, the biggest market in the world for US 0:12:19.200 --> 0:12:22.439 is actually the United States. It might sound counterfactual because 0:12:22.840 --> 0:12:25.520 you know, I think there is obviously a split debate 0:12:25.679 --> 0:12:27.840 over this. You know, do you go green or the 0:12:27.920 --> 0:12:30.439 United States is the world's largest oil and gas producer 0:12:30.480 --> 0:12:34.360 in the world, now bigger than Saudi or Iran. But 0:12:34.400 --> 0:12:36.319 the reason I think it works well in the United 0:12:36.360 --> 0:12:39.680 States is because of the economic focus, right, you know 0:12:40.160 --> 0:12:44.440 why cutting waste in other words, doing the same or 0:12:44.480 --> 0:12:47.520 more just using less energy, not because you're trying to 0:12:47.559 --> 0:12:50.160 skimp and save or degrowth. It because you're just being 0:12:50.200 --> 0:12:55.240 more competitive and more productive. It's a basic American commercial value. 0:12:55.280 --> 0:12:57.880 So we see huge take up to try and deliver 0:12:58.000 --> 0:13:01.400 energy services cheaper, cleaner, more reliable, so on site generation 0:13:02.080 --> 0:13:05.280 being more efficient. The America is by miles our biggest market. 0:13:06.080 --> 0:13:09.960 Europe after the Rushi Ukraine crisis having said that suddenly 0:13:10.000 --> 0:13:12.520 had to wake up to energy security crisis, very high 0:13:12.559 --> 0:13:15.400 prices and trying to do something about carbon and the 0:13:15.440 --> 0:13:18.400 European Commission came up with a policity three words energy 0:13:18.480 --> 0:13:22.520 efficiency first. So I think we're starting to see the 0:13:23.360 --> 0:13:27.160 the idea catch on, not just in America but around 0:13:27.160 --> 0:13:29.160 now around the world. 0:13:29.520 --> 0:13:32.360 What part of this, though, is dictated on policy, because 0:13:32.360 --> 0:13:34.760 clearly this is most definitely in the crosshairs for the 0:13:34.840 --> 0:13:38.200 US presidential election. How much of what you do is 0:13:38.240 --> 0:13:39.840 dependent on what governments do. 0:13:41.679 --> 0:13:44.920 So what we do typically is focus on projects that 0:13:44.960 --> 0:13:48.160 are commercially sustainable. So, going back to the point I made, 0:13:48.520 --> 0:13:50.640 if the grid is wasting two thirds of the energy, 0:13:50.679 --> 0:13:53.599 and we can solve that problem by building energy services 0:13:53.640 --> 0:13:57.559 at the point of use and actually being efficient, it's cheaper. 0:13:57.800 --> 0:14:00.719 It's not just cleaner and more reliable, it's also cheaper. Now, 0:14:00.720 --> 0:14:04.840 these are again fundamental core values, right, energy security, cost, efficiency. 0:14:05.360 --> 0:14:08.160 And you know, if you're into it decarbonization and you 0:14:08.200 --> 0:14:10.720 say that we're in the cross hairs, well, you know 0:14:10.760 --> 0:14:13.040 there are things that are in the cross hairs. You know, 0:14:13.320 --> 0:14:17.240 the Republican movement now looking at potentially getting rid of 0:14:17.240 --> 0:14:19.840 the power plant Rule, the vehicle efficiency Rule, the Inflation 0:14:19.920 --> 0:14:23.120 Reduction Act, and so on coming out of the Paris Agreement. 0:14:23.160 --> 0:14:29.280 That will set back renewable energy production. But renewable energy 0:14:29.320 --> 0:14:32.320 is a relatively small part of the US economy energy economy. 0:14:33.000 --> 0:14:35.400 The biggest part, which I think is we're not in 0:14:35.440 --> 0:14:37.640 the cross hairs. The biggest part is what's going on 0:14:37.880 --> 0:14:40.280 still today. Most of it's fossil fuels and most of 0:14:40.320 --> 0:14:43.880 it's being wasted. So I think this is a bipartisan 0:14:45.000 --> 0:14:48.920 basic commercial imperative. In fact, what an Earth is going 0:14:48.960 --> 0:14:52.200 on if companies as well as governments are wasting so 0:14:52.320 --> 0:14:52.920 much energy. 0:14:53.760 --> 0:14:57.560 So Johnson, what's a typical client for your firm? Is 0:14:58.400 --> 0:15:01.280 it an oil and gas companies, that utility. 0:15:01.200 --> 0:15:03.400 Or big office building? 0:15:02.440 --> 0:15:03.880 Exactly? 0:15:05.560 --> 0:15:09.840 I am. So most energy is used by buildings, industry, 0:15:09.840 --> 0:15:12.560 and transport. Most people think of the energy sector as 0:15:12.560 --> 0:15:14.680 if it's a big utility or the grid, which is 0:15:14.720 --> 0:15:17.480 the customer, But actually they're not the customers. The customers 0:15:17.480 --> 0:15:20.120 are buildings, industry and transport. That's where the energy goes. 0:15:20.120 --> 0:15:23.960 So those are our customers. Now who are customers? The biggest, 0:15:24.160 --> 0:15:27.760 fastest growing sector, and this is interesting, is obviously the 0:15:27.840 --> 0:15:31.800 data center market, particularly given the rise of AI. Why 0:15:31.800 --> 0:15:34.640 does AI matter because it requires eight to ten times 0:15:34.720 --> 0:15:37.920 as much energy as the data center, typical cloud data center, 0:15:38.200 --> 0:15:40.760 and these things are growing, proliferating. It's a very fast 0:15:40.800 --> 0:15:45.320 moving market, one of the largest demand centers for energy 0:15:45.480 --> 0:15:48.200 in the world and very very fast growing. So that's 0:15:48.200 --> 0:15:51.080 one key area. By the way, recent report this week 0:15:51.160 --> 0:15:54.760 saying that potentially that could increase overall electricity consumption in 0:15:54.760 --> 0:15:57.080 the US by nine percent of the next four years. 0:15:57.280 --> 0:16:02.240 Second big area is commercial sorry, public buildings, government forty 0:16:02.360 --> 0:16:05.240 forty five percent of GDP. Typically in most countries like 0:16:05.360 --> 0:16:11.560 the United States or government is a massive energy zer, hospitals, universities, municipalities, 0:16:11.600 --> 0:16:14.360 and then the last is steel, cement, chemicals, plastics, ie 0:16:14.400 --> 0:16:18.240 the industry. So it's actually heavy industry. It's public buildings 0:16:18.280 --> 0:16:20.880 and its data centers. That's where most of the action is. 0:16:21.320 --> 0:16:24.720 But that's where you can create investible deals and investible 0:16:24.720 --> 0:16:28.200 solutions that cut costs, improve productivity, and deliver investment returns. 0:16:28.280 --> 0:16:29.400 All right, Jonathan, thanks a lot. 0:16:29.440 --> 0:16:32.200 We very much appreciated Jonathan Maxwell's CEO and co founder 0:16:32.440 --> 0:16:40.160 of Sustainable Development Capital. I've be't told it's forty sixties 0:16:40.320 --> 0:16:44.840 until the US presidential election. Bloomberg Television, Emory Hordern will 0:16:44.880 --> 0:16:47.320 be live in North Carolina. She's speaking to the governor 0:16:47.360 --> 0:16:50.800 later on today at three thirties. Who don't miss that interview. 0:16:50.840 --> 0:16:53.320 But it's a good time to check in with Wendy Schiller. 0:16:53.880 --> 0:16:58.280 She is a Brown professor, Brown University professor, and she 0:16:58.400 --> 0:17:02.080 joins US now. She covers political sounds, international and public affairs, 0:17:02.120 --> 0:17:05.240 et cetera. Hey, Wendy, we had this really interesting town 0:17:05.320 --> 0:17:09.280 hall with Vice presidential Vice President Kamala Harris along with 0:17:09.320 --> 0:17:12.480 Oprah and all other Hollywood AID listers. Is that the 0:17:12.680 --> 0:17:15.560 tact that her campaign is going to take versus like 0:17:15.600 --> 0:17:18.040 a formal sit down, meet the press kind of interview. 0:17:19.280 --> 0:17:21.000 Well, I mean, I think the Harris campaign in that 0:17:21.040 --> 0:17:25.240 particular instance recognizes the vital importance of the black vote 0:17:25.400 --> 0:17:27.840 to the success of that campaign. We saw that it 0:17:28.040 --> 0:17:32.040 underperformed for Hillary Clinton, got out a little bit better 0:17:32.160 --> 0:17:34.560 for Joe Biden, but still, you know, has. 0:17:34.520 --> 0:17:36.959 Not reached the Obama turnout levels. 0:17:37.200 --> 0:17:39.080 And you know, if you want to win North Carolina, 0:17:39.119 --> 0:17:41.840 which looks much tighter than it did even for Biden 0:17:41.880 --> 0:17:42.520 and Trump. 0:17:42.240 --> 0:17:44.639 In twenty twenty, you're going to need, you know, a 0:17:44.680 --> 0:17:47.280 really good portion of those million black voters to get 0:17:47.320 --> 0:17:47.760 out the door. 0:17:48.080 --> 0:17:50.439 So I don't know if the format was really the 0:17:50.480 --> 0:17:53.840 most important thing about that interview as much as really 0:17:53.880 --> 0:17:57.080 appealing to a core constituency in this election for the 0:17:57.119 --> 0:17:59.400 Democrat Party, Wendy. 0:17:59.119 --> 0:18:03.400 For the I guess the middle of the road investors 0:18:03.400 --> 0:18:06.919 that each campaign is trying to get to their side, 0:18:07.160 --> 0:18:10.360 is there an issue or two that is the most important, 0:18:10.359 --> 0:18:12.920 do you think, Well, it's interesting. 0:18:12.640 --> 0:18:15.000 While that you say investor, right, you know, we can 0:18:15.080 --> 0:18:17.919 think about all no, I mean it's it's not a 0:18:17.960 --> 0:18:20.560 slip up. It's actually that's what that's how we think 0:18:20.600 --> 0:18:21.480 about politics. 0:18:21.640 --> 0:18:25.080 You know, voters think, I am giving my commodity, my 0:18:25.240 --> 0:18:28.320 vote to a candidate, and I'm investing in what I 0:18:28.320 --> 0:18:29.280 think they're going to do. 0:18:29.200 --> 0:18:30.280 For the next four years. 0:18:30.600 --> 0:18:33.360 And to the point about interviewing, the problem for Harris 0:18:33.359 --> 0:18:37.159 among independent voters or you know, educated investors is that 0:18:37.200 --> 0:18:39.880 she hasn't given quite enough detail about what she'll do. 0:18:40.200 --> 0:18:41.280 She's getting a little. 0:18:41.040 --> 0:18:43.360 Bit better, and that's where you know, some of these 0:18:43.359 --> 0:18:47.520 smaller but high profile interviews would help her define her 0:18:47.560 --> 0:18:51.000 message on taxes, on the economy, even gun control, which 0:18:51.000 --> 0:18:52.840 you know she's been emphasizing a little bit more that 0:18:52.920 --> 0:18:54.800 she's a gun owner and that she would use. 0:18:54.720 --> 0:18:56.359 Her gun in certain circumstances. 0:18:56.680 --> 0:19:00.440 This, you know, this strategy of avoiding that can also 0:19:00.680 --> 0:19:04.920 loser the opportunity to really shape her, you know, her policy, 0:19:05.160 --> 0:19:08.080 what what she's selling to voters who want to invest 0:19:08.119 --> 0:19:08.320 in her. 0:19:09.040 --> 0:19:11.800 So then the fifty basis point cut from the FED 0:19:12.480 --> 0:19:15.160 and sort of the trajectory as we go here, who 0:19:15.160 --> 0:19:17.560 does that help slash hurt it? 0:19:17.680 --> 0:19:18.080 Certainly? 0:19:18.160 --> 0:19:19.640 I mean we expect you know it takes a little 0:19:19.640 --> 0:19:22.080 while for credit card rates to adjust, and they're pretty 0:19:22.119 --> 0:19:23.480 high when you carry a balance. 0:19:23.760 --> 0:19:26.440 But of course if you have a high balance. 0:19:26.000 --> 0:19:28.199 And that cuts, you know, that's going to save you 0:19:28.320 --> 0:19:30.800 some money, either in your minimum payment or you know 0:19:30.840 --> 0:19:32.880 how you're trying to catch up and really pay down 0:19:32.920 --> 0:19:33.320 that debt. 0:19:33.600 --> 0:19:36.280 So voters will see that, but will they see it 0:19:36.359 --> 0:19:39.080 in time? You know, we're getting, as you said, very 0:19:39.119 --> 0:19:40.160 close selection day. 0:19:40.320 --> 0:19:42.800 Early voting starts in a lot of states just in 0:19:42.840 --> 0:19:43.440 a couple of weeks. 0:19:43.440 --> 0:19:45.840 It's already started in a couple of states now. 0:19:46.160 --> 0:19:48.520 So that's the problem for the you know, sort of 0:19:48.520 --> 0:19:51.680 the economic outlook, which looks really pretty good with inflation 0:19:51.680 --> 0:19:54.640 and unemployment right now, is that the window is closing 0:19:54.680 --> 0:19:57.879 for people to feel the sort of upswing the economy 0:19:58.080 --> 0:19:59.479 before they cast their vote. 0:20:00.280 --> 0:20:02.720 When you were gonna have a vice presidential debate coming up, 0:20:03.280 --> 0:20:04.560 should people pay attention to that? 0:20:06.280 --> 0:20:08.240 You know, it's an interesting thing with this debate because 0:20:08.240 --> 0:20:11.639 you've got Tim Waltz and you've got jd Vance and 0:20:11.720 --> 0:20:14.840 now Trump's age is still an issue with some voters. 0:20:15.080 --> 0:20:18.560 You know, he's seventy eight, and he's always projected more 0:20:18.680 --> 0:20:21.720 energy than Biden did. But you still have to consider 0:20:21.760 --> 0:20:25.040 the possibility that he may not serve out his entire term, 0:20:25.320 --> 0:20:26.160 and that means jd. 0:20:26.320 --> 0:20:27.960 Vance will be president of the United States. 0:20:28.320 --> 0:20:31.399 So I think the Democrats want to really emphasize that 0:20:31.560 --> 0:20:34.760