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Apple EU Warning, Carnival Earnings · Bloomberg Intelligence

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  Speaker 3: Today, we'll look at a story about how seventy two
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  Speaker 4: Plus, we're going to take an in depth look at
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  Speaker 3: First, we dive into big tech and Apple. Apple's anti
• 1:09
  Speaker 3: trust feud with the European Union over allegedly illegal practices
• 1:12
  Speaker 3: on the App store Intensified.
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  Speaker 4: For more on this, we were joined by Tamlin based in
• 1:16
  Speaker 4: Bloomberg Intelligence technology analysts, and we first asked Hamlin to
• 1:19
  Speaker 4: talk to us about what is happening with Apple right now.
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  Speaker 5: The European Commission announced preliminary findings in an investigation into
• 1:27
  Speaker 5: Apple under the Digital Markets Act. This is the sweeping
• 1:31
  Speaker 5: new competition rules that the European Union is sort of
• 1:34
  Speaker 5: implemented in March of this year. The findings of this
• 1:37
  Speaker 5: probe relate to anti steering rules, so essentially to Apple's
• 1:42
  Speaker 5: rules that it has in place to sort of prevent
• 1:45
  Speaker 5: app developers from informing users of maybe cheaper subscription options
• 1:49
  Speaker 5: outside of the app store. Now this might sound familiar,
• 1:52
  Speaker 5: because just in early March, before the DMA took effect,
• 1:56
  Speaker 5: the Commission did find Apple one point eight billion euros
• 2:00
  Speaker 5: over sort of these same anti steering policies. Now, what
• 2:04
  Speaker 5: their commission said is that Apple is still not complying
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  Speaker 5: now with the DMA in terms of really letting developers
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  Speaker 5: freely engage with users and direct them to cheaper options. Specifically,
• 2:18
  Speaker 5: this kind of they want developers to be able to
• 2:21
  Speaker 5: market within the app and show cheaper subscriptions within that.
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  Speaker 5: So it's really this kind of more pressure on those
• 2:28
  Speaker 5: sort of app store revenues that Apple.
• 2:31
  Speaker 4: So what does Apple say to that? Well, what's their
• 2:33
  Speaker 4: defense to that, because presuly they had months to kind
• 2:35
  Speaker 4: of get it together.
• 2:36
  Speaker 5: What do they said is they think that they do
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  Speaker 5: comply with all of this. What's interesting about the DMA, though,
• 2:41
  Speaker 5: is that this is the DMA. The European Commission did
• 2:44
  Speaker 5: play a strong role in drafting these rules, and it's
• 2:48
  Speaker 5: also responsible for enforcing them, and there are a lot
• 2:51
  Speaker 5: of sort of subjective interpretations in terms of first complying
• 2:57
  Speaker 5: with this. So I think what we are going to
• 2:59
  Speaker 5: see is probably the European Commission taking a very strict
• 3:02
  Speaker 5: view of what's reasonable in these circumstances and probably really
• 3:07
  Speaker 5: try to get strict adherance here. So it's going to
• 3:10
  Speaker 5: be going to be up to them to decide whether
• 3:12
  Speaker 5: Apple is complying or not, and then Apple can then
• 3:15
  Speaker 5: sort of appeal to the courts. But I do think
• 3:16
  Speaker 5: it's pretty likely we're going to see another fine in
• 3:19
  Speaker 5: this and some behavioral remedies coming down the line.
• 3:22
  Speaker 3: We've seen this time and time again where the Europeans
• 3:24
  Speaker 3: just start nitpicking at these US technology companies, tam what's
• 3:29
  Speaker 3: the feeling within the regulatory environment of Europe as to
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  Speaker 3: really what they're trying to do here, because it just
• 3:35
  Speaker 3: doesn't seem like it's even relevant. I mean, it just
• 3:38
  Speaker 3: at the end of the day, they just whether it's
• 3:40
  Speaker 3: Google or Facebook or they just write checks here to
• 3:43
  Speaker 3: make it all go away. Do European regulators recognize that
• 3:47
  Speaker 3: it just doesn't seem to be that material what they're doing.
• 3:51
  Speaker 5: Yeah, So I think if you look at this specific investigation,
• 3:54
  Speaker 5: you know, this is one that sort of came out
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  Speaker 5: of sort of Spotify, which of course is headquartered in Europe,
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  Speaker 5: and the app developers are complaining that the Apple is
• 4:02
  Speaker 5: squeezing them too hard. So I think in some of
• 4:04
  Speaker 5: these instances, Europe is trying to protect some local players
• 4:08
  Speaker 5: by sort of ordering a sort of loosening of these
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  Speaker 5: rules that sort of maybe benefit the gatekeeper on the TNA,
• 4:14
  Speaker 5: which would be at Apple, Google, Microsoft brothers, and they
• 4:17
  Speaker 5: are sort of trying to show domestic industry that they
• 4:20
  Speaker 5: are trying to pry open the markets. I do think
• 4:23
  Speaker 5: you're right that I think at this point investors are
• 4:26
  Speaker 5: sort of kind of just shrugging this off. This is
• 4:28
  Speaker 5: just one thing after another. I will point a difference
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  Speaker 5: under the DMA is that the timeline is really much
• 4:33
  Speaker 5: quicker than under of former case law, where it may
• 4:37
  Speaker 5: take three four years until you got a result after
• 4:40
  Speaker 5: an industiation. Here, this finding came just three months after
• 4:44
  Speaker 5: the inquery opened, and we're going to have sort of
• 4:47
  Speaker 5: a final remedial measure by early next year. So I
• 4:50
  Speaker 5: do think the timeline is faster. Whether or not that
• 4:54
  Speaker 5: this results and sort of the impact that the regulators
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  Speaker 5: might be looking for, I think definitely remains to be seen.
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  Speaker 5: I think investors are definitely looking a little bit of
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  Speaker 5: skew at it and thinking maybe this is sort of
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  Speaker 5: just more of the same.
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  Speaker 3: And Alex, I mean, you know, it's really almost, maybe
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  Speaker 3: even more than thirty years ago that Microsoft started going
• 5:11
  Speaker 3: through the same whole thing with the European Union, and
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  Speaker 3: again it investors became conditioned to it's no big deal.
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  Speaker 3: They just write it check and it kind of goes away.
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  Speaker 3: The tobacco industry. You know, investors kind of said, put
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  Speaker 3: it in context, it's not that big a deal, and
• 5:26
  Speaker 3: you kind of wonder, you know, given that the US
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  Speaker 3: regulators have taken a very light touch to technology and
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  Speaker 3: then allowing these companies to get so big. It seems
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  Speaker 3: like the Europeans are trying to do what they can
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  Speaker 3: to kind of rein it in, but it seems almost
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  Speaker 3: too little, too late, right.
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  Speaker 4: And also you can make the argument too that you know,
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  Speaker 4: Europe doesn't have a lot of technology companies. They have some,
• 5:44
  Speaker 4: of course, like ASML for example, yes's fitty, Yeah exactly, SAP,
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  Speaker 4: But I mean, can you name anymore?
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  Speaker 3: No, I'm there's some.
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  Speaker 4: But I think that that's kind of the point if
• 5:54
  Speaker 4: you take a look at you know, European stocks versus
• 5:57
  Speaker 4: the SMP and market cap like twenty years ago versus now,
• 6:00
  Speaker 4: Oh my gosh, forget that. Hey Tamlin, what's going on
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  Speaker 4: with Apple in general? It seems to be making a
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  Speaker 4: little bit of a comeback here. What do you make
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  Speaker 4: of that?
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  Speaker 5: Yeah, I mean I think some of this comes some
• 6:09
  Speaker 5: sort of the recent announcement to sort of build AI
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  Speaker 5: into the iPhone, and maybe it made me sort of
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  Speaker 5: accelerate the recycle in terms of getting people to buy
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  Speaker 5: those zones. Definitely, I don't think the regulatory headwinds are
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  Speaker 5: really causing it much damage right now. I will point
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  Speaker 5: out that although the US is definitely, like well said,
• 6:31
  Speaker 5: taking a light touch approach, the one area they are
• 6:34
  Speaker 5: getting involved in is on sort of these apps for rules,
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  Speaker 5: where where Apple's obviously been in litigation with Epic for
• 6:39
  Speaker 5: years and years and years. So I think on both
• 6:41
  Speaker 5: sides of the Atlantic, there are some pressure on those
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  Speaker 5: services revenues that we might see shaking out over the
• 6:46
  Speaker 5: next you know, nine to eighteen months to see how
• 6:48
  Speaker 5: that plays.
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  Speaker 3: Out our thanks to Tamlin Basin Bloomberg Intelligence Technology Channels, we.
• 6:52
  Speaker 4: Move next to the electric vehicle industry. This week we
• 6:55
  Speaker 4: heard Beijing suggested Germany's luxury car manufacturers could benefit if
• 6:59
  Speaker 4: Berlink convinces the European Union to drop tearraffs on Chinese
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  Speaker 4: electric vehicle exports.
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  Speaker 3: Beijing currently imposes a fifteen percent fee on passenger vehicles
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  Speaker 3: from the block. For more on this in the State
• 7:10
  Speaker 3: of the ev Industry, we were joined by Steve Mann,
• 7:12
  Speaker 3: Bloomberg Intelligence Global Autos and Industrials Research channelists.
• 7:15
  Speaker 4: We first asked for his take on this week's news.
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  Speaker 6: It's a big deal for the Germans, especially the luxury
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  Speaker 6: automakers like BMW Mercedes and Audi, which Volkswagen owns Audi.
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  Speaker 6: You know, they have about eighty percent of the market,
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  Speaker 6: the luxury car market in China, so they sell a
• 7:34
  Speaker 6: huge amount of cars in China. About a third to
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  Speaker 6: forty percent of these companies' revenues actually generate in China,
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  Speaker 6: so they Yeah, so they want to make good with
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  Speaker 6: the Chinese. As you know, Germany has been against the tariffs.
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  Speaker 6: So if the Germans are able to get something from
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  Speaker 6: China and help ease some of the terrors, or if
• 8:00
  Speaker 6: China can get the Germans to help them eat some
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  Speaker 6: of the tariffs in the EU, I think it will
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  Speaker 6: benefit you know, potentially companies like Stelentis as well, which
• 8:09
  Speaker 6: is which also has a new joint venture.
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  Speaker 4: But here's the thing that I get confused. Is it
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  Speaker 4: China's making a pitch to individual countries versus the European
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  Speaker 4: Union trying to operate as one body in relation to tariffs,
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  Speaker 4: and I wonder how that's going to work itself out.
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  Speaker 6: Yeah, I think it's it's that divine and conquer strategy
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  Speaker 6: they're taking. So, but you know, I think the Germans
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  Speaker 6: probably has the most to lose out of the global
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  Speaker 6: automakers here. You know, about sixteen percent of their battery
• 8:43
  Speaker 6: electric vehicles that are produced in China, it's actually shipped
• 8:46
  Speaker 6: out globally. So China plays an important part for the
• 8:50
  Speaker 6: BEEV market as a low cost producer. So, you know,
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  Speaker 6: I don't think there's a lot of other automakers that
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  Speaker 6: are you know, that have that many bev's produce in
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  Speaker 6: China and sold elsewhere around the world.
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  Speaker 3: And Steve Canada now gets into the game. Canada announces
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  Speaker 3: planned to curb imports of Chinese made EV's. First of all,
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  Speaker 3: just give us a sense of how good, how competitive
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  Speaker 3: are these Chinese evs, because if you tell me they're
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  Speaker 3: good vehicles, let's bring them into the market.
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  Speaker 6: I don't know, Yeah, I think some if you talk
• 9:21
  Speaker 6: to some of the our makers, they actually have the
• 9:23
  Speaker 6: same thinking. Let's let's let's compete, right, I think competition
• 9:27
  Speaker 6: will make the whole industry better. You saw that with
• 9:30
  Speaker 6: Tesla being the you know, fourth or third automaker in
• 9:35
  Speaker 6: the US and actually helped drive a lot of the
• 9:38
  Speaker 6: b EV costs down. But you know, it's not surprising
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  Speaker 6: that Canada is is implementing tariffs. They are part of
• 9:47
  Speaker 6: the US, Mexico, Canada free trade agreement, and I think,
• 9:51
  Speaker 6: you know, they have to close that door, that back
• 9:54
  Speaker 6: door where the Chinese EV's can come in. It is
• 9:57
  Speaker 6: very competitive. I think, you know, Chinese evs are cheap
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  Speaker 6: enough that if some argue that even with the tariffs,
• 10:04
  Speaker 6: even with some engineering changed so that they fit the regulatory,
• 10:09
  Speaker 6: safety and mission rules here, is still be a very
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  Speaker 6: competitive price vehicle for North America.
• 10:17
  Speaker 4: So then to that point, we're waiting for Mexico now,
• 10:19
  Speaker 4: right because I think we talked about this before. So
• 10:21
  Speaker 4: not only is Canada going to put tariffs on EV imports,
• 10:24
  Speaker 4: they're also going to curb imports of Chinese made evs.
• 10:27
  Speaker 4: The idea is that if Mexico doesn't have any of
• 10:29
  Speaker 4: those restrictions, that they can just import EV's from China
• 10:31
  Speaker 4: and then through Mexico go into the US. And that's
• 10:34
  Speaker 4: a different way of operating. When do we get that
• 10:37
  Speaker 4: from Mexico.
• 10:38
  Speaker 6: I think there are some negotiation that's happening now with
• 10:43
  Speaker 6: Mexico to kind of implement similar tariff. I've heard that
• 10:47
  Speaker 6: VOVO is already kind of lobbying. VOVO is actually part
• 10:51
  Speaker 6: of Chile, is actually lobbying the Mexican government to not
• 10:55
  Speaker 6: implement to not put tariffs in place. So then negotiations
• 10:59
  Speaker 6: are ongoing. I don't think we were gonna wait have
• 11:04
  Speaker 6: to wait too long to hear any news from that.
• 11:06
  Speaker 3: All right, So stepping back a little bit, give us
• 11:09
  Speaker 3: the latest thinking out of Detroit and other auto capitals
• 11:13
  Speaker 3: around the world about EV's versus the hybrids. Is the
• 11:19
  Speaker 3: hybrid gonna be I guess the stepping stone to a
• 11:23
  Speaker 3: pure EV environment? Do you think is that still the thinking?
• 11:27
  Speaker 6: Yeah, I think that is still the thinking. I think
• 11:29
  Speaker 6: with BEEV sales slowing down or growth slowing down, the
• 11:35
  Speaker 6: automakers do need something else to meet the cafe the
• 11:41
  Speaker 6: few economy regulation, the missions regulations. So hybrid is a
• 11:45
  Speaker 6: stopgap measure. But if you talk to the all the automakers,
• 11:49
  Speaker 6: there's still spending a lot of money on BEV. They
• 11:52
  Speaker 6: think that is the future because at the end of
• 11:54
  Speaker 6: the day, hybrid vehicles do still spell out pollution or
• 11:58
  Speaker 6: greenhouse gases. So you know, these emission standards, these few
• 12:03
  Speaker 6: economy standards, they're only going to get tighter and tighter. O.
• 12:07
  Speaker 3: Thanks to Steve man bloomerg Intelligence, Global Autos and Industrials
• 12:10
  Speaker 3: research channels.
• 12:10
  Speaker 4: Coming up, We're going to look at Bloomberg Intelligence's midyear
• 12:13
  Speaker 4: outlook for North American restaurants and food service companies.
• 12:16
  Speaker 3: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing indiffer
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  Speaker 3: research and data on two thousand companies and one hundred
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  Speaker 3: in the terminal.
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  Speaker 4: I'm Paul Sweeney and I'm Alex Steele, and this is Bloomberg.
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• 12:48
  Speaker 4: We look next at the restaurant and food service industry.
• 12:50
  Speaker 4: It's Bloomberg Intelligence recently released it's midiar outlook for both
• 12:54
  Speaker 4: in North America.
• 12:55
  Speaker 3: For more on this, we were joined by Michael Halen,
• 12:57
  Speaker 3: Bloomberg Intelligence Senior Restaurant and Food Service. We first asked Michael,
• 13:01
  Speaker 3: what is expecting for the back half of the year.
• 13:03
  Speaker 7: Sales are probably looking a little bit better just because
• 13:07
  Speaker 7: than they were in the first half, because the year
• 13:09
  Speaker 7: over year comparisons are getting easier, higher income consumers should
• 13:14
  Speaker 7: have money to spend. Right, we see stock markets at
• 13:19
  Speaker 7: all time highs, bitcoins having a rough day, but not
• 13:21
  Speaker 7: far off the highs, and home prices have held in
• 13:24
  Speaker 7: despite the higher rates, so that those should kind of
• 13:28
  Speaker 7: booy restaurant sales. But on the other end, the other
• 13:32
  Speaker 7: end of the k, the low income consumers continue to struggle.
• 13:36
  Speaker 7: You know, consumers under seventy five thousand were cited by
• 13:39
  Speaker 7: Darden the other day on their earnings call, is struggling,
• 13:42
  Speaker 7: especially consumers you know that are earning less than fifty thousand.
• 13:46
  Speaker 7: So we have kind of a push and a pull there.
• 13:50
  Speaker 8: You know.
• 13:50
  Speaker 7: Margins are okay, you know, we would like to.
• 13:53
  Speaker 3: See better sales because that's really.
• 13:55
  Speaker 7: What drives most of the margin expansion in that business.
• 13:58
  Speaker 7: Right There's a lot of operating leverage in the mind model,
• 14:01
  Speaker 7: so maybe some modest margin expansion. Then stocks generally haven't
• 14:05
  Speaker 7: done so well this year. What we wrote is that
• 14:08
  Speaker 7: we think we're going to see a larger spread between
• 14:11
  Speaker 7: the stock market, you know, the market share winners and
• 14:15
  Speaker 7: losers this year, you know, which we've largely seen in.
• 14:18
  Speaker 3: The first half.
• 14:18
  Speaker 7: You've seen stocks like Chipotle absolutely knocked the cover off
• 14:22
  Speaker 7: the ball again and really appreciate where other chains like
• 14:26
  Speaker 7: blooming Is kind of struggled in the first half and
• 14:28
  Speaker 7: you've seen that stock, you know, sell off pretty precipitously.
• 14:31
  Speaker 3: Talk to us about California and their new minimum wage law.
• 14:35
  Speaker 3: What's the impact been on the fast food business.
• 14:38
  Speaker 4: We just have like a famous Hollywood restaurant closed because
• 14:41
  Speaker 4: of that, like the famous like Hollywood McDonald's.
• 14:44
  Speaker 7: Or something San fran Yeah, so it's not been good
• 14:48
  Speaker 7: so far.
• 14:49
  Speaker 3: April results were.
• 14:50
  Speaker 7: Kind of in line with the US in terms of
• 14:52
  Speaker 7: same slore of sales at quick service restaurants, but I
• 14:55
  Speaker 7: think everybody went in April and then they had got
• 14:58
  Speaker 7: sticker shock and they didn't return in May.
• 15:01
  Speaker 3: So the McDonald's are the world in the restaurants in
• 15:04
  Speaker 3: general in California. Are they raising prices to cover their higher.
• 15:07
  Speaker 7: Labor, Yeah, high single digits is typical, which is a lot,
• 15:12
  Speaker 7: and that's not even covering it because the traffic loss
• 15:15
  Speaker 7: that we've seen here in May, it's it's not even
• 15:18
  Speaker 7: going to cover it. So they may even have to
• 15:20
  Speaker 7: raise prices again if they can. Quick service California same
• 15:25
  Speaker 7: store sales underperformed by almost four hundred basis points in
• 15:28
  Speaker 7: May versus the US. Yeah, so you know what we
• 15:31
  Speaker 7: wrote is that we expect quick service to continue to
• 15:34
  Speaker 7: outperform casual dining just because it's a cheaper check. Even
• 15:39
  Speaker 7: though it's gotten all the bad press about the eighteen
• 15:41
  Speaker 7: dollars big mac meal, twenty two dollars smash burger meal,
• 15:44
  Speaker 7: it's still you can eat there a lot cheaper on
• 15:46
  Speaker 7: the value menu and stuff like that. Also, you know,
• 15:49
  Speaker 7: chains are starting to discount more Burger King and McDonald's
• 15:52
  Speaker 7: five dollars meals, things of that nature. But California is
• 15:57
  Speaker 7: definitely going to weigh on quick service growth throughout your
• 16:00
  Speaker 7: end for sure.
• 16:01
  Speaker 4: So as the k shape recovery grows even wider, it
• 16:05
  Speaker 4: feels like, so do the valuations of those companies that
• 16:08
  Speaker 4: service those two lines.
• 16:09
  Speaker 1: Is that a fair statement.
• 16:11
  Speaker 7: Yeah, if you're a chain that can attract high income
• 16:13
  Speaker 7: consumers like Chipotle has done such a good job of
• 16:16
  Speaker 7: doing and McDonald's has done a good job of it
• 16:19
  Speaker 7: as well since since the start of the pandemic.
• 16:21
  Speaker 4: Chipotle is their Wednesday day, Paul, It varies, but it's
• 16:24
  Speaker 4: seven one day week they get Chipotle.
• 16:26
  Speaker 3: But here's a funny Chipotle story. They got slammed in
• 16:29
  Speaker 3: social media for like underfilling their tacos and things like that.
• 16:33
  Speaker 3: Now they've gone overboard and they overfill them. So the
• 16:37
  Speaker 3: net result for me, instead of getting three hard tacos
• 16:40
  Speaker 3: with chicken and I'd give you the whole order later,
• 16:42
  Speaker 3: I only get two.
• 16:43
  Speaker 2: There you go.
• 16:44
  Speaker 3: So it's got to be hurting their sales. So that
• 16:46
  Speaker 3: is an interesting tidbit.
• 16:48
  Speaker 7: Thinking about doing some work into it, but we haven't
• 16:51
  Speaker 7: done anything yet. There was definitely some some heat and
• 16:54
  Speaker 7: some shade thrown at Chipotle for a little while there.
• 16:57
  Speaker 3: I'm going to say a year and a half ago,
• 16:59
  Speaker 3: somebody came in there, this kind of the beginning of
• 17:00
  Speaker 3: this whole AI thing, and somebody came in to this
• 17:03
  Speaker 3: studio said, one of the biggest areas is going to
• 17:06
  Speaker 3: be like, for example, drive through going through a drive
• 17:09
  Speaker 3: through McDonald's, it's gonna be all AI blah blah blah
• 17:12
  Speaker 3: blah blah. So my question to you is, are local
• 17:15
  Speaker 3: I don't know McDonald's or Burger Kings. Did they have
• 17:17
  Speaker 3: fewer employees because they're using technology or at all like that?
• 17:21
  Speaker 7: Well, there, they have tried to cut labor hours in
• 17:25
  Speaker 7: other ways. That's a goal using AI for sure. It's
• 17:29
  Speaker 7: been harder though at the drive through then anticipated a
• 17:33
  Speaker 7: lot of things just like accents, you know, you know,
• 17:36
  Speaker 7: something like that you know actually is has caused some
• 17:39
  Speaker 7: issues up they're also using AI with these cameras that
• 17:43
  Speaker 7: are using AI to see if orders are being packaged correctly,
• 17:46
  Speaker 7: you know, since takeout and delivery has become such a
• 17:49
  Speaker 7: big part of these businesses. But you know, one of
• 17:52
  Speaker 7: the companies that was doing that got caught using people
• 17:56
  Speaker 7: in India watching like screens.
• 17:58
  Speaker 2: Videos supposedly quote unquote AI. So we're not quite there
• 18:03
  Speaker 2: yet with the AI our.
• 18:05
  Speaker 3: Thanks to Michael Hanlin, Bloomberg Intelligence Senior Restaurant and food
• 18:08
  Speaker 3: service Analysts.
• 18:09
  Speaker 4: Here at Bloomberg, we'd like to keep you up to
• 18:10
  Speaker 4: date on all the fun, juicy Wall Street stories, and
• 18:13
  Speaker 4: this week we focused on the Bloomberg Big Take story
• 18:15
  Speaker 4: titled the Last seventy two Hours of our kegos for more.
• 18:18
  Speaker 3: We were joined by one of the stories authors, Shreed Nanarajen,
• 18:21
  Speaker 3: Bloomberg News Senior Finance reporter. We first asked Streid to
• 18:25
  Speaker 3: walk us through what this story is about.
• 18:27
  Speaker 9: This is a story that's fascinated Wall Street for much
• 18:29
  Speaker 9: of the last three years, right Billhong out of nowhere,
• 18:33
  Speaker 9: had built up such enormous wealth, had a family office,
• 18:38
  Speaker 9: and yet hid wealth had gone from a billion to
• 18:41
  Speaker 9: four billion, from four billion to thirty six billion in
• 18:44
  Speaker 9: a span of six months. That all collapsed very publicly
• 18:47
  Speaker 9: in March twenty twenty one, when in a matter of
• 18:50
  Speaker 9: days he lost his entire fortune. Everyone on Wall Street
• 18:54
  Speaker 9: has been trying to figure out what happened, how it happened,
• 18:57
  Speaker 9: and a lot of the details have been dribbling out
• 18:58
  Speaker 9: for the last few years. But over the last few
• 19:01
  Speaker 9: weeks any court room in downtown Manhattan, Bill Huang is
• 19:05
  Speaker 9: on trial. Prosecutors accused him of manipulating markets, of defrauding lenders.
• 19:11
  Speaker 9: But after having spent a lot of time in the courtroom,
• 19:14
  Speaker 9: another key takeaway from it all has been that Wall
• 19:17
  Speaker 9: Street doesn't look all that great. Here was someone whose
• 19:21
  Speaker 9: personal wealth might have been thirty six billion dollars, but
• 19:23
  Speaker 9: he had another one hundred and twenty five billion dollars
• 19:26
  Speaker 9: in borrowed money. He had a gross portfolio size of
• 19:29
  Speaker 9: one hundred and sixty billion dollars, making concentrated bets on
• 19:33
  Speaker 9: much of the same names, and all the banks were
• 19:36
  Speaker 9: largely caught unawares. Yes, they got vague answers, evasive answers,
• 19:42
  Speaker 9: but they also relied on pinky promises effectively to give
• 19:45
  Speaker 9: him so much firepower for his bets. And in the
• 19:48
  Speaker 9: end the banks were burnt badly, lost over ten billion dollars,
• 19:51
  Speaker 9: and one of those banks, the most badly hit credit Squeeze,
• 19:54
  Speaker 9: doesn't even exist anymore. And you could argue Bill Huong's
• 19:56
  Speaker 9: firm played a key role in that.
• 20:00
  Speaker 3: What I found fashionating about this article, and it's a
• 20:02
  Speaker 3: great minute by minute walk through a seventy two hour
• 20:04
  Speaker 3: period when it all kind of came to an end
• 20:07
  Speaker 3: for everyone involved, was that the banks did not know
• 20:11
  Speaker 3: that Piquang and his firm was layering on such concentrated
• 20:14
  Speaker 3: bets across various firms. One bank didn't know what the
• 20:17
  Speaker 3: other bank was doing. Therefore they didn't know the magnitude
• 20:20
  Speaker 3: of the exposure. How did that happen?
• 20:22
  Speaker 9: And look all the conversations we have, they will tell
• 20:25
  Speaker 9: you we're not allowed to ask if you're in the
• 20:27
  Speaker 9: prime brokerage business, if you're in the business of extending
• 20:29
  Speaker 9: leverage to your client, the client doesn't necessarily have to
• 20:33
  Speaker 9: tell you or show you their exact portfolio. They will
• 20:36
  Speaker 9: claim secrecy, they will claim proprietary information. But at the
• 20:40
  Speaker 9: end of the day, banks can also say, if you
• 20:42
  Speaker 9: don't give me as many disclosures as possible, I will
• 20:46
  Speaker 9: not give you that money. That never happened. These guys
• 20:49
  Speaker 9: would come in and say, yes, we have a diversified portfolio,
• 20:52
  Speaker 9: and yes, don't worry, we have all the controls in place,
• 20:55
  Speaker 9: and it's across a mix of names, and the banks
• 20:57
  Speaker 9: would believe that, yes, they expect honesty and truthful answers.
• 21:02
  Speaker 9: And if they didn't get that, and you can see
• 21:04
  Speaker 9: why the DOJ wants to go after Billhong and ArKade goes.
• 21:07
  Speaker 9: But just think about it for a moment. You walk
• 21:08
  Speaker 9: into a bank today as a retail customer and want
• 21:11
  Speaker 9: a ten thousand dollars loan or a mortgage, or you
• 21:15
  Speaker 9: are trying to get into a co op, the hoops
• 21:18
  Speaker 9: that one has to jump through, the signatures you have
• 21:21
  Speaker 9: to get. I mean, to get into a co op,
• 21:22
  Speaker 9: you will need three witnesses, three friends, your high school teacher,
• 21:27
  Speaker 9: your college professor, and so many other people.
• 21:29
  Speaker 4: When you're first born man, and if you're getting into
• 21:31
  Speaker 4: a co op.
• 21:32
  Speaker 9: Pretty much and in this case, he as someone who
• 21:35
  Speaker 9: said I would like five billion dollars in capacity, Actually,
• 21:38
  Speaker 9: can we increase it ten billion now? Because my portfolio
• 21:40
  Speaker 9: sizes increase and all the banks are doing you're sure
• 21:43
  Speaker 9: you're good for that, right, and we can trust you
• 21:46
  Speaker 9: that you're investing well and you're doing this responsibility.
• 21:49
  Speaker 1: Yep, yep.
• 21:49
  Speaker 9: Great. They didn't even require written declarations about what the
• 21:53
  Speaker 9: portfolio looks like. These were phone conversations and that was
• 21:55
  Speaker 9: convincing enough for them to extend this kind of money.
• 21:58
  Speaker 9: And that's why for us. Yes, the legal process will
• 22:01
  Speaker 9: follow its on path, and the jury of twelve New
• 22:03
  Speaker 9: York kers will decide whether Bill Hoong his CFO, if
• 22:06
  Speaker 9: they are guilty or not on the charges that have
• 22:08
  Speaker 9: been brought against them. But it's not a great look
• 22:11
  Speaker 9: for Wall three.
• 22:13
  Speaker 4: So in terms of Wall Street, could this happen again
• 22:16
  Speaker 4: or do you think now things will be rethought? Those
• 22:19
  Speaker 4: pinky swears will be by the wayside.
• 22:23
  Speaker 9: By the way I was told by one of the
• 22:24
  Speaker 9: editors that pinky swears are the highest grade of promises
• 22:29
  Speaker 9: out there. So if you can't rely on that, what
• 22:31
  Speaker 9: do you rely on. I will make the point though,
• 22:34
  Speaker 9: that the lack of copycats before our Chigoes or even
• 22:38
  Speaker 9: after our Gooes, isn't necessarily a reflection of a new
• 22:43
  Speaker 9: regime of banking, of strengthened controls, of great oversight. As
• 22:47
  Speaker 9: much as in the case of our gegos, there was
• 22:50
  Speaker 9: one man who was willing to take a pliant system
• 22:55
  Speaker 9: to the extremes. There was a lot of noise about
• 22:58
  Speaker 9: bringing in rules. Family offices don't face the same kind
• 23:01
  Speaker 9: of oversight as hatch funds, and they will talk about
• 23:03
  Speaker 9: what can be changed, how the rules need to be modified.
• 23:07
  Speaker 9: Some have been put in place, but for the most
• 23:09
  Speaker 9: part it's been a lot of talk, and these things
• 23:12
  Speaker 9: take time. The worry still remains. And look, this happened recently,
• 23:17
  Speaker 9: so the banks are perhaps shy of doing this with
• 23:19
  Speaker 9: someone else, but it's not entirely clear to me how
• 23:23
  Speaker 9: they avoid a repeat of this situation. If someone else
• 23:27
  Speaker 9: comes along and follows this, you know, you may want
• 23:30
  Speaker 9: to call it what might have looked like genius investing
• 23:33
  Speaker 9: to start with, but really at the end of it
• 23:35
  Speaker 9: reckless investing. If they follow the same pattern, can we
• 23:38
  Speaker 9: be guaranteed that they won't be a repeat? I don't know,
• 23:43
  Speaker 9: and Credit Swiss will tell you it doesn't even matter
• 23:46
  Speaker 9: because they don't they don't exist anymore to be able
• 23:48
  Speaker 9: to tell you if there will be a repeat or not.
• 23:50
  Speaker 9: That was the kind of consequence we saw from the
• 23:52
  Speaker 9: collapse of this one film.
• 23:53
  Speaker 3: Say it's how this trial is gonna go, Sery.
• 23:55
  Speaker 9: Well, it's fascinating. It's happening in the court room of
• 23:59
  Speaker 9: a ninety year old judge, right, and you have a
• 24:02
  Speaker 9: jury most of them, well all of them, had never
• 24:05
  Speaker 9: heard of Billhong or our kaid goes before. And that
• 24:08
  Speaker 9: kind of means that they have been getting a finance
• 24:10
  Speaker 9: one o one finance one on one sounds challenging in itself,
• 24:14
  Speaker 9: But then if the prosecutors and the defense lawyers have
• 24:17
  Speaker 9: to spend much of their time trying to explain security
• 24:19
  Speaker 9: based swaps, margin leverage, even discuss what memes talks and
• 24:24
  Speaker 9: what they're not, and have to define for some of
• 24:26
  Speaker 9: these people what Goldman Sachs is, it'll be very interesting
• 24:29
  Speaker 9: to see how it pans out, because when you're listening
• 24:32
  Speaker 9: to some of the arguments in court, when you hear
• 24:34
  Speaker 9: prosecutors talk about a lot of heavy investing towards close
• 24:38
  Speaker 9: of market, they were lifting the firm limit to try
• 24:40
  Speaker 9: and drive the price up, and yet on counter you
• 24:44
  Speaker 9: kind of understand that is how business is done on
• 24:46
  Speaker 9: Wall Street. I mean, some of this jargon sounds sinister,
• 24:50
  Speaker 9: but isn't necessarily sinister. But how we see and perceive
• 24:54
  Speaker 9: it doesn't matter. It's what's getting through to the jury.
• 24:57
  Speaker 9: The prosecution rests its case today, the defense gets another
• 25:00
  Speaker 9: couple of days, and after the break next week we
• 25:03
  Speaker 9: will come back with closing remarks and then we will
• 25:05
  Speaker 9: get the final liddict on this one.
• 25:07
  Speaker 3: Our thanks to Shri Natarajen, Bloomberg News Senior finance reporter.
• 25:10
  Speaker 4: I coming up on the program, We're going to look
• 25:12
  Speaker 4: at how the strong demand for cruises impacted Carnival's quarterly earnings.
• 25:15
  Speaker 3: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
• 25:18
  Speaker 3: depth research and data on two thousand companies and one
• 25:21
  Speaker 3: hundred and thirty industries. You can access Bloomberg Intelligence via
• 25:24
  Speaker 3: bi go on the terminal, I'll Paul Swinging.
• 25:25
  Speaker 4: And am Alex Steele, and.
• 25:26
  Speaker 1: This is Bloomberg.
• 25:32
  Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 25:36
  Speaker 2: weekdays at ten am Eastern on Apple car Play and
• 25:39
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• 25:42
  Speaker 2: live on Amazon Alexa from our flagship New York station.
• 25:46
  Speaker 2: Just say Alexa Play Bloomberg eleven thirty.
• 25:50
  Speaker 4: We move now to the cruise line industry and Carnival.
• 25:52
  Speaker 4: This week, Carnival raised it's full year earnings outlook after
• 25:55
  Speaker 4: strong demand for cruises helped it post a surprise profit
• 25:57
  Speaker 4: last quarter.
• 25:58
  Speaker 3: For more, we were joined by Brian Egg, Bloomberg Intelligence
• 26:01
  Speaker 3: Senior Gaming and Lodging analyst.
• 26:02
  Speaker 4: We first asked Brian to make sense of Carnival's positive results.
• 26:06
  Speaker 10: I think what Carnival is seeing is going beyond pent
• 26:10
  Speaker 10: up demand from the pandemic to genuine, ongoing, sustainable, disposable
• 26:16
  Speaker 10: spending on leisure travel. So they're seeing it across the board.
• 26:19
  Speaker 10: I mean, it really is broad base. They're seeing in
• 26:21
  Speaker 10: Europe and North America. They're seeing it for both on
• 26:24
  Speaker 10: board spending and ticket fare gains. And they're seeing it
• 26:28
  Speaker 10: both on new hardware and you know, kind of legacy
• 26:32
  Speaker 10: ships as well. So it is pretty broad based.
• 26:34
  Speaker 3: So is it the typical cruising customer, is it new
• 26:38
  Speaker 3: people coming into the industry? What are they seeing here?
• 26:42
  Speaker 10: I think it's both. There's always a focus on new
• 26:45
  Speaker 10: cruise customers and marketing the value relative value of cruises
• 26:49
  Speaker 10: compared to other forms of vacation. I think it's really both.
• 26:53
  Speaker 10: And you know, different brands attract different demographics and age groups,
• 26:57
  Speaker 10: but you know, to the extent that it's broad based,
• 27:00
  Speaker 10: and it seems to be happening not only in the
• 27:02
  Speaker 10: first quarter, but continuing to the second quarter, and as
• 27:05
  Speaker 10: Alex mentioned, next year as well. You know, I think
• 27:07
  Speaker 10: it's we're seeing it across the board.
• 27:10
  Speaker 4: If we go into a real slump or if inflation
• 27:14
  Speaker 4: stays sticky, does that affect this sustainable leisure demand the
• 27:17
  Speaker 4: Carnival and you were talking about.
• 27:19
  Speaker 10: You know, it does. Certainly. Travel prices have increased, and
• 27:23
  Speaker 10: we're seeing that dismanifested of the fact that Carnival raised
• 27:26
  Speaker 10: its net revenue old growth outlook for twenty twenty four
• 27:29
  Speaker 10: from nine point five percent to ten and a quarter percent,
• 27:32
  Speaker 10: so they're partly benefiting from that price. But obviously, you know,
• 27:35
  Speaker 10: inflation cost inflation does affect the disposition of consumers. But
• 27:39
  Speaker 10: for now, at least, you know, the demand on the
• 27:42
  Speaker 10: consumer discretionary side certainly seems to be there.
• 27:45
  Speaker 3: How about on the cost side, I'm thinking fuel I'm
• 27:48
  Speaker 3: thinking labor. What's going on on the cost side for
• 27:52
  Speaker 3: a lot of these crews companies.
• 27:53
  Speaker 10: Yeah, it's a factor certainly in terms of cost positioning.
• 27:57
  Speaker 10: They've maintained I guess i'd say kind of a stable
• 28:00
  Speaker 10: full year unit cost growth out look of about four
• 28:03
  Speaker 10: and a half percent or so excluding the increases in
• 28:06
  Speaker 10: the fuel. There are some increases going on there, but
• 28:09
  Speaker 10: they're also to some degree being offset where they can
• 28:12
  Speaker 10: by operating efficiencies and you know where they can refinancing
• 28:18
  Speaker 10: of debt and interesting and they've also identified just operational
• 28:22
  Speaker 10: cost savings throughout wherever possible. So it's a challenging cost
• 28:26
  Speaker 10: environment generally for the economy, but they are, I think,
• 28:30
  Speaker 10: seeing pockets of opportunity to manage and mitigate that cost growth.
• 28:34
  Speaker 4: Is there a distinction between Disney Cruises and Norwegian Cruise
• 28:39
  Speaker 4: like the ones that take it to Iceland and the
• 28:40
  Speaker 4: Paul would go on versus the ones that like I
• 28:42
  Speaker 4: would have to go on with my kid, Like, are
• 28:44
  Speaker 4: there a distinction or is this like a broad stroke
• 28:47
  Speaker 4: for the cruise like guys.
• 28:48
  Speaker 10: I mean, there are so many distinction across brands to
• 28:51
  Speaker 10: give you some sense of it, you know, like domestically
• 28:54
  Speaker 10: or in terms of US brands, they saw yields up
• 28:58
  Speaker 10: in the quarter seven percent, European brands up twelve percent.
• 29:01
  Speaker 10: So it's pretty broad based, with some differences in comparisons.
• 29:04
  Speaker 10: I will say that the level of yield growth expectation,
• 29:08
  Speaker 10: it's ten percent ish, as I mentioned for Carnival, you know,
• 29:11
  Speaker 10: it's nine and a half percent for a while, and
• 29:13
  Speaker 10: it's a touch above seven percent for Norwegian. And while
• 29:16
  Speaker 10: there are differences across companies in terms of comparisons, I
• 29:20
  Speaker 10: think you can say those are roughly in the same
• 29:22
  Speaker 10: ballpark in terms of the inertia momentum for bookings.
• 29:26
  Speaker 3: This is an industry. Are they building new ships?
• 29:30
  Speaker 10: There are new ships in order, you know, the level
• 29:32
  Speaker 10: of supply growth slows down a little bit going into
• 29:35
  Speaker 10: next year. It's kind of like a kind of a
• 29:38
  Speaker 10: mid single digit long term supply growth rate, which historically
• 29:41
  Speaker 10: is actually a little bit more modern than what we've
• 29:44
  Speaker 10: seen over some past decades. So they are building new hardware,
• 29:47
  Speaker 10: but they're also I mean, this is kind of key
• 29:49
  Speaker 10: for Carnival. They have been repositioning some ships and rebranding
• 29:53
  Speaker 10: a lot of the former Costa and Piano Australia ships
• 29:57
  Speaker 10: as Carnival brands, so in addition to some new shipbuilding,
• 30:00
  Speaker 10: there's also some rebranding and brand positioning going on.
• 30:03
  Speaker 3: Our thanks to Brian Egg, Bloomberg Intelligence Senior Gaming and
• 30:05
  Speaker 3: Launching analysts, and we.
• 30:07
  Speaker 4: Have something here at Bloomberg called Bloomberg New Energy Finance.
• 30:09
  Speaker 4: The idea behind it is to provide data on commodities, power, transport, industries,
• 30:13
  Speaker 4: buildings and agriculture plus new technology.
• 30:16
  Speaker 3: This week we took a look at the global carbon
• 30:18
  Speaker 3: market and also some of the price trends in the
• 30:20
  Speaker 3: US and global market.
• 30:22
  Speaker 4: From where we are joined by Bocan Bloomberg bn EF
• 30:25
  Speaker 4: lead US carbon analyst.
• 30:26
  Speaker 3: We first asked both to define what a global carbon
• 30:29
  Speaker 3: market is.
• 30:30
  Speaker 8: Carbon market is a large market that is growing very quickly.
• 30:35
  Speaker 8: What I look at particularly is compliance carbon market, where
• 30:38
  Speaker 8: we set a cap on emissions and allow entities to.
• 30:42
  Speaker 1: Trade under the cap.
• 30:43
  Speaker 8: There are also another set of carbon market which is
• 30:46
  Speaker 8: more focused on voluntary obligations and voluntary commitments. But the
• 30:52
  Speaker 8: growing part here is really the compliance carbon markets, where
• 30:55
  Speaker 8: we have seen a huge increase in not only traded
• 30:59
  Speaker 8: value but also emissions covered. Today we have almost twenty
• 31:03
  Speaker 8: percent of global greenhouse gas emissions covered mainly boosted by
• 31:08
  Speaker 8: countries and regulators zero commitments. We have now almost one
• 31:15
  Speaker 8: hundred and fifty countries with net zero carbon target and
• 31:21
  Speaker 8: with one and forty five states and regions with a
• 31:24
  Speaker 8: net zero carbon target as well. And with those they
• 31:27
  Speaker 8: have been looking for different ways to reduce emissions, and
• 31:30
  Speaker 8: carbon markets particular compliance carbon markets have become one of
• 31:34
  Speaker 8: those tools to drive that emission reduction.
• 31:38
  Speaker 3: So there isn't a federal carbon market for the entire US.
• 31:42
  Speaker 3: It's state by state.
• 31:43
  Speaker 1: Yes, so right now we don't have.
• 31:46
  Speaker 4: To decide that which is weird because we all breed
• 31:48
  Speaker 4: air and it's all the same air.
• 31:50
  Speaker 1: That's also weird.
• 31:51
  Speaker 3: But somebody to explain what a carbon market is.
• 31:55
  Speaker 8: So the carbon market, basically it's a regular set of
• 31:58
  Speaker 8: target and there are two types of carbon markets. So
• 32:02
  Speaker 8: there's a cap and trade where the regular set a
• 32:04
  Speaker 8: cap and the entities under the cap trade with each other.
• 32:09
  Speaker 1: So the just passed for the second.
• 32:10
  Speaker 4: So basically that means that a company is only allowed
• 32:13
  Speaker 4: to have x amount of emissions, say a year, and
• 32:16
  Speaker 4: then if they go over that, they have to trade
• 32:18
  Speaker 4: those emissions and spend money buying them to then say,
• 32:21
  Speaker 4: look I've offset that.
• 32:22
  Speaker 1: Yeah, okay. It really actually depends on what kind of
• 32:25
  Speaker 1: carbon markets. So there are two.
• 32:26
  Speaker 8: Cap and trade is Basically you set a cap on
• 32:29
  Speaker 8: over all markets, so it's comprising of all the sectors
• 32:34
  Speaker 8: that you want to set a cap on. Then it
• 32:37
  Speaker 8: doesn't really matter which company reduces. The advantage here is
• 32:41
  Speaker 8: really that the one who has the cheapest abatement options
• 32:44
  Speaker 8: they reduce first, and those that are more hard to
• 32:47
  Speaker 8: abate they can basically chill and pay for the permits
• 32:52
  Speaker 8: to pollute. Meanwhile, the cheaper sectors would abate for them.
• 32:57
  Speaker 1: There are also other types of carbon market is.
• 33:00
  Speaker 8: The other type would be a baseliner and credit where
• 33:03
  Speaker 8: it's what you mentioned. You're start a baseline and then
• 33:06
  Speaker 8: you if you're above the baseline, you have to buy credit.
• 33:10
  Speaker 8: If you're below, then you can sell into that market
• 33:12
  Speaker 8: and make money.
• 33:13
  Speaker 1: Exactly exactly.
• 33:14
  Speaker 3: I'm just a busy Google maps Finland because bo, you
• 33:21
  Speaker 3: grew up in Finland. Yes, I mean I had to
• 33:24
  Speaker 3: Google Map because I think I kind of knew generally
• 33:26
  Speaker 3: part of the world where it was. But go on,
• 33:28
  Speaker 3: olex you continue because this is fascinating to.
• 33:30
  Speaker 4: But actually it's an interesting that you wind up in
• 33:33
  Speaker 4: this industry coming from Finland, because I feel like the
• 33:35
  Speaker 4: Scandinavian countries have done really well when it comes to
• 33:38
  Speaker 4: managing their carbon emissions. Why do you think that they've
• 33:41
  Speaker 4: done so well versus the rest of the world.
• 33:44
  Speaker 8: I think at the end of the first is that
• 33:47
  Speaker 8: Infinland or in Scandinavia, we have the motivations, so that
• 33:50
  Speaker 8: first you start with the target, and.
• 33:53
  Speaker 4: That's a government part right like you, they had strip
• 33:56
  Speaker 4: government targets and they've had them for a while.
• 33:57
  Speaker 8: Exactly, and then you find different tools that will guide
• 34:00
  Speaker 8: you help you to get to that target. So pretty
• 34:04
  Speaker 8: much is like a fitness plan, when you first set
• 34:06
  Speaker 8: your fitness target and then you find the different tools
• 34:09
  Speaker 8: to guide you there. And in Finland there in carbon markets,
• 34:13
  Speaker 8: really we can't really deliver alone those nes target or
• 34:18
  Speaker 8: whichever target you have set. We do work in collaboration
• 34:22
  Speaker 8: with other policies. For example, you usually have subsidies for
• 34:27
  Speaker 8: different technologies for carbon capture, hydrogen.
• 34:30
  Speaker 1: Or renewable energy.
• 34:32
  Speaker 8: In addition to having a carbon market, the advantage really
• 34:35
  Speaker 8: with a carbon market is that you have a price transparency.
• 34:38
  Speaker 8: You typically when we talk to people, they don't investors
• 34:43
  Speaker 8: or policy makers or just normal people in the in
• 34:46
  Speaker 8: the society. They don't know what the carbonization means and
• 34:50
  Speaker 8: what it costs, and carbon market helps there. It helps
• 34:56
  Speaker 8: bring that transparency and bring a number of value to
• 35:00
  Speaker 8: what decarbonization mean today and in the future. Particularly it's
• 35:05
  Speaker 8: in the future that's the area where a carbon market
• 35:09
  Speaker 8: can help with because what for example, those carbon prices
• 35:14
  Speaker 8: that you see today, we have seen just in America,
• 35:18
  Speaker 8: we have seen those compliance carmerace. The California's price has
• 35:23
  Speaker 8: doubled since twenty twenty one. Now we have drifted slightly downwards,
• 35:27
  Speaker 8: but we had a record of forty four dollars per
• 35:29
  Speaker 8: ton this year, which is quite significant. And we have
• 35:33
  Speaker 8: seen here in Northeast. U asked, there's the.
• 35:36
  Speaker 1: Power market, carbon market and.
• 35:38
  Speaker 8: The value has tripled since twenty twenty one, really highlighting
• 35:41
  Speaker 8: that the price for decarbonization has increased.
• 35:45
  Speaker 1: And it is important for these.
• 35:48
  Speaker 3: Dates about some of the huge developing economies like China,
• 35:51
  Speaker 3: like India. Are they worried about their carbon emissions?
• 35:55
  Speaker 1: Are they doing anything? Yeah? Yeah, they are healthy and
• 35:58
  Speaker 1: as well.
• 35:59
  Speaker 8: Okay, they have like China has done quite a lot
• 36:02
  Speaker 8: in helping the energy transition globally. Well, first, they also
• 36:08
  Speaker 8: have a carbon compliance carbon market they started, yeah a
• 36:12
  Speaker 8: few years ago, and in terms of covered emissions, it's
• 36:15
  Speaker 8: actually the world's largest.
• 36:17
  Speaker 1: Everything was trying to it's.
• 36:19
  Speaker 8: The largest, so it's four gigatons of emissions covered. It's
• 36:24
  Speaker 8: only power sector at the moment, but they are looking
• 36:27
  Speaker 8: into expanding it to cover industries as well, like cement.
• 36:31
  Speaker 8: One of the things that has also drive in this
• 36:35
  Speaker 8: carbon market expansion is not just the net zero targets
• 36:38
  Speaker 8: that we have been talking about, but also there have
• 36:41
  Speaker 8: been more carbon border adjustment mechanism being introduced. So you
• 36:46
  Speaker 8: started first with their carbon border tariff and now UK
• 36:51
  Speaker 8: also start is looking into setting one and announced that
• 36:56
  Speaker 8: last last December.
• 36:58
  Speaker 1: And there are also like Canon and.
• 37:00
  Speaker 8: Australia looking into this and US we are also looking
• 37:03
  Speaker 8: into it, but it's maybe hardier because we don't have
• 37:06
  Speaker 8: as I mentioned before, we don't have a federal carbon pricing.
• 37:10
  Speaker 1: Yeah.
• 37:10
  Speaker 4: Thanks to both Ken Bloomberg b and E F lead
• 37:13
  Speaker 4: US carbon analyst.
• 37:14
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