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Christie’s Chair With Inside Look At $450 Million Da Vinci Sale · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg P and L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Four
• 0:36
  Speaker 1: hundred and fifty million dollars that's a lot to pay
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  Speaker 1: for any painting, even if it is a Leonardo da Vinci.
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  Speaker 1: And here to help us understand the complexities of the
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  Speaker 1: art world and the money involved. A Stephen Lash. He
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  Speaker 1: is Chairman Emeritus of Christie's America and he joins us
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  Speaker 1: here in our eleven three oh studio. Stephen Lash, thank
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  Speaker 1: you very much for being here. Let's just begin with
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  Speaker 1: that four hundred and fifty million dollar Leonard da Vinci
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  Speaker 1: that was recently auctioned at Christie's. Were you in the
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  Speaker 1: room during the auction process? I was in the room
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  Speaker 1: during the auction process, and it was one of those
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  Speaker 1: high moments in one's auction life. What was it like?
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  Speaker 1: Can you just describe it for us? Correct? There was
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  Speaker 1: huge excitement, Um, there was anticipation and no knowledge of
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  Speaker 1: really what it would end up bringing. We were estimating
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  Speaker 1: the picture at a hundred million dollars. It was guaranteed
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  Speaker 1: at or about that level. Uh, And it ended up
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  Speaker 1: selling for four hundred million dollars plus our commission. How
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  Speaker 1: how big was the crowd? They were close to a
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  Speaker 1: thousand people attending the auction in several rooms at Christie's. Wow. Um,
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  Speaker 1: you said, including commission. And I remember over Thanksgiving break
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  Speaker 1: one of my relatives came up to me and said
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  Speaker 1: that Leonardo da Vinci, she said that there were fifty
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  Speaker 1: million dollars of fees ATTACKTCH to it. And he said,
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  Speaker 1: what were those? So? What were those? Christie's charges? A
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  Speaker 1: typically a fee to the buyer and the seller as
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  Speaker 1: you move up the scale in value, and four hundred
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  Speaker 1: and fifty million dollars does that smartly? The fees are negotiated,
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  Speaker 1: not the fees with the seller, but the way in
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  Speaker 1: that case we would divide the fees between ourselves and
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  Speaker 1: people like the guaranteurs who come in months before the
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  Speaker 1: auction and offer to put in a bid at a
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  Speaker 1: certain level. Tell people a little bit about your personal background,
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  Speaker 1: because that also informs some of the experience and skills
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  Speaker 1: that you bring to not only the art side of Christie's,
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  Speaker 1: but also the business side. I'm a lucky guy because
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  Speaker 1: I get aid to do what I love to do,
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  Speaker 1: which is to look at art, meet interesting people, and
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  Speaker 1: travel around the world all the time. My background is
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  Speaker 1: um uh, privileged in the sense that I chose my
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  Speaker 1: parents very wisely and they encouraged me with this career.
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  Speaker 1: Um But you are on Wall Street for it. For
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  Speaker 1: a bit. I was on Wall Street, and people think
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  Speaker 1: that there's a great economy between working on Wall Street
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  Speaker 1: and working at Christie's. But by your opening question, you
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  Speaker 1: know otherwise that this is also, in its way a
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  Speaker 1: financial business. But what I learned on Wall Street was
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  Speaker 1: the importance of long term relationships. The important time to
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  Speaker 1: see a client and is when nothing is at stake
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  Speaker 1: and you're there to say you care about the client
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  Speaker 1: and her long term needs. Okay, so who are the clients.
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  Speaker 1: Is it a handful of wealthy individuals that you speak with.
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  Speaker 1: We deal with a wide variety of of people. Yes,
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  Speaker 1: some are wealthy, some are super rich, others are modest
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  Speaker 1: people who play a premium on owning objects that have
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  Speaker 1: appreciated to dramatic levels, and it's so interesting to get
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  Speaker 1: to know these people and to watch them. There can
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  Speaker 1: be multimillion dollar collections in tiny, little, modest, split level
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  Speaker 1: houses in the suburbs of some regional city, and it's
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  Speaker 1: great fun to discover those. Talk a little bit if
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  Speaker 1: you can about and I'm using this word badly, but inventory.
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  Speaker 1: In other words, there's got to be a process by
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  Speaker 1: which you and your team and the team that auction
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  Speaker 1: houses go out and try to convince or as you say,
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  Speaker 1: build relationships with potential sellers. How has your experience informed
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  Speaker 1: you about those making those kinds of connections, Because not
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  Speaker 1: everything is going to be a four million dollar painting,
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  Speaker 1: absolutely not. In fact, our average sale would be um
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  Speaker 1: much much less, uh, several thousand dollars perhaps, But what
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  Speaker 1: we do know is we're very fortunate and having a
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  Speaker 1: distinguished name. We're two hundred and fifty years old, and
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  Speaker 1: we treasure that that reputation that we have. So everything
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  Speaker 1: is built on the trust that the public has in us.
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  Speaker 1: We as a result, have wonderful records on what people
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  Speaker 1: have bought over the years. One of the real joys
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  Speaker 1: of the job, which you asked about um was our staff.
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  Speaker 1: We have tremendous specialists who are vastly knowledgeable about the
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  Speaker 1: works of art and very approachable. We're open to the
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  Speaker 1: public virtually seven days a week, and what these staff
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  Speaker 1: specialists like most is to talk to people who are
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  Speaker 1: interested in their subject, even if it's not about the
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  Speaker 1: most expensive painting we're going to sell. So in some ways,
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  Speaker 1: the concept of an auction house where people stand around
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  Speaker 1: and hold up signs if they're interested in upping the
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  Speaker 1: bid is anachronistic in the Internet age. Is there any
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  Speaker 1: move to online sales of any sorts or is this
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  Speaker 1: sort of an area that is off limits for that No,
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  Speaker 1: not all limits at all. Online sales have become hugely
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  Speaker 1: important to us. A business opportunity for us is to
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  Speaker 1: make ourselves as accessible as possible to the public, to
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  Speaker 1: encourage people to come into the auction house, to let
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  Speaker 1: them know they don't have to pay an admission ticket,
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  Speaker 1: to let them know that we have extended hours, to
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  Speaker 1: let them know there are evenings when people can come in.
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  Speaker 1: They can even get a drink, and they're not charged
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  Speaker 1: for that. So online sales are a way for people
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  Speaker 1: to familiarize themselves with a uh interesting process, and once
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  Speaker 1: they're familiar, they're more comfortable in coming to the live auctions.
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  Speaker 1: I just want to quickly ask you about your desire
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  Speaker 1: for collecting. You've got a personal collection. Is there a
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  Speaker 1: piece from your ocean liner memorabilia collection that you particularly treasure?
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  Speaker 1: Give you about twenty seconds, um, Yes, I have wonderful murals,
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  Speaker 1: um that were trials for the Old Queen Mary built
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  Speaker 1: in ninety six. I read about them thirty years ago,
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  Speaker 1: called up the artist on the telephone and said, do
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  Speaker 1: you have anything you might sell? And she said yes.
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  Speaker 1: I wish that we could share a picture of the
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  Speaker 1: shine in your eyes as you talked about that with
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  Speaker 1: our listeners, but suffice it to just describe it. Stephen Lash,
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  Speaker 1: thank you so much for joining us. Stephen Lash, chairman
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  Speaker 1: Emeritus of Christie's America in New York, and Pim, I
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  Speaker 1: want to go, Uh, look, let's go. I think that
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  Speaker 1: would be really fun. Anyway, we want to focus a
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  Speaker 1: little bit on what's going on in Europe, where they
• 8:50
  Speaker 1: are still going strong with their stimulus efforts and have
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  Speaker 1: yet to start raising rates. Simon Ballard joins us from London.
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  Speaker 1: Simon Ballard is a global credit strategist for Bloomberg Simon,
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  Speaker 1: I want to talk a little bit about Greece first
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  Speaker 1: and foremost, since tenure yields in that nation dropped below
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  Speaker 1: five per cent to the lowest levels since two thousand
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  Speaker 1: and nine. Is this because of the ongoing stimulus from
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  Speaker 1: the European Central Bank or is this because of something
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  Speaker 1: more fundamental? Well, I think it's probably a combination of
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  Speaker 1: certainly the the ongoing stimulus from the Central Bank and
• 9:26
  Speaker 1: the chase for yield that has seen investors push further
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  Speaker 1: and further from from core Europe out to the periphery
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  Speaker 1: in terms of trying to find incremental yield for their
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  Speaker 1: for their portfolios. But it's also sort of a reflection
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  Speaker 1: of the perceived fundamental change, if you wish, from from
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  Speaker 1: from from from Greece's perspective. Um, And yes, you know,
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  Speaker 1: perhaps the market has a fairly short memory. Perhaps the
• 9:45
  Speaker 1: you know, the indebted situation of the Greek economy is
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  Speaker 1: still far from far from robust. But yeah, as you said,
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  Speaker 1: we're back down subs sub five percent, So it's a
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  Speaker 1: it's it's an appreciation of of ongoing stimulus from the ECB,
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  Speaker 1: the backstop bid and the actually improving macroeconomic profile across
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  Speaker 1: the Eurozone, which of course, you know, tends to lift
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  Speaker 1: all ships even if the if the weaker vessels are
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  Speaker 1: still there on the edge, but you know, they'll still
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  Speaker 1: they'll still ride on that on that wave, as as
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  Speaker 1: Greece is doing. And just to sort of extrapolate out
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  Speaker 1: this central bank backstop, Breven Howard, it was reported as
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  Speaker 1: starting up two funds to invest in the recovery of
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  Speaker 1: Greek assets going forward. It's trying to preserve some of
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  Speaker 1: its client interest after getting a lot of withdrawals and uh,
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  Speaker 1: you know, yes, Greek bonds are rallying in part because
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  Speaker 1: of this deal with its creditors. Uh that it that
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  Speaker 1: it came to last week when it concluded a debt
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  Speaker 1: swap um. But it seems like there's sort of an
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  Speaker 1: air of I don't know if I want to say desperation,
• 10:45
  Speaker 1: but desperation with respect to getting yield. Well, excuse me
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  Speaker 1: that there is to a certain extent. I mean, you're
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  Speaker 1: you're fighting against your fighting with the with the central
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  Speaker 1: banks in times of find to find liquidity and yield.
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  Speaker 1: But I think, you know, we look at Greece and
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  Speaker 1: a little bit more detailed and you know, the people
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  Speaker 1: talking about the you know, they're coming back to the
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  Speaker 1: back to the public markets, becoming sustainable in terms of
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  Speaker 1: their you know, self financing or beard at a level
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  Speaker 1: that you know, they're still like a lower level of yield,
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  Speaker 1: but we're away from the precipice if you wish of
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  Speaker 1: of of of of debt conversion out of the eurok
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  Speaker 1: or so we say, sort of breakdown of the of
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  Speaker 1: the euro Zone itself was worse feared at one stage
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  Speaker 1: when you know, Greece was trading in in double digit yields.
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  Speaker 1: Um So from that perspective, yes, you know, we're we're
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  Speaker 1: on we're on a firmer footing. It's still it's still fragile,
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  Speaker 1: but it's firmer and I think that's why we're seeing this,
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  Speaker 1: you know, continued consolidation and compression in in in grease
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  Speaker 1: and other peripheral yields. Well, simon catching your attention now
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  Speaker 1: to Britain, because I'm trying to understand something here. You know,
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  Speaker 1: I know that you've issued well I see you laugh,
• 11:47
  Speaker 1: right well done, Yeah right, it doesn't I'm trying to
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  Speaker 1: fit this together. The fifty you've got, you've got a
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  Speaker 1: fifty year guilt, right a British government bond. Um. I
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  Speaker 1: believe the yield there is one point six three percent.
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  Speaker 1: And if you don't like the the fifty year, they've
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  Speaker 1: got a yummy forty year for you at one point
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  Speaker 1: six nine. But then can you explain why the thirty year,
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  Speaker 1: which trades at one point eight to why would the
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  Speaker 1: thirty year be higher in yield than the forty or
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  Speaker 1: the fifty and why would it be the actually lower
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  Speaker 1: uh than than the twenty five years? Why are you
• 12:25
  Speaker 1: trying to make this make sense? Oh? Sorry, you don't
• 12:28
  Speaker 1: have to, you don't. You don't just draw the line
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  Speaker 1: and forget it. Let's call it liquidity there. Let's call
• 12:33
  Speaker 1: it liquidity Pam. And it really is all about the
• 12:35
  Speaker 1: liquidity in the thirty year part of the curve relative
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  Speaker 1: to forty or fifty. Forty or fifty year guilts get bought,
• 12:40
  Speaker 1: they get put down there away, that's it. You don't
• 12:42
  Speaker 1: see them until maturity a little um or probably very little,
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  Speaker 1: whereas the thirty year is you know, the the you
• 12:48
  Speaker 1: know the long the long term benchmark, it will trade
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  Speaker 1: with with much greater fluidity um and hence you probably
• 12:54
  Speaker 1: see that pricing, that pricing anormally, um, that little huck
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  Speaker 1: up in the in the curve going out to go
• 13:00
  Speaker 1: up for the years relative relative to the longer days.
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  Speaker 1: I'd say it's all to do liquidity and the barn
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  Speaker 1: hold mentalities in at the longer end, all right, So
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  Speaker 1: it has to do only with the liquidity. Is it
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  Speaker 1: cannot be said for for other markets? I mean, is
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  Speaker 1: that similar to let's say, what's going on in places
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  Speaker 1: like I don't know France for example. I mean, because
• 13:18
  Speaker 1: I'm looking there and you know you kind of have
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  Speaker 1: a similar situation. Uh, And what's the reasoning? Well, again,
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  Speaker 1: it's because you know, the thirty sorry, the forty or
• 13:27
  Speaker 1: fifty year paper gets brought by asset managers or you
• 13:31
  Speaker 1: you know, the guys that have the long the long
• 13:33
  Speaker 1: duration asset liability. You know, so the real investors versus
• 13:36
  Speaker 1: the speculators, like the investor part of the curve versus
• 13:40
  Speaker 1: the speculator part of the current. Well, there is that,
• 13:42
  Speaker 1: but let's not say that there aren't sort of real
• 13:44
  Speaker 1: money investors at thirty years as well. But there tends
• 13:46
  Speaker 1: to be a greater degree of liquidity and new issues,
• 13:48
  Speaker 1: long dated new issues will be priced off the long bond.
• 13:51
  Speaker 1: We priced off the thirty year, they won't priced off
• 13:53
  Speaker 1: the forty year, or unless it's a specific corporate bond
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  Speaker 1: that comes with a with a forty or fifty five
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  Speaker 1: year maturity. Should we say, as we've seen over the
• 14:00
  Speaker 1: course of the last week, but generally the thirty year
• 14:03
  Speaker 1: is traded to a much greater extent than forty or paper,
• 14:06
  Speaker 1: and that makes it more volatile in terms of the
• 14:08
  Speaker 1: price and yield proof profile. But pim it also suggests
• 14:11
  Speaker 1: that real money investors to not believe that inflation is
• 14:14
  Speaker 1: going to necessarily pick up, thank you so much more
• 14:17
  Speaker 1: over the next forty years, that they are okay with
• 14:21
  Speaker 1: walking in forty year paper at lower rates, they won't
• 14:24
  Speaker 1: be around in forty years. They bought them so that
• 14:27
  Speaker 1: they've managed to maintain that kind of asset liability mix, right,
• 14:32
  Speaker 1: all right, Well now I know draw the chart, don't
• 14:34
  Speaker 1: worry about it. Thank you very much for being with a.
• 14:37
  Speaker 1: Simon Ballard as our global credit strategist for Bloomberg, he
• 14:40
  Speaker 1: joins us from London. A fascinating story today on the
• 15:06
  Speaker 1: Bloomberg by Matt Robinson, financial regulation reporter of Bloomberg News,
• 15:10
  Speaker 1: and it's about the sec looking into how banks sometimes
• 15:15
  Speaker 1: help hedge funds to perhaps uh prop up values of
• 15:19
  Speaker 1: bonds to uh perhaps make their books look a little
• 15:22
  Speaker 1: better toward month end or year end. And Matt joins us, now,
• 15:26
  Speaker 1: can you just explain the overall investigation where it is
• 15:30
  Speaker 1: right now and what you're learning about the steps ahead. Sure,
• 15:33
  Speaker 1: So the agency has actually been looking at this market
• 15:36
  Speaker 1: ever since the crisis, and um ever since the crisis.
• 15:41
  Speaker 1: Basically it was lightly regulated for years and years up
• 15:44
  Speaker 1: until the financial crisis, mortgage backed securities, you know, thinly
• 15:48
  Speaker 1: traded bonds, you know, sort of the alphabet soup of
• 15:50
  Speaker 1: of debt that led to the crisis. So they had
• 15:54
  Speaker 1: a hands off approach. After the crisis, they started digging
• 15:56
  Speaker 1: in and you know, we've seen some criminal cases against
• 16:00
  Speaker 1: sell side traders of the bond prices. And this is
• 16:02
  Speaker 1: sort of like the next chapter in uh their investigation
• 16:06
  Speaker 1: looking at how you know, traders value their books and
• 16:10
  Speaker 1: how hedge funds value their books and how you know,
• 16:13
  Speaker 1: because since there's a lot of wiggle room in pricing,
• 16:15
  Speaker 1: are people taking advantage. Matt could just step back and
• 16:18
  Speaker 1: explain to people that are not familiar with the relationship
• 16:21
  Speaker 1: between hedge funds and banks, why this would be taking
• 16:25
  Speaker 1: place and maybe even what role do hedge funds play
• 16:30
  Speaker 1: in the day to day operations of banks and vice versa. Right,
• 16:34
  Speaker 1: this is you know, because you know, hedge funds are
• 16:36
  Speaker 1: such a big clients of banks. You know these you know,
• 16:40
  Speaker 1: thinly traded securities where prices move a lot. Wait wait,
• 16:43
  Speaker 1: and and you say customers of banks are clients and banks.
• 16:46
  Speaker 1: That could be that they're borrowing money from the bank.
• 16:49
  Speaker 1: They could be that all of their uh sort of
• 16:52
  Speaker 1: administrative or their detailed operations are housed in a bank,
• 16:57
  Speaker 1: or a variety of different relationships, right right, Yeah, you know,
• 17:00
  Speaker 1: buying derivatives, you know, buying I p O s. So,
• 17:04
  Speaker 1: you know, a portfolio manager of these very I liquid
• 17:07
  Speaker 1: securities is usually kind of walled off from valuation because
• 17:11
  Speaker 1: of these, you know, because because they're so conflicted. But
• 17:14
  Speaker 1: what they can do is if there isn't good pricing
• 17:17
  Speaker 1: by you know, market providers, they can go they can
• 17:20
  Speaker 1: call up a trader say well, I think this bond
• 17:22
  Speaker 1: feels like an eight five this month and you know
• 17:25
  Speaker 1: the you know when in reality it should probably be eighty.
• 17:29
  Speaker 1: So that portfolio manager can go to the Valuation Committee.
• 17:31
  Speaker 1: Blake Listen, I have a recent quote. This is fresh.
• 17:34
  Speaker 1: This is from a market participant. You know, why don't
• 17:37
  Speaker 1: we call why don't we split the difference? It's called
• 17:39
  Speaker 1: eighty two and a half? All right? Taking taking taking
• 17:41
  Speaker 1: a step back here. Also, let's just sort of paint
• 17:45
  Speaker 1: a picture of what hedge funds do. If they have
• 17:48
  Speaker 1: assets that don't trade all that much, like some of
• 17:50
  Speaker 1: these bonds, what they do is at the end of
• 17:53
  Speaker 1: a quarter or at the end of the year, they
• 17:55
  Speaker 1: will put a some kind of valuation on their assets
• 17:59
  Speaker 1: that they then tell their clients their investors to give
• 18:03
  Speaker 1: a sense of how their assets are doing. So, you know,
• 18:07
  Speaker 1: just to get a sense what is the potential consequence
• 18:09
  Speaker 1: of this action if hedge funds are, say, uh, overstating
• 18:14
  Speaker 1: the value of their assets and telling their clients that
• 18:17
  Speaker 1: their returns are substantially larger than they perhaps actually are.
• 18:21
  Speaker 1: So the SEC has been working with criminal authorities. There
• 18:24
  Speaker 1: was a case, um last year with portfolio manager at
• 18:29
  Speaker 1: Visium Asset Management who's doing just that, saying, um, you know,
• 18:33
  Speaker 1: getting getting better price quotes that took a negative month,
• 18:36
  Speaker 1: you know, or negative quarter to a positive one. I
• 18:39
  Speaker 1: mean the way that I'm thinking about this is it
• 18:42
  Speaker 1: has potentially pretty vast implications if this is a widespread practice,
• 18:47
  Speaker 1: because it means that should the market fall, or should
• 18:51
  Speaker 1: the hedge fund have to sell some of the assets,
• 18:55
  Speaker 1: all of a sudden, those valuations tumble much more than
• 18:57
  Speaker 1: people are expecting when you actually have to find a
• 18:59
  Speaker 1: mark it rather than just sort of propping things up
• 19:02
  Speaker 1: and sort of falsely marking things way above where they
• 19:05
  Speaker 1: would trade. No, right, right, yeah, I mean, because you know,
• 19:08
  Speaker 1: depending it all depends on redemptions. I mean, if if
• 19:11
  Speaker 1: they're you know, if you're gonna have widespread redemptions, you
• 19:14
  Speaker 1: know that will you know, crush valuations. But for a
• 19:16
  Speaker 1: lot of these firms, you know they're invested in a
• 19:18
  Speaker 1: lot of different credit you know they're probably going to
• 19:21
  Speaker 1: sell out of the more liquid stuff. First, is this
• 19:24
  Speaker 1: really because you've got to be able to show the
• 19:26
  Speaker 1: customer a variety of numbers. You've got to show them returns,
• 19:31
  Speaker 1: you've got to show them valuations, and that if this
• 19:35
  Speaker 1: was really a big deal, this would also hurt the banks,
• 19:38
  Speaker 1: right because if you're a bank and you've got a
• 19:39
  Speaker 1: client and you're housing their collateral and you're giving them
• 19:44
  Speaker 1: evaluation for that collateral, maybe the bonds that they purchased,
• 19:47
  Speaker 1: and if that valuation is too high, that's going to
• 19:50
  Speaker 1: skew the way you lend the money. Right, Well, I
• 19:54
  Speaker 1: mean what the SEC is concerned about is having you know,
• 19:57
  Speaker 1: one bond, one price. You know, if if one part
• 19:59
  Speaker 1: of the bank is is you know, has one price
• 20:01
  Speaker 1: here and then another part for a favorite client there.
• 20:04
  Speaker 1: The same thing with hedge months. They wanted they wanted
• 20:06
  Speaker 1: to have like you know, conformity, you know with those
• 20:08
  Speaker 1: But does that really make sense? And because if you
• 20:11
  Speaker 1: have something that is thinly traded, you're going to find
• 20:14
  Speaker 1: you know, one group of investors who know the real
• 20:17
  Speaker 1: value and are willing to put a price and put
• 20:19
  Speaker 1: money behind it, and then someone else it might be
• 20:22
  Speaker 1: packaged into some larger investment entity. How would you be
• 20:26
  Speaker 1: able to tease out the vat that? What the SEC
• 20:29
  Speaker 1: would want to know is like, all right, did you
• 20:30
  Speaker 1: follow the same process throughout? You can't pick this process
• 20:33
  Speaker 1: this time, another process you know tomorrow. It's it's it's
• 20:36
  Speaker 1: This is a fascinating topic because it's also such a
• 20:39
  Speaker 1: slippery area where people will pay a different price depending
• 20:43
  Speaker 1: on how much they have to sell depending on a
• 20:45
  Speaker 1: lot of things. It's not just reliance, say on whether
• 20:48
  Speaker 1: you think you're going to get your money back from
• 20:50
  Speaker 1: the company that's borrowing the money or the individuals. So
• 20:52
  Speaker 1: it's a fascinating issue. Really well done. We look forward
• 20:55
  Speaker 1: to hearing more about it. Yes, indeed, thanks very much
• 20:58
  Speaker 1: for being with us, and thanks for this orry. Matt
• 21:00
  Speaker 1: Robinson is our financial regulator regulation reporter. I beg your
• 21:03
  Speaker 1: pardon for Bloomberg speaking about the Securities and Exchange Commission
• 21:08
  Speaker 1: set to probe but whether banks have helped hedge funds
• 21:11
  Speaker 1: inflate their returns. Nuclear energy is much more established in
• 21:35
  Speaker 1: Europe than it is in the US. Just by way
• 21:37
  Speaker 1: of comparison, about twenty percent of the electricity in the
• 21:41
  Speaker 1: US is fueled by nuclear energy, compared with seventy five
• 21:45
  Speaker 1: percent in France. Here to give us more perspective is
• 21:47
  Speaker 1: Bob Freeman, vice president of the Nuclear Fuel for North
• 21:51
  Speaker 1: America for Arriva and as well as Seth Gray, President
• 21:55
  Speaker 1: and chief executive officer of light Bridge Bridge Corporation. Thank
• 21:58
  Speaker 1: you both for joining us. Bob, I want to start
• 22:01
  Speaker 1: with you and get a sense of what the main
• 22:03
  Speaker 1: obstacle has been to bring more nuclear energy to the
• 22:07
  Speaker 1: US and what inwards are being made there. Sure the
• 22:12
  Speaker 1: difficulty with bringing new nuclear to the United States has
• 22:15
  Speaker 1: typically been the UH initial startup cost. The it costs
• 22:19
  Speaker 1: a large amount of money to build a nuclear power
• 22:22
  Speaker 1: plant that's going to last sixty to eighty years, as
• 22:26
  Speaker 1: well as public opinion and some regulation difficulties to bring
• 22:30
  Speaker 1: the technology that's been around for fifty years to a larger,
• 22:35
  Speaker 1: larger supply seth grade. The ability to contain nuclear energy
• 22:43
  Speaker 1: is then related to the ability to contain any feasible
• 22:46
  Speaker 1: UH material. One, if you could just offer some details
• 22:50
  Speaker 1: about your experience. I know you've worked in the Middle
• 22:53
  Speaker 1: East helping to kind of create these containment like programs.
• 22:58
  Speaker 1: Just give us an update on how that works. Us
• 23:02
  Speaker 1: talking about two areas. One is physical containment of very
• 23:07
  Speaker 1: thick steel and concrete structures that keep within them UM
• 23:12
  Speaker 1: any material. In the event of an incident. For example,
• 23:16
  Speaker 1: at Three Mile Island, nobody was injured because everybody everything
• 23:20
  Speaker 1: was kept inside the containment facility. And secondly, we're talking
• 23:24
  Speaker 1: about technologies and safety cultures that also um prevent or
• 23:31
  Speaker 1: mitigate the effect of any accident as it's happening in Ariva.
• 23:34
  Speaker 1: Bob's company has been a leader in that area. So
• 23:38
  Speaker 1: talk to us Seth about the agreement that light Bridge
• 23:41
  Speaker 1: just came to with Ariva. Well, when Bob talked about
• 23:46
  Speaker 1: the obstacles to nuclear power, they really come down to
• 23:51
  Speaker 1: public and governmental concerns about nuclear safety and market and
• 23:56
  Speaker 1: company concerns about economics. So light Bridge has an then
• 24:00
  Speaker 1: did a new type of nuclear fuel and new technology
• 24:03
  Speaker 1: that will work in the existing reactors as well as
• 24:06
  Speaker 1: new ones that will be built that dramatically improve the
• 24:09
  Speaker 1: economics of nuclear power generation by letting the reactors produce
• 24:13
  Speaker 1: more energy and significantly improve the safety of the reactors
• 24:18
  Speaker 1: as well. And we've been working with four of the
• 24:21
  Speaker 1: largest nuclear utilities to help us design the fuel make
• 24:26
  Speaker 1: sure it meets their needs. We've patented it and now
• 24:29
  Speaker 1: we've signed these agreements with Arriva. We're forming a joint venture.
• 24:34
  Speaker 1: We expect to sign the final joint venture operating agreement
• 24:37
  Speaker 1: this month and launched the joint Ventuare Company in the
• 24:40
  Speaker 1: first quarter of next year to manufacture and sell this
• 24:45
  Speaker 1: nuclear fuel. And a large US utility has actually already
• 24:50
  Speaker 1: signed the first letter of intent with us to be
• 24:52
  Speaker 1: the first to commercially demonstrate this new technology in their
• 24:57
  Speaker 1: reactors to show the economic and safety advantages of this fuel,
• 25:02
  Speaker 1: and combined with the reva's tremendous industrial capacity, knowledge experience
• 25:08
  Speaker 1: in global reach, we intend for this to be a
• 25:11
  Speaker 1: significant product in the nuclear power industry, Bob, do you
• 25:14
  Speaker 1: believe that this new fuel will invigorate the US nuclear
• 25:19
  Speaker 1: power industry? And will it maybe even galvanize more and
• 25:26
  Speaker 1: A people who are worried about climate change CEO two
• 25:30
  Speaker 1: emissions environmental issues. Will this galvanize those people to be
• 25:36
  Speaker 1: more active in supporting nuclear power? Absolutely has the potential
• 25:41
  Speaker 1: to do so. If you can take existing structures and
• 25:44
  Speaker 1: you can allow ten to seventeen percent more power out
• 25:48
  Speaker 1: of them without actually creating new power plants. So use
• 25:52
  Speaker 1: the existing footprints, UM, So you're not creating more, you're
• 25:55
  Speaker 1: just producing more as well as improved the safety. This
• 26:00
  Speaker 1: fuel operates at center line temperature about a thousand degrees
• 26:04
  Speaker 1: cee lower than conventional fuels, which allows it to be safer,
• 26:09
  Speaker 1: which the public is very interested in in UH and seeing,
• 26:13
  Speaker 1: as well as producing economic benefits as Seth had mentioned,
• 26:16
  Speaker 1: that make the power producers UM excited about the technology,
• 26:22
  Speaker 1: interested in investing it and without having to build a
• 26:25
  Speaker 1: new power plant where you can just simply change the
• 26:27
  Speaker 1: fuel design and get those benefits, it's definitely attractive. Web.
• 26:32
  Speaker 1: Can you give us an estimate of what proportion of
• 26:35
  Speaker 1: US electricity usage which should come from or could come
• 26:39
  Speaker 1: from nuclear sources within the next ten years? I mean,
• 26:43
  Speaker 1: just to give us a sense. If it's currently about
• 26:45
  Speaker 1: of energy used by the US, what could you see, say,
• 26:49
  Speaker 1: ten years from now, so without creating new actual footprint
• 26:53
  Speaker 1: reactors and using just this fuel, I would see a
• 26:57
  Speaker 1: good seventeen percent improvement if this fuel was applied to
• 27:00
  Speaker 1: all the existing reactors. In other words, now it's on
• 27:06
  Speaker 1: so probably moved up to ABO and you know, maybe
• 27:11
  Speaker 1: just a set if you could offer your experience working
• 27:15
  Speaker 1: with other countries and what some of the obstacles were
• 27:20
  Speaker 1: and how you managed to overcome them, because this is
• 27:23
  Speaker 1: not an issue that is just contained by geography. It
• 27:26
  Speaker 1: is a transnational issue. Well, first of all, we've been
• 27:31
  Speaker 1: very selective as to which countries we we've worked with,
• 27:35
  Speaker 1: with very responsible governments that want to comply with the
• 27:39
  Speaker 1: highest international standards of nuclear safety, and in our experience,
• 27:45
  Speaker 1: the countries prioritize safety, but obviously will choose natural gas
• 27:51
  Speaker 1: or renewables if that is the better better choice because
• 27:57
  Speaker 1: those are safe to um and what we've designed here
• 28:02
  Speaker 1: and we're bringing to market with Ariva is a fuel
• 28:05
  Speaker 1: that will provide all these countries really the lowest cost
• 28:10
  Speaker 1: way of generating electricity on their grids. We've designed this
• 28:15
  Speaker 1: fuel so with the ten or seventeen percent power upgraad
• 28:19
  Speaker 1: that Bob described, upgrading a reactor with this fuel, that
• 28:25
  Speaker 1: added electricity will be the lowest cost electricity on the
• 28:29
  Speaker 1: grid in those countries, cheaper than as they added coal
• 28:33
  Speaker 1: or natural gas or renewables. So the countries we've worked
• 28:37
  Speaker 1: with are are keenly watching what we're doing here. I
• 28:40
  Speaker 1: was thinking for United our aramits is the most visible one.
• 28:44
  Speaker 1: I guess that you've worked with Z that correct? Yes, okay,
• 28:48
  Speaker 1: thanks very much. A gentleman much appreciated. As Seth Grade
• 28:51
  Speaker 1: is the president and the chief executive of a Light
• 28:54
  Speaker 1: Bridge Corporation. Bob Freeman, we thank you as well, a
• 28:57
  Speaker 1: vice president for nuclear Fuel for North America for Arriva
• 29:02
  Speaker 1: based in Paris. Thanks for listening to the Bloomberg P
• 29:11
  Speaker 1: and L podcast. You can subscribe and listen to interviews
• 29:14
  Speaker 1: at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer.
• 29:19
  Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm
• 29:22
  Speaker 1: on Twitter at Lisa Abramo. It's One before the Podcast.
• 29:26
  Speaker 1: You can always catch us worldwide on Bloomberg Radio