Latest / Bloomberg Intelligence / BI Weekend: Meta, Constellation Deal, Tesla Robotaxi Limits

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BI Weekend: Meta, Constellation Deal, Tesla Robotaxi Limits · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence
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  Speaker 1: with Alex Steel and Paul Sweeney.
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  Speaker 2: The real ap performance has been in US corporate high yield.
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  Speaker 3: Are the companies lean enough? Have they trimmed all the fats?
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  Speaker 3: Do investors like the M and A that we've seen?
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  Speaker 2: These are two big time blue chip companies.
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  Speaker 3: Window between the peak and cunt changing super fast.
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  Speaker 1: Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio.
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  Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big
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  Speaker 2: business stories impacting Wall Street and the global markets.
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  Speaker 3: Each and every week we provide in depth research and
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  Speaker 3: data on some of the two thousand companies and one
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  Speaker 3: hundred and thirty industries our analysts cover worldwide.
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  Speaker 2: Today, we'll take a look at the telecommunications company Comcast
• 0:56
  Speaker 2: and how it's benefiting from its theme parks.
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  Speaker 3: Plus we'll look at how oil and gas companies are
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  Speaker 3: investing in low carbon technologies.
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  Speaker 4: Well.
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  Speaker 2: First, we begin with some news in tech and energy.
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  Speaker 3: This week, Constellation Energy agreed to sell power from a
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  Speaker 3: Clinton Nuclear Plan in Illinois to the tech giant Meta Platforms.
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  Speaker 3: It's a twenty year contract starting in mid twenty twenty seven.
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  Speaker 2: And this comes as nuclear power has emerged as one
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  Speaker 2: of the biggest winners from the AI fueled search and
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  Speaker 2: electricity demand.
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  Speaker 3: For more on the tech side, we are joined by
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  Speaker 3: man Deep saying Bloomberg Intelligence in your tech industry analyst,
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  Speaker 3: and we first ask man Deep why Meta needs this
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  Speaker 3: deal with Constellation.
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  Speaker 5: If they're raising their capex, which they did it in
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  Speaker 5: their last earnings, that capex is going towards you know,
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  Speaker 5: getting more AI chips, and you know, if you are
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  Speaker 5: putting more AI chips, you need more power. So clearly
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  Speaker 5: that is where the shortage is right now. And look,
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  Speaker 5: if this is an AI supercycle that we all believe
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  Speaker 5: it is going to be the case, and I think
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  Speaker 5: you will see a power supercycle as well. And in
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  Speaker 5: this case, all the higher scalers will be looking to
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  Speaker 5: procure power for their data centers. I mean, Meta serves
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  Speaker 5: over three billion monthly active users across their family of apps. Now, granted,
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  Speaker 5: those users right now are using more CPU compute, but
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  Speaker 5: if you're rolling out AI tools and LLM searches, you
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  Speaker 5: need more power for the AI chips, and I think
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  Speaker 5: that's the intent here.
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  Speaker 6: And Mandy, let's be honest here.
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  Speaker 2: I mean, all you tech guys, you Silicon Valley guys,
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  Speaker 2: you always think you're the smartest guys in the room.
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  Speaker 6: But let's be honest.
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  Speaker 2: You guys don't know anything about the oil and gas
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  Speaker 2: business and the nuclear business. Why is Meta And I'm
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  Speaker 2: guessing some others are going to kind of get more
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  Speaker 2: deeply and strategically involved in the energy side of their business.
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  Speaker 6: Is this a trend here?
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  Speaker 5: Just look at how far they have come in terms
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  Speaker 5: of you know, infrastructure, like a company like Google. Not
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  Speaker 5: only are they designing their own data centers and you know,
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  Speaker 5: creating their own chips, and now they are you know,
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  Speaker 5: procuring power to the extent that they want to make
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  Speaker 5: sure that these AI chips, which can have volatile power needs,
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  Speaker 5: are most optimized when it comes to the efficiency of
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  Speaker 5: their infrastructure. And that's why these hyperscalar companies really have
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  Speaker 5: got so many different aspects to their mode. So it's
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  Speaker 5: not just about the search algorithm or in the case
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  Speaker 5: of Meta, you know, their social media knowledge graph. It
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  Speaker 5: is about the entirety of how they run their infrastructure,
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  Speaker 5: and that is what is a long term mode, because
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  Speaker 5: nobody else can operate at the scale at at which
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  Speaker 5: these hyperscalers are operating right now.
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  Speaker 3: This is a fun fact in the article Bible Rate
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  Speaker 3: from Bloomberg. So Meta first of all, has a global
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  Speaker 3: energy head.
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  Speaker 6: They have a global energy head. Okay, all right, so
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  Speaker 6: they do.
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  Speaker 3: They're really kind of ramping that out, and they were
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  Speaker 3: looking at proposals. They announced in December they were looking
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  Speaker 3: at proposals for as much as coore gigawatts of new
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  Speaker 3: US reactors, and it received fifty from a range of companies,
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  Speaker 3: including Constellation. To that point, I'm also wondering Mande the
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  Speaker 3: significance of when they're building data centers and hyperscalers for lllms,
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  Speaker 3: a large language model and that training versus when they
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  Speaker 3: have to build stuff for inference, which could be smaller
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  Speaker 3: and more co located, so closer to the cities, closer
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  Speaker 3: to our Paul and I have our phone. Does that
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  Speaker 3: tend to look different than in terms of their power needs.
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  Speaker 5: Absolutely, And I think so far the market was concentrated
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  Speaker 5: towards training. Every year you would have a ten times
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  Speaker 5: larger model, which was more intelligent and it could do
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  Speaker 5: more in terms of you know, answering your queries. But
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  Speaker 5: with inferencing your right. I mean, the traffic patterns may
• 4:44
  Speaker 5: vary depending on the population, and so if you're serving
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  Speaker 5: traffic in New York, it's very different from serving traffic
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  Speaker 5: somewhere else that may not have the same concentration. And
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  Speaker 5: with that, I think the challenge these companies have had
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  Speaker 5: is the transfer lines can be upgraded. I mean you need,
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  Speaker 5: you know, a pretty lengthy review process and the whole
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  Speaker 5: thing may take years. So right now they are trying
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  Speaker 5: to procure power wherever they can to offset the increased consumption,
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  Speaker 5: and some of it may come at the expense of
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  Speaker 5: power usage for some other purpose. Then you know why
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  Speaker 5: data center is being prioritized here, and that is what
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  Speaker 5: will be interesting because with inferencing, the power needs can
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  Speaker 5: be variable. I mean, one trend we have seen is
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  Speaker 5: with reasoning, you need more compute, so you know, the
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  Speaker 5: model is thinking a lot more at the time you
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  Speaker 5: are putting the prompt in, as opposed to training, where
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  Speaker 5: all of the training is happening in background over a
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  Speaker 5: period of a few weeks. So reasoning is per query
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  Speaker 5: and depending on how complex your query is the model
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  Speaker 5: is doing more work and that's why it may need
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  Speaker 5: more power.
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  Speaker 2: Another data point from this new Bloomberg News article, Meta
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  Speaker 2: is contracting for more power after the company's total electricity
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  Speaker 2: consumption nearly tripled from twenty.
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  Speaker 6: Nineteen to twenty twenty three. So yeah, I guess they
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  Speaker 6: need some more energy man deposition in the.
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  Speaker 2: CAPEX numbers for Meta and for these other tech companies,
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  Speaker 2: or they need to take those CAPEX numbers up even
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  Speaker 2: more if they're going to get deeper into the energy space.
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  Speaker 5: I mean, all signs are the CAPEX numbers may continue
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  Speaker 5: to go up, but right now, the biggest component of
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  Speaker 5: the CAPEX is still the spend on the GPU chips. Obviously,
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  Speaker 5: the power needs will take some portion of the CAPEX,
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  Speaker 5: but it's still not as big as the chips. And
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  Speaker 5: think of it this way. If you're getting you know,
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  Speaker 5: twenty thousand Nvidia chips, the cost of keeping them idle
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  Speaker 5: or not being able to utilize them one hundred percent
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  Speaker 5: is way higher than anything you are spending in terms of,
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  Speaker 5: you know, the energy deal that they had. So clearly
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  Speaker 5: they are focusing on utilizing the chips that they have already,
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  Speaker 5: and that's why they are proactive with you know, these
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  Speaker 5: power deals.
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  Speaker 2: Our thanks to Man Deep Seeing Bloomberg Intelligence senior tech
• 7:07
  Speaker 2: industry analyst.
• 7:09
  Speaker 3: We recently focused on a Bloomberg Big Take story entitled
• 7:11
  Speaker 3: A fatal Tesla crash shows the limits of full self Driving.
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  Speaker 3: You can find it on Bloomberg dot Com and the Terminal.
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  Speaker 2: The story looks at how federal regulators are investigating whether
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  Speaker 2: Tesla's robotaxi system is dangerous even with the human behind
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  Speaker 2: the wheel.
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  Speaker 3: From where we were joined by Craig Trudell, Bloomberg Global
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  Speaker 3: Autos Editor. We first asked Craig to walk us through
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  Speaker 3: the details of what the issues are with completely autonomous vehicles.
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  Speaker 7: I guess maybe the thing to start with is the
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  Speaker 7: Teslas that you can buy today that are on the
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  Speaker 7: road now are not that right. They are not autonomous.
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  Speaker 7: You can pay extra for a system called full self driving,
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  Speaker 7: and yet it's a miss snowmer. It's a system that
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  Speaker 7: you have to pay attention to at all times. You know,
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  Speaker 7: if you get into a crash, it is it is
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  Speaker 7: on you. And we've seen that, you know, play out
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  Speaker 7: when Tesla customers have you know, tried to come after
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  Speaker 7: the company. The company says, look, you know, we we
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  Speaker 7: warned you. We told you that you know, you're you're
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  Speaker 7: responsible for driving while using this system. The company is
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  Speaker 7: trying to make this leap, that's been trying to make
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  Speaker 7: the sleep for years, to eventually get to a point
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  Speaker 7: where you do not have to to supervise and you know,
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  Speaker 7: even to take it further than that, you know, take
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  Speaker 7: the human out from behind the wheel altogether. And we
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  Speaker 7: hear Musk, you know, talk about that quite a bit
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  Speaker 7: lately because it's something that they're actually trying to commercialize,
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  Speaker 7: even just in the next matter of you know, next
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  Speaker 7: week or so. There's a lot of questions about how
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  Speaker 7: exactly they intend to do that, whether they can do it,
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  Speaker 7: especially after he's predicted, you know, year after year that
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  Speaker 7: they're on the cusp of doing it. And part of
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  Speaker 7: the reason there are doubts is is because of the hardware.
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  Speaker 7: And I think that's kind of an important aspect of
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  Speaker 7: today's story is is this particular crash involves, you know,
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  Speaker 7: an incident where a driver was using full self driving
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  Speaker 7: driving into the sun, and that appeared to play a
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  Speaker 7: part in the crash, which resulted in a fatality, and
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  Speaker 7: it led to a federal investigation that is ongoing.
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  Speaker 3: I mean, this is all very much feels as part
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  Speaker 3: of the growing pains as we kind of understand this
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  Speaker 3: technology and how it works itself out. So what are
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  Speaker 3: the steps that Tesla's taking and that the regulators are
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  Speaker 3: taking at this time.
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  Speaker 7: Yeah, so you know, we should acknowledge that this incident
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  Speaker 7: happened in November twenty twenty three. You know, Tesla has
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  Speaker 7: has changed. They've they've made upgrades both to hardware and software.
• 9:44
  Speaker 7: You know, hardware for certain customers, they should say, but
• 9:48
  Speaker 7: you know, in terms of their approach to the sensor
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  Speaker 7: system for their vehicles, Elon Musk has been you know,
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  Speaker 7: really sort of out on a limb and having this
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  Speaker 7: you that all you need is cameras and company companies
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  Speaker 7: that are also in this space. I think the one
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  Speaker 7: people recognize the most is Weimo, the Google company, and
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  Speaker 7: they use a mix of camera, radar and wide R
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  Speaker 7: and their sensor set is much more expensive. It's more extensive.
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  Speaker 7: You know, these sensors are placed all over the vehicle.
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  Speaker 7: But you know, the sort of bet here on the
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  Speaker 7: part of Weimo is that is worth it. It will
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  Speaker 7: mean this system is safer. What Musk has tried to
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  Speaker 7: do is go with the cheaper route, go with the
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  Speaker 7: you know system that he can afford to put in
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  Speaker 7: every Tesla, and make this bet that you know, he
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  Speaker 7: can develop his way to autonomy faster by sort of
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  Speaker 7: leveraging the broader Tesla fleet, even if it means putting
• 10:47
  Speaker 7: you know, cars on the road that you know, draw
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  Speaker 7: scrutiny from federal regulators as to whether or not that
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  Speaker 7: this is you know, unreasonably unsafe.
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  Speaker 2: So, Craig, I think Elon Musk is back at the company.
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  Speaker 6: What does that mean?
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  Speaker 2: I mean, are you hearing anything like, Okay, now we
• 11:08
  Speaker 2: can get back on track.
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  Speaker 6: Now we can really move forward, maybe at you know,
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  Speaker 6: higher velocity. What's that mean?
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  Speaker 7: Yeah? I'm you know, I think it's difficult to tell
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  Speaker 7: at this point because he's kind of coming back to
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  Speaker 7: business means coming back to so many businesses, right, and
• 11:25
  Speaker 7: so on a day to day yeah, we're you know,
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  Speaker 7: we're seeing him travel to to his various companies, you know,
• 11:32
  Speaker 7: devoting some time and attention to to them. But it's
• 11:35
  Speaker 7: not as though he's sort of one hundred percent, uh,
• 11:38
  Speaker 7: you know, focusing in on Tesla and neglecting all of
• 11:42
  Speaker 7: his other businesses. We see him, you know, regularly engaging
• 11:46
  Speaker 7: with you know, users on x about you know, troubleshooting
• 11:50
  Speaker 7: problems that they have with that service. You know, I
• 11:53
  Speaker 7: would say he is you know, more actively engaging there
• 11:58
  Speaker 7: on on teslas and definitely is trying to sort of
• 12:02
  Speaker 7: send this signal that you know, okay, it's it's time
• 12:05
  Speaker 7: to get back to business here. But whether or not
• 12:08
  Speaker 7: that's you know, resulting in sort of tangible changes at
• 12:11
  Speaker 7: the company, I think remains.
• 12:12
  Speaker 8: To be seen.
• 12:13
  Speaker 3: What's the rush for autonomous driving?
• 12:18
  Speaker 7: You know, I think forty thousand people die on US
• 12:22
  Speaker 7: roads every year, right, and so the rush of course
• 12:24
  Speaker 7: is to bend that, you know, to to change that.
• 12:27
  Speaker 7: And I think one of the challenges that you have
• 12:30
  Speaker 7: if you're a company in this space is we've now
• 12:33
  Speaker 7: you know, seen a lot of companies pursue this for
• 12:35
  Speaker 7: you know, roughly a decade. That number has not budged.
• 12:38
  Speaker 7: So you know, we still have a long way to
• 12:41
  Speaker 7: go to where this capability is you know, making putting
• 12:46
  Speaker 7: a dent in those figures.
• 12:48
  Speaker 9: All right.
• 12:48
  Speaker 3: Thanks to Craig Drudell, Bloomberg Global Autos editor coming up
• 12:51
  Speaker 3: a conversation with the CEO of Tay Technologies and the
• 12:54
  Speaker 3: company's approach to commercial fusion power.
• 12:56
  Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, but riding
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  Speaker 2: one hundred and thirty industries. You can access Bloomberg Intelligence
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  Speaker 3: I'm Paul Sweeney, an amalk Steel, and this is Bloomberg.
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• 13:27
  Speaker 3: We move next to the telecommunication space.
• 13:30
  Speaker 2: The cable provider Comcast recently opened its newest theme park
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  Speaker 2: in Florida, called Universal Epic Universe. The goal is to
• 13:37
  Speaker 2: keep guests staying longer and spending more in the competitive
• 13:39
  Speaker 2: Orlando market.
• 13:40
  Speaker 3: And according to research from Bloomberg Intelligence, Comcast theme parks
• 13:43
  Speaker 3: are poised to become of its most valuable assets, with
• 13:46
  Speaker 3: revenue and IBADASA to jump around forty percent from twenty
• 13:49
  Speaker 3: twenty four to twenty twenty six.
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  Speaker 2: For more on what this means, guest host John Tucker
• 13:54
  Speaker 2: and I were joined by Githa Rong Andathan Bloomberg, intelligence
• 13:57
  Speaker 2: US media analyst, who first asked Githa to talk about
• 14:00
  Speaker 2: Universal's new park.
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  Speaker 8: May twenty second was the grand opening of Epic Universe
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  Speaker 8: in Florida. This is the first big park that has
• 14:09
  Speaker 8: opened in Florida in twenty five years, and it was
• 14:12
  Speaker 8: the biggest investment by Comcast in a theme park. They
• 14:15
  Speaker 8: spent over seven billion dollars on just this park. So,
• 14:18
  Speaker 8: as you said, huge investments by Comcast in their theme
• 14:22
  Speaker 8: park business. This is really an area of growth for them,
• 14:25
  Speaker 8: especially now that their broadband business is struggling actually quite
• 14:29
  Speaker 8: a bit.
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  Speaker 10: So what is this likely to do for their earnings?
• 14:33
  Speaker 8: So, you know, you kind of think about Comcast and
• 14:35
  Speaker 8: you think about Disney. For Comcast, so let me start
• 14:39
  Speaker 8: with Disney. So for Disney, parks is actually sixty percent
• 14:42
  Speaker 8: of their profits. For Comcasts, it's really maybe less than
• 14:46
  Speaker 8: six percent. So again for Comcasts, you know, eighty percent
• 14:50
  Speaker 8: of their of their money, of their profits still comes
• 14:52
  Speaker 8: from the cable business. But really, as we kind of
• 14:55
  Speaker 8: think about what their strategy is here and you look
• 14:58
  Speaker 8: at all of their portfolio of assets, I mean, we're
• 15:01
  Speaker 8: really excited about the theme park business because growth is great,
• 15:04
  Speaker 8: returns on investment are great, and this is really a
• 15:07
  Speaker 8: fantastic way for comcasts, just like what Disney has done
• 15:11
  Speaker 8: with kind of deepening all of those relationships with those
• 15:14
  Speaker 8: universal characters. You think of all the ip that they
• 15:16
  Speaker 8: have with Minions, with Jurassic Park, now with Wicked, you know,
• 15:19
  Speaker 8: and some of the other franchises that they have with
• 15:22
  Speaker 8: Harry Potter. You know, this is just such a great
• 15:25
  Speaker 8: way to build on that fan engagement.
• 15:28
  Speaker 2: How much can the theme park business, how much do
• 15:30
  Speaker 2: you think that could be worth for comcasts? Because again
• 15:32
  Speaker 2: you mentioned that some of their core businesses, like the
• 15:36
  Speaker 2: video business, the tridtional cable business, even the broadband business,
• 15:39
  Speaker 2: they're facing some headwinds here. Theme parks are going to
• 15:42
  Speaker 2: become more and more important important for investors I think
• 15:45
  Speaker 2: going forward. So what do you think the valuation could.
• 15:47
  Speaker 8: Be absolutely, Paul, So that's a really really important point
• 15:50
  Speaker 8: that you bring up. So you think of the cable business,
• 15:52
  Speaker 8: which is really their mainstay. Cable valuations have actually dropped
• 15:55
  Speaker 8: pretty significantly over the past few years. We've gone from
• 15:58
  Speaker 8: about ten x to around six and a half to
• 16:01
  Speaker 8: seven times EBITDA multiple you think about the park business though,
• 16:05
  Speaker 8: it's actually quite the opposite. You know, most of the
• 16:08
  Speaker 8: some of the pure play pure play park operators are
• 16:10
  Speaker 8: treating it about you know, twelve to fourteen times IBADA.
• 16:13
  Speaker 8: So again this is an area of growth. You know,
• 16:16
  Speaker 8: experiential businesses are seeing this huge upswing. And so we
• 16:20
  Speaker 8: think that just based on about five billion in ibitdah,
• 16:24
  Speaker 8: which we think Comcasts can get to in a few
• 16:26
  Speaker 8: years time, that business could be easily worth you know,
• 16:29
  Speaker 8: forty five fifty billion dollars or upwards of that.
• 16:33
  Speaker 10: So my takeaway is there are Disney wanna be at
• 16:37
  Speaker 10: this point. I got to wonder if like they're going
• 16:39
  Speaker 10: to start poaching Disney executives too.
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  Speaker 8: That's very possible. I mean, right now, there's still a
• 16:45
  Speaker 8: pretty small player John when you compare them to Disney.
• 16:48
  Speaker 8: So you just kind of think about Disney in terms
• 16:50
  Speaker 8: of theme park visitations. We are looking at about one
• 16:53
  Speaker 8: hundred and fifty million global visitors to Disney parks every year.
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  Speaker 8: Compare that to Universal or Comcast sparks it's about sixty million,
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  Speaker 8: So still much smaller than Disney. But what they're doing
• 17:03
  Speaker 8: now is a lot of expansion. So we had this
• 17:05
  Speaker 8: new park, Epic Universe, which opened just last week. They're
• 17:09
  Speaker 8: actually opening a new park in London in a few
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  Speaker 8: years time. They're expanding with new properties in Las Vegas
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  Speaker 8: in Texas. So basically, when you put all of that together,
• 17:18
  Speaker 8: we're thinking that they are basically going to expand visitation
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  Speaker 8: from about sixty million to by fifty percent to about
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  Speaker 8: you know, eighty to ninety million. So they're really kind
• 17:27
  Speaker 8: of closing in on that gap with Disney stepping back.
• 17:32
  Speaker 2: The Comcast stock story, I mean, how do people view
• 17:35
  Speaker 2: it here, because again, cable TV business just in secular decline.
• 17:39
  Speaker 2: The broadband business, which had saved it for a good
• 17:42
  Speaker 2: decade or so, that seems to be stalling because a
• 17:45
  Speaker 2: competition and the cable networks, I don't know what they're
• 17:48
  Speaker 2: doing with them. What do investors think about Comcast.
• 17:52
  Speaker 8: Yeah, it's really a tough story right now, Paul, as
• 17:55
  Speaker 8: you rightly point out, I mean, broadband is again majority
• 17:58
  Speaker 8: of this business is really tough to how broadband does.
• 18:01
  Speaker 8: So you know, any stock movements are directly correlated to
• 18:05
  Speaker 8: the health of the broadband business, which actually is in
• 18:07
  Speaker 8: a very very tough spot right now. So this is
• 18:10
  Speaker 8: a business that was gaining about one to two million
• 18:12
  Speaker 8: subscribers every year. They are still one of the largest
• 18:15
  Speaker 8: broadband providers at about thirty million subscribers in the US,
• 18:18
  Speaker 8: but they are going to lose close to about a
• 18:21
  Speaker 8: million subscribers this year. As you know, the telecoms kind
• 18:23
  Speaker 8: of really intensified competition. So it's really a tough story
• 18:28
  Speaker 8: right now. The one thing that we are kind of
• 18:29
  Speaker 8: looking at in terms of a positive catalyst is the
• 18:32
  Speaker 8: spin off of the cable networks. So this is something
• 18:35
  Speaker 8: that they announced last year. It probably happens a little
• 18:38
  Speaker 8: bit later this year. They're calling it Versut. What's going
• 18:41
  Speaker 8: to be interesting is not just the spin but what
• 18:43
  Speaker 8: happens after the spin. So will Comcast really look to
• 18:46
  Speaker 8: become kind of this consolidator of media assets and that would,
• 18:51
  Speaker 8: I think be a little bit of an interesting story
• 18:52
  Speaker 8: in media. But unless they can really revive growth in
• 18:56
  Speaker 8: their broadband business, I think it's going to be a
• 18:59
  Speaker 8: little bit of a tough sell.
• 19:00
  Speaker 10: What's Disney's response to Universal to Comcast?
• 19:05
  Speaker 8: So Disney a huge response in terms of what they
• 19:08
  Speaker 8: have planned over the next few years. John, So they
• 19:11
  Speaker 8: are really kind of doubling down on their parks business. Again,
• 19:14
  Speaker 8: this is really the bread and butter for Disney. Sixty
• 19:17
  Speaker 8: percent of their profit comes from the parks business. So
• 19:20
  Speaker 8: they have about a sixty billion investment planned for parks
• 19:24
  Speaker 8: over the next you know, seven to eight years. And
• 19:27
  Speaker 8: it's not just the theme park experience, it's you know,
• 19:30
  Speaker 8: they're having parks on water, what they call parks on water,
• 19:32
  Speaker 8: which are the cruises, and that's a huge investment for them.
• 19:36
  Speaker 8: You know, we think that that business basically doubles triples
• 19:40
  Speaker 8: revenue as they keep on adding these new cruise ships,
• 19:44
  Speaker 8: you know, to their fleet. So are they are doubling
• 19:47
  Speaker 8: down on parks as well?
• 19:48
  Speaker 5: All right?
• 19:49
  Speaker 3: Thanks together, mang An Athen Bloomberg, Intelligence analyst on US Media.
• 19:52
  Speaker 2: We've moved next to the energy space this week.
• 19:54
  Speaker 3: We looked at a company called Tay Technologies. Tay develops
• 19:57
  Speaker 3: commercial fusion power with the cleanest environment profile.
• 20:00
  Speaker 2: The company also recently raised more than one hundred and
• 20:03
  Speaker 2: fifty million dollars in its latest funding round, exceeding the
• 20:06
  Speaker 2: company's initial target for the round.
• 20:08
  Speaker 3: For more and what the company is doing, host Paul
• 20:10
  Speaker 3: John Tucker and I were joined by Michael Binderbauer, CEO
• 20:13
  Speaker 3: of Tay technologies. We began the conversation by asking Michael
• 20:17
  Speaker 3: to break down exactly what fusion power is.
• 20:20
  Speaker 9: So it's basically what nature does, based right, It keeps
• 20:23
  Speaker 9: us our life and energy here on the planet from
• 20:25
  Speaker 9: the Sun son any star you look up suffusion reactor
• 20:28
  Speaker 9: basically right. So what we're trying to do is to
• 20:31
  Speaker 9: replicate that terristrially to make essentially copious power, carbon free,
• 20:36
  Speaker 9: clean and sustainable for the future of humanity.
• 20:40
  Speaker 2: Where are you in the process at tay So.
• 20:44
  Speaker 9: We're very close. We're just one machine a way to
• 20:47
  Speaker 9: get to a point where we actually harvest more energy
• 20:49
  Speaker 9: than what we're putting into the facility. This has been
• 20:52
  Speaker 9: obviously a long journey. It's hard to do terristrially. The
• 20:55
  Speaker 9: stars have a lot of gravity. We don't have that.
• 20:57
  Speaker 9: We have to use other means, magnets and all sorts
• 20:59
  Speaker 9: of things, and as you've probably seen over the last
• 21:02
  Speaker 9: few years, has been a playthrow of news inching really
• 21:05
  Speaker 9: really close to the goal line across multiple efforts on
• 21:07
  Speaker 9: the planet. So we're about a three year way to
• 21:10
  Speaker 9: get tonate energy and somewhere early twenty thirties we hopefully
• 21:14
  Speaker 9: have a power plant online.
• 21:16
  Speaker 3: What would be if you're able to achieve it and
• 21:18
  Speaker 3: have a power plant, Like, what is that? Is that
• 21:21
  Speaker 3: just tremendous amount of energy with like no footprint.
• 21:26
  Speaker 9: Yeah, it's very small footprint. So it's the highest energy
• 21:28
  Speaker 9: density fuel you can have, by the factor of five
• 21:31
  Speaker 9: to ten, higher than fission. Even it utilizes hydrogen or
• 21:36
  Speaker 9: light species that are ubiquitous. So there's infinite fuel supply
• 21:40
  Speaker 9: if you will, and you would harvest clean energy out
• 21:43
  Speaker 9: of that at probably starting in a scale of a
• 21:45
  Speaker 9: gas fired turbine, so something like four or five hundred
• 21:48
  Speaker 9: makawatts per plant, and it would literally be able to
• 21:51
  Speaker 9: distribute wherever you needed it in the grid.
• 21:54
  Speaker 11: Is there?
• 21:55
  Speaker 2: Can you talk about the economics surrounding this technology? Gee,
• 22:00
  Speaker 2: who would be the who would be the users, the buyers,
• 22:02
  Speaker 2: the developers of this technology?
• 22:05
  Speaker 9: Yeah, so I think what we're seeing and this gets
• 22:07
  Speaker 9: to what we just announced, you know, raising capital. We
• 22:09
  Speaker 9: really have a long partnership with Google and they've been
• 22:13
  Speaker 9: deep with us on machine learning and tools to help
• 22:15
  Speaker 9: make this more efficient and more economic, and in fact,
• 22:19
  Speaker 9: they would be a great first off taker for that, right,
• 22:22
  Speaker 9: all the hyperscalers, everybody that has high energy, intense applications
• 22:27
  Speaker 9: growing at tremendous rates right with a gap between supply
• 22:30
  Speaker 9: and demand. Developing is looking for electrons and particularly green electrons.
• 22:34
  Speaker 9: So those would be probably the first off takers for
• 22:36
  Speaker 9: the technology.
• 22:37
  Speaker 10: Oh, I got to ask, what sets you with John Tucker?
• 22:40
  Speaker 3: He likes his fusion?
• 22:41
  Speaker 10: What sets you apart from ETR in terms of the
• 22:44
  Speaker 10: reactor itself, the containment that's act fusion reactor or what?
• 22:50
  Speaker 9: Yeah, so good question. So Eater and others are working
• 22:54
  Speaker 9: on tokamacs, we actually are not. We're working what you
• 22:56
  Speaker 9: see if you have a visual and even have a
• 23:00
  Speaker 9: compact machine not the size of gas turbine that can
• 23:02
  Speaker 9: make about the same output as those other plants. It's
• 23:06
  Speaker 9: much more efficient to uses smaller magnets. There's various tricks
• 23:09
  Speaker 9: in the physics that allow you to do that, and
• 23:11
  Speaker 9: that brings something that's more compact, cheaper to produce, of course,
• 23:15
  Speaker 9: more economic to deploy, easier to maintain, etc. And you
• 23:18
  Speaker 9: can essentially centralize these. We think we can build those
• 23:22
  Speaker 9: sort of cookie cutter in the factory and deploy on site.
• 23:26
  Speaker 9: And the other thing I should add is that sighting
• 23:28
  Speaker 9: on this compared to the other nuclear cousin which is fission. Right,
• 23:31
  Speaker 9: It is a lot easier. There's no meltdown possibility, there's
• 23:35
  Speaker 9: no sort of nuclear accident of substance that people would
• 23:39
  Speaker 9: have to worry about. It's truly clean and benign, and
• 23:41
  Speaker 9: so you can deploy it where you need it in
• 23:43
  Speaker 9: a much more straightforward way.
• 23:44
  Speaker 10: And there's no use of beryllium in that reactor, no, No.
• 23:49
  Speaker 9: In fact, ours is using hydrogen and boron, both of
• 23:53
  Speaker 9: which are light and super ubiquitous.
• 23:55
  Speaker 10: Well deterium as the fuel, right.
• 23:59
  Speaker 9: So tritium is one fuel cycle that's used by some
• 24:03
  Speaker 9: of us in the fusion community, and we can burn
• 24:05
  Speaker 9: that too, but we're really focused on hydrogen and boron. Ultimately,
• 24:09
  Speaker 9: that turns out that only makes helium, so you have
• 24:11
  Speaker 9: no neutrons, you have no radioactivity to speak of. It's
• 24:15
  Speaker 9: just a nirvana of energy. Essentially.
• 24:17
  Speaker 2: You get ubiguous.
• 24:18
  Speaker 9: Fuel in no radioactivity or pollution in the process, totally sustainable,
• 24:23
  Speaker 9: and we think it will be competitive from a cost perspective.
• 24:26
  Speaker 9: It will be probably starting out midfield in current generation
• 24:29
  Speaker 9: asset costs, so you're not as cheap as you know,
• 24:32
  Speaker 9: gas or renewables, but you're not as expensive as fision
• 24:36
  Speaker 9: is today. Is somewhere in the midfield and then trending down.
• 24:39
  Speaker 3: Okay, let's pretend that neither of us understood what any
• 24:41
  Speaker 3: of you guys were talking about in terms of brilliant.
• 24:44
  Speaker 3: That's why we have him right. He knows a lot
• 24:45
  Speaker 3: about a lot of different things. Before we let you go,
• 24:49
  Speaker 3: just how hard is it to have gotten to where
• 24:52
  Speaker 3: you are?
• 24:52
  Speaker 2: Like?
• 24:52
  Speaker 3: What has been like the biggest hurdle?
• 24:55
  Speaker 4: Oh gosh, it's been an enormous journey. I mean, I
• 24:57
  Speaker 4: have aged.
• 24:58
  Speaker 9: I started this out at graduate school with my really
• 25:00
  Speaker 9: in PhD mantour and then it took us about twenty
• 25:02
  Speaker 9: plus years to amalgamate the technology around it. There's a
• 25:06
  Speaker 9: lot of esoteric, absolutely extreme things. You've got a master
• 25:10
  Speaker 9: power supplies, accelerator technology, diagnostics, feedback loops, you know, use
• 25:15
  Speaker 9: a lot of machine learning and AI, a lot of
• 25:17
  Speaker 9: that we developed together with Google in the last decade
• 25:19
  Speaker 9: that can react on the blink of an eye to
• 25:21
  Speaker 9: make changes in what happens inside and do that reliably
• 25:25
  Speaker 9: and consistently. And so those are all the technologies we
• 25:28
  Speaker 9: now have. So now we're putting in the last machine.
• 25:30
  Speaker 4: So it's been a.
• 25:30
  Speaker 9: Long journey and developing lots of technology to do that.
• 25:34
  Speaker 2: Thanks to Michael Binderbauer, CEO Take Technologies.
• 25:37
  Speaker 3: Coming up in the program, we're going to look at
• 25:38
  Speaker 3: oil and gas companies and how they're investing in low
• 25:41
  Speaker 3: carbon technologies.
• 25:42
  Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
• 25:45
  Speaker 2: depth research and data on two thousand companies and one
• 25:47
  Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via
• 25:50
  Speaker 2: bi go on the terminal, Umpaul.
• 25:52
  Speaker 3: Sweeney, an amlex deal, and this is Bloomberg.
• 26:01
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 26:05
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 26:08
  Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
• 26:11
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 26:15
  Speaker 3: Each week we look at research from Bloomberg and EF
• 26:18
  Speaker 3: previously known as New Energy Finance.
• 26:20
  Speaker 2: They're the team at Bloomberg that tracks and analyzes the
• 26:23
  Speaker 2: energy transition from commodities to power, transport, industries, buildings, and
• 26:27
  Speaker 2: agricultural sectors.
• 26:28
  Speaker 3: This week we looked at oil and gas companies and
• 26:30
  Speaker 3: how they're investing in low carbon technologies.
• 26:32
  Speaker 2: For more, we were joined by David Dhugherty, BNEF, head
• 26:35
  Speaker 2: of Natural Resources Research.
• 26:37
  Speaker 3: We first asked David what US oil companies are thinking
• 26:39
  Speaker 3: with regards to investing in fossil fuels and more green
• 26:42
  Speaker 3: friendly technologies.
• 26:43
  Speaker 4: Yeah, economically friendly is a great choice of word versus
• 26:46
  Speaker 4: environmentally friendly. Two separate things sometimes, and the story's very
• 26:51
  Speaker 4: different if you're looking at a US major versus a
• 26:53
  Speaker 4: European major, and even the technology they'll invest in. In general,
• 26:58
  Speaker 4: the group of big oil companies talk about investing about
• 27:01
  Speaker 4: seven eight percent in low carbon technologies things like wind, solar,
• 27:05
  Speaker 4: carbon capture, renewable fuels. Yeah, and it's plateaued around there
• 27:09
  Speaker 4: for the last two three years.
• 27:10
  Speaker 3: Yeah, it's something I mean like that. But what we
• 27:14
  Speaker 3: learn is that the Trump administration is taking back some
• 27:16
  Speaker 3: of the loans and the money that a lot of
• 27:18
  Speaker 3: these oil companies are using for some of those projects.
• 27:21
  Speaker 3: Xon in particular, they have a project in Texas it's
• 27:24
  Speaker 3: going to use hydrogen, and that funding is poof gone.
• 27:27
  Speaker 4: Yeah, right, so now what happens? Now? What happens? I mean,
• 27:31
  Speaker 4: you know, a tax BIK would be great for somebody
• 27:32
  Speaker 4: like an Xcell. They could probably go ahead without it. Arguably,
• 27:36
  Speaker 4: the pro oil Trump administration isn't necessarily ticking the boxes
• 27:40
  Speaker 4: for the oil companies to the moment, we're seeing these
• 27:42
  Speaker 4: tax breaks, we're seeing really low prices, not necessarily all
• 27:46
  Speaker 4: down to policy. It's worth highlighting, but not not beautiful.
• 27:49
  Speaker 4: If if you're a US oil company, for example, or
• 27:51
  Speaker 4: with exposure to US production, particularly on shore shale for example,
• 27:56
  Speaker 4: it's not a great time for them. It's not the
• 27:57
  Speaker 4: worst time, but it's not a great time.
• 28:00
  Speaker 11: Are the European energy companies or are just outside of the
• 28:02
  Speaker 11: US energy companies, Are they stepping up and trying to
• 28:05
  Speaker 11: fill that void for some more environmental friendly technology because.
• 28:10
  Speaker 3: They got so punished.
• 28:11
  Speaker 4: For that just like a yep, they made some decisions.
• 28:14
  Speaker 4: Maybe I'm not sure they would make again. That said,
• 28:16
  Speaker 4: some of the biggest players are still at the European
• 28:19
  Speaker 4: with equinor for example, last year wind Solar made a
• 28:23
  Speaker 4: comeback that's really interesting. They've got really per cassular stories,
• 28:26
  Speaker 4: much lower returns, center of traditionals. So you're definitely seeing
• 28:29
  Speaker 4: a split between the US and the European majors for sure,
• 28:33
  Speaker 4: But the environment's completely changing for all of them.
• 28:35
  Speaker 3: So I hear your point, particularly in the US, like
• 28:37
  Speaker 3: then Exon, they can probably still push ahead in Texas
• 28:41
  Speaker 3: even without the loan. They might not like it, but
• 28:44
  Speaker 3: they can manage it. But a lot of these companies can't.
• 28:46
  Speaker 3: So what happens to the projects that are already underway
• 28:49
  Speaker 3: to deal with you know, carbon capture, director capture, decarbonization.
• 28:53
  Speaker 4: They go looking for more money or they stop.
• 28:55
  Speaker 3: Is the money there ex government?
• 28:58
  Speaker 4: I think so? I think so, Like this jitter is
• 29:00
  Speaker 4: for sure, right, this is a four year window. And
• 29:02
  Speaker 4: is it a four year window or is it an
• 29:03
  Speaker 4: eight year window? Nobody knows. Nobody's going to bet on
• 29:06
  Speaker 4: that or guess, but you know, for the right anything
• 29:10
  Speaker 4: will happen for the right price. I guess the is
• 29:12
  Speaker 4: the the bottom line. But it's a huge question mark
• 29:15
  Speaker 4: for us in the in the next four years for sure.
• 29:18
  Speaker 2: But if we have oil down here in the low
• 29:20
  Speaker 2: sixties for an extended period of time, what are the
• 29:24
  Speaker 2: oil companies? I mean, do they have capital to invest
• 29:27
  Speaker 2: back into fossil fuels or do they just give it
• 29:30
  Speaker 2: back to shareholder?
• 29:32
  Speaker 4: It's a mix. If you look at like the players
• 29:34
  Speaker 4: that don't have let's say a family presence, right, you
• 29:37
  Speaker 4: know your mom knows, I know, Chevron, Exxon. If you
• 29:39
  Speaker 4: think of an EOG or any of those companies that
• 29:42
  Speaker 4: don't have less necessarily a like a household name, they've
• 29:45
  Speaker 4: got a very different way of operating. At around sixty dollars,
• 29:48
  Speaker 4: you're getting into territory where it's going to start to
• 29:50
  Speaker 4: hurt a lot of the US shale players. Fifty five
• 29:53
  Speaker 4: is where you'll see bock and start to fall out
• 29:55
  Speaker 4: of profitability. That will go down, and you're about twelve
• 29:58
  Speaker 4: dollars below that for a break even for some something
• 30:00
  Speaker 4: in the permium. So there's still space to play. But
• 30:03
  Speaker 4: you know, the guidance we're seeing for CAPEX quarter on
• 30:06
  Speaker 4: quarter is down about three four percent, whereas production is
• 30:09
  Speaker 4: down marginally like one percent. So the impact of the
• 30:11
  Speaker 4: actual production will happen a lot later than the CAPEC story.
• 30:15
  Speaker 4: But they're starting to, you know, tighten their belt a
• 30:18
  Speaker 4: bit when it comes to spend, and we'll see that
• 30:19
  Speaker 4: in barrel terms later like more delayed. You will see
• 30:22
  Speaker 4: it come through. You're not seeing it yet.
• 30:24
  Speaker 3: I also have to wonder too, what winds up happening
• 30:27
  Speaker 3: with say offshore projects, so onshore is much more reactive,
• 30:30
  Speaker 3: but say Gulf of Mexico, a lot of production is
• 30:32
  Speaker 3: going to come online that investment decision was made years ago,
• 30:35
  Speaker 3: so you can do nothing about it. But then if
• 30:36
  Speaker 3: you're making decisions today with this oil price, looking at
• 30:39
  Speaker 3: the curve for twenty twenty seven, twenty eight, that's when
• 30:42
  Speaker 3: you get some question marks.
• 30:44
  Speaker 4: One hundred percent. Yeah, and that plus like all this
• 30:46
  Speaker 4: actual barrel's coming off from OPEC new projects in Guyana
• 30:50
  Speaker 4: for example, coming on line and ramping up short term
• 30:53
  Speaker 4: looks like pain. Longer term, this investment still needed. Otherwise
• 30:56
  Speaker 4: you get into territory of price spikes or causing short supply.
• 31:02
  Speaker 4: So it's a really delicate balance for the moment.
• 31:04
  Speaker 2: So if I were to go to the oil patch
• 31:06
  Speaker 2: down there in Texas, would they be happy today or
• 31:08
  Speaker 2: not so much?
• 31:09
  Speaker 4: Yeah, it's been worse, and I think we have a
• 31:13
  Speaker 4: habit of saying crazy times, crazy times. It's not really
• 31:16
  Speaker 4: that crazy at the moment. Sixty dollars if you think
• 31:18
  Speaker 4: about it, we had fifty five flat for about what
• 31:21
  Speaker 4: two years, just two three years ago, and Texas was booming.
• 31:24
  Speaker 4: When you're in Houston, it's flying right. So we're not
• 31:27
  Speaker 4: in the territory of fear just yet. And no one
• 31:29
  Speaker 4: makes for great headline, but data wise, we're still a
• 31:32
  Speaker 4: bit away from the pain, and ushal always surprises to
• 31:35
  Speaker 4: the upside when it comes to efficiencies and when it
• 31:37
  Speaker 4: comes to how resilient it is.
• 31:40
  Speaker 3: Right, and then to your point, the production is only
• 31:42
  Speaker 3: down fractionally whereas capex is down more speaks to that point.
• 31:45
  Speaker 3: But I feel like the difference this time is that
• 31:47
  Speaker 3: oil companies went into this administration super pumped. I mean
• 31:51
  Speaker 3: super pumped is actually an understatement.
• 31:53
  Speaker 4: Pumped is a great choice, yeah, exactly.
• 31:55
  Speaker 3: But then the reality has been so much different. It
• 31:57
  Speaker 3: feels like that's the differentiation versus underlying oil price and
• 32:02
  Speaker 3: a little confusion. I mean, what was a billion dollars
• 32:04
  Speaker 3: the oil industry gave to or the energy industry gave
• 32:07
  Speaker 3: to President Trump? And then they're like wait what, So
• 32:10
  Speaker 3: it feels like that's a little bit different. There is
• 32:13
  Speaker 3: there one form of low capture, a low carbon investment that's.
• 32:16
  Speaker 4: Just toast ooh. Green hydrogen csis book cards to justify
• 32:23
  Speaker 4: without some form of a tax break, and the knock
• 32:25
  Speaker 4: on impact for that's pretty pretty significant if you think
• 32:28
  Speaker 4: of it, and things of like e fiels or synthetic fuels,
• 32:31
  Speaker 4: all of that is needed to make those things down
• 32:33
  Speaker 4: the line. So those two kind of toast the other
• 32:38
  Speaker 4: ones wind Solar there could have stune in their ground
• 32:41
  Speaker 4: a bit.
• 32:41
  Speaker 2: More thanks to David dharerty bn EF, head of Natural
• 32:44
  Speaker 2: Resources Research.
• 32:45
  Speaker 3: We move next to some news from the financial sector.
• 32:48
  Speaker 2: This week, Wells Fargo CEO Charlie Sharp cleared the Federal
• 32:51
  Speaker 2: Reserve seven year old cap on assets, allowing the bank
• 32:54
  Speaker 2: to grow and compete larger rivals.
• 32:56
  Speaker 9: For more.
• 32:56
  Speaker 3: In this we were joined by Hannah Levet Bloomberg, senior
• 32:58
  Speaker 3: finance reporter.
• 33:00
  Speaker 2: First asked, Hannah, how Wells Fargo is now positioned for
• 33:02
  Speaker 2: its next stage of growth.
• 33:04
  Speaker 12: Yeah, so this has truly been such a long saga
• 33:07
  Speaker 12: for them. Like I started covering Wells Fargo more than
• 33:11
  Speaker 12: seven years ago, they had just gotten put under this cap.
• 33:15
  Speaker 12: At the time, I was still enjoying my mid twenties,
• 33:18
  Speaker 12: and you know, now we are no longer there. For
• 33:22
  Speaker 12: Charlie Sharf, this means that he can finally play offense.
• 33:26
  Speaker 12: He can you know, they're not capped in size to
• 33:28
  Speaker 12: their level at the end of twenty seventeen anymore. And
• 33:31
  Speaker 12: remember that's been a huge deal for them along the way.
• 33:34
  Speaker 12: I mean, some of the businesses that he's marked for
• 33:36
  Speaker 12: growth like the trading business most notably that's been constrained
• 33:42
  Speaker 12: because it's more balance sheet heavy and they haven't been
• 33:44
  Speaker 12: able to allocate that balance sheet because they're restricted. And
• 33:47
  Speaker 12: like just for context, JP Morgan, the biggest US bank,
• 33:50
  Speaker 12: has grown almost an entire Wells Fargo in terms of
• 33:53
  Speaker 12: assets in the time that Wells has been capped.
• 33:55
  Speaker 6: Wow, all right, Hanna, I you know a full discorder.
• 33:59
  Speaker 2: I have my account with Wells Fargo, but I'm guessing
• 34:02
  Speaker 2: the CEO and the management team there they want.
• 34:04
  Speaker 6: To do something more than that. They think they can
• 34:06
  Speaker 6: do a little bit bigger and better than Paul's and
• 34:08
  Speaker 6: needs checking account.
• 34:08
  Speaker 2: So what are some of the the businesses you mentioned trading?
• 34:12
  Speaker 2: Are there other editors where they think they can really
• 34:15
  Speaker 2: grow by allocating more capital there?
• 34:17
  Speaker 12: Yeah, absolutely, so the businesses that Charlie Sharff marked for growth,
• 34:23
  Speaker 12: you know in this time while he was running the firm,
• 34:25
  Speaker 12: but it was still under the cap where investment banking
• 34:28
  Speaker 12: and trading and wealth management and credit card. But virtually
• 34:33
  Speaker 12: every business aside from mortgage, which they've said they're shrinking.
• 34:36
  Speaker 12: And remember Wells Farga used to be huge and mortgage
• 34:38
  Speaker 12: at one point they were churning out one in every
• 34:40
  Speaker 12: three home loans in the country. Every business other than
• 34:43
  Speaker 12: that should grow now, and they have room to do that.
• 34:46
  Speaker 12: But I think those businesses where they've already said that
• 34:50
  Speaker 12: they're targeting growth, that may be where the earliest moves are.
• 34:55
  Speaker 12: You know, we've reported that they're working on a high
• 34:58
  Speaker 12: end credit card, so that could be something that people see.
• 35:02
  Speaker 12: But yeah, so it really just it goes across all
• 35:05
  Speaker 12: of those and beyond now because they don't have this
• 35:07
  Speaker 12: constraint anymore, so.
• 35:11
  Speaker 3: How quickly can they scale in the other parts of
• 35:13
  Speaker 3: their business.
• 35:14
  Speaker 12: Yeah, well, it's an interesting question, right because we've seen,
• 35:18
  Speaker 12: you know, the tales of banks trying to grow too
• 35:20
  Speaker 12: fast and then having you know, a calamitous blow up,
• 35:24
  Speaker 12: and so that's something that they definitely want to avoid.
• 35:27
  Speaker 12: And Charlie Sharff has talked about that that it's not
• 35:30
  Speaker 12: like an on switch day one, but it does give
• 35:33
  Speaker 12: them more flexibility so they can you know, the most
• 35:36
  Speaker 12: immediate thing is the trading business where they just have capacity,
• 35:41
  Speaker 12: but besides that, it's more being able to lean into
• 35:47
  Speaker 12: more enthusiastically those growth initiatives that they've already kind of outlined, right.
• 35:54
  Speaker 6: So Hannah.
• 35:55
  Speaker 2: They now have them regulatory capability to maybe do more,
• 35:58
  Speaker 2: to maybe grow a little bit more quickly.
• 36:01
  Speaker 6: Did they have the balance sheet to do that? Did
• 36:03
  Speaker 6: they have the capital to do that?
• 36:04
  Speaker 12: Yeah, they have a ton of excess capital, and that's
• 36:06
  Speaker 12: been a theme throughout. I mean even in the earliest
• 36:09
  Speaker 12: days of the asset cap like, they couldn't deployed that capital,
• 36:13
  Speaker 12: so they gave investors a bigger dividend and more buybacks
• 36:18
  Speaker 12: than they were expecting. It was sort of like a
• 36:21
  Speaker 12: you wouldn't think that would be the outcome, but it
• 36:23
  Speaker 12: was at the time. So they've had excess capital. And
• 36:28
  Speaker 12: also because the banks in general were preparing for the
• 36:30
  Speaker 12: possibility of tougher capital rules that have not panned out,
• 36:35
  Speaker 12: so they were a lot of them been hoarding capital anyway,
• 36:37
  Speaker 12: sitting on a bunch of.
• 36:38
  Speaker 3: Extra Well, we're seeing in Wall Street it's definitely a
• 36:42
  Speaker 3: competition for talent, particularly if you wrap in hedge funds
• 36:45
  Speaker 3: as well as huge asset managers are private equity. Can
• 36:48
  Speaker 3: Weill's Hargo play in that game.
• 36:50
  Speaker 12: Yeah, they already have been. I mean they hired Fernando Rivas,
• 36:55
  Speaker 12: who is the head of the Corporate Investment Bank there.
• 36:58
  Speaker 12: He was a major hire from JP Morgan, so that
• 37:02
  Speaker 12: that was huge for them, and you know they've made
• 37:04
  Speaker 12: other hires over the years. Doug Bronstein is there, another
• 37:08
  Speaker 12: former JPM executive and he's vice chair. They have very
• 37:14
  Speaker 12: summers running wealth, so they have you know, they've been
• 37:16
  Speaker 12: able to get talent at the highest level and then
• 37:19
  Speaker 12: you know even further down as well.
• 37:20
  Speaker 3: All Right, Thanks to Hannah Lovit, Bloomberg Senior Finance Reporter.
• 37:23
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