Latest / Bloomberg Intelligence / Oracle Earnings, EU China Tariffs

Transcript

Oracle Earnings, EU China Tariffs · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence
0:11
Speaker 1: with Alex Steel and Paul'sweeny.
0:13
Speaker 2: The real app performance has been the US corporate high yield.
0:16
Speaker 3: Are the companies lean enough? Have they trimmed all the fats?
0:18
Speaker 2: The semiconductor business is a really cyclical business.
0:22
Speaker 1: Breaking market headlines and corporate news from across the globe.
0:25
Speaker 3: Do investors like the M and A that we've seen?
0:28
Speaker 2: These are two big time blue chip companies window.
0:32
Speaker 3: Between the peak and cut changing.
0:34
Speaker 1: Super fast Bloomberg Intelligence with Alex Steel and Paul'sweenye on
0:39
Speaker 1: Bloomberg Radio.
0:42
Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big
0:44
Speaker 2: business stories impacting Wall Street and global markets.
0:47
Speaker 3: Each and every week we provide and up research and
0:49
Speaker 3: data on some of the two thousand companies and one
0:51
Speaker 3: hundred and thirty industries our analysts cover worldwide.
0:54
Speaker 2: Today, we'll look at why trade tensions between the EU
0:56
Speaker 2: and China may be escalated.
0:58
Speaker 3: Plus we'll discuss how the energy transition will drive a
1:00
Speaker 3: significant uptick in demand for metals.
1:03
Speaker 2: But first we begin with the computer technology company Oracle.
1:06
Speaker 2: This week, Oracle reported fourth quarter results that fell short
1:09
Speaker 2: of analyst expectations. But Oracle shares still hit a record high.
1:13
Speaker 3: From where we were joined by anorog Rana, Bloomberg Intelligence
1:16
Speaker 3: technology analyst. We first asked Anaurag why investors were so
1:19
Speaker 3: happy about Oracle.
1:21
Speaker 4: I think the biggest thing in our view were the
1:22
Speaker 4: two partnerships that were announced, one with Google and one
1:25
Speaker 4: with open Ai, you know, from a.
1:27
Speaker 5: Future point of view.
1:28
Speaker 4: At the same time, we continue to see strong demand
1:30
Speaker 4: for the cloud infrastructure business, which has been kind of
1:33
Speaker 4: the story on cloud on Oracle for the last you
1:36
Speaker 4: could say, eighteen months or so. So that remained strong.
1:39
Speaker 4: But remember, prior to going into the quarter, there is
1:42
Speaker 4: a lot of noise about software spending slowing down, but
1:45
Speaker 4: that's on the application site that's a different kind of
1:47
Speaker 4: the business. But on the infrastructure side, where you're hosting
1:51
Speaker 4: somebody's you know, application or a workload, that business is
1:55
Speaker 4: still doing well. So it's good for Amazon, it's good
1:57
Speaker 4: for Microsoft, and now it's actually good for Audio.
2:00
Speaker 2: Also, Anura, can we put Oracle into our besket of
2:03
Speaker 2: ai stocks?
2:04
Speaker 4: Now, yeah, I mean have we been talking about it
2:07
Speaker 4: for a while that they would be most likely the
2:09
Speaker 4: fourth largest cloud infrastructure vendor down in the future, right
2:13
Speaker 4: behind you know, Amazon, Microsoft, Google, and then it'll be Oracle. Now, remember,
2:18
Speaker 4: everybody's trying to get the workloads or trying to figure
2:21
Speaker 4: out how to put their AI experiments out in the
2:24
Speaker 4: cloud desk to see what they can do with it,
2:26
Speaker 4: and they're running short of capacity. So when you look
2:28
Speaker 4: at a company like Oracle, which has deep pockets, can
2:31
Speaker 4: actually afford to spend more. They announced they're going to
2:34
Speaker 4: double their capex this year, so that's going to be
2:36
Speaker 4: somewhere around fourteen billion dollars or so for the next
2:40
Speaker 4: twelve months. I mean, they can spend the money so
2:42
Speaker 4: people will.
2:43
Speaker 5: Come to them.
2:44
Speaker 3: So let me just dumb it down for me here.
2:46
Speaker 3: So Microsoft and Google then are using Oracle stuff for
2:50
Speaker 3: their AI cloud infrastructure. So all the language model learning
2:55
Speaker 3: things that happen, and all the data they're collecting for
2:57
Speaker 3: AI goes now to Oracle's hardware software.
3:01
Speaker 4: Well think about it that. Let's assume that you know,
3:03
Speaker 4: Oracle is an electricity provider, and if for any reason,
3:06
Speaker 4: Microsoft feels short of it, they can go out and
3:08
Speaker 4: you know, rent some from somebody else. I mean, because
3:11
Speaker 4: everybody is getting a lot of workloads or incoming inquiries
3:14
Speaker 4: to do things. But they're running shot of capacity, and
3:18
Speaker 4: that's where you know they can go out and borrow.
3:20
Speaker 4: But when it comes to Google, what they basically are
3:22
Speaker 4: doing is they're saying, we have a lot of companies,
3:25
Speaker 4: let's say banks and airlines that house their data on
3:29
Speaker 4: Oracle's databases. They're going to take their servers and put
3:32
Speaker 4: it in Google's cloud data centers. So if anybody wants
3:36
Speaker 4: to run you could say, an AI or an mL
3:40
Speaker 4: machine learning algorithm, they can then tap into that data
3:44
Speaker 4: that's housed into the audicle database so that you know,
3:47
Speaker 4: they can run those queries faster.
3:50
Speaker 2: Listen to this evaluation story. This is just another one
3:52
Speaker 2: that's very much like Nvidia on a terms of valuation,
3:55
Speaker 2: trailing Pe on their fiscal twenty twenty four gens May
3:58
Speaker 2: thirty first, twenty four reading about thirty six times earnings
4:01
Speaker 2: on forward earnings just on their May twenty twenty five
4:05
Speaker 2: twenty two times earnings. Oh, I mean, it's another one
4:08
Speaker 2: those in video word, this is a company that appears
4:10
Speaker 2: to be growing itself into the multiple How do you
4:12
Speaker 2: think about valuation here on a rock for the oracles
4:16
Speaker 2: of the world, for the videos of the world. Now
4:18
Speaker 2: that it seems to like, boy, it's kind of a
4:20
Speaker 2: new paradigm here with AI.
4:22
Speaker 4: Yeah, when you look at cloud infrastructure companies, you know,
4:25
Speaker 4: one could argue that article's slightly cheaper than all the others,
4:28
Speaker 4: But at the same time, their cloud infrastructure business is small,
4:32
Speaker 4: so small compared to the overall pie, which is not
4:35
Speaker 4: growing as much. Remember, after all said and done, for
4:38
Speaker 4: next year, article may grow sales let's say, around eleven
4:42
Speaker 4: twelve percent someone in that rain, So it's not anywhere
4:45
Speaker 4: close to where in video is going to grow, you know,
4:47
Speaker 4: their revenues for the next twelve months.
4:49
Speaker 2: All right, So let's step back and look at your
4:51
Speaker 2: space in general. Here on a rock. When we think
4:54
Speaker 2: about I mean, I feel like we're learning something or
4:56
Speaker 2: at least iron every day about AI, the cloud, OU,
5:00
Speaker 2: the spending associated where the spending's coming from. So, as
5:04
Speaker 2: you sit back and you're constructing a basket of AI stocks,
5:07
Speaker 2: kind of what would you throw in there kind of
5:10
Speaker 2: in order? Would you say?
5:11
Speaker 6: Good question?
5:12
Speaker 4: Yeah, that's it's a very good question. In fact, everybody's
5:15
Speaker 4: trying to figure that out. But when you look at
5:16
Speaker 4: the AI basket, you know, the bigger companies on the
5:19
Speaker 4: chip side are the first one, So that was Sisennvidia.
5:22
Speaker 4: You know, Dell's been a bigger, somewhat of a player
5:24
Speaker 4: over there. But when you come to the software side,
5:27
Speaker 4: the number one company from an AI exposure is Microsoft
5:30
Speaker 4: and that's because of its partnership with open AI. Now
5:33
Speaker 4: when you look at you know, the downstream play, it
5:35
Speaker 4: is the cloud vendors. Now they have a very small
5:37
Speaker 4: portion of their workloads coming from AI, but that's going
5:40
Speaker 4: to rise going forward. That's going to be you know,
5:42
Speaker 4: the likes of Amazon, Google Cloud, and then Oracle Cloud.
5:45
Speaker 4: So these are the infrastructure players, then the application companies. Now,
5:49
Speaker 4: these companies are right now experimenting with products. They don't
5:52
Speaker 4: really have a full, you know, massive suite out there.
5:55
Speaker 4: You know, that's the like of Salesforce or or service
5:58
Speaker 4: Now companies that are experimenting with it or will have
6:02
Speaker 4: smaller products or newer products coming in. Adobe is actually
6:05
Speaker 4: another one that actually stands out for us because they
6:08
Speaker 4: have a product that's working very well. We'll see what
6:11
Speaker 4: they do about it.
6:12
Speaker 3: Oh really, because I feel like, isn't the whole thing
6:14
Speaker 3: with Adobe is that they haven't unveiled the right AI
6:17
Speaker 3: product or anything along those lines.
6:20
Speaker 4: Well, they have one for creating images, So that's doing
6:23
Speaker 4: really well. The one, the next one where everybody's waiting for,
6:25
Speaker 4: is the AI product that can create videos on the fly. Now,
6:30
Speaker 4: the big controversy on Adobe is that, oh, why do
6:32
Speaker 4: I need to buy a software when I can create
6:34
Speaker 4: these images through you know, let's say chat GPT. But
6:38
Speaker 4: it's not just about creating images. First and foremost. When
6:40
Speaker 4: you use an Adobe product, you first of all, are
6:43
Speaker 4: not worried about copyright issues. Second thing, you really use
6:46
Speaker 4: Adobe for editing and the entire workflow process, not just
6:50
Speaker 4: creating images. So creating images can be a commodity, but
6:53
Speaker 4: editing and actually giving out a big story you still
6:56
Speaker 4: need a software for that.
6:57
Speaker 2: Our thanks Anna rag Rana, Bloomberg Intelligence to Knowledge Analyst.
7:00
Speaker 3: We now take a look at one of the Bloomberg
7:02
Speaker 3: Big Take stories featured this week on Bloomberg Intelligence. It
7:05
Speaker 3: focuses on the recent exit of talent at the Federal
7:08
Speaker 3: Reserve Bank of New York and the piece is titled
7:10
Speaker 3: talent exit at Williams New York fed stokes concern on
7:14
Speaker 3: its way for more.
7:15
Speaker 2: We are joined by Alex Howers, Bloomberg short term interest
7:18
Speaker 2: rate reporter. We began by asking what exactly is going
7:21
Speaker 2: on at the New York FED.
7:22
Speaker 7: What's kind of happened over the last couple of years
7:24
Speaker 7: is you've seen an exodus of basically senior management. These
7:29
Speaker 7: are people who have been with the bank for decades
7:32
Speaker 7: just deciding to exit, either that they retire or that
7:35
Speaker 7: they you know, find another opportunity on Wall Street, or
7:38
Speaker 7: just really but what's ultimately driving it is the environment
7:42
Speaker 7: is just not they have found just not conducive either
7:45
Speaker 7: that you know, there's been changes in the bank under
7:49
Speaker 7: the leadership of John Williams that they have found, you know,
7:52
Speaker 7: doesn't necessarily work for them anymore. And as a result,
7:56
Speaker 7: they're leaving. And what people are worried about is the
7:59
Speaker 7: so called brand. It leaves a vacuum of people who
8:02
Speaker 7: are experienced at fighting crises. Because remember a lot of
8:06
Speaker 7: these people have been there. They were there for the
8:08
Speaker 7: financial crisis, they were there for the repo market blow up,
8:10
Speaker 7: they were there in twenty twenty. Like, they have crisis
8:13
Speaker 7: fighting experience, and so you're leaving a lot of that
8:16
Speaker 7: knowledge is leaving the bank, but then also just their
8:19
Speaker 7: ability and the question of are they ready for whatever's next,
8:23
Speaker 7: And that's what.
8:23
Speaker 6: People are really concerned.
8:25
Speaker 7: Is they're feeling like something severely lacking under the leadership
8:29
Speaker 7: of John Williams.
8:30
Speaker 3: There's why I love that you wrote this, because Alex
8:32
Speaker 3: is usually the person has those really nerdy repo market
8:35
Speaker 3: articles where you're like, I know this is important. I
8:38
Speaker 3: know I'm going to read it three times and I'm
8:39
Speaker 3: still going to understand twenty percent of it and I
8:41
Speaker 3: have to email Alex Harris. So thank you for writing
8:43
Speaker 3: an article that I understood right off the bat.
8:46
Speaker 6: What did they do about that?
8:47
Speaker 1: Then?
8:47
Speaker 3: I mean, is it as easy as like, hey, we're
8:49
Speaker 3: going to offer more work from home? Is it not
8:51
Speaker 3: that at all? Is it something very different?
8:54
Speaker 6: I think it's very different.
8:56
Speaker 7: I think really what people are going to have to
8:58
Speaker 7: start looking at is to be a really serious look
9:01
Speaker 7: at the role of the New York Fed. You know,
9:03
Speaker 7: for some people, they've said, look, Lorie Logan got elevated
9:07
Speaker 7: out of the New York Fed to running the Dallas Fed,
9:10
Speaker 7: and she's taken a lot of that staff with her.
9:12
Speaker 7: She has this experience on the balance sheet. People really
9:15
Speaker 7: trust her. So now people are wondering, well, it doesn't
9:17
Speaker 7: necessarily have to be New York that carries out you know,
9:20
Speaker 7: the implementation of the Fed's policies when it comes to
9:23
Speaker 7: their balance sheet, like this could shift to Dallas.
9:26
Speaker 6: So people are.
9:27
Speaker 7: Starting to ask that question or pose that question. At
9:30
Speaker 7: the same time, though, you know, people are pushing back
9:32
Speaker 7: and saying, no, no, no, this has to be in New York.
9:34
Speaker 7: We need to fix what is happening in New York.
9:36
Speaker 7: We need to retain talent in New York because the
9:39
Speaker 7: banks are here, and if something happens with the banking system,
9:42
Speaker 7: it's much easier to call everyone down to Liberty Street
9:44
Speaker 7: and say, hey, get in here, we got to figure
9:47
Speaker 7: this out than trying to call people all the way
9:49
Speaker 7: down to Dallas and say, hey, we got to figure
9:51
Speaker 7: this out.
9:52
Speaker 2: So historically the New York Fed has been the branch
9:55
Speaker 2: that manages the Treasury's balance sheet, correct buying and selling.
10:00
Speaker 7: Well the Fed's balance sheet. So there are whole things
10:02
Speaker 7: of treasuries and mbs and such.
10:05
Speaker 2: Again, they have traders there and stuff that do this.
10:07
Speaker 2: I mean, this is where it happens in New York.
10:08
Speaker 7: Well, and you have other like Chicago still has you know,
10:12
Speaker 7: market analysis people, they still have all these things coming
10:15
Speaker 7: out of the other banks.
10:16
Speaker 6: But it is primarily a function of the New York Fed.
10:19
Speaker 7: They're tasked with managing their Fed's portfolio. Roberto Pearley is
10:23
Speaker 7: the SOMA manager, so he manages the FED securities portfolio.
10:26
Speaker 7: You know, so these things, and so the New York Fed,
10:29
Speaker 7: really post financial crisis, has just taken on such a
10:32
Speaker 7: larger role. They've essentially become like a giant broker dealer
10:37
Speaker 7: just given the size and the sheer size of their
10:39
Speaker 7: balance sheet. And that's you know, someone like Christopher Whalen
10:42
Speaker 7: is making the argument that you don't need an academic
10:45
Speaker 7: running the New York Fed. You need someone who's comfortable
10:48
Speaker 7: with operations, with the nuts and bolts, and can kind
10:50
Speaker 7: of see it from a more markets oriented perspective than
10:54
Speaker 7: an academic one.
10:55
Speaker 3: So how do they pitch that, Because who's going to
10:59
Speaker 3: give up a job Goldman that pays a nice chunk
11:01
Speaker 3: of change. Actually, I have no idea how much the
11:03
Speaker 3: New York Fed does, but I have to assume it's less.
11:05
Speaker 6: How I do it.
11:06
Speaker 7: It's like I think, when I last look at the
11:08
Speaker 7: annual report from twenty twenty three, I think it's like
11:10
Speaker 7: a little over half a million dollars that the president
11:13
Speaker 7: of the New York Fed makes but I mean, look
11:15
Speaker 7: Beth Hammock, who ran funding, who ran the Goldman Sex fundings.
11:19
Speaker 6: Are she's elevated. She's taking the role as the Cleveland
11:22
Speaker 6: Fed president.
11:23
Speaker 7: You know, Lorie Logan could always you know, people are
11:26
Speaker 7: speculating that she could come back to New York and
11:28
Speaker 7: run it. You know, these are the kinds of people
11:30
Speaker 7: I think that they envision when they're thinking about the
11:33
Speaker 7: role and who could possibly you know, helm the New
11:37
Speaker 7: York Fed after John Williams, who decides to retire a
11:39
Speaker 7: step down?
11:40
Speaker 2: Do we have a problem with John Williams? Is that
11:43
Speaker 2: a people placing the blame on these departures on John
11:46
Speaker 2: Williams and his.
11:47
Speaker 7: Style or you know, I think it's a I think
11:50
Speaker 7: it's a bit of both. I think, you know, again,
11:54
Speaker 7: you know, when we spoke to people, the message was
11:56
Speaker 7: always he is a brilliant macro economist, but just ill
12:00
Speaker 7: suited for the role. I also think culturally, the other
12:04
Speaker 7: sense I got from people is that, you know, culturally,
12:07
Speaker 7: it's it's very different than the San Francisco Fed, which
12:10
Speaker 7: is what he was running for seven years before he
12:12
Speaker 7: came and took the role in New York.
12:14
Speaker 6: It's just very different.
12:15
Speaker 7: And you know, sometimes culturally people don't fit and that's okay,
12:20
Speaker 7: and so that's something to also think about.
12:22
Speaker 6: So I think it's a bit of both.
12:24
Speaker 7: I think it is somewhat of the of the culture
12:26
Speaker 7: and just sort of not meshing.
12:29
Speaker 6: You know, they were just sort of ill suited for
12:31
Speaker 6: each other.
12:32
Speaker 2: Our thanks to Alex Harris, Bloomberg Short Term interst rate Reporter.
12:35
Speaker 3: Coming up, we're gonna break down my French President Emmanuel
12:38
Speaker 3: Maccron's call for a snap legislative election may be a
12:41
Speaker 3: serious gamble.
12:42
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
12:45
Speaker 2: depth research and data on two thousand companies and one
12:47
Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via
12:50
Speaker 2: bi go on the terminal, I'll Paul Swingey.
12:52
Speaker 3: And am Alex Steel and this is Bloomberg.
12:58
Speaker 1: You're listening to the Blueloomberg Intelligence podcast. Catch us live
13:02
Speaker 1: weekdays at ten am Eastern on affocr Play and Android
13:06
Speaker 1: Otto with the Bloomberg Business App. Listen on demand wherever
13:09
Speaker 1: you get your podcasts, or watch us live on YouTube.
13:14
Speaker 3: We move now to politics. French President Manuel Macron recently
13:17
Speaker 3: called for a snap legislative election.
13:20
Speaker 2: That's after Marine Lippen's far right National Rally Party defeatedt
13:23
Speaker 2: Macron's Renaissance Party in European parliament elections.
13:27
Speaker 3: The consequences of Macron putting politics above economic stability could
13:30
Speaker 3: be profound, and it's the subject of a Bloomberg opinion
13:33
Speaker 3: piece this week titled Macron plays Fast and Loose with
13:37
Speaker 3: investor Faith for more.
13:38
Speaker 2: Guest host Jess Mett and I were joined by the
13:40
Speaker 2: story's author, Marcus Ashworth. He's a Bloomberg Opinion columnist covering
13:44
Speaker 2: European markets. We first asked Marcus for his reaction to
13:47
Speaker 2: what we saw in Europe this week.
13:49
Speaker 8: I was thinking that this was a long time coming,
13:52
Speaker 8: but it was worse than perhaps everyone, including Macrol, had expected,
13:57
Speaker 8: and therefore it put him in a very difficult situation
13:59
Speaker 8: with I guess his main opposition pulling more than.
14:02
Speaker 5: Twice which his party got. Then he got like fifteen
14:06
Speaker 5: percent or something. So though he has another three years
14:09
Speaker 5: as president.
14:10
Speaker 8: If he wants to, I don't think he'll resign, but
14:12
Speaker 8: there was some question about that. He means he won't
14:14
Speaker 8: have the ability to equim of Congress to be able
14:18
Speaker 8: to do very much. He can still do a lot
14:21
Speaker 8: of presidential decrees, but nonetheless it's boxed him in, and
14:25
Speaker 8: more importantly, he can't run again by then, you know,
14:29
Speaker 8: in by twenty twenty seven, his ten year legacy would
14:32
Speaker 8: be pretty poor. So I think what he's decided to
14:35
Speaker 8: now is gamble on a political swing which has gone
14:40
Speaker 8: to the right wing that perhaps the French people they're
14:43
Speaker 8: challenged again, may push.
14:45
Speaker 5: Back against that. But the consequence of this.
14:47
Speaker 8: Is that the bomb market in particular and the stock
14:50
Speaker 8: market and some degree the economy is is going to
14:53
Speaker 8: have to take a little bit of a how can
14:55
Speaker 8: we say this bit of a shakeup, because politically this
14:59
Speaker 8: is a very aggressive move and it also puts into
15:03
Speaker 8: very much sharp contrast the financial fiscal situation of France,
15:07
Speaker 8: which is rising ever and extorably higher in debt and
15:10
Speaker 8: particularly it's budget deficits annual spend is much more than
15:14
Speaker 8: it takes in. It's five and a half percent last year,
15:17
Speaker 8: which is pretty shocking and not likely dropped much by
15:20
Speaker 8: next year. And I think the European Union could put
15:23
Speaker 8: it into double secret probation. They call it an emergency
15:27
Speaker 8: deficit procedure, but really what it means is there's in
15:30
Speaker 8: the sin bin, and that's hugely embarrassing for macn or
15:33
Speaker 8: any government. But the point is the rating agency, the
15:36
Speaker 8: credit rating agencies we saw S and P at the
15:39
Speaker 8: end of May knock France down to double A minus
15:44
Speaker 8: Fitch are already there, and movies that came out and
15:47
Speaker 8: basically said they're one notch up at double A two,
15:50
Speaker 8: but they may be having a look at it. So
15:52
Speaker 8: it's all about a worsening credit of France, a worsening
15:56
Speaker 8: political regime, which makes the European Union very nervous because
16:00
Speaker 8: you know we've seen with the previous situations with Greece
16:03
Speaker 8: and Italy that will turn the blind eye to most things.
16:05
Speaker 8: But they want everyone to be very much pro Europe
16:09
Speaker 8: and Marie La Penn's right wing party, which is the
16:11
Speaker 8: National Rally though they no longer argue for Frexit or
16:16
Speaker 8: France exit, they once did and then reason pretty.
16:19
Speaker 5: Long in Brussels.
16:21
Speaker 8: So the last thing they want is a non fully backing.
16:25
Speaker 5: Euro style prime minister.
16:28
Speaker 8: Even under Mackerel's president that we're out and settling for Brussel.
16:32
Speaker 8: That means it's very unsettling for credit rating agencies. Panic panic, panic,
16:36
Speaker 8: It means that French debt is perhaps a little bit
16:39
Speaker 8: more risky, still pretty safe, but a little bit more
16:41
Speaker 8: risk than it was before weekend.
16:44
Speaker 3: You were talking about how France has seen a sustained
16:47
Speaker 3: deterioration its fiscal position, particularly when you're looking at its debtload.
16:50
Speaker 3: How did France get into this position?
16:53
Speaker 5: Aha, they spend more than they had. The reason is
16:59
Speaker 5: I mean k Kart.
17:00
Speaker 8: Was elected on reforming the fiscal situation, and principally one
17:03
Speaker 8: of his key things was raising the retirement age, which
17:07
Speaker 8: he raised from sort of really sixty sixty two up
17:10
Speaker 8: to about sixty four. He wanted to get it up
17:12
Speaker 8: to about sixty seven, which for instance where the UK is,
17:17
Speaker 8: but massive pushback and the fact he very basically couldn't
17:21
Speaker 8: get it through unless he pushed it through by this,
17:23
Speaker 8: as I mentioned before, presidential decree worried some of the
17:26
Speaker 8: raising aginsties. Then now the fact that he has gotten
17:29
Speaker 8: really nowhere of getting stuff through the National Assembly, the
17:33
Speaker 8: Parliament or Congress is a really scary situation.
17:36
Speaker 5: So you know that means.
17:38
Speaker 8: There's even less chance of any form of fiscal improvement,
17:43
Speaker 8: of getting that budget deficit down and reducing the overall
17:47
Speaker 8: and debtness of France.
17:49
Speaker 5: And that's a pretty difficult.
17:51
Speaker 8: Situation, complete gridlock because if the national Rally were to
17:55
Speaker 8: become the person the party to have the Prime minister
17:58
Speaker 8: and try and form some form of coappitatial cohabitation, I
18:02
Speaker 8: think it's say English, is that they won't get in it.
18:05
Speaker 8: They won't allow any form of spending cuts or anything
18:09
Speaker 8: to reduce the benefits that a lot of French people.
18:13
Speaker 8: Eight percent of the French economy is state spending. It's
18:16
Speaker 8: a very socialist driven state and they don't like their
18:20
Speaker 8: benefits getting touched, which means nothing will happen at least
18:24
Speaker 8: twenty twenty seven, no improvement on the fiscal outlook. That's
18:28
Speaker 8: very bad news for bondholders, for credit radio season, indeed
18:31
Speaker 8: probably for European Union cohesion.
18:34
Speaker 2: So I know in your column, Marcus, perhaps one of
18:38
Speaker 2: the rationales from Mark Crohn's boldness here is that will
18:41
Speaker 2: actually force Marine Leapen to maybe reveal what her plans
18:44
Speaker 2: for the economy are. What do we know or what
18:47
Speaker 2: don't we know?
18:48
Speaker 8: Well, we they deliberately a bit like the Labor Party
18:50
Speaker 8: it's about to take power in the UK.
18:52
Speaker 5: They've been very should we say with.
18:54
Speaker 8: Erchet In telling us what they are actually going to
18:57
Speaker 8: planning to do, and Marilla Penn has basically said no
19:02
Speaker 8: to many things but hasn't told anyone really what they
19:05
Speaker 8: are planning to do.
19:06
Speaker 5: How you would sort the pension situation out.
19:09
Speaker 8: But the one thing we know, if you're sure, they
19:10
Speaker 8: are pretty anti immigration, and they are pretty anti the
19:15
Speaker 8: pension changes in any other form of benefit changes. So
19:19
Speaker 8: it's gonna be almost impossible for the government to stop
19:22
Speaker 8: its welfare spending bill, and that you can only mean,
19:26
Speaker 8: you know, essentially this would be a deficit and debt
19:29
Speaker 8: to GDP ratio negative scenario.
19:32
Speaker 5: I would think it'd be very hard for her.
19:34
Speaker 8: But you know, Mackerel's gamble is precisely as you laid out,
19:37
Speaker 8: is that if they put them in power, at least nominally,
19:40
Speaker 8: the Prime Minister doesn't have anything like as much control
19:42
Speaker 8: as you would think, but they have ability.
19:44
Speaker 5: To try and put some things through.
19:46
Speaker 8: If they turn out to be incompetent and they turn
19:49
Speaker 8: out not to do what they said they would go
19:51
Speaker 8: to do, or anything like this, it would make the
19:54
Speaker 8: presdential elections in twenty twenty seven a bit of a little
19:57
Speaker 8: bit more anti rally and pros we say Macrols or
20:02
Speaker 8: more more centrists. The huge gamble was it could go
20:05
Speaker 8: the other way. These guys could turn out to be
20:07
Speaker 8: very good in power. And the fact the center rights
20:09
Speaker 8: are already talking about maybe teaming up with the National
20:13
Speaker 8: Rally of the far right and creating an anti Macron
20:15
Speaker 8: coalition that can become very popular, and we could see
20:19
Speaker 8: it would be a very stupid gamble that Macrol's taken.
20:23
Speaker 8: We just don't know. The point is that either a
20:24
Speaker 8: bondholder and indeed, as you seem with the French banks
20:27
Speaker 8: like Sockgen got hit really hard. You know, why would
20:30
Speaker 8: you want to take the risk and perhaps go to
20:32
Speaker 8: somewhere a little bit more safe like Germany or I
20:34
Speaker 8: don't know, somewhere else in Europe?
20:36
Speaker 9: All right?
20:36
Speaker 3: Thanks to Marcus Ashwareth, the Bloomberg opinion columnist covering European markets.
20:40
Speaker 2: Staying in Europe this week, you heard that the European
20:42
Speaker 2: Union will impose additional tariffs on electric cars shipped from
20:46
Speaker 2: China starting next month. This could take levies to as
20:49
Speaker 2: much as forty eight percent.
20:50
Speaker 3: It's a move that further escalates trade tensions between the
20:53
Speaker 3: EU and China, and it also adds to the cost
20:55
Speaker 3: of buying an EV For more.
20:57
Speaker 2: We were joined by Craig Trudell, Bloomberg Global Ottos Editor.
21:00
Speaker 3: We first asked Craig for his take on the tariff increases.
21:03
Speaker 10: This is huge news, it was anticipated, but the particulars
21:07
Speaker 10: are something that are very fresh. So the European Union
21:12
Speaker 10: launched this investigation last year into the extent of the
21:15
Speaker 10: subsidization of electric vehicles by China, which are are increasingly
21:21
Speaker 10: you know, coming into Europe and you know, really able
21:24
Speaker 10: to compete with local manufacturers. There's been concerns about you know,
21:28
Speaker 10: Chinese cars being able to undercut companies like Volkswagen and
21:33
Speaker 10: Stlantis and Renault. Sa I see, the maker of MG,
21:37
Speaker 10: which is a British brand that you know, was was
21:40
Speaker 10: sort of brought back from the brink by a state
21:43
Speaker 10: owned company in China. Sa I see. They are going
21:47
Speaker 10: to be subject to a thirty eight percent additional tariff.
21:50
Speaker 10: And MG has really been sort of lighting, you know,
21:54
Speaker 10: lighting things on fire here in Europe and in the
21:56
Speaker 10: UK in terms of really you know, being able to
21:59
Speaker 10: push a lot more volume the last couple of years.
22:03
Speaker 10: Another big manufacturer that's going to be subject to a
22:06
Speaker 10: substantial TERRAF will bgi Le they of course own Volvo
22:10
Speaker 10: and Pollstar and some other big brands. Byd is another
22:14
Speaker 10: company that will be subject to seventeen percent additional tariff,
22:18
Speaker 10: and the rest of the industry will be subject to
22:21
Speaker 10: an a weighted average duty of twenty one percent.
22:25
Speaker 2: So talk to us about just the EV market and
22:28
Speaker 2: the China's percentage, Like what's China's market share in Europe
22:31
Speaker 2: of EV's broadly defined, because you can't find one here
22:34
Speaker 2: in the US.
22:36
Speaker 10: Yeah, I mean, it's tricky because it of course depends
22:38
Speaker 10: a little bit on how you define it. And I
22:40
Speaker 10: think one of the things that's really interesting here is
22:42
Speaker 10: that it's not necessarily just Chinese companies that are doing
22:46
Speaker 10: this importing. The biggest importer as a matter of fact,
22:49
Speaker 10: is Tesla. They have the plant in Germany where they
22:53
Speaker 10: make Model Wise, but they don't make Model threes there,
22:56
Speaker 10: so they've been shipping an awful lot of Model threes
22:58
Speaker 10: from their plant in Shanghai. They interestingly are going to
23:02
Speaker 10: try to have a lower duty rate and make the
23:07
Speaker 10: argument to the Europink Commission that because they've been, you know,
23:11
Speaker 10: benefiting less than other manufacturers, you know, from subsidies that
23:17
Speaker 10: they should have a sort of commensurate duty rate. Other
23:20
Speaker 10: manufacturers are able to make that request and have what's
23:24
Speaker 10: called a you know, individually calculated rate, but at this juncture,
23:29
Speaker 10: the only company that we know that's asked for that
23:32
Speaker 10: and make get it is Tesla.
23:34
Speaker 3: Here's what I don't quite understand. I know I'm kind
23:37
Speaker 3: of beating my head against all on this one, but
23:39
Speaker 3: if the goal is to go green, why wouldn't they
23:41
Speaker 3: want to flood the market with a ton of Chinese
23:43
Speaker 3: ev imports and get the green stuff going. And I
23:46
Speaker 3: appreciate that they want to protect their current manufacturers, but
23:49
Speaker 3: you know, importing cheaper evs also spurs competition. So the
23:54
Speaker 3: line to thread the needle I find to be very confusing.
23:59
Speaker 10: It's absolutely needle threading or or you know, tightrope walking,
24:02
Speaker 10: pick your metaphor. And it is a very valid question.
24:06
Speaker 10: And depending on who you ask, they're they're doing absolutely
24:09
Speaker 10: the right thing here, or or they're really sort of
24:12
Speaker 10: shooting themselves in the foot folks in bruskly. The you
24:15
Speaker 10: know debate here is is to what extent do you
24:19
Speaker 10: know local manufacturers need to be protected from the fact
24:22
Speaker 10: that kinda has jumped up out to this huge lead.
24:25
Speaker 10: They're dominant in this space. They're able to you know,
24:28
Speaker 10: bring electric vehicles to market with much cheaper batteries that
24:32
Speaker 10: people can actually afford, and that's been you know, the
24:36
Speaker 10: the major you know, sort of pain point for the
24:39
Speaker 10: industry is they have not been able to bring prices
24:42
Speaker 10: down far enough fast enough for you know, more mass
24:46
Speaker 10: market adoption. China has been able to pull that off. Uh,
24:50
Speaker 10: you know, in large part European companies have not been
24:53
Speaker 10: able to do that. So while you know, we've seen
24:55
Speaker 10: quite a bit more momentum in Europe relative to say
24:58
Speaker 10: the US, that momentum has really slow of late, particularly
25:02
Speaker 10: as we've seen you know, the cost of living crisis
25:05
Speaker 10: and inflation really hitting consumers pocketbooks. We've not seen you know,
25:09
Speaker 10: the growth rates that you know, just in the last
25:12
Speaker 10: few years. We're really eye popping and you know, getting
25:15
Speaker 10: a lot of people excited about you know, this transition
25:19
Speaker 10: being doable.
25:20
Speaker 2: Our thanks to Greig Judell, Bloomberg Global Autos Editor.
25:23
Speaker 3: Coming up on the program, a conversation with Next Era
25:25
Speaker 3: Energy CEO John Ketchum on how the demand for power
25:28
Speaker 3: is dramatically increasing.
25:30
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
25:33
Speaker 2: depth research and data on two thousand companies in one
25:36
Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via
25:39
Speaker 2: b I go on the terminal On'm Paul Sweeney.
25:41
Speaker 3: And am Alex Steel and this is Bloomberg.
25:48
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
25:52
Speaker 1: weekdays at ten am Eastern on applecar Play and Android
25:56
Speaker 1: Auto with the Bloomberg Business app. You can also listen
25:59
Speaker 1: live on Amazon on Alexa from our flagship New York station,
26:02
Speaker 1: Just say Alexa playing Bloomberg.
26:04
Speaker 3: Eleven thirty, we begin to look at the company Next
26:07
Speaker 3: Era Energy. It's TICKERSNEE. Next Era Energy is a leading
26:11
Speaker 3: clean energy company headquartered in Juno Beach, Florida, and it
26:14
Speaker 3: provides clean, affordable, reliable electricity to approximately five point eight
26:18
Speaker 3: million customer accounts or more than twelve million people across Florida.
26:22
Speaker 2: For more on how the demand for power is dramatically increasing,
26:25
Speaker 2: we were joined by Next Era Energy President and CEO,
26:28
Speaker 2: John Ketchum. We began by asking him more about what
26:31
Speaker 2: his company does.
26:32
Speaker 11: We're made up of two businesses. One we own the
26:36
Speaker 11: nation's largest rate regulated utility Florida Power and Light. And
26:41
Speaker 11: two we are the world's leader in renewables when solar
26:47
Speaker 11: battery storage a unique combination bringing those two companies together.
26:51
Speaker 3: But you still have like nuclear and gas too, right
26:54
Speaker 3: like it.
26:54
Speaker 2: We do for the utility side, we do so we
26:57
Speaker 2: covered all.
26:58
Speaker 11: We're in every part of the energy value chain, not
27:00
Speaker 11: only a renewables. We have six gigawatts of nuclear and
27:05
Speaker 11: we're one of the best operators in the country on
27:07
Speaker 11: the nuclear side, and we also own gas fire generation.
27:10
Speaker 11: Seventy two percent of our generation fleet in Florida is
27:14
Speaker 11: actually natural gas fired. So we view ourselves really as
27:19
Speaker 11: a very credible source in being able to advise our
27:21
Speaker 11: customers on what the lowest cost option is for generation.
27:26
Speaker 2: Owning a utility electric utility in Florida would seem to
27:30
Speaker 2: be a tough business with all the weather down there.
27:33
Speaker 2: What happens when these storms come through? How do you guys?
27:36
Speaker 2: You have to almost be in a constant state of
27:39
Speaker 2: emergency almost to be able to react.
27:40
Speaker 11: We are battle tested. That's one of the great things
27:43
Speaker 11: about our company is that nothing catches us up by surprise,
27:47
Speaker 11: and it comes from a culture of continuous improvement and innovation,
27:51
Speaker 11: and we practice and we drill, and we've had what
27:54
Speaker 11: forty nine hurricanes in the last twenty or thirty years.
27:58
Speaker 11: We're never caught by surprise. Company that is used to
28:02
Speaker 11: managing through diversity, and that's one of the strengths.
28:05
Speaker 3: So you mentioned catch by surprise. So there was an
28:08
Speaker 3: investor presentation that you made and you did, were you
28:11
Speaker 3: outline your forecast this year through twenty twenty six. You're
28:14
Speaker 3: also twenty twenty seven midpoint for profit forecast. That's the
28:18
Speaker 3: one that analysts said that falls short of our estimates. Yeah,
28:22
Speaker 3: And I guess the question is if data demand and
28:24
Speaker 3: data power is going to drive so much demand for
28:27
Speaker 3: your stuff, why isn't that midpoint higher.
28:30
Speaker 11: Well, here's what we see, and we talked a lot
28:32
Speaker 11: about this at the analyst day. There are three things
28:35
Speaker 11: that I think really differentiate Next Era as part of
28:38
Speaker 11: our value story. One, we're seeing an inflection point and
28:42
Speaker 11: power demand. Two, it's going to be met by renewables
28:45
Speaker 11: because it's low costs, fast to deploy, and it's clean.
28:48
Speaker 11: And no companies better positioned to meet it than we are.
28:51
Speaker 11: And our business model has always been what I would
28:55
Speaker 11: call a replacement cycle. We were building new renewables to
28:58
Speaker 11: replace higher cost coal plants, higher costs, less efficient gas
29:05
Speaker 11: fired units, oil fire units. We now have this new
29:08
Speaker 11: opportunity that's really emerged in the last six to nine months,
29:12
Speaker 11: which is what I call our growth cycle opportunity. It's
29:16
Speaker 11: a new demand that has come and it's across industries.
29:21
Speaker 11: It's not just data centers get a lot of discussion,
29:24
Speaker 11: but it's industrial electrification reshoring to manufacturing as well. But
29:29
Speaker 11: when you think about it, we're having all these discussions
29:32
Speaker 11: with these customers now. Take data centers, for example, it
29:35
Speaker 11: takes two to three years to build a data center,
29:38
Speaker 11: so they won't need the power until twenty twenty seven.
29:41
Speaker 11: We might sign a contract today, but the power comes
29:44
Speaker 11: in twenty seven, which means it contributes in twenty eight.
29:47
Speaker 11: And so we're trying to explain to investors, Look, we
29:50
Speaker 11: have a tremendous long term growth outlook, but a lot
29:53
Speaker 11: of this growth cycle demand is really going to start materializing,
29:58
Speaker 11: producing revenues and earn needs in twenty seven, which means
30:02
Speaker 11: it really starts to contribute in twenty eight.
30:04
Speaker 2: As you walk through mitt On, Manhattan, you probably see
30:06
Speaker 2: some empty office space here. I think they all move
30:09
Speaker 2: down to your state. Talk to us about how that's
30:12
Speaker 2: impacted your business in terms of demand and maybe what
30:15
Speaker 2: you have to invest back into your GRIED.
30:17
Speaker 11: Yeah, and that's what's great about our business, right is
30:19
Speaker 11: the Barbell approach. We've got the nation's leading great regularly
30:23
Speaker 11: utility in Florida and the world's leader in renewables in Florida.
30:26
Speaker 11: We're seeing tremendous growth over the next twenty years. We're
30:30
Speaker 11: projecting a forty four percent increase in GDP. We have
30:34
Speaker 11: one thousand people a day moving to the state of Florida.
30:38
Speaker 11: Four the five fastest growing metropolitan areas in the United
30:43
Speaker 11: States are in Florida.
30:45
Speaker 2: Florida.
30:45
Speaker 11: We're a country, it would have the fourteenth largest economy
30:49
Speaker 11: in the world, and we're there to power all that growth.
30:53
Speaker 11: So our growth story is not only about what I
30:56
Speaker 11: just discussed about all this renewable demand that we see
31:00
Speaker 11: power in AI and industry and manufacturing across the United States,
31:04
Speaker 11: but it's also all the growth that we see right
31:07
Speaker 11: in our own backyard in Florida.
31:09
Speaker 3: Talk to me about rates. So you're going to need
31:12
Speaker 3: to invest a lot, right, Like there's maybe an enormous
31:14
Speaker 3: investment cycle as you mentioned, like the growth cycle for utilities, right,
31:18
Speaker 3: what is it like on the regulated side of going
31:21
Speaker 3: back to the government and saying, Okay, guys, I got
31:23
Speaker 3: to invest it, You've got to raise the rates.
31:25
Speaker 1: Yeah.
31:26
Speaker 11: And so what we do is we have done a
31:28
Speaker 11: terrific job of taking cost out of our business. So
31:31
Speaker 11: when you look at what we've been able to do
31:33
Speaker 11: over the last twenty years, our O and M on
31:37
Speaker 11: a dollar per megawate hour basis is seventy percent seventy
31:41
Speaker 11: percent lower than the national average. That's three billion dollars
31:46
Speaker 11: we put in our customer's pocketbook every single year compared
31:51
Speaker 11: to an average utility. And we've always been able to
31:54
Speaker 11: make really smart capital investment decisions around bringing low cost
31:59
Speaker 11: generation in the fold. And the lowest cost generation option
32:03
Speaker 11: that we have in Florida is solar and storage. So
32:06
Speaker 11: although we're investing more capital, it's actually lowering the bill
32:10
Speaker 11: because it's a lot cheaper than other generation alternatives, combined
32:15
Speaker 11: with our ability to take cost out with the way
32:17
Speaker 11: we operate.
32:18
Speaker 2: But for you, from your investors perspective, is a unit
32:21
Speaker 2: of power from a renewable source, what's a profit margin
32:24
Speaker 2: on that versus maybe an existing source.
32:28
Speaker 11: Well, when you think about renewables, I mean renewables, you know,
32:32
Speaker 11: have really strong returns and they're low cost, and you
32:36
Speaker 11: talked about you know, interest rates, you being one of
32:39
Speaker 11: the factors we pass those costs through to our customers.
32:42
Speaker 11: And so the cost of wind and solar has gone
32:46
Speaker 11: up a little bit as we've seen some pressure you
32:49
Speaker 11: know here from the macro environment, So have cost increase
32:53
Speaker 11: for every other type of generation. Actually, gas fired generation
32:57
Speaker 11: has really gone up in price. So you know, what
33:00
Speaker 11: we have seen with gas fire technology is a fifty
33:04
Speaker 11: percent increase in the last twelve months. That has not
33:08
Speaker 11: happened to renewables, making renewables even lower cost than they've
33:12
Speaker 11: ever been on a relative basis to gas turbine options.
33:16
Speaker 3: So what I hear is that everything is just more
33:19
Speaker 3: expensive because that's the environment that we're in. But because
33:22
Speaker 3: you're able to take costs out, the rate payer may
33:25
Speaker 3: not get hit as hard. Is that a fair statement?
33:28
Speaker 11: That's exactly right. And so what we've been able to
33:30
Speaker 11: do in Florida, our bill is thirty seven percent lower
33:34
Speaker 11: than the national average thirty seven percent. It's because of
33:37
Speaker 11: our ability to take all those costs out of the
33:40
Speaker 11: company and also offer them low cost renewable solutions as
33:45
Speaker 11: part of the generation mix. And when you put those
33:47
Speaker 11: two together, that's how we're able to achieve that thirty
33:51
Speaker 11: seven percent lower bill than the rest of the nation.
33:55
Speaker 11: That's a really compelling customer value proposition and investor value opposition.
34:00
Speaker 2: Our thanks to John Ketchum, President and CEO of next Er.
34:03
Speaker 3: Energy, saying with energy, we have something here at Bloomberg
34:06
Speaker 3: called Bloomberg New Energy Finance. The idea behind it is
34:09
Speaker 3: to provide data on commodities, power, transport, industries, buildings and
34:14
Speaker 3: agriculture plus new technology.
34:16
Speaker 2: This week we looked at how the energy transition will
34:18
Speaker 2: drive a significant uptick in demand for metals.
34:20
Speaker 3: Bloomberg and EF estimates six trillion dollars worth of key
34:23
Speaker 3: metals will be needed between twenty twenty two and twenty fifty,
34:26
Speaker 3: and to reach net zero emissions by mid century that
34:29
Speaker 3: number leaps to ten trillion.
34:31
Speaker 2: For more, we were joined by Sung at Choi Bloomberg
34:33
Speaker 2: BNEF Metals and Mining Analyst. We first to ask Sung
34:37
Speaker 2: to comment about the amount of metal that would be
34:39
Speaker 2: needed in the energy transition.
34:41
Speaker 9: As we progress through the technologies where we shift from
34:45
Speaker 9: fossil fuel to clean energy, and with the innovation and technologies,
34:50
Speaker 9: especially in the transportation sector and data sector as well
34:54
Speaker 9: and power grids more, obviously more metals will be needed
34:57
Speaker 9: in order to get the electrons flow. You need metals
35:00
Speaker 9: obvious right now, the particular categories of metals that are
35:04
Speaker 9: of interest lately is lithium and copper. Those two metals
35:08
Speaker 9: are very interesting at this moment.
35:11
Speaker 2: Where do we get these metals and is that a
35:13
Speaker 2: concern where we do get them?
35:15
Speaker 9: Yes, that is a concern. So for me, demand is
35:21
Speaker 9: is of a concern, but it isn't too much of concern.
35:23
Speaker 9: Supply is more of the concern. The reason for that
35:26
Speaker 9: is the reason that I say that is because many
35:30
Speaker 9: of the places that have this particular resource such as
35:33
Speaker 9: copper and lithium in areas where it has very sensitive
35:38
Speaker 9: political and social landscape. And in order to get those
35:42
Speaker 9: you know, supply out of the ground right, miners have
35:45
Speaker 9: to navigate through those complicated situations. Right For example, just
35:50
Speaker 9: starting this year or last end of last year, many
35:54
Speaker 9: people podcast that the copper will be in set plus
35:57
Speaker 9: for twenty twenty four will be a cur us yah.
36:00
Speaker 9: It would be a slight surplus for twenty twenty four,
36:02
Speaker 9: there was, there was the expectation. But then at the
36:06
Speaker 9: start of this year right in Panama, Cobra Panama was
36:10
Speaker 9: shut down for many reasons. Right as a result of that,
36:14
Speaker 9: we're experiencing this, you know, run up in copper prices,
36:18
Speaker 9: right because there's a dislocation between a copper mince plot
36:22
Speaker 9: and the smell of capacity.
36:24
Speaker 7: So here is.
36:25
Speaker 3: Where I think raises the problem because you're looking at
36:27
Speaker 3: a structural shift among metals that are cyclical. So that's
36:30
Speaker 3: one area where we were surprised to the upside, and
36:33
Speaker 3: now we're going to see a deficit. But then I
36:34
Speaker 3: look at lithium, and we knew the ev revolution and
36:37
Speaker 3: the batteries we were going to need lithium. So all
36:39
Speaker 3: of a sudden the lithium guys, and a lot of
36:41
Speaker 3: them are in South America. When game busters are like,
36:43
Speaker 3: we need all this lithium. It's going to be awesome.
36:45
Speaker 3: The demand's going to be there, and then the price
36:47
Speaker 3: is crashed and then they had to shut down some
36:49
Speaker 3: of their operations because it wasn't economic anymore. We do
36:51
Speaker 3: need the lithium, but we didn't need it that day.
36:54
Speaker 6: How do we manage that.
36:56
Speaker 9: So you know, with everything, you know, timing is everything,
37:00
Speaker 9: but it's really impossible to predict any type of timing
37:04
Speaker 9: with any type of investments, right, So copper is in
37:07
Speaker 9: this moment right now. For lithium, there was two years ago, right,
37:12
Speaker 9: all this hype around you know, electric vehicles use of lithium,
37:16
Speaker 9: difficulties in getting lidium, so all the investments poured in
37:19
Speaker 9: into lidium space and as a result of that, there's
37:21
Speaker 9: currently there is an oversupply issue with lithium.
37:23
Speaker 1: Right.
37:24
Speaker 9: But despite the oversupply issue, the lithium industry isn't really
37:30
Speaker 9: at the cusp of a paradigm shift in technology innovation. Right.
37:36
Speaker 9: There's this thing called direct lithium instraction technology where you take.
37:39
Speaker 2: The direct lithium extraction.
37:41
Speaker 9: Yes, direct lithium distraction technology. So there's two routes where
37:46
Speaker 9: you could extract lithium. There's mainly a hard rock with
37:50
Speaker 9: theium where you take the spodi up, you mind it
37:53
Speaker 9: at the rock and you process it. All The process
37:56
Speaker 9: is brian. You take you take the Brian and you
38:01
Speaker 9: exchect the lithium out of it.
38:02
Speaker 2: But butter think water, yeah, okay, but.
38:05
Speaker 9: Using evaporating metive so you basically you're using something like
38:09
Speaker 9: to evaporate the water out of it and extract lithium
38:11
Speaker 9: and that takes two years. Now d l E or
38:13
Speaker 9: dark lithium extraction process, that's gonna bring that lead time
38:18
Speaker 9: down to two weeks instead of two years. So main
38:22
Speaker 9: competition versus you know, hard rock that is right now,
38:25
Speaker 9: that's going to be a you know, game changer for
38:27
Speaker 9: the industry where it's gonna actually lower the cost card.
38:30
Speaker 9: Right it may load the cost card. It's been too
38:33
Speaker 9: early to tell right now, but at the you know,
38:35
Speaker 9: at the cost of commercialization of this technology, it may
38:38
Speaker 9: loader the cost card and it may you know, change
38:40
Speaker 9: the industry forever.
38:41
Speaker 3: Our thanks to Sun Choi, Bloomberg, Andy, app Metals, and
38:44
Speaker 3: mining Analysts.
38:45
Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,
38:49
Speaker 1: and anywhere else you get your podcasts. Listen live each
38:53
Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com.
38:56
Speaker 1: They are your radio app tune In and the Bloomberg
38:59
Speaker 1: Business app. You can also watch us live every weekday
39:02
Speaker 1: on YouTube and always on the Bloomberg terminal