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So let's get to the consumer confidence numbers coming in for July at one hundred point three, although you had June revised slightly lower. We're going to get the read now with Dana Peterson, Chief Economists at the Conference Board. I labeled this good but with a question mark. Can you help me understand if this is a good report bad report? What this means? I think it's kind of a mixed report.
Yes, the headline ticked up a bit, but if you look over the last two years, it's been basically been moving around in the same range, it's been moving sideway. So and really that headline is made up of five different indicators, including thoughts about business environment, employment, and also income.
And certainly when you look at the present situation, consumers are becoming less optimistic about the present situation, and they have been kind of dour on expectations, even though the expectations index ticked up a bit, it's still below eighty, and eighty is kind of a signal of trouble.
So what is the history? What does it tell us what consumers are going to actually do.
Well?
I think it's good to look at the guts of the report where we ask them what are you planning on doing about spending on goods and services? So with respect to goods, for the most part, they are not interested in buying homes or cars.
They were a little bit more.
Interested in buying appliances and also electronics like PCs and laptops. But when it comes to spending on services, they're definitely downtrading, and they're saying we're going to spend mainly on services we need, not things we want, and we'll go to will stream instead of going to the movies.
Oh that's interesting, Okay, So when except for Deadpool obviously, when did you get an indication the survey of when that stops, like how sensitive that reading in terms of spending on services and downtrading might be to a rate cut for example?
Well, we look at.
These measures on a six month moving average, because from months to month they're pretty voluable, volatile and over the last six months, it continues to weaken in terms of buying durables. That makes sense because we know that durables are expensive and also you have to finance them. We did see in the Q two GDP report a pickup in spending on durables, but I think it was also because prices were lower, so consumers kind of jumped in there.
But really we're not seeing much in terms of a big desire to buy durables, and certainly with services, they're buying cheaper services.
All right, Danny, we appreciate thanks for the incident analysis. Aanipeterston, chief economist at the Conference Board of joining US. No table saws yet for John Tucker.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and rout Outo with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa, playing Bloomberg eleven.
Thirty Alex alongside John Tucker. Paulsweeny is off today. This is Bloomberg Intelligence Radio. We bring you all the top news and business, economics and finance through are lens of our Bloomberg Intelligence folks. They cover two thousand companies and a one hundred and thirty industries all around the world. We also have an amazing print team here at Bloomberg, and they literally cover everything around the world, particularly when it comes to money and politics. What's not to like
about that? Combo? Michael Smith is joining us now, senior reporter on Bloomberg's national team is joining us on Ken Griffin spending boatloads of money to put his stamp on Trump's goop. Michael, walk me through what.
You learned, Well, what we learned is that Ken Griffin is one of the most influential donors to the Republican
Party in America. In the last ten years or so, he's donated almost two hundred and fifteen million dollars to Republican causes and candidates, and this year alone, he's spending tens of millions of dollars to back the Republican primary candidates that he really likes that sort of share his conservative, pro business views and sometimes that sort of clashes with the Republican Party that Trump has has shaped, which is much more populist in orientation.
Just to remind everybody who Ken Griffin is where he gets his money from.
Yeah, so Ken Griffin is he's He's worth about forty two billion dollars as of late. He's the founder and owner of Citadel, which is a one of the largest hedge fund and securities trading firms on Wall Street in the world. Actually, and he's incredibly influential or in terms of philanthropy, he gives a lot of money to a lot of different causes. And in terms of politics, he's quite outspoken Republican publican uh back or so to speak.
And he he he regularly zooms in on political issues that he cares about and he backs it up with his money.
Is this just a Trump thing or is this a Republican ticket thing for Ken Griffin.
Well, it's really, he says. His goal is to get people who elected, who will govern well, who will get things done along, you know, in the areas that he's that he's really interested in, like defense, promoting the American Dream, he likes to say, which is a whole sort of coterie of of economic policies that he believes in, and not obstructing good legislation like he's he's given the candidates who have challenged a lot of the you know, Freedom Caucus members in the House who have been sort of
disruptive over the last few years. He doesn't seem to want that kind of legislature in the Congress, so he's directed his money at candidates along those lines a lot of times. It it jibes with what Trump wants. He's he's backed a lot of Trump endorsed candidates, but not all the time. So he really seems to be forging and says he's forging.
His own way. What does he say about Donald Trump or does the money do the talking for him?
Well, according to the most recent disclosures that we've been able to find, which are as of this month, actually he hasn't given any money to directly to Trump, and historically he's not He hasn't given money to Trump, and he's you know, but he had you know, it's not he hasn't come out directly against Trump. Uh he says he's still deciding, I think, and still sort of to be to be to be announced whatever stiff he takes
by election day. Uh So, but he's been quite careful not to directly financed Trump's campaign, at least so far from what we can see now.
It's easy to talk about, you know, Ken Griffin supporting the GOP, but you know there's some billionaires also on the Democratic side that also put a lot of money into these super packs and stuff, right, that's correct.
This is not a Republican thing. And ever since, you know, the Supreme Court made some rulings in the mid two thousands that basically allowed individuals or to give as much money as they want to so called super packs. These are political action committees that back a cause or find ways to support candidates. You know, you've got money pouring it from both sides, so this is quite common. And Ken Griffin just happens to be one of the biggest ones on the Republican side.
So what's his track record of the candidates received his money? Has he been successful in getting them elected?
Well, our reporting shows that he's supported about sixty candidates, either via these massive infuses of money to super packs that in terms support them, or directly as an individual supporting a candidate's campaign. Under federal law, you can give up to sixty six hundred dollars per cycle to a candidate directly, but you can give unlimited amounts in support of a candidate through a pack that targets that campaign. So anyway, he's he's supported about sixty candidates, and roughly
two thirds of those have won their election. The others will see what happens.
Is he a single issue kind of donor? Like, is there one thing that he really stands for that he's pushing for all the candidates that he's supporting.
Kind of thing, Yeah, he says he Well, no, it's not single issue. I would say it's sort of a a package of things. I mean, he cites a number of different things, and you know, in his comments to us, for example, and just sort of through the reporting that we were able to do, you know, securing the borders, halting and reversing inflation, protecting young people from war from going to war, and also encouraging the American dream. So those are pretty sweeping concepts.
Yeah, it was like that's not very specific, but sure, but you know so, But that's that's how he describes what he's looking for, and in effect, that's kind of the kind of candidates.
You're seeing, traditional conservative Republicans that he believes fit that mold that I just described.
And money left over to buy a stegosaurus, and didn't.
You buy something in the south of France. Wasn't it a boatload of millions or something? Probably?
Yes, he just bought a modest home in Santrepez I think worth more than a million dollars. And he yes, he just bought an auction a complete Stegosaurus skeleton for forty five million dollars.
We just don't know if the Stegosaurus is going in his enterpez No.
I think he's actually donating that to a museum.
Yes, yeah, Michael, he.
Is going to exactly he's going to donate to a museum.
Michael. We got to leave it there. We really appreciated Michael Smith joining us from the Bloomberg National team. I should put out it's not a big take, my bad, but it is a Bloomberg little Bee, which means it's an exclusive to Bloomberg News. Definitely check it out by Michael Smith and Bill Allison about Ken Griffin and his contributions to the GOP and really shaping that party.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Effo CarPlay and then Broud Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts. Or watch us live on YouTube.
I'm Alex Steel here alongside John Tucker. This is Bloomberg Intelligence Radio. We bring you all the top news and business, economics and finance. There are lens of our Bloomberg Intelligence analysts. They cover two thousand companies and one hundred and thirty industries worldwide. So our next guest is going to give us a great perspective sort of inside the mind of
hedge funds and institutional investors and other clients. Joining us now is Sarah Samuel's head of Investment Manager Strategy at NEPC. Any PC is one of the industry's largest independent, full service investment consulting firms. They serve more than four hundred clients with over one point six trillion dollars in assets under advisement. Sarah joins us now. Sarah, great to have you joining us from Boston. Thanks for joining us.
Alex, it's great to see you again.
Thanks for having me on the show, you bet. I also should point out John Tucker that Sarah wrote a children's book about financial literacy for kids. Really yes, which you know what you and I could probably use.
I could probably use that.
I definitely could have used.
That is still telling kids to save, actually to go a.
Step further than saving. It's telling them to be brave, take some risks and try their hand at investing.
I think given the current rate environment, you probably have to go out a little.
Yeah. Yeah, we'll get to that too, because my daughter very much enjoyed that book. But Sarah, for the pros for the profession in the market, what are people thinking and doing right now?
So the big theme that we're seeing among our clients at any PC and we work with endowments and foundations, we work with family offices, we work with public and corporate pension funds, We work with lots of different clients, and we help manage their entire portfolios across private markets, private equity, page funds, and anything publicly traded. So the big theme that we're seeing in our clients' portfolios today is that investors are getting less money back from their
private market investments than they had expected and budgeted. And for distributions and dal activity to pick up, we really need to see valuations reset further or for the cost of capital to come down, which we're beginning to see recently. And you know, what we're really telling our clients is that this could be a great time to put capital to work.
Okay, So well, let's focus on the liquidity picture right now.
What is it?
What are the implications?
Okay, So when we think about why does liquidity matter, especially from private markets investments, because capital and liquidity for institutional investors is really necessary to fund their operations and to help these institutions achieve their missions. What are their missions? You know, this is something where an endowment will send college kids to school, a hospital system helps take care of the sick, a public fund or a retirement system
helps retirees live comfortably. And these big money institutions like public funds, endowments, foundations, family offices, they might have twenty up to forty or maybe even fifty percent of their portfolios and private equity and venture capital and private debt and real assets. And so this drop in liquidity that we've seen, this drop in distributions relative to what they've modeled, is really impacting their ability to support their missions. So
why are these exits lower? Why is there less liquidity today? It really has to do with a few things. One is the cost of financing so used to be four to five percent to take on debt, in a lower rate environment for a buyout, for example, and buyout debt is typically floating rate, so now it's eight, nine or ten percent, and that really eats into the profitability of these underlying portfolio companies and buyers and sellers cannot meet on price.
So that's a lot though. I wasn't really aware that some of these foundations and family offices have as much as forty percent or more like twenty Okay, maybe less, but forty percent. Does that number change now that they're having a hard time getting those getting their money back? In essence, does it change that they allocate.
You might think that they would be backing off. These are really smart investors though, and they're very extremely long term oriented. So one study by Polar Capital found at over eighty percent of investors plan to increase or hold steady their private markets exposure in the next several years. And so investors are showing that they really still believe in private markets. They are getting frustrated with a lack of distributions.
Does everybody agree on the valuations?
No, no, we do not agree on the valuations. And so we are seeing the m and A market begin to warm up again. As I'm sure you've been talking about on the show, and that's a function of a couple of things. But it's really starting to loosen up this transaction capability in the marketplace. And what's happening is that banks are beginning to re enter the market, which
is providing more capital at potentially a lower rate. And there's been a bevy of dollars raise for private debt funds, and private debt has been lending to these portfolio companies at nine or ten percent. Now there's competition for capital. So in a way, there's been a sneaky rate cut just found its way into the cost of debt financing. So it instead of costing nine percent or ten percent to take on debt for these types of strategies, it's
more like eight or nine percent. And the cost of financing really has a lot to do with where we're able to exit a company and what we do to agree upon price. So there are a lot of buyers and sellers who are not able to meet in the middle. I believe we're going to get there, but the sellers may need to come down a little bit.
This feels like a good moment though, to pivot to your book, So I mentioned that you were a children's book for literacy for kids, Braving Our Savings. Can you tell us like what it's about and how you deal with with savings when it comes to your kids, because man, when she put me to shame, when when she's telling me about this earlier.
Well, thank you so much Alex for bringing it up. So the book is called Braving Our Savings and it's a children's book. It's available on Amazon. It's available and giving it away to lots of kids. If you know of any organizations that are serving underrepresented kids, please let me know. But the goal of Braving Our Savings is to empower kids from all economic backgrounds to invest and
be brave. And we've had great support from really a trifecta from We've had endorsements from the investment community, so folks at Nasdaq for example, and any PC. We've had lots of partnerships over twenty with nonprofits, and then the pro sports community has really stepped up in endorsing the book like Alex Rodriguez, Kyle Arrington, Brandon Copeland, Jonathan Jones. These are Patriots players and we all know Alex Rodriguez and this has really helped to amplify the message and
broaden our reach. So we've given over twenty five hundred books away to kids at this point, and we're just getting started.
Where is financial literacy right now? Just how big of a gap is there?
Just to it's getting a lot better. So many more states are beginning to have it as an essential. Yes, it is promising, but the reality is that there's a lot of shame and fear around money when you get to the individual family level, and that because it's not taught in schools, it leaves the discussion to the dinner table, and many families just aren't equipped to have these conversations.
So we want to sort of expand kids families and become part of them and begin to show them things that maybe their their core tribes aren't able to.
But what's so interesting, Sarah, is like you talk about taking risk, like kids investing in stocks like that. I mean, you know, not on like a large scale, but like learning how to not only manage money but make money.
That's right, And you know, it's a really important skill to learn. And especially if you come from a place of not having much money as a child, you may be less likely to take risks, which just extends bad cycle and making ends meet, because if you don't take risks, then you may not be able to sort of change, have a step function change. And I've taught seventeen hundred kids alive in the last three months, and I can tell you that they get it, even at a very young age.
They talk about day traders.
Right, Yeah, that's right.
We need to be careful of that.
No, no day traders, Like there's still a risk element that we want to protect. But it's super awesome us. Thank you, Sarah, Thanks a lot, We really appreciate it. Thank you for the perspective head of investment Manager Research over at any PC. But also thank you for the book, Sarah Braving Our Savings. I'll be buying one for John Tucker just after the break. Sarah Samuels joining us from Boston, Massachusetts.
But it's such an interesting point. I mean, I remember I didn't know anything about budgeting or savings or how to manage anything until I bought like a book in my late twenties. When I was in debt. It was like how to get out of debt? And that's when I started to learn stuffy.
I would argue a lot of small business owners don't know it either, especially those like doctors and dentists. They don't teach you business in those schools.
Which you really should. And I like the idea that you're actually sort of investing to grow, not just putting money in a city bank savings account, no offensive city bank, but actually like trying to think about wealth in a different way. I thought that was really cool.
Great.
You know you gotta save up to by that table saw.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays ten am Eastern on applecar Play and Android Otto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa, playing Bloomberg eleven thirty.
Alex Stee alongside John Tucker. Paul Sweeni's off today. It's a Bloomberg Intelligence Radio. We bring you all the top news and business and finance and economics to your lens of our Bloomberg Intelligence folks. They cover two thousand companies and one hundred and thirty industries around the world, and one of them is on a rag run up Bloomberg Intelligence senior technology analyst, and he's joining us to look ahead to Microsoft earnings, but also like what is happening
right now? Microsoft is down almost two percent in Nvidia is off by over six percent. Tech is starting to get hit very hard on arag what's going on?
So I think if you look at it, you know, since the launch of Chat GPT, you know, a year and a half ago or so almost two years ago, we have seen a massive run up in all technology stocks, except especially the largest and the biggest ones. And what we've sawday and what we've been seeing for the last two to three weeks is just a big rotation from the large cap into the small cap. And I think
that's really what's driving a lot of this thing. I don't think there is anything more than that particular element.
So what's the key number when Microsoft delivers results, say after the close?
Yeah, see Azure cloud growth remains the most important factor for Microsoft when they report tonight. This figure grew thirty one percent last quarter, and streets expecting between thirty and thirty one percent right now. So I think that's the first number we will look for, and the second part would be what kind of guidance they give on the conference call as to what would be this number for next quarter. Frankly speaking, this is the only thing that matters.
There is discussions about how much capex is going to go up as well, but I think this is still the most important thing.
We need to focus on.
What was the contribution to Azure am I saying that right from artificial intelligence?
Yeah, so what we have calculated now, remember for Microsoft's case, they do not publicly disclose the dollar number of Azure growth the Azure sales, but they only give the growth rates. What we have done is come to backward calculations is in the last quarter, contribution from all AI was roughly around a billion dollars or which an annualized basis is
about four billion dollars. So in terms of the contribution in percentage points, they grew thirty one percent last year last quarter, and out of that seven percentage points of growth was because of AI. So that's another metric we're going to look for, is what kind of contribution they get this time and what could we expect next time.
Today the news is that Microsoft is reporting an outage of some office and cloud services. That doesn't feel good into earnings, particularly after the crowd strike incident. Why is this stuff happening?
See One of the things is to remember is this thing is so big right now, and they these guys, you know, you could say whether it's a software update or cyber attack. I'm not saying in this case it is a cyber attack. But there are so much pressure on a lot of these larger cloud vendors to make sure their services are up and which should be because these need to be up ninety nine point ninety nine percent of the time because so much depends on it.
So there is always going to be scrutiny anytime there is any disruption in services. But I have a feeling that Microsoft will get a lot of questions on the car today about not just this outage, but what happened with cloud strike and how could let Microsoft let you know something like that happen.
How much does Microsoft depend on other companies like in Nvidia for.
Instance, Well, they do depend on it because at the end of the day, if they are getting a lot of AI demand coming in let's say from open ai, because open AI is back end is Microsoft Clouds infrastructure services, if they are not able to get GPUs from Nvidia, they can't expand at that same rate at which the
growth is coming. So there is a bottleneck over there when it comes to chip supply, when it comes to just the expansion of the data center architecture or the infrastructure, those are very important things, and you know that could also be a concern for expansion of AI into next year.
Does at some point they say to themselves, Hey, we don't want to be dependent on in video, Let's do it ourselves, or is that even a threat in other parts of the industry.
Well, most cloud companies are working on their own chips, their own design that works in their own data centers. But frankly speaking, at this point in video is the person or the company that can give them those GPU chips that are needed to train some of these large language models down the road. Yeah, anything can happen, but that's not you know, you know, unlike just creating a
new building, this is not that easy. It takes years to build up a capacity and even come up with anything close to what in Video is doing.
We heard well is the NBC reported that Delta's sort of looking at CrowdStrike for some compensation based on the outages and how much money they had to put out to manage their clients. Is Microsoft going to see the same thing from companies or does Microsoft go to CrowdStrike, how does all that interaction work?
Yeah, this is where the lawyers are going to get really creative because Microsoft is much much deeper pockets than anybody else out there. And one of the things we think what's going to happen down the road, this is going to force companies to work with larger vendors because they have deeper pockets when it comes to business interruption. You know, large companies can go after the likes offt you know, whether it's Microsoft or Amazon or Google, if
they are buying more technology products from them. So we think there is going to be a movement, but I am dead shure we're going to see so many more claims coming in, not just on CrowdStrike, but Microsoft as well. Down the road. Now what happens with that, you know, that's I'm sure is going to be a lengthy battle.
If I use their office applications and I want to protect myself, do I have to do I get less cloudy? Not really.
In fact, the more you are in public cloud, the safer it is, just because the dollar amount of money that's going to protect those services, you may be worse off if you just have you know, your own device without any extra protection on it, and you're you know, don't have that level of third party you know, firewalls.
Protecting it all right, an arag We're really excited to see this play out over the next few hours and then into earnings. We're looking forward to your analysis on that as well as anarag Rana Bloomberg Senior Technology analyst for Bloomberg Intelligence, joining us on Microsoft. That's dock heading lower into the earnings report, where it's going to be about the Azure growth, makeup of AI and then that Capex and sort of how all three of them work together.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven.
Malex Stee alongside John Tucker PELSWEENI is op today. This is Bloomberg Intelligence Radio. We bring you all the top news and business and finance and economics and commodities because you know me, I love commodities. Looking at the oil market here, it's down by over one percent. You also have aluminum down by over one percent. Overall, this sector has been hit quite hard. I mean, oil is near
a seven week low. It really does feel like the likes we've heard from sey Heineken, the weaker readings over in GDP in Germany, all of that circles around China and the lack of demand there. There's also, though, some still interesting investment opportunities within the sector.
Here.
You're just looking at the S and P Energies Index over the last six months, it's up a healthy eight point six percent, and many say, you know what, the commodities may have its moment in the sun right now as we head into the back half of the year. So you wanted to talk to someone with some money in the ground. That's funny money in the ground. Yeah, let's go for it.
Do we like that?
Cat assets? Real assets?
All right, We'll let grow Tyler in the ground.
Tyler Rosenliked is head of natural resource Equities over at con and Steers. I hate joined us now in the studio. Cone and Steers is the leading global investment manager with about eighty point seven billion dollars in assets under management that looks to diversified real assets and energy broadly. Tyler, welcome, Thank you for having me. What do you make of this energy space right now?
Yeah, you know, we think there's a lot of tension going on in global energy today. You know, clearly there's questions about long term demand for traditional resources and obviously all the growth that we see in alternatives as we
pursue a global energy transition. You know, when you talk about oil prices here and now, you know, one thing that we've been spending a lot of time on is obviously demand does seem like it's weakening, but we think some of the weakness and crude is really more supply related.
As we look at global oil supplies into twenty twenty five, we actually see a lot of supply coming not just from OPEC, but from North America and from other non OPEC producers like Guyana, like Brazil, like Namibia and so forth. So oil feels a little bit challenged here. But we all always take a step back and say, people hear the word energy and they think oil and oil is not the only part of global energy markets going forward. I mean, oil is a big driver of production and
energy supply, but natural gas is growing a lot. Nuclear is growing, a lot, alternatives continue to grow, and so we think that there's things that look really good and things that look a little more challenged as we head into next year.
How much does China control your life as an investor in oil and energy?
You know, it's funny today it's a lot less about China as you think about energy, and way more about AI and the demand that we see for energy broadly.
So when you talk about an oil molecule, clearly China is a big driver there, But when you're talking about energy broadly, it's really about all energy supply and can we provide the electricity and the other energy resources that we need to satisfy technological advances, to satisfy a rising middle class globally, urbanization, desire to travel, and so forth.
So here and now I think think everybody thinks China is slowing, it's really more about, hey, is energy intensity changing in other ways and how's that going to drive things?
And you brought an AI and that in essences, the data centers need a lot of energy in order to run. I keep reading information that yes, the power demand is going to be huge, but we're maybe overestimating that demand right now, how do you view it as an investor.
Yeah, So we think about sort of long term cycles as much as we can, and we spend a lot of time thinking about what the future of energy is going to be, and we start with where demand is going to go in the next few decades. So we built a model that says, what is energy going to demand going to be in twenty forty, And there's only three factors that you would care about. The first is population growth, Basically, more people in twenty forty means more
energy consumption. The second would be economic growth, bigger economy, more energy consumption. The third one is a trickier one, which is the energy intensity of the global economy. Basically, how efficient can we be consuming energy to generate economic growth. You know, we've been of the view that we are going to get a lot more energy efficient. Technology is changing, costs are coming down, there's desire from governments and consumers to be better users of energy. I'm a little bit
worried about that assumption, to be honest. It does feel like the economic growth is becoming more energy intense as a lot of this technology technological growth is going to be really high energy usage. So you know, We've thought that the demand for energy was going to rise a lot, and candidly, we think we might have underestimated it. Now there's huge expectations for AI in the short term and what that might mean for energy demand. Are those overstated potentially?
But in the very long term, we think we are in an energy addition world. We really need to add as much supply as we can.
Well, we're talking about oil. We're not just talking about energy. We're talking about all the other stuff that oil make. I brushed my teeth this morning. Oil was in my toothpaste and it was used to make my tooth brush. And that's just the start of it. I mean, are you are you smart enough to tell me what the breakdown a barrel of cruity is, how much of that is used for energy? And how much is that used to produce all the stuff that? Okay, how about you?
I mean, a lot of oil demand comes from transportation, fuels, it's flying, it's driving, it's all that sort of stuff. Clearly, there's a lot of it that goes into every other product that we use. But when you talk about oil, it's not always just the oil barrel, right, You get a lot of those petrochemicals from what we call natural gas liquids NGLs. When we think about energy again, a
lot of times the conversation becomes around oil prices. But as we think into the future, we think oil demand is going to keep growing a little bit and then it's sort of plateaus later this decade and declines a little bit in the twenty thirties, but huge increase in demand for natural gas for all the reasons that you laid out in terms of how it's ubiquitous in our daily lives. But then also, as you know, global consumers consume way more of.
All this stuff.
So what do you like right now? Like, what do you want to invest in?
Yeah, so we look at the world as hey, it's not just like I said, oil and gas. It's all of the energy value chain, which includes both traditional resources and alternative resources. And I'd say we see massive winners across both sides of the table. On the traditional side, we really like us natural gas. We think LNG demand as we export to global consumers is going to rise a lot in the next few years. We also think this supply is going to be a little more curtailed
into twenty twenty five and twenty twenty six. So we like natural gas. We really like the Canadian oil sands, where we think it's very low variable cost. They've built their businesses to survive sixty dollars oil, and we think they're generating a lot of free cash that they're delivering to investors. And we also like sort of integrated energy companies that are pursuing the energy transition themselves credibly, using their existing infrastructure and assets to help sort of drive
emissions changes. I'd say on the alternative side, we are very bullish the companies that are building out the electrification assets and infrastructure we need to satisfy the sort of upgrowing electricity demand, Companies that build transmission wires and transmission
lines and so forth. And we're also really bullish nuclear in the long run, you know, we do think it's going to be about refurbishing existing nuclear assets and building new nuclear globally to satisfy the demand for low carbon energy.
Yeah. You know, Bill Gates just broke ground on his nuclear power plant a bit where a Montana I think.
I remember, I think that's right.
Yeah, I mean it's a sodium based nuclear power plant, which you know, sodium can capture a much more of the heat energy that is generated, and you can use it as a storage facility as well. So use that energy whenever you need it.
Wait, let me ask you this question, how much petrochemicals are in your toothpaste? Because I think you might actually know this.
I believe five point eight seven percent.
I don't know.
I was going to totally looking at me screen.
Where's he getting that from? No, but it is in your toothpaste?
And Tyler, when you talk about integrated companies that are really taking the energy transition seriously, well, what's your judgment case on that?
Yeah?
You know, we think a lot of energy companies are genering a lot of cash today, and the opportunity costs dot cash is fairly high. Investors are sort of requiring it to be paid out in dividends or via stocker purchases. But I think what people forget is energy companies own hard assets. They might own pipelines in the ground that you can convert to move hydrogen, or maybe they're experts in developing large scale infrastructure projects, which part of it is energy, but part of it is can you deal
with permitting, can you deal with government regulations? Can you finance large, large wind projects and so forth. So for us, it's about, hey, what is your competitive advantage? Can you utilize your existing labor force or your existing asset base to actually pursue alternative investments at a creative returns? And we think there are some companies that definitely can. There's some that won't. There's some that will do very silly m and A. They'll destroy a lot of capital over time.
But those that get it right we think will be great leaders in the next decade.
All right, Tyler, thanks a lot, really appreciate its super interesting. Tyler rosenlike a head of natural resource equities over at Conan Steers, we didn't get to this point. But also how much of that's going to be dependent on policy from governments too, to know that which sort of bets you're going to make on the energy edition or transition.
You're going to have an energy policy or what it is in this country.
Well, for the IRA we have a everything kind of thing. Let's throw money in a lot of different things and see what sticks, which makes some very nervous because if you put things in the wrong area, then you're going to be wasting time. Anyway. Much more on that coming up all right, Tyler, Thanks live.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa Play Bloomberg eleven thirty.
Let's get back to jet Blue. The stock still holding strong here, up by almost twenty percent. It's deepening its cost cuts in this turnaround plan that it's going through.
Right.
If you can't beat them, join them, and if you join them, you're cutting costs. We're going to George Ferguson now Bloomberg Intelligence, senior Aerospace, defense and airlines analysts on this. Are you surprised by the extent of the stock move here based on the news?
I am a bit.
So it makes you wonder too if there wasn't some a fair amount of short activity in here that's probably trying to get out of the way when things move this quickly. But still, I think that you know, what jet Blue is presenting today is definitely the right way forward, right. I mean, it's all about lowering capacity, firming up fares, and they already have the mint product, that's a premium product that ought to help them bring in some better revenues.
So I think it's the right way forward. I just think the move is probably a little bit dramatic.
And they've cleared a day on your calendar, George, because they've canceled Investor Day. That can't be a good sign.
Well, yeah, I think when companies have less exciting things to talk about, they can investor Day. United can it early earlier, you know, before this earnings period. It made me think there's something going on. So yeah, agreed, But again my guess is we have a lot of the bad news out for the airline industry.
Now.
It's a function of getting people to cut capacity, which you're going to improve fares, and.
So they may just short of that, they may don't have much else to talk about.
So they increased to fifteen the number of cities where they're ending service, and they've already cut more than fifty roots. So you know, the growth prospects for this airline aren't that great.
Well, so, and you watch them again defer airplanes, which I largely think are all about growth. There's some replacement at that, but you wouldn't defer airplanes you needed for replacement. So essentially, I think their fleet plant told us too that they're not a lot of growth. Yeah, I mean, I think we're back to that old question about what is up BLU going to be when it grows up?
Right?
But I think near term you've got to make sure you keep the balance sheet in good shape and and get the income statement healthy, and then you can start to think.
About what are your long term options, what do.
You want to be So you have the top line, and then you have the cost cutting measures in the streamlining, which is going to wind up helping to support as you mentioned, the balance sheet. When do you think that they tackle that top line question?
Then, sorry, I didn't catch that the what line question?
The top line like actually growing here and becoming the company is going to be.
Well, look, I mean I think this summer again we just see too much capacity and so there's there's it's going to be really hard to grow that top line.
I mean, and then you know, with the cuts they're bringing, my senses, they don't see this market being ripe to be growing strongly and at least strongly right, They're still they're still taking aircraft and so they're still they're still growing through a certain degree, but they're not looking to grow like they were in the past, And it tells me, you know, they think this could persist even into I guess next year and the years following.
I think that's a pretty long way to look out. So, you know, I'm not sure all.
The drivers behind cutting things in twenty twenty six, twenty twenty seven, But you know, when do they figure out what they want to be in the long run and how to grow that top line in a large way?
I don't know, that's a good question. I don't have an answer to that one.
Is Southwest something of a template for Jet Blow?
I well, you know, I'd argue that Jet Blue is already further down the road on premium and on on revenue generation than probably Southwest. Southwest to me seems like an airline that needs to become more like a full service carrier.
Their costs are just as high.
They run the entire length of the country right and do a bunch of the you know, the near term international markets. So to me, I think Southwest started looking more towards the full service and has got to sort of keep going there. Given their footprint I Jet Blue is too small like Jeff Blue is just isn't uh.
You know, they're a niche carrier. They're not. They're not a full service carrier. They you know, East Coast New York.
Expensive cities in the East Coast they've got they've got this niche and it's great stuff.
But yeah, again, the question is where do you go from there?
All right, George, great stuff, appreciate it. They definitely don't want to be compared to.
Southwest Long Island City.
There you go, all right, George. I'll be talking to you later because Airbus is also reporting earnings in just about two hours time. George Ferguson and Bloomberg Intelligence, a senior aerospace, defense and airlines analysts, joining us there.
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