December 15, 2025 • 32 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
The last full trading week of 2025 started with stocks, bonds and the dollar wavering as Wall Street geared up for key economic data that will help shape the Federal Reserve rate outlook.
On the eve of the jobs report, the S&P 500 closed mildly lower. A renewed tech slide saw Broadcom Inc. posting its worst three-day plunge since 2020. Oracle Corp. extended its multi-session selloff to about 17%. A rout in cryptocurrencies also kept a lid on riskier assets.
Treasury two-year yields edged down amid bets the Fed will cut rates twice next year to support the job market even as inflation shows signs of stickiness. The dollar barely budged, but closed at the lowest since October.
Following the Fed’s latest decision to slash rates, the November jobs report — due on Tuesday — is expected to show a sluggish labor market. The reading will also include an estimate of October payrolls — figures that were delayed by the federal shutdown.
- Today's show features:
Bloomberg TV and Radio International Economics & Policy Correspondent Mike McKee on the week ahead in economic data and global central bank activity - Meghan Robson, Head of US Credit Strategy for BNP Paribas, on the credit market outlook for 2026 and market jitters over tech sector capital spending
- Sally Librera, President, National Grid New York, on the state’s energy infrastructure and the creation of energy demand as a result of data center projects
- Bloomberg News Chief Wall Street Correspondent Sri Natarajan on McKinsey & Co. plotting a wide swath of layoffs
See omnystudio.com/listener for privacy information.
Mark as Played
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 Stenebek on Bloomberg Radio.
Speaker 2 (00:32):
Well, the big debate in the US treasury market over
the extent of Federal Reserve interest rate cuts ahead is
about to hit up.
Speaker 3 (00:38):
Tim.
Speaker 2 (00:38):
We've got a string of pivotal economic data releases, and
it starts tomorrow with a bunch of reports on the
labor market.
Speaker 4 (00:44):
Yeah, it'll go a long way and filling the void
created by the US government shutdown delayed announcements of monthly
employment and inflation figures, and then early January brings in
more key jobs data. We've got with us Michael McKee,
Bloomberg at TV and Radio, International economics and Policy correspondent.
He joins us here in the Bloomberg Business Week Studio.
Also here Megan Robson, head of US Credit Strategy for
BNP Parabas. She's going to jump in with US in
(01:06):
just a minute. Job's Tuesday. We don't usually say that.
We usually say jobs Friday.
Speaker 5 (01:12):
Usually say we haven't said that in a long time.
Speaker 3 (01:14):
But are we getting a complete picture? No, we're not.
Speaker 5 (01:16):
We're getting a partial picture. And it is also an
old picture, so it isn't clear exactly how much difference
it will make. I will defer to the smarter person
to my left in terms of what the bond market
is going to do about this, But you have to
realize we're not going to get half of the October.
We're getting October and November, but not half of the
October report. We're not going to get the household survey,
(01:38):
so we don't get the unemployment rate, which is what
matters to the Fed. And we don't know in the
October report how many of the actual categories in the
establishment survey we're going to get either, because a lot
of that comes in electronically and some of it they
have to call and get it, and whether they were
able to call and get it or not, we don't know.
Which means for November we're going to have a number
(02:01):
for how many jobs were created, but compared to what
is that compared to September or is that compared to
October and November. I mean, it's going to take a
little while to figure all this out. We also have
one other big complication, and that is the federal workers.
They were furloughed in October, so depending on when they
(02:21):
were off the job and how many were off the job,
they will count us as not being employed. And then
the doged workers, the people who were fired or who
took early resignations and had a severance. That severance ran
out on September thirtieth, so that they would fall off
as well. So we could have like a big negative number,
(02:43):
but you drop the federal workers out and it's slightly positive.
And I think that's kind of what people are looking
at with this fifty thousand consensus in the survey.
Speaker 2 (02:51):
All right, wait a minute, So we're not happy when
we're not getting data, and then we're not happy when
we're getting kind of weird data, right, I mean, Megan,
is there anything to it? Come on in on the conversation.
Is there any value in this for you?
Speaker 6 (03:03):
I think that the market does want to see some
employment data, So I think it's good that we're starting to,
even if it's backfilled and will be noisy. I think
it's good to have that data. I think investors are
also starting to think about four Q earnings, and typically
you just have GDP in other economic data that gives
you a sense of how earnings will come in. So
(03:23):
I think it will be a little bit of a
relief to get to get past some of this data
and see where it comes in.
Speaker 3 (03:30):
Mike, if you're FED, CHAREJ.
Speaker 4 (03:31):
Powell or a voting member of the FOMC, are you like,
why couldn't.
Speaker 3 (03:35):
We have gotten this data last week?
Speaker 4 (03:37):
But would it have changed any of the way that
people on the committee voted.
Speaker 3 (03:41):
We don't know.
Speaker 5 (03:43):
If we get a big surprise one way or another,
it might have. The reason they couldn't is the FED
meeting was very early, and they extended the survey period
for November to be able to get as much as
they could because they not only got started late, but
they had Thanksgiving in the middle of it, so they
weren't able to change it or get it in time
(04:04):
for the FED meeting. But I think what you'll see
is FED officials they'll give us a feel for how
they think about what it's telling them about the economy,
but they're really going to wait for the December numbers,
which will get on January ninth, if we don't have
another government shutdown, and that will be more of the
basis on which they'll make a decision for the end
(04:25):
of January meeting. Although also with the CPI numbers we're
going to get on Thursday.
Speaker 2 (04:30):
Right, and I wonder if they're more important. We did
know that fedho J. Powell. You guys know this that
he did say there's pressure on both the labor and
inflation mandates on the Federal Reserve, and he talked about
this being challenging when it comes to inflation. Stephen Myron,
the FED governor recently appointed by President Trump, he shared
his view once again on US inflation. He spoke earlier
today at Columbia. Here's what he had to say, guys.
(04:51):
There was a large bat of inflation that resulted in
an increase in prices after the pandemic. While American families
are still rightly distraught with that experience and unhappy with affordability,
unhappy with affordability, prices are now once again stable, albeit
at higher levels. Policies should reflect that. Megan, Mike, you
both smile?
Speaker 7 (05:10):
Is he right? Meg?
Speaker 6 (05:11):
So we at B ANDP were actually forecasting inflation to
accelerate a bit into twenty twenty six. We think there
still will be pressure on goods inflation the tariffs or
because of YA based on tariffs and some of the
delayed impact of goods. So we have inflation target around
three percent, and so we do think there also will
be some bumpiness in the labor market potentially is Mike
(05:34):
highlighted for the January report. So we think we get
one more cut next year, but that inflation will prevent
the FED from really extending a cutting cycle.
Speaker 8 (05:43):
Beyond that, it's.
Speaker 5 (05:44):
Pretty much a universal view that we're going to see
inflation accelerate because of tariffs into twenty twenty six. There's
some question about when that falls off. Jay Polli said
six to nine months. It could be that we see this.
But the interesting thing about what Steven Myron said, remember
he's there to give Donald Trump's viewpoint, was that inflation
has stabilized, albeit at higher levels. Well wait a minute,
(06:07):
that's what you're supposed to bring down.
Speaker 2 (06:10):
Then there's inflation.
Speaker 4 (06:11):
But that brings up a good point and that's about
the Fed's two percent target and whether or not that's
actually a realistic thing right now?
Speaker 6 (06:17):
What do you think, Megan, I think that an environment
that we're in, I think it's going to take I mean,
look at their look at their forecast. I think it's
going to take some time for for for the FED
to get to the to get to the actual two
percent target. And it does seem like although they're looking
at both sides of the mandate, Powell does still seem
like he's biased towards the unemployment side of things. So
(06:40):
if anything, we would likely get more more cuts based
on that posture.
Speaker 2 (06:45):
Mike, We'll see p I help us out here in
terms of giving us some good information on inflation.
Speaker 5 (06:51):
I don't think he'll give us a specific amount of
information unless it's a surprise. As I say, that will
change FED feelings because I think they have a pretty
good feel for where we are within a certain range.
But the thing that is UH is going to get
people is when do we have a feel for what
(07:12):
unemployment is going to do versus inflation? And that's what
you need to have, is the comparison, because right now
they're betting on unemployment being worse. They're looking at the
some rule basically and saying when when unemployment starts to accelerate.
Speaker 3 (07:26):
It goes up fast.
Speaker 5 (07:27):
If it doesn't do that but inflation doesn't come down,
then they're going to flip their mandate and start worrying
about inflation.
Speaker 2 (07:34):
You guys have been watching it for a long time.
What does if both of them are challenged, what are
they going to be most Let's say jobs gets better
but inflation gets like which one is more important? I
guess what I'm guessing in terms of the mandate. I'm
not playing laying it out well, but I mean, just
one of them.
Speaker 5 (07:55):
They don't want to say one matters to the other.
But what they're what their official strategy is is you
look at the one that is farthest away from the
goal that will be the hardest to bring back to
where you want them to be. And right now they
think that's going to be unemployment, because they had been
making progress on inflation until we got the tariffs and
(08:16):
things started to turn around there. But there's another argument
that there are some embedded inflation problems in the numbers
that are not related to tariffs, and that's what they're
going to have to be able to tease out here
and figure out. I was thinking when megan was talking
since twenty fifteen, roughly when they started putting out these
Summary of Economic projections.
Speaker 3 (08:38):
Two percent has.
Speaker 5 (08:39):
Always been their goal, but every year they move it
two years out right now, we're not going to see
two percent until twenty twenty seven. Well last year it
wasn't going to be till twenty twenty six, and the
year before that wasn't going to be till twenty twenty five.
So can they hit it? That's an interesting question.
Speaker 3 (08:56):
Two years from now, maybe two years from two years
from does years done? Just two weeks?
Speaker 4 (09:02):
You know, well, Megan on the dual mandate, what Carol
is getting at and this seems to be the core
tension between different members of the FOMC. Which one is
the priority in your view, one needs to get under control.
Speaker 6 (09:14):
So we think we think they will protect what they
will do, not necessarily what they should do. We do
think they will protect the labor market, and so we
think they are biased towards more cuts. I think that's
partially why you're seeing asset prices so elevated at the
risk of inflation, at the risk of inflation because you
have the FED at your back, you know, if unemployment
(09:35):
we do see a nonlinear sort of rise, and then
the labor unemployment numbers like we did over the summer,
the FED is there really to really cut for now?
We haven't seen inflation rising to any degree like we
did outside of the pandemic, so I think that is
lower on the priority list for now.
Speaker 2 (09:51):
All right, So I want to ask you, Megan, I
want to stay with you for a moment in terms
of the credit markets and what we're seeing. It seems
like we had a little bit of stress earlier this year,
right in terms of some of the regional some of
the kind of subprime auto lenders and so on and
so forth. What are you seeing right now?
Speaker 6 (10:07):
So I think the debate right now is really around
are we seeing a transition from de leveraging to releveraging?
And for most of twenty twenty five through third quarter,
we still really saw corporates very disciplined, not much borrowing,
higher rates really impacted debt issuances. And then that sort
of started to change in third quarter with the hyperscalers
(10:28):
and just really chunky MNA deals in the expected pipeline.
So for next year, we do think there will be
a pickup and supply, an end to the quote unquote
bond scarcity story, but we're still forecasting less supply than consensus.
We think that rates are still elevated and they will
dissuade some sectors outside of the known utilities hyperscalers from
(10:52):
really borrowing too much. So I think that's the key story,
especially in the investment grade markets.
Speaker 4 (10:58):
You know, and we talk a lot about the shaped economy,
and that's kind of been like, you know, the backdrop
of our conversations over the last few months. You note
the credit market is K shaped.
Speaker 3 (11:08):
What do you mean about that, so KE shaped?
Speaker 6 (11:11):
I think it means a couple things. You have some
sectors where you're really seeing CAPEX expectations surge and that
they're expecting growth, and you're seeing borrowing on the back
of that.
Speaker 3 (11:21):
Technology.
Speaker 6 (11:22):
Technology is a great example. I think utility is another example.
CAPEX has increased twenty percent related to the techntive to.
Speaker 2 (11:30):
Talk about like the New York power spend really a
little bit later.
Speaker 6 (11:33):
But on the other on the other side, you have
sectors much more tied to the consumer. They're growing much
more slowly and they're much more cautious about about adding leverage.
So we do think that there's a dichotomy there, and
so overall credit can can perform well. And part of
it is you're not seeing that real animal spirits in
a lot of a lot of the market.
Speaker 2 (11:53):
Mike. When you think about the economy and moving into
a new year, I mean, it's it's hard to believe
all the kind of twist and turns we had this year,
But what are the major risks to the economy next year.
Speaker 5 (12:03):
Well, it's interesting because the President is touting and some
economists are writing into their forecast the idea that people
are going to get bigger tax increases tax refunds this
year because of the President's tax cuts, and then they're
talking about some sort of bonus checks that's probably not
going to happen. But the offset to that is the
whole thing with the Obamacare of premiums. Because if you're
(12:27):
going to get fifteen hundred dollars back on your taxes,
but you're going to have to pay two thousand or
three thousand dollars a month, that's not going to go
very far. So we don't really know what's going to happen.
And I think the overhang of all this is confidence.
Speaker 8 (12:43):
Confidence.
Speaker 5 (12:43):
I've said this many times before recessions are when confidence falls,
and so it depends on how people are going to
be feeling, which is kind of the tension you see
coming out of Washington as the Republicans are saying to
the President, get out there and tell people how wonderful
it is, and then people when they hear saying no,
not so much. And so the Democrats are going to
be pilged on that side and the Republicans on this side.
(13:05):
And we'll just have to see how people feel as
the year goes on and all these things come at them.
Speaker 4 (13:11):
Yeah, Megan on that the way that people feel obviously
has a way of impact on the way that they spend,
on the way that they think about the economy. How
are you looking at that going into I think.
Speaker 6 (13:22):
For credit investors there are some places you can position
for some of the weakness and strengths that we're seeing
on the consumer side. In the high old market, we
like mortgage servicers and originators. We think as rates continue
to fall down and you have exposure to more medium
upper income consumers that that sector can perform well next year.
(13:42):
And then on the other side of the coin, sectors
that are exposed to not only lower income but also
that middle tier that's starting to show weakness. We think
are places you might want to avoid, so leisure, out
of home, entertainment, places like bowling Out. These movie theaters
in the High Old Market have really struggled more. And
that's places we would we'd be more cautious on.
Speaker 2 (14:03):
You were just out of bowling Out.
Speaker 6 (14:04):
No.
Speaker 4 (14:05):
I did bike by a bowling alley over the weekend,
but I did not go inside. We hear from the
cruise operators that everything is awesome.
Speaker 2 (14:12):
Super rosy, super super rosy. You send more cautious.
Speaker 6 (14:15):
I think on the cruise lines are interesting because they
do a lot of their revenue is pre booked, so
they could be booked for all of twenty twenty six,
and so there is this sort of lagged impact on
weakness that we haven't seen on the cruise lines. But
to your point, we've seen cruise lines has been an
area we've liked. We've seen upgrades, and they've done a
great job deleveraging their balance sheets.
Speaker 2 (14:36):
Mike twenty seconds Fed Williams. John Williams, the President of
the New York Fed, said monetary policy now well positioned
for twenty twenty six. When he talks it's important right.
Speaker 5 (14:45):
Well, when he talks, he kind of gives you an
idea of where the chair is because he's the vice
chairman of the Open Market Committee, which by tradition never dissents.
But we already know that because that's exactly what Poule said.
So they're out delivering it unified message.
Speaker 2 (15:01):
Now, team all aboard, stay with us.
Speaker 4 (15:07):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (15:15):
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 2 (15:29):
It was a report in the Albany Times Union and
they sit over the weekend national grid and other utilities
are spending billions of dollars to prep New York's electric
grid for a generational shift. And it includes things like
all those AI data centers that are being built in
the state and across the country.
Speaker 3 (15:46):
Really yeah.
Speaker 4 (15:47):
The paper went on to note that New York utilities
are spending that much money to modernize the grid for
those facility facilities, their investments for New Yorkers, many of
whom are already struggling with utility costs. Are gonna have
to pay for that in the coming year. But the
idea is that we're prepping it for the future.
Speaker 2 (16:03):
Exactly exactly, But so how uncomfortable as the build out
happens and the stress on the grid continues. Let's see
what our next guest has to say. We've been looking
forward to this. Sally Librera is president National Grid New York.
It's a subsidiary the publicly held electricity, net gas and
clean energy utility National Grid PLC, serving millions in New
York and Massachusetts. National Grid ADRs trade in the US.
(16:24):
They've got about a seventy five billion dollar market cap.
They're up more than twenty seven percent year to date.
So nice to have you here.
Speaker 7 (16:29):
How are you great to be here? Thanks Carol and
Tim for having me.
Speaker 2 (16:32):
Well, it's great to have you here. How would you
describe power demand today and how that demand is growing, surging?
Use whatever word makes sense so that we understand what's
the current situation.
Speaker 7 (16:42):
Sure, so, at National Grid in New York, we serve
more than four million customers and we deliver natural gas
and electricity to those customers, and our focus is on
doing it safely, reliably and affordably. But the reality is
there is increasing demand for energy across the entire state,
and we serve through Upstate, we serve in Long Island,
(17:05):
and we also serve in New York City, and it's
our job to deliver that energy to meet that energy demand, where,
when and how folks need it.
Speaker 2 (17:14):
How would you quantify that demand though, Give us some idea,
because we're talking NonStop about deals of AI data centers,
whether it's New York or elsewhere. Give us an idea
how stressed is the situation.
Speaker 7 (17:25):
So we work with our New York Independent System Operator,
the NISO, and NISO manages a what we call the
large Load Queue. So it's essentially the companies that have
indicated wanting to hook into the New York grid that
have large power needs. And they estimate that the cumulative
power need across those companies that are essentially in line
(17:46):
to connect sometime over the next five or so years
is about ten gigawatts of energy. And so, just to
give you some context, at our peak in New York,
we demand about three times that across the higher State.
And another really important point is that one year ago
that q was one third the size.
Speaker 2 (18:08):
It literally tripled in.
Speaker 7 (18:10):
Just one year, all data centers, no, not all data It's.
Speaker 4 (18:13):
Done because it does seem like for many years we
thought that power demand across the country would actually stay
relatively flat, and it did stay relatively flat, But just
in recent years we've seen so much of an uptick
in demand. What are you seeing on your grids?
Speaker 7 (18:28):
Well, there's definitely there, definitely is the impact of data centers.
But New York is also very attractive to manufacturing and
large scale manufacturing, particularly some of the modern manufacturing we
see around semiconductors and computer components. It's very energy intensive,
and companies with big power needs are drawn to New
York and we are working to make sure that they
(18:51):
have the power that they need, not just today but
well into the future.
Speaker 2 (18:54):
So it's interesting, right because we think about this White House,
right and encouraging investment from foreign companies to build here.
I mean, I guess you know that's the good thing, right,
We want to see other companies investing into the United States,
But there's a power grab on that too, right, As
a result of that, In order to meet that well, potentially.
Speaker 7 (19:15):
I think it is important to note that even if
we weren't at this unique moment in time with rapidly
increasing demand for power. We still have a grid in
New York and this is true across many places in
the country. We have a grid that needs investment. We
have assets that are close to one hundred years old.
Speaker 2 (19:33):
Why why right, tim like? How many people like? Why
if it's one hundred years old, why are twenty years ago?
Speaker 5 (19:39):
Right?
Speaker 3 (19:40):
Why didn't we make the investment?
Speaker 2 (19:41):
Then?
Speaker 3 (19:41):
Yeah, we've been politics. I've guess part of that was
a lot of please you answer the question.
Speaker 2 (19:49):
So I understand because it's important.
Speaker 7 (19:51):
We have been very careful about balancing the bill impacts
which customers bear with the investments that we make in
our infrastructure, and even today, where we look at assets
that are seventy eighty one hundred years old, we're very
strategic and pinpointed about which of those assets, which of
those parts of infrastructure we replace, because we want to
(20:12):
keep customer bills low. So we look for those opportunities
where we can do multiple things with an investment, where
we can replace an aging asset with something that's more
modern and something that can carry more energy, something that
can unlock more energy that our generators have to connect
into the grid and something that's going to be more
resilient to storms and better leverage technology so it's cheaper
(20:35):
to maintain.
Speaker 4 (20:35):
Does more resilient too, storms mean bearing power lines?
Speaker 3 (20:40):
Is that the way to do it?
Speaker 7 (20:41):
In some cases we do that, But it's also the
type of infrastructure that we put up. We are replacing
in places sometimes wooden poles with steel poles, just much
stronger infrastructure.
Speaker 2 (20:52):
Well, you know, and I think about how do you
balance all of that? Like affordability, as you know, has
become quite the word that we are hearing a lot,
certainly in the political environment. So how do you keep
your investors happy and the grid reliable without rising bills
that make your customers furious and invite regulatory and political pushback.
I mean, that is a hard mandate.
Speaker 7 (21:13):
It is a difficult balance and it's one that we
navigate every single day. We do it through a number
of avenues. We certainly work closely with our customers to
help them manage costs, and we do that through a
variety of bill assistance programs and energy efficiency programs and rebates,
and we work we have consumer advocates whose job it
(21:34):
is to specifically work with folks in communities to help
them manage their costs. We also, as I mentioned before,
very careful about where and how we invest in assets,
and we make sure that if we're investing in an asset,
that we're going to get more power from investing in
that asset, that we're going to get more resiliency, and
then we're going to get more efficiency from investing in
that asset.
Speaker 4 (21:53):
The President has been outspoken about his disdain for certain renewables,
especially wind power. Our investment in renewables, are sourcing energy
from renewables. Has that changed under this administration?
Speaker 7 (22:05):
Well, we certainly support the all of the above energy
approach and are pleased with the most recent version of
the State Energy Report that's just come out today that
leans into an all of the above approach. Given the
rate at which demand for energy is increasing, we need
to we need to be utilizing all of those opportunities,
(22:28):
from renewables to natural gas to nuclear to make sure
that is.
Speaker 4 (22:32):
That more difficult if the federal government is not supportive
of certain renewables.
Speaker 7 (22:36):
We are working on the infrastructure to move power from
point A to point B. So while we support projects
like say the NeSSI pipeline, that's a supply project. It's
not our project, but we support it because we know
how critical it is to the downstate community and how
reliant New York City and Long Island are on natural
(22:57):
gas and how thin that reserve margin and their energy
demand for energy is growing as well. So we support
NESI for those reasons. The other side of our business
is about building transmission. It's about building the highway over
which the power moves. So the sourcing as to where
it's coming from isn't a national grid decision. We work
(23:20):
with generators of all kinds.
Speaker 5 (23:21):
You know.
Speaker 2 (23:22):
Bottom line though, does this potentially as you guys are
very careful about when you invest so that power prices
don't go up? But are there going to be moments
where prices are just going to go up just because
of the environment. And it's hard to kind of predict everything.
And forgive me, just got about thirty seconds.
Speaker 7 (23:37):
There are moments, and now is one of those moments
where customers are seeing increases on their bills. And that's
for a number of reasons, but primarily it's to be
investing in infrastructure that is necessary. Those investments are necessary
to make sure that folks continue to have the safe
and reliable energy.
Speaker 2 (23:53):
That they need, and those investments include renewables, green, all
of it.
Speaker 7 (23:57):
Well, we're investing in the ability to unlaw those energy
sources and be able to bring them onto the grid
and move them at a greater frequency.
Speaker 2 (24:07):
Stay with us. More from Bloomberg Business Weekdaily coming up
after this.
Speaker 1 (24:15):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (24:30):
Well, it's the most read story on the Bloomberg terminal.
It's about how one of the go to advisors for
companies and countries that often recommends cost cutting maybe facing
some cost cutting in the form of jobs. Shrinat Rajin
is a Bloomberg News Chief wall Stree correspondent. He joins
us here in the Bloomberg Interactive Brokers studio. We're talking,
of course, about McKenzie. It's getting ready to celebrate it's
(24:50):
one hundred. I had no idea it was a one
centennial in twenty twenty six. As you write, it has
an enviable roster of clients. Blue chip companies like Coca
Cola and Goldman Sacks, governments that span the globe.
Speaker 3 (25:03):
What's going on there?
Speaker 8 (25:04):
Well, first, after one hundred year right nineteen twenty six,
it was a University of Chicago accounting professor James McKinsey
who started doling advice to a local meatpacker, Armors and Company.
That's how McKinsey got it starts. That was sort of
the start of the management consulting industry. And today, undoubtedly
this company is the flag bearer of that industry. As
(25:26):
goes McKinsey, so goes the rest of the consulting industry.
And the fact is the last few years you get
the sense that the industry has been facing some headwinds.
Their traditional services are not in the same level of
demand as they would like their clients, companies, countries, everyone's
getting more cost conscious. And the first thing you do,
(25:47):
after perhaps advertising money, is you look at your consulting
contracts and you look to see if you can pare
back on that front. So, if you look back at
the last five years, McKinsey's gone through a bit of
a challenge in two fronts. On the personal front because
it has had to navigate its own scandals opioid scandals,
some of the work it did in China and Saudi
Arabia and even with ice, but also the industry in
(26:11):
general has been facing this little bit of a slowdown,
and McKinsey's revenues is a sort of flatline. We've gone
twenty twenty one was about fifteen billion dollars. We've stayed
in that fifteen to sixteen billion dollar band over the
last five years. So even though late October when all
the McKinsey Global partners gathered in Chicago to kick off
their one hundred year festivities, and you had the global
(26:33):
managing Partner, Bob Sternfelds, the de facto leader of the company,
try to give this raw ra speech and with plain
spoken Bravados said, you know, we are ready to kick
some ass as we approached the second century, and anyone
who's excited about that mission, and if you say yes,
get on board, because the good times are ahead of us.
(26:53):
It still shields some of the more pragmatic messaging behind
the scenes, and the messaging there has been its time
to get leaner. And you know, it is a fact
we associate the consulting industry with going into a lot
of companies and unfairly so perhaps simplified to saying all
that they do is cut costs and.
Speaker 3 (27:13):
Duplicating for space.
Speaker 8 (27:16):
It's perhaps unfair, but unfortunately that's the image that's stuck
with them, and I suspect there is a little bit
of Shaddon freud when you see news about McKinsey considering
its own measures to get let's call it consulting jargon.
Speaker 3 (27:29):
Leaner.
Speaker 2 (27:29):
Well, if they're cutting costs, maybe they should have a
brother in your meeting.
Speaker 8 (27:33):
You are tough, Carol.
Speaker 3 (27:35):
It is a hundred year festivities. I don't worry. That
wasn't a question.
Speaker 2 (27:41):
Now what I want to ask you, though, Street, is
this more of a change in just kind of consulting
industries going through a lot over the last few years,
and just there's a pushback in general the industry has changed,
it's not always the go to Or is it a
case of a sign of what's going on in the
broadery economy if McKenzie is cutting back. I'm just trying
(28:03):
to understand is it an industry thing, is an economic
indicator or why?
Speaker 8 (28:09):
And is it also an indicator of what is shaping
the economy in this moment, because look at the statement
from the McKinsey representative. As a firm Mark six one
hundred tier, we are operating in a moment shaped by
rapid advances in AI that are transforming business and society.
So if you strip out all the extraneous words there,
the one word that you will zero in on is AI,
(28:30):
and that is a real concern. It is going to
have a significant impact on the job's landscape. If not
the number of jobs, but at least the jobs that
are done today. Will they be there tomorrow or will
people be pivoting to other kinds of jobs. That is
a concern that hours over all of us. We think
about the legal industry, we think about the banking industry
and entry level jobs and how that could transform. It
(28:51):
would be hard pressed to imagine that the consulting industry
will not be affected by it.
Speaker 2 (28:55):
I just kind of find this funny in some ways,
because the consulting industry is probably consulting other companies on
the impact AI is going to have on the labor market,
and so it's I don't know again, kind of ironic here.
Speaker 8 (29:09):
So let me read you the other part of the
McKinsey representative statement, and this way we would have done
all the needed disclosures. But just as we are partnering
with clients to strengthen their organizations, we are on our
own journey to improve the effectiveness and efficiency of art
support functions. So, in a lot of fluffy language, he's
making the same point that you're making.
Speaker 4 (29:30):
Carec you mentioned the beginnings, the humble beginnings of McKenzie said,
University of Chicago right.
Speaker 8 (29:38):
A University of Chicago, counting Professor Jian McKinsey.
Speaker 4 (29:41):
So, over the last ninety nine years, the company has
engaged China and Saudi Arabia. They've gotten in hot water
over consulting during the opioid crisis and what it allegedly
happened during that How much of a hangover is that
for the organization.
Speaker 8 (29:58):
I'll present it in the words of Done Fells himself,
and he told is gathering in Chicago in late October
that he feels that they've collectively righted the ship. And
that's perhaps true. They have gone through a rocky phase
over the last three or four years, and they may
well have righted the ship. The question is, can the
industry be as robust as it has been in the past,
or can it be as rewarding and fulfilling for them
as it has been in the last ninety nine years,
(30:19):
because you don't get to fifteen billion dollars in revenue
out of nothing.
Speaker 4 (30:23):
Okay, So when I was in business school, this was
the place that everybody wanted to work. And this was
close to a decade ago, but it was like okay,
BCG Kinsey, you know the other.
Speaker 2 (30:32):
All the consulting pace.
Speaker 3 (30:33):
Yeah, yeah, does it in the idea?
Speaker 4 (30:35):
As you go, You work really hard for a couple
of years, You spend a lot of time at airports,
you don't see any of your friends, you live in
a hotel. But then you go and do something else
and it's a bridge to that next thing.
Speaker 3 (30:45):
Is that still the case?
Speaker 8 (30:47):
You know, as much as we want to revel in
the fact that someone like a McKinsey is going through
a tough time because they are an easy punching back,
the fact is that they are in a category of one.
You cannot deny that. Much like no company would go wrong,
at least in any sort of board review if it
were to hire Goldman Sax Bankers to pursue deals, you
(31:08):
cannot be faulted for hiring McKinsey. For management consulting work,
for strategy work. Because they are still considered in a
league of their own, and that perhaps two times as
big as their next closest rival. There is no one
close to them. And when you have a business of
this scale and this size, yes, there are some extreme
cases on either end. Sometimes the advice might just seem
(31:29):
too pedestrian and too simple, and sometimes it might be
some controversial work, But the bulk of the work must
be really, really good, because how else do you have
repeat business from some of the biggest and best companies
across the world.
Speaker 2 (31:42):
And just so Oprah doesn't hate me, I mean she's
I'm sure.
Speaker 8 (31:45):
No one can hate you. Care No.
Speaker 1 (31:48):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm e on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(32:09):
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 Stenebek on Bloomberg Radio.
Speaker 2 (00:32):
Well, the big debate in the US treasury market over
the extent of Federal Reserve interest rate cuts ahead is
about to hit up.
Speaker 3 (00:38):
Tim.
Speaker 2 (00:38):
We've got a string of pivotal economic data releases, and
it starts tomorrow with a bunch of reports on the
labor market.
Speaker 4 (00:44):
Yeah, it'll go a long way and filling the void
created by the US government shutdown delayed announcements of monthly
employment and inflation figures, and then early January brings in
more key jobs data. We've got with us Michael McKee,
Bloomberg at TV and Radio, International economics and Policy correspondent.
He joins us here in the Bloomberg Business Week Studio.
Also here Megan Robson, head of US Credit Strategy for
BNP Parabas. She's going to jump in with US in
(01:06):
just a minute. Job's Tuesday. We don't usually say that.
We usually say jobs Friday.
Speaker 5 (01:12):
Usually say we haven't said that in a long time.
Speaker 3 (01:14):
But are we getting a complete picture? No, we're not.
Speaker 5 (01:16):
We're getting a partial picture. And it is also an
old picture, so it isn't clear exactly how much difference
it will make. I will defer to the smarter person
to my left in terms of what the bond market
is going to do about this, But you have to
realize we're not going to get half of the October.
We're getting October and November, but not half of the
October report. We're not going to get the household survey,
(01:38):
so we don't get the unemployment rate, which is what
matters to the Fed. And we don't know in the
October report how many of the actual categories in the
establishment survey we're going to get either, because a lot
of that comes in electronically and some of it they
have to call and get it, and whether they were
able to call and get it or not, we don't know.
Which means for November we're going to have a number
(02:01):
for how many jobs were created, but compared to what
is that compared to September or is that compared to
October and November. I mean, it's going to take a
little while to figure all this out. We also have
one other big complication, and that is the federal workers.
They were furloughed in October, so depending on when they
(02:21):
were off the job and how many were off the job,
they will count us as not being employed. And then
the doged workers, the people who were fired or who
took early resignations and had a severance. That severance ran
out on September thirtieth, so that they would fall off
as well. So we could have like a big negative number,
(02:43):
but you drop the federal workers out and it's slightly positive.
And I think that's kind of what people are looking
at with this fifty thousand consensus in the survey.
Speaker 2 (02:51):
All right, wait a minute, So we're not happy when
we're not getting data, and then we're not happy when
we're getting kind of weird data, right, I mean, Megan,
is there anything to it? Come on in on the conversation.
Is there any value in this for you?
Speaker 6 (03:03):
I think that the market does want to see some
employment data, So I think it's good that we're starting to,
even if it's backfilled and will be noisy. I think
it's good to have that data. I think investors are
also starting to think about four Q earnings, and typically
you just have GDP in other economic data that gives
you a sense of how earnings will come in. So
(03:23):
I think it will be a little bit of a
relief to get to get past some of this data
and see where it comes in.
Speaker 3 (03:30):
Mike, if you're FED, CHAREJ.
Speaker 4 (03:31):
Powell or a voting member of the FOMC, are you like,
why couldn't.
Speaker 3 (03:35):
We have gotten this data last week?
Speaker 4 (03:37):
But would it have changed any of the way that
people on the committee voted.
Speaker 3 (03:41):
We don't know.
Speaker 5 (03:43):
If we get a big surprise one way or another,
it might have. The reason they couldn't is the FED
meeting was very early, and they extended the survey period
for November to be able to get as much as
they could because they not only got started late, but
they had Thanksgiving in the middle of it, so they
weren't able to change it or get it in time
(04:04):
for the FED meeting. But I think what you'll see
is FED officials they'll give us a feel for how
they think about what it's telling them about the economy,
but they're really going to wait for the December numbers,
which will get on January ninth, if we don't have
another government shutdown, and that will be more of the
basis on which they'll make a decision for the end
(04:25):
of January meeting. Although also with the CPI numbers we're
going to get on Thursday.
Speaker 2 (04:30):
Right, and I wonder if they're more important. We did
know that fedho J. Powell. You guys know this that
he did say there's pressure on both the labor and
inflation mandates on the Federal Reserve, and he talked about
this being challenging when it comes to inflation. Stephen Myron,
the FED governor recently appointed by President Trump, he shared
his view once again on US inflation. He spoke earlier
today at Columbia. Here's what he had to say, guys.
(04:51):
There was a large bat of inflation that resulted in
an increase in prices after the pandemic. While American families
are still rightly distraught with that experience and unhappy with affordability,
unhappy with affordability, prices are now once again stable, albeit
at higher levels. Policies should reflect that. Megan, Mike, you
both smile?
Speaker 7 (05:10):
Is he right? Meg?
Speaker 6 (05:11):
So we at B ANDP were actually forecasting inflation to
accelerate a bit into twenty twenty six. We think there
still will be pressure on goods inflation the tariffs or
because of YA based on tariffs and some of the
delayed impact of goods. So we have inflation target around
three percent, and so we do think there also will
be some bumpiness in the labor market potentially is Mike
(05:34):
highlighted for the January report. So we think we get
one more cut next year, but that inflation will prevent
the FED from really extending a cutting cycle.
Speaker 8 (05:43):
Beyond that, it's.
Speaker 5 (05:44):
Pretty much a universal view that we're going to see
inflation accelerate because of tariffs into twenty twenty six. There's
some question about when that falls off. Jay Polli said
six to nine months. It could be that we see this.
But the interesting thing about what Steven Myron said, remember
he's there to give Donald Trump's viewpoint, was that inflation
has stabilized, albeit at higher levels. Well wait a minute,
(06:07):
that's what you're supposed to bring down.
Speaker 2 (06:10):
Then there's inflation.
Speaker 4 (06:11):
But that brings up a good point and that's about
the Fed's two percent target and whether or not that's
actually a realistic thing right now?
Speaker 6 (06:17):
What do you think, Megan, I think that an environment
that we're in, I think it's going to take I mean,
look at their look at their forecast. I think it's
going to take some time for for for the FED
to get to the to get to the actual two
percent target. And it does seem like although they're looking
at both sides of the mandate, Powell does still seem
like he's biased towards the unemployment side of things. So
(06:40):
if anything, we would likely get more more cuts based
on that posture.
Speaker 2 (06:45):
Mike, We'll see p I help us out here in
terms of giving us some good information on inflation.
Speaker 5 (06:51):
I don't think he'll give us a specific amount of
information unless it's a surprise. As I say, that will
change FED feelings because I think they have a pretty
good feel for where we are within a certain range.
But the thing that is UH is going to get
people is when do we have a feel for what
(07:12):
unemployment is going to do versus inflation? And that's what
you need to have, is the comparison, because right now
they're betting on unemployment being worse. They're looking at the
some rule basically and saying when when unemployment starts to accelerate.
Speaker 3 (07:26):
It goes up fast.
Speaker 5 (07:27):
If it doesn't do that but inflation doesn't come down,
then they're going to flip their mandate and start worrying
about inflation.
Speaker 2 (07:34):
You guys have been watching it for a long time.
What does if both of them are challenged, what are
they going to be most Let's say jobs gets better
but inflation gets like which one is more important? I
guess what I'm guessing in terms of the mandate. I'm
not playing laying it out well, but I mean, just
one of them.
Speaker 5 (07:55):
They don't want to say one matters to the other.
But what they're what their official strategy is is you
look at the one that is farthest away from the
goal that will be the hardest to bring back to
where you want them to be. And right now they
think that's going to be unemployment, because they had been
making progress on inflation until we got the tariffs and
(08:16):
things started to turn around there. But there's another argument
that there are some embedded inflation problems in the numbers
that are not related to tariffs, and that's what they're
going to have to be able to tease out here
and figure out. I was thinking when megan was talking
since twenty fifteen, roughly when they started putting out these
Summary of Economic projections.
Speaker 3 (08:38):
Two percent has.
Speaker 5 (08:39):
Always been their goal, but every year they move it
two years out right now, we're not going to see
two percent until twenty twenty seven. Well last year it
wasn't going to be till twenty twenty six, and the
year before that wasn't going to be till twenty twenty five.
So can they hit it? That's an interesting question.
Speaker 3 (08:56):
Two years from now, maybe two years from two years
from does years done? Just two weeks?
Speaker 4 (09:02):
You know, well, Megan on the dual mandate, what Carol
is getting at and this seems to be the core
tension between different members of the FOMC. Which one is
the priority in your view, one needs to get under control.
Speaker 6 (09:14):
So we think we think they will protect what they
will do, not necessarily what they should do. We do
think they will protect the labor market, and so we
think they are biased towards more cuts. I think that's
partially why you're seeing asset prices so elevated at the
risk of inflation, at the risk of inflation because you
have the FED at your back, you know, if unemployment
(09:35):
we do see a nonlinear sort of rise, and then
the labor unemployment numbers like we did over the summer,
the FED is there really to really cut for now?
We haven't seen inflation rising to any degree like we
did outside of the pandemic, so I think that is
lower on the priority list for now.
Speaker 2 (09:51):
All right, So I want to ask you, Megan, I
want to stay with you for a moment in terms
of the credit markets and what we're seeing. It seems
like we had a little bit of stress earlier this year,
right in terms of some of the regional some of
the kind of subprime auto lenders and so on and
so forth. What are you seeing right now?
Speaker 6 (10:07):
So I think the debate right now is really around
are we seeing a transition from de leveraging to releveraging?
And for most of twenty twenty five through third quarter,
we still really saw corporates very disciplined, not much borrowing,
higher rates really impacted debt issuances. And then that sort
of started to change in third quarter with the hyperscalers
(10:28):
and just really chunky MNA deals in the expected pipeline.
So for next year, we do think there will be
a pickup and supply, an end to the quote unquote
bond scarcity story, but we're still forecasting less supply than consensus.
We think that rates are still elevated and they will
dissuade some sectors outside of the known utilities hyperscalers from
(10:52):
really borrowing too much. So I think that's the key story,
especially in the investment grade markets.
Speaker 4 (10:58):
You know, and we talk a lot about the shaped economy,
and that's kind of been like, you know, the backdrop
of our conversations over the last few months. You note
the credit market is K shaped.
Speaker 3 (11:08):
What do you mean about that, so KE shaped?
Speaker 6 (11:11):
I think it means a couple things. You have some
sectors where you're really seeing CAPEX expectations surge and that
they're expecting growth, and you're seeing borrowing on the back
of that.
Speaker 3 (11:21):
Technology.
Speaker 6 (11:22):
Technology is a great example. I think utility is another example.
CAPEX has increased twenty percent related to the techntive to.
Speaker 2 (11:30):
Talk about like the New York power spend really a
little bit later.
Speaker 6 (11:33):
But on the other on the other side, you have
sectors much more tied to the consumer. They're growing much
more slowly and they're much more cautious about about adding leverage.
So we do think that there's a dichotomy there, and
so overall credit can can perform well. And part of
it is you're not seeing that real animal spirits in
a lot of a lot of the market.
Speaker 2 (11:53):
Mike. When you think about the economy and moving into
a new year, I mean, it's it's hard to believe
all the kind of twist and turns we had this year,
But what are the major risks to the economy next year.
Speaker 5 (12:03):
Well, it's interesting because the President is touting and some
economists are writing into their forecast the idea that people
are going to get bigger tax increases tax refunds this
year because of the President's tax cuts, and then they're
talking about some sort of bonus checks that's probably not
going to happen. But the offset to that is the
whole thing with the Obamacare of premiums. Because if you're
(12:27):
going to get fifteen hundred dollars back on your taxes,
but you're going to have to pay two thousand or
three thousand dollars a month, that's not going to go
very far. So we don't really know what's going to happen.
And I think the overhang of all this is confidence.
Speaker 8 (12:43):
Confidence.
Speaker 5 (12:43):
I've said this many times before recessions are when confidence falls,
and so it depends on how people are going to
be feeling, which is kind of the tension you see
coming out of Washington as the Republicans are saying to
the President, get out there and tell people how wonderful
it is, and then people when they hear saying no,
not so much. And so the Democrats are going to
be pilged on that side and the Republicans on this side.
(13:05):
And we'll just have to see how people feel as
the year goes on and all these things come at them.
Speaker 4 (13:11):
Yeah, Megan on that the way that people feel obviously
has a way of impact on the way that they spend,
on the way that they think about the economy. How
are you looking at that going into I think.
Speaker 6 (13:22):
For credit investors there are some places you can position
for some of the weakness and strengths that we're seeing
on the consumer side. In the high old market, we
like mortgage servicers and originators. We think as rates continue
to fall down and you have exposure to more medium
upper income consumers that that sector can perform well next year.
(13:42):
And then on the other side of the coin, sectors
that are exposed to not only lower income but also
that middle tier that's starting to show weakness. We think
are places you might want to avoid, so leisure, out
of home, entertainment, places like bowling Out. These movie theaters
in the High Old Market have really struggled more. And
that's places we would we'd be more cautious on.
Speaker 2 (14:03):
You were just out of bowling Out.
Speaker 6 (14:04):
No.
Speaker 4 (14:05):
I did bike by a bowling alley over the weekend,
but I did not go inside. We hear from the
cruise operators that everything is awesome.
Speaker 2 (14:12):
Super rosy, super super rosy. You send more cautious.
Speaker 6 (14:15):
I think on the cruise lines are interesting because they
do a lot of their revenue is pre booked, so
they could be booked for all of twenty twenty six,
and so there is this sort of lagged impact on
weakness that we haven't seen on the cruise lines. But
to your point, we've seen cruise lines has been an
area we've liked. We've seen upgrades, and they've done a
great job deleveraging their balance sheets.
Speaker 2 (14:36):
Mike twenty seconds Fed Williams. John Williams, the President of
the New York Fed, said monetary policy now well positioned
for twenty twenty six. When he talks it's important right.
Speaker 5 (14:45):
Well, when he talks, he kind of gives you an
idea of where the chair is because he's the vice
chairman of the Open Market Committee, which by tradition never dissents.
But we already know that because that's exactly what Poule said.
So they're out delivering it unified message.
Speaker 2 (15:01):
Now, team all aboard, stay with us.
Speaker 4 (15:07):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (15:15):
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 2 (15:29):
It was a report in the Albany Times Union and
they sit over the weekend national grid and other utilities
are spending billions of dollars to prep New York's electric
grid for a generational shift. And it includes things like
all those AI data centers that are being built in
the state and across the country.
Speaker 3 (15:46):
Really yeah.
Speaker 4 (15:47):
The paper went on to note that New York utilities
are spending that much money to modernize the grid for
those facility facilities, their investments for New Yorkers, many of
whom are already struggling with utility costs. Are gonna have
to pay for that in the coming year. But the
idea is that we're prepping it for the future.
Speaker 2 (16:03):
Exactly exactly, But so how uncomfortable as the build out
happens and the stress on the grid continues. Let's see
what our next guest has to say. We've been looking
forward to this. Sally Librera is president National Grid New York.
It's a subsidiary the publicly held electricity, net gas and
clean energy utility National Grid PLC, serving millions in New
York and Massachusetts. National Grid ADRs trade in the US.
(16:24):
They've got about a seventy five billion dollar market cap.
They're up more than twenty seven percent year to date.
So nice to have you here.
Speaker 7 (16:29):
How are you great to be here? Thanks Carol and
Tim for having me.
Speaker 2 (16:32):
Well, it's great to have you here. How would you
describe power demand today and how that demand is growing, surging?
Use whatever word makes sense so that we understand what's
the current situation.
Speaker 7 (16:42):
Sure, so, at National Grid in New York, we serve
more than four million customers and we deliver natural gas
and electricity to those customers, and our focus is on
doing it safely, reliably and affordably. But the reality is
there is increasing demand for energy across the entire state,
and we serve through Upstate, we serve in Long Island,
(17:05):
and we also serve in New York City, and it's
our job to deliver that energy to meet that energy demand, where,
when and how folks need it.
Speaker 2 (17:14):
How would you quantify that demand though, Give us some idea,
because we're talking NonStop about deals of AI data centers,
whether it's New York or elsewhere. Give us an idea
how stressed is the situation.
Speaker 7 (17:25):
So we work with our New York Independent System Operator,
the NISO, and NISO manages a what we call the
large Load Queue. So it's essentially the companies that have
indicated wanting to hook into the New York grid that
have large power needs. And they estimate that the cumulative
power need across those companies that are essentially in line
(17:46):
to connect sometime over the next five or so years
is about ten gigawatts of energy. And so, just to
give you some context, at our peak in New York,
we demand about three times that across the higher State.
And another really important point is that one year ago
that q was one third the size.
Speaker 2 (18:08):
It literally tripled in.
Speaker 7 (18:10):
Just one year, all data centers, no, not all data It's.
Speaker 4 (18:13):
Done because it does seem like for many years we
thought that power demand across the country would actually stay
relatively flat, and it did stay relatively flat, But just
in recent years we've seen so much of an uptick
in demand. What are you seeing on your grids?
Speaker 7 (18:28):
Well, there's definitely there, definitely is the impact of data centers.
But New York is also very attractive to manufacturing and
large scale manufacturing, particularly some of the modern manufacturing we
see around semiconductors and computer components. It's very energy intensive,
and companies with big power needs are drawn to New
York and we are working to make sure that they
(18:51):
have the power that they need, not just today but
well into the future.
Speaker 2 (18:54):
So it's interesting, right because we think about this White House,
right and encouraging investment from foreign companies to build here.
I mean, I guess you know that's the good thing, right,
We want to see other companies investing into the United States,
But there's a power grab on that too, right, As
a result of that, In order to meet that well, potentially.
Speaker 7 (19:15):
I think it is important to note that even if
we weren't at this unique moment in time with rapidly
increasing demand for power. We still have a grid in
New York and this is true across many places in
the country. We have a grid that needs investment. We
have assets that are close to one hundred years old.
Speaker 2 (19:33):
Why why right, tim like? How many people like? Why
if it's one hundred years old, why are twenty years ago?
Speaker 5 (19:39):
Right?
Speaker 3 (19:40):
Why didn't we make the investment?
Speaker 2 (19:41):
Then?
Speaker 3 (19:41):
Yeah, we've been politics. I've guess part of that was
a lot of please you answer the question.
Speaker 2 (19:49):
So I understand because it's important.
Speaker 7 (19:51):
We have been very careful about balancing the bill impacts
which customers bear with the investments that we make in
our infrastructure, and even today, where we look at assets
that are seventy eighty one hundred years old, we're very
strategic and pinpointed about which of those assets, which of
those parts of infrastructure we replace, because we want to
(20:12):
keep customer bills low. So we look for those opportunities
where we can do multiple things with an investment, where
we can replace an aging asset with something that's more
modern and something that can carry more energy, something that
can unlock more energy that our generators have to connect
into the grid and something that's going to be more
resilient to storms and better leverage technology so it's cheaper
(20:35):
to maintain.
Speaker 4 (20:35):
Does more resilient too, storms mean bearing power lines?
Speaker 3 (20:40):
Is that the way to do it?
Speaker 7 (20:41):
In some cases we do that, But it's also the
type of infrastructure that we put up. We are replacing
in places sometimes wooden poles with steel poles, just much
stronger infrastructure.
Speaker 2 (20:52):
Well, you know, and I think about how do you
balance all of that? Like affordability, as you know, has
become quite the word that we are hearing a lot,
certainly in the political environment. So how do you keep
your investors happy and the grid reliable without rising bills
that make your customers furious and invite regulatory and political pushback.
I mean, that is a hard mandate.
Speaker 7 (21:13):
It is a difficult balance and it's one that we
navigate every single day. We do it through a number
of avenues. We certainly work closely with our customers to
help them manage costs, and we do that through a
variety of bill assistance programs and energy efficiency programs and rebates,
and we work we have consumer advocates whose job it
(21:34):
is to specifically work with folks in communities to help
them manage their costs. We also, as I mentioned before,
very careful about where and how we invest in assets,
and we make sure that if we're investing in an asset,
that we're going to get more power from investing in
that asset, that we're going to get more resiliency, and
then we're going to get more efficiency from investing in
that asset.
Speaker 4 (21:53):
The President has been outspoken about his disdain for certain renewables,
especially wind power. Our investment in renewables, are sourcing energy
from renewables. Has that changed under this administration?
Speaker 7 (22:05):
Well, we certainly support the all of the above energy
approach and are pleased with the most recent version of
the State Energy Report that's just come out today that
leans into an all of the above approach. Given the
rate at which demand for energy is increasing, we need
to we need to be utilizing all of those opportunities,
(22:28):
from renewables to natural gas to nuclear to make sure
that is.
Speaker 4 (22:32):
That more difficult if the federal government is not supportive
of certain renewables.
Speaker 7 (22:36):
We are working on the infrastructure to move power from
point A to point B. So while we support projects
like say the NeSSI pipeline, that's a supply project. It's
not our project, but we support it because we know
how critical it is to the downstate community and how
reliant New York City and Long Island are on natural
(22:57):
gas and how thin that reserve margin and their energy
demand for energy is growing as well. So we support
NESI for those reasons. The other side of our business
is about building transmission. It's about building the highway over
which the power moves. So the sourcing as to where
it's coming from isn't a national grid decision. We work
(23:20):
with generators of all kinds.
Speaker 5 (23:21):
You know.
Speaker 2 (23:22):
Bottom line though, does this potentially as you guys are
very careful about when you invest so that power prices
don't go up? But are there going to be moments
where prices are just going to go up just because
of the environment. And it's hard to kind of predict everything.
And forgive me, just got about thirty seconds.
Speaker 7 (23:37):
There are moments, and now is one of those moments
where customers are seeing increases on their bills. And that's
for a number of reasons, but primarily it's to be
investing in infrastructure that is necessary. Those investments are necessary
to make sure that folks continue to have the safe
and reliable energy.
Speaker 2 (23:53):
That they need, and those investments include renewables, green, all
of it.
Speaker 7 (23:57):
Well, we're investing in the ability to unlaw those energy
sources and be able to bring them onto the grid
and move them at a greater frequency.
Speaker 2 (24:07):
Stay with us. More from Bloomberg Business Weekdaily coming up
after this.
Speaker 1 (24:15):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (24:30):
Well, it's the most read story on the Bloomberg terminal.
It's about how one of the go to advisors for
companies and countries that often recommends cost cutting maybe facing
some cost cutting in the form of jobs. Shrinat Rajin
is a Bloomberg News Chief wall Stree correspondent. He joins
us here in the Bloomberg Interactive Brokers studio. We're talking,
of course, about McKenzie. It's getting ready to celebrate it's
(24:50):
one hundred. I had no idea it was a one
centennial in twenty twenty six. As you write, it has
an enviable roster of clients. Blue chip companies like Coca
Cola and Goldman Sacks, governments that span the globe.
Speaker 3 (25:03):
What's going on there?
Speaker 8 (25:04):
Well, first, after one hundred year right nineteen twenty six,
it was a University of Chicago accounting professor James McKinsey
who started doling advice to a local meatpacker, Armors and Company.
That's how McKinsey got it starts. That was sort of
the start of the management consulting industry. And today, undoubtedly
this company is the flag bearer of that industry. As
(25:26):
goes McKinsey, so goes the rest of the consulting industry.
And the fact is the last few years you get
the sense that the industry has been facing some headwinds.
Their traditional services are not in the same level of
demand as they would like their clients, companies, countries, everyone's
getting more cost conscious. And the first thing you do,
(25:47):
after perhaps advertising money, is you look at your consulting
contracts and you look to see if you can pare
back on that front. So, if you look back at
the last five years, McKinsey's gone through a bit of
a challenge in two fronts. On the personal front because
it has had to navigate its own scandals opioid scandals,
some of the work it did in China and Saudi
Arabia and even with ice, but also the industry in
(26:11):
general has been facing this little bit of a slowdown,
and McKinsey's revenues is a sort of flatline. We've gone
twenty twenty one was about fifteen billion dollars. We've stayed
in that fifteen to sixteen billion dollar band over the
last five years. So even though late October when all
the McKinsey Global partners gathered in Chicago to kick off
their one hundred year festivities, and you had the global
(26:33):
managing Partner, Bob Sternfelds, the de facto leader of the company,
try to give this raw ra speech and with plain
spoken Bravados said, you know, we are ready to kick
some ass as we approached the second century, and anyone
who's excited about that mission, and if you say yes,
get on board, because the good times are ahead of us.
(26:53):
It still shields some of the more pragmatic messaging behind
the scenes, and the messaging there has been its time
to get leaner. And you know, it is a fact
we associate the consulting industry with going into a lot
of companies and unfairly so perhaps simplified to saying all
that they do is cut costs and.
Speaker 3 (27:13):
Duplicating for space.
Speaker 8 (27:16):
It's perhaps unfair, but unfortunately that's the image that's stuck
with them, and I suspect there is a little bit
of Shaddon freud when you see news about McKinsey considering
its own measures to get let's call it consulting jargon.
Speaker 3 (27:29):
Leaner.
Speaker 2 (27:29):
Well, if they're cutting costs, maybe they should have a
brother in your meeting.
Speaker 8 (27:33):
You are tough, Carol.
Speaker 3 (27:35):
It is a hundred year festivities. I don't worry. That
wasn't a question.
Speaker 2 (27:41):
Now what I want to ask you, though, Street, is
this more of a change in just kind of consulting
industries going through a lot over the last few years,
and just there's a pushback in general the industry has changed,
it's not always the go to Or is it a
case of a sign of what's going on in the
broadery economy if McKenzie is cutting back. I'm just trying
(28:03):
to understand is it an industry thing, is an economic
indicator or why?
Speaker 8 (28:09):
And is it also an indicator of what is shaping
the economy in this moment, because look at the statement
from the McKinsey representative. As a firm Mark six one
hundred tier, we are operating in a moment shaped by
rapid advances in AI that are transforming business and society.
So if you strip out all the extraneous words there,
the one word that you will zero in on is AI,
(28:30):
and that is a real concern. It is going to
have a significant impact on the job's landscape. If not
the number of jobs, but at least the jobs that
are done today. Will they be there tomorrow or will
people be pivoting to other kinds of jobs. That is
a concern that hours over all of us. We think
about the legal industry, we think about the banking industry
and entry level jobs and how that could transform. It
(28:51):
would be hard pressed to imagine that the consulting industry
will not be affected by it.
Speaker 2 (28:55):
I just kind of find this funny in some ways,
because the consulting industry is probably consulting other companies on
the impact AI is going to have on the labor market,
and so it's I don't know again, kind of ironic here.
Speaker 8 (29:09):
So let me read you the other part of the
McKinsey representative statement, and this way we would have done
all the needed disclosures. But just as we are partnering
with clients to strengthen their organizations, we are on our
own journey to improve the effectiveness and efficiency of art
support functions. So, in a lot of fluffy language, he's
making the same point that you're making.
Speaker 4 (29:30):
Carec you mentioned the beginnings, the humble beginnings of McKenzie said,
University of Chicago right.
Speaker 8 (29:38):
A University of Chicago, counting Professor Jian McKinsey.
Speaker 4 (29:41):
So, over the last ninety nine years, the company has
engaged China and Saudi Arabia. They've gotten in hot water
over consulting during the opioid crisis and what it allegedly
happened during that How much of a hangover is that
for the organization.
Speaker 8 (29:58):
I'll present it in the words of Done Fells himself,
and he told is gathering in Chicago in late October
that he feels that they've collectively righted the ship. And
that's perhaps true. They have gone through a rocky phase
over the last three or four years, and they may
well have righted the ship. The question is, can the
industry be as robust as it has been in the past,
or can it be as rewarding and fulfilling for them
as it has been in the last ninety nine years,
(30:19):
because you don't get to fifteen billion dollars in revenue
out of nothing.
Speaker 4 (30:23):
Okay, So when I was in business school, this was
the place that everybody wanted to work. And this was
close to a decade ago, but it was like okay,
BCG Kinsey, you know the other.
Speaker 2 (30:32):
All the consulting pace.
Speaker 3 (30:33):
Yeah, yeah, does it in the idea?
Speaker 4 (30:35):
As you go, You work really hard for a couple
of years, You spend a lot of time at airports,
you don't see any of your friends, you live in
a hotel. But then you go and do something else
and it's a bridge to that next thing.
Speaker 3 (30:45):
Is that still the case?
Speaker 8 (30:47):
You know, as much as we want to revel in
the fact that someone like a McKinsey is going through
a tough time because they are an easy punching back,
the fact is that they are in a category of one.
You cannot deny that. Much like no company would go wrong,
at least in any sort of board review if it
were to hire Goldman Sax Bankers to pursue deals, you
(31:08):
cannot be faulted for hiring McKinsey. For management consulting work,
for strategy work. Because they are still considered in a
league of their own, and that perhaps two times as
big as their next closest rival. There is no one
close to them. And when you have a business of
this scale and this size, yes, there are some extreme
cases on either end. Sometimes the advice might just seem
(31:29):
too pedestrian and too simple, and sometimes it might be
some controversial work, But the bulk of the work must
be really, really good, because how else do you have
repeat business from some of the biggest and best companies
across the world.
Speaker 2 (31:42):
And just so Oprah doesn't hate me, I mean she's
I'm sure.
Speaker 8 (31:45):
No one can hate you. Care No.
Speaker 1 (31:48):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm e on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(32:09):
and always on the Bloomberg terminal
Hosts And Creators
Tim Stenovec
Carol Massar
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Betrayal: Weekly
Betrayal Weekly is back for a brand new season. Every Thursday, Betrayal Weekly shares first-hand accounts of broken trust, shocking deceptions, and the trail of destruction they leave behind. Hosted by Andrea Gunning, this weekly ongoing series digs into real-life stories of betrayal and the aftermath. From stories of double lives to dark discoveries, these are cautionary tales and accounts of resilience against all odds. From the producers of the critically acclaimed Betrayal series, Betrayal Weekly drops new episodes every Thursday. Please join our Substack for additional exclusive content, curated book recommendations and community discussions. Sign up FREE by clicking this link Beyond Betrayal Substack. Join our community dedicated to truth, resilience and healing. Your voice matters! Be a part of our Betrayal journey on Substack. And make sure to check out Seasons 1-4 of Betrayal, along with Betrayal Weekly Season 1.