Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
In this week's podcast: Anurag Rana, Bloomberg Intelligence Technology Analyst, joins to break down Oracle earnings. Alex Harris, Bloomberg Short-term Interest Rates Reporter, talks about the Bloomberg Big Take story: “Talent Exit at Williams’ New York Fed Stokes Concern on Its Sway.” Marcus Ashworth, Bloomberg Opinion Columnist covering European Markets, discusses his Opinion column: “Macron Plays Fast and Loose With Investor Faith.” Craig Trudell, Bloomberg Global Autos Editor, discusses news that the EU will impose additional tariffs on EV imports from China. John Ketchum, President and CEO of NextEra Energy (NYSE: NEE), discusses how power demand is dramatically increasing. Sung Choi, Bloomberg BNEF Metals and Mining Analyst, talks about an issue with the supply and prices of metals used in the energy transition.
The Bloomberg Intelligence radio show with Paul Sweeney and Alix Steel podcasts through Apple’s iTunes, Spotify and Luminary. It broadcasts on Saturdays and Sundays at noon on Bloomberg’s flagship station WBBR (1130 AM) in New York, 106.1 FM/1330 AM in Boston, 99.1 FM in Washington, 960 AM in the San Francisco area, channel 121 on SiriusXM, www.bloombergradio.com, and iPhone and Android mobile apps. Bloomberg Intelligence, the research arm of Bloomberg L.P., has more than 400 professionals who provide in-depth analysis on more than 2,000 companies and 135 industries while considering strategic, equity and credit perspectives. BI also provides interactive data from over 500 independent contributors. It is available exclusively for Bloomberg Terminal subscribers.
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence with Alex Steel and Paul'sweeny.
The real app performance has been the US corporate high yield.
Are the companies lean enough? Have they trimmed all the fats?
The semiconductor business is a really cyclical business.
Breaking market headlines and corporate news from across the globe.
Do investors like the M and A that we've seen?
These are two big time blue chip companies window.
Between the peak and cut changing.
Super fast Bloomberg Intelligence with Alex Steel and Paul'sweenye on Bloomberg Radio.
On Today's Bloomberg Intelligence Show, we dig inside the big business stories impacting Wall Street and global markets.
Each and every week we provide and up research and data on some of the two thousand companies and one hundred and thirty industries our analysts cover worldwide.
Today, we'll look at why trade tensions between the EU and China may be escalated.
Plus we'll discuss how the energy transition will drive a significant uptick in demand for metals.
But first we begin with the computer technology company Oracle. This week, Oracle reported fourth quarter results that fell short of analyst expectations. But Oracle shares still hit a record high.
From where we were joined by anorog Rana, Bloomberg Intelligence technology analyst. We first asked Anaurag why investors were so happy about Oracle.
I think the biggest thing in our view were the two partnerships that were announced, one with Google and one with open Ai, you know, from a.
Future point of view.
At the same time, we continue to see strong demand for the cloud infrastructure business, which has been kind of the story on cloud on Oracle for the last you could say, eighteen months or so. So that remained strong. But remember, prior to going into the quarter, there is a lot of noise about software spending slowing down, but that's on the application site that's a different kind of the business. But on the infrastructure side, where you're hosting somebody's you know, application or a workload, that business is still doing well. So it's good for Amazon, it's good for Microsoft, and now it's actually good for Audio.
Also, Anura, can we put Oracle into our besket of ai stocks?
Now, yeah, I mean have we been talking about it for a while that they would be most likely the fourth largest cloud infrastructure vendor down in the future, right behind you know, Amazon, Microsoft, Google, and then it'll be Oracle. Now, remember, everybody's trying to get the workloads or trying to figure out how to put their AI experiments out in the cloud desk to see what they can do with it, and they're running short of capacity. So when you look at a company like Oracle, which has deep pockets, can actually afford to spend more. They announced they're going to double their capex this year, so that's going to be somewhere around fourteen billion dollars or so for the next twelve months. I mean, they can spend the money so people will.
Come to them.
So let me just dumb it down for me here. So Microsoft and Google then are using Oracle stuff for their AI cloud infrastructure. So all the language model learning things that happen, and all the data they're collecting for AI goes now to Oracle's hardware software.
Well think about it that. Let's assume that you know, Oracle is an electricity provider, and if for any reason, Microsoft feels short of it, they can go out and you know, rent some from somebody else. I mean, because everybody is getting a lot of workloads or incoming inquiries to do things. But they're running shot of capacity, and that's where you know they can go out and borrow. But when it comes to Google, what they basically are doing is they're saying, we have a lot of companies, let's say banks and airlines that house their data on Oracle's databases. They're going to take their servers and put it in Google's cloud data centers. So if anybody wants to run you could say, an AI or an mL machine learning algorithm, they can then tap into that data that's housed into the audicle database so that you know, they can run those queries faster.
Listen to this evaluation story. This is just another one that's very much like Nvidia on a terms of valuation, trailing Pe on their fiscal twenty twenty four gens May thirty first, twenty four reading about thirty six times earnings on forward earnings just on their May twenty twenty five twenty two times earnings. Oh, I mean, it's another one those in video word, this is a company that appears to be growing itself into the multiple How do you think about valuation here on a rock for the oracles of the world, for the videos of the world. Now that it seems to like, boy, it's kind of a new paradigm here with AI.
Yeah, when you look at cloud infrastructure companies, you know, one could argue that article's slightly cheaper than all the others, But at the same time, their cloud infrastructure business is small, so small compared to the overall pie, which is not growing as much. Remember, after all said and done, for next year, article may grow sales let's say, around eleven twelve percent someone in that rain, So it's not anywhere close to where in video is going to grow, you know, their revenues for the next twelve months.
All right, So let's step back and look at your space in general. Here on a rock. When we think about I mean, I feel like we're learning something or at least iron every day about AI, the cloud, OU, the spending associated where the spending's coming from. So, as you sit back and you're constructing a basket of AI stocks, kind of what would you throw in there kind of in order? Would you say?
Good question?
Yeah, that's it's a very good question. In fact, everybody's trying to figure that out. But when you look at the AI basket, you know, the bigger companies on the chip side are the first one, So that was Sisennvidia. You know, Dell's been a bigger, somewhat of a player over there. But when you come to the software side, the number one company from an AI exposure is Microsoft and that's because of its partnership with open AI. Now when you look at you know, the downstream play, it is the cloud vendors. Now they have a very small portion of their workloads coming from AI, but that's going to rise going forward. That's going to be you know, the likes of Amazon, Google Cloud, and then Oracle Cloud. So these are the infrastructure players, then the application companies. Now, these companies are right now experimenting with products. They don't really have a full, you know, massive suite out there. You know, that's the like of Salesforce or or service Now companies that are experimenting with it or will have smaller products or newer products coming in. Adobe is actually another one that actually stands out for us because they have a product that's working very well. We'll see what they do about it.
Oh really, because I feel like, isn't the whole thing with Adobe is that they haven't unveiled the right AI product or anything along those lines.
Well, they have one for creating images, So that's doing really well. The one, the next one where everybody's waiting for, is the AI product that can create videos on the fly. Now, the big controversy on Adobe is that, oh, why do I need to buy a software when I can create these images through you know, let's say chat GPT. But it's not just about creating images. First and foremost. When you use an Adobe product, you first of all, are not worried about copyright issues. Second thing, you really use Adobe for editing and the entire workflow process, not just creating images. So creating images can be a commodity, but editing and actually giving out a big story you still need a software for that.
Our thanks Anna rag Rana, Bloomberg Intelligence to Knowledge Analyst.
We now take a look at one of the Bloomberg Big Take stories featured this week on Bloomberg Intelligence. It focuses on the recent exit of talent at the Federal Reserve Bank of New York and the piece is titled talent exit at Williams New York fed stokes concern on its way for more.
We are joined by Alex Howers, Bloomberg short term interest rate reporter. We began by asking what exactly is going on at the New York FED.
What's kind of happened over the last couple of years is you've seen an exodus of basically senior management. These are people who have been with the bank for decades just deciding to exit, either that they retire or that they you know, find another opportunity on Wall Street, or just really but what's ultimately driving it is the environment is just not they have found just not conducive either that you know, there's been changes in the bank under the leadership of John Williams that they have found, you know, doesn't necessarily work for them anymore. And as a result, they're leaving. And what people are worried about is the so called brand. It leaves a vacuum of people who are experienced at fighting crises. Because remember a lot of these people have been there. They were there for the financial crisis, they were there for the repo market blow up, they were there in twenty twenty. Like, they have crisis fighting experience, and so you're leaving a lot of that knowledge is leaving the bank, but then also just their ability and the question of are they ready for whatever's next, And that's what.
People are really concerned.
Is they're feeling like something severely lacking under the leadership of John Williams.
There's why I love that you wrote this, because Alex is usually the person has those really nerdy repo market articles where you're like, I know this is important. I know I'm going to read it three times and I'm still going to understand twenty percent of it and I have to email Alex Harris. So thank you for writing an article that I understood right off the bat.
What did they do about that?
Then?
I mean, is it as easy as like, hey, we're going to offer more work from home? Is it not that at all? Is it something very different?
I think it's very different.
I think really what people are going to have to start looking at is to be a really serious look at the role of the New York Fed. You know, for some people, they've said, look, Lorie Logan got elevated out of the New York Fed to running the Dallas Fed, and she's taken a lot of that staff with her. She has this experience on the balance sheet. People really trust her. So now people are wondering, well, it doesn't necessarily have to be New York that carries out you know, the implementation of the Fed's policies when it comes to their balance sheet, like this could shift to Dallas.
So people are.
Starting to ask that question or pose that question. At the same time, though, you know, people are pushing back and saying, no, no, no, this has to be in New York. We need to fix what is happening in New York. We need to retain talent in New York because the banks are here, and if something happens with the banking system, it's much easier to call everyone down to Liberty Street and say, hey, get in here, we got to figure this out than trying to call people all the way down to Dallas and say, hey, we got to figure this out.
So historically the New York Fed has been the branch that manages the Treasury's balance sheet, correct buying and selling.
Well the Fed's balance sheet. So there are whole things of treasuries and mbs and such.
Again, they have traders there and stuff that do this. I mean, this is where it happens in New York.
Well, and you have other like Chicago still has you know, market analysis people, they still have all these things coming out of the other banks.
But it is primarily a function of the New York Fed.
They're tasked with managing their Fed's portfolio. Roberto Pearley is the SOMA manager, so he manages the FED securities portfolio. You know, so these things, and so the New York Fed, really post financial crisis, has just taken on such a larger role. They've essentially become like a giant broker dealer just given the size and the sheer size of their balance sheet. And that's you know, someone like Christopher Whalen is making the argument that you don't need an academic running the New York Fed. You need someone who's comfortable with operations, with the nuts and bolts, and can kind of see it from a more markets oriented perspective than an academic one.
So how do they pitch that, Because who's going to give up a job Goldman that pays a nice chunk of change. Actually, I have no idea how much the New York Fed does, but I have to assume it's less.
How I do it.
It's like I think, when I last look at the annual report from twenty twenty three, I think it's like a little over half a million dollars that the president of the New York Fed makes but I mean, look Beth Hammock, who ran funding, who ran the Goldman Sex fundings.
Are she's elevated. She's taking the role as the Cleveland Fed president.
You know, Lorie Logan could always you know, people are speculating that she could come back to New York and run it. You know, these are the kinds of people I think that they envision when they're thinking about the role and who could possibly you know, helm the New York Fed after John Williams, who decides to retire a step down?
Do we have a problem with John Williams? Is that a people placing the blame on these departures on John Williams and his.
Style or you know, I think it's a I think it's a bit of both. I think, you know, again, you know, when we spoke to people, the message was always he is a brilliant macro economist, but just ill suited for the role. I also think culturally, the other sense I got from people is that, you know, culturally, it's it's very different than the San Francisco Fed, which is what he was running for seven years before he came and took the role in New York.
It's just very different.
And you know, sometimes culturally people don't fit and that's okay, and so that's something to also think about.
So I think it's a bit of both.
I think it is somewhat of the of the culture and just sort of not meshing.
You know, they were just sort of ill suited for each other.
Our thanks to Alex Harris, Bloomberg Short Term interst rate Reporter.
Coming up, we're gonna break down my French President Emmanuel Maccron's call for a snap legislative election may be a serious gamble.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries. You can access Bloomberg Intelligence via bi go on the terminal, I'll Paul Swingey.
And am Alex Steel and this is Bloomberg.
You're listening to the Blueloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on affocr Play and Android Otto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
We move now to politics. French President Manuel Macron recently called for a snap legislative election.
That's after Marine Lippen's far right National Rally Party defeatedt Macron's Renaissance Party in European parliament elections.
The consequences of Macron putting politics above economic stability could be profound, and it's the subject of a Bloomberg opinion piece this week titled Macron plays Fast and Loose with investor Faith for more.
Guest host Jess Mett and I were joined by the story's author, Marcus Ashworth. He's a Bloomberg Opinion columnist covering European markets. We first asked Marcus for his reaction to what we saw in Europe this week.
I was thinking that this was a long time coming, but it was worse than perhaps everyone, including Macrol, had expected, and therefore it put him in a very difficult situation with I guess his main opposition pulling more than.
Twice which his party got. Then he got like fifteen percent or something. So though he has another three years as president.
If he wants to, I don't think he'll resign, but there was some question about that. He means he won't have the ability to equim of Congress to be able to do very much. He can still do a lot of presidential decrees, but nonetheless it's boxed him in, and more importantly, he can't run again by then, you know, in by twenty twenty seven, his ten year legacy would be pretty poor. So I think what he's decided to now is gamble on a political swing which has gone to the right wing that perhaps the French people they're challenged again, may push.
Back against that. But the consequence of this.
Is that the bomb market in particular and the stock market and some degree the economy is is going to have to take a little bit of a how can we say this bit of a shakeup, because politically this is a very aggressive move and it also puts into very much sharp contrast the financial fiscal situation of France, which is rising ever and extorably higher in debt and particularly it's budget deficits annual spend is much more than it takes in. It's five and a half percent last year, which is pretty shocking and not likely dropped much by next year. And I think the European Union could put it into double secret probation. They call it an emergency deficit procedure, but really what it means is there's in the sin bin, and that's hugely embarrassing for macn or any government. But the point is the rating agency, the credit rating agencies we saw S and P at the end of May knock France down to double A minus Fitch are already there, and movies that came out and basically said they're one notch up at double A two, but they may be having a look at it. So it's all about a worsening credit of France, a worsening political regime, which makes the European Union very nervous because you know we've seen with the previous situations with Greece and Italy that will turn the blind eye to most things. But they want everyone to be very much pro Europe and Marie La Penn's right wing party, which is the National Rally though they no longer argue for Frexit or France exit, they once did and then reason pretty.
Long in Brussels.
So the last thing they want is a non fully backing.
Euro style prime minister.
Even under Mackerel's president that we're out and settling for Brussel. That means it's very unsettling for credit rating agencies. Panic panic, panic, It means that French debt is perhaps a little bit more risky, still pretty safe, but a little bit more risk than it was before weekend.
You were talking about how France has seen a sustained deterioration its fiscal position, particularly when you're looking at its debtload. How did France get into this position?
Aha, they spend more than they had. The reason is I mean k Kart.
Was elected on reforming the fiscal situation, and principally one of his key things was raising the retirement age, which he raised from sort of really sixty sixty two up to about sixty four. He wanted to get it up to about sixty seven, which for instance where the UK is, but massive pushback and the fact he very basically couldn't get it through unless he pushed it through by this, as I mentioned before, presidential decree worried some of the raising aginsties. Then now the fact that he has gotten really nowhere of getting stuff through the National Assembly, the Parliament or Congress is a really scary situation.
So you know that means.
There's even less chance of any form of fiscal improvement, of getting that budget deficit down and reducing the overall and debtness of France.
And that's a pretty difficult.
Situation, complete gridlock because if the national Rally were to become the person the party to have the Prime minister and try and form some form of coappitatial cohabitation, I think it's say English, is that they won't get in it. They won't allow any form of spending cuts or anything to reduce the benefits that a lot of French people. Eight percent of the French economy is state spending. It's a very socialist driven state and they don't like their benefits getting touched, which means nothing will happen at least twenty twenty seven, no improvement on the fiscal outlook. That's very bad news for bondholders, for credit radio season, indeed probably for European Union cohesion.
So I know in your column, Marcus, perhaps one of the rationales from Mark Crohn's boldness here is that will actually force Marine Leapen to maybe reveal what her plans for the economy are. What do we know or what don't we know?
Well, we they deliberately a bit like the Labor Party it's about to take power in the UK.
They've been very should we say with.
Erchet In telling us what they are actually going to planning to do, and Marilla Penn has basically said no to many things but hasn't told anyone really what they are planning to do.
How you would sort the pension situation out.
But the one thing we know, if you're sure, they are pretty anti immigration, and they are pretty anti the pension changes in any other form of benefit changes. So it's gonna be almost impossible for the government to stop its welfare spending bill, and that you can only mean, you know, essentially this would be a deficit and debt to GDP ratio negative scenario.
I would think it'd be very hard for her.
But you know, Mackerel's gamble is precisely as you laid out, is that if they put them in power, at least nominally, the Prime Minister doesn't have anything like as much control as you would think, but they have ability.
To try and put some things through.
If they turn out to be incompetent and they turn out not to do what they said they would go to do, or anything like this, it would make the presdential elections in twenty twenty seven a bit of a little bit more anti rally and pros we say Macrols or more more centrists. The huge gamble was it could go the other way. These guys could turn out to be very good in power. And the fact the center rights are already talking about maybe teaming up with the National Rally of the far right and creating an anti Macron coalition that can become very popular, and we could see it would be a very stupid gamble that Macrol's taken. We just don't know. The point is that either a bondholder and indeed, as you seem with the French banks like Sockgen got hit really hard. You know, why would you want to take the risk and perhaps go to somewhere a little bit more safe like Germany or I don't know, somewhere else in Europe?
All right?
Thanks to Marcus Ashwareth, the Bloomberg opinion columnist covering European markets.
Staying in Europe this week, you heard that the European Union will impose additional tariffs on electric cars shipped from China starting next month. This could take levies to as much as forty eight percent.
It's a move that further escalates trade tensions between the EU and China, and it also adds to the cost of buying an EV For more.
We were joined by Craig Trudell, Bloomberg Global Ottos Editor.
We first asked Craig for his take on the tariff increases.
This is huge news, it was anticipated, but the particulars are something that are very fresh. So the European Union launched this investigation last year into the extent of the subsidization of electric vehicles by China, which are are increasingly you know, coming into Europe and you know, really able to compete with local manufacturers. There's been concerns about you know, Chinese cars being able to undercut companies like Volkswagen and Stlantis and Renault. Sa I see, the maker of MG, which is a British brand that you know, was was sort of brought back from the brink by a state owned company in China. Sa I see. They are going to be subject to a thirty eight percent additional tariff. And MG has really been sort of lighting, you know, lighting things on fire here in Europe and in the UK in terms of really you know, being able to push a lot more volume the last couple of years. Another big manufacturer that's going to be subject to a substantial TERRAF will bgi Le they of course own Volvo and Pollstar and some other big brands. Byd is another company that will be subject to seventeen percent additional tariff, and the rest of the industry will be subject to an a weighted average duty of twenty one percent.
So talk to us about just the EV market and the China's percentage, Like what's China's market share in Europe of EV's broadly defined, because you can't find one here in the US.
Yeah, I mean, it's tricky because it of course depends a little bit on how you define it. And I think one of the things that's really interesting here is that it's not necessarily just Chinese companies that are doing this importing. The biggest importer as a matter of fact, is Tesla. They have the plant in Germany where they make Model Wise, but they don't make Model threes there, so they've been shipping an awful lot of Model threes from their plant in Shanghai. They interestingly are going to try to have a lower duty rate and make the argument to the Europink Commission that because they've been, you know, benefiting less than other manufacturers, you know, from subsidies that they should have a sort of commensurate duty rate. Other manufacturers are able to make that request and have what's called a you know, individually calculated rate, but at this juncture, the only company that we know that's asked for that and make get it is Tesla.
Here's what I don't quite understand. I know I'm kind of beating my head against all on this one, but if the goal is to go green, why wouldn't they want to flood the market with a ton of Chinese ev imports and get the green stuff going. And I appreciate that they want to protect their current manufacturers, but you know, importing cheaper evs also spurs competition. So the line to thread the needle I find to be very confusing.
It's absolutely needle threading or or you know, tightrope walking, pick your metaphor. And it is a very valid question. And depending on who you ask, they're they're doing absolutely the right thing here, or or they're really sort of shooting themselves in the foot folks in bruskly. The you know debate here is is to what extent do you know local manufacturers need to be protected from the fact that kinda has jumped up out to this huge lead. They're dominant in this space. They're able to you know, bring electric vehicles to market with much cheaper batteries that people can actually afford, and that's been you know, the the major you know, sort of pain point for the industry is they have not been able to bring prices down far enough fast enough for you know, more mass market adoption. China has been able to pull that off. Uh, you know, in large part European companies have not been able to do that. So while you know, we've seen quite a bit more momentum in Europe relative to say the US, that momentum has really slow of late, particularly as we've seen you know, the cost of living crisis and inflation really hitting consumers pocketbooks. We've not seen you know, the growth rates that you know, just in the last few years. We're really eye popping and you know, getting a lot of people excited about you know, this transition being doable.
Our thanks to Greig Judell, Bloomberg Global Autos Editor.
Coming up on the program, a conversation with Next Era Energy CEO John Ketchum on how the demand for power is dramatically increasing.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies in one hundred and thirty industries. You can access Bloomberg Intelligence via b I go on the terminal On'm Paul Sweeney.
And am Alex Steel and this is Bloomberg.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon on Alexa from our flagship New York station, Just say Alexa playing Bloomberg.
Eleven thirty, we begin to look at the company Next Era Energy. It's TICKERSNEE. Next Era Energy is a leading clean energy company headquartered in Juno Beach, Florida, and it provides clean, affordable, reliable electricity to approximately five point eight million customer accounts or more than twelve million people across Florida.
For more on how the demand for power is dramatically increasing, we were joined by Next Era Energy President and CEO, John Ketchum. We began by asking him more about what his company does.
We're made up of two businesses. One we own the nation's largest rate regulated utility Florida Power and Light. And two we are the world's leader in renewables when solar battery storage a unique combination bringing those two companies together.
But you still have like nuclear and gas too, right like it.
We do for the utility side, we do so we covered all.
We're in every part of the energy value chain, not only a renewables. We have six gigawatts of nuclear and we're one of the best operators in the country on the nuclear side, and we also own gas fire generation. Seventy two percent of our generation fleet in Florida is actually natural gas fired. So we view ourselves really as a very credible source in being able to advise our customers on what the lowest cost option is for generation.
Owning a utility electric utility in Florida would seem to be a tough business with all the weather down there. What happens when these storms come through? How do you guys? You have to almost be in a constant state of emergency almost to be able to react.
We are battle tested. That's one of the great things about our company is that nothing catches us up by surprise, and it comes from a culture of continuous improvement and innovation, and we practice and we drill, and we've had what forty nine hurricanes in the last twenty or thirty years. We're never caught by surprise. Company that is used to managing through diversity, and that's one of the strengths.
So you mentioned catch by surprise. So there was an investor presentation that you made and you did, were you outline your forecast this year through twenty twenty six. You're also twenty twenty seven midpoint for profit forecast. That's the one that analysts said that falls short of our estimates. Yeah, And I guess the question is if data demand and data power is going to drive so much demand for your stuff, why isn't that midpoint higher.
Well, here's what we see, and we talked a lot about this at the analyst day. There are three things that I think really differentiate Next Era as part of our value story. One, we're seeing an inflection point and power demand. Two, it's going to be met by renewables because it's low costs, fast to deploy, and it's clean. And no companies better positioned to meet it than we are. And our business model has always been what I would call a replacement cycle. We were building new renewables to replace higher cost coal plants, higher costs, less efficient gas fired units, oil fire units. We now have this new opportunity that's really emerged in the last six to nine months, which is what I call our growth cycle opportunity. It's a new demand that has come and it's across industries. It's not just data centers get a lot of discussion, but it's industrial electrification reshoring to manufacturing as well. But when you think about it, we're having all these discussions with these customers now. Take data centers, for example, it takes two to three years to build a data center, so they won't need the power until twenty twenty seven. We might sign a contract today, but the power comes in twenty seven, which means it contributes in twenty eight. And so we're trying to explain to investors, Look, we have a tremendous long term growth outlook, but a lot of this growth cycle demand is really going to start materializing, producing revenues and earn needs in twenty seven, which means it really starts to contribute in twenty eight.
As you walk through mitt On, Manhattan, you probably see some empty office space here. I think they all move down to your state. Talk to us about how that's impacted your business in terms of demand and maybe what you have to invest back into your GRIED.
Yeah, and that's what's great about our business, right is the Barbell approach. We've got the nation's leading great regularly utility in Florida and the world's leader in renewables in Florida. We're seeing tremendous growth over the next twenty years. We're projecting a forty four percent increase in GDP. We have one thousand people a day moving to the state of Florida. Four the five fastest growing metropolitan areas in the United States are in Florida.
Florida.
We're a country, it would have the fourteenth largest economy in the world, and we're there to power all that growth. So our growth story is not only about what I just discussed about all this renewable demand that we see power in AI and industry and manufacturing across the United States, but it's also all the growth that we see right in our own backyard in Florida.
Talk to me about rates. So you're going to need to invest a lot, right, Like there's maybe an enormous investment cycle as you mentioned, like the growth cycle for utilities, right, what is it like on the regulated side of going back to the government and saying, Okay, guys, I got to invest it, You've got to raise the rates.
Yeah.
And so what we do is we have done a terrific job of taking cost out of our business. So when you look at what we've been able to do over the last twenty years, our O and M on a dollar per megawate hour basis is seventy percent seventy percent lower than the national average. That's three billion dollars we put in our customer's pocketbook every single year compared to an average utility. And we've always been able to make really smart capital investment decisions around bringing low cost generation in the fold. And the lowest cost generation option that we have in Florida is solar and storage. So although we're investing more capital, it's actually lowering the bill because it's a lot cheaper than other generation alternatives, combined with our ability to take cost out with the way we operate.
But for you, from your investors perspective, is a unit of power from a renewable source, what's a profit margin on that versus maybe an existing source.
Well, when you think about renewables, I mean renewables, you know, have really strong returns and they're low cost, and you talked about you know, interest rates, you being one of the factors we pass those costs through to our customers. And so the cost of wind and solar has gone up a little bit as we've seen some pressure you know here from the macro environment, So have cost increase for every other type of generation. Actually, gas fired generation has really gone up in price. So you know, what we have seen with gas fire technology is a fifty percent increase in the last twelve months. That has not happened to renewables, making renewables even lower cost than they've ever been on a relative basis to gas turbine options.
So what I hear is that everything is just more expensive because that's the environment that we're in. But because you're able to take costs out, the rate payer may not get hit as hard. Is that a fair statement?
That's exactly right. And so what we've been able to do in Florida, our bill is thirty seven percent lower than the national average thirty seven percent. It's because of our ability to take all those costs out of the company and also offer them low cost renewable solutions as part of the generation mix. And when you put those two together, that's how we're able to achieve that thirty seven percent lower bill than the rest of the nation. That's a really compelling customer value proposition and investor value opposition.
Our thanks to John Ketchum, President and CEO of next Er.
Energy, saying with energy, we have something here at Bloomberg called Bloomberg New Energy Finance. The idea behind it is to provide data on commodities, power, transport, industries, buildings and agriculture plus new technology.
This week we looked at how the energy transition will drive a significant uptick in demand for metals.
Bloomberg and EF estimates six trillion dollars worth of key metals will be needed between twenty twenty two and twenty fifty, and to reach net zero emissions by mid century that number leaps to ten trillion.
For more, we were joined by Sung at Choi Bloomberg BNEF Metals and Mining Analyst. We first to ask Sung to comment about the amount of metal that would be needed in the energy transition.
As we progress through the technologies where we shift from fossil fuel to clean energy, and with the innovation and technologies, especially in the transportation sector and data sector as well and power grids more, obviously more metals will be needed in order to get the electrons flow. You need metals obvious right now, the particular categories of metals that are of interest lately is lithium and copper. Those two metals are very interesting at this moment.
Where do we get these metals and is that a concern where we do get them?
Yes, that is a concern. So for me, demand is is of a concern, but it isn't too much of concern. Supply is more of the concern. The reason for that is the reason that I say that is because many of the places that have this particular resource such as copper and lithium in areas where it has very sensitive political and social landscape. And in order to get those you know, supply out of the ground right, miners have to navigate through those complicated situations. Right For example, just starting this year or last end of last year, many people podcast that the copper will be in set plus for twenty twenty four will be a cur us yah. It would be a slight surplus for twenty twenty four, there was, there was the expectation. But then at the start of this year right in Panama, Cobra Panama was shut down for many reasons. Right as a result of that, we're experiencing this, you know, run up in copper prices, right because there's a dislocation between a copper mince plot and the smell of capacity.
So here is.
Where I think raises the problem because you're looking at a structural shift among metals that are cyclical. So that's one area where we were surprised to the upside, and now we're going to see a deficit. But then I look at lithium, and we knew the ev revolution and the batteries we were going to need lithium. So all of a sudden the lithium guys, and a lot of them are in South America. When game busters are like, we need all this lithium. It's going to be awesome. The demand's going to be there, and then the price is crashed and then they had to shut down some of their operations because it wasn't economic anymore. We do need the lithium, but we didn't need it that day.
How do we manage that.
So you know, with everything, you know, timing is everything, but it's really impossible to predict any type of timing with any type of investments, right, So copper is in this moment right now. For lithium, there was two years ago, right, all this hype around you know, electric vehicles use of lithium, difficulties in getting lidium, so all the investments poured in into lidium space and as a result of that, there's currently there is an oversupply issue with lithium.
Right.
But despite the oversupply issue, the lithium industry isn't really at the cusp of a paradigm shift in technology innovation. Right. There's this thing called direct lithium instraction technology where you take.
The direct lithium extraction.
Yes, direct lithium distraction technology. So there's two routes where you could extract lithium. There's mainly a hard rock with theium where you take the spodi up, you mind it at the rock and you process it. All The process is brian. You take you take the Brian and you exchect the lithium out of it.
But butter think water, yeah, okay, but.
Using evaporating metive so you basically you're using something like to evaporate the water out of it and extract lithium and that takes two years. Now d l E or dark lithium extraction process, that's gonna bring that lead time down to two weeks instead of two years. So main competition versus you know, hard rock that is right now, that's going to be a you know, game changer for the industry where it's gonna actually lower the cost card. Right it may load the cost card. It's been too early to tell right now, but at the you know, at the cost of commercialization of this technology, it may loader the cost card and it may you know, change the industry forever.
Our thanks to Sun Choi, Bloomberg, Andy, app Metals, and mining Analysts.
This is the Bloomberg Intelligence podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday ten am to noon Eastern on Bloomberg dot com. They are your radio app tune In and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal