Match of the Day

Published Dec 16, 2022, 3:30 PM

Jonathan Levin and John Authers join to discuss the Fed’s response to the inflation outlook for 2023 and beyond: fairly unanimous until it’s not. The market, too, a player in this game. David Fickling joins to discuss fusion, how it works (now that it does) and what’s to be done with that “BFD”, in the phrasing for Energy Secretary Granholm.

Welcome to Bloomberg Opinion. I'm Bonnie Quinn. FED Chair Jerome Powell announced a fifty basis point move higher in rates this week. We have raised interest rates by four and a quarter percentage points this year. We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to two percent over time. A week where markets also saw a more benign CPI report, it showed headline inflation slowing, albeit still at a seven point one percent rate. Markets went on a little ramble during Powell's news conferences has become the pattern. I asked nuomerg Opinions Jonathan Levin to parse the f O m C statement and signals. So Jonathan, the Fed chair seemed extraordinarily hawkish throughout the statement, but then the market seized on what the potential for a change in the mandate. Perhaps yeah, I mean, I think, to be fair, my take is that he really didn't change much. The markets tried to change without him in the dovish tens, right, and so what we saw at the outset was first and foremost. They come out with this statement, and if you want evidence that they really didn't change at all, just take a look at the statement. They didn't change a word. Actually, to be more precise, they changed two words, which for our purposes were completely immaterial in terms of the broader inflation fight. The press conference starts, you, uh, you get a little bit of a sense of reality seeping in. There was that moment where the chair came out and said, we think we're getting close to the level of restrictive or sufficiently restrictive, and you did see stocks come back for a little bit. But the big takeaway here is the market tried to get optimistic after this cp I. I gotta say I was feeling pretty optimistic after the c p I. But the story is we've done a complete round trip. We're exactly back where we were on Monday, as if the CPI had never happened. You get that in a minute, hopefully. But Preston wants to talk to you about the dots to some real economic projections. What did it tell you, because it does seem like there's a lot of let's call it unanimity in the very near future, but really none as you go out further. Yeah, it's interesting. So I think in terms of three that the doubts are not particularly surprising. A very simple rule of thumb in terms of how I think many on the committee are sort of thinking about what is sufficiently restrictive is very simple. They're looking at where they think we're PC is going to be, and they're looking at getting a real rate on the Fed funds rate of something like one point five one point six percent above that. So that's been sort of consistent. Actually, if you look at where we were on the September step, they were also looking to get to a real rate of about one point five percent on the Fed funds for twenty three. The only thing that's changed is that those inflation expectations got notched up a little bit. Is really interesting, and it shows a complicated time this is, and of course how difficult and complex it is to forecast in an environment like this, because the dispersion going off memory is really all over the place. On those on those projections, you're looking at a spread of like two percentage points, which you know, frankly is huge, huge, and it's not even that far out. We're only talking about another twelve months plus. So policymakers right now projecting rates when next year at five that's the media and forecast before being cut to four point one four, that's still higher than previously indicated. How close are we too sticky invlation expectations? Yeah, I think the Brookings Institution speech from Powell last month was very important in that he essentially broke inflation down into three pillars. Actually I saw four pillars right, So number one he wants to see that the economy is going below potential. Number two he wants to see those core goods prices coming down, and he's actually getting that right. A lot of the supply chains have become unclogged, and we're not just getting core goods this inflation. We're getting core goods deflation. If you look at the past couple of prints. Housing is a little bit tricky. There are all these funky methodological things going on here, but it's clear from pal zone remarks that he expects housing to come in based on the forward looking indicators on like market rents and so forth. So it all really comes back, at least for PAL to this sector of core services and especially core services X shelter and PAL seems very much convinced that that's just going to keep chugging along unless you're able to do something about this tightness in the labor market. If you go back a few big reports before this, to the last jobs report, there was a ton of debate about how to read the latest print on average hourly earnings, and I totally get that average hourly earnings can be particularly volatile. There can be some questions about whether the makeup of that indicator is representative, so absolutely take that with a grain of salt. However, we've also seen previous months revised up on the average hourly earnings, So even if you're sort of generous in your interpretation, we have trend wage growth in this country of about five and there's no way that we're going to see the Fed get comfortable with that until it looks something more like three and a half percent. The forecast for unemployment is a rise of point nine percent and then GDP growth of point five percent. Does that seem like recessionary territory to you. Yeah, it's really tricky. I mean, I think ultimately, an interesting thing the chair said was, look, a lot of analysts, a lot of economists think that the natural rate of unemployment has moved up this atmosphere. So what you're seeing in the SEP is not necessarily an indication that we're expecting disaster, but better said, that people are expecting the israels to converge with a rate of on employment that people actually think is sustainable and non inflationary. In practice, we all know that unemployment tends to snowball. It rarely moves up in uh tiny increments. This is of course the famous some rule um and so you know, it would be a huge historic anomaly for the FED to be able to thread this needle and move unemployment up just a little bit without causing things to go off the rails and cause an honest to goodness recession. Knew. I just Ban Emmons has pointed out that the real FED funds rate, so the rate adjusted for core pc e X shelter, is just now at zero percent. So FED policy has just got restrictive, but not restrictive enough. What was your feeling on how restrictive power things policy is right now? Yeah, I mean it totally depends if I'm just going off of said funds for end of two. In other words, where we just got to versus where the committee think core PC and the year. In other words, the core PC print that we get in January, the implication is actually that the real FED funds rate might be slightly negative. So there's no question on a historic basis that we're just now getting to the territory of restrictive and you know, I expect that that is very much what is behind this attitude of the Committee to keep on going. I think what we heard from pal is that there's no indication unless they really get some shocking data in the next month or so, that they're not going to hike again when they meet for the first meeting in February, and then consensus is that they'll keep on going with at least one or two more. So what you're thinking, haven't listened to everything in Jonathan, Do we see another fifty and then twenty five or maybe we're already at twenty five and what will we plateau at next year for the rest of the year, presumably, you know, I don't think that this really changes the base case for a lot of people. As I said, I think if the FED got together and strategized and they said, what is the one message that we want to put out here. I think that that message was probably consistency, right, So if you're taking the FED at their word, you probably aren't going back to the drawing board and completely rethinking your path for the FED funds. I think our own team at Bloomberg Economics and along has nailed this. Ever since the summer, they've been calling for a five percent terminal rate, and that looks like what we're on pace for. You know, it could be five point to five at the upper extreme. If everything goes great, maybe they just do another twenty five basis points and they stopped, so four point seven five. But you know, we're really debating essentially small increments here compared to where we've come from. Yeah, that's for sure. John Authors used the word reassuring about the CPI report. Is that what it was to you? Reassuring? Yeah? I do think it was reassuring. I mean, you know, as I say, I was encouraged by that. I was clearly more encouraged than the FED was. But understand their note of caution. I think that they are right that the main thing that we have to be focusing on here is core services X shelter and look, where is that the move in core services x shelter in the most recent report implies an annualized pace of just one point five per cent, But that was one report. I'm extrapolating annualizing from one report. If you smooth out the three months average, we're at a trend pace in that particular category of around five. So that's clearly not going to be there yet. For Jerome Powell, if you believe that five is the real rate, that's not really moving down. It's sort of moving sideways since this summer, and he's going to want to see some real, honest to goodness directionality in that particular metric. Yes. In response to a question about the two average inflatient Monday's Powell sort of brushed it away, but then he mentioned that maybe there might be a longer term goal about looking at this. Did he mean that, is there the potential for the Fed to start looking at whether an average to percent inflation rate should be their mandate? I think there is. I don't think that he should have answered that question in the way that he did. I think he sort of tried to correct himself subsequently, and I think that that was the right thing to do. The bottom line is, yes, We all know that two is just a number. It's a completely arbitrary number. There is nothing magical about two percent inflation on the PC. But one thing is for sure. If this inflation fight is all about maintaining credibility, we can't be moving the ball in the middle of this fight. And I think that that is a message that Jerome pal is trying to convey, and he was right to do so. Bloomberg Opinions Jonathan Livin stay tuned a reaction to the week next from Opinions, John als Or, Is this is Bloomberg Opinion? You're listening to Bloomberg Opinion? I'm Vonnie Quinn. Well, the markets were on red alert this week for the CPI and lation data, followed by an f o MC decision which delivered a slowdown and interest rate increases and many questions for Q one historical record cautions strongly against prematurely loosening policy. We will stay the course until the job is done. Markets and the Fed locking horns. It seems I spoke with Bloomberg Opinions John Authors for some perspective. We got the FED decision the final one of the year. You wrote a column today Investors aren't supposed to fight the FED, but the conflict remains intense, and it really was quite stunning the market reaction yesterday. Powell came out and literally every single sentence and his statement was hawkish. That said, if you analyzed it really carefully, you could find a few places where if he really wanted to be more aggressive, he could have been. And I guess there was a lot of wishful thinking involved as well. People we're looking for weakness, we're looking for flaws in the armor. And decided that the fact that he was obviously signaling the possibility of hiking in small increments and that he wasn't prepared to talk down the stock market suggested that he wasn't actually really as tough as he was trying to make out. Extraordinarily, because there was this unified call from across the FOMC that we should all prepare for rates above five by the end of next year, rates are down since that came out, which is very very odd. Is it the idea that it looks more likely that we're going into recession because the FED chairs suggested a half percent growth and that's really as small as you can get without actually calling for a recession which the FED chair isn't going to do well. He's some other central banks, notably the Bank of England, have said in as many words, yes, we're going to have a recession, and ahead of the Central Bank of New Zealand has just said in as many words, yes, we expect it to be a recession because we want one. Just being very candid that that that you need to reset to avoid inflation in the future. I think the market skepticism is partly an honest almost like a version of an academic dispute. Depending on the models you use. There are sensible models that suggest that, yes, inflation really can come down pretty quickly now for everybody with all that, but there's a lot to discuss. But yes, there is a sensible argument for that. There's also a sensible argument, particularly if you're concerned about expectations about whether there is inflation, psychology can allow inflation to take grout. There's ample argument that in fact inflation is likely to be pretty durable, and that's why the FED will have no choice but to really call some pain before it's done. So that's that is where there is this critical difference of opinion. I mean to talk about things like average already earnings and how they weren't seeing what they were hoping that they would see by now an average or learning. So he sort of did tiptoe around the idea that the labor market might see pain. Yes, it has to see more pain than it's currently suffering for inflation to come down. I don't I don't see a way around that point nine percent labor market growth. Is that enough? Well, I mean it's it's if you look at, um, the kind of change in unit labor costs, if you if you look at what kind of percentage, what what kind of percentage pay rises people are demanding, and what kind of productivity gains can be made elsewhere in the process. It's I'm not saying people shouldn't demand a wage that will keep them up with inflation. They absolutely should. I don't like getting sub inflation pay rises whenever that happens. It's but that is a condition where um, you're making your you're spending more money to make the same product, which means it's price will ultimately be higher. It's very clearly directly inflationary. When you talk about this intense conflict between the Fed and the market, I mean, does the market ever win if it's going up against the Federal Reserve, well, this is the I mean, it can definitely, I'm sure impact some decision making by impacting data and financial conditions and so on. But I mean that's a very roundabout way of doing something. The FED a reserve can just come out and say something. Yes, there, I suppose there's there are two schools of thoughts here. I guess one is, yes, the idea of don't fight the Fed. There is no institution more powerful than the Federal Reserve the global economy period, ridiculous to try to argue otherwise. But there is also the suggestion that one of the quote from Bill Clinton's political guru James Carville, which I must have cited dozens of times in my career, that when he comes back, if he ever gets incarnated, he wants to come back as the bond market because the bond market can terrorize people, and there is that fact that those two things do have some kind of a symbiotic relationship, and that the bond market does have the power to change the Fed's reality if it comes to that. I would say, however, that the logic behind don't fight the Fed certainly ought to make sense, but I would my suspicion is that people are responding to a very long period in which the FED bails when the market gets ugly. Moral hazard would be your technical term for it. That that and um I would argue that the bailout of long term capital management this very Yes, that was I think the critical moment. Up until then, you'd had the Vulcan experience and green Spanner created a bare market in bonds in he'd had his irrationally zubrant speech trying to talk down the stock market that you know, the FED was still until that point plainly antagonistic to anything that looked like market excess. And after LTCM, which incidentally, as far as I can see, was the only time Paul Vulca ever publicly criticized his successor, he said, I wouldn't have done that, And I think I think now in retrospect we can't know the count factual, but I think he was probably right. Since then, you've had the concept of the green span put like nobody would have mentioned such a thing in when he really did surprise people by hiking aggressively. By the time he left, it seemed a perfectly reasonable concept. You could do graphs that, Yeah, when the SMP goes down, FED funds are follows it down, and vice versa. Once the market is safely going up, then the FED feels it's okay to raise bed funds. And obviously the Great Financial Crisis and the various fun and games with with the quee and with J. Powell's attempt to tighten things up which led to the pal There's been a succession of incidents which have ingrained in people's minds that the FED may say something, but you can bully it into submission if you're a critical market, if you're a systemic market. And I think I'm not sure that's true anymore, because ever since ninety eight, for reasons that go beyond what central banks are doing, inflation hasn't been a risk, and it certainly hasn't taken off. That isn't true anymore, and I'm therefore not sure at all that the moral hazard argument still stands. You also mentioned I want to quote this. If the FED is going to make a mistake, it will be raising weights too high, not too little, and everyone should work on that assumption. So you're warning the market in the market participants, I may well be wrong, but it's my job to try to you know, it's my job to try to come up with some sensible guidance. It seems to me that j. Powell has said in as many words that he's more prepared to overtighten than undertighten. He doesn't want to go down like the Fed chairs of the seventies who eased rates too soon and let inflation take off in a big way. Again. I would believe him he's more likely to overtighten and undertighten, and people should allocate their assets on that assumption. Bloomberg Opinions, John Authors stay tuned. Another major development this week the success of a fusion experiment for the first time, in simple terms, more energy out than in Bloomberg Opinions. David Fickling explains the chemistry and why we should celebrate the achievement. If not quite a shift in the energy outlook just yet. This is Bloomberg Opinion. You're listening to Bloomberg Opinion. I'm Vonnie Quinn. This week, US scientists accomplished something never before done. They managed to carry out a fusion reaction which generated more power than they put in. It was hailed as a so called b f D literally the phrase of the U S Energy Secretary, and the US is spending hundreds of millions of dollars into the billions when you include public private partnerships to research and potentially build out this form of power generation. But how much of a breakthrough was it this week and how much closer does it bring us to fusion power being a substitute for a less clean electricity, I asked Bloomberg Opinions David Fickling in Sydney. So, David, we've spoken several times about nuclear energy and about the future of hydrocarbons and fossil fuels and net zero and so on. Then we have this breakthrough this week. Just how big of a development is it? Well, I think it's very significant when you consider the longest true fish Remember, like nutly a fusion research is almost as old as nuclear ficion research. You know, the the first nuclear fusion designs with sort of theorized in the fifties, which was, you know, only sort of less than a decade after the first you know, the Chicago Pile one, the first nuclear fission plant um or the first nuclear fission reaction, I should say, So it's been a long time since then, and they've so far failed to clear the most basic hurdle, which is that you should generate more electricity from a reaction than you put into it. So what's significant about this is that they did generate more electricity than they put into it. Essentially, about two mega jews of energy was put in and three just over three mega jews of output came out. That's that's not a lot of electricity. That's equivalent to about the energy in in half a pizza. Doesn't sound like a lot, but you know, let's bear in mind Chicago Pile one that the first nuclear fission reaction synthetic nuclear action in nuclear fist Enrico Suffermi did that. That produced half a what of electricity, So that power that's less than you'd get from hearing a battery. So the first prone is always going to first trial, and you would hope that things could improve further from beyond that. But but having said this, there are enormous engineering problems ahead of nuclear fusion research before it becomes anywhere close to commercial viability. I think the biggest thing is that the way this fusion reaction works is essentially firing a bunch of lasers at a golden crucible containing a tiny pellet of fuel. Now those lasers, the ones that they were using the Lawrence Lives More laboratory, those are less than one percent efficient um. And of course what's actually happening in a fusion reactor, if you built it, is something that like James what would recognize that the inventor of the steam engine, It's produces heat and then the heat heats up a liquid in a bunch of pipelines, and the pipes go around and turn a turbine, and that produces electricity. It's a it's the same thing as you'd have in a certainly efficionary actor, but also like a cold cold plant or a gas plant, and the thermal efficiency of that process, you know, the amount of heat that comes out of the reactor less than fifty percent or round about fisture then typically ends up with electricity in a sort of cold plant or a gas plant or efficient plant. So if you add all that together, we talked at the moment ago about you know, two megadeals of energies put in, well, actually two hundred mega jules of energy is being put in because of course the lasers only one percent efficient. It's two megadeals of laser energy, but to power the laser you need two hundred mega jules. And of course you get out that three megadules of output, but only half of that can turn into electricity. So ultimately you're putting in two hundred megadeals of energy and you're getting out one point five megadals of energy. That's clearly a huge net energy. Think you're not actually producing electricity, you're losing a lot of electricity. So all those efficiencies need to be very, very dramatically ramped up before we're even talking about something that can confunction. But that's that's what engineering does. It improves those efficiencies. And so we've crossed one pretty important hurdle. Well, and it's a shot in the arm for those trying to solve other problems. If this particular problem has been solved, I mean, because it's been done once, does that mean it's repeatable? Well, I mean, if you if you look at the research of the UM, you know this particular facility of the National Ignition Facility, they have been for several years, they have been gradually sort of ramping up the degree of output they can get. What makes this a breakthrough is that there's more output than they put in. But for several years, if you you know, if you go through their their press releases and their announcements, you'll see, well, you know, we've hit sevent of output. We've hit output. So yes, you would hope that you could keep keeping going beyond there. And I think the other thing that that really we need to start thinking about if if this is ever to be viable, is the engineering challenges involved. I mean, what you're talking about, these fuel pellets are just a couple of millimeters across as just a little plastic bead containing a couple of isotopes of hydrogen, And if you had a working fusion reactor, what you'd be talking about would be essentially like firing a machine gun stream of these very very tiny pellets very very precisely into the middle of one of these little gold crucibles and focusing all these lasers on them at the same time, and of course using that to drive your turbines. The pellets would have to produced very cheaply. We don't really have the technology for for placing them as accurately as that, and those are only the you know, the starts of some of the challenges that we would have to face. Well, there is funding out there, so there's definitely a strong bet on this particular type of technology and on this particular type of generation of energy. So Congress directing what more than seven hundred million dollars for fusion research and construction. And there's also public private partnerships with the likes of Jeff Bezos, Bill Gate, Spear Teel all back in fusion companies. So the bets are very heavily on this technology. Or is this just one of the technologies that people are betting on. I mean, it's one of many types of technologies. And of course if you look at what people are betting on most of the moment, if you look at investment in energy as a whole, leap to energy actually sucks up a great deal of the R and D spending in energy as a whole, and historically always has, Like I think if you go back in the figures, roughly fifty percent of R and D is spent on nuclear power, which you know, nuclear powers never generated more than about prevent of the world's electricity. So it's but of course it has to suck up a lot of R and D because you seems enormously complicated, But if you look at actual overall investment in energy as a whole, nuclear power of any source has always been a rather small proportion of it, you know, historically has mainly been fossil fuels. In the past a couple of years, we've reached this point where where renewables essentially are overtaking fossil fuels, and wind and solar now sucks up more energy than than sort of upstream investment in oil and gas. And that's a very dramatic change. And that is actually, in terms of investment as a whole, what we are going to see over the next two years. The International Energy Agency just wrote on this last week of energy electricity investment over the next five years is going to be just wind and solar, just those two things. And it's worth bearing in mind that in terms of commercializing something like fusion power, the growing dominance of wind and solar in our electricity grids is going to be quite a challenge in itself because the fusion power was first conceptualized back in the fifties at a time when you build an energy grid around you know what's called baseload power, which is that you have a big power station. It provides a big lump of power, and you sort of try and match demand to the power that's coming out now what we're moving to now. Of course, wind and solar are variable. Soner doesn't generate when the sun goes down, wind doesn't generate when it when it's still, and they are the cheapest forms of power out there, So every other form of electricity generation has to sort of fit in around the growing shares of when and solar. That's potentially a problem for fusion because all that money basically translates to very large capital spending. It translates to very large power plants and gigga what scale power plants, and they're probably not very well suited towards the way the energy grid is evolving. And if you look certainly at what's happening in the fishing space, a great deal of the money and the sort of venture capital money that's going into fishing at the moment is looking at ways of making reactors smaller and more able to fit into that future. So reactors and how they're also problematic in the sense of not being particularly safe, or at least not having a long history of safety protocols and so on. Yeah, and I think that you know, past dependency is crucial with the there are no functioning small moderity. I mean there's a there's a couple that would would somehow to find themselves a small moderate reactors, but there are no real functioning some moderate fish and reactors at the moment, so we don't know a lot about their characterists is not just brand safety that I think more importantly around non proliferation, which is obviously a worry with any fish and materials. So that is a significant challenge, and I think in any safety critical technology you have to think about path dependency. We still fly planes that have pretty much the same you know, shape and form as they did in the forties, and that's really a lot of that is about past dependency and the fact that we know it's a safe design that works well. And if you look again at fish and reactors, most reactors in the world today and under construction in the world today are essentially updated versions of nineteen sixties designs. There's a lot of part dependency there. Now, what fusion is asking is to come up with an entire new technology with an entirely different set of protocols and risks that we don't really know at the moment, and that's going to be a challenge. It might be a stupid question, but explain to the difference between atomic power and fusion. So I guess fishing and fusion. Fishing and fusing, well, I mean essentially fishing, you're splitting apart some of the largest atoms in nature, and that generates electricity. Fusion, you're smashing together some of the smallert aesthoms in nature to generate electricity. So so fish and obviously mainly use uranium. It's very big, very heavy atom. It essentially will fall apart under the sort of weight of its own nucleus, and that produces spare neutrons, which are one of the particles in the nucleus of the atom, and the movement of those neutrons generates heat, which generates electricity fusion. You're doing the opposite thing. You're taking two isotopes of hydrogen. So these are varieties of hydrogen, and typical hydrogen nucleus is just one proton positively charged particle. Add one neutron to that and you get something called deuterium. Add two neutrons that you get something called tritium um. These these are both varieties of hydrogen. If you smash deuterium and tritium together, you can produce an atom of helium, and then you get a spare neutron, which just does with suffishient reaction can be used to generate heat and electricity. Now the advantage of this, of course is the uranium is pretty rare in the world. As you said before on this program, you really have to have a good relationship with CASA down if you want your uranium rate. Absolutely, there's a sort of fuel supply problem around nuclear fission that a little bit like with sort of cobalt from Congo or let's face it well, from Saudi Arabia. The people who produce the fuel are really potentially can have a lot of influence over your ability to generate electricity. Now, of course, hydrogen it's the main ingredient of water H two O. Every country in the world has plentiful water and certainly enough force to power a nuclear reactor. You can filter deuterium out of water. It's actually quite a common ingredients. So called heavy water, which is water with deuterium atoms in it is used in a lot of conventional nuclear reactors right now, and tritium can also be made from nuclear reactor. It's a little bit more complicated, but in principle that the fuel is very abundant, it's available to any country on Earth, and of course, unlike fish, and it's producing helium four, which is a stable atom, it is not radioactive, so you're not getting radioactive waste from the fuel. Having said that, of course, what happens when any neutron hits another atomic nucleus is it transmutes that and generally that will often turn into a radioactive material. So the neutrons that are creating the heat, they are also creating radioactive material. In this case, it's not the waste fuel, but it's actually the reactive vessel itself. There are a few proposals for chemistries that don't do this quite as badly as others, but there's a genuine risk that's certainly if you're using basically, you know, this DT fuel, deuterium and tritium, these hydrogen isotopes, then the reactive itself will actually degrade, transmute into other materials, and become radioactive waste in itself, and you'll have to replace it very regularly, so there are huge challenges. That was not what I was expecting you to say. That really puts the kibosh on the whole project if that word happened. But we don't know that that's going to happen yet, right well we well, I mean, I think we do know that it would be enormously challenging to use a hydrogen based fusion reaction that is not going to degrade and damage the vessel reactor. There are proposed chemical alloy solutions to this, but it's all immensely complicated and it's not really what anyone has been researching yet. Remember, we've taken seventy years to get to the point of a fusion reaction that actually generates more intrician you put into it. These engineering problems, I mean, they're not even the next hurdles across, but they're several hurdles down the way, and all this on the servers of Nezeral. If it works, it has tremendous potential. Personally, I suspect that you know, fish and we have a working nuclear technology that produces similar levels of energy energy from the sort of same amounts of material. I'm not yet convinced that fusion has enough advantages over fishing, and fishing has enough struggles as a technology. So I'm not yet convinced that fusion is there, But of course it does get there, then it's it's tremendously exciting. So you know, I think it's worthwhile that we are spending the money in investigating this and in developing it and sort of ironing out some of these difficulties. But in terms of is usually going to be a big part of the electricity grid in my lifetime or my children's lifetime, I doubt it. I think we know that we will have a grid mainly based on wind and solar with an analystis nuclear fision. They're about like ten percent or maybe a bit more than ten percent, and with maybe hydrogen or maybe abated natural gas as a sort of way of managing some of the variability. But we're not going to have countries power by nuclear fusion. Loomberg Opinions, David Fickling. That does it for this week's Bloomberg Opinion. As always, send your thoughts are away. I'm at Viquan at Bloomberg dart Net. We're produced by Eric mollow Until next time on Doomburg opinion,

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