Latest / Bloomberg Intelligence / Nuclear, Oil, UNGA, and Insurance (Podcast)

Transcript

Nuclear, Oil, UNGA, and Insurance (Podcast) · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
0:04
Speaker 1: my co host Matt Miller.
0:05
Speaker 2: Every business day we bring you interviews from CEOs, market pros,
0:09
Speaker 2: and Bloomberg experts, along with essential market moven news.
0:14
Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever
0:17
Speaker 1: you listen to podcasts, and at Bloomberg dot com Slash podcast.
0:21
Speaker 1: Talk about the global energy. We've been calling out the
0:23
Speaker 1: price of WTI crude oil, you know, for the last
0:26
Speaker 1: several months, as it's moved off of it's low, and
0:28
Speaker 1: he's now up another one point four percent today for
0:30
Speaker 1: WTI crude just under ninety three dollars or barrel, and
0:33
Speaker 1: it's getting a lot of people as it does when
0:35
Speaker 1: we see big moves talking about alternatives to oil. One
0:39
Speaker 1: of those is nuclear. Seth Gray joins us. He's a
0:41
Speaker 1: president and chief executive officer light Bridge Corporation. That's a
0:46
Speaker 1: nastac trade. It's company ltbrs at ticker to put in there. Seth,
0:50
Speaker 1: thanks so much for joining us here in our Bloomberg
0:52
Speaker 1: Interactor Brooker Studio. What is light Bridge Corporation? What do
0:56
Speaker 1: you guys do? What's your strategy?
0:58
Speaker 3: Look, our main activities are. We are designing advanced fuels
1:02
Speaker 3: that will work in the existing reactors as well as
1:04
Speaker 3: the newcoming small ones that we're talking.
1:07
Speaker 1: So we're talking nuclear nuclear.
1:08
Speaker 3: Fuel fuel, so fuel you put inside the reactors. The
1:11
Speaker 3: reactors won't work without it. But this is a reimagined,
1:14
Speaker 3: for the first time, new better fuel for the reactors.
1:18
Speaker 3: We're partnering with Idaho National Laboratory to develop and test it,
1:23
Speaker 3: and this will improve the safety of the reactors and
1:26
Speaker 3: the economics of the reactors dramatically, as well as the
1:29
Speaker 3: non proliferation and can allow reactors to load follow with
1:34
Speaker 3: renewables on a zero carbon grid.
1:36
Speaker 2: How safe can they be? I just got finished watching Chernobyl,
1:41
Speaker 2: which is terrifying, and I know I'm one of the
1:44
Speaker 2: last people to watch it. But before that, I watched
1:47
Speaker 2: Inside Bill Gates' Brain and I thought it was really
1:50
Speaker 2: a fantastic cell for the nuclear industry. He seems to
1:54
Speaker 2: have found a very safe solution to creating nuclear energy.
1:58
Speaker 4: Right.
1:59
Speaker 3: What's happening now is companies like terror Power that Bill
2:03
Speaker 3: Gates is the chairman of and light Bridge, our company,
2:07
Speaker 3: are developing newer, much safer technologies that literally physically cannot
2:14
Speaker 3: have an accident like Chernoybyl. These are very different, extremely
2:18
Speaker 3: safer technologies. The light Bridge fuel runs one thousand degrees
2:22
Speaker 3: celsius cooler in reactors than the current fuel and actually
2:26
Speaker 3: will produce more power while doing it, and just extremely safe.
2:30
Speaker 1: Set reset kind of the world energy grid for US,
2:35
Speaker 1: where is nuclear power today in the US, and then
2:38
Speaker 1: maybe in other parts of the world. Is it on
2:41
Speaker 1: the ascendency or is it still facing a lot of headwinds.
2:45
Speaker 3: It's on the ascendancy. The polling in most countries shows
2:49
Speaker 3: nuclear has about two thirds favorable or strongly favorable support,
2:54
Speaker 3: and the people who work in nuclear don't believe that,
2:58
Speaker 3: and that we're seeing new nuclear reactors being finished in Georgia,
3:04
Speaker 3: in the United States, ordered in many countries, we're seeing
3:10
Speaker 3: rapid development of these small reactors and advanced fuel like
3:14
Speaker 3: what light Bridge is doing. And it's partly for climate reasons,
3:18
Speaker 3: but I think the stronger driver right now is energy security.
3:22
Speaker 3: Countries that either want to get off relying on Putin's
3:24
Speaker 3: fossil fuels, or it turns out whoever supplies them with
3:27
Speaker 3: fossil fuels they tend not to trust, and being able
3:30
Speaker 3: to get off that is a good thing. And you
3:32
Speaker 3: know you just mentioned the one percent you know, increase
3:35
Speaker 3: in oil prices, it will translate to about one percent
3:38
Speaker 3: price increase in a lot of expenses, including gasoline. That
3:42
Speaker 3: doesn't happen in nuclear it's very level pricing. A one
3:46
Speaker 3: percent increase in uranium price would result in a tiny,
3:51
Speaker 3: tiny fraction of one percent of increase in a nuclear
3:54
Speaker 3: power price.
3:56
Speaker 2: But it's the startup costs that are what terrifies everyone.
3:59
Speaker 3: Right, Yes, in in terms of if you're building one
4:04
Speaker 3: or two, Yes, if you're building four, By the time
4:08
Speaker 3: you get to the third one, those issues are done.
4:11
Speaker 3: The United States built over one hundred large reactors, you know,
4:15
Speaker 3: most of them on schedule, on budget. The United Arab
4:18
Speaker 3: Emirates just built four pretty much on schedule on budget.
4:22
Speaker 3: China is, Russia is, France built almost sixty of them
4:26
Speaker 3: on schedule on budget. So yes, it's like building a bridge.
4:30
Speaker 3: If it's a one of a kind thing, the engineering,
4:33
Speaker 3: the complex construction can go over but you build several
4:36
Speaker 3: of them, that's not the case. And with these small reactors,
4:40
Speaker 3: where much of them will be factory built, you could
4:42
Speaker 3: build them like seven thirty sevens, very large numbers and
4:47
Speaker 3: really know the timeframes and costs.
4:49
Speaker 1: Talk to us about those smaller reactors. I guess I've
4:52
Speaker 1: heard about them just over the last several years. Tell
4:54
Speaker 1: me what are they, how are they different, and what's
4:57
Speaker 1: kind of their purpose?
4:59
Speaker 3: Well, right now, the typical nuclear actor is one thousand
5:03
Speaker 3: megawats electric power. Small reactors under the US government definition
5:08
Speaker 3: are three hundred megawats are smaller, and some go way
5:11
Speaker 3: smaller than that, so say less than a third the
5:14
Speaker 3: size of the current reactors to even much smaller than that.
5:18
Speaker 3: So first of all, you could get them small enough
5:21
Speaker 3: that you could have dedicated power to critical facilities like
5:24
Speaker 3: military bases, data centers, oil refineries, et cetera. So if
5:29
Speaker 3: someone shuts down the electric grid, you don't lose the
5:32
Speaker 3: military base, etc. Another factor is that because so much
5:38
Speaker 3: of them are factory built and shipped to the site,
5:41
Speaker 3: you have very good quality control, can build them much cheaper,
5:45
Speaker 3: much faster, and they're just using more advanced, more modern
5:50
Speaker 3: technology on safety, so that even with situations like you've
5:57
Speaker 3: seen where a reactor will lose water that kind of thing,
6:01
Speaker 3: these reactors could not harm anybody literally.
6:06
Speaker 5: You know.
6:06
Speaker 3: It looks like even if they lived across the street
6:09
Speaker 3: from the plant.
6:10
Speaker 1: Are they are we building them in the US now
6:13
Speaker 1: we are.
6:14
Speaker 3: Going too soon. New Scale is working with Idaho National
6:19
Speaker 3: Laboratory to deploy one at Idaho National Laboratory. The company
6:24
Speaker 3: you mentioned, Terror Power with Bill Gates is looking at
6:27
Speaker 3: deploying at least one in Wyoming. X Energy is looking
6:32
Speaker 3: at deploying in Texas to power down chemical plants, and
6:36
Speaker 3: there are several others that are looking at near term
6:38
Speaker 3: and probably the first will actually be nearby. G Hitachi
6:43
Speaker 3: deploying one at Ontario Power Generation in Canada.
6:47
Speaker 1: Okay, so I know the nuclear energy policy. Someone is
6:50
Speaker 1: in New York this week. What's the number one issue?
6:54
Speaker 3: Yeah, yeah, and I was pleased to speak there yesterday,
6:57
Speaker 3: and the number one is shoe there, I'd say, ostensibly
7:04
Speaker 3: is climate change, and that's what John Kerry spoke about
7:07
Speaker 3: in his keynote yesterday as part of Climate Week. But
7:11
Speaker 3: with President Zelenski about to arrive here in New York
7:14
Speaker 3: and speak at some events here too, I think energy
7:18
Speaker 3: security is really dominating and we're hearing more and more
7:22
Speaker 3: about that at the conference too, not just climate.
7:26
Speaker 2: I wonder when everybody started adding a second you to
7:29
Speaker 2: the word nuclear. Have you noticed that even George Bush
7:33
Speaker 2: says nuclear?
7:34
Speaker 4: Yeah?
7:35
Speaker 2: Yeah, where's that come from?
7:37
Speaker 1: Well?
7:38
Speaker 3: I think it came from George Bush originally, but it
7:41
Speaker 3: kind of stuck. So it's an American thing. I don't
7:47
Speaker 3: hear that in other countries.
7:48
Speaker 1: All right, Seth, thanks so much for joining us. Seth Gray,
7:50
Speaker 1: President and chief executive officer of light Bridge Corporation lt
7:55
Speaker 1: BR is a ticker to load into your Bloomberg terminal.
7:59
Speaker 5: You're listening to the team ken'shur Live program Bloomberg Markets
8:03
Speaker 5: weekdays at ten am Eastern on Bloomberg dot com, the
8:06
Speaker 5: iHeartRadio app, and the Bloomberg Business App, or listen on
8:09
Speaker 5: demand wherever you get your podcasts.
8:13
Speaker 1: There's just a lot of folks out there doing some
8:15
Speaker 1: really good work about just alternative energies in general. One
8:18
Speaker 1: of them is Jonathan Maxwell. He's the CEO and co
8:20
Speaker 1: founder of Sustainable Development Capital, and he has also has
8:25
Speaker 1: got a new book out scene right here, got a
8:27
Speaker 1: new book out the Edge, How competition for resources is
8:30
Speaker 1: pushing the world and it's climate to the brink and
8:33
Speaker 1: what we can do about it. Jonathan, thanks so much
8:35
Speaker 1: for joining us here on our Bloomberg Interactive Broker's studio.
8:38
Speaker 1: What's the big message for you when you're getting you
8:40
Speaker 1: know you here. It's Climate Week in New York, it's
8:42
Speaker 1: United Nations General Assembly. I gotta think energy, Given what's
8:46
Speaker 1: happening in the world is front and center. What's what's
8:49
Speaker 1: the message you bring to your clients.
8:51
Speaker 6: So some people might say the clean energy transitional sustainability
8:56
Speaker 6: isn't going so well, okay, by most eighty two percent
8:59
Speaker 6: of the world is gas and coal in terms of
9:01
Speaker 6: its energy. So the message I bring is that not
9:04
Speaker 6: only do we need to figure out, which is the
9:06
Speaker 6: mainstream piece, how to get more clean energy into the system,
9:10
Speaker 6: but we've got to figure out how we can start
9:12
Speaker 6: wasting two thirds to three quarters of the energy in
9:16
Speaker 6: the system in the first place. So much of the
9:18
Speaker 6: gas and the oil is love.
9:20
Speaker 1: Before, right, Yeah, because the inefficiencies is your thing, right,
9:24
Speaker 1: This is exactly.
9:26
Speaker 6: Inefficience is my thing. Because the world weighs seventy five
9:29
Speaker 6: percent of its energy, half of the food, and the
9:31
Speaker 6: third of the water.
9:32
Speaker 2: Is there a cool scientific term for energy that's wasted
9:36
Speaker 2: and used.
9:37
Speaker 6: Its energy losses, losses of primary energy, energy waste. Some
9:41
Speaker 6: of the best work in the world has done here
9:43
Speaker 6: in the United States by the Lawrence Livermore National Laboratory.
9:46
Speaker 6: They run an energy flow chart. You show how much
9:48
Speaker 6: energy comes into the US economy, how much survives. On
9:51
Speaker 6: the other side, you lose about two thirds of the
9:54
Speaker 6: energy and it's mostly heat. So you talked about nuclear
9:57
Speaker 6: power stations. It's great producing power from a nuke plant,
10:00
Speaker 6: but if you're dumping the heat, then it's only operating
10:03
Speaker 6: at thirty eight percent efficiency. If you've got a gas
10:06
Speaker 6: turbine which is driving electricity onto the grid and it's
10:10
Speaker 6: dumping the heat, it's delivering forty to fifty percent efficiency.
10:13
Speaker 2: But at least the nuclear isn't creating a carbon footprint, right.
10:17
Speaker 6: But yes, but you're wasting the heat, and so yeah.
10:20
Speaker 2: I understand. But the thing is other energy sources create
10:25
Speaker 2: carbon dioxide, which contributes to global warming, right as we
10:28
Speaker 2: are told. I don't care if nuclear dumps ninety five
10:32
Speaker 2: percent of its energy as long as it doesn't contribute
10:36
Speaker 2: to global warming.
10:37
Speaker 7: Right.
10:37
Speaker 5: Yeah.
10:37
Speaker 6: So there are three things and one dimension and that
10:40
Speaker 6: they're deditional to think about. So the first is carbon.
10:43
Speaker 6: That's a really important thing to solve for. The second
10:45
Speaker 6: is cost. How much does it actually cost? Total life
10:49
Speaker 6: cycle and actually saving energy is the cheapest possible way,
10:52
Speaker 6: especially if you're dumping two thirds of it. The third
10:55
Speaker 6: is resilience and availability, and that brings us into the
10:58
Speaker 6: last point, like how reliable. Clear is very reliable when
11:01
Speaker 6: you put it on the grid. It can run what
11:02
Speaker 6: they call baseload, But the problem is how long. So
11:04
Speaker 6: here's the last point. Time. So we all talk about
11:07
Speaker 6: transitioning the energy system, but it's going to take decades
11:11
Speaker 6: and trillions of dollars and we're going to do it.
11:13
Speaker 6: And that's what Janet Yellen is talking about tomorrow in
11:16
Speaker 6: General Assembly, and we celebrate that. What I'm saying is
11:20
Speaker 6: in the meantime it's just as important and it can
11:23
Speaker 6: be done if not to waste the energy in the meantime.
11:27
Speaker 2: And that's what is the most efficient source of energy
11:30
Speaker 2: for running our homes and businesses and cars.
11:34
Speaker 6: So the most efficient source of energy for running cars
11:38
Speaker 6: is electricity. It's about seventy five percent efficient compared to
11:41
Speaker 6: about fifteen to thirty.
11:42
Speaker 2: Well, but that electricity comes from many different sources of energy.
11:45
Speaker 2: Read it could come from nuclear, come from dirty core.
11:47
Speaker 6: So most efficient way of generating energy for electricity it
11:54
Speaker 6: is if you can use the heat as well as
11:56
Speaker 6: producing the electricity. So cogeneration using wastegot is natural gas
12:01
Speaker 6: even but as long as you're using their heat, nuclear
12:03
Speaker 6: as long as you're using their.
12:05
Speaker 2: Heat, So nuclear with a turbocharger.
12:06
Speaker 6: Essentially nuclear with a heat recovery system, and then using
12:10
Speaker 6: that heat and then in an industry needs a tremendous
12:12
Speaker 6: amount of heat as well as power. And the last
12:15
Speaker 6: point I'd make is we always talk about energy as
12:17
Speaker 6: if it's electricity. Do you know how much of the
12:19
Speaker 6: world's energy is electricity?
12:23
Speaker 2: Wow?
12:23
Speaker 6: Wow, Well the rest it's heat and transport fuel. So
12:27
Speaker 6: here we are in the United States. The United States
12:29
Speaker 6: loses seventy eight percent of the primary energy and other
12:32
Speaker 6: way to the oil that goes into transport.
12:34
Speaker 2: That's the number one told us yesterday, Paul that the
12:38
Speaker 2: growth in demand for electricity over the last twenty years,
12:42
Speaker 2: or the growth in production, has been zero, which I
12:45
Speaker 2: thought was fascinated. I would have imagined it's exponentially larger.
12:49
Speaker 6: Well, actually, you know Whatentially, if you look at where
12:51
Speaker 6: electricity ends up, it ends up in the home largely,
12:54
Speaker 6: so domestic our homes are very significant uses of energy.
12:58
Speaker 6: Business and industry to something almost nothing in transport yet, right,
13:02
Speaker 6: So if you then put everything into the energy system,
13:05
Speaker 6: the big piece is we've got a big problem with
13:07
Speaker 6: heat and transport. That's the piece that needs to be solved.
13:10
Speaker 6: Seventy five percent of all of this energy solution is
13:13
Speaker 6: addressable through making more efficient solutions for buildings, industry, and
13:17
Speaker 6: transport generate energy where you need it.
13:20
Speaker 2: So you say heat, are you talking about hvactis in general.
13:23
Speaker 6: I'm talking about h fact high temperature process heat. I'm
13:26
Speaker 6: talking about cooling steel mill, cement plants and very high
13:29
Speaker 6: temperature heat cooling. There's more growth in demand for cooling
13:32
Speaker 6: by twenty thirteen, then the whole demand for energy and
13:36
Speaker 6: India put together. You know, data Center's massive public buildings
13:41
Speaker 6: in the country. I come from from my funny accent
13:43
Speaker 6: for UK. Fourteen percent of the UK's energy goes used
13:46
Speaker 6: by the public sector. The biggest part of it's the
13:48
Speaker 6: hospitals and they use again as much heating and cooling
13:51
Speaker 6: as they do electricity, and they waste most of it.
13:55
Speaker 1: What are some of the technologies that you've seen or
13:58
Speaker 1: that you're funding that go this energy waste issue recovery?
14:03
Speaker 6: Yeah, So recovering things that would otherwise be wasted, so
14:06
Speaker 6: you can you can generate a natural gas even you
14:09
Speaker 6: use it in natural gas on site, but use if
14:11
Speaker 6: you're on site. You can use the heat for power, sorry,
14:13
Speaker 6: heat for heating. If you're taking a blast furnace, you
14:17
Speaker 6: can take which we do. We take the waste gases
14:19
Speaker 6: from the blast furnace and recycle them into power and steam.
14:22
Speaker 8: For steel mills.
14:24
Speaker 6: You can put solar on your rooftop, not just at home,
14:26
Speaker 6: but a massive scale in commercial industrial applications, and there's
14:30
Speaker 6: almost no transmission and distribution loss, and you can match
14:33
Speaker 6: your loads well. If you pair it up with batteries.
14:35
Speaker 6: You can do heat efficiently by putting heat pumps in
14:39
Speaker 6: industrial applications. I've been doing this job for fifteen sixteen
14:43
Speaker 6: years of on site energy generation. The biggest innovation I
14:46
Speaker 6: was dealing with eleven twelve years ago was the LED
14:48
Speaker 6: light barb. All of a sudden, you could save ninety
14:50
Speaker 6: percent of the energy with an asset that worked twenty
14:53
Speaker 6: percent sorry, twenty times longer. But on site energy generation
14:57
Speaker 6: is a massive part of the solution. By the way,
14:59
Speaker 6: if you don't stop wasting all of this energy, I'm
15:02
Speaker 6: afraid there's no point making all the new stuff, however
15:07
Speaker 6: green it is, if we're just dumping the existing energy
15:09
Speaker 6: networked out.
15:10
Speaker 2: Well, don't tell anybody that.
15:12
Speaker 6: We have to do both. We have to go as
15:14
Speaker 6: fast as possible in generating clean energy and at the
15:18
Speaker 6: same time, but to the same level of effort and
15:21
Speaker 6: the same level of investment, we have to invest in
15:24
Speaker 6: efficiencies and improvement is happening, it's just starting. I have
15:29
Speaker 6: to celebrate the United States on this one, compared to
15:31
Speaker 6: my country. At the moment, the United States, about twenty
15:33
Speaker 6: percent of the Inflation Production Act is designated for things
15:36
Speaker 6: I would broadly define as on site generation or efficiency.
15:40
Speaker 6: The European Commission has a massive policy called energy efficiency first.
15:44
Speaker 1: That's because if you.
15:45
Speaker 6: Remember when Russia last invaded Ukraine, when the annexed Crimea,
15:48
Speaker 6: the Europeans came out and said, well, for every unit
15:50
Speaker 6: of ass we don't use is too and half we
15:52
Speaker 6: don't need to buy from Russia. So Ever, since then,
15:54
Speaker 6: although they mumbled it, until last year, the European Commission
15:57
Speaker 6: had been quite serious about energy efficiency. It's now in
15:59
Speaker 6: the number one policy the UK needs to get serious today.
16:03
Speaker 6: There is actually finally a message from the Chancellor looking
16:06
Speaker 6: at ways of addressing this. But this is the largest, fastest,
16:10
Speaker 6: cheapest source of greenhouse gas emissions, the biggest way of
16:13
Speaker 6: cutting costs in the economy, and a huge The great
16:16
Speaker 6: news is I'm not here talking about becking for subsidies.
16:19
Speaker 6: I'm talking about getting something done that's good for business,
16:22
Speaker 6: good for the economy. Actually, I think it's the greatest
16:25
Speaker 6: economic opportunity that I know.
16:27
Speaker 1: That's all right, Jonathan, great stuff. I knew once you
16:29
Speaker 1: start talking. I know this guy, Jonathan Maxwell, CEO and
16:32
Speaker 1: co founder of Sustainable Development Capital.
16:35
Speaker 5: You're listening to the tape cans are Live program Bloomberg
16:38
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the
16:41
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
16:45
Speaker 5: You can also listen live on Amazon Alexa from our
16:48
Speaker 5: flagship New York station, Just say Alexa, play Bloomberg eleven thirty.
16:53
Speaker 1: Not surprisingly, climate change and natural disasters are at the
16:58
Speaker 1: forefront of concerns among corporate executives, and we want to
17:02
Speaker 1: get a handle on that, so we check in with
17:04
Speaker 1: Pat Gallagher. He's the CEO of Gallagher Insurance. It is
17:08
Speaker 1: on the New York Stock Exchange listed company a JG
17:11
Speaker 1: is the ticker. It is a fifty billion dollar market
17:15
Speaker 1: cap company. It's starts up twenty four and a half
17:17
Speaker 1: percent year to date. It's a fifty two week high
17:20
Speaker 1: and it's up seven tens to one percent today. Pat,
17:22
Speaker 1: thanks so much for joining us here. I know you
17:25
Speaker 1: guys recently conducted a survey of one thousand US business
17:28
Speaker 1: owners to understand kind of how they're thinking about risk.
17:31
Speaker 1: What are some of the key takeaways you found.
17:35
Speaker 4: Well, first of all, it is no surprise that the
17:39
Speaker 4: business owners are incredibly concerned about climate change and weather
17:44
Speaker 4: related issues. And so when you think about what's happened
17:47
Speaker 4: just in the past week or two with Lee coming
17:50
Speaker 4: up these coasts, we kind of escaped a major hit,
17:53
Speaker 4: but those things continue to rack the business community. In fact,
17:58
Speaker 4: I think we estimate the first half natural causes first
18:01
Speaker 4: half of the year caused about one hundred and thirty
18:04
Speaker 4: eight billion dollars of losses. And if you're a business person,
18:07
Speaker 4: you know that's a lot of businesses being impact that's
18:10
Speaker 4: a lot of homes being impacted by natural disasters. So
18:13
Speaker 4: that really is one of the main concerns of business
18:17
Speaker 4: people We interviewed about a thousand clients, all of them
18:22
Speaker 4: privately owned. So this is not the professional risk management community.
18:26
Speaker 4: These are the people day in and day out that
18:28
Speaker 4: make a living by running businesses, and they are concerned
18:31
Speaker 4: about their risk management needs, which they should be.
18:34
Speaker 2: I wonder, sorry, I wonder if there's a difference. Well,
18:39
Speaker 2: they're concerned, but are they doing anything about it? Is
18:42
Speaker 2: there anything they can do about it?
18:45
Speaker 4: Yes, there is, and that's I think a really good point.
18:48
Speaker 4: The fact is that there's a lot they can do
18:52
Speaker 4: about it, and risk management and the ability to counsel
18:55
Speaker 4: with them and to give them some advice is a
18:58
Speaker 4: huge part of what we're all about out Insurance is
19:01
Speaker 4: just really one piece of what we do for a client,
19:04
Speaker 4: and in fact, we start with that premise that insurance
19:07
Speaker 4: plays a role in your risk management. But your risk
19:10
Speaker 4: management is not just we buy insurance, and it should
19:13
Speaker 4: be what can we do? Where do we locate plants,
19:16
Speaker 4: where do we move trucks? How do we react when
19:18
Speaker 4: a storm is coming? What is our disaster recovery planning?
19:22
Speaker 4: We help on all of that. So when something happens
19:25
Speaker 4: that's really a major disaster, how do we get you
19:28
Speaker 4: back up in business as quickly as possible. Insurance plays
19:32
Speaker 4: a role in all of that, but it's.
19:34
Speaker 1: Not the be all and end all, right, So from
19:37
Speaker 1: the insurance perspective, I mean, you know, it's interesting, Pat,
19:41
Speaker 1: I see a lot of companies relocating to It seems
19:44
Speaker 1: like everybody and the Brothers going down to Florida. But boy,
19:46
Speaker 1: it'd be a tough place to base a business given
19:49
Speaker 1: all the challenges they're facing from you know, all the
19:52
Speaker 1: weather issues down there. What do you see when you
19:55
Speaker 1: talk to some of these smaller mid sized businesses about
19:59
Speaker 1: kind of how they really try to incorporate that into
20:01
Speaker 1: kind of their future.
20:03
Speaker 4: Well, first of all, I think it's really important enough
20:05
Speaker 4: that not all the midsized businesses across America are moving
20:08
Speaker 4: to Florida, and they're not moving to Texas. They're in
20:11
Speaker 4: business because the communities they're in need them. Whether they're
20:14
Speaker 4: construction companies or real estate owners, or whether they're food companies,
20:19
Speaker 4: whatever it is, they're in locations because there's business opportunities there.
20:23
Speaker 4: So first of all, you've got to start with the
20:24
Speaker 4: premise that not all companies either have the same exposures
20:28
Speaker 4: are the same. Way to mitigate those exposures. You have
20:31
Speaker 4: to really personalize this and you have to sit down
20:34
Speaker 4: with a client and understand where are they operating, what
20:37
Speaker 4: business is it in. We happen to be privileged to
20:40
Speaker 4: be very very expert at about thirty to fifty areas
20:44
Speaker 4: of business. So take hotels, or take real estate, or
20:47
Speaker 4: religious or not for profit or construction. In these areas,
20:51
Speaker 4: we really know that business. So we can sit down
20:54
Speaker 4: and it's a different set of exposures for the person
20:56
Speaker 4: that has to be a contractor in Naples versus the
20:59
Speaker 4: person who's as a contractor or real estate owner in Chicago.
21:03
Speaker 4: And these businesses are literally global, but they're across the
21:07
Speaker 4: interviewed businesses were across the United States, and you start
21:11
Speaker 4: with saying, okay, what are your exposures your No, two
21:16
Speaker 4: businesses are exactly the same, and no two business owners
21:20
Speaker 4: have the exact same appetite for risk. I'll give you
21:23
Speaker 4: an example. I can take a large auto dealer in
21:27
Speaker 4: the town that I live in, Glenview, Illinois, on one
21:29
Speaker 4: side of town and have a large auto dealer on
21:31
Speaker 4: the other side of town owned by different families. Those
21:35
Speaker 4: families will have a different appetite for risk. How much
21:38
Speaker 4: of the lot exposure for Hale, does one want to
21:41
Speaker 4: take versus the other? And you have to sit down
21:44
Speaker 4: with the owner and say, all right, you know, what
21:46
Speaker 4: is your personal balance sheet, what is your appetite? How
21:48
Speaker 4: do we mitigate that? What do you do when you
21:51
Speaker 4: see a storm coming? What is the coverage that you
21:53
Speaker 4: need to take care of that open lot? How much
21:56
Speaker 4: are you going to have out there, how much are
21:57
Speaker 4: you going to be able to move indoors, et cetera.
22:00
Speaker 4: And that varies across industries, and it varies across geographies.
22:05
Speaker 4: And that's the starting point for someone like Gallagher, who
22:09
Speaker 4: then says at the end point, now let's buy this
22:13
Speaker 4: insurance to cover the things that you can't mitigate. And
22:17
Speaker 4: I think that's a really important function that a lot
22:21
Speaker 4: of people don't understand about the responsibility that the brokers
22:25
Speaker 4: have for their commercial clients.
22:29
Speaker 2: By the way, in terms of Gallagher, can you keep
22:34
Speaker 2: premium increases across coverage across geography in line with inflation?
22:41
Speaker 2: I know we've been doing some stories about, for example,
22:43
Speaker 2: automotive insurance rising double digits every month for the past
22:47
Speaker 2: twelve so the inflation is there, but everywhere else, I mean,
22:50
Speaker 2: you know, your cost to repair or replace is going
22:53
Speaker 2: to be higher with inflation. So do you do you
22:56
Speaker 2: see the increases in premiums as well? Do you have
22:58
Speaker 2: that pricing power?
23:00
Speaker 4: Well, no, we don't have pricing power because recall we
23:03
Speaker 4: are brokers. We take no risk. So our job is
23:06
Speaker 4: to help that insured figure out number one, how to
23:09
Speaker 4: mitigate their own risk and then number two, how to
23:12
Speaker 4: properly buy insurance. And that means that in order to
23:15
Speaker 4: keep that pricing or to keep that cost at the
23:18
Speaker 4: level that it should how much should they retain? How
23:21
Speaker 4: much of a deductible so they should have So let
23:23
Speaker 4: me put it in personal line standards. Do you want
23:26
Speaker 4: to take a five hundred dollars deductible on your personal
23:28
Speaker 4: lines or a five thousand dollars deductible? Well, different people
23:32
Speaker 4: will take different amounts, and that has a direct impact
23:35
Speaker 4: on the cost of your personal lines, whether it's your
23:38
Speaker 4: auto insurance, your homeowners same is true in business. So
23:41
Speaker 4: if you have the personal balance sheet to be able
23:44
Speaker 4: to take more risk, you can mitigate the cost to
23:46
Speaker 4: the premium that you're going to pay to a third party.
23:50
Speaker 4: And we're very very good at that, whether it be
23:52
Speaker 4: putting together group captives, whether it be putting together self
23:55
Speaker 4: insurance programs, or whether it simply be saying, look, the
23:59
Speaker 4: best place for you to get your insurance is this
24:01
Speaker 4: first dollar policy written by XYZ Insurance Company. But we
24:05
Speaker 4: don't actually have pricing power. Our job is to help
24:10
Speaker 4: that person who doesn't live day in and day out
24:12
Speaker 4: in the market get the best deal. And right now,
24:16
Speaker 4: you're absolutely right. The cost of ensuring people is terrifically
24:22
Speaker 4: impacted by inflation.
24:24
Speaker 1: And so for it I mean is inflation, is the
24:27
Speaker 1: rates insurance companies can charge. Is that relegated by the state.
24:31
Speaker 1: Is that regulated by the state, and so therefore you
24:34
Speaker 1: have to work with the state.
24:36
Speaker 4: So it depends on the line of coverage, and it
24:38
Speaker 4: depends on the state. So in most states personal lines,
24:42
Speaker 4: in particular automobile rates are regulated. Okay, and you see
24:46
Speaker 4: a conflict going on right now that I think most
24:48
Speaker 4: of your listeners will be aware of. In the state
24:50
Speaker 4: of California, a lot of companies have said, look enough,
24:53
Speaker 4: we're not going to write here. And part of that
24:56
Speaker 4: is the loss picture the wildfires and the hurt that
24:59
Speaker 4: the the threats that they have just in terms of those,
25:02
Speaker 4: but a lot of it also is simply saying, look,
25:05
Speaker 4: we have inflation, the cost to repair is significant. We
25:08
Speaker 4: need to file for rate increases, we need to base
25:11
Speaker 4: rate change in order to cover these costs, where you
25:15
Speaker 4: have a political system that makes that difficult to do.
25:18
Speaker 4: You finally have a break point in California where some
25:21
Speaker 4: carriers have said I just can't write anymore here, and
25:25
Speaker 4: that's a real problem politically, and it is on those
25:30
Speaker 4: lines of coverage that everybody has to buy. Now, when
25:33
Speaker 4: you leave that and you go to a commercial concern,
25:36
Speaker 4: then you do have some lines of coverage that are regulated.
25:39
Speaker 4: But you also have a pressure release valve we refer
25:43
Speaker 4: to as the excess and surplus market, and that allows
25:46
Speaker 4: insurance to be quoted on a free form, free to rate.
25:50
Speaker 4: So that allows me to sit for the commercial client
25:53
Speaker 4: and say, don't buy that from the regulate identity. Let
25:56
Speaker 4: me structure this for you differently.
25:58
Speaker 8: Got it.
25:59
Speaker 4: So the answer your question is, yes, there's a heavy
26:03
Speaker 4: dose of regulation. It varies by geography, it varies by
26:06
Speaker 4: line of coverage.
26:07
Speaker 1: All right, Pat, great stuff has always Pat Gallagher, he's
26:10
Speaker 1: the CEO of Gallagher Insurance. But that's a tough business
26:15
Speaker 1: for me to really understand it always has been. But
26:17
Speaker 1: fortunately there are people out there who kind of get it.
26:20
Speaker 1: Gallagher Insurance, it's a New York stock change list of
26:22
Speaker 1: company A jay G is the ticker. Some wee can
26:25
Speaker 1: load that in the Bloomberg terminal.
26:27
Speaker 5: You're listening to the Team Ken's are Live program Bloomberg
26:31
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot com,
26:34
Speaker 5: the iHeartRadio app and the Bloomberg Business app, or listen
26:37
Speaker 5: on demand wherever you get your podcasts.
26:41
Speaker 1: All right, we got Joe Mysek in studio, but it's
26:44
Speaker 1: not Friday. So why is Joe Mysek, who covers all
26:46
Speaker 1: the municipal bond stuff for Bloomberg News. Why is he
26:49
Speaker 1: in there? Because he wrote a BusinessWeek column, a story
26:53
Speaker 1: that went back to his work on a little book,
26:56
Speaker 1: this little edition he had to this book called The
26:58
Speaker 1: Bonfire of the Vanities, and if you haven't read it,
27:01
Speaker 1: go back. It is the definitive Wall Street book of
27:05
Speaker 1: the great decade that was the nineteen eighties. Absolutely that
27:11
Speaker 1: came after, that came after, and Liarys Poker is very
27:13
Speaker 1: good because and that's also a great one.
27:15
Speaker 2: Barbarians at the Gate.
27:16
Speaker 1: Also a great one. That came after Tom Wolf, author
27:20
Speaker 1: of Bonfire of the Vanities, and Joe actually kind of
27:23
Speaker 1: was part of that. Joe mysec tell us about kind
27:25
Speaker 1: of how you what small part you played in working
27:29
Speaker 1: or kind of working with or helping Tom Wolf, the
27:31
Speaker 1: author of Bonfire the Vanities.
27:33
Speaker 7: Oh, that was a that was a pricing pricing business.
27:38
Speaker 7: At one point, Sherman McCoy, the Star Bond salesman, is
27:45
Speaker 7: working on a transaction and I was looking at the
27:47
Speaker 7: galleys and you know, there was a reference there and
27:52
Speaker 7: instead of referring to the coupon and maturity, there was
27:58
Speaker 7: a reference to maturity, and it's like, what about those thirteens?
28:04
Speaker 7: What about those thirteen years? And I said, you know,
28:06
Speaker 7: I called Tom up and I said, you know, I
28:10
Speaker 7: think what they do is really talk about the coupon
28:13
Speaker 7: and the maturity here, you know, like the tens of
28:16
Speaker 7: thirty six or something like that. And he said, okay,
28:19
Speaker 7: what would it be? I said, all right, smart guy.
28:21
Speaker 7: I had to go get the Monroe calculator out and
28:25
Speaker 7: we kind of backed into it and it's the ten
28:27
Speaker 7: tens of whatever.
28:29
Speaker 1: So you're helping Tom Wolf with a little boy way
28:31
Speaker 1: those rates.
28:32
Speaker 2: That's him throwback already ten percent, Yes.
28:36
Speaker 1: Exactly, united fragrance. So again, big big book there on
28:41
Speaker 1: Wall Street in the eighties, Tom woff is there's a
28:44
Speaker 1: film coming out about him, isn't there?
28:46
Speaker 7: Yes, there is Radical Wolf by Richard Dewey, And it
28:51
Speaker 7: is a documentary about Tom Wolf.
28:54
Speaker 8: And it's funny, Michael.
28:56
Speaker 7: It's based on a Michael Lewis article in Vanity Fair
28:59
Speaker 7: back in two twenty fifteen, and Michael Lewis went to
29:04
Speaker 7: the New York Public Library where Tom Wolf has sold
29:07
Speaker 7: his papers and kind of dove in and look around
29:11
Speaker 7: a little bit and and wrote about it, and then
29:14
Speaker 7: wrote about going out and seeing Tom Wolf in Southampton.
29:17
Speaker 8: Uh.
29:17
Speaker 7: And it's it's just a it's a fascinating piece of work.
29:21
Speaker 7: And Dewey points out, well, actually Lewis points out that
29:25
Speaker 7: that Wolf really became quite a performer. And Dewey points
29:30
Speaker 7: out that that he he accumulated one hundred and fifty
29:34
Speaker 7: hours of a film, not including interviews he performed, and
29:42
Speaker 7: more than three thousand still photos, so you could see
29:46
Speaker 7: Tom loved the camera.
29:48
Speaker 1: Yeah, and he became I mean Tom Wolf became a
29:51
Speaker 1: player himself. I mean, you know, just all around the Hampton,
29:54
Speaker 1: New York City, all that, all that kind of stuff.
29:58
Speaker 2: Yes, indeed, Well, I will never forget reading The Electric
30:01
Speaker 2: kool Aid Acid Tests.
30:03
Speaker 5: Yep.
30:03
Speaker 2: That was like my first foray into the world of
30:08
Speaker 2: the Grateful Dead and kind of the Hell's Angels. And
30:11
Speaker 2: I think that's probably the book that made him initially famous, right,
30:16
Speaker 2: But then he had so many hits after that. He
30:20
Speaker 2: wrote The Right Stuff, which became a movie. Obviously Bonfire
30:23
Speaker 2: the Vanities became a movie as well. He must be
30:28
Speaker 2: one of the biggest, most successful American authors.
30:32
Speaker 7: Well, I would say though he was certainly the most
30:35
Speaker 7: probably the most interviewed and photographed of American writers, and
30:40
Speaker 7: that includes Hemingway and Mark Twain.
30:43
Speaker 1: Gorvadal So you actually went to this vault right in
30:47
Speaker 1: then your public library? Oh oh, and what were you
30:50
Speaker 1: looking for?
30:51
Speaker 7: You know? I was looking for this for the the
30:54
Speaker 7: origin of the quote. There's a there's a quote in
30:58
Speaker 7: The Bonfire of the Vanities and Sherman McCoy's little daughter Campbell. Yeah,
31:06
Speaker 7: bon Bond salesman h Campbell McCoy says, Daddy, what do
31:10
Speaker 7: you do? She's like six, I think or seven? Uh,
31:14
Speaker 7: And I got daddy, willly what do you do? And
31:18
Speaker 7: he's fumbling around, and all of a sudden, his wife,
31:21
Speaker 7: Judy says, no, no, I got this uh. And and she says, well, well, Daddy.
31:25
Speaker 7: What daddy does is, uh, he slices the cake and
31:29
Speaker 7: he hands it out and to different people, and Daddy
31:32
Speaker 7: gets to keep the crumbs.
31:34
Speaker 8: So Sherman is humiliated. Uh. And you know, later on
31:38
Speaker 8: like crumbs, well, because.
31:40
Speaker 1: He thinks he's the master of the universe.
31:45
Speaker 7: So I was in search of this of this quote,
31:47
Speaker 7: and I remember Tom Wolf told me over dinner at
31:51
Speaker 7: Ben Benson's. I asked Hi about his who came up
31:53
Speaker 7: with that? It was a very felicitous way of describing
31:56
Speaker 7: what bond salesman do. Uh, And he said Desmond Fitzgerald.
32:02
Speaker 7: And I, you know, I kind of I wanted, you know,
32:05
Speaker 7: I tucked that away. And then last year I was
32:08
Speaker 7: searching around to write a column and I said, gee,
32:12
Speaker 7: I wonder if I could find this that's home Wolf papers.
32:16
Speaker 7: And you know I didn't find that, but I found
32:18
Speaker 7: something else.
32:20
Speaker 2: What was it?
32:22
Speaker 7: Well, you know, Sherman McCoy begins as a writer. The
32:30
Speaker 7: role this series in Rolling Stone, you know, goes on
32:34
Speaker 7: for like twenty seven episodes or twenty four episodes, and
32:38
Speaker 7: Sherman requires a writer of and his famous book is
32:42
Speaker 7: called A Man in Slices, And of course later on
32:46
Speaker 7: he writes a novel. Tom wolf writes a novel called
32:49
Speaker 7: A Man in Full anyway, a Man in Slices. So
32:52
Speaker 7: I'm looking through Tom Wolfe's papers, and in February of
32:56
Speaker 7: nineteen eighty four, the headmaster of his school, and Christopher
33:00
Speaker 7: is and.
33:00
Speaker 1: Rich Richmond know it well, writes a letter and.
33:03
Speaker 7: Says, hey, you know the Tom Wolfe had been, as
33:06
Speaker 7: you pointed out, or a successful author. He uh, he
33:14
Speaker 7: had been a trustee for Saint Christoph of Saint Christo's
33:17
Speaker 7: for about ten years.
33:19
Speaker 1: So get in touch with a certain.
33:20
Speaker 8: So he wants it.
33:21
Speaker 7: So, so George McVay, who's the headmaster, says, could you
33:24
Speaker 7: get in touch with this guy, Kirk Maturne, who is
33:29
Speaker 7: then Atlizard freyer Uh, because he just gave us a
33:31
Speaker 7: very nice contribution and we're ramping up our endowment fundraising. Okay,
33:39
Speaker 7: great Tom does. Now Tom is already writing Bonfire the Vanities,
33:46
Speaker 7: but he writes a very nice letter to Kirk maturn
33:51
Speaker 7: Kirk maturn sends back a letter on the Blizard stationary saying, wow,
33:56
Speaker 7: so nice of you to write.
33:57
Speaker 8: Me, Thank you so much, and you know.
34:00
Speaker 7: Discusses their various lives and how they've what they do,
34:06
Speaker 7: and invites Tom to lunch at twenty one. Yea he
34:09
Speaker 7: now shuddered. Twenty one He and about five other guys, well,
34:13
Speaker 7: he says, Wall Street guy says, I'm not gonna put
34:15
Speaker 7: you on a podium.
34:16
Speaker 8: It's just an informal watch.
34:18
Speaker 7: So Tom goes has this fabulous time, writes some return like, wow,
34:24
Speaker 7: your friends were terrific and they introduced me to this
34:30
Speaker 7: place that you know, I couldn't imagine this whole.
34:32
Speaker 1: World of Wall Street and so therefore I'm going to
34:35
Speaker 1: change Sherman McCoy from a writer to a.
34:38
Speaker 7: Banker and a bond salesman. And just and I saw this,
34:43
Speaker 7: it was taking place, and you know, the papers themselves
34:46
Speaker 7: are they're organized, but not tremendously so, so you really
34:51
Speaker 7: have to you know what's going on here. Oh, here's
34:54
Speaker 7: another letter from Kirk mcturn and it's setting up and
34:56
Speaker 7: appointments for Tom, including.
34:59
Speaker 8: The UH Treasury auction at I want to say.
35:03
Speaker 1: Solon Brothers sure the biggest bond desk on the four
35:07
Speaker 1: and as his side. I worked for Kirk Return at
35:09
Speaker 1: Paine Webber my first job part of rotation, so it
35:13
Speaker 1: all comes full circle and he had me. I did
35:15
Speaker 1: my first bond trade at the behest of me.
35:18
Speaker 2: Do you think your kids are going to appreciate I
35:20
Speaker 2: mean the historical stuff that like people that you rubbed elbows.
35:26
Speaker 1: They have a couple they will Now they're creating their
35:31
Speaker 1: own history. They could care less about what I did.
35:33
Speaker 5: You're listening to the tape Cat's are live program Bloomberg
35:37
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the
35:40
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business app.
35:44
Speaker 5: You can also listen live on Amazon Alexa from our
35:46
Speaker 5: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
35:52
Speaker 2: I am excited to talk to Berner Hoyer, who's just
35:55
Speaker 2: come into the studio here. He is the president of
35:57
Speaker 2: the European Investment Bank, which is one of the biggest
36:02
Speaker 2: extra national supernational lenders in the world. They are the
36:07
Speaker 2: development arm of the European Union and so Wierner, thanks
36:12
Speaker 2: so much for joining us. You invest I mean, for example,
36:15
Speaker 2: I imagine you financed the eused green transition as well as
36:20
Speaker 2: I wonder do you have an interest in financing the
36:25
Speaker 2: defense industry of the European Union.
36:28
Speaker 9: Not really, we do quite a bit and when it
36:30
Speaker 9: comes to dual use activities and technology promotion. But we
36:35
Speaker 9: are not indirectly involved into arms of ammunition.
36:38
Speaker 2: I'm just because of the Russian invasion of Ukraine and
36:41
Speaker 2: we have Zelenski here.
36:43
Speaker 9: We are very highly engaged in Ukraine. There's two reasons.
36:46
Speaker 9: Number one, we of course active in Ukraine since the
36:48
Speaker 9: independence of Ukraine. But in twenty fourteen we did a
36:52
Speaker 9: step change because I said at that time, guys, this
36:55
Speaker 9: guy is not going to stop in Crimea, so this
36:58
Speaker 9: will go on. And then we stopped our business in
37:00
Speaker 9: Russia and diverted the funds who are available for Russia
37:04
Speaker 9: to the neighboring countries, to Moldova, Georgia, in particular to Ukraine.
37:07
Speaker 9: So when the war started, we were already there and
37:11
Speaker 9: we could beef up our activities there.
37:13
Speaker 2: So what kind of activities are those? I mean, what
37:15
Speaker 2: are you investing in there? And I guess you take
37:18
Speaker 2: equity stakes, you lend money, You have a number of
37:20
Speaker 2: different transmission maas you.
37:22
Speaker 9: Are a project finance here, so we invest into concrete
37:26
Speaker 9: projects and sometimes we are a little bit diverted because
37:30
Speaker 9: we see the military needs and all these things. But
37:32
Speaker 9: it's also an absolute necessity to keep the economy running,
37:35
Speaker 9: and the Ukrainians are doing a fantastic job under the
37:38
Speaker 9: circumstances under which they live, and that means the infrastrcture
37:42
Speaker 9: must work if you want to keep the economy rolling.
37:44
Speaker 9: Your bridges, your railroads, public transportation systems must work, and
37:50
Speaker 9: this is the key area of our activities. Also the
37:53
Speaker 9: health sector, which is vital in the best sense of
37:56
Speaker 9: the world, so we are very active in this field
37:59
Speaker 9: as well. Just restored the finance the restoration of the
38:03
Speaker 9: destroyed hospital in Odessa, So these are very important projects.
38:06
Speaker 1: The reconstruction eventual reconstruction in Ukraine. How do you envision
38:12
Speaker 1: the role of the European Investment Bank.
38:15
Speaker 9: Well, I think as far as the European Union will
38:18
Speaker 9: be involved, we will have to be involved quite a bit
38:20
Speaker 9: as well, and probably we are in a certain way
38:24
Speaker 9: in the lead. On the other hand, what I insist
38:26
Speaker 9: on now is there is no possibility, no responsible possibility,
38:30
Speaker 9: to wait for the end of the military confrontation before
38:34
Speaker 9: you begin with your reconstruction, because what is needed now
38:37
Speaker 9: is keep the economy rolling, keep the tax revenues coming in,
38:41
Speaker 9: keep the agricultural sector being able to export, and not
38:44
Speaker 9: overlooking the fact that Ukraine is also a very interesting
38:48
Speaker 9: partner country for industry. So these support for these support
38:54
Speaker 9: measures for Ukraine must take place now and not once
38:57
Speaker 9: one day. Hopefully the ink under a peace treaty is dry.
39:00
Speaker 2: How is the EIB financed?
39:02
Speaker 1: Do you sell bonds or.
39:04
Speaker 9: We sell bonds. We are selling between seventy and one
39:07
Speaker 9: hundred billion euros IIB bonds per year, considered part of them,
39:11
Speaker 9: by the way, green bonds nowadays. We were the pioneers
39:13
Speaker 9: and the issuings of green bonds, and so this is
39:17
Speaker 9: the basis of what we are doing. The capital endowment
39:19
Speaker 9: of the bank is big, but in comparison to our
39:23
Speaker 9: lending ridiculous. We have never seen more than twenty five
39:26
Speaker 9: billion euros in cash from our she elders, but we
39:29
Speaker 9: have a portfolio of almost six hundred billion euros. So
39:34
Speaker 9: the leverage effect is enormous, and that is due to
39:36
Speaker 9: the trust of the private the capital markets in the bank.
39:39
Speaker 9: And it's a technical experience. We are an engineering bank,
39:44
Speaker 9: bank that is endowed with fantastic people from science and technology,
39:50
Speaker 9: and this makes sure for the investors who give us
39:53
Speaker 9: their money that we invest into bankable but also technologically
39:57
Speaker 9: doable projects.
39:58
Speaker 2: By the way, the EIB was one of the first
40:00
Speaker 2: I guess supernational organizations to I'm pretty sure and correct
40:05
Speaker 2: me if I'm wrong Werner to issue a bond on
40:08
Speaker 2: the blockchain or to use issue a digital bond.
40:11
Speaker 9: In essence, yes, we are always trying to pioneer in
40:15
Speaker 9: these fields. And it's fascinating. When we issued the first
40:19
Speaker 9: green bonds and made sure that what labeled green is
40:22
Speaker 9: green and there is no green cheating or something like this,
40:26
Speaker 9: I think we were considered lunatic. And now this, this
40:28
Speaker 9: market is a trillion dollars heavy.
40:30
Speaker 1: Well what is I know, you guys refirst with the
40:33
Speaker 1: green bonds, what is that market conditions like today?
40:36
Speaker 9: Well, it is the market. The market's partners are very,
40:41
Speaker 9: very interested in this because it serves their own sustainability,
40:48
Speaker 9: not only image but reality. And nowadays everybody who invests
40:52
Speaker 9: in anything, into anything in Europe must be in line
40:56
Speaker 9: with these principles.
40:57
Speaker 2: In terms of the IR, I mean a lot of
41:01
Speaker 2: Europeans were unhappy about the kind of subsidizing and almost protectionist.
41:07
Speaker 2: I guess you could use that word bent of this legislation.
41:12
Speaker 2: Do you have an answer to that?
41:13
Speaker 1: In Europe?
41:15
Speaker 9: Well, the mixed feelings. Number one, I'm happy that under
41:20
Speaker 9: President Biden, the US has three detected climate change and sustainability,
41:24
Speaker 9: so this is very positive andredent. Biden takes the entire
41:28
Speaker 9: economy along. On the other hand, I'm not naive, and
41:31
Speaker 9: it comes to the sortion of competition then is something
41:33
Speaker 9: that affects US seriously. So we need to come to
41:36
Speaker 9: common terms for the United States of America. But I
41:38
Speaker 9: don't believe that trade war is the brightest thing to
41:41
Speaker 9: do now. It's more about finding synergies and taking all
41:47
Speaker 9: the challenges together.
41:48
Speaker 2: In fact, I was talking to Ola Collenius yesterday who
41:51
Speaker 2: was saying we was making similar statements saying that we
41:55
Speaker 2: really need to support global trade as well in order
41:59
Speaker 2: to kind of lift all of the boats right or
42:02
Speaker 2: to grow the pie.
42:03
Speaker 9: I completely agree.
42:04
Speaker 2: But right now the EU is looking into I guess
42:10
Speaker 2: ways if I'm going to say it without kind of
42:12
Speaker 2: camouflaging it, to block the import of Chinese electric vehicles
42:16
Speaker 2: to Europe, does that concern.
42:19
Speaker 9: You, Well, it would concern me if it would be
42:22
Speaker 9: so simple. I mean, Vice President Dombroskis of the European
42:24
Speaker 9: Commission is right now on his way to China to
42:27
Speaker 9: come to a reasonable terms with the Chinese. And I
42:30
Speaker 9: think there is between Europe and the United States, but
42:34
Speaker 9: also between Europe and China, some commonality of interests, and
42:38
Speaker 9: we should go for that.
42:39
Speaker 1: Because one of the things I know about, obviously the
42:42
Speaker 1: economies of Germany and other large European economies is perhaps
42:46
Speaker 1: a very strong trade relationship with China. Where do you
42:51
Speaker 1: guys fit into that? How do you think about that?
42:54
Speaker 9: Well, what we have learned from the terrible experience with
42:58
Speaker 9: the Ukraine War is that you better stay away from
43:01
Speaker 9: being too dependent on somebody, whether it's in security from
43:05
Speaker 9: one partner, whether it's from trade from one partner, or
43:08
Speaker 9: when it's from the provision of critical raw materials from
43:11
Speaker 9: another one. So we have to diversify in every aspect,
43:14
Speaker 9: and that's the lesson we have learned.
43:17
Speaker 2: I wonder about the green investment here in this country.
43:21
Speaker 2: ESG has become a negative term attached to any investment vehicle,
43:27
Speaker 2: but that's not the case in the rest of the
43:28
Speaker 2: world and do you expect to make real returns on
43:32
Speaker 2: these investments, I guess is the most important question outside
43:36
Speaker 2: of the climate issue.
43:38
Speaker 9: Well, for us, that's key. I mean, we are dependent
43:41
Speaker 9: totally on the financial markets which give us their resources.
43:45
Speaker 9: They trust us, They trust us because they know we
43:47
Speaker 9: are engineers and scientists driven bank So we make sure
43:51
Speaker 9: that a project that goes through our due diligence is bankable,
43:55
Speaker 9: is technologically feasible, and then at the end of the
43:58
Speaker 9: day it brings returns lucrative and I think we should
44:01
Speaker 9: always I mean in view of the time times where
44:04
Speaker 9: we talk about dooms scenarios from morning tonight, we tend
44:07
Speaker 9: more to the can do approach and say yes, if
44:09
Speaker 9: we develop the right technologies and yes we can do that,
44:12
Speaker 9: then we should be able to meet these challenges.
44:13
Speaker 2: We were just talking about sustainable energy with somebody who
44:18
Speaker 2: runs a nuclear fuel company, and I know a lot
44:22
Speaker 2: of people consider nuclear power to be safe and clean.
44:27
Speaker 2: Now that isn't really the view from Germany.
44:30
Speaker 9: Well from Germany it's a different view. I mean the
44:33
Speaker 9: politically it is also divided issue and the same goes
44:35
Speaker 9: for the European Union. So as a bank that is
44:38
Speaker 9: dependent upon the support of its shoulders, which are totally
44:41
Speaker 9: split on this issue. I don't take my head out.
44:44
Speaker 9: The statutes of the Bank do not keep us from
44:47
Speaker 9: the financing these things. In reality, we have never done it.
44:50
Speaker 9: What we have done is said a lot is investing
44:53
Speaker 9: into safety, security and into dual use opportunities.
45:00
Speaker 1: Just real quick, your successor what can you tell us
45:02
Speaker 1: about a potential successor?
45:04
Speaker 9: Well, I can only say one thing. I leave the
45:07
Speaker 9: bank with a very very good feeling. After twelve years,
45:09
Speaker 9: my mende is running out. The Member States have proposed
45:12
Speaker 9: five outstanding candidates. I'm very proud that we've brought the
45:16
Speaker 9: bank to a place where people of this caliber are
45:18
Speaker 9: interested in taking the lead.
45:20
Speaker 1: Do you think there needs to be a woman president?
45:22
Speaker 9: That would be wonderful, But of course we have beautiful,
45:25
Speaker 9: not beautiful, but perfectly excellent gentlemen in the race as well.
45:29
Speaker 9: So I don't take anything.
45:31
Speaker 2: About a liberal in the European sense. I know Lindner
45:34
Speaker 2: said he wants continuity, and you're an FTP.
45:37
Speaker 9: Liberals are always good people, all.
45:39
Speaker 1: Right, Erner Hoyer, thanks so much. Erner Hoyer, President European
45:43
Speaker 1: Investment Bank, Thanks.
45:46
Speaker 2: For listening to the Bloomberg Markets podcast. You can subscribe
45:50
Speaker 2: and listen to interviews at Apple Podcasts or whatever podcast
45:54
Speaker 2: platform you prefer. I'm Matt Miller. I'm on Twitter at
45:57
Speaker 2: Matt Miller nineteen seventy three.
46:00
Speaker 1: Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast,
46:03
Speaker 1: you can always catch us worldwide at Bloomberg Radio