October 28, 2025 • 36 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
OpenAI is giving its long-time backer Microsoft Corp. a 27% ownership stake as part of a restructuring plan that took nearly a year to negotiate, removing a major uncertainty for both companies and clearing the path for the ChatGPT maker to become a for-profit business.
Under the revised pact, Microsoft will get a stake in OpenAI worth about $135 billion, the companies said in a statement Tuesday. In addition, Microsoft will have access to the artificial intelligence startup’s technology until 2032, including models that achieved the benchmark of artificial general intelligence (AGI), a more powerful form of AI that most say does not exist yet.
Microsoft will also continue to be entitled to receive 20% of OpenAI’s revenue, according to people familiar with the matter, who spoke on condition of anonymity as the information is not public. But as part of the new pact, OpenAI can pay more later. In a blog post, the companies said a revenue share agreement remains in effect until an expert panel verifies AGI.
With the agreement, OpenAI said its corporate restructure is now complete. The company had spent much of this year working to form a more traditional for-profit company, which is considered more attractive to investors. Microsoft, which backed OpenAI with some $13.75 billion, was the biggest holdout among the ChatGPT maker’s investors, Bloomberg News has reported.
Today's show features:
- Bloomberg Intelligence Senior Technology Analyst Anurag and on Microsoft taking a 27% stake in OpenAI
- Danielle DiMartino Booth, CEO and Chief Strategist at QI Research, on this week’s FOMC meeting and interest rate decision
- Bloomberg News Climate Reporter Eric Roston on impact of Hurricane Melissa in the Caribbean and beyond, as well as his recent Big Take on the growing “disaster economy”
- James Walker, Chief Executive Officer of NANO Nuclear Energy, on the launch of the firm’s KRONOS MMR drilling program at the University of Illinois at Urbana-Champaign (with Bloomberg News Energy Reporter Will Wade)
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
As we've said, Tim, there's just so much coming at
us on this Tuesday, and E love it is because
of end Video, but there's just so much going on
when it comes to AI related news today.
Speaker 3 (00:41):
Yeah, Opening I continue so to forge relationships, as does PayPal.
The two announce to tie up whereby PayPal's digital wallet
will be embedded into Chat GPT. It'll send PayPal shares
up the most in more than six months, or it
did send PayPal shares up the most in more than
six months. And then the Microsoft news that we've talked
about quite a bit, Carol, longtime backer, Microsoft a twenty
seven percent ownership stake in Open Ai. This part of
(01:03):
a restructuring plan that took nearly a year to negotiate.
It rooms a major uncertainty for both companies. And clears
the path for chat GPT and the maker of chat
GPT to become a for profit business.
Speaker 2 (01:13):
It's a lot, so let's get into it and really
just how open ai continues to be at the center
of so much. But we've so many questions about why
Microsoft is doing this at this time. Limberg Intelligence senior
technology analyst an rog Rana joining us from the Bloomberg
News bureau in Chicago, anurag why is Microsoft doing this?
Did the company need to do this kind of cement
(01:33):
that relationship financially and otherwise with open Ai.
Speaker 4 (01:39):
Yeah, I mean they had to do it because Open
the Eye has been raising capital with the idea that
they will go from a not for profit to a
for profit company eventually going public someday. So I mean
this had to be done. The big contentious for there
are so many things that they were arguing against, you know,
revenue share, technology share, all sorts of different things. Microsoft
had controllable which cloud providers that they can use, et cetera.
(02:02):
So this new agreement kind of cements a lot of
those things, removes a big overhang that's on I would
say more on Microsoft than on open Ai, frankly, because
Microsoft is using open eies technology in their products, in
the copilot products that are out there. You know, that's
I think for us that's the most important thing. Frankly,
it's not so much the other financial details.
Speaker 3 (02:24):
Since Microsoft will have this twenty seven percent ownership stake
in open ai, can we look at Microsoft share price
on a daily basis as some sort of public proxy
for open ai and how investors are valuing open Ai
or am I trying to do too much math here?
Speaker 5 (02:42):
No?
Speaker 4 (02:43):
I think that's that's a bit too extrapolation over there.
The thing that you want to focus on is or
how many US will Microsoft has have access to open
EI's leading models. So when you look at frontier models,
you have open Ai, you know, perhaps you know most
in the lead. Then you have Entropic Gemini. Those are
the three big ones that everybody talks about down the road.
(03:04):
Microsoft needs to make sure that the copilot products that
they are selling out to the public, both on the
M three sixty five and then the GETHLP co pilot
which is used for coding, they really have an alternative
to open EI. One answer could be they have their
own models, but they're not there yet. So this contract,
you know, extend that to twenty thirty two, which is,
(03:24):
you know, you can say that they're giving themselves seven
years to figure this thing out.
Speaker 6 (03:29):
Help me out.
Speaker 2 (03:30):
Though, It's just like open ai and Microsoft. I'm looking
at the Bloomberg open ai and PayPal, open ai and
SoftBank open ai, you know, pick your company. They are
just I feel like lining up deals or agreements or
relationships with everybody and anybody. I mean Microsoft, I mean,
(03:51):
are they going to have to share the wealth if
you will? And does it become a little bit messy
because I'm just assuming that there will be companies that
maybe in some ways are also competing with Microsoft that
have deals with open ai or is that not right?
Speaker 6 (04:08):
I don't know.
Speaker 4 (04:09):
See it's a very common thing in technology. Almost everybody
who's competing with each other are also working closely with
each other. So that's you know, that's on the side.
But when you look at open ai, that's an area
where you and I use a chat GPT a lot.
But imagine that. Now what you can do is, you know,
let's say they have a partnership with Walmart with PayPal.
Today you are looking at a product and you decide
(04:31):
that you can just buy the product seamlessly from that.
They have a similar agreement with Stripe and Shopify. So
what OPENINGI is basically saying, let us be the front
end for a lot of what you're doing. Let's say
on the consumer side, so example that I gave you
is more for a retail purchase. But on the other hand,
they also have a deal with Salesforce, so for example,
(04:52):
if you are in chat GPT and you want to
look at your Salesforce application, you can do that as well.
So open AI wants to make sure that they are
the front end for a lot of discussions that are
going to happen, and that's where I think a lot
of the fighting is going to be down the road
on it rog.
Speaker 6 (05:07):
I'm, i'm.
Speaker 3 (05:08):
We had this conversation with you on Vanka Vanak yesterday
and he talked a lot about AI and the AI trade,
but he also mentioned some stats about when when web
traffic is going from chat GPT two websites, and it
got me thinking about how people are increasingly replacing or
supplementing what they do on the internet using chat GPT.
(05:29):
The news today too that that this potential PayPal tie
up where you can pay for stuff within chat GPT
also got me thinking, does Golphabet have to be scared
about its core business here?
Speaker 4 (05:43):
But you know, but that's been the case for so
many years. I mean, there have been people have been
talking about this the first day chat GPT was launched, that, oh,
what's going to kill Google search business? I mean, so far,
I haven't seen those numbers that are out there that
are just having a very large financial impact. I'm sure
there is some share loss and searchers, but I haven't
seen it. So we'll see. You know, how the shapes
(06:04):
uf Google has or Alphabet has a lot of interesting assets.
I mean, they have semi conductors that are very important,
They have a cloud platform, they have a large frontier model.
So I think they have all the pieces out there.
The question is, you know, whether the market is big
enough for a lot of them to exist core coexist
(06:25):
at the same time.
Speaker 2 (06:26):
Hey, Anna Rogh, you know, over the summer, Bloomberg put
out how open ai said, Elon Musk identified Mark Zuckerberg
is one of the people with whom he had communicated
about potentially financing a deal to purchase open ai. Does
this Microsoft deal put an end to any other big
player coming in?
Speaker 6 (06:42):
I mean this is theirs.
Speaker 4 (06:45):
I think so. But again, you know, legal grammifications are
such that you don't know how some of the judges
will move towards. But this is you know, this is
basically open AI saying we have figured out a way
to how to go you know, you could say, become nonprofit,
become for profit, and eventually some day go public.
Speaker 6 (07:04):
M Yeah, that's going to be interesting, right, I mean,
listen what valuation. Well for open right, but.
Speaker 2 (07:10):
For open AI, right, they can kind of stop the
money grab for now, right because they just got a
massive cash infusion.
Speaker 4 (07:20):
Yeah, but they're also spending at the amount that nobody
has seen. I mean, they have a very large contract
with open Air, with the Oracle and they you know
today with this agreement, they've committed another two hundred and
fifty billion dollars of computing capacity with Microsoft. So it's
you know, their expense is far exceeding the revenue right now.
They are doing these you know, you could say investments
(07:41):
so that down the road they can recognize the value
of some of these investments. So that's I think where
the where the mismatches for a lot of people, And
so unless there is some equilibrium, I think it's going
to be very tough for them to go public.
Speaker 2 (07:53):
Yeah, the money flows around AI in out is like phenomenal.
An rag YouTube phenomenal. Thank you, Thank you so much.
He is Bloomberg Intelligence Senior technology analyst out there in
our Bloomberg New Chicago bureau.
Speaker 3 (08:05):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (08:13):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (08:27):
It's a FED Tuesday, Carol. It is a FED Tuesday,
which means it's followed by a FED Wednesday.
Speaker 7 (08:33):
That's how it works.
Speaker 6 (08:34):
Two day meetings.
Speaker 3 (08:35):
Let's get too. Let's get into it with Danielle di
Martino bo She's CEO and chief strategist at the research
and analytics firm QI Research. He's also a former advisor
at the Dallas Fed. She's here in our Bloomberg Interactive
Brokers studio. We've spoken to you a couple times in
recent months. I want to go back to our conversation
with you.
Speaker 7 (08:52):
Back in July.
Speaker 3 (08:54):
I remember it because You were kind of the first
person to warn me of weakness in the lane labor market.
You talked about the gig workers out there and the
people who were driving for Uber for example, or Lyft
or doing other gig work, and the way that a
lot of them, in your view, were overqualified because they
couldn't find work and what they were trained for, what
they went to college for. Is the labor market worse
(09:16):
now than it was back in July?
Speaker 8 (09:18):
Judging by my lift in Uber drivers, I would have
to say yes. The demographics has expanded, and you've especially
got a lot of kind of college graduates right now
who are looking for gig work because they can't secure
work in the broader economy as they thought they would
be able to, you know, walk across the stage proud
with their diploma, and boom, there's no work. So I mean,
(09:40):
right now, the unemployment rate among college graduates is the
high suspense since.
Speaker 6 (09:44):
Nineteen eighty eight.
Speaker 8 (09:45):
Nineteen eighty eight, it was a supply issue because that
was a peak of baby boomers entering the workforce. Now
it's the flip side of it. It's a demand issue,
and these kids are rightfully, they're very anxious.
Speaker 2 (09:57):
So when You've got Amazon on letting go fourteen thousand jobs,
a lot of it corporate, right, We've got UPS and
that's part of its cost cutting.
Speaker 3 (10:06):
Matt Zetie Deutsche Bank says, pay no attention to these
headline figures because they're small in comparison to the churn
that we see each and every month.
Speaker 6 (10:13):
And that five million jobs are still being created. So
what is the net.
Speaker 3 (10:18):
New look skeptical.
Speaker 6 (10:19):
Yeah, well, I mean so.
Speaker 8 (10:22):
We collaborate sometimes with Macro Edge and they're they're an
alternative to challenge your grand Christmas.
Speaker 6 (10:27):
Yeah.
Speaker 8 (10:28):
And with the UPS announcement this morning, and of course
that was so much higher than what was expected, right,
it was thirty percent of what they had previously announced.
So we learned from so many companies after the fact
about attrition or layoffs rather than layoffs being announced in
any event. At one hundred and thirty one thousand announced
layoffs for the month of October thus far, and being
(10:50):
in the heat of earning season, when so many companies
are like, I'm going to get the stock to pop,
I'm going to lay some people off. We're seeing the
third highest level of announced layoffs in three excuse me,
in two years so that, to me at least, is
alarming when you do what Chair Powell suggests you do,
if you add the lack of hiring to the firing,
(11:11):
because a few years ago there wasn't.
Speaker 6 (11:13):
All of this lack of hiring.
Speaker 8 (11:15):
Now it's very much a pervasive phenomenon in addition to
the layoffs coming through.
Speaker 2 (11:21):
Yeah, and then there was the hoarding that was still
going on after the pandemic.
Speaker 6 (11:25):
People were freaked out.
Speaker 2 (11:26):
They couldn't find workers, right, absolute pandemic post pandemic, and
so they're like, let me hold on to it.
Speaker 6 (11:31):
I mean, UPS is ap eight percent, and they're you know,
UPS is flawed.
Speaker 8 (11:34):
I mean, but I mean, but look at the one
year chart.
Speaker 6 (11:36):
Yeah, it's a good point of UPS. And that required
forty eight thousand layoffs.
Speaker 8 (11:41):
In addition to the thirty four thousand they announced there
was another fourteen thousand in their corporate office. Amazon today
said that's fourteen, but that's fourteen of thirty and we
know that.
Speaker 2 (11:52):
Stocks down thirty percent in the past year. WEPS, Yeah, UPS,
Oh yes, absolutely well, So then got quite the all right,
one word, how do you describe the economy?
Speaker 6 (12:02):
One word weak? So does the FED obviously needs to cut.
Speaker 8 (12:07):
In your view, I don't think the FED has any Yes,
the FED absolutely has to cut. I think that they
begin to discuss given the magnitude of the layoffs that
are rolling in and the lack of hiring that Chair
Powell said could in and of itself increase the unemployment rate.
I think that right now what they're discussing is twenty
five or fifty in December.
Speaker 6 (12:27):
So can I just throw at you?
Speaker 2 (12:30):
Like Tim and I have had lots of conversations about earnings, right,
Earnings growth is there, Revenue growth is there.
Speaker 6 (12:36):
So companies are doing well.
Speaker 2 (12:41):
That's the analysis that has come our way. And it's
not just big tech, although we'll see what big tech
has right this week because we get a big read,
but it's been broader based.
Speaker 6 (12:51):
I would say that Earth you not agree with that?
Speaker 8 (12:53):
No, no, no, I would say that earnings are doing
better than revenues. And so in one survey after another,
whether it's a CEO survey, a CFO survey, a regional FED.
Speaker 6 (13:02):
Surveys, revenue growth, it's I think coming in better. That's again,
there's revenue growth. But remember these are all.
Speaker 8 (13:08):
Based on lowered bars that are easier to get over.
I mean, if it's if you want to look at
the entire revenue picture, I think it's important to bring
in the bcy go function and look at the bankruptcies
that are coming in on top of this. And that
is you know, S and P has been tracking monthly
bankruptcies uh forever and last month September came into the
(13:32):
highest number in the post pandemic era of bankruptcies. And
we're seeing what I mean, bcygos hoppin'. Whoever whatever's in
charge of that is busy.
Speaker 3 (13:40):
So is is you know, we talk a lot about
the K shaped economy when it comes to consumers, but
is it is it? Is it a K shaped market
where you know the and we know this about the
S and P five hundred companies that they are, you know,
the mag seven have just carried this index for years.
But are you seriously concerned about pretty much the other
(14:01):
company all the other companies?
Speaker 8 (14:03):
Well, I mean, if you're asking me if I'm seriously
concerned about the other ninety percent of Americans who are
outside of the top ten percent who represent fifty percent
of spending.
Speaker 6 (14:10):
Yes, yes I am.
Speaker 8 (14:11):
And I think we're seeing that in freight.
Speaker 3 (14:14):
But we're seeing it in freight, and we're seeing it
in some companies, but we're not seeing it. I mean,
we're at record a new record for.
Speaker 6 (14:22):
Not seeing it in asset prices. Why are we not
buying it an assets prices?
Speaker 8 (14:25):
Well, there's something very automated about this market, and this
market will continue to feed on itself because that is
that is the structure of passive investing.
Speaker 9 (14:33):
Structure.
Speaker 8 (14:34):
Passive investing forces stock prices up because you have to
buy the biggest market cap look at Nvidia today. But
that's that is a function not of necessarily enthusiasm about
in Nvidia the stock on a fundamental level, the way
we used to think of portfolio management one oh one.
But it is a function of passive investing flows.
Speaker 6 (14:54):
So what do you tell investors? Do you just tell
them get ready?
Speaker 8 (15:01):
According to Bloomberg, the cost of hedging against a decline
in the markets is very expensive right now. So we
know that, we know that portfolio managers are very nervous
about what's happening.
Speaker 6 (15:10):
But no, I actually watch.
Speaker 8 (15:11):
The FED the most closely because you've got all of
this money, trillions and trillions, and I think twelve thirteen
trillion dollars in cash cast equivalents, money market friends, et cetera.
That's you know, that's predominantly owned by people who are
seventy and older.
Speaker 6 (15:25):
So as long as the.
Speaker 8 (15:25):
FED does not cut too much, I think we're okay.
But if the FED starts to cut into what retirees
consider to be the corpus of their monthly income, because
they have really enjoyed the FED being higher for longer,
they've collected every single fifty basis point cut by the FED,
you take seventy one billion dollars of cash out of
the hands of retirees. We don't want for people who
(15:47):
own forty percent of the stock market, ie the seventy
year olds to even think about selling, because that unleash
is passive.
Speaker 6 (15:53):
Okay, got to leave it there. Hey, thanks, good to
see you.
Speaker 2 (15:56):
Danielle Di Martino Booth CEO, Chief strategist at the Research
and Analytics for QI Research.
Speaker 3 (16:02):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (16:10):
Let's not forget we have a big storm. We know
Hurricane Melissa has made landfall in Jamaica. Strong, strong wind
and so it's something we're talking about a Category five storm.
Speaker 6 (16:21):
This is a very serious storm.
Speaker 3 (16:23):
Yeah, Melissa Crosston to Jamaica, with sustained winds of one
hundred and eighty five miles per hour, making it a
rare Category five hurricane at landfall. It's struck near your
New Hope on Jamaica's southern coast, is about twenty five
miles south of Montego Bay. The US National Hurricane Center
set in a statement at one pm in New York Times.
Since then, it's strongest winds have weakened to one hundred
(16:44):
and sixty miles per hour, still at the top of
the five step scale. We got a great voice with us.
I want to bring in Eric Roston. He's Bloomberg News
Climbate reporter. He joins us from New Jersey. Eric, it's
too early to be talking about the actual cleanup effort.
We don't even know that devastation that this current storm
will rot and also what happens later on in hurricane season.
(17:06):
But you've talked a lot, and you've written and reported
a lot about the big business of disaster recovery. Let's
talk numbers here, because you looked at those numbers in Asheville,
North Carolina, for example. Just how much does it cost
to clean up after one of these natural disasters.
Speaker 5 (17:26):
Just to take readers back a second to a year ago.
In at the end of September twenty twenty four, Hurricane Helene.
Technically it was a tropical storm by then, but didn't matter.
Instead of going out to the Atlantic, took a left
of the Appalachians and brought us just about the worst
Appalachian hurricane you've ever seen. That's not a phrase we're
(17:49):
used to hearing before. In December, after there was an accounting,
North Carolina came out with a report saying that it
caused sixty billion dollars in damage, concentrated in the western
part of the state, which includes Ashville. Wow, the cleanup
(18:15):
effort has largely been completed. When it comes to the
immediate aftermath of removing debris, there was three and a
half million cubic yards of debris removed from Buncombe County alone.
That's the county where Asheville, the city of Ashville is located.
(18:39):
And what you miss from the numbers is, and I
spent time down there in May, is just the incredible
vitality of this community and the incredible pride of western
North Carolinians. Of course, other states were hit as well,
in trying to claw back the worst hurricane that part
(19:02):
of the state I'd ever seen.
Speaker 2 (19:03):
You know, I got to say, Eric, that doesn't surprise
me my husband as a family member who is living
in that area, and just first of all the neighborhoods
coming out to help one another with generators and so
on and so forth. But then you know, everybody kind
of had to leave because there was no infrastructure left
really you know, to be there day by day. But
as you say, it's impressive, like the comeback or what
(19:25):
people want to do to bring everything back.
Speaker 6 (19:28):
It's interesting in a day.
Speaker 2 (19:29):
Where we're talking a lot about the US economy, we're
waiting for a FED decision, we have a government shutdown,
we don't get a lot of government data. We're trying
to figure out what is the economy going forward, what
will be the strains on the economy. Maybe AI will
mean less job creation here. Unfortunately, these extreme weather disasters,
(19:50):
you know, communities do often want to build back, right,
and that creates It comes at a cost, but it
also creates economic activity.
Speaker 5 (20:01):
It does. There's an economists always for decades have been
fighting about the relationship between disasters and growth, with different
high ranking folks coming out on either side. What's interesting.
So I went to Asheville in May, which was eight
(20:23):
months after the storm. There were shoots of renaissance in
business districts coming back. And the story that we ran
last week is a profile of this very quiet, but
very very large segment of the US economy that is
(20:45):
increasingly being called on to rebuild after disasters and to
help places prepare for the next one. And another leg
of this conversation for the last generation really has been
governed and spending, Whereas until maybe till twenty sixteen or seventeen,
(21:06):
the US government was picking up the bill for maybe
a third of recovery costs in disaster stricken areas. That
number has been falling dramatically since then. It's probably down
under two percent. And so there's a lot of questioning
now and a lot of concern about where is the
(21:29):
money going to come from. If the government is stepping
back to pay for the services that we need before, during,
and after disasters, well, there's all the disasters are going
to keep on coming.
Speaker 3 (21:44):
There's also the question eric of how this changes the
economic landscape in these areas from a housing perspective. I mean,
we've had reports coming from places such as Malibu that
insurance costs have become so burdensome that you see homes
for sale for a tiny fraction of what they would
(22:04):
cost if they were ensurable. One of our guests a
few months ago just shocked me by noting that you
could get like an actual house in Malibu for like
just over one million dollars, which is a shockingly small number.
We're seeing this effect the real estate market in Florida
as well. Is the free market solving this a little bit?
Speaker 5 (22:29):
We're the free market like the whole system. If you
talk to economists who look at systemic risks, we're a
little bit protected from these disasters just by the nature
of how they hit like big don't fortunately or they
fortunately haven't yet like hit everywhere at once, And so
(22:51):
the places that are undergoing this kind of level of
suffering that you know, I can only imagine what's happening
in Jamaica right now. There's got to be something that
hits everywhere at once right for the systemic focused economists
to really raise alarm bells, and they've started to exactly
(23:16):
because of the dynamic you described, which is we have
a system of federally backed mortgages that hinges on potential
homeowners being able to get insurance policies at a time
when disasters are becoming more intense, more frequent, and more expensive.
So the systemic concern to the extent there is one,
(23:38):
and this has been mentioned at very high levels. The
head of the FED earlier this year expressed some concern
about it in you know, in the in the decade
or so ahead, right, that is something to keep an
eye on.
Speaker 6 (23:54):
I think what's fascinating too.
Speaker 2 (23:55):
There's a lot in this story, but you know, you
also cite John Stevenson, who's a senior analyst at our
Bloomberg Intelligence dem of created an index, the Prepare and
Repair Index, and it's about one hundred large public companies
that will be evolved in these extreme weather situations cleaning up.
Speaker 6 (24:11):
It reminds me of one of my first jobs in broadcast.
Speaker 2 (24:15):
Business journalism, and it was a mutual fun show and
when there was an earthquake, we would put on fund
managers or CEOs of cement companies because it was just
a logical investment plate feels a little cold, but it
was kind of the reality of our world. Incredible story,
highly recommend folks check it out on the Bloomberg at
Bloomberg dot com.
Speaker 6 (24:34):
Eric, thanks so much.
Speaker 2 (24:36):
Eric Roston, Bloomberg News Climate Reporter, Joining us out there
in New Jersey.
Speaker 3 (24:41):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (24:49):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five.
Speaker 6 (24:55):
Yes.
Speaker 1 (24:55):
During that, listen on Applecarplay and Android Otto with the
Bloomberg Business app Watch us live on YouTube.
Speaker 3 (25:02):
We got to talk about everything, or at least I'm
not going to make it everything because that would be exhaustive.
That would just be impossible. But we got to talk
about a lot when it comes to everything happening with
nuclear energy. Shares a Canadian uranium producer, Chemico, rose as
much as twenty seven percent to a record high today.
This after the US government signed a packed with Westinghouse Electric,
(25:23):
chemic COO, and Brookfield that will see at least eighty
billion dollars of new nuclear reactors constructed in the US
to accelerate nuclear power in AI deployment and breaking. Late yesterday,
next Air Energy planning to restart a nuclear power plan
in Iowa, primarily to supply Google data centers. We got
Will Wade with us. He's Bloomberg News energy reporter. He
joins us here in the Bloomberg Interactive Brokers studio. Did
(25:44):
the US make a mistake Will in shutting down nuclear
reactors over the last few years.
Speaker 9 (25:50):
Oh, that's a tough question. When they made those decisions
to shut down reactors, and I used to keep a
spreadsheet on my desk. I call it the dead Nukes
file of the dozen or so reactors that were shut
down in the past a little more in a decade.
It was the right decision. Then they were expensive to operate.
Nobody wanted to pay that.
Speaker 7 (26:10):
Much for power. But the world has really changed around us.
Speaker 3 (26:14):
And I think at Indian Point, close to New York City,
that one was didn't it outlive It's like life cycle.
It was sort of at the end of its life.
Speaker 7 (26:22):
Oh no, it was closed ahead of time.
Speaker 3 (26:24):
It was closed ahead of time.
Speaker 9 (26:25):
Yeah, that was a big political campaign. There were people
that were really worried about having a nuclear power plant
so close to the biggest city in America. I mean,
that's a legitimate concern. But we closed that plant and
immediately people started saying, wait, New York State carbon emissions
are going to go up this year because we replaced
all the nuclear with natural gas, like who would have thought.
Speaker 2 (26:45):
So it does feel like we mentioned the US signing
an eighty billion dollar pack to boost nuclear power in
that AI push, Google buying power from next era nuclear
power plant being revived. So the spend is on, the
deals are on. Is the bild on though, to really
build out maybe the nuclear capacity that's needed.
Speaker 9 (27:04):
Oh, building nuclear No, nobody's doing that.
Speaker 3 (27:08):
But the money's there, the commitments are there, the mothballing
is being undone.
Speaker 9 (27:13):
Okay, So here's what we're seeing. There is an enormous
amount of interest in nuclear energy right now. I've been
seeing it for eighteen twenty four months. This is because
electricity demand is going to go through the roof. That's
largely for data centers and AI. It's not just that.
It's for a lot of things, but that's the big
part of it. We need new electricity, we need a
(27:34):
lot of it. We did not see this coming. We
were not building new nuclear plants. At the same time,
we would love our electricity to be clean. So that
really makes nuclear the best option because it's available around
the clock.
Speaker 7 (27:48):
Unlike wind and solar right.
Speaker 3 (27:50):
How quickly can nuclear power plants be built outside of
the United States? In China, Korea, Japan.
Speaker 7 (27:56):
Oh, China's really good at building them. They've been.
Speaker 9 (27:59):
They've been doing a NonStop they got I think they're
soon going to surpass the US in terms of the
number of reactors they've got going. So yeah, they're faster
at it than us. The Koreas are really good at it.
I was in Korea this year. Their nuclear industries they've
been going NonStop for fifty something years. Our industry pretty
much ground to a holt around nineteen seventy nine with
(28:23):
through My Island, so we spent years doing nothing and
we never really recovered from that.
Speaker 7 (28:30):
We're working on it.
Speaker 2 (28:31):
Well, we're going to keep Will Wade with us Bloomer
News Energy Report. Someone else who's working on it too
to build out nuclear capacity is James Walker.
Speaker 6 (28:39):
He's CEO of Nano Nuclear Energy.
Speaker 2 (28:41):
It's a two point three billion dollar market cap nuclear
energy company that is working on SMR small modular reactors.
Speaker 6 (28:48):
Shares are up.
Speaker 2 (28:49):
Nearly ninety percent so far this year. Big chunk, though,
of the float is short. James joining us from Vancouver.
James come on in on this conversation. I mean, we'll
list how long before we actually you actually.
Speaker 6 (29:04):
Get an SMR built and it's up and running.
Speaker 10 (29:09):
It's a good question because it gets asked, as you
can imagine, more than any other question. And there's kind
of two answers to it too, because to get a
reactor built and constructed and licensed is one question, But
the other question is how long is it going to
take for the fuel supply chain to be built back
adequately in the country to be able to mass manufacture
the fuel to allow the mass manufacture of reactors. So
(29:31):
on one side, our company is already going ahead with
the construction project two construction projects to build reactor systems,
and we're talking to data centers and all of those
sort of groups as well. But on the other side,
like you know, we even our company, we need to
get involved in that fuel supply chain and build it
back because, as well was saying just before this sort
of after Three Mile Island, the investment into the country
(29:54):
sort of broke down a lot. We need that investment
to go back into rebuilding that fuel supply chain so
companies like ours can mass manufacture the reactor systems.
Speaker 3 (30:04):
But James on Carol's question about a timeline here, what
would be a realistic timeline for completion of your first
modular nuclear reactor.
Speaker 10 (30:12):
So we're doing a drill program right now, as it's
already started on the site. So we'll have the geotechnical
data to submit for a construction permit that'll go in
early next year, and our see will turn that around
in twenty twenty six. So construction twenty twenty seven, twenty
twenty eight, twenty twenty nine, and then fully licensed reactor
operating commercial license twenty thirty is very reasonable timeline. So
(30:36):
I would say early twenty thirties. Then you're going to
see the mass rollout of reactor systems, so dozens on
an annual basis.
Speaker 9 (30:43):
Yeah, that timeline fits with what I hear from a
lot of companies early twenty thirties for a significant wave
of new power plants. But I guess the issue is
that we have all these people who want power yesterday.
Speaker 7 (30:56):
How do we meet their needs?
Speaker 10 (30:59):
Look, there's a it's actually a very reasonable question. Like
as a company, we you know, we want to be
conservative and truthful with everybody because you know, we've got
to earn long term trust here. There are good interim solutions,
Like I know, companies have been exploring things like gas,
and to be honest, if they can get hold of
that in the interim, great, But even things like gas contracts,
(31:20):
they're all tied up for seven eight years. Turbines around
gas are tied up for seven eight years too, So
there's no easy solution here. Even bringing in as you mentioned,
like wind and solar or anything like that, these are
it's aminten technologies which require huge battery storage technology to
run alongside them. A lot of the time it's just
not feasible. They're also very locationally dependent, so you be
(31:41):
limited on where you can even deploy these things. I mean, unfortunately,
there's no there's no great solution, which is why when
the show started they were talking about opening up these
old power stations and recommissioning old nuclear power plants because
those are the some of them are the interim solutions.
It won't be enough power, but it'll be some.
Speaker 9 (32:01):
Yeah, those restart projects, that's low hanging fruit. Do you
think there are other plants that we can restart or
is it just the ones we've already seen? Are we
exhausted that list?
Speaker 10 (32:12):
So it's a good question, Like there's a number have
been shut down, and like it's it's arguable that you
mentioned Indian Point as an example. I know it wasn't
politically popular and maybe there was some of that related
to the decisions around that kind of plant that could
be an act, that could be a route, even the
old three Mile Island plant. Since we're bringing that up
(32:34):
as I think it's see the Microsoft or Constellation, we're
involved in recommissioning that and trying to get that back
up and running.
Speaker 9 (32:42):
Yeah, Constellation says that'll be ready by twenty twenty seven.
Speaker 10 (32:45):
There we go. So, like you know, I think, as
you say, like there's going to be big projected powering
demand increases in the country, they might not get solved
until we get to those twenty thirties, and that the
proper there is that that could mean a stagnation in
the tech industry. They'll find every means they can to
get power. But like that big online colocation green technology
(33:10):
that provides baseload power that can only really come from
nuclear and a lot of these reactor systems. Despite any
really outlandish claims about deploying neotom it's it's going to
be early twenty thirties, twenty thirty and onwards.
Speaker 2 (33:22):
All right, so the demand story is compelling that the
obstacles are just as a parent. Those aren't my words,
those are Well Wade words who reports on this sector,
as you well know. I mean, help me out here though,
because I'm just wondering.
Speaker 6 (33:37):
You know, if I'm looking at.
Speaker 2 (33:39):
A stock that is up eighty percent year to date,
you know, you guys don't have any revenues, right, I mean,
like our investors, Yeah, this is what we do.
Speaker 6 (33:51):
Like are they probably getting ahead of themselves?
Speaker 2 (33:53):
Thirty percent of your float is short, so investors are
just kind of waiting for something maybe negative to hit
because negative the sentiment. I mean realistically, you're talking at
least five years right before you're showing significant revenue or
earnings or anything along those lines.
Speaker 10 (34:12):
No, like our early US and our company will come
online a long time before that. I mean, because there's
this massive build back. The opportunity at the moment in
the nuclear space is huge. It can come through the
fuel supply chain or transportation or isotopes. Like the nice
part is that we're part of this build back effort.
So and look, the stock market is always about an
investment in the future. I mean, the nice part is
(34:33):
that the demand is there in a way that's unprecedented.
Like buying now really is an investment in the future,
and a future that's inevitable. The tech industry is not
going to just give up and pack up and go away.
Speaker 6 (34:44):
But what if what if.
Speaker 2 (34:45):
The what if the AI spend and build that is
I know, everybody comes out and says no bubble or
a lot of people do what if there is, though,
an overspend?
Speaker 6 (34:53):
Where does that catch you guys? Potentially?
Speaker 10 (34:56):
I think the bubble has only been discussed around AI.
But like in terms of data centers, those are things
that cannot be bubbles. That is, power that's needed for
our whole tech industry, like a data center cannot be
a bubble. Like if you need increased power for computing power,
it has to come from somewhere AI. Whether that's going
(35:16):
to bear out the fruits of what's been promised that
remains to be seen. But currently it's just expanding. But
it's it's it's kind of irrelevant to the long term
power requirements because the electrification of the country, the reindustrialization
of the country, that's all going ahead. And you mentioned
stocks like cars and the short interest.
Speaker 6 (35:34):
Great.
Speaker 10 (35:35):
If people want to short us, that's better because we've
We've gone higher and higher as a stock just because
every time the shorts have been squeezed. The more shorts,
the better for us because they always.
Speaker 3 (35:45):
Only only ten seconds left. But would you say that
you are most further along than any other company, the
most along than any other company in terms of microreactors?
Speaker 5 (35:55):
Yees.
Speaker 10 (35:56):
I believe we'll have the first US constry tructed full
scale commercial commercially license my corrector in the.
Speaker 2 (36:03):
Country where you can put an SMR in my backyard
because my monthly electrical bills are crazy.
Speaker 6 (36:09):
You're shutting off.
Speaker 7 (36:10):
Lights, Carol, you're glowing today.
Speaker 6 (36:12):
Yeah, I'm glowing.
Speaker 2 (36:13):
Will Wade of Bloomberg News and James Walker, CEO of
Nano Nuclear Energy, Guys, thank you so much.
Speaker 6 (36:18):
Great discussion.
Speaker 1 (36:19):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
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(36:41):
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
As we've said, Tim, there's just so much coming at
us on this Tuesday, and E love it is because
of end Video, but there's just so much going on
when it comes to AI related news today.
Speaker 3 (00:41):
Yeah, Opening I continue so to forge relationships, as does PayPal.
The two announce to tie up whereby PayPal's digital wallet
will be embedded into Chat GPT. It'll send PayPal shares
up the most in more than six months, or it
did send PayPal shares up the most in more than
six months. And then the Microsoft news that we've talked
about quite a bit, Carol, longtime backer, Microsoft a twenty
seven percent ownership stake in Open Ai. This part of
(01:03):
a restructuring plan that took nearly a year to negotiate.
It rooms a major uncertainty for both companies. And clears
the path for chat GPT and the maker of chat
GPT to become a for profit business.
Speaker 2 (01:13):
It's a lot, so let's get into it and really
just how open ai continues to be at the center
of so much. But we've so many questions about why
Microsoft is doing this at this time. Limberg Intelligence senior
technology analyst an rog Rana joining us from the Bloomberg
News bureau in Chicago, anurag why is Microsoft doing this?
Did the company need to do this kind of cement
(01:33):
that relationship financially and otherwise with open Ai.
Speaker 4 (01:39):
Yeah, I mean they had to do it because Open
the Eye has been raising capital with the idea that
they will go from a not for profit to a
for profit company eventually going public someday. So I mean
this had to be done. The big contentious for there
are so many things that they were arguing against, you know,
revenue share, technology share, all sorts of different things. Microsoft
had controllable which cloud providers that they can use, et cetera.
(02:02):
So this new agreement kind of cements a lot of
those things, removes a big overhang that's on I would
say more on Microsoft than on open Ai, frankly, because
Microsoft is using open eies technology in their products, in
the copilot products that are out there. You know, that's
I think for us that's the most important thing. Frankly,
it's not so much the other financial details.
Speaker 3 (02:24):
Since Microsoft will have this twenty seven percent ownership stake
in open ai, can we look at Microsoft share price
on a daily basis as some sort of public proxy
for open ai and how investors are valuing open Ai
or am I trying to do too much math here?
Speaker 5 (02:42):
No?
Speaker 4 (02:43):
I think that's that's a bit too extrapolation over there.
The thing that you want to focus on is or
how many US will Microsoft has have access to open
EI's leading models. So when you look at frontier models,
you have open Ai, you know, perhaps you know most
in the lead. Then you have Entropic Gemini. Those are
the three big ones that everybody talks about down the road.
(03:04):
Microsoft needs to make sure that the copilot products that
they are selling out to the public, both on the
M three sixty five and then the GETHLP co pilot
which is used for coding, they really have an alternative
to open EI. One answer could be they have their
own models, but they're not there yet. So this contract,
you know, extend that to twenty thirty two, which is,
(03:24):
you know, you can say that they're giving themselves seven
years to figure this thing out.
Speaker 6 (03:29):
Help me out.
Speaker 2 (03:30):
Though, It's just like open ai and Microsoft. I'm looking
at the Bloomberg open ai and PayPal, open ai and
SoftBank open ai, you know, pick your company. They are
just I feel like lining up deals or agreements or
relationships with everybody and anybody. I mean Microsoft, I mean,
(03:51):
are they going to have to share the wealth if
you will? And does it become a little bit messy
because I'm just assuming that there will be companies that
maybe in some ways are also competing with Microsoft that
have deals with open ai or is that not right?
Speaker 6 (04:08):
I don't know.
Speaker 4 (04:09):
See it's a very common thing in technology. Almost everybody
who's competing with each other are also working closely with
each other. So that's you know, that's on the side.
But when you look at open ai, that's an area
where you and I use a chat GPT a lot.
But imagine that. Now what you can do is, you know,
let's say they have a partnership with Walmart with PayPal.
Today you are looking at a product and you decide
(04:31):
that you can just buy the product seamlessly from that.
They have a similar agreement with Stripe and Shopify. So
what OPENINGI is basically saying, let us be the front
end for a lot of what you're doing. Let's say
on the consumer side, so example that I gave you
is more for a retail purchase. But on the other hand,
they also have a deal with Salesforce, so for example,
(04:52):
if you are in chat GPT and you want to
look at your Salesforce application, you can do that as well.
So open AI wants to make sure that they are
the front end for a lot of discussions that are
going to happen, and that's where I think a lot
of the fighting is going to be down the road
on it rog.
Speaker 6 (05:07):
I'm, i'm.
Speaker 3 (05:08):
We had this conversation with you on Vanka Vanak yesterday
and he talked a lot about AI and the AI trade,
but he also mentioned some stats about when when web
traffic is going from chat GPT two websites, and it
got me thinking about how people are increasingly replacing or
supplementing what they do on the internet using chat GPT.
(05:29):
The news today too that that this potential PayPal tie
up where you can pay for stuff within chat GPT
also got me thinking, does Golphabet have to be scared
about its core business here?
Speaker 4 (05:43):
But you know, but that's been the case for so
many years. I mean, there have been people have been
talking about this the first day chat GPT was launched, that, oh,
what's going to kill Google search business? I mean, so far,
I haven't seen those numbers that are out there that
are just having a very large financial impact. I'm sure
there is some share loss and searchers, but I haven't
seen it. So we'll see. You know, how the shapes
(06:04):
uf Google has or Alphabet has a lot of interesting assets.
I mean, they have semi conductors that are very important,
They have a cloud platform, they have a large frontier model.
So I think they have all the pieces out there.
The question is, you know, whether the market is big
enough for a lot of them to exist core coexist
(06:25):
at the same time.
Speaker 2 (06:26):
Hey, Anna Rogh, you know, over the summer, Bloomberg put
out how open ai said, Elon Musk identified Mark Zuckerberg
is one of the people with whom he had communicated
about potentially financing a deal to purchase open ai. Does
this Microsoft deal put an end to any other big
player coming in?
Speaker 6 (06:42):
I mean this is theirs.
Speaker 4 (06:45):
I think so. But again, you know, legal grammifications are
such that you don't know how some of the judges
will move towards. But this is you know, this is
basically open AI saying we have figured out a way
to how to go you know, you could say, become nonprofit,
become for profit, and eventually some day go public.
Speaker 6 (07:04):
M Yeah, that's going to be interesting, right, I mean,
listen what valuation. Well for open right, but.
Speaker 2 (07:10):
For open AI, right, they can kind of stop the
money grab for now, right because they just got a
massive cash infusion.
Speaker 4 (07:20):
Yeah, but they're also spending at the amount that nobody
has seen. I mean, they have a very large contract
with open Air, with the Oracle and they you know
today with this agreement, they've committed another two hundred and
fifty billion dollars of computing capacity with Microsoft. So it's
you know, their expense is far exceeding the revenue right now.
They are doing these you know, you could say investments
(07:41):
so that down the road they can recognize the value
of some of these investments. So that's I think where
the where the mismatches for a lot of people, And
so unless there is some equilibrium, I think it's going
to be very tough for them to go public.
Speaker 2 (07:53):
Yeah, the money flows around AI in out is like phenomenal.
An rag YouTube phenomenal. Thank you, Thank you so much.
He is Bloomberg Intelligence Senior technology analyst out there in
our Bloomberg New Chicago bureau.
Speaker 3 (08:05):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (08:13):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (08:27):
It's a FED Tuesday, Carol. It is a FED Tuesday,
which means it's followed by a FED Wednesday.
Speaker 7 (08:33):
That's how it works.
Speaker 6 (08:34):
Two day meetings.
Speaker 3 (08:35):
Let's get too. Let's get into it with Danielle di
Martino bo She's CEO and chief strategist at the research
and analytics firm QI Research. He's also a former advisor
at the Dallas Fed. She's here in our Bloomberg Interactive
Brokers studio. We've spoken to you a couple times in
recent months. I want to go back to our conversation
with you.
Speaker 7 (08:52):
Back in July.
Speaker 3 (08:54):
I remember it because You were kind of the first
person to warn me of weakness in the lane labor market.
You talked about the gig workers out there and the
people who were driving for Uber for example, or Lyft
or doing other gig work, and the way that a
lot of them, in your view, were overqualified because they
couldn't find work and what they were trained for, what
they went to college for. Is the labor market worse
(09:16):
now than it was back in July?
Speaker 8 (09:18):
Judging by my lift in Uber drivers, I would have
to say yes. The demographics has expanded, and you've especially
got a lot of kind of college graduates right now
who are looking for gig work because they can't secure
work in the broader economy as they thought they would
be able to, you know, walk across the stage proud
with their diploma, and boom, there's no work. So I mean,
(09:40):
right now, the unemployment rate among college graduates is the
high suspense since.
Speaker 6 (09:44):
Nineteen eighty eight.
Speaker 8 (09:45):
Nineteen eighty eight, it was a supply issue because that
was a peak of baby boomers entering the workforce. Now
it's the flip side of it. It's a demand issue,
and these kids are rightfully, they're very anxious.
Speaker 2 (09:57):
So when You've got Amazon on letting go fourteen thousand jobs,
a lot of it corporate, right, We've got UPS and
that's part of its cost cutting.
Speaker 3 (10:06):
Matt Zetie Deutsche Bank says, pay no attention to these
headline figures because they're small in comparison to the churn
that we see each and every month.
Speaker 6 (10:13):
And that five million jobs are still being created. So
what is the net.
Speaker 3 (10:18):
New look skeptical.
Speaker 6 (10:19):
Yeah, well, I mean so.
Speaker 8 (10:22):
We collaborate sometimes with Macro Edge and they're they're an
alternative to challenge your grand Christmas.
Speaker 6 (10:27):
Yeah.
Speaker 8 (10:28):
And with the UPS announcement this morning, and of course
that was so much higher than what was expected, right,
it was thirty percent of what they had previously announced.
So we learned from so many companies after the fact
about attrition or layoffs rather than layoffs being announced in
any event. At one hundred and thirty one thousand announced
layoffs for the month of October thus far, and being
(10:50):
in the heat of earning season, when so many companies
are like, I'm going to get the stock to pop,
I'm going to lay some people off. We're seeing the
third highest level of announced layoffs in three excuse me,
in two years so that, to me at least, is
alarming when you do what Chair Powell suggests you do,
if you add the lack of hiring to the firing,
(11:11):
because a few years ago there wasn't.
Speaker 6 (11:13):
All of this lack of hiring.
Speaker 8 (11:15):
Now it's very much a pervasive phenomenon in addition to
the layoffs coming through.
Speaker 2 (11:21):
Yeah, and then there was the hoarding that was still
going on after the pandemic.
Speaker 6 (11:25):
People were freaked out.
Speaker 2 (11:26):
They couldn't find workers, right, absolute pandemic post pandemic, and
so they're like, let me hold on to it.
Speaker 6 (11:31):
I mean, UPS is ap eight percent, and they're you know,
UPS is flawed.
Speaker 8 (11:34):
I mean, but I mean, but look at the one
year chart.
Speaker 6 (11:36):
Yeah, it's a good point of UPS. And that required
forty eight thousand layoffs.
Speaker 8 (11:41):
In addition to the thirty four thousand they announced there
was another fourteen thousand in their corporate office. Amazon today
said that's fourteen, but that's fourteen of thirty and we
know that.
Speaker 2 (11:52):
Stocks down thirty percent in the past year. WEPS, Yeah, UPS,
Oh yes, absolutely well, So then got quite the all right,
one word, how do you describe the economy?
Speaker 6 (12:02):
One word weak? So does the FED obviously needs to cut.
Speaker 8 (12:07):
In your view, I don't think the FED has any Yes,
the FED absolutely has to cut. I think that they
begin to discuss given the magnitude of the layoffs that
are rolling in and the lack of hiring that Chair
Powell said could in and of itself increase the unemployment rate.
I think that right now what they're discussing is twenty
five or fifty in December.
Speaker 6 (12:27):
So can I just throw at you?
Speaker 2 (12:30):
Like Tim and I have had lots of conversations about earnings, right,
Earnings growth is there, Revenue growth is there.
Speaker 6 (12:36):
So companies are doing well.
Speaker 2 (12:41):
That's the analysis that has come our way. And it's
not just big tech, although we'll see what big tech
has right this week because we get a big read,
but it's been broader based.
Speaker 6 (12:51):
I would say that Earth you not agree with that?
Speaker 8 (12:53):
No, no, no, I would say that earnings are doing
better than revenues. And so in one survey after another,
whether it's a CEO survey, a CFO survey, a regional FED.
Speaker 6 (13:02):
Surveys, revenue growth, it's I think coming in better. That's again,
there's revenue growth. But remember these are all.
Speaker 8 (13:08):
Based on lowered bars that are easier to get over.
I mean, if it's if you want to look at
the entire revenue picture, I think it's important to bring
in the bcy go function and look at the bankruptcies
that are coming in on top of this. And that
is you know, S and P has been tracking monthly
bankruptcies uh forever and last month September came into the
(13:32):
highest number in the post pandemic era of bankruptcies. And
we're seeing what I mean, bcygos hoppin'. Whoever whatever's in
charge of that is busy.
Speaker 3 (13:40):
So is is you know, we talk a lot about
the K shaped economy when it comes to consumers, but
is it is it? Is it a K shaped market
where you know the and we know this about the
S and P five hundred companies that they are, you know,
the mag seven have just carried this index for years.
But are you seriously concerned about pretty much the other
(14:01):
company all the other companies?
Speaker 8 (14:03):
Well, I mean, if you're asking me if I'm seriously
concerned about the other ninety percent of Americans who are
outside of the top ten percent who represent fifty percent
of spending.
Speaker 6 (14:10):
Yes, yes I am.
Speaker 8 (14:11):
And I think we're seeing that in freight.
Speaker 3 (14:14):
But we're seeing it in freight, and we're seeing it
in some companies, but we're not seeing it. I mean,
we're at record a new record for.
Speaker 6 (14:22):
Not seeing it in asset prices. Why are we not
buying it an assets prices?
Speaker 8 (14:25):
Well, there's something very automated about this market, and this
market will continue to feed on itself because that is
that is the structure of passive investing.
Speaker 9 (14:33):
Structure.
Speaker 8 (14:34):
Passive investing forces stock prices up because you have to
buy the biggest market cap look at Nvidia today. But
that's that is a function not of necessarily enthusiasm about
in Nvidia the stock on a fundamental level, the way
we used to think of portfolio management one oh one.
But it is a function of passive investing flows.
Speaker 6 (14:54):
So what do you tell investors? Do you just tell
them get ready?
Speaker 8 (15:01):
According to Bloomberg, the cost of hedging against a decline
in the markets is very expensive right now. So we
know that, we know that portfolio managers are very nervous
about what's happening.
Speaker 6 (15:10):
But no, I actually watch.
Speaker 8 (15:11):
The FED the most closely because you've got all of
this money, trillions and trillions, and I think twelve thirteen
trillion dollars in cash cast equivalents, money market friends, et cetera.
That's you know, that's predominantly owned by people who are
seventy and older.
Speaker 6 (15:25):
So as long as the.
Speaker 8 (15:25):
FED does not cut too much, I think we're okay.
But if the FED starts to cut into what retirees
consider to be the corpus of their monthly income, because
they have really enjoyed the FED being higher for longer,
they've collected every single fifty basis point cut by the FED,
you take seventy one billion dollars of cash out of
the hands of retirees. We don't want for people who
(15:47):
own forty percent of the stock market, ie the seventy
year olds to even think about selling, because that unleash
is passive.
Speaker 6 (15:53):
Okay, got to leave it there. Hey, thanks, good to
see you.
Speaker 2 (15:56):
Danielle Di Martino Booth CEO, Chief strategist at the Research
and Analytics for QI Research.
Speaker 3 (16:02):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 2 (16:10):
Let's not forget we have a big storm. We know
Hurricane Melissa has made landfall in Jamaica. Strong, strong wind
and so it's something we're talking about a Category five storm.
Speaker 6 (16:21):
This is a very serious storm.
Speaker 3 (16:23):
Yeah, Melissa Crosston to Jamaica, with sustained winds of one
hundred and eighty five miles per hour, making it a
rare Category five hurricane at landfall. It's struck near your
New Hope on Jamaica's southern coast, is about twenty five
miles south of Montego Bay. The US National Hurricane Center
set in a statement at one pm in New York Times.
Since then, it's strongest winds have weakened to one hundred
(16:44):
and sixty miles per hour, still at the top of
the five step scale. We got a great voice with us.
I want to bring in Eric Roston. He's Bloomberg News
Climbate reporter. He joins us from New Jersey. Eric, it's
too early to be talking about the actual cleanup effort.
We don't even know that devastation that this current storm
will rot and also what happens later on in hurricane season.
(17:06):
But you've talked a lot, and you've written and reported
a lot about the big business of disaster recovery. Let's
talk numbers here, because you looked at those numbers in Asheville,
North Carolina, for example. Just how much does it cost
to clean up after one of these natural disasters.
Speaker 5 (17:26):
Just to take readers back a second to a year ago.
In at the end of September twenty twenty four, Hurricane Helene.
Technically it was a tropical storm by then, but didn't matter.
Instead of going out to the Atlantic, took a left
of the Appalachians and brought us just about the worst
Appalachian hurricane you've ever seen. That's not a phrase we're
(17:49):
used to hearing before. In December, after there was an accounting,
North Carolina came out with a report saying that it
caused sixty billion dollars in damage, concentrated in the western
part of the state, which includes Ashville. Wow, the cleanup
(18:15):
effort has largely been completed. When it comes to the
immediate aftermath of removing debris, there was three and a
half million cubic yards of debris removed from Buncombe County alone.
That's the county where Asheville, the city of Ashville is located.
(18:39):
And what you miss from the numbers is, and I
spent time down there in May, is just the incredible
vitality of this community and the incredible pride of western
North Carolinians. Of course, other states were hit as well,
in trying to claw back the worst hurricane that part
(19:02):
of the state I'd ever seen.
Speaker 2 (19:03):
You know, I got to say, Eric, that doesn't surprise
me my husband as a family member who is living
in that area, and just first of all the neighborhoods
coming out to help one another with generators and so
on and so forth. But then you know, everybody kind
of had to leave because there was no infrastructure left
really you know, to be there day by day. But
as you say, it's impressive, like the comeback or what
(19:25):
people want to do to bring everything back.
Speaker 6 (19:28):
It's interesting in a day.
Speaker 2 (19:29):
Where we're talking a lot about the US economy, we're
waiting for a FED decision, we have a government shutdown,
we don't get a lot of government data. We're trying
to figure out what is the economy going forward, what
will be the strains on the economy. Maybe AI will
mean less job creation here. Unfortunately, these extreme weather disasters,
(19:50):
you know, communities do often want to build back, right,
and that creates It comes at a cost, but it
also creates economic activity.
Speaker 5 (20:01):
It does. There's an economists always for decades have been
fighting about the relationship between disasters and growth, with different
high ranking folks coming out on either side. What's interesting.
So I went to Asheville in May, which was eight
(20:23):
months after the storm. There were shoots of renaissance in
business districts coming back. And the story that we ran
last week is a profile of this very quiet, but
very very large segment of the US economy that is
(20:45):
increasingly being called on to rebuild after disasters and to
help places prepare for the next one. And another leg
of this conversation for the last generation really has been
governed and spending, Whereas until maybe till twenty sixteen or seventeen,
(21:06):
the US government was picking up the bill for maybe
a third of recovery costs in disaster stricken areas. That
number has been falling dramatically since then. It's probably down
under two percent. And so there's a lot of questioning
now and a lot of concern about where is the
(21:29):
money going to come from. If the government is stepping
back to pay for the services that we need before, during,
and after disasters, well, there's all the disasters are going
to keep on coming.
Speaker 3 (21:44):
There's also the question eric of how this changes the
economic landscape in these areas from a housing perspective. I mean,
we've had reports coming from places such as Malibu that
insurance costs have become so burdensome that you see homes
for sale for a tiny fraction of what they would
(22:04):
cost if they were ensurable. One of our guests a
few months ago just shocked me by noting that you
could get like an actual house in Malibu for like
just over one million dollars, which is a shockingly small number.
We're seeing this effect the real estate market in Florida
as well. Is the free market solving this a little bit?
Speaker 5 (22:29):
We're the free market like the whole system. If you
talk to economists who look at systemic risks, we're a
little bit protected from these disasters just by the nature
of how they hit like big don't fortunately or they
fortunately haven't yet like hit everywhere at once, And so
(22:51):
the places that are undergoing this kind of level of
suffering that you know, I can only imagine what's happening
in Jamaica right now. There's got to be something that
hits everywhere at once right for the systemic focused economists
to really raise alarm bells, and they've started to exactly
(23:16):
because of the dynamic you described, which is we have
a system of federally backed mortgages that hinges on potential
homeowners being able to get insurance policies at a time
when disasters are becoming more intense, more frequent, and more expensive.
So the systemic concern to the extent there is one,
(23:38):
and this has been mentioned at very high levels. The
head of the FED earlier this year expressed some concern
about it in you know, in the in the decade
or so ahead, right, that is something to keep an
eye on.
Speaker 6 (23:54):
I think what's fascinating too.
Speaker 2 (23:55):
There's a lot in this story, but you know, you
also cite John Stevenson, who's a senior analyst at our
Bloomberg Intelligence dem of created an index, the Prepare and
Repair Index, and it's about one hundred large public companies
that will be evolved in these extreme weather situations cleaning up.
Speaker 6 (24:11):
It reminds me of one of my first jobs in broadcast.
Speaker 2 (24:15):
Business journalism, and it was a mutual fun show and
when there was an earthquake, we would put on fund
managers or CEOs of cement companies because it was just
a logical investment plate feels a little cold, but it
was kind of the reality of our world. Incredible story,
highly recommend folks check it out on the Bloomberg at
Bloomberg dot com.
Speaker 6 (24:34):
Eric, thanks so much.
Speaker 2 (24:36):
Eric Roston, Bloomberg News Climate Reporter, Joining us out there
in New Jersey.
Speaker 3 (24:41):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (24:49):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five.
Speaker 6 (24:55):
Yes.
Speaker 1 (24:55):
During that, listen on Applecarplay and Android Otto with the
Bloomberg Business app Watch us live on YouTube.
Speaker 3 (25:02):
We got to talk about everything, or at least I'm
not going to make it everything because that would be exhaustive.
That would just be impossible. But we got to talk
about a lot when it comes to everything happening with
nuclear energy. Shares a Canadian uranium producer, Chemico, rose as
much as twenty seven percent to a record high today.
This after the US government signed a packed with Westinghouse Electric,
(25:23):
chemic COO, and Brookfield that will see at least eighty
billion dollars of new nuclear reactors constructed in the US
to accelerate nuclear power in AI deployment and breaking. Late yesterday,
next Air Energy planning to restart a nuclear power plan
in Iowa, primarily to supply Google data centers. We got
Will Wade with us. He's Bloomberg News energy reporter. He
joins us here in the Bloomberg Interactive Brokers studio. Did
(25:44):
the US make a mistake Will in shutting down nuclear
reactors over the last few years.
Speaker 9 (25:50):
Oh, that's a tough question. When they made those decisions
to shut down reactors, and I used to keep a
spreadsheet on my desk. I call it the dead Nukes
file of the dozen or so reactors that were shut
down in the past a little more in a decade.
It was the right decision. Then they were expensive to operate.
Nobody wanted to pay that.
Speaker 7 (26:10):
Much for power. But the world has really changed around us.
Speaker 3 (26:14):
And I think at Indian Point, close to New York City,
that one was didn't it outlive It's like life cycle.
It was sort of at the end of its life.
Speaker 7 (26:22):
Oh no, it was closed ahead of time.
Speaker 3 (26:24):
It was closed ahead of time.
Speaker 9 (26:25):
Yeah, that was a big political campaign. There were people
that were really worried about having a nuclear power plant
so close to the biggest city in America. I mean,
that's a legitimate concern. But we closed that plant and
immediately people started saying, wait, New York State carbon emissions
are going to go up this year because we replaced
all the nuclear with natural gas, like who would have thought.
Speaker 2 (26:45):
So it does feel like we mentioned the US signing
an eighty billion dollar pack to boost nuclear power in
that AI push, Google buying power from next era nuclear
power plant being revived. So the spend is on, the
deals are on. Is the bild on though, to really
build out maybe the nuclear capacity that's needed.
Speaker 9 (27:04):
Oh, building nuclear No, nobody's doing that.
Speaker 3 (27:08):
But the money's there, the commitments are there, the mothballing
is being undone.
Speaker 9 (27:13):
Okay, So here's what we're seeing. There is an enormous
amount of interest in nuclear energy right now. I've been
seeing it for eighteen twenty four months. This is because
electricity demand is going to go through the roof. That's
largely for data centers and AI. It's not just that.
It's for a lot of things, but that's the big
part of it. We need new electricity, we need a
(27:34):
lot of it. We did not see this coming. We
were not building new nuclear plants. At the same time,
we would love our electricity to be clean. So that
really makes nuclear the best option because it's available around
the clock.
Speaker 7 (27:48):
Unlike wind and solar right.
Speaker 3 (27:50):
How quickly can nuclear power plants be built outside of
the United States? In China, Korea, Japan.
Speaker 7 (27:56):
Oh, China's really good at building them. They've been.
Speaker 9 (27:59):
They've been doing a NonStop they got I think they're
soon going to surpass the US in terms of the
number of reactors they've got going. So yeah, they're faster
at it than us. The Koreas are really good at it.
I was in Korea this year. Their nuclear industries they've
been going NonStop for fifty something years. Our industry pretty
much ground to a holt around nineteen seventy nine with
(28:23):
through My Island, so we spent years doing nothing and
we never really recovered from that.
Speaker 7 (28:30):
We're working on it.
Speaker 2 (28:31):
Well, we're going to keep Will Wade with us Bloomer
News Energy Report. Someone else who's working on it too
to build out nuclear capacity is James Walker.
Speaker 6 (28:39):
He's CEO of Nano Nuclear Energy.
Speaker 2 (28:41):
It's a two point three billion dollar market cap nuclear
energy company that is working on SMR small modular reactors.
Speaker 6 (28:48):
Shares are up.
Speaker 2 (28:49):
Nearly ninety percent so far this year. Big chunk, though,
of the float is short. James joining us from Vancouver.
James come on in on this conversation. I mean, we'll
list how long before we actually you actually.
Speaker 6 (29:04):
Get an SMR built and it's up and running.
Speaker 10 (29:09):
It's a good question because it gets asked, as you
can imagine, more than any other question. And there's kind
of two answers to it too, because to get a
reactor built and constructed and licensed is one question, But
the other question is how long is it going to
take for the fuel supply chain to be built back
adequately in the country to be able to mass manufacture
the fuel to allow the mass manufacture of reactors. So
(29:31):
on one side, our company is already going ahead with
the construction project two construction projects to build reactor systems,
and we're talking to data centers and all of those
sort of groups as well. But on the other side,
like you know, we even our company, we need to
get involved in that fuel supply chain and build it
back because, as well was saying just before this sort
of after Three Mile Island, the investment into the country
(29:54):
sort of broke down a lot. We need that investment
to go back into rebuilding that fuel supply chain so
companies like ours can mass manufacture the reactor systems.
Speaker 3 (30:04):
But James on Carol's question about a timeline here, what
would be a realistic timeline for completion of your first
modular nuclear reactor.
Speaker 10 (30:12):
So we're doing a drill program right now, as it's
already started on the site. So we'll have the geotechnical
data to submit for a construction permit that'll go in
early next year, and our see will turn that around
in twenty twenty six. So construction twenty twenty seven, twenty
twenty eight, twenty twenty nine, and then fully licensed reactor
operating commercial license twenty thirty is very reasonable timeline. So
(30:36):
I would say early twenty thirties. Then you're going to
see the mass rollout of reactor systems, so dozens on
an annual basis.
Speaker 9 (30:43):
Yeah, that timeline fits with what I hear from a
lot of companies early twenty thirties for a significant wave
of new power plants. But I guess the issue is
that we have all these people who want power yesterday.
Speaker 7 (30:56):
How do we meet their needs?
Speaker 10 (30:59):
Look, there's a it's actually a very reasonable question. Like
as a company, we you know, we want to be
conservative and truthful with everybody because you know, we've got
to earn long term trust here. There are good interim solutions,
Like I know, companies have been exploring things like gas,
and to be honest, if they can get hold of
that in the interim, great, But even things like gas contracts,
(31:20):
they're all tied up for seven eight years. Turbines around
gas are tied up for seven eight years too, So
there's no easy solution here. Even bringing in as you mentioned,
like wind and solar or anything like that, these are
it's aminten technologies which require huge battery storage technology to
run alongside them. A lot of the time it's just
not feasible. They're also very locationally dependent, so you be
(31:41):
limited on where you can even deploy these things. I mean, unfortunately,
there's no there's no great solution, which is why when
the show started they were talking about opening up these
old power stations and recommissioning old nuclear power plants because
those are the some of them are the interim solutions.
It won't be enough power, but it'll be some.
Speaker 9 (32:01):
Yeah, those restart projects, that's low hanging fruit. Do you
think there are other plants that we can restart or
is it just the ones we've already seen? Are we
exhausted that list?
Speaker 10 (32:12):
So it's a good question, Like there's a number have
been shut down, and like it's it's arguable that you
mentioned Indian Point as an example. I know it wasn't
politically popular and maybe there was some of that related
to the decisions around that kind of plant that could
be an act, that could be a route, even the
old three Mile Island plant. Since we're bringing that up
(32:34):
as I think it's see the Microsoft or Constellation, we're
involved in recommissioning that and trying to get that back
up and running.
Speaker 9 (32:42):
Yeah, Constellation says that'll be ready by twenty twenty seven.
Speaker 10 (32:45):
There we go. So, like you know, I think, as
you say, like there's going to be big projected powering
demand increases in the country, they might not get solved
until we get to those twenty thirties, and that the
proper there is that that could mean a stagnation in
the tech industry. They'll find every means they can to
get power. But like that big online colocation green technology
(33:10):
that provides baseload power that can only really come from
nuclear and a lot of these reactor systems. Despite any
really outlandish claims about deploying neotom it's it's going to
be early twenty thirties, twenty thirty and onwards.
Speaker 2 (33:22):
All right, so the demand story is compelling that the
obstacles are just as a parent. Those aren't my words,
those are Well Wade words who reports on this sector,
as you well know. I mean, help me out here though,
because I'm just wondering.
Speaker 6 (33:37):
You know, if I'm looking at.
Speaker 2 (33:39):
A stock that is up eighty percent year to date,
you know, you guys don't have any revenues, right, I mean,
like our investors, Yeah, this is what we do.
Speaker 6 (33:51):
Like are they probably getting ahead of themselves?
Speaker 2 (33:53):
Thirty percent of your float is short, so investors are
just kind of waiting for something maybe negative to hit
because negative the sentiment. I mean realistically, you're talking at
least five years right before you're showing significant revenue or
earnings or anything along those lines.
Speaker 10 (34:12):
No, like our early US and our company will come
online a long time before that. I mean, because there's
this massive build back. The opportunity at the moment in
the nuclear space is huge. It can come through the
fuel supply chain or transportation or isotopes. Like the nice
part is that we're part of this build back effort.
So and look, the stock market is always about an
investment in the future. I mean, the nice part is
(34:33):
that the demand is there in a way that's unprecedented.
Like buying now really is an investment in the future,
and a future that's inevitable. The tech industry is not
going to just give up and pack up and go away.
Speaker 6 (34:44):
But what if what if.
Speaker 2 (34:45):
The what if the AI spend and build that is
I know, everybody comes out and says no bubble or
a lot of people do what if there is, though,
an overspend?
Speaker 6 (34:53):
Where does that catch you guys? Potentially?
Speaker 10 (34:56):
I think the bubble has only been discussed around AI.
But like in terms of data centers, those are things
that cannot be bubbles. That is, power that's needed for
our whole tech industry, like a data center cannot be
a bubble. Like if you need increased power for computing power,
it has to come from somewhere AI. Whether that's going
(35:16):
to bear out the fruits of what's been promised that
remains to be seen. But currently it's just expanding. But
it's it's it's kind of irrelevant to the long term
power requirements because the electrification of the country, the reindustrialization
of the country, that's all going ahead. And you mentioned
stocks like cars and the short interest.
Speaker 6 (35:34):
Great.
Speaker 10 (35:35):
If people want to short us, that's better because we've
We've gone higher and higher as a stock just because
every time the shorts have been squeezed. The more shorts,
the better for us because they always.
Speaker 3 (35:45):
Only only ten seconds left. But would you say that
you are most further along than any other company, the
most along than any other company in terms of microreactors?
Speaker 5 (35:55):
Yees.
Speaker 10 (35:56):
I believe we'll have the first US constry tructed full
scale commercial commercially license my corrector in the.
Speaker 2 (36:03):
Country where you can put an SMR in my backyard
because my monthly electrical bills are crazy.
Speaker 6 (36:09):
You're shutting off.
Speaker 7 (36:10):
Lights, Carol, you're glowing today.
Speaker 6 (36:12):
Yeah, I'm glowing.
Speaker 2 (36:13):
Will Wade of Bloomberg News and James Walker, CEO of
Nano Nuclear Energy, Guys, thank you so much.
Speaker 6 (36:18):
Great discussion.
Speaker 1 (36:19):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(36:41):
and always on the Bloomberg terminal
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