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Why Working Women Are At A Tipping Point: Former SBA Head · 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. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
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  Speaker 1: at Bloomberg dot com slash podcast. Good Monday Morning from
• 0:23
  Speaker 1: the Bloomberg Inactive Broker Studio in New York City and
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  Speaker 1: points beyond to our worldwide audience. Paul Sweeney with you.
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  Speaker 1: Matt Miller's out today, but we're joined by Lisa A.
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  Speaker 1: Bromwi's Lisa, thanks so much for joining us. It's always
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  Speaker 1: great to be back with you, and it's for a
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  Speaker 1: really interesting day. Today is International Women's Day, and I
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  Speaker 1: gotta say, Paul, it couldn't come on a more powerful moment.
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  Speaker 1: One that has been the She Session where women have
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  Speaker 1: disproportionately found themselves out of work as a result of
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  Speaker 1: the pandemic. And this comes as a whole host of
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  Speaker 1: reasons fuel it. And yet here we are at a
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  Speaker 1: pivotal moment for women entering the labor force and Karen
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  Speaker 1: Mills joining us now has vast experience both from the
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  Speaker 1: female perspective of being an entrepreneur, but also of what
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  Speaker 1: it is to be in the in the labor market,
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  Speaker 1: particularly with small business. She's a senior fellow at Harvard
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  Speaker 1: Business School, the former Small Business Administrator for President Obama
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  Speaker 1: from two thousand nine to two tho thirteen. Joining us
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  Speaker 1: from Karen from Boston, not Karen. I apologize, Karen, thank
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  Speaker 1: you so much for being with us. I just want
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  Speaker 1: to start with just the vast pain experience in the
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  Speaker 1: pandemic by women. How deep is the she session. First
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  Speaker 1: of all, I'm so pleased to be with you today
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  Speaker 1: because it's International Women's Day and you know we're marking
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  Speaker 1: this moment, and you ask exactly the right question. Women
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  Speaker 1: were a lot harder hit by, uh, this pandemic in
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  Speaker 1: terms of, you know, the economic impact, and that is
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  Speaker 1: true in two ways that I worry about a lot.
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  Speaker 1: One is a lot of women dropped out of the
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  Speaker 1: workforce because of the increased pressures. And the number are tough.
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  Speaker 1: Two point three million women dropped out one point eight men.
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  Speaker 1: So you can just see there, you know they're going
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  Speaker 1: to be more impacted. And we can talk about small
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  Speaker 1: businesses they've been much harder hit in the smallest and
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  Speaker 1: the women and minority owned businesses. So that's a problem too,
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  Speaker 1: all right, So, Karen, as we begin to approach, I
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  Speaker 1: guess what a lot of people feel like is a
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  Speaker 1: reopening of the US economy. Here, what can women do
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  Speaker 1: to try to get back into the market, get back
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  Speaker 1: into the labor force, get perhaps their businesses back, reopen
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  Speaker 1: to that type of thing. Well, thank goodness, we passed
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  Speaker 1: another round of the Small Business Aid the p p
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  Speaker 1: P around Christmas time, and there's more in this package
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  Speaker 1: that's going through Congress because small businesses are really devastated.
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  Speaker 1: And I just looked at these numbers before I came on,
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  Speaker 1: because women owned businesses, fifty eight percent of them say
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  Speaker 1: they're running out of cash. They're either out of cash
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  Speaker 1: or they're about to run out of cash at fifty
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  Speaker 1: eight compared to of the men owned businesses. And why
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  Speaker 1: is that? Because a lot of these customer facing businesses
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  Speaker 1: that had to shut and these very small non employer
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  Speaker 1: businesses sold proprietorships. This is where the women have gained
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  Speaker 1: some economic grounds. You know, when I ran the s
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  Speaker 1: b A, women particularly actually Hispanic women were the fastest
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  Speaker 1: growing part of our small business world, and now we've
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  Speaker 1: given them a real setback. So they've got to take
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  Speaker 1: advantage of every single thing that is out there for
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  Speaker 1: them because there's a lot of grant money coming out
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  Speaker 1: through these p p P programs, there's low interest loans,
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  Speaker 1: and they've got to stay with us because if they
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  Speaker 1: shut their doors, it's going to take the economy a
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  Speaker 1: really long time to recover, and it's going to recover disproportionately,
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  Speaker 1: which we know is a problem. Or you know that
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  Speaker 1: hurts everybody. Well, Karen, do you talk a little bit
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  Speaker 1: about why women have suffered so disproportionately. Some people say
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  Speaker 1: because they have more jobs in certain areas like education
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  Speaker 1: that have been hit hard, but there's also the childcarrish.
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  Speaker 1: You can you talk a little about that. Yeah, you know,
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  Speaker 1: all across um being a woman, you know, trying to
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  Speaker 1: prosper economically, there are frictions and barriers that you know,
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  Speaker 1: I hope in my lifetime will get better and go away.
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  Speaker 1: And it's it's true we've made progress, but I actually
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  Speaker 1: think we're at the tipping point all of these kinds
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  Speaker 1: of frictions and barriers where more burdens fall on the
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  Speaker 1: women and also employers don't do enough. We we know
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  Speaker 1: right now we need all the women in our workforce,
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  Speaker 1: and we know we want to create a culture that
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  Speaker 1: works for them, and we want to create uh, you know,
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  Speaker 1: help for them because they have children. Having children is
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  Speaker 1: the absolute the best thing thing. I have three boys,
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  Speaker 1: best thing ever. But you know, it's a lot of work,
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  Speaker 1: and especially when they're young. So we need to make
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  Speaker 1: sure that employers step up and not do this as
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  Speaker 1: a nice to have. This is a must have if
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  Speaker 1: you are going to be competitive all right along that front, Karen,
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  Speaker 1: You know, we see more and more talk, We hear
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  Speaker 1: more and more talk about diversity from some of the
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  Speaker 1: larger corporations. Is that real? Is you see real change
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  Speaker 1: occurring or is it more in the department lip service?
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  Speaker 1: You know, we're not quite at that inflection point in
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  Speaker 1: terms of the corporate diversity programs. I just wrote a
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  Speaker 1: case for Harvard Business School and one of the big
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  Speaker 1: tech companies, one of them you know whose name you
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  Speaker 1: say every day and it you know it is really
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  Speaker 1: focused on doing a real diversity, equity and inclusion program.
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  Speaker 1: And they're philosophy is that's where they're going to get
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  Speaker 1: competitive advantage. It was very interesting to go deep in
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  Speaker 1: this because it was a persuasive argument that if you
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  Speaker 1: want to make your customers happy, you have to have
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  Speaker 1: a happy and inclusive workplace. If you want to have
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  Speaker 1: diverse customers, you want to have a diverse and inclusive
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  Speaker 1: workplace and people who are not spending any of their
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  Speaker 1: mind share worrying about am I being left out of
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  Speaker 1: this meeting for some reason? So I am persuaded that, uh,
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  Speaker 1: the ones who get it, which is not everybody, will
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  Speaker 1: have competitive advantage. Interesting, We will follow up on that.
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  Speaker 1: Karen Mills, thank you so much for joining us. We
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  Speaker 1: appreciate that. Karen Mills, Senior fellow Harvard Business School, former
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  Speaker 1: small business administrator for President Obama as well getting her
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  Speaker 1: thoughts on women in the workplace and the sheet session
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  Speaker 1: in which women have been hit harder and Karen shared
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  Speaker 1: some statistics there. Women have been hit harder in terms
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  Speaker 1: of unappoyment and other economic metrics during this pandemic and
• 7:03
  Speaker 1: during the recession, insulting well. In the equity markets, it's
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  Speaker 1: really been about the rotation trade really since about September
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  Speaker 1: of last year. Some of those more cyclical sectors such
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  Speaker 1: as energies such as banking have been out performing some
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  Speaker 1: of the typical drivers of this market, some of the
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  Speaker 1: large kept technology names. The question is how much more
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  Speaker 1: does that trade have left and where should we be
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  Speaker 1: looking in the markets these days? Lisa Schaalett, she's a
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  Speaker 1: chief investment officer at Morgan Stanley Wealth Management. She joins us,
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  Speaker 1: we always appreciate Lisa's opinion. So, Lisa, again, the rotation
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  Speaker 1: trade has been a really interesting trade for a lot
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  Speaker 1: of investors. Um, how much more do you think has
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  Speaker 1: left to go here in that type of portfolio? Look,
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  Speaker 1: our perspective is that, you know, a lot of these sectors,
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  Speaker 1: whether we're talking about financials, energy, industrials, infrastructure, you know,
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  Speaker 1: parts of consumer services and consumer durables have really been
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  Speaker 1: left behind, not only uh during the recession, but we're
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  Speaker 1: left behind for the entire last business cycle. Uh. You
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  Speaker 1: know that we saw from from you know, the post pandemic. Uh.
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  Speaker 1: And so we think that there's you know, quite a
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  Speaker 1: lot more to go. And uh, you know, this is
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  Speaker 1: not simply about economic growth and and that's especially true
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  Speaker 1: of uh, some of the services, more cyclical services businesses.
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  Speaker 1: And you know, one of the things that we've talked
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  Speaker 1: a lot about is that in this new business cycle
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  Speaker 1: that we're entering, the opportunities for some of these UH
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  Speaker 1: cyclicals to really embrace and optimize on digitization, optimize on
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  Speaker 1: some of the lessons learned from the pandemic on contactless
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  Speaker 1: business models. Means that they're not just going to benefit
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  Speaker 1: from a pickup in economic growth, but they're gonna pick up,
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  Speaker 1: uh benefit from a pickup in margins and return on assets.
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  Speaker 1: I really think some of these companies are gonna, uh,
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  Speaker 1: you know, see some some very big improvements uh in
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  Speaker 1: in moving towards asset light business models. Well, here's the tension, though, Lisa,
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  Speaker 1: is that people see very fast growth, at least in
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  Speaker 1: the near term, and yet we've got a FED that's
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  Speaker 1: talking about inflation remaining low. Janet Yellen was speaking at
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  Speaker 1: MSNBC moments ago and Treasure Secretary, and she said that
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  Speaker 1: she doesn't think that the stimulus bill will be uh
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  Speaker 1: something that will cause inflation problems. Do you buy this?
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  Speaker 1: I mean, isn't there sort of an uncomfortable reality here
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  Speaker 1: of fast growth yet no inflation, which is sort of unsustainable. Look,
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  Speaker 1: it's it's it's always a daunting thing to disagree with
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  Speaker 1: with people like you know, the head of the bed
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  Speaker 1: and your own fowel, and and certainly do you know
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  Speaker 1: Janet yelling at at Treasury and so you know what
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  Speaker 1: my comments are are obviously made with a huge degree
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  Speaker 1: of humility, uh and respect for for them. Uh. But look,
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  Speaker 1: I do think that while certainly, uh, there's lots of
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  Speaker 1: evidence that that some of the inflationary pressures, especially those
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  Speaker 1: related to the supply chain, um, are are probably going
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  Speaker 1: to be transitory. And we know that very often, you know,
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  Speaker 1: big moves we've seen commodity prices are transitory. Uh. The
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  Speaker 1: reality is that we think that there are some other
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  Speaker 1: things going on here. Uh. The degree to which fiscal
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  Speaker 1: stimulus uh, you know, in this recession has gone directly
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  Speaker 1: uh too small businesses and directly to households is relevant. Um.
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  Speaker 1: It's coming at a time when there is behavioral pent
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  Speaker 1: up demand for consumer services, for travel, for leisure, for entertainment,
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  Speaker 1: and there is household balance sheet capacity to spent. And
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  Speaker 1: so what's different for us this time is that we
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  Speaker 1: actually are believers that monetary velocity is going to be
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  Speaker 1: uh picking up, is going to be one of the
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  Speaker 1: drivers of inflation. Uh. And we don't think that this
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  Speaker 1: is going to be a cycle like like uh the
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  Speaker 1: last one where deleveraging among the banks and deleveraging among
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  Speaker 1: households prevented money velocity from picking up. And that's why
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  Speaker 1: you were able to see the Fed print money but
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  Speaker 1: not have inflation. So that's that's the thing that's different
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  Speaker 1: to us this time is is fiscal and it's the
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  Speaker 1: directness of the fiscal right, It's it's not CAx cuts, Lisa.
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  Speaker 1: I'm gonna let you go. But before I do, how
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  Speaker 1: high can yields go before it stops the equity rally?
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  Speaker 1: Just twenty seconds? Uh? Yeah, So unfortunately I probably don't
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  Speaker 1: have a twenty second answer on that. Uh. As running
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  Speaker 1: at a time, I wish we had more time with
• 11:50
  Speaker 1: your I know, but but look, uh, you know our
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  Speaker 1: our senses that um, you know this is all about
• 11:59
  Speaker 1: equity risk for me. Um. And that means uh that
• 12:02
  Speaker 1: you know, rates can continue to go up and not
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  Speaker 1: hurt stocks if earnings estimates are also going up. Uh.
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  Speaker 1: And so our our our our our our cents however,
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  Speaker 1: is that we're reaching a peak and earnings revisions bread
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  Speaker 1: uh And therefore, you know, any further move higher in rates.
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  Speaker 1: If we were to get, you know, into the one
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  Speaker 1: seventy five range, it starts becoming problematic unless unless we
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  Speaker 1: really can can start looking to two and much much
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  Speaker 1: higher earnings. So we've got up as the bookcase on
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  Speaker 1: SMP index. Uh, you know, but but not a lot
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  Speaker 1: more from here. Lisa Shalit, chief investment officer at Morgan
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  Speaker 1: Stanley Wealth Management, thank you so much. Let's turn our
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  Speaker 1: attention to the global energy markets. I'm looking at w
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  Speaker 1: t I crew here, sixty five dollars, fifty five cents,
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  Speaker 1: down about fifty five cents today, but of course oil
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  Speaker 1: has been on a major move higher. A w t
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  Speaker 1: I we touched almost sixty eight dollars today, so a
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  Speaker 1: big move, presumably a play on higher global demand going forward.
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  Speaker 1: And then we also had OPEC kind of holding supply steady.
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  Speaker 1: Let's get the latest on the global energy markets. We
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  Speaker 1: do that with Regina Mayor, Global Energy head for KPMG.
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  Speaker 1: So Regina again, big move up here in global crude.
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  Speaker 1: What's your takeaway? Well, we're at a nearly two year high.
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  Speaker 1: We haven't seen prices like this since April, and I
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  Speaker 1: think we're going to continue to see a pretty buoyant
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  Speaker 1: price for the next few months. US shale producers are
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  Speaker 1: committed to staying the course and not radically increasing production,
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  Speaker 1: and it's sort of a low risk, high reward strategy
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  Speaker 1: for OPEC plus to pursue to keep the supply out
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  Speaker 1: of the market and continue to drive the price closer
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  Speaker 1: to seventy dollars per barrel. They need that oil revenue
• 13:53
  Speaker 1: most of them still isn't that doesn't meet their budgetary
• 13:56
  Speaker 1: needs for their countries, and so right now they're going
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  Speaker 1: to play it for as long as possibly can. Although
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  Speaker 1: you know, the move overnight was really interesting and I'm
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  Speaker 1: wondering on a larger scale, there were these attacks in
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  Speaker 1: Saudi Arabian oil production sites that are some of the
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  Speaker 1: richest in the worlds that I believe produced something like
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  Speaker 1: seven of all the oil consumed UH any year have
• 14:15
  Speaker 1: that capacity, and there was nobody injured, there were no
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  Speaker 1: production sites actually taken offline, and yet oil prices searched
• 14:22
  Speaker 1: in particular, Brent, what do you make of that in
• 14:25
  Speaker 1: terms of what it means about the supply demand dynamic. Well,
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  Speaker 1: I think it means that the market is starting to
• 14:32
  Speaker 1: worry about the potential coming together of demand and supply.
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  Speaker 1: There was a view that we would hit a point
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  Speaker 1: in the market where things would get pretty tight, that's
• 14:40
  Speaker 1: the supply overhang would be gone, demand would return to
• 14:44
  Speaker 1: post a pre pandemic levels, and that we would get
• 14:47
  Speaker 1: a spike in the crude price. What we're seeing now
• 14:51
  Speaker 1: is the reality of that potential coming together. But from
• 14:54
  Speaker 1: what I see, the fundamentals don't actually require the price
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  Speaker 1: to go that high. I think it's still overly frothy
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  Speaker 1: um and a little bit overly worried because the supply
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  Speaker 1: of a million and a half barrels per day that
• 15:07
  Speaker 1: open plus is currently keeping off the market can pretty
• 15:10
  Speaker 1: quickly come back into the market. But again, the industry
• 15:13
  Speaker 1: is grateful for the higher price, so we'll take it
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  Speaker 1: for as long as we can get it. All right, Regina,
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  Speaker 1: talk to us about our good friends in the US
• 15:21
  Speaker 1: shell patch here with w t I, it's sixty bucks
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  Speaker 1: a barrel. Are they making money? Are they fixing their
• 15:28
  Speaker 1: balance sheets? What are they doing here? They're definitely making
• 15:32
  Speaker 1: money now. Most of them have even made commitments at
• 15:35
  Speaker 1: any dollars over forty per barrel would be would be
• 15:40
  Speaker 1: given back to shareholders as UM dividends or being used
• 15:44
  Speaker 1: for debt repayments, or being used for stock buy backs,
• 15:48
  Speaker 1: so we're talking about it differential. At this point, that's
• 15:51
  Speaker 1: a lot of cash that they'll be able to figure
• 15:54
  Speaker 1: out what to do with. I think they're going to
• 15:56
  Speaker 1: stay the course relative to little to no production increases
• 15:58
  Speaker 1: because they've told us to rights to the street that
• 16:01
  Speaker 1: they're going to be fiscally disciplined cash preservation, returning those
• 16:06
  Speaker 1: dollars to shareholders, and they have to continue to tell
• 16:09
  Speaker 1: that story. There may be fringe producers that will get
• 16:11
  Speaker 1: pretty excited and try to go drill, baby, drill, but
• 16:14
  Speaker 1: I don't think we'll see that in well, and that's
• 16:18
  Speaker 1: been kind of the bet right. I mean, a lot
• 16:19
  Speaker 1: of people have kind of dismissed the swing production factor
• 16:22
  Speaker 1: of shale producers, the idea that they won't come online
• 16:25
  Speaker 1: that quickly because they've you know, found light the light
• 16:28
  Speaker 1: and I have now production discipline. Do you think that
• 16:31
  Speaker 1: there are any signs to challenge that assumption that perhaps
• 16:34
  Speaker 1: we could see the shale producers rampant production back up
• 16:37
  Speaker 1: far beyond what people are expecting, not in the short term, Lisa,
• 16:41
  Speaker 1: because it's not a tap that they can turn on
• 16:43
  Speaker 1: and off, and we'd have to start seeing rig counts
• 16:46
  Speaker 1: go up pretty dramatically UM and flows coming coming up
• 16:49
  Speaker 1: pretty dramatically. We've been study at eleven million barrels per
• 16:52
  Speaker 1: day in production in the US UM, but we were
• 16:56
  Speaker 1: off two million barrels per day with the storm, and
• 16:58
  Speaker 1: so I think we'll stay steady at eleven million barrels
• 17:02
  Speaker 1: per day, and I think the industry will stay disciplined
• 17:06
  Speaker 1: at least through the next couple of quarters. I'm not
• 17:08
  Speaker 1: saying they're gonna stay disciplined even through the end of
• 17:11
  Speaker 1: the year, because it's just too hard to resist drilling
• 17:14
  Speaker 1: at at a sixty plus dollar per barrel, But that's
• 17:17
  Speaker 1: when I think OPEC plus returns that supply to the market,
• 17:20
  Speaker 1: so they sort of keep it at this goldilocks price.
• 17:22
  Speaker 1: It's not too hot, it's not too cold, and it
• 17:25
  Speaker 1: maintains maximum revenue for the OPEC plus. Producers were surprised
• 17:30
  Speaker 1: up just quickly surprised by OPEC plus kind of keeping
• 17:33
  Speaker 1: supply steady. I was not, actually, I know a lot
• 17:37
  Speaker 1: of analysts had predicted that at least a million barrels
• 17:40
  Speaker 1: per day would come back. I didn't see the rationale
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  Speaker 1: for that because they had been I mean, the Saudias
• 17:45
  Speaker 1: in particular have demonstrated they have their hand on the
• 17:49
  Speaker 1: steering wheel relative to how well they're managing crude price.
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  Speaker 1: They're not ready to take their hands off the steering
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  Speaker 1: wheel and lease things up for grabs again. So I
• 17:58
  Speaker 1: wasn't surprised, but um I am surprised by the significant
• 18:02
  Speaker 1: buoyancy in the price. Regina Mayor, thank you so much
• 18:05
  Speaker 1: for being with us. Regina Mayor, Global Energy head at
• 18:08
  Speaker 1: KPMG talking about some of the massive greens that we've
• 18:11
  Speaker 1: seen in oil prices and really some pretty big swings
• 18:14
  Speaker 1: overnight and Paul, it was interesting to see that production
• 18:17
  Speaker 1: wasn't taken offline and yet still there was a pretty
• 18:21
  Speaker 1: sizeable move, particularly the price of Brent. Yeah, exactly right,
• 18:24
  Speaker 1: and we did see that spike in the morning, but
• 18:25
  Speaker 1: it's since come back here and again, as Regina was suggesting,
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  Speaker 1: shale producers are going to keep disciplined. I interesting to
• 18:32
  Speaker 1: see to watch throughout the year, at least, she said,
• 18:36
  Speaker 1: in the next couple of months. There's a big caveat there.
• 18:38
  Speaker 1: She said, you know, the near term is truly the
• 18:41
  Speaker 1: near term. Right now we are seeing gains throughout the
• 18:43
  Speaker 1: commodity complex as people foresee stronger growth ahead. Right now,
• 18:48
  Speaker 1: we are foreseeing more legislation and possibly the passage of
• 18:51
  Speaker 1: that one point nine trillion dollars stimulus tomorrow. We're talking
• 18:56
  Speaker 1: about vaccines, We're talking about the pandemic almost ended ending.
• 19:00
  Speaker 1: We're forgetting the energy crisis in Texas, and yet Elon
• 19:04
  Speaker 1: Musk is not. He is working on a potential solution
• 19:07
  Speaker 1: despite the fact the energy of energy officials in that
• 19:10
  Speaker 1: region tried to peg some of the problems on renewable
• 19:13
  Speaker 1: energy sources. Joining us now to tease out all the
• 19:16
  Speaker 1: different parts of this evolving story, as Marine Malik, a
• 19:19
  Speaker 1: Bloomberg News reporter covering all things energy, Marine, can you
• 19:22
  Speaker 1: just start by laying out the energy crisis in Texas
• 19:26
  Speaker 1: and how it's been connected to the advent and the
• 19:29
  Speaker 1: surge in renewable energies in that state. Yeah, So Texas
• 19:34
  Speaker 1: had a widespread generation failure um last month, and where
• 19:39
  Speaker 1: you had the state and most of the country is
• 19:42
  Speaker 1: mostly reliant on natural gas. Natural gas plants tripped offline
• 19:47
  Speaker 1: because they were frozen or they couldn't get fuel, So
• 19:50
  Speaker 1: you had, like the US, more reliant on natural gas
• 19:54
  Speaker 1: than ever not able to get get gas lay a pipeline.
• 19:58
  Speaker 1: And this is we've never seen this tested on this
• 20:01
  Speaker 1: level before. Power markets, like the grids Texas, like whichever
• 20:05
  Speaker 1: grid do you think about, is mostly geared towards preparing
• 20:09
  Speaker 1: for summer. So the demand wasn't was supposed to match
• 20:13
  Speaker 1: or maybe even exceed summer demand in in Texas, which
• 20:17
  Speaker 1: is amazing just to think about that. You'd have more
• 20:20
  Speaker 1: people turning on power in winter than in summer when
• 20:22
  Speaker 1: it's like a hundred plus degrees UM. But you had
• 20:25
  Speaker 1: generation failure across across the board, like wind generation of froze.
• 20:31
  Speaker 1: You had obviously solar when there's no when there's cloud
• 20:34
  Speaker 1: coverage and at night you can't get solar panels to work.
• 20:38
  Speaker 1: UM and coal piles froze up. And a lot of
• 20:41
  Speaker 1: the blame early on was was placed on wind and
• 20:45
  Speaker 1: UM and solar because they are intimate and resources. The
• 20:49
  Speaker 1: difference is that and and they did see a large
• 20:53
  Speaker 1: chunk of generation shut off, But the difference was the
• 20:56
  Speaker 1: grid operator was expecting that What has been apparent from
• 21:00
  Speaker 1: the last month's events was they now have to rethink
• 21:04
  Speaker 1: how to prepare for winter extremes. If there's another repeat.
• 21:09
  Speaker 1: All right, So that's kind of a summary, but we
• 21:11
  Speaker 1: appreciate that summary of what occurred now in rides elon Musk.
• 21:18
  Speaker 1: What is Tesla doing in the Texas energy market? So
• 21:22
  Speaker 1: to be fair, um Tesla was likely working on this
• 21:25
  Speaker 1: project for a while, but it's interesting we don't know
• 21:28
  Speaker 1: exactly what what his intention is. But batteries can play
• 21:32
  Speaker 1: several rules. They are seen as a critical part of
• 21:35
  Speaker 1: integrated integrating more renewables, and Texas like doesn't have state
• 21:40
  Speaker 1: mandates or subsidies. They do like like other states do,
• 21:44
  Speaker 1: to integrate a certain amount. So it's really like costs
• 21:48
  Speaker 1: for solar and wind have plunged so much. You're seeing
• 21:50
  Speaker 1: Texas like adopt these renewable sources in and at an
• 21:55
  Speaker 1: accelerating pace. So as you get more intimit and resources,
• 21:59
  Speaker 1: you need more batteries to back that up. And so
• 22:02
  Speaker 1: there there are a couple of ways at least that
• 22:04
  Speaker 1: tests I can can have a role in in this market.
• 22:09
  Speaker 1: They can you know, at night, when there's too much
• 22:12
  Speaker 1: um wind or or in the day when there's too
• 22:15
  Speaker 1: much solar, it sends. They call it the dunker Duck curve.
• 22:19
  Speaker 1: When you have too much power and not enough demand
• 22:21
  Speaker 1: and it causes prices to collapse. So what we've seen
• 22:24
  Speaker 1: battery makers do is come in during those low price
• 22:28
  Speaker 1: periods soak up like that extra power um that is
• 22:31
  Speaker 1: just sitting there really cheap or even being paid to
• 22:35
  Speaker 1: take that power, and they store it in batteries, and
• 22:38
  Speaker 1: then when prices are high, like in the evening like
• 22:41
  Speaker 1: six to eight pm, when you know, like people like
• 22:44
  Speaker 1: the sun is going down and and you have people
• 22:46
  Speaker 1: turning on lights like, then they sell it back at
• 22:49
  Speaker 1: that point. Batteries can also provide grid stability services, so
• 22:54
  Speaker 1: like make sure power is flowing at this like narrow
• 22:58
  Speaker 1: range it always has to at the hurts, and provide
• 23:01
  Speaker 1: frequency control. So they could play multiple markets. We don't
• 23:04
  Speaker 1: know exactly what they're going to do, but there's definitely
• 23:07
  Speaker 1: opportunity there well. And the reason why I connected the
• 23:10
  Speaker 1: to the energy crisis a couple of weeks ago in
• 23:13
  Speaker 1: Texas and these batteries is because they kind of go together,
• 23:17
  Speaker 1: this idea that there could be a missing link here
• 23:19
  Speaker 1: of storing renewable energy for times when it's more needed.
• 23:23
  Speaker 1: And I'm just wondering how much that crisis kind of
• 23:26
  Speaker 1: gave umph the c F a term to Elon Musk
• 23:30
  Speaker 1: to try to get this implemented throughout texas well. As
• 23:34
  Speaker 1: I said, we don't know how big his plans are,
• 23:36
  Speaker 1: but he's coming at the perfect time when this is
• 23:39
  Speaker 1: exactly like when people are trying to figure out what
• 23:42
  Speaker 1: the energy transition could look like. And we definitely need
• 23:45
  Speaker 1: more batteries and need to figure out how to winterize everything.
• 23:49
  Speaker 1: So it will get like if he has hopes for
• 23:52
  Speaker 1: grander on a grander scale to implement more batteries and
• 23:56
  Speaker 1: and usually you see that if a battery maker comes in,
• 23:59
  Speaker 1: they're not just doing on project there in it and
• 24:02
  Speaker 1: and you get that know how of building one and
• 24:04
  Speaker 1: then you build a lot more. Um So this could
• 24:07
  Speaker 1: definitely help him and he could become a critical part
• 24:10
  Speaker 1: of the conversation. Noreene Malik, thank you so much for
• 24:13
  Speaker 1: being with us Natural Gas and Power markets reporter for
• 24:15
  Speaker 1: Bloomberg on Elon Musk riding into the Texas energy scene
• 24:19
  Speaker 1: where he already has been anyway to try to take
• 24:22
  Speaker 1: advantage of a situation as well as perhaps add to it.
• 24:25
  Speaker 1: This is Bloomberg. Thanks for listening to the Bloomberg Markets podcast.
• 24:29
  Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
• 24:33
  Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
• 24:37
  Speaker 1: on Twitter at Matt Miller and on fall Sweeney I'm
• 24:41
  Speaker 1: on Twitter at pt sweeney. Before the podcast, you can
• 24:44
  Speaker 1: always catch us worldwide at Bloomberg Radio