Rates, SocGen, Markets, and COP27 (Podcast)

aben raising rates to do that. The question is, you know, kind of when will they stop? Where will they stop? And a lot of folks are saying, let's talk about the European markets, in the UK markets, what's going on there? We touch base with Hugh Worthington. He's a European rate strategist for Bloomberg Intelligence based in in London. Hugh, thanks so much for joining us here. Give us your sense of kind of what you're seeing there in the UK and Europe in terms of the rate environment. What are

you seeing over there? Well, I think I think the situation in the UK he's putty more and not like sports going on in the US. The UK has been hiking rates for some time. It's been you know, it's it's got its self fairly well down the curve in terms of of of kind of negative of exiting the

negative interestrate policy. But the ECB does seem to be lagging still a little bit, and I think there's there's concerns that you know, they they they're they're still behind the curve and their their focus is a primary focus on inflation. They don't have a dual man they like the said just for example, and I think that there's

there's a definite sign of the changing attitude there. There's, if you like, the Germans seems to be much more in control of the ECB and the focus very much remains on fighting inflation and it's going to continue that way, I think, and I think they're they're basically the latest things they've been saying is that they are going to be hiking in December and they're going to keep going

and they're going to keep hiking into restrictive policy. And it may well be that they're they're still doing that whilst people like the FED in the Bank of England may well be starting to ease off a little bit Well, that's interesting to me because on the one hand, you have these odds of recession, the US specifically going to three really ramping up, but those arts have been quite strong, I want to say, for at least a year now

in Europe. Why would they keep hiking. Isn't just to perhaps close the divergence between the ECB and the FED and other central banks, or is there a real fundamental reason behind it? Well, I think I think they're they're very concerned that they know they forget the e CV is still printing cash to buy bonds back in as early as as late as June, so they were still being very accommodatated when things were being being much more

strictive elsewhere. Also, you've definitely got some things that are happening in Europe which happened happened for many, many years. There's later stage on wages out from the funny enough in Central Bank of Ireland, on wage growth in places like Germany, wage's running at something like seven percent, and those sort of thing as you haven't seen for fifty years.

And it's very hard to know that they think that the ECB is going to get their inflasi and target back down to two percent when German wages are running a nomenal wage worth's running at that sort of level. So they are basically saying that they are going to be having to be hiking into a restrict into restrictive territory. And obviously they look sort of worryingly behind the curve and a rate bill look low in Europe compared to

what they are in the English tax and sphere. Also, I think, you know, definitely QT is definitely going to be on the agenda there as well, and that's going to be something which is gonna be probably restrictive for the yields and maybe something which means it can keep yields curves pretty steep. In the UK and Europe. There's a lot of issues that needs to be done to meet in particular things like the energy subsidies that are being put in place to help the economies in the

wake of you know, Cuton's illegal actions in Ukraine. Yeah, that's kind of where I want to go here. I mean, you know, the US are our recession discussion is generally if it happens in twenty three, you know, how short will it be, how shallow will it be? That tends to be the discussion narrative talk to us about kind of as European banks continue to tighten, what's the recession

discussion over there? Well, I think I think the UK probably is already in recession um and we're expecting a pretty long, if if relatively shallow procession, not to not such a hard recession like I was in two thousd and eight. But it looks the Bank of England and the and and the Office of the Responsibility in the last week's statement in in in the UK Parliament was expecting pretty much a recession to last all next year

as well. So it's going to be pretty long and pretty painful, but it maybe not as as as sharp as it was in two thousand and eight. And it's a very much going to be a similar situation. I suspect um in in Europe and in particular in Europe this time around Germany is going to be leading their work the way down and obviously in the past prices in Europe it hasn't been Germany's. It's been hits it hard. But it looks like Germany is going to be the you know, the main the main impact will be in

Germany probably next year. I suspect we have about literally thirty seconds here. When does QT start for the e c B. I think they're lands it in in December. I'm not sure they'll they'll and in terms of active sales, but it'll just be basically not letting, not reinvesting bonds as they roll off, and that's obviously gonna matter. An aflot was already very very high issuance needs and that's going to be keeping pressure on nels and spreads high

in Europe. All right, you great stuff, As always, always appreciate getting your perspective the UK European rates outlook. Uh there Hugh Worthington European rates strategies for Bloomberg Intelligence. He's based in our London office, Queen Victoria Street, extraordinary building in the city of London, just spectacular. Our brand new headquarters over there opened up a few years ago. Good stuff.

Looking at the markets here, uh the pound one spot one eight on your sterling and Europe above parody here. Remember we were below parody several weeks ago. One spot zero two seven eight on US euro ten year treasuries. Talking about rates ten years up thirteen thirty seconds, pushing that yield down to three point seven seven percent on your ten year treasury. It's not a little education now shout we Stephen Kramer, he's the CEO of Bright Horizons.

That's a New York Stock Exchange traded company the symbols b F, A M. You put that into your Bloomberg terminal Education services company. The company also offers a child and other dependent care solutions as part of their employee benefits. We work with them, you do, Bloomberg Bloomberg works, We do. That's what I mean. Yeah, if you, you know, have an emergency and you need childcare, an unexpected emergency, or if you just um, you know, have if you're sick

and you need childcare, fail step into help. Oh cool, excellent? Uh, Stephen, thanks so much for joining us here. Talk to us about Bright Horizons. What are you guys up to these days. What's your strategy over the next several years to drive your growth. It's a pleasure to be here. Thank you for including me, and thank you obviously to Bloomberg for being a great client over many years. Our strategy remains

the same as it always has been. We are very focused on working with our employer clients to support UH their employees. UH to integrate their work in their life. We do that through the provision of on site chold care centers. We provide backup child care as you just outlined, and elder care, and then in addition to that, we

support organizations and their employees with workforce education. And so certainly we continue to see great demand across our services and continue to focus on being across those services and also continuing to operate in multiple geographies across the globe.

So what kind of growth are you looking at? I can imagine that employers now as they do things like expand um UH parental leave policies and look to offer more solutions for for daycare and elder care, UM, they can attract better candidates UM if they have you know, bright horizons working with them. So what kind of growth

are you looking at? Yeah, so we we continue to focus our growth with our employer clients, and you're right, as they continue to recognize all the challenges that their employees are facing with childcare and other dependent care needs as well as in workforce education. UM, we continue to expand our client base, we continue to expand the utilization of our services, and ultimately that propels our growth forward. UH.

Each and every year. Is it quantifiable? Yeah, So in typical times we were growing at sort of call it eight to ten per um. We had a major dislocation obviously in COVID UH. And so back in March and April we closed eight percent of our centers. Obviously saw a significant degradation UM in UH, in our revenue as well as the services that we deliver UM. We are at this point continuing to grow at a much faster

clip against the comps of the prior two years. But we expect in the long term that our growth algorithm will come back into UH that more normalized place UH and continue on on that starting in the next year or two. So, Steve and I gotta imagine, like many many many businesses and industries, you were dramatically impacted by the pandemic. How have you your discussions with your clients kind of evolved over the last several years as we come out on the other send, the other end of

this pandemic. Yeah, So there has been a great awakening among employers. I call it a great renaissance among employers recognizing that they need to lean in more heavily than they ever have. And so in the current situation where there's a war for talent, or even in a scenario where employers are just simply looking for UM, you know, supports that allow for productivity of their employees. UM. There

has been great receptivity towards the services we offer. UM. I think it's well understood that through the pandemic UM you know, somewhere between ten and of child care centers across the US permanently closed, and so there is an expectation among employers that there will continue to be a great imbalance between supply and demand, and so employers are looking to lean in and support their employees to provide

better access, higher quality, and more affordable care. UH. And then on the backup side, we've seen really significant growth because again, UH, employees have really needed those extra supports as some of the supports that were generally available to them in their community have really dried up. Well. What are the kind of challenges that you face in terms of childcare and elder care? I imagine it's a business

that is rife with regulation. UM. Compliance must be difficult, and UM, you know, you've got to have a certain amount of sensitivity as well for both of those UM, but for both both those demographics. Yeah, so I certainly think, um,

you know that there is a strong regulation. I think there are um you know, a maniacal focused on health and safety and other things that we do, and over thirty five years have really perfected in terms of making sure that what we're delivering every day is high quality and meeting the needs of those who we serve. I

would say the biggest challenge is around workforce. So there is a significant shortage of teachers, and we see that across all the geographies in which we operate, but specifically acute here in the US, where their pre COVID was a shrinking pool of talented people going into early childhood education that was exacerbated in the pandemic. And so I would say our biggest challenge is really on the workforce side in terms of attracting um, you know, talent into

the field and then ultimately to bright horizons. So how difficult is it then to uphold margins because I can imagine, you know, um, teachers are going to be wanting substantial hourly salaries and parents are going to want to pay less than what dollars a month, But that that puts you in a tight spot. Yeah, no, for sure, I

mean certainly. We have always looked to be at the top of the market in terms of the pay that we provide to the heroes in our classrooms are teachers, uh, and so over the last several years, we have accelerated wage increases pretty significantly. Um to quantify it, it's been more than to our teachers over the last several years

and so um. Obviously, working families struggle to afford the investment in early childhood education, but the reality is is expensive to deliver, and so we have always relied upon our employer clients to help their employees to offset some

of the costs of childcare. And that's really what makes our model unique, right, which is our employer clients lean in and provide subsidy so that their employees are not responsible for the full cost of childcare and the full cost of delivering that childcare, and ultimately that becomes an important benefit to them for working at companies like Bloomberg. All right, good stuff, I really appreciate you taking a time.

Stephen Kramer, CEO of Bright Horizons again in New York stock has changed listed company b f A M is a symbol to type into your Bloomberg terminal there. So, uh, you're a user, Yeah, well we can. It's a great service that Bloomberg um offers. You know, the interesting thing the comparison I make is between what the system in

Germany and here, right, because I just moved back. I pay more in taxes here than I did in Germany, really, but childcare was free there, so they had doublic daycarees with organic food and musicians and farm field trips over there, and here it's like two or three grand a month for the basics, right, parent contrast, not saying which one is better, but just comparing tressed all right, sp of eight tens of one percent. We'll take that on a

holiday Tuesday. This this bood bern get a little bit of a deal here, and it really got my attention. So chen Or Society General is doing a deal with Alliance Bernstein. Alliance Bernstein is one of the combination of two of the best names I think in the US global finance. Jonathan Tyson's his senior analyst European banks for Bloomberg Intelligence. He's based in London. He joins us, Hey, John, you know the story that we've heard over and over and over again over the years is kind of the

European banks retrenching, pulling back. I'm thinking credits Swiss Deutsche Bank. But what does suck Gen doing well? I mean, you're completely right, and sockd In has only just finished about three years of a lot of disposals there in mind, they sold their stake in the Monday to UM Credittal, they sold lix Source creditcal next to the number of businesses, but um they are pretty strong in equities and prime services, of which castext is probably not the strongest part of it.

So I think they're trying to do what BMP did with x mat UM and they've picked a very good franchise. I agree with you at Alliance UM and Bernstein Research. So what does this mean? Are they going to be moving pushing to move market share higher? UM is chen making a play here? Are they an aggressive dealmaker? Now? Oh no. But basically the outgoing CEO who who leaves may have next. He has been there for fifteen years,

a lot of ups and downs. The new guy coming in is ex corporate investment banking and clearly a lot of the restruction has been done. But if you look at say their equities division, they've beaten for the last six quarters and I don't think any bank's done that, so they would have pretty good franchise there. He's making his mark. He's confirming that sock Jan as the European

player and a global equities player wants to play. And as I say, I think they've looked at BEMP did with nex Han over a few years, eventually buying in a year or so ago, and the strength of their franchise there, and they're trying to do the same thing. They have said. We don't think there'll be that many job cuts. There's not that much of an overlap, probably nine hundred staff in total across the two businesses. Um

it's suspensible move. And in terms of how they're paying for it, I mean banks are actually profitable again, so that they're paying for it by using up some of the capital they're generating. You know what I thought was interesting. Um So soft Gen takes fift Alliance Bernstein gets the CEO position, um and they're going to be headquartered in London.

Why headquartered in London? Five years ago we thought maybe that was going to shift as a as a financial hub, you know, to the continent, or maybe more business would come back here to New York. But is it still just so attractive that when you're there you can get

the best talent. Well, I think it's time zones. Um. It is also language, as you say, the Bernstein research quite US heavy, very English speaking, and also the uk IS is doing everything you can with the kind of watering down post Brexit, etcetera, to make this as a nicer place to be a bank as possible. We were even looking at things like tweaking Bank Aponus as we've removed the cap so there's no reason to rush anything. And I mean this is they've got five years to

buy the remaining four nine. This is a a thing that we've done in a hurry. But I think at a starting point it makes sense to me in London given the the US An American English speaking component of Burnstein. So, Jonathan, you've covered all the European banks here, this seems a little bit of, you know, out of step with some of the other ones. Does this suggest that maybe some others European banks may be looking to maybe increase through your U S exposure. Um, maybe thinking that twenty three

will be a better year for the financial markets. Not at all. No, I think well, this is though, this is a bank that's come to the end of a very long and painful restructuring okay, torture bank, and it's looking at the businesses is doing well in it is profitable, it's generating capital, it's got more capital than it needs. So it's sort of building out in the franchises. Another franchise has got a l d S. You've probably never heard of it, but it's pretty much the biggest leasing

company in Europe um and it's going great guns. That's another business that they are building out via acquisition. The ext franchise. They used to be very very strong and derivatives, remember the French blew up massively in one Q twenty. They've got through that. They've got revenues right back again. This unit is supposed to make about three billion next year, so that they're just sort of moving on to the next CEO and consolidating in the businesses that they're good at.

When when you talk to your institutional investor clients these days, what is there kind of outlook for kind of European and UK banks? Well, I mean the thing is we've been waiting for ten years for revenue to start going up. They started going up. Rates went up that interesting and went up. Then Ukraine invason happened. It's has begun to look through it. But the fact is we can see the peak of the rate cycle now. So they're now worrying about the downturn and quite how badly bad debt

is going to impact the banks. And we have an accounting standard that's reasonably new and pretty untried and untested. So they're a little bit skeptical, world more bullish, were comfortable that the banks will weather this and actually report double digit r o e s, which if you've looked at European banks for the last ten of fifteen years, you can't even remember the last time you saw that and did thirty seconds Jonathan. Brexit Did it kill the city of London? Do you think? Or it's just a

minor blip. It hasn't helped um And hopefully the new government is going to stop kind of the UK and the ECB being at war about things like euroclearing and derivatives, so hopefully the hospitalities will cease or the least softened. But no, it didn't, it didn't help all right, good stuff, Jonathan Tyce. He covers all the European and UK banks for Bloomberg Intelligence. He's been doing it for decades. One of the best in the city of London, so he's

seen it all. But I mean he gets some masters in classics, literature and linguistics from I don't Oxford Cambridge one of those super duper banker major and then you got classics and then you go to financial services. I just don't get it. But he is a really really good banks I would get some massive I would guess a double digit percentage of successful bankers majored in classics classics. All right, I'll take your word for they love it. That's why I always hedge funds have like Greek god names.

Let's talk energy here. Yesterday, as John was just mentioning today we got w t I crude oil eight cents. We had a seven handle yesterday which got my attention. Got gasoline prices unleaded regular. Yeah that I'm going to tell you that's not good for your engine. Yeah that's your car was engineered to tank ninety one octane. Alright, so it's cheaper. Yeah, I know the long run, it's not Do you love your car question? Yes you do? And will you be able to replace it. No, MW

does not make those anymore. Right, I'll take better care of it. But diesel is the issue here, and I want to talk to much more important fuel for the global economy. Exactly right, Scott Levin, senior Energy and industrial analysts for Bloomberg Intelligence Joints us Hey. Scott talked to us about diesel. I mean, I don't put it in my car. I don't like the sound diesel engines make.

But it's big, it's great, it's a great sound. Talk to us about diesel UH fuel Scott House concerns should we be Yeah, you have kind of a unique phenomenon going on with right now. And if you look at your local gas station, you'll see a gap of close to two dollars gallon in some places between diesel and gasoline. And that's abnormally large, obviously, and the primary reason for that, I think is unusually low inventories of diesel weren't less than half of or we typically are this time of year.

UH for diesel fuel, and diesel fuel is much more commonly used to fuel trucks and the industrial economy at large. Is also used in the Northeast as a source of

heating oil. And so it's that uh, that phenomenon with inventories and getting additional supply to the Northeast in particular that is coming up the works and driving a spike in diesel prices and causing some concern uh coming into the winter months where you know, you could have harshal weather and some very uncomfortable people unless we get some additional supply cooking well. And in other countries, diesel is very common as personal transport fuel. You know, UM, a

lot of people drive diesel engine cars in Europe. That's not really the case in the US. UM. And I guess it doesn't matter as much because Europe has public transportation. But how how hardcore is the knock on effect going to be in terms of shipping costs? You know, we we see shipping costs coming down broadly, but if diesel is short, I can imagine UM truckers and you know, UM boat vessel operators are gonna have to raise prices. Yeah.

It's gonna definitely provide an underlying support, uh for for the transportation industry at large. Uh, more so in Europe, as you point out, than in the US. But in both places, uh, And there's a somewhat regional phenomenon here in that Europe is going through its own um energy supply crunches, you know, uh, knock on effect of the Russian invasion in Ukraine, and so they've been trying to resolve their own uh crunch uh in terms of diesel natural gas, which can also be used as sources of

heating fuel over there. So whereas that's potentially or in the past has been a source of supply and could be used to alleviate some of the pressure that we're seeing in the US northeast this year, that is not the case clearly this year as uh. You know, the European countries in general have been building up inventories uh in advance of a supply crunch for this winter, so

you know, a knock on effect there. But yes, this certainly underpins higher pricing for the transportation sector in general and maybe helps them overcome some of the cost pressure that they're seeing on the labor side. Hey, Scott, you know, whenever I hear about energy shortages, whether it's diesel or not, gas or gasoline, my first response is just crank up the refineries. What's the big deal? Go down to Texas and Louisiana and get those things going. But that's not

the case. Is it tells what the refining situation is in this country. Yeah, you know, unfortunately, in this instance, with diesel being the issue, us refining is much more geared toward gasoline than diesel. I think you get to uh gallons out of every barrel for every gallon of diesel that you produce here, So the uh, the cracks are are skewed more towards gasoline than diesel inherently in

this country. And from a gasoline standpoint, yeah, we're higher, certainly higher than then we'd like to see, you know, at four dollars a gallon or there about, but uh, not abnormally high, certainly nothing like we're seeing in the diesel market right now. And uh, you know that's kind of consistent with eighty dollar crude or thereabouts. And so we have not seen much of a push to increase

refining capacity within the country. If anything, what we need to do is make it easier to get from one place to another from the existing refineries that we have, and it's typically the Gulf coast that serves the majority of the Eastern seaboard, So make it easier. How do you mean, like more pipelines or more ships? How do you make it these year to transport? Yeah, so we'll

start with the pipelines. Pipelines is an obvious way, and we have an administration obviously that is ah against pipeline construction, uh, particularly as it relates to hydrocarbons, and so Mountain Valley Pipeline is still on hold. That's one of the big conduits along the Eastern Seaboard that has been on hold pending resolution of environmental permits. And then you know, if we were to look at shipping, uh, it's the Jones Act.

The Jones Act requires uh, you know, the ships that carry crewed uh with the area to be h on US flag ships and there are a significant limitations there. So you have transportation bottlenecks that are really making the situation more Yeah. I think we need somebody needs to look at that Jones Act. I keep hearing about that all the time. And when we think about not having

fuel in the Northeast, what's up with that? So anyway, Scott Levine, senior Energy and Industrial analysts for Bloomberg Intelligence. Markets moving higher today, lower volant, but move on. Higer we'll take the green on the screen. Let's check in on what we should be doing in these markets. Tom Mantion, he is a managing director at UBS Private Wealth Management. Hey, Tom, you know, we're thanks so much for joining us here.

We're you know, we're ten percent or so off the bottom here in s What are you telling your clients these days? You know what I think the next three to six months do you have to still understand that we're going to remain volatible. We're gonna watch every fat governor speak. We're gonna listen to what they say. We're gonna parse every single word and look for clues as

to win. The set is going to stop. But at the you know, I think the heavy lifting is behind us, right, So I think next three to six months be defensive. Look for value. I think Staples, healthcare, energy, defense, infrastructure, income plays. But but somewhere in you've got to think inflection. Right, things are going to change. By the way, as on the side, don't you wish fewer of them would speak? I mean, you've been in this industry, You've been at

UBS for like twenty years. You were Mother Meryl before that for ten um. It didn't always used to be like this, Every single FED speaker offers a different opinion, moving the markets each time. Yeah, it can't be good, you know, I don't don't forget. We used to watch the briefcase. Remember Alan Greenspan had his briefcase and whether it was thick or sin you know, So a little bit of this has been almost my entire thirty year career.

It never ceases to amaze me, how how one word can move a market, you know, three in either direction. I think the longer term investors here can find opportunities in those moments. So do you have do you have clients who say, like Tom, enough of this macro crap, like, give me some of them up research. It seems like

no one cares about companies. Well, you know, and I think this is definitely two has completely shown you that earnings matter, right, And I think we've seen that in the last few weeks where stocks that didn't have a good things to say, didn't do a good job, have

been punished severely by this market. And then stocks that that have done well and have navigated what has been a very difficult year from an interest rate and inflation perspective, certainly with supply chains those companies that have done well have been rewarded. So there are there are names on the board that are up this year and up significantly. And I think being positioned the right way has helped. But you know, you're not going to get it right

every single time. But I do agree with you. I think I think thinking macro is helpful, but you need to bring it back down a reality every once in a while. And Tom, you mentioned financials is a sector you like. I mean, do I want to own kind of the big money center global banks, the JP Morgans cities, or do I want to go maybe regional banks who may benefit more from a you know, you know, an economic kind of reopening as we get through whatever recession

we're gonna have in twenty three. Yeah, I love that, you know, whatever recession we're gonna have in three I think people have been talking about recession now for it seems like a year and a half um and it hasn't it hasn't yet occurred. I think you need to own both. I think the I think the big money centers have have hail winds here. I think the regionals

also have tail winds. Obviously, I think that there's some some regional risk to certain industries UH that that that may or may not do well in a in a recession in three given the type of recession that we're having UH or or may have. You know, nothing is a fed up complete But I like I like both sectors here. I also think staples in healthcare and and obviously we've seen some some positive and negative earnings reports

in the healthcare sector. So you need to be really smart about what you want to own UH and why. But I do think there are some at least for the next three to six or nine months, some some some places I hate to use the word hide, but some places to be defensive. If people want to be If investors want to put more risk on the table, what do you think about going outside of the US? I mean, I'm assuming most of your clients are here in America. UM, but with the dollar it had climbed

to such amazing heights. I mean, what an opportunity to you to invest elsewhere. Certainly you can look to a pack, you can look to Europe. But if you're worried about the US being in a recession in three, I think you've got to be much more concerned about what's happening

in Europe. I think the geopolitics on the in the European continent or are significantly more dangerous than that than they are domestically here in the U. S. So, uh, they obviously have a significant energy crisis that's going to take some take a while to work out, and and that is that is uh, you know, if we can control inflation here with the said to be much more difficult for the ECB to control inflation with with energy costs not being impacted by the economic situation, but but

outside factors. Alright, Tom, good stuff, appreciate you're checking in with us. Tom Menteon, he's managing director UBS, a Wealth of Management. He's up in Stanford, Connecticut. I think about a huge operation up there in Stanford, huge trading floor there. Yeah, I'm not en sure if they still use it. Also, our second Fairfield grad in the same number of days, is that right? Alright? But then he went to Wharton instead of Duke. Yeah, Well, what what are you gonna do?

What do you call it? The Fuqua School, the Fuqua School of Business, Fuqua, Yeah, JB. Fuqua, one of the first um kind of like consolidator kind of guys. He was a. You think some of those big companies back in the sixth seas and seventies that owned multiple businesses. I feel like off the tongue a little bit easier. It does, it does so, but we'll see. Well, the United Nations COP seven conference just finished up a few

days ago. It was a two week conference where leaders small over the world got together to talk about climate and sustainability and all that good stuff. And Bloomberg Intelligence send our expert over their Shaheen contractor. She has an E S G research analyst at Bloomberg Intelligence. She joins us live in our Bloomberg Interactive Broker studio because she doesn't phone it in. She comes to the office, which she gets a gold star for UM. So she's triple

triple mint, as Tom Keane would say. So Sheen, what are some of the takeaways that you had from the COPY seven conference. So, first, full thank you for the good stuff. But the COP conference was it was, at least being my first time that it was amazing. I think it's two weeks. You know, when people descended about one thing. Mikey bakeaways were first, you know. On the ground, the most divided topic was around carbon markets. The companies

using offsets to basically offset their own emissions. That was the most divided topic. The other frustration was this gap we had and I mentioned this before, around companies carbon reduction goals and no real plan to do that on the ground. As we progressed towards the end, many many people called it a disappointing cop mainly because of the mitigation aspect. We didn't build on emission reductions that we already established last year in Glasgow. Why what what? Why

didn't we get there? And are we sticking at least to the commitments we made in Glasgow? Apparently there was a fight to stick to that. A lot of the things were debated that we had already established in Glasgow, which I thought was interesting. This year, what's being said is there was a lot of sort of roadblocking from a lot of the oil rich countries like Saudi Arabia to actually push things of the finish line. That was

the main roadblock this year. So but in the end there was some kind of communic a right, So in the end were we able to save CAP twenty six at cap we were able to maintain it, I believe, I mean the way we went beyond that is the is the establishment of this loss and Damage Fund, which was really groundbreaking. It's basically the more developed countries creating a fund and paying some of the more less developing countries for the for the adaptation of climate and mitigation.

That was the main thing that came out. That's more. That's less on the emission reductions, right, it's about money. China. Is China involved in CUP twenty seven? Are they? Are they constructive? Are they supportive? What are they? They sort of I think they sort of laid low this one and Cup compared to last year, where they came out with a little more fanfare. This year was a lot more about the Middle East. Okay, so what's the Where do we go next year? By the way, it next

year is Dubai Dubai Okay. They don't come to Detroit or Cleveland, do they? I don't. I don't know, but that would be great. Columbus could host. Columbus could but Detroit. As you know, I am an avowed fan of the Ohio State University, but I love Detroit. It's such a great city gearhead um and for conferences as well. It's really ideal UM in terms of the big cops. I feel like Glasgow got a lot of attention and charmel

shake not so much. Why is that? I think a lot more was achieved in Glasgow in terms of actual mitigation of emissions. Paris was obviously the biggest. I think that's when you know the country has decided to put nationally determined contributions, ago is it around their emissions um This one sort of built off that, but the biggest one was this loss, this loss and damage fund for sure. So what is the role of the United States in

these efforts year to year to year? So it's it's an effort of all the countries right to the Conference of parties. They come in and they negotiate basically, and the end goal every country has to agree on it. And that's really the big challenge. You come in knowing what your country wants, but you don't know what the

other one wants. That's really a negotiation between everyone. So the idea this year, the groundbreaking move is that the rich countries who have benefited from, you know, destroying the environment are going to pay the developing nations who have been hurt. Is that the idea, Yes, they established a fund which is and this is the first time that agenda came on too. Sort of discussions. They established a fund.

Now the workings of the fund, how much food bay is all that will be established over the next hill before we head into the by That's that's what I understand so far. Okay, So what what was some of the more optimistic expectations going in to top twenty seven that maybe we're not fulfilled? Well, the biggest expectation is, you know, continued emission reductions. We all see these reports about us being you know, far off what we really

need to be in terms of temperature alignment. The expectation as we build more of those goals, more countries update their goals to meet sort of the baddest baras aligned um sort of temperature benchmark. And that didn't happen. So what are the takeaways for investors? What do you bring back to Bloomberg intelligence that's actionable. So the biggest takeaway from me is primarily around these again these companies carbon reduction goes. What do they actually mean for a company's investment?

So what the UK did is actually interesting. During cop they announced that they have this new plan. If a company has a goal, they actually have to have a plan to meet it, and there's a lot we can do with that. We can establish, you know, is it and PB positive, Is it and P be negative given different carbon prices, given different scenarios. And I think that's

the biggest question we have today. And that kind of discourages greenwashing because that means the company can't just come out and say, hey, we're gonna be carbon and but they have no idea how exactly. And we need that to domin financial impact, like we've done this great example of S S A B where we find that the carbon goal is MPV positive only in a high steel price, high carbon price environment and otherwise it's not. So we need insights like that that's actionable. What are the incentives

for US companies to go green? So well? The Inflation Reduction Act that we we saw recently puts a lot of subsidies, puts a lot of tax breaks onto you know, clean energy, onto renewable fuels. Um that would be the biggest sort of incentive. I think over the long term, if you imagine some kind of carbon price and regulation that comes in, it is cost positive. It is efficient to have these things in place for your bottom line. Mr I don't. I don't know if investors are buying it.

I mean, that's still a lot of skepticism out there, that is in the US and YopE. I think where you have a more study regulator mechanism by the EU emission training scheme, you do see a cost. It's a very substantial cost to company. We're skeptical. The thing is, Paul and I are skeptically. I know, I know that before, but we love having you on the show exactly. So that's why we're like, hey, Shaheen, convince us, but we're

neither one to do it. All right, she can contracted great stuff E s G. Research channels for Bloomberg Intelligence back from Egypt, the Top twenties seven conference there and again they're always needs pretty cool locales. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Pet On Ball Sweeney I'm on Twitter at pt Sweeney.

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